An article that should be of interest to all investors

We have always believed that “knowledge is power,” and are, therefore, committed to providing our clients and followers with reliable information on topics that are of value to all investors. 

One such topic, which is particularly relevant right now, is rising interest rates. 

There’s a reason why interest rates are such a hot topic right now

You can’t turn on the news or read an article that isn’t talking about inflation. In January the consumer price index, which measures the changes in the cost of everything from food and gasoline to housing, reported that inflation has hit its highest rate in 40 years — 7.5% in the US and 5.1% in Canada. I’m sure you’ve felt the impact. 

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Creating real wealth

When we think of Warren Buffett, Bill Gates, Jeff Bezos or Elon Musk we all recognize the obvious. They are billionaires. Enormous wealth that was created by owning amazing businesses over very long periods of time. Through good and bad times the fruits of their labour took decades to harvest.

Investing is a marathon. Yet today the markets are dominated by short-termism.Read More »

Does your estate plan include everything it should?

I ask, because if you can answer “yes” to even one of these questions, simply including personal assets and investments in your estate plan isn’t enough. What I’m referring to are “digital assets” — certainly not something traditional estate plans ever included.

  • Do you use email?
  • Do you bank or invest online?
  • Do you shop online?
  • Do you collect and redeem airline points?
  • Do you have a blog, are you on Facebook, LinkedIn, Twitter, Instagram, Pinterest or any other social media?
  • Do you have photos or other documents stored in Cloud or other storage accounts?
  • Do you use PayPal or Apple Pay?
  • Are there websites where any of your financial information is stored?

Would you be surprised to learn that even if all you have is an email account, if you answered “no” to the rest of the questions, email is a “digital asset.” And frankly the truth is, most of us have expanded our digital presence beyond email, particularly since COVID curtailed so many of our activities.

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Taxes can take a huge chunk out of your returns, which is where tax efficient investing comes in

If you look through our website you’ll see some quotes that reflect our thinking, beliefs and points of view. One that sums up our thoughts on tax effective investing is by Robert Kiyosaki: “It’s not how much money you make, but how much money you keep, how hard it works for you and how many generations you keep it for.” Which is the point of this post — tax efficient investing and the key role it plays in building and growing your wealth.

Most investors consider their risk tolerance and asset allocation when putting an investment plan together, but what about the location of those assets? As you may know, asset allocation is the process of determining the appropriate balance of different asset classes such as fixed income, equities, cash etc., given your objectives and risk profile.

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A meaningful and actionable financial plan is more than some notes scribbled on the back of a napkin. It’s a thoughtful and dynamic process that helps ensure an investor’s success

It’s probably safe to assume that most of us invest for the same reason. To accumulate (and preserve) wealth — enough to live well in our retirement years and take care of our loved ones after we’re gone.

Investors tend to focus on short-term returns, so much so “performance” alone is often how advisors are judged by clients. What’s not often discussed — or even considered — is the value advisors provide that goes beyond returnsbut does, in fact, play a very significant role in investors’ long term success — which is, at the end of the day, what investing is really all about. The long term.

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We have no problem ascribing value to tangible goods. But it’s not that easy when it comes to the more intangible, like expertise or knowledge. Why?

There was a time when the only way an investor could buy and sell stocks was through a stockbroker who was, in effect, a gatekeeper.

It didn’t matter which broker you used. The only time you paid anything was when you bought or sold a stock. That’s the way it was done. And it was easy for investors to reconcile.Read More »

How do you define risk and how much of it can you honestly handle? Understanding both is essential for successful investing

Risk is one of the most interesting topics in investing; it can mean so many things to so many different people. Some investors consider risk as volatility. Others think of it as the permanent loss of capital. For others, it’s the chance that an investment outcome will differ from an expected return. 

We, Friedman Investment Group, define risk as the permanent loss of capital, rather than volatility or price movement. Looking at risk this way keeps portfolios on track and prevents trading in and out of stocks, based on temporary price fluctuations. 

However you think about risk, each investor has his or her own unique risk profile, and that profile determines an investor’s willingness to accept and handle risk. Therefore, understanding a client’s risk profile is of paramount importance for an investment professional to build a correspondingly appropriate portfolio.

Time to tweak the 60/40 mix?

One of the main tenants of investing is diversification. You’ve heard the old adage – “don’t put all your eggs in one basket.”

By diversifying, you spread your risk across different asset classes, which helps to smooth a portfolios variability of returns. This has traditionally been achieved through a 60/40 mix of stocks and bonds. Over the past forty years this mix has performed quite well as stocks and bonds have both benefited from a number of factors: good economic growth, low inflation, falling interest rates and low correlation between the two asset classes. This was especially evident during recessions, when bonds demonstrated negative correlation to stocks.

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