RRSP season is typically a period when Canadians make significant contributions to their portfolios. This year you have until February 29th to make an RRSP contribution that you can apply to reduce your taxable income for the 2023 tax year. I’ve updated the RRSP season post on Cut The Crap Investing. You’ll find a link that will allow you to pit the RRSP account type vs the wonderful TFSA account. You will likely be surprised. This Sunday Reads also includes a host of retirement focused post links and commentary. It was also a big week for earnings and my portfolio.
Here’s how to invest this RRSP season.
That post aligns with last weeks Sunday Reads – too many Canadian investors are bananas for choosing high-fee actively managed mutual funds vs low-fee passive index ETFs. Who doesn’t want to double their retirement lifestyle?
Just magnificent
A look at the magnificent earnings highlights from our Microsoft …
While most would suggest the stock is expensive, it’s possible that the revenue and free cash flow growth will gobble up that valuation issue in quick order. Just wow. Artificial Intelligence is already figuring out how to boost earnings in every division.
And then from my favourite and largest growth stock – Apple.
Apple and Microsoft lead the growth charge for our U.S. stock portfolio. Berkshire Hathaway too, given that almost 50% of the public stock portfolio is invested in Apple. I recently updated the (out)performance of our U.S. stock portfolio on Seeking Alpha.
That link offers many of my Seeking Alpha posts. At the top of the list you’ll find that U.S. stock portfolio update article.
More Sunday Reads
We’ll first check in with Mark at My Own Advisor. Mark turns up the volume, asking if loud budgeting will work for you. Budgeting and knowing where your money is going is so important. To invest, and build wealth, we need to earn much more than we spend. We need to be cash flow positive.
Here are some wonderful tools at Get Smarter About Money. And check out my personal finance book. OK, it’s so simple I scrapped the book idea and went for a 1500 word blog. I found $888,000 in your coffee while looking at the personal finance basics.
Mark also shared the top utility stocks in Canada from stocktrades.ca.
Dan at Stocktrades was stumping everyone with this incredible Tweet …
Last week was the magnificent earnings feast. A few of the market-driving magnificent 7 reported quarterly and annual earnings. Dividend Hawk is keeping an eye on things with the weekly wrap that includes the top blog posts of the week. You’ll also see Hawk’s dividends received for the week. I was in on Scotiabank, TD Bank, TC Energy, CVS Health and more. He’ll be busy next week, too …
We then make the climb to catch up with Banker on Wheels, who asks if we should invest in stocks at all-time highs. This was worth Tweeting …
And turning back to that all-time high question …
Also in the mix was a post on A Wealth of Common Sense. A reader asked if they should live off of the dividends. You’ll find some great charts in that post that demonstrate why living off of the dividends is not a good idea. The spend rate would be too low, you’d spend less, and you’re at the mercy of dividend cuts.
See the dividend decline chart (U.S. stocks) in that post.
You don’t want to be forced to curtail your retirement plan because of an ill-timed financial crisis.
Ben Carlson
With a common sense well-balanced portfolio you can spend more while managing the sequence of returns risk with bonds and other.
Why retirees hold bonds, cash and GICs.
Readers will know that I also like some dedicated inflation fighters in the mix.
All said, a Canadian would be able to generate a higher dividend yield, and Canadian dividend payers can be a wonderful part of a retirement portfolio. But we can’t turn our backs on the importance of international diversification and again, that sequence of returns risk.
The 4 phases of retirement
Fritz at The Retirement Manifesto offers the 4 phases of retirement. The post looks at a Ted Talk that has generated millions of views.
- The honeymoon phase
- Loss and lost
- Trial and error
- Reinvent and rewire
As always, a very thoughtful and thought-provoking post from Fritz. We both often write that we have to have a retirement life plan (filled with purpose) to work in tandem with that rock-solid financial plan.
Another look at annuities
This is one of the most-read posts on Cut The Crap Investing …
Pensionize your nest egg with annuities, your super bonds.
I have freshed up that post for 2024 and beyond. For many, annuities would make perfect sense for a portion of the retirement portfolio. And again, it means increasing the pension component of your investment mix – guaranteed income for life.
On Twitter I offered, on annuities vs bonds.
And on the general premise …
This is not advice. Do what’s right for you. But know the difference between cash and bonds and GICs vs annuities.
Related post from Alexandra Macqueen …
Defined benefit pension planning. Bad advice could cost you your retirement.
Portfolio update
At Passive Canadian Income Rob looks back at 2023 and a year of progress.
At Findependence Hub this week I will highlight Understanding ETF Distributions from BMO ETFs and Bob Lai asks if split-shares are safe for creating retirement income.
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Happy Sunday. And have a great week.
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CASHFLOWS & PORTFOLIOS
The self-directed investor might consider the service provided by Mark Seed from My Own Advisor. He runs Cashflows & Portfolios where they will provide options for that optimal retirement funding strategy. That service is provided for a very reasonable fee.
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Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.5% and 3.5%. You’ll find some higher rates on GICs up to 5.2%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
OUR CASHBACK CREDIT CARD
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For December we received $55 in cash.
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Hi Dale,
Thanks for another great weekend read!
Have you looked at benefit plans in retirement ? Most going into retirement will need to make a choice when leaving an employer. Wondering if there’s been any significant comparisons done in this area. Any resources you can recommend?
Thanks,
Charlie
Thanks Charlie. Are you referring to pension plans?
Sorry Dale, I should have been more specific. I was referring to health and dental benefits. When you retire from an employer you have 30-60 days to convert to a follow me plan or go on your own via another 3rd party. I haven’t been able to find any resources to help me decide.
I think this is an excellent question. I have done a little research, but nothing that would qualify as definitive.
My modest research tells me that most ‘follow-me’ plans are going to include premiums for things that I’m not likely to leverage – chiro, physio, massage – I mean, maybe at first, but I don’t think consistently. Dental is the biggy of course and I lean towards not getting a benefit plan and instead plan to insure (pun intended) that there is ample access to funds should a large dental expense get incurred.
I would be very interested in any studies (not done by insurers :p) to see what the real life risks are. Basically, I think this is analogous to buying the three year warranty on my new appliance. I generally don’t ever do that either.
Good points James. Outside of dental, the other benefit we will use from the follow me plan is the travel medical coverage. Allows travel for 60 days at a time then just need to be back in Canada for 24 hrs and the 60 days start again.
At some point when our travels do slow down, we’ll likely drop the plan and pay as we go.