All posts by Financial Independence Hub

How do Canadians feel about the new Real Estate regulations?

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

The anniversary of the implementation of the Ontario Fair Housing Plan has come and gone, and the playing field is just starting to even in the province’s housing market. Designed to cool demand and price growth in the Greater Golden Horseshoe, the 16-part package of housing regulations has effectively done just that, with sales down double-digit percentages throughout the region, and prices softening for the most expensive housing types.

Housing analysts argue that this result is mainly due to psychological factors, rather than the new regulations – which include a foreign buyer’s tax, and overarching rent controls – themselves.

But what do Ontarians really think about the new regulations? To find out, Zoocasa conducted a survey of 1,400 respondents on their sentiments around the highlights of the plan, and whether they support the government’s intervention in the free housing market.

Following BC’s footsteps

If Ontario’s attempt to tax foreign purchasers of real estate seems familiar, that’s because it closely resembles what occurred in British Columbia; the province initially implemented a 15-per-cent levy on foreign buyers within the Metro Vancouver area in August 2016, before upping the tax to a full 20 per cent, and extending the affected geographical area, in February of this year.

While Ontario’s version, called the Non-Resident Speculation Tax (NRST) still taxes just 15 per cent of a home’s purchase price, it will apply to anyone buying a home within the GGH – including homes for sale in Hamilton, or condos for sale in Mississauga, who is not a Canadian citizen or permanent resident (those who obtain such status, or who are enrolled in a minimum two-year full-time post-secondary program within a year of their home purchase are eligible for a full rebate on the NRST).

At the time of its implementation, former Ontario premier Kathleen Wynne was adamant that the tax was not intended to discourage newcomers to Canada from settling in Ontario.

“The Non-Resident Speculation Tax has nothing to do with new Canadians or people who want to make Ontario their home,” she stated to a media scrum on April 20, 2017. “This is targeting people who are not looking to raise a family, who are just looking for quick profit or a place to park their money.”

The measure appears to have resonated well with all Canadians; according to survey results, 69 per cent of respondents from all provinces indicated they support the tax, while 61 per cent felt foreign ownership directly impacts prices in the local housing market.

Perhaps not surprisingly, respondents from provinces with the most competitive real estate marketplaces were most likely to support the tax: 77 per cent of British Columbians and 70 per cent of Ontarians indicated they were pro-tax.

Support extends beyond affected Housing markets

However, even respondents from provinces where foreign investment and homeownership is not considered a stressor on the market, indicated support for the tax; 65 per cent of Albertans indicated support, even though only 40 per cent feel out-of-country buyers impact housing prices in their region. Continue Reading…

Investing for people over or under 45

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By Tea Nicola

(Sponsor Content)

Your ideal investing strategy when you’re 25 just is not the same as when you’re 52.

That’s because what you earn is partly a function of what you’ve already managed to acquire. In Canada, about 85% of all financial assets are in the hands of people over age 45. Pension assets are held in the same proportions. On the real estate front, just 32% of all real estate value is in the hands of those under age 45. Meanwhile, fewer companies today offer a pension plan of any kind. The defined benefit pension plan is on its way to extinction.

What’s a young person to do? And for older investors who are going to retire earlier, how should their investment strategy change? What are the lessons that need to sink in when it comes to investing for people over or under 45?

What’s the investment strategy for Canadians under 45? Lower your fees!

You’re finished with school (at least for now). You’ve entered the job market and you’re starting to build up some savings. You’re diligently putting between 10 and 20 per cent of your salary into an RRSP. The younger you start to contribute to an RRSP, for instance, the sooner you can take advantage of compound interest.

Regardless, you want a good return on your investment and maybe you’ll get lucky and enjoy a bull market.

You can’t actually control that return, even if you’re investing in your own company … but if you’re using an investment platform like WealthBar or a traditional firm, you definitely can control how much you pay in fees.

For instance, with a WealthBar account, an investor might pay about 0.6% in management fees to WealthBar, versus 2.2% for a mutual fund at a bank. Put another way, an investor might pay $10 a month for WealthBar to manage $25,000, versus nearly $46 per month with a typical bank mutual fund.

Fees add up! While it may seem like the older generation controls the vast majority of assets (OK, they do), young people can at least control how much they pay a firm to manage their account. The right choice can literally save hundreds of thousands of dollars in value that would otherwise pad a financial adviser’s pocketbook.

But, should you race to the bottom? Perhaps not. Ensure that your strategy is still sound and diversified in order to achieve your goals in time. So, do not invest all your money into that 0.05% US Equity ETF. Some fees are ok, if they provide value such as diversification, cash flow, currency alignment and liquidity.

What’s the investment strategy for Canadians over 45? Reduce your risk!

Perhaps you’re one of the lucky Canadian investors over 45 who has had a good run. A pride-inducing chunk of that 85% chunk of financial assets are in your account. Continue Reading…

How in sync are global Central Banks?

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By Kevin Flanagan, WisdomTree Investments

Special to the Financial Independence Hub

Without much fanfare, the U.S. Federal Reserve (Fed) provided its policy guidance late in May. Although no rate hike was implemented [it raised its overnight lending rate by 0.25% at 2 pm today, June 13, at 2 pm: Editor]  the money and bond markets fully expect the U.S. central bank to continue on its tightening path for the remainder of 2018, if not beyond. While the lion’s share of the focus has been Fed-centric on this front, it seems like a good exercise to check in on what the expectations are for the developed world’s other key monetary policy makers.

Heading into 2018, optimism for ongoing global growth seemed to be the norm. Indeed, along with the outlook for continued global growth, discussions were arising on whether central banks would soon turn their attention to any potential increase in inflation. While we still have almost seven months to go in this calendar year, recent data appears to be suggesting a plateauing of sorts on the economic front.

One economic indicator that is widely watched for help discerning economic trends on a global basis are the various Purchasing Managers’ Indexes (PMI) on a country or regional basis. While the levels being posted in the developed world still point toward further expansion, they don’t necessarily indicate a pick-up in growth prospects on the immediate horizon. In fact, the readings for April on an aggregate basis were relatively flat, and in some cases — such as the eurozone, the UK and Canada — have actually slipped a bit from their recent peaks.

So, what should investors expect in near-term global central bank policy? As illustrated in the table above, expectations for the upcoming policy meetings certainly differ quite a bit. The overarching outlook is for the Fed to raise rates at its convocation on June 13, with the Fed Funds Futures implied probability being 100%, as of this writing. The remaining four developed world central banks — the European Central Bank (ECB), the Bank of England (BOE), the Bank of Canada (BOC) and the Bank of Japan (BOJ)  — all fall in the “no rate hike” camp. Continue Reading…

“Unretirement” and why it’s not selfish to be selfish

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“Unretired” novelist and blogger Joyce Wayne

By Yvonne Ziomecki, HomEquity Bank

Over the last few years, we have seen a growing trend among older Canadians: what we call “unretirement.”

This is where some Canadians take action on long-held dreams once they settle into their retirement and start to consider activities and interests for added personal fulfilment. They’re increasingly seizing the opportunities that retirement presents, fulfilling personal passion projects, which, up until now, they never had the opportunity to prioritize.

One particular obstacle seems to hold Canadians back from achieving their retirement dreams: the guilt of feeling selfish if they actually do something just for themselves!

The obstacle to a fulfilling unretirement: selflessness

We recently surveyed 1,361 Canadian homeowners, aged 55 and over. We asked, “If you received a $100,000 cash gift, what would you most want to do with the money?”

Using the money to pay off debts or giving the money to family members or donating to charity were very popular choices. More popular than putting the money towards their own retirement or funding a lifelong dream.

It seems that Canadians are extremely generous souls, putting others’ needs ahead of their own. But is their selflessness preventing them from having a fulfilling and purposeful retirement?

Mark van Graft, Vice President at Mackie Research Capital Corporation, believes it is.

“I enjoy motivating my clients to realize that it’s not selfish to be selfish”

For decades, Mark has been helping Canadians to make informed financial decisions in their own best interests.

“I enjoy motivating my clients to realize that it’s not selfish to be selfish,” he says. “They should spend some of their investments on their own enrichment versus sitting on savings or worrying about everyone else.”

Mark likes to help his clients embrace their personal goals and aspirations in their retirement. “Coaching clients who have unrealized dreams is one of the favourite parts of my job,” he says.

“I show clients how to use a reverse mortgage, not as a last resort or dire straits resource. A reverse mortgage can unlock funds to go beyond aging at home. It’s more like enabling a desire to ‘unretire,’ to bring a passion project to life, to fund a legacy project or finance a long-held dream to travel or innovate.”

Write a new chapter and unretire

Joyce Wayne is a retired college writing instructor and an unretired novelist and blogger. “I have always loved writing,” she says. Continue Reading…

Why Sean Cooper quit his full-time job after 8 years

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What a thoughtful goodbye email. Gosh, it’s hard to keep a secret! I guess everyone knows about my mortgage burning story, even my colleagues at work!

 

By Sean Cooper

Special to the Financial Independence Hub

If you follow me on Instagram, you may have already heard the big news. After 8 years, I’m quitting my full-time job at the pension consulting firm. I gave my employer plenty of notice. I handed in my resignation 2 months ahead of time. June 1st will be my last day in the office. To celebrate this big career milestone, I’ve booked a weeklong trip to New York City and Boston.

I always planned to quit my full-time job. I just didn’t think it would happen so soon. I’m at a crossroads in my life. I’m 33 years old and not getting any younger. It’s time to make some tough “adult” decisions. I can either take the easy road and keep working for a company where I’m comfortable, or take the hard road and become a full-time entrepreneur. I chose the latter.

Keeping a promise to myself

A promise I made to myself after I burned my mortgage in September 2015 is that I’d slow down and get a better work-life balance. Unfortunately, that just wasn’t happening.

I’m someone who’s super ambitious. So, 6 weeks after burning my mortgage papers, I started writing a book. With the success of my book and speaking career, I’m finding myself busier than ever. I’m probably working harder now than when I was paying down my mortgage (no joke).

I’m still putting in the 80+ hour workweeks, waking up at 6:30AM and working until midnight or 1AM most days – and for what? I’m mortgage-free. I don’t have to work this many hours, but the problem is I love what I do. I enjoy my side hustle as a personal finance journalist, money coach and speaker more than my full-time job. I couldn’t keep working at this insane pace forever. I was tired all the time. Something had to give.

So with mixed emotions, in early April I made the difficult decision of choosing my budding career as a personal finance expert over my full-time career. It wasn’t an easy choice, but I was ready to make the jump.

Taking a risk

This was probably the most difficult decision I’ve ever had to make. It wasn’t easy to walk away from a steady, full-time job with benefits and a defined benefit pension plan. It was especially difficult for someone as risk adverse as me (I did after all pay off my mortgage in record timing in 3 years).

When I shared the big news with those closest to me – friends, family and coworkers – I didn’t know what to expect. Thankfully everyone has been supportive of my decision. Saying goodbye to my coworkers will be especially tough. My coworkers are like family to me. They were there when I burned my mortgage and launched my book.

It’s going to take me a while to get up and running. Luckily I have time and money. My house is paid off. I also (still) rent out the main floor of my house. The rental income alone can support me. I also have savings to last me for the years to come.

From a personal standpoint, it helps that things are less complicated. I’m single (I’m half joking when I say I’m still looking for a frugal girlfriend). I don’t have a spouse or children to look after. (Although this is a double-edged sword since I don’t have a spouse’s income to rely on either.) I’d probably hesitate to do the same thing if my circumstances were different and I was married with children.

You’ll never get rich working for someone else

Continue Reading…