Weekend Reading – Kudos to National Bank, correcting BNN, bloggers to follow, living paycheque to paycheque

Welcome to my latest Weekend Reading edition friends. Earlier this week I shared my latest dividend income update on my journey to financial freedom and this is the tax treatment associated with Canadian dividend paying stocks to be mindful of.

I’m REALLY looking forward to some time off from work but that won’t stop me from publishing a few posts.  See you here next week.  Be safe and enjoy your weekend!


Kudos to National Bank Direct Brokerage, which has eliminated commissions for online trades of 100 shares or more of TSX-listed exchange-traded funds.

Larry MacDonald featured this investor who likes REITs and small cap stocks.

FIRECracker corrected BNN – when asked about her millionaire dollar portfolio thanks to foregoing home ownership in Toronto – being a millennial retiree.

Thanks to RateHub for mentioning yours truly – 15 Canadian Personal Finance Bloggers to follow this year.

Vanguard just turned 40.  The ETF giant now manages some $3.6 trillion dollars.

This MarketWatch article informed us that U.S. Dividend Aristocrats have historically beaten the returns of the S&P 500 index – including 2016 so far.

Michael James on Money wrote about some adventures in obtaining and correcting his credit file.

Big Cajun Man was annoyed with the cash cow that is university textbooks.

Many working Canadians are living paycheque to paycheque.

Last but not least, check out this Canadian MoneySaver webinar series.  Yours truly will be hosting a webinar with my friends from Canadian MoneySaver in November – talking about Canadian dividend stock investing.  I’m honoured they reached out to me for this opportunity.  Sign up for this event and others!

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.

31 Responses to "Weekend Reading – Kudos to National Bank, correcting BNN, bloggers to follow, living paycheque to paycheque"

    1. Index funds are not “passive” (as if there is such a thing!). In fact, they promote an even greater degree of “active” market making.

      Think of it like the index fund/Wall St. as a shark, and the index investor as those sucker fish that glom onto the shark’s belly for a free ride and easy food.

      1. You’re welcome.

        LOL. I can imagine why you don’t always agree with his points.

        I do most of the time but he may be rather devout when it comes to his ideas on indexing, as opposed to some others who may be equally as devout with their ideas on dividend investing.

          1. Bingo.

            Many people have been successful reaching their financial goals in different ways. The things in common are probably strong savings rates, starting earlier and understanding benefits of compound interest, minimizing debt to name some of the reasons.

            1. No doubt a strong savings rate which means living below your means for years, if not decades, is absolutely the way to achieve financial wealth. Leveraged investing (in real estate, other) only works for the select few I believe.

  1. Interesting nomination cannew. I only know what I just read about Dow on wiki. A journalist responsible for the wall street journal, the dow jones avg, and beginnings of technical analysis, indeed among other accomplishments was certainly important in paving the way for a better investing environment.

    Re Vanguard, their fees are much less than 1% at .18% avg. as measured in 2014, and their largest funds are at .05%. They continue to lower fees and no doubt growing volumes helps this. It’s a unique structure as the fund owners are the company shareholders and there are no outside investors, generally accepted as avoiding conflict like with other publicly traded investment companies. That also minimizes fees.


    Mark, I think many “indexers” have a number of ETF’s that may have overlap, and that number is probably growing with so many new funds and active or smart beta being launched, of course including Vanguard.

    I don’t know anything about the number of dividend growth investors but I would think that number is exploding as there is hardly a day goes by without reading something about it, and prices of those type of stocks seem to be increasing accordingly. With interest rates so incredibly low equity companies with yield have much greater appeal for many.

    1. Some Vanguard funds are very cheap. I recall VTI that I own is 0.05%. Crazy good.

      I suppose it’s what you define as an index investor right? There are many indices out there but I would imagine many investors who have gravitated to ETFs of late might own more funds than they need. I own 3 ETFs now. Over time, I might only own 2: VTI and VXUS – as I continue to unbundle my Canadian ETF. At last count the stocks I own comprise almost 60% of the ETF XIC. That means as my stocks go, so does the performance of XIC and vice-versa. Heck, even if you only own the top-10 in XIC, that’s 35%+ of the Canadian market right here and no fees for doing so other than your original purchases to own the stocks.

      With interest rates so low, and likely to remain low in the coming decade or so, I can’t imagine what folks who are retired and trying to live off 40% or 50% bonds are thinking right now. They must be freaking out!

      1. Broad market ETF funds are cheap. Yes, VTI is .05- costs will likely continue to decrease.

        From the latest shareholder semi annual VTI report:

        “On a separate note, the Total Stock Market
        Index Fund’s Institutional Select Shares
        launched on June 27. With an expense
        ratio of 0.01%, the new share class is
        part of our ongoing efforts to reduce the
        cost of investing.”

        Yes, some of us may hold too many ETF’s particularly if you subscribe to the original indexing theory. I hold VEA and VWO vs VXUS- about 20% lower MER in the weightings I have. Unbundling CDN ETF’s could make sense especially when you’re already most of the way there. For me it’s a very big decision, with lots of factors.

        My take on bonds may be a bit different than yours. Returns on VAB for example over 1 or 3 yrs. have been actually been good. Looking ahead at YTM and likelihood of rising rates definitely looks ugly, although some investment grade bonds can still pay decently. Most of my bonds do now but the future is far from certain. Retirees holding that much in bonds may well freak more when equities drop big time, or when the energy sector takes a nose dive and divvys get cut, since most of them rely on a combination of interest, capital gains and selling of assets to fund retirement. Therefore the stabilizing factor of bonds has to be considered and they also allow saavy investors/retirees to buy back into equities when they drop to re-balance their portfolio. However low rates mean those without a cushion are forced to take on greater risk with more equities, or hold junk bonds, (both which may or may not be successful) or become re-employed, or adjust lifestyle- so yes some freaking out. This stretch for yield seems to be a reality now even for institutional and pension funds. Low interest rate policies aren’t working globally, hurt investors and savers, distort real estate values, promote personal and government debt over leveraging, to name a few issues. I guess you can tell I’m not a fan.

        IMHO, all investors and retirees probably have to accept that future returns for all assets may well be lower and plan accordingly.

        1. Wow, 0.01%. Amazing.

          It will take me another few years to unbundle the CDN ETF but I will get there eventually. Then, after that is done, likely just hold a few U.S. stocks and then a bunch of VTI and VXUS long-term in the RRSP > RRIF. That’s the plan.

          VEA and VWO are great products.

          I like that VXUS is an all-in-one outside U.S. fund. This is good since I own VTI and most of Canada via many XIU stocks directly.

          Based on what I know from your portfolio, you have very little to worry about – with bonds. I suspect most retirees won’t be a fortunate as you. Bonds are stabilizing but have no growth so some retirees will be fighting a) bad yields and b) longevity risk. Junk bonds are just that 🙂 I wouldn’t touch them!

          You are absolutely correct: “Low interest rate policies aren’t working globally, hurt investors and savers, distort real estate values, promote personal and government debt over leveraging, to name a few issues.” I wish rates would rise a bit to be honest. They should have been raises years ago to be folks back to “normal”. I’m not an economist but I think this is simply very bad policy.

          1. Your plan sounds great.

            VXUS is a good product I considered. I decided to choose my own allocation to emerging markets (less than with VXUS) and have a lower overall cost for exNorth America~.102 MER.

            You may be right with bond longevity risk, although IMHO unless people have reduced return assumptions for all assets they may still have this risk. I try not to predict things but doubt these low interest rates will last, and when they change the pace and amounts may surprise and cause pain for lots of people. Bonds can have growth like over the past number of years of declining rates but the opposite will happen as they rise, outside of holding to maturity.

            I hope you’re right with having very little to worry about. That’s the plan and so far so good. You also know my longer term game plan that will take patience and care to implement.

            Sounds like we’re on similar page with raising rates.

            1. I’m hoping for 4% real return from our portfolio. That’s it. Anything more is a bonus.

              As for bonds, maybe they will provide appreciation, it’s hard to say….

              As you know I don’t own any bonds and likely won’t as long as we have a pension plan at work. After ~20 years, the commuted value of that pension should be worth close to $400,000 at time of retirement; arguably that might be a good 25% or so of our overall portfolio. That’s likely enough bonds/fixed income outside of government benefits starting around age 60 or 65.

              We are very much on the same page with interest rates. A small bump would be great but I won’t hold my breath for the next decade 🙂

          2. As you know I’m planning for 1% real return but “hoping” for more. That may arguably be overly conservative. However, if we do better we can adjust our “draw” over time. Any rise in our equity allocation should improve returns over the long term.

            Aggregate bonds in Canada returned about 6% annually over the past 3 yrs. The only way they can appreciate now is if rates go lower. Who would have predicted such low (even negative) rates globally for such an extended time, although the bottom may be here or close. It’s ugly.

            I know you’ll be in excellent shape in retirement.

            1. 1% real return is very conservative but as we have talked about, I think that’s great for money management – to be conservative with returns.

              If we don’t spend all our money on BC wine, and keep working for another 10 years, I hope we will be in great shape 🙂

  2. SST: “Bogle is akin to Steve Jobs. Both created products which changed not only their immediate sectors, but the world at large. Would be interesting to know what your readers think is the most innovative/best financial creation from the last 100 years. I might put the index fund at the top”

    Even at less than 1% I don’t think Vangard or the others are losing money, in fact they may be making more as the volumes may be higher.

    I’ll add Charles Dow who felt Yield was a valuable measure of value. Though its been suggested that less than 3% of investors are DG investors.

    1. Interesting comparison. I wonder if others see it that way?

      It wouldn’t surprise me 3% of all investors are DG investors. I suspect the pool is rather small compared to indexing although I often wonder how many investors are true indexers vs. folks that hold a number of ETFs.

      1. That number, 3%, might be misleading. That might be 3% of stock-picking investors. But if I’m an indexer and buy a dividend index/ETF, I’m still a DGI it’s just that the fund is buying on my behalf, thus excluding me from that 3%, although I’m actually included. I would say, merely by price increase over the last few years, there are a great many buyers of dividend stocks out there, in all forms — individuals, professionals, funds, etc., far more than 3%.

        1. It’s hard to say really. As you know I’m a hybrid investor with CDN stocks and few CDN ETFs. The inverse is true for me with the U.S. and International equities whereby more and more, I’m owing more VTI and VXUS. I can’t really call myself a die-hard dividend investor just like I cannot call myself a true indexer. I feel I get the best of both worlds via this approach – especially so since the CDN market is not diversified and it’s rather easy to invest in dividend stocks.

          What are your holdings again?

    1. I recall the professors don’t make any money off textbooks, as a kickback. The folks that make the money are the publishers, then the authors, then the universities for selling the books.

  3. +1 from me regarding Nelson’s analysis of Firecracker.
    What Firecracker did was very wise – they lived within their means and invested the rest.
    But how they really accumulated their wealth was by having jobs that started at about $55,000 per year in 2006, and managed to bump those salaries to about $135,000 per year within 6 years.
    Whether they bought stocks and bonds, or property is immatterial.

  4. Congrats Mark on being chosen for the webinar. Good luck.

    SST, I agree with what you’ve written about the corp/citizens crime and penalties; Bogle and the index fund as being incredibly innovative and valuable; and high individual or (dual) incomes along with high savings rates as being common to early retirees.

  5. Vanguard: being a vanguard in the financial sector, they have an interesting history which makes a lot of statements about the sector as well as investors. For those few who don’t know, the Vanguard index fund — the first index fund — failed. Their IPO tried to raise $110 million (I believe) and they managed to get ~$11 million. Kudos to Bogle et al for forging ahead regardless, managing to keep the fund alive only by merging it with a different and more successful fund. At inception, the public didn’t want this thing and the financial players definitely didn’t want this product. Now everyone can’t live without it and its off-spring. One of the best innovations, in any field.

    FIRECracker: Nelson has a great breakdown of the situation on his site, Financial Uproar (http://financialuproar.com/2016/08/26/no-millennials-didnt-get-rich-avoiding-homeownership/). I’ll leave it at that.

    Canadian paycheque: not sure why these kinds of reports still shock. It’s a natural state of economy: a few own most, most own a few.

    And for your amusement…Biggest US bank Wells Fargo creates 1.5+ million fake bank accounts (and 500,000+ fake credit cards) over the last 5 years to collect more fee-based profit. Fires 5,300 employees and pays a $190 million fine…or 0.01% of it’s assets. Oh, and no one goes to jail. Make up your own joke.

    1. I just read Nelson’s post. It was good and of course it was a high savings rate, very, very high savings rate, that got these guys to where they are.

      Bogle is rather genius when you think about it, isn’t he?

      WFC isn’t the only culprit of white-collar crime. The rich get richer I guess….

      1. ~Not only a very high saving rate, but a very high dual-income. That’s something which is almost never touched upon in these “retire early” articles — the retiree almost always has a six-figure income. Makes saving money easier when you actually have money to save.

        ~Bogle is akin to Steve Jobs. Both created products which changed not only their immediate sectors, but the world at large. Would be interesting to know what your readers think is the most innovative/best financial creation from the last 100 years. I might put the index fund at the top.

        ~It’s not a matter of the rich getting richer, it’s a matter of one set of laws for corporations and one set of laws for citizens. Like this, for example (I know, different countries, but still…): http://globalnews.ca/news/2492062/man-faces-9-charges-in-canada-revenue-agency-scam/ . It’s ok to commit 2 million crimes of fraud (not really considered a crime since no one was actually charged with anything) but if you only commit 5 then you’re screwed. Not only that, but in the end, it’ll be the same customers who got ripped off that’ll be paying the bank’s fine as the bank merely passes along that cost of doing business.

        1. I guess that is what I was trying to imply….the rich, i.e., those caught in white-collar crime that run massive schemes – seem to operate within a different set of rules than everyone else. Sad but true.


Post Comment