All posts by Financial Independence Hub

Managing your Finances after Immigrating to the United States

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Pexels photo by Matt Barnard

By Devin Partida

Special to Financial Independence Hub

Every day, the United States welcomes people worldwide who epitomize the American dream. After settling into their new country, many buy homes, launch businesses, become outstanding citizens and live prosperous lives.

However, moving to another country often presents financial challenges. Those new to the U.S. should remember these tips when setting up and managing their assets after immigrating.

1.   Open a Spending Account

A spending account will allow you to store your money and make everyday transactions safely, such as clothing or groceries. It may help to see if your bank in your native country has international branches. In that case, you could likely open an account in the U.S. without changing institutions.

TD Bank and RBC Bank are just some of the Canadian financial institutions with U.S. branch offices. If not, many banking institutions simplify opening a new spending account and may even offer some perks.

2.   Ask Questions

There is much to know about financial management in a new country. The best way to learn is to reach out for support. Some experts — bankers, accountants and financial advisors — specialize in helping immigrants and will offer guidance on taxes, investing, and other benefits.

Likewise, seeking community organizations or local government agencies to bring yourself up to speed is a good idea. Community groups in particular are an excellent way to connect with other immigrants, and learn with and from one another.

3.   Build Credit

Building credit will allow you ample opportunities in your new country: a daunting feat if you’ve established excellent credit in your native country and must start over. Fortunately, some apps allow you to import your previous credit.

Like any U.S. borrower, establishing legal residency and maintaining good credit is crucial for loan eligibility. Lenders require at least two to three years of credit history to qualify. With excellent credit, newcomers can take out a loan to purchase a home, refinance or take out a second mortgage. You can use a second mortgage to pay off credit cards or fund home projects.

4.   Set a Budget

Immigrating to the United States can be expensive, with international relocation costs totalling anywhere between $2,000 USD and $10,000 USD. With these and the various expenses that follow, it’s important to create a budget for your relocation.

U.S. goods may cost less or more than your native country. Once you arrive, you’ll have a much better idea of what to expect from your monthly spending. Items you may not consider at first are car and health insurance, or the fees to obtain a driver’s license. Creating a budget by categorizing your spending — food, medical, housing and transportation — will help you determine how much you’ll need to set aside from your paycheck. Continue Reading…

10 Lifestyle Changes that could Lower your Life Insurance Premiums

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Image courtesy FitInsure.ca

By Lorne Marr, Jane Cotnam and Mohammed Azeez Amer,

FitInsure.ca

Special to Financial Independence Hub

Getting the best life insurance premium for the highest possible coverage amount is important. Life insurance is what stands between your and your loved ones’ financial future should something catastrophic happen. Whether it is critical illness insurance that pays a lump sum to the life insured to help with the costs of treatment or a bucket list trip, or life insurance that goes to a beneficiary, applicants have the power to lower their premiums. How? Through lifestyle changes.

Each applicant’s lifestyle figures heavily into the underwriting process for traditional/standard and rated policies. While simplified issue insurance does not have a medical exam, lifestyle/health questions are asked; the answers affect both the success of the application and the premium. Guaranteed issue insurance has no questions or medical exams – but this is typically reserved for applicants as a last resort. Guaranteed issue is expensive, has limiting conditions, and offers low coverage.

By taking care of the following lifestyle factors today, applicants greatly improve their access to favourable premiums on standard insurance.

10 Lifestyle Factors and how they Impact Life Insurance Premiums

  1. Quit smoking – Smoking has been proven to be a major risk factor for many health issues including cancer, heart disease, and stroke.
  2. Lose weight – Being overweight or obese increases your risk of developing chronic diseases such as diabetes, heart disease, and stroke.
  3. Reduce alcohol consumption – Excessive drinking can increase your risk of developing liver disease, high blood pressure, stroke, and other health problems.
  4. Get your blood pressure under control – High blood pressure increases your risk of developing several serious diseases. Keeping your blood pressure under control through diet, exercise, and medication will help reduce this risk.
  5. Lower your cholesterol – High cholesterol increases your risk of developing heart disease, among other problems. Eating a healthy diet and exercising regularly will help lower cholesterol levels.
  6. Increase water intake – Water makes you feel full faster so that you eat less food overall, which helps with weight loss efforts as well as reducing the amount of sugar in the body – and that helps with diabetes management too! Drinking more water throughout the day is an easy way to improve overall health.
  7. Meditate – Meditation has been shown to have positive impacts on both mental health and physical health by reducing stress levels, which in turn helps with weight management efforts too. Taking some time each day to practice meditation is an easy way to improve overall well-being.
  8. Eat more vegetables – Eating more vegetables is an easy way to improve overall nutrition while helping to lower life insurance premiums at the same time. Vegetables are packed with vitamins, minerals, antioxidants, and fibre, which all work together to promote better health outcomes.
  9. Exercise – Regular exercise has been proven to have numerous benefits for both physical and mental well-being including improved moods, increased energy levels, and improved cardiovascular fitness, which all contribute towards lowering life insurance premiums.
  10. Develop good sleep habits – Getting enough quality sleep each night is essential for maintaining good physical and mental health.

A Closer Look: Examples

Insurance broker Jane Cotnam shares a story about the power of weight loss impacting life insurance premiums.

“I had a client who applied for level CI with Canada Life. She was rated for her weight,” says Cotnam. “Bordering on obesity, this was the determining factor in her finally losing the weight. It’s been six months and she is down 50 pounds so far. She’s so much more confident now and will continue to lose weight in order to get a standard premium.”

Broker Mohammed Azeez Amer is also happy to share details by showing how Equitable Life’s Stop Smoking Incentive Program (ELSSIP) works.

“Applicable to Equation Generation IV and Equimax, the ELSSIP can be offered to applicants that have ‘quit smoking for 12 consecutive months within the first two policy years. Equitable Life will refund the difference between what they paid as a smoker and what they would have paid as a non-smoker for a maximum one month period. Eligibility is subject to certain conditions including a negative cotinine level and evidence of continued insurability. Term clients may be eligible to move from a Class 4 Preferred Smoker or Class 5 Smoker to a Class 3 Non-Smoker.’”

The Best Way to Get the Best Rate

Taking care of one’s health improves more than life insurance premiums. It improves quality of life and longevity. Health is a gift you can give yourself, and then enjoy its many resulting benefits. Yet, good health is not always in our hands. Illnesses or accidents can rob us no matter our good intentions. Continue Reading…

An ETF Strategy with Exposure to High Credit Security and High Monthly Income

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Harvest Premium Yield Treasury ETF (HPYT)

Harvest ETFs this week announced its new Harvest Premium Yield Treasury ETF, now available.

By Michael Kovacs, President & CEO of Harvest ETFs

(Sponsor Blog) 

Canadian investors have been forced to adapt to aggressive interest rate hikes from the Bank of Canada. This was preceded by a prolonged period of low interest rates that continued since the 2007-2008 Financial Crisis.

Some experts and analysts are projecting that interest rates are at or near the peak of this tightening cycle. In this environment, an optimal investment strategy factors in high interest rates while preparing for the eventual downward move that many analysts expect in 2024 or later. When the period of high interest rates subsides, there may be great potential for capital appreciation and income generation with an investment strategy that captures those benefits/opportunities. That is where the brand new HPYT ETF comes into play!

What is it?

HPYT is an ETF that holds several long-duration US Treasury ETFs and actively manages a covered call write position on those ETFs to generate an attractive monthly income.  It has an approximate yield of 15%, representing the highest fixed-income yield in Canada. The approximate yield is an annualized amount comprised of 12 unchanged monthly distributions (the announced distribution of 0.15 cents on Sept. 28 multiplied by 12) as a percentage of the opening market price of $12 on September 28, 2023.   Continue Reading…

Covered Call Strategy vs. Traditional Income Investments

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By Omanand Karmalkar, CFA, BMO ETFs

(Sponsor Content)

The need for income from investments has become more important than ever given an aging population, higher inflation, and cost of living. There are many ways to earn income from investments, but two distinct pathways emerge: the well-trodden path of traditional income and the emerging use of covered call strategies. Let’s dive a bit deeper into the two methods.

Covered Call Strategy: A Paradigm Shift in Income Generation

The covered call strategy is an investment strategy that involves the purchase of an underlying asset, such as a stock, and the sale of a call option on that same asset. By selling the call option, the investor agrees to sell the underlying asset at the strike price of the option if the option is exercised. Essentially, they involve holding a portfolio of stocks while simultaneously selling call options on those holdings. This approach creates a dual stream of income: dividends from the underlying stocks and premiums collected from the sale of call options.

  • Balancing Act: Income vs. Capital Appreciation

The allure of the covered call strategy lies in its potential to provide a higher yield compared to traditional income investments. Furthermore, the yield generated by writing call options is taxed more preferably under capital gains accounts while interest income from fixed-income products (such as GICs) is taxed under income.  

Traditional Income Investments: The Time-Tested Approach 

  • Classic Income Investments

By contrast, traditional income investments have been around for a very long time and can be reliable sources of income. This category includes bonds, GICs, and dividend-paying stocks. Bonds provide regular interest payments, GICs [Guaranteed Income Certificates] offer fixed interest rates, and dividend stocks distribute periodic income.

  •  Stability and Predictability 

The hallmark of traditional income investments is their stability. Bond interest payments, GICs, and dividend distributions are relatively predictable. This predictability appeals to investors who prioritize a steady income stream and wish to avoid the potentially higher volatility associated with other investment options.

Comparing Covered Call Strategies and Traditional Income Investments

Yield Potential

Covered Call strategies typically offer a higher yield due to the combination of dividends and option premiums. This can be especially attractive for income-focused investors seeking higher returns. By contrast, traditional income investments tend to provide more modest but steady income streams. Continue Reading…

Reasons to make Estate Planning part of your Retirement

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It’s never a bad idea to carefully organize your belongings. Discover a few important reasons to make estate planning part of your retirement process.

 

Adobe Image by Daenin

By Dan Coconate

Special to Financial Independence Hub

Retirement may feel like a distant prospect for many, but it’s never too early to start planning for your golden years.

Many people focus solely on their financial savings and investments when it comes to retirement preparations, but estate planning is another crucial element to consider. Estate planning not only protects your hard-earned assets, but it also ensures they go to your specified loved ones. Explore five essential reasons to incorporate estate planning into your retirement strategy.

Protecting your Legacy and Loved Ones

One of the main goals of estate planning is preserving your legacy after you’ve passed. A proper estate plan safeguards your assets for future generations by outlining your wishes for the distribution of your estate. This includes creating a will, designating beneficiaries for your assets, and even making provisions for minor children. By keeping your estate plan up to date, you’re setting your loved ones up for success and protecting them from legal disputes.

Avoiding Probate and Minimizing Taxes

Probate can be a long, costly, and complicated process, draining your estate’s value and leaving your loved ones in limbo. A well-crafted estate plan can help avoid probate by designating beneficiaries and establishing trusts. In addition, estate planning can minimize or eliminate the taxes your heirs will have to pay. By using smart planning strategies during retirement, such as gifting assets to heirs, you can potentially reduce estate taxes and maximize the wealth passed down to your loved ones. Continue Reading…