Following up on her bestselling book Thinking in Bets , Annie Duke’s new book How to Decide makes good on its promise of “Simple Tools for Making Better Choices.”  This is a workbook of sorts filled with reader exercises and space to write in your work.  Readers can get a lot out of this book by just reading through it, but they’ll get more if they try some of the exercises. A necessary part of improving decision making is avoiding common types of mistakes.  But we tend to believe that while others make these mistakes, we don’t make them ourselves.  Duke does an excellent job of illustrating different types of mistakes and persuading readers that we make these mistakes too.  Perhaps a critical part of getting readers to understand their own failings is that Duke characterizes them as normal human tendencies rather than “mistakes” or “failings”.  Whatever we call them, it’s apparent that avoiding them requires mental effort and building new habits. A common...

I recently made my annual withdrawal from my BMO Investorline RRSP.  Curiously, Investorline added an extra eight cents to the withdrawal.  I suppose it’s possible I mistyped the amount, but it seems unlikely.  I remember typing in the dollar amount and deciding to add the “.00” to the end.  The eight key isn’t beside the zero key on my keyboard.  Is it possible that RRSP withdrawals are reviewed and retyped by an actual human at Investorline, and the person misread the final zero as an eight?  If this is right, I’m surprised the process isn’t more automated. Here are my posts for the past two weeks: Transitioning Your Portfolio into Retirement Quit Like a Millionaire Choose Financial Independence Here are some short takes and some weekend reading: The typical Canadian who takes CPP at 60 instead of 70 “loses over $100,000 of secure lifetime income in today’s dollar” according to a report by the National Institute on Ageing (NIA) and the FP Canada Research ...

Many of us dream of financial independence.  Chris Mamula, Brad Barrett, and Jonathan Mendonsa offer many practical ideas for achieving financial independence (FI) and enjoying the journey along the way in their book Choose FI: Your Blueprint to Financial Independence .  They avoid many of the problems we see in the FIRE (Financial Independence Retire Early) book category. The authors avoid the biggest problem with most FIRE books.  It’s annoying to tell the story of a high-income earner deciding to live like a student his whole life and retire in his 30s, and then say “you can too!”  Although I point out the bad parts of books, I can forgive a lot if my mind is opened to a good idea.  For this reason, I’ve enjoyed FIRE books even if they have some bad parts.  This book manages to avoid the worst parts of other FIRE books. The authors don’t bother much with retirement.  FI gives us choices so we can “scrap the idea of retirement completely and focus on...

Many of us dream of what life would be like as a millionaire.  In their book Quit Like a Millionaire , Kristy Shen and Bryce Leung tell the story of starting dirt poor and eventually retiring millionaires in their 30s.  The book is a cross between a how-to guide and their personal stories that works quite well to keep the reader engaged.  The main criticism is that the authors don’t seem to have realistic ideas about how the stock market is likely to perform, but this doesn’t take away from the practical ideas and motivation to help readers achieve financial independence. The book covers the usual subjects like education, debt, housing, banks, investing, taxes, travel, and retirement, all woven into Shen’s personal story.  She grew up dirt poor in rural China, and after coming to Canada made a series of steps ultimately leading to wealth.  If she can do it, you likely can too, and the authors set out to show you how. It’s common to hear that you should follow yo...

It's common for investors to want less risky investments as they transition into retirement.  This means that somewhere in the years leading up to retirement, investors plan to sell some of their stocks to buy more fixed-income investments.  What is the best way to make this transition? Like most things in life, there is no single answer that applies to everyone.  A range of approaches are possible, from a gradual shift over several years to a sudden sale of stocks on retirement day.  To decide which approach makes sense, I’m guided by my rule that I only invest in stocks with money I won’t need for at least 5 years. Last-minute stock sale upon retirement Can it ever make sense to wait until just before retirement to sell a pile of stocks to get to the asset allocation you want in retirement?  The answer is yes, if a number of conditions are met. Suppose you’ve been working for several years at a secure job with the plan to retire when your savings hit a target ...

I thought I was going to have to replace the locks on my house doors.  At first I just had to jiggle the key a little to get it in the lock.  But then it was getting bad enough that as I fought with it, I wasn’t sure the key could go in all the way any more.  Fortunately, before I called a locksmith, I did an online search.  The locks just needed a little grease.  I can’t believe how well it worked.  The locks had seemed like they were broken, not just a little stuck. There might be better lubricants for the job [a reader suggested graphite spray as a better solution], but I just used WD-40 in the keyholes.  A few seconds later, the locks were like new.  Don’t forget to hold a tissue or rag under the lock to catch the excess; it can make a mess dripping down your door. Here are my posts for the past two weeks: CPP Timing: A Case Study The Capitalist Code Management Expense Ratio per Quarter Century (MERQ) The Ultimate Retirement Guide for 50+ The ...

People without pensions like to call civil servants’ pensions “gold-plated.”  However, when they get a chance to get their own pension, they often turn down half of it. The inflation-indexed pensions common among government workers are extremely valuable.  Government accounting fictions set the value of these pensions lower than they really are, and taxpayers stand ready to make up the difference. Fair or not, it frustrates many private sector workers who have no pension to have to contribute taxes for others’ pensions.  But when these frustrated taxpayers get the chance to collect their own CPP pensions, they often opt for payments less than half of what they could be. The catch here is that to get the largest CPP payments possible, you have to wait until you’re 70 to start collecting CPP.  These payments are more than twice as large as payments are when you take CPP starting at 60. We can’t blame people for taking CPP early if they don’t have any retirement savings...

Canada’s tax system is very complicated.  It takes an army of accountants to help Canadians navigate the tax system and another army of tax collectors at Canada Revenue Agency (CRA) to police all the rules.  Author and CPA Neal Winokur thinks we need to simplify the tax system even if it puts him out of work.  He offers ideas to fix the tax system in his book The Grumpy Accountant .  The book also serves as an easy-to-understand introduction to the Canadian tax system. The book is written in the style of a story, not unlike The Wealthy Barber , which works surprisingly well.  The “story” parts are very brief, so we get to each tax issue quickly, but the story helps to give context as we follow a couple throughout their tax lives.  This presentation, along with the fact that Winokur doesn’t get mired in unnecessary details, helps the reader get a good high-level understanding of the major aspects of Canada’s tax system. Winokur advocates huge simplifications...