Weekend Reading – More experts saying you need $5 million to retire
Hey Everyone!
Happy Holidays!
Welcome to some new Weekend Reading highlighting some favourite finds from the week that was, including a few posts/links of my own – before we get to the plight of more experts saying you need $5 million bucks to retire.
Sigh.
This week, I shared a few stocks or ETFs I hope to buy more of in 2025 – I would be curious to see what you’re adding to your shopping list and why!
And…a reader was curious about some of the top-ETFs I like, what I own, and why, so I directed them to this updated ETFs page here:
Weekend Reading – More experts saying you need $5 million to retire
Really?
Where does this nonsense stop?
According to Kevin O’Leary, retirement minimums are around “$5 million in the bank.”
Gosh, I would hope so.
Headlining this Weekend Reading edition was Kevin’s interview in the Financial Post (FP) (subscription). From the article and his reasoning:
FP: You have said that people need at least $5 million in the bank. Would you stand by that?
KO: It’s the minimum and it’s very, very, very hard to get. If you want personal freedom, and you want to not have to answer the phone and do whatever you wish with your time, you’re going to need $5 million in the bank. Not $5 million in housing, and not $5 million in stocks; $5 million liquid.
The absolute hardest is to get the first one, the first million, to have the discipline to save that first million. Then everything gets a lot easier after that because the only way you can save $1 million is to have the discipline back to the very first aspect, that you’re somehow making sure 15 per cent of everything you make is invested in yourself. It’s put aside, but nobody can do it. It’s really, really, really hard. People are weak: “Oh, I want those sneakers.” “Oh, I want those jeans.” “Oh, I want that. I want this.” The answer is “No, you don’t want that. You want financial freedom when you hit 65.”
Kevin’s suggestion, who has $400 million in net worth apparently, also aligns with Suze Orman who doesn’t live in the real-world either.
You might recall from this Weekend Reading edition that Suze Orman also mentioned $5 million as a starting point for retirement. From Suze:
“Things happen. . . If you have $20, $30, $50 or $100 million, be like me, okay? If you have that kind of money, and you want to retire, fine.” – Suze Orman.
And maybe worst of all (?), financial expert Dave Ramsey recommended that retirees invest 100% of their assets in equities, from which they could withdraw 8% per year from a portfolio’s starting value, with each year’s expenditures adjusted for inflation.
Thus, if inflation was running at 3%, the retiree could/should withdraw $40,000 in Year 1 from a $500,000 portfolio (8%), then slightly more in Year 2, and withdraw even more in Year 3….and so on.
The challenge of course with Dave’s thinking is you could literally run out of money within a decade at that high withdrawal rate based on sequence of returns risks.
Pretty dangerous stuff and advice.
I don’t follow it at all….
For fun, to test both Kevin’s and Suze’s claims that you need $5 million to retire, I used a simple calculator from my Helpful Sites page that shows how much you could spend and for how long, starting age 60, if you indeed had $5 million invested…
The results?
Using the FIRECalc tool, you can see that $5 million invested could not only last a VERY long-time but depending on any meaningful returns over a 30-year period, you could end up with A LOT more than that even after a lifetime of very high income spending $175,000 per year and rising every year. That’s being uber-uber conservative. See chart below.
To be somewhat realistic, $5-million invested well instead of “cash in the bank” as per O’Leary would likely allow you to spend $200,000 per year, every year, for 30+ years without fear of running out of money or about $16k per month every month on average.
Bonkers.
Source – Credit to: FIRECalc. Notes: Without any other information, FIRECalc will assume you want to keep your annual spending about the same for as many years as you specify, you aren’t planning on receiving any Social Security or pension, and your retirement portfolio is invested in a “couch potato” portfolio of 75% stock index and 25% bond funds, with a 0.18% fee to the fund.
Reading bad financial advice is often bad enough, although comical at times. Following bad, expert financial advice is even worse.
What do you make of these expert claims by Kevin, Suze and Dave?
More Weekend Reading…
A reminder if you want real help for those of us living in the real-world that will never need such lofty investment numbers to retire comfortably, you are welcome to contact me anytime for your personalized tailored retirement income projections reports at a discount as a thank-you for being a dedicated My Own Advisor reader.
A Wealth of Common Sense highlighted a hierarchy of investment mistakes:
- Annoying ones – things like “selling a winning position too early”.
- Self-inflicted ones – things like “paying egregiously high fees” or “confusing your time horizon with someone else’s….”
- Painful ones – like timing the market or trying it often.
- Endgame ones – getting sadly wrapped up in frauds or scams.
Dividend Growth Investor suggests for holiday giving, you should consider gifts that can keep on giving decades from now – dividend paying stocks for kids.
My friend Tawcan shared some dividend stocks he is considering to buy in 2025. A good list.
From The Globe and Mail (subscription), affluent retirees don’t need OAS and don’t need subsidies from younger taxpayers – suggesting some serious Old Age Security (OAS) program reform is needed. From the article:
“Public support is on the rise to reduce OAS benefits for affluent seniors, because there are so many better ways to spend tax dollars. My recommendation is to reduce OAS for retirees with six-figure incomes so that the savings are repurposed to eliminate seniors’ poverty, help younger generations and reduce the federal deficit – a shift supported by a large majority of Canadians.”
I would largely agree and I would support any government to simplify, merge GIS (Guaranteed Income Supplement) and OAS programs, including streamlining an overly complex tax system. I mentioned as much a few years ago.
Have a great weekend and I’ll be back for a post next week before the holiday break. 🙂
Mark
Hi Mark. I am trying to figure out the best approach for investments for our TFSA and RRSP.
Back story. We (husband and I) are 59 years old. We made a LOT of stupid financial mistakes over the years including way too much debt, keeping a failing business long after I should have, investing in Nortel at the wrong time, having kids in hockey, etc. Over the past 10 years we have turned the situation around. No debt except mortgage. I work for the government now and will get a small defined benefit pension amount when I retire. Small because I have not worked there for the 30+ years required for a full pension. Husband has no pension.
We are finally at the point that we can start investing. Better late than never I guess. But I have analysis paralysis. I fear that just as we are about to enter the investment ring, things are going to tank (much like our Nortel experience). I read articles that answer the “can we retire question” for people with full pensions, paid off homes, and other real property (usually in the Globe and Mail). That is definitely not us.
Scenario
We have $26K of TFSA room. We have hundreds of thousands of dollars of RRSP room. We are both in the 37% tax bracket so I think RRSPs should be the focus for now. I have been using the TFSA to park money for various financial commitments, usually in 5 – 6% GICs which you can’t get any more. We have $14K set aside to go into RRSPs plus I plan on borrowing to contribute according to a formula Tim Cestnick wrote about that calculates how much to borrow to get enough of a refund to pay off the loan. I have set up accounts with Questrade and Wealthsimple where we are holding investments. I am not sure what to buy with the RRSP money.
Here are our current holdings
TFSAs
approx $80K invested as $30K in GICs maturing in July (earning 5.5%), 23K in savings accounts earning 4%, $22K in a Wealthsimple managed account, and $6K in a tangerine balanced growth ETF fund. The $14K to invest in RRSPs is sitting in TFSAs right now. Also need $11K of this in September to buy out my car.
RRSPs
approx $45K invested $7K in Wealthsimple managed account, $3K in XGRO at Wealthsimple, $11K in Tangerine balanced growth,and the rest with Questrade invested 40% in XGRO and 20% in each of VBAL, XDIV and VEQT.
I want to figure out how to max out what we can in the next few years. We don’t have the runway to deal with a major loss but we don’t have enough that we can ride off in a lower risk portfolio. I also want to simplify things. I am thinking that everything should be at Questrade and then use Passiv to rebalance as needed. Or just to buy one ETF and forget about it.
Sorry for the long rambling post but maybe you can make a blog out of my mess. I don’t see a lot of stories about people like us, too old to take advantage of long investment horizons, not a lot of existing investments, but in a position to actually do some investing. We “may” eventually get some inheritance money but probably just enough to make my analysis paralysis worse.
Hi Susan!
I enjoy long comments/posts!
I can consider a case study down the line….
A few quick thoughts!
1. We are all on different financial journeys. Nothing right or wrong – just what is. We all make different decisions, good, bad, indifferent and for the most part – nobody is ever trying to sabotage their own financial life. 🙂 Meaning, they are trying to make the best decisions they can with the information they have.
2. Some of the G&M articles are bonkers – although I do like reading some that are more relevant! I don’t know where they get their case studies but certainly any individual or couple with modest spending desires can afford to retire and never work again on $3M+ invested….
3. To me, the TFSA is a gift of an account for all adult Canadians – where possible, max it out of contribution room and invest inside the TFSA as much as possible for as long as possible with mostly equities for long-term growth unless you really need the money, tax-free, soon. All-in-one ETFs are great for the TFSA.
4. RRSPs are great accounts, max those out next if possible. Same logic applies = bias to equities.
If you can do #3 and #4 in that order, then without any debt as you get older, you are largely “set” since a maxed out TFSA and a maxed out RRSP (or some RRSP assets) combined with any pension (small or not), CPP, OAS and mostly importantly no debt is very good.
https://www.myownadvisor.ca/the-best-all-in-one-exchange-traded-funds-etfs/
https://www.myownadvisor.ca/etfs/
Happy investing!
Mark
Thanks for the encouraging words.
It sounds like O’Leary has a spending problem if he needs that much in a bank balance. Unfortunately people say these things as if there is a one size fits all and most people reading this article know better. When I look at my various friends I can see the difference in our spending without even having to ask. I have one friend who is currently paying to put two kids through university, another has a daughter about to graduate high school, some without children, so yes everyone has different spending. One of my friends, his housing and utilities spending each month is what I would spend in 4 to 6 months on mine. The cost of one family vacation almost covers the cost of me doing 2 to 4 trips. So the amount people need is different depending on the person. So yes, for O’Leary maybe he does need $5 million to continue to maintain his current lifestyle, it just isn’t my lifestyle.
Barry, as to walking for grocery. I started incorporating that into my life in 2024. I use to be lazy and just hop in the car and go and pick up what I needed, even if it was just a loaf of bread. However, then I would go for a walk around the neighbourhood which would include walking very near a grocery store. So one day I did what you were doing, I took one of my smaller back packs and instead of just walking around the neighbourhood, I walked to the store, picked up the couple items I needed and walked back home. Now when I need just a few items this is how I get them. I have three grocery stores, two drug stores, a butcher shop, and more all within a 15 to 20 minute walk (one direction). As for hiking, have you ever done Jofree Lake? A couple years ago I went out to BC to visit friends and we hiked up and camped there for a couple days. I also spent a couple days at Whistler and did a bit of hiking around there as well. This was during September so before the snow, I think I actually like it better during the off season than during the winter season.
Yes, certainly no one-size fits all forumla but to suggest everyone “needs” $5M to retire is such an idiotic statement, let alone $5M “cash in the bank” as per O’Leary.
As per his words…
“…you’re going to need $5 million in the bank. Not $5 million in housing, and not $5 million in stocks; $5 million liquid.”
In doing my work at Cashflows & Portfolios for folks, running retirement income planning numbers at a lower-cost than pretty much anyone else, I’ve concluded anyone in their 50s approaching a lofty $2M portfolio is “enough” for most Canadians – although it really depends on their spending goals of course, always does.
A $2M diversified stock/bond portfolio (i.e., 60/40 or 70/30 ish) is very likely to generate at least 5% annualized returns and so even with modest inflation, withdrawing 4% from that portfolio and slowly tapping the capital over many years, that should last 30-40 years with ease when you include some CPP and OAS government benefits. I did the math for a 50-something couple here.
https://www.myownadvisor.ca/how-much-do-you-need-to-retire-on-7000-per-month/
At the end of the day, to your point, everyone has different spending needs. The key is to understand that: 1. spending goals/needs first, and then 2. figure out where and when that money will come from to cover such expenses. Another post:
https://www.myownadvisor.ca/your-free-playbook-to-retirement-income-planning/
Excellent points on the walking. I love walking.
All my best to you Paul!
Mark
Like all blowhards, O’Leary, just wants people to talk about him.
I intentionally have nothing else to say on the matter!
Well said!! 🙂
Mark
All Kevin and company are experts in is gaming the system at the expense of everyone else. FP benefits from selling the panic, discontent and over save narrative, selling wants as needs is just marketing or as we call it a lie.
If I run his number through Ben’s retirement estimator (gross pre retirement income x 65%-(CPP+OAS) = required investment return/6% average rate of return which gives you your nest egg estimate) you would need $5M to fund the equivalent pre retirement income of $500K which puts you, surprise surprise, quite a bit up in the 1% group. Median income however is ~$110K so $700K should be ample to cover the needs for the majority of people. I think we should just ignore anything he/she/they say or think.
I was not able to read the article don’t have access but I agree with the point Globe and Mail made, OAS needs to be rebalanced and simplified. I’d be interested to see what numbers we are talking about but in general terms the idea is pretty sound. I’ve always been at a loss why OAS and CPP are so low in Canada. Combined they don’t even get everyone near the poverty line ($38K-$50K depending where you live) so unless you have a pension (only 35% do) you need to save up privately (which >40% do not) and even if you are it is hard if you do not have money left at the end of the month and you’re 1000’s of dollars in debt because your income has not kept up with your cost. Tweaking OAS makes sense to me but the problem as always is convincing people that have too much to share a little bit of their excess wealth with less fortune folks.
BTW my numbers are AI generated so apply some salt we are still learning:)
Thanks, Ben.
See my reply shared with Michael, very close!
Anything ~ $1M or so at age 65, sets up most Canadians VERY well for retirement when you add in modest CPP and OAS.
Absolutely, OAS needs to be redesigned with GIS, in my opinion.
Free article, very similar to the G&M one:
https://www.fraserinstitute.org/commentary/canadians-should-understand-costs-of-expanding-old-age-security
Thanks for your detailed comment!
Mark
If $5M of invested assets is the min needed to retire I estimate well over 99% of retirees will never be able to retire. I call BS!
Totally. Unless you want to travel business class for the rest of your life, have a villa in Europe or another vacation property in some other country, there is no “need” to have that much for retirement – definitely a wealthy lifestyle if you do have that much invested.
Consider $5M invested, at age 60, could end up being worth $25M in value even after a lifetime of spending using 3%-4% withdrawal rules, etc. The FIRECalc tool shows that is possible given positive rates of return. Bonkers.
Mark
Anyone that says you need $5 million to retire is not an “expert”. Everyone’s wants and needs are different. There is no one size fits all
On your what to buy for your TFSA I’m considering your XAW or NA. I already have some XAW but have never for some reason had any NA in any of my accounts Still think it’s a good growth stock with a nice growing dividend. CNQ is the other option. Decisions. Decisions.
Agreed, Don!
Yes, I actually couldn’t help myself the other day and bought a bit more CNQ in my taxable account. I’ll report that in my Decemeber 2024 (final) dividend income update for this calendar year. I am officially out of money. 🙂
I am leaning on more XAW to diversify away from those CNQ, NA, and BN, etc. – other Canadian stocks I own.
Ha, yes, good decisions, decisions to have though!
Mark
those so-called advisors are fools…how much do they pay for a walk in the park?…i think they have lost the ability to enjoy life and are trying to make up for that by spending LOTS of money.
Well put, Brad. Some of the best things in life are free.
Mark
The median invested assets of people in the US who describe themselves as happy in retirement is $500,000. $5 million is absurd.
Totally. Thanks Steve, happy holidays to you!!
Bold statement, light on details. Not usually where I spend much time.
I did like the details about what your friend plans to buy in his TFSA. Thanks for that and what you plan to buy.
Telus is a maybe for me as well as nexus industrial REIT.
Thanks, Steve. Ya, I have lots of Telus so looking to diversify more beyond Canada is my focus for the 2025 TFSA.
Do you own ETFs as well?
Makr
The opinions of these “experts” show the elite and disjointed assumptions of the average retiree. The annual returns of that sum of money likely far exceeds the spending requirements of the average Canadian. Mr. Wonderful is once again talking to himself in a mirror.
I am a Financial Planner/Insurance Broker and Engineer. I believe in risk transfer in the early parts of your working years to avoid the plan coming off the tracks due to situational based depressed asset sales or income loss. Disciplined saving is also required early in your life to meet adequate savings/retirement goals. Mr. Wonderful is correct in that many people do not have the strength to do it. That being said, more than a million is required to retire, but $5M is too much. My time value of money calculations show that $3.5M in the bank allows a 45 year old to retire and still leave about a million for the kids when I kick it at 95.
Thanks, Michael.
That’s largely my analysis too.
As you well know from your own work, “having enough” financially is all about what you intend to spend.
My math and insights from others tells me the following, at traditional retirement ages:
1. Age 65 – $1M invested, assuming modest CPP and OAS and no debt = no retirement problems for most. Golden!
2. Age 65 – $1.5 invested, as above, very comfortable and likely need to consider estate planning/gifting.
3. Age 65 – $2M or more invested, more than enough spending/looking at a few luxuries here and there to say the least.
Thanks for your comment and Happy Holidays!
Mark
Oh yea. Lots of XAW in the RRSP, as part of the 60/40 mix.
The TFSA is mostly dividend payers but shifting to growth recently. I have some QQC and will nibble on that some more this year either in Jan or with dividends.
Nice. QQC is a great fund. Hard to ignore tech in the S&P 500 or NASDAQ-100 for growth potential.
Mark
On the question of “affluent ” pensioners not needing OAS that is already taken care of with the clawback. Someplace around $1.25K I believe it has disappeared from your revenue stream. At least the clawback is classified as a withholding tax so that makes for Fed tax paid on income.
Used to like O’Leary as being brash but he is a bit too full of himself now for my liking.
And remember, the 4% rule is only for taxable accounts and maybe a TFSA. RIF’s and LIF’s are subject to mandatory withdrawals.
Suzy Q , O”Leary and some others live in the 1% world. Not everyone has an island or two, seasonal houses and all the staff so you don’t have to cook your own chicken.
There are many flavours of retirement from basic needs and on up to the rarifieds that spend our yearly values in a month.
Are you happy and can pretty well do what you want with a few restraints. Then you got it made!
RICARDO
Ya, O’Leary is totally full of himself and that boat accident he was in, was horrible…
These “experts” do not live in the real-world – they have tens or hundreds of millions of dollars and money is not an issue for them. Ego is.
I say if you are happy, and you have your health – you are wealthy.
Thanks for your comment and happy holidays to you!
Mark
Mark my question is have you ran the numbers of what percentage your dividends increase now that you are not reinvesting ? I plan on not taking any capital and spend dividends and believe there increases should keep up with inflation. I will stop reinvesting dividends myself in July , that will be our 1 year before fully retirement . Thanks and another great post .
Good question, JP.
I’m actually not reinvesting very many dividends or distributions any longer. I’ve stopped all DRIPs inside our RRSPs and taxable accounts.
Shared a bit here:
https://www.myownadvisor.ca/faqs/
I have done that, to your point, since I might be needing to withdrawal the income from our portfolio; cash built-up/paid by dividends and distributions for living expenses in 2025. We shall see what part-time work brings.
I do continue to keep DRIPs running for everything inside my TFSA (always have) and my LIRA.
I hope that helps!
Mark
I have been drawing dividends only for 6 years now and the capital keeps growing. Average dividend growth over this time has been 7% annually. Dividend yield on total portfolio is 4.75%. We also have shares of BRK.B which I sometimes sell some off to pay for US vacations. Also have CSU which I use for my annual donations to charities we support. We are 100% equities still and don’t see the need for any changes. The budgeted spending we planned on when we retired have long been surpassed, we just spend more now as money comes in. Tax planning will become an issue soon. But keeping it simple has worked very well for us.
Nice call on the BRK.B to pay for USD vacations. I guess that answers part of my question – what do you own now?
“The budgeted spending we planned on when we retired have long been surpassed, we just spend more now as money comes in.”
Amazing position to be in. You’ve earned it.
Mark
I wonder about “the experts”. Here’s my story.
I’ve been “retired” for 15 years (but I do a lot of volunteer work here in our strata complex). Our total income was $53,000 (wife stopped working). Today it is nearly triple that and I didn’t do much except reinvest the dividends which we didn’t need to live. We added and grew our TFSAs (now part of the income equation above but never used … after our Jan. 2nd contribution the unused and hence reinvested income will nudge $33,000), kept driving our trouble free 2008 Honda Civic with over 254,000 kms until last month (bought an absolutely pristine 2020 Honda HR V Sport with under 25,000 kms).
I waited until 70 to collect OAS at a 36% premium, collected CPP at 60 because it was a pittance anyway, and my wife started to collect her foreign pension in May … so the above first paragraph income enhancement is not all dividend growth and reinvesting – except for the TFSA which of itself should be very instructive on how a young person should proceed by foregoing immediate gratification and consumption of products of dubious value. TFSAs are a gift … save like mad to contribute. It may seem onerous at first but after a decade of discipline it really takes off.
And more importantly for young people, ASK QUESTIONS of those who are living well. Be curious as in “how did you do that?” and learn instead of sniping from the sidelines as in “you think you’re so clever” which is another way of saying “I don’t want to know”. Someone in this building asked and I shared and today over 10 years later he is very very happy because I will share with the curious.
You really have to watch your spending and make sensible choices – my mind boggles on every day shopping “needs” of others and thankfully my wife feels the same way – and repeat the last again – your choice of a “significant other”.
We never “suffered”, made healthy choices by eating fresh and home cooked meals, rarely eating out or driving when walking will do … and I walk A LOT. Do you really need that gym membership? On a regular basis I walk nine kms (all together there and back) with my backpack to buy groceries which are on sale. The advantage – saving money and getting exercise at the same time. When I was young I travelled all over the globe with a backpack so it always brings back fond memories … of seeing new things which gave new eyes … and entrenched frugality as in how to see/do more on less.
Incredible, Barry. 🙂
Will likely be semi-retired/working part-time in 2025.
It is my hope our dividend income will cover many expenses in semi-retirement.
https://www.myownadvisor.ca/november-2024-dividend-income-update/
Like you, I hope to wait until age 70 to collect CPP for the income boost. We’ll see?!
“TFSAs are a gift … save like mad to contribute.”
Totally. I will max ours out again 2 weeks. $14k ready to go.
I’ve been fortunate in running this site to learn from many financial mentors as I call them – I have asked them over and over:
1. How did you invest? Why?
2. Do you favour income or growth or both? Why?
3. What was your approach on debt? Why? Why not?
These answers from folks that have “been there, done that” have helped shape how I invest and I’ve adjusted what I’ve learned from them – tailored things for our goals and needs.
I’m not perfect, but I’d like to think I’ve done more good things than bad and happy to pay it forward on this site.
Sounds like you’ve done VERY well for yourself and you continue to do so because you have thought for yourself. 🙂
Happy Holidays to you, Barry!
Mark
Same to you Mark.
Some may call it boasting but I’m really trying hard to encourage …
No boasting, Barry, you are sharing your story rather respectfully – you’ve done very, very well and kudos.
Folks can learn from you.
Mark
Barry
I had a quick question if you care to divulge and totally understand if not. Was that $53K your final max amount working or what you did in your first year retired with pension and CPP together? Are you a hybrid investor e.g. ETF and dividend stocks or lean more one to another? I find it amazing to learn what people who have been retired for a while did to get there…so before CPP was around, some a mix and some who fully had it available.
I’m in my first year of full retirement at 59 (did semi for 9 years)and hoping i can avoid sequence of returns risk for a while as I have no new capitol to deploy. I should have some cushion based on spending predictions, but, will be a little nervous until i have a couple years under my belt.
Keep on living the dream and doing what you do and best wishes to you
Merry Christmas
Lou
53K max for the year. Started CPP in 2013. OAS in 2023 at 70. Only dividend growth stocks with a good credit rating. Presently a large cash component as a back up. Really though I took advantage of the credit crisis nadir and plunged 75% of my available cash pool between January and March 2009. I was shaking! Bought a lot of BMO right at the low in March which was lucky … and ballsy … yielding over 10% at the time. Also CNQ in 2020 when it was around that yield.
I can recommend a really great book which you can pick up from the library Stephen Jarislowsky “The Investment Zoo” or look at this simplified YouTube video on the book https://www.youtube.com/watch?v=Gcl8St_dZsk Highly recommended by Tom Connolly at http://www.dividendgrowth.ca/dividendgrowth/ … another guy you should look at.
Just buy the best of the best – a bank, a pipeline, a utility, an insurer, a grocer, a railway, a pharmaceutical, the only resource stock I own is the aforementioned CNQ with its 25 year dividend growth record. I do not own ETFs or mutual funds. I own 13 stocks … that’s it.
Thanks, Barry.
Which stocks do you own?
I suspect we are very similar/with similar holdings in Canada?
-Banks + lifecos? – like BMO
-Energy + pipelines? – like CNQ
-Utilities?
-Rail – CNR or CP?
-Grocery?
I’m down to about 27 CDN stocks now I think, would need to double-check since I sold AQN back in Jan. 2023.
Big fan of The Investment Zoo.
https://www.myownadvisor.ca/my-favourite-takeaways-from-the-investment-zoo-%e2%80%93-part-1/
Mark
To the “experts” it may seem there’s a lack of portfolio diversification but I take Warren Buffett’s qualified approach which has worked for me – “Diversification is protection against ignorance. It makes little sense if you know what you are doing”. The qualification is … don’t take it literally if you have an otherwise busy life. He thought that a well diversified passive index fund/ETF does the job in the long run. And that was his mentor Ben Graham’s opinion as well in an interview just before he died in the mid 1970s.
Depends on your starting point too. As said 2009 was a gift that keeps on giving … then you have to work on your good fortune by avoiding stupidity (aka lessons) … the rest becomes the residue of good design.
Royal Bank, TD, BNS and BMO … all bought between Jan-March 2009. BNS was also purchased for our TFSAs when the yield hit 7% last year.
Power Corp … the parent company which includes Great West Lifeco.
CNQ, TC Energy, SOBO,ENB (also in our TFSAs and will buy more with our $14,000 contribution on Jan 2nd)
Fortis/Emera
CN
Metro
In the US
Procter and Gamble
JNJ
Walmart
AbbVie
That’s about it. I missed out on A LOT by not buying into tech but I buy stuff I understand. No Gold or Bitcoin either. I understand the message but I don’t like the dark side of those two. Especially bitcoin.
Digression: There was a court case in 2022 in BC which is quite telling. As you know “mining” bitcoin (aka competing with others to maintain the ledger} is consuming more and more energy by running massive computer data centres. The energy is also needed for keeping them cool. A small lumber company wanted to set up a bitcoin center and BC Hydro refused … I don’t know the full details but BC Hydro maintained – and the company denied (of course) that the power consumption would result in HALF the new power from the now completed Site C dam (an expensive public investment). That is just not good for ordinary residential consumers as our rates are low (11 cents for the first step and then Step 2 @ 14 cents per kilowatt hour). The judge ruled in BC Hydro’s favor and the request was denied. The decision was appealed and dismissed … thank god! Now the Vancouver mayor wants a bitcoin digital wallet component and fortunately that was also denied by the provincial government.
Let me add that although I wrote about the frugal lifestyle it doesn’t mean we do not indulge … but we save for it, and there were no mishaps (which helps!) along the way. I travel to Europe every year and my Hungarian wife has an apartment in Budapest which we use as a base and take cheap commuter flights to other European destinations. There is fabulous hiking in the Budapest area if you’re into that kind of thing with zero foreign tourists. The city is “chock-a-block’ full of foreigners but they don’t seem to venture much outside except for a few places. There are some incredibly beautiful areas … surprisingly so … and Hungary is not all flat … the hills are great. Country/city wide transportation is free for my wife (over 65) and that helps too although we do have a Yaris.
We also ravaged out trusty and reliable Honda Civic like no tomorrow since 2009 by driving up to Alaska, across Canada to NFLD and back, through over 40 states in the USA , visiting over 50 National Parks from California to Maine to Florida. We hiked A LOT in those parks. Loved it and it wasn’t THAT expensive for us. Timing helps too. In Canada during 2017 all the parks were free (150th anniversary). Gas was cheaper, we had a National Parks year pass for $80 for the US, used coupons for hotels and bought food in supermarkets rather than restaurants.
Excellent work. As you might know from my site, I really got into dividend investing, etc. in the 2008-2009 years.
Coming out of that crisis, I bought some stocks like ENB, RY, TD, BCE, etc.
Although my DIY stock portfolio has changed a bit over the years, it’s always been a “hybrid” strategy as I call it: a mix of dividend stocks for income and growth, with low-cost ETFs for extra diversification – focused largely on growth/price gains.
So far, so good.
My portfolio sounds similar to yours:
-Canadian banks + lifecos
-Canadian energy including pipelines
-Canadian utilities (FTS, EMA, CPX, BEPC and BIPC)
-Canadian lower-yielding but higher growth stocks namely BN, CNR and WCN these days.
I own just a few USD stocks now, since I own more XAW I figure “why bother too much” beyond that fund which has >60% USD stocks. Will keep BRK.B for the years ahead, that’s essentially an indexed fund itself!
Amazing travel work. 🙂
I love hiking and I hope to get my wife into hiking more as we age a bit…I could walk for 10-15 km easily in some hills and love that.
Mark
As for The Investment Zoo I remember his recommendation to buy Manulife which worked well until it blew up in 2009 and they cut their dividend. Jarislowsky was furious at their malfeasance so it just goes to show that nothing is 100% fool proof! Just get it right 70% of the time and you’ll be fine. PS – I owned Manulife at the time …
Agreed. I own a bit of MFC still. Nice run-up in 2024 for sure.
Ha, yes, being right 70% of the time is good.
Do you own BCE? What will you do when they cut their dividend? Buy more?
Mark
Well done on MFC … it’s up 54% incl. dividends this year.
Yes – BCE owner since 2010 and bought more 10 years ago. I’ve pretty much received everything I ever put into it with all the dividends. My cost base is $30.22 and represents about 4% of my overall portfolio.
I’m passive about it. And that’s not good, I know. A part of me looks at it and says, “easy come, easy go” knowing I’ve recouped all the invested money. Another is “if it hits my purchase price, then I’ll sell it” because – at least during 2024 – I don’t need any more capital gains. Losses would be preferable – I have zero in my pool. I might revisit in 2025. Another thought – “We have enough income, why not sell it and spend it” because after all these years of grinding our way ever upwards and watching the pennies accumulate into dollars it’s hard to gear into spending mode. But at 72 why leave all the loot to heirs who haven’t a clue and will spend it all. My wife being the exception to all that.
Not a very sensible answer but I hardly spend anything and have excellent survivor skills since there were years in my youth when I struggled, just like my wife in Communist Hungary. So we always know we’ll be alright.
By the way Mark – if you have any questions about travel feel free to ask as you have my email address. I lived 10 years in Europe.
BCE is definitely <1% of our portfolio.
Telus is between 3-4% depending on share price these days.
No Rogers, barely moved in price since 2007…
I have a mix of growth and income stocks in my portfolio. Likely always will.
BCE will be interesting. I anticipate a 50% dividend cut in 2025.
I have a very boring investing plan for 2025: XAW for TFSA, BN for taxable and that’s about it.
I’ve heard that from other successful retirees: re: very hard to move from spending to saving mode. All good.
I appreciate that, re: travel. We hope to go back to Europe in a few years. Greece and the Med. Sea was great this year for 2.5 weeks.
A very Happy Holidays to you,
Mark
Well done Barry. I also tell people the that the TFSA is the best vehicle to invest in. Starting at 18 and maximize your contribution every year, you could be a millionaire by 65. That alone could be a retirement plan along with CPP and OAS. Love the walking to buy groceries. I walk 4-5 times a week playing golf.
Excellent advice, as usual Div.
Any investing plans yourself in 2025? Keeping the same stocks?
I recall our portfolios are very similar…but you own CSU for the last few years = smart. 🙂
Do you also have BRK.B like me still, and QQQ?
Other than that, I suspect you can guess my Canadian stocks; about 27 of them and down to about 4 USD stocks since I own lots of XAW now.
All my best to you in 2025.
Mark
Thanks Mark, no specific investing plans for 2025. Maybe will buy another loan from a private lender I started investing with this year. Loans pay around 12% interest and are very secure. But will leave the portfolio as is other then re-investing dividends and new contributions in the TFSA’s. No ETF’s, including QQQ. Maybe missing out on some tech, but we are doing well without it.
Amazing, great work. I’ll say, doing more than fine. 🙂
Happy holidays to you and your family. Continued success in 2025.
Mark
I don’t disagree that some people need $5million to retire. But O’leary said you need that in cash not including other holdings in property or stock market. He was probably just trying to get attention.
The $5million number could be lower or higher. It depends on if you want to continue the lifestyle you enjoyed before retirement. The 4% rule would say that you can draw $40k pa if you had $1million. Or $200k pa if you had $5million. Many professionals earn $200k and many much more.
At present, say a couple live off $90k per year before taxes and receive say $35k in CPP/OAS then they would need $55k which at 4% would require $1.375 Million. More risky, but at 5% $1.1million. If they wanted $150 – $160k pa before taxes amount needed approaches $2million.
The above numbers assume retiring close to 65 when OAS/CPP come into play. 50 somethings need to do their own math or just keep working 🙂
Not hard to see how the kind of people who rub shoulders with the likes of O’Leary would need at least $5milliom.
Some will argue that the 4% rule is just a guide. It is, but drawing more adds risk.
100%, Graham, all depends on what you want to spend at the end of the day – how much, how often.
I have little doubt Kevin, Suze, “need” tens of millions for the private jets and islands. I would “need” that too. 🙂
I’ve solved what 50-somethings need for $84k per year starting around age 50, at the very top-end of retirement savings:
https://www.myownadvisor.ca/how-much-do-you-need-to-retire-on-7000-per-month/
“In playing with some numbers, if you wanted to spend-it-all, assuming 5.5% rates of return you’d need to have closer to $2M – $2.15M invested at age 51 to float your $7,000 per month spend that increases by 3% for the next 45 years.”
This of course is almost worse-case scenario since most can and could retire on much, much less and their spending is variable in any given year.
Thanks for the great comment,
Mark
Hi,
I have read so many of these articles on “you need $X to retire on”, where $X is such a ridiculously high number, I now treat them as comic relief. I’m surprised so called “experts” endorse/write those articles. I guess headlines like that grab more attention that ones that would say “let’s look at your projected expenses in retirement and work from there to determine your own number”.
CK
$5 million to retire on? That just says that Kevin, Suze and Dave are completely out of touch with real people. Must be nice to live in that rarified world of yachts, exotic vacations, overseas villas, and wonder how anyone can do with less!.
“What do you make of these expert claims by Kevin, Suze and Dave?”
I don’t waste my time reading what their opinions are. (and my time is not worth much if anything)
Can add that Rosenberg guy at the Globe to that list as well.
LOL. I figured you might reply like that, Lloyd. 🙂
All my best,
Mark
I’m predictable. 🙂
As an aside, I sold all the XDIV in my RRIF, LIF and wife’s TFSA and converted to XEI. You were right, having two fairly similar products was just more clutter. Added the funds to the existing XEI positions for the greater diversification over XDIV. Cost me ~$60 but the spreadsheet looks cleaner.
Lloyd,
I’m thinking of doing the same. Did you see the DEC-2024 XEI estimated distribution? Looks like a nice one off bump.
CJ
‘morning CJ, ya, I saw that on the 19th when MA posted it at FWF. That was basically the trigger for this move. I was going to wait until the new year and start with the new contributions to the TFSA but this probably made it better to go early and in all three accounts. A bit higher yield and greater diversification, but the MER is higher. I can live with that.
I do find it curious how they calculate the distributions though. It didn’t make sense to me to adjust the amount down throughout the year, and then pump out a “bonus” at year end. I hope they just set a reasonable number ($.114-$.119 would be nice) for end of Jan and not vary so much through the year (not holding my breath though).
Take care.
XEI is a great fund, as you know – a nice blend of income and growth.
Mark
CJ,
You probably know already but the Dec -2024 distribution is now posted. Even better than the estimated.
Thank you Lloyd. I just looked and that’s a nice year end gift to us! Makes up for the lower distribution in the 4th quarter of 2024!
Yes, should be a complete list here:
https://www.globenewswire.com/news-release/2024/12/19/2999526/0/en/BlackRock-Canada-Announces-Estimated-December-Cash-Distributions-for-the-iShares-ETFs.html
Happy Holidays and Happy Investing,
Mark
Hoping for a slight pullback next week in XEI for the Wife’s and my 2025 TSFA contribution.
I’m leaning towards XEI for the wife’s TFSA and will be looking at around the 8th to pull the trigger. That’s when her REI dividend shows up so I might as well sweep that in as well. I’ll send in the sell order on the TDB8150 on the 6th. We don’t DRIP her TFSA and I’m just too lazy to try to set it up now. So all distributions get swept into the ISA until the new year and then invest it with the new contribution.
For mine, I’m fairly certain I’ll just add to BIP.UN early in February. My TFSA is DRIPped so there isn’t much in the ISA but I’ll still scoop that up as well.
I’m still concerned about January 21st though. )-:
Good stuff. XEI is a great Canadian fund = nice balance of income and growth.
I like TDB8150 for the taxable accounts too, at least a bit of income vs. idle cash losing out to inflation.
Mark
Ya, XEI is a great Canadian fund for income and growth. I could see that.
Mark
WOW 5 million !! ?? :o) with that advice, probably most people saving for retirement can just toss in the towel ! Even if you had no CPP, no OAS and no pension plan, whether it’s defined benefit or contribution, you would certainly be fine with 2 million at the finish line I think. You should be able to generate 80K annually without breathing hard and that could cover a basic lifestyle. You can never have enough money, but you can have an adequate amount.
Totally, and yes, while everyone has a different spend = therefore, a different retirement number per se, the suggestion that you need this much for most/everyone is absolutely insane IMO.
Oh well, I just share my thoughts on this site with some math to back it up. 🙂
$2M invested would be incredible for 99% of everyone I would think!
All my best,
Mark
Wel that is my retirement gone to the dogs then! $5 million cash? we don’t have $5 million in cash and investment accounts but seem to be surviving quite well after fifteen years of retirement and our investment balance is growing.
It must depend on what you want to do and in how much style, I am quite happy flying business class, I don’t need a private jet
I would be thrilled to fly business class now and then, for us, and certainly with $5M you could do it all the time every month on demand for the rest of your life!
Ya, I’ve thought about the private jet – not for me – I would feel bad to have folks wait around on me all day. Ha.
Best wishes,
Mark
“I would feel bad to have folks wait around on me all day.”
I wouldn’t like that either!
Ha. 🙂
A private plane is useful. We had a little plane that could get us to Toronto or down to Boston much quicker than flying air cwnada. However, they are not all plush leather armchairs and vvip meal service.
I don’t need my mandatory rif withdrawal, it goes straight from rif to tfsa where it stays.
As with others, I find that O’Learys comment is way off.
Amazing, Richard…and if I could fly private, I would!
Yes, O’Leary is WAY off.
Happy Holidays to you and best wishes for 2025.
Mark