All posts by Financial Independence Hub

Affordable Housing: Is it worth it to “Drive until you Qualify”?

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DCIM100MEDIADJI_0412.JPGBy Penelope Graham, Zoocasa

Special to the Financial Independence Hub

It’s an affordable housing conundrum for many downtown city dwellers: is it worth it to trade the convenience of urban living for suburban sprawl? As Toronto real estate prices continue their ascent, the only affordable way to own a detached house seems to be packing up and moving beyond city borders.

Hence the term “drive until you qualify”: the practice of moving far away to a region where real estate is still affordable. Doing so often means assuming a long daily commute to and from a bedroom community to an urban business hub – and the need to drive to the nearest corner store just to pick up some milk.

An Urban Exodus

But logging more time behind the wheel doesn’t seem to be deterring buyers in the GTA; according to recent numbers, they’re heading to the burbs in droves.

Sales are soaring in the municipalities surrounding Toronto – 3,586 houses sold in the 905 region in August, up 24% from the previous year, according to the Toronto Real Estate Board (TREB). Townhouses are also in high demand, with 1,154 units sold. By contrast, a scant 863 houses and 357 townhomes sold within Toronto proper.

Condos were the only housing type that remained stronger in the city than on the outskirts: 1964 compared to 822 in the 905.

But is moving out of the city always an affordable decision for those looking to upgrade their real estate, or accommodate their growing families? There are a number of areas to consider.

You Won’t Escape the Bidding War

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Fixed Income: What about inflation?

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kevin-temp2By Kevin Flanagan, Senior Fixed Income Strategist, WisdomTree

Special to the Financial Independence Hub

The last few months have certainly given the money and bond markets a lot of divergent news headlines to digest. Not surprisingly, the focus has been on negative rates abroad, geopolitical events and, a bit more recently, some better-than-expected employment news juxtaposed with a softer-than-expected GDP report. That begs the question: What about inflation? Isn’t that a key ingredient in the bond market mix?

Without a doubt, U.S. inflation data has taken a backseat for fixed income investors, and for good reason; there just haven’t been any fresh developments lately. Certainly, the conversation has shifted from a year ago, when deflation concerns were permeating market psychology. But the latest figures don’t elicit concerns that price pressures will be rearing their ugly head anytime soon, or at least that’s what the collective thinking is in the fixed income markets.

Breakeven inflation ratesvrGP Breakeven-Inflation-Rate

So, what does the inflation backdrop look like? According to the widely followed Consumer Price Index (CPI), the year-over-year inflation rate came in at +1.0% in June (Note 1)—very little changed from the readings posted over the last four months, but definitely higher than the +0.1% for the same month in 2015. The core gauge, which excludes food and energy, rose at a +2.3% annual clip and has been residing in a range last seen in 2012. There continues to be a large dichotomy between core goods (-0.6%) and core services (+3.2%) .(Note 2)

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Staying fit can save you money on Life Insurance

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By Syed Razad, LSM Insurance

Special to the Financial Independence Hub

The cost of life insurance increases as you get older. It is also more expensive for people with less than perfect health. Even if you are in perfect health today, you could become ill tomorrow or your fitness level could drop, especially if you live a sedentary life. People generally become less active when they get older. Insurance companies are now launching new incentives to help keep Canadians fit and healthy longer.

Manulife, one of Canada’s top insurance companies, is introducing an innovative new product called the Vitality Program. This product rewards policyholders for maintaining a high level of health and fitness and Goodlife Fitness is going to help with reduced membership fees.

“You make choices every day. With Manulife Vitality, you get rewarded for the healthy ones.”

This is the first time such a program has ever been offered. The Vitality Program combines the benefits of life insurance with two great features:

• The opportunity to save money on your life insurance premiums

• The opportunity to earn valuable rewards for improving your health

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Top 5 Credit Card myths Busted

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by Kevin Chu, RateHub.ca

Special to the Financial Independence Hub

Credit cards, much like any financial product, seem to create anxiety for many. With so many rumours surrounding credit cards, we decided to turn to top influencers in the community for help on busting these myths and sharing the facts.

Here are your top 5 credit card myths busted once and for all:

Myth #1: Having a credit card means you are financially irresponsible

Credit cards are a great way for you to start building credit and earn rewards from everyday purchases. If you’re spending wisely and are paying off your balance each month, credit card debt won’t be an issue.

Myth #2: Getting a credit card will hurt your credit score

The exact opposite is actually true here. The best way to establish credit is to start by getting a credit card. By paying off your debt in full each month, there’s nowhere but up for your credit score. Be wary of credit utilization though. A high utilization ratio will affect your credit score negatively.

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Dividends: The Foundation of the Smart Beta Movement

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blog-see-more-dividendschris_gannatti_crop-bwBy Christopher Gannatti, Associate Director of Research, WisdomTree

Special to the Financial Independence Hub

Smart beta exchange-traded funds (ETFs) are rapidly proliferating and capturing assets at a faster clip than the broader ETF industry. In 2015, 143 smart beta ETFs came to market, [Note 1] representing half of the year’s new ETF launches, or double the percentage of traditional beta products born last year.

Dividend strategies are one of the primary drivers of smart beta ETF growth. Smart beta ETFs had about $616 billion in assets under management at the end of 2015, [Note 2] and more than a quarter of that total was allocated to dividend-oriented funds.

Since the publication of the widely followed Fama-French research in 1993, outperformance of fundamentally weighted indexes has mostly been attributed to the market factor, the size factor (mid- and small caps outperforming larger stocks) and the value factor. [Note 3] Later, momentum factor was added as an accepted driver of fundamental weighting’s ability to top market cap-weighted strategies.

At WisdomTree, we believe weighting by dividends elevates fundamental indexing or smart beta. In 2006, 25 dividend ETFs [Note 4] came to market, 22 of which courtesy of WisdomTree. Our Dividend Stream® weighting methodology offers distinct advantages over weighting by market capitalization, dividend yield or focusing on the number of consecutive years that companies have increased payouts. Continue Reading…