Weekend Reading – Top REITs, the secrets to retirement, top dividend ETFs, side gigs and more #moneystuff

Weekend Reading – Top REITs, the secrets to retirement, top dividend ETFs, side gigs 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.

Earlier this week, I published this:

My November 2019 dividend income update. As a reader of this blog so kindly pointed out, that means part of my portfolio now churns out $2.21/hour for every hour of every day without fail! The best part? Some of that money is tax-free!!

Here is a reminder about some of the great things you can do with your TFSA. You should really consider these things for 2020 as well.  Will write about my investing choices for 2020 soon enough.

Have a great weekend and as always, happy investing.

Mark

Weekend Reads

The Penny Hoarder shared a few side gigs to earn extra income that you don’t have to work for. I dunno, I love the odd burger, but I’m not sure I want to get paid to buy or eat burgers at Burger King.

The guys over at StockTrades highlighted the top 7 REITs to own. Surprised CAR.UN (one of my favourite REITs) didn’t make the cut. It’s on my short-list for my 2020 TFSA investment. You? Thoughts?

Matthew Freeman shared his November dividend income update. Another great example of slow and steady progress – sticking to a plan – can do wonders over time…

One of the companies in the portfolios of many Canadian dividend investors is Bank of Montreal (BMO).They increased their dividend this week by $0.03 per share.Those measly three cents per share increased our annual passive income by over $40 per year. Again, small changes can translate into big differences over time.

National Bank also hiked their dividend by over 4% this week.

A reader asked me to link to the list of the top dividend ETFs to own, including some U.S. aristocrat ETFs – so here that is!  (Note: NOBL is the ETF you’ll want to do more research on if you’re very focused on U.S. Dividend Aristocrats, companies that have raised their dividends for 25 consecutive years or more.)

Always interesting to read or hear about folks reflecting; what the last decade has meant – this one about Michael Batnick, Director of Research at Ritzholtz Wealth Management, who blogs at The Irrelevant Investor.

Freedom 101 discussed their environmental impact when it comes to their financial journey. Certainly this line caught my eye:

“We currently live in a 3600 sq ft home, located in a suburb of Vancouver. Of that, 1200 sq ft is dedicated to a 2 bedroom basement suite, leaving us with an ample 2400 sq ft of living space for our family.”

That’s a lot of house. But homes are emotional for many people, myself included. I suspect that’s why I resisted downsizing for so long even though it was going to be the eventual thing for us to do. Although it was a very busy year for us I’m glad we downsized our home to this condo.

Henry Mah has a new book coming out – entitled Your TFSA “Compounder” Work Your TFSA Harder, So You Can Retire Sooner.

You may recall Henry wrote his first book about Your Ever Growing Incomea book I reviewed and delivered a few copies to some lucky readers on my site. About the new book from Henry:

“Your TFSA Compounder” will show you how to achieve financial independence during your retirement by putting the money you save in a Tax Free Savings Account (TFSA) and by investing those funds with the Income Investment strategy. I’ll give you the tools you need to achieve your retirement goal, but you must provide a priority towards saving and the investment of time. Alone, just a saving account and an investing strategy, together, so much more!

Stay tuned to this channel to win copies of this book in the coming weeks and months…and make sure you read the Foreword of the book too!

Dale Roberts said you might not need a financial planner. I agree. I think the biggest benefit many financial planners (I mean the fee-only kind) can provide is their ability to help DIY investors uncover their blind spots or get past your biases. Biases – we all have them. We’re all flawed after all.  Interestingly from Dale’s I took Rona Birenbaum’s abridged checklist to heart regarding what some fee-only planners can provide when it comes to their services – here are my answers:

  • Are you paying as little tax as possible? (Pretty much, my RRSP is maxed out, my wife’s account is very close.)
  • How about a budget? (Uh, heck ya but I think this is a better way to budget.)
  • Do they have a properly drafted Will and Power of Attorney? (Yes, we do.)
  • Adequate disability and life insurance? (Yes, I believe we do. We have enough to cover all debts and then ~ 3 years of income should one of us want to take time off from work.)
  • Is their debt structured well and at the lowest possible cost? (Yes, our only debt is our mortgage around 3% interest – getting lower by the week!)
  • Do they have an emergency fund or unused LOC to deal with unexpected job loss or expenses? (Yes, we keep our emergency fund at $10,000 cash.)
  • Are they taking advantage of company matching of group retirement programs? (No, but I have a good reason – I have a defined benefit pension plan that I consider a “big bond”. My RRSP is maxed out too.)
  • Do they have a savings plan for future large expenses like vehicle replacement, condo/house down payment, home repairs and the like? (Yes, we do.)
  • Are they positioning themselves for career advancement and income growth? (I’m on pace to semi-retire before age 50. I think that’s pretty good.)

Millennial Revolution said the pursuit of FIRE (Financial Independence Retire Early) doesn’t “fix” everything.  Amen. She wrote:

“I also love the idea of impermanence. Buddhism teaches us that all life is suffering, and nothing is ever permanent. Good things that happen to you don’t last forever, but bad things also don’t. What’s important is being in the moment.”

Retirement Manifesto shared the secrets of a great retirement from a 94-year-old couple

The first answer from this couple = “stay busy, stay happy”. Another secret, “…when you’re making the decision of when to retire, it turns out that the secrets of a great retirement focus more on the “softer” issues of life.” I’m definitely starting that process now…

Reader question of the week (adapted for site):

Hi Mark:

I have read your website quite carefully…I’m committed to mostly ETFs myself.  Your site has always given me something else to think about – so thanks for your content. I’ve put aside some $US cash in my RRSP to make the plunge soon into U.S. ETFs for U.S. / international assets. I think I’ve chosen VYM/VTI for U.S., and VYMI/VXUS for international.  About $20k in U.S., and the same amount for international.

I read your remarks the other day about why you like dividend funds/stocks, and it has thinking….how to potentially divvy-up the purchase.  

My questions are as follows:

  1. Would there be justification for buying heavier in the dividend ETFs? (VYM/VYMI)?
  2. For balancing in the future I was thinking of owning TD e-series, since I’m with that brokerage and it’s a no-load fund.
  3. Thoughts about XAW?

Lots to think about so your remarks are always appreciated!

Gosh, these readers always impress me with their knowledge. Great questions. Here is my take from my own perspective that may or may not work for you – just keep that in mind!

  1. I believe your decision should largely be based on your desire (and future expectation?) to spend the distributions per se from VYM and VYMI (with capital gains as a secondary but expected benefit) versus banking on the total returns of ETFs like VTI and VXUS.

When I compare the 10-year or max returns of each ETF you listed, I get the following:

Vanguard Yield 10-year Since Inception
VTI – MER 0.03% 1.9% 13.43% 7.48% (2001)
VYM – MER 0.06% ~3% 12.66% 8% (2006)
VYMI – MER 0.32% ~4.2% n/a 9.5% (2016)
VXUS – MER 0.09% ~2.9% n/a 3.8% (2011)

Personally, I have a plan/desire to “live off dividends” to a degree in the coming years.  So, I’ve structured my portfolio among other ETFs and stocks with a few hundred shares of VYM such that I can withdraw just the distributions generated by VYM in early retirement, and not sell any VYM units. Is that approach ideal for me let alone others? I can’t say, but I do believe it will help me reduce any sequence of returns risk.

2. I think for any re-balancing work you wish to do, since you are a TD customer already, those TD e-series funds are a solid way to go.

3. Thoughts on XAW? I think it’s a very good all-world ex-Canada fund. I like it so much I included it in some of my best, low-cost ETFs to own for your RRSP. This Canadian-listed fund of funds is a nice way to get international exposure for 0.22% and not worry about any CDN <> U.S. exchange. I haven’t ruled out owning it myself for additional diversification in the coming years.

A reminder if you want to exchange CDN to U.S. $$ for less: here is how to use Norbert’s Gambit to exchange CDN to U.S. dollars for less.

Mark

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're inching closer to our ultimate goal - owning a 7-figure investment portfolio for semi-retirement. We're almost there! Subscribe and join the journey. Learn how I'm getting there and how you can get there too!

17 Responses to "Weekend Reading – Top REITs, the secrets to retirement, top dividend ETFs, side gigs and more #moneystuff"

  1. Great post, and thanks Mark to the link on the financial planner article. Yes, I think that the Rona checklist is amazing. For the self-directed investor that might help them detect a hole or a weak spot.

    I hope readers will check out my first article in that series on advice-only planners. That’s a rising tide. Conflict-free advice. Advice that we can buy a la carte. You can even get a check up on an hourly rate. Perhaps best suited to the self directed investors. Others may then go with plan in hand to a Robo or get those one ticket options.

    Thanks again, have a great weekend everyone.

    Reply
    1. I see no reason why the financial industry can’t be like anything else – you can pay for a service on demand. We do that for accounting, lawyers, dentists, and the list goes on. Once the financial industry figures out you can charge by the hour for certain services, the embedded fee structure will erode.

      Reply
  2. Thanks for the great retirement article. I have finalized my job transition so that I will enjoy my work without too much stress, I should be able to work longer as the job itself is quite secure. With this in mind, and scared by sequence risk, now I raised my bar of my retirement financial goal to 30Xannual expensed. Now I am pretty confident that I will be financially safe when I retire, but how to stay busy and happy after retirement will be a bigger challenge than finance for sure.

    I am pretty much a couch potato. Working provides the benefit that I have a structured life so it is actually good in this sense. Maybe like many others here, I will not retire from a full-time job, but transit from full-time to part-time to fully retirement eventually.

    Reply
    1. Hi May. I identify with what you say very much. My work is stressful. Rather than quitting completely and starting all over again in another field, I cut down on the hours and work part time. It reduces the stress and gives me more time for myself. My work is more tolerable for now. I foresee myself continuing part time work for more years to come. Also as a home person, working gives me a purpose to leave the house, stay active and socialize publicly daily. Otherwise, I will be bored at home.

      RN

      Reply
    2. My husband always said that he is going to work till he is 70. I have been managing the finances and we are in great shape (such a change from what I thought only 9 years ago). So I think I have convinced him to go on half time for 5 years starting in 2021. But I will work on him giving it up completely. However, I do like the idea of all the benefits–travel insurance, medical, dental–continuing, as we could travel for 4 months a year without having to fund our own travel insurance.
      I like the idea of 30x expenses, too.

      Reply
      1. I think part-time work is the way to go. Work longer, stay engaged (mentally and more) and have a bit of income + benefits. I hope my current employer will allow me to do in about 4-5 years. That is my hope 🙂 As soon as our debt is gone I suspect options are going to open up for us.

        Reply
        1. Certain types of work are more flexible and allow a part time schedule. I have known of folks who have to quit completely from burnout. Their field just doesn’t allow part time work.

          Reply
          1. Ya, that’s a great point. I certainly never want to get to that point re: burnout. Terrible to hear. Mental and physical wellness is soooo important. Health is wealth.

  3. Mark & Reader of the week,

    Re: “10-year or max returns of each ETF”
    For comparison here are the returns of equivalent Mawer funds to VTI & VYM:

    Mawer Global Equity (MAW120)
    10-year= 13.30% Since Inception date Oct 22, 2009= 13.05%
    Mawer U.S. Equity (MAW108)
    10-year= 15.29% Since Inception date Dec 10, 1992= 8.45%%

    Reply
  4. Mark,

    Re: “The guys over at StockTrades highlighted the top 7 REITs to own”
    I was surprised too! I don’t know what criteria the author used to base his pick but if you base the rankings on ROE, Total Debt, P/E, Payout Ratio and 3-Yr Chowder Rule they are ranked as below (and I don’t disagree):
    (1) Granite REIT (GRT.UN)
    (2) Canadian Apartment Properties REIT (CAR.UN)
    (3) Allied Properties REIT (AP.UN)
    (4) Summit Industrial Income REIT (SMU.TO)
    (5) InterRent REIT (IIP.UN)
    (6) RioCan REIT (REI.UN)
    (7) SmartCentres REIT (SRU.UN)

    Reply
    1. I’m leaning on CAR.UN for the 2020 TFSA and maybe…some SMU.TO as well. I own enough REI.UN and Smart REIT. Both of those are DRIPping nicely each month.

      Reply
  5. hi mark
    steve from pickering ontario.
    just joined your newsletter,wanted to know why you like canadian apartment properties REIT.
    i own chartwell for 2 years now & looking to buy maybe a couple more reits.
    RIO CAN was on my list too.
    steve

    Reply
    1. I like CAP REIT due to assets across the country, in most provinces. The yield is modest, income is steady, growth has been great over the last 5 years that I’ve owned it. (Price has doubled.) Now, will that continue? No idea but I have hunch that even if a real estate correction happens there will always be some folks that wish to rent.

      Happy investing Steve!

      Reply

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