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August 2021

August 2021 in Review Retirement, Crypto, Exercise!

August 2021 Performance TSX 1.6% Year-To-Date 20.2% S&P 500 3% Year-To-Date 21.6% MSCI World 3.7% Year-To-Date 17% Gold 0.0% Year-To-Date -4.1% Silver -6.0 % Year-To-Date -9.1%

How much money do you need to retire? Realizing that they may end up retiring earlier than they had planned, 64 per cent of Canadians are worried they're simply not saving enough, according to Fidelity Canada's recent 2020 retirement survey While a few may have reason to be concerned, the good news is that most people should be able to get where they want to go.

Crypto Banking and Decentralized Finance, Explained The revolution in digital money is now moving into banking, as cryptocurrency starts to reshape the way people borrow and save. The development of Bitcoin and thousands of other cryptocurrencies in a little over a decade has changed the definition of money - and spawned a parallel universe of alternative financial services, allowing crypto businesses to move into traditional banking territory.

And finally, here’s what Katie’s interested in this morning (August 18, 2021 Bloomberg) Much has been made of the fact that Treasuries have been a pretty lousy buffer when it comes to cushioning equity market pullbacks. Turns out high-grade corporate bonds are losing their luster as well. JPMorgan Chase strategists crunched the numbers and found that prices on investment-grade bonds and U.S. stocks are the most positively correlated since 1997 on a one-year trailing basis. If you broaden that out to a three-year trailing basis, total returns for the two asset classes are still moving in tandem by the most since 2008. That’s a new dynamic: stocks and credit have moved inversely for much of the past two decades, they said. The bad news: that doesn’t leave an investor many options when it comes to hedging. The good news: We can blame the Fed, kind of. “HG credit has become more correlated with stocks and thereby also more correlated with the HY bond market,” JPMorgan analysts led by Eric Beinstein wrote in a report. “This, in our view, is the result (at least in part) of so much QE-driven liquidity in the market that investors are buying everything: stocks and bonds.” That’s an easy answer, but it’s not the only one. “Exceptionally strong” corporate earnings may be driving a company’s share price and debt higher in tandem. We’re getting another taste of how strong Corporate America is about halfway through the second-quarter reporting period. Nearly 88% of S&P 500 companies have beaten earnings estimates so far, according to Bloomberg data. No matter the explanation, the fact remains that there’s one less tool available to diversify equity risk with. “Traditionally portfolio theory says that bonds are a diversifier for equity market investments,” the strategists write. “This has not been the case recently, with the risk that it also remains not the case if/when there is an equity market selloff.”

September 3, 2021 BLOOMBERG This wasn’t supposed to happen. Bitcoin wasn’t supposed to bounce off the lows before wiping out all late-comers to the rally that started last year. It was supposed to drop at least 80%, as it did every previous time prices exploded higher. This time is different. The original cryptocurrency got above $50,000 on Thursday. As recently as mid-July, it changed hands below $30,000. Yet the total drawdown, which measures the peak-to-trough decline, was just 52%. The probable explanation is that it is now more integrated into the global financial system. In the past, trading as an uncorrelated asset in a parallel system on its own unregulated exchanges, Bitcoin truly was the wild financial west. Investors were as likely to see their stake stolen as they were to realize profits. That’s no longer the case. Today there are a number of recognized and trusted trading avenues, ironic for an asset that was supposed to solve the algorithmic problem of trust. CME’s futures give professional investors a mechanism to gain price exposure without holding Bitcoin. Retail investors can gain access on venues like PayPal, circumventing earlier problems with custody. Exchange-traded funds and contracts are available in many jurisdictions, albeit not the U.S. In short, the crypto universe is showing early signs of maturity, so its extreme volatility can be expected to subside. Just don’t expect it to happen all at once. Eddie van der Walt is a Markets Live reporter and editor for Bloomberg News in London. @EdVanDerWalt

How Much Exercise Do We Need to Live Longer? Two studies suggest the sweet spot for longevity lies around 7,000 to 8,000 daily steps or about 30 to 45 minutes of exercise most days. To increase our chances for a long life, we probably should take at least 7,000 steps a day or play sports such as tennis, cycling, swimming, jogging or badminton for more than 2.5 hours per week, according to two, large-scale new studies of the relationship between physical activity and longevity.

And highlights from past newsletters...

Retirement basics: Understanding how RRIFs work It's no secret that saving for retirement is one of the most important things you can do to secure your financial future. While there are a number of paths Canadians can take, RRSPs remain one of the best ways to build retirement savings.

CPP contributions: How much CPP will I receive when I retire? The Canada Pension Plan (CPP) is a defined benefit pension plan administered by the federal government. It's purpose is to provide working Canadians with a source of guaranteed income when they retire. How Does the CPP Work? While you are working, you contribute to the CPP through regular deductions from your paycheque.

The article below is quite long but if you have any interest in learning about the possible future of gold and bitcoin it is worth the time.

Why Gold And Bitcoin Are Popular Alternative monies like gold and bitcoin generate more controversy than most other asset classes. This article sheds light on why a sizable minority of people like them.

STATEMENT DEFINITIONS Some of the most regular questions I get are about statement definitions. Here are the most common ones. If you have others please let me know!

  • Book Value: The amount of your account that you have paid tax on. OR the amount deposited plus the amount you have paid tax on. It's not a very relevant number inside a registered account like an RRSP as all income is taxable. It is more applicable to non-registered accounts. It will represent the amount you can take out of these accounts tax-free.

  • Net Invested: This is the amount of money you have deposited to your account. BE AWARE however that in some circumstances if multiple fund changes occur this number may look excessive as it can be double and triple counted and make it appear you've invested more than you actually have.

  • Market value is simply the value of the account as of the last day the markets closed.

  • Gain/loss is the dollar value of the amount of money made or lost for the period in question.

  • RoR is the percentage rate of return for the period in question.

Manulife New Underwriting Limits. NO FLUID Requirements! You can now purchase life insurance without providing any fluids including blood and urine samples. Up to $3m for ages 18 - 50 and up to $1m for ages 51 - 60.

Cryptocurrencies explained by John Oliver. Best explanation I've heard yet! Warning, offensive language!

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