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).

20 tips for getting Life Insurance without a medical

Posted By Financial Independence Hub | December 8, 2016

By Lorne Marr, LSM Insurance

Special to the Financial Independence Hub

The No-Medical Life Insurance market in Canada is exploding. More and more people are opting for the convenience of obtaining life insurance without a medical.

No-Medical Life Insurance policies fall into two categories: Guaranteed Issue (no health questions) and Simplified Issue (anywhere from a 2 to 25 + health questions). No-Med policies are available as Term policies — where the cost starts off low and increases as you get older or Permanent policies — the premiums start off higher but never increase.

There’s a plan for everyone, bu these plans can be an especially good deal for customers that may otherwise be considered hard-to-insure.

Here are 20 points to consider:

1.) Understand the difference between different types of life Insurance.

Simplified issue life insurance: Doesn’t require a medical exam but there are still a number of health-related questions. Typically, the more questions, the lower the premiums. The maximum limit on this type of policy is usually $150,000. You might not qualify for this policy if you have been denied life insurance in the past two years.

Guaranteed issue life insurance: Doesn’t require a medical exam and there are no health-related questions. It is available to everyone, even if you have been declined life insurance within the last 2 years. The coverage limit is typically $25,000 and some payout restrictions may apply during the first two years of coverage. Continue Reading…

Three myths about trading Fixed Income ETFs

Posted By Financial Independence Hub | December 7, 2016

By Michael Barrer, WisdomTree Capital Markets

Special to the Financial Independence Hub

Fixed income exchange-traded funds (ETFs) provide the investing world with transparency in an otherwise opaque asset class. Although launched in 2002, fixed income ETFs did not become mainstream until 2008, and today these funds are often considered the growth engine for the ETF industry. However, because of the over-the-counter nature of the fixed income market and the fact that ETFs with fixed income underlying securities were adopted later than their equity-based relatives, there are still myths around the trading and liquidity profiles of these funds. I want to address these myths and explain the realities of the fixed income ETF structure.

Myth 1: Fixed income ETFs are not liquid, and on-screen volume equals ETF liquidity

Reality: ETFs are just an exchange-traded wrapper around a basket of securities. The minimum liquidity available of the ETF is defined by the liquidity of the underlying securities. With equity ETFs, the volume of the underlying securities can be measured and tracked. Implied liquidity is an industry standard metric that quantifies basket liquidity in equity-based ETFs.

In the fixed income market, the over-the-counter trading nature and lack of centralized trade reporting make quantifying fixed income ETF liquidity more challenging. That being said, there is a basic industry practice that assumes 5% of an outstanding issue will turn over daily and a conservative estimate to avoid market impact is to not be more than 25% of that daily turnover.

We recently discussed this subject in a separate blog post, where we quantified the potential daily liquidity in our new “Smart Beta” fixed income strategies. The bottom line remains that fixed income ETFs are designed with liquidity in mind, so they can scale, and the minimum liquidity available will always be based on the liquidity of the underlying asset class. On-screen volume only acts as an additional layer to the overall liquidity profile of the ETF.

Myth 2: Fixed income ETFs have wide spreads

Reality: The spread of an ETF is a representation of the spread in the underlying asset class, plus the costs and risks associated to the market maker. The exchange-traded and transparent nature of ETFs allows investors to see these spreads in real time. Whereas in a mutual fund, the portfolio spread would mirror that of an ETF with similar characteristics, however, the mutual fund structure does not allow for this level of intraday transparency.

Buying a home with an Income suite? What you need to know

Posted By Financial Independence Hub | November 30, 2016

By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

As Canadian real estate becomes steadily more expensive, homebuyers are increasingly exploring new affordability options. Renting out a portion of your home to help offset mortgage costs has become a popular method – and with the price of an average detached house well past the $1 million mark in the Toronto real estate market, it may be the only way some buyers can move beyond condos and townhomes.

For these buyers, assuming the role of landlord in exchange for a bigger house or better neighbourhood seems a smart trade-off. However, renting out part of your property – especially when you also dwell there – can be a complicated undertaking, and requires extensive research and resources. Here’s what those considering the purchase of a home with secondary suite should take note of.

What is a secondary suite?

Also referred to as an income suite, secondary suites are separate units within a principal residence. It must have its own private entrance, kitchen, sleeping and living areas. In order to comply, and be protected by, your province’s Residential Tenancies Act (RTA), you cannot share any of these living facilities with your tenant, as they’re otherwise considered a boarder. Continue Reading…

Robo advisers will expand beyond investing to insurance & lending

Posted By Financial Independence Hub | November 29, 2016

By Pramod Udiaver

Special to the Financial Independence Hub

While the online advice industry is still relatively new to Canadian investors, the breadth of online financial services has been evolving quickly. This is good news for investors who are looking for more goal-based investing options and services that consolidate their various financial needs.

Goal-based investing considers a client’s goals and the steps needed to achieve them. This practice helps investors see their financial goals as easy-to-navigate paths, with clear beginnings and ends. It ensures investors fund their accounts based on desired results, rather than how much they think they might need. And it takes the uncertainty out of investing by showing exactly how and when each goal will be achieved.

While investing and insurance goals are not generally planned under the same service, insurance is an important part of any financial plan and the goal-setting process. Progress towards our goals can be thwarted by events like disability, serious illness, or the death of a loved one.

Role of insurance

We see that in many cases, even if one of these events were to occur, clients say they would still want to stay on a path to achieve their goals. Proper insurance can help them stay on track by replacing a portion of their income while they are disabled, allowing them to maintain a desired standard of living and keep saving. Life insurance can ensure that goals set for one’s family, like sending kids to good schools, allowing the surviving spouse to retire comfortably, or the desire to leave a legacy in the form of a charitable donation, can still be achieved.

What is goals-based investing?

Posted By Financial Independence Hub | November 28, 2016

By James Gauthier, CIO, Justwealth

Special to the Financial Independence Hub

Most individuals are aware of the importance of investing – not everybody does it, but they know that it can be beneficial for their future.

For those who are able and engaged in investing, a good percentage will invest their savings through their financial institution, a financial advisor or some will do it on their own. Financial planning helps investors figure out questions such as “How much do I need to save?,” “How much can I spend?” or “What rate of return do I need to make?”

Before you attempt to answer these questions, you should be asking yourself the question “What is the objective of my investment?” The responses to this question can vary greatly, but might fall into one of the following categories:

• Saving for the short term (such as a down payment for a home in a few years)

• Saving for the long term (such as a retirement nest egg)

• Generating income (either as a primary or secondary source)

•Preserving your capital (looking to keep up with inflation or just very risk averse)