Friday, November 27, 2009

Short Takes: Save by Paying for Advice, a Fifth Birthday, and Property Management

I had the opportunity to give an invited talk to an investment club called the Ottawa Share Club on Wednesday night.  I was peppered with many interesting questions some of which are likely to inspire future posts on this blog.  Many thanks to the club members and specifically co-founder James Palmer for the invitation.

1. Rob Carrick explains why you can save money by paying explicitly for financial advice rather than taking seemingly free advice.

2. The Canadian Capitalist blog has been going strong for 5 years and is giving away $500 to celebrate. Congratulations on 5 years of sound information and analysis.

3. Jonathan Chevreau notes that the recent bear market has motivated financial advisors to recommend more alternative investments (the web page with this article has disappeared since the time of writing). I think this characterization is too charitable for financial advisors. Clients are more inclined to buy alternative investments because of the perception that standard investments don’t work any more. Financial advisors are willing to sell whatever the client will buy as long as the advisors make money from it. My characterization may be a little too uncharitable, but I bet it’s closer to the truth.

4. Canadian Financial DIY reports on research into how long it takes for stocks to give positive real returns. This should resonate with investors who have little stomach for volatility.

5. Preet has a guest writer, Ken Kivenko, to explain how you can get hit with tax distributions from mutual funds even if you didn’t own the mutual fund when it earned the income.

6. Larry MacDonald looks at the issue of whether to go with a bond ETF or a bond ladder. I think he’s overdoing it by having 10 bonds in the bond ladder, but seeking to minimize costs is definitely the right approach.

7. If you enjoy a good rant, check out the latter half of Potato’s discussion of searching for housing and dealing with real estate agents.

8. For more ranting, have a look at the Big Cajun Man’s thoughts on gifts to charity in lieu of presents and battling with Bell. You may or may not agree with him, but he is funny.

9. Do you make a lot of transactions in your bank account and want to minimize fees? Guest writer Kathryn at Million Dollar Journey has information on unlimited banking packages and how to get the fees waived at major Canadian banks.

8 comments:

  1. Thanks Michael. Another explanation for advisors diversifying clients into alternative investments is that they are chasing performance just like other investors. For another recent example, look at all the University endowments who copied Yale and piled into private equity, hedge funds and other illiquid investments.

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  2. CC: You're right that some advisors must be recommending alternative investments because they genuinely believe that their clients will make more money that way. However, other advisors make this pitch just because it works on their clients. It's always easy to say "look at this approach that just blew up; it's obviously flawed and I can show you the smart path to wealth." When alternative investments start blowing up (as all investments with risk do from time to time), how many of these advisors will then just jump to the next thing to sell their clients?

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  3. MJ:

    A week of great spleen venting from my side, but it needed to be said!

    Have a pleasurable weekend.

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  4. Thanks again Michael for coming and speaking to our group.
    It was a very interesting and informative discussion. Thanks for staying late to answer everyone questions.
    Enjoy
    James

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  5. Thanks for the link!

    I'll tell the tale of dealing with landlords directly soon, probably Monday (I have one more house to look at this weekend first!)

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  6. Thanks for the link. That's pretty neat that you gave an investing talk.

    Mike

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