All posts by meylec2

    No matter the age of life you are in, your financial plan should be your boon companion and echo your place upon the stage, helping you with your life goals, for your lifetime.

    Looking for your cue?  Lifetime Financial Services can develop a playbill for your world; from financial literacy to estate planning and everything in between.

    Source

    You have different financial needs at different stages of your life and your advice should evolve with the role you play.

    Financial advice for all the ages of your life.

    www.lifetimefinancialservices.ca

    Over the course of this year, I have talked about the importance of being prepared for those moments in life that no one wants to experience.  Those moments that can put enormous stress on us, our families, and our businesses.

    The role of the financial advisor, in many respects, is to warn clients of possible threats to their financial well being and to offer protection from those threats.

    This month, I will present one of the easiest and cost effective ways to prepare yourself financially: life insurance. Specifically, I’ll focus on what has come to be called mortgage insurance.  I receive many questions about mortgage insurance, which is really just another name for life insurance.  It is of vital importance to many homeowners, especially with the dramatic increase in house prices over the last few years.

    Like many other products and services we buy, it is a good idea to shop around and compare prices and products.  Do not feel that you are obligated to take the insurance that is offered by your mortgage lender.  It may be convenient, but it may not fit your needs and there may be a better value out there.

    I hope that these two resources, one from the Financial Consumer Agency of Canada, and the other an article from moneysense.ca that features Peter Wouters, can offer you perspective and information.  If you would like to discuss your personal insurance situation, I would be happy to talk to you.

    Financial Consumer Agency – mortgage insurance

    moneysense.ca – mortgage insurance

    I hope that everybody has a wonderful holiday season and is able to visit with long unseen friends and family!  Stay safe and healthy and here’s hoping for a great 2022!

    Chris

    “Strangeness adds to the weight of calamities, and every mortal feels the greater pain as a result of that which also brings surprise. Therefore, nothing ought to be unexpected by us. Our minds should be sent forward in advance to meet all problems, and we should consider, not what is wont to happen, but what can happen.”

    “We should therefore reflect upon all contingencies, and should fortify our minds against the evils which may possibly come. We must reflect upon fortune fully and completely.”

    Seneca, Moral Letters to Lucilius, 91.3-4 & 7-8

    I ran across the above quote from Seneca the other day and it struck me how relevant it is to what I do on a daily basis, and how, by extension, powerful it can be in everyone’s life.

    It is from Moral Letters to Lucillius, a collection of letters that Seneca wrote to his friend.  In this letter, number 91, he is writing about a fire that destroyed the city of Lyons in Gaul, which is now France.  He thinks that we should meditate on how fortune can turn on you. We should think about a worst-case scenario in our everyday lives.  “What would happen if …?”  This practice has been called premeditato malorum which translates as premeditation of evil.

    Through premeditato malorum we can prepare ourselves so that we will not be caught off guard if something “unexpected” should occur such as a sickness, accident, or death.  We will have made prior arrangements that can soften the blow of an “unexpected” event.

    In a sense, the entire insurance industry has been built upon this notion of preparing for the worst.  People buy insurance to avoid or mitigate the financial consequences of a worst-case scenario.   If a family member dies, the survivors may not be able to pay all the bills, go into debt, and are forced to sell assets and lose the house and are now homeless.

    Perhaps my imagery is a little too Dickensian (think Bleak House or Oliver Twist) but with large mortgages, educations to fund, and everyday expenses, the reality is that in most families today both partners must work.  What happens if one partner dies or gets sick or injured?  Proper insurance coverage is a necessity.

    Financial advice goes beyond thinking about what would happen if there was an injury or death.  Post secondary education and retirement just don’t happen by themselves.  We have to look forward and consider the possible outcomes of our actions today.  If you want to put off saving for your retirement until later in life, you may have to deal with the reality that your retirement is not what you wanted when it is time to stop working.

    Many people do not like looking at the unpleasant aspects of life.  We have it pretty good these days.  Life is a lot better now than it was in the 1st century AD when Seneca wrote his letters.  He and his fellow Romans had to deal with city consuming floods and fires, plagues, and callous, hypocritical politicians.

    Well, maybe things haven’t changed that much.

    As I wrote last month, life, or Fortune, doesn’t care about what you would rather be doing, then or now.  At least today there are financial advisors that can help you answer some difficult questions, just as they have helped others before you.  All you have to do is ask for some assistance with premeditato malorum.

    What is the worst that could happen?

    In June I asked, “Can you afford to get sick?”.  I encouraged you to look at your present situation and see how your family and you would be able to financially respond to a medical emergency.  That article also had a link to a video about Dr. Barnard and how he was inspired to create critical illness insurance after seeing firsthand the financial devastation that an illness can have on a family.

    As I was writing the article, I was thinking about how easy it is to be complacent when things are going well.  We do not want to think about unpleasant things like sickness or injury.  There are more interesting and less depressing things to do, especially when we are healthy.

    In that piece, I wrote about an emergency surgery that I had many years ago.  That event has made me grateful for my health and aware of how quickly things can change.  The reality of change hit me in the face (as it were) again in September.  I was reminded of our fragility when I had a retina detach in my right eye.  Again, I found myself in emergency surgery hours after the event.  The surgery was successful, and my vision is recovering.

    The point I would like to make here is that at any moment our lives can change.  Life does not care what we would rather be doing.  A car accident, illness, or relationship breakdown can happen at any time.  How would you respond?  Would you even have time to respond?

    I encourage everyone to review your wills, power of attorney.  Look at your life insurance coverage and look into critical illness and disability insurance.  Talk to your loved ones about your wishes.  Understand the wishes of those close to you.  Make sure that your important documents are secure but accessible.  If something were to happen, you may not be able to take care of any of these things.

    To help, here is an article about resilience as well as a financial log to keep track of important financial information and contacts.  Physical copies are available, just reach out and I would be happy to send you one.

    As always, I am available to talk and would like to help.

    Chris

    I frequently get asked about the difference between segregated funds and mutual funds.  In fact, some people have never heard of segregated funds.  One reason for that may be that there are significantly more mutual funds available in Canada than segregated funds.  They may also have a branding problem; they are known as segregated funds, segs, guaranteed investment funds, and GIFs.  GIFs seem to be the new standard, and that is what I will call them.

    So, what are GIFs?  Simply stated, they are mutual funds provided by an insurance company.  This may not seem important, but it gives GIFs significant features that mutual funds do not have because they are insurance contracts.  The benefits include:

    • Maturity guarantee
    • Death benefit guarantee
    • Ability to name a beneficiary on registered AND non-registered investments
    • Ability to bypass the estate (if a beneficiary is named)
    • Possible creditor protection (under certain circumstances)

     

    This short video illustrates the difference in under 2 minutes:

    The original video can be found here: Seg funds or mutual funds

    The downside to GIFs is that the benefits are not free.  You, as the investor, pay for them through higher fees than mutual funds.  That being said, GIFs can potentially save an estate a lot of money in probate and legal fees as they do not form part of the estate.  There is also a privacy benefit: the funds go directly to the beneficiary, bypassing the estate, which is in the public domain.  This means that your nosey sibling need never know where your money went.

    GIFs can make a lot of sense for many people and their families.  If you want more information, I am always happy to discuss them with you and see if they make sense for you.

    Enjoy your summer!

    Chris

    If I had to pick a couple of positive points that have come out of this pandemic, it would be that many people have a greater sense of what is important in life and how important good health is. The pandemic has shown many of us how fragile our health can be. We can be fine one day and have our health turn for the worse the next. I had this lesson taught to me a number of years ago when I had a lung collapse suddenly and without notice. It is called a spontaneous pneumothorax. I found myself in an emergency room with tubes being inserted into my chest. While I don’t think my life was in danger, I was in real danger of losing a lung. Fortunately, I had a successful surgery and only missed a few weeks of work. I don’t think I’ll ever forget how fast my health changed.

    More serious medical conditions like cancer and stroke can also happen very quickly with little warning, and they have the power to change your life. The survival rate from these conditions is better than ever. The road to recovery, however, can be long and can test your resolve, courage, and your finances. Yes, your finances.

    If you were unable to work for six months due to cancer, how would your finances hold up? Would you be able to pay the mortgage and the bills? Would you have to use your savings? What would that mean for the kid’s education? For your retirement? Once your savings are depleted, then what? Would you depend on your family? Would you ask strangers for help through something like GoFundMe?

    While it is great that services like GoFundMe exist, there is no guarantee that any help will be forthcoming. They are a last resort. You can help yourself, though. Critical Illness insurance works much the same as life insurance except it pays you if you get sick and survive rather than when you die. It can supplement your income and pay your family’s bills while you take the time you need to recover. You are also in control. You set the amount of coverage you need through a rational process. Many policies also have a return of premium feature that returns your premium after a certain number of years.

    I know what you’re thinking – it won’t happen to me. Perhaps, but the current cancer statistics show that 1 out 2 Canadians will have some sort of cancer in their lifetime. Check out this EMPIRE CI Info sheet. The statistics come from the Canadian Cancer Society. The numbers also show that 9 out 10 families with a cancer diagnosis have reported financial difficulty.

    You will also find a video below about Dr. Marius Barnard, the South African surgeon who developed critical illness insurance after seeing firsthand the financial problems his patients were experiencing while battling health problems.

    I encourage you to learn more about this safety net for your family. We have no problem insuring our death through life insurance, we should also insure our life with critical illness insurance. If you want more information, I will be happy to help.

    Chris

    The video can be originally found here: video

     

     

    In the past I have written about the impact of finances on our mental health. Our financial situation can often make a mental health issue worse. This is not entirely surprising as many financial challenges can coincide with difficult personal situations and major changes in our lives, some of which may be traumatic. The death of a close family member or a divorce come to mind, but financial pressures can also be one of many issues that can cause a tipping point.

    A financial advisor can help with many financial issues and help prepare for unexpected events that can improve a financial situation, and this can reduce stress. A financial advisor, however, is not equipped to provide help with mental health issues. That is why I am including a link to the Canadian Mental Health Association (www.cmha.ca). There are many great resources on the site that can provide insight and show how to get help. Here are some sobering facts from the CMHA website which shows that we cannot ignore mental health:
    • In any given year 1 in 5 Canadians will personally experience a mental health problem.
    • By age 40, 50% of Canadians will have had a mental illness.
    • Almost half of the people who feel that they have suffered from depression do not seek help.
    Remember that it is not just the individuals that are impacted, but family, friends, and coworkers as well.

    To help in a small way, I am participating in the Distinguished Gentleman’s Ride on May 23, 2021. In cooperation with Movember, the purpose of the ride is to raise awareness and funds for mental health and prostrate cancer. If you are able to donate, your contribution will be greatly appreciated. Here is my link: https://gfolk.me/ChrisMeyler411165. You can also find more info about the Distinguished Gentleman’s Ride here.

    Thank you for whatever support you can provide. If you are suffering, there is help and you are not alone. If you want to discuss your financial issues, please do not be afraid to reach out.

    Thanks. Be safe. Be healthy.

    Chris

    As an advisor, I find it very helpful to know what the people managing the mutual funds that I recommend think about the markets, the economy, and where they think they can make money. I think more investors should take the time to understand what the portfolio managers that are investing for them are thinking, as there is so much more to a mutual fund investment than the basic summary that most people look at.
    With that in mind, let me present a podcast given by David Fingold of Dynamic Funds. He discusses the markets, the economy, and where he thinks he can make money for his investors. I hope it gives you some insight. If you have questions about the funds that David manages or any investment that you own, please let me know, and I can try to get clarity and answers from the portfolio managers.

    David’s podcast:
    We Remain Optimistic on the Economy

    Thanks,
    Chris

    I wanted to share this article from Brian Levitt, an analyst with Invesco Canada. It provides an interesting picture of the markets during the last year and questions one of the “rules of investing” – buy low and sell high. He argues that it is unrealistic to buy investments when the markets are at their lows due to uncertainty and our own biases. I would tend to agree. As much as we would like to think that we make rational decisions, we often make decisions that are contrary to logic. We know markets go up and down, we know that markets go up over the long term, and we know that we should buy investments when the price is low; however, putting money into an investment when the price is low and continues to go lower with no end in sight is something that few people are able to bring themselves to do, even when they know that the price will be higher if they stay invested over the long term. Essentially, Brian is saying that today’s high will seem low with the passage of time.

    This is why I think advisors are so important. We can provide perspective and help people work through their biases and fears, which can lead to better financial decisions, whether it is to buy low or buy high, because if you are not invested over the long term, you will miss out.

    All the best,
    Chris

    Buy high, sell higher

    This month I thought I would share this recent podcast from Tye Bousada, a portfolio manager and founding partner of Edgepoint Wealth Management. I know that the vast majority of investors do not really pay attention to how their investments are managed by the men & women whose job it is to make investment decisions on the investors’ behalf. I understand; life is busy and talking about investing can be boring at the best of times. I think, however, that many investors are missing an opportunity to better understand what they are investing their money in and how the investment is run. To that end, this podcast from Tye is approachable, as he talks about what he saw in the markets in 2020 and how they continue to respond to the COVID pandemic. He also gives some excellent advice for any investor.
    I have invested with Tye and Edgepoint for a long time and I hope you take the time to listen. Of course, if you have any questions about Edgepoint or your own investment journey, please feel free to get in touch with me.

    Chris

    Not investing with the herd in 2020