This week I came across a more than surprising article. The article referenced a report from UBS in Switzerland. They handle investment accounts for many of the richest folks on earth. What was surprising is that many of them borrowed monies to invest at or near the recent market bottom. Don’t they have enough? Or when the world’s richest borrow to invest, are they simply showing us the way?
Here’s the article link and headline …
And from that post …
Billionaires looked after by Swiss bank UBS are looking to move their cash out of equities after profiting from an unprecedented sell-off and rapid rebound from March to May, the world’s largest wealth manager said on Thursday.
During the rout in stock markets across the globe in March, UBS’ richest customers took out loans to place billions into crashing stock markets. They are now looking to pull that money from equities and put the profits in illiquid and private assets, UBS’ head of global family offices told Reuters.
So they borrow to invest, and now they take the money and run.
That seems contrary to how a family office (who cater to the more affluent) would act. From my discussions with industry types, the goal is more about protecting and growing wealth. It’s about preserving wealth through generations.
Keep in mind that UBS is not referring to a typical multiple family office. A single family office is just an investment structure (Corp, LLC, etc) which a family’s members invests through.
The transfer of wealth and property.
In MoneySense Jason Heath offers a wonderful post on capital gains and the cottage transfer or inheritance.
There is a 1994 capital gains tax election. At that time property owners would have been able to eliminate $100,000 of capital gains. That elimination of cap gains is up to that point in time. Future gains after 1994 would still have to be applied and paid.
My wife will be gifted a cottage, or it will come by way of inheritance. My father-in-law had often stated that he had ‘prepaid’ taxes of $150,000 on the property. Jason offers that pre-pay is not an option. My father-in-law must have been referring to this capital gains tax election. He may get to $150,000 buy using $75,000 for himself and his wife.
The next two decades or more will bring the greatest transfer of wealth in history. It is crucial that we understand how to transfer assets in the most tax efficient manner possible. Advice is likely required.
One common mistake is leaving large RIFF accounts for the tax man. Moslty we do not want large investment portfolios in the estate.
The rich will have more issues and complexity. They are already advised. Join them.
Design the life you want.
Here is a very inspiring post from Mike on The Dividend Guy. Mike describes the exciting but more than trying journey after leaving the regular rat race and finding his own way. Mike has a lot of courage, but mostly a lot of optimism and positive energy. He’s a can-do type of guy.
Mark Seed offers his June portfolio income update. He’s seen a few dividend cuts but he’s staying the course. Mark holds many of the top holdings in BMO’s Low Volatility ETF and those found in the TSX 60. He’s creating his own blended index.
And here’s an interesting way to frame that portfolio income …
It’s the equivalent of earning $9.79 per hour assuming I work a 40-hour work week ($20,360/2,080 hours (40 hours x 52 weeks)). Then again, some of that income is 100% tax-free (thanks TFSA).
John DeGoey is connecting dots on findependencehub.
Lessons from the pandemic.
A provocative and insightful post from VOX … lessons from the pandemic.
So many incredible charts and observations, including …
Greater profitability today, compared to the 70’s …
At GMO they are not worried about elevated profit margins. And speaking of interesting charts, here’s a look at the elevated profits at S&P 500 companies.
6% annual returns for US stocks?
Goldman Sachs predicts 6% annual for US stocks, with a 90% chance of beating bonds. Surprisingly the belt goes to bonds over the last 20 years, with Treasuries beating the stock market.
For Morningstar Ruth Saldanha looks at the stagnant strategic beta market in Canada.
Strategic beta is another term for smart beta.
And bad news on the economic and COVID-19 front …
What does it take to become a financial expert? Lowestrates.ca talked to six personal finance pros to find out. (Bruce Sellery, Bola Sokunbi, Enoch Omolulu, Erin Lowry, Desirae Odjick, and Preet Banerjee).
That is a great read. Most of the insights are well beyond the scope of being labelled a financial expert.
And here’s an interesting bit on FAANG stocks from Barry Ritholtz. FAANG stocks get 43% of their revenues from international markets. It’s about that global recovery.
This week I also found this more than interesting chart on the FAANG performance and contribution to the S&P 500. In this case it’s FANG, no Apple.
DiNero’s out of dineros?
The pandemic has hit everyone, even the rich. Here’s …
Chris Rock entered the conversation with …
If Bill Gates woke up tomorrow with Oprah’s money, he’d jump out of a window and slit his throat on the way down saying, ‘I can’t even put gas in my plane!’
On Mauldineconomics Roberts Ross applauds Warren Buffett’s purchase of pipeline assets.
Maybe we should follow the master he suggests. Mr. Ross likes two Canadian staple pipelines. Who doesn’t like gushers of dividends?
And last but not least, on Cut The Crap Investing Leo Gutierrez offered a wonderful guest post.
Thanks for reading. Don’t forget to follow, and share this post.
And this just in, my latest weekly wrap for MoneySense …
Canada’s top-ranked discount brokerage.
Cut The Crap Investing readers can sign up with Questrade (Canada’s top-ranked discount brokerage) through this partnership link. You can buy ETFs for free, including the wonderful one ticket options.
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