Weekend Reading – Death by PowerPoint, Bond ETFs, RESPs and more #moneystuff

Weekend Reading – Death by PowerPoint, Bond ETFs, RESPs and more #moneystuff

Hey Everyone!

Welcome to my latest Weekend Reading edition, where I list some of my favourite finds from the personal finance and investing blogosphere.

In case you missed the last edition, you can check it out here: Tax Free Investing Power.

These were my articles from the last week:

This edition has some good news about Microsoft PowerPoint, some top bond ETFs to consider, I answer a reader question about RESPs, and I highlight some savvy tax approaches for any retiree to consider.

Read on and enjoy!

Mark

Weekend Reading

A great read and interesting links as always in the Carrick on Money column in The Globe and Mail. Thanks for the mention about this post on Cashflows & Portfolios about the Longevity Pension Fund – should you own it?

As a long-time PowerPoint user, I welcome this. Many companies are ditching the 30, 40 or 100+ slideshows (yes, I’ve seen those) in favour of more simple briefing notes and instead, making time during meetings to actually, well, meet!

Anyone else tired of death-by-PowerPoint?

From the article: “Even 11 words on a slide can overload working memory. Imagine what 30 or 60 minutes of non-stop information does, he says.” – skills consultant and expert. “Companies such as Amazon, Acceleration Partners, LinkedIn and several others have banned PowerPoint. Employees communicate, discuss, engage and strategize without using the loathed decks.”

I enjoyed this tax savvy article from Alexandra Macqueen and Morningstar.ca. By following a few simple tax strategies, this couple lowered their lifetime tax bill. From the article/strategy used:

  •  “…moving the $300,000 in their highly-taxed RRSPs to lower or non-taxable accounts (non-registered accounts and/or TFSAs).
  • By implementing this strategy, “the amounts in their RRSPs that will need to be converted to RRIFs by the end of the year in which they turn 71 will be reduced, thus lowering, in turn, the amount of required minimum withdrawals from RRIFs.
  • Finally, starting withdrawals now, when both members of the couple are alive, is another tax management strategy. If either member of the couple were to pass away, the tax on their remaining investments would fall entirely on the surviving member, reducing the amount that could be withdrawn before hitting the next tax bracket – at a time when that spouse is also dealing with lower household income due to reduced government and work pensions.”

Alexandra has been an excellent contributor to this site too. Read on for her content:

  1. Ten questions on annuities – answered here!
  2. Why you should consider pensionizing part of your retirement nest egg.

Our Life Financial shared an impressive dividend income update.

I’ve got my latest income update partly drafted for next week – stay tuned. You can read about my May 2021 dividend income update here:

May 2021 Dividend Income Update

Cashflows & Portfolios covered off an important topic – What is a Credit Score and How Do Credit Scores Work?

Dividend Earner shared what he believes is the best bond ETF in Canada. His pick?

VGV – Vanguard Canadian Government Bond Index ETF.

A good pick but I think ZAG, VAB and some others deserve more attention, due to their lower-fee structure, higher number of holdings, and shorter-term duration. Keeping a shorter-duration bond is important, based on what I shared in the MoneySense Best ETFs in Canada for 2021 edition with my pal Jon Chevreau. You own bonds for a flight from equity safety, not necessarily returns:

“New panelist Mark Seed of the My Own Advisor blog similarly calls for more selectivity in bond ETFs. He figures that if you want bond ETFs, you should go domestic if you plan to retire in Canada and, “more importantly, bonds could be considered your safety parachute when equity markets fall. Otherwise, go with more equities in your portfolio for growth if you have a multi-year investing time horizon.” Apart from helping dampen stock market volatility, Seed says 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). Finally,” he notes, “bonds can help protect against deflation.”

Like Dale Roberts, we’re all trying to make some sense of the markets.

Modest Millionnaires shared her tips about negotiating a remote work agreement.

Stocktrades shared some of the best blue chip stocks to own in Canada for 2021. You might recall we had a post together about how the owners of Stocktrades.ca manage their own money…!

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. A family member used their services and they completed a review with me. 

I earn about $600 in cash back every single year. Scroll down my Deals page to get the same credit card I use in your wallet. 

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

Hello!

I’m new to your site. I have been trying to Google your name for content and podcasts that I can listen to throughout the day and very much enjoying your content. Thanks.

You did mention you might answer some questions from readers, so I’m going to give mine a try in the hopes that you might have the time to help…

I’m a woman in my late 40s with 3 kids. Around 14 years ago I was off on mat leave and was determined to figure out how I could manage my own investments and more specifically my kids education fund because I had been duped by an RESP company when I had my first child. I happily stumbled on the couch potato portfolio. I followed that guidance for my two boys’ RESPs by making monthly automatic contributions to the TD eSeries funds ($400 split 3 ways: Canadian, International, U.S.). I’ve really had no time over the years (maybe until now) to look at how things are doing!

I think I know more than the average person about investing, but I would still consider myself a very junior DIY’er. Anyhow, fortunately for me, that TD eSeries approach was a solid one and now there is a decent amount of money available to them, but I don’t know what to do for next steps in order to ‘dial down’ the investment risk.

One will potentially be university bound in 4 years, the other in 8 years. I mean, if we hit a 3-4 year recession when either one goes to university, we would likely be able to fund the university costs from another source
to prevent pulling the money out at a bad time, but maybe that’s not prudent. I’m mostly afraid of the lost gains from a bad stock market. I wonder if there is a safer approach.

Would it be such a bad thing to leave it all in equities and hope that the money I make in the 4 or 8 years?

Is that just greedy or foolish?

Thank you so much for any reply!

Thanks for your readership!!

Well, I cannot offer direct financial advice of course but I will say I know of many parents that use or have used the TD eSeries funds for RESPs (Registered Education Savings Plans). Some of those funds are great products for all the reasons you already know. The challenge becomes, as you have eluded to, when kids are close to using / needing the money. How best to invest?

Personally, I think you’re already on the right track.

If you need money sooner than later, for whatever reason in life I believe it should not be in equities. 

A good rule of thumb to consider:

  • Any money needed in the next 1-2 years, keep in cash. (No stocks or equities whatsoever.)
  • Any money needed in years’ 3-5, consider some bonds or GICs (for stability when equities tank).
  • Any money needed in 5+ years, then potentially mostly equities although there are risks. 

Back to you and the RESPs, I think you should consider dialing down the risk for the one child that is about 4-5 years away from accessing RESP assets. Equities could tank and the value of the RESPs (if heavily in stocks) could tank too leaving little time to recover before the money is accessed. 

You might want to check this out: 4 things to get right when tapping RESP savings.

Point #2 in that article is all about dialing down risk. 

“While you will need to find the right mix that suits you, experts generally recommend that you should invest more in equities than fixed income in the early years of an RESP, then gradually up the fixed income and cash proportion as your kids get closer to using the funds.”

So….potentially look at changing the asset mix to mostly fixed income 1-2 years out.

In fact, when about a year or so out, the asset mix should likely be at least 80-90% fixed income.

Here is a great read from my friend Owen at PlanEasy to help structure your asset mix by the year. 

Setting The Right Asset Allocation For RESP Investments

I hope this information was helpful!

All the best, 

Mark

Other great pages and reading material:

You can see other great questions asked by readers on my FAQs page. 

There are also dozens of Retirement stories and essays you can learn from on that page. 

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and I'm 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. Subscribe and join the newsletter! Follow me on Twitter @myownadvisor.

9 Responses to "Weekend Reading – Death by PowerPoint, Bond ETFs, RESPs and more #moneystuff"

  1. Individual bonds had always been my choice, but now that high grade corporate bonds pay virtually nothing as they mature I’ve had to resort to etfs. ZAG and ZCS are my current choices, along with a bit from XGRO. Only represents about 5% of our holdings but I’m slowly building that war chest. I am also considering switching to ZSB which I think is an even better option.

    Reply
    1. Thanks RBull. I certainly see some merit with ZAG and/or just own some XGRO to your point for those nearing retirement since they get the all-in-one rebalancing as well. Folks could also do well over time with a “BAL” fund but I’m simply not very fond of bonds unless you are using them for portfolio stabilizers and/or to park money when the next financial correction occurs – and then deploy the bonds to equities when things tank.

      I guess because I’m still in my working and asset accumulation years, I don’t see huge value in bonds right now. I also have a pension as you know in my future, so that’s always been considered “a big bond” to me.

      Alas, I’m sure I’ll change my mind on bonds a few times in the future 🙂

      BTW – you’re a Twitter machine. Ha.
      Mark

      Reply
      1. Deane Hennigar (RBull) · Edit

        Ya, we’ve had that discussion many times. You being in asset accumulation phase, then planning to earn income in semi retirement, and finally having a pension available is different than where I’m at. Have been where you are and I changed in full retirement, for the very reasons you refer to. I give up some return potential but I’ve understood for years now I don’t “need” to do anything more. Don’t spend what we could now and its certainly not all about the money, and no heirs to consider either. IMHO, this is also the most stimulated and manipulated stock, rate, and debt markets the world has ever known, and recency bias is prevalent now. Maybe it will keep rocketing to the moon (ha) or maybe it will all implode. Even paying off cheap debt with a lot of capital tied up like real estate “seems” dumb, vs investing it. Savers punished and debtors rewarded. Its an upside down world. Weird. But things change.

        At age 62 a 70/30 split after having trimmed from the mid/upper 70’s recently is a bit of balance for me. Whenever we do have that real reset I’ll probably have a few bucks to throw back into equities. And $52K/yr+ indexed from CPP/OAS in 7-8 years looks sweet.

        Twitter…machine…lol…a twitter nut maybe.

        Deane

        Reply
  2. Great article as usual Mark! a lot of info to digest 🙂 I can relate to your reader’s problem regarding the resp , during last year market crash my son ( first year university) was trying to access the fund but we didn’t want to withdraw the money at a 34% discount so we ended up paying for his tuition from our account untill market went back to normal by year end , I guess having a HELOC will help also to weather the storm in some cases, this year is my daughter’s turn as she starts her first year in university but the situation is much better then last year:) when they were born we automaticaly signed up with a private financial institution and i completely ignored my friend warnings about the fees they charge and at that time 19 years ago i never heard of a TD e-series 🙂 but although the fees were high but I’m glad we did it because it should cover both of their education fees with no loans needed.

    Reply
    1. Excellent to hear Gus, re: even with higher fees, sticking to a long-term plan led to RESP success. Best wishes for your daughter in the years ahead!

      Reply
  3. It takes subject knowledge to make a presentation without notes on front of you.
    The best presentation that I ever saw had two slides, throughout the presentation there was a picture of a duck swimming on a lake then right at the end we saw a cutaway showing the duck paddling like mad under the the nice calm water. We had been held mesmerized by the presentation for about anhour!

    Reply

Post Comment