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.

Retirement Planning in your 20s

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By Jenn Hamann

Special to the Financial Independence Hub

Young people are notoriously focused on the here and now. With their entire lives ahead of them, it’s easy for them to lose sight of how important it can be to plan for the future. This is especially true when it comes to retirement planning. The subject is far from exciting, but it can have a tremendous impact on your life as you get older. Failing to have enough retirement savings when you leave the workforce could make it much more difficult for you to enjoy your golden years.

At least you wouldn’t be alone. More than 40 per cent of millennials say they have not yet started saving for the future. The good news is that the sooner you start, the better off you’ll be when the day finally comes.

One of the most significant obstacles when it comes to millennial retirement savings is simply waiting too long to get started. Many younger workers don’t take full advantage of their employers’ 401(k) matching contributions, for example (in the U.S.; the Canadian equivalent are group RRSPs or Defined Contribution pension contributions). The simple math says that the earlier you begin, the more you potentially could have when you cash out your savings.

If you’re one of those who are convinced you still have time to ignore your future, think again. The adjacent infographic shares some sobering facts about the importance of financial planning, as well as some tips you can use to be more prepared.

Jenn Hamann is Executive Vice President of ToInsure.Me, a leading provider of auto, life and home insurance. She has more than 12 years of experience in the industry, and currently focuses on sales, managing, planning, coaching and retaining business. 

 

Sharing for Profit: 7 lazy ways you can earn money through the Sharing Economy

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By Sienna Walker

Special to the Financial Independence Hub

Sharing is caring. Sharing something you own, sharing a little bit of your time, or sharing a skill you’ve cultivated can amount to a pretty decent payday. In fact, this is the very foundation of the sharing economy idea that has taken world by storm.

The best part about sharing economy gigs is that many of them are often easy. Since you set your own schedule and choose the way you participate, you can engage whenever you feel like it. If you want a boost to your income on your own terms, the sharing economy might be a perfect fit for you.

1.) Deliver Stuff

Sometimes, people want specific food, but for whatever reason, they can’t prepare it themselves or drive out to go get it. If you join an app as a delivery driver, it can become your job to drop fast food at someone’s doorstep. It’s as simple as that.

Most delivery jobs will score you a little money from the app company and a tip from the delivery recipient. If you limit yourself to your local area and make yourself available on the weekends when people might be a little too – ahem – tipsy to drive, you can make a decent amount of money for relatively little effort.

2.) Rent out stuff you aren’t using

You can rent out almost anything you aren’t currently using. People who only need something for the short term don’t want to purchase it: they don’t want to be stuck with it after it outlives its brief purpose.

You can rent bikes, skis, surfboards, cameras, or even clothes. Over time, you might even make more money than if you had chosen to sell the item. As long as it stays in relatively good condition, you can rent it indefinitely.

3.) Rent out your house while you’re away

You’re going on vacation for two or three weeks. That leaves your house vacant for an extended period of time. It’s just sitting there, not making you any money. Unless, of course, you rent it. A rental property calculator can help you determine how much you can realistically charge as a rental fee for your home.

If you have extra space even when you’re home or your trip is going to be short, you can use short term rental apps to help supplement your income.

4.) Drive people places

If you don’t mind driving, you can always sign up with a ride hailing service. You’re essentially making money from your driveway. Some people make enough money becoming a driver that they make it a full time job. Before you sign up, compare and contrast the differences between services to be sure you’re choosing the best one for you. Much like food delivery, ride hailing app drivers typically make great money on the weekends if their coverage area includes a lot of busy bars. Help people get home safe and make some extra cash. Continue Reading…

The best bank accounts for Students

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Photo by Dan Dimmock on Unsplash

By Zack Fenech, RateHub.ca

Special to the Financial Independence Hub

As a new or returning post-secondary student, finances probably lean on the less exciting side of this new or continuing life chapter.

Be that as it may, properly managing your finances is still something you’ll have to do at one point or another.

Finding the right student bank account can help you save some money. In some cases, you can earn unique student tailored benefits: if you choose the right chequing account or savings account, that is.

After all, would you rather spend money on school supplies and experiences or pay monthly account fees or transaction commissions?

That said, the best student bank accounts offer a wide variety of options and advantages tailored to student living, and provide students with more financial freedom.

The other side of the coin for student bank account options might be using a free bank account. Free bank accounts allow you to use the account beyond graduation, in exchange for student tailored perks.

This article will detail the difference between the two types of accounts and which account is best for each category. It’ll also help you get a clearer understanding of which type of account is best for you.

Student Bank Accounts vs. free Bank Accounts

Student bank accounts are regular bank accounts that offer unique advantages to students. Some of these advantages include no monthly or annual banking fees, unlimited transactions and e-transfers, and sign-up promotions or point programs.

Another option fitting for students is free bank accounts offered by digital banks. Though not student accounts by definition, free bank accounts are entirely free and limitless, making them ideal for anyone, whether you’re a student or not.

The only difference from paid accounts is that they do not include many of the student-tailored advantages previously mentioned. Continue Reading…

Can home buyers hope to use the First-Time Home Buyer’s incentive (FTHBI)?

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

The brand-new First-Time Home Buyer’s Incentive will hit the real estate scene on September 2nd, but will it be useful in your local market?

The federal mortgage equity sharing program was initially announced in the March 2019 budget as a new Canada Mortgage and Housing Corporation (CMHC) initiative. Under the new program, qualifying first-time home buyers can receive an interest-free loan from the agency to go toward the purchase of a new home (5% for a resale property, and either 5% or 10% for a brand-new build).

In exchange, the CMHC retains the same percentage of equity in your property, which the homeowner must pay back as a lump sum when either the home is sold, or the 25-year mortgage amortizes.

Qualifying purchase price too low in some markets

However, the income and mortgage-to-income ratio (MTI) restrictions the FTHBI requires reduces its effectiveness in many markets, particularly where home prices are high and arguably where first-timers would need its help most. Under its criteria, home buyers cannot have a combined household income that exceeds $120,000, and their MTI cannot be more than four times their income. This means, for a home buyer earning the maximum and putting 5% down on a resale home, the largest home purchase they can make is limited to $505,000.

As well, it’s important to understand how the equity sharing portion of the FTHBI will work. Basically, the amount provided by the CMHC is added onto the home as a second mortgage, which won’t bear interest, and must be paid back all at once when the loan is due. However, as the CMHC retains 5% of the home’s equity, the amount they pay back will reflect how the property has appreciated or depreciated over that time frame.

For example, let’s say they receive a 5% loan of $25,000 through the FTHBI for a home purchase of $500,000. The homeowner sells the home several years later, and its value has increased to $550,000. The homeowner would then need to pay the CMHC back $27,500 to reflect 5% of the increased value of the home. However, if the home loses value over that time period, only the original amount of $25,000 would be due to the CMHC upon its sale. Continue Reading…

The vulnerable Euro

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By Jeff Weniger, WisdomTree Investments

Special to the Financial Independence Hub

These are interesting times for the euro. Relative to the Canadian dollar, it may be nearing the end of its four-year uptrend (figure 1).

Figure 1: EURCAD

 

Figure 2 shows the most recent Wall Street forecasts for 2019 exchange rates. Despite the great unknown of what happens when European Central Bank (ECB) president Mario Draghi passes the sceptre to Christine Lagarde this winter, the median estimate for EURCAD is a miniscule weakening of the loonie from C$1.484 to C$1.49 at year-end.

 

Figure 2: Street Consensus, EURCAD

Street Consensus EURCAD

Meantime, the backdrop is a total currency war, with Canada among the weakest of the fighters, which is a good thing for CAD bulls. Like the Bank of Canada, the Federal Reserve is — by comparison with many other central banks — fighting the currency war meekly. The U.S. central bank’s balance sheet has declined from US$4.5 trillion to US$3.8 trillion in about four years. But at the ECB and the Bank of Japan (BoJ), crisis-style quantitative easing is at the top of the rumour mill.

And though the Fed may not be fighting hard in the currency war, Washington makes up for it. President Trump is clearly jawboning for a weak dollar. There’s also the matter of the federal fiscal situation in the world’s largest economy, which doesn’t matter until it matters. The U.S. budget deficit-to-GDP ratio of 4.3% is the reddest ink in the G10. In sharp contrast, the Street forecast for Ottawa is for roughly balanced budgets as far as the eye can see.

Canada the exception?

We could almost understand the “need” for currency wars 5 or 10 years ago, but today, with the S&P 500 Index just off recent highs of around 3,000? Hardly. Yet almost every country is fighting this war, with the arguable exception of Canada, sitting here with a largely responsible budget and a central bank that may do nothing this year.

Continue Reading…