Weekend Reading: Rational Reminder Edition

This week I had the pleasure of being a guest on the Rational Reminder podcast with PWL Capital’s Ben Felix and Cameron Passmore. We discussed how I built the blog, my switch from dividend investing to indexing, my thriving fee-only financial planning business, and simplicity versus optimization in your investment portfolio.

Check out the Rational Reminder Episode 11: Simple vs. complex with Robb Engen. While you’re at it, make sure you subscribe to the podcast on iTunes, Stitcher, Spotify, or wherever you get your podcasts. Great intelligent conversations around investing and financial behaviour.

I want to expand a bit on the simplicity versus optimization discussion. I mentioned that I know I’m leaving money on the table by holding a Canadian listed ETF (VXC) in my investment portfolio instead of getting my U.S. and International stock exposure through U.S.-listed ETFs.

The tradeoff is cost versus convenience. By holding VXC, I’m giving up about 50 basis points in costs due to additional foreign withholding taxes on dividends. By using U.S.-listed ETFs instead, I could bring the total cost down to about 0.20 percent (versus 0.70 percent total cost with VXC).

That said, the U.S.-listed ETFs add a layer of complexity that may not be worthwhile for many investors. Multiple ETFs makes rebalancing more complicated, not to mention more trading costs to deal with. Then there’s the foreign currency conversion trick known as Norbert’s Gambit, which can be problematic to execute even for seasoned investors.

For those reasons I choose, for now, to keep things simple with my VCN and VXC two-ETF portfolio. That choice costs me about $750 a year in higher fees, which is certainly not trivial and will only get higher as my portfolio grows. But it’s a tradeoff I accept right now, perhaps until my portfolio reaches $250,000 or so. Who knows, by then a new product might come along that elegantly solves this problem for Canadian investors.

This Week’s Recap:

Earlier this week I compared Canadian cash back shopping sites, Ebates.ca vs. Great Canadian Rebates.

I finally was able to book our return flights home from Dublin next July. We fly on United Airlines from Dublin to Chicago to Calgary. The reason we chose United Airlines for both our flights to Edinburgh and our flights home from Dublin is because United does not levy any fuel surcharges.

We redeemed Aeroplan miles for both the departure and return flights. Altogether we spent 240,000 Aeroplan miles and just $590 total on taxes, fees, charges and carrier surcharges.

Weekend Reading:

Dale Roberts at Cut the Crap Investing shares his background a DIY investor and lists some ETF model portfolios on his site.

Dale also neatly recaps the week with a weekend reading post of his own (he’s giving me a run for my money!). He includes a great quote:

“Your portfolio is like a bar of soap; the more you touch it, the smaller it gets.”

Jason Heath explains how to reinstate your Old Age Security benefits after they’ve been clawed back.

Personal finance columnist Rob Carrick talks to author Fred Vettese about the best practices to stretch your retirement savings:

Carrick is also set to launch a retirement podcast called A Look Ahead: Rob Carrick’s Retirementality. It debuts with a three-part series starting October 1st.

Her elderly mother sold the family home for $300,000. Here’s how to help a parent invest in their 80s.

Ben Felix tells regulators, lobbyists, and investment firms to go ahead and keep charging deferred sales charges. He’s confident his firm, PWL Capital, will reap the benefits.

Mark Seed, the blogger behind My Own Advisor, says he’s feeling financial trapped as he inches closer to an early retirement goal and is realizing there is more to life.

The Million Dollar Journey blog lists the biggest weed stocks in Canada, along with an ETF to get exposure to the budding industry.

Nick Magguilli looks at abnormal markets and how to prevent forced selling with this gem: Why you don’t know the price until you sell.

Whether or not you need life insurance is a question that many people struggle to answer. In this latest Common Sense Investing video, Ben Felix looks at whether you need permanent life insurance:

Why for baby boomer couples, synchronize or stagger is the new retirement dilemma.

Thinking about retirement? Here are two key income sources to expect.

Consumer advocate Ellen Roseman looks into the Expedia experience: How the giant travel agency treats its customers.

Finally, why some of the best data on human behaviour is privately held by social media companies, and how universities can convince them to share that information.

Have a great weekend, everyone!