Weekend Reading – Juicy dividend stocks, commuted pensions, bad news for actively managed money, 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.
This week, I found some FREE retirement income calculators and reviewed one in particular with some fictional data to see where my wife and I might end up in a few years. Check that out and leave a comment on what you think!
Here is a reminder I posted my latest dividend income recently approaching a new milestone inside our TFSAs and non-registered account. Very exciting stuff!
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!
Here are two stocks that have just increased their dividends – more juicy dividends again!
ModernAdvisor provided a brief overview comparing commuted values for pensions vs. keeping the pension. When looking at the lump sum commuted value or income stream for life, I usually ask myself: how much would I need to have invested to deliver a comparable income stream? Example from post:
Pension – An annual pension of $38,570 starting at age 55.
Commuted value – A lump sum amount of $488,562.34.
On the surface, I would argue it would take much more than ~$500,000 invested to deliver ~$38,000 as cash for life (30+ years). What do you think?
Andrew Hallam shared why it’s not looking great for actively managed mutual funds.
Roadmap2Retire bought these stocks, a couple that I own actually, and one in particular I’ve been purchasing for a few years now for great income and long-term growth.
Speaking of growth, I’ll share my latest dividend income update in another week or so – stay tuned! In the meantime, this was my chart from last December, a milestone we’ve long since surpassed. Stay invested, stay boring!
Reader question and email this week (information adapted slightly below):
I think I first heard you on the investing for beginner’s podcast and discovered your blog after. I really like your approach to investing using ETFs and dividend paying stocks. I am starting my investments with $8,000 in each; RRSP and TFSA. My questions are:
- How do you recommend to start for each account?
- Do I have enough to start with dividend paying stocks in my TFSA with $8,000? Should I just stick
to ETFs for now?
- Finally, how much is really enough to start investing and how would you start all over again?
Thanks for your email and questions Kate. Lots to unpack there! I will do my best for you since I can’t offer direct investing advice.
How to get started with investing
Well, in terms of how to get started with investing – a reminder that Rob Carrick from The Globe and Mail was very kind to include my article in his Carrick On Money column recently 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.
In terms of a specific way to get started for your TFSA and RRSP, although there really isn’t one best way (!) I would suggest you consider setting up pre-authorized monthly contributions to those accounts. This way, your money is siphoned towards investing and you’ll never miss the money! Spend and enjoy what is leftover…
I would also caution you about the RRSP contributions right away. I mean, it’s a GREAT retirement savings vehicle but depending upon your income (say less than $75,000 per year) I would argue it’s best to try and max out every single available contribution penny to your TFSA before your RRSP contributions are made. Once your TFSA is filled up with contribution room and you’ve invested all the money into long-term growth stocks or ETFs, then you can consider using your RRSP.
Do you have enough – is $8,000 in each account enough to get started?
Absolutely! Well done!
I wish I had that kind of money when I was younger. I wish I had low-cost ETFs to invest in when I was younger as well. I recall I started contributing just $25 per month to my RRSP in my late-teens and early 20s. I put that money into big bank mutual funds that were very expensive. I learned from that.
How would I do it all over again? Should you just stick to ETFs?
I think for any younger investor, including anyone at any age just starting out with investing, I would make a strong case for investing in low-cost ETFs. This way, you avoid any stock market speculation and you’re not as susceptible to tinker with your portfolio. As you develop more investing knowledge, you can then consider some “exploring” for your “core” ETF portfolio; you can better understand the risks involved with stock investing (along with any healthy rewards).
Here is my ETFs page where I list some of my favourite low-cost ETFs to own from around the world. There are links on this page about how many ETFs are enough, in what accounts you might want to own certain ETFs, and much more!
Got a question for me? Send it along. I read every comment on this site and every email.
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