Golden Girl Finance
Teri Courchene
Posts (4)


The tell-all guide to ETFs

June 13th, 2017 by

Low-cost, easy-to-trade, large variety...what's not to like? (Hint: Read the fine print)


The first exchange-traded fund in the world, called TIPS, was launched on the Toronto Stock Exchange in 1990. (Yeah, Canada!) Back then, choosing an ETF was easy because there were so very few. Today, there are thousands of ETFs on the market.

Before you buy, it pays to understand the unique benefits (and risks) of this investment product.

The lowdown

What are the key benefits of ETFs?

  1. Very low cost 
  2. Trade like a stock
  3. Wide variety

The primary appeal of ETFs is that investors can build their own portfolios at a low cost. Low management expense ratios (MERs) – usually less than 0.5% per year— are much less than for comparable mutual funds which can charge up to 2-3% in MERs annually. The fact that ETFs trade on an exchange, like a stock, means investors can trade them throughout the day at a low cost by using a discount broker. The incredible variety in ETFs, ranging from traditional stock and bond index funds to commodity and derivative ETFs, means there’s an ETF for almost any investment strategy. 

Risk and reward

But ETFs come with risks too: 

  1. Market Risk
  2. Risk of Impulse Trading
  3. Liquidity Risk

Every ETF faces the risk related to the market to which the ETF is exposed. Of course, this applies to all investments. However, not all investors take the time to fully understand what particular markets to which an ETF may have exposure. This information can be found on the ETF Fact Sheet. An ETF that tracks the S&P/TSX will earn the same overall return as this index (minus fees and trading costs) and face the same risks as the index. But what about more exotic ETFs like “dynamic beta”? (Whaa?) For these, it’s imperative to read the ETF Fact Sheet to find out about the ETF’s investment strategy, benchmark, portfolio characteristics, top holdings, among other attributes.

What appears to be an advantage of ETFs (easy to trade) also becomes a double-edged sword. During market volatility, the easy access to trading ETFs may lead some investors to panic selling since many ETFs are very liquid. In this case, investors may lose out on the benefits of holding investments over the long term. Always refer to your investment plan to avoid emotionally-driven trading. 

Does the ETF you wish to purchase trade regularly and in sufficient volumes? How large is the gap between the bid and ask prices quoted? If the gaps are large, this should ring a warning bell that the ETF is not very liquid and you may not be able to trade in and out as easily as you expect—especially during periods of heightened volatility. 

Fact of the matter

There’s no doubt ETFs have changed the investing landscape for the better. Once you’ve identified your investment goals and adopted a relevant investing strategy for achieving them, ETFs are a low-cost way to implement your strategy on your own. 

If there’s one piece of advice you take away from this article, it’s: Read the ETF Fact Sheet!

To learn more about ETFs, check out's ETF University and Canadian ETF Association’s Information Centre.


Why Mastermind groups are making a comeback

May 23rd, 2017 by

Behind every great leader...


Mastermind groups have been around for close to 100 years but lately they’re popping up everywhere, especially women-only groups. Have you set a goal to bring your business to the next level, but you need some inspiration and support on the way? A Mastermind group could be just the ticket. These are mentoring groups that have several key features:

  • Small, carefully chosen groups of motivated, successful members
  • Members brainstorm ideas and hold each other accountable
  • Diverse skills, experiences and interests among members
  • Commitment to structured meetings—either in-person or online

GGF visited one successful Mastermind group at Verity Club, an elite women’s club in Toronto that’s been hosting Mastermind groups since 2005. According to Mary Aitken, founder and CEO of Verity, there are currently 14 Mastermind groups meeting regularly at Verity, representing 112 women. 

Aitken envisioned Verity as a home away from home. The club opened in 2004 and has 800 members today. Located in a former chocolate factory in downtown Toronto, it has a top-rated George restaurant, a boutique hotel called Ivy, and Sweetgrass Spa, each of which are open to the public. Club members also have access to quiet workspaces, meeting rooms, dining areas, fitness classes, a hairdresser, makeup artist, flower shop, pool, hot tub and steam room. 

Talking club rules with Mary Aitken

GGF: What’s the key benefit for women who join a Mastermind group? 

MA:  Accountability. It’s all well and good to state your hopes and dreams and goals but it’s another thing to stick to them and achieve them. Members are held accountable to the group but the group is supportive rather than judgmental. This enables members to test challenges that they face and come up with alternatives in a non-competing atmosphere. They attribute their success in reaching their goals to participation in their Mastermind group. Our Mastermind groups meet regularly, and are run according to strict guidelines by a facilitator.  Another key benefit is the informal learning that happens within the club from others with diverse experience. It’s easy to meet up over a coffee to talk in between meetings. 

GGF: Do Mastermind members have to be in the same business? 

MA: No. We put together groups of 8 diverse, successful women—not friends, family or working colleagues. They benefit from hearing different, informed points of view. Our Mastermind groups are carefully curated to create chemistry and bring together a wide range of transportable skills. The groups can stay together for a year or two—or some continue for much longer and develop strong relationships.  One of the key features is confidentiality—each member signs a confidentiality agreement at the outset.

GGF: Why do Mastermind groups work so well at your club?

MA: Verity is the only club of its kind in the world – a bricks-and-mortar social enterprise designed exclusively for women. It allows women to recharge outside the silos of work and home. In other words, we are community of women helping each other. Mastermind is a natural fit for Verity, and a critical part of our club. Men have had networking opportunities and men’s clubs for a long time—and it’s important for women to have these opportunities. It’s our turn. It’s our time. We will all benefit from the success of this club. 

Rise together

Although not all of us can have access to Verity, we can learn from its successes. The Mastermind idea of bringing together a diverse, committed group of women holding each other accountable for reaching their goals could be implemented anywhere. The key is the commitment to work together to reach goals. A quick online search will lead you to many established Mastermind groups in your region. Alternatively, you may want to set up one of your own.

Whether we’re part of a formal Mastermind program or informally mentoring each other, Aitken is right: “It’s our turn. It’s our time.” 


When weight gain is a good thing

May 9th, 2017 by

Important changes you can expect on your investment statements this year


As a woman over 50, I can vouch that weight gain does not usually bring happiness. Yet, as an investor, it’s all about gains—the more, the better!

When time isn’t money

On your investment statements, you may see the term “time-weighted returns” (more on this later). Starting this year, investment statements will show “money-weighted returns”. What’s the difference? Which one is better? The short answer is that both are valid, although there are pros and cons of each. 

Let’s have a look: Suppose best friends Sue and Jane each use the same adviser and invest the same amount in the same portfolio during the year. The portfolio does great in the first half of the year, but lags in the second half.

Sue invests $10,000 on January 1st. Her investments rise 20% in the first half of the year and drop by 10% in the second half. By the end of the year, her portfolio is worth $10,800.

Jane staggers her deposits. She invests $5,000 on January 1st and another $5,000 on July 1st. By the end of the year, Jane’s portfolio is worth $9,900.

It’s all about TIME for portfolio managers

For portfolio managers, it’s all about time. The time-weighted method shows the results of the manager’s investment decisions over a specific time-period; they’re not affected by client contributions or withdrawals. This allows managers to compare their results with those of others, as well as to industry benchmarks. 

The time-weighted return for the year for both Jane and Sue was a gain of 8%. 

It’s all about MONEY for investors

But from an investor’s point-of-view, it’s about gains and losses in the portfolio. At the end of the year, when her adviser tells Jane that her time-weighted investment return was 8%, she’s going to flip! But her advisor is correct. 

However, when using the money-weighted method, Jane’s return was minus 1%. That’s because money-weighted returns include cash flows, as well as the performance of the underlying investments.  

With no inflows or outflows from Sue’s portfolio, her money-weighted return is the same as her time-weighted return: a gain of 8%. But, because Jane added funds just before the market downturn, her money-weighted return is worse than her time-weighted return. (If she had added funds just before a market upturn, then her money-weighted return would be higher than her time-weighted return.)  

Money-weighted return is also called a “personal rate of return” since it accounts for the investment performance, as well as personal decisions to deposit or withdraw funds from the portfolio. 

One drawback of using money-weighted returns is you cannot compare them directly to market benchmark returns since the measurement methods differ. On the other hand, money-weighted returns more closely match your personal experiences of gains or losses in your portfolio. 

Let them eat cake

So, Sue takes the cake for her investment acumen of being fully invested during a market upturn. Sue can have her cake and eat it too, but I recommend sharing it with Jane. After all, friendships are far more important than investment gains.

Stock Market

After a long rally are we in for a shock?

March 28th, 2017 by

5 must-knows about today's bond markets


Investors have enjoyed a bond market rally for the past few decades but, sadly, all good things must come to an end. Like Yogi Berra said, “the future ain’t what it used to be”.  Having become accustomed to steady bond returns for decades as interest rates trended downwards, investors may be in for a rude shock if interest rate rise.

Here’s what you need to know about bonds today:

Diversification is queen

One of the key reasons to have bonds is the diversification they provide: bond returns are inversely correlated with stock returns. That means if equity markets go down, high-quality bonds almost always go up. Adding high-quality bonds to a stock portfolio lowers the overall risk.

Extreme couponing – how low can they go?

Buying bonds has rarely been as unappealing as it is now. A $1,000, 10-year Government of Canada bond (the top quality bond) carries a coupon rate of 1.8 per cent per year. (Compare this to the same quality of bond 20 years ago that paid 7 per cent.) Today’s bond yields are similar to rates on guaranteed income certificates (GICs). In other words, they are barely keeping pace with inflation before taxes. There are higher-yield bonds in the market, such as corporate bonds, but they carry more risk than bonds backed by the government.

The 'See-Saw' effect

Interest rates and bond prices are like a see-saw. When one goes up, the other goes down; when interest rates rise, the prices of bonds will decrease. Here’s why: Let’s say interest rates rise to 3%. The new $1,000, 10-year bond has a 3% coupon. Now, your measly 1.8% bond is less attractive to buyers, so the price drops. (Note that if you hold your bond to maturity you still get your principal back. You would only incur a capital loss if you sold your bond before maturity.)

The name's Bond Funds

The bonds held inside a mutual fund or exchange traded fund are traded on a regular basis, locking in losses if interest rates rise. The longer the term to maturity, or the duration of the bonds in the fund, the bigger the negative impact of a jump in interest rates. Many investors prefer to hold bond funds rather than individual bonds, since bond funds are easier and cheaper to buy, and they can be held indefinitely. Note that just as the price of the bond fund goes down when interest rates rise, the price would rise if interest rates fall down the road.

What should you do?

The answer depends on whether you’re a passive or active investor. A passive investor trusts her asset allocation and rarely deviates from it. In that case, if the bond portion of her portfolio underperforms, she’ll buy more bonds/bond funds the next time she rebalances to get back to her original asset allocation.

On the other hand, if she has a more active investment style and expect rates to rise, she’d act now and invest in bonds with shorter bond durations or even reduce the proportion of bonds in her portfolio. As a substitute for bonds, she could simply shop around for short-term GICs with favourable rates. Not a bad place to park some of the money while waiting to see where rates go.  

Preparing for the shock

Given our historically low interest rates, they’ve got to head higher at some point. If you work with an adviser, a good conversation-starter would be “where should I invest as interest rates rise?”