All posts by Financial Independence Hub

The “mostly stocks” Retirement Portfolio

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By Dale Roberts, cutthecrapinvesting

Special to the Financial Independence Hub

It was a long time in the making, but I recently finished and posted the stock portfolio for retirees, on Seeking Alpha. It uses an all-weather portfolio approach but only puts stocks to work. Stocks are arranged by sector to perform in certain economic environments. Stocks and REITs will have to step up to do the work of bonds, gold, cash and commodities. We’re building the retirement stock portfolio on the Sunday Reads.

Here’s the post – Stocks for the retirement portfolio. That is a U.S. version. I will also post the Canadian stock portfolio (ideas for consideration)  on Cut The Crap Investing.

Defense wins ball games

The key is a core defensive stance: for market corrections, recessions and deflation. For those who are not able to access Seeking Alpha, here’s the portfolio.

As always, this is not advice. This is an idea and strategy for consideration.

Defensives @ 60%

Utilities – 10%

NextEra Energy, Duke Energy Corp, The Southern Co, Dominion Energy, Alliant Energy, Oneok, WEC Energy.

Pipelines – 10%

Enbridge, TC Energy, Enterprise Partners, Energy Transfer, Oneok.

Telecom – 10%

AT&T, Verizon, Comcast, T-Mobile, Bell Canada, Telus.

Telco REITs – American Tower, Crown Castle.

Consumer Staples – 10%

Colgate-Palmolive, Procter & Gamble, Walmart, Pepsi, Kraft Heinz, Tyson Foods, Kellogg, Kroger, Hormel Foods, Albertsons Companies.

Healthcare – 10%

Johnson & Johnson, Abbott Labs, Medtronic, Stryker, CVS Health, McKesson Corporation, United Health, Merck, Becton Dickinson, Cigna Corp.

Canadian banks – 10%

RBC, TD Bank, Scotiabank, Bank of Montreal.

Growth assets – 20%

Consumer discretionary, retailers, technology, healthcare, financials, industrials and energy stocks.

Apple, Microsoft, Qualcomm, Texas Instruments, Nike, BlackRock, Alphabet, Lowe’s, Amazon, TJX Companies, McDonald’s, Tesla, Visa, Mastercard, Raytheon, Waste Management, Berkshire Hathaway, Broadcom.

Inflation protection – 20%

REITs 10%

Agree Realty Corporation, Realty Income, Essential Properties, Regency Centres Corporation, Stag Industrial, Medical Properties Trust, Store Capital Corporation, Global Self Storage and EPR Properties.

Oil and gas / commodities stocks 10%

Canadian Natural Resources, Imperial Oil, ConocoPhillips, Exxon Mobil, Chevron, EOG Resources, Occidental Petroleum, Devon Energy.

Agricultural

Nutrien, The Mosaic Company.

Precious and other metals

Tech Resources, BHP Group, Rio Tinto

All said, I am still a fan of some cash and commodities and bonds. This was offered in the post …

The hybrid approach might then include:

  • 5% cash
  • 5% bonds
  • 5% commodities
  • 85% retirement stocks

More Sunday Reads Continue Reading…

Your home and your retirement plan

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By Anita Bruinsma, CFA, Clarity Personal Finance

Special to the Financial Independence Hub

“Your home should not be your retirement.”

This is a common headline in personal finance and although the details are nuanced, the headline can give the wrong impression: that you shouldn’t rely on the equity in your home to fund your retirement.

Certainly, it shouldn’t be the only source of retirement income: homeowners also have to save using RRSPs and TFSAs. However, homeowners in high-priced housing markets will likely have excess equity in their homes that should be considered when building a retirement plan and determining how much they need to save.

The rationale for the “don’t rely on your home for retirement” advice is twofold: first, that you will always need a place to live and the value of your home will be needed to buy or rent another residence; and second, that you need money to buy food and other things, which you can’t do if all your wealth is tied up in your home.

Both these points are valid, but they don’t apply to everyone. Like all aspects of financial planning, each individual’s personal circumstances need to be considered and in fact, many people should count on their home to help fund their retirement.

You’ll always need a place to live

To address the first point — that your current home will fund your next home — consider doing an analysis that looks at the cost of renting for the years after you sell your home. For those in high-priced housing markets like Toronto, the proceeds from selling a mortgage-free home will likely more than offset the cost of renting for 30 years in retirement, including paying for long-term care. The same analysis applies to downsizing by buying a smaller place in a less-expensive market. This means there could very well be excess funds that can be used later in life and this should be accounted for when determining how much retirement savings you need. Continue Reading…

6 unique ways to Increase your Net Worth and Build Generational Wealth

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By Emily Roberts

For Financial Independence Hub

Whether or not you consider building wealth a complicated process, the fact is that there are time-tested paths to make it happen. Increasing your net worth and building generational wealth is never unintentional; this article described six unique ways to help you do it.

Build Solutions for Unique Problems

All of the world’s wealthiest people, self-made millionaires, created solutions for global problems, and that’s why they became rich. You may argue that most industries already have wealthy giants, but you can find a niche with a growing problem and design a solution. Scale the solution for the global market, and you would have made a step in building generational wealth.

Invest in Profitable Startups

Investment has always been key to building wealth. If you invest early in a business, you position yourself for massive profits when the business grows. Carefully profile startups and invest in them. You should hire a financial advisor or learn more about investment before doing this.

Hire a Debt Management service

You may get into debt as you invest and build a business. Debt is not necessarily wrong when taking loans to build a business, but it could easily cripple your finances. Debt management helps you overcome depth without declaring bankruptcy, improves your cash flow and gives you the more significant financial freedom to invest in building wealth. You can contact Harris and Partners to learn about consumer proposals and how they could help you. A consumer proposal is an alternative to declaring personal bankruptcy and helps create an agreement with creditors.

Hire brilliant Employees

All rich people who built their wealth from scratch have one thing in common: despite their brilliance, they hire the best minds and hands to handle their business and investments. Whether or not you are brilliant, you need employees with specific traits. As Warren Buffett puts it, you need employees with integrity, intelligence, and energy to get the best results. Of course, you need to show strength and foresight, but ensure you have a solid team working for you. Continue Reading…

Should your Small Business partner with a Social Media Influencer?

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Image Source: Pixabay

By Beau Peters

Special to the Financial Independence Hub

Justifying working with social media influencers in a big business is much easier. They have the resources, reach, and reputation to make the process seamless. But should your Small Business partner with a social media influencer?

Let’s examine three pros and cons of working with a social media influencer as a small business. Then, we’ll guide you in deciding if this type of partnership is worth pursuing.

Pros and Cons of working with a Social Media Influencer

Working with a social media influencer can positively impact your business’s bottom line, but first, you must weigh the pros and cons of this kind of partnership equally. Let’s start with three substantial disadvantages:

1.) Working with an influencer is hard to justify with a small budget

Small businesses have to be diligent about their finances. The last thing you want to do is spend unnecessary money on a marketing strategy you don’t need. When you have a small marketing budget, it can be hard to justify working with an influencer.

You must consider whether you can actually afford to bring on an influencer and that you’re committed to measuring the return on investment to ensure it’s worth it.

2.) It’s risky

Any marketing strategy is risky, but working with an influencer can be particularly risky because you can’t control people. Even if an influencer checks off all the boxes on your “ultimate influencer” list, they may not do what you thought they would do for your brand.

From taking your product and running to not producing the agreed-to content to being completely ghosted, many things can go wrong when working with a social media influencer.

If you aren’t comfortable with the risks, this may not be for you.

3.) It takes a lot of time and effort to find the right influencers

One of the most complex parts of working with influencers is finding the right ones to partner with. Working with the wrong influencers can damage your reputation. If they do something against your brand’s values, your audience won’t be pleased you’re associated with them.

Finding the right influencers to work with takes a lot of time and effort. But you must put in that time and effort to ensure you’re partnering with people with shared values, morals, and ethics.

Even with these cons, the advantages of working with a social media influencer can be significant for a small business. Here are three of them:

1.) Capitalize on the trust influencers have with their audience

Hyper-personalized customer experiences are becoming more important for marketing strategies to be effective. However, the challenge is building enough trust and a deep enough relationship with your target audience to provide that experience.

The great thing about successful influencers is that they know their audience. They built massive trust with them through content they can resonate with. You can capitalize on influencers’ trust with their audience when you choose the right ones to work with. Continue Reading…

Fed Pivot turned into a Divot

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By Dale Roberts, cutthecrapinvesting

Special to the Financial Independence Hub

It was a more than interesting week. Not much mattered until Jerome Powell (the U.S. Federal Reserve Chair) delivered comments on Friday. He came clean. Or at least he helped to reverse the delusion created by stock market enthusiasts that the Fed would ‘pivot’ and reverse course on the market-unfriendly series of rate hikes. Rates are going higher and they will stay higher. There will be some pain for consumers and business. Inflation must be crushed. They will do what it takes. The Fed pivot turned into a divot. The markets were not happy with the reality check.

In a Seeking Alpha article published just days before the Powell presser, Michael J Kramer of Cott Capital Management offered …

The futures, bond, and currency markets are already telling the world that there is no dovish pivot, and quite frankly, there probably never was a dovish pivot. The only market out there that hasn’t gotten the message appears to be the equity market.

If Powell can deliver a message that even a golden retriever (I own two goldens) can understand, then the equity markets’ day of reckoning will arrive in short order.

Also from Michael …

The futures knew it, bonds knew it, and the dollar knew it. Once again, the only market living on an alternate planet was equities …

Powell finally delivered a direct message

In his Jackson Hole speech, in the opening paragraph, he made it clear that his remarks would be shorter and the message would be more direct. That it was.

Very simply, rates still have further to rise, and once there, they will stay there for some time. In the following paragraphs, I have borrowed from Michael and others, I will avoid quotes for readability. My own commentary is in the mix.

Powell offered that reaching an estimate of the longer-run neutral rate is not a place to pause or stop. He said the June FOMC projections suggest rates would rise to just below 4% through the end of 2023 and that history warned against loosening policy too soon.

It’s evident that the Fed is aware of the mistakes made in the 1970s and 1980s with the stop-and-go monetary policy approach that led to even higher rates, and the Fed appears determined not to repeat those mistakes. There can be no 70’s show rerun.

Fed Chair Jay Powell said:

Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.

Powell noted that fighting inflation will take a sustained period of below-trend growth and a softening labor market, which could bring pain to households, and are the costs of reducing inflation. In the third paragraph of his speech, it’s right there. The Fed is willing to sacrifice growth and face rising unemployment to bring inflation down. He is telling the market there will be no “pivot” anytime soon.

Inflation is driving the bus

The Fed chair said central banks need to move quickly, warning historical episodes of inflation have shown that delayed reactions from central banks tend to come with steeper job losses.

“Our aim is to avoid that outcome by acting with resolve now,” Powell said.

The following image is not a live video, but an example of the headlines that ‘spooked’ the markets.

Federal Reserve Chairman Jerome Powell on Friday said the central bank’s job on lowering inflation is not done, suggesting that the Fed will continue to aggressively raise interest rates to cool the economy.

Get the inflation-killing job done

“We will keep at it until we are confident the job is done,” Powell said in remarks delivered at the Fed’s annual conference in Jackson Hole, Wyoming.

“While the lower inflation readings for July are welcome, a single month’s improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down,” Powell said Friday.

The central bank has delivered four consecutive interest rate hikes over the last six months, moving in June and July to raise rates by 0.75%, the Fed’s largest moves since 1994. By raising borrowing costs, the Fed hopes to dampen demand by making home buying, business loans, and other types of credit more expensive. Continue Reading…