Weekend Reading – Dividends flowing, avoiding mutual fund salespeople, and more!
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!
An oldie but goodie from Farnam Street blog: how to think.
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.
“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.
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.
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:
My recent stuff:
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.
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Reader question of the week (adapted slightly for the site):
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.