Wealth Building Strategies

U.S. household net worth jumps to record $142 trillion

Total U.S. household net worth — the value of all assets minus liabilities — jumped by $5.8 trillion to a record $141.7 trillion at the end of June, according to a report from the Federal Reserve released Thursday.

The value of corporate equities rose $3.5 trillion to $47 trillion in the second quarter and the value of real estate rose a record $1.2 trillion to $38.4 trillion, the Fed said in its quarterly report on the financial accounts of the United States.

Balances in currency, checking accounts, savings accounts and money-market funds rose by $200 billion in the second quarter to a record $17 trillion. Cash holdings of households have risen by $4.3 trillion since the beginning of 2020…read more.

Why are investors turning to mortgage funds?

Returns on GICs and “high-rate” savings accounts have been in general decline for decades. Investors in these low income-generating products now face an uphill battle as inflation accelerates, with countries printing money at an astounding rate. Real inflation numbers are difficult to peg, though we’re convinced that money earning under 3-4% is losing the war.

Investors have rationally responded to low rates and inflation by piling into equities and real estate, pushing each to new heights. This has left many in the enviable albeit somewhat confounding position of having an incredible year financially in the midst of a pandemic.

The question many of this group are asking is “What do I do now?” It’s an important question, though an increasingly difficult one to answer with confidence in the current economic environment. Stock market volatility is making investors hesitant to go all-in at current valuations. Low interest bearing GICs and savings accounts are often a non-starter for the reasons above. Investing in private mortgage funds, commonly referred to as MICs, has been part of the answer for many.

A mortgage fund lends money (secured against real estate) to borrowers that may not qualify for conventional bank financing. Typically, borrowers from mortgage funds pay higher interest rates than they would with a bank. As a result, mortgage funds are often a temporary solution until the borrower can qualify for a lower-rate mortgage.

For investors, mortgage funds have the potential to generate higher income than most fixed income products such as GICs, often targeting returns of 6% or higher. Distributions are typically made quarterly or monthly.
Another attractive characteristic of mortgage investing is defensive positioning. Holding the debt on a property typically carries lower risk than investing in the equity of that property. This is because equity is the first money to be lost if there is a market downturn, giving investors more peace of mind in today’s economic climate.

There are over 200 private mortgage funds to choose from in Canada and many factors can influence their risk and return. These may include the type of property lent against, loan-to-value ratios, the composition of mortgages (1st, 2nd, or 3rd), the quality of the borrower, and the calibre of the fund’s team, just to name a few.

Hawkeye Wealth has extensively researched numerous private mortgage funds to provide investors with vetted options at little to no additional cost, saving them time and helping them invest with confidence.

To learn more about investing in mortgage funds, how to assess risk and return, and how to participate if interested, you can watch our recorded webinar and access an investor package here.

Kevin O’Leary says he wants to more than double his crypto holdings to 7%

Celebrity investor Kevin O’Leary says he wants to at least double his cryptocurrency holdings by the end of 2021, and predicts that “trillions of dollars” could pour into the market if crypto becomes a new asset class.

The “Shark Tank” investor had previously said bitcoin was “garbage,” but he later changed his mind.

O’Leary, who is chairman of O’Shares ETFs, said he is bullish on crypto and wants to allocate more in his personal portfolio.

“I want to raise my exposure to crypto — currently at 3% — to 7% by the end of the year,” he told “Capital Connection” on Monday…read more.

Canadian investment portfolios took flight during pandemic lockdown

According to data released by Statistics Canada this week, Canadian investors acquired a record $57.2 billion in foreign securities during the spring months that constitute the second quarter of 2021.

The massive flow of investments were made by Canadian businesses, governments and big institutional investors, but also include individual retail investors either directly or through pensions, mutual funds and exchange-traded funds (ETFs).

It’s a sharp increase from the $40 billion invested by Canadians in the first quarter as investors plowed their cash into equities and debt securities like bonds.

StatsCan said the $20 billion invested in foreign debt securities was almost evenly split between corporate and government borrowers as Canadian investors scoured the globe for whatever meagre yields were being offered…read more.

 

How to Invest in the Booming Chip-Tech Industry

How much of the modern world is powered by chip-tech? From computers and TVs to cars and washing machines, chips (or semiconductor devices) enable almost all of our digital goods.

When the COVID-19 pandemic brought the regular world to a halt, it put a focus on our increasingly digital world and personal electronics. Even as consumption of major purchases like vehicles slowed down, more than 1 trillion chips were shipped globally in 2020.

As economies picked up and demand increased across all goods, a global semiconductor shortage started to impact the largest companies and economies in the world. All of a sudden, the global semiconductor field was front-and-center in the minds of politicians, executives, and investors…read more.

Wildfire Tech Finally Sees Investor Momentum

After years of hesitance, investors are finally warming up to wildfire tech.

Questions around monetization have generally been the reason financiers have avoided startups making technology to help combat wildfires.

According to Ahmad Wani, co-founder and CEO of disaster preparedness company One Concern, VCs tend to disregard business models that depend on governments as primary customers.

“As soon as you go to a venture capitalist and say the words ‘disaster’ or ‘government,’ they say, ‘You are a disaster. There’s the door,’ ” says Wani…read more.