Weekend Reading – How to play the AI game
Hi Passionate DIY Investors!
Welcome to a new Weekend Reading edition on the curious subject of how to play the AI game in your portfolio.
Before that theme, a recent post!
I just updated this article since I retired a few months ago and thought it would be good to edit anything I might have missed for aspiring retirees. Check it out!
Weekend Reading – How to play the AI game
Image source: Pexels.
Onto the theme for this week, this article by Jon Chevreau caught my eye: AI for conservative investors.
Within the article, there are a few ETFs I’ve considered to adjust our portfolio for AI success long-term:
- Fund: Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ) – that ETF provides balanced diversification across the entire AI ecosystem, including hardware, software platforms, and foreign AI leaders. Top holdings frequently include giants like Nvidia, Broadcom, and Apple.
- Beyond that article you can also consider Fund: TD Global Technology Leaders Index ETF (TSX: TEC) – with a lower MER and TEC is also heavily-traded in Canadian-dollars so this is a low-cost option for global tech.
- Finally, you can stick with what I * used to own QQQ or a Canadian-listed ETF that clones it – those ETFs invest in the top-100 companies on the NASDAQ-100 index so it’s a very passive way to own tech and AI-related tech.
* I used to own QQQ but I sold all of it about a year ago now in favour of 1. portfolio simplicity and 2. Canadian-listed ETF investing. I’m better for it – since my two-fund Canadian-listed ETF solution is up about 12% combined YTD for almost 50% of my portfolio and we don’t need to worry about AI run-ups or bubbles anymore in doing so. We ride diversified returns…
Like Jon from the article, although in my early 50s vs. 70s, from where I sit I’m planted firmly in the retirement risk zone whereby the early retirement years need to be monitored carefully – which also implies to me no major portfolio overhauls either. Just some adjustments from time to time.
There could be a an AI-bubble ready to pop or this could be the summer in which we all look back on and wonder how cheap some of these AI stocks really were. Hindsight will provide all the facts but instead of guessing I’ll continue with my two-fund solution along with many Canadian stocks that pay us dividends and see where we net out a few years from now. My guess is we’ll be just fine. 🙂
Do you own lots of tech in your portfolio? Any AI specific stocks you own? Why or why not?
More Weekend Reading – Beyond how to play the AI game
Unlike The Globe and Mail, I don’t believe LIRAs (Locked-In Retirement Accounts) are too difficult to figure out. Yes, they have some quirks and yes, they do fit into a broader retirement portfolio (subscription) but the account structure can be put into a few simple bullets:
- LIRAs are similar to RRSPs, but they’re locked in = Locked-In Retirement Account is in the name so owners cannot make contributions.
- Locked-In also means there are restrictions on withdrawals when the time comes. Investors can’t typically withdraw money from a LIRA until the age of 55. (That will be me.) This is because unlocking eligibility is determined by the pension legislation governing the LIRA. Most plans are provincially regulated, but some are federal, it depends on where the pension originated. (My LIRA is in Ontario.)
- Finally as part of the basics, like an RRSP/RRIF, a LIRA must be converted to a LIF by the end of the year the investor turns 71. Similar to a RRIF, there are minimum annual withdrawal amounts for a LIF, based on age and account value. However, LIFs also have a maximum withdrawal limit set by the pension jurisdiction governing the plan – essentially a locked-in feature protecting the life income fund (LIF) / pension-like money for you for life.
If you have a LIRA, it must be managed like any other investment account but don’t overthink it.
As part of the design of LIRAs (like other registered accounts in retirement) the money has to come out at some point. I believe it’s best to consider registered withdrawals over long periods of time to meet your income needs and wants in retirement and also to smooth out taxation.
Keep it simple.
On Cashflows & Portffolios we wrote about a few surprises in early retirement – so far.
Finally, active ETFs are growing in popularity, but the low-costs and higher diversification from broad market ETFs still make passive investing a great choice too.
Have a great weekend!
Mark
Mark
My name is Mark Seed – the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I’ve reached financial independence and I’ve retired from the workforce in my early 50s. Now, I share my lessons learned for free on this site. Join the newsletter read by thousands every week.
