Financial Independence – Are We There Yet?

by Avrex on September 24, 2015

The ultimate goal, here at Avrex Money, is to achieve Financial Independence.

This blog has been in existence for three years. During this time, I have written a whopping total of 22 posts. Wow! With that output rate, I can officially declare myself, the “Least Prolific Personal Finance Blogger in Canada.” 🙂

Why have I written so few posts?
Well, mostly because I’m lazy. 😉 Another reason is that there are already so many superb personal finance blogs out there, sharing quality information, that I feel I would just be repeating the same information. The final reason is that, if you’re disciplined, the road to Financial Independence is actually fairly simple.

What does it take to reach Financial Independence?

  • LBYM
    Live Below Your Means. ie. Save more than you earn.
  • Low fees
    Invest in a low-cost passive ETF index portfolio. This will shave years off of your working life.
  • Patience
    The magic of compounding will get you there quicker than you think.

In other words…. it’s kinda boring. And that’s ok. There’s no need to be constantly checking your portfolio. Just keep saving and re-balancing your portfolio as required. This gives you more time to go outside and enjoy life.


Has Avrex Money reached Financial Independence?
Nope, not yet. But, I’m definitely on the last lap of this race.

Before I declare my ‘Findependence Day’, there are issues that I need to explore further and refine. These include:

  • Projected Retirement Expenses.
    How do I envision my lifestyle when I’m not working? How much will this cost? Do I have enough money now?
  • Probability of Success.
    Since I will be drawing down my portfolio until death, I need to determine what probability of success is an acceptable risk, and how much money that will require. I will also need to determine how to mitigate the chance of failure (i.e. going broke).
  • Asset Allocation.
    What will my Asset Allocation look like? How will I structure my assets across my registered versus non-registered accounts to minimize taxes and maximize retirement income?
  • Health.
    Quality of Life is another important factor in trying to determine if it’s finally time to leave your full-time gig.

The reason for this post, is that I’d like declare that…

“I will be writing here more often to explore these pre-retirement issues.”

I hope you join me, as I document my thoughts and steps, as I head towards the finish line.

Thank you,


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Tax Rate in Retirement

by Avrex on February 22, 2015

Years ago, I built a spreadsheet to calculate how much money I would need to retire. I would update it regularly. One of the biggest factors in knowing ‘when you have enough to retire’ is to look at your spending habits and determine how much you want to spend in your retirement years. For example, in today’s dollars, I have estimated that I might need about $33,000 annually to retire.

However, one factor in my spreadsheet that I just glossed over, was the average tax rate during retirement. During my working years, my average tax rate is about 23%. In the spreadsheet that I created years ago, I also blindly used the same 23% tax rate during retirement.

That meant that during my retirement years, I would need an income of $42,850 at 23% taxation in order to obtain the $33,000 in after tax dollars that I require.

But, I now realize that my average tax rate in retirement will probably look much different than it does during my working years.

Example 1: Retirement income

I pulled up the 2015 calculator for Ontario, and entered a breakdown in today’s dollars, an example of how I might receive my future retirement income.
RRSP withdrawal: $10,000
Cdn dividends: $5,000
Income/interest: $17,000 (this includes $13,000 from CPP/OAS)
Capital gains: $5,000

The calculator states that with 37,000, I would pay approx. $3,700 in taxes, leaving $33,300 for retirement income. This is an average tax rate of 10 %.

I now see that I don’t need nearly as much money as I originally thought I needed.
i.e. $42,850 @ 23% versus $37,000 @ 10%

Example 2: Early Retirement income

The news gets even better, if you are saving for early retirement. i.e. The years before you receive CPP (at age 65) and OAS (at age 67) from the government.

Here at Avrex Money, to reach “Financial Independence” as soon as possible, we are maximizing our RRSP/TFSA accounts and are pouring further savings into a non-registered account.

In order to bridge the time between early retirement and receiving CPP/OAS payouts from the government, I’ll need to withdraw money from my RRSP as well as selling dividend stocks from my non-registered account.

Once again, using the Taxtips calculator, I entered another scenario of how I might earn income in my early retirement years.
RRSP withdrawal: $15,000
Cdn dividends: $10,000
Income/interest: $5,000
Capital gains: $5,000

The calculator states that I would pay approx. $2,000 in taxes, leaving $33,000 for retirement income. This is an average tax rate of 5.7 %.

In this early retirement example, I would only need $35,000 @ 5.7% tax (versus $42,850 @ 23% in the original calculation) to receive the $33,000 that I require for retirement income.


The Average Tax Rate in retirement can drastically affect the calculation of how much money you require in order to retire. In my examples above, I discovered that I only need to allow for 5.7% taxation in early retirement and 10% taxation during the normal retirement phase.


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Canadian Companies : The Piotroski F-Score

February 21, 2015

In a previous post, I discussed The Piotroski F-Score, as a metric to assist in determining the financial health of a company. Review the post, The Piotroski F-Score, to see how this score is calculated. Today, let’s apply this metric to our home market: Canada. Here are the Piotroski F-Scores for companies in the S&P/TSX […]

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2015 Option Income Goals

January 11, 2015

In 2015, I’ve challenged myself to generate income by selling call/put options. With that said, here is the 2015 Avrex Options Income Challenge Goal: I would like to make a $12,000 profit in 2015. (i.e. $1,000 per month). However, the problem with options, is that the resulting returns are highly variable. There is a large […]

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Best Canadian Consumer Defensive Stocks

March 30, 2014

Are you looking for stable, low-beta stocks that pay a dividend? How about the Canadian Consumer Defensive sector. Here’s a ranked list, for your further investigation.

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2014 Winter Olympics – Predicted Medal Totals – Plus 17 Key Events for Canada

February 6, 2014

Normally at AvrexMoney, we discuss topics on Investing and Saving you money. Today, we’ll take a little detour as I share with you one of my other passions. The Olympics. And more specifically, Canada at the Olympics. How will Canada perform at these Olympics? To get the answer, let’s look and see what the bookmakers […]

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Locked-in Retirement Accounts – A Road Map

January 1, 2014

The purpose of this article is to look at how you can control and direct your company pension money: from the day you leave your job, until the day you die. Life Stage: Pension Savings Approximately one-third of Canadians have a company sponsored Registered Pension Plan (RPP). When I leave my company, what are my […]

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Should I be take risks with my TFSA?

November 19, 2013

Although the TFSA is called a ‘savings account’, it should be considered an ‘investment account’. Some individuals have taken on risks, to grow their accounts far beyond their initial contributions. Similar to the Financial Post’s query earlier this year, MoneySense magazine was also asking it’s readers to let them know how well they were doing […]

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S&P / TSX Composite Index – Company Dividend Yields and Rates

September 17, 2013

Here is the dividend yields and dividend growth rates for all companies in the S&P / TSX Composite Index. The table is sorted by Company Name, but feel free to sort by any column, or use the Search box to find your favorite company (for example: Royal Bank) Last updated: Sept 17, 2013.

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The Piotroski F-Score

August 4, 2013

Valuating a company using the Piotroski F-Score Congratulations. You’ve discovered a nice cheap value stock to invest in. But wait. Maybe that company’s stock price is cheap and/or unpopular for a reason. Maybe the company’s financial health is not as good as you think and that’s the reason the stock price has been beaten down. […]

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