Weekend Reading – Royals on FI vs. #FIRE, too much RRSP, best stocks to own in 2020, and more #moneystuff

Weekend Reading – Royals on FI vs. #FIRE, too much RRSP, best stocks to own in 2020, 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.

Earlier this week:

I answered a reader question about investing in covered call ETFs. Read on to find out my conclusion including why I invest differently for now.

I posted my latest dividend income update, summarizing dividend income earned from a few key accounts in 2019. I love seeing this chart change with time!

MOA December 31, 2019 Dividend IncomeWith our TFSAs now maxed out with contribution room, we have some monthly RRSP contributions established for 2020 that should see us max out those accounts as well. Stay tuned to this site to learn about what I buy for those RRSP accounts, why, and how might our overall dividend income grow because of it!

Enjoy these articles and news stories from the week that was and see you in the comments section below or on Twitter where over 6,300 people follow along @myownadvisor.

Mark

Weekend Reads

StockTrades.ca highlighted some of the best Canadian dividend socks to own this year. In particular, Dan likes TD Bank, Enbridge, and Algonquin Power among others as the best of the best to own in 2020.

Janet Gray, a fee-for-service financial planner, offered some sound advice on when you should stop contributing to your RRSP in this MoneySense article. But really, let’s be honest, for the most part, you can’t contribute “too much” to your RRSP. If most Canadians could strive to max out their TFSA (first – read why here) and then max out contributions to their RRSP for decades – they would be financially set. Unless someone can prove me otherwise, having a tax problem in retirement is a great problem to have.

Kudos to Oaken Financial. They are giving away some cash to one lucky winner. How to win? Stay tuned to this channel!

One of my favourite Twitter follows shared this recently, apparently dividends do matter:

Dividends Matter January 2020

Crocodile tears for Vancouver real estate? Hard not to have them based on some stories. I read in this article how real estate in VanCity is down along with other BC real estate – as in $87 billion down from its peak. From the article: “So that old couple that’s been living in that house for 30 or 40 years thought they had $5 million to retire, sell the house, live off the money for the rest of their lives,” Sullivan said. “Instead of having $5 million, now they have $3 million and out of that $3 million they have to buy a home, and then retire.”

Geez…$3 million in real estate. Terrible problem to have.

In terms of news heard around the world…Prince Harry and Meghan, Duchess of Sussex, will be stepping back per se as senior members of the Royal Family. The reason? The couple say they will “work to become financially independent, while continuing to fully support Her Majesty The Queen.”

Direct from their Instagram account:

“After many months of reflection and internal discussions, we have chosen to make a transition this year in starting to carve out a progressive new role within this institution. We intend to step back as ‘senior’ members of the Royal Family and work to become financially independent, while continuing to fully support Her Majesty The Queen. It is with your encouragement, particularly over the last few years, that we feel prepared to make this adjustment. We now plan to balance our time between the United Kingdom and North America, continuing to honour our duty to The Queen, the Commonwealth, and our patronages. This geographic balance will enable us to raise our son with an appreciation for the royal tradition into which he was born, while also providing our family with the space to focus on the next chapter, including the launch of our new charitable entity. We look forward to sharing the full details of this exciting next step in due course, as we continue to collaborate with Her Majesty The Queen, The Prince of Wales, The Duke of Cambridge and all relevant parties. Until then, please accept our deepest thanks for your continued support.” – The Duke and Duchess of Sussex

You know what? Good on them. I mean, I can’t imagine the scrutiny they must face. So to help them out, they should definitely consider structuring their financial plan in terms of Financial Independence (FI) vs. #FIRE.

My Own Advisor FIRE

While it’s a slap on the wrist, at least The Mutual Fund Dealers Association (MFDA) has fined Vancouver-based registered dealer Kindle Blythe $35,000 for not exercising due diligence, processing unauthorized trades and falsifying records. Such a good reason to be a DIY investor!!

Savvy New Canadians offered up 15 ways to make some passive income this year.

Looks like Vanguard’s all-in-one ETFs are flying off the shelves. “Assets under management reached $3 billion at the end of 2019 after monthly accumulations of about $100 million last year, according to a report published by National Bank of Canada.”

You can read up on these and other, simple, all-in-one funds for your TFSA, RRSP, RESP right here.

Dale Roberts from Cut The Crap Investing highlighted the returns of some Canadian and U.S. dividend aristocrat ETFs. I’m a big fan of dividend ETFs personally, for income and growth, although I have unbundled my Canadian ETF to focus on passive, growing income.

You can read about that unbundling process and the reasons why here.

Jon Chevreau reminded us that playing the currency hedging game is likely going to cost you more money in the long-run.

This millennial is definitely making strides on his net worth. Well done All About The Dividends.

When Million Dollar Journey speaks, I listen. He shared the top dividend growth stocks to own in 2020. 

As reminder as of January 1, 2020, you can contribute another $6,000 to your financial future self via the Tax Free Savings Account (TFSA). Need help with your TFSA in 2020?

Here is my TFSA 101 post to help you get started with this account.

If you tend to spend your RRSP refund, the TFSA makes WAY more sense to invest in.

How should you invest inside the TFSA? These are great things you can do.

Can you or should you transfer stocks or ETFs into your TFSA?

How can you diversify your portfolio and TFSA using low-cost ETFs?  This post has the goods.

Are there some easy, simple, all-in-one funds for your TFSA? You bet – right here!

Already have a TFSA? Great, but make sure you have it set-up for the appropriate beneficiary!

Got a question about this absolute gift of an account? Flip me a comment or an email. I read every one and I will do my best to get back to you.

Reader questions of the week (adapted for site):

Question 1:

Hi Mark,

Love your articles. I read this one – why you don’t invest in Canadian dividend ETFs.

I read other sites compared to yours and I’m super confused…I can’t understand P/E ratios, Chowder rules, how much I should pay for a stock, what is the right price for a stock and so on.

I am based in Canada in my late 30s. I’m rather new to investing. I’m worried about my retirement plans. So I’m looking for long term investments that will grow. Right now my approach is to look at other portfolios for help. I’m still learning the ropes.

In that article above I noticed that you have basically built your own ETF of Canadian individual stocks.

My questions are:

  1. How long did that take?
  2. What do you own?
  3. Should I try and follow the exact same approach?

Thanks so much!

Great questions. You know, I see many emails like this.

First off, don’t be too worried about being in your 30s and not being “ready” for retirement. You have a few decades to save, invest and watch your money grow. 

Secondly, don’t worry about P/E ratios or Chowder rules or other right now. I would focus on a few simple questions as part of your financial plan:

  • Why is money important to you?
  • What are you saving for?
  • What are your goals when it comes to money?

I wrote about what financial plans typically cover here.

What I think you’ll find (as a new investor, “still learning the ropes”) is answers to those questions are HUGE keys into determining how you should invest. For many investors, I think it makes sense to start with and likely stay with low-cost Exchange Traded Funds.

You can find various low-cost solutions here, about just getting started with investing including help to determine your portfolio, but there are certainly more options.

More direct answers to your direct questions!

How long did that take?

At least ten years!  You can review my financial decade of investing and blogging here.

What do you own?

I don’t reveal my entire portfolio but I have quite liberal in sharing lots of financial details on my site – you can see most of what I own here.

Should I try and follow the exact same approach?

Probably not.

Personal finance is personal. The answers to why money is important, what are you saving for, what are your goals will be different than mine. Ultimately you might arrive at following a similar investing approach (a mix of dividend paying stocks and low-cost ETFs) but the reality is why and how you got to that conclusion will be thankfully through your own decision-making. That’s a great thing.

I wish you well and thanks for being a subscriber!

Question 2:

Hi Mark,

I have been reading your posts and find them very helpful. I am wondering if you have any thoughts on the Private Investment portfolios offered by Wealthbar. They claim to have good returns with less volatility due to diversification out of stock/bond portfolios.

Would you have any concerns with them?

I have a sizable portfolio in mainly mutual funds but based on my knowledge of low-cost solutions on your site, I’m going to change that soon I think!

Very nice to hear I have inspired you to think about lower cost investment solutions!

All things being equal, lower cost financial products will be the best indicator of future (potential) returns. I mean, simply put, the money you don’t pay in money management fees will be money you can keep for yourself and grow!!

I don’t have any personal experience with Wealthbar so I can’t make a comment either way.

What I can say is that minding your investment behaviour, keeping your portfolio diversified, keeping your costs low are collectively HUGE enablers to wealth building. Part of the goal of the “Wealthbars” of the world is to help investors do just that.

Just remember businesses are created to make money. Usually lots of it. So be sure to ask “what’s in it for me” first and understand “what’s in it for them”.

Thanks for your readership and keep me posted on what you find out!

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18 Responses to "Weekend Reading – Royals on FI vs. #FIRE, too much RRSP, best stocks to own in 2020, and more #moneystuff"

  1. Nothing wrong with calculating annual returns, but I’ve always considered the exercise a waste of time. What difference if your return was up 15% or down 15%. Are you planning to sell? Does the increase or decrease for the one year really make a difference?
    Me I like to record and monitor how much my income has gone up from the previous year and if the income has gone up each and every year, just as Marks income chart posted earlier shows.
    Market value may look good now but the future is a total unknown.

    Reply
    1. Not everyone invests for investment income. Some people might be investing for growth, some might be a hybrid. I have some holdings that I want to see grow (BAM.A for example).

      Reply
    2. Yes, rising income is very important and at some point, if you are meeting your goals including your income goals that’s all that matters for sure Cannew.

      Will have you on the site in the coming months! I hear there is a new book out!

      Reply
    3. I agree Cannew, I’m retired too. Your capital increases, or decreases, are only at that moment in time and only on paper unless you make material changes.. The income is real, its what pays the bills in ones distribution phase. That said I do like to keep tabs on how I am doing (capital & income) should I want to change up or diversify my holdings such as in my TFSA which I still add to annually.

      Reply
  2. “When should you stop contributing to an RRSP?”

    My immediate take on that article was that the questioner didn’t have a problem with TFSA v. RRSP so much as a self discipline issue. If a person can’t keep their hands off their investment TFSA then ya, maybe an RRSP might be better.

    We might be a poster child for the ‘having too much RRSP’ POV. The thing is, RRSPs are the most effective when started young (long investment time frame) and who the heck knows where they will be when they get “old”? We never intended to have such large plans. I was supposed to retire at 50 and use the RRSPs to bridge to the pension at 60. Sometimes events occur that change those plans. Suffice to say I’d rather be sitting here at 59 (I can see 60 from where I’m sitting) with too much RRSP than worrying about not having enough. Peace of mind has a value.

    Reply
    1. “Suffice to say I’d rather be sitting here at 59 (I can see 60 from where I’m sitting) with too much RRSP than worrying about not having enough. Peace of mind has a value.”

      I put that on the Twitter machine. Great insight.

      Reply

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