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.

Create a Money Machine: The Effect of Compounding

Posted By Financial Independence Hub | October 5, 2015

effect_of_compounding1 — Billy Kaderli, RetireEarlyLifestyle.com

By Billy Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

Our adventures around the world allow us to interact with many younger travelers in cafes and restaurants. Travelers are a great source of information about where they have been, places to stay and where to avoid. Things to do and the best way to get to a destination are often the topics of conversation.

Many times we are asked about how we can afford to travel for so long and then there’s the predictable wistful response: “I wish I could do what you’re doing.”

That’s when I tell them they can.

I explain in simple terms about investing and how they can create their own pension or annuity or as I like to call it a “personal money machine.” It is right about now when their eyes glaze over like they are speaking with their crazy uncle at a Thanksgiving Dinner.

I bring their attention back by saying they have something that I do not have; time. Usually I get a nod and a blank stare. I go on and ask if they know what “compounding” is. More often than not, they do not have a clue. These are college grads or they are taking a break from school to pursue their traveling bug. But to my surprise they do not understand the concept of compounding, which, in my opinion, is the easiest way to build wealth.

According to Investopedia, the definition of compounding is “the ability of an asset to generate earnings, which are then reinvested in order to generate their own earnings. In other words, compounding refers to generating earnings from previous earnings.”

Bingo!

Sweet simplicity.

The earlier you invest, the sooner Findependence

Who gets the Porsche — you or your investment firm? … Fees Matter! Introducing FWB TV

Posted By Jonathan Chevreau | September 30, 2015

The Financial Independence Hub is excited to unveil a new Internet video project on investing made possible by FWB TV, a unit of Toronto based Financial Wealth Builders Securities.

Starting today and on a regular basis, the Hub’s sister site, Findependence.TV, will be housing video content provided by FWB TV Paul Philip CLU, CFP and his associates. These high-quality videos generally run between two and four minutes and focus on investment strategies that are quite consistent with the content normally run on the Hub blogs.

You can find the first one by clicking on this headline: Who gets the Porsche — you or your investment firm? … Fees Matter! Expect the next instalment in a week or two.

Q&A on the rationale for FWB TV

To introduce the series and explain the rationale, here is a Q&A between myself and FWB TV owner Paul Philip CLU, CFP:

Optimizing CPP: how to avoid missing out on $100,000 of retirement income

Posted By Financial Independence Hub | September 29, 2015

Because the Financial Independence Hub was moved Monday to a new server to accommodate ever-rising volumes of web traffic, we took the liberty of posting the normal Monday “Hub” blog at sister site FindependenceDay.com. The guest blog below is on optimizing CPP benefits: the same subject as my Financial Post column that ran online Monday under the headline: Optimizing Your CPP is no trivial exercise. Now let’s get it from the horse’s mouth: Doug Dahmer. — Jonathan Chevreau

By Doug Dahmer, Emeritus Retirement Income Specialists

Special to the Financial Independence Hub

Canadians are an easy going and trusting people. Every year thousands of people, across the country, carelessly start their CPP payments and in the process forego hundreds of thousands of dollars in payments to which they are entitled.

I call this “The Great Canadian Pass Up.”

To ensure you fully appreciate the value of making the right decision, before you elect to a start your Canada Pension, Emeritus Retirement Income Specialists has created a powerful tool called the CPP Optimizer. Give it a try at: www.cppoptimizer.com.

Most people seriously underestimate their lifetime CPP income entitlement:

Your CPP benefits are a big deal. For a couple, where both spouses have regularly contributed to the CPP plan, the lifetime CPP income they can anticipate will likely exceed $700,000. Consequently it represents an important strategic contributor to the creation of a sustainable retirement income. Therefore, decisions about this benefit need to be taken seriously.

Reliance upon “conventional wisdom” can be very costly

Weekly Wrap: Horizons escalates ETF price war, Questrade expands active ETFs, CSA to review robo advisers

Posted By Jonathan Chevreau | September 25, 2015

Three significant developments in the ETF and robo-adviser space late this week, the full recap of which can be found in my new Weekly Wrap that may run online Fridays in the Financial Post. You can find the link for the first one here.

Horizons ETFs has rejigged fees on its popular Canadian equity fund, Horizons S&P/TSX 60 Index ETF [ticker HXT,] to just 0.03% or three basis points (plus taxes, down from the previous 0.05%. Previously the low-fee threshold was 0.05%, shared with three other providers.

Meanwhile, Questrade Wealth Management launched two actively managed ETFs, a global equity fund plus a fixed income ETF subadvised by institutional money manager, Jarislowsy, Fraser Ltd. These expand the lineup of six Questrade Smart ETFs launched in March.

On Thursday, the Canadian Securities Administrators (CSA) issued CSA Staff Notice 31-342 directed at portfolio managers providing online advice, popularly known as robo advisers. The CSA says it may conduct compliance reviews of online advisors within one or two years following launch, particularly as operations become more complex than the first generation that had basic ETFs or mutual funds as its underlying investments, and “uncomplicated” asset allocation models.