“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

Four Financial Risks Worth Taking

Four Financial Risks Worth Taking

Sometimes you have to take a risk. But not all risks are created equal. Some risks have rewards that greatly outweigh the potential downside. These risks can pay off big-time down the road, but its important to pick the right ones.

When it comes to personal finance there are lots of risks (and lots of rewards!). Taking a few strategic risks can do wonders for your long-term personal finances. But it’s important to understand the trade-offs.

Almost nothing in the world of personal finance is completely risk free (except maybe a guaranteed deposit with an insured bank) but there are four financial risks that can be worth taking.

If you understand the potential downsides, these financial risks can have a huge positive impact on your finances.

read more
Two (Less Obvious) Financial Benefits Of Owning A Home

Two (Less Obvious) Financial Benefits Of Owning A Home

There are a number of personal and financial benefits when owning a home. There is the stability, the forced savings of mortgage payments, the potential for appreciation etc. etc. But there are two somewhat less obvious benefits of owning a home.

These benefits will help homeowners financially, both before retirement in the accumulation phase and also after retirement in the decumulation phase. These benefits will make it easier for homeowners to achieve their financial goals, decrease taxes, and minimize government benefit clawbacks.

In this post we’re going to explore two, perhaps hidden, benefits of owning a home.

read more
The Biggest Risk In Retirement Is… Sequence Of Returns Risk

The Biggest Risk In Retirement Is… Sequence Of Returns Risk

There are a lot of risks that we face in retirement (including early retirement). When you enter retirement, there are lots of changes happening all at once. Along with big personal changes, and lifestyle changes, there are also big changes happening to your finances. After you enter retirement one of the biggest financial changes you’ll face is a shift from a regular income source (eg. employment) to an income source based entirely on your own savings and pension. Making this switch can create a few risks, one of those risks is the risk of running out of money.

One of the biggest risks facing retirees is something called sequence of returns risk. When a good portion of your retirement income comes from your own savings this is the biggest risk a retiree can face. But what does “sequence of returns risk” mean exactly?

Before we talk about sequence of returns risk it’s important to understand that most retirement plans are based on an assumed (and constant) investment return each year. This investment return is usually assumed to happen in a straight line with the same percentage return each year. An assumed return of return of 5% would be 5% per year starting on the day you retire, but in reality your investment return is going to fluctuate from year to year, and this is where the risk comes from.

Over the short-term you will probably see your investment return fluctuate greatly from year to year. Instead of seeing investment returns of +5%, +5%, +5%, +5%, +5%, you might see +20%, +2%, -10%, +15%, +1%. In this case the average return is still +5%, but there were some huge swings from year to year. “Sequence of returns risk” refers to this sequence, the actual investment returns you see year after year.

The big risk for retirees happens when the sequence is negative for a few years in a row. Even if average investment returns recover over the long-term, that short period of negative returns can have a devastating effect on a retiree’s portfolio.

read more

Owen Winkelmolen

Fee-for-service financial planner and founder of PlanEasy.ca

“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

Four Financial Risks Worth Taking

Four Financial Risks Worth Taking

Sometimes you have to take a risk. But not all risks are created equal. Some risks have rewards that greatly outweigh the potential downside. These risks can pay off big-time down the road, but its important to pick the right ones.

When it comes to personal finance there are lots of risks (and lots of rewards!). Taking a few strategic risks can do wonders for your long-term personal finances. But it’s important to understand the trade-offs.

Almost nothing in the world of personal finance is completely risk free (except maybe a guaranteed deposit with an insured bank) but there are four financial risks that can be worth taking.

If you understand the potential downsides, these financial risks can have a huge positive impact on your finances.

read more
Two (Less Obvious) Financial Benefits Of Owning A Home

Two (Less Obvious) Financial Benefits Of Owning A Home

There are a number of personal and financial benefits when owning a home. There is the stability, the forced savings of mortgage payments, the potential for appreciation etc. etc. But there are two somewhat less obvious benefits of owning a home.

These benefits will help homeowners financially, both before retirement in the accumulation phase and also after retirement in the decumulation phase. These benefits will make it easier for homeowners to achieve their financial goals, decrease taxes, and minimize government benefit clawbacks.

In this post we’re going to explore two, perhaps hidden, benefits of owning a home.

read more
The Biggest Risk In Retirement Is… Sequence Of Returns Risk

The Biggest Risk In Retirement Is… Sequence Of Returns Risk

There are a lot of risks that we face in retirement (including early retirement). When you enter retirement, there are lots of changes happening all at once. Along with big personal changes, and lifestyle changes, there are also big changes happening to your finances. After you enter retirement one of the biggest financial changes you’ll face is a shift from a regular income source (eg. employment) to an income source based entirely on your own savings and pension. Making this switch can create a few risks, one of those risks is the risk of running out of money.

One of the biggest risks facing retirees is something called sequence of returns risk. When a good portion of your retirement income comes from your own savings this is the biggest risk a retiree can face. But what does “sequence of returns risk” mean exactly?

Before we talk about sequence of returns risk it’s important to understand that most retirement plans are based on an assumed (and constant) investment return each year. This investment return is usually assumed to happen in a straight line with the same percentage return each year. An assumed return of return of 5% would be 5% per year starting on the day you retire, but in reality your investment return is going to fluctuate from year to year, and this is where the risk comes from.

Over the short-term you will probably see your investment return fluctuate greatly from year to year. Instead of seeing investment returns of +5%, +5%, +5%, +5%, +5%, you might see +20%, +2%, -10%, +15%, +1%. In this case the average return is still +5%, but there were some huge swings from year to year. “Sequence of returns risk” refers to this sequence, the actual investment returns you see year after year.

The big risk for retirees happens when the sequence is negative for a few years in a row. Even if average investment returns recover over the long-term, that short period of negative returns can have a devastating effect on a retiree’s portfolio.

read more

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

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