Weekend Reading – Beating the TSX, Desert Island ETFs, FIRE ingredients and more #moneystuff
Welcome to my latest Weekend Reading edition where I share some of my favourite articles from the week that was across the personal finance and investing blogosphere.
I got around to posting this article this week:
How to draw down your portfolio using Variable Percentage Withdrawal (VPW).
The driver for that post was deeper thinking about my own draw down plans in the coming 5-10 years, or sooner (!), and trying to figure out the best way to earn income from my portfolio while ensuring I don’t keep assets/capital intact unnecessarily for any large estate.
I have some ideas on what we will do but I’m still working those out. I’m 45, I have time I think.
Next week I intend to have an update from this previous freedom 50 post, so I’ll have more to share then!
Have a great long weekend, enjoy my takes on the articles I read below.
What money strategies should this young couple take? I think killing off debt more aggressively would be a big one. I can’t imagine having kids and owing more than $500,000 in various debts. I wouldn’t be able to sleep. Could you?
Million Dollar Journey shared some background on a strategy known as “Beating the TSX”, including the Canadian stocks you should pick in 2019 to do so. My take? I own all these stocks already (and I’ll continue to hold them for years on end unless dividends are cut). This way, without selling them, I avoid transaction costs; I’ll collect my juicy dividends, and I don’t need to worry about timing the TSX. I think FrugalTrader follows the same approach.
That said, you can read up here how Ross Grant is a big fan of this approach and how it paved the way to his early retirement. Kudos Ross. I hope to have you back on the site soon.
Credit Card Genius shared some tips on getting great deals and using less miles from Aeroplan.
I enjoyed these “desert island” ETF selections on MoneySense. I think my personal favourite is the VEQT fund that Robb Engen picked. I mean, to own > 26,000 stocks from around the world for a fee of 0.22%? This is one of many great, new all-in-one ETFs you can own.
On the same FI theme, Retire by 40 listed his ingredients for financial independence. I was glad to see “good income” was on his list, because it’s very difficult to save for retirement let alone reach financial independence in your 40s if you don’t have a solid income to start from.
What should I do with my inheritance? I won’t be getting one and not planning for it!
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y take? I own all these stocks already (and I’ll continue to hold them for years on end unless dividends are cut). This way, without selling them, I avoid transaction costs;
Mark I think you’re missing the bigger picture here. This isn’t about active trading but knowing what stocks are on sale and thusly have a bigger upside. Think of it this way, you just deposited 5 grand into your RRSP and are undecided on what great dividend stock you want to buy more of. Say your looking at both BNS and RY, both great stocks but RY happens to be on sale. So you choose the latter!
It can be reversed. You need to sell some shares to fund retirement. It can tell you what ones are over valued and worth harvesting profits from.
Doing this can seriously ramp up your returns while adding no extra risk or transaction costs to your portfolio.
No active trading here Rob. I buy and hold and reinvest almost all dividends paid for income. I usually buy the lagging stock(s) in my portfolio to rebalance assets.
In terms of selling shares in retirement, I will, eventually, but I hope to realize our goal of earning ~ $30k from our non-reg. and TFSAs first. That should set us up well long-term.
Thanks but it looks like my comment got merged with another one I wrote another time. ?
Anyways keep up the good work enjoying reading your blog
All good Rob. Appreciate the kind words!
What should I do with my inheritance? I won’t be getting one and not planning for it!
Because your parents are planning on dying broke or because they’ve already passed and you got your inheritance?
I don’t see leaving an inheritance as a bad thing, if anything it’s something you do for your kids.
No kids here. Parents are intending to die broke and that’s totally fine. They have very good workplace pensions to live from in the meantime, they are very fortunate to have those but those pensions are unable to be passed down. So, no inheritance coming at all – which is just fine. I’ve always learned to take care of myself financially anyhow and I would argue many adults should learn to do the same 🙂
Thanks, kind of figured it was something like that.
I’ve always thought of an inheritance as a gift from your parents. For my wife and I if things go as planned we’ll never need to touch our principal.
Our assets should (in theory) generate enough income for us to live on while the principal will get passed on.
we’ve planned that our assets will generate income foer the rest of our lives while leaving the principal to be passed on.
as usual another informative post !
I’ve been busy with moving to my new place but that haven’t stopped me from checking your site daily 🙂
we finally decided to put our place for sale because we thought that owning three properties is a bit of a headache to manage so if everything goes well we’ll sell our current place and pay off the mortgage on the new place and we would have about 50-60k in overflow and I’m thinking of investing it in a ETF Reit in my TFSA since i just started that this year so i got all the room for it , i know you guys all here go for individual stocks but i love simplicity and the one shot diversification 🙂 so I’m looking at ZRE, XRE and VRE to buy but i simply can’t tell which one is better for us and one more question Mark is there a Reit Etf that invest in Canada and US or perhaps International ? or should i just stick to Canadian reit since we live here and it’s more tax efficient ?
Thank you so much guys for your help and expertise and enjoy the Victoria long weekend 🙂 ( we should have a long weekend every weekend).
Good to hear from you! I’ll be moving soon too!
Thanks for checking my site daily – tell others to do the same 🙂
I can appreciate the challenge with properties. We used to be landlords too and got out of that and decided to own REITs instead!
Having $50-60k in cash after your house sale goes through sounds like a very nice problem (to invest the money? how?) to have.
I can’t offer advice of course but I can say for my portfolio, we own almost 10 REITs now and all the top holdings in XRE. Some holdings are on this page:
In terms of REIT ETFs, hard to go wrong with 5-10% of your entire portfolio in REITs since I personally believe they are a different asset class than equities and bonds. So, performance my operate differently accordingly. A good thing for long-term returns.
ZRE is more equal weight vs. market cap (XRE) as you know so at least ZRE doesn’t go overweight into the companies that are larger caps (REI.UN, CAR.UN). Pros and cons of each method of course.
In terms of an international or U.S. REIT ETF, I don’t own any, but I would be inclined to buy and hold and DRIP VNQ. If you held VNQ in your USD $$ RRSP there would be no withholding taxes and therefore it would be very tax-efficient at 0.12% MER. 10-year returns have been 15%! Now, past performance is never indicative of future results…but…I could foresee close to double-digit growth in the coming decades again.
All the best and good luck!
Thank you so much for your reply Mark,
as far as telling people about the site you don’t have to mention it because i’m spreading the word in my family and friends and coworkers ,
You know i never thought about Reit being a different asset class but now that you mentioned it it makes complete sense to me and i’m leaning towards ZRE .
I’m so excited about the move and mostly the view that we have on the 16th floor it’s breath taking over looking mountains and in the far site Downtown Vancouver, I’m sure you’re excited too Mark .
Best of luck on the move and Thank you so much for everything that you do it helps a lot 🙂
Ha, well, shameless plug Gus!
Yes, with REITs, they can help diversify a portfolio because they historically have a low-to-moderate correlation with other sectors of the stock market and fixed income. So, REIT returns can zig when other assets zag. That’s a good thing.
16th floor in Vancouver? Sounds lovely. We haven’t been there for a year but really enjoyed it. I hope to get back in another year or so for a short vacation.
All the best and thanks for the kind words. It means a lot.