Tag Archives: Investing

Vlog Ep 11 – The Value of a Financial Planner


Did you know that the average annual return of the stock market over the last 50 years has been over 7% while the average individual investor has achieved only 2.3% over the same period?

Ever wonder why that is?

It has nothing to do with fees, or institutional investors taking all the good opportunities.  It’s much simpler than that.

In Today’s VLOG I’ll tell you why most individuals can’t achieve those kinds of returns consistently and how to give yourself a fighting chance.  The answer is simpler than you might think…

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Vlog 4 – Understanding your Balance Sheet


This week’s Vlog grew out of a conversation I had on Tuesday with young business owner about the importance of building your net worth and managing a balance sheet.

Enjoy…

 

New Media Channel – I’m on YouTube!


Thanks to the camera in my iPhone and a free editing program I downloaded, I am know able to record my thoughts on video!

Here is the first of what I hope will become a new way to communicate my message to the world.  Check out my first Vlog – “What I do and Why I do It.”

Let me kow what you think!  Feedback is always appreciated.

The Big 3 Life Changing Events that can Significantly Affect Your Finances


In my practice as Financial Security Advisor I hear variations of these themes almost every day, my job of course is the help people live life to the fullest, get out of debt, build wealth and leave a legacy but that’s a lot harder than it sounds, especially when one of these large uncontrollable and unpredictable events occurs. But there are a few things we can do to prepare, and throw you a life line when you need it.

1 – Serious Illness

According to a Statistics Canada report from 2011, about 8% of full-time employees are away from their jobs for part or all of any given week due to illness, disability, or personal and family responsibilities. When you add it all up people miss an average of just over nine days at work every year. Illnesses very greatly in intensity and cost, they can range from a head-ache with the sniffles to Ebola. They can be acute (and over relatively quickly) or chronic (and last a long time). Whether an illness affects you or a close family member, it may lead to unpaid absences from work as well as a wide range of additional expenses that aren’t covered by provincial health plans or employer benefits.

Check with your employer or your benefits manual to find out exactly what is, and isn’t covered, and consider purchasing additional coverage in the form of Long Term Disability or Critical Illness Insurance to avoid some of the financial losses that could occur should something like this happen to you.

2 – Job Loss

Again, according to Statistics Canada, in 2015, the economy created 151,000 full-time jobs.

Yay?

On the surface this looks like good news, but it doesn’t tell the whole story. The unemployment rate still rose by 0.4% to 7.1% with 110,000 more people looking for work at the end of the year. Some of the people were of course new to the work force, newly graduated from colleges and universities, or new immigrants but others were established and experienced workers who had lost their jobs. Job loss can sweep through a specific industry, like manufacturing in Ontario or the oil patch in Alberta. Or it can happen individually. Some lucky workers are offered severance packages but too often they receive nothing and families face an immediate drop in income.

Job loss is the very definition of a financial emergency and the number one reason you should have an emergency fund of at least 3 months of expenses. Knowing your bills will be paid while you look for work and wait for other forms of support like government employment insurance to kick in can relieve a lot of stress associated with losing your job.

3 – Divorce

About 70,000 divorces are finalized every year in Canada, not to mention the breakdown of common-law relationships that never make it into the official numbers. Separation and divorce carry with them far more considerations than the merely financial concerns that come up and I don’t mean to over simplify and minimize what can be a significantly painful and personal experience. It may be the result of years of discord, or sudden and unexpected but the fact is that managing two households is significantly more expensive than one and when one party makes considerably less income than the other the impact is often felt disproportionately.

Not to mention the potential for a large legal bill at the end of it all. Engaging the help of a financial security advisor to help separate financial assets, like joint retirement accounts, life insurance policies and RESPs is a must for any separating couple.

This is by no means an exhaustive list but keeping these three things in mind when designing your financial plan could go a long way to avoiding a lot of extra head-ache, heart-ache and stress down the road.

Lauren C. Sheil is a serial entrepreneur who has been in business for over 25 years. He has operated a small farm, a recording studio and a music manufacturing plant, and has written 3 books on Economics, Ethics and Spirituality.  He has presented his ideas to business owners and leaders from all over the world. His latest book “Meekoethics: What Happens When Life Gets Messy and the Rules Aren’t Enough” is available on Amazon.com.

Mr. Sheil is currently a Financial Security Advisor and Business Planning Specialist with one of Canada’s premier financial planning organizations.  He brings to his work a passion for people and a desire to teach everyone to live life to the fullest while Eliminating Debt, Building Wealth and Leaving a Legacy.  

He can be reached at themeekonomicsproject@gmail.com or by calling 613-295-4141.

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Quote of the Day – 2/12/2017


Successful investing does not depend on “beating the market.” Attempting to beat the market – to do better than other investors – will distract you from the fairly simple but quite interesting and productive task of designing a long-term program of investing that can and will succeed at providing the best feasible results for you in the long run. – Charles D. Ellis; Winning The Loser’s Game – Timeless Strategies for Successful Investing

 

7 Tips to Recover from a Financial Setback


why-meBad things happen to good people. Overcoming financial challenges – in whatever form – takes dedication, patience and planning.

In life, you will have trouble, that’s a given. This can include losing your job, going through a divorce, or experiencing a serious illness. Then there are all those unexpected expenses life throws at you. A leaky roof, flooded basement, major car repair – any one of these could cost thousand, with no time to waste and room to negotiate.

And to add insult to injury, often times, more than one of these situations occur at once. It’s fairly obvious to think that these challenges often affect your finances – so how do you recover?

Here are seven tips for getting back in track after a financial setback, as recently published in “Solutions for Financial Planning”, a periodical publication from Manulife Financial.

  1. Get Professional Advice – A professional perspective can be invaluable, no matter the size of your problem. An financial advisor can help you assess the impact on both your short-term and long-term plans, adjust your goals, and develop a plan that helps lead to recovery. Getting advice first, will help you avoid making bad decisions like, racking up a large credit card balance that could only serve to prolong your troubles. Your advisor should help you gain perspective, relax a bit and offer constructive solutions to your problem.
  2. Tighten You Budget – Your budget probably has some slack. Regardless of the cause of your troubles, it’s time to eliminate that slack and get your budget back in balance. Take a hard look at your non-essential costs. I encourage all of my clients to play a little game call “Every Dollar Has A Name” in order to find the margin in their budget. Are there free or lower-cost alternatives to the things you do on a regular basis? Borrowing books, magazines and videos from the library, activities in a local park or at a community centre, or the ever popular staycation versus expensive vacation can all help save thousands. You could even take a look at negotiating a better deal on certain products and services without cutting back.
  3. changesExplore Big-Ticket Cost Savings – If things look as if they could have a lasting impact, and a high cost, it may be time to make some significant changes to your lifestyle. Changes that go beyond simple trimming and include some of the biggest line items in your budget. Consider moving to a smaller home a more affordable area and can you make do with one car? Major changes are difficult, but they may be the key to helping protect your future.
  4. Earn Extra Income – Spending less can only go so far, can you bring in more money? Can you sell something of value like art, an antique or a collectible? Maybe you can work more hours or even take a second job. Or course, working more takes time away from other commitments and might increase certain expenses like child care. And don’t forget the tax implications of earning more income. Ask your advisor to help you run all the numbers to ensure your extra income will more than pay for those extra costs.
  5. Talk To Your Mortgage Provider – If you have a mortgage, you may be able negotiate more manageable terms. You could switch from accelerated to more standard payments or if you’ve made lump-sum prepayments in the past, you may qualify for a short-term holiday from payments. It might also be possible to lengthening your mortgage’s amortization and add any payments you’ve missed to your balance. Lastly, if you are close to the renewal date on your mortgage, a full scale consolidation and change of provider may be in order.
  6. Talk To Other Creditors Too – Don’t letting bills slide, call your creditors, explain your situation and ask to lower your interest rate or reduce your payments. Most companies recognize the value of keeping you as a customer long term and are willing to negotiate rather than take a hard line and risk losing your as a customer forever. This can give you the breathing room you need to get through the worst of a setback and help protect your credit rating.
  7. Borrow Sensibly – If you simply can’t find any more savings or increase your piggywaterincome and you’ve run through your savings, check into the lowest-cost sources of borrowing. This can usually take the form of a secured line of credit or the aforementioned consolidation loan. Your advisor can help you identify the best solution for you.

 

Recovery from a financial shock is a journey. It will likely take several months or even years to get back to where you once were. But with a little determination, patience, planning and hard work, it can be done!

As things start to improve, make sure you stick to a streamlined budget and put extra money towards your long term debts. Start building a substantial emergency fund (three to six months of expenses) so you have resources on hand the next time you hit a financial speed bump.

Once you are in a stronger position, with more a bit more margin, look at other ways to help protect yourself from future shocks, such as various forms of personal insurance including, health, dental, critical illness and disability coverage. Start to set some money aside for the future too in one of the many government sponsored tax advantaged savings vehicles like a Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP) or even a Registered Education Savings Plan (RESP).

After enough time has passed and you have recovered emotionally from the stress, take some time to look back and think about what you might have done differently. Hindsight is 20/20 so use it to your advantage. Learn from the experience, without assigning blame and make sure you’re in a stronger financial position in case another difficult situation occurs.

balancingLastly, and I can’t stress this enough, go back to the very first tip and engage the help of professional financial advisor. Strong financial advice means a strong financial future. Households with an advisor are more likely to:

  • Have enough money to live the life they want (61 per cent compared to 31 per cent with no financial plan)
  • Be able to take an annual vacation (74 per cent compared to 44 per cent with no financial plan)
  • Have enough money for splurges (65 per cent compared to 31 per cent with no financial plan)

It doesn’t “just happen.” But it does happen if you have the right plan and support.

Lauren C. Sheil is a serial entrepreneur who has been in business for over 25 years. He has operated a small farm, a recording studio and a music manufacturing plant, and has written 3 books on Economics, Ethics and Spirituality.  He has presented his ideas to business owners and leaders from all over the world. His latest book “Meekoethics: What Happens When Life Gets Messy and the Rules Aren’t Enough” is available on Amazon.com.

Mr. Sheil is currently a Financial Security Advisor and Business Planning Specialist with one of Canada’s premier financial planning organizations.  He brings to his work a passion for people and a desire to teach everyone to live life to the fullest while Eliminating Debt, Building Wealth and Leaving a Legacy.  

He can be reached at themeekonomicsproject@gmail.com or by calling 613-295-4141.

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Dress For the Weather, Live For the Climate.


The daily weather is comparably different from the climate. Weather is about the short run; climate is about the long run. And that makes all the difference. In choosing a climate in which to build a home, we would not be deflected by last week’s weather. Similarly, in choosing a long-term investment program, we don’t want to be deflected by temporary market conditions. – Charles D. Ellis; Winning The Loser’s Game – Timeless Strategies for Successful Investing

weatherandclimateCharles D. Ellis is an investment consultant and one of the world’s leading thinkers in investment management.  In 1972 he founded the international consulting firm, Greenwich Associates and began offering strategic investment advice to many of the world’s largest financial institutions. You could say that Mr. Ellis is the financial advisor to your financial advisor’s boss.

In 1975 Ellis published a book called “Investment Policy” in which he explained the financial “climate” around us and the essential steps investors should take to build long term wealth. The book was originally aimed at institutional investors, the people who make strategic decisions for banks, pension funds and the largest mutual fund organizations but with the advent of the 401k plan in the US and the increasing popularity of RRSPs in Canada he soon realized that more and more individuals were taking control of their own investment plans and could benefit from knowing the strategies being employed by his large clients. The third edition of Investment Policy was released in 1998 under a new title “Winning the Loser’s Game – Timeless Strategies for Successful Investing”, and marketed for individual investors.

losersgameEllis explains that a winner’s game is a game in which you out match an opponent and win because you are better than they are. A loser’s game on the other hand is a game in which players are evenly matched and the “winner” just makes fewer mistakes than the “loser”.  The best example I can think of to describe a loser’s game is to think about how children learn to play chess.  The game is complicated and mastery of it takes years, when they first start to play children are far more likely to win if they simply make fewer mistakes than their opponent.  Beginners don’t so much “win” a chess match as they outlast their opponent long enough not to lose.

The stock market is a loser’s game simply because there are so many smart players, all with equal access to information about the companies they are buying and selling. If you are trying to “beat” the market with your skill at stock picking you are essentially trying to outsmart some of the smartest people in the world. Not only that but those super smart people are looking at the same information that you are. Your only hope at “winning” is for a large number of the players to simultaneously make a mistake and for you to have the fortitude to resist the consensus.

It does happen once in a while, but not enough for anyone to consistently beat the market over the long run. In fact, over a rolling 15 year period dating all the way back to the mid 19th century the New York Stock Exchange has lost money only once. The Toronto Stock exchange has never lost money over a rolling period of 10 years or more. This makes beating the market, winning when everyone else is losing, exceedingly hard.   Nobody does it consistently for long so Ellis’ strategy is simple – if you can’t beat them, join them.

Ellis uses the analogy of weather and climate extensively throughout the book to explain the difference between short term and long term investing strategies. Weather happens and is largely unpredictable climate takes longer to unfold and is relatively predictable.

I can’t tell you if it might snow tomorrow but I can tell you that it is highly unlikely for it to be 30 Celsius for at least another 4 months. The more data you can bring to your analysis, the longer your outlook and the broader the sampling of stocks (and bonds) you can purchase, the more predictable your returns will be. It is through this extreme diversification and a long term outlook that you can virtually eliminate risk from your portfolio.

warrenbuffett1Warren Buffet, the oracle of Omaha once said, “Our ideal holding period is forever.” Buffet understands climate.

Will the stock market go down tomorrow – maybe, I really couldn’t say for sure. Will it rain? No clue. Will the stock market gain over the next 20 years? Again I can’t say for sure but it’s never lost over that long before so it’s a pretty good bet, just like it’s never been 30 Celsius in February so I think I’ll wear a coat.

You can win the loser’s game. All you need to do is play not to lose and you’ll be just fine.

Lauren C. Sheil is a serial entrepreneur who has been in business for over 25 years. He has operated a small farm, a recording studio and a music manufacturing plant, and has written 3 books on Economics, Ethics and Spirituality.  He has presented his ideas to business owners and leaders from all over the world. His latest book “Meekoethics: What Happens When Life Gets Messy and the Rules Aren’t Enough” is available on Amazon.com.

Mr. Sheil is currently a Financial Security Advisor and Business Planning Specialist with one of Canada’s premier financial planning organizations.  He brings to his work a passion for people and a desire to teach everyone to live life to the fullest while Eliminating Debt, Building Wealth and Leaving a Legacy.  

He can be reached at themeekonomicsproject@gmail.com or by calling 613-295-4141.