Weekend Reading – Credit scores, homes cost, investment picks, best books and #moneystuff

Home ownership costing plenty of money: of course it does! Duh! But “home ownership” has been spun into some kind of fanciful fairytale by certain entities over the last 60+ years (definitely over the last 30+ years). Even the two words, ‘home’ and ‘ownership’ are not true representations of the actual condition as both play to our emotionality in order to get our money. I did the cost analysis of renting (and investing) vs buying (and mortgaging), and the two came out to roughly the same figure over the long run. Lifestyle was the deciding factor. Speaking of the long run, residential real estate appreciates in and around the same level as inflation (probably below). Think again about a house being a great “asset” (hint: it’s not), especially in the future environment (hint: the major factor behind the long rise in RE prices has been the long decline in interest rates; that driver has dried up).

Adviser/Advisor: not at all shocking that people working in the money sector take advantage of legal minutiae to worm their way to more money and less accountability. Reminds me of Bubba’s zinger: “It depends upon what the meaning of the word ‘is’ is.”

List of the best investing books: still chuckling. Even the very best information is laid waste by our hugely fallible brains. Exceptionally few of us will actually translate the information and theories into permanent and profitable practice. It’s no use trying to control the world around when we have so little control of the world within us. As commented, “ETFs and robo advisors…”.

5iResearch: Agree on every point, esp. parroting my mantra: “Simply putting the information out there” (see above). Teaching basic money matter is about the most practical lesson ever — from the poorest of poor to who’s ever #1 on the list, money is in all our lives. Forget about self-publishing more useless books or starting up a new PF blog, if you truly want to instigate lasting and effective socio-economic change, spend that time lobbying your government — from local MLA to school boards — to put mandatory financial literacy courses in school, K-12. The only problem is that the more complex the material becomes (e.g. investing), the more bias is introduced; I have my doubts that a high school teacher would have even a fraction of a Roche-like outlook/understanding of how all the pieces of money fit together. And what texts would be used? Egad! Never a perfect solution, but it has to begin.

(Interesting side note from the article: “If everyone is able to save and invest better, the net worth of the nation (and individuals) should rise…”. At the start of the month I posted a link about this very thing, the research finding “Canada’s real per capita comprehensive wealth grew by just 0.19 per cent annually between 1980 and 2013…” Massive fail considering the ever-declining rates coupled with the largest-ever bull market. Financial literacy is bigly important. On that note…)

My pick for 2016: My best buy in 2016 was Manulife (MFC) — up 37% with a 4% dividend. Thanks Trump.

Life can mess up: It’s a bit odd to read MJ’s take on this. I’m going to have to lightly disagree for reasons of probability.

It’s a chilly -2 here…might get down to -3…BRRR! We might not have towers of snow and extreme cold weather warnings, but we do have a bumper crop of stupidity in the shape of free house down-payments (http://business.financialpost.com/personal-finance/mortgages-real-estate/vancouvers-interest-free-loans-for-homebuyers-risk-fuelling-debt-binge-and-hiking-prices) and a fentanyl craze (http://www.cbc.ca/news/canada/british-columbia/fentanyl-bc-deaths-november-tally-622-so-far-2016-1.3901731). Woo hoo!

ModernAdvisor: “When it comes to investing, we truly believe that simple is better. And for most Canadians, a simple, well-diversified portfolio of low-cost ETFs is the best long-term investment strategy available.”

Couldn’t leave without commenting on this one. Quote from Connolly Report: “ETFs, with exceptions, of course, have four fatal flaws: a lot of mediocre securities, too many holdings, not enough holding (the ‘T’ for trading, in ETF) and little or no increasing yield. In the total scheme of things, ETFs have not been around very long. Ben Graham wanted twenty years of continuous dividends before he purchased a stock. Few ETFs have a track record over a decade”.
“To truly build wealth, you have to build a portfolio yourself with individually selected dividend growth stocks. There are only a few dozen great Canadian dividend growth stocks. ETFs have too many mediocre stocks”.

Thanks for the mention, Mark. Those picks for 2017 are pouring in from the community and as usual, some great picks all around.

Looking forward to sharing the post in the new year
R2R