A recent Morningstar podcast gave me yet another reason to stay away from private equity.  Episode 357 of The Long View is an interview with Leyla Kunimoto who “is the founder and editor of Accredited Investor Insights , a newsletter that helps investors navigate private markets.”  Among other interesting insights, Kunimoto explained how the practical expedient rule allows private equity to maintain made-up valuations even after private assets are traded at lower prices. In public markets, company valuations are set by the actual price where willing buyers and sellers trade equities.  In private markets, equity valuations are made up.  The methods owners of private equity use to value their holdings can give a wide range of answers.  It’s up to savvy buyers to determine the true value of any assets they choose to buy.  All but the most savvy buyers of private equity are at risk of overpaying. There is now a proliferation of secondary private equity funds b...

The 2025 investment return for my overall portfolio measured in Canadian dollars was 13.7%, which is below my 2025 benchmark return of 16.0%.  There are two main reasons for this difference.  The first is that we made a large financial gift, and the timing of our stock sale to raise cash for this gift was unlucky.   The second reason is my decision a few years ago to shift gradually away from stocks when stock prices are high as measured by the cyclically adjusted price-to-earnings ratio (CAPE) of world stocks.  This shift is tied to my rebalancing plan that is automated in a spreadsheet.  My benchmark doesn’t do any automated shifting away from expensive stocks. This year, stock prices were high but they gave good returns anyway, and my slightly lower than usual allocation to stocks cost me money.  This has happened two years in a row now.  But I’m content with this outcome.  By shifting modestly away from stocks when they’re expensive, my p...

Long time reader Garth asked for my opinion on Wade D. Pfau’s essay Eight core ideas to guide retirement income planning .  Pfau is a smart guy and it’s no surprise that his article is excellent.  I do have some thoughts around the edges, though. “Play the long game” Pfau starts with an important point: “A retirement income plan should be based on planning to live, rather than planning to die.” This means that making sure you have enough money in old age is more important than trying to squeeze out as much money as you can in early retirement.  But we’re not asking you to sacrifice now.  By taking reasonable steps to protect your much older self, you’re freed up to spend a reasonable amount early in retirement without fear of running out of money.  Pfau lists six steps toward playing the long game which I’ll translate into the Canadian context. Delaying starting CPP and OAS As long as you have some savings to live on and you’re in reasonable health, delaying the...

Alts are all the rage now, at least among the people trying to sell them.  But every time I look into an alternative investment class and then back away from the details for a 1000-foot view, this is what I see:

It’s challenging enough to figure out how much you’ll want to spend at the start of retirement.  Even more challenging is deciding how your spending will change as you age.  These choices make a big difference in how much money you’ll need to retire.  They also shape the spending options you’ll have available throughout retirement.  Here I explore the good and bad parts of common wisdom on retirement spending to arrive at my own spending plan for retirement.  Spoiler alert: the “go-go, slow-go, no-go” narrative is good marketing, but it has cracks. Two extremes Some people focus on the early part of their retirement.  They want as much money as possible available early on while they’re still young enough to enjoy it.  They seem to think of their older selves as a different person who they care less about than their current selves. Others focus on their older selves and worry about running out of money at some point.  These people usually spend far...

When Canadians are just getting started managing their own investments at an online broker, their pre-existing ideas create a lot of confusion.  Here I go through several of the most common misconceptions I encounter in a conversation format. Novice Investor:   Ok, so I’ve opened a TFSA with my online broker, and I’m ready to put my $50,000 in. Michael James:   Great.  We just have to transfer the money to your new TFSA from some external account, like a chequing account at your bank.  Just a few clicks and we’re done.  The money will be there in a day or two. NI:   Wow! That was easy. So, we’re all done? MJ:   Not quite.  All we’ve done is fill your TFSA with dollars. NI:   That’s all I did with the TFSA I used to have at the bank.  It’s closed now. MJ:   Yes, but that TFSA was just a savings account earning a little bit of interest.  You said you want to put this $50,000 away for the long term in an all-in-one ETF. ...