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.

Making the most of the money you already have

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Image via Pexels

By Jim McKinley

Special to the Financial Independence Hub

It does not matter if you have $1,000 or $100,000 in your account: you probably want to make the most of the cash you have. But how, exactly, is this accomplished?

There are many strategies. The Financial Independence Hub details some of the easiest and most effective below.

Get Help

If money management is your weakest link, look for an accountant or financial consultant to help you get a better grip on your financial future. You can find experienced financial professionals through different online job boards and platforms.

Manage your Debt

There is nothing wrong with having a house or car payment. These are debts that most people expect to take on. However, credit-card debt is something that eats away at your bank account more than you might imagine. According to Business Insider, average credit card interest rates in 2020 are more than 15 per cent. And these only compound, meaning that you pay interest on interest accrued each month as your balance continues to rise. Look at it this way: For every $100 you are in debt each month, you pay an extra $15. To keep more of your money, eliminate debt as soon as possible. Pay down your lowest balances first and then add that payment each month to your high-balance cards.

Check your Bank Accounts

When it comes to bank accounts, there are two primary types of accounts you might think about: chequing and savings. What you may not realize is that each of these has different subcategories, and some pay higher interest rates than others, and you may only be getting a small interest payment each month. Consider switching to a money market, which has a higher interest rate. Continue Reading…

10 smart spending tips from frugal Small Business owners

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How can small business owners be more frugal and spend smarter?

To help you and your small business to be more frugal and spend smarter, we asked small business owners and financial experts this question for their best advice. From polyphasic sleep to developing your IT skills, there are several tips to help your small business to be more frugal and to spend smarter.

Here are ten ways your small business can be more frugal and spend smarter:

  • Google my Business
  • Unsecured Loan or Line of Credit
  • Outsource to Experts
  • Free Trials
  • Check annual discounts for Services
  • Reevaluate your Digital Marketing Strategy
  • Budgeting ahead to Avoid Impulsive Spending
  • Use Free Software
  • Automate and Delegate
  • Only Spend if it adds more Value than it Costs

Google my Business

Google Ads offers small businesses a great opportunity to develop visibility in search result pages. By expressing a willingness to bid on keywords relevant to a business, small business owners can pay per click to attract potential customers to their website. However, as competition amongst advertisers increases, so does the cost per click. In our industry, keyword costs can be $50 – $100 per click. With rising advertising costs, small businesses have less and less margin for profits. To spend smarter, small businesses can invest in an organic search presence to increase their visibility for keywords without paying for each click. One simple step for small businesses is to start a Google My Business page to increase visibility on the local level. Alternatively, businesses can blog about topics similar to keywords in a Google Ads account to reduce paid ad costs and increase organic traffic. — Dan Reck, MATClinics

Unsecured Loan or Line of Credit

Pre-revenue businesses still need to spend in order to launch a new venture. Sometimes the best time to be frugal is when a small business owner is seeking financing and needs to pay extra attention to the interest rate that comes with an unsecured loan or line of credit. Many funding sources tout simple application processes and short pre-approval turnaround times. Be careful not to move too fast on a loan that carries a higher interest rate. Instead, take the time to do your due diligence because some upfront work can save on long-term frugality. — Craig Johnson, Unsecured Funding Source

Outsource to Experts

Let’s say that you’re a small business owner who wants to invest in something like SEO (search engine optimization). You can pay an SEO agency like us $2,500 per month, or $30,000 per year to perform SEO at an expert level. Or, you can hire an SEO manager internally for $65,000 to $85,000 annually to perform SEO for a company. Sometimes, it saves to outsource certain services to experts instead of hiring internally for a business need. Consider the alternatives before posting a job description to a career page. –– Brett Farmiloe, Markitors

Free Trials

Sending secure communications typically comes with a cost to ensure security and compliance. However, some communications companies offer free trials to test their service. For example, our company offers small businesses the ability to send a free fax. If a small business owner is looking to be frugal when it comes to communications, seek out these free trials as a way to save money and discover services that can truly support your business. — Eli Patashnik, iFax

Check Annual Discounts for Services

If you know that you are going to be using a service for an entire year, see if you can pay the entire year in advance for a discount. This often netted us 10-20% discounts on services that we were already paying for. Even if a service doesn’t appear to offer this type of discount, you should inquire as some companies will offer quarterly or semi-yearly discounts as well. I also recommend a quarterly review of your small expenses and ensure that everything is being used. There were many times, we were able to cut costs by simply realizing that we no longer properly utilized a specific service. — Matt Blake, Entrepreneur, Investor and Partner

Reevaluate your Digital Marketing Strategy

Look at your digital marketing ad spend, analytics and metrics. Are you meeting goals and objectives? There is a lot that can be done organically (non-paid) with content marketing — blogging, videos, podcasts — in conjunction with social media marketing, that will help with Search Engine Optimization (SEO) and drive traffic to your website without spending money. Continue Reading…

The Resilience of Dividends

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Franklin Templeton: Image by iStock

By Nick Gétaz and Matt Quinlan

Franklin Equity Group (Sponsor Content)

As fund managers with the Franklin U.S. Rising Dividends team, we believe that a company increasing its dividends is evidence of three key characteristics: growth, strong capital allocation, and resilience.

Firms that show substantial and sustainable dividend growth also tend to experience greater long-term stock price appreciation. Being able to consistently increase dividend payouts, even during periods of wider economic malaise (the past year being a perfect example) points to a company that is well managed and with a resilient business model. Investors can therefore participate in market growth, while still protecting their capital against downside risk.

Dividend-paying companies can be found across all sectors, and diversification is an important element of the Rising Dividends portfolio. Currently, Industrials, Information Technology and Health Care have the largest allocations in the fund, while there is no exposure to Communication Services, Utilities and Real Estate: the latter two sectors’ growth prospects make them generally less attractive at the moment.

In Health Care, current holding Medtronic PLC is a good example of the type of company we seek out for the portfolio. With consistent dividend increases for 43 years, the world’s largest medical device manufacturer has a diversified and resilient product shelf. Medtronic is a leading provider of cardiovascular and surgical products, and the development of surgical robots and a suite of cardiac rhythm products position it for potential sales growth and efficiency gains in the coming years.

The largest position in the fund is Microsoft, which has accounted for 8–9% of the portfolio over the past year. In our view, Microsoft has a number of different growth drivers among its cloud, enterprise productivity and gaming offerings. Microsoft Teams has also become a vital tool for many companies that had employees switch to working from home over the past year, which is further evidence of Microsoft’s resilience and ability to thrive through different market cycles.

Dividend cuts were less severe than expected during the pandemic

Resilience, on a variety of fronts, has certainly been required over the past year as the COVID-19 pandemic has hammered the global economy. At the outset of the crisis, dividend reductions were widely predicted, but these cuts weren’t as far reaching as expected: in our portfolio, approximately 3% of holdings reduced dividends in 2020.

Historically, the evidence shows that dividend-growing stocks have tended to perform better than stocks that don’t provide dividends, and they have done so with less risk. The chart below shows dividend growers against the S&P 500 Index over the 30-year period ending December 31, 2020. This time frame includes multiple market cycles and downturns, including the Dot-Com collapse; the Global Financial Crisis; “The Lost Decade”, the 10-year period up to 2009 when U.S. equities (represented by the S&P 500 Index) had a near-zero return; as well as the correction of last February/March.

 

Taking a long-term view, corrections and drawdowns are inevitable, so it’s crucial to build portfolios of high-quality companies that can navigate different economic cycles. Continue Reading…

Review: The Disciplined Trader

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81o4jz+QTgLI am not and never will be a “trader,” in the sense of a full-time stock-picker/market-timer.

However, on the suggestion of my financial advisor, I recently ordered and read a copy of a classic trading book called The Disciplined Trader, by Mark Douglas (New York Institute of Finance, 1990).

Personally, my main interest in the topic involves hedging downside risk:  taking actions that limit some downside, at the expense of some potential upside. What surprised me about this book — which bears the subtitle Developing Winning Attitudes — is how much space was allocated to psychology and mental attitudes. In fact, fully all of the third of the four major sections is devoted to what I would call “softer” topics like understanding the nature of the mental environment, how memories, associations and beliefs manage environmental information, managing mental energy and similar topics. Continue Reading…

Digital Banking: the smarter way of saving that’s here to stay

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By Dave Schurman

Special to the Financial Independence Hub

By nature, we’re creatures of habit, but this past year has taught us that necessity clears the way for change. In a relatively short time, we’ve adjusted how we shop, work and study. The same can be said for banking. We’re looking for new ways that check all our boxes: easy, convenient, safe and smart.

What is digital banking?

Easy. It’s like having a financial institution at your fingertips.

Digital banking is fully online: it gives you the same financial products and security you would find in a traditional financial institution without need for expensive bricks and mortar, achieving cost savings that are then passed on to customers in the form of better rates and lower fees. And, the really good news in digital banking is that the “doors are always open,” so you manage your money on your time, not bankers’ time, and you do it from anywhere you want!

Who should consider digital banking?

Pretty much anyone looking for something more. We all like to get more from the services we use. More convenience. A more intuitive experience. More value. Here are the top reasons digital banking has taken off:

  • Low or no monthly fees
  • Better rates
  • Access whenever you need it
  • Easy-to-use and secure online experience
  • Ongoing innovation and updates based on customer feedback

 How do you choose the right digital banking platform?

Shop around.

First, decide which banking products you are looking for. If it is investments, what are you saving for: Retirement, an upcoming purchase or just a rainy day? Are you willing to lock your money in for a period of time to get a higher rate or do you prefer to have quick access to your money? Once you’ve figured out what you are looking for, next look into rates. How does one digital bank compare to another? Searching online is a great place to start. Once you have a shortlist of possible digital banking options, consider the following questions:

  • Is this digital banking solution backed by an established financial institution?
  • Will you have easy access to a real person if you need help or have questions?
  • What do the reviews say?
  • Will you have to pay for fees and, if so, how much?
  • What is the deposit insurance limit?

What is a HISA?

Don’t worry; it’s better than it sounds.

HISA stands for high interest savings account, and here’s what people love about digital HISA accounts: The rates are generally higher than what you get at traditional financial institutions with branches. So, for example, let’s say you find yourself in the middle of a pandemic. You’re not spending as much, so you have more money to save. A good move would be to put your money in a HISA and watch it grow faster. Saven’s HISA offers a competitive 1.55%* rate with no monthly fees, no minimum deposit and free e-transfers and direct deposits! Plus, your money is not locked in, so you can access it at any time.

What about GICs?

A smart choice to give your savings even more of a boost. If you want to lock in, then a Guaranteed Investment Certificate is another great way to save. This option is best for long-term savings at a fixed term (usually anywhere from one to five years). Saven’s GICs offer up to 2.05%**. Our super competitive rates are locked in so you see consistent growth. Continue Reading…