General

Fixing your Credit for a Real Estate Purchase

Posted By Financial Independence Hub | February 7, 2023

By Jessica Mohajer

Special to Financial Independence Hub

To purchase a home, having good credit is essential to be approved for mortgage financing.

If your credit needs some improvement, then there are steps you can take to fix it and make yourself more attractive to lenders when seeking approval for a real estate purchase.

What is the credit score, and why do you need it for real estate purchases?

Your credit score is a numerical value calculated using information from your credit report. It typically ranges from 300 to 850 and reflects how likely you are to repay debts based on factors like payment history, the total debt owed, length of credit history, and types of accounts used.

A good credit score can make it easier for you to get approved for a mortgage loan and secure favorable interest rates and terms. Conversely, a low credit score can result in higher borrowing costs and potentially even difficulty obtaining financing for a home. For this reason, it is vital to ensure that your credit score is in good shape before attempting to purchase real estate. It’s also a good idea to check your credit score regularly, as it can change based on any changes in your credit activity.

Enlist the Help of a Credit Repair Service

Enlisting the help of a credit repair service can be an effective way to improve your credit score for a real estate purchase. A reputable credit repair service can work with you to identify errors on your report, dispute information, and offer guidance on how best to handle any financial issues dragging down your score.

Look for a credit repair service that offers personalized services such as customized plans, detailed analysis of your credit report, and a team of certified professionals. It’s also important to check the credit repair service’s reputation: ensure they have good reviews from past clients and are licensed in your state.

Have a positive payment history

Your credit score is one of the key factors that lenders look at when evaluating your loan application, and a good payment history will help you get approved more quickly. Paying your bills on time every month is crucial because it shows that you are responsible for managing your finances. The longer and more consistently you can make your payments, the better. It’s also a good idea to keep track of late payments and rectify them as quickly as possible. If you have missed a payment or two in the past, work on building up your credit score by making timely payments in the future. This will show lenders that you are taking steps to repair your credit and are dedicated to staying on top of your finances.

Check for errors on your credit report

It is important to check for errors on your credit report before you start buying a home. Errors on your credit report can cause significant problems when trying to secure financing and result in delays or even denial of loan applications. While there are several ways to review your credit report, the most efficient method is to get a copy from each of the three major credit bureaus: Experian, Equifax, and TransUnion. By getting a copy from each bureau, you can compare results and make sure all information is accurate. Continue Reading…

Resource Stocks provide long-term gains and inflation hedging

Posted By Pat McKeough | February 6, 2023

Including good stocks for long-term investment gains from the Resource section can be especially helpful in times of inflation. Learn more below.

For most investors, resource stocks should make up only a limited portion of their portfolios. That means that while we think you should maintain some exposure to resource stocks, you should still aim to balance your portfolio across most if not all of the five economic sectors.

If you want resource stocks in your diversified portfolio, then you need to know how to find good stocks in that sector for long-term investment gains.

Resource stocks, though volatile, tend to rise with inflation and can be good stocks for long-term investment gains

The resource sector is subject to wide and unpredictable swings in the prices it gets for its products. In the rising phase of the business cycle, when business is booming, resource demand expands faster than resource supply, so resource prices shoot up. This balloons profits at resource companies. When the economy slumps, resource prices fall, and this drags down resource profits and stock prices.

In addition to rising and falling with the business cycle, however, resource stocks have a history of rising along with long-term inflationary trends. This gives them a rare ability: they provide a hedge against inflation.

Back in the inflationary 1970s and 1980s, investors used to see this hedge-against-inflation ability as the main reason for buying resource stocks. But until recently, they rarely thought of it. That’s because inflation had waned for three decades.

Inflation peaked at a yearly rate around 13% in the early 1980s. It fell by two-thirds from that level by the middle of the decade. It went through a series of peaks and valleys, but had been working its way downward ever since.

However, after years of relative stability, inflation has come back to levels not seen in decades.

While the cost of just about everything has gone up, nobody can predict trends in inflation or interest rates with any consistency. And we disagree with investors who think we are on the verge of a huge outburst of never-ending price increases.

Even so, adding top Resource stocks to your portfolio lets prosper two ways: you can profit even without inflation — and these stocks will also provide an added boost in inflationary times.

It’s important to know your risk tolerance when investing in good stocks for long-term investment gains — including Resource stocks

There are several considerations that go into a successful growth investing strategy. Still, many investors overlook a number of important factors that can lower their risk.

In the end, there’s no such thing as risk-free investing. The tips below for lowering your growth investing strategy risk have long been part of the Successful Investor approach.

Balance your cyclical risk
Be skeptical of companies that mainly grow through acquisitions
Don’t overindulge in aggressive investments
Keep an eye out on a growth stock’s debt
Keep stock market trends in perspective
Look for growth stocks that have ownership of strong brand names and an impeccable reputation
The best long-term growth stocks should have the ability to profit from secular trends

Meantime, we continue to recommend that you cut your risk in the volatile resource sector by investing mainly in stocks of profitable, well-established mining companies with high-quality reserves. And as mentioned, resource stocks (and this includes oil and gas, of course) should make up only a limited portion of your portfolio. Continue Reading…

Income Needs and Wants in Retirement

Posted By Financial Independence Hub | February 3, 2023

By Mark Seed, myownadvisor

Special to Financial Independence Hub

Some time ago on this site I wrote one of the biggest retirement questions is: how much is enough?

What might be our income sources, needs and wants be in retirement?

The answer to such questions are usually: it depends.

This updated post will share those details and outline how such needs and wants might be funded in our upcoming semi-retirement days – planned for sometime in 2024.

Read on and let me know your thoughts, questions or comments!

What are your income needs and wants in retirement?

It largely depends on what you’ll spend in retirement.

That’s always been step #1 in our book.

Whether you’re 35, 45 or 55, I believe it’s essential to figure out what retirement might look like to you.

Here are a few questions we’ve been working through:

1. When do we want to retire or semi-retire?

Math is helpful but I also believe we want to retire to something.

Both of my parents stopped all form of work around age 60. That may or may not work for me – literally. I like to be busy and instead of stopping work cold-turkey per se I would rather glide into semi-retirement/work on own terms and then slowly ease off the gas pedal per se whenever I want. At least that is my thinking now …

Sure, math helps: the later you retire from full time work, the longer you have to accumulate that retirement nest egg. But I believe there is also the work-optional option of part-time work in our 50s when the debt is gone and most of the assets needed for full-on retirement spending have already been accumulated.

Your mileage may vary. :-)

2. Where do we want to live in retirement or semi-retirement?

Likely Ottawa, as a home base still.

Our family is here. Most of our good friends are here or in the immediate area.

We don’t aspire to own a second home in the sunny south – too many liabilities.

We do however want to travel more/live some time abroad.

Our thinking could always change but it will be nice to have our condo bought and paid for without any debt on the books very soon and maintain it as a home base.

This means all income we do intend to make, including during semi-retirement, is for us to spend as we please.

3. What will our expenses be?

The general wisdom is that you will need somewhere between 70-80% of your current salary for living expensses in retirement. That means, if you make $100,000 combined per year, you should plan to have $70,000 to $80,000 in combined retirement income spending, as an example.

This general wisdom includes the logic that you are likely to spend less as a retiree – since you’re not commuting to work, you might have downsized your home, and/or you’re not supporting dependents.

I think these rules of thumb (like the 4% safe withdrawal rate/rule while valuable to a point) don’t make much sense when you dig further into your personal details, needs and wants. Rules of thumb are a starting point – only.

I far prefer to calculate what our fixed expenses will continue to be, during retirement, including inflationary spending, adding in some variable spending needs and wants as well.

Here is a snapshot on the former:

Key expenses	Monthly	Annually	Semi-retirement comments ~ end of 2024???
Mortgage	$2,240	$26,880	We anticipate the mortgage “dead” before the end of 2024.
Groceries/food	$800	$9,600	Although can vary month-to-month!
Dining/takeout	$100	$1,200
Home maintenance/expenses	$700	$8,400	Represents 1% home value per year, increasing by inflation.
Home property taxes	$500	$6,000	Ottawa is not cheap, increasing by inflation or more.
Home utilities + internet/TV/cell phones, subscriptions, etc.	$400	$4,800
Transportation – x1 car (gas, maintenance, licensing)	$150	$1,800	May or may not own a car long-term!
Insurance, including term life	$250	$3,000	Term life ends in 2030, will self-insure after that without life insurance.
Totals with Mortgage	$5,140	$61,680
Totals without Mortgage	$2,900	$34,800	As you can see, once the debt is gone, we’ll be in a much better place for financial independence!

Add in other spending/miscellaneous spending to the tune of $1,000 per month and that’s our base budget. Continue Reading…

Digital wallets: How payment technology is dominating the future of finance

Posted By Financial Independence Hub | February 2, 2023

By Sander Meijers

Special to Financial Independence Hub

The payments technology industry is exploding in Canada. Due to economic indicators and progressive technology alike, consumers across the country have adopted new habits over the past few years, changing how they make payments. In particular, the adoption of e-commerce and unified commerce solutions validates that consumers are demanding more flexibility in how they use their “wallet.”

One trend to watch is digital wallets, which have become an increasingly important feature for Canadian merchants to offer. Since 2021, nearly one third (29%) of Canadians have completed a purchase using a digital or mobile wallet. With digital wallet options including Apple Pay, Google Pay, and WeChat Pay gaining in popularity, Canadians are regularly using their mobile devices to make payments in person and online. Knowing exactly how to implement a digital wallet can make a difference in how Canadians can make payments in 2023 and beyond.

Understanding what a digital wallet is

A digital wallet stores payment information, such as credit cards, which enables the consumer to pay both online and in person. This ultimately streamlines the payments experience for businesses and shoppers alike. A digital wallet can also be a software program on a desktop or built into an internet browser.

The most important thing to know about digital wallets is that they can completely replace the need for physical payment cards. Some digital wallets also let consumers make peer-to-peer payments, ATM withdrawals, and pre-load funds. Other digital wallets store more than payment information, including loyalty cards, vouchers, tickets, and more in the same place.

There are also mobile wallets, which work only for mobile devices such as smartphones and smartwatches. The key difference here is that “digital wallet” is a term that includes mobile wallets. In Canada, when it comes to online payments, digital wallets are the second most popular form of payment among shoppers.

What are the perks of digital wallets?

There are major benefits for businesses to accommodate digital wallets in Canada, including expanding your consumer reach, stabilizing conversion rates, and strengthening high security levels.

Canada is a socioeconomic melting pot, welcoming a diverse range of consumers from across the world. As such, shoppers from around the world have different payment preferences, so increasing flexibility and payment options helps ensure that today’s diverse consumer profile can complete their payments in methods with which they are most comfortable. Continue Reading…

A Conversation about CPP

Posted By Financial Independence Hub | February 1, 2023

By Michael J. Wiener

Special to the Findependence Hub

Close Friend: My wife and I are just a year away from being able to start our CPP benefits when we turn 60. I’m not sure if we should start them right away or wait until we’re older to get bigger benefits.

Michael James: I don’t usually get involved with giving this kind of advice about people’s specific situations, but you’re a close enough friend that I’ll try to help. Let’s go through a standard checklist of questions to help you decide.

CF: Fire away!

Do you need the money?

MJ: The first question is “Do you need the money?”

CF: Of course I need money. What kind of question is that?

MJ: Hmmm. You’re right. That question isn’t very clear. I think the idea is whether you need CPP benefits to be able to maintain your standard of living.

CF: Well, I’m retiring in a few months, and I don’t really know what standard of living I can afford.

MJ: Another good point. Let’s try to make the question more precise. If you don’t start your CPP until you’re 65 or 70, will you have less money available to spend before CPP starts than you’ll have after CPP starts?

CF: I’m not sure. My wife and I have $600,000 saved in our RRSPs that we could live on during our 60s.

MJ: That’s more than enough to live on while you wait for larger CPP benefits at 65 or 70.

CF: Okay, next question.

Life expectancy

MJ: Do you have a shorter than normal life expectancy?

CF: My dad died at 82, but my mother and both my wife’s parents are still kicking. One of my uncles died in his 60s. Maybe I should take CPP now in case that happens to me.

MJ: We can all imagine dying young, but it’s more important to make sure you don’t run out of money if you live a long life. Maybe a better way to phrase the question is “Are you willing to spend down all your savings before you turn 80 because you’re sure you won’t live that long?”

CF: No, I’m not.

MJ: So, even though you don’t know how long you’ll live, you’re going to have to use your savings sparingly in case you live a long life.

CF: Does that mean I should take CPP at 60 so that I won’t spend as much of my savings in my 60s?

MJ: No, it means the opposite. When you spend some savings in your 60s, you’re buying a larger guaranteed CPP payment that is indexed to inflation. You’re taking part of your savings that you spend over exactly 10 years and turn it into an income stream that could last for decades. By making this choice, you’ll be able to safely spend more money each month starting today.

CF: I’m starting to see a trend toward taking CPP at 70.