How To Get Your Kid Set For Retirement

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I’ll just cut to the chase: When your kid is born, put $12,400 in an investment generating 7% interest, and they’ll be a millionaire by 65. I know that sounds crazy, and I’m making a LOT of assumptions, but you can find all the justifications for my logic in this post here. Again, this is presented as data ONLY. Listen up, new parents. It’s time to make your kids millionaires.

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All of these equal $1M:
0 – $12,400 x 65 years of 7% growth
1 – $13,200 x 64 years of 7% growth
2 – $14,100 x 63 years of 7% growth
3 – $15,100 x 62 years of 7% growth
4 – $16,200 x 61 years of 7% growth
5 – $17,300 x 60 years of 7% growth
6 – $18,500 x 59 years of 7% growth
7 – $19,800 x 58 years of 7% growth
8 – $21,200 x 57 years of 7% growth
9 – $22,700 x 56 years of 7% growth
10 – $24,300 x 55 years of 7% growth
11 – $25,900 x 54 years of 7% growth
12 – $27,800 x 53 years of 7% growth
13 – $29,700 x 52 years of 7% growth
14 – $31,800 x 51 years of 7% growth
15 – $34,000 x 50 years of 7% growth
16 – $36,400 x 49 years of 7% growth
17 – $38,900 x 48 years of 7% growth
18 – $41,600 x 47 years of 7% growth

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By this logic, you should actually reconsider sending your kids to university! The average four-year university undergraduate degree costs $84,000! DO YOU KNOW WHAT THAT CAN DO FOR A 23-YEAR-OLD? Invested at 7% interest – (I know some of you are still skeptical, so here’s further justification from someone far smarter than me) – THEY’D HAVE OVER $500,000 IN THE BANK BY 50. Wait 10 years more AND THEY’RE MILLIONAIRES. Here, crunch some numbers and get back to me. What’s especially wild is these are essentially set-and-forget investments: NO FURTHER CONTRIBUTIONS NEEDED! How are NO new parents doing this? It’s goddamn insane! Index funds, FTW!

If I’d known at 18 what I know now, I would’ve skipped post-secondary entirely. One of the richest and most successful people I know didn’t have any formal schooling AT ALL. Another friend is an artist and is set to retire with $800,000+. It turns out financial success isn’t all that linked to skills or intelligence at all. All you need is (a little) Money and (a lot of) Time!

If you completely ignored my post about not having kids, don’t ignore this one. Making a new millionaire from scratch costs $12,400 and your kids will be grateful forever. I don’t know about you, but that sounds like the best damn deal I’ve ever heard.

Wishing you and your kids riches,
Unconbentional

I Want You To Half-Retire (HR)

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I worked this week. Well, kinda. Yesterday, I drove a few towns over and dropped off a wedding photo delivery I’d shot two months ago. Between lazy shifts at my liquor store and prodding at Lightroom edits for the past few weeks, I’ve been averaging 20 hours a week for a few months now. It’s enough to get by. Considering that a week has 168 hours, working 20 hours is only 12% of that. Not a bad trade, I figure.

Anyway, I know a lot of you work 40 hours a week, and that’s certainly smart. Everything you invest now is worth 10x more, so I can see why you’d want to put in your hours and aim for an early retirement. I mean, what’s better than never having to work again? Well, as I found out, the closer I got to No Work, the worse my mental health was. When I was working just 30 days a year, I was definitely less than sane. What eventually happened was the idea of Half-Retirement, or HR. Statistics Canada “examined data for more than 265,000 workers over 28 years” and “shows that of those Canadians who exited a long-term job at age 55 to 59, 60% were re-employed in some capacity within 10 years”. Based on that, it looks like Retirement is as ill-defined as ever. Even when shown Early Retirement, most people chose Half-Retirement instead! What gives?

Well, I’ve theorized that people need to actively work on something in order to feel truly fulfilled – progress equals happiness, after all – but after some basic digging, it turns out research backs me up. In the Netherlands, over “half of Dutch workers are on part-time hours” and they consistently rank as “one of the world’s happiest countries”. Meanwhile, this article suggests “people who keep working after age 65 tend to be much happier than their peers who are retired”. This was particularly interesting to me because full-on Retirement no longer seemed like what to aim for. The goalposts had been moved. If Half-Retirement was what made people happiest, WHAT’S STOPPING US FROM DOING THAT RIGHT NOW?!? All we need is basic frugality.

I certainly feel content with a light workload, and I’m confident my decision to not frontload all my moneymaking towards my youthful years is a good one. While I’m young and dumb, I want most of my weekdays off, and I’m honestly not just fucking around with them. I’m taking time to learn skills and meet people who will benefit me for years to come. This past month, I’ve taken time to hike with FI nerds, I’ve started work on a new garden, and I’ve expanded my writing opportunities by applying for an ACTUAL writing job that I can’t even tell you about yet! It’s all stuff I couldn’t accomplish if I were working a 40-hour 9-to-5, but here I am, financially stable (though admittedly, debt is an issue) and happy as can be.

I’d also argue if you take the time for self-care early on and use an HR mentality, your health won’t degrade as much and working part-time in retirement age would be more rejuvenating than torturous. Why not half-retire now by being frugal, AND EXPERIENCE THE SAME LEVEL OF FREEDOM AS SOMEONE WHO’S 65?

Consider that Tim Ferriss wrote “The 4-Hour Workweek” after presumably mastering a 4-hour workweek. He then wrote “The 4-Hour Body”, “The 4-Hour Chef” and “Tools of Titans”. IF A 4-HOUR WORKWEEK IS THE IDEAL AMOUNT OF WORK FOR A PERSON TO DO, WHY IS HE VOLUNTARILY TAKING ON A LARGER WORKLOAD? I humbly suggest a workload of anywhere from 20 hours (working for someone else) to 40 hours (working on your own projects). Maybe fulfillment isn’t just chasing Happiness. Maybe fulfillment has something to do with Usefulness.

If HR is the goal, WE CAN ACHIEVE THAT NOW WITH FRUGALITY. Then, we can coast our entire lives on a lifestyle that even retirees find preferable to full Retirement! As someone who’s lived it, it’s fucking wonderful.

Imagine this: Most of the week, I wake up without an alarm. I poke around in the kitchen and decide what I want to make for dinner. I make sure the gardens are okay, leisurely edit some photos and maybe blog a bit while having a beer, then shop for ingredients. Making dinner is a joy. If I’m feeling particularly adventurous, I ride my trike to the brewery and pick up a growler. I go to bed whenever I feel like after some screen time. If I work in the morning, I set an alarm. Even then, it’s usually just 8 hours at the liquor store for a day, or an 8-hour wedding. It’s good to know I’m needed somewhere. I can honestly say coasting like this forever is what I want. I will never tire of this. It’s goddamn magic.

If this all sounds too good to be true, it’s not. If rent is too high, live with someone. If you’re short on cash, you can always make a buck. If paying for gas is killing your budget, live closer to what you need. If you spend too much on events, don’t pay for them. If you drink too much, use smaller glasses. And so on, and so on. You can live HR now, and it’s better than full-on Retirement. It’s just frugality and part-time work!

I had trouble finding Unconbentional’s core message before, but this is it: HR is better than Retirement, and you can have this now. Build your wealth and optimize your situation until you can live on part-time work. Give yourself the gift of free time, especially while you’re still young enough to make some memories. Work isn’t a bad thing. You need it to live a fulfilling life. What you want is work-life balance. Don’t blindly sacrifice your youth chasing a day when you no longer have to work, but also don’t be a dumbass with your money. HR is the goal now. You can make this work, and you’ll be miles ahead of the modern workforce. You. Yes, you. You can do it.

I believe in you.

Am I nuts? Tell me on Facebook.

Financial Planning for Your Life Expectancy

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77. I’m going to die when I’m 77.

I was playing around with this life expectancy calculator and dutifully filled in my personal info, dreading the results. Would I die like my dad did, from heart complications at 55? Or would I flip Death the middle finger like my grandfather who passed away at 84? It was hard to tell. On one hand, I was reasonably healthy for a 28-year-old. On the other, I was a regular drinker and wasn’t as active as I could be. I was fully expecting my number to be below 65, making all my retirement planning silly and useless, but what I got was 77. Respectable, I thought. Now that I knew, it was time to start planning for it.

Using this compound interest calculator, I punched in my current investments and contribution rate: $17,245 to start, $3,000 a year, 37 years to grow (until I’m 65), and 7% interest. The results were heartening. Even though it’s fuzzy math, it estimated $725,479 when I’m 65. Not a bad little number. I wasn’t exactly a millionaire, but I didn’t need to be. I just needed enough to carry me through to my life expectancy. Here’s what I found.

Accounting for inflation – I used 2% – I was able to adjust my $725,479 to what it’d be worth in 2053, when I’m 65. I was shocked at what inflation ate up. My spending power was only about $348,673 in today’s dollars. Since that’s the more relevant number at this point, I’m using that to calculate my retirement plan. I want to know my spending power, not some wildly-inflated, future number. You can calculate your current dollars for inflation here.

My “$348,673”, at 7% interest, gets me “$24,407” a year while it’s invested, or “$2,033” a month. That’s about in line with my current spending. I spend just over $2,000/month now. If I play my finances this way when I’m 65, I could live off my nest egg FOREVER. But let’s say for a second the financial climate of 2053 is a riskier one, and I no longer want my money invested in US equity. If I cashed out EVERYTHING – like an idiot, but I digress – I could pace my “$348,673” out to “$29,056” a year, or “$2,421” a month until an expected death at 77. I am, somehow, covered both ways! Well, that’s a relief. By sheer luck alone, I don’t have to make any alterations at all to my retirement plan! Yay!

You have the tools now in the links I’ve given you above. You NEED to run your numbers and make a retirement plan that works for you. Ignoring this post could be the difference between literal life and death. Being broke at 80 is a far different story than being broke at 25.

On a happier note, with my finances taken care of, I can now shift the focus towards health and living a longer life. Let’s look at the life expectancy calculator again. I filled it in as follows: M, 28, 5’ 8”, 180 pounds, high blood pressure, quit smoking, 3-5 drinks a day, somewhat active. My life expectancy: 77. The best way of increasing my life expectancy is to bring my exercise level from “somewhat active” to “several times per week”. New life expectancy: 81. I can go even further by bringing my alcohol consumption from “3-5 drinks per day” to “2 drinks or less per day”. My life expectancy then becomes 82. Uhh… FUCK THAT. I like my beer. One extra year is not a fair trade. More beer now.

This might be an extreme method of measuring personal finance, but it’s still a useful exercise. It took me 10 minutes to come up with the numbers you see above. If a 10-minute time investment helps you make better financial and health decisions FOR THE REST OF YOUR LIFE, wouldn’t you take it? Tell us what you thought in the comments.

With that extra four years, maybe I’ll take up scuba diving…

Bank Your Raise

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The liquor store doesn’t pay me much. $13/hour is only $26,000/year full-time. Luckily, that gig isn’t my main source of income. No one ever needs a wedding photographer on a Monday though, so I figured I may as well make some extra money on my weekdays.

I got a small $1 raise three months into that job. Starting on September 1, I’ll be banking that raise. I started that job at $12/hour and lived just fine, so I’m dumping that extra $1/hour into my investments. You can bank your raise too. It’s easy: Just compare how much you currently make per hour to what you started at, then multiply the difference by the hours on your paystubs. Throw that into investments ASAP. Here’s some math on how much you’ll save.

On my last paystub, I worked roughly 47 hours over two weeks. If I bank my raise, that’s $47. I get about 25 pay periods per year. That’s setting aside an extra $1,175/year, and that’s at the low end! What if you’ve had a full-time job for years and your raises add up to more like $5? That’s investing $10,000/year into your future! If you have a $50,000 income, that’s about what you’d need to max out your RRSP! If you make banking your raise automatic, and literally use just that step alone, your retirement will become automatic too! Even my paltry $47 per pay period adds up to $43,475 by 65 – AND THAT’S IF I DON’T INVEST IT. Invested the way I normally do, I’m looking at $200,000 JUST BY BANKING MY $1 RAISE.

As usual, run your own numbers. I’m just here to remind you financial security is easy. This is such a simple way to compartmentalize your savings, and mentally set aside money.

You lived perfectly fine when you started your job. Anything extra is just icing on the cake.

Everything Actually Costs 10x More

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This one’s a quickie.

If you’re reading this, I’m gonna assume you’re around 30. You’re here because you care about Money and Retirement, but you’re also reading this because you haven’t figured it all out yet. You’re not a Millionaire yet. That’s okay. Neither am I… but I can help you get there more effectively. All you need to remember is the title of this post. Here’s why.

Assuming you’re 30, you’ve got 35 years left before a standard retirement age of 65. Every $1 you put into an investment now, generating 7% interest annually, will turn into – wait for it – $10.68 BY 65! Do you know what that means?!? EVERY $10,000 YOU’RE ABLE TO PUT AWAY NOW IS WORTH $106,765.81 BY RETIREMENT!

Before you all jump on me saying 7% annually is unrealistic, I’m obviously talking about index funds that sometimes go up, and sometimes go down. The idea is that 7% is the average growth over a number of years, and you’re not gonna be dumb enough to cash out your index funds entirely right after a crash like 2008. When you decide to cash out, you’ll already be swimming in hundreds of thousands, so you can wait a little bit for the market to recover. You only need to withdraw enough to live on anyway, which should only be about $100/day for maximum happiness! Even that’s kind of extravagant.

For me personally, the US index fund I invested in has gone up 8.2% in the past 10 years. My MER is oddly high (and I’m gonna look into that), but even after factoring that in, my projection for 10-year growth is still about 7%. I’m not just telling you what to do! I’m also doing it!

Just remember: Spending $1 today is costing you $10 in the future. Save it, and invest it. And if you suddenly come across a windfall of $100,000, put it aside so you can become a Millionaire through no effort at all.

$1 + Time = $10.

Simple, right? Even a millennial like you can do it.

The Super Boring Post on Normal Retirement

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Normal Retirement at 65 is basic personal finance, which is why it boggles my mind that Most People haven’t figured this shit out yet. Up until yesterday, I hadn’t figured it out either. After all, it wasn’t too long ago I said Retiring at any age wasn’t likely. The truth is I was just lazy and hadn’t run my numbers yet. I just got back from the bank, and I’m now 100% set for Normal Retirement (NR). Here’s how I did it.

I have $13,174.09 in my RRSP right now. $8,605.79 is invested in a Select Growth mutual fund and $4,568.30 is in US Index. I plan to go even more aggressive in my investment strategy and put 80% into US Index. I expect that to return 7% annually. I’m only 27, so I have 38 years of growth to look forward to before I’m an old sack of shit who won’t want to work anymore. If I do, I’ll have even more money, but let’s just pretend I’m useless at 65. Using our trusty Compound Interest Calculator, let’s see what happens if I maintain 7% growth for 38 years without further RRSP contributions: $172,307.50! Not bad, but I can’t Retire on that. What if I put in $100/month, or $1,200/year? Holy assballs, we’re looking at $393,875.85! THAT’S ONLY ADDING $100/MONTH! That’s enough to Retire on. I’ll still have my Home inflating my Net Worth to $500,000+ and I’ll most likely still be Working instead of being 100% Retired. I’ll be even richer! And all it took was $100/month. Go, me.

Are you in your 20s? Right now is the absolute most crucial time to save. Did you know investing just $15,000 from the time you’re 20-34 means more than investing $35,000 from the time you’re 30-64? WHAT THE FUCK. If, at 20, you start saving $100/month and invest it in US index funds with a 7% annual return, you’ll have $366,902.12 by 65! Are you an overachiever? $200/month gives you a whopping $733,804.23! HOW ARE YOU NOT ALREADY DOING THIS? ARE YOU NOT AWARE THAT BANKS ARE MONEY MACHINES DESIGNED TO MAKE YOU RICH?

If you’re reading this, you’re most likely a Millennial with no hope of Retiring. I’m here to tell you Retiring is possible. NR can be yours for less than $200/month. That’s approximately the cost of NOT buying a $5 latte every day. It’s also approximately the cost of NOT going to a club filled with douchebags and racking up a one-night bar tab every month.

Your Future is in your hands. What means more to you? The Retirement you never thought was possible, or the soy-mocha-frap-fuckdrink you “can’t live without”? Buy a coffeemaker. Go to shitty clubs less. Treat yourself still, but not in a way that costs money. Go for a goddamn jog. Eat well. Read a book. You’ll be Rich in no time.

If you need me, I’ll be over here mathing how to put an extra $100/month into my TFSA. Maybe I can try for EARLY Retirement. I can’t believe how simple Getting Rich is…

What I Learned by Retiring for 2 Years

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Realizing I didn’t need a day job anymore was pretty freaking cool. I figured this out in 2014.

2014 was a year of both awesomeness and shittiness. I lost my dad that year. I also inherited the money I needed to get out of my substantial debt – $25,000 at the time. Since I’m the Dumb Ben though, I wasted no time at racking up more debt. I owe $19,000 now. More on that later. I was also able to get my place sorted out. I’m now the owner of a 99-year leasehold property in Richmond, BC. For those of you unfamiliar with leaseholds, I basically own the property, just not the land underneath it. I have 72 years left before I get booted out. I’ll be homeless at 99. More on that later too.

The remaining 72 years are all paid off. It was $170,000. The strata fees and property taxes are 100% covered by the rent I charge my roommate. I’m super lucky, and as I type this, I can already hear the lynch mob forming. At 27, I don’t have rent.

That’s not to say I do nothing. I have a successful wedding photography business, and charge up to $4,400 for my packages. I hardly count it as Work though. I love every part of what I do, and outsource the stuff I don’t like, like editing. On my last $4,400 wedding, I outsourced virtually everything except the actual photography. Time investment: 1½ days. The lynch mob is banging on my door now.

So with my photo “work”, food was covered too, and then some. Now what? For me, the answer was Retire. Sure, I’m cheating a little bit, but I was “working” around 30 days a year, and was frugal enough that I could live off that. I don’t care what you say. I was fucking Retired.

No lies, it was great at first. I could get up at 4 PM, slam two beers, play Minecraft until 9, then hit the pub. I got to see my friends and family whenever I wanted. I’d go on adventures, disappearing into the US for weeks at a time. I even made it to the UK for my friend’s wedding, and made some great memories there. And then… I just sat on my ass a lot.

Like, A LOT. What I didn’t know was the first 40 hours of Minecraft are pretty fun. The next 200 hours are significantly less so. I started gaining weight. I developed a drinking problem. My mental health started to suffer. Getting together with my friends got more challenging, since they had work and families, and I just kind of had… nothing. My life, without Work, suddenly had zero Meaning. I was suddenly a depressed slob who couldn’t remember the last time he’d had a shower. Since I only ever worked at weddings, and was always too focused on taking pictures instead of interacting with people, I’d often go weeks without an actual conversation. I mean, it’s no wonder so many people die right after retiring. Read this. Without a purpose in life, even if that purpose is as silly as earning money, why go on?

I realize this sounds like the privileged whining of a 1%-er, and in many ways, you’re right. I have what a lot of people want. I thought I wanted this too. I want you to reconsider Retirement though. What would you REALLY do if money were simply not an issue? What would you do with your life if you had an extra 8 hours every day? If you’re the type of person who’s so hard-working that you can Retire early, what makes you think suddenly having NOTHING to do will make you feel good?

After two years of mild existential terror, I figured it out. Retirement wasn’t about doing nothing. It was about finding out what had Meaning to me. Meaningful employment is important, even if it doesn’t earn a bunch of money. I currently sell wine to people for $13/hour when I’m not shooting weddings. I don’t need the money, but it gets me out of the house. I don’t drink as much now. I shower more often. I have real conversations with people. I get to talk about fine beer, wine and spirits, which is a passion of mine. And to top it all off, the money I make goes into getting me out of debt, and profitable investments for the future. I had Meaning again. I was choosing to Work. Even though I’d “made it”, I needed Work to feel whole.

Rethink Retirement. You can Retire and work on something you love, and if it happens to make enough money for you to live on, guess what? You’re Retired! Get a job that doesn’t feel like Work. Get a job that gives you more Time. Get a job that has Meaning. I know it’s not as simple as all that, but make it a goal. All of this is better than the fantasy of never having to work again. Trust me, you’d probably hate it.

Oh, hey. That lynch mob is ringing the doorbell. I should probably let them in.