Weekend Reading – Why cash and cash flow is king
Welcome to some new Weekend Reading: why cash and cash flow is king edition.
You can find some other recent Weekend Reading editions below:
A reminder, when it comes to dividends, I also shared this recent dividend income update – a brand new all-time high number!
Why cash and cash flow is king
Leading off this Weekend Reading edtion, I found a nice summary from Accidentally Retired on this very subject – why cash is king.
I won’t steal his thunder but that post really reasonated for me – why cash (and more importantly to me: cash flow) is king to me, namely:
it doesn’t matter how much money is coming in the future if you don’t have enough money to get from here to there.
That means, like any business, I want as a co-CEO / co-CFO of our personal finance affairs:
- Predictable cash flow to manage our ongoing expenses, with,
- Some cash buffer built-in to avoid any “cease in operations”!
At Cashflows & Portfolios, we wrote about why cashflow is king for a few reasons.
What say you? Do you have the same philosophy?
More Weekend Reading…
Vibrant Dreamer shared his experiences in travelling around Greece recently. Pretty amazing stuff.
Matt Poyner wrote about mutual funds being a tax on the uninformed investor.
I enjoyed two of his punchlines:
“Mutual funds serve the needs of fund companies and advisors, not investors. Their fees are exorbitant, they’re riddled with conflicts of interest, and they underperform far cheaper, simpler, and more effective investment products.”
Highlighting more dividend income updates from the blogosphere, Reverse the Crush shared his October update.
On the behavioural-side of investing….
The Irrelevant Investor told us to let the market worry for you instead
From the article:
In Bill Miller’s most recent investor letter, he perfectly captures the posture that most investors ought to have.
When I am asked what I worry about in the market, the answer usually is “nothing”, because everyone else in the market seems to spend an inordinate amount of time worrying, and so all of the relevant worries seem to be covered. My worries won’t have any impact except to detract from something much more useful, which is trying to make good long-term investment decisions.
Fans and partners of this site, 5i Research, wrote about some mental hurdles with investing.
“We find that the best investors are those that are not only able to turn their emotions off, but also those that are able to introspectively view their own emotional biases and use that information to invest effectively.”
More fun stuff…
On Cashflows & Portfolios, we wrote about Bitcoin! If you want to own the top Bitcoin ETFs in Canada hit that link for our list.
Love it Larry:
Rob Carrick is on the money when he says some millennials could benefit from cash flow management, debt management and other tools in the financial planner toolbox vs. an investment advisor.
From Rob’s article:
“A report on millennials commissioned by FP Canada, which oversees the certified financial planner (CFP) designation in Canada, highlights the financial challenges faced by young adults today. They’re graduating with higher levels of debt than previous generations into “one of the hardest job markets in a century.” As a result, many millennials are working in the gig economy, which means temporary or contract work, and have erratic income.”
Dale Roberts was back in trying to make sense of the markets on MoneySense.
BTW – I also voted “Yes” when Elon Musk, the CEO of Tesla, took to Twitter asking if he should sell 10% of his Tesla stock? Amazing….
Win a Tesla – What????
GeniusCash is a pretty sweet deal on its own, but right now and until May 31st 2022, they are giving away a brand new Tesla Model 3 or $10,000 to one lucky user who received a GeniusCash Payout!
More FREE My Own Advisor content:
I keep dozens of free Retirement essays and case studies to help you out here.
You can read up about low-cost ETF investing, including how I invest in some ETFs, here.
Looking for free calculators, tools, or even my support? Check out my Helpful Sites page.
A reminder you can hire me! I also run a site with my partner called Cashflows & Portfolios, a site dedicated to free content for any age but also low-cost services about how to drawdown your retirement portfolio and provide personal, tailored answers to these time-tested questions:
- How much can I safely spend in retirement?
- Will I run out of money?
- What accounts should I drawdown first?
- What is the best drawdown order for tax efficiency?
- When should I take CPP or OAS?
- How much will my estate be taxed?
- And more!
Reader question of the week (adapted slightly for the site):
I’m a big fan of yours…that’s for sure. I wanted to ask if you could post about REITs (Real Estate Investment Trusts) in the future? What might be a good place to own those REITs – what accounts?
We’re thinking about selling one of our rental condos (in Vancouver) and using a good portion of the proceeds for REITs – we will stay invested in real estate this way but without the tax challenges, tenant headaches here and there, along with helping with overall investment diversification instead of holding rentals.
I know you can’t provide advice on what you’d buy, or own, but your insights are always very much appreciated. Thanks in advance.
Thanks for your readership and kind words!
Well, to your point, not advice of course but I like some warehousing REITs like SMU.UN (Summit) and some residential REITs like CAR.UN. I own both and have done so for some time now….a few years.
In terms of what to own where, I like (and only hold REITs) inside my TFSA or RRSP.
Why? From that post:
“Thanks to the Tax Free Savings Account (TFSA), REIT investing can be very tax-efficient…as-in tax-free! There are no small business costs to manage unlike being a landlord owning property. The Registered Retirement Savings Plan (RRSP) is also a great home for your REITs as well – although I personally prefer owning U.S. assets in my RRSP for increased diversification beyond Canadian borders.”
Further reading: Check out this older but very relevant post: all about asset location, location, location!
If you decide to invest with REITs inside a taxable account, things get more messy tax wise. REIT distributions can come from multiple sources, such as capital gains, interest and income – and all such sources are taxed differently so buyer beware!
Finally, given what I assume can only be a large influx of cash from any sale, maybe a REIT ETF is a good idea for your TFSA or RRSP. My favourites = Best REIT ETFs in Canada:
- BMO Equal Weight REITs Index ETF (ZRE)
- Vanguard Canada FTSE Canadian Capped REIT Index ETF (VRE)
- iShares Canada S&P/TSX Capped REIT Index ETF (XRE)
- CI First Asset Canadian REIT ETF (RIT)
I hope this post provided some ideas, not advice of course 🙂
Save, Invest, Prosper with BMO and other Deals!
As always, check out my Deals page.
My very own personal BMO promo code remains available! Use that BMO code to get hundreds in cash back when you open investment accounts with BMO like your RRSP, TFSA, taxable account and more! What’s even better with BMO now is they have commission-free ETF investing. Yup. They are now offering commission-free investing for more than 80 Exchange Traded Funds (ETFs), via their self-directed BMO InvestorLine clients. The ETFs cover a broad range of asset classes, geographies, management styles and popular themes from Canada’s largest ETF providers, including BMO, iShares and Vanguard. Simply awesome and I hope more big discount brokerages follow their lead.
With LegalWills.ca use my personal My Own Advisor promo code for 15% off any services – that never expires.
I earn $600 in cash back every single year. Scroll down my Deals page to get the same credit card I use in your wallet.
All my best,