PREPARING FOR THE UNEXPECTED
Part of the work we do is to help clients be prepared for unanticipated events that can have dire financial and emotional consequences if planning has not been done.
This planning includes making sure beneficiary designation are correct, setting up joint ownership and/or using segregated funds for nonregistered plans where appropriate, making sure Wills are up to date and correctly worded, using trusts and various other planning strategies that can be really helpful when an investor becomes disabled or dies.
This can save a lot of headaches for those who have to deal with the situation and it can ensure that the person’s wishes are carried out as intended. It often avoids or minimizes squabbles among family members and it can significantly reduce expenses associated with handling of a loved one’s financial affairs. This is a conversation that we can have with you for no additional cost that could save you or someone you love a lot of extra grief during a difficult time. Please give us a call if you would like to discuss how to plan for the unexpected.
The Stock Market
A stock’s price is decided by the free market, hence the name. In developed markets like USA large cap, there are hundreds of highly educated analysts studying each company every day deciding on what the companies are worth. This leads to what we call a highly efficient market, because all the stocks are priced fairly for what they are.
Fund managers try to outperform by picking stocks where the value or growth potential outweighs the market price, which rarely happens in efficient markets because prices reflect the new value as soon as any news is released. All of this to say, it is extremely difficult to outperform an efficient market net of fees, especially an efficient bull market.
What does this mean for us? We’d like to start adding some passive strategies to the portfolios, however, global GDP growth is slowing, we’re evidently in late market cycle and it’s being further extended and manipulated by the US federal reserve (likely to serve a certain 2020 political campaign.)
We feel it is most prudent to wait until mid-market cycle again before switching funds to passive strategies. This is because mid-cycle is the most difficult time for active management to outperform. In the meantime, we continue to track the most cost-effective indices and will recommend the switch when it is most advantageous to do so.
RESPONSIBLE INVESTING
Now that we have a membership in the Responsible Investing Association, riacanada.ca, we will be paying more attention to options for socially responsible investments (SRI) and environmental, social and governance(ESG). Statistics suggest that responsible investing does not necessarily making big compromises on performance.
Companies that are operating pro-actively to work toward reducing climate change, water scarcity, women in leadership roles, fairness in compensation and reasonable rather than excessive executive remuneration, community relations and supply chain. Responsible investing is a growing trend in Canada and assets being managed using these strategies is increasing dramatically, (41.6% from Jan 1 2015 to Dec 31, 2017).
One of the benefits of investing in SRI funds is that the fund companies, as important shareholders, have influence over the corporations and how they operate. This can influence decisions being made and policies being implemented at the executive levels. RI can also improve risk management by reducing exposure to certain risks more inherent in companies not adopting socially and environmentally responsible policies. For clients interested in SRI, it is possible to allocate a portion of a portfolio to this type of investment while still holding onto other investments as well.
My experience is that we rarely see any villain companies in the funds we use and just because an investment is not specifically SRI does not necessarily mean it’s holdings are not companies that are socially responsible. Being a member now of the RIA, we will be paying more attention to these issues.
Office News
As many of you know, Adeline has officially retired as of August 29th 2019 after 14 years of serving as Anne Marie’s assistant. If you wish to send her a note, you can do so to her same e-mail (admin@businessplannersfinancial.com) and we’ll be sure to get it to her. We are very grateful for her great contribution to the practice over the years.
Our Schedule: Hans and Anne Marie will be attending an educational conference on November 6 to 8. Anne Marie will be working on Quadra the week of the third full week of each month.
QUOTES
They mistook leverage for genius
I am easily satisfied by the very best.
Wealth consists not in having great possessions, but in having few wants.
DISCLAIMER: This newsletter contains general information only and is intended for informational and educational purposes provided to the clients of Anne Marie Dryden & Hans Bischoff. While information contained in this newsletter is believed to be reliable and accurate at the time of printing, Anne Marie Dryden & Hans Bischoff do not guarantee, represent or warrant that the information contained in this newsletter is accurate, complete, reliable, verified or error-free. This newsletter should not be taken or relied upon as providing legal, accounting or tax advice. You should obtain your own personal and independent professional advice, from your lawyer and/or accountant, to take into account your particular circumstances. Commissions, trailing commissions, management fees and expenses all may be associated with ETF & mutual fund investments. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. ETF’s & Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the prospectus before investing. The views expressed in this message are not necessarily the views of Investia Financial. Exchange traded funds, mutual funds and exempt market products are offered through Investia Financial Services Inc.
