Archive | May, 2017

Podcast 8: Couch Potato With a Conscience

Are you interested in indexing but uneasy about the idea of investing in certain “sin stocks”? In my latest podcast, I look at whether you can be a Couch Potato investor and still stay true to your values.

The episode features a detailed interview with Tim Nash, a financial planner, creator of the Sustainable Economist blog and a specialist in socially responsible investing (SRI), with a particular expertise in green ETFs. I first interviewed Tim here on the blog back in 2013, and since then he has been my go-to guy on sustainable investing.

During the interview we discuss several ETFs. Here are links to the ones Tim mentions:

iShares Jantzi Social Index ETF (XEN) offers exposure to 50 large-cap Canadian companies weighted according to environmental, social, and governance (ESG) criteria.

iShares MSCI KLD 400 Social ETF (DSI) is one option for large-cap US stocks. According to Tim: “Really what they’re trying to do is to replicate the S&P 500, but getting rid of the worst of the worst companies.” The fund drops the lowest-ranking 20% of stocks based on their ESG scores.

Continue Reading 20

Bond Basics 3: Should You Wait for Higher Yields?

In my last podcast, I set out to answer a series of common questions about bonds. Here’s one I’ve been hearing on and off since 2009: “With yields so low now, is it even worth it to invest in bonds? Wouldn’t I be better off waiting until interest rates go up?”

It’s true that interest rates are near historical lows: as of early May, 10-year Government of Canada bonds are yielding just over 1.5%, and a broad-based bond index fund like the ones I recommend in my model portfolios yield a little less than 2%. It’s hard to get excited about that, especially when equity returns have been so strong in recent years.

It’s also hard to tune out the financial media, which is still populated by gurus who warn interest rates have “nowhere to go but up.” Since rising rates will cause the value of bonds to fall, why not just stay out of bonds until yields are higher?

The first thing to discuss is this idea that interest rates are highly likely to go up in the near future. I don’t think we can take people seriously anymore if they continue to beat this drum.

Continue Reading 33