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Managing Money as a Student
by FCNB on 

Managing Money as a Student

Tuition, books, housing, groceries, bills…paying for post-secondary education and avoiding a heavy debt load is definitely a big challenge – but it’s not impossible. You can find lots of ways to save and manage your money while you’re studying.

Having a budget is a great place to start. But, according to data from the 2014 Canadian Financial Capability Survey, only a third of 18- to 24-year-olds has a budget. Here’s a round-up of tips and tools you can use to help keep your money in check so you can spend more time enjoying student life and less time worrying about your bank account!

Live Within Your Means (aka Budgeting)

Budgeting as a student can be tough, with irregular income, or student loan funds to manage. Consider all the different sources of income available and consider how to supplement these with free money (woohoo!). Many scholarships, bursaries and grants go unclaimed each year. Don’t leave free money on the table, Apply for any that you are eligible for – the more you earn and pay out of pocket, the less you’ll have to take on as debt.

Here are some tools to help:

Money Milestones Series:

Student Loan Tips from the Financial Consumer Agency of Canada (FCAC):
“You can repay your student loan faster by increasing the size of your monthly payments. The amount you pay over and above your monthly minimum payment will go directly toward the principal of your loan, which reduces the amount of interest you'll pay. Find out more about repaying your student debt

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Live Within Your Means – How to Keep the Money In/Money Out Scales Balanced
by FCNB on 

This week is all about living within your means.  And while it may bring to mind thoughts of cutting back or missing out, we’re here to tell you that being smart with your spending doesn’t have to lead to a major case of FOMO (Fear of Missing Out).  Small changes in your spending habits can have a big impact on your overall financial situation.

It’s a balancing act – and the most important thing to balance is money in/money out.  Living within your means is not always easy, but it is the best way to avoid excessive debt. If you spend more than you earn and find yourself relying on debt to make ends meet, you can easily get caught in the debt spiral.  A heavy debt load also makes you more vulnerable if your financial situation changes or if you need to pay for unexpected expenses.

Here are some tips and tools from FCNB to help you build a budget that works and manage debt so you can get (and keep) the money in/money out scales balanced!


Managing Credit - Credit is not extra income! 

Tips for Living Within your Means (from the Financial Consumer Agency of Canada)

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Mutual Funds, Index Funds, ETFs – who is the real winner?
by FCNB on 

Mutual Funds, Index Funds, ETFs – who is the real winner?
Yankees versus Red Sox…Rebel Alliance versus the Galactic Empire… Maverick versus Iceman… Team Edward or Team Jacob…  Each generation has seen and lived through an epic rivalry, but these pale in comparison to the current one raging in the investment world: passive versus active investing.

People are divided, strongly supporting mutual funds,  index funds or exchange-traded funds (ETFs), as the financial product of choice.   So how is an investor supposed to decipher the meaning behind all the blog posts, decades-long bets, and financial news to choose the right product and approach for them?

First, let’s meet the contenders.

What is a Mutual Fund?
A mutual fund is a collection of shares, bonds or other types of investments.  Mutual funds are actively managed by an investment company, for a fee, on behalf of investors.  A portfolio manager chooses the investments that the mutual fund will hold, hoping to choose investments that will be strong performers and avoid poor performers.  (This is known as an active fund management – more on this in a minute).  Different types of mutual funds are available, including money market funds, bond funds, growth or equity funds and balanced funds, among others.

What is an Index Fund?
An index fund is a subset of mutual funds.  An index fund closely tracks the performance of a particular benchmark.  For example, if the fund is tracking the S&P 500 (i.e. the index that tracks the performance of 500 large-cap companies on the New York Stock Exchange), then it will need to hold the majority, if not all, of these companies.  The goal of an index fund is to mimic (or track) the market’s performance.  Indexing is a passive form of fund management.

In general, there are two types of index funds: index mutual funds (a lower-cost mutual fund that tracks an index and is not actively managed by a portfolio manager), or ETFs.

What is an ETF?
An ETF is a subset of index funds.  Like mutual funds, ETFs bundle together a variety of financial products to help diversify and minimize risk, and do their best to mimic an index or sector.  Unlike mutual funds, ETFs are traded on the stock market.  ETFs track the performance of an index or a sector instead of a single stock.  There are ETFs that allow you to invest in bonds, equities, specific sectors (such as emerging technology), foreign currencies, and more. 

So…which one is right for me?
Before choosing a product, it is important to understand how each is structured, and what type of investing strategy it employs. 

Enter: active investing versus passive investing.

Before deciding if you are more comfortable with an actively or passively managed fund, here are some points to consider and discuss with your financial advisor:

Are you happier being a passive or an active investor?
Passive Investing - Slow and steady wins the race. Successful passive investors have a buy-and-hold mentality.  They keep their eye on the prize and are able to ignore short-term setbacks. This can be hard – investors tend to want to chase past returns and avoid losses at all costs.  Successful passive investing limits the amount of buying and selling within a portfolio, even when facing big setbacks. 

Active Investing – Show me the money!  Successful active investors try to beat the stock market’s average returns.  They have a more hands-on approach: picking and choosing what they think will be big winners and taking advantage of short-term price changes.  Successful active investors believe they can beat the stock market – they analyze the right time to buy or sell and, if successful, are right more often than wrong. 

How comfortable are you with weathering volatility?Volatility exists in every investment portfolio.  The market goes up and down in value regardless of which type of fund you purchase or strategy you employ.  It just may look a little different depending on your approach.

Because the goal of passively managed funds is to track the market, you are unlikely to see large boosts of returns in the short term (unless the market has a boom).  Passive investors believe that, despite ups and downs, the market will trend upwards in the long run.  That also means if the market sees a drop in the short term, so will your fund.  This will be a challenge for some investors to stay steadfast in the face of setbacks. Since passive funds track an index or sector, you are limited to investments in these areas, no matter what happens in the market. 

In an actively managed account, opportunity may exist for larger gains in the short term. In an active investing strategy, the portfolio manager picks stocks with the goal to beat the market.  If the portfolio manager is right, the investor may realize high returns. If they are wrong, the investor is open to higher potential losses.  This is challenging for some investors too, because we feel the hurt of a loss much more than the pleasure of a gain of the same amount.  Portfolio managers aren’t restricted to follow a specific index.  They can use techniques like hedging, short sales or put options, or leave stocks or sectors completely when the risk gets too high.  An investor must be prepared and comfortable with the potential volatility and risk, and confident in the portfolio manager’s ability to beat the market. 

How much does it cost?
In general, a passive investing strategy results in lower fees than an active investing strategy.  This may boost returns in the long run.  While ETFs are attractive to many investor because of the lower fees (relative to comparable mutual funds), don’t forget about trading costs!  When you buy an ETF, you may have to pay trading fees, which could actually make this option more expensive than an actively managed mutual fund.  An actively managed fund is more expensive for the investor. 

An actively managed fund requires a portfolio manager as well as analysts and other professionals to help manage the fund.  The fees and costs associated with transactions, portfolio management, and other administrative costs are paid for by the investor.

Be sure to talk to your advisor about all the fees involved to buy, sell and hold any investment.   

If you do not hold your investments in a tax sheltered plan (like an RRSP), the buy-and-hold strategy of passive investing can help avoid capital gains tax for the year. 

Active investors can also maximize tax efficiency with an actively managed portfolio using tax management strategies to offset capital gains taxes.

You should consult a tax expert for more information on the tax benefits and disadvantages for each investing strategy.

And the Winner Is…
In this rivalry, there’s no clear winner.  After you speak with your financial advisor, you may find a clear winner, or you may find that a combination of the two will work best to meet your needs.  Each investor is unique in their financial situation, needs and risk tolerance.  Talk to a financial advisor, who can help build a portfolio that’s right for you!

Firms or individuals who are registered (or required to be registered) are known as registrants.  While many different titles can be used, it is the category of registration that will tell you what a registrant is allowed to do. 

Make sure you’re working with a financial advisor who is registered to offer the products and services you’re interested in. Check Registration

If you’re not already working with an advisor, use our 5 Steps to Choosing an Advisor workbook to help find one. 

The terms ‘advisor’ and ‘financial advisor’ used here generally refer to a financial professional, and do not indicate a category of registration or licence. The registration category and type of licence is more important than a title. Visit to check now!

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Seven wind farms, hundreds of Maritime owners: Learn how a CEDC can harness energy and community power
by FCNB on 

Seven wind farms, hundreds of Maritime owners: Learn how a CEDC can harness energy and community power

About 80 people braved the cold for a ribbon-cutting ceremony at a site just outside Antigonish, N.S. on a cold November day in 2012.

The wind was blowing, however, the strong gusts were likely welcomed with enthusiasm among those gathered for the opening of the Fairmont Wind Farm, funded in part by a Community Economic-Development Investment Fund (CEDIF). Many of them lived nearby and had joined together to finance the project, with the promise of dividends from the power it produces over the next 20 years.

A CEDIF in Nova Scotia is similar to New Brunswick’s Community Economic Development Corporation (CEDC) program. The Halifax-based energy developer Natural Forces established Wind4All for the Fairmont project. In total, more than 150 people from all walks of life had invested on average just over $14,000 each, raising $2.3 million.

 “As a company,” said Austen Hughes, the vice-president of operations for Natural Forces, “we were looking at this program and trying to understand the best way we could participate. It wasn’t open to for-profit organizations like Natural Forces, but it was open to to CEDIFs.”

New Brunswick’s community investment program, which will be explored during FCNB’s FullSail 2017, our annual event promoting capital markets in New Brunswick. Hughes is among our guest speakers for the free, one-day session, titled Exploring the Possibilities: Community Economic Development Corporations (CEDCs). It takes place on 14 November at the Dieppe Centre of Arts and Culture and includes a how-to session. Register here.

We spoke to Hughes to get a preview of his message at the event and how New Brunswickers interested in the province’s CEDC program could learn from the Nova Scotia example.

After Wind4All, Natural Forces established four more CEDIFs over the four succeeding years, all involved in wind farms.

The first one raised $2.35 million from 154 investors. The proceeds were used to acquire 35 per cent of the $11-million Fairmont Wind Farm.

In 2013, it established its second CEDIF, Wind4All Communities Inc., and raised $5.5 million to invest in two wind farm projects: one located in the Halifax Regional Municipality and the other in Cape Breton.

The remaining three invested in windfarms in Pictou County, Amherst and Cape Breton.

“For these projects, we were oversubscribed, which is a good indicator of the interest and appetite for investing in these kinds of projects.”

All five projects saw a total investment of more than $100 million in Nova Scotia in five years. All five also used local contractors and services. For example, more than 20 different companies worked on the first project, all hailing from Nova Scotia.

“We’ve always hired local contractors for the roads and the electrical, and even on the legal side,” he said. “The CEDIF program has allowed us to contribute a lot to the Nova Scotia economy.”

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You might be an investor if…you own bonds
by FCNB on 

You might be an investor if…you own bonds

In our conversations with New Brunswickers all over the province, we’ve come across a trend that might surprise you. When we ask people if they are investors, many of them say no when in fact they have a handful of investments to their name.
Why is that? Well, it’s because many of us have an image of what an investor looks like. It’s typically someone in a power suit, reading the Wall Street Journal daily to keep a close eye on the stock market. They have hundreds of thousands of dollars in their bank account and have an advisor at a brokerage firm on speed dial.

Does that sound familiar? Sure.

Does it look like you? Probably not.

The truth is, investing is for everyone. Are you contributing to an RRSP or a tax-free savings account? You’re an investor. Do you have money in a mutual fund? You’re an investor. Do you have a GIC?  You guessed it – you’re an investor!

October is Investor Education Month. That means everyone has an opportunity to learn something new about investing – whether they are seasoned investing veterans or total newcomers.

Today, we want to talk about five things you need to know about bonds :

1. What are bonds?

When you buy a bond, you are lending your money to a government or company (bond issuer) for a fixed period of time (term). In return for lending your money, the bond issuer promises to pay you interest for the term of the loan and to repay the money borrowed (face value) at the end of the bond’s term (the maturity date). 

2. How risky are bonds?

There is no such thing as a risk-free investment, and bonds are no exception. Bonds are subject to interest rate risk. This means as interest rates go up, the value of the bond goes down.  Keep in mind that higher returns mean accepting more risk. The opposite is also true: the lower the risk you are willing to take, the lower the returns you can expect to earn.

3. How can I make money?

There are two ways you can make money with bonds:

  • Holding bonds until their maturity date. You will not only get your initial investment back, but you will also receive interest payments while you hold the bond.
  • Selling a bond for more than you paid. When interest rates go down, the value of a bond would normally go up. By selling the bond in this situation, you may get more than you paid for it.  You will also have the interest payments you received while you held the bond. 

4. How can I lose money?

There are two ways you can lose money with bonds:

  • Selling a bond for less than you paid. When interest rates go up, the value of a bond would normally go down. If you have to sell your bond early for some reason, you could lose money.
  • The bond issuer can’t pay you the interest payments.  If a company is dissolved, their bondholders have a right to a portion of the company’s remaining assets, but they may not get back all the money they originally paid.

5. Are bonds right for me?

The answer to this will depend entirely on you, your current financial goals, and how much risk you’re willing to take on. Talk to your financial advisor to see if bonds are right for you. 

Want to know more? Be sure to check out our Saving and Investing page.

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