Friday, November 20, 2015

Short Takes: Stock Return Expectations, Bond Index Criticisms, and more

Here are my posts for the past two weeks:

Enough Bull

Retirement Spending Stages

Choosing Investments You Understand

Taking My Investment Decisions Out of the Loop

Here are some short takes and some weekend reading:

Jonathan Clements explains why stock investors should expect about 6% return per year and 2% inflation for the next 10 years. A 4% real return sounds just fine to me. I’m not sure why we “need to save like crazy to compensate for the market’s likely modest gains.” However, I’m definitely with him that investors “should make sure they capture as much of those gains as possible, by opting for low-cost market-tracking index funds.”

Canadian Couch Potato explains why certain criticisms of bond indexes are wrong.

Tom Bradley at Steadyhand adds to my list of complaints about index-linked GICs.

Jonathan Chevreau explains that Real-Return bonds aren’t as safe as they appear because it’s difficult to match their maturities to when you’ll need to spend your money.

Squawkfox uses her foray into gourmet olives to motivate us to track our spending. It can be an eye-opener to see where the money goes.

Big Cajun Man explains the latest step he’s had to take so that CRA will continue to recognize his son’s disability.

Boomer and Echo helps a reader deal with RRSP over-contributions.

My Own Advisor tests himself on Gail Vaz-Oxlade’s 9 major money mistakes. He definitely gets a passing grade. But, like me, he doesn’t have a budget. I’m always torn talking about this because I see no need to have a budget myself, but I know others who desperately need one but don’t have one.

The Blunt Bean Counter has a guest expert explaining estate planning for blended families who have a marriage contract and others who don’t have a marriage contract.


  1. Thanks for the inclusion this week. Let us hope there is enough information for the CRA, fingers crossed. Have a great weekend.

    1. @Big Cajun Man: I think there's a post waiting to happen whenever you get a response.

  2. Fingers crossed for BCM. Thanks for the mention Michael. I'll have a post coming up in another couple of weeks about how we forecast expenses but I certainly don't use mason jars like Gail advocates :)

    I doubt you ever did that.

    All the best,

  3. re: disclosure rules (CRM2)...there's already a downward trend in advisor population due to the new environment. It's mix of "bad" advisors being forced out as well as good advisors unwilling to adopt a heavy work load. I hold a licence within the financial sector and I'll tell you straight up that the work required to fulfill all the ever-evolving regulations and compliance rules is hefty. I'm 2/3rds admin secretary and 1/3 advisor!

    It might actually lead to higher costs to use smaller/independent advisors if they need to hire staff, and lower costs to use big bank advisors who can easily assume the cost. Time will tell...

    (As a side note...looks like we won't be hearing from MDJ guest advisor Ed Rempel for a long while due to regulation & compliance "irregularities".)

    1. @SST: I heard that some advisors are switching to selling seg funds to avoid disclosure rules. I don't know if this is true.

      Regulations always have good and bad effects. But disclosing fees in a way investors understand is so important that if we had to get rid of some regs, I'd keep this one and look for older regs to drop.

      Is this information about Ed Rempel public?

  4. I think most advisors give themselves too much credit for their actual value added and are trying to find ways in which to justify their cost. Some advisors will do anything to secure their income; career risk and incentives are huge drivers in the financial sector.

    I've known seasoned advisors who have published obviously wrong information all with the intent of gaining more clients (aka money). When confronted about the matter they responded with the childish excuse "I hit send instead of save", but neither retracted the information nor issued a correction.

    The unfortunate part is that there is a lot of this kind of activity which goes on and is neither reported nor disciplined. Hopefully a two-pronged approached of wide-spread investor education and regulator accountability will benefit all involved.

    Regarding Rempel:

    "...the Hearing Panel imposed the following sanctions on the Respondent...:

    (a) a prohibition from conducting securities related business in any capacity as an Approved Person of, or in association with, any Member of the MFDA until August 5, 2018"

    As per the published Decison & Reasons, the Hearing Panel finds "deplorable conduct on the part of the Respondent."

    The complete case:

    1. @SST: This reminds me of the Upton Sinclair quote: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" With motivated reasoning, people can make themselves believe many things.

      I hadn't seen the Ed Rempel stuff before. I wonder what Frugal Trader thinks of this.