Weekend Reading: Succession Planning Edition

Earlier this week, Million Dollar Journey blogger Frugal Trader wrote a letter to his wife explaining how their finances work in case he passes away and she needs to succeed him as the household CFO. It’s an interesting topic, and one that former Boomer & Echo correspondent Sandi Martin covered here last year.

Although his wife has little-to-no interest in personal finance and investing, Frugal Trader chose to explain how his somewhat complicated financial arrangements work – for example he uses the Smith Manouevre and collect dividends from a corporate investing account – and what his wife can do to continue on with his plan. I disagree with that strategy, and instead prefer Warren Buffett’s approach:

“My advice to the trustee [for my wife] could not be more simple: Put 10 percent of the cash in short-term government bonds and 90 percent in very low-cost S&P 500 index fund.”

I’m in the same boat as Frugal Trader in that my wife has no interest in budgeting or investing and so she would prefer to let me, who has a keen interest in doing so, manage our day-to-day finances and investments. (I balance this out by having absolutely zero knowledge of, or interest in, home repair and maintenance while my wife can run circles around me with a set of power tools)

I very much doubt that my wife would want to have three chequing account, seven different rewards credit cards, and investments spread across three different trading platforms. Therefore if I write a similar letter to my wife I would hope to simply, rather than optimize, our finances to the point that someone with limited interest in the subject could continue on without feeling lost or afraid to make a decision.

This week’s recap:

Last week we ran a giveaway for a copy of the latest Michael Lewis book called Flash Boys. There were 46 entries and the randomly chosen winner is Al, who left a comment at 7:55am on September 27th.

On Monday I looked at four sensible reasons to put your money into GICs.

On Wednesday I introduced Wealthsimple, the new easy, yet sophisticated way to invest your money.

On Friday Marie continued her retirement benefits series with a look at private pension plans.

Also, check out the new Star Touch app for iPad (and coming soon for Android). That’s where you’ll find my new column, The Comparison, in the Smart Money section.

Finally, Sandi Martin and Jackson Middleton have launched Because Money 2.0, with Young and Thrifty’s Kyle Prevost replacing me as the host for this season. I don’t want to say they’re better off without me, but if the first two episodes are any indication, I might not be getting a call back any time soon. (Kidding: I had to step away due to several other commitments but I hope to join them for a few episodes this season)

Weekend reading:

How to save your college and university age kids from getting an F in personal finance? Read this financial survival guide for young adults, by Rob Carrick.

Robin Powell interviewed Nobel Laureate Eugene Fama, also known as the godfather of modern finance, who is most famous for his work on Efficient Market Hypothesis.

MoneySense Magazine’s Bruce Sellery shares his golden rule and rule of thumb for retirement savings in this video:

Pat McKeough explains why having a second home in the U.S. is a good lifestyle decision but a bad investment.

Doug Dahmer shares the CPP Optimizer, or how to avoid missing out on $100,000 of retirement income.

Can you make money going back to school as an adult? Garry Marr explains why it’s all about the degree you choose.

Ellen Roseman investigates why there’s so much confusion about the penalties for breaking your mortgage early.

Rob Carrick argues that in rising markets, such as Vancouver and Toronto, it’s time to abandon the 20% down-payment rule.

Adam Mayers on why your vote gets a better CPP or bigger TFSA, not both.

Here are four things the winning party should do to boost retirement.

Finally, Our Big Fat Wallet blogger Dan Wesley explains how to find quality dividend stocks in under 5 minutes.

Have a great weekend, everyone!

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  1. Joe on October 3, 2015 at 11:40 am

    I’m with you Robb. I have exactly ZERO interest (or ability) in doing household repairs. I get excited when we need to rebalance our portfolio though! Have a good weekend!

    • Echo on October 5, 2015 at 12:37 pm

      Right on, Joe! I don’t feel bad about taking the title of Canada’s Worst Handyman.

  2. Dan on October 3, 2015 at 4:20 pm

    Thanks for the mention Robb. I agree there should be some sort of succession planning in case one spouse passes away. And I’d say most couples are in a similar situation of one person taking a keen interest in the finances and the other person not at all (at least that is the case here). Speaking of finances, I recently renewed the mortgage for 1.90% (5 year variable). I never thought I’d see rates this low. Have a good weekend!

    • Echo on October 5, 2015 at 12:38 pm

      Hey Dan, nice rate on the mortgage! Ours is up for renewal next summer. I’m guessing not much will have changed and we’ll still be able to nab a great 5-year variable or short-term fixed rate.

  3. FrugalTrader on October 4, 2015 at 8:14 am

    Hi Robb,

    Thanks for featuring my article. It’s a tough balancing act, especially when one spouse has no interest in the financial topic. The goal of the article was to help out in case I were to pass away “today”. As we get older, my goal is to simplify our accounts as much as possible.

    But I totally agree, for most families who plan on traditional retirement, index your portfolio and away you go. However, for us, we plan to retire much earlier (in our 40’s), which means that eating into our capital to fund our lifestyle can be risky prospect.

    • Echo on October 5, 2015 at 12:43 pm

      Hi FT, that makes sense. If something happened “today” it might be harder to untangle everything rather than just keeping it going as it is now.

      I hear what you’re saying about retiring early and not wanting to eat into your capital. If I walk away early from my day job, I’ll probably still keep the online business going. In that case I’ll treat that income as our “dividends” and withdraw enough to cover our expenses so that our indexed retirement portfolio can continue to grow for as long as possible.

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