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It's Your Money  

Dealing with financial infidelity

Financial infidelity problems

Money matters are often considered one of the most sensitive topics in relationships.

Yet, while discussions about trust, fidelity and transparency are common in romantic partnerships, the issue of financial infidelity remains largely unaddressed.

Financial infidelity occurs when one partner hides financial information or engages in financial activities without the knowledge or consent of the other. In Canada, this phenomenon poses a significant threat to the financial wellbeing of individuals and their relationships.

Financial infidelity takes many forms, from secret bank accounts and undisclosed debt to hidden purchases and clandestine investments. Regardless of the specifics, the consequences can be devastating, both financially and emotionally. The breach of trust resulting from financial infidelity can erode the foundation of a relationship, leading to feelings of betrayal, resentment, and insecurity.

One of the most immediate impacts of financial infidelity is the strain it places on a couple's financial situation. Hidden debts, undisclosed expenses, or secret financial transactions can disrupt budgeting efforts and jeopardize long-term financial goals. In extreme cases, financial infidelity may even lead to financial ruin, as the unsuspecting partner is left to deal with the consequences of undisclosed liabilities or mismanaged funds.

Moreover, financial infidelity can have lasting effects on individuals' mental and emotional wellbeing. The sense of betrayal and mistrust that accompanies the discovery of financial infidelity can cause significant psychological distress. Feelings of anger, shame, and guilt may arise, further complicating the already delicate dynamics of the relationship. Left unaddressed, these emotional wounds can fester, leading to long-term damage to individuals' mental health and overall wellbeing.

Beyond the immediate impact on individuals and couples, financial infidelity can have broader implications for Canadians' financial stability and security. In cases where one partner has been financially dependent on the other, the revelation of financial infidelity can leave them vulnerable and exposed. Without access to essential financial resources or knowledge of their true financial situation, individuals may find themselves ill-equipped to navigate the challenges of financial independence.

Furthermore, financial infidelity can hinder individuals' ability to plan for their future and achieve their long-term financial goals. Trust is a fundamental component of successful financial planning and wealth management. When trust is compromised due to financial infidelity, individuals may struggle to make informed decisions about their finances, leading to missed opportunities for growth and prosperity.

Addressing financial infidelity requires open and honest communication between partners. It's essential to create a safe space where both parties feel comfortable discussing their financial concerns and aspirations openly. Couples should establish clear expectations regarding financial transparency and accountability, laying the groundwork for a healthy and trusting relationship.

Seeking professional help from a professional financial planner or therapist can also be beneficial for couples struggling to overcome the impact of financial infidelity. A qualified professional can provide guidance and support as couples work through the challenges of rebuilding trust and restoring financial stability.

Talking about money matters can be hard and sometimes even embarrassing, but by fostering open and honest communication, setting clear expectations and seeking professional guidance when needed, Canadians can mitigate the impact of financial infidelity and build stronger, more resilient relationships based on trust and transparency.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.





Everyone needs a financial plan

Financial planning for all

In a professional services world that often seems tailored for the wealthy, the notion of financial planning can sometimes feel like an exclusive privilege reserved for those with substantial assets.

However, the truth is that everyone, regardless of their income bracket, can benefit from a well-crafted financial plan. Lately, a wider range of Canadian consumers are realizing the importance of financial planning in navigating the complexities of today's economic landscape.

Let’s explore the universal need for a comprehensive financial plan for all consumers and shed light on how certified financial planners (CFPs), as well as qualified associate financial planners ( QAFPs) can assist individuals at every stage of life and income level.

Financial planning is not just about managing vast fortunes, it's about creating a roadmap for a secure and comfortable future. From budgeting and saving to estate and retirement planning, a comprehensive financial plan considers an individual's unique circumstances, goals, and risk tolerance. It's a tool that empowers individuals to make informed decisions about their finances, paving the way for a more stable and prosperous future.

The misconception that financial planning is only for the wealthy is gradually fading away. Canadians from all walks of life are recognizing the need to take control of their financial destinies, and this realization has brought attention to the role of CFP and QAFP. These experts are equipped with the knowledge and skills to guide individuals through the intricacies of financial planning, ensuring that everyone, regardless of their income level, has access to sound advice and strategies.

One significant aspect of this inclusivity in financial planning is the role of QAFPs. The QAFP certification is designed to cater to a broader segment of the population, including those with less substantial assets. QAFPs undergo rigorous training to provide financial planning services specifically tailored to individuals with more modest means, making financial planning more accessible and relevant to a diverse range of Canadians.

For individuals with fewer assets, the emphasis shifts towards prudent budgeting, debt management and establishing a solid foundation for future financial growth. QAFPs are adept at crafting strategies that align with the unique challenges faced by Canadians with limited resources. This may include creating manageable savings plans, addressing debt systematically, and exploring investment options that match the risk tolerance of those with smaller portfolios.

Moreover, QAFP understand financial planning is not a one-size-fits-all endeavour. They recognize the importance of customization, tailoring their services to accommodate the specific needs and aspirations of individuals with varying income levels. This personalized approach ensures that financial plans are realistic, achievable, and adaptable to life's inevitable twists and turns.

The necessity for a comprehensive financial plan extends far beyond the confines of wealth. Every Canadian, regardless of their income bracket, can benefit from the guidance of a CFP or QAFP.

As we navigate the complex financial landscape of the 21st century, embrace the idea that financial empowerment is a universal right and, with the right guidance, everyone can build a path to a more secure and prosperous future.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



Investing in emerging markets

Emerging market investment

As Canadian investors navigate the dynamic landscape of global markets, the question of whether to include emerging markets in their portfolios looms large.

Historically, investing in emerging markets has been met with mixed results, often underwhelming compared to more established counterparts. But will this sector continue to underperform? Or is now the opportune time for it to start to shine? Here are some things to consider:

Historical performance

Emerging markets, encompassing economies in Asia, Latin America, Africa, and the Middle East, have historically exhibited high growth potential but also heightened volatility. Investors have approached these markets with caution due to concerns about political instability, currency risks, and varying levels of market maturity.

In the past, emerging markets have faced challenges ranging from economic crises to geopolitical tensions, influencing investor sentiment and performance outcomes. However, recent years have seen a shift in the global economic landscape, prompting a reassessment of the potential for emerging markets to deliver substantial returns (but not without a continued level of elevated risks).

Let’s take a look at the pros and cons of investing in this asset class and some things that you should consider before jumping in.

Current economic landscape

Several factors contribute to the changing dynamics of emerging markets, making them increasingly attractive to investors:

1. Technological advancements—Emerging markets are experiencing rapid technological advancements, fostering innovation and economic growth. As these economies embrace digital transformation, opportunities for investors in sectors such as technology, e-commerce, and fin-tech are on the rise.

2. Demographic dividends—Many emerging markets boast young and growing populations, creating a demographic dividend that can fuel economic expansion. A burgeoning middle class with rising purchasing power presents opportunities for companies tapping into consumer-oriented industries.

3. Infrastructure development—Governments in several emerging markets are prioritizing infrastructure development. Investments in transportation, energy, and communication infrastructure not only drive economic growth but also offer avenues for foreign investors to participate in these projects.

4. Globalization and diversification—The interconnectedness of global markets has increased, making it imperative for investors to diversify portfolios. As emerging markets become more integrated into the global economy, Canadian investors are exploring these markets as a means of diversification.

Risks and challenges

Despite the potential opportunities, investing in emerging markets comes with inherent risks and challenges.

1. Political and regulatory risks—Emerging markets may face political and regulatory uncertainties that can impact investor confidence. Changes in government policies, currency controls, and geopolitical tensions can create volatility in these markets.

2. Currency risk—Currency fluctuations can pose risks for investors in emerging markets. Sudden changes in exchange rates may affect the value of investments denominated in local currencies.

3. Liquidity concerns—Some emerging markets may have less developed financial markets, leading to lower liquidity. This can affect the ease of buying and selling assets and may result in higher transaction costs.

4. Corporate governance—Governance standards in emerging markets can vary, and some companies may lack transparency and adherence to international standards. Investors need to carefully assess corporate governance practices to mitigate risks associated with unethical conduct.

Is now the time to invest?

The decision to invest in emerging markets should be based on a careful assessment of individual risk tolerance, investment goals, and time horizon. While there are compelling reasons to consider allocating a portion of a portfolio to emerging markets, investors should approach this decision with a strategic mindset.

1. Diversification benefits—Including emerging markets in a well-balanced portfolio can enhance diversification. As these markets often have a low correlation with developed markets, their inclusion may contribute to risk reduction.

2. Long-term growth potential—Emerging markets, driven by demographic trends and technological advancements, hold considerable long-term growth potential. Investors with a horizon spanning several years may benefit from the compounding effects of growth in these economies.

3. Cautious pptimism—While the potential for outperformance exists, a cautious approach is advisable. Investors should conduct thorough research, stay informed about geopolitical developments, and consider a diversified approach that encompasses various emerging market regions and sectors.

The question of whether investing in emerging markets will continue to underwhelm or if it is poised to outperform is multifaceted. The evolving economic landscape, driven by technological advancements, demographic shifts, and globalization, presents new opportunities for Canadian investors. However, the risks and challenges associated with these markets require careful consideration.

Investors seeking to explore emerging markets should approach the decision with a balanced perspective, acknowledging the potential rewards while mitigating risks through thorough due diligence and strategic asset allocation.

Consulting with qualified financial planners and staying informed about global economic trends will empower investors to make well-informed decisions in the pursuit of a diversified and resilient investment portfolio.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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Use RRSP contribution deadline time to reassess you finanical situation

RRSP deadline looms

As the RRSP deadline looms on the horizon, the usual sense of urgency and stress tends to envelop the conversation.

I have written about the advantages of RRSPs many times and likewise discussed the habits of many who wait until the deadline, instead of contributing evenly throughout the year. So instead of repeating that (very wise) rhetoric, I’ll take a different approach this year.

What if we reframed this impending deadline (Feb. 29 this year), not as a stressful countdown but rather as a golden opportunity to reassess your financial priorities and reimagine your financial future?

The RRSP deadline, traditionally perceived as a source of stress as individuals scramble to maximize contributions, could instead be seen as a natural checkpoint for a comprehensive financial self-evaluation. Instead of fixating solely on the race to contribute before the clock runs out, Canadians can use this time to reflect on their overall financial health, goals and spending habits.

One of the primary advantages of the RRSP deadline is it compels individuals to take a closer look at their financial priorities. It prompts a pause in the hectic rhythm of life, allowing for a deliberate examination of where hard-earned money is going and where it could be more effectively directed. It's an opportunity to ask critical questions, such as are your financial goals still aligned with your life aspirations? Are you allocating your resources in a way that brings you closer to your dreams?

Reassessing financial priorities in the context of the RRSP deadline involves more than just calculating contributions and tax benefits. It's about crafting a financial roadmap that reflects your values, ambitions, and the life you envision for yourself. Use this moment to redefine what financial success means to you and reallocate your resources accordingly.

The RRSP deadline also invites a deeper examination of short-term and long-term financial goals. Beyond the immediate pressures of contributing before the deadline, consider the bigger picture. Are you saving enough for emergencies? Do you have a strategy for major life events, such as buying a home, starting a family, or launching a business? This reflection can lead to adjustments in contribution plans that better align with your evolving financial objectives.

Moreover, the psychological impact of the RRSP deadline should not be underestimated. The looming date can create a sense of financial anxiety and a fear of missing out on potential benefits. By shifting our mindset, we can turn this perceived stressor into a catalyst for positive change. View the RRSP deadline as a friendly reminder to take control of your financial narrative rather than a source of pressure.

Reimagine your relationship with money by considering how your spending habits align with your values and aspirations. Are there areas where you could cut back to redirect funds towards goals that truly matter to you? Embracing the RRSP deadline as an opportunity to reassess and realign your financial priorities allows for a more mindful and intentional approach to money management.

Furthermore, Canadians can use the RRSP deadline as a catalyst for learning and growth. Take the time to educate yourself on investment strategies, explore new financial opportunities, and seek advice from professionals. The deadline serves as a yearly reminder to continuously evolve your financial literacy and make informed decisions about your money.

As the RRSP deadline approaches, it's time to shed the stress associated with the ticking clock and embrace it as a moment of financial reflection and re-imagination. Use this opportunity to reassess your financial priorities, realign your goals, and take control of your financial narrative.

By approaching the RRSP deadline with a mindset of mindfulness and intentionality, Canadians can turn what is commonly seen as a stressful countdown into a powerful catalyst for positive financial change.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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About the Author

Brett Millard is vice-president and a member of the executive leadership team at FP Canada, the national professional body for the financial planning industry. A not-for-profit organization, FP Canada works in the public interest to foster better financial health for all Canadians by leading the advancement of professional financial planning in Canada. 

He has worked in the financial advice industry for more than 15 years and is designated as a chartered investment manager (CIM) and is a certified financial planner (CFP).

He has written a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges they face in every stage of life. Enhancing the financial literacy of Canadian consumers is a top priority for Brett and his ongoing efforts as a finance writer focus on that initiative. 

Please let Brett know if you have any topics you’d like him to cover in future columns ,or if you’d like a referral to a qualified CFP professional in your area, by emailing him at [email protected].

 



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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