Monthly Archives: March 2017

The Price of Security

By akaisha-in-a-longboat-on-the-mekong-riverBilly and Akasha Kaderli,

Special to the Financial Independence Hub

Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure, or nothing.” —  Helen Keller

Recently I have been reading a book called Daring Greatly by Brene Brown. You may have heard of it. The theme of the book is about being vulnerable, taking risks and being willing to expose ourselves to possible failure. It’s an enlightening read.

I bring this up because what I want to share with our readers is that security has a price. Everyone speaks about how risk is dangerous and sometimes unthinkable. It seems that everyone wants unmitigated surety – the 100% guarantee.

But security never makes one courageous nor does it make a person’s heart sing.

We all want our bases covered, and none want to be starving or out in the land of the lost. But there is an energy about taking a risk with the possibility of failure that adds dimension to our lives and creates memories that we share with our children and grandchildren and we can ruminate over when we become old. Having everything laid out, fully unchallenged with no adversary to overcome makes for a dull story.

Personal examples

To make my point, I want to share with you a couple of big risks I took with my life direction over the years.

In 1971 was 19 years old and my then 20-year-old boyfriend wanted to make an extensive summer motorcycle trip across the country from the Midwest through a semi-southern route, up the coast of California to Alaska and back again via northern roads. This sounded like the most exciting thing I could imagine in my life at that time.

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Emerging Market local debt: a seasonal opportunity

EM Asset Returns and U.S. Benchmark Average Returns over Rolling Three-Month Calendar Windows for Horizons Ending 3/31/06–12/31/16

For definitions of indexes in the chart, visit this glossary.

By Rick Harper, Head of Fixed Income & Currency, WisdomTree

Special to the Financial Independence Hub

So far this year, emerging market (EM) bonds, currencies and equities have outperformed many corresponding U.S. asset classes. The EM rally stands in marked contrast to EM disappointments in January the past three years and is all the more surprising given struggles in both Mexico and Turkey. Investors can now look forward to an investment window that recently has been characterized by EM outperformance and strong absolute returns. Over the last 11 years (the inception of the local debt index1), the three-month investment window from February 1 through April 30 has, on average, produced the strongest returns for EM assets, in particular EM local debt and EM equities,2 and generated the fewest and the smallest shortfalls.

As seen in the table above, EM performance within the February-through-April window is distinct from other three-month investment windows. EM local debt, corporate,3 USD-based sovereigns4 and equities all post their most consistent performance during the window. While other windows tend to be lifted by greater one-time gains, the gains during the early spring period tend to be consistent, and losses are less frequent and shallower in scope.

A Spotlight on EM Local Debt

Among the bond sectors, EM local debt shines brightest during this period, generating substantial excess returns versus EM corporate and EM USD sovereigns. Positive contribution from foreign exchange (FX) is a significant piece of this excess return performance. The local bond returns are robust but still lag both EM corporate and USD-denominated sovereign bonds in isolation. In particular, the falling rate environment has been a very supportive tailwind for much longer-duration USD sovereign debt market proxies. The estimated 3% boost from FX gains pushes local debt to the fore. Continue Reading…

Why it’s NOT okay to be in debt when approaching Retirement

By Douglas Hoyes

Special to the Financial Independence Hub

While we all strive for a Victory Lap leading to our Findependence, a growing number of Canadians can only dream about getting out of debt.

Every two years my firm, Hoyes, Michalos & Associates Inc., releases our Joe Debtor report, where we profile our clients who have filed a bankruptcy or a consumer proposal.  In our report two years ago we reported that seniors are the fastest growing risk group for insolvency, and that’s still the case today.

Almost one in five insolvencies involve pre-retirement debtors in their 50s, and more than one in 10 (12%) involve seniors in their 60s and 70s.

What’s the problem?  Shouldn’t older Canadians have a lifetime of savings to rely on as they enter their Victory Lap?  Many do.  If you had a well-paying stable job that allowed you to save and build assets,  have an employer-provided pension, or have been fortunate enough to own a house during the current real estate boom, you are probably in great shape heading into your golden years.

Many over 50s still have dependents

However, not everyone in the over 50 crowd is as fortunate.  Continue Reading…

The 6 steps to Financial Independence

L to R: Ed Rempel, Jon Chevreau, Mike Drak

By Ed Rempel, CFP, CMA

Special to the Financial Independence Hub 

What is financial independence? How do you get there?

Financial independence means work is optional. You have enough money to live the way you want without having to earn money.

When you get there, life changes. You have freedom. You can do only what you enjoy or find meaningful.

If you don’t like your job or your boss, just quit. Your life is full of options. You can make the most of your own life.

When you get there, you can have a quiet confidence. You are financially secure.

Your plan should start with understanding your inner motivation and defining specifically the lifestyle you want to have once you are financially independent. It is your opportunity to determine your future.

Becoming financially independent requires planning and effort, but it is worthwhile to live a more fulfilling life. “It’s not about the money. It’s about your life.”

“Real freedom is financial freedom.” When is your Findependence Day?

Achieving financial independence is a very broad topic. Writing nearly 1,000 comprehensive, professional financial plans specifically for real Canadians has given me a deep insight into what really works.

Seminar in Toronto this Wednesday evening

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The evolution of Robo advice

By Josh Miszk, CFA, CFP

Special to the Financial Independence Hub

Alongside the rapid growth of the online wealth management space is the speed with which firms are evolving to investors’ demands.

Some of the first online investment managers in Canada have evolved their initial investing models to include services like financial planning, advisory firm partnerships, and now, a platform offering portfolios from multiple management firms.

One of the challenges in evaluating cost, performance, and reputation across multiple “robo-advice” platforms is looking at their similarities and differences to get a real sense of how each portfolio compares. In addition, many firms are relatively new and, while investors like the experience of working with an online advisor, they’re restricted to portfolios designed solely by the same firm they feel provides that great experience.

A simple way of choosing the right portfolio

In response to the demand for greater choice, we’ve created a platform that offers clients multiple portfolio options created by two of the largest and most reputable institutional money managers in the industry; BlackRock and Vanguard. In working with these two firms, we are not only leveraging the quality of their investment products, but also their expertise in providing great portfolio solutions.

This addition will allow potential clients to compare and select portfolios based on our recommendations for them, as well as the elements of a portfolio they value most, like performance, asset allocation, and cost.

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