how much do you need to retire comfortably?

Paul is speaking with his friend Margaret, the lady who by now is famous for her investment strategy whereby her income increases regularly by at least 10% every year. They’re going for a walk, a brisk one because it’s fall and one walks briskly in order to stay warm.

Paul is a little impatient. “Margaret,” he says, “several months ago you talked about The Number, that being the amount of capital one needs in order to retire. You started telling me how you figured it out, but then you sidetracked into calculating how much we spend everyday and keeping track of the pennies going out.

“Then you took me to the information session on investing for dividends with your superstar money manager, with whom I’ve decided to work, by the way, because she just makes so much sense. No one has ever talked about money the way she does. And her assistant made the account transfer a breeze for me. It was painless.

“But now,” his voice rises, “We’re about to see snow on the ground and I still haven’t your answer on calculating The Number. You’re holding out on me.”

Margaret smiles widely. “So you admit to being addicted to the new habit of keeping track of your money. Congratulations! And you’ve become serious about managing your money by opening an account with the Adena Franz Group at 3Macs. Another congratulations! Come, let me buy you a nice mochacinno coffee with 2% milk, topped with shaved chocolate to celebrate, and then I’ll tell you more about The Number.”

Once sitting, Margaret continues. “I’m not that great with words sometimes, so I’ll just tell you my story and you take it from there, ok?”

Paul nods, takes a sip. The coffee is really good.

Margaret starts. “I was able to figure out how much I needed to retire on by the amount that I spent. It wasn’t fancy, the calculation, you know. Hydro cost $200 a month, groceries around $400 or so, gas was another $150 and then there were the other things like gifts, wine, cigars, trips, etc.

“I took an average of the monthly costs on each item over 2 years, and found that I needed $45,000 a year in my pocket to live very nicely. Then I met with Adena and we calculated how much my portfolio had to generate to match that number. I had to take on some risk in the early years, and over time, as my dividends grew, that risk diminished.

“I really think that it boils down to managing your future, which is an extension of your present. Everyone’s plunking numbers into a computer yet their numbers are all over the board. No one else really knows how much you need.

“I always say: spend less, save more and make more returns on the money you have, or you’ll simply have to work longer. Never spend more than what you have.”

“You’ve certainly got the investment side of it growing nicely,” remarks Paul.

“That’s the best part,” Margaret plops her hands into her lap decisively, “Because my income grows every year, I don’t even need to look at market values anymore. My plan only focuses on rising dividends. It doesn’t get much better than that.”

Paul is quiet, again.

“It is interesting watching people,” Margaret continues. “How they shop, where they eat, and book their vacations. I pride myself on spending my money efficiently. Keeping track of my expenses means I’m very aware of how much is going out. That in turn automatically means I spend less. And if I spend less, my portfolio needs to make less. And if it needs to make less, I have more time to do what I like: research trips and vacations, find great places to shop, to eat and buy gifts. It’s more of a mindset. Not everyone thinks like this.”

Then she drops her bombshell: ““It all boils down to controlling one’s expenses; including how much you spend on taxes. Did you know that Quebecers can earn $24,000 of dividend income and pay zero tax on it?” Margaret flashes a report triumphantly, like a queen leading a parade. “Not only do dividends grow, they attract fewer taxes.”

Call us at 514-394-3771 for a risk-free, confidential meeting to discuss how you too can enjoy increasing income. You won’t regret it.

The Adena Franz Group has over 16 years’ experience of successful portfolio management and is with the independent firm
MacDougall, MacDougall and MacTier Inc.
1010 de la Gauchetière West, Suite 2000
Montreal, Qc H3B 4J1
Phone: 514-394-3771
Email: ptria@3macs.com

The information contained in this article is for general information purposes only. It does not account for specific investment objectives or the financial situation of any person reading it. Opinions expressed are those of the author and do not necessarily represent the opinions of MacDougall, MacDougall & MacTier Inc. Investors should seek professional advice regarding the appropriateness of investing in any securities discussed or recommended here and should recognize that statements regarding future prospects may not be realized.