Weekend Reading
It’s been a busy vacation thus far, not that we’ve travelled far. We’ve taken a few day trips, spent some time with family, I played some golf, we did some much needed work around the house and there were some days to relax in between – when it wasn’t pouring rain here in Ottawa. That said with that schedule I haven’t been overly committed to the blog. I suspect as the fall comes around that will change. There are a number of money-items on my mind including a potential move back into the city in a few years. That’s something to plan and work towards. Certainly lots of things to share with you…
Here was my article from this week: try these five ways to stash more cash.
Enjoy these articles and I hope you have a great weekend!
Mark
John Heinzl listed five ways to de-stress your investing plan. I agree with John’s tips. Here is some more explicit direction from me:
- Keep most ETFs and Real Estate Investment Trusts (REITs) that produce return of capital inside registered accounts.
- Keep your U.S. dividend paying stocks inside your RRSP. You can read more why here.
- Keep your trading to a minimum. Agreed. This is certainly one key to self-directed investing success.
- Keep your investment return expectations realistic – don’t chase yield.
- Keep diversification at the heart of your investment plan. Invest outside Canada’s borders (we are only 4% of the world market).
With those five reminders to help you I believe the best time to invest was actually yesterday.
On the subject of home ownership Holy Potato revisited the rent versus buy debate. We’re not against renting for a few years ourselves.
A Wealth of Common Sense wrote about prioritizing your time. Ben’s post led me to this article with Aziz Ansari about quitting the internet and the allure of wanting more in GQ.
Thanks to Dividend Growth Investor for sharing this post about my investing journey.
Half Banked believes millennials don’t need cash-value life insurance, but term life insurance – yes. Here is why I like term insurance and why we use it:
- It’s simple to understand. You have premiums, you have a term for your premiums and you get coverage.
- Our policy is renewable and convertible. This means our coverage can be renewed and/or converted to a permanent plan when the term is up without a medical exam.
- Our premiums are low.
- Our premiums are fixed. They won’t go up for the length of our term.
- We hope to self-insure eventually when all debts are paid off and assets can cover the following:
- Income replacement from a prolonged job loss
- Money for emergencies
- “Final” expenses
Million Dollar Journey updated the performance of the Dogs of the TSX. Like MDJ I also own all the stocks mentioned in his article and I have no intention of selling them unless those stocks stop paying dividends.
This is why Mr. 1500 owns a home. I’m not sure we own one for the same reasons.
Looks like Toronto home prices are actually falling since their highest peak earlier this year. I suspect if we see another interest rate increase (this year) this trend will continue. Otherwise it’s just a small blip on the trendline going higher still. (Note: after looking at house prices in downtown Ottawa this week I simply cannot get over how pricey things are…$700,000 semi-detached homes that need work; $800,000 single-family homes that need significant work; seems a bit crazy but alas it is what it is…).
Here are some top stocks in the financial sector according to Sure Dividend.
Could the popularity of indexing reach a tipping point? Probably but we’re nowhere near that yet. Here is what investing guru Andrew Hallam thinks.
Freedom Thirty Five Blog wrote about millennials rejecting capitalism.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
That was a good nap.
re: “certainly something I’ve realized: “but you can’t eat home equity” – it’s all tied up…Homes are certainly maintenance. I can vouch for that!”
Considering these facts, makes you wonder why people still chase the “homeowner” dream. Perhaps it’s the Millennial+ generations who opt for an investible/liquid asset, maintenance-free, cash-flow flexible lifestyle via renting who have it right. After all, a mortgage is merely a lifetime of rent squished into a couple of decades.
In the same vein, a recent analysis states: “Real estate commissions, land transfer taxes, legal costs and fees for inspecting and surveying homes make up almost two per cent of Canada’s economy.” That’s nuts. We freak out over 2% mutual fund fees (MFs are still the bulk of Canadian investment holdings) but think it’s ok if 2% of the economy is nothing more than outright skim and grift. The difference is…???
http://www.cbc.ca/news/business/real-estate-fees-home-sales-1.4226630
re: FIRE (not in this Weekend Reading, but frequently enough…)
Couple interesting statements from 92- year old Canadian billionaire Joseph Segal: “He describes retirement at the age of 65 as packing it in early…” So what does that say about stopping at 35, 45, or even 55? Additionally, he says, “When you make money, you have an obligation to your community and you recognize the obligation.” — something I NEVER see mentioned in the context of those seeking FIRE; it’s mostly a selfish pursuit.
https://www.theglobeandmail.com/report-on-business/at-92-bc-billionaire-joseph-segal-is-still-hard-at-work/article35778043/
(As a side note concerning work force longevity, (from a CRA-real estate issue): ” “I have never seen this type of inquiry before in my short business career of 30 years,” said Jason Hong, president and CEO of Argo Ventures”…This man views a 30-year career as “short”, and many who seek FIRE haven’t even been alive for that long!)
re: getting hit by a car…
One never really thinks about the impacts (ha ha) of an accident (or negative health) until after the fact. Considering only the financial aspects, that single event has both acute and chronic effects. Employer/insurance/health care payments (resulting in higher over-all health care & insurance costs), repairs, lifestyle alterations (e.g. commuting costs, parking costs, outsourcing house maintenance), etc. The ripple effects from the inattentiveness of a single person (be it a crappy driver or rogue trader or crazy POTUS) can be substantial.
Had some curious reading this weekend (my eyes still work) pursuing the works of Dr. Brian Knutson (Prof. Neuroscience, Stanford; https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=474180). He’s found that during trading decisions, the brain’s pleasure and pain centres wage chemical warfare between seeking profit (e.g. dopamine & stocks) and avoiding loss (e.g. serotonin & bonds). More…amusingly, he “very quickly found out that nothing had an effect on people like money — not naked bodies [sex], not corpses [death]…It got people riled up. Like food provides motivation for dogs, money provides it for people.” Yikes. No wonder the financial state of the world is in such a mess! Also explains the complete global dominance of the Capitalist system.
Please send your rain this way…it’s a bit burny here at the moment.
re: Holy Potato revisited the rent versus buy debate
Three things:
i) “So when Wayfare was in the hospital and then continued being sick so we’re down to basically one income, we were (and still are) able to stay in our house.” This was exactly our situation twice in the last five years. Luckily, during the initial years of our mortgage we piled on the extra payments as well as getting to re-up with a ridiculous 2% rate. This allowed us to live on a single income (cue the 1950’s);
ii) “You may “build equity” with each mortgage payment, but you can’t eat equity…” Exactomundo. You have to pay to access your own “equity”, in other words, it’s not your equity at all. Don’t delude yourself, the bank owns your house coming and going.
iii) “…the sizeable downpayment is spinning off dividends to help with cash flow. So even if they fell short or lost both jobs, they could manage for a while.” As well, dividend-only income enjoys very favourable taxation (or lack thereof).
re: This is why Mr. 1500 owns a home.
A lot of interesting points and I could comment on each but I’ll stick to three financial notes:
i) “I have 11 years of payments to go on my mortgage. After that, the home will cost me only property taxes…” Again, not your home, not your equity. You will ALWAYS be ‘renting’ your house from either the bank and/or government.
ii) “…and insurance…” I think this may be an error. I believe house insurance is required by law only if you have a mortgage (again, to protect the bank’s asset first and foremost); optional if there is no mortgage. Correct or totally wrong?
iii) “(Editor’s Note: AND MAINTENANCE!!! WHY DOES EVERYONE “FORGET” MAINTENANCE????? ;))” And that’s the difference between “investing” in a house and investing in a company/stocks. I’ll edit a line that Cullen Roche (Pragmatic Capitalism) wrote about public companies to better illustrate the fact: “If firms [home buyers] distributed all cash flow [mortgage payments] without investing a dime in ongoing operations [maintenance] they would cease to exist [crumble].” In other words, you will keep paying for a house until you die, you will keep getting paid by stocks until you die (a la Grace Groner whose $180 turned into $7 million over the span of 75 years…without nary a single penny of additional capital…aka maintenance).
(bonus iv) “I strongly believe that I’ll come out ahead over the long term.” Highly contextual, especially in regards to flipping RE. A lot of built-in bias.)
re: millennials rejecting capitalism… “One explanation for the outcome could stem from the fact that not all millennials understand what capitalism is.”
This may be a general symptom of that generation (and beyond) — an over-abundance of information with an under-abundance of knowledge. Without capitalism, no millennial would be enjoying avocado toast let alone tweeting about it.
re: Looks like Toronto home prices are actually falling since their highest peak earlier this year.
And a year after B.C. tried to put the brakes on the housing bubble…”home prices have continued to escalate…” Keep trying, policy makers.
http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-market-unfazed-by-foreign-buyers-tax-one-year-later-1.4236138
re: A Wealth of Common Sense wrote about prioritizing your time.
I could drone on endlessly about this…or at least until my time ran out. As one blogger who also reviewed the study commented: “It seems obvious, from my nonscientific perspective, that the reason most of us don’t think of using money to save time is because we don’t have enough discretionary income to save large amounts of time.” That aside, one need only pay attention to Carlson’s title, “Time Scarcity”, to realize this topic is a matter of mind over money — abundance vs scarcity. For those of us in the upper decks of income and/or wealth, we all have an abundance of time, regardless if you think otherwise.
(re: Aziz Ansari (via Seinfeld) — interesting to note they both create(d) time to meditate, mirroring what Gandhi (perhaps) said, “I have so much to accomplish today that I must meditate for two hours instead of one.”)
re: Here is why I like term insurance…
After getting hit by a car recently, I might have to review my insurance needs…
More after my nap.
How is your recovery coming along?
As for your comments…that is certainly something I’ve realized: “but you can’t eat home equity” – it’s all tied up.
Regarding home insurance, it’s not law in Canada (for some reason??) but it’s usually contractual by nature.
http://www.ibc.ca/ns/home/buying-home-insurance
Homes are certainly maintenance. I can vouch for that!
Mark, it’s good to read the MDJ BTTSX article, thanks for pointing it out.
Most welcome.
Thanks for the mention, Mark. 🙂 I wish we could have some rain on the west coast. It’s been so warm and dry around here. I’ve been kind of busy as well with work and relationships, and wish I had more time to spend blogging. At least this upcoming Monday is a holiday. I can’t wait to watch this weekend’s Game of Thrones. It seems like they’ve been building up for some major action sequences in the last few episodes. 😀
My wife is a huge GOT fan. She’s pumped about the series.