I’ll be participating in a live discussion on investment topics on Globe Investor on Monday, August 17, 2009 at noon. I hope you can join in.

  1. Investing is fairly simple — develop a good plan and stick to it. Many investors don’t even have a plan but even those that do have trouble with the “sticking to it” part. Dan Richards wrote in The Globe and Mail about the behavioural traps that keep investors from sticking to a plan. Michael James also noted that when stocks are down, investors fail to rebalance believing their plan might be too aggressive.
  2. I don’t want to pick on The Star but its headline (Canadians paying through the ear for cellphones) is representative of a recent OECD report on cellphone prices in 30 countries. Dig deeper into the reports and you’ll find that Canada actually ranked 11th (out of 30 countries) in low-use, 3rd in “medium-use” and 12th in “high-use”.
  3. Rob Carrick shows how to build a diversified portfolio with just three iShares ETFs.
  4. Tim Cestnick listed the things that can help with winding down a loved one’s estate.
  5. Thicken My Wallet says that financing a small business is a larger-scale version of personal money management and the lessons of one apply to the other.
  6. Million Dollar Journey wrote about the Guaranteed Income Supplement (GIS) and its clawback. Personally, I’m hoping we won’t receive GIS!
  7. Claymore is conducting the 2nd Annual Next Top Model Summer ETF Competition. Larry MacDonald has some tips on winning stock picking contests. Last year, I picked CLO, COW and GAS and finished somewhere near the bottom.
  8. Kids will be back to school in a couple of weeks. Chaya Cooperberg wrote about how back to school shopping is stressing parents out.
  9. Where Does All My Money Go? featured a guest post by Daniela Garritano on having a champagne wedding on a beer budget. Speaking of weddings, Realizing Retirement, a new financial blog, featured the first in a series of posts on planning an actual budget wedding.
  10. Summer is also the time for vacations. Four Pillars says that to calculate the true cost of vacations, you have to net out the expenses of staying home.

With temperatures topping 30 degrees in Ottawa, summer seems to have finally arrived in Central Canada. Have a great weekend everyone!

This article has 18 comments

  1. Here in Edmonton we’re at 15 degrees right now… I think our 2 week summer has come and gone!

  2. Thanks for the mention – enjoy your weekend.

  3. Thanks for the link love!

  4. Thanks for the mention. I had seen the cell phone report and was surprised to read that Canadians (who have cell phones) average 15 minutes of use per day. I’m not keeping up my end — 15 minutes would be a heavy month for me.

  5. Thanks for the link CC!

  6. I find it rather amusing that people here have been complaining that we haven’t had a summer… Then when the hot weather finally arrives, the same people start to complain about the heat. Anyways…

    I think your (stick to the) investment plan is too simplistic. For example, if we were pumping $1k per month into new investments and we lose our jobs, then does it make sense to keep pumping $1k per month into investments to accelerate our way into bankruptcy? Or an illness due to disability or whatever? The investment plan must change to reflect changing living conditions…

  7. Canadian Capitalist

    @Michael: Same here. Our usage is extremely low as well.

    @Phil: Good point. If circumstances change, bigger problems than sticking to an investment plan need to be attended to. It is also a moot point — if I lose my job, I may not have the savings to keep investing anymore.

    But the point made here is that assuming personal circumstances are largely the same, investors still are frozen with fear in bear markets. Just look at mutual fund flows — the outflows typically peak at market bottoms. And inflows typically peak at bull market highs.

  8. @CC: But that’s exactly my point. Isn’t it possible that at least a portion of the mutual fund flows may be as a result of people who have lost their jobs and have no other option than to liquidate their investments in order to keep a roof over their head and food in their tummy? Circumstances can have a dramatic effect on investment patterns, although I don’t have any firm numbers on how many investors were laid off from their jobs. It’s all anecdotal.

  9. The same thing applies to people who are forced into early retirement, a severance or whatever… When this occurs en masse, then pension funds have to liquidate in order to fund the massive blip in beneficiaries. This liquidation also ultimately affects the market, but the pension funds aren’t liquidating because they want to – they are doing so because they have to in order to maintain some liquidity.

  10. Thanks for the mention CC, I’ll be logged in on Monday for sure! Good luck!

  11. Thanks for the link. Good luck Monday.

  12. Don't Like My Advsior

    Looking for some advice. I have been thinking of switching to index/ETF investing for some time and my last meeting with my advisor confirmed my thoughts. Here’s my problem. If I transfer my holdings to a TD account I have to cash out and I would lose approx 1.1% of my investments because of the asinine 7yr DSC fund he put me in. Assuming I have average MERs, I should be able to make up the loss simple by being in ETF’s that have MER’s that are approx 2%+ lower. Is my logic right?

  13. CC, a friend and I were talking about dividend payouts on US Exchange ETFs. I know that you do not use DRIPs and instead choose to accumulate your dividends. Since I do not have the option to hold US$ in my TD RRSP account, where do I park the dividends without incurring FX charges? Can I set it up so that any dividend payouts go in to the TD US money market fund?

    • Canadian Capitalist

      @Cogsy: I don’t think you have the option of accumulating dividend payments from US equities in the TD US MMF. Assuming the dividend yield of your portfolio is 3%, the FX charge would cost you 3 basis points (1% of 3%) and another 3 basis points for converting to US dollars. Since, there is no way that I know of to avoid this charge, I don’t worry about it too much.

  14. Is there any currency conversion if I set the US ETFs up as DRIPs?

  15. I’m surprised that Rob Carrick did not discuss transaction costs in his portfolio advice. A 20 something investor may not necessarily come out ahead when investing in etfs if they only invest, say, 10% of their pay a month.

    Questrade is charged 5 bucks a trade. So if you are investing each month into three etfs, that’s 15 bucks a month (plus taxes I assume). That’s almost 200 bucks a year.

    Anyone have any advice for a young investor on how to keep costs down? Purchase your etfs only once a year? Or, would low cost index mutual funds be a better bet?

  16. If you are looking to do small amounts on a wide variety of investments, you may want to check out a service like shareowner investments. The best strategy here is to move money each pay in to a high yield saving account, and then every quarter, half, or yearly, make one bulk purchase of a selection of investments from their pre-selected funds available.

    It’s not like a regular discount broker, since it’s a co-op trading system, so it takes some getting used to, but you can always transfer out once you get a larger amount in your accounts after a few years.

  17. Thanks for the tips Traciatim.