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Assante Capital Management Ltd. February 2021

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The McClelland Financial Group Newsletter

 

Announcements
A special message from the TMFG team

25% Open
COVID-19 Update
Health and Safety

We have taken the following steps to ensure your safety and the safety of our staff:

  • Limiting the number of team members
  • Screening anyone that enters our office
  • Increased frequency of cleaning
  • Added protective PPE throughout our office
  • Contactless drop-off and pick up
  • Paused on all in-office appointments

 

Announcements
A special message from the TMFG team

Claire Isabelle May was born on Jan 28th to happy parents Josh and Chelsey Chartren

 

Big Speakers, Big Events!
is BACK!

Virtually

Dr. Lisa Belanger
Behavioral Change Expert and Researcher

Healthy Habits and Improved Mental Well-Being

Join us by clicking the link below to register

March 1st 12:00-1:00 pm

 

RRSP Deadline is March 1st, 2021

Why does she look so happy?
She remembered the RRSP deadline before it was too late

Don't leave it to the last minute.

Did you know?
A contribution to your RRSP can reduce your tax bill?
RRSP Contributions grow completely tax free.
Contributions can be used towards the Homebuyers Plan or Lifelong Learning Plan.
Every contribution you make today will provide for your comfortable retirement tomorrow.
Get one step closer to your goal today!

 

FINANCE
Light Read – Useful and Relevant

Rob's Read

Small Stocks Roar After Years of Getting Trampled

Advisor.ca:

"The Russell 2000 Index has more than tripled the gains of S&P 500 in the last three months.

Small stocks are delivering the biggest punch on Wall Street.

Over the last three months, an index that tracks 2,000 of the smallest stocks in the U.S. market has more than tripled the gains of the big-cap S&P 500. The rally for the Russell 2000 got going Nov. 9 as a swell of optimism for the economy rose after Pfizer reported resoundingly encouraging data for its coronavirus vaccine and Joe Biden’s White House victory sparked hopes for more stimulus for the economy.

It marks at least a temporary return to form for smaller stocks, which have historically provided bigger returns than large-cap stocks over the long term.

The Russell 2000 currently includes stocks like Bank7, a community bank based in Oklahoma with a market value earlier this week of about $150 million, and fuel-cell maker PlugPower, whose market value shot from less than $6 billion in October to more than $33 billion earlier this week. The median company in the large-cap S&P 500 has a market value of about $26 billion."

View Article 

Rob McClelland RFP, CFP, HBA
Vice President, Co-Branch Owner, Senior Financial Planning Advisor
The McClelland Financial Group of Assante Capital Management Ltd.

 

FINANCE
Light Read – Useful and Relevant

Finance

Cryptocurrency: What’s It All About?
Part 1: Understanding Cryptocurrency

It’s hard to scan the financial headlines these days and not feel some level of FOMO with Bitcoin. Stories of great wealth gained, whether in the news or from our neighbour’s mouths, prompts the same internal question: Why not me? So, before you start loading up on bitcoin or any other form of cryptocurrency, let’s take a closer look at what you may be getting yourself into, in three parts:

  1. Understanding cryptocurrency
  2. Spending cryptocurrency
  3. Trading in cryptocurrency

Our quick take? Cryptocurrency is an interesting development with a number of promising possibilities. But like any relatively new, highly volatile opportunity, it entails considerable risk.

If you’d like to try earning and spending cryptocurrency, be sure you’re familiar with the nature of the beast. If you’re thinking of trading in it for fun or profit, we advise against putting in any more than you could afford to lose entirely. In our estimation, cryptocurrency remains more of a speculative venture than a disciplined investment.

With that, let’s proceed!

Beginning with Bitcoin

Cryptocurrency was introduced in 2009 by Satoshi Nakamoto (pseudonym perhaps?). Nakamoto described a new kind of money, or currency, which was meant to exist in a secure, stable, and limited supply strengthened by electronic security, or encryption. Pair “Encryption” and “currency,” and, voila, “cryptocurrency”.

Bitcoin became the first cryptocurrency, and is still the most familiar kind.[1] According to CoinMarketCap, Bitcoin had a market cap of nearly $600 billion as of January 22, 2021, with its closest competitor Ethereum at $140 billion. Market caps drop considerably after that, but there are plenty of others. As of September 30, 2020, a CFA Institute Cryptoassets Guide reported: “More than 6,000 different cryptoassets exist, and many new ones are created each month.”

Unlike a dollar bill, cryptocurrency only exists as computer code. You can’t touch it or feel it. But increasingly, holders are spending cryptocurrency in ways only formerly done in traditional methods (i.e. exchanging regular money). There’s also growing interest in trying to build or at least preserve wealth by trading in cryptocurrency, which some describe as being like “digital gold.”

Cryptocurrency vs. “Regular” Money

In comparing cryptocurrency to regulated fiat currency – or most countries’ legal tender – there are at least two components to consider: limiting supply and maintaining spending power.

  • Limiting Supply: Obviously, if a currency “grew on trees” it would cease to have any value to anyone. That’s why central banks like the U.S. Federal Reserve, Bank of Canada, and Bank of England are tasked with limiting their currency’s supply, without strangling its demand. For Bitcoin, supply is limited to a maximum of 21 million coins. While cryptocurrency proponents offer explanations for how supply and demand will be managed, some systems will undoubtedly be more effective than others at sustaining this delicate balance, especially when exuberance- or panic-driven runs might outpace reason.
  • Maintaining Spending Power: Neither fiat currency nor cryptocurrency are still directly connected to the value of an underlying commodity like gold or silver. Thus, both must have another way to maintain their value, or spending power, relative to inflation. In most countries, the nation’s central bank is in charge of keeping its fiat currency’s spending power relatively stable; only the government can add or subtract from its “money” supply. For cryptocurrency, there is no central bank, or any other centralized regulator. Stability is instead backed by its underlying blockchain.
What’s a Blockchain?

Using bitcoin to illustrate, a block is essentially a bitcoin transaction waiting to be settled. Think of it as being like a written, but uncashed cheque; it’s not real money until the transaction is verified and added to a permanent ledger.

Except there is no bank to complete the transaction. Instead, bitcoin “miners” compete against one another for the role. Each block is secured with a complex mathematical equation. The first miner to solve the equation gets to add the new block to a blockchain. The winning miner is then rewarded handsomely for their effort. They are paid with bitcoin, which, at current, is valued at tens of thousands of dollars for settling a single block. [Source]

Blockchains create a strong, yet globally decentralized check-and-balance system. The competition among thousands of miners keeps everyone relatively honest. According to the CFA Institute’s Cryptoassets Guide, at current, approx. 40,000 computers are independently verifying every single bitcoin transaction.

Next Up:
Part 2 - Spending Cryptocurrency
Part 3 - Trading in Cryptocurrency

We’ve now provided a general introduction to cryptocurrency. In our next piece, we’ll cover some of the ways people are using it, along with some of the challenges involved in doing so. In the meantime, don’t hesitate to be in touch if we can answer additional questions.

[1] You may notice, we sometimes capitalize Bitcoin as a proper noun, and we sometimes leave it as lower case. General practice is to capitalize the entity, “Bitcoin,” but to use lower case for the coins themselves. Think of it like the difference between “the U.S. Dollar,” vs. “a dollar bill.”

Carlo Cansino FMA, FCSI, CFP
Senior Financial Advisor
The McClelland Financial Group of Assante Capital Management Ltd.

 
 

OPINION
Light Read – Editorial

Opinion

This is not a game.

Have you seen the advertisement with a financial advisor saying to the client, “this is a long-term game” and the client’s response back, “this is my financial future, it is not a game!”? The ironic thing is the same people that have created these ads are the same people that are turning the market into a game. Recently, we have seen the effect that short-term, retail investors can have on the market. Remember, it’s a short-term effect, not a long-term impact. The current issues with GameStop, and other companies like Blackberry and AMC, are great examples of how people can take advantage of the free markets. In reality, GameStop had the biggest effect on the hedge fund managers that were “short” on the stock. Taking a “short” position means you are making a bet on the company to go down in value. Whenever you short a company, you take on an incredible amount of risk. Short sellers continually “play the game”, and someone beat them at their own game. In my opinion, if we take a step back, we’ll realize that all of the noise we are hearing is not investing. It is literally a form of wagering. Superbowl Sunday is coming up and I may make a few wagers with some close friends, but this is certainly not my investment strategy for retirement.

Michael Connon B.Sc, CFP
Senior Financial Planning Advisor, Co-Branch Manager
The McClelland Financial Group of Assante Capital Management Ltd.

 

FINANCE
Light Read – Useful and Relevant

Finance

RRSPs & TFSAs

Both RRSPs and TFSAs allow your money to grow tax free. The main difference between the two is the timing of tax. The common question is: “Which one should I contribute to first?” The answer is: "It depends!" The attached video will explain why and help you answer this question.

View Video 

John Iaconetti B.A.S., Spec. Hons. Administrative Studies (Finance)
Financial Advisor
The McClelland Financial Group of Assante Capital Management Ltd.

 

LIFESTYLE
Light Read – Fun and Enjoyable!

Lifestyle

The Essential Role of Sleep in Immunity

Sleep has so many health benefits for you that it's a wonder why we are such a sleep deprived nation. It helps keep our immune system working at full capacity which can impact how well the COVID vaccine works.

View Article 

#sleep #covid #health #wellness #immunity

Michael Ams B.Com.
Strategic Associate
The McClelland Financial Group of Assante Capital Management Ltd.

 

FINANCE
Light Read – Useful and Relevant

Finance

Why is Sustainable Investing the new trend in the marketplace?

With the world becoming more aware of Global warming there has been a large push to sustainable investing. Utlizing how you choose to invest could assist in the movement for a green earth.

View Infographic 

#Sustainable #Investing #ESG

John Iaconetti B.A.S., Spec. Hons. Administrative Studies (Finance)
Financial Advisor
The McClelland Financial Group of Assante Capital Management Ltd.

 

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Copyright © 2021 The McClelland Financial Group.

Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.

Certain employees of (TMFG Tax Service) maintain a relationship with Assante Capital Management Ltd. ("Assante") through which they sell investment products. The relationship that they have with Assante does not include tax preparation services which (TMFG Tax Service) is solely responsible. (TMFG Tax Service) is not associated in any way with Assante, and Assante has no responsibility for the tax preparation services offered by (TMFG Tax Service).

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