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.

Canada ranks 10th in global Retirement Security

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Global investments and international finance business symbol with four blue eggs with the maps of the world in a nest as a concept of savings and money management in many regions as Asia North America Europe and Latin America.While it ranks ahead of the United States and the United Kingdom, Canada ranks in tenth place in a global retirement security survey being released today (Tuesday).

Several countries in northern Europe and Scandinavia rank higher in the study by Natixis Global Asset Management. Norway is number one, followed by Switzerland and Iceland. However, because of a revised methodology, Canada’s 2015 ranking is two spots higher than under the 12th place spot it had under the survey’s older methodology. The Natixis Global Retirement Index was introduced in 2013, and bases its overall retirement security scores on four factors affecting the lives of retirees.

A central component is of course finances but three sub-indices measure well being, health and quality of life, providing a more holistic view of retirement than mere financial considerations.

Low interest rates a drawback for Canadian retirees

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How small business lending has changed since 2008

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Photo: deathtothestockphoto.com

By David Gens, founder and CEO of Merchant Advance Capital

Special to the Financial Independence Hub

The small business lending landscape today bears little resemblance — functionally, structurally or in terms of customer priorities — to what it was at the moment of the 2008 financial crisis. The intervening years have seen the creation of many new alternative finance companies, who are able to efficiently deliver credit by leveraging technology. Here’s how these developments affect the range of choices among your borrowing options.

Online lending growth consistent, lenders gain trust

Conventionally, a small business owner would attempt to reach out to a major bank for financing: a process that has become less and less viable as banks become less willing to accept the risk of lending to new businesses with limited credit profiles and limited hard assets with which to secure a loan.

Today, online small-business loans from alternative lenders account for about 2% of all small-business loans despite their ability to offer more tenable and accessible financing agreements for SMB owners. Growth, however, is a solid prediction for the industry: loans from the same providers are expected to comprise 16% of the total small business loan volume by 2020, according to a 2015 report by Morgan Stanley.

Consumers and businesses now have alternative financing options outside of traditional banking – moreover, these alternatives have gathered increasing mainstream relevance and investor confidence, moving beyond the high-risk/high speed niche to which they were originally confined.

Access to capital a key motivator

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Millennials: Visualize the Future, then make it Reality

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Excel concept as a creative solution to a challenge as a businessman crossing a complicated maze or labyrinth with a bridge made from a rainbow as a success metaphor for visualizing a future accomplishment or virtual reality.By Helen Chevreau, Hub Staff 

We millennials are often told to visualize our future, then go out there and make it happen. But like so many things in life, this is more easily said than done.

Let me start with a disclaimer:  Though finances are at the root of this week’s post, it’s mostly focused on spending our time and money on what we really want, as opposed to what society thinks we should want. ‘Should’ is a word I’ve come to decide to avoid at all costs.

As millennials, we get so focused on making sure we become good grownups that sometimes we forget just what we want it to mean. Do you want to become a good grownup by owning property, or is that just what everyone has told you makes a good grownup?

Could you be a good grownup by being completely financially self-sufficient while living the life you always wanted? Or do you think that being a good grownup means sometimes saying ‘no’ when you’d like to say ‘OMG YES PLEASE ALL OF THEM AND DO THEY COME IN RED?’

Clearly, being a ‘good grownup’ means different things to different people, which means it’s super important to define to yourself what you believe makes one. If you spend these valuable years working toward someone else’s dream, you could end up in a bad place.

Benefits of Imagination

A wonderful way to figure out what you want from life is to visualize or imagine it. Imagine yourself in your ideal place, doing the job you’d do even if they weren’t paying you. Daydreaming is a great way to escape the stresses of modern millennial life, Continue Reading…

Wisdom Tree Canada’s first 6 ETFs; plus 6 ways to prolong nest eggs

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wisdomtree-investments-squarelogo-1449147347386We mentioned this was coming in the FP early in June but it’s now official: the first batch of WisdomTree ETFs are now available in Canada.

While WisdomTree Canada opened its office earlier this year, the first six products started trading on the Toronto Stock Exchange Thursday (July 14).

The US parent company is best known for its dividend-weighted ETFs and currency-hedged equity strategies. The initial lineup is focused on the U.S., European and broad international equities. The Head of WisdomTree Canada is Raj Lala, pictured below.

Here’s what he said in a press release today:

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Raj Lala

“By combining the best elements of active and passive investing, WisdomTree’s Smart Beta ETFs give Canadians the opportunity to participate in effective, risk-managed investments. We look forward to growing our business in Canada through a commitment to anticipating and addressing key investor needs.”

Here are the six ETFs and their TSX tickers: Continue Reading…

RRIF or Annuities?

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MarieEngenBy Marie Engen, Boomer & Echo

Special to the Financial Independence Hub

We all know that in the year you turn 71 you will have until December 31 to convert your RRSP into a RRIF or an annuity. Which do you choose?

First, let’s recap the basics.

RRIF option

The year after you set up your RRIF you will have to start withdrawing a mandatory minimum amount. At age 71 the minimum is 5.28% of your balance on January 1. That percentage increases as you get older. Of course, you can withdraw more than the minimum and there is no maximum withdrawal amount for a regular RRIF. For this comparison we’ll use the minimum amount.

You will continue to decide where to invest your RRIF assets and your investments will continue to grow on a tax-sheltered basis, but the amount you withdraw is taxed at your marginal tax rate.

On your death, the remaining assets are generally transferred to the surviving spouse, tax free, or goes to your estate and is taxed.

Annuity option

An annuity is a specialized financial product provided by an insurance company. In exchange for a lump sum investment from your RRSP you receive regular retirement income for the rest of your life.

Once you choose to purchase an annuity there is no access to your capital. You basically are giving it up for a guaranteed income that never decreases. It creates a personal pension plan for those without pension plans.

Annuity income is based on several factors: Continue Reading…