Short Takes: CPP Costs, Peter Lynch’s Advice, and more

I wrote one post this week tackling a clever argument in favour of the current model of mutual funds paying embedded commissions to financial advisors:

Embedded Commissions: Mutual Funds vs. Cars

Here are some short takes and some weekend reading:

Andrew Coyne explains that the cost of running the Canada Pension Plan has ballooned to over $2 billion per year. Much of the higher cost is going to bloated administration and external management fees. It seems that CPP is heading towards the same high-cost structure that most Canadian mutual funds use. Almost all mutual funds fail to recoup their costs in the form of higher returns, and there is little reason to believe CPP will be any different.

Rick Ferri explained why Peter Lynch gave bad advice in his classic book One Up Wall Street. I really enjoyed this book many years ago, and it played a part in propelling me into life as a stock-picker. I’d be wealthier now if I had never read it.

James Osborne is a CFP with an interesting observation about what it takes to become financially independent.

Potato explains why RRSPs are better than non-registered accounts, even for people with defined-benefit pension plans. However, he advocates investing in a TFSA first.

Million Dollar Journey explains that even defined-benefit pension plans have risks and suggests a specific strategy for how to deal with those risks.

Big Cajun Man reports that you may be able to turn the recent credit card security breach at Home Depot into free credit monitoring for a year.

Boomer and Echo say it’s not a question of if but when Canada bans embedded commissions and brings in a best interests standard for financial advisors.