Weekend Reading – Core and explore edition
Welcome to my latest Weekend Reading edition.
You can read my previous editions below:
Why you should focus on cashflow for your portfolio, and
More recently, the fighting inflation edition including how I intend to fight inflation using my portfolio.
A reminder this is your last chance – on My Own Advisor at least – to win one of six (6) (yes, 6!) copies of Preserving Wealth.
Beyond my site, check out Cashflows & Portfolios – we asked the author of Preserving Wealth this question below and he answered it completely for us.
“With one founder of Cashflows & Portfolios being an early retiree and the other one almost there, we have seen all sorts of approaches when it comes to asset decumulation. Why is this such a puzzle? Can you speak to the asset drawdown complexity you see and help clients with?”
Check out the entire interview with author Jack Lumsden and your chances to win more copies of Preserving Wealth here.
Have a great long weekend!
Jon Chevreau wrote an interesting piece in MoneySense lately – rethinking the “core and explore” investing approaches that many DIY (Do-It-Yourself) investors use.
This got me reflecting on core and explore and what it means to me…
What is core and explore?
Essentially, core and explore is an investment strategy where you take the bulk of your portfolio (say more than 50% and upwards of 80% or even 90%) and invest it into something called core holdings. Those core holdings/the bulk of your portfolio could be real estate, stocks, or other things that you hope will appreciate in value over time. It could also mean how you invest to stabilize your portfolio or as per the links above – Preserve Wealth.
This means the definition of a “core” holding can be personal and subjective. It does not need to mean an indexed fund although I can appreciate some investors (not Jon of course) think this way…
When I think about my own portfolio, my “core” can be considered dividend paying stocks. These are investments that I’ve held, in some cases, approaching 15 years now – investments that I believe are high-quality investments with a proven track record of performance. In staying true to my “core”, we’ve now surpassed any initial thoughts on how much this portfolio might have become years ago. I simply can’t believe the power of compounding…something as an investor you cannot underestimate for your financial independence plan!
I do however hold some “explore” assets.
The premise behind explore is to keep some assets in more speculative, more volatile or riskier investments for potential reward. This could mean a smaller allocation to oil and gas stocks that might be cyclical in nature or investing in cryptocurrencies or a small hedge towards tech-stocks. The list goes on…
So, when it comes to core holdings – you are seeking long-term quality and consistency.
When it comes to explore holdings – you are largely being opportunistic.
How I built my dividend income portfolio
Over the last few weeks, related to “core and explore”, I’ve received a few reader questions so I replied to those passionate readers using these links below:
How I built my dividend income portfolio!
What to consider when it comes to taxable investing
At the end of the day, I don’t see myself so much as a “core and explore” investor per se as a hybrid investor – something I proclaimed when I started this blog. That means we follow two basic investing approaches as we continue to work towards semi-retirement in a few years:
Approach #1 – we own a number of Canadian dividend paying stocks for income and growth.
We own these stocks inside our non-registered account and within our Tax Free Savings Accounts (TFSAs). My monthly dividend income updates focus on that.
Approach #2 – we own a number of U.S. dividend paying stocks for income and growth AND we’re owning more units of low-cost U.S. Exchange Traded Funds (ETFs) inside our RRSPs over time.
We own U.S. assets because we believe investing in companies beyond Canada’s borders will provide us with some much needed U.S. and multinational diversification.
I can’t necessarily speak to your “core and explore” investing decisions, but I will say defining a plan, working towards goals related to that plan, and continually monitoring that plan for adjustments will be a methodology that should pay massive dividends (no pun intended) that can work for you too.
What are your thoughts on “core and explore”? Do you have your own definition? What’s working for you?
The 2021 Canadian Financial Summit is here, I’m there for year #5!
As my blog and readership continues on a upward trend (thanks very much to all readers!), I’m now considering investing within my corporation.
In fact, on that subject and more – yours truly is back once again at the 2021 Canadian Financial Summit to share what I know!
If you haven’t attended the summit in the past, well, this is your chance to do so – FREE.
The Canadian Financial Summit is a virtual summit that features over 35 Canadian personal finance experts discussing a wide range of topics geared towards helping you become the best investor you can be!
As I’ve always said on this site, follow my journey and learn how to become “your own advisor” too! 🙂
The summit is 100% virtual, free, and it kicks off on September 22nd.
You can get your free tickets right here, courtesy of me / My Own Advisor.
What else can you learn about at the free summit? Read on:
- Learn how to buy back some time with FIRE!
- How much does it cost to travel FOREVER?
- How to take a tax holiday by working outside of Canada
- Want an Unlimited TFSA? Try moving to these countries with territorial taxation
- Are dividend stocks in a bubble?
- The risks of investing in cryptocurrency
- Should I have Bitcoin in my Portfolio?
- Maximize the New Aeroplan and Post-Covid travel plans
- Don’t let FOMO ruin your investment returns
- Maximize Work From Home tax tips in a Post-Covid World
- Will the Canadian Housing bubble finally pop?
- How to setup a corporation, invest within it, and then pay yourself
- The BEST ETFs in Canada
- Why self-made dividends are better than ordinary dividends in every way!
How do you sign up?
Just head on over to the Canadian Financial Summit and sign up for free with my link here.
This way, you’ll be automatically entered to win one of the free Premium All Access Passes they will giving away when the event goes LIVE.
My link gives you access to all the talks – you won’t miss a thing – and you can watch and listen from your couch or patio!
I look forward to hearing about your feedback on the entire summit and my contribution to it!
More Weekend Reading
Matt Poyner believes you should stop saving for retirement and start saving for financial independence. I’m with you Matt – been focused on that for many years now myself!
My friend Dividend Growth Investor wrote about investing in the U.S. Dividend Aristocrats.
GenY Money reviewed Common Stocks and Uncommon Profits of late.
Congrats to Rob on his latest passive income update.
A reminder about big banks banking-big on Cut the Crap Investing.
Ben Carlson wrote about Death of the Starter Home. Like Ben, I continue to believe low rates are fueling the housing issues in Canada as well. As long as rates remain low, people will continue to borrow their brains out.
“Rates have allowed buyers to move up their price points. Yes, taxes and down payments are higher too but lower mortgage rates have allowed homebuyers to build pricier homes with little-to-no inflation in their monthly payments. People can afford more home at today’s rates. The monthly payment for a $400k house is now lower than the monthly payment for a $300k home in 2002.”
Save, Invest, Prosper!
As always, check out my Deals page.
My very own personal BMO promo code remains available! Use that BMO code to get hundreds in cash back when you open investment accounts with BMO like your RRSP, TFSA, taxable account and more! What’s even better with BMO now is they have commission-free ETF investing. Yup. They are now offering commission-free investing for more than 80 Exchange Traded Funds (ETFs), via their self-directed BMO InvestorLine clients. The ETFs cover a broad range of asset classes, geographies, management styles and popular themes from Canada’s largest ETF providers, including BMO, iShares and Vanguard. Simply awesome and I hope more big discount brokerages follow their lead.
I’ve got a new partnership with EQ Bank – just look at the banner in the margin! EQ Bank typically offers the best savings account rates in Canada. I hope to park my cash wedge for retirement there!
With 5i Research, take a no obligation FREE trial for your ETF and stock research.
With LegalWills.ca use my personal My Own Advisor promo code for 15% off any services – that never expires.
I earn $600 in cash back every single year. Scroll down my Deals page to get the same credit card I use in your wallet.
Other great, free, My Own Advisor content:
How I invest in dividend paying stocks is always found here.
Why I invest in low-cost ETFs – along with dozens of articles about ETFs can be found here.
Looking for free calculators, tools, or even my support? Check out my Helpful Sites page here.
I regularly update my FAQs page – with dozens of answers here.
I might be approaching 30 free, retirement case studies you can learn from here. More to come!
Very excited for your appearence at the Canadian Financial Summit this year. Your talk last year was great. I always tune in for you and a few others.
Very kind of you Loonie. I also try and keep up with your site as much as I can. We have a great small, but mighty, personal finance community 🙂
Best wishes and let me know your thoughts on my talk!
“Like Ben, I continue to believe low rates are fueling the housing issues in Canada as well.”
Mark, would recommend listening to David Herle’s podcast from July 29th where he interviews John Webster, President and CEO of the Scotiabank Mortgage Authority.
They talk about housing and affordability in Canada, interest rates is one part of it, the charging of $160,000 in levies per unit to developers is another big issue. Which leads to supply, we build approx. 200,000 units per year in Canada, not nearly enough. Think about that in context with immigration numbers, and you can understand the pressures seen in the regions/cities/ where the jobs are.
Anyone cheering on the housing boom, my tongue in cheek reply, “so you hate your kids do you?”
Speaking of kids, passing on our investments to the next generation is definitely of interest. Will have to look at the book Preserving Wealth, sorry I missed out on the draw.
Indeed David – we are simply not building enough homes for anyone, let alone newcomers to Canada. Certainly incentives need to be put in place for more building starts and/or more retrofits. Lots of empty office buildings could use a makeover!
Yes, Jack did write a good book and happy to share that book on this site such that others learn more about the asset decumulation puzzle!
I appreciate your readership.
My explore portion of my portfolio is approximately 15%. Like you, I’m in a NASDAQ 100 ETF ZQQ which has done well. The 2 other speculative ETFs I’ve invested in is ZCLN Clean Energy ETF as I think 10 years from now will show an incredible return with all the government focus in clean energy investment. The other speculative ETF I’ve invested in is ZINN Innovation ETF. This is similar to the ARK.K ETF in the US full of innovation stocks in disruptive technology, genomics, internet and financial stocks. I’ll be really interested to see how well this does over the next 10 years as well. But the rest of the portfolio is Canadian divided stocks and ZUQ High Quality US ETF. Cheers.
Well done DCBass. Big fan of QQQ or ZQQ – either one should work wonders for the coming decades as a tech growth kicker per se.
ZCLN is interesting. Not invested in it yet but won’t rule it out given I have the same thesis as you!
ARK.K is also a nice speculative play. Hard to argue with 500% returns in the last 5-years but I have a feeling that will not repeat. I could be wrong of course!
I’m 100% invested in Core equities. I like to call my Core, “Stocks to Consider”, just those I’ve screened and decided they are the only ones I want to consider owing. They have continued to grow my income, so what else do I need to worry about.Certainly not the market value.
Enjoy the Summit.
Thanks cannew. Keep up the regular posts, I do my best to keep up to them!