Investments Archives - 3i Financial

Dividend

3iwebdev — Thu, 26 Aug 2021 15:00:00 +0000

What is a Dividend?

A dividend is a share profit of a company’s earning to a particular class of its shareholders. The amount is determined by the company’s board of directors. When a company makes profit and accumulates retained earnings, those can be reinvested in the company or paid out as dividends. Dividends are paid out as cash or in the form of additional stock. Dividend yield is the annual dividend per share divided by the share price.

Types of Dividends

Cash

Actual cash payment to shareholder usually made electronically and may also be paid check or cash.

Stocks

Stock dividends are paid out by issuing new shares from the company to the shareholders.

Assets

Dividends can also be paid in forms of assets such as, investment securities, physical assets, and real estate but it’s not common.

Special

A dividend that is paid outside of the company’s regular policy.

Common

Refers to the class of shareholders.

Preferred

Refers to the class of shareholders receiving the payment.

A dividend is a distribution of cash or stock to a class of company shareholders which are usually drawn from the company’s retained earnings. Some types of dividends are stocks, cash, special, common, preferred and assets. The board of directors are the ones that decides who receives dividend and when. Dividend payout helps to provide insight into a company’s intrinsic value.

Source: Investopedia, Corperate Finance Institute

Important disclosures:

The articles posted on 3i Financial are not intended to provide specific advice or recommendations for any individual and for general information only. All contents and information are believed to be from verified sources; 3i Financial makes no representation as to its completeness or accuracy.

Do you have any questions? Contact us to find out more!

Tags: Financial, Investments

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Exchange-traded fund (ETFs)

3iwebdev — Thu, 19 Aug 2021 15:00:00 +0000

What is an Exchange Traded Funds (ETFs)?

An exchange-traded fund (ETFs) is a financial security that tracks a particular index and is traded on a stock exchange. ETFs can contain stocks, bonds, commodities or a mixture of these investment types.

Advantages

Diversification

ETF gives you a more diverse portfolio. Can explore a broader market for stocks, bonds or commodities.

Transparency

The price for ETFs can be found by anyone with internet access and the fund holdings are disclosed to the public each day.

Tax Benefits

Flexible trading and better tax efficiency in taxable accounts.

An Exchange-traded fund (ETFs) is for both institutional and individual investors and is one of the most popular investment vehicles. It offers diversification in the portfolio, transparency, trading, tax benefits and an arbitrage option.

Source: Mackenzie Investments, Investopedia, Nerdwallet, CI Global Asset Management

Important disclosures:

Contact a 3i Financial Group Advisor today to learn more.

Tags: Financial, Financial Products, Investments

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Mutual Funds

3iwebdev — Tue, 17 Aug 2021 15:00:00 +0000

What is a Mutual Funds?

A Mutual Fund is a financial vehicle which uses pooled money from the investing public to purchase stocks, bonds, money market instrument etc. Mutual Funds allow you to take advantage of professional investment management as it is operated by professional money managers. The investment vehicles also give individual and small investors access to portfolios of equities, bonds, and other securities.

Liquidity

Variety of Offerings

Professional Management

Minimal Investment Requirements

Diversification

Transparency

Can be bought and sold with ease, making them highly liquid investments.

Many investments vehicles are available to investors.

A professional investment manager takes care of all trading.

Some mutual funds provide minimum investments.

Diversity in your portfolio to minimize the risks

Mutual funds are subject to industry regulation that ensures accountability and fairness to investors.

A mutual fund is pools of money from various investors which are invested in securities such as bonds and stocks. Mutual funds offer diversity, liquidity, transparency, professional management, varieties of offerings and it has minimal requirement to invest. Mutual funds are managed by professionals who make the investment decisions.

Source: Sunlife, Investopedia, Mackenzie Investments

Important disclosures:

Contact a 3i Financial Group Advisor today to learn more.

Tags: Financial, Financial Products, Investments

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Alternative Funds

3iwebdev — Thu, 12 Aug 2021 15:00:00 +0000

What is Alternative Funds?

An alternative fund is a financial bridge gap asset between Mutual Funds, ETFs and hedge funds. It is a liquid alternative that is not categorized as conventional investments (eg. Stocks and Bonds). Alternative funds investments include venture capital, managed futures, arts & antiques, commodities, derivatives contracts and private equity. Real estate is often classified as alternative investments.

Facts:

Offers a variety of investment vehicles and some tax benefits
Provides opportunities that is not offered in the traditional market
Invests in a non-traditional securities, including cryptocurrency
For Sophisticated Investors

Diversity

Reduce volatility and risks in the portfolio.

Direct Ownership

No paper asset but direct ownership of the product such as property and antiques.

Inflation Hedge

Offsets the anticipated decrease in a currency's price.

Alternative investments often have high minimum investments. Due to lower levels of turnover, transaction costs are lower compared to conventional assets. Alternative investments capitalize on opportunities that are not offered in public markets. An alternative investment gives you diversity, an inflation hedge and direct ownership.

Source: Investopedia, Fidelity, CI Global Asset Management

Important disclosures:

Contact a 3i Financial Group Advisor today to learn more.

Tags: Financial, Investments

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Bonds

3iwebdev — Tue, 10 Aug 2021 15:00:00 +0000

What is a Bond?

When the government or cooperation wants to raise money they issue a bond. A bond represents debt to a company and a source of fixed income to an investor. Bonds are used by the government or a company to fund projects and operations. Bonds give you no ownership rights from the insurer’s company unlike stocks. Bonds give you a stream of income and can offset some volatility from stocks.

Advantages

Profit if you sell at a higher prices.
Get all the principal back when making withdrawal at maturity.
Income through interest gain.

Categories of Bonds

Disadvantages

Companies can default on the bonds
Bonds pays lower than stocks
Bonds yield can fall

Corperate Bonds

Companies issues bonds instead of seeking a loan from the bank.

Varieties of Bonds

Municipal Bonds

Some offers tax free coupons to their investors.

Government Bonds

Issued by the Federal Government.

Agency Bonds

Government affiliated organizations that offers bonds to investors.

Zero-Coupon Bonds

A debt security instrument that does not pay interest.

Convertible Bonds

Allows the bondholders to convert their debt to stocks

Callable Bonds

The company can call back the bonds when it reaches it maturity.

Puttable Bonds

Allows the bondholders to sell the bond back to the company before it's maturity.

A bond is sold by the governments and corporations and is a type of security. It’s a way for them to raise money from investors. The investor gets a guaranteed repayment of the principal and a flow of interest payments. There are categories of bonds such government bonds, cooperate bonds, municipal bonds, and agency bonds. Some varieties of these bonds include zero-coupon bonds, callable bonds, puttable bonds and convertible bonds.

Source: Mackenzie Investments, Investopedia, Fidelity

Important disclosures:

Contact a 3i Financial Group Advisor today to learn more.

Tags: Financial, Investments

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Interest

3iwebdev — Tue, 03 Aug 2021 17:00:00 +0000

What is Interest?

Interest is the premium someone is willing to pay to borrow your money and expressed as an annual percentage rate (APR). Inflation rates, length of the loan, liquidity and risk of default can all affect the interest rates.

The amount of interest you earn or pay depends on:

The interest rate
The amount of the loan
How long it takes to repay

The borrower pays more if the rate is higher and a longer term loan.

How to calculate interests?

Simple Interest

Simple Interest=(Principal (P) x Interest Rate(r)) x Time(t)

= (P x r) x t

If you borrow $100 with an interest rate of 5% for a year, the interest to be paid is $5.

= (P x r) x t

= (100 x 0.05)1

= 5

Total amount to be paid back will be $105 including interests and principal.

Compound Interest

	=	final amount
	=	initial principal balance
	=	interest rate
	=	number of times interest applied per time period
	=	number of time periods elapsed

A=P (1 + r/n)^(nt)

If you borrow $100 with an interest rate of 5% for 5 years compounded monthly, the interest to be paid is $28.34.

A=P (1 + r/n)^(nt)

A=100 (1 + 0.05/12)^(12 x 5)

A=128.34

Total amount to be paid back will be $128.34 including the interest and principal.

Source: Dynamic Funds, BMO Global Asset Management, Investopedia

Important disclosures:

Contact a 3i Financial Group Advisor today to learn more.

Tags: Financial, Investments

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Investing

3iwebdev — Tue, 27 Jul 2021 15:00:00 +0000

What is Investing?

Investing is a way of allocating money or resources in the hopes of generating an income or profit. The future value of every investment is a function of its present price; whether it be positive or negative. The objective of investing is to produce a positive return.

Examples of Investments

Stocks, Bonds, Mutual Funds, ETFs, Real Estate, Bank Products, Options, and Annuities

The History of Investing

The term investing dates back to the period between the 17th and 18th centuries, when the development of the first public markets connected investors with investment opportunities.

Fun Fact: The NYSE (New York Stock Exchange) was established in 1792.

How Do I Start Investing With my Money?

Myth: Investing is for the wealthy.

Fact: Investing is not reserved for the wealthy. You can invest nominal amounts. For example, you can purchase low-priced stocks, deposit small amounts into an interest-bearing savings account, or save until you accumulate a target amount to invest.

Different investments have different levels of risk and offer different rates of return. For example, investing in property is more risky than investing in bonds.

Determining your risk tolerance will allow you to best choose your investment type. Book a meeting with a financial advisor to get help with your investments.

Why Should You Invest?

Investing allows you to put your money in vehicles that have the potential to earn strong rates of return. If you don’t invest, you are missing out on opportunities to increase your financial worth.

The power of compound interest is not known enough. With the power of compound interest and time, your investments will grow at an exponential rate; and in turn will let your money work for you.

Source: All Business, Investopedia, Business Insider

Let’s take a look at an example: The S&P 500 is an index of the 500 largest U.S traded companies. The average return over the last 10 years was 13.6%.

Your initial investment of $1,000.00 into the S&P 500 plus your monthly investment of $150.00 at an annualized interest rate of 13.6% will be worth $87,808.57 after 15 years when compounded yearly.

Total value of your investment: $87,808.57

Total Interest Earned: $59,808.57

Calculating Compound Interest:

Compound interest = total amount of principal and interest in future (or future value) less principal amount at present (or present value)

= [P (1 + i)ⁿ] – P

= P [(1 + i)ⁿ– 1]

Where:

P = principal

i = nominal annual interest rate in percentage terms

n = number of compounding periods

Source: All Business, Investopedia, Business Insider

Important disclosures:

Contact a 3i Financial Group Advisor today to learn more.

Tags: Financial, Financial Products, Investments

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TFSA Facts

3iwebdev — Tue, 13 Jul 2021 15:00:00 +0000

What Is TFSA?

The Government of Canada introduced the Tax Free Savings Account (TFSA) in 2009 to provide Canadians with a personal savings vehicle, tax free.

TFSA Facts

Tax-free on any investment earnings
Tax-free withdrawals
No age limit
Contribution limits are not determined by income
No impact on government benefits
Spouses (and common-law partners) can give each other monies to contribute to their own TFSA without triggering attribution rules. TFSA assets can be transferred to a spouse tax-free upon death.
An individual can only contribute up to their TFSA contribution room. Unused TFSA contribution room can be carried forward to later years.

Year	Annual Contribution Limit	Cumulative Limit
2021	$6,000	$75,500
2020	$6,000	$69,500
2019	$6,000	$63,500
2018	$5,500	$57,500
2017	$5,500	$52,000

Source: Canada Revenue Agency

Contact a 3i Financial Group Advisor today to develop a plan that ensures you to take advantages of the tax-free savings strategies of a TFSA

Important disclosures:

Tags: Financial, Financial Products, Investments, Tax Free Savings Account

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Volatility

3iwebdev — Thu, 08 Jul 2021 15:00:00 +0000

What is Volatility?

Volatility is a measure of the rate at which price of a security increases or decreases for a given set of returns. The market will be more volatile if the price fluctuates more frequently. It indicates the risk and is a normal part of investing.

Use the average price to find the difference between the prices.

15-14=1
11-14=-3
13-14=-1
17-14=3
14-14=0

Square the differences and add the total.

(1)^2=1
(-3)^2=9
(-1)^2=1
(3)^2=9
(0)^2=0

Add Total 1+9+1+9+0=20

How to Calculate Volatility?

Stock price of XYZ Inc.

Day 1. $15 Day 2. $11 Day 3. $13 Day 4. $17 Day 5. $14

Follow our Step Method.

Find the average between the prices.

($15+$11+$13+$17+$14)/5=$14

Find the population variance and standard deviation

Variance (Population Standard deviation)

20/5=4

Population Standard deviation

Square root the Variance (Population Standard deviation) = Square Root (4)=2

Therefore the stock price deviates from an average of $2.

Source: Corporate Finance Institute

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Tags: Financial, Financial Products, Invest Inform Insure, Investment Services, Investments, Volatility

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