General

Don’t make this Life Insurance mistake

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Life insurance is a must if you have a spouse or children who depend on your income to get by. But asking a life insurance agent if you need more life insurance is like asking a barber if you need a haircut. Of course the answer is going to be ‘yes’. Indeed, the life insurance business has a long history of commission-hungry agents pushing expensive policies onto consumers who would be better off with simple term coverage.

While you should view any life insurance discussion with a skeptical eye, the reality is that many people are severely under-insured. Most group insurance policies at your workplace only provide coverage for one or two times your annual salary. You might need 10 or 15 times that amount if you have a young family at home.

The other challenge with group life insurance coverage is that it’s not transferable: you can’t take it with you when you leave your employer.

Ending my Group Coverage

That’s the situation I find myself in right now. The group coverage I have with my employer is quite generous at 2.5 times salary. They also offer the voluntary option to add up to an additional $500,000 in coverage at favourable rates (each $100,000 in coverage cost just $4.50 per month). I took the maximum optional coverage and increased my overall life insurance coverage to approximately $700,000. My total premiums cost less than $35 per month.

The rational side of me knew that I’d eventually leave my job and would need to take out a private insurance policy. But I didn’t get around to it. Then I quit my job.

Now I’m scrambling to get an insurance policy in place before the end of the year to avoid any lapse in coverage. First, I performed a life insurance needs analysis. A lot has changed in 10 years. My kids are older (11 and 8 next year). We have a lot more money saved. We have less debt. Do we still need $700,000 in coverage? Do we need more?

A needs analysis considers things like your survivor’s income and spending needs, years of income replacement, personal and household debt, children’s education, non-registered assets, and final expenses. My analysis found that a 15 year term with $600,000 in coverage would be sufficient.

Term Life Insurance quotes

I shopped around for term life insurance quotes using the website term4sale.ca (no affiliation). Continue Reading…

Currency investing may seem appealing but you’ll lose in the long run

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It’s A Rare Investor Who Makes Enough Profit From Long-Term Currency Investing Activities To Compensate For The Risk Involved

As a general rule, we advise against long-term currency investing speculation for many of the same reasons we advise against options trading and bond trading. It’s a rare investor who makes enough profit from these activities to compensate for the risk involved.

Our view is that if you like a currency’s outlook, you should buy stocks that will profit from a rise in that currency. Our longstanding advice is to invest mainly in well-established companies. Avoid exposure to currency trading, penny stocks, new issues, options, futures or any high-risk investments. That way, while you may experience modest losses when markets drop, you should show overall positive results over time.

Keep hedged ETFs as a long-term currency investing strategy out of your portfolio

If you want to buy U.S. stocks and hedge against currency movements, you could buy a hedged ETF.

Hedged ETFs, like, say, the iShares Core S&P 500 ETF (symbol XUS on Toronto) are funds sold in Canada that hold U.S. stocks. However, they are hedged against any movement of the U.S. dollar against the Canadian dollar. That means that the ETF’s Canadian-dollar value rises and falls solely with the movements of the stocks in the portfolio.

For example, if a stock rises 10% on, say, New York, but also rises a further 5% for Canadian investors due to an increase in the U.S. dollar, a holder of a hedged ETF would only see a 10% rise in the value of that holding in their hedged ETF. At the same time, the reverse is also true: If a stock rises 10% on New York, but falls 5% for Canadian investors due to a decrease in the U.S. dollar, a holder of a hedged ETF would still only see a 10% rise in the value of that holding as part of their hedged ETF.

Note, though, that hedged funds include extra fees to pay for the hedging contracts needed to factor out currency movements. Of course, those costs can rise or fall regardless of currency swings.

Hedging against changes in the U.S. dollar only works in your favour when the value of the U.S. dollar drops in relation to the Canadian currency. If the U.S. dollar rises while your investment is hedged, it reduces any gain you’d otherwise enjoy, or expands a loss. Continue Reading…

The benefits of Mobile Pay Stubs

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By Gary Bordeaux

Special to the Financial Independence Hub

Both employees and employers can benefit from keeping track of how much money goes into each paycheck. For employers, it’s important to know for business tax reasons. Employees, while also needing to know how much they make for tax reasons, may also need to provide their pay stubs when signing up for government benefits, when renting an apartment, or for a number of other reasons. However, sometimes it can be hard to keep track of paper pay stubs; that’s where mobile pay stubs come in.

What are Pay Stubs?

Before we get into the benefits of using mobile pay stubs, let’s first discuss what a pay stub actually is. When it comes to people who get paper paychecks, the pay stub will be attached to the paycheck.

For those who get direct deposit paychecks, paystubs can be a little harder to find. The employee may have a website they can check to see their pay stubs. If that is not possible, employees may need to contact the payroll department directly to get printouts or computer files of their paystubs.

What are Pay Stubs used for?

What makes paystubs so important? Why do they need to be kept track of? To put it simply, pay stubs are used as a record of how much an employee makes. As mentioned earlier, it’s important to keep track of pay stubs in order to keep track of income or expenses (based on whether it is the employee or employer looking at pay stubs). Since people usually cash their checks right away, keeping the pay stubs is a great way to keep a record of how much they make.

What information do paystubs have on them? A paycheck only shows the net pay (what a person makes after taxes, insurance, and other items are taken out). However, a pay stub will show an itemized list of earnings and deductions. This includes the gross pay, taxes, insurance, retirement savings, and the net (take-home) pay.

Why use Mobile Pay Stubs?

If paychecks come with a pay stub attached, why should people who get paper checks bother with mobile pay stubs? Unless you’re extremely careful with your pay stubs, they can be easy to lose. Continue Reading…

Tricks about residential home construction you wish you knew about before starting

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By Daniel Quindemil

Special to the Financial Independence Hub

Designing a home is often one of the best (or worse) experiences for most people.

Building in general is a relatively difficult task, but building your own house can sometimes be nerve racking!

As a construction company, we understand the importance of planning the project beforehand, designing a solid design, getting pricing and the labor and material take offs done early so you can accurately create a budget.

That’s why we wrote this simple guide packed with tricks so you don’t fall into pitfalls some owners and investors fall into.

First, let’s look at the different types of residential projects.

What is Residential Construction?

Residential construction is building or remodeling a structure designed for everyday living.  Residential consists of Single Family, Duplexes, Triplexes, Townhouses, even Apartment and Condo buildings.

Each has its own challenges.

Single Family

Single family construction is typically designed for one family, hence the name single.  They typically are one or two stories, although some places like New York often go more vertical due to availability of space.

Duplexes, Triplexes, and Quadplexes, Twin Homes, Townhomes

These are single structures designed for multiple units.  A duplex will have two units within the structure, triplexes have three, quadplexes four.  A twin home is similar to a Duplex but has two owners.  Duplexes are owned by one party.  Townhomes are a group of units within a structure.  They are usually two or more stories.

Apartments and Condominiums

Apartments and Condos can be single story, but more often multi-story. Apartments are designed for rentals while Condominiums are for purchase, although they look very similar.

How long does it take to design and build?

The short answer: it depends. Every project is going to have its unique budget, schedule, sequencing, and craftsmanship.  All of these will come into play when planning your schedule.

When planning the overall project, you have to take into account four important timelines:

Design time

Timeframe for architects will vary quite a bit depending on size, details, and complexities involved with the project.  Often when an interior designer is involved, the timeline doubles or even triples because of the level of detail required.

Typically a single family and duplex home can be designed in 1-3 months.

Townhouses can take longer depending on the number of units.  Designing a townhouse building is very similar to a duplex and often the units are repeated or “flipped,” which speeds up the design process. Continue Reading…

How to enjoy your Retirement years on a Fixed Income

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Photo via Rawpixel

By Sharon Wagner

Special to the Financial Independence Hub

For many new retirees, adapting to a fixed income can be a bit of a challenge. However, living on a limited budget shouldn’t take any fulfillment out of your golden years. With a few budget tweaks and some smart financial planning, you’ll be able to enjoy today and remain financially secure for the future. Here are some quick budgeting tips for financial success now that you’re retired.

Cut unnecessary subscriptions and services

If you’re not careful, memberships and subscriptions can eat up a lot of your budget. For example, canceling your cable subscription and replacing it with an inexpensive streaming service can save you hundreds of dollars a year! Gone are the days of paying for a bunch of channels you never watch. If you decide to cut the cord and do away with your cable box, you’ll want to get a streaming device so you can watch your favorite shows and movies on your TV. Simply compare streaming devices to match the features and the right device with your budget.

Spend less on food

Eating out frequently can eat a massive hole in your budget. According to Nestle Professional, senior households spend thousands on eating out every year! Considering that cooking a meal at home costs a fraction of dining out, you can save a significant amount of money by spending more time in the kitchen.

Get familiar with some quick and easy meals that you can throw together the next time you’re tempted to order takeout. You can also take steps to cut down on grocery spending: review flyers and look for deals, write a shopping list, and don’t buy anything that’s not on your list.

Pay off debt

If you have debt, make a plan to pay it off as soon as possible. Any money you pay in interest on your debt is money you can’t spend on fun retirement hobbies and activities. Kiplinger recommends starting by focusing on high-interest debt. Credit card debt can be particularly burdensome, so do whatever you can to avoid taking on more. Medical debt can also be overwhelming, but credit experts advise against prioritizing this type of debt since it typically carries low to no zero interest. Continue Reading…