Don’t forget to enter the draw for a copy of John Robertson’s new book The Value of Simple . Here are my posts for this week: The Point of Diversification Book Giveaway: The Value of Simple Future Shop Looks Out for Its Customers Here are some short takes and some weekend reading: Tony Robbins does a great job explaining the 9 most common investing myths. The first few are particularly well-written. These are some things I wish I had known in my youth. Rob Carrick has published his 16th annual ranking of online brokers. I’m glad to see that my choice of BMO InvestorLine is still high in the rankings. The Blunt Bean Counter gives some detailed instructions on how to properly do some tax-loss selling. He also discusses flow-through shares. This interests me because I’m having a good year financially, and looking at the total tax listed on my pay stub is painful. However, I’m not sure if it is too late for the 2014 tax year, and I’m not sure if I want more risk an...

I don’t shop much. I like to say that there is only one shopping day left until Christmas because I’ll only shop one day. But my wife and I wandered into Future Shop recently, and I'm pleased to say that they saved me from an impulse purchase. As we entered, a young employee was hurrying by, but he took the time to pause and say “Hi guys! Welcome.” Despite the fact that I still find it sounds strange to hear a woman included among “guys,” the friendly gesture improved my already good mood. I then made an impulse decision to buy a piece of electronics whose price is about $100. Stepping quickly to find a cash, I found none had any cashiers. No problem, though, because there were a couple of desks on the other side with employees behind them. The first desk was the “customer service desk” where one customer with multiple receipts laid out was waiting for an employee seated on a chair facing the other way. The prospects didn’t look good. The second had a young guy tappin...

Many good investing books advocate simple, index-based investing strategies. No doubt some readers are lulled into thinking that these strategies are just too simple. However, real-world complications find their way into even the simplest of strategies. John Robertson makes a strong case for investing simplicity in his new book, The Value of Simple . (The giveaway for this book is now over.) The main thing that separates this book from other investing books is that Robertson goes into detail for how to invest using each of three different financial institutions and types of funds: Tangerine funds, e-Series funds at TD Direct Investing, and Exchange-Traded Funds (ETFs) through Questrade. He judges these to be good trade-offs between cost and simplicity. He goes through the important practical steps of using each type of account using a few screen-shots. Most investing books back away from the details Robertson takes on. This is mainly because these details are untidy and make ...

The most common explanation of the value of diversification is avoiding big losses. Investing everything you owned in Nortel stock before the bankruptcy would have been a disaster. However, there is another side to the value of diversification. Josh Brown reported that many are blaming active fund managers’ failure to keep up with markets in 2014 on Apple’s success . Apparently, many fund managers owned proportionally less Apple stock than its percentage in the index. This failure to own high-flying shares is the other side of the benefits of diversification. In any given year, there are relatively few stocks that give huge gains. If you only own a few stocks and choose them essentially randomly, there is a good chance you’ll miss all the big winners. The advantage of an index is that it always gets its share of all stocks, including winners and losers. Keep in mind that a “winner” is a stock that performs better than the index, and a “loser” earns less than the index. The...

Here are my posts for this week: Evaluating Reasons to Avoid Index Funds Dividends vs. Capital Gains in Retirement Core and Explore Here are some short takes and some weekend reading: John Oliver (video) has a very funny and hard-hitting take on lotteries and the supposed good things they fund. NBC News reports that more than $10 billion of losses from Bernie Madoff’s Ponzi scheme have been recovered to be given back to victims who will get back nearly 60 cents of each invested dollar. This is somewhat misleading, though. Victims will get back a percentage of what they put in, not including returns. So, a long-time investor whose investments had tripled on paper would only be getting 20% of the amount on his phony statements. But this is certainly better than nothing. Jason Zweig reports on a study that found that individual forex traders lose an average of 3% per week . Remember this the next time you see a come-on for entering the supposedly profitable world of ...

The idea of “core and explore” investing is that you commit the bulk of your portfolio to a sensible “core” strategy, and use a small percentage to “explore” some of your own stock picks. Much has been written about the merits of this investing approach, but my thinking differs from what I’ve read before. As a starting point, it’s important to admit that for the vast majority of investors, the explore part of the portfolio will underperform a core index strategy over the long term. I won’t defend this assertion here, but if you reject it, then you won’t agree with much else I say. However, it’s not automatically true that core and explore is a bad idea just because the explore part of the portfolio is likely to underperform. One possible benefit of core and explore is that it allows an investor to scratch the itch to make stock picks with a small amount of money in the explore pot instead of making much bigger bets with the entire portfolio. In effect, allowing some exploring m...

Trying to maximize your after-tax retirement income is a complicated business. Cheerleaders for dividend investing are convinced that the dividend tax credit makes it a no-brainer that a dividend strategy is best to minimize taxes. However, as we’ll see, there are good strategies that use the 50% capital gains exemption as well. Let’s look at two investors in the same situation but using different investment strategies. Dean, the dividend investor, and Carla, the capital gain investor, are both 58 years old, single, and living in Ontario. (No, there will be no romance in this story.) They both have a $500,000 RRSP and $1,232,000 in a non-registered account. (I’ll explain this cooked-up number.) Dean owns dividend stocks that we’ll assume earn a 2% capital gain and 4% dividend each year. Dean’s dividend income is 4% of $1,232,000, or $49,280. This just happens to be the maximum he can earn and pay no taxes other than the $600 health premium. Carla earns the same total retu...