If I had a nickel for every time I heard someone say they were ‘cautiously optimistic’ about one thing or another, I’d be wealthy. This got me to thinking – why do I never hear anyone say they’re ‘cautiously pessimistic’ when invited to prognosticate about the not so distant future?
Seeing as the future is unknowable by definition… and seeing as there’s a strong consensus that caution is an appropriate stance to take when looking forward, why is there near uniformity that this caution should be tempered by optimism? Where are the cautious pessimists? For that matter, where are the reckless people (optimists and pessimists alike)?
The financial services industry is prone to Bullshift – where the glass is always half full and the industry will try to convince you of much no matter what the facts are and no matter how dire the circumstances may be. Think back. When was the last time you heard an analyst predict a year over year market decline?
Optimistic Realist?
My point here is that I don’t want to be a downer. Rather, I want to be a realist. Heck, some people have even called me an optimistic realist. At any rate, it seems to me that pessimism isn’t particularly well thought of in my line of work. Continue Reading…
By Preyesh Patel (ESG Analyst, Franklin Templeton Investment Management Limited)
(Sponsor Content)
Environmental, social and governance (ESG) investing has been around in different forms for over three decades now but has really become a key focus for the industry over the past five years. Previously, this kind of investing was considered somewhat niche and exclusionary in approach, focusing on “values” regarding tobacco, weapons and companies working with repressive regimes. Nowadays, acceptance of fiduciary duty, climate change and human rights is a common requirement among investors of all stripes. The flow of capital into ESG also makes it the fastest-growing type of investing across the global marketplace right now.
Pension Planning
The change in attitudes towards ESG was reflected in November when CEOs of Canada’s eight leading pension plan investment managers issued a joint statement on the subject. AIMCo, BCI, Caisse de dépôt et placement du Québec, CPP Investments, HOOPP, OMERS, Ontario Teachers’ Pension Plan and PSP Investments — representing approximately $1.6 trillion in assets under management between them — called for economic growth that was both sustainable and inclusive.
This kind of growth can only be achieved through stronger ESG disclosure standards for companies, they said, allowing investors to better assess their risk exposures. Stronger standards will mean standardization of how data is collected on issues such as diversity & inclusion, human capital and climate change. To achieve this, the pension plan leaders called for the adoption of the Sustainability Accounting Standards Board (SASB) standards, as well as the Task Force on Climate-related Financial Disclosures (TCFD) framework.
Responding to the statement, Tiff Macklem, Governor of the Bank of Canada, expressed how making ESG a priority was the right approach on many different levels.
“A strong commitment to environmental sustainability, diversity and inclusion and good governance principles will not only make our economy and financial system more resilient, it’s also the right thing to do. Leadership from Canada’s financial sector is essential as we focus on building an enduring and more equal economic recovery from the pandemic.”
Finding industry-wide consistency on how to measure ESG performance remains a challenge. The Corporate Reporting Initiative is another example of the various attempts to standardize ESG reporting, but there is still work to be done to ensure that these three letters represent much more than a branding tool.
For us at Franklin Templeton, it means seeking out material ESG insights and incorporating them into our decision-making process in a manner that best fits our investment philosophy.
For example, in its most recent update, the Templeton Global Macro (TGM) team outlined how it applied ESG criteria to its investment processes, focusing on: integration; forward-looking data points; projected “tails,” which signal major ESG shifts; a long time horizon; as well as engagement with policy makers.
Pandemic Impact
For investment teams like TGM, the past 12 months have only increased the need for sound ESG policies. Even before COVID-19, analysis by TGM revealed a decline in the number of countries that showed improving ESG momentum: the pandemic has only worsened this trend. Continue Reading…
Whether it’s pandemic infections or U.S. presidential elections, investors have been enduring at least the usual, if not higher levels of market uncertainty lately. As the daily news plays out, I’ve been fielding at least the usual level of questions about how to manage the related market risks.
Two sides to risks and returns
In recent posts, such as going defensive in uncertain times and the vital importance of rebalancing, I’ve reminded readers why investors seeking long-term returns must hunker down during uncertain times and let near-term market volatility have its way as part of their well-planned portfolio. Because:
In other words, viewing the same point from a different angle shows us we pay a price either way for the two reasons we invest to begin with:
Accumulating Wealth: If you’re still building lifetime wealth, you may be best served by taking on more market risks and pursuing higher expected returns. The price you pay for investing more aggressively is being more uncertain whether you’ll achieve your ambitious goals. As long as you stay put and have time on your side, odds are you will ultimately prevail. But there is no free lunch in investing, so you never know for sure.
Preserving Wealth: If you’re at or near your lifetime financial goals, you may be best off avoiding market risks and the wider range of uncertain outcomes they create. Here, you pay a different price. In exchange for having more certainty about your investment outcomes, you must expect lower returns, and slower portfolio growth.
Lifelong planning
By the way, whether you’re accumulating or preserving wealth isn’t necessarily based just on your age. It also depends on your goals. For example, even if you’re in your 20s or 30s, with decades before you retire, you still might focus on preserving some of your wealth to purchase a house within a few years. Conversely, even if you’re retired, you still might have wealth accumulation goals if you wish to leave a substantial legacy or charitable bequest. Continue Reading…
Long-time readers of this blog will know I remain many years away from full-on retirement – so I have tons of time to consider when to take our Canada Pension Plan (CPP) benefit and our Old Age Security (OAS) benefit.
For those who might be closer to retirement age and/or you want to know when to take CPP or OAS, make sure you read these posts below!
One factor rarely covered on many blogs or financial forums is the subject of survivorship benefits for either program. It can be a major factor when determining when to take CPP or OAS for some.
What are the pros and cons of taking CPP or OAS early or late, when you factor in survivorship benefits?
Doug Runchey; DRPensions.ca
Like other financial subjects, I have my own ideas based on our financial plan but I wanted to talk to an expert. I reached out again to Doug Runchey, a pension specialist who has more than 30 years of experience working with both CPP and OAS programs.
In our latest discussion, we tackle the survivorship subject and what general rules of thumb apply.
Doug, welcome back. Good to chat again and I hope you’ve been well …
Thanks for having me back again Mark.
I always appreciate the outreach for a take on this important subject. I agree, this isn’t talked about enough: how survivorship factors into government benefits decision-making.
For those folks not familiar with the benefits of CPP, can you remind them about the factors they should consider – when to take CPP?
The most important thing is to know exactly what your real choices are, because the numbers on your SOC or online at the MSCA website are not always very accurate. Once you have accurate numbers, you should consider factors like life expectancy, taxation, impact on other benefits (e.g., GIS), estimated expenses and other income streams.
When to take your CPP should be integrated with your overall financial retirement plan.
As we discussed in a previous post, there are some reasons to take CPP or OAS as early as possible:
you need (and want) the money to live on now (probably the biggest reason)!
you have good reason to believe that you have a shorter-than-average life expectancy; take the money now and spend as you please.
you already have a good reliable defined benefit pension with full indexing and the CPP and OAS are “gravy”;
you want to delay taking your portfolio withdrawals since you may wish to maximize the amount of money in your estate; and/or
you are a “bird in hand” investor so you take Canada Pension Plan money now while you can.
Great reminders. So, what about the survivorship benefits of CPP? How are these calculated? Should that play into the decision, when to take CPP?
They should Mark.
CPP survivor’s pensions are based on two different formulas, depending on the age of the surviving spouse.
For now, let’s just consider the formula for survivors over age 65 and that is 60% of the deceased contributor’s “calculated CPP retirement pension.”. By “calculated,” I mean prior to applying the age-adjustment factor if they started receiving their retirement pension before/after age 65. This 60% is reduced however, if the surviving spouse is also in receipt of their own CPP retirement pension, under what are known as the “combined benefit” calculation rules.
These combined benefit calculation rules should definitely be a factor in deciding when to take your CPP if the survivor’s pension is in play prior to making that decision, but probably not otherwise.
Shall we look at an example, from a couple that prefers the “bird in hand” income?
To demonstrate these combined benefit calculation rules, let’s use an example where the husband’s calculated CPP was $1,000 and the wife’s calculated CPP was $700.
If they both took their CPP early at age 60, they would each receive 64% of their calculated CPP, which would be $640 for the husband and $448 for the wife.
If the husband passed away at age 70, the wife would normally be eligible for 60% of his calculated CPP, which is $600. Under the combined benefit rules though, that amount is reduced by 40% to $360.
As a result, the survivor’s retirement pension is increased by a “special adjustment” in the amount of $86.40 (36% of the $240 reduction to the survivor’s pension). The net combined benefit that the wife would receive is then $894.40 (her original retirement pension of $448, the reduced survivor’s pension of $360 and the “special adjustment” increase to her retirement pension of $86.40). Continue Reading…
A phrase you’ll hear over and over again when you run a business is “time is money.” And, for the most part, it’s true. Especially when you have workers paid by the hour, it’s tough not to see their time as a reflection of your business’s value. Most modern offices have lots of wasted time that could easily be trimmed to save everyone a headache, and save you money. These tips will give you some good ways to start saving time.
1.) Software and Automation
Managing a team of people can be tough on your own. Requests for breaks, time off, and sick days add up over time, and you can wind up with a lot of money thrown out the window. Relying on pen and paper systems will frequently become a headache and errors are inevitable. Investing in good management software will save time in more ways than one.
If you’re supervising a team and want a good way to manage their time clocks, a time card calculator is a great tool to have. You can track their productivity as well as their reported hours, giving you a better idea of how their time has actually been spent on a certain task. Automation is also a necessity in modern business, as certain tasks just can’t be done as well by a human as by a machine. Give the monotonous tasks to your software and watch as you gain time back.
2.) Minimize Distractions
A lot of wasted time during the workday comes down to unnecessary distractions. While it’s good for employees to bond over a conversation in the break room and feel comfortable stopping by each other’s desks for a chat, it’s best to keep these interactions at a reasonable minimum. Encourage employees to take their lunch breaks together to cut down on the need for conversations throughout the work day.
But time can be wasted by work-related interactions, as well. Most meetings can be summarized easily by a mass email, and chat software can easily interrupt an employee’s train of thought, so consider replacing longer meetings with a shorter daily one. Allow employees to turn off their notifications, encouraging them to check their email during specific times, and allow them to have plenty of time for focused and productive work.
3.) Go easy on multitasking
Some individuals truly are great at multitasking, but the truth is, many of us are challenging ourselves to a task we’re not up to. Productivity doesn’t come down to the number of things you’ve worked on in a day, but the volume of work you’ve completed. Allow yourself to prioritize a certain task and work on it until it’s complete. Continue Reading…
Posted By 
