Chinese equities will be going mainstream next year following a decision by the MSCI to include 222 China A-shares in the MSCI Emerging Markets Index (EMI). China A-shares were traditionally only available to domestic and qualified institutional investors, but have recently expanded global investor access through the Hongkong-Shanghai and Hongkong-Shenzhen Stock Connect programs.
The A-share market, including shares from Shanghai and Shenzhen markets, is worth roughly $7.5 trillion, the world’s second largest after the New York Stock Exchange and Nasdaq.[i]
“The decision to include China’s A-shares on the MSCI Emerging market index is very positive for the onshore listed companies as well as foreign retail and institutional investors, who will now benefit from more investment opportunities in China’s domestic growth” says Christine Tan, Chief Investment Officer and Senior Portfolio Manager with Excel Investment Counsel Inc. “This decision comes after four years of consideration, during which the Chinese regulators have made many positive changes to improve investor access to the onshore equity market.”
“These A-share corporations will benefit from increased investor interest and flows,” says Tan. “In turn, mutual funds such as the Excel China Fund and Excel Chindia Fund will now invest directly in China-listed companies for further diversification and access to sectors that were not well-represented on the HongKong exchange.”
Almost $18 billion to move into Chinese stocks
According to the MSCI, the inclusion of A-shares on the index will result in about $17 billion to $18 billion of global assets moving into Chinese stocks initially. Continue Reading…
Over the years you’ve taken plenty of advice, saved and invested diligently. Now you and your family are knocking on retirement’s door or, perhaps, in its midst.
The good news is the family members will likely live longer than before. The flip side is that more money may be required to fully fund retirement lifestyle.
Let’s assume that retirement spans from age 60 to 90, often longer. Many worry that the money won’t last and runs out during retirement.
Analyze life expectancy of the immediate family members for both spouses or partners. Specifically, review the current ages of grandparents, parents, uncles, aunts and cousins.
Some are petrified at the mere thought of such a prospect becoming reality. The question becomes what you can do to at least contain this situation.
I summarize six essential ideas designed to ballpark your lifestyle needs and help your retirement money last:
1. Family life expectancy
Analyze life expectancy of the immediate family members for both spouses or partners. Specifically, review the current ages of grandparents, parents, uncles, aunts and cousins. Get familiar with the ages attained by family members that have passed away. Pay attention to patterns of critical illness and longevity.
Today, it is commonplace for many to live well into their 80s. It is wise planning for a family to expect that at least one spouse could easily live past age 90. Another expectation is that family longevity continues to increase. Updating the retirement projection refreshes the family’s capital needs for the desired lifestyle.
Protecting and growing your retirement nest egg is one of your most important financial responsibilities. Ensuring that your nest egg is sufficient to fund your lifestyle in retirement often means putting at least part of it at risk in the stock market.
Unfortunately, too many people are swayed into believing that being a successful stock market investor means you have to actually beat the market. Beating the market is really, really difficult, especially over longer periods of time. It’s a tough job, but why is it so difficult?
Picking outperforming stocks is hard
A recent article from one of our favourite authors and commentators, Larry Swedroe, highlights some data points from studies that indicate why stock pickers might have such a tough time beating the market:
The Russell 3000 Index of the largest 3000 US stocks delivered an annualized return of 12.8% between 1983 and 2006
While that’s an impressive return over that period and achievable for anyone investing in a Russell 3000 Index fund (if there was one in 1983!), trying to beat that index by picking stocks would have been a formidable task – here’s why:
the median annualized stock return was only 5.1% and the average stock actually lost money, -1.1% annually
39% of stocks lost money
half of the stocks that lost money lost at least 75% of their value
64% of stocks under-performed the Russell 3000 Index
just 25% of stocks were responsible for all of the gains.
only 48% of stocks returned more than one month Treasury bill returns
No wonder it’s so difficult to beat market indices. Outperforming stocks are really hard to find!
The TFSA (Tax Free Savings Account) has become a popular saving and investment vehicle for many Canadians. It has also potentially become a significant portion of retirement savings.
When TFSAs were first introduced I thought they were pretty straightforward. However, we still get lots of questions, and Gordon Pape wrote an entire book about them (The Ultimate TFSA Guide), so there’s still some confusion.
A lot has been written about how to invest within a TFSA, but what happens to these funds when the planholder dies? The amount in the account at the date of death is tax free: then it depends on who the funds are given to.
Estate Planning For Your TFSA
There are three different estate planning options for your TFSA:
Appoint a successor holder
Designate a beneficiary
Assign the funds to the estate
Only a spouse or common-law partner can be appointed successor holder.
Creating a will can be an emotional experience, but it’s an important step in ensuring peace of mind for you and for your loved ones. According to our recent survey, it was surprising to learn that half of Canadians do not have a will, a crucial step in allocating assets after death.
Moreover, more than a quarter (28%) of Canadians without a will are between the ages of 53 and 71. Even more concerning is the stat that 39% of boomers have not even discussed estate planning wishes with their children.
The risks of not having a will are two-fold: first, the government can intervene and distribute your assets which could mean that your wishes are not fulfilled; and second, not having a will can create unnecessary conflict and animosity among members of the family during an already difficult time.
The survey found that one in five Canadians (19%) who received a family inheritance say they experienced conflict with their siblings and other relatives over the division of those assets, with two in five (41%) saying they considered taking a smaller share of the inheritance to maintain family harmony.
Although some may believe estate planning is only necessary for those with significant financial assets, the truth is that it is essential for everyone, regardless of the total value of assets. To help manage your estate and avoid potential tax implications and family conflicts, we offer the following tips:
Items like the family home, summer cottage or jewelry are all considered property assets, regardless of what they’re worth. A professional appraisal is an important starting point for valuing these assets. Once you understand the dollar value, you can get a sense of how to distribute them among your loved ones.