Weekend Reading – New ventures, FIRE is not about retirement, dividend growth stocks and more!
Hey Folks!
Welcome to my latest (and first!) Weekend Reading edition of the new year – where I share some of my favourite articles from the week that was across the personal finance and investing blogosphere.
Again, I hope 2021 is good to you and your family!
Earlier this week on the blog in case you missed it:
I have a fine interview with Mark Noble, Executive Vice President, ETF Strategy at Horizons ETFs about the Horizons ETF line-up including their all-one-funds and beyond. We touched on the tax-efficiency of their ETF funds, why Mark feels investors should consider larger equity weightings in their portfolios, the classic case of overcoming home bias, how Mark invests his own money, and more.
I also had the pleasure of talking to LegalWills.ca about making a legal Will in Canada. A grim topic to an extent but an essential one as part of your overall financial plan.
Enjoy the weekend reads below and some news about a new venture too!
Mark
Weekend Reads
One of my favourite sites, reminded investors about the various fees you pay (or may not realize you pay). I understand my money management fees every year – do you?
I enjoyed this year in review from Ben Carlson. Good perspective on returns of course:
“It’s worth remembering what your personal goals and circumstances are when you hear so many people bragging about how much money they made or how huge their returns have been.
As long as you stayed true to your investment plan and continued making progress towards your personal and financial goals, that’s a win in my book.”
Speaking of staying true – incredible work by Mr. Tako Escapes:
“How much did we spend? In 2020, the Tako family spent $41,891. This works out to an average monthly spend of $3,490. With passive-income (mainly from dividends) of $60,737, our spending was comfortably less than our passive income! That’s an excess of $18,846.”
I have a long ways to go to catch-up to Mr. Tako but I’m working on it in this update here:
I guess the power lessons from Mr. Tako for you and I:
- Save your money – invest it wisely
- Keep expenses modest
- Rinse and repeat so that eventually, your money invested exceeds your expenses.
Pretty good wealth building formula.
Matthew is getting there himself. To Mark Noble’s advice from the Horizons ETF post – he bought more of low-cost ex-Canada ETF XAW to diversify beyond Canadian borders.
Big fan of Rob Carrick when these articles come out. For non-Globe & Mail readers (image from Globe below), here are the Canadian dividend growth companies, as calculated by Mr. Dividend Growth himself Tom Connolly, that increased by more than an average 7.2 per cent annually from 2010 through November, 2020.
I own 10 of these stocks above at this time.
Money Saved is Money Earned wondered if any FIRE (Financial Independence, Retire Early) bloggers really retire. Of course not, well, most don’t in my book. They just do different kinds of “work”. They influence, they blog, they write books, they do podcasts, they do all kinds of things to make some money but they don’t retire.
I’ve never really liked the inflated marketing around FIRE, especially the “RE” part. I’ve coined my own journey: #FIWOOT
I prefer Financial Independence Work On Own Terms (FIWOOT) versus FIRE
There is of course nothing wrong with any of these things (books, blogs, podcasts and more) but you’re not “retired” if you work for money and earn an income from it. Debate on.
I hope to always work to some degree and if I can earn some money – great – since I want to keep my mind and body active. I also enjoy having a purpose or purposes in life. I’m just wired that way.
A new venture is coming soon from yours truly…
Do you know where your money is going? Do you understand your cashflow?
Are you aware of the best ways to invest for long-term returns? Do you want to learn step-by-step how to build a responsible portfolio?
Looking for some options to draw down that portfolio in a smart, tax-efficient way?
I’m very proud to be launching a new venture soon with my friend about exactly this stuff.
We’ll formally launch the site next week (update – now live!!) and although we’re in the very early days of site design and maintenance, we promise over time this just might be the best “how-to” site in Canada – how to go from zero to hero when it comes to managing your expenses, investing for the long-run wisely, and then ultimately planning for a smart, tax-efficient, and successful retirement – at any age no less.
I look forward to sharing more details over time including with a dedicated post about what we plan to build, maintain and why!
(Don’t worry, My Own Advisor is not going anywhere and I’m not selling out this site! I enjoy it too much….)
Do you have a financial plan? What goes into that? MoneySense has some ideas.
I also have a very comprehensive post on this subject.
Reader question of the week (adapted just slightly for the site):
Hi Mark,
I enjoy reading your insights.
I do have a question about portfolio manager software. I have a brokerage but some minor irritations on data pertaining to day-over-day changes. As such, and if I recall correctly, you mentioned both Wealthica and another software tool.
I have tried to research a bit about Wealthica, and, it seems to be legit and safe to use. As an older retiree, in addition to my company and government pensions, I am realizing just over $600/month in dividend income from my investments. To ease my conservative nature, I would appreciate any advice you could bestow about your experiences on such software use – should I consider it? Is it safe to use?
Great question. I wish I knew the definitive cybersecurity answer for you!
Wealthica (no affiliation) was created a few years back out of Montreal and last time I checked it helped investors track billions of their money easily, online. (Mint does something similar.) Wealthica is also free to use.
Wealthica will aggregate and consolidate investment brokerage information and more. I haven’t used the service myself and don’t intend to – since I manage my own financial affairs largely without any online software like this – although that may or may not change over time.
The main reason I don’t use Wealthica or Mint or another tool like this is to this point is, despite their cybersecurity protocols in place (that I can’t speak to) I feel there is already plenty of risk incurred with any financial information in a brokerage, or bank, or CRA, or other today. I don’t need to complicate my cybersecurity financial life. I don’t need to link various online accounts and aggregate it online for others to manage. I’d rather keep a personal spreadsheet or other tools at my disposal to itemize my assets and liabilities and manage it from there. Other folks may or may not feel the same.
Unfortunately my answer is: I don’t know. I know some users of Wealthica and Mint or other solutions as well but the minimal amount of online solutions that I need to store my financial information, by others, the better.
I hope that provides some insights and this is certainly not a knock to the solution providers – just how I feel right now.
I appreciate all reader questions and keep them coming!
Mark
Save, Invest, Prosper!
Thanks to my passion for personal finance and investing, some great companies want to offer deals. As always, never an obligation…
BMO will be back very soon with my personal promo code to use when opening investment accounts with them. Get cash back with them! Awesome.
Until then, there are other deals should you want to take advantage and explore them:
- With 5i Research, I’ve secured a FREE no obligation trial to learn about model portfolios, the best ETFs to own and more.
- You can get $50,000 managed FREE with ModernAdvisor.
- Sign up for commission-free investing with Questrade – that’s right, buy and hold ETFs for FREE.
- Grow your money – invest with Wealthsimple.
- LegalWills.ca now offers a unique code for 15% off any services – that never expires.
Happy investing and see you in the comments section!
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.
For your reader question this week… I have been using Wealthica for a year and a half now. I love it’s features and how it aggregates everything for me. Speaking directly to the security, I did have my concerns. Unfortunately they do not use an API, which with my limited knowledge, is the safest ‘read only’ way of accessing secure info. For example, Passiv uses an API that connects to Questrade to pull down all your account info to their platform. This is provided by Questrade and is secure. Wealthica ‘scrapes’ your accounts, which means they use your actual login to get in there, scrape for the latest info and then put it on their platform for you to view. This may be a show stopper for some. I can’t speak to the safety of this either, but it is at least good to know how they are aggregating your info. Sounds like a good podcast episode to chat with them about.
Looking forward to hearing about the new venture!!
Cheers, MM
Very good to hear about your experiences MM. Glad to know that is working for you and I hope that helps the reader 🙂
Forgot to mention that the pandemic has lowered my expenditures from approx $3.5K mth (2019) to approx. $2.7K mth. (2020)
So, at least in theory, that makes for an extra close to $10K to reinvest.
The proverbial silver lining to every cloud.
Now just have to stay healthy to put all that in to action.
RICARDO
Those are some good operating costs Ricardo. I think post-mortgage and when we stop saving for retirement (those two expenses right now cost us about $4K per month), I’ve calculated with modest travel our spend-rate is about $4,000 or so after tax a month to live where we live.
You can see on my Dividends page we are about $30,000 per year (after-tax) or closer to your $2,700/mo for base costs w/o travel in 2021 dollars:
https://www.myownadvisor.ca/dividends/
Health is indeed wealth!!
Looking forward to read your articles on the forthcoming website Mark.
Retired since July 2017.
Converted LIRA to LIF last year and had a minimal withdrawal. As it was towards the end of the year the withdrawal was prorated for the number of months that had already lapsed.
Mandatory RRSP conversion this year to RIF. Prorating doesn’t matter with a RIF as there is no maximum limit.
Figuring out how much I can withdraw, if any, above the minimum while avoiding the OAS clawback.
One “good” thing about the pandemic is that it lowered my principal account balance so it is a little bit easier to stay below the next tax bracket if not the OAS clawback.
My philosophy is that it is human nature to complain, so even if we are well off relatively speaking I like to have a kick at the can anyway. Still feel fortunate to be in the “unfortunate” position I am in. LOL
Talking with a investment advisor, different from financial advisor, this last summer I had to complain that I was running out of money to buy more stocks.
Dividends within my registered plans dropped a fair amount – 16%
from 2019 to 2020. Significant dividend cuts there. Lots of IPL in my holdings. Have not sold as I am hoping for a rebound in the 2023 – 2024 timeframe.
Still pulled slightly >$60K last year within the funds so like I said, it is hard to complain but that is human nature.
At any rate my new purchases are kicking in now so dividends should improve this year.
Excess funds from the RIF/LIF withdrawals will get re-invested all while keeping a cash balance for safety.
Take care, stay healthy
RICARDO
Thanks, I’ll have more news in another week!
What is your draw down order again? RRSP/RIF first, then non-reg., then TFSAs I assume?
Have you used VPW calculator to figure how much you “can” withdraw and then using OAS rules (i.e., <$78K) figure out the difference? https://www.myownadvisor.ca/how-to-draw-down-a-portfolio-using-variable-percentage-withdrawal-vpw/
“Still feel fortunate to be in the “unfortunate” position I am in. LOL”
Yes, if you are “complaining” about trying to avoid OAS clawback then I know immediately you’re in a good financial state. 🙂
You might be right about IPL re: coming years. I’m 100% out of that now and only own ENB and TRP for pipes. That’s enough for me.
With regards to portfolio management software, I have use Quicken for decades and have found it easy to use, reliable and has a wealth of reporting abilities. I download my credit card statements from Quicken and categorize the expenditures, most of which are the same every month. I have my spending records for the last few decades at my finger tips. With regards to investments, Quicken tracks the ACB of each purchase, handles stock dividends and splits, tax withheld from US dividends, etc. You can create a budget if you like.
Calculates rate of return, etc.
It works for me.
Oh that’s good Roger, re: Quicken for ACB – I didn’t know that. I usually direct folks to this free online tool:
https://www.adjustedcostbase.ca/blog/how-to-calculate-adjusted-cost-base-acb-and-capital-gains/
Hey Mark,
Really looking forward to seeing what you come up with for your new venture. I can’t tell you how many young people ask me questions about starting to invest and especially how to buy specifically stocks. I started to get more questions this year at work once I shared my closet returns and great success I’ve had on my investing journey.
It’s really difficult to tell young people about the long journey that personal wealth is when they focus so much of the here and now of quick stock market returns and FOMO. Trying to explain to them building financial wealth is a lifestyle versus throwing darts at stock market winners and the reality is that it’s not glamorous or sexy like Youtubers make it out to be is sometimes onerous.
I always refer them to your site and a couple others where you concentrate on the lifestyle choices and slow approach of dividends. It’s easier to send them to you versus try to explain how to start off small with low fee investments, personal spending wise decisions and growing an account until you have some money to assume more risk and to always have a strategy that both you and your partner buy into for the long haul. They don’t want to put in the two to three hours like I do per night of research, education and often entertainment of reviewing various sources.
Hopefully your new venture will assimilate all that good stuff into one site as a one stop shop. I imagine a website like your current one tied with information platforms like Investopedia, 5iresearch, Marketbeat, coupled with relevant Youtubers along with bloggers like Boomer and Echo and PlanEasy. Oh the fantasy of not having to wade through all the crap of the internet would be wonderful. Lol. I can use that time to build even further wealth. 🙂
If you can reach that younger time challenged generation I think it’s a win win for everyone. Our youth, even though we can be hard on their seemingly wanton desire to receive the world for little effort approach sometimes, face a far greater challenge today, if we look especially at the underlying cost to own a home today and save for those rainy days and retirement, than any of us did, no matter how hard done we might think we were along our journey.
Bring on the next chapter. Cheers
Thanks Jeff 🙂
I’ve realized over the years that while the investing landscape has changed, tremendously, there is really know good “how-to” to manage savings, then investing, then retirement draw down considerations end-to-end. I look forward to sharing more details as we evolve – it’s going to take time – but it will get there!
“I always refer them to your site and a couple others where you concentrate on the lifestyle choices and slow approach of dividends.”
Thanks for doing that. I know dividend investing in CDN stocks (or a few U.S. stocks) doesn’t appeal to all folks, but this approach along with low-cost ETFs has 110% helped me to get me/us where we are financially in the last 10-11 years – without question. The math and returns simply don’t lie.
As you well know since you seem very wise on this stuff, once you figure out your cashflow, then simplify your investing approach, and then keep doing it; absolute wonders take over. Rinse and repeat over a few decades, while boring, then wake up somewhat wealthy. The path is simple but not easy (re: discipline). So, that is the plan, “assimilate all that good stuff into one site as a one stop shop”.
It is our hope you learn a few new things from our site, with many examples and simple DIY tools, and simply continue your wealth-building journey.
All the best Jeff – sounds like you are well on your way!
Mark
Hi Mark,
Do you know who owns the Money Saved Money Earned website? The About page doesn’t work and it looks just just an assortment of writers. Curious as to what made you link to them.
I definitely think one of the greatest early retirement skills is figuring out how to get your spouse to work longer to pay for healthcare and everything else. It’s some thing that I’ve tried to do but keep on failing. Which is why I’m impressed with Mr Tako, Joe from RB40, Chris from Can I retire yet and so forth.
It’s so hard to convince my wife to go back to work after having children. She wants to spend every day with them before going to school full time at age 5.
All tips welcome!
I do not actually Sam. I found the article interesting from the perspective that it aligned with my thoughts that is not something talked about enough. Most FIRE folks don’t really retire. They just do other stuff for a living for income. I feel there is a big issue in the FIRE-space about that and most folks are just selling a dream.
Ha, my wife won’t be one of those people that continues to work if I’m fully “retired”. We could have retired years ago but we enjoy work and some lavish stuff now and then – hence the work. We also both like our jobs so that’s a motivator as well. I have no tips for that one 🙂
I liked this article and will likely link to it soon:
https://www.financialsamurai.com/the-biggest-downside-to-paying-off-your-mortgage/
I see a mortgage (at these low rates) as a form of forced savings. We don’t pay our mortgage off for that reason and favour investing over mortgage payments right now.
Also, curious, you’re still in the San Fran area – do you intend to stay there long-term? Seems with your net worth you could move and have a better lifestyle (?) in a lower cost of living U.S. city with more options and less oversight with your rentals. Curious about your take on that and potential fodder for a future post on your site. Thoughts?
Happy 2021 and continued success. I recall you’re earning $300,000 USD in passive income which is insane to us average folks!
Mark
Gotcha. Yeah, after a year of early retirement in 2012, I no longer said I was retired. Too much interesting stuff to do, and also embarrassing, frankly. It felt disingenuous.
But I haven’t been hustling or creating products like I should be since 2012. Once the tax cuts were enacted in 2018, I did decide to become more entrepreneurial on Financial Samurai. And then once the pandemic began, with less fun things to do, I refocused again.
But I’m tired, and I would rather write mainly for fun, at least 80% or 90%, then try to make money online. It just feels like too much like work. My goal is to try to accumulate as much Wealth as possible before vaccination. Then it’s back to kicking back. Hopefully that’s in 2h2021.
San Francisco, believe it or not, is an amazing city. I’ve been everywhere in America, and I’ve lived in six different countries growing up, and I’ve been to at least 50 other countries for work and pleasure. There’s no city I would rather live in than San Francisco. The weather is great all year, I just finished playing softball for three hours for example. And I’m playing tennis tomorrow in 60° weather with the CEO of a cool public company.
There’s a lot of diversity here and the people are truly dynamic. I like it, which is why I stayed for 20 years. There is a correlation with the cost of living and quality of life. And if you can afford the cost of living, then the quality of life is really really good, at least here in America.
However, I do plan to eventually move back to Honolulu, Hawaii so I can be with my parents more. Being with them is the most important thing. And this pandemic has screwed things up for now.
Best,
Sam
Ya, I think you’ve pivoted a bit on your site to be more clear you’re not really retired but rather an entrepreneur – which I think is a breath of fresh air in this FIRE space. I mean, you have rentals, major blog income, royalty income from your book, I mean you know the list 🙂
You’ve done well to say the least…really nothing else to prove I wouldn’t think so take it easier now and then! I certainly would…
It is a nice city for sure, just sensed you are “tired” and don’t need to push so much. While purpose in life is important, once you’ve “won the game per se” with family, friends, have good assets, have your health – I wouldn’t push more than necessary and enjoy the ride more. Life is short as you know….
Looking forward to being vaccinated here in Canada likely this fall after front-line workers get the vaccine and rightly so.
All the best,
Mark
I enjoy Financial Samurai’s site too and enjoy reading the US perspective.
We paid off our mortgage as fast as we could in the mid-2000s – we were averse to debt and wanted that feeling that no one owned us. As it turned out, it was financially wise as well – interest rates were much higher than today, and returns during the “lost decade” were low, so it worked out so that we hit the 2010s with high savings rates and rode the bull market up. I wish I could claim great forecasting skill but it was pure luck and debt aversion. We didn’t lose the edge to work hard and accumulate our retirement savings either, but I can see how that might happen.
If I could go back, I likely would have taken longer to pay off the mortgage so we could buy more investments when markets were cool during the late 2000s. And I would have supercharged it with Smith Maneuver. Hindsight…
“It’s so hard to convince my wife to go back to work after having children. She wants to spend every day with them before going to school full time at age 5.”
I have to say that I find this statement completely bizarre, especially after I read further down and it is written that you make over US$300000 in passive income annually.
Then you go on to say that you want to move eventually to be closer to your parents.
Children need a lot of time and attention and time spent with them is never wasted. So despite having a huge income, you would like them to be with strangers babysitting? They are a full time job, even after they are in school “full time”–which is not many hours of the day.
You asked for tips. Mine would be that you and your wife need to get on the same page and have your priorities right if you want your marriage to last. I don’t mean to be harsh, but children are the true riches.
Hi Barbara,
Thanks for your advice. I said it somewhat tongue-in-cheek. I do think it’s cool that men are reinventing or at least re-branding being a stay at home parent with early retirement.
I definitely don’t want to get a divorce after having kids. I am just tired after being a stay at home dad for almost 4 years now. 2020 was also a very difficult year since we pulled our son out of preschool and have a baby.
I wake up every morning by 5 AM, write for a couple hours, then try to spend two hours in the morning with the children, two hours in the afternoon with the children, and one hour in the evening with the children. In the evening, like now, I catch up on stuff I missed with my website and online.
My days go from 5 AM until 8:30 PM every single day. I admire stay at home parents who can raise kids full-time for so long. I’ve tried my best, but sometimes I just want a vacation. And one of the vacations I’m thinking about is going back to work to take a break from parenthood.
Most of my peers who are fathers spend just 1-3 hrs a day with their kids. So on a relative basis, I *think* I’m doing Ok. But I understand if you think I am not doing enough. I will try harder.
How long were you and your husband stay at home parents for? What type of work did your husband do to earn income from home? And how did you guys spend your time when they were in school?
Also, given I have been a stay at home father for the past four years, what do you think about the fathers who have not been stay at home fathers for the first several years of a child’s life?
My plan has always been to be a stay at home father for the first five years of my children’s life before they go to school full-time. After that, I should have more flexibility.
Thanks,
Sam
Hi Sam,
I don’t know anything about you, so didn’t realize that you were joking.
But really…..men being a stay at home parent with early retirement??? Are you much older than your wife? This really isn’t an option for those spouses closer in age.
I did know a PhD who stayed home and took care of their two school age boys while the mom worked; this was partly because as a geologist he would have had to go up to the wild blue yonder to work. But very few men do this. My husband said he would like to stay home while I worked, but I did not trust him to be enough of an engaged parent. My income was higher than his at that time.
Oh, going back to work is definitely like a vacation when you have kids. You get to have a coffee break when you want, go out for nice lunches, talk to adults, wear good clothes, lol. We chose to give up a lot of income to have me stay home, but the decision was easier as my husband and I worked in different cities. He took daytime care of our first child from age 14 months (when I went back to work) to age 2, when I quit permanently. I feel their time together over that period really bonded them; I never felt he had the same link with our second son. So if fathers are able to do that, I would say it is really worth it. We did not have the financial luxury of being able to have neither of us earning an income.
At that time I felt sorry for friends, who said they hated the weekends because they didn’t know what to do with their toddlers and pre-schoolers and were happy to be back at work on Mondays. Of course all of our friends have massive amounts of money now, but we have enough. And I am proud of my oldest having a PhD from an Ivy League university, but more importantly, he loves his mom and dad and phones regularly for one hour chats. Academic achievement to the best of their abilities is important in our family.
My husband is a professor, which meant he could do a lot of work at home. But that also meant he was always working, often 80 hour weeks. Sometimes I had to do a lot of nagging to force a break and keep him engaged with the children. We did a lot of travel together as a family and always ate dinner together at the table, something which friends told me isn’t all that common.
For me, even when the 3 kids were all in school I was super busy. My youngest was born with some problems which required surgery and she also developed Type 1 Diabetes at age 2 and that requires 24 hour vigilance,. Once at school I had to go there every day at lunch time until she was 11 years old and I was never away from her until later once when I went with her brother on an overnight school band trip. With many other medical problems in the children, my worst/busiest time once had 17 medical appointments in one calendar month. I have sat/slept in intensive care wards in 3 different hospitals more than one time in each; each day feels like a week. The brain surgery was the worst for me to watch over.
So, be thankful if your kids are healthy, because you never know how long it will last or what could develop. No one expects anything serious. Cherish your time with them.
Sorry Mark, a bit long for a financial blog! It was after I didn’t have to research so much medical stuff on my own (you cannot rely on the doctors you see for the best info) I was able to get back to dealing with financial affairs.
Well that’s the thing. So few men are stay at home dads, so hopefully you can cut me some slack for being one for almost the past 4 years.
We consciously decided to make as much money and experience freedom first before having kids. It was a risk since we are older parents. But we made it so far.
I agree to cherish our children! At the same time, I wouldn’t mind finding a vacation job too.
“Cherish your time with them.”
This, this here is singularly the best piece of advice I’ve ever seen at MOA. Parents who have lived the nightmare grasp the sentiment. Hugs to Barbara.
Very well said.
Write and comment away Barbara – that’s what the features on the site are for 🙂
Mark
I’m extremely excited to hear about your new venture Mark! Even though each of us invests somewhat differently, I think we’ve each figured out the basics of investing. Financial planning, and the timing and sequence of retirement drawdowns, is a far broader and more complex topic with so many variables that need to be considered and modeled. I’m hoping your new venture will include more sophisticated planning calculators so those of us managing on our own will have a single place to build a proper plan.
I’m influenced by the accounting and finance courses that I took in business school, so every Jan 1st I calculate the growth (or decline!) in my net worth (balance sheet) and produce an income statement all with the goal of understanding my cash flow. I started a number of years ago, motivated by the question of “how much does it actually cost me to live and run my household” so I could use that as a guideline for retirement planning. As per your question above, I even compute how much I’m paying in dollar terms for my ETF MERs!
Can’t wait to see what you have ready to unveil – I’m sure it will be great, and I’m really glad to hear MyOwnAdvisor will continue.
Yes, MOA is not going anywhere but with my friend and partner, we simply feel there is a niche to fill and we hope to do that. We’ve got some work to do to make it what we want over time but I think it will be an essential site for anyone going from saving to investing to draw down options at any age.
That’s the plan, we’ll learn a bit as we go and also have a members only area for some unique benefits and services! Stay tuned!
Thanks for your engagement on this site Bart – I try and learn from others as much as I can.
Mark