Can we shop our way out of a recession? Consumers in Canada are giving it their best shot.

The strong first-quarter growth in GDP that caught economists off guard was powered by two sectors, exports and consumer spending, with the latter rising 5.7 percent on an annualized basis.

That growth was twice as fast as economists expected, and it pushed consumer spending to its highest share of GDP since records began in 1961.

South of the border, resilient consumers have been credited for helping stave off recession. But Canadian shoppers are outspending even their counterparts in the United States, where consumer spending rose 3.8 percent.

None of this is good news for the Bank of Canada as it tries to cool inflation by discouraging people from buying stuff. Instead, Canadians defied rate hikes and recession warnings to fork out for goods such as vehicles and services, including restaurants and hotels, at a frenzied pace.

The boom in services spending will have been particularly troubling to the bank. Governor Tiff Macklem warned in early May “the biggest upside risk to our inflation forecast is that services price inflation could be more persistent than we expect.”

This is why some economists believe the bank isn’t done tightening. “This is just the latest data point reinforcing the strength of the Canadian economy, particularly the consumer,” wrote Randall Bartlett, an economist with Desjardins. The shopping spree “substantially increases the odds of another rate hike.”

Thursday, April 20, 2023 | 11 a.m. MT
IG Wealth Management is a proud partner of the Alzheimer Society and as part of the Empower Your Tomorrow community program, we are committed to increasing the financial confidence of all Canadians. The seniors, parents, and grandparents of our communities often face unique financial challenges that come with age. For those facing a journey with dementia, the need for advice has never been greater. According to Christine Van Cauwenberghe, Head of Financial Planning at IG Wealth Management and author of Wealth Planning Strategies for Canadians, “I’ve been involved in many files where clients are starting to struggle with making financial decisions and it can be difficult for both the client and their family to navigate. Even a little planning in advance can help to reduce the stress.”

Gain valuable insight for the journey

Christine from IG will be co-presenting with Dr. Sarah Main, Research Scientist of The Alzheimer Society of Canada. Together, they will provide

• Tips and tools for wealth planning for aging individuals
• Advice for caregivers and people living with dementia
• Tax considerations and resources available for Canadians

Webinar registrants will all have access to the playback of the event and a resource toolkit that includes a financial confidence checklist for people living with dementia and caregivers, a Power of Attorney guide, and information and resources from the Alzheimer Society.

With over 30 years of business development, critical thinking, and wealth management experience, Vas Pachapurkar brings an innate ability to communicate and connect ideas, tactics, strategies, and philosophies through his experience as a Consultant, Field Director, MFDA Panelist, and member of the National Distribution Leadership team. Vas is a proud graduate of Wilfred Laurier University and holds his RRC and CFP designations. Prior to IG Wealth Management, Vas worked with PricewaterhouseCoopers and Dresdner Bank AG.

Within his community, Vas has worked with the Make-a-Wish Foundation, the Herb Carnegie Foundation and Tour for Kids in partnership with Coast to Coast Against Cancer. Vas is also a driving force behind the IG Wealth Management Walk for Memories in support of the Alzheimer Society of Toronto. Vas and his family reside in Toronto, Ontario.

Featured speakers

Christine Van Cauwenberghe is the Head of the Financial Planning Division of IG Wealth Management. Christine obtained both her Commerce and Law degree from the University of Manitoba prior to being called to the Bar in both Manitoba (1995) and Ontario (2004). Christine spent several years practicing tax law with a large law firm in Winnipeg prior to joining IG Wealth Management in 2001.

Christine is a member of the Canadian Tax Foundation, has her Certified Financial Planner designation, is a Registered Retirement Consultant and is a Trust & Estate Practitioner, as certified by the Society of Trust and Estate Practitioners (“STEP”). She has previously served on the board of STEP Canada and is a recipient of a STEP Founder’s Award.

Christine is also the author of Wealth Planning Strategies for Canadians, which is published annually by Thomson Carswell and is currently in its 15th edition. She has published several industry papers, including with the Canadian Tax Foundation, the Canadian Association of Life Underwriters, the Law Society of Manitoba and the Estates, Trusts and Pension Journal. Christine has given lectures to numerous professional groups and is a regular media spokesperson for IG Wealth Management. Christine lives in Winnipeg with her husband and son.

Dr. Sarah Main is a Research Scientist for the Alzheimer Society of Canada (ASC), a leading not-for-profit health organization working nationwide to improve the quality of life and well-being of persons living with dementia and care partners.

Sarah has been on this career path for over 10 years, motivated by her family’s own personal experiences with dementia. Throughout this time, Sarah has led many dementia-focused initiatives and works with a range of collaborators, including persons living with dementia, care partners, and healthcare professionals to see these projects through. Sarah has been involved in creating regional dementia strategies, improving community-based supports, creating educational materials for healthcare professionals, and developing evaluation frameworks to support quality improvement efforts for numerous healthcare organizations, among other efforts. Sarah is committed to working alongside dementia advocates to illuminate and transform healthcare system inequities.

Sarah currently oversees the National Dementia Guidelines Program, which is a new strategic initiative launched by ASC to create standardized best practices that will improve experiences across the continuum of care for all impacted groups, including persons living with dementia, care partners, and healthcare professionals.

This information is for your convenience only and IG Wealth Management is not responsible for and disclaims any liability for third-party businesses, organizations, and individuals featured in this newsletter. For more information, please visit www.ig.ca/en/legal/disclosures.

It’s no secret that financial stress can take a toll on your mental health — especially at a time when Canada’s inflation rate remains high, layoffs are making headlines and there is talk of a looming recession.

Nearly one in four Canadians rank money as their top source of stress, nearly twice as much as personal health, work and relationships, FP Canada’s 2022 Financial Stress Index survey found.

One in three Canadians said financial stress has caused them anxiety, depression and other mental health challenges, according to the survey of 2,001 Canadians conducted by Leger.

Young Canadians are especially affected, the survey revealed, with 45 per cent of Canadians between the ages of 18 and 34 saying financial stress has hurt their mental health, compared with 31 per cent of Canadians aged 35 and up sharing that opinion.

Worrying about money can affect many facets of a person’s life, spanning their sleep quality, relationships and ability to work, said Stacy Yanchuk Oleksy, CEO of Credit Counselling Canada and a professional coach and a certified personal finance educator.

It can also exacerbate a person’s pre-existing mental health challenges, said Yanchuk Oleksy.

“Money and stress go hand-in-hand,” she said.

But despite their budgets growing more and more tight, some Canadians have found free and cheap ways to take care of their mental well-being — and they say it’s helped them to better cope with their financial stress.

About a year ago, Amy Dyck said she went through a rough patch and was experiencing a lot of mental distress. Through word-of-mouth, she was able to find help despite her financial constraints and started accessing virtual group therapy funded by Alberta Health Services.

“It’s free, thankfully, because I don’t think I could afford a one-on-one therapist,” she said.

Dyck said group therapy has helped her regulate her emotions and learn by hearing other people’s stories. It’s a resource that’s been especially helpful at a time when Dyck has been overwhelmed by the rising costs of living, she added.

“I don’t dwell on it or anything,” Dyck said of her finances.

If finances are weighing heavily on your mind and are starting to take a toll on your mental health, remember to breathe and realize that you’re not alone, said Yanchuk Oleksy of the Credit Counselling Society.

“Many, many Canadians struggle with this because it’s not something we’re taught. We don’t typically talk about it around the dinner table or in the classroom, but we’re expected at 18 to magically know how to manage our finances — and that’s kind of silly,” she said.

Oleksy suggests reaching out for support, whether it be a non-profit credit counsellor who can help you sort out your personal finances at little or no cost, or a mental health counsellor with whom you can discuss your mental health challenges.

Dyck said she recommends people speak to their doctor about the free and affordable mental health services that may be available to them.

Some therapists in Canada also offer sliding scales, meaning a cheaper rate for their services based on a client’s income.

K Kealey, a 27-year-old living in Calgary, said they were able to find a therapist with a sliding scale through Skipping Stone, a non-profit organization that connects trans and gender diverse individuals with low-barrier access to mental health services.

Kealey said they were previously accessing free therapy through Alberta Health Services, but they made the switch to their new therapist — who currently charges $80/hour — because they wanted to speak to someone who had experience working with trans and gender diverse people who could listen to them without judgement and help them navigate their transition.

“I find therapy pretty essential for figuring out things in my life and handling stress of work, money, relationships, all the things that you have to deal with,” said Kealey. “I don’t think I could’ve transitioned without that support, without probably burdening someone in my life.”

The Affordable Therapy Network is another resource that connects people to cheaper therapy options across Canada. This includes in-person therapy available in major cities and virtual therapy available throughout the country.

Katie McCowan, director and founder of the Affordable Therapy Network, said all of the roughly 450 therapists listed in the network’s online directory offer a limited amount of either low-cost rates — at $65 or less — or sliding scale rates, which are supplemented by others paying the full cost of therapy.

“People really need support. And (some people) really can’t afford (it) ... standard therapy’s about $150, oftentimes more, for an hour,” she said.

McCowan said she’s glad to see that access to therapy has improved in Canada over the years, but said she hopes to see more subsidized options in the future.

People should always reach out for help if they’re struggling financially, mentally, or both, Oleksy stressed.

“When you start to feel like you’re in control of your money, and you have a plan, it can kind of ease things up mental health wise,” she said.

“And vice versa, when you have a plan and a support system to deal with your mental health, it can give you a bit more breathing room to deal with your finances as well.”

To get the advice you need as a young person during these ever-changing times, schedule a meeting with an advisor from our team! 

5 Things to Do Now to Propel Your Business in 2023

With the right playbook, entrepreneurs can survive and thrive in whatever economic scenario. Here are five things you can do to propel your business ahead now and through the difficulties of business cycles for years to come.

1. Learn the lessons of more challenging times

A rocky economy presents a unique opportunity to make tough decisions about the business plan. Everything is open to reexamination. How has the market changed? Are your customers facing challenges that create new opportunities for your solutions? How do new conditions change your assumptions, and what actions do you need to take in response?

Critically evaluate your product roadmap. Is this the time to pivot or become more aggressive with your current plans? Prioritize the highest margin features that are achievable in the next twelve months. Push out projects that don't make that list, and re-assign resources accordingly. Re-assess pricing. Even as inflation tiptoes back from the highest levels in forty years, raw material and transportation costs remain way up. What will impact your customers if you adjust the pricing or add surcharges to offset these costs, at least temporarily?

It's been a rough year for hiring. Many companies took the talent they could get. If there are employees or gig workers who would fare better in a different job, now is the time to let them go. Make tough-minded corrections that will pay off overall — corrections that might be avoidable in less challenging times.

2. Tighten your grip on cash

Venture capitalists are pulling back. In the third quarter, Crunchbase reported that funding for startups in U.S. and Canada fell 50% year-over-year. Valuations are down across the board. If you are fortunate enough to be a later-stage startup that benefited from VC largess in 2021, make your last raise last longer than intended.

Keep your dry powder dry, and put off going for another round until the markets even out. Reemphasize the basics for early-stage companies with less market validation and greater distance between now and a potential exit. Delay all capital expenditures. Leverage the hybrid work model if possible, to reduce rent and other office expenses. Continue with Zoom or Google Meet. Now is not the time to rack up travel costs. Re-negotiate fees and terms with service providers. Seek credit terms with key suppliers, in a word, bootstrap.

3. Talk to customers, in person. Now!

How have the business needs of your customers — whether paying or beta — changed over the last 18 months? Are there benefits to your solution that have more recognized value now? Nearly every business, for example, from corporates to startups, has been forced to re-learn the lessons of supply chain management. Startups that can help their customers make better business decisions based on artificial intelligence (AI), reduce costs by improving inventory management, or protect against out-of-stock scenarios by identifying and building relationships with new, more local sources of supply will have an edge.

4. Non-dilutive capital

According to PitchBook, venture capitalists are showing greater interest in portfolio companies "whose satellite, robotics and software tools can do double duty " in military and commercial markets. International conflicts are one reason, of course.

Another is that the defense and military security industries are generally viewed as recession-proof. Our firm routinely encourages portfolio companies to consider non-dilutive funding from the Small Business Administration — grants to support cutting-edge technologies range from $150,000 to more than $1 million.

Navigating the application process isn't for the faint of heart. A startup must be realistic about the work involved, but in many states, there are resources to help. Besides the funding, severe responses to agency requests for proposals are reviewed and evaluated by technologists. At a minimum, this can be terrific feedback and a great source of industry contacts.

5. Blue-chip cultures attract blue-chip talent

Company culture can be an asset or a liability. An inclusive, rich culture helps key hires say yes. Finding stakeholders that believe what you believe and are aligned with your team's values significantly improves the odds that they will stick with you in good times or bad.

After months of "great resignation" fever, the over-heated demand for talent may be cooling off. Maybe offers aren't as fast or grand as they were a year ago. Maybe Twitter won't be the only advanced technology business to let people go. Regardless, the search for great talent isn't a faucet that a young company turns off and on. A startup might modulate the timing or the number of hires but stand at the ready to recruit and filter for culture fit.

With the right mindset and intentional approach, an entrepreneur can make 2023 a year to strive and thrive. As Yogi Berra, my favorite baseball player of all time, said, "Swing at the strikes." In business, like baseball, the right swing can turn even the most challenging pitch into a hit.

Discover how to put these practices into action for your business and
book a meeting with Sunshine and her team!

Maximize the value of donation tax credits

The first $200 of donations you claim on your tax return receive a lower donation tax credit rate than donations claimed above $200.  To limit donations subject to the lower $200 credit rate, consider bringing forward donations planned early in the new year and make them prior to December 31st in order to combine them onto this year’s tax return.  You can also maximize the amount above $200 by combining into a single tax return donations made by you and your spouse, and carryforward unclaimed donations made in any of the prior five years.

The federal donation tax credit is enhanced if your income is in the top tax bracket.  Rules vary by province, but there may also be an increase to the provincial donation tax credit based on your income.  If this is a high-income year, consider donating prior to the end of the year to take advantage of the potentially higher donation tax credit available to you.
 

Review your investment portfolio and donation opportunities

An additional tax incentive is available where publicly traded securities, such as stocks and mutual funds, are donated “in-kind” to charity.  When the security is donated “in-kind”; any accrued capital gain is realized, however, the taxable portion of the capital gain is reduced from 50% to zero.  Consider donating securities with large accrued capital gains, as opposed to cash, to enhance tax efficiency.  You benefit from both the donation tax credit for the value of the security donated and eliminate the capital gains tax.

You may hold securities that are in a loss position, and you may wish to realize these capital losses for tax planning purposes to offset any capital gains you may have realized in the year.  Donating the security to charity will realize the capital loss and generate a donation tax receipt, providing multiple benefits for your year-end tax planning.

If you have employee stock options for publicly traded securities; special tax provisions can exempt the taxable benefit resulting from the exercise of the option if the shares are subsequently donated to charity.  After exercising the options; the shares, or the cash proceeds, must be donated within specified time limits to qualify for additional tax incentives.  Planning, in collaboration with your IG Consultant, should be completed well in advance of the exercise of the options and any donation.  The custodian of the options should be contacted to help coordinate the donation to your chosen charity.  The applicable tax provisions are complex, and there may be limitations.  Obtain tax advice specific to your circumstances.  If you wish to donate securities before the end of the year, don’t wait until the last minute as additional time may be required for the financial institution and charity to process the request.
 

Time TFSA withdrawals used to make donations before year-end to restore contribution room quickly

You may wish to withdraw funds from your TFSA to fund a charitable donation.  A TFSA withdrawal is tax-free, however, contribution room will not be restored until January 1st of the following year from the withdrawal.  Plan to make your TFSA withdrawal prior to the end of the year so that your TFSA contribution room is restored on January 1st of the following year.  This gives you the extra flexibility to re-contribute amounts to your TFSA in the new year and utilize donation tax credits on this year’s tax return.
 

Keep track of donation receipts

Often donation receipts are received immediately rather than being distributed in the new year.  These receipts may be issued physically or by email.  As you receive your donation receipts throughout the year keep a record and file them.  This will make it easier to locate these receipts when it’s time to file your tax return.
 

Establish a donor-advised fund

A donor-advised fund can be beneficial in any charitable giving strategy.  You can setup an account, name it as you so wish, and receive the tax benefits from donations.  Assets can grow on a tax-exempt basis; and you retain control by recommending investments, grant amounts, and recipient charities.  You may wish to give to charity before year-end but have not yet decided which causes to support, and a donor-advised fund may provide an appealing solution.

Consider setting up a donor-advised fund with the IG Wealth Management Charitable Giving Program - a partnership between IG Wealth Management and the Strategic Charitable Giving Foundation.  The program can help you create a lasting legacy by facilitating grants over an extended period or in perpetuity to the charities you choose.  If desired, your family members can assume responsibility for recommendations on the account after your death or incapacity, establishing a multi-generational tradition of philanthropy.  Discuss with your IG consultant how you and your family may benefit from creating a donor-advised fund.

As you can see, there are many considerations when deciding to give to charity.  It is important to seek advice to help navigate these issues and maximize benefits both for you and the causes you care about.   For more information on charitable giving and how it fits into your plan, speak to your IG Consultant.

Written and published by IG Wealth Management as a general source of information only, believed to be accurate as of the date of publishing. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal, or investment advice. Seek advice on up-to-date withholding rules and rates and on your specific circumstances from an IG Wealth Management Consultant.  Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations.

Herb Carnegie in 1953

IG Wealth Management is delighted to share that hockey pioneer and Order of Canada recipient Herb Carnegie has finally been inducted into the Hockey Hall of Fame.

Herb was arguably the best Black player to have never played in the NHL as he, unfortunately, faced numerous challenges and barriers due to the racism of the day.
 

Despite the racism he faced, Herb played hockey in various leagues from the 1930s into the 1950s, often standing out as the best player on the ice. When he retired from hockey, he took over the financial industry.

Herb was one of the true legends of IG Wealth Management. He spent 32 years with IG (then Investors Group), serving clients with excellence as he carried his passion from the ice to his community.
 

In 1987, Herb founded his hockey school, Future Aces, and the Future Aces Foundation to “inspire and assist youth and adults to become the best they can be as responsible, respectful, peaceful, confident and caring citizens.” Herb’s values have been engraved in the teachings at Future Aces, including kindness, treating people well, and appreciating who you are.
 

To honour Herb, IG created the Herbert H. Carnegie Community Service Award in 2003 to recognize advisors who demonstrate extraordinary dedication and service to their communities.

Congratulations to the entire Carnegie family on this achievement – we couldn’t be prouder!

Not All Advisors are Created Equal

In a recent study (Oct 27, 2022) on Canadians and personal financial planning conducted by IG Wealth Management, Christine Van Cauwenberghe, Head of Financial Planning, underlined the importance of appreciating that, although many financial institutions may have staff who are capable of completing transactions, not all may be able to provide the full scope of financial planning services required, including the ability to provide comprehensive advice. 

“When you’re choosing a financial advisor, verify their credentials to ensure that they have expertise in financial planning. You should also make sure that they take the time to get to know your personal situation and identify your individual objectives before immediately recommending specific products. Some advisors are only capable of providing investment advice and will start suggesting specific investment solutions before they’ve asked you many questions – that’s a flashing red light that they are more concerned about selling a product than creating a plan that meets your needs”.

In fact, the study found:

• One-fifth (21 percent) of Canadians go to retail bank-based representatives for complete financial advice. 
• Almost half (46 percent) of Canadians expect advice on their financial health from where they do their banking, but only 29 percent say they actually receive this.

“Canadians deserve more when it comes to financial advice,” stated Ms. Van Cauwenberghe. “It’s important to understand that not all bank-based representatives are certified financial planners. While you may feel comfortable going to your financial institution for guidance on loans or investing, you may be missing out on crucial advice about all the other aspects that should make up a financial plan.”

You deserve more! Contact me and my team and get the advice you need to acquire true richness in life!

Click below and go to ‘Meet with Sunshine’ to book an in-person or online meeting!


 

• Over two-thirds (69 percent) of Canadians report not feeling “financially healthy” given current economic conditions.
• Almost half (46 percent) expect advice from their banking institution, but only 29 percent say they actually deliver on this.
   

WINNIPEG, MB – October 27, 2022 – In advance of Financial Literacy Month, IG Wealth Management (IG) today released a study on Canadians and personal financial planning. According to the study, Canadians are feeling uncertain when it comes to their personal finances.  However, those who use a financial advisor are much more likely to feel secure and “financially healthy” as they navigate current market conditions.   

The study, conducted in partnership with Pollara Strategic Insights, found:

• Sixty-nine percent of Canadians stated that they are not feeling financially healthy as a result of recent economic conditions.
• Two-fifths (44 percent) say they are getting by financially but could be better off.
• Similarly, 44 percent worry they are not handling their finances in the best way possible.
• One-third (31 percent) of Canadians who do not work with a financial advisor are worried about their finances. However, this number drops to just 16 percent among those who do work with one.

“It’s understandable that so many Canadians are feeling insecure about their personal finances given everything they’re seeing out there, whether it be market volatility, inflation or rising interest rates,” said Christine Van Cauwenberghe, Head of Financial Planning, IG Wealth Management.  “In many cases, people may feel overwhelmed and uncertain of how to navigate current market conditions.  It’s not a surprise that those who take advantage of the advice provided by a qualified financial advisor are less likely to be concerned about their situation.” 

Ms. Van Cauwenberghe noted that, in times like these, it is especially important for Canadians to work with a financial advisor who has the knowledge and expertise to review all aspects of their financial world and ensure they have a holistic financial plan so they can make better decisions and feel more confident.
 

Connect with a local advisor in St Albert! Click the link below to learn more about and connect with Sunshine Pawchuk, Division Director/CFP professional, and her team at IG Wealth Management in St Albert.

Taran and Bunny Ghatotra run Blume — a seven-figure, skincare and period products company.

The sisters initially began in 2016 with a subscription business for organic period care products, when Taran was 23 and Bunny was 21. They learned they had to get creative to get their dream funded, since accessing capital through bank loans and getting credit with suppliers was difficult in the early stages.

“Often [banks] need to see some kind of collateral or a certain amount of inventory or profitability. So obviously, as a brand new business, you don’t always have those things,” says Taran, who lives in Vancouver, B.C.

A recent Angus Reid Institute survey conducted in conjunction with Tabit — a buy now, pay later (BNPL) platform at point-of-sale for small businesses — found that over half of Canadian small business owners would consider an alternative financing option at checkout where payments are made in installments over time.

And younger owners (aged 18 to 34) were twice as likely, compared to older owners, to “definitely” consider this type of financing solution.

What are the benefits of BNPL platforms for businesses?

“The smaller the business, the higher the risk from a lot of banks’ perspectives,” says Corinne Pohlmann, senior vice-president, national affairs and partnerships for the Canadian Federation of Independent Business (CFIB).

“It also depends on, are you at the beginning of your business stage or your startup? … And what is the reason for the capital needs?”

It can be difficult for a young business to get approved for a bank loan, but there are other options when it comes to funding and dealing with expenses. BNPL can essentially work as a loan, but young business owners are more likely to be approved for it.

BNPL has already gained popularity in the consumer space, especially among younger shoppers — and it’s now making its foray into the business-to-business world in Canada.

“What you need is a way to automatically come up with a credit decision, right at checkout with no delay, and that’s not easy, especially in business transactions,” says David Gens, president and CEO of Merchant Growth and Tabit.

Tabit — which launched in February this year — functions as a third-party platform to allow businesses to pay their suppliers in weekly installments. It’s a first for Canada, although BNPL services for the business-to-business space are available in other countries, like Resolve, Billie, Apruve, and Slope.

“We’re providing more credit to more businesses to make more purchases, but we’re also streamlining things for that supplier,” says Gens.

Banks typically secure loans against assets like real estate or inventory, with these assets acting as collateral. In contrast, BNPL platforms may use algorithms, credit checks, or other scoring mechanisms in order to approve a business.

With this system, Tabit approves more small businesses for unsecured loans, where no collateral is necessary. Unlike bank loans or credit cards, Tabit also doesn’t currently report to the credit bureaus, which means that if you don’t make your payments on time, it won’t affect your business credit score.

The length of the payment time may vary. For Tabit, it ranges from one to 12 months, while Resolve offers 30-, 60- or 90-day terms.

How does BNPL work for small businesses?

Taran says Blume doesn’t use a third-party platform but directly negotiates with its suppliers to pay in installments.

“You want to make sure that you can afford the payments when the time comes, and that you’re really managing your cash flow adequately, but I think it can be really meaningful for small brands to be able to use that money for marketing and growth until you get paid.”

However, it often takes time for businesses to build a good relationship and earn credit with suppliers.

While BNPL platforms take on the responsibility of approving small business buyers and paying their suppliers, be mindful that there may be extra fees or penalties involved.

Resolve and Billie, for example, don’t charge fixed fees or interest rates to buyers. Instead, the suppliers are charged fees. If payments are not made on time, Resolve or Billie may be able to offer extended payment terms. However, in a worst-case scenario, the companies may utilize collection agencies to secure repayment.

Tabit features zero percent interest for up to 90 days. Merchants pay a fixed fee to offer the zero percent option to buyers, but in other cases, the buyer will need to pay a fee based on things like their risk profile, sales or industry.

Gens explains that Tabit will work with buyers if they’re struggling to meet their payment terms, but may need to use legal means if the buyers are unresponsive or refuse to cooperate.

BNPL for businesses could be potentially beneficial for cash flow and creating competition, says Pohlmann, but adds that there may be downsides as well.

“Having a few more options that can maybe help [owners] deal with expenses that they need to actually incur in order to get their business back on its feet, there may be some potential here. But there also can be some drawbacks if you end up paying more overall [on interest or fees].”

What other options do small businesses have when it comes to financing?

Pohlmann says some business owners may turn to family members or friends for financial help, use credit cards or dip into their personal savings.

“In the early days, we definitely used our own credit card debt and student loans, and bootstrapped them,” says Taran.

Taran adds that she and her sister acquired their first loan from Futurpreneur — a Canadian non-profit that supports young entrepreneurs — and later raised funding from angel investors and venture capitalists.

However, relying on credit cards and personal savings accounts can fuel debt. The CFIB reported in March that two-thirds of businesses have taken on debt, at an average of $158,000 per business.

Taran suggests looking into grants, although Pohlmann says these aren’t always accessible to everyone.

“There aren’t a lot of them … they’re often very specific and targeted, and can come with a lot of paperwork.”

Pohlmann advises small business owners to explore different options.

“Don’t just go to the traditional banking route, see what works best for your business. Figure out the amounts that you need … and how much you can afford as a business to take on … You may have family or friends that are also willing to help you out.”

A vacation property—whether it’s a cottage in Muskoka or a chalet at Tremblant—is a valuable asset, not just in terms of the real estate, but also as a place that holds years of family memories. For many Canadians, passing the property to the next generation is a priority, but there are significant tax and non-tax-related considerations associated with keeping that cabin or condo in the family.

Do your children want the property?

The first thing to consider is whether your children or grandchildren are interested in owning the property. Although they may enjoy spending time there with you, there’s no guarantee that they will be interested in maintaining or using the property after you’re gone; particularly if they live in another province. If you have more than one child, you will also need to determine if they are interested in sharing ownership and responsibility for the property with their siblings.

Once you’ve confirmed that your children are interested in owning the property, it’s important to think about the tax liability that inheritance will trigger for them and make plans to help mitigate the impact.

Tax implications

When a vacation property passes to anyone besides your spouse or common-law partner at the time of your death, it will trigger a tax liability for your estate based the appreciation in the value of the property. That appreciation is calculated using the fair market value of the property at the time of transfer, less the purchase price and the cost of any improvements made to the property during your period of ownership. As your vacation property may have increased considerably in value over the years, the concern is that the tax liability could be so large that your beneficiaries may have to sell assets—possibly the vacation property itself—to meet the tax obligation. Making provisions for the transfer of your vacation property as part of your estate plan is, therefore, essential.

Strategies for mitigating the tax impact

Using the principal residence exemption
One possible way to reduce the tax liability is to designate the property as your principal residence to exempt some or all of the capital gains on its disposition from taxation. Keep in mind that your family can only have one principal residence in a given year, but you don’t have to designate which property that is until you sell it or are deemed to have disposed of it (as you would in the year of your death). Your executor or liquidator should consult with your tax and financial advisors to determine how to use the principal residence exemption to best advantage.

Preserve the adjusted cost base
The taxable capital gain on your vacation property can be reduced by increasing the adjusted cost base (ACB) of the property. The ACB is increased by adding the costs of property improvements made over the years to the initial purchase price. So, be sure to keep records and receipts for materials and professional fees paid for renovations and upgrades.

Using insurance
If your estate doesn’t have sufficient liquid assets to cover the capital gains tax that will be triggered by the transfer of your vacation property, consider using life insurance to cover the liability. Your children may even be willing to pay the premiums on a life policy if it means being able to keep the property without having to cover a large tax bill down the road.

Gifting during your lifetime
As is the case with a transfer of a vacation property upon death, gifting a property during your lifetime will be deemed to have occurred at fair market value (unless you transfer the property to your spouse). This means you will be liable for tax on the capital gain calculated as the difference between what you paid for your vacation property and what it’s worth now. If you choose to sell a property to your children during your lifetime for less than its fair market value, you will, regardless of the selling price, be deemed to have received fair market value and will be responsible for the tax on difference.

Although capital gains taxes on the disposition of a vacation property cannot be avoided by gifting it during your lifetime, one potential advantage of this strategy is limiting the amount of tax payable by gifting the property at its current market value, rather than its potentially higher value at the time of your death.

Co-ownership considerations

If one or two of your children want the vacation property, but others do not, the issue may become how to equalize the estate, and you may want to consider using insurance to help fill the gap.

If several children want the property, then you should also consider having a co-ownership agreement between them created before the property is transferred (and possibly as a condition of inheritance). Such an agreement outlines how the property will be used, who is responsible for its upkeep, and how the property will be passed on in the future.

U.S. and foreign properties

There are different and significant tax implications pertaining to the succession of vacation properties outside of Canada. When considering purchasing or passing on such properties, it is important to speak with a cross-border tax advisor.

As you can see, it’s important to plan for how a vacation property will be passed on to the next generation long before it happens.

For more information, ask me for copies of our white papers, Vacation Property Succession Planning and Canadians Owning Vacation Properties in the U.S.

Written and published by IG Wealth Management as a general source of information only, believed to be accurate as of the date of publishing. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Trademarks, including IG Wealth Management and IG Private Wealth Management are owned by IGM Financial Inc. and licensed to its subsidiary corporations. Insurance products and services distributed through I.G. Insurance Services Inc. (in Québec, a Financial Services Firm). Insurance license sponsored by The Canada Life Assurance Company (outside of Québec).

KEY TAKEAWAYS

• Life insurance can be financial help for your loved ones once you're gone, but it's a big investment.
• Many factors contribute to how high your premium payment is and whether you qualify for discounts.
• Age is the most important factor in determining the cost, as a younger person will make payments for many years before cashing out; therefore the younger you are, the lower your payments tend to be.
• Gender is also a crucial factor since women statistically live five years longer than men; as a result, insurance carriers typically offer women slightly lower premiums.
• Smoking, health, lifestyle, family medical history, and your driving record are the other key determinants of how much you might expect to pay for life insurance.

Life insurance quotes are based on several factors, some of which may be beyond your control; when researching policies, consider the seven factors here and choose an insurer less likely to penalize those in your particular position.

1. Age

Not surprisingly, the number one factor behind life insurance premiums is the age of the policyholder. If you’re young, the chances are that you’ll be paying the insurer for years before they ever have to worry about writing your family a check. Consequently, you’re better off taking out a policy before it’s too late. But that doesn’t mean you need insurance right after college if you don’t have any financial dependents.

2. Gender

Next to age, gender is the biggest determinant of pricing. Insurance carriers use statistical models to approximate how long someone with a specific profile will be around. The fact is that women, on average, live nearly five years longer than men.1 And because they’re usually paying premiums for a longer period of time than males, they enjoy slightly lower rates. Sorry, guys.

3. Smoking

Smoking puts you at a higher risk for all sorts of health ailments. So if you like to light up, it’s a red flag for insurance companies. In fact, it’s not uncommon for smokers to pay more than twice as much as non-smokers for comparable coverage. The effect on your pocketbook is another great reason to try and kick the habit.

4. Health 

The underwriting process for most carriers includes a medical exam in which the company records height and weight, blood pressure, cholesterol, and other key metrics. They may also require an electrocardiogram (ECG or EKG) to check your heart in some cases. It’s important to get any serious conditions like high cholesterol and diabetes managed before searching for coverage to ensure a competitive rate. Some companies do offer “no exam” policies, but you can expect to pay more.

5. Lifestyle

Is your favorite pastime racing cars or climbing treacherous mountains? If so, you’ll probably have to shell out substantially more for insurance. Any time you engage in high-risk activities, there’s an increased likelihood that you’ll meet an early end – a big concern for carriers. Some companies also charge more if you have a relatively dangerous profession, such as mining, fishing, or transportation.

6. Family Medical History

There’s not much you can do about your gene pool. However, a family history of stroke, cancer, or other serious medical conditions may predispose you to these ailments and lead to higher rates. Carriers are usually interested in any conditions your parents or siblings have experienced, particularly if they contributed to premature death. Some carriers put more emphasis on your family’s health than others, but it’s likely to have some impact on your premium.

7. Driving Record

It may come as a surprise, but many life insurance companies look at your driving record during the underwriting process. Whether or not they ask about violations on the application, they can access Department of Motor Vehicles records to find out if you’ve run afoul of the traffic laws. Keep in mind that the last three to five years carry the most weight, so if you’ve improved your driving habits, you may benefit from a more favorable price.

Article Source:
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You filed your taxes on time, and you’re expecting a refund. Instead, the Canada Revenue Agency (CRA) contacts you to clarify some details about your return. There’s no reason to panic. The CRA occasionally contacts people for more information and things can be cleared up quickly, if you’re prepared.

Why does the CRA reach out?

The CRA can contact individuals for any reason. In most cases, they may want further details about an item you’ve claimed on your return, including:

• Medical expenses
• Capital gains related to the disposition of real estate
• Consistent losses from self-employment income
• Vehicle expenses
• Foreign tax credits
• Significant changes from your filing history

The CRA is typically seeking documents that will verify your claims. For example, if you’ve claimed unusually high medical expenses, they may want you to provide detailed receipts.

Verify that it’s the CRA contacting you

In most cases, the CRA will contact you by sending you a formal letter when requesting additional information. They may also call you or send you a secure message directly to your CRA online account.

That said, fraudsters can contact you via phone posing to be a CRA agent. Here are a few things to consider before you provide any information:

• A legitimate CRA agent will provide their name, number, and office location. With that information, you can contact the CRA directly to verify the person’s identity.
• CRA agents will not use aggressive language or pressure you into making quick decisions.
• The CRA does not ask for payments in cryptocurrency, prepaid credit cards, or gift cards.
• The CRA will never ask you questions unrelated to your tax return, such as your credit card information.
• CRA agents will never offer to apply for benefits on your behalf.

Respond to the CRA

Once you’ve verified the authenticity of the request, you can gather the required documents. The letter will typically describe exactly what you need to provide. You’ll also want to make note of the reference number (included in your letter), the date you need to respond by, and the office that’s handling this request.

Before you send your documents, make copies so that you can keep them for your own records.

Once you’re ready to submit your documents, you have the following options:

• Login to your CRA online account and upload all of your documents.
• Send the documents by standard mail. Be sure to include a cover letter that lists your reference number and any other relevant details.
• Fax your documents. The fax number should have been provided in the request letter.

When uploading files online, you’ll get a confirmation number: Keep the number for your records. If there was a problem with any of the files or documents received, the CRA may request that you resubmit them.

Keep all your records on file

Since there’s no way of telling what information the CRA may ask for, you need to keep all your records, or at least have access to them for at least six years following the relevant tax year.

This six-year rule would apply to all your tax documents, not just expenses. In other words, hang onto all your income statements, receipts, and any other relevant documents. There’s always a possibility that the CRA asks to review or audit your taxes at a later time. Having all your documents in one place will ensure that you’re prepared.

What happens if you don’t respond

If you choose to ignore the request for additional information, or you forget to respond, the CRA may reassess your tax return. That could result in taxes owed, penalties, and interest payments. Plus, there’s a possibility that your tax return could be flagged for further review, such as an audit.

If you’ve filed your tax return honestly, there’s no reason to fear any requests from the CRA. All they’re looking for are details, especially if there’s been a major change to your income or expenses. Most of the time when you provide the supporting documents, you won’t hear from the CRA again until you get your notice of assessment.
 

Click the link to book a meeting to learn more about your taxes or other financial matters!

https://bit.ly/3kgr25Z
 

As we are all aware, many businesses were forced to close down or vastly reduce their operations in 2020 to comply with their regional or local public health orders to reduce the spread of this virus. This situation directly led to millions of Canadians losing their jobs or being furloughed until their employers were able to open up again.

CERB was introduced to provide financial support to both employed and self-employed Canadians whose income was directly affected by COVID-19. Eligible applicants for CERB could receive $2000 for every qualifying 4-week period ($500 per week) between March 15 and September 26, 2020.

This was a welcome program for many Canadians during this tumultuous time, providing income to 8.9 million individuals across the country when they could not work through no fault of their own.

With tax season on the horizon, now is an excellent time to take stock of how these benefits will affect your taxes if you haven’t already.

CERB is a taxable benefit, so it will count towards the individual’s income for the year when they file their 2020 tax return. However, unlike most people’s pay from their employers, the income tax for these benefits was not withheld when they were paid out, so this could make for a very unwelcome surprise at tax time.

Calculating the tax owing on the CERB benefits can get a little tricky because all of a person’s income from before and after they received these benefits also needs to be accounted for, in order to add up the individual’s total income for the year. Once a person has this figure, there are free online income tax calculators for 2020 that will help them work out how much federal and provincial tax they will owe, such as the one at Wealthsimple (https://www.wealthsimple.com/en-ca/tool/tax-calculator/). Once the person knows how much tax they will owe for the year, they can calculate how much tax is due for the CERB benefits. Divide the total tax figure by 52 to get a weekly figure. Then multiply the weekly figure by the total number of weeks that the CERB benefit was received for the year. This will give the amount of taxes that are owed on the CERB benefits.

If you received CERB benefits in 2020, it is a good idea to ensure that you have enough money set aside to cover the taxes that will be owing on these benefits. If you haven’t put anything aside to cover these taxes, start as soon as possible. If you don’t think that you will have enough set aside to pay these taxes, consider contacting the Canada Revenue Agency to arrange a payment plan (https://www.canada.ca/en/revenue-agency.html).

This tax situation can get overwhelming but being proactive now can prevent a nasty shock down the road.

Dean LaBerge, Local Journalism Initiative Reporter, Grizzly Gazette
This information is for your convenience only and IG Wealth Management is not responsible for and disclaims any liability for third-party businesses, organizations, and individuals featured in this newsletter. For more information, please visit https://www.investorsgroup.com/en/legal/disclosures.

Find out how you can improve your financial well-being score! 

Trump’s Out; Biden’s In: What You Need To Know If You’re Invested In Stocks

Emotional Investing: A Recipe for Disaster

We are emotional creatures (even those who are highly analytical), and as such, we all have feelings. Moreover, it is our thoughts that form our beliefs and our feelings (emotions) tend to dictate our actions. This is a subject that has been studied at length. Nonetheless, if we can control our emotions, we can minimize investment mistakes. Have you ever heard that we shouldn’t make important decisions when we are highly emotional? This pandemic, coupled with the plethora of mis- and disinformation on social media and some extreme news sites, has created a highly emotional citizenry. Thus, while it is disappointing, we shouldn’t be terribly surprised at the type of behavior we’ve witnessed. As repugnant as it may be, it has little to do with the directional trend of the stock market. Therefore, don’t let your emotions control your investment decisions.

Politics, Profits, and Stocks

A common investment mistake is connecting politics with stock market performance. Stock prices rise and fall based on corporate profits, period. Thus far, corporate profits have been good. Even though many things affect profits, the current political climate is not one of them. More on that in a moment.

Economy & Stocks

The stock market is not wholly connected to the economy. A study in the 1990s by Goldman Sachs demonstrated that only about 40% of stock performance can be attributed to the performance of the economy. Thus, it is a link worth considering. Approximately 70% of U.S. economic growth is derived from consumer spending. Therefore, when consumers spend, the economy thrives. Conversely, when consumers hold back, the economy tends to suffer. In 2020, consumer spending fell 1.55% for the year. However, from April 1, 2020 to the end of the year, consumer spending increased 20.27%, thanks in part to federal government stimulus. Although the economy ebbs and flows, we must be mindful of its long-term trend, which is almost always higher.

Politics, Social Unrest, & Stocks

I mentioned that politics and stock market trends are not connected. There is an exception to this, but we have not seen it in the U.S. in the modern era. In a third world country where markets are not as free, if a dictator decided to employ a chokehold on businesses, stock performance would surely suffer.

U.S. stock markets have survived numerous social and political events. For example, when President Kennedy was assassinated November 22, 1963, stocks fell 2.89%, then immediately rose, logging a 17.0% return for the year. Even during the mass rioting that swept America between 1963 and 1968, stocks held up well. When Martin Luther King Jr. was assassinated April 4, 1968, stocks lost 0.77% the following day, then rose, ending the year with a 4.27% return. Though social unrest is very disturbing, it has had little to do with stock market performance. This is vital to understand, especially with emotions running high.

Politics, Socialism, and Stocks

Some are concerned over the prospect of America’s trend toward socialism. I am also concerned. Does socialism cause stock performance to suffer? I propose that America is already steeped in socialism, beginning with FDR in the 1930s, and continuing with LBJ in the 1960s. Though I am not an advocate of socialism, one has only to look at Europe to understand that financial markets can exist and function well, even under socialism. I AM NOT suggesting there should be no concern, but as far as the financial markets are concerned, it is not an issue at this time. Again, it’s important to separate our emotions from our investing.

Why Politics Have Little Effect on Stock Performance: Who Really Runs America?

Princeton and Northwestern Universities conducted a study on the amount of political control/influence of ordinary citizens compared to corporate America. Looking at data from 1982 to 2002, here’s what they learned. If large corporations and wealthy individuals wanted a law implemented, there was a 60% chance it would pass. If the same group didn’t want a new law to be passed, there was a 100% chance it would fail. For ordinary citizens, the numbers were 30% and 30% respectively. Thus, it is corporations that most often influence policy, not ordinary citizens or even the government. Although government officials debate and vote on legislation, it is often at the behest of corporations. Think about that for a moment. Since corporations wield great power, they will tend to resist laws that would be detrimental to their business.

But there’s another important point to make here, which is connected to my statement that financial markets can do well, even under socialism. Corporations hate uncertainty. If the rules are clear and there’s a way to make a profit, they will find it. This is why corporations often donate money to both parties.

Why Stocks Could Continue to Trend Higher

If much of what we hear in the news is not that pertinent to financial market performance, what is relevant? Today, it is Covid-19 and the vaccine, stimulus, interest rates, and liquidity. First, if enough people are vaccinated before the current surge in cases gets too bad and before it mutates beyond the scope of the vaccine, we will be able to put this terrible episode behind us. Next, stimulus is a major factor. With democrats in control of Washington, the stimulus faucet will be unclogged and that will provide great support for the economy (which helps corporate profits and stock prices). Next, interest rates are low, providing cheap money for corporate borrowing, which can help companies grow. Finally, the Fed has expanded the money supply to assure plenty of liquidity for markets to function properly. Remember 2008? An enormous part of the problem was that liquidity dried up.

As investors, we must learn to dismiss the “noise” and focus on what’s relevant to financial markets. We must also learn to separate our feelings on social and political issues from our financial decisions. Yes, America may be in the throes of a tumultuous period, but this too shall pass. The pendulum may swing far left, then far right, but this has been a common occurrence throughout history. America will indeed survive this as well.

Despite recent events, as far as stock markets are concerned, much of it is noise and has little effect on how stocks perform.

By Mike Patton, Senior Contributor

© 2020 Forbes Media LLC. All Rights Reserved

As we embark on a new year that’s starting out with a bumpy ride, what key initiatives do you consider to be your top priorities to take your team to the next level?

To answer that question, I recommend following these steps:

1.Collaboratively set the goals. Many times, I’ve seen leaders set goals and then roll them out to their co-workers. This authoritarian approach to goal-setting may result in compliance and maybe even some achievement, but rarely does it result in genuine enthusiasm, creativity, and discretionary effort.

On the other hand, collaborative goal setting can result in strong buy-in and excitement that propels the team to success. I encourage leaders to provide their co-workers with some high-level concepts or direction and then invite their team to share what they believe should be the priorities. Eric W. Bennett, chief investment officer and co-founder of Tolleson Wealth Management in Dallas, which is one of my clients, says, “I am very intentional about having an engaging brainstorming process with my team that results in our team goals, not my goals. When doing goal planning, we create an environment that encourages people to think differently, creatively, and candidly. I believe this results in more engagement and buy-in from the team, and better ideas than if I was just pushing my own goals on the team.”

2. Establish specific measurements of success. For each goal, answer questions such as:

• What quantitative measurements will be established to gauge success?

• Instead of just one measurement at the end, can milestones along the way be established?

• What dates apply to each measurement?

• Who is specifically responsible for each goal’s achievement?

• Do team members feel like they are in control of their success?

3.Constantly communicate progress. Map out a communication plan with your team. Come to agreement about who is responsible for sharing progress for each goal, plus when and how that person will share updates about progress.

4.Celebrate achievements along the way and at completion. In the competitive financial services industry, many leaders do not make celebrating achievements a priority. When a goal is achieved, many times they’re already moving on to the next topic without genuinely celebrating and acknowledging success. Financial rewards are great but they do not take the place of emotionally engaging the team by celebrating success together.

In terms of specific goals, I’ve observed teams frequently focus on initiatives related to technology upgrades, sales, activity-based benchmarks such as client calls, asset retention, and marketing initiatives. In addition to these, I’m encouraging my clients to also consider foundational goals, such as:

• Strengthening specific behaviors that may have weakened in a remote environment, such as candor, appreciation, accountability, and actionable feedback.

• Employee development beyond required compliance training or new technology mastery. Team building, leadership development, and other training opportunities let staffers know you continue to invest in each of them

• Gauging team culture—where it is now, how it changed over a challenging year, and where you want it to be this time next year.

• Addressing talent gaps through training incumbents or targeted hiring.

• Creating or updating your team’s succession plan to manage expectations and ensure thoughtful transitions.

Whatever goals you choose, the likelihood of successful achievement is significantly higher when you establish specific measurements and (this is also essential) share those measurements with others who will hold you accountable, such as coaches, advisory boards, or colleagues outside of your team. Taking steps to control what you can by thoughtfully setting targets can unite your team and be key to this new year being a breakthrough year.

Fran Skinner, CFA, CPA, is a partner at AUM Partners, a Libertyville, Ill.-based talent assessment and leadership development training firm that works exclusively with financial services firms.

Dow Jones & Company, Inc.

 

Financial planning involves a lot of work. If you're not an expert, a financial planner could be an invaluable asset. 

A financial planner could be your go-to person for all of your questions about investing, keep you accountable for working towards goals and helping your money grow. Almost anyone can get a lot of value from financial planning and advising, but if you're younger, you still might not feel like it's critical.

If you're thinking about getting a financial planner but aren't sure it's the right time, there are three signs you should go for it.

1. You don't know much about managing money, and don't have the time to learn it all yourself

Managing money isn't always simple, and it can be tough to learn quickly. Especially for busy young professionals, it can be hard to make the time you need to learn how to make a budget and a financial plan. Hiring a financial planner can help you get it done. 

Writer Hanna Horvath hired a financial planner shortly after graduating from college for this reason. "I knew next to nothing about personal finance. I had never made a budget; I didn't know the difference between a 401(k) and an IRA. I couldn't even tell you what a "good" credit score was," she wrote for Insider. 

The financial planner she hired helped her craft a financial plan and a budget, without her needing to take hours of time learning how to do these things herself. "After graduating college, it's easy to feel lost. Having someone to hold your hand through the process of becoming financially independent can be essential," she wrote. 

2. You're starting to save for retirement

Retirement planning takes a long time, and the sooner you start, the easier it will be to achieve your goal A financial planner can help you make sure you're on the right track.

Writer Zina Kumok worked with a financial planner years before she planned to retire. The experience taught Kumok and her husband that they weren't saving enough to retire by 60 as they'd hoped, even though they'd been saving since they graduated college. 

By working with a financial planner years before retirement, Kumok was able to start increasing her savings now to avoid bigger problems later.

3. You have a complicated financial situation, like being self-employed

When running your own business or being self-employed, your financial situation isn't like that of someone who earns a paycheck every two weeks. A financial planner could give you some extra help in understanding your finances and the unique requirements of managing your income.

Financial planners can help with things that can be complicated, like finding health insurance, which is purchased individually when not available through an employer, and saving for retirement without access to a 401(k) plan. From managing money when income is inconsistent to planning for taxes each quarter, a professional can help you make a plan. 

4 Things People Always Forget to do With Their Money Before the End of the Year

1. Re-evaluate your employee benefits during open enrollment 

Many companies offer open enrollment periods toward the end of each year, giving you a chance to review what your employer offers and make changes to your current benefits selections.

Selecting your employee benefits solely on price (or employing a "set it and forget it" strategy where you do no review at all) can actually be detrimental to your cash flow. Considering that the average American pays $6,792 annually (varies based on location, employer subsidy, and type of plan) in health insurance premiums, there's obviously a lot of money at stake when picking the right plan for your situation. 

Instead of only looking at one number, consider the whole picture: look at deductibles, monthly premiums, and total possible out-of-pocket costs. Then consider your own situation and health. Have things changed in the last year? Are you usually a heavy or light user of insurance?

Understanding these variables can help determine the right plan for you.

Another strategy to consider may be to forgo traditional health insurance (like PPO and HMO plans) and use a high-deductible healthcare plan in conjunction with a health savings account. 

This could potentially lower your overall costs if you're relatively healthy and don't use your insurance much. While the deductible is higher, the monthly premiums are lower. Access to an HSA also means you can contribute tax-free dollars into an investment vehicle that benefits from both tax-deferred growth and tax-free withdrawals on any funds used on medical expenses. 

2. See if you can lower your taxes

Most people know that increasing contributions to a traditional 401(k) can be a huge help come tax time. But what should you do if you hit the maximum limit and still have money available to save? 

Participating in other tax-deferred savings vehicles via your employer, such as deferred compensation plans, can provide an additional way to lower your taxable income. Typically, these plans will allow your funds to go in with some form of pre-tax benefits and grow tax-deferred, but you will pay ordinary income taxes when those funds are withdrawn. 

Don't forget to evaluate the potential for after-tax 401(k) contributions, too. When contributing to your 401(k) with after-tax dollars, you can employ strategies such as Roth 401(k)s or Mega Backdoor Roth contributions, where individuals could put as much as $19,500 to $37,500 (2020 tax year) into Roth IRA funds. 

3. Take advantage of tax-loss harvesting 

Many DIY investors often overlook their after-tax rate of return, which is your investment return minus the taxes you need to pay on any gains. To improve your overall after-tax return rate, you may be able to leverage a tax-loss harvesting strategy. 

When you realize investment losses, it can allow you to offset gains elsewhere in your portfolio, which lowers your overall tax bill. Because 2020 has been a very volatile year, it opens up the door to tax-loss harvesting opportunities.

For example, sectors such as energy, financials, and real estate have not fully recovered from the coronavirus pullback in March 2020. If you hold assets from these sectors in your portfolio, then this might be the right time to sell those underperforming investments to generate tax savings. 

If you have no gains to offset, you can still take advantage of a tax-loss harvesting strategy by using capital losses (up to $3,000 annually) to offset your ordinary income. If you are someone who is in the highest tax bracket of 37%, that could result in a tax savings of up to $1,110. 

4. Make any last-minute charitable contributions now

The CARES Act that Congress passed in March 2020 provided many changes and adjustments to the normal rules around taxes. There are some that you may be able to take advantage of before December 31, including the $300 "above-the-line" deduction allowed for qualified charitable contributions. 

Most deductions for charitable contributions are itemized, but almost 90% of Americans use the standard deduction that the Tax Cuts and Jobs Act of 2017 put into place. The CARES Act allows you to add a deduction of up to $300 for charitable giving to your tax return without itemizing. 

While this time of year is typically reserved for gathering together with family and friends, you may want to try something a little different this year and incorporate your finances, too. Remember, these decisions you are making now will be sticking with you for the next 12 months.

After more than half a year living in pandemic mode, it’s obvious that this holiday season is going to look a little different.

The pandemic has forced big retailers to make big changes to their holiday sales cycle, which will change how we shop this year. Amazon delayed its summer shopping holiday, Prime Day, due to the pandemic, then announced it for October 13 and 14. Large retailers like Walmart and Target followed, announcing similar sales to take place around the same time.

Some stores have announced they will offer deals at the level of Black Friday savings throughout November and December to reduce crowding and make sure customers get their shipped orders in time.

That stretches the holiday shopping season to 10 weeks, compared to a “normal” year when holiday sales ramp up around mid-November. This extra time may be helpful if you like to plan ahead and have a well-prepared budget. But what if your finances have changed dramatically this year? How can you approach this longer-than-usual holiday shopping season to make it work for you?

Forbes Advisor talked to a few experts to help you make sense of the ways holiday shopping will be different this year—and how you can protect your wallet from the temptation to overspend.

Why Retailers Are Stretching The Season

Brands have actually been nudging the holiday shopping season to last longer for years—and it’s in part due to the way consumers plan during this part of the year.

“Each year about 40 percent of consumers begin their holiday shopping before Halloween,” said Katherine Cullen, senior director of industry and consumer insights at the National Retail Federation.

A key difference this year is that retailers are announcing their holiday shopping options and precautions to shoppers as early as possible to help them plan. “Retailers are stocking their holiday merchandise earlier and jump-starting their seasonal promotions and deals so consumers can shop safely and shop earlier,” Cullen said.

Many of this year’s sales campaigns remind us that we shouldn’t wait too long to buy gifts, and minimize the risk that something goes awry. “Many people have experienced shipping delays during the pandemic, and might want to order early to play it safe,” said Scott Rick, a marketing professor at the University of Michigan Ross School of Business.

Blockbuster sale offers once reserved for Black Friday and Cyber Monday may make for exciting sales tallies, but can cause major logistics issues that could curb your holiday spirit—such as pandemic-related manufacturing slowdowns, trucking delays and whether the United States Postal Service will be resourced to cope with the additional strain.

Longer Shopping Season Can Exacerbate Stress

Your holiday budget may be smaller this year, transformed by pandemic-induced job loss or reduced income.

Taking some time to shop, especially online in the safety of your home and sweatpants, might be just the thing some of us need right now. “Many people are hurting and in need of distraction,” Rick said. “Retail therapy might help.”

Needing a distraction is one thing. Having the money to start holiday shopping early is another. A survey by professional services provider PwC found that 40% of people plan to spend less on the holidays than they did last year, compared to 14% in 2019. Of the respondents in the labor market (meaning they’re not retired), over half reported their income had been negatively affected by the pandemic.

The pandemic-caused lifestyle changes and its continuing effect on Americans’ wallets can make it hard to plan ahead for the holidays.

“The idea of celebrating Thanksgiving or Christmas is so low on our list,” said Maggie Baker, a psychologist and financial therapist and the author of “Crazy About Money: How Emotions Confuse Our Money Choices and What to Do About It.”

It’s hard to see beyond the present for many people, and each layer of uncertainty—from our health, to our finances and beyond—creates more and more anxiety for many of us. “When someone is anxious … they don’t make the best decisions,” Baker explained.

Many Americans are already preparing their finances with an uncertain future in mind. A survey of 2,500 adults released in September by Bank of America found that 57% of people plan to continue reduced spending on nonessentials in the coming months.

Four Ways To Budget for This Extra-Long Holiday Shopping Season

Just because money may be tight this year doesn’t mean you’re not allowed to have any fun. But financial constraints may require some adjustment. These strategies can help you think through holiday traditions—and how you might adapt them for this strange year.

Acknowledge That Things Are Different

“It’s important to acknowledge that this is not going to be your normal Christmas,” Baker said, to yourself as well as to your family and friends. She explained that our reaction to negative elements in our life can be twice as strong as how we experience positive events. That negativity bias can put a damper on your holiday fun even if you’ve tried your best to keep things jolly.

Before embarking on any holiday planning and shopping, Baker recommends having a conversation with your family or friends about expectations for the holidays. Talk about what would make you feel better during a stressful time. The answers can help guide how much you can comfortably spend, and prevent misunderstandings with loved ones.

Rethink Your Priorities

If your income has changed during the pandemic, you may not have savings to dip into to finance your holiday fun. “If holiday spending is important to you, can you find ways to save in other parts of your budget and redirect this to your holiday spending goal?” said Amy Richardson, a CFP and Schwab Intelligent Portfolios Premium Planner.

Richardson said to look for ways to reduce spending, even temporarily, to free up extra cash. Call to try to renegotiate your cable or internet package, or turn to unused gift cards you might have on hand. If you have any credit card or debit card rewards available, you may be able to convert them to gift cards or get cash back.

It’s also a good time to look for phantom charges, advised Kevin Condon, senior vice president of deposit products at Bank of America—those recurring expenses you may have forgotten about after a free trial ends. Canceling those expenses, however small, can free up a little extra cash. If you use a budgeting app, it may identify recurring subscriptions for you; otherwise, take a look at your latest bank statement to spot charges for services you’re not using.

Adjust The Scale of Your Holiday Celebration

A miniature celebration may be enough to keep spirits bright through the winter. “Consider doing a secret Santa this year instead of buying gifts for everyone,” Richardson said. “Agree on a spending limit, select a name and purchase one gift instead.”

If you’re not sure how to set limits that everyone will abide by, have a conversation that acknowledges how this year is different and talk about what this means practically. Some people in your circle may need a gentle reminder that not everyone can afford to participate at the same level.

“If you set some guardrails, it can be fun to live within those guardrails,” Condon said.

Look For Deals, but Don’t Get Overwhelmed

If you plan to purchase gifts, but want to save as much as you can in the process, be diligent in your research. Obsessing over when you’ll get the very best deal can put you into a price-comparison tailspin—and lead you to window shop for yourself. Extra time researching prices may help you save a few dollars, but it’s not likely to net you significant savings.

Rick noted that it’s hard to outsmart a retailer who seems like it offers a different “deal” each time you turn around. Try not to get too caught up in researching prices and purchasing options. Many of the tried and true money tips like making a list and sticking to your budget still apply here, he said, although leaning toward creative or utilitarian forms of gift giving certainly help too. A handmade gift or volunteering to help a relative around the house can show your gratitude just as well as a store-bought item can.

For online shopping, Richardson recommended installing browser extensions that will compare prices for you to help determine the best time to buy. As for in-store shopping, many retailers will match a better price if you can prove that another retailer is advertising it.

Remember, retailers are ready to make up the ground they lost during pandemic shutdown periods, so your wallet may benefit from their willingness to move merchandise at a discount.

by Lisa Rowan, Forbes Staff
This information is for your convenience only and IG Wealth Management is not responsible for and disclaims any liability for third party businesses, organizations and individuals featured in this newsletter. For more information, please visit https://www.investorsgroup.com/en/legal/disclosures.

Back in 1999, Robert G. Hagstrom wrote a book about the legendary investor Warren Buffett entitled "The Warren Buffett Portfolio." What's so great about the book, and what makes it different from the countless other books and articles written about the "Oracle of Omaha," is that it offers readers valuable insight into how Buffett actually thinks about investments. In other words, the book delves into the psychological mindset that has made Buffett so fabulously wealthy.

Although investors could benefit from reading the entire book, we've selected a bite-sized sampling of the tips and suggestions regarding the investor mindset and ways to improve stock selection that will help you get inside Buffett's head.
 

Stocks Are a Business

Many investors think of stocks and the stock market in general as nothing more than little pieces of paper being traded back and forth among investors. This might help prevent investors from becoming too emotional over a given position, but it doesn't necessarily allow them to make the best possible investment decisions.

That's why Buffett has stated he believes stockholders should think of themselves as "part owners" of the business in which they are investing. By thinking that way, both Hagstrom and Buffett argue that investors will tend to avoid making off-the-cuff investment decisions and become more focused on the longer term. Furthermore, longer-term "owners" tend to analyze situations in greater detail, and then put a great deal of thought into buy and sell decisions. Hagstrom says this increased thought and analysis tends to lead to improved investment returns.

Increase Your Investment

While it rarely – if ever – makes sense for investors to "put all of their eggs in one basket," putting all your eggs in too many baskets may not be a good thing either. Buffett contends that over-diversification can hamper returns as much as a lack of diversification. That's why he doesn't invest in mutual funds. It's also why he prefers to make significant investments in just a handful of companies.

Buffett is a firm believer that investors must first do their homework before investing in any security. But after that due diligence process is completed, investors should feel comfortable enough to dedicate a sizable portion of assets to that stock. They should also feel comfortable in winnowing down their overall investment portfolio to a handful of good companies with excellent growth prospects.

Buffett's stance on taking time to properly allocate your funds is furthered with his comment that it's not just about the best company, but how you feel about the company. If the best business you own presents the least financial risk and has the most favorable long-term prospects, why would you put money into your 20th favorite business instead of adding money to the top choices?

Reduce Portfolio Turnover

Rapidly trading in and out of stocks can potentially make an individual a lot of money, but according to Buffett, this trader is actually hampering his or her investment returns. That's because portfolio turnover increases the amount of taxes that must be paid on capital gains and boosts the total amount of commission dollars that must be paid in a given year.

The "Oracle" contends that what makes sense in business also makes sense in stocks: An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.

Investors must think long term. By having that mindset, they can avoid paying huge commission fees and lofty short-term capital gains taxes. They'll also be more apt to ride out any short-term fluctuations in the business, and to ultimately reap the rewards of increased earnings and/or dividends over time.

Have Alternative Benchmarks

While stock prices may be the ultimate barometer of the success or failure of a given investment choice, Buffett does not focus on this metric. Instead, he analyzes and pores over the underlying economics of a given business or group of businesses. If a company is doing what it takes to grow itself on a profitable basis, then the share price will ultimately take care of itself.

Successful investors must look at the companies they own and study their true earnings potential. If the fundamentals are solid and the company is enhancing shareholder value by generating consistent bottom-line growth, the share price should reflect that in the long-term.

Think in Probabilities

Bridge is a card game in which the most successful players are able to judge mathematical probabilities to beat their opponents. Perhaps not surprisingly, Buffett loves and actively plays bridge, and he takes the strategies beyond the game into the investing world.

Buffett suggests that investors focus on the economics of the companies they own (in other words the underlying businesses), and then try to weigh the probability that certain events will or will not transpire, much like a Bridge player checks the probabilities of his opponents' hands. He adds that by focusing on the economic aspect of the equation and not the stock price, an investor will be more accurate in his or her ability to judge probability.

Thinking in probabilities has its advantages. For example, an investor that ponders the probability that a company will report a certain earnings growth rate over a five- or ten-year period is much more apt to ride out short-term fluctuations in the share price. By extension, this means that his investment returns are likely to be superior and that he will also realize fewer transaction and/or capital gains costs.

Understand the Psychology 

Very simply, this means that individuals must understand that there is a psychological mindset that the successful investor tends to have. More specifically, the successful investor will focus on probabilities and economic issues while letting decisions be ruled by rational, as opposed to emotional, thinking.

More than anything, investors' own emotions can be their worst enemy. Buffett contends that the key to overcoming emotions is being able to retain your belief in the real fundamentals of the business, and not get too concerned about the stock market.

Investors should realize that there is a certain psychological mindset that they should have if they want to be successful, and try to implement that mindset.

Ignore Market Forecasts

There is an old saying that the Dow "climbs a wall of worry." In other words, in spite of the negativity in the marketplace, and those who perpetually contend that a recession is "just around the corner," the markets have fared quite well over time. Therefore, doomsayers should be ignored.

On the other side of the coin, just as many eternal optimists argue that the stock market is headed perpetually higher. These should be ignored as well.

In all this confusion, Buffett suggests that investors should focus their efforts on isolating and investing in shares that are not currently being accurately valued by the market. The logic here is that as the stock market begins to realize the company's intrinsic value (through higher prices and greater demand), the investor will stand to make a lot of money.

Wait for the Fat Pitch

Hagstrom's book uses the model of legendary baseball player Ted Williams as an example of a wise investor. Williams would wait for a specific pitch (in an area of the plate where he knew he had a high probability of making contact with the ball) before swinging. It is said that this discipline enabled Williams to have a higher lifetime batting average than the typical player.

Buffett, in the same way, suggests that all investors act as if they owned a lifetime decision card with only 20 investment choice punches in it. The logic is that this should prevent them from making mediocre investment choices and hopefully, by extension, enhance the overall returns of their respective portfolios.

The Bottom Line

"The Warren Buffett Portfolio" is a timeless book that offers valuable insight into the psychological mindset of the legendary investor, Warren Buffett. Of course, if learning how to invest like Warren Buffett was as easy as reading a book, everyone would be rich! But if you take that time and effort to implement some of Buffett's proven strategies, you could be on your way to better stock selection and greater returns.

The prediction, from the Conference Board of Canada, says things won’t get back to anywhere close to normal until there’s a vaccine to battle COVID-19, likely sometime next June.

“Until we’re seeing COVID fully behind us, it’s going to be a rough ride. We won’t see a complete recovery until there’s a vaccine and this has been brought under control. The biggest risk is if a vaccine ultimately isn’t found,” said Conference Board chief economist Pedro Antunes in an interview.

The Conference Board’s argument was bolstered by a report from Statistics Canada on Wednesday showing the size of the Canadian economy is still six per cent smaller than in February, and that just a quarter of industries have hit their pre-pandemic size.

Statistics Canada showed Canadian Gross Domestic Product grew by three per cent in July, after having grown by 6.5 per cent in June. The StatsCan report also said data is expected to show that the economy grew by just one per cent in August.

While the economy started to bounce back in May and June as COVID-related restrictions eased up, the start of the second wave spells more trouble, said Antunes.

“Before, we were trying to flatten the curve of new COVID cases. Now, it’s a case of COVID flattening the recovery,” Antunes said.

Consumer spending picked up as restrictions started to loosen, Antunes said, partly because of pent-up demand, and partly because of government support programs including the Canada Emergency Response Benefit and the Canadian Emergency Wage Subsidy.

“It was consumers to the rescue with a lot of borrowed government money,” said Antunes, who predicted the CEWS will eventually be extended until next June.

Some sectors will struggle more than others as the second wave continues, Antunes said, singling out the hospitality, travel and cultural industries.

Other industries are seeing disruptions which are likely permanent, he added. Among the most heavily-affected sectors in the long term, Antunes predicted, will be bricks and mortar retailers, and commercial real estate, particularly office buildings. Simply put, companies are realizing that having employees doing their jobs from home works just fine.

“I think telecommuting will become permanent in a lot of cases. And that also means there will be a lot of office space on the market,” said Antunes.

For retailers, a gradual move to e-commerce turned into a tidal wave because of COVID-19, and many customers won’t be going back once COVID ends.

“I think a lot of those changes are permanent. We had more of an increase in e-commerce in a few months than we did in six years,” said Antunes.

That assessment is backed up by retail analyst Lisa Hutcheson.“The retailers who weren’t making these changes are likely the ones who’ve gone out of business,” said Hutcheson.

In a recent survey, J.C. Williams Group found that 39 per cent of Canadians say they’ll stick with their current shopping habits even once an effective treatment for COVID-19 is found, Hutcheson said.

Article by:  Josh Rubin of the Toronto Star

Oct. 1, 2020

While the stock market is riddled with uncertainty, certain tried-and-true principles can help investors boost their chances for long-term success.
 

Some investors lock in profits by selling their appreciated investments while holding onto underperforming stocks they hope will rebound. But good stocks can climb further, and poor stocks risk zeroing out completely.

KEY TAKEAWAYS

• The stock market is riddled with uncertainty, but certain tried-and-true principles can help investors boost their chances for long-term success. 
• Some of the more important basic investment advice includes riding winners and selling losers; avoiding the urge to chase "hot tips"; resisting the lure of penny stocks; and picking a strategy then sticking to it.
• If your time horizon allows it, a focus on the future with an eye toward long-term investment can maximize profits for most any investor.

Understanding Successful Long-Term Investing

Ride a Winner

Peter Lynch famously spoke about "tenbaggers"—investments that increased tenfold in value. He attributed his success to a small number of these stocks in his portfolio.

But this required the discipline of hanging onto stocks even after they’ve increased by many multiples, if he thought there was still significant upside potential.1? The takeaway: avoid clinging to arbitrary rules, and consider a stock on its own merits.

Sell a Loser

There is no guarantee that a stock will rebound after a protracted decline, and it’s important to be realistic about the prospect of poorly-performing investments. And even though acknowledging losing stocks can psychologically signal failure, there is no shame recognizing mistakes and selling off investments to stem further loss.

In both scenarios, it’s critical to judge companies on their merits, to determine whether a price justifies future potential.

Don't Sweat the Small Stuff

Rather than panic over an investment’s short-term movements, it’s better to track its big-picture trajectory. Have confidence in an investment’s larger story, and don’t be swayed by short-term volatility.

Don't overemphasize the few cents difference you might save from using a limit versus market order. Sure, active traders use minute-to-minute fluctuations to lock in gains. But long-term investors succeed based on periods of time lasting years or more.

Don't Chase a Hot Tip

Regardless of the source, never accept a stock tip as valid. Always do your own analysis on a company before investing your hard-earned money.

Tips do sometimes pan out, depending upon the reliability of the source, but long-term success demands deep-dive research.

Pick a Strategy and Stick With It

There are many ways to pick stocks, and it’s important to stick with a single philosophy. Vacillating between different approaches effectively makes you a market timer, which is dangerous territory.

Consider how noted investor Warren Buffett stuck to his value-oriented strategy and steered clear of the dotcom boom of the late '90s—consequently avoiding major losses when tech startups crashed.

Don't Overemphasize the P/E Ratio

Investors often place great importance on price-earnings ratios, but placing too much emphasis on a single metric is ill-advised. P/E ratios are best used in conjunction with other analytical processes.

Therefore a low P/E ratio doesn't necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued.

Focus on the Future and Keep a Long-Term Perspective

Investing requires making informed decisions based on things that have yet to happen. Past data can indicate things to come, but it’s never guaranteed.

In his 1989 book "One Up on Wall Street" Peter Lynch stated: "If I'd bothered to ask myself, 'How can this stock possibly go higher?' I would never have bought Subaru after it already had gone up twentyfold. But I checked the fundamentals, realized that Subaru was still cheap, bought the stock, and made sevenfold after that."2? It’s important to invest based on future potential versus past performance.

While large short-term profits can often entice market neophytes, long-term investing is essential to greater success. And while active trading short-term trading can make money, this involves greater risk than buy-and-hold strategies.

Be Open-Minded

Many great companies are household names, but many good investments lack brand awareness. Furthermore, thousands of smaller companies have the potential to become the blue-chip names of tomorrow. In fact, small-cap stocks have historically shown greater returns than their large-cap counterparts.

From 1926 to 2017, small-cap stocks in the U.S. returned an average of 12.1% while the Standard & Poor's 500 Index (S&P 500) returned 10.2%.3

This is not to suggest that you should devote your entire portfolio to small-cap stocks. But there are many great companies beyond those in the Dow Jones Industrial Average (DJIA).

Resist the Lure of Penny Stocks

Some mistakenly believe there’s less to lose with low-priced stocks. But whether a $5 stock plunges to $0, or a $75 stock does the same, you've lost 100% of your initial investment, so both stocks carry similar downside risk.

In fact, penny stocks are likely riskier than higher-priced stocks, because they tend to be less regulated and often see much more volatility.

Be Concerned About Taxes but Don't Worry

Putting taxes above all else can cause investors to make misguided decisions. While tax implications are important, they are secondary to investing and securely growing your money.

While you should strive to minimize tax liability, achieving high returns is the primary goal.

Article Sources

1. Peter Lynch. "One up on Wall Street," Pages 32-33. Simon & Schuster, 2000. Accessed Aug. 25, 2020.
2. Peter Lynch. "One up on Wall Street," Page 261. Simon & Schuster, 2000. Accessed Aug. 25, 2020.
3. Morningstar. "2018 Fundamentals for Investors," Page 9. Accessed Aug. 25, 2020.

8 Ways to be Less Stressed About Money During COVID-19

Losing sleep over your finances and getting angry or emotional won’t make the situation better. Instead, these common-sense techniques will help reduce money stress starting today, and empower you to take control. They also work really well even when we’re not feeling threatened by a global pandemic. As always, involve your spouse in this process; you need to be aligned with your finances or your stress will grow, not shrink.
 

Look at your accounts. Don’t hide from them

Awareness is the first step to reducing money stress. Log n and review your banking and credit accounts, alongside your CRA My Account, which contains information about taxes and your government benefits (which may be in flux as CERB gets replaced this fall). Note the balances and important updates or notifications. If your blood pressure starts to creep up, try to let the stress roll over you. You need to look, before you can make a plan to tweak and improve the situation.

Streamline

If during the above process you uncover that you have a lot of accounts scattered everywhere, which can be tough to manage, acknowledge the challenge, and over the next few weeks, start to streamline and reduce the accounts to only what’s necessary. Fewer accounts saves money on fees and allows you to keep better tabs on your finances.

Assess your money situation now, and then do it regularly

What do you think needs to change, now that you’ve faced the reality of your accounts? If you’re staring at overdraft balances, trimming your expenses is necessary, so make a list and start to tackle them. Note that non-essential spending tends to be easiest to cut — subscriptions, takeout, etc. If increasing your income through a side hustle seems to be the best approach, draft up a business road map and actions to test it out. Note that a side hustle doesn’t always need to be a new business idea. It could simply be a part-time gig driving a Lyft on weekends, or tutoring in the evenings. Just remember to set aside money for income taxes if your side hustle pays you in pre-tax dollars.

Use technology to your advantage

Set up your bills to be paid automatically on the day they are due (not before). Use a downloadable template or budgeting app to track your spending. Create a calendar entry in your phone to review your upcoming monthly expenses, and the previous month’s digital statements. Sign up for a free credit report and fraud alerts. If this seems like a lot of work, trust me — it’s going to get easier after these systems are in place.

Save for an emergency

The pandemic has shown a heightened need for reserve funds in the event that we lose work or have unexpected expenses. If you’ve never set aside money for an emergency, now is the time to do so, and create some peace of mind. This is best achieved through an automatic transfer from your chequing to your emergency savings account either daily, weekly or on payday. It takes time to build this fund, so just stick with it!

Invest in your future

When I was 17, I was on the Oprah Winfrey Show talking about how important it is for young people to learn healthy saving habits. My fellow guest was a woman named Marcia and her claim to fame was amassing $650,000 in retirement savings as a single mom, making less than $40,000 per year. One of her strategies was setting aside approximately $10 per day for her investments, from the moment she got her first job, until retirement at age 65.

The purpose of sharing this story with you is investing for retirement can be done with small amounts of money; the equivalent of a latte or sandwich purchase. So, if you’re thinking about getting started, see what you can do to free up a small daily amount of money to put toward your future.

Stop comparing yourself to others

The consumption culture we live in is hard on our mental health as well as our finances. Do what’s right for your finances, not because someone else is driving that decision, but because you genuinely care about the thing you’re spending on or saving for. Another thing to remember is that statistically, the luxurious lives that people post about on social media are backed by a lot of consumer debt, and debt is extremely bad for stress.

Learn more about it, and maybe get some help

No one is born with financial knowledge. It’s learned. The more you know, the greater your financial empowerment. You don’t need to be a pro at this stuff, but you should try to learn enough so you feel confident that you understand the decisions you are making with your day-to-day spending. It’s empowering to be able to assess important factors when it comes to debt (interest, payment terms, etc.), picking investments (risk tolerance, fees and historical rate of return) and who’s qualified to give you advice.

Read about money weekly. Talk to advisers. Sign up for money courses. Read the educational materials your bank sends you.

These techniques will not completely eliminate your financial worry, and that’s probably a good thing. You need to have a healthy tension between you and your money so that you’re curious and continuously trying to improve your situation.

Article by:  Lesley-Anne Scorgie | Toronto Star | Aug. 25, 2020

 

The agency confirmed on Saturday that as of Aug. 14, about 5,500 accounts had been affected by the separate attacks but that the breaches are now contained. The CRA's My Account, My Business Account and Represent a Client services were affected in the incidents. 

"The CRA quickly identified the impacted accounts and disabled access to these accounts to ensure the safety and security of the taxpayer's information," CRA spokesperson Christopher Doody wrote in an email.
 

"The CRA is continuing to analyze both incidents. Law enforcement assistance has been requested from RCMP and an investigation has been initiated."

The admission came after repeated inquiries from CBC News after CBC noticed a pattern of similar hacks occurring over the past two weeks. 

Earlier this month, Canadians began reporting online that email addresses associated with their CRA accounts had been changed, their direct deposit information altered and that CERB payments had been issued in their name even though they had not applied for the COVID-19 benefit.

Most reported that they were first alerted to the suspicious activity after receiving legitimate emails from the CRA confirming that their email addresses had been discontinued.

Attacks based on reused usernames, passwords

The incidents are a type of attack known as "credential stuffing," the Treasury Board's Office of the Chief Information Officer shared in a statement.

"These attacks, which used passwords and usernames collected from previous hacks of accounts worldwide, took advantage of the fact that many people reuse passwords and usernames across multiple accounts."
 

Aside from CRA accounts, thousands of others linked to GCKey — a secure portal that allows Canadians to access government services online — were also affected.

"Of the roughly 12 million active GCKey accounts in Canada, the passwords and usernames of 9,041 users were acquired fraudulently and used to try and access government services, a third of which accessed such services and are being further examined for suspicious activity," the statement read.

Compromised accounts connected to that platform, which is used by about 30 federal departments, were shut down when the threat was first discovered. 

CERB fraud not uncommon

In an email sent to CBC News days before the CRA publicized the attacks, the agency said there is typically an uptick in fraudulent activity at the beginning of each CERB pay period. The most recent period started Aug. 2.

The Canadian Anti-Fraud Centre has already received more than 700 reports of identity fraud connected to the federal emergency response benefit. Resolving a fraud attempt can sometimes be a lengthy process for victims that can see them frozen out of receiving other benefits until their accounts are restored.

The CRA said it is sending letters to those affected by the attacks explaining how to confirm their identity to regain control of their accounts. Individuals phoning the agency for help can select the "report suspected fraud or identity theft" option to fast-track their call.

Canada's cyber intelligence agency recommends that anyone affected by the breach update their passwords immediately and choose something they will not use for any other account.

A second wave of COVID-19 could pummel the markets — here’s how to protect your portfolio!

The steep dive in stock prices in February and March has taught a hard lesson on how quickly your portfolio can lose a lot of ground.

Now that stock prices have rebounded close to where they were before the crash, it’s a good time to make sure your portfolio and finances are resilient. Although no one can reliably predict what’s going to happen to markets in the next year or two, the potential threat of a second COVID-19 wave creates lots of financial uncertainty.

“Given what happened in March and that sharp market crash, clients are focused on protection. They want resiliency in whatever way it can be delivered to them,” says Neville Joanes, a chief investment officer.

In what follows, we describe key things you can do to make sure your portfolio and your finances are resilient no matter what happens to stock prices in the short term. We have included insights and practices cited by Joanes and another chief investment officer, James Gauthier.

Start with a resilient attitude

While there are a number of concrete things you can do to make your finances resilient, it’s important to realize that you also need a resilient attitude to go with it.

It’s human nature to feel anxious when your stocks get pummelled, which makes it tempting to sell. Unfortunately, that means selling low — doing the wrong thing at the wrong time. So you have to resist that urge and stay invested in stocks for the long term.

Realize stock market downturns happen periodically and unpredictably. “If the markets seem crazy, you have to stick with your plan, stay focused on the objective you have, and the time horizon you have,” says Gauthier.

Find the right balance

A resilient portfolio needs the right balance between stocks and fixed income like bonds and GICs. That balance should be based on your financial objectives, your risk tolerance, your time horizon, and other personal circumstances. An asset allocation of 60 per cent equity and 40 per cent fixed income is a classic split for investing long-term, but individual situations vary. Retirees often suit a little less equity (50 to 60 per cent equity is a reasonable range for most retirees, in my view). On the other hand, younger investors can often benefit from more than 60 per cent equity.

The equity in your portfolio is the main driver of long-term returns and growth but suffers during market meltdowns. Relatively safe forms of fixed income like investment-grade bonds and government-insured GICs don’t generate much interest these days. However, they generally hold their value during stock downturns and therefore provide stability when you need it most. So equities and fixed income are complementary and you generally need both when investing long-term.

That balance helps you do smart things when stock markets swoon. The fixed-income component reduces the impact on your portfolio when stocks are beaten up, thereby making it easier to “stay the course” and benefit from the eventual market recovery. It also sets you up to benefit from rebalancing back to your long-run asset allocation. In that case, you sell the asset that has held its value — fixed income — to buy stocks cheaply, so you’re selling relatively high and buying low.

Diversify your equity

You should spread out risks from different stocks so you’re not overly dependent on the returns of a particular company, industry or geographic area. That helps you avoid a common pitfall of loading up on a hot stock, sector or area just before it turns cold and drops sharply. The tech boom and bust of the late 1990s and early 2000s is a famous instance, but that pattern repeats in smaller-scale examples. “Most recently we had the cannabis sector which had this huge run-up and effectively fizzled out,” points out Joanes.

There is no one right formula for diversifying, but one simple approach is to use broad-based ETFs to invest one-third in Canadian stocks, one-third in U.S. stocks, and one-third in international stocks. Investment firms typically apply similar principles in a more sophisticated fashion with a number of sub-asset classes. For example, the U.S. stock exposure might be disaggregated into large-capitalization, midcap and small-cap stocks.

Invest conservatively for short-term goals

If you’re saving up for a definite short-term goal, you should avoid stocks and instead invest in something that you know will retain its value. Good options for short-term money include an investment savings account or a very conservative fund dominated by fixed income. Unfortunately, you also have to put up with very low interest rates on short-term money these days.

What’s the dividing line between short term and long term? In my view, money that you’re pretty certain to need in the next year or so should be invested short term. Money that you’re pretty sure you won’t need for at least five years can be invested long term, in line with your long-term asset allocation. For time horizons between one and five years, look for an in-between asset mix that provides the desired tradeoff between short-term protection while providing some exposure to higher expected returns from equities. Figuring out the right balance can be tricky because it can depend on evaluating different factors such as the concreteness and relative priority of your goal. Your advisor help you figure out what works best for your situation.

Have a source of emergency cash

Many experts advise that most people should have an easily accessed “emergency fund” that covers three to six months’ worth of spending, while recognizing that retirees often benefit from more. In my view, that is good advice, but there are a couple nuances to consider.

For one thing, money set aside for short-term goals might do double duty as emergency cash. If, for example, you’ve set aside money in an investment savings account for the down payment on a home, but you lose your job because of the COVID-19 crisis, then if necessary you can dip into the down-payment money to support yourself until you get another job.

Also, your emergency money doesn’t all have to reside in a separate account. You might also tap into the short-term fixed-income part of your portfolio to supplement your separate emergency fund. (But be cognizant of the tax impact if you’re potentially withdrawing those funds from an RRSP or RRIF.)

Protect retirement withdrawals

Retirees generally need to draw money from their portfolio to live on. But in generating that cash flow, they need to avoid having to sell stocks at distressed prices. If you encounter a steep and prolonged stock downturn early in retirement, selling stocks to cover living costs can diminish your portfolio so much that you don’t benefit much when stocks eventually recover. (The experts refer to that as “sequence of returns” risk.)

There are three main strategies for protecting retiree finances from having to sell stocks at the wrong time. First, there is a general approach to structuring your portfolio known as the “bucket” strategy. Under that approach, you notionally divide your portfolio into at least two “buckets.” You create a short-term bucket composed of cash and reliable forms of short-term fixed income, which is separate from your long-term bucket holding your equities and other relatively risky assets. The idea is to make sure you have enough assets in your short-term bucket to supply your withdrawal needs for an extended period if and when stock markets are depressed. That leaves your long-term bucket untouched during a market sell-off, thus allowing it to recover undisturbed.

The second approach is income investing, where you rely on reliable forms of dividends and interest to generate most of the money you need to live on. On the equity side of your portfolio, you generally invest in blue-chip, dividend-paying stocks such as large Canadian banks, insurance companies, telecoms, and utilities. You’re looking for stocks that pay ample dividends, but you also want to make sure they’re reasonably reliable and won’t get cut during recessions (although even blue-chip stocks come with some risk of that happening). On the fixed-income side, you stick mostly to relatively safe investment-grade bonds and government-insured GICs. If most of your cash-flow needs are covered reliably, then that helps you avoid getting cornered into selling equities at the wrong time to cover living needs.

A third approach is using part of your portfolio to purchase annuities, which provide guaranteed cash flow for life. However, annuity payout rates are closely linked to interest rates, so payout rates are very low right now. Still, they can make sense in the right situation.

TFSAs, RRSPs and the Tax Hikes to Come!

A bit of personal finance advice to see you through the decades ahead: Fill your TFSA. Fill it to the brim.

Tax-free savings accounts are the most universally loved franchise in the Canadian money universe, which suggests a certain redundancy in urging people to exploit them to the max. But as popular as they are, TFSAs are under-used. If governments raise taxes in the years ahead to help pay for their pandemic spending, your best defence is having a topped-up TFSA.

Speculation about higher taxes ahead has already begun, even though the economy is too fragile right now to support them. People must be encouraged to spend right now and higher taxes would discourage that.

But with Ottawa, the provinces and cities spending hundreds of billions more in total than they’re taking in, tax increases seem inevitable.

Speculating about tax hikes makes a strong case for using TFSAs. You contribute to these accounts with after-tax dollars and then you’re done, tax-wise, as long as you follow the contribution rules. Investment gains in your TFSA are tax-free, and so are withdrawals.

Expect the TFSA versus RRSP debate to intensify in the years ahead. A registered retirement savings plan works well if you have a tax rate in retirement that is lower than when you were working. The thinking here is that the tax break you got for making the RRSP contribution would be larger than the tax hit on money withdrawn from your RRSP or, once you turn 71, registered retirement income fund.

TFSAs are a good choice if you expect a higher tax rate in retirement, possibly because you have yet to reach your peak earnings years. TFSAs also work well for people concerned that their retirement income will be high enough to trigger a clawback of Old Age Security benefits. RRSP or RRIF withdrawals count toward the clawback threshold, but TFSA withdrawals do not.

There’s a lot going on in the world today in all respects, but financially in particular. We’re still figuring out how badly the economic lockdown caused by the pandemic has hurt people in terms of lost jobs and income. In the background, stocks crashed and then soared, interest rates plunged, gold prices surged and inflation tanked, except for pockets where the cost of living is pushing noticeably higher.

If your reaction to all these financial storylines is to disengage or back away, consider that bit of advice we started out with. Fill your TFSA to the brim.

You won’t regret it, even if an RRSP might turn out to be the better choice in terms of reducing total taxes paid over a lifetime. Even when RRSPs function well, people freak out about the taxes they have to pay as retirees. Tax-wise, TFSAs are friction-free.

Sure, there’s a risk that the federal government could change the TFSA rules. But slapping a tax on withdrawals of money faithfully committed for years to a TFSA is the sort of breach of faith that gets governments punted out of office. It would be smarter to focus changes on future TFSA contributions – perhaps by introducing a lifetime limit.

As appealing as TFSAs are currently and in a future sense, they’re still widely under-used. Federal government numbers for 2017, the most recent year available, show that the average amount of unused contribution room was $30,947 and the average fair market value for TFSAs per person was $19,633.26. As of 2017, total TFSA contribution room stood at $52,000; for 2020, the cumulative limit is $69,500.

There were 14.1 million TFSA holders in 2017, but 5.9 million of them did not make a contribution and only 1.4 million made the maximum contribution.

Unused TFSA capacity is a symptom of income inequity as much as anything. But if you do have money to invest, filling your TFSA is a smart way to prepare for a future with higher taxes.

This Globe and Mail article was legally licensed by AdvisorStream.
This information is for your convenience only and IG Wealth Management is not responsible for and disclaims any liability for third party businesses, organizations and individuals featured in this newsletter. For more information, please visit https://www.investorsgroup.com/en/legal/disclosures.

Guide to Emergency-Proofing your Finances

KEY TAKEAWAYS

• Because of the normal bust and boom cycle of the economy, there will always be downturns.
• To prepare, save an emergency fund, make sure your insurance is adequate, create a budget, and pay down debt.
• Once your child turns 18, you need permission to access their medical records or make medical decisions on their behalf.

While it's difficult to predict when or if a recession will hit, downturns happen eventually because the economy goes through boom and bust cycles. When the Dow Jones Industrial Average—the "Dow"—fell 777.68 points (6.98%) in intraday trading on Sept. 29, 2008, it was the largest point drop in history. Today, we can almost feel nostalgic remembering the good old days when DJIA losses were measured in hundreds, instead of thousands.

Since the U.S. first realized the seriousness of the COVID-19 coronavirus—and that a recession was likely unavoidable—the markets have sustained epic losses that make the 2008 financial crisis look like small potatoes. The stock market crash of 2020, as it's now called, started on March 9 when the Dow fell 2,013.76 points—a 7.79% drop.

On March 11, the Dow lost 1,464.94 points to close 20.3% down from its Feb. 12 high, signaling a bull market and the end of the 11-year bull market that began in March 2009. On March 12, the Dow dropped another 2,352.6 points (9.99%). So far, the worst day has been March 16, when the Dow lost 2,997.10 points (12.93%).

We never know when an emergency will strike—whether it's a hurricane, earthquake, a pandemic like COVID-19, or your own changing financial or medical situation. It pays to have a plan in place that can help get you and your loved ones through the crisis. And even though we're facing unprecedented times today, it's not too late to work on emergency-proofing your finances.

Financial Health

It's easier to respond and adapt to an emergency when you're prepared. For starters, take a look at your financial health. Pay attention to your income, savings, investments, net worth, and debt. If you're like most people, you have room for improvement when it comes to your financial health. Here are a few things to work on:

• Make a budget and stick to it. People usually know how much money they have coming in, but it can be a shock to see where your money goes. Find ways to cut your costs, if possible. Think: Do I really need that? Do I have something already that I could use instead? Do I want this more than I want to be financially stable?
• Save and invest a certain percentage of your income every month. Put it in your budget to help make it happen, and review your progress each year. Even though it's never too late to start, your money has more time to grow if you start early. And remember, economic downturns are temporary. Think long-term, and try not to panic.
• Organize your important documents so you know where to find them in an emergency. Consider putting your hard-to-replace documents, collectibles, and heirlooms in a safe deposit box. Since you can't access a safe deposit box 24/7, however, don't put anything in it that you might need in a hurry—such as a passport or the only copy of a living will, advanced medical directive, or durable power of attorney.
• Improve your credit score. During a recession, lenders favor the strongest borrowers. You will have access to better terms and rates if you have a higher credit score.
• Designate a financial power of attorney who can make financial decisions on your behalf if you're physically or mentally unable to handle your affairs.

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Emergency Fund

Financial planners recommend that you should set aside three to six months' worth of living expenses in an emergency fund. If you're able to, it's a good idea to save even more. Keep in mind that your emergency fund should be used only in a true emergency—such as to make ends meet when you're unemployed, recover from a natural disaster, or pay medical bills.

Fast Cash

If you don't have an emergency fund—or you've already burned through it—you might need to raise some cash as quickly as possible. Here are several options for doing so:

• Go through your home and garage to find things you can sell. Post your items on an online marketplace or hold a yard sale.
• Borrow from your retirement account. You may be able to take a short-term loan from your retirement account—and do your best to pay it back on time.
• Borrow from friends or family. This one is tricky because it can put a strain on relationships. Be careful what you promise, and always follow through.
• Earn extra cash. Work extra hours at your existing job if it still exists, ask for that long-awaited raise, or find a side hustle. 

  ---

Debt Management

It's a lot easier to face an emergency if you don't have a lot of debt. Good debt has the potential to increase your net worth—such as borrowing for college, a home, or a small business. Bad debt is when you borrow to buy something that doesn't increase in value or generate income, including cars, clothes, and most credit card debt. Whether you're facing an emergency or not, it's always a good idea to avoid bad debt, as much as possible. Still, if you can't pay your bills due to an emergency, you may be able to:

• Take out a low-interest loan to consolidate higher-interest debt.
•  Ask for debt settlement, where a lender forgives part of your debt.
• Ask your lender about any debt relief programs.

Insurance Coverage

Insurance is an essential part of emergency planning. Now is a good time to review your insurance (including property, health, life, car, and umbrella policies) to make sure you have the right amount of coverage, and to make changes, if necessary.

You may be able to save money on your premiums by taking advantage of any available discounts, such as for bundling your car and property insurance. It's a good idea to call your insurance provider once a year (for instance, when you get your renewal notice in the mail) to make sure you're not missing out on any deals.

Healthcare

Making sure you have adequate health insurance is only one aspect of your overall healthcare. To prepare for emergencies, it's essential that you also have a medical power of attorney, a legal authority that gives one person the power to act for or on behalf of someone else. Also important: anyone over age 18 must give written permission for someone else to receive medical information about them—even if the other adult is a parent. You'll also need a medical power of attorney to make decisions on your adult child's behalf if they become incapacitated. So, in addition to making sure you have assigned that power to someone in case something happens to you, be sure both adult children and other adults in your family have these documents in place.

Make a Will

Along with a medical (and financial) power of attorney, everyone needs a will, even if you're a long way from being old. A will is a legal document that sets forth your wishes. If you die without a will, your wishes may not be carried out. A living will is a separate document (and also important). It sets forth your wishes for medical care if you become incapacitated, including whether you want to be resuscitated or if life support should be used to prolong your life.

When Disaster Strikes

Any emergency is disruptive and difficult, even when you're prepared for it. But if you haven't planned, it can be even more challenging. Emergencies—whether natural disasters or recessions—are all but inevitable, so it makes sense to prepare for them as best you can. That way, you may be able to lessen the disruption, reduce your stress, and be in a better position to ride out the crisis.

10 Steps to Achieve a Growth Mindset in Business

We all take pleasure when our ideas come to fruition. We’re even more pleased when the ideas have an impact by improving motivation, innovation or productivity, among other areas. The spread of an idea can benefit many, but that popularity can also alter and distort the original.

I am a fan of Carol Dweck’s research. Dweck is a highly regarded professor of psychology at Stanford University and the author of several books, including Mindset: The New Psychology of Success . In Mindset , Dweck differentiates a “growth mindset” from a “fixed mindset.” According to Dweck:

A growth mindset is “the belief that an individual’s most basic abilities and skills can be developed through dedication and hard work—brains and talent are just the starting point.”

A fixed mindset is “the belief that an individual’s basic abilities and skills, their intelligence and their talents, are just fixed traits.”

Dweck concluded that individuals who believe they can develop their talents through hard work, good strategies and input from others have a growth mindset. These individuals are likelier to achieve more than those with fixed mindsets because they put more energy into learning and are less concerned about looking smart.

Adopting a growth mindset can supercharge your wellbeing and growth. Here are ten ways to develop a growth mindset in business.

1. Be 100 percent accountable

To grow, you need to be accountable, or willing to accept responsibility. As an entrepreneur, you must start to be responsible and accountable to yourself. As you grow, you will be demonstrating accountability and its value to your team; they will follow your lead, making accountability part of your company’s culture.

2. Do not be concerned with what others have

Avoiding envy is fundamentally important when you’re trying to be focused, driven and leading. Focusing on what others have and what they are doing sets expectations that simply slow you down and take focus away from your purpose.

3. Become an expert in your field

I meet so many so-called “headliners,” people who skim the surface. In a world fueled by fake news, Photoshop’ed social posts and other illusions, it’s critical to become an expert. Strive to become truly good at what you do—so good that everybody wants your services. Stand out based on your specialty.

4. Don’t focus on your failures

When we learn that we should work on our weaknesses, we tend to think we need to hold on to our failures. But focusing on your failures gives detractors too much leverage against you. Instead, claim and learn from your failures and then focus on learning and growing from your mistakes.

5. Do the work and put in the time

Greatness does not come when you put in just ten percent. Put in ten percent, and you’ll achieve only two percent of your potential. To achieve greatness, you’ve got to be at 100 percent, putting in the time and effort.

6. Do what you love for the people who love what you do

One of my favorite sayings is, “You need to be purpose-driven doing what you love for those who love what you do.”

Discovering your purpose is as important as finding your niche. You will bring much more value and expertise to those that need you, and you will have so much more fun delivering your products and services.

7. Don’t focus on money

Business leaders that focus solely on money are never fully satisfied, and often lose their customers. Instead, care about creating value. You want customers to say how proud they are about your products and services. You want employees to say how great it is to work for you and how much they learn from you. Focus on creating fans through value creation.

8. Achieve your outcomes quickly

Do not be obsessed with perfection. Instead, be fast. Getting somewhere first has more value than being perfect but last. That first-mover advantage is very important for growth. Develop an appetite to fail often and quickly, developing your products and services quickly and better aligned with the needs of your customers.

9. Be grateful for what you have

Be grateful for what you have now. Be grateful for what you’re going to achieve. Be grateful for what you don’t have. Gratitude is a gift and a core requirement for a growth mindset. The true expression of gratitude sets off energy that has the power of drawing people towards you. Explore and embrace it.

10. Become self-aware and understand your purpose

If you want to succeed in life, you must know your purpose. If you want to have a business growth mindset, you must become self-aware and understand your purpose. Self-awareness has the power to align your will and humility, which attracts people to you through your purpose.

Growth mindset is the belief that skills and abilities can be improved and that developing these is the purpose of your actions.

Build a culture whereby all employees are enabled and encouraged to develop growth mindsets for themselves—reward improvement.

Emphasize that failures are opportunities and not threats. Leaders need to encourage and challenge employees to be brave and courageous.

A growth mindset is a continuous belief that improvement is possible and that failures are opportunities to learn. It is much larger than the limited objective of improving earnings.

Growth mindset is a frame of mind. Leaders can positively assist people in adopting growth mindsets by fostering a culture encouraging specific behaviors and practices. Individuals and organizations can have growth mindsets.

A growth mindset is not unbounded. Just because you put your mind to something doesn’t mean you can do anything. You have to work at it, so start by implementing these ten steps and begin to live with purpose.

This information is for your convenience only and IG Wealth Management is not responsible for and disclaims any liability for third party businesses, organizations and individuals featured in this newsletter. For more information, please visit https://www.investorsgroup.com/en/legal/disclosures.

 

Does it matter what sort of mask you wear?

Yes. Different types of mask offer different levels of protection. Surgical grade N95 respirators offer the highest level of protection against Covid-19 infection, followed by surgical grade masks. However, these masks are costly, in limited supply, contribute to landfill waste and are uncomfortable to wear for long periods. So even countries that have required the public to wear face masks have generally suggested such masks should be reserved for health workers or those at particularly high risk.
 

Are paper surgical single-use masks better or is a cloth mask OK?

The evidence on any mask use, outside of surgical masks, is still emerging: there appears to be some benefit, but the exact parameters of which masks are the best and the extent to which they protect the wearer or those around them are still being figured out. A tighter fitting around the face is probably better, but the CDC suggests any covering, including a bandana, is better than none.

One US study investigated which household materials best removed particles of 0.3-1.0 microns in diameter, the typical size of viruses and bacteria, and concluded that good options include vacuum cleaner bags, heavyweight “quilter’s cotton” or multiple layers of material. Scarves and bandana material were less effective, but still captured a fraction of particles.
 

How do you take them on and off safely?

Before putting on a mask, clean your hands well with soap and water. Cover the mouth and nose with your mask and make sure there are no gaps between your face and the mask. Avoid touching the mask while using it and, if you do, wash your hands. Replace the mask when it is damp. To remove your mask, take it off using the elastic tags, without touching the front and discard immediately into a closed bin or, if the mask is reusable, directly into the washing machine.

How often do you need to wash masks?

They should be washed after each use. The US Center for Disease Control suggests “routinely”.
 

Is there an environmental concern?

Many commercially available masks are made from layers of plastics and are designed to be single-use. According to an analysis by scientists at University College London, if every person in the UK used one single-use mask each day for a year, an extra 66,000 tonnes of contaminated plastic waste would be created. The use of reusable masks by the general population would significantly reduce plastic waste and the climate change impact of any policy requirements for the wearing of face masks, according to the UCL team, led by Prof Mark Miodownik. They say that according to the best evidence, reusable masks perform most of the tasks of single-use masks without the associated waste stream.

article by:

Hannah Devlin of The Guardian | June 16, 2020

 

This information is for your convenience only and IG Wealth Management is not responsible for and disclaims any liability for third party businesses, organizations and individuals featured in this newsletter. For more information, please visit https://www.investorsgroup.com/en/legal/disclosures.

Pandemic Leads to Six Months of Global Market Mayhem

LONDON (Reuters) - Probably the best thing to say about world financial markets so far this year is simply that it has been quite a ride.

If somehow you missed the coronavirus slamming the global economy like a wrecking ball, current market levels certainly do not reveal the wild swings that unprecedented events unleashed.

Sure, world stocks are down nearly 9% for their worst start to a year in a decade, some big emerging market currencies are down over 15% and super low-risk U.S. government bonds and gold have returned 16%. But none of that is exactly unique.

In fact, some bits look distinctly bullish. The tech-heavy Nasdaq is near a record high thanks to those fantastic FAANGs again, Chinese stocks are now up for the year as are Italian bonds, which might all suggest nothing serious has gone on. Wrong!

The reality is that it has been one of the most turbulent six months ever seen. Having slumped 35% between Feb. 20 and March 23 in the most destructive sell-off since the Great Depression, MSCI's world equity index has rallied to within 10% of February record highs and Wall Street has had its best quarter since 1998.

It has all been fuelled by $l8 trillion worth of fiscal and central bank stimulus, interest rates slashed to 0% or below in most major economies, and massive debt buying programmes. Borrowing costs for high-grade U.S. companies are now below January levels despite rising numbers of firms going bust.

Oil markets have been even more dizzying. Brent might be down nearly 40% for the year overall, but its second-quarter rebound of 80% is its best since 1990 when markets were worrying about the first Gulf War.

"It has been a bit crazy," said Hans Peterson, veteran global head of asset allocation for Sweden's SEB investment management, who has never experienced a market as unpredictable as in the last six months.

"The initial drop (in asset prices) was so quick that I think a lot of people got skewed in their portfolios and they had to rebalance," whereas the rebound came in the wake of the "extreme support" from governments and central banks, he said.

A breakdown of the best- and worst-performing stocks also tells the story of the pandemic, which has claimed over half a million lives and sent unemployment spiralling.

The boom in video chat has made Zoom's 277% surge the best in the world so far. Moderna, one of the drug firms in the race for a vaccine, is up over 200% too, and sit-on-your-sofa stocks like Netflix and Amazon have jumped 36% and 45%.

At the other end, cruise ship companies Carnival and Royal Caribbean have plunged 69% and 66%, and scores of airlines have been battered, though the biggest loser is scandal-hit German payments firm Wirecard which has lost 99% of its value.

FASTEN YOUR SEATBELTS

Ultra-safe U.S. government bonds and far more risky emerging market government debt have both made double-digit returns as the Federal Reserve has chopped U.S. interest rates to effectively zero, leading a charge of almost 150 cuts globally.

As a result, the dollar has given back all of the gains against big currencies like the euro but with the Fed also scooping up companies' bonds, global corporate debt is up 8% for the second quarter having skidded 5% in the first quarter.

In emerging economies, where some of the worst COVID-19 outbreaks are now happening, the damage is still heavy in stocks.

Russian equities, which top-performed globally last year, have been routed 23% in dollar terms, although the loss was 40% at one stage. Brazil and Colombia, where infection rates are now soaring, shares have plunged 40% and 50%, and Mexico, South Africa, and Indonesia are all down over 25% for the year.

In March alone, international investors withdrew more than $80 billion from EM economies, the largest single-month capital outflow on record, although money has started to trickle back again.

Ecuador's bonds have made a world-beating 75% since the country's creditors agreed to debt relief. Angola's bonds have leapt over 50%, and in China where the virus first struck, blue-chip stocks are now up 2.7%, having been down 16% in March.

"This has been a huge quarter because you had some recovery from the March sell-off," said Kevin Daly at emerging market specialist Aberdeen Standard Investments.

"Markets are looking through the COVID cases now and taking the view that in six months time if we do see a rebound, high yield, and EM assets are going to do very well."

Among the major currencies, there have been some milestone moves too. Australia's dollar, which is often seen as a proxy for China's fortunes due to the metals Australia sells there, has had its best quarter since 2010.

The euro made its first quarterly gain versus the safe Swiss franc in over two years as the eurozone cooperated on a recovery fund, while the stellar rebound in oil and low COVID numbers gave the Norwegian crown its best quarter against the euro and dollar in a decade.

Credit Suisse's Global Chief Investment Officer Michael Strobaek said that after such a strong rebound and with so much uncertainty ahead, including what is likely to be a bitter U.S. presidential election in November, markets will face another rollercoaster six months.

"We are fastening our seatbelts for the ride ahead," he said. "Investors are well-advised to do the same."

(Additional reporting by Thyagaraju Adinarayan; Editing by Cynthia Osterman) Copyright (2020) Thomson Reuters.

This article was written by Marc Jones from Reuters and was legally licensed by IG Wealth Management.
This information is for your convenience only and IG Wealth Management is not responsible for and disclaims any liability for third party businesses, organizations and individuals featured in this newsletter. For more information, please visit https://www.investorsgroup.com/en/legal/disclosures.

Safe or Scary? Ranking the Risks of Everyday Life

Five Toronto disease experts give their personal assessments of dozens of things we all used to do without a second thought.

Going to the gym, going to church, playing some golf, having a drink on the patio at your favourite bar, taking public transit. These are things we once took for granted and did without thinking.

Maybe not anymore.

Throughout the COVID-19 pandemic, many of them have been off-limits, deemed unsafe.

But as Ontario dips its big toe into reopening and you consider whether to take part in some of these activities again, what really should be your comfort level?

 

"We're all getting anxious. I know I am. I would like to go do some things," said Gerald Audette, associate dean in the Faculty of Science at York University. "We've got a good handle on this, but we haven't got it completely licked yet.

"We're at that point where, yeah, if we're intelligent about this, you can do some things. However, you've got to be aware."

The Star surveyed five university health professionals to get their take on just how comfortable they'd feel doing formerly mundane activities.

The questions were open-ended. Their answers - on a scale of 0 to 10, with 10 indicating a level of risk that made the expert extremely uncomfortable - are not recommendations, more generalizations to get people to think.

It's a conversation, not a scientific survey.

If there was a consensus, it was that outdoor activities where social distancing is easier are far less risky than prolonged indoor activities with other people.

"Indoors is always going to be much, much less safe," said Colin Furness, an epidemiologist and assistant professor at the University of Toronto's Faculty of Information. "Length of exposure and closeness, those are the major risks."

And activities where you know and trust the other participants are much less risky than with strangers involved.

"We should be doing bubbling," said Furness. "If you just hung out with people you trusted, you'd be way less at risk."

From hiking to attending an indoor party, here's the list:

Going hiking

(Rated from 0 to 2)

As a group, our experts were most comfortable with hiking - so long as it wasn't hiking in a pack. "If it's pretty isolated and you're just bumping into a couple of people, probably a 1," said Thomas Tenkate, an expert in health risk assessment at the School of Occupational and Public Health at Ryerson University. "But if it's more crowded, and every minute you're bumping into someone, that's ramping it up to a 6."

Going for a bike ride

(Rated from 0 to 3)

After hiking, our experts were most comfortable with going for a bike ride. "When you're on a bike, you can't get too close to people, so I think it's pretty safe," said Tenkate.

"If you're by yourself, it's a 0," said Timothy Sly, an expert in influenza pandemics at Ryerson's School of Occupational and Public Health.

Playing golf or tennis

(Rated from 0 to 2)

Golf these days involves individual carts and not touching the flag. Both sports lend themselves well to social distancing. "If you're stuck in the clubhouse with a bunch of other people who are angry about losing golf balls, well, that might be a little different," said Audette, who gave a 0 rating. "But you can effectively socially distance even in a party of four."

"They're both activities where you have a bit more control over social distancing," said Tenkate, one of three experts to give a 2. "If you're like me, you're pretty isolated because you're looking for the ball all the time."

Going camping

(Rated from 0 to 4)

A family trip to a provincial park seems an acceptable risk. "You can stay on your own little campsite, but it depends on what the kids are doing and how they're mixing," said Anna Banerji, director of Global and Indigenous Health in the Faculty of Medicine at the University of Toronto.

"You're reasonably isolated when you're camping anyway," said Tenkate. "Apart from, I suppose, the use of public facilities."

Said Sly, who gave a 4: "If you go with 16 other people and a huge case of beer, it's very different."

Visiting the dog park

(Rated from 1 to 5)

Another relatively low-risk outdoor activity where the dog walker has social-distancing control - although the dogs may change that equation. "People like to be a little bit social when they're there," said Tenkate, who gave the lone 5. "Some dogs are more social, too."

Going inside a library or museum

(Rated from 1.5 to 4)

These activities got good marks for COVID-19 comfort, despite being indoors, because the experts believed the managers of libraries and museums would take proper care of their patrons. "In these sorts of activities people tend not to be all over each other," said Sly. "They tend to keep separate."

Added Audette: "You can limit access."

Going to the beach

(Rated from 1 to 5)

The outdoors and the idea of relatively easy spacing got the experts to skew toward comfort. "I'm thinking about what you're doing and how much you can control in regard to your interactions with other people," said Tenkate. "I think you can control your interactions a little bit easier at the beach, versus in a public swimming pool."

Going to the dentist

(Rated from 1 to 6)

Even though it's indoors - and it got our first rating on the top half of the scale, a 6 from Sly - the experts were largely comfortable that those involved with dentistry are health professionals who take sanitary practices seriously and have proper personal protective equipment. "Dentists will be really hardcore about this," said Furness. "There's going to be masks, and there's going to be PPE."

A backyard BBQ with friends

(Rated from 1.5 to 5)

Being outdoors, choosing the people to invite and being in control of their surroundings led to relatively high comfort. "As long as I know the friends I'm having over, and we've understood about how we're social distancing, and we're all aware of where we've been and what we're doing, I'm fine with that," said Audette.

Going to a hair salon, barber or nail salon

(Rated from 3 to 8)

One high-end response, an 8 from Furness, but overall one of few indoor activities the health experts were comfortable with because they trust the barbers and salons to be professional when it comes to hygiene and protecting their customers. The workers, after all, run more risk than their customers.

"The ones I've seen have been practising (safe habits) as much as they can," said Sly. "Nobody in the waiting room, one customer at a time. It can be done."

Working in an office

(Rated from 1 to 7.5)

A wide range of answers.

Audette, who offered a 1, said he'd be comfortable in his office, where he can close the door.

"It depends if you have to use an elevator and it's a big tower," said Furness, who offered a 7.

"You can actually give people space nicely, working away in the computer and desks," said Sly, who gave a 4. "But it's the pinch points when you get to the office, the elevator, the elevator button, the handrails, the subway getting there, the lunchroom."

Walking in a crowd on Queens Quay or the boardwalk

(Rated from 1 to 8)

Another wide range, with experts torn between the benefit of being outside and the whole idea of being in a crowd.

"If it's a moderate crowd where I can actively socially distance myself, I'm fine with that," said Audette, who gave it a 1.

"Just a sea of bugs," said Tenkate, who gave it a 7.5.

Going to the gym

(Rated from 2.5 to 7)

Our first activity to get an average rating worse than 5, but the experts held vastly different opinions. Furness gave it a 7, worried about "sweaty machines" and the ability to distance in locker rooms. Audette's 2.5 reflected a belief that gyms would adequately enforce social distancing and clean machines. "People going to the gym is a much more adult audience, so they're all going to be much more aware," said Audette.

None of the experts were high on the idea of group workouts, however. "Doing a Zumba class would be disastrous," said Sly.

Eating and drinking on a restaurant patio

(Rated from 3 to 9)

The crowds are risky, but being outside helps with the comfort zone. Being able to socially distance, as well. "The one thing I would worry about at that point is the serving staff," said Audette. "Mainly because there's going to be interacting with multiple people."

Playing basketball outside

(Rated from 3 to 8)

A three-on-three schoolyard game is problematic, the experts say, because it would involve a lot of contact and maybe strangers joining in. "You're going to get a lot of contact. I'd have to know who I was playing with," said Audette.

"You're getting sweat and viruses and bacteria all over you," said Sly.

Going to an outdoor public pool

(Rated from 3 to 9.5)

Summer is approaching, and so are sunny days when lots of people might want to cool off. At 9.5, Banerji was least comfortable. "So many people around. You can't control kids," she said.

Furness gave an outdoor crowded pool scenario a 3, but said it would go much higher on an indoor pool.

Sitting in a doctor's waiting room

(Rated from 1.5 to 9)

The idea of being in one with other patients didn't sit well with most (Audette gave the lowest rating of 1.5). Doctors would be wise, they said, to limit numbers.

"It always was a problem," said Sly. "You go there with an ingrown toenail and you come out with a throat infection. If there was only one person in it, there's no problem at all. If it's a normal waiting room with lots of people waiting - which I don't think is happening these days - people are going be there anyway because they've got something quite wrong with them."

Visiting elderly relatives

(Rated from 3 to 9)

A nursing home visit caused a lot of consternation since the elderly have been hit particularly hard by COVID-19. For that, the experts preach extreme caution. They wouldn't want to inadvertently introduce the virus, which can happen even from asymptomatic and presymptomatic patients.

"If you think about the broader scope of things, what is isolation for people doing versus disease transmission risk? If it's done with good consideration for prevention measures, then it's not no-risk but it's lower-risk," said Tenkate.

Visiting healthy elderly parents in their homes was less concerning, they agreed.

Eating at a buffet

(Rated from 5 to 8)

This gave the experts the shivers. They acknowledged restaurants could be trusted to adhere to social distancing rules, but were deterred at the thought of lines at the food bar and sharing serving utensils. "It depends how crowded as it is, but I certainly wouldn't do it," said Furness, who gave it a 6.

"I'm not comfortable with doing that at the moment," said Tenkate, who offered a 7.5.

Getting on an airplane

(Rated from 5 to 9)

Airlines and airports are pushing the narrative they have safety figured out. The experts were less sure, even with empty seats. "It's not just the plane, but it's the whole process of having to line up. At various points in the whole process you end up having to be close to people," said Tenkate.

"I would wear a mask, I would be social distancing where I can, I would be very aware of what was going on. I would be vigilant," said Audette.

"I'd still be nervous," said Sly.

Letting your kids sleep over at a friend's place

(Rated from 4 to 8)

Even going over scenarios where the number of children was limited to two and with both families trusting each other, there was still reluctance. "If it was one kid and a family that you knew, and they were completely virus-free, you never can tell. I'd be more cautious," said Audette.

"We're not doing it, and I don't think we would want to," said Tenkate.

Eating and drinking inside a restaurant

(Rated from 5 to 10)

The same activity as on a patio, but the indoors changes everything. Sly gave it a no-go 10 (this was the only activity to get a maximum rating). "Bars are a problem and will be for a long time," he said. "People get a little back-slappy."

Going to the theatre

(Rated from 6 to 8)

Live theatre with a lot of clapping might be slightly worse than, say, a movie theatre. Either way, being indoors and side-by-side with strangers left the experts with a great deal of discomfort. "Getting a complete six-foot circle around everybody is going to be a bigger challenge," said Audette.

Going to church

(Rated from 5 to 9)

The idea of strangers sitting beside each other indoors for an hour or so left our experts unanimous in their discomfort. "Shoulder to shoulder and singing? That's going to be a 9," said Furness.

Riding the subway

(Rated from 5 to 9)

Be careful on the TTC, was the message from the experts. If the train is empty and you're wearing a mask and have hand sanitizer at the ready, then it might be a 3, said Sly, "but if distancing is completely breached and you are in the breathing zones of dozens of people for up to 40 minutes" then it's much higher. (Sly gave a final rating of 9.)

"Even though the TTC is asking people to wear masks and has blocked off some seating, there can still be crowding on the platform and in the subway cars. This means that it is still difficult to maintain the recommended social distance," said Tenkate.

Taking the ferry to the Islands

(Rated from 5.5 to 8)

Not that it's possible, yet. Being outdoors on the Islands - either the beach or going for a walk or bike ride - seems fine. The ferry, however, offers an uncomfortable pinch point.

Tenkate: "I've been on the ferry and it's pretty crowded. It's hot, and everyone's sweaty and so it's probably not (for me) unless they put in a bit more distancing."

Audette: "Once you're on Centre Island you can social distance, of course, but getting there is a challenge."

Going to a wedding

(Rated from 6 to 8)

Indoors, crowds, lots of social contact, and drinking. "At events like this, you might not be able to socially distance as well as you would like," said Audette.

"Lots of people drinking, who at the best (of times) don't observe boundaries," said Banerji.

Going to a child's birthday party

(Rated from 5 to 9)

Like a wedding, but swap in hyper preteens for the drunk adults. Most experts didn't like what they saw, and this activity got the worst rating on average. Banerji gave it a 9, because "there's a whole bunch of people."

Audette was the most optimistic, coming in at a milder 5, "mainly because a lot of people will try to do that social distancing, which is really what you need to be doing in a situation like this." But he acknowledged "once you've got a sniffle, you've got problems."

Copyright 2020. Toronto Star Newspapers Limited. Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission. All Rights Reserved.

This article was written by Kevin McGran from The Toronto Star and was legally licensed by AdvisorStream.

How the Coronavirus Will Reshape World Trade

When the global economy finally gets beyond the pandemic, expect it to be less globalized than before.

Governments, including many longtime advocates of global trade, are using the crisis to erect barriers to commerce and bring manufacturing home. Japan now pays companies to relocate factories from China. French President Emmanuel Macron pledges "full independence" in crucial medical supplies by year-end. In Washington, Republicans and Democrats alike back new "Buy American" requirements for government health spending.

From semiconductor makers to surgical-gown producers, companies are reassessing far-flung, multinational production networks that have proven vulnerable to disruption.

"What the pandemic has done is highlight some of the ways that globalization may have gone a bit too far," said Peter Anderson, vice president of supply chain and manufacturing for Indiana-based engine maker Cummins Inc., which has 125 factories in 27 countries. A decade of disease, natural disasters and trade wars has shown how companies have been "putting a huge amount of risk in global supply chains," he said.

Those disruptions, he said, are prompting Cummins to accelerate plans to make its production systems less global and to concentrate manufacturing closer to where the final goods get sold.

In the post-pandemic world, more economic activity will be designated vital to national security, and thus deemed to require self-sufficiency. If governments wall off segments of their economies, costs could rise and growth could slow. Richer economies may grow more slowly while newly industrializing one—winners in recent years—may fall back. The World Bank this month warned of lasting harm to low-income countries from "prolonged damage to global supply chains, global trade and financial flows, and global collaboration."

"Global capitalism will have to be rebalanced," said Pascal Lamy, former director-general of the World Trade Organization and now European chairman of consulting firm Brunswick Group. "That pre-Covid balance between efficiency and resilience will have to tilt to the side of resilience."

Not all the pandemic responses have been inward-looking. A coalition of smaller nations, led by Singapore and New Zealand, is promoting a tariff-cutting pact to expand trade in medical products, saying that international cooperation is the most efficient way to boost scarce health supplies. A videoconferencing boom is accelerating a move toward online work and remote services, such as telemedicine, that could globalize sectors that have long been primarily domestic.

By forcing a sudden expansion of online work, the pandemic has severed more jobs from physical locations. "It's not as simple as saying globalization is over," said Susan Lund, a partner at the McKinsey Global Institute. "Globalization will be reshaped."

Foreign trade is forecast to fall by as much as a third this year, and foreign direct investment by 40%. International investors pulled $83 billion out of emerging markets in March alone, a single-month record, though the investment totals rebounded slightly in April and May.

Nearly 90 governments have blocked the export of medical goods to preserve supplies for their citizens, while 29 did the same with food, according to Global Trade Alert, a Swiss-based monitoring group. More than 70% of the world's ports of entry—air, sea, and land—restricted foreign travel. Some export curbs have been lifted recently.

Even before the coronavirus struck, globalization had been stalling after a boom in the 1990s and 2000s, when the end of the Cold War unified the international economy. The financial crisis ended that expansion, and the election of Donald Trump and Britain's exit from the European Union further hampered economic integration.

The world economy grew at a healthy pace in 2019, but trade declined, in part because of Trump administration trade policies aimed at China and other U.S. trading partners. Global foreign direct investment was 25% below its 2015 peak. International migration has trended steadily downward over the past decade, after sharp increases between 1990 and 2010.

The WTO has two post-pandemic forecasts. Its optimistic scenario shows trade bouncing back by next year to roughly the same level it would have reached without the crisis. Its pessimistic one shows a more tepid pickup and a slower growth rate, with cross-border commerce 20% below the levels expected before.

Similarly, a century ago, the Spanish flu and World War I abruptly halted growth in global trade, finance and migration. The war, the 1918 pandemic, nationalism and protectionism severed international links so thoroughly that it took more than half a century for global economic integration to recover to early-20th-century levels.

The pandemic has exposed an apparent Achilles' heel of the global economy—intricate supply chains stitching together factories, distributors and consumers. Cross-border shipments within supply chains came to account for more than half of all international trade by 2007, according to the World Bank.

Medtronic PLC, a Minnesota-based maker of medical devices, says the ventilators it makes contain more than 1,500 parts from 100 suppliers in 14 countries.

The concentration of global auto-parts production in China's Wuhan area—the region where Covid-19 first emerged, and the first place to shut down—prompted assembly-crippling shortages in Japan, South Korea and Serbia.

"For the last 20 years or so, supply chains have really been structured for efficiency," making them "very vulnerable to disruption," said Hamid Moghadam, CEO of the Prologis Inc., a logistics firm.

At one point, China blocked Sweden's Mölnlycke Health Care AB from exporting gowns from Chinese factories to its Czech Republic plants for packing in surgical kits sold throughout Europe. Those Czech facilities also were hampered by Poland's decision to close its border with the Czech Republic, cutting off half the company's local workforce.

France barred Mölnlycke from shipping masks stored in its Lyon warehouse to Spain and Italy, while the EU temporarily stopped exports from the company's Belgian distribution center designated for nearby non-EU members Switzerland and Norway. When Mölnlycke was unable to fulfill plans to ship products from that Belgian center to the Middle East, Morocco stopped the export to Europe of the caps and scrub suits the company makes in Morocco.

"I thought Europe was all about a common market and solidarity. Now it's like the Wild West," said Mölnlycke Chief Executive Richard Twomey. "One thing that's 100% certain is that the way we supply things is going to have to change. We're working with various countries in Scandinavia to put in place an element of local manufacturing."

Some U.S. factories that remained open, or sought to reopen quickly, were hampered for a time by closures of their suppliers in Mexico. The CEOs of more than 300 American manufacturers, including auto makers and electronics and chemical firms, signed a petition pleading with Mexico to coordinate with American production plans, warning that shutdowns are "imperiling our ability to deliver critical supplies and daily essentials to citizens…across North America."

Mexican officials responded that they were worried about contagion in border factories. "We're part of a global supply chain, but Mexico's priority today is the health and safety of the sick," said Foreign Minister Marcelo Ebrard at the time.

Blake Moret, chief executive of Rockwell Automation Inc., a Milwaukee-based industrial-automation equipment maker, expects companies to reduce reliance on single factories from a sole supplier for a crucial part or raw material. "We are already seeing some manufacturers' plans to return manufacturing to North America," he said.

Even before the coronavirus crisis, the U.S. and China were each erecting barriers to protect domestically developed technology and other sectors in the name of national security. The fifth generation of wireless technology is fracturing into American and Chinese-led versions.

Mr. Trump's chief trade negotiator, Robert Lighthizer, told fellow trade ministers from the world's biggest economies that one lesson of the pandemic was that "over-dependence on other countries as a source of cheap medical products and supplies has created a strategic vulnerability."

Secretary of State Mike Pompeo said the crisis should prompt a reassessment of U.S. reliance on China, not just for pharmaceuticals but rare-earth minerals, nuclear materials and "a host of other things that really are central to American security."

In the weeks after the pandemic hit, at least nine separate bills were introduced in Congress aimed at curbing American dependence on foreign medical goods, six with sponsors from both parties. Michigan Democratic Rep. Elissa Slotkin has introduced legislation aimed at treating the health sector more like "a homeland security asset." The Trump administration has said since May it is considering imposing tariffs or quotas in the name of national security on various products, including mobile cranes and materials used to make electrical transformers and aerospace and defense equipment.

Policies to foster self-sufficiency are catching on among some governments that opposed Mr. Trump's earlier attacks on globalization. "The question posed by this crisis is that we may have gone too far in globalization," said Thierry Breton, the EU's internal market commissioner. German Chancellor Angela Merkel has declared that, when it comes to medical supplies, "we need a degree of sovereignty in this area, or at least a pillar of domestic manufacture."

At least eight countries, along with the EU, have this year unveiled new limits on foreign investment, aimed in particular at blocking takeovers of distressed strategic industries.

Governments have been using subsidies to prop up domestic businesses through the shutdowns. Some of the most contentious trade fights of recent years—pitting the U.S. against the EU, and nearly every major country against China—have centered on market-distorting government support for industry.

Trade experts warn of new battles over whether such funding improperly promotes exports or blocks imports, especially when justified in the name of health security. "Dealing with precautionism will be much tougher than dealing with protectionism," said Mr. Lamy, the former WTO chief. The varied ways that countries choose to protect their populations from risks, he said, "will fragment the global trading system in a much more definitive way than tariffs."

When similar strains emerged during the 2008 financial crisis, the WTO stepped in to quell a nascent trade war. The Geneva-based organization no longer has such clout. The Trump administration last year blocked the appointment of judges to the trade court, effectively stripping WTO's legal system of its powers to enforce global rules. Longtime paralysis has stymied the WTO's ability to write new ones to cover new challenges.

Some policy makers in the U.S. and elsewhere argue that the crisis calls for more integration, not less, and that moving toward more independent economies would leave the world more at risk of supply breakdowns. More than 100 governments, including the U.S., have cut tariffs and eased other restrictions on medical imports that had been imposed before the pandemic, an acknowledgment that—in the short run at least—they are better off by importing more, not trying to cut off foreign supplies.

"If more countries pursue the track of self-sufficiency, it will increase competition for scarce resources, drive up prices and deepen international hostilities," said Phil Hogan, the EU trade commissioner. "It would be a lose-lose situation for our citizens and our economies."

Despite the rhetoric about re-shoring, the economic factors driving production abroad will persist, said Mo lnlycke's Mr. Twomey. Years of demands for cheaper medical products by cash-strapped public health systems had driven him to shift production to Cambodia, Myanmar, and Morocco.

Governments now asking him to localize production, he said, "will have to pay a bit more."

Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com

Copyright 2020 Dow Jones & Company, Inc. All Rights Reserved.

How to Teach Kids to Use Passwords

It's crucial to teach children good password hygiene and computer security from an early age.

The only question is: How?

Think about how hard it is to teach adults good password and cybersecurity best practices. Then try to come up with an age-appropriate practice for a 4-year-old. Or a 7-year-old. Or a 9-year-old. It isn't easy.

The problem is that password "good practice" requires skills that very young children might not yet have developed, even as many of them are using online devices from a very young age.

For example, consider a 4-year-old who is just learning how to read. She would likely be hard pressed to memorize an alphanumeric password, because she doesn't yet know her alphabet. Instead, she may have to remember a shape on the keyboard. As children learn their alphabet, they start being able to reproduce simple passwords. But because they type very slowly, they will have a hard time remembering the moving position within the password while they search for the right key.

Other challenges for our 4-year-old: She uses a keyboard displaying uppercase letters, but when typed, it actually enters a lowercase letter. Even worse, the entered password is hidden during entry so that she gets no feedback. She also isn't able to keep her passwords secret, nor can she perceive or anticipate deception, the whole reason for secrecy.

The trick is to have a strategy that allows parents and teachers to explain things in a way that a child at different developmental stages would understand—and be able to implement.

Here's a look at what those best practices might look like for children of various ages, based on research I've conducted with my colleague Suzy Prior.

Ages 4-5

Ideally, we wouldn't ask children to use a password at all, but instead find another way to authenticate them when they go online.

To this end, one of my students developed a password alternative for preliterate children that relies on the child's ability to recognize faces. Under this alternative—which is still just a concept and not a product—the child's caregiver would provide the system with a photo of an adult the child knows well. To log in, children would identify themselves by picking the animal that they chose when they enrolled. They then would authenticate by choosing their familiar face from a set of faces displayed on the screen. (One is theirs and the others aren't real people, but are computer-generated).

Unfortunately, it isn't going to be possible to avoid passwords altogether. So, caregivers and educators for children this young should start by explaining the consequences of lost passwords, using examples such as, "You might not be able to play a game if you lose your password." This will help the child understand the rationale behind password use. Giving them a concrete example makes it personal.

For children of this age, their trusted adults have a prominent role to play. They generally wouldn't have the required creativity and problem-solving skills to create passwords, so their caregiver should do this for them.

Still, children at this age can be made aware of the need to check for someone observing their password as they enter it. ("Before you enter your password, make sure no one is peeking.") In this way, they can start taking ownership of "their" password—implicitly teaching them the cardinal rule of passwords: keep them secret.

Ages 6-7

Having made children aware of the consequences of a lost password, at this age they can understand the specific reason for passwords: "This will stop others from using your computer" and "People will tell the computer that they are you."

This is possible because children of this age are able to anticipate and imagine other people's actions.

What's more, children at this age are capable of creating and memorizing their own passwords, and they have developed problem-solving skills, so it is possible to give them more autonomy. They are ready to create their own passwords, with advice like: "Make up a silly sentence" ("silly" makes it easier to remember) and "Make sure you can remember your password." Then, because they have also developed metacognition skills, we can tell them to think about creating a password that will be easy for them to remember and won't confuse them when they are typing.

Many password guidelines tell people not to write down their passwords, but that approach doesn't necessarily work with children, where it is better to phrase the advice in positive terms. If you tell a child not to write down his password, he has to first think about writing it down, and then remember that he should not do this. He might easily forget the "not" part of the instruction.

So it's better to simply tell a child to "remember your password." You can get at the written concerns more indirectly, by noting separately that one issue with passwords is that "somebody could find your written-down password."

It is also important for this age group to understand that they should change a password only if someone else knows it. This advice runs counter to more old-fashioned advice about changing passwords regularly. But we now know that forcing people to come up with new passwords at regular intervals makes them use weaker passwords, so the practice is counterproductive.

We can also update the password entry advice to: "Before and while you enter your password, make sure no one is peeking."

We retain the advice about consulting a trusted adult. Yet the parents have a lesser role: less active participant and more mentor who can be relied upon for advice and help.

Ages 8-9

This group is likely to be reading fluently, and to have a range of skills that mean they can cope with a lot more advice. We can now address the issues related to password reuse ("Doors have different keys, you should also use different passwords"), and also suggest that they match the strength of the password to the value of what is being protected ("If someone could use your password to change something you care about, choose a longer password").

We would still advise this age group to come up with a silly sentence as their password. Because they can be expected to be fluent readers, they can be encouraged to use longer and perhaps more words in their silly sentence to make it stronger.

Finally, they are ready to be taught to check for the little padlock in the address bar of the browser before they enter their password (to check for a secure connection). At this age they are likely to have the attention skills to be able to focus on this level of fine-grained detail.

If they do all these things, they are on their way to being security-savvy consumers. And probably showing more-secure behavior than most of the adults around them.

Dr. Renaud is professor of cybersecurity at Abertay University in Dundee, Scotland. She can be reached at reports@wsj.com.

Copyright 2020 Dow Jones & Company, Inc. All Rights Reserved.

That Big Vacation You Scrapped Is Already Selling Out for Next Summer

Deborah Pilla's summer travel is all planned and booked.

Next summer, that is.

Dr. Pilla, a retired pediatric dentist from New York, was supposed to go to Russia with her husband and another couple in April. When the coronavirus pandemic made that impossible, she rescheduled the exact same itinerary, including private tours and hotels, for late May 2021. Then, just to be safe, she also reserved a vacation to Sicily for June 2021.

"I definitely believe we'll be up and running by then, and I don't want to miss out," she says.

Looking forward to next summer? Then it might be a good idea to start looking now. Travel agents say the majority of their clients are postponing, instead of canceling, the big international trips they'd planned to take this year. Worried about lost deposits, and still eager to celebrate the occasions behind the expeditions, many have committed to hotels, resorts and safaris much further in advance than usual.

"It's incredibly full already," says Wayne Nupen, the regional touring director for &Beyond, a South Africa-based travel company that arranges high-end tours in Asia, Africa and South America. He says 89% of clients with trips upended by the virus have rebooked the same itineraries for 2021. The lodges and camps the company uses have limited space, and they're also seeing new bookings for next summer on top of the postponements.

Kensington Tours of Wilmington, Del., has already rescheduled thousands of bookings since January, most to Europe and Africa, for next year. "They spent months planning, so there's an emotional attachment to where they were going," says Alison Hickey, the company's president, who has dubbed it the Do-Over Trip.

"Last year we never would have had people making reservations a year in advance," says Jannes Soerensen, the general manager of the Beaumont, a 73-room hotel in the Mayfair district of London. Although the hotel has been closed since March, and people usually don't book more than 90 days in advance, he has been in continuous contact with guests whose stays were canceled and already taken about a dozen bookings for next summer.

What kind of travel plans, if any, are you making for coming months? Join the conversation below.

In a study released earlier this month, Tripadvisor reported that over a third of consumers surveyed in late March reported rescheduling a trip due to Covid-19 rather than canceling it, with another quarter planning to reschedule a canceled trip at a later date. Two in five travelers said they rescheduled as a result of the travel restrictions or because their chosen destination was closed for visitors.

Travel economists say there's no data on hotel and airline bookings for next summer yet because people don't usually start making reservations this early. Although many forecasts predict international cross-border travel won't fully recover until 2023 even if there is a vaccine within the next 18 months, it's reasonable to expect that there will be significantly more travelers next summer because of deferred trips, says Adam Sacks, president of consulting firm Tourism Economics.

Henry Harteveldt, president of travel research company Atmosphere Research Group, says that while many people are postponing trips until next summer, no one can really say what will happen, because the course of the coronavirus remains so uncertain: "Bookings don't always mean travelers."

Susan Howell shares that uncertainty. She was scheduled to go on a two-week journey with her family to South Africa and Botswana this June to celebrate her daughter's acceptance to medical school. In April, the travel company she booked through told her she would lose her deposit of $14,000 if she canceled the trip because even though the borders of the countries were closed, the camps were still planning on being open in June, and the borders might reopen by then. Her travel insurance, which included trip cancellation, didn't cover a pandemic.

"I was in a bind," says Ms. Howell, who owns a custom home-building company with her husband based in Lawrence, Mass. In mid-May, the travel company told her the longer she waited, the fewer options she would have to find dates next summer, since everyone else was deferring. Ms. Howell decided to reschedule the exact same trip for June 2021: That way she didn't lose her deposit, but she does have to pay an additional $2,000 for the annual rate increase.

Even though she had been planning the trip since September and didn't want to start from scratch, Ms. Howell would have preferred to cancel and rebook on her own time. It is unclear whether there will be a vaccine next year—or if the camps she's booked will even still be in business. "I'm excited to go, but I'm uncertain it will really happen," she says.

For Darcey Carr, the decision to postpone rather than cancel her trip to Ireland was less about fear of losing the deposit than it was about protecting the health and safety of her family and not being able to secure a space at the location of her dreams in the country where she was raised. The New York-based investment banker planned a wedding with 175 people at Dromoland Castle in Ireland's County Clare. When she started looking into rescheduling it, she found many of the people she'd hired, such as the photographer, makeup and hair artists and the band, were already filling up fast with bookings for next summer.

Instead of June, as was planned this year, Ms. Carr picked a date in September. She says the hotel and all the vendors honored the same rate she would have paid this year. She expects almost all the guests will still attend, in part because they will be much more grateful about being able to get away. "It will be even greater to be able to celebrate," she says.

Write to Nancy Keates at nancy.keates@wsj.com

Copyright 2020 Dow Jones & Company, Inc. All Rights Reserved.

Millennial Money: Unexpected Perks of Scaling Back Spending

When I originally set out to write this column, I wanted to share the unexpected benefits of cutting back on my online shopping habit.

At the beginning of the year, I set a personal challenge to reduce my online orders from several times a week (insert embarrassed emoji) to a few times a month. As time passed, I realized I had fewer deliveries to track and more money left in my bank account at the end of the month.
 

But then COVID-19 happened. And now eliminating online shopping is more than a fad or a New Year’s resolution. For millions, cutting things out of the budget is an absolute necessity.

If you’re having to scale back on discretionary spending — whether that’s shopping, travel or something else entirely — here’s how to give up that financial habit without feeling deprived.

SEE THE SILVER LINING

The news is filled with fear, worry, and sadness. But it helps to see the silver lining, says Denise Downey, a certified financial planner and owner of Financial Trex LLC, based in Spokane, Washington.

Depending on where you live, you may be forced to stop some spending — on travel, sporting events, haircuts, entertainment, and more. This involuntary saving can help you make changes you wouldn’t have otherwise made on your own.

“Those decisions are being made for us right now,” Downey says. “It’s not a matter of, ‘Do I cut the vacation this year or not?’ It’s cut. There’s no decision to be made with that.”

“If you want to put a positive spin on it, it’s making it easier for people to cut their expenses because they’re removing that decision-making hurdle.”

It’s all about perspective. So, if you can, focus on the benefits. For instance, you may find you’re feeling a positive boost as you watch your bank account grow and your credit card bill stops climbing.

So sure, my deliveries of clothing, makeup, and the newest scented candles aren’t as frequent. But much like the thrill of getting a delivery, I’m finding that not spending is also appealing.

GET YOUR POWER BACK

It’s probably obvious that placing fewer online orders equates to saving more money, as long as you don’t substitute an expensive activity in its place. The same goes for other types of spending. Cutting back any spending habit can lead to savings.

It can also give you a sense of empowerment, says Drew Harris, CFP, senior financial advisor.

“It’s a good way to gain back some control by taking ownership of our spending,” Harris says.

Cutting back means you’re giving something up. But you’re also gaining freedom from the financial stress that discretionary spending can cause, as well as the buyer’s remorse that so often accompanies spending.

This sense of empowerment can help you feel better. L. Kevin Chapman, a licensed clinical psychologist, says you may “adopt a sense of mastery when eliminating something that has led to financial strain.”

Basically, you’ll feel a sense of accomplishment, which allows you to feel positive (rather than negative) about the changes you’re making.

LEARN A NEW HABIT

Don’t get discouraged. Your decreased spending won’t have to last forever.

But then again, you may find you don’t necessarily want to return to your pre-pandemic spending habits. And that’s OK, too.

Chapman says many people will become more accustomed to shopping less following the COVID-19 outbreak, especially if they’ve replaced their shopping habit with more cost-effective activities.

Take this time to learn some new habits in place of your old costly ones. Harris suggests going for a walk, talking with family and friends, or finding some other inexpensive activity you enjoy doing.

Another example? Downey says her children were constantly busy with extracurricular activities — activities that cost money. But since the family has been home, she’s noticed they’re happy and entertained, even with a not-so-busy schedule. That has led her to rethink enrolling them in quite as many activities in the future.

Regardless of the specific substitutions you make, the changes you’re implementing during these unprecedented times will help boost your savings and emergency fund. Best case scenario, when life returns to some degree of normalcy one day, hopefully, that fund is more than you ended up needing, Downey says.

In that case, you can reward yourself by buying something you’re putting off right now — and paying for it in cash.

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This column was provided to The Associated Press by the personal finance website NerdWallet. Courtney Jespersen is a writer at NerdWallet. Email: courtney@nerdwallet.com. Twitter: @courtneynerd.

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