adplus-dvertising
Connect with us

Investment

4 ways to tell if your investment advisor is a good investment

Published

 on

Nearly half of Canadians who invest through advisors are shopping for new talent.

According to the 2023 Ernst and Young Global Wealth Research Report, 45 per cent of surveyed people said they were looking for better portfolio managers – a 24 per cent increase since 2021.

The waning confidence in professional management is likely linked to how well advisors navigated the market turmoil caused by the pandemic. As the lockdowns took hold in 2020, investment firms reported an influx of new clients. A survey commissioned by Manulife Investment Management at the time showed 63 per cent of respondents were looking for an advisor, compared with half in the year before COVID.

If your new year’s resolution is to review your investment advisor, or if you are in the market for one, here are four ways to tell if they are earning their fees.

1. HOW DO YOUR RETURNS COMPARE WITH THE BROADER MARKET

2023 was a good year for the two main asset classes that make up a balanced investment portfolio: stocks and fixed income.

The U.S. stock benchmark S&P 500 advanced by 25 per cent, the Canadian stock benchmark TSX Composite returned over eight per cent, and guaranteed investment certificates (GICs) paid yields as high as five per cent.

Your portfolio should reflect those stellar performances if it is properly diversified among asset classes, major sectors and geographic regions.

Inversely, properly diversified portfolios would likely have shown losses in 2022 when stock markets fell and yields were much lower. It’s long-term gains you are looking for.

If your returns are consistently out of whack with broader markets, ask questions. Lagging portfolio performance might be attributed to specific misunderstandings relating to your risk tolerance or return goals.

2. HOW MUCH OF A BITE ARE FEES TAKING?

A portfolio that consistently underperforms the broad markets could be weighed down by excessive fees.

Professional management costs money. The only way for most Canadians to access professional management and diversification is through mutual funds, which charge an annual fee based on a percentage of the amount invested.

Depending on the fund, those fees can top three per cent, which can shrink a return of five per cent to two per cent.

Returns dwindle further when other fees such as loads and commissions are piled on.

A good advisor knows the best funds for the buck, but should also find ways to minimize fees over time by shifting assets to lower cost exchange traded funds (ETFs) or investing directly in equity markets.

There are other ways advisors are compensated that could cost less, including flat fees.

Fee rates should fall as the portfolio grows and the dollar amount increases. High net worth investors generally strive for total fees under one per cent of the amount invested.

3. IS THERE A STRATEGY FOR KEEPING MORE TAX DOLLARS INVESTED?

Part of an advisor’s job is to ensure your savings are invested in a tax-efficient manner. Keeping more of your tax dollars to compound in your portfolio is a risk free way to boost returns.

If too much money grows in a registered retirement savings plan (RRSP), for example, investments could reach a point where withdrawals will be fully taxed at a high marginal rate. Eventually, minimum withdrawals will be mandatory, putting government benefits like old age security (OAS) in jeopardy.

Before it gets to that point, an advisor should strategically channel savings into tax-efficient vehicles such as RRSPs, tax free savings accounts (TFSAs), income splitting tools like spousal RRSPs and even non registered investment accounts.

4. DOES YOUR ADVISOR EVEN KNOW YOU?

Do you only hear from your advisor when RRSP season rolls along? Portfolio management is a year-long event and regular communication is essential.

Your advisor should be in touch with you by phone or email, or at the very least a regular newsletter explaining any market-moving situation and assuring you your investments are well positioned for what comes next.

In addition, a good advisor should know your retirement goals, tolerance for risk and personal circumstances that impact your finances.

They should also know your big financial picture: debt levels, home equity, workplace pension plans and other major assets and liabilities.

If any of these points ring true, it’s time for a chat – or a change.

 

728x90x4

Source link

Continue Reading

Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

 on

 

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

 on

 

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

 on

 

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending