Financial Nuggets – February 22, 2017

Critical Insurance Tips For Women!

The alarm goes off — ugh, time to get up and go to work. As you give your pillow a final fond squeeze, you think how sweet it would be to stay in bed and not go to work. But have you ever stopped to imagine what would happen if you suddenly couldn’t work? You have life insurance to protect your family in case you get sick and die, but what if you get sick — and live? The costs of treatment, care and inability to work can ravage a family’s finances, yet according to a recent poll conducted by TD Insurance, 65% of Canadian parents don’t have critical illness insurance. Let’s look at 7 famous women who survived life-threatening breast cancer and see what you can do to protect yourself and your family.

1) Be on guard
Vigilance is the price of freedom, as the saying goes. According to Dave Minor, Vice President of TD Insurance, “The best time to buy critical illness is now, when you are healthy, as you never know when you might get sick.” Statistics show that about one in two Canadians will develop cancer in their lifetime and 1.6 million Canadians currently have heart disease or have had a stroke. Olivia Newton-John discovered breast cancer in 1992 through a self-exam and now actively encourages women to be proactive about their breast health.

2) Fill the gap
Critical illness insurance is designed to fill the financial gap if you must take time off work to take care of your health. Policies usually pay out after 30 days of being diagnosed and may have a 90 day waiting period from when you sign-up. Most policies pay a lump sum benefit and you can use this money however you need it: for mortgage payments, household bills or specialized treatments and healthcare. Sheryl Crow put her career on hold after being diagnosed with breast cancer in 2006 after a routine mammogram.

3) Focus your energy
Beverly Beuermann-King is a stress and wellness specialist. She says, “As parents, we often spend more time considering the needs of our children and those around us and put our own health on the back burner. Though we have the best of intentions, we may avoid thinking about what would happen if we became seriously ill and what impact that may have on our ability to take care of our children. Critical illness insurance can ensure that we are financially able to make ends meet and spend our needed energy focused on recuperating.” Edie Falco (aka “Nurse Jackie”) was diagnosed with breast cancer in 2003. She took time off work until she went into remission, then went on to adopt two kids.

4) Reduce anxiety
According to Beverly, “We know that supportive families have a beneficial impact on the patient’s response to treatment. They act as a buffer for the patient’s anxiety and serve as valuable resources for patient care. However, if the family anxiety is high, they may be unable to support the patient and may transfer their anxiety to him or her.” Indeed, “Peace of mind and protection of your family’s lifestyle are the two top benefits of critical illness insurance,” says Dave Minor. Christina Applegate chose to have a double mastectomy after being diagnosed with early-stage breast cancer in 2008.

5) Choose carefully
Compare critical illness insurance policies to make sure yours has the features most important to you. “The biggest difference between policies is the number of illnesses that are covered,” says Dave Minor. “The basic and lowest cost plans cover the three most common illnesses: heart attack, stroke and cancer. However, you can find policies that cover up to 24 illnesses.” Cynthia Nixon (Miranda Hobbes to her SATC fans) whose mother is also a breast cancer survivor, was diagnosed through a mammogram in 2006.

6) Nothing is free
As you shop around for policies, make sure you read the fine print. Some benefits seem advantageous, but not if you end up paying a higher premium than you otherwise would. For example, ‘return of premium’ policies give you back some or all of the premiums you paid if you never make a claim. The premiums are higher to offset the cost of returning them. As Dave Minor says, “Nothing is free.” Fashion designer Betsey Johnson found breast cancer lurking under a saline breast implant that she had removed in 2002.

7) Each policy has its place
When someone has a serious illness or suffers a heart attack, getting better is the first thing on the mind of every family member. Life insurance is important in the case of death, but critical illness insurance is the policy that is there for you while you’re on the road to recovery. After all, how will you feel if you ‘kick the sick’ only to face financial ruin? Both types of insurance have a place in a well-planned estate. Trusting her gut and getting a second opinion was the lesson Kylie Minogue learned when she found out she had breast cancer in 2005, after an initial misdiagnosis.

The good news
Despite the high statistics of illness, the good news is that the probability of recovery is better than ever. “Thanks to medical advancements, many people are surviving critical illnesses and living longer, fulfilling lives with their families,” says Dave Minor. And just like taking your vitamins and going to the gym, the key to critical illness care is to be preventative. Get your policy in place before you need it. “We all know someone right now, who has suffered or is suffering from a heart attack, stroke or cancer,” says Dave. “This in itself should be your call to action.”


Top 5 Renovations To Increase Property Values

Looking to increase your homes property value? Here are five of the best renovations you can do to your home to increase property value. These five renovations can sometimes have a return on investment 5-6x what they cost.

# 5 Flooring
Flooring is one of the most important aspects of your house. You will see an immediate rise in property valuation with the installation of hardwood floors. Existing hardwood floors that you can refinish are ideal as they are less costly to restore and in higher demand than new flooring materials. For the bathroom, tile will always be in demand and retain value exceptionally well.

# 4 Fixtures
Kitchens often look tired and dated, in large part due to old fixtures. Replacing or updating cabinet hardware, light fixtures, countertops and faucets will result in an immediate increase in your home’s value. This small, but effective upgrade will also revitalize the entire home. Pot lights are in high demand in open concept style homes.

# 3 Bathroom
The bathroom is the second most important room in the home in terms of valuation. If you can add a three-piece bathroom to a home with only one full bathroom, you will see a dramatic rise in the market value of your home. While you should never compromise bedroom space for a bathroom, try sneaking one in dead space in the home. Scott managed to fit in a 3-piece bathroom under a staircase – the width of the room measured just 44 inches. As an added tip, use glass for the shower to make the bathroom feel more spacious.

#2 Kitchen
Kitchens are the single most important room in the home relating to valuation. The kitchen can make a significant difference in the value of your home. As such, it is crucial that you invest in having a modern, fresh and desirable kitchen. Modern cabinetry, under cabinet lighting and new appliances will all significantly increase the value of your home on the market. To save on cost without compromising construction and desirability, look at options like Ikea cabinets as opposed to custom cabinetry.

#1 An Income Suite
No surprise, but the single biggest way to increase the value of your home is to build an income suite within the property. Whether this is converting your basement into a rental, or another floor in the home, an income property will increase your home’s worth. The main reason for this is that it covers a portion, or sometimes all of your mortgage payments, and results in your home being cash flow positive – which creates real wealth that can supplement your income.

Rent To Own A Worthwhile Option For Those Seeking Home Ownership

As a Licensed Realtor actively trading in today’s Toronto Real Estate Market, I can safely attest that it’s no secret Real Estate became increasingly unaffordable for many over the past 18 months. With the consistently low inventory and relatively maintained demand, Toronto home prices lean towards leveling off at most over reducing at all in the near future. It is clearly a seller’s market; has been for some time now and no market indicators suggest that will change anytime soon either. Buyers are still aggressively in search for homes.

There have been so many changes in the Toronto Real Estate Market over the past 36 months that it created some uncertainty, especially with the new mortgage rules implemented in 2017 making it more difficult for buyers to get approved for a mortgage. Some buyers may have good credit but insufficient down payment. Others have down payment but poor credit history. Rent-to-own programs may provide a win-win for both and have increased in demand due to tightened mortgage guidelines.

For many people, a home will be the biggest purchase they ever make.

Nevertheless, both buyers and sellers should carefully weigh their options before agreeing to any binding contract, especially existing Tenants considering how to tackle Toronto’s aggressive Real Estate Market right now. Let’s look at some advantages and disadvantages for buyers who opt to enter into a Rent-To-Own:


  • Buyers may not have the down payment now, but will have it at the end of occupancy, as a result of the additional payments in the form of Occupancy Agreement Down Payment Saving Plan;
  • If a buyer’s credit is not good, it can be improved over the course of occupancy through credit repair and/or credit counselling;
  • If the market price of this home is more than the originally agreed upon future purchase price at the end of occupancy, buyer still get to buy it for the same agreed price.


  • There is no guarantee that a bank will finance when time comes due to. Buyer must satisfy existing requirements which may include improved credit score, increased down payment or a strong co-signer
  • If the buyer is just one day late on a month’s rent payment, most agreements void the rent credit for that month. The buyer in the rent-to-own agreement must pay on time, every time.
  • If the seller fails to pay the original mortgage on the house, it may be foreclosed and the buyer forced to move.
    For Buyers looking to invest in the GTA Market but cannot get approved for financing due to credit issues or low down payment, there is a solution. Buy now on a New Low Down Payment Rent-To-Own Program: HOME TO OWN (H2O).

Here’s how it works:

  1. Occupant signs all Realtor Agreements, completes application, Qualifies for HOME TO OWN (H2O) PROGRAM then pays all Set-Up Costs maxed a $1500.00
  2. Occupant chooses any Condo, Townhouse or House anywhere in GTA & Surrounding Area to purchase
  3. Investor (Owner) purchases home of Occupants choice through Realtor for Occupant then Occupants deposit is paid to the Investor upon the initial closing
  4. Owner and Occupant finalize details of Occupancy and Delayed Purchase Agreement then closes purchase of the property
  5. Occupant takes Occupancy and pays all expenses and Required Savings including Down Payment & Future Closing Costs on Future Purchase Price
    (Present Purchase Price Increases Maximum 3% Annually)
  6. Occupant has 2-3 years to satisfy terms of Occupancy Agreement & Mortgage Approval then close on their home purchase from Owner to take Full Title
    After conducting my own personal detailed research and due diligence on this program, I have underlined the following advantages and disadvantages for the consumer.


  • Occupants build their OWN equity rather than risk being kicked out of the market and waste on rental charges
  • Home Improvements increase home value along with benefits of inflation instead of simply spending on a rental property with the hopes of being reimbursed dollar-for-dollar by a Landlord
  • Occupant can choose Any GTA Home, Condo or Townhome from $200K and up currently on the market to purchase and occupy that suits their sole requirements
  • Occupant protected against surging home prices & sets future purchase price of their home TODAY with an upfront mutually agreed upon Annual Price Escalation of under 3%
  • Investor/Owner financially strong enough to safely never default


  • Occupant must show stable and strong income from minimum $50K+Annually from a single source or combined married couple only in order to qualify for program, which is base entry level income requirement.
  • Minimum Down Payment of 4% must be readily available to secure Investor’s purchase, to be held in trust only until successful completion of occupancy and transfer of title to ownership. The Occupant’s deposit is released to the Investor when the Investor closes from the Original Seller.
  • Occupant responsible for all carrying costs of purchased property along with Home Improvement, maintenance, repair and down payment savings expenses for entire duration of occupancy.
  • Set Up Costs (capped at $1500 maximum including H.S.T.) must be paid immediately upon approval of program in order to commence program process which includes mandatory credit counselling that must be strictly followed in order to ensure successful completion of occupancy and transfer of title to ownership.

Although tenants feel that renting saves, due to price surges, without a program like HOME TO OWN (H2O), tenants may never be able to enter the market. Without NEW buyers entering our market, whatever will become of Toronto Real Estate? Unless the price surges stop and existing tenants save a complete down payment including closing costs and maintain good credit alongside stable income, they may never be able to buy their first home. Let’s consider all the following:

  • Required Savings are credited to the Occupant and comes off the total amount owed, being typically $450-$850 per month. If an existing tenant must save towards their first purchase, there is clear benefit to doing this in conjunction with an Occupancy Agreement in a Rent-To-Own Program and working towards reducing the future amount owing on their mortgage to be credited on closing.
  • As a result of very strong demand for ownership up against an extremely constrained supply of listings in 2017, the growth rate for the average selling price will be between 10 and 16 per for the majority of home types across the GTA but approved Occupant’s escalation is capped at 3% annually allowing any excess appreciation to remain for the Occupant’s benefit through HOME TO OWN PROGRAM (H20) only.
  • Any Home Improvement costs (example: painting, decorating, landscaping or any other general improvements) improve future property value dynamically, typically yielding an increase in equity equivalent to cost times 4 or 5.
  • Occupants build saving while enjoying all the pleasures and benefits of home ownership alongside maintaining control by securing themselves by never getting evicted by Landlords.
  • The entire process is designed to be win-win! Win for the Occupant-buyer by ensuring only applicants with clear potential to close will be approved and strict follow up on credit repair instructions will be implemented. Win for the Investor who is guaranteed an annual return on their investment in a safe and secure investment model alongside helping a family accumulate wealth.
  • Average existing monthly rental charges begin at $1500 per month minimum, which means $1500 monthly X 36 months = $54,000 minimum rent expense that will never be recovered is Tenant wealth lost and Landlord wealth secured.

A rent-to-own agreement allows potential buyers to move into their dream home while getting their finances in order to purchase the home several years in the future. It’s not without risks since they could end up losing money if they don’t (or cannot) buy the property when time comes due. For this reason, it’s vital for buyers to read and understand every word of the contract and know exactly what they’re getting into.

Bottom line is if you are serious about getting into home ownership, now is the best time to start looking into your options. If you can qualify for a mortgage, I would always recommend that avenue but if you cannot qualify, you really should find out what your options are with HOME TO OWN (H20). It doesn’t cost anything to have your questions answered and you may just find a new path to home ownership open for you when you thought there were none BUT the costs can be high if you choose to do nothing and continue down the same rental path.

In my professional opinion, HOME TO OWN (H2O) is the fairest, most transparent program on the market today and I would highly recommend it to all GTA Tenants over renting. For further information on this program or to apply, please feel free to contact Minee Nehru, Licensed Realtor with RE/Max West Realty Inc. directly at 416.282.2444.

Exchange Traded Funds

Exchange traded funds (ETFs) can be a great investment vehicle for small and large investors alike. These popular funds, which are similar to mutual funds but trade like stocks, have become a popular choice. However, there are some disadvantages that investors need to be aware of before jumping into the world of ETFs. In this article, we will look at some of the disadvantages of ETFs. Good information is an investor’s most important tool. Read on to find out what you need to know to make an informed decision.

Trading Fees
One of the biggest advantages to ETFs is that they trade like stocks. As a result, investors can buy and sell during market hours as well as put advanced orders on the purchase such as limits and stops. Conversely, a typical mutual fund purchase is made after the market closes, once the net asset value of the fund is calculated.

Every time you buy or sell a stock you pay a commission; this is also the case when it comes to buying and selling ETFs. Depending on how often you trade an ETF, trading fees can quickly add up and reduce your investment’s performance. No-load mutual funds, on the other hand, are sold without a commission or sales charge, which makes them advantageous, in this regard, compared to ETFs. It is important to be aware of trading fees when comparing an investment in ETFs to a similar investment in a mutual fund.

If you are deciding between similar ETFs and mutual funds, be aware of the different fee structures of each, including the trading fees. And remember, actively trading ETFs like stocks can severely reduce your investment performance as commissions can quickly pile up.

Underlying Fluctuations
ETFs, like mutual funds, are often lauded for the diversification that they offer to investors. However, it is important to note that just because an ETF contains more than one underlying position doesn’t mean that it can’t be affected by volatility.

The potential for large swings will mainly depend on the scope of the fund. An ETF that tracks a broad market index such as the S&P 500 is likely to be less volatile than an ETF that tracks a specific industry or sector such as an oil services ETF. Therefore, it is vital to be aware of the fund’s focus and what types of investments it includes.

In the case of international or global ETFs, the fundamentals of the country that the ETF is following are important, as is the credit worthiness of the currency in that country. Economic and social instability will also play a huge role in determining the success of any ETF that invests in a particular country or region. These factors must be kept in mind when making decisions regarding the viability of an ETF.

The rule here is to know what the ETF is tracking and understand the underlying risks associated with it.

The biggest factor in any ETF or stock or anything that is traded publicly is liquidity. Liquidity means that when you buy something, there is enough trading interest that you will be able to get out of it relatively quickly without moving the price.

If an ETF is thinly traded, there can be problems getting out of the investment, depending on the size of your position in relation to the average trading volume. The biggest sign of an illiquid investment is large spreads between the bid and ask. With so many new ETFs coming to market, you need to make sure that the ETF is liquid. The best way to do this is to study the spreads and the market movements over a week or month.

The rule here is to make sure that the ETF you are interested in does not have large spreads between the bid and ask prices.

Capital Gains Distributions
In some cases, an ETF will distribute capital gains to shareholders. This is not always desirable for ETF holders, as shareholders are responsible to pay the capital gains tax. It is usually better that the fund retains the capital gains and invests them, rather than distributing them and creating a tax liability for the investor. Investors will usually want to re-invest those capital gains distributions and, in order to do this, they will need to go back to their brokers to buy more shares, which creates new fees.

Lump Sum Vs. Dollar Cost Averaging
Buying an ETF with a lump sum is simple. Say $10,000 is what you want to invest in a particular ETF. You calculate how many shares you can buy and what the cost of the commission will be and you get a certain number of shares for your money.

However, there is also the tried-and-true small investor’s way of building a position. This way is called dollar-cost averaging. With this method, you take the same $10,000 and invest it in monthly increments of, say, $1,000. This is called dollar-cost averaging because some months you will buy fewer shares with that $1,000 because the price is higher. In other months, the share prices will be lower and you will be able to buy more shares.

Of course, the big problem with this strategy is that ETFs are traded like stocks; therefore, every time you want to purchase $1,000 worth of that particular ETF, you have to pay your broker a commission to do so. As a result, it can become more costly to build a position in an ETF with monthly investments. For this reason, trading an ETF favors the lump sum approach.

The rule here is to try to invest a lump sum at one time to cut down on brokerage fees.

The Bottom Line
Now that you know the risks that come with ETFs you can make better investment decisions. ETFs have seen spectacular growth in popularity and, in many cases, this popularity is well deserved. But, like all good things, ETFs also have their drawbacks. Making sound investment decisions requires knowing all of the facts about a particular investment vehicle – ETFs are no different. Knowing the disadvantages will help steer you away from potential pitfalls and, if all goes well, toward tidy profits.
Source: Investopedia