“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

What Is An ETF? And How Do They Work?

What Is An ETF? And How Do They Work?

ETFs have taken over the world of investing. Everyone is getting behind ETF investing, from DIY investors to Warren Buffet, from robo-advisors to huge institutional investors. But what is an ETF? What does ETF stand for? And how do they work?

ETF stands for Exchange Traded Fund… what that means is that it’s a collection of investments, stocks, bonds etc, and those investments are grouped together into one fund that you can purchase and sell on the stock exchange.

This is slightly different than mutual funds. Mutual funds also hold a collection of investments but you purchase them through the fund provider and at a set price at the end of the day based on how much the fund is worth.

The difference is subtle but it matters, and I’ll explain why.

ETFs have grown in popularity over the last 10-years. One of those reasons has to do with low-cost index investing. Index investing is when a fund (could be an exchange traded fund, or it could be a mutual fund) tries to replicate the returns of a particular index. And an index could be anything.

For example there is an S&P 500 ETF that aims to replicate the returns of the S&P 500, a collection of the 500 largest companies in the US. An index could also be a bond index, in this case a bond ETF aims to replicate the return of a certain type of bond, maybe corporate bonds, maybe government bonds, maybe high-risk/junk bonds etc.

The amazing thing about ETFs, especially index ETFs is how little they cost, how highly diversified they are, and how simple they makes investing for the average person.

But how do ETFs work?

It’s a great question.

read more
Setting The Right Asset Allocation For RESP Investments

Setting The Right Asset Allocation For RESP Investments

One of the hardest things about RESPs is choosing the right investment and managing the allocation between stocks and bonds. There are so many RESP investment options and it becomes especially challenging when families have more than one child. When families have a few children, who are perhaps a few years apart in age, it becomes very challenging to set the right asset allocation for the investments inside the family RESP.

Why is it important to set the right asset allocation?

Asset allocation is a large driver of risk. The more equity assets in a portfolio, and the less fixed income assets, the more risk. There is always risk when investing, whether that be in stocks or bonds, but stocks have always had a “risk premium”. That means they have a higher risk but also a higher return.

When managing asset allocation in an RESP we need to be very careful because were typically investing over a few different time horizons.

A 16-year old high school student is going to have a very different asset allocation in their RESP than a 4-year old pre-schooler. We want to make sure the 16-year old has money for post-secondary in two years and isn’t going to lose half of their education fund during a downturn. On the other hand, our pre-schooler has loads of time, so we can take on a bit more risk and hopefully grow their education savings over the next 14+ years.

It’s these different investment horizons that make investing inside an RESP especially challenging (even more so for self-directed RESPs where the individual investor is making all the decisions).

Typical investment horizons for RESPs include…

read more
TFSA Beneficiary vs Successor Holder? The Difference Is HUGE!

TFSA Beneficiary vs Successor Holder? The Difference Is HUGE!

We’re always told to make sure we have beneficiaries designated on all our accounts. We’re told to make sure that our beneficiaries are in accordance with our final wishes and we’re also told to review them regularly.

But when it comes to the TFSA there is another, more important designation, the successor holder, and in some cases we don’t want to list a beneficiary on our TFSA we want to list a successor holder instead.

There are lots of benefits to having a beneficiary (or successor holder) designated on your account. It helps expedite things after you pass. It helps your loved ones access cash and investments faster. It helps avoid probate fees. And it helps keep assets from entering the estate and getting held up in the estate process.

Having a beneficiary also helps to keeps things private. When you don’t have a beneficiary list on your account, your assets pass through your estate. Estate information is available to the public, so any assets passing through your estate are out there available for everyone to see. By naming a beneficiary on your account, the assets in that account avoid your estate and go directly to the beneficiary. They’re kept private and no one knows the details.

But when it comes to the TFSA there is another designation that you can make on your account. The difference is subtle, but like many things in personal finance the impact can be HUGE.

When it comes to the TFSA you can designate someone a beneficiary but you can also name someone a successor holder.

Here’s the difference…

read more
Page 3 of 3812345...

Owen Winkelmolen

Fee-for-service financial planner and founder of PlanEasy.ca

“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

What Is An ETF? And How Do They Work?

What Is An ETF? And How Do They Work?

ETFs have taken over the world of investing. Everyone is getting behind ETF investing, from DIY investors to Warren Buffet, from robo-advisors to huge institutional investors. But what is an ETF? What does ETF stand for? And how do they work?

ETF stands for Exchange Traded Fund… what that means is that it’s a collection of investments, stocks, bonds etc, and those investments are grouped together into one fund that you can purchase and sell on the stock exchange.

This is slightly different than mutual funds. Mutual funds also hold a collection of investments but you purchase them through the fund provider and at a set price at the end of the day based on how much the fund is worth.

The difference is subtle but it matters, and I’ll explain why.

ETFs have grown in popularity over the last 10-years. One of those reasons has to do with low-cost index investing. Index investing is when a fund (could be an exchange traded fund, or it could be a mutual fund) tries to replicate the returns of a particular index. And an index could be anything.

For example there is an S&P 500 ETF that aims to replicate the returns of the S&P 500, a collection of the 500 largest companies in the US. An index could also be a bond index, in this case a bond ETF aims to replicate the return of a certain type of bond, maybe corporate bonds, maybe government bonds, maybe high-risk/junk bonds etc.

The amazing thing about ETFs, especially index ETFs is how little they cost, how highly diversified they are, and how simple they makes investing for the average person.

But how do ETFs work?

It’s a great question.

read more
Setting The Right Asset Allocation For RESP Investments

Setting The Right Asset Allocation For RESP Investments

One of the hardest things about RESPs is choosing the right investment and managing the allocation between stocks and bonds. There are so many RESP investment options and it becomes especially challenging when families have more than one child. When families have a few children, who are perhaps a few years apart in age, it becomes very challenging to set the right asset allocation for the investments inside the family RESP.

Why is it important to set the right asset allocation?

Asset allocation is a large driver of risk. The more equity assets in a portfolio, and the less fixed income assets, the more risk. There is always risk when investing, whether that be in stocks or bonds, but stocks have always had a “risk premium”. That means they have a higher risk but also a higher return.

When managing asset allocation in an RESP we need to be very careful because were typically investing over a few different time horizons.

A 16-year old high school student is going to have a very different asset allocation in their RESP than a 4-year old pre-schooler. We want to make sure the 16-year old has money for post-secondary in two years and isn’t going to lose half of their education fund during a downturn. On the other hand, our pre-schooler has loads of time, so we can take on a bit more risk and hopefully grow their education savings over the next 14+ years.

It’s these different investment horizons that make investing inside an RESP especially challenging (even more so for self-directed RESPs where the individual investor is making all the decisions).

Typical investment horizons for RESPs include…

read more
TFSA Beneficiary vs Successor Holder? The Difference Is HUGE!

TFSA Beneficiary vs Successor Holder? The Difference Is HUGE!

We’re always told to make sure we have beneficiaries designated on all our accounts. We’re told to make sure that our beneficiaries are in accordance with our final wishes and we’re also told to review them regularly.

But when it comes to the TFSA there is another, more important designation, the successor holder, and in some cases we don’t want to list a beneficiary on our TFSA we want to list a successor holder instead.

There are lots of benefits to having a beneficiary (or successor holder) designated on your account. It helps expedite things after you pass. It helps your loved ones access cash and investments faster. It helps avoid probate fees. And it helps keep assets from entering the estate and getting held up in the estate process.

Having a beneficiary also helps to keeps things private. When you don’t have a beneficiary list on your account, your assets pass through your estate. Estate information is available to the public, so any assets passing through your estate are out there available for everyone to see. By naming a beneficiary on your account, the assets in that account avoid your estate and go directly to the beneficiary. They’re kept private and no one knows the details.

But when it comes to the TFSA there is another designation that you can make on your account. The difference is subtle, but like many things in personal finance the impact can be HUGE.

When it comes to the TFSA you can designate someone a beneficiary but you can also name someone a successor holder.

Here’s the difference…

read more
Page 3 of 3812345...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

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