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  • What is a market-linked GIC? – MoneySense

    What is a market-linked GIC? – MoneySense

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    If you like the safety of GICs but also want exposure to the stock market, there’s a type of investment for that: market-linked GICs. These investments guarantee the return of your principal along with a minimum interest rate, while also providing limited exposure to stock market movements.

    How market-linked GICs work

    Unlike a traditional GIC, a market-linked GIC is tied to a particular stock market index—like the Canadian S&P/TSX 60 or the American S&P 500. This gives investors an opportunity to benefit from market gains to a limited extent. We say “limited” because even if the S&P 500 index gains 50% over a three-year period, a GIC linked to that index may limit your gains to, say, 35%.

    Any gain isn’t guaranteed, as no one can predict what the markets will do, but the potential upside is there—and your principal is protected regardless of what the stock market does.

    Of course, you can invest in the stock market by buying individual shares, mutual funds and exchange-traded funds (ETFs). Unlike these, however, a market-linked GIC ensures that you won’t lose any of your principal if there’s a market downturn. Market-linked GICs offer:

    • A guaranteed minimum rate of interest
    • Canada Deposit Insurance Corporation (CDIC) coverage of the GIC’s principal and interest, up to $100,000, in case of a bank failure, if the GIC issuer is a CDIC member institution

    Additionally, there is no fee to invest in a market-linked GIC or other types of GICs.

    How do market-linked GICs and ETFs compare?

    Consider this comparison of a traditional Scotiabank three-year non-redeemable GIC with Scotiabank’s US Tracker Index ETF (SITU) and Scotiabank’s three-year market-linked GIC—both tied to the S&P 500 index. (GIC rates current as of Nov. 20, 2023.)

    Term Minimum guaranteed interest rate Maximum full-term return Principal guarantee Linked index Fee
    Traditional GIC 3 years 4.1% Not applicable Yes None None
    Market-linked GIC 3 years 2.44% Limited to 35% Yes S&P 500 None
    Scotiabank ETF (SITU) None None Matches the index without limit No S&P 500 0.08%

    Are market-linked GICs a good investment?

    Market-linked GICs have several things going for them:

    • They’re eligible for both non-registered and registered investment accounts, including the registered education savings plan (RESP), registered retirement savings plan (RRSP), registered retirement income fund (RRIF), tax-free savings account (TFSA) and registered disability savings plan (RDSP).
    • They have a low minimum investment amount—as low as $500, in the case of Scotiabank’s GICs.
    • Market-linked GICs are eligible for CDIC protection, up to $100,000 per depositor, at CDIC member institutions.

    Are market-linked GICs right for you?

    Like all investments, a market-linked GIC could be a good investment if it aligns with your financial situation, financial goals, risk profile and investment time horizon. Typically, these GICs could suit Canadian investors who:

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    Aditya Nain

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  • Making sense of the markets this week: November 26, 2023 – MoneySense

    Making sense of the markets this week: November 26, 2023 – MoneySense

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    Source: Google Finance

    In a report full of positive figures, perhaps the most impressive highlight was that data centre revenue (mostly from cloud infrastructure providers like Amazon and Microsoft) was up 279%, to USD$14.51 billion. Only a few years ago, Nvidia was basically known as a fairly simple (albeit still profitable) company that made computer chips for video games. As long as it maintained its competitive advantage on AI chips, it essentially has license to print ever-increasing amounts of money. We’ll see how long it takes the other chip heavyweights to catch up.

    The fly in the ointment of Nvidia’s earnings report, though, was a warning that export restrictions from China and other countries were going to have a negative effect on the fourth quarter’s bottom line.

    When should we expect the stock market to hit new highs?

    Ben Carlson is back, on A Wealth of Common Sense, with an interesting look at how often the U.S. stock market breaks its previous all-time high.

    With all the negative news headlines these days, you might be forgiven for assuming things must be pretty rough at the moment. Heck, you might even have thought we were a long way away from a new market high.

    The truth is the U.S. stock market is fast approaching its all-time high. And it looks like this gap between market peaks will be the fifth longest on record. In other words, the recent bear market has caused substantial pain, but it’a far from the worst-case scenario.

    In Canada, the TSX Composite index index hit 22,213 in April of 2022. Today, we sit at about 20,114, so we’re still down about 10% from all-time highs. That said, we wouldn’t bet against the Canadian stock market crashing through that ceiling in early 2024. (Predictions column to come soon!)

    It’s also important to remember that the companies that make up Canada’s stock market index pay out higher annual dividends than their U.S. counterparts. That isn’t reflected in these index comparisons.

    Of course, one might want to consider that while stock prices are bouncing back they’re still pretty far away on a “real” basis if we adjust for inflation. In other words, if you’re selling stocks to pay for life’s expenses, then you will have to sell more of those stocks (even if they’re back up to 2022 levels) to buy the same stuff that you used to. That price difference is obviously due to the high inflation rates the last couple of years.

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    Kyle Prevost

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  • 6 Tips to Invest in Renewable Energy Now | Entrepreneur

    6 Tips to Invest in Renewable Energy Now | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Around the globe, clean energy investment has never been higher, creating plenty of opportunities for investors who want to take advantage of trends like recovering supply chains, the IRA (Inflation Reduction Act), and more. But where to begin?

    Many large companies such as CEG and FLNC are performing well, but energy stocks can shift (especially with inflation-targeting interest rates being high right now), and sometimes quickly! How do you know where to focus your investments? Talking to your financial advisor is always a good start, but I also have several tips on where to begin with healthy renewable energy investment for the coming years.

    1. Solar and EVs are hot markets

    In the early 2020s, two rapidly expanding areas are solar power and EV (electric vehicle) investment, making these sectors great places to start. Both are seeing high growth due to pent-up demand during the pandemic and more widespread adoption in low-saturation areas.

    As with much clean energy spending, investments primarily focus on a few high-growth regions, including China, the EU, the United States and Japan. But opportunities also exist in smaller markets where numbers are starting to rise, notably India, Africa and Brazil. There’s plenty of growth potential in all these regions, especially as EVs grow increasingly familiar with infrastructure build-out to support them. This remains primarily focused on urban growth with excursions into commercial markets for short-length delivery and freight.

    Related: 5 Top Green Energy Stocks To Look Out for in 2023

    2. Invest in the most vital supply points

    As you research potential investments, remember that some parts of the renewable supply chain still need to be stronger or are particularly important to the long-term success of products. That includes makers of battery storage components, which are necessary to utilize solar and EV-related energy investments fully. It includes makers of the latest high-quality photovoltaics, ocean-rated turbines and micro-inverters. For some examples, look into the operations of First Solar (FSLR), Enphase (ENPH), Vestas (VWS) and SunPower (SPWR).

    Related: Oil and Gas Stocks: A Safe Way to Invest in Renewable Energy

    3. EFTs remain a safe, powerful bet

    For many years, one of the most reliable ways to invest in clean energy was EFTs (exchange-traded funds) specializing in renewable markets. Because renewable energy is seeing lots of global growth across many sectors, fueled partly by concerns about traditional supplies from Russia and Iran, EFTs are strong if low-risk options to get started on energy investments.

    Another thing I like about today’s EFTs is that they allow for broad targeting of specific sectors. For example, FAN focuses on wind deployments, and TAN is on solar. Each fund has a portfolio with mixes weighted toward various technologies.

    4. Long-term investment in the global south

    For ground-floor investments with lots of long-term growth opportunities in the next decade, I suggest looking toward the global south. Currently, the global south is seeing a significant shortage of renewable investment compared to many northern regions. Brazil and Australia have growing opportunities, but Africa and many parts of South America still need development. There are lots of options here for investors who don’t mind a slow burn and want to take advantage of projects in the making.

    Related: 5 Long-term Strategies To Create Wealth

    5. Wind and hydrogen are poised for steady growth

    Wind has come a long way in recent years, and many farms, especially offshore options in ideal global locations, are planned for the 2020s. Like solar, wind has many entry points for investment, from turbine creation and other manufacturing to battery storage capabilities. The EU, USA, and China all have many farms in various stages of development, most focused on using the latest engineering and software to maximize efficiency.

    Hydrogen is also in a good spot. Much of the discussion focuses on green hydrogen, which uses low-carbon techniques. Green hydrogen has the potential to meet many business-related carbon footprint goals, so its use could spread across the United States and the EU, as well as other nations, in the coming decade. But anywhere with the potential for hydrogen infrastructure shows promise.

    6. YieldCos continue to show potential

    YieldCos are ambitious investment vehicles that purchase power generation assets directly with a focus on profit growth that translates to high dividends. If dividends are your goal, look into YieldCos as a higher-risk option with lots of opportunities for returns…especially once interest rates and inflation finish cooling down.

    This is just the start of the potential investments in renewable energy. It’s an industry that covers multiple fields, including rare earth, shipping companies and many types of manufacturing. Clean energy has never been more popular, but watching the (metaphorical) headwinds and political movements is always a good idea as you balance your portfolio.

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    Abe Issa

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  • Making sense of the markets this week: November 19, 2023 – MoneySense

    Making sense of the markets this week: November 19, 2023 – MoneySense

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    Target shareholders finally avoid slings and arrows

    The big headlines in U.S. retail this week centred around Target shares seeing a massive 18% spike, while Walmart shares came down over 8% after Thursday’s earnings announcement. However, we look behind those headlines to the context of those moves to get the real story.

    U.S. Retail earnings highlights

    All earnings numbers in this section are in USD.

    • Walmart (WMT/NYSE): Earnings per share of $1.53 (versus $1.52 predicted). Revenue of $160.80 billion (versus $159.72 billion estimate).
    • Home Depot (HD/NYSE): Earnings per share of $3.81 (versus $3.76 predicted). Revenue of $37.71 billion (versus $37.6 billion estimate).
    • Target (TGT/NYSE): Earnings per share of $2.10 (versus $1.48 predicted). Revenue of $25.4 billion (versus $25.24 billion estimate).
    • Macy’s (M/NYSE): Earnings per share of $0.21 (versus $0.00 predicted). Revenue of $4.86 billion (versus $4.82 billion estimate).

    While the quarter was obviously a great redemption story for Target, these volatile stock moves were based on sky-high expectations for Walmart (the stock hit an all-time high this week before the earnings announcement) and a relatively terrible year for Target so far. It’s still down over 14% year to date even after the earnings bump.

    Target’s C-suite commented that its improved margins were due to progress made on inventory management and reducing expenses, as well as reduced shrinkage (theft).

    Walmart’s team stated the company is still worried about pressure on the U.S. consumer despite higher online sales (24% increase in the U.S. and 15% worldwide this year) and increased grocery revenues. 

    Walmart CEO Doug McMillon believes price relief might soon be in the cards, saying that general merchandise and grocery prices should, “start to deflate in the coming weeks and months.” He said, “In the U.S., we may be managing through a period of deflation in the months to come. And while that would put more unit pressure on us, we welcome it, because it’s better for our customers.”

    We’re fairly certain that Walmart will be able to resist that “unit pressure” and that it will manage to satisfy both shareholders and customers, given its track record over the years.

    CPI goes down, stocks go up

    If you needed confirmation that U.S. interest rates are still foremost on investors’ minds, this week’s Consumer Price Index (CPI) from the U.S. Department of Labor was a big checkmark. Stocks rallied after Wednesday’s news that headline CPI was down to 3.2% annually (before coming down slightly later in the day’s trading session).

    Source: CNBC

    CPI summary index report highlights

    The main takeaways from the CPI report included:

    • Core CPI (which excludes food and energy prices) is still at a 4% annual rate of increase.
    • Both the headline CPI and core CPI numbers were lower than anticipated Wall Street estimates, which led to market optimism. 
    • Gasoline costs were down 5.3% annually.
    • Shelter costs were up 6.7% annually and were a major part of the overall headline inflation raise.
    • Travel-related categories ,such as hotel pricing and air travel, were also down substantially.
    • Used vehicles are down 7.1% from a year ago.
    • With unemployment rising from 3.2% to 3.9%, there should be less pressure to increase wages in most sectors going forward, thus contributing to a reduction in both headline CPI and core CPI.

    Market watchers at CME Group report that the chances of any immediate interest rate hikes by the U.S. Fed have declined to nil. As you might expect, this confidence drove down long-term bond rates and raised future expectations for corporate earnings (and share prices).

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    Kyle Prevost

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  • What Canadian investors can do in times of world crisis and war – MoneySense

    What Canadian investors can do in times of world crisis and war – MoneySense

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    Emotions in investing

    The humanitarian crises taking lives and garnering headlines are heart-wrenching—particularly for Canadians who have family and friends in the affected regions. More broadly, no one knows for sure how these crises will affect global economies, access to resources and financial markets. It’s understandable that investors are scared and making investment decisions based on their fear. Some people are selling their equities and leaving the markets. As an advisor, it’s my job to help take the emotion out of investing.

    We know from previous wars, terrorist attacks, pandemics and other terrible events that people, governments and markets are resilient, and can even become stronger than they were before. This happened after 9/11, the global financial crisis and the global COVID-19 pandemic. The historical evidence suggests that the best thing investors can do when the world experiences a crisis is to separate feelings about the tragedy from the facts about the businesses you’re invested in and look for buying opportunities. 

    Impact of global crises on investments

    The impact of wars and other traumatic events on the markets tend to be relatively short-lived. That’s because unlike fiscal policy—such as raising interest rates—the events themselves are not “economic” in nature.

    For example, if war breaks out in an oil-producing country, will that affect the price of oil? Theoretically, it shouldn’t, because other, larger producers can offset any lost supply from the war-torn country.

    But, as we know, perception can be more powerful than reality when it comes to the stock market. The initial, automatic reaction could be a spike in oil prices—and then prices should adjust with time.

    What is a Canadian investor to do?

    So, what do you do as an investor in Canada? Not an awful lot. As investment advisors, we get paid to grow people’s wealth. When markets sell off for reasons that are more temporary than related to economics and performance, it’s important to take emotion out of decision-making and not go into panic mode about your investments.

    Markets may dip, but they don’t usually collapse. It’s possible your portfolio’s value may drop for a period of time. In the past, after a crisis has ended—and regardless of the outcome—the markets have regained stability, and investment returns have bounced back.

    A crisis investment strategy

    My best advice in the face of a world crisis: Stay calm, take a deep breath and focus on the fundamentals. Keep your risk profile front and centre, and think about where you want to put your money. My approach is to be sector agnostic and look for good value wherever I can find it.

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    Allan Small

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  • Making sense of the markets this week: November 12, 2023 – MoneySense

    Making sense of the markets this week: November 12, 2023 – MoneySense

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    Disney (and most U.S. companies) surprise to the upside

    With 88% of companies in the S&P 500 having now reported results, nearly 9 in 10 have surpassed earnings estimates. Consumers continue to feel worse about the economy, and companies just continue to make more money. It’s quite an odd time to try to make sense of the markets.

    U.S. earnings highlights

    This is what two American companies reported this week. All figures below are in U.S. dollars.

    • Uber (UBER/NASDAQ): Earnings per share of $0.10 (versus $0.12 predicted), and revenues of $9.29 billion (versus $9.52 billion predicted). 
    • Disney (DIS/NYSE): Earnings per share of $0.82 (versus $0.70 predicted), and revenues of $21.24 billion (versus $21.33 billion predicted).

    Disney’s outperformance was chiefly due to ESPN+ subscriptions and continued revenue increases at theme parks. Investors appear to be big supporters of CEO Bob Iger’s announcement that Disney will “aggressively manage” its costs and will now be targeting $7.5 billion in cost reductions (up from a $5.5 billion target earlier in the year). Shares were up 4% in after-hours trading on Wednesday. 

    “As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences business.” 

    — Disney CEO Bob Iger

    Uber, on the other hand, had a more subdued day. The earnings miss was contextualized by CEO Dara Khosrowshahi, when he pointed out that gross bookings for people-moving mobility were up 31% year over year (YOY), while UberEats gross bookings were up 18% YOY. The markets appeared to agree with Khosrowshahi’s spin, as shares were up 3% on Tuesday, despite the earnings news.

    Canadian fossil fuels profitable—for now

    Despite a United Nations report stating that Canadian fossil fuels should be kept in the ground, the sector continued right on pumping out profits this quarter. 

    Canadian earnings highlights

    Here’s what came out of the earnings report. 

    • Keyera Corp. (KEY/TSX): Earnings per share of $0.36 (versus $0.50 predicted). Revenue of $1.46 billion (versus $1.60 billion estimate).
    • TC Energy Corp. (TRP/TSX): Earnings per share of $1.00 (versus $0.98 predicted). Revenue of $3.94 billion (versus $3.91 billion estimate).
    • Suncor Energy Inc. (SU/TSX): Earnings per share of $1.52 (versus $1.36 predicted). Revenue of $12.64 billion (versus $12.85 billion estimate).

    While accounting changes at Keyera resulted in an earnings-per-share miss, shareholders appeared to take the news in stride. Share prices were down less than 1% on Wednesday. Management highlighted the Pipestone expansion being on track and to be completed in the next two months, as well as a recent credit upgrade. The company was in great shape going forward. With net debt to adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) at 2.5 times, the company is on the conservative side of its 2.5- to 3-times target range.

    TC Energy was up nearly 1% on the day after positive earnings news and the announcement that the new Coastal GasLink was completed ahead of the year-end target. Management also stated that it is taking steps to strengthen the company’s balance sheet, including selling off $5.3 billion in asset sales that will be used to pay down debt.

    Despite total barrels of oil produced falling from 724,100 to 690,500 in last year’s third quarter, Suncor outperformed expectations and shares rose 3.7% on Thursday. Investors were forgiving in the decrease of adjusted earnings due to lower crude oil prices and increased royalties.

    The company attributed the decrease in adjusted earnings to lower crude prices and a weaker business environment, as well as increased royalties and decreased sales volumes due to international asset divestments.

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    Kyle Prevost

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  • Responsible investing is growing in Canada. Which ESG factors matter most? – MoneySense

    Responsible investing is growing in Canada. Which ESG factors matter most? – MoneySense

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    According to the 2023 Canadian Responsible Investment Trends Report, released on Oct. 26 by the Responsible Investment Association (RIA), the answer is yes: investors continue to prioritize responsible investing, and more growth is expected as local and international reporting standards improve. Survey responses are from Canadian institutional asset managers and asset owners who answered questions in mid-2023. The data shared paints a picture of the industry on Dec. 31, 2022. Here are some highlights from the report.

    About half of assets under management are invested responsibly

    With $2.9 trillion of assets under management in responsible investments (RI) in Canada, this is no small industry. And while this number is a slight decrease from the previous year, that’s a product of market conditions: it actually reflects a higher proportion of all Canadian professionally managed assets than in 2021, and RI’s market share has grown from 47% to 49%.

    Responsible investing is a risk management strategy

    You might think the main motivation for anyone choosing responsible investing is what’s in the ESG acronym: environmental, social and governance factors. And while those are definitely important—14% of survey respondents said their organization’s primary reason for choosing RI was to fulfill its mission, purpose or values—there are many other factors at play. One of the big ones? A common goal for any type of investment: minimizing risk and maximizing value.

    In fact, 35% of organizations surveyed said that minimizing risk over time was their primary reason for choosing responsible investing, and a further 41% ranked it second or third. And 61% said that improving returns over time was one of the top three factors influencing their choice to prioritize ESG investments.

    Another issue that mattered to many respondents was fiduciary duty—their obligation to maximize their clients’ returns—which 26% listed as their organization’s primary motivation.

    Which ESG factors do organizations consider? All of them

    The risks facing our society due to climate change are top of mind for Canadians, and the investors here are no exception. This year, 93% of respondents said that greenhouse gas emissions were a factor they considered in their investment decisions, an increase from 85% in 2022. Climate change mitigation and climate change adaptation were the other top environmental factors mentioned by respondents, at 84% and 76% respectively.

    Top social factors mentioned by respondents include equity, diversity and inclusion (81%), human rights (76%), labour practices (76%), and health and safety (71%). The governance factors that respondents deemed significant included board diversity and inclusion (87%), executive pay (71%) and shareholder rights (70%).

    Many strategies make for comprehensive decisions

    Organizations surveyed use a number of tools to help themselves include ESG factors in their decision-making. These three topped the list:

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    Kat Tancock

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  • How to Find Great Stocks for Day Trading | Entrepreneur

    How to Find Great Stocks for Day Trading | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    If you don’t have a thorough understanding of what professional day traders actually do, then you most likely think day traders are kids with more money than brains.

    The composite image of day traders is not flattering when it’s composed of things like this:

    • Someone took his life savings to invest in a meme stock to “teach Wall Street a lesson” — and lost it all.
    • The guy who brags that he trades on his phone while stopped at a red light.
    • Gamers with a can of RedBull in one hand and a mouse in the other and get their trading tips from Reddit threads.

    I’m here to tell you that there exists a type of day trader who is highly disciplined and thoroughly trained. These people are more like the “quants” that Wall Street firms hire to make sense of vast amounts of data. Far from being a gambler, this type of day trader is a hunter of volatility and a manager of risk.

    Among professional day traders, there are different investing styles to match different risk tolerances. Therefore, I’ll give you my take on five characteristics that make up a strong stock from a day trading point of view.

    Related: How I Turned $583 into $10 Million by Day Trading

    1. A stock that’s moving now

    Imagine someone who graduated from business school and maybe even got an advanced degree in accounting. Oh, and this person also interned at Goldman. They are great at deciphering income statements and balance sheets.

    Now, let’s imagine they’ve identified an “under the radar” stock that exhibits powerful signals for being significantly undervalued.

    As a day trader, I have little interest in this stock. Why? Because it currently is not moving out of its narrow daily band. It’s not good enough for a stock to be “significantly undervalued” or “poised to move.” I don’t want to wait around hoping that a stock moves. As a hunter of volatility, I am only interested in stocks that are moving right now.

    You may think that this approach does not maximize potential profits. After all, the stock has already moved by the time I’m looking at it. It’s true that by waiting until a stock moves, I’m foregoing some profit. But I’ve traded that profit for something far more valuable — the certainty that the stock is one of the biggest movers right now. I’d rather have actual movement versus the theoretical potential of movement.

    Related: Learn How to Earn Passive Income Through Day Trading and Investments

    2. FOMO

    I try my best not to trade with the fear of missing out (FOMO). I instead recognize FOMO as a powerful, primal force on many traders, and I use that knowledge when I take my trades.

    Long-term investors may be satisfied with stocks that grow by single digits in a year. Yet, on any given day, some stocks can move up 50% in minutes. Sometimes, the moves can be in the triple digits.

    When day traders see a stock that has made such a move, they know that someone, somewhere, just did very well with a short-term trade. These stocks have a powerful mental effect on traders. I look for stocks where FOMO has become a strong signal. The attention these stocks receive may allow me to make some short-term trades.

    This means rather than falling victim to FOMO, I capitalize on FOMO that exists in the market.

    3. Stocks that are the subject of greed and regret

    Yesterday’s epic mover activates the greed glands of many traders the next morning. They say to themselves: “I can’t believe I missed that whole runup!” And they swear that today will be different.

    Not only can that emotion mean that yesterday’s hot stocks still retain some heat, but they can infect other stocks in their wake. It’s as though the pent-up desire to participate in yesterday’s headliners is casting about to find the next big mover.

    It also can happen out of the blue: When one stock is unusually strong, several others often start to pick up for no apparent reason — other than what I call “sympathy momentum.” I’m on the lookout for this behavior.

    Related: 4 Passive Income Investment Strategies That’ll Free Your Time and Peace of Mind

    4. An imbalance between supply and demand

    The term “float” refers to how many shares of a stock are available to trade on any given day. It’s not uncommon for a handful of stocks to have a few million shares of float. If they become the hot stocks of the day, those stocks can trade in the hundreds of millions of shares.

    Just think about what that means: how many times does a stock with a 5-million-share float need to change hands when it trades 350 million shares in a day? As a “hunter of volatility,” I pay particular attention to such stocks.

    5. Former-runner status

    Day traders have good memories for high flyers. It’s like brand recognition or an afterglow for the stock that was the subject of so much attention in the last trading session. I keep an eye on these former runners because if they take off again, it can happen especially fast.

    In summary

    Notice how these five stock characteristics have nothing to do with earnings estimates, revenue forecasts, management shake-ups, and other common Wall Street assessments of a stock’s likelihood to move. Even so, they have everything to do with what’s in the minds of other traders as they hover over the buy and sell buttons on their keyboards.

    Profiting from short-term fluctuations in price is what day trading is all about. Day traders must be masters of technical analysis and experts at assessing the current emotions among traders. After all, it’s not just the stock chart that is important; it’s how traders feel about a stock that will ultimately drive its price action. If you understand and act on these common forces at work during any given trading session, you have the potential to come home with something to show for your hunting trip.

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    Ross Cameron

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  • Making sense of the markets this week: November 5, 2023 – MoneySense

    Making sense of the markets this week: November 5, 2023 – MoneySense

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    Both hardware and software continue to siphon profits from all over the world back to the U.S.A. and into shareholders’ pockets. No big surprises.

    Air Canada and Cameco fly high

    Air Canada was so confident in its profits this quarter that executive vice-president of network planning and revenue management Mark Galardo stated:

    “We see relatively strong demand for (the fourth quarter) in almost every single geography that we operate in, in almost every single segment that we operate in. […] We’re not seeing any major slowdown at this point in time.”

    Canadian earnings highlights

    Three very different Canadian companies saw quite different quarterly results this week.

    • Air Canada (AC/TSX): Earnings per share of $2.46 (versus $1.60 predicted). Revenue of $6.34 billion (versus $6.09 billion estimate).
    • Cameco (CCO/TSX): Earnings per share of $0.32 (versus $0.13 predicted). Revenue of $575 million (versus $718 million estimate).
    • Nutrien (NTR/TSX, NYSE): Earnings per share of USD$0.35 (versus $0.65 predicted). Revenue of USD$5.37 billion (versus $5.74 billion estimate).

    Despite Air Canada’s results, share prices closed down slightly on Monday, as shareholders appear skeptical that the good times can continue. You can read more about investing in Air Canada at MillionDollarJourney.ca.

    Cameco’s quarterly report didn’t dive into operations too deeply, but instead it focused on the bigger picture for nuclear energy. President and CEO Tim Gitzel stated:

    “Increasing average global temperatures and the fires and floods that are becoming more and more frequent can’t be ignored. The evidence continues to point to our carbon-based energy systems as a key contributor to the problem. This has led to electron accountability and proposals by countries and companies for achieving net zero targets taking center stage. And today it’s clear, achieving those targets does not happen without nuclear power. That itself is a notable difference, but it goes even deeper. This time policymakers are not shying away from proposing nuclear as a key part of their energy mix, some even reversing their previously anti-nuclear stance.”

    Despite the positive long-term view and substantial earnings beat, share prices were nearly flat on Wednesday, closing at $56.88. That said, the stock is up about 10% this week, as we go to press.

    Nutrien’s bad quarter can be chalked up to the volatile price of potash. (Nutrien is a Canadian company based in Saskatoon, but trades on the New York Stock Exchange and reports in U.S. dollars.) As an almost pure play on the resource, Nutrien’s stock generally rises and falls with supply and demand in that single market. It’s similar to the dynamics behind an oil producer.

    With more potash products from Russian and Belarus slipping through the sanctions net and onto the world market, Nutrien’s brief period of market dominance is at its end. That said, the share price didn’t move much this week, so it appears the market somewhat anticipated the bad news. It rose 2.3% to USD$55.39 at the close Thursday. 

    The U.S. Fed tones down hawkishness 

    The U.S. Federal Reserve continues to be the predominant market mover. 

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    Kyle Prevost

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  • Don’t Waste Your Money — Here Are 5 Proven Tips for First-Time Investors to Build Wealth | Entrepreneur

    Don’t Waste Your Money — Here Are 5 Proven Tips for First-Time Investors to Build Wealth | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    It’s estimated that 42% of Americans don’t own stocks. There are plenty of potential reasons why so many people choose not to invest, from fear of losses and not feeling like they have enough money to start investing to simply being unsure of how to start.

    However, first-time investors can get started even with a small amount of money, and with sound investments, they can earn much more than they would from the interest generated by a savings account.

    Still, there’s always risk with any investment — there’s never a guarantee that you’ll get big returns. However, by following some key practices, you can reduce your risk of losses and avoid wasting your money.

    Related: Why Entrepreneurs Shouldn’t Invest in Stocks

    1. Establish an investing plan

    Every first-time investor should start by developing a basic investing plan. This doesn’t have to be so detailed as to list each stock you’ll invest in. Instead, it should set your parameters and goals that will help guide your investing strategy.

    For example, your investing plan should consider how much money you can afford to invest each month — most financial experts recommend a goal of 15% of your pretax income. You should also lay out your overall risk tolerance — including how much money you can afford to lose through your investments.

    Above all else, your investing plan should have a goal. A clear goal will help you determine how much and how long you’ll need to invest.

    2. Invest for the long-term

    One of the most frequently repeated pieces of advice every first-time investor should adhere to is to focus on the long-term rather than trying to achieve short-term gains. Stocks tend to be very volatile in the short term, with prices rising and falling rapidly. Far too many newbie investors fall into the trap of trying to constantly buy low and sell high, but this can easily lead to making impulsive decisions that waste money.

    Instead, it is better to view investments as a form of long-term financial growth. Buying and holding stock enables investors to benefit from long-term growth, which is usually far more consequential than short-term ups and downs. Rather than trying to time the market based on speculation or emotions, a focus on the long-term keeps you on track with your goals.

    Related: How to Live With Purpose and Stay Focused On Long-Term Goals

    3. Carefully vet your financial advisor

    Many first-time (and experienced) investors choose to work with a financial advisor to help them manage their money. A quality advisor can provide advice tailored to your goals and risk tolerance to put you on track for successful investing. But as with any other field, not all advisors are created equal.

    As a report from AdvisorCheck reveals, 12.74% of actively practicing financial advisors have a disclosure on their record for incidents such as bankruptcies, client complaints or a criminal record. Information on what disclosures are on an advisor’s record can be found online, but this isn’t something they are likely to broadcast on their own public-facing profiles.

    By researching whether an advisor has a disclosure (and what that disclosure means), as well as comparing advisors’ services, fees, assets under management and client ratios, investors can ensure they’re working with someone they can trust rather than just selecting the first advisor they meet with.

    4. Diversify in stocks you understand

    Diversifying your investment portfolio is key to mitigating risk. Investing in an individual stock — even if it is currently performing well — is extremely risky. No one can predict the market’s future with 100% certainty, and if the company you invested in goes bankrupt or suffers another major setback, you would stand to lose a lot. Investing in multiple companies across a variety of industries helps reduce the overall risk associated with your investment.

    As part of this, you should also make sure that you understand what you’re investing in. Cryptocurrency saw a flurry of investments in 2021, even though a lot of investors didn’t understand what it was for or how it worked. Then, in 2022, FTX and several other major cryptocurrency companies collapsed. Cryptocurrencies experienced a significant loss in market cap, causing many people to lose money.

    By investing in things you understand, you can better assess if they will provide a stable source of returns or if they are a risky investment.

    Related: 3 Major Advantages of Investing In Startups

    5. Be consistent

    Contribute to your investment accounts often. Even if you can only put aside a small amount at a time, regular investments will give you more opportunity for growth through compounding returns. The earlier you can put your money to work, the more time it has to grow.

    You can streamline this process by setting up automatic deposits from your checking or savings accounts into your investment account. You can even choose which stocks or mutual funds you want the automatic deposit to go to. This way, you won’t have to worry about forgetting to make consistent contributions, timing the market or other short-term worries that could keep you from achieving long-term gains.

    Invest with confidence

    The S&P 500 has delivered an average rate of return of 10% per year — well above what you can get from a savings account. First-time investors who avoid common mistakes and are wise with how they allocate their funds can start growing their wealth, even if they have relatively little to invest. The sooner you start, the more you stand to gain.

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    Lucas Miller

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  • Financial advisers make rich people richer. But is that all there is?

    Financial advisers make rich people richer. But is that all there is?

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    In 1989, author Marsha Sinetar wrote a bestselling book, “Do What You Love, The Money Will Follow.” She urges readers to pursue a career that stokes their passion.

    Many advisers take that advice. They love what they do. And the money follows: Median pay for U.S. financial advisers was $95,390 in 2022, according to the Bureau of Labor Statistics.

    Lately, though, the passion is waning for some advisers. They still love the practice of wealth management — customizing financial plans, constructing client portfolios and analyzing the ever-growing menu of investment products.

    They’re just not as enamored of their clients’ wealth. Reassuring wealthy retirees that they can afford to buy a second (or third) vacation home has its merits. But helping them accumulate more and more wealth rings hollow after awhile.

    Steve Oniya, a Houston-based certified financial planner, works with a diverse mix of clients. He enjoys helping them achieve their goals, regardless of their net worth. “It’s more gratifying helping them get over some hurdles to get to the life that they really want,” he said. “You make more of an impact that way.”

    He compares his work to a firefighter’s job. Some days, they rescue people from burning buildings. Other days, they put out a dumpster fire. Yet they’re always driven to excel and perform at a high level.

    Nevertheless, if an adviser serves rich clients who hoard their money, don’t give to charity and lack perspective on what matters most in life, a day at the office can feel dispiriting. “Sometimes advisers may be passionately opposed to certain clients’ values,” Oniya said. “In those instances, end the relationship or limit the scope.”

    Oniya said he does not find clients’ wealth objectionable. He sees his role as an ally who seeks to understand — and not judge — others’ beliefs and values.

    “I like to stay in the neutral camp,” Oniya said. “It’s easy to empathize with another person and see they are a person who needs help just like others. We’re generally here to advise them on how to be more efficient and effective financially in attaining their goals.”

    The arc of an adviser’s career comes into play as well. To build a practice, newly minted financial planners might welcome pretty much anyone with sufficient assets.

    Once they establish a stable book of business, advisers may get picky in deciding whom to serve. Their onboarding process might get more rigorous in an effort to determine if they’re aligned with a potential client’s aspirations, goals and priorities.

    Some advisers shift gears as they gain experience working with different types of clients. They come to realize what they like most about the job and adjust their practice — and the type of clients they serve — accordingly.

    “Everyone evolves,” said Angeli Gianchandani, a professor of marketing at University of New Haven’s Pompea College of Business. “Advisers may see there’s a greater reward and opportunity helping people in a different income bracket.”

    As a self-test, advisers at a career crossroads might want to ask themselves how they’d respond to two clients. The first one says, “You saved me $5 million. Now I want to save $10 million to buy a bigger yacht.”

    The other says, “You helped me pay off my student debt” or “You helped me save enough for a down payment to buy my first house.”

    “You may feel more valued and appreciated as an adviser” if you pave the way for someone who lacks vast wealth to build a nest egg for the future, Gianchandani says.

    Advisers who have misgivings about helping wealthy people attain greater wealth are not alone. Brooke Harrington, a sociology professor at Dartmouth College, interviewed 65 wealth managers between 2007 and 2015. About one-quarter expressed qualms about helping lower ultra-wealthy clients’ tax liabilities.

    Still, another 25% did not feel such qualms. They saw their role as defending their clients from an unjust tax code.

    More: Wall Street legend Byron Wien dies at 90. Here are his ’20 life lessons’

    Also read: The IRS is auditing the rich. Can you fly under the radar if you’re not wealthy?

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  • Making sense of the markets this week: October 29, 2023 – MoneySense

    Making sense of the markets this week: October 29, 2023 – MoneySense

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    IBM’s business is split into two key divisions: IT consulting and software. The latter is the primary revenue driver. The software unit generated $6.27 billion revenue, up 8% versus the consulting division, generating $4.96 billion in revenue, up 6%. Like many tech companies, IBM’s software division is also investing in AI to drive future growth.

    Amazon

    Amazon announced record third-quarter profits after the close Thursday and surged 5% Friday morning (at press time) after strong growth in its highly profitable Cloud business. While the stock was up 40% on the year, shares had fallen 8% in the previous two days after rival Alphabet warned that cloud customers were curbing spending. 

    Growth is growing…

    While North American bank stocks answered the question about how the economy is fairing, technology stocks answered questions about growth. The big message with tech is that growth is still there, and it will continue to be going forward. In today’s market, investors looking for growth need to own at least a few big-cap tech stocks. These companies are becoming the consumer staples of tomorrow. That includes stocks from companies like food and grocers and utilities that ground portfolios. That’s because, when the market dips, people still have to buy food and heat their homes. In today’s digital age, the technologies we’ve been talking about are embedded in our everyday lives and are poised to continue to grow.

    Bank of Canada pauses interest rate hikes 

    The general consensus going into the week was that Bank of Canada Governor Tiff Macklem would push the pause button on another interest rate hike. And that’s exactly what he did on Wednesday. Even though interest rates didn’t go up another quarter point—which was the plan—the damage has been done. Some Canadian investors and the markets worry that another rise in interest rates could increase the pressure on individual households and businesses, ratcheting up the fear and likelihood of a recession. 

    Source: Bank of Canada

    The Bank of Canada (BoC) itself was under a lot of pressure from provincial premiers to hold off on a rate hike precisely for these reasons. That’s despite not being closer to the 2% inflation target the BoC has set its sights on. For me, though, the question has always been: Is 2% a realistic target? And even if it is, how much pain is the BoC willing to inflict on the economy to achieve it? 

    Personally, I’d rather see a 3% inflation rate target, along with strong employment and healthy consumer spending, over targeting 2% inflation and lost jobs and a recession. Some analysts are predicting that the recession that was expected this year will take hold next year.

    I’m surprised we’re here, in the third week of October, still talking about interest rate hikes. I thought by now the central banks would have stopped relying on them so heavily. The Bank of Canada has raised interest rates 10 times since March 2022.

    It’s interesting that both the BoC and the U.S. Federal Reserve keep referencing the lag effect between when a rate hike is implemented and when its effects show up in economic data. Yet, neither specify just how long this can and/or should take. How do we know if the hikes are working? Are they willing to blow everything up because we’re stuck on 2% inflation? 

    When you have the cost of borrowing tripled, in some cases because of all these interest rate hikes, I have to wonder whether the BoC is sending an inadvertent message to Canadians: “You are living beyond your means. You’ve enjoyed a run of many years of low interest rates, where money was basically free with no worry about what happens later, when the cost to carry debt rises. The days of high interest are here now for the foreseeable future.”

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    Allan Small

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  • 6 Ways to Make Passive Income Through Rental Properties | Entrepreneur

    6 Ways to Make Passive Income Through Rental Properties | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    One of the oldest and easiest ways to create passive income is through rental properties. Luckily for investors and entrepreneurs, the property rental market remains strong and continues to grow. Based on data from the U.S. Census Bureau, more than 35% of households in the U.S. rent homes. Additionally, RentCafe reported that multifamily construction in 2022 reached a 50-year high nationwide, and according to Axios, “one million rental units are slated for completion through 2025.”

    Additionally, a recent GoBankingRates survey revealed that 14% of Americans don’t believe they will ever be able to afford a home, and 27% have no interest in buying a home, contributing to the demand for rental housing options. This is due to a variety of factors, including a low inventory of homes for purchase, barriers to homeownership such as high prices and high-interest rates, and a growing nomadic workforce that doesn’t want to be tied down to one location.

    Although rents appear to be stabilizing, demand for rental properties is still high and on-time rental collection rates recently rose above pre-pandemic levels. That means now may be a good time to rent out property, which may be easier than you think.

    Here are six types of rental properties that can help you earn passive income and even begin building generational wealth.

    1. Traditional investment properties

    Traditional investment properties have long been a popular choice for those seeking to generate passive income through rentals. It’s a rather simple concept: purchase a property, find tenants to rent it out and collect monthly rental income. Investors have the opportunity to decide whether to invest in long-term, mid-term, or short-term (vacation) rentals.

    Long-term rentals offer stability in rental rates and cash flow with a reduced risk of vacancies, while vacation rentals and short-term stays allow for higher rental rates with a higher risk of vacancies. Vacation rentals are also less passive, requiring more work to clean and ready the property in between stays and find tenants on a much more frequent basis. But the returns on investment can be much higher.

    There’s also a “mid-term rental” investment option, where the lease lasts for more than one month but less than one year (college student housing would fit into this category). Mid-term rentals require a bigger time investment than long-term properties but aren’t as demanding as short-term rentals. Some investors may want to diversify their rental property portfolio by owning a mixture of long-term, mid-term, and short-term rental properties, while others may commit to whichever style best suits their preferences.

    2. The accidental rental

    Investing in a new property isn’t always necessary to become a rental property entrepreneur. There are instances where you may already own extra property, such as a vacation home, a newly inherited property or perhaps you recently got married and both you and your spouse own your own home. Instead of selling these extra properties, you may consider renting them out.

    Sometimes, it’s more beneficial to hold on to a property over the long term rather than collecting a quick payout. Retaining properties for rental purposes cannot only help you build more real estate equity, but it can bring in a significant amount of passive income as well (and you may benefit from tax savings, but consult a tax professional on that). Combining the extra income with long-term equity gains can contribute to building generational wealth.

    3. House hacking

    Another strategy that has gained traction in recent years is “house hacking.” House hacking involves renting out a portion of your own home. If you own or purchase a property that is bigger than your housing needs, and you’re looking for a way to earn some extra cash, rent out a room (or several rooms).

    House hacking allows you to significantly reduce or eliminate your own housing expenses by using the rental income from renting out extra rooms to help pay down your mortgage and/or offset utilities and other costs of homeownership. House hacking can be a great way to start building passive income without the need for a large initial investment.

    4. Built-for-rent

    A growing trend in real estate is the “built-for-rent” market. Built-for-rent homes are built by companies that specifically design their properties for rental purposes only. These properties are often strategically located in desirable areas, ensuring high demand and consistent occupancy rates, and are marketed to people looking to maximize their returns on investment in the real estate industry.

    Investing in built-for-rent properties has become one of the most lucrative ways to generate a steady stream of passive income. By purchasing residential properties specifically designed for rental purposes, you can benefit from a consistent monthly income with minimal involvement. Typically, the built-for-rent company handles all aspects of property management, including finding tenants, handling maintenance and repairs, and collecting rent. This enables you to sit back and enjoy your rental income without the stress and time commitment associated with traditional real estate investments.

    5. Mixed-use properties

    A mixed-use property is a real estate asset that combines both commercial and residential spaces. This provides a unique opportunity to rent out both residential and commercial units. Leveraging the potential of these properties can lead to a sustainable and reliable passive income source, but there are several strategies to consider.

    One effective strategy for generating passive income through mixed-use properties is maximizing rental yields. This can be achieved by strategically curating a mix of commercial and residential tenants that complement each other. For example, having a retail shop on the ground floor of a residential building can attract more tenants and increase rental demand.

    Another strategy is to focus on choosing the right location for your mixed-use property by conducting thorough market research to identify the most profitable locations. For example, investing in areas with strong growth potential, high foot traffic, and a good mix of commercial and residential demand can increase the value and attractiveness of your property.

    In addition, look for other shared space opportunities like coworking spaces that provide short-term or flexible rental options that cater to the evolving and increasingly nomadic habits of modern workers. By taking an innovative approach to offering mixed-use rental spaces, you can tap into a variety of rental markets and maximize their passive income potential.

    6. Storage units

    When you think of rental properties, storage units usually don’t come to mind. However, renting out storage space can also generate passive income streams. There is a high demand for storage space, and fulfilling this need can help you earn money effortlessly by maximizing unused space. In addition to renting out traditional storage units, people can also rent out space in garages, basements, attics, and spare rooms. By getting creative and marketing effectively, you can effectively turn your empty spaces into profitable assets.

    Regardless of what kind of property you decide to rent out, technological advancements have streamlined property management, making it a more efficient and attractive endeavor. Property management tools and software automate many routine, time-consuming tasks such as listings, tenant screening, rent collection, and maintenance requests. This means you can spend less time on administrative duties and focus more on more important life activities, all while maximizing your passive income.

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    Ryan Barone

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  • Making sense of the markets this week: October 22, 2023 – MoneySense

    Making sense of the markets this week: October 22, 2023 – MoneySense

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    Finally, A&W Revenue Royalties Income Fund (AW/TSX) reported earnings roughly in line with shareholders’ expectations. Share prices barely moved on Wednesday when it was announced that royalty earnings were up 5.4% in year-over-year comparisons. Perhaps the only thing juicier than the Papa Burger is its current dividend yield of 6.26%.

    Have you heard? The Canadian Financial Summit is free: 

    In case you missed it, the Canadian Financial Summit is taking place RIGHT NOW!  Don’t miss out FREE sessions with familiar faces from MoneySense (see below). Registering for the Summit is exactly $0, and you can click here for more details.

    Jonathan Chevreau 

    The Personal Finance Book Hall of Fame

    After reading every new book on the Canadian personal scene for several decades, (as well as writing a few himself), Jonathan Chevreau led an all-encompassing discussion on the best personal finance books ever written. He talks about books written exclusively for Canadians, as well as those written for international readers. We’ve got classics, new takes, lesser-known gems, and best-in-class selections. Don’t miss this one if you love to get your info from written text.

    Michael McCullough

    Top Canadian ETFs for This Year and Beyond

    With so many ETF options available, it can be hard for investors to know what to put into their portfolios. MoneySense’s executive editor, Lisa Hannam, hosts as journalist Michael McCullough looks at the makeup of the ETF market. Hewill share, based on MoneySense’s ETF All-Stars Report, the ETF products Canadians could consider buying today.

    Allan Norman, MSc, CFP, CIM

    All your FHSA questions answered

    The first-home savings account is brand spanking new, and Canadians have questions. In the similar format of MoneySense’s popular Ask A Planner column, executive editor Lisa Hannam will ask Certified Financial Planner Allan Norman real questions from Canadians about the FHSA, from what it is to where to open this account.

    Lisa Hannam

    Personal finance trends to plan for in 2023 and 2024

    MoneySense executive editor Lisa Hannam and columnist Kyle Prevost work together on the popular column Making Sense of the Markets. It contextualizes headlines for Canadian investors, so together the duo will be looking at the headlines from the year and those to come, including interest rates, crypto (remember that asset?), employment, AI, GICs and so much more. 



    About Kyle Prevost


    About Kyle Prevost

    Kyle Prevost is a financial educator, author and speaker. He is also the creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course.

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    Kyle Prevost

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  • When Is The Right Time to Raise Institutional Capital For Your Business? Here’s What You Need to Know. | Entrepreneur

    When Is The Right Time to Raise Institutional Capital For Your Business? Here’s What You Need to Know. | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    As the founder of Viirtue, my entrepreneurial journey was a rollercoaster of decisions, risks and strategic turns. But one of the most critical turning points was knowing when to seek institutional capital for my business. This is a decision that can make or break a startup, and understanding the correct timing was paramount for us.

    My company was bootstrapped for many years, and we maintained profitability throughout. This was a significant advantage, especially when the economy took a downturn in 2022. It was a moment when investors started valuing profitability more than unicorn potential, which put us in a favorable position.

    But even then, the decision to raise institutional capital wasn’t taken lightly. It came after we saw rising traction and rapid growth. Larger groups had access to more capital and strategic advisory than we did, which fueled our motivation to seek institutional funding.

    We ran a long process, vetting investors just as much as they vetted us. In our eyes, this was not just about finding a partner for financial growth, but also about securing strategic guidance. We were not looking for a mere check; we were in search of a partner who could offer advice and mentorship based on experience and industry insight.

    The process wasn’t without its pitfalls. One of the primary lessons we learned was about the importance of hiring investment bankers that specialize in your industry. Initially, we made the mistake of hiring inexperienced bankers. This decision cost us time, money and a long tail period when we decided to move on from them. If there’s one thing I wish we did right from the start, it would be interviewing many bankers who specialized in our vertical and meticulously checking references.

    Related: Kevin O’Leary Explains Why Institutional Capital Must Have a Role in Sustainability

    Investment bankers are not just intermediaries who connect you with potential investors. They represent you at the negotiation table. Many founders can receive Letters of Intent (LOIs), but the real challenge lies in navigating deals that don’t retrade and negotiating with future stakeholders, especially when emotions run high. These are the moments when a seasoned investment banker can make all the difference.

    Ultimately, we decided to raise capital for a multitude of reasons. The business was growing exponentially, and we needed the development and sales funding to help us scale from a $20 to $30 million company to a company worth over $100 million. We had long-time minority investors who were looking to exit and needed liquidity. And most importantly, we were in search of strategic partners who could fuel our growth thoughtfully as well as financially. Raising capital was the silver bullet that enabled us to accomplish all of these goals in one fell swoop.

    Are you ready to take on institutional capital?

    Firstly, are you ready to commit to the robust reporting requirements of investors? Institutional investors will need regular and detailed reports on business performance, financials and strategic updates. This requires a significant time commitment and a level of transparency that some business owners may find uncomfortable. We had always operated Viirtue with candor and transparency. This made the transition so much more frictionless.

    Secondly, do you truly need the capital to reach a milestone, or are you just taking money? Money for the sake of money can lead to wasteful spending and a lack of focus. It’s crucial to have a clear understanding of what you need the capital for, such as reaching a particular business milestone or achieving a specific growth target.

    Thirdly, do you have a thoughtful growth plan of how you will deploy the capital? It’s not enough just to have money; you need a strategic plan for how that money will be used to grow your business. This includes identifying key areas for investment, understanding how these investments will drive growth and having a clear timeline for when you expect to see returns. Detailed financial modeling is an incredible asset for any founder. We never had a full-time finance leader, yet still were able to create detailed models with our CPAs and bankers. Additionally, when it comes time to pitch to investors, they will want to see these models coupled with market research and other evidence to support your assumptions.

    Finally, have you set the stage to significantly scale your team? Fundraising is a pivotal step, but it’s just a piece of the puzzle. The real task is putting the capital to good use, which often implies expanding your team. This demands not only a well-crafted recruitment strategy but also the capacity to house a growing workforce.

    At Viirtue, we have always held our people in the highest regard. Our human capital, which comprises industry experts and genuinely wonderful individuals, has been our greatest asset, our superpower. The team’s dedication and expertise have been instrumental in shaping my company’s identity and will continue to give us a competitive edge as we move forward.

    The unique culture we have cultivated at my company has been a magnet for new talent, making our scaling efforts more seamless than we could have ever anticipated. But, let me assure you, a strong culture doesn’t materialize overnight. It’s a product of time, open dialogues with your team, investing in their growth and success, and co-creating a vision that resonates with their sense of purpose.

    I have often emphasized the transformative power of finding purpose in work. When you can align a group of uniquely talented individuals towards a shared mission and imbue their roles with purpose, the result is nothing short of magical. A purpose-driven team is not just a group of employees; it’s a community of dedicated contributors who are invested in the company’s journey and its ultimate success.

    Related: 4 Passive Income Investment Strategies That’ll Free Your Time and Peace of Mind

    The quest for institutional capital is more than just a funding round. It’s a strategic move that can catapult a business to new heights if done correctly. But it’s crucial to remember that timing is everything. Raising capital should be considered when the business shows promising growth and needs an additional boost to reach its full potential. It should also be considered when partners are looking for an exit, and the company requires strategic guidance to navigate future growth.

    One more point to consider is the importance of maintaining profitability. It’s not just about creating an appealing proposition for investors. It’s about ensuring that your business can weather economic downturns and still come out on top.

    I hope you find success and the answers you are searching for in your entrepreneurial journey. Whether or not it is the right time to raise capital is ultimately up to you as a founder.

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    Daniel Rosenrauch

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  • 5 Entrepreneurial Mindset Principles That Empower Financial Literacy | Entrepreneur

    5 Entrepreneurial Mindset Principles That Empower Financial Literacy | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    An entrepreneurial mindset encourages individuals to view their personal finances as an opportunity for wealth creation and growth. This mindset emphasizes the importance of investing, whether in stocks, real estate, or other assets, to generate passive income and build wealth over time. That being said, developing your own foundational belief systems around your relationship with money is just as important as the financial vehicles themselves.

    One should remember that financial literacy is a journey, and it requires consistent effort, practice and application of these foundational principles to enhance your understanding and improve your financial wellbeing. When it comes to money, adopting certain mindset philosophies can help shape your relationship with wealth creation and guide your decision-making. Here are five imperative viewpoints to consider:

    1. View money as you would view a current

    While the term “currency” is derived from the Latin word “currere,” which means “to run” or “to flow,” the concept of money flowing like a current is metaphorical rather than a literal representation. The term “currency” primarily refers to a system of money that is used as a medium of exchange for goods and services.

    However, the metaphor of money flowing like a current can be used to describe the dynamic nature of money and its movement within an economy. Money circulates through various transactions, changing hands from one individual or entity to another. It flows through the economy, enabling economic activity and facilitating trade.

    Similar to a current in a river, money is constantly in motion, connecting different participants in the economy. It can be earned, spent, invested, and transferred, creating a continuous cycle of transactions and economic interactions.

    This metaphor highlights the importance of understanding and managing the flow of money. Just as currents in a river can be strong or weak, money can fluctuate in terms of its availability, value, and the speed at which it circulates. By being aware of this flow and managing their finances effectively, individuals and businesses can navigate the economic currents and make the most of their financial resources.

    Related: We Need a Real Commitment to Mental Health at Work. Here’s How (and Why).

    2- Don’t allow the limits of your past to have any bearing on your future

    Embracing an abundance mindset involves believing that there are plentiful opportunities for wealth and success. It is about focusing on possibilities rather than limitations. With this mindset, you approach money with a positive and optimistic outlook, recognizing that there is enough for everyone and that your financial situation can improve through hard work, smart choices and abundance mindset-based actions.

    Many emerging thought leaders have recently endorsed the ideology of “mindset monetization.” With these new, but logical shifts, countless case studies across the nation validate that financial empowerment begins with shifting your paradigm. And thus, by challenging the rigid, conservative “work, spend, save” 9-5 mindset and evolving from thinking like an entrepreneur rather than an employee, one can drastically uplevel their monetary milestones.

    3. Pivot — don’t pause

    The philosophy of financial independence centers around achieving freedom and control over your finances. It involves building a solid financial foundation that allows you to support yourself and pursue your desired lifestyle without being reliant on others. This mindset encourages you to take ownership of your financial situation, prioritize saving and investing, and develop multiple streams of income.

    Take the pandemic, for example; leaders who adopted remote skills, studied macroeconomics and understood what sectors were poised for growth not only weathered the pandemic but significantly improved their business and personal growth.

    4. Continuous learning to stay updated on the latest financial trends

    An entrepreneurial mindset prioritizes continuous learning and improvement. When it comes to financial literacy, this means actively seeking out resources, courses, and information to enhance your understanding of financial concepts, investment strategies and personal finance management. The post-Covid era has democratized online certifications from individual subject matter experts to academic institutions, so there is now a level playing field regardless of your geographical standpoint. Engaging in lifelong learning allows you to stay updated with the latest financial trends and adapt your financial strategies accordingly.

    The philosophy of delayed gratification, in tandem with a commitment to learning, involves prioritizing long-term goals over immediate satisfaction. It requires resisting impulsive spending and prioritizing saving and investing for future financial security and goals. By delaying gratification, you can make wiser financial choices, avoid unnecessary debt, and accumulate wealth over time.

    Related: The Financial Literacy Basics Entrepreneurs Need to Know

    5. Practice mindful spending and asset allocation

    Mindful spending involves being intentional and conscious about how you allocate your financial resources. It means aligning your spending with your values and priorities as well as the emerging, lucrative sectors that require attention. With this mindset, you take the time to evaluate your needs versus wants, track your expenses, and make deliberate decisions that reflect your financial goals. Mindful spending helps you avoid impulsive purchases, stay within your budget and make more conscious choices with your money.

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    Ben Sever

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  • The Definition of Value Is Changing — What Entrepreneurs Need to Know | Entrepreneur

    The Definition of Value Is Changing — What Entrepreneurs Need to Know | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Entrepreneurs have long worked hard to build their wealth and create dynasties by creating value in the marketplace and finding unique ways to solve problems. In recent years, however, the way entrepreneurs have been approaching this has shifted. Often, this involved allocating a percentage of their profits into savings accounts to act as a hedge for the well-being of their companies during a market downturn or a need for liquidity to meet payroll. Another method was to generate profits, raise your net worth, take a member draw and make your money work for you by putting it into real estate or stocks.

    However, the world is changing, and along with it, the idea of what is valuable is changing. Entrepreneurs need to understand this updated landscape to capitalize on these changes and continue building their multigenerational dynasties.

    Value has historically been defined by fiscal money, tangible assets (such as art, land and property) and other net worth-building components. However, the collective, modern mentality is changing what the term “value” means in today’s world.

    Related: The Key to Generating Maximum Value in Today’s Fast-Changing, Competitive Business Environment

    What people deem to be important today is shifting rapidly from what it was even 20 years ago. The laptop or digital nomad lifestyles are en vogue, and business owners have started investing earlier in other opportunities such as digital currency, other businesses and more flexible means of creating value.

    This is part of what has led to a shift in wealth distribution, with millennials and Gen Zers taking the lead for spending power, opening the interpretation of what is considered valuable. Younger generations value experience above products or things, and they use their assets to expand and enrich those life experiences.

    For example, if you offer someone in their twenties $100,000 in cash or $100,000 in travel experiences, most of them will choose the travel option.

    As an entrepreneur, it’s vital to know what is considered valuable so you know where to put your time, energy and resources — and what kind of company to start, invest in and be a part of in today’s world. Whereas before, an entrepreneur may have kept a large storehold of cash in a savings account to shore up the business, but with the recent bank collapses, entrepreneurs are now looking for other safe havens to ensure their value — and their company’s value — remains secure and available to them. This is the current state of how value is shifting and what you need to know.

    How values shift

    Value has been changing in the form of delivery since the beginning of time. We used to trade beads and rice, then we valued fiat currency, and now we’ve moved to blockchain and digital currencies.

    As technology continues to quicken the speed of human advancement, the actual things we use to symbolize value will likely keep changing. This is because the way that we value our time, energy and life experience is evolving beyond just survival.

    Old systems of earning value, investing value and accumulating value are breaking down, and that’s leading to a different meaning of what value can be.

    Instead of homes, cars and belongings, people are finding more value in freedom. Freedom of experience. Freedom of time. Freedom of expression. Freedom of opportunity.

    No longer are fiat currencies and tangible assets the go-to; in fact, studies show that the growing trend of other nations to establish alternate trade routes concerns entrepreneurs about the long-term value of the dollar. Entrepreneurs are looking outside the USA to international vehicles, currencies, and other categories to diversify so their wealth and businesses survive. They are looking for assets that retain their value and that they value personally, rather than putting fiat currency in a bank account or counting the number of computers and company equipment in their commercial real estate office as the only options to give the business value.

    The only tried and true methods are not enough; they want to diversify with other asset classes in holdings as a backup. This may include: collecting hard assets like valuable art, gems or collectibles. In a minimalist trending society that values time over everything else, assets need to be mobile so that it’s easier to access the experiences you want to have.

    Related: How to Build an Impressive Investment Portfolio

    How value is perceived

    Because of the pandemic, people are valuing their time as an asset more than previous generations. People are no longer waiting around and assuming that they have time to waste — this is why entrepreneurs are getting younger and starting businesses earlier in life, according to the Centre for Entrepreneurs. Because of the worldwide quarantines from the pandemic, people feel that they need to make the most out of their lives in every way possible. This awakening has led to a significant difference in what people consider valuable and how they want to run a company.

    How value is experienced

    If you want to shore up your business with a hedge against inflation or a market downturn, consider how to increase your portfolio of assets. How someone experiences their assets directly correlates with how they experience their life and the purposes they need them to serve.

    For example, some people love to collect art, hang it on their walls or proudly display it in their galleries. Other collectors have a vault of art that they haven’t entered in the past 20 years, where portraits that have been passed down for the past six generations are simply collecting dust.

    For the vault owner, the $30,000,000 in art they purchased with the business is not working for them. It may or may not be accumulating more wealth for them, they’re not admiring it, and it’s not being used in any meaningful way. So, the vault owner’s collection may not be considered valuable to them because it’s not enriching their life and there’s a cost associated with maintaining it. Not every investor holds the same value for the same assets. It’s a personal decision that goes beyond fiscal interest but also includes mental and emotional well-being considerations.

    However, for the collector who spends time admiring the brushstrokes of the Impressionist paintings in their gallery each week, that person may feel that their art collection expands their creativity and happiness — therefore bringing value to their life.

    Related: How to Use Alternative Assets as a Hedge Against Inflation

    Overall, things are different now

    There is a big difference between materialism and lived experience. Materialism for previous generations was the equivalent of wealth. Their net worth was tied to their belongings, and that was in alignment with their value system as people. However, lived experience is what today’s generations value above everything else. Assets are to be used to elevate life and delight the senses, which is why travel is so highly coveted. The key to assets being considered high-value today is, in part, tied to their ability to be easily mobilized to create more lived experiences, liquidate to convert, transfer or serve other immediate personal or business needs. Therefore, the more flexible and mobile your assets are, the more subjectively valuable they are.

    Because of the current housing market, stock market and other traditional investment opportunities, people are asking different questions about their valuable hard assets.

    Here are some questions to ask to choose the best asset for your diversification needs:

    • Will I still want this in three years?

    • Is this an asset that fits my current lifestyle or the lifestyle that I want?

    • Is this asset something that’s tradeable for something else?

    • How quickly can I divest this if I don’t want it anymore or need cash for a business or personal need?

    • Does this asset expand my time freedom, or does it rob me of the time that I have that I want to invest in other experiences?

    • Does this asset pull from other assets such as money, stocks, or other things?

    • Does this asset continue to accumulate value on its own accord?

    What each entrepreneur, investor or asset holder perceives as valuable will be unique to them. So, when purchasing or acquiring an asset, get clear on what that asset will do for you, how it will retain its value, whether it will cash flow or give you more time or location freedom, how quickly you can liquidate for cash to meet payroll or any other emergency business or personal needs and what its value is in your life. Adding hard tangible assets to your portfolio may ensure your personal net worth remains stable and your company remains secure in the months and years ahead.

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    Jarrett Preston

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  • What Are The Safest Investment Options for Earning a Good Return Over Time? | Entrepreneur

    What Are The Safest Investment Options for Earning a Good Return Over Time? | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    A safe investment typically refers to an option that is considered to have a low level of risk compared to other investment opportunities. While there is no completely risk-free investment, a safe investment aims to preserve capital and provide a stable return over time.

    Some of the common characteristics that define a safe investment are as follows.

    • Capital preservation: Safe investments prioritize protecting the initial investment amount. The risk of losing money is minimal or relatively low.
    • Low volatility: Safe investments tend to have relatively stable and predictable returns without significant fluctuations in value. They aim to avoid large and sudden price swings.
    • Liquidity: Safe investments often offer high liquidity, meaning they can be easily bought or sold without causing a significant impact on their value. This allows investors to access their funds quickly if needed.
    • Steady income: Safe investments frequently generate consistent money flow, such as interest payments, dividends or rental income. This income stream adds to the overall stability of the investment.
    • Government-backed or high credit quality: Safe investments may include government bonds or highly rated corporate bonds — which are considered to have low default risk. These investments are backed by the financial strength and stability of governments or reputable organizations.

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    Baruch Mann (Silvermann)

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  • How to Think Like an Investor When Preparing Your Pitch Deck | Entrepreneur

    How to Think Like an Investor When Preparing Your Pitch Deck | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Startups are no longer confined to their local markets for fundraising. In the last decade, global venture capital (VC) investment in the startup ecosystem surged from $347 billion in 2010 across 31,623 deals to $671 billion in 2021 across 38,644 deals.

    Startups are looking for more than just cold monetary transactions to fuel their growth and global exposure.

    Today, successful startup fundraising boils down to one single most important thing: the pitch deck. It’s still the golden ticket for startups to secure both local and global VC funding. However, there are strategic differences between these two.

    Related: Stop Giving Boring Presentations — Follow These 6 Presentations Hacks to Captivate Your Audience

    The differences between the investment strategies of local and global VC firms

    Local VC firms usually invest close to home, often within their own country. This is usually because they know their local market well, including its trends and regulatory nuances. Moreover, they often invest based on personal connections and grasp local culture and business habits well. This helps them pick and support startups that fit well in their region.

    Local VC firms typically invest in newer startups but in well-known markets. They’re also a bit more careful with their investments, building trust and checking everything before investing.

    As their name suggests, global VC firms invest all over the world. They’re open to investing in startups from different countries, giving them a wider view and spreading their risks. Usually, they have a mix of investments in different areas and industries. And they’re especially interested in new tech and business ideas that can change industries.

    They mostly invest in startups that have already shown some success and focus on newer markets. They’re willing to take more risks and generally quicker in making decisions. While they, too, check everything before investing, they are more likely to invest if they feel there is an excellent opportunity.

    So, it’s fair to say there are some basic differences in their investment perspectives. That’s why your pitch deck must be more than just a presentation for securing global VC funding and exposure.

    Let’s dig deeper into the stats.

    1. Techcrunch analyzed that VC investors are spending 24% less time evaluating pitch decks in 2022 than in 2021.
    2. According to Infobrandz’s recent research paper, global startup funding astonishingly crashed down from $42 billion in 2021 to $25 billion in 2022, 40.5% less than in 2021, as investors were looking for more risk-averse investment opportunities.
    3. A recent industry research report published by AstelVentures highlights that you have to capture investors’ attention in the first 30 seconds or first 2 to 3 slides of your pitch deck presentation else you risk losing them for the rest of the presentation.

    Factually, it’s getting tougher to win global investment, and your pitch deck can turn it around.

    Related: Here’s What’s Brewing in the Minds of Startup Investors

    Proven pitch deck trends

    Let’s now study the trends and understand the investors’ perspective here. After all, investors see hundreds, if not thousands, of pitch decks each year. So, finding what sets the successful ones apart is crucial so you can learn what investors look for and optimize your pitch deck accordingly.

    First, visual content plays an increasingly crucial role in a pitch deck. This is because it helps to simplify complex information, making it easier for investors to understand your business model, market opportunity, and growth strategy. A well-designed pitch deck can make a lasting impression, helping you stand out in a sea of startups. Investors also want to see that you’ve identified a significant problem and have a unique solution that is different and better than what’s currently available, as this directly affects your sales. Moreover, investors are looking for businesses that can scale over time. They want to see a large and growing market for your product or service to ensure long-term returns.

    Most importantly, they want to know how you will make money. This is a key question investors want answered to see a clear and viable business model that shows potential for high returns. But one key factor is as important as the numbers and aesthetics — a factor often missed in pitches. Yes, I’m talking about the human factor!

    Investors invest in people as much as they invest in their business ideas. They want to see a passionate, capable team with the skills and experience to execute the business plan. After all, it’s often the grit and determination of the team that makes all the difference when a business faces challenges in a volatile market.

    How to craft a pitch deck in 2023

    Now that we understand what investors are looking for, how do we craft a pitch deck that ticks all the boxes?

    Here are the essential elements of a Pitch Deck:

    1. Storytelling and design — A successful pitch deck tells a compelling story about your business idea and team. It uses visual content to engage the audience, create an emotional connection, and make the business idea come alive. The pitch deck’s design should be professional, clean, and on-brand.
    2. Data and validation — Investors want proof. Include data that validates your market opportunity, business model, and growth projections. This could be in the form of market research, customer testimonials, or key performance indicators that are presented aesthetically.
    3. Call to action — End your pitch deck with a catchy and convincing call to action. What do you want investors to do next? Whether scheduling a follow-up meeting or investing in your startup, make sure it’s clear and compelling.

    Understanding the investor’s perspective is key to crafting a successful pitch deck, as the future of global fundraising is likely to be even more interconnected and competitive. Further, startups that can adapt to the evolving funding landscape, leverage technology, and align to the multi-cultural nature of the business will be well-positioned to stand out in the international arena.

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    Vikas Agrawal

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