All posts by Financial Independence Hub

6 investment tips for Millennials

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Source: Unsplash (Edited on Canva)

By Hari Subramanian

Special to the Financial Independence Hub

From the ‘safety-first’ attitude of baby boomers to the ‘putting themselves out there’ nature of Gen Z, generational cohorts offer great insights into the evolution of the human psyche based on different experiences.  

Millennials are not exactly what you call ‘risk takers’ but are more open towards new opportunities, compared to previous generations. This characteristic of millennials can be seen in the way they invest their money: they are willing to move away from fixed deposits and RRSPs that the boomers swore by and are looking to invest in stocks, cryptocurrency, and other financial avenues. 

Why should Millennials invest?

While more and more millennials are dabbling into investing in different portfolios, almost 50% of the cohort is still waiting to invest until they earn more money. This data contradicts the popular belief that the best time to invest is yesterday, and those who wait are losing precious time to grow their money. 

If you are one of those who procrastinate about investing money for later or think you need a 6-digit income to substantially boost your financial growth, you couldn’t be more wrong. Start your investment journey as early as you can as your returns compound  with time, and you’ll learn the tricks of the trade to become a more component investor in the future. And, you can start investing with just a handful of dollars.   

Investment Tips for 2022

If you are a millennial just beginning to build your investment portfolio or a seasoned millennial investor, these 6 financial tips will help you stand in good stead for 2022:    

Robo Advisors to the rescue

Trading in stocks requires constant scrutiny of rising and falling stock prices and earnings, and a good understanding of how the stock market functions. In the recent phenomenon of a surge in GameStop shares created by a group of Reddit investors, many retail investors and short-selling hedge funds that were betting for the company to fail lost billions of dollars. 

While it is only human to jump on the bandwagon of a stock market frenzy in an attempt to earn substantial profits, it entails high risks and can cause a lot of damage to your finances.   

If you are new to the stock investment game or don’t have enough time to monitor the peaks and troughs of the stock market, then you should explore robo advisors to help you achieve your financial goals with minimal risks. 

For the uninitiated, robo advisors are digital portals that control and optimize your investment portfolios through the use of algorithms and data-driven strategies. Robo advisors are very easy to use, as they automate your investments based on your investment budget and long-term financial goals. 

They also are pretty inexpensive with an affordable minimal balance to open investment accounts for investors from all walks of life. With minimal human supervision, a robo advisor can adjust your investments automatically based on market fluctuations while focussing on your monetary goals. Thus, if you wish for steady growth of your investments without any undue risk, you can explore the web to find the right robo advisor for you.  

ESG Investments can make you a better investor

Source: Pixabay

As more and more millennials are standing up for environmental, social, and socio-political causes, it is time for their investments to reflect their thought process. ESG investments are defined as investments based on non-financial factors such as environmental, social, and governance impact of a company on society.

In ESG investments, millennials pour in money on the company stocks they believe will make a difference to the world they live in. Through ESGs, millennials extend their support to companies whose beliefs align with theirs and hope that it creates a sustainable future for their children. 

ESG investments also provide a great learning curve for investors. Since personal beliefs, values, and socio-environmental impact are involved, you as an investor tend to go the extra mile to learn everything about the company including its financial health and revenue model instead of just blindly buying stocks that are on the rise.

ESGs can help you understand how and why a company’s stock performs in a certain way and can teach you a lesson in becoming better investors.      

Ditch individual Stock Picking

Before we delve into why stock picking is not a good investment option, it is imperative to understand what stock picking is. Based on market research and analysis, stock picking is a strategy to find the stocks that are most likely to deliver favourable investment returns.  Continue Reading…

Getting your finances ready for the new year

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By Stuart Gray,

Director, Financial Planning Centre of Expertise, RBC

(Sponsor Content)

If you’re like many Canadians, with 2022 around the corner, you’re likely thinking about what you would like to achieve in this new year.

You can begin by having a good look at your current financial situation and the steps you can take to stay on top of your money.

As we consider what this year will bring, here are five areas of personal finances you can focus on to get 2022 onto solid financial footing:

• Make sure your financial plan still works for you

As the economy continues to recover and we look toward whatever this year holds, having a financial plan can help you take stock of where you are and what you need to do to continue to work toward your financial goals.

A financial plan can help strengthen your confidence when it comes to managing your money, both now and in the future. Taking the time to build a plan that works for you and your unique financial situation is a good start. Use your plan to identify your goals and objectives, evaluate your finances and put steps in place to achieve your financial goals. It’s also important to revisit your plan regularly, especially as your finances or priorities change.

• Stay on top of your cash flow

As inflation continues to impact Canadians’ purchasing power, cash flow will become an even more important part of managing personal finances in 2022. Here’s where having a budget, to complement your financial plan, is a huge help. A budget will give you a good picture of the money you have coming in and going out.

If you already have a budget, it’s a good time to review and update your expenses to account for rising costs: from gas and groceries to utilities and activities. This will help you see what you may have left over to put into savings.

Managing any debts and how you plan to pay them off is also an important part of managing cash flow. A piece of advice here: Don’t worry about paying all your debts at once. Instead, focus on taking care of higher interest rate debts first. This will have a good impact on your overall financial health, to help you worry less and save more.

New digital tools, like NOMI Budgets and NOMI Forecast can also help you stay on top of your money and avoid unnecessary expenses. Available to RBC clients through the RBC Mobile app, NOMI Budgets simplifies the budgeting process by taking a close look at your spending and recommending a personalized monthly budget based on your habits. NOMI Forecast learns from your past transactions and uses predictive technology to provide a rolling forecast of your expenses for the next seven days.

• Be prepared for the unexpected

One important lesson the pandemic has taught us is that the unexpected can happen at any time. It also has reinforced the importance of having an emergency fund that you can rely on to help cover the costs of unexpected expenses like loss of income or repairs to vehicles or flooded basements.

Setting up an automatic savings plan can make it easier to save regularly. Using a digital savings account like NOMI Find & Save can also help, as it finds extra money in your cash flow it thinks you won’t miss and automatically sets it aside. If a payment or transfer is due to come out of your linked chequing account, the money is automatically transferred back to ensure you have what you need to cover those transactions.

• Look past the headlines when investing

It can be tempting to do ‘emotional investing’ – reacting to negative headlines and market volatility by altering a well-designed investment plan. While selling off your portfolio may make you feel better, this decision could mean lost opportunities and not achieving your long-term investment goals. Continue Reading…

A new asset class for affluent investors: Cult Wines expands into the US

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By Atul Tiwari, CEO Cult Wines Americas

Special to the Financial Independence Hub 

Wine investing in North America is hitting the mainstream.

Historically, the wine investment category has been perceived as only for the wealthy or wine experts.

Although traditional HNW [High Net Worth] investors have been investing in portfolios of fine wine for years, it is still a new asset class for some.

However, new specialist services are opening up the fine wine investment universe. Cult Wines, whose story began in London, England in 2007, recently expanded into North America with offices in Toronto and New York. Known as ‘The Americas,’ our task is to build the awareness of fine wine and accessibility to the asset class.  In addition, Cult Wines recently introduced a new platform, new product structure and new technology to better serve our clients.

Our expension into The Americas is helped by fine wine’s strong track record of consistent returns and low volatility. Currently, the asset class is enjoying a sustained rally with year-to-date returns over 13.7% through the end of October, as measured by the Liv-ex 1000, an index of some of the most sought-after investment wines from around the world.

The U.S. is the world’s largest Wine market

The US, the world’s largest wine market, is a natural fit for wine investment. 49% of Americans drink wine and 431 million cases of wine were sold in 2020. The US has been making some investment grade wines for decades and to the end of October, the California 50 wine index is the third best performing wine region globally with a year-to-date return of 16.5%. Continue Reading…

Even successful Business Executives face this threat to their Financial Independence

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By Holly Klamer

Special to the Financial Independence Hub

While most business executives are and should be approaching Financial Independence, there is a little-known threat to their financial well-being: addiction/substance abuse.

In fact, according to the SAMHSA [Substance Abuse and Mental Health Services Administration], around 11.4% of management employees (example business executives and managers) are diagnosed with a Substance Use Disorder every year.

If the addiction is not managed in a timely fashion, abrupt dismissal could torpedo any long-term goals for financial freedom.

As an aspiring business executive or someone who is serious about their financial education, it’s good to be aware of addiction and its possible ramifications.

So in this post, we look at why business execs should take addictions seriously. We also discuss different treatment options available for business executives to overcome SUD.

Help is Available

Anyone can suffer from drug addiction, including those in white-collar, executive positions who juggle a lot of responsibilities. In fact, it could be more difficult for them as they may be tempted to avoid/delay treatment so their career or work doesn’t suffer due to the required time off.

That’s where executive addiction-related treatment centers come in. These treatment centers are equipped with high-end tools, services, and necessary amenities so that patients can maintain active personal and professional lives while also achieving sobriety.

Often the main highlight of these programs is the luxury setting and amenities given to the professionals and a distraction-free comfortable environment.

Addiction Treatments available for Business Executives

Medical Detox

Often the first phase of most recovery programs; medical detox aims at the cessation of drug usage. In the absence of medical aid, the patient may experience myriad unpleasant withdrawal symptoms.

Executive treatment facilities, such as detox centers in California, deploy safe and medical procedures to make the detox process as comfortable and less painful as possible.

Psychotherapy

Often the therapeutic phase of the program begins right after the detox is successfully over. Inpatient rehab centers in Los Angeles for example, use it in individual and group settings. Psychotherapy mainly aims to recognize the psychological reasons that are causing or triggering the drug usage.

After that, it teaches several relapse prevention mechanisms and coping techniques to deal with tough situations without resorting to drugs. Continue Reading…

Marty Zweig and the Inflation Boogeyman

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Outcome Metric Asset Management

By Noah Solomon

Special to the Financial Independence Hub

The continued rise in stocks, real estate, and almost every other asset class on the planet can be attributed to three things: liquidity, liquidity, liquidity. According to legendary investor Marty Zweig:

“In the stock market, as with horse racing, money makes the mare go. Monetary conditions exert an enormous influence on stock prices. Indeed, the monetary climate – primarily the trend in interest rates and Federal Reserve policy – is the dominant factor in determining the stock market’s major direction.”

In today’s markets, you don’t have to look very hard to find strong evidence of Zweig’s theory, which explains why stock markets were making fresh highs during successive outbreaks of Covid-19 and spiking unemployment. It also explains why approximately two thirds of stock returns over the past decade are attributable to multiple expansion rather than earnings growth. It’s hard to envision things turning south when real interest rates remain highly negative, and money is so freely available.

Something is happening here but it ain’t exactly clear what

For the first time in decades, the inflation genie is threatening to escape from its bottle. The abundant global liquidity that has been the primary driver of markets is threatened by the potential need to combat inflationary pressures, which have been rearing their head after a several-decade slumber.

Despite some disconcerting inflation readings over the past several months, it is possible that this phenomenon turns out to be a Covid-induced disruption in supply chains that will prove temporary. If this scenario prevails, then rates will remain fairly low, as will the probability that stocks will crater. Conversely, it is entirely possible that the recent uptick in inflation marks the beginning of a longer-lasting trend, in which case rates could rise materially, thereby increasing the chances of a severe decline in risk assets.

There are certainly some signs that suggest that at least a portion of the recent surge in inflation may have staying power. Bridgewater, the world’s largest hedge fund, recently wrote a research report called “It’s Mostly a Demand Shock, Not a Supply Shock, and It’s Everywhere.” The authors contend global production is back to normal levels following last year’s Covid-related disruptions. On the other hand, they claim global demand has exploded. Bankim Chadha, Chief U.S. Equity & Global Strategist at Deutsche Bank Securities, summarized his recent discussions with company executives:

“Most companies noted that supply chain issues kept them from fulfilling the underlying demand, which was much stronger than they had expected. They didn’t plan their supply chains to have a sustained surge in volume for 18 months. Labor availability and cost pressures show no signs of abating any time soon, a development that is new and not welcome. Companies are however very confident in their ability to raise prices.”

Although rates have risen modestly over the past few months, they have yet to rise materially. Both central banks and market participants remain skeptical that inflation will become a serious concern, which has prevented rates from spiking and provided stocks with sufficient “cover” to remain buoyant. On a rolling 10-year basis, equities are beating bonds in the U.S. by the largest margin since 1964. As long as the money is coming the mare will keep running. Continue Reading…