Weekend Reading – Do Nothing
Welcome to some new Weekend Reading about your investing behaviour: do nothing.
(I also want to again thank some readers and their email questions of late, I enjoy them in the comments section. They make me reflect and think!)
Before the do nothing subject, a reminder about my post this week…
Yay!
We crossed a HUGE new major forward dividend income milestone this month even after the small BCE dividend cut we incurred (since we just don’t own very many BCE shares any longer – long since sold most in 2023 and also sold more in 2024, highlighted in this June 2024 post that a dividend cut should be coming in 2025….it has arrived…)
With the recent 7% Telus dividend increase in particular this week over last year, it will be interesting to see where we might end up next month!?
Weekend Reading – Do Nothing
I don’t know about you, but I don’t know anyone personally who got rich quickly.
Instead of hoping or following some get rich scheme, we’ve been on a much more boring yet somewhat predictable get wealthy eventually path for 20 years now. We haven’t fulfilled all our financial goals yet but we have surpassed a few along the way…
I learned as a DIY investor a long time ago to largely treat my/our portfolio like a bar of soap.
Like a bar of soap, the more I touch the portfolio the smaller it could get…
Source: Pexels
Sure, while I continue to adjust stocks and ETFs in my portfolio here and there – there are just tweaks.
I am slowing raising more fixed income assets like cash/cash-alternative ETFs for retirement planning of late. I know the best way to grow our wealth over time is to largely do nothing.
I’m getting better at that as an investor as I age.
Long-term success, maybe like most things in life, usually involves doing the boring, small stuff consistently well over time. Wealth building and investing seems no different.
- Pay off your debt/get debt-free.
- Save your money.
- Develop a long-term investing plan.
- Invest your money in products/investments that align with your plan.
- Stick with your plan as much as you can.
Learn to keep saving and investing very, very simple.
This Weekend Reading edition was inspired by this article in The Globe and Mail (subscription) entitled:
“The best advice for investors right now: Do nothing. Really.”
“Acting on news that’s urgent, but not important increases costs and distracts from your plan. Warren Buffett has said, “Wall Street makes its money on activity. You make your money on inactivity.”
Here are some other insightful quotes on this do nothing theme that might inspire you. Let me know what I’ve missed so I add any other quotes or notable statements for a future updated post.
Have a great weekend!
Mark
Weekend Reading – Do Nothing
“In the financial markets, people often sabotage their portfolios out of sheer boredom.” – Christopher W. Mayer
“In the short run, the stock market is a voting machine; in the long run it is a weighing machine.” – Benjamin Graham
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson.
“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
“The stock market is a giant distraction from the business of investing.” – John C. Bogle
“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” – Albert Einstein (attributed to)
Source: https://x.com/DividendGrowth/status/1920826715661533384
Another investing friend and my upcoming debate partner Henry Mah shared an income comparison between some TSX stocks he holds and a low-cost dividend ETF VDY.
Debate?
Yes, but I think we actually agree on a few things…
I’m taking some time off work to engage with you this afternoon so register here for the event for free!
Save the Date! Thursday, May 22, 2025 @ 2:30 PM ET
It will be interesting to discuss the BCE dividend cut with Henry Mah from Your Ever Growing Income who will be arguing in favour of a concentrated basket of dividend growth stocks in a portfolio vs. myself who takes a bit more of a total return approach as a hybrid investor: I own many dividend stocks (25+) for sure but I also own low-cost ETFs for extra diversification just in case. I want that and figure I need that long-term including from the U.S. stock market in particular for long-term performance. That’s where we largely differ and likely a few other subjects as well. 🙂
Plus at this event, we’ll both answer questions from the audience – live – about our respective strategies and considerations for building a retirement nest egg in this live Q&A session.
It got me thinking about whether I knew anyone who got rich quickly. It did occur to me that the six billionaires that I know personally all got rich instantly, the moment they were born in the delivery room! But that’s not what you meant. I do know only one person who got rich very quickly, my son’s college roommate. While my son graduated to an engineering career and then medical school and now earns a very nice wage as an oncologist, his roommate took a different path. He went to work for an unknown startup company that was doing remote video conferencing. You may have heard of it, its called Zoom. As one of their first employees he became a multimillionaire almost overnight when Covid brought all of us into the world of boring remote teleconferencing.
Steve, that’s quite the story!! Thanks for sharing. Rare stuff for sure.
Mark
Hey Mark,
No major changes we currently have 45% in Div growth stocks/ETFs, 45% in pure income generating funds and 10% in Real estate. Average yield is >10%, don’t see a reason to change much. Goal remains to live of income and to not have to sell equity with a sufficient buffer should things go south.
I.e. for my RIF: income = 125%*withdrawal with enough in cash/Money market and short term bonds to cover long term income deficits (2+years). The 25% gets reinvested and is really no different then the saving rate during my working years. Not losing sleep over what the market is or isn’t doing. As an income investor I am actually quite fond of down markets and I’m still buying every week or so mostly reinvesting our USDs. Getting more income for less is fine by me.
TR matters but you can get great results with income focused portfolios, you can get great results with growth stocks and anything in between. Moot point imo, best for you is all that matters and that can be any number of things. I personally like dividends for the blend of income, growth and low volatility. For retirees it’s a bit like the goldilocks zone and don’t forget about that compounding magic:)
Excellent…
Very much our goal as well….for the most part, live off dividends and distributions but we will sell capital over time for sure. Otherwise, there will be underspending.
I got some XAW earlier this year when it was down under $40. Now above $45. I do like stocks or ETFs on sale too. 🙂
Buying anything this year? What does most of your cashflow from the portfolio come from? Curiuos?
Most of ours in Year 1 and Year 2 will come from Non-Reg + Corporation withdrawals (N) + RRSPs (R) as part of a long-term NRT (T = TFSAs) drawdown order.
Cheers,
Mark
Currently building out 2 holdings, FSCO and OXLC both are US funds investing in non investment grade corporate debt. Both will be minors (1%) and provide a 15% blended yield with built in capital preservation.(in theory). After that I don’t know, not feeling exited for equities yet.
https://seekingalpha.com/comparison/new/MSUyQ2ZzY28lMkNveGxj?interval=3Y&metric=totalReturn
There is less excess CAD after I’ve given myself a decent raise this year. Most is going into CMR for now figured a bit of extra buffer is not a bad thing.
We have a simple setup my RIF +2xTFSA and 1xRSP that obviously does not generate cashflow (the Mrs. still has a J.O.B.), RIF accounts for 70% the TFSA’s for 30%.of our investment cashflow. If I had to estimate I’d say we we live off 1 salary + 50% of cashflow, we have a sizable emergency fund outside of our reg accounts and no mortgage or debt (just to give you some context).
Ben
Great context. Fully support the no mortgage and no debt. We’ve been living that way for almost 1.5 years and love it – a big reason why I feel we are financially independent now. Extra cash into CMR = the money market fund? Seems smart.
I’ve been slowly raising some cash/cash equivalents inside our RRSPs x2 this year for withdrawals in 2026 and 2027.
Seems you have a great cashflow plan.
Mark
In regards to doing nothing, As the years move on, I’m attempting to more act like an index fund for the Canadian market, rather than an active fund. It’s a DIY portfolio but so far I’ve found it more within my circle of competence to actually do nothing when it comes to selling. I’m only active on the buy side and it’s more of a “what dividend bargain have we got on the market for this month”. Looking at the broad based Canadian indexes and the dividend ETF’s none of them tried to evade BCE’s forthcoming dividend cut and this morning BCE is still allocated in all them. Not expecting anything to change.
From what I read in Benjamin Graham’s 1963 speech in San Francisco (easily found in an internet search) I believe that if Ben were alive today, he’d be saying something similar…..and of course I shouldn’t forget John Bogle.
Great stuff. I have basically created my own Canadian dividend ETF as well. Likely to keep the 25+ stocks I have and eventually, I might just have XAW and some QQQ as my lone ex-Canada ETFs for growth. Keep a year or so in cash for near-term spending and live off dividends and distributions. That would feel pretty darn good.
I like your plan. 🙂
Mark
One of my goals is to maintain a certain level of income from interest (bonds and cash) and dividends. This income is an important metric in our cash wedge calculation— the higher the income, the less cash we need to hold. As we transition from our now 72/28 portfolio to a 90/10 portfolio over the coming years, I’m replacing bonds sold for RRIF withdrawals with dividend stocks in our non-registered and TFSA accounts.
Rather than buying individual stocks, I’m utilizing low-cost, dividend-focused ETFs. The individual stock approach requires too much work and causes unnecessary monitoring anxiety for me.
Bob
Sounds like a great plan. We’re at 90/10 now and likely to stay that way for the coming years.
With DRIPs turned “off” inside RRSPs x2, then dividends and distributions from RRSPs will be saved up as cash and likely spent in 2028.
We have our RRSP withdrawals set aside for all of 2026 and most of 2027 – just a bit more tweaking to do this year. 🙂
Thanks for your readership and sharing.
Mark
Hi Mark, A quick question if you don’t mind. Are dividends from dividend-focused ETFs eligible for the dividend tax credit?
Hi JF,
I hope Mark doesn’t mind me jumping in. The answer is “it depends” on the ETF. Since HDIV has come up a couple of times I’ll show you how it works:
Total Distribution: $1.96
Eligible Div: $0.30577, Capital Gains: $0.80748, Other Income: $0.08378, Return of Capital: $0.77897
So, for HDIV only 15.6% of the distribution is eligible dividends. Source: https://hamiltonetfs.com/tax-information/
XIU on the other hand looks more like this (for Nov 2024): total distribution: $0.315, eligible: $0.29106, ROC: 0.02394
It varies each quarter for XIU. Source: https://www.blackrock.com/ca/investors/en/library?productIdentifier=CA46428D1087%7E46428D108%7E239832
Every ETF should have a web page available where they display the tax information for at least the previous fiscal year, so you should be able to locate the information for any ETF and determine it’s tax treatment.
Return of Capital, if you’re not familiar, has the effect of lowering your cost base. It does not affect your taxes in the year of the distribution, but by lowering your cost basis it will increase your (potential) capital gain when the time comes for the holding to be sold.
I hope that helps.
~James
Hi James, This is very kind of you! This is indeed helpful. I appreciate you sharing your knowledge. I’ve bookmarked this page for my future reference. Thank you!
All good, James.
Recall there is no free lunch but I know you know this. 🙂
You can get lots of dividends via HDIV leverage and some return of capital (i.e., your own money back) or more growth or other ways to get “shareholder” return.
“Every ETF should have a web page available where they display the tax information for at least the previous fiscal year, so you should be able to locate the information for any ETF and determine it’s tax treatment.”
Agreed!
Mark
Yes, some are. See XIU as an example. A great fund to own for “eligible dividends” or “cash dividends” when you look up the distributions tab in any fund fact-sheet or prospectus.
Hi Mark, I’m a regular but mostly silent reader. It is great to see you achieve FIWOOT success after working at it consistently for so many years. Can you please provide links to any retirement case studies you’ve done for single folks? I’d appreciate that! Thank you.
Thanks very much, JF. Now onto the next phase, see what part-time work brings for the rest of the year and up some travel booking plans into 2026 and 2027.
I have a few:
https://www.myownadvisor.ca/im-single-is-it-possible-to-retire-at-age-55/
https://www.myownadvisor.ca/age-60-retirement-on-a-lower-income-can-i-do-it/
I hope to publish another one later this year too. 🙂
Let me know your thoughts after you read those!
Cheers,
Mark
I wish you continued success, Mark. Great that you are thinking ahead to travel for 2026 and 2027.
Thank you for those links. I will add my thoughts directly onto the linked pages. Enjoy the rest of the weekend!
Indeed I am! Best wishes and let me know if you have any questions.
Continued success to you.
Mark
I agree with the “Do Nothing”, with a small caveat. Our go forward income took a 4% hit from the Bell reduction. I had added a very small BCE position in one of our non-registered accounts a few months ago and now plan to sell it to pay a little extra on our mortgage which is due for renewal next month. We’re now at $73.7k in divvies for the coming 12 months, and my spreadsheet tells me with no additional investments (and no further dividend raises this year -unlikely) it will take the rest of the year to recover from the BCE dividend cut (not counting what I’m about to sell).
Our portfolio is at an all time high due to some aggressive investing earlier this year. Assuming I can get some more contract work in addition to what’s scheduled, we will get things back on track soon enough. Still eyeing July 2027 for retirement.
Hi James, Congratulations on that dividend income! If you don’t mind me asking, are you entirely invested in Canada with no foreign stocks/investments?
Hi JF,
Yes,100% Canadian with a few minor exceptions:
ARE, BCE, BMO, BMS, CM, CNQ, CPX, EIT.UN, EMA, ENB, ENS, FTN, HDIV, MFC, POW, PPL, SOBO, SRU.UN, TD, TRP
A few of those have some US exposure.
I limit our investment to EIT, ENS, FTN and HDIV to 15% in aggregate.
I DRIP 100%.
I acknowledge that our portfolio is not optimal but it has kept me
from repeating previous errors trying to chase growth stocks. I get excited updating every DRIP and watching our annual income grow.
We took a 4% ish hit to our annual income from BCE but due to some aggressive investing earlier this year we’ve only been set back to where we were in February. However it might take the rest of the year to make it back through DRIP and raises from other companies. If we can, we will invest more to accelerate the replacement of the lost dividend income.
I do plan to sell ARE in the future for better dividend opportunities which will aid us in this goal, but that is likely to be in 2026 or 2027.
Lots of investors likely got “hit” due to the BCE dividend cut. It happens at times when you invest in dividend paying stocks so you have to accept it I find or otherwise go with a more total return approach with low-cost ETFs whereby their distributions are unlikely to get cut but you rely more on growth for your returns.
Just the way it goes. Can’t have it all. Tradeoffs. 🙂
Great to see you have a nice diverse basket of stocks to help offset, more $$ into XDIV or related ETFs vs. HDIV (that uses leverage?) would be an enabler for your secure income.
Mark
Hi James, Thanks for sharing the details! You’ve put a lot of thought into your plan. Continued success to you!
Smart on killing the mortgage, James. The sooner, the better. 🙂
July 2027 will come soon I’m sure!
Mark
Hi Mark.
We have used the downturn to make some adjustments in our accounts in terms of taking some profit from positions that have done well in the past year or two and purchase some stocks we like that have suffered more that we think they should have. We also sold some US non-dividend payers to purchase some Canadian dividend payers like ENB, CNQ, GSY. And we also sold a few higher paying, riskier stocks in exchange for a little less return but better quality stocks. A recent purchase in PRL recovered so quickly that we took the profit of $9000 made in a couple of weeks and bought some more Canadian banks for the long haul. We’re still below our highs of last year but we’re nearing that number sooner than I had expected after the drop. Our new additions should help us grow even faster in the future. And we now have a yearly dividend of nearly $59k.
$59K in yearly dividends – wow – that is fantastic! Well done Paul!
Indeed. 🙂
Excellent work, Paul. CNQ makes up close to 4% of our portfolio in fact. ENB about 3% maybe. GSY a bit risky but they have been a nice growth story for sure….
We’re just off our ATH but that’s because we own XAW and QQQ – which are down a bit still. All good. Long-game.
Congrats on $59k per year in divi income. Very good week. I would have to tally everything we own but I report x2 RRSPs + x2 Taxables + x1 my LIRA = just over $50k per year now and hopefully finish in the $52k range.
Stay in touch!
Mark
I wouldn’t be a dividend investor without your blog. While I was researching the idea you and a few others gave me the confidence to change our path and I thank you for that. I see success in our future and your financial review helped confirm that. Keep up the good work.
I really should have bought some XAW when it dipped. Maybe soon.
Amazing, thanks Paul. Ya, the good news is on XAW, the best price is today’s price for any indexed ETF but I get what you are saying since I bought some recently/this year and along with more dividend raises of late from Telus, PPL, and SLF – my May dividend income update should be higher again.
Continued success.
Mark
Congratulations on your planning and success, Paul. If you don’t mind sharing, what percentage of your portfolio is in Canadian dividend paying stocks?
Thanks JF.
I don’t mind sharing at all. That what this site is all about. As of last week we are 100% invested in Canadian dividend stocks. We grew our investments with a wider mix including a decent chunk of Apple that my wife purchased 20 years ago and a couple of rental properties before prices skyrocketed here but now we’re dialed back. I know that doesn’t leave us globally diversified but we’re spread out over a number of sectors and we feel pretty good about where we’re at. I do favour energy and financials and I hope we’re correct about those holding strong in the future.
Thank you, Paul. Appreciate learning about your journey. Congrats to your wife on purchasing Apple!
I am currently invested in both Canada and the US and am trying to see how best to position myself going forward so that I achieve financial independence soon. I may need to sell at least some of my US holdings and purchase Canadian stocks. My struggle is the lack of diversification in Canada and coming to terms with Canadian stocks not appreciating as much as some US stocks. I can’t have it all though!
Thank you again for sharing your journey. Continued success to you!
I’ve grown so weary of the “dividends versus total return” debate that I just can’t be bothered to listen anymore. They’re both right, they’re both wrong. Taking a definitive stance on one side or the other is just plain stupid unless one knows *and* completely understands the personal situation of the individual investor.
With the caveat that maybe the purpose of the debate is just to garner clicks, eyeballs, selling books, etc etc etc. If that’s the case, have at it.
(a tractor had a flat tire so I’m a tad bit grumpy this morning)
Ha, so right Lloyd. Same thoughts. There is no right or wrong for everybody; its an individual choice for each individual situation.
Good luck with the tractor tire.
Mark, my favourite quote from above is Albert Einsteins.
Thanks, Deane. I echo everything you said.
Mark
100% Lloyd. The best are the financial advisors and wealth managers that preach dividends nor distribution income don’t matter. Sure, in a perfect world they are both irrelevant but nobody lives life in a spreadsheet.
Personal finance is personal and you’ve “won” at the game a long time ago.
I hope the tire will get fixed soon. 🙂
Mark