Weekend Reading – Millennials love toast, safe GICs, market tops and #money stuff

Weekend Reading

Happy Weekend Reading friends – and best wishes on this “May two-four weekend”.  The unofficial start of summer or more appropriately, to celebrate and honour Queen Victoria’s birthday that was…May 24, 1819.

Got any plans?

I’ll be helping out with some local community association work, helping my parents with landscaping, doing some yard work myself and basically just relaxing.   Let’s not forget – GO SENS GO!

Here is the lone article I wrote this past week and some of my favourites from the week that was.

2017 Financial Goals – May Update.



Financial Samurai believes millennials are being “completely rational by living their ideal lifestyles before they turn 40 because they CAN.”  This includes eating avocado toast. I don’t necessary agree but there is some truth to having a balanced life – something we strive for.

ModernAdvisor answered the question:  are GICs still safe?   They made a good point worth repeating – GICs are only as safe as the bank that issues it.

Canadian Mortgage Trends reminded us record houses prices continue.  Wild.

Jessica Moorhouse interviewed Andrew Hallam – how to become a millionaire on an average salary.  You can check out my most recent interview with Andrew here.

Here are 5 insightful articles from 5iResearch, one of my great site partners.

A Wealth of Common Sense outlined the anatomy of market tops.  I look forward to the follow-up on market bottoms.

I enjoyed Robb Engen’s thoughtful take on income investing during your asset accumulation years.  He shared some good counterpoints to my investing approach that includes dividend investing along with low-cost ETFs.

Canadian Couch Potato had more bond basics here.

Money Crashers has some tips on flipping cars.  I’ve heard of this but I’m not sure I can be bothered.  Seems like plenty of work!

Save?  Pay down debt?  Do Both?  (We do both.)  Read on about the considerations on my friend’s site HowToSaveMoney.

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17 Responses to "Weekend Reading – Millennials love toast, safe GICs, market tops and #money stuff"

    1. He’s a bright guy and certainly had a very interesting saving and investing journey! Not sure I would follow his lead with the investment club though 🙂

  1. re: rational Millennials
    — I’ve written before about the complete irrationality of the avocado toast guy, so I won’t get into that. As for “balance”, it’s a perception that this generation has none, that they are spending far more time in leisure than labour. Thing is, there are now more Millennials in executive positions than any other cohorts of other generations — including bitter Boomers (how quickly they forget their Hippie roots). The Millennial mindset is discussed often at our three-generation weekly dinners, lots of different opinions. Most interesting is that no one really knows what to make of these (not so) young upstarts. Who cares, really.

    re: flipping cars
    — yup, a lot of work, but for people who enjoy that kind of thing, more of a passion than a side-hustle (to borrow a Millennial term), and something much more in your control than hoping stocks keep going up. Two important facts though, i) this activity creates usable and tangible value to sell, buyer, and economy at large, something a lot of other hustles (like blogging) don’t do, and ii) introducing a refurbished old car into the economy kicks the sh!t out of manufacturing a brand new electric car in terms of “green”/environmental impact. It’s better for the economy, it’s better for the planet.

    re: record houses prices continue
    — stock prices and margin debt (and corporate profits) — which are also assets — also continue to hit record prices/levels, but the media and general public don’t seem too overly concerned with the high price of those things (e.g. why isn’t the government implementing legislation to stem the rise of stock prices so “average” folk can buy them, perhaps a ‘foreign ownership tax’ on Canadian stocks?). I’m guessing it’s much easier to sell/hype the emotions surrounding real estate (e.g. the continuous use of the word ‘home’ instead of ‘house’) and the North American Dream than it is to sell a running narrative about the behind-the-scenes of Wall Street — all of us have to live somewhere, but only a few of us own stocks.Tangentially, there are now more index funds than individual stocks…there’s always a new bubble a-brewin’! As well, ‘rental income’ has also hit record highs — which is really disturbing because rent prices are established far more by (non-landlord) imputed income — how much a homeowner would charge themselves to live in their own residence — than actual tenant-paid income. The rise in residential real estate prices has contributed to my coveted millionaire status, so I’m not all that displeased to be a member of the 1%.

    1. I had to smile when I read….”I’m guessing it’s much easier to sell/hype the emotions surrounding real estate (e.g. the continuous use of the word ‘home’ instead of ‘house’)…”

      Houses/homes can be very emotional for people.

      Happy to see an indexing bubble. I would expect active investors could exploit the market more. Just a hunch.

      I suspected you are part of the 1%. Not sure if I am, yet!!

    1. I’m optimistic the portfolio will provide about $40,000-$45,000 or so, per year, every year. Some of that will be tax-free (TFSA account). We’re more than halfway there.

  2. Cannew, I think you’re right in what you’re saying.

    RE GIC’s I have a little different take. Your GIC is ultimately as safe as the insurance (CDIC or other provincial organization) that may or may not come with it. (insurance availability depending on the institution/amount)

    There has NEVER been a CDIC backed GIC default in Canada that has not been covered. One can assess the quality of the issuer at time of purchase but cannot predict what happens 5 years later. This is why there is government backed insurance for purchasers at CDIC member institutions and up to 100K from each different member issuer. I accept some people may not want to rely on this as their final backstop (particularly provincial) and choose a GIC only issued by one of the big 5.

    Yes, being a used car dealer is a lot of work and takes a fair bit of knowledge and risk.

    1. “There has NEVER been a CDIC backed GIC default in Canada that has not been covered. One can assess the quality of the issuer at time of purchase but cannot predict what happens 5 years later.”

      Great points. I get both arguments for owning GICs – case dependent!

  3. Forgot to consider:
    If one reinvested the dividends its likely they at least doubled the number of shares. If the company had any splits during the 20 years they probably own many more shares and all this without having to Buy, Sell and repeat over and over.

    But each to their own.

  4. @Boomer, says: “But it doesn’t matter whether you bought 1,000 shares of TD stock for $6 in 1995 or bought 1,000 shares of it yesterday for $63. The dividend today – 60 cents per share – is what matters, and in either case would pay you $600 every three months.”

    1. When you paid $6 your total cost was $6000
    2. Today you would pay $63,000
    3. So if the price grew from $6 to $63, did you not get capital growth.
    4. what was the dividend back in 1995? Probably 6 cents
    5. Seems like one would achieve both DG and Capital appreciation by investing for income.
    6. By investing for growth can one be sure the market will grow each year or the stocks selected will grow as expected over 20 years?
    7. Yes income is not guaranteed but by sticking with companies with a long history of providing and growing the income it generally safer than those that don’t.

    1. “5. Seems like one would achieve both DG and Capital appreciation by investing for income.”

      This is exactly what I am focusing on. Yes, income is never guaranteed but I think it’s generally more reliable than capital gains.

      1. re: “… income is never guaranteed but I think it’s generally more reliable than capital gains.”
        — “income”, or dividend, is actually capital gains. It’s merely given to the stock holder instead of kept within the corporation.
        The stock holder gets the dividend but also enjoys a lower stock price as a result (ex-dividend).

        If all one is doing is re-investing that dividend into the exact same company, dividends paid-out make very little sense even when compared to straight capital gains, or based on “reliability”. It’s introducing oneself as a middle-man into the process just so one can enjoy the short-term activity/”reward” instead of passively sitting around for 35 years waiting to cash in.

        1. Totally understood SST. Reinvested dividends = individual total return stock approach. This approach differs from the “optionality” as you know – taking the cash. So, yes, I am the middle-man as you put it who can decide what to do (better?) than the total return the company can provide if they never paid a dividend in the first place.

        2. Yabut, some DRIPs are offered at discount. The way I look at it is that the dividend is usually based on earnings whereas a capital gain is based on finding someone else to pay more for the stock than I did. Absolutely, if a company keeps all, or most, of its earnings to grow the company it should (and usually does) increase in value (BAM.A comes to mind). So if the two are equal, then why not DRIP? If investing is mostly emotions and psychology, why not have the monthly/quarterly pleasure of seeing the income being generated increasing?

          I freely admit I am not a sophisticated investor but even though the appreciation of my property has far exceeded the growth of my investments, I get a bigger kick out of watching for dividend increases and DRIPs. Pleasure can be a strong motivator IMO.

          1. I also get the psychological kick out of the dividend payments and increases. I admit that. I personally think this is an understated benefit of “sticking to a plan” – that can get DIY investors like myself closer to market returns (or above) than many people think over long investing periods.

    2. @cannew – just for fun I looked at the rate of return for TD between 1995 and today and it’s about 11.3 percent. Coincidentally, the annual return of the S&P 500 from Jan 1 1995 to Dec 31 2016 is 11.3 percent.

      The point of my example was to show that (in theory) an investor could have put $6,000 into an index fund in 1995, waited 20+ years, then, in retirement decide to switch to an income-focused portfolio of dividend stocks and be at the exact same point as an investor who carefully built and maintained a portfolio of dividend stocks in his or her accumulation years.

      The reason why I switched from dividend investing to indexing was not because of some moral superiority. I truly believe a disciplined investor on either side will end up with roughly the same rate of return over the very long term. I simply did not want to spend any more time than I had to on investing while I’m busy working, writing a blog, and raising a young family, so I chose to take a simple, diversified path and let it ride for decades.

      1. “The reason why I switched from dividend investing to indexing was not because of some moral superiority.”

        This makes your views very balanced Robb, which I have always appreciated. Some other investors absolutely do not have the same mindset! 🙂

        As always, I wish you well with your plan – it’s a good one.


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