By Adrian Mastracci, KCM Wealth Management

Special to the Financial Independence Hub

“My 2016 leadoff sage advice to investors.”

I recommend turning over a new money leaf for 2016, the earlier the better.

If you have but one mission on your plate, make it the discovery of your “retirement number.”

That retirement number is the estimate of how much capital is required to realize your retirement goals: no doubt, the most important calculation for the vast majority of investors.

However, very few investors have anything that resembles it.
Occasionally, I see one that is woefully out of date.

Put aside your preoccupations with performance and picking best investments.
Rather, focus on what you have to do to achieve your goals.

Three major phases of life

Say your life span is near 100 years.
Now loosely divide up your century this way:

• Up to age 30 – pursue your education.
• Age 30 to 65 – accumulate your retirement nest egg.
• Age 65 to 100 – spend it, enjoy it and, perhaps, pass it on.

2016 presents an opportune time to zoom in on your retirement’s big picture.
The critical key is to ballpark the family’s retirement needs. Continue Reading…

“’Tis the Season …” but the season for what exactly?

“To be jolly,” if you stick to the lyrics. But who can stick to the lyrics when all around you there are others hurtling towards excess?

Given that this is the same every year, it would be more factually correct for the lyric to read, “’tis the season for consumption” – and consumption on a truly grand scale. The numbers are mind-boggling. US$595 billion in the US alone was splurged on holiday season 2013 (from Thanksgiving to Christmas). Likewise for food consumption: an all-you-can eat binge and perfect recipe for calorie-bloat and food comas. So maybe the song ought to go, “‘tis the season for overconsumption.”

The season for overconsumption

Continue Reading…

The latest FWB TV investing video is now available by clicking on the linked title here: When it comes to investing you are often your own worst enemy. That’s Benjamin Graham pictured above. The four-minute video — which is also archived at Findependence.TV —  describes the hazards of investing when you’re under stress, or when a surge of testosterone raises your confidence more than may be prudent. Or as the comic strip character Pogo once famously pronounced: “We have the met the enemy and it is us.” Below is additional commentary by FWB TV’s Paul Philip:

By Paul Philip

Special to the Financial Independence Hub

Human beings are not hard wired to make good financial decisions. It’s a fact. We are emotional beings and are affected continually by the news around us. Most investors react exactly the opposite to what they should do when their investments inevitably fluctuate.

Continue Reading…

By Randy Cass

Special to the Financial Independence Hub

A lot of people have heard of exchange traded funds (ETFs), but don’t really understand what they are or what a great investment they can be.

ETFs are not a novel concept — in fact, they have been around for more than 20 years. Worldwide, there is currently $3.5 trillion invested in ETFs.

Interestingly enough, the average household income of investors in ETFs is $131,000, more than twice the median household income and about 30 per cent higher than the average income of households that own plain mutual funds, according to the Investment Company Institute.

But what is an ETF, you say? ETFs are funds, which means that for all practical purposes, each one includes dozens, hundreds or even thousands of stocks or bonds. Most ETFs track broad, well-established indices like the S&P 500 or the TSX.

Large institutional investors typically use ETFs to cheaply and efficiently gain exposure to a variety of asset classes, including bonds, stocks and real estate. When compared to mutual funds, a significant difference is that ETFs usually have much lower fees and can be bought and sold throughout the day.

So, how do you pick the right ETFs? Here are the criteria I use:

Look for low costs

Continue Reading…

By Adrian Mastracci, KCM Wealth

Special to the Financial Independence Hub

“Many portfolios are overloaded with same or similar investments. Few investors know about overlap.”

A frequent investing theme is owning more than 15 different mutual funds:
purchased over the years with little thought as to how the collection fits together, if at all.

Owning several funds can create a significant “overlap” of securities.
That is, individual holdings within the mutual funds are often the same, or very similar.

While fund names may differ, their holdings do not.
For example, mutual funds buy from a short list of Canadian stocks, like banks.

Having several accounts can also have you owning many of the same stocks in each.
This may tilt your portfolio in one or more asset type or sector. However, you hardly see anything written about portfolio overlap. Most investors have little or no knowledge of the implications of overlap, such as:

• Owning a collection of funds heavy on overlap reduces your portfolio diversification.
• Overlap increases if you choose funds from similar investing styles and sectors.
•  Portfolios that overindulge on overlap can also be affected in their long-term results.

Some portfolios have more than 40% overlap.
Problems can arise with as little as 10% overlap. Continue Reading…