Weekend Reading – Financial stress index edition
Welcome to my latest Weekend Reading edition, where I list some of my favourite finds from the personal finance and investing blogosphere.
In case you missed the last edition, the Worried About Inflation edition (and what you can do about it) you can make a simple click here.
Enjoy the articles, stay well, and have a great weekend!
Interesting thoughts by a financial planner on MoneySense recently, when tax-deferred and tax-free accounts might be taxable.
From the article:
“The tax treatment of RRSP and TFSA withdrawals should motivate investors to choose their asset allocation wisely between not only types of stocks, but also stocks and bonds. It may be beneficial to hold more fixed income in an RRSP and more stocks in a TFSA. That way, growth should occur primarily in a tax-free TFSA, instead of a tax-deferred RRSP that will someday be taxable.”
Personally, I think more fixed income in an RRSP is a big mistake and I wouldn’t follow this advice myself.
You can read in general terms what I own where, and why, from these dedicated pages below including the U.S. withholding tax considerations. I wouldn’t let taxation get in the way of equity growth.
What dividend paying stocks I own and why here.
What low-cost ETFs I own and what you can consider owning here.
As a follow-up to the first interview “Reader B” is back, on Tawcan’s site. This reader is earning an incredible $360,000 per year in taxable, dividend income. “Reader B” was back to tout the advantages of taxable investing over investing inside the RRSP. Interesting stuff, but the RRSP is still one heckuva tax-deferred account…
As part of the Weekend Reading headliner, I grabbed this infographic below from FP Canada as part of their recent 2021 Financial Stress Index.
I had little doubt money and personal health are at the top of this stressful list…
Financial Independence – Retirement
As part of my ongoing commitment to share some financial independence, early retirement or retirement articles from the blogosphere, here are some links!
On Cashflows & Portfolios, we profiled the Longevity Pension Fund and offered our take on why this may or may not be the retirement income fund for you.
Love or hate the 4% safe withdrawal rate? This early retiree has no preference and clearly ignored the 4% rule as part of his plan for retirement. Read on: the proven path to early retirement ignoring the 4% rule.
This Canadian investor retired at 32! Find out how here!!
There are also dozens of Retirement stories and essays you can learn from here.
Well done Cheesy Finance. Gotta love this chart.
Maple Money answered the question: what is value investing?
What is the Smith Manoeuvre and how does it work? Stocktrades.ca has some answers.
Liquid Independence shared some tips on how to sell a used vehicle.
Are bonds back (in favour)? Not in my portfolio. Dale Roberts has a take.
Robb Engen wrote about misguided dividend investing. That post is sure to get some investors riled up!
Save, Invest, Prosper!
As always, check out my Deals page.
My very own personal BMO promo code remains available! Use that BMO code to get hundreds in cash back when you open investment accounts with BMO like your RRSP, TFSA, taxable account and more!
I’ve got a new partnership with EQ Bank – just look at the banner in the margin!
With 5i Research, take a no obligation FREE trial for your ETF and stock research.
With LegalWills.ca use my personal My Own Advisor promo code for 15% off any services – that never expires.
I earn $600 in cash back every single year. Scroll down my Deals page to get the same credit card I use in your wallet.
Enjoy your weekend!
I have over 50 different idea’s. Some now owned well over twenty yrs. A closed end fund now a ci mutual fund, when I bought it called sentry select. Think it went like this sdt.un and had a ton of warrants for 3.51. Back in 2001. Fund run by Sandy McIntyre. Did the market call guest thing bnn. Does anyone remember him. Got fired for selling Nortel’s at over 100 bucks and using it to buy cos.un for a little over 10 bucks. In my books this guy is a star. As for energy last Halloween just throw a dart and buy what ever name it hit. But now the easy money has been made. Natural gas is going to have a revival tour. Only just getting started. The stocks are starting to price it in already. Vet is slow to get going, debt holding it back. Free cash flow will help sort it out. Maybe asset sale@? That just me thinking out loud. And I know nothing.
Yes, all the smart money went hard into energy (oil and gas) after April 2020. Good on them!
Thanks for the mention Mark. The longevity pension fund was a great read. Have a great weekend.
Thanks very much! All the best to you!
I would prefer to hold more equities in my RRSP as well. Fixed income is generally not an asset I want to buy right now. But I wonder how investing dynamics would change if interest rates were higher. If it made sense to hold bonds again from a valuation point of view, is it better to keep them in a TFSA or RRSP? Great round up as always, Mark. And thanks for the mention. 🙂
Ya, I think some bonds inside the RRIF makes sense but anyone saving their way to retirement should really learn to live with mostly stocks in the coming decades. RRSP, TFSA, taxable. The bond bull run I think, is over.
Regardless of how people choose to create cash flow in retirement it needs to be done so there is enough to cover the inevitable creep of taxes, inflation and be sure to minimize fees. Plus have a $$$ buffer. That seems to be a universal choice for those living comfortably and financially stress free in retirement.
RE the Money Sense Jason Heath statement on more FI in RRSP’s it wasn’t clear to me what he was advocating. More FI overall, or just in RRSPs etc
Yes, RRSPs still have a very good place for many typical investors. Learn and think it through though to make sure.
I think the point is the interest generated by FI will be taxed the same no matter it’s in RRSP or in a taxable account, while dividend and capital gains taxed more favorably in a taxable account. So if one wants to hold FI, then holding in RRSP is more tax-efficient?
Yes that makes sense. (How I do it too mostly except HISA cash wedge )
Yes, I suspect that is where the advisor is coming from (i.e., fixed income in RRSP) but I personally think many investors are given up tons of equity growth inside the RRSP if they do that. Some bonds as part of your RRIF, yes, I could see that however since wealth preservation is different.
Same, it was a little murky for me too but I think some bonds as part of RRSP make sense, maybe a small bit in RRSP, but jeepers not more bonds than stocks 🙂
I would say for those looking for conservative, balanced or even a growth portfolio determining the bonds amount in RRSP should likely be in context of all accounts values. Maybe a lot or maybe very little in the RRSP depending on the individual’s plan, account values etc.
That’s fair. I guess I don’t see lots of value in having lots of bonds in the asset accumulation years but I have my own biases!
We agree on that, and I lived it too. (no bonds in accumulation years)
Since retired a more conservative stance has taken hold with some consideration to what I really “need” to do and to what helps us sleep at night. Different strokes.
You bet and good plan, as many retirees (successful ones like you…) don’t need to take on any additional equity risk. 50%, 60%, 70% or even as high as 80% equities in retirement = whatever works! 🙂
Agree on “whatever works”. 72% right now. I could see that climbing another 10-15% as we close in on CPP/OAS.
Bonds hold their own risks now with such dismal prospects. But they may look good in the next correction.
Ha, yes, the next correction is always right around the corner!!
Oh so true!!! Climbing the wall of worry. The market that never dies and when it did last March it was only a hiccup.
Running slowly coming back. Hope your exercise is good too.
Thanks you too.
Hi Mark: I continue to be surprised that so many people fret about factors which might affect the market. Inflation, taxes, stress, and the list goes on. I’m sure know that growing a secure income stream is the easiest way to ensure ones retirement needs. Many have read Tawcan article about B and the success they have achieved, but did he ever mention and of those factors, I don’t think so. Why because if one invests for income, all those factors are minimized if not totally irrelevant.
I hear ya. Inflation, you can’t really control it. Higher, overall taxes, nope. I would focus on things you can control in your life and I try and do that myself.
Likely content for another post for you. Larry Bates wrote about similar things here:
“Wealth killers are fees, taxation and inflation. Any one or more of these things are wealth destroyers you will need to fight as you work through your investing journey. You should always strive to avoid high priced products – since that’s less potential return for you. Taxation can be mitigated by “applying all savings first to TFSAs, RRSPs, or other tax-sheltered accounts” like RESPs. Given you have no influence on inflation whatsoever, you simply have to beat it via dividends, capital gains, interest income or all three. Invest accordingly!”
Hello everyone. It’s very nice and of value to us, Mark shares his ideas with us. I am someone who has been buying stocks $ mutual funds from the late 70ites. But would I have listened at a young age. That’s easy, no way. So income and compounding is where it’s at. And traded in twenty years youth for that. And dividend yield is king. But I do like putting 20% in growth, my favorite is cyclical ideas. Oil gas copper gold.
One of the best inflation beaters is gold. 35 dollars when born. 200 when legal drinking age. Now about 1800 one year before 65. Real estate is good too. But no so for small towns in Saskatchewan that got their railway tracks tore up. But again this is a great place for ideas and risk management.
Great stuff Rob and thanks for the praise of the site. I enjoy running it. Anything on your buy list this year? Index funds or stocks? Oil prices seem to be rising…