Weekend Reading – Gord Downie, when companies lie, loving ETFs and more #money stuff
Welcome to my latest Weekend Reading edition – after a small break due to vacation.
Some sad news this week with the passing of Canadian rock-poet, artist and front-man of The Tragically Hip Gord Downie. A significant loss for us fans, losing a beloved Canadian music icon and culture advocate too soon – so a nice touch I think by a local radio station to do this:
Here was my article this week:
Enjoy the rest of these reads as part of your weekend reading – see you here next week.
Dividend Growth Investor highlighted the performance of dividend paying stocks over non-payers.
Simply Investing wondered how you might invest when companies lie to you.
Interesting, older article I read (thanks to a reader question to me) about equal weight investing using ETFs. The punchline about this strategy – it may produce returns greater than a traditional cap-weighted investing approach – depending upon the investing period of course. Nothing is guaranteed in the financial future. From the article: “Equal weighting is an active strategy that’s more volatile and expensive, so advisors need to have a good reason to use it.”
On the subject of Exchange Traded Funds – what’s not to love about ETFs?
From the oldie but goodie file, here is why I like ETFs as they relate to index investing. Otherwise I buy and hold stocks for passive income and growth. Not all ETFs are good ones.
I found this new Canadian dividend ETF (XDIV) by BlackRock. People may tout some dividend ETFs as better alternatives to holding individuals stocks – but I don’t follow that crowd blindly. While the management fee for this new ETF is low (0.10%), it only holds 22 Canadian stocks – about 60% financials and 20% energy. Hardly diversified even for Canada. I also think it’s a bit nuts to have an ETF labelled as “medium” risk with 80% of your assets in two sectors.
Good on Ken Kivenko – Canadian investor advocate in action – to post this on CanadianFundWatch:
“Studies of actively-managed equity funds have found little evidence that strong past returns predict strong future returns after fees. This is a very important fact. Chasing performance is therefore a fool’s game and not a good reason to select a fund. Fund companies advertise their high-performing funds because they have proven effective at exploiting and encouraging investors’ tendency to chase funds with high past returns. Simply put, investors tend to put their money with fund managers who have succeeded in the PAST, despite the fact that this will not mean that the fund manager will succeed in the future.”
Sean Cooper has some mortgage advice for Canadians: shop around, make lump sum payments, and switch from monthly payments to bi-weekly payments to slay your mortgage debt. I think he forgot a big one – establish a short amortization in the first place.
Who doesn’t love getting a deal?
Don’t forget about my Deals page where you can save hundreds or even thousands of dollars over years with better saving and investing solutions. It’s your money – get more out of it!
New mortgage rules are coming into effect. Soon, lenders will be required to “stress test” all uninsured mortgage loans – those where the buyer makes a down payment of at least 20 per cent of the home’s purchase price – at the greater of the Bank of Canada’s five-year posted rate or 200 basis points (two percentage points) higher than the negotiated contract rate. I think this is a great move.
Thanks for being a fan everyone.