Weekend Reading – Financial Independence Update edition
Welcome to some new Weekend Reading: financial independence update edition.
You can check out some other recent Weekend Reading editions below:
Financial Independence Update
Wow, what a week for bank dividends.
Remember this post: financial dividends are coming?
Well, they arrived, in style.
In case you missed bank earnings and raises this week, here is breakdown:
- Tuesday: Bank of Nova Scotia reported some $2.56 billion in net income in the three months ending Oct. 31. They increased their dividend by 11%.
- Wednesday: Royal Bank, Canada’s biggest lender, increased its quarterly dividend by 11% to C$1.20 a share. National Bank, increased its dividend by a whopping 23% to 87 Canadian cents.
- Thursday: TD said it would increase its dividend by 12.7%, and buy back up to 2.7% of outstanding shares. CIBC raised its dividend by 10.2% to C$1.61 per share and will buy back up to 2.2% of stock.
- Friday: BMO Financial Group raised its quarterly dividend 25 per cent and beat expectations as it reported a fourth-quarter profit of nearly $2.2 billion, up from nearly $1.6 billion in the same quarter last year. The bank says it will now pay a quarterly dividend of $1.33 per share, up from $1.06. It also plans to buy back up to 22.5 million of its shares.
Those increases added well over $1,000 to our dividend income stream for our future semi-retirement. To put that payday into perspective, at current bank yields, that’s like writing us a cheque for tens of thousands of dollars. Incredible.
I have no idea what 2022 will bring for any dividend raises, but this was a stellar week to say the least for my portfolio.
In fact, if you add in other recent financial raises, it was a heckuva month:
This week definitely accelerated our finanical independence path that I encourage you to read about and comment on!
A great quote from my one of my favourite blogs:
“What looks like success is often just patience.”
Enjoy the rest of these Weekend Reads and see you here next week – for some free tax tips as you plan for calendar year end!
Maybe not surprisingly, active money management in Canada is a laggard – in fact, they have been the worst.
“Among five developed markets examined, Australia’s mutual funds stacked up best against their benchmark, with less than half (44%) doing worse than the S&P/ASX 200 for the year ended on June 30, 2021. Meanwhile, Canada had the dubious distinction of having the greatest proportion of underperforming mutual funds, with 60% lagging the S&P/TSX Composite. The U.S. and Japan did only slightly better, as 58% of mutual funds in the two regions did worse than their respective benchmarks.”
Dividend Strategy was not impressed when it comes to free financial seminars.
Frugal Trader updated his financial freedom journey – impressive as always really!
Congrats to Dividend Daddy – crushing it with his dividend income journey.
Robb Engen was channelling some Cashflows & Portfolios thinking this week – highlighting using an example why you should’t take CPP at age 65.
Cashflows & Portfolios would agree – in fact – the math says taking CPP at age 70 (if you can’t make 7-8% or more returns on any CPP income if you invested the money instead) is actually better.
I read a few articles this week related to how to invest when stock markets are at near highs. With too many articles to link to, here are some tips:
- Forget FOMO (Fear Of Missing Out) – invest when you have the money to do so.
- For 2022, experts have no idea if markets will continue to climb or not. So, don’t be worried if the best gains may or may not be behind you. If your goal is to invest for the long-term, then think and act long-term.
- If you don’t yet have a financial plan, next year might be best year to consider making a financial plan.
- Should you speculate with your retirement portfolio? I wouldn’t speculate too much anyhow. While extreme risks can deliver extreme rewards, what can make you wealthy if you go big can also make you poor.
A Purple Life recaps how she went from $5K in savings to retirement in, get this: 9 years.
Always great to see what is or is not making sense in the markets this week, thanks Dale!
Who owns U.S. stocks? Dividend Growth Investor has some details.
Accidentally Retired reviewed The Psychology of Money. This seems to be a great book to be on my reading list as well.
A big thanks to Tawcan for his thorough review of my financial projections service over at Cashflows & Portfolios.
More FREE content
How I invest in dividend paying stocks is always found here. I’ll have another juicy dividend income update very soon!
Looking for free calculators, tools, or even my support? Check out my Helpful Sites page here.
My Retirement page is filled with many successful retirement case studies – folks that have been there and done that! Learn from them for free.
Here is just one example from that page:
Mike and Julie want to spend $50,000 per year in retirement starting in their 50s. How much do they need?
Reader question of the week (adapted slightly for the site):
Congrats on all your efforts for moving towards FI. Love that you were also enlightened by The Wealthy Barber. And on behalf of many Canadians, thanks so much for writing & speaking about your journey – and educating and inspiring so many to consider our own finances and take action!
I’m in a curious position following a serious accident, need to ensure I have a solid financial plan & to implement it well (for current living and well into the future) and so would love to hear some of your thoughts, experiences, choices, best practices or lessons learned.
I have the ‘bare bones’ of a retirement and financial plan but there is a lot of grey area in terms of implementation and I have a lot to learn.
I have a fairly large lump sum to invest, over $200,000. I want to be very careful with that. I am humming and hawing over a few things and thought to ask your thoughts and practices.
- Thoughts on dollar-cost average? Buy in say 3 groups of equal sums, equal time apart. Maybe once each month or every two months, or every 3 months?
- Market timing: I have read and have practiced this before but not sure how much merit there is to this: Buy tomorrow, 2 days before Black Friday? and/or 2 days prior to Christmas?
Thanks so very much!
Thanks for your readership and your kind words.
I’m sorry to hear about your serious accident and I wish you a strong recovery.
I really can’t offer specific advice….but I can provide some information and happy to offer a personal take!!
For one, that’s a lot of money. So, please take some time to choose wisely. What I mean is, identify your goals with money first. This includes any goals with a large sum of money.
- What is this money for?
- What do you need it for?
- When do you want to access this money?
Answers to these questions will help.
I’m a big believer that any money you need for near-term spending, say within 1-2 years, should likely be in cash; an interest savings account. The reason is: you don’t want to take big risks with any money needed near-term and incur a loss by investing that money in equities or stocks in the process. At least I don’t.
I’m eventually planning to keep 1-years’ worth in cash myself as I consider semi-retirement in a few years.
Further Reading: how much cash should you keep?
If you decide you don’t need the money in the next 1-2 years, that’s OK, then you might want to figure out how to invest it – for some growth. If you need access to this money in the next 3-5 years, then potentially you don’t want to take major stock market risks. Instead, consider investing in a more conservative, low-cost, liquid Exchange Traded Fund (ETF).
Some examples of those funds can be found on my ETFs page but considerations for you could be:
- ZBAL or ZCON (to be more conservative)
Check out this post as well for all-in-one funds that require really no effort on your part.
If you decide you want to invest the money, some of the money, etc. for a period of longer than 5 years then you need to decide your tolerance for risk. Some of those funds above have far more risk associated with them, than others.
- Are you willing to see your money/assets drop by 10% in any given week?
- What about a 25% decline – how long could you ride that out?
Markets can go down a long ways before any climb back up. That is why you need to stay invested. Investing is typically a long-term endeavour. Your behaviour should match.
Finally, a point about dollar-cost averaging. I believe that approach helps investors (including me!) psychologically – which is great. However as we have said, the market does gyrate up and down. The good news is, the markets tend to go up more over time than down. So, with a large sum of money and with markets just south of all-time highs, dollar-cost averaging may be for you if:
- You want to minimize the downside risk of a huge investment,
- You want to take advantage of the market’s natural volatility by lowering the average price you might pay – over a few quarters, and/or…..
- You want to avoid any feelings of regret if the market takes a downturn after you invest.
I personally try and invest when I have the money to do so. So, I use lump-sum investing with amounts of around $1,000, $5,000 or even higher. But, I’m also not investing a large lum sum like you are.
Certainly dear reader, none of this is any investing advice but I can say that I would probably tilt a bit myself towards some form of dollar-cost averaging in the coming months, to invest any money that size, just in case.
Best wishes, take care, and thanks for being a fan of the site.
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Have a great weekend!