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Canada needs to Own the Podium of international investment

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Craig Wright is the chief economist at the Royal Bank of Canada

You cannot stand out when you are in the middle of the pack. But that’s where Canada finds itself as we enter the 2020s and perhaps the most competitive, and disruptive, economic race we’ve seen.

According to the 2019 Wealth Opportunity Index, which was produced by the Economist Intelligence Unit for RBC Wealth Management, Canada stands in seventh place among 15 high- and middle-income countries vying for global capital. The index measures economic fundamentals, market dynamics, innovation and risk, and should matter to the prosperity of every Canadian as it shows what we’re up against in the competition for capital that’s needed to build infrastructure, launch and grow businesses and finance our indebted public sector.

First, some good news. In a world where geopolitical tensions undermine the confidence of global investors, Canada is viewed as a safe harbour – ranking near the top of the index’s risk category. That’s in large part owing to our stable macroeconomic, financial and political climate. We must continue to play to this strength as we compete for foreign investment.

Canada also fared well in the market dynamics category, which examined a country’s attractiveness and activities that are contributors to wealth generation. Yet much of our success stemmed from our robust real estate markets – a precarious advantage given the cyclical nature of property values.

These strengths were offset by some troubling signs. Our macroeconomic and demographic drivers – including real gross domestic product (GDP) growth – ranked us in the bottom half in the economic fundamental categories.

Moreover, Canada’s ability to generate new businesses, products and services, as well as produce research and development was also a clear vulnerability. Our predisposition to generate wealth through innovation lags behind patent-producing economies found in Japan, Singapore, the United States and Hong Kong. Other countries, notably China, benefited from strong productivity growth.

None of these results should come as a surprise, but they do point to the need to address some of the burdens that weigh us down in the race for international investment. We can improve our standing by:

  • Reducing interprovincial trade barriers. By doing so, the International Monetary Fund estimates a lift of 4 per cent in real GDP per capita.
  • Better leverage our well-educated labour force. We have one of the world’s best education system, which attracts hundreds of thousands of new Canadians, and yet we don’t do enough with it to drive economic and social innovation.
  • Explore new trade agreements in South Asia, the Middle East and Latin America, while also helping business and entrepreneurs take advantage of the deals we’ve signed with Europe, Asia-Pacific countries and most recently, our North American neighbours.
  • Encourage business and investors to ramp up research and development (R&D) in emerging sectors such as renewable energy and clean technologies for traditional industries.

We also must seize new challenges that will impact our ability to create wealth in the coming decades. For instance, millions of Canadians will need a set of skills for multiple roles, rather than a single career. But educators, employers and policy makers have yet to adjust fully for this skills economy. This also includes helping those at risk of losing their jobs through automation.

A recent RBC report suggests there are about one million Canadian workers in this situation who possess many of the vital skills required for the health-care sector. Helping them make the transition could be an important remedy for a sector that is expected to exceed the overall economy in job creation in the coming years.

Getting this right would represent an important step forward in creating the kind of economy we need to generate greater opportunity and wealth. We entered the 2010s with a national commitment to Own the Podium at the Vancouver Winter Olympics and it worked. The same determination can guide us into the 2020s, to own the podium of international investment and, in turn, stand out from the pack.

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Bitcoin hovers near 6-month high on ETF hopes, inflation worries

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Bitcoin hovered near a six-month high early on Monday on hopes that U.S. regulators would soon allow cryptocurrency exchange-traded funds (ETF) to trade, while global inflation worries also provided some support.

Bitcoin last stood at $62,359, near Friday’s six-month high of $62,944 and not far from its all-time high of $64,895 hit in April.

The U.S. Securities and Exchange Commission (SEC) is set to allow the first American bitcoin futures ETF to begin trading this week, Bloomberg News reported on Thursday, a move likely to lead to wider investment in digital assets.

Cryptocurrency players expect the approval of the first U.S. bitcoin ETF to trigger an influx of money from institutional players who cannot invest in digital coins at the moment.

Rising inflation worries also increased appetite for bitcoin, which is in limited supply, in contrast to the ample amount of currencies issued by central banks in recent years as monetary authorities printed money to stimulate their economies.

But some analysts noted that, after the recent rally, investors may sell bitcoin on the ETF news.

“The news of a suite of futures-tracking ETFs is not new to those following the space closely, and to many this is a step forward but not the game-changer that some are sensing,” said Chris Weston, head of research at Pepperstone in Melbourne, Australia.

“We’ve been excited by a spot ETF before, and this may need more work on the regulation front.”

 

(Reporting by Hideyuki Sano in Tokyo and Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa)

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These are the only times it's smart to make changes to your investment portfolio – CNBC

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Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

Recent market volatility has many investors wondering if now is a good time to alter their investments.

The short answer experts generally advise? It’s rarely actually a good time to make changes to your investment portfolio.

“Most investors who jump in and tweak their portfolios typically do it in response to market conditions and history has shown us this just doesn’t work out in their favor,” says Tony Molina, a CPA and senior product specialist at Wealthfront. “What often feels right when it comes to investing, is usually wrong.”

Though you may feel tempted to modify your investments when the market dips, you’re often better off leaving them alone for the long haul. The reality is, downturns happen but your money is safer if you ride out the storm. Just as quickly as the market can go down, it can also go up — and keeping your cash invested throughout these fluctuations is what helps your money grow over time. This is especially true when investing in index funds and ETFs.

But, we wondered, is there ever a good time to adjust your investments? Turns out, there are a couple conditions when it’s OK.

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When it’s a good time to make changes to your investment portfolio

While it’s typically best to leave your investments alone, you may want to change course if there has been a change in your investing goals’ time horizons, and consequently, your risk tolerance, advises Ivory Johnson, a CFP and founder of Delancey Wealth Management.

On one hand, you may find that you have extended the number of years until retirement and can take on more risk. Or, on the other hand, perhaps you’re retiring sooner than you thought and shortening that timeframe means that you need to put your money in lower-risk investments.

Using a robo-advisor is an effective workaround to avoid having to worry whether your investments match your risk tolerance. Robo-advisors have users fill out a brief questionnaire that helps them know how to best allocate your cash depending on your investment goals and the top robo-advisors will regularly rebalance your portfolio for you as needed.

Betterment, for example, will recommend a stock-and-bond allocation based on your goals and adjust automatically whenever you make a deposit, withdraw funds or change your target allocation. Betterment’s algorithms will also check your portfolio drift (how far you are from your target allocation) once per day and rebalance if necessary.

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The automated investing platform through SoFi Invest® automatically rebalances investors’ portfolios as well, but on a quarterly basis. SoFi is a good option for investors also looking for lending products as SoFi members receive a 0.125% interest rate discount on SoFi’s student loan refinancing and personal loans.

Johnson adds that he would generally change an investment allocation when a big event has taken place, such as a severe illness or a large economic windfall (like an inheritance). In both of these cases, an investor’s need for capital appreciation reduces, he says.

Molina agrees that a good time for investors to make changes to their portfolios would be in response to major life events. Specifically, he means events that put the investor in a position where they would need to access their investments in the near future (three or so years). Examples include marriage, a family emergency or as an investor nears retirement.

“This would be a good reason to reduce their investment risk or pull out their funds altogether,” Molina says.

Much of an investor’s decision to change their portfolio in this scenario depends on how soon they may need to withdraw their funds. “In general, if you need the funds within the next three years or less, you may want to consider changing your investment strategy,” Molina adds.

When it comes to investing in individual stocks, keep in mind that you should be using money that you are comfortable having tied up for at least the next five years. While individual stock investors are advised to hold for the long term (especially during times of volatility) in order to best maximize their returns, they may choose to sell a losing stock if it is more risk than they can handle and it generates significant financial loss. Investing in index funds and ETFs are an easy way to take on less risk and diversify your investments.

Bottom line

If you’re thinking of adjusting your investments, most of the time it’s probably not the best move for your long-term growth in the market.

The exceptions to this rule are if your time horizon and risk tolerance suddenly change. Another exception is if there has been a major life event where you no longer need your money to be invested, or where you could be better off financially with the cash accessible in your wallet.

Catch up on Select’s in-depth coverage of personal financetech and toolswellness and more, and follow us on FacebookInstagram and Twitter to stay up to date.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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Cushman Investment in WeWork Rests on Successful Stock Listing – BNN

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(Bloomberg) — Cushman & Wakefield Plc agreed to invest $150 million in WeWork Cos., contingent on the flexible work company successfully completing its forthcoming stock listing, a person familiar with the matter said. 

The investment was born of a partnership the two companies unveiled Aug. 9. They said at the time that they were discussing a potential investment but hadn’t signed a definitive agreement.

A spokesman for Cushman said the company was pleased with the progress of the WeWork partnership but declined to comment on the investment. A spokesperson for WeWork also declined to comment on the investment. WeWork is preparing to go public via a $9 billion blank-check merger in late October.

The companies cited the effects of the Covid-19 pandemic as a catalyst for their accord. For many businesses, the return to the office has been a stilted process. Widespread vaccines in the U.S. brought some workers back, but the return stalled, along with vaccination rates, and outbreaks of new variants played a role.

“The partnership we announced with Cushman & Wakefield in August is a testament to WeWork’s long-term value proposition and we remain incredibly excited about the opportunities that lie ahead as we team up with one of the leading real estate firms in the world,” WeWork said in a statement Sunday.

The deal represents a marriage of old real estate and new. Cushman & Wakefied is more than a century old and one of the largest commercial real estate services companies in the world. WeWork is barely a decade old.

©2021 Bloomberg L.P.

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