Tag Archives: wealth accumulation

9 Business Leaders share best Opportunities for Wealth Accumulation

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To shed light on effective wealth-building strategies, we’ve gathered insights from nine experts in the field, including investment specialists, financial advisors, and more.

From the importance of diversifying your portfolio and investing in yourself to the consistent investment in stock indices, these professionals share their top investment opportunities and asset classes that have proven particularly effective in securing financial independence.

 

  • Diversify Your Portfolio and Invest in Yourself
  • Prioritize Exchange Traded Funds (EFTs)
  • Look into Home Ownership and 401(k) Investments
  • Make Systematic Progress Across Asset Classes
  • Generate Passive Income with a Niche Website
  • Build Wealth through Real Estate
  • Focus on Healthcare and Nutraceuticals
  • Seek Rental Property Investments
  • Be Consistent with Investment in Stock Indices

Diversify your Portfolio and Invest in Yourself

One investment opportunity that has proven particularly effective in building and securing financial independence is a diversified portfolio that includes a mix of equity, bonds, and alternative assets. 

This strategy allows for exposure to different asset classes, mitigating risk while aiming for growth. Equities provide the potential for high returns, bonds offer stability and income, and alternative assets such as real estate, commodities, or private equity can add further diversification and potentially enhance returns. 

However, it’s essential to emphasize that investing in oneself has been the best investment of all. Personal and professional development, education, and acquiring new skills have consistently yielded substantial returns over time. These investments enhance earning potential, open up new opportunities, and empower individuals to adapt to changing circumstances. — Ahmed Henane, Investment Specialist and Financial Advisor, Ameriprise Financial

Prioritize Exchange Traded Funds (EFTs)

The equity market is the single greatest wealth creator for investors. If someone has 10 years or more as their time horizon for investing, then an equity growth mutual fund or ETF (Exchange Traded Fund) is highly recommended to build wealth. 

ETFs are very similar to mutual funds. ETFs typically represent a basket of securities known as pooled investment vehicles and trade on a stock exchange like individual stocks. A growth ETF is a diversified portfolio of stocks that has capital appreciation as its primary goal, with little or no dividends. 

One such investment would be the Vanguard Growth ETF (VUG/NYSE Area). This ETF is linked to the MSCI US Prime Market Growth Index, which offers exposure to large-cap companies within the growth sector of the U.S. equity market. Investors with a longer-term horizon ought to consider the importance of growth stocks and the diversification benefits they can add to any well-balanced portfolio. — Scott Krase, Wealth Manager, Connor & Gallagher OneSource

Look into Home Ownership and 401(k) Investments

There isn’t any one asset class or investment opportunity I’d recommend over the other for the general populace. Those types of financial decisions are circumstantial and based on the needs of the client. 

Nonetheless, the two ways to “Build Wealth for Dummies” would be to purchase your home and invest in your 401(k). From a behavioral-finance perspective, the automatic contributions to these two vehicles have, more often than not, created better outcomes for clients. — Rush Imhotep, Financial Advisor, Northwestern Mutual Goodwin, Wright

Make Systematic Progress across Asset Classes

A systematic progression across multiple asset classes has been successful in developing wealth and financial freedom. A cash-generating firm provides a stable financial basis for future projects. 

Real estate investing offers passive income and property appreciation, boosting financial security. Diversifying the portfolio with equities and other assets follows, harnessing the potential for exponential growth and mitigating risk through a well-balanced mix. However, amidst this multifaceted approach, it is crucial not to overlook the most pivotal investment: oneself. 

As Warren Buffett wisely advised, “Be fearful when others are greedy and be greedy only when others are fearful.” Investing in self-improvement, education, and personal development enhances decision-making acumen and emotional resilience, providing the intellectual foundation to navigate the ever-evolving landscape of wealth accumulation.  — Galib A. Galib, Principal Investment Analyst

Generate Passive Income with a Niche Website

A few years back, an affiliate website was launched in the personal finance niche. The payoff? Consistent ad revenue and affiliate commissions with minimal oversight, essentially becoming a self-sustaining income stream.

Running a website is not as time-consuming as commonly believed. After the initial setup and content, it just needs occasional updates. Soon enough, it turned into a low-maintenance income source. Continue Reading…

The Robo Generation: Robo-Advisers now Magazine Cover Stories

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teanicola
Tea Nicola, WealthBar

By Jonathan Chevreau

Interesting cover story on robo-advisers  in the current issue of Financial Post Magazine, delivered with Tuesday’s National Post.

As an ex magazine guy myself, I find it fascinating that robo-advisers have made it to magazine cover status so quickly. A year ago they were barely known in Canada, although they’ve been a rising force in the U.S. for a few years now (chiefly via WealthFront).

In the FP feature story, deputy editor Andy Holloway describes veteran financial planner John Nicola, founder of Vancouver-based Nicola Wealth Management, which targets the 1% of investors with at least $1 million in investible assets.

Then the article moves on to the next generation: WealthBar Financial Services Inc., a (so-called) robo-adviser service headed by John Nicola’s eldest son, Christopher, and daughter-in-law Tea (pictured). Continue Reading…

“Robo Advisers” — Rise of the machines

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Doug Dahmer

By Doug Dahmer, Emeritus Retirement Income Specialists

Special to the Financial Independence Hub 

I know Isaac Asimov’s Three Laws of Robotics, I read Arthur C. Clarke’s 2001: A Space Odyssey and I love the Terminator movies (I’ll be back!).

From all this I know three things: Robots are very smart. Robots always start off to help you. Robots have a tendency to turn on you.

One of the newest crazes and buzzwords in personal finance is: “Robo-Adviser.” If you’re not familiar with the term, it refers to investment management by algorithm in the absence of human input.

With a “Robo” you are asked to complete an on-line risk assessment questionnaire. Your responses determines the prescribed portfolio of ETFs (Exchange-Traded Funds) with a built-in asset allocation best suited to your needs. Once a year the portfolio is rebalanced to this prescribed asset allocation recipe.

Dynamics change as shift from Saving to Spending

Continue Reading…

Why do we invest?

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Aman Raina, Sage Investors

By Aman Raina, Sage Investors

Special to the Financial Independence Hub

One day as I was perusing the world wide web, I came across a posting about DRIP investments, which ran in the new blog by PWL Capital’s Justin Bender.

What caught my eye had nothing to do with DRIP investments but more about a comment made at the end of article that really got me thinking. It said:

“…Investors should be focusing their attention to more important investment decisions that are likely to have a bigger impact on overall success (such as savings rate, expenses, risk, fees, taxes, and behaviour)…” 

Make no mistake, these are important factors in developing your investment ideology or strategy. However, these elements just get you into the game of investing; on their own they are not going to guarantee you will be successful. Continue Reading…

The Decumulation Dilemma of Defined Contribution pensions

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Depositphotos_18757183_xsAh, life was so simple when all we had were Defined Benefit pension plans! I sometimes envy my late father, who only had to invest in GICs (Guaranteed Investment Certificates) to supplement his inflation-indexed Ontario Teachers pension. Just like a salary, that guaranteed pension flowed in like clockwork, including a healthy survivor’s benefit after my father predeceased my mother.

Unfortunately, such pensions do not pass to the next generation and it’s becoming harder to find employers that offer new employees DB plans: even if you’re fortunate enough to be in one, you may be subjected to pressures to switch to a Defined Contribution Plan, putting stock-market risk squarely on the pensioner’s shoulders instead of the employer’s.

Decumulation Issues similar with RRSPs and RRIFs

Since RRSPs behave quite similarly to DC pensions, the issues are almost the same, both on the wealth accumulation side as well as what we call the Decumulation side. (Here at the Hub, we have sections devoted to blogs on either topic).

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John Por, Decumulation Institute

One of the frequent contributors to the Hub’s Decumulation section is John Por, founder of the (you guessed it!) Decumulation Institute. John recently wrote an intriguing article in Benefits Canada about the need to overcome the Behavioural Obstacles inherent in Decumulation Decision Making.

Unlike DB plans, members of DC plans need some employer-supplied education so as to optimize both the wealth accumulation as well as the ultimate decumulation that is the ultimate raison d’être of any pension. Por says an OECD study found most employer communications programs about DC pensions were rather ineffective in improving the behaviour of the plan members when it came to investing decisions. The average score of such programs was only 10 out of a maximum 100.  (a range of 50-60 is considered effective).

Anyone near retirement and without significant income from old-fashioned DB plans well knows the stress of seeing RRSP or RRIF values fluctuate with financial markets. As Por notes, one reason for the disappointing DC scores is this:

Plan members are expected to make complex decisions about an uncertain future … Members are expected to make the same or even more difficult decisions as chief investment officers (CIOs) of large pension funds.

His fifth point is also instructive:

Educators fail to recognize the inherent challenge of overcoming limitations imposed by human nature, such as people’s hard-wired biases and heuristics.

Most DC plans do a good job educating members in the Accumulation years. Por says default options can guide more than 80% of members to a well-diversified efficient portfolio at low costs. But it all breaks down just when the money is needed at retirement:

Unfortunately, much of this support disappears at the decumulation decision— the very point where complexity explodes. Yet 60 cents of every retirement dollar are paid by returns earned after retirement as the direct result of decumulation decisions.

Por delves into behavioural economics, noting that one reason retirees shy away from annuities is that they “discount” the value of the tradeoff involved in converting capital to long-term secure income stream that should last 20 or 30 years.

While Por’s focus is DC plans, remember that the decumulation issues are also quite relevant for those planning for the transition from RRSPs to Registered Retirement Income Funds (RRIFs). But with 9 million Canadians set to retire in the next 15 or 20 years, he’s optimistic that employers and financial institutions will rise to the Decumulation challenge:

Canadian society will produce 1,500 retirees every working day for the next 20 years, and financial institutions have an overriding interest in serving them. As these institutions vie for asset decumulation, competition will result in better financial products and more effective education efforts.