Bristol Capital Management, 2401 Bristol Circle, Oakville, ON (2026)

02/22/2023

The rise in interest rates in 2022 led to an increase in the cost of borrowing and as a result to the repricing of financial assets ranging from equities and bonds to real estate. Higher long-term rates also had a collateral effect on an asset type that is rarely discussed in media – the commuted value of pension benefits in a defined benefit pension plan.

An increase in prevailing interest rates has a negative effect on the commuted value of a pension as less funds are required to purchase or pay the monthly pension the employer has promised the potential pensioner.

But does this mean that commuting doesn’t make sense anymore? Find out in our latest blog post.

High interest rates have led to a drop in pension commuted values. But does this mean that commuting doesn’t make sense anymore?

02/03/2023

A few years ago, Wall Street Journal finance columnist Jason Zweig shared an interesting three-part rule, relayed to him by his father, about the different ways one can get paid in life. It goes like this:

There are three ways to make a living.

1) Lie to people who want to be lied to, and you’ll get rich.
2) Tell the truth to those who want the truth, and you’ll make a living.
3) Tell the truth to those who want to be lied to, and you’ll go broke.

A few years ago, Wall Street Journal finance columnist Jason Zweig shared an interesting three-part rule, relayed to him by his father, about the different ways one can get paid in life. It goes like this: There are three ways to make a living. 1) Lie to people who want to be lied to, and …

01/12/2023

Last year was pretty rough for stock and bond markets, but January may bring some respite even if only for a month. The January Effect refers to the theory that stock prices tend to increase more during the month of January than during other months of the year. In this article, Rodrigo Anzola reviews the reasons why there may be better returns in January compared to other months, how this applies to different areas of the market, and why this ultimately impacts retail investors.

The January Effect refers to the theory that stock prices tend to increase more during the month of January than other months of the year.

12/28/2022

The TFSA is one of the best tools Canadians have to save for retirement. One of the lesser-known benefits of the account relates to estate planning, as assets in the TFSA can be passed on to the estate without paying tax. In this article, we take a look at the tax implications of transferring a TFSA to a beneficiary versus a successor holder, and which is the best choice for most Canadians.

An article explaining the difference between the TFSA beneficiary and successor holder designations and which one is preferrable in different scenarios.

12/23/2022

This fantastic episode of the Rational Reminder podcast can help you understand why financial literacy is absolutely vital in terms of financial and personal well-being.

Specifically, you will get insight into the economic outcomes related to financial literacy, and the differences between those who are financially literate and those who are not.

What impact does financial literacy have on decision-making and financial outcomes? How is financial literacy tested? In this episode, we help listeners understand why financial literacy is vital in terms of financial well-being. Learn the definition of financial literacy, how financial literacy rel

12/22/2022

The bull market in bonds that started almost 40 years ago in 1982 has come to an end in 2022. LQD, the largest investment grade corporate bond ETF, is down 16% since the beginning of the year. The 10-year US treasury bond, considered by many asset managers as the risk-free benchmark, has seen its yield jump from 1.5% to 3.17% in the last 6 months. The current market turmoil can be seen in two ways. Bonds may play a more significant role in retirement planning going forward as this could be a great opportunity for retirees and savers to earn attractive returns without much risk. On the other hand, this could be just the start of a large downturn in the bond market as inflation spirals out of control and rates continue rising for the foreseeable future. By revisiting some of the basics about bonds, the different types of risks associated with them, and some historical examples of bond market turmoil, we hope to provide some clarity as to whether this drawdown is an opportunity, or an indicator that the credit market isn’t as healthy as we thought.

Contents hide 1. Introduction 2. Bonds: What They Are and How They Work 3. Risks Associated with Bonds 4. Stocks vs Bonds 5. Bond Market Turmoil: Historical Examples 6. Conclusion 1. Introduction The bull market in bonds that started almost 40 years ago in 1982 has come to an end in 2022. LQD, the l...

12/21/2022

For the first time in recent history, North American central banks are losing money. The Federal Reserve and the Bank of Canada have both raised interest rates substantially in 2022 to fight record inflation, but this has consequences for their profitability. In this article, Rodrigo Anzola explains how restrictive monetary policy has led to a predicted deficit of up to $200 billion for North American central banks, and what impact this has on the economy and capital markets.

For the first time in recent history, North American central banks are losing money. The Federal Reserve and the Bank of Canada have both raised interest rates substantially in 2022 to fight record inflation, but this has consequences for their profitability.

12/20/2022

The active versus passive debate has been ongoing for nearly 60 years but really gained steam since the 2008 recession. The financial crash and resulting stock market collapse scarred a large number of investors and made them lose faith in mutual funds and their ability to perform through market downturns.

Couple that with a growing body of research that showed that active managers couldn’t consistently beat their benchmarks over the long-term and investors started questioning the entire mutual fund industry.

In our latest article we examine the empirical evidence underpinning this debate.

The active versus passive debate has been ongoing for nearly 60 years but really gained steam since the 2008 recession. The financial crash and resulting stock market collapse scarred a large number of investors and made them lose faith in mutual funds and their ability to perform through market dow...

12/19/2022

As employers move away form defined benefit pension plans, LIRA accounts have proliferated. These locked-in accounts are designed to transfer and preserve pensions savings until retirement age. Learn everything you need to know about these accounts in our latest article.

Contents hide 1. What is the LIRA and Why Does it Gain Popularity? 2. DBP and DCP Comparison 3. Locked-In Retirement Accounts 4. Unlocking a LIRA 5. LIF Options and Distribution Rules 6. Conclusion 1. What is the LIRA and Why Does it Gain Popularity? Pensions serve the essential role of replacing or...

12/16/2022

The Canadian Foundation for Advancement of Investor Rights (FAIR Canada) ran a poll on Twitter recently asking retail investors whether they know how much they pay in fees. Over 60% of respondents stated that they “definitely” understand their investment management fees.

However, research from the Mutual Fund Dealers Association shows that investors struggle to understand their cost of investing, including the information presented in annual fee summaries. For example, fewer than one in five of the investors surveyed correctly identified what types of costs are included in current fee summaries. Even experienced investors struggle to understand key terms and how their choices influence the type and amount of fees they pay. The root cause of low comprehension is the inherent complexity of investment fees and how they relate to investor choices.

To solve this problem, we prepared a comprehensive primer on the costs related to investing in mutual funds.

Contents hide 1. Management Expense Ratio (MER) 2. Trading Expense Ratio (TER) and Total Mutual Fund Fees 3. Advisor Series and Fee-Based Series Mutual Funds 4. Where to Find the Management Expense Ratio 5. Examples of Fund Fact documents 6. Average Fees in Canada 7. Impact of Fees on Investment Gro...

12/15/2022

Exchange-traded funds (ETFs) have become one of the most popular investment instruments for both institutional and individual investors. Cheaper and arguably better than mutual funds, ETFs offer low-cost diversification and trading options for investors. Yet, the unique creation/redemption mechanism behind ETFs remains widely misunderstood.

Contents hide 1. Introduction 2. The Transition from Mutual Funds to ETFs 3. Vanguard and Blackrock 4. How ETFs are Created and Maintained 5. Conclusion 1. Introduction Exchange Traded Funds (ETFs) have become extremely popular in recent years. Global inflows for 2021 exceeded $1 Trillion for the fi...

12/14/2022

In Budget 2022, the government proposed the introduction of the Tax-Free First Home Savings Account (FHSA). This new registered plan would give prospective first-time home buyers the ability to save $40,000 on a tax-free basis. In our latest article we explore how the account works and what advantages it offers both to current homeowners and people looking to get in the real estate market.

The FHSA is a hybrid between the RRSP and the TFSA. The plan allows account holders to contribute on a pretax basis like the RRSP, so any contribution would lower taxable income for that year. Like the TFSA, any contributions and investment income can be withdrawn tax-free. Anyone who is a resident....

Bristol Capital Management

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01/12/2023

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