In this article, we’re going to take a close look at the rise of Canadian trading apps and see how they can help you grow your portfolio and free yourself from wage tyranny.
Paychecks?
I’ll let you in on a life-changing secret, the kind that they never teach you at school. No matter what job you get (with very few exceptions), you will never get rich whilst working for a paycheck. No never. Seriously, I know high profile corporate lawyers who were quickly left ruined and living in basements after a nasty divorce or simply after losing a lucrative job. If you really want to get out of the rat race, be comfortable and never worry about paying the gas bill again, then you absolutely need to diversify your income streams.
The more sources of money you have coming in, the safer you are. Without a doubt, the best way to do this is by trading stocks and shares. But it all sounds a bit complicated, right? It can be, but thanks to technological innovations and a whole plethora of cutting edge trading apps, it's getting easier than ever.
Buy! Buy! Sell! Sell!
When most of us visualise the stock market, we think of frenzied trading floors, giant screens showing who is up and who is down, ringing telephones and cries of “buy, buy! Sell! Sell!”. If it sounds stressful, it's because it is. Corporate burnout in the Wall Street stock exchange is at pandemic levels. But it does not need to be like this. Remember that the whole point of the stock market is that it is open to everybody including you. Whether you are Warren Buffet looking to invest $10 million of loose change, or a humble bartender looking for someplace to invest $100 in tips, you can now get a piece of the stock market from the comfort of your own pocket.
Stock Trading Apps
Stock Trading Apps are smart/iPhone apps that allow you to watch, monitor, study and take part in the Stock Trade market in real-time. You simply install the app on your phone, set up your account, fund it, and off you go. You can buy and sell stocks and shares, you can trade and you can cash out at any time you like.
The rise in Stock Trading Mobile apps has been both meteoric and absolutely inevitable. The appeal of a stock trading phone app is obvious. Whereas once upon a time you needed a desk, multiple computer screens, a set of braces and possibly a casual cocaine habit to get on the stock market, now all you need is a phone - the stock market is now accessible for everybody. This means participants can trade in an environment, and in a way in which they feel comfortable. Best of all, they can do it in their spare time whether that's sitting on the train home from work, waiting for a coffee, or sneaking a quick toilet break (imagine coming back from the bathroom $100k richer than when you went in eh?).
A lot of apps have also aimed themselves as user friendly such as allowing “practice runs” where basically you can play the real stock market using “monopoly” money until you get a feel for it. Other investment apps like e-Toro, allows you to simply “mimic” top traders - if they make a trade, so do you (albeit with a smaller amount) so you don’t have to do any of the hard work or thinking yourself.
But what are the implications of this?
Well, the opening up of the stock market to the masses has caused some notable consequences. Some commentators have even suggested that the 2020 Wall Market bubble that seemed to ignore the financial crisis caused by the COVID pandemic, was partially a result of furloughed workers sitting at home spending their time and money investing in the stock market! Cynics (and dare I say snobs) have even alleged that these “amateur” participants are dangerously meddling in the sanctity of the market.
A high profile consequence was the Gamestop debacle which made global headlines. To recall, a Reddit based community of DIY stock app aficionados using the Robinhood Trading App collectively decided to invest in the (previously underperforming) Gamestop Company sending the share price skyrocketing in a bubble that was sure to burst. This prompted the Wall Street regulator to step in and sanction the Robinhood platform on the grounds that it had facilitated market manipulation and forced Robinhood to apologise and revisit its business model. Of course, the counterargument is that this kind of “manipulation” is exactly what professional Wall Street traders have been doing every day for the last 100 years with no reprimand.
Apps like Robinhood, have also seriously dented the earnings of Stock Brokers and Financial Advisors as more and more of their clients realise that they no longer need to pay a middleman. This is serious business. According to the Financial Times, retail trading including mobile trading (that's ordinary folk with extraordinary phones) now accounts for as much stock market trading as mutual funds and hedge funds combined.
Regulatory Realities
In theory, the internet exists outside of geography and cyberspace knows no borders. But in practice, financial markets around the world are tightly regulated. Every platform has to be registered in somebody's jurisdiction and abide by their market rules and every user, (wherever they are based) is also subject to the financial regulations of whichever country their bank account or credit is registered in. For this reason, DIY investors in Iran will find they are locked out of trading apps as their country is totally and completely financially blacklisted. On the other hand, citizens of the US, the EU and the UK will find that their financial services friendly governments have made it insanely easy for them to get involved with few questions asked. As long as you can prove how you are funding your account, and personally undertake to declare any earnings for tax purposes, you can get trading on investing apps in minutes. Whilst the Canadian financial services authority is not quite as open as those in the UK and the US, they are still liberal enough to allow pretty much anybody to get involved with minimal hassle.
The Best Trading Apps In Canada
As promised, we are going to take a quick look at some of the best trading apps in Canada.
Wealthsimple Trade
Wealtsimple trade has proven itself as Canada’s favourite trading app. You can open an account with $0 (though you will need to fund it to trade) and they charge a $0 commission on trades. Typically users can expect to save $9.99 per trade compared to brokerages and the app interface is quite easy to use once you have gotten to grips with it.
Questrade
Questrade bills itself as being for the “experienced and the beginner alike” but the $1000 minimum deposit says otherwise. Still, their commissions range from $4.99 - $9.99 so they are competitive and they do offer a range to a whole load of corporate stocks.
Qtrade
Qtrade is popular with credit unions. They are not quite as established as Wealthsimpe and their fees are a bit higher. They also sting you with a $25 quarterly “maintenance” fee (i.e. account rent) which is a big deal for small, dime and nickel traders. So why use them? Well, their customer support is excellent.
FrontWell is a private credit fund focused on providing transitionary senior debt financing to middle-market companies in the United States and Canada. In his role, Geoff is responsible for sourcing senior secured debt transactions with financing needs ranging between $5MM - $50MM, whilst working in conjunction with the prospective client and the company’s experienced underwriting and portfolio team to structure and deliver the optimal senior debt capital solution.
FrontWell differentiates itself by providing creative bespoke senior debt capital solutions, in the forms of revolving and term lines of credit to middle-market companies that may be distressed, are in high growth situations, require recapitalisations, are engaged in M&A activity and require the necessary transitional capital, outside of traditional sources of senior debt, in order to properly capitalise the business for growth and transitionary purposes so that the business can transition to more traditional financing (i.e. bank or bank ABL).
How has the pandemic affected private credit funds in Canada?
The COVID-19 pandemic, which has quickly morphed into a global humanitarian crisis and economic disaster, has added a new layer of complexity. And while the supportive subsidy programs initiated by the Canadian Federal Government have enabled companies to continue to operate, these subsidies will soon come to an end and will no longer provide a band-aid to troubled companies, particularly lower-middle market companies.
During COVID transactional flow has remained strong in Canada, however, we are not seeing as many financing opportunities that intersect with our approach to credit structuring as a substantial percentage of non-essential distressed lower to middle-market companies are currently being supported through government subsidies and, perhaps reluctantly, traditional lenders.
As such, Canadian private credit funds have been proactive in preparing for, what is believed to be, a tremendous amount of future deal flow as these companies prepare for the government financial assistance to end in the near term and are already beginning to assess their capital needs in order to identify potential liquidity and liability mismatches and are seeking to bridge the gaps – especially as the traditional covenant governed credit facilities provided by the traditional banks continue to proactively assess the credit quality and future of these companies following the elimination of government financial assistance.
FrontWell is in an ideal position, with its experienced team of asset-based and corporate banking professionals, to expeditiously and strategically assist these companies with their capital needs as the traditional sources of financing (i.e. banks) prepare to exit their credit facilities with these lower-middle market companies.
Canadian private credit funds have been proactive in preparing for, what is believed to be, a tremendous amount of future deal flow as these companies prepare for the government financial assistance to end in the near term and are already beginning to assess their capital needs in order to identify potential liquidity and liability mismatches and are seeking to bridge the gaps – especially as the traditional covenant governed credit facilities provided by the traditional banks continue to proactively assess the credit quality and future of these companies following the elimination of government financial assistance.
Have you noticed an increase in Canadian and US middle-market companies’ needs for loans over the past year and a half?
We have noticed an increase in Canadian and US middle-market companies’ needs for loans over the trailing 18 months – however, a larger portion of the transactions that we have observed US$1B+ are in non-essential industries, during this unfortunate lengthy pandemic, such as income-producing realty (i.e. hotels, shopping plazas etc.) which experienced an enormous decline in revenue. Furthermore, we have observed $500MM+ of Oil and Gas and Mining (i.e. coal) companies that, even absent a pandemic, are highly cyclical and subject to global commodity risk, which have been further impaired during the pandemic and are seeking rescue capital in the form of equity, mezzanine capital – given that they are term heavy transactions with minimal utilisation – which leads to prolonged cash burn.
We are also observing similar subsidies and financial support from the US Government with small and medium enterprises which has provided US banks (similar to the Canadian banks) with some breathing room. This support, which shall run its course shortly, has made some of these SMEs, in need of alternative financing, reactive to the situation when they should be proactively preparing themselves to be transferred into special/distressed account management with the banks.
Having said that, we have been fortunate to secure and assist a number of companies that took the proactive approach of seeking alternative financing prior to the conclusion of the government subsidies.
How have you, at FrontWell Capital Partners, reacted to this?
At FrontWell, we are not reactive, rather we are proactive. We anticipated the economic issues and we fully understood the negative economic impact on lower-middle market companies.
We are generalists, as such, we immediately proactively set out to commence direct calling into the US and Canadian traditional industries, banks, alternative financiers (seeking “club” on transactions, active restructuring groups in the large accounting firms as well as the specialty restructuring advisory firms, that we support, where we can clearly identify “cracks in the façade” and propose creative debt capital solutions thus alleviating the predictable issues that they may face with their traditional sources of finance (i.e. anticipated defaults; being pushed into special/distressed account management) which allows these businesses to avoid the associated default and monitoring fees imposed upon them.
What would you say are the benefits of financing solutions that go beyond traditional sources of capital?
FrontWell is a relationship-driven lender providing flexible “stretch” committed senior secured credit facilities that rely on adaptative and knowledgeable management, well-established operations and adequate asset coverage. We do not rely on financial covenants.
FrontWell provides transitionary debt capital solutions, and as such, we seek to provide a clear path for companies to transition from point A to point B, absent leverage covenants and tenuous debt service coverage covenants – we are providing patient capital in structures such that the company does not need to continually worry that they are going to be tripping covenants - peace of mind – so that the leaders of the company can focus on achieving their objectives so that they may return to traditional financing. And in some cases, such companies remain with FrontWell given our friendly, professional, and experienced approach to working with the companies to achieve such objectives. Our team which has over 150+ years of North American asset-based and large institutional corporate lending experience with an expansive network of professional relationships also allows us to provide companies with a myriad of services.
What do you think the future holds for your industry?
The sky is the limit. In creditor friendly markets, by way of taking security against debt, such as the US and Canada, alternative credit shall continue to grow at an exponential pace, and we are already beginning to see a substantial increase in our pipeline for businesses seeking alternative debt capital solutions as they are fast approaching the near term maturity of the government subsidies.
There is always going to be a space for creative “stretch” senior secured debt capital solutions and FrontWell is in an incredible position to deliver the first-in-class service to prospective clients.
Bitcoin, blockchain, and other innovations are proving that they are capable of transforming the status quo, as well as advance digital currencies as a whole. This makes it a likely contender to completely replace traditional fiat currency, which in turn is putting governments in an awkward position.
The topic of digital currencies and regulations is a complicated one. Cryptocurrencies, by their nature, are freewheeling and not bound by country borders or a government’s agencies. However, this admirable nature introduces a predicament to policymakers who are accustomed to handling straightforward definitions for assets.
Regulation is one of the most important factors affecting the price of Bitcoin and other cryptocurrencies. The rise of this new form of finance has been halted whenever a government brings up its policies, with each country taking a different approach to crypto regulation.
Walking a fine line
Creating legislation that urges the adoption of trailblazing financial infrastructure could provide a sizeable benefit to economic competitiveness. However, granting too much freedom to people might put the integrity of the country’s paper money at serious risk.
A balance has yet to be established. Therefore major governments have different reactions to the emergence of Bitcoin and other cryptocurrencies in their respective countries. These responses have ranged from hesitation and fear to genuine acceptance. Something that they can all agree on is that the choice should not be taken lightly.
Canadian regulations and crypto
Digital currencies are rapidly becoming more mainstream in Canadian finances. Now more than ever, investors are looking to buy cryptocurrency in Canada. Since becoming the first government to pass a national law on digital currencies, Canadian regulators have remained proactive in their approach towards crypto. They are cautiously optimistic and are trying to promote innovation while at the same time protecting the interests of investors.
In Canada, digital currencies are regulated under securities laws as part of the securities’ regulators directive of protecting the public. The Canada Revenue Agency characterises cryptocurrency as a commodity, and states using cryptocurrency to pay for goods or services should be treated similarly as a barter transaction. Because of cryptocurrency’s commodity treatment, it has consequently prohibited the unfavourable misreporting of taxes. With that said, the landscape is always evolving, meaning that regulators need to be up to date to keep crypto enthusiasts from looking at the U.S., Asia, or Europe as alternatives.
Progress in other countries
As is the case with other countries, America has a lot on the line and a lot to gain from the adoption of cryptocurrency and blockchain technology. Interestingly, lawmakers have mostly opted not to acknowledge the budding trend and instead let it exist without much hullabaloo.
The United States Federal Government has not claimed the right to regulate cryptocurrencies exclusively yet. They are allowing individual states to figure out how their citizens can partake. New York, Nevada, Arizona, Vermont, and Maine, among other states, have introduced bills to their state senates thus far. They are primarily dealing with the appropriate use of smart contracts and blockchain ledgers for various tasks such as record-keeping.
Switzerland is embracing cryptocurrency in the same non-regulatory fashion as other European countries. The Swiss Federal Council affirms that while there is currently no need to regulate cryptocurrency, laws regarding the financial sector’s use of them are being put in place to establish their status as securities and taxability.
Price control
Government intervention can impact cryptocurrency prices in a handful of ways. First and foremost, governments can regulate the price of assets, like fiat currencies, through purchasing and selling activities in international markets.
Second, they can compress extreme enthusiasm for an asset class by attaching regulations to it. Specifically, ones that boost the cost of conducting business. A notable example of this tactic is the consideration of Bitcoin regulation from an array of states in the U.S. For cryptocurrency exchanges within their jurisdictions, most states need surety bonds. Alternatively, an equivalent amount in fiat currency.
Lastly, governments can make the asset rare by forcing certain controls on it. Take the case of gold as an example of this method. This precious metal has import restrictions in various countries. Each of these actions has the capacity to fail regarding Bitcoin and cryptocurrencies. The reason for this being that cryptocurrencies have decentralised ledgers that extend across multiple countries. Their regulation demands an organised effort from several economies, which might be a difficult task to complete. Especially given the different levels of fascination with cryptocurrencies, as well as their effect on national economies in diverse locations.
Conclusion
Overall, the total market capitalisation of cryptocurrency is quickly rising into the hundreds of billions. Because of this, the world’s governments have implied that they are willing to allow this revolution to transpire. With a few exceptions, their key strategy has been – and will continue to be for the time being – to watch from the sidelines.
Research shows an increase in spending in Canada during the past decade, yet it has come to a halt as the economic repercussions of the pandemic continue to play out across the country and the world. That said, not everyone is spending (or not spending) their money in the same way. There are still some unique differences between the Canadian generations when it comes to spending, saving, and investing their money. Today, we’re going to take a closer look at millennials and their spending habits over one of the most tumultuous years in recent memory.
Millennials Are Still Making “Comfort” Purchases
Prior to the pandemic, the data showed that millennials spent more than all other generations on “comfort” purchases like clothing, streaming services, and going out to eat. For the most part, these spending habits have remained intact. However, due to COVID-19 restrictions, millennials are opting to get food delivered rather than eating at a restaurant. Though spending is down across the board, millennials are still making financial decisions that reflect their desire to enjoy their free time.
However, not all comfort purchases have stayed popular — or even possible — during the pandemic. Concerts and similarly crowded events have become more complicated with COVID-19 restrictions in place. Additionally, millennials have shown a greater aversion to travel than Generation X or baby boomers.
Millennials Rent More Than They Buy
Income inequality has become a hot button issue that often pits millennials against their parents’ and even grandparents’ generations. While living expenses have continued to rise over the last 30 years, especially in populous cities like Vancouver and Toronto, wages have stagnated. As a result, millennials simply do not have the capital saved to buy or even finance a home. Instead, they tend to rent apartments or houses — often with at least one roommate to cut down on expenses.
While living expenses have continued to rise over the last 30 years, especially in populous cities like Vancouver and Toronto, wages have stagnated.
In fact, many millennials don’t even have enough money to rent their own place. Though unemployment is steadily declining in Canada, the unemployment rate is still significantly higher than it was in 2019. This has disproportionately affected younger, less-established workers. With little savings and fewer job opportunities, many Canadian millennials are opting to live with their parents well into their 20s and 30s.
Millennials Are Paying Down Their Debt
Millennials are one of the most educated demographics in Canada, but this achievement came at a high cost. With average college tuition exceeding $20,000 per year, younger Canadians have no choice but to take on large student loans to get the education they need. With more and more Canadians acquiring some form of degree, higher education has become a necessity to remain competitive in the job market.
Thus, millennials spend much of their available cash paying down new or existing loans. Since Millennials have a propensity for spending their income on “comfort” or non-essential purchases, they also tend to lean more on high-interest credit cards. This has led to an ever-worsening relationship between poor spending habits and soaring debt for many young Canadians.
Millennials Invest In Smartphones More Than Anything Else
For many young people, a smartphone represents a gateway to the rest of the world. It is both a powerful tool to manage mundane tasks like bank transfers and phone calls, as well as a portal to the world’s collective supply of information. Millennials can learn a new language, start a business, or keep just keep in touch with friends — all on one device. As a result, millennials don’t mind shelling out a few extra dollars to upgrade their phones on a regular basis.
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However, it’s important to note that buying phones is not a completely practical act. Among Canadian and American millennials, there’s also a certain degree of “keeping up with the Joneses” involved. Though there are plenty of low-cost, functional smartphones on the market, a large percentage of millennials opt for more expensive models, even if it means adding even more to their debt.
What? Never pay yourself a T4 salary? Whatever do you mean?
If you pay yourself a T4 salary of $60,000 or more annually, then you are fully paying your employee portion into the Canada Pension Plan (CPP) and your business is paying the employer portion into the CPP. In other words, you are paying double into the CPP.
This means that jointly you are contributing approximately $6K-$7K per year, and if you do this over a 30-year timeframe, you would have paid $180,000-$210,000 into CPP without any return on your investment.
That’s right. You will NEVER get 100% back of what you put into CPP.
For example, if I was able to offer you two options, which one would you take?
Option #1: You get $264,000 or $292,000 of CPP income, all of which is taxable and none of which will go to your estate.
Option #2: You get $418,000 of tax-preferred or even tax-free money, and it will result in an estate for your beneficiaries.
Let’s drill down on that.
The current annual CPP for someone age 65 is $13,900 per year. No, not all all Canadians are at this level, but we will use it as our basis.
The average life expectancy for a Canadian male is age 84, and for a female it’s age 86.
In Option #1, if you start accepting CPP payments at age 65, you would get approximately $264,000 by the time you turn age 84 ($13,900 x 19 years), or $292,000 by age 86 ($13,900 x 21 years). But 100% of that income is taxable!
If you pass away early, you will receive less money, although it will rollover to your spouse on a tax-free basis. But when your spouse passes away – unless you have children dependent upon you – your CPP is gone forever.
But what about Option #2? What if you didn’t have to contribute to CPP?
Then you could take your $6,000 per year and invest it into a conservative portfolio with an average annual return of 5%. After 30 years, it would be worth $418,000.
If the $418,000 is in a non-registered portfolio, then it is only 50% taxable on the capital gain. And if the $418,000 is in a TFSA, then it is 100% tax-free money. Wow.
Make sense? Instead of paying yourself a T4 salary, you should pay yourself a T5 dividend income. By doing so, you are exempt from contributing to the CPP.
Now you are in control:
- you can withdraw money on your terms
- if you pass away early, the money will rollover to your spouse
- when your spouse dies, there is an estate for your beneficiaries
So back to my question. Which option would you prefer?
Option #1: You get $264,000 or $292,000 of CPP income, all of which is taxable and none of which will go to your estate.
Option #2: You get $418,000 of tax-preferred or even tax-free money, and it will result in an estate for your beneficiaries.
Option #2, of course! As an incorporated business owner, contributing into the CPP is a negative return on your money. So NEVER pay yourself a T4 salary!
Business owners: This is just one of the secrets from my MasterClass,The 6 Secrets: What Every Business Owner Must ALWAYS and NEVER Do With Their Corporate Cash Flow. Want to see a live illustration of this Secret and the 5 others? And get some great bonuses? Just watch here: http://bit.ly/2JiIpnK
John Moakler, BMath, CFP, CLU
President and Senior Executive Financial Planner
Moakler Wealth Management, Inc.
info@moaklerwealthmanagement.com
Tell me a little bit about yourself and your role at Colliers International.
I joined Colliers in 2002 and have been promoted through the organisation over the course of my career. I started as part of the brokerage team, completing over 500 transactions and providing a full range of services to both national and international clients. My strength is in building lasting relationships with clients and advisers which in turn helped me achieve my longterm goal of joining the Colliers leadership team in 2015. My leadership philosophy is that it’s through relationships and trust that loyalty and influence are earned. I want my team to follow me into battle because they want to, not because they have to. New disruptors, whether they’re small or large, create opportunities to move your team ahead through change management. It is essential to have a team to believe in and work towards the same goals to capitalise on this fast pace industry.
Downtown Toronto, by all accounts, has become the tightest office market in North America and might
be getting tighter despite new supply. What is your take on this statement and what would you recommend to tenants?
Our projections show that the market will continue to tighten for tenants. Relief will be available for tenants in 2021 after new developments at 81 Bay Street and 16 York Street are delivered and tenants vacate older buildings to migrate to the new developments. Of the 720 built properties in the downtown and midtown markets, only 29 can accommodate a user 30,000 square feet; that’s 4.0% of all properties. To put that into context, 30,000 square feet is approximately one full floor sized tenancy in any given bank building. Tenants are now starting their real estate exercises earlier than the traditional 12-18-month lease expiry outlay as a means of securing their future workplaces.
“Tenants are now starting their
real estate exercises earlier than
the traditional 12-18-month lease
expiry outlay as a means of
securing their future workplaces.”
What are your thoughts on coworking and how has it added or taken away from the Toronto market?
Fixed vs flex, the world of commercial real estate is changing quickly. As advisers, we look at coworking providers and flexible providers as a solution to our clients’ business needs. Flexible providers are changing the landscape of our industry and this is disrupting traditional ideology. Giving people more choices about how and where they work - now that’s exciting! Today, flex space represents less than 1.1% of Toronto's overall market and when compared to other places like London and Manhattan, which reported 5.1% and 2.1% respectively at the end of 2018, we still have room for growth.
One example of a young tech firm navigating the challenging office market due to exponential growth in a short period of time is Colliers’ tenant, Peninsula Group - a provider of remote HR and health and safety services. Like many new entrants to the Canadian market, Peninsula began leasing coworking space at WeWork for their first 8 employees, which quickly expanded to accommodate 45 employees. After only ten months, the company outgrew their coworking space and needed to find a new solution. Today, they have secured over 17,000 square feet of office space in downtown Toronto for their now 180 employees.
Why is it important for tenants to consult a professional when faced with a complex issue?
Ten years ago, we asked our clients how many square feet they needed. Five years ago, we suggested we would save them money on their rental rates through negotiations and what type of space designed they wanted to complete tasks and activities. Now we are asking them what type of workplace they want for their employee experience. It’s no longer only about saving tenants money on a per-square-foot basis through negotiations with landlords. Real estate represents between 3% - 7% of most companies’ fixed operating budget. We can help save companies money by advising them on choosing the right location that helps increase productivity and helps retain and attract top talent.
With up to 90% of an organisation’s costs dedicated to human capital, companies need to consider the value of employee engagement and creating work environments dedicated to HOW employees work best within a space. Creating functional employee experiences (“EX”) within the workplace will help foster a high level of employee engagement. This nurtures a profound connection to the company and increases retention, enhancing the ability to drive innovation, increase profitability, and move an organisation forward.
To learn about portfolio management in Canada, Finance Monthly hears from Constantine Lycos, the Founder and CEO of Lycos Asset Management Inc., a Vancouver-based firm offering investment management services to business owners and professionals. Constantine has over 20 years of experience as an investment professional, holds the Chartered Financial Analyst designation, as well as a Master’s degree from Oxford University in Mathematical Finance.
In what ways does Lycos Asset Management do things differently than other investment management companies?
I believe several factors differentiate us from other firms:
- We are a boutique firm and we look after a relatively small number of families’ investment portfolios and our clients really matter, they are not rounding errors as they can be for large firms managing billions of dollars.
- Our vision, which is to manage clients’ ‘serious money’ as a marathon, using a proven and consistent approach to grow and preserve clients’ wealth with a long-term investment objective. We believe that the centerpiece for success is a long-term plan that outlines the investment polices to follow, so that clients can reach their unique goals. Our experience is that asset mix decisions have the greatest impact on portfolio returns as well as portfolio risk and we pay a lot of attention to getting that right for each and every client. The foundation of investing ‘serious money’ requires patience, discipline and objectivity.
- We are committed to the success of our clients and to fostering long-lasting relationships and we tend to have a very low client turnover rate.
- We are independent and ‘fee-only’, only compensated by our clients.
- Our advice is objective and unbiased.
- Our counsel is without conflicts of interest.
- Our integrity of counsel is uppermost.
- We are fiduciaries, i.e. we are obligated by law to put our clients’ interests first, ahead of ours and do what’s in their best interests. While this is true of all portfolio managers in Canada, portfolio managers currently make up a very small percent of the investment professionals helping families invest and manage their wealth, so we operate at the highest level.
- Client portfolios subject to a minimum asset size are fully customizable allowing for special circumstances to be taken into consideration and for better tax efficiency.
- We have a value investment philosophy. We look for good investments where there is good inherent value in the investment. If the market takes such investment down in price unless the fundamentals have changed, we feel good buying more of such investment. While this is true for all asset classes it is especially true for public traded equites where market prices may fluctuate a lot more than the inherent intrinsic values of the investments. This not only makes us more comfortable navigating volatile markets, it also provides us with opportunities at times when other investors are running scared, realising losses and taking permanent hits to their portfolios.
- The biggest problem investors face is in our opinion a behavioral bias, specifically recency bias. Investors tend to give more weight to recent performance than they probably should, feel good when markets are down and commit more capital at higher prices, feel bad when markets are up and either sell or do not commit new capital at lower prices. Our investment philosophy helps us fight this in clients’ portfolios, forcing us to buy when prices are generally low and sell when prices are generally high. We also help educate clients of the huge importance of the correct investment behavior and how it can determine their financial success more so than picking any individual investment.
- Our investment philosophy also helps us avoid ‘benchmarkitis’, a disease that has plagued the investment management community, where investment managers construct client portfolios in such as way is to be very similar to market benchmarks. This is done unintentionally by over-diversification or intentionally by trying to avoid the risk of under-performing a benchmark by a wide margin. This behavior is usually not in the best interest of clients and allows for a dumb investments, usually in highly overvalued stocks, that can have devastating effects when markets go down.
When is the best time for a family office or business owner to take on a portfolio manager?
Immediately! Business owners and professionals with a minimum of $500K of investable assets that do not work with a team of investment professionals that are fiduciaries do themselves a huge dis-service. I will emphasise the word fiduciary again, as our industry has been very good at making things look very complicated when they don’t have to be. Fiduciaries have to do what’s in the clients’ best interest. Portfolio managers licensed to operate in Canada, in order to earn the right to be able to invest client money on a discretionary basis (i.e. the portfolio manager decides what investments make up the investment portfolio), have achieved the highest level of professional qualifications, experience and integrity and are obligated by law to act in the best interests of clients. Hiring a portfolio manager when a family’s nest egg has reached 500K is a no brainer, even if they are already working with a financial adviser, typically at a bank. Our fees are usually lower than the banks’, and perhaps more importantly - the opportunities for improvements in the family’s investment portfolio and tax efficiency are huge. If they are not working with an investment professional already, the opportunities are even bigger. Research has shown that investors working with an adviser have vastly outperformed, on average, investors investing on their own. A 2016 study by Dalbar concluded that the average investor grew 100K to 305K over the previous 30 years when over the same period, the stock market would have grown 100K to 2.3 million! Working with an investment professional, especially one that subscribes to a value investment philosophy, would likely have produced at least similar results to that of the stock market. My US stock picks over the last 17 years have outperformed the market by roughly 3.5% per year, with the market returning 202% total return and my picks returning (net of fees) 425%.
What can you advise for strengthening an investment strategy?
Typically, if there is room for improvement in an investment strategy, it comes from the risk management side, for example incorporating low cost hedging. Hedging is hopefully a drag in investment performance because it means that the main investment strategy is performing well, but is there just in case the strategy does not work.
For what reasons might a client’s portfolio need to be customised?
The two most common reasons are a family’s over exposure to specific stock or sector and tax efficiency. An Executive’s or Senior Manager’s stock options or holdings in a publicly traded stock can be dealt with by using a custom portfolio - part of which includes a hedge against that single stock risk and/or sector risk. Similarly, a business owner’s exposure to a particular sector or industry can be hedged or dealt with by using a custom portfolio approach. Additionally, every family’s tax situation is different - some carry unused capital losses for example and some don’t. Thus, different strategies can be employed depending on the circumstances of the individuals involved. Capital loss harvesting can be employed for some families but not necessarily for others. More flexibility allows for better efficiency.
What is your process for identifying the risks and opportunities?
We typically look after a family’s whole nest egg and the opportunities and risks can be on the investment side, the tax side, the estate side, etc. In order to help clients as best as we can, we need to (and do) get to know our clients very well. Then the risks and opportunities specific to them and their situation will reveal themselves.
On the investment side, the risks and opportunities are more investment specific rather than client specific. We typically find the best investment opportunities in equities. They typically carry with them the most risk. Our value investment philosophy of ‘buying good businesses at good prices’ helps both to identify good opportunities and mitigate risk through a margin of safety in our valuation process. Typically, we would prefer lower beta stocks to higher beta stocks (relative volatility to that of the market), if other stock attributes are similar. My best stock ideas are in the fund that I manage, the Lycos Value Fund.
We also find good investment opportunities in private equity, albeit with an even longer time horizon than publicly traded stocks. For private equity, we would rely on outside managers. The process here is more with identifying competent and honest outside managers that are also reasonable on fees, an approach every investor should be using in selecting investment managers.
Fixed income investments are challenging in this low-interest-rate environment and are going to be challenging for years to come as either rates stay low or go up, essentially devaluing the worth of longer dated debt. We are at this point underweighting high-grade corporate bonds as the additional yield these bonds offer over government bonds is not enough to compensate for the additional risk and reduced diversification benefits, due to the higher correlation to equities. At this point, we prefer shorter-term private debt financing growth companies in the US or commercial mortgages also in the US, as the yields are better and the US economy is doing well. We also obtain private debt exposure through outside managers, so the process here is similar. In addition to analysing the risks and opportunities inherent in the asset class, we try to identify competent, honest and low-fee outside managers to help us. We also use long dated US Treasuries and long dated provincial bonds that carry the so-called duration risk, i.e. that the value of our holdings will go down as yields go up, not because of the yield we are getting from there, but primarily because of their negative correlation to risky assets such as equities.
Finally, and most importantly of all - how do all the different pieces fit together? Getting the asset mix right is the most important decision for us. Our process there is that for any particular return target for a client portfolio - we optimise the allocation to the various asset classes so that the portfolio can have the highest expected Sharpe ratio, i.e. the highest expected return divided by the expected volatility of the portfolio. We have found that this method has worked quite well.
Of what importance are third-party custodians in the management process?
Having independent third-party custodians to hold client cash and securities is important to our clients. As managers, we make buy and sell decisions on clients’ behalf, but we do not have physical access to their money, cannot make withdrawals from their accounts and essentially, have trading authority only. This is a good standard, one that I believe should be a requirement for all investment funds and a standard that helps maintain a high integrity and trust in the markets. I believe that the Madoff scandal would have been avoided if this was a requirement then, as the custodian for Madoff’s funds was a related party, not an independent third party.
What are the signs of a good investment to buy into?
Equities tend to make the best investments over time so I’ll focus on this asset class. Shares of businesses (“stocks”) whether traded on a stock exchange or not, represent fractional ownership of the businesses. Investors sometimes lose track of that simple fact and think of stocks as things that go up and down based on random macro-economic events, geopolitical events, company news, investor phycology, etc. While all of these may be true at one time or another, they neglect the two most important factors: the quality of the underlying business and even more importantly the price/valuation of the business in question. A good way to bring these two important factors into focus would be to think that you owned the entire business, not just a fraction of it, and that you couldn’t sell for a very long time, if ever. With that in mind, good investments will tend to be shares of good businesses bought at a good price. What makes a business a good business? This is not a particularly hard question. Some signs are:
1. The business has a good track record of profitability, for example an average return on equity over the last 5 years of at least 10% per year;
2. Good future prospects: for example, analysts are expecting decent growth over the next 3%-5% years;
3. A strong balance sheet;
4. The business has some ability to control its own destiny, rather than rely on external
factors such as the price of commodities or energy; As far as price is concerned, traditional valuation metrics here work well: low price to book, low price to earnings, low price to sales, low price to cashflow. Additionally, else being equal, given two stocks with the same attributes, a stock with a lower price volatility would be preferable.Stocks that meet the above criteria tend to do really well over time and make great investments. I have made it my aim in my professional life to look for such investments! Examples of good investments like these today would be: Walgreens (WBA) with a 5 year average Return on Equity (ROE) of 16%, price to book (P/B) of 2.26 and price toearnings (P/E) of 10; Arrow Electronics (ARW), Toyota Motors (TM) and Goldman Sachs (GS) with similar attributes.
Is there anything else you would like to add?
I would like to reiterate the most important takeaways for investors: 1. Work with an investment advisor if you do not already have one, research has shown that investors working with an advisor vastly outperform those that do not. 2. Work with a fiduciary if you have enough money to invest such a portfolio manager. A fiduciary has to by law put your interests first ahead of their own or other clients’. 3. Do not let emotions dictate when you invest money, invest money consistently: do not sell after markets are down just because they are down and do not add to investments after they’ve gone up in value because you feel good about them. Using an investment manager with a “value” investment philosophy will go a long way in helping with that.
Website: http://www.lycosasset.com/
US President Donald Trump and Canadian Prime Minister Justin Trudeau were all jokes and smiles for the media as they met at the Group of Seven leaders summit in Quebec on Friday, but neither budged on the serious trade dispute between them.
Lisa Davis LL.B, is the CEO of PearTree Securities. Drawing on her extensive advisory and business experience in the investment industry, Lisa oversees the strategic direction of the firm and is responsible for the legal aspects of the firm’s business. Lisa gained her in-depth knowledge of securities regulation at the Ontario Securities Commission and as General Counsel for a specialized investment fund business. Through private practice, Lisa specialized in corporate and securities law.
Dedicated to the Canadian resource sector, Lisa is a Director of the Prospectors & Developers Association of Canada (PDAC) and co-chairs the Finance & Taxation Committee. Here she tells us all about PearTree Securities.
PearTree Securities Inc. is a subsidiary of PearTree Financial Services Ltd., an exempt market dealer and a specialized fund manager. PearTree created an investment platform for High-Net-Worth Canadian clients to access the tax benefits available in resource exploration and development activities funded through the issuance of flow through shares, for the ultimate purpose of lowering their after tax cost of philanthropy.
A flow through share is a unique Canadian hybrid instrument made up of a common share and a tax benefit available only to the first subscriber. Our platform captures the tax benefits for our clients enabling the sale of the shares stripped of tax value to global equity investors at a discount. Since January 2016, PearTree has deployed more than $500M (CDN) of capital with equity acquired from PearTree by global institutional and strategic investors, at material discounts to market.
Junior resource companies rely heavily on Canada’s flow through share system to raise high risk capital for exploration and development. Flow through shares enable these companies to “renounce” eligible expenses funded with subscribers’ money. These investors then claim these expenses as deductions for tax purposes. However, flow through share tax benefits are available only to Canadian resident investors, a retail market.
PearTree’s platform increases access to capital for junior resource companies by expanding the capital pools available. We secure the highest price possible for the share issuer, with less dilution to existing shareholders.
Our clients are a triumvirate - the resource sector (mining and oil & gas), the banking/brokerage community and the “end buyer” investors, often international. We offer the flexibility of being able to facilitate financings by public or private issuers and can participate in all or part of a flow through financing. PearTree provides additional demand from a larger, more diverse investor base and the potential for higher remuneration on larger financings.
Our format adds no incremental cost to the flow through financing process. We are paid by our clients with no fees charged to the share issuer, bank or broker or the end buyer. Therefore our program doesn’t interfere with any existing fee arrangements.
The PearTree format is well-known in Canada and our goal is to grow market share, retain and grow trusted relationships and expand the market through adoption of this financing platform by international investors. By providing optimized investment access to high-quality Canadian resource stocks, we create new opportunities for investment in the Canadian resource exploration sector. Our format is well poised to expand the universe of capital sources, bringing a unique value proposition directly to a worldwide investment community.
Website: http://peartreesecurities.com
Kicking off July’s Game Changers section is an interview with David Taylor, the Founder, President and CEO of VersaBank. Here he tells us all about the exciting journey that building Canada’s first virtual, branchless bank has been thus far.
You founded VersaBank in 1993 – could you tell us a bit about this 24-year journey and what it has taught you?
It certainly has been an exciting journey, filled with challenges and lessons. I thought that by applying emerging digital technology to banking, I could create a bank without branches with low overheads that could economically serve small niche markets that were not well-served by Canada’s large full-service banks. Considering this ‘branchless model’ didn’t exist at the time, I expected that I would have to educate regulators, the banking industry, customers and partners about how it would work and what the benefits would be.
I think the most discouraging lesson I learned was that banking regulators like the status quo and do not welcome new ideas, even if it means that some Canadians in niche markets would continue to suffer with only limited access to economical banking.
On converse, I think one of the most encouraging lessons I learned was that some large Canadian full-service banks recognized the important role that VersaBank could play in serving niche markets, which are perhaps too small or obscure for them, and have aided VersaBank in fulfilling its mission to serve these markets.
Developing and improving the software and systems to deliver ideally suited products to our niche markets is always an ongoing challenge, but as Terence Mann said in ‘Field of Dreams’, “If you build it he will come”. I found to my great satisfaction that if you truly endeavor to deliver ideally suited products, you will never have to look for customers. They will ‘come’.
Our niche markets are diverse and include: financing hospitals and schools in the remote Canadian arctic, developing customized web-based banking packages for the insolvency industry, providing back-end funding for the Fintech industry and point-of-sale financiers so that people can lease their hot water heaters, have cosmetic surgery, or lease equipment for their retail or business operations.
In many respects, we are the original FinTech, continuing to leverage the power of new technologies to reach our customers and serve their needs, but unlike the FinTechs of today, we’re also a Schedule 1 chartered bank with access to a huge source of funds, through an expansive network of more than 120 financial advisory and brokerage firms who deliver deposits to us digitally.
Finally, we have proven that you don’t need lax credit standards to attract borrowers. Convenient access, reasonably pricing and flexible terms will attract good quality borrowers. VersaBank has had no need for a collections department and has established one of the lowest loan loss histories in the industry. My hope was that by applying new technologies to banking, we could really make a difference to our customers’ lives. I think we have been able to do this and I look forward to continuing to grow our bank and to finding more innovative ways to serve my fellow Canadians.
Could you tell us a bit about your background prior to founding VersaBank?
I was fortunate to be provided with a solid foundation in banking by working at two leading, but very different, banks. I started my banking career at a large full service Canadian bank, the Bank of Montreal, where I discovered a passion for the business. It was a terrific opportunity to learn the basics of banking and I spent eight years there, before moving to Barclays Bank of Canada. In Canada Barclays PLC employed a niche strategy. However, when, amidst a downturn Barclays decided that the country was a non-strategic market, I saw an opportunity to create a Canadian niche bank, which ultimately led to the formation of VersaBank.
What have been your biggest achievements to date?
A couple of things immediately come to mind, which are at opposite ends of the VersaBank journey. They being: getting the digital bank started back in 1993 and successfully completing a very complex amalgamation transaction earlier this year. Both of these achievements were ‘firsts’.
I soon discovered that the banking regulators had no appetite to grant a bank license for a brand new bank with an untested model. So I decided to acquire an existing financial institution and transform it into my new model. I looked for the smallest financial institution I could find and discovered Pacific & Western Trust in Saskatoon, Saskatchewan. I met with the owner - Bill MacNeill at a restaurant and sketched out a plan on how I could transform Pacific & Western Trust on a napkin. When he asked if I was there to buy his trust company, I surprised him by suggesting instead that he ‘buys’ me to run and transform his trust company. I had extensive experience in the industry and was a banker and he was, in fact, a miner. He agreed to my suggestion and that opened the door for me to build Canada’s first virtual, branchless bank.
I also believe that the completion of our amalgamation in January 2017 was a key accomplishment. It was the first successful merger under the Canadian Bank Act and enabled us to significantly simplify the structure of the bank, while also realizing some significant financial benefits. It was a very complex transaction that required approvals from the shareholders of VersaBank, PWC Capital, the regulators and even the Canadian Minister of Finance. We secured an overwhelming approval from shareholders of the two companies and the other required approvals. It was a great accomplishment and was vitally important to the positioning of VersaBank for the future. We’ve created a unique state-of-the-art bank that is profitably providing banking services in niche markets throughout Canada.
Could you please tell us a bit more about the merger with PWC Capital and what it means for the future of VersaBank?
This transaction was historic in the sense that it was the first merger to be successfully completed by a Schedule 1 bank (a domestic bank that accepts deposits) under the Canadian Bank Act. Previous attempts by other banks had been unsuccessful.
While that’s a fun fact, the merger for us was critical to our future success, as it ultimately was about creating a simplified structure for VersaBank and eliminating confusion that existed with its parent company, PWC Capital. Previously, there had been two publicly traded companies, VersaBank and its parent a financial holding company, PWC Capital. This created duplication and PWC Capital had been highly leveraged. In addition, potential investors often were confused about the differences between PWC Capital and the banking entity, Pacific & Western Bank of Canada (now VersaBank). This structure was inefficient and it impeded our ability to grow. We needed to change it.
What emerged out of this complex transaction is a growing, standalone, publicly traded, high-margin, branchless chartered bank that uses its software to reach key niche markets, traditionally underserved by the big Canadian banks. We have enormous growth potential.
You’ve also recently opened a new digital facility, which provides the infrastructure for VersaBank’s branchless model and complements Canada’s FinTech industry – how did the idea about the platform come about? What is your outlook for its future?
Right from the founding of VersaBank, we believed that we would have a significant competitive advantage by designing, developing and maintaining state-of-the-art, custom banking software that helps to address customers’ specific and unique needs, while also minimizing the required investment in physical infrastructure and human resources. We’ve tended to focus on niche markets that are traditionally underserved by Canada’s big banks.
By following this approach, for example, we’ve become the bank of choice for Canada’s national consumer insolvency firms, by creating a banking package ideally tailored specifically to the unique needs of insolvency professionals. It’s highly efficient and very economical both for us and for our clients and has become a win-win for ourselves and our customers.
We recognized that there could be tremendous synergies if we brought some of our in-house teams under one roof, which has led to the establishment of our new digital facility, the VersaBank Innovation Centre of Excellence – the modern, new home of our in-house software development division and its eCommerce division. By bringing them together, we have enabled these teams to work side-by-side to encourage collaboration to improve our existing banking solutions and create new solutions for tomorrow.
The team already is working on some innovative new solutions that likely will hit the market in the next couple of years.
Is there anything else you would like to add?
Arguably, when first conceived, VersaBank was a little ahead of the times, but the times have now caught up and VersaBank is finally able to take full advantage of its systems and model to serve people across Canada without branches. Its products are in high demand and its margins lead the industry without the usual loan losses. Twenty years ago this would have been a dream, but today, the dream has become a reality.
Website: http://www.versabank.com/
The global trend of the past few years towards a "low-rate, broad-base" business tax environment continues, as worldwide economic growth shows no signs of improving and countries introduce new or improved incentives to compete for business investment that will stimulate growth.
Canada isn't immune to global trends, but its tax policy direction is hard to predict at the moment due to the uncertainty around tax policy reforms being considered in the US. This is according to the EY Outlook for global tax policy in 2017, which combines insights and forecasts from EY tax policy professionals in 50 countries worldwide.
"Tax reforms emerging in Europe and the U.S. are putting pressure on governments to find creative ways to compete for business investment," says Fred O'Riordan, EY Canada's National Advisor, Tax Services. "Canada has improved its international tax competitiveness over a number of years, but it's at risk of losing some of this ground, in particular if the United States goes ahead with a tax reform package that includes significant rate reductions."
Competition for investment globally
With the implementation of the G20/Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) recommendations, governments are now more compelled to compete with each other and attract investment through different tax changes. According to EY's report, of the 50 countries surveyed, 30% intend to invest in broader business incentives to stimulate or sustain investment, and 22% plan to introduce more generous research and development (R&D) incentives in 2017.
But Canada is bucking the global trend of investment-stimulating policy. Here, the government has been more focused on the personal income tax side and redistributing the tax burden so the highest income earners bear more and middle income earners bear less.
Tax reform in the United States may impact Canada
An increased likelihood of tax policy reform in the US is strongly influencing both the Canadian and global tax policy outlook. With a Republican President and Republican control of both houses of Congress, the probability of a reform package being implemented is higher than in previous years. As a result, Canada and many other countries are taking a "wait and see" approach until new legislation is adopted in the US before they commit to any reforms themselves.
"A "border tax adjustment mechanism" is currently proposed as part of the tax reform package in the US," says O'Riordan. "Because our two economies are so closely integrated, this could have a significant impact on cross-border trade in both goods and services with our closest neighbour. Any Canadian company doing business with the US definitely ought to pay attention to upcoming changes in the US."
Corporate income tax rates
Of the 50 country respondents, 40 report no change or anticipated change to their national headline corporate income tax (CIT) rate in 2017, but rates continue to decline in a number of jurisdictions, particularly in Europe. Canada is one of only two countries where the rate actually increased (the average combined federal/provincial rate increased marginally -- by 0.2 percentage points). This in itself is unlikely to deter investment, but is still slightly out of step with global peers.
(Source: EY)
Mortgage debt increased by 11%1 to $201,000 last year and more than half (52%) of Canadian mortgage holders lack the financial flexibility to quickly adjust to unexpected costs, per a new Manulife Bank of Canada survey. This despite 78% of Canadians having made debt freedom a top priority.
The problem is most acute among Millennials, who saw their mortgage debt rise more than any other generation. Millennials are also most likely to have difficulty making a mortgage payment in the event of an emergency or if the primary earner in the household were to become unemployed.
"The truth about debt in Canada is that many homeowners are not prepared to adjust to rising interest rates, unforeseen expenses or interruption in their income," says Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada. "However, building flexibility into how they structure their debt can help ease the burden."
Overall, nearly one quarter (24%) of Canadian homeowners reported they have been caught short in paying bills in the last 12 months. The survey also revealed that 70% of mortgage holders are not able to manage a ten% increase in their payments. Half (51%) have $5,000 or less set aside to deal with a financial emergency while one fifth have nothing.
1 The percentage change in average mortgage debt controlled for regional, age and income differences between the samples. However, different research providers were used for each wave of the study which may impact trended results.
Millennials not alone
Despite generally having more equity in their homes, many Baby Boomers face the same challenges as Millennial homeowners. Some 41% of Baby Boomers said that home equity accounted for more than 60% of their household wealth and for one in five (21%) it makes up more than 80%.
This indicates Boomers may need to rely on the sale of their primary residence to fund retirement, since much of their household wealth is wrapped up in home equity. However, more than three quarters (77%) of Baby Boomer respondents want to remain in their current homes when they retire.
"Many Boomers approaching retirement share the same lack of financial flexibility as Millennials," said Lunny. "They want to remain in their current homes, but their home makes up a big part of their net worth. Instead of downsizing, or even selling and renting, homeowners in this situation could consider using a flexible mortgage to access their home equity to supplement their retirement income."
Helped into the housing market
Almost half (45%) of Millennial homeowners reported that they received a financial gift or loan from their family when purchasing their first home. By comparison, just 37% of Generation X and 31% of Baby Boomers received help from family members when they purchased their first home. Conversely, almost two in five (39%) Boomers, many of whom are the parents of Millennials, still have mortgage debt.
The generational increase in new homeowners requiring family support comes despite a long-term trend toward two-income households. The number of Canadian families with two employed parents has doubled in the last 40 years, but housing costs are growing faster than incomes2.
"With higher home prices and larger mortgages, it's more important than ever to find the mortgage that's right for you," says Lunny. "A flexible mortgage that offers the ability to change or skip payments, or even withdraw money if your circumstances change, can help you ride out financial difficulties more easily."
Manulife Bank recommends that Canadians have access to enough money to cover three to six months of expenses.
2 Statistics Canada. May 30th 2016
Quebec homeowners most at risk
In addition, the Manulife Bank survey found that:
- Mortgage holders in Quebec (76%) would have the most difficulty with an increase of 10% to their mortgage payment and are more likely to be impacted should they have a fiscal emergency, as almost 30% have no emergency funds.
- British Columbia had the highest instance of homeowners getting help from family members when they purchased their first home, with almost half (45%) saying they either borrowed or were given money.
- Compared with other regions, homeowners in Manitoba and Saskatchewan (73%) prefer most to own and live in their current home when they retire.
Debt management should begin at an early age
More than two in five (44%) learned "a little" or nothing about debt management from their parents—and were also most likely to have been caught short financially in the past 12 months (28%).
"Kids who learn about money and debt management are more likely to become financially healthy adults," says Lunny. "One of the best lessons we can teach our children is the importance of saving for a rainy day. Being prepared for unexpected expenses is good for our financial health, good for our mental health and gives us the freedom and confidence to deal with the unexpected expenses and opportunities that come our way."
(Source: Manulife Bank)
