Earning More

Earn Passive Income in your Sleep

Income is what sustains us, it is what pays the bills, and knowing that this income will be there tomorrow is truly freeing. Having to stress about money is never fun but there are easy tricks that can make you relax and enjoy life. If you are like most of us and work for income, you are generating active income. You are basically trading your time for money. This can be risky depending on your health, life events, or any major life changes. Would you still bring in as much if you got sick? Would you still earn as much if you wanted to work part-time? What if you wanted to take a year off to travel the world? Wouldn’t be better to have some passive income coming in to sustain your expenses?

For most people, active income comes from their job and if you are like 76% of Americans that are living paycheck-to-paycheck, you might be a lot more dependent on that paycheck that you might think. However, there is a remedy to all this. You can live a happy, stress-free life, with passive income and of course; living below your means and saving.


22% of the 1,000 people it recently surveyed had less than $100 in savings to cover an emergency, while 46% had less than $800. – CNN Money

passive income


Earn in your sleep

Passive income will bring you the security and leisure to enjoy life like you should. By passive I mean, whether you put in more hours or not, the income will come. A perfect example of this is dividends; you work once to accumulate and invest into a dividend-paying security, then dividends will roll in without any additional effort.

If you are somewhat creative, there are so many things that you can do today to earn a little side money; selling digital music, writing books, writing a blog, making apps, creating online courses, making games… Or you can always invest in others to earn you some passive income.

Passive income is not easy and does take commitment to start up. Success doesn’t come overnight and you need to continue pushing before earning enough to live comfortably off of it. Some might build empires in a few months, it is possible now with the massive client base found online but for the rest of us, you need to be patient and continue at it.

To summarize passive income, you need to do only two things:

  1. Invest your time, or
  2. Invest money

You need to see the long-term prospects of your work or money and stop thinking in hourly-wage-mode. The hundred hours spent to write an Amazon book might generate income for years and years to come without any additional efforts.


Size does matter

When starting to earn, you might not be impressed by your first checks, but you should be! Let’s say you start a website and earn $100 a month in passive income. You might have invested a few hours of work into it and feel like you wasted your time but think of it as a dividend.

To earn $100 a month in dividends, you roughly need to invest $50,000 in index funds (assuming 2.4% annual). Now to put that in perspective; how many hours do you need to work at your day job to earn $50,000?

On top of this, that additional $100 a month is a great start to financial security. Having a buffer lightens the load and will allow you to focus on other things in life.



Having multiple income streams is a great way to increase your income and have a more secure revenue if anything would happen. By diversifying your income, you could be able to face a change of employment or layoff from your principal job much easier than if you were living paycheck to paycheck.

In my case, I have 4 different income sources to support my family. This blog, for example, is passive. I spend a lot of time researching and writing but my work has long-term earning potential. Then I created a few apps in 2015 and they continue to earn over $10 every day in ad revenue. I have not worked on, promoted, or changed anything at all on these apps since 2015.

In addition, I have my day-job and invest over half that income. Investments are a great, truly passive, source of income that anyone can start with a very low initial capital or time commitment.


online side hustle tips


You need to find your passion and find a way to monetize that said passion. I suggest you focus on one thing at the time and try to work hard on that one thing. Focusing on only one project at the time will allow you to optimize it and become a pro at it.


Start earning more today

The secret in building a strong stream of passive income is to be motivated and invest that initial time needed. It can get challenging to stay constantly motivated but it is crucial to your success. Start today and keep a regular schedule for a while. If you don’t know where to start, you should check out 23 passive income ideas you can start today by 

Investing in index funds are a great, truly passive, source of income that anyone can start with a very low initial capital. With indexing, you do not have the concern of choosing the right stocks or knowing when to buy or sell individual companies. I suggest you go with Vanguard given their free commissions.

start a website todayStarting a website and monetize it with affiliate programs or ads takes creativity but can be passive after an initial time investment. Affiliate programs can be very profitable and are easy to implement.

Agencies are quick to signup and let you choose which product to promote. Once you mention a product on your site and close sales, you’ll get a cut of the sales. This is how this site is run and I find it much less intrusive than ads.

If you have a passion and you would like to blog about it, WordPress Hosting will be ideal for you to start a blog and monetize it.

Writing a book can be hours and hours of work but could be a great source of passive income for years and years to come. Now with Amazon, it is easier than ever to self-publish and promote your book yourself. It’s something I am considering myself since you can write about any subject that you want and have recurring royalties coming in for years to come.


I hope this helps you start a long stream of recurring income to secure your financial freedom. Good luck and live happily, Xyz.







6 Hidden Benefits of Dividend Reinvestment that Will Grow your Wealth

If you are invested in the stock market, you might cringe when you see your portfolio drop 10%. Even show a little tear when it drops 40% but you should not go through all of this. I have already talked about why you should be glad to invest in a bear market. Today, I will expand a bit on the topic with a few tactics to ease the ride. There is no reason you should not thrive in downturns and accelerate your wealth accumulation.


Stock returns without crashes

what to do market crash

Before diving into the topic, we should look into hypothetical history. Imagine if stock prices never dive and the market simply had a smooth ascent instead of plummeting every few years.

The economy would be better, the massive unemployment and bankruptcies would never happen but what about investors?

For long-term investors like me, the returns would have been far worse than with the sharp declines our markets actually incurs. If recessions never occurred, long-term investors would not have the possibility of reinvesting their dividends. Nor invest at discounted prices.


No one likes roller coasters… – Mr. Investor 


Dividend power

The beauty of crashes is that it gives the advantage to long-term investors who reinvest their dividends. Looking back at history, reinvesting dividends in market lows almost doubled the total return of the S&P500 index (see figure below). Even in periods where dividend payouts were cut a whopping 50 percent, stock prices fell even more!

As a result, the total return for investors actually increased over the long-term. The extra shares you would have purchased during a bear market would have been greatly discounted. This would have caused your returns to grow astronomically once the market recovers.


It works because the market always recovers

For example, if you have Vanguard S&P 500 ETF (VOO), currently at $187.27 at the time of publishing, and you are earning a 2.13% dividend. A crash would allow you to buy some shares at lower prices with those dividend payouts.

Buying shares through dividend reinvestment at $170, $150, or even $100 would greatly increase your total return once VOO returns to the $187 mark and beyond.

As shown below, market crashes historically recovered quite rapidly. For a 50% drop, it is estimated to recover in only 2.3 years, which is really negligible for a long-term investor.


will we recover market crashData: NYTimes Source: FlannelGuyROI


Most investors who got whipped out in market crashes either were investing on margin or simply sold in a panic to cut their losses. If you stay away from the financial news and invest in index funds, you should be able to weather the storm and enjoy the sweet recovery.


should i use dividend reinvestments


Buying the discount

Another great way to drastically increase your total returns is to increase your position when the markets are low. As I stated before, it is impossible to time the market. Nevertheless, if you are investing a portion of every pay and constantly investing on a regular basis, market crashes will be beneficial for you.

On the other hand, if you are investing in a lump sum, you can benefit if you invest once a year or bi-yearly but I do not suggest you try to time your entry. Trying to spot the bottom of a crash is very risky and you might end up staying on the sidelines when the market recovers.


investing in bottom of market


Timing the market is a loser’s game

If you try to time the market, you will miss it. I invest on a regular schedule, whether yearly, monthly or every paycheck, to cut out market timing of the equation. Some prefer to buy the dip by investing only after a decline in the market.

This is a valid strategy for indexing given the probability of recovery compared to stock investing where a dip could be the start of a drop towards bankruptcy. However, I don’t adhere to this strategy since it is trying to time the market. It won’t be an optimal investment solution over the long run. In addition, waiting for right time to get in is statistically worse. For any given year, you have 3.5 times more chances that the market ends up higher.

A study from Ned Davis Research found that from 1900 through 2013, there were only 32 bear markets where the index dropped more than 20% from its peak (one every 3.5 years). On top of that, if you are waiting to invest and waiting to spot the bottom, keep in mind that the average bear market takes only 15 months to recover according to Azzad Asset Management. This leaves little time to purchase at great prices and you will most likely miss the boat.

how to profit from recessionWaiting for the market to drop has a few uncertainties:

  • When will you actually consider it a valid drop? 10%, 20%, 50%?
  • Will the markets continue to grow while you wait for a dip?
  • Do you really get a discount if the market was rising when you were waiting?

For example, let’s look at the chart above and assume you had a considerable amount to invest back in 2014 but decided to wait for a 10%+ drop before investing.

You would have waited until mid-October before finally investing at $172 per share of VOO, and that is if you time the drop perfectly and get the very bottom of it. Now, if you had invested in January, you would have paid only $167 for the index ETF. All of that without any luck or market timing.

What you could do, however, is increase your 401k contributions or non-registered investments when there is a dip. Here again, within a regular, planned, schedule. Investing without timing eliminates the need to constantly follow the market and focus on your investment. You will be able to relax and enjoy life.


Don’t aim

Now even though I am talking about dividend reinvestment, I am not saying to target dividend-paying stocks in your portfolio. I believe in market efficiency and that indexing will generate the greatest returns over the long-run. I suggest you go with a balanced portfolio of ETF or use Personal Capital’s advisory service for a fully automated investing experience. When choosing dividend-paying stocks, you need to keep in mind that:

  • Choosing one stock over a non-dividend paying stock is betting you know it will outperform.
  • Stock picking could mean that some holdings go down to zero.
  • There are some negative tax implications for dividend-paying stock portfolio since you cannot time when you will be receiving the dividend as you can do with capital gains.

Personally, I stick to a Total Market ETF (VTI) and reinvest the dividends automatically through a DRIP set up with my broker. DRIP stands for Dividend ReInvestment Plan and it is available through your broker to automatically purchases more share or fractional shares at the time of payout. This a great commission-free way to purchase new shares of great companies or ETF you believe in.

This is a great way to smooth out the market’s roller coaster and increase your total returns over the long-term. If you are interested, you can see my exact holdings and investments to learn a bit more about my strategy.

Live happily, Xyz.





Budgeting Saving

10 Ways to Save Money and Live on a Better Budget

best free budget tool onlineLiving below your means is the key to financial independence. Whether you are trying to get out of debt or you are in the accumulation phase, you always need to earn more than you spend. If you earn less than you spend, you will fall into an ever-increasing amount of debt.

With a good budget and proper planning, anyone can succeed.


Think about your life as a business, you always need to turn out a profit.


If you think about your personal finances as a business, would you invest in yourself right now? As a business, you need to put yourself accountable to not only make money but also to return a profit after expenditures. For example, if you have start-up costs (student loans) you should have a viable repayment plan that will rapidly turn your finances positive. You need to boss around your finances, don’t let them boss you.


Think about your fixed costs

The first step to a good financial plan is knowing your fixed expenses since they are easy to track and usually essentials (Mortgage/Rent, Phone, Electricity). You can make a list of all your recurring bills and see if there is anything you could cut or downsize without hindering your well-being.  For me, the obvious things were cutting cable and reducing my bill from $60/month to $8/month with Netflix. I also bought a cheaper house that I could afford and lowered my electricity bill with smarter house temperatures.

There is plenty of ways to save on your fixed costs that might be slightly less convenient but offer great returns. Living a frugal lifestyle does not mean living a boring lifestyle. I suggest you find a proper balance in frugality to optimize your savings and happiness. Here are 10 tips to become the boss of your finances!

10 frugal tips 1. Getting a non-smart phone can lower your bill to as low as $10/month. If you are currently paying more than $50/month for your current plan you could be saving a lot over a year and even more over decades.

A great alternative to this is to have a smartphone without a data plan. With wifi readily available everywhere you should not have a problem to connect with the world without paying the high premium of data plans.

 2. To help pay your housing costs, you can get a roommate if you have extra rooms. This one might be more of an inconvenience and lifestyle change than other suggestions. Nevertheless, it can make you save around $300 to $1000 a month. I can imagine the drastic change in lifestyle it would be to have 4 or 5 roommates.

I had one roommate and I truly enjoyed it. Having a roommate gives you company, someone to eat suppers with, someone to help out with the chores… I actually preferred living with a roommate than alone, just for the social aspect of it. With the possibility of dropping your shelter-related expenses by half, this is one of the most effective ways to lower your fixed costs. Now, for example, we listed our extra bedroom on Airbnb to earn a small income on the side.

 3. You can decrease your electricity bill easily with a few simple steps. First, lower temperatures in the winter and higher ones in the summers can make you save hundreds per year. If you live in a cold climate like me, your electricity bill probably doubles in the winter time. Taking simple steps like setting your thermostat to 64°F instead of 70°F can make you save as much as 15% off your heating bill.

In the summer, you can close blinds, open windows and use natural shade to cool off your house instead of AC and you can save another 100$ per summer there. This is assuming 1 window mounted AC unit and 6 months of summer but savings go up even more with central AC or if you live in the desert. You can also save by closing lights you do not use, taking shorter showers or lowering your water heater temperature.

 4. As any business would do, you need to negotiate. You would be surprised how much you can save off recurring bills by simply calling your provider and negotiating. Call in the beginning of the month since most agents have monthly refund limits and call on a Friday since it is the day people are the happiest (more likely to give it to you when they are in a good mood). Be prepared and tell them about a competing offer.

I called my phone provider once saying a competing offer that was offering a super low price (with the fine print: for the first 3 months) I ended up getting that price matched without any fine print or promotional period. You can easily cut by almost half any service-based bill if you have good arguments and sound like you are ready to leave the company.


Hi, I’m having trouble paying my bills and I would like to know if you have any promotions or specials that could lower my bills…

– Sorry, there are no promotions currently available in your area.

Oh! Then I would like to cancel my service…

– One moment sir, I will transfer you to our customer retention specialist.


That’s when you can really negotiate and lower your bills. Try to get the retention department on the line since they are the ones with the power to truly reduce your bill. Stay polite and simply compare the competition offerings and you should be able to save some good bucks.

The biggest advantage of cutting or reducing your fixed costs is that you will then be able to plan a fixed investment schedule and increase your savings rate drastically. Remember that as a business, the best customer is a recurring customer. Seeing your personal finances like a business, your best way to save is to reduce your recurring expenses.


Variables are controllable

Your variable expenses should be tracked and budgeted. They are mostly controllable spending that you can easily manage and cut with a little willpower. The first step is to track all of your expenses (I recommend Personal Capital) then see what are the easiest things to cut out or reduce.

how to save on restaurants 5.
For me, the quickest fix was bringing my own lunch to work. Any fast-food will not be as healthy as your own cooking and if you go to better restaurants you will not find much under $10.

Working 5 days a week for 50 weeks, that is $2500 a year you could save just by bringing leftovers or sandwiches to work. I will let you calculate how much you would save if you usually go to mid-range or high-class restaurants! 🙂

 6. Then there is a ton of socializing that can eat through your budget even faster. Dates can always be done at home or in a good quality, reasonably-priced restaurant. When going for drinks with friends, you can always vary your routine and invite people over to your place once in a while. Just a few more nights at home can make some nice room in your budget.

 7. Groceries can be one of your biggest monthly cost (for us it is about $500/month). For bargains on real healthy food for your home cooking, I suggest you try shopping at an ethnic market. Instead of major grocery stores, try to find a local ethnic grocer since they are cheaper on fresh produce and meats.

Major chains usually make more profits off pre-packaged foods and simply use their produce section to make you feel hungry and then buy something pre-made. Clients in ethnic communities usually are on tighter budgets and, in most cultures, cook much more from scratch with raw ingredients. With bigger volumes, those markets usually can offer cheaper prices on all that good freshness.

best budget tips 8. As much as healthy eating, exercising is important to stay in shape and happy. You can always shop around and find cheap gym memberships (around $10/month for the most basic gyms). However, free is even cheaper than that.

I suggest using local parks and the national beauties of nature around you to exercise. Parks can be great for running, walking, biking, or even exercising on the children monkey bars. In national nature parks, you can hike, bike, walk, rock climb, some might even have lakes to swim in.

 9. When shopping, I try to always wait a day before buying anything. Then, ask myself if I really want it. Clothes, electronics or house furniture should all be thought about twice before buying. You can compare anything in a store with its online version to save a lot off the ticket price. You can even check on Craigslist for some cheaper finds.

Almost everything can be bought online and it literally takes seconds to shop around. Sometimes, we save as much as 50% off the brick and mortar store prices doing this. There is even a site that searches for spelling mistakes and typos in eBay listings to make you save a ton on auction items.

 10. Luxuries can be cut but I suggest simply reducing your spending in this category. We all need a little fun in life! Absolute frugal living might be the absence of all non-necessities. If you try to go cold-cut and make extreme changes to your lifestyle, you will more likely fail. Drastically cutting down your budget might work for a few months. However, you might get overwhelmed and switch back to expensive habits.

I prefer replacing luxuries than cutting them. For example, cable is a luxury that I value a lot. I follow a lot of TV shows and do not think I would happy without it. However, there is a great alternative to cable that costs almost 10x less; Netflix. I get all the shows I want, without ads, for only $8/month. That is a great investment for me. You can find endless replacements like this for a fraction of the price, comment below your finds to share.

I hope these 10 quick frugal tips will help you put money aside in your budget and, hopefully, increase your savings rate.  Live Happily, Xyz.




6 Ways to Find your Perfect Budget + Free Printable Budget Spreadsheet

For most people, starting a budget can be hard and even harder to follow through. I think that a simple personal budget is always better than no planning at all and can drastically help your savings in the long term. Finding your own way is the first step to a clear and sound financial path. I will share a few tips that helped us a ton. If you just want your free budget worksheet, you can scroll to the end of this article.


Try Our Free Budget Template #Budget #DIY #Frugal #Savings


Keep it simple

Most budgets include too many things to follow or are simply too tedious to maintain. I suggest a simple, easy to track, budget that you can actually follow month after month. I included a free copy for you to use at the end of this post.

The first step before starting your plan is to know where you are currently spending your money. Using a free tool such as Personal Capital will greatly help you track your income and spending and has a lot more to offer to improve your financial well-being! I suggest you get the Personal Capital app but if you really want something just to track your spending, a simple budget app or Mint will do the job. Once you know where your money is going, it is time to categorize your spending and create a simple budget.

Going through each little details will make it impossible to maintain and follow through. I suggest keeping track of major categories such as Groceries, Auto, Home, but skip the subcategories like Home Insurance, Home Maintenance, Home Lawn Care.  You can use this free template and modify it for your own needs.


You need to account for the main categories of spending (in order of importance):

  1. Fixed Expenses (Rent, Utilities, Payments…)
  2. Variable Life Expenses (Groceries, Gas, Entertainment…)
  3. Investments (401k, Roth IRA…)
  4. Savings (Emergency Fund, House Down Payment…)
  5. Guilt-Free Spending (Restaurant, Gifts, Shopping…)


I would say that number 1, 3 and 4 should be fixed, I know exactly what my mortgage payment is every month and I invest a fixed amount of my salary every paycheck to get my employer match and maximize my tax benefits. Then 2 and 5 are the most variables and the easiest to cut down. We eat well and spend about $500 a month on groceries but on the other hand, we have cut down restaurants and entertainment. If you are struggling to cut down, you can follow my money-saving tricks to learn easy alternatives to your current spending habits.


Try Our Free Budget Template #Budget #DIY #Frugal #Savings


Keep your budget updated

This is the part were simpler budgets overcome larger, extended, worksheets. Going back to your file and seeing how you are doing over multiple months, or years, will keep you on track and give you a perceptive on where you stand. You can track it manually in excel or you can let aggregators like Personal Capital or Mint do it all for you.


Keep goals

You should also include goals into your personal plan. Having a goal in mind will motivate you and including it in your budget will show you how attainable it is. To come back to my previous point, keeping track of that goal month after month will motivate you to continue forward and push until completion. An easy way to track goals is having separate accounts for different goals. We have a vacation account where we save up for our next trip!


Stay out of debt

Budgeting is a perfect tool to increase your savings but your priority should always be to repay high-interest debt first. If you have credit card debt or high-interest student loans you should definitively include those in your budget and prioritize them. I also recommend you take a look at my tools to repay your debt faster.


Keep revising and rethinking

Once you completed your budget, rethink each and every category and their respective spending. You can make it a goal to reduce certain expenditures or to cut them out completely. From my personal experience, the easiest things to cut to reduce your spending are:

  • Replacing cable with Netflix (around $50/month in savings)
  • Bring your own lunch to work (around $200/month in savings)
  • Not driving to work (around 200$/month in gas savings depending on the distance)
  • Inviting friends for drinks at your place instead of bars (around 50$/night out in savings)


For each expenditure you should ask yourself; do I really need this?


As Maslow’s Hierarchy of Needs states, your physiological needs such as food, clothing, shelter are the most important. The second tier is safety; this includes insurance, utilities, and so on. Anything after those can be reduced, cut, or accepted as guilt-free spending. Once you attain this mindset and choose your luxuries, you will enjoy them even more. You should also take concrete steps to save money if you really want to cut down on your expenses.


Keep it loose 

If you are not using a free tracking tool like Personal Capital, you will probably not get all your figures to the cent on the first try. Keeping some wiggle room in your budget will make it easier to follow. Keep in mind that setting unachievable targets or cutting unreasonably could demotivate you. We all need to budget for fun and luxuries.


Reverse budgeting

When you get more advanced or if you are already comfortable with your abilities, you can try to reverse budget like me. I use reverse-budgeting where I plan to save first, then spend what is left. If you are like me and save more than half your income, you might want to plan things differently and start with a fixed amount of savings each month. This might force you to be frugal and inventive but it can drastically increase your savings rate!

1. Investments (or Debt repayment)

2. Essential Expenses

3. Discretionary Money

The whole point of a budget is to get you to save more (or repay debt faster) so why not prioritize that in the first place. Paying yourself first optimized debt repayment and savings goals and can be set automatically. The reverse-budgeting method teaches you to live within your means and avoid debt.


Get your free budget worksheet

No email, no sign-up or anything. Just click to view it in Excel.


Good luck and happy budgeting, Xyz.






Put Your Money on Autopilot with Dollar Cost Averaging

dollar cost averaging or lump sum investingYou probably heard the terms dollar-cost averaging and lump sum investing before. Dollar-cost averaging (or DCA) refers to periodic investments regardless of the share price. Whereas lump sum investing refers to investing in one single purchase.

In other terms, DCA is when you have a sum to invest but wait a certain time frame to invest in multiple smaller purchases rather than investing as soon as you can.

  • $10,000 invested in DCA would be like investing $1000 a month for 10 months.  vs
  • $10,000 invested all today would be like a lump sum.

The DCA might be easier since it can be automated and saves you from the temptation to try to time the market. However, studies have shown that lump sum investing has twice the probability of outperforming than dollar cost averaging.

A Vanguard study (see figure 1) made by averaging for 12-months compared to one single lump sum and based on rolling 10-year periods, research showed a 67% chance of outperforming when investing now compared to only 33% with dollar cost averaging.

Past performance does not necessarily predict future results but you are still statistically more likely to finish ahead if investing in one lump sum than DCA. You need to find your own way, the important part is to save, invest and stay constant.


Looking back at historical results

Dollar-cost averaging was first popularized back in the 1980s by many finance book such as David Chilton’s The Wealthy Barber. However, after back-testing the idea, the results show that dollar-cost averaging rarely outperforms lump sum investments.

1979 research paper from the Journal of Financial and Quantitative Analysis found that DCA produced higher returns in just 27% to 39% of the scenarios it tested.

However, constantly buying in the market will take off a lot of the psychological aspect of investing. When your investments are falling, it just means you will be buying more shares at a better price.

In addition, if you are risk-averse, dollar-cost averaging does limit volatility. You will reach lower highs but your investments will drop less in times of market swings. With a proper asset allocation, you can enter the market with a steady, periodic, investment approach minimizing your regrets from a loss even if you might not optimize your gains. You need to know what kind of investor you are and find the proper method for your investment style.


What feels worst? Seeing your portfolio drop by 100$ or missing out on a 100$ profit ? If you don’t like drops then a dollar-cost average approach is appropriate for you.


Living paycheck to paycheck (the good way)

Now, there is a difference between dollar-cost averaging and investing every paycheck. When purchasing investments every pay, you are effectively investing as soon as the money is available to you, which is technically lump sum investing.

I use an investing program given by my current employer to automatically invest a portion of every paycheck to maximize the matching contribution my employer offers and to invest as soon as the money is available to me. I also invest my bonus in a registered account the day I receive it to minimize my taxes. Investing all my bonuses in my registered retirement plan (401k) lowers my tax bracket and forces me to keep it invested.

Whether more profitable or not, your worst bet, over the long-term, is not being in the market at all. Automating your investments prevents you from forgetting to invest. It might be the perfect solution depending on your person.

The double edge of investing first is the budgeting aspect it brings to your finances. Reverse-budgeting is setting a fixed amount of your budget for savings and living off whatever is left. I force myself to live paycheck to paycheck. I just have half my income to live off but this strategy greatly accelerates our savings. It can be hard at first. However, it is a really effective way to quickly pay off debts or increase your savings rate drastically.


Don’t save what is left after spending; spend what is left after saving. – Warren Buffett


In addition, if you work for an employer that matches part of your contributions, you should definitively take those free dollars. Many 401k or employee stock option programs offer an employer match. I, for example, get 50¢ to the dollar if I invest in my employee stock option. You should definitively max out those accounts since you will always be better off with all that free cash to invest. Those matches are usually done every pay so in that case, you would be optimizing your returns by investing as soon as possible.


Where to invest?

If you found an investment strategy that works for you and you are ready to invest, stick to it and stay consistent. I suggest you invest a portion of your pay automatically into index funds and take a look at my investment suggestions to choose a proper asset allocation for your objectives. You can also see exactly how I invest in my Open Book series.



  • Bennyhoff, Donald G. Emotional Circuit Breakers: Equity Implementation Plans.
  • Chilton, David. The Wealthy Barber
  • Constantinides, George M. A Note on the Suboptimality of Dollar-Cost Averaging as an Investment Policy.
  • Gerstein Fisher & Associates. Does Dollar Cost Averaging Make Sense For Investors?
  • Malkiel, Burton G. A Random Walk Down Wall Street.
  • Rozeff, Michael S. Lump-Sum Investing Versus Dollar-Averaging.
  • Williams, Richard E., and Peter W. Bacon. Lump Sum Beats Dollar-Cost Averaging.





How to Invest when the Stock Market is Overvalued?

In recent years, the market has seen great growth. Some may ask themselves if it is gone too far. Has it gone too high? Is the next stock market crash coming? The stock market is overvalued with P/E ratios higher than average. Valuations seem to be in bubble territory… Or are they?


The P/E ratio is the Price of a stock versus its Earnings. What a company earns is compared to the current price of its stock, the lower the P/E, the cheaper the stock is.


As of posting, the price per earning of the S&P500 is standing at 20.57 compared to the mean of 15.57 as shown in the graph below.


is the market overvalued nowSource:


However, can we really still use P/E to value the market? Many technological stocks are now irrelevant to this metric since they intentionally keep their earnings low (Amazon for example with P/E of 403). The market has greatly changed and evolved from what it was even 20 years ago.

Earning growth and dividends are the driving factor that impacts stockholders returns. However, no one can successfully time the market or guess the future of the market. Even investing at the highs of the market has generated considerable returns over the long run. The game has changed and history cannot be used to predict future returns.


how to properly diversify your portfolioThe secret is diversification

So what if the stock market is overvalued? We have established that you cannot predict the market. You cannot time the market but how can you protect your hard earn cash from the crash? Diversification.

For this previous research, I used the S&P500 for simplicity but you should diversify even more than 500 companies. I suggest a Total Market fund (VTI) with some International fund and some Bond fund (BND) depending on your age.

With great companies going out of favor (Polaroid…) and huge behemoths getting gamble away by management (Nortel, Enron…), you cannot expect to pick the perfect stocks and hold them forever.

However, with index funds, you can easily buy and hold a Total Market ETF such as VTI and expect it to grow considerably over the long-term. Investing in over 3700 companies lowers volatility and your overall risk of the fund.

To further diversify, I loosely use a three-fund portfolio (US, International, and Bonds) that maximizes returns with lower risks with very little fees. You can see my exact holdings and the type of account I use in my Open Book series.

Of course, being diversified will not save you from a market crash. It is healthy for the market to correct itself. Ups and downs simply mean that the market is volatile but you can use this volatility to your advantage with dividend reinvestment and a strong investment plan.


You need to be patient

At least once in our lifetime, the market will crash and there is nothing you can do about it. The only thing you can do is to diversify to soften the ride. As long as you have a long-term horizon to enjoy the ride up.


Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. – Warren Buffett (2008)


Short-term investing is a loser’s game and can be very stressful. By taking a long-term approach, you allow yourself the time to capture the market’s biggest up-trends and greatly increase your total returns.

There is a really interesting study that shows how only a few days in a year will contribute to the majority of annual gains in the market (chart below). You can only imagine that it is incredibly hard to identify these days and much easier to miss out on the gains. When including dividend reinvestment, time is certainly on your side and anyone in this mindset will outperform cash.


What is important is time in the markets

stock market timing or investingIf you are young like me and planning to invest for the next decades ahead, you have a lot of time ahead. There is one important thing in investing; stay away from the temptation to try to time the markets. What is important is time in the markets.

You can trade, buy, sell, all you want. In the end, chances are that you would have been better off simply holding it. The markets have their ups and downs. It is statistically very hard to get it right trade after trade, year after year.


Warren [Buffett], it strikes me that if you did nothing else you never sell. That is, if you can grit your teeth through and just disregard short-term declines in the market or even long-term declines in the market, you will come out well. I mean you just stick all your money in stocks and go home and don’t look at your portfolio you’ll do far better than if you try to trade it.  – Alan Greenspan


You are never the only one to get it wrong

There is a classic example of Bob the world’s worst market timer where Bob invested at every high of the market, just before every major recession. Even investing only at the very highs of the market, Bob would still end up with major profits (around 10.1% annualized since 1970) if he simply sticks to index investing with dividend reinvestment.

Market timing is hard, if not impossible over a long period, and I do not suggest it. What I do suggest, however, is having a good, clear plan that will sustain market dips. Grow your wealth over the next decades. As the historical data shows below, the annualized returns of stock indices would be much higher with a buy and hold approach rather than trying to time the market.

Being out of the market on the 10, 20 or 30 best days has significantly reduced returns. You simply cannot guess those days every single time. Remaining invested and staying focused on the long-term is the best strategy for investing in volatile markets.


should you try to time the market or not


A Good plan includes

  • Savings rate (whether a saving schedule or defined amount each year)
  • Investment accounts used (always try to optimize your taxes)
  • Investment allocation
  • Rebalancing schedule

To start, your savings rate is the principal instrument to determine your accumulation of wealth as explain in my basics for financial independence. Whether you use dollar-cost averaging, lump sum investing or investing at every pay, you need to have a plan to save and invest. When writing out your plan, you need to keep in mind:

  • It is OK to make mistakes, do not lose focus and stick to your plan.
  • Losses will happen if you invest in stocks, there is no way around it. You need to be prepared for them and again, stick to your plan.
  • Saving more, thinking long-term and allowing compound interest to work in your favor are your biggest accelerator for building wealth.
  • Time is your biggest asset in your investment plan, use it. Here again, stick to your plan.


Always optimize

To continue, you should maximize your tax-advantaged accounts such as 401k (or RSP in Canada). Doing so will greatly help you grow your wealth given that all profits and dividends will not be taxed. In addition, this will decrease your taxable income and leave you with even more money to invest. The difference in returns turns out to be phenomenal even at the lowest tax rates.

You should also consider any program where your employer is giving an employee match, this is free money. I prefer maxing out my retirement account to get the tax break on today’s income since I know I will have a smaller income once I am retired and therefore, will pay fewer taxes in the end.

As I said, investing pre-tax monies gives you a huge advantage over the long-run. For example, if you have $1000 to invest today, it will grow much more than if you were to invest only $700 of after-tax monies (assuming 30% tax rate). That $1000 will grow over the years all tax-free when kept in your retirement account.


Indexing is the key

In terms of investments, I will go over this in multiple posts but I suggest index investing to offer proper diversification and optimal growth. This strategy requires next to no effort and can offer great long-term growth. To each its own, the buy and hold value investing strategy that Warren Buffett has used to build wealth has worked out great for him. However, indexing requires less research, knowledge, and capital to grow wealth.

Rebalancing will also help reduce your portfolio’s risk and keep your portfolio allocation in line. I personally rebalance my funds once a year to make sure my allocation stays in line. If a fund has grown by the end of the year, I will sell the profits. Then, buy more of the under-performers to come back to my set allocation.


If all of this sounds too complicated, we suggest Wealthsimple.

Start your automatic investment account today!


I still think that the best time to invest is today and you should not try to time the market. Even if the market did tank tomorrow, I know that I am investing for the long-run and time is on my side.

Live Happily, Xyz.







How Should You Invest? Find the Optimal way to Grow your Money

how to buy index funds

After researching the subject and my own little trial and error, I came to the conclusion that index fund investing might be my best path to financial freedom. Exactly how to buy index funds and build a proper portfolio is no easy task.

I started investing in the stock markets playing individual stocks (note here the word playing) back in 2013. I had a very good year and made a 30% return but I do not think I would have been so luck year after year. Stock picking can be profitable and thrilling but in most cases but your lucky strike will not last.

In my first year, even after a good profit, I realized that it is a game that you simply cannot win year after year. Just think about it, out of all actively managed mutual funds (run by teams of professionals that analyses the market as a full-time job) a whopping 82% of them did not constantly beat the index over the last decade.


Nearly 89% of actively managed funds underperformed their benchmarks over the past five years and 82% did the same over the last decade, S&P said CNNMoney


When millennials like me are thinking of investing for the next 50 years or so, missing out on a few basis points can really hurt down the line. When choosing your own stocks, your odds are even lower than those funds managers, unless you have access to all the information and analysis they do. That is not something I would like to bet on!

Anyone who wants to retire early should start investing young and should save the majority of their income to quickly become financially independent. Before you start going out there buying every stock your hipster barista says is a sure hit, realize that you just cannot beat the market. Professionals in actively managed mutual funds cannot even constantly beat the market! (89% of them)

Even the averages show a large discrepancy. From 1970 to 1992 (a 22 year period) the average equity mutual fund return was 10.8% while the total market return of passive investors would have been of 12.0%. This represents a shortfall of -1.2% but the actual shortfall was roughly -2.5% given the average annual expense ratio of 1.3% during this full period.

To put it in numbers, a $1000 investment in an actively managed mutual fund would have grown to $5,778.65 after 22 years and a whopping $12,100.31 if invested in a total market index. That is more than double the return of the “professionals”.

The most important lesson I can teach you in investing is; Be patient and believe in the index. Many great fund managers have outperformed the market, some for decades, like Warren Buffett or Peter Lynch. However, those are the exception, the best in their trade, and it is highly improbable to pick those managers. Peter Lynch said it himself:


Most investors would be better off in an index fund. – Peter Lynch


Even the great Warren Buffett stated that his heirs should not try to beat the market and simply invest in index funds. In a recent annual letter to Berkshire shareholders, Buffett stated that after all of his Berkshire shares are donated to charity, take the cash left and just buy index funds.


My advice to the trustee couldn’t be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers. – Annual letter to Berkshire shareholders.


You cannot control the market

Professional managers charge for their services and frequent trading. They usually advertise a lot, which increases the annual fees and have a high turnover which increases taxes. If you compare the 0.05% to 0.30% fees Vanguard charges to the 1% to 2.5% actively managed mutual funds charge, it’s obvious! (Morningstar found the average fee to be 1.19%)

Index investing gives you diversification in the markets at a very low cost and little effort. Some mutual fund companies are doing everything to get new clients like showing results in such a way to increase advertised returns by showing their best years or comparing to an unfit benchmark.

If you try to pick good stocks or good mutual fund managers, you will quickly find that you are spending a lot of time researching. In addition, when you do make a decision, you will regret it and be anxious when it drops. I have seen fund companies close, freeze funds or dropping drastically simply because of management changes.

You cannot control the market. However, you can control your fees. With low-cost ETFs such as Vanguard’s, your costs can be as low as 0.05% per year! On the other hand, if your portfolio had an average expense ratio of 1.19% in actively-managed funds, you would be giving up quite a lot of to those “professionals”.

Over a 20-year horizon, $10,000 invested in the above index fund would have grown to $65,225.84 if invested in an S&P 500 fund with a 0.05% annual expense ratio. Comparatively, the same investment with an average expense ratio of 1.19%, would have grown to only $52,940.96. This is a cost of $12,284.88. This is without any change in returns, simply a slightly higher expense ratio.

The other beauty of indexing is that it does not require much of your time and it will let you focus on other things. When the markets will drop, you can feel confident that your portfolio is properly diversified and will bounce back up every time. You need to remember that individual stocks or mutual funds do not always recover, but markets do.


Both individuals and institutions will constantly be urged to be active by those who profit from giving advice or effecting transactions. The resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit. So ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm. – Annual letter to Berkshire shareholders.


Relax and let it be

index fund EFT investing

For me, I decided to automate my savings and investing and trust my allocation. Indexing can be stress-free and require very little of your time if you want it so. You should look into automatic 401k (or RRSP) contributions with your employer, this automates investing and you might even get an employer match.

I invest in a set allocation every paycheck and I try to stay away from the market news. On this, notice that news outlets are made to captivate the audience and often dramatize everything, the simplest dip and it’s the apocalypse. Patience is a virtue and long-term investments will grow with time.

You can partake in indexing through mutual funds or ETFs that track the index for very little fees. Depending on your country and investment objectives, either option can offer great savings if you take the time to shop around. The best solution is to get a commission-free option with hyper-low management fees such as a Vanguard account.

In Canada, I suggest the TD e-series mutual funds if you do not have a commission-free broker since they do not charge commissions and have a low minimum investment of 100$. However, if you prefer ETFs given their lower management fees, you should look for a commission-free broker such as Questrade and purchase Vanguard Canada funds to save on annual fees.


If all of this sounds too complicated, we suggest Wealthsimple.

Start your automatic investment account today!


Make your savings work for you

The most important thing when selecting investments is diversification. If you have 5 stocks in your portfolio and wish to hold them for 50 years, chances are at least one of them will go out of business and you will be losing 20% of your portfolio in one stride.

The simple way to avoid that is to own a lot of stocks and bonds in your portfolio. You could achieve this by buying hundreds of individual stocks and bonds but this would take huge capital and cost you a ton in trading commissions. However, the easiest way to achieve proper diversification is to buy funds that are composed of thousands of stocks or bonds.

Asset allocation is a key factor in the total return of your portfolio and will help you lower the volatility. The main things you should consider when picking index funds are the total number of stocks held, annual expenses ratio, and ease of use (how easily tradable it is).

  1. Should hold at least 1500 individual stocks
  2. Should have a low management fee (0.05% to 0.30%)
  3. Should be easy to buy and sell at no or very low cost

In Canada, look into TD e-Series mutual funds if you and to invest regularly at no cost or open an account with a commission-free broker like Questrade to invest in Vanguard index funds.

You really only need an allocation of the Total Stock Market (VTI), Total International Stock (VXUS) and Total Bond Market (BND) to have full diversification over multiple economies.

Vanguard Total Market holds 3,757 American companies in small, mid, and large caps which gives you great reach compared to the S&P500 or the Dow Jones index.

Their Total International Stock ETF includes 6,005 stocks invested in over 46 countries. This is great to give you proper diversification in developed and emerging markets. The US has a great history for investors and is still producing great returns but the international investment might be the next big run-up and will diversify your portfolio if the US does not perform as well as it has been.

Finally, depending on your age, you might want to include the Vanguard Total Bond Market index fund which has 7,860 different bonds. Again, holding bonds depends on your age and your risk preference, some hold 100% equity portfolios and do just fine. Some others prefer to keep a portion in bonds to ease the ride. You can see exactly how I invest in my Open Book series.


What is the perfect portfolio?

This is not investment advice, simply my personal thoughts on a good asset allocation for a young investor. There is no perfect portfolio but I look at it in terms of years before retirement; the more time ahead, the more equity you should own.

If like me, you are more than 5 years away from retirement, you should invest mostly in the total U.S. market (80%) hold some international (20%) and no bonds at all. Some go for even more international but I am happy with the exposure I get from American companies that operate overseas and a slight percentage of international ETF.

The reason I invest next to nothing in bonds is that over the long-term, equities have always outperformed bonds and you do not need that security if you are not withdrawing anytime soon. As the time approaches, you might want to go for a 70% total market, 10% international, and 20% bonds to lower the volatility of your portfolio in retirement and be able to withdraw from the bonds when the markets are having a bad year instead of selling equities when they are low.

Going for a 100% equity portfolio will maximize your opportunities to grow your money over the long-term and keeping the majority of your portfolio in equities, even in retirement, will ensure it continues to grow and supports you. You can read more about my views on bonds in a guest post I wrote on GYFG.


ideal portfolio allocation for millennial


Rebalance and reinvest your dividends

Rebalancing has been shown to increase the average returns over time and is quite easy to do yourself. I rebalance once or twice a year by selling my top performers and buying the underperformers to rebalance to my set allocation.

This might seem illogical but rebalancing allows you to cash in your profits and increase your share of cheaper assets. This will keep your allocation on track since a huge might add unwanted risk to your portfolio if it gets out of your comfort zone.

In addition, you should always reinvest your dividends and automate your contributions.  This will allow you to invest mindlessly and make the most out of compounding. To put it in more concrete terms, the annualized S&P 500 return without dividend reinvestment has been 5.471% in the last 100 years.

Now, if we compare the same time period (1916-2016) but with dividend reinvestment, the annualized return was 9.875% (calculator from Almost half of the total returns have come from dividends and if you are investing for the long-term, you should leave it all there and reinvest. You can read my in-depth post about the benefits of dividend reinvestment to learn more.


how to invest in index fundsSource:


If you have more ideas, please share in the comment section below. Happy investing, Xyz.




Every Stock is Falling, What Should You Do?

As someone who invests more than half its income, I know how stressful it can be to invest in a falling market. It is hard to know how to invest in a bear market and keep your cool. When the markets are falling it is counter-intuitive but the best thing to do might just be to invest more and ride the fall.

We see it times after times when the markets tank. The media starts yelling on every rooftop: SELL sell sell! This is the classic buy high, sell low, method everyone is talking about right? In his 1997 letter to shareholders, Warren Buffett wrote:


If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. […] This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices. – Warren Buffett


Over and over again, the market had its ups and downs but high savers with long-term investment goals should be happy about those bargain prices. Staying on the sidelines will not make you rich. To benefits from the great wealth-producing powers of the market, you can invest in a low-cost, highly diversified, index funds and try to automate all your savings.

The now infamous 1982 Business Week cover:  “The Death of Equities”. As it turned out marked the beginning of the greatest bull market of all times just goes to show you how the media should not always be followed.

If you look at any bear market, even the Crash of 1987, biggest one-day drop in history (brokers were, literally, on the window ledges and more than a couple took the leap), the market always recovers.  


If someday it really does not, well, no investment will be safe and money will probably have no value anyway.


SP500 market chart history


All-in-all, you cannot time the market and even market valuations will misguide you. Some easy steps to wealth are to you automate your savings, cut your spending, invest, and forget about it. Time will show again and again that equities will be volatile (it might be scary at times). How on the longer term, equities will always trump over cash. Staying on the sidelines is never a long-term solution.


Start investing today

Today is a better day to invest than yesterday. The longer your time horizon, the better chances are of positive returns. For example, over any 1-year holding periods, the worst yearly average return was -37% and the best was +52.62%. However, this changes drastically over longer periods.

Over 15-year periods, the worst average return was of +4.31% and the best of +18.93% per year. Finally, over any 25-year periods, the worst average yearly return was of +7.94% and the best was +17.24%.

If you are a millennial like me and have a few decades to invest, we can assume the average of the last century to hold true and generate considerable wealth over our lifetime. The annualized stock market return for the overall period is about 11% or about 7% after the average inflation rate.

The best day to start investing is today.

Do not try to time the market and do not try to outsmart the market. My best advice for you is to invest in a simple, low-cost, index fund and hold it long term.

The thing is, if you wait for the perfect entry point, you might just miss a great run up and miss on huge profits. On the other hand, if you invest now, even if the market could crash tomorrow you would not even feel the crash over the long-run.

If you want more details you can read my post on why you should invest in index funds.


Time is on your side

As a millennial, I will be over 50 years in the markets over my lifetime. Even more, if I choose to pass it on to my estate. My biggest asset is Time! I have recently read a great book by Patrick O’Shaughnessy. He is a portfolio manager at O’Shaughnessy Asset Management, who wrote about how millennials can get over their fear and into the market. It is worth the read, you can get Millennial Money: How Young Investors Can Build a Fortune at your local library for free.

This book introduces a strategy that can help overcome our shortcomings as investors. It underlines the fact that we have time on our side. You simply cannot underestimate the power of compounding!


Make it all automatic and check your accounts as infrequently as possible. – Patrick O’Shaughnessy


With that much time ahead of you, savings become much more rewarding. For example, if you would invest only 2,300$ per year for 50 years, (I hope you are saving way more if you are reading this blog!) you would reach the 1,000,000$ with average returns after inflation of the S&P500.


compound interest investingSource: Moneychimp Calculator


Automate your savings

The fallacy in humans is that we tend to overreact and get emotional when investing. The majority of investors know the secret of making money: Buy low, Sell high. However, our instincts actually make us buy high and sell when the markets are low.

Just look at the financial headlines or popular financial shows like Mad Money with Jim Cramer. Every time a stock rise and rise he will say that it is a HOT pick and time to get in the action! When it slumps he starts shouting at you to sell.

The easiest way I found to ignore the noise and invest logically is to automate my savings.

  1. Check with your employer for a 401k match and start investing on every paycheck. (or RSP in Canada)
  2. Check for employee ownership plans, most of them will match and there again, make it automatic on every pay.
  3. Set up an automatic transfer from your bank account to your brokerage account, either every year, month, pay or week. Then, set that amount to be invested in your desired allocation automatically.


Want something completely automated? We suggest Wealthsimple.

Start your automatic investment account today!


If you are hesitating between investing every paycheck or just investing in a lump sum, you can read my thoughts on the best way to invest and lump sum investing. I personally invest every pay just for simplicity. I do not think about it and never need to look at it.

Many brokers such as Vanguard offer free ETF trades. You can also choose a low-cost index mutual funds if your broker does not offer free trades. In Canada, we have the TD e-series mutual funds that are really cheap or you can set up accounts with Questrade who offers free ETF purchases. If you are interested in exactly what I invest in, you can read my Open Book series to see my holdings.

You should also check out with your employer for a 401k match and employee ownership plans that might be offered to you. Not maxing out these accounts is like leaving free money on the table.


Cut your spending 

Cutting your spending is a double edge sword. It will not only slash your retirement nest requirement but also increase your savings rate. The size of your required retirement nest is a direct result of your spending. The more you get used to a certain level of spending, the more you will need before you can safely retire.

Using the general rule of thumb of 4% safe withdrawal rate from the Trinity Study, your nest requirement would be about 25 times your yearly spending.

If you are spending 40,000$ a year you will need 40,000 x 25 = 1,000,000$ in retirement nest. You will then be able to live off that amount. Withdrawing 40k plus inflation every single year would have a very high chance of success. Some prefer to be safer and use a 3% withdrawal rate, therefore, 33x your annual spending.

Cutting your spending will directly affect this total goal for financial freedom. Therefore, the number of years you will need to work. The more you can put aside in your accumulation phase, the sooner you will be able to retire. The basic principles behind early retirement are fairly simple; if you can save more than 65% of your income, you can attain financial independence in less than 10 years! You can play around with historical simulations on cFIREsim or use Personal Capital’s free Retirement tools and get to your own conclusions. 🙂


Forget about it

To conclude, the best advice I can give you is to forget about it. Once you automate your savings into a proper asset allocation for your situation, simply stick to your plan and do not sell before your goal is attained. People will tend to sell when the markets are low but you should actually be buying at those great valuations!

Short-term investing is a loser’s game. As young investors, we have time on our side to profit from compound interest and capture the most of the market’s uptrend. If you think that you would be too susceptible to news events or daily swings, I suggest you start investing automatically and forget about it.

The only thing you might want to do is to rebalance once in a while but again, not according to news events.

The following years will be fun, invest properly and be smart. Be happy, Xyz.




Earning More

Optimizing your Bank Account and Cards (My Bank Gave me $1000!)

Yeah, that’s right! My bank gave me $1000 this year, and you can do the same. (EDIT: We got even MORE in 2016!) With the top bank accounts available, super high-interest savings accounts, and credit card rewards, you can easily make as much. It might seem hard to find the optimal bank account and cards but check out how we did it.

Here is the thing; most personal finance recommendations will say to keep your money in high-yield savings accounts and use a good cashback credit card to get 1% back on all your purchases.  I say; do the math and see how much you can really get. We use reward cards to do a little travel hacking and fly for free.

Using credit cards for all your purchase can be very advantageous if, and only if, you pay back the full balance on time every single month. Interest on cards are way too high and it will affect your credit score if you are late on payments. If you are good with debt, then you should be more than fine using credit cards for rewards.


Use cash or credit cards?

I suggest you use a credit card for all your purchases for two reasons,

  1. It is easier to track since it is all in one place. (Try Personal Capital for free)
  2. You will get rewards for each dollar spent. (Find your optimal credit cards)

Now, of course, this assumes you manage your spending and always pay your full balance on time. It is very important to never pay any credit card interest given their high fees (19%+). That is pretty easy to accomplish if you track your spending habits.

Personally, I try to put every single expense on cards, not only store purchases but also municipal taxes, online purchases, work expenses (I get them reimbursed but still get the cashback).


Cashback or rewards?

If we put it in numbers, a 1% cash back means that on an average spending of 2000$ a month, you only make 20$ in cashback a month. Not that great!

Where it gets interesting is with travel reward cards. We have multiple cards and earn a return over 5% in travel points!!!

Of course, you need to be a traveler to make it worth it but I know my points will be spent given my urge to see the world. Some cards offer points that are not restricted to one single airline. You can also convert your points to Aeroplan or other points programs and combine reward cards to accelerate your accumulation.


Getting more than one card

It is super easy to apply for multiple cards and accumulate thousands of dollars worth of points over a short period of time. I suggest you do not apply for more than one card a month but some people get away with 4 or 5 times as much without ever getting denied.

You can even book rental cars, hotels, or even cruses with reward points. We used them on our honeymoon and saved a ton by doing so!

If you have a high credit score and good credit history, you can seek out the welcome bonuses many cards offer and apply to them just for the rewards. If you apply to multiple credit cards, you need to look for the minimum purchases required to get the bonus (most American Express cards are $1,500 in the first 3 months) and you need to watch your credit score if you are doing too many applications at the same time.


Read the conditions and fine prints

When choosing a credit card you need to consider the annual fee, of course, but with most banks, you can get it waived if you have multiple products with them or apply during a promotion. Make sure you read the fine prints and maximize your rewards by paying attention to the payback structure.

In some cases, some purchases will give out more points depending on the category such as gas and groceries. You can optimize your cash back by having different cards for different expenses. Some cards advertise a 5% cashback but the fine print specifies that it is only on groceries and gas then 1% on everything else. You can also look into airline credit card if you fly frequently and plan on using your card to pay for travel expenses. Many airline credit cards are specific to a single carrier but can offer great advantages.


Find your card today and start earning those SWEET miles!


Optimizing your bank account

With so many banks and so many choices, you might find it hard to choose the best bank account. Either for your checking or savings accounts,  your banking could end up costing you more than you think. The most important thing to remember when shopping for bank accounts is that it should not cost you anything, it should reward you!

For any account you shop for, you should avoid the following fees:

  • Account maintenance or administration fees.
  • Withdrawal penalty fees.
  • Minimum balance penalty fees.
  • Deposit penalty fees.
  • ATM use fees.
  • Account link/online banking fees.

Some banks even use promotions to get you in but will charge you fees after a certain period of time or will charge high fees for less common things like Replacement Debit Cards or  Incoming Wires. You should always read the fine print before signing up for anything. Open an account online today and start getting the most out of your bank account.


You should make money, not pay fees

With interest-bearing checking accounts, you will be able to generate a few bucks out of your day-to-day account instead of paying monthly fees. After searching, I found that the Discover Cashback Checking is one of the highest paying checking accounts given its reward structure.

You can get 10¢ cash back for every single purchase you make, no matter the dollar amount. Their cap is 100 transactions per month which work out to 120$ in cash back per year. Compared to most other banks where you usually need to pay monthly fees on checking accounts, it is a pretty good deal. On top of this, their cashback checking does not require any minimum balance!


You should save money

For any unplanned little thing that life could bring us, we all need an emergency fund. You should have at least 3 months of living expenses in cash for those unbudgeted events. Some go as far as 6 months but it all depends on your job security and personal preferences.

Your emergency fund should not be in a checking account. You should simply open a high-yield savings account and earn a higher interest on those thousands put aside.

I suggest you shop around for the highest paying savings account and pay attention to the services offered. Some online banks will offer ATM access, some others don’t. Some online platform such as CiT Bank will offer unlimited transactions without any monthly fees.


Now, how about Canada?

For Canadians like me, none of the Big Banks offer very high yields. We do have options with online banks such as PC Financials or Tangerine but the service might be lacking.

Another option for those of you who have a brokerage account (you really should) is to invest in High-Interest Saving Accounts at discount brokers. Such funds have symbols like BTB100, ATL5000, or RBF2010.

To purchase those funds, simply enter a mutual fund order with the proper symbol. *Make sure your broker does not charge any transaction fees for HISA.

These offer higher rates than money market funds and are guaranteed by CDIC up to $100,000.

If you are fine with an online-only bank without access to ATMs, I found that Alterna Savings offers a great rate on their savings accounts and works great as an emergency fund.

Finally, I’m sure you can achieve and surpass my accomplishments. Simply choose the right card and use the right bank account to maximize your returns. You should do everything to optimize your returns such as keeping your emergency fund in a high-yield savings accounts and opening a cash back checking account on top of optimizing your credit card rewards. On this, let’s see how we do next year!


Be happy, Xyz.






Financial Independence

6 Books to Reach Financial Independence and Retire Early

So here is the thing, knowledge is power. If you want to reach financial independence, you will need all the power you can get. There are a ton of blogs out there but if you are like me and prefer the paperbacks, here are 6 amazing financial independence books. With these in hand, you will be set for success.

To get ahead in the game, I found that a cheap, easy way, to gain knowledge was reading regularly. Make it a habit of reading a lot and often.

Books are cheap entertainment and it can teach you a bunch of things that you might not have thought of otherwise.

I have recently started reading a book per week and it transformed the way I see books. I used to stray away from books, now I devour them. If it will get you off Netflix a bit, it cannot be that bad! 🙂

For all of you out there aiming for financial independence, you need to grow and explore a new mindset that will prioritize your wealth and wellbeing.

I wanted to share with you some books that I really enjoyed so far and changed me a bit along the way. These are, for me, the best books on financial independence and the tools to get there.


Early Retirement Extreme

Early Retirement Extreme: A Philosophical and Practical Guide to Financial Independence The first book on my list is not for everyone but definitively an eye-opener. Early Retirement Extreme: A Philosophical and Practical Guide to Financial Independence by Jacob Lund Fisker is about retiring on a very small budget, very early!

Jacob runs a blog over at that is pretty instructive and offers a ton of free content. I enjoyed his take on early retirement since it makes it available to the lower and middle-class and anyone starting out his career.

I could easily relate to Jacob’s book since he puts up a very achievable goal. He retired on a tiny budget and follows traditional values to maximize his life. It is an excellent read for anyone, whether you make $20 an hour or $200, the principals shared are always relevant.

If you are earning under $50,000 a year, it can be hard to save up a million dollars and you might get demotivated before the first decade but fortunately, we do not all need $1M to retire. 🙂


The Bogleheads’ Guide to Investing

Best book for financial independenceOn the investment side, I really liked The Bogleheads’ Guide to Investing by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf. This book was written by John C. Bogle (Founder of Vanguard) fanboys (Bogleheads) and covers great strategies to invest properly with Vanguard.



The Little Book of Common Sense Investing

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market ReturnsIn addition, I would also recommend The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns by John C. Bogle.

Those two complement themselves as the base to index fund investing. John C. Bogle is the founder and CEO of Vanguard and literally changed Wall Street by giving the chance to everyday retail investors to participate in the markets at a very low cost. I use this approach to investing in my own portfolio and believe that low-cost index fund strategies are one of the best ways to accumulate wealth.


Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game. Common sense tells us – and history confirms – that the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost. – John C. Bogle.


Many books can change the way you see and perceive wealth. It is often overlooked but most wealth creation comes from simply having and following the right behaviours.


The Millionaire Next Door

The Millionaire Next Door: The Surprising Secrets of America's WealthyA real eye-opener for me was The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Dr. Thomas J. Stanley and Dr. William D. Danko. This covers a 20 year-long research that the authors performed interviewing millionaires across the country.

The findings show the common traits that most millionaires share and their path to amass such wealth. I found it very interesting to compare with my own behaviors and spending/saving habits.

This is a quick read that can help you improve your financial habits or general views on life. It is always so fascinating to see how normal wage earners like plumbers and teachers can reach financial freedom and retire early.


Nearly anybody with a steady job can amass a tidy fortune. – Thomas J. Stanley and William D. Danko


Millionaire Teacher

Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School Another good inspiration for me was the Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School by Andrew Hallam. This book shows how simple index fund investing and a proper investment methodology can help any middle-wage individual become a millionaire.

The author was a schoolteacher who has accumulated great wealth simply by sticking to the plan. Like Jacob’s book, this helps any middle-class investors to relate. A very inspiring book that shows a clear step-by-step to wealth building. It shows the very principles I teach here; younger investors should invest steadily, automatically, stop looking at stock market news, ignore the “professionals”, and, invest in low-cost index fund investing.


The Wealthy Barber

The Wealthy BarberFinally, for the folks like me from Canada, a good start is The Wealthy Barber by David Chilton.

This is a comprehensive, step-by-step book that offers the Canadian’s perspective on the basics of personal finance. Explained in Lehman’s terms, this is a great start for anyone just starting off.

David Chilton goes through the basics of personal finance but he does not directly aim towards financial independence or early retirement like the other books discussed here. He rather guides ordinary people to comprehend, adapt, and keep a healthier financial picture.


To conclude, I hope you get your bedside table ready and get reading!

Take your time, read one at the time of the next 6 months if you need. Just like investing and reaching financial independence; reading is not a race. Go at your pace and remember that consistency is key.

If you do not feel like reading whole books, you can always subscribe to our mailing list to receive our articles every week!