Weekend Reading – Zero-fee investing, value traps, fat TFSAs, Canadian Financial Summit 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.
Like I promised readers last week, I shared an update about a successful DIY investor profiled many years ago – who thanks to her investments hasn’t had a mainstream job in almost 20 years!
Although it’s hard to avoid at times, comparing yourself to others, I decided to compare our financial goals in this post – about being ready to retire in 10 years via these 10 goals. Thoughts on our game plan? What do you make of these milestones?
Hard to believe it’s almost Labour Day weekend. Time for me to get out and enjoy the nice summer weather while it’s still here in Ottawa!!
Enjoy your weekend and see you on the site!
Mark
It was a great week for the dividend income portfolio – a recent update you can find here. Both Royal Bank and CIBC increased their dividends this week.
Here is how I built my dividend income portfolio and how you can too!
A funny take on financial planning here:
“Most financial institutions estimate the average Canadian will need about a million dollars to retire comfortably. People can accrue this wealth by putting their money into real estate, registered retirement saving plans or mutual funds, but experts agree the best way to have a million dollars for future retirement is to already have a million dollars in the present. If managed well, you might then have even more than a million dollars for retirement.” Good one.
Here are some ideas about avoiding the value traps with some stocks.
Dan Bortolotti of Canadian Couch Potato fame argued zero-fee ETF investing, even negative-fee ETF investing won’t deliver the investor success some people think it will.
Also, in a few short weeks, one of the podcasts I will be part of is the 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.
EVEN BETTER – this Summit is 100% FREE – and you don’t have to get out of your pyjamas to check it out!
I’m joining leading financial experts on the following money topics:
- 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!
Once again – this event is completely FREE to attend. However, if you can’t make it for the scheduled date/time, you will be given the option to purchase a special any-time, anywhere, Premium All Access Pass that will allow you stream the entire conference whenever fits you best.
I look forward to sharing what I will be talking about at this Summit in the coming weeks – spoiler alert – I’m really going to put myself out there!
The chief executives of America’s top 350 companies earned 312 times more than their workers on average last year, according to a recent report published by the Economic Policy Institute. That’s a BIG delta…
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Happy Investing!
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.
Do you recommend 1 million for a couple or 2 million?
Ha, well, depends on what the couple spends 🙂
Our TFSAs are dripping over $14K in Divs. (280K value)
That’s killer work.
I agree. Same here. Only have a half position
Mine is generating $4114 on about 86800. I still haven’t fully invested however- about 5K cash now, down from 25K a few months ago. I’ve also emptied it about 6 yrs ago for 8 or 9 months, probably only had it topped maybe 2/3 of the time since 2009. I’m on a better path now. LOL
Agreee with the points you made Lloyd.
Off on a jet tomorrow!
Impressive tax-free income! My TFSA returns have been dragged down by some REITs like REI.UN and HR.UN in recent years. I will continue to hold them and DRIP them though; 1 share per month earned for each. BMO has performed well. FTS not too bad either.
Enjoy the trip!!
Thanks. Yours is great too.
I’ve done a little trading in mine over the years and had my share of losers, but fortunately some winners too. As I mentioned before just started all drips too now that things are on track buy and hold, so should make a little more progress.
In order of size I hold RY, CAR.un, IPL, BIP.un, TNT.un in mine.
Gotcha on the REITs. My wife’s TFSA has been affected by some dogs. HR.un too that I’m reviewing. She has FTS too but more cash than me right now. All on drips.
Thanks.
I haven’t been fond of HR.UN but I’m DRIPping it cheap now so not really worried about it. I think over time I will see some capital appreciation from it.
I found myself getting frustrated when I read that TFSA article. Specifically the line;
“In fact CRA data reveal the average size of a TFSA (2015 tax year) was about $15,000 – a far cry from the maximum contribution of $57,500.”
How could a credible financial correspondent compare 2015 data with 2018 contribution limits? And why would they? Surely they must realize the silliness of doing so. Not that the point does not have merit but c’mon.
Spoke before really looking at my numbers. My $57500 with reinvested dividends is $76431 and my wife’s is $77466. The 6.09% & 6.42% are on these amounts, not the $57500.
Solid work!!
Mark: On how to grow TFSA, I like you comments, but its too bad you didn’t separate yourself from the rest by mention the Income your TFSA is generating. The market value is only valid if one sells their holdings.
Having max’d out our TFSA’s mine is generating dividends of 6.09% on $57500 while my wife’s is 6.42% with banks, utilites & pipeline stocks.
One could counter that the income being generated is only valid if one currently needs that income. Some folks may be investing some money for growth as well. Case in point, my TFSA is only generating 4856 in dividends and distributions but a decent portion is invested in some e-series funds so that portion is more growth oriented as I do not require the income.
IOW, there is no one metric by which all TFSAs can or should be measured.
Interesting you say that Lloyd since that is my plan right now in real time: “Some folks may be investing some money for growth as well.”
Essentially, I’m building my income war chest.
And it doesn’t have to be a pure growth play either. I think in terms of something like BAM.A. It pays a smaller dividend (usually rising) but seems to be more of a growth kinda play. We hold a lot of it and have never had a regret owning it.
I haven’t considered (much) owning dividend payers that pay a low yield and offer more capital upside, until recent years. Thinking WCN is a good example (along with BAM.A) although I own all other major Brookfield companies for higher yield – DRIPping all of them Lloyd.
Well, I did tell the journalist but I guess they could only take certain quotes to fit the article. Joel’s editor has all the power! Both TFSAs are now generating close to $8k per year tax-free. It should be more in 2019 after my next contribution 🙂
The first million is the hardest.
Steve Martin’s classic recipe for becoming a millionaire: https://www.youtube.com/watch?v=T28ouCAUl4w
Humourous, but I don’t get that that was a “recipe”.
Step 1. Get a million dollars…
lol…that ain’t a “recipe” either.
recipe: a set of instructions; something that is likely to lead to a particular outcome
Step 1. Get a million dollars….is likely to lead to you being a millionaire.
🙂
Don’t mind me. I’m cooped up inside all weekend attempting to avoid the free cigarettes:
https://shootismoke.github.io/?ref=producthunt
First, get a million dollars. re: CRA: “I forgot”. 🙂
I’m finding that too!!
Congrats and good luck on being involved with the Financial Summit.
Kind of a strange piece on the $1M from the Halifax planner. I didn’t start with a million and I know you didn’t either Mark (and are well on your way). We know others on here alike. Maybe I’m missing something.
Re CEO pay- not good: Would be interesting to know where pro athletes, top entertainers etc compare to avg societal wages and to ticket prices, compared over the years. My “guess” is it’s out of hand too.
Yeah SST, g/l with the fire situation out there.
re: strange piece on the $1M
Thing is, all the people on the sell side are absolutely adamant that we all need $1,000,000+ in order to retire just above the poverty level. Why? Because at ~2%, a $1M portfolio will generate a larger commission cheque for the manager than a $200K portfolio. Thing is, if you start accumulating stocks early enough, your $200K portfolio will generate enough cash for you to retire comfortably. The reality you require and the reality the financial sector wants you to believe you require are very different — mostly to their benefit and your detriment.
re: CEO pay vs entertainers pay
Let’s face it, a lot of things are out of whack…a lot. But, like a lot of things, the market determines the value of the price/cost (e.g. The Pet Rock). In terms of the price of entertainers (of all stripes, including sports people*), people are still buying the tickets and filling the seats which means there is still room for prices to move to the upside. CEO pay is a different situation all together as it’s almost always a board (and not the public/stock holders) who determines their price, and as we all know, directors and execs are most often in a bubble of their own making.
*(As a gauge, 30 years ago Wayne “The Great One” Gretzky was traded for $15 million ($28 million in 2018 bux). It was a BIG deal. Now there’s players making $15+ million in a single year…and they aren’t even the greatest ever hockey player. Do they provide more “value”? As I said, a lot of things are out of whack.)
re: BC burning
Talked with a guy who lives in Manitoba who said even they are getting smoke from the fires here — THREE provinces away! Yikes.
“Talked with a guy who lives in Manitoba who said even they are getting smoke from the fires here ”
Ya, we do see some B.C. smoke but that is aloft in the higher atmosphere. The surface smoke we are seeing now is generated a lot closer.
The start with a million thing is weird to me. Perhaps we’re talking about 2 different things on the $1M. I’m speaking of “accumulating” 1M not how much I’ve contributed. Don’t know that number. $200K in stocks at retirement time won’t generate enough income for most to live on. 200K invested in well chosen stocks or an index over a long period of time – “could”. I didn’t get my number from or pay attention to an advisor to plan my retirement, nor did I paid 2% for long, and I expect others on here are similar.
My perspective is as someone who doesn’t follow much pro sports live or TV, or sports news even, and not a whole lot of entertainment stuff either. You’re right on how this stuff gets set. Much of it’s wonky to me. We don’t pay people like top shelf doctors a fraction.
Our sky here on the east coast high atmosphere was BC fire affected yesterday. Slightly hazy and unusual red hue to the sun. That really says something considering the distance.
re: $200K in stocks at retirement time won’t generate enough income for most to live on
Most Canadians currently live on less than $35,000/yr. If you have accumulated $200K in dividend growth stocks over the period of 30-40+ years, then yes, that $200K market value could very definitely be proving a normal living standard.
re: We don’t pay people like top shelf doctors a fraction.
We also don’t pay enough for clean drinking water (although if we were Nestle we would pay a LOT less for pristine water). So it goes when a society deems certain goods and services as essential and “socialized” (e.g. health care, water) while others are deemed a discretionary luxury sold for profit (e.g. entertainment). Unless you live in Canada, where you get top notch socialized entertainment in the form of CBC programming. 😉
True, but if you’re used to making $35k per year then a few thousand per year from $200k portfolio, add in CPP and OAS, you’re probably making $25k after tax in retirement.
Love CBC 🙂
Good luck earning 35K from 200K “at retirement time”. It takes me a heck of a lot more than that to earn 35k.
There certainly are some anomolies, but a great country nonetheless. CBC not so much. I only paid for water about 9 out of the last 30 years and haven’t now for 7 years. I guess that’s not counting the electricity to run pump or the initial costs!
Oh for sure, I guess I was thinking that is you’re used to earning $35k per year, about 50% of would be replaced in retirement after working 30-40 years with CPP and OAS payments. Various calculators tell me $200k invested should deliver about $15k in income for about 20 years until that nest egg runs dry.
If folks are lucky to have $500k invested, that should deliver about $30k for about the same time period; say 20-22 years until that’s gone.
re: Good luck earning 35K from 200K “at retirement time”.
Check the math. 🙂
The point is, don’t let the money manager bullies scare you into thinking you i) need $1,000,000 to retire and/or ii) need to save $1,000,000 to retire. Perhaps their target audience is the 1-10% who could actually perhaps scrape together $1M in order to provide a healthy commission cheque.
All one needs to do is have a cursory look at history to see that people have been retiring for decades on a fraction of $1M…society still hasn’t imploded. Save diligently, invest prudently and almost all of us will be just fine.
p.s. — BC wildfire smoke is now hitting Nova Scotia.
Our gift to the entire country. You’re welcome.
Well, as my own money manager I figure I need $1 M to retire on. Not paying very many people a commission in the process – although Vanguard does get some of my money but it’s at a fee of 0.08% MER so that’s like $40 per year from me. Peanuts.
Sorry to hear about all the trouble in BC with the fires. I’ve been watching the stories. Very troubling to see what is happening.
Check away. Does your math produce something better?
$200K * 4.5% yield = 9K
$200K @ 4% SWR = 8K
$200K @ 5% VPW = 10K
It seems you’re confusing $200K “at retirement time” with $200K invested in div growth stocks for 30-40 years. Have another read of my posts.
The Beaverton is a satire site so don’t put any weight into that article 😉
That’s the part I was missing. LOL
re: A funny take on financial planning…experts agree the best way to have a million dollars for future retirement is to already have a million dollars in the present.
Unfunnily enough, that’s pretty accurate. Only 1-2% of the current Canadian population has achieved millionairedom, thus, if you don’t already have a million dollars now, it’s highly probably you won’t have a million dollars in the future.
re: The chief executives of America’s top 350 companies earned 312 times more than their workers…
This data is the perfect demonstration of the #1 (albeit unspoken) path to wealth — be a White American Male. No one likes to admit the glaring obviousness let alone discuss it, but it exists. Anything other than these three non-controllable traits is a barrier to entry to wealth.
re: Canadian Financial Summit
Soooo….basically a big marketing fest for PF bloggers? Considering many of the presenting bloggers have been thoroughly thrashed & trashed on the ol’ interwebs (as well as at least one criminal!), I wouldn’t touch this thing with a ten foot pole.
Well, back to watching my province burn.
Yes, very sad about BC wildfires.
re: CDN Financial Summit – not just for bloggers by the way but it’s available for folks that want to listen.
re: CEO data, yes, sadly, still true in America. Hopefully times will change that.