Weekend Reading – Biggest stocks and ETFs, OAS, 4% or 5% rules, stay invested and more #moneystuff

Weekend Reading – Biggest stocks and ETFs, OAS, 4% or 5% rules, stay invested and more #moneystuff

Hi All,

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 edition here – about paying minimal tax (thanks to Canadian dividends), calling out the early retirement police, and highlighting some great money advice for the ages. 

I’m out for a long walk soon and to run some errands, but not before I put this latest post in your inbox to enjoy!

Have a great, safe weekend and see you on the site.

Mark

Weekend Reads

In case you missed it, I shared my September 2020 dividend income update here. 

September 2020 Dividend Income Update

A reader asked me some compelling reasons to stay invested. Here is my reply.

Smart stuff from Dividend Earner to help you understand Old Age Security (OAS). I liked his key options to help avoid the OAS clawback:

1. Maximize contributions to your Tax Free Savings Account (TFSA). We try and do that every year.
2. Take advantage of income splitting.
3. Optimize your investments for tax efficiency.

You can also check out my comprehensive post about OAS below:

Little known facts about Old Age Security you need to know

Bill Bengen, the originator of the “4% rule” actually stated you can likely spend more than that in retirement – in this post here: what if the 4% rule became the 5% rule?

The key takeaway for you and me, regardless of the withdrawal rate you pick:

“You also have to consider no one actually lives their life in a spreadsheet. Something like the 4% rule is a rough guide that assumes a fairly linear path of spending. Every financial plan should be open-ended because the whole point of the planning process is making corrections as reality meets your built-in expectations.”

I have a number of articles about the 4% rule on my site as well – it remains a decent rule of thumb to at least start thinking about retirement withdrawals.

Why the 4% rule is actually (still) a decent rule of thumb

The proven path to early retirement ignoring the 4% rule

I asked this financial advisor – does the 4% rule still make any sense???

Dale Roberts is back with MoneySense to make sense of the markets.

Congrats to Another Loonie who saved diligently for a housing down payment. 

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

Hi Mark,

As a follow-up to that answer about your biggest stock and ETF holdings, you buying any more of these stocks right now?

Thanks for your question.

You bet! To recap, here are my biggest stock and ETF holdings at the time of this post:

• TD Bank (TD)
• Emera (EMA)
• Vanguard High Dividend Yield ETF (VYM)
• Royal Bank (RY)
• Fortis (FTS).

Only TD Bank is more than 5% of my overall portfolio – around 5.6%. I prefer to keep any one stock holding at no more than 5% of my portfolio.

To answer your question, I am DRIPping every single stock above, multiple shares or ETF units per quarter. So, yes, technically, I am buying more of these every quarter and I have no intention of stopping my reinvestment plans for any of these top-5 holdings. 

Right now, I’m currently trying to save up $12,000 for 2021 TFSA contribution room. That available room opens up on January 1, 2021. 

Back to your question, you can learn more about dividend reinvestment plans or DRIPs on this dedicated page here. I believe any investor should strongly consider reinvesting their dividends in registered accounts as much as possible. 

Partnerships and Deals!

Thanks to my passion for personal finance and investing, some great companies want to offer deals. As always, 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.
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• You can get $50,000 managed free with ModernAdvisor.
• Sign up for commission-free investing with Questrade.

Happy investing and see you in the comments section!