See where yields on the US 10Y notes are: 4.5%. What do you think cooperates are paying? Way more than that. For a stock market that’s been breaking all time highs for over a year, and with a potentially new technology like AI sucking most of the liquidity, I think caution is very much warranted. There’s no real fear but there’s certainly capital competition now and with the bond market telling the FED we already hiked for you, that’s the real caution cue. Major growth stocks and high cash burn companies are being sold off because soon, there’ll find it difficult to see liquidity.
Bond Market Moves before Stocks The reaction to FOMC interest rate decision saw yields on longer term bonds edge higher as opposed to the short end. This is a bear steepening and caution is needed. Yes! bond market already hiked for the FED. Yields on the 2Y treasury sit at 4.3% and the FED’s target range is 3.5 - 3.75. If this correlation continues to hold as it has historicall, it means the FED has to hike in a few months time. More bearishness for stocks. 3 members dissented and opted to have a hike. This number will keep increasing. YTD inflation is what 4.2%. While the monthly data was encouraging with a slight cool, there’s still no clear downward trend. The Fed will hike interest rates in a few months unless monthly readings trend further downward. Stocks especially ones burning a lot of cash, sold off aggressively and this will only continue because there’s we are soon going to see liquidity issues read more
Long-term bond yields are rising around the world 📈 The U.S., Japan, Germany & other major markets are seeing long-term rates hit multi-year highs. And remember: bond yields ↑ = bond prices ↓ That’s why TLT has been under pressure. I’m watching this closely because if long-term rates eventually reverse, TLT could move FAST in the other direction.
I currently receive 4.25% interest rate on my bank’s savings account until end of 2026. I’d like to start investing in my TFSA, and my time horizon is 1.5-2 years before I move countries. The TFSA GIC with another institution offers 2.55-2.8% between 3-6 months (which I need for short term). I then plan to reinvest the gains. Since HYSAs are taxable but the rate is just under double the GIC’s, what do you think I should do?
The $25 Rule: What a Guaranteed $1 of Pension Income Is Really Worth Imagine two retirees. One has a $500,000 investment portfolio. The other receives a guaranteed lifetime pension of $20,000 per year. At first glance, they seem difficult to compare. One owns a pool of investments, while the other receives a monthly cheque for life. Yet a surprisingly simple rule of thumb suggests they may provide roughly the same level of retirement income. It’s known as the $25 Rule. If you’ve spent any time around retirement planning forums, you’ve probably seen it: For every $1 of guaranteed annual pension income you receive, you need roughly $25 less in your investment portfolio. It sounds almost too neat to be true. And in some ways, it is. But the logic behind it is sound enough to make it a genuinely useful planning tool—as long as you understand where it comes from and where its limitations begin. ⸻ Where the Number Comes From The $25 figure isn’t arbitrary. It’s the mathematical inverse of the well-known 4% rule, a retirement withdrawal guideline popularized by financial planner Bill Bengen in the 1990s. The rule suggests that a retiree could historically withdraw about 4% of their portfolio during the first year of retirement, then increase that dollar amount each year with inflation, while having a high probability of their savings lasting for a 30-year retirement. The math is simple: If 4% of a portfolio produces $1 of annual income, then producing $1 requires approximately $25 of investments. $1 ÷ 0.04 = $25 Using that shortcut, a pension paying $20,000 per year is roughly equivalent to having a $500,000 investment portfolio generating sustainable retirement income. This isn’t an actuarial valuation of the pension—it’s simply a convenient way to compare two very different sources of retirement income. ⸻ Why This Shortcut Is So Useful For quick retirement planning, the $25 Rule solves a real problem. Pensions pay guaranteed income for life. Investment portfolios are pools of assets that must be managed and gradually spent. The rule translates both into a common language. It can help you: * See your complete retirement picture. Instead of viewing your pension and investments as unrelated, you can estimate a combined “portfolio equivalent.” * Decide how much investment risk to take. Someone whose essential living expenses are largely covered by guaranteed pension income can often afford to invest the remainder of their portfolio more aggressively because they already have a secure income floor. * Evaluate pension buyout offers. While it shouldn’t replace professional advice, the rule provides a quick reality check on whether a lump-sum offer appears generous or surprisingly low. ⸻ A Quick Example Using the 4% framework: Annual Guaranteed Pension Approximate Portfolio Equivalent $10,000 $250,000 $20,000 $500,000 $30,000 $750,000 $40,000 $1,000,000 Again, these are rough planning estimates, not precise pension valuations. ⸻ Where the Math Starts to Break Down Despite its usefulness, treating every dollar of pension income as exactly equal to $25 of investments overlooks several important realities. The 4% Rule Isn’t a Law of Nature The 4% rule is based on historical market data—not a guarantee of future outcomes. Many researchers today suggest sustainable withdrawal rates may range anywhere from 3% to 5%, depending on retirement length, investment fees, future returns and personal circumstances. That changes the math considerably. * At 3%, $1 of annual income requires about $33 of investments. * At 3.5%, it requires about $29. * At 5%, it requires only $20. The “right” multiplier depends on your assumptions. Guaranteed Income Is Different From Market Income A pension continues paying whether markets are booming or crashing. A portfolio doesn’t. Retirees relying on investments face sequence-of-returns risk, where poor market performance early in retirement can permanently reduce how much income their portfolio can safely provide. Because of this, many financial planners argue that a dollar of guaranteed lifetime income is actually worth more than an equivalent dollar of portfolio withdrawals. Inflation Matters The traditional 4% rule assumes withdrawals increase with inflation every year. Many private pensions do not. If your pension payments remain fixed for decades, inflation steadily reduces their purchasing power. By contrast, government pensions like CPP/QPP and Old Age Security include inflation adjustments, making them more valuable than many private pensions over long retirements. Taxes Matter Pension income, RRSP/RRIF withdrawals, TFSA withdrawals and taxable investment income are often taxed differently. Two retirees receiving the same pre-tax income may end up with different amounts left to spend. Survivor Benefits Matter Some pensions stop when you die. Others continue partially—or fully—to a surviving spouse. Investment portfolios, meanwhile, generally become part of your estate. Those differences can significantly affect the true economic value of a pension. ⸻ The Behavioural Advantage One benefit that’s difficult to measure is peace of mind. Retirees whose essential expenses are covered by guaranteed income often find it much easier to stay invested during bear markets. Instead of worrying about selling investments after a large market decline, they can allow their portfolios time to recover. That emotional stability can improve long-term investing outcomes just as much as mathematics. ⸻ How to Use the Rule Wisely The $25 Rule works best as a conversation starter—not the final answer. A few practical guidelines: 1. Use it as a planning shortcut. It’s excellent for estimating whether your retirement picture is generally on track. 2. Adjust the multiplier when appropriate. If you’re retiring very early or prefer a more conservative withdrawal rate, using a multiplier closer to 28–33 may be more appropriate. 3. Remember that guaranteed income is unique. A pension isn’t just another investment—it’s insurance against living longer than expected and against poor market returns. 4. Seek professional advice for major decisions. Pension buyouts and retirement timing deserve a detailed analysis using actuarial assumptions, taxes, inflation and your personal circumstances. ⸻ The Bottom Line The idea that every $1 of guaranteed annual pension income replaces roughly $25 of investment savings is one of the most useful mental shortcuts in retirement planning. It provides a simple way to compare lifetime income with investment portfolios and helps put pensions into terms most investors immediately understand. Just remember that it’s a translation tool, not a valuation tool. The true value of a pension depends on inflation protection, taxes, survivor benefits, longevity and market conditions. Used appropriately, though, the $25 Rule remains one of the quickest and most practical ways to understand the real contribution guaranteed income makes to your retirement security. Think Saskatchewan Pension Plan, available to all Canadians or partial annuitization of your RRSPs as a sleep-well-at-night fund, no market risk. Let CPP act as the bond which is indexed for inflation and your TFSA’s as inflationary protection. If you want to stay in your home, apply for the provincial deferral of property tax programs, where the province pays your property taxes. ** I am heavily invested in Saskatchewan Pension Plan, interesting fact, I now get a pension tax credit for buying it at 55. Second interesting fact, I won’t touch it until 71, as it converts to an annuity the whole amount is converted, there is no RRIF mandatory tax, I just pay income taxes on annual basis on what it pays me.read more
It's Friday again, and both stocks and bonds are down since last week. But wait, aren't bonds supposed to protect you when stocks fall? Last week, @ian_s asked a very good question about the correlation between stocks and bonds. I attempted to answer it in my column in The Globe and Mail this week. In short, bonds may not be negatively correlated with stocks at the moment, but they can still reduce your risk, as illustrated by the parachuting good boi below. Feedback and more questions always welcome! Gift link here: https://www.theglobeandmail.com/gift/abf033097f2aee7cc380b493716e784abcd3170694bf0ae4c6f2ccb5a67962f4/5GDXBAX3BFFXHNPK3EHHETZUK4read more
According to the recent markets activities, there’s been a massive shift in fixed income markets lately. The U.S. 10-year Treasury yield recently surged past 5.0%, hitting levels not seen since 2007. When global benchmark borrowing costs rise this fast, it reshapes asset allocation strategies across the board. Did You Know? 🧐 For over a decade following 2008, investors followed the "TINA" principle. There Is No Alternative to stocks, because interest rates were near zero. Today, with short-term Treasury yields and cash-equivalent ETFs paying around 5%, financial markets have shifted to "TARA", There Are Reasonable Alternatives! That means you can earn solid risk-free income while waiting for stock market volatility to cool off. Market Outlook💰 Higher government bond yields act like gravity on stock market valuations. When "risk-free" yields rise, corporate future earnings get discounted more heavily, putting valuation pressure on speculative growth and high-P/E tech stocks. However, this rate environment opens up fantastic opportunities for income-focused investors. For the first time in years, fixed income and short-duration cash equivalents offer genuine yield competition against equities. The key to navigating this market is focusing on strong free cash flow, short-duration bonds, and high-quality dividend compounders that aren't weighed down by heavy debt loads. Key Funds & Tickers to Watch For 🇨🇦(CAD) Investors: * Short-Term & Ultra-Short Yield: $CASH (Global X High Interest Savings ETF) or $XSB (iShares Core Canadian Short Term Bond Index ETF) * Dividend & High Free Cash Flow: $BNS (Bank of Nova Scotia) or $PPL (Pembina Pipeline Corp.) * Broad Core Exposure: $VCN (Vanguard FTSE Canada All Cap Index ETF) For 🇺🇸 (USD) Investors: * Short-Term Treasuries & Income: $SHY (iShares 1-3 Year Treasury Bond ETF) or $BIL (SPDR Bloomberg 1-3 Month T-Bill ETF) * Cash-Flow Heavy Value: $CVX (Chevron Corp.) or $BRK-B (Berkshire Hathaway Inc.) * Broad Core Exposure: $SCHX (Schwab U.S. Large-Cap ETF) How are you adjusting your portfolio with yields at 15-year highs? Are you locking in fixed income yields with CASH and SHY, or buying the dips in core broad equities like VCN and SCHX? — This is for educational and informational purposes only and does not constitute financial, legal, or investment advice. read more
On BNN Bloomberg's Market Call, Mike Philbrick, CEO of ReSolve Asset Management, highlighted a fundamental shift in global markets. Did You Know? 🧐 Did you know that fixed-income yields are offering their most competitive returns in over a decade? For years, 1% bond yields forced investors to take big risks in equities just to get a return. Today, high-quality bonds yield nearly 4%, making fixed income a reliable source of portfolio stability and income once again. For years, ultralow interest rates rewarded investors for paying top dollar for mega-cap growth stocks. Today, capital has a real cost, and elevated valuations mean investors need disciplined portfolio management rather than relying solely on broad-market momentum. Growth vs. Value Think of constructing a balanced portfolio like building a house: * Growth Stocks: Premium, high-priced properties in high-demand neighborhoods. You pay top dollar today because you expect property values to keep soaring fast. * Value & Fixed Income: Sturdy, cash-flowing homes bought at fair prices. They cost less upfront and generate steady rental income (yield) along the way. What changed? When borrowing money was almost free, investors paid premium prices for growth. With interest rates sitting around 4% to 5%, high-quality fixed income and quantitative value equities are providing real competition for capital again. Asset Allocation Ideas 1. Canadian 🇨🇦 Dollar (CAD) Options * BMO Aggregate Bond Index ETF ($ZAG): Provides broad exposure to Canadian federal, provincial, and corporate bonds yielding ~3.8% with 6.9 years duration, offering steady income without taking equity risk. * Vanguard All-Equity ETF Portfolio ($VEQT): A complete, all-in-one global stock portfolio for long-term equity growth. 2. US 🇺🇸 Dollar (USD) Options * Alpha Architect U.S. Quantitative Value ETF ($QVAL): Uses quantitative screens (like $EBIT to Enterprise Value) to pick undervalued, cash-generating U.S. companies rather than paying top dollar for momentum. * Vanguard S&P 500 ETF ($VOO): The low-cost anchor for broad-market U.S. large-cap exposure. — This is for educational and informational purposes only and does not constitute financial, legal, or investment advice. read more
I was chatting with an AI system they was built into my banking app. I am very clear with my finances and I am responsible as far as I know. Long story short: I asked it why I couldn’t save enough money to reach my goal and it told me (paraphrasing) “you don’t make enough to reach your goals that quick. Sorry🤷🏾♀️” I WAS SIIIIICCCKKKKK I CLOSED THE APP AND WENT TO BED!
I’m building a simple income-focused strategy around $FFord and $SANSantander. The plan: * Buy 100 shares of each * Sell covered calls to collect premium * Collect dividends while holding * If shares get called away, sell cash-secured puts to potentially buy them back * Repeat the process and compound the income * Use the premiums/dividends to help pay down my PLOC The goal isn’t to chase the highest possible premium. I want to own large, established companies that I’m comfortable holding long term while generating additional income from the wheel. My core portfolio stays focused on long-term growth, while F + SAN are my income/wheel positions. I’m new to both of these stocks and from some quick researching and understanding they are safer stocks that have a somewhat decide bull case for the future mixed with business strategy’s that have a competitive edge. Still thinking upon this and if my thoughts decide on it I should be making this happen next week at some time. If anyone has any good information on either of these companies or thoughts upon this strategy please lmk! read more
Good morning! I hope everyone had a great Labor Day weekend. With 10-Year and 30-Year treasury bonds at multi year highs, lets take a second to take about what the heck these things are. For lack of better words, bonds are just debt, an entity or individual will sell bonds to institutions or investors, with a coupon rate (interest rate) and that is the return in the investor can expect to make on top of their principal. There are different types of bonds, that function in their own way because they are used for different purposes. Below you will find a list of US Government Securities 1. Treasury Bill , 1 year or less, zero coupon 2. Treasury Note, 2-10 years, pays semi annual interest 3. Treasury Bond, up to 30 years, pays semi annual interest 4. STRIPS - long term, zero coupon 5. TIPS - long term, long term, pays semi annual interest The 30-year treasury note is currently yielding 5.27%, the highest level seen since 2007, what does that mean? 1. Inflation and interest rate fears. 2. Debt supply pressure Recent comments from federal reserve officials and rising energy costs; with brent crude approaching $100 a barrel, have forced markets to price in the possibility of further rate hikes or a prolonged higher for longer stance. Expanding government deficits are requiring massive amounts of new treasury issuance, testing the market's capacity and pushing yields higher to attract buyers. Essentially, you can average 8-10% in the market, at the same time turn right around and yield 5.27% from a 30-year treasury note, which is how the US pays their debt, by issuing debt.read more
