Tag Archives: Financial Independence

What and Who are the Canadian Robo Advisors?

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By Dale Roberts

Special to the Financial Independence Hub

Most investors want or need investment advice. I learned after many decades in and around the industry, including over 5 years as an advisor on lower-fee index-based portfolios, that Canadians are not all that interested in their investments. We’d call that a low interest category.

Nope, folks are more interested in making money and well, living. So most need, or seek advice. Now unfortunately most Canadians by force of habit simply line up at their big bank or mutual fund sales office and sign up to pay some of the highest investment fees in the world. Those fees are crippling, I know, I saw the results when Canadians showed me how they were invested.

But just because you might need an advisor does not mean you have to pay some of the highest investment fees in the world. And yes the fees are important. We know that the fees typically and greatly impact the returns. From Justwealth the chart at the top is a comparison of the potential portfolio returns impact over longer periods, based on an initial $100,000 investment.

We can see that the effect of high fees paid can become exaggerated over time. Remember you pay investment fees every year, throughout the year, and as your portfolio grows over time you pay more in fees as the fees are based on your portfolio value. That’s a nasty kind of negative compounding.

So just what is a robo advisor?

Yup, just as per the image, a robo advisor is an investment advisor that’s well, not human. But don’t be scared. If you want to talk to a human the companies that offer robo advisory services can also put you in touch with real flesh and blood advisor types.

So if a robo advisor is not human, just what is “it”? A robo advisor is simply an online platform that asks you questions to help you get into the right investment portfolio. A robo advisor will ask the same type of questions as would a human advisor. Based on your answers the robo advisor will put you in the appropriate portfolio.

So what type of questions will the robo advisor ask you?

The robo advisor platform may try and gauge your investment knowledge. There may be questions on your net worth and salary and employment status, basic personal details. Each robo advisor offering has its own nuances and I will dig deeper into that in future articles. But most importantly a robo advisor wants to know …

  1. Your time horizon for the monies that you are about to invest.
  2. Your tolerance for risk (the amount or percentage that the portfolio could decline).
  3. Your objectives for the investment, whether you’re looking for more growth, a more balanced approach or a very conservative approach that might include a lot of bonds and fixed income.

And once again, each robo advisor will have its own methods (robo personality?) for asking those questions and discovering your investment personality and needs. If you want to ‘play around’ with a basic robo question and answer process have a look at Tangerine Investments’ Portfolio Selector Tool. Continue Reading…

7 tips for earning extra money from your Driveway

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By Sarah Kearns

Special to the Financial Independence Hub

Do you want to earn a quick extra buck or two with items that are just lying around the house? How about making money off your handyman skills? And, oh, did you know that it’s also possible to earn extra money from your unused driveway space?

If you’re looking to earn some extra cash by running your own business right on your very own driveway, then you might want to consider these seven money-generating tips.

1.) Hold a garage sale

The first thing that comes to mind when you think of earning money from your driveway is the garage sale. Aside from earning a few hundred dollars, you also get to clean out the clutter in your home. A garage sale is also a good weekend family activity and is a great exercise to learn about the basics of entrepreneurship.

2.) Set up a concession stand

Remember those lemonade stands kids put up during summer break? You can set up a concession stand on your own driveway too! It’s even better if your street has lots of foot traffic. Of course, different countries, states, or territories have different laws regarding this; so, always check your local regulations first before you set up.

3.) Rent out your tools

If you have tools that are seldom used, you can rent them out to neighbors and contractors in your area for extra cash. There are websites like ToolMates that let you post your for-rent tools and equipment online. These services let you make some extra money off your tools; which is always better than letting these expensive items just gather dust in the shed.

4.) Start your own handyman business

Since we’re already on the topic of tools, you can also set up your own, independent, handyman business. If you have handyman (or handy woman!) skills like carpentry, ceiling repair, car maintenance, and such, then it might be good to put those skills into work and earn some extra money. Sites like AirTasker allow you to post your services online so that people in your area can get in touch with you whenever they need your skills.

5.) Share your car with neighbors

Now, this is a fairly new concept and companies like Lyft and Uber have taken this innovative idea to the next level. However, if you don’t like driving around that much, it’s also possible to rent out your car to your neighbors when you’re not using it. CarNextDoor is a service that allows neighbors to ‘share’ their cars with each other, thereby offsetting the cost of ownership.   Continue Reading…

How much will my Defined Benefit pension pay In Retirement?

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I contribute to a defined benefit pension plan at work. How much will I get from the pension plan in retirement? That depends on when I retire or leave the plan. Hang on, we’re about to get math-y.

Normal retirement age is 65 and I joined the pension plan in 2009 at age 30. Retiring in 2044 (the year I turn 65) would give me 35 years of pensionable service.

The pension plan has a retirement calculator on its website. Curious about the amount of retirement income I’d receive at various ages, I took a look. The calculator just needed a couple of inputs: current salary, plus an assumption for future annual salary increases (I used 2 per cent).

Retiring at age 65 would max out my pensionable service and give me an annual retirement income of $46,000 in today’s dollars. Continue Reading…

Marketing for your Side Hustle

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By Christina Sanders

Special to the Financial Independence Hub

You may be running a small business on the side to achieve financial independence. These side hustles can be anything from lawn mowing to website design. No matter what your side hustle is, you’ll need marketing to gain new customers. It doesn’t have to cost you an arm and a leg either. There are plenty of options and methods for promoting your business through cheap, yet effective means.

1.) Focus on local markets

In marketing, there is a constant focus on target markets. These are the people that you want to buy your product or service. They’re the people most likely to buy your product because it solves a problem they have or they trust it to improve their life. This comes down to not only geographics, but also demographic data focused on income level, family size, interests, gender, and age. All these factors will help you to hone in on who you should spend your marketing efforts on.

For a small business, it’s likely best to focus on your surrounding geographic area. Utilizing a local market is usually less expensive and you have a competitive edge by being based in the same region as your customers. That geographic intimacy provides a better understanding of local culture, including common pain points and values. Use that to speak to your potential customers on a more personable level.

2.) Design distributables

You’ll likely want to make some business cards and flyers for your business. Digital marketing is crowded, often difficult, and can be expensive. Physical distributables are very effective, especially in local markets. They can be passed for referrals, posted on community boards, and distributed through mail. If you’re unsure about how your design should look, check out some flyer examples and look at what other businesses have done. There are simple and free online programs for designing flyers, brochures, and posters. Simply do a Google search to find one that works for you.

Having a personal brand in your advertisements goes a long way. You can build trust and confidence with your potential customers by having high-quality designs and messaging. Your brand should represent what values you and your customer both deem important. Having brand consistency will be important for becoming recognizable and memorable in your community. So don’t ever settle for less than high quality, because your brand defines what people will think of your service.

3.) Create a website

People may hear about your business and then wonder more. Where will they likely go? The internet. You need a webpage that answers questions they will likely be wondering and that drives further interest.

This doesn’t have to be difficult. Sites like Wix.com make it easier than ever to build your own website based on beautifully designed templates. Make sure you choose a website design that values ease of use over anything else. Make it incredibly simple for your customers to understand exactly what you do and any other information that would be valuable to them. This is called UX, which you can research online for a more in-depth understanding. Continue Reading…

How investing makes it easier to achieve Financial Independence

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By Gary Bordeaux

Special to the Financial Independence Hub

If you are looking for a way to secure your financial future, learning how to invest your money can help accomplish that goal. There are a variety of investment vehicles that can be tailored to fit your needs, timeline, and risk tolerance.

Let’s take a look at some of the specific reasons how investing helps a person obtain financial independence (aka “Findependence”).

Make money both today and tomorrow

If you are interested in generating a steady income from your investment portfolio, you can buy dividend stocks or a REIT (Real Estate Investment Trust). You make money today by receiving a dividend payment every month or quarter. You make money in the future by holding the security as it appreciates in value. When it reaches what you feel is the height of its value, feel free to sell it and lock in a profit. It is also possible to hold stocks in a trust that can benefit children, grandchildren or other beneficiaries after you pass on.

Obtain returns greater than the Rate of Inflation

Thanks to inflation, a dollar that you hold in your hand today will be worth the equivalent of 98 cents a year from now. This is because the price of goods will increase by an average of 2 per cent per year. In some cases, inflation can reach 4 per cent or greater in a given 12-month period.

As a general rule, stocks will appreciate by about 7 per cent per year, and that amount is higher if a stock offers a dividend. What this means is that you are increasing your net worth above what it takes to keep up with cost-of-living increases. Over a period of years or decades, you could accrue tens or hundreds of thousands of dollars that can be used to enhance your lifestyle.

Improve your chances of owning a home

Let’s say that you are looking to buy your first house. You could decide to buy a single-family unit with a monthly mortgage of $1,000 that you are responsible for paying on your own. However, another option is to buy a duplex that you can both live in and derive income from. At the very least, having a tenant living in the other half of your home will decrease the monthly mortgage payment.

The money that you save can then be used to improve the home or make other investments. If you make improvements to a property that is used for rental purposes, it may be possible to write off the amount of those repairs on a state or federal tax return. Continue Reading…