Weekend Reading – Nine skills you need to learn, your enough number and other pre-retirement math #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.
Earlier this week, we surpassed another milestone on our journey to earn $30,000 per year from Canadian dividend paying stocks inside our tax-free (thanks TFSA!) and non-registered accounts.
Enjoy this Weekend Reading edition and see you here next week for more new content!
Interesting article here, nine skills you should learn – that pay dividends in your life. I would put asking for help, developing high emotional intelligence, and ensuring you get some high-quality, consistent sleep near the top of any list. Thoughts?
MoneySense answered this question from a reader – can this 40-something couple retire early at age 50? Based on the data in the article, I would think that’s hard to say since despite what the couple have accumulated, ultimately you need to figure out what you’ll spend in retirement to determine your enough number.
I’ve written a few case studies on my site – check these articles to see how your retirement plans might compare:
I know for us, we’re striving for a $1 M portfolio (beyond assets in future pensions, excluding future government pensions, excluding any elective part-time work). That should be enough for us. Your mileage might vary.
You can check out my Retirement page for multiple essays/posts from readers of this blog who have been kind enough to share their story; what “enough” for them is. I’ve also put some links to some free calculators and tools on that page so you too can determine your “enough number”.
Simply put, I believe any person or couple with no debt, with modest spending or expense needs, should be able to retire rather comfortably around ages 60-65 with a $1 M balanced portfolio of stocks and bonds and cash. This assumes they have no workplace pension(s) of any kind and they’ll have some average CPP or OAS or ideally both government benefits at some point.
Here are some retirement-age targets to aspire to, from MoneySense:
The reality is, if you want to spend more you’ll need more. If you feel you need more, you basically have only a handful of options: work longer; save more; get higher investment returns or a combination of these things.
Since I like dividend income, and so does Rob from PassiveCanadianIncome, I found out he just bought more 3M stock because of its recent nosedive. I think this is a good play for this dividend king but I’m personally very bullish on U.S. healthcare stocks more than any other sector. People always need their health, they don’t need Post-it® notes 😉
Reader question of the week (email adapted for site):
Good morning Mark,
Any thoughts (or writings) on an eventual, major market adjustment, maybe even a crash, as far an ETF dividend strategy is concerned?
Good question and interesting timing, given all the market volatility.
I’ve received similar, recent emails on this subject so I might take some time this weekend to author a response on how I would manage my portfolio in a market meltdown.
Just for now though, I pulled some brief information from a couple of my favourite dividend ETFs: XIU and ZDV.
You’ll see coming out of the horrific great recession of 2009-2010, XIU distributions slowly returned as well. So, my thinking is, this particular fund would either see their distributions run flat OR they could even dip for a period of time in any prolonged equity market storm (like they did).
Image courtesy of iShares.
Although the data does not go as far back for ZDV as it does for XIU, I could foresee the same thing with this fund or another top-dividend ETF.
Image courtesy of BMO.
Bottom line, just like dividends from dividend friendly companies could be trimmed in any major market downturn, so could ETF distributions. I hope that helps out a bit – or – at least provides my take.
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