Weekend Reading – Fired Vanguard – hello stocks, how to build a fat RRSP, buy or lease a car and more #moneystuff
Welcome to my latest Weekend Reading edition where I share some of my favourite articles from the week that was across the personal finance and investing blogosphere.
I posted my latest dividend income this week – approaching a new milestone inside our TFSAs and non-registered account.
I hope you enjoy these articles that I checked out, or was identified in, and you have a great weekend.
See you on the site!
Rob Carrick answered a reader question about whether it is better to buy or lease a car. I think the answer is, it depends. Can you write off part of those expenses? How much will you even drive the car? What kind of car are you leasing? The list goes on. Personally, I don’t like dealing with the fine print and scheming car dealerships for a lease – so in recent years we’ve decided to pay cash for our 2-4 year-old used cars outright.
Rob’s summary: “The top choice of frugal-minded car owners: Buy lightly used cars, preferably with cash, to minimize the impact of depreciation, and then hang onto them as long as you can.”
This couple thought #vanlife (quitting your job and living in a van) was the ultimate financial freedom reality. Then they realized it was cheaper to fly around the U.S. and stay in Airbnbs.
Preet Banerjee, all around good guy (and financial guru), says essentially have a plan and have a spending limit in mind to save both time and money at the grocery store.
CrossBorderFI wrote about ditching/firing their Vanguard funds (despite what all the financial experts typically suggest) and instead, they are considering owning just the top market-cap companies for income and growth. Here is what they wrote:
“As of 1 July 2019, we have purchased the top 25 companies on the list of 185, allotted in size approximately following the same proportions as the VCN index fund.”
What do you make of their move? I think, while seemingly bold, it’s smart – there are many friendly dividend histories in the top-25 stocks of Canada’s big Exchange Traded Funds (ETFs) like VCN or VCE or XIC or XIU. Thoughts?
Rob Carrick was very kind to include my article in the Globe and Mail this week about getting started with investing – “Ideal intro for millennial and Gen Z investors.”
You can find more support to getting started with investing, how millennials can get wealthy eventually; how you can open your discount brokerage account; how you can get started with investing using dividend paying stocks on this page here.
Robb Engen has demonstrated solid progress in his mid-year net worth update.
Roadmap2Retire – who likes craft beer almost as much as I do – shared this Q2 passive income update.
It’s been a few months since I’ve blogged about our goals for 2019, so I’ll probably post an update on this soon.
I also want to write an update about how things have transpired in our new condo since we’ve moved – an outcome from our housing dilemma series. I’ll share some expenses that have hit us, some things that surprised me about downsizing and more. Stay tuned for a future post (or two) on that!
Million Dollar Journey wrote about building a fat RRSP starting in your 30s, 40s, and 50s.
Reader question and email this week (information adapted slightly below):
I am a new subscriber, love your website, easy to follow and very practical advice on investing. Some questions for you:
- I usually invest in an ETF that tracks the S&P 500 (an ETF offered by BMO InvestorLine that allows you to buy into the S&P using a Canadian-listed ETF), would you recommend only investing in the S&P 500 or would you recommend diversifying into other ETFs, such as a consumer or utility specific ETF given the volatility?
- How do you zoom-in per se to focus on a short list of individual stocks to invest? There are a bazillion stocks to choose from. Also, I favour U.S stocks given that they seem to perform better than Canadian stocks. So, how do you buy U.S. stocks with your Canadian money?
Thank you for any thoughts you can share on this!
More great, detailed questions. Keep them coming folks!
Regarding question and point #1, I think investing in the S&P 500 is a great idea. Great access to the U.S. market and you have therefore chosen to diversify away from Canada’s borders – which I’ve grown to appreciate more over time.
I can’t recommend any ETFs for you specifically, but I do have some low-cost favourites on this ETFs page here.
If you own an ETF that tracks the S&P 500, whether that is in U.S. dollars or Canadian dollars, you already own a number of consumer stocks, utility stocks, technology stocks and many more stocks in various sectors. As such, I don’t think it makes too much sense to load up on an S&P 500 ETF and then pile on a few sector ETFs as well. That’s just me though!
See below an example of the sector allocation from a BMO ETF (ZSP) that invests in the U.S. market in Canadian dollars – not sure if you own this one or not!?
Image courtesy of BMO.
Regarding questions and point #2, I’ve decided (rightly or wrongly to others!) to unbundle my broad-market Canadian ETF (e.g., VCN, VCE, ZCN, XIC, XIU, etc.) and own the same top-Canadian stocks the same big ETFs own. I wrote about this approach in these posts:
Now, does owning some Canadian telcos, utilities; a few low-dividend yielders but higher-dividend growers, and some financials (i.e., the “TULF” stocks) make up a good portfolio? Probably not. Even though Canada’s market operates as an oligopoly, it’s probably not wise just to invest in Canada alone. I recall we represent 3-4% of the world market. So, my wife and I have decided to invest in U.S. dividend paying stocks and U.S. ETFs to complement our Canadian stocks holdings for income and growth.
I also wrote about my approach to exchange Canadian money to U.S. money to buy more U.S. dividend paying stocks and U.S.-listed ETFs for my portfolio over time here:
I hope that provides some insights!
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