Weekend Reading – How not to be stupid, how real estate will correct, the 4% rule could fail 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.
BIG weekend of football folks. I hope to catch a few games while running some errands and getting caught up on things around home.
I would like to be outdoors, walking or hiking or maybe hitting the ski hill for the first time in a long time – but it’s very cold in the Ottawa tundra. I woke up to -20 deg. C without the windchill! I’m not going outside any longer than I have to today…
Here are the articles I posted on the blog this week – this one right below got lots of attention:
Little know facts about Old Age Security (OAS) you need to know. When do you intend to take OAS? As soon as you can? Most Canadians do that for two reasons or a combination of these:
- You are a “money on the table person” – might as well get what you can from the government and/or
- You are a “bird in the hand person” – who knows what might happen in the future including government regulations.
What say you? Have a read and leave a comment. I’m always curious what people think about these government programs.
I shared our 2018 results on our financial goals here. Admittedly, our goals could have been better last year and so for 2019 they will be far more aggressive. I’ll post those next week.
Here are 5 stocks I considered for my TFSA in 2019. I’ve now filled up our TFSA accounts and made many of these purchases. On a side-note, since I’m a dividend investing fan, it was nice to see my first dividend increase for 2019. Canadian Utilities increased their dividend payment by 7.5%. I suspect there are more dividend increases to come in 2019. I hope so – this chart on this page is banking on it 🙂
Here are some interesting reads that caught my eye…
From Farnam Street blog, how not to be stupid. If it was only that easy some days?!
Tawcan delivered some stellar dividend income in 2018. I also watched lots of Die Hard over the holidays – there are Christmas movies right? The race is on Tawcan!
This was our December 2018 dividend income update.
Millennial Revolution recapped their 2018 finances/spending aboard. “Adding in expat insurance from IMGlobal of $781 CAD/$601 USD per couple, that gives us a total of $40,519 CAD or $31,168 USD.” Pretty great considering all the time they spent in Europe (read in higher costs).
FrugalTrader from MDJ highlighted some excellent items for your early 2019 financial checklist.
According to Macleans magazine, this is how our real estate correction begins.
Andrew Hallam told us where the 4% rule could fail investors:
“Never assume that low-inflation rates are here forever. And don’t assume that the stock market will perform splendidly in the future. These are unknowns. As such, it’s prudent to maintain conservative levels of withdrawals. They should be lower than 4% for those who pay high investment fees.”
I didn’t link to this article but according to The Street’s Robert Powell, if you’re planning to retire in 2019 make sure you consider the following:
- Identify your sources of income
- Identify your expenditures
- Identify your risk management
- Retire to something.
Seems like good advice.
Here is a reader who wants to retire with a small pension – now what should they do?
Enjoy your weekend and see you here next week when I intend to post some aggressive 2019 financial goals and I’ll give you a chance to win another copy of The Behavior Gap.
Have a great weekend!
Mark
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. 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.
Hi Diane,
I also set up RRIF accounts and am having some money flowing into our account. Watch out for any extra payments being withdrawn. My bank accidentally gave me two deposits in January. It just took a phone call to correct.
Be careful that the added money doesn’t push you into the next tax bracket once you add all your income sources together. I use an income tax calculator (taxtips.ca has an easy one to use) to get a ball park and plan strategies.
It’s also a good idea to do some calculations on what would happen if a spouse passes. That can also push you into next tax bracket as you lose the opportunity to split RRIF income. We plan to gradual move money from RRIF with an extra payment to just below the next tax bracket and put into TFSA. I know if one of us passes, the survivor will get bumped into next tax bracket due to losing income/pension splitting opportunity.
Mark, I enjoyed the ” how not to be stupid” story. Quite the helpful list for Diane.
Hi Diane,
Yes, you have to be careful to ensure the cash needed for payments for scheduled RRIF payments is there to avoid an unpleasant surprise. I established LIF payments myself last year. For the “No tax” I think maybe you’re referring to no tax withheld if payments are at minimum amounts according to the RRIF factor schedule. At year end all withdrawals are considered income for tax purposes, so you may want to consider if you need an amount of tax withheld(in context of all income sources), which you can specify to broker.
Here’s another calculator that might help: https://www.taxtips.ca/calculators/rrsp-rrif/rrsp-rrif-withdrawal-calculator.htm
Yes, I should have included that link to taxtips and their calculators – that is one I use frequently and have highlighted on my Retirement page.
https://www.myownadvisor.ca/retirement/
Great articles Mark! Thanks for all your research, it is so helpful. I haven’t seen where you talk about RRIFs, I could have missed it. Anyway I turned 71 in 2018 so had to convert my RRSP account into a RRIF. Not so easy and not much information out there about it, maybe you can do an article on this topic.
The easy part is that all my self-directed stocks went into my RRIF. Then you have to take out a minimum each year. Apparently there is a formula for this, but that percentage is not easy to find. Part of the money you take out is tax-free (that is what I was told, but I will find out if that is true come tax time!) I settled on taking out $350 on the 15th of every month. If you don’t keep an eye on the cash part of your RRIF (mine is from dividends), then they will randomly sell one or more stocks, they don’t ask me! I think I can handle this unless the market slips and/or companies reduce or stop paying dividends.
The other notable thing is choosing a beneficiary. If it is a spouse, that person will continue on the payment plan you set up. However if you want to name a second beneficiary, I think the 2nd beneficiary (or estate) has to withdraw all of it and taxes have to be paid, probably from the estate. I think this is the same as an RRSP, which rolls over to a spouse, but inheriting by a secondary beneficiary is a little murky – not just sure how this works.
Anyway I think it is important to have second beneficiaries, but most people that I know don’t have them. So if my husband dies, he is no longer the first beneficiary, then when I die, my 2ND beneficiary will have to pay taxes etc.