Weekend Reading – Dividend ETFs, drawing down a portfolio, not paying off a mortgage and more #moneystuff
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.
I got around to posting this article this past week:
I don’t invest in any Canadian dividend ETFs. Instead, I’ve decided to build my own DIY ETF – a collection of Canadian dividend paying stocks in my own quantities across various accounts. Stocks, very similar in fact, to the top holdings in XIU:
This approach is, I believe, working well. Year to date the portfolio is up over 17%. Over the last five years the portfolio is up 8% annualized. Since inception, almost 10 years since I started this approach, my Canadian stock portfolio is up just over 9%.
Although I’ve built my own DIY Canadian stock portfolio I’ve decided to own more low-cost U.S. ETFs over time within my RRSP – for diversification and exposure beyond Canada’s borders. You can find what I own and what I believe are some of the best low-cost ETFs, dividend ETFs or broad market ETFs in general on this page here.
Best wishes for the weekend and see you here next week!
This article says based on a recent survey, 48% of Canadians are just $200 away from insolvency. I find that number very hard to believe, far too high, especially given the survey was conducted for an insolvency firm.
I enjoyed reading Million Dollar Journey’s plan to draw down his portfolio – to fund his early retirement. He’s thinking along the same lines I am – “living off dividends” to a degree while spending his RRSP assets before spending the TFSA (tax-free) assets. He would do well to defer his Canada Pension Plan (CPP) and/or Old Age Security (OAS) until at least age 65 to enjoy these higher fixed income payments, which are also indexed for inflation.
You can read about when to take CPP or OAS in these articles below:
For MDJ, not that he needs any help with his personal finances whatsoever (!), here is an article about a couple seeking to withdraw $800,000 from their portfolio, in a tax-efficient order, as part of an early retirement plan (age 52).
Well put Nick Maggiulli, from Of Dollars and Data about one of the biggest problems with financial advice – it is not relevant to anyone but you! He emphasizes his point citing the experiences of a very successful U.S. blogger who earned a ridiculously high salary in his 20s to become a millionaire (in net worth) by age 30. To quote Nick about how realistic that is:
“Unfortunately, the sad truth is that most Americans will NEVER be able to do this. They will never earn enough money to invest and get rich. Remember that 54% of U.S. households don’t own any stocks and 69% of working Americans save 10% of their income or less (with 21% of working Americans saving nothing at all).”
Robb Engen says it’s not that important to pay off his mortgage – right away. He and his wife only have so much money to go around, and have decided to prioritize his money this way:
- “TFSA – contribute $1,000/month
- RRSP – max out our available contribution room
- RESP – max out contributions for our two kids
- Travel – Visit Scotland/Ireland this summer. Vancouver in October. Maui in February”
We can relate. Although we’re paying down our mortgage with small, extra bi-weekly payments, we have prioritized our savings for investment purposes this way: max out x2 TFSA accounts every year ($12,000), strive to max out x2 RRSP accounts in the coming year or so (>$20,000), and enjoy life by taking an international trip. Life is not always about looking ahead – you really need to live in the present. You can read up about our 2019 financial goals here.
How do you prioritize your money?
Save, Invest, Prosper!
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Happy investing and see you in the comments section!