Weekend Reading
Welcome to my latest Weekend Reading edition, listing some of my favourite personal finance and investing articles from the week that was. Unless you were living under a rock this week, United Airlines assaulted one of their passengers. Horrible to say the least – here is some commentary on this mess. Airline overbooking practices are not going away but I’m optimistic this type of treatment will never happen again.
On a happier note it’s Easter Weekend and I hope you enjoy some downtime with family and friends. The weather is finally turning a nice springy corner here in Ottawa so I intend to get outside during the day, do some yard work and probably hit the driving range. The evenings will be reserved for a few craft beer and watching my Ottawa Senators in the playoffs. I hope you enjoy whatever you have planned…
Here are my writings for the week:
I believe given the Canadian market operates as an oligopoly buying and holding some dividend paying stocks is rather easy. Then you can consider index investing the rest of your portfolio from around the world.
Don’t forget these travel considerations and items.
Here is our latest dividend income update – nearing the halfway mark of our early retirement goal.
Also, congratulations to Angela and Thess, winners of the Burn Your Mortgage giveaway on my site. The books are in the mail to you!
Other fine reads…
Andrew Hallam said the best investors don’t even think about the stock market. I try and do that as much as possible: ignore.
Based on this survey most Americans have pathetic retirement savings. More and more it seems there is a divide of “haves” and “have nots” in our society which will not be good long-term.
Image via article and courtesy of GoBankingRates.
Boomer and Echo suggested there needs to be an industry financial overhaul.
The Blunt Bean Counter said lifestyle expansion can plague your retirement plan. Agreed. We try and avoid this mistake ourselves by automating at least 10% of our net savings for investments purposes every month. We find it’s far more difficult to spend what is already gone and invested. We also care very little about keeping up with anyone else.
Thanks to Stephen Weyman I discussed how to rebalance your portfolio on HowToSaveMoney this week. Let me know your thoughts in a comment or tweet.
Canada remains in a wild west mortgage market. We hope to pay off our house in the years to come to avoid any real estate financial catastrophe that could be coming. I still can’t wrap my head around the fact that people can afford a $1 million dollar home. There is no friggin’ way we could…
From the oldie but goodie file here are three investing enemies you need to avoid.
Kerry Taylor went off on The Globe and Mail – good on her – why weren’t women on this panel??
Tawcan answered a question I asked here as well: If you’re so smart, why aren’t you retired already?
Here are my answers including #1 on my list: I invested in high-priced mutual funds for too long.
Get FIRE’d asap wondered if credit cards are the instrument of the financial devil. I will be profiling this blogger next week so stay tuned!
Half Banked offered some budgeting advice.
Canadian Couch Potato shared bond basics. Here were the key takeaways for me (and you): “…the principle is still the same: when interest rates rise, the value of all these underlying bonds will fall in value, so the price of your fund will decline to reflect that. …If you’re a long-term investor with a properly designed portfolio, it never makes sense to sell your holdings based on your feeling about where interest rates are headed, because you have no idea where interest rates are headed.”
Canadian Budget Binder discussed your food budget in retirement. Personally I don’t think ours will change. We will still look for deals where it makes sense, price match from time to time, and try and eat healthy. Keep it simple.
How much do you need to retire? A Wealth of Common Sense shared a good list of questions to figure out that answer. We know our number and are working towards it.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Those stats are scary for many people in that age group. I know too many people who I would guess are in a similar situation with a low net worth in their 50’s.
Horrific numbers for people in their 50s. Most retirees should have NW approaching $1 M by then.
“Horrific numbers for people in their 50s. Most retirees should have NW approaching $1 M by then.”
Um…no. No correlation between age and income, you don’t automatically earn more the older you get.
Don’t forget, this is America we are talking about; the country where socioeconomic mobility is rare and poverty is not.
If you are poor when you are 5, you are most likely poor when you are 55.
My point is, the older you get, for the most part, the less debt you should likely have, the more assets you’ve accumulated over your life, the higher your NW should be. “Should” is my operative word. It is not a given, I agree.
Your point about America is a good reminder about the haves and have nots in that country. A HUGE divide. Only to get worse.
Some great reading there Mark. I’m looking forward to reading this week’s upcoming blogger profile on ………. me, hehe.
Post going up later today! I will email when I do.
re: Wild west mortgage market; I still can’t wrap my head around the fact that people can afford a $1 million dollar home.
— They aren’t affording a $1 million home…they are buying a $1 million mortgage debt. The result of the last 60 years of pervasive societal brainwashing and a classic example of how people along the entire chain are “thinking” exceptionally short term and emotional.
Funny that since the BC government put measures in place to deflate the BC residential real estate bubble, the money simply flowed into (mainly two) new bubbly markets — BC commercial real estate and Toronto residential real estate. You’re welcome!
re: Financial industry overhaul
— I’ve read that there are approx. 100,000 advisor/ers in Canada and only 1% of those operate under actual fiduciary rules. That’s right, only 1% of the financial industry is legally bound to manage your money with your best interest in mind. Good luck trying to overhaul an industry where 99% of the participants see you as nothing but a giant piggy bank, especially when that same industry holds sway over public policy. Be your own advisor (that sounds familiar…).
re: The best investors don’t even think about the stock market.
— That’s part of the magic of index fund investing. You are placing your money in the hands of dozens or hundreds of top notch business people whose job it is to manage both growth and risk. You not only diversify across sectors and countries but management style (e.g. an energy company is going to be managed differently than an internet company). These businesses are successful for a reason, there’s no reason for you to try to do their job. Give the market your money and forget about it.
re: Most Americans have pathetic retirement savings.
— not sure why this stat continues to be so surprising when ~50% of Americans live in poverty (or very near proximity). Heck, 1/3 of Americans use pay day loans! Pretty hard to save money when you don’t have any money. As you said, “more and more it seems there is a divide of “haves” and “have nots” in our society which will not be good long-term”, which mirrors Piketty’s argument that the Natural state of economy is Rich or Poor — the Middle Class is a decaying anomaly. Perhaps we might be last generation to enjoy a classic retirement.
re: Credit cards are the instrument of the financial devil.
I had high hopes for this one, although I’m not sure why, considering the author is a FIRE cheerleader, so right off the bat his thinking is…astray. His following statement proves as much: “I reckon that the inflationary loss on the cash in my wallet actually may exceed the value of carrying it.” A clear sign this person does not understand the entire sequence of credit card operations. I’d love to see his math on that ‘reckoning’. Then there’s this doozie, “…it’s not the spending that’s the problem.” Actually it IS the spending. Again, a blatant non-understanding that 99.99% of credit card debt is used for consumables; isn’t that some kind of PF Commandment: “Thou Shall Not Use Credit to Buy Consumable Goods!” ? Hilarious that there’s a continuous lack of connecting the dots surrounding credit cards and PFers. I’ll chalk it up to deliberate ignorance.
Have a great Easter (terrible weekend to be a chocolate bunny…)!
^ this post was brilliant. Well done.
I have none [sic] idea who you are, but thanks! 🙂
A bit of harsh feedback there SST. Actually, several of my comments in that post were deliberately tongue-in-cheek since for so many, credit cards are the fast track to financial hell. Perhaps too subtle but the point was that if you use a card, it should only be to spend what you were going to spend anyway, not a reason to spend more. Oh well, thanks for visiting my site and your comments.
Not harsh at all. For example, “…the point was that if you use a card, it should only be to spend what you were going to spend anyway…” Again, and for starters, why use debt to buy consumables? That action in direct conflict with one of the most basic PF tenants, yet almost every PF blogger loves credit cards. And that’s just the tip.
(p.s. — just because you zero your card every month does not negate the fact that it’s debt.)
It’s only harsh because it opposes your limited beliefs in regard to credit cards. I’ve read PF blogs for around a decade, and can say with certainly (yet anecdotally), PF bloggers understand only their side, the consumer side, of the credit card industry — and don’t even want to admit there is a curtain to peek behind lest it throw their PF world into turmoil (e.g. “A bit of harsh feedback…”). Anywho….always lots to learn! 🙂
Always appreciate your comments…
re: mortgages. “Afford” was probably misleading. I doubt the 1% of the 1% can afford $1 M home. I will be happy when we’re out of debt myself…
re: be your own advisor to the extent possible. I would agree 🙂
re: indexing/not thinking about the market. I am absolutely indexing more.
re: we might be the last generation to afford a decent retirement. Rather sad and it will only get worse; the middle class is fading away for sure. I can see it with the Millennials right now. 30+-year-olds still living with Mom and Dad. Sad.
No chocolate bunnies in this house!!
Found the figures:
Each survey targeted one of three age groups: 1) ages 18 to 34, which collected 1,502 responses with a 2.3 percent margin of error; 2) ages 35 to 54, which collected 1,500 responses with a 1.2 percent margin of error; and 3) age 55 and over, which collected 1,504 responses with a 4.3 percent margin of error.
Does surveying 4500 people provide only a 1.2% to 4.3% margin of error when applying it to 400 Million people?
That is quite scary reading. One way to summarise it is that over 40% of Americans over 55 have less than $10,000 retirement savings.
I did not see any mention of pensions, hopefully a few of that 40% are covered that way.
I would hope. Otherwise they are in a real mess. I suspect it’s only going to get worse.
Even if the sampling error is 5%, those are damn scary numbers. No?
Haven’t read the entire article, but the survey on how Americans have saved is interesting. Tried to find out how large the survey covered, number of people, but didn’t see it. Might change the figures if the survey was less then 100,000.
Posted a comment on your Asset Allocation article.
Thanks cannew 🙂 I need time to read your attachment in my email too.
Focus on sample sizes can frequently be a red herring. You don’t need a huge sample size (certainly not 100K) to make defensible and reliable inference about a population. The greater challenge is actually more focused on HOW on is able to sample. I would be more confident i a survey that sampled 100 people reliably than 100,000 people that were sampled improperly.
Agreed re: sample size.
Personally I think the numbers say it all. I’ve been to the States many times. They are “haves” and “have nots”. The “have nots” typically work in the service industry and have for decades. Their income is low and always has been. They can barely afford rent let alone a car and other basic necessities. Some never finished high school.
It’s only getting worse.
This is an interesting article. One has to wonder WHY don’t people have money saved for retirement? Is it because of poor spending habits or is it because their income is so low that there isn’t enough left over to save at all? The fact that women have poorer retirement savings then men suggests the latter due to (as they point out) the gender pay gap as well as the “woman tax” based on a tremendous amount of personal hygiene products, clothing, etc.
Based on my other comment, I would say the two biggest factors are 1. low income from 2. lack of formal education.