We always think of Canadians as those reasonable, conservative investors but if you look at the chart on the right, you’ll probably be as shocked as I am…! Wow! Here are a few good readings from the past few days!

General Readings

-The robots are losing @ BusinessWeek
-Eurozone unemplyment out of control? @ CuriousCat
-Bitcoins and other bizarre investments @ HopeToProsper

Dividend & Passive Income Readings

-6 dividend stock to profit from the stock squeeze @ TheDividendGuyBlog
-McDonald’s: Appealing under $100 @ DividendMonk

Tech Stock Readings

-Will Zynga (ZNGA) shareholders be compensated for their patience? @ SeekingAlpha
-New Apple iOS is better and worse at the same time @ TheVerge

chart credit: BusinessInsider

As I’ve discussed several times, I think it’s a bit foolish to count on government promises to fund your retirement. Most Western governments have important deficits, huge debts and will end up being unable to live up to their promises. They are slowly making some changes to things like the retirement age, tax rates and other measures. That being said, it’s not close to being enough. The fact is that in most cases, we really need to fund our own retirement.

It’s Not Rocket Science

You start early, open a savings account, start adding money into that account every month and invest that money into a clear and established strategy (ETF’s, dividend stocks, etc). It’s fairly easy to setup.

The big problem of course is that the majority of the population lacks the discipline to do it. Most would say they can’t afford to do it but if you pay yourself first, you will see that no matter what your income is, you’re able to save a certain % of your money.

It’s Not About How Much You Make

If you look at people that are forced to go bankrupt, you’ll see that some are high school dropouts with low income but you’ll also find athletes and execs that have made millions of dollars. It’s really not about having enough money.

What Else Can Be Done Then?

The Australian government decided to take action forcing all of its working citizens to save a certain % of their salary every year. I have mixed feelings about this kind of solution but it’s not a terrible idea either. The biggest problem I see is that having the government get MORE involved in my retirement sounds like a bad idea. I’d hate the government to tell me how much to save, where to invest, etc. It’s just rarely a good idea to get more intervention.

On the other hand, if I know that most Americans (and others) are not saving nearly enough, this seems like the only way to make sure that they have something saved up. Will it necessarily be enough? Of course not. But it would be a very good start. In the wake of all the recent scandals, I’m not sure adding more government involvement would maybe at some point everyone will agree that the current system simply does not work.

What are your thoughts on such an initiative?

Some time ago, I wrote about how the 4% rule applied to a dividend portfolio and that generated quite a few reactions. Many of them regarded how much was truly needed to retire, especially since I had used a $1 million retirement starting plan. I personally hope and expect to retire with more but never did I even consider that you’d need $1 million to retire. That would be wrong on so many levels.

Your Own Number

ING made a splash when it started advertising that we all should know and work towards saving “our number”. As I discussed, I do understand that there are several unknowns, especially considering numbers like inflation. Even a rather small change in that number can have massive consequences, especially on those who have retired. That being said, I believe in planning, with the best available estimates. Then, over time we can adjust that number. It’s still better to have a number and adjust it over time than not having anything.

Where To Start

Before even starting, one thing I’d say is that there are a million different ways to do this. I will not give my exact numbers but will give some estimate here:) It’s important to remember that a few changes can make a massive difference, those can include moving to a new location which I discussed earlier this month.

Salary for my wife and I: $120,000
After taxes salary: $80,000

I think the main number to look at here when trying to determine at how much I will need. The first number I’m looking for is how much I currently have every year to spend. That number is my before tax numbers. I will then take out the following expenses:

-annual savings $15,000
-mortgage (should be paid by then): $30,000
-work related expenses (work clothes, transport, etc): $5,000

So that gives me a total of $30,000 that I need to generate before taxes assuming that everything else remains the same.

It’s important to consider that my tax rate will be significantly lower considering the lower income and some of it coming from capital gains. So I could likely be ok with $50,000 or so?

There will likely be more changes:

-govt or other pension: I prefer not to count on this at all as I think that most governments will have to break many promises if they want to avoid going completely broke
-travel: I am likely to travel more once I retire, so ideally I’d have something extra saved for such expenses
-sure I might have to move to a place with a rent at some point but the extra income from selling the house should be enough to compensate

So what would be my number?

I’m sure a lot of other changes that I cannot even consider now will occur. That is why my number will change every time I recalculate but that is more than fine.

What about you? What is your number?

Man oh man, no matter how involved or not involved the White House is in all of this… it really looks bad. After Bengazi, the IRS and the spying on AP, now we seem to learn that the NSA is working with tech companies and phone carriers to spy on all citizens? Is the government out of control? Here are some readings that you will hopefully find interesting:)

General Readings

-Should we trust economists? @ TheAtlantic
-Is the NSA spying on all of us? @ WashingtonPost

Passive Income/Dividend Readings

-Top Canadian dividend stocks @ TheDividendGuyBlog
-Coca-Cola (KO) dividend stock analysis @ Dividend-Growth-Stocks
-Pepsi (PEP) to buy Sodastream? @ Reuters

Tech Stock Readings

-The power of Amazon (AMZN).. fascinating @ TechCrunch
-Zynga (ZNGA) announces major layoffs @ TechCrunch
-Wall Street Hates Facebook (FB) @ Wired
-Apple (AAPL) getting ready for iRadio? @ Bloomberg

Have you ever heard of Reddit? It’s an amazing community/website and I’m always stunned at what I see over there. This story is just one example.. the power of Reddit! Very impressive stuff! Anyway, here are some good readings before starting your weekend.

General Readings

-Can Japan export its way to a recovery? @ EconBrowser
-If cable is dying, why is it making so much money? @ Atlantic

Dividend & Passive Income Readings

-Stock squeeze! Look for the money to invest now @ TheDividendGuyBlog
-How Warren Buffett made his fortune @ DividendGrowthInvestor

Tech Stock Readings

-The race to a smart tv is over, Xbox won @ PandoDaily
-Facebook IPO one year later, what really happened? @ Atlantic

I was impressed overall with the quality of the discussions when Apple’s Tim Cook testified regarding Apple’s taxes… that being said, there is an issue, a very difficult one and if you look at the chart on the right, you’ll see that it’s getting worse and worse. Here are some readings:

General Readings

-How to buy happiness @ LA Times
-If cable is dying why is it making so much money? @ Atlantic

Dividend/Passive Income Readings

-Can Disney (DIS) please investors as much as it pleases my kids? @ TheDividendGuyBlog

Tech Stock Readings

-Is Netflix (NFLX) the exception that proves the rule? @ SA
-Will Facebook (FB) be forced into other social acquisitions? @ SA
-Yahoo (YHOO) is buying Tumblr @ TechCrunch
-Apple’s (AAPL) international tax structure @ TheBigPicture