The fifth and final of my “Mistakes you’re probably making” series at MoneySense.ca was published today: Retirement saving mistakes you’re probably making.

In it, Emeritus Retirement Solutions’ Doug Dahmer — a frequent Hub contributor in the “Decumulation” section — points out that the strategies used in Wealth Accumulation are quite different than those needed once you reach the De-Accumulation or “Decumulation” stage. One of his colourful phrases is “dollar cost ravaging,” which is the opposite of “dollar cost averaging.”

The blog ends with links to the four earlier instalments this week.

As indicated in this space on Monday, MoneySense.ca is running a week-long special series of blogs, including daily ones by Yours Truly, recounting the most common mistakes we all make in saving, paying down debt, investing, retiring and in selling our homes.

Today’s instalment tackles the latter and titled Real estate mistakes you’re probably making.

Other instalments

Continue Reading…

The latest FWB TV video is now up at FWB Securities Inc. and Findependence.TV.

Or click on the enigmatically titled “Millions of dollars lost in bike spokes as children.” That’s a reference to children using baseball or hockey cards a noise-makers on their bicycle wheels, oblivious to the possible future value of their Wayne Gretzky or Mickey Mantle rookie cards.

This video, featuring  Emeritus Professor of Finance Elroy Dimson of the London Business School, is a little more off the beaten track than the earlier ones focused on stocks and bonds. It looks at how “emotional assets” or “collectibles” (like art or stamp collecting)can generate some “psychic income” from the sheer pleasure of enjoying art on your walls or fine wines.

But surprisingly, historically the investment returns from collectives have also been more than decent. Going back between 1900 and 2012, collectibles have generated nominal annual returns of 6.4% and real (net of inflation) returns of 2.4%. That means they’ve actually beaten treasury bills and even such alleged inflation hedges as gold, silver or diamonds. However, they have not performed as well as equities.

The conclusion? If you enjoy the “psychic income” and pleasure of collectibles, that should be return enough but if you also make money from collecting things you’re interested, that should be considered a bonus.

My latest ETF column in the Financial Post carries the descriptive headline, Real-return bond funds are worry-free funds, right? Hardly. As you can see by clicking through on the link, the worry-free label refers to a book by Zvi Bodie entitled Worry-Free Investing.

The book touts the benefits of (in the U.S.) Treasury Inflation Protected Securities (or TIPS) and by extension their equivalents in Canada: Real Return Bonds (RRBs), whether sold individually by the federal government or some provinces, or whether packaged up in mutual funds or ETFs (the latter being the focus of this particular column).

To be sure, this is an asset class that I think deserves to be a subset of most investors’ fixed-income portfolios. But as you can see in the column, when I asked investment advisors and ETF experts about whether now is the time to start building positions in RRB or TIPS ETFs, they were decidedly on the cautious side.

The book, shown above, has been in my personal library since it was originally published, and when I was I reviewed it positively. Curious about whether the author, Zvi Bodie, has updated his views, I tried to reach him for this column but did not hear back. If he does read this, the Hub would be delighted to run a guest blog by him on the topic.

In the meantime, it would seem that inflation-linked bonds and fixed-income funds holding them or any longer-duration products, won’t be as worry-free (relative to stocks) as they once seemed. That’s especially the case if, as now seems to be the case, the Federal Reserve starts to come off zero (interest rates) as early as this December.

Starting Monday and running every day this week, MoneySense.ca will be running a daily blog written by me on the biggest mistakes we make in various facets of personal finance.

The first instalment, just published, is titled Biggest mistakes you make with your savings: the worst thing you could do is not save at all.