A great many investors have lost money on Fortress syndicated mortgages.  The fact that investors sometimes lose money isn’t news.  But I have a more personal story concerning how these syndicated mortgages were sold. According to Neil Gross , “thousands of Fortress investors were badly stung or wiped out entirely – losing perhaps hundreds of millions of dollars in total,” but the Financial Services Regulatory Authority (FSRA) “announced that everything’s been settled by Fortress agreeing to pay an administrative penalty of $250,000 – an astonishingly low amount in comparison to the estimated $320-million that Fortress pocketed in fees and paid its agents.” At question is whether Fortress misled investors.  Gross says “FSRA hasn’t provided a rationale for the low penalty, or an explanation about why Fortress was given such a settlement deal without first compensating its investors.” My small contribution to this story started with a friend (let’s call him Jake) asking for...

I wrote one post in the past two weeks in the form of a quiz: A Quiz on the 4% Rule Here are some short takes and some weekend reading: Rate Spy has some statistics about Canadian mortgage deferrers who are soon to have to start making payments again.  How much this will affect the housing market is anyone’s guess. Morgan Housel explains why we should save like pessimists and invest like optimists.  I would add that we should avoid debt like pessimists as well. Robb Engen at Boomer and Echo asks whether he has already achieved FIRE (Financial Independence Retire Early).  FIRE gets used to mean so many different things that it’s hard to say.  To me, financial independence means not needing income from work ever again.  So, Robb doesn’t pass this test.  I define retirement as being free from demands on my time that I can’t ignore because I need the money.  Robb doesn’t pass this test either.  However, to many people FIRE means quitting the job th...

Reporters and bloggers write endlessly about William Bengen’s 4% rule for retirement spending, but its details are widely misunderstood.  So, I’ve created a short quiz to test your knowledge of this rule.  I give answers below, but this isn’t multiple choice, so you’ll have to decide for yourself how closely your answers match reality. Jane retired a year ago with $500,000 saved.  She is using the 4% rule, so she initially withdrew $20,000 to spend during her first year of retirement.  Today it’s time for her next withdrawal, and her portfolio has grown from $480,000 to $505,000.  Inflation was 2%, and she’s now 66 years old.  To follow the 4% rule, how much should she withdraw today? Jane pays a hefty 2.5% MER on her mutual funds.  If she reduces her costs to only 0.5% per year, how does that change her withdrawals under the 4% rule? Tom saved aggressively during his working years and retired at 45.  How does the 4% rule apply in his case? Jim i...

Here are my posts for the past two weeks: The Intelligent Investor Count on Yourself Here are some short takes and some weekend reading: Mr. Money Mustache explains an easy way to go about socially responsible investing.  He also describes all he is doing in this area. Justin Bender estimates future return rates for Vanguard Canada’s asset allocation ETFs (VCIP, VCNS, VBAL, VGRO, VEQT).  They’re not very high because stock and bond prices are very high right now. Neil Gross isn’t impressed with proposed changes to the Ontario Securities Commission’s mandate. Big Cajun Man is getting free online access to his credit report due to a data breach.  It’s crazy that he can’t get them to spell his name right.  My TransUnion credit report swapped my home address with my brother’s home address for a few years, and I can’t get that fixed either.  They even use this address in authentication questions before they’ll send me a free credit report.

Author and personal finance columnist Alison Griffiths wrote the book Count on Yourself aimed at beginning investors to teach them do-it-yourself index investing.  She takes a gentle approach starting with interesting stories and working in financial material slowly.  This approach works well initially, but the final range of recommendations allows so many possibilities that many readers will remain confused about what to do with their investments.  Published in 2012, much of the detailed information about discount brokerages and index ETFs and mutual funds is now out of date. A strong part of the book is the explanation of why low-cost index investing is better than the expensive mutual funds most Canadians own.  She makes this case with stories and case studies presented in a way that is accessible to the many Canadians who know little about investing.  Today, you could simplify the recommendations for the novice investor down to just choosing one of Vanguard...

Warren Buffett credits Benjamin Graham with writing “by far the best book about investing ever written,” The Intelligent Investor . It holds a mythical status among value investors. Graham produced four editions from 1949 to 1973. I read the revised edition, which is Graham’s 1973 edition with added material from Jason Zweig in 2003 to explain parts of the book and to add more modern examples. For anyone planning to read this book, I recommend Zweig’s revised edition. Graham’s writing is at times subtle and indirect, and assumes knowledge of historical context that may be unfamiliar to readers so many decades later. Zweig does an excellent job of clarifying Graham’s meaning at critical points. This book is filled with Graham’s widely-quoted ideas, including the distinction between investors and speculators, the Mr. Market parable, and margin of safety. I won’t explain these ideas here. The most remarkable part of the book is in Graham’s 1973 Introduction: “The determinin...

I wrote one post in the past two weeks: What the Experts Get Wrong about Inflation Here are some short takes and some weekend reading: Rob Carrick and Roma Luciw discuss housing costs for young people today. I had to laugh at remarks in the second half by Bridget Casey. It’s true that certain aspects of modern life are more challenging for young people than they were a generation ago. Even adjusting for inflation, rents are higher, university costs are higher, and finding full-time work is harder. However, her characterization of what life was like back in the 1980s was way off. If I could be young again, I’d rather do it in 2020 than go back to the 1980s. Steadyhand offers help to investors who sold out of stocks during the recent crash and are now faced with the hardest decision in investing: how to get back in. Big Cajun Man has a set of heuristics for what to do with savings. There are exceptions to his rules, but you could do a lot worse than his plan.