Weekend Reading – Financial Literacy Month, valuable dividends, Tangerine results and Mr. Market

Welcome to my latest Weekend Reading edition – one that kicks off Financial Literacy Month in Canada for this year.  #FLM2016.  Earlier this week I shared some thoughts from my inner minimalist and I revisited a stock I started buying more than six years ago (and haven’t stopped since) – Bank of Nova Scotia.

Anything you’d like to read about on my site during Financial Literacy Month?  If so send me a comment or send me an email.  I’ll add it to my writing to-do list.  I hope to share a new dividend income update next week and I’m starting to look at what are my favourite dividend ETFs – for you to consider for your portfolio – so stay tuned for that.

Until next time, enjoy your weekend,


Make sure you follow me on Twitter this month where I’ll share some of my favourite money saving tips and more using #FLM2016.  Join over 4,000 people who follow me on Twitter.

A reminder about a great resource for all things money is the Financial Consumer Agency of Canada.  They have a huge database of resources here.

I like what Frances Woolley (professor of economics at Carleton University) wrote recently: “Financial literacy education tries to remove that last obstacle, self-discipline, by lecturing people about the virtues of managing money and debt wisely. But, for the most part, it does not work.”  People absolutely have to want to change.  Adult behaviours are tough to alter.

Here is why dividends are still valuable:

  • an appealing source of income to fight market volatility,
  • a major contributor to total return, and
  • fighting monetary policy and general inflation.

Movevator told us the truth about borrowing – it’s from your future self.

Mr. Market doesn’t like surprises and neither does Steadyhand investments.  Here is what this firm is doing should Donald Trump win.  Scary thought.  I thought Halloween was over??

Some inspiring news and interesting results from Tangerine’s latest survey here.  “When it comes to young adults (aged 27-34), Tangerine’s survey found that 68 per cent are actively saving money using a savings account, RSP account or TFSA (Tax-Free Savings Account), and they are putting away $270 a month on average.”  Well done.

Cait Flanders hit on what I also believe is the cornerstone of intentional living or living in general – a focus on healthy relationships.

Michael James on Money reminded us that financial incentives (within the financial industry) are powerful motivators.

What do investors complain about the most?  Big Cajun Man has a top-5 list.

Thanks to fan of this site Ken Kivenko for digging up this oldie but goodie article about risk-ratings associated with ETFs in Canada.  Basically, the article is stating the onus remains on the investor to do their due diligence with any investment choice.  This is because the disclosure information about ETFs or other funds remains very grey to shady at best.  No wonder financial consumers remain hoodwinked – the deck is stacked against them.

Boomer and Echo asked what’s in your professionally managed portfolio.  My answer is absolutely nothing.   So, I agree with them:  “…why would you not build your own ETF portfolio or use a robo-advisor?”  A reminder you can go for a risk-free 30 day trial with $1,000 of someone else’s money here with ModernAdvisor.

Ben Carlson said don’t be afraid of market all-time highs.  You can summarize his article this way:  Most of the time markets continue to rise from all-time highs so you only know “the top” in hindsight.  My advice to you?  Just keep saving and stay invested.  Less to worry about this way.

How to Save Money provided some ideas to save money on airport parking and transit costs.  My top tips?  Get a friend to help you out or travel with someone else to split the costs when you can. Use hotel and airport shuttles (in the article by Stephen).  Use public transit when and where it makes sense.  We did the latter on our recent trip to Vancouver.  We used the money saved to enjoy a few drinks on a patio when we arrived.

Here’s a plug for my friend Preet Banerjee’s Money School YouTube channel.  Great for #FLM2016 and beyond.  Subscribe away!

16 Responses to "Weekend Reading – Financial Literacy Month, valuable dividends, Tangerine results and Mr. Market"

  1. “The problem does not rest with content. The problem lies with action and behaviour.”

    If a person is searching out personal finance blogs, that probably means they are attempting to correct/alter their monetary behaviour — they “want it”. If that same person runs across two blogs, one by Freedom35 who advocates building wealth utilizing various debt mechanisms, and one by Dave Ramsey who outright vilifies all debt…that person is now faced with financial literacy choices of 0 and 100 and every degree in between. There is far too much unnecessary (and damaging) financial information. Some of it is correct, a great deal of it is just plain wrong (mostly because the blogger has no fundamental understanding of their published content to begin with).

    “People have to want it – most don’t otherwise their actions would follow their thinking.”

    Yes, but after literally decades of conditioning, it requires incredible effort to change actions, let alone thinking.

    I think we can agree that if the majority of Canadian citizens are to reach an acceptable level of financial literacy, there must be considerable and meaningful change on all fronts.

    re: blogs — I know ‘financial literacy’ isn’t the focus of this blog, I would guess it’s more of a ‘lead by example’ public journal of sorts. I think the strength of this particular blog lies in i) your level-headedness, and ii) your willingness to entertain and further meaningful discussions in attempts to achieve a better and/or different understanding of the subject. So thanks for that.

    1. Agreed SST, it does take an incredible amount of inertia to alter current behaviours – I see this at work everyday. This is why I’m a fan of carrots and consequences to change behaviour. Without big incentives, or sticks, or both unfortunately we’ll keep on and carry on. BTW – not a huge Dave Ramsey fan. You’re not a horrible person if you have some debt.

      Correct, this blog isn’t all about financial literacy but it does try to help people and for that, I will continue to do my part. It’s also self-help 🙂

  2. Bundeling responses:

    “…two-tiered pricing model in Canada…it’s just a matter of a few major businesses to start the wave…”

    No, it’s a matter of the gov’t instating policy to which ALL commercial firms must adhere. Period.
    Both Australia and the US allow for different price:payment options with no economic drag whatsoever.
    Canada adheres to single-price structure for what reason? Definitely not to “help…improve [our] financial well-being” nor “the economy as a whole”.

    “All the advice in the world usually has little effect.”

    I didn’t want to mention it, but since you brought it up… With tens of thousands of books about personal finance and with (most likely) tens of thousands of personal finance blogs, the problem of ‘financial literacy’ obviously isn’t the amount of available literature. The problem lies mostly in the content and the delivery.

    I hate to say it, but PF bloggers, on the whole, are terrible (no disrespect to MOA). It’s a free-for-all on the internet, with zero barrier to entry (e.g. no peer review). At least with hardbound published material, there is a whiff of fact checking and at the very least interest from an advance-paying publisher (exceptionally few self-published books are worth anything; Chilton’s ‘Wealthy Barber’ is an example of quality, kind of).

    After decades of trying to increase financial literacy, and failing, we keep pumping out the same claptrap hoping for a different result.

    “I feel adult behaviour is very difficult to change…”

    That’s exactly the point — ADULT behaviour… We can’t start when we are adults, it’s far too late and demands far too much effort; the change has to come during the formative years. Yes, there will always be the few who manage to be well trained in the fiscal arts, but to change the nation it will take a paradigm shift, one which will almost never take place as long as our society and economy are based on mass consumption. (As well, as long as Canada remains a natural resource heavy economy, the will to change won’t ever materialize. It’s almost a pervasive cultural mindset of “we’ll never run out”.)

    We can either accept and admit that due to the composition of our economy we can’t have both a high degree of financially healthy citizens and a financially healthy economy existing at the same time; or we can begin the long challenge of changing the game. (Just how we will never “win” ‘The War on Drugs/Poverty’.)

    We can demand our policy makers study the governments and institutions of other countries, picking out the strongest parts which would meld with our country (e.g. Singapore, Scandinavia). We can demand our policy makers take a long-term view of the state of our country and the citizens (e.g. Western countries seem to operate on a very short time scale, 4 years, whereas countries such as China operate on time scales of centuries). And on and on.

    Financial literacy doesn’t mean much, and won’t change much if the system in which you are trying to accomplish it doesn’t support it.

    And when a leader of the biggest economy in the world commands his 300 million (not all highly astute) subjects: “I encourage you all to go shopping more”…what kind of damage does that do to the financial literacy camp?

    This just in, a timely piece from the CBC:
    “[The CIBC] spent 14 years overcharging its customers…even the most financially literate would have had a hard time finding those extra fees. The way things are set up in Canada right now, it’s virtually impossible. Individual investors can study all they want. Until politicians take up the file and force change, that faith will continue to be eroded.”

    “Here is why dividends are still valuable… as supported by data:

    e.g. “…the standard deviation [volatility] measure from 1927-2014 equals 18.3%, compared to 30.1% for non-dividend payers.” Less volatility means you are less likely to fall into a cycle of greedy buying and fearful selling.

    Have a great long weekend!

    1. re: Bundling
      It will be a long time before government intervenes on that…but I’m for it!

      re: Financial literacy
      No disrespect felt. There are tens of thousands of blogs and books. All free. The problem does not rest with content. The problem lies with action and behaviour. People have to want it – most don’t otherwise their actions would follow their thinking.

      re: Behaviour
      No, we can’t start when we are adults but even adults need to recognize life is about learning and unlearning. It’s unfortunate most don’t see it that way. At the end of the day changes come largely from within. We could demand our policy-makers to take a long-view but unfortunately their survival depends on the current term, not what happens 10, 20 or more years down the road. Herein lies the biggest problem with government – they are not held to account.

      I appreciate your thoughtful comments SST.

  3. I think its difficult to deal with the masses. We all have to find our own path and it usually happens from learning from our mistakes. All the advice in the world usually has little effect. People must be responsible for their own course and they either recognize the need to learn about FI, saving, investing or they don’t.

    If one can help one person you’ve probably accomplished more than all the books and news articles will. They are in it for the money more than good intentions.

    1. I know I’ve learned a bundle from my mistakes…hopefully I don’t make too many more in my financial future.

      The problem with saving is largely two-fold I think: 1) behavioural and 2) income-related. Some folks know they should save but don’t have the discipline. Some folks might have the desire and discipline but don’t have the income (various reasons). “If one can help one person you’ve probably accomplished more than all the books and news articles will.”

      Probably right. SST would agree with you. 🙂

  4. To continue my own conversation….

    Financial Literacy: When Woolley writes, “Changing the rules governing credit cards would…cut into credit card firms’ revenues, and so is unlikely to happen,” she is bang on.

    The Government of Canada proclaims, via the Financial Consumer Agency of Canada, that “financial literacy is important for the financial well-being of individuals, but also to the economy as a whole,” and via the National Strategy for Financial Literacy that “it fulfills the commitment we made to Canadians to help them improve their financial well-being…[with] financial literacy [being] a priority for our government”. However, with their corporate favouritism in the realm of credit cards, the government has betrayed every single statement and proven themselves to be, once again, an failed institution. (There should probably be a Ministry of Lip Service.)

    As the insanely knowledgable JP Koning states*, “cash-using consumers, which tend to be poor” will always have to reap the higher prices which the non-poor credit card users sow. Thus, as I previously commented, the GOC doesn’t truly give a crap about helping Canadians “improve their financial well-being”, nor does it fully understand and/or care about the long-term consequences “to the economy as a whole” of NOT “changing the rules governing credit cards”.
    *(read the full article to become smarter & wiser: http://jpkoning.blogspot.ca/2016/10/bitcoin-drowning-in-sea-of-credit-card.html)

    If a Capitalist haven/disaster like the USA can implement a two-tier pricing model — cash or credit — with nary a blip in commerce, then there is zero reason from inhibiting Canada from instituting the same in order to fulfill their commitment and priority. I’m not holding my breath.

    Movevator/future self — True. Just as when a company borrows money, they are raking future returns into the present. Or when the stock market deviates from its average return — when you get a +30% year, you know a -15% year is coming down the pike at some point. Or when the government swaps long-bond yields for short-bond yields. Yet another helpful(?) topic would be for people to understand that household, corporation, and governments (and markets) all operate differently. When a government is in a permanent state of debt and deficit spending, it’s not the same kind of catastrophe as if a household had the same financial behaviour.

    (As a side note, I am currently volunteering with a literacy organization. The purpose is to both increase individual literacy capacity, but also to gain experience and knowledge of what low-literacy people need/want in terms of financial literacy (e.g. how to read and understand a cell phone/credit card contract). I am constructing a basic FL package which can be utilized by literacy organizations, hopefully, on a national level. So, yes, I do have a vested interest in proper and substantial literacy strategies at all levels.)

    1. I would be in favour of a two-tiered pricing model in Canada, I think that is exactly what we need. It’s just a matter of a few major businesses to start the wave; small businesses likely wouldn’t put a dent in the current paradigm. Count me in but I’m not holding my breath either.

      Kudos with the volunteer work. I want to do the same. I run this blog for the passion in hopes others learn from it, dissect it and help me improve it. If it makes some money, great, but for years it didn’t make a penny and that was fine by me.

      Eventually I could see myself volunteering more – anything in the personal finance space I would be happy to do. I will however volunteer more outside that when I start working part-time. Maybe a shelter or something. I’m rather passionate about the Ottawa Mission. So many people in need of shelter and a good meal.

  5. Financial Literacy — There has to be a focus on basic literacy. With up to 40% of Canadians having low-level literacy (even after factoring out non-English speaking immigrants, but factoring in post-secondary graduates), we can’t expect any degree of financial literacy. In fact, I’d have no reservations labeling ‘Financial Literacy’ as “problem” of the well-to-do.

    Woolley —

    “Financial literacy education tries to remove that last obstacle, self-discipline…Adult behaviours are tough to alter.” This is the problem. We are approaching FL from a “fix the problem” point of view instead of from a “build a better machine” POV. Kind of like our modern medical system, it’s all about treating the symptoms of illness instead of eliminating the causes. We have to ask WHY are we behaving like this in the first place? Behaviours don’t just appear out of the ether. It is, at the very root, a symptom of living in a capitalist society, one which is very predominantly (80%+?) driven by consumerism. We are trained to spend, not save. The results won’t change unless we start using a different cookie cutter; 1% are millionaires, 99% are not. One has to be incredibly steely to swim upstream, unfortunately most fail the test.

    “Changing the rules governing credit cards would…cut into credit card firms’ revenues, and so is unlikely to happen.” Exactomundo. Putting the profits of a foreign corporation before the financial well-being of your own citizens always ends well.

    “Much financial management is nothing more than basic arithmetic…increasing high school mathematics requirements improved graduates’ financial outcomes…” This might be one of the strongest correlations to healthy personal finances. Increase in ability to think is required, not actual ‘financial literacy’ (e.g. how to open a TFSA).

    Tangerine Survey — With such a microscopic sample size giving a wholly incomplete snapshot, I can’t take results such as this seriously, no one should. Perhaps that’s part of why financial literacy is still an issue — big banks (read Scotiabank) continue to publish trivial material such as this; basically a marketing piece disguised as useful information.

    Cait Flanders — basically reiterating what the 75-year longitudinal Harvard Grant Study has already revealed: “warmth of relationships throughout life have the greatest positive impact on ‘life satisfaction’ “. Focus more on your friends than your finances.

    Michael James on Money — financial incentives, and career risk, are the two main drivers in the financial industry. Many studies have revealed that a high percentage of financial employees (across the entire moral spectrum) would engage in “wrong” behaviour if there was a large enough pay out. We also know from publicly available data that almost none of the wrong behaviour is i) investigated, ii) prosecuted, iii) paid for. So, yeah, why wouldn’t you lie, cheat, and steal if you knew there was a VERY good chance you will get away with it? Would be interesting to find out just how financially literate those people are.

    1. How do you suggest we deal with (financial) behavioural issues SST? I’m a big believer in “carrots and consequences”. Either major carrots/rewards are needed to change behaviour or major/severe reprimands are in order. Without significant incentives (or sticks), I feel adult behaviour is very difficult to change…myself included 🙂

      Yes…personal well-being and a focus on meaningful relationships in life is far more important than money – any amount of money for that matter.

      Thanks for such a detailed set of comments. On to your next one!


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