Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Canadians worried about Inflation’s impact on their retirement savings, Questrade survey finds

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It’s here, it’s not going away anytime soon, and every time you open a business news article, the word leaps out at you: “inflation.”

And, according to a recent Leger survey commissioned by Questrade of 1,547 Canadians, it’s not only very much top of mind for us, but it’s keeping many of us awake at night: not just about the short-term scenario, but also when we contemplate our retirement future.

According to the survey, four in five (84%) Canadians say they are worried about inflation, with almost two in five (39%) saying they are very worried.

For the short term, most of the Canadians surveyed are concerned about the everyday costs associated with rising inflation. More than eight in ten (86%) who are apprehensive about rising inflation say what worries them most is the increasing cost of food, while nearly as many (82%) are concerned about the increasing cost of everyday items. And not far from mind is the impact of inflation on savings and investments: 45% of those surveyed expressed concern about how inflation would affect their savings and investments, with 51% of those who are investing for their retirement saying this.

Investors are less worried about inflation than non investors

However, while many Canadians are experiencing inflation angst to varying degrees, those taking steps to invest for their retirement appear to be in a better overall frame of mind than those who aren’t. In the Questrade survey, of the 39% who say they are very worried about inflation-related costs, the worry is less with those investing for retirement (36%), compared to those not investing (49%). In particular, those holding an investment vehicle such as a mutual fund, RRSP, or TFSA appear to be consistently less worried about rising inflation than those not holding these products.

For those who are concerned about the longer-term impact of inflation on their investments and retirement, 39% are worried about the cost of living when they retire, followed closely by 38% who are concerned about lower purchasing power.

What’s interesting is that, despite their inflation anxieties, only one quarter of Canadians (23%) have made a change to their investments to safeguard themselves from possible inflationary effects. The remaining 77% either don’t know or haven’t made any change.

Of those who are making changes to their investments due to inflation, 24% are planning on contributing less while 22% are going to contribute more this year. The survey revealed that among those with an RRSP, 39% say they plan on contributing more to it this year, especially those aged 18–34 (57% vs. 36% for those aged 35+), with an average of about $5,409 extra. The reasons for contributing more to their RRSP vary, but for nearly half, it’s because retirement is a priority for them. Continue Reading…

Canadians more optimistic about money than their love lives this Valentines

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Despite Valentines Day being right around the corner, Canadians appear to be more optimistic about their financial futures than their love lives, according to a survey released Wednesday. Here is the press release.

TD’s second annual Love and Money survey gauged the financial behaviours of more than 1,700 Canadians who were married, in a relationship, or divorced in 2021.

It found that 60% of respondents claimed it’s harder to find true love than financial success, up from 51% in 2020’s report.

  • For those in committed relationships, 51% said they’re experiencing barriers to meeting their financial goals and are delaying milestones like planning a wedding.
  • 74%  of divorced Canadians feel their financial status is the same or better than when married: 54% said it is easier to manage their finances post-divorce.

The survey also explored millennials’ unique approach to love and money, including their intolerance for financial ‘red flags’ that would cause them to leave their partner:

  • They never offered to pay for anything (86%)
  • They were secretive about their finances (81%)
  • They didn’t seek professional financial advice (77%)

 As for life post-divorce, 52% said they learned a new financial skill like tracking their spending (28%), making bill payments (24%) and saving for retirement (23%). 57% said they are spending less after divorce while 45% consider themselves financially better off. 54% said it’s easier to manage their finances post-divorce.

TD says the survey also reveals the downside of not talking about finances in relationships. Divorced couples were less likely to have regularly discussed money during their marriage, with only 29% of divorced respondents saying they talked about money weekly with their former partner, compared to 50% of married couples who say they have the talk weekly.

Millennials, Love and Money

Millennials are more likely than other demographic cohorts to keep their money separate from their partners, with 49% of respondents saying they have no common accounts or shared credit cards. Millennials are also less tolerant of ‘red flag’ financial behaviours: they say they would leave their partner if they never offered to pay for anything (86%); if they were secretive about their finances (81%); or if they didn’t seek professional financial advice (77%).

Financial challenges of committed couples

The survey also shines a light on the financial challenges of committed couples. It found 28%  are keeping a financial secret from their partner, up from 8% from the 2020 report. Of those keeping a secret, 64% don’t plan to ever tell their partner. The survey also shows that a secret purchase is the most kept (42%), followed by a secret bank account (29%). Continue Reading…

Crowdfunded Commercial Real Estate Investing: A primer on commercial real estate investing

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Image by Shutterstock

By Veronica Davis

Special to the Financial Independence Hub

A Brief Disclaimer on Becoming an Investor:

The “investing world” can seem like a challenging mountain to climb if you are just getting started. The “investing world” itself isn’t a practical term for what should instead be thought of as an interdependent system of markets tied to the valuation of assets.

The tremendous scope of this investing world can push people away from sinking their teeth in and learning about how this exciting and lucrative system works. I could never hope to explain something as complicated and broad as the “investment world” in a single post, so instead, I will focus on a very specific investment market – that of commercial real estate investing – and how you can start your journey as an investor.

Most people cannot afford to be Full-Time Investors

Unless, of course, that is their full-time job. Without the help of crowdfunding real estate investment platforms, real estate private equity firms, or real estate investment trusts (REITs), most retail investors would lack the capital, resources, and time to manage real estate properties effectively.

However, retail investors can pool their capital in a number of ways to add commercial real estate into their portfolios and benefit from the growth of the commercial real estate market.

So, let’s have a look at some of the options:

Crowdfunding Commercial Real Estate Platforms

In the early 2010s, the rise of investing platforms such as Robinhood and Fundrise opened investment markets to millions of new and eager retail investors. With these new investment apps, the average person could now invest in markets previously only available to people who had private brokerage accounts or professional investors who could meet the often high investment minimums.

So, what are some of the investment platforms available to retail investors?

Fundrise

Founded in 2012, Fundrise was one of the first crowdfunded investment platforms. It is currently unavailable in Canada but is open to US residents (don’t worry, there are plenty of options for Canadians, too – see below). Users of Fundrise do not need to be accredited investors to open up an account, but Fundrise does offer accounts exclusive to accredited investors.

Fundrise has several investment tiers, and the least expensive tier starts at 10 dollars, meaning practically anyone can start investing. Investor capital is spread out among many REITs or real estate investment trusts. REITs are a type of mutual fund that takes the investment capital they receive and manages various high-value real estate properties.

Fundrise investors receive a percentage of the profits made by the REITs. Depending on the type of investment account, users saw an average ROI of between 7.31% and 16.11% over five years.

What are some comparable crowdfunding real estate platforms available in Canada?

NexusCrowd

NexusCrowd was founded in 2015 and was Canada’s first online investment platform that allowed accredited investors to team up with institutional investors to invest in real estate.

A benefit of NexusCrowd is that it heavily vets its investment opportunities. It only invests in projects that are at least 50% funded by other investors. If the investment project fails to meet its fundraising goal, NexusCrowd reimburses investors. Continue Reading…

Manage Fixed Income Uncertainty with Multiple Return Drivers

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By Mark Lindbloom and Travis Carr, Western Asset Management, a Franklin Templeton Specialist Investment Manager

(Sponsor Content)

The new investing year started with renewed uncertainty around the Omicron wave of the COVID-19 pandemic, inflation, central bank policy and the global recovery.

What are Canadians with fixed income investments to do? Our answer is to use diversified strategies in this market to find yield across a broad range of sources.

This is certainly a challenging time for an investment manager to arrive in Canada, but we at Western Asset Management welcome the challenge to help Canadians build fixed income portfolios with substantial yield advantages within their risk tolerance.

Western Asset is a Specialist Investment Manager of Franklin Templeton, with US$492.4 billion in assets under management as of December 31, 2021. Founded in 1971, we specialize in active fixed income investing — it’s our sole focus. All our attention and resources are concentrated on the bond market and active strategies for investors. We are a globally integrated firm with offices and senior investment professionals in North America, South America, Europe, Asia and Australia, which gives us direct knowledge of and expertise in markets around the world.

Investment Approach

Financial markets tend to move from euphoria to depression — sometimes quickly — and this affects the pricing of individual securities, sectors of the fixed income market, and interest rates. As a fundamental value investor, we strive to find opportunities in this mispricing by doing research and analysis of a security or sector. We want to buy when prices are below our assessment of fair value and when prices are likely to increase over time.

As we are an active manager, we work together globally to employ a top-down view of markets, economies and central banks and develop our macro and credit investment outlook. This will drive decisions on duration (a measure of the sensitivity of the price of a bond or other debt instrument to interest rate changes), yield curve, country, currency, sector, and subsector positioning. We also use our deep bottom-up research and analysis to make individual security selections, supported by rigorous risk management.

Four core beliefs describe our investment philosophy and drive how we make investment decisions:

  • Markets often misprice securities: Prices can deviate from fundamental fair value, but over time, they typically adjust to reflect inflation, credit quality fundamentals and liquidity conditions. Consistently investing in undervalued securities may deliver attractive investment returns.
  • We strive to identify mispricing: We try to identify and capitalize on markets and securities that are priced below their fundamental fair value. We do this through deep analysis to compare prices to the fundamental fair values estimated by our macroeconomic and credit research teams around the world.
  • Our portfolios emphasize our highest convictions: The greater the difference between our view of fair value and a market price, the bigger the potential value opportunity. The greater the degree of confidence in our view of fundamentals, the greater the emphasis of the strategies in our portfolios.
  • We seek diversified sources of investment returns: We aim to meet or exceed the performance objectives of our investors, within their risk tolerance. We seek to diversify investments and add value across interest rate duration, yield curve, sector allocation, security selection, countries and currencies. We deploy multiple diversified strategies that benefit in different environments so no one strategy dominates performance, which can dampen volatility. Continue Reading…

8 Administrative tasks to sort out before Moving Abroad

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Image by Pexels

By John Moran

For the Financial Independence Hub

Moving abroad as an expat is a huge decision and it can be a little daunting. With so many big decisions ahead of you, it can feel tough to stay on top of everything that there is to do.

Here’s a list that you can use as a guideline for some of the most important things you’ll need to plan before you move abroad.

Insurance

Do some research and find out what your options are in terms of travel insurance, as well as health and medical insurance once you’ve moved over. In most cases, IMG Global is a good option for any expatriates since its available to all nationalities and offers worldwide service.

You’ll also need to consider travel insurance for your luggage and any other travel-related emergencies, as well as home or contents insurance once you arrive, life insurance and other necessary policies.

Bank Accounts

Opening an international bank account is a good start, especially if you’re planning on moving money, but there are also specifically designed expat bank accounts.

Do some research and spend time asking questions to those in the know. Fortunately, this isn’t a make-or-break decision, since you can always change over to a different bank at a later stage. However, to avoid unnecessary spending, try to make the right decision early on.

You’ll also want to make sure that this is sorted out before you make the move, which should be manageable since creating a bank account online has become easier than ever.

Transport

 Once you’ve landed in your new home, you’re going to need a way of getting around. Consider the area you’re in, how far you’ll be living from your place of work, what the public transport is like, etc.

If you’re planning on using public transport to get around, make sure to factor that into your budget and your search for a new home. If you’re looking to purchase a vehicle, start doing research on what’s available, what fits into your budget and what documents you’d need to do so as a foreigner.

Accommodation

Where you live is not only important for practical reasons, but this will play a major role in how you and your family adjust and settle down. Moving abroad is a big life change, and feeling unsettled or uncomfortable in your own house is a sure-fire way to feel the effects of homesickness as soon as you arrive.

Choosing a home that everyone in your family likes and feels comfortable in is important for this reason. You’ll also want to make sure that it’s in a good location and fits easily into your budget.

Moving Companies

When you move abroad, you have the option to sell all your possessions and use the money you get to start fresh, from scratch in your new home. Many people find this to be the easiest option and even find great joy in being able to create their dream home from the ground up.

However, many people have established entire homes and don’t want to give up what they own, due to sentimental reasons, financial reasons, or various other factors. Continue Reading…