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.

Should your Small Business partner with a Social Media Influencer?

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Image Source: Pixabay

By Beau Peters

Special to the Financial Independence Hub

Justifying working with social media influencers in a big business is much easier. They have the resources, reach, and reputation to make the process seamless. But should your Small Business partner with a social media influencer?

Let’s examine three pros and cons of working with a social media influencer as a small business. Then, we’ll guide you in deciding if this type of partnership is worth pursuing.

Pros and Cons of working with a Social Media Influencer

Working with a social media influencer can positively impact your business’s bottom line, but first, you must weigh the pros and cons of this kind of partnership equally. Let’s start with three substantial disadvantages:

1.) Working with an influencer is hard to justify with a small budget

Small businesses have to be diligent about their finances. The last thing you want to do is spend unnecessary money on a marketing strategy you don’t need. When you have a small marketing budget, it can be hard to justify working with an influencer.

You must consider whether you can actually afford to bring on an influencer and that you’re committed to measuring the return on investment to ensure it’s worth it.

2.) It’s risky

Any marketing strategy is risky, but working with an influencer can be particularly risky because you can’t control people. Even if an influencer checks off all the boxes on your “ultimate influencer” list, they may not do what you thought they would do for your brand.

From taking your product and running to not producing the agreed-to content to being completely ghosted, many things can go wrong when working with a social media influencer.

If you aren’t comfortable with the risks, this may not be for you.

3.) It takes a lot of time and effort to find the right influencers

One of the most complex parts of working with influencers is finding the right ones to partner with. Working with the wrong influencers can damage your reputation. If they do something against your brand’s values, your audience won’t be pleased you’re associated with them.

Finding the right influencers to work with takes a lot of time and effort. But you must put in that time and effort to ensure you’re partnering with people with shared values, morals, and ethics.

Even with these cons, the advantages of working with a social media influencer can be significant for a small business. Here are three of them:

1.) Capitalize on the trust influencers have with their audience

Hyper-personalized customer experiences are becoming more important for marketing strategies to be effective. However, the challenge is building enough trust and a deep enough relationship with your target audience to provide that experience.

The great thing about successful influencers is that they know their audience. They built massive trust with them through content they can resonate with. You can capitalize on influencers’ trust with their audience when you choose the right ones to work with. Continue Reading…

Infrastructure as an Alternative Investment

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BMOETFs.ca

By Sa’ad Rana, Senior Associate – ETF Online Distribution, BMO ETFs

(Sponsor Blog)

At a time when market volatility, rising rates and high inflation are a common denominator, investors are looking for alternative solutions that can boost returns, while diversifying their asset mix away from traditional assets and fixed income.

In 1991, an investor with a portfolio of only Canadian bonds could have earned an annualized return of ~11% over 5 years. [1] Investors have increasingly had to look to alternative assets to add diversification, for growth and income generation, and enhanced returns with more challenging market environments

Alternative investments include non-traditional assets, like real estate and infrastructure. Investors can access these types of investment through ETFs that invest in public securities to give exposure to alternative investments offering greater diversification to a portfolio.

Infrastructure defined

When focusing on infrastructure as an alternative investment, it is important to first define what infrastructure actually is. One way to think of it is that infrastructure is the essential underpinning of modern industrial societies: all the core physical structures that allow us to function and enjoy modern life. Examples of such modern physical structures are transportation (roads, bridges, railroads etc.), energy infrastructure (energy transmission lines and pipelines), telecom infrastructure (cell phone towers) etc.: the things that allow all commerce to occur across the globe.

These core assets to modern life are staples for society and you don’t see demand vary much with the economic cycle. This lends to a few key attractive characteristics that makes infrastructure good to look at from an investment perspective.

So why Infrastructure?

One of the aspects that makes Infrastructure a good hedge or offset to the cost of inflation is the nature of the underlying business. These businesses are often supported by long-term contracts with governments, municipalities, or cities. This could lead to relatively steady cash flow with a potential yield component. Another important aspect to consider is that the high barrier to entry in the marketplace which does not encourage competition to emerge easily (mostly monopolistic businesses).

In a lot of the cases, contracts are linked to inflation or the operators have the ability to pass on the inflation to the end consumers. Because of the nature of the services being provided, people aren’t going stop paying the costs associated with services and products. You can rely on income being generated. So essentially, there is baked-in inflation protection.

Continue Reading…

Retired Money: All about the OAS boost at age 75 and implications of deferring OAS and CPP benefits

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My latest MoneySense Retired Money column looks at a rare 10% boost of Old Age Security (OAS benefits) Ottawa recently confirmed for seniors aged 75. As you’ll see there are plenty of implications and points to consider for those who are younger and contemplating deferring OAS to 70, or indeed CPP.

You can find the full column by clicking on the highlighted headline here: Delaying CPP and OAS — Is it worth the Wait?

The National Institute for Aging (NIA) confirmed OAS payments for Canadians aged 75 or older will be hiked 10%: the first permanent increase in almost 50 years. The NIA’s Director of Financial Security Research, Bonnie-Jeanne MacDonald, and Associate Fellow Doug Chandler said in the release the best way for retirees to maximize this boost is to defer OAS benefits for as long as possible, either by working longer or by using their savings to fund the delay.

By now, most retirees are aware they can boost Canada Pension Plan (CPP) benefits by 42% by delaying the onset of benefits from age 65 to 70, or 0.7% for each month of deferral after 65.  What’s less well known is that a similar mechanism works for OAS. Unlike CPP, OAS is never available before age 65, but by delaying OAS benefits for 5 years to age 70, you can boost final payments by 36%, or 0.6% more for each month you delay benefits after 65, according to the NIA. Before the August increase at age 75, the NIA said average Canadians would “leave on the table” $10,000; but after factoring in the new increase, they would now lose out on $13,000 by taking OAS at 65.

MacDonald and Chandler noted there are three other reasons to postpone OAS benefits: Reduced clawbacks of the Guaranteed Income Supplement (GIS) after age 70; Better OAS benefits despite clawbacks for those with more retirement income: and Increasing residency requirements. On point one, it says lower-income seniors wishing to avoid GIS income-tested clawbacks could draw down on RRSP savings to defer and boost OAS benefits, thereby preserving GIS payments after 70. On point 2, those subject to OAS clawbacks may find the age 75 boost in combination with delaying benefits may increase benefits but not the clawback. And on point 3, waiting may mean more years of residency for those who have not lived their entire years in Canada: to qualify for OAS you need to have been a Canadian resident for at least 10 years after age 18, so the five extra years of waiting for benefits could add to the payout.

However, on the first point retired actuary and retirement expert Malcolm Hamilton says it’s true deferring OAS until 70 and drawing more from your RRIF to compensate, means your RRIF income after 70 will be smaller and OAS pension larger. “However, by not drawing OAS until 70, low-income seniors will forfeit the full GIS benefit before 70. This doesn’t look like a good plan to me.” Continue Reading…

Post Ethereum Merge, will Crypto survive or thrive?

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By Jacky Goh

Special to the Financial Independence Hub

According to a recent report from CNBC, Ethereum has just completed its “final dress rehearsal” for the so-called Merge, which will shift the second-largest cryptocurrency by market value from a “proof of work” validation protocol to “proof of stake.” As CNBC notes, this upgrade has been years in the making and is considered “one of the most important events in the history of crypto.”

The reason is simple: efficiency. Moving to “proof of stake” will reduce Ethereum’s carbon footprint over 99.5% per its internal estimates, and also significantly lower its “gas” prices, i.e. the cost of transactions. Carbon emissions and the cost of converting crypto to fiat currencies (or other crypto currencies) are the two major criticisms of Ethereum, in particular, and crypto, in general.

Network will be more secure and less prone to manipulation

The Merge is not only important to the investing public, however; it’s a critical upgrade for the crypto community. The Ethereum network will now be more secure and less prone to manipulation. For example, anyone who wants to take over 51% of the network will now need to hold half of the total staked amount in ETH, rather than 51% of the mining hash power, as was the case previously. What this means is that the platform is guaranteed to be controlled by those who have a long-term interest in its success, ergo the term “proof of stake.”

But it’s the lower “gas fees” that will probably attract the most attention: and have the most profound effect on adoption. As the cost to process any transaction on the Ethereum blockchain goes down, more adoption will occur, meaning more people will be more open to participate in Ethereum blockchain projects. Think of how stock trading took off in the 1980s after US markets were deregulated and the world’s first discount stockbroker, Charles Schwab, opened for business. More recently, Robinhood spurred another surge in trading by reducing the cost of stock transactions to zero. This is commonly referred to as the “democratization” of investing. With the Merge, a similar revolution is coming to crypto. Continue Reading…

What Higher Rates mean for the Mortgage Stress Test

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By Sean Cooper, for Loans Canada

Special to the Financial Independence Hub

With higher rates arriving sooner than expected, Canadian’s finances are certainly being stress tested. In this article we’ll look at the history of the mortgage stress test and how higher rates are impacted it.

History of the Mortgage Stress Test

The mortgage stress test was introduced by the federal government several years back to stop homebuyers from overextending themselves. Previously, Canadians homebuyers only had to qualify based on the mortgage rate at the time of application. This was problematic for a couple of reasons.

First of all, mortgage rates could be higher when your mortgage came up for renewal. This could mean that you could face a much higher payment at renewal if mortgage rates were a lot higher then.

Most Canadians choose a five-year mortgage term. However, for those who chose a shorter mortgage term, that means the payment shock can be that much more if your mortgage comes up for renewal sooner.

The second reason it was a problem is that if someone chooses a variable rate mortgage, there’s really no limit to how high mortgage rates can go. You’re only asked to prove that you can qualify at the date that you applied. You’re not being asked to qualify again later on if and when rates rise.

What is the Mortgage Stress Test?

To avoid a similar meltdown as Americans experienced in the real estate market, the mortgage stress test came to be.

With the mortgage stress test, the borrower must prove that they can qualify at the greater of the stress test rate or your mortgage rate at application time plus 2%. The idea was to better protect homebuyers, but this came at a cost. Homebuyers saw their home purchasing power drop by 15% to 20% overnight. This is a direct result of having to qualify at a much higher rate.

Where we are Today

We’re in an interesting situation today. The mortgage stress test is still here. We’re seeing it put to good use, as interest rates are increasing faster than expected. Continue Reading…