Tag Archives: Blockchain

The Role of Technology in facilitating Impact Investing

Posted By |
Image by Unsplash

By Devin Partida

Special to Financial Independence Hub

Most investments share a fairly straightforward purpose: making money.

However, the past few years have seen an uptick in impact investing. While financial returns still play a role in this practice, the additional goal is to make a positive difference in the world.

According to Wikipedia, impact investing refers to investments “made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.” It’s about alining an investor’s beliefs and values with the allocation of capital to address social and/or environmental issues.

Impact investors want their funds to go toward causes they believe in. Historically, that’s been more easily said than done, but new technology makes it more accessible and reliable than ever. Here’s a closer look at how.

Facilitating Easier Investments

Like in all investments, Technology streamlines the trading process when impact investing. Digital platforms provide a single point where users can look through sustainable or socially conscious options to find an opportunity in less time. The same apps let people invest with a few taps of the screen, bypassing the time and intermediaries of conventional transactions.

Financial technology (fintech) also enables faster, smoother payments once users decide on an investment. Blockchain is one of the most promising innovations here, as even international transactions take just four to six seconds on these networks. Tech like this also reduces processing costs.

Such speed and cost-effectiveness mean impact investing is a more accessible practice. People who are interested but worried about the cost of third-party fees or don’t know where to begin can work around these concerns.

Providing new Impact Investing opportunities

Similarly, fintech provides new ways to get into impact investing. On a surface level, trading apps offer live news and cover deposits to make finding and jumping on unique opportunities easier. Beyond that, tech has democratized the finance industry to let people invest in causes they care about outside the conventional market system.

Peer-to-peer networks are a great example. Crowdfunding platforms like GoFundMe let anyone create a place for others to donate to or contribute directly to social impact. These opportunities are often more targeted than traditional investing. You couldn’t fund someone’s surgery on the stock market, but you can do so easily online.

Maximizing Transparency

New technologies also make it easier to ensure impact investments actually go to the causes they intend to. That’s important because 71% of young investors would turn down a significant sum of money if it meant supporting a company with a negative social or environmental impact.

Blockchain is a big difference-maker because the records are virtually impossible to change. Consequently, companies using the technology in their operations can provide proof of their sustainability or social impact. For example, diamond producer De Beers uses blockchain tracking for tamperproof assurance that its gems are ethically sourced.

The rise of digital data also means finding details on a business’s operations is more straightforward than ever. Similarly, it lets organizations provide specifics on their environmental and social efforts. This transparency helps investors determine if an opportunity aligns with their goals to boost trust in their investments.

Streamlining Impact Reports

Along similar lines, fintech can help impact investors see how their funding affects the causes they support. Many of these platforms were born online and can provide easily accessible updates on how the companies they highlight make a difference. For example, The Impact Crowd requires crowdfunding projects to submit reports at least once a year so users see what their funds do. Continue Reading…

The best Canadian Blockchain ETFs

Posted By |

By Mathieu Litalien

Special to the Financial Independence Hub

The interest in Blockchain has surged in recent months as Bitcoin goes on a record run. Naturally, the two are inherently linked but one common mistake investors make is to assume one equals the other.

Unfortunately, it is a mistake made by many and one that could not be further from the truth. Blockchain is not Bitcoin, and Bitcoin is not Blockchain.

Without going into great technical detail, Blockchain is the technology that underpins the Bitcoin cryptocurrency. Blockchain powers Bitcoin and while it was initially created for Bitcoin, they are not one and the same.

Decentralization

Blockchain is a decentralized database or a ledger that is distributed across many computers. Hence, why it is referred to as decentralized. Arguably, it is what makes Blockchain’s technology so revolutionary and why the use cases expand far beyond that of cryptocurrencies.

Many believe that Blockchain’s decentralization will revolutionize the way companies do business. For one, it is largely considered to be safe as there is no single point of attack for which to target. Secondly, Bitcoin has made the use case for making digital transactions much easier (and secure). Finally, given its nature blockchain leads to greater transparency, increased accuracy and ultimately, can lead to significant cost reductions.

The potential use cases for Blockchain are too many to list but include things such as executing contracts, maintain records and auditing. Today, organizations worldwide are investigating how they can utilize and adopt Blockchain technology.

How can investors benefit?

Exchange Traded Fund (ETF) investing, is one of the simplest ways of gaining exposure to a broad base of assets. Canadian ETFs cover markets, sectors, industries and in some cases, get down to specific niche industries. Blockchain is one such niche industry and in Canada, there are two solid options for investors.

Harvest’s Blockchain Technologies ETF (TSX:HBLK)

It is worth noting that there have been a few failed attempts at Blockchain ETFs in the past and today, Harvest’s Blockchain Technologies ETF is one of the only one’s left standing. The fund aims to track the performance of the Harvest Blockchain Technologies Index. HBLK (TSX:HBLK) invests in equity securities of issuers exposed, directly or indirectly, to the development and implementation of blockchain and distributed ledger technologies.

he fund is now two years old having first launched in December of 2018. A $10,000 investment in HBLK would be worth $13,699 as of end of November. Worth noting that the fund was underwater until it made a big comeback this past June.

TSX:HBLK Dividend Adjusted Return

HBLK ETF

This chart provided by StockRover. Check out Stockrover Here!

Holdings include a mix of well-established large caps and stand-alone emerging blockchain companies. As of end of November, emerging and large cap companies accounted for 55% and 44% of the fund. It carries a high 0.65% Management Expense Ratio (MER) fee and is eligible for most account types.

As of writing, the company is trading at $15.00 per share, a 9.4% premium to its net asset value (NAV) of $13.70 per share. It is a smaller ETF, with holdings of approximately $10.5 million and as such, is prone to greater volatility.

The ETF appears to be well diversified with no holding accounting for more than 6% of the fund. Combined, the Top 10 account for approximately 50% of assets. Among the notable names, there are upstarts and hypergrowth stocks such as DocuSign and Square which are complemented by large players such as Intel and Oracle.

Horizon’s Big Data and Hardware ETF (TSX:HBGD)

Although it is not explicitly stated in its name, Horizon’s Big Data and Hardware ETF (TSX:HBGD) is a blockchain focused fund. The fund seeks to replicate the performance of the Solactive Blockchain Technology & Hardware Index which tracks companies focusing on blockchain innovation and development, and companies providing hardware and hardware-related services used in blockchain applications.

Horizon’s ETF has a reasonable MER of 0.55% and at today’s price of $48.70 trades at a steep 20.15% premium to its NAV of $40.53. The fund was launched in June of 2018 and a $10,000 investment in HBGD at the time of inception would be worth $17,487 as of end of November. Much like HBLK, most of those gains have come over the past six months.

TSX:HBGD Dividend Adjusted Return

HBGD ETF

 

Somewhat surprisingly, the fund also pays a modest annual distribution of $0.3701 per share (0.76% yield). Distributions are rare for ETFs that track technology and growth stocks. Horizon’s ETF is made up of approximately 50% mid-to-large cap stocks, while 23% of holdings are microcap stocks. Once again, this is a small fund with only $7.1M in assets and is a higher-risk investment.

This is accentuated by the makeup of the company’s holdings.

 

The company’s Top 10 holdings are vastly different than that of HBLK. For starters, none of the Top 10 overlap. Although the Top 10 also account for approximately 50% of fund holdings, two companies – Hive Blockchain (TSX:HIVE) and Riot Blockchain (NASDAQ: RIOT) – account for ~30% of holdings. This means that the fund is more reliant on those two companies to drive performance.

Furthermore, half of the top 10 holdings trade on exchanges outside of North America and approximately 31% of total holdings operate in Asia. This makes it the more globally diversified fund of the two.

HBLK vs HBGD

Interestingly, both ETFs offer something different and can be held together without worry of much overlap. Harvest’s fund is likely to be less volatile given its exposure to some of the larger and more traditional tech companies. Continue Reading…

The Evolution of Real Estate Investing

Posted By |
Image by Pixabay

By Emma Williams

Special to the Financial Independence Hub

An insight into the modern methods of real estate that is much more accessible and inclusive!

We have now shifted from steel locks to smart locks in our homes, but for a long time, the conventional real estate systems continued functioning with similar patterns. One of which is real estate investments.

Real estate investment involves the purchasing and sale of a real estate asset for rental profits or market returns. Historically, this investment has yielded better and continuous returns for investors. However, a major roadblock to this remained its accessibility and high barriers in terms of capital and liquidity. For a long time, this segment was exclusive to a specific niche.

However, with modern instruments and advanced innovations at hand, real estate investment has the potential to widen its range. Through these new models, the potential of real estate investment has entirely been transformed.

Let’s take a look at the future of real estate investment with such modern innovative tools.

Investing With REITs

Image by Pixabay

Real Estate Investment Trusts (REITs) are one of the techniques that has made property investments accessible to a certain extent. With REITs, individuals invest in companies that further deal with real estate investments. In return, shareholders receive dividends in proportion to their investment share in the company.

With REITs, instead of directly investing in real estate an individual would invest in a company that has invested, in part, in real estate. The company then offers dividends through its rental income to its stakeholders. Any investor can hold shares and indirectly become an investor in a real estate asset. This eliminates the need for high capital needed in a traditional system. Continue Reading…

Bitcoin Blues: How new cryptocurrencies are disrupting Tax Reporting obligations (to IRS and CRA)

Posted By |

By Elena Hanson

Special to the Financial Independence Hub

The latest buzzword is “disruption” and nothing has caused more disruption in the investment world than virtual currency, most commonly referred to as cryptocurrency. If you’re considering cryptocurrency as an investment option, there are a few things to know.

In a nutshell, cryptocurrency is a digital asset that can work as a medium of exchange. It uses cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

The main difference between virtual currencies and traditional currencies is the decentralized control system. Cryptocurrencies like Bitcoin, which has been around since 2009, and Ether use distributed ledger technology such as block chain as a public database for transactions. Distributed ledgers are virtual ledgers that are decentralized across multiple locations, resulting in multiple copies of a transaction. While there is no central authority governing these transactions, the public nature of the ledger serves as a check and balance. However, having a currency that isn’t tied to any country or banking system can make regulation a challenge.

Just ask the 10,000 U.S. taxpayers who recently received letters from the Internal Revenue Service informing them that they may have improperly reported transactions involving virtual currencies and may owe back taxes on unreported cryptocurrency earnings.

The letters were accompanied by a stern warning from IRS Commissioner Chuck Rettig, who issued a press release on the matter. He said: “Taxpayers should take these letters very seriously by reviewing their tax filings and, when appropriate, amend past returns and pay back taxes, interest and penalties. The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”

The IRS treats cryptocurrency like physical property and taxes it the same way. For example, if you receive a virtual currency as compensation from an employer, it is considered income subject to withholding and payroll taxes. And if you sell it, you could face capital gains tax. According to the IRS: “If you sold, exchanged, or disposed of virtual currency, or used it to pay for goods or services, you have engaged in a reportable transaction.”

CRA treats virtual currency much like the IRS

So, how does the Canada Revenue Agency treat virtual currency? Unfortunately, much like the IRS.

As far as the CRA is concerned, when cryptocurrency is used to pay for goods or services, it is subject to the rules for “barter transactions” or transactions that don’t involve legal tender. When accepted as payment for goods or services by a GST/HST registrant, the GST/HST portion must be calculated based on the fair market value at the time of the transaction. Continue Reading…

Thinking about taking a flyer on cannabis stocks or blockchain? Follow these guidelines.

Posted By |

By Scott Ronalds

Special to the Financial Independence Hub

 
“I’m thinking of taking some money out of my portfolio with you guys to buy some shares in a blockchain-related start-up. Am I crazy?”

 

We were asked a question along these lines recently, and I suspect we’ll hear it again, whether it’s blockchain, bitcoin, cannabis, space tourism or whatever new investment opportunity seems exciting. Our answer might surprise you.

No, you’re not crazy. We don’t necessarily think it’s a bad thing to invest a portion of your portfolio in an unconventional, illiquid, or even highly speculative investment. You can learn a lot from it. We do have a few caveats, however. Most importantly, you need to have a high tolerance for risk and should be mentally prepared to lose everything you invest, because you just might. Below are a few other things to consider.

Limit it to 5% of your portfolio

Five per cent isn’t a magic number, but curbing a risky investment to 5% or less of your total portfolio will limit the damage if things go south. True, it will also limit your potential upside, but it’s a prudent trade-off. You don’t want to put your retirement plans and future standard of living at risk by investing too much of your portfolio in an adventure.

Have a plan

This seems obvious, but we find it’s often overlooked. Let’s use bitcoin as an example. Say you invest in the cryptocurrency when its value is $16,000. What will you do if it falls to $8,000? Or if it rises to $24,000? Do you have a floor and ceiling in mind for how much you’d be willing to lose or gain before making a difficult decision with your investment? Bitcoin is a great example of the hyper volatility that comes with speculative investments. You need to be prepared for it, and you need to have a plan.

Consider how it will change the risk profile of your portfolio

If your target breakdown between stocks and bonds is 60/40 and you want to carve off 5% to invest in a start-up, for example, you should be taking the money from the stock portion of your portfolio so that you don’t inadvertently increase your overall level of risk. If you’re venturing into investments that are higher up the risk spectrum, you shouldn’t fund them by cashing in your safer stuff (e.g. cash and bonds).

Further, if you hit the jackpot on a speculative investment, it will comprise a larger portion of your portfolio, which means you should think about reducing the level of risk in the rest of your accounts to keep your overall balance between growth and safety in check. On the other hand, if your investment tanks, your overall portfolio may have less exposure to growth assets than your plan calls for. In this case, it would be appropriate to increase your exposure to stocks. After a bad experience with a high-risk investment, this can be hard to do.

Read the fine print on fees and redemption clauses

If it’s a product or offering that you’re considering, rather than an individual security, be sure to do your homework on fees. Continue Reading…

Powered by the Financial Independence Hub.
© 2013-2025 All Rights Reserved.
Terms of Use
Financial Independence Hub Logo

Sign up for our Daily Digest E-Mail!

Get daily updates from the FindependenceHub.com straight to your inbox.