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).

What are Canadian Depositary Receipts (CDRs) and should you invest in them?

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Are CDRs the better way to hold U.S. investments? What are the pros and cons?

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Canadian Imperial Bank of Commerce (CIBC)’s Canadian Depositary Receipts (CDRs) give investors the opportunity to buy shares and/or fractions of shares in any of a number of U.S. or other foreign companies, in bundles that start out trading at a price of about $20 Cdn. each.

CDRs come with a built-in hedging feature that reduces exchange-rate fluctuations. This feature costs you 0.60% of your investment yearly.

CDRs let you invest small sums in U.S. or other foreign stocks, some of which have exceptionally high per-share prices. (For instance, Nvidia recently was trading for $475.06 a share.) Note, though, that with highly liquid stocks like Nvidia, or the other shares underlying CIBC’s CDRs, investors can easily buy, say, just one or two shares if they want.

CDRs represent shares of U.S. or other foreign companies but are traded on a Canadian stock exchange in Canadian dollars.

CIBC currently offers about 47 CDRs that trade on Cboe Canada (formerly NEO Exchange). Here’s just a few of them:

  • Alphabet Canadian Depositary Receipts – GOOG
  • Amazon.com Canadian Depositary Receipts – AMZN
  • Apple Canadian Depositary Receipts – AAPL
  • Meta Platforms Canadian Depositary Receipts – META
  • Microsoft Canadian Depositary Receipts – MSFT
  • Netflix Canadian Depositary Receipts – NFLX
  • Nvidia Canadian Depositary Receipts – NVDA
  • PayPal Canadian Depositary Receipts – PYPL
  • Starbucks Canadian Depositary Receipts – SBUX
  • Tesla Canadian Depositary Receipts – TSLA
  • Visa Canadian Depositary Receipts – VISA
  • Walt Disney Canadian Depositary Receipts – DIS

Cboe Canada is recognized by the Ontario Securities Commission.

An individual CDR is not intended to equal the cost of a single share. Instead, each new CDR started out trading at around $20 Cdn., representing ownership of one or more shares and/or a fraction of one share of the underlying stock, depending on the stock’s price. As mentioned, shares of many of the largest companies in the world trade at significantly higher prices, although some trade much lower as well.

Dividends paid on the shares underlying CDRs will be passed through to CDR investors in Canadian dollars when received, based on the current foreign exchange rates.

The main negative about CDRs is the Fees

CIBC charges no direct management fees for CDRs. However, the CDRs are hedged against movements of the U.S. dollar relative to the Canadian dollar. That means the Canadian-dollar value of the CDRs rises and falls solely with the movements of the underlying stock.

Of course, hedging has costs: and hedging against changes in the U.S. dollar only works in your favour when the value of the U.S. dollar drops in relation to the Canadian currency. If the U.S. dollar rises while your investment is hedged, that reduces any gain you’d otherwise enjoy, or expands any loss. Continue Reading…

Smart tips to Recession-Proof your Household Finances

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Image by Pexels

By Jim McKinley

Special to Financial Independence Hub

With economic uncertainty looming, taking control of your household finances is more important than ever. Preparing for potential downturns doesn’t mean drastic lifestyle changes: it means implementing smart, practical strategies that safeguard your financial well-being. By making a few savvy adjustments, you can create a solid buffer that shields your household from the effects of a recession while keeping your long-term financial goals on track.

Launch a Side Business

 Starting a side business can be a powerful way to add extra income and recession-proof your finances. Whether you’re leveraging a hobby, tapping into a specialized skill set, or exploring new opportunities, a small business can provide a flexible, low-risk way to diversify your income. Consider ventures that align with your interests, such as freelancing, consulting, or offering home services, which tend to remain in demand even during tough times. By starting small and focusing on industries that offer consistent value, you can gradually build a side income that provides financial stability when it’s most needed.

Pay Down your Debt

Paying down debt is one of the most effective ways to strengthen your financial position ahead of a recession. High-interest debt, such as credit-card balances or personal loans, can quickly eat into your budget, making it harder to manage everyday expenses when the economy tightens. Focus on prioritizing payments to reduce or eliminate this kind of debt, starting with the highest interest rates. This not only frees up more of your income but also reduces financial stress. By becoming less reliant on borrowed money, you can better weather potential income fluctuations and maintain greater control over your finances.

Organize your Financial Records

Organizing your financial records can have many benefits, such as improved efficiency, better decision-making, and easier access to important information. Digitizing your documents can help you keep track of them more easily, save space, and add an extra layer of security to protect against theft or damage. After digitizing your records, try the process of splitting PDF content to break  a document into smaller, more manageable files. Continue Reading…

Preparing your Successors for Continued Financial Success

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Discover essential strategies and insights into succession planning to ensure a smooth transition and ongoing financial success for your small business.

Adobe Stock: Prostock-studio

By Dan Coconate

Special to Financial Independence Hub

 As small business owners approach early retirement, ensuring the continued financial success of their business becomes a top priority. The journey of building a business is filled with hard work, passion, and dedication.

To ensure that successors are prepared to carry on the legacy and achieve ongoing financial success, delve into these essential strategies.

Succession Planning

Succession planning is a critical part of preparing for retirement. Identifying potential leaders within the team early on and providing them with opportunities to grow is key. This includes offering challenging projects, exposing them to various aspects of the business, and involving them in key decision-making processes. An effective succession plan ensures a smooth transition and continuity when the time comes for new leadership to take the reins.

Financial Literacy Training

Financial literacy is indispensable for any leader aiming to drive business success. Investing in comprehensive financial training programs that cover budgeting, financial analysis, risk management, and strategic financial planning is crucial. Developing a strong grasp of financial principles equips future leaders to make informed decisions that positively impact the business’s bottom line.

Executive Coaching

Executive coaching plays a significant role in developing leadership skills and ensuring alignment with business goals. There are several benefits to offering personalized executive coaching sessions, whether led by you or a third party. It’s an easy way to help potential leaders enhance their decision-making abilities, improve their emotional intelligence, and refine their leadership style. Continue Reading…

The verdict is in: Canadian investors value financial advice

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Image: Deposit Photos

By Mario Cianfarani, Vanguard Canada

Special to Financial Independence Hub

We recently conducted a “Value of Advice” survey of Canadian investors that reinforced to us how important financial advice really is. We found that while advisors enjoy high levels of client satisfaction and loyalty, younger investors are increasingly opting to manage their assets themselves through online discount brokerages and digital services.

Among Canadian investors, 44% feel their advisor provides high value, and 74% believe their financial advisor is worth every dollar they pay. Additionally, 71% say they plan to remain with their current advisor, with that figure rising to 80% among those aged 55 and over.

While these results were not surprising, the level of trust that financial advisors enjoy is changing with a cohort of younger investors. Among those aged 18-34, 40% use online platforms for investment management, while only 38% rely on financial advisors. By contrast, 70% of those over the age of 55 use a financial advisor, with only 17% turning to online platforms.

A Tale of 2 Investors

It’s clear that Canadian investors highly value financial advisors and the guidance they provide. However, there is a tale of two investors split by age in terms of the duration, method and frequency of financial advice they receive.

This presents both a challenge and opportunity for financial advisors to provide more holistic wealth management services and relationship-oriented advice to younger investors.

While younger investors are more inclined to go digital with investing, they also show a significant level of hesitation. Among younger investors, 35% report not fully trusting their financial advisor. When asked whether they can manage their own investments, many admitted to lacking the time (47%), knowledge (39%), or confidence (42%) to do so effectively.

The study highlighted that financial advisors remain the preferred source of advice for most Canadians, regardless of age. In fact, 89% of investors report that their go-to source for financial information and advice is their financial advisor or bank. Moreover, human advisors are perceived to deliver better investment returns, with 44% of respondents believing that human advisors generate higher returns, compared to only 9% who hold the same view of robo-advisors.

Almost half in regular touch with advisors feel optimistic about their financial future

The data revealed that frequent communication with clients is shown to make a significant difference in client satisfaction and optimism. Among those who communicate with their advisor monthly or more, 46% feel optimistic about their financial future, compared to just 18% of those who communicate only once a year. Additionally, 40% of those who have a financial plan created by an advisor express a high level of optimism about their financial future, compared to only 22% of those without a formal plan.

We have been looking at the impact of financial advice for more than 25 years and the utility and benefits are the same.

As the investment landscape evolves, financial advisors will need to focus on building trust, maintaining regular communication, and emphasizing the value they provide in an increasingly digital world. Doing so will enable them to serve both traditional and younger investors more effectively, today and in the future.

Mario Cianfarani is head of distribution for Vanguard Canada. Most recently, Mario was head of national accounts & institutional sales and was previously head of ETF capital markets. Before joining Vanguard in June 2015, he was a portfolio manager at First Asset Investment Management, responsible for domestic and global equity ETFs and sector-based, North American covered call ETFs. Mario has held senior sales and trading positions with a number of Canadian capital markets teams. His experience includes trading equity derivatives and marketing derivative-related risk management solutions to a broad range of clients.

Mario earned a BA in applied mathematics from York University and is a CFA® charterholder.

How to earn money from a Moving-Labor Side Hustle

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2023-2024 HireAHelper Moving Migration Report: Artwork by Esther Wu

By Volodymyr Kupriyanov

Special to Financial Independence Hub

When we released our last study of starting a moving labor company as a side hustle, it was a great time to get into the business. Home sales were at an all-time high, and the number of Americans who moved that year inched up for the first time in a decade. 

However, after only one year, the housing market has cooled off. And even though sales of newly built homes are still up 6%, home sales as a whole aren’t as high as last year.

The cost of moving has also grown 4% in 2023 (ahead of inflation rates), and this is actually good news! It means movers’ earnings have most likely also increased. So if you’re interested in adding a side hustle to your income, starting a moving labor company is well worth considering.

Findings from 2023 Study on Moving Labor

  • In 2023, a typical moving company earns between US$90 and $150 per hour on average, or from $244 to $407 per move
  • Mover earnings in 2023 are highest in Birmingham, AL where average hourly earnings on a labor-only move reached $146
  • The state with the greatest demand is Mississippi, with 434 moves per moving company registered in the state 

What is a Moving Labor Company, and can it work as a Side Hustle?

You can start a side hustle as a full-service mover. These are the huge van line companies, and they tend to offer the whole service package and charge significantly more. Moving labor companies are often responsible for loading, unloading, and, sometimes (though rarely), packing up people’s possessions. 

Why is labor-only so profitable?

Here are a few more reasons why moving labor is a good choice for a side hustle: 

  • You don’t require a special mover’s license in most states
  • No need to invest in your own truck or spend money on gas 
  • With almost half (48%) of all moves taking place on the weekend, you can keep this side hustle alongside your main job or your studies

Fast Facts about Moving Company Earnings in 2023

Here are some estimates on moving marketplace earnings:

How much revenue do movers make per hour?

In 2023, the average amount a moving labor company earned on HireAHelper is $113 per hour (after fees). That rate is based on the service of two movers loading and unloading a customer’s belongings and does not include potential tips. 

According to Forbes, local movers usually charge between $50 to $250 per hour in 2023.  Continue Reading…