All posts by Financial Independence Hub

How credit cards can help your 2019 budget, not hurt it

Posted By |

By Hyder Owainati, RateHub.ca

Special to the Financial Independence Hub

Whether your financial resolution for 2019 is to dial back your spending, build up savings or better manage your debts, odds are your credit card – and how you use it – crossed your mind a few times as you were formulating your money goals for the new year. And while knee-jerk thinking leads many of us to jump to the conclusion that credit cards can only hurt our budgeting goals, it’s not necessarily the case.

Below are some key ways credit cards can help you reach your 2019 money resolutions (not hurt them).

Use your credit card to put your spending habits under the microscope

One of the many benefits of a credit card is that all your past purchases can be easily tracked either on paper statements or on your card issuer’s app (in the case of the latter, you can often sort purchases by category). By investing some time into looking at how you spent your money last year, you can get a big picture view of your worst purchasing habits and take action to avoid repeating the same mistakes.

For example, if you find that you’re paying subscription fees for services you rarely take advantage of, it’s time to cancel them and start adopting a more strategic approach to what you sign up for. If your daily latte purchases add up to an exorbitant amount of money every month, you may want to start brewing coffee at home. And if your holiday and birthday purchases led you to carry a large balance from one month to the next, you may want to rethink your expensive gift-giving habits.

Maximize your rewards with a credit card that aligns with your spending habits

By using a credit card that offers bonus rewards on the purchases you make the most often, you can rack up some significant savings. On the other hand, if you carry a card that doesn’t align with your spending habits, you could be needlessly leaving money on the table.

Do you spend big on gas? Then you’ll want to consider a card that offers bonus rewards at the pump (some of the best gas credit cards in Canada offer as much as 4% in cash back). Are you among the many Canadians who eat out at restaurants more than twice a week? With a rewards credit card catered for dining out, you can earn as much as 5% in travel points for every dollar you spend at restaurants (we’ve calculated that can add up to $180 in points over the course of a year; all on just restaurants).

To find the best credit card in Canada for you, it’s best to compare your option across multiple financial institutions and not confine your choices to a single bank.

Use a balance transfer to tackle your past credit card debts

If you’ve racked up significant credit card debt over the past year and your goal for 2019 is to eliminate your interest payments once and for all, a balance transfer credit card can go a long way in helping you chip away at your debts faster. Continue Reading…

How to make the most of your HELOC

Posted By |

By Sean Cooper

Special to the Financial Independence Hub

A HELOC, short for “home equity line of credit,” is a revolving line of credit secured by your home’s equity. HELOCs have a reputation for being a convenient, flexible and low-cost way of accessing credit. A HELOC can be a great way to borrow money cheaply (it sure beats using your credit card!), as long as you do it responsibly.

Using your HELOC responsibly means using it for something that is likely to increase your net worth and having a plan to pay back the money you borrow. (It can be tempting to make interest-only payments, but you’ll literally find yourself no further ahead.) To address this, most lenders have recently introduced stricter qualification rules for HELOCs. You’re required to pass the mortgage stress test (2% + your HELOC rate), in addition to some lenders making you qualify based on your HELOC limit rather than your current outstanding balance.

The amount that you can borrow by way of a HELOC has also decreased over the years. With a HELOC today, you can access up to 65% of your home’s appraised value. Note that your mortgage balance and HELOC together can’t be more than 80% of your home’s appraised value.

Now that you have a better understanding of HELOCs, let’s take a look at a couple ways to make the most of your HELOC.

Home Renovations

A popular use of HELOCs is home renovations. But before undertaking a major home renovation, it’s important to ask yourself why you’re doing the renovation. Continue Reading…

BMO keeps it simple with its One-ticket Asset Allocation ETF portfolios

Posted By |

By Dale Roberts

Special to the Financial Independence Hub

Last week we witnessed another entry into the Canadian Asset Allocation One Ticket Portfolio Solutions.

Welcome BMO.

On Friday February 15th BMO launched three asset allocation portfolios by way of the Conservative ZCON, the Balanced ZBAL and the Growth ZGRO.

Here is the overview from the Fact Sheets:

Wonderfully simple or plain vanilla?

Take your pick. These are certainly plain vanilla, they’re not even Lemon Raspberry White Chocolate. But they’re still wonderful.

I am certainly surprised that BMO Global Asset Management kept the portfolios so clean and simple. As you may remember from my review of the BMO SmartFolio. the Robo Portfolios are actively managed. That is to say there is active asset allocation with respect to the core and smart beta ETFs. From my BMO SmartFolio review …

The portfolios will be rebalanced every 2 to 6 months. And back to that human touch, the management team with also make adjustments to that asset mix based on market conditions. They may be more active in periods of market turmoil compared to the current market conditions where we are mostly cruising to the upside for Canadian, US and International stocks. Continue Reading…

Volatility arrived in 2018 but the ETF Exodus didn’t

Posted By |
Figure 1: Market Share, Canadian ETFs

By Jeff Weniger, WisdomTree Investments

Special to the Financial Independence Hub

 Money managers had a rough year in 2018. The S&P/TSX Composite Index was off 8.8%, while the MSCI World Index of global equities was down 0.1% in Canadian dollar terms. About the only bright spot was the S&P 500 Index, which was down 4.4% in USD but up 4.1% for Canadians because of U.S. dollar strength. But these tepid figures mask the freefall’s extent; many markets met the bear market definition — declining more than 20% — inside the confines of Q4.

Figure 1 above grabbed attention in our 2019 Canadian ETF Industry & Market Outlook. Many didn’t realize how much market share the smaller players have gobbled up recently.

No doubt, the biggest ETF providers are doing just fine. In fact, we imagine most of the 33 Canadian ETF companies in our corner of the asset management industry must be downright giddy. Many are hitting the sweet spot where track records are becoming seasoned, brand recognition is solidifying and product users are now proselytizing for them.

Grasping at straws

“Active” mutual fund managers have for years been tossing around a prediction that needs to be checked at the door.  To paraphrase them: Wait until we see a downturn in stocks. That’s when everyone is going to dump their ETFs and come back to active mutual funds.

Be careful what you wish for; we think the exact opposite.

The stock market peaked in September, but the exodus from ETFs and into mutual funds never materialized. As an industry, our collective AUM is ever so slightly off its peaks, but that’s because of market losses, not outflows. Continue Reading…

For the love of Money

Posted By |

By Heather Compton

Special to the Financial Independence Hub

I have invested a lot of my lifetime learning, living, teaching and writing about healthy practises around money.  When a young friend recently asked for some guidance on making peace with money, I wanted to fall back on those well learned strategies.

There are many practises that will bring some ease into your financial life. Living within your means, paying yourself first, getting your financial house in order: but you must lean into your own wisdom to bring peace.  It’s an evolutionary, lifelong journey for all of us and I am moved by the struggles we all have with money and the false powers we grant it.

What we buy, what we invest in, what we purchase for others and what we choose to finance or contribute to can bring us peace or its polar opposite.  What if we had a change of heart or a shift in worldview? A change of heart brings about a change of circumstance:  that’s transformation. Changing our worldview means changing what you believe is true – do big houses, fancy cars, expensive wardrobes and larger paycheques really spell success, acceptance, power or freedom?  Ask your authentic self that question.

The Heart test

We are all vulnerable to ambitions that disregard the balance and wisdom of our intuitive hearts. What if every spending decision had to pass through your heart before you pulled out your wallet?  Would you spend differently?

When we use our resources in ways that truly meet our authentic and universal needs for connection, integrity, joy, inspiration, physical well-being, meaning and choice, we find a path to peace.  That’s when money is in service to us and not the other way around. Money is an admirable servant but a terrible boss.

Lining up money’s flow with our authentic self and using it as a direct expression of our values and our vision is simple but it’s not easy.  It requires daily discipline to follow the practises that are the gateway to peace. Continue Reading…