Weekend Reading – Best ETFs for Canada, shortest recession (ever), FIRE is for wimps 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.
You can find my last Weekend edition here about Warren Buffett buying up Suncor and Canadian gold stocks, my latest (free) podcast on moneystuff including ideas about structuring your portfolio for retirement, and taxation that might be coming our way to pay for this healthcare crisis called COVID-19.
First up this week – a reminder about this $500,000 decision (not a typo) if you only consider putting 5% down on your mortgage and instead, invest the difference.
That’s a pile of money….
Check those articles out and much more below!
See you on the site and I’ll be back next week with more original content.
Family Money Saver wrote about why people don’t do FIRE (Financial Independence, Retire Early). Dedicated fans of this site probably already know my reasons but if you don’t here is the punchline: “retire early” doesn’t fit me but financial independence and working on my own terms absolutely does.
I prefer Financial Independence Work On Own Terms (FIWOOT) versus FIRE
Generally speaking, we believe we can semi-retire once the dividend income goal on this page is reached based on our planned expenses. We’re about 70% there towards our goal (give or take).
Our goal is to live off the income generated by our portfolio (both dividends and distributions) while working part-time. We’ll draw down the capital at a later date.
Speaking of retirement – this is nuts. I fell for more clickbait this week: there is no way anyone needs $8 million to retire.
A Purple Life is a mere few weeks away from early retirement. She claimed FIRE is for wimps.
Helpful stuff at Credit Card Genius – how to save money on any foreign currency exchange fees when using your credit card.
Early Retirement Now (ERN), an outstanding U.S. site and blogger for the record, shared his thoughts on the U.S. economy – including the shortest recession – ever.
Image courtesy of the big ERN:
Thanks to Jon Chevreau for highlighting one of my latest blogposts – where I discuss the precious currency of time – don’t waste it!
Have you considered investing like the 8th largest pension plan in the world – eh?? You should. Check out how the Canada Pension Plan Investment Board invests right here.
While Boomer & Echo suggests there are risks carrying debt (including your mortgage) into retirement, they are not as dire as they once were. Low-interest rates are perpetuating this problem. There is no incentive to save nor pay down debt – just take more on. Robb has made a conscious choice to prioritize his RRSP, TFSA, and even non-registered investments before his mortgage. Smart but I’m biased too and I’ve done the same for years.
Why? See below.
The definitive answer to paying down your mortgage or investing
Now to daydream a bit….The Prince of Travel highlighted the costs of going to one of my sought after destinations – The Maldives. Read on about this lavish place of luxury.
I know GenY Money wishes to travel to the Maldives one day as well…so here is her recipe to get there via early retirement and freedom.
- A high, prolonged savings rate.
- Strain out debt.
- The desire to get there, including a willing partner.
- As an alternative but an enabler, establish a side-hustle or anything else to accelerate the process beyond any day job.
Dale Roberts wonders if you have enough tech in your portfolio? I don’t – not based on this recent run up!!
Reader question of the week (adapted slightly for the site)
Love the site, love the journey. Thoughts as a new investor? What are the best low-cost ETFs to own for Canada? There seem to be so many to choose from and I don’t know where to start.
Paralysis by Analysis
Let me help you get unstuck. I’ve narrowed my best-of to these ETFs in Canada below. Check them out and let me know if you have more questions. You can read up about ETFs, indexed ETFs for that matter, how I invest and dozens of other articles in the links below.
I’m happy to answer more questions anytime via the blog.
My Dividends page – how I invest and why.
The best, low-cost, diversified ETFs you can own on my ETFs page. Including all-in-one funds!
Index investing? Why? Read on since Warren Buffett plans to put his estate into an indexed fund.
Best-of Canadian ETFs to ride Canadian market-like returns:
|iShares Core S&P/TSX Capped Composite Index ETF (XIC)||S&P/TSX Capped Composite Index||0.06%||Own all the major stocks in the Canadian market, >200 of them and ride their returns less minor fund fees.|
|iShares S&P/TSX 60 Index ETF (XIU)||S&P/TSX 60 Index||0.18%||Own the biggest names in Canada, get consistent 3% yield + long term growth. Win-win and one of my personal favourites. (I used to own this fund for many years.)|
|Vanguard FTSE Canada All Cap Index ETF (VCN)||FTSE Canada All Cap Domestic Index||0.06%||Exposure to small, medium and large cap stocks in the Canadian market, similar product to XIC but different provider of course.|
|BMO S&P TSX Capped Composite Index ETF (ZCN)||S&P/TSX Capped Composite Index||0.06%|
|BMO Low Volatility Canadian Equity ETF (ZLB)||Uses smart beta/rules based approach||0.39%||Yes, higher MER but low-volatility fund for any defensive times. Think a better balance of financials, utilities, grocery stores/consumer staples and telcos as top holdings.|
Partnerships and Deals – Invest with confidence and save $$$
Thanks to my passion for personal finance and investing, some great companies want to offer deals. As a reader, you might as well take advantage of them although there is never an obligation.
From my Deals page:
- As a My Own Advisor reader you get full-access, during your FREE trial, to all of 5i’s research reports, all the model portfolios, top companies and best ETFs to own.
- You can use my promo codes when you invest with BMO to save hundreds of dollars right away!
- You can get $50,000 managed free with ModernAdvisor.
- Sign up for commission-free investing with Questrade.
All the best and talk soon.
It took me a few decades to learn how to keep things relatively simple when it comes to investing.
Now it’s a global balanced low cost index ETF in the TFSA’s and the RRSP/RRIF.
We have an all Canadian individual equity dividend growth portfolio in the taxable portfolio. This is portfolio 2.
Portfolio 1 a mix of Canadian, U.S., and foreign ADR dividend stocks was cashed in during the late 90’s bull market in order to give us a large down payment on the bungalow we bought. Mortgage paid off in about three years. Quite a bit of luck and good timing involved.
I hope your full retirement works out for you whenever it’s time.
A global ETF sounds smart. I own a few low-cost ETFs for a blend of income and growth and likely always will. I keep those in my TFSA and RRSP.
I keep only CDN dividend paying stocks in my taxable, a blend of banks, utilities, pipelines, ATD.B – you know, the usual names 🙂
VERY good timing with your mortgage. Well done. We still have some debt but steady as it goes for progressing to $1 M portfolio and paid off home/condo in a few years. I figure that will be a great 1-2 semi-retirement plan before age 50.
Thanks for the kind words. I get inspiration from folks like yourself!
I only wish I could of retired thirty five years ago at the age of 35, but my future wife and I had nowhere near the financial means to do so at that time. It was to be another twenty years later before I could achieve that goal along with a reduced pension and my wife decided to leave the workforce a few years later. I had read other books on early retirement but the most important one that was released at the right time fifteen years ago that finally nudged me out the workplace was “Why Swim With The Sharks? An unconventional guide to early retirement by Canadian authors Diana Salomaa & Henry Dembicki.
I love retirement because for once I’m the boss of my own life and nobody tells me what to do anymore. It truly is freedom.
“I love retirement because for once I’m the boss of my own life and nobody tells me what to do anymore. It truly is freedom.”
I only hope I can say that in a few years myself in semi-retirement 🙂
How are you investing now?
Being mortgage free in retirement is not as critical as it once was when interest rates were much higher. It’s all about generating enough cash flow in retirement. I can be debt free with a paid for house but If I can’t generate income how do I eat? Smart people, who read this blog, understand this and save while paying their debt. Building up assets that can generate future cash flow is critical. Know why you are doing what you are doing. I still have mortgage and HELOC debt but generate enough cash flow to cover all the bills. We actually chose to unlock some of the equity in the house earlier before the knees go. You can be financially independent with debt.
East Coast next fall, NZ in 3 years.
Ya, I will probably have some form of leveraged investing once our mortgage debt is gone (as long as I’m still working full-time). Likely start with $10K or something like that to invest inside taxable account.
Until then, focusing on maxing our TFSAs and RRSPs every year and building a larger emergency fund/cash cushion for any impending future market crash this fall 🙂
NZ in 3 years – sounds amazing. I hope to be there or Maldives in a few years too!
Yes I agree FIRE is overrated. And it is true that many FIRE bloggers are still working part time which is not really FIRE. Even working on a blog for 5 year hours a week is still working part time. I haven’t had full time work since 2012 , but I am definitely NOT FIRE.
I think ETF’s are a good way to at least keep up with the market. I hold no Canadian ETF’s rather individual stocks like the 5 banks. But I hold 2 Canada based ETF’s that track the US market VUN.TO and VFV.TO. I find they are good a keeping up with the US indexes.
I guess I simply understand the “FI” part better than all the mass marketing around “RE”. 🙂
VUN and VFV are great funds to track the U.S. market. I also like XUU in this space as well beyond any individual Canadian stock holdings. You can set and forget the U.S. market this way.
Thanks for the mention. Hey, I just saw another Travel Zoo promo this week for the Maldives. Something like OVERWATER bungalow resort stay for under $2500 for two people I think. We booked ours to travel before 2022, hopefully that will be realistic and hope this pandemic is over soon.
Have a great weekend!
Wow, you’re going / planning to go in 2022? Which resort? I think we’ll get there in a few years. Currently trying to save up some Aeroplan for business class tickets to NZ in a few years!
All the best GYM 🙂
Hi Mark, thanks for the mention. Definitely a new retirement reality now with rates so low but also with the stigma around carrying debt becoming normalized. The debt issue is further complicated by divorces or layoffs later in life. Tricky stuff to manage.
I’ll join you and GenY with Maldives envy. It’s on our bucket list, for sure.
As for your reader question, I’m a big fan of the one-ticket ETFs for new investors. No sense agonizing over a few basis points, or worrying about rebalancing, when you can just own a low cost, globally diversified, risk appropriate portfolio all wrapped up in just one ETF.
Enjoy the weekend! Kids are back to school next week so we’re a bit nervous but also looking forward to a new routine.
Yes, all-in-one funds are great and I will continue to link to those on my site even though I don’t use them myself – yet. 🙂
Good luck with the kiddos going back to school. Not easy times! Take good care.