The problem with only listening to one perspective on a topic is that there may not be a one-size-fits-all solution. That’s certainly the case when it comes to your personal finances, which are, indeed, personal. On the show this week, a chat with Mark Seed, founder of the Canadian financial blog, My Own Advisor. Mark is saving and investing his way to a million dollar portfolio using low cost ETFs and dividend paying stocks. Mark joins me this week to talk about financial independence and early retirement and how to tailor your FIRE plans to fit your lifestyle.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Do you know that 57 percent of Canadian adults don’t have a will? Willful has made it more affordable, convenient and easy for Canadians to create a legal will and power of attorney documents online from the comfort of home. In less than 20 minutes, and for a fraction of the price of visiting a lawyer, you can gain peace of mind knowing you have a plan in place to protect your children, pets and loved ones in the event of an emergency. Get started for free at maplemoney.com/willful and use the promo code Maple Money to save 15 percent. Now, let’s chat with Mark…

Tom: Hi, Mark. Welcome to the Maple Money Show.

Mark: Thanks so much, Tom. It’s great to be back and nice to see you again.

Tom: Thanks for coming back. It’s been a while. I wish I had the number in front of me but I think you were one of the very early episodes and now you’re in episode 150. I can’t remember exactly which one since it’s probably been a couple of years but I’m glad to have you back.

Mark: Well, you’re busy. You’ve had a lot of great guests and a lot of great content, Tom. I always try to check out your site as much as I can. We share a lot of similar values and things around personal finance so it’s always good to catch up.

Tom: Well, thank you for all that. And yes, we do have similar values. That’s one of the things I wanted to have you on to talk about. You had a post that caught my attention. I think you might have coined a new term here (correct me if you got it from somewhere else) what is FI WOOT?

Mark: I’d like to say I’m the founder of FI WOOT. At least I put that on my Twitter handle. I haven’t seen it before. But the premise of it is, instead of looking at the whole FIRE (financial independence, retire early) mantra—and I’ve got a lot of great stuff that comes out of that with people’s journeys, goals and objectives. I’m all for quite a bit of that. But I find FI WOOT, which is financial independence, work on own terms, is more realistic. It’s much more relative to what a lot of 30, 40 somethings or even 50 somethings want to transition into the workforce, look at semi-retirement or follow some of their passions or hobbies. It’s a term I think is much more relative and speaks to what they’re really trying to do which is be financially independent. They want to have a bit of money in the bank. They want to be able to live off their investments to some degree, but maybe want to work on their own terms too. They may want to follow the passion they’ve been thinking about for years or start a new hobby or new passion. Do wood working out of their garage, freelance—any number of other things. Maybe they want to stay in the workforce and take advantage of their employee benefits or stay with their current employer but work part-time. Or go into some sort of contract work to keep their foot in the door just because they love the work. I think (WOOT) work on own terms is much more relative, an honest representation of what a lot of people in the FIRE journey are actually doing.

Tom: I have a few thoughts on that. First of all, everything you just described not only replaces retire early, the concept of early at all would apply just as much. If you’re 40 or you’re 70, I still see a benefit to someone staying busy. Retirement shouldn’t just be this thing where you say you’re done, stop doing everything, and then go sit on the couch and watch TV.

Mark: Yeah. How many people do that? How many people in their 30s, 40s or 50s don’t want to have purpose? Or even later in life, for that matter. I think everybody wants to have a sense of purpose. They want to have the inertia and motivation to get out of bed in the morning and maybe do something positive, either for their family, for their friends, for their community, or, again, maybe they have that entrepreneurial spirit. I think a lot of people, whether you’re a successful podcaster like yourself or you blog for a living—maybe you just want to do freelance work or you’re very good at various trades, a lot of people just have that entrepreneurial spirit. I don’t think there’s anything wrong with that. In fact, I think that’s what should be marketed more and actually be more endorsed in terms of people taking these types of second or third career paths. It shows that you’re dynamic and versatile and that you want to give back in ways that you traditionally couldn’t do through your working career. Again, from the FI WOOT perspective (work on own terms), I think it’s just a very relative, honest and transparent way of really rebranding the whole FIRE movement. I hope it takes a little bit more of a foothold. And if it doesn’t, that’s okay. I think it’s still a term that works for me, you and many other people.

Tom: You mentioned blogging as a form of income, but sometimes that seems like too much of an inside thing. People in the FIRE community that follow all these bloggers and podcasters—I know you’ve mentioned this before and I have the same issue with this too, if you claim you’ve retired early but have a blog, podcast or book deal that actually makes more than some people’s regular job, you can’t really call that retired early.

Mark: Yeah, it’s true from a traditional sense that you’re not retired. If you’re a traditionalist, that’s ceasing to work or ceasing to work at a certain vocation. Beyond that, I find it’s a bit disingenuous and there’s a lack of integrity there. There’s nothing wrong with celebrating a new mantra around FIRE which could be financial independence, retire to entrepreneurship, right? You can have the financial independence but retire to entrepreneurship instead of retire early. You’re moving on to the next thing so that’s something that should also be celebrated. But to say you’re retired… I think I saw MarketWatch or some article where there’s this 30 something person in Ontario the article said was “financially independent”. I’m glad they didn’t say retired because you read through the article and he’s still working. He’s still making money. I think if you’re going to be a blogger, podcaster or write a book, there needs to be some level of transparency to say, yes, you’re making royalties off these things or it is part of your job, your passion. But there’s nothing wrong with trying to create or be a creator and make a little bit of money on it if that’s what you really want to do. It would not be unlike any other job. But I think to call yourself retired is a bit of a stretch.

Tom: Yeah, exactly. In that sense, I don’t know if I’m ever going to use the term retired for myself because I’ve always been a huge fan of the idea of multiple streams of income. Whether it’s through dividends, your day job or your business—anything you can do, the more levels of income you have, the better. Similar to your own investing, it’s just diversification. You’ve got these different streams of income coming in. Why would I cut off all but one just so I can collect dividends and have the label of retired? I can’t see myself ever just stopping everything else just so I can say, “There! Look… I’m not doing anything.”

Mark: Yeah. I’m kind of wired to be pushing myself a little bit so I enjoy having different outlets or different places to spend my time and energy, whether that’s in a sporting capacity where I’m not making any money at all. I enjoy biking, golfing and doing all these things, so that’s an outlet for me. I run the blog. That’s another outlet for me. I really enjoy my current employer and the team I work with so that’s a great outlet for me to use some of my technical and analytical skills. I’m kind of wired that way—I’ve always been that way. For people that are thinking about semi-retirement or full-on retirement, they need to think about that diversification. Not from the portfolio speak—not having funds from Canada and the US and so on and so forth, but really thinking about how you’re going to spend your time, and what income streams you want to draw on for that time. I think having those layers with some different safety valves built into your plan can become super important. It can also make you super resilient, especially in a world we’re living in where nobody really can predict the future with any accuracy. I think having different levers and different types of diversification built into your financial life, your personal life, is just a hedge on an uncertain and unknown future.

Tom: Exactly. There’s a lot of talk in the FIRE movement, FIRE community, about the four percent rule—how much money you can pull out. You can challenge that number. You can come up with different numbers. You can kind of put all that aside if you have additional income that can be benefited from. With both of us, it’s blogging. It’s to have that extra income even with our careers. It gives us a sense of stability, a sense of a backup plan. But for people that aren’t bloggers, by all means, just fill it in with anything else. You could be driving Uber for a few hours. You could be walking the dogs with Rover. There’s all sorts of things you could do where you might make $500 or $1,000 a month. That could make a big difference. Say you’re retired, your mortgage is paid off and you’ve got that small additional income. That kind of bridges a lot of the gaps so you don’t have to dig into your investments as much.

Mark: Yeah, and it’s a smart way of looking at it. Something my wife and I are thinking about is, it’s really a transition away from full-time work. The concept of us retiring “cold turkey” where there is this magical day you’ve got circled on the calendar saying this is the day I go from an 8 or 9 hour day to basically zero. It doesn’t make a lot of sense to me because I think, emotionally, it would be too hard for us. And also financially, it’s not where we want to be. We’re looking for kind of a slow transition where maybe in a few years, if we can work a couple of days less a week with our current employer, that would be great. Who knows if that can or can’t happen. There’s obviously so many changes today. The future, as we well know, is always very cloudy but I’d love to be able to transition to that space. And I think emotionally and mentally as well as financially, it’s really going to be a nice bridge between full-time work and where I want to be with other things like blogging or not blogging in the future. It will allow me that time to reflect and think about some of the next phases I want to go through with my own values, and where we want to go as a couple and what we want to do in terms of spending our time helping our community, volunteering more, doing other things that maybe have been put off based on time and capacity over the last couple of decades. I think that would be something for aspiring early retirees or even people thinking about full-on retirement. Really think about how you’re going to plan your day because I suspect “cold turkey” may not work well for a lot of people. The reality is, you may get bored pretty easily if you don’t have any hobbies or passions to kind of gravitate to. In summary, I’m a big believer in retiring to something and not trying to run away from something, necessarily.

Tom: Yeah, I’ve already differentiated this idea that there’s us (bloggers) and then normal people. This is exactly what I’m hearing. I’ll go to local FIRE community meetups and talk to people that don’t have a blog. They don’t benefit from FIRE as a movement. They just want to have that lifestyle, and they’re doing quite well. They retired early, legitimately. There’s no additional income. And a couple of people I’ve talked to have actually gone back to doing something because they were bored. There was just nothing to do. I think one guy said he only lasted six months. It doesn’t take long once you are doing nothing to get tired of that.

Mark: Yeah, I could see that. I can’t remember what US podcasts I listened to… it could have been one of the folks from the wealth side of things but the essence of the podcast was that even golf can get really boring if you’re playing with the same people every day… The same 18 holes, the same food at lunch. It sounds great but the reality is, even if that’s your passion, it’s going to get pretty stale, pretty quickly if you do the same thing over and over. Groundhog Day doesn’t mean a lot of excitement for a lot of people. I think folks are really well served to think through how they’re going to spend their time, how they’re going to provide some variety and really think about the purpose they want to retire to. I think that’s a big part of certainly being happy, mentally, physically and emotionally, in a long, semi-retirement.

Tom: I think that even goes back to the traditional retiree that might be a Wal-Mart greeter or work at Home Depot simply because they want to talk to people about tools. Now, there’s two sides to that. One, is the obvious, additional income. That’s going to help in retirement. But then there’s also just some social interaction. And like you said, a sense of purpose—giving them something to do. Now, I used an example for someone that’s probably 70 years old, but even if you’re younger, it’s still applies. You do need something to do. And if you can make money doing it at the same time, it kind of solves a couple issues in early retirement.

Mark: Yes, you’d like to hope everybody is going to fight some level of longevity risk. They’re all, for the most part, happy, healthy and surrounded by good people. And certainly longevity risk is a nice problem to have, especially after the year we’ve experienced. I know the reality is that not everyone gets to cherish that type of lifestyle. But I think it’s certainly something a transition from full-time retirement into semi-retirement or maybe into full-on retirement that can serve people really well.

Tom: So if someone’s looking to do this, some sort of early retirement with an income on the side as well, what are your thoughts on all this? I brought up the four percent withdrawal. Is that legit? How does an income kind of work with that?

Mark: That’s a great question. I think everybody’s different. As we know, personal finance is personal, Tom. We can talk about how I invest. I’ve certainly kind of coined the term on my site of being a “hybrid investor.” I’ve been doing that for 10 or 15 years now where I do rely on some dividends for an income stream. I expect I’ll use the dividends provided from the companies I own to basically pay for some expenses, and hopefully, there’s some inflation power built in, because if you check your cell phone bill or any other heating and hydro bills, those tend to go up over time and the companies that provide those services largely are those dividend payers. Certainly here in Canada anyways. I’m also thinking of it as a hedge from the risk side, just because I’m a conservative guy at heart. Having some sort of cash wage in retirement. That’s basically having at least six months, if not a year’s worth of cash. I won’t use high interest savings account because those don’t exist. Let’s say it’s a moderate interest savings account or something. But kidding aside, having a year’s worth of cash just basically as a hedge (because nobody knows what the future holds) is basically a big emergency fund. That’s something that’s really important to my wife and I as we enter semi-retirement. Should stock prices be terrible and we not have the V-shaped recovery like they did after March 2020 when everything was going haywire until summer when there was some hope coming with vaccinations and other things—if that were to happen again and that trough is not a V-shaped recovery but really more of a U-shape that lasts for six months or a year, hopefully, we would have a little bit of money to draw on if we needed to. And then the other plan for us is really looking at ETFs and growth. I’m a big fan of having a bit of a bias, certainly more to stocks than maybe a traditional planner might. This whole 60/40 balanced funds in terms of 60 stocks and 40 bonds doesn’t work for me. I’m kind of more of a 70/30 or 80/20 kind of guy. And even at that level of bonds I’m still trying to build that cash wedge over time. I’m pretty much 100 percent equities right now. And I’ll probably be very high equities when I start semi-retirement just because I think that’s where the growth is coming from and bonds really are paying next to nothing. It’s the equivalent of having cash and getting two percent. There are a couple strategies I’m using but the combination of dividend paying stocks for income, a bit of growth and the other part of my hybrid approach, which is really low cost ETFs, having that cash as a bit of a buffer, along with my other interests; part-time work, contract work, I think those are the diversification levers I’ll be able to draw on in the coming years. It’s aligned with my risk tolerance but I think it’s also aligned with the reality that anything can happen and you need to be prepared for it.

Tom: Over this past just year, like you mentioned, that V-shaped recovery is a reminder to me why I don’t consider myself some stock market expert. I still look at it and it doesn’t make sense to me. I’m a big fan of ETFs and invest regularly. I couldn’t possibly try to time this. I did buy a little extra on the way down, but I thought I was really messing up because it would go down more the next day and I’d think, “Oh, I didn’t I didn’t hit the bottom.” In the end, it worked out but it’s dumb luck. It wasn’t some masterful thing on my part. I was just putting a little extra money in because I saw it was going down, but I did not expect it to go back up so suddenly at all. Again, it just kind of reinforced my thoughts that I don’t understand this enough. Maybe no one does. You can’t predict this, obviously. You mentioned that you’re aiming towards a one year of sort of an emergency fund. I’ve been heading that direction, too, in my thoughts. Not my actions yet. But just the idea of whether your emergency fund should be three months or six months, you can make a pretty good case for a year based on this past year alone. If something like this happened again a decade from now, 20 years from now where maybe the government isn’t as willing to bail people out the way they did—there are all sorts of things that could happen so you could make a good case for a one year emergency fund no matter where you are in regard to retirement.

Mark: Covid has certainly changed a lot of people’s lives and expectations. I’ll be the first to say that my wife and I are still very fortunate in terms of having our jobs. We’re very thankful for that. On the flip side, though, even through this time, it’s forced us to kind of step back from our perspective, knowing that we’ve worked really hard to get here, to think, “Okay, what is that cushion or buffer we may need? Because this could happen again. What is it going to take for us to weather some of these potential storms that may happen again in the future?” So beyond the part-time work and what other ventures I may pursue, I think there’s an absolutely strong case to have a little bit of cash savings. It doesn’t mean you need to have a year, two years or even six months. But this pandemic and certainly all the circumstances around it—all the government CERB and programs really shine a light on the fact that you need to be prepared as personally as you can because you just don’t know what’s coming around the corner. I think if people can sock away a couple of weeks’ worth of money for when the car breaks down or when the fridge breaks, whatever the case may be, there’s nothing wrong with having a little bit tucked aside just for the unforeseen. I think this pandemic has been a huge teachable moment for that, for a lot of people. Some people have weathered the storm quite well. To your point, some people have probably prospered a little bit because they saw the V-shaped market downs as an awesome time to buy. They kind of hedged their bets knowing it would come back based on their knowledge of market history. While other people sold and were never were part of the recovery that’s been the last nine months. So I think we see the whole gamut, to be honest. But there have been a lot of lessons learned in the pandemic… certainly financially and from the workplace. It’s good to reflect on those to see what that means for you and your plan.

Tom: I assume when you’re saying a one year emergency fund for you, in your case, it’s really about getting to the point of some form of retirement and being able to weather the market. It is not as much about the appliance breaking down, but I guess it all applies. If you need to pull money from somewhere, it’s better to be pulling it from a fund than from your investments.

Mark: Yeah, I don’t know if I mentioned we were in the process of moving to the condo on the last podcast or not. But we’re in the condo now and condo fees, special assessments and reserve funds happen. One of the things I’m thinking about is, in the next five or 10 years, if we’ve got to go through an assessment, where’s that money going to come from? Am I going to pull it from my dividends or am I going to have to work a little bit longer? Or is there cash available to us that can be drawn on a moment’s notice? It’s liquid and I don’t have to worry about working longer. I don’t have to worry about cashing in my RRSP, assets, or other things. These are the things I kind of think through. I know there’s a lot of semi-retirees and retirees or aspiring retirees that read my site and comment frequently and these are some of the concepts we talk about. It seems to have served them really well so I’m just basically trying to absorb some of their lessons, learn to be a bit of a sponge and see how it applies to me.

Tom: But that’s another great point. I’ve seen this personally with my parents. Just as they entered retirement, they were in a condo that was hit with an assessment. They needed all new siding around the condo and it was going to be $20,000 per occupant, I guess, so that was a big hit. And they didn’t have a well-funded retirement. It was pretty bare-bones as it was so to get hit with $20,000 and no source of future income was terrible timing. So thinking of those kind of things now and preparing for them can go a long way.

Mark: I think so. That’s the thing, it’s just really hedging your risk. Do the best you can to disaster-proof your life. And even then, you may have to react to things. But that’s okay. It’s just a plan. Plans are subject to change but at least you’ve got a starting point.

Tom: We split the episode with beating up on the second half of FIRE a bit. But ultimately, whenever I read more FIRE focused blogs, you could call it a form of marketing. But really, it’s all still great personal finance fundamentals. It’s saving up a lot of money, reducing your expenses, planning for retirement, whether it’s at 40 or 60. I don’t want to come off too negative because they’re really saying the same things I would consider as more of an old-school, regular personal finance. I think we’re still espousing the same things; get your money under control with a good cash flow.

Mark: Ultimately, I think it is about cash flow management. It’s really knowing where your money goes. From a lifestyle perspective, one thing I have tried to be more conscious of is if my money going where I value. At the end of the day, do I enjoy spending money on X, Y and Z? I I do, that’s okay. There’s nothing wrong with having material items or personal assets like a house, or clothing, etc. There’s nothing wrong with spending money on things you value. It is your life. At the end of the day you want to live it within your means but you also want to be happy. To your point around the FIRE blogs, there’s tons of great stuff out there. I’m a huge fan of the FI part. Don’t get me wrong, I think it’s great. There is living below your means, risk mitigation, all the things we’ve talked about. It’s exposing some level of frugality and delaying consumption, if you will, for a better future, brighter day that’s maybe happening sooner than most. Those are all great things to pursue. I just wouldn’t get caught up in the actual full-on retirement part because, again, I think everybody needs purpose. But there’s tons of great stuff that comes from many of the FIRE blogs. I’m a fan of a lot of them, and I’m a fan of the overall message that that comes out of it. But ultimately, what I’ve tried to do is spend a bit more on things that I like and cut back on the things that just don’t add value. That kind of cash flow management or reassessment, I think is super eye-opening for a lot of people if they go through it.

Tom: Yes. When you track your spending, there’s a little bit of spending… $100 here, $200 there. It can really add up. I’d much rather skip that and think about what I want. What do I value? What’s my next goal for a really cool thing I will actually enjoy? I’d much rather put money towards that big purchase than just have it eating away from these little purchases where you don’t even think about the menu. You don’t take that moment to think, is this necessary? Does this bring me any joy? I definitely like the idea of thinking about what you’re doing with your money.

Mark: And budget is a scary word for people. It means you’re constrained sometimes. I much prefer cashflow management for those type of concepts where you just want to understand where your money goes. It’s not to beat yourself up and talk to yourself in the mirror and say you’re a bad person. It just means you need to know where your money’s going. If it’s going on things that you absolutely value and enjoy for you and your family, then kudos. But if it’s not, then maybe it’s time to reassess those things and put your money where it really does align with your values. Whether that’s early retirement or never retirement, a big trip, a nice car, it doesn’t matter. Cashflow management is a similar concept but it has a different outcome and certainly a different mindset.

Tom: Yeah, exactly. Like I said, I definitely put myself in the never retirement camp. I’m happy to be financially independent. Even if I qualify, I really don’t get into these labels of “exact math.” When it comes to labels, I’ll probably never use the retirement label.

Mark: You can use FI WOOT, Tom.

Tom: I might have to. I also lose track of all these FI terms but that one stuck out to me. Thanks for being on the show. Can you let people know where they can find you online?

Mark: Yeah, for sure. It’s myownadvisor.ca. I’ve been running the site for many years. As you know, Tom, I’m here to help others, whether it’s through the blog post, answering as many comments as possible, emails, reader questions, case studies—the list goes on. You can find me there. I’ve also got a bunch of helpful sites, information, retirement headers. I talk about my dividend journey as well as low-cost ETF investing, which I’m quite passionate about. Whether it’s any kind of sort of free content on the personal finance space, you can probably find it on my site and I encourage people to check it out. They can also follow me on Twitter @myownadvisor. I’m pretty active on there (as is Tom Drake). I’m happy to interact with people on Twitter as well. Those are the two main sources. So check me out.

Tom: Well, I’m not as active on Twitter as you are, but I’m hoping to get better. But thank you for being on the show.

Mark: Thanks so much, Tom. It’s great to talk with you again.

Thank you, Mark, for sharing your thoughts on the important topic of financial independence and early retirement. It’s refreshing to know there is more than one path people can take. You can find the show notes for this episode at maplemoney.com/150. I want to take a moment to thank you for listening to the Maple Money Show. I appreciate your support in helping us continue to grow. If you have the Apple podcast app on your phone, can you pull up Maple Money and give it a quick rating? Even better, leave a review and let everyone know what you think of the show. I look forward to seeing that next week when we have CFL Pro, Courtney Stephen, on the show to discuss what blockchain technology is and how it’s changing finance. See you next week.