Weekend Reading – Dividends flowing, avoiding mutual fund salespeople, and more!

Weekend Reading – Dividends flowing, avoiding mutual fund salespeople, and more!

Hi Again!

Welcome to my latest Weekend Reading edition that shares some of my favourite articles from the week that was across the personal finance and investing blogosphere.

In case you missed last week’s edition, about couples living in vans to save money, why people underspend in retirement, some cash for life ETFs to own, as well as my updated list of FREE retirement calculators to toy with, you can find it all in this link!

Have an awesome weekend and a BIG reminder it’s Mother’s Day this weekend!

Mark

Weekend Reading

An oldie but goodie from Farnam Street blog: how to think.

How to Think: The Skill You’ve Never Been Taught

From the article:

“The best way to improve your ability to think is to actually spend time thinking. Your decisions do the talking for your thinking.”

Matt Poyner highlighted some of the very real problems in the financial industry, including dealing with mutual fund salespeople.

From Matt:

“As shocking as this data is, it reinforces a very important point: financial advisors are first and foremost, salespeople. If advisors knew that frequent trading, chasing returns, high fees, active management and under diversification were bad ideas for their clients, you wouldn’t expect them to commit these blunders themselves. But they do. They’re drinking the poison Kool-aid too, and the dismal returns of their own portfolios prove it.”

Investor advocate and friend of this site Ken Kivenko – who continues to hope DSC funds and trailer fees go away very soon – brought yet another example of a useless Canadian money market fund to my attention, from Fidelity.

https://www.fidelity.ca/cs/Satellite/doc/FF_STAF_A_en.pdf

Sadly, a whopping $1.6 billion is invested in this fund – if Investor X invested $1,000 in series A units of this fund, 10 years ago, it is now worth $1,029. That is not a typo. This works out to an annual compound return of 0.3%.

Also, very unappealing that this fund is only available on a deferred sales charge basis which helps keep investors locked in for up to SIX years. For icing on the cake, this fund has a whopping 0.88% MER. If part of your money, within this $1.6 billion fund is needed, the DSC penalty must be incurred to access your cash.

How such products continue to be sold to hard-working Canadian investors is beyond belief. Buyer beware!

Can’t wait for DSC funds to be gone soon…

From the juicy dividend income file!

Nice to see a 10% raise from Algonquin Power (AQN) in my portfolio this week. That will absolutely accelerate the Financial Independence path!

There was also recently a small bump in Telus (T) dividends this week. I suspect they might move back to increasing their dividend x2 per year (that was their previous guidance), and in the coming years, a spin-off may occur. Shareholders will wait and see!

Either way, both increases from AQN and T will fuel the compounding machine that is my dividend income. You can check out my latest monthly update right here.

Monthly Dividend Income Update

Staying with the dividend income theme, some updates from a few of the bloggers I follow:

Bob Lai from Tawcan developed his own Canadian dividend calendar.

GenY Money is really making progress on her dividend income journey – impressive that she might hit earning close to $20,000 per year, by the end of this year.

Looks like Passive Canadian Income is pleased with his ownership in this growing renewable energy company – rightly so.

As much as dividend investing remains part of my investing plan, I would encourage all investors to reflect and consider:

Is Dividend Investing Right for You?

My recent stuff:

This is why I own CAP REIT.

This is why I own some U.S. Dividend Aristocrats.

More Weekend Reading

Fans of this site LowestRates.ca highlighted the penalties for breaking a variable vs. fixed mortgage. I liked their advice:

“Wait until the end of your term to walk away. If you can wait, break your mortgage when you’re near the end of your term. For instance, don’t break it in the first year, but if you’re in the fourth year of a five-year mortgage term, then it might make sense because you’ll pay less in interest penalties.”

Jon Chevreau shared the costs of bad DIY financial planning can be far more than you think!

There are things you really shouldn’t care about as an investor. Great list from Ben Carlson. I’ll put just a few of my favourites from his list below:

“8. Success in other areas of your life. Your biggest risk as an investor depends a lot on your personality, emotional make-up and station in life.”

10. Producing alpha in your portfolio. … The whole point of investing in the first place is achieving your financial goals, not beating the market.”

Amen. The amount of times I hear you need to index invest or your approach is flawed, is nauseating. 

A fine interview with entrepreneur, Dragon investor, and new podcast host Manjit Minhas – by Jessica Moorhouse.

With thanks to Rob Carrick and his Carrick on Money reader, I found this interesting article: some liken the cryptocurrency bug to a game of catch-me-if-you-can.

Nice to see others embrace a slower path to their personal form of financial independence – including leaving higher-stress roles behind when their body tells them to do so. I enjoyed this podcast with Mel from Modest Millionaires on the Explore FI Canada podcast – have a listen. 

The guys at Stocktrades.ca like this defensive stock for the next market correction. 

Amazing, detailed post by Savvy New Canadians on How To Buy Bitcoin in Canada.

Save, Invest, Prosper!

As always, check out my Deals page.

Some of these personal promos codes are unique in Canada – you can’t find these codes or deals anywhere else in Canada – to save on investing and more!

My very own personal BMO promo code remains available!  Use that BMO code to get hundreds in cash back when you open investment accounts with BMO like your RRSP, TFSA, taxable account and more! 

With 5i Research, take a no obligation FREE trial for your ETF and stock research.

With LegalWills.ca use my personal My Own Advisor promo code for 15% off any services – that never expires.  

I earn $600 in cash back every single year. Scroll down my Deals page to get the same credit card I use in your wallet. 

On Cashflows & Portfolios, my partner and I can run your retirement draw down projections for your tax efficient retirement. Contact us for details!

Reader question of the week (adapted slightly for the site):

Hi Mark,

I just got to reading some of your newsletters, I appreciate your transparency to help others. Unfortunately, I have made a mess of my finances. I realize that you are not a financial advisor – and you cannot provide any advice to me. I am just looking for some general direction to recover, with a less stressful future.

I made the big mistake of trying to handle my own RRSP and got into trouble. I had a low six-figure amount invested in some stocks last year and it went south after the market turn. I should have known better. I regret it. Being 60 now, my portfolio is down. While I have an RRSP with my employer (which is doing well) I lost a lot of money. I just need some help in pointing me in the right direction. Thanks so much.

First of all, I’m very sorry for your current position and I feel for you.

I’ve lost money investing in penny stocks and made other bad financial decisions myself. I’m far from a perfect investor.

Back to you, second, I would only encourage you to take some time to reflect, which you probably are, and consider what is your financial plan. 

One my investing philosophies is plans come before products.

Here is a post about what a financial plan should cover. It’s a lot of reading but worthwhile. The reason why a plan is helpful is it might save you from yourself. Consider this plan like a grocery shopping list of sorts. If you make such a list, before you head to the store, chances are in your favour you’ll stick to the list. Not only might you stay within budget with a grocery list, you’ll probably make better food choices, reduce waste and feel better overall.

To help you with your financial plan, consider engaging a fee-only financial planner. These planners have unbiased opinions about product selection (funds, ETFs, GICs, stocks, etc.) and have your personal financial objectives in mind. They help you start, maintain and improve that metaphorically speaking – grocery shopping list. 

My friend John Robertson from Holy Potato tries to maintain a list of fee-only planners and I’ve posted that here. 

I interviewed John about his well-written book The Value of Simple and more here. Definitely worth the read and check it out. 

Lastly, by far and away, don’t beat yourself up. Yes, I can appreciate this has been a big personal financial lesson. Yet with some time to reflect, learn what could have been better, getting some new new support to amend any future decisions, I suspect you can right the ship. 

Thanks for your readership and good luck with your next steps.

Mark

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and I'm 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. Subscribe and join the newsletter! Follow me on Twitter @myownadvisor.

24 Responses to "Weekend Reading – Dividends flowing, avoiding mutual fund salespeople, and more!"

  1. Hi Mark, thanks so much, again, for sharing our podcast with your readers. Your support means a lot!

    We’re always happy to shine the light on stories like Mel’s, with a more measured, thoughtful journey to FI.

    Lots of other great reads here! I’ve saved a bunch of posts for later. 🙂

    Reply
  2. AQN and T increased their dividends now I know why dividend investors get excited about this kind of news 🙂 I’m glad that i’m part of that now doing the hybrid approach and glad that i bought those two and couple of others I was hoping for MFC to raise dividends as well but i’m guessing regulators are restricting them along with banks to do so ? I’m not sure but thank you Mark for all the effort that you do in here you helped me a lot 🙂

    Reply
    1. I think financials are still asked to ‘stand down’ any dividend raises for some time Gus.
      https://www.investmentexecutive.com/news/from-the-regulators/no-dividend-hikes-share-buybacks-for-banks-and-insurers-until-lockdowns-end-osfi/

      “The head of Canada’s federal banking regulator won’t consider lifting restrictions that have kept banks and insurers from hiking dividends, offering share buybacks or increasing executive compensation until Covid-19 lockdowns have subsided.”

      “Regulators in Europe, for example, forced banks to reduce or suspend dividends..”

      “The restrictions that we brought in at the onset of the pandemic were much less severe than those of most regulators and supervisors around the world…”

      So, when lockdowns do lift (for good?) likely this fall 2021 then I would anticipate all big-6 banks + all big-3 insurers (GWO, MFC, SLF) to all increase dividends or least issue a “special dividend” of 5-10% EACH 🙂

      Just a guess of course but could be a lot of cash flowing to shareholders in the coming year or so once lockdowns are over while restrictions remain in place for some time to come.

      Thanks for the kind words. The hybrid investing approach has served me well to date too!

      Do share the site with others where you can.

      Stay in touch,
      Mark

      Reply
      1. Deane Hennigar (RBull) · Edit

        Think you’re right about when/how raises may occur for the financials.

        “Lots of cash flowing to shareholders”

        Nice, if it comes to pass!

        Reply
  3. Lots of interesting stuff there this weekend Mark.

    Yes Telus and AQN were nice to see and I agree T will probably do the 2x/ yr raises.

    I’m on Ben’s email list and read that. Often good stuff from him.

    Sad reflection on that fidelity fund. Hoping soon all that crap dies a fast death.

    Interesting catch me if you can commentary. I’m less convinced we are stuck in a world of imperfect fiat currencies. They’re doomed. Most of our growth (markets too) for a long time now is driven by central banks. There isn’t enough to sustain crazy debt levels even at absurd interest rates (some negative).

    Rock on everyone.

    Reply
    1. “I’m less convinced we are stuck in a world of imperfect fiat currencies.” Yup. Poor decisions by central banks have created their own mess.
      Quite terrible actually…and kicking the can to future generations to figure things out. Pathetic.

      Well, on that cheery note, off for another bike ride and grocery run for the week later today.

      Have a great weekend – see you on the Twitter machine.
      Mark

      Reply
  4. Thanks for the reads, Mark! I really like both quotes from the article on how to think. Taking time to think is important, and advisors are salespeople. I was happy to see the modest $T raise as well. That’s an interesting dilemma for the reader question this week. I’ve definitely made a lot of money mistakes myself. All we can do is move forward. I don’t think it was clear if the reader sold those positions or is still holding positions that are down. I would try to assess the positions to see if they are temporarily down or if they are bad companies altogether. If they are quality stocks, in 5 years time it might now be such a bad mistake. Enjoy your weekend!

    Reply
    1. Yes, sadly, I think he was in over his head with some selections but the fact that he has reached out, knows his financial behaviour was unfortunate, is absolutely a step in a positive direction!

      It is my hope I avoid similar mistakes since direct stock ownership can play with your emotions sometimes. For now, staying the course! 🙂
      Mark

      Reply
  5. I read the link to Andrew Peller as a defensive stock. In a similar vein I hold Corby Spirit and Wine but their dividend is better. The share price did not dip much during the pandemic and currently they seem to be holding up well, with a reliable dividend. Consumer Defensive sector.

    Reply
    1. I had DEO before and pretty happy with it. Regretted have sold it a few years ago and still waiting to buy it back. Right now it’s obviously too expensive. But I feel it’s a super good stock if you want to invest in alcolhol business so I am patiently waiting here.

      Reply
    2. Yes, I haven’t owned that one myself Maureen but I know many bloggers and investors over the years that love those consumer defensive wine stocks!

      Reply
  6. Many investors think everyone is a winner in what is essentially a bull market.

    One of the first lessons I learned in the early 80’s when first starting into investing was that the above is not true at all. I was lucky enough to find a book I could sit down and read in the reference library with the title “Wiped Out. How I Lost A Fortune In The Stock Market While The Averages Were Making New Highs”, by an Anonymous Investor, published 1966. Still one of the best investment books I’ve ever read.

    Reply
    1. Great lesson: “Many investors think everyone is a winner in what is essentially a bull market.”

      I’ve learned the hard way on a few of those!

      Buying anything lately or just swimming in your dividend income?!
      Mark

      Reply
      1. “Buying anything lately or just swimming in your dividend income?”

        Whenever my wife and I have savings combined with income I always find some Canadian company in our non-registered portfolio we already own shares in and just add to it with more shares. Last month according to my spreadsheet it was AQN I had room to add to. Like you said Mark, it was nice to see the 10% dividend increase from this company.

        Reply
  7. Hi Mark,
    I am fairly new to dividend investing (about two years in) and am still in the accumulation phase.
    I’ve been following along your dividend investing journey as well as some of the other bloggers that you have suggested. I really like the information, stock picks and breakdowns that you have provided.
    I am wondering if you could give me some guidance on how to manage the portfolio a bit more and what percentages of banks, utilities, energy, industries, ETFs, etc you would hold in a dividend investing portfolio.
    I am 30 years old and plan to be dividend investing for the long term.

    Thanks and I appreciate your blog posts!

    Reply
    1. I don’t understand how your reader question guy could possibly be down in his portfolio? The market has soared since that little dip a year ago in March. It would be nearly impossible to have picked enough losers to be down right now. Yet he didn’t say he panicked and sold at the bottom. Not sure how he could still be down unless he invested in nothing but cruise lines and cinemas, and maybe airlines.

      Reply
      1. No idea Steve but maybe there was some trading, flip-flopping in the portfolio, etc. Everyone’s behaviour is different when it comes to investing but it’s a VERY good lesson in know thyself.

        How are you investing these days?
        Mark

        Reply
    2. Always great to hear from readers Andrew – tell others to subscribe! 🙂

      I can’t offer direct advice of course….but I tend to manage my DIY CDN stock portfolio like this:
      https://www.myownadvisor.ca/how-i-built-my-dividend-portfolio/

      I try and limit any one stock to around 5% of my total portfolio – to avoid any individual stock risk.

      If all / anyhow unsure about individual stocks, pick great low-cost ETFs in Canada and the U.S. Then, over time, if you want to hold some individual stocks then you can…slowly, as you learn more.
      https://www.myownadvisor.ca/etfs/

      Hope that helps? 🙂
      Mark

      Reply
  8. Thanks for the mention Mark. I don’t think I’ll get there this year and I’m ok with that, would rather aim for total appreciation than yield.

    Very cool you and your partner at Cashflows can run this projections for a tax efficient retirement- that is an excellent service.

    Reply
    1. Thanks GYM 🙂

      You’re doing GREAT with your income journey and feel free to spread the word about Cashflows & Portfolios where you can.

      Will reach out to you about that and more in the coming months!!

      Have a great weekend,
      Mark

      Reply

Post Comment