Contrary to what some may feel, equities in retirement is not an oxymoron. If you’re retired or almost so, you may be thinking it’s time to lighten up on your equity exposure.
The problem with rules of thumb is that some of them get quite dated and nowhere is this more relevant than in the maxim that a retiree’s fixed income exposure should equal their age. (So, the guideline goes, 60 year olds would be 40% in stocks and 90 year olds only 10% in them).
My latest MoneySense Retired Money column looks at this in some depth, via reviews of two books that tackle both the looming North American retirement crisis and this topic of how much equity retiree portfolios should hold. You can find the full article by clicking at the highlighted text: How to Boost Your Returns in Retirement.
As the piece notes, the single biggest fear retirees face is the prospect of outliving your money. Unfortunately, retiring in this second decade of the 21st century poses challenges for just about any healthy person who lacks an inflation-indexed employer-sponsored Defined Benefit (DB) pension plan. We’re living longer and interest rates are still mired near historic lows after nine long years.
The two books surveyed are Falling Short, by Charles Ellis, and Chris Cook’sSlash Your Retirement Risk. I might add that regular Hub contributor Adrian Mastracci twigged me to the Ellis book when he compared and contrasted it to my own co-authored book, Victory Lap Retirement. See Adrian’s review here: Two notable books to guide your “Retirement” journey.Continue Reading…
(Added Thursday: The article has also been published in the print edition of Thursday’s paper, on page FP8, under the headline Boomers ‘fearful’ of online investing: advisor. This Hub version of the column elaborates on a few points, adding the important distinction that newer online do-it-yourself [DIY] investors do NOT have to go without human advice or guidance, which they can get through fee-for-service planners, fee-only money coaches or investment coaches.)
According to a TD Bank Group survey titled Too shy to DIY, 79% of Canadian baby boomers use the Internet for banking but only a paltry 16% are DIY online investors. The poll of 2,000 Canadian adults was conducted late in July.
Since the Boomers have embraced most aspects of the Internet and are just as addicted to smartphones as Millennials and Generation X, it’s clear (as the headline notes) that “it’s not a technology thing.”
Rather, the main reason for low Boomer use of online investing is lack of investment knowledge: TD says 79% of those surveyed don’t manage their money online because they simply don’t know enough about investing, while 22% say they don’t have enough time to invest on their own.
When I asked Jeff Beck, Associate Vice President at TD Direct Investing, why the disparity he replied with this email:
“The gap between Boomers who bank online and those who invest online can be attributed to the fact that many say they are unfamiliar or uncomfortable with online investing tools. There’s a misperception that online investing is a complicated, time-consuming activity. That’s why TD Direct Investing offers a range of educational resources, tools and support to help investors get off to a great start, whether their goal is active trading, long-term investing, or both.”
So too do the other major discount brokerages as far as I’m aware: TD is one of the discount brokerages our family uses and there’s certainly no dearth of information on investing there or indeed most other major financial institutions.
As a boomer myself I was a tad surprised by the findings. Continue Reading…
The following is Part 2 of a sponsored Q&A with the founders of the firm behind Canada’s new Prosperium cybercurrency. Doug Coyle, pictured on the left, is the Chief Executive Officer of Toronto-based Prosperium Inc. Tony Humble is President and Chief Organizational Officer. You can find the introductory blog in this series by clicking on Blockchain Revolution, Global Prosperity and Prosperium. Also, a new white paper has just been published.
The pre-Sale rollout plan for Prosperium tokens
Jon Chevreau: Let’s resume with a recap how you’re rolling out Prosperium units and how pricing steps up over time.
Doug Coyle: Our currency Prosperium does have a period at the beginning, which we call our Presale period, when accredited investors can buy the coin at a value that is rising over time. The current value that we’re offering our token at is $2 per token for the presale token. That will be stepped up to $2, $4, $6, $8, $10, $15, $20, then by increments of $10 until finally it gets to $100 per presale token.
That price is based upon the network value; as we accomplish various milestones and increase the value and utility of the Prosperium platform and token the market price increases steadily; but once you reach $100 it then converts at 100 to 1 so one Prosperium token becomes 100 Prosperium “dollars” at a 1 to 1 ratio. It becomes stable at that point. That means that 1 Prosperium dollar is equal to one Canadian dollar. From then on it’s stabilized by smart contracts so it becomes very easy for someone to look at their Smartphone, see their balance is 1000 Prosperium dollars and they know what they what can buy with one thousand Prosperium dollars since it’s equal to C$1,000.
Jon: And outside Canada?
Doug: Each country will have its own Prosperium token that matches the local fiat currency. So in England, one Prosperium pound will equal one UK pound; same with the peso or the US dollar etc. We are set to be a stable-value token in all countries that accept us: wherver the regulators accept our platform so people are able to trade in a currency and know the price of anything in Prosperium dollars or tokens.
This is very different than Bitcoin because right now Bitcoin is worth around $4,000. So on any given day how do know how much the price of a cup of coffee is in Bitcoin? You don’t, not without doing a bit of a calculation or having your phone do it for you. So it’s a big advantage having a stable-value currency for everyday use that you can trust won’t fluctuate and be volatile while they hold it and that they know the price of things in that currency.
Fiat currencies vs cybercurrencies
Hub CFO Jon Chevreau
Jon: You used the term fiat currency just now. Can you comment on traditional “money” and so-called fiat currencies like the dollar, Euro etc.? There’s nothing magical about the value of a dollar except that it’s dictated by governments, right? At least since it’s no longer backed by gold.
Doug: You’re right: part of understanding how to design a currency for Prosperium is understanding the mechanism that all currencies play in an economy; an economy is just a community of people trading their work with each other: goods and services. The economy, the GNP or GDP, is just the sum of all those transactions in that community; so what is money? Money is just a trusted accounting system; and the important word there is trusted. If you’re in an economy or country that has its currency backed by gold or silver or some commodity, you’re using that commodity to create that trust factor; you’re trusting that gold will be relatively stable over time.
If you live in a country like Canada or the United States, or most of the world now, it’s not backed by a commodity like gold or silver but by the promise of the sovereign: of the government. You are relying on the fact that the government will say yes, we’re going to back that dollar and manage it and keep it at a relatively stable value. You can question how much you can trust any sovereign to handle money but that’s the theory. So you have those two systems of creating trust; backed by a commodity or backed by the promise of a sovereign.
Jon: Do you use the term fiat?
Doug: Yes, we use the term fiat. Fiat just means by demand or by order. I as the king demand, or order, that this piece of paper here is worth one Canadian dollar.
What is backing Prosperium?
Jon: At least when it was backed by gold, it was finite, like Bitcoin. But now it’s potentially infinite? Look at Zimbabwe and what happens with inflation when it’s backed by nothing? Or Venezuela.
Doug: Yes, which raises a very interesting question. What is backing Prosperium? In our case, it’s a very concrete thing that backs it. New currency can be created; you have to remember that all currency is created. Continue Reading…
Prosperium Inc. CEO Doug Coyle (L); President and COO Tony Humble (R)
The following is a sponsored Q&A with the founders of the firm behind Canada’s new Prosperium cyryptocurrency.
Tony Humble is President and Chief Organizational Officer of Toronto-based Prosperium Inc. and Doug Coyle is Chief Executive Officer (both pictured on the left).
Also, a new white paper has just been published. The overall Prosperous business model is described on its home page. And for a layperson’s perspective, see Tony’s blog.
The Q&A will continue tomorrow.
Jon Chevreau: In the first blog, we mentioned Ethereum and Prospereum as two examples of cryptocurrencies spawned in Canada. Clearly, the name Ethereum inspired your name and it was a clever stroke to get the word Prosper in there too. Can you confirm this genesis of the name?
Tony Humble
Tony Humble: Well, the name Prosperium was a natural, but we tried a few others first, like Prosperus, as in “prosper us all” and “prosperous” and ProsperX. But the elemental affinity with Ethereum was irresistible: like atomic bonds. Ethereum is named for both a celestial region and an “element” in the periodic table. On earth, it is both a currency and a platform for smart blockchain contracts: revolutionary and brilliant.
Jon: Can you elaborate on what the name means in practice, relative to Ethereum? Is it the same business model?
Tony: Like Bitcoin, the total number of coins issued by Etherium will be fixed, aiming for continuous growth in value. In comparison, Prosperium is also named as an element, is a crypto-currency, and is a platform: for growth in real prosperity. In contrast, however, once Prosperium has reached a target value it will be fixed in price and supported at that value, but the number of coins issued will continue to grow. It will be minted for measurable value, created by regional accelerators to generate jobs and production, and its use for transactional purposes will be tracked on the Prosperium blockchain. It will be 100% open and auditable by governments, and will maintain a large reserve to support the price in the marketplace.
Jon: A prospectus for Canada’s first Bitcoin ETF was recently filed. I’m not sure if that shows your timing is impeccable or whether you’re late to the party?
Doug Coyle: I do see that there are more and more ETF funds being launched in Canada and around the world for Bitcoin.
Jon: Starting with the Winklevoss twins of Facebook fame?
Doug: Yes, they tried to get a Bitcoin ETF going and ran into some barriers but they prepared the ground a great deal. I feel it’s adding infrastructure so I’m in favor of multiple ETFs for Bitcoin or any other crypto currency being established.
Jon: Is Prosperium going that route?
Doug: Not directly. In some ways we do provide the ability for clients who hold Prosperium tokens to trade those tokens and eventually the currency itself will be freely trading; so we have a very sophisticated way of doing a — call it an ETF — but we hold a reserve account that is core to how we stabilize the Prosperium coin. Buyers can find a ready market there at all times; they don’t have to count on any broker to find a match on buying and selling; it’s all done automatically in the software.
Why Prosperium isn’t going the ICO route
Jon: You chose not to go the ICO (Initial Coin Offering) route although it sounds like you were thinking about it. Why not, or are you doing the same thing under a different name? Continue Reading…
It is admittedly a complex strategy but the Globe & Mail’s Report on Business has just published my latest article for high-net-worth investors who don’t mind trading RRSP losses today for tax savings tomorrow. You can retrieve it by clicking on the highlighted headline here: An RRSP strategy to ‘liberate your losers” in order to save tax.
Liberating your Losers is a phrase used by a broker source of mine who prefers for now not to be identified. The strategy describes a possible bright side to crystalizing RRSP losses by “withdrawing them in kind” to non-registered status. That is, you keep the position but in effect move it outside the RRSP.
An alternative to early RRSP drawdowns
This is an alternative to the more typical RRSP drawdown tactic of first selling your stocks inside the RRSP, then withdrawing the cash. Either way you are “deregistering” some of your RRSP, which means paying withholding taxes. You’ll pay 10% for withdrawals under $5,000, 20% for those between $5,001 and $15,000 and 30% beyond that. This can be handled automatically by your RRSP trustee.
Liberating your losers can make sense under three circumstances, my source says: when you have had bad timing in your RRSP/RRIF investment choices; when you’re confident your investment will return to its previous higher value; and if you prefer to pay tax on 50% of a capital gain rather than 100% of income.
Making Lemonade from Lemons
Mind you, I also talked to three sources who were willing to be on the record, and some were skeptical that the strategy was worth implementing. Continue Reading…
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Contrary to what some may feel, equities in retirement is not an oxymoron. If you’re retired or almost so, you may be thinking it’s time to lighten up on your equity exposure.
