All posts by Jonathan Chevreau

Retired Money: A new DIY financial literacy course for aspiring Retirees

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Kyle Prevost: https://worryfreeretire.com/

My latest MoneySense Retired Money looks at a new Canadian DIY financial course created by MoneySense Making Sense of the Markets columnist Kyle Prevost [pictured above].

For the full column, click on the highlighted text: How to plan for retirement for Canadians: A review of Four Steps to a Worry-Free Retirement course.

November is of course Financial Literacy Month in Canada. And Kyle Prevost is well qualified to help Canadians boost their financial literacy, especially as it relates to Retirement.

In addition to being a subject matter expert in Canadian personal finance, Prevost is also a life-long teacher, which makes him doubly qualified to create this course, which he describes as a first in Canada.

And the combination shows: it’s a slick multi-media package that features snazzy graphics with voice-overs by Kyle himself, plus more in-depth PDF backgrounders and videos with various experts gathered through one of Prevost’s other projects: the annual Virtual Financial Summit (for which I have often been interviewed.)

Entitled 4 Steps to a Worry-Free Environment in Canada, the multi-media course is targeted to those thinking seriously of retiring from the workforce in the next decade or two, and even semi-retirees or those who have already reached that milestone but who want to finetune their retirement income strategy.

An ongoing theme throughout the course and related materials is “No one will care about your retirement as much as you do.” That’s a variant of the oft-used phrase “No one cares about your money more than you do.”

From CPP/OAS to Working for a Playcheck

You can find the course at this site: https://worryfreeretire.com/. You can get a flavor of what’s included before committing to payment by clicking on the “Tell me more” button. If you’re ready for the full enchilada, click on the “Get Started” button. There are various payment options, including major credit cards.

At C$499, the course does represent a major investment but the outlay could be considered a bargain if it helps some DIY retirees escape the clutches of a conflicted securities salesperson who cares more about their own retirement than that of their clients. Continue Reading…

Canadian Financial Summit starts online October 18

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https://canadianfinancialsummit.com

 

The annual Canadian Financial Summit kicks on online tomorrow: Wednesday, Oct. 18, 2023.

The all-virtual summit, now in its 7th year, features more than 35 speakers, including Yours Truly, as well as several other financial commentators pictured to the left: Ellen Roseman, Rob Carrick, Preet Banerjee, Ed Rempel, Lisa Hannam and many more.

Other familiar names that will be familiar to Hub readers include Dale Roberts, Jason Heath, Robb Engen, Kornel Szrejber and Barry Choi.

Here are some of the topics:

  • How to plan your own retirement at any age
  • How to save money on taxes by optimizing your RRSP to RRIF transition
  • Get Into Your First House with the New FHSA (First Time Home Savings Account)
  • Retirement Decumulation Strategies
  • Adjusting to the World of High Interest Rates
  • Using Annuities and Equities to Create a Retirement Paycheque
  • The Pension Paradox: Lump Sum vs Cash for Life
  • Plan your personalized combination of a DIY portfolio alongside an annuity for a customized stream of retirement asset growth + monthly income.
  • What Canadian real estate investments looks like in 2023
  • How to deal with inflation on your bills and in your investment portfolio
  • The best Canadian personal finance books of all time! (That’s my topic).
  • When to take your OAS and CPP
  • Travel for free with Canada’s loyalty rewards programs

The founder of the Summit is Kyle Prevost (pictured right), who is also a writer at Million Dollar Journey, and writes the weekly MoneySense Making Sense of the Markets column, among other things.

Kyle also is the creator of a multi-media course titled 4 Steps to a Worry-Free Retirement, which I’ll be featuring in my next MoneySense Retired Money column.

The All-Access pass costs $89 if you act quickly enough. Plus, there’s a no questions asked money-back guarantee for those who change their mind.
Prevost will be sending email updates most of the week. Here’s what Monday’s said (in part):

Despite recession fears & inflation, DB pension health improving: Mercer

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Things appear to be looking up for members of Defined Benefit [DB] pension plans in Canada, despite inflation and rising fears of a looming recession.

In the third quarter, Canadian defined benefit (DB) pension plans continued to improve, according to the Mercer Pension Health Pulse (MPHP), released on Monday.

The MPHP, which tracks the median solvency ratio of DB pension plans in Mercer’s pension database, finished the third quarter at 125%, up from 119% last quarter. At the beginning of the year, the MPHP was at 113%, as shown in the chart above left.

This strengthening appears somewhat counterintuitive, as pension fund asset returns were mostly negative in the quarter, Mercer said in a news release. Over the quarter, bond yields increased, which decreases DB liabilities.  This decrease, along with a fall in the estimated cost of buying annuities, “more than offset the effect of negative asset returns, leading to stronger overall funded positions.”

Plans that use leverage in the fixed-income component of their assets will not have seen this type of improvement, it added.

Of plans in its database, at the end of the third quarter 88% were estimated by Mercer to be in surplus positions on a solvency basis (vs. 85% at the end of Q2). About 5% are estimated to have solvency ratios between 90% and 100%, 2% have solvency ratios between 80% and 90%, and 5% are estimated to have solvency ratios less than 80%.

Ben Ukonga

“2023 so far has been good for DB pension plans’ financial positions,” said Ben Ukonga, Principal and leader of Mercer’s Wealth practice in Calgary [pictured on right],” “However, as we enter the fourth quarter, will the good news continue to the end of the year?”

The global economy is still on shaky grounds, Mercer says.  “A recession is not completely off the table, despite continued low unemployment rates. Inflation remains high, potentially back on the rise, and outside central banks’ target ranges.”

Geopolitical tensions also remain high, reducing global trade and trust and fragmenting global supply chains – which further reduces global trade. And the war in Ukraine “shows no sign of ending – adding economic uncertainty atop a geo-political and humanitarian crisis.”

Mercer also questions whether recent labour disruptions at U.S. auto manufacturers will be resolved quickly, with Canadian workers expecting large wage increases, leading to further inflationary pressures.

Interest rates may stay at high levels

Mercer also worries that central banks globally may continue to keep benchmark interest rates at elevated levels.

 “Given the delayed effect of the impact of interest rate changes on economies, care will be needed by central banks to ensure their adjustments (and quantitative tightening) do not tip the global economy into a deep recession, as the full effects of these actions will not be known immediately. As many market observers now believe, the amount of quantitative easing during the COVID-19 pandemic was more than was needed.”

Most Canadian DB pensions are in favourable financial positions, with many plans in surplus positions, the release says: “Sponsors who filed 2022 year-end valuations will have locked in their contribution requirements for the next few years, with many being in contribution holiday territory (for the first time in a long time).”

That said, it added, DB plan sponsors should not be complacent: “Markets can be volatile, and given that plans are in surplus positions, now more than ever is the time for action, such as de-risking, pension risk transfers, etc. These actions can now be done at little or no cost to the sponsor.”

Mercer also said DB plan sponsors should “remain cognizant of the passing of Bill C-228, which grants pension plan deficits super priority over other secured creditors during bankruptcy and insolvency proceedings.”   Continue Reading…

Retired Money: Time for a Newsletter Purge?

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My latest MoneySense Retired Money column suggests that for retirees and semi-retirees like myself, it may be time for a newsletter purge. You can find the full column by clicking on the highlighted text here: Check your inbox: Investing newsletters can cost you more than a sub fee.

The column is a frank confession of some rather painful investment losses sustained the last three years, mostly from recent IPOs or SPACs.

When I asked myself where some of these investment “ideas” came from I realized that almost all of them came from investment newsletters published by various American stock pundits, self-proclaimed or otherwise, including two I mention below.

The worst of these is supposed EV play Lordstown [RIDE], down in my account an astounding 100%, following its recent bankruptcy. And no, I did not renew the newsletter responsible, which I have been persuaded I should not divulge here.

Credit another Letter for tipping me to such losers as Matterport (MTTR/Naqsdaq: down 83% after its recommendation), Zoom (ZM), down 80% and Coinbase (COIN), down a whopping 78%. I won’t name his newsletter as it doesn’t matter: the culprit responsible left some time in 2022, his patience exhausted long before the “Hold with strong hands” patience he recommended for his hapless readers.

When I further asked myself how it came about that I subscribed to these newsletters in the first place, I realized that well more than half were the result of email pitches and — typically — a US$49 per year offer. You know the drill: get 3 or 4 “special reports” that divulge the ticker symbols of these moonshots that are as apt to crash your portfolio as they are the hoped-for 10-baggers.

From a risk management perspective, I tend to invest far less in such speculations (for that’s what they are), compared to blue-chip individual stocks, broadly based ETFs or GICs, but those $1,000 or $1,500 per spec losses do add up.  The MoneySense column goes into some detail on the hazards of holding such losers in registered accounts, versus tax-loss selling in taxable ones.  [The tax tail often waves the investment dog in both directions.}

Stop biting on initial pitches, then stop renewing

So job one is to stop clicking on those email pitches. Second, do not renew them when they come up for it, typically after a year. Beware automatic renewals: you may have to contact the publishers directly to cancel.

A few exceptions

I don’t want to throw out the baby with the bathwater and it’s only fair to say there may be the odd exception, particularly here in conservative Canada. I have long been on the record for reading and sometimes acting on the recommendations of Patrick McKeough of The Successful Investor and his stable of newsletters like Wall Street Forecaster and Canadian Wealth Advisor. Most of Patrick’s stock picks are well-known blue chips. When he does go further afield with foreigner domestic juniors he identifies them as being riskier and suitable mostly for “aggressive” investors. Fair enough! Incidentally, Patrick kindly allows us to run an article here on the Hub roughly on a monthly basis: you can do worse than act on recommendations like this recent instalment: Use these successful investment strategies for your portfolio success.

I also respect the work of fellow Canadian Gordon Pape, who is a regular writer for the Globe & Mail. For the most part I find the Motley Fool to be decent, although I tend to focus on their free audio podcasts rather than their paid-for newsletters. At one point, in fact, I wrote for them.

Minimize media market noise

The MoneySense column also mentions some related topics, like monitoring cable TV all-news channels that also run stock quotes. We’ve looked before on the Hub about steps to take to avoid investment noise and the Fear of Missing Out (aka FOMO: currently, it’s all about AI). CFA and investment advisor Steve Lowrie, also a Hub contributor, and one who I initially met through the aforementioned Pat McKeough, captured this nicely in this blog: SPACs, NFTs and another Tech-inspired Silly Season. Continue Reading…

Retired Money: What ETFs are appropriate for retirees?

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Photo by Alena Darmel from Pexels, via MoneySense.ca

My latest MoneySense Retired Money column looks at what ETFs might be appropriate for retirees and near-retirees. You can find the full column by clicking on the headlined text here: The Best ETFs for Retirement Income.

I researched this topic as part of a MoneyShow presentation on the ETF All-Stars, scheduled early in September, to be conducted by myself and MoneySense editor Lisa Hannam. Regular MoneySense and some Hub readers may recall that I was the lead writer for the annual ETF All-Stars package but after almost a decade decided to pass the reigns to new writers: this year’s edition was spearheaded by Michael McCullough.

While the ETF All-stars (which are selected now by a panel of seven Canadian ETF experts) are appropriate for all ages and stages of the financial life cycle, a solid subset of the picks can safely be considered by retirees. A prime example are the Asset Allocation ETFs, many of which have been All-Star picks since Vanguard Canada launched them several years back, and since matched by BMO, iShares, Horizons and others.

Generally speaking, young people can use the 100% growth AA ETFs like VEQT etc., or (which I’d be more comfortable with), the 80% growth/20% fixed income vehicles like VGRO. Near-retirees might go with the traditional 60/40 stocks/bonds mix of classic balanced funds and indeed pension funds: VBAL, XBAL, ZBAL, to name three.

Those fully in Retirement who want less risk but a bit of growth could flip to the 40/60 stocks/bonds mix of VCNS, XCON (check) and ZCON (check.).

In theory all you need is a single asset allocation ETFs, no matter where you are in the financial life cycle. After all, all these ETFs are single-ticket highly diversified global plays on the stock market and bond market, covering all or most geographies and asset classes. And their MERs are more than reasonable: 0.2% or so.

A single Asset Allocation ETF can suffice, but consider adding some tactical layers

In practice, most investors (whether retired or not) will want to do a bit more tinkering than this. For one, the asset allocation ETFs tend to have minimal exposure to alternative asset classes outside the stocks and bonds realm. They will include gold stocks and some real estate stocks or REITs, but little or no pure exposure to precious metals, commodities or indeed cryptocurrencies. (Maybe that’s a good thing!).

The MoneySense article bounces my ideas for adding tactical layers to an AA ETF. For example, you might use the 40/60 VCNS instead of 60/40 VBAL, for 80% of your investments, reserving the other 20% for more tactical mostly equity specialized ETFs. You’d aim for a net 50/50 asset mix after blending the AA ETF and these tactical ETFs. Continue Reading…