Bracing your investment portfolio for ongoing waves of volatility: Ask BNN Bloomberg – BNN

With growing economic uncertainty during the COVID-19 pandemic, the financial landscape is shifting every day.

Whether it’s dealing with sudden unemployment, ballooning debt, or expenses related to working from home, BNN Bloomberg wants to help Canadians navigate these uncharted waters.

That’s why we created Ask BNN Bloomberg, where you can have your personal finance questions answered by industry professionals.

Email or send your questions via video to askbnnbloomberg@bellmedia.ca, and we will aim to answer them weekly.

Questions and answers have been edited for clarity. Last names will not be used.

Financial aid for Canadian contractors

Alex in Oshawa, Ont.:

My wife rents a commercial unit and is a sub-landlord to five hairstylists in her salon. These independent contractors pay a chair rental fee and are not on a payroll system. She pays rent to the landlord for the unit she leases it in her name.

My wife wants to know if she can apply for the rent relief program since she doesn’t think her landlord will participate in it and she wants to help her stylists out with rent.

Just trying to ease their pain. l keep hearing that we are all in this together. (May 12, 2020)

Mary Ng, minister of small business, export promotion and international trade:

Thank you, Alex. Like you said, we are all in this together – and we will continue working to support Canadians every step of the way through this crisis.

Although the tenant-landlord relationship is ultimately the responsibility of the provinces and territories, our government has stepped up to provide support through the tools that we have, the Canada Mortgage and Housing Corporation, so that small businesses can get the rent relief they need. We strongly urge all landlords to apply for the Canada Emergency Commercial Rent Assistance (CECRA) – it makes financial sense and will help all of us get through these tough times.

CECRA is just one of a wide range of other emergency supports we’ve bought in to help businesses and all Canadians. The Canada Emergency Response Benefit (CERB) could help your wife and her stylists if they’ve seen their income reduced, and the $40,000 interest-free loan CEBA (Canada Emergency Business Account) can help business owners like your wife keep up with non-deferrable expenses, like rent and utilities – which is available at your local bank or credit union. (June 30, 2020)

Choosing between CERB and CESB

Jenny from Montreal:

Hello BNN Bloomberg,

Thank you so much for taking the time to answer my questions concerning my personal financial situation.

I am a student who just graduated this winter semester. I was working part-time at school during the school year and with the pandemic, I stopped working there as the school was (and is still), closed.

I applied for CERB from mid-March till June, as I have earned more than $5,000 in 2019. On the side, I had a smaller part-time job that earns about $200 per month so I am also well-below the $1,000 maximum as income per month for CERB.

My question is, can I keep taking CERB instead of Canada Emergency Student Benefit (CESB)?

I have not returned to work at school but seeing that summer is here, I normally would have had to sign a new contract with the school for a part-time job as the winter semester is officially done.

Thank you so much for your clarification! (June 15, 2020)

Tim Cestnick, co-founder and CEO of Our Family Office Inc.:

There’s still a lot of confusion around the Canada Emergency Response Benefit and also the Canada Emergency Student Benefit and particularly which can you claim and when.

Now just to share with you one story; one student was working during the school year on a part-time basis, now that work was supposed to come to an end at the end of April but she was working part-time during school and had earned over $5,000 in the last year so she was fine that way. When her job came to an end because of COVID-19, she did qualify for the CERB and has been claiming that benefit. Her question was “What about the summer months?”

So in the summer months, she had no guaranteed work for the summer months, it’s not like there was a contract already in-place, she had a job for the summer, it was guaranteed and now she lost it because of COVID-19.

If that had been the case she would be able to continue claiming the CERB, but that wasn’t the case. Now she’s left looking for a job like many other students are this summer. If she has trouble finding that work for the summer, she could claim CESB.

Now it’s going to take a separate application, it’s not as generous as the CERB but it’s still not bad, it’s free money so don’t hesitate to apply for it. But keep in mind as well that the government will not let you claim both the CERB and CESB in respect to the same period of time so you can’t double dip.

But still if you do qualify make sure apply, because it is free money and it’s going to help you. (June 29, 2020)

Managing your portfolio amid ongoing waves of volatility

Roland from Toronto:

I’m finding it really difficult to sit and watch our (risk adverse) mutual funds fluctuate so greatly.

The advice we get from the bank from the on-set (early to mid-March) is that it will return to the original value and to be patient. Even when everyone was selling and things started to slide, we were told to hold on versus protecting our assets.

While we still haven’t recovered from initial losses from March, I wonder if it’s too late to protect what we already have in event there is another downturn this fall.

What types of guaranteed investments can we move our mutual fund money to until we get over this hurdle? (June 29, 2020)

Frank Settino, investment counsellor at Kerr Financial:

You are in good company because most investors find it difficult to deal with the volatility that comes with investing in equity markets. However, with the added volatility there is the prospect of generating rates of return that are well above guaranteed investments over the long-term. The long-term is measured in years and not months.

If you feel uncomfortable with the fact that the value of your investments has fallen below the original value, we suggest that you review your risk tolerance and time horizon. As a result, you may discover that based on your investor profile your current investments are not suitable for you.

If this is the case you may want a much smaller allocation to equities that typically exhibit greater volatility, and a larger allocation to bonds and guaranteed investment products that provide stable income and preserve capital. In reducing your exposure to investment risks tied to equities, you should also expect to generate lower returns over the long-term. (June 30, 2020)

To have your personal finance question answered an industry professional, send an email to askbnnbloomberg@bellmedia.ca.

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