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When investing, think like a landlord
– moneysense.ca
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The annualized total returns for the TSX and S&P 500 (in Canadian dollars) were 9.6% and 11.7% as of December 31, 2021.
It is impressive, but the short-term volatility of the market can be quite extreme, and this year is a good example. The annual ups and downs of the market can lead investors to focus more on capital appreciation and depreciation. But stock returns come from both capital growth and dividend income, the latter being more predictable…
Are ETFs a good investment for an all-weather portfolio?
– moneysense.ca
It’s true short-term bank savings accounts and guaranteed investment certificates (GICs) seem relatively safe from both stock meltdowns and precipitous rises in interest rates, but now there’s the added scourge of rising inflation. Even if you can earn 2% annually on a GIC, if inflation is running at 4%, you’re actually losing 2% a year.
Are ETFs a good investment for an all-weather portfolio?
It’s tempting to throw your hands up and retreat to those much-praised asset allocation exchange traded funds (ETFs)…
ETFs aren’t just for passive investing anymore
– moneysense.ca
Even though many investors cling to their mutual funds, the traditional mutual fund companies are feeling the pressure of ETFs and are coming up with their own products to ensure are not left behind. In April 2022, ETFGI, an independent research and consultancy firm specializing in ETFs, reported there was been a 22% compound annual growth rate in smart-beta ETFs globally in the previous five years.
It was only a matter of time before those structures pushed their way north. A steady stream of new active and smart-beta ETFs is coming to Canada this year giving investors more options, not just in the number of choices, but in investment style…
How to use ETFs in your child’s RESP
– moneysense.ca
In many ways, RESPs are fundamentally different from retirement accounts such as RRSPs. They typically have a shorter time horizon, and they are usually depleted within four or five years once your child reaches post-secondary school. In general, they are also much smaller than retirement accounts, since the most you can contribute is $50,000 during a beneficiary’s lifetime. But the same principles of risk management apply, and holding nothing more than a Canadian dividend ETF in an registered education savings plan account may not provide enough diversification.
READ: What is an RESP?
If you’re opening a new RESP for a baby, then you have at least 18 years before you need to start withdrawing the money. So you should start with the goal of building a globally diversified portfolio, which includes all asset classes, not just Canadian dividend stocks…
What ETFs should a millennial couch potato invest in?
– moneysense.ca
A. Conventional investing wisdom says that young people can afford to be aggressive, especially if they can look forward to a defined pension plan in retirement. I’ve heard from many investors in their 20s and 30s who, like you, are contemplating an all-equity portfolio, and it’s not surprising. Stocks have a significantly higher expected return than bonds, so if you have a long time horizon, why not strive for maximum growth?
The problem is that what makes sense on a spreadsheet doesn’t always hold up in real life. While long-term stock investing has mostly been rewarding, the short-term is often gut-wrenching. We have seen this in 2022. Market fluctuations will frequently trim your portfolio by 20% in a matter of a few months—this is called a bear market—and during your lifetime you should probably expect an all-stock portfolio to be cut in half at least once, as well…