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).

Robo Portfolio Update: One Year Later

Posted By |
AmanRaina
Aman Raina

By Aman Raina, Sage Investors

Special to the Financial Independence Hub

One year ago I opened up an investment account with one of the new online portfolio management companies that have been taking the financial services landscape by storm. I wanted to see how these type of Robo Adviser services work and more importantly perform. I deposited $5,000 of my own money and decided to track how it performed and capture any notable observations on my blog.

So let’s dive in and check how much money my ROBO made for me this past year. First let’s look at the portfolio returns.

 

My ROBO portfolio lost money last year. 2.15 per cent to be exact. Then again, many stocks and ETFs lost money last year. The learning point here is that  ROBO services can lose money just as well as other portfolio management services. Don’t expect any marketing campaigns to tell you this.  The thing is … it’s OK. To expect ROBO advisers to be perfect and make money on every holding is unrealistic.

In terms of asset allocation of my ROBO portfolio, below is the breakdown at year-end January 28, 2016. Remember, when I setup my account, I answered a series of questions that assessed my risk tolerance and subsequently determine the type of portfolio the Robo Service would create and manage for me. In my case, because I have a high proficiency and literacy about stocks and investing, ROBO proceeded to rate me as a 9 out of 10 on the risk tolerance scale.

 

Continue Reading…

Should couples talk about money this Valentines weekend?

Posted By |

Shape of heart from hundred dollars at red backgroundBy Josh Miszk, Invisor

Special to the Financial Independence Hub

Almost half of married couples say their investing styles differ from that of their spouses, and about one-quarter of couples fight over money, according to a BMO survey.

While your romantic Valentine’s Day dinner may not be the best time to discuss finances, most of us agree that these discussions really do need to happen between couples. Here are a few tips that will help contribute to a sound financial future for couples.

 Keep it open and honest

 It’s important for couples to be on the same page when it comes to goal planning and how you intend to achieve these goals together. Adopt the “yours, mine and ours” approach and make your finances visible to your spouse so that you both will be in a better place to plan together for the future. For example, some advisors offer a consolidated household online view of their portfolio, which provides easy access to investment accounts for each spouse. Not only does that allow you to have a more holistic view of your position, but having it all in front of you at once can make it much simpler to digest.

 Talk about your goals

Smiling couple reading menu and choosing meal
Surely they’re not reading Findependence Day for this special night out?

Finances may not seem like fun dinner conversation, but talking about your goals can be. Start the conversation with questions like “what are your top goals/dreams?” or “where do you see yourself/us in 10-20 years”? The more you have that conversation, the better you can visualize what your goals are, and the easier they are to quantify.

Once you have identified your goals, start talking about how you will achieve them. It’ll make those goals seem less like a dream and more like a reality. Taking the first steps towards achieving those goals is one of the most rewarding feelings you can get. Continue Reading…

Can’t cope with market volatility? Try embracing your inner ostrich

Posted By |

Concept of fear with businessman like an ostrichMy latest Financial Post Investing Pro blog is titled Feel Free to Embrace Your Inner Ostrich, as long as you do your homework first.

Seems a common reaction to watching a sea of red on financial terminals is simply not to look at the carnage. And, depending on how you set up your portfolio, this may not be as bad a thing as it may seem.

So says The Stingy Investor’s Norman Rothery. The blog also features a couple of occasional Hub contributors, Steve Lowrie and Aman Raina, both of whom look at the behavioural finance aspects of such “ostrich” behaviour.

EQ Bank: Your new High-interest No-fee Banking Solution

Posted By |

eqbankbanner_HISABy Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

Over the last decade or more Canadian banking customers have had to accept two inevitable truths:  interest rates on savings deposits would plummet and stay at historic lows, and banks would continue to raise fees on everyday bank accounts and services. All of this occurred while Canada’s big five banks hauled in record profits.

Savvy bank customers had to invent complicated workarounds to keep their hard-earned money safe, free of fees, and to earn a decent interest rate. That meant limiting transactions, maintaining high minimum balances, and bouncing from bank-to-bank chasing the latest short-term high-interest rate promotional offers.

If only there were a bank that offered one solution: a hybrid chequing-and-savings account that paid market-leading interest rates with no monthly fee, and no extra charges for moving your money around via e-Transfer or for paying bills.

EQ Bank

Enter EQ Bank – a new digital bank and offshoot of Equitable Bank – with its unique EQ Bank Savings Plus Account. Launched on January 18th, 2016 Continue Reading…

FWB video: Investors are often their own worst enemy

Posted By |
Screen Shot 2016-01-19 at 12.38.01 PM copy(1)
The latest video from FWB TV is available now by clicking here. You can also view all the FWB and SensibleInvesting.TV videos at this new link at Findependence.TV.

 

If you’re an investor, there’s a good chance the real enemy is the face you see every morning while shaving (or applying makeup!). The pithy quote in the screen shot is of course from legendary value investor Benjamin Graham.

The main point of this 4-minute video is that successful investing is about controlling what you can. You can’t control what the market does, but you can control what you do in response. In our experience, a person’s returns depend less on whether they pick great investments than on whether they can manage their emotions.

One of the experts in the video describes the physiology of stress that investors suffer during — well, times like the past few weeks! In the heat of volatility, particularly the downward variety, our emotions can get the better of us. There’s a reference to a Cambridge University study of 142 students, all male, who were invited to play a game about trading stocks. They found that the more testosterone they found in the subjects, the greater the risks they took on. Such surges of chemicals and emotion can actually affect your perception of the future, and seldom for the better!

Implications for actively managed funds

Since the Evidence-based Investor Videos largely sing the praises of passive or index investing, you might not be too surprised by a statement that this research may have some implications for investors who use actively managed funds. One source asserts that the investment industry is a stress competitive arena and many fund managers tend to be young males. The decisions they make under pressure and stress may cause them to be overconfident about the stock bets they place on your behalf.

The video concludes that investors may benefit by doing business with a rational, use unemotional advisor.

After watching the video if you want to learn more, download the free guide, 12 Essential Ideas For Building Wealth.

How to Win the Loser’s Game, Part 7

Screen Shot 2016-02-09 at 4.17.07 PMIn addition, SensibleInvesting.TV has put up part 7 of the How to Win the Loser’s Game series of videos. While indexing is a relatively simple way to invest, there are still important questions index investor need to ask. Crucially, they need to ensure they are invested in a diverse range of assets that reflects their attitude to risk. They might also want to “tilt” their portfolios to particular risk factors — small-cap or value stocks, for example. While more volatile, these have been shown to deliver higher returns over the long term.