https://www.methorstandassociates.ca/

Methorst & Associates - IG Private Wealth Management, 4515 Central Boulevard, Metrotower 3, 8th Floor, Burnaby, BC (2026)

05/16/2024

The lesson of Loki? Trade less

Going back as far as the Norse gods, the market has tricked investors into making rash decisions.

Loki is notoriously malevolent, and no doubt would love to take the wealth of retail investors and set it on fire, if he could. But when faced with such a — shall we say binding? — constraint, what damage could he really do?

One possible explanation for this behaviour is that investors are deeply influenced by what they’ve seen the stock market doing across their lives so far. The economists Ulrike Malmendier and Stefan Nagel have found that the lower the returns investors have personally witnessed, the less they are likely to put in the stock market. This means that bear markets scare investors away from their biggest buying opportunities.

Morningstar found that the gap between investment and investor returns is largest for more specialist investments such as sector equity funds or non-traditional equity funds. The gap is smaller for plain vanilla equity and smaller still for allocation funds, which hold a blend of stocks and bonds and automate away investor choices. That suggests that the investors who are trying to be clever are the most likely to fall short, while those who make the fewest possible decisions will lose out by the smallest amount.

05/14/2024

How to avoid mistakes when making a will - and other estate planning tips

Believing you don’t need a will or estate plan

Many people assume that you need to be extremely wealthy to have a will or an estate plan. Firstly, once you consider your home and all the belongings you own, along with any investments or savings you have, you could realize that you have more than you thought. You need to ensure that everything is distributed according to your wishes. Without a will there could be family disputes or litigation when you’re gone.

Secondly, if you don’t make a will or set up powers of attorney (for financial and health care decisions), this could cause a lot of added stress and expense to your family members further down the line. It could also mean that, if you’re no longer able to make decisions for yourself, you won’t have a say in who makes those decisions on your behalf.

Believing you don’t need a will or estate plan

Many people assume that you need to be extremely wealthy to have a will or an estate plan. Firstly, once you consider your home and all the belongings you own, along with any investments or savings you have, you could realize that you have more than you thought. You need to ensure that everything is distributed according to your wishes. Without a will there could be family disputes or litigation when you’re gone.

Secondly, if you don’t make a will or set up powers of attorney (for financial and health care decisions), this could cause a lot of added stress and expense to your family members further down the line. It could also mean that, if you’re no longer able to make decisions for yourself, you won’t have a say in who makes those decisions on your behalf.

02/06/2024

Should you invest for retirement or pay off your mortgage?

The advantages of paying down your mortgage
A key advantage is paying less in interest, which could save you thousands of dollars. You’ll also free up future income that would otherwise go towards paying the mortgage, which could be particularly important for investors heading into retirement.

Once you’ve paid off your mortgage, you’ll have more money available to invest, which can very quickly boost your overall savings, plus you’ll have the peace of mind of knowing you fully own your home.

Also, building up equity in your home can give you quick access to more borrowing options, such as a low-interest home equity line of credit.

The downsides of paying down your mortgage
You’ll miss out on investment opportunities that could make you considerably better off: over the last couple of decades (when mortgage rates were typically considerably lower than returns from investments), it usually made financial sense to invest rather than pay off your mortgage.

By focusing on your home, you limit the diversification of your assets, meaning you could miss out on other opportunities. And, if the housing market were to fall, a large part of your assets could lose value for a considerable period of time.

You don’t have much liquidity when your main investment is your home: it can take a long time to sell it if you suddenly need access to a large amount of cash. However, having a home equity line of credit can reduce some of these concerns.

12/08/2023

As Airbnb falters, hostels seek to compete

Once a niche market for frugal, globetrotting young people, hostels are becoming a popular form of alternative lodging. No longer just rows of bunk beds, some hostels now offer private rooms and amenities like rooftop pools and spas.

Take the Selina Boquete hostel in Panama. Guests are served an evening welcome drink. While there’s a shared option called a community room, the hostel offers hotel-style private rooms and the unique option of a pod-style room made from an “upcycled” concrete cylinder. Some nights, guests are treated to live music.

She says the private room she booked at the hostel was $50 to $100 cheaper per night than what she would have paid for an Airbnb nearby.

Hostels are usually cheaper than hotels. In notoriously pricey San Francisco, for example, the average daily hotel room rate in 2022 was $231, according to the San Francisco Travel Association, which is forecasting an even higher average of $246 for 2023. However, at the HI San Francisco Fisherman’s Wharf Hostel, you can find a bed in a shared room for less than $30 or a private room for less than $100 on some nights. That rate includes Wi-Fi, breakfast and luggage storage.

12/04/2023

What It Takes to Be in the One Percent—of Taylor Swift Fans

Spotify announced Wednesday that fans listened to her songs more than 26.1 billion times. The Wrapped results also told Swifties how they ranked among their peers.

This year, it was harder than ever for individuals to crack the top 1% of Taylor Swift listeners. Some woke with ricocheting tears, discovering they fell to the top 2% or 3%. A handful found themselves in the elite top 0.001%.

Our analysis showed that you would have needed over 6,000 minutes of listening to get into the top 1%. Nearly 10,000 minutes and you’d be in the top 0.5%.

11/23/2023

Until 2005, Canadians were severely restricted in how much of their RRSP portfolio (or registered pension plan) they could hold in foreign securities. Those restrictions no longer exist, but the question remains of just how important it is to diversify globally.

We will consider only equities with the returns measured in Canadian dollars. The three options are (a) U.S. equities (the S&P 500), (b) Canadian equities (the S&P/TSX) and (c) the World, as represented by investing a third in U.S. equities, a third in Canadian equities and the balance in the MSCI World Index, excluding the U.S. I’ve chosen 10-year periods because retirees cannot afford to wait 20 years – or longer – to get satisfactory results.

If one wanted consistently mediocre results, Canada would seem to be the place to invest, as 10-year average annual returns were never worse than 5 percent. The returns in the U.S. have been spectacular with the glaring exception of the 2000s, where U.S. equity returns suffered the triple whammy of the bursting of the dot-com bubble, the rise in the Canadian dollar and the Great Recession of 2008-09. Diversifying around the world has provided decent returns for the most part.

As for the future, there are two big questions from a Canadian perspective. First, will the Canadian dollar strengthen? Second, how big will AI impact returns (and which region will benefit the most)? In the absence of clear-cut answers, diversification may be the best course.

10/28/2023

Why Olive Oil Is So Expensive Right Now?

Like oil from the ground, olive oil is a globally traded commodity, with events in one part of the world reverberating far away. Drought in Spain, the world’s largest olive oil producer, has devastated recent harvests, and bad weather has hit olive crops in other major growers like Italy, Greece and Portugal. The United States imports almost all of the olive oil it consumes, primarily from Spain and Italy.

The result is prices climbing to dizzying heights, well over $9,000 per metric ton, which filters through to pricier bottles of the oil that have become a fixture in many American households, used for cooking and drizzling on foods associated with a healthy Mediterranean diet. A 750-millileter bottle of Bertolli’s extra virgin olive oil that cost around $9 at the grocery store last October is around $11 today, a nearly 22 percent increase, according to IRI, a data provider.

Southern Europe, which accounts for more than half of global olive oil production, is to olive oil what the Middle East is to crude oil. And things are not looking good for the upcoming European harvest, which began this month: The European Commission recently said olive oil production in Spain, Italy and other European Union countries would recover only slightly from last season’s 40 percent decline, limiting supplies and pushing up prices.

10/24/2023

Canada is beating the U.S. into a recession. Here’s how investors should position for it

Canada is close to recession — if one has not begun already. Potent effects of higher interest rates are moving through Canada’s overextended real estate sector and leveraged financial system. Combined with high gearing to global demand and an increasingly fragile consumer, the Canadian economy is cooling off much faster than the neighbor it so often lags.

The question now becomes how deep and damaging the recession will be. On the verge of a forceful deleveraging process, the Bank of Canada risks staying too tight for too long to pursue its inflation mandate, potentially turning a recession into a crisis. We think the BoC will need to ease financial conditions before the Fed. Therefore, Canadian sovereign paper is attractive on a comparative and absolute basis, while the loonie appears set to lose ground.

The sharp rise in interest rates and tightening financial conditions that have characterized 2023 are a global phenomenon, but Canada appears to be among the first to show clear signs of transmission to the real economy. After GDP contracted by 0.2% on an annualized basis in Q2, Canada is one quarter away from the popular definition of a technical recession. But given the slowdown in business activity, sentiment, and price pressures (and with the benefit of finalized data revisions), future business cycle dating committees may well conclude that Canada is already in a recession.

09/30/2023

It’s getting more expensive to own and operate a new car.

The average annual cost of ownership is up more than 13 percent from last year to more than $12,000, or just over $1,000 a month, according to the latest automobile owners group AAA research. Higher car prices and the surging costs of financing, insuring and maintaining a new car all contributed to the increase.

The analysis also considered depreciation a cost even though it’s not paid out of pocket. AAA says the average cost per mile for a vehicle driven 15,000 miles a year is about 81 cents. But it’s $1.06 for a popular half-ton pickup truck like a Chevrolet Silverado. If you need a truck only occasionally to haul mulch from the garden center, buying a smaller car — say, a compact sport utility vehicle like a Nissan Rogue — at about 67 cents per mile and renting a truck when you really need one.

According to an analysis from https://ow.ly/1AMc50PQj1L, an online car search site, buyers with a $23,000 budget could buy a three-year-old car in 2019, but the same amount is not enough for the average six-year-old car today.

09/28/2023

Why you should consider a First Home Savings Account even if you can't afford a home

FHSAs hit the market in April of this year as another registered savings account available to Canadians, where anyone who hasn’t yet bought a property can put away up to $40,000 tax-free for purchasing their first home

The lifetime maximum of an FHSA is $40,000, and you can contribute up to $8,000 to the account every year.

Individuals can carry out unused portions of their annual contribution limit into a subsequent year on top of the $8,000 available for that future year.

‘Extension of TFSA’

Even if you’re not in a place to financially contribute anything substantial — or anything at all, for that matter … opening the account is still a great way to secure more of an opportunity for savings in the future when you’re ready to make use of it

09/16/2023

Pet Owners Resort to Cheaper Food as Inflation Weighs on Wallets

Pet food—typically one of the last places animal owners look for savings—may no longer be sacrosanct.

With the cost of pet food up nearly 11% from a year ago, according to the July consumer-price index, animal owners are trading down from more expensive gourmet brands or shifting to smaller pack sizes

Premium dry dog food, for instance, is losing share at an accelerating rate—down 2.9 percentage points in the three months ended in July compared with a year earlier—and across all income groups, suggesting that the desire for savings is broadly felt

General Mills, which owns the Blue Buffalo line of premium pet foods, is seeing the effects of pet owners trading down or looking for smaller-size food options.

Pet food and product retailers Petco Health & Wellness and Chewy are similarly seeing a shift among some consumers toward value-driven spending.

Methorst & Associates - IG Private Wealth Management

05/16/2024

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