All posts by Jonathan Chevreau

Life Annuities: What to Watch Out For When You Buy

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Chantal Marr

By Chantal Marr,

Special to the Financial Independence Hub

An annuity is a type of investment sold through insurance companies. You can think of a life annuity as a life insurance policy in reverse — you pay the insurance company a large lump sum of cash and in return the insurance company pays you monthly premiums for life.

This can act as a form of retirement income after you leave the work force. Although life annuities can be a great option, here is some advice on the things you should look out for when it comes to life annuities.

Know the Difference between Immediate and Deferred Annuities

You should understand and watch out for the language in an annuity agreement. There is language that will signal if the policy is an immediate or deferred annuity. As its name implies, an immediate annuity means that you will obtain your fixed payments right away. There will be no delay in receiving your money. A deferred annuity is different. Continue Reading…

Weekly wrap: Futurepreneurs, seminar ripoffs and millennial homeowners

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businessman and businesswoman outdoorsWe’ve talked on the Hub before about older Boomerpreneurs (Baby Boomer entrepreneurs) but what about younger entrepreneurs? After all, Bill Gates and Steven Jobs made the leap into entrepreneurship while they were barely out of their teens. The Million Dollar Journey blog this week did a good piece on the Futurepreneur Canada programs. 

Beware however some entrepreneurs who may be getting rich on your desire to become an entrepreneur via real estate. Read this Boomer & Echo blog: Free Seminar — Learn How to Get Ripped Off.

And while we’re on the subject of real estate, check out the Broke Millennial’s recent blog on The Compromises Millennials Make to be Homeowners.

In Canada there has long been talk about expanding the CPP, or Canada Pension Plan. But most of the chatter in the United States has been about retrenching on social security benefits. Riding to the rescue is celebrity economist Paul Krugman, who argued this week in the New York Times the Case for Expanding Social Security.

But just in case you do fall short in saving for retirement, you can take heart from Jonathan Clements’ article in the Wall Street Journal this week, arguing Why you will need less money than you think for Retirement. Of course, we here at the Financial Independence Hub don’t much believe in the outdated concept of Retirement. We prefer the term Findependence, Continue Reading…

A murder mystery: who will kill the global economy?

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Andrew Busch (Twitter.com)

By Jonathan Chevreau

One of the more entertaining financial presentations at this week’s BMO investing conference in Chicago was a keynote talk by author and broadcaster Andrew Busch on who killed the global economy. (I qualify this with the phrase financial presentations because Rick Mercer’s talk was also highly entertaining but could hardly qualify as being financial).

By contrast, Busch had worked at BMO Capital Markets for 22 years earlier in his career and grew up in Chicago. His financial research is available free here.

Billing his talk as a “Murder Mystery,” he ran movie clips from various Film Noirs to illustrate his points.

Among his suspects; the ECB’s Mario Draghi, Japan prime minister Shinzo Abe, China president Xi Jinping and the Federal Reserve’s Janet Yellen. Busch played the role of “Private Economic Investigator.”

Resemblance to Greece?

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Suspect 1

Starting with Yellen, he submitted clue number 1 as the unemployment rate. With 3 million Americans underemployed, this fact shows up in sluggish wage increases so “we’re not seeing an acceleration in wealth gains so are not seeing inflation.” What jumps out from the latest job numbers is where they are located; 14 million Americans are employed in local government, another 2.7 million in the federal government and 5 million more in the states. Continue Reading…

Having retirement options means freedom

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Robb Engen, Boomer & Echo

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

Saving outside of my defined benefit pension plan will give me several options to consider when it comes to retirement.  To me, options mean freedom, even though I’ll be faced with some tough choices.  Here’s why:

According to my plan provider, I should be able to retire at 57 and receive an annual pension of roughly $64,800.  That will equal approximately 55 per cent of my average salary in my top five earning years.

(Note that I contribute nearly 12 per cent of my salary toward the pension plan each year, in case anyone believes these retirement benefits were conjured out of thin air).

I’ve also built up a decent sized RRSP portfolio – over $100,000 before my 35th birthday.  If left alone with no further contributions, and assuming an 8 per cent annual return, this portfolio will be worth $543,000 by the time I turn 57.

To stay in a 32 per cent tax bracket (22 per cent federal, 10 per cent provincial) I could withdraw up to $23,000 (in today’s dollars) from my RRSP to give me an annual salary of $87,800.

The RRSP Meltdown strategy Continue Reading…

Secular bull market is very much alive: BMO’s Brian Belski

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Brian Belski

By Jonathan Chevreau

“The largest stealth bull market of our careers” is still very much alive, says BMO Capital Markets chief investment strategist Brian Belski.

In the keynote address  Wednesday for BMO Global Asset Management’s Global Vision, Global Perspectives conference in Chicago, the American-born investment veteran said U.S. stocks are now six years into a 20-year secular bull market.

“Bull markets rarely end when everyone is looking for an end to them,” he said, “The media is consumed with negativity.”

Canada “bottoming”

While Belski believes America is setting the pace for global markets, Canada “is in the process of bottoming,” he said. Most of the investment professionals at the three-day conference on mutual funds and ETFs are Canadian. It might not yet be quite time to buy Canada, he added, since the first quarter has been one of “shock and awe” caused by the worldwide plunge in energy prices. Looking further out, though, he said “Canada is the place to be.”

One reason the Canadian market has languished is a call by a large Wall Street firm to “sell Canada.”   Continue Reading…