All posts by Financial Independence Hub

Congratulations – Your credit score has just gone up!

Posted By Financial Independence Hub | September 12, 2016

Richard Moxley

By Richard Moxley, eCreditFix.ca

Special to the Financial Independence Hub

Congratulations – Your credit score has just gone up!

I would love to say it increased just because you are reading this article but in reality it is because Equifax has implemented a change in its algorithm (the computer scoring system that banks use to predict the chances of you paying on time).

These changes have had a huge impact on the report and 80 per cent of Canadians have seen a jump in their personal credit score. So if you were declined for financing previously, you might want to try again.

Here are some of the main changes that have been made:

Mortgage Payments now affect your credit score

As of June, your mortgage payment history now affects your credit score. If you are like most Canadians and paying your mortgage is top priority, then this will be one of the main reasons why your score has jumped.

Lines of Credit report different than your Credit Card

Before the recent changes, a high balance (any balance over half of the limit) on a line of credit or a credit card would lower your score the same amount. Now, a high balance on your line of credit will not hurt your score as much as if you have a high balance on a credit card. Continue Reading…

The search for yield ahead

Posted By Financial Independence Hub | September 9, 2016

By Kevin Flanagan, Senior Fixed Income Strategist, WisdomTree

Special to the Financial Independence Hub

Unfortunately for fixed income investors, the search for yield remains an ongoing challenge. Without a doubt, a primary culprit behind the historically low-rate backdrop in the U.S. are overseas developments, as developed world sovereign debt yields have been hitting their own new lows throughout the summer.

The low-rate phenomenon does not necessarily have a “center of the universe” aspect to it, either, as yield levels on a global scale are all part of this spectacle. As the graph below clearly illustrates, low sovereign debt yields can be found throughout the G7 group of nations, ranging from Japan and Europe (Germany, France, UK, Italy) to North America (U.S., Canada).

Indeed, as of this writing, the bellwether 10-year maturity ranges from a low of -0.11% in Japan and Germany to a high of only 1.51% here at home. In between, France is barely above the zero threshold, while Canada and Italy post readings around the 1% level. The UK had been the second-highest-yielding sovereign rate, but the recent Brexit fallout has 10-year gilts back into the middle of the pack, making the UK a full-fledged member of the “negative and sub 1%” club.

10-year Treasury Yields

The reasons behind the current — and more than likely upcoming — environment have been well documented: slow global growth, low inflation, flight-to-quality/event risks and the monetary policy responses associated with these developments.

Are mutual funds headed for extinction?

Posted By Financial Independence Hub | September 8, 2016

James Gauthier, JustWealth

By James Gauthier, CIO, JustWealth

Special to the Financial Independence Hub

The advent of the mutual fund was one of the greatest innovations in the field of finance. Mutual funds created a practical means for common folks to invest in the markets which used to be only accessible by the wealthy.

The mechanics of how mutual funds operate have not changed much in the many decades since they have been around. Simply put, a group of investors pool their money together and form a unit trust where all investors get a pro rata ownership of what they contributed to the pool in the form of units (or shares). The pool is then used to buy a number of underlying investments such as stocks or bonds.

At the end of each day, all investments in the trust are priced and a Net Asset Value (or NAV) is determined by dividing the total value of the trust investments by the units outstanding. Investors who want to purchase shares of the trust may do so based on the NAV established at the end of each day.

Mutual funds have been available to Canadians for over 80 years, and now number more than 15,000 worth well over $1 trillion. Companies or individuals who sell mutual funds like to promote the benefits of mutual funds: Continue Reading…

Employee Savings Plans: why say no to free money from your employer?

Posted By Financial Independence Hub | September 3, 2016

The September long weekend is upon us and, for many, it’s the last chance to spend some quality family time before the transition back to school and work.

The post-Labour Day shift into a more productive mindset offers a good time to review your Employee Savings Plan (ESP), a benefit that can be a great way to save money but can also add some risks.

An ESP is a program set up by an employer that allows employees to contribute a portion of their income into an investment the employer has provided. In some cases, the employer may also match all or a portion of the contribution made by the employee.

Benefits: free money!

By participating in your ESP you’re basically getting free money. Whether an employer matches part or all of your contributions, you will be hard pressed to find any other investment out there that provides immediate returns. Say, for example, that your employer will match 50% of your contributions, up to 6% of your salary (a typical scenario). All growth and other earnings aside, your investment immediately grows by 50% and your 6% turns to 9%.

How to maximize Credit Card loyalty rewards programs

Posted By Financial Independence Hub | August 31, 2016

By Frank Psoras, TD Canada Trust

Special to the Financial Independence Hub

Credit cards can offer many benefits to achieve your financial goals. And with most credit cards today, the more you swipe, insert or tap, the more opportunities you have to earn and redeem loyalty rewards.

According to a recent TD survey, nearly three-quarters (72 per cent) of Canadian adults carry at least one card that offers a rewards program, with most cardholders (82 per cent) saying it’s one of the top factors when choosing a credit card.

North Americans are among the most rewards-savvy consumers in the world; they’re always looking for better ways to get the most from their rewards programs to reach their goals faster. That is why it’s no surprise our survey also shows that almost half (49 per cent) of Canadians are willing to change where they shop to earn and redeem points faster. But remember to pay your balance on time and in full to avoid incurring interest charges on purchases. Continue Reading…

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