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).

Buying an Annuity versus Equities

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Billy Kaderli, RetireEarlyLifestyle.com

By Billy and Akaisha Kaderli

RetireEarlyLifestyle.com

Special to Financial Independence Hub

I read an article by Mark Hulbert titled Why retirees are better off safe than sorry.

This article was about retirement satisfaction and asked if having little money, a reasonable amount of money or lots of money made a difference.

I have followed Mark’s writings for years and was surprised that Mark, to make his point, was hawking annuities.

Mark explains that you could put $100,000 into an annuity and receive $501 per month guaranteed for your lifetime. This equates to $6,012 per year or a 6% return.

My perspective and why

Here’s the problem that I have with this.

Inflation. As inflation has heated up after years being quiet, your $501 monthly check is going to buy you less and less over time. The erosion of buying power will not be noticed at first but over the years it certainly will. This is a huge negative for me.

Once you turn your money over to the annuity company, you no longer have control of it and possibly it is no longer part of your estate. This means you cannot leave it to your spouse, a child, grandchild or your favorite cause. And remember, your annuity is only as good as the company that backs it. If they have dereliction in management or other calamities you could be getting back pennies on the dollar. It happens.

In the example with this annuity It will take you about 16.5 years to break even with your investment.

What if you die before that?

My suggestion

There are other options if you have $100K and want a 6% yield for income and still keep control of the asset.

For instance, you could purchase any or all of these high yielding dividend-paying stocks.

AT&T (T) yield 4.04%

Plains All American Pipeline (PAA) yield 9.10%%

Energy Transfer (ET), yield 7.32%

Exxon Mobil (XOM), yield 3.84%

Main Street Capital (MAIN) yield 5.51%

In this example, you could put $20,000 into each of the above for a 5.96% average yield or $5,962 per year income. Also, there is potential for these equities to increase in value as well as raise their dividends. So, in this case, you have the possibility of being able to reinvest any amount over the 6% giving you the opportunity to increase your holdings while still covering the $6,000 annual income.

Other options

However, if you are not comfortable owning three out of the five stocks in the energy field, for more diversification, you could purchase DVY, IShares Select Dividend ETF with a portfolio of 100 different companies and with a 3.72% yield.

The idea here is to receive the 3.72% dividend distributions and sell off $2,280 worth of shares annually to make the 6% yield.

How is that done? You invest 100K into DVY taking the quarterly dividends which amount to a 3.72% yield. After one year-and-a-day (so that you meet the long-term capital gains requirement), you sell off $2,280 worth of shares.

DVY 10 Year Total Return = +9.40%

In this example based on the past 10-year performance of DVY, your principal would have grown to approximately $109,400, year one, which is a 9.4% annual total return. You receive $3720.00 in dividend income and $2280.00 in capital gains = $6000.00, leaving approximately $103,400 invested.

We all know that past performance is no indication of future results, but there are no guarantees in retirement, investments, nor annuities.

See the performance chart below. Continue Reading…

Unlock Healthcare Value and Monthly Income | HHL & HHLE

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Image courtesy Harvest ETFs

By Ambrose O’Callaghan, Harvest ETFs

(Sponsor Blog)

The U.S. healthcare sector has faced unique challenges in late 2024 and the first half of 2025. Last year, we provided an in-depth look at global healthcare as a long-term opportunity and examined some of the catalysts and innovations that were impacting the sector. Today, the U.S. and global healthcare space continues to evolve while combatting headwinds in some key areas.

The state of U.S.  healthcare equities

Healthcare performed relatively well in the early part of 2025, despite broader trade uncertainty and macroeconomic headwinds. The medical technology and tools sub-sector experienced some short-term volatility that was driven by the uncertainty surrounding tariffs. That comes as little surprise, considering companies in the space reliance on oversees manufacturing and revenue generation.

Domestic names, like those in Managed care and select Biopharmaceuticals, remained relatively insulated during this period. This stemmed from an easing in the tariff narrative, which was triggered by a sharp drop in several macroeconomic indicators that included manufacturing activity and consumer confidence. As we progressed further into 2025, a cloud of uncertainty crept into healthcare. That contributed to some recent volatility across several sub-sectors. In this article, we have provided some recent catalysts to help investors make sense of the current situation in healthcare.

Drug pricing in 2025

On May 12, 2025, President Donald Trump signed an Executive Order (EO) titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.” This EO proclaimed that the Trump administration “will take immediate steps to end global freeloading and, should drug manufacturers fail to offer American consumers, the most-favoured-nation lowest price, my Administration will take additional aggressive action.”

Ultimately, the aim is to align U.S. drug prices more closely with lower prices paid internationally. This EO echoes a summer 2020 Trump-era EO that was blocked in court and failed to be implemented. The current version faces similar hurdles. There is no bipartisan backing for the policy, the legality surrounding it is dubious, and there is opposition among both Democrat and Republican lawmakers.

All of these make the implementation of this EO unlikely. However, we could see pilot programs within the Department of Health and Humans Services (HHS), making attempts to fold the current EO’s proclamations into future IRA negotiations, or more comprehensive legislative proposals.

In addition, there are those who have predicted the policy could reduce the research and development (R&D) budgets further. That could potentially impact innovation and companies that have been propelled due to strong R&D spending. However, the risk may truly lie in the negative sentiment that continues to emerge in the news cycle.

Vaccine market uncertainty

The appointment of Robert F. Kennedy Jr. as the United States Secretary of Health has damaged sentiment for healthcare companies that manufacture vaccines. RFK Jr. is a vocal “vaccine sceptic.” Moreover, the Trump administration has pursued leadership changes at the Food and Drug Administration (FDA), which raises questions about stricter vaccine approval processes going forward.

Merck & Co, the U.S.–based pharmaceutical giant, with its vaccine-related businesses, has felt the pressure. In addition to the political uncertainty, a recent CMS technical document has added to the complexity in the vaccine arena. The report suggested that reformulated drugs may no longer be classified as “new” for Medicare negotiations. This development could impact companies with operations in the “combination therapy” space like Johnson & Johnson’s Darzalex Faspro, or Bristol Myers’ subcutaneous version of Opdivo. That could affect future patent projections as well. Continue Reading…

The stock market and politics: a Case Study in Applied EMH Testing

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Image courtesy Pixabay: Sergei Tokmakov

By John De Goey, CIM, CFP

Special to Financial Independence Hub

I have long been interested in the interplay between politics and the stock market. We had a fascinating real world case study that played out in real time last month.

Those who know me will likely know that I have long been a proponent of the Efficient Market Hypothesis, which was put forward by Nobel Laureate Eugene Fama as a means of explaining capital market behaviour. It comes in three forms: weak, semi-strong, and strong: each representing different levels of market efficiency.

The Weak form asserts that all past market prices and data are fully reflected in current stock prices. Therefore, technical analysis methods, which rely on historical data, are deemed useless as they cannot provide investors with a competitive edge. However, this form doesn’t deny the potential value of fundamental analysis.

The Semi-strong form extends beyond historical prices and suggests that all publicly available information is instantly priced into the market. This includes financial statements, news releases, economic indicators, and other public disclosures. Therefore, neither technical analysis nor fundamental analysis can yield superior returns consistently.

Finally, the Strong form asserts that all information, both public and private, is fully reflected in stock prices. Even insiders with privileged information cannot consistently achieve higher-than-average market returns. This form is criticized because it conflicts with securities regulations that prohibit insider trading.

Examples supporting EMH

While the EMH has faced criticisms and challenges, it remains a prominent theory in finance that has significant implications for investors and market participants. It has been both supported and challenged by various market phenomena. Here are some notable examples supporting EMH:

Random Walk Theory: Stock prices appear to follow a ‘random walk,’ meaning past prices do not predict future movements, something that is disclosed and disclaimed on every prospectus.

Index Fund Performance: Passive index funds often outperform actively managed funds, suggesting that markets efficiently price securities, especially once fees are taken into account.

Earnings Announcements: Stock prices quickly adjust to new earnings reports, reflecting the semi-strong form of EMH.

Examples challenging EMH

The obvious example that challenges EMH is the existence of stock market bubbles. Events like the Dot-Com Bubble and the 2007-2009 Global Financial Crisis show that prices can deviate significantly from intrinsic values and for prolonged periods of time. Such anomalies suggest that while markets are generally efficient, behavioral biases and structural factors can lead to inefficiencies, include macro-level mispricings. A well-known industry chestnut is that “markets can remain irrational longer than you can stay solvent.” Here’s where the story gets interesting …< Continue Reading…

Emergency Saving Hacks for the Gig Economy Worker

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Image from Unsplash/Robert Anasch

By Devin Partida

Special to Financial Independence Hub

Freelancers are growing in abundance. The gig economy benefits from the rise of digital platforms connecting workers to customers for short-term employment. While the whole setup affords freedom and flexibility for many, it also comes with financial uncertainty.

Unlike traditional employees, gig workers don’t have a steady paycheck that comes through from month to month. There are also no work benefits nor guaranteed work hours. The unpredictability of gigs can make it difficult for people in the industry to save and build an emergency fund.

Why Gig Workers need an Emergency Fund more than ever

An emergency fund is any gig worker’s safety net. Your unique circumstance as a freelance worker makes income inconsistent and paid sick leave non-existent. This lack of employer-sponsored benefits necessitates creating your own cushions. However, financial planning is even more challenging as a gig worker :  medical emergencies, vehicle breakdowns or slow business months can become financial disasters without proper savings.

Building an emergency fund ensures you’ll be prepared when income dips or unexpected expenses arise.

Smart Saving Strategies for Gig Workers

It’s challenging, sure, but that doesn’t mean it’s impossible. Here are ways to help you start your savings journey:

Automate Your Savings From Gig Payments

Every time you receive your paycheck, set up an automatic transfer to a high-yield savings account. Some banks allow their users to automate transfers so they can set aside a portion of every deposit. If your bank doesn’t, you can do the same with apps like Digit, Qapital or Chime.

Automating your savings allows you to set it up once and forget you’re actively saving in an emergency fund. Even 5% to 10% of each payment can add up to a significant amount over time.

Use High-Yield Savings Accounts

Keep your emergency funds in a savings account with high returns rather than a checking account that pays very little interest. A high-yield savings account is an accessible and secure place to save your emergency stash. You’ll earn competitive interest while the money is idle and can withdraw cash whenever needed. Many online banks offer this benefit so you can grow your savings.

One word of caution, though: You should not put all your money in one high-yield savings account. Diversifying them creates better financial resilience.

Implement the “Pay Yourself First” Strategy

Robert Kiyosaki popularized the “pay yourself first” scheme. This method means prioritizing your saving goals before your expenses. If you treat your savings like a monthly nonnegotiable expense, you ensure you funnel some money toward financial security over discretionary spending.

Budget Based on your Lowest Income Month

Because gig work is unpredictable, you should budget every month as if it’s slow. Calculate your lowest earning month and structure your essential expenses accordingly. Put any excess in your savings fund.

Cut Unnecessary Expenses and Redirect to Savings

Do you eat out more often than you should, or buy new clothes you don’t always wear? Are you being tempted to swipe your credit card for every purchase? Assess areas in your life where you most indulge in spending money.

Knowing where your money goes can reduce shelling out where you don’t need it. Cancel unused subscriptions and opt for public transportation rather than Uber to your location. Cook at home instead of dining out and take advantage of discounts and cashback rewards. Every dollar saved can go toward building your financial cushion.

Leverage Microinvesting Apps for Small Gains

Microinvesting allows you to start saving with minimal capital, often investing spare change from day-to-day purchases. Apps like Acorns and Stash round up your purchases and invest the spare change. While not suitable as a primary emergency fund, these microinvestments are perfect for beginners and those with limited funds to supplement their savings over time.

Diversify your Income Streams

Decrease your financial vulnerability by tapping into multiple income sources. Consider taking on different types of gigs to ensure a steady flow of earnings. Whether freelancing, online tutoring or renting out a spare room, extra income streams can help you save more consistently. Continue Reading…

Canadian stocks at all-time highs

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By Dale Roberts, cutthecrapinvesting

Special to Financial Independence Hub

On Twitter [X] I was asked what the heck is going on. “I don’t get it” offered a follower and blog reader. The Canadian economy is entering a rough patch, things are supposed to get much worse, and Canadian stocks are surging higher. In fact, the TSX Composite just reached an all-time high. More proof that no one knows what is going to happen. We can’t time the market or sitting Presidents.

Around Tuesday April 8, President Trump began to walk away from his nonsensical tariff war blabbering, just as I had predicted on March 20th.

My take on the global tariff war concept was and is …

The bad news is a global tariff war spells economic destruction.

The good news is a global tariff war spells economic destruction. Essentially, it can’t happen, I think and hope. The markets will push back  …

The markets pushed back on Trump’s plans, Trump listened, and then stocks moved on to higher prices.

And remember, the stock market is not the economy. And nearly 50% of TSX companies’ revenues originate outside of Canada.

What sectors are driving the TSX Composite?

From April 8, the TSX Composite is up 19% [as of  May 16]. We know that financials and energy and resources drive Canadian stock markets so let’s have a look there first.

Sure enough, during that period the financials XFN-T are up 28%. The banks ZEB-T are up 16%. The insurers that are within the financials indexes have helped to drive returns well above that of the banking index. Diversifed financial Brookfield is up 36%. Fairfax Financial (Canada’s Berkshire Hathaway) is up over 44% over that last year and an incredible 540% over the last 5 years, not including the modest dividend.

So ya, the financials are humming. As I wrote in investing in Canadian banks, the banks are a proxy for the Canadian economy. But they are much more as well with considerable earnings in the U.S. and in other economies and regions. Same for the insurers who are very international.

I’m more than happy to hold this ETF in my personal RRSP. My wife holds most of the indivdual stocks in her RRSP.

Not including dividends

Canadian energy stocks

Let’s move on to energy and other resources. In October of 2020 I suggested that readers consider Canadian oil and gas stocks. The timing was fortunate as the sector went on an incredible run, up over 400% at the peak. The sector did some heavy lifting along the way.

But the sector has cooled and is down some 7.3% over the last year. The returns are also negative from April 8.

That said, the Canadian pipelines have been carrying the energy sector. Enbridge ENB-T and TC Energy TRP-T are leading constituents in the Canadian TSX Composite and they have greatly outperformed over the last year. They’ve made a minor contribution.

TC Energy is up about 35% over the last year while Enbridge is up in the area of 30%. Enbridge is the forth largest holding in the TSX while TC Energy is top 15.

The materials sector XMA-T helped to lift the TSX over the last year, up 26% at its peak a week ago. Gold stocks drove the index. Gold was and is the perfect hedge for Trump’s unpredictability and potential inflation-inducing tariff strategy. Materials did some lifting along the way.

Defensive equities rise to the occasion

Consumer staples XST-T have outperformed over the last year. They have been a wonderful defensive holding. They shone during the worst of the Trump fears. That said, they (unfortunately) have a very small weighting in the TSX.

Utilities XUT-T have kept pace with the markets over the last year and have offered recent support, as the sector is near all-time highs. More on this below when we discuss retirement and managing risk with defensive equities.

Canadian tech rocks

One of the main drivers to the new highs is the tech XIT-T sector. It’s up over 41% over the last year. Shopify is up 95% over the last year. Constellation Software is up 37.5% over one year. Shopify has the second largest weighting in the TSX. It will often trade places with RBC for top spot.

From April 8, XIT is up 26%, largely driven by Shopify.

Here’s the lift from Financials and Tech from 2023 … Continue Reading…