All posts by Financial Independence Hub

Investing in the Aftermath of the Trump victory

image005By Kara Lilly, Mawer Investment Management

Special to the Financial Independence Hub

Donald Trump became the 45th president-elect of the United States last night. The businessman beat former secretary of state, Hillary Clinton, ending what has been a long and salacious presidential campaign. The GOP also kept control of both the Senate and the House, leaving the fractured party with room to implement its policy platform.

Markets were relatively calm today despite the knee-jerk selloff that was triggered by the impending victory last night. Equity indices have steadied and volatility indices have fallen as market anxiety has tempered. The greatest impacts so far appear in the bond and currency markets. Yields on longer term U.S. government bonds have risen amid wagers of higher spending. Meanwhile, the Canadian dollar and Mexico peso have sunk on concerns of unravelling economic integration with the U.S.. Within equities, pharmaceutical stocks rose as investors unwound bets that a Clinton win would usher in greater regulation.

No meltdown but still a significant investing event

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Are you taking Rate Comparison seriously enough?

young man showing ignorance on a white backgroundBy Sean Cooper

Special to the Financial Independence Hub

For many Canadians, shopping is a national pastime. Some of our favourite activities include planning a vacation and picking up new furniture – unfortunately, shopping for a mortgage and auto insurance doesn’t seem to be one of them, finds a recent Ipsos survey commissioned by LowestRates.ca.

For most of us, buying a home is the single biggest financial decision of our lifetime. It shouldn’t come as a surprise then that 67% of Canadian mortgage holders consider taking a mortgage a “very important” financial decision. Yet, what comes as a shocker is how little time we’re spending shopping for mortgages. We’re spending an average of 7.75 hours planning a $2,000 vacation, yet we’re only spending 5.75 hours (2 hours less) finding a $300,000 to $500,000 mortgage. I discuss these surprising findings and more in my upcoming book, Burn Your Mortgage.

The survey findings aren’t any different for auto insurance. While 52% of us believe auto insurance is a “very important” financial decision, we’re spending more time picking furniture and choosing a paint colour than auto insurance. Based on these findings, it would seem many of us don’t have our financial priorities straight.

 Take the time to shop for Mortgage and Auto Insurance

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“Scary” Investment moves to avoid

Shocked scared woman with financial market chart graphic going down on grey office wall background. Poor economy concept. Face expression, emotion, reaction

By Fraser Willson 

 Special to the Financial Independence Hub

 

If you have young children or grandchildren, you know what’s really important. Yes, it’s Halloween time again, which means you’ll see plenty of witches and vampires scurrying around. You’ll no doubt find these characters more amusing than frightening, but you don’t have to look far to find things that are a bit more alarming — such as these scary investment moves:

Paying too much attention to the headlines

Some headlines may seem unnerving, but don’t abandon your investment strategy just because the news of the day appears grim.

Chasing “hot” investments

You can get “hot” investment tips from the talking heads on television, your next-door neighbour or just about anybody. But even if the tip was accurate at one point, by the time you get to a “hot” investment, it may already be cooling down. And, even more importantly, it simply may not be appropriate for your individual risk tolerance and goals.

Ignoring different types of investment risk

Most investors are aware of the risk of losing principal when investing in stocks. But if you shun stocks totally in favour of perceived “risk-free” investments, you’d be making a mistake because all investments carry some type of risk. For example, with fixed-income investments, including GICs and bonds, one risk you may encounter is inflation risk — the risk that your investment will provide you with returns that won’t even keep up with inflation and will, therefore, result in a loss of purchasing power over time.

Another risk you can incur is interest-rate risk — the risk that new bonds will be issued at higher rates, driving down the price of your bonds. Bonds also carry the risk of default, though you can reduce this risk by sticking with bonds that receive the highest ratings from independent rating agencies.

Failing to diversify

If you only own one type of investment, and a market downturn affects that particular asset class, your portfolio could take a big hit. But by spreading your dollars among an array of vehicles, such as stocks, bonds and government securities, you can reduce the effects of volatility on your holdings. (Keep in mind, though, that diversification cannot guarantee profits or protect against loss.)

Focusing on the short term

If you concentrate too much on short-term results, you may react to a piece of bad news, or to a period of extreme price volatility, by making investment moves that are counterproductive to your goals. Furthermore, if you’re constantly seeking to instantaneously turn around losses, you’ll likely rack up fees, commissions and possibly taxes. Avoid all these hassles by keeping your eyes on the future and sticking to a long-term, personalized strategy.

You can’t always make the perfect investment choices. But by steering clear of the “scary” moves described above, you can work toward your long-term goals and hopefully avoid some of the more fearsome results.

0ec7e0fFraser Willson is a financial advisor and insurance agent for Edward Jones Investments. He works closely with families and businesses, helping them achieve their investment objectives in an organized and disciplined manner.

 

 

Third Age education: Later-life learning

Mature students are very focused on their classes
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By Aaron Hector, Doherty & Bryant Financial Strategists

Special to the Financial Independence Hub

Have you ever wanted to do or learn something, but never seemed to have the time? With commitments to family, friends, your career and hobbies, it’s easy to see how life can get away from you.

The term ‘Third Age’ refers to the stage in life after which you have retired and your children are independent. This is the stage at which you become liberated and finally have extra time.

It’s back-to-school season for our youth this fall – but why not for you too? Let’s look at some options for lifelong learning opportunities available during your third age.

First, it doesn’t have to be expensive! There are a number of low-cost to no-cost education options available. Seniors are offered discounts on many different products and services; including reduced bank fees, transit passes, discounted meals and even tax breaks. Perhaps the single greatest of all such discounts is the offer of free tuition – which has been extended by many universities here in Canada. If you consider that one year’s tuition can cost over $10,000, then a four-year degree could equal $40,000 in savings. Of course, you don’t need to commit to a four-year degree; you could get plenty of enjoyment from taking a single personal interest course.

Seniors and the Lifelong Learning Plan

The cost of various student fees, class materials, and textbooks are generally not free. For seniors on a strict budget, or for those who are trying to keep their net income below the Old Age Security (OAS) clawback threshold ($73,756 for 2016), taking advantage of the Lifelong Learning Plan (LLP) could be a suitable option to pay for these supplemental education costs. Continue Reading…

3 questions if you often carry a balance on your credit card

Attractive girls with bags and credit cards on a white backgroundBy Alyssa Furtado, RateHub.ca

Special to the Financial Independence Hub

When comparing credit cards, it’s easy to get seduced by reward programs offering cash back, travel points, or other benefits. If you pay off your entire credit card balance every month, then these types of cards are a great option. But if you don’t usually pay your balance off in full or you have an upcoming expense that’ll take you a while to pay off, using a rewards card might not be the smartest move.

1.) What’s the best type of credit card?

If you usually carry a balance on your card, you might want to consider getting a low-interest credit card.

As the name suggests, low-interest credit cards are specifically designed to offer competitive low interest rates on purchases, balance transfers, and cash advances. Not only will you pay less in interest, you will also be able to pay off your debt faster since your interest costs will be lower.

This is why a low-interest rate is one of the key features many people look for in a credit card.

2.) What’s the best low-interest card?

There are a number of fixed low-interest credit cards so it’s worth comparing them, but one of the best cards available is the BMO Preferred Rate MasterCard.

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