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.

2016 RRSP tips – ‘Back to basics’ primer

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Adrian
Adrian Mastracci, KCM Wealth

By Adrian Mastracci, KCM Wealth

Special to the Financial Independence Hub

Understanding the RRSP regime makes it easier to stickhandle your retirement marathon. This workhorse has been delivering on retirements since its introduction in 1957.

It really fits two groups of investors like a glove.
Those without employer pension plans and the self-employed.

Some investors still shun RRSP deposits but three solid reasons to pursue RRSP accumulations stand out for me:

• Long-term, tax deferred investment growth.
• Future withdrawals, ideally at lower tax rates.
• Contributions provide immediate tax savings.

Stay focused on how the RRSP dovetails into your total game plan.
The power of compounding really delivers.

Your RRSP mission is three-fold:

• Keep it simple.
• Treat it as a building block.
• The journey lasts a lifetime.

I summarize six vital “back to basics” RRSP areas for your review:

1.)  Setting saving targets Continue Reading…

Record cash levels in bear market suggests buying opportunity for stocks?

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Stock market trend business concept and financial prediction uncertainty symbol as a heard of bulls and bears running towards each other to set the direction of an economic forecast.
Is Cash your no-man’s land between battle of the bulls and bears? Try not to get trampled!

Here’s my latest Financial Post blog, which looks at the record amounts of cash scared Canadian investors are sitting on during this bear market. For full blog, click on the coloured headline here: When Volatility Scares You, is it Time for Investors to Buy or Sell?

The blog accompanies Garry Marr’s piece on the CIBC World Markets report released Tuesday: Ocean of Fear: Canadian investors sitting on record cash pile risk billion in lost returns.

Since markets got off to their worst January in decades, per force the Hub has been running several blogs on the topic of volatility. See also from the past week:

Hedging in the Retirement Risk Zone (which is mentioned in today’s FP blog).

Volatile, Unpredictable and entirely normal.

Behavioural Finance: Coping with Losses.

Volatile, Unpredictable … and entirely Normal

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Kara Lilly 4x6 Formal blue bg
Kara Lilly

By Kara Lilly, CFA

Special to the Financial Independence Hub

Stock markets have been jittery lately.

After improved sentiment last quarter, investors now appear to have heightened concerns. Not only have fears around China resurfaced, stoked in part by downbeat economic data and circuit breaker sell-offs, but weak global commodity prices also continue to elicit concern. Oil now sits below $30 per barrel, while the VIX index, a measure of volatility in the S&P 500, remains at an elevated level (approximately 29).

A lot has been going on in the global economy…enough that some shops have issued dire warnings of the days ahead. But while recent events do appear negative—insofar as they represent bad cards that have come up—they are not wholly surprising; the risks around China and weak commodity prices have been known for some time. Moreover, they warrant neither a kneejerk reaction nor panic.

Investor apprehension in this environment is both understandable and natural —and we must ensure it does not hijack us.

Markets are always volatile and unpredictable

Continue Reading…

Is it Work or is it Passion?

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Work or Passion 2
Billy and Akaisha Kaderli

By Billy and Akaisha Kaderli

Special to the Financial Independence Hub

While taking a break from the sun and surf, relaxing in my hotel room in a tiny beach town on Mexico’s rugged Pacific Coast, my cell phone rang.

“Howdy, Beautiful!” my friend of four decades shouted from snow country, thousands of miles away. “Been watchin’ your website for years and I read all your stories. Love ‘em. But I thought you were retired!”

How many times over the twenty-plus years since we left the conventional work force have we heard that challenge? Our responses have ranged from surprised silence to justification of our volunteer work, to just laughing out loud.

We run a popular website, photograph our travels and share our lifestyle adventures with people like you. Some think that by doing this, we have somehow become unfit to call ourselves “retired.”

Once findependent, you’re free to choose how to spend your time

Today I would like to pose this question to you: “Once you leave the mainstream labor-for-paycheck world and become financially independent, aren’t you free to choose what you do with your time? When is something considered work, and when are you pursuing a passion?” Continue Reading…

Behavioural Finance: Coping with Losses

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Depositphotos_65204705_s-2015By Aman Raina, Sage Investors

Special to the Financial Independence Hub

In the 20-plus years I have been investing, I have yet to meet or work with anyone who enjoys losing money.

I’ve met people who have lost money (yours truly included) and I can’t say it gives anyone or myself great satisfaction. We spend all of our time trying to make investment decisions that will be successful.

Unfortunately and it’s nobody’s fault, we don’t spend enough time understanding what losses mean and how they can impact our future decision making beyond the tangible reduction in our RRSP or TFSA broker account.

In my previous post, I discussed a concept involving the Endownment Effect that Richard Thaler observed in his book, Misbehaving: The making of behaviorial economics. According to Mr. Thaler, the Endowment Effect feeds into a general discussion on how we behave when it comes to losing and making money. Conventional thinking suggest that because we don’t like losing money that we will tend to take less risk to minimize loss and conversely take more risk when we are making money.

Losses “hurt” more than “gains” provide pleasure

Continue Reading…