Weekend Reading – Excellence and the Stock Market
Hello everybody,
Welcome to our new Weekend Reading edition on Excellence and the Stock Market.
Inspiration on that topic will come soon, but first, some books I’ve read recently.
In case you missed it, here is a helpful retirement income case study about a couple in their 40s who want to retire in a few years and therefore want to work part-time rather than full-time. Will they be able to do that?? How much additional investment would it take to scale back? That post has some guidance.
Some investors may invest differently than I do, which is of course fine with me: I continue to benefit from earning income from a portion of my portfolio, and my withdrawal rates in retirement should be modest and fairly predictable.
I will share my latest monthly dividend income updates here.
Dividend income update for May 2024
Weekend Reading – Excellence and the Stock Market
It’s a great idea to invest consistently. Investing over the long term almost guarantees a winning percentage, similar to what Roger Federer has seen throughout his career.
With gratitude A treasure trove of common sense.
Source/Attribution: https://awealthofcommonsense.com/2024/06/roger-federer-vs-the-stock-market/
Also, Dividend Growth Investor recently shared a similar view on X/Twitter: Avoid market timing and stay invested. @DividendGrowth.
To support non-subscribers The Globe and MailI found this article very interesting and hope it will interest you as well in relation to the latest CPP Annual Report. It’s a great read and there’s no need to worry about whether the CPP is sustainable.
“The most recent triennial report by the Office of the Chief Actuary confirmed that the CPP will be financially sustainable for at least 75 years.”
The Globe article focuses on why index investing is a better way to invest for most people, including the CPP team.
“Last year was a bad one for the Canada Pension Plan. You’d never know it from reading the latest annual report of the fund’s administrator, the CPP Investment Board, which spends the better part of 80,000 words boasting that the hard work of its employees and the administrator’s sophisticated investment strategies have delivered an 8 per cent investment return to CPP recipients.”
So…
“What does that mean? It means that if fund managers had stopped picking stocks and instead bought index-tracking ETFs like we did (a strategy called passive investing, which the average high school kid could pull off), our investment returns last year would have been more than double what they actually were.”
I found the semi-retirement planning advice that Ed Rempel gave to Canadian podcaster and friend Cornell to be very practical, including:
“a) Defer paying taxes as much as possible. A good example of this is using tools like RRSPs.
b) Or, once you are financially independent/retired, manage your income to always be in the lowest tax bracket. For example, take advantage of how different accounts like TFSAs and RRSPs are taxed to ensure you and your partner are always in the lowest tax bracket when living off your portfolio.”
We’ve been following this advice for years.
We max out our TFSA every year and make it a priority, evidence of that from my very first post in 2012.
We defer taxes through RRSPs.
For investors like my podcaster friends,Only withdraw from non-registered personal investments that fit your lifestyle (as you will do over the next few years), and, as Ed said, “…continue to put more money into your TFSAs and RRSPs until you have no non-registered investments left.”
The article pointed out some potential (big) changes in retirement savings planning that younger generations are making to build their wealth.
“While traditional stocks and bonds remain the top investment options for older HNWIs, younger HNWI investors are prioritizing the following six options over traditional investments.
- Real estate (31 percent)
- Cryptocurrency/digital investments (28 percent)
- Private equity (26 percent)
- Personal companies/brands (24 percent)
- Direct investment in businesses (22 percent)
- Positive impact-focused businesses (21 percent)
Consistent with this pattern, younger cohorts of wealthy investors were more likely to hold more cryptocurrencies and alternative investments in their portfolios than older investors.”
It will be interesting to see if they succeed in the long run!
Dale Roberts wondered what other mistakes he thinks some investors are making. Let us know your thoughts.
Last but not least, keep in mind that the 4% rule is still a good rule of thumb.
In addition to my post, this article The Globe and Mail (Subscription) Highlighting a 4% withdrawal rate from a TSX Stock Market retirement portfolio, and an upgraded 60/40 stocks and bonds split (versus a 50/50 mix) from Bengen research, it became clear that the portfolio would remain highly resilient even in tough times.
If you’re taking 6% out of your portfolio over time, that’s not much.
Take care of your health and have a great weekend!
mark
mark
My name is Mark Seed and I’m the founder, editor and owner of My Own Advisor. I’m my own financial advisor and I want to start semi-retirement sooner than most people. Find out what I did and what you can learn to pave your own path to financial independence. Join the newsletter that thousands read every day. It’s always free.
