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).

BMO slashes fees on bond ETFs

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BMO’s Kevin Gopaul

BMO Asset Management Inc. says it is slashing fees on its flagship bond ETFs, and that after they are implemented on or about June 22 BMO ETFs will sport some of the lowest-cost fixed-income ETFs in Canada.

Some of the fee cuts on its broad fixed-income products are more than 50%: Given the minuscule interest rates being paid out on bonds these days, that should get investors’ collective attention.

Here’s the new fee structure BMO issued in a press release today:

BMO ETFs

Ticker

Current Maximum Annual Management Fee (%)

New Maximum Annual Management Fee (%)
BMO Aggregate Bond Index ETF

ZAG

0.20

0.09
BMO Discount Bond Index ETF

ZDB

0.20

0.09
BMO S&P 500 Hedged to CAD Index ETF

ZUE

0.10

0.08
BMO S&P 500 Index ETF

ZSP/ZSP.U

0.10

0.08
BMO Short Corporate Bond Index ETF

ZCS

0.12

0.10

Kevin Gopaul, Global Head of ETFs for BMO Asset Management says the move follows earlier fee reductions in 2012, 2013 and 2014. “Clients are recognizing the value and liquidity of using low-cost ETFs for fixed income exposures in their portfolios.”

The 50% cut on the broad-market  ZAG and ZDB makes them the lowest-cost fixed-income ETFs in the country, at nine basis points. As the chart shows, it has also reduced fees on its currency hedged and non-hedged S&P500 ETFs (ZUE and ZSP/ZSP.U respectively) to 8 basis points from the previous 10 basis points.

Polling financial literacy: results both encouraging and worrisome

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graham-bodel
Graham Bodel

By Graham Bodel, Chalten Advisors

Special to the Financial Independence Hub

The Canadian Securities Administrators (CSA) just released its 2016 CSA Investor Education Study, an assessment of financial literacy across the country.

Some of the findings are encouraging while others are a little bit worrying.

There are clearly still key gaps in investor knowledge and behaviour.  For example, while many investors rely exclusively on advisors for investment information and knowledge very few investors actually check to see that their advisor has the appropriate registrations.  Some other key points:

Risk Tolerance

To begin with, findings show that more and more people seem to be paying attention to their risk tolerance, which is great!  Risk tolerance is what should drive the mix of different investments that you hold, often referred to as asset allocation.  Risk tolerance is driven by your need, ability and willingness to take risk and should be informed by your current financial situation as well as near and longer term financial planning goals.  Risk tolerance can definitely change as your circumstances change or as you enter different stages of life so it is worthwhile checking periodically to ensure your investments are suitable for your risk tolerance.

Investment Knowledge

Survey respondents were asked to answer seven questions to assess general investment knowledge.  6 of 10 people answered 4 or more questions correctly, which is about the same as in previous surveys.  25% of respondents answered 6 of 7 questions correctly indicating a “high” level of investment knowledge.

Continue Reading…

Choosing frugality amid social pressures to spend

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Man keeping a woman from entering a store and begging her to stop shoppingBy Helen Chevreau, Hub Staff

As millennials, we often feel pressured by both the media and our peers to look and act a certain way. It’s a general rule of thumb that if you’re in your twenties or thirties, you’ll feel the strain of wanting the newest and best something at least once. Many of us will crack under pressure and eventually purchase that new iPhone (even though our current one works fine), or that new pair of jeans (even though we already have a pair in that colour).

The thing about succumbing to these societal pressures, though, is that for the most part, at the end of the day, we don’t feel better about ourselves after making these big purchases. In fact, a lot of the time, it’s quite the opposite. We see the shiny new product and our first reaction is “I need this now.” We can convince ourselves the price is irrelevant, and that it will pay for itself, or that it’s a necessity. But how frequently is that true? Do we ever really need to bow to those pressures?

Stop, Drop, Don’t Shop

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Mrs. Frugalwoods

It seems there is a trend emerging in the financial millennial blogosphere wherein bloggers enact a “shopping ban.” The terms of the bans vary by site, but the general premise remains the same:  a new consumption philosophy rooted largely in the theory of not purchasing anything.

“Mrs. Frugalwoods” of the blog Frugalwoods, for instance, is well on her way to going three years clothes-purchasing-free. Continue Reading…

FinTech wars heat up as Robo firm NestWealth hires former BlackRock sales director

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Chris Hogg heads up new Nest Wealth Pro unit

The fin-tech wars are heating up on the Sales front: Toronto-based robo adviser NestWealth.com today announced it has hired the former Director of National Accounts for iShares BlackRock to head up its new B2B offering, Next Wealth Pro.

The hiring of sales veteran Chris Hogg is a “huge day for Nest and I think for the industry as a whole,” says NestWealth founder and CEO Randy Cass.

Nest Weath Pro is a new digital wealth management platform: it provides traditional brokerage firms, advisors, and asset managers with a “white label” turn-key solution that includes know-your-client tools and customizable portfolio management.

Disruptive shift

In a press release issued this morning, NestWealth said Hogg has more than 20 years industry experience, including the last three years at BlackRock. The release quotes Hogg as saying that “I’ve seen many changes within the industry, but have never encountered a shift as meaningful and disruptive as what we’re seeing today.”

Case said Nest Wealth Pro demonstrates that “technology and tradition can co-exist in a way that supports advisors and benefits their clients.”

NestWealth describes itself as “Canada’s largest independent Robo-Advisor.”

Speaking of disruption, there’s a good piece on finch’s impact on the banks in Thursday’s Financial Post. See ‘Disruption here and now’: Pressure of Uber moment transforming banks, conference told.

Housing Bubble? Why it’s Crazy to buy in Vancouver or Toronto

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Beautiful view of Vancouver, British Columbia, Canada
Vancouver, B.C.

When central and southern Alberta experienced catastrophic flooding in June 2013 there were 32 states of emergency declared and over 100,000 people displaced throughout the region. Reports of price gouging at various retailers surfaced on social media; one story in particular claimed that an unscrupulous Calgary retailer was selling individual bags of ice for $20.

Given the urgency of the situation, and depending on your level of preparedness, what options do you have?

  1. Move on to the next retailer and hope to find an honest owner
  2. Go home with no ice and wait for the situation to return to normalCalgary-price-gouging
  3. Suck it up and buy the ice, grumbling the entire way home about how you got ripped off
  4. Hope for some kind of government intervention to protect you and other consumers from price gouging
  5. Borrow ice from a friend or neighbour who has plenty to spare

Continue Reading…