What’s the Rule of 30? And what does it have to do with income and retirement? + MORE Oct 26th

When my spouse was a kid, his dad gave him a few physical share certificates of BCE. But this was a long time ago, and he didn’t do anything with them. In fact, he didn’t even know where the actual certificates were. 

Recently, he came across the actual share certificates. Now we’re wondering what he should (or can) do with them. He doesn’t have any interest in continuing to own the physical shares, but we have no idea how to convert them into cash or contribute them to a TFSA or RRSP. Can you help? 

FPAC response:

Congratulations to you and your spouse! Discovering those BCE certificates must feel like quite a windfall. 

BCE (formerly Bell Canada Enterprises) is a publicly traded Canadian holding company for Bell Canada and is one of Canada’s largest corporations. 

Your spouse’s stock certificates are pieces of paper that physically represent his ownership shares in BCE. Most shares are issued in electronic form today, but shares from 20 or 30 years ago might have been issued in paper or certificate form…

I thought initially this new rule sounded familiar: Back in 1998, another actuary, Malcolm Hamilton wrote the foreword for my co-authored book, The Wealthy Boomer, which talked about the Rule of 40, as it applied to mutual fund fees. The Rule of 30, however, is quite different. 

In a nutshell, the 30 idea is a rule of thumb financial planners can use to guestimate how much young couples starting off on their financial journeys need to save for retirement. Rather than state something like save 10%, 12% or 15% of your gross (pre-tax) income each and every year, The Rule of 30 views retirement saving as occurring in tandem with daycare and mortgage repayment. 

From the get-go, Vettese suggests young couples allocate 30% of their gross or after-tax income to those three major expenses: Retirement savings, daycare costs and mortgage payments…