By Guest Blogger Ryan Lewenza
No I’m not talking about the spandex wearing, blood spitting rock band from the 70s (but how great are the songs “I was Made for Lovin’ You” and “Detroit Rock City”!), rather today I’m talking about the KISS principle, that is “keep it simple, stupid”. A tip of the hat first to one of our clients who reminded me of this great concept that he lives by. I’m also a strong proponent of this, especially as it relates to investing. Our industry has a bad habit of over-complicating things when for most people keeping it simple is the best way to go and often results in the best outcomes. So today I “keep it simple, stupid” by highlighting a few key investment principles and strategies that will help readers improve their investment outcomes and better achieve their long-term financial goals.
1. The Beauty of Balance
Unless you’ve been living under a rock you know that we are not huge risk takers and at our core we believe in balanced portfolios, using a mix of equites and bonds in constructing client portfolios. The key reason we believe in balanced portfolios is that one asset class is always (generally speaking) working while the other is not. For example, in a strong economy stocks generally do well due to rising corporate profits and bullish investor sentiment, while bonds underperform as interest rates and bond yields rise. So in a strong economy stocks are going up while bonds are flat to down.
Conversely, in a weak economy or during a recession central banks are cutting interest rates, which are generally good for bonds (government and high quality corporate bonds in particular) while stocks are generally weak. So bonds are going up while stocks are selling off.
Basically there is an embedded push/pull dynamic within balanced portfolios. This can be seen in the chart below, which compares the relative performance of Canadian stocks and bonds. The green line indicates periods when bonds are outperforming, while the red line indicates stocks are outperforming. This chart essentially captures this push/pull dynamic and why we believe so strongly in building balanced portfolios.
Relative Performance of Canadian Stocks and Bonds
Source: Morningstar, Turner Investments
2. Diversification
Next up is the importance of diversification in portfolios. This is the old adage “don’t have all your eggs in one basket”. We view diversification in two key ways. First, is at the individual security level. We prefer to invest in ETFs, which holds a basket of securities rather than investing in individual stocks or bonds. Numerous studies have shown that to have a well-diversified portfolio – that is a portfolio that removes “non-systematic risk” or company specific risk and leaves the investor with just “systematic” or market risk – you need to hold over 30 different securities. Essentially we’re just talking about minimizing the risk of holding a Nortel, Sino-Forest or Bre-x, which can torpedo a portfolio.
The second element of diversification is to hold a number of different asset classes, ranging from stocks, bonds, cash and then down to specific areas within the equity and bond markets. For equities this would include things like investing in both small and large-cap stocks, and across different sectors and geographies. For bonds this includes holding a mix of government, corporate and high-yield bonds. The reason we want to diversify across different areas is that we never know for certain, which asset class is going to outperform in a particular year. Take a look at the busy table below, which tracks the annual performance of different assets over time and you can see just how random performance can be. So hold a mix of different assets classes to better diversify your portfolio.
Annual Returns for 20 Major Asset Classes
Source: Fidelity
3. Low Fees
Our third KISS principal is to focus on low fees, either looking at the fees on different mutual funds, ETFs etc. or the fees charged by a full-service advisor for the services provided. High fees can have a huge impact on performance and long-term investment outcomes.
For example, let’s compare two portfolios both earning 7% before fees, with one investor paying a 1% fee versus and the second investor who pays a 2% fee. Assuming the two investors both save and invest $20,000/year for 25 years, the investor paying a 1% fee would see their portfolio grow to $2.36 million versus the second investor who would see their portfolio grow to $1.89 million. The 1% higher fee from the advisor or mutual fund company results in a lower ending portfolio value of $465,691 for the second investor.
Clearly, fees are a huge deal and it’s why we prefer to invest in low-cost ETFs and why we charge a 1% fee to clients versus the overall industry at 1.5% and higher.
Ending Portfolio Values for Investors Charged 1% and 2% Fees, Respectively
Source: Turner Investments
4. Saving Early
This is an oldie but a goodie. Do to the power of compounding returns the benefits of staring early to save and invest are immense. If an individual starts saving $20,000/year at age 30 and earns a 6% return over the long-run they would have $2.36 million by age 65. Compare that to a person who starts saving the same amount at age 40 and they would have just $1.16 million at retirement. So saving the same amount but starting 10 years earlier results in a higher portfolio value of $1.2 million at retirement.
Readers don’t waste another day! Start saving now if you want to have financial security, peace of mind, and a great retirement.
Portfolio Values if Start Saving at 30 and 40, Respectively
Source: Turner Investments
5. Taxes and Portfolio Construction
Finally, we live in high tax country and it’s seems to be only getting worse so smart tax planning is a critical aspect in structuring portfolios and one’s overall financial affairs. This includes things like maxing out RSP contributions to reduce your income and taxes paid, topping up your TFSAs to shelter future growth, income splitting pension income, borrowing to invest, which allows you to write off the interest, and focusing on Canadian dividend-paying stocks due to the dividend tax credit.
From a portfolio perspective it’s critical to structure the portfolio in a tax-efficient manner so that you minimize taxes paid and maximize your after-tax return. We don’t want to make clients more money just to send it back to Uncle Sam, or in our case Uncle Trudeau. This involves putting more of your bonds in your RSP as interest income is taxed at your higher marginal tax rate, putting higher growth equities in your TFSA to shelter future capital gains, and placing dividend-paying stocks in your non-registered account, which allows investors to take advantage of the dividend tax credit.
It’s one thing to build a well-diversified and balanced portfolio, but then you also want to structure it as tax efficiently as possible.
So there are five easy and simple strategies to grow your wealth, achieve financial security and have a bitchin’ retirement. Get to it!
Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.
65 comments ↓
Sale sale sale…everything must go. Huge discounts just the beginning
https://globalnews.ca/news/5314158/homes-west-vancouver-selling-discounts/
“Our industry has a bad habit of over-complicating things when for most people keeping it simple is the best way to go and often results in the best outcomes….”
******
Simplicity.
Another excellent topic.
Sadly it’s most industries these days with similar bad habits.
A Shakespearean character once said,
“First, kill all the lawyers…”
May I suggest a modern update to that sentiment, “Second, follow the lawyer’s demise with Human Resources staff……”
@#87 Baggagetown Gnarly
“The message may look cute or clever superficially, but is vile and retrograde.”
++++++
Or
Even pretty girls are allowed to offer their own opinion to androgynous SJW feministas….
free speak sux when you dont agree with it.
I would have loved to start saving when I was 30, but:
1. this blog didn’t exist back then
2. everything I know about investing I learned on this blog
Despite the 4th dimensional problem, my retirement still looks a lot better than it used to. Thanks for all the free knowledge!
I hope you pay joe his 1% fee he is now due!….
#88 joe on 05.25.19 at 2:04 pm
wow a long winded Millenial, i can say that tune in one sentence:
“live within your means” …..KISS
If the fee based adviser charges a low (tax deductible) fee of 1% and makes the investments tax efficient the net cost for good advice is even lower.
I’m very happy with my fee based adviser and figure my net fees are below 1/2%. I love the fact that my current arrangement allows me to sleep at night, and concentrate on my job and family. The returns are as promised around 6.75%/year average thus far after fees.
The advice given on today’s blog should be printed out, laminated and reviewed often. I have paid good money for the same advice, so you are getting your moneys worth coming to this blog.
When you look for an adviser bring it with you and judge them on there reaction and ability to follow it.
#3 crowdedelevatorfartz on 05.25.19 at 2:49 pm
free speak sux when you dont agree with it.
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What’s going on Crowdie?
You getting NoName to write your comments now.
Also, I have thought of good person to take a ride with you.
Olivia Newton-John.
She’s going through a bit of a rough patch at the moment.
Fighting cancer and her brother just died.
Maybe the only thing that could cheer her up at the moment is a ride to the penthouse in an elevator with you while she sings…
Let me hear your body talk…
M44BC
https://m.youtube.com/watch?v=VjRA0vCV8iw
@#7 Flop
Speak vs speech
dam spell check !
*******
I would hold back on the “emanations” if ON-J was riding in the elevator …..out of respect for my Aussie amigo Flop
Wow, bit of a snoozefest on here.
I’ll try and jazz it up.
All the government workers are tending their gardens.
InfLewenza, I thought it was a good post.
Gonna make sure I concentrate on putting more dividend producers in my non registered the next time any government in Canada decides to let me keep some of my own money.
Do you bother to read the comments during the week?
I reckon Robax does, closet masochist maybe?
Anyway, here is a article I ran during the week, I think you might enjoy it and another one I never got around to running…
M44BC
https://howmuch.net/articles/international-liquidity-country
“Visualizing How Americans Spend Their Money.
In April 2019, the Bureau of Labor Statistics released the latest Consumer Expenditure Survey (CE) report to analyze broader economic trends related to consumer spending. Our new visualization uses the BLS data from this report to paint a picture of how the average American household allocates its budget.
The BLS report uses data from 2017, the most recent year available. According to the BLS, consumer spending increased 4.8% in 2017 compared to the year before, despite a 1.5% decrease in average income before taxes. In this time frame, consumer expenditures also increased more than the Consumer Price Index (a key indicator of inflation), which rose by 2.1%. Average consumer expenditures in 2017 amounted to $60,060.
Given the rise in consumer expenditures, we wanted to visualize how the average American household was spending its money. In creating the visualization, we used selected categories of the Consumer Expenditure Survey (CE) to represent average household expenses, including housing, food, and insurance. Almost all of these categories experienced expenditures increases from 2016 to 2017.
The Largest Spending Categories for the Average American Consumer
1. Housing – $19,884 (33.1%)
2. Transportation – $9,576 (15.9%)
3. Food – $7,729 (12.9%)
4. Personal insurance and pension – $6,771 (11.3%)
5. Healthcare – $4,928 (8.2%)
6. Entertainment – $3,203 (5.3%)
7. Other expenses – $2,214 (3.7%)
8. Cash contributions – $1,873 (3.1%)
9. Apparel and services – $1,833 (3.1%)
10. Education – $1,491 (2.5%)
There are a few other takeaways from the BLS report. Average household income after taxes was $63,606, leaving $3,546 to be allocated toward savings after all expenditures were accounted for. However, these numbers represent the U.S. average and don’t tell the whole story. Consumer spending varies significantly from household to household, based on factors such as income, location, cost of living, household debt, and whether someone is a homeowner or a renter. According to the BLS report data, the average consumer in the bottom 60% of earners spent more than they earned. Similarly, the average consumer under the age of 25 and the average consumer over the age of 65 had expenditures greater than their income.”
Visualization
https://howmuch.net/articles/consumer-spending-in-the-united-states
In the flesh.
Forex makes this all posable, year after year.
https://www.pscp.tv/w/b7mg6TFETEtCQWVselJrUUp8MU93eFdrdmpFd0F4UUAKUHXghErOdajdmbSSsXyd_AoQVd-UA1VJdLwxfJ-x?t=3s
I saw Kiss in 1997, which was their retirement tour. I did not know whether they would ever tour again.
Looks like they are still touring.
#9 Flop
Just because it is a snoozefest it doesn’t mean you have to repeat yourself. Also just post the article links instead of also pasting in the the whole article verbatim
Ryan
Thank you for an informative post. Your section on taxes and portfolio construction in particular gave me a better perspective on how to coordinate the use of all three accounts for increased tax efficiency and I will be making adjustments moving ahead. This is another post to bookmark.
One question about your recommendation for placing dividend-paying stocks in the non-registered account: would those be individual stocks or ETFs? Also, do you select those stocks or ETFs based (in part I imagine) on a certain level of yield or range of yields?
It’s imparative you watch your own money – or with help – because everyone else sure it. From the street beggar eyeing you approach, to the CRA.
It’s all about the money: Sports TV crowing over the Raptors no longer call them a team; they call them a “Franchise” – over and over . Like another burger joint, they simply wish it to supersize their returns from you.
Can we stand another post on teachers? Perhaps MF and Smoking man can peruse this new Toronto school board dress code. The language is quite Newspeaky
http://ppf.tdsb.on.ca/uploads/files/live/97/204.pdf
More Fleash
https://www.pscp.tv/w/b7mu6jFETEtCQWVselJrUUp8MWpNSmd2eWJWZ09HTAqUiG-VNZBg8AOofpwfrQAPN_ci-VCyJ2nCQKbHIqgT?t=1s
#2 crowdedelevatorfartz on 05.25.19 at 2:43 pm
A Shakespearean character once said,
“First, kill all the lawyers…”
May I suggest a modern update to that sentiment, “Second, follow the lawyer’s demise with Human Resources staff……”
————————————————–
Great quote, but rarely if ever properly attributed to the
character in Willie Shakes’ Henry VI with the jaunty title of ‘Dick the Butcher’ – spoiler alert, its not b/c he sold prepared meats… Its generally understood to mean the end to the rule of law, careful what you wish for there, may get messy – now, almost anyone left in large company HR, even if they started as looking to better things by supporting the humans, might be closer to Dick than the lawyers…
#14 TurnerNation on 05.25.19 at 5:43 pm
they call them a “Franchise” – over and over . Like another burger joint, they simply wish it to supersize their returns from you.
———————————-
Uh, that’s b/c they are a franchise, like any pro sports team they trade entertainment for $$ in an organized league – you are getting tougher to follow: you against capitalism now or just basketball capitalism?
#12 Douglas Whitmore on 05.25.19 at 5:26 pm
#9 Flop
Just because it is a snoozefest it doesn’t mean you have to repeat yourself. Also just post the article links instead of also pasting in the the whole article verbatim.
////////////////////
Hush little baby, don’t say a word.
Floppy’s gonna buy you a mockingbird.
And here I was thinking that Grumpy Cat was dead!
Also, you are mistaken and I guess reading comprehension is probably not your strong suit.
Link one was for Ryan Lewenza to read in case he missed it during the week, discussing international liquidity.
https://howmuch.net/articles/international-liquidity-country
Link two had never been run before and I put it up for someone to have some content to read on the crapper since things were a bit quiet.
See you cats tomorrow…
M44BC
AlMac “One question about your recommendation for placing dividend-paying stocks in the non-registered account: would those be individual stocks or ETFs? Also, do you select those stocks or ETFs based (in part I imagine) on a certain level of yield or range of yields?”
We would use an ETF that invests in dividend-paying stocks. Why buy a few dividend paying stocks when you can get a diversified basket of dividend-paying stocks. And yes I would look at the dividend yields of the different dividend ETFs but focus on dividend growers than just high dividend stocks. They provide the best long-term returns. – Ryan L
Great post Ryan. I think the tax planning part can paralyze many DIY investors. Especially when considering across multiple account types or a corporation. So, I actually made a couple online portfolio building tools to help DIYers. There can be a lot of complexity to tax planning for those making/saving enough to use tax-exposed accounts. So, I made these to run that math behind the scenes with a simple interface.
There is a 3-4 ETF one to be super simple.
https://www.looniedoctor.ca/three-four-etf-portfolio-builder/
And a 5-6 ETF one for those wanting a bit more granular control.
https://www.looniedoctor.ca/canadian-portfolio-builder-basic/
I have one in the works that includes the options for REITs, prefs, and rebalancing. The current ones use top marginal tax rates for tax planning, but the one under construction will adjust for approximate personal income tax bracket as well.
Feel free to not post this. I don’t really do website promotion or make money from blogging. Just think these may be useful to some people going the DIY route. I make them mostly because I am an Excel/tax/investing nerd.
-LD
Ryan what is the average ETF cost to your client? And am I correct to assume the ETF fee is in addition to Turner Investments 1% fee for advice.
Ryan please share what all the colours mean, for your Fidelity Chart of 20 Asset Class returns. Means nothing unless you give us the key. THanks
Lana “Ryan please share what all the colours mean, for your Fidelity Chart of 20 Asset Class returns. Means nothing unless you give us the key. THanks”
The different colours refer to different asset classes. For example, REITs are in yellow. Note how the colours change for each year showing the performance of different assets each year. – Ryan L
Lana “Ryan what is the average ETF cost to your client? And am I correct to assume the ETF fee is in addition to Turner Investments 1% fee for advice.”
Correct. The blended MER of our portfolio is 25 bps, or one-quarter of one per cent. – Ryan L
Hi Ryan, would CDZ etf be good choice for non-registered account in your opinion? Thanks!
#11 JSS
LOL!
KISS thought about retiring over 20 years ago?
Some Boomers need to age with some dignity and know when to hang it up. Same with the Crue.
https://www.youtube.com/watch?v=fL6uYfOBx4E
Fade into Boomer irrelevancy please.
The fees are the killer; good post!
This video reflects one of the response Garth gave to a certain poster, I think? I never know with him but anyways; interesting video; around 5 minutes long.
https://www.youtube.com/embed/OAOrT0OcHh0
You made a typo that doesn’t add up:
“Assuming the two investors both save and invest $20,000/year for 25 years, the investor paying a 1% fee would see their portfolio grow to $2.36 million versus”
That 25 years should be 35 to match your graph. And if there is no fee, that amount grows to a hair under $3M…
I’m all in on the S&P500 http://www.moneychimp.com/features/market_cagr.htm
#20 Loonie Doctor on 05.25.19 at 6:37 pm
Loonie, I looked at your robo portfolios as soon as you posted them. Definitely another nice resource especially when you have corporate accounts.
What do you think, should we move away from Horizon Total Return ETFs with Moroneau’s new threat or bet on Andrew winning and keeping them in place? I liked to have my corporate account broken down like a separate individual rather than just stuffing VCN in there…
I’m really stupid. I had a wedding in Ottawa and decided to try Airbnb. So my wife booked an entire home since we have a baby. 2 days before we were scheduled to arrive the “super host” messaged and said the home was under construction (water damage) so my wife asked for our money back. He refused, so she contacted Airbnb. They were very helpful and told us to book something else that would suit our needs. My wife booked what was represented as a condo, in reality it was the store top on a very busy street with walls that were paper thin. The best part of it was the raccoon roof top party at 3:30 am. Well long story short we left first thing in the morning never to return even though we booked for 2 night. Lesson learnt, Airbnb is not for me.
The Toronto Raptors are in the NBA finals!!!!!
Toronto and the Raptors rock!!!!!!!!!!!!!!!!!!!!!!!!!
#22 Lana on 05.25.19 at 6:56 pm
Ryan please share what all the colours mean, for your Fidelity Chart of 20 Asset Class returns. Means nothing unless you give us the key. THanks
————–
Agree.
Most financial advisors are so hung up with their charts that they forget that the talk to a simple person.
‘Token comment in show of support for Ryan.’
There, I did my bit.
With super low Bond Yields the new norm and relatively good run on Stocks, such conventional wisdom of KISS principles might need some fine tuning as MoneySense whitepaper (2014) analysis that stuffing Bonds in RRSP is not ALWAYS the best choice. Thanks for the informative writeup.
#14 TurnerNation on 05.25.19 at 5:43 pm
I would be honoured to peruse through that with such esteemed company.
At least I know what cisgendered really means now.
Btw, apologies in order for my harsh words last time. I actually read all your comments. Some are hilarious. Some ironic. Some I disagree with, but I read them all and they are a good contribution to the blog.
MF
#20 Loonie Doctor on 05.25.19 at 6:37 pm
I have one in the works that includes the options for REITs, prefs, and rebalancing. The current ones use top marginal tax rates for tax planning, but the one under construction will adjust for approximate personal income tax bracket as well.
****************************
I’d be very interested to see that as I use REITs as most of my fixed income and I’m never sure if I’ve spread things out correctly tax-wise for TFSA/RRSP/corp/non-reg
How many 30 year olds are saving $20k a year? I save pretty aggressively and have a good paying job and I achieve about $14k. If I didn’t live by myself I could probably hit 20k but I don’t think high savings are very common. I hope my heart lasts another 35 years. 40+ would be nice, for all the trouble of saving.
Fake Gutiar , but who cares.
The world I live in now.
https://www.pscp.tv/w/b7oXODFETEtCQWVselJrUUp8MWRqR1hwWGF6RE9HWhuVMp_zDyZrocVGpoFW_23VJbkPkl6D_z54xOax6abv?t=4s
Saving! Absolutely! Even if you have a good chunk saved and invested early, keep on adding to it. Really helps a lot.
Old people.
https://youtu.be/-zol906ltPU
@#16 Remembrancer
“now, almost anyone left in large company HR, even if they started as looking to better things by supporting the humans, might be closer to Dick than the lawyers…”
+++++
Thou dost speaketh the truth.
I recall reading somewhere that the reason the 1st Human Resources Depts were created 30-40 years ago was due to the very expensive Lawsuits and Settlements for sexual harrassment and wrongful dismissal filed by employees of ….. Law firms in California.
The Law Partners realized they needed someone other than another Partner to reign in the unwanted advances of the firms lawyers and their subordinate staff.
And thus the Inhumane Resources Depts were born.
Originally designed to help employees and companies avoid costly lawsuits…..now an endless swamp of Byzantine, Politically Correct, rules and regulations that ebb and flow like the social justice pablum spoonfed to the masses.
But I must say in my experience…… HR staff seem to use the “Stress Leave ” vacation junket more than most of the other staff in most large organizations.
It helps to write the rules I suppose.
Funny that.
#7 Flop… on 05.25.19 at 3:32 pm
#3 crowdedelevatorfartz on 05.25.19 at 2:49 pm
free speak sux when you dont agree with it.
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What’s going on Crowdie?
You getting NoName to write your comments now.
—
no, no…
You know he would not let me near his keyboard, not even in elevator, just for info last few days i’ve bean amalayzing and comapring (hypo) glycemic index and load of culuflower and yucca/cassava…
But if he ever turns liberal and loses self estime and he is desperate need of DUFF (designeted ugly fat friend) ill be there for him.
@ponzius pessimistic
Todeay i learned my self that cow lets 9/10 of greanhouse gases thru front and only 1/10 at the back, who new. Aparently cows are much worst that f150s
http://theconversation.com/to-reduce-greenhouse-gases-from-cows-and-sheep-we-need-to-look-at-the-big-picture-56509
Now that i am on a topic of gut bacteria, what i learned yesterday is that high 9/10 of seratonin is created in human gut. Serotonin-tryptophan is created buy bifidobacterium infantis, so when they say that depressio is chemical unbalance in a brain is lie, its actualy unbalance in gut.
And on a side note, there is this charity that donates cows to poor people in an attempt to reise them from poverty, i just sent them some funds.
What gave an idea was video that i watched years back, one time I was watching this google talks and there is this some guy who have some micro loan/charity organisation that buys cows for poor people to lift them out of poverty. So the it works like this, he helps people to establish one grazing unit that houses and feed one cow, so getting a one more cow usually doesn’t require any more resource and there is no significant increase in work load, but benefit is lets say exponential. from his experience small barn houses 3 cows and one field (one grazing unit) can usually feed up to 3 moomoos.
When war on cow is done probably next thing is goat and sheep, and probably pig will be only survivor lest, very little green house emissions from thos animals…
—
Balance (something that many luck) is divinity.
#29 Imgonnabesick
Personally, I wouldn’t do anything about Horizon TRI funds until we know how that will pan. That part of the budget hasn’t been put into a bill yet and the election approaches. Their were some unintended complexities to actually targeting them without unintended collateral damage. Reminds me of their initial proposals about corp passive income that would have broken tax integration and created accounting nightmares. I think they will be toast at some point – but who knows.
#36 Soggyshorts
REITS are interesting. They pay a combination of income and return of capital. If using an ETF, the distribution makes it tax inefficient enough that a tax-sheltered account is preferrable. Plus, that spares tracking changes in adjusted cost base from the ROC.
Historically, REITs have had a total return and volatility similar to equity. So, I like having some in my TFSAs. They don’t lose anything to foreign withholding tax. As a bonus, holdings that aren’t well correlated but have similar expected long-term returns benefit from rebalancing by buying low and selling high. In a TFSA, that doesn’t trigger capital gains tax. So, I rebalance them to an exact target in my TFSA rather than loosely with a buy-only strategy like I do with my tax-exposed accounts. I also prefer my TFSA to my RRSP for REITs because it leaves room for my bonds in my RRSP and I’d rather have my lower expected return bonds shared with the government than my higher return holdings. That said, I hold REITs in both. The reason is that I consider my TFSA precious and don’t know what will do best in the future so I don’t want to bet all of my TFSA on REITs and have globally diversified my TFSA.
I can fit my REITs in my TFSA and RRSP. However, if holding some outside those accounts, I would consider buying individual REITs with a largerly return of capital structure. That has the increased risk of less diversification and the pain in the butt to find enough to overcome that. The opposite of what Ryan recommends above (and I agree with).
P.S. I finished factoring in tax-brackets on my calculators last night.
-LD
https://www.theguardian.com/lifeandstyle/2019/may/25/women-happier-without-children-or-a-spouse-happiness-expert
Funy would it be sexist to aks for same study for men?
Thanks Ryan. Always appreciate the free but valuable advice you guys give us each week. Always good to go over the fundamentals every so often.
interesting read
The problem with investing in more solar panels in California is that the output often will not cause fossil fuel based generators to turn off, because they are already idle at the time of day the solar panels will produce power.
https://energy.stanford.edu/news/100-renewables-doesn-t-equal-zero-carbon-energy-and-difference-growing
The only thing holding up the U.S. stock market is Trump. Meanwhile Deutsche Bank is handing over all of Trump’s records and Trump’s stalling tactics aren’t working. We could be seeing new lows lower than the March 2009 lows very soon without Trump. The two biggest bubbles of all time tulip bulb mania and todays U.S. stock market.
#41 crowdedelevatorfartz
…now an endless swamp of Byzantine, Politically Correct, rules and regulations that ebb and flow like the social justice pablum spoon fed to the masses.
——————————————————————–
Ha ha ha. I love it.
Social Justice Pablum. Great description. Too funny!
They are jamming it down our throats ad nauseam.
Ready to spew.
Canada’s only NBA team make the NBA finals!! Check out the good citizens of Toronto celebrating the historic win!!
Go Raptors!!!!!!!!!!!!!!!!!!
https://www.youtube.com/watch?v=BjTkfo9msUo
Saving $20k per yr needs about $35k of pretax income.
Did you work out how that squares with the average 30-40yr old in this country? A group coming out of university with some debt, first lower paying job, perhaps newly married with a kid on the way and a first mortgage.
Answer, it doesn’t.
@#32 Pontificating Poser
“Most financial advisors are so hung up with their charts that they forget that the talk to a simple person.”
******
I assume you’re the “simple person” in that equation?
Insightful post as usual, Ryan.
With regard to your comment:
“putting higher growth equities in your TFSA to shelter future capital gains, and placing dividend-paying stocks in your non-registered account, which allows investors to take advantage of the dividend tax credit”
Please correct me if I’m wrong, but from a taxation stand-point in a non-registered account, is interest (taxed more than) > dividends > capital gains ?
If so, is there a case to be made for putting dividend-paying equities in TFSA accounts and growth equities in non-registered for the following reasons?
1) having dividend payers in the non-registered account will mean paying taxes on dividend distributions yearly (no choice), which will be a drag on overall portfolio returns;
2) having growth equities in the non-registered account means you can choose when you want to trigger capital gains/losses when you sell, AND they enjoy a more favourable tax treatment than dividend income;
3) dividend payers can also benefit from capital gains, which will be sheltered if placed in a TFSA account?
Thanks as always for your sage advice!
The Irony.
https://theprovince.com/news/world/noahs-ark-theme-park-damaged-by-heavy-rain-and-the-lawyers-come-two-by-two/wcm/4004233e-41bd-489e-b9ed-213dad54c136
Bitcoin is the best performing asset of 2019*
Get. Off. Zero.
not 1st “Saving $20k per yr needs about $35k of pretax income. Did you work out how that squares with the average 30-40yr old in this country? A group coming out of university with some debt, first lower paying job, perhaps newly married with a kid on the way and a first mortgage. Answer, it doesn’t.”
Ok don’t save for your future and employ the strategies I put forward. The numbers are simply illustrative to prove the point that starting early and watching fees can have a huge impact on ones retirement nest egg. If you can’t save $20k then do what you can, but don’t complain on this blog in 20 years when you realize you didn’t save enough. – Ryan L
Hi Ryan,
The relative performance chart, Bond vs TSX, seems to indicate that it’s a good time to increase bond exposure in the balanced portfolio.
It sure looks like a near historical bottom o’ the dip.
Cheers, R
Ryan, always good to see some solid advice here.
Taxes are my biggest challenge. After 20 years of investing and structuring my assets as you recommend in this article, I finally decided to stop with salaried work and enjoy the fruits of the trees I have been planting for so many years. My problem is that I got so much dividend income that I got slapped with the alternative minimum tax. Looks like you can not win, eh ?
#57
Ok don’t save for your future and employ the strategies I put forward. The numbers are simply illustrative to prove the point that starting early and watching fees can have a huge impact on ones retirement nest egg. If you can’t save $20k then do what you can, but don’t complain on this blog in 20 years when you realize you didn’t save enough. – Ryan L
—————————-
Your advice is solid, but it seems young adults have to choose between buying real estate and sensible diverse investing. I hope my investments don’t get taxed out of my hands when these housing bag-holders grow older and poorer.
#37 Not buying
It is doable. Just live below your means. When I started working and supporting myself in my 20s, I saved around 50% of my net income, which was the equivalent of roughly 20K.
Asking people to do the impossible is not a solution. Median house hold income in Canada is $70k. There is nothing left from income to save.
What people should do is convert their main expense (their home) into an asset (HELOC) and invest the difference as it is paid down. That’s the only place to find $1000 a month for most people.
@#56 Ryan
” If you can’t save $20k then do what you can, but don’t complain on this blog in 20 years when you realize you didn’t save enough. – Ryan L”
*****
True that.
I didnt start til I was 30( who really thinks about retirement in their 20’s? AND there wasnt a blog like this OR the internet to give free advice) and have been maxing out RRSP’s, TFSA’s and other investments ever since.
VERY glad I did.
#35 MF thanks man. I write most posts tongue-in-cheek unless it’s facts.
Blog dog group tail wag. Wagwagwag.
#55 Andrew on 05.26.19 at 12:18 pm
Bitcoin is the best performing asset of 2019*
Get. Off. Zero.
***
It’s actually the best performing asset of the decade, and will continue to be for the next decade.
Ryan you must have missed adding in some axis value for your chart of 20 assets classes and performance returns. The bottom axis is ‘year’, what the horizontal axis value? Ya I get the colours of your chart are the asset classes – where are the numbers. Okay, I’ve copied the chart and sending to Value Trend Blog guy Keith Richards. His charts tell a story. Your chart from Fidelity does not. I’ll ask him to interpret it and get back to you and the blog. No charge.