Taking Advantage of Opportunities to Retire Early

Dale Jackson retired at the age of 55. He didn’t win the lottery or start his own successful business. He just worked and saved diligently throughout his career as a media journalist, most recently known for writing investment articles for BNN Bloomberg.

He explains how he achieved early retirement in a recent interview. Here are some highlights below.

• Keep an eye out for opportunities

Jackson explains that “opportunities come along for every generation.” Most of the time economic recessions are seen as bad times. But it’s actually an opportunity to speed up the retirement process. Asset values are down so we can buy more stocks at a discount. Interest rates are low so we can pay down the mortgage faster. Another example he points to was in 2011 where the Canadian dollar was worth more than the U.S. dollar. That doesn’t happen often. So with the suggestion of his financial advisor Jackson sold CAD to buy USD and that was one of the best currency trades any Canadian could have made during this past decade.

• Diversify your holdings

Speaking of buying US dollars. It’s not enough to simply hold other currencies. We have to keep our money constantly working. Jackson says that Canada isn’t big enough to make up a diversified portfolio. But the United States is. 🙂 Buying U.S. companies in USD is highly recommended, especially when TFSA and RRSP allow for US dollar accounts. He uses the following graph to explain how over the past 10 years the resource-heavy Canadian stock market index (TSX Composite) has advanced only 55% while the S&P 500 in the U.S. has more than tripled in value! Uh oh. Poor Canadians.

• Own your own home

Jackson believes that real estate is arguably the best long-term investment for most Canadians. According to the CMHC, the average Canadian residential property has appreciated in value by over 5% annually over the past 30 years. And if someone owns a primary residence, then all of that capital appreciation would be tax exempt. 🙂

• Watch out for fees

Be mindful of what fees are associated with each investment. As a general rule Jackson says investors shouldn’t be paying more than 3% for their fees.

I’m glad to see a middle class guy using practical financial means to achieve an early retirement without earning a CEO level salary. I use all 4 strategies he mentioned above, and they are very effective. Usually around 40% to 50% of my stock portfolio is in U.S. equities. So my portfolio return over the years has been very rewarding thanks to my heavy exposure to the U.S. market. 🙂

That’s why investing is so amazing. It doesn’t care about your race, gender, or political views. If you practice the behaviors of long term successful investors then you will be on the road to prosperity. The only thing in common between everyone who bought the S&P 500 ten years ago, was that they bought it ten years ago. And if they held it until today, they would be 3 times richer. 🙂 Overall I agree with Jackson’s general rules to reach early retirement, and I hope more people can be inspired and reach their financial goals as well.

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