Weekend Reading – Dividend raises, cost of living, #RRSP myths, market bubbles and more!
Hey Folks!
Welcome to my latest Weekend Reading edition, highlighting some of my favourite (and sometimes entertaining) articles from the week that was across the personal finance and investing blogosphere.
Just in case you missed last week’s edition I wrote about ‘shorting’ stocks, bloggers who pretend to FIRE, if you should really speculate with your retirement portfolio, dividend all-stars to own, and much more.
Well, it was a very busy week on MOA (My Own Advisor) with two original posts!
As a follow-up to the 5 stocks I want to buy (more of) in 2021, I posted this one:
Here are three great ETFs I want to buy in 2021.
Thanks to R.J. for this guest post focused on U.S. readers – how to not waste your upcoming U.S. stimulus payment.
From the article:
“In researching some data for Mark’s post, I found U.S. households hold on average $5,300 of cash. So an unexpected “windfall” of as much as $2,000 per adult represents a significant change. This is a scary stat unto itself I know…”
To support my future income needs, you all know by now I invest in a mix of dividend paying stocks to deliver passive, growing income and low-cost ETFs for extra diversification.
Well, I welcomed three major dividend raises to my portfolio this week: Bell Canada (BCE), Brookfield Renewable (BEPC), and Brookfield Infrastructure (BIPC). Those raises increased my forward dividend income by a few hundred bucks per year, doing nothing at all.
I hope to post my overdue January 2021 dividend income update – soon!
Till then, you can see where I left off 2020.
Enjoy the reading and see you around the comments section!
Weekend Reading
Love reading the prop bets associated with The Super Bowl. Are you gonna wager anything???
Chrissy from Eat Sleep Breathe FI calculated her family’s basic costs of living in Vancouver (for her family of four). Her math checked in at spending about $30,000 per year, without a mortgage; no entertainment or travel.
That’s very good I think.
I’ve done our math (family of two + two loveable cats), re: what our basic expenses might be in any upcoming semi-retirement, and I have us checking in at about $2,700 per month or $32,400 per year for basic expenses. This assumes we’re not saving for retirement nor do we have a mortgage. These expenses exclude any major entertainment or international travel expenses.
Maybe more incredibly though, when we’re not paying a mortgage nor saving for retirement (using our TFSAs and RRSPs) that will easily save us $3,000 to $4,000 per month in today’s expenses. Basically, our income needs to cover our expenses will drop in half.
I include our savings for retirement purposes as expenses. I’ve been doing this for decades.
I just think that’s a better way to budget. You?
You can check out some articles related to our plan to “live off dividends and distributions” in the coming years here.
Some good insights here from MoneySense about RRSP contribution myths and facts. My personal favourite here is you cannot hold your mortgage inside your RRSP. You absolutely can as the author suggests but I wouldn’t hold your mortgage inside your RRSP for these reasons:
- There are opportunity costs – you can hold other growth-oriented assets inside your RRSP (instead of real estate) that are likely to appreciate more in value over time.
- It tends to be more costly, for a mortgage product to do that.
I’ve always seen this as a double-whammy but to each their own.
Bob from Tawcan believes the stock market is not a get rich quickly approach.
I call investing and my approach a get wealthy eventually plan.
As per Bob:
“I don’t believe in these get rich quickly stock trading strategies. Most of them, if not all, are highly risky and you can get into trouble very easily. Please don’t believe the idea that you can just watch a stock price go up and sell it when it stops going up. “
Fritz from The Retirement Manifesto answered the question: are we in a stock market bubble?
Fritz had the same answer I did!
I also liked his comment from the post:
“What we do know is that a bear market will arrive at some point in the future. The bear never dies, he just hides in the woods for years at a time. You can be sure at some point in the future he’ll come back out of hiding. It’s his nature. The more important questions are the ones you should be asking to address this reality, and we’ll get to those in a minute.”
On Cashflows & Portfolios there was the real truth about retirement income planning.
Dale Roberts took a look at Tangerine performance for 2020. Surprisingly good!
Reader question of the week (adapted slightly for the site!)
Hi Mark,
Thanks for your highly valued information on ETFs above. I am actually moving from individual dividend stocks to solid ETFs, so I fully agree with your list.
Curious, do you personally edge your portfolio against market downturn with ETFs like HSD or HXD?
Thanks for your readership and question.
Nope!
I like HGRO in particular from their line-up and I could see myself owning a bunch as part of my corporation investing later this year.
My boring plan has served me very well for the last 11+ years and I suspect it will treat me well for many more.
Happy investing!
Mark
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Managed to get Hawaii in last year before everything was shut down.
So for two people “GROCERIES” we were approx $550 mth which includes stuff from the pharmacy as well. Not prescriptions but toothpaste, paper towels, dish soap, etc. Not strictly edibles. It wouldn’t make all that much difference at any rate.
Total for the year was $32,449 or $2,704 mth
If things keep up like this it will be lower this year. Not planning any vacation time until I get a jab in the arm and even then I would check the stats before any trip.
RICARDO
Ya, when I have “groceries” it’s 90% food 🙂 We budget another $50 or so per month for pharmacy, toiletries, etc. We also budget about $100 per month for dining or takeout with our groceries budget.
If you’re $2,700 per month, that’s very close to what we plan to spend for basic expenses in retirement ourselves. I’ve outlined those major buckets on our dividends page.
https://www.myownadvisor.ca/dividends/
Same, waiting for the jab in the arm (hopefully by Christmas 2021??) for any future travel.
Thanks for the mention Mark.
Speaking of cat, ours lately has been jumping in our bed and starts purring early in the morning as a way to get some food. So much for sleeping in haha.
Ha, yes indeed! Have a good weekend.
Ha ha, love the comment above. As someone who has cat-sat a few times in the past, I have the same question. ?
Thanks for the mention. I call this our “no fun” budget—just the core essentials to meet our basic needs. Once you add in the fun stuff, we’re not quite as frugal, LOL.
I always enjoy your roundups. Thanks for sharing all this great content. I hope you, your wife and the cats have a lovely weekend.
Wow, $32,400 per year for basic expenses in Vancouver for a family of four. That’s super AMAZING! And it’s super amazing your grocery bill for one month is $550, my trip to Costco often cost me more than that. 2020 is the year I think we spent the least due to the pandemic, it’s still well over $50K.
We are living well within our means so I am OK with our expenses. But still, Wow.
Hi May, thanks so much for reading. I totally get the “Costco Effect”! It’s very hard to leave that store with less than several hundred in purchases every time!
Thankfully, my MIL shops there quite often and is happy to pick up the odd item for us. No more Costco temptations for me! ?
Indeed. Even for a family of 2, every time we hit that Costco place, it’s easily $200. Wild how much things add up so fast. We go once every month or so. That’s about it.
Great work on the expenses Chrissy.
Yes, sounds low.
I don’t deal with “basic expenses”, just totals. 7 years in retirement our annual avg spending is $74689. That’s everything including income taxes. In 2020 it was $55153 using a pretty good estimate for taxes. For the first 6 years travel was about $24k/yr avg. of the total. We spent around $40k on home improvements. This year we need to replace at least one car. (Have 3 plus motorcycle and small boat.) Groceries here averaged $492 for last 5 years. In 2020 it was $509/mth. The previous 4 years we were travelling an avg of 10 weeks per year so our costs probably would have been closer to $550/ mth avg. We eat exceptionally well and healthy. A vegetable garden helps. Much freezing, canning, and cold storage. Carrots and potatoes in peat/soil in cold garage still available.
Home improvements do really add up. None of those now but we do pay it condo fees.
Having toys are expensive but you’ve earned it 🙂
Well, I figure our basic expenses will be around $2,700 including $600-$700 per month for food in the condo here. Another $2K per month ideally for “extras” in life such as entertainment and international travel. Hopefully that occurs again. I miss travelling.
For sure. Much has to do with our type of home, property size and location. My last larger newer city house was miniscule in costs comparatively. Seaside salt air, shore erosion from rising tides in spite of 400+ feet of rock armouring now, significant rain and wind issues, massive paved area, private lane maintenance, huge landscaped property etc. There are more maintenance things coming…
Well I’ve had them all my life. Looking at a few new things. Oh boy. LOL
That’s darn good. You’ll have lots more income available to live much higher than that – if desired.
Ya, I don’t know about that but we are on a good path – you’re a good inspiration for me/us!
Yes you are!
Thanks. Nice to read.
Thanks Chrissy, and our cats are loveable to us, honest!!
Forget the finance stuff, I want to know how the heck you got two cats to be loveable!? Ours are only slightly loveable when their dish gets *close* to empty and/or the kitty litter gets a bit odoriferous!
LOLOL