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This is the fourth update in a new series where I intend to share the progress of Baby R2R’s investment portfolio. I started documenting this in Q3 2017 and intend to provide quarterly updates.

Baby R2R was born in Spring 2016 and a few months later, I setup her education fund to which I contribute on a regular basis. We live in Canada, so we take advantage of the RESP program (Registered Education Savings Plan), an account type where we can save and invest for our child’s secondary education. In addition to tax advantages, we also receive an education grant, which matches upto 20% of the saved amount (upto a max of $500 per year). How can anyone say no to free money?

In addition to the education fund, we also decided to start a Nest Egg fund, where we save and invest for Baby R2R and let compounding do its job over the course next couple of decades. The two accounts take different approaches to investing strategy.

The Education Fund

For the Education fund, I have chosen to go with index funds. The details of portfolio construction are shared in this post. While I contribute regularly, I  invest at a slower rate and leave a healthy sum of funds in cash and dollar cost average over the months.

To get full benefits from the government, I contribute $2,500 per year and will receive $500 in grants. So, the total contribution amount going into the account is (and will be) $3,000 per year.

As it stands at the end of Q2 2018, the total account value is $9,149, of with 44% invested in the funds and the rest in cash.

Portfolio Composition and Returns

This portfolio consists of four ETFs giving exposure to Canadian Equities (20%), All World Ex-Canada Equities (40%), Canadian Fixed Income (20%) and Emerging Market Fixed Income (20%).

YTD returns have been (excluding dividends): ZCN (0.5%), VXC (3.29%), ZAG (-0.96%), ZEF (-7.39%); appalling results, but the yield on the portfolio helps cushion the blow a bit.

The Nest Egg Fund

The Nest Egg Fund is extra savings and contributions that I earmark part of my tax free savings account for Baby R2R. The goal was to save an extra $100/month, although I may have been a bit more generous with the contribution in the last few months

Portfolio Composition and Returns

This portfolio consists of 3 dividend growth stocks:

YTD returns have been (excluding dividends): BMO (1.02%), BAM (-2.54%), FNV (8.82% since position initiation); a much better performance thanks to buying the dip in FNV.

Summary

Between the two accounts, I am happy with the progress we are making for our daughter’s future. The account values have grown and Baby R2R has started earning dividend income (to date, just the dividend income has added up to $162.33 between the two portfolios).

As of Q2 2018, Baby R2R’s total portfolio value and dividend income looks like this:

What are your thoughts on these portfolios and the plan going forward? Share your thoughts below.

Full Disclosure: Long all stocks & funds mentioned above. Our full list of holdings is available here.

The post Baby R2R’s Portfolio Update – Q2 2018 appeared first on Roadmap2Retire.

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Roadmap2Retire by Roadmap2retire - 5d ago
Welcome to the quarterly update for Q2 2018. This is part of  a series where I track our financial progress on a quarterly basis. I present three parts in this series: (i) Investment & Portfolio Update, (ii) Passive Income Update, and (iii) Goals Update.
1. Investment & Portfolio Update
Q2 2018 saw a some decent activity in our portfolio.
We added to the following positions.

We closed positions in

We continued adding to the following funds

Q2 saw 4 dividend increase announcements in our portfolios. The companies from our portfolios increasing their dividends and details of portfolio changes are summarized below.

2. Passive Income Update

A great quarter on the passive income front. During the quarter, we managed to earn a passive income of $2,515.43 – a new all time high for second quarter passive income.

Year Q1 Q2 Q3 Q4
2013 $383.65 $516.32 $718.33 $1,063.97
2014 $1,322.47 $951.18 $1,055.79 $1,803.90
2015 $1,546.87 $1,960.10 $2,076.81 $2,256.01
2016 $2,167.95 $2,404.43 $1,965.95 $2,561.37
2017 $2,067.19 $2,159.57 $2,150.41   $3320.46
2018 $2,454.61 $2,515.43

You can read previous quarterly updates here.

“Other” Passive Income

Passive income that we achieve is split between investments from dividend paying companies and what I call other sources of passive income, which includes cash back rewards credit card, advertising revenue from this blog, interest on cash and writing premium articles for Seeking Alpha. As you can see from the chart below, our other category has performed well. Our passive income from the ‘other’ sources saw continued traction in Q2 2018, providing us with some great overall passive income – which we proceed to invest into stocks and funds to compound our growth.

I realize that some of our sources of passive income are not completely passive, as it requires us to put some time and effort into it. However, I consider these sources to be semi-passive and I wrote an article to capture my thoughts on the scale of passivity of each income type. Be sure to check out Passivity of Income.
3. Goals Update

Onto the goals that I set and see how we did overall on that front.

  • Earn $11,000 in annual passive income – On track
    • Passive Income YTD is $4,970 (45.1% achieved)
  • Pay down an extra 25% towards our mortgage debt – No progress here, but we are on track to pay some extra amount later this year
  • Portfolio rebalancing & diversification focus – No progress here and needs attention.
    • More passive investing. Target 60/40 for passive/active
    • Rebalance stock portfolio to reduce materials exposure. Target 35%
    • Asset class diversification. Reduced equity focus and increased international exposure

Stay Connected / Subscribe

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That’s all folks! Thanks for reading. Be sure to leave a comment at the bottom – I love to hear from the readers on your thoughts and opinions.

The post Quarterly Update – Q2 2018 appeared first on Roadmap2Retire.

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Roadmap2Retire by Roadmap2retire - 6d ago

2018 turned out to be a great year for knowledge building by reading a wide variety of books. I took a conscientious decision in 2017 to quit some social media platforms such as Facebook and Instagram and whittling away overusage of Twitter. I still see a lot of value in Twitter, so I find it hard to quit completely — especially since I get to connect with some brilliant people and have/follow interesting ideas and conversations in an easily digestable format.

In addition to quitting social media, I made a decision to reduce my consumption of news. Most of today’s news – be it financial media, political media etc is nothing but drivel that generates excessive noise in my mind, and I wanted to get rid of that from my head.  These little changes opened up so much time; allowing me to do more of what I wanted to do for the past few years: read more books.

Sure enough, I have made tremendous progress so far in 2018 and decided to provide a half year update on what I’ve been reading. Here’s a list of books I read in 2018 and my short take on each of these.

  1. Sapiens: A Brief History of Humankind by Yuval Noah Harari – Probably the best book I read so far this year. There are so many snippets that stand out from this book that apply to various aspects of life. This book has definitely left a lasting impression on me and I still go back to read some passages over as the author presents a unique perspective on commonly narrated human stories – such as money, religion, politics etc. The book does a fantastic job of walking through various phases of our evolution, broadly classified into Cognitive Revolution, Agricultural Revolution, and the Scientific Revolution. I highly recommend reading it if you haven’t read it yet. Verdict: ★★★★★
  2. Fooled by Randomness by Nassim Taleb – Taleb does a remarkable job putting himself on the pedestal and convincing himself that he is god’s gift to humanity. I knew of this before I read the book, and the book shows this behavior — I didn’t enjoy the read as the author simply diverges into meaningless rants. A few interesting points about randomness and decision making that were good though. Verdict: ★★
  3. The Case Against Sugar by Gary Taubes – This is the first Gary Taubes book I read. His books have known to be a bit of a journey down a rabbit hole and sure enough, there were sections of the book that seemed to delve deeper than I expected. Nonetheless I thought it was a decent read and well researched. The book walks you through the history of sugar cultivation during the late middle ages and through overusage through the centuries. Majority of the book spends time on the 20th century American  medicine and how the culture of sugar found its deep roots in all our present day diets. A pretty decent read if you are interested in diets, health and longevity. Verdict: ★★★
  4. Robot-Proof: Higher Education in the Age of Artificial Intelligence by Joseph Aoun – Not the best book I read this year. Most of the book talks about the usual disappearing job due to automation over the coming years. I wasn’t too impressed with the simplistic and slightly repetitive writing. Verdict: ★
  5. The Talent Code by Daniel Coyle – This was a great book and I thoroughly enjoyed it. The author walks through the process of how skills and talents are developed; about how Myelin plays a central role in our nervous system to develop talent. While the biology can be a bit complex, the author did an amazing job to make it easily understandable and presentable to a layman like me. Highly recommended. Verdict: ★★★★
  6. Surely You Are Joking, Mr. Feynman by Richard Feynman – This was an interesting book. Normally I don’t read biographies/memoirs, but this one came highly recommended from multiple sources, so I decided to give it a try. The book is a collection of short stories and personal experiences of Dr. Feynman. While the first 1/3 of the book was not as interesting, the book caught my attention when Dr Feynman recalled stories from the days of the Manhattan project. There was a lot about him that I didn’t know and it was a good fun read. Verdict: ★★★½
  7. How Google Works by Eric Schmidt & Jonathan Rosenberg – This was a business book about the company culture at Google, a company that I am always fascinated by. The engineers who work and form the company are legendary in the industry, but it was good to read from the vantage point of management and the leadership team. Lot of the culture has now percolated to the rest of the tech industry, but how the company was initially run contributed massively to drive Google to the top of the world in becoming one of the most successful companies, in a very short time. Verdict: ★★★★
  8. Factfulness by Hans Rosling, Anna Rosling Ronnlund, and Ola Rosling – Definitely one of the top books of the year. It is an important book to read, albeit a bit dry, but that is the point of the book — to simply look at the facts without getting emotionally swayed by say, the media overplaying a particular angle to a story. This is the book that Bill Gates recently bought the rights to distribute a free copy to every American university graduate this year. In a nutshell, this book implores everyone to learn how to look and evaluate statistics/facts and not let either pre-conceived or outdated information influence their world view. The authors start the book with a few simple questions on the status of the world and then present the data to show that most polls show high ranking professionals, businessmen, policy & decision makers did worse than randomized results generated by banana picking chimpanzees! In addition, there are some good resources to explore online such as Dollar Street at Gapminder. Be sure to check it out. Verdict: ★★★★★
  9. The Obesity Code by Dr. Jason Fung – This is an easy & quick read. Dr Fung does a fantastic job of getting to the bottom of the obesity crisis and how conventional medicine over the past 3-4 decades has got it completely wrong on inconclusive and unproven data. This book delves into how the body processes the food we eat, how insulin plays a central role, not just in causing obesity, but also the fact that insulin resistance is the root cause for major chronic diseases such as Type 2 Diabetes. It was an eye opener on understanding various aspects of some major diseases in an easily presentable way. Verdict: ★★★★

Those are the 9 books I have read so far in the first half of 2018. I am pretty happy with the progress and doing far better than I had imagined. I didn’t really have a goal in mind as I am not aiming for a high quantity of books that I want to read for the year. I am just enjoying reading these books that I find interesting and will hopefully expand my knowledge horizon over the coming years.

Have you read any interesting books lately? What should I read next? Leave comments below with your recommendations.

The post Books I read in 1H 2018 appeared first on Roadmap2Retire.

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Welcome to our monthly passive income update for June 2018. This is part of the scorecard series where we track our dividends and other sources of passive income. We also include changes and updates related to our investments during the month – showing the overall progress.

Passive Income  Update

Passive income for the month of March 2018 was CAD$796.25, which comprised of US$340.77 and CAD$346.43 (exchange rate is US$1 = CAD$1.32).

The change for the month is -3.69% QoQ and +17.52% YoY for the month. This brings our passive income to $4,970 YTD and achieves 45.1% of our annual goal of earning $11K.

Income Sources

Passive income contributing entities:

Stocks:

  • Brookfield Asset Management (BAM.A.TO)
  • Brookfield Infrastructure Partners LP (BIP.UN.TO)
  • Canadian Utilities Ltd (CU.TO)
  • Franco Nevada Corp (FNV.TO)
  • Inter Pipeline Ltd (IPL.TO)
  • Johnson & Johnson (JNJ)
  • Ventas Inc (VTR)
  • Wheaton Precious Metals (WPM & WPM.TO)

Funds:

  • BMO Aggregate Bond Index ETF (ZAG.TO)
  • BMO EM CAD Hedged Bond ETF (ZEF.TO)
  • Vanguard Emerging Market Bond ETF (VWOB)
  • Scotia Diversified Monthly Income Fund (mutual fund)

Other:

The breakdown of our passive income contributing entities: dividends & options totaled $388.41 and other passive income totaled $407.84. Read more about why we consider this as passive income in the Passivity Index post.

Portfolio Activity Dividend Increases
  • None
Added Positions

During the month, we added the following position to our portfolio

Stocks:

Funds:

You can track the options via a tracking sheet here.

That’s all folks! Hope you had a great June as well. Be sure to share your thoughts, comments or concerns below. I love hearing from the readers.

Disclosure: Our full list of holdings is available here.

< Passive Income

Stay updated: Be sure to stay updated on all the posts by subscribing via or following via Twitter, Google+Facebook, or Pinterest.

The post Passive Income Update – Jun 2018 appeared first on Roadmap2Retire.

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Roadmap2Retire by Roadmap2retire - 1w ago

The dog days of summer are here. Here in Ottawa Canada, we’ve been setting records of sweltering heat…on Canada Day (July 1st), we hit 47°C with humidex!! More importantly, the hot stock market in the US continues its streak with no letdown in sight. While Tech grabs all the headlines, its the Consumer Discretionary that topped the returns for the first half of 2018. The following return charts are courtesy of Novel Investor.

Outlook for July 2018

My portfolio’s exposure to the Materials sector had crossed the 50% mark earlier this year, and I decided that I had to pull back and start selling some of my positions in order to manage my risk exposure. Even after a few sales over the past 2-3 months, the increased returns keep my portfolio close to 50% mark (see the stock diversification chart below) and I will be looking to taking more profits in coming months, while maintaining an overweight position to the sector.

50% is a line I have drawn in sand that I do not want to cross when it comes to exposure to a single sector of the market. There are still some good finds elsewhere as the market re-prices equities and we go through multiple contraction as the bond yields rise. I will be looking to diversifying my portfolio further in the coming months while maintaining a healthy cash position.

I also had a couple of my positions closed in May after the covered call options expired and got called away. I managed to book some healthy profit on that front, so can’t really complain.

As of Jun-30-2018, our overall portfolio diversification is structured as shown below.

Looking for investment ideas? Check out this Top Investment Picks for 2018, where 35+ bloggers present their top pick and a reason to invest in those securities.

What are your thoughts on the points mentioned above? Do you have any specific thoughts on the markets and looking at anything interesting? Share with a comment below.

Full Disclosure: Our full list of holdings is available here.

The post Outlook for July 2018 appeared first on Roadmap2Retire.

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Roadmap2Retire by Roadmap2retire - 2w ago

A quick update on a recent purchase in my portfolio. This round is a new position in my portfolio.

Although I have been pulling back from the Basic Materials sector since the sector has grown to a big part of my overall portfolio, I find some good lucrative businesses to invest in, as the sector still remains one of the most undervalued sectors of the economy. I initiated a new position in Equinox Gold (EQX.V).

I bought the company in two tranches, first in May and the second earlier this month. I own a total of 2,000 shares with an average cost basis of C$1.05.

Recent Buy Decision
  • A company chaired by Ross Beaty, a legend in the mining sector. Ross Beaty is a serial entrepreneur, who has started, run, grown and sold a series of successful businesses over the past few decades. While the management team is young, Ross’ leadership should guide this company to a successful outcome. In addition, Ross’ first successful company was also called Equinox, and he has indicated that he wants sandwich his career with two companies with same names.
  • His success has resulted in fortunes being made by many investors and I intend to join that club with this investment. Betting on smart, successful entrepreneurs with a proven track record make this a relatively safer speculation. While Ross has built his career in the silver sector, he has turned his attention to gold on this company. Ross thinks that gold mining is more lucrative in current environment.
  • The company owns resources in US (Castle Mountain, California) and Brazil (Aurizona); while owning some other assets in other countries including Ecuador, Canada etc. In fact, last night it was announced that Equinox will spin off its copper assets to create Solaris Copper.
  • The company is on a fast track to start producing gold. Aurizona is on track to start pouring before the end of the year. The resource estimates show that this will be a producing mine for decades to come.
  • The company also intends to grow substantially to become a major mid-tier mining company via acquisitions with its $200M debt facility.

For more details, see Equinox Gold’s corporate presentation.

Full Disclosure: Long EQX.V. Our full list of holdings is available here.

The post Recent Buy – EQX appeared first on Roadmap2Retire.

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Welcome to our monthly passive income update for May 2018. This is part of the scorecard series where we track our dividends and other sources of passive income. We also include changes and updates related to our investments during the month – showing the overall progress.

Passive Income  Update

Passive income for the month of May 2018 was C$694.91. The passive income for the month comprised of US$376.28 and C$209.51 (exchange rate is US$1 = C$1.29).

The change for the month is -8.9% QoQ and -21.65% YoY for the month. This brings our passive income to $4,173.80 YTD and achieves 37.94% of our annual goal of earning $11K.

Income Sources

Passive income contributing entities:

Stocks:

  • Bank of Montreal (BMO.TO)
  • Inter Pipeline Ltd (IPL.TO)
  • Kinder Morgan Inc (KMI)

Funds:

  • BMO Aggregate Bond Index ETF (ZAG.TO)
  • BMO EM CAD Hedged Bond ETF (ZEF.TO)
  • Vanguard Emerging Market Bond ETF (VWOB)
  • Scotia Diversified Monthly Income Fund (mutual fund)

Other:

The breakdown of our passive income contributing entities: dividends & options totaled $210.82 and other passive income totaled $484.09. Read more about why we consider this as passive income in the Passivity Index post.

Portfolio Activity Dividend Increases

May saw one dividend increase announcement in our portfolio.

  • Algonquin Power & Utilities (AQN.TO) raised its dividend by 10.04%
  • Bank of Montreal (BMO.TO) raised its dividend by 3.23%
  • Franco Nevada Corp (FNV.TO) raised its dividend by 4.35%
  • Kirkland Lake Gold (KL.TO) raised its dividend by 50%
Added Positions

During the month, we added the following position to our portfolio

Stocks:

Funds:

Reduced/Closed Positions

During the month, we reduced/closed the following positions

  • Nevsun Resources (NSU) — Covered call option, Called Away

That’s all folks! Hope you had a great May as well. Be sure to share your thoughts, comments or concerns below. I love hearing from the readers.

Disclosure: Our full list of holdings is available here.

< Passive Income

Stay updated: Be sure to stay updated on all the posts by subscribing via or following via Twitter, Google+Facebook, or Pinterest.

The post Passive Income Update – May 2018 appeared first on Roadmap2Retire.

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Dividend growth investing is a popular model followed by the investing community to build assets. Companies which not only pay dividends, but raise them year after year have been shown to perform better overall for investor returns. On the flip side, it is also important to keep an eye on the dividend cuts, which could signal troubling times ahead for a company. This post captures the announcements of changes in dividend amount for the week – both increases and cuts.

Note that only $2B+ (Midcap+) companies are included in this list.

Continue Reading Here >

The post Top Dividend Raises for May 2018 appeared first on Roadmap2Retire.

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Roadmap2Retire by Roadmap2retire - 1M ago

A bit late since I’ve had to travel for work last few days. Work has been extremely busy, so I haven’t had a chance to keep up with the markets and the steady flow of drama/news, which has actually been refreshing. I knew that I was consuming too much news and have cut back over the course of year or so, but last couple of weeks have shown that I am still consuming too much financial/social media and need to cut back.

I will keep this post really short and put a current snapshot of my portfolio as of May 31, 2018. Not much has changed as for the outlook and I still maintain a fairly defensive stance on the overall market.

Outlook for June 2018

My portfolio’s exposure to the Materials sector had crossed the 50% mark earlier this year, and I decided that I had to pull back and start selling some of my positions in order to manage my risk exposure. Even after a few sales over the past 2-3 months, the increased returns keep my portfolio close to 50% mark (see the stock diversification chart below) and I will be looking to taking more profits in coming months, while maintaining an overweight position to the sector.

50% is a line I have drawn in sand that I do not want to cross when it comes to exposure to a single sector of the market. There are still some good finds elsewhere as the market re-prices equities and we go through multiple contraction as the bond yields rise. I will be looking to diversifying my portfolio further in the coming months while maintaining a healthy cash position.

I also had a couple of my positions closed in May after the covered call options expired and got called away. I managed to book some healthy profit on that front, so can’t really complain.

As of May-31-2018, our overall portfolio diversification is structured as shown below.

Looking for investment ideas? Check out this Top Investment Picks for 2018, where 35+ bloggers present their top pick and a reason to invest in those securities.

What are your thoughts on the points mentioned above? Do you have any specific thoughts on the markets and looking at anything interesting? Share with a comment below.

Full Disclosure: Our full list of holdings is available here.

The post Outlook for June 2018 appeared first on Roadmap2Retire.

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The following is a guest post from Troy Bombardia from BullMarkets.co

The current bull market and economic cycle are extremely stretched. But remember that bull markets don’t die of old age – they die of excess. And although economic and market excess aren’t as high as they were in 2000 or 2007, excess is starting to creep in. You can see this slowly rising excess in rising debt, rising valuations, etc.

But the key point is that although these signs of excess are concerns, they are not significant enough to end the bull market in stocks and economic expansion right now. This means that although the economic expansion and bull market are getting old, they still have a few years left.

Here are the best ways to invest during the final few years of an economic expansion.

Buy TIPS

Inflation tends to rise during the final few years of a bull market and economic expansion. See the chart below.

Hence, the first and foremost goal of any medium-long term investor is to protect his or her portfolio from rising inflation. Investors in bonds with short durations (e.g. short term Treasury bonds) typically lose money because short term interest rates rise when inflation rises.

This is why inflation-wary investors should invest in TIPS. TIPS (Treasury Inflation Protected Securities) are bonds whose value rise when inflation is rising. You are paid a fixed rate of interest on a TIPS. However, the principal that you receive when the bond matures increases if inflation rises. So when inflation goes up, investors in TIPS are rewarded.

Commodities

This is one market that many equities investors overlook. Commodity prices tend to rise when inflation is rising. This inherently makes sense. Headline inflation (CPI) is strongly driven by the year-over-year change in oil prices. Since oil and commodity prices tend to move in the same direction in the long term, this implies that the entire commodities family will do well when inflation and oil rises.

There are multiple ways investors can get involved with commodities. The easiest method is to buy ETFs. For example, gold has the ETF GLD, silver has the ETF SLV, and oil has the ETF USO.

There’s another reason why oil is doing particularly well right now. The 2014-2016 decline in oil put a large hole in Saudi Arabia’s and other OPEC nations’ budget. Many OPEC nations need oil to be $70-80 a barrel just to breakeven. Hence, OPEC continues to curb its supply in an effort to drive oil prices higher.

So if you want to protect your portfolio from rising inflation over the next few years, invest in some commodities.

Dividend stocks

Dividend stocks are safer than growth stocks when it’s getting late in the bull market and economic cycle. It’s not possible to exactly pinpoint when the bull market will end and when the bear market will begin. All we can do is estimate the turning point in the long term trend.

So if you want to be on the safe side, consider switching your portfolio from growth stocks to dividend stocks. Growth stocks (tech and FANG stocks in particular) will continue to outperform as long as this bull market continues. But once this bull market ends, growth stocks will fall more than the broad index. Growth stocks tend to be high beta stocks, which means that they are more volatile than the broad stock market.

Dividend stocks don’t rise as much as growth stocks during bull markets. But they also don’t fall as much as growth stocks during bear markets. And at the very least, dividend investors will earn the dividend yield when a bear market occurs.

Real estate

This is one area where I want to caution long term investors. I’m seeing this pop up a lot nowadays. Real estate prices have gone up for the past 10 years, and many people are seeing real estate investing as the holy grail to a solid portfolio.

The reality is that real estate has its cycles too – there are strong boom and bust cycles that older people will remember. Keep in mind that:

  1. Interest rates are going up, so mortgage payments will become more expensive as the Fed raises rates.
  2. Real estate prices in many places are already sky high.
  3. The price-to-rent ratio is not rising as fast as prices, which means that yields on real estate investing are going down.

So be careful with real estate investing during the last few years of a bull market. Do not plow most of your life savings into this market.

Thank you for reading! I’m Troy Bombardia, a professional trader who blogs about bull markets, bear markets, and everything in between.

The post How to invest in the final few years of a bull market appeared first on Roadmap2Retire.

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