My recent MoneySense column stars David Bowie. He was much more than a music visionary. It’s almost as if David Bowie could see the future. He was a creative business man as well offering the Bowie Bonds that allowed him to buy back his music rights, as investors then profited from the success of his music catalogue. It’s a fascinating story and leads into the theme of scarcity as a source of value. Scarcity can be found in many items, from baseball cards to fine wines to bitcoin. Many suggest scarcity and real assets can be a wonderful portfolio diversifier, perhaps replacing part of your bond portfolio.
This Financial Post article looks at a recent Bank of America report.
BoA believes a secular turning point for both inflation and interest rates has arrived and the 40-year bull market in bonds has come to an end. That scenario is bullish for real assets, commodities, small cap, value and emerging market stocks, and bearish for bonds, the U.S. dollar and large cap companies.
Of course no one knows where the stock and bond markets will go next. I am happy to continue to hold onto my bonds, but I also embrace some real assets. The building blocks for a truly well-balanced portfolio are stocks, bonds, real assets and cash.
Get real, assets.
We looked at that premise with the most basic demonstration in The Permanent Portfolio.
Most investors are ‘under-exposed’ to real assets. From that FP post …
“Only 5.5 per cent of the total market cap of all ETF’s is exposed to real assets; hard assets comprise just 1.5 per cent of BofA Global Wealth & Investment Management private client portfolios; and yet real assets provide exposure to structural themes in 2020s, e.g. infrastructure spending, increased data usage, e-commerce, logistics and renewable energy sources,” the bank said.
I’ve been beating that real asset drum for a while. Canadians might consider a simple one stop ETF such as the Purpose Real Asset ETF.
And we might also get a little more adventurous as suggested in that MoneySense post. Former Vanguard Canada chief executive Atul Tiwari is pouring his energy into a new joint venture with British-based Cult Wine Ltd.
Here’s the link for Cult Wines Canada. And from their investment document.
It’s more than an interesting space. I will be looking a little closer at this potential ‘bond substitute’ or additional real asset.
Here is a great post and outline on the opportunity from Dr. David Graham at FiPhysician.
Previously I reviewed Dr. Graham’s book, From Killer to Common Cold, that looked at the path of the pandemic.
How does the pandemic end? With a cold. That read is more than relevant today. When and how do we get to the other side of the pandemic?
And on the theme of greater diversification, yesterday on Cut The Crap Investing I looked at some US equity options to consider during these times, with the S&P 500 being terribly expensive. Will the Dividend Aristocrats come through again?
Economist David Rosenberg has never been this excited to bet against the herd.
And if you’re looking for value in Canada, The Sunday Investor looks at the Canadian value ETFs.
On Million Dollar Journey, undervalued Canadian stocks.
More Weekend Reads.
On Findependence Hub, Purpose Investments has been cleared to launch the first Ether ETF.
“Our role in Purpose Ether ETF is to help make sure the more complex aspects of cryptocurrency ownership and transactions fit together,” said Brian Mosoff, CEO of Ether Capital. “We focused on addressing key issues relating to Ether custody, transactions and liquidity. Ether is the cryptocurrency we believe has the most potential for the future and is where our expertise really lies.”
Brian was a great help to me when I covered the new cryptocurrency regulations in Canada.
Evolve also has an Ether ETF set to launch and will wave their fees until May 31st.
And back to dividends, here’s the March dividend update from Mark at My Own Advisor. We see that quick climb toward financial independence.
They call this the snowball effect. 🙂
- That dividend income earned per year could be considered earning the equivalent of earning $10.34 per hour assuming I work a 40-hour work week (income/2,080 hours per year) but then again, maybe higher since some of that income is tax-free (thanks TFSA).
Here is the March Portfolio update on Passive Canadian Income.
This week on the Maple Money podcast, how couples can get on the same financial page.
On Tawcan, what to do after you’re in the very fortunate position and you’ve maxed out your RRSP and TFSA. While Canadian dividends do become attractive in non registered accounts thanks to the dividend tax credit, I’d suggest that risk and asset allocation still drive the bus.
On GenYMoney the high net worth PF blog round up.
Here’s a very useful post for first time homebuyer’s on the first-time home buyer’s credit.
Here’s a great post on Savvy New Canadians as Enoch looks at the best stock trading apps in Canada.
And last but not least, a look at Canadian dividend paying stocks and REITs on stocktrades.ca.
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Consider Justwealth for RESP accounts. That is THE option in Canada.
At Questrade, Canadians can buy ETFs for free.
I use and I’m a big fan of the no fee Tangerine Cash Back Credit Card. We make about $55 per month in cash back on everyday spending.
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are still at 2.3%.
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