Building Wealth

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).

Good timing for a Travel & Leisure Index ETF?

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Talk about nice timing!

Just as the first Covid vaccines are coming into widespread use, Harvest Portfolios Group Inc. has filed a preliminary prospectus for what it says will be Canada’s first Travel & Leisure Index ETF.

Travel and leisure stocks have of course been among the most hard-hit during the Covid-19 pandemic and are among the sectors that have started to move up as optimism over Covid vaccines and economic recovery builds.

When in January it begins trading on the TSX as TRVL, the Harvest Travel & Leisure Index ETF will provide investors with access to some of the most prominent Travel & Leisure companies in the world, says Michael Kovacs, President & CEO, Harvest Portfolios Group Inc.: “The ETF provides a low cost portfolio that will benefit from a rebound in international travel as the global economy recovers, as well as a demographic trend that was well established prior to the recent Industry shut downs.”

The ETF is based on the Solactive Travel & Leisure Index, which invests in large-cap issuers that own or operate travel-related businesses and are listed on regulated North American exchanges.

Clean Energy ETF also in the works

Harvest has also filed a preliminary prospectus for what it says will be “one of” Canada’s first clean energy ETFs: Harvest Clean Energy ETF (ticker HCLN). Kovacs says this is aagrowing space, an area that is “getting the proper political and societal attention it needs as more Canadians look to environmental factors when investing. There are large sources of Government and Private capital flowing into this space at unprecedented levels which we see continuing to grow into the future. With the changes going on in Energy generation, the future is definitely Clean.”

HCLN will invest in large-cap issuers engaged in clean energy related businesses listed on regulated stock exchanges in North America, Developed Asia or certain European countries. The preliminary prospectus has been filed with securities commissions in all Canadian provinces and territories, copies of which are available on SEDAR (www.sedar.com).

The ETFs’ Management Expense Ratios (MERs) have not yet been divulged but are expected to be in the range of .04, a company spokesperson said. That’s in line with its other passively managed index ETFs, and less than its actively managed ones.

Founded in 2009, Harvest is a Canadian Investment Fund Manager managing more than $1 billion in assets for Canadian investors.

6 tips for building Wealth in your 30s

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It pays to invest early and often.

Starting to invest earlier in life ensures that your money will compound and grow over time.

By the time you reach your thirties, investing tends to become a serious consideration. People in their thirties may have families, their first mortgage, and a blossoming career that enables investing to take place.

So what’s the best investment strategy for someone in their 30s looking to build wealth?

We asked financial planners, thirty-somethings, and other professionals for their best investment strategies and tips.

Here’s what they had to offer about building wealth in your thirties:

Invest in your own companies

I’m a 36-year-old business owner and dad of 3. As I drive my minivan around town, I often think about the best way to build wealth in my mid-thirties. I’ve looked to max out retirement plan contributions for the last decade and set defined contributions to investing in mutual funds and stocks. But, I don’t believe any of that stuff is the best way to build wealth. The place I’ve landed is to invest in yourself, your ideas, and your own companies for the biggest investment. That way, you create real assets where you have a direct impact on the outcome. If you lose the investment, you just lose money. But you still win because you’ve invested in yourself, and the long-term payoff on “you” is one of the most rewarding returns in life. — Brett Farmiloe, Markitors

Start early on Real Estate

Real Estate continues to be an excellent way to build wealth. Especially in a state like Arizona, where we currently have a housing shortage and a large influx of people wanting to live here, owning real estate should be a key part of building wealth long term. — Rod Cullum, Cullum Homes

Invest in things you understand

Keep it simple by spending less than you earn; with the money that you retain, you can start building a safety fund of 3-6 months of spending. By doing so, you won’t need to sell investments or go into credit card debt if an emergency comes up. In regards to investments, ensure you are choosing investments with low fees and that you have a clear grasp on what you are investing in. Fully understanding what your investment entails will prevent you from getting emotionally attached to your investments. — Keith Piscitello, S2 Wealth Planning

Pay off your Debt

The best way to build wealth for a 35-year old is to start by paying off all of your debt as soon as you can. Pay off your credit cards, student loans, car loans, and maybe your home loan. Continue Reading…

Organize your Small Business finances with these 6 steps

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By Gary Bordeaux

Special to the Financial Independence Hub

Owning a business comes with a great deal of freedom, but also with substantial financial responsibility. No matter what business you are in, making a profit is job one. The key to successful money management is organization. These six steps can help.

1.) Schedule

Set aside a block of time each day for minor operations such as scanning paper documents or entering figures into accounting software. One day each week, take an hour to monitor expenses, calculate profits and review the accounting.

2.) Separate

When you first start out, it may seem silly to keep personal funds separate from business funds. After all, you may be dealing with small amounts and infrequent activity. However, if you plan to grow the business, there will come a time when you need to know what belongs to the business and what belongs to you. It is cleaner and simpler to separate finances from the start, rather than trying to untangle your commingled funds later. Your business should have its own bank account and credit card as soon as it has a name, structure and business license.

3.) Prepare

If you have employees, you need to set aside money for several types of payroll deductions including federal income tax, Medicare and Social Security. Your state or province may require income tax and other employee taxes as well. A paystub generator can  help you and your employees keep current on state and federal requirements. Accuracy is paramount.

Avoid a surprise tax bill by setting aside a percentage of the company’s earnings from the start. Consult with a tax professional to get an annual or quarterly estimate, then reserve an appropriate amount of money each month.

This works with more than just taxes. You can prepare for any quarterly or annual expense if you know it is coming. Suppose you face an annual regulatory fee of $10,000. Simply set aside $833 each month, then when the bill comes due you can pay with ease. Even better, automate the process by having your financial institution sweep the $833 from the debit account to savings on the same day each month.

4.) Track

You need a good filing system, either paper or digital. A functional system allows you to retrieve information easily and quickly. It should be simple and intuitive, yet flexible enough to grow with your business. General categories may include: Continue Reading…

Long-term investors tiptoeing back into Emerging Markets

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Franklin Templeton/Getty Images

By Andrew Ness, Franklin Templeton Investments

(Sponsor content)

The COVID-19 pandemic has tested health systems, social and economic structures throughout the world this year. Global financial markets took a hit during the severe downturn last spring, and emerging markets typically bore the brunt of negative sentiment as investors sought safety above all: first to be abandoned and slower to recover.

Over the past six months, a renewed appetite for risk has brought investors back to emerging markets. But as the second wave of the pandemic takes its toll on economic activity over the next few months, will they stay?

Defying stereotypes

Historically, emerging markets have been lumped together at the far end of the risk/reward spectrum, outperforming developed markets in good times but substantially underperforming in bad. The perception of unpredictable politics, unsatisfactory governance and unhealthy levels of debt has lingered since the 1980s. This misperception attracts speculators who ride the market up, make a quick profit and sell off just as quickly.

We would argue that this is a mistake. From our vantage point as veteran investors ― not speculators ― in the emerging markets, we see that traditional perceptions and today’s realities do not always match up. Closing the gap reveals long-term growth opportunities in resilient, but less familiar, businesses.

Which one is the mature market?

Emerging market businesses have evolved from the early days, when opportunities were limited and difficult to access, and the years when successful companies were primarily tied to the commodities boom. Today, companies domiciled in emerging markets are increasingly at the leading edge of technology and innovation. Corporate governance has improved, and global accounting standards have made company finances more transparent. Greater re-privatization and allocation of more private capital are signs that investors are making more long-term commitments to these markets.

No one has a monopoly on entrepreneurship, and as the pandemic has starkly revealed, some “developing” countries are proving more resilient and better able to manage the pandemic than their ostensibly more developed counterparts.

Emerging markets are not monolithic

While countries like China and India offer a large opportunity set, smaller nations such as Korea, Taiwan, Mexico and Malaysia also harbour great opportunity and have proven their resilience during the pandemic. For example, glove manufacturers in Malaysia have recently seen a dramatic surge in demand, driven by COVID-19. We believe it is important to keep an open mind and cast a wide net.

Emerging Asia, the first area to experience the pandemic, may also be the first to recover. In the last quarter, for example, stocks in China rose as its economic resurgence gained pace, with industrial production and retail sales beating growth expectations in September. Strong corporate earnings led Taiwan’s market advance and robust technology exports contributed to that economy’s third-quarter rebound. In Indonesia, the government relaxed coronavirus curbs in Jakarta and passed a job creation law aimed at reducing regulations and boosting investments: all in the space of a single quarter.

Beyond the pandemic

As the prospect of a vaccine providing immunity to COVID-19 grows brighter, those with a longer-term vision are looking beyond the pandemic to economic recovery and opportunities for meeting other global challenges: climate change, overpopulation, disappearance of habitat and biodiversity, among others. We think emerging market companies will be an integral part of the solution. Continue Reading…

4 simple tips for building your Nest Egg and Retiring Early

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By Lisa Bigelow 

Special to the Financial Independence Hub

Retirement! For many of us, it’s an event so far in the future that it almost seems unreal. Taking active steps to plan and invest for the “golden years” feels unnecessary.

Yet as anyone who’s lived through their 30s and 40s can share, those decades go by quickly. And if you want to retire early, the worst thing you can do is wait to start saving or unintentionally sabotage your portfolio.

Long story short, if you want to retire early (and wealthy), you’ll want to start now. But what does “start” mean when it comes to saving for retirement?

The answer is surprisingly complex. The good news is that learning how to build your nest egg won’t consume all of your free time. With attention and discipline, you can retire early: so let’s get started.

1.) Visualize your future and figure out what that costs

You wouldn’t renovate your kitchen without choosing a style and establishing a budget. Think of building your nest egg the same way: you need a goal and a plan to get there. Sure, you know you want to retire early. But what does retirement look like for you once you’re there? Do you want to travel? Live in your hometown? Play bridge? Take piano lessons? Visualizing your retirement home base and how you’ll spend your free time will help you set your savings goal.

Envisioning a loose plan for what you want your post-work life to look like is a great start. But you’ll also need to take into account inflation and investment returns, among other factors. AARP’s retirement calculator can help you understand where you’ll need to be financially in order to achieve your goal. It will also help you prioritize the actions you’ll want to take now so you can actually get there later.

2.) Pay off debt and reapply the payments

Debt is a normal part of life for most Americans. Buying a home or paying for college often requires taking out a loan, and so does starting a business. Borrowing responsibly in these areas can help you get ahead financially, but other kinds of debt, like high-interest credit card payments, can hinder your retirement savings efforts.

First, if you have education debt and think the scholar-”ship” has sailed, think again. There are actually scholarships that pay off education debt for borrowers who have already graduated. And if you have excellent credit, you can also look into refinancing your student loans.

If you have credit-card debt, personal loans, or other high-interest payments, prioritize paying off those balances in full. If the payments were manageable for your budget, repurpose those payments into building your nest egg instead. Bonus: once you’ve paid those debts, your credit score will probably rise. And that helps you qualify for lower rates when refinancing or taking out a new fixed or adjustable-rate mortgage.

3.) Get sneaky with microsavings so you can live life along the way

Small dollars add up fast. That’s great news for people who want to enjoy life and save for retirement at the same time. If you’re aggressive with microsavings, you’ll have an easier time affording life’s little niceties and still be able to save for retirement at the same time. Continue Reading…