Canadian investing blog on index funds, model portfolios, ETFs, and portfolio returns for do-it-yourself investors.
Commenters recommend it as a go-to starting point for new investors, citing its model portfolios, often alongside Bogleheads.
> If you exclude dividend paying stocks, then the entire stock market starts to look like a giant pyramid scheme casino.
Stocks can start paying dividends in the future: MSFT did not in the past, and does now. AAPL did, stopped in the 1990s, and started doing so again.
You should be indifferent to the company's dividend scheme since it's the underlying business activity that drives total returns, and not its distribution policy. There is all sorts of magical thinking when it comes to dividends:
* https://canadiancouchpotato.com/2011/01/18/debunking-dividend-myths-part-1/
* https://pwlcapital.com/the-irrelevance-of-dividends-still-a-non-starter/
A pyramid scheme can run out of people to keep it going: the stock market is in a sense a 'savings scheme' for future consumption. Younger people work and turn their cash into savings, older people take their savings and turn it back into cash: as long as young people need to think about the future, and older people / retirees need to pay bills, there's a mechanism to maintain this cycle.
> Stocks are just like hens. They lay eggs called “dividends”,
The general advice of not worrying about market dips/corrections is good. Even if you only invest at market peaks, if you stick with it and don't sell, things will turn out pretty well:
> Meet Bob.
> Bob is the world’s worst market timer.
* https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/
The specific advice of going after dividends is not as prudent, as one should (especially with retirement savings) go after total return:
* https://www.youtube.com/watch?v=UpXI_Vd51dA
There are a whole bunch of myths that have sprung up over dividends:
> Dividend Myth #1: Companies that pay dividends are inherently better investments than those that don’t.
> Dividend Myth #2: Dividend investors are successful because they select excellent companies and buy them when they are attractively priced.
> [Total of six myths.]
* https://canadiancouchpotato.com/2011/01/18/debunking-dividend-myths-part-1/
Not sure why there was such a knee-jerk reaction, but it's actually fairly straight forward and not scammy at all. You're performing two trades, using a money market ETF that trades at the currency exchange rate, and paying standard brokerage fees + spread instead of currency conversion fees.
If you pay $20 in fees + spread for 2 trades, that'll be the cost of the conversion. For a $10k conversion, that's 0.2%. Unless you're suggesting that a money market ETF is prone to manipulation, your brokerage is going to scam you, or you don't like to deal with taxes on your stock purchases/sales, there isn't much drawback other than time. The larger the amount though, the more it'll potentially be worthwhile.
More info about this:
http://www.theglobeandmail.com/globe-investor/norberts-smart-way-to-convert-dollars-across-the-border/article20279926/
http://canadiancouchpotato.com/2013/12/03/norberts-gambit-the-complete-guide/
http://www.finiki.org/wiki/Norbert's_gambit
I read that book this year. The entire book can be summarised as.
Don't attempt to beat the market. The market cannot be beat (many examples in the book). Invest in index funds long term which is the right mix of risk/reward for most people.
It does have a chart in the back which tracks your age and situation. For example as you approach retirement you should start to liquidate your funds and buy government bonds so you aren't hit by a bad year when you have to start drawing on your investments.
It did convince me. I opened accounts with Wealthsimple and Questrade the next day.
A great site for fellow Canadians is http://canadiancouchpotato.com/ - you can skip the book.
This book is an excellent start and the author has made it available for free as a PDF (you can also get it on Amazon)
http://efficientfrontier.com/ef/0adhoc/ifyoucan.pdf
It lays out an effective retirement strategy in the first paragraph or so, and spends the rest of the book explaining it. Short and easy read. The strategy has to be adapted somewhat for non-Americans - if you're Canadian, the adaptations can be found at https://canadiancouchpotato.com/.
Like I said, it's a start, but it also recommends a lot of good and trustworthy resources to continue your learning after you read it. I found it through /r/personalfinance as the other commenter suggested.
> I’ve never seen anyone recommend 60/40 at least in the era of forums like Reddit personal finance and Bogleheads.
It's recommended all the time in (e.g.) /r/PersonalFinanceCanada if you want a more conservative portfolio (e.g., in or nearing retirement):
* https://canadiancouchpotato.com/model-portfolios/
or if it suits your risk profile (you'd lose sleep over large dips in your portfolio, even if you aren't in/near retirement):
* https://old.reddit.com/r/PersonalFinanceCanada/wiki/investing#wiki_consider_the_risks
* https://www.youtube.com/watch?v=JyOqqtq12jQ
* https://canadianportfoliomanagerblog.com/model-etf-portfolios/