For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).
By Les Stelmach, Izabel Flis, Mike Richmond, Naveed Sunderji
Franklin Bissett Investment Management
(Sponsor Content)
This is an interesting time for the energy industry. Occasional reflexive selling based on emerging demand or supply concerns has been short-lived. Late last fall (based on January distribution), consuming nations like the United States tried to mitigate higher crude oil prices by releasing volumes from their strategic petroleum reserves to little avail.
More recently, higher rates of COVID infection in some European countries and the emergence of the Omicron variant sparked some selloff in oil prices, but this is likely to be short-lived as the trajectory for global demand approaches pre-COVID levels.
In addition, the ongoing focus on climate change concerns — most recently articulated at the COP26 conference in Glasgow, — has increased pressure on producing nations and companies to limit production. The current lack of a coordinated suite of energy alternatives that can deliver reliably at the necessary scale does little to deter demand. Arguably, this phase of the transition is contributing to higher prices for crude oil and natural gas. Prices for both commodities have supported greater returns and profitability for oil and gas companies, rewarding investors willing to ignore the volatility.
The path to net zero: journey of 1000 steps
While the last 20 years have seen significant improvements in cost-effectivenes and efficiency for renewable technologies, the sobering reality is that they are not yet able to carry the full load of global economic activity. Renewables still generate comparatively less energy than hydrocarbons, are less stable and vulnerable to demand shocks. An aggressive transition to renewables can backfire, as Californians discovered during last summer’s severe heatwave when their heavily renewable-reliant energy supply was unable keep up with the increased demand. The result was rolling blackouts.
The infrastructure created to support the extraction, production and transportation of hydrocarbons will not be transformed overnight, but in some cases it will become part of the transition to cleaner energy. Pipelines, for example, are essential conduits for hydrocarbons. Political controversy aside, from an environmental perspective they are currently the safest, most efficient, most cost-effective and cleanest mode of transport.
Some natural gas exports are already serving decarbonization efforts in developing nations. In the future, some pipelines may be converted to carry low-carbon recycled natural gas (RNG), hydrogen or carbon dioxide to be sequestered as these alternatives become more widely adopted. Longevity and cash flows for these assets are considered stable over the near future.
Energy and ESG: surprisingly compatible
For oil and gas companies, the emphasis on “E” in ESG (environmental) is really a “C” (climate change). The scrutiny around gas emissions does not isolate one measure to the exclusion of others. Water and waste management, turnover rate, injury rates: these and many other factors are part of a comprehensive ESG analysis. Continue Reading…
From the ‘safety-first’ attitude of baby boomers to the ‘putting themselves out there’ nature of Gen Z, generational cohorts offer great insights into the evolution of the human psyche based on different experiences.
Millennials are not exactly what you call ‘risk takers’ but are more open towards new opportunities, compared to previous generations. This characteristic of millennials can be seen in the way they invest their money: they are willing to move away from fixed deposits and RRSPs that the boomers swore by and are looking to invest in stocks, cryptocurrency, and other financial avenues.
Why should Millennials invest?
While more and more millennials are dabbling into investing in different portfolios, almost 50% of the cohort is still waiting to invest until they earn more money. This data contradicts the popular belief that the best time to invest is yesterday, and those who wait are losing precious time to grow their money.
If you are one of those who procrastinate about investing money for later or think you need a 6-digit income to substantially boost your financial growth, you couldn’t be more wrong. Start your investment journey as early as you can as your returns compound with time, and you’ll learn the tricks of the trade to become a more component investor in the future. And, you can start investing with just a handful of dollars.
Investment Tips for 2022
If you are a millennial just beginning to build your investment portfolio or a seasoned millennial investor, these 6 financial tips will help you stand in good stead for 2022:
Robo Advisors to the rescue
Trading in stocks requires constant scrutiny of rising and falling stock prices and earnings, and a good understanding of how the stock market functions. In the recent phenomenon of a surge in GameStop shares created by a group of Reddit investors, many retail investors and short-selling hedge funds that were betting for the company to fail lost billions of dollars.
While it is only human to jump on the bandwagon of a stock market frenzy in an attempt to earn substantial profits, it entails high risks and can cause a lot of damage to your finances.
If you are new to the stock investment game or don’t have enough time to monitor the peaks and troughs of the stock market, then you should explore robo advisors to help you achieve your financial goals with minimal risks.
For the uninitiated, robo advisors are digital portals that control and optimize your investment portfolios through the use of algorithms and data-driven strategies. Robo advisors are very easy to use, as they automate your investments based on your investment budget and long-term financial goals.
They also are pretty inexpensive with an affordable minimal balance to open investment accounts for investors from all walks of life. With minimal human supervision, a robo advisor can adjust your investments automatically based on market fluctuations while focussing on your monetary goals. Thus, if you wish for steady growth of your investments without any undue risk, you can explore the web to find the right robo advisor for you.
ESG Investments can make you a better investor
Source: Pixabay
As more and more millennials are standing up for environmental, social, and socio-political causes, it is time for their investments to reflect their thought process. ESG investments are defined as investments based on non-financial factors such as environmental, social, and governance impact of a company on society.
In ESG investments, millennials pour in money on the company stocks they believe will make a difference to the world they live in. Through ESGs, millennials extend their support to companies whose beliefs align with theirs and hope that it creates a sustainable future for their children.
ESG investments also provide a great learning curve for investors. Since personal beliefs, values, and socio-environmental impact are involved, you as an investor tend to go the extra mile to learn everything about the company including its financial health and revenue model instead of just blindly buying stocks that are on the rise.
ESGs can help you understand how and why a company’s stock performs in a certain way and can teach you a lesson in becoming better investors.
Ditch individual Stock Picking
Before we delve into why stock picking is not a good investment option, it is imperative to understand what stock picking is. Based on market research and analysis, stock picking is a strategy to find the stocks that are most likely to deliver favourable investment returns. Continue Reading…
Director, Financial Planning Centre of Expertise, RBC
(Sponsor Content)
If you’re like many Canadians, with 2022 around the corner, you’re likely thinking about what you would like to achieve in this new year.
You can begin by having a good look at your current financial situation and the steps you can take to stay on top of your money.
As we consider what this year will bring, here are five areas of personal finances you can focus on to get 2022 onto solid financial footing:
• Make sure your financial plan still works for you
As the economy continues to recover and we look toward whatever this year holds, having a financial plan can help you take stock of where you are and what you need to do to continue to work toward your financial goals.
A financial plan can help strengthen your confidence when it comes to managing your money, both now and in the future. Taking the time to build a plan that works for you and your unique financial situation is a good start. Use your plan to identify your goals and objectives, evaluate your finances and put steps in place to achieve your financial goals. It’s also important to revisit your plan regularly, especially as your finances or priorities change.
• Stay on top of your cash flow
As inflation continues to impact Canadians’ purchasing power, cash flow will become an even more important part of managing personal finances in 2022. Here’s where having a budget, to complement your financial plan, is a huge help. A budget will give you a good picture of the money you have coming in and going out.
If you already have a budget, it’s a good time to review and update your expenses to account for rising costs: from gas and groceries to utilities and activities. This will help you see what you may have left over to put into savings.
Managing any debts and how you plan to pay them off is also an important part of managing cash flow. A piece of advice here: Don’t worry about paying all your debts at once. Instead, focus on taking care of higher interest rate debts first. This will have a good impact on your overall financial health, to help you worry less and save more.
New digital tools, like NOMI Budgets and NOMI Forecast can also help you stay on top of your money and avoid unnecessary expenses. Available to RBC clients through the RBC Mobile app, NOMI Budgets simplifies the budgeting process by taking a close look at your spending and recommending a personalized monthly budget based on your habits. NOMI Forecast learns from your past transactions and uses predictive technology to provide a rolling forecast of your expenses for the next seven days.
• Be prepared for the unexpected
One important lesson the pandemic has taught us is that the unexpected can happen at any time. It also has reinforced the importance of having an emergency fund that you can rely on to help cover the costs of unexpected expenses like loss of income or repairs to vehicles or flooded basements.
Setting up an automatic savings plan can make it easier to save regularly. Using a digital savings account like NOMI Find & Save can also help, as it finds extra money in your cash flow it thinks you won’t miss and automatically sets it aside. If a payment or transfer is due to come out of your linked chequing account, the money is automatically transferred back to ensure you have what you need to cover those transactions.
• Look past the headlines when investing
It can be tempting to do ‘emotional investing’ – reacting to negative headlines and market volatility by altering a well-designed investment plan. While selling off your portfolio may make you feel better, this decision could mean lost opportunities and not achieving your long-term investment goals. Continue Reading…
Wine investing in North America is hitting the mainstream.
Historically, the wine investment category has been perceived as only for the wealthy or wine experts.
Although traditional HNW [High Net Worth] investors have been investing in portfolios of fine wine for years, it is still a new asset class for some.
However, new specialist services are opening up the fine wine investment universe. Cult Wines, whose story began in London, England in 2007, recently expanded into North America with offices in Toronto and New York. Known as ‘The Americas,’ our task is to build the awareness of fine wine and accessibility to the asset class. In addition, Cult Wines recently introduced a new platform, new product structure and new technology to better serve our clients.
Our expension into The Americas is helped by fine wine’s strong track record of consistent returns and low volatility. Currently, the asset class is enjoying a sustained rally with year-to-date returns over 13.7% through the end of October, as measured by the Liv-ex 1000, an index of some of the most sought-after investment wines from around the world.
The U.S. is the world’s largest Wine market
The US, the world’s largest wine market, is a natural fit for wine investment. 49% of Americans drink wine and 431 million cases of wine were sold in 2020. The US has been making some investment grade wines for decades and to the end of October, the California 50 wine index is the third best performing wine region globally with a year-to-date return of 16.5%. Continue Reading…
Almost since the Hub’s inception in 2014, the principals behind the popular RetireEarlyLifestyle.com have provided in-depth coverage of global travel and the tips to achieve early Financial Independence they used themselves to “retire” in their early 30s.
The following email interview was between myself and Billy and Akaisha Kaderli. Our intention is to publish it on both sites. Here’s the link to their version, which ran Dec. 14th.
So without further ado:
JC Q1: Akaisha and Billy, you are about the same age as myself and my wife Ruth and apart from being American and Canadian, we appear to have several things in common: we both run sites focused on Financial Independence, have written some books on same, and continue to be working at least on our own terms even though we have achieved Findependence years ago: more than 30 in your case, seven in ours. One difference is you travel a lot more, while we are content to stay in our Toronto home near Lake Ontario and take just a few weeks abroad, preferably if it’s a business expense. So let me start with the provocative statement that I think travel is expensive and over-rated. I have no doubt you can rebut that!
A&B: First, let us clarify that the time we spend on our website is what we consider to be our volunteer time. Yes, there are products that we sell, but 99% of our information is free because we are passionate about teaching financial literacy to those who want to learn.
In regards to your comment about travel being expensive and over-rated, it depends.
We think that there are differing styles of travel. There are tourists, visitors and travelers. There is no one-right-way to journey around, and we love it that people get out and about, expanding their minds.
Tourists tend to go on vacation for a week or two, spending a good deal of money on lodging, transport, entertainment and meals. Every day must be “perfect” and if the weather doesn’t cooperate or if service is not great, then there is this sense of disappointment. They tend to go to resorts or even exotic locations, but the lodging and amenities have a sense of Disneyland unreality, and are often over-priced.
Sure, there might be a water buffalo in some rice fields, with “workers” wearing a “traditional clothing uniform” but the real locals are miles away. Tourists will pay $10 or more for a beer that the residents of the area would purchase for about a buck.
Also, Tourists might like the idea of a vacation or might not. Mostly, they like the comfort and routine of home, and a vacation is an interruption in their experience of the familiar. Many times, it borders on the feeling that “this is a waste of time. I’d rather be home.” They don’t know any local phrases in a foreign language except maybe Yes, No, Thank you, Bathroom and Beer. Tourists have more of a passive approach to their excursion and want to be entertained. Then they rate their experience with their friends when they return home.
In order to go on this vacation, they stop their mail, perhaps have a house sitter or family member/friend water their plants or watch their pet. They have probably cleaned out their refrigerator and have to stock up once again when they return home. And it all seems to be a hassle. “Would have been easier to just stay at home in the first place. Plus, now we have this credit card bill and all these souvenirs to give to friends.”
Visitors on the other hand stay in a location for a bit longer – maybe even a month or so. They know some survival phrases in the local language and choose lodging that is more middle range than a resort option. About half the time, they will eat outside of big chain restaurants with well-known names and take a chance on a local restaurant.
They are a bit more self-guided in their entertainment choices, perhaps utilizing Google maps or a local tour of the area to become familiar with their surroundings. They may select local transportation or hire a driver to go from archaeological ruins and museums or they might take a self-directed walking tour.
Using a daypack, they bring their own drinking water and perhaps some snacks to munch on as they go from place to place in their day.
Traveling for them is not necessarily a “vacation” but more of an experience, or a sabbatical. They could take cooking classes, language classes, painting courses and the like and they interact with the local people.
After their time away from home, their lives have altered in some way, perhaps expanding their perspectives or dropping an outworn routine. They look forward to their next adventure.
Then you have Travelers.
Billy and Akaisha at Chacala Beach, Nayarit, Mexico
These are the people who go from place-to-place with no itinerary other than their own style of meandering. They usually buy only one-way tickets, figuring out how to return – if they do – at another time. They communicate with the native inhabitants in their own language, purchase food, clothing and travel equipment from markets in the area and will often eat street food or dine in local restaurants.
These people travel for months, sometimes years at a time and rent apart-hotels, AirBnBs, house sit or bargain for a hotel room for a monthly rate. They may or may not have a home base for when they return from their wandering.
Travelers are more flexible mentally and are willing to have their routines interrupted. If the weather pattern is not to their liking, they might move on, or hunker down till the cold, heat, or rain stops. They do not live their traveling life as in “Today is Tuesday so it must be Belgium.” They speak with other travelers to get insight into their possible next stop.
Travelers employ digital equipment and apps to communicate with family and friends. They utilize email, sending digital photos or videos taken of their experiences, and they travel lightly. They throw their daypacks onto a bus or carry them on an affordable inter-country flight. Getting their cash in the currency of the country they are living in, they work the ATMs with a debit card that pays the withdrawal fee back.
They manage their lives online and have been receiving paperless mail for a long time. Photos are placed up in the cloud and they take care of business via Skype, WhatsApp or Signal, benefitting from medical tourism for their health care.
Travel does not cost them “more.” In fact, if they were spending their time “at home” they would still have a baseline of expenses – lodging, food, transport, entertainment for instance. But now they have incorporated these same expenses along with globe-trotting which creates memories for a lifetime and stories to share.
In general, travel has broadened their minds, giving them a unique perspective of the world and a confidence and self-reliance that pervades daily living.
We think it’s important to know one’s traveling style and enjoy who you are. There is not a one-size-fits-all, and we recognize that travel isn’t for everyone.
Someone has to stay home, attend the roses and mow the lawn!
Hub CFO Jonathan Chevreau
How does extensive travel differ from short vacations from full-time employment?
JC Q2: To clarify, we enjoy travel too; was just playing devil’s advocate. Before we switch to Findependence, do you think there’s a big difference between the expensive two-week vacations many salaried employees take, and actually renting a house or suite abroad for 3 or 4 months at a time in Semi-retirement?
A&B: Yes, there is a big difference, actually.
When one is still working, vacations are stress busters. Work hard, play hard.
These holidays tend to be results of pent up demand for luxury; things we have denied ourselves during our working life like splurging on fine meals out, visiting an exotic place far from home, a ski vacation, or a safari. Continue Reading…
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