Digital Citizen Show. Left to right: Hugh Reilly, Norman Evans, Jon Chevreau
By Kollin Lore, Hub Staff
We are edging nearer to 2031, the year when all Baby Boomers will be age 65 and above, and most will at least be contemplating some form of Retirement or Semi-Retirement.
It will also be a time when the millennials will have pretty much all grown up and taken over the workforce.
Next month Jonathan Chevreau and Mike Drak’s Victory Lap Retirementwill be published, a perfect time considering the age we are headed towards. However, though the book concerns the older generation, there is much to learn for millennials too.
Earlier in July, Chevreau discussed his upcoming book on Digital Citizen’s ThatChannel with creative director, Norman Evans, Laura Tyson, and host, Hugh Reilly. Click on the highlighted link to access the YouTube video: Get Ready to Earn Your “Playcheque.”
“The Boomers have reinvented every stage in life they have gone through,” said Chevreau. “Now they are going to reinvent retirement, by starting with the word ‘retirement’ because they are not ready to stop … That’s why Mike and I created the phrase Victory Lap.”
This titular ‘Victory Lap’ concerns finding that balance between stress and boredom following retirement. It means staying active and can include anything from travelling the world, to part time jobs, to volunteering to more time with family.
Of the many activities in which to partake during the Victory Lap, volunteering is an especially valuable past time to consider. Continue Reading…
While it ranks ahead of the United States and the United Kingdom, Canada ranks in tenth place in a global retirement security survey being released today (Tuesday).
Several countries in northern Europe and Scandinavia rank higher in the study by Natixis Global Asset Management. Norway is number one, followed by Switzerland and Iceland. However, because of a revised methodology, Canada’s 2015 ranking is two spots higher than under the 12th place spot it had under the survey’s older methodology. The Natixis Global Retirement Index was introduced in 2013, and bases its overall retirement security scores on four factors affecting the lives of retirees.
A central component is of course finances but three sub-indices measure well being, health and quality of life, providing a more holistic view of retirement than mere financial considerations.
Low interest rates a drawback for Canadian retirees
The small business lending landscape today bears little resemblance — functionally, structurally or in terms of customer priorities — to what it was at the moment of the 2008 financial crisis. The intervening years have seen the creation of many new alternative finance companies, who are able to efficiently deliver credit by leveraging technology. Here’s how these developments affect the range of choices among your borrowing options.
Online lending growth consistent, lenders gain trust
Conventionally, a small business owner would attempt to reach out to a major bank for financing: a process that has become less and less viable as banks become less willing to accept the risk of lending to new businesses with limited credit profiles and limited hard assets with which to secure a loan.
Today, online small-business loans from alternative lenders account for about 2% of all small-business loans despite their ability to offer more tenable and accessible financing agreements for SMB owners. Growth, however, is a solid prediction for the industry: loans from the same providers are expected to comprise 16% of the total small business loan volume by 2020, according to a 2015 report by Morgan Stanley.
Consumers and businesses now have alternative financing options outside of traditional banking – moreover, these alternatives have gathered increasing mainstream relevance and investor confidence, moving beyond the high-risk/high speed niche to which they were originally confined.
We millennials are often told to visualize our future, then go out there and make it happen. But like so many things in life, this is more easily said than done.
Let me start with a disclaimer: Though finances are at the root of this week’s post, it’s mostly focused on spending our time and money on what we really want, as opposed to what society thinks we should want. ‘Should’ is a word I’ve come to decide to avoid at all costs.
As millennials, we get so focused on making sure we become good grownups that sometimes we forget just what we want it to mean. Do you want to become a good grownup by owning property, or is that just what everyone has told you makes a good grownup?
Could you be a good grownup by being completely financially self-sufficient while living the life you always wanted? Or do you think that being a good grownup means sometimes saying ‘no’ when you’d like to say ‘OMG YES PLEASE ALL OF THEM AND DO THEY COME IN RED?’
Clearly, being a ‘good grownup’ means different things to different people, which means it’s super important to define to yourself what you believe makes one. If you spend these valuable years working toward someone else’s dream, you could end up in a bad place.
Benefits of Imagination
A wonderful way to figure out what you want from life is to visualize or imagine it. Imagine yourself in your ideal place, doing the job you’d do even if they weren’t paying you. Daydreaming is a great way to escape the stresses of modern millennial life, Continue Reading…
We recently highlighted that now more than $10 trillion of government debt was trading at a negative yield. We mentioned it again in the Chalten Q2 Investment Review and have received a number of questions asking why anyone would ever hold a bond that would pay them back less than they invested. Why not just hold cash instead?
While it does seem bizarre at first there are both risk-related and practical reasons why investors might hold negative-yielding bonds instead of cash and some other reasons negative yielding bonds might still have value for investors.
Risk related / practical reasons for holding negative yielding bonds over cash
Just to get this one off the table right away, it is simply not practical or safe to hold cash physically, in a safe, under the mattress or buried in the back yard in mason jars!
Fortunately, the above options aren’t necessary as we have banks. However, there are definitely times where the safety and security of specific banks or the banking system in general is called into question. We can’t really relate here in Canada but living in Hong Kong in 1997/1998 and in the UK in 2008/2009, the topic came up quite regularly; by the end of the most recent financial crisis a lot of the UK banking system was effectively nationalized (nobody lost any deposits). For large depositors like institutional investors, keeping money in the form of bank deposits simply isn’t practical or prudent.
Certain institutions, such as insurance companies, are required to hold specific asset classes. So some may not have a choice but to hold certain government bonds with negative yields.
Other reasons why negative yielding bonds might still have value for investors
While certain governments’ bonds might currently be posting negative yields, an investor might still want bond exposure in that particular currency. For example, some global investors often think of the Swiss franc or Japanese yen as “safe haven” currencies. 10-year government bonds from those two countries currently have a negative yield. Perhaps the premium reflects current demand levels for safe haven currencies.
If an investor feels yields are going to fall even further, they might be expecting to receive further gains from bonds, even if current yields are negative.
In a deflationary environment, a bond with a negative nominal yield, could still give you a positive real (inflation adjusted) return. Ultimately investors care about real returns.
Perhaps most importantly, bonds are not just return generators – their principal role in an investor’s portfolio should be to act as an uncorrelated shock-absorber when stock returns turn negative. According to Vanguard, current correlations between stocks and bonds are at records lows (see: By this metric, bonds have never been more valuable).
I’m sure there are more reasons. Yes, it still seems strange; however, investors have gotten a little too used to thinking of bonds being return-generators or growth assets. Taken for what they really are, an investor’s safety net, bonds still hold a very valuable place in a diversified portfolio, even at negative yields. And of course there are still plenty of bonds, bond funds and ETFs offering yields well above those being offered for cash in the bank.
Graham Bodel is the founder and director of a new fee-only financial planning and portfolio management firm based in Vancouver, BC., Chalten Fee-Only Advisors Ltd. This blog is republished with permission: the original can be found on Bodel’s blog here.
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