General

How in sync are global Central Banks?

Posted By |

 

By Kevin Flanagan, WisdomTree Investments

Special to the Financial Independence Hub

Without much fanfare, the U.S. Federal Reserve (Fed) provided its policy guidance late in May. Although no rate hike was implemented [it raised its overnight lending rate by 0.25% at 2 pm today, June 13, at 2 pm: Editor]  the money and bond markets fully expect the U.S. central bank to continue on its tightening path for the remainder of 2018, if not beyond. While the lion’s share of the focus has been Fed-centric on this front, it seems like a good exercise to check in on what the expectations are for the developed world’s other key monetary policy makers.

Heading into 2018, optimism for ongoing global growth seemed to be the norm. Indeed, along with the outlook for continued global growth, discussions were arising on whether central banks would soon turn their attention to any potential increase in inflation. While we still have almost seven months to go in this calendar year, recent data appears to be suggesting a plateauing of sorts on the economic front.

One economic indicator that is widely watched for help discerning economic trends on a global basis are the various Purchasing Managers’ Indexes (PMI) on a country or regional basis. While the levels being posted in the developed world still point toward further expansion, they don’t necessarily indicate a pick-up in growth prospects on the immediate horizon. In fact, the readings for April on an aggregate basis were relatively flat, and in some cases — such as the eurozone, the UK and Canada — have actually slipped a bit from their recent peaks.

So, what should investors expect in near-term global central bank policy? As illustrated in the table above, expectations for the upcoming policy meetings certainly differ quite a bit. The overarching outlook is for the Fed to raise rates at its convocation on June 13, with the Fed Funds Futures implied probability being 100%, as of this writing. The remaining four developed world central banks — the European Central Bank (ECB), the Bank of England (BOE), the Bank of Canada (BOC) and the Bank of Japan (BOJ)  — all fall in the “no rate hike” camp. Continue Reading…

The reverse mortgage pitfalls you need to know about

Posted By |

Canadian seniors may borrow on their home equity in the form of a reverse mortgage — but should they?

Money lenders are always coming up with innovative ways for you to borrow money. One such innovation is the reverse mortgage. Interest in reverse mortgages is rising with an aging population and low interest rates on savings accounts. As a result, we hear from our Inner Circle members periodically asking whether a reverse mortgage would be a good way to tap into the equity they have built up in their homes.

Reverse mortgages in Canada let homeowners who are 55 years of age or older borrow on their home equity—the minimum age was 60 until a year ago. (For married couples, both spouses must be above age 55). Typically, the loan-to-value ratio is up to 40%. But depending on their age and property, some borrowers may qualify for a loan of up to 55% of the value of their home. The loan and accumulated interest are repaid only after the house is sold or from the proceeds of the homeowner’s estate.

Reverse mortgages are best seen as loans of last resort

Continue Reading…

“Unretirement” and why it’s not selfish to be selfish

Posted By |
“Unretired” novelist and blogger Joyce Wayne

By Yvonne Ziomecki, HomEquity Bank

Over the last few years, we have seen a growing trend among older Canadians: what we call “unretirement.”

This is where some Canadians take action on long-held dreams once they settle into their retirement and start to consider activities and interests for added personal fulfilment. They’re increasingly seizing the opportunities that retirement presents, fulfilling personal passion projects, which, up until now, they never had the opportunity to prioritize.

One particular obstacle seems to hold Canadians back from achieving their retirement dreams: the guilt of feeling selfish if they actually do something just for themselves!

The obstacle to a fulfilling unretirement: selflessness

We recently surveyed 1,361 Canadian homeowners, aged 55 and over. We asked, “If you received a $100,000 cash gift, what would you most want to do with the money?”

Using the money to pay off debts or giving the money to family members or donating to charity were very popular choices. More popular than putting the money towards their own retirement or funding a lifelong dream.

It seems that Canadians are extremely generous souls, putting others’ needs ahead of their own. But is their selflessness preventing them from having a fulfilling and purposeful retirement?

Mark van Graft, Vice President at Mackie Research Capital Corporation, believes it is.

“I enjoy motivating my clients to realize that it’s not selfish to be selfish”

For decades, Mark has been helping Canadians to make informed financial decisions in their own best interests.

“I enjoy motivating my clients to realize that it’s not selfish to be selfish,” he says. “They should spend some of their investments on their own enrichment versus sitting on savings or worrying about everyone else.”

Mark likes to help his clients embrace their personal goals and aspirations in their retirement. “Coaching clients who have unrealized dreams is one of the favourite parts of my job,” he says.

“I show clients how to use a reverse mortgage, not as a last resort or dire straits resource. A reverse mortgage can unlock funds to go beyond aging at home. It’s more like enabling a desire to ‘unretire,’ to bring a passion project to life, to fund a legacy project or finance a long-held dream to travel or innovate.”

Write a new chapter and unretire

Joyce Wayne is a retired college writing instructor and an unretired novelist and blogger. “I have always loved writing,” she says. Continue Reading…

Why Sean Cooper quit his full-time job after 8 years

Posted By |
What a thoughtful goodbye email. Gosh, it’s hard to keep a secret! I guess everyone knows about my mortgage burning story, even my colleagues at work!

 

By Sean Cooper

Special to the Financial Independence Hub

If you follow me on Instagram, you may have already heard the big news. After 8 years, I’m quitting my full-time job at the pension consulting firm. I gave my employer plenty of notice. I handed in my resignation 2 months ahead of time. June 1st will be my last day in the office. To celebrate this big career milestone, I’ve booked a weeklong trip to New York City and Boston.

I always planned to quit my full-time job. I just didn’t think it would happen so soon. I’m at a crossroads in my life. I’m 33 years old and not getting any younger. It’s time to make some tough “adult” decisions. I can either take the easy road and keep working for a company where I’m comfortable, or take the hard road and become a full-time entrepreneur. I chose the latter.

Keeping a promise to myself

A promise I made to myself after I burned my mortgage in September 2015 is that I’d slow down and get a better work-life balance. Unfortunately, that just wasn’t happening.

I’m someone who’s super ambitious. So, 6 weeks after burning my mortgage papers, I started writing a book. With the success of my book and speaking career, I’m finding myself busier than ever. I’m probably working harder now than when I was paying down my mortgage (no joke).

I’m still putting in the 80+ hour workweeks, waking up at 6:30AM and working until midnight or 1AM most days – and for what? I’m mortgage-free. I don’t have to work this many hours, but the problem is I love what I do. I enjoy my side hustle as a personal finance journalist, money coach and speaker more than my full-time job. I couldn’t keep working at this insane pace forever. I was tired all the time. Something had to give.

So with mixed emotions, in early April I made the difficult decision of choosing my budding career as a personal finance expert over my full-time career. It wasn’t an easy choice, but I was ready to make the jump.

Taking a risk

This was probably the most difficult decision I’ve ever had to make. It wasn’t easy to walk away from a steady, full-time job with benefits and a defined benefit pension plan. It was especially difficult for someone as risk adverse as me (I did after all pay off my mortgage in record timing in 3 years).

When I shared the big news with those closest to me – friends, family and coworkers – I didn’t know what to expect. Thankfully everyone has been supportive of my decision. Saying goodbye to my coworkers will be especially tough. My coworkers are like family to me. They were there when I burned my mortgage and launched my book.

It’s going to take me a while to get up and running. Luckily I have time and money. My house is paid off. I also (still) rent out the main floor of my house. The rental income alone can support me. I also have savings to last me for the years to come.

From a personal standpoint, it helps that things are less complicated. I’m single (I’m half joking when I say I’m still looking for a frugal girlfriend). I don’t have a spouse or children to look after. (Although this is a double-edged sword since I don’t have a spouse’s income to rely on either.) I’d probably hesitate to do the same thing if my circumstances were different and I was married with children.

You’ll never get rich working for someone else

Continue Reading…

10,000 days of Findependence (Financial Independence)

Posted By |

By Billy and Akaisha Kaderli

Special to the Financial Independence Hub

Wow! We made it!

Ten thousand days of financial independence!

Now into our 28th year, we just passed the 10,000-day milestone. And all the while our net worth has grown: above inflation and spending. We have been financially independent longer than some of our readers have been alive! Think about that!

Do you know what this is? This is unbridled success!

No one thought we could do this, and many told us we’d fail.

And we have always said that if WE could do this, YOU could too!

In the beginning

It was January, 1991 that we traded our briefcases for backpacks and we haven’t looked back. We were 38 years of age when we ventured into uncharted waters for the great unknown. That sounds dramatic, but it’s true.

At the time there was no internet, no Google, no social media or Youtube, few ATM’s and – with little guidance – we left our secure jobs for a lifestyle of adventure and experiences. We wanted something different for ourselves than what traditional thinking offered.

There was no word for what we were planning to do. In fact, the road we were taking was a barely visible, unmarked trail. Some people thought we were crazy to put our financial and social lives in danger like this. Others just looked at us with pity, “knowing” we’d be back in a few months from our vacation with our tails between our legs, begging for re-entry into the world that we seemed so willing to chuck for the sake of adventure.

But we weren’t designing their dream, we were creating ours. And, after all these years of world travel, we are still here (and with a stronger portfolio! Do you ever hear THAT from the financial pundits?)

Overcoming challenges and moving into the future

The most difficult part of this adventure was that there was no support system in place for “professional vagabonds.” The word “Location Independent Living” hadn’t been invented yet, nor had email, electronic bank transfers, safe withdrawal rates, downloadable books or music.

That was almost three decades ago (seems almost primitive, doesn’t it?), and today the choice to become financially independent and live a lifestyle of travel is So. Much. Easier.

To stay in touch with family and friends, we utilize email, Skype and social media. Our photos are digital and are kept on a hard drive or up in the cloud. Ninety-nine percent of our bills and financial transactions are done online with the click of a key. The snail mail we do get is handled through a mail service. We can get our news in an instant with 24/7 worldwide coverage. We download movies, take online courses, and order music or books from Amazon or from hundreds of businesses who offer what we are looking for.

Things have changed a LOT over the last 3 decades and digital nomads are everywhere.

Freedom was our motivation

While there are many ways to live a life, and we aren’t criticizing anyone’s choice, for us, Freedom was our motivation. Continue Reading…