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.
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.
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.
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 Canadians. In that book, Steve shared his tips, tricks, and secrets to travel more and pay less.
I enjoyed Steve’s book but I have a copy to giveaway and I’m happy to do so here – so enter to win!
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!
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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?