Weekend Reading – Dividend powerhouse, best U.S. dollar accounts, legal wills and more!
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.
It should be another great weekend to get outside and be active. It’s going to be hot, hot, hot in Ottawa!
Glad we know someone in our family with a pool! 🙂
I hope you have a great weekend and you enjoy these articles.
See you here next week when I will (finally) post an update about my dividend income journey!!.
On my site, in case you missed it, here is when to sell a stock after a dividend cut:
Great work on GenY Money about the best U.S. dollar accounts to own in Canada.
We keep a bit of U.S. dollars in a no-fee account for international travel (that is…when we did travel…sigh) so I think that’s your best bet.
Dividend Growth Investor answered a question about how long it might take to generate $1,000 in dividend income. I recall it took me about 12-13 years of saving and investing. It took an even shorter amount of time to reach $2,000 per month. You can see where I am on this page here from a few key accounts.
Here is where that logic comes from:
“If on the other hand we get better entry yields, and we see dividend yield of 4% and dividend growth of 6%/year, I will reach my goals within 154 months. This is close to 13 years. This is a likely scenario, which will likely present itself during the next bear market. It is possible that dividend investing falls out of favor with the investment community, which may translate into lower prices and better starting yields. Around the time of the financial crisis, and even up to 2012, it was possible to build a portfolio of attractively valued securities yielding around 4%.”
A reader recently asked me about some best ETFs to own to diversify their TFSA (including XUU, XAW, VXC and more) so I pointed them to this article here.
My friend Million Dollar Journey has a comprehensive review of Canadian Legal Wills.
Tawcan talked to a dividend powerhouse – a reader who is now financially independent. The reader’s “three things” he would like to do in retirement align nicely with my semi-retirement goals in the coming years:
- Get into a good exercise routine to maintain better health.
- Spend as much time in the summer outdoors – enjoying golfing, biking and hiking.
- Travel, including spending a few weeks in the winter in Belize or another warm weather country.
View from our villa this February in Belize.
Awesome work by Beau Humphreys on his Personal Finance Show when interviewing Kassandra Dasent. I put Beau’s podcast on when I went out for a 1 hour+ walk the other night. In this episode, one of many in his COVID-19 series, Kassandra shares her experience with COVID-19 so far, and how it has affected her ability to see her mother in Montreal, and her step-child in Trinidad. They also discussed the current anti-racist protests around the world, Kassandra’s experience with explicit and implicit racism in her own life, and what we can all do to help change the way Black people are viewed in the US, Canada and everywhere. It was a very good show…
Dale Roberts told us indexing works.
Boomer & Echo argues that while asset location (i.e., putting your assets in the correct accounts to optimize and therefore lower taxation) works well in theory most DIY investors probably don’t need it. The simple reason: it’s complicated and hard to sustain with time. I think he’s right and I’ve long believed that while some basic approaches are fine (see below) most investors are better served with simplicity vs. complexity and keeping the same asset locations over time. That means by a few low-cost, diversified ETFs and own some Canadian and U.S. stocks as you wish within your maxed out registered accounts and be done with it. Live your life after that!
I wrote this post almost 10 years ago and it remains true to my approach today!
Thanks to my passion for personal finance and investing, some great companies reach out to me and provide reader offers. I’m happy to share those below from my Deals page:
- As a My Own Advisor reader you get full-access, for FREE, to all of 5i’s research reports, all the model portfolios, top companies and best ETFs to own.
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- You can get $50,000 managed free with ModernAdvisor.
- Sign up for commission-free investing with Questrade.
Reader question of the week (adapted for the site):
Have you any thoughts on putting in alerts, or stop loss triggers on individual stocks?
In more detail, with the last downturn, stock prices dropped about 20-30%. I was thinking it will happen again. How about limiting exposure to this with a loss trigger to sell when a stock drops more than X%.
Thoughts? Love the site.
Thanks for that!
Humm, stop loss eh? You know, I don’t use them and here’s why: I don’t sell very often.
For those that don’t know, a stop-loss order is an order placed with your broker to buy or sell once the stock reaches a certain price. A stop-loss is designed to limit an investor’s loss on a position. So, setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss on that purchase to 10%.
While this free brokerage tool might be good for many investors, the use of this is not for me.
When I buy a stock or an ETF my intent is to own that position for many, many years. This way, I take advantage of buying more shares when stock prices are down and I enjoy the “ride up” when stock prices climb higher.
While a stop-loss activation might allow for some investing decisions free from any emotional attachment I think investors are far better off just learning to live with the ups and downs of stock prices.
If you feel stop-loss orders are helpful for you – great! But for my long-term buy and hold approach using any stop-loss orders they are largely irrelevant.
Oh, and on a totally unrelated investing note, I will be sharing some of my favourite golf drills in the coming weeks so stay tuned for that.
Happy investing and enjoy your golf game!