FIRE Canada Interview #4 – Cash flow is the oxygen of financial independence

Over the last year, I have the chance to interview a number of Canadians that have reached financial independence retire early. These interviewees have all provided great insight into how they managed to become financially independent at a young age and the path they took to reach this important financial milestone. What I really enjoyed are all the unique Canadian perspectives these interviewees provided.

So I intend to turn the interviews into a series where I interview Canadians that have reached financial independence, retired early, or are totally financially independent retired early.

I came across today’s interviewee on Reddit. I was so impressed by his response to a Reddit thread that I couldn’t help but reach out to him and asked for an interview. It was a surprise that he told me that he reads this blog.

Without further ado, let’s get the interview started!

Table of Contents

Q1. It is amazing to hear that you have reached financial independence at age 44 while living in Toronto, one of the most expensive cities in Canada. When did you become interested in personal finance and realized that financial independence retire early is possible?

The Millionaire Next Door was published in the same year I started University. Around the same time, I discovered the Motley Fool’s Living Below Your Means message board.

Between, this and my finance and accounting classes in business school, I started learning about saving and investing.

It was in my Finance 100 class that I first learned about the magic of compound interest and realized that FI is possible.

The Time Value of Money equation is the E=mc2 of FI.

Q2. You mentioned that you are making a 6-figure salary while your dividend portfolio is generating more passive income than your take-home pay. How does this make you feel knowing that you make more money than some of your company’s executives?

It’s been less than a year since I achieved this milestone so I’m still taking it all in and thinking through what it means.

Growing up, I was taught a very specific life path to “success” (this may sound familiar):

  1. Study hard to get good grades in school
  2. Get a good job
  3. Work hard to get promoted

It’s a path that rarely gets questioned and when I achieved it, I asked what’s next and there really wasn’t an answer, except to get more promotions. Yet I didn’t feel very successful.

I realized that underlying this standard model of success is the implication that one’s identity and self-worth are tied to the company one works for and the title one holds. So a VP is “better” than a Director is “better” than a Manager. This puts one’s life and sense of self in the hands of something outside of ourselves.

When I realized that I could achieve financial success outside of my job, I also realized, why see yourself as [Name], [Title] at [Company], when you could be the CEO of your life. This is a far more noble and worthwhile position, and there is no one more qualified for the job than you.

It’s not easy to change to this way of thinking but there is an advantage: If an executive at work loses their job, they lose their income. I’m going to have an income regardless of whether I have a job or not.

This certainly re-frames the Employer/Employee relationship. Late last year I started a new job and it soon turned out to be a really toxic environment, so I quit without another job in hand. Everyone at the company was shocked, because in the traditional model, one would ever do that, but I did. And within a month I had a new and higher paying job.

Finally, there is a story that comes to mind:

The ancient Greeks told of a philosopher eating bread and lentils for dinner. He was approached by another man, who lived sumptuously by flattering the king. Said the flatterer, “If you would learn to be subservient to the king, you would not have to live on lentils.” The philosopher replied, “If you would learn to live on lentils, you would not have to be subservient to the king.”

Tawcan: I love you brought up the question as [Name], [Title] at [Company], when you could be the CEO of your life. Is it really your life ambition to climb the corporate ladder? Or is it better to be the CEO of your life and find something that will make you content and happy? I think being the CEO of your life is a way better way to approach life.

Q3. Can you tell me about your career path and what are some of the obstacles that you have faced during your financial independence retire early journey?

Sure. Originally, I planned to go into a career in finance but due to the stock market crash in the early 2000’s, I ended up in traditional marketing in a company with a very well-loved brand. From there I realized early on the future potential of digital marketing and over the course of time, shifted my work in that direction and built a strong track record of success for a number of large, well-known companies.

In terms of obstacles, I grew up in a first-generation immigrant family that started out poor, living near Jane and Finch (the area of Toronto with the highest crime and poverty rates). My parents never advanced beyond blue collar jobs and divorced in my early teens. I went to 6 different high schools and graduated University right into a stock market crash and recession. This translated into precarious employment and dead-end jobs. It took until age 28 before I finally had my first “career” job, so I have a lot of empathy for the Millennials struggling to get established, because I lived through it.

But it’s not all bad. I was fortunate that my parents chose Canada, I was born with good intelligence, good health, an innate curiosity and love of learning.

If there is one takeaway for your readers, it’s this: I started my FI journey relatively late in life (at 28) and despite the fact that I made a lot of costly career and financial mistakes, I still managed to FI in 15 years. If I had the knowledge that is available today, I’m sure I could have achieved this in under 10 years. It’s not too late to start and the knowledge available now can shorten your path.

Tawcan: Both of our families came to Canada as immigrants. Immigrants sure face a number of challenges in a new country, but many of them are also very driven to create a new life.

Q4. You are still working although you are financially independent. Has the meaning of work changed since FI? Do you find yourself enjoy work more?

When I was younger, my identity and self-worth were wrapped up in my career. I worked as if I was the “owner” of the company, and this was a double-edged sword. On one hand, it made me very invested in achieving success for the company but on the other hand, such efforts are not necessarily recognized or rewarded.

I once built a system for a company on my own initiative that every year in perpetuity would generate $300K of value. For that, I didn’t get a thank you, I received a $2,000 raise that year (this did not even match inflation), and later that year I was unceremoniously laid off.

These days, I am very aware that I am the CEO of my life, and that comes first. While I do earn a good salary, I am capable of operating at a higher level, but from a cost/benefit point of view, I will no longer let my job be my life. If I’m going to build something that is going to generate significant value, it will be for me, not for someone else.


Q5. Do you think you will continue working for the next 10 years?

If I were to answer mathematically, no. My RRSP (the US equivalent is the 401k) has already reached a level where at some point, I will have to stop working for tax reasons in order to melt it down. Also, while I have achieved FI, I haven’t hit my target number yet. This will be achieved in the next 3-4 years.

If were to answer emotionally, I have a Type A personality and I’m still in the process of understanding my point of Enough.


Q6. What is your investing style? Sounds like you are investing in dividend growth stocks like us. Can you explain your methodology in terms of picking dividend stocks? What is your investment philosophy?

I think what we do is very similar, though I would call what I do Dividend Cash Flow. This differs from Dividend Growth in that instead of buying a company and hoping/waiting for the dividend to grow, I buy companies that already pay out strong dividend cash flow, even if the growth rate is lower.

Why? Doing some back-of-the-napkin math, if you had a choice between Stock A that had a 3% yield with a dividend growth rate of 7% vs. Stock B with a 7.5% yield and a 0% growth rate, it would take almost 20 years for Stock A to start paying the same level of dividends as Stock B, and during that time you would have collected over 40% more cash flow from Stock B.

Cash flow is the oxygen of FI.

In terms of picking companies, I ask myself the question, “In 20 years, will people still be doing [X]?”

For example, if I think in 20 years people will still be renting apartments to live in, I would buy residential REITs. If I think in 20 years people will still be eating pizza, I may buy a pizza company. Or if in 20 years I think less people will work in offices, I would avoid office REITs.

I also avoid certain industries completely such as energy and mining, as their stock price is based on spot pricing of commodities, something that the company itself has zero control over.

In short, I’m looking for companies with strong cash flow in a durable industry, and I collect dividends the way a landlord collects rent.

Tawcan: Interesting. We are buying a mix of low yield high growth and high yield low growth stocks. I really like your question of “in 20 years, will people still be doing [X]?” That’s the similar question I ask myself when I build my dividend city.

Q7. Do you rent or did you buy a property in Toronto? What was your rationale behind your decision? If you performed any calculations, please share with us.

I rent a modern bachelor condo right in the downtown core of Toronto that’s less than 3 years old. I’ve been in this condo for 2.5 years now and the market rents have gone up a lot during this time. Fortunately, my landlady has not raised my rent by very much.

The rent vs. buy decision was easy. The numbers were so out of line that doing the math wasn’t even necessary but out of curiosity, I went through the exercise:

Right now, to buy the same condo I rent would cost $425K CAD.

If I took out $425K from my portfolio to pay for the condo with cash (let’s assume no tax implications), the opportunity cost is the yield-on-cost of my dividends on that money.

Let’s use a 7.5% dividend yield-on-cost in the calculations (my actual is higher).

$425K x 7.5% divided by 12 months = $2,656 per month in dividends.

My current rent is $1,270 per month.

So without even factoring the negative cash flow of maintenance fees and property taxes, the math is strongly in favour of renting.


Q8. What are your thoughts on cannabis stocks and cryptocurrency? Have you invested money in them? If not, do you ever you feel that you have left money on the table?

My theory on any given currency is that there are 3 components that make up its value:

  1. The productive capacity of the country of origin (as measured by GDP)
  2. The taxing power of its government
  3. Confidence in the currency itself

The first two components are the intrinsic value of a currency, of which in the case of cryptos, there is none. And the third component is emotion driven. IMO investing based purely on emotions is not a sustainable investing model.

As for cannabis stocks, while it could be argued that people will still be using cannabis in 20 years, there are currently no companies that generate strong cash flow at a reasonable value. When there are, I will certainly take a look. This could very well be the next Phillip Morris (one of the best-performing stocks of all time), but I’m not going to pay prices for it.

When I first started investing, I was seduced by the huge capital gains potential of dotcom stocks and on the other side of the coin, the crushing volatility. I made and lost a lot of money (mostly lost). At some point, I found a way of investing that matched my temperament and was successful for me.

I now collect more in dividends in a year than someone bringing home a 6-figure income. So the desire for the mirage of quick uncertain gains at high risk has been replaced by the joy of buying great companies and watching certain cash flows come in like clockwork every month.


Q9. Since you are FI but working, are you spending 100% of the working income on expenses? Or are you still saving and purchasing dividend stocks to increase your retirement margin of safety?

I spend less than 50% of my income on expenses, so my savings rate is over 50%. I use the savings to purchase more dividend stocks and I re-invest all dividends. Because I have not spent any of this money before, this money still feels theoretical, like numbers in a video game, rather than real dollars that one works for. This is something I am still in the process of coming to terms with.


Q10. Are you taking advantage of tax-sheltered accounts like RRSP and TFSA? Do you plan to withdraw early from RRSP before age 71? If so, do you have any early withdrawal strategies? 

I’m enrolled in my company RRSP because of the matching plan so that’s free money. Plus I max out my RRSP to bring down my taxes.

I plan to do an RRSP meltdown at some point, and will need to quit working in order to do so.


Q11. Do you keep it a secret to co-workers and friends that you are financially independent? Do they feel uncomfortable whenever you share with them about your financial success? If so, why do you think money is such a taboo subject in society?

Only a few very close friends know. When I want to tell someone, what I try to do is start with more easily relatable subjects such as getting out of debt, living below one’s means and maxing out one’s TFSA or RRSP, and scale up from there. I soon realized most people couldn’t even handle these subjects so I knew talking about FI is not a good idea.

Right now I have a friend who was also on a similar FI path, but in the past year he got married, bought a house and is about to have a baby. It’s not the situation itself but the choices he has made in reaction to his situation that has put his FI path on indefinite hold. He has verbally expressed his unhappiness about this and I noticed recently that he backs away when we talk about FI so I have dropped the subject from our conversations completely in order to preserve our friendship.

I think that money is a taboo subject because for most people, there is a strong connection between money to one’s status and self-worth. So to reveal one’s money situation is to also reveal one’s true place in the status hierarchy and true sense of self-worth. Especially in a city like Toronto that is so status and success driven, it’s no surprise why one’s money situation would be a closely guarded secret.

Tawcan: That’s a shame to hear. It’s too bad that money is a taboo subject to many people. My aim for this blog is to remove this taboo somehow.


Q12. Do you ever plan to leave Toronto and move somewhere else in Canada? Or travel and explore the world?

Most of my closest friends for various reasons have moved out of Toronto, and even out of Canada.

My travel plan is to start local and expand my radius from there.

One of the top things on my bucket list is to do a road trip across Canada. My brother lives in Vancouver and I plan to visit him this summer. A friend moved to Poland and has invited me to visit. Also, a lot of people I know and bloggers I read have congregated in Thailand. Basically, I travel to see people rather than places.

Tawcan: Hit me up if you ever to come for a visit in Vancouver.  

Q13. What would you tell someone like me who is trying to achieve financial independence retire early in Canada?

In my perception, every single person who has ever achieved self-made wealth has followed a variation of the same core formula, from the Millionaire Next Door to Steve Jobs to Warren Buffett:

  1. Raise capital (usually through saving)
  2. Use capital to build or acquire assets that generate money
  3. Take that money along with more capital to build or acquire more assets
  4. Repeat until rich

There are variations on this formula such as leveraging other peoples’ money, or creating assets vs. buying assets, or being a better allocator of capital but for the most part, I think this is the basic core formula.

Q14. Do you have anything else you would like to share with me and my readers?

Thank you for the opportunity to share my story. I’m a very private person but while going through my journey, I had to figure out a lot of things for myself the hard way. So if I can help shorten the path for someone, then it was worth it.

Also I am still trying to make sense of where I am, so writing this has helped to crystalize my thought process.

One last thing: Money is an amplifier of who you are, both the good and bad. Which is why so many people who have a dramatic windfall end up losing it all. While building up your wealth, remember to build yourself up as well.

Tawcan: Love that, gotta remember to improve yourself as a human being at the same time!

Dear reader, are you enjoying the Financial Independence Retire Early Canada Interview Series? Are you a Canadian that is financially independent or retired early from your career? If so, I would love to have a chat with you.

Here are other FIRE Canada Interview series I have done:

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38 thoughts on “FIRE Canada Interview #4 – Cash flow is the oxygen of financial independence”

  1. Great read! I love hearing others’ stories. You may want to consider Atlantic Canada if you plan on moving! Great lifestyle and very affordable. I’m biased though! 😉

    • Hi Wally, I know it’s been over a year since you wrote this but I just came back from a business trip to Halifax, Nova Scotia. What an amazingly beautiful place. I loved it thoroughly and would love to read some stories about Atlantic Canada. I know I could easily afford to just quit my job and retire in Atlantic Canada right now and I’d love to hear more about the lifestyle and the weather (I hear the winters can be brutal and I’m not a fan of winter).

    • Thanks Passive Income Guy! I read about a term a long time ago that I liked, “Stealth Wealth”. Or as I put it, I like to speak softly and carry a big bank account 🙂

  2. Great interview! Will be reading other interviews as well. Keep up the great work.
    My favourite quote from the interview – “While building up your wealth, remember to build yourself up as well”

    On a side note – do you still climb? Would love to climb with you.

  3. Great interview! A testament to rent versus buy, especially in a crazy real estate market like Toronto, where everyone is getting a case of FOMO. I also liked how he said ‘you are the CEO of your own life’

    • Thanks Gym! Around this time last year in Toronto, real estate was in full FOMO, but now things are pulling back.

      Ultimately I think that we are all the CEOs of our own lives. We can’t be an “employee” in our own life and expect things to just drop on our laps steadily and get benefits, because more often than not, they won’t.

  4. Thanks Tawcan and Interviewee,
    There’s so much $$$-wisdom gold distilled in this piece.
    Congrats on being on the right path and enjoy your hard earned freedom and flexibility.
    Do hit me up if your travels ever bring you to Switzerland, Singapore or Taiwan and you’d like to talk about FI!

  5. Interesting interview. Does anyone publish an annual top 10 list of high dividend Canadian stocks that have a strong 20 year outlook such as the subject of the article was mentioning? It would save me a lot of time and research..

    Interesting that he mentions his friend who had the wife, baby and home and lost the plot with Financial independence. Financial freedom for a single guy on a 6 figure salary is certainly achievable. Much more challenging for those choosing the family. . unless their partner is also a high earner and divorce is very unlikely.

    • Hi Daniel,

      This was something I proposed to Interviewee initially but both of us didn’t feel comfortable mentioning specific stocks. After all, we aren’t professionals and we want people to do their own research and base their buying decisions on their research, rather than relying some posts on the internet. 😉

      It’s easy to say that FI is easier to achieve for a single person… but look around how many single people do you know are FI? It certainly takes dedication and will to achieve this financial milestone.

      • PS: As Bob mentioned, we tossed around the idea of whether or not to name specific stocks (I assure you, there are stocks that currently yield 7.5% or more that I think are in durable industries and have a safe payout ratio).

        Also to Bob’s point, I immediately thought of Firecracker and Wanderer, the couple who run Millenial Revolution. They worked together as a team to achieve FI and I feel the fact that two people did it together is a greater accomplishment than a single person doing it. The level of alignment and teamwork needed to do this amazes me.

    • Thanks Daniel! I use the stock screener on TMX Money to look for stocks. I have a watchlist of about 30 stocks that I’ve already researched and vetted and I track them on a Google Sheet that auto-updates the stock prices.

      The reason why my friend fell off the FI wagon is because he went from renting a modest place to buying a big house (he bought around this time last year and massively overpaid, I would estimate he’s down about $150-200K on his purchase at this point). This took up a lot of cashflow. Once he closed on the house, he learned firsthand that maintanence on a house is a real thing, he’s had a number of repairs with further took up more cashflow. He also spent a lot of money buying baby stuff in anticipation of the baby. He bought a very expensive stroller, paid almost $1000 for it, and when I casually suggested he could have bought a used stroller on Craigslist, he nearly took my head off. It was a shock as he’s been a very frugal person all his life. It’s as if a switch flipped in his head the moment he and his wife were expecting.

      I really believe that cashflow is the oxygen of FI, and in this case, there is nothing right or wrong about what he did, there are only consequences. As a result of his decisions, his available cashflow to save money to invest went to basically zero. But he loves the process of investing and laments that he can no longer do it. From my perspective, it’s as a result of the choices he made, but I know that pointing this out would not be conductive to our relationship.

      Your statement about choosing family reminded me of what Napoleon Hill said, that the #1 determinant of whether or not you will become rich is your choice of life partner.

      • Life style choices. Not everyone understands or believes in FIRE. As a couple, it will be awesome if both hold the same belief. Often, the other party does not and that can disrupt the FIRE plans. Perhaps that’s the case of your friend.

      • As a mom of two, I never understand why anybody want to spend $1000 on a stroller. Raising a baby actually could be quite cost efficient. Even you don’t like second hand staff, half of the price can already buy a super good stroller. Also, raising kids are a marathon, not 100 meter run. If I need to spend $1000 on my kid, I will spend $400 to buy a stroller and put the $600 into her resp account.

        Being a couple actually saves money. You pay one rent instead of two. Or you can afford a house double expensive. Having kids is more expensive, but they are priceless anyways.

        I don’t have any stock pay more than 7.5%. Really curious what kind of stocks you invest. But I guess I have to do my own work.

        For RRSP melt down, have you ever thought about borrowing to invest as a way of doing that?

  6. Great interview overall. I just wanted to make one comment on the poster using 7.5% as the opportunity cost for renting vs buying. Given that renting is a relatively risk-free proposition, I think you should use the counterpart relatively risk-free yield on investments, which would be significantly lower than 7.5%. In addition, the 7.5% yield being used is pre-tax, which the rent number being used would be on net of tax dollars.

    I think you should re-think the whole buy vs rent question and use much more realistic numbers, I think the final result would be a lot more interesting than the above provided numbers.

    • Thanks for your feedback Sean! There are many different ways to calculate the Rent vs. Buy equation. Here’s the basic numbers:

      Cost of condo to buy: $425K
      Condo maintanence per month if I owned: $300
      Property taxes per month: $150

      My monthly rent: $1270

      If don’t know if it’s possible to make these numbers work in favour of buying, but I’m open to the possibility.

  7. Great interview. He did an amazing job building his FI. It sounds like the hard part is still to come. Type A personality is going to have a hard time slowing down. Good luck with this one.
    I love the CEO of your own life concept. Everyone should keep this in mind especially if they work a corporate job.

    Follow up question – do you think life is easier as a single person? Are you planning to get married at some point or is that not really important to you? Cheers.

    • Thanks Joe, I also read your blog so appreciate your kind words!

      You’re right, it’s going to be hard to slow down. In fact, I’ve been doing the opposite lately. A friend of mine who is an extraordinary salesperson turned me on to Grant Cardone recently and that’s been like a shot of adrenaline.

      I’ve been a little complacent lately and certain parts of my life have plateaued recently, so it’s been a great wakeup call to keep the foot on the gas pedal.

      As far as relationships go, I was seeing someone for a time and we parted ways in February. We never talked deeply about finances, and when I’d hint at where I was financially or talk about dividends and compound interest, it was clear that she did not understand. I don’t blame her since her field of study was HR and not finance.

      From a FIRE point of view, life is easier being single in that I spend a lot of time researching stocks, it’s something I’m excited by and Tawcan and I had some brief but enlightening exchanges. So I have more time and I suppose I have more money (she was not an expensive date, we’d go to noodle shops, sushi, dessert places, movies).

      But in terms of relationships, let’s just say if I had to choose between a million dollars and the right relationship, I’d put the relationship as a higher priority, because the money really is just a means to sustain myself and provide for those I care about. Also I know I could make a million dollars again.

      It’s probably helped me save a lot more money that when I was younger, I didn’t play the expensive mating game and spent that time learning about living below your means and investing. At some point though, money stops becoming an issue. Like if you have $10K/month in passive income, you’re not going to sweat whether you shopped at Whole Foods or Walmart. And while I came from a very frugal past, more and more I’m leaning toward the idea that it’s better to increase your means than to reduce your desires.

      • Very interesting answer about the relationship and I think that makes a lot of sense. Having a greate relationship takes just as much work (if not more) as becoming financially independent. 🙂

  8. Very cool interview Bob. This guy really sounds like a ten year older me who started his journey a bit earlier, so much to relate to in his approach. I also really like the “CEO of your own life” narative as it is so outside of the societal norm but so worth it to view yourself that way.
    Keep them coming!

    • Thank you for the feedback Wealthy Content, one of the challenges I’ve had on my journey is that I didn’t have any real life mentors, so I relied on books for mentorship. Fortunately some really smart people wrote some really great books.

      The cutthroat nature of the corporate world really reinforced the “CEO of your own life” mindset. We are very far away from the traditional model where a person worked at the same company for their entire lives and there was a mutual exchange of loyalty. I once pointed at the CFO’s office to a direct report and said, if the CFO could save one penny by letting go of us, he’d do so in half a second and not only would he not lose any sleep, he’d sleep better knowing that he saved the company a penny.

  9. Great interview Bob! This guy sounds like he really has his stuff together!

    I especially like the attitude of being “CEO of your own life”. That’s how I think of it too!


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