This is a video post by Ed Rempel.

Financial Planning is not about the money itself. It is about what the money will do in your life. This video will highlight why you DO NOT get financial security by paying off debt and safe investments. It comes from having a huge nest egg.

[youtube_sc url=”” title=”Financial%20Security%20comes%20from%20a%20huge%20nest%20egg”]

Question: From your experience, how do people really benefit from financial planning?

Financial planning is not about the money itself. It’s about what the money will do for you in your life. A plan is not a bunch of numbers – it is about your life. Our clients find that our planning meetings are actually fun.

For example, we ask clients: “What’s important about money to you?” The #1 answer we get is security. They want to know there will always be enough income for their family, for emergencies, or for things important to their lifestyle.  A plan can help you and your family achieve financial security.

Question: Can’t they get financial security without a plan?

We find most people that want security do exactly the opposite of what they need to do to get it. The common mistake people make is to think they can be financially secure by paying off debt and having safe investments.

We call it this the Zero Plan. Their goal is to retire with zero debt, zero investments (nearly), and zero income (except a bit from the government). Investing very little money and buying low return investments means you never build up much of a nest egg.

Real security: comes from having a huge nest egg.  I’ll give you a simple example. Who is more secure?

  • Person A: With no mortgage or.
  • Person B: With a $200,000 mortgage and $1 million in investments. That’s what real financial security is.

Question: How do you get financial security then?

Building a nest egg probably means you need to invest in the stock market. It does not have to be scary, though. You can invest successfully and safely in the stock market. Here’s what you need to do:

  • First, you need to think long term. The growth of the stock market has been quite consistent if you invest long term.
  • Second, you need a solid investment strategy. Our strategy is to hire the world’s best investors. We call them, “All Star Fund Managers”. Knowing they are investing for us gives us confidence.
  • Third, you need a long term, written plan so you know what you are doing.
  • Fourth you should work with one financial planner you trust.

In short, you do NOT get financial security by paying off debt and safe investments. It comes from having a huge nest egg.

“Disclaimer: Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Opinions expressed are the personal opinion of Ed Rempel.”

About the Author: Ed Rempel is a Certified Financial Planner (CFP) and Certified Management Accountant (CMA) who built his practice by providing his clients solid, comprehensive financial plans and personal coaching.  If you would like to contact Ed, you can leave a comment in this post, or visit his website  You can read his other articles here.


  1. SST on December 1, 2012 at 8:10 am

    @JJ Re: Billionaire gold — The more intriguing of the two billionaires being Soros, as I’ve stated, because of his personal history.

    Paulson may just be an “all-in” bull trying to ram his way to profits; he’s done rather well this century.

    Soros, on the other hand, some would say, has an agenda which has nothing to do with money. You have to piece things together: Soros with solid White House connections, the US government strongly considering re-instating gold as money, Soros with four tons of gold at the ready… Who knows what he’s up to, pure profit might not be his end-game. What’s the old adage: He who owns the gold makes the rules. (Never has the same been said of mutual funds!)

    A whiff of agreement between Ed and myself in that one might want to know the man behind the money before following his investments.

    See you at $1,000,000!

  2. SST on December 1, 2012 at 11:43 am

    A great post to close out Financial Literacy Month!

    Just read this apropos study by New York University economics professor Edward N. Wolff:

    As FT is defining his MIllion Dollar Journey by household net worth, use of these metrics is valid.

    The paper states MEDIAN household net worth is $57,000 (2010 dollars).

    Also stating there was 7.655 million households with a $1,000,000 net worth — the lowest level on the millionaire pyramid.

    The USCB claims 114.2 million households in America (2010).

    (note: I use the USA because, as I’ve stated before, it is most likely much easier to accumulate wealth in that country due to different taxation and regulations. However, the two economies are intertwined and the US provides somewhat of a mirrored standard for Canada.)

    i) a full 50% of households are extremely far from the $1,000,000 mark, so much so that it might as well be $0. In fact, 19% of all US households do have “zero or negative” net worth.

    ii) only 6.7% of ALL households hold $1,000,000 of net worth (a much broader measurement than ‘investable assets’).

    iii) only 8.3% of ALL households owned mutual funds (2010).
    The $1,000,000 group holds just 15% of net worth in “corporate stock, financial securities, and mutual funds”.
    (Important to note that 75% of mutual fund ownership is held inside employer-sponsored retirement plans; this may be US-specific.)

    a) even in the easiest possible environment, there are relatively very, very few millionaires created; either measured strictly by individual and/or investable assets (0.6%; Canada), or broadly by household and/or net worth (6.7%; America).

    b) the recorded millionaire portfolio has a MAXIMUM 15% mutual fund allocation.

    See you at $1,000,000!

  3. SST on December 3, 2012 at 11:20 am

    Oh! Thanks for the edit, FT!

    Guess I’ll have to re-word that last paragraph….

    Wondering how the financial industry can ethically/morally continue to sell the “$1,000,000 Retirement Fund” (esp. via mutual funds) when mathematical facts continually prove that this course of action does not work, and has never worked, as advertised?

    Hope that’s acceptable.

  4. FrugalTrader on December 3, 2012 at 11:38 am

    @SST, no offense intended. However, it is our policy to not allow any personal attacks on our site.

    Thanks for understanding.

  5. SST on January 7, 2013 at 12:26 pm

    Pay close attention to how your CPP is being invested:

    “We believe that private equity assets can produce risk-weighted returns that will outperform public equities in the long run,” he [CPPIB’s newly appointed and well-regarded CEO, Mark Wiseman] told the Globe and Mail in September 2012.

    CPP’s holdings in publicly traded companies amounted to 33.2 per cent of the portfolio…”

    Probably not a lot of mutual funds in that portfolio.
    Just one more high-level case for private equity investment.

  6. SST on January 14, 2013 at 10:34 pm

    I ran across a very interesting man this weekend:

    Ian Gordon*, a Canadian independent stock broker (retired), developed his “Longwave Theory” and started trading it in 1998/99.

    *His portfolios consist exclusively of gold mining stocks.

    *His average annual rate of return is ~70% since inception.

    *He started to charge a fee for his information only this year; his knowledge was free prior to this.

    As Mr. Rempel began his mutual fund sales career around the same time period, it would be interesting to compare the gains of Ed’s own “All-Star Manager Theory” to the gains posted by Ian’s theory.

    Eg. $10,000 invested with Ian in 1999 would be worth almost $3.5 million today.

    So much for gold being worthless and high-risk.

    The above reminded me of Harry Browne’s “Permanent Portfolio Theory” in which 25% is allocated to gold (and 25% in cash).
    It’s 40-year CAGR is 9.7% and had only two negative seasons — 1981 @-4% and 1994 @-2.5% (there was 2008 @-0.7% but considering what everything else was doing…).

    William Bernstein did a 45-year back-test using pure market data and found the P.P. returned 8.5% annually (7.7% volatility), while a 60/40 stock/bond portfolio returned 8.8% (11.3% volatility).
    The increase in volatility far outstripped the marginal gains.

    How could high-risk gold and zero-dividend paying/zero-earnings cash, and gold, contribute to such a rock-solid (and volatility-adverse) performance for four decades running?

    Yet another example that the road to the elusive “huge nest egg” has many, many options. Conventional “wisdom” is usually not the wisest convention.

    *Mr. Gordon lives in B.C., it would be great to hear any tips he has on living frugally in this province! Beyond riding a bike and eating Chinese food, that is…

  7. SST on January 31, 2013 at 10:20 pm

    New data from StatsCan re: 2011 spending:

    “Single seniors reported $26,047 in household spending.”

    With an average annual government cheque of $18,000, that leaves said senior to come up with $8,000 of his/her own scratch.

    Assuming the obsolete ‘4% rule’, the senior has a “huge nest egg” worth approximately $300,000.

    Saved over a 45-year work life, that’s $70 per pay cheque (bi-weekly; 5% interest).

    The 5% is the approximate average return rate (+/-) of the ultra-conservative Canada Savings Bonds over that 45-year span.

    No mutual funds needed.
    No financial advisors needed.
    No stock markets needed.
    No $1,000,000 marketing scheme needed.
    No fees. No fees. No fees.
    No risk needed.

    Just savings.

    Don’t believe the hype.

  8. Ed Rempel on February 3, 2013 at 2:00 am

    There are a few reasons post 107 would not work for most people today:

    1. Most people today would not consider $26,000/year a comfortable retirement income. Today’s retirees mostly grew up during the Great Depression and might be able to get by on near poverty level incomes, but most people in our generation have become accustomed to a much more comfortable life.
    2. Retirement income should allow for inflation. After 25 years, the cost of living with 3% inflation would double. Inflation generally hits seniors harder, since the expenses they commonly pay are affected more by inflation. This means that over a 25-30 year retirement, you should plan for your income to at least double.
    3. The 4% rule still has some validity. It assumes you have a diversified portfolio averaging 6% or so, which allows you to take 4% out every year. You cannot get that return with Canada Savings Bonds.
    4. You can’t get a 5% rate on Canada Savings Bonds today. The basic bonds are at .6% and the premium bonds at 1.2%. The average was much higher because rates were much higher back in the 1970s and 1980s. However, we also had very high inflation then. Canada Savings Bond interest rates are usually roughly equal to inflation, so they are not useful for growing a retirement nest egg.
    5. A 45-year investing time horizon is not realistic. Most Canadians save for less than 30 years. If you use 30 years instead of 45, $70 bi-weekly at 5% grows to only $123,000, not $296,000.
    6. Why would anyone want to invest only in CSBs over 45 years when you could make a far higher long term return in a proper portfolio?

    In any event, nobody should use stats for average Canadians in their retirement plan. You should create a personal goal for your situation, which includes your actual spending, the specific lifestyle you want after you retire, assumptions applicable to your situation, and a reasonable long term return based on investments suitable for you.


  9. SST on February 3, 2013 at 11:55 pm

    re: #108

    Addressing a few points lays moot to the rest of that post:

    1. It matters not what “most people would not consider”, it only matters what actually is. Reality tells us retiree expenditures are ~$26,000 a year. Period. Regardless if said retiree would prefer a more “comfortable” retirement.
    (And today’s eldest retirees were barely born in the Great Depression.)

    5. How rich! You call a 45-year saving span “not realistic” yet staunchly commit to using truly un-realistic non-investable S&P data reaching back to 1880?!?
    Sales people are amusing.

    Then there are your glaring incongruent statements:
    “nobody should use stats for AVERAGE Canadians in their retirement plan”

    Yet you do EXACTLY this in post #3 in attempts to validate your “huge nest egg” theory:
    “with an AVERAGE family income close to $80,000…would need $1.25 million”.
    Also completely ignoring your own income information in post #85: “The AVERAGE actual [CPP] benefit is just over $6,000/person; …the maximum [OAS] of just over $6,000”, which results in an average $300,000 retirement nest egg.

    Not to be out-done by this:
    #3: “Most families have 2 incomes…they want a similar [comfortable] lifestyle…which means at least $50,000/year before tax as a retirement income.”

    #108: “Most people today would not consider $26,000/year a comfortable retirement income.”

    First you say $50k is a “comfortable” retirement for a couple — that’s $25k each, but then you claim an even greater amount — $26k — is not a comfortable retirement income. Which one is it, Ed?

    Face the FACTS, Ed — 99% of people will never have $1,000,000 (investable assets) before, during, or after retirement, and of those very few who do, they certainly did not achieve the wealth through the stock market, let alone being fully invested in mutual funds.

    Don’t believe the hype.

  10. SST on February 7, 2013 at 9:27 pm

    Reposting from another MDJ article:

    Good FP article on this topic:

    “…the amount of income you need after retirement if you want to consume at the same rate as when you were working…is only 50% of your gross income and might even be less.”

    “In general, a couple with two children and a home can calculate their target RRSP balance by taking the portion of their household income over $70,000 and multiplying it by 6. These calculations assume you will retire at 65 and achieve a net return on your savings of 5.75% per annum both before and after retirement.”

    (currently reading a 2010 paper by the author to investigate the methods)

    Thus, an average retired Canadian household (working income $70,000) would require only 47% of gross income, need not contribute any money to an RRSP, and only save 4% of gross for 35 years to attain the same-level of consumption as their current lifestyle (coupled with government transfers).

    That’s saving $2,800 a year for a total of $280,000.
    [$115 a month per person in the household.]

    Kinds flies in the face of Ed’s theory:
    “with an AVERAGE family income close to $80,000…would need $1.25 million”.

    $1.25 million vs. $280,000.

    No wonder the financial industry tries in desperation to sell its products.

    Don’t believe the hype.

  11. SST on February 10, 2013 at 12:02 pm

    #108: “The 4% rule still has some validity.”

    An American paper comparing five retirement strategies — the ‘4% Rule’ comes out as the worst by 15-45%.

    Also notice the household retirement portfolio is $250,000, similar to that used in #110. No where near $1,250,000.

  12. SST on February 12, 2013 at 10:11 pm

    Yet another article opposing Mr. Remple’s ‘$1,000,000’ retirement theory.

    Gerlsbeck’s Calculation:
    Household earning $100,000 needs $500,000 at retirement (65).

    Remple’s Calculation:
    Household earning $80,000 needs $1,250,000 at retirement (65).

    Of course more is always better, especially when it comes to money, however, attaining more is a difficult feat.

  13. SST on February 16, 2013 at 1:13 pm

    When do you address RRIFs, Ed?

    Average Canadian life expectancy is ~82 years of age.

    (The current population is comprised of 2% of people aged 85 or older; projections shoot this number out to 4%.)

    *Your* “average” couple retiring at 65 with $1,250,000 in their RRSP will withdraw $50,000 gross income for six years.
    Starting at age 71, after RRIF conversion, their federally mandated minimum withdrawal rate will be $92,000+ in gross income.

    That’s an increase of 84% in gross income for the last 65% of their retired lives. Also an increase of 155% in taxes.

    Perhaps this over-abundance of money is needed to pay for care facilities and the like. As the Heart & Stroke Foundations says, “the average Canadian will spend their last ten years in sickness.”

    Or the couple could save $700,000, roughly half of what you suggest, enjoy their “good” years and the fruits of their labour with the extra cash, and when they hit 71, only have to keep withdrawing a steady $50,000.

    In this static scenario there will be RRSP capital draw-down to ~$550,000, with RRIF funds running out at age 83 instead of leaving ~$750,000 unused in the bank at average time of death, if subscribing to the “huge nest egg” theory.

    Becoming a millionaire: 99% failure rate
    Living to 85: 98% failure rate

    Don’t believe the hype and enjoy your money while you can.

    (Be free to correct all tax/RRP calculations.)

  14. SST on February 18, 2013 at 2:56 am


    The Great Mutual Fund Rip-off:

    “…the highly flawed mutual fund industry is taken to task for fees and sales practices that do not benefit the investor — in fact, quite the opposite.”

    Oop! Is that the Emperor I see? :)

    The full paper:

    “…payments to mutual fund brokers may skew brokers’ incentives. This paper is the FIRST to examine whether this occurs, and if so whether it affects consumers’ welfare.”

    For a so-called Capitalist society, the general public is woefully (and dangerously) under-educated in finance.

    Don’t believe the hype.

  15. Ed Rempel on April 29, 2013 at 12:06 am

    Hi SST,

    If you have an intelligent comment to make on the topic, I’ll address it. Whenever you make comments implying I am biased or “Don’t believe the hype.”, I take that as you ran out of intelligent comments on the topic.

    Your latest post about the mutual fund industry is obviously your intention to make a point against me without an intelligent argument on the topic.

    I can tell you that all our clients can see their actual rate of return after fees in total, by account or by fund online daily. We disclose every fee in detail to clients. In addition, we are one of the only financial planning firms in Canada that writes a custom, professional comprehensive financial plan for every client. We disclose and earn our fees and our clients are generally able to outperform indexes in the long run after all fees, including the cost of preparing the financial plan.

    There will be a lot of talk in the media about fees in the next while and I’m looking forward to it. There will be new rules that will make it difficult for most of our competitors.

    If I can make a personal plea to you, SST, nearly all your posts have an angry rant feel to them. I don’t sense that you are trying to seriously address the topics. Your posts usually comes across like you are searching hard to find anything to discredit my opinions. FT has deleted your most blatant personal attacks, but honestly most of your posts come across to me as a personal attack, not as an serious attempt to discuss a topic. You come across as against everything, but rarely state what you actually believe.

    I usually ignore and don’t even read most of your posts. When I read them, any post that implies I am biased or comes across as a personal attack, or just an angry rant – I will not respond to.

    Your last couple of posts on other threads show some attempt to discuss the topic. You do seem to have quite a bit of knowledge. I welcome some real debates with you.


  16. SST on May 12, 2013 at 11:28 am

    Apologies for the delayed response; I have lots of things on the go when summer hits!
    (this might not be exceptionally coherent as it is rushed! Life goes on…)

    “If you have an intelligent comment to make on the topic, I’ll address it. Whenever you make comments implying I am biased or “Don’t believe the hype.”, I take that as you ran out of intelligent comments on the topic.”

    Sorry, let me reword that for you:
    Don’t believe the marketing/advertising/promotion.
    Are those words more “intelligent” for you?

    Yes, you are most definitely biased, Ed.
    Anyone who has a vested interested in any product is biased.

    Anyone who pens an article extolling the virtues of a product and closes with a link to his website which sells that very product is indeed conducting hype/marketing/advertising/promotion.

    “Your latest post about the mutual fund industry is obviously your intention to make a point against me without an intelligent argument on the topic.”

    I was merely the messenger, thanks for shooting.
    Perhaps you could take up your disappointment with the academic authors of the paper and forward your thoughts about their lack of intelligent arguments and research on the topic.

    “If I can make a personal plea to you, SST, nearly all your posts have an angry rant feel to them. I don’t sense that you are trying to seriously address the topics. Your posts usually comes across like you are searching hard to find anything to discredit my opinions. FT has deleted your most blatant personal attacks, but honestly most of your posts come across to me as a personal attack, not as an serious attempt to discuss a topic. You come across as against everything, but rarely state what you actually believe.
    I usually ignore and don’t even read most of your posts. When I read them, any post that implies I am biased or comes across as a personal attack, or just an angry rant – I will not respond to.
    Your last couple of posts on other threads show some attempt to discuss the topic. You do seem to have quite a bit of knowledge. I welcome some real debates with you.”

    It really is nothing personal, Ed.
    If it were our host, FT, posting the same, I would reply the same. You would be hard-pressed to locate a discouraging word from me in your tax articles. Tax is more black-and-white than investing, and I’m sure you are very competent in that area.

    There seems to be a nature here of ignoring the unwanted.

    Here are few reasons why I rant against the information you present, Ed.

    The ideological:

    1) you eschew gold (and silver) as an extremely risky and terrible asset into which you and your company would never put money. Yet on your company’s website, you utilize gold and silver symbolism and imagery extensively in your main banner. Why?
    Obviously you must think gold and silver carry some value, at the very least some deep-seated intrinsic psychological value the general public has equating gold with wealth.

    You publicly hate gold yet use it as a marketing tool in hopes of making your company more profit.

    Hypocritical business practice, at best; schizophrenic, at worst.
    Why would I ever give money to a “professional” who is at odds with himself?

    (Not only that, but to rave of the long term power of stock performance over gold, yet bluntly ignore the fact that for the last 40+ years, the top 500 public global companies in America could only eke out a sub-2% return over gold. That’s a hell of a lot of expensive and complex work for extremely little return over that of a simple shiny rock.)

    2) your commercial website claims “We want to make sure that you have the right diversification of assets so that your portfolio will meet your long term goals.” Yet there is zero diversification because you personally state “In my opinion, the best investment strategy is to be a buy and hold investor (to be fully invested) all the time.” If a person has 100% of their investable assets in stocks/mutual funds, then there is is 0% diversification.

    Again, schizophrenic business practice.

    The fundamental:

    3) you claim the average couple needs over $1,000,000 in order to retire.

    **1% of Canadian citizens have a liquid net worth of $1 million or more.**

    **According to current Canadian retiree stats, the median portfolio is approximately $300,000.**

    But don’t worry, Ed, you are not alone.
    I see the TD bank has re-upped the ‘$1,000,000 to Retire!’ mantra in their new hyp…oop…advertising campaign:

    4) you claim the only way to achieve that goal is to be FULLY invest in stocks (or your mutual funds).

    Exceptionally few millionaires have gained their wealth via the stock market alone. Most, such as FrugalTrader, use the stock market to augment their net worth. I would make strong bets that no Canadian millionaire has 100% of their liquid assets in stocks, let alone mutual funds.

    I’ve made a list of all the true-blue millionaires I know personally, as well as through one degree of separation; comes out to a dozen.
    Exactly ZERO of them made their first liquid million via stocks. It was accomplished through business creation/ownership and/or salary.

    Again, you fail to acknowledge the heaps of data which go against your 100% stock portfolio theory. The Permanent Portfolio, with 25% in equities, is one. Heck, even the above TD promotion assumes only a 50% stock allocation to reach $1,000,000.

    You continually ignore the measured mathematical FACTS which dust both previous points.

    I can only assume you repeatedly promote an investment goal which is unattainable, and a deficient investment path, in order to gain the most for you and your company. If a client has to turn over 100% of their assets to you for a couple of decades, that brings in a lot more fees than 50% for a few years.

    5) you make patronizing statements such as “Most Canadians are scared to have $1 million in the stock market and will never get anywhere close”.
    It’s the investor who is the weak link, is it, Ed?
    The markets and the financial industry and financial professionals all function flawlessly and lawfully? The real reason only 1% of Canadians have $1 million of liquid assets is because the other 99% is too scared to be wealthy?
    How about I make a statement that the reason the other 99% are not millionaires via the stock market is because the financial industry and its employed are inept. One is just as valid as the other.

    As for what do I actually believe…

    I believe in facts and math.
    I believe in using reality-based analysis.
    I believe there is a time and place for each true asset class.
    I believe the stock market is most definitely not the silver bullet.
    I believe a true money manager is unbiased and has no vested interest in the direction he sends a client’s money.

    Perhaps I should make a personal plea to myself and side-step any and all “investment” articles penned by E. Rempel.
    But then I too would be guilty of conscious ignorance.


  17. Ed Rempel on May 20, 2013 at 1:16 pm

    Hi SST,

    First, I need to point out that I have a financial planning practice that often recommends high allocations to equities because I firmly believe in equities (not the other way around). I have 4 book shelves full of books on equities and financial planning. I believe everyone needs a proper financial plan, everyone needs genuine professional advice, and most people need a high allocation to equities to have the best chance to achieve their life goals.

    My personal investments have been 100% equities for the last 20 years (other than personal use assets and my practice). I invest only with the same fund managers I recommend for my clients (adjusting for risk tolerance).

    In your case, you believe in gold and private equity. You must invest in those areas. Then you write favourably about them here, because you believe in them – not because you make money from those investments. The same is true about me.

    Regarding your other points:

    1) I don’t hate gold. I think it is pretty. I wouldn’t invest in it, because I think it is purely speculative. I prefer to invest in things with fundamentals. We could close every gold mine in the world for 100 years and it would not matter. We have more than enough gold.

    Gold is a measure of fear. Fear has been high. However, I have been forecasting for several years that fear will be lower at some point in the future and then gold will likely collapse. It may be starting that now.

    Gold is not a proxy for inflation. Morningstar lists the correlation of gold to inflation between -.23 and -.31 for the last 5, 10,15, 20 and 25 year periods. That’s negative correlation. Gold actually goes down on inflation and up in times like now when there is little inflation.

    In short, I don’t believe the gold bugs’ arguments and see gold as highly speculative.

    I had a marketing guy design my web site and he picked some pretty colours that he thought were appropriate. I’m in the process of having a new marketing guy redesign my web site. He has picked different colours this time.

    2) I believe highly inequities and invest 100% in equities personally. However, that is not appropriate for everyone. The right allocation varies depending on risk tolerance and life goals.

    3) People needing $1 million or more to have the retirement they want is based on personal experience.

    My team and I have prepared custom retirement plans for thousands of Canadians. We look at what they spend today and adjust every expense to the lifestyle they want in retirement – down to how much they want to spend on travel, entertainment, what cars they will buy, etc.

    These retirement plans are usually not grand. Most of the time, it is maintaining their current lifestyle, less the mortgage and the kids costs, plus more travel, entertainment and spending money.

    Then we project the future cost of that lifestyle and figure out the nest egg they will need to have the retirement they want (assuming a rate of return appropriate based on their risk tolerance).

    Most of our clients that are in their 30s and 40s now end up needing more than $1 million to have the retirement they want. Remember, this is in future dollars. The cost of living will likely have roughly doubled by then.

    4) Your argument here is actually irrelevant. I’m talking about ordinary people today that want a specific lifestyle in retirement and what they have to do to get there.

    They will need an investment that gives them a strong and relatively reliable long term return. Most of the time, we find they need a long term return of 7% or 8% per year to achieve their life goals. If they make less, then they would have to invest a lot more from their cash flow today.

    I believe that equities are the most reliable way to make a long term return high enough for them.

    5) Again, your argument here is intellectual and not really relevant to the topic.

    From experience working with many people and their money, the most challenging problems are often emotional and behavioural. What do I recommend for someone that needs to eventually have $1 million in equities to afford the lifestyle they want in retirement, and yet they would be very uncomfortable with $1 million in equities? It’s a challenging issue for me that requires education and helping clients make informed decisions.

    The biggest behavioural issue is people being scared to invest after market crashes – which are the most important times to be invested. This is another serious issue for us. We are spending time now during the good times preparing our clients for the inevitable next market crash.

    It’s these behavioural issues that are usually the most serious risk to mess up a retirement goal.

    My point is that my opinions are not purely intellectual opinions.My views on financial planning and retirement are based on the reality of actual people I talk with every day.


  18. SST on June 19, 2013 at 10:31 pm

    As per the CBC (via RBC):

    “Canada had 298,000 HNWIs [in 2012].
    HNWIs are defined as people who have investable assets of $1 million or more, excluding primary residence…”

    REAL millionaires counted 298,000 out of 34,880,500.

    That’s 0.85% of Canadians.
    Wow. Looks like my 1% was far too generous!

    Tell us again,Ed…where are all the people with “huge nest eggs”?

    Where are all the Canadian millionaires the financial industry has created over the last 30, 40, 50 years?

    Oh, and then there’s this:

    “…total wealth held by HNWIs was kept in cash [28 percent], followed by equities (26 per cent)…”

    Certain financial “professionals” tell us to be 100% fully invested in the stock market and/or mutual funds, yet the people who actually are rich have only 26% in paper equities.

    Who are you going to believe, the people with the money or the people trying to sell you stuff?

    Anyone buying into the 99% failure rate “dream” will get what they pay for. Just a shame that it’s still legal to hawk such swindles.

    All retorts welcome.

    p.s. — thanks CBC/RBC for upholding my claim. Yet somehow it’ll still be rubbish. ;)

  19. SST on July 4, 2013 at 9:36 pm

    Still searching for where all the huge millionaire nest eggs are, created out of the last 60 years of stock market growth and earnings.

    Having trouble….

    The above report states Canadian HNWI population has grown ~6.5% annually over the last three years (~1% general population growth).

    Assuming this rate to continue unabated, by 2060 there should be about 6 million millionaires in Canada, out of a population of about 57 million = 10.5% of the Canadian population will be millionaires in 2060.

    Nice theory.

    Thus, after 50 years of stock market shenanigans, there is a ~1% millionaire population in Canada. After the next 50 years of being
    “all-in” the stock market, there will be ~10% millionaire population.

    The math spells it out — 100 years of stock market dividends and growth and earnings and other fancy schmancy industry jargon will produce only 1/10th of the population with a $1,000,000 nest egg.

    Still believe the stock market will make you a millionaire?

    Looking forward to the next advert.

    Happy July the 4th!

  20. SST on July 6, 2013 at 3:50 pm

    According to the RBC report, only 0.85% of Canadians have $1 million or more in investable assets, with ~37% of this being in stocks. Meaning, for a true $1 million “huge nest egg” in stocks, investable net worth would need to be around $2,750,000.

    According to the report, roughly 43% of millionaires have $1-5 million. If we halve this again (for the sake of ease and lack of distribution data), we would get ~78% of millionaires with the means to have a $1,000,000 “huge nest egg” in stocks.

    Thus, only 0.6% of Canadians have achieved what this article’s financial industry “professional” author has claimed to be completely within the realms of reality.

    The “all-in” strategy has a proven long-term failure rate of 99.4%.

    Don’t believe the hype.

  21. SST on July 6, 2013 at 4:02 pm

    Edit: grave error due to mislabeling:

    According to the report, roughly 90% of millionaires have $1-5 million. If we halve this again (for the sake of ease and lack of distribution data), we would get 55% of millionaires with the means to have a $1,000,000 “huge nest egg” in stocks.

    Thus, only 0.47% of Canadians have achieved what this article’s financial industry “professional” author has claimed to be completely within the realms of reality.

    The “all-in” strategy has a proven long-term failure rate of 99.5%.

  22. SST on July 8, 2013 at 10:49 pm

    re: #117 “Most of our clients that are in their 30s and 40s now end up needing more than $1 million to have the retirement they want. Remember, this is in future dollars. The cost of living will likely have roughly doubled by then.” — E.R.

    Thus, a future $1,000,000 “huge nest egg” thirty years from now equates to a current $500,000 “huge nest egg” today.

    A 2012 industry study estimated there to be 594,000 Canadian households with $500,000-$1,000,000 in investable assets in 2010 (average of $730,000).

    The 2011 Canadian census recorded 13,320,615 households (average of 2 people per).

    This gives us a result of 0.88% of Canadians with an average $730,000 nest egg = $1.46 million future huge nest egg (~20% more than Ed’s example).

    Sure, years/data skirt a bit, but you get the general gist.

    In Ed’s #3 example, he pushes the sale by telling us today’s average family (aka household) needs a $1.2 million retirement nest egg to sustain their current life style. As above, cutting that future nest egg in half (remember, living expenses will have doubled) gives a current nest egg of $600,000.

    But…only 0.88% of the Canadian population has achieved this standard over the last 30 years — an era which included the greatest bull market of all time, the greatest credit expansion of all time, some of the greatest innovation and growth of all time, the greatest financial frauds and crimes of all time….and not even 1% of the population could attain a “huge nest egg”.

    Further more, I’ll be the awesome guy that I am and throw in all the true-blue millionaires: ~1.75% of the Canadian population currently owns $500,000 or more of investable assets.

    Does anyone really think this trend will be surpassed by a great margin any time in the future? If so, forget mutual funds…I’ve got a bridge for you….

    Not only that, Ed, but I am assuming licensing prohibits you from operating outside of Ontario, correct? A 2006 industry study found 45% of Canadaian millionaires reside in Ontario, but I’ll give you 50%.

    Chances of the article’s author making you a true millionaire and/or a ‘nest egg’ millionaire with mutual funds, now or in 30 years, just dropped to 0.875%.
    Odds of winning $20 in the Lotto Max: 1.4%.

    [side note: annually, ~1% of all new millionaires in Canada are produced from lotto winnings. Your chances are now even less than less.]

    It’s not my website, but how long will financial industry propaganda be allowed to trump mathematical fact?

  23. SST on July 9, 2013 at 9:39 pm

    Another gem from RBC:

    “According to RBC…those who are not yet retired have significantly reduced their retirement savings goal…to an average of $564,000 in 2012 from $778,000 in 2011.”


    Guess maybe people are cluing in that it’s near impossible to amass a “huge nest egg” of $1,000,000+ (and/or $778,000) and have decided to take a step into reality. Good for them.

  24. Lombard on July 10, 2013 at 8:25 pm


    Are you just on Ed’s case because he says amass “huge nest egg” or the financial industry in general? If it is the latter then where else have you been spreading the facts?

  25. SST on July 10, 2013 at 9:43 pm

    Dear Lombard,

    I send plenty of correspondence into the ether.
    As a matter of example, I’ve unleashed my niceties to upper-upper management and other appropriate channels of the TD bank corp. concerning their recent ‘$1,000,000 Retirement’ advertising campaign.

    Am I on Ed’s case?

    Interesting how a financial industry “professional” can pen an article extolling the musts of retirement based upon a $1 million-plus “huge nest egg” in stocks (as well as being “all in” stocks), accompanied with links to his mutual fund selling company…and that’s A.O.K. with the hoi polloi.

    Yet when a person delivers facts and data disproving the industry-standard propaganda, said person is deemed to be “on X’s case”.
    Some of us choose not to consciously ignore truth, no matter how unpopular.

    Perhaps if YOU could present more than 1 or 2% of the Canadian population which has amassed $500,000 or more in investable assets — even better if it’s ALL positioned in stocks — then I might ease up on the near-impossible peddlings of financial industry “professionals”.


  26. SST on July 28, 2013 at 1:28 pm

    A professional POV substantiating the factual claims:

    The Royal Road To Riches — James Gruber

    “The stock market can certainly play a part in generating wealth but SIMPLE MATHS dictates that it’s HIGHLY UNLIKELY to make you rich enough to retire early.”

    “The real road to riches can instead found through earning income rather than investing in assets. By this, I mean earning through excelling at your workplace or, more likely, starting a business of your own.”


  27. MoneySheep on October 26, 2013 at 11:35 pm

    Asset Management Fees are the greatest invention by financial service industry. It is a thievery in plain sight. Yet, these predators have persuaded the average joe that “it is normal for wolves to keep watch of hen house.” It is moral hazard at its best, they use your money to play at no risk to them; if there is a loss, they are not responsible for it. Worse, they charge you for it.

    If you have $1 million, a 2% fee is $20,000. You want to be the one who spend that $20,000 in retirement. By giving that $20,000 to the predators for just by watching, you guarantee the predators’ retirement.

  28. SST on October 27, 2013 at 1:30 pm

    @MoneySheep — reminds me of the classic book ‘Where Are the Customers’ Yachts?’ by Fred Schwed (yes, his real name). It was written over 70 years ago(!) so this dog and pony show is not anything new. Well worth a read.

    and: “…they use your money to play at no risk to them; if there is a loss, they are not responsible for it. Worse, they charge you for it.”

    This, even more than your ill will towards fees, is another great invention of the finance business: the government sanctioned blanket disclaimer.

    If the industry is so sure of what they sell/create, then why the need for a disclaimer to absolve any and all accountability?
    (If you ever do visit a financial advisor, ask him/her this question.)

    Imagine your mechanic* told you that he will try to fix your car but he might not do as good a job as he did last year, and, in fact, he might just make your vehicle operate even worse, but you will still pay him full price. Would you leave him your keys or would you drive away?

    Imagine you were taking a nice vacation to Italy. The pilot* comes on and announces that he will be flying you to Italy…at least he will try to get you to Italy. He continues by stating that he could end up in a completely different location, Poland perhaps, and there was always the chance that he might just crash the plane. And even if he does manages to land in Italy, your luggage may or may not. He concludes by saying he’s not legally responsible for where you or your bags eventually end up. Enjoy the ride!

    [*insert any field of work into the examples]

    About the only other “industry” which operates on the same basis, but without the disclaimer, is the government. But that is a different issue.

  29. SST on January 12, 2014 at 3:04 pm

    Index Funds Beat 99.6% of Mutual Fund Managers Over Ten Years
    (US-centric but I’ll assume mirrored in Canada)

    Still think mutual funds are going to make you a “huge nest egg”?

    Others view the financial industry marketing machine in much the same way (“Freedom 55” anyone?):

    “However, the resources of the financial services industry generated by fee income will continue to fund mass-media advertising/propaganda in the ongoing attempt to convince the top next 19% that they can “beat the market” if only they turn over their savings to the industry to “manage”. Little do most “investors” know that they are funding the perpetuation of the industry’s fraud, their own underperformance, and failing to match risk-adjusted returns of cash and fixed income after fees, taxes, and inflation over a cycle.

    Now, imagine what would happen to the financial services and banking industries and financial print, broadcast, and online media were these unsanitized facts about dismal money “manager” performance to be widely reported and internalized by a significant minority or small plurality of investors or the public at large.”

    Remember, stay fully invested!

  30. Ed Rempel on January 14, 2014 at 12:34 am

    Hey SST, that is the stupidist article I’ve seen in a long time. Only 10 of 10,000 fund managers CONSISTENTLY beat the S&P500? Why is CONSISTENTLY relevant? The S&P500 didn’t CONSISTENTLY beat my chequing account. :)

    A little education here. The index industry uses the word CONSISTENTLY to set a ridiculously high bar to try to inflate the success of indexes. Any article that uses the word CONSISTENTLY is irrelevant to investing.

    If you look at the screens they used in the article, you can get a good laugh. It is not 12-year return vs. index. It is a series of screens that includes only low-fee managers, and will screen out funds that don’t beat the index in both big up and big down markets. It does not measure returns vs. the index at all!

    There is a flaw with recommending index funds. The average mutual fund is irrelevant. All I have to do is find one mutual fund manager that I can identify ahead of time that beats the index over time.

    We have only used one U.S. equity fund in the last decade. Since inception, January 1, 2001, it has had 4 times the growth of the S&P500 (after all fees). It only beat the S&P500 in 8 of 12 calendar years, so not CONSISTENTLY, but it had 4 times the growth!

    This fund manager also paid the full cost of having a financial planner – and still had 4 times the growth. He is quite brilliant and works hard. I would take him over the S&P500 any day.


  31. SST on January 14, 2014 at 1:02 pm

    “[Thou] doth protest too much, methinks.” ~ Shakespeare

    Arguing vehemently against the terminology of one stupid methodology yet utilizing the equally irrelevant terminology (“The growth of the stock market has been quite CONSISTENT if you invest long term.”) in an opposing stupid methodology is, well, stupid.

    Perhaps another study (by a Princeton/Stanford MBA & CFA) which grants your vocation much more success:

    Only 24% of Active Mutual Fund Managers Outperform the Market Index (2002-2012)

    “Only 21% outperformed the index by a statistically significant amount…the truth is probably even more dire…survivorship bias implies that index fund returns are even more superior to active fund returns than the numbers indicate.”

    You say the average mutual fund is irrelevant because you can find an index-beating “All-Star” manager.
    I say your manager is irrelevant because I can find manager-beating investments.

    Your hand-picked manager, quadrupling the total returns of the S&P 2001-2012 would give him an annual average of 10%.
    Gold, that riskiest and most useless 6,000 year-old investment, returned 43% annually — quadrupling your manager’s growth.
    (the GLD ETF returned 33.5% from inception 2005-2012; -current 18.5%/yr)

    Apples to oranges to bananas.

    I’m no fan of most of the financial industry; all I gotta say, Ed, is where are the “huge million-dollar nest eggs”, mutual fund-made or otherwise?

    Good laugh, indeed.

  32. Ed Rempel on January 14, 2014 at 7:41 pm


    “Huge million-dollar nest eggs” mutual fund-made are very common.

    You may not know these people, but I know many.


  33. SST on January 15, 2014 at 11:39 am

    “Very common”?

    Even ignoring all statistical facts gleaned from multiple sources, millionaires are NOT “very common” — 1% of Canadians — thus making those created via mutual funds even more rare.

    Perhaps you and I hang out in different millionaire circles.
    The ones I know have all made their cake through business ownership and/or employment income: finance (3), lawyer, engineer (2), automotive (2), restauranteur (2), real estate.

    Also interesting to note, even though you advertise on MDJ (paid and free), and link to this site on your company website, the proprietor, FrugalTrader, owns no mutual funds. Why that is?

    Could it have something to do with consistency?

  34. SST on January 16, 2014 at 11:53 am

    The CSA’s 2012 report shows 55% of Canadians own securities outside of their company pension plans, with 62% of those owning mutual funds = 34% of Canadians own “independent” mutual funds.

    Applying that to the 10% of the 1% (0.1%) of Canadians who achieved a million dollars in investable assets via public equities alone, gives us 0.03% of Canadians who have become mutual fund millionaires or roughly 10,000.

    Sure, a few others may have a million dollars in mutual funds but those were built primarily upon contributions, not returns (see FT as an example).

  35. Goldberg on January 16, 2014 at 2:14 pm

    Its highly misleading to say someone became a millionaire from mutual funds. It sounds like someone invested $20,000 and five years later, voila! But start a successful business, and five years later, voila! $1m saved, that’s possible.

    At the end of the day, the variable is time. Do you want your million at age 40 -50 or do you want it at age 70-80… and how much is inflation making that million much less in real value 40-50 years from now anyway????

    If you want a real million, time for compounding is not your friend…mutual funds are not the way to go… you need a business or a high income/high savings… but if you just want a million that will buy $400k of stuff in 40 years of inflation, then yeah, 8-10% a year is sufficient.

  36. SST on April 8, 2015 at 9:38 pm

    Something which I don’t think has been addressed regarding the following statement:

    “At retirement…they want at least $50,000/year before tax…you would need $1.25 million so that you can take out 4%/year…My point is that financial security comes from having a large portfolio, say $1 million or more.”

    If a couple were to invest a small amount in Dividend Aristocrat et al stocks and reinvest the dividends for let’s say 30-35 years, their dividend yield in retirement could easily pay out $50,000 on the back of a portfolio worth well below $1 million.

    More ways than one to skin a cat! :)

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