Weekend Reading – Self-care, FIRE FAQs, not learning from history and more #moneystuff

Weekend Reading – Self-care, FIRE FAQs, not learning from history and more #moneystuff

Hi Folks!

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.

It should be another great weekend to get outside and be active. I have the driving range in my future today after some chores. You?

via GIPHY

Earlier this week, I discussed some initial plans to renew (or not) my term life insurance policy that’s coming due in the another few months. I haven’t made a final decision yet but you can see my thinking in this post and my further takes in the post comments. 

Should I renew my term life insurance policy?

Enjoy these articles and your precious weekend time!

See you here next week.

Mark

Weekend Reads

COVID-19 has triggered all kinds of self-care discussion. I think this is excellent and I’ve tried to embrace more of this myself. Kudos to Jessica at The Fioneers for sharing her perspectives.

On a personal note, I believe self-care should ideally be driven from a place of mindfulness after getting to know yourself better. i.e., you know what you need and why. Self-care in my opinion includes:

• Ridding yourself of toxic people or environments.
• Reducing work from your life that does not add value or meaning to your life. Otherwise, find something else to do…
• Exercise regularly, at your own pace, on your own terms.

I know there are more things to practice and work on but those are good starters for me.

Good stuff over at Handful of Thoughts – how to optimize some money stuff after you take care of the big ticket items in your life (housing #1; transportation #2). Maria suggested you consider the following money hacks:

• #1 – Credit card hacking
• #2 – Negotiating Your Bills
• #3 – High-Interest Savings Accounts

Got questions about FIRE (Financial Independence, Retire Early)?

The Physician on FIRE who successfully FIRE’ed has your FIRE FAQs covered here!

The Dividend Guy thought about the next bottom in a recent income update report.

Speaking of which, I will get around to reporting the next edition of my income report soon as a follow-up to this one:

April 2020 Dividend Income Update

Ben Carlson has some insights why we don’t learn from history. 

Interesting stuff on the MapleMoney Show with host Tom Drake, who had guest Michael Allen from Wealthsimple discussing robo-advisor myths and more. 

Dale Roberts checked in on Canadian dividend ETFs this week. 

I’ve decided not to own ANY Canadian dividend ETFs (see post – why I don’t invest in Canadian dividend ETFs specifically) but I certainly don’t feel the same way about the U.S. market. In fact, I’m happy to own a few hundred shares of U.S. ETF VYM for income and growth that I will likely draw on in about 5 years from now.

Image courtesy of Vanguard. 

Fun stuff and deals…

I’ve been very fortunate that many major financial institutions want to partner with me due to my passion for personal finance and investing.

Here are just some of the great offers you can take advantage of on my Deals page:

• You can use my promo code when you invest with BMO to save hundreds of dollars.
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• Last year we earned over $600 in cash back money using our favourite credit card. We’re on pace to earn almost $650 this year! I continue to keep it in my wallet and I use it every week.

• Last but not least, sign up for commission-free investing with Questrade.

Reader question of the week (adapted slightly for the site):

Hi Mark,

Many thanks for your articles and the research that you have on your site. Especially as a Canadian, I find them extremely helpful. And they’re also extremely enjoyable to read!

Just a question: Given the market reaction over the past 3-4 months, I am thinking that despite the opportunity cost, a larger amount in “Bucket One” may be warranted in the future. Would you expect to increase the amount you plan on having in your “Bucket One”?

Also, do you think if you entered retirement with RRSP, TFSA, and non-registered accounts, but no annuity or pension plan (other than CPP) you would you consider a higher amount than $50,000 in that bucket?

Thanks so much for your thoughts!

Great questions! Thanks for those.

I believe the reader is referring to this post when I wrote about how much cash should you keep, where I explain my bucket approach to investing.

How much cash should you keep?

Would I expect to increase the amount in my “Bucket One”?

I don’t see it happening but I am about 5-years away from starting semi-retirement so I might change my mind.

The way I see it, yes, while there is an opportunity cost in holding cash you probably shouldn’t hold too much cash. While maybe more secure for some, holding anything more than two years in cash will be a drag on your portfolio returns. Unless you can find a good savings account that pays you interest that keeps up with inflation (in the range of 2-3% per year), you’re likely better off owning some cash plus a mix of GICs and some short-term bonds for fixed income security. 

In fact, if you have time, read this post on the 4% rule which remains a good rule of thumb and listen to Michael Kitces.

Also, do you think if you entered retirement with RRSP, TFSA, and non-registered accounts, but no annuity or pension plan (other than CPP) you would you consider a higher amount than $50,000 in that bucket?

Probably not for my reasons above. $50,000 cash set aside, beyond your daily cashflow needs, is still a good pile of money as an emergency fund for most people to weather a year (or so) of spending in a terrible market cycle.

Should you have no pension whatsoever as you enter retirement or semi-retirement, all the reading and advice I’ve ever heard over the years is you should at least consider some fixed income assets inside your RRSP, TFSA, and non-registered accounts to buffer against market calamity. 

The best thing you can do in a bad sequence of returns is to stay invested. This means you should try and learn to live with stocks as much as possible and keep more stocks in your portfolio than bonds. A 60% stock / 40% bond or even a 70% stock and a 30% bond allocation would serve many investors very, very well in retirement or just prior to.

Happy Investing!

Mark