Insights: Not all or nothing, electric vehicles, creating a legacy + Saint Patrick’s blue?
Good reads:
Best quote of the week:
"May the best day of your past be the worst day of your future." – Irish Blessing
Best visuals of the week:
When markets are bumpy, investors often can’t see the forest for the trees. This is completely understandable, particularly in the age of social media and non-stop news everywhere you turn.
It’s important to remember the long-term benefits of the stock market though, particularly with regards to beating inflation and compounding wealth.
Below is a great chart from A Wealth of Common Sense that shows the average returns of stocks vs bonds vs cash, along with the best and worst performance of each asset class. The higher risk asset (stocks) produced substantially more return, but came with a greater degree of volatility. In other words, there is no such thing as a free lunch – in order to get the higher return, some level of discomfort was the tradeoff.
Of course, investing is not about all or nothing. You don’t need to have everything in stocks or everything in cash. It’s about finding the right mix for you (i.e. the right asset allocation) and sticking with a plan. And most importantly, not allowing short-term market volatility to cause you to drastically change that plan.
“Cash has a place in a portfolio for short-term liquidity needs and stability. Bonds have a place in a portfolio to provide income and protection against deflation and disinflation. Stocks have a place in a portfolio to provide higher expected returns and protection against the long-term impacts of inflation. I just think it’s difficult to constantly shift your asset allocation into and out of these asset classes without causing some harm to your investment plan. Asset allocation is for patient people” – A Wealth of Common Sense article
Here is another great chart that helps to visualize why it’s important to ignore the noise, as best possible! The chart was provided by BMO Global Asset Management and shows how stocks have historically recovered following market downturns. From stagflation of the 1980s to the global financial crisis of 2008, markets have bounced back – and perhaps sooner than you would’ve thought.
Best soundbite of the week:
Considering buying an electric vehicle? Obviously there are benefits for the environment, but many people are opting for them based on perceived cost savings. Barron’s did a great article that outlined some key considerations from the financial perspective. They found that EVs may take five to six years to break even compared with gasoline models, factoring in higher upfront prices and expenses like electricity, insurance, maintenance, and depreciation. However, they noted that the difference really depended on the model. Here are some key excerpts from the article (prices in USD):
· The place to start the number-crunching is with the transaction price. The average price of an EV is about $60,000, generally at least $10,000 more than a comparable gas model.
· You’ll then have to factor in the cost of gas versus charging. According to the Natural Resources Defense Council, the cost of charging an EV at home is equivalent to filling up a gas model at roughly $1 per gallon. The current national average is $3.45 per gallon.
· Another factor is the cost of a high-speed home charging station. The popular JuiceBox 40 runs about $650, and the ChargePoint Home Flex, about $750. Installation costs vary from about $1,000 to $6,000 depending on how close the charger is to the home’s electrical panel, and whether you need a new panel and electrical upgrade.
· Insurance is another variable. Premiums for EVs typically run 5% to 15% more than for gas models.
· Another key variable is your states’ electricity rates, relative to gas prices, and incentives for buying and owning an EV, which can include state tax credits and rebates for EVs and charging installation.
· One positive for EVs is that maintenance should run less than the cost of gas vehicles because there’s no need for things like oil changes and other traditional upkeep. Five-year maintenance costs for the Ford F-150 Lightning EV, for instance, are estimated at $6,187, compared with $7,189 for the gas pickup, according to AAA.
· Depreciation, or resale values, used to be a big disadvantage for EVs. But battery technology has improved sharply, so the cars last longer before a battery needs to be replaced. That is helping to narrow the depreciation gap.
You’re Invited: One Size May Not Fit All – Creating a Meaningful Legacy in Your Estate Plan
Whether you are a business owner, retiree, professional/executive, single, part of a married or common law couple, or part of a blended family, more and more Canadians are looking to do good for causes that are close to their hearts. Did you know that in the last few years, over 5.5 million Canadians donated almost $11 billion to charity on an annual basis?
If leaving a lasting legacy is important to you, join us to hear valuable insights and ideas on how to achieve your charitable goals.
Date: March 30, 2023
Recommended by LinkedIn
Time: 10:00 am PT/ 1:00 pm ET
Contact me for a registration link: kim.inglis@raymondjames.ca
In case you missed it:
When it comes to financial planning, there are some challenges that tend to be more commonly experienced by women. I had a great chat with Jonathan Forsgren from Asset TV Canada where I highlighted some of those challenges + shared advice on how to better address them. Watch the full interview here:
I’d love to hear from you
Do you have a question about the markets? Or perhaps you’d like to learn more about a particular financial planning topic? Maybe you’ve got a question about your own personal situation?
Send me your question, and I’ll include it as a topic in an upcoming newsletter: kim.inglis@raymondjames.ca.
Beyond the markets:
Today is St. Patrick’s Day, so I would be remiss if I didn’t share some fun facts about it. Here you go:
· Historians generally believe that St. Patrick, the patron saint of Ireland, was actually born in Britain (not Ireland) near the end of the 4th century. At age 16 he was kidnapped by Irish raiders and sold as a slave to a Celtic priest in Northern Ireland. After toiling for six years as a shepherd, he escaped back to Britain. He eventually returned to Ireland as a Christian missionary.
· Legend had it that St. Patrick stood atop an Irish hillside and banished snakes from Ireland—prompting all serpents to slither away into the sea. In fact, research suggests snakes never occupied the Emerald Isle. There are no signs of snakes in the country’s fossil record.
· The original Irish name for leprechaun is “lobaircin,” meaning “small-bodied fellow.” Belief in leprechauns likely stems from Celtic belief in fairies— tiny men and women who could use their magical powers to serve good or evil. In Celtic folktales, leprechauns were cranky souls, responsible for mending the shoes of the other fairies.
· The shamrock, a three-leaf clover, was called the “seamroy” by the Celts and was considered a sacred plant that symbolized the arrival of spring.
· Though we've come to associate kelly green with the Irish and the holiday, the 5th-century saint’s official color was “Saint Patrick’s blue,” a light shade of sky blue. The colour green only became associated with the big day after it was linked to the Irish independence movement in the late 18th century.
· St. Patrick’s Day used to be a dry holiday. It’s a national holiday in both Ireland and Northern Ireland, but up until the 1970s, pubs were closed on that day. Before that time, the saint’s feast day was considered a more solemn, strictly religious occasion.
Sources: History.com, Mental Floss
Thanks for reading, and I wish everyone a great weekend!
Cheers,
Kim
Kim Inglis, BCom, CIM, PFP, FCSI, CAFA
Portfolio Manager
T: 416.777.6417 (Toronto)
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