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.

Planning in uncertain times: How inflation is pressuring Canadian businesses to meet employee expectations

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By Elizabeth English, Mercer Canada 

Special to the Financial Independence Hub

The squeeze inflation is putting on businesses and their employees alike is being felt around the globe. As employees and their families deal with the increasing cost of living, employers are under pressure as they manage compensation budgets and salary expectations for the next year and beyond. Employees have heightened expectations of a commensurate pay increase with lower purchasing power. Employers must respond or risk losing talent.

As businesses grapple with the best ways to retain existing employees and attract new hires, Mercer released its 2023 Compensation Planning Survey, compiling data from more than 550 organizations of varying sizes across 15 industries. The survey reveals a number of insights for employers and employees alike.

Most companies are just beginning to think about increase budgets

With the price of everything from gas to groceries on the rise, there is an expectation from employees that their compensation should keep up with rising costs. Many organizations are in the early stages of deciding how to respond; the Survey shows that as of August, only 5 per cent of organizations had approved increased budgets, 11 per cent had proposed increases, and 84 per cent were still in preliminary stages.

Budgets continue to rise

Inflation is causing Canadian employers to increase their compensation budgets. Heading into the upcoming year, employers surveyed are budgeting an average of 3.4 percent for merit increases and 3.9 per cent for total increase budgets in 2023. This puts merit and total budget increases up from 3.1 per cent and 3.4 per cent, respectively, from 2022. However, even with these raises, merit and total increases fall short of year-over-year inflation, which hit a 40-year high of 8.1 per cent in June, moderating to 7.6 per cent in July and 7.0 per cent in August.

Across Canada, the highest increases in total budgets are in Montreal (4.5 per cent), Greater Edmonton (4.3 per cent), Saskatchewan (4.2 per cent) and Greater Calgary (4.1 per cent). With compensation budget increases falling well short of inflation, organizations across Canada will need to focus on managing employee expectations. This can be done through their internal communications, planning for multiple scenarios, as well as adopting a more comprehensive and broader total rewards perspective to attract and retain talent.

Off-cycle increases are being used for a variety of reasons

Historically, inflation isn’t the top metric for shaping compensation strategies. Still, in this high inflation environment, 34 per cent of organizations are considering ad-hoc, off-cycle wage reviews or adjustments to combat turnover. This is a significant hike from 19 percent considering the same in March of 2022. Continue Reading…

Get Income at the Short End

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Franklin Templeton/iStock

By Brian Calder,

Franklin Bissett Investment Management

(Sponsor Content)

Nowhere to run to, nowhere to hide: that could be the description of the 2022 investor year. It has been a difficult 2022, and many investors are looking to enhance their cash positions while preserving capital, given market volatility and rising interest rates. In this environment of high inflation, higher rates, and slow economic growth, an ultra-short duration bond strategy could be timely.

The major equity and bond markets have been hit hard this year by geopolitical shocks, fallout from the COVID-19 pandemic, and sluggish growth. Rapid and aggressive moves by major central banks to increase interest rates resulted in a flat or inverted bond yield curve and contributed to elevated market volatility. An inverted yield curve means that interest rates on short-term bonds are higher than those of long-term bonds. For instance, on October 6, 2022, the yield on the three-month Government of Canada bond was around 3.68%, while the yield on the 10-year Government of Canada bond was 3.34%.

An inverted yield curve is often seen as a pessimistic market signal about the prospects for the wider economy in the near term. Bond markets have priced in even more interest rate hikes from central banks like the Bank of Canada and the U.S. Federal Reserve.

So, rather than thinking about being ‘ahead of the curve,’ it may be time for investors to be at the front of the curve.

These challenging market conditions are ideal for an ultra-short-duration bond strategy. Duration is a number that’s used to measure how sensitive a bond’s price is to changes in interest rates:  how much the price is likely to change as rates change. The longer the duration, the greater the sensitivity to shifts in interest rates for a bond. Understanding the use of duration can help an investor determine the position of bonds in a portfolio.

Time for short-term thinking

At the front end of the federal government bond yield curve, opportunities are available for investors because the curve remains flat in the middle and at the back end. A yield comparison of the Canadian market as of August 31, 2022, showed that an ultra-short duration strategy outperformed three-month Treasury bills and was competitive with one-year to three-year government bonds. Because short-term yields are less sensitive to rate hikes, they can be more protected and stable, plus they are not as exposed to potential drawdowns like those seen in strategies with longer-term exposures.

Also, an ultra-short duration strategy can be less volatile than longer bonds (see chart).

 

Continue Reading…

What we’re doing in this beet-red Bear market

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Image Tawcan/Unsplash

By Bob Lai, Tawcan

Special to the Financial Independence Hub

Unless you’ve been living under a rock, you probably have heard that the global stock market has been on a downward spiral. Yup, the bear has entered the room and many of us are seeing beet-red market conditions over the last number of months.

Year to date the TSX is down more than 13%.

TSX YTD performance

Meanwhile, the S&P 500 is down more than 22% year to date.

S&P500 YTD performance

The typically high-flying NASDAQ is down more than 30% year to date.

NASDAQ YTD performance

For those investors who only started investing in 2021 or those who are used to the only-going-up-bull-market condition, the recent downward trend is undoubtedly hard to stomach.

Given that we’ve been DIY investing for more than a decade, some readers have reached out and asked what we’re doing in this bear, beet-red market condition.

So what are we doing?

Allow me to explain.

Think long term

First of all, it’s essential to think long term. If you’re still in the accumulation phase, like us, you should be wishing and hoping for an extended bear market.

Why?

Because investors in the accumulation phase will want to buy stocks at discounted prices.

How often do you see the likes of Royal Bank and TD having an initial dividend yield of over 4.1%? The 10-year historical average dividend yield for Royal Bank is 3.92% while the 10-year historical average dividend yield for TD is 3.8%. Continue Reading…

Canadian Financial Summit 2022 (Virtual)

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This week a veritable who’s who of Canadian financial personalities and personal finance bloggers will be featured at the 2022 (and virtual) edition of the Canadian Financial Summit, starting this Wednesday. Hub readers will recognize several guest bloggers, including (pictured above) Robb Engen of Boomer & Echo; Bob Lai of Tawcan; Kyle Prevost of Million Dollar Journey and MoneySense; myself; as well as well-known media commentators like Robb Carrick of the Globe & Mail, Peter Hodgson of the Financial Post, Fred Vettese of the G&M, financial planner Ed Rempel and many more. There will also be MoneySense colleagues Dale Roberts (of Cutthecrapinvesting) and MoneySense executive editor Lisa Hannam

The online summit runs from Wed., Oct. 12 to Saturday, Oct. 15th, 2022.

To register, click on the home page here.

Here are just some of the topics that will be covered:

  • How to plan your own retirement at any age
  • How to save money on taxes by optimizing your RRSP to RRIF transition
  • What cryptocurrencies like Bitcoin actually are – and if you should be investing in them
  • How to maximize your Canadian Child Benefit (CCB)
  • How to efficiently transition your investing nest egg to a steady stream of retirement income
  • What Canadian real estate investments looks like in 2022
  • How to deal with inflation on your bills and in your investment portfolio
  • How to avoid crippling fees and terrible advice
  • When to take your OAS and CPP
  • How to buy your own pension – income for life!
  • Why Canadian dividend stocks might be the right fit for you
  • How to use your housing equity to maximize your retirement lifestyle

Here’s what MillionDollarJourney had to say about the conference:

I’m proud to say that MDJ’s own Kyle Prevost is co-hosting the event alongside MDJ writers Kornel Szrejber and Dale Roberts – so I can speak firsthand to the quality of the product!

One thing I always appreciate about this Summit each fall is that it is produced by Canadians – for Canadians.  Too much of the money-related content we see is American-based in nature – but you won’t have to translate any talk about 401Ks or American private health insurance at this event!

Together, the roster of All Star Speakers have authored more than 100 personal finance books, hosted 1,000+ podcast episodes, written 20,000+ blog posts and newspaper columns, and have been featured in thousands of media articles and interviews from every news and financial publication in Canada.  

Needless to say – you will not find this elite group in one place anywhere else!

And it’s free!

Here’s a sampling of the event’s FAQ:

Is the Canadian Financial Summit really free?

Yes. The videos are completely free to view for 48 hours. After that you need the any-time, anywhere All Access Pass.

What’s the catch?

There. Is. No. Catch.  We believe you’ll think the information presented by our 35+ Canadian experts is so solid, so actionable, so lacking in fluff and sales jargon – that we think you’ll pay for it after already seeing it for free.

How do I watch The Summit?
Simply click here to claim your free ticket. You should immediately get an email confirming your registration – just follow the directions in that email and you will get a link sent to you 24 hours before The Summit goes live. You can view The Summit on any phone, tablet, or computer.
I signed up for the 2017,2018, 2019, and 2020 All Access passes, but am not sure how to access those membership pages.

Click here, and simply fill in your info.  You will be be taken to a page that allows you access the 2017, 2018, 2019, and 2020 content. If you have forgot your Canadian Financial Summit password, simply click here to re-set it.

A sampling of the sessions

Rob Carrick

Where is Housing Headed?

In a drastic change from past years, we’re seeing some major pull backs in the Canadian housing market. Join Rob and I as we break down how this is affecting Canadians’ net worth, who is getting hit the hardest, and where we go from here. We also discuss if renting is still an option that we’re recommending and what we think could happen in regards to the long-term trends of immigration and housing stock within Canada now that the pandemic is in the rearview mirror.

Ellen Roseman

Addressing Canadians’ Inflating Sense of Worry

Longtime Canadian consumer advocate Ellen Roseman is back and wants to help Canadians weather the recent storm of inflation and rising costs of living.  Her personal experience with Canada’s last bout of quickly rising prices have given her some hard-won wisdom in practical ways to deal with modern inflation issues.  We talk about what to pay attention to, watch out for, and some top tips in this high-price environment.  We wrap by speculating on what all of this will mean for Canadians’ investment portfolios. Continue Reading…

14 creative ways to make Extra Money on the side

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What is one way to make extra money on the side?

To help you find creative ways to make extra money on the side, we asked career coaches and business leaders this question for their best insights. From doing freelancing through Upwork to engaging in pet care, there are several easy ways to start making extra money in addition to your regular day job.

Here are 14 creative ways these leaders recommend for making extra money on the side:

  • Do Freelancing Through Upwork
  • Put Ads on Your Car
  • Sell Informational Products
  • Offer Gaming Services Online
  • Do Social Media Marketing
  • Become a Food Delivery Driver
  • Donate Blood Plasma
  • Sell Old Electronics
  • Try Random-Rewards Banking
  • Rent Free Space on Airbnb
  • Work as a Virtual Assistant
  • Become a Video Game Tester
  • Teach English Language
  • Engage in Pet Care

 

Do Freelancing through Upwork

We have hired a lot of freelancers from Upwork over the years who have their normal day jobs but do the same type of work on their own through Upwork in their spare time. Upwork makes it very easy to list your skills and have a company hire you for small projects. We have worked with one candidate through Upwork for over 5 years now. We will have website redesign projects and he will help us. I know this is a side gig for him and we work around his schedule, but it also saves us a lot of money not having to hire through a marketing company and getting the same level of talent. If you have any good computer skills you can find a task that you can help someone with through Upwork. It can be as simple as data entry or replying to emails, there are all types of jobs available. Being an online freelancer is nice because all you need is a computer and internet connection, there is very little up front cause to start earning extra money on the side. — Evan McCarthy, SportingSmiles

Put Ads on your Car 

A super easy way to make anywhere from $100-$300 in extra income is by simply driving your car as you normally would through car-wrapping ads. There are usually a few general requirements for legitimate car wrapping ad companies in larger cities: such as a minimum driving time as well as driving a newer car that is still in good condition. Assuming you meet these requirements, however, you can comfortably earn an extra income without making any changes to your day-to-day life. –– Kristine Thorndyke, Test Prep Nerds

Sell Informational Products

If you’ve got enough knowledge or hands-on experience in a particular field of interest, selling informational products like e-books, audiobooks, or courses is a great way to make some extra money. The best part about informational products is that once you’ve poured in your time and energy to create them, they won’t need constant attention or time: literally making you money while you sleep. — Harry Morton, Lower Street

Offer Gaming Services Online

If you’re an ardent gamer or someone who dedicates a lot of time to video games, you could make some extra money by selling gaming services online. There are a few different ways of going about this. You could offer coaching services to help others improve their gameplay or even sell in-game items and currency that you’ve acquired. You could also stream your gameplay on platforms and earn income from advertisements. The amount of income depends on how many hours you’re willing to commit and the type of services you offer. But if you’re able to build up a large following, you could potentially make a career from this side hustle job. –– Demi Yilmaz, Colonist.io

Do Social Media Marketing

In this digital world, businesses are always searching for strong social media marketers. The millennial generation or Gen Z can thrive in these positions as they spend the majority of their time on popular platforms such as Instagram and TikTok. This side gig can easily be done on your own time as freelancers can schedule posts through third-party apps like Later, and work on an influencer marketing strategy through Aspire IQ. Graphics can be made through free websites such as Canva, and all community management can be handled straight from your home office. While a content role such as social media may feel like it’s never-ending, it’s a great side hustle for those looking to advance their digital skills. — Corey Ashton Walters, Here

Become a Food Delivery Driver 

One way to meet fitness goals while making cash on the side is to run food for a food delivery app. Professionals can handily make over a thousand dollars a week part-time by working in busy delivery areas during peak hours. Depending on the area, delivery drivers can bike or use a car to maximize total deliveries during their shifts. In particularly busy cities for food delivery, such as New York, orders are certain to be nonstop on specific days of the week, guaranteeing flexible supplementary income.  Continue Reading…