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Investment portfolios should be well-balanced



As the markets seesaw up and down, the way your money is distributed among different types of investments and asset classes can change. Over time, these changes may increase or decrease the risk of your portfolio. As a result of these changes, it could be time to rebalance your portfolio.

What is rebalancing?

The purpose of rebalancing is to move a portfolio back to its original target allocation by following the first rule of investing: Buy low and sell high. Rebalancing is the process of selling a portion of your portfolios over weighted investments, and using the proceeds to buy more of your underweighted investments until the percentage of each asset is equal to the original portfolio.

Why rebalance?

Once you have built a well-diversified portfolio, you may need to rebalance it periodically to ensure that it continues to match your investment goals and objectives. Taking the time to rebalance your portfolio will ensure that your investment goals are still on track. If you don’t rebalance and one asset class in your portfolio becomes too large, you are, by default, changing your portfolio’s risk profile.

For example, let’s say you own two funds: Fund A and Fund B. You have a $100,000 portfolio and have selected an asset allocation such that each fund represents 50% ($50,000 each) of the total. The following year, Fund A gains 20% while Fund B loses 20%. Your portfolio’s value hasn’t changed and is still worth $100,000. However, the difference in the performance of the two funds causes the allocation of your portfolio to change from a 50-50 mix to 60-40. As a result, the portfolio now has different risk and return characteristics than its original allocation. To return to your desired 50-50 allocation, you would rebalance your portfolio by taking $10,000 from Fund A (sell high) and invest it into Fund B (buy low).

Most investors understand the concept and logic of rebalancing. However, the counterintuitive logic of rebalancing often leads investors to do the complete opposite. Emotionally, they want to buy more of the investments that have recently made the most money (buy high), and sell more of the investments that have lost and/or made the least amount of money (sell low). From a long-term, wealth-accumulation standpoint, this is exactly opposite of what investors should do.

Rebalancing accomplishes three important objectives:

1. Guarantees you will buy low and sell high.

2. Removes your emotions from the investing process.

3. Keeps your portfolio’s asset allocation in line with your risk profile

There can be tax consequences to rebalancing, depending on what type of account your money is invested in. Rebalancing (i.e., selling an investment) in a tax-deferred account, such as a 401(k) or an IRA, is not a taxable event. The only time you pay taxes in a tax-deferred account is when you withdraw money from the account. Unlike tax-deferred accounts, whenever you rebalance (sell) an investment that has appreciated in value in a taxable account, non-IRA or 401(k), you could owe taxes from capital gains

How often should you rebalance?

There are various theories about the best ways and time to rebalance. Just as there is not one perfect asset allocation, there is not one perfect rebalancing strategy.

At a minimum, rebalancing should be performed once per year. At Capital Wealth Management, we review each client’s portfolio every month to see if rebalancing is needed. Our investment policy dictates rebalancing when a client’s individual target asset allocation is out of balance by plus or minus 5%.

For instance, if a client’s portfolio has a target allocation of 60% stocks and 40% bonds, this method rebalances if stocks reach either 65% or 55%, and bonds make up 35% or 45% of the portfolio.

Rebalancing is an important part of long-term investing. Portfolio rebalancing can help reduce downside investment risk, and ensures that your investments are allocated in line with your financial plan. A year-end review with your financial adviser is an ideal time to review your portfolio’s allocation and rebalancing options.

Martin Krikorian, is president of Capital Wealth Management, a registered investment adviser at 9 Billerica Road, Chelmsford. He can be reached at 978-244-9254,, or via email

Source:- Lowell Sun

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Sydney's Smart Shop to reopen amid surge in downtown investment –



The construction of the new Nova Scotia Community College Marconi campus on the Sydney waterfront is spurring investment in the downtown.

A notable recent development is the purchase of Sydney’s iconic Smart Shop Place on the corner of Charlotte and Prince streets, which has been sitting vacant in recent years.

“We see Sydney as booming nowadays,” said Ajay Balyan, who recently purchased the three-level building along with his brother, Ankit.

Brothers Ajay and Ankit Balyan, former CBU students from India, have purchased downtown Sydney’s iconic Smart Shop building. (Holly Conners/CBC)

It was a different picture when he moved to Cape Breton from India in 2017 to study at Cape Breton University.

A lot has changed since then, with a boom in international enrolment at CBU and unprecedented public infrastructure investment in the area, including the new NSCC campus, health-care redevelopment and a potential new regional library.

“We know after NSCC, the Sydney downtown is going to be the main spot for the students to hang out or to eat,” said Balyan. “And we’re getting good support from the community, as well. So we find it to be a good opportunity for us.”

Smart Shop Place opened in 1904 as a clothing store and long served as a retail anchor in Sydney. The Balyans plan to rename the building Western Overseas, after their family’s business in India.

Ajay Balyan, shown in the lower level of the former Smart Shop Place, which he plans to reopen as a fine-dining restaurant. (Holly Conners/CBC)

Construction is underway to convert the main floor into a small food court and the lower level into a fine-dining restaurant. The upper level will become apartments.

The brothers, with family partners in India, have similar plans for the former Cape Breton Post building on Dorchester Street, which they bought last year.

The two also own Swaagat, an Indian restaurant they opened on Prince Street in 2019.

Craig Boudreau is among a group of investors who have been buying up properties in downtown Sydney. (Holly Conners/CBC)

Meanwhile, on Charlotte Street, local entrepreneur Craig Boudreau and a group of partners recently bought four buildings and are negotiating a fifth.

Two years ago, Boudreau purchased the former Jasper’s Restaurant site on George Street. It’s currently being used as a parking lot, but he hopes to start construction next fall on a multi-story commercial and residential development.

NSCC students will need housing and the community could use more dining options, said Boudreau.

“It’s really spinoff,” he said. “It’s kind of the perfect scenario.”


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Don't let fear drive you into a fee trap when working with an investment advisor – BNN



Spiking market volatility and a renewed threat of global economic stagnation caused by COVID- 19 has sent stressed-out investors flocking to advisors.

Many advisors have been reporting a rise in new clients since last spring’s lockdown, and a new survey commissioned by Manulife Investment Management backs it up. It shows 63 per cent of respondents plan to seek investment advice in 2020 compared with half in 2019. And more than half of respondents in Canada indicated they were interested in retirement planning and investing advice.

It’s good that more people are looking for long-term retirement plans managed by professionals, but fear can lead investors into fee traps that consume their investment dollars.

The path to those fee traps typically begins with investors looking to coordinate a mishmash of investments in their registered retirement savings plans (RRSP), and tax-free savings accounts (TFSA). For the vast majority of Canadians, the only route to a diversified, professionally-managed portfolio is through mutual funds.

The price investors pay for diversification and professional management in a mutual fund is an annual fee based on a percentage of the money they have invested called the management expense ratio (MER). MERs vary depending on the fund company and asset class, but a typical MER on a Canadian equity fund purchased through an advisor is about 2.5 per cent.

That might not seem like a lot at first glance, but on a $500,000 portfolio of mutual funds, it adds up to $12,500 annually whether the fund makes money or not. That’s $12,500 each year not invested and not compounding, and potentially hundreds of thousands of dollars over a lifetime of investing.

Baked into the MER is a hidden trailing commission, or trailer fee, to compensate the advisor who sold the fund for “ongoing advice.” A typical trailer fee is one per cent annually – or $10,000 on a $500,000 portfolio of mutual funds each year.

Trailer fees are banned in most of the developed world due to the inherent perception of conflict of interest. You have to wonder if an advisor is selling a fund because it is right for the investor or because it provides the best trailer fee from the mutual fund company. 

And it get’s worse. 

Some advisors will direct investors toward segregated funds, which are essentially mutual funds wrapped in an insurance product. Seg funds have the potential to make money from the investments they hold but are insured, or partially insured, against losses on the principal amount invested over long terms – often 19 years. Investors pay for that extra security through higher MERs. Manulife – the company that commissioned the survey – for example, sells segregated funds with MERs above three per cent.  

Segregated funds have certain advantages for small business owners wanting to protect their savings in the event of bankruptcy, but sometimes appear in workplace defined contribution pension plans. 

Advisors sometimes push seg funds on unsuspecting clients through a regulatory loophole known as “the-know-your-client rule,” which requires advisors to document a questionnaire relating to return goals and risk tolerance, and only sell investments in line with the client’s answers.  

Some clients might not understand that all investments have some degree of risk and say they expect their savings to grow risk-free. Only segregated funds fit that bill.  

Payback Time is a weekly column by personal finance columnist Dale Jackson about how to prepare your finances for retirement. Have a question you want answered? Email 

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TransLink in time crunch to update its 10-year Metro Vancouver transit investment plan – Vancouver Sun



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The COVID-19 pandemic and an unexpected provincial election have put TransLink in a time crunch to finish a required update to its 10-year investment plan.

Metro Vancouver’s transit authority is obligated, by provincial legislation, to update the plan at least every three years. The current plan was approved on June 28, 2018, which means the new one is due by June 28, 2021.

“Originally we had had planned for that to happen this year, but because of COVID-19 and dealing with the emergent financial challenges with that, that was not possible,” Mayors’ Council chair Jonathan Coté said following a meeting on Thursday. “But we’ve now reached the point where we need to start to work towards that.”

Priorities for the update include finding revenue to cover long-term COVID-19 losses. Although the federal and provincial governments will provide a combined $644 million to TransLink to cover its pandemic losses for 2020 and 2021, there will likely be shortfalls of $100 million to $300 million each year between 2021 and 2030.

The losses will depend on how long the pandemic lasts, the depth of economic damage and how quickly transit ridership recovers. The plan cannot show a deficit.

“Even with the near-term financial aid, we almost certainly have a fairly significant structural hole in our budget and we’re going to have to work to understand just what that hole is over the months to come,” CEO Kevin Desmond said after the meeting.

“There’s still a lot of uncertainty about the path of the pandemic.”

The investment plan will also deliver elements of the second phase of the 10-year regional transportation vision that are outstanding or were delayed due to the pandemic, plus approving projects that are already funded, such as a SkyTrain extension to Fleetwood and the next stage of the low-carbon fleet strategy.

A lot will have to be done before next June, including confirming federal and provincial contributions, finding new regional funding sources and setting rates, plus consultation with the public and local governments.

“No doubt this is going to be a significant part of our work plan and probably one of the more challenging things the Mayors’ Council is going to have to work on,” Coté said during the council meeting.

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