Reader Questions – Saving and Investing Updates

Reader Questions – Saving and Investing Updates

With thanks to so many fine readers and subscribers, I appreciate hearing from you and receiving your saving and investing questions.

I’ll be the first person to acknowledge our saving and investing approach might not be suitable to everyone however I believe things are working out pretty well so far thanks to the following – some multi-decade saving and investing discipline:

  • We put a high priority on saving for investing purposes each month.
  • We keep our money management fees very, very low. We don’t trade stocks or ETFs. 
  • We have a plan to kill off our mortgage debt in a few short years prior to semi-retirement. 

Reader Questions – Saving and Investing Updates

Since the early part of this year, I’ve received various emails and questions from readers about how we invest the way we do, my thoughts on the current market, some plans for semi-retirement, why I’m buying and much more!

So, with that in mind and much more, I thought I would answer these questions below. 

(Reader questions are in bold, my answers follow.)

Mark, can you remind me how you built your dividend income portfolio? What stocks you own and why?

You bet 🙂

See link here.

How I built my dividend portfolio

Mark, I notice your dividend income updates keep going up even when the broader stock market is going down or sideways. How is that possible? Can you comment on that for me? I think that’s probably because: 1) you invest new money, and/or 2) you reinvest all your dividends and distributions often and/or 3) you’re counting your dividend or distribution increases as well. Is that correct?

Yes, yes and yes!

Let me answer each one of your questions or points. 

  1. Yes, my dividend income is going up over time thanks in part to new money added to my taxable account for investing and/or thanks to annual Tax Free Savings Account (TFSA) contributions. Every year, since 2009, my wife and I have been maxing out our TFSA contribution room. 2022 was the same. So, my spreadsheet used to calculate this dividend income chart (below) gets a small “bump” in value every January after I invest that money. I suspect the same will hold true for 2023. After the TFSA is maxed out, and after all RRSP contributions are made, if we have any money leftover we invest from time-to-time in our taxable account although that is very infrequently since there is only so much money to go around…
  2. Yes, the chart below is consistently on the rise over time thanks to reinvested dividends. The way I’ve always seen it: money that makes money, can make more money. Especially if you leave it alone and don’t interrupt the power of compounding!
  3. Finally, yes, we are fortunate that many of the stocks we own increase their dividends year after year – even during a pandemic! So, when dividend increases happen, that tends to increase the dividend income year-over-year as well. 

January 1, 2022 Dividend Income Target

Mind you, this income stream took well over a decade to build – and we’re not done yet – but thanks to new money invested, reinvested dividends, and dividend increases the upward income trend continues…

I read your post about how much do you need to retire on $5,000 per month or $60,000 per year with great interest – that’s my target! Honestly though, do you think most Canadians can either save that much up OR could even retire on that with higher inflation?

Thanks for reading and here is that post you referenced in case others want to read it too!

In terms of your first question, my answer is yes on the condition that many Canadians need a modest, sustained salary coupled with long-term investing discipline to realize that investing goal.

(I suspect that double-double is rare for some Canadians however….)

In that case study, my case study couple needed the following saved up by age 50:

  • x2 TFSAs = about $150,000 each.
  • x2 RRSPs = about $400,000 each.
  • x1 Joint Non-Registered Account (Rebecca from case study) = $250,000. 

These seem like very big numbers, I can appreciate that, but like I mentioned in my answer above, you don’t actually need to save that much money for retirement since time invested and the power of compounding does much of the work for you…

As for your second question, “it depends”!

I know some retirees that live on $4,000 or so, per month, debt-free, quite nicely. 

I know other retirees have told me they couldn’t possibly imagine living on less than $6,000 or $7,000 per month. 

I wrote years ago I believe it depends on what you spend to determine your “enough number”. I still feel that way today.

Consider what you spend for your enough number

I also like this sketch 🙂

How much is your enough

Reference: The Behavior Gap, Carl Richards.

Here are some other detailed case studies on my site if you want to benchmark where you’re at and where you might be headed:

  1. This couple has $1.2 million saved up for retirement but no company pensions. Can they retire?
  2. This couple wants to spend at least $50,000 per year in retirement. How much do they need?

Mark, I know you get a 42% income boost by deferring your Canada Pension Plan (CPP) benefit from age 65 to age 70. Are you going to take CPP at age 70?

Correct, and yes. That’s largely our plan now in our late-40s.

We are likely to take both CPP benefits at age 70. We are likely to take both OAS benefits at age 65. 

I’ll keep you posted!

What are your thoughts on inflation? Is higher inflation here to stay?

I think so, and I’m planning for that. 

This is how I’m investing for higher inflation.

As you approach semi-retirement, are you going to change your portfolio? Own more ETFs? Own more stocks? Own more bonds? Other?

Not in my plan at least!

I will continue to own the same ETFs I do, for diversification beyond Canada’s borders just more of them! 

I don’t see any reason to change my current stock holdings.

I keep most of my dividend stock holdings updated on this page here.

My saving and investing plan is rather boring and pretty much on autopilot now – it has been that way for about 5+ years. I just need a bit more savings for investment purposes, that money invested, and time in the market for a few more years.

I also need to kill off the mortgage debt.

Once the debt is gone, I believe my wife and I will be in a financial position to consider part-time work / work in semi-retirement. It’s been our long-term plan all along…

I have no plans to own any bonds near-term. 

There is a case to own bonds, I just don’t have any plans to do so.

Reminders from the article:

“Bonds haven’t helped offset losses in the stock market this year. And high inflation has been a double-whammy against fixed income assets. But bonds can still play a role in a well-diversified portfolio. They can still protect against deflation and disinflation in the economy.”

Do you invest in any preferred shares?

Actually, I do not. 

This is the reasoning behind that. 

How often do you check your portfolio?

Probably about once per week or at least every two weeks – largely to tally my growing dividend income. Ha.

Reader Questions – Saving and Investing Updates Summary

Readers, keep your questions coming. I enjoy trying to keep up to every email, every comment and every interaction on Twitter with me.

In future Reader Questions editions, I’ll highlight some other questions from readers this summer including sharing just how much income I think our portfolio will reasonably generate in a few years to start semi-retirement with. 

Thanks for reading and sharing. Drop me a comment below!

Mark

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

15 Responses to "Reader Questions – Saving and Investing Updates"

  1. Hi again Mark,
    Thank you for answering my question above. I am now in a position to open a non registered account and buy dividends. I understand the accounting of dividends can be a headache. If you are DRIPing, is there one brokerage that is better than the rest for helping keep things organized ? Or are you better off just to take the cash dividend? Thank you.

    Reply
    1. Hi Again Alice,

      Pros and cons of course to DRIPping in taxable account. I’ve had experiences with a few of them and they are all the same really – but I do recall TD Bank keeps track of your adjusted cost base and iTrade might as well.

      Here is an interesting article.
      https://www.adjustedcostbase.ca/blog/can-you-rely-on-your-brokerage-for-calculating-adjusted-cost-base-and-capital-gains/

      At the end of the day, you can DRIP (and keep track) or just take the cash dividend and reinvest it where possible.

      The accounting can be a small hassle but rather easy to get used to!
      Mark

      Reply
  2. Mark, you said “We are likely to take both CPP benefits at age 70. We are likely to take both OAS benefits at age 65.”
    Why would you not defer oas too? 36% more at age 70. Plus, if the clawback is in effect, wouldn’t you get to keep more of it if the payment was larger?

    Reply
    1. Thanks David. We might 🙂
      I don’t think any OAS clawback will apply to us, but it might if we defer to age 70. Also, there are no OAS survivorship benefits per se so we figure deferring only CPP makes the most sense. OAS is also tangible money we might need in our late-60s to spend and enjoy.
      That decision is about 25 years away for us so we can have some time since we plan on semi-retiring before taking any CPP or OAS benefits.

      Thoughts!?
      Mark

      Reply
  3. Hi Mark, what are your thoughts on buying an annuity at age 70 with 30% of your assets to create another income stream if you don’t have a defined pension plan? Thank you

    Reply
  4. Hello: In retirement for a number of years now we have been in the process of collapsing our RRIF(RRSP),paying some taxes and funding our TFSA with the withdrawals. In this way we transition to a more favourable tax treatment vehicle that is growing. In our TFSA mainly defensive ,quality, dividend paying/ growing companies are held with a long term perspective. In the event of unfortunate health circumstances the funds could continue, hopefully , to be held with minimal worries.Thank you for your insights and work on this blog. Take care. Mike

    Reply
    1. Mike, that seems very smart to me and that’s also a playbook with other successful retirees: moving RRSP/RRIF assets to TFSAs where possible.

      I appreciate your kind words and comments! 🙂
      Mark

      Reply
  5. Great article Mark, thanks for taking reader questions. Can you recommend a spreadsheet or tracker to keep stocks and dividends up to date and generate nice charts like you have of your monthly/yearly dividends?

    I’ve switched to a hybrid approach similar to yours and learned quite a lot from your blog and Henry Mah’s books.

    Thanks for the continued education!

    Reply
    1. Hey Charlie!

      Great to hear from you.

      I put a very simple spreadsheet on my Helpful Sites page – see top link:
      https://www.myownadvisor.ca/helpful-sites/

      I’m biased of course, but I’m a big fan of my hybrid journey since I feel I get the best of both worlds – growing dividend income and low-cost diversification via ETFs 🙂

      Let me know if you have any further questions please!
      Mark

      Reply
  6. ” I notice your dividend income updates keep going up even when the broader stock market is going down or sideways. How is that possible?”
    Why all investors (and especially those so-called financial advisors) are not aware of this aspect of investing for Income or dividends, has always stumped me. This is alone should encourage investors, to at least look into investing for income, and consider the advantages it has over investing for growth.

    Reply
    1. Ha. Well, I can’t speak for others Henry but certainly part of my ongoing motivation to stay invested, and buy more stocks over time, is because of dividends – the tangible income I can see and use!
      Mark

      Reply
    2. My thoughts exactly. One should do their homework before investing in securities. Fluctuating stock prices do affect your capital should you hold them. However, those up down or sideways price gyrations do not negatively affect your dividend income…unless you have a dividend cut on a rare occasion.

      Reply

Post Comment