From the Editor: Off-Kilter

Q3 | September 2020

Laptop, notebook, Tablet and coffee on work desk

Topic: Investments

Dianne C. White, CPA, CA, CFP, TEP

September 30, 2020

Image used with permission: iStock/PRImageFactory


Print & Share

Print

From the Editor: Off-Kilter

Q3 | September 2020

Fall is usually my favourite season. It feels more like the start of a new year than does the start of a calendar year. I look forward to setting new resolutions and starting fresh. This fall, however, feels slightly off-kilter.

We enter the fall with a volatile stock market, ultra low interest rates, a red-hot housing and renovation market (just try and find a contractor), high unemployment and a rising tide of COVID-19 infections. Our neighbours to the south are preparing for what is sure to be a circus of an election. There is legitimate concern about the fragile state of the economy and there is still a lot more of 2020 to come!

These challenging times are driven by uncertainty. As you will learn from Alex Jemetz’s article in this issue of Nexus Notes, uncertainty manifests itself as volatility for investors, and uncertainty absolutely increases risk. The good news, however, is that time reduces risk. Alex goes on to say that in theory investors should be able to handle short-term volatility because they should be confident that equities will have positive returns over the long term. It turns out that uncertainty is the reason to build a portfolio that has both growth potential but also defensive characteristics. Uncertainty is the reason to focus on one’s strategic asset allocation and not try to time the markets.

Of course, I have been spending a lot of time thinking about the concerns and challenges that our clients face in this environment. One that is top of mind is the persistence of low interest rates. Clients’ desire to flee to safety in times like these can have real risks. Low returns on cash and bonds mean zero or negative real return after inflation and taxes. There will also be capital losses if interest rates rise. Cash and bonds may have little or no return right now, but that does not mean they do not have a place in an investor’s portfolio. The question becomes how much do you need?  Cash and bonds provide short-term liquidity and stability. Depending on your short-term needs from your portfolio, it might make sense to increase your equity allocation. At Nexus, we are well positioned to help clients work through what asset allocation makes the most sense for their circumstances and help them navigate these uncertain times.

A client’s portfolio is only one part of retirement planning.  Another is the different income sources available. Most working Canadians will be eligible to collect income from the Canada Pension Plan at some point in their lives. We are often asked “When should I start my CPP payments?” which just happens to be the title of an article by Brad Weber in this issue of Nexus Notes.

The final article featured in this issue focuses on one aspect of a raft of increasingly penetrating and personal questions that financial providers like Nexus must ask in the guise of “knowing our client”, but which in reality arise because of a legal or regulatory obligation. If you want to have a better understanding of the long arm of the IRS, then read Denys Calvin’s article about the foreign tax compliance requirements we face.

In closing, I would like to welcome Preethi Khatri Chetri to the Nexus team. Preehti joined us in September as our Pooled Fund Portfolio Administrator and we are thrilled to have her on board. While these are strange times to hire and train a new employee, Preethi is up for the challenge! You can read more about Preethi inside this issue. Happy Thanksgiving to all.

More Like This...

See another CRM2 blog post that may be of interest to you.

CRM2: The Nexus Approach to our CRM2 Reports

Topic:
CRM2
Excerpt:
With changing securities regulations coming into effect, investment firms are now required to provide individual investors with specific additional in

More Like This...

See another Foundations & Endowments blog post that may be of interest to you.

Charitable Giving Made Easier

Topic:
Foundations & Endowments
Excerpt:
Giving to charities and supporting our community are important to us at Nexus. We donate a portion of our management fees back to the charities and

More Like This...

See another Human Interest blog post that may be of interest to you.

The Case for Openness – An Open and Shut Case?

Topic:
Human Interest
Excerpt:
From time immemorial, mankind has been open. Open to new ideas, open to trade, and open to migration – the three critical ingredients for progress.

More Like This...

See another Inside Nexus blog post that may be of interest to you.

Here we Grow Again!

Topic:
Inside Nexus
Excerpt:
Recently, the Nexus team welcomed our seventh new face to join us since the start of the pandemic in 2020. As growth is an integral part of our

More Like This...

See another Investments blog post that may be of interest to you.

Lessons From the Art World and Beyond

Topic:
Investments
Excerpt:
“Exactitude is not truth.”

More Like This...

See another Pearls of Wisdom blog post that may be of interest to you.

“Work, Work, Work, Work, Work, Work”

Topic:
Pearls of Wisdom
Excerpt:
This has been a busy year. I’ve had lots happening on the home front (a wedding!) and lots going on at the office (too long to list!) Managing work

More Like This...

See another Tax Planning blog post that may be of interest to you.

Saving in my Professional Corporation – It’s a Great Idea!

Topic:
Tax Planning
Excerpt:
The ability for professionals in Canada to incorporate their practice has existed for some time. Doctors, dentists, lawyers, accountants, and other

More Like This...

See another Wealth Planning blog post that may be of interest to you.

Living to 100

Topic:
Wealth Planning, Living to 100
Excerpt:
“You’re going to live to 100!” For some, this may sound like a fantastic, welcome prognosis. They imagine gazing at sunsets every evening at the

On a Side Note…

See another CRM2 Nexus Notes Quarterly article that may be of interest to you.

No posts found.

On a Side Note…

See another Foundations & Endowments Nexus Notes Quarterly article that may be of interest to you.

Charitable Giving Made Easier

Topic:
Foundations & Endowments
Excerpt:
Giving to charities and supporting our community are important to us at Nexus. We donate a portion of our management fees back to the charities and

On a Side Note…

See another Human Interest Nexus Notes Quarterly article that may be of interest to you.

The Case for Openness – An Open and Shut Case?

Topic:
Human Interest
Excerpt:
From time immemorial, mankind has been open. Open to new ideas, open to trade, and open to migration – the three critical ingredients for progress.

On a Side Note…

See another Inside Nexus Nexus Notes Quarterly article that may be of interest to you.

Here we Grow Again!

Topic:
Inside Nexus
Excerpt:
Recently, the Nexus team welcomed our seventh new face to join us since the start of the pandemic in 2020. As growth is an integral part of our

On a Side Note…

See another Investments Nexus Notes Quarterly article that may be of interest to you.

The End of an Era – Inflation is Back!

Topic:
Investments
Excerpt:
Inflation talk is dominating the news. It is on the mind of the man in the street and investors alike – and not just in North America or the lands of

On a Side Note…

See another Pearls of Wisdom Nexus Notes Quarterly article that may be of interest to you.

A Table for None, Please; Working From Home on the Rise

Topic:
Pearls of Wisdom
Excerpt:
Reading is one of the principal occupations in our profession. As we digest a wide range of material, interesting ideas and surprising facts – some

On a Side Note…

See another Tax Planning Nexus Notes Quarterly article that may be of interest to you.

Saving in my Professional Corporation – It’s a Great Idea!

Topic:
Tax Planning
Excerpt:
The ability for professionals in Canada to incorporate their practice has existed for some time. Doctors, dentists, lawyers, accountants, and other

On a Side Note…

See another Wealth Planning Nexus Notes Quarterly article that may be of interest to you.

From The Editor: What’s My Age Again?

Topic:
Wealth Planning, Living to 100
Excerpt:
How old are you? It’s a simple question, one we readily know the answer to, although some of us might not want to talk about it. And why do we know