Gamechanger? — Vanguard’s one-ticket ETF solution comes in 3 flavours

Both investors and advisors are asking for “simple yet sophisticated single-ticket investment solutions that provide well-diversified global equity and bond exposure within a low-cost ETF structure,” says Atul Tiwari, managing director for Vanguard Canada. The new ETFs offer investors three different risk profiles and regular rebalancing.

In effect, each ETF is a fund of funds although Vanguard describes them as having an “ETF of ETFs structure.” Each holds seven existing core Vanguard index ETFs (which I list in the postscript below). Each new ETF of ETFs has a management Fee of 0.22%. Vanguard says that when one of its ETFs invests in underlying Vanguard funds, “there shall be no duplication of management fees.” Spokesman  Matthew Gierasimczuk said “There are no duplicate fees beyond the 0.22 management fee, other than a basis point or two for operating expense and the trading fee for buying or selling the ETF.”

The three asset allocation ETFs cover the normal range from Conservative to Balanced to Growth, as reflected in the product names. Equity weights range from 40% for the Conservative offering, to 60% for the Balanced and 80% for the Growth.

Here are the 3 ETFs and their ticker symbols on the TSX:

Vanguard Conservative ETF Portfolio (VCNS) seeks to provide a combination of income and moderate long-term capital growth by investing in equity and fixed income securities with a strategic allocation of 40% equities and 60% fixed income.

Vanguard Balanced ETF Portfolio (VBAL) will provide long-term capital growth with a moderate level of income split 60% equities to 40% fixed income.

Vanguard Growth ETF Portfolio (VGRO) provides long-term capital growth by investing in equity and fixed income securities with 80% equities and 20% fixed income.

In a press release, Vanguard Canada head of product Tim Huver said the ETFs offer “a simplified and scalable solution for financial advisors, and a one-stop globally-diversified and transparent option for investors … Investors can rely on Vanguard’s global investment experts to continuously assess their portfolio’s exposure and rebalance it back to its intended risk level.” 

With the three new ETFs, Vanguard Canada now offers 36 ETFs, with C$14 billion in assets under management. Vanguard Investments Canada Inc. is a wholly owned indirect subsidiary of The Vanguard Group, Inc.

You can find more at Vanguard Canada’s website.

Postscript: My Take

After sleeping on this announcement, it strikes me as more significant than I had initially perceived. Read more

Younger Next Year 2018: A new Facebook Group

912AUo-z6rLYounger Next Year. How’s that for a New Year’s Resolution?

Seriously, as we head into 2018, who wouldn’t want to be younger in 2018 than they were in 2017?

Impossible, you scoff? Clearly, you haven’t read the New York Times bestselling book, Younger Next Year, or its spinoff titles, including Younger Next Year for Women.

The authors are a vibrant 70-year old (at the time of writing) and ex New York litigator Chris Crowley and his personal physician (25 years his junior), named Henry Lodge (Harry in most of the text; I should clarify that this is the late Henry Lodge, since he passed away at age 58  early in 2017 of prostate cancer. Ironic.)

The subtitle says it all: Live Strong, Fit and Sexy — Until You’re 80 and Beyond. I’m grateful to one of my sources — Hub contributor Doug Dahmer of Emeritus Retirement Strategies — both for twigging me to the book’s existence and to supplying me a copy. (He appears to have laid in a good stash of the book).

Take control of your Longevity

And for good reason. The book is all about taking control of your personal longevity, chiefly  through proper nutrition but first and foremost by engaging in daily exercise: aerobic activity at least four days a week and weight training for another two days a week. Week in and week out, for the rest of your life. And the payoff is what is promised in the subtitle.

Apart from daily exercise and “Quit eating crap” (to use the authors’ phrase, one of Harry’s 7 Rules reproduced below) the authors urge readers to “Connect and Commit,” which means staying engaged even after formal retirement. In fact, as we argue in our own book Victory Lap Retirement, there’s a case to be made for never entirely retiring. Leaving the corporate workplace, probably, but semi-retirement and self-employment from home are certainly viable alternatives. Read more

How to prepare for market corrections and advances

How-to-Prepare-for-Market-Corrections-and-Advances

By Adrian Mastracci

Special to FindependenceDay.com

Motivation is what gets you started. Habit is what keeps you going.” —Jim Ryun, Olympic runner

We’re working our way through the fourth quarter 2017. Many stock indices have been hovering near their tops and often keep making new highs. Daily headlines are typically a mixed bag of fears and optimism. They are often interpreted as indications of possible changes in market direction.

Some themes really stand out. For example, NAFTA talks are topics du jour in the US, Mexico and Canada. The United Kingdom is wrestling with Brexit implications. German politics are entertaining altering the seating arrangements.

Many stock indices hover near their tops and keep making new highs.

China faces pressures from increasing debt levels. US tax cut battles keep marching along. Several faces will soon change at the US Federal Reserve. Rising interest rate discussions send chills down the spines of borrowers. These few points alone are forceful enough to create trepidation in investor minds. You will have no difficulty finding headlines for every investment neighbourhood.

As a result, investors develop itchy fingers that want to migrate to the safety of the sidelines, whether it’s beneficial or not. Of course, these investors that have the need for action will make the crucial timing calls on what to buy or sell. Everyone should know by now that timing the markets is a low percentage approach, fraught with many dangers.

My Observation

This brings me to one important observation. Wise investors are in the habit of investigating what it takes to be well prepared for both market corrections and advances. They have at least sketched out a rough game plan for each case on the back of the napkin. Something to get started, aiming for the right path. I encourage you to become conversant with what you would likely do with stocks and bonds during bullish and bearish markets.

Most investors that think in this fashion prefer to have some framework of how to approach the uncertainties that come their way. Just some simple ideas are required to get started. The best news is that today’s planning is being conducted while stock prices are high.

Finding the motivation to be informed is a welcome initial step. Perhaps, discussions with your investment professional will shine more light on what actions are in your best interests. Reconfirming your family risk profile is also time well spent. Hopefully, these efforts lead to more disciplined planning for the precious nest egg. The main mission is to reach and deliver your retirement objectives.

Seasoned investors are well aware that diversification and rebalancing strategies are part and parcel of this logical planning approach. I cannot emphasize that enough as nobody knows where the markets are headed or when a directional turn comes around the curve. Bells do not ring when the time is ripe to make portfolio changes. Neither at the top, nor at the bottom.

My Recommendation Read more

Make & Save: The importance of actionable Personal Finance habits

coins-currency-investment-insurance-128867By Hellen McAdams

Special to FindependenceDay.com

When it comes to actionable personal finance habits, earning more money and saving a good portion of it are near the top of the list. Sadly though, before you can ascend the tower of wealth, many of us need to first dig out of the basement of debt.

Escape Debt in 5 years

Did you know the average American household has approximately $137,063 in debt? (all figures $US.) That’s too much debt. But what if you were to discover it’s possible for the average household to get out from under the thumb of that kind of debt in as little as five years?

There are several ways to do this. Loan consolidation is a practice whereby you reduce the complication of managing debt by combining everything together. If you have a bunch of little debts that individually compound separately from one another, one possible solution could be to take out a small loan, pay them off, then pay off the small loan in a single payment from then on.

There are online loans of this type which can, believe it or not, be secured online, if you’re considering such.

Still, this is just a debt transition; it doesn’t truly get rid of that which you owe: it merely reduces the complexity of paying a dozen little things off in tiny increments; like cellphones, furniture, and medical bills. A better way to get your debt paid off more quickly is to downsize.

Debt Relief Strategy

This is where you have to establish good financial habits. This hypothetical revolves around $3,000 a month in earnings from the primary breadwinner of the household. That comes to $36,000 a year before taxes. Now say you’ve got $137,000 in debt hanging over your head. You need to find a way to pay that off with the money you’ve got.

In five years, you will have made $180,000 through a job that pays $3,000 a month, or $36,000 annually. If you can reduce your annual budget to $8,600 a year, you can pay off the debt in five years: assuming, of course, that the $137,000 figure is an overall projection throughout the time, which includes accumulated interest.

But how is that possible with mortgages at $1,500 a month, gas at $3 or more a gallon, and rising food costs? Well, the first thing you might do is get rid of your mortgage. If you’ve got $70,000 paid in on a $250,000 house, you can sell the house and turn the majority of that $70,000 into paying off your $137,000 debt.

Read more

Stocktrade.ca’s Interview with me about Findependence & Victory Lap Retirement

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By Dylan Callahan, Stocktrades.ca

Special to FindependenceDay.com

We’re constantly reaching out to financial authorities we feel would benefit our audience the most. From Mark Seed, to Xiaolei Liu, to Rob Carrick, we are always looking to compile information and pick the brains of experts in the industry. This is why we were ecstatic to hear that Jon Chevreau was willing to do a little interview with us about his most recent book.

A little bit about Jon before we start

snippetpicture-150x150Jon has long had our attention here at Stocktrades from his writing on Moneysense and the Financial Post. He is the owner of FinancialIndependenceHub, the author of Findependence Day and the co-author of Victory Lap Retirement, which is what this interview will be about. He was a columnist for the National Post from 1993 to 2012 and was the Editor-in-Chief for Moneysense Magazine from 2012 to 2014. If we had to choose some financial authorities on the internet today that we’d follow, Jon would be near the top of the list.

We hope you enjoy this interview, and if you’re interested in purchasing Jons book, head on over Victorylapretirement.com to see what it’s all about or purchase it from Amazon here.

WHAT INSPIRED YOU TO WRITE THIS BOOK?

Jon: Co-author Mike Drak approached me with the idea of a book about Retirement/Victory Laps after he encountered my website, the Financial Independence Hub, and my financial novel, Findependence Day. We thought we could marry the two concepts since Findependence gets you to the point you can launch a proper Victory Lap.

COULD YOU BRIEFLY DESCRIBE THESE FOLLOWING TERMS IN YOUR OWN OPINION, OR AS THEY RELATE TO THE BOOK?

What is Findependence?

JonathanChevreauJon: Findependence is simply a contraction of the phrase Financial Independence. And so Findependence Day is the day you achieve financial independence, which we define as the moment when all sources of passive income (pensions, investments, royalties etc.) exceed your monthly expenses nut (rent/mortgage, food, clothing, utilities etc.)

Explain a Victory Lap Retirement?

Jon: Victory Lap Retirement can be described variously as semi-retirement, self-employment, an encore career or launching a creative career (writer, artist, musician) that lets you monetize what was previously a hobby. Normally, the Victory Lap is made possible by first achieving Financial Independence. It differs from traditional full-stop retirement in that you may still be working, albeit not for a single employer.

Rather you have multiple streams of income, some of which may be passive (pensions, investments) and some of which may be active (part-time work, contracts, an online business). This allows you to pursue the inner creative dreams you may have harbored when you were young, and which you may have put aside during the decades you worked in a traditional “Job” and raised a family. In your Victory Lap, you work because you want to, not because you have to (financially speaking).

Lastly what is an Encore Career?

Jon: An Encore Career or Legacy Career is a late-life reinvention of your career, as described by the website encore.org and the book Encore by Marc Freedom. Its subtitle says it all: Finding Work that Matters in the Second Half of Life.

snippetpicture-150x150IN YOUR OPINION, HOW IS A VICTORY LAP RETIREMENT MORE BENEFICIAL THAN THE TRADITIONAL RETIREMENT?

Jon: We think it’s crazy to go from the 100% work mode of traditional salaried employment to 100% non-stop leisure, which is the traditional “full-stop” retirement that often occurs at age 65. By the way, I turn 65 next April and don’t expect to slow down much if at all. I’m in the fourth year of my own Victory Lap and am as productive as ever, and probably in much better physical and mental health.

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