If you don’t have a defined-benefit pension, odds are you’re losing some sleep worrying about saving enough money during your working years to retire well. You might even have a retirement savings goal in mind. With all this to worry about, you probably don’t think much about how to spend that money during your retirement. Probably something like the 4% rule will be good enough, right? Well, the 4% rule is better than no plan at all, but you can do a lot better. Frederick Vettese explains solid strategies for the “decumulation” phase of your life in his excellent book, Retirement Income for Life: Getting More Without Saving More . He starts off showing how the 4% rule can fail, and then makes a sequence of 5 enhancements that improve the decumulation strategy significantly. The five enhancements Reducing investment fees Deferring your CPP pension to age 70 Buying an annuity with about 30% of your savings Being prepared to adjust your annual spending if markets boom or cra...

Here are my posts for the past two weeks: Beat the Bank Getting Even by Owning Big Business Stocks Here are some short takes and some weekend reading: Dan Bortolotti discusses the “catch” with zero-fee index mutual funds. Dan says “there is no catch here,” but I’d like an expert opinion on the securities-lending practices of different index mutual funds and ETFs. Who gets the interest the funds collect from short-sellers who borrow stocks? How much hidden risk is there for investors? Dan Hallett analyzes the price levels of pot stocks. Squawkfox explains how social media and FOMO can make you unhappy and cost you money. The Blunt Bean Counter explains clearance certificates from CRA for a deceased person’s estate. Without one, the executor(s) could be held personally responsible for any taxes CRA comes looking for after a reassessment. This is timely for me because I’ll be filing tax returns for an estate next spring. I’m still on the fence about whether a clear...

Common advice to make up for high bank fees is to buy bank stocks to get your money back in dividends. We could extend this to the big telecommunications companies as well. I decided to look at how I stand in collecting dividends from these companies vs. what I pay for their products. On the dividend side, it’s not a good idea for your portfolio to be too concentrated. I own Canadian stocks through Vanguard’s Canada All Cap Index ETF (ticker: VCN). The part of VCN’s dividends that come from the six big banks plus Bell, Rogers, Telus, and Shaw amount to about 34 cents per share each year. So, suppose you add up what you pay to these businesses and it comes to $1000 per year. As I write this, you’d have to own $90,800 worth of VCN to collect $1000 per year in dividends. Of course, these businesses don’t pay all of their earnings out in dividends, so you could own a little less VCN than this to have the total profits cover your costs. You could also argue that these businesse...

It can be frustratingly difficult to get the masses to understand how important it is to control investment costs. Ex-banker Larry Bates does an excellent job of explaining what he calls Simply Successful Investing in his book Beat the Bank . Canadians who hand their savings over financial advisors at banks or elsewhere need to read this book. Bates knows that people don’t want to become investing experts. “There are countless things about investing you don’t need to know: this book focuses on the few things you do need to know.” You don’t have to “listen to the daily tsunami of utterly useless media chatter about the financial markets.” As a career banker, Bates understands the harm that bank mutual funds do to people’s savings. This harm became personal after a conversation with his sister. He was left embarrassed and ashamed after learning that she was taken in by his employer’s high-fee mutual funds. “Fees are stealth wealth killers.” The book refers to “top banks, ins...

Here are my posts for the past two weeks: Managing a GIC Ladder in Retirement More Money for Beer and Textbooks My House vs. My Stocks Here are some short takes and some weekend reading: Gordon Pape takes Doug Ford and Vic Fedeli, Ontario’s Finance Minister, to task for “dumping cold water” on Canadian Securities Administrators’ mutual fund reforms “that would significantly benefit investors.” This position “flies in the face of everything the Premier claims he stands for.” The C.D. Howe Institute reports that the 4% increase in the top federal income tax rate didn’t produce the hoped-for $3 billion increase in tax revenues. Instead it resulted in a slight decrease in combined federal/provincial tax revenues. My own retirement made a small contribution to reducing tax revenues in the future. Canadian Couch Potato interviews Larry Bates who is trying hard to explain to Canadians just how much of their investment gains are getting consumed in fees. Check out his “T-R...

My wife and I bought our house in mid-1993. We’re at the young end of the baby boom, but we bought our house when we were fairly young. As a result, we’ve lived through the huge run up in house prices older boomers have enjoyed. In 25 years, the price of our house has gone up about 160%. So, how has this compared to our investment portfolio? Well, in that same period of time, our portfolio has had a cumulative return of 1030%. That might seem to end the comparison, but real estate is typically a leveraged investment. We paid off our home quickly, so we didn’t get much advantage from the leverage. But what if we had used leverage? The average discounted mortgage rate over that period was about 5%. Suppose we had put 10% down and made payments on a 5% mortgage for 25 years. The Internal Rate of Return (IRR) on our investment works out to 5.8% per year or a cumulative return over the 25 years of 307%. It might be tempting to add in a return from not having to pay rent, but...

When I headed off to university, I was pretty naive about money. It’s safe to say that this is true of most kids starting post-secondary education. There are lots of ways to get yourself into financial trouble at school. This is where Kyle Prevost and Justin Bouchard come in with their book More Money for Beer and Textbooks . These authors offer Canadian students and their parents solid information that I wish I had back when I was in school. This book isn’t purely about finances. Just because one choice is more expensive than another doesn’t necessarily make it a bad choice. The authors discuss cost differences and weigh them against other advantages and disadvantages. They start with how much school will cost and the relative costs of being on and off campus. They also offer a number of tips on finding one or more of the scholarships and bursaries available, many of which never even have one student apply. You’re not likely to find many other books that even devote a sect...

The following good question about managing a GIC ladder during retirement came from AT in Calgary (edited for length and privacy): I’m 100% FIREd and have no regrets about this. After working for 30+ years, I was just done. I spent the better part of a year learning about money, and your articles have been particularly helpful. I have put 3 years into GICs (1,2,3) and the '1' comes due 2019 May 1. Assuming I stick with the 3 year model, do I roll that one into a new 3 year GIC and then continue as before? That seems to make sense but here is my question that I can't quite wrap my head around. If I lock it in on May 1st, then what happens if the market crashes on May 2nd? Somewhere there has to be a cash cushion for that year unless I just have to bite the bullet and draw down my registered money. What do you think? First of all, congratulations on retiring! I know I felt great about retiring to my personal projects rather than doing what other people wanted ...