March 9, 2009 is a day that went down in history, as stocks went down at a rate not seen since the Great Depression. What followed was the greatest bull run and wealth building opportunity in stock market history. In tw0 charts we can witness the essence of investing. We take on (accept) risk for the potential of great gains. And there are many more lessons wrapped up in the financial crisis of 2007 to 2009. This past week marked the anniversary of that market bottom and the beginning of our incredible bull run. It’s the best of times as we remember the worst of times. Plus, the Sunday Reads.
U.S. stocks went on to post gains over 800% from the market bottom. The U.S. market outpaced Canadian stocks, just a wee bit …
Stocks fell 57% from the previous peak. It took several years for U.S. stocks to set a new high from that previous peak. From October 0f 2007 we had to wait until January of 2013 to see those new highs. That is a loooooong time to be patient and consistent. But those investors with legendary risk tolerance (and incredible behaviour) were setting the table for the incredible gains to come.
Invest within your risk tolerance level
The only worthwhile investment plan is the one you can embrace for the longer term. We have to invest within our risk tolerance level. If you can’t handle a 30%, 40% or 50% portfolio decline, you are likely to sell near that market bottom and create real losses. That’s mostly what happened in the financial crisis. Too many investors bailed out. As readers know, we add cash and bonds to work like shock absorbers for the portfolio.
And risk certainly feels different when we are in retirement. It not only feels different, risk is different in retirement. We face sequence of returns risk.
Why retirees hold bonds, cash and GICs.
In 2019 I also penned – should you roll the dice with your retirement savings.
I also like to use defensive sectors for retirement – healthcare, consumer staples and utilities. They work in concert with the bonds.
Make your cash work harder at EQ Bank
More Sunday Reads
We’ll start with the Sunday reads and podcasts from Banker on Wheels. That is usually the most robust weekly offering.
Next we’ll see what Dividend Hawk is up to. We shared some dividends from Enbridge and Johnson & Johnson. Stories include my RTX winning an order for 35 engines for an Icelandair order. An asset simply changes hands for me as TC Energy (TRP) sells Portland Natural Gas Transmission System to BlackRock (BLK). I hold both. Qualcomm (QCOM) that I hold, increased its dividend, while Target reported earnings. And this was nice to see …
Enbridge Inc. (ENB) Extends Visible Growth Outlook, Reiterates Strategic Priorities and Announces Accretive Investments; For 2026, ENB forecast average annual growth for adjusted EBITDA of 7%-9%, earnings per share of 4%-6%, and distributable cash flow per share of 3%. After 2026, the company said it expects average annual growth of ~5% for EBITDA, DCF/share and EPS.
Mark on benchmarking
At My Own Advisor Marks suggests that we should not obsess over benchmarking. Of course, I would respectfully disagree. If it’s important, measure it. Investors should certainly be aware if their approach underperforms a simple benchmark. They can make the switch to a low-fee ETF portfolio. In the accumulation stage it’s total return for the win. More money is more better 😉 More money creates greater retirement income.
Separate the accumulation and decumulation stages.
And then in retirement, your portfolio funding success will come down to your total return and risk level. That’s it. While the dividends feel good, they are of no consequence other than the tax treatment. I am creating a post for Seeking Alpha that will offer a couple of surprising demonstrations that support that ‘untuitive’ fact.
Buy ETFs for free at Questrade
That said, many dividend investors might offer –
If it feels good, do it.
Heading to the Prairies
And for sure, I will give Prairie Investor a follow.
It’s awesome when folks embrace self directing for their wealth building process. We can invest for ourselves but not by ourselves. There is certainly a community willing to help and share and offer support and encouragement.
All in on all-in-one ETFs
At Stocktrades Dan takes a look at Vanguard’s VEQT. That’s an all-in-one asset allocation ETF that is all equity. And it’s a global offering. An investor with a higher risk tolerance level and a longer term time horizon (beyond 10 years) could have it all in one ETF. I have been partial to the iShares XEQT offering. They are quite similar, while the iShares offering has been slightly ‘superior’.
On this link you’ll find the asset allocation ETF performance comparisons for the major ETF providers.
Here’s an example of ‘the community’ and sharing the message and success.
Dividend Daddy
I’ve shared many Tweets from Dividend Daddy. He provides a wonderful example of a high savings rate and very consistent behaviour – buy, buy, buy!
Here is a very good post from Bob at Tawcan, that answers – who’s your Daddy?
Dividend Growth Investor Q & A series – Dividend Daddy.
I really like the very popular approach of Canadian self directed investors; they will hold a portfolio of Canadian stocks and use an ETF such as XAW for U.S. and International diversification. Dividend Daddy is in that camp.
My only ‘quibble’ with this approach is that investors should recognize the incredible value in the share prices. Factor that in beyond the dividends received. You might:
- Retire earlier than expected
- Create greater retirement income
Why ignore what might be your greatest source of growth and potential income?
Of course we can manage the sequence of returns risk by adding some cash, bonds and GICs. Many will layer in some annuities as well.
At Million Dollar Journey, you’ll find Mike Heroux’s (The Dividend Guy) top 10 stocks for 2024. That a good list, you’d be on your way to creating a Canadian Wide Moat Portfolio.
At Findependence Hub, Dividend investing vs index investing and hyrbrid strategies.
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Cut your fees when you cut the crap
Earn a break on fees by way of many of these partnership links.
CANADA’S TOP-RANKED DISCOUNT BROKERAGE
Cut the Crap Investing readers can earn a break on fees at Questrade by way of that partnership link. At Questrade, you can buy ETFs for free. It is a good place to build your stock portfolio as well.
I have partnerships with several of the leading Canadian Robo Advisors such as Justwealth, BMO Smartfolio, Nest Wealth and Questwealth from Questrade.
Here’s Canada’s top-performing Robo Advisor, Justwealth. You can get advice, planning and l0w-fee ETF portfolios all at one shop. You can have it all.
Consider Justwealth for RESP accounts. That is THE option in Canada with target date funds that adjust the risk level as the student approaches the College or University start date.
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.
If you do head to Cashflow & Portfolios (as do many Cut The Crap Investing readers), be sure to tell them Cut The Crap Investing sent ya.
OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.5% and 3.0%. 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
We make between $40 to $70 every month! And that’s on everyday spending. There are no fees with …
The Tangerine Cash Back Credit Card
For February we received $40 in cash. That’s our lowest level of spending and cash back in years.
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