Tag Archives: saving

Why customizing a personal investment portfolio matters

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By David Miller, CFP, RFP

Special to the Financial Independence Hub

As we say goodbye to a tumultuous 2018 and hello to 2019, it is time for you to review your investment portfolio strategy to ensure it is set up for success in the New Year and for the long-term.

Below are some questions you should ask yourself as you review your investment portfolio:

  • Is your portfolio suitable for your personal situation?
  • What is your overall investment strategy and has it changed given the level of volatility you likely have experienced?
  • Did you receive individualized investment advice from a qualified professional?
    • Is that qualified professional a portfolio manager or a salesperson?
  • Do you or your advisor look at the whole picture when it comes to managing your money?
  • Are your investments held in a ‘cookie cutter’ investment portfolio?

To ensure your portfolio is suitable, reliable, and catered to your situation, a customized investment portfolio, built by a portfolio manager, may be what you need.

The trend towards a ‘Model Portfolio’

Computers and the use of algorithms have made it easier for banks, institutions and, more recently, Robo-advisors to automate the investment process for the masses. Model portfolios are now common place because of the economies of scale; it’s just cheaper and easier to do. For some people this approach might help save on fees, but for someone with more unique financial planning and investment needs, a cookie-cutter portfolio just doesn’t cut it. You need a portfolio that is customized to your situation.

Why Custom Portfolio Management?

Let’s look at high-income earner John. John has saved faithfully through his big bank over the years, and along with his defined contribution pension/stock plan through his work, he has maximized his RRSP and TFSA. He has no debt and there are very few places he can now allocate his savings without having to worry about the tax implications. He’s in the prime of his earning years and has 10+ years until he’d like to retire.

John is increasingly aware of the high fees his bank is having him pay. He’s seen the advertising on the importance of keeping his fees low *there seems to be a race to the bottom for investment fees1*. He’s looked at the Robo-options and even at managing his own investments, but he’s not sure and a little stuck. It’s not his expertise.

Here are five big reasons why John may want a tailor-made portfolio: Continue Reading…

Getting the best bang for your buck with everyday purchases

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By Sia Hasan

Special to the Financial Independence Hub

You work hard for your money, so it makes sense that you would want to stretch your dollar as far as possible. If you are like many other hard working adults, you may splurge here and there on a cup of coffee or a matinee movie. However, most of your take-home pay may go toward everyday or typical purchases. These may include food, gas, clothes and more.

It may seem challenging to stretch your dollar in these essential areas, but rest assured that there are several strategies you can employ to get the most bang for your buck. Before you make another purchase on regular or everyday items, consider how these tips can benefit you.

Choose your payment method carefully

The primary payment methods for standard purchases are cash or credit cards. Cash may be in the form of hard currency, checks or a debit card. Many people believe that paying with cash or a cash alternative is a smart option because it helps you avoid taking on expensive debt. It is true that debt can cost you money.

However, if you use credit cards responsibly, a credit card may be a better payment option. Consider that you can make all your regular purchases with a credit card, and you can pay the full balance off each month. Therefore, no interest is accrued, and there is not a cost for using the credit card. You may enjoy the benefit of bolstering your credit score with responsible use of your credit card. Keep in mind that higher credit scores may qualify you for a lower rate on a mortgage, a car loan, insurance rates and more. Therefore, this payment method can yield tremendous savings over time.

Take advantage of Credit Card Rewards

When you make purchases with credit cards regularly, you may also enjoy the additional benefit of earning rewards points. You can begin by searching for a good credit card for average credit and comparing rewards programs or opting into the rewards program on an existing account. Pay attention to the fine print as you compare programs. Some credit card rewards programs, for example, limit the points that you can earn within a specified period of time. Other programs require you to use the points within a certain period of time. These rewards may essentially give you cash back on your purchases, or the points may be redeemed for other items with financial value.

Shop around

Even when you take these steps to stretch your dollar, there may be other ways to save as well. Shopping around is easier to do than ever because of the Internet. Continue Reading…

5 surefire ways to stay out of Debt

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By Gary Bordeaux

Special to the Financial Independence Hub

In the modern world, there are two types of debt: good bad and bad debt. Good debt would be considered financing something that has the potential to go up in value, like a home or a small business. Bad debt would be considered consumer debt like jewelry, designer clothes, and luxury cars. These things tend to depreciate. People typically get into trouble financially when they start going into debt with consumer goods or things they really don’t need.

1.) Create a budget

Unless you are already financially well-off, you are going to need to create a budget for you and your family. This is the single biggest way not to go into debt. Why? Because you are tracking every dollar you spend. Start out by listing your monthly income after taxes at the top of the budget, then list your expenses below that. If you don’t have a surplus of money after all your expenses are accounted for, you are either spending too much money or you are not making enough money. Whatever the case may be, adjust your budget accordingly.

2.) Quickbooks

The Quickbooks online platform by Intuit is probably one of the best online financial tools you can use for your business. In general, it is an online accounting software that helps manage your finances for you. With an easy Quickbooks online payment, you can pay people and you can receive money too. In the end, business finances can get pretty confusing. Quickbooks allows you to track your finances more easily. Also, Intuit has a budgeting app called Mint. I use Mint quite often and it tracks all my transactions and spending activity. It also tracks your budgets, monthly cash flow, and your credit score along with many other investments and other accounts.

3.) Emergency fund

Let’s face the fact that bad things happen to good people. When these setbacks occur, people need money set aside to protect themselves from debt. This is what an emergency fund can do. First, start by putting away a simple $1,000 just in case an emergency happens. Continue Reading…

How to Retire debt-free

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By Laurie Campbell

Special to the Financial Independence Hub

These days, don’t be surprised to find a senior citizen standing behind the counter of your favourite fast food spot taking your order instead of a braces-wearing teen. What retirement looks like today has changed quite significantly from what it was even just ten years ago, and there’s no stopping this trend. More and more seniors are staying in the workforce, and for many of them, they have no choice.

Last June for Seniors Month, our agency, Credit Canada co-sponsored a seniors and money study that looked at the financial difficulties Canadian seniors are facing; the results, while shocking, were no surprise.

As a non-profit credit counselling agency, our counsellors are on the forefront of what’s happening when it comes to people and their financial hardships, and we are seeing a large number of people who should be starting to settle into their “golden years” still working, maybe even taking on an additional side job, just to pay off their debt, let alone get a time-share in Florida.

When we conducted our study in June 2018, it revealed that one-in-five Canadians are still working past age 60, including six per cent of those 80 and older. And while one third do so simply because they want to — which is fantastic, kudos to you — 60 per cent are still working because of some form of financial hardship, whether it’s too much debt, not enough savings, or other financial responsibilities, like supporting adult children.

The truth is the golden years have been tarnished, and I don’t know if we’ll ever get them back.

Half of 60-plus carrying some form of debt

Many of today’s retirees are living on fixed incomes, making them vulnerable to unpaid debt. In fact, our study revealed more than half of Canadians age 60 and older are carrying at least one form of debt, with a quarter carrying two or more types of debt. What’s even more alarming is that 35 per cent of seniors age 80 and older have debt, including credit-card debt and even car loans.

Staring at the problem isn’t going to help, nor is hiding from it. The best thing we can all do is to face the facts head-on and devise a plan of action that we know will work, whether it’s getting rid of any debt while building up savings, taking on a side job, delaying retirement by a few years, or all of the above.

Sizing up Government support

Before delving into the numbers it’s important to understand what income you can expect to have during your retirement. A few numbers have been compiled here as an example, but if you wanted to get more detailed information you can visit the Government of Canada website and click on the Canada Pension Plan (CPP) or Old Age Security (OAS) pages.

So, let’s get started by taking a look at 2017. Continue Reading…

Dear Generation X: Here’s how to fix your Finances

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The number of financial responsibilities facing Generation X – those ages 37 to 52 today – seems overwhelming. Getting married, having kids, and raising a family can be expensive enough. Now factor in building an emergency fund, paying down the mortgage, setting aside money for retirement, saving for your child’s education, and everything else that comes along with improving your finances. It’s a tall order – I’ve been there! In fact, I’m living it.

But let’s skip the scaremongering and over-generalizations and get to some common sense advice.

How do you balance paying off debt, saving, and investing with the everyday costs of supporting a family? Let’s start by setting up a simple plan for each of these categories to ensure that you are on the right financial path. Here’s how to fix Generation X finances:

Treat consumer debt like a financial sin

You can’t move the needle forward financially if you’re constantly spending more than you earn. But when your mortgage payment, car payment(s), daycare costs, groceries, and gas take up your entire available budget then you have no wiggle room to plan for unexpected costs.

Not only that, when the “I deserve this” moments come up and you want to treat yourself or your family to dinner, a movie night, or a vacation you end up going into debt (just this one time) to make ends meet.

Start with a list of everything you currently spend over a period of three months. Where does all your money go? Find a way to slash expenses so that you’re no longer going into debt just to get through the month.

Make it a rule: No new debt this year

Now it’s time to tackle your current debt, whether that’s in the form of a lingering line of credit or (gasp!) a high-interest credit card. If it’s the latter, put all savings and extra spending on hold and throw every extra dollar at that debt until it’s paid off.
Continue Reading…