Weekend Reading – Best ETFs in Canada, lessons on bonds, permanent portfolios and more!
I hope you had a great week.
Welcome to my latest Weekend Reading edition, a long Easter weekend edition no less, highlighting some of my favourite articles from the week that was across the personal finance and investing blogosphere – including the Best ETFs in Canada for 2021.
Just in case you missed last week’s edition you can find it here including if $1 million is really “enough” for any early retirement for this couple profiled:
I wish you all a great long Easter weekend and stay safe. See you here next week with new content!
As Jon and the team have done in the past, this ninth edition of the MoneySense ETF All-Stars edition, you’ll find the following:
- Top Canadian ETFs to own – to invest in our Canadian market
- Top ETFs to invest in for the U.S. market
- Top ETFs to consider for international returns
- Some fixed-income ETFs to select from (see lessons on bonds below!)
- Outstanding all-in-one ETFs to own, and finally,
- If you’re really stuck on an island and had to pick just one – there are some desert-island ETF picks!
Overall, Jon and the team I was part of were happy to largely “stay-the-course” to recommend some broadly diversified low-cost ETFs (that’s how I invest along with some stocks myself) but that doesn’t mean there are not some new considerations….given increasingly volatile stock markets, ever-fluctuating economic conditions and new blitzes of ETF products.
Read on and enjoy! Leave me a comment and let me know your thoughts. Happy to see any reader takes!
Earlier this week, since I also invest in some individual stocks, I posted this article with the guys at Stocktrades.ca about some stocks you might want to consider for post-pandemic results. Reader comments were somewhat mixed on these. What do you have your eye on? Here are 5 stocks to buy for post-pandemic results.
I found out one of the biggest pension funds in the country, the Ontario Teachers’ Pension Plan said it earned 8.6% last year, trailing its benchmark. But I think the biggest lesson here from this update is not about “the importance of robust portfolio diversification” from the Chief Investment Officer, Ziad Hindo, rather:
“With a persistent low interest rate environment expected in the coming years, fixed income will be a less effective source of diversification and returns in the immediate future,” Hindo said.
Humm, makes me think you should really learn to live with stocks if you want decent investing returns over the coming decades. Returns will not come from bonds in my opinion.
I go back to this article with thanks Ben Carlson, who wondered why anyone would own bonds right now.
Ben cites a few reasons in his post but my favourite is in bold below with my reasoning:
- Bonds can help your investing behaviour – riding out stock market volatility.
- Bonds can be used to rebalance your portfolio; keep your portfolio aligned to your investing risk tolerance, and help you adjust it back to its target asset allocation (i.e., keeping a balanced mix of stocks and bonds).
- Bonds can be used for spending purposes – where some fixed income is “king” for major, upcoming expenses or spending.
- Finally, bonds can help protect against deflation – since inflation is a killer for bonds long-term.
The Sunday Investor got excited and mentioned in a recent newsletter: “this was too much good (and free) data….to pass up”! Read on for his latest newsletter about U.S. industry returns, momentum and more here. Outstanding stuff for those that enjoy stock analysis.
Tawcan believes there are some parallels between the roaring 20s and potentially where we are now – what might be to come.
I hope he’s right and I’m wrong! I wrote on his site:
“I don’t see it personally. Sure, with some upcoming transfer of wealth some “roaring” might occur but I believe there are many new “have nots” coming out of this pandemic and socially, we’re potentially moving to a darker place including days of higher inflation and taxation.”
John Heinzl from The Globe and Mail cited some remarks from a retired investment advisor when it comes to dividend paying stocks and higher interest rates. Don’t always believe any negative publicity.
“When the news is all about rising interest rates, dividend-payers will sell off in anticipation of higher rates and rising inflation. Often the worst-case scenario gets cooked into these stocks, a sigh of relief follows and share prices rebound…”
Financial Pilgrimage has some money advice for kids.
On Cut the Crap Investing, Dale Roberts shared some portfolio results by owning equal parts of stocks, bonds, cash and gold as part of the somewhat bearish permanent portfolio. The goal of this portfolio, should you wish to invest this way: “…hold assets that will perform in each economic environment. Something is always working.”
Robb Engen believes some of the PWL Model Portfolios are not ones to copy for most DIY investors. I’m far from an ETF or market academic to really comment in detail on any Fama-French five-factor investing model that PWL incorporates in their model portfolios but I will say simple is better when it comes to investing. That includes having some long-term conviction in buying what you know.
With all the resources and products now available to investors over the last few decades, simply put, asset accumulation has never been easier: if you don’t want to own individual stocks then own one or two (or at the most a handful) of low-cost, broad market ETFs and be done with it.
I don’t see any reason to hold more than that.
As one reader on Robb’s blog put it, even just one ETF might do!
“For the overwhelmingly majority of investors, a simple index like the S&P 500 will do just fine. Actually more than just fine, the best that they can ever possibly do in their lifetime. No need to get all complicated with playing around with the allocation percentages and such. Or the Fama French model.
S&P 500 all the way.”
For what it’s worth, the founder of Vanguard (the late-great investor Jack Bogle) never invested in many of his own funds either including any international funds. He focused on the S&P 500. More stuff to chew on….
Financial Independence – Retirement
As part of my ongoing commitment to share some financial independence, early retirement or retirement articles from the blogosphere, here are some links!
A few readers have emailed me this week in particular highlighting the pandemic was not a great time for them to retire. I know, I wish we all had a crystal ball. Personally, I’m striving for financial independence and not zero work in my 50s or even 60s. I’ve always believed there is power in postponing full-on retirement.
What are your plans? Has the pandemic changed them?
Other readers asked me recently how I came to the conclusion of determining our FI (financial independence) number. Here are some posts and a new article about just that.
Here is how you can determine your FI number.
Here is how one reader, blogger, and investor fulfilled his financial independence – Dividend Growth Investor.
If you’re looking for an aggressive path to retirement or work on own terms – check out this detailed case study on Cashflows & Portfolios. Michelle, age 25, has financial independence dreams at age 40. Can she get there? What would that take? Read on!
As always, ensure you check out my dedicated Retirement page where I have case studies about “how much is enough”, how other successful retirees are managing their portfolios and much more. They’ve been inspirational to me and shape where I want to be…
And more Long Weekend Reading…
The Dividend Guy highlighted what types of Brookfield shares you might consider owning. Mike’s thoughts align my own decision back in the fall of 2020:
“However, I can tell you this: it seems that if you are more interested in total returns and you don’t mind receiving a smaller dividend yield, the corporation shares may be the better option over the long haul. Going forward, demand is likely to remain stronger for the corporation shares because they are easier to trade and deal with the tax implications than the LP or Trust units.”
Tom Drake had a great guest post from Maria Smith about co-signs for loans. Personally, I wouldn’t consider it unless it was a last resort option but I’m risk averse. You?
Nice to hear Peter Hodson on the Canadian MoneySaver podcast with financial expert Ellen Roseman as moderator and host – when Peter shared some lessons learned on stock picking as an independent analyst.
Reader question of the week (adapted slightly for the site):
Mark, I was just reading your dividend income updated from February and noticed you take to answer questions from followers. That is so awesome!
Have you considered adding a position to Fortis Inc.? I was reviewing it earlier today and it honestly pays a high dividend that can’t be ignored necessarily.
I am interested to know what you think about Fortis Inc.!
Actually, I think very highly of Fortis – I own a bunch. I haven’t bought any new shares recently since I recall I DRIP around 6 or 7 shares of FTS every quarter so I guess effectively I am buying more with time.
I should mention that most of my portfolio is actually on autopilot. Most of what I own (see Dividends page here) is DRIPped re: dividends and distributions from my low-cost ETFs as well are automatically reinvested to buy more shares commission-free next month or quarter. It’s basically money making money.
Read on about the types of DRIPs here. I actually don’t invest very much new capital anymore relative to my portfolio value.
I/we maxed out our TFSAs in early 2021 and we’re now saving up money to do the same for January 2022. I figure my wife and I need another $12,000 ready for that contribution. That’s saving $1,000 per month just for that.
I hope that provides some insights!!
Save, Invest, Prosper!
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Happy saving and investing folks!