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.

How to save money on TV, Phone and broadband packages

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By Jeremy Dawson

(Sponsored Content)

Many people have made the blunder of subscribing to TV, phone or broadband packages without due diligence about the kind of service they are paying for. This leads them to pay hefty bills on a monthly, quarterly or yearly basis without realising that they can actually save more on those subscriptions.

They only realise they have been getting a raw deal when a friend alerts them to a better service with which they have experimented. In most cases, these people still see adverts of cheaper subscriptions online or in the media, but they are skeptical to try new services with which they have no experience.

Before subscribing to any TV, phone or broadband services, it’s advisable to conduct thorough research, both online and offline. This will help you identify the service provider with the best yet affordable deal. Some people have the notion that a cheap service provider offers low-quality products and hence, they tend to stick to the overrated and sometimes inferior services. There are various factors to look for when shopping around for the best service provider for TV, phone and broadband, which can save you a considerable amount of money in the long-term.

Type of subscription

The first factor you may want to consider when choosing the best service provider for TV, phone and broadband packages is the kind of subscription. Different service providers have diverse types of subscriptions, depending on the kind of services they are offering. Continue Reading…

Large RRSPs nice problem to have, tax on them not so much

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My latest Financial Post column can be found in Friday’s paper or online by clicking on this headline: Confronting the ‘wonderful’ problem of the too-large RRSP.

It describes what one source describes as a “nice problem to have.” That’s having accumulated so much money in a Registered Retirement Savings Plan (RRSP) that it presents a lucrative source of tax revenue for the federal Government once you reach age 71 and have to start making forced annual — and taxable — withdrawals from a Registered Retirement Income Fund or RRIF.

Doug Dahmer

This is a huge tipping point: moving from Wealth Accumulation to De-Accumulation, or what this site calls Decumulation.  Suddenly, you’re confronted with the flipside of what CIBC Wealth’s Jamie Golombek has famously dubbed “being blinded by the refund,” a reference to the juicy tax deductions we enjoy by making regular RRSP contributions during our high-earning high-taxed working years.

The article quotes regular Hub contributor Doug Dahmer – president of Burlington, Ont.-based Emeritus Retirement Income Specialists, and pictured here – who says baby boomers have a huge looming tax problem ahead with their 6-figure RRSPs once it comes time to start withdrawing money or securities from them. The FP piece references Dahmer’s Hub blog earlier this year: Better Retirement Choices: An elegantly simple solution.

The case for early RRSP withdrawals and delaying Government benefits

As Dahmer has related here and elsewhere, he does believe RRSPs can get too large (at least if you’re averse to generating large amounts of taxable income down the road), so he is an advocate of drawing down RRSPs during the low-taxed years that many semi-retirees may experience somewhere between corporate life (typically early 60s) until it’s RRIF time in your early 70s. Continue Reading…

Odds of outperformance in emerging markets stacked in favor of active managers

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By Caroline Grimont

(Sponsored Content)

When investing in emerging markets, the odds of outperformance are stacked in favor of active managers. That’s because, unlike developed markets, emerging markets are a heterogeneous and inefficient asset class.  Each individual market and region possesses unique characteristics, risks and opportunities, which can be best leveraged through active, on-the-ground management.

The underlying truth is that indices such as the MSCI Emerging Markets Index that are used by passive managers to invest in emerging markets are a poor representation of opportunities in these markets. Indices typically include only the largest stocks by market capitalization and exclude potentially faster growing small and medium cap stocks which can be accessed by active managers.

And the fact that roughly two thirds of emerging market stocks are excluded from the respective indices means that investors in passive index-based investments lose the opportunity to participate in the growth of the majority of emerging market equities.

On the other hand, active on-the-ground managers have the advantage of being “free to roam” in making their investment decisions, compared to passive managers who are restricted to investing in stocks in an index over which they have no control.

As well, “in certain niche markets, like emerging market and small company stocks … it is possible for an active manager to spot diamonds in the rough,” states a Wharton, University of Pennsylvania article.[i] Conversely, the performance of passive managers is dictated by the index.

To put this reality in perspective, one of the world’s largest index providers, S&P Dow Jones Indices, highlights the shortcomings of using a broad-based passive strategy to invest in emerging markets in its research paper, Emerging Markets: What’s in your Benchmark?  It surmises: “Numerous factors, including country and regional combinations, can create vast differences in performance and return patterns. If you’re looking to boost returns through exposure to international markets, you may want to dig deeper and consider looking beyond traditional broad-based benchmarks to truly assess the value of an allocation to any of the world’s emerging economies.”[ii]

Unconstrained by sector bias

Another benefit of using active managers in emerging markets results from the fact that they are not constrained by the dominant sector bias in EM indices.

Continue Reading…

Looking under the hood of a Guaranteed Universal Life Policy

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By Jessica Walter

Special to the Financial Independence Hub

Though it can be morbid and upsetting to think about, it’s important that seniors have life insurance in place so that their families don’t have to worry.

Despite this, 54% of Americans say they are unlikely to purchase life insurance. As well as this, according to research organization LIMRA, 51% of all households say they would rely on life insurance payouts to pay bills and maintain their lifestyle, in the event of the main breadwinner passing away. That’s why it’s so important to choose a life insurance policy that works for you, and brings you the best benefits and flexibility.

Understanding the different types of available insurance policies is vital, as it could make a big difference to the amount you pay in premiums, as well as how much the family will receive in the event of a death.

What Is a Guaranteed Universal Life Policy?

A guaranteed universal life policy is one of the best ways for seniors to get coverage for life, for the lowest possible cost. Whether you qualify will depend on your health, and your age. The main positive of a GUL plan is its ability to meet a wide range of budgets.

This type of plan is similar to a whole life insurance policy, but is made more affordable by gaining cash value in the initial years. This value is then used to offset an increase in premiums in the future. This is in contrast to a whole life insurance policy, which would continue to gain cash value, but requires higher premiums to be paid. A guaranteed life insurance policy is one of the most popular around, and will meet the needs of the majority of healthy people, but it isn’t the only insurance policy available.

The Benefits of a Guaranteed Universal Life Insurance Policy

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A Millennial’s Jump Start on Personal Finance

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By Trevor McDonald

Special to the Financial Independence Hub

Most millennials aren’t taught personal finance beyond the few who soaked up “lessons” from having an allowance or chores while growing up. Given the increasing use of digital currency, from tapping phones together to send money, depending on Venmo and utilizing bitcoins, ask a millennial how to write a check or balance a bank account and few can give a succinct answer: but does that even matter? Has personal finance changed so much in the past few decades that its definition is due for an overhaul?

Financial literacy and well-being is and always will be vital. How it’s defined and its best practices evolve as we do. Just like any type of “health,” financial health requires setting a strong foundation, teaching and practice. It’s strange that we have an entire generation in full-fledged adult categories without a clue of how to handle their finances.

Consider this the starter kit for millennials:

1.) Credit score management

 The importance of credit scores isn’t going anywhere. In fact, they’re more important than ever with some employers using credit scores to narrow down job candidates. Make sure to monitor your credit score, check your credit report regularly for errors, and make your payments on time. This will help ensure you maintain a healthy score. There are other ways improve your credit score that you might not know, too, such as snagging a tradeline where you’re added onto a person’s credit account who already has a solid score. A tradeline company can manage this, linking paying customers to a tradeline account so any messiness of blending finances with personal relationships is avoided.

2.) Buffering that nest egg

Having at least three months’ worth of living expenses in “liquid cash” that’s easily accessible is a reasonable starting point. Some financial experts recommend one year, but a year’s salary can sound very overwhelming. Start socking away funds in an emergency account by using an app that rounds up purchases and siphons funds to this account so you don’t even notice.

3.) If possible, entrepreneurs and business owners should seek out life in specific states or overseas

Millennials are the generation of entrepreneurs, and this makes personal finance even stickier. Where you live plays a huge role in your ability to build wealth. Obviously some regions have higher costs of living than others, but every state also has a different income tax. There are seven states, including highly desirable ones like Florida, that boast a zero per cent income tax rate. Moving abroad often allows for foreign earned income exemption in which you don’t pay any state income tax (of course) but also no federal taxes except social security and Medicare.

4.) Budget, budget, budget

Continue Reading…