Investment
Seniors deserve help with expenses in the pandemic, but investment losses are another matter – The Globe and Mail
The federal government is doing right by seniors in paying them as much as $500 to help with expenses incurred as a result of physical distancing.
The bulk of government financial help in the pandemic has been designed to replace the income of laid-off workers and help their employers survive the economic shutdown. Seniors don’t fit this model.
There has also been a “we’re-all-in-this-together” theme to the government response to the pandemic. Helping everyone but seniors would be callous.
But there’s an important distinction to be made between helping seniors with their costs, as the feds are doing, and helping them with the investment losses they’ve had in the stock-market plunge of late February and March. So far, and rightly so, the government hasn’t addressed investment losses by seniors.
Many seniors were shocked by how quickly and sharply stocks fell. They feel vulnerable as a result and have been waiting to see what financial support the federal government might offer. The cash payments announced Tuesday may disappoint some, but it’s not the job of government to backstop individual investing losses. If anyone loses money in the stock market, that’s on them.
The financial support for seniors announced Tuesday consists of a one-time, tax-free payment of $300 to people eligible to receive Old Age Security. An extra $200 will be paid to low-income seniors eligible for the Guaranteed Income Supplement.
With seniors facing added costs and hits to their savings from the COVID-19 pandemic, Prime Minister Justin Trudeau said the government will bump payments under old-age security and the guaranteed income supplement by up to $500 for those who qualify. The Canadian Press
The maximum $500 in payments will offset the added costs of living with physical distancing. For example, it costs more to have groceries delivered than it does to shop in person and take advantage of what’s on sale. What this federal money likely won’t do is calm the nerves of seniors whose investment portfolios were exposed to the recent stock-market crash.
The S&P/TSX Composite Index fell about 37 per cent in a little more than a month, which is an exceedingly rough ride. The index has since halved its loss, but the trauma of the decline remains.
Ottawa hasn’t ignored investment losses incurred by retirees. For 2020, the minimum mandatory withdrawal from registered retirement income funds has been reduced by 25 per cent. If a senior has to sell hard-hit stocks or equity funds to pay for a RRIF withdrawal, this move reduces the sting a little bit.
The feds should have waived this year’s RRIF withdrawal requirement entirely. They could still do that, but they’d have to take an additional step of allowing people who already made a RRIF withdrawal to put the money back in without penalty. This would be a huge hassle for all concerned, seniors and their advisers and investment companies, but also a morale booster for retirees who feel they were mugged by the stock market.
It’s a flaw of our retirement system that seniors feel the pain of stock-market declines as intensely as they do. We’d all be better off if more people retired with defined-benefit pension plans, where cash is paid monthly as long as you live and professional money managers handle stock-market ups and downs.
Without a defined benefit pension, you have to rely on your own investing skills or those of an investment adviser. You need to pay close attention to your retirement investments, notably the mix of stocks, bonds and cash. At all times, you need to be prepared for the kind of stock-market decline we saw recently.
The extent of the stress felt by seniors about their investments recently suggests that they may not have been as conscious of risk as they should have been. They may need to work harder, either themselves or by questioning their adviser, to prepare their retirement investments for big stock-market downturns.
Helping seniors cover extra living costs in the pandemic is compassionate. But helping them with investment losses sends a message that there’s a safety net for people who don’t manage their investments well.
Unfortunately, that’s not true in our retirement system for many people. They have to look after themselves.
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2 hours ago
Everton are searching for third-party investment in order to push through a protracted takeover by 777 Partners.
The Miami-based firm agreed a deal to buy the Toffees from majority owner Farhad Moshiri in September, but are yet to gain approval from the Premier League.
On Monday, Bloomberg reported the club’s main financial adviser Deloitte has been seeking fresh funding from sports-focused investors and lenders to get 777’s deal over the line.
BBC Sport has been told this is “standard practice contingency planning” and the process may identify other potential lenders to 777.
Sources close to British-Iranian businessman Moshiri have told BBC Sport they remain “working on completing the deal with 777”.
It is understood there are no other parties waiting in the wings to takeover should the takeover fall through and the focus is fully on 777.
The Americans have so far loaned £180m to Everton for day-to-day operational costs, which will be turned into equity once the deal is completed, but repaying money owed to MSP Sports Capital, whose deal collapsed in August, remains a stumbling block.
777 says it can stump up the £158m that is owed to MSP Sports Capital and once that is settled, it is felt the deal should be completed soon after.
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Investment
Warren Buffett Predicts 'Bad Ending' for Bitcoin — Is It a Doomed Investment? – Yahoo Finance
Currently sitting in sixth on Forbes’ Real-Time Billionaires List, Berkshire Hathaway co-founder, chairman and CEO Warren Buffett is a first-rate example of an investor who stuck to his core financial beliefs early in life to become not only a success but a once-in-a-lifetime inspiration to those who followed in his footsteps.
One of the most trusted investors for decades, the 93-year-old Buffett isn’t shy to pontificate on his investment philosophy, which is centered around value investing, buying stocks at less than their intrinsic value and holding them for the long term.
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He’s also quite vocal on investments he deems worthless. And one of those is Bitcoin.
Buffett’s Take on Bitcoin
Over the past decade, it’s been clear that the crypto craze isn’t something Buffett wants any part of. He described Bitcoin as “probably rat poison squared” back in 2018.
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Buffett said in 2018. And his stance hasn’t wavered since. According to Benzinga, Buffett believes that cryptocurrencies aren’t a viable or valuable investment.
“Now if you told me you own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything,” Buffett said at the Berkshire Hathaway annual shareholder meeting in 2022.
Although the Oracle of Omaha has his misgivings about the unpredictable investment, does that mean crypto is doomed as an investment? Not necessarily.
For You: 10 Valuable Stocks That Could Be the Next Apple or Amazon
Is Buffett Wrong About Bitcoin?
Bitcoin bulls argue that while it’s not government-issued, cryptocurrency is as fungible, divisible, secure and portable as fiat currency and gold. Because they occupy a digital space, cryptocurrencies are decentralized, scarce and durable. They can last as long as they can be stored.
Crypto boosters continue to predict massive growth in the coin’s value. Earlier this year, SkyBridge Capital founder and former White House director of communications Anthony Scaramucci told reporters that Bitcoin could exceed $170,000 by mid-2025, and Ark Invest CEO Cathie Wood predicts Bitcoin will hit $1.48 million by 2030, according to Fortune.
“They really don’t understand the concept and the whole history of money,” Scaramucci said of crypto critics like Buffett on a recent episode of Jason Raznick’s “The Raz Report.” Because we place a value on “traditional” currency, it is essentially worthless compared with the transparent and trustworthy digital Bitcoin, Scaramucci said.
Currently trading around the $66,000 mark, Bitcoin is up nearly 50% in 2024. This means it’s massively outperforming most indexes this year, including the S&P 500, which is up about 6% in 2024.
Although Berkshire Hathaway has invested heavily in Bitcoin-related Brazilian fintech company Nu Holdings, which has its own cryptocurrency called Nucoin, it’s possible Buffett will never come around fully to crypto, despite its recent surge in value. It’s contrary to the reliable investment strategy that has served him very well for decades.
“The urge to participate in something where it looks like easy money is a human instinct which has been unleashed,” Buffett said. “People love the idea of getting rich quick, and I don’t blame them … It’s so human, and once unleashed you can’t put it back in the bottle.”
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This article originally appeared on GOBankingRates.com: Warren Buffett Predicts ‘Bad Ending’ for Bitcoin — Is It a Doomed Investment?
(Bloomberg) — Ping An Insurance (Group) Co.’s profit dropped 4.3% in the first quarter as stock-market declines and falling bond yields eroded investment returns.
Net income fell to 36.7 billion yuan ($5 billion) in the three months ended March 31, from 38.4 billion yuan a year earlier, the Shenzhen-based company said in a filing to the Hong Kong stock exchange Tuesday.
Operating profit, which strips out one-time items and short-term investment volatility, fell 3%.
China’s stock market rout at the start of the year and lower bond yields have weighed on insurers’ investment returns. They hurt profit even as more customers seek to buy savings products. Co-Chief Executive Officer Michael Guo said last month that profitability will recover after a 23% drop in net income last year.
“China’s macroeconomy gradually recovered in the first three months of 2024, but there were still challenges,” the company said in a statement, citing weak domestic demand. “In response to volatile capital markets and declining treasury yields, Ping An continued to pursue long-term returns through cycles via value investing.”
Read More: Ping An Trust Wins First Court Ruling Over Delayed Trust Product
Net investment yield of insurance funds dropped to 3%, the statement said, down from 3.1% a year earlier. Real estate investments fell to 4.2% of the 4.9 trillion yuan portfolio, from 4.6% the year earlier.
The CSI 300 Index slumped as much 7.3% this year through the start of February, before government intervention fueled a rally.
New business value, which gauges the profitability of new life policies sold, rose 21% in the first quarter. That followed a 36% jump last year as the company’s efforts to improve the productivity of life agents started to bear fruit. NBV per agent jumped 56% from a year earlier, the statement said.
Ping An shares rose 3% to HK$33.00 in Hong Kong trading on Tuesday, trimming the year’s loss to 6.7%.
(Updates with company comment in fifth paragraph, more details afterwards)
©2024 Bloomberg L.P.
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