Mainstreet Blog

Liz Oliver | Financial Advisor | Mount Brydges

Whether you are buying your first home, refinancing or renewing an existing mortgage, sometimes deciding whether to go with a fixed or variable rate mortgage can be confusing. I’d like to share some information that may be helpful when deciding if a fixed rate mortgage is right for you.

First off, what does a fixed rate mortgage even mean?

A fixed rate mortgage is a home loan product that has the same/consistent interest rate for entire length/term of the mortgage. Even if the markets and rates fluctuate your rate will remain the same as the day the mortgage began.

Locking into a fixed rate mortgage offers you the homeowner/borrower stability against any sudden or potential interest rate increases within that locked in term. You can budget accordingly and know that your weekly, bi-weekly or monthly mortgage payment that you set-up at the start will remain the same unless you decide to increase your payment amount.

The most popular fixed rate mortgage tends to be a 5 year fixed term where you lock in to that rate for 5 years, however Mainstreet and most financial providers and banks, offer terms from 6months to 5-10 years in length/duration. Rates offered are different depending on the length of term you pick.

On the flip side, there are a few things to keep in mind about a fixed-rate mortgage.

-They generally have a slightly higher interest rate, making the qualifying criteria a little more difficult.

-In case of an interest rate decrease in the markets, you the borrower will not be able to take advantage of that new lower rate as the mortgage would be locked-in for a certain length of time depending upon the term chosen. Breaking that contract will incur penalties, an unwanted extra cost to the borrower.

Regardless of your preference, it is important to understand and know all the details and fine print of your mortgage. Our goal is to offer our members knowledge and support in their home financing needs.  Book a meeting with a Mainstreet advisor today to learn more.

James Lounsbury | Branch Manager | Goderich

Are you having difficulty keeping up with multiple monthly credit card or loan payments?

Do you have multiple credit card bills or loans to keep track of and pay on different dates?

Does it feel like you’ll never be able to pay off what you owe?

Credit card debt can be expensive to pay down as most cards have high interest rates (10%-20%+) on any balance owing. If you only make the minimum monthly payment on a regular basis you will be paying a large amount of money in borrowing/interest costs and could take a long time to pay off the amount owed. If you have a smaller balance your minimum payment might be as low as $10.00 per month however if your balance is higher your payment is most likely a percentage of the outstanding balance which is generally 3%. Most credit card statements will detail out the number of years it will take you to pay the amount off using just the minimum payment and depending on the amount owed that could be over 20 years and thousands of dollars you’ll pay just in interest on top of what you owe.

Something that can help better manage the debt is a consolidation loan. Simply put, if you combine all your credit card debts into one low-rate loan, you can save a lot of interest and only have to worry about one loan payment vs. paying multiple credit card bills each month.

To demonstrate why a consolidation loan may be the ‘right’ choice for you here are two scenarios to think about:

As you can see in the example above with the consolidation option, you save money overall in interest costs + would be paying $50.00 less each month! Mainstreet also offers additional insurance options you can add to loans that provide peace of mind by covering the debt of the loan if you suffer a death, critical illness, or a disability.

Here are a couple of very helpful calculators that can be used to demonstrate how you can benefit:

Mainstreet Credit Union – Loan Calculator (mainstreetcu.ca)
Credit Card Payment Calculator – Canada.ca (fcac-acfc.gc.ca)

Of course our staff can always help by working with you to review your borrowing – whether loans, credit cards, mortgage or more, to ensure you have the best financial plan and lowest rates possible to save you money. Book a meeting with a Mainstreet Financial Advisor to get started today.

Written by: Marina Kraft | Financial Advisor | Strathroy Branch

If you have been searching and searching and haven’t yet found your dream home, building one from the ground up might be the right solution for you.

A few things to consider if you are thinking of undertaking a home build:

• You’ll need to secure a special construction/builder’s mortgage. Note: There can be additional financing costs for this mortgage type.
• Do you currently own land, or will you have to purchase a property? Vacant land may require separate financing, or if you currently own a home, you may be able to secure a Home Equity Line of Credit (HELOC) to purchase the lot.
• Be sure to do your research. Ensure you will be able to obtain permission to build from the municipality and/or conservation authority. Also research zoning, environmental, the availability of utilities, high-speed internet, etc. Should something need to be addressed, the cost of these items can be significant and will need to be addressed in the build budget.
• Ensure you have a home builder/ general contractor you trust. This will ease much of the work around the build and managing the sub-trades. As well by Ontario law, a build contractor is required to provide a warranty (typically through Tarion). Be sure to carefully review what is covered under the policy. There is also the option if you have the background, expertise, and disposable time to manage the build yourself (“self-build”). Note that some financial institutions may charge higher fees for a “self-build”, as it poses more risk, and requires you to obtain an “all risk builder’s” insurance rider on your home insurance policy.

How does a construction mortgage work?

Funding for the build project will be advanced by the financial institution in stages, based on the completion of the build. There are generally two methods used to calculate how much is given in each stage:

• Progress Draw Mortgage: A home inspector will be sent to the property to review the progress of the build to ensure it is going to plan. The inspector completes a report for the financial lender, and if all the components of the stage are completed, they will advance funds. Should the inspector indicate the project is not progressing on plan, the financial lender may hold back some of the scheduled funds until the construction is back on track. Each time the inspector visits the project, a fee is charged (typically to the borrower). Typical stages are: Foundation (excavation, foundation, backfill & framing); Shell (windows, doors, exterior finishes, and roof); Drywall (includes plumbing, electrical, HVAC, duct system and insulation); Finishing (drywall, painting, finished flooring, electrical fixtures, finished plumbing and carpentry).
• Percent Completed Draw Mortgage: This method is a little more fluid. The inspector completes a report for the lender and indicates the percent of the project completed and that percentage will reflect how much of the total mortgage is funded to the borrower.

For both types, as part of the Construction Liens Act there is a required 10% holdback amount that is kept aside from each draw and accumulates to the end of the project. Once the build has been completed and you’ve received the official occupancy certificate from the local building inspector, there is a 60-day waiting period before the lender releases the accumulated holdbacks.

Separate to this, it is recommended that you have 10% or more of your home’s build cost set aside for unexpected and extra costs that can arise throughout the project.

Building a new home and acquiring a builder’s mortgage may not be for everyone; however, a well thought out and thorough financial and build plan will help to ensure a smoother path to creating your dream home.

Mainstreet and our advisors are here to help you build your dream home and apply for a builder’s mortgage/financing. Book a meeting online or call your nearest branch location.

Written by: Abby Randall | Financial Advisor | Brigden Branch

Are you thinking about doing some home improvements, going on vacation, or even putting in that dream swimming pool but unsure how to fund these improvements?

Have you thought of using the equity in your home to borrow at a low cost?

Let’s explore how this can work with a Home Equity Line of Credit (HELOC).

What is a HELOC?

A HELOC is an affordable and flexible way to borrow money using the equity and value you’ve built through owning a home and paying your mortgage.

With a HELOC, like a credit card, you are given a maximum amount you can spend from. You draw from that amount based on how much you need to use at a time. Funds are always ready to use.

A HELOC is typically a more affordable way to borrow funds because it is secured by you owning a home.

Instead of using a credit card, or other high interest rate borrowing product, the HELOC can be added to your Mainstreet account and be ready to use when the need arises for renovations, education costs, pay off more expensive debt, buy a new car, or other life goals.

How do I repay a HELOC?

You can pay as much as you want when you want, and the best part is there are no penalties! As you pay back the amount borrowed, this amount becomes available again for future use if they are needed.

What makes a Home Equity Line of Credit different from a Line of Credit?

A home equity line of credit is secured by your home which makes it less risky for the lender and they can in turn offer a lower interest rate to you.

What if I already have a mortgage, loan or line of credit?

You might already have your mortgage or other borrowing with Mainstreet or another provider and wonder can you apply for a HELOC? The answer is yes you can. When you meet with a Mainstreet Financial Advisor they will outline all the steps involved in applying for and adding a HELOC to your account.

I’ve paid off what I’ve borrowed in my HELOC. Now what?

If you’ve paid back in full what you borrowed from your HELOC – you can either close the product completely or leave it open in case a future borrowing need comes up which means you won’t have to apply for a HELOC or loan again in the future.

The best part is there is no interest being charged or payments that need to be made if you aren’t using the funds in your HELOC and maintain a zero balance.

Call your advisor or book a meeting online today to make an appointment to see how Mainstreet HELOC may help you in achieving your home improvement and other life goals!

Written by: Aimee June | Assistant Branch Manager | Chatham Branch

Unless you have been hibernating all winter long, you’ve likely seen how hectic the real estate market has been already! The additional stress this is putting on home buyers has increased substantially but it is a particularly difficult situation for first time home buyers.

Competitive multiple offers (often with no conditions attached), restricted showings, rising prices, lack of inventory and COVID-19 restrictions have all made buying a home even more challenging. So, what is one thing you can do to make things easier and a little less stressful?

Get a pre-approval from your financial institution before you start house hunting.

Having a pre-approval in place does several things for a home buyer, especially a first-time home buyer:

1. It shows that you are a serious buyer

In this extremely competitive environment, having a pre-approval shows realtors and sellers that you are a serious buyer. Sellers are often reviewing multiple offers. While you may require an appraisal, or approval from Canada Mortgage and Housing Corporation (if you do not have 20% down), if you can show that you have a pre-approval in place for the mortgage from your Financial Institution the seller will likely be more apt to accept an offer they know is likely to stand. In today’s market, realtors prefer buyers to come to the market knowing they are pre-approved.

2. Eliminates possible disappointment

Getting pre-approved can eliminate possible disappointment. You don’t want to start house hunting, fall in love with a home, make an offer, only to find out you have been declined for the mortgage. Getting pre-approved will also correct any potential credit problems that may be hiding. First time home buyers often are not in-tune with their credit scores. They perhaps have not yet built a credit score or have a surprise late payment or collection item on their credit report they were not aware of. Starting the pre-approval process ahead of time will give you a chance to correct this before the house hunting gets serious.

3. See the true costs of buying a home

A pre-approval will help you to understand all the true costs of buying a home and home ownership before you make the commitment. It is great if you have a down-payment saved, but what about closing costs? Utility set-ups? Moving costs? Repairs that may need to be done? A financial advisor will be able to help you work through all these numbers and ensure that you have enough set aside for additional, sometimes unexpected, costs.

4. Plan your home payment

This is a great opportunity to discuss your budget and decide what type of mortgage payment is affordable for you when you consider additional monthly bills like property taxes, utility bills, and maintenance, with your financial advisor.

5. A pre-approval will guide you to your optimal purchase price.

The last thing you want is to be house poor. Buying a home, especially if you are a first-time home buyer can be complicated, especially in today’s market. Buying a home should be an exciting and joyous time in your life. Sitting down with a qualified financial advisor to review your personal situation and becoming pre-approved will help take some of the stress out of your buying journey.

If you are thinking of buying a home, connect with a Mainstreet Financial Advisor to start the conversation, you will be glad you did. Book a meeting today.

Written by: Doreen Welsh | Commercial and Agricultural Account Manager | Goderich Branch

COVID-19, and the onset of the pandemic, brought fear and panic to many.

Job layoffs, business interruptions, and closures, along with the hesitancy to leave your house for fear of contracting the virus, forced us into unknown territory and left many wondering how to cope in this changing world, and how to continue to meet financial obligations.

At Mainstreet, we are very committed to assisting our members through difficult times, and we continue to work with each member to manage the effects of this pandemic.

Life happens, and we understand there may be times when it is necessary to take a break from a regular financial obligation, such as your mortgage.

Before making the difficult decision to skip your mortgage payment, we recommend that you take a few minutes to discuss with your Mainstreet advisor, the various options that best meet your needs, now, and for the future.

Together with your advisor, you can weigh in on the short, and long term effects of skipping payments, things like:

• how much more interest will I need to pay
• what happens to the missed principal portion -when payments resume, depending on the amount, rate, and amortization of the mortgage, it can take 4-5 months to catch up just the interest portion of the payment
• if I need to add missed principle to the mortgage at maturity, how much time does this add to my mortgage
• how can I catch up to reduce costs over the long term

If you need help to determine what is right for you, we encourage you to reach out to your Mainstreet advisor to help you make an informed decision.  Book a meeting with an advisor today.

Written by: Shawn Gethke | Investment Advisor | Credential Asset Management Inc. | Goderich

Investing in the markets isn’t always the right fit for everyone when it comes to deciding how you will save and grow your money over your lifetime.

It’s important to do investment and financial planning with a trusted and qualified advisor. During your planning they will focus on ensuring you have the right product mix and diversification based on your financial goals, risk tolerance, and the amount of time you have to be invested. In the end you should have an investment plan and strategy unique to you.

When deciding whether to invest in the markets, it’s important to consider that the markets can fluctuate up and down. Your advisor will work with you to identify if there is enough time to leave the funds invested in the markets before you need to begin drawing on those savings. With time on your side, if the market takes a hit and investment values dip down, you won’t need to draw on those investments and can leave them there until the markets have recovered to the original amount you invested at or higher.

It is important to remember that a decline in market value is a temporary state, you haven’t “lost money” unless you sell your investments at a lower price than what you bought them for. If our market history has taught us anything, it’s that over time markets have always recovered.

For those with less time to save before needing the funds, or wanting savings with less potential associated risk, term deposits (including index-linked term deposits), and high-interest savings accounts are often a better fit as they guarantee a set interest rate and you won’t lose the amount you invested. These types of investments, although a lower risk, tend to offer lower growth potential because of lower interest rates, when compared to market-based investments.

For investments that are intended for the long-term, market-based funds provide a greater opportunity for growth. With time on your side, you can withstand market fluctuations. Taking more risk in the early stages of life and your investment journey, then slowly lowering risk as you approach the date of your retirement, or when you will want to begin drawing on your savings, is a wonderful strategy for investing. Also consider a drip approach for your contributions, which is the act of making regular and frequent, even if small amounts, of contributions to your investments. This ensures you are investing throughout market fluctuations, which will help to average out the risk and price you are buying into the markets.

Investment market fluctuations are inevitable and a normal part of the market cycle. The value of having an advisor you trust, whether at Mainstreet or another provider, is they can help you make strategic decisions for your investment plan, encourage you to stay the course during market dips and not sell low, help you navigate the market overall, and update your investment and financial plan as your goals, age, and risk tolerance changes.

You’re not alone in your investing endeavours, we’re here to help.  Book a meeting with an advisor today.

Shawn Gethke | Investment Advisor | Credential Asset Management Inc. | Goderich
Book a meeting with Shawn Gethke today.

Mutual funds are offered through Qtrade Asset Management (a tradename of Credential Asset Management Inc). Mutual funds and other securities are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc.

This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.

Written by: Marc Pranger | Investment Advisor | Credential Asset Management Inc. | Sarnia Region – Exmouth St.

Investing when you are young is hard to get excited about. Experiencing the ‘lightning-fast loading with ultra-high-speed SSD, adaptive triggers and 3D audio’ with the new PS5 gaming console could arguably provide more satisfaction than putting money away for retirement – a possible 30+ years down the road.

The sooner you make it a priority to invest for retirement, the better. When time is on your side, it’s a huge ally. The earlier you start, the more you benefit from the power of compounding, which is when the returns that you earn begin to pay off. RSPs allow for unhindered growth because investment earnings are not taxed as long as the funds remain in the account.

Here are some important factors to consider when it comes to saving for retirement:

Compounding Returns

Have you ever built a snowman?

Compounding returns on your investment work in the same way as building a snowman – the longer you compound your interest or reinvest dividend payments (or roll your snowball through the snow) the larger your initial investment (or snowball) will get.

The longer the length of time your investment is compounded, or the earlier you start investing, the greater your snowball/wealth may be when you reach your goal.

Increased Risk Tolerance

As a young investor, you tend to have time on your side – especially if you are building your wealth to save for retirement. If the value of your investments goes down, you generally have enough time to recoup your losses. This also allows you to invest more aggressively into new, more speculative opportunities and offers the potential for larger returns by taking on larger risks.

The value of experience

Having exposure to market volatility and experiencing how your advisor works for you to protect your capital is invaluable but not gained overnight. Learning early to trust your advisor can make a significant difference in your journey to build wealth. Investors can sometimes get caught in misinformation or find themselves trying to time the market. Having the right relationship with a trusted advisor will instead point you in the right direction.

In times of uncertainty, it can be tempting to sell your investment and hide it under your pillow. An advisor can put things into perspective and could show you this chart – it shows the growth of investing $10,000.00 in January 1990 to December 2019 and the difference missing some of the best days in the market. These days often occur after a period of market concern.

Better financial habits

Creating the mindset of savings first, spending later is not as easy as it may seem – it can take years before it becomes natural. Starting young and designating a portion of your income into a savings or investment account keeps the money “out of sight and out of mind” and the sooner you get into the habit of saving before spending, the more time you have to reach your goals and build your wealth.

After reading this blog, it is my hope for you that when it comes to your investment journey, you remember the reasons to start as soon as you can. Book a meeting with a Mainstreet advisor today.

Marc Pranger | Investment Advisor | Credential Asset Management Inc. | Sarnia Region – Exmouth St.

Book a Meeting Today

® Qtrade is a registered trademark of Aviso Wealth Inc. Online brokerage services are offered through Qtrade Investor, a division of Credential Qtrade Securities Inc., a wholly owned subsidiary of Aviso Wealth Inc.

Mutual funds are offered through Qtrade Asset Management (a tradename of Credential Asset Management Inc). Mutual funds and other securities are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc.

This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.

Written by Doug Price (Wealth Management Manager, Mainstreet CU, Senior Wealth Advisor, Credential Securities)

In 1982 Wayne Gretzky scored 92 goals in a single season. This single-season NHL goal-scoring record remains intact after 38 years. Impressive. My parents told me to pay attention. “This will never happen again”. So far they have been correct.

The S & P 500 Index set an all-time closing high February 19, 2020, with a closing value of 3386 points. Today , August 18, 2020, this all-time high was breached and the S & P 500 Index closed at 3389 points. The previous record lasted 181 days or 49.58% of one year. This means the S & P 500 Index has regained all of the losses from the low points in March. It also means the S & P 500 has recovered from every pullback, correction or bear market in its 90 plus year history. To this point, there has been nothing that has been able to stop this measurement of wealth from achieving new highs.

Here is an interesting tidbit. Gretzky scored his 92nd goal of the season on March 28, 1982. The S & P 500 index closed on March 26, 1982(a Friday) at 111.94 points. The average annual return on investment in the S & P 500 Index over this 38 year period has been approximately 9.40%. If dividends were reinvested the total return works out closer to an annual average of 12%. During these 38 years, the S & P 500 set more than one hundred new closing highs. All have been surpassed. All an investor had to do was invest and wait.

Even more interesting, the S & P 500 set a yearly high of 31.86 in 1929, the year of the most famous stock market correction in history. This tells us someone with the worst market timing in history still managed to increase investment more than 100 fold, excluding dividends, just by sitting and doing nothing. If dividends are included the total return is greater than a 200 fold increase in value. Important to know the many investment options available to us today were not available in 1929 so these numbers are theoretical in nature. They do illustrate the best time to invest for the long term is when you have the money available and free to be committed for an appropriate amount of time.

So what do a hockey goal scoring record and the S & P 500 Index have to do with each other? Nothing. Absolutely nothing. The only possible commonality is the fact 2020 has provided us the chance to see the Stanley Cup playoffs begin in August and the market index achieves another new high watermark in the same month. I feel it is fair to say this is a spurious correlation.

Other than the above, the only thing I can think of is the old cliche about records being made to be broken.

I wonder which record will last longer, the S & P 500 record closing high of 3,389 or Wayne’s goal total of 92?

Disclaimer: Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. The information contained in this email was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete.

Written by: Marc Pranger (Mainstreet Advisor, Sarnia Region – London Rd.)

A lot of my friends and I are new homeowners and we often find ourselves talking about home-ownership and our mortgage rate. So many are concerned about who has the best rate and might not give other important features of the mortgage enough attention. I’ll outline a few.

Pre-payments or Increase per Payment

Make sure when shopping for a mortgage you ask your bank, credit union, or mortgage specialist about the pre-payment privileges that come with your mortgage and rate. You can save thousands of dollars and shave years off your mortgage by taking advantage of pre-payment options (learn more by reading our blog on the power of pre-payments here). Some low-rate mortgages may not offer pre-payment privileges or the ability to increase your regularly scheduled payments. If you have the funds available, or maybe get a raise at work, it will be reassuring to know if you can pay more towards your mortgage and what the prepayment penalties (if any) will be. Paying more towards your mortgage will have you mortgage-free sooner meaning you pay less interest on the loan and keep more in your bank account.

Flexibility

Need to move, upgrade, or another unexpected life event comes up? Ensure your mortgage has flexibility! Can you blend your mortgage, can you move your mortgage to another home, what options are available? Life changes, make sure your mortgage can adapt with you.

Expertise 

It is important to have trust in your mortgage specialist– this is likely one of the biggest purchases in your life. This trust will come from the comfort of knowing your advisor has experience with mortgages and your best interests in mind.

Banking Perks

At some financial institutions, the more business you have with them translates to discounts or free services. See how else you can save by having your mortgage with this provider. At Mainstreet Credit Union, for example, if you have a mortgage or any total combined business with Mainstreet of $100,000.00 or more, you have a choice from several free chequing accounts and higher interest rates available on some of our savings products as well.

Community 

Does where you bank and have your mortgage improve and invest back in your community? Knowing that your bank supports local programs, teams, events, and services can make a big difference.  Challenge your mortgage specialist to see if they can show and teach you where the interest you pay goes and if it benefits where you live, work, and play.

If you want to hear more about other important mortgage tips and tools,  reach out to any of our Mainstreet financial advisors who are here to help you.

Marc Pranger
Mainstreet Advisor
Sarnia Region – London Rd.

Before working at Mainstreet, Marc studied Business Finance at Fanshawe College in London where he focused on the areas of retirement planning, estate planning, accounting, personal and business taxation, investments offered in Canada, and many other financial topics useful to his role today. Marc has gained experience across a variety of personal and business financial services, from lending, mutual-fund advice, account processing, and more. Outside of the office Marc enjoys being surrounded by friends and family, cycling around our beautiful province, singing with his church band, and spending time on his family’s farm.

Book a meeting with Marc

Written by: Doug Price- Investment Services Manager

2020 certainly has turned out to be a surprise for many investors.  In February, many equity markets achieved all-time highs.  In March COVID-19 changed many people’s perspectives and equity markets became strained under heavy selling and asset liquidations. Many people were selling whatever they owned in an effort to raise cash.  Uncertainty reigned and this feeling was reflected in market activity.  

In April, just as quickly, outlooks and attitudes around investing began to change.  Major indexes rallied approximately 30%, restoring much of the value lost the previous month. In fact, the Nasdaq Index is close to even for the year and approximately 6% away from the all-time high set in February.

It makes sense if this seems like a bit of a rollercoaster ride.  Volatility has been present creating an unsettling feeling for many investors.  This cycle has been repeated many times in the past.

How is someone supposed to process these events and ensure they remain in a position to prosper in the future?
Do an inventory of personal assets.  Make sure an adequate emergency fund or Line of Credit is available to deal with short-term unexpected events.  This helps many people sleep at night knowing they can cover immediate expenses.  It takes the stress away from worrying about the short term performance of investments targeted at long term goals.

Review any outstanding debts.  Today’s low interest rates have created an opportunity to restructure high-interest debts, freeing up cash flow.

Have a well-developed plan in place outlining goals and ensuring the money set aside for each of these goals is invested appropriately.  Some goals will take place this year, some will take place in 3 years and some will occur 10 or more years in the future.  The funds for each one of these goals needs to be invested in different solutions to ensure you are balancing the right amount of risk with the right amount of opportunity for growth.

Invest. It is always a good time to invest.  The question is always: what is the right investment solution?  Savings accounts, term deposits, mutual funds, and others, can all be the right solution depending on the goal.

Invest in quality solutions.  There are ways to determine if an investment is of quality and stands up to scrutiny against peers.  Not all investments are structured the same and not all investments perform the same.  Some will take a very conservative approach, others will use more aggressive approaches.  The best intentions in the world won’t matter if the underlying investment is poorly managed.  

Invest regularly.  Using a predetermined schedule helps many people avoid trying to pick the perfect time to invest funds.  Picking the single best day or moment to invest has proven to be virtually impossible for investors.  Investing regular amounts on a regular schedule takes the guesswork out of this process

Keep perspective.  The wealth created in today’s world is all a reflection of human ingenuity.  This process of innovation and wealth creation will continue.  There have been stops along the way and periods of tremendous growth.  This process will continue.  Right now we are all in the middle of one of those stops. 

As this message is written countries around the world are beginning to re-open economies.  Our own economy is also beginning to re-open.  It is always most difficult to believe in prosperity and economic recovery in uncertain times.  One thing we have seen throughout history is better days do lie ahead.  It is like traveling through a valley.  Sometimes you cannot see the other side of the valley but it is there. 

We cannot know what the future will bring; however, I do suspect the attributes which have stood the test of time will continue to provide comfort and guidance.  Have a plan in place, invest regularly in quality assets, diversify properly and appropriately, maintain a long term view and control emotionally driven responses. If you need help with any of those items an Investment Advisor is a fantastic resource to guide you throughout your financial and investment journey.

Disclaimer:

Mutual funds are offered through Credential Asset Management Inc. Online brokerage services are offered through Qtrade Investor. Mutual funds and other securities are offered through Credential Securities. Qtrade Investor and Credential Securities are divisions of Credential Qtrade Securities Inc. Credential Securities and Qtrade are registered marks owned by Aviso Wealth Inc.

If you want to own your home sooner, become mortgage-free, and pay less money in the long run on your home – do we have exciting news for you!

Did you know when you make your mortgage payments a portion of that amount goes to paying the original mortgage amount owed (often referred to as the principal), while the other portion goes to paying off the interest cost on the money you have borrowed, to the bank or credit union you have your mortgage with? Typically as time goes on, a higher portion of each mortgage payment goes towards paying off the mortgage principal vs. the interest, but you can make this happen sooner.

It’s actually really easy and doesn’t require a ton of extra cash lying around to do (phew!- sigh of relief). The trick lies in a few simple strategies:

Change your mortgage payment schedule
Super simple and it is a no-cost way to shave years off your mortgage and save you money. If you are paying your mortgage right now monthly or bi-weekly, switch to accelerated weekly if you can. Accelerated payments are calculated by taking the monthly payment and dividing this by 4 weeks allowing you to pay 4 extra payments per year (after all is said and done, you’ll be able to pay down the principal of your mortgage quicker).

Shorten your amortization period
Instead of automatically picking a 25 year amortization period (the most standard option) choose to pay the mortgage down in fewer years when you are setting up your mortgage and payment schedule. With this option, payments will be higher than it would be with the standard amortization schedule but you will be paying less for your home in the long-run and pay it down more quickly.

Increase the amount you pay, even if it is just a small amount
You can do this by rounding-up your scheduled payments to the nearest whole number (rounding $750 to $800 or $850 to $1,000).  This option can have minimal impact on your household budget and pay off your mortgage faster.

Take advantage of pre-payments
Any time you have extra money available consider skipping that dinner out or new clothing item and putting it towards your mortgage. Many mortgage providers offer the option of doubling up your regular mortgage payment amount or paying 10-20% of your original mortgage amount borrowed back, either throughout the year or in one lump-sum amount on your mortgage anniversary. See what your provider offers. This option can really speed-up the amount of money going to paying off your principal and can get you mortgage-free years earlier. Interested to see how the power of pre-payments can work for your situation? Speak to your advisor or try out our pre-payment calculator.

Keep paying the same mortgage payment amount when you renew your mortgage
Do you qualify for a smaller mortgage payment then you had before when your mortgage term comes up for renewal? Keep your foot on the gas and instead, continue to pay the same amount as before and you’ll pay off your mortgage that much sooner.

Use income from your property to pay down your mortgage
Consider leasing a portion of your property, like a basement suite, and putting this income to work on paying down your mortgage sooner.

Another benefit of paying off your mortgage quicker is that you will be able to use the equity in your home (how much of your home you fully- own) to get a home equity line of credit (HELOC) which can allow you to borrow funds as you need them for home projects quite often at a lower interest rate than other personal loan/borrowing options.

If saving money and owning your home sooner is something you want to explore for yourself, reach out to your Mainstreet advisor so we can see how these tips may best apply to your own financial situation.

Visit our mortgage calculators to see which option works best for you.
Book an appointment with a financial advisor or mortgage specialist.

“The four most dangerous words in investing are: “This time it’s different”.”- Sir John Templeton

Whether it was SARS, the housing crisis of 2008, or other world events that came before, we probably caught ourselves thinking “this time is different”– this time housing prices, the markets, whatever it may be, will plunge and not recover. Yet if history has taught us one thing it would be you would have been wrong, markets have done one thing over time- go up. So why is it every time there is a bump in the road we feel like “this time is different”?

The latest bump in the road is the impact on the investment market as a result of the fear surrounding Covid 19 (Coronavirus). The global threat of the virus spreading and how that will affect our economy continues to impact the investment market. It’s important that we look at the market changes in context, which is that over the past 10 years the S&P 500 index has more than doubled in value. Less than 2 weeks ago it was at an all-time high. This all-time high was achieved despite wars, recessions, global panics, political scandals, and any number of troubling events stretching back over dozens of years. The index has rebounded from every other event which occurred during the 20^th century and there is no reason to believe this time is any different. Sometimes it rebounds quickly, sometimes it takes a bit longer. The important thing to keep in mind is that recovery has always occurred.

The media has painted the situation with one brush, that the stock market has plummeted. A balanced, diversified and reasonable portfolio gets ignored in the hype. It is all about risk and reward- if you are heavily invested in equities you will have seen a bigger decline but during good times you likely experienced higher returns. Alternatively, a more diversified portfolio would have experienced a smaller decline with slightly lower returns when markets are performing.

When markets decline, whether it is 1% or 12% or more, even the most seasoned and intelligent investors can succumb to fear and panic. Panic selling leads to locking in losses, possibly never reinvesting, or making even riskier choices to try to make up lost ground. Market conditions come and go.  This is repeated time and again. There is never a sign held up indicating “troubling times are about to begin”; likewise there is never a sign held up indicating “all clear” however history has shown that no global health crisis has had an enduring impact on the market’s growth.

Your best bet is to invest on a regular basis in a thoughtful manner balancing stability, risk, and opportunity. Invest in a manner that respects your own tolerance for volatility. Sleep soundly at night by sticking with your plan and taking comfort in decades of positive market history.

If you are about to hit “sell” and jump out, call your advisor, it is times like this that their advice can help you from locking in losses and give you the confidence through the turbulent times so you can be there to reap the rewards when markets recover and once again grow.

Disclaimer:

Mutual funds are offered through Credential Asset Management Inc. Online brokerage services are offered through Qtrade Investor. Mutual funds and other securities are offered through Credential Securities. Qtrade Investor and Credential Securities are divisions of Credential Qtrade Securities Inc. Credential Securities and Qtrade are registered marks owned by Aviso Wealth Inc.

Written by: Jennifer McQueen (Investment Advisor – CFP, RRC)

You’re 28 years old. You’ve been applying to be a contestant on Survivor for 10 years now. You’ve watched the show since you were a kid waiting for your chance to compete. You haven’t given up, and you FINALLY get chosen. You quit your job, pack a small bag of clothes and leave your whole life behind to reach the goal of being the ultimate survivor and winning the $1-million cash prize. You get to the island and it is completely different than you thought. You are sleeping on a rickety bamboo platform, it has been raining constantly for 3 days and you’ve barely eaten because you can’t keep a fire going long enough to cook the small amount of rice each person has been given. How are you going to get to day 39? You think about giving up and going home but if you give up, you won’t reach your goal.

Now, picture yourself today. You’ve just entered the workforce in the career of your dreams. Instead of spending 39 days on an island, you are now planning to work for 25 – 30 years with the ultimate goal of enjoying retirement. How will you get there? What do you do? What does an enjoyable retirement look like for you? The first step is finding a Financial Planner that you trust to lead you through the process.

Financial planning is a circle, not a straight line. There is no end. Constant review and re-evaluation is key to achieving success. Setting new goals and adapting existing ones to meet your current situation is paramount to reaching the top.

Investing in mutual funds can be an up and down ride. Economic cycles change at the drop of a hat without notice. And after seeing your portfolio drop 20% in 3 months you may be thinking it’s time to call it quits. But if you give up, you won’t reach your goal and could miss out on some of the best returns trying to time the markets. For example: If you had invested $10,000 on August 1, 2002, and during the market decline of 2008/2009 you chose to change your investment to something more conservative until the volatility evened out – if you missed only the best 10 days in the Canadian market from then until December 31, 2018, you would have missed out on over $15,000 in growth – and being that much closer to your goal.

Your advisor is there to help you. They are here to give you advice and to show you how you will still be able to reach your goal within your time frame – even if it means having to change the path.

The average CPP in 2019 is $683.65 per month starting at age 65*. Relying on only programs like this may not afford you the kind of retirement you’ve always dreamed of. If you don’t have an advisor helping you understand what the future may look like, and showing you the way to get there, you could miss out on something great. And if you leave the island before the final immunity challenge, or stop applying to be on your favourite show, you won’t reach your goal.

Whatever your income level, whatever your job, whatever your age, whatever your financial status…always have a goal and a way to reach it. Financial planning is for everyone, not just the rich and famous, not just the doctors and lawyers of the world, everyone can benefit from having a plan and an advisor to help them reach those goals.

*Source – https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/amount.html

Disclaimer:

Mutual funds and related financial planning services are offered through Credential Asset Management Inc.

Jennifer McQueen
Investment Advisor – CFP, RRC
Credential Asset Management Inc.
Chatham Region & Mount Brydges

Jennifer has been working in the investment industry since 2004. After graduating with an Honours BBA degree from Wilfrid Laurier University, Jennifer continued her education by obtaining FPSC’s Certified Financial Planner® and Registered Retirement Consultant® designations. Jennifer believes in building a holistic financial plan by reviewing a member’s full financials whether they are planning for, or already in, their retirement years. Outside of the office, Jennifer enjoys spending time with her family and friends, traveling, cooking, and watching sports.

Book a meeting with Jennifer