Debt & Frugality

As Didi says in the novel (Findependence Day), “There’s no point climbing the Tower of Wealth when you’re still mired in the basement of debt.” If you owe credit-card debt still charging an usurous 20% per annum, forget about building wealth: focus on eliminating that debt. And once done, focus on paying off your mortgage. As Theo says in the novel, “The foundation of financial independence is a paid-for house.”

RBC Vantage: Unlocking value for things consumers do every day

Posted By |
RBC/Getty Images

By Erica Nielsen, Senior Vice President, RBC

(Sponsor content)

When it comes to everyday banking, our clients have made it clear they want more value for their business. Specifically, they want more value from the things they do every day and to be rewarded for their banking relationship, particularly as it grows with us. They want our help building confidence in making critical financial decisions. And most importantly, they want us to earn their trust by looking out for their best interests and having their backs.

This was the important feedback that we heard from Canadians, and which led to the launch of RBC Vantage.

RBC Vantage is our new way to describe all of the powerful benefits that our clients can enjoy every day, just by having a bank account with us. Through RBC Vantage, we’re transforming the way we approach the client relationship, moving beyond simply selling a chequing account to ensuring that we meet our clients’ needs and expectations holistically.

We’ve taken the best of what we do and have innovated our offering to deliver more value than ever before as well as insights and tools to help our clients make critical financial decisions and confidently manage their money.

So, how can RBC Vantage give Canadians more value every day?

Unlock more value

Our new Value Program, one of the innovations that we’ve launched as part of RBC Vantage, is designed to recognize and reward our clients for banking with us. By simply enrolling their eligible bank accounts, they will be able to enjoy more savings on monthly account fees, and now can earn RBC Rewards points on debit purchases in-store or online. And the deeper the relationship that a client has with us, the more fees they will save and points they will earn.

Earnings points on debit is a great option for clients who spend less on credit but still want an opportunity to earn rewards, or for those who want to up their earning potential by collecting rewards on both debit and credit purchases.

Whether it’s building up points for a big-ticket item or using them to pay for everyday purchases like groceries or to pay bills, having more opportunities to earn points can really make a difference. Continue Reading…

New 2nd edition of US version of Findependence Day now available; plus an Interview with Myself

Posted By |

Happy Canada Day!

Just in time for America’s Independence Day, I’m happy to announce that a new updated 2021 edition of Findependence Day is now available in the US market. Published by Best Books Media in New York, you can buy the paperback version of the book here through Amazon.com.

Or you can buy the new paperback for US$15.99 or Nook ebook for US$1.99 at Barnes & Noble.

Below is an Interview with Myself, which explains the timing, the differences and other things. If “An Interview with Myself” strikes some as a little bizarre, let me acknowledge that I originally got that idea from British journalist and author Malcolm Muggeridge, who I knew when he was the Writer in Residence at the University of Western Ontario journalism school in 1978-1979.

So without further ado, here’s the Q&A with myself:

 

Jon Chevreau: So Jon, you already had an American edition out in 2013. Why are you updating it eight years later?

Jon Chevreau: Good question, Jon, it’s mostly a matter of timing and the fact that North America, led by the United States, is just starting to emerge from the Covid pandemic. Suddenly, young people are starting to have hope again about their futures, including their financial futures. And, Findependence Day is a novel geared to younger adults, millennials, people just starting out on their life’s journey.

JC-Q: I see. I know Canada is a bit behind the USA in its vaccination program and economic recovery, but why a new US edition and not a new Canadian edition?

JC-A: True but the fact is that while the original Canadian edition has sold well and continues to sell in Canada, the original print run was such that there are still enough copies left that it doesn’t make much sense to make the old version obsolete. And besides, the content in the Canadian edition is still current.

As you know, Jon, the first edition from 2008 was actually written as a North American edition and attempted to include both Canadian and American content. But you decided a few years ago that the US market — which after all is ten times as large — needed its own edition with no reference at all to Canada or to Canadian financial content.

JC-Q: How do the different editions differ?

JC-A: Well, both the 2013 Trafford U.S. edition and the updated 2021 Best Books US edition are what I wanted the original edition to be. The cover concept was always the one you see above: it’s just that when Power Publishers published the first edition, the design team there went with the cover concept of the red balloon in the blue sky.

JC-Q: But you really wanted the image of a calendar set in the future, circling July 4th as the Findependence Day selected by one of your main characters?

JC-A: Correct. The 2013 and 2021 covers are quite similar although Best Books slightly reworked it and we changed the futuristic date from 2027 to 2036.

JC-Q: So the protagonist, Jamie, still has 15 years to achieve his dream of Financial Independence while he’s still young enough to enjoy it?

JC-A: Quite right, Jon.

JC-Q: Any other big differences?

JC-A: Well, the other thing the two US edition incorporated was something some people suggested I include in the original Canadian edition but chose not to at the time. That’s the chapter summary at the end of each chapter of the key lessons that Jamie and his wife Sheena learned. The new 2021 edition retains that feature and updates some of the financial info.

JC-Q: How do you categorize Findependence Day? Is it non-fiction or is it fiction?

JC-A: I wish you hadn’t asked that one, Jon because that’s a tough one to answer. In truth, it’s a hybrid of fiction and non-fiction, which I realize is a bit unusual.

JC-Q: So which is it, if you put a gun to our head?

JC-A: First, I’d say please remove the gun. Second, I’d say it’s primarily a novel but a financial novel.

JC-Q: Like David Chilton’s The Wealthy Barber and its many imitators?

JC-A: Sure, David Chilton established this genre way back in 1989 and no one has sold more copies than him in that niche. Incidentally, David has told us he “believes” in Findependence Day and that it is “excellent.” You can find that among the many laudatory testimonials the book has gathered over the years.

JC-Q: So why the hybrid and how does Findependence Day differ from all those other Wealthy Barber knockoffs?

JC-A: Well, most of the imitators tend to be what I call “information dumps” — the focus tends to be on the financial information and the stories around them tend to be a bit thin when it comes to characterization, plot etc.

JC-Q: And Findependence Day isn’t?

JC-A: We tried to bring traditional novel-writing structure and techniques into the book so that the young people who are its target audience would first be entertained and drawn in sufficiently that they’d want to see what happened to Jamie and Sheena. Yes, we sprinkle in the financial info as the plot proceeds but not at the expense of Story. So the minute any financial dump starts to sound contrived and unlikely to occur in real life, we cut it short and returned to the story.

That’s another reason for the end-of-chapter summaries and incidentally the reason we also created two Amazon ebooks that summarize the plot and reprise the end-of-chapter summaries. They cost just $2.99: they’re called A Novel Approach to Financial Independence. (one for Canada, the other for the US)

JC-Q. In short, we tried to write a “real novel.”

JC-A. We did try and many reviewers seemed to think we pulled it off. One financial planner, Diane McCurdy, said Findependence Day is “the closest you’ll come to a great beach book that helps you make enough money to retire!”

JC-Q: How is it a beach read? Continue Reading…

Bonds are back but what did they just say?

Posted By |

 

By Dale Roberts, cutthecrapinvesting

Special to the Financial Independence Hub

Bonds are the adult in the room. And when they speak, we should probably hear them out. This week [late June] bonds went on a tear. What were bonds trying to say? They were listening to the ‘Fed Speak’ in the U.S. that left many confused. Of course, the Federal Reserve and the Federal Reserve Chairman set the overnight rates that affect bond markets and our borrowing costs. It’s an economic lever. Maybe the adults in the room are suggesting that inflation is not a threat? We’ll see deflation in the near future? Or maybe a recession is closer than we think?

Here’s a good barometer for the bond market and economic sentiment – long term U.S. treasuries.

They’ve had a good month (and more) and they had an explosive week. The index ETF was up about 3% over the last two days. Long term treasuries are known as some of the best stock market risk managers. They punch above their weight.

Must read: Bonds are the adult in the room.

Recently I suggested that the stock and bond markets are buying the transitory inflation argument.

And in my most recent MoneySense weekly I had a look at some of the economic data for Canada and the U.S., including that recent Fed Speak and reaction.

Perhaps the bond market is going well beyond saying ‘inflation is transitory’. Let’s have a listen to what a few experts say about this weeks stock and bond activity.

David Rosenberg says look out below.

In a recent Globe and Mail piece Mr. Rosenberg suggested that inflation jitters will turn into deflation fear by year end. (pay wall) Of course bonds like deflation. And that’s one reason why we hold bonds right? Even though almost no one thinks that we could enter a long period of economic contraction and deflation. From Mr. Rosenberg …

“When these temporary disturbances fall out of the data, people are going to be surprised at how low the readings are going to be on these official inflation statistics,” the famed Canadian economist said in an interview Friday.

“I think we’re going to go back to talking about disinflation and deflation [by] the end of the year.”

The boring balanced portfolio is having its way these days. Stocks for growth and bonds for ballast and no-growth scenarios. Readers will know that I am also a fan of covering off inflation as well, you’ll read about that in the new balanced portfolio.

Investing is like a box of chocolates.

To quote Forrest Gump, you just never know what you’re going to get. This past week gave us that big and important reminder. Who would have thought that bond investors would have a such a sweet week? I’m happy to hold long term treasuries and that TLT and the BMO Canadian dollar version in ZTL.

Mike Philbrick at ReSolve Asset Management offered via Twitter …

No one knows the future price of any asset class so diversification is incredibly important as the first line of defense.

And as an example, pick your poison of inflation or deflation or economic shocks of any variety. More from Mike …

Another great example, why making sure investors are always exposed to inflation shocks rather than trying to time it … Money and mindshare piled in recently but all the returns came months before that, when investors were not noticing.

Perhaps there is no real economic growth?

Perhaps the bond markets echo Lance Roberts (no relation), CIO and partner at RIA Advisors, with respect to what is real and sustainable economic growth?

The reason that rates are discounting the current “economic growth” story is that artificial stimulus does not create sustainable organic economic activity.

And on the inflation front from Lance, you can’t create real inflation from artificial growth. From that post …

Yes, we see that word “deflation” again.

Rethinking the 60/40 portfolio?

That has been a hot topic for quite some time given the low yield environment. Many suggest tweaking up your equity exposure to the 70% level or so, if you have the risk tolerance. That was certainly covered in this post on the Horizons one ticket ETFs. Those portfolios employ U.S. Treasuries that help dampen the volatility of increasing equity exposure. Continue Reading…

Navigating Fixed Income Challenges with Flexibility

Posted By |

By Brian Giuliano

Brandywine Global Investment Management, a specialist investment manager of Franklin Templeton

(Sponsor Content)

Flexibility and adaptability can work to an investor’s advantage in the challenging fixed income markets of 2021. Structural disinflationary trends are now clashing with cyclical inflationary forces in a global economy struggling to recover from the COVID-19 pandemic. Add on interest rates at record lows, demographic pressures, heavy government debt levels, and widespread technological disruption throughout the global economy.

The market environment of low interest rates makes it difficult to generate income while preserving capital. As a result, many investors have taken on additional credit or interest rate risk to try to earn a more attractive income from fixed income assets.

But there are pitfalls to this approach. Without a counterweight to the extra portfolio risk, investors could be vulnerable to an increase in interest rates or a selloff in credit markets.

One option for investors is a multisector strategy with the flexibility to adapt quickly to changing markets. A strategy that’s able to capture opportunities when available but also play defense when market conditions call for it.

Global Income Optimiser strategy

The portfolio team behind the Franklin Brandywine Global Income Optimiser strategy are strong believers in flexibility, which means we try to adapt the income and risk exposures in a portfolio to the market environment. This approach does not have any structural, home country or sectoral biases. We aim to rotate the portfolio across what we believe are the best risk-adjusted return opportunities in the global fixed income universe.

Our goal is to generate high-yield-like returns with investment-grade-like volatility for investors. We want to maximize the income that can safely be earned in a given market environment.

The Franklin Brandywine strategy seeks returns from across the investment universe, including global investment grade and high yield credit, developed market sovereigns, structured credit and emerging market debt. Furthermore, sector rotation, duration management, quality rotation and security selection are employed to meet the strategy’s investment objective. Foreign currency is hedged primarily back to an investor’s base currency, such as the Canadian dollar; however, limited exposure may be used opportunistically to add alpha for a portfolio.

This strategy became available to retail investors in Canada on June 4, when Franklin Templeton introduced the Franklin Brandywine Global Income Optimiser Fund*. Globally, the strategy has a successful track record, dating back to its inception in 2013. In the U.S, a similar fund, to the degree allowed by Canadian regulations, is 5-star rated by Morningstar.** Brandywine Global is a specialist investment manager that was part of Franklin Templeton’s acquisition of asset manager Legg Mason in 2020.

Portfolio positioning for the reopening

Brandywine Global sees growth and inflation returning to the global economy this year. We increased spread duration late in the first quarter of 2020 and began reducing high quality government bond duration; so overall portfolio duration was roughly flat last spring. From last summer through winter, we materially reduced portfolio duration.

Now, the positioning of the strategy is for a short duration, cyclically-oriented portfolio of companies that have some pricing power, given inflationary pressures from the reopening trade. There’s a mix of U.S. and European names with a concentration in the BBB and BB space. The level of credit risk is largely investment grade over the long term; less than 5% of the portfolio is in CCC securities. High quality government bonds can help manage volatility. These and other ‘safe’ assets offer lots of ‘episodic value’ for the portfolio at times, especially during volatile markets, by being sources of alpha and acting as a counterweight to riskier holdings.

Capital protection is a top priority, and the Brandywine team will not reach for yield in this strategy.

Environmental, social, governance assessments

Also, Brandywine Global integrates ESG analysis into our comprehensive assessment of information risk and price risk with this strategy. The focus is on the material ESG issues that can impact a country’s economic growth, the business activities of a corporation, or the integrity of securitized collateral. Continue Reading…

What are Cryptocurrency Loans and how do you get one?

Posted By |

By Hristina Nikolovska

Special to the Financial Independence Hub

If you urgently need some extra money, a personal loan is the most viable option. There are various kinds of loans like mortgages, credit cards, or personal loans. Usually, you’d head over to banks or credit unions to get the funds. However, there’s another way to get a personal loan you probably haven’t considered. This article will explain what you need to know about crypto loans.

What are Crypto Loans? 

Cryptocurrency has evolved and entered multiple markets. That’s why you also have the option of getting a cryptocurrency loan, just like you would get one from a bank. However, there are some differences. 

Cryptocurrency is decentralized, meaning you don’t need an intermediary to deal with your financial transactions. The same applies to a crypto loan. There still is a platform you should register on, but you won’t be borrowing funds from it. Instead, you’ll borrow funds from other cryptocurrency owners. You also won’t need any credit checks. 

How do you borrow Crypto?

One thing you should know is that you’re required to over-collateralize a crypto loan to be eligible for it. This proves you have enough financial power to get the loan, and it protects both sides. 

Usually, you’ll collateralize your loan with some other cryptocurrency. Once you pay off your loan, you’ll get your cryptocurrency back. If you’re worried about the high volatility of cryptocurrencies, some platforms allow you to collateralize your loans with cars, real estate, or other off-chain assets. 

The cryptocurrency loan process is quick, and you’ll receive your money almost immediately. The first thing you need to do is verify your identity. Identity verification or know your customer (KYC) is there to protect the platforms and lenders from frauds, money laundering, terrorist financing, and similar acts. 

This identity verification is fast. Typically, you need to take a photo of one of your official documents and send it in for a scan together with your data. After this step, you’re required to deposit collateral. Depositing is as fast as the blockchain. 

Since this form of lending doesn’t require any assessment of your credit score, it’s a great choice if you don’t have any financial history, bank account, or you’re self-employed. It also allows you to switch between crypto assets and make your funds liquid without triggering a taxable event. 

What are the safest Crypto Lending Platforms? 

There are many crypto lending platforms out there that differ in fees, interest rates, withdrawal terms, and other aspects. 

The most famous platform is Binance. Loan duration lasts from 7 to 90 days. Daily interest rates are 0.0244%, while annual interest rates are 8.90%. Binance offers two types of lending, fixed deposits and flexible deposits, where the fixed one locks your funds, and the flexible one lets you withdraw funds whenever you want.  Continue Reading…