Short Takes: Consumer Protection Trumps Financial Literacy and more

My article debating what income level is safe in retirement got a mention in the Findependence Hub’s Weekly Wrap. It’s important to be realistic about both portfolio returns and the effect of costs.

 Here are my posts for this week:

Understanding Diversification

Where are the Customers’ Yachts?

Here are some short takes and some weekend reading:

 Helaine Olen at Slate.com explains why financial literacy can’t work and we need better consumer protection in financial services. The way I see it, we should focus on consumer protection at the macro scale of governments and laws. It still makes sense for parents to try to teach their children financial skills, and it makes sense for adults to try to educate themselves. But financial literacy programs can never be an effective substitute for consumer protection laws. Few of us can defend ourselves against predatory practices disclosed in deliberately confusing contracts.

Million Dollar Journey suggests two ETF-based index portfolios and explains which portfolio is best for each of the major discount brokerages.

Big Cajun Man says some important things you can do for your retirement are to exercise and quit smoking to improve the odds you’ll be alive to enjoy your retirement.

Boomer and Echo expain how to get access to money in a locked-in retirement account due to financial hardship.

My Own Advisor has some advice for an investor just starting out.

Comments

  1. Alan W. (BCM)February 13, 2015 at 7:08 AM

    Thanks for the inclusion this week, the best thing you can do for your retirement is be alive, enjoy the frigid weekend.

    ReplyDelete
  2. Robb EngenFebruary 13, 2015 at 9:40 AM

    I liked how Olen described why the financial services industry is so in love with financial literacy programs - it's a noble distraction from actual consumer protection.

    FYI - the Dave Liggat link is pointing to Million Dollar Journey. I'd love to check out the spreadsheet once I have more than one account to track :)

    Thanks for the mention!

    ReplyDelete
    Replies
    1. PotatoFebruary 13, 2015 at 10:40 AM

      I'd be interested as well. My rebalancing spreadsheet was set up to let you enter information from multiple accounts, but then gives you the rebalancing for the whole portfolio (i.e. it may say you need 300 more shares of VCN across all accounts, but not where those shares should go). Would be interested to see if he's done basically the same thing, or taken the next step...

      And I had the same thoughts as Michael on fin lit -- regulation is good and fin lit isn't really a replacement for that, but in the short term fin lit is what we have to work with. Especially because regulation can sometimes have unintended consequences when there isn't literacy to complement it (e.g. non-recourse lending).

      Delete
    2. AnonymousFebruary 13, 2015 at 12:04 PM

      The Dave Liggat link should be:
      http://liggat.org/2015/02/09/perpetually-current-asset-allocation/

      Delete
    3. Michael JamesFebruary 13, 2015 at 8:51 PM

      Thanks @Anonymous. I've fixed the link now. Sorry for the inconvenience.

      Delete
  3. aBFebruary 13, 2015 at 11:10 AM

    Slowly building up my balancing spread sheet using GoogleDocs.
    Still working out some of the bugs on mine though. A lot of reference rebalancing spreadsheets I find have a direct proportional rebalance calculation, which I find inadequate.

    For example my sheet currently has VTI/VXUS both at 50% allocation, because they are in an RRSP account and contribution is maxed (nothing for 2015 yet, waiting for return). Then, based on the dollar value and total value, the amount of VUN I should get in my TFSA is calculated (to bring VTI+VUN ~ 40%).

    My biggest problem is I have 2 sheets, one for the index side, the other for dividend side.. and they are calculating different things.

    ReplyDelete
  4. My Own AdvisorFebruary 13, 2015 at 4:22 PM

    Thanks for the mention! I have to check out that spreadsheet. You posted yours some time ago didn't you?

    Stay warm this weekend!
    Mark

    ReplyDelete

Post a Comment

Popular posts from this blog

Short Takes: InvestorLine’s HISAs, 24-Hour Trading, and more

I recently moved some cash into BMO InvestorLine’s high-interest savings accounts (HISAs) that are structured as mutual funds.  Their designations are BMT104, BMT109, and BMT114, and they purportedly pay 4.35% annual interest (which they can change whenever they like).  However, the way they report the monthly interest payments is so baffling that I wasn’t able to sort it out in my first 15 minutes of trying.  A further complication is the following text in the HISA description: “The Bank may pay, monthly or quarterly, compensation to your Dealer at an annual rate of up to 0.25% of the daily closing balance in the BMO HISA.”  I couldn’t find any evidence of such a charge, but I haven’t been invested for a full quarter, and I can’t yet say that such a charge isn’t buried somehow in the confusing reporting.  I have more digging to do before I can recommend these HISAs. Here are some short takes and some weekend reading: Preet Banerjee explains the dangers of Robi...
Read more

My Asset Allocation

I’ve resisted discussing my asset allocation for some time, but now is finally the time to describe it and the reasons behind it. I’m not holding it out as a model portfolio; I believe it’s suitable for me and not necessarily anyone else. With that warning, enjoy the discussion and feel free to ask questions or take some pot-shots. The main reason why I haven’t discussed my asset allocation in detail before now is that I don’t want readers to treat it like a model portfolio and follow it blindly. Everyone’s situation is different. The need for variation in asset allocation from one investor to the next usually isn’t huge, but there is no one-size-fits-all portfolio. A secondary reason for keeping my asset allocation to myself is that I can’t be sure I’ll never change it. For example, I recently made the minor change of switching from an ETF of small-cap stocks to an ETF of small-cap value stocks . I don’t have any plans to change my current allocation, but I may think differe...
Read more

Updated Currency Exchange Method at BMO InvestorLine

There is now a more recent update of the method I use for exchanging currency at BMO OnvestorLine . I recently changed the procedure I use to convert large sums between Canadian and U.S. dollars at BMO InvestorLine. The method I use saves a lot of money compared to using the InvestorLine foreign exchange system. The latest change I made eliminated an annoying interest charge that I had to ask to be reversed. Most people don’t realize how expensive it can be to exchange currency. The extra charge banks and brokerages add gets hidden in the exchange rate. To see this extra charge, start by taking a sum in Canadian dollars, say C$10,000, and finding out how many U.S. dollars you can get. Then see what this U.S. amount would get going back to Canadian dollars. Many people might guess they’d get their original C$10,000 back, but they’d be wrong. In a recent test I did at BMO InvestorLine, I’d get back C$9754, for a loss of C$246 in two currency exchanges. That’s $123 per excha...
Read more

Archive

Show more