Life is uncertain. We are living our day-to-day lives with a certain level of uncertainty, but that’s part of the fun. Some people don’t like having too many uncertainties, so they take actions and precautions to reduce uncertainty.
The same thing can be said for early retirement and living off one’s investment portfolio. There are many steps you can take to increase the margin of safety of your investment portfolio to ensure it can sustain your lifestyle and you don’t run out of money.As we draw closer to achieving Financial Independence through dividend income, also known as living off dividends, we are spending more time on the steps needed to prepare ourselves for this significant financial and life milestone.
I thought it would be interesting to explore the steps we are taking in 2026 when it comes to our early retirement planning.
Building up our Cash Reserve
Along our Financial Independence journey, we have been extremely focused on building up our dividend portfolio. As a result, we have been working hard to grow our savings gap and invest the saved-up money to buy dividend stocks and index ETFs.
For the most part, we don’t keep a lot of cash in our chequing and savings accounts, because we see too much cash sitting around as opportunity cost.
But as we get closer to Financial Independence, it is important to start building up our cash reserve. Cash reserve is important because it provides flexibility and prevents us from having to sell off our investments during a sudden market crash because of some unexpected need.
Last year, we managed to save enough money so that we had over $25,000 in our Long Term Savings for Spending account. Unfortunately, at the time of writing, we are below that number because of the yearly RESP contributions and having to buy a new fridge. Since one of our financial goals is to have more than $35,000 in our cash reserve, this means we need to save up more to first bring the amount in our LTSS account to above $25,000 first, then try to save more to hit the $35,000 market.
But building up our cash reserve is more than just having cash sitting around in our bank account. It’s also about having cash available in our investment accounts, too, as I’ll explain in the next section.
Turning off DRIPs
We are currently investing 100% of our dividend income. We enroll in dividend reinvestment plans (DRIPs), so dividends are automatically used to get additional shares. Years ago, when fractional DRIPs weren’t available, we could only drip full shares (i.e. dividends received were more than the share price). We’d let the remaining dividends accumulate in our accounts until we had over $1,000 before we bought more dividend stocks or index ETFs (we did this so the trading commission was less than 1% of the overall transaction).
Nowadays, with the existence of fractional DRIPs from brokers like WealthSimple and TD, most of our dividends are reinvested right away. Before fractional DRIPs were enabled with TD, and because TD charges $9.99 per trade, we would move the remaining dividends collected in our taxable account with TD to WealthSimple to take advantage of the no-commission trading. We no longer have to do this.
Questrade still doesn’t support fractional DRIPs (and only fractional share purchase on certain securities), so we can only drip full shares and the remaining dividends get deposited in our accounts. Since Questrade no longer charges trading commissions, we don’t need to wait for dividends to accumulate to over $1,000 before reinvesting the money. Lately, we would use dividends to buy more stocks & ETFs when there’s a red day in the markets.
As we get closer to Financial Independence, we plan to change the way we utilize DRIPs. We want to drip selectively. We plan to turn off drip in our taxable accounts and RRSPs by the middle of this year (or by Q3). We will keep DRIP on in our TFSAs to allow investments/dividends to compound.
That’s step one in building up a cash wedge in our taxable accounts and RRSPs for the eventual withdrawals when we do live off dividends. But we certainly don’t want money sitting in cash and not doing anything for us.
So what’s our plan with the dividends received in taxable accounts and RRSPs?
This is where investing in safe Cash Alternatives comes in.
Investing in safe Cash Alternatives
For dividends received in taxable accounts and RRSPs, we want to put them to work. But we don’t want to reinvest them into dividend-paying stocks, then have to sell stocks when we start withdrawing. Nor do we want to be waiting for dividends to accumulate before withdrawing.
Turning off DRIPs will allow us to start accumulating cash. Ideally, we want to accumulate enough money to cover 100% of our expenses for the next year, so we don’t need to sell any stocks. This is one way to increase our margin of safety in early retirement. Another benefit to having sufficient cash for next year’s expenses is that it is easier to budget, since we would know how much money we would have at the beginning of the year.
With the money accumulating in our taxable account, RRSPs, and savings account, we need to look at alternative ways to grow the money so we are not losing purchasing power due to inflation.
Since distributions from these high-yield HISA ETFs are taxed as 100% interest income, they are not overly tax-efficient. Therefore, it makes sense to invest in these HISA ETFs inside of our RRSPs.
Note: I know that withdrawals from RRSPs are taxed as working income as well so there may not be too much of a difference, but income inside RRSPs is tax-deferred so we can let the interest grow until withdrawals. This is a lot better than taking the tax hit in the same year as when you receive the interest.
For dividends sitting in our taxable accounts, if we invest in “safer” investments like GICs, HISAs, HISAs ETFs, bond ETFs, or even money market, all the interest earned would be taxed as 100% interest income, and not very tax efficient. Unfortunately, there’s no other way around it. If we really want, I suppose we can invest the money in dividend-paying Canadian stocks, but that’d go against the idea of building up a cash reserve in our taxable accounts.
Therefore, it probably makes the most sense for us to just take the tax hit and invest dividends in our taxable accounts in one of the HISA ETFs or move the money and start building a GIC ladder if the rates are attractive. (Knowing the low interest rates environment we’re in, probably hard to find attractive rates for short term GICs).
What would we do with the cash sitting in our LTSS? Well, we may consider parking some of it in cash inside a flexible high-interest savings account for planned expenses. To make sure money is working hard for us, it probably makes sense to invest the money in a high-yield HISA ETF.
Our plans with money in taxable accounts and LTSS aren’t 100% decided. More tax calculation and planning is needed, considering I will be working full-time and earning income in 2026 and Mrs. T is generating income via her side hustles.
If any readers have other suggestions or recommendations on what to do with cash in our LTSS and taxable accounts, I would love to hear them.
Alternatively, we can consider turning DRIP off first in our RRSP and invest the money in one of the HISA ETFs. Then, in the latter half of 2026, turn off DRIP in our taxable accounts to minimize tax consequences. This approach, however, means we won’t have as big a cash reserve.
It’s complicated to plan everything and that’s part of the fun of planning for early retirement!
Planning extended healthcare coverage
We currently have extended healthcare benefits through my employer. The extended healthcare benefits allow us to get coverage on prescription drugs, out-of-country trip medical coverage, paramedical services like massage, acupuncture, counselling, physiotherapy visits, vision care, and dental care. Continue Reading…
Regular readers of this site are probably well aware of ETFs (Exchange Traded Funds). Indeed, many blogs here have covered their role either as Core holdings of Retirement portfolios or portfolios still in the Wealth-building phase. Some espouse ETFs as a Core holding but play around at the fringe with so-called “Explore” investments either in high-conviction individual stocks or in more tactical specialized ETFs. Many espouse a “hybrid” strategy of mixing ETFs with individual stocks, perhaps by “skimming” the same ETFs for particular stocks that appeal at some level, whether for income, growth or other reasons.
Roughly once a month for much of the existence of this site, Featured.com has provided useful content on investing and retirement. In the past year, it changed its strategy so editors like myself could have more input into the creation of its blogs. Now the process is one of posting a question or general request to its site, soliciting input from a wealth of largely US-based financial experts and business owners.
Today’s blog focuses on various strategies on ETFs and variants of using them as Core or Explore holdings, plus the pros and cons of the “hybrid” approach mentioned above. Most of these experts are on LinkedIn, as you may see by clicking on their company names below each entry.
Here’s how we posed the opening question for respondents:
When it comes to managing your personal Retirement Funds or that of clients, what role do ETFs (Exchange Traded Funds) play: Core, Explore, Tactical or what? If you do use ETFs, do you prefer to use them exclusively or do you like hybrid strategies where you also pick individual dividend-paying or growth stocks; or do you also cherry-pick individual stocks from favorite ETFs?
So with no further ado:
Hybrid Strategies of mixing ETFs with individual stocks can lead to trouble
When it comes to the role of ETFs, for the vast majority of people — especially the ones I see in my practice trying to build stable long-term wealth — they belong in the “Core” position. ETFs are a brilliant legal and structural innovation: they provide instant diversification, they are incredibly low-cost, and they are tax-efficient. They allow you to own the market rather than trying to guess which individual company will win, which is essentially an impossible game for most humans to play consistently over 30 years.
The hybrid strategy — mixing ETFs with individual dividend or growth stocks —is tempting, but it is often where people get into trouble. “Cherry-picking” individual stocks is not investing; it is gambling with better marketing. I have represented clients who lost their retirement savings because they became over-concentrated in a single “favorite” stock that cratered. When you cherry-pick, you aren’t just betting on the company; you are betting against the market, the sector, the economy, and your own lack of inside information.
If you are a professional investor with the time to research, the discipline to rebalance, and the stomach for volatility, go ahead. But for the average person, or even the professional focused on their own career, the most successful strategy is usually the simplest: Core, boring, broad-market index ETFs.
The most successful retirement portfolio is often the one you forget you own, not the one you tinker with every week based on a “hot tip” or a gut feeling. I’ve never seen a client file for bankruptcy because they were too boring with their index funds. I have seen clients file because they tried to get clever with individual stocks and got decimated by a market downturn. Complexity is rarely your friend in long-term wealth building. Keep it simple, keep costs low, and let time do the heavy lifting. That isn’t just good investment advice; it’s sound risk management. — Lyle Solomon, Principal Attorney, Oak View Law Group
ETFs are foundational to my plan for retirement. The consistency and broad market exposure that they represent allow them to be at the core of all of my other investment decisions. I use a blended model. In order to achieve this blend, I have selected low cost indexed products (that provide for consistency) in addition to specific dividend producing stock selections to provide additional income. — Zack Moorin, Founder, Zack Buys Houses
ETFs as Core with individual Satellite positions like Crypto
My personal approach to retirement portfolio construction uses ETFs as the core, with a satellite allocation to individual positions including crypto assets.
The core ETF layer serves a specific purpose: broad market exposure at near-zero cost, with automatic rebalancing and no single-company risk. For U.S. equity exposure, a total market or S&P 500 ETF handles this. For international exposure, a developed-markets ETF. For bonds, a total bond market ETF scaled by risk tolerance and time horizon. This core doesn’t require active management or conviction: it just needs to capture beta.
The satellite layer is where I allocate capital I’m willing to analyze actively and hold with genuine conviction. For me, this includes individual positions in companies I’ve studied deeply and blockchain assets backed by whitepapers I’ve read and evaluated (through ChainClarity’s own research process). The satellite allocation is sized so that a complete loss wouldn’t materially affect the core goal.
Why I don’t go pure ETF: I find that having no individual positions reduces my engagement with the market as a learning mechanism. Tracking companies or protocols I own forces me to read earnings reports, understand industry dynamics, and notice when my thesis was wrong. That active attention makes me a better analyst, which has compounding value beyond the direct investment return.
The hybrid strategy I’d caution against: owning both an S&P 500 ETF and individual U.S. large-cap stocks. The ETF already owns those companies: you’re just adding concentration risk and management overhead without meaningful diversification. If you’re going to pick stocks, pick categories the ETF doesn’t cover adequately.
Roman Vassilenko is the founder of ChainClarity (chainclarity.io), an AI platform that makes blockchain whitepapers accessible to investors and developers. — Roman Vassilenko, Founder, ChainClarity
Active Strategies only work if you a demonstrable Edge
The statistics don’t favor an active equity allocation strategy. Over the 10 years ending 2021, 84% of U.S. large-cap growth funds lost to their benchmark, the S&P 500. Even if we add back some of those funds to the universe that died along the way, the failure rate only drops to 91%. You might still have to explain why you’d invest money for a 0.66% expense ratio, which is what active equity funds average compared with 0.03% for their passive alternatives (SPY, VOO). On $500K invested for 30 years that grows at a real rate of 7% annually, you can expect to have spent nearly $387K in fees over your investment horizon. Half of this goes to the active funds manager, whether they perform well or poorly.
The exception to this advice comes if you feel an edge exists. Perhaps you work in Silicon Valley and have insight into Netflix or perhaps have engineer-level technical understanding on why a company’s underlying product will prevail over competitors, but unless you genuinely possess such an asymmetric advantage, most of the advice below comes from investing in low-cost ETF cores, keeping a few per cent in cash or cash alternatives and picking one or two individual stocks that you’re willing to lose money entirely, without jeopardizing your Financial Independence. I think anything beyond that could fit onto one side of a sheet of paper. — Jere Salmisto, Founder, CalcFi
ETFs remove the big risk of your own Decision-Making
Most investors treat ETFs as a convenience tool, but their real power is that they quietly remove the biggest risk in portfolios: your own decision-making.
I think of ETFs as a “behavioral anchor.” In most retirement strategies, they should be the core, not because they outperform everything else, but because they reduce the chances of overtrading, emotional decisions, and concentrated mistakes. They create a stable base you’re less tempted to interfere with.
In practice, I’ve seen this play out repeatedly. Clients who built portfolios purely on individual stock picks often drifted into overexposure or reactive selling during volatility. In contrast, those with ETF-heavy cores made fewer impulsive changes and stayed aligned with long-term goals. When we added individual stocks, it was deliberate and limited, more of a satellite layer than a competing strategy.
The takeaway is simple. ETFs are not just about diversification, they’re about discipline. Use them as your foundation, then layer in individual stocks only where you have conviction and a clear reason. The goal isn’t to outperform the market every year, it’s to avoid the mistakes that quietly destroy returns over time. — Omer Malik, CEO, ORM Systems
ETFs are my core. Period.
ETFs are my core. Period. I don’t have the time or the ego to think I can outpick the entire market with every dollar I own. My retirement strategy is built exactly like our risk models at Insurance Panda: you need a massive, diversified base to survive the outliers. I put the vast majority of my capital into broad-market index funds and let them ride. It’s the only way to ensure you actually have a pile of cash when you’re ready to exit the game.
But I’m a business owner, so I can’t help but look for an edge. I use a hybrid model. I keep the boring foundation in ETFs, then I pick individual growth stocks in sectors I actually understand: specifically digital infrastructure and software. I don’t bother “cherry-picking” individual names from a favorite ETF. That’s just over-analytical busywork. If I see a company we’re actually using in our own tech stack that’s clearly dominating its niche, I buy the stock directly.
And here is the hard truth. Most people mess this up by being too tactical with money they can’t afford to lose. They treat their Retirement fund like a casino. Don’t do that. Secure the base layer first with low-cost funds. Then, and only then, use your actual industry knowledge to take a few shots on individual winners. If you don’t have a clear information advantage, stay in the index. — James Shaffer, Managing Director, Insurance Panda
ETFs should be the core 70 to 80% of your Retirement Portfolio
To any of our MintWit readers who are saving for retirement, my advice will be to build the bulk of your retirement portfolio using ETFs because they provide instant diversification and very low fees. In essence, ETFs will form the basis, or the bread and butter, as part of your investment strategy, making up 70%-80% of your retirement portfolio. The message we always preach is that you use the ETFs as a safety measure; then you explore by buying a few stocks, such as those paid by dividends from companies such as Johnson & Johnson and Coca-Cola, to make up the remaining 10%-20%. –– Scott Brown, Founder, MintWit
ETFs as Core help maintain Target Allocations
ETFs are most useful as core holdings in a retirement portfolio because they offer broad exposure and make it simple to maintain a target allocation. I recommend using ETFs to establish the backbone of a portfolio, then layering in individual dividend or growth stocks only when they serve a clear, specific purpose. Relying exclusively on ETFs can work for many investors, but a hybrid approach lets you target income or single-stock opportunities without losing diversification. Keep the overall asset allocation aligned with your risk tolerance and time horizon. Automate contributions and set a regular rebalancing schedule so ETFs and any individual holdings stay within your intended ranges. Consult a qualified advisor for tax and account-structure considerations before making changes. — Amir Husen, Content Writer, SEO Specialist & Associate, ICS Legal
Hybrid Strategy uses indexing and select individual stocks
I view EFTs (Exchange Traded Funds) as my base of operations for overall market exposure and stability. I prefer to implement an index fund or hybrid strategy which incorporates both index investing and selected individual stock investments into my portfolio. The Hybrid Strategy will allow me to maintain broad based investment diversification by utilizing index fund(s), and also pursue greater returns on investment via selected individual equities. At times, I review the top holdings in the most popular EFTs to see if they are among my potential long-term investment options. — Mike Otranto, Founder, Wake County Home Buyers
ETFs belong in the Retirement core bucket but not a fan of Index Skimming
I’m coming at this as someone who’s been in estate planning since 2008 and now leads operations at Safeguard in Arizona, where retirement planning and asset protection are part of the same conversation every day. My view is that ETFs usually belong in the core bucket because retirement money needs clarity, liquidity, and a structure that’s easier to coordinate with the rest of the estate plan.
What matters most to me is not “ETF vs stock” in isolation, but whether the investment setup works cleanly with beneficiary designations, trust funding, and the reality of incapacity or death. A simple ETF-based core is often easier for a spouse, successor trustee, or family to understand and manage than a scattered collection of hand-picked positions.
I’m generally more comfortable with a hybrid only when there’s a clear purpose for it, not because someone wants more activity. For example, if a family has a living trust and wants long-term retirement assets organized so a successor trustee can step in smoothly, broad ETF holdings tend to create fewer administrative headaches than a portfolio full of one-off stock ideas.
I’m not a fan of cherry-picking names out of favorite ETFs just because they showed up on a list. In retirement and wealth preservation, I’d rather see a plan that accounts for inflation, Social Security timing, healthcare costs, and smooth transfer to heirs than a portfolio that becomes harder to administer when the family needs simplicity most. — Julie Jewett, Director of Operations, Safeguard.
ETFs should have a clear purpose, like Targeted Income or Tactical Exposure
I view ETFs as core building blocks of retirement portfolios, especially for taxable accounts, given their tax characteristics. Asset location is critical, so I often favor index ETFs in taxable brokerage accounts to help control when gains and income are realized.
Dividend-paying stocks and corporate bonds are typically better held in tax-advantaged accounts to avoid current taxation on dividends and interest. ETFs that do not distribute frequent income also give more control over timing because you generally recognize gains when you sell.
However, I do not use ETFs exclusively. I treat them as the foundation and layer individual securities when they serve a clear purpose, such as targeted income or tactical exposure. The precise mix depends on a client’s tax situation, income needs, and retirement phase, with asset location guiding those choices. — Clint Haynes, Financial Planner, NextGen Wealth
The point of ETFs is to provide exposure to an idea without taking single-stock blowup risks
ETFs are immensely diverse, that’s the first thing to clear up. Income ETFs, dividend-growth ETFs, low-volatility ETFs, broad-market index ETFs, growth ETFs, and speculative covered-call funds (YieldMax, Roundhill) are all ETFs, but they serve fundamentally different roles. Their shared job is to express an investment thesis with diversification. The point of an ETF is to give you exposure to an idea without taking the single-stock blowup risks (management, execution, etc.) that come with picking individual names.
For Retirement, low-volatility and dividend-growth ETFs are the natural fit, because they prioritize stability of distributions and capital preservation, which is what matters when you’re drawing down rather than accumulating. Speculative income products like YieldMax or Roundhill weekly-pay funds can play a role, but they’re a speculative income tilt, not a core retirement holding. The high headline yields often come at the cost of NAV erosion that trailing yield figures don’t show. A retiree leaning on these without understanding the option-writing mechanics underneath can find their principal halved over five years even while collecting “income.”
Growth ETFs are a different beast entirely. Their volatility and lower (or zero) distributions don’t suit the liquidity and income needs of someone in retirement, but they’re the right call for accumulators in their 20s, 30s, or 40s with decades-long time horizons. Different season, different tool.
On methodology: the right way to think about an ETF is bottom-up, not top-down. If you research the underlying stocks and like what you see, the businesses, the dividend track records, the valuations … you buy the ETF as a convenient, low-cost container for that thesis. It’s not a common or advised investment strategy to cherry-pick individual stocks out of an ETF you like, without having done the individual fundamental work. That’s reverse-engineering: you’ve already paid for the diversification, picking out individual names just adds concentration risk while losing the structural benefit. If you want concentrated exposure to one or two names, buy the stocks directly. If you want diversified exposure to a thesis, hold the ETF that expresses that thesis.
Across age cohorts and goals, the principle is the same: an ETF is a way to express a stock thesis efficiently, not a substitute for having one. — Ignacio Planas Gonzalez, Founder, YieldMaxCalc Continue Reading…
The technology sector is currently experiencing an historic AI stock bifurcation. While semiconductor giants are reaching all-time highs, many established software companies are struggling to maintain their valuations.
This “inner fight” in tech has created a massive performance gap. For example, the iShares Semiconductor ETF (SOXX) has skyrocketed by over 150% in the last year, while the iShares Expanded Tech-Software Sector ETF (IGV) has decline 8% over the same time period.
As an investor, understanding why this split is happening is crucial for protecting your portfolio. We are witnessing a transfer of value from the application layer to the infrastructure layer.
The Rise of Infrastructure: Why Hardware is King
Currently, the market is in the “Build” phase of the AI revolution. Companies are racing to build the data centers required to train Large Language Models (LLMs).
This has created a massive tailwind for companies that provide the “physicality” of AI. These are the “picks and shovels” of the modern gold rush.
Nvidia (NVDA): The undisputed leader in AI training chips.
Broadcom (AVGO): A dominant force in networking and custom AI silicon.
Vertiv Holdings (VRT): A crucial provider of cooling and power systems for data centers.
The Software Struggle: The Fear of “Seat Compression”
The AI stock bifurcation is most painful for traditional Software-as-a-Service (SaaS) providers. The primary reason is a phenomenon known as “seat compression.” The sharp decline in software stocks is called the SaaSpocalypse and we can blame it all on Claude.ai, which is powerful enough to do the work that many of those software companies were doing for a small fraction of the cost.
Historically, software companies sold licenses per human user. However, as AI agents become more capable, companies may need fewer human employees to perform the same tasks. If an AI agent can do the work of five people, the software provider loses four paid “seats.”
The companies affected most fall into three categories: horizontal point solutions, “per-seat” model giants, and UI-heavy applications.
1. Most Impacted Public Companies (2026 Performance)
The following heavyweights have seen significant year-to-date (YTD) declines as of early 2026 due to fears of AI disintermediation:
2. Why These Companies are Struggling
The crisis isn’t just about stock prices; it’s a fundamental challenge to how these companies make money.
The “Death of the Seat”: Traditional SaaS revenue is tied to the number of human users (seats). As AI agents like Claude Cowork or OpenAI Frontier handle the work of multiple people, enterprises are demanding consumption-based or outcome-based pricing rather than paying for idle software seats.
Vibe Coding & Low Barriers: New AI tools allow startups to replicate complex software features (“vibe coding”) much faster than before, eroding the “moats” that protected billion-dollar companies.
Budget Cannibalization: Enterprises are not increasing total IT spend; they are shifting funds away from “incremental” software updates to pay for expensive AI compute and specialized AI agents.
3. The “Safe” Exceptions
While the sector is in turmoil, analysts (including those from JP Morgan and HSBC) suggest that “mission-critical” infrastructure is more resilient. Companies like ServiceNow (NOW), Microsoft (MSFT), and CrowdStrike (CRWD) have fared better because their software acts as the “operating system” for the enterprise, making them harder to replace with standalone AI agents.
Summary of the “SaaSpocalypse” Narrative
This narrative drove the S&P Software & Services Index down over 20% in early 2026. While some view this as an overreaction, the shift toward Vertical SaaS (industry-specific tools for healthcare or manufacturing) and AI-native architectures is now a requirement for survival in the public markets.
The Winners of the Software Pivot
Not all software is doomed. The winners will be those who control the “System of Record” or successfully pivot to outcome-based pricing. It’s important to distinguish between companies that provide disposable tools (vulnerable) and those that provide essential infrastructure (resilient).
Here are the software sectors and specific companies currently showing strength:
1. The “Orchestrators” (AI-Native Infrastructure)
These companies don’t just sell a “seat” for a human to sit in; they provide the brain that runs the enterprise.
Palantir (PLR): While it felt the initial market tremors, Palantir is emerging as a winner. In early 2026, it projected 61% growth, positioning itself as the “operating system” for AI. Unlike traditional SaaS, Palantir thrives on complexity—integrating AI into massive, messy datasets that standalone agents can’t handle.
ServiceNow (NOW): Despite a 30%+ price drop in early 2026, it is being touted as a “value opportunity.” By acquiring Moveworks and launching Autonomous Workforce, they’ve pivoted to selling “AI agents” that resolve 90% of IT issues, effectively shifting their model to capture the value AI creates rather than just charging for human logins.
2. The Cybersecurity “Moat”
Security is non-negotiable, and the rise of AI agents has actually increased the “threat surface” for companies.
CrowdStrike (CRWD): Recognized as a core “safe” play. They have integrated AI into their Falcon platform to secure the very AI infrastructure everyone else is rushing to build.
3. Vertical SaaS & High-Complexity Platforms
Software that is deeply embedded in a specific industry’s regulatory or physical workflow is much harder to replace.
Shopify (SHOP): Standing out with a 26% gain recently. Because Shopify controls the physical flow of commerce — payments, shipping, and inventory — it isn’t as easily “disintermediated” by a coding agent as a simple marketing or HR tool might be.
Datadog (DDOG): As companies deploy more AI models, they need more monitoring to ensure those models aren’t “hallucinating” or breaking. Datadog’s observability tools are seeing a 30%+ gain as they become essential for the AI era.
Summary: What Makes a “Winner” in 2026?
The Bottom Line: The companies doing well are those that have stopped fighting the AI agents and have instead started becoming the platform that manages them.
The Next Layer: Where to Focus Now
If you feel you missed the initial semiconductor surge, you can take a look at the Secondary Infrastructure layer — often called the “Physical Layer” — is arguably where the most durable value is being built right now.
While chips get faster every 12 months, the power grids, cooling loops, and transformers being installed today are 20-to-30-year assets. The “Secondary” layer extends into three specific sub-sectors:
1. The “Power Hungry” Layer (Electrical Equipment)
As GPU density increases, the electrical bottleneck isn’t just the chip; it’s the ability to get high-voltage power to the rack without melting the wires.
Eaton (ETN): It is the “blue chip” of this layer. They manufacture the switchgear and power quality hardware that prevents AI data centers from blowing out the local grid. It recently committed over $30 million to a new Nebraska facility just to keep up with data center demand.
Schneider Electric (SBGSY): A global leader in data center energy management. Its EcoStruxure platform is the standard for managing the complex power architectures required for liquid-cooled AI clusters.
Powell Industries (POWL): A “hidden gem” in this space. It specializse in custom-engineered switchgear. It recently reported record earnings and announced a 3-for-1 stock split due to the surge in massive-scale industrial power orders.
2. The “Nuclear & Grid” Layer (Utilities)
Hyperscalers (Amazon, Google, Microsoft) are now the world’s largest buyers of clean energy. They need “always-on” power that solar and wind can’t provide alone.
Vistra Corp (VST) & Constellation Energy (CEG): These are the primary owners of the U.S. nuclear fleet. They have signed massive, long-term power purchase agreements (PPAs) directly with hyperscalers. Vistra is currently seen as a high-conviction “power-as-a-service” play.
GE Vernova (GEV): Since spinning off from GE, they have become a pure play on the electrification of the world. They make the gas turbines and grid orchestration software that utilities use to balance the sudden, massive loads from AI campuses.
3. The “Cooling & Enclosure” Specialists
Air cooling is dead for AI. Liquid cooling is now the industry standard for racks exceeding 50kW.
nVent Electric (NVT): While Vertiv handles the overall system, nVent specializes in the “liquid-to-chip” manifolds and high-tech enclosures. It recently raised their three-year organic sales growth targets specifically because of the data center supercycle.
Modine (MOD): Originally an automotive cooling company, it has pivoted hard into data center liquid cooling. It is often viewed as a smaller, more specialized alternative to the larger players.
Summary Comparison for the Secondary Layer
Frequently Asked Questions
1. Why is software falling while chips are rising? Investors are prioritizing hardware because it is a tangible requirement for AI. Software faces uncertainty due to “seat compression” where AI replaces human users who previously paid for licenses.
2. Is it too late to buy semiconductor stocks? While valuations are high, the transition to the “Inference Era” suggests long-term demand remains strong. However, focus on companies providing cooling and power (the infrastructure) rather than just the chips.
3. Which software stocks are safe? Software companies with a deep “data moat” or those that own the “System of Record” are safer. Look for companies moving toward usage-based or outcome-based pricing models.
Alain Guillot is a part time event photographer, part time Salsa teacher, and part time personal finance blogger. He came to Quebec as an immigrant from Colombia. Due to his mediocre French he was never able to find a suitable job, so he opened a Salsa/Tango dance school and started his entrepreneurship journey. Entrepreneurship got him started into personal finance and eventually into blogging. Now he lives a Lean FIRE lifestyle and shares his thoughts in his blog AlainGuillot.com. This blog appeared first on his blog and is republished here with permission.
Navigating the complex world of Elder Law Asset Protection requires expert guidance to maintain independence and ensure appropriate financial resources for your future well-being. Proper legal planning is a critical strategy in wealth preservation.
Elder Law experts, including Ettinger Law Firm, offer the best services for protecting savings, including Medicaid asset protection trusts, long-term care planning and the creation of irrevocable trusts. These services help seniors qualify for aid while shielding their nest eggs from depletion by healthcare costs.
What are the Hidden Financial Threats to your Retirement Savings?
Aside from market fluctuations, one of the biggest dangers to retirement savings is the cost of long-term care. The national average for a semi-private room at a nursing facility is $112,420 annually, and is expected to reach $186,000 in 20 years with inflation. This outlay alone is enough to deplete your assets entirely.
Without proper Asset Protection for seniors, one’s estate could also be drained by probate. Additionally, sudden incapacitation could leave your finances vulnerable and result in costly guardianship proceedings that jeopardize the nest egg you have worked tirelessly to build.
How do Elder Law Attorneys Strategize Estate Planning for Retirees?
An Elder Law attorney deploys comprehensive legal tools designed for direct financial benefit. These methods help them shield your savings from long-term health care costs, probate and unforeseen incapacity before they ever arise.
Asset Protection Trusts
Planning for incapacity is critical. A revocable living trust allows you to designate someone you trust to manage your affairs, ultimately avoiding the costly and restrictive court-appointed guardianship.
Attorneys might also use an irrevocable trust to shield assets from long-term-care creditors. By transferring assets into this specialized trust early on, you can add legal protection to your savings so you do not spend them on nursing home costs. This effectively preserves your legacy for your spouse and heirs.
Medicaid and Government Benefits Planning
An Elder Law attorney can restructure your finances so you are qualified for Medicaid’s long-term care requirements. Rather than hide your money, they will arrange it to circumvent complex government rules. The approach preserves a portion of your assets for the living spouse’s expenses or as an inheritance for your children.
Long-term Care Insurance
Long-term Care Insurance is a financial product that helps you cover future care expenses by paying a benefit for services. While it is an excellent tool, it is not suitable for everyone due to complex policies and high costs.
However, if you have a good income, Long-term Care Insurance is worth considering. A person turning 65 has a 70% chance of requiring long-term care services. On average, women need care for 3.7 years while men need it for 2.2 years.
Durable Power of Attorney and Advance Directives
A durable power of attorney gives a trusted individual of your choosing control over paying your bills, managing your investments and handling affairs that you can no longer do yourself. It ensures seamless management of your assets without needing court intervention. Also, advance directives for health care help prevent family disputes and ensure everyone follows your medical wishes.
What Differs among Estate Planning Strategies?
It is beneficial to compare the asset protection and estate planning services for retirees.
Strategy
Primary Financial Goal
How It Protects Assets
Best For
Key Consideration
Asset Protection Trust
Protect assets from creditors and lawsuits so they remain preserved for your heirs
Transfers ownership of assets to a trust, so they are removed from your personal estate
Those with substantial assets who want to ensure a legacy for their family
Usually requires giving up direct control over your assets that are placed in a revocable or irrevocable trust
Medicaid Planning
Qualify for federal assistance to cover long-term care without depleting your savings
Strategically structures assets to meet Medicaid’s eligibility limits
People with moderate assets who may not be able to fund long-term care on their own
Subject to a five-year look-back period, requiring advance planning
Long-Term Care Insurance
Pay for future long-term care needs with a dedicated insurance policy instead of your personal savings
An insurance policy offers a defined benefit for approved care services
Healthy individuals who can afford the premiums and want a predictable way to cover future care costs
Must qualify according to health, as premiums are usually costly and may increase over time
Power of Attorney
Prevent expensive court-appointed guardianship for seamless financial management if you become incapacitated
Legally appoints a trusted individual to manage your finances on your behalf
Everyone — it is a foundational tool for all adults, regardless of their wealth
The chosen individual retains power over assets, so trust is critical
How do you Choose the Right Asset Protection Specialist?
Selecting a reputable Elder Law attorney is critical for protecting your assets as an older adult. You want to partner with a firm that has the experience to navigate intricate eligibility requirements for various options while prioritizing your comfort. Continue Reading…
If you are Canadian and you buy or sell U.S. stocks, you need to remember that arbitrage in the stock market is your friend, all the more so when it has an assist from AI, or Artificial Intelligence.
Arbitrage is the simultaneous purchase and sale of an asset in different markets, to exploit tiny differences in prices. We take advantage of it for our Portfolio Management clients whenever we can, to cut their trading costs. Here’s how it works:
If we’re selling a Canadian stock for a client and plan to use the proceeds to buy a U.S. stock, we offer the Canadian stock (on a Canadian or U.S. exchange) for sale in U.S. funds. When we want to sell a U.S. stock to buy Canadian, we reverse the order and offer the U.S. stock for sale in Canadian funds.
Now that you can buy and sell in either currency on both sides of the border, arbitrageurs (also known as “arbs” — traders who buy and sell in two different currencies simultaneously) constantly monitor trading activity to spot slight differences in one currency versus the other. When they spot any such difference, they simultaneously buy the stock where it’s cheaper and sell it where it’s more expensive, eking out a tiny profit on the difference.
This trading activity serves to cut cross-border share-price differences to the point where they are, for practical purposes, negligible. This makes the markets more liquid. It cuts trading costs for everybody. Continue Reading…
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