Weekend Reading – Advice from legendary investors

Weekend Reading – Advice from legendary investors

Hey Everyone,

Welcome to a new Weekend Reading edition, including some good, sage advice from some legendary investors. 

I’ll share that information soon. 

First up, a few reminders:

Some serious caution to avoid any firm retirement rules of thumb including a whopping 8% withdrawal rate

Weekend Reading – 8% retirement withdrawal rules? No thanks.

I just posted an update on our Financial Independence path including some details I very rarely share on this site!

Weekend Reading – Advice from legendary investors

Weekend Reading - Advice from legendary investors

Image source: Pexels, Jordan Benton.

Chris White’s article at 5i caught my eye this week, which inspired this weekend theme: advice from legendary investors.

Over the investing years, I’ve read dozens of personal finance and psychology books on money and while I can distill those gazillion pages down into some of my own bullet-items advice below, I really liked what Chris and Peter put together, this particular gem included: 

“Good investing is not necessarily about making good decisions, it’s about consistently not screwing up.” – Morgan Housel, The Psychology of Money.

Here are some of my own thoughts and advice on money:

  • You should spend less than you make. This might require a budget. 
  • You should establish and maintain an emergency fund. Ideally, at least a few months’ worth in cold-hard cash. (We have this and maintain this.)
  • You should make savings for investment purposes automatic.
  • You should invest a good portion of your savings for long-term growth; as in equities.
  • Once invested, you should keep your investing fees as low as possible for as long as possible. Avoid trading. 
  • You should diversify your investments across companies, countries and world economies.
  • You should obtain adequate life and disability insurance for the “what ifs” in life to protect against a catastrophic financial loss. 
  • You should continue to educate yourself; continuous improvement will keep your mind growing and active.
  • Money doesn’t mean much if you don’t have your health. You should do what you can to stay healthy. Health is always the ultimate form of wealth.

Of course, all these “shoulds” are easier said than done. I’m not perfect on them all either…

Staying with my partner on this site, 5i, read more about 5i free trials and free research here, they blogged about some pros and cons of the new FHSA account that might be relevant to someone in your family.

A key takeaway:

“We can see that the FHSA combines the best elements of both the RRSP and TFSA, and has a higher annual contribution limit than the TFSA. Although, an FHSA does have an upper limit on how much can be deposited ($40,000) and the maximum carryforward amount is not all unused contribution room from prior years like the RRSP and TFSA.”

Image source: 5i:

FHSA - MOA - 5iResearch November 2023

A shoutout to Dale Roberts on calling out bearish predictions. Bulls make money.  

I’ve always liked this simple advice on stocks from Ben Graham, Warren Buffett’s mentor.

“The individual investor should act consistently as an investor and not as a speculator.” Ben Graham.

Ben Graham on 100% stocks and cash

Reference: The Intelligent Investor, via Revised Version, Commentary by Jason Zweig. 

Thanks to Tawcan for mentioning my post in his latest round-up of personal finance reads. 

In The Globe and Mail, John Heinzl hinted that Canadian banks might increase their dividends…again.

“Desjardins Securities predicts the Big Six banks will raise their dividends by about 3 per cent, on average, when they report fourth-quarter results in late November and early December. Specifically, it expects that Toronto-Dominion Bank (TD) will hike its dividend by 5 per cent, with Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CM), National Bank (NA) and Royal Bank (RY) each raising their payouts by about 3 per cent. The only big bank not expected to raise its dividend is Bank of Nova Scotia, which typically reviews its dividend when it posts second-quarter results in May.”

I can’t wait…

via GIPHY

Congrats to my friend Chrissy on two years of financial independence with her husband. 

Dividend Growth Investor demonstrated Microsoft’s lost investing decade.

“Even a business that does well over time would have long periods of time where the stock price goes nowhere. Being a long-term investor is not easy, because to earn the great returns of investing, you need  to be sitting through the long periods of poor performance, in order to experience the joys of good performance. There is no way around that.”

Save, Invest, Prosper!

As always, check my Deals page – partnerships and discounts to help you make the most out of your money – some of them you can’t find anywhere else!

Check out my partnerships with:

  • Dividend Stocks Rock (including my deep lifetime discount from Mike!)
  • 5i Research
  • StockTrades.ca
  • LegalWills
  • Borrowell 
  • and more!

As always, you can also consider reaching out here for some low-cost financial projections services – anytime.

Cashflows & Portfolios

I launched this service with my DIY investor good friend – a service founded by DIY investors for DIY investors without the conflict of any advice, without costly fees (like some folks charge), while offering money-back guarantees because we’d expect that as DIY folks ourselves…

Enjoy your weekend. 🙂

Mark

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. 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.

12 Responses to "Weekend Reading – Advice from legendary investors"

    1. Very kind! I hope all is well out West!?

      It’s still fun to run the site after all these years (15 of them!!) and engage with others.

      I look forward to more updates on the site as I start making the transition to the work on own terms, FIWOOT, any part-time work that could be had in the coming years. The mortgage will be dead in 5 months and then the party begins. 🙂 Ha.

      All my best,
      Mark

      Reply
  1. Mark, can you elaborate on why XIU is great for tax efficiency? Do you mean just in a tax-sheltered account such as TFSA, or also in a non-registered account? Thanks; love the newsletters!

    Reply
    1. Sorry, I should have been more clear. XIU is great for tax efficiency, in a taxable account. No tax efficiency needs inside registered accounts like RRSPs, TFSAs, etc. since all the money coming out of the RRSP, for example, is taxed as income.

      I like XIU because the ETF distributions can be eligible for the Canadian dividend tax credit, just like common stocks would such as Royal Bank or Canadian National Railway (among many others…) in a taxable account.

      Older post, but same principles apply…
      https://www.myownadvisor.ca/dividend-tax-credit-101/

      Of course, stocks and ETFs that don’t pay any distributions are even more tax efficient – since there are no dividends or distributions paid to the owner taxed as income…

      I hope that helps!
      Mark

      Reply
  2. Mark,
    TD raises their dividends once yearly, the other five of the big six banks raise biannually. Would you know if Desjardins predictions of 3% dividend increases for RY, BMO, CM & NA are for the forward 6 or 12 period? I suspect they mean ~1.5% increases are coming.

    Reply
    1. My guess is something in the range of 2-4% for every bank except TD, to your points, since they raised earlier this year. We’ll see.
      TD is likely to raise between 4-5% and that is my hope. 🙂

      Mark

      Reply
  3. Hi Mark,

    Re: “I’ve always liked this simple advice on stocks from Ben Graham, Warren Buffett’s mentor.”

    Benjamin Graham died in 1976 so he could not have given advise for the bear market noted in the book excerpt shown above. Because there is no end date shown for that bear market or any mention of the severe bear of 2007-09 I gather the excerpt is from an early 2000’s copy of Graham’s book updated by another author.

    Reply
    1. Ah, updated the reference, I meant to add it’s the The Intelligent Investor revised version with revised commentary from Jason Zweig. Updated. 🙂

      Mark

      Reply
  4. Thanks Mark. I found DGI’s post on Microsoft’s lost investing decade interesting AND relevant! I was fortunate to get in on this company after that period and have experienced a 10X growth in my investment! Of course, this has resulted in it being my portfolio’s largest investment holding – and it has also meant it represents more than 5% of my total portfolio (like you, I like to keep things to a max of 5%). However, with the company having a solid strategy and continuing to do well, I can’t see myself reducing that amount (~8.5%) quite yet. Heck – if Buffett can have 50% tied up in one stock (Apple), then a “measly” 8.5% shouldn’t be anything to lose sleep over!

    Reply
    1. Very interesting, right? Stocks are duds until they are not.

      Ya, it’s OK to let a few winners run, the 5% portfolio rule is just a guideline for me so I don’t overrotate on any one stock and I’m likely to buy more XAW for the TFSA to avoid some stocks being over 5% of my entire portfolio in 2024. If XAW gets to be 5%, 10% or more of my portfolio that’s a good thing but I’m not planning to sell my stocks at this time. The last sale I did was a bit of AQN after the dividend cut.

      https://www.myownadvisor.ca/weekend-reading-dividends-can-get-cut-edition/

      Otherwise, I just keep buying what I already own.

      Ha, yes, Buffett ~ 50% of the portfolio in Apple. Wild. I bet he will sell some eventually…

      Thanks for your comment. Any plans for your TFSA in 2024?
      Mark

      Reply
      1. Ya – was thinking of more XIU and possibly XAW in the TFSA. With XAW having foreign holdings however, isn’t there a withholding tax charged? I’m assuming I wouldn’t have to keep track of that as it would be automatically accounted for in the dividend payout?

        Reply
        1. Yes, some withholding taxes with XAW for sure. Same goes with any Canadian-listed ETFs that hold foreign ETFs. I don’t worry about it because I keep ETFs inside our TFSAs, RRSPs, LIRA, etc. so no major math to worry about and I only keep CDN stocks that pay dividends inside our taxable accounts. I get a T5 every year and makes my life simple for tax filing needs; I try to avoid selling any taxable assets.

          XIU is great for tax efficiency. 🙂

          Mark

          Reply

Post Comment