All posts by Financial Independence Hub

Big Data & AI: What’s the Connection?

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By Lachlan Malone

Special to the Financial Independence Hub

Big Data and AI are buzzing technologies that are gaining traction by the day due to their potential to revolutionize their respective fields completely. Aside from the promise they show by themselves, their combination might revolutionize the world as we know it.

Data has played a critical role in marketing, analysis, and corporate endeavors. With the addition of AI, those fields will change for the better in a multitude of ways.

In this article, we’ll explore everything there is to know about these two technologies and how their merger could change the virtual landscape as we know it.

What are Big Data and AI?

Big data and AI are two different technologies. What ties them together is the popularity and traction they’ve garnered in recent years. Both technologies are relatively young and still have many evolutions to undergo before they’re fully implemented.

Big Data

Big data is a data field that promises to analyze, refine, and assess vast amounts of otherwise too complex data for conventional means. This technology could revolutionize how we deal with data and significantly impact the corporate world.

Big data is the next logical step in the data world and promises to solve current stump traditional data processing software issues. It can do this through advanced data processing, which is often assisted by some form of AI.

AI

AI stands for artificial intelligence, a software program that mimics human and animal intelligence. Chatbots, problem-solving software and other machines capable of learning are all considered AI. AI is one of the most promising technologies of the 21 countries and has many potential implementations.

Since it’s one of the most popular technologies, investments and improvements are being made daily. This cognitive technology could change the way we live by a considerable margin.

How are Big Data and AI connected?

While both are popular technologies that show promise to change the world as we know it, as of now, there is minimal connection between them. The relationship between AI and Big Data could significantly augment the desirable features of both.

The implementation of this connection is usually seen in data refinement software. Data, in its initial form, is known as raw data and is virtually useless. It requires extensive refinement to become a usable piece of data, and that’s where AI steps in.

Since AI is a cognitive mimicking technology, it could significantly augment the quality of the refined data. Data refinement becomes seamless through AI, making things like business analytics simple, quick, and efficient.

AI works well with big data since AI machine learning and deep learning technologies are getting more sophisticated by the day – it’s hard to predict what the future could hold for this technology.

What does this combination provide?

This combination works well to bring both technologies to new horizons. Machine learning isn’t a simple or automatic process, as it requires vast amounts of data. Huge amounts of data need a lot of processing power and cognitive problem-solving capabilities to undergo refinement. Through this merger, the two technologies complement each other.

Most business, marketing, and analysis landscapes undergo fundamental changes in operation, sophistication, and complexity through their mutual evolution.

Below, we’ll list four ways that this combination promises to revolutionize the world, and how it’s doing so: Continue Reading…

Q&A: The case for Gold

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By Michael Kovacs

(Sponsor Content)

The case for gold is still strong.

Gold has had a record run this year with the price passing through US $2,000 per ounce. That has pushed the S&P TSX Global Gold Index is up 48.98% [1], year-to-date, making it a top performing group on the Toronto Stock Exchange. By comparison, the S&P/TSX composite index was down 2.68%.

Gold’s resurgence after a nine-year bear market began early last year. Rising uncertainty about the staying power of the global recovery combined with interest rate reductions led to concerns about a weakening US dollar and a resurgence of inflation.

The impact of the Covid-19 pandemic has accelerated these trends. Global growth has fallen sharply and central banks have undertaken even more aggressive interest rate cuts to stimulate growth. The yields on bonds have fallen with some sovereign issues now in negative territory. The US dollar, which is used to price gold, has also declined against a basket of currencies.

Harvest Portfolios Group launched the Harvest Global Gold Giants Index ETF (TSX: HGGG) in January, 2019 to position itself to take advantage of a rebound in gold’s fortunes. The strategy behind HGGG could not have foreseen the pandemic, but the ETF’s performance has proved it is well positioned to thrive with this added challenge.

In a Q&A, Harvest President and CEO Michael Kovacs [MK below] revisits the blueprint underpinning the ETF and explains why the outlook for gold continues to be positive. He also discusses how the ETF aligns with the core Harvest philosophy of owning strong businesses.

Financial Independence Hub: Did you expect gold to be this strong in 2020?

MK:  We were looking at a weakening economic cycle, but we could not have anticipated the pandemic; what happened this year is beyond anyone’s imagination.

We launched the ETF as a defensive investment because the economic cycle was pretty long in the tooth. We were not gold bugs, but had watched the market for some time, especially gold company shares.

How do you see the outlook for gold?

Gold may have got a bit over-priced in the short term, but over the next 12-to-18 months it should touch U.S. $3,000 an ounce, which is 50% higher than it is now. Why? The pandemic has created a whole new ballgame.

It ties into the massive amounts of stimulus injected into the global economy by governments and central banks.  As a result of the pandemic, governments are budgeting with wartime percentages of debt. These levels will devalue currencies and could bring back inflationary pressures. That’s good for gold.

Warren Buffett recently bought his first gold holding, a stake in American Barrick. What does that say?

It was an unusual move considering that Buffett is a long-time value investor with a dislike for gold. He prefers assets that have cash flows or pay dividends. But he didn’t buy bullion, he bought the second most valuable gold company in the world, a great gold producer with great assets. It has a growing cash flow and pays a dividend. So, it’s a logical place for Berkshire Hathaway to diversify.

How will the Harvest Global Gold Giants Index ETF benefit from these trends?

When we launched the ETF, gold had been in a bear market for eight years. The industry had consolidated, share prices were low and we saw considerable value. At that point, average production costs for the model portfolio were U.S. $800 per ounce and most of the target companies were cash flow positive. We believed that if gold rose there would be a lot of upside potential. That is what has happened and will continue if gold prices rise. Continue Reading…

The Ups and Downs of passing your Home down to Family

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By Holly Welles

Special to the Financial Independence Hub

You’ve recently encountered an important decision. Should you pass down your home to your family? Many people make this choice before weighing a few pros and cons. It’s essential to examine this situation from every angle. Otherwise, you may create an unnecessary and unwelcome problem for you and your loved ones.

Here’s a look at whether you should pass down your property:

1. )You could redistribute your Wealth

Here’s a central reason why individuals decide to pursue this process. While houses themselves don’t always appreciate, your land has likely accrued value over time: and your family can benefit as a result. That occurs because land as a commodity isn’t readily available. Many homeowners don’t own any assets more expensive than their houses. You can ensure your family gains more wealth by giving them your residence.

They’ll likely thrive financially if they take specific actions. For instance, they could sell your home to create a monetary cushion. They may even want to move from their current residence to reduce their expenses. In some cases, it’s smart to pass down your house so you can assist them in managing finances.

2.) You may cause issues between Heirs

It’s not guaranteed whether your heirs will find a way to manage this transaction. Various concerns may arise between them. It could create jealousy if you trust your home to one sibling or child. But if you divide your home amongst multiple heirs, disagreements over ownership can still happen. You may cause more problems than you originally anticipated.

You’ll also want to consider what may occur if you’re alive while this process takes place. You may have to face a few different scenarios that create difficulties for you personally. Make sure to choose a method that protects you. It’s always best to think about your interests, too. If you move forward with this transaction, take steps to resolve issues that may occur after you pass.

3.) You can downsize to a smaller place

As you age, it’s often harder to care for a large home. That’s why many older adults tend to downsize into a rental community. They don’t have to deal with the costly maintenance that tends to come with more expansive space. It may also be a more immediate experience for some families:  if you have unexpected health issues that don’t allow you to climb steps, it’s likely time to find a home without an upstairs level. Continue Reading…

Educating your Canadian children in the United States (Part 1)

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Princeton University

By Elena Hanson

Special to the Financial Independence Hub

Congratulations! You are sending your son or daughter to college in the United States to further their education and help put them on the road to a great career. But have you as the parent done your due diligence to make sure this doesn’t end badly with a big chunk of money ending up in the hands of the IRS? It could happen.

The IRS has long arms and extensive resources, and once it starts examining the earnings and assets of your child who is attending a U.S. school, well, as the saying goes all is fair in love and war. What’s more, the IRS might even wind up investigating the finances and assets of the whole family!

How do you avoid a muddle with the IRS? Good, sound, cross-border tax planning. That’s how. It will protect the income and assets of your child, and of you, and ensure full compliance in Canada and the U.S.

Start with the Visa

Let’s go to the beginning. Your son or daughter has been accepted for admission to the U.S. university or college of their choice, which means they have an F-1 Student Visa or a J-1 Exchange Visitor Visa. All the necessary documentation is complete and there is nothing to worry about.

Well, not exactly. As Canadians you better be up to snuff on all the rules for your child to attend school south of the border or Uncle Sam might have the last laugh, and here’s why. The moment Bobby or Jennifer sets foot in the U.S. the IRS day-counter gets rolling. They keep tabs on the number of days your child is in the country and this is why you, the parent, must do everything to make sure your Canadian child retains their status as a non-resident alien.

Tax residency in the U.S. is based on citizenship/lawful permanent residence (i.e., Green Card) and/or the Substantial Presence test (i.e., days present in the U.S.). This means that if your son or daughter is not a U.S. citizen or a Green Card holder, they will likely meet the criteria for the Substantial Presence test, which is calculated based on the number of days spent in the country over a three-year period. So, if your child’s magic number is 183 days or more, they are considered a U.S. tax resident.

Key is avoiding U.S. residency status

Thus, avoiding U.S. residency status is key and you can do that by filling out a form: Form 8843, which is called ‘Statement for Exempt Individuals.’ It allows students to exclude the number of days they are present in the U.S. for purposes of the Substantial Presence test. But the student must avoid any activities that disqualify this exemption. That could be looking for a job or buying a home in the U.S., or marrying a U.S. person.

If the student has a home in Canada and actively maintains it, but they do not qualify for the exemption as per Form 8843, they can still avoid U.S. taxation on their worldwide income and those IRS filings because of the Canada-US Income Tax Convention (the Treaty). And even if your child is not able to maintain their non-resident status, being aware of a few important things can be a big help.

It all has to do with good tax planning. Here are some examples: Continue Reading…

Cost Matters: But does your Advisor care?

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Advisor John DeGoey, author of STANDUP to the Financial Services Industry.

By John DeGoey, CFP, CIM

Special to the Financial Independence Hub

Perhaps the most conspicuous disconnect in the financial services industry today revolves around cost.  It should be noted at the outset that the cost paid by a client comes in two forms: the cost of advice and the cost of products used to construct portfolios.  Both matter a great deal.

The adage that many in the financial services industry use is: “price is what you pay; value is what you get.” I’ll leave it to you to do your own due diligence about both the cost of advice and the value provided.  Today, I want to talk about the confluence of those two factors as it pertains to product cost.  The combination of quality advice with low-cost products can be a powerful one.  Unfortunately, my experience has been that some otherwise excellent advisors remain dogged in their determination to use high cost products:  or at least to be indifferent to cost as a primary determinant when making product recommendations.

After over a quarter century in the business, my sense is that many advisors who work at brokerage firms with a “traditional” mindset (i.e., a firm that has historically recommended individual securities as building blocks) are more cost conscious if only because the individual securities that they sometimes recommend don’t have MERs.  Of course, individual securities can add to portfolio risk due to their reduced diversification, so there’s a trade-off to be considered.

Big price difference between Mutual Funds, ETFs and Seg Funds

For those advisors like myself that want their clients to have broadly-diversified baskets to get access to specific asset classes and strategies, the options generally boil down to segregated funds, mutual funds and exchange traded funds.  All of these options cost money, but the difference in price is often substantial.  Does your advisor care?

In a ground-breaking paper entitled “The Misguided Beliefs of Financial Advisors” released in late 2016, some American academics show that many advisors are essentially indifferent to product cost.  The paper also shows that advisors tend to chase past performance and recommend unduly concentrated portfolios,  but those very real problems are beyond the scope of what we’re looking at here. Continue Reading…