Cut The Crap Investing recently looked at the go-to chart on creating retirement income. The post looked at sustainable spend rates. The 4% “rule” suggests that you can start at a 4.2% spend rate, and then increase spending each year to adjust for inflation. That protects your spending power and lifestyle in retirement. That said, the 4% rule is based on a very conservative 50/50 stock to bond allocation using U.S. assets. We might be able to boost the spend rate in retirement by adding more growth and more non-correlated assets.
Here’s the post – creating retirement income from your portfolio. The very telling chart in that post looks at 4%, 5% and 6% spend rates for every month start date from 1994.
Check out the updated GIC rates at EQ Bank
See the blog post for how to read this chart.
In the above post and charts we see the challenges of a 5% or 6% spend rate with a traditional balanced portfolio.
Here’s a very good post that shows how we can potentially boost our spend rate. And the go-to table on boosting your retirement start date with gold, REITs, small cap value, and international stocks in the mix. The equity allocation is moved up to 70% as well.
From that post …
So instead of limiting your retirement portfolio to the S&P 500 and government bonds, think about diversifying with small-cap value and gold! If you don’t mind a little more complexity, go a step further with REITs, utilities, and international stocks. This level of diversification has done very well in the past. It includes at least one asset that does well in each type of economic situation.
That post offers a nod to the all-weather portfolio and utilities as a defensive asset. Readers will know I am a favour of both additions, especially the defensive sectors for retirement that includes consumer staples, healthcare and utilities (including pipelines and telco). I’m hopeful that the approach will allow us to boost our spend rate to the 5-6% range.
Canadian banks in 2024
At the beginning of the month we looked at investing in Canadian banks. I noted that it is difficult to pick the winners and there is a surprising variance in returns among the individual banks. Here’s the total returns in 2024.
What is interesting is that you’ll find CIBC and Scotiabank in the Beat The TSX Portfolio for 2024. That high dividend strategy has a habit of finding value among distressed TSX 60 constituents.
And certainly, rate-sensitive stocks are fighting back.
Here’s the sector returns for U.S. stocks for the month and year.
Dalio on International growth
In the above graphic we see that legendary hedge fund manager Ray Dalio sees very little growth in developing markets. The growth is in emerging markets. You can look to an ETF such as XEM.TO for that added diversification.
This past week China announced significant stimulus measures. That more than caught the attention of David Tepper (perhaps the most successful investor of the last 30 years). He looks for big ideas and then goes big. Of course, that increases risks at the same time.
You will get some modest emerging market exposure in the Canadian asset allocation ETFs. If you like the idea you can increase exposure with an individual EM ETF.
Same goes if you build your own ETF Portfolio.
I was happy to see the surprising level of emerging market exposure with our Colgate-Palmolive stock. There is more than one way to tap the growth in those countries. Have a read of …
Cash is not King in accumulation
The oil watch
A look at the energy situation. I find it fascinating that the world is awash in oil and we are largely investing in Saudi oil price control. While that Canadian oil stocks are incredibly cash flow rich, we do need a certain oil price to support buy backs and dividend growth. Experts suggest that we need to be above $50 for Western Canadian Select.
I’ve held on to all of our oil and gas stocks and continue to chip away in certain accounts.
This story got some big attention this week. Oil plunged over 2% on rumours that the Saudis are ready to increase output.
The Financial Times were a little more dramatic. We’ll keep an eye on those ‘suggestions’.
More Sunday Reads
And what if your brokerage does go out of business?
Dividend Hawk looks at his dividends and stories for his stocks this past week.
At Stocktrades Dan wonders if Fortis is a slam dunk thanks to the rate cut cycle.
The company’s forward P/E of 18.18 is fairly reasonable for a stable utility, especially given its growth prospects. It is a near double digit discount to what Fortis historically trades at.
As interest rates start to dip, Fortis should see its borrowing costs shrink. This could give a nice boost to their bottom line, which will ultimately fuel share price appreciation as well, even if the price to earnings ratio stays below averages.
Banker on Wheels starts with a look at U.S. vs International stocks. Also in the mix, and a favourite approach for me – why quality stocks perform so well.
And more on that topic at Findependence Hub – what is quality investing?
Jonathan Chevreau also takes RetireMint for a test spin. You can also take that tool for a free test spin.
Check out Canada’s top Robo Advisor
And here’s Part 2 from Bob at Tawcan – Visiting Iceland.
At The Retirement Manifesto Fritz and his wife are chasing the Fall colours in the Ozarks.
Thanks for reading and sharing these posts.
Join Cut The Crap Investing
You can follow this blog, it’s free. New posts, plus other free content and ‘ideas’ will be delivered to your email inbox. Enter your email in the subscribe area, or ‘join us today’ on the home page.
ETFs / Stock Portfolios / Retirement Strategies / Wealth Creation
Thanks Partners
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’s a great place to build your stock portfolio.
Here’s Canada’s top-performing Robo Advisor, Justwealth. You can get advice, planning and low-fee ETF portfolios all at one shop.
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.
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 4.50%. 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 Augutst we received $40.11 in cash. You can select 3 categories for 2% cash back.
That cash will go into my TFSA.
While I do not accept monies for feature blog posts please click here on the mission and ‘how I might get paid’ disclosures. Affiliate partnerships help me (try to) pay the bills for this site. But they don’t, ha. That will allow me to keep this site free of ads and easy to read.
Wondering if you can solve this problem….my husband and I spend several months in Costa Rica (travelling back and forth, every few weeks). Rogers communications charges $15 a day for us to use our cell phones and receive the 2 step verification required now, to access our Scotia Itrade accounts ( they don’t use Whatsapp). We would like to access our accounts daily so this is very expensive. We both have large stock portfolios and live off our dividends. Scotiabank has advised we MUST have 2 step verification on our accounts – no exceptions and we don’t have a landline in CR so cell phones are the only option. Short of getting a cell phone from CR, can you see any solution to this? Are you aware of any financial institution we could transfer our assets to that does NOT have 2-step verification? Do you have another solution? I’m sure there are a lot of snowbirds with the same problem. Thanks so much, Jennifer
When I travel,I find that the code appears in the text message without me opening it so I don’t have to pay for the international rates. Also, some of my accounts will let me choose an email account to receive the code so all I need then is wifi, which I can usually find for free. I also pay for a VPN ( virtual private network) to protect my phone and tablet on public wifi. This worked for my travels last year in Europe and the UK. I hope this helps.
In same predicament as you with Scotia I-Trade. We are told to use the Scotia I-Trade Ap when traveling instead of their web browser. Ask Scotia I-Trade about this for more details.