Weekend Reading: Financial Literacy Edition

November was financial literacy month but you wouldn’t know it from any specifically promoted ‘literacy’ articles on this blog. I take issue with the way banks and investment firms try to shoe-horn their way into the financial literacy curriculum when a good portion of the content should be about educating Canadians on how to become savvy customers of bank products.

As The Globe and Mail’s Rob Carrick hit on the nose last year, the industry turns #FinLit into financial hypocrisy month with their avid participation in this initiative.

One of the more active financial literacy proponents is Investors Group – stop and let that sink in for a moment – and Jonathan Chevreau took the company to task in the Financial Post, saying “it’s beyond me how the firm can countenance this stance [on selling its high MER funds over cheaper alternatives] while also trying to wrap themselves in the rhetoric of their alleged efforts to improve financial literacy.”

Chevreau piled on with the quote of the month:

There’s a reason why Investors Group and their ilk have been so vocal in defending commission-based advice: The recently released Cummings report could be the final nail in the coffin for trailing commissions.

The greatest trick the mutual fund industry ever did was convincing people they should pay a percentage of their assets to invest.

But who cares about fees if your actively-managed mutual fund beats the index, right? Andrew Hallam looks back at a Business Insider article written four years ago titled, 7 Mutual Funds To Buy, and it turns out the S&P 500 has outperformed all seven funds over the last 52 months and delivered a severe beating to those funds over the last decade.

One of the biggest problems with mutual funds in Canada is closet-indexing, an affliction whereby investors pay a steep price for active management while receiving index-hugging returns:

New research suggests that Canada’s mutual fund industry has earned the dubious distinction of being the world leader in closet indexing. The paper estimates estimate that about 37 percent of the assets in equity mutual funds sold in Canada are in closet indexers.

This week(s) recap:

Last Monday I explained why patience is a virtue when it comes to carrying out a financial plan.

Last Wednesday Marie continued her financial management by the decade series with a look at the 30s.

And last Friday I showed how a gross-up loan or top-up loan can supercharge your RRSP.

On Monday this week I revealed how I turned a blog into a profitable online business.

On Wednesday Marie asked the age-old question: spend less or earn more?

Finally, on Friday I shared how to boost your rewards even further using the Amex refer-a-friend program.

Speaking of rewards, over on Rewards Cards Canada I explained how Costco throws a wrench into your rewards card calculations.

Weekend Reading:

Mortgage industry insider Rob McLister says the Liberals are pondering a hike to minimum down payments, from 5 to 10 percent.

A great explanation by Preet Banerjee of the Liberals proposed Canada Child Benefit (CCB) and what it could mean for your family:

Are dividends magic, or just part of an investors overall return? John Ryan has a good explanation.

I’ve mentioned before how excited I am to see The Big Short, the ultimate feel-furious movie about Wall Street, just in time for the holidays.

2015 hasn’t been a great year for investors but it has been another banner year for Hindsight Capital, as Downtown Josh Brown explains.

Krystal Yee from Give Me Back My Five Bucks checks in on her early retirement goal.

Michael James once considered taking a job with the federal government but decided to stay in the private sector, even after weighing the merits of a very valuable public sector defined benefit pension plan.

Jeff Rose lists 67 money saving tips that will add almost $10,000 to your pocket.

Mortgage debt in Canada is not tax deductible unless you use the Smith Manoeuvre. Mark Seed explores whether you should make debt tax deductible.

Alan Whitton latest TD Bank rant is about how bank tellers are now trying to upsell loans and investments.

A great explanation from JD Roth on how much the stock market returns over the long run.

Michael Drak with some thoughts on early retirement and the gift of findependence.

Milestone birthdays are a great time to reflect and here Bridget Eastgaard, who turned 30 last week, shared 20 things you need to know about money in your 20’s. Here’s my reflection from my birthday last year: 35 thoughts on turning 35.

Have a great weekend, everyone!

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  1. Michael James on December 5, 2015 at 12:59 pm

    I thought the response tweets from some IG consultant were funny. Something about beating the index by 10 points. Yeah, right. Thanks for the mention.

  2. My Own Advisor on December 6, 2015 at 6:40 am

    Thanks for the mention Robb. Some great reading here over a morning coffee.

    Enjoy your weekend,

  3. Big Cajun Man (AW) on December 6, 2015 at 10:26 am

    Would you like to biggy that loan application? I liked the comment about tellers announcing to those in line your exact credit position as well, nice touch. Yes, the banks need to sell stuff, however, not while I am cashing a cheque !

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