Is it Possible for a Business to Profit and Contribute to Positive Changes?

Chivas, the Scottish whiskey maker, has decided to find out the answer to this question with its million-dollar fund set aside for start-up companies. The Venture campaign, as it is titled, gives entrepreneurs the chance to win a share of this fund. Read more “Is it Possible for a Business to Profit and Contribute to Positive Changes?”

Index vs Mutual Funds Investing

From everything I have read over the last ten years within the financial industry, high management fees (referred to as MERS) that mutual funds charge hurt the portfolios of small investors. If we in fact take a closer look at the Canadian industry, a majority of investors pay around 2% (and often more) for investing in mutual funds. So if you make an investment of $1,000 and the fund makes 5%, all you will earn is $30, with the other $20 going to your mutual fund company in order to pay the management fees (as well as the advisor who sells the fund). If you think about it, based on your investment return that’s a 40% commission.

But it gets even worse: just think if the fund that you invested in went down 5% in a bad market. Then you would show a $70 loss or -7%. No matter what, mutual fund companies are going to get their 2%. The rest will either go into your pocket or come out of it!

Unfortunately, for a very long time, mutual funds were just one way of diversifying into multiple products (bonds or company shares) that were professionally managed within a single trade. One mutual fund could be purchased by an investor, including part of it being invested into something safer such as bonds, as well as international, American and Canadian company shares. For those without a lot of investment knowledge, mutual funds do the job but they are also expensive.

The ETF Revolution

Like any other industry, whenever a product shows high profit margins or is overpriced, other players enter into the market and offer alternative options. Vanguard was probably the first to come up with an alternative option to mutual funds. It offered one of the first ETFs. Exchange traded funds (ETFs) are an alternative way of purchasing multiple stocks or bonds within one trade.

Simply put, an ETF refers to a group of various investment products (mainly bonds or company shares) that represents a basket. For instance, the ETF iShares S&P/TSX 60 (on the stock market it ix XIU), represents 60 of the largest companies trading on the Canadian market (TSX). An individual purchasing 1 unit of XIU is purchasing a basket that contains the 60 largest companies that are traded within the Canadian market. The ETF does everything for the investor, he doesn’t need to know anything about them or be able to mange them within his portfolio.

So what is the difference between purchasing the XIU and Canadian stock mutual fund? Around 2% in management fees. According to, XIU fees are 0.18%, while a majority of Canadian stock mutual funds charge a management fee of more than 2%. What that means is that a portfolio manager managing a mutual fund needs to outperform the ETF by at least 2% before even $1 is generate for the investor. The following is a quick example to illustrate this:

$1000 Invested in Mutual Fund

Investment Fees: 2.18%
Investment Return: 5%
Net Return : 2.82% ($28.20)

$1000 invested in XIU

Invest Fees: 0.18%
Investment Return: 5%
Net Return: 4.82% ($48.20)

As can be seen, there is a large discrepancy between the ETF and mutual fund even if the same investment return is shown (before fees).

So Why Are Individuals Still Investing In Mutual Funds?

My answer is because it’s harder managing a portfolio than it is making a peanut butter sandwich!

Some people will then recommend a “coach potato” style of investing. This approach involves choosing a couple of ETF indexes that are a good reflection of your risk tolerance. Say you wanted to have a balanced portfolio (around 50% in bonds and 50% within the stock market. A portfolio could be built with just 4 ETFS:

10% in ETF that tracks International stocks
15% in ETF that tracks US stocks
25% in ETF that tracks Canadian stocks
50% in ETF that replicates the DEX (Canadian bonds overall)

I agree that just about anyone who has a pen, sheet of paper and calculator can build this kind of portfolio. You then rebalance your portfolio two times per year to ensure that you show the same percent always (buy low, sell high). That is a fairly effective method for managing your portfolio and tracking your return on investment in the markets (On a 5 year return, 95% of all portfolio managers fail to beat their benchmark). In addition, your management fee is less than 0.50%, which is 1.50% cheaper at least that it would be for the same investment that was part of a mutual fund. So, for example, if you were to invest $100k into this portfolio, you would save $1,500 a year in fees alone!

However, it isn’t that easy. It just isn’t that easy managing your portfolio.

When The Game Changes Here Is What Can Happen

Over the past year, a very low interest rate was being paid on bonds. This resulted in bonds starting to lower their value as interest rates started to rise. That’s why XBB (a Canadia ETF that tracks bonds) over the last 12 months has shown a -2.37% negative return. When the bond interest that this ETT pays is added (3.26%), the result is a small 0.89% investment return. What is the explanation of the fact that a majority of mutual funds performed better on their bond (fixed income) portion? After speaking with a friend of mine who is a great ETF investing fan, I noticed that over the last 3 years his bond performance wasn’t all that great. Poor returns on Canadian bonds mainly explained this.

I assumed at first that everyone had the same environment, until I was able to check the performance records of a couple of mutual funds. During that same period, a majority of mutual funds were showing better returns. How was that possible? It isn’t due to portfolio managers being better? It was due to the fact that they were including other classes within their fixed income portfolio like US bonds, international bonds and high yield bonds. That is why, mutual funds have been able to beat the coach potato classic portfolio over the last 3 years. It was due to the fact that other other kinds of investment classes were included.

Index vs Mutual Funds Investing

It’s true that if the same exact model had been replicated with 8 to 10 ETFs, then it probably could have beaten out the mutual fund. However, who is there to tell you that this type of portfolio could be made if you have adopted the coach potato style of investing? Your online broker isn’t going to. All he does is perform the trades. Your advisor won’t because you won’t have one.

You can probably see whee the problems lies with ETF investing: in order to build your portfolio and manage it, you do need to have a solid financial background. If you try doing it after just reading a couple of books, chances are good that you will have lower investment returns than the mutual fund even after the large fee that they charge.

Enjoy Financial Security by Saving for Your Retirement

Those who want to live comfortably after retirement often want to know how much money they need to set aside to make it happen. Of course, the exact amount anyone would need to set aside will depend on how much they are making each week and how much they want to have when they are officially ready to retire. If you would like to leave the labor force earlier on in life, you will need to have more money saved away. And, if you would like to live lavishly when you are no longer working, you need to set more money aside.

Is There a Certain Percentage I Need to Save?

Some people like to set aside a specific percentage of their monthly income, regardless of how much they make, even if they have done some overtime at work. You can choose a set percentage that you feel most comfortable with if that would make the saving process a lot simpler. Several experts say that about 15% of your monthly earnings is an ideal amount to place into a bank account for your retirement.

If you happen to get a raise at your workplace, consider putting that extra money into an account. If you regularly get raises, it will be easier for you to accumulate a large sum of cash to use after you have stopped working.Saving for Your Retirement percentage

How Can I Figure Out What I Will Need?

If you know what you want to do after your retirement, you can take the proper steps to saving enough cash to make those things happen. For example, you may want to travel around the world and genuinely enjoy life. If you are not much of a traveler, you may plan to simply spend more time at home with your grandchildren or pets. It is best to discuss your retirement goals with a financial planner who can help you figure out how much to put away for you future.

Many people believe it is best to start saving while you are still young. Even though you might want to drive the luxury car and go out to restaurants to eat with friends throughout the week, it is better to skip out on some of the fun things so you can save some of that cash because you will need it later in your life.

Are There Certain Accounts I Need to Use?

You can open up your own retirement account to avoid having to pay any additional taxes on the money you have accumulated. Some people like to have a 401k plan while also setting some of their cash into their own personal savings account where it can collect interest over the years. If you add the greatest amount of funds to your 401k plan, you could always open up a separate savings account or start investing money in real estate, which is what some people to do to make more for their future.

What Happens If I Decide to Retire a Bit Sooner?

There are some people who choose to retire early for different reasons, whether they are becoming too tired and sick or are having a hard time adjusting to new work after losing a position they had for several years. However, those who choose to retire early may have to deal with penalties, causing them to lose out on some of their money.retirement savers

If you want to retire early, it is better to have money placed into one of your own savings account until you can use money from social security. After all, you can not use the money from social security until you reach the age of about 69 or 70. A financial planner could offer even more advice and tips on where to start putting your money if you want to quit working at an earlier age.

Why Small And Medium Size Companies Need Culture

Companies Need CultureIt used to be that big companies ruled the world. Most people vied for positions in them. They started sloughing off workers in the 1980s to the 2000s. After 2008, most of the workers of the world either could not secure work with these companies or found a better alternative — small- to medium-sized companies.

While big companies have a hallmark name and style of doing business within and without their company, smaller enterprises may ignore or struggle with breathing that defining persona into their outfit. Yet, it is important to do so for employees to get a sense of their work lives, and, furthermore, how to build company value.

Keys To Survival
Many companies do not make it past the litmus test — the hallowed five-year mark. The ones that do have taken the time to define culture, such as how prominent leadership styles, management, and employee contribution are to the success of the company itself.

At smaller firms, employees may be given a voice, instead of being kept quiet and in the dark, like they were at big corporations. They are empowered to make the company more innovative by being effective problem solvers. They may be the key to the next wave of product and service offerings, after all, so this is a business survival and growth concept that is important.

Companies Need CultureYet, regardless of company culture, the day-to-day experience of individual departments or teams matters the most to success. It sounds easy enough to embrace a culture of empowerment where employees are treated to a playful environment that begets better productivity, right?

Not always. Some firm owners are concerned about running a tight ship. After all, a smaller company faces bigger fallout if it makes a bad decision based upon an unmitigated risky action. Or, not. Here’s why.

Hiring well-rounded individuals who are encouraged to continue learning is a key to making sure innovative ideas are based upon solid evidence. They need to understand the underpinnings of the market that the products are made for to thrive. This information makes them better thinkers, who are better able to make real-world solutions that meet the ever-changing needs of the company’s customers.

Management, especially c-level executives, need to be hands off and trust in the teams that are running their company. Empowering employees may have payoffs for the long-term survival and growth of the company while minding pennies can turn off perfectly good employees. Everyone is a free agent these days, and they may take their great ideas elsewhere if upper management is unwilling to trust them.

A playful environment allows creation to occur more organically, and will impact the value of the outcomes — new and improved products. Think about the extremes to understand the value of trust. On the one hand, prying, surveillance, and watching employees for theft or misuse of the Internet creates fear. It is akin to having a stalker, and fearing for one’s life.

Now maybe management believes it is just guarding company information. What it is doing to morale is scaring people and not just demonstrating a lack of trust, but invading boundaries in the process. Sure, proprietary information is important, but so is trust. The other problem is that backbiting behavior, and throwing one another under the bus starts happening. It creates a crew that undermines one another constantly.

Playfulness and the next best innovation is not going to occur in a land where there is no trust.  Instead, the opposite — where people are working collaboratively, and trusted, creates better outcomes. Plus, work still gets done, because everyone takes ownership when they are trusted.

Giving people the choice to use their best judgment is empowering. Telling people they must do this, that, and then that and only in that order for a sales person is next to ridiculous. For the operation of machinery, it might  be sound advice for the safety of the whole operation, though.

Happy workers who are given authority, autonomy, and trusted will perform better. Customers will feel more comfortable dealing with a healthy company that trusts. An interesting phenomenon occurs where workers are empowered and trusted — the company gains a good image.

It turns out that people have had to find employment on average every five years. Some have worked multiple jobs at the same time. They are veritable experts on good employers and shoddy ones. They talk to their friends and the community. If you are trustworthy, word gets around, and you suddenly have the pick of the best potential employees as well.

If employees are encouraged to work collaboratively, they will enjoy work more, and feel more responsible for the outcomes they make happen. This type of culture and working environment is tied to good results. People take responsibility for their actions this way, naturally — without a camera or boss watching their every action.

Leaders in smaller and medium companies need to encourage their teams. Constant learning, a good environment, and even playfulness work toward creating better outcomes for a company. Consider employing these efforts organically within a company for the best effects.

Provide Feedback
Use positive reinforcement, not the old “oh, there’s nothing wrong with criticism” is important. Positive reinforcement tells them what they are doing right, which encourages more of that behavior. Meanwhile, a little “harmless criticism” is akin to shooting down people. It shuts down employees telling them their efforts just stink.

Learning comes through sharing information. For instance, if the president of the company learned a new process that might help the company, she or he should share it with employees. Consider a little meeting, video or a lunch and learn to teach the new information. Have teams brainstorm on how they might employ the new learning to improve productivity in the company.

Encourage employees to contribute a solution to them, not just presenting problems. This shows employees a better way to carry themselves while empowering them. It demonstrates the ultimate in trust too.

4 Ways to Get New Clients – and Keep them Coming

It can be stressful running your own business, and the process of getting clients to keep that business running smoothly can be a difficult task. Many business owners find getting clients one of the most anxiety-riddled tasks to undertake. Here I will share 15 in-depth ways that can help you get more clients for your service-based business and keep them coming.

Here are four ways to ensure that your business gets booked months in advance. These are my favorites for finding and keeping new clients.

Participate in Facebook GroupsParticipate in Facebook Groups

The notion that Facebook for business is dead is dead itself. There is a small organic reach with the social media master and that is about 3 percent. With numbers like that, it is easy to think that the notion of Facebook business being a dead end might have some truth to it. Actually, it is a great place for finding clients and building your business.

Join groups where your ideal client might be spending time. For instance, if you are a graphic designer, you might join groups that are aimed at bloggers and other small business owners. These people will definitely need the help of a graphic designer. Jump in on conversations and answer questions. Be sincerely helpful. People will take note of your expertise and will be happy to click on any link you leave to your own Facebook page or website.

Many users of this tactic have actually found that doing this is a great way to “meet” new clients who want and need your services. In addition, you can interact with them online so you make a genuine connection with each other. The more these people connect with you, the more likely they are to spread the word about your services.

Think of Facebook as the easiest and most affordable digital word-of-mouth referral system around. It is also easy to spread your business to your own family and friends on Facebook and get clients that way. Family and friends can be a great source for connecting with new and future clients.

Some owners have found that of the 90 percent of clients that come from networking within Facebook groups there is another 10 percent that comes as referrals from those same clients they first connected with on groups. It is definitely a useful contact tool. It is also a great way to meet other business to business contacts and grow with one another’s help and client referrals.

Startups Ideas For 2016: What’s Your Best Bet For Success?

Starting your own business is the American dream, but the opportunities of today are more vast and volatile than ever before. While there are more avenues to take in building a business, the competition is incredibly fierce. Here are a few of the most promising ventures you can take in the new year.

1. Delivery Or Storage

While both sound rather boring, delivery and storage are big business in 2016 and beyond. Big companies need little companies to help them get their products to customers or to store them until the customer can pick them up. Consider setting storage locstorage and deliverykers up locally or picking up the slack for deliveries where the major companies leave off. Either way, delivery and storage can be a lucrative focus for any startup.

2. Fitness Boot Camp

No matter how advanced the world becomes, people will still need to lose weight and get in shape, and do it the old fashioned way – by working for it. If you have any expertise in fitness, think about becoming a professional consultant who runs a camp for getting people down to size. You don’t need a lot of space or equipment and the going rates are pretty steep, meaning your profits can be huge.

3. Renting A Room In Your Home

There are a lot of companies popping up that specialize in renting rooms for specific needs and events. If you’re in a popular area, such as Seattle, Atlanta or anywhere around a big sports venue, get in touch with one of these companies. You could quickly prep a room in your home for rental and thereafter, simply rake in the dough.

4. Smart Home Technology

Smart homes are unquestionably the way of the future and this is an area you can still get involved with before it becomes too saturated and therefore, competitive. Investigate products, brush-up on your programming skills or start promoting an existing home tech company. The earlier you make connections and establish yourself, the sooner you can make your mark on this growing industry.

5. 3D Printing 3d printer

You can make amazing things with 3D printers and the future for this market is virtually unlimited. Although they can be expensive, you can start making money off production right away. The key is to tap into areas that aren’t already capitalized on, and hit the ground running. You could make small parts that are currently manufactured overseas and try selling them to local companies. More and more businesses want American made items and you can offer a lower price than an overseas companies because you don’t have to ship internationally. If you’re an artist, see what kind of jewellery or sculptures you can create with 3D printing. This industry is growing rapidly and the technology changes even faster, so get in while the getting is still good!

When starting up a company, you need to know it can carry you into the future. While your ideas should be limited only by your imagination, they should be grounded in something tangible and practical. These startup ideas can lead to your success, whether you start them on the weekend from your basement or go all out in front of venture capitalists. Whatever you decide, be prepared to devote all your time and energy, and to be persistent until you reach your goals.

Coastal Real Estate

Investing in real estate is always a good idea. Real estate investments have proven to increase your investment portfolio on a regular yearly basis. The question that many investors have is which city is the best place to invest your money. Dollar for dollar one of your best real estate investments would be in cities that have a coast line. The reason for this is quite obvious. People are attracted to the ocean and therefore real estate property that is close to the ocean is more preferable to buyers.

A coastal real estate area will provide the buyer with a variety of recreational options. For example, people who live in cities on the coast have access to sailing, scuba diving, power boating, kite surfing, surfing, snorkeling, sun bathing on the beach, fishing, and an endless variety of other water sports and activities. Everyone enjoys a pleasant afternoon with her family on the beach and therefore choosing a property in a coastal town is a wise investment.coastal town

There are many coastal towns throughout the world. When choosing an area to invest in it is always good to look for an area that has a stable government. There are many opportunities to purchase coastal properties in countries that do not have a stable government but the risk is high to purchase these type of properties. There are many examples of governments taking over properties from foreigners and therefore avoid unstable government countries for property investment at all costs.

When investing in a coastal town it is also advantageous to choose a property that is as close to the water as you can get. In fact, if you can purchase a property that is on the waterfront you should do so. Waterfront properties are scarce and they will hold their value and increase in value quicker than an inland property. Of course, purchasing a property in a coastal town will depend upon a person’s budget.

When purchasing a property in a coastal town always remember to keep your emotions in check. Many investors make the mistake of allowing their emotions to become involved when making a real estate transaction. They assume that the property that they are interested in will sell quickly and therefore they often pay too high a price. Just remember that there are always other real estate investment deals just around the corner and therefore you should look for bargains.

It is preferable to purchase a property in a coastal town that includes a dwelling of some type. It really does not matter what type of dwelling it is. It can be a beach cottage, a townhouse, an apartment, or a residential dwelling. True, town houses and apartments do not increase in value as quickly as detached residential dwellings but if your budget cannot afford the latter than the former is still a good option. There are many other investment tips that a person can utilize when purchasing coastal properties. The key to any good real estate investment is to thoroughly investigate the property and area before investing.

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