The Allies of F.I.R.E. – Income Building

There are precisely two controllable ways that a diligent dragon can go about adding gold to their hoard:

  1. Increasing their income, and
  2. Decreasing their expenses.

This, of course, assumes that when your income increases, you don’t immediately also increase your expenses, because adding income and adding expenses generally nets out to a zero effect. This is called “lifestyle creep”, and we’ll talk about why this is a bad thing and how to avoid it in a later post.

Of the two ways to add gold to the hoard, increasing income is undoubtedly the easier of the two. Decreasing expenses generally involves a sacrifice of some kind, such as moving to a smaller lair, or cutting down on fancy meals, or selling an expensive car and buying a more practical, cheaper model. On top of that, decreasing expenses has limits. I could, of course, move out of my apartment and live in my car – that would save me $1,500 or more a month. However, there would be multiple unacceptable trade-offs – potential to freeze to death, nowhere to store food, nowhere to shower, a probability that I’d lose my job due to being unable to present myself professionally, etc. As such, decreasing expenses can be impossible at a certain point – frugality only goes so far.

Increasing income, on the other hand, has absolutely no limits. As long as your creativity and determination persist, there is always a way to make more money. For example, consider the following:

  1. Asking for a raise at work,
  2. Working overtime,
  3. Getting a second job,
  4. Starting a side-business,
  5. Selling items you own but never use,
  6. Switching to a higher-paid field, or
  7. Renting out a spare room.

These are just some ideas out of a possible list of hundreds, but they make my point – the only limit to your income is your own drive and your own ideas. Let’s go into further detail.

Asking for a Raise

In some cases, you may not even need to ask. For instance, in my workplace, salaries receive regular reviews every September based on an annual employee evaluation. If you performed well, the raise can be quite substantial. If you performed less well, there is still a raise, but it might be significantly less, designed to combat inflation and nothing more. However, if your workplace is less structured, or you feel the structure is not working fairly, you may need to ask for a raise, and argue for it.

Regardless of whether the process is automatic or requires initiation, there is one thing you’ll need to do: Sell yourself.

And no, I don’t mean into slavery; that would defeat the whole purpose of F.I.R.E. More Daenerys, less Unsullied, okay? Here, I mean self-advertising, self-promotion, the act of painting yourself in the best possible light. If you have performed exceptionally, this is generally much easier than if you’ve simply been an average employee, but it should be noted that even mediocrity can be made to look exceptional with an adequate amount of charisma. There is a reason that snake-oil salesmen were never truly forced out of business. However, I would generally encourage you to take your parental unit’s advice and “Always do everything to the best of your ability”, because it makes financial rewards much easier to obtain.

In order to maximize that reward, before you go to your employee evaluation, or before you ask for a raise, I would suggest doing the following things:

  1. Make a list of your accomplishments: This can be anything from meeting budgets, hitting a difficult deadline, gaining a new client, changing a workplace item to be more efficient, surpassing expectations, raising revenues, or anything that could be considered praiseworthy. Often managers and bosses are unaware of these accomplishments, and won’t realize them until you point them out yourself. Be specific as possible, so you’ll be prepared to explain why these accomplishments added value to the business.
  2. Make a list of skills you’ve gained: Maybe you learned a new language, gained a new certification, or made progress towards a professional designation. Maybe you taught yourself to code in a new software, or attended a professional development course that made you a more knowledgeable employee. Maybe you took on parts of someone’s job when they went on leave and became cross-trained in another area of the business. If anything on your resume has changed since the last time you received a raise that is relevant to your job, this can be an important thing to leverage.
  3. Do some compensation research: Get an idea of what people in your field make, using parameters like years of experience, skill sets, and job descriptions. If your old job description doesn’t match your actual work, this may even be an indication that you should ask for a promotion – not just a raise. Having an idea of what you’re worth will allow you to determine whether asking for a raise would be reasonable and what dollar value that would amount to.
  4. Practice the conversation: Put yourself in your manager’s or boss’s shoes and imagine responses and questions they might ask, then formulate responses. This will help make both you and your boss more comfortable in the conversation.
  5. Don’t use idle threats: Threatening to leave when you have no intention of leaving or nowhere to go is not going to take you far, and may backfire. If you’re going to put a threat of quitting on the table, make sure you mean it, and that you know what you’re going to do if you do quit. The compensation research should help you in this regard – if you see a lot of jobs you’re qualified for elsewhere, and you know your firm is understaffed, your threat may hold a lot of weight.
  6. Prepare yourself for “No”: In some cases, it might not be the right time to ask, or your boss may have opinions that differ from yours on your performance. If you are refused a raise, be sure to follow-up and ask what you need to do to be considered for a raise in the future. If your boss can’t answer that question, then it may be possible that you’re facing more than just a monetary issue – prejudice or workplace culture could be the problem, and could indicate that you would be more valued elsewhere.

Conversations about money and compensation tend to be almost taboo in modern cultures. However, while it may seem terrifying to bring up the topic, just remember that everyone is aware that you are here because you need to be paid – money is a natural part of a capitalist society, and learning to talk about it with confidence can be very rewarding. If you are uncomfortable about approaching the topic, consider asking an HR manager or a close workplace friend if there are any channels for revisiting your salary, rather than your manager. They may have insights into the process that will make the task easier to handle before you go to your manager.

I recently used these suggestions to pursue a raise at my own work to great effect, increasing my own salary by 19%. Remember, managers are often unaware of your accomplishments and extra work you’ve been doing. Never underestimate the ability of people to get absorbed in their own lives. It’s generally best to assume people have forgotten you exist when it comes to monetary rewards, even when you know they appreciate you and your work. It just doesn’t come naturally for most managers to look around and ask “Who here needs a raise?” It will likely fall on your shoulders to make them ask that question.

Working Overtime

As I’ve mentioned in this post, overtime has its trade-offs. Another hour of work is an hour you could have spent doing something else, like reading or hiking or teaching your hatchling to tie his shoelaces. However, in most professions, an hour of overtime can also mean anywhere between 1x to 2x a normal hour’s worth of pay.

I have always considered the idea of a 40-hour work-week to be fairly random. From a mathematical perspective, let us consider a day’s worth of time, or 24 hours. We generally need about 8 hours of sleep, so that leaves 16 waking hours. Assuming 2 hours for getting ready for the day, commuting, and getting ready for bed, that leaves 14 hours. After a workday of 8 hours, that leaves 6 hours remaining. Generally, we use an hour of this on a lunch break, another hour making and eating dinner, and then the remaining 4 hours are a free-for-all. TV, reading, sports, gym, hobbies, etc., those are used to fill those last 4 hours. On weekends, a full 16 hours are free.

But what if you could monetize those hours? Working through lunch break is the easiest of these, where your work allows it – an hour on lunch break is still an hour at work, spending it making money doesn’t have much in way of downsides. But what about those extra 4 hours a day? What would those be worth? Depending on your hourly rate, it can be quite substantial. In my case, an extra 5 hours of work a day is over an extra $150. In a month, that could amount to an extra $3,000. If I were in a profession that required 1.5X or 2X overtime payout, it would be worth even more.

However, this is generally considered unsustainable. Why? Because even dragons are frail creatures, and exhaustion and burnout are nothing to laugh at. However, in general, I found I was able to sustainably manage to work for 11 hours a day, 5 days a week, by working through lunch break and trading in 2 of my free hours for more pay. I would generally also work 5 hours on Saturdays. I did not perceive a significant decrease in my overall well-being or my work productivity from working 60-hour weeks. In fact, I generally felt fairly good about my life because the pay was quite worth it, and I still had (albeit shorter) evenings and a day and a half every weekend to do what I liked. I also learned to free up more time by making my morning routine more efficient and making batches of food so as to cut down on cooking every day, routines which I have kept even though I no longer work as much overtime in the off-season.

(I also briefly experimented with cutting down sleep to 6 hours a night, but this had definite negative effects and I would not recommend it).

I imagine there would be further trade-offs to consider for someone who had bond-mates or hatchlings or pets or demanding extra-curriculars, but that is not my point. My point is that we are definitely capable of working more than 40 hours a week, and the only one preventing you from doing so is yourself.

Additionally, to give you a bit of history, the 40-hour work week has only been around for about a century. According to this article, 10-16 hour shifts used to be the norm, before Henry Ford, the automobile creator, decided to switch it up and move his workers to 8-hour shifts. His reasoning? So they had more time to spend money. Ford’s actions were not the first, but Ford was the largest company to cut down work hours. Then, in 1940, according to Business Insider, the 40-hour work-week was mandated by American Congress. Apparently, it seems, in a quest to encourage capitalism.

With this in mind, I would encourage you to test it out and see whether working beyond the 9-to-5 is worth it to you in your quest for F.I.R.E. And if you are unable to get paid overtime at work, there is always another option…

Getting a Second Job

Second jobs are generally considered the purview of students and the lower class. Which is unfortunate and rather classist, as this is definitely a feasible way to earn extra money. You may not always be able to pick up a job in the same field, due to non-compete clauses in your employment contract, but there are many types of work with flexible hours that do actually compensate fairly well, such as bartending, freelancing and pizza delivery. Of course, “fairly well” is relative, and this may not be as feasible for people with higher salaries than entry-level.

There can also be interesting money making opportunities that your work may even encourage. For instance, the CPA profession has its own professional development requirements of 20 hours a year. The CPA body needs people to teach these courses, and classically, they need CPAs to come teach them. Many accounting firms consider this to be a good way to build soft skills, generate larger professional networks, and get the firm’s name out, so it’s a win-win. More money for the CPA, more skills and potential for growth in the firm.

Similar opportunities may exist in your profession, so make sure to look around and see what precisely is available to you. For instance, I was recently contracted to mark the CPA certification exam, which will earn me an extra $5,400 over two weeks, and my employer was willing enough to give me the time off using my banked overtime hours. Keep your eyes open!

Starting a Side-Business

A side business, or “hustle”, is also a valid way to earn extra money on the side. Often, side hustles are the brainchild of your hobbies. You like writing? Start a blog, maybe it’ll earn money (haha, not this one though). Or write a book, and maybe it’ll get published (persistence required here, Rowling herself was turned down 12 times). You like paper crafts? Make handmade cards and sell them on Etsy. Good at drawing or making comics? See if people are willing to give you commissions. Or maybe you do leatherwork, or calligraphy, or coding, or baking… all of these can be monetized, if you’re willing to put in a bit of time and effort.

In some cases, something that starts out as a hobby that maybe earns a bit of money can turn into a full on business, to the point that you really can’t call it a “side” business anymore. As an accountant, I have seen many a client who has quit their day job because of a hustle that took off. It’s all a case of supplying to demand and learning how to meet customer needs.

However, I do warn the danger of turning your hobby, something you love, into something you do for a living. You may hate it by the end!

Selling Stuff You Own But Never Use

Ahhhh, capitalism! Us dragons are the worst offenders of all. Oh we hoard, yes we do. We find those shiny new things and we pile them up, up, up into a massive nest, and then we cover them in more things and forget the old things exist.

Are you guilty of this? I sure am. I have to rifle through my packed-full closet on a biannual basis and toss things into a donation bin, and every time I move I swear there’s a larger and larger truck involved.

Donating is convenient, isn’t it? There are clothing bins on corners, a Salvation Army and Value Village in every town, there’s that drop-off point in the alley behind the thrift store that’s just perfectly on the way to work. It’s almost too convenient. And taking advantage of that convenience may very well be losing you cash.

Maybe you have a garage, or a garden shed, or an attic, or a closet in a guest bedroom, that’s just full of stuff that you’ve put away for a rainy day. Out of sight and out of mind. However, if you never use the thing, what’s the harm in throwing a garage sale, or even just taking a picture and throwing it up on Craigslist or Kijiji or Castanet? Make them come to you and pick it up, and it might very well be the easiest $10, $50, or maybe $100 or more you’ve ever made, all for something you’ll never actually miss.

What’s that colloquialism people say? “Does it spark joy, Janet?!” I don’t really hold with that sheeple nonsense about decluttering, but even dragon hoards need a little spring cleaning sometimes. Might as well build the gold hoard while you lose the consumerist one! And if it really doesn’t spark joy, you can always set it on fire, I suppose.

Switching to a Higher-Paid Field

Career moves are stressful. No one is arguing that one. Generally not all of your skills are transferable, and riding a learning curve later in life is always much harder than it was in your twenties. Maybe you’ll have to go back to school, or get training. Maybe you’ll have to compete with bright little barely-grown dragons on the interview floor. All of these things can seem like insurmountable barriers, but getting past those barriers may very well be what is required to get you on the path to F.I.R.E.

Let’s try a story. Once upon a time, there was a depressed dragon who worked an entry-level warehouse job in the great city of Vanaheim. After years of service to the great corporate entity who ruled the warehouse, our depressed friend scraped by on barely any savings, his meager wage eaten by his rent and food, with no hoard to speak of, which only made him more depressed. Years later, he retired on the pitiful public stipend known as the Canadian Pity Pennies, and died soon after, with not a single shiny gold coin to pay his passage to the afterlife. He drifted in the never-ether, for all eternity, screaming in the dark. The End.

Did I say this was a happy story? No. No, I did not.

But here’s a plot-twist. What if, instead, our depressed friend had discovered this blog, even in his late adult dragonhood, and considered his future? With a change of heart, this dragon returned to the halls of learning, emerged with a professional plumber certificate and a slight amount of debt, but built his hoard, and retired within 10-15 years. Many years later, he would hand a gold coin to the Keeper of death’s doors and enjoy a comfortable afterlife in dragon heaven.

See, this is a happier story, and it all comes to one thing: Return on Investment. Changing careers has to make sense from a financial perspective. If you have to go back to school, it is entirely necessary that you research the demand for staff and the salaries of the profession. When making a switch later in life, you want to make sure that when you graduate, you are employable, not just on paper, but economically as well. There must be a need in the market for you to fill.

However, you will not be alone, no matter how intimidating it might be to return to the halls of learning over-run by hormone-ridden juveniles. Many people return to school later in life, and there are always online classes, and night classes.

And you’d be surprised how little time it takes to earn a trade certificate, and also how little it costs. I still smoke a bit at the nostrils when I think about my sibling’s bondmate, who paid less than me for school (in fact I believe between grants and co-op earnings he made money off it), spent less time in school, and still made more than me when he got out. Admittedly my earnings have greater growth potential, but his salaries are not anything to scoff at.

And while it takes longer, medical, financial, accountancy and other similar degrees can and programs can also have very high return on investment. The investment just may be higher than a trade would be.

Renting Out a Spare Room

Admittedly, if you have extra space, it might make much better financial sense to just downsize, but there are situations where that isn’t true. For instance, if you have been locked in at the government mandated rent increases for years, while the local rental market has been in a crazy bubble, it may be more expensive to rent something smaller than what you already have. My parental units have this exact problem. Or perhaps you bought at a low point and your ownership costs are much less than buying or renting a smaller place.

In any case, if it doesn’t make sense to downsize and save money that way, it might be a good idea to utilize the extra space for something other than a guest room that’s used twice a year or a place to store the gym equipment you said you were going to use and then never did. And if you have a second bathroom that you also never use… welllll…

Roommates really aren’t that bad. Typically, you’ve been living with someone your whole life. Us dragons are pack animals. We exist in family units inside family dwellings. We have parental units and siblings and bondmates and hatchlings and friends. We are inherently used to sharing space, and our psyches are inherently built for it.

Sharing space with strangers may sound like a different story, but really, it’s often easier. A roommate probably won’t blatantly steal your favourite necklace, like your sibling might. They probably won’t “borrow” your car, or eat your leftover pad thai, or track mud on the floor, like your hatchling might. And yes, there are bad roommates, but there are also good, decent roommates, who understand the social requirements of sharing space and know to do their own dishes and clean up their own messes. Not everything is a soap opera or TV show, incidentally.

So if you have the space, consider monetizing it. You could get a full-time annual-lease roommate. You could put up a student during the school year. Shards, if you don’t want a long term commitment and live in a touristy enough place, you can even consider an Air BnB. Just check your local rental ads, determine a reasonable price, post your room on a rental board, and do a thorough interview.

And remember, at least in BC, there is generally no law that can force you to share space with someone in a normal renting out a room situation. Roommate leases where the roommate lives with the landlord are way different than normal leases, and can be broken at any time, if you share a bathroom or a kitchen. So what is there to lose?

And what about that cousin or sibling or friend of yours that seems just a bit lonely? Roommates also don’t have to be strangers.


The key thing to remember here is that increasing your income (and thereby increasing your hoard and someday reaching F.I.R.E.) is limited only to your imagination and your persistence.

So write a business plan, list some of your monetizable skills, consider job fields that are gasping for employees, check the dust levels of your guestroom. Find that city over the hill you could raid for gold (okay not literally, stealing is bad, but moving is an option too). Be a dragon!


How to Start Your Hoard

Surely one must be a large, strong, vicious dragon to start building a hoard, you’d think. Surely fire-breathing will be necessary, angry growly noises will need to become your first language, and hours will be dedicated to sharpening those razor sharp claws. After all, it’s not like some tiny, smoke-spewing, pale-scaled wyrm could survive the stock market, right?

As it turns out, you’d be wrong!

And that, right there, is the very first hurdle that you’ll need to spread your wings and hop right on over.

I’ve had many conversations with many fellow dragonkind, from juveniles still itchy from their fast-growing scales to elder dragons with spikes the size of lances. Surprisingly, fear of the unknown does not discriminate against age. But let’s make this entirely clear:

“Investing is not actually that hard.”

Shock! Horror! Surely not!

It is a very common misconception, and one that everyone would be better off without. Yes, investing seems scary, the stock market seems complicated, it all seems very daunting. But really, once you have the basics covered, there’s really not much of a learning curve. You put money in, you top up your stocks, and you log out.

It’s not like you have to pillage a dwarven city, kill its inhabitants, and then spend the next century angrily spewing smoke signals to keep the riff raff out. That would be complicated. And possibly deadly.

However, there are ways that you can make investing deadly, and there’s a very simple way to avoid this: Accept the fact that you are ordinary.

Accept your fate! Accept it! Can you predict fortune cookies? Do you have an anti-ESP result to predicative card games? Do you have dreams that come true? Do you win the lottery on a weekly basis? No? THEN DON’T TRY TO PICK STOCKS. You will fail, you will lose your entire hoard, your castle, your bond-mate, and then some story-teller will shoot you with a massive arrow, just to top it off. Seriously! Just don’t!

The stock market, on average, makes 7% a year, just by existing. The economy chugs forward, dragonkind makes advancements, inflation happens, and the stocks, on average, just keep going up. This is on a long-term basis, but that’s what good investing is:

  1. Long-term – go for the long-haul, there is no such thing as getting rich quick
  2. Diversified – buy the whole market, and you’ll make that same 7% return
  3. Balanced – have both the stocks that grow and the steady ones that rarely falter

Good investing, which does not in any way involve stock picking, is not scary. It’s easy, it’s routine, and cheap. It doesn’t involve banks, or an advisor. It involves buying the whole market, getting the 7% at very low risk, and living your life just as you already do.

But how do I buy the whole market, you ask? Surely that’d mean you already need to have a hoard the size of a dwarven city!

As a matter of fact, no it does not, because of one beautiful thing: index fund ETFs.

You’ve probably heard of mutual funds – big bundles of stocks that the banks hoard, but they’ll sell you a small slice of it (for a fee, of course!). ETFs, or “Electronically-Traded Funds” are a lot like mutual funds, except for a few key differences:

  • They don’t have managers, so you’re not paying the exorbitant fee for some bank-mad idiot who probably can’t predict the stock market anyway (there have actually been studies where literal monkeys choosing at random do just as good in the stock market as so-called “experts”), and
  • They’re computer-run, they automatically pick up new stocks, and therefore they remain consistently balanced, never “missing out” on any part of the stock market.

ETFs still pay dividends, they’re still publically traded, and they’re way cheaper than mutual funds, usually charging an MER (management expense ratio) of a fraction of a percent, compared to the 2-3% charged by most mutual funds. And in a stock market that makes 6 or 7%, cutting out 2-3% can be a severe drain on overall portfolio growth.

In fact, if you need a million to retire, you put in $10,000 a year, and you only make 4% versus 7%, this is what it can look like:

Years to Retirement at Different Growth Rates

At 7%, it takes 30 years to retire. At 4%? Forty-one years, or eleven years longer. In short, that MER can have significant consequences over the long-term. And this is why, overall, I very strongly recommend ETFs over all other kinds of investing.

But let’s get back to the bare bones of what we’re doing here.

The Basics:

Building your hoard is a fairly straightforward process, which can be broken down into five steps:

  1. Open an investment account.
  2. Choose your risk allocation.
  3. Choose your ETF allocation.
  4. Buy your stocks.
  5. Wait, and repeat step 4 on a regular basis, topping up each ETF based on your allocation in Step 3.

Slowly but surely, over years of repeating this process (and hopefully putting in increasingly more gold) your hoard will get bigger and bigger, until it gets to the point where you can retire. You’ll never have to rely on a bank manager, or risk losing all your money. And at the end, if you want, you can take it all out, convert it into gold, and then curl up and sleep on top of it for a couple of days, just for the sheer pleasure.

…I take that back, that’s a good way to attract dwarves. And you know, get killed violently. Moving on…

STEP 1: Opening an Account

This can actually be one of the most daunting parts of starting your hoard, if only for the massive number of options that are available. But before you begin a Google search, which will ultimately scare you off, let me break it down. There are two main types of investment platforms:

  1. Bank-owned investing platforms, such as TD WebBroker, Scotia iTrade, or BMO InvestorLine, and
  2. Dedicated investing platforms, such as Questrade and Qtrade Investing.

The main difference between the two is this: One is primarily a bank. The other is primarily a broker. Banks are large, diversified, and tend to offer their investing platforms as a side-business to their bank accounts and mortgage operations. Dedicated brokers, however, are primarily about helping people invest, and so they tend to win the awards for best user experience, best customer service, and best fees. Banks generally also charge more than dedicated brokers, though this is not always the case.

If I were to recommend one investing platform over all others, I would recommend Questrade, for many reasons:

  1. Incredibly user friendly,
  2. Easy to put money in (just like any other bill payment),
  3. Easy to open an account, or multiple accounts,
  4. Excellent monthly reporting,
  5. No monthly fees if you’re under 25 or carry over $5,000,
  6. Buying ETFs is free, no commission, and
  7. Carrying both USD and CAD is hassle-free, no extra fees.

I have considered a TD WebBroker account simply due to the convenience of being combined with my banking, but it has yet to be able to beat out the advantage of absolutely no fees.

Once the trading platform is chosen (I recommend reading some reviews if you are unsure), the next steps are easier. You simply go to the bank branch or website of your choice, and you fill out the forms and hand over the appropriate information to prove you are who you say you are. Then, you choose your account. This, again, can seem daunting, but there are three main kinds of investment accounts:

  1. Tax exempt accounts – such as the TFSA or Roth IRA
  2. Tax-deferred accounts – such as the RRSP or traditional IRA
  3. Taxable accounts

For the average person making the average salary, it is best to first max out your tax-exempt accounts (which you can use as emergency savings and pull from whenever you need), and then max out your tax-deferred accounts (which you can’t without paying tax), before you ever open a taxable account. For a Canadian, this means that you max out your TFSA, then your RRSP, and then you open a taxable account. So, wherever you are in that progression, open the account you need.

Just make sure you choose a direct-investing account, and not a managed account, because the whole point of this is to be your own DIY expert in investing.

You might have to wait a few days for everything to be set up, but that isn’t a big deal, because you’ll need time to….

STEP 2: Choose Your Risk Allocation

I know I said that ETFs are low-risk, but that doesn’t mean no-risk. This is because ETFs come in big baskets of similar stocks. For instance, you could choose an ETF that holds bonds. Bonds are very stable, very safe investments. They pay very little in dividends, but they always pay dividends. They are dependable.

On the other hand, you can also choose an ETF that holds high-growth American REITS (Real Estate Investment Trusts). Real estate is sometimes a bit wobbly, it can pay huge dividends in some years and barely force out a trickle in others. They are riskier, but they also have more potential for growth. Bonds don’t grow. They just sit there. Like rocks. Really stable, valuable rocks.

In short, most ETFs can be classified into two different categories:

  1. SAFE  – which consists of dependable, low-return things like bonds and preferred shares, and
  2. GROWTH – which consists of fluctuating stocks that can grow a lot in value, like REITs and equities.

Your risk allocation, which is your own to choose, is simply the percentage of SAFE versus GROWTH ETFs that you’d like to hold. As an example, a 40:60 ratio of safe to growth is considered a fairly conservative, safe risk allocation, which is recommended by most investment advisors for those in their mid-30s and up. If you’re younger (and therefore have more time in which to accidentally lose money and make it back later), you could consider a riskier ratio, such as 20:80 safe to growth. If you’re an elder dragon just retired to a nice desolate castle and worried about the longevity of your hoard, a 60:40 allocation might be better.

As a 22-year-old juvenile dragon, I could probably slot myself into the “young and reckless” category, but part of me freaks out at the idea of losing up to 50% of my hoard if the economy tanks, and so, like a 50-year-old, I actually do hold a nice, conservative 40:60 risk allocation. Which, might I add, still makes 6-7% a year in returns. And I have not, at any point, despite Trump and Brexit, lost any money at all.

Once you have your risk allocation decided, next up is:

STEP 3: Choose Your ETF Allocation

Essentially, the idea here is to pick ETF categories that match into your risk allocation that you picked above, while also diversifying on a global scale. To give you an idea of what that looks like, here is my basic allocation:



Government Bonds 8%
Corporate Bonds 7%
High-Yield Bonds 5%
Preferred Shares 20%


Canadian REITs 5%
American REITs 10%
International REITS 5%
Canadian Equities 19%
American Equities 14%
International Equities 7%

To be clear, your allocation can be more complicated or less complicated than the one above (more complicated is easier if you have more cash to buy with). For instance, you could choose to buy exactly two ETFs (this is called a “couch potato” portfolio, but is a very valid investment strategy), one that is safe, and one that is growth, such as a Preferred Share ETF and a Global Equity ETF.

Once that’s done, it’s just a matter of choosing specific ETF stocks that fit into the category that you want. My way of doing this involved a spreadsheet with different tabs for each category, while I did a couple hours of Googling and wrote down every ETF I could find in each category. I then sorted them based on their dividend payout rates and MERs and chose the ones with the highest dividend payout rates and the lowest MERs (logically, the highest return).

My information would be two years out of date and not especially useful, so I recommend that you do a similar search. Regardless of what you choose, ETFs rarely lose money over the long-term, and there is no “wrong” choice as long as you are choosing a diversified enough category. For instance, if you buy an ETF that specializes in British Columbia wineries, this will be much higher risk than a buying a Vanguard or iShares ETF that holds a huge number of American corporate growth equities.

I am somewhat preferential towards iShares and Vanguard ETFs, which are strong dividend-payers, and also to anything that specifically has “Index” or “Index Fund” in the name. However, your own research will indicate what you prefer, and I encourage you not to be scared by the influx of information. Look for these four things and these things only:

  1. The name and symbol of the ETF,
  2. The “dividend payout ratio” or the “dividend yield” or “yield”,
  3. The MER, or sometimes just “Expense Ratio”, and
  4. The price per share, which will be relevant when calculating how many to buy.

For an average investor, those are the only things you need to care about. Everything else is just window-dressing. Once you have your stocks and your allocations, it’s on to…

STEP 4: Buy Your Stocks

The first and most important part of this is actually putting money in your account. It can be as little or as much as you want, though some brokers have a limit that requires an initial $1,000 minimum deposit. Once you can see the money in the account, it’s off to the races.

Main things to remember when buying stocks:

  1. When you calculate how many stocks to buy, make sure you convert any USD shares into CAD, or you may find yourself with the incorrect allocation.
  2. It is best to buy stocks when the stock market is open (9:30AM to 4:00PM Eastern Time on weekdays, or 6:30AM to 1:00PM in B.C., where I live). In off-hours, sometimes there are restrictions where you are required to buy in “board-lot” sizes, which is generally either increments of 10 or 100 shares. This can also mess up your allocation.
  3. Leave yourself a bit of wiggle room if you are exchanging currencies, as exchange rates sometimes change and having a buy-order denied due to lack of funds is never a fun thing.

And the next part is easy. Take the cash you’re putting in, multiply it by your allocations, and divide by the ETF’s price to get the number of ETFs you are buying. For example, if I have $1,000 and I’m buying 40% of ETF 1, which costs $5.50, and 60% of ETF 2, which costs $14.75, I might do the following:

$1,000 – $25 (wiggle room) = $975

For ETF 1 = $975 *40% = $390/$5.50 = 71 stocks

For ETF 2 = $975 *60% = $585/$14.75 = 40 stocks

Due to rounding, I will end up spending $980.50 and having $19.50 in cash left sitting in my account (less than the wiggle room, which is why the wiggle room is important). Just make sure you use the price that is in the currency you are spending when doing these calculations.

Once that’s done, it’s just a matter of pressing buttons. In Questrade, for instance, I would:

  1. Log into the trading platform,
  2. Click “Buy/Sell”,
  3. Type in the Symbol for the ETF I am buying,
  4. Type in the amount of shares I’m buying,
  5. Choose the “Market” option as I just want to buy the stocks at the price the market is selling them for, and
  6. Click Buy.

Almost instantly, during trading hours, you will receive an “Order Filled!” notification that tells you that you are now the proud owner of an ETF. And that’s it, you have successfully invested!

STEP 5: Rinse and Repeat

Over the next few days after undertaking Step 4, you’ll probably feel an overwhelming urge to constantly log in and check on your investments. I encourage you not to. Investing is meant to be passive, and long-term. The ups and downs of a day are generally nothing over the long scheme of things. Log out, have a barrel of liquor of your choice, take a nice relaxing flight outside, maybe roast some knights, and continue with your life. At next month’s paycheque, that will be the time when you can log in again, because it’ll be time to put in more cash and top up your investments.

Time to build that hoard! Some prefer to do biannual or annual investments, but I generally prefer to get the cash out of my bank account and into the hoard ASAP, if only to avoid spending it on books or shiny things.

…I have a dragonish weakness for shiny things….

So go on and log back in. If you bought an ETF that pays monthly dividends (some pay quarterly and some annually), you might actually see that your cash balance has increased as well, like magic. Once you’ve put in your new investment, you should remember to add the current cash balance to the new deposit, and then it’s back to the calculations.

This time, you’ll need to add up the market value of your ETFs plus your cash balance. Lets say your stocks from Step 4 are now worth $995, and you have an initial $25 in cash (yay dividends!) plus another $200 that you’re putting in. That means your total amount is $1,220. Again, we have to multiply this by the allocation rates:

$1,220 – $25 (wiggle room) = $1,195

For ETF 1 = $1,195 *40% = $478

For ETF 2 = $1,195 *60% = $717

However, we already have stocks, so we can’t just divide this by the current stock price and buy more stocks – we wouldn’t have enough cash. So, instead, we have to deduct our current ETF values from the amount we want. Let’s say our 71 stocks in ETF 1 are now worth $400 and the 40 ETF 2 stocks are worth $595, and their prices haven’t changed.

For ETF 1 = $1,195 *40% = $478 – $400 = $78/$5.50 = 14 stocks

For ETF 2 = $1,195 *60% = $717 – $595 = $122/$14.75 = 8 stocks

We buy these, spending $195 (leaving $25 in our cash account as buffer), and we’re back to our same allocation. In some cases, you might need to sell some stocks and buy more of the other to get back to the correct allocation, and this is also fine.

And that’s it! If this same process is repeated, and more and more cash is funneled in throughout your lifetime, eventually, you will reach a point where your hoard is large enough to truly be a hoard! It might be a retirement hoard, a new-hatchling hoard, a fly-free-and-travel-the-world hoard, but it will be yours, to do with as you please.

With an initial bit of courage and some dedication, yes, even tiny, smoke-spewing, pale-scaled wyrms can have a hoard that would make Smaug red with jealousy.

Wait, isn’t he already red?

We must be doing well then!!!