All posts by Financial Independence Hub

Why you may wish to own a U.S. Dollar Investment Account

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Royalty-free image courtesy Justwealth

By James Gauthier

(Sponsor Blog)  

 

Many Canadians are aware that you can open a U.S. dollar bank account at most Canadian financial institutions.

But did you know that you can also open a U.S. dollar investment account through many different investment companies?

The following are reasons why you may wish to consider opening a U.S. dollar investment account.

 

Reduce the cost of U.S. dollar conversion

Every time that you convert Canadian dollars to U.S. dollars (or vice versa), you will pay a fee to the financial institution that makes the conversion for you. That fee is known as the currency spread, and can usually be noticed by looking at the difference between the “bid” and the “ask” prices displayed by the financial institution.

For example, if the current spot exchange rate is quoted as $1.35 Canadian for each U.S. dollar, the bid (or price that you will receive for selling U.S. dollars) might be $1.32 and the ask (or price that you must pay to purchase U.S. dollars) might be $1.38. So, every time you buy or sell U.S. currency you lose 3 cents per dollar. If you are regularly converting currency, that becomes very expensive!

Buying or selling U.S.-listed securities in a Canadian dollar investment account is a common example of Canadians paying unnecessary currency conversion costs, allowing the broker to pocket the currency spread on buys and sells, dividends or interest paid. The more that you buy and sell, the more that you lose. These costs can be eliminated by simply owning your U.S.-listed securities in a U.S. dollar investment account instead since there is no need to convert currency on every transaction.

Hedge the impact of currency exchange rates

Have you ever felt like you had to limit your spending on travel to the U.S. because the value of the Canadian dollar was depressingly low? Or how about not ordering that item located in New York on eBay because it was priced in U.S. dollars which made it too expensive? The value of the Canadian dollar relative to the U.S. dollar has fluctuated greatly over time. In the past few decades alone, the exchange rate has ranged from more than $1.60 Canadian per U.S. dollar to less than $1.00 – yes, the Canadian dollar has on occasion been worth more than the U.S. dollar!

But why leave it to chance? If you have a portion of your investments denominated in U.S. dollars, you can always draw from it when you need it. You won’t pay conversion costs, and the current exchange rate should not matter because you don’t have to convert anything. For folks who require the frequent use of U.S. dollars for business, travel, or shopping, a U.S. dollar investment account can make a lot of sense.

For a simple illustration, consider a shrewd Canadian investor who vacations in Orlando, Florida for one week in February every year. The typical expense for this trip each year is about $5,000 U.S. dollars. This investor opened a U.S. dollar investment account and invested $100,000 U.S. dollars in an income-oriented investment portfolio that consistently earns 5% per year. This investor should never have to worry about exchange rates, or conversion costs since $5,000 U.S. dollars can easily be withdrawn every year!

Eliminate PFIC reporting (for U.S. citizens living in Canada)

Unfortunately for U.S. citizens living in Canada, Uncle Sam requires you to continue filing U.S. income tax returns. Also unfortunately, the I.R.S. requires additional reporting requirements for Passive Foreign Investment Corporations (PFICs), which may result in additional taxes owing. If you own any mutual fund or exchange traded fund issued by a Canadian company, it is considered a PFIC. Regulations require that all mutual funds purchased in Canada, must be issued by a Canadian company. Unless you enjoy the extra reporting requirements, this can be problematic for some investors. Continue Reading…

Creating your own Podcast Studio: A Step-by-Step Guide

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Image courtesy Canada’s Podcast/unsplash royalty free

By Philip Bliss

Special to Financial Independence Hub

In the ever-expanding world of podcasting, creating a professional and efficient podcast studio is essential for producing high-quality content that captivates your audience.

Whether you’re a seasoned podcaster or just starting out, building a dedicated podcast studio can elevate your production value and enhance the overall podcasting experience.

In this guide, we’ll walk you through the essential tasks, equipment, and strategies to not only set up your podcast studio but also effectively promote your podcast.

 

 

 

Tasks

  1. Define Your Niche and Audience:
  • Identify your target audience and the niche you want to focus on.
  • Research competitors in your niche and understand what sets your podcast apart.
  1. Create a Content Plan:
  • Develop a content calendar outlining topics, guests, and episode release schedule.
  • Plan for regular, engaging content to keep your audience coming back.
  1. Design Your Studio Layout:
  • Choose a quiet and dedicated space for your podcast studio.
  • Consider acoustic treatment to minimize echo and external noise.
  1. Invest in Quality Recording and Editing Software:
  • Choose reliable recording software like Audacity, GarageBand, or Adobe Audition.
  • Invest time in learning the basics of audio editing for polished episodes.
Image courtesy Canada’s Podcast/unsplash royalty free

Equipment

  1. Microphone:
  • Invest in a high-quality microphone like the Shure SM7B or Blue Yeti.
  • Consider a pop filter and shock mount to enhance audio clarity.
  1. Headphones:
  • Choose closed-back headphones to prevent audio leakage during recording.
  • Opt for comfortable and studio-grade headphones like Audio-Technica ATH-M50x.
  1. Audio Interface:
  • Select a reliable audio interface such as Focusrite Scarlett 2i2 for clear audio signal processing.
  1. Mixing and Monitoring Equipment:
  • Include a mixer if you plan to have multiple hosts or guests.
  • Invest in studio monitors for accurate sound monitoring.
  1. Recording Accessories:
  • Use a sturdy microphone stand or boom arm for convenience.
  • Consider a portable vocal booth or isolation shield for noise reduction.

Promotion Strategies: Continue Reading…

Emerging Trends in B2B Payments for 2024: A Comprehensive Overview

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By Yana Yefimova, Clarity Global Inc.

(Sponsored Content)

In the dynamic landscape of business-to-business (B2B) payments, staying abreast of the latest trends is essential for companies aiming to flourish globally. The year 2024 brings forth an array of transformative trends that promise to redefine how businesses handle financial transactions. The Clarity Global team explores  these trends and the way they can empower your business to navigate the intricate realm of B2B payments.

Cross-Border Payment Evolution

International expansion remains a coveted goal for businesses, but managing exchange rates and cross-border payments poses challenges. A staggering 95% of finance professionals express the need for better solutions to handle exchange rates, with 56% acknowledging significant struggles in this regard. Cross-border payment solutions emerge as a remedy, simplifying the intricate process of transferring money between businesses in different countries.

Third-party payment processors streamline currency exchange and logistics, ensuring swift payments. Clarity Globalsolution is exemplary in simplifying B2B international payments, minimising fees, and expediting transactions for seamless global market expansion.

Digital Transformation: Electronic Payments vs. Checks

The paradigm shift from traditional paper checks to electronic payments gains momentum, aligning with experts’ prediction that 80% of B2B sales interactions would be digital by 2025. Electronic payments offer speed, convenience, and eco-friendly operations. 2022 witnessed a notable transition, with 36% of companies still using checks for over half of their payments, while 49% planning to shift to electronic methods. This shift promises improved cash flow, reduced administrative burdens, and heightened financial efficiency.

The Rise of Virtual Cards

Virtual cards, representing digital versions of physical debit or credit cards, are gaining prominence. Global virtual card transactions are projected to soar by 340%, reaching over €120 billion by 2027. These cards offer enhanced security, control, and flexibility, making them an attractive option for B2B transactions in various contexts. Continue Reading…

Bitcoin & Cryptocurrencies: Still not an asset class to which investors need to pay attention

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The Michael James on Money blog was skeptical about Bitcoin and Cryptocurrencies as long ago as 2018, as this post demonstrates. He hasn’t changed his opinion since then.

Deposit Photos

By Michael J. Wiener

Special to Financial Independence Hub

As noted above, Jon Chevreau asked if it was okay to republish this post that I wrote way back in 2018. As little has changed since then, here it is, without further changes or commentary.

 

The technology used to create Bitcoin comes from the field I used to work in professionally. I’ve followed Bitcoin from its obscure beginnings to its recent bubble-like rise. After fielding so many questions about cryptocurrencies, it’s about time I organized my thoughts about Bitcoin as an investment and as a currency.

To understand Bitcoin, you don’t have to understand the technology behind it. The big problem anyone can see with digital money is that after you spend it you still have a copy of it, so you can spend it again. Much of the effort in creating digital money centers on preventing this double-spending. Bitcoin does this with some clever cryptography and computer protocols called blockchain.

Another feature of Bitcoin is that more money gets created over time. Those who do enough calculation with their computers get more Bitcoins. This is called mining, and is intended to roughly mimic mining for gold.

Bitcoin as an investment

Before Bitcoin’s meteoric rise, the few people who’d heard of Bitcoin understood that it is a currency, and is intended to be used like money. Now most people have heard of Bitcoin, and they tend to think of it as an investment. Some in the financial world suggest that cryptocurrencies should be considered an asset class. This is nuts.

It makes no more sense to invest in Bitcoins than it does to invest in Somali shillings, Indian rupees, or British pounds. The typical person should think of these things as currencies, not investments. The fact that the Bitcoin exchange rate is so volatile should make us stay away, not dive in.

Bitcoin as a currency

The digital and cryptographic nature of Bitcoin sets it apart from more familiar currencies like dollars. But this doesn’t really capture the important difference. After all, most transfers of dollars are digital and use cryptography.

Bitcoin isn’t backed by any particular government. No such backing is necessary. The U.S. government backs U.S. dollars, and it can impose rules about how dollars are used. If a bank doesn’t play by the rules, the U.S. government could cut that bank out of the dollar system. There is no easy way for the U.S. government or any government to regulate Bitcoin.

One thing governments do with their currencies is demand that electronic transfers not be anonymous. A certain amount of anonymous transfer is possible with physical cash, but this is limited. For the most part, if governments want to trace large money flows, they can do so. Continue Reading…

A Canadian Perspective on Health Care Overseas: Q&A with RetireEarlyLifestyle.com

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Jim and Kathy McLeod in Mexico/RetireEarlyLifestyle.com

By Akaisha Kaderli, RetireEarlyLifestyle.com

Special to Financial Independence Hub

Billy and I are Americans. For most of our adult lives we have been self-employed, paying for our own health insurance out-of-pocket.

We retired at age 38, and while initially we paid for a US-based Health Insurance policy, we eventually “went naked” of any health insurance coverage. Wandering the globe, we took advantage of Medical Tourism in foreign countries and again, paid out-of-pocket for services.

This approach served us very well.

However, we understand that choosing the manner in which one wants to pay-for-and-receive-health-services is a personal matter.

In our experience, it seemed that Canadians generally were reticent to stay away from Canada longer than 6 months because they would lose their access to their home country’s health care system.

We did not know the full story of why many Canadians preferred not to become permanent residents of another country due to this healthcare issue. So, we asked Canadian Jim McLeod if he would answer a few questions for us to clarify! And then, to give that information to you.

Below is our interview with Jim McLeod. He and his wife are permanent residents of Mexico, and now receive all their healthcare from this country.

It is our hope with this interview, that there would be options explained to other Canadians who might not want to maintain 2 homes, be snowbirds in Mexico, or could vision living in Mexico with its better weather and pricing.

Take a look!

Jim and Kathy in Mexico

Retire Early Lifestyle: In the beginning, did you choose to do a part-time stint in Mexico before fully jumping in? You know, like to test the waters?

Jim McLeod: Yes. Because of the following stipulations for our Ontario Health Insurance Plan (OHIP) and the possibility of getting a maximum of 180 days on a Mexican Tourist Card, we decided to do the “snowbird” thing initially: 6 months in Ontario during the warmer months, and 6 months in Mexico during the colder months.

“You cannot be out of Ontario for more than 212 days (a little over 6 months) in *any* 12 month period (ex. Jan – Dec, Feb – Jan, Mar – Feb, etc.)”

During this time, we used World Nomads for trip insurance to cover us while in Mexico. For us, this wasn’t too bad. However, according to other couples we’ve spoken with, after a certain age, depending on your health, this can become quite expensive.

Retire Early Lifestyle: When you retired early and left your home country of Canada, was leaving the guaranteed health care system that your country provides a large hurdle to your plans? How did you factor that cost in?

Jim McLeod: After doing the “snowbird” thing twice, we had enough data from tracking all our spending, as per Billy and Akaisha’s The Adventurer’s Guide to Early Retirement, that we knew we would save approximately $10,000cdn a year by moving full time to Mexico. And we knew we would lose our OHIP coverage. As such, we budget $2000cdn a year for out-of-pocket medical expenses. But we also knew that, at that time, we qualified for the Mexican Seguro Popular insurance coverage. Note: Seguro Popular has since been replaced with a new health Care system, el Instituto Nacional de Salud para el Bienestar (INSABI), which has the following requirements:

• Be a person located inside Mexico

• Not be part of the social security system (IMSS or ISSSTE)

• Present one of the following: Mexican Voter ID card, CURP or birth certificate

As an expat, in order to obtain a CURP,  you must be a Temporal or Permanente resident of Mexico.

Retire Early Lifestyle: Initially, did you go home to Canada to get certain health care items taken care of and then go back to Mexico to live?

Jim McLeod: No, we have not gone back to Ontario for any health care. Having said that, there is one medication that Kathy needs, that she is allergic to here in Mexico, so she gets a prescription filled in Ontario whenever we return and we pay for it out-of-pocket. Continue Reading…