Investment

Why experts are abandoning the traditional investment portfolio – Financial Post

Published

3 years ago

December 17, 2021

Harry Miller

Low interest rates and new financial tech are changing the game for investors

Author of the article:

MoneyWise

Sigrid Forberg

Africa Studio / Shutterstock

For years, a simple benchmark guided investing advice: Find a “60/40 balance” in your portfolio and keep it forever.

This principle was championed by the investing pioneer Jack Bogle, who founded industry heavyweight Vanguard Group and popularized index funds. According to Vanguard , the 60/40 portfolio has offered the best returns for nearly a century for people who can tolerate moderate fluctuations with their money.

But in the decades since Bogle made this portfolio famous, rules of thumb like the 60/40 portfolio have started to fall out of favour with many financial advisors.

“If you’re doing a good job for your client, you should be probing deeply into their situation,” says Tina Tehranchian, a senior wealth advisor and certified financial planner with Assante Capital Management Ltd. in Richmond Hill, Ont.

“And a lot of times [the right balance] may not be the 60/40 portfolio.”

Breaking down the 60/40 portfolio

The percentages in a 60/40 portfolio refer to the investor’s asset allocation: Investors put 60 per cent of their money into riskier investments, like stocks. The other 40 per cent goes into traditionally safe investments, like government bonds.

This division of assets was originally designed to help investors protect their portfolios from the market’s volatility, while putting them in a good position to grow their money at a rate faster than inflation.

Advisors suggested over the years that investors rebalance their portfolios every year to maintain the 60/40 split. Say bonds went up in value the year before — individual investors should reallocate some of their money into stocks to ensure they’re back to the right mix.

Diminishing returns

For decades, financial advisors pushed this as the perfect balance, especially for a retirement portfolio.

However, current market conditions may actually slow your portfolio’s growth right now. With interest rates set to remain historically low for the next few years, a 40 per cent investment in bonds is unlikely to outpace rising inflation — which means those bonds will drag down a portfolio’s overall performance.

That’s not to say bonds can’t be a valuable addition for a certain investor’s portfolio. In fact, Vanguard Canada released a report this fall suggesting analysts aren’t keen to give up the balanced portfolio just yet. Even with inflation as a growing concern, they’re loath to throw out this time-tested strategy.

But many advisors argue bonds should no longer account for nearly half of the everyday investor’s portfolio. They argue investors can look to other relatively safe bets, like blue-chip stocks and low-volatility exchange-traded funds, or ETFs. What really matters, experts say, is your financial goals.

New strategies

It’s not just the 60/40 portfolio that’s going out of fashion. Advisors are increasingly steering clear of following hard-and-fast rules in general.

With more sophisticated tools to analyze a client’s risk tolerance and to allocate a customized portfolio, Tehranchian says those rules of thumb simply aren’t necessary anymore.

“These days, we have the technology and the tools available to do a much more detailed analysis for each client,” she says. “And then based on that more detailed analysis, we’re able to provide a customized portfolio that is not a cookie cutter portfolio like it used to be.”

These more personalized approaches mean clients walk away with a portfolio that reflects their reality rather than some idea of what their planner thinks their life should look like.

Which is much more effective, given that not everyone fits the mould or expectations of their age or income bracket.

Tehranchian says she works with financially conservative 20-somethings and 85-year-olds who forcefully reject investing in fixed income like bonds. Portfolios should reflect more than just someone’s age — other factors like their family situation, liquidity needs, estate plans, tax liabilities, income and financial goals must be considered as well.

“When you go to a financial planner, they need to know the full picture, because all of these things impact each other,” says Tehranchian. “It has to be holistic to work.”

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

9 hours ago

September 19, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

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

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Investment

Canada’s Probate Laws: What You Need to Know about Estate Planning in 2024

Published

10 hours ago

September 19, 2024

Harry Miller

Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.

For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.

Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.

Let’s unearth how these updates can simplify the process for you and your family.

What is probate?

Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.

Here’s how it works.

Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.

Probate ensures everything is done by the book, giving you peace of mind during a difficult time.

Recent Changes in Canadian Probate Laws

Several updates to probate law in the country are making the process smoother for you and your family.

Here’s a closer look at the fundamental changes that are making a real difference.

1) Virtual witnessing of wills

Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.

Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.

2) Simplified process for small estates

Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.

Fewer forms and legal steps mean less hassle for families handling modest estates.

3) Substantial compliance for wills

Courts can now approve wills with minor errors if they reflect the person’s true intentions.

This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.

These changes help make probate less stressful and more efficient for you and other families across Canada.

The Probate Process and You: The Role of a Probate Lawyer

(Image: Freepik.com)

Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.

Here’s how they can help.

Navigating the legal process

Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.

Handling paperwork and deadlines

They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.

Resolving disputes

If conflicts arise, probate lawyers resolve them, avoiding legal battles.

Providing you peace of mind

With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.

With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.

Why These Changes Matter

The updates to probate law make a big difference for Canadian families. Here’s why.

Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.

With these changes, probate becomes smoother and more manageable for you and your family.

How to Prepare for the Probate Process

Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.

Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.

These simple steps make the probate process easier for everyone involved.

Wrapping Up: Making Probate Easier in Vancouver

Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.

Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.

Economy

Energy stocks help lift S&P/TSX composite, U.S. stock markets also up

Published

2 days ago

September 17, 2024

Anne Joseph

TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.

The S&P/TSX composite index was up 34.91 points at 23,736.98.

In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.

The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.

The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.

The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.

This report by The Canadian Press was first published Sept. 17, 2024.

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

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