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.

Are you suffering from investing bias?

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Overview

Situation: Nobody is immune from the adverse ramifications of investing bias.
Symptom: Left unchecked, your bias can inflict long-lasting portfolio damage.
Solution:  Recognize your biased patterns and muster up willpower to change.
Summary:  Stop emotional attachments and adopt rational decision making.

“The art of being wise is the art of knowing what to overlook.”
— William James (1842 – 1910) American psychologist and philosopher.

Our investment behaviours are dramatically influenced by the bias we keep. Left unchecked, bias can inflict long-lasting portfolio damage, such as lower returns. The goal is to become aware of how bias affects the outcomes of investing behaviours. My challenge is extended to all investors.
Bias has many definitions, such as, “a preference or an inclination, especially one that inhibits impartial judgment.” Too many portfolios are devastated by various signs of biased investing. Resolve to unravel the consequences of biased investing to regain a portfolio with purpose.

Recognize and make adjustments to bias that is holding back your money management. Step out of your comfort zone and revisit your biased behaviours. All investors can resolve to make simple and sensible bias alterations. This process helps us become better investors.

Nobody is immune from the adverse implications of investing bias. Researchers point out that our brains are wired with many preset investment bias, professionals included. Thankfully, the wiring is easily changed. In addition, portfolio managers devote plenty of effort in minimizing the affects of bias found in client portfolios.

Delving into a few amusing behaviours of investing is a fascinating subject. My favourite is the impatience bias that grandmas and grandpas don’t have.

Change this wiring soon

I highlight a few important biases for you to recognize and change:

• Over-confidence bias: The most common investor bias by far is over-confidence. That is, believing that we are more savvy and wise about particular investment strategies than we actually are. Over-confidence often leads to quick decisions that we later regret. For example, investing too much money into one or two “surefire” stock selections.

• Confirmation bias: Investors have built-in desires to find facts, figures, data, trends, information, people and institutions that agree with their existing views. Then they ignore all the other people and data that contradict existing beliefs and positions. Does it sound close to home?

• Recency bias: Your next investment decision can be unduly influenced by the outcome of your last trade. You are more receptive to investing if you just realized a gain, versus if you realized a loss. Regardless of whether or not the investment climate is right for you.

• Impatience bias: Have you noticed that grandmas and grandpas seldom get mad or annoyed for very long with their grandchildren? In contrast, the children’s moms and dads may reach the hot point with the same children much sooner. This observation also applies to their investment portfolios. Those grandmas and grandpas have more patience with portfolio outcomes, versus their sons and daughters. Consequently, the moms and dads reach more emotional resolutions and/or fewer logical decisions than grandmas and grandpas. This is an easy one to correct. Continue Reading…

Gold still shines but watch China

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Financial advisors should ensure that gold comprises 20% of their clients’ portfolios to improve their return and lower volatility, Nick Barisheff, CEO of BMG Group Inc. in Markham told Wealth Professional.

“From an advisor’s point of view, that’s the easiest thing to do: just add some gold to your client’s portfolio – without getting into all the complexity of a currency or anything else,” he said. “It’s that simple. That’s as far as they need to go. Everything else gets very complicated.”

Barisheff was reacting to recent commentary that gold’s place in the investment world was being eclipsed by Bitcoin. He noted that for something to be an effective currency, it needs to store wealth as well as be a medium of exchange – and Bitcoin doesn’t accomplish that.

“You can’t conceive of doing a long-term bond with Bitcoin because the volatility in the fluctuation is so huge,” he said, “and then there’s really nothing backing it.”

While Bitcoin’s value is increasing, Barisheff attributed that to the hype surrounding it rather than any solid justification for it.

The Bank of International Settlements, which he noted sets the rules for all central and commercial banks, has authorized gold as a zero-risk monetary asset equal to U.S Treasuries.

“They didn’t say that about Bitcoin,” he added.

China and Russia increasing their holdings of Gold

The other thing that Barisheff said to watch for in the world of gold is the fact that the world’s central banks hold about 30,000 tonnes of gold – and the central banks of China and Russia, as well as other countries, are increasing their holdings. China has said it has 1,600 tonnes of gold, but he said some estimate that its sovereign wealth fund, which doesn’t have to report its gold holdings, may have 5,000 to 6,000 tonnes of gold.

“They will move it to the central bank when they feel they’ve bought enough gold,” he said. “Their officials have publicly stated that their objective is to have more gold than the U.S. and the U.S. has 8,000 tones, so China’s goal is to have 10,000 tonnes. So, they’re not going to announce that until they’ve finished buying the gold because, when they do, the price will go ballistic, and it’s in China’s best interest for the price to stay down for the time-being.”

Once that happens, he noted that there will be questions about where they got that gold. Continue Reading…

7 ways to earn money with a Mobile Phone

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How can you earn money by using a mobile phone? You are on your phone constantly, and, for some of us, it’s seemingly impossible to put down. Make your screen time do double duty by tapping into your phone’s earning potential.

To help you earn a little extra cash, we asked business professionals and financial experts and this question for their best advice. From managing social media accounts to selling your stuff online, there are several strategies you can use to generate an income using your smartphone.

Here are seven ways you can make a profit by using a mobile phone:

  • Raid your Closet
  • Get Cash back
  • Help test Websites
  • Manage Social Media accounts
  • Download a Research App
  • Take on Small Jobs
  • Sell your Stuff

Raid your Closet

One way to earn extra cash by using your mobile phone is to look at what’s in your closet. Apps like Depop or Poshmark allow you to sell your unused clothes from your phone. It’s a fact that sometimes clothes get buried in drawers and in the back of the closet forgotten to time. When you need some spare cash, or you just want some additional income, you don’t have to do a lot to get it. In your spare time, take a look at what’s in your closet that you’re not wearing anymore and support sustainable practices by giving your clothes a new home rather than just tossing them out. — Vanessa Molica, The Lash Professional

Get Cash back

Your mobile phone can be a time-sucking, social-media black hole. But it could also be the savvy consumer’s most powerful secret weapon. You can earn cashback with awesome free apps, such as Ibotta, at thousands of retailers on almost every product you can think of. And simply getting 2–5% of what you’ve spent really starts to add up. So every time you hit the shops, make sure your cashback app is fired up and ready to keep your wallet a little heavier. — Chris Panteli, LifeUpswing

Help test websites

The app User Testing sets business and website owners up with technology users and asks them a series of questions to help improve the user experience of their site or app. Each session pays $10, and some “live” sessions pay $30–$60 for your responses. It’s very easy to sign up for and a great way to make some extra cash for the week! Tests are chosen based on your experiences, so be sure to be thorough when filling out your profile! — Katie Fellenz, Trust & Will

Manage Social Media account

Social media has turned out to be a huge platform with various jobs associated with it. The ‘Social media assistant’ is one such job where you manage the social media profiles of a client. It’s hassle-free as most of the tasks are performed through your mobile device. Continue Reading…

Semi-Retirement: the Halfway House between Employment and Full Retirement

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As those who have clicked on some of the 37 interviews featured at this week’s Canadian Financial Summit will know, there’s a lot of content to absorb.

One of those 37 talks was my chat with Kornel Szrejber for a talk titled Semi-Retirement: the Halfway House between Employment and Full Retirement.

To find it, you need to click on this link and then scroll down to my name, or whichever of the other 36 speakers you are interested in hearing. Each name is highlighted in blue and is a hyperlink to the actual interview. At the bottom of this blog you’ll find a link to Thursday’s content, including my conversation with Kornel and PWL’s Ben Felix about the MoneySense ETF All-Stars.

Similar to my MoneyShow Zoom interview earlier this week that was also about the MoneySense ETF All-Stars 2021 edition, the video with Kornel shows me in my home office: like all regular Zoomers, some of the books I have written are not too subtly displayed over my right shoulder.

New 2nd US edition of Findependence Day

Regular readers of the Hub will likely find my interview with Kornel to be somewhat familiar. We cover the topic of Findependence, which is a term I invented and introduced with the first Canadian edition of my financial novel titled Findependence Day. You can still buy the original book by clicking on the site.

Alternatively, you can click on the “Buy US edition” tab and you can find the first US edition published by Trafford, or the just-published second US edition published by Best Books Media in New York. Apart from focusing on US financial rules, the second edition also includes end-of-chapter summaries that weren’t in the original edition. It also puts more emphasis on the “Work Optional” theme.

Victory Lap

As the title of the interview with Kornel suggests, I view Semi-Retirement as a halfway house between full traditional salaried employment and the old-time Full Retirement that used to commence the moment you reached age 65. I am now three years beyond that, so am well into what Retirement guru Doug Dahmer calls the “Work Optional” phase. Another term for this is Victory Lap Retirement, which is the title of a non-fiction book I coauthored with former banker Mike Drak.

During our chat, Kornel asks me about what I’ve been up to since I left full-time employment in 2014 and how Findependence differs from traditional Retirement. As I say to friends and family, I try to work just three or four hours a day but when you’re operating a website aiming for fresh content every business day, it’s hard to really “retire” in the usual sense of the word.  It’s all about “encore” careers, although I saw a clip on Twitter yesterday that suggested that in the post-Covid world, aging baby boomers are becoming a bit disillusioned with the Encore career idea and are increasingly inclined to really slow down and smell the roses while they and close friends and family are still healthy enough to enjoy their leisure.

More on the MoneySense ETF All-Stars

The other of my presentations at the Canadian Financial Summit was a three-way chat with Kornel and PWL Capital’s Ben Felix, about the MoneySense ETF All-Stars 2021. It’s an audio-only conversation taped in the summer and you can access it through the usual podcast platforms here. Continue Reading…

Virtual talks this week at Financial Summit and MoneyShow [continued & updated]

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Yesterday, Wednesday, Kornel Szrejber’s all-virtual Canadian Financial Summit kicked off,  running until Saturday, Sept. 25. As the image above shows, you can register free. Here is the main link for info on the more than 35 presentations.

Now that Day One of the Summit has taken place, the organizers issued this update:

Good morning. If you couldn’t make it to the kickoff webinar last night, feel free to check out our recording here and then let me welcome you to the Canadian Financial Summit!

A special thank you to those of you that took the time to help us spread the word on social media, and who emailed us encouraging messages about the Summit Kickoff.

We’ve received hundreds of emails from attendees this week, so if you submitted a question, I promise that we’ll get to it, we’re just working through them in chronological order. If you don’t want to wait, then definitely check out the kick-off event video that I posted yesterday, as there’s a 90%+ chance that your question is answered in that video.

Today [Sept 23] we’re super excited to feature the following speakers (free for the next 48 hours):

Rob Carrick
Can Renting a Home Actually Make More Financial Sense for Some Canadians?

Ellen Roseman
How to Protect Yourself as a Canadian Consumer in 2021-2022 + Retirement Strategies for Canadians

Ed Rempel
Self-Made Dividends – Better than Ordinary Dividends in Every Way

Bridget Casey
What Role Should Cryptocurrency Play in Your Portfolio?

Kyle Prevost
Want an Unlimited TFSA? Move to These Countries and Build a Portfolio Tax-Free!

Ben Felix, Brendan Wood, Tim Nash
FAQs and Misconceptions about DIY Investing

Alanna Abramsky
Understanding Credit and Managing Debt

Jonathan Chevreau
Semi-Retirement: The Halfway House between Employment and Full Retirement

Mike Heroux
Are Dividend Stocks In a Bubble?  What Market Is Safe?

Andrew Hallam
Balance – How to Invest and Spend for Happiness, Health, and Wealth

Ben Felix
What is Factor Investing, Why Do Smart People Like It, and Can It Make You Money?

Robb Engen
Don’t Let FOMO Rule Your Investment Decisions

Click here to see your Day 1 Summit Sessions.

If the link doesn’t work, please try copy and pasting the following into your browser:
https://canadianfinancialsummit.com/2021-day-1/

My presentation is the one titled Semi-Retirement: the Halfway House between Employment and Full Retirement.

It consists of a 45-minute Zoom interview with Kornel is pretty wide-ranging but focuses on Retirement Income, as opposed to Wealth Accumulation. That’s Semi-retirement: or as Doug Dahmer and other retirement gurus have dubbed it, the “Work Optional” phase of our working careers.

Here’s the formal description for that talk:

September 23:
Semi-Retirement: The Halfway House between Employment and Full Retirement

Should you transition into a semi-retirement instead of a full-stop retirement? What if doing so allowed you to ‘retire’ many years earlier?

Join us as we speak to someone who has done exactly that: Jonathan Chevreau, professional writer and former Editor-in-Chief of MoneySense Magazine takes us through his real-life lessons learned from transitioning to the decumulation phase and actually living off the investment portfolio. 

To access the video, click the highlighted title above and scroll down to Jonathan Chevreau, then click on the highlighted name.

We cover:

  • How Jon ensures that he doesn’t run out of money in retirement
  • The investment withdraw strategy that he prefers
  • How he withdraws from his investments in a tax efficient way
  • Important lessons to know before transitioning to semi-retirement or full-stop retirement 
On Friday, Sept 24, the MoneySense ETF All-stars are the focus of a three-way chat between myself, Kornel and PWL Capital’s Ben Felix (who is also an ETF panelist for the All-stars). Here’s the formal Summit description:
September 24:

MoneySense: Jonathan Chevreau, Ben Felix, Kornel Szrejber
The Best ETFs in Canada for 2021

In this video presentation, we’re going to cover the top ETFs in Canada, specifically for Canadian investors. 

These findings are based on 8 experts in this field who are part of the Best ETFs in Canada Guide which is published annually on MoneySense and written by the one and only Jonathan Chevreau.

In this interview and presentation, we’re going to talk about what the findings were with the creator of the guide, and one of the top Analysts from the panel (Benjamin Felix, Portfolio Manager at PWL Capital). Continue Reading…