Weekend Reading – Great Aeroplan changes, hitting financial independence, Brookfield Asset Management news and more!

Weekend Reading – Great Aeroplan changes, hitting financial independence, Brookfield Asset Management news and more!

Hey Everyone,

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.

If you missed last weekend’s reading material on the big tech boom (making many people wealthy) check that out.

This week, I found articles about Aeroplan, nailing financial independence in your 30s, the parent company Brookfield of Brookfield Property Partners (BPY, BPY.UN) making an offer sheet (and what to do about it), how to calculate your adjusted cost base (in a taxable account of course), an update on our Canada Pension Plan investments, and more!

Enjoy and see you on the site!

Mark

Weekend Reads

I offered some looks into the future with this post recently – what does our post-pandemic future look like?

What does our post-pandemic future look like?

Liquid Independence from Freedom Thirty Five Blog has hit his crossover point before age 35 – see below! Congratulations on reaching your goals!

Freedom 35 Blog

Wondering how to calculate your adjusted cost base? Million Dollar Journey has you covered.

I enjoyed Mike’s take (aka The Dividend Guy Blog) on the Brookfield Asset Management offer sheet to tender Brookfield Property Partners (BPY.UN) shares – although with his investing thesis on the BPY.UN company itself. You can check out his short YouTube video on this below. I hope to have Mike on the site for a feature in the coming months.

Nice to see Air Canada listen to the voice of their customer and revamp their long overdue Aeroplan program with a bunch of great changes. Here are the highlights as I see it:

  • With family sharing the points – they will add up. As of November 8th when the program launches, up to eight family members can pool their points for redemption.
  • The combination of points and cash will be available for all flight rewards. Also, you will be able to book every Air Canada seat, in every cabin class, with points.
  • Use your points for perks during travel – like upgrading to a higher cabin class. (We hope to do that in the coming years for some major international trips.)
  • With the new program, points will cover the cash surcharges on flight rewards with Air Canada, so there will be more transparency at time of checkout.
  • Earn status without flying – since come January 2021 “Everyday Status Qualification” will become a permanent feature of the revised program.
  • Flight rewards will be booked right at aircanada.com or on the Air Canada app – simple as it should be!

Also, recently effective July 20, 2020, Air Canada / Aeroplan started waiving the current expiry provisions so that you will have an additional 6 months added on to the points expiry date. So long as you keep your account active (and I will), points won’t expire at all – and staying active is as easy as earning or redeeming a single point within 18 months.

I’m striving to have a 6-figure Aeroplan points balance soon that should be worth a few trips or a nice long-distance business class flight in a few years. Onwards and upwards!

You can check out more details and perspectives on these program changes from travel-lover Barry Choi!

Dividends in Hand shared 10 popular stock picks to hold (if you had to) for the next 10 years. Any guess on #1?

Our Canada Pension Plan (CPP) investments are doing rather well I think, with a 10-year return of over 10%. If you want to see the highlights check out how they are doing it here.

My friends at 5i don’t believe gold is going back under $1,700 – again. Read on here!

Reader question of the week (adapted slightly for the site)

Hi Mark,

What’s your take on bonds these days? I recall you don’t own them anymore based on this asset location post and how to invest in various accounts? Thoughts?

Should I invest in taxable accounts?

Thanks for your readership and question.

Interestingly, I got a few emails from readers about this over the last couple of weeks. I don’t know if that’s because it’s the gold run-up, the tech-stock boom of late or other, but folks don’t seem to be fans of bonds these days. 

Here are some snippets from other reader emails to me on this subject before my answer:

“I don’t understand the purpose of cash except for monthly contributions for short periods.” On bonds:

“Why own bonds at near zero return? Especially if you pay a MER.”

“Mark, I own a few one and two-year GICs and 6-months of expenses in cash. I’ve been retired for 10 years and I live off part of my dividend income. I see absolutely no reason for bonds at these prices or rates for the coming 30 years. Good luck to people who own them!”

“I figure if I have a long investment time horizon, as in decades, beyond some cash I see no reason to hold bonds. I’ll just buy equities over time thanks very much.”

Cool insights. When it comes to my answer, I think you should consider owning bonds for these key reasons:

  1. If you need help with your investing behaviour – bonds can help – riding out stock market volatility.
  2. Bonds can be used to rebalance your portfolio; to keep your portfolio aligned to your investing risk tolerance (say 70% equities and 30% bonds). Buying bonds or selling bonds can help you adjust your asset allocation back to its target.
  3. Bonds can actually be used for spending purposes – when equities have tanked and you don’t want to sell stocks at tanked prices for your living expenses.
  4. They may help protect against deflation – since inflation is a killer for bonds long-term.

The main reason I would keep any bonds (and I don’t right now) in my portfolio is if you’re saving for a major purchase in a few years and would like rely on some form of fixed income between now and then to help with that purchase. Otherwise, an interest savings account in the short-term will do that and GICs in retirement with a bias to stocks should work just fine. 

I absolutely believe you should learn to live with stocks for long-term wealth building.

You can also read up about my plan to own this much cash in our upcoming semi-retirement, and how I’m striving to structure my portfolio for continuous income in the coming years. 

Happy Investing!

Mark

Partnerships and Deals!

Thanks to my passion for personal finance and investing, some great companies reach out to me and provide reader offers. I’m happy to share those below from my Deals page:

 

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're very close to realizing two major money goals: owning a 7-figure+ investment portfolio along with no debt to start semi-retirement with. Find out how we did it, what's next, and what you can learn from me to tailor your own financial independence path. Subscribe and join the newsletter! Follow me on Twitter @myownadvisor.

11 Responses to "Weekend Reading – Great Aeroplan changes, hitting financial independence, Brookfield Asset Management news and more!"

  1. Bonds are an interesting subject these days. We don’t hold much, < 5% with VGRO and some money in Co-power green bonds. I think this is a well written article, even though it is a year old now. https://edrempel.com/high-risk-of-bonds/ One definitely has to know WHY they are holding bonds, not just because it's a traditional equity/bond mix portfolio. These days the opportunity cost of keeping bonds in order to re-balance with your equities, probably hurts your overall returns.

    Reply
    1. VGRO is a great fund. I think that’s the thing with investing – you need to know your WHY – whether that is equities, bonds, cash, GICs, real estate, bitcoin, other. If you don’t know WHY are you investing in these things you best start there and do some homework. I recall I had a post about that too!
      https://www.myownadvisor.ca/what-should-my-financial-plan-cover/

      Know your why, then what, they how various investments work together. It’s an approach I’ve used for years and I bet you do as well Mechanic!
      Cheers,
      Mark

      Reply
    1. That’s the thing right now Dale, folks looking for fixed-income could be well served with a GIC-ladder aligned to their risk tolerance + equities for income and growth.

      Reply
  2. Better to pay down debt than own bonds and GIC’s at these low returns. I’ve become a DGI investor (retired) and no interest in buying bonds or GIC again. If you have a pension in your future consider equities only. As Mark has said before, the pensions can act like a bond. Enjoyed Freedom 35 article.

    Reply
  3. Hey Mark,
    I have a question about the recent BEP and BEPC special distribution. I don’t understand it and was wondering if you could explain it in layman’s terms. I’m assuming this is some kind of bonus?

    Reply
    1. It is confusing for sure as a BEP or BIP shareholder but I thought Brookfield themselves did a good job here:
      https://bep.brookfield.com/~/media/Files/B/Brookfield-BEP-IR-V2/events-and-presentations/2020-bepc-presentation-april-2020-vf.pdf

      Basically the split is to help any existing investors wanting units solely own a Canadian corporation, very helpful if shares are not currently held within RRSP and investors wish to own in a taxable account in particular.

      Reply

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