By Adrian Mastracci, KCM Wealth

Special to the Financial Independence Hub

Is your nest egg a tangled patchwork of stuff in need of a retrofit?

Perhaps, purchased over time for no apparent reasons?

I’ve kept tabs on portfolios that I reviewed seeking second opinions. Investors range from do-it-yourselfers to those dependent on advisers, representing all ages.

The portfolio with the least number of investments had just three, while the highest had 97.

Most portfolios hold a patchwork of 15 to 35 mutual funds.

It’s a daunting task for anyone with a full time job to keep track of a dozen or more investments.

Several potholes can get in the way of your investing roadway.

There are two questions that every investor ought to ask:

▶ “Do I own a portfolio patchwork of stuff?”
▶ “If so, how did I get there?”

Here’s my summary of vital signs you’re a candidate for a portfolio retrofit: Continue Reading…

By Greg Pollock, Advocis

Special to the Financial Independence Hub

Over the years I have had the opportunity to have many meaningful conversations with members of Advocis across the country. They often tell me about the positive relationships they have with their clients and about the difference they are making in their clients’ lives.

As the president and CEO of a voluntary professional association of financial advisors, I take my role to heart and recognize that the work our members do plays an important part in helping millions of Canadians be financially prepared and protected. But I’ve often wondered if others, whether they be government, regulators, media, or the general population, truly understand the value of professional financial advice.

Do media, government, regulators and the public understand true value of advice?

This is part of the reason Advocis decided to conduct a national survey earlier this year to examine the level of value investors place on the advice they receive from their financial advisor and how satisfied they are with the services they receive and the fees they pay. More than 1,500 Canadian investors, whose financial advisors are Advocis members, participated in the study.

At Advocis, we have long proclaimed the value of advice and its impact on people’s lives. But we decided it was time that we formally heard from our members’ clients. The financial advice industry is currently at a crossroads, and two expert panels are set to present their recommendations on the regulation of financial advice in Ontario in the coming months.

Banning trailer commissions could lower access to advice

Continue Reading…

By Patrick McKeough, TSI Network.ca

Special to the Financial Independence Hub

Some investors believe that market timing—trying to figure out if the market will rise or fall—is or can be an aid to their investing decisions.

However, most investors who try to time the market find that it costs them money in the long run. When it works, it may help them make some modest profits or avoid some modest losses. When it fails, on the other hand, it often does so in a bigger way. At times it leads to ghastly losses.

The key risk in market timing is the “false signal.”  That’s when the market does exactly the opposite of what the timer expected. In fact, some false signals may seem like sure things until they fail.

Danger of false signals

Market timers may multiply the danger from false signals by making much bigger transactions than usual. They can also raise their risk by shifting to more aggressive and highly leveraged forms of trading — delving into stock options or futures trading, for instance.

Right now, some investors are venturing into market timing without realizing it. They are trying to base investment decisions on the next movement in interest rates. Continue Reading…

By Bill Tufts, Fair Pensions for All

Special to the Financial Independence Hub

The Harper government introduced the Tax Free Savings Account (TFSA) in 2009. At the time Finance Minster Jim Flaherty wanted Canadians to bolster saving, mainly for retirement. The growth of RRSPs had started to slow and many Canadians are going to be in for a big surprise on their first day of retirement and be greeted with even bigger surprises a decade or two into retirement.

The first year of the TFSA proved a big success when Canadians opened an estimated 3.6 million accounts and deposited $12.4 billion in just the first six months of the plan being opened.

After this initial success and the resulting growth of assets that Canadians could use for retirement, the government decided to build on this success. The plan had expanded once, raising the annual limit from $5,000 and was boosted by $500 as an inflation adjustment for calendar 2013 to $ 5,500. TFSAs were also designed to be cumulative and savers could backfill the TFSA using previously unused accumulated room.

In 2015 the federal budget hiked the annual contribution allowance to $10,000 annually. Canadians around the country applauded this move.

TFSA opponents have no problem with “tax cost” of public-sector pensions

The increased room announced in the budget for the TFSA and the fact that it would accumulate tax free alarmed some groups. The Broadbent Institute was the first out with a report, concerned about the ability of government to continue funding ever expanding and increasing government programs. Broadbent was opposed to the TFSA and any expansion of the program because it was leaving too much money in Canadians’ bank accounts and not coming to government as tax. Continue Reading…

SensibleInvesting.tv recently released a free documentary that’s a behind-the-scenes look at the multi- billion dollar investment industry.

How to Win the Loser’s Game includes interviews with Vanguard founder John Bogle, Nobel Prize-winning economists Eugene Fama and William Sharpe, author and wealth manager Larry Swedroe, among many others. (To view Part 1, which runs for six minutes, click the red link above, which takes you to YouTube.com). You can also find it and future instalments housed here at Findependence.TV.

While the publisher is UK-based, most of the concepts are widely applicable to most of the fund management industry, both in Canada and the U.S.

The series clearly communicates the challenges that investors face and gradually covers the benefits of a low-cost, long-term, low-maintenance, diversified investment strategy.  This is valuable information for consumer-investors, although many in the investment fund industry would probably prefer that it not be widely distributed.

After watching the video if you want to learn more, download the free guide, 12 Essential Ideas For Building Wealth.

“If you are serious about investing and building wealth the video documentary series ‘How To Win the Loser’s Game’ is a must-see. It’s excellent.” — Paul Philip, Financial Wealth Builders Securities