No matter what goes on in the news, Washington or the world, to build a stable tomorrow, we must take control of our own lives. Even with all the current upheaval, here are five things you can do today to empower yourself.
Track spending
This is the number one most useful financial technique to implement today. Imagine if businesses did not track their expenses. How would they know the financial health of their enterprise? It is no different for you and me. It is paramount to know where your money is going and what percentage of your net worth you are spending.
Know your net worth
Assets minus Liabilities equals Net Worth. Place a value on everything you own and subtract what you owe. This figure is your net worth. Now divide how much you spent last year by your net worth number and you will have your percentage of spending to net worth. Continue Reading…
While there is only one trading day left in 2024, it is clear that it is another year that fooled everyone. The year 2023 fooled economists and market prognosticators with U.S. stocks up over 26% in U.S. Dollars (and up more in Canadian Dollars). 2024 is shaping up as a carbon copy in performance and in big swing and miss predictions. Canadian stocks are looking to finish the year up over 20%. Good luck making predictions as we enter 2025: a zero visibility age. Trump economic ‘policy’ will likely shape the year. There’s just no tellin’ what will happen.
But before we move on to 2025, some Santa stock market rally housekeeping.
As can be seen from the chart, a Santa rally has successfully occurred 18 times out of 24 in the 2000s. One year saw a flat performance, while five years saw a decline, including as recently as 2023.
But so far, Santa read the Trump economic policy and went back into Santa’s house to have a nice hot chocolate. Here’s the equal-weight S&P 500 (RSP), more representative of broader market sentiment.
Or maybe Santa went inside for something a little stronger, perhaps a few hot totties.
And more holiday fun …
Did a rally start last Tuesday? Who knows. True, US and Canadian markets took a big hit down yesterday with the Dow down 418.5 points or 1% and Nasdaq fell 1.2% (Monday, Dec. 30th). But it doesn’t really matter it’s obvious that 2024 was a wonderful year for investors who stayed the course, stayed invested; for investors who stuck to their investment plan. The final returns for stock markets will simply be statistics for the record books.
Trumpenomics and 2025
In the Globe & Mail John Rapley did a nice summary of the battle between the Fed, bond markets and Donald Trump’s economic ‘policy’. I put policy in quotes because the incoming U.S. President’s platform is currently more threats than anything else.
Here’s a key paragraph …
But it now looks like the Fed may be girding for a battle with the administration, with some governors hinting that they’re beginning to factor the inflationary impact of his policies into their own projections. If they decide to counterbalance a loose fiscal policy with a tight monetary one, the economic prognosis may well change.
Translation: proposed Trump tax cuts and looser regulations will battle with inflationary tariffs and deportations. Add in crippling U.S. debts and deficits. The bond market has been moving rates higher. The stock market (other than the magnificent tech) is moving lower over the last month. Both stocks and bonds are repricing Trump. But Trump is like a box of chocolates – you don’t know you will get.
The zero visibility age
Ian McGugan (also in the Globe & Mail) frames why forecasts are likely to be wrong (again) in this zero visibility age …
The simple explanation for these forecasting failures is that the world has entered some very odd economic territory. Lingering effects of pandemic weirdness, manic exuberance around artificial intelligence and a surprising resurgence of strongman politics are helping to create a thick fog of uncertainty.
It’s a weird mix of optimism, fear and uncomfortable uncertainty that can make you make all kinds of strange (and uncomfortable screwed-up) expressions. Continue Reading…
As healthcare costs continue to rise, finding ways to save on health insurance is becoming increasingly important.
In 2025, it is estimated that the average American family will spend over $25,000 a year on healthcare expenses.
This high cost not only affects individuals and families but also puts a strain on the overall economy.
Here are 7 tips to save on health insurance in 2025
Compare Plans
With the rise of online marketplaces, comparing health insurance plans has become easier than ever. Take the time to shop around and compare different plans from various providers. Consider factors such as premiums, deductibles, and coverage options before making your decision. You may find a plan that offers the same coverage for a lower cost.
Consider High-deductible Plans
High-deductible health plans (HDHPs) typically have lower premiums but higher deductibles. This means you will pay less each month for insurance, but will have to pay more out of pocket before your insurance kicks in. If you are generally healthy and do not require frequent medical care, an HDHP could save you money in the long run.
Utilize Preventive Care Services
Many health insurance plans cover preventive care services at no additional cost to the patient. Take advantage of these services — such as check-ups, screenings, and vaccinations — to catch any potential health issues early on and avoid expensive treatments in the future. Continue Reading…
Here’s a look at the different ways investors can express a view on Canada’s banking sector via ETFs.
Getty Images courtesy BMO ETFs
By Skye Collyer
BMO Global Asset Management
(Sponsor Blog)
The first week of December brought a flurry of earnings reports from Canada’s “Big Six” banks: Bank of Montreal (BMO), Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Scotiabank (BNS), Canadian Imperial Bank of Commerce (CIBC), and National Bank of Canada (NA).
The best way to describe the results? A “mixed bag.” For example, BMO missed earnings expectations and increased provisions for potential loan losses.
Meanwhile, CIBC reported a jump in Q4 profits year-over-year and raised its dividend, a move mirrored by NA and RBC. BNS posted a rise in Q4 profits but warned of headwinds from a slowing economy and decelerating loan growth.
The biggest disappointment came from TD, which fell 7% intraday after adjusted earnings took a hit from penalties tied to anti-money laundering violations in the U.S. and a cap on asset growth for its U.S. retail banking business1.
What’s the takeaway for investors? Short-term fortunes can vary dramatically among the Big Six, so unless you have expertise in this space and the time to stay on top of developments, stock picking might not be ideal.
Historically, Canadian banks as a group have delivered strong earnings and dividend growth, making them a more reliable bet for long-term investors.
Instead of zeroing in on individual names, you might consider investing in the entire industry through ETFs. Here are three ETF options, catering to different risk profiles2 and objectives.
BMO Equal Weight Banks Index ETF (ZEB)
The flagship ETF for investors looking to express a neutral, bullish view on Canada’s banks — without worrying about which one will outperform — is the BMO Equal Weight Banks Index ETF (ZEB).
This ETF is a heavyweight in the space, with just shy of $4 billion in assets under management as of December 19, 2024, and it has been a staple for Canadian bank investors since its launch in October 20093.
It tracks the performance of the Solactive Equal Weight Canada Banks Index, which — as the name suggests — gives equal weight to all six banks regardless of their size. This approach is rebalanced periodically, introducing a natural “buy low, sell high” mechanic.
ZEB charges a 0.28% Management Expense Ratio (MER) and currently pays a 4.00% distribution yield4. What’s particularly attractive for income-focused investors is the monthly distribution schedule, compared to the quarterly payouts of individual bank stocks.
BMO Covered Call Canadian Banks ETF (ZWB)
If you’re seeking higher cash flow and don’t mind capping some potential share price appreciation, the BMO Covered Call Canadian Banks ETF (ZWB) could be an appealing alternative to ZEB.
ZWB holds the exact same six Canadian bank stocks as ZEB and is also well-capitalized, with $3.2 billion in assets under management as of Dec 19, 20245. However, it boasts a higher 6.67% distribution yield as of Dec 19, 2024. How does it achieve this? By employing a covered call strategy. Here’s how it works:
ZWB sells call options on the bank stocks it holds and receives premiums , which generate additional yield for the fund (with premiums taxed favourably at the capital gains rate).
In exchange, ZWB agrees to sell a stock at a set price (the strike price) if the stock’s market price exceeds that level by the option’s expiration. This caps the upside price appreciation of the shares over and above the selected strike price.
However, if the stocks stay flat or decline, ZWB keeps the premium and the underlying shares, adding a layer of enhanced yield while providing a volatility cushion.
While this strategy increases cash flow, it does come with trade-offs. Investors sacrifice some of their potential price gains for enhanced monthly cash flow. The fund charges a 0.71% MER as of June 30, 2023, reflecting the costs associated with managing the options. Read more about our covered call ETF methodology here.
BMO Canadian Bank Income Index ETF (ZBI)
Stocks aren’t the only way to invest in Canada’s banking sector. Banks also issue a variety of securities such as corporate bonds, preferred shares, and limited recourse capital notes (LRCNs).
LRCNs are hybrid securities that function like bonds but are designed to absorb losses in extreme scenarios, providing a layer of stability for the issuing bank.
These instruments often provide returns that are less correlated with bank stocks and typically come with lower volatility. However, accessing them as a retail investor can be challenging. That’s where the BMO Canadian Bank Income Index ETF (ZBI) comes in.
ZBI offers a convenient way to gain exposure to all these securities in a single ETF. As of Dec. 12, its portfolio is diversified as follows: 53.46% in corporate bonds, 26.61% in limited recourse capital notes, 10.83% in preferred stock, and 9.10% in non-viable contingent capital securities7.
Rated as low risk*, ZBI charges a 0.28% MER as of June 30th, 2023 and offers a 3.55% distribution yield as of December 19th, with monthly payouts. It’s an excellent way to complement common bank stocks with quasi-fixed-income exposure.
Want more insights on Canadian bank earnings?
Listen to our deep dive into the fourth quarter earnings from Canada’s Big Six, breaking down recent results and examining key economic variables. Listen here. Continue Reading…
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By Billy and Akaisha Kaderli
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