Weekend Reading – More money moves to weather the pandemic, frugal living tips, commuting pensions and more!

Weekend Reading – More money moves to weather the pandemic, frugal living tips, commuting pensions and more!

Welcome to my latest Weekend Reading edition where I share some of my favourite articles from the week that was across the personal finance and investing blogosphere.

You can find my last edition here – writing about the top considerations for millennials who are just getting started with investing, how many DRIPs are enough to run within your portfolio, and much more.

First up, thanks to Join Piggy for asking me to contribute to their list of frugal living tips. Lots of great ways to save and get what you want at the same time here.

This week, I wrote about how I used to sabotage my portfolio. Terrible stuff really…don’t make the same mistakes I did!!

Rob Carrick wrote about five defensive plays to make to weather the pandemic this fall. Since some of you don’t pay for the Globe content like I do…here is a summary of Rob’s five points and my commentary on them.

1. Ask about breaking your mortgage. Yes, you should ask but I don’t think you should break it unless you do that math, re: the penalty is worth it. Our mortgage is currently 1.7% and we’ll be renewing it very soon (for a final time and term)!
2. Take some of the risk out of your investment portfolio. Rob writes “sell enough of your stocks or equity funds to get back to your target asset mix….”. While an option, personally, I wouldn’t sell any stocks. I would rather buy stocks in different sectors to rebalance. If you feel your portfolio has too much risk, right now after a major recovery no less, you probably have too much equity in your portfolio anyhow. This is how I rebalance the Canadian equity portion of my portfolio and my sector targets. I try and ensure no one sector in my portfolio is more than 20%.
3. Contact your lender if you’re not going to be able to afford your mortgage or debt payments when your deferral ends. I think this is wise advice, get ahead of the curve if you will. If nothing more, this pandemic has delivered all of us some great financial lessons. Here is what I’ve learned from the pandemic and what our future might look like – including I intend to invest.
4. Exploit the opportunity presented to renters. Rob highlights rents are down in some major Canadian cities. While that may be true, we’re not intending to rent but instead own our condo in the coming years. Only a few more years of mortgage payments…
5. Squeeze all the juice possible from your savings. Rob is correct in that “high interest” savings accounts no longer exist and likely won’t again anytime soon. We have a simple recipe for savings in general: we automate everything. We have savings for near-term expenses and we have savings directed to our brokerage account for investment purposes. That’s it. We also keep our emergency fund steady at this amount although I plan to keep much more cash in the coming 3-5 years as part of our semi-retirement plans in our late-40s and early-50s.

Thoughts on these above???

A reader recently asked me about owning some dividend aristocrats so I directed him to this post. Yes, we own some and we reinvest all our dividends paid by them to own more shares in these companies (JNJ, PG to name a few) commission-free every quarter.

You can see many of my current holdings on my Dividends page here.

On the subject of dividends, Dale Roberts had some thoughts on whether Canada’s energy sector (and dividends paid by some companies) are safe.

With some companies I own, I don’t see any trouble at all. Fortis increased their dividend this week by 5%+ and is intending to keep increasing their dividend by the same rate in the coming years. That’s great news for shareholders like me!

Along with Fortis, this adds to the following dividend increases in my portfolio in the COVID-19 era alone:

• Algonquin Power (AQN)
• Emera (EMA)
• Capital Power (CPX)
• Johnson & Johnson (JNJ)
• Procter & Gamble (PG)
• Southern Company (SO)
• Brookfield Infrastructure (*BIP)
• Brookfield Renewable (*BEP)

*Dividend payment increases made at end of March 2020 prior to adjusted stock split to BIPC and BEPC – new Canadian corporations respectively.

My friend Gen Y Money wrote about her preference when it comes to never touch your principal (NTYP) vs. the safe withdrawal rate (SWR). As you know, I’ve written about the SWR a few times on this site…and…I have a goal to “live off dividends” to a degree.

See below!

This is the early path to retirement ignoring any 4% rule.

Why the 4% rule is actually (still) a decent rule of thumb

My goal to live off dividends remains alive and well!

That said, I must say, of course I intend to “eat some capital” but I will do that slowly and eventually on my own terms. So, I would say I’m in the I-will-not-touch-the-principal-in-the-early-years of retirement camp. Too long of an acronym I know so I spelled it out!

Hear me speak at this year’s Canadian Financial Summit!

As a passionate investor and reader of my site, I wanted to reach out today and tell you that I’ll be speaking at the upcoming Canadian Financial Summit taking place October 14-17, 2020.

I must say, it’s absolutely great that the host is having me back to this Summit for a 4^th consecutive year!

Hi Mark!

I really enjoy your blog! I also really like your concept of hourly passive income wage – it’s something I’m now tracking myself!

I have a very important pension question for you – could you answer from your perspective knowing you have a pension as well? Thoughts?

Thanks so much.

Readers, sounds good and stay tuned for an upcoming post on commuting your pension!

Happy Investing All!

Mark