Toronto-based online robo-adviser Nest Wealth Asset Management Inc. has announced its first strategic investor: Metroland Media Group Ltd. Metroland is investing $1.5 million into NestWealth.com, which was the first automated financial adviser to have launched in the Canadian market.
In a press release issued Tuesday morning, Metroland Media president Ian Oliver said the company is pleased to be “leveraging our print and digital assets to partner with Nest Wealth in an area of business growth that provides cost savings to the communities we serve.”
The release cited Morningstar’s 2015 Global Fund Investor Experience Study, which found Canadians pay some of the highest fund fees in the world. Nest Wealth invests client portfolios in low-cost exchange-traded funds (ETFs), rebalancing portfolios as markets fluctuate so asset allocation remains in a defined range. Customized portfolios are created based on the current financial situation of clients, their stated goals and tolerance for taking investment risks. Continue Reading…
This month’s financial “STOP Doing” advice is inspired by the events in Europe, with Greece at Ground Zero. I wish I could tell you how it’s all going to play out or, better yet, promise you a happy ending, sooner than later.
Unfortunately, I can’t do that. Time alone will tell. The understandable craving to maintain control over your personal and financial well-being may leave you scanning the popular media’s headlines, searching for tidbits on how to protect yourself from the unfolding uncertainty. That’s why this is an excellent time to repeat a theme I’ve covered before: STOP feeding on junk media.
The Media Can’t Protect You from Volatile Markets
As I described in an April 2014 post, “Here’s why you should ignore the [popular] financial media … While I could recommend many things, I think the most important point for everyone to remember is that it is a myth that today’s headline news has a direct effect on the financial markets.”
This point can be hard to wrap your head around. It seems counterintuitive, but here’s the scoop: Any good or bad news reported by the media may feed your curiosity about what’s going on in the world, but it’s of no use with respect to investing.
Here at the Hub we like to present all points of view. On Tuesday, we ran a guest blog by author and chartered accountant David Trahair about the new second edition of his book, Enough Bull, which explained why he is 100% in fixed-income vehicles like GICs. Today, we do the same thing with a guest blog by Scotia McLeod’s Robert S. Cable, who argues almost the polar opposite in his new book, Inevitable Wealth. We’ll review both books formally in the coming weeks. Meanwhile, over to Bob! – – JC
Stocks beat bonds, hands down
Robert Cable
By Robert S. Cable
Special to the Financial Independence Hub
All of the research I’ve carried out since I began doing this in 1980 and every piece of research I’ve seen comparing stocks to bonds– every single time comes to the same conclusion — that is that stock returns don’t just beat the returns of bonds, stocks clobber bonds. It’s absolutely no contest.
In my book, Inevitable Wealth, I compare 40 years of returns, from 1975 through 2014. I show $100,000 invested in Government of Canada five-year bonds, with money reinvested every five years, to the same $100,000 invested in stocks by way of the TSX Composite Index.
In 1975, those bonds yielded 7.25% so your annual income started out at $7,250. Stocks paid somewhat less, $5,360. Advantage bonds—initially. However just four years later, the dividends paid on stocks had moved higher to the point where the dividends paid on stocks was greater than the bond’s income.
But check out these numbers. In 2014, your bonds paid an annual income of just $2,770, down from $7,250, 40 years earlier. Talk about taking a pay cut! Meanwhile in 2014, stocks paid dividends of $49,560. Your stock income was more than 17 times what bonds paid.
What’s really interesting though is this: while stocks paid a much superior and growing income, they really aren’t income investments. The dividend income paid is simply a by-product of these companies sharing their profits with shareholders.
But as they say, that’s only half the story. We’ve looked at the income stocks and bonds produced. But what about the value of each of these investments over those 40 years?
Stocks beat bonds by 17 to 1 over 40 years
Well, that $100,000 you invested in bonds back in 1975 is still worth right around the same $100,000. If you took inflation into account, your $100,000 would actually be worth more like $15,000. The $100,000 invested in stocks? Well, not including the dividends, at the end of 2014 your stocks would be worth a bit more, $1,732,060. Continue Reading…
By Michael Hasenstab, Ph.D. Chief Investment Officer Templeton Global Macro
Special to the Financial Independence Hub
We find that most observers tend to fall into one of two camps on China: the die-hard skeptics and the perma-bulls. The skeptics are convinced that nothing about China—from the data to the banking system to the demographics—bears close inspection. This school of thought argues that the official numbers are too unreliable to follow, and the imbalances too large to warrant detailed analysis.
Skeptics envision an implosion of the Chinese economy, resulting from a bubble in the housing market, in local government debts, in the stock market—or frequently in all three. In their view, the collapse is impending, and has been for the last 10 years.
The smaller group of China bulls takes an extremely benign view of the country’s transformation. This group expects the China growth miracle to continue smoothly, with any moderation lasting only temporarily. This camp tends to shrug off concerns about imbalances, arguing that China has more than enough money, the right policies in place and an unparalleled control over its economy.
We try to take a few steps back and provide an objective assessment of where the Chinese economy currently stands, where we see it going and what risks we foresee in the period ahead.
Optimistic but cautious
Shanghai Lujiazui civic landscape of China national flags (DepositPhotos)
We take a more nuanced and balanced view than either the die-hard skeptics or the perma-bulls. On balance we remain optimistic about China’s outlook, but we recognize that the country faces formidable policy challenges and substantial risks that bear close monitoring. Continue Reading…
I have been writing about personal financial issues for over 12 years now. I have also been giving seminars to other accountants on my ideas since 2008.
Suffice it to say I have spent a large amount of time thinking about and analyzing the best way to get ahead financially and I have had a tremendous amount of feedback along the way.
And I still have 100% of my family’s investments in guaranteed fixed-income products.
Zero exposure to stock market
That’s correct, I have zero exposure to the stock market. It’s all in Guaranteed Investment Certificates (GICs) or provincial government bonds using a three-year laddered approach.
Sound crazy? Well I’ll tell you why it’s not.
First of all, the assumption is that you have to have exposure to the stock market because it’s the only thing that will give you excellent returns. But how good are those returns versus plain old GICs?
I have done an analysis for my Enough Bull course that will give you some idea. Continue Reading…
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