Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Top Ten questions & answers on Medical Tourism

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Medical building in Guatemala City

By Akaisha Kaderli

Special to the Financial Independence Hub

Because Billy and I live a lifestyle of travel, we often get readers asking us basic questions about medical tourism. Below we have the answers to some of the most common questions we get asked. How do you know if this option will work for you? The following should help you decide.

Q: I have heard the term “Medical Tourism,” but what exactly is it?

A: Generally, Medical Tourism refers to going elsewhere other than your own city or state/province to receive medical care. For example, people in the U.S. have been going out of their home state to Mayo Clinic or Cleveland Clinic for years, and no one thinks twice about it. Canadians will come to the U.S. for procedures perhaps because they don’t want to deal with long waits in their own home country or maybe they have other personal reasons.

Today, there are dozens of countries like Thailand, Mexico, Costa Rica, India, Guatemala, Singapore and the Philippines which offer excellent medical care delivery in ultra-modern facilities for very affordable prices.

The importance of medical tourism – and this cannot be overstated – is that its availability offers options to those who are:

  • Under-insured
  • Self-insured
  • Not insured and,
  • For procedures not approved in the USA (or the patient’s home country).

Q: Is Medical Tourism expensive? And how does one choose a hospital or country?

A: In terms of budgeting for medical tourism, we think it’s a good idea to have an emergency fund, or institute your own style of a Health Savings Account, where you only utilize that money for health related issues.

When you purchase medical care overseas, you will know how much it will cost before you purchase. There is no guessing game because you check off what you want as if from a menu. If you want to have an “Executive Physical” for instance, you can choose all the features you would like: lung x-ray, bone density test, colonoscopy, full panel blood tests, and so on, and with every choice, your total at the bottom of the page changes. You see beforehand what your cost outlay will be and what price everything is individually.

The delivery of medical care in the States is expensive and out of the reach of many. If you have a high deductible, and you go out of network, sometimes that deductible doubles.

Treatment in the States for a heart condition or cancer can cost hundreds of thousands of dollars. Not so overseas.

A heart valve replacement in the States can cost US$170,000 but will run you US$24,000 in Guatemala City. Chemotherapy in the States runs about $75,000 but is under $20,000 in Guatemala City. A bone marrow transplant can cost up to $200,000 in the U.S., but will run up to $25,000 in India. A spinal fusion runs between $80-100,000 in the United States but will cost you $6-10,000 overseas.

There are many medical tourism concierge services available and websites of hospitals in various countries have their prices listed for procedures. Continue Reading…

Priced out of the housing market? 5 creative financial ideas to get In

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By Sean Cooper

Special to the Financial Independence Hub

Are you finding it a challenge to buy real estate in the big Canadian cities? If you’re looking to purchase a home in Calgary, Toronto or Vancouver, even buying with the minimum five per cent down can be tough. (The new mortgage stress test sure doesn’t help.)

Despite rising home prices, millennials haven’t given up on buying homes. In fact, they’re still finding ways to get into the real estate market. Survey after survey shows that younger folks still see homeownership as a good long-term investment.

So how do you actually afford to buy real estate in the more expensive markets? Let’s look at five creative ways to still get into pricier real estate markets:

1.) Tapping the Bank of Mom and Dad

The “Bank of Mom and Dad” may be a term you’re already familiar with. Property virgins are increasingly turning to their parents for financial help with a down payment. Parents often gift their adult children some or all of their down payment. Often, this benefits both parties. The adult children can live closer to their parents in a good neighbourhood and see each other more often. The parents may be able to provide childcare, while the adult children can look after their parents in their old age.

2.) Buying with Family and Friends

Are you finding it tough to qualify for a mortgage if you’re single? You don’t have to necessarily buy a property with a spouse. A new trend is to buy with family and friends. If you know a family member or friend that you trust, why not combine your finances and buy a home together? Two incomes and down payments: sure makes it a lot easier to afford a home in a nice neighbourhood. (However, if you buy with family or friends, be sure to have a written agreement in place so that when someone wants to sell, your expectations are in line.)

3.) Buying in a Satellite City and Renting in the Big City

Can’t afford to buy in the big city, but still want to own a piece of the real estate pie? Why not buy in a satellite city and rent in the big city? This is becoming a lot more common in Toronto and Vancouver, where the cost of homeownership is the highest in the country. When you buy in a more affordable satellite city, you can start build up equity to eventually move into the big city. Continue Reading…

Quality is the Factor ETF investors should emphasize in today’s Market

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By the WisdomTree ETFs team
Special to the Financial Independence Hub
 

Investing is hard. Trying to time the market is harder. Timing return factors at the right time? Forget about it.

The past few years have seen some of the industry’s brightest minds publish papers concerning the feasibility of timing return factors. The conclusions have varied slightly, but most generally agree that when investing in factors, trying to determine which ones to invest in at a given time is an incredibly difficult undertaking.

However, most of these papers analyze factor timing from the lens of the valuations of these factors. What if we take a different approach and see if we can estimate which factors could outperform from the context of where we are in the market cycle?

Where are we now?

The U.S. equity bull market started on March 9, 2009. In the almost nine years since then, the S&P 500 has rallied nearly 400%.1 We are certainly not calling for an end to the bull run — in fact, the market environment still appears benign, and corporate earnings have remained strong — but it is certainly not a stretch to claim that we are closer to the end of the cycle than we are to the beginning of it.

As of this writing [mid-February], we are in the midst of the longest period without a 3% pullback in the history of the S&P 500.2 With implied and realized volatility hovering near their all-time lows, it seems reasonable to expect more choppiness — if not an outright correction — coming in the next few months. Based on what we know from history, what factors tend to outperform in the late stages of market cycles?

Factor performance prior to market corrections

Factor Performance Prior to Market Corrections

Late-Stage Outperformers: Momentum, Quality

Dating back to 1990, there have been ten distinct 10% corrections in the S&P 500,3 with bifurcated results in the months preceding the correction. In the lead-up to the downturns, momentum and quality stocks have seen consistent excess performance compared to the market, whereas the size and value factors have generally underperformed.

These results provide an interesting backdrop for today’s market. If we are indeed late in the cycle, and the market dropped 10% tomorrow, this trend would hold true once again. The MSCI Momentum Index and MSCI Quality Index have outperformed the S&P 500 over the last 12 months (by 1,700 and 320 basis points (bps), respectively), whereas the Russell 2000 Index and Russell 1000 Value Index (well-known small-cap and value indexes) have both lagged by more than 700 bps.4

While it is interesting to look at what factors worked well, we think it is also important to analyze what didn’t. If size and value lagged, one can conclude that their complements — large caps and growth companies — outperformed as a result.

Factor performance during market corrections

Factor Performance during Market Corrections

Quality: The best of Factors in the worst of times

Shifting our focus to the market corrections themselves, when the S&P 500 fell at least 10%, it is clear that quality was the most desirable factor by a relatively wide margin. Intuitively, that makes sense—when there is stress in the markets, high-quality companies should help protect investors during market downturns. Encouragingly, the factor excess performance was largest in the most severe market sell-offs (with the quality factor having captured only 74% of the market downside during the tech bubble and 81% during the financial crisis).

Again, value underperforms here, with size and momentum each having relatively more mixed results during market corrections.

What are Size and Value good for? Continue Reading…

The 5 worst financial decisions you can make

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 By Alana Downer

Special to the Financial Independence Hub

Sometimes when it comes to your finances it can be difficult to know if you’re making the right decision. What bank account should you pick? Should you buy a car outright or pay it off as you go? Are you eating too much takeaway? Every day we have to make decisions that affect our finances and some are harder and more consequential than others. In fact, sometimes one small financial decision can have a lasting impact on the health of your bank account. Here are the five worst financial decisions you can make, so you can avoid making the wrong choice in the future!

1.) Spending more than you earn

Overspending is probably the number one money mistake that you can make. You cannot build wealth or be financially secure if you are spending more than you’re earning. By spending money that you should be saving you are doing serious damage to your finances and stalling your financial progress.

It’s true that not everyone has high-paying jobs or huge inheritances, but this doesn’t mean you can’t build up healthy savings by simply monitoring your spending. Part of spending less than you earn means putting effort into living below your means. Track your spending and take a hard look at your spending habits. Are you buying two or three coffees a day? Do you pay a lot of money every month for a gym membership you don’t use? Or perhaps on a bigger scale, you have a huge house or luxury car that you just don’t need.

2.) Never Budgeting

Creating a budget goes hand in hand with learning how to spend less than you earn. A budget is a blueprint for financial success. Without budgeting, it is nearly impossible to keep track of your expenses and ascertain whether or not you are spending more than you should. By creating a budget to follow week-to-week or month-to-month you can stay on top of your finances and prevent yourself from making financial decisions that you may regret.

When creating a budget, it’s a good idea to look at your whole year and the payments that you have to make, such as your rent, your bills, your car registration and cost of transport. Use bills, your bank statements and receipts to help you understand all your expenses. Once you’ve figured out roughly how much you spend over a certain period, figure out your net income (i.e. the money deposited in your bank account each pay period). Subtract your expenses from your income and what is left should be what you aim to save.

3.) Not creating an Emergency Fund

Many people have the mindset that bad things won’t happen to them and that if they do, they will find some way to deal with it when the time comes. This is not a financially intelligent way to think and could leave you in serious trouble if something goes wrong. An emergency fund is exactly what the name suggests, a bank account that can you use in the case of an emergency without having to dip into your savings or rearrange your budget. It is money set aside specifically for use when things go haywire.

Continue Reading…

The 2018 MoneySense ETF All-Stars

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The 2018 edition of the MoneySense ETF All-Stars has just been published: you can read the whole article by clicking on the highlighted headline: The Best ETFs for 2018.

The “All-Star” portfolio consists of a 7-person expert panel plus myself. While the number of ETFs trading in Canada have reached 583, the All-Star list is now at 20, up from 14 a year ago. We added one to each existing category (except international equity) and
created a new category: the panel was unanimous in declaring the three new Vanguard Asset Allocation ETFs as All-Stars. See the Hub’s February 1st commentary on the launch of those three new products: Gamechanger.

In addition to adding the new category we call “One Decision” Packages, the panel added a single new ETF in three of the four existing categories: Canadian equities, US Equities and Fixed Income. We stood pat on the three international equity ETFs, although that asset class is also covered by the new Vanguard products.

Canadian equities

New in Canadian equities is the BMO S&P TSX Capped Composite IDX ETF (ticker ZCN), which expands the list from the returning three picks: Vanguard FTSE Canada ;All-cap Index ETF (VCN/TSX) XIC: the iShares Core S&P/TSX Capped Composite Index ETF; and HXT: Horizons S&P/TSX 60 ETF.

The panel was unanimous in retaining all three of these picks, since the trio maintain the lowest management fees among the segment, and HXT is particularly tax efficient and low cost for non-registered portfolios. But the panel agreed with Forstrong’s recommendation to add ZCN, which has the same rock-bottom annual fee of 0.05% as VCN and XIC. ZCN now has more assets than VCN.

US Equities

The panel agreed to add a fourth pick to the US all-cap space, again from BMO: BMO S&P500 Index ETF (CAD), ticker ZSP. As the Forstrong team observed, ZSP’s fee of 0.08 is the same as VFV’s and the fund now has the most assets of the four core US ETFs.

Two of our returning US equity picks are the hedged and unhedged versions of Vanguard Canada’s S&P 500 ETFs: VSP and VFV respectively, plus the iShares Core S&P US Total Market ETF (XUU.)

Fixed Income

The panel added a sixth ETF to the existing lineup of fixed-income ETFs: the iShares Core Canadian Short Term Bond Index ETF (XSB). Continue Reading…