Weekend Reading: Family Day Edition
Happy Family Day weekend, everyone! This edition of weekend reading includes an introduction to a great new money series on Global, some shoddy life-insurance advice that got BMO into hot-water, a new book from retirement expert Fred Vettese, and why market volatility shouldn’t scare off novice investors.
Last year we spent much of Family Day outdoors as Lethbridge reached a high of 10 degrees. This year might be family game night indoors (with the fireplace on) as the temperature is expected to hit minus 28 degrees with the windchill. Brrr!
This Week’s Recap:
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Global launched a new series last week called Money123. In the first instalment – How much do you really need for retirement? – I helped author Erica Alini do the math for a couple of Joe Canuck’s.
Here on Boomer & Echo:
On Monday I shared a sensible RRSP vs. TFSA comparison.
On Wednesday Marie looked at claiming your investment expenses on your taxes.
And on Friday Marie explained how retirees can make good use of TFSAs.
Weekend Reading:
Another good Money123 post looked at saving versus paying down the mortgage and how rising interest rates are changing the math.
And this Money123 instalment looks at what taxes can do to your savings if you’re not careful.
Finally, Global’s Alini explains when saving into an RRSP instead of a TFSA could cost you dearly.
- This series is incredibly well done. Sign up for the Money123 weekly newsletter here.
At age 71, Ella Beck bought a guaranteed life-insurance policy that would pay $3,200 upon her death. Now 82, Beck has paid more into the plan than the policy is worth. CBC’s Sophia Harris helped Beck get some money back, along with an apology from the policy issuer BMO.
Retirement expert Fred Vettese has a new book out called Retirement Income for Life. We hope to review the book here soon, but in the meantime here’s a couple of excerpts that were published this week:
- Is a 70% retirement replacement income too high?
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Mainstream, The Cleavers, Super-savers, YOLOs: What type of retiree are you?
Vanguard’s new CEO on Canada’s rapid ETF growth and just how low investing costs will go.
“The biggest difference for everybody else in this industry that competes with us is pricing is a strategy,” Mr. Norris says. “For us, pricing is an outcome. If we grow, we will continue to lower the price. It has nothing to do with strategy.”
Canadian Portfolio Manager Justin Bender breaks down the costs of Vanguard’s latest all-in-one solutions, including foreign withholding taxes when held in an RRSP or TFSA. The aggressive portfolio, VGRO, comes in at an impressive 0.43% MER.
Three retirement-savings rules come into question as stocks and bonds get more expensive and retirements last longer.
Preet Banerjee’s latest Drawing Conclusions video explains why volatile markets shouldn’t scare off investors:
On a similar note, pundit Josh Brown says if you’re under 40 you should be hoping for another stock plunge.
And Rob Carrick advises millennials not to make the retirement-wrecking mistake of avoiding stocks.
More than 3,000 employees took a buyout offer from Shaw Communications after a massive restructuring. Here’s how to assess an employer’s buyout offer.
Finally, when infamous chicken farmer short-seller Marc Cohodes went after MiMedx’s CEO Parker Petit, he didn’t expect the FBI to show up at his farm demanding Cohodes stop sending threatening tweets.
Have a great Family Day weekend, everyone!
Regarding paying down mortgage versus RSP contributions, something I don’t think I ever see mentioned is in the pay down mortgage first then move that money to RSP contributions scenario: take into consideration the time window you have left for those increased RSP contributions. I’d suggest if it’s 10 years or less before retirement, you are increasing the risk of poor performance in that time period, in addition to the usual advice of reallocating your portfolio to more fixed income versus equity to reduce risk as you reach retirement. There’s more of a risk of getting lower than expected returns in such a context.
Hi Brad, that’s exactly the argument that author David Trahair advises (to mixed reviews). He argues that since we’re such bad investors – many chase returns only to end up losing money in the long run, or get swindled by their advisor through fees or some investment scheme) – people should just stick to paying off their mortgage quickly and then maxing out their RRSP afterwards using only GICs.
This strategy would reduce the risk of poor performance, but since one could only reasonably expect returns of 2 or 2.5% from a GIC, you’d have to save an incredible amount of money in your final working years before retirement.
To me, that’s a risky proposition and that’s why I advocate for a balanced approach to saving and paying down debt.
Fred Vettese has one of the most reasonable views on saving for retirement, which is that we should aim to smooth out our consumption throughout our working years and into retirement so that at no stage in your life are you over-saving or over-spending. It might mean saving less in the early years of raising a family when expenses are high – and that’s okay as long as you make up for it in your later years.
Thanks for the link to the article on saving versus paying down the mortgage. This is a discussion my husband and I have been having lately, and we’re on opposite sides of this fence. It’s good to read more about it and see some numbers crunched to help in our discussions.
My pleasure! I love the detail that went into the Money123 series. They’re doing a great job!
Hope it helps you and your husband reach a decision you can both live with.
Thanks for reading!
It would be useful/nice if the listed links were accessible.
eg. “Three retirement-savings rules come into question as stocks and bonds get more expensive and retirements last longer.” above goes to a WSJ article behind a pay wall.
In this case unless you subscribe to the Wall Street Journal (I don’t) the link is fluff and a waste of time.
@fbgcai – Sometimes you can bypass the paywall if you visit from a link through Twitter or Facebook. Give this a try: https://twitter.com/WWinterton/status/962021673439395840 and just click the ‘X’ when the subscription box pops up. Worked for me just now.
I don’t subscribe to the WSJ but often find useful articles via Twitter and forget they throw up a seemingly arbitrary paywall.
Sorry for the inconvenience.
I’m always bothered by the fact that most investment advice stops at investing into RRSPs or TFSAs, or paying down the mortgage. What if I have maxed out my RRSP and TFSA, and I have the choice of paying down my mortgage or investing more into my non-registered account? Sorry but there are quite a few of us who manage to max these out, but we seem to be ignored.