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How to Teach Kids Financial Literacy

How to Teach Kids Financial Literacy

Financial literacy is one of the most important skills a person can have. It is important to start acquiring financial literacy skills at a young age. There are a few simple steps parents can take to help steer their kids in the right direction.

1. Make a savings chart with rewards for hitting certain thresholds. This will keep them motivated and focused.
2. Play a game! There are many online games that teach kids about finance. Practical Money Skills has a long list of games and apps for people of all ages.
3. Create a matching goal. Once a certain goal has been reached, let’s say $100, you can match their goal by giving them $100 for their hard work.
4. Find a workshop in your neighbourhood. Money School Canada offers workshops for both parents and kids of all ages where financial literacy is taught using real life examples.

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Leveraging a Wealth Management Portfolio

Leveraging a Wealth Management Portfolio

Leverage is a scary word for many investors… and rightfully so. Depending on one’s unique financial goals, personal risk adversity and portfolio structure, applying the principle of leverage could be deemed a fool’s errand. However, it is important to understand that the intended purpose of using leverage is to improve portfolio performance overall – that is; increase returns, improve diversification and reduce risk.

Goals and Objectives
The first consideration is always towards financial goals. Leverage can typically help yield greater returns faster. However, the age old topic of risk versus reward needs to be carefully analyzed. As a general rule, aggressive return investments tend to be tied in with a fair degree of leverage. That is, the higher the risk quota of a particular investment or strategy, the greater the return.

Return on Investment
This is not to say that leverage, as a strategy, is a high risk endeavour. However, a high degree of discipline and control is needed when applying this investment approach. Meaningful diversification, aka: a balanced portfolio approach across the spectrum of assets, helps to stabilize leverage within a portfolio to achieve financial goals faster.

In short: Leverage should be used to spread risk, not just in the context of one particular investment or asset class, but in consideration of the total portfolio. This comes down to the time tested strategy of diversification. In doing so, one avoids designing a portfolio that looks like one big undiversified, leveraged bet.

A key discussion to have with your Advisor is: How is the manager of this portfolio using leverage?
Reach out to an Optimize Advisor today and let them asses your current situation and how this strategy could help your specific financial goals.

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Retirement Planning for Millennials

Retirement Planning for Millennials

Born between 1981 and 1996? You’re part of the ‘Millennial’ generation. This means you’re probably too young to start thinking about retirement – right? Think again.
You are never too young to start making prudent decisions about your money. Retirement planning needs to be viewed in the context of helping you achieve specific goals in your life, be that a dream vacation, your first home purchase or paying off student loan debt.
Financial planning is simply your list of short and long-term goals that are important to you, with a strategy of how you’re going to use your money and other assets to achieve those goals.
Because of the way compound interest works, the sooner you start saving for retirement, the less principal you’ll need to invest to end up with enough money to retire. Financial independence is another way to think about ‘retirement planning.’ Financial independence allows you to experience lifestyle freedom. The last thing you want to do when you reach the age of retirement is spend your time working just to survive.
Retirement planning is simply the act of saving and investing your money smartly with a credible plan backing your financial actions.

Budget. Save. Minimize Debt.
Budgeting will be your first tool in helping you achieve your financial goals, and yes, this includes saving for retirement. Key considerations in your budget include optimizing your financial and investment assets, minimizing your taxes, saving and minimizing debt.
Paying careful attention to your budget means thinking about all of these areas together in order to arrive at your personalized financial plan.

Investments
When you are young, you have time working in your favour. The more time you have to invest, the more risk you can (potentially) afford to take on. This means you have more opportunity to yield higher returns faster. You also have more time to structure your investments to best meet your lifestyle needs and goals. This is one of the main reasons that starting to think about retirement planning at a young age will benefit your overall lifestyle plan.
You work hard for your money, so invest it wisely and have it work hard for you, many years to come. You are never too young to meet with a Financial Advisor and determine how best to structure your pension plan, retirement savings, and other assets to achieve your specific goals.

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Economic Impacts of the 2015 Wage Increase

Economic Impacts of the 2015 Wage Increase

Ever since the Canadian government announced a wage increase in 5 provinces, there has been a debate over whether or not this will benefit the economy. We will take a look at 3 impacts of the wage increase in our economy.

Increase Consumer Spending
The Ontario government relies heavily on consumer spending for economic growth; therefore raising the minimum wage will in fact stimulate the economy. By increasing the minimum wage, the government is consequently increasing the demand that drives purchasing power and, in turn, economic growth. The recent wage increase on October 1st is closing the gap between those earning minimum wage and the poverty line. The more disposable income people have the more they will spend back into the economy, this is called the multiplier effect. Small increases in spending have a large (and positive) economic impact.

Increase Employee Productivity
Happier employees are proved to be more effective employees. By closing the bridge between those earning minimum wage and the poverty line, it will decrease employee stress and increase worker morale. This will increase job focus and provide employees more incentive to be innovative. Studies have proven that business who invest in their employees have higher productivity and profitability levels.

Will Increasing the Minimum Wage Kill Jobs?
Simply put – no. There is no correlation between the minimum wage and impact on employment whatsoever. The performance in our market is driven by demand. If people have more money in their pockets they will be about to afford to spend more, therefore pumping more money into our economy.

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