Weekend Reading – Why people don’t save money, financial facelift folly and more #moneystuff

Weekend Reading – Why people don’t save money, financial facelift folly 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.

It was a very busy week for me so I only managed to sneak in this article (about dividends) – some of my favourite U.S. dividend ETFs for 2018.

I also posted this case study with a financial advisor:  this couple wants to spend $50,000 per year in retirement.  Did they save enough?

Enjoy these articles about behavioural finance (why people don’t save money and one way to address that), how to retire early, some financial facelift folly and much more.

Next week, I hope to conclude my series about my favourite dividend ETFs or maybe I’ll post my latest dividend income update.  Stay tuned to find out what I post!

Enjoy your weekend and see you on the site.

Mark

This Globe and Mail article highlighted why some people don’t save any money.  The argument goes:  “…it’s inhumane to even ask people to think long-term.”  While probably true here’s one solution to fix that:  automate your savings.  From the article:  “Create a tool to take money out of your chequing account the moment your salary is deposited. You would feel that you are less wealthy and you would make better trade-offs on saving and spending.”  We’ve done this for years and I think it works well for us.

I enjoyed Ryan Modesto’s take on this financial facelift – where there was a profile of a couple with a whopping $2.57 million in assets (only $380,000 was in the form of real estate), they had no debt and they wondered if they can retire; with a defined benefit pension plan no less. *Sigh*  If that wasn’t enough, consider the crappy financial advisor’s advice:

“Logan and Tina could benefit from simplifying their investments by moving from an investment dealer to an investment counsellor, a firm that has a legal duty to act in the best interests of its clients, Mr. Ardrey says. Investment counsellors charge an annual fee that is a percentage of the client’s assets.

For the fixed-income side of the portfolio, he suggests supplementing traditional fixed-income securities with some alternative income investments such as private debt, international real estate and accounts receivable factoring. This would improve fixed-income returns and lower overall risk because alternative investments are less correlated to the broader financial markets.”

WTF?  “…alternative income investments such as private debt, international real estate and accounts receivable factoring.”  Good luck with that.  Certainly not all financial advisors are created equal.

You Let Someone Else Control Your Money Chloe Meme

Millennial Revolution posted an interview about a couple who have been retired for well over a decade, since their early 40s.  How did they do it?  For one, they lived in a super cheap U.S. city.  “We’re probably the only people in Boulder who paid just $95,000 for a home in the downtown area, which is unheard-of low in Boulder.”  It’s also unheard-of in most parts of Canada. Two, they invested a significant part of their after-tax income for 15 years straight.  That’s great but….accordingly to their plan, apparently you too could invest $15,000 per year or $1,250 per month for 20 years and then likely retire.  I’m not so sure.  To reach their magical portfolio value of $1 M to retire, that means you would need to earn 10% throughout your 20-year-plan.  That’s optimistic.  Mind you, decreasing your returns to a more realistic and modest 7% you’d have $300,000 less in your bank account.  The punchline for investing success and early retirement:  saving lots is great but returns matter too.

Want to win another book on my site?  Of course you do!  Some time ago, I profiled Steve Zussino’s book Travel Hacking for CanadiansIn that book, Steve shared his tips, tricks, and secrets to travel more and pay less.

Travel Hacking

I enjoyed Steve’s book but I have a copy to giveaway and I’m happy to do so here – so enter to win!

a Rafflecopter giveaway

That FREE Canadian Financial Summit is coming up soon!!

Next week, yours truly will be part of the 2018 Canadian Financial Summit.  In one place, you’ll find 25+ Canadian personal finance experts who will share their insights, tips, and favourite money hacks to save more, invest more and grow your money.

Join 10,000+ Canadians at the free Canadian Financial Summit!!

Although I have my own topic, I’m joining leading financial experts who will discuss:

  • Saving more on everyday items
  • Better, smarter, easier ways to invest
  • Getting the most out of TFSAs, RRSPs, and RESPs
  • How to prepare both your portfolio and lifestyle for retirement
  • Aspirations to own a $1 million portfolio and F.I.R.E. (Financial Independence/Retire Early)
  • Getting financially setup in Canada for New Immigrants
  • Avoiding crippling fees and terrible financial advice
  • Understanding the housing market and where it’s headed
  • The best credit cards in Canada if you want free travel or cash back
  • Great, cheap travel tips and much, much more!

My topic discusses a money milestone my wife and I have achieved in recent years – but you’ll have to attend the Summit to find out!

Just head on over to the Canadian Financial Summit, sign up for free, and be automatically entered to win one of the free Premium All Access Passes they will giving away when the event goes LIVE on September 12th.

End of summer and investing reminders!

Here is a free trial to unbiased stock and ETF suggestions in Canada.  Take advantage of this trial to learn about the best low-cost ETFs for your DIY portfolio with no obligation.

I can get you $50,000 managed FREE for one year thanks to my partnership with ModernAdvisor.

Want hundreds of dollars of cash back?  Use my promo code MYOCASH with BMO for your InvestorLine account.

If you invest online with BMO, you won’t pay fees on your first $15,000 invested for a year.  Make sure you use promo code MYOSF for My Own Advisor’s special offer when opening your BMO SmartFolio account.

Last but not least, Boomer and Echo wondered if the 4% rule is the new normal for retirees.  Like the article on Robb’s site suggested, we’re also embracing the 4% rule.  Once we reach our lofty portfolio goal we figure we could largely “live off dividends” coupled with some part-time work in our 50s.  We figure earning $40,000 or so per year from our portfolio would be very good – and so – that’s something we are actively saving and investing towards.  How about you?

Mark Seed is the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've grown our portfolio to over $500,000 - but there's more work to do! Our next big goal is to own a $1 million investment portfolio for an early retirement. Subscribe and join the journey!

11 Responses to "Weekend Reading – Why people don’t save money, financial facelift folly and more #moneystuff"

  1. “why you won’t pay attention to perfectly good financial advice such as spending less and saving more.”
    Answer, hire a professor of psychology and behavioural economics to provide answers few would follow or explain what happen when its too late to do anything about it.
    From a layman, it’s just not something that’s important to the young and by the time they are in a position to save more for retirement, they still don’t feel its that important.
    I think one must be taught earlier the importance of saving and assisted in the beginning to make it a priority even though they don’t have much to save or realize it’s importance. For the majority who will likely never earn big bucks, it may be the only way for them to secure a reasonable retirement.

    Reply
    1. Agreed. For the majority of us who will never own a small business, be at the top of any company, we’ll have to save and invest the ol’ fashioned way: save a few bucks every week; every month, ideally automate those savings; invest in stocks and over many years let those stocks (a few or a huge collection via indexing) earn us some growth.

      Reply
  2. re: why some people don’t save any money.
    Dan Ariely is great. I see my thoughts on the whole PF et al sector are validated: “There was a study that came out a few years ago that showed that for the US$700-million or US$800-million a year the U.S. is spending on financial literacy, the improvement in financial behaviour is 0.1 per cent…but it’s much worse than I thought.” We are drowning in information but never use any of it. Applying the 80/20 Rule, we can very safely eradicate 80% of finlit (and full-stop publishing more) and still have too much info. This is also why the millionaire population grows slower than the general population. As for why people don’t save any money, most (50%+) don’t have any money to save in the first place. Poverty also has a massive negative effect on just what Ariely discusses — thinking long-term. I suspect this effect lesses as one moves further away from poverty but is then replaced by too many choices (e.g. I can buy so many things!). That said, even the best brain is very terrible at long-term thinking; it’s not designed for it. We also know that decision fatigue is also a factor in making good decisions (like saving), so automating these very simple types of activities is a huge game changer (imagine if you have to make an investment decision every single day with your daily earnings!).

    re: early retirement
    One solution to funding retirement, as pointed out by Dan Ariely: working is actually very cheap. 😉

    Reply
    1. In a funny way SST, that last comment re: working is actually very cheap compared to retirement was interesting!

      We’re naturally wired to think and act short-term. i.e, run from bears! Not think nor act long-term. i.e., what’s going to happen next winter when we run out of food in our cave?

      Reply
  3. re: financial facelift

    I am reminded of Mr Buffet’s line “it is insane to risk what you have and need in order to obtain what you don’t need.”

    I am leaning towards this more and more.

    Reply
  4. There’s lot of reasons why people don’t save money. Unemployed. Lengthy illness. Living paycheque to paycheque and still not covering the bills. Financially irresponsible….

    Travel and horses are my passion. Horse ownership has limited my travel.

    Reply
  5. I read Travel Hacking for Canadians too by Steve a few years back, it was great! I still don’t collect that many Air Miles but am a big fan of the Aeroplan rewards system.

    Hope you have an awesome rest of your weekend!

    Reply

Post Comment