All posts by Financial Independence Hub

Aman Raina’s 3-year review of his Robo Advisor portfolio

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By Aman Raina, Sage Investors

Special to the Financial Independence Hub

PLEASE NOTE: This review was written in early February before the big correction started in the market.

I can’t believe it has been three years since I opened up my Robo Advisor account. For those new to investing, a Robo Advisor is a new wave of wealth management companies that invest on behalf of others using an online platform and a combination of algorithms and computer coding to identify and manage portfolios. About three years ago these firms were in their early days, but since then they have mushroomed and even traditional investment companies are now offering some flavor of online investment  management services. It seemed quite appealing; however, there was one thing that many marketing materials, blogs, and mainstream media were avoiding (and still are I might add) … do these types of services make money for investors?

Three years ago I decided to try an experiment and find out for myself. I set up an account with one of the big Robo Adviser firms and invested $5,000 of my own money into it. My goal was to go through the process and blog about my experience and more importantly, the results. I said that we need a good five years to really get a handle on how effective these services are compared to traditional wealth management services. Well, we’ve now crossed the 3-year anniversary of my ROBO account, so let’s take a look at how it’s doing now. Continue Reading…

In wealth transfer, communication is as important as inheritance

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By Jim Greenwood, CFP

Special to the Financial Independence Hub

What’s the most difficult thing to talk about with your children? For many of us, discussing plans for our estate is pretty high on the list. Talking about your will and your own passing can be uncomfortable. According to a recent IPC Private Wealth survey of Canadians with at least $500,000 in investable assets, 58 per cent have not talked to their heirs about instructions for their estate, both financial and personal.

Having the inheritance discussion is very important, largely because of the consequences after your passing if you don’t have the talk. Perhaps one child wants to keep the vacation property while the other wants to sell, creating financial discord among siblings. Or there is a dispute about one’s final wishes upon death. The consequences are many and varied, and can be different for each family but equally devastating.

Holding the family meeting

As a financial planner myself, I can tell you that I am very happy to host or attend a family meeting, which should include the executor. It takes the pressure off you. Just let your children know that your advisor recommends having beneficiaries present during part of your estate planning process.

Or say you want to hold a meeting on your own. Beforehand, ask your advisor for coaching on approach and content. You’ll feel a lot more comfortable during the family meeting.

At my firm, we believe there are two main themes to a wealth transfer meeting. The first is about values. Share your views of money and wealth, ask your children what money means to them, and have a discussion. Tell your children what it took to create your wealth. Talk about the idea of a legacy – helping out your children and grandchildren with the hope that your children will do the same. Why discuss these ideas? You want to guide your children to a place where they feel appreciative, not entitled. Where they are trustworthy, not irresponsible.

The second theme is all about your will. Talk about how you’d like your legacy to be managed, and go through the distribution of assets, explaining the reasons for your decisions. This is where you discover if any of your bequests could unintentionally lead to conflicts between children, delays in estate administration, or your will being contested. If any problems arise, you’ll have the opportunity to resolve them — and you’ll be thankful you uncovered the issues now.

Wealth transfer for blended families

If you’re in a blended family, you have an additional layer of estate planning. Take the case of an individual in a second marriage who has children from the first marriage, and needs to provide for both the spouse and children. Continue Reading…

Buying a condo in the GTA on one income? Here’s where It’s possible

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Looking to purchase a home in the Greater Toronto Area on your own? According to new data, the real estate reality for solo buyers is pretty heartbreaking, with most options out of financial reach for those earning the median single-household income in the region.

In fact, owning a condo within a GTA municipality will set a single homeowner back more than double the recommended shelter cost, even in the most affordable markets. With two incomes getting far more home for their buck than one, it’s no wonder buyers are increasingly partnering with family, friends, or even strangers to improve their real estate affordability.

Tough affordability throughout GTA

Check out this infographic to see how affordable condos are for both single and multi-income buyers throughout the GTA.

To find out the extent of housing affordability for single buyers, Zoocasa calculated what’s called the home-price-to-income ratio in 17 of the markets tracked by the Toronto Real Estate Board. Crunching the average January 2018 condo price and median income earned in each municipality determines how many years of total income (as in, one’s entire annual salary) it would take to pay off a condo in that region. The higher the ratio, the tougher the home will be to carry financially.

The ratio recommended by most financial experts for shelter costs is three, but that’s well below what’s possible in the GTA market, the numbers reveal. The data finds that the minimum ratio for a single condo buyer is seven, available in only two markets: Milton and Clarington.

That’s not to say dual-income households have it much easier; coupled-up buyers have only three regions that satisfy the recommended affordability ratio (Milton, Clarington, and Whitby), while another 10 regions hover just above the four-point mark.

City Centre most challenging for all buyers

The toughest place to purchase for all Toronto condo buyers is Toronto central, which sets single buyers back a whopping 16 times their income, and seven times for multi-income buyers. And, while affordability varies throughout the region, it’s steep across the GTA; Mississauga condos command 10 times a single buyers’ income, while Vaughn costs 11 times the median household income.

Penelope Graham is the Managing Editor of Zoocasa.com, a leading real estate resource that uses full brokerage service and online tools to empower Canadians to buy or sell their home faster, easier, and more successfully.

 

 

9 ways to survive when money’s tight on Maternity Leave (or Pat Leave)

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By Maria Weyman

Special to the Financial Independence Hub

Being on maternity ‒ or paternity leave ‒ usually means you’re taking a pay cut, and that can leave you feeling perpetually broke.

Not only are you bringing in a smaller income each month, but you’re also shelling out for baby items you never had to buy before. Despite the crunch, many parents also struggle with the temptation to shop more than usual since they have extra time to spend wandering around the malls or browsing online.

However with some effort, it’s possible to get through maternity leave with your finances ‒ and your sanity! ‒ intact.

Challenge yourself

Saving money can be kind of fun if you make a game out of seeing how much you can save ‒ and then trying to beat your own record.

1.) Get your thrift on

Babies outgrow their clothes very quickly, and secondhand items are usually in nearly-new condition because they’re hardly worn.

So why not plan an outing at the thrift store, meet up with a friend (who’s also on mat leave) and dig through the bins and racks together.

2.) Try couponing

Even if you’ve never clipped a coupon in your life, there’s no better time to learn.

You can save on groceries once you learn how to find grocery coupons online, how to stack coupons, and earn money with cash-back couponing apps.

Pssst. Babies also come with some handy freebies if you know where to look.

3.)  Trim the budget

Sit down and look at where your spending could be tightened, and decide on a goal that’s going to help you spend less each month.

If you’re overspending on groceries ‒ after all, you are home all of the time now ‒ maybe you can set a strict budget and really stick to it.

If you’re visiting the coffee shop a little too often, make the effort to bring a hot drink in a travel mug when you head out the door.

Look for free fun

It might feel like every activity costs money, but there are so many ways to get out that are absolutely free.

4.) Take a walk

Walking is a great way to explore new neighbourhoods, get some exercise, and lower your stress levels by breathing in the fresh air.

Babies also enjoy going for walks, and usually the movement lulls them to sleep. If it’s too cold or rainy to walk outside, look for an indoor track. Often it’s free for people from the community to use, and you can bring the baby in their stroller.

5.) Try something new

Most gyms and fitness centres offer a trial membership, whether it’s a day pass or even a full week. By expressing interest in maybe joining their facility, you can get the chance to try out their equipment, sweat through a cardio class, and take a shower in peace.

Bonus points if you find a place that offers free daycare for your little one!

6.) Join a group Continue Reading…

Even more rookie mistakes that seasoned investors make

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By Neville Joanes

(Sponsor Content)

Even though we all “knew it was coming” the precise timing of the market correction this month caught quite a few seasoned investors by surprise. Hey, it happens. No one can predict where the stocks go all the time. But how did you respond? Did you sell along with the herd — and lock in your losses? Or did you see this as a buying opportunity? How were you prepared for it in the first place?

Even the most experienced investors can get caught short in times like these. Recognize your investing biases that can lead to bad decision-making — and learn from them. Here are a few more that we didn’t cover last time. (See 3 rookie mistakes that seasoned investors still make.)

Confusing the familiar with the safe

Disney, Coca Cola and Starbucks are big brands. But are they safe, or even good investments — by virtue of their size?

Just a few years ago, you might have gotten the same feeling of rock-solid reliability about Nortel, Blockbuster or Kodak. Or Sears. Pan Am airlines. Netscape. Pets.com Or hundreds of other companies with billions in their war chests …  that aren’t even around today. By last year, just 60 companies remained from the original Fortune 500 list.

Investors have inherited the illusion of stability and power from size, possibly from our origins in hunting wooly mammoths with wooden spears. The big guys are hard to take down (we think). So even experienced investors will throw their money at blue-chip stocks and other institutional-style investments. It’s a half-baked hedging strategy.

When you have this bias, you don’t do the proper due diligence you would with other investments. Why look too closely, when the trading megafauna like Amazon or Apple just keep bounding onward and upward? Because the bigger they are, the harder they fall.

A big-name brand is not necessarily a bad bet. This is where a strategy of diversification comes in. By planting seeds in a range of investments instead of a single big-name brand, you’re in safer territory. Continue Reading…