Weekend Reading – Living in a cube van, underspending in retirement, generating income and more!
Welcome to my latest Weekend Reading edition that shares some of my favourite articles from the week that was across the personal finance and investing blogosphere – including couples now living in a cube van! More on that in a bit.
A reminder, in case you missed last week’s Weekend Reading edition – here it is – about some real estate advice, U.S. Dividend Aristocrats to consider owning, and our federal government’s recent budget decisions otherwise known as Spendapalooza.
Have a great weekend and enjoy these articles. A reminder to hit me up with a comment about the site, my articles or a shoutout on social media @myownadvisor regarding Weekend Reading or any other content anytime!
Stay well and be safe!
OK, now the cube van stuff. This Toronto couple decided to live in a cube van – to save money for a future home. This is what real estate and the desire to own a home in Canada has come down to…
On almost the other end of the spectrum – a very popular post and case study on my site this week:
“My goal is to simplify the complicated process of buying and storing Cryptocurrencies focusing on Bitcoin and Ethereum. However, I will briefly cover the ways to purchase Altcoin currencies like Dogecoin, Cardano, or SafeMoon.” Nicely done Vibrant Dreamer with this epic guide to purchasing the above.
Graham from Reverse the Crush highlighted how you can earn $1,000 per month in dividends – saving money is a start! A good reminder from him that if you chose to invest in stocks or ETFs, that you need to consider how you want to invest and in what accounts to be tax efficient. Focus on the TFSA and RRSP first folks!
Rona Birenbaum, founder and certified financial planner at Caring for Clients, a fee-for-service financial planning cited a few good reasons why underspending in retirement can be a problem if it’s affecting a person’s health.
Some problems that some retirees face from the article:
- Overcoming their saving mindset (to stop saving when they don’t have to), leading to,
- A state that undermines your physical or mental wellness.
I suspect these problems rest with the minority of retirees, but I have seen articles, case studies and readers commenting on my own site highlighting these problems are very real. In fact, just recently, a reader believed something similar.
At the end of the day, I believe money is a tool. While I believe it’s important to have enough capital for needs, some wants and then some buffer, it’s important to keep it all in perspective. Try not to obsess over anything and keep things in balance. I’m trying to work on those things myself.
Million Dollar Journey highlighted some good Canadian dividend ETFs. I hope to update my post/series on that subject. If you are interested, here is my Dividend ETFs series from my dedicated ETFs page that also covers U.S. and international markets:
You probably know I have since ditched all Canadian dividend ETFs in my portfolio and built my own fund per se – full of similar stocks but in different quantities the big funds own. I avoid paying money management fees this way and I control the portfolio more. My returns from this approach are about 9% in my non-registered account over the last 10-years. I use ETF XIU as my Canadian benchmark but I don’t obsess over benchmarks since for some periods I beat the market and in other periods I lag it.
As always, I enjoy when MoneySense and Dale Roberts try to make sense of the markets. I can’t!
The Sunday Investor continues to churn out outstanding content. Check out his latest newsletter by subscribing – Geoff offered up a comparison between time in the market vs. timing the market. Can you guess which one won out?
My other posts and more Weekend Reading
A reader emailed me asking about the products and services at LegalWills re: have I used them? I have not (yet) but a family member did and provided honest feedback on the LegalWills process and products here.
A reminder about my contributions to the Best ETFs to own in Canada 2021 edition on MoneySense here. It was an honour and great to contribute to the panel this year. You can see my own desert island pick in the list – an ETF I own personally!
Beyond maxing out your TFSA and RRSP, should you have any money leftover to invest, you can consider investing in taxable accounts. I answered some questions about how I invest and what I invest in, in my taxable account here.
Financial Independence – Retirement
As part of my ongoing commitment to share some financial independence, early retirement or retirement articles from the blogosphere, here are some links!
A thanks to Jon Chevreau for highlighting my comprehensive post about how to generate retirement income on his Hub this week with contributions from CFP, Steve Bridge.
I’ve recently updated my FREE list of retirement and draw down calculators to use on my Helpful Sites page. Check those out!
Good for Chad in this MarketWatch article – he became financially independent at age 36 (not “retired”). As readers know, almost nobody in their 30s “retires” re: ceases to work. I far prefer the term financially independent over the term retired. Then again, such articles are misleading since he still works.
Kudos to him but *sigh* – when retirement still means working for a living to pay your bills.
Choose #FIWOOT. (Founder of FIWOOT here.) Then nobody like me will complain that you continue to work (if you want to work) on your own terms.
On Cashflows & Portfolios we covered everything you need to know about Registered Retirement Income Funds (RRIFs) including some tips to turn this tax-deferred money into tax-free money!
Reader question of the week (adapted slightly for the site):
If you want to read more about RRIFs, and specifically my plans for this account when it comes to our RRSP/RRIF draw down plans – check out this link when I answered another reader question.
This week, something new and more focused!
Greetings! I’m relatively new to your site so I apologize if you’ve already covered this.
I’m curious on your take on the various split share corps and covered call ETFs like BMO offers as a means to increase yield – once retired. I’ll be age 54 this coming October and I’m planning to retire at 60. Today about 65% of my portfolio is in blue chip dividend payers, some Real Estate Investment Trusts (REITs), and I have dipped my toe into ENS.TO as an example. My goal is to get the portfolio to between $1.2M and $1.8M by retirement. At which time, I’ll have switched the entire portfolio to dividend payers.
All this to say, I’m considering more aggressive dividend styles with split share corps and covered call ETFs where yields are higher. Not for the whole portfolio, maybe 25-35%.
I should add I’m fine with generating my current 6%, or even desired 7.5% in retirement which is very attractive for obvious reasons. I’m also okay with the possible loss in capital growth that can happen with these choices. I want to leave some inheritance but it’s not my main objective.
Great question! Thanks for your readership.
Well, I haven’t yet covered the investing concepts behind split share corps, but I have written about some covered call ETFs on my site before – you can find that post and quick take here.
I’ll come back to split share corps in a bit….
Personally, I’m not yet sold on some of fees for these covered call ETFs, the complexity of them, over some plain vanilla ETFs or all-in-one ETFs. I can however change my mind. So, I don’t yet own any.
As for split share corps, I must confess I haven’t done lots of research. My basic understanding of these products is there are two classes of shares: capital shares and preferred shares. They trade separately and as such, they may differ in their performance. Based on an older Globe and Mail article on this subject:
“The preferred shares are geared to income-oriented investors and have first dibs on the dividends spun off by the underlying portfolio. The preferreds also get first claim on the capital of the portfolio, up to a certain amount (equivalent to the issue price of the preferred shares). Because of these built-in protections, the preferreds typically provide a high level of safety, but minimal upside potential.”
Capital units by nature vs. preferreds are more risky. Also from the article I gleaned:
“In exchange for giving up most or all of the underlying dividends, these units are entitled to all of the value in the underlying portfolio over and above what the preferreds are entitled to. The capital shares are essentially a leveraged play on the underlying portfolio – and as we all know, leverage cuts both ways.”
So, the capital shares can either see big gains or big losses.
At the end of the day, while such products can deliver high yields one has to question how long and how sustainable that might be. Chasing yield is likely to end poorly. It did for me.
I can’t tell you what you should invest in of course, but I can say that for my own portfolio I try and limit any one individual stock holding to no more than 5% – just in case something goes belly up.
I’ve also seen a similar approach taken with retirees who might want to speculate a little bit with their retirement portfolio. Read that article here from one of Canada’s best financial journalists.
I hope that provides some insight!
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