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.

Volatility arrived in 2018 but the ETF Exodus didn’t

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Figure 1: Market Share, Canadian ETFs

By Jeff Weniger, WisdomTree Investments

Special to the Financial Independence Hub

 Money managers had a rough year in 2018. The S&P/TSX Composite Index was off 8.8%, while the MSCI World Index of global equities was down 0.1% in Canadian dollar terms. About the only bright spot was the S&P 500 Index, which was down 4.4% in USD but up 4.1% for Canadians because of U.S. dollar strength. But these tepid figures mask the freefall’s extent; many markets met the bear market definition — declining more than 20% — inside the confines of Q4.

Figure 1 above grabbed attention in our 2019 Canadian ETF Industry & Market Outlook. Many didn’t realize how much market share the smaller players have gobbled up recently.

No doubt, the biggest ETF providers are doing just fine. In fact, we imagine most of the 33 Canadian ETF companies in our corner of the asset management industry must be downright giddy. Many are hitting the sweet spot where track records are becoming seasoned, brand recognition is solidifying and product users are now proselytizing for them.

Grasping at straws

“Active” mutual fund managers have for years been tossing around a prediction that needs to be checked at the door.  To paraphrase them: Wait until we see a downturn in stocks. That’s when everyone is going to dump their ETFs and come back to active mutual funds.

Be careful what you wish for; we think the exact opposite.

The stock market peaked in September, but the exodus from ETFs and into mutual funds never materialized. As an industry, our collective AUM is ever so slightly off its peaks, but that’s because of market losses, not outflows. Continue Reading…

For the love of Money

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By Heather Compton

Special to the Financial Independence Hub

I have invested a lot of my lifetime learning, living, teaching and writing about healthy practises around money.  When a young friend recently asked for some guidance on making peace with money, I wanted to fall back on those well learned strategies.

There are many practises that will bring some ease into your financial life. Living within your means, paying yourself first, getting your financial house in order: but you must lean into your own wisdom to bring peace.  It’s an evolutionary, lifelong journey for all of us and I am moved by the struggles we all have with money and the false powers we grant it.

What we buy, what we invest in, what we purchase for others and what we choose to finance or contribute to can bring us peace or its polar opposite.  What if we had a change of heart or a shift in worldview? A change of heart brings about a change of circumstance:  that’s transformation. Changing our worldview means changing what you believe is true – do big houses, fancy cars, expensive wardrobes and larger paycheques really spell success, acceptance, power or freedom?  Ask your authentic self that question.

The Heart test

We are all vulnerable to ambitions that disregard the balance and wisdom of our intuitive hearts. What if every spending decision had to pass through your heart before you pulled out your wallet?  Would you spend differently?

When we use our resources in ways that truly meet our authentic and universal needs for connection, integrity, joy, inspiration, physical well-being, meaning and choice, we find a path to peace.  That’s when money is in service to us and not the other way around. Money is an admirable servant but a terrible boss.

Lining up money’s flow with our authentic self and using it as a direct expression of our values and our vision is simple but it’s not easy.  It requires daily discipline to follow the practises that are the gateway to peace. Continue Reading…

Fed Watch: The “New” normal is really just the “Old” normal

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By Kevin Flanagan, WisdomTree Investments

Special to the Financial Independence Hub

The first Federal Open Market Committee (FOMC) meeting of 2019 is now in the books. While the result did not deviate from the market’s expectations on the rate front, the policy statement did provide further evidence that the Federal Reserve (Fed) is going about things in a different way than investors have been accustomed to over the last few years. Is this decision-making process the “new” normal? No, it is really just the “old” normal, or how the Fed typically conducts monetary policy when the Fed Funds Rate target is not zero.

Since the FOMC began raising rates in December 2015, and picked up the pace during the last two years, the plan was to move the Fed Funds Rate target away from zero, i.e., to normalize policy. Now, with the upper band of the policy rate target at 2.50%, or close to what is considered a neutral rate, the voting members have achieved their goal. So instead of raising rates in a somewhat gradual, but more importantly, predictable manner, further possible rate hikes will hinge upon upcoming economic data. In other words, monetary policy has become data-dependent. This is how the FOMC typically went about its business prior to the global financial crisis/great recession.

With inflation below the Fed’s 2.0% target, the policymakers can afford to be patient and, in the words of Chair Powell, “flexible” as well. Certainly, the decline in risk assets as 2018 came to a close created an environment of tighter financial conditions. The question now is whether that development had any visible, longer-lasting impact on economic growth.

Waters will be muddy for a while

So, where do things stand as the markets look ahead? Unfortunately, the waters will be muddy for a while. Due to the partial government shutdown, both the Fed and the bond market have not been receiving any fresh insights on the economy. The only exceptions have been the Bureau of Labor Statistics and private vendors. Continue Reading…

5 mistakes people make buying Term Insurance

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By Jane Rupert

Special to the Financial Independence Hub

An essential component of planning for the future involves planning your finances. After all, when your career finally falls into place, your funds need to be managed appropriately too. How you save, invest, spend and leverage your income can help with deciding how secure (or not secure) your finances for the coming years will be. In times like these, when the avenues and options are aplenty, it shouldn’t be too difficult to choose the right options for yourself. You can also do research on finding recommended independent agents who can help you get the right insurance policy for your need.

However, making mistakes when you try to work things out on your own is only human, and that’s why we’re here to throw light on some mistakes that you can avoid.

When we say mistakes, we’re talking particularly about Term Life Insurance. Term Life Insurance involves selecting the term or duration for which you will be paying your premium and also allowing your policy to mature and grow in monetary value. Needless to say, the longer you let it mature, the larger your policy amount is going to be when you decide to cash it in or pass it on to your family. That being said, it’s a given that we believe in the importance of taking up a life insurance policy. So, let’s also throw some light on mistakes that you should avoid making when you decide to invest in one.

1.) Being hasty

There are tons of policies and financial companies that you can choose from, so why be hasty about it? A common mistake some people make is to go for the first policy that is presented to them, without doing their own research and weighing out the alternatives in the market. Now, this could lead to you overpaying for your policy or taking up too many riders, without deriving any actual, significant benefit from it. Hence, step one is to always check out multiple, get instant term life insurance quotes, make a proper comparison and then decide which policy best suits your requirement.  

2.) Buying small

For some of us, an insurance policy is a way to make up for deficit income. Whether it’s because of disability or unemployment, it’s important to have something as a backup to help you out in times of financial crisis. However, a common mistake people make is to take a policy that is only just enough to make up for their income, without considering the long-term repercussions of it. Taking a small policy amount also means that it won’t last you too long, and if a sudden medical emergency arises, for example, you might burn through that amount in no time. Taking a larger policy amount is a smart move because it ensures that you have a broader net to fall on if times get rough. Continue Reading…

Can you afford to launch a startup? Yes!

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By Emily Roberts

(Sponsored Content)

There is a common misconception that starting a business is an expensive proposition. You need equipment, a website, an office, and staff to get the venture off the ground. Sure, in some instances, you will need all that and more: but there are ways to minimize your expenditure and secure funding to help you get going.

Why start a business?

Whether you have been ‘packaged out’ or are looking to transition into a new career, there has never been a better time to start a business. Working for yourself gives you unprecedented freedom. You can work flexible hours, from home if you choose, and any profit you make is yours. For anyone tired of working for someone else, while they reap the benefits, there’s a lot to like about being your own boss.

Financial support for entrepreneurs

There is a ton of support available for entrepreneurs. Fundera recently compiled a list of 105 different ways to secure money for your small business. You might not be eligible for all of them, but it’s worth taking a look.

Look for free loans first. These don’t need to be repaid, so it’s a win-win for you. If your startup is in a tech, science, or health niche, there are Federal small business grants available. These include the Small Business Technology Transfer Program and the Small Business Innovation Research Program. Check grants on offer in your state too, as there is less competition for state funding.

To check the full list of available grants and funding packages, click here.

Tools and equipment

Many businesses need tools and equipment to get started. For example, if you want to set up a handyman business, you’ll need a truck, basic tools, and possibly gardening equipment. Some of these you’ll likely already have, but you may need to purchase other items. Continue Reading…