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RBC Vantage: Unlocking value for things consumers do every day

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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…

Embracing Uncertainty: Do Nothing and hope Nothing Happens but don’t make me Think

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By Noah Solomon

Special to the Financial Independence Hub

One of my favourite quotes is attributable to the late, great economist John Maynard Keynes. During a high-profile government hearing, when a critic accused him of being inconsistent, Keynes responded, “When the facts change, I change my mind. What do you do, sir?”

Being uncertain of what to do and/or scared of being wrong can cause investors to cling to their existing strategies and portfolios regardless of changes in the economic backdrop or market environment.

Another cause of investor inertia lies with the wealth management industry, which generally espouses a “do nothing and hope nothing happens” approach to investing whereby clients are encouraged to adopt a static, buy-and-hold approach and refrain from making any significant changes to their portfolios, regardless of changes in the investment environment.

The behavioral explanation behind the abdication of action in favor of passivity is nicely summarized by the following quote:

“You see, Dr. Stadler, people don’t want to think. And the deeper they get into trouble, the less they want to think. But by some sort of instinct, they feel that they ought to and it makes them feel guilty. So they’ll bless and follow anyone who gives them a justification for not thinking.”

– Ayn Rand, Atlas Shrugged

Despite this tendency to cling to the status quo, the fact remains that refusing to change your portfolio in response to changing conditions has historically been one of the costliest mistakes in investing.

Sometimes It’s OK to Do Nothing (But it’s really hard to know when)

When asked what went through his mind when he listened to his own music, jazz legend Miles Davis responded, “I always listen for what I can leave out.” Davis meant that there are times when less is more: restraint can be more effective than action. As is the case with music, there are investment climates in which it’s best to do nothing.

The value of sound risk management varies depending on the market environment. The ability to manage risk has little value when conditions are favourable.  During a bull market that occurs against a backdrop of attractive valuations, low leverage, and a favourbale economic climate, risks are minimal and any move to take profits and reduce risk will likely make you worse off: just sit back and enjoy the proverbial ride. Conversely, there have been (and inevitably will be) times when risk management and flexibility can prevent a great deal of financial (not to mention emotional) pain.

So far so good: swing for the fences and make huge returns in favourable markets and apply the brakes to avoid losses when conditions turn hostile. But wait! To pull this off, you need to do the impossible and successfully predict exactly when markets will turn from favourable to hostile and vice-versa. In other words, you need to be consistently right … or do you?

It’s not just about Being Right. It’s also about What you Do when you’re Wrong

People put too much emphasis on being right. One explanation for this is that people get psychic income from being right:  taking profits on winning positions makes them feel good. Conversely, accepting a loss forces us to admit we were wrong, which can be psychologically challenging even for professional investors. The net result of these opposing reactions is that investors often strive to maximize their percentage of winning vs. losing positions. While this strategy seems like a good idea, it can lead to highly sub optimal results. Continue Reading…

My review of The Boomers Retire

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My latest MoneySense Retired Money column reviews the new fifth edition of The Boomers Retire by certified financial planners Alexandra Macqueen and David Field. Click on the highlighted headline here to retrieve full article: Fresh takes on the challenges facing baby boomers as they approach retirement.

As I note in the column, the original edition of The Boomers Retire (which I read at the time) was by Lynn Biscott and was published back in 2008.

Macqueen and Field are both CFPs and the book is aimed at both financial advisors as well as their clients, as indicated in the book’s subtitle.

Clearly, retiring boomers constitute a massive potential readership. I myself co-authored The Wealthy Boomer, way back in 1998. At that time, baby boomers may have started to worry about Retirement but most, including myself, would have been squarely in the Wealth accumulation camp.

Wealthy Boomers now well on way to transition to Decumulation

Here in 2021, Decumulation is the emerging financial focus of Baby Boomers, many of whom will already be retired or semi-retired, and considering new decumulation solutions like the Purpose Longevity Fund, which this site has looked at more than once. (here via Dale Roberts and here via another MoneySense Retired Money column.) Continue Reading…

History lessons for managing Market Mishaps: 10 things you can do

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By Steve Lowrie, CFA

Special to the Financial Independence Hub

If there’s a consolation prize for growing older, it’s that we get to learn an increasing number of history lessons first-hand.  Take, for example, my past post on lessons from the 2008–2009 bear market:  “What Should I Do – or NOT Do – During the Next Bear Market?”  One suggestion I made for when the next bear came along (now here), was to revisit the article and review the lessons history has to offer us … if only we will heed them.

Good idea.  The circumstances precipitating each event may vary, but the abiding lessons remain relevant every time.  Continuing the theme, today’s post combines a two-part series revisiting 10 points on how to navigate down markets and economic crises.

Since most of us prefer action to idleness, we’ll first cover the following five actions you can take to help. In part 2, right below Part 1 here on the Hub, we’ll cover five things not to do in troubled financial times.

#1:  Simplify

It’s hard to remain calm in turbulent times, when everything seems to be happening at once.  To help, try embracing simplicity, in your life and your financial plans.  That’s not always so easy!  Here are two pieces to assist:

Why Simplicity Beats Complexity

Simple Investing Isn’t Easy

#2:  Trust the evidence to avoid “the big mistake.”

Every investor yearns to buy low and sell high.  But many end up doing just the opposite in a crisis, assuming, “this time, it’s different.”  Here’s a post on using evidence-based history to avoid making this big (if common) mistake:

How Evidence Based Investing Saves Long-Term Wealth by Avoiding the Big Mistake

#3:  Control the controllable

When the world around us seems especially chaotic, it can feel as if we have no say over anything.  There are some greater forces we must leave to fate, but disciplined portfolio management needn’t be one of them, as described in this important January 2019 post:

The Best Year-End Commentary Almost Never Published

#4:  Rebalance back to plan 

Among the most important “controllables” is sticking to your personalized investment mix by rebalancing your portfolio back to plan during down markets. Because this typically calls for selling excess bonds and buying low-priced stocks, rebalancing can feel scary and counterintuitive at the time. Here’s a piece on why it’s still a sensible thing to do:

Rebalancing in Down Markets: Scary, But Important

#5:  Maintain an adequate lifestyle reserve

So, this last one was much better completed in advance.  Still, it’s worth using the current crisis to see how you feel about past efforts:  Are your current lifestyle reserves enough for now?  If the answer is no, make a note to revisit this piece in the future … for next time. Continue Reading…

Canadian market outpaces global developed markets in first half

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By Dale Roberts, Cutthecrapinvesting

Special to the Financial Independence Hub

For the first half of 2021 the Canadian stock market outpaced markets in the developed world. Canadian stocks are up over 17%. Our stock market is well positioned for any inflationary environment or what they call the reflation trade. The TSX is one of the most economically sensitive global indices in the world. Inflation-sensitive (or inflation friendly) sectors comprise 73% of the TSX composite weight, compared with less than 40% of the S&P 500.

Financials, materials, industrials, energy, real estate and consumer discretionary are known to be those economically-sensitive sectors. The Canadian stock market is on a roll and ready to roll in the economic restart or grand reopening. From S&P Global …

We see the Canadian market outperformance in U.S. dollar terms. For American readers, and on my Seeking Alpha blog I suggested that U.S. investors consider Canadian stocks.

Canadian markets and U.S. markets make for a very nice tag team.

Canadians are ready for the grand reopening

A recent Bloomberg post offered that the Royal Bank of Canada’s spending tracker shows consumer activity in early June was well above pre-pandemic levels. Consumer confidence has been hovering at record highs for more than a month. Job posting data from Indeed Canada show restaurants are ramping up hiring. Mobility data from Google shows Canadians are doing more walking, driving and taking public transportation.

The GDP numbers put the economy on track for growth of at least 2 per cent annualized in the second quarter, down from 5.6 per cent in the first three months of 2021. The expansion is seen accelerating to a pace of 9.1 per cent in the third quarter, with a 6 per cent gain in the final three months of 2021, according to a Bloomberg News survey of economists earlier this month. The Bank of Canada has projected growth of 3.5 per cent in the second quarter.

Recovering from recent weakness caused by lockdowns

Canada appears primed for the reopening. We lead the developed world in vaccination levels. Most of us (the lucky ones) are flush with cash thanks to pandemic savings. We can’t wait to travel and buy experiences.

Let’s cross our fingers for Canada and the rest of the world. The virus is always the wild card. My guess, after too much reading on the virus and vaccines, is that Canada will have an incredible Summer. The vaccines are effective, even against those variants of concern.

The 2021 first half time show

  • Canadian stocks are up 17.3%.
  • Canadian bonds are down 3.5%.

If we look south of the border, U.S. stocks are up near 12.3% in Canadian dollar terms. The Canadian dollar has been stronger in the first half of 2021 compared to the U.S. dollar.

  • International developed markets are up 6.5% in Canadian dollar terms.
  • Developing market stocks are up 6% also in Canadian loonies.

A typical Canadian 60/40 balanced portfolio is up about 5.2% to 6.2% if we look to the BMO one ticket ETF and the iShares asset allocation ETF.

If we look at the horizons asset allocation ETF we see that they continue with that drastic outperformance. HBAL is up over 8% in the first half of 2021. Those ETFs are also total return, tax-efficient.

The sector watch

Canadian REITs are up 21.5% according to the BMO equal weight ETF. On the REIT front you might also consider the actively managed CI REIT ETF – RIT.

Energy (oil and gas) producers are up 55% year to date. Of course I put investing in Canadian energy stocks on the table, some 110% ago. Congrats to readers who jumped on that faster that I did.

We’re holding iShares capped energy index ETF.

BMO’s equal weight oil and gas ETF is up 48%. That index includes some pipelines that will bring down the performance. Pipes don’t have the sensitivity or torque of the producers.

A must read …

Here is an absolute must read on the global energy reality. The author suggests that traditional energy might offer very favourable long term prospects. That might be good for investors. Not so good for the planet. Continue Reading…

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