Weekend Reading
Welcome to my latest Weekend Reading edition. I hope you had a great week. Here are my articles from the past week:
This post outlined Sure Dividend’s favourite Canadian dividend stocks (as well as my own).
I wondered who wants to be a millionaire?
See you here next week where I hope to post my (delayed) dividend income update!
Mark
Millennial Revolution said budgets suck. Do this instead. Personally I think there is a better way to budget – we forgo a detailed budgeting process because we’ve purposely put as many “pay yourself first expenses” and “save first, spend later expenses” ahead of other things. This means after we pay ourselves first we have no remorse and spend whatever we want from there.
How are you going to save or borrow money differently now that interest rates are climbing again, finally? This is our plan for higher interest rates.
ESI Money provided a few ways to save more money in Part 2 of that series here.
Looking for a few dozen safer Canadian stocks to invest in that pay out juicy dividends? Count me in. Norm Rothery has you covered.
Dan from StockTrades.ca has a nice summer giveaway underway.
Tawcan posted his dividend income update and mid-year review. Like I mentioned above I have to post my June update soon – stay tuned. In the meantime, check out our progress from this report.
My friend Kyle Prevost posted an article about DIY index investing vs. Robo Advisors on one of my favourite sites for savings and deals: HowToSaveMoney.ca. I largely agree with Kyle. For investors that are worried, scared and/or need some extra coaching to get started or stay invested in a low-cost, diversified fee structure I think Robo Advisors can absolutely help. Check out my post for how you can train your investing brain with some help from a leading Canadian Robo Advisor firm here. You can start investing with them using $1,000 of their money.
Ben Carlson shared some thoughts on the FIRE (Financial Independence Retire Early) movement. Like Ben, we feel: “Specific financial goals come and go over the years as your life invariably changes and throws you some curve balls.” While we feel age 50 is a good stretch target for our semi-retirement FIRE remains something I’m curious about.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Hi Mark
I am not buying into the higher interest rate scenario. I am 66 now and seen a lot of high rate periods, and they have all been caused by either high inflation or a low Canadian dollar (requiring an influx of foreign capital to prop up it up so that it does not go lower). High inflation in the past has been caused by excessive wage rates obtained by unions without a corresponding increase in productivity. The Canadian Auto Workers and their demands from the big three auto manufacturers come to mind as well as other situations such as the Canada Post strikes. The world has changed since then- inflation will remain low (microchips and automation have replaced many unionized workers, and reduced the power of unions) and the Canadian dollar,despite the oil glut, is holding its own. The threat of higher interest rates is only to cool off the amount of debt being incurred by Canadians, and there are other ways to do it. In fact there is so much debt out there that a even a slight increase in rates will cause economic slowdown ( I am betting that by this time next year, the latest rate increase will have been rescinded). The result – keep buying those good paying dividend stocks, because they are the only game in town for now and many years to come.
Hey Paul,
There is certainly nothing “high” about current interest rates. They remain dirt low. I suspect they will hover around here for decades to come given largely shifting demographics.
Can you foresee an age where high inflation is coupled with lower rates? I can’t. I can see inflation rise a bit though.
“The threat of higher interest rates is only to cool off the amount of debt being incurred by Canadians, and there are other ways to do it.”
Totally agree. I have no intention of selling those good paying dividend stocks.
Thanks for the mention Mark. Looking forward to your June dividend income report!
Great 🙂
“$1 million in financial assets is a sizable sum of money most Canadians will never own.”
“Never” is a term I think one should not apply to their future. Starting that way or just giving up ensures one will never achieve their goals. One should not just dream\hope for a rosy future, but just keep working to do the best they can.
For those who follow this blog and are already working towards achieving their goals, nothing is impossible. Think positive but be realistic.
(previous attempt got zapped so…here’s a truncated version…)
” “Never” is a term I think one should not apply to their future…nothing is impossible. Think positive but be realistic.”
Sometimes “never” and “impossible” are realistic.
The very long-term trend shows that 99% of Canadians will never own “$1 million in financial assets”. Aim for it, for sure, but realize that almost everyone will definitely come up short.
Two other points:
i) a million dollars used to be a very substantial amount. Having $1 million 100 years ago would be akin to having $20 million today. It’s the difference between being completely dependent on 100% of your money just to maintain a standard of living (e.g. $40,000/yr in dividends) and being rich enough to spend freely without consequence (e.g. $10,000 bottle of wine). I guess eventually we will all be millionaires…if we live long enough. Point is, a million dollars is a near-flaccid form of its former glory that still almost everyone will not reach. You can think about what that trend reveals.
ii) in parallel, only 10% of the “1%” income earners will stay within that 1% for the duration of a decade. Meaning, just like the bulk of low-rung millionaires, it’s very difficult to attain a lot of money and it’s even more difficult to keep it; most millionaires and most 1%ers will rotate out of those upper echelons of wealth.
You’re right, “never” is a strong word. I probably could have used unrealistic!
I still think it’s a tremendous amount of money.
You’re right, nothing is impossible. Likely too strong of a word and I appreciate the feedback!
re: Do you still want to be a millionaire? — “I read an article about Canada’s wealth…”
My reply from the original post (https://www.myownadvisor.ca/weekend-reading-healthy-living-smart-beta-etfs-as-wmds-and-money-stuff/):
“From the analysis: “Private financial wealth includes cash and deposits, mutual funds, listed and unlisted equities, debt securities, life insurance payments, and pension entitlements…”. Thus if we remove the last two forms of calculated wealth — life insurance payments and pension entitlements — which are not ‘in-hand’ and not at all liquid, accessible, or investable, I’m quite sure Canada’s millionaire household rate would drop from 3.5% (485,000) down to the more realistic ~1% I put forth (we also mustn’t forget that a portion of that “growth” is from immigration). A more reasonable wealth report would be the Capgemini analysis, which reports a *reduction* of millionaire households (down 10,000 to 320,000; ~2%). Not only that, but 95% of Canadian millionaire households are valued at $5 million or less, with much of those hovering around the $1 million mark; a more precarious than robust clan.”
— “$1 million in financial assets is a sizable sum of money most Canadians will never own.” — true. But as stated above, $1MM no longer has the power it used to carry 150, 100, or even 50 years ago, yet the dream won’t die (welcome to Capitalism). You’ll need at least $7 million if you want to be on the same level as historical millionaires (i.e. be part of the real 1%). In addition, why isn’t ‘human capital’ found anywhere in these calculations? If such inane and never-realized sums such as “insurance payments” are considered, then why isn’t human capital also considered in net worth statements?
— “that $1 million saved and invested for your retirement should exclude government pensions and programs like Canada Pension Plan (CPP) and Old Age Security (OAS). Count on yourself before you count on government policy.” — again, true, but gov’t policy can touch anything and everything — even your “count on yourself” investments (e.g. the $35+ billion loss of 2006’s ‘Halloween Massacre’). It’s a completely biased mindset which excludes one source of wealth yet includes a different source based merely on provider. You discount future gov’t actions yet credit future corporate actions. Based on what FACT?
In the end, do I still want to be a millionaire? Guess that all depends on whose arbitrary calculations I apply to my wealth. Currently, I am both a millionaire and not a millionaire at the same time…that should tell you all you need to know about the popular notion of being a millionaire.
re: budgets suck — “…figure out your values, and fill that jar your way, with your own rocks, and screw what anyone else thinks.”
Including deliberately flaunting rejecting “home ownership” in favour of “financial independence” in order to gain heavy media exposure to fuel your burgeoning blogging job? Once again, a highly contextual example. And if we truly follow that advice, then why should any of us care what FIRECracker has to think or value? Guess that conclusion wasn’t too carefully thought out. On a side note, any confused blog with a motto “Stop working. Start Living.” is mightily far, far off-base, and once again, equating work with death (i.e. if you are working, you are not living) and that is definitely not a valuable mentality. ‘Millennial Revolution’??? Wtf are they revolting against — enjoying the highest ever standard of living in history?!? LOL!
p.s. I guess Derek ‘Idiot Millionaire’ Foster can no longer legally use the title “Canada’s Youngest Retiree”.
re: Ben Carlson shared some thoughts on the FIRE (Financial Independence Retire Early) movement. — “A running theme with most [FIRE] stories I read is that the people hate their jobs…”
Uh huh. As I’ve stated before, it’s easier to fill the wallet than fix the mind. I think most of these FIRE bugs fail to do what Ben prescribes, “define what having a rich life means to you”. They think working is the source of their misery and not working (and money) is the key to their happiness — yikes. I could go on and on about this malady, but there’s really no changing people’s beliefs via extrinsic means. As Ben says, congrats to all those who did the monetary hard work.
As an end-note, and in relation to both budgets suck/FIRE movement…if a standard PF rule of thumb is to first pay yourself 10% of your income…and if an accepted axiom is ‘time is money’…I wonder how many people out there pay themselves first 10% of their time? How many FIRE bugs would feel as grossly disgruntled with life if they used 2-3 hours a day deliberately focused on creating their best possible life? I’m probably safe to say that most use that 10% of ‘time money’ in pursuit of non-deliberate escapism.