All posts by Financial Independence Hub

How Low-Volatility ETFs can help in this environment

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By Sa’ad Rana, Senior Associate – ETF Online Distribution, BMO ETFs

(Sponsor Blog)

With recent market volatility, investors are demanding solutions that stay afloat during market ups and downs. When looking at behavioural finance studies around loss aversion, an interesting finding arises that people’s fear of loss is (psychologically) twice as powerful versus the pleasure they experience from gains. This is one reason we have seen investors pulling money out of the markets in the past couple months. In reality, this may be a disservice to themselves, if they could just stay invested in a solution that could ease those bumps in the road, they would be better off. Low Volatility investing is one such solution.

So, what is Low Volatility (Low Vol) Investing? Well, it is an approach to investing that allows one to gain equity exposure for some possible growth in their portfolio while providing downside protection.

The chart below (long-term historical performance of the MSCI ACWI – global equities) perfectly demonstrates this. Low Vol is sitting a little bit higher than the broad market (from a returns aspect) but, yet significantly reducing risk. Low Vol sitting at around 10%, whereas the average equity risk is approx. around 15%.

Measuring Low volatility and BMO ETFs’ Approach

Low-volatility is a type of factor-based investing, which is a process that is repeatable and disciplined in its execution. Therefore, in order to invest in this manner, you need to use metrics to identify between what is considered a low volatility stock vs. a high volatility stock. There are a lot of different approaches in the market. The two most prevalent are the Low Beta and Standard Deviation methodologies.

Beta is a risk metric that measures an investment’s sensitivity to fluctuations in the broad market (market sensitivity). The broad market is assigned a beta value of 1.00, an investment with a beta less than 1.00 indicates the investment is less risky relative to the broad market. Low beta investments are less volatile than the broad market and can be considered defensive investments. Over the long term, low-beta stocks may benefit from smaller declines during market corrections and still increase during advancing markets. Additionally, low-beta stocks tend to be more mature and provide higher dividend yield than the broad market. Continue Reading…

Age Tech: a Coming of Age Story?

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By Mark Venning, ChangeRangers.com

Special to the Financial Independence Hub

Is Age Tech a Coming of Age story?

Well you might think so, given all of sudden it seems, how far but quickly we’ve come, to where we’re at now, this point in 2022. While on the one hand Age Tech is a coming of age story, in the world at large it is either unheard of, or if it is heard of in some circles, it is either misunderstood or too confusing in its jumble of jargon for everyday people to grasp. Even some in this emerging industry question whether Age Tech is the best term to use. So what’s the story?

Perhaps we should start at the beginning with once upon a time. Simply the story goes, in the 1970s some engineers, industrial designers and gerontologists were curious and asked a question about how technology could join up with the field of aging studies and, as noted in the 2009 publication Defining Gerontechnology for R&D Purposes: they “recognized the need for a conceptual framework.”

Along came the 1980s, the marriage of gerontology and technology: Gerontechnology. Originator of that term in 1988, Jan A.M. Graafmans was part of a research team in Eindhoven University of Technology, “that started an effort to develop a program of research and education in gerontechnology aiming at further integration of engineering sciences with those disciplines already involved in aging studies.” Read his The History and Incubation of Gerontechnology.

As an inter-disciplinary, academic and research field, Gerontechnology established itself in 1997 forming the International Society for Gerontechnology (ISG). Speaking of jargon, at the best of times Gerontechnology is a mouthful to say let alone to understand fast. On the ISG website it is described as “designing technology and environment for independent living and social participation of older persons in good health, comfort and safety.”

Fast forward. My journey with technology and aging began in 2013 when Stanford Centre on Longevity kicked off its Longevity Design Challenge competition. In 2015 I followed Canada’s newly formed technology and aging network AGE-WELL. To appreciate the development of Gerontechnology, I highly recommend the 24 collected papers compiled by editor, Sunkyo Kwon – Gerontechnology: Research. Practice and Principles in the field of Technology and Aging. [cover on the left]

But even then all this did not quite make a coming of age story. Until now. Roughly since 2020, Age Tech has become the fast term that has at least made for an easier conversation starter. The real secret in explaining what it means is the ability to link up the Age Tech talk to the human needs it services. All you need are three examples everyday people can identify with, such as health and home care, mobility and transportation & social connection.

Avoiding the risk of overwhelming you here, to prove that there is a real coming of age marketplace for Age Tech, there are several new resources that can help you quickly do your own research; and no doubt some of you may have experienced some of the products available, even if their brand recognition is low.

Recently published (2022) is the book by Keren Etkin – The AgeTech Revolution. If you want to be bedazzled before you read the book, on Etkin’s website The Gerontechnologist you will find a very busy Age Tech Market Map filled with brand logos under various categories and sub-categories from health and wellness to tech-enabled home care.

Early in March at last AGE-WELL with help from the Centre for Technology Adoption for Aging in the North (CTAAN) published Canada’s Agetech Startup Map (seen at the top of this blog). Actually if you click on the logos on the PDF link you will find the websites for all the brand names featured. On the CTAAN web page for Age Tech you will find links to products listed under six clear topic headings, some more products not listed on the Agetech Startup Map.

If you think this is all hype and are not yet convinced that Age Tech has arrived at its coming of age, then you soon should be convinced after you check out some of what I’ve highlighted here. Try some of this out as a conversation starter next time you meet up with friends to test market awareness as it were. And because I can’t resist I’ll leave you with one more.

Poking around as I do, to see what’s covered on Age Tech in other parts of the world, I found a snappy article What is Age Tech? by Andreea Toma, dated 2020 from a UK based marketing agency Creative Quills (love that name.) Toma’s quill keeps it simple: “AgeTech is an emerging group of technologies which seeks to improve the lives of older adults.”

Mark Venning is a writer, speaker, researcher and advisor on the business, technology, health & social aspects of ageing and longevity which include changing concepts in a longevity society for Age Inclusive Communities. He is an Associate Member of the International Federation on Ageing.

This blog originally appeared on March 15, 2022 and is republished here with his permission. 

Today Self vs Tomorrow Self

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By Mark Seed, myownadvisor

Special to the Financial Independence Hub

From one of my favourite blogs and podcasts to listen to (Farnam Street), I recently read a few lines about today-self and tomorrow-self that offered up some reflection.

In a nutshell:

“There is a constant battle in all of us between our today-self and our tomorrow-self.”

Today-self tends to care about today … looking for immediate gratification or in some cases, avoiding doing things today that can be done tomorrow. Very child-like.

Tomorrow-self is like our inner adult, who has the knowledge and experience that it takes time to get meaningful results. That could be working on things like your career, your relationships or your financial independence journey.

From the Farnam post:

“Imagine you are tasked with building a brick wall. Today-self looks at the empty space in disbelief, discouraged at the size of the project. Today-self decides to start tomorrow. Only tomorrow never comes because the empty space again seems insurmountable. Today-self decides to talk about the wall they’re going to build, as if it were the same as building the wall. It’s not.

Tomorrow-self knows that no one builds a wall all at once. It’s going to take a month of consistent effort from the time you start before it’s done. Tomorrow-self wishes you’d stop thinking about the wall and focus on one brick.”

How true.

So, as so many sayings tend to go related to behavioural psychology for any sort of success:

think BIG, act small. 

Life is complex. Life is very uncertain. We can be easily and often overwhelmed by the magnitude of things and things to do.

At the end of the day, while we need to have our long-term brick wall in mind, we should just focus on one or two bricks each day. Do some of the smallest things well that move you forward. Then repeat. The logic is simple but not simplistic.

From The Behavior Gap:

Simple but not Easy

The wisdom of tomorrow-self is this: Focus on one thing you can do today to make tomorrow easier. Repeat.

(Click here to share this Tiny Thought on Twitter.)

More Weekend Reading…

Thinking about today-self and tomorrow-self, that’s a good reflection for this chart: Continue Reading…

Maintaining Balance in Volatile Markets

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Franklin Templeton/Getty Images

By Ian Riach, Portfolio Manager,

Franklin Templeton Investment Solutions

(Sponsor Content)

It’s been a volatile first half of the year for the world’s capital markets. In many countries, both equities and fixed income have declined, which has led to the second-worst performance for balanced portfolios in 30 years. Typically, bonds outperform stocks in down markets, but not this time. In fact, this has been the worst start to the year for fixed income in the past 40 years, thanks to higher inflation and the resultant rise in interest rates.

Supply-side inflation harder to tame

Central banks use rate hikes as a tool to curb demand for goods and services; but the current inflation is being driven more by supply-side issues stemming largely from the COVID-19 pandemic and exacerbated by the Russia/Ukraine war. Unfortunately, central banks have little influence over supply. All they can do is try to dampen demand with an aggressive interest-rate adjustment process, but they must be careful not to overshoot. Raising rates too quickly runs the risk of tipping weak economies over the edge into recession territory.

Canada’s most recent inflation imprint, released in June, showed an increase to 7.7% year-over-year. One negative consequence is that real incomes are being squeezed as inflation continues to accelerate.

Rates are rising quickly

Both the U.S. Federal Reserve (Fed) and Bank of Canada (BoC) have increased their overnight lending rates from essentially 0% prior to March of this year to 1.5%-plus in June. The Canadian futures market had priced another 75-basis point (bp) increase at BoC meeting in July, which ended up an even higher 100-bps with indications of more to come in September.

Rising interest rates are hurting several sectors of Canada’s economy, notably real estate — especially risky for the economy as housing and renovations have been leading Gross Domestic Product (GDP) growth for the past few years. A significant correction in that sector could lead to a recession.

If there is any silver lining in the current situation, it may be in the Canadian dollar versus its U.S. counterpart. Short-term rates in Canada have moved higher than in the United States. This differential, along with the direction of oil prices, affects the value of the Canadian dollar against the U.S. dollar. If the differential widens and stays higher in Canada, the loonie will likely benefit.

Recession risks are growing

The likelihood of recession is hotly debated within our investment team. Recession in North America is not our base case, but a soft landing will be very difficult. We are currently in a stagflationary environment and recession risks are increasing daily. Europe may already be in recession.

The stock market is a good leading economic indicator, and its recent decline indicates the risk of recession is rising. In addition, the yield curve is very flat, which typically portends an economic slowdown. These market signals have somewhat altered our team’s thinking. Given the current environment, we are reducing risk in our portfolios. In fact, we recently went slightly underweight equities.

Regionally, we are reducing the Europe weighting as that region is more exposed to the negative headwinds associated with war. We are slightly overweight the U.S. but acknowledge that valuations are subject to disappointment with declining earnings growth. We are overweight Canada, which continues to benefit from rising resource prices. Continue Reading…

12 Questions to Ask when Buying a House

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What is the one question to ask when buying a house?

To help you be informed when purchasing a home, we asked business owners and finance experts this question to hear their best advice. From inquiring about homeowners’ fees to asking about renovations, there are several questions that may help you when buying property in the future.

Here are 12 questions to ask when buying a house:

  • Are There any Homeowners Association Fees?
  • How Old are Appliances and Major Systems?
  • How Long Has the House Been on the Market?
  • What does the Inspection Reveal?
  • How Much Have Nearby Properties Sold for?
  • Are There Any Risks to One’s Health Or Safety?
  • What Do the Seller’s Disclosures Signify?
  • What Kind of People Live Nearby?
  • Is the Home Prone to Floods Or Other Natural Disasters?
  • What is the Seller’s Reason for Leaving?
  • What’s Included in the Sale?
  • Were any Additions or Major Renovations Made?

Are there any Homeowners Association fees?

When looking for a home, you usually think about the payments that affect your mortgage, like taxes, insurance and upgrades. You may also try to estimate what you will have to pay for your utilities. However, when you find that perfect home, you should also consider if there are any homeowner association (HOA) fees that come with living in a new community. HOA fees are required payments that help ensure the neighborhood and properties are maintained to a certain standard.

HOA fees can cause you to lose your home if you don’t pay them monthly or annually. They are separate from your mortgage, and the fee can range depending on where you live, possibly ranging from $100–$1,000 per month. Because these fees are not included in your mortgage, you have the responsibility to pay them, and you should factor the cost into your budget so that you don’t find yourself in a dire financial situation or risk losing your home. — Annette Harris, Harris Financial Coaching

How old are appliances and major systems?

This is one question that I believe should be asked when purchasing a home, because knowing the expected lifespan of important systems and appliances—such as the air conditioner, furnace, water heater, washer, dryer and stove—can help you budget for major repair or replacement costs. Request a house warranty from the seller to cover the expense of replacing these things if they are nearing their end of life, or if they have already reached it. — Gerrid Smith, Joy Organics

How long has the house been on the market?

I believe this is an important topic to ask before making an offer on a house, since a seller will be more willing to negotiate a lower price if their house is on the market for a longer period of time. As a result, you may be able to haggle on the price, conditions, terms and credits associated with the replacement of worn-out carpet or other obvious difficulties. 

If a home is overpriced from the start, it may sit on the market for a long period before finally selling after several price reductions. For some purchasers, an overly long time on the market and frequent price decreases suggest that something is amiss with the property. As a result, you have a fantastic opportunity to work out a bargain. — Edward Mellett, Wikijob

What does the inspection reveal?

You can never ask too many questions when buying a house. It’s a major investment and one that a lot of people spend a lifetime saving up for, and it’s important to have all the information before making your purchase. Generally speaking, the important questions will be answered during the inspection and appraisal processes, which you should ensure always happen if you can help it. Continue Reading…