Mutual Fund Fees Can Cost As Much As A Small House

Avoid Mutual Fund Fees

First Published Date: August 17, 2016

It is an open secret that mutual fund fees can cost you quite a fortune in one lifetime, especially in Canada where fees are even higher than other industrialized countries. Given the fact that there are other low-cost options available like ETFs, investors often forget or ignore what they are paying in the long run.

Toronto-based digital wealth management firm Nest Wealth released some cold, hard figures to put the fees you will be paying holding mutual funds into perspective. For example, if you take a 25 year-old investor starting with a $10,000 investment and adding $5,800 for the next 39 years, at a rate of 6.5 percent return and 2.35 percent mutual fund fees, the investor would have a balance of $229,000, but the fees paid would be $323,654.50.

With those kinds of fees, it is possible to buy a small house in many Canadian cities. It always pays to pay attention to what you are paying for fees and what you can do about it. A study released by Environics Analytics found out that the average Canadian household’s liquid assets amount to $229,000. If you are paying annual 2.35% fees on investments, it will definitely take out a good chunk out of your retirement, considering many ETFs fees are below 0.50 percent.

Nest Wealth offers some neat calculators and portfolio-building tools on its website. You will be able to visualize how different fees or mutual fund MERs affect your investments in dollar terms and what kind of customized portfolios are suitable for you based on your scenarios.

Regardless, you are building your portfolios online or face to face with a qualified financial professional, always do your own research and make best-educated decisions that suit your needs and lifestyle.

Price Protection Not Covered by Travel Insurance

My Grand Bahia Principe Runaway Bay Jamaica Trip and Do You Need Price Protection Guarantee?

First Published Date: August 21, 2016

Today, I am presenting a video of my recent Grand Bahia Principe Runaway Bay trip to Jamaica. I will not talk about the details of my trip, because you will have a good idea of the full trip after watching the video. However, I will talk about a price protection guarantee customers can buy in all-inclusive vacation packages – which might come in handy if vacation prices drop.

All-inclusive vacation packages are popular among North American vacationers going to Caribbean countries. Flight, hotel, unlimited food, drink – basically everything is included in this type of package. Travellers who are looking to relax without worrying about anything else usually choose this type of all-inclusive package.

Price protection guarantee is a separate add-on that you can purchase for all-inclusive vacations. It can run from $50 to $100 or even more. Price drop protection is actually not covered by premium credit card insurances that cover all sorts of travel insurances such trip cancellation, trip interruption, medical emergency, flight delay, and so on.

When I bought my vacation package in November from a 3rd party travel agent, the original vacation provider was offering a price protection guarantee as a promotion free of charge, so I did not mind accepting it – just in case. At the same time, I setup a price drop alert on the travel website that would alert me when the price drops below what I paid previously.

In April, I received an email alert stating my vacation price has dropped roughly $200. I contacted the claim call centre to find out the procedure. I was told that I could claim only once, so if the price even drops further I won’t be able to claim if I decide to claim it right then. My options were to claim at that time or wait for a further drop to claim later, so I decided to claim right away.

The process was simple. You just need to give the agent all your related info and mention you would like to claim. I received the difference on what I paid versus what it had dropped to within three business days in my bank account.

All-inclusive vacation packages tend to drop significantly before two months or just before the departure date, as vacation providers try to empty their unsold inventories. So it may make sense to have this feature added if you would like to minimize your risks. However, you need to decide on whether you would like to pay extra to buy this protection. There is also the possibility that the price won’t drop at all. Based on your risk tolerance and lifestyle, make an educated decision before paying for anything extra and always do your research

The World’s First Skyscraper

The First Skyscraper

First Published Date: Oct 16, 2010

Skyscrapers dominate cities these days but there was a time when no building, apart from a church, were higher than five floors at most. That has changed immensely and its origin can be traced back to one building in Chicago, which started the dawn of the skyscraper age. It was the Home Insurance Building and it has the honour of being the world’s first skyscraper.

Built in 1885 in Chicago, Illinois, the Home Insurance Building was the first building to use a structural steel frame, although it should be noted that the majority of the building was composed of cast and wrought iron, making it extremely heavy. That being said, it is the first tall building to be supported, inside and out, with a fireproof metal frame. There was a previous building to use this method, the Ditherington Flax Mill, but it was only five stories tall, while the Home Insurance Building was 10 stories tall. The building stood 138 feet, and it had two additional floors installed in 1890 to make it 12 stories tall. It was also the first building to carry both floors and external walls on its metal frame. The architect of this legendary skyscraper was William Le Baron Jenney, who was an engineer that saw the potential for the power of steel. The building was so revolutionary that many worried about its safety and its construction was halted so that city officials could inspect it to see if it would fall over. It was not long before this idea was copied over and over. In 1888, an architect in Minneapolis named Leroy Buffington was given a patent to build a skeletal-frame tall building, which he proposed as a 28-story stratosphere-scraper. It was mocked at the time but within a few decades, that patent was used to create the dominant building form of the 20th century.

While the building may have been revolutionary, it only lasted to 1931 when it was demolished to make way for the Field Building. Today, the Bank of America Building now occupies the site where the first skyscraper once stood and in its lobby it has a plaque that reads:

This section of the Field Building is erected on the site of the Home Insurance Building which structure, designed and built in eighteen hundred and eighty four by the late William Le Baron Jenney, was the first high building to utilize as the basic principle of its design the method known as skeleton construction and, being a primal influence in the acceptance of this principle was the true father of the skyscraper, 1932

This skyscraper is the first of what would be many. Without the Home Insurance Building, we would not have New York as we know it. There would be no Empire State Building, no Sears Tower and no large skyscrapers of any type. This one building literally changed the world for all of us over 100 years ago in Chicago.

What Is A Good Credit Score?

Understanding Credit Score Range

First Published Date: March 13, 2016

Your credit score is a three digit number that reflects the well being of your credit worthiness or how efficiently you are managing money or debts. Various credit reporting agencies such as Equifax and TransUnion provide this information and Fair Isaac Corp. produces the most commonly used credit scoring algorithm known as FICO, although various other credit scoring models exist.

The credit score ranges are very similar for most of the credit scoring models and they can run from the upper 200 to upper 900 range. I will use the FICO score to illustrate what a good credit score is in this article, as FICO is the most widely used credit scoring model.

What is considered a good score or a bad score varies according to the lender and what type of loan is being sought because lenders have their own set standards to approve or deny you credit.

Here is a very general guideline for FICO score range (300 – 850):

350 – 629 = Bad

630- 689 = Fair

690 – 719 = Good

720 + = Excellent

The highest FICO score possible is 850 and not many are able to achieve that. However, anything above 720 in general is considered an excellent credit score and those who achieve it most likely will get approved for whatever they apply.

Although having a score above 800 is kind of like having an elite status in score, lenders usually treat those within the range from 750 to 850 the same way. In other words, if your score is 750 you will most likely get the same rate as someone at 820.

Canada Savings Bond

The Amazing Canada Savings Bond And You

Published Date: July 22, 2010

When you want to build up a good, safe investment for yourself, or you want to save money for a retirement without losing sleep, you should look at the Canada Savings Bond. The Canada Savings Bond is an investment instrument created by the government of Canada and it sells between October and April of every year. Issued through the Bank of Canada, it offers a competitive rate of interest and there is a guaranteed minimum interest rate on it.

Created in 1946 as Victory War Bonds, it was a safe way to invest and to save for Canadians who did not want to use mutual funds. The Victory War Bonds were just one of four different types of bonds that were issued including the Canada – Dominion War Savings Certificate, the Canada Fourth Victory Loan and the Dominion of Canada Victory Loan.

These Canada Savings Bonds became very popular and a great way to invest and they would often be bought for younger children as a gift that they could redeem years down the road. However, lately, bond sales have begun to fall because of the low interest rate environment causing yields to be lower, which means more people are going to stocks and mutual funds in order to get more money for what they are spending. During the 1980s, rates were as high as 18 percent, which yielded big savings, but these days the interest rate has fallen by so much that Canada Savings Bonds held by Canadians were no more than 10 percent of people. In totally, Canada Savings Bonds are worth $19.2 billion in terms of bonds held by Canadians.

There are many types of Canada Savings Bonds that you can buy. These include:

·      Canada Savings Bonds are purchased with regular and compounding interest varieties and you can cash them at any time. They come in denominations of $100, $300, $1,000 and $10,000 with the interest guaranteed for a year and then fluctuating for the remaining nine years until the Savings Bond reaches its maturity date.

·      Canada Premium Bonds are purchased with the same choices in interest as Canada Savings Bonds but they can only be cashed on the anniversary of the issue date, or within 30 days after. Other than that, they are pretty much the same as Canada Savings bonds except the interest rates differ slightly. These bonds are sold with interest rates up to the third each, with each year after having higher interest and the interest rate fluctuates for the remaining seven years depending on the condition of the market until the maturity date is reached.

·      Canada Investment Bonds were available for a time between 2003 and 2004 and are were not redeemable until they matured, and each one had three-year maturities.

There are also several plans that are offered through the Canada Savings Bond, which include:

1.    The Canada RSP, which is a no-fee retirement savings plan that, uses compound interest Canada Premium and Canada Savings Bonds.

2.    The Canada RIF, which is a no-fee retirement income fund that holds Canada Premium and Canada Savings Bonds.

3.    The Payroll Deduction, which is when employees choose how much they can have deducted off their paycheques in order to put into a Canada Savings Bond under the Canada RSP.

In regards to the rates that are used in the Canada Savings Bonds, with the exception of when the rate is fixed at the start of the bond term, the rate is always dictated by the market conditions. An example of this was seen in 2009 when there was a very low rate in the market, which meant that those who purchased the Canada Savings Bonds in that year having very low rates. Low rates mean that your bond is not going to increase in value by much, which is why the Canada Savings Bond market is not doing as well in terms of the number of Canadians buying the bonds.

If you want to withdrawal from your Canada Savings Bond, you can typically do so at any point from most of the big banks within Canada. If you withdraw within three months of issue, you typically will only get the face value of the bond back. What is meant by this is if you have a $10,000 Canada Savings Bond, then you will get $10,000 back. After the first three months, you get the face value plus any interest you have received on the bond. With the Canada Premium Bonds, you can redeem them one year and 30 days after issue, which is important to keep in mind.

You are going to be fully taxed since the Canada Savings Bond is seen as income at your current tax rate. This is why it is a very good idea to take your Canada Savings Bond and hold it in an account that is tax-deferred, like your Registered Retirement Savings Plan.

The Canada Savings Bonds are a very safe way to invest and a good way to build up money that you can use for your retirement. If the Canada Savings Bond grows at the 18 percent per year as was seen in the 1980s, then a $10,000 Canada Savings Bond over that ten years will go from $10,000 to $52,338 by the time the ten years is over. Even at a low of four percent per year, your $10,000 would grow to $14,802.

A safe investment that can also serve as a good gift for someone, the Canada Savings Bond is what you should consider if you are new to investing, or you do not want to invest in the riskier investments of mutual funds and stocks. This way you keep your money growing, albeit at a slower ate, while at the same time increasing your savings using nothing but the interest rate that exists at the time. Look into the Canada Savings Bond and see your savings grow without you having to do anything.