Weekend Reading – Semi-retirement vs. FIRE, Qatar travels, ETF currency exposure and more!
Hey Readers!
Welcome to my latest Weekend Reading edition about semi-retirement, FIRE and more – where I share some of my favourite articles from the week that was across the personal finance and investing blogosphere.
Happy Weekend!
Whether you are like this guy above having a great time or you have other plans – enjoy! Summer will not be here forever…!
Earlier this week, I answered this reader question (below) about investing in taxable accounts including sharing more details about how I invest inside my own account and why.
Enjoy the rest of these articles (including another reader question as you scroll down) and we’ll see you on the site and in the comments section!
Mark
Weekend Reading
Interesting factoids about retirement confidence in the U.S. Meaning, it’s not that strong. From the data:
- 62% of Americans more concerned about retirement today compared to a year ago.
- 72% of Americans now plan to work in retirement. (Up from 67% from study data in May.)
- 1 in 5 Americans in their 60s have been laid off/furloughed due to COVID-19.
- 24% of Americans are planning to tap their 401(k) today. (41% for those laid off due to COVID-19.)
Will the numbers get worse due to COVID-19?
Justin Bender had a great article about ETF currency exposure here.
Since we invest in XUU (in our CDN RRSP), I was curious about his take:
“For example, when comparing their returns in U.S. dollars, we would expect XUU.U to have nearly identical performance to ITOT. And, in fact, during the first quarter 2020 stock market crash, ITOT and XUU.U both lost around 35% of their value in U.S. dollar terms.
But once you convert both funds’ performance to Canadian dollar terms, XUU.U and ITOT provided similar returns to their Canadian-based counterpart, XUU. In fact, during the worst of the downturn, all three ETFs dropped by essentially the same amount – just under 29% in Canadian dollar terms.”
I don’t believe it’s really right or wrong to own either fund. Pick one and invest away!
You can see some of my holdings that I keep updated here.
I found this revised article interesting by Late Starter FIRE – why age 40+ is the perfect age range to begin your FIRE (Financial Independence Retire Early) journey.
On the FIRE subject, I was pleased to read a far less rah-rah, rushed approach to any early retirement on Eat, Sleep, Breathe FI. I mean, why not consider semi-retirement?
This is absolutely our path and has been for many years now. I would also add semi-retirement offers a chance to be productive and have some fun!
Nice to see MoneySense has embraced fine writer and passionate blogger Dale Roberts in this week’s edition of making sense of the markets.
Reader question of the week (adapted only slightly for the site):
Hi,
I read your articles regularly. You have achieved a significant amount of income from dividends; however, I see no reference to the actual amount invested to achieve your return. Can you share how much you have invested (in market to achieve your dividend portfolio rather than a broad comment like a “seven figure portfolio” that covers a lot of ground)?
Thank you.
Thanks for your readership and question – blunt and to the point!
I haven’t really bothered to calculate the “actual amount invested” to achieve this portfolio value but I can say I’ve/we’ve managed to max out contributions to our Tax Free Savings Accounts (TFSAs) and our Registered Retirement Savings Plans (RRSPs). I also have a decent non-registered portfolio full of stocks – see taxable investing post above.
All combined, those accounts are bringing us much closer to our desired “seven figure portfolio” to start semi-retirement with.
I invested tens of thousands in our non-registered portfolio (after we sold our first condo) over a decade ago and it has more than doubled in value since then.
If you are even more curious, our Canadian stock holdings inside that taxable account and inside our TFSAs specifically have returned about 7% for the last 10-years to this day.
Those are the income updates I report like this one every month:
I benchmark our Canadian stocks a bit since I want to know if I am under-performing my key Canadian benchmark that is iShares ETF XIU. XIU holds the 60 largest cap-weighted stocks in Canada. Given I pick and choose what I want to own from that ETF for my DIY stock portfolio, I figure that’s a good benchmark.
To be honest, I don’t really benchmark my/our RRSP assets. I’m investing more and more in low-cost ETFs there. I do hold some Canadian stocks in our RRSPs still however. Besides, while benchmarking is all fine and good ultimately reaching my income goal is all that matters.
So, I’m probably not answering your question directly but I do hope that provides more insight. While I share a bunch of information about me on this site I’m really not that comfortable sharing my entire soul let alone my entire portfolio. I will continue to share whatever I am comfortable with!
Happy investing!
Mark
Thanks for the shoutout, Mark! Lots of good resources here.
In your Q&A, I love your response and your focus on generating the appropriate income. That’s certainly helpful to keep in focus as the primary end goal!
Thanks very much SRP! Yes, I have been always focused on the income my portfolio can generate vs. portfolio value. Helps me stay within a long-term plan!
All the best and stay in touch!
Mark
I really appreciated your response to the question of the week, Mark. Balanced. Real.
On another matter, my partner retired in April. I plan to retire on June 30, 2024. Yup, specific. We recently paid for an advice-only retirement planning session. Unlike the many retirement planning and investment sessions we’ve had at banks, though they were helpful, this one completely focused on us and gave us a much clearer picture of what we need to, and can, do that would most benefit us. I would recommend it to anyone, especially if they are within the last five or ten years before retirement.
All the best with your investing.
John
Most welcome John. I try and disclose what I can on this site but totally sharing my financial soul all the time is something I just can’t do. I will however share what I can to help others who are genuinely interested in how I invest and want to learn from it (or in some cases totally avoid what I do to be a better investor than me)!!
I think what you did in going to a fee-only advisor is exactly what most DIY investors should consider at some point. We all have biases and blind spots and getting a second (or third) opinion about 6- or 7-figure portfolios is not a bad ideal whatsoever. I will probably do that myself a few times just to see if my assumptions are decent as I enter semi-retirement. I think they are but you never know 🙂
All the best and thanks for following along.
Mark
Thanks so much for mentioning my post! It is not too late for 40 somethings or older to consider beginning their FI journey – we are a growing community, even though the RE part may be a bit elusive for some of us. But then again, retiring early is relative. Anything before 67 for me is a bonus.
Welcome!
I think the fact that in your 40s you have some things figured out, including yourself, it happens to be a great time to start any hardcore saving. I just wouldn’t leave all the saving too late since I’ve been saving for about 20 years now and hope to semi-retire in another 5 years.
All the best and keep up the good work!
Stay in touch,
Mark
40s is very early indeed. We began our journey in the 50s. Fortunately for us, we have been doing well at least on the saving part, always lived much under our means. So we are on the right track to retirement. 65 or 67 to retire is unacceptable for our kind of job. Our plan is to retire between 55 and 60.
If living expense keeps as low as now we can retire right this moment. No travel, no big money for kids extra curriculums, also no shopping other than grocery. But life is quite boring this way so I guess I can not rely on this lifestyle for retirement. LOL.
Hi May, it’s great that you always lived below your means – I did too and it’s the only thing I reckon that saved me financially. Hope you find the balance between saving for retirement and living a little 🙂
Great stuff!
Sorry for the misunderstanding. This year due to coronavirus we cannot do much. We are not the type to live a very simple life in order to retire early. We want to enjoy life while being responsible for our finance. We have a big house with home theatre and pool table and we normally travel twice a year. Last year we replaced both of our cars with new ones. Not that we have to, just we have very busy life and buying new cars is easier.
Just as Mark, retire early is not the goal. FI is.
There is nothing wrong with spending money on things you a) enjoy b) can afford and c) that add value to your life.
I could have “retired” years ago by saving more and living in a 1-bed condo or apt and just blog about it. Not my kind of life 🙂
Mark
Similarly, we could stay in our old house about three years ago and retire at that time. Not my kind of life either. The entire family enjoys the new house tremendously. I feel very fortunate that we could afford the bigger house and we also decided to move.
This year it proves again how correct the decision was. With the coronavirus, everybody is home but not interrupt each other even everybody is in some online conference. We also have lots of good time watching shows on a big screen and playing pingpong right at home.
That’s the thing May. If you can readily afford a nice (larger) house, a new car or cars every few years, and those things bring you joy and value then go for it. Life is short. The challenge with some people is that they can’t afford it and certainly don’t know it.
Sounds like you have a nice balance. Kudos.
Mark
I think as long as you are working towards your own goals, on your path, with your own confidence and values in mind May – that’s all that matters. Personal finance is personal and you never need to compare any journey to anyone else’s 🙂
Retirement between the ages of 55 and 60 is still great and if you have your health and a bit of money to spend – that’s all that matters!
Cheers.
Yeah, retire too early has been never something I pursue. I enjoy the feeling that I have achieved something and also being needed with a job. For me, working is one way to make our lives more meaningful, not a rat race as many people claimed. I want to retire earlier is just that with aging working becomes more tiresome and I don’t want to continue to work after working becomes exhausting.
Agreed. I’m not trying to run from anything in my current job. Life is too short to be doing that. Trying to stay with a role I enjoy while investing along the way. To us it’s always been about balance and we’re striving for more when we get to our FI number. Getting very close in the coming years…
I’m right there with you on that Mark, I’m in no rush for FIRE but rather my focus on the FI, give myself more options, simple as that ??
Have a great weekend,
DG Capital
Indeed. All about FI and not so much caring about RE!
All the best,
Mark