Weekend Reading – New dividend milestone, retirement bucket approaches, $500 GIC giveaway, and more #moneystuff
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.
This past week, I set out to define some new financial goals as we march towards a $1 M portfolio, stock market willing.
Before we get to my Weekend Reads, awesome to see two raises already so far in our portfolio this year, adding a couple of hundred bucks to the dividend war chest:
Canadian Utilities (CU) increased their dividend by 3%.
Brookfield Renewable Partners (BEP.UN) increased their dividend by 5%.
Even without those raises, I have a new dividend income milestone to report soon and I can’t wait to share it. In the meantime, check out where we finished recently here in a few key accounts – our plan is coming together!
Very interesting article here on the concept of generating retirement income through a “bucket” strategy.
Image from post – Retirement Manifesto.
A few things I would disagree with though with the savvy Retirement Manifesto on this one, at least for my portfolio. Your mileage may vary.
- I wouldn’t put anything in the “income bucket” related to bonds. Anything greater than >5 years is in equities for me, dividend paying stocks or low-cost ETFs.
- There is no way with >10 years investment horizon I would hold junk bonds or commodities in my portfolio. Again, I would own income and growth oriented stocks and low-cost growth-oriented ETFs.
So, my bucket approach is going to be very different than the above. After tucking away a modest cash wedge (about 1-year in cash for an emergency fund (Bucket 1), sitting in an interest-generating savings account) I intend to “live off dividends” and distributions with the rest in the early years of any retirement.
I also answered a host of retirement income strategy questions in this post.
Anything I should revisit on this bucket strategy for a future blogpost??? Happy to hear it.
Alrighty then, last week in this Weekend Reading edition where I discussed that a Royal Couple is now in search of financial independence just like me (!) I told you I was ready to giveaway some money. Well, here is the contest!
To help kick-start your 2020 savings, Oaken Financial is giving away a GIC with an opening value of $500 to one lucky winner! How to participate? Simply fill out all required information on this link (takes 1 minute).
Legal terms and conditions so you know!
Oaken’s contest is open to legal residents of Canada (excluding Quebec) who are over the age of majority in their province/territory at the time of registration. Starts January 13, 2020, 12:01 a.m. ET and ends on January 31, 2020 at 11:59 p.m. ET. Prizes available to be won: 1 x Oaken Financial GIC with an opening value of $500. Enter and good luck!
Great work by Jon Chevreau here citing reasons why DSC (deferred sales charge) funds need to go away, everywhere, for good. Very kind of him to include my thoughts in his MoneySense article as well. Thanks Jon – keep up the great work in helping Canadians build wealth.
I enjoyed Canadian FIRE’s take on FIRE.
Congrats to Tawcan on his new dividend income milestone!
Dividend Earner highlighted the best Canadian bank stocks to own. Crazy that all big-6 banks are now yielding at or over 4%!
I must say, I really enjoyed the update and returns shared by Rob Carrick on the 2MP. What the heck is a 2MP?
Essentially the 2-Minute Portfolio (MP) was first introduced some 20-years ago in the Globe & Mail as a means to investigate the idea of simplifying the portfolio-building process by focusing on the largest stocks in the Canadian stock market. The strategy was later refined to include the largest two dividend-paying stocks in each of the 11 subgroups of the S&P/TSX Composite as measured by market capitalization.
Based on Rob’s article (for subscribers only):
“Data for the 2MP is managed by Morningstar CPMS, which has done back-testing that sets Dec. 31, 1985, as the start date. In the 34 years of the 2MP, the past 10 might be the best stretch ever. The total return for the portfolio from 2010 through 2019 was an average annual 10.4 per cent, compared with 6.9 per cent for the index.”
Impressive stuff. Here are some of the stocks as part of the 2MP (image from article in Globe & Mail):
Money in Your Tea kicked around the question about whether it was smart to invest money as a lump sum or limp in (via dollar cost averaging). My answer: invest when you have the money. #justinvest.
Why do that?
Dollar cost averaging is essentially striving to time the market, strategically.
Dale Roberts wrote about the high dividend yield ETF portfolios and some 2019 returns. He mentioned one of my favourite ETFs in his post:
“South of the border Vanguard’s High Dividend ETF VYM delivered 24.2%.” This ETF, among others I believe, are the top dividend ETFs to own to secure cash for life.
Need help with your TFSA in 2020?
By now you know you can contribute another $6,000 to your financial future self via the Tax Free Savings Account (TFSA).
To get help, check out my Deals page where you can get cash back when you invest with Bank of Montreal, you can get a $50,000 ETF portfolio managed fee-free for a year with ModernAdvisor and, you can save big with one of Canada’s low-cost investment leaders: Questrade.
Also make sure you check out these posts:
Are there some easy, simple, all-in-one funds for your TFSA? You bet – right here!
Reader question of the week (adapted for site):
Love reading your various posts, it’s inspiring and educational! Very well done for a 40-something!!
OK, we are retired and withdrawing from our RRSPs at the moment. Our withdrawals happening 2 or 3 times per year. Since we’re withdrawing money actively, I really don’t have the dividends reinvested via DRIPs like you do. (Mark – here is why I’m a BIG fan of DRIPs here.)
Without DRIPs, I feel that I’m leaving money not invested…it could bite me if the market drops. Is it worth the risk given the time span? Your thoughts?
Great questions! You’ve done some thinking on this subject!
I think if you need the money, you should turn off the DRIPs. Just let the cash accumulate for your withdrawals x2 or x3 per year. Then take out the money. Let stock market growth do the work for you.
If you don’t need the cash or even all of the cash, for sure, DRIP away since I believe that is one of the big benefits of DRIPping – it helps you avoid any bad behaviours and any market timing. DRIPping allows money to compound for you, FREE of charge I might add, and take advantage of buying more stock shares when the market dips.
All the best to you and thanks for being a fan of the site – tell others about it in 2020 and stay tuned for more posts! 🙂
Other readers, I have your questions in my inbox and I will be answering them soon!