Weekend Reading – Raiding RRSP, Telus, Pensions, DIY and more

Welcome to my latest Weekend Reading list.  Earlier this week I provided an update on our financial goals for this year and I had high praise for Robert Brown’s book Wealthing Like Rabbits.  Back to the subject of financial goals, I had an interesting comment from a financial advisor that I tweeted this week – paying off my mortgage wasn’t really a great move on my part (apparently):

Tweet

What do you think of the financial advisor’s comment?

Enjoy the best from the personal finance blogosphere for your Weekend Reading, and see you here again next week.

Sandi Martin compared using the Home Buyers Plan to raiding your retirement plan, but not.  “Money diverted from long-term goals is money diverted from long-term goals whether it’s taken from our RRSPs, our TFSAs, or from under our mattresses, whether we use it to buy a house, a new iPhone, or a series of piddling little purchases we can’t even remember.”

Susan Brunner reviewed Telus stock.

Mr. CBB reminded us to take the FREE money provided by employer pension programs.

My friend Larry MacDonald profiled this DIY investor.

Michael James on Money enjoyed The Empowered Investor, a book I’m going to read soon.

Here is what Vanguard recommends when it comes to rebalancing your portfolio.

Kerry Taylor also known as Squawkfox enlisted some help from fellow bloggers to write this article:  Ten financial rules of thumb worth a thumbs up.

Dividend Growth Investor said the time to buy some stocks is when no one wants them.

The guys at My University Money served up the classic coffee-a-day personal finance story.

Here are some lifetime investing lessons from A Wealth of Common Sense.

According to a recent BMO Fall Home Buying Report, 4 in 10 homebuyers say they need to increase their purchase budget by 21%.

Big Cajun Man said if hackers can find nude photos online, maybe your online security should be questioned.   I think he’s just looking for more site impressions by putting the word “nude” in his title.  I should try that soon.

LSM Insurance wondered if your car payment is larger than your RRSP deposit.

24 Responses to "Weekend Reading – Raiding RRSP, Telus, Pensions, DIY and more"

      1. get rid of the mortgage mark! you can choose to save but you have to make your mortgage payments. you can put a hold on your savings plan should you lose your job, get sick, have an accident, etc. but your mortgage payments go on and on and on. i don’t have a mortgage and i’ll tell you it is a GREAT feeling.

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        1. That’s exactly what we plan to do Gary. Take every penny, after the mortgage is done, and funnel that into investments. I like hearing from folks that don’t have a mortgage, they seem pretty stress-free to me 🙂

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  1. Regarding paying off the mortgage, I think it depends on a few things – the interest rate, amount owing, interest paid annually, rate of return on the money if its invested, etc. Also, theres no sense in paying off the mortgage if the savings in monthly payment is going to be wasted

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    1. After the mortgage is paid off, I intend to put every penny into investments until the retirement date. That’s the plan. Paying my mortgage is a guaranteed rate of return and reduces my risk.

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      1. That’s the plan Dan, kill the debt and channel all funds that were going to the mortgage into investments. In the meantime, we will continue to invest in our RRSPs and try and max out our TFSAs.

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  2. Now appearing “Bare Nake Ladies!!!”, hey it worked for the band!

    Thanks for the mention, I think the advice in your comments is BULLSH*T! and you can quote me on that. Pay off your debts, then get “fancy” with your finances.

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      1. I agree with you, having no debt and no stress from it is easily worth a potential % or two more you’d be earning by investing more. And after this weeks corrections you probably feel even better.

        Being debt free definitely makes me feel more comfortable with investing a bit more cash when I can, and needing a slightly smaller cash cushion for that just in case time if i were to lose my job since I have no debt payments to make! And once your house mortgage is paid off it will be kind of like living rent free!

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        1. I actually welcome the corrections, just wish I had money to invest. Currently saving now for our latest goal so no money to invest until likely November. I also like your “rent free” thinking Wisp.

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  3. There’s no way you’ll ever get to an 8-figure portfolio and retire at 50 unless you jump all over the leverage. There’s also no way you’ll go broke with your plan unless you use leverage. Thanks for the mention.

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    1. 8-figure portfolio, that is totally out of reach for me. You on the other hand since I recall some people in your household want to you keep working…. ? 🙂

      I think I’ll stick with increasing my mortgage payments, maxing out the TFSA and within the next 3-5 years, maxing out of any RRSP contribution room. I think that’s about as good as I can do.

      Thanks for the comment Michael.

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  4. I think something that gets lost is what is the ‘financially optimum’ approach and what falls with the bin of being a really good choice.

    What is the financially optimum choice is always a probabilistic recommendation. For example, if mortgage rates suddenly spike to 20% and the market crashes then absolutely you are doing the right thing. Of course, the market more often than not outpaces low mortgage rates but still the chance is there.

    I think the quibbling is somewhat akin to freaking out over relatively small differences in MER when index investing. As long as you’re saving and investing it appropriately (either by paying off your mortgage or having a good investment strategy) it doesn’t really matter all that much.

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  5. Strictly speaking, if you can earn an average after-tax rate of return on investments that is higher than your mortgage interest rate, you are (on average) better off investing the money and applying the lump sum at the end of your mortgage term. However there is always the risk that your investments won’t produce a rate of return that exceeds your mortgage interest rate.

    With that being said I am in the same camp as you, saving for retirement and paying down the mortgage at the same time. I just add an extra 20% onto my accelerated weekly mortgage payment (an extra $75/week) and cognitively I don’t even notice the difference.

    With regard to the financial advisor’s comment, I am sure you would be considerably better off investing your mortgage lump sums in mutual funds with MER’s “comparable to the big banks”. Oh, and leverage too, put that leveraged money into the same funds. And just for the convenience, I’m sure they would be willing to extend you the leverage loan with an interest rate “comparable to the big banks”. Gosh, I hope that wasn’t too much sarcasm.

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    1. The other thing I think about in this debate (that folks might not think about), you pay your mortgage with after-tax dollars, so the rate of return for paying your mortgage is actually higher. Also, unless you are investing in your TFSA, there is a tax-drag on your investments, you need to pay the taxes that are deferred at some point (inside RRSP) or be wary of capital gains (non-registered).

      In the end B, I think about plan to do both should serve us well. If we can semi-retire in our late-40s or early-50s, I guess I’ll know the answer 🙂

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  6. Mark,
    Paying off the mortgage is not even an investment decision. It’s a matter of security and well being. It’s a matter of sleeping well at night knowing you have a place to sleep at night and nobody can ask you to leave. THE RENT HAS BEEN PAID!

    Ignore all the “experts” and do what you need to do. Get rid of that mortgage as soon as possible and don’t feel bad doing it.

    Regards
    John

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    1. “The rent has been paid”. I can’t wait for those days really. My post didn’t say I shouldn’t and will not invest right now, but working to be debt-free is a priority and part of my risk-reduction plan. Thanks John.

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  7. Mark, I have no mortgage. Own a modest townhouse, (no other debt) we consider it shelter. I take your mortgage comments as a compliment. 90 minus your age, is the number that should represent what your net worth should be tied up in a house. Most people have no assets but lots of house/mortgage debt. Tackle that bitch first, then invest. You have so much time. More time than you think.

    When I’m 65, we will have $4200 net per month in pension income alone, plus our house is paid for. My wife will continue to work because she loves me and wants to keep me in the lifestyle I’ve grown accustomed to. I still have 7 years left to add to our PF, which currently stands @ 187K. It’s small because we put every penny we had left over at the end of the month on our mortgage. Now I invest that money. Yes I robbed the cradle:-) Have a great weekend!

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    1. Thanks for the support Peter.

      We have some assets…
      http://www.myownadvisor.ca/august-2014-dividend-income-update/

      but lots of mortgage debt still:
      http://www.myownadvisor.ca/write-investing-200000-debt/

      I intend to take-down the debt in about 7 years should our mortgage prepayment rates stay the same.

      At 65 with that type of pension income and no debt, you’re set. Are you going to work until 65 or close to it? So, no debt, good pension income coming and a portfolio of almost $200k? Geez, well done Sir!

      I hope I can catch up.

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      1. Starting 1 November I’m only working 3 days a week so I’ll continue to do that for as long as I can. At least I’ll have the days off/ work ratio in my favour. Yes my wife and I both took chances in our youth to end up where we are now. I intentionally left out her pension income at 65, she’s an ER nurse so she also has a generous plan but she works her ass off for her money and pension. We are on track to live on 75% of our current income in retirement. It is a good feeling.
        This is why I can take on a little more portfolio risk with our investment accounts. I can, but I don’t really. We’ll see going forward, I’ll be posting regular monthly account statements once I get my blog up and running.
        Take care!

        Reply

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