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).

Sorry Boomers, as FinTech rises, Millennials now main focus of financial industry

Posted By Jonathan Chevreau | August 12, 2016

As I recount on page FP3 of today’s Financial Post, the baby boomers are fast becoming supplanted by the Millennial generation when it comes to attracting the attention of the financial services industry and in particular the rise of the fintech industry.

For online version, see Sorry boomers, the focus is shifting: Millennials are fast becoming new apple of financial industry’s eye.

Certainly, much of the action around so-called “Fin-Tech” is oriented to the Millennial market, with many of the firms also founded or cofounded by Millennials. The big three fintech categories are online lending, robo-advisers and payment technology.

Note the New York Times had an interesting piece this week on fintech and blockchain: Envisioning Bitcoin’s Technology at the Heart of Global Finance. Also note my Hub review of Don Tapscott’s groundbreaking book on blockchain, with a link to a video: Book Review: Blockchain Revolution.

YOLO: the new Millennial motto?

Also in the FP package today is a review of a book written by a Millennial that addresses Millennials: You Only Live Once, otherwise known as the popular millennial slogan YOLO.

Is your investing style to preserve or perform?

Posted By Adrian Mastracci | August 9, 2016

Many investors tell me they want the highest returns for the least risk. However, savvy investors know that to be a myth.

A periodic reassessment of the facts is time well spent for every investor. One where plenty of frankness prevails.

For example, step back and revisit your investor style. Even rethink if it truly fits the financial goals you seek.

My question helps:
“What drives your investing style: “preserve” or “perform” ?

Let’s define these two types:

1.) “Preserve” investors care first about risks they incur. They lean toward capital conservation.

2.) “Perform” investors seek high returns with less concern for risks. They prefer more exciting growth strategies.

Rightly or wrongly, my observation is that the majority are clearly driven and sold by performance. Their exuberance too often chases fleeting past performance, a mugs game at best.

Wise investors know that some portfolio preservation is desirable strategy. However, performance just has far more cachet and always will.

Every family needs to find their acceptable investing balance. That is, between becoming too conservative and throwing caution to the winds.

Establishing your profile

Slap Shot: How pro athletes can (legally) “skate by” high tax rates

Posted By Financial Independence Hub | August 5, 2016

By Trevor R. Parry, M.A., LL.B,LL.M (Tax), TEP

Special to the Financial Independence Hub

For many Canadians, the state of our beloved national game reached a nadir when none of the seven NHL franchises qualified for last year’s playoffs. This wholesale failure has given rise to the over-analysis and questioning that only a nation of amateur general managers could produce.

What’s the armchair consensus about the source of Canada’s poor performance? Some would-be GMs decry economic maladies they believe are unique to the Canadian franchises, while others bemoan the current lacklustre state of the Canadian dollar — while still others point to punitive rates of taxation introduced by federal and provincial governments in recent years.

While the first two factors may be the likely cause in the delay in awarding an expansion franchise to Québec City — which, as a Habs fan, I am particularly distressed by as we await the return of our primordial enemy — the latter factor, whilst a reality, can largely be eliminated through recourse to a financial strategy that has now existed for fully 30 years.

Introducing the RCA

In 1986 the federal government amended the Income Tax Act to include the Retirement Compensation Arrangement rules. Better known as an “RCA,” this is the only structure available in Canada that allows supplemental retirement benefits to be funded on a tax-deductible basis. Continue Reading…

Investing is a Marathon, not a Sprint

Posted By Financial Independence Hub | August 4, 2016

By Fraser Willson

Special to the Financial Independence Hub

The 2016 Summer Olympics is just getting under way in Rio de Janeiro. One of the most compelling events is the marathon, a 42-kilometre endurance contest with roots dating back to ancient Greece. It may be that we’ve kept our interest in the marathon because it can teach us much about life – and it certainly has lessons for investors.

In fact, if you were to compare investing to an Olympic sport, it would be much closer to a marathon than a sprint. Here’s why:

Long-term perspective

Sprinters are unquestionably great athletes, and they work hard to get better. Yet their events are over with quickly. But marathoners know they have a long way to go before their race is done, so they have to visualize the end point. And successful investors, too, know that investing is a long-term endeavor, and that they must picture their end results – such as a comfortable retirement – to keep themselves motivated.

Steady pacing

Financial planning for Retirement: uncertainty is certain

Posted By Financial Independence Hub | August 3, 2016

By Sandi Martin

Special to the Financial Independence Hub

If you’re planning for retirement and make the mistake of scrolling through any finance section in a slow news week, you have to ask yourself: what kind of questions are they asking to produce breathless headlines like these?

Half of Canadians don’t think they’ll be able to retire comfortably: poll
Many Canadians believe they will run out of money 10 years into retirement, poll finds
Retiring Canadians will see ‘steep decline in living standards’: CIBC

If a friendly pollster called you in the middle of dinner and asked “Have you saved enough for retirement?,” how would you answer if you were only given the choice between “yes,” “no,” and “I don’t know” and wanted to get off the phone and back to your family?

I doubt that the statisticians or infographic designers would be happy if “it depends on what you mean by ‘enough’” were added as a fourth option, but I’d bet a lot of money that it would be the single most frequent response if were presented as an option.

Leaving aside that most of these studies and polls are commissioned by banks and mutual fund shops whenever their managed asset levels get lower than they’d like, let’s talk about how silly it is to frame retirement planning around the concept of “enough,” as if “enough” was something we could universally, quantitatively measure.