Weekend Reading
Welcome to my latest Weekend Reading edition!
Here are my thoughts from this past week:
I’ll be back next week to post my latest dividend income update and likely some other money musings as well.
All the best and enjoy the weekend!
Mark
Here are the mental money mistakes we make.
Tawcan wrote about the great debate that will never end – index investing versus dividend growth investing. At the end of the day I feel these strategies are more similar than different but no doubt many people will continue to disagree on that.
Another sad story about broke and bankrupt NHL players, this one about former tough guy player Chris Simon. Chris earned more than $15 million during his NHL playing career and yet according to recent court documents, he hasn’t worked since November 2015 and his gross income for all of last year was just $3,836.13.
Million Dollar Journey wrote about the global merits of ETFs XAW and VXC.
The Blunt Bean Counter highlighted a number of reasons why talking about money is taboo.
Physician on FIRE provided some insight into what your part-time number might be. I think for us if we’re able to keep up our savings rate, age 50 is when we could start.
Should the age of eligibility for CPP/OAS be raised? Save with SPP has some thoughts on that.
Dividend Earner is now earning over $1,000 per month in dividends. Like I mentioned above I hope to provide my passive income update in another week or so – stay tuned!
Here are 7 ways to get ahead with your first paycheck. In the article the millennial author writes about the 50/30/20 rule. I like that rule but this is what I consider the best (and most straightforward) budgeting rule of thumb. This is because I feel folks will confuse wants versus needs including what debt repayments actually constitute.
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.
re: mental money mistakes we make
— such as with almost everything in life, master the mental game and most of the physical pieces fall into place.
re: index investing versus dividend growth investing
— indexing is the top form of diversifying and reducing risk, it’s the best way to preserve wealth using public equities. DG investing, although similar, decreases diversification and increases risk, thus has a foot in both wealth preservation and creation. Those who think DG is a silver bullet most likely have no quantification of the inherent risk involved.
re: talking about money is taboo
— it’s a Canadian thing. We can talk in general terms (‘Build Your Net Worth!’) but never in specific terms (“I might one day share how much money I make/have…”). Our American cousins have no problem voicing their financial opinions. Their hyper-Capitalist society is most likely one of the main drivers as to why ~5% of their population are millionaires vs. ~1% of the Canadian population. They embrace money whereas the polite Canadian culture still deems ‘money talk’ to be taboo.
re: 7 ways to get ahead with your first paycheck
— #6 – Select a Credit Card….yeah…great idea. Cuz, y’know, that always works out. LOL. Yet another amateur PF blogger who understands exactly what the bank/credit card marketing department want him to understand about the process — and nothing more. Using credit cards makes EVERYONE less wealthy, in real terms, above and beyond those perceived “free benefits”.
@SST,
I never thought about it that way but you’re probably right: “We can talk in general terms (‘Build Your Net Worth!’) but never in specific terms (“I might one day share how much money I make/have…”).”
I have to wonder if because we’re not as focused on talking about capital creation this is exactly why we shy away from money conversations.
Hey, I didn’t say I agreed with all of her points. Credit cards are useful to a point but they are really not for everyone. I wonder if folks truly realize that the people that cannot afford to pay off their credit card debts are the same people that subsidize the rewards to others. Not exactly a great thing to promote to each their own.
How about best of both worlds? I make up my own etf of Canadian stocks ( ry, td, bns, fts, ema, cn, cp, enb, sap, bam, bce & t) for income and tax efficiency, as I am retired, and one US stock, Brk.b, whick is almost like an etf, and pays no dividend, so no withholding tax.
Nothing wrong with that Brian but I’m biased, largely my approach: 30+ CDN stocks including all the ones you mentioned for income and tax efficiency and a couple of U.S.-listed ETFs for income and diversification. BRK.B is like an index fund. 🙂
I agree with you Mark – the approaches are more similar than different. In fact, when I published my holdings once, a reader made fun of me for “making my own etf”. My dividend portfolio is essentially a custom built ETF that fits my needs, so they were not far from the truth.
However, it is always fun to rile up the masses and see where their misconceptions lie 😉
That’s very much how I see the CDN portion of my portfolio = my own CDN dividend ETF with higher assets in utilities and telcos than the index provides in its cap-weighted methodology.
The die hard indexing fans will always critique my path but there are indexers out there, including those that follow this site, that take a much more balanced view – which I appreciate.
This debate on funds or stocks takes me back to the fork/spoon debate with Campbell Chunky Soup (and I still haven’t decided on THAT one yet!)
LOL. Good one.
Lots of interesting articles Mark.
On CPP:
Funny it takes so long for people to realize that at some point the young will be supporting the old. Even making the changes only “Increase the probability of it’s sustainability”.
Commented on Boomers article earlier, but suggesting that one invest in Index funds for growth? I’m not the one to judge as I’m 100% Cdn DG stocks, but look at the five Cdn Dividend funds when compared to the five DG stocks I mentioned. (be sure to look at the charts in the “All” setting:
ZDV Ave Price just below current price. No Dist growth
https://www.google.ca/finance?q=TSE%3AZDV&ei=-nExWdmgMZbDU-C2g-gM
VDY Ave Price just below current price. No Dist growth
https://www.google.ca/finance?q=TSE%3AVDY&ei=CHIxWfm_MdHBU-25i4AM
XDV Ave Price just below current price. Dist dropped over time
https://www.google.ca/finance?q=TSE%3AXDV&ei=c3IxWaibOMHLU5LrrfgM
XEI Ave Price just below current price. Min Dist growth
XIU Ave Price just below current price. Better Dist growth
https://www.google.ca/finance?q=TSE%3AXIU&ei=P3MxWZG2CMmiUbK4orAM
BCE Steady price growth. Good Div growth
https://www.google.ca/finance?q=TSE%3ABCE&ei=u3MxWcm9N4WZULDQpMgL
CNR Good price growth, great div growth (lost of splits)
https://www.google.ca/finance?q=TSE%3ACNR&ei=RHQxWbiHL8HCUfH1pqAM
FTS Good price growth since 2005, excellent div growth
https://www.google.ca/finance?q=TSE%3AFTS&ei=lXQxWdi4KYLOU77cu6gM
ENB Excellent price growth, excellent div growth, 2 splits
https://www.google.ca/finance?q=TSE%3AENB&ei=_nQxWZHxHtacUOT7vsAM
RY Excellent price growth, excellent div growth, 2 splits
https://www.google.ca/finance?q=TSE%3ARY&ei=XnUxWZChD4OUUP39nJgM
These may not be the best funds to use as a comparison but they are one Mark listed. I can attest that by investing only in quality DG stocks I’ve gotten both Income increase and price growth, not just one or the other.
Ha, well, I for one certainly know I’ve been paying for the livelihood of “older” folks for a LONNGGG time now! That’s what younger generations do 🙂
I’ve always thought about dividend ETFs this way – you get steady income not really any capital appreciation. The only minor exceptions are some U.S.-listed ETFs like VYM and HDV. There is capital appreciation there.
Also, I just so happen to own most of those and DRIP them for the reasons you already know: BCE, FTS, ENB, etc.
Year to date 11 dividend increases, so on target to match the 21 last year. That’s what I love about our holdings, they continue to pay us just for holding.
19 dividend increases this year, out of close to 40 CDN holdings. Pretty good!