Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

4 small-cap Tech Stocks to watch

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By Sia Hasan

Special to the Financial Independence Hub

The small-cap technology stock sector is fascinating in that it’s comprised of companies that have the potential to grow fast. Small caps are considered riskier than large- or mid-caps, and this means they have a higher potential for making huge profits for investors.

However, this is not to say that you should invest in small-cap tech stocks blindly. With a little due diligence, you can accurately determine the winning companies that can overcome the risks to move higher and give you lucrative returns. Here are some of the top small-cap stocks that are already excelling in the stock market, and which you might consider for investment.

Oclaro Inc. (OCLR, Nasdaq)

Oclaro Inc. is an optical networking company that’s a serious player in optical networking for high-speed global networks. The company offers transmission products and modules to telecom firms, enterprise networks, and data centers. While OCLR is a small-cap company, it is in competition with some of the biggest players in networking, such as Cisco Systems. However, OCLR focuses on core markets and high-speed components, and this has given it the cutting edge in the industry.

The company has shown great potential for growth, especially after establishing a solid position in China. OCLR aims at modernizing and upgrading its computing and telecom speeds, an indication of impending growth for the company. This great potential makes it an ideal company to invest in as its stocks are bound to generate even better returns in the years to come.

Celestica Inc. (CLS, NYSE)

Celestica Inc. is a popular company in the electronic manufacturing services (EMS) industry. Based in Canada, it provides a broad range of products such as wireless networking, telecommunication equipment, smartphones, storage devices, and printer supplies to original equipment manufacturers. The company has consolidated its services, allowing clients to purchase various products from them. This gives Celestica the upper hand in the industry in case of instances of market contraction in the EMS industry.

In the past few years, Celestica has begun to focus more on becoming a niche market provider rather than on the consumer market. This is because a significant proportion of its revenue comes from industrial companies. Management projects that the net profit margin will continue to grow from the current 2.18 per cent, making the company an excellent choice for some investors.

Zillow Group (Z, Nasdaq)

Zillow Group is a small-cap company that operates one of the largest a real estate informational websites and a mobile phone application. Continue Reading…

Blending families and assets: How to make it easy

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By Rowena Chan, TD Wealth

Special to the Financial Independence Hub

Finances can become challenging when adding — or removing — a new partner, stepchild or extended family member into a household. The instances of blended or multigenerational families are becoming more and more common in Canada as the number of multigenerational families has grown in the last 15 years – rising 37.5 per cent. In addition, 12.3% of families in Canada are stepfamilies, according to recently-released 2016 Canada Census data.

A recent TD survey found 66% of Canadians living in a blended family say they face financial challenges because of their household situation. Additionally, 47% find juggling these challenges stressful. The top three financial challenges they faced are determining who pays for ongoing household expenses (25%), having different views on managing the household budget (23%) and determining household saving priorities (21%). Take a look at this infographic here for more survey findings, tips and advice.

No matter your family situation, money matters can get tricky. To guide you through the process, there are some simple steps blended families can implement to help create a more stable financial future for everyone involved. Continue Reading…

How Modi is accelerating India’s growth

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India Prime Minister Shri Narendra Modi chairing the ICT-based, multi-modal platform for Pro-Active Governance and Timely Implementation, in New Delhi on July 12, 2017.

By Caroline Grimont

(Sponsor Content)

The Narendra Modi government has made enormous strides in transforming project execution in India, enhancing the momentum of country’s growth.

Modi’s success is largely premised on his principle of “Minimum Government, Maximum Governance,” which has been the Prime Minister’s mantra for transforming project execution in India.[i]

Shortly after assuming power, Modi announced that India’s government systems suffered from two weaknesses: “They are complex. And they are slow.” He noted that this had to be changed and that government systems must be sharp, effective, fast and flexible.[ii]

Government has no business being in business

To do this, India needed a policy-driven state, with simplified processes in which the government needed to focus upon the things that are required of the state, which must in turn deliver on the things it sets out to do. He emphasized that government “has no business to be in business” and must instead focus on policy formulation and execution.” [iii]

Modi also noted that in 20 years of liberalization the government has not changed “its command-and-control mindset,”[iv] which is exactly what he set out to do in transforming project execution in India.

An earlier McKinsey report identified what Modi referred to. It stated: “Inefficiencies in implementing infrastructure projects in India occur at all stages. This includes awarding projects as per plan targets, securing financial closure, and executing projects within cost and time.”[v]

Cutting through red tape

In accelerating project execution Modi has personally taken on India’s notorious red tape to clear tens of billions of dollars in stalled public projects, hoping that his hands-on intervention can bend a vast, dysfunctional bureaucracy.

He has focused on improving governance and introducing changes to legislations, rules and procedures wherever necessary to make processes more efficient; and cut down on multiple clearances those choke investment.

To keep track of project execution Modi holds a meeting with top state and central bureaucrats once a month, to check why projects have not got off the ground: leading to the revival of tens of billion dollars in value of central government and state projects in a wide range of areas.[vi]

Central and state bureaucrats are linked by video to Modi’s office for the meeting, usually held on the fourth Wednesday of each month. They are typically from the finance, law, land, environment, transport and energy ministries whose clearances are needed for many projects. [vii]

The agenda is set the previous week and usually has about a dozen stalled projects, public grievances and other governance issues.

By empowering government officials to execute on project implementation and managing the process on a monthly basis, Modi has effectively been able to remove the policy paralysis that has plagued India for decades.

“Modi has won plaudits for the initiative that has chipped away at a $150 billion backlog of planned roads, ports, railways, power stations and other projects.”[viii]

He has also taken major steps to eliminate corruption and transparency that have in the past paralyzed project execution. Continue Reading…

If an enhanced CPP takes you off GIS rolls, count your blessings!

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Let’s HOPE this advisor’s financial plan means this senior couple won’t qualify for the GIS!

Here’s my latest MoneySense column, which looks at the headline-grabbing “news” that an  Enhanced Canada Pension Plan (CPP) would mean roughly 243,000 low-income seniors might not be eligible for the Guaranteed Income Supplement (GIS) once the full-bore enhanced CPP system is in place in the year 2060.

Click on the highlighted headline for the full piece: Retirees should be happy not to qualify for GIS.

None of the five financial experts whose input appears in the piece disagreed with this article’s premise: that far from being a bad thing to make so much from CPP (or any other source of retirement income) that you exceed GIS minimum income thresholds, it’s actually a good thing. Yes, you have to work at a job to earn CPP benefits, whether “enhanced” or not, and yes, this entails payroll contributions taken off the top. That’s no different than anyone with a good employer pension or who saves in RRSPs or any other vehicles.

That’s what saving is all about: providing for future needs by taking a little out of current income. It’s all about living within your means, being responsible for your own future and all the other themes that the Financial Independence Hub espouses every day.

The Hub and MoneySense recently looked in-depth at OAS and the GIS, which you can find here.  And earlier today we looked at Survivor benefits for CPP, OAS, GIS and other sources of retirement income.

One of the sources for the GIS article was TriDelta Financial’s wealth advisor, Matthew Ardrey. Time and space limitations meant we could include only a snippet of Matthew’s analysis in the MoneySense column itself but he has given us permission to run his whole opinion below:

TriDelta Financial’s Matthew Ardrey

The government plans to enhance CPP through two measures. One, increasing the contribution amount from 25% to 33% and two by increasing the income limit on which contributions are made to $82,700. Combined these two measures will take the maximum pension of $13,370 today to about $20,000 in the future.

There will be some measures to offset these contributions for the employee including an enhanced Working Income Tax Benefit (WTIB) to help offset the cost for lower income workers and making the enhanced contributions a tax deduction instead of a tax credit. Though that helps out today it does nothing for the low-income earner in retirement.
Continue Reading…

Ask Tyler: Should I sell my stocks, given the North Korea situation?

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By Tyler Mordy, Forstrong Global

Special to the Financial Independence Hub

Diversifying Fire & Fury

What danger does the North Korea situation present for global investors? Clearly, Trump’s indulgence in nuclear brinksmanship carries risk. Pyongyang potentially firing missiles at US territory in the Western Pacific is also real. And there is a global existential threat should it ever escalate into intercontinental warfare.

Yet, rather than add to the volumes of prognostications about North Korea’s specific situation, consider the track record of major events and their impact on markets.

Most geopolitical events are false alarms

First, most geopolitical events are false alarms. As card-carrying members of the change-anticipation field, we understand the desire to divine the big events: to be first to spot the outlines of a looming disaster can be glorious (and career-enhancing).

But most warnings are false alarms simply because big turns are rare events. Remember Y2K, Saddam Hussein’s so-called “weapons of mass destruction” and, recently, Brexit? None of these widely-feared threats materialized or they delivered benign outcomes.

Second, more often than not, geopolitical events create opportunity. Rummaging through past post-crisis periods produces a long list of stellar returns after the initial event. For example, the Cuban Missile Crisis in October 1962 was a 13-day confrontation between the US and the Soviet Union, widely considered the closest the Cold War came to full-scale nuclear warfare.

However, after the crisis subsided, the Dow went on to gain more than 10% that year. Or take the Korean War, when the North invaded the South. This conflict lasted from June 1950 — July 1953. During that time, the Dow was up an annualized 13.6%. History is brimming with similar examples.

Such events often have binary outcomes

Finally, geopolitical events may have binary outcomes. By this we mean that a negative scenario would either produce an extremely large portfolio loss or gain. There is no knowing which ahead of time. As such, narrowly focusing on one type of risk is speculative at best.

Continue Reading…