The role of a financial advisor

Differentiating from robots and algorithms

In this era of robo-advisors and artificial intelligence, it’s easy to believe that the expert, professional flesh-and-blood financial advisor has gone the way of the horse and buggy. It’s even easier to believe if you buy into the aggressive marketing by online portfolio management services that implies a human financial advisor basically sits back, collects fees, and buys a new luxury car every year. Of course, this grossly misrepresents what real advisors (as opposed to algorithms) actually do for their clients. So here’s a quick refresher on what to expect from a “real” financial advisor. READ MORE

DIY dangers!

When your investments take control of you

There’s nothing quite like the thrill of managing your own investments. That is, until things go south and you wonder whatever possessed you to buy that two-times daily bull crude oil ETF! Then there’s all that paperwork to contend with (what the heck is a “T3 – Statement of Trust Income Allocations and Designations”?) When should you sell to take a tax loss? And can you apply it against gains? Those brokerage fees that get into triple digits can really give you that sinking feeling at year-end (are they deductible or not?). Take heart. You’re not doing anything wrong. But you may have fallen into the trap that so many do-it-yourself investors do. You’ve let your investments start controlling you instead of the other way around. READ MORE

Fixed-income investing in a rising rate environment

Carefully selected bond funds as part of a diversified asset mix

If you haven’t checked your portfolio for a while, you may have noticed that the performance of your bond mutual funds and ETFs has been lagging a bit. And you may be thinking of selling or switching. But before you do, think about how bonds are priced and the purpose they serve in a portfolio. While bonds are the classic defensive investment, and should generally be a part of a well-diversified portfolio as an asset class that is uncorrelated to equities, their prices react directly to the prevailing level of interest rates. READ MORE

The right financial advice doesn’t cost, it pays

Choosing the best financial advisory team

Once you’re established in your profession or career, and you’re accumulating a sizeable nest-egg, getting financial advice from your second cousin or the bank teller just won’t do. You need to get some professional money advice. But where to begin? There seem to be so many people offering advice, and you often read of people losing their investments through fraud or incompetence. Begin by asking yourself what you think you might need a financial advisor to do. Very likely, you’ll be running across some of these experts. Here’s a look at what they all do. READ MORE

Compare apples to apples when benchmarking performance

How to compare your portfolio with an index

A benchmark is a market yardstick independent of your portfolio against which your performance can be evaluated. It’s usually an index that tracks the performance of the broader market, like the S&P/TSX Composite Index or the Dow Jones Industrial Average, and so on. But with the growth of financial products over the past 20 years or so, especially exchange-traded funds (ETFs), indexes have sprouted like mushrooms, tracking ever-finer slices of this market or that. Many indexes have been created solely to provide a benchmark for just one ETF or one investment fund or pool and are therefore virtually useless as a gauge of broader market performance. READ MORE

Sell in May and go away? Not so fast!

Seasonal patterns can be misleading

“Sell in May, go away, and don’t come back till Labour Day.” With the return of volatility earlier this year after many years of an uninterrupted bull market, many analysts are warning that the stock market is due for a correction, and that now is the best time to sell stocks – before the summer doldrums set in. The market’s crystal ball gazers claim to have a window into the future. In fact, no one does, and acting on what might happen can be decidedly bad for your financial health. READ MORE

Avoid Market Excitement Syndrome!

Stock markets are setting records daily. Ignore it!

“The market will fluctuate.” That old bit of market wisdom is ascribed to Gilded Age financier J.P. Morgan, and is as true today as it was a hundred years ago. The primal emotions of fear and greed are ultimately at the bottom of all market movement, and they take turns confounding market watchers, analysts, and investors. Trouble is, no one ever knows when there will be a market top (or bottom). READ MORE

Is it time to look for active bond management?

Bond ETFs retreat as rates edge up

You might have noticed that the shorter-term returns of the broader index-tracking bond ETFs, such as the iShares Core Canadian Universe Bond Index ETF (TSX: XBB), have been sliding recently. Is it time to switch out of passive, index-tracking bond funds, and look for something more actively managed? READ MORE

How to assemble a financial advisory team

Professionals bring unique skills to the table

It seems like there are “financial advisors” around every corner. Trouble is, they all seem to offer different services and have different qualifications. And they all charge different fees. Do you really need a lawyer or an accountant to set up a portfolio? How do you know you’re getting the best bang for your buck? Here’s a guide to the various professionals who might offer financial advice, and how they can work for you. READ MORE

The lure of ‘haven’ assets

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The danger of investing by headline

We’re once again seeing the geopolitical situation heating up – North Korea, U.K. elections, French elections, Trump’s trade threats, and so on. Is it time to sell stocks and switch to gold and bonds? How did that strategy work out last time? READ MORE

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