Weekend Reading – RRSP deadline advice, bucket strategies, great U.S. ETFs 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.
I was very inspired to write after coming back from my winter vacation to Barbados this week, these were my posts:
I can appreciate other bloggers enjoy posting their net worth on their sites – that’s great. I still don’t post net worth on my site for these key reasons. Should I change my tune?
Instead of obsessing over net worth – I do really enjoy monitoring the cash flow that can be generated from parts of my portfolio – namely dividend income from our non-registered account and TFSAs. So much so, I continue to post my monthly dividend income updates. Here is January’s update where we surpassed another HUGE milestone on our way to semi-retirement.
Enjoy the weekend with family and friends and see you here next week!
I liked this U.S. article about “bucket strategies”. Recall, the idea behind bucket approaches is to divide your retirement portfolio into several different buckets – allowing the buckets to work together for long-term retirement withdrawals. The first bucket would contain enough cash and liquid assets to fund several years of retirement, with other buckets containing riskier assets. You replenish the first (cash) bucket only when those riskier assets perform well. From the article, only one approach was foolproof or had a 0% failure rate over time.
“Bucket approaches have great intuitive appeal, since they insulate the retiree from concern about the impact a bear market might have on their retirement.”
I’ve got my own “bucket approach” designed for semi-retirement. It goes like this:
I figure my approach might be foolproof since with a “live off dividends” approach and/or sell assets as I please approach since I will have already created a very secure income stream in retirement this way. Thoughts?
I almost fell over when I read this stat: on average, two of every five Canadian households do not pay anything towards federally and provincially funded expenses such as health care, education, community and social services, national defence, public safety and even the good old Canada Revenue Agency. One household of every five pays much more than 70 per cent of all of those costs. Something is seriously broken with our tax system. This implies most tax cuts to help any “middle class” are not effective because many Canadians (2 in 5) do not pay any meaningful income tax.
I have my own posts about a similar list of low-cost U.S. equity ETFs for your portfolio, and more, here on this Exchange Traded Funds page. I’m investing in the U.S. market more via U.S. ETFs (like VYM, HDV) because 70-75% of the companies in Canada, are concentrated in financials (think banks and life insurance companies), energy, and industrials and materials. A U.S. ETF gives me great exposure to healthcare, consumer stocks and much more – cheap.
Last but not least, more Canadians are expecting to retire on a lower income – for many reasons. Here is Preet Banerjee discussing that very subject.
Another reader question:
Mark, maybe a dumb question, but how do you actually designate a TFSA as tax free? When you open a trading account to purchase dividend paying stocks, is there a box you tick off for TFSA or RRSP or other? Does Canada Revenue Agency (CRA) know it’s tax free? Am I missing something? Thanks!
Answer: You bet CRA knows it’s tax free – just like CRA knows when you open an RRSP account – both the TFSA and RRSP are registered accounts subject to contribution room and certain rules monitored by CRA.
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Happy investing and see you in the comments section!