Category: Blog

Good goals: they aren’t just for clients!

It is not a surprise that when January is mentioned, “goal setting” is often also used in the same sentence. Yes, it seems like a cliché to set goals as the new year rolls around, but there is something to be said for starting a new year with a solid new plan.

As advisors, we are often setting goals with our clients. We use our expertise to assist them in creating a well thought out plan that will help them achieve success. When you are so busy helping others with their goals, it is undoubtedly difficult to take a step back and set some of your own.

We know people who give advice for a living are not usually the best at taking it, which is why we created this short list of tips to set good, attainable goals this year to improve yourself and your business in 2018.

Tip #1

Your business goals need to align with your personal goals. This means that your goals for your business must make sense for where you are in your personal life. For example, if you are at the retirement stage of life, your goals should reflect this and be based upon the smooth transition out of your business. In contrast, if you are new to the business and just starting out, your goals need to be challenging but not out of the realm of possibility.

Tip #2

Let your team know about your goals. Make communicating to the team a priority. This not only helps keep you accountable, but it also inspires those around you to do the same. Keeping everyone motivated is key to any businesses success and a great way to do this is to encourage those around you by sharing your own plans for improvement.

Tip #3

Good goals are widespread; they do not just focus on one area. It can be difficult for someone with an entrepreneurial inclined mind to not limit your goal setting to numbers; trying to achieve a certain volume of sales. This would be doing yourself and your business a disservice. Yes, they are important, but it is also important to improve other areas of your business, such as your communication, administration and work environment.

Tip #4

Review your goals often. It can be easy, as work piles up and the months go by, for the goals you set in January to become forgotten. Setting time aside each month can be difficult, but it is so important in ensuring you are successful. It is not enough to set goals and forget about them. Active goal management should be part of your agenda to consistently review your progress and set you up for attainability.

Instead of letting another goal-less year go by, cease your opportunity this January to set yourself up for success. Being proactive in this endeavour improves yourself and your practice. Good luck and all the best in the year to come!

Understanding tax loss harvesting: tips and tricks

We are reaching the end of 2017 and for retail investors that also marks the end of another tax year. As we look forward to 2018, we prepare for tax time and dread it as we may, understanding the options is the best way to ensure investors are minimizing their taxes owing.

Tax loss harvesting

One tactic investors hear about during this time of year is tax loss harvesting. Tax loss harvesting is a method by which an investor purposely incurs capital losses to offset the taxes they would otherwise pay on capital gains. Essentially, the investor makes the best of a bad situation.

The process involves:

  1. Selling shares on which a loss has been incurred.
  2. Potentially reinvesting, if there is faith in that sector (or in a similar sector, but not too related as to not drastically alter their market exposure).  
  3. Claim capital losses incurred to offset capital gains on the tax return.

There are some important considerations to keep in mind prior to implementing this strategy:

Purchase a similar security: If an investor feels that the investment in which there has been a loss still has potential for growth in the future, it would be wise to reinvest in a similar security whose performance is close to the stock being sold.

Utilize tax loss harvesting as a secondary option: A primary investment plan should always take precedence.

Use capital losses for past and future returns: Losses must first be applied to 2017 taxes, but if the amount allows for it, they can also be applied to the previous three returns, or carried forward indefinitely.

Do not use this method for registered accounts: Successful tax loss harvesting can only be performed in non-registered accounts and may not be used for investments within a TFSA or RRSP.

Ensure this is not a superficial loss: CRA rules prohibit the rebuying of the same shares that were sold off to incur a capital loss right away. An investor must wait 30 days after selling a stock before repurchasing. This includes purchases made by a spouse and purchases made from different accounts owned by the investor.

Start early: Official transfer of shares occurs approximately three days after the trade is executed. Also, don’t forget that there are several statutory holidays near the end of December that impact trading dates. If using this tactic, it is best to do so before December 20.

Triggering losses to decrease capital gains taxes could be the right approach for you this tax season. Determining if this method fits your needs is one way we can help.

Change is in the air: 1 year anniversary of Pay-for-performance

We can’t believe it’s been a year since we launched Canada’s first pay-for-performance investment model. We listened to investors over the years and the message was clear: Canadians are tired of paying high investment costs that aren’t tied to results. So we responded to the overwhelming overpriced asset management landscape with our Transcend platform.

What is it?  Watch our video here.

Investors pay an extremely low base fee of 0.25% (this covers admin costs for various funds).  From there, if a fund performs better than the benchmark, a performance fee equal to 20% of the fund’s return above the benchmark is applied.  You pay one of the lowest fees on the market and nothing more until you see results.

Where is it going?

We’re proud to announce that on September 30 Transcend is launching a fixed income fund!

The past year has been a whirlwind and the response has been great.  We’re now moving into the fixed income space with the Provisus Multi-Strategy High Yield Fixed Income Fund. Continuing the belief that investors should only pay a nominal amount unless performance results dictate otherwise- our new fund will open up more earning possibilities for investors and will charge the same low pay-for-performance fee.

Join the movement
Join the movement of empowered investors who are demanding transparency and advisors striving for freedom and independence.

Don’t just save – secure your retirement

Retirement savings. The two dreaded words we’re all forced to embrace. No matter where you turn, another article promising the best retirement savings advice stares back at you. Do I invest? How much risk do I take? What if I want to pass on my money? There’s no cookie cutter formula out there that will apply to you, your neighbour, and your boss simultaneously. All you need to know when (and if!) that last day of work rolls around, is that your money will last- no matter what your golden days look like. Whether you plan to live it up, or lay low- remember the 4 L’s:

Lifestyle & Longevity
Before starting off asking how much you need to save, what are you even saving for? Step 1 is to think of your lifestyle goals for your post-work years. Do you plan to travel the world? Would you rather lay low and live simply? All of this, in conjunction with your current resources, has to be considered to determined how long your money will last and where it can take you. Step 2 is to see an advisor so they can help manage the run-up phase (accumulation) and the de-accumulation phase of your money’s life cycle.

Legacy Goals
If you want your money to last beyond your lifetime, typical low-risk strategy doesn’t apply. You may
look to adapt more aggressive investments that carry higher risk, yet likely greater returns.
With this goal in mind, you have to stop thinking of the money as yours; think of it as theirs and what
you could be doing to maximize it for their future benefit.

Liquidity Goals
Retirement is like a big vacation; you can never know what to fully expect. Liquidity goals are about
maintaining additional assets that can be tapped into quickly no matter what the situation, whether it
be supporting family members, major repairs or unexpected illness. Keeping a nest egg of easy cash is
always a good idea, but there’s also clever ways to create liquidity from “non-liquid” items. For example,
the laddering strategy involves purchasing GICs varying in maturity, which gives you staggered access to
your money every few years.

Do you have an advisor you trust? Learn how to choose the right one.

How to travel often & maximize your investments

men in suit in front of airplane

We’re finally in travel season.

The last thing you want now amongst your wanderlust is a hard hit to your wallet. But a simple trip to the doctor’s office in a foreign country can eat away multiple paycheques.

Whether you’re an ex-pat for work or a perpetual avid lover of travel (and even if you’re a snowbird), there’s small steps you can take to always ensure your money is always traveling with you…

If you’re an expat

Always file a report with the government. In other words, just let them know. It’s important so they can establish a timeline of your departure. File the report, avoid future fines. Reason enough.

What to do while you’re away:
⦁ Open bank accounts
⦁ Keep your investments in those accounts

What to remember:
⦁ If you wire in more than $10,000, banks are legally required to disclose the info to the CRA
⦁ You’re required to report assets in excess of $100,000 on your income tax return (you don’t get taxed, they just want to be aware).
⦁ Let them know you’ve returned: Seems simple, but forgetting to do this means you’re not considered Canadian and unable to contribute to certain accounts, like a TFSA. And if you do, contribute without notifying, those funds will meet an unwelcoming fine.

If you’re an avid traveler

⦁ Before you go, look at the banking relationships between your native country and the one you’re traveling to. This will help ensure you don’t run into issues with ATMs and withdrawing funds from your account(s).
⦁ Always have US dollars with you – it’s one of the most readily transferable currencies
⦁ Keep half your money denominated in local currency
⦁ Buy local currency at a favourable rate as much as you can from your local bank
⦁ Have expense prepaid or predebited so you don’t have to worry
⦁ Arrange money to be deposited into a US dollars account from your investment portfolio
⦁ This allows you to take debit cards in US currency

This strategy is a lot easier on your money given the current exchange rate. If you can minimize exchange costs, you’re ahead of the game. Everytime you exchange you can lose 2-5% of your dollar; that adds up to a big loss over time. Example: Exchange $5000 at a time and say hello to a 5% hit on your debit or credit card.

If you’re a snowbird

Most people who travel often, have a balanced portfolio already on auto-pilot. If this is you and your investments aren’t steady, stop what you’re doing and consult a professional first. If you’re in the clear there, you’re likely set up for a vacation that never worries about nickels & pennies.

Your biggest concern should be your health insurance. Health care in another country can be completely devastating to your wallet.

Make sure to:

Shop around
Compare various health insurance options to see which fits best for your lifestyle

Find the best policy
Once you’re happy with an option, make a purchase as soon as possible and remember to keep all proofs of purchase + always keep a copy on you at all times while traveling.

Understand the country where you’re headed
Do some research and understand the basics around health care and legalities in the country you’re visiting

Start off healthy
In case of any accident or illness while traveling, starting off with a clean bill of health is one of your best lines of defense to staying healthy and wealthy.

Meet the team: Our President

Chris is Transcend’s President and the heart and soul behind the company. To say he’s passionate about revolutionizing fees in the investment industry is a gross understatement. “[I] believe that linking investment management fees to the quality of performance achieved is a good way to align our clients’ interests with ours, ensuring that we are successful when our clients are successful”. He’s the kind of guy you always want on your team. Read on for more about Chris:

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What is your favourite investment strategy?

You have to look at the big picture of your life. It depends where you are, what you’re trying to accomplish and what your individual goals are. A square peg in a round hole will never work.

If you had to choose, what is your one piece of personal finance advice or your “motto”?

I like to say, “a rut is just a shallow grave with both ends kicked out”

No matter what kind of financial rut you’re in…if your investment portfolio is a mess and doing nothing for you, there’s always strategy to make an easy fix and a positive change.

What is the best part of being on the Transcend team?

The diversity of what we offer, seeing and learning new things constantly, and never experiencing the same thing day in and day out. The thought-provoking opportunities I face every day keeps it interesting.

What’s your next big finance goal?

Honestly, just to continue to build on what I’ve already accomplished. Eventually it adds up!

I’m more about current consumption than far-off dreaming. It’s not about where you’re going but how you get there.

 

If I were a client, why would I want to work with you?

Because I’m exceptionally witty.

But seriously, were a very personable, service-oriented firm and we’re not full of ourselves. We always deliver on what we say we’re going to do.

Do you consider yourself conservative or a risk-taker?

You have to take risks occasionally, but always keep one foot close to the sidelines.

 

At what point would you tell someone they need professional finance help?

The best time is when you’re thinking about making a change

Going from debt-mode to accumulation mode, single person to a couple or family? Seek the help of an advisor.

 

 In your opinion, what’s the biggest financial fail someone can make?

Relying on rumours and peoples suggestions (hot stocks, anyone?)

Don’t be a trend-follower – there’s no quick fix. If you want a quick fix, buy a lottery ticket or go to the casino.

 

What were some early leadership lessons for you?

When I had my first job, I was always dumbfounded by how little I actually had in the bank.

Spending and consumption seemed important until I realized it wouldn’t get me anywhere. Everything changed when I created a temporary budget. It might seem a little boring, but it’s pay me now or pay me later.

 

If you could have lunch with any three people, living or dead, who would they be?

The French philosopher Voltaire, the Hunchback of Notre Dame and Walt Disney.

 

Meet the team: Our Managing Director

Ryan is our client expert, dealing with customers and investors on a daily basis, helping them reach their financial goals. He’s not afraid to roll up his sleeves and get down to business. Despite his busy schedule, he’s always smiling and, more importantly, making others smile. Read on for more about Ryan.

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What is your favourite investment strategy?

My strategy involves staying patient, sticking to my financial goals, and staying the course even when times are turbulent.  Slow and steady wins the race.  Also, consistent monthly contributions.

If you had to choose, what is your one piece of personal finance advice or your “motto”?

Invest for success!  Or be debt free.  

What is the best part of being on the Transcend team?  

Being a part of a team that is revolutionizing the Canadian investment industry by creating the first Pay-for-Performance™ fee structure.  Literally the most client-friendly fee structure in Canada!

What is your biggest personal finance goal for yourself?

Saving for a comfortable retirement and the ability to provide for my family.  

If I were a client, why would I want to work with you?

Fees are based more on merit and the performance of our portfolio managers rather than fees based solely on asset size.  I’m always looking out for the best interests of our clients.  Also, we’re very nice!

Do you consider yourself conservative or a risk-taker?
In order to produce better than average returns we must be willing to absorb additional risk.  While I’m not a conservative investor, I only take calculated risks using plain vanilla strategies and avoiding sectors and products I don’t fully understand.  

At what point would you tell someone they need professional finance help?

When I meet them.  No matter who you are, we can all use help.  Be it a coach, guide, or mentor.  Different ideas and perspectives help us become more aware!

In your opinion, what’s the biggest financial fail someone can make?

The biggest financial fail is someone who believes that they can do just fine without some type of plan.  The second biggest failure is someone who doesn’t stick to the plan once it’s created.  

What were some early leadership lessons for you?

You have better production and results when you work as a team.

If you could have lunch with any three people, living or dead, who would they be?

Abraham Lincoln, Winston Churchill, and Rodney Dangerfield  

Is Real Estate Worth The Investment?

house key

Real estate or stocks – which can make you richer?

Asking this is like asking whether a Bentley or Benz is a better option for you. There isn’t one correct answer, because it comes down to your personality, preference and style. But with Toronto’s electric housing market, this decision may be a cornerstone for many in upcoming years. The financial benefit depends entirely on a number of factors. What you can do is consider all angles:

REAL ESTATE

STOCKS

PROS

  • Great place to live and raise a family
  • Has appreciated in price over the last 5 years
  • Real estate is often a more comfortable invest for populations who grew up exposed to it from parents
  • Investing in real estate means investing in something tangible
  • Diversification in real estate requires a substantial amount of up-front money
  • Your ownership of partial businesses through stocks allows you to benefit from company results without putting in much work
  • High-quality stocks increase their profits and cash dividends year after year (this means that every year that passes, you’ll receive bigger checks in the mail as the company’s earnings grows)
  • It’s much easier to diversify when you invest in stocks than when you invest in real estate. With some mutual funds, you can invest as little as $100 per month
  • Stocks are much more liquid than real estate investments. During regular market hours, you can sell your entire position, many times, in a matter of seconds.
  • Borrowing against stocks is a much easier process than real estate. If you are approved for margin borrowing, it’s as simple as writing a check against your account

CONS

  • Property taxes, furnishings, maintenance, improvements, insurance and mortgage interest all affect how much money is being made
  • Compared to stocks, investing in real estate takes many more management hours and hands-on work
  • Real estate liquidity can be very difficult- you may have to list it for months before finding a buyer
  • Recency and familial bias make buying a house feel like the most ‘comfortable’ option for young investors
  • It’s unlikely that the housing market will maintain its momentum, meaning stocks could add to their advantage in the upcoming years
  • In order to avoid being defrauded, one must ensure they trust their management and auditors
  • Despite their long-term benefit, most investors are too emotional to benefit (i.e. folding or selling everything during a crash, instead of staying calm)
  • Your stock prices may experience extreme fluctuations in the short-term

 

Sources:

http://bit.ly/2lGAHni

https://tgam.ca/1Ocw00v

The Highs and Lows of Do-It-Yourself Investing

In the age we’re in now, when you can DIY everything from your bathroom to your finances, DIY investing is on the rise. Like anything, without professional guidance, investing and self-managing wealth can be quite risky, especially when your future is at stake. Do-it-yourself mistakes are all too common, so we sat down with Transcend CEO Chris Ambridge to learn the pros and pitfalls of this financial trend. Keep reading to find out the red flags to independent investing:

 

1. What are some of the signs your DIY investing needs professional support?

If investments start to lose steam and performance starts to lag relative to the benchmark, that’s a big red flag. Also, not maximizing tax advantages and carrying investments below $10 in share and stock price (i.e. risky penny stocks) are easy mistakes for a DIY investor to make.

 

2. What are things a DIY investor cannot typically do on his/her own?

A DIY investor can often lack perspective in managing their financial choices, whereas having a professional around helps with adding diversification and objectivity. People fall in love with things they buy, but being objective is key in realizing if value becomes impaired. Optimization for tax advantages, including tax codes or changes in regulation, is a huge opportunity that is often missed, causing DIY investors financial losses. It’s also common for self-investors to be victim to narrow focus, with strong investing in one particular area.  Without a professional, investors often lack the time, and tools, needed to really maximize investments. It’s human nature to remember big successes and losses, but not the “in-betweens” that can make you big money in the long run.

 

3. What does a DIY investor often miss out on, beyond the obvious?

Independent investors often have their valuation targets wrongly based on rumours and here say, rather than facts. They also typically underperform cash because they try to time the market and are notorious for selling out and not getting back in. The biggest miss is having someone professional to bounce ideas off of. Having a professional to provide objective advice on current goals for different life stages is extremely beneficial for maximizing investments and growing wealth.

 

4. What are the different types of DIY investors?

There are many different styles of independent DIY investors, and understanding which you relate to may help you to understand your financial flaws with more objectivity.

 

  • Day traders (full time job trying to make money)
  • Frugal financers (refuse to pay fees and often forego performance as a cost)
  • Inheritors (Inherit stocks and investments and they sit there with no action)
  • Social investors (hear a rumour, buy a stock without any real strategy)
  • Learners (investing learned by trial and error)

 

5. Do you have to choose between DIY investing and having a professional advisor?

If you can’t drop your love for DIY, no need to worry. Some independent advising with a hired advisor can work quite well. Many people have successful finances this way, but the key is to keep your advisor in the know. The way to make this work is to invest with your own money, but use a financial planner to structure it correctly and stay on target for long-term goals.

The Drawbacks of Mutual Funds

The world’s first mutual fund can be dated back to 1774. These investments were backed by income from plantations and were an early version of today’s mortgage-backed securities. A lot has changed since then, and we’re faced with tons of choices of where to invest our money. Mutual funds might be ‘safe’, but not always the best option to grow your finances. Make sure you understand their serious drawbacks:

 

1. FEES

Like any investment, it’s crucial to be aware of the fees you’re paying. Most mutual funds charge management and operating fees, which pay for the fund’s management expenses. In addition, some charge sales commissions and redemption fees. Some funds buying and trading so often, transaction costs can add up significantly.

 

2. TRADING

Although mutual funds are highly liquid, most cannot be bought or sold in the middle of the trading day. You can only buy and sell them at the end of the day after they have been calculated at the current value of their holdings. Mutual fund managers trade frequently, as they respond to redemption and investment requirements of the fund they’re managing. What does this mean? Higher turnover generating higher tax liabilities and increased costs.

 

3. DIRECT OWNERSHIP

Managers of mutual funds make all of the decisions about when and which securities to buy and sell.  When it comes to building wealth, this is not advantageous as it isn’t personalized for your specific needs. For example, the tax consequences of a decision by the manager to buy or sell an asset at a certain time might not be optimal for you.

 

4. PERFORMANCE

Returns on a mutual fund are not guaranteed. On average, 75% of all mutual funds fail to beat major market indexes. When deciding on which fund to buy,  research the risks involved and make sure to review past performance.
What’s our opinion?  We suggest our clients use separately managed accounts. With a SMA, you have access to some of the best money managers in the industry with proven track records for providing reliable risk-adjusted returns. You own the individual securities directly and fees are deductible on your tax return, further reducing cost. All fees are fully disclosed and the relationship between you and your investment advisor is open and all about your needs and priorities for timing. Before you invest, do your homework and look at the fund’s history of gross performance– the facts should speak for themselves.