Protection against investment loss hard to come by

Guarantees are expensive, insurance is limited

As stock markets gyrate alarmingly in this season of market volatility, novice investors often start to have second thoughts about their investment strategy, especially those novices who don’t have a financial plan, an investment strategy policy, or a clue about their real tolerance for risk. That’s when financial advisors start to get questions about “guaranteed” investments and deposit insurance and segregated funds, and other types of vehicles that seem to offer safe haven or some protection against loss. Let’s take a look at some of these, and see what’s really involved.

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Do you need all that insurance?

The big business of life, mortgage, and critical illness insurance

Insurance is a numbers game. Anyone who has ever purchased any kind of life or health insurance knows this firsthand. But here’s one number you won’t often hear about: $4.7 trillion (no mistake, that’s a “T”). That’s how much life insurance coverage is owned by the 22 million Canadians who have policies, according to the Canada Life and Health Insurance Association 2018 report. In 2017, that represented $21.4 billion in premiums. And the average coverage per household is $417,000. Health insurance added another $43 billion in premiums. No doubt about it – insurance is big business in Canada. Here’s a quick look at the types of insurance advisors are asked about most frequently. READ MORE

Three first steps for the suddenly rich

Financial planning for lottery winnings, inheritances, gifts

For those few who are lucky major lottery prize winners or for those who have inherited sudden wealth, the real question isn’t how to spend it…it’s how to keep it. For people in this rarefied group, my advice is always to start with these three first steps. READ MORE

Seniors playing with fire when taking on a big debt

The use and abuse of mortgages in retirement

Are retirees playing with fire? They could be if they decide to use money borrowed through a mortgage to supplement their other sources of retirement income. The most common ways those at or close to retirement do this is to hold a mortgage through their Locked-in Retirement Account (LIRA) or to borrow money against their home through a so-called “reverse mortgage.” But retirees should think long and hard before entering into either of these arrangements. READ MORE

Robyn has good news for worried retired teacher

Robyn Thompson is featured in The Globe and Mail’s “Financial Facelift” series by Diane Maley. This time, Ruth, a retired teacher, is worried that her existing savings and reduced income won’t be enough to provide for her kids’ university education or support her financially into retirement. Read Robyn Thompson’s advice on how Ruth can stop worrying by creating a financial plan that rebalances her existing assets into a tax-efficient, income-producing portfolio.

Dealing with market scares

Resist the urge to “do something”

Unless you’ve been away on vacation in a secluded place, you’ll know that stock markets sank alarmingly earlier this month as the U.S. Treasury bond yield curve “inverted” – that is, the yield on short-term bonds climbed above the yield on long-term bonds, albeit only very briefly. Fearing that an inverted yield curve signals a recession (as it often has historically), traders went into full-on panic mode, dumping stocks and moving to “safe haven” investments, like gold and, yes, bonds. The big North American stock market indices consequently lost ground, some sinking by triple-digit amounts in a span of two days. So is it really time to panic, sell all your stocks, and hunker down with your piles of cash? READ MORE

What you should know about your credit score

What’s in it, who can see it, and why it’s important

We often hear financial experts advising people to check their “credit score.” It’s a good idea to do that every year. That will give you an idea of what kind of risk lenders think you are. It can also signal if you’ve been a victim of identity theft and fraud. But very few people actually have a good idea of what a credit score is or how it’s compiled. Here’s my summary of what goes into a credit score, who keeps track, who can see it, and what you can do to raise a low score. READ MORE

School’s in session – and it costs!

How to cope with higher education’s sticker shock

There’s no two ways around it: The cost of a post-secondary education is high. For some, it’s a real challenge to make ends meet while attending college or university. In fact, students can expect to pay a total of about $60,000 for an average four-year post-secondary education program, including tuition, books, board and lodging, and living expenses. It’s more than double that for professional degrees like law, medicine, dentistry, and engineering. READ MORE

Coping with the single life

Financial planning for the suddenly single

If you find you’re suddenly single again after many years of being part of a couple, the financial challenges can seem overwhelming. But there are some lifelines at hand if you feel like you’re teetering on the edge of financial chaos. Here’s my prescription for settling your nerves and getting your life back on track. READ MORE

IPPs and Group RRSPs offer flexible pension options

Plans to keep both bosses and workers happy

There are flexible alternatives to conventional pension plans for both employers and employees. For employers, offering a Group Registered Retirement Savings Plan (RRSP) as a benefit can be more attractive to potential employees than a registered pension plan. And for business owners, executives, and professionals, an Individual Pension Plan (IPP) can offer enhanced retirement savings over and above an RRSP. READ MORE

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