The Canadian Investor - Spicy Hot Retirement Takes for Canadians

Episode Date: February 27, 2023

In this episode, Simon gives an update to the retirement dividend income portfolio. We then talk about some controversial retirement hot takes. We wrap up the episode by talking about RESP and what Simon is doing for his daughter. Symbols of stocks discussed: BEPC.TO, BIPC.TO, DLR, GRT-UN.TO, CNR.TO, CNQ.TO, TXN, AP-UN.TO, HD, RY, T, JNJ, PEP, TD.TO, FTS.TO Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. Register for ShakepaySee omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Welcome to the show. My name is Brayden Dennis, as always joined by the unequivocal Simon Belanger. Today, we have a great show for you. Episode 251. We're now over the hump. We had a celebratory episode 250 last week, so make sure you tune into that. Today, you are going to talk about this dividend income portfolio that you've been tracking on our portfolio page at join tci.com.

at join tci.com i'm going to come out with some curated flaming spicy hot takes on investing in personal finance you're going to look at our esps and then we're going to do stocks on our radar stocks on our watch list presented by our beautiful friends at eq bank you want to kick us off yeah so i wanted to do a quick update on the dividend income portfolio. I'm going to do that quarterly for our Patreon subscriber at joinTCI.com. I'll still go over the names here because that's one thing we've committed to do. We don't want to, you know, we want to make sure that we still provide, you know, the same kind of content to the podcast. The only thing I won't do is it's there's much more details for our patreon um subscribers but i'll still go through the names here and then

if you want more details by all means you can go and support it on join tci.com so this is all equal weighted five percent each 20 in total positions uh Some of them are duplicate position just because their cash and cash equivalents was just easier and cleaner to do it that way. The total yield that I was able to achieve was 4.05%. The target here is always to do 4% plus. And it's probably actually a bit higher right now because the markets have been, I think they're down like 2% today. So I'm assuming most of the names are probably yielding a little more. So a lot of the names are the same ones. I made a couple of changes here.

So Brookfield Renewable Partners, Brookfield Infrastructure Partners, Digital Realty Trusts, Granite REIT, Canadian National Rail, Canadian National Resources, Texas Instrument. Allied Property REIT is actually one of the new names. So I changed that with a realty income that was there before. The main reason here was that Allied does have higher yield than realty income. And it's something that, you know, I'm personally bullish on Allied in the next five years or so. Could be a rough couple of years or two, but I thought it was a good play here for a dividend income portfolio. And they have a pretty conservative payout ratio when you look at funds from operations or adjusted from operation. Next name here is Home Depot. Royal Bank after that. TelELUS, Johnson & Johnson,

Pepsi, TD Bank, Fortis as another utility, a bit like Brookfield Renewable, which is pretty much a utility. And then I have the Evolve US High Interest Saving Fund, so 5% twice in there because it's yielding 4.93% for USD. And then I have two one-year GICs and a two-year GIC. So the reason I remove actually a three-year GIC here is the three-year GIC rates have actually gone down, and it made more sense to have a bit more in terms of the short term. What happens with that though is you're actually, you know, it's not a bet per se, but if you lock in a rate over three years, you're essentially betting that, okay, I'm getting 4%, whatever it is for three years, while I'm betting that rates will probably go down below that so I can lock in that rate.

Whereas if you have more of a short term, higher rates is you're kind of giving yourself a bit more flexibility. But if rates do go down, you'll be impacted by that a bit more. So I have a bit more to add here. Did you have anything to add on that? No, thanks for touching on like the one and two year fixed incomes are the same rate, which is going to turn heads until you think about that logically. And you're like, okay, that makes sense. And the reason for the two-year versus the one-year is you want the security at that 5%. I think that that's fine. One thing I want to comment here is like, maybe you're new to the show or you're just tuning in. Jointdci.com is the Patreon page. And you and I disclose our actual real money portfolios,

which look very, very different than this. And this is strictly a dividend income portfolio that we just put on the side because we know that we have so many listeners kind of in that retirement zone range. One thing I see so often, there's apps now that you can kind of in that retirement zone range. One thing that I see so often, there's apps now that you can kind of see other people's portfolios, you know, and share it. And it's kind of like, you know, investing becomes so social and all this stuff. I see 24 year old guys with this portfolio and I'm just like, what are you doing? Like, why are you just buying dividend payers, high yielders, low growth at the age of 26? So I think that that context is important. It has a place, these income portfolios. They're fine. But I wanted to add that color.

Yeah, no, and that's great. And I think, you know, I love dividends as much as the next person, but oftentimes, you know, the names, some of the names I own, like do pay dividends, but they're much smaller, but they grow their dividends quite quickly over time. But the goal here was... And you're not only buying div payers. No, exactly. So I have other types of business as well.

So that's something to keep in mind. The two-year GIC is actually under 5%. So it's a bit under. It's just a weighting. I think you were looking at the wrong column. So that's why. But that's okay. It's still under 5%. Wow, Brayden. Try to make a cool point of the wrong data. But it's still above the three-year. I think the three-year is just around 4%. So that's why I went there. Now, a few other points here. The goal here is to have the dividend portfolio provide most of the income from dividends. in cash or cash equivalent is to provide a cash cushion of at least three years in case of any shortfall in dividends where you're not forced to sell a position so that's the reason especially right now too i mean the the evolve u.s high interest savings fund i mean you're getting 4.93 on usd clearly though it is not cdic insured so keep in mind there's a bit more risk because it's not insured by the federal government, but the deposits are done at some of the largest Canadian banks.

So I would say it's still pretty safe, but they are considered money market funds here. Now, I was trying, like I mentioned, to get as close to 4% average yield as possible. Stocks that have a sustainable dividend, some dividends growth in the past three to five years, and most of the names have very good dividend growth, but with a higher starting yield, of course, oftentimes dividend growth will be, you know, you're essentially getting higher yield in exchange for slower growth in dividends. So you have to keep that in mind. Whereas if you look at certain names, even Alimentation Cousteau, for example, is a good example there. It's not on the list, but it has a very small dividend, but it grows pretty quickly,

typically. Or TFI, I think they also grow their dividend pretty quickly. So something to keep in mind because that's often the trade-off you'll do. So you're trading off a higher yield for slower dividend growth or a smaller yield for higher growth. Now, sustainable free cash flow payout ratio or payout ratio in terms of FFO for REITs or utility type businesses. I did not verify every single payout ratio on the list, but I did so for the vast majority of them and it's sustainable for the industry they're in.

The company has some revenue growth is also important. You don't want a company that's kind of plateaued. And for the most part, this is the case here. They will not be growing quickly. Just to be clear, for the most part, that's one of the other things. You get that higher yield, the top line growth will be slower. And now just some quick numbers here. For a $500,000 portfolio, it would mean 20,250 income per year. $1 million, it would be $40,500. $1.7 million, it would be $68,850.

And I use that number because that's the amount that apparently Canadians think they need to retire. We talked about it a couple of episodes back. And $2 million portfolio would bring $81,000 in revenue per year. And I think the last note here, it's just an important reminder for people, it's not the only way you'll get income at retirement. So the main advantage of this is that you shouldn't have to touch your capital.

So you should mostly rely on dividend. This is great, especially for someone who may want to leave some money, either an inheritance or a spouse that they're nervous about running out of cash. But there are other strategies. So you can have a portfolio that may not be so heavy on dividend and you have an actual decumulation strategy where you actually go down and you sell some stocks, you sell some holdings, whether it's funds, whatever it is. And the goal is to not run out of money until you pass away. So it's not the only way. It's one way you can look at it. But it's, you know, it is something to look at. It may not be perfect for everyone. Just make sure you kind of figure out what you want to do

at retirement and what the actual outcome is that you want to achieve. With this stuff, I say, when in doubt, spreadsheet it out. And I've never said that ever, but I just said it now, and I'm going to run with it. When in doubt, spreadsheet it out. When it comes to retirement, decumulation, dividend income, retirement planning, it's not the most exciting thing to do. It's not, hey, I'm pumped this Saturday. I'm going to spreadsheet it out and get my finances in order. But it's the right thing to

do. And you do not need to be an Excel, Google Sheets wizard to put together some basic rows and build out a timeline using, you know, maybe a 4% rule or on withdrawals or, you know, factoring in this dividend income you're talking about. But it's just got to be done. Like there's no way around it. Yeah. Yeah, exactly. And there are some good tools too, right? That are free out there that will actually, you know, they'll prompt you to put all different kind of input. So there's a lot of tools if you're willing to. And I definitely would encourage anyone that wants to do it by themselves, you have to put the work in, right, you have to put some time to make a plan. Because if you don't have a plan, you know, a bunch of outcomes will probably come where, you know, you may not be maximizing your RSPs. You're withdrawing on them at the wrong

time. You're taking CPP too early or too late. Same thing for old age security if you're eligible. So you have to really draw up a plan before you retire. And that's really important. Not once you're retired, like before. I would say at least two, three years, but probably a five-year plan before you retire to make sure that you have something pretty solid going forward and some best worst case scenario and a kind of medium case scenario as well i have a pro tip that works for nerds like me. What I do is if I have something like this, it's not like particularly thrilling,

but I got to do it. You know, sometimes in life, you just got to sit down and get the work done and do it. And what I do is if it's going to be like on a weekend or like, you know, you don't have time during the week to do something like this. You have your job, you know, kids, life, whatever. If you like coffee, or if you're not a coffee drinker, you like tea, Saturday morning, bright and early, go to a cafe, bring a nice one, a nice one, one that you're going to spend way too much on that fancy latte

and bring your laptop. And in two, three hours, you're going to go into deep work and you're going to spend way too much on that fancy latte and bring your laptop. And in two, three hours, you're going to go into deep work and you're going to get that thing that you need to do done Saturday morning, Sunday morning. And then you do it early enough. You actually come out of that with so much energy for your day. You come out of the coffee shop. It's a beautiful day. energy for your day. You come out of the coffee shop, it's a beautiful day. This is the thing that actually works for me. I don't know if you've ever done anything like this. Try it out. If you have something that's been sitting on your to-do list that you need to do digitally on your computer, bring your laptop to that fancy cafe this Saturday morning and get it done. Spend the $7 on that stupid latte and enjoy yourself.

I thought you were going to say, you know, get up, take a flight to Costa Rica, go to caffeine Costa Rica, take a flight back, and then you're done. Yeah, just hop on an international flight so you can build out this spreadsheet. No, but I did do that a few times in Costa Rica and then waltz over to the beach, have a great weekend day. But sometimes you got to do... It's the hard thing about hard things, man. You got to get stuff done. As do-it-yourself investors, we want to keep

our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense, and with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly.

Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests.

It's a win-win since you make some extra money hosting on Airbnb, make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Let's move on to spicy flaming hot takes. I had to go to the part of the internet where everyone is angry called Twitter to gather some hot, spicy spice factory takes and just see what people had to say. I picked some of them and some of them I kind of even made. Disclaimer here, it's like a drug ad, like at the end of the drug ad. It's like, I may or may not agree with any of these spicy hot flaming takes. Please consult your doctor before sending me an angry email. Of course, there is nuance to this stuff. With that out of the way, let's go through the Simone.

And I'm challenging both of us. I'm challenging you. I'm challenging I to be extremely open-minded and perhaps even less conservative in the way that we think about rules of thumb and conventional financial wisdom. Because we can be so anchored to rules of thumb, what you can expect in the stock market after inflation, what's a good mix of stocks and bonds. We can be so anchored to that. And great investing books and investing legends may have like gospel or rules of thumb, but rules are meant to be broken. So let's just throw our mental parachutes away for this. Number one, once you have over 100,000K liquid in stocks, you don't need an emergency fund. What do you think?

Well, if you like living on the edge. it's actually a really good one to start yeah yeah i mean spicy and i i don't know where do you want to take this i mean as long as you know what you're in for right as long as you're like you're basically you're running you're yeah i don't know i see you frozen right now and that means this is a good one yeah it's a good one i mean look obviously you're not in financial ruin if you have 100k so you have something to fall back on because that's what i you can sell these stocks yeah exactly is that you know that probably the issue i have with that statement is, you know, it's 100K today. It may be 50K in a year from now, right? Or whatever it is, depending on what the market does.

But I guess you give yourself the maximum upside, but you also, you know, you increase your downside as well because you may end up having being forced to sell just to cover an emergency for example i kind of love it because i'm kind of i'm kind of on board even though i would never do this i'm kind of on board uh you know once you got 100k liquid uh in stocks you don't need an emergency fund i'm kind of on board and i kind of hate it um so it's a good one. Well, I think it's also different where you're at in your life. So if you're, you know, you're pretty young, you're single, you have no one else that relies on you, you're just renting, you don't have any much in terms of unexpected expenses that could come up, then I think it's a lot less of a stretch than someone who has a family, owns a home,

you know, and all these different things. So I think it's probably a bit more nuanced, I would say. Yeah, they call it personal finance because personal is not general finance rules of thumb. And, you know, refer back to the disclaimer at the beginning here. Of course, there's nuance here. Buying rental properties is a waste of time when you can own real estate investment trusts. Yeah. I mean, I think you can make a case for both there. I think Dan and Nick would disagree

with us. But the downside or upside, I guess guess depending how you look at it is that with rental properties you can definitely maximize your leverage but as we've seen if you take a variable rate that can go both ways um but the advantage of reits is it's truly a passive investment um so that's the biggest upside you can also get right, if you do kind of buy it on margin. But then again, you know, I think it really, to me, it's just, it really depends on what you're looking for. Lifestyle. Exactly. Lifestyle, do you want something that's liquid or not?

If you don't care about having it liquid, then obviously rental properties probably makes more sense. Well, it may make more sense for you. And if you're someone who's really handy, you can probably maximize your abilities that way. Whereas if you're not, I mean, you can still own rental properties, but you're going to have to rely on other people to help you out with the maintenance and things like that. Those are great points. I wholeheartedly agree with all of them. My very simple answer to this one is, do you want a job or not? Because you can definitely make more wealth with physical properties. You can take advantage of better pricing. You can use your elbow grease. You can use the wonders of leverage, but those all require time and a job. You're giving yourself a job. That's the question that

you have to ask yourself. It's more of a lifestyle question than a financial one, in my opinion. Early retirement is a scam and bad for your mental health. You know my stance on this. I agree. I think early retirement is a scam. I would love to be just, I kind of already am in a place where I can just do the things I want to do and have fun with it. I'm already doing it now. But I do think that if I was to just do nothing, I would have, I would, I wouldn't live as long mental health wise. Uh, I'm, I'm on board with this one. Yeah. I think again, this is really a personal thing. Um, I think for a lot of people, they would lose like a purpose in life for other people, you know, they may want to be just traveling. Um, and you know, that's retirement for them, just visiting the world, you're doing

something. I think the most important is, do you have a plan for retirement? Whether it's working part-time, whether it's traveling, whatever it is, if you don't and you're just looking forward to not working anymore, I don't think it's going to work out all that well for you. If your calendar is completely empty, I don't see how you're having a good time at all. I really don't. But you know, if that is you, or you can sit on the beach seven days a week, go for it. I think you'll drive yourself nuts. Having, I can't, I can't comment really on this one, but I'll, I'll take my, my take. Having kids can supercharge your career. What do you think as a new father?

Probably not in the first six months. I mean. You're so right. Yeah, definitely. You know, you have to put things in perspective, right? Your priorities definitely shift. I don't think it has to necessarily be bad on your career, that's for sure. It can be a plus, it can be an extra motivation too, right? Maybe for some people, they have a nine to five job that, you know, pays well, they don't really love, they're just kind of

growing through the motions, but having their kid kind of gives them that extra motivation. So I've heard of those kind of things happening. So I think that's, you know, I can see that. I mean, it's definitely, it's hard for the first little while for sure, just because you have to almost learn to be able to work on unpredictable sleep. That's pretty much what it is. And, you know, I like my sleep and that's been the biggest challenge for me.

And you've seen me write some of the podcasts. Hopefully it wasn't too bad at times. But I mean, Sophia, our daughter, she was up for three hours in the night and it was like the third day in a row. So I was running on about 10 hours of sleep in like three days so you kind of you know it's not always the best but that's why you have visit this question in five years ish yeah yeah i think that's a good idea

because i think you touched on two pieces where these people are coming from who suggested it are the motivation piece and being forced to be productive on less time yeah and you know like that's that's that's your superpower of becoming a parent i guess and i think is the take and probably the last thing is just seeing things from a different perspective too true yeah um i can see that i mean clearly no experience yet, but hopefully one day. All right. Fed Chair Jay Powell is actually doing a really good job. Oh, man.

Who's going first? Yeah, go for it. I feel like I've been going first. Yeah, I'll go first. You know what? I think it's a spicy hot take, and i think that it's a good one because the numbers that are coming out later it's like you can kind of see like jay powell just like sitting in his chair like you know who's the who's the billionaire guy in the simpsons is it uh burns

montgomery yeah he's sitting there in his chair he's just like excellent like this is working you know um there is a soft landing potential so maybe maybe uh maybe i'm gonna give it a maybe i don't know what else to say yeah i think i would i would say probably a maybe as well um i think he's doing a better job than, you know, Tiff over here. I'll just say that just because the ultimate rug puller, Tiff McClemm. Yeah, Tiff McClemm. I think, you know, one of the biggest issues I've had with Tiff is just just a lack of consistency and just the way he communicates with the markets. You know powell's not perfect by any stretch of the imagination but he's definitely trying to be a bit more transparent and i feel like he's from the

interviews i've seen uh tiff mcclim sometimes just seems to be like way on the defensive and almost you know i almost wish sometimes they just job sucks dude yeah i mean i wouldn't want to do it defensive it's the worst job ever yeah but i wish they kind of took onus a bit more when they you know they missed it um yeah for you know whether that's true there's never any ownership ever yeah like look we we've we did not we overshot the interest rates way too low. And now we have to make up for that. But the reason why, you know, I think they've never, I've never seen, I think I've seen his lieutenant say a bit like, oh yeah, like we didn't really understand. And now we do a bit more on what happened, you know, during the pandemic. But yeah, I think, you know, I wouldn't want to be

doing this job. And at the end of the day, they just had limited tools, right? think, you know, I wouldn't want to be doing this job. And at the end of the day, they just had limited tools, right? They, you know, you can say what you want about Tiff McLean or Jerome Powell or Kristen Legale over in Europe. At the end of the day, they have limited amount of tools. Like there's nothing really they can do to help supply chains, for example. And that's going to have a big impact on inflation, which is our priority right now. So I think that's something to keep in mind is, you know, sometimes they, you know, they use a hammer, but you know, it's not a nail that needs to get put in. So I think they just have a few set of tools. Yeah. Wow. That was really good, by the way. I like that one here on fire. next one if you haven't maxed out

your tfsa don't even think about using any other account oh god oh what have we done oh yeah the dms we're gonna get yeah no i actually like this one i like it too yeah i'm i'm i'm on board but oh god i can't wait for the comments we'll get. I think it just comes down to, okay, we've been brought up and everyone, I'm sure we'll get some DMs or people tweeting at us saying, well, you know, if you're a high earner- What about this scenario, that scenario? If you're a high earner, your taxes will, you should be deferring your income by using the RRSP and withdrawing at retirement because your income will be lower, you'll pay less taxes. But the problem is, and people are so steadfast on their thoughts about the RRSPs, for example,

is that the reality is, the beauty about the TFSA is there's certainty again attached to it you you're taxed right now you put it in it and you're not taxed anymore the RSP you're making a projection a lot of things can change taxes you know income taxes could be higher because uh the overall Canadian debt is higher and at some point you know we're going to have to pay it down. That's a good argument. I know someone made it on Twitter when we were having a discussion a bit earlier today. I mean, there could be something that happens where maybe your income is actually ends up being way higher than you thought at retirement too. There's all different kind of scenarios that could happen that you're just you're projecting there's no

guarantee you can plan it as best as you can make the most reasonable looking assumptions but at the end of the day they don't pan out and that's why i love the tfsa is because there's certainty right now and there's a lot of value in that personally so true all the things you just said the certainty the tax rates in the future. Yeah. It's great to defer your tax. Now you're probably going to be, you know, most people, if they're, you know, six figure high tax bracket, 150 K plus earners that you want to defer some tax. Totally get that for me personally. And this is why it's personal finance, not general finance. I am hoping I'm making boatloads of money in

retirement. That's the way I'm setting up my life. I got two businesses. I'm going to start many more. I'm hoping to have seven plus, sorry, eight plus figures by the time I'm 40. I'm literally on track already. And so having that much money in an RRSP doesn't make sense, which rounds out to the last hot take because I wanted to bring it tangentially in there. The hot take is no one should have more than 500K in their RRSP. If you do the math, taxation-wise, this is true. I think the number I came up with when I went and spread sheeted out

was like 600-ish K in an RRSP that if you do withdrawals, you're basically like net negative on taxation. It really – so what assumptions did you use? On withdrawal, I think I used a 4% withdrawal based on how much money that's going to be tax-wise on income, other income that you might have. I threw it in there and that's the number

that I spat out with that I would never have more than that amount of money intentionally in my RFPsp put it this way i wouldn't be contributing if it was past 620k i see people i see people adding to their rsp it's worth millions of dollars and they're and they're still contributing to it i think that's a terrible way uh to be i think it's terribly tax inefficient. I'd have to crunch the number personally. It's just because you can, there's ways you can actually- We'll see you at the coffee shop on Saturday.

Yeah, yeah. I mean, but there's ways you can actually play with it, right? So even if you have a large balance and I've talked, I've referenced this a little bit before, but you could, if you retire and you're 60 or even a bit earlier, you could actually make sure that you, you know, defer CPP. Let's say you're, you know, you make too much for old age security and we'll just talk about CPP. You defer it as long as you can and then you just live off your RSPs. So you're actually withdrawing more than that 4% the first, say, 8, 9, 10 years. And then you actually lower that amount as you get further into retirement and you have other sources that income that kick in through CPP and, you know, whether

it's old age security or you have, you know, income property, whatever it is. So I don't know, I'd have to look at the numbers. I mean, it seems reasonable. I think you could probably be able to have a decent strategy and have a higher balance than that, but I think there's definitely a certain point where it would become ineffective. Yeah, exactly. There is a point, and you can read all about this online. I'm not the first one to come up with this math, but we'll see you at the coffee shop on Saturday morning. online broker by MoneySense, and with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real

people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who

don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host this is a seriously uh retirement and canadian focused vehicle show because you got resps resbct yeah you got that on the show here let's do it let's do it yeah and something I've had some people requesting that I look back at these because we did an episode on it, but it probably was a year and a half ago. If I can't even remember when we did it, I think it was the first version of our document.

Now, RESPs are registered education savings plans. You'll typically want to open this for one of your children's education. However, it doesn't have to be your child it could also be like a nephew a grandchild so it doesn't have to be your own children it can be used for a wide range of education including apprenticeship programs on the quebec side trade school colleges universities there's a full list on the Quebec side, trade school, colleges, universities. There's a full list on the Government of Canada website for the type of education that is eligible for that. The main things you need to know,

and these are not all the details, so make sure you do your research for that. These are just kind of the overview and to give everyone a general idea how it works. So you don't get a tax credit when you contribute to your child RESP. So it is actually money that's been taxed. As a side note, you could contribute to an RESP, like I said, for a child that's not your own. RESP contributions may be eligible for government grants. The one

that is available to everyone in Canada is the Canada Education Savings Grant, also known as CESG. You can contribute a lifetime maximum of $50,000. You can contribute to an RSP for up to 31 years and the plan can remain open for a maximum of 35 years. Contributions that you made, so the actual contribution that you made can be withdrawn tax-free and are known as post-secondary education withdrawals. Those are just the contribution you did. Now, withdrawal from funds contributed by the government via grants, investment income from your contribution and those grants, or whether it's capital gains, that's the same thing. or whether it's capital gains that's the same thing they count as taxable income for the child when he is she or she is enrolled in a post-secondary program since the child will be having low income there will be either no taxes taken because they have you know that tax credit for the first probably 15 000 now i i can't recall the last time I completed one of those payroll forms, but either

they're not going to pay a lot of taxes or very little on those amounts. So like I said, I've had a few questions here, especially since people know I have a daughter now. Now what you really want to focus on if you're opening RESG for your child is that the CESG grant that the government of Canada does matches 20% of your contributions up to a total of $500 per year. That means that if you contribute $2,500 per year, you max out the grant. The lifetime maximum of that grant per child is $7,200, which is equal to a bit more than 14 years of maxing out the matching. Now, what my wife and I are doing is pretty simple. We're contributing $208.33 per month. Actually, we'll round it up and say $209 per month to our daughter's RESP. That's a monthly amount that you

need to contribute to get the $2,500 for the year and therefore max out the CESG. So we do that consistently every month. We don't have to think about it and we know we're maxing out that grant. Now, it's not the only grant that is available, but it's the only one that we are eligible for. There is also the Canada Learning Bond for lower income families, and some provinces also offer grants of their own. And in terms of investments, I'm keeping it very simple right now and just putting the money in the fund from Vanguard, VEQT. I may add some individual stocks at some point, but I think it's most likely going to be index

ETFs. So I may kind of switching up a little bit in terms of that, but that's the approach I'm taking right now and what I'm doing for Sophia's RESP. For an account like this, I love that all-in-one stupidly diversified equity ETF like you've done. I think I would do the exact same thing because who's trying to manage multiple accounts of multiple stocks, all these accounts. That's such a set in, forget it type account. And I would do the exact same thing that you did. I think it's a good call. Yeah, no. And I think if people can afford it, it's just a great way to save for your child's education. Just slowly maximizing government grants while you're at it.

Let it compound over time and then, you know, kind of remove the stress of those high kind of cost of tuition that, you know, if your child goes to college or university. And, you know, there's other institutions that educational institution that are eligible that are not as costly, but it's just nice. Like we want her to do what she loves. So it's nice to know that, you know, our financial situation won't limit our options. Yeah, well said. I like it. It's cool. And there's all these grants. Dude, I just learned a lot. Honestly, I didn't know half of the stuff you just said. So that's helpful. Thank you. I like legit. That's brand new to me. So thanks for bringing it forward to the listeners.

with stocks on our radar presented by our beautiful friends at EQ bank, longtime sponsor of the show. And, uh, dude, like I love the platform. I'm not just saying that. Like I have put all of my cash, like emergency fund cash and cash for tax.

I know I'm going to owe the wonderful CRA and I just throw it all in there. And you can either GIC it or just own the cash. It's just, it's the best. It's so easy to use. We're both going to go with one as we always do for this segment that we do every other week. I am going off the board here with a stock that was on my radar. And it's an example of why doing even just the bare minimum of research on a financial data platform like Stratosphere or whatever you're using, and just looking at the base level fundamentals financially is so important before making any assumptions about the business quality. Because here I was thinking

this was a pretty cool opportunity. Probably no one's looking at it. Interesting idea, anecdotal. I understand it. Something that was on my radar. And if you look at the financials, you become quite disturbed. Disturbing is the example so as many not on your radar presented stock no longer even close to my radar uh presented by

friends now i'll i'll go i'll just back. I'll explain what the business is. It is called Selena. It's a Selena hostels, hotels. It is a hospitality business. And it came on my radar because they're all over Central America. And they are like the leaders in Costa Rica as well. And what they are is it's, it's basically a collection of hostels and hotels, but it's like, it's not hostels in the way that you think of like, you know, kind of scrappy, like young people traveling in, um, you know, dirty, whatever,

like they're actually really nice. And typically in Costa Rica and each location that they have, they have all the major places that people visit. They will own like the most important centralized real estate of that entire town or city, like legitimately, you know, on a beach town, being kind of like the central hub for people to hang out. They've done such a good job of picking the spots and being cool. It's not just for drunk 20-year-olds on spring break going to these hostels. They've really solidified the remote working, co-living type thing. Here I am thinking they must be crushing it. They're popular, seemingly well-run. They nickel and dime you everywhere you are in a kind of clever way.

And they've developed this co-living model, co-working for remote workers, people living digitally nomadic lives and appealing to what I have now coined the iced latte yogis. Okay. The iced latte yogis is their bread and butter. It's a very cool concept. And I think that's a pretty nice segment to touch on because they like to spend money. I had no idea they were public until I saw, I was, you know, I was going through basically the lobby to the beach to go surfing. This is an example of how centralized these locations are. I was walking the beach and I'm basically going through their property and they had a sign in the lobby. It said that they went public via SPAC. It didn't say via SPAC. It said they went public

on the NASDAQ. And so I looked it up and I'm like, oh man, this was a SPAC and it didn't say via SPAC. It said they went public on the NASDAQ. And so I looked it up and I'm like, oh man, this was a SPAC and it trades under the ticker SLNA for Selena. So it was a SPAC. So for those who are newer to the jargon and acronyms of the investing world, it just means it went public via a special purpose acquisition company SPAC, which is fancy words for saying a company, a shell company was formed to raise money through an IPO to buy another company. In this case, BOA Acquisition Corp took Selena public. SPACs were very popular ways to go public in 2020 and 2021. And they're always listed at $10 US per share. Many of them have gone on to do anything but spectacular, spectacular. They've done anything but. And Selena is no different. Shares now $2.60 from that initial $10. And revenue grows nicely, you know, operating so many

locations, growing locations, there's over 160 of them, they're now doing over 100 million in revenue growth seems to be really nice on this beautiful, straight trajectory. But they now currently have less than 10 million in cash. That is not a typo. Burning 70 million in operating income per year. Net losses are astounding, and their main auditor issued a going concern. They actually have negative gross margins up until 2022. The unit economics are out of control, And no wonder they're trying to nickel and dime their guests for everything because they still cannot make this model work. Yet they're who cares open more locations. It looks like we work based on like the co working model,

the locations, the this new dream of a new way to live and work. And I think it's cool. I'm all in on this. I love the idea of digital nomadic stuff. I basically did it for all of 2023 so far. Now I'm home. But this is an example of watch out for whisper stocks and watch out for convincing yourself that this is a good business without looking at the financials. And sure as hell, don't invest in a business before doing research on it. So this is stocks no longer on my radar presented by EQ Bank. Yeah. Okay.

Well, I'll add one. I mean, I don't have too much to say. I wasn't familiar with the company. But yeah, SPACs, I mean, there were some pretty famous ones. There's still the DWAC one, the one for Trump media. The Trump one. The Trump one. That one went, I think, pretty high.

Now it's around $15. All the Tramath SPACs too. Those are all nightmares. Yeah, exactly. So it's just, I think there's less, is it me or I think there's less heightened regulatory compliance required, right? I think that was one of the reasons. It's cost effective. They don't have to go through like a whole prospectus and I think it's more, yeah. like a whole prospectus and i think it's more yeah like i could be super wrong on this but i think there's like different s1 requirements for the business that they're acquiring right

because you're going public you're already public as a shell yeah yeah you're going as a shell and so i'm no lawyer and i don't work for the sec or anything like that but you're on the right track. That's basically, and they were such a sign of the times of, it is so easy to raise money right now when the, you know, SPACs were all the rage, 2020,

21 rates are zero. So easy to raise money. People are going so far out the risk, risk spectrum. And, and a lot of companies were down to go public. So they were a huge sign of the times. Most of them have been disasters.

I would say like, you know, over 80% of them have been disasters in terms of being down also 80%. Well, I think an issue is people, you know, they would get a big pop going public. Just back, not even the acquisition. And then people would get all hyped up buy it instead you know the value is $10 a share then they would buy it at $60 $70 and then just on the hype and then things don't pan out and it starts trading at around the $10 and you know people end up losing 60 $70 $80 $90 of their money yeah as soon as it was announced that they were gonna take selena as the like the takeout target or whatever the stock jumped all the way to 40 us 41 almost

and uh it's now two dollars and 56 cents so uh you can you can you can fill in the gaps there okay so now i'll move on to an actual stock on my list uh this one i've talked about before um i'm gonna go oil and gas here with canadian national resources ticker cnq i know i've talked about this one before a little bit um still haven't pulled the trigger on it now the reason why I'm eyeing CNQ of all the different options in Canada and of course the US as well, is because it has an amazing track record and they also have a low breakeven cost when it comes to the West Texas Intermediate. Their breakeven cost is in their mid $30 per barrel. So let's just say for the podcast, it's $35. So the breakeven costs would cover base maintenance, capital requirements and dividend commitments. So it's pretty unlikely that the price of oil gets to that level.

But it's good to know that, you know, they're sustainable, even if it does go to that level. Now, when most of the oil and gas companies were cutting their dividends during the early days of the pandemic, CNQ did not cut its dividend. If people remember or if we have new listeners, we actually saw the future price of oil go negative. did not have enough place to actually store and there was like a lack of demand so they were paying people to actually take those contracts so that's why clearly for those companies not as solid as Canadian National Resources it created a problem Suncor was one of them who actually cut the dividend during that period of time and last year Canadian Natural Resources actually paid a special dividend I think it was around August their dividend currently yields around just 4.5 percent they've also been returning capital to shareholder via buybacks pretty nicely since 2018 the share count is down quite a bit since then they have a pretty balanced portfolio with operations in North America the North Sea

and offshore Africa in 2023 their production was almost evenly distributed between natural gas, heavy oil, synthetic crude, and a small portion to light oil and natural gas liquids. They consistently have a high return on invested capital compared to the rest of the industry, and their assets are long-life assets, meaning that they'll be good for an extended period of time, which can be an issue with those oil and gas play where, you know, the

easiest way to explain that to people is if you have an oil well, you know, when it's exhausted, it's done, right? You can't create oil out of thinner, thinner. Now, the case here is clearly betting on a global recovery over the next five to ten years renewable energy is great um i'm you know all for it but we are not there yet and in the meantime we will need companies like canadian national resources and on top of that most experts i've listened to on the subject and i've done quite a bit of listening in the past couple months actually probably past six months and there hasn't been they say they had there hasn't been enough investment in this space in the past decade which obviously puts upward pressure on the price of oil

and gas prices especially if demand starts picking up even more and more the reason for that is the price kind of really dipped in I think it around 2014, and a lot of companies got caught with their pants down, with the lack of better analogy there, where they were investing too heavily in unprofitable projects. price went down a lot of these companies that $35 price per barrel break even while companies were looking at 70 80 even more than that so they were in a situation where they were producing and selling it at a loss so a lot of companies pulled back on investment in the past decade and now we're in the situation where we're at where there's been a lack of investment, not only for companies in a similar situation as CNQ here. CNQ is not in that case because they have really good assets, but also for refineries. So that could be a major issue in the next, I would say, five years. They do not own any refineries, but just to make a bit more sense of that. So clearly, I think it's a great business for commodity play.

It is dependent on the price of commodities. Clearly, that will be a big determining factor on the profitability and your returns here. But I think the medium to longish term, I think the tailwinds should be there for a company like this. And in terms of exit strategy, I'm not sure because I think that would probably be time slash macro slash price dependent. I don't think you can just put a price of oil and then decide to sell then and there, especially if there's still some macro tailwinds with oil and gas. I think your last caveat paragraph is exactly what keeps me out of these names,

but that's not to say that this is not such a brilliantly run company. So actually, I had a meeting with, shoot, I forget his name. It's okay, anyways. A meeting with one of the engineers at CNQ, really bright guy. He lives in Calgary and I was talking to him. I was like, dude, this guy's so smart. Like CNQ clearly has like really high quality talent. And he spoke really highly of,

of how they operate the business. And that's always been my interpretation as CNQ is just one of the probably one of the best run commodity businesses in the world. And so I definitely stand by that. You spoke about lots of the things that they have going for them. But again, it always comes back for me as an investor around the commodity, for me as an investor around the commodity. I'm just not smart enough to predict commodity and macro forces. I don't even know what I ate for lunch today, let alone know what the price of oil is going to do in the next five years. So that keeps me away because I just try to be in the places that I can understand. And this just never really is. No, I mean, that's a fair point. My view has changed a bit on that where I wasn't really interested in commodities at all. Well, I wouldn't say at all, but I was kind of reluctant. I

definitely kind of more in line with you. But the more I read and I listen to experts on the subject, you know, I'm not going to have a commodity dominant portfolio. That's not what I'm doing. But I definitely want to have some allocation to it, whether, you know, I'm thinking not only oil and gas, but maybe commodities as a whole, probably anywhere between 5% and 10% just to kind of give a hedge to my portfolio.

That's what I'm thinking about. So, um, CNQ, I mean, I will probably start a position very soon because, uh, yeah, it's just, you know, you look at all the metric, you just, I know Suncor is not the only one, but you compare it to Suncor and everything's like, everything's higher. Yeah. And if the macro works for this kind of position, you will make tons of money on this. Like it's too cheap. It spins out a boatload of cash. The assets are solid, long duration assets. solid long duration assets. We still need what they're making for a long, long time. It's a slam dunk. Honestly, it really is. If you get that part right. And a lot of people who are very bullish on being right about the macro on oil names and have been mostly right, I think, for the last couple of years. So congrats to you.

If that's true, it's a slam dunk. The amount of cash this thing will spin off, the special dibs you'll make, the yield along the way, the EPS growth over the next five years, I'm all there. I just, I don't know. I'd have no conviction on if that's right or not. And I think this is a perfect example of you just know more about this than me, um, by a long shot and that's okay. Like you've built that conviction. I haven't. And I think that that, like, I'm trying to normalize this if you, if you know what I mean. Yeah.

Yeah. And I mean, there's scenarios where it doesn't. I mean, I think at the very least, you'll get some growth out of it. I think that's kind of the bear case. Probably not, you know, market beating. But the top case, obviously, you're kind of betting on global growth there. But the biggest thing, right, if global growth kind of stalls for several years, then it's probably not going to be a market beating stock. That's just the reality of it right there. But if growth just kind of, it just picks up, the lack of investment, like everything, if growth picks up globally, it's going to line up quite

nicely for Canadian natural natural resources and the other thing i would look at and i'm just starting to dig on and i know there's some bigger players in the u.s for that but also having another name in this sector but that has refineries because i think that's another area where it's going to be hyper profitable just because of the lack of investment and some of the refineries actually coming to their end of life and not yet replace or not having yet a replacement uh in the works yeah good point and just so capex heavy these businesses oh yeah and yeah and that's the both the knock on it and the bull case for just being able to like how do you compete with the amount of capex like no stanford brilliant genius grad is coming out and really excited about building the next cnq

like that human does not exist today in the world uh i can say with complete confidence and that's kind of the barrier to entry right it's like no one's excited about putting up the capex required for these industrials and commodity names. Thank you so much for listening to the pod. I think it was a solid one. And if you have not gone to Stratosphere, I really would appreciate you check it out. Stratosphere.io is a financial data and analytics company. I spend all my waking minutes on making it better and better over time. So go ahead and check that out, stratosphere.io. If you want to join the Essentials paid plan, a professional paid plan, Essentials take 15% off with code TCI. And if you want to get on the pro

plan and hit me up directly, just hit that contact form and I'll get you set up. Simone, I'll get you set up. Simone, how's life, man? I am so confused about being back home in Canada. It's warm here. I thought it was going to be freezing. I don't know what it's like in Ottawa. It's freezing. It's freezing.

It's freezing and snowing. It was warm for a week and a half, and then we got a preview of what spring would be like and now it's like winter is back with a vengeance for what looks like the next couple weeks but you know mentally once i get to march it's always like okay the harshest months are behind me and i just you know i'm just looking at uh ford at the nice weather so yeah just uh powering through for another few weeks yeah so okay so it's i mean i'm not surprised it's auto that's just four hours away you know what you're in for yeah but like for us for instance um you

know on the real estate podcast they've been working with that snowblower company troy built and i'm getting the emails and they're like, we'd love to make the content for you, but there's just no snow. And I kept seeing these emails come through for the past like month and a half. And I'm like, why is there no snow here? Anyways, just completely out of the loop because my parents live in Florida and stuff. Yeah. Probably the last thing i'll say on that just to tell you how warm it has been even here um this will be i don't know if it's the first year ever but one of the only years if it's not where the rito canal will not open for skating this year damn yeah really yeah just because it hasn't opened what yeah i know because the one thing that i always always like hesitant like i don't want to leave like i don't want to leave during the winter

because i love some of these snow sports and i love playing outdoor hockey with my buddies on weeknights and stuff like that having a you know having a beer and playing hockey dude those rinks have just been slushed like they're not open yeah yeah and the rito canal i mean i think beaver tales officially said that they're not opening even if they open the rito canal it's at this point and we've had really cold days but it was only for like you know less than a week and then we get rain and warm weather so it's been all over the place but right now it's cold but it's towards the end of the season so i don't even know if they'll go ahead and open it which is kind of one of the nicest things of ot is being able to go on the Rideau Canal and skate.

And then you have Winterlude where there's tons of activities and that actually just finished yesterday. So it's been interesting. I got to come visit you. I've never, I mean, well, not clearly not this year. I've never skated on the Rideau Canal. And I think that would be a good, I think that would be like one of those touristy things that's super not overrated, like super underrated. Cause that's like pretty sick

to be able to skate on the Rideau Canal. I can skate, but stopping is a challenge. So I kind of go in circles and now that I'm older, I'll probably put like underneath my pants so people don't see them. I have like mountain bike, very slim knee pads. So I'm definitely going to put those in case I fall and I don't want to break anything. Oh boy. Okay. Well, I'll leave you in the dust back there. The only thing I'm going to have maybe in my, uh, in my pants is a couple of those little

fireball packets. Those things are electric on that there. Thanks for listening to the pod, guys. We really appreciate you. We are here Mondays and Thursdays. Like clockwork, the show goes on Mondays, Thursdays. Tune in, give the show a rating, share it with a friend. Head to join tci.com. That is our Patreon page where Simone talks about not only this retirement portfolio, but also our own real money portfolios that we update every single month. We'll see you in a few days. Take care. Bye-bye.