5 small steps to improve your physical health & 5 for your financial health

Duke University conducted a two-year study of 218 healthy adults of normal weight to determine if a modest, sustained calorie reduction would show appreciable benefits. The plan was to reduce calories consumed by 25 per cent, but participants were unable to achieve that much.

(Author’s note: I sure couldn’t do it! A 25% reduction in my 2,000 daily calories would leave me staggering around at only 1,500 per day.)

Participants were able, however, to cut calories by an average of about 12 per cent.  This smaller change allowed them to stick to the plan without any adverse effect on mood (wherein lies a useful message in itself). The results? Lowered blood pressure; decreased insulin resistance; as well as a drop in several predictors of cardiovascular disease.

But the most appreciable result concerned C-reactive protein, a substance produced by the liver and a marker of inflammation in the body. The participants’ C-reactive levels plunged by almost half: a remarkable 47%!

It’s a no brainer that poor dietary habits would exacerbate internal inflammation. But very often this is an invisible menace (see my article ‘The Truth About Inflammation’, October 2015). Most of us remain blissfully unaware of any chronic inflammation cascading throughout our bodies. Yet this exposes us to chronic health risks as a result of knocking the body out of whack. In my case, I had the aforesaid silent inflammation and observable inflammation, which I felt in my poor old joints. And I am pretty convinced that chronic inflammation was one factor in my developing cancer.

An elevated C-reactive protein level can be a valid identifier of inflammation in the body. So, if just a 12% calorie restriction can reduce this marker by almost 50%, this is as good information as that available to an insider trader.

In the blindness of youth, so many of us can compromise our health in a mad dash for wealth. But from the other end of the lifespan, a good many seniors would gladly sacrifice some wealth for even a smidgen of better health. Those who don’t make time for their health early on in life more often have to make time for illness later.

5 ways to improve your physical health

So, if you are young, young at heart, worried that you are no longer young, here is some insider information. Five smart, little investments you can make, the aggregate interest of which, over time, will have compound into positive health returns. Continue Reading…

The Robo RRSP and 11 lame excuses for not maxing your RRSP contribution this year

Can you trust your retirement to a robot? Illustration by Chloe Cushman/National Post files

With the annual RRSP season coming to a close next week (the RRSP contribution deadline is March 1st), there’s plenty of media coverage to remind investors of this fact. Two this week came from my pen (or electronic equivalent).

Earlier this week, the Financial Post published the following column you can retrieve by clicking on the highlighted text of the headline: Can you Trust your Retirement Savings to a Robot? 

By robot, we are referring of course to so-called Robo-Advisers or automated online investment “solutions” that generally package up various Exchange-traded Funds (ETFs) and handle the purchase, asset allocation and rebalancing at an annual fee that’s generally is far less than what a mutual fund or two might deliver. (that is, usually 0.5% plus underlying ETF MERs, compared to 2% or more for most retail mutual funds sold in Canada.)

The piece begins with a fond nod to a topic I used to write about periodically in the FP in the 1990s, at the height of so-called Mutual Fund Mania. It was then that I would write about a set-it-and-forget it approach we dubbed the Rip Van Winkle portfolio, which was simply two mutual funds (Trimark Income Growth, a balanced fund) and  a global equity fund (Templeton Growth) that in effect did (and still do, I suppose) everything the modern robo advisers do. The difference is that because of ETFs, the robo services are about a quarter of the price of the old “Rip” portfolio.

But speaking of undercutting, and as the piece also notes, both “Rip” and the robo services have been undercut by the three new Vanguard asset allocation ETFs that were announced on February 1st, more of which you can find in the Hub blog I wrote at the time: Gamechanger? As I noted there, the Vanguard ETFs seem to be ideal for TFSAs (especially VGRO, the 80% equities offering) but of course they are also ideally suited for a “Rip” like RRSP core offering: VBAL (60% equities) for the typical balanced investor, VCNS (40% equities) for very conservative investors and perhaps those now in the RRIF stage who are required to make forced annual (and taxable) withdrawals.

Motley Fool Canada: 11 myths equals 11 lame excuses for not maxing your RRSP

Meanwhile, Motley Fool Canada has just released a special report I wrote titled The 11 Most Common RRSP myths.  The report builds on several RRSP myths that CIBC’s Jamie Golombek published earlier this year, which you can find here, and my FP commentary on them here.  The report adds several new myths submitted from veteran advisers like Warren Baldwin.

You can also view this promotional email on the RRSP report by Motley Fool Canada Chief Investment Officer Iain Butler.

Top retirement advisor tips to get the most from your savings

All investments come with a mix of risk and potential reward. The greatest danger comes when you understand the mechanics of an investment, but you’re missing some of the details. Your understanding of the potential reward can make you greedy, while the gaps in your knowledge limit your natural, healthy sense of skepticism.

When it comes to retirement, you should be long-term focused, which takes a lot of the guessing and game playing out of the equation. The best retirement plan you can have is to start saving as early in your working career as possible. You then invest a steady or rising amount of that money in the stock market every year. When you follow this plan, you automatically profit from dollar-cost averaging. You will automatically buy more shares when prices are low, and fewer shares when prices are high.

Continue reading for more retirement advisor tips and strategies for saving.

Retirement advisor tip: Use an RRSP For Retirement

You have to learn a lot of things to become a successful investor, and few people learn them all in any logical progression. Instead, most of us move from one subject of interest to another, with a lot of zigs and zags in between.

But one tip is clear: If you want to pay less tax on your investments while you’re still working, investing in an RRSP (Registered Retirement Savings Plan) is the way to go.

To cut tax bills, RRSPs are a great option. RRSPs are a form of tax-deferred savings plan. RRSP contributions are tax deductible, and the investments grow tax-free. (Note that you can currently contribute up to 18% of your earned income from the previous year. March 1 is the last day you can contribute to an RRSP and deduct your contribution from your previous year’s income.) When you later begin withdrawing the funds from your RRSP, they are taxed as ordinary income.

Registered Retirement Income Funds (RRIFs) are also a great long-term retirement investment planning strategy

Converting your RRSP to a RRIF is clearly one of the best of three alternatives at age 71. That’s because RRIFs offer more flexibility and tax savings than annuities or a lump-sum withdrawal (which in most cases is a poor retirement investing option, since you’ll be taxed on the entire amount in that year as ordinary income).

Like an RRSP, a RRIF can hold a range of investments. You don’t need to sell your RRSP holdings when you convert—you just transfer them to your RRIF. Continue Reading…

Creating retirement income: a Fixed Payment Strategy

Once you stop working you may want to simplify your investment strategy. Your objective shifts from growing your investment portfolio to generating income. Flat and unpredictable markets, combined with historically low interest rates, can make this a challenging time in terms of creating retirement income.

One idea for creating a reasonably consistent level of monthly income is with a Monthly Income Fund. These funds have been around for quite some time. They hold a variety of government, municipal and corporate bonds, preferred shares and dividend stocks, and the payments come from a combination of interest and dividends, and sometimes, return of capital.

With these investments, cash flow is based on the number of units you own, not on the market value of the assets.

In non-registered accounts, the distributions can be more tax efficient than interest earned on GICs and bonds. However, keep in mind that there can also be taxable distributions in December (just as in other mutual funds) in addition to the monthly payout amounts.

Comparison of monthly income funds

Monthly income funds are sold by Canadian banks and mutual fund companies, and are also available in ETF versions.

The following chart is a comparison of some funds sold by Canadian banks as well as two popular ETFs. Continue Reading…

Buying a condo in the GTA on one income? Here’s where It’s possible

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Looking to purchase a home in the Greater Toronto Area on your own? According to new data, the real estate reality for solo buyers is pretty heartbreaking, with most options out of financial reach for those earning the median single-household income in the region.

In fact, owning a condo within a GTA municipality will set a single homeowner back more than double the recommended shelter cost, even in the most affordable markets. With two incomes getting far more home for their buck than one, it’s no wonder buyers are increasingly partnering with family, friends, or even strangers to improve their real estate affordability.

Tough affordability throughout GTA

Check out this infographic to see how affordable condos are for both single and multi-income buyers throughout the GTA.

To find out the extent of housing affordability for single buyers, Zoocasa calculated what’s called the home-price-to-income ratio in 17 of the markets tracked by the Toronto Real Estate Board. Crunching the average January 2018 condo price and median income earned in each municipality determines how many years of total income (as in, one’s entire annual salary) it would take to pay off a condo in that region. The higher the ratio, the tougher the home will be to carry financially.

The ratio recommended by most financial experts for shelter costs is three, but that’s well below what’s possible in the GTA market, the numbers reveal. The data finds that the minimum ratio for a single condo buyer is seven, available in only two markets: Milton and Clarington.

That’s not to say dual-income households have it much easier; coupled-up buyers have only three regions that satisfy the recommended affordability ratio (Milton, Clarington, and Whitby), while another 10 regions hover just above the four-point mark.

City Centre most challenging for all buyers

The toughest place to purchase for all Toronto condo buyers is Toronto central, which sets single buyers back a whopping 16 times their income, and seven times for multi-income buyers. And, while affordability varies throughout the region, it’s steep across the GTA; Mississauga condos command 10 times a single buyers’ income, while Vaughn costs 11 times the median household income.

Penelope Graham is the Managing Editor of Zoocasa.com, a leading real estate resource that uses full brokerage service and online tools to empower Canadians to buy or sell their home faster, easier, and more successfully.