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.

5 ways to turn your Savings into Capital Gains

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By Sia Hasan

Special to the Financial Independence Hub

Continuously adding to your savings account is a responsible and astute financial step towards a comfortable retirement. Unfortunately interest rates offered by banks on standard savings accounts make for really slow growth, which is barely enough to keep up with inflation. Fortunately, there are other investment options out there that can increase your money at a more decent pace, one of which is stocks. Here are five techniques to turning your spare cash into a portfolio that grows both in capital gains and dividend income.

1.) Start Small

You don’t need to pour all of your savings into stocks right away. Going about it slowly can minimize risk. For example, if you have $10,000 as your savings, start buying 10 to 20 shares of stocks per month. Consider increasing your order size or frequency of purchase as you gain more experience or as you get more data about specific companies. If company XYZ’s stock price has solid momentum, consider buying more of it.

2.) Dollar Cost Averaging

You can also do dollar cost averaging, which basically involves setting a budget to buy stock each month. For example, if you have $1,000 to invest per month and company XYZ’s stock costs $50 for this month, you buy 20 shares of it. The next month, it costs $40 per share, so you buy 25 shares. The month after that, it actually increase to $100, so you buy 10 shares for that month and so on.

3.) Strategize according to your Lifestyle

A methodical approach to investing is key to growing your investment portfolio consistently. Strategy removes emotions from the equation, which for an investor can be a detrimental quality or set of qualities to bring in the stock market. Figure out what strategy best fits you. Someone who is saving money month after month is probably occupied with a full-time job; hence there are limited hours in the day for monitoring prices and current positions. Continue Reading…

The destructive effects of poor Human Resource Planning

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 By Dr. Yvonne Foster

Special to the Financial Independence Hub

The success of every business depends on so many things, one of which is strategic human resource planning. If you are a start-up organization, you will benefit greatly by taking the advice of an HR consultancy firm or a trained HR agent who will pilot the affairs of your organization.

Poor human resource planning has a long-term and immediate influence on management policies, employee recruitment, corporate profitability and organizational functioning. In this post, we are going to talk about effects of poor human resource planning:

Poor HR planning and Management

If you have a poor or incompetent human resource department, it will have a negative impact on your organization, there will be no or poor training and re-training of the employees. Also, if your executive management does not pay enough attention to HR best practice it will lead to poor decision making process and critical mistakes. If you have a poor HR system, you will be liable to have employees that won’t have the best interests of your organization at heart.

Unmotivated employees

Having a poor HR system has so many drawbacks. It can lead to poor team building and personality conflicts, and most experienced employees may be uncomfortable with the work environment.

Adversely, there would be gross underutilization of their skills. Poor HR planning will give rise to lack of incentives, poor motivation, poor performance, and perhaps also the production of poor products and services.

Employee requirement mismatch

Recruiting and hiring the right talent is a continuous process. An HR professionalwith poor communication skills and lackadaisical attitude will be unable to address organizational and workforce requirements.

Continue Reading…

Why “Topping up to bracket” makes sense if you’re temporarily in a low tax bracket

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My latest column in Wednesday’s Globe & Mail looks at a strategy called “Topping up to Bracket,” which can be useful to anyone who is temporarily in a lower tax bracket.

Click on the highlighted headline to access the online version, assuming you have Globe subscriber privileges or haven’t exceeded the monthly free click quota: A strong tax case for early RRSP withdrawals.

When might you be “temporarily” in a lower tax bracket than usual? This can of course happen when you lose a job or if you’re in your Sixties and transitioning between full employment (typically earning in higher tax brackets) and Semi-Retirement, when it’s tempting to “bask” in lower tax brackets.

Temporary because as Semi-Retirement progresses, you can end up moving back into higher tax brackets: for example, if you start to receive Old Age Security (OAS) at 65, then take Canada Pension Plan (CPP) a few years later, these are both taxable sources of income.

And the big hit can come at the end of the year you turn 71, when RRSPs must be converted to Registered Retirement Income Funds (RRIFs) or else annualized or cashed out. RRIFs entail forced annual withdrawal rates that keep rising between your 70s and your mid 90s.

So that makes “Topping up to Bracket” (a term used in a BMO Wealth Institute paper on the topic, published around 2013) a strategy not to be ignored. In practice it means making sure that in those low-earning years you at least bring into your hands each and every year the roughly $12,000 of untaxed earnings that’s called the Basic Personal Amount (BPA). And as the G&M column explains, it’s also a good idea to at least bring in the dollars that are in the lowest tax bracket (15% federally, 5% in Ontario), or roughly $42,000. There are of course higher tax brackets above that but the law of diminishing returns starts to kick in beyond the $42,000.

Note too that this is a “use it or lose it” proposition. If for example a year went by that you failed even to bring in even that $12,000 income that would not have been taxed, you can’t carry forward the opportunity to benefit from it the following year. You will of course have another opportunity for the BPA that year but it won’t double up because you neglected to earn low- or non-taxed income the previous year. Continue Reading…

Do men and women have different Savings Habits?

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By Danielle Kubes

Special to the Financial Independence Hub

In an online survey about savings habits, financial comparison site Ratehub.ca reports that although Canadian men and women save almost the same amount of money, men have a greater level of confidence in their financial planning.

Inspired by 2014 Statistics Canada data that says Canadian women have lower financial literacy scores than men and were less likely to consider themselves “financially knowledgeable” (31% of women versus 43% of men), Ratehub.ca set out to discover if there truly is a gender divide. 

The company digitally surveyed a random sample of 1,087 Canadians in November, with respondents self-identifying their gender.

“Our survey revealed that while men and women differ in aspects of their financial planning, at the core, their personal finance goals and concerns are nearly identical,” the report says.

Both genders have similar financial goals

Indeed, both genders report almost the exact same financial goals. At the top of list of priorities is retirement, followed by travel and then having an emergency fund.

Both men and women prefer to save and invest in registered accounts, especially the registered retirement savings plan (RRSP) and tax-free savings account (TFSA). What they choose to invest in within these accounts — guaranteed income certificates (GICs), exchange traded funds (ETFs), stocks, or other products — is unknown.

Yet men and women diverge most in how confident they are that they’ll have enough money to retire: less than half of women, 41%, say they’re confident compared to over half of men surveyed, at 56%.

Odd, because both genders save almost the same amount of their salaries, with women saving 26% and men 29%.

The gap could potentially be explained in how able they are to grow those savings through investing. Eighty-five per cent of men invest their money, while only 76% of women do.

Of those that do invest, less women than men self-manage their investments, potentially indicating another worrisome lack of confidence in their financial knowledge.

This is supported by the original Statistics Canada data, which found women were less likely to state they “know enough about investments to choose the right ones that are suitable for their circumstances.”

Confidence doesn’t mean financial knowledge

But does confidence translate to actual financial knowledge? Apparently not. When Statistics Canada quizzed Canadians who rated themselves financially literate, one in every three women failed, while one in every four men failed. Continue Reading…

TREB vows to take battle over housing market data to Supreme Court

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Real estate consumers will have to wait a little longer to access transparent housing market data: the Toronto Real Estate Board (TREB) has vowed it will take its fight to keep such information private all the way to the nation’s highest court, in response to losing its latest appeal.

The Federal Court of Appeal has rejected the real estate board’s arguments that the sharing of its database would violate both its copyright and home sellers’ privacy. It contains extensive details on past sold homes, including their asking versus sale prices, the length of time they lingered on the market, as well as the commissions earned by real estate agents.

Currently, agents can only divulge this info directly to their clients; posting it publicly on a website or emailing it to a subscriber base has been prohibited by TREB (and it has aggressively shut down past attempts to do so, including Zoocasa’s past solds emails in 2015).

Challenging Information gatekeepers

However, restricting this data was challenged by the Competition Bureau of Canada, which took TREB to the Competition Tribunal in 2011. After the case was initially dismissed and appealed, the Bureau won in 2016 (a decision immediately appealed by TREB).

The Bureau successfully argued that withholding the data was not only to the detriment of consumers, but hurt the business models of virtual online offices (VOWs for short, referring to online real estate brokerages).

The Appeals Court upheld this ruling last week, saying TREB’s database did not qualify for copyright protection, and throwing out their privacy argument. While based around the Toronto real estate market, the implications could be nationwide, setting an important precedent for how all real estate boards collect and distribute data. Currently, only Nova Scotia releases it in Canada, though it is common practice in the United States.

Better data benefits consumers

Lauren Haw, Zoocasa’s Broker of Record, says better access to sold data will help consumers make educated decisions when buying or selling real estate. For example, having access to comparable solds records can help buyers determine whether a Toronto townhouse, condo or detached home is fairly priced.

“The ability to share and display market data (such as past-sold prices) with consumers is a positive development for the real estate industry,” she says. “We strongly believe in a model where consumers are educated and able to work with experienced agents that act in an advisor capacity: not as gatekeepers of information.”

Continue Reading…