Tag Archives: Retired Money

Retired Money: “Exploring” with baskets of individual stocks once the indexed core is taken care of

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Image via MoneySense.ca: Chris Montgomery on Unsplash

My latest MoneySense Retired Money column looks at how retirees can use a hybrid  “core and explore” approach to portfolios. Click on the highlighted headline for full column: How to master Core-and-Explore Investing.

For the average investor at or near Retirement age, I believe the “core” – the 80 to 90% of so-called “Serious Money” – can be held in balanced funds or low-fee indexed solutions like Asset Allocation ETFs from BMO, Horizons, iShares,  and Vanguard: a single such fund holds thousands of stocks and bonds spread around the world.

If your risk tolerance is high enough, that leaves 10 to 20% for a more adventurous “Explore” allocation that could go into more speculative alternatives to the mostly stocks and bonds held in the core. This could include new tech IPOs or cryptocurrencies like Bitcoin or Ethereum, or investment funds that track them, as Dale Roberts and I surveyed in twoMoneySense articles recently. Sadly, volatile cryptos and crypto funds can also generate comparable losses just as quickly so keep these to no more than 1 or 2% of a total portfolio and be quick to take partial profits in registered accounts.

If booking gains without tax considerations, you could put the proceeds into less volatile speculations. One surprize from 2020 and so far in 2021 is the glut of new stock offerings, IPOs, including the mania over SPACs, which I only touch on in the column.

The one rule for speculative single issues is not to bet your whole speculative budget on a single name. Older folk may choose “baskets” of four or five stocks in several sectors.

I’m normally wary of IPOs: some joke IPO stands for It’s Probably Overpriced. However, for the first time I recently bought an IPO on its day of issue: online vacation rental firm Airbnb Inc. [ABNB/Nasdaq], recommended by more than one investment newsletter to which I subscribe. That was the first time I bought an IPO the day it started trading, though I regret NOT having jumped on Google’s IPO back in 2004.

Recent IPOs

I prefer to wait a few months for new issues to settle: that approach worked with Facebook after it fell within a few months of its initially botched IPO. And recently I’ve taken post-launch “starter” positions in plant-based meat substitute maker Beyond Meat [BYND/Nasdaq], cloud data warehousing firm Snowflake Inc./[SNOW/NYSE, and the now ubiquitous Zoom Video Communications [ZM/Nasdaq.] Continue Reading…

How TFSAs can aid your Victory Lap

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depositphotos_43073977_xs-300x295My latest MoneySense Retired Money column on TFSAs is now online. You can read the whole thing by clicking on this highlighted link: How retirees can use TFSAs to save on tax.

I’m a huge fan of The Tax-free Savings Account or TFSA both for young people and for seniors, and everyone between.

It’s the single most powerful investment tax shelter available to Canadian investors. (For any American readers, the TFSA is roughly the equivalent of Roth IRAs).

So if you’re a member of the much-touted “Millennial” generation, you should move heaven or earth to maximize the annual $5,500 contribution as soon as you turn 18 – even if you have to solicit a “matching” contribution from your parents.

If you’ve not yet opened up a TFSA,  as of 2017 the cumulative TFSA room built up since the plan’s debut in 2009 will be $52,000. As I say in the column, for millennials the combination of the newly expanded Canada Pension Plan and a TFSA maximized from age 18 on means that by the time they are old enough to read the Retired Money column, they will be well positioned for retirement.

While late for Boomers, TFSAs can still be a boon in retirement

But as this particular MoneySense column has been dubbed “Retired Money,” the focus is on what the TFSA can do for near-retirees and seniors already retired. When it first came out in 2009, we aging baby boomers lamented the fact the TFSA hadn’t been available when we we were just starting out.

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Debuting today: my new “Retired Money” blog at MoneySense.ca

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happy businessman with passive incomeToday and every two weeks or so, MoneySense.ca will be running a new online column by me they’re calling “Retired Money.” You can find the first instalment by clicking on this highlighted headline: Ways to Pay Less Tax in Retirement.

This first piece looks at some tax credits that working folk will probably be unfamiliar with: The Age Credit for those who are 65 with relatively low incomes, and the Pension Credit.

So what do we mean by “Retired Money?” What happened to Findependence and Victory Lap? Well, those will remain a focus of this website and my forthcoming book with Mike Drak: Victory Lap Retirement. Here’s how MoneySense bills the new column:

Retired Money …. will explore smart ways to draw down income in retirement and semi-retirement. 

Here at the Hub, we usually house topics like this under the Decumulate & Downsize section. A typical guest blog will be something from Doug Dahmer, such as Debt is a Four-Letter Word during your drawdown years.

MoneySense Portfolio Event this Saturday

Going back to MoneySense, this coming Saturday morning, May 7th, MoneySense is hosting a special event. Continue Reading…