Weekend Reading – Stocks, dividend ETFs, reader question about ETFs, bad things from good decisions, 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 got around to posting these articles this week:
We’re getting VERY close to realizing some semi-retirement dreams – by age 50 – outlined here.
Here’s how a successful investor used real estate investments, ETFs, and dividend paying stocks to realize his semi-retirement goals, by age 47.
All this semi-retirement reading (and publishing) has me really thinking of late. Maybe I should find something new? Try something outside my current place of employment all together? Why not work part-time longer (versus staying in a full-time job for a shorter period of time that is both stressful, emotionally draining, among other factors….)?
I might need to take a dose of my own medicine and take a leap of faith – soon.
A Retired Guy might have summed up how I feel right now. There are a lot of things that go into this decision. Happiness with work, health, family needs, etc.
Thoughts? Experiences to share? I’m all ears.
I’ve got a few books to giveaway before my wife and I move into our condo in a few weeks – so stay tuned for a blast of giveaways coming up soon!
Enjoy your weekend fans,
Interesting article here about selecting some U.S. blue chip stocks to buy and hold, but when in doubt, consider picking an ETF like VYM or VYMI (both U.S. listed ETFs from Vanguard) to own hundreds of dividend paying stocks from the U.S. and around the world respectively.
I own VYM, a few hundred units, and I intend to own more units for many years to come. You can read up about other lower-cost U.S. ETFs that can be a great fit for your portfolio below:
Top International Dividend ETFs
Dale Roberts wondered if Canadian dividend ETFs could be used as your core holding. I recall Dale holds VDY – a fund that holds mostly Canadian banks and pipelines. Although I don’t mind VDY as a product I’ve decided to hold the top-10 stocks (that VDY holds) outright. I’ve largely unbundled Canadian dividend ETFs like VDY and XIU for income. Your mileage might vary!
The best time to buy airline tickets? Generally speaking, mid-week departure flights vs. weekend are cheaper. International flights are best booked multiple months out. Other than that, shop around and get lucky!
This blogpost highlighted something that resonated with me – since I’m living this at work right now – bad outcomes often occur from bad processes and choices. However, bad things can also come from good processes or decisions – but it’s more rare. At least with a good process you’re putting the odds of success in your favour. If you continue to follow a bad process, likely your self-awareness (or lack of) is to blame.
If we are delusional and let our ego dominate, we mistakenly see this as bad luck. While we are aware that we had a negative outcome, we are unaware that it resulted from a bad process. In this case, we learn nothing. We are doomed to repeat our mistakes. More self-reflective people see bad outcomes resulting from bad process as an opportunity to learn as much as we can to avoid repeat failures.
Reader question and answer of the week:
I’m going to include a new feature on this site, sharing a reader question as part of my Weekend Reading updates and providing any answer back to said reader to the best of my ability.
Here is a recent question I got (paraphrased); here is my response:
One small question about all-in-one ETFs – which you wrote about. The management fees are modest for the one I am looking at (about 0.22%). I assume that this fee would be in addition to the fees for the component ETFs, basically doubling the management fees when compared to holding the component ETFs separately. Is that correct?
Thanks for your question. The all-in-one fee structure can be confusing but as I understand it (although the fund’s prospectus should confirm this for you anyhow) – you only pay one (1) management fee with an all-in-one ETF. Let’s use VGRO as an example – image from Vanguard’s site:
You’ll see in the Vanguard fine print:
1 The management fee is equal to the fee paid by the Vanguard ETF to Vanguard Investments Canada Inc. and does not include applicable taxes or other fees and expenses of the Vanguard ETF. For any Vanguard ETF which invests in underlying Vanguard fund(s), there shall be no duplication of management fees chargeable in connection with the Vanguard ETF and its investment in the Vanguard fund(s).
Now, this is not to say there are not some withholding taxes for these products. What does that mean?
Well, because such funds (VGRO, others) are Canadian-listed ETFs, you should know that such Canadian-domiciled funds have 15% withholding tax on dividends from U.S. stocks from the underlying holdings. Unfortunately, this withholding tax applies regardless of the type of registered account (RRSP, TFSA) you hold the fund in but in a non-registered account, you can generally claim a foreign tax credit at the time of tax filing.
There are more details about withholding taxes, including ETF tax-efficiency that I’ve learned about and posted on my Indexing page here.
Speaking of all-in-one funds, my friend Robb Engen switched his simple two-fund portfolio to the super-simple all-in-one Vanguard product VEQT. Great call for what Robb is looking for – that’s about as easy as 100% equity investing to own >12,000 stocks will get!
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Thanks Mark, yes I use that VDY for my wife’s main RRSP account. In my account I hold individual stocks – a few oligopoly wide moat generous dividend staples. For US I skimmed the Dividend Achievers list, with 3 picks thrown in. Get rid of the MER, even though it’s very small.
Gotcha. Any chance you’ll unbundle your VDY eventually?
Top-10 of VDY has been historically at least 5-banks and 3-pipelines.
Hi Mark, yes I think we will. I’d be happy with 10 or 11, 12, 13 of ’em. Perhaps TD, RY, BNS, Telus, Bell, TRP, ENB, PMB, rails, groceries. Maybe Couche-Tard and Brookfield mothership.
That’s pretty much my CDN portfolio right there 🙂
Largest CDN holdings for me/us:
“These are banks (examples: RY, TD, BNS, BMO, CM, NA).
These are insurance companies (examples: SLF, MFC, GWO).
These are pipeline companies (examples: ENB, TRP, IPL).
These are telecommunications companies (examples: BCE, T).
These are energy companies (like SU).
These are utilities (examples: FTS, EMA, AQN, CU, CPX, INE, BEP.UN).”
We also own about 7 REITs.
Would love to own more CNR actually. A couple hundred shares eventually would be great.
I would like to own more U.S. stocks as well, working on that. MDT is hot on my list of U.S. healthcare stocks along with more (U.S.-listed ETFs) like VYM or HDV.
Love the new avatars. 🙂
Thanks for the mention Mark. Much appreciated. I’m a big fan of VYM too. Tom
All the best Tom and will continue to visit your site. Cheers.
Thanks for the mention, Mark! The MER on each of Vanguard’s asset allocation funds is expected to be 0.25% (that is, the management fee of 0.22% plus another 0.03% for other fees and taxes). Foreign withholding taxes is expected to add another 0.24% when held in an RRSP or TFSA.
I’ve also been thinking about a career switch and perhaps finally jumping into the freelance writing / financial planning world with both feet instead of with just one. I’ve circled Dec 31, 2020 on my calendar – if I haven’t already made the leap by then. Hang in there!
Good to hear from you Robb. I started my CFP courses but I didn’t have the time to finish the first one. Work is nuts and I’ve recognized I need a life and I could only do so much….so I deferred that and focused on work, my blog, having a life, etc.
Hard to know what I will do. I definitely have some big decisions to make in the coming months. I know that for sure.
All the best and well done with VEQT. As you know, even though I don’t invest this way (yet), it’s a solid approach many investors could learn from.