Guardian Financial Planning

06/02/2022

What’s happening to my investments lately?

An excerpt from The Globe and Mail May 11, 2022

“The epitome of 2022 weirdness is the failure of the traditional balanced portfolio, with a 60 per cent weighting in stocks and 40 per cent in bonds. Holding bonds is traditionally how you take the edge off stock market declines. But stocks are down in 2022, and so are bonds.

For the year through May 10, the S&P/TSX Composite Index was down 5.4 per cent, the S&P 500 was down 16 per cent and the FTSE Canada Universe Bond Index was off 11 per cent. Bonds are supposed to go up when stocks plunge, or at least hold their ground. What’s gone wrong?

Blame inflation, which was brought back from a state of near-irrelevance by the pandemic. Crimped supply chains met voracious demand from people unable to spend during lockdowns and produced inflation like we haven’t seen in 30 years.

Inflation will be conquered, but it’s a messy process. Interest rates have to rise – that’s why bonds are floundering just now. As rates rise, the economy cools. Concern about a recession is why stocks have lost the zip that propelled them to huge gains after the COVID-19 crash in March, 2020.

It’s tempting in these uncertain times to think there’s a particular investment or asset that will shield your portfolio from losses. Good luck with that. Gold, supposedly a rock of stability, has fallen from its March peak to not much higher than it was a year ago. Bitcoin has lost about one-third of its value since the beginning of the year, with most of the damage happening in the past six weeks.
The asset that has delivered more than any other in the past 15 or so years is real estate. But even here, there’s no respite from the bad news of 2022. Rising interest rates are making it more expensive to finance the purchase of a home, and this in turn has weighed on sales and prices.

In their way, the first two years of the pandemic were just as disruptive to the financial world as 2022. The difference is that this earlier volatility caused stocks, houses and other assets to soar in value. Now, it looks like some of that pandemic wealth will be clawed back from the people fortunate enough to have participated. Remember, a lot of Canadians were financially slammed in the pandemic because they lost income and jobs.

Whatever happens with investments in the months ahead, stay focused on 2023 and beyond. Today’s dramatics are a pandemic-driven anomaly, not a rewriting of the rules of investing.”

01/14/2022

On behalf of everyone here at Guardian Financial Planning, I encourage all of you to look after yourselves and those you care for through these difficult times.

Although we are suspending in-office appointments and working remotely for a while, we’re still available if you need anything through the wonders of technology. Investment reviews or insurance comparisons, we’ll get you everything you need to make informed decisions about your financial future. And then help you implement those plans without leaving the comfort of your own home... whether by a simple chat on the phone or a full video conference call. So phone, text, email or FB message… let us know what we can do for you. Take care and Stay safe!

11/16/2021

If you or someone you know needs help with retirement cash flow expectations and planning, we're here to help :)

Non-working seniors need an income withdrawal strategy that considers their different income sources and tax rates

11/09/2021

Do you want to save for retirement... or do your part to save the planet? Turns out you can do both and I can show you how. Because what's the good in saving for a future that doesn't provide your kids and grandkids with drinkable water and breathable air?

06/09/2021

Why Central Banks will crush Bitcoin and other private digital currencies.

Their concern is that the use of private digital currencies to buy real stuff could, over time, crowd out the official currency, which gives central banks their raison d’être

03/29/2021

What does your retirement look like?

02/23/2021

Both TFSAs and RRSPs can be significant savings vehicles for your clients. We've put together an article to help your clients easily understand the differences between them – with one section focussing on differences in deposits and one focussing on differences in withdrawals. The deposit section ...

10/30/2020

Do you have your mortgage at a Big Bank... you might want to check the fine print. A conventional mortgage often favours the bank's interests over yours and there are lots of options available these days that offer far more flexibility with better terms. Borrowing to buy a home is one of life's biggest investments and certainly deserves a close look before signing up at a bank just because that's where you happen to have a small chequing account.

Plus 10 rookie investing blunders

10/13/2020

Second wave coming?...how should you prepare?

For those of us fortunate enough to live in Western New Brunswick these days, it may seem like things are almost back to normal. Unfortunately, that could easily change as evidenced by the recent outbreak in Moncton, increasing cases being experienced by our fellow Canadians and continued acceleration of cases South of the border. So what should you do to prepare?

One of the basics of any sound financial plan is always to have some funds set aside in a boring old savings account to use in emergencies. The rule of thumb is three to six months of living expenses … and yes, I know that’s certainly difficult with everything going on but you’ll be surprised at how much better you’ll sleep knowing that you’ve made at least some preparation for the unexpected …or perhaps in this case, the expected.

If you’re not able to put in a few more hours to make more income each month, the only other option to generate surplus cash is to identify spending within your control to reduce. Even a little bit here and there can add up over time. So take a look at simple things like the cost of your cell phone plan, cable or satellite costs, unreasonably high interest rates on credit cards or bank charges that provide little value. Believe me, the savings are out there, but you will need to spend a little time having a look. If you need assistance, we’re here to help. Stay safe!

05/26/2020

With Canada and many other countries practicing physical distancing or participating in complete lockdowns because of COVID-19, thoughts are now turning to what the world may look like after the restrictions have been lifted. Many people are expressing a desire for life to return to how it was before the arrival of this public health emergency. However, it's entirely likely that some aspects of our lives will have been irrevocably changed. Now that governments around the globe have set new precedents in dealing with declared emergencies, we may see future global disruptions that require dramatic action by governments and their citizens.

So, how does one best prepare for such an event? Well, there’s lots of information readily available offering tips about the types of things you can do to be physically prepared … emergency food supplies, some cash on hand, candles, batteries, bottled water and so on. But what about financially prepared? What will you need to change about the way you handle your finances …effective use of any surplus income, risk management through cost-justified insurance coverage, mortgages, credit cards and other debt?

If you need to chat about your personal situation, we’re here to help.

04/14/2020

How the cost of making your mortgage go away for six months could top $12,000 ... an excerpt from yesterday's Globe and Mail.

"The offer from Canada’s banks to people experiencing financial hardship as a result of the pandemic to defer their mortgage payments for up to six months has been popular. Close to 600,000 people had either arranged to defer their mortgages or skip a payment as of April 8, the Canadian Bankers Association says.

What hasn’t been discussed much is the cost of this deferral. They work on a case-by-case basis, but it’s now clear the interest not paid during the deferral period is added to the balance owing. This means you’re paying interest on interest.

It would be great if banks let people defer mortgage payments with no additional interest cost, but that’s not happening right now."

If you're considering a mortgage deferral, be sure to ask your mortgage provider for a long term comparison of your existing arrangement versus a deferral so you're able to make an informed decision. Then, before making the change, get a second opinion ... an experienced financial planner can often identify measures that could temporarily ease budget pressure without the significant cost of a long term deferral.

And most importantly, stay safe!

Woodstock Financial Planner - Stephen LaPage

03/27/2020

Around the globe, people are experiencing a range of emotions, with fear over their own health and that of their loved ones justifiably at the top of the list. These are concerning times and these emotions are certainly normal. I want to extend our support to you and your family and hope that you are doing well as this crisis continues to unfold.

As we’ve seen in the past, each market downturn has its own set of circumstances. Today, countries are doing things in the interest of public health that, by their very nature, limit certain kinds of economic activity – travel, tourism, even going to your workplace or to buy groceries. To make things even more volatile, there’s been an unexpected shock to the oil markets as the Saudis attempt to exert their influence on global pricing and production. Ironic isn’t it that we’re finally seeing lower fuel prices only to be told not to go anywhere.

We’ve seen a lot of moves by government in recent weeks as they use significantly lower interest rates and stimulus spending to try to limit the impact on our economy. As COVID-19 runs its course, these types of backstops can lessen the likelihood of recession or reduce the severity if there is one.

As I said in our bulletin a couple weeks ago, investor behavior is now more important than ever. During downturns, many investors are tempted to cash everything in with the intention of re-entering the markets when things reach the bottom. Unfortunately, the bottom is usually only revealed in hindsight, well after the benefits of getting back in have passed. In fact, long-term studies show that when investors attempt these types of emotionally driven timing decisions, their long term returns generally suffer as noted on this chart showing various outcomes from the last big correction in 2008.

History suggests that following a market decline, we have always seen periods of recovery which can sometimes happen very suddenly with favorable news on stimulus packages or, more likely in this case, an effective vaccine. We don’t yet know when the coronavirus will be contained, how long it will affect markets, or to what extent…no one does. But regardless of when that recovery takes place, we know that investors who remain calm and invested, benefit most from the eventual recovery.

If there’s anything we can do to address any concerns that you have, please let us know ... we’re here to help.

BJ, Gail and Stephen