Finance

Investing in Agricultural Commodities as an Inflation Hedge

March 15, 2023 by Ben Leave a Comment

Investing in agriculture directly may look like a wise strategic move at first. Regardless of whether the economy is weak or strong, people still need to eat. This is why farming and agriculture are considered recession-proof investments, except when armed conflict or war arises. Furthermore, as the world’s population is constantly growing, we will need even more food to be able to feed everyone.

Buying agricultural land can be a good investment strategy but is certainly not for everyone. Farming not only requires a substantial capital investment but leasing and operating a farm can be a costly and time-consuming endeavor. Fortunately, there are plenty of good ways to invest in agriculture such as mutual funds, ag ETFs, stocks, and farm REITs.

Stocks

Agriculture or farm stocks give investors access to major publicly-traded companies, including those involved in growing crops and businesses supporting farms. Investing in businesses engaged in crop and food production is one opportunity to explore. Examples of such publicly-traded crop production companies include AppHarvest, Adecoagro SA, and Fresh Del Monte Produce Inc.

Another option is to buy shares in various sectors that provide supporting activities. There are hundreds of thousands of companies that specialize in packaging, processing, distribution, and other supporting activities. Such sectors include crop processors and distributors, equipment manufacturers, and seeds and fertilizer producers. Many businesses are engaged in the production of seeds and fertilizers, for example, including companies such as FMC Corp, Corteva Agriscience, and Scotts Miracle-Gro. The sector was in haywire last year due to severe weather, new export-licensing regulations, and the high cost of natural gas. However, the ongoing conflict in Ukraine has made carriers shun Russia, which is a major fertilizer exporter, causing stocks to rise to record levels.

There are also companies that specialize in supporting activities such as processing, transport, and distribution of crops. Some examples include Bunge Limited and Archer Daniels Midland.

Note that while stocks provide good equity returns, the stock markets can be volatile due to adverse conditions, including economic, market, regulatory, and political developments. Foreign securities, in particular, are subject to multiple risks such as political, economic, and currency exchange rate risks. The agriculture and farming industries can be affected by government regulations, global competition, export and import controls, world events, consumption, and commodity prices. For all the reasons above, stocks are considered one of the riskiest investment products.

Farm REITs

Farm real estate investment trusts invest in a portfolio of farmland and then provide farmer-friendly leases. This is the closest you can get to operating an actual farm with the added benefit of significant diversification. REITs provide investors with the opportunity to own stocks in more than one farm and across geographies. Also, stocks have a better liquidity and can be quickly traded on the major exchanges. Unfortunately, there are just a few farm REITs to invest in, including Gladstone Land Corporation and Farmland Partners Inc.

Agricultural Mutual Funds

Some mutual funds invest in agriculture and farming businesses as part of their portfolio. The goal is to achieve long-term capital growth by investing indirectly or directly in equity-related securities and equities. Similar to stocks, investing in mutual funds can be risky as the value of securities can fluctuate. Adverse events such as floods, droughts, and fires can affect the commodities and agricultural markets and negatively impact demand and supply relationships.

Soft Commodities

Soft commodities are actually futures contracts whereby the underlying commodities are grown and not mined or extracted otherwise. This category covers a wide range of agricultural products, including livestock, wheat, rice, sugar, cotton, coffee, cocoa, and soybeans. Some exchange traded funds and notes give exposure to a single commodity, whether grains or corn, while others include a basket of commodities. The Invesco DB Agriculture ETF, for instance, specializes in sugar, soybeans, wheat, and corn futures contracts. The fund is only suitable for investors with a high-risk profile as it trades in volatile markets. The iPath Bloomberg Agriculture Subindex ETN also invests in a basket of commodities, including cotton, coffee, sugar, soybeans, wheat, and corn. As the ETNs have no principal protection, they are riskier than other types of debt securities. As unsecured debt securities, ETNs are not guaranteed or an obligation, indirectly or directly of a third party. In general, due to risks associated with pathogens and adverse weather conditions, soft commodity features are riskier and more volatile than other debt securities. Harvesting, seeding, and weather forecasts, for instance, can cause fluctuations in oilseed or grain prices, which can affect contract values based on delivery dates.

Using Agricultural Commodities as an Inflation Hedge

Agricultural commodities can be a good investment when inflation rises quickly. The price of agricultural products, industrial and precious metals, gas, and oil rises with inflationary pressures. Due to the fact that these commodities could be volatile markets, it is important to carefully choose the products you would invest in. Also, solid investment firms can be a good choice in uncertain times but commodities only make for a small percentage of the final product they sell.

Corn, soybeans, and livestock are considered some of the best farm commodities to invest in. Corn, for example, is a staple as livestock feed and in ethanol production. Over 1.2 billion metric tons are produced globally per year.

Investors use a variety of futures contracts and ETFs to trade for profit. When predicting price fluctuations, there are different factors they take into account, including oil and gas prices. When prices increase, the ethanol market sees a surge in demand, which results in a higher demand for corn. Also, there are more price fluctuations during the summer months due to the fact that corn is a warm-season crop. If crop-damaging storms occur, this may impact supply and market prices.

With livestock trading, there are different factors that play a role. One is the cost of feed such as soybeans, wheat, and corn. When prices are high, farmers may choose to shorten the period during which livestock is fed, resulting in excess supply. Illnesses that affect livestock, including outbreaks caused by parasites, bacteria, and viruses, also affect demand and supply.

Finally, soybeans are used in margarine, cooking oils, lumber, and building materials. Due to the fact that they have uses in a variety of food products, any news about adverse health effects could result in a low demand.

Best Canadian Bank Accounts

October 18, 2022 by James Todorov Leave a Comment

The two most popular account types are chequing and savings accounts. They are each useful for different things, with varied strengths and weaknesses catering to all kinds of people. Chequing accounts are the most common and are well suited to everyday routine purchases. Savings accounts are created to serve longer-term goals. They impose limits on withdrawals per month, allowing money to build in the account. Most banks also offer youth accounts, which usually present lower fees and high interest rates. There’s also the option of merging your finances with a separate individual, known as a joint account. Basically, every one of the big old established banks will offer these accounts and more, though other fresher options exist. Financial Tech companies are constantly growing in number, size and influence. They can often cut the usual fees because of their fully online presence, making them a great option for those looking to save money. There are many differences between chequing and savings accounts and it may seem overwhelming. This article will help you better understand the landscape of bank accounts and what the best option is for you.

Chequing Accounts

RBC offer four levels of chequing account. At $4/month, the RBC Day to Day Banking option is the most inexpensive in the range. Interac and e-Transfers are free. If you don’t make many transactions, this account could work very nicely. The levels above offer greater rebates and other small advantages here and there. At the top level for $30/month transactions worldwide are free and unlimited, whereas the others are Canada wide only.

TD chequing accounts have the same 4 level mold as RBC. Their Minimum Chequing Account comes in at $3.95/month with up to 12 free debit transactions per month, just like RBC’s Day to Day Account. One difference is that e-transfers cost $0.5-1.00 each with TD. This is not the case with their higher level accounts, which also offer boosted amounts of free monthly transactions and free annual rebates at the top two levels.

BMO chequing accounts offer a similar style of levels but have an added fifth option. Once again, the most basic account costs $4/month and comes with 12 free transactions. The accounts scale up at a similar pace to their competitors. The Plus, Performance and Premium BMO bank accounts offer $0 in monthly fees if you maintain a certain balance in the account.

This also goes for Scotiabank’s three higher level chequing accounts. Scotia’s basic account is $3.95/month with features that match all the former.

Savings Accounts

If you’re looking to save money for the future, here are some Canadian savings accounts which can help you reach your financial goals. Savings accounts offer varying interest rates which build your money but most established big banks will likely give you a lower interest rate than some newer fintech competitors. Nevertheless, they are still widespread and grow your money. RBC offers a few types savings accounts, all without monthly fees. Their High Interest account has an interest rate of 0.8%. TD’s version of the high interest savings account offers only 0.05% interest, assuming you have at least $5,000 in the account. Scotiabank’s Momentum Plus Savings Account allows you to earn higher interest the longer you save. The base rate is 0.85%, and only grows the longer you wait. This Scotiabank Savings Account is really not made for spending but within one year you can really increase your interest rate. All these banks offer generally low interest rates. Neo Financial is an entirely digital company that offers you 1.80% interest with the Neo Money Account. This interest rate is exponentially higher than average. There are no monthly fees, and it doesn’t matter how much you have in the account. Any amount generates the same interest rate. To top this, the account simultaneously acts as a chequing account. Transactions are free and unlimited. All this and more is why this is one of the best no fee bank accounts Canada has to offer.

Specialized Accounts

Though the most common, normal savings and chequing accounts are not always perfectly suited to everyone’s needs. If you find yourself in a relationship or simply in a situation where it is pertinent to merge your money with somebody, a joint account could work perfectly. They are widely offered, from RBC joint accounts to Scotiabank. If you are a parent and want to teach your child about managing their money early on, check out CIBC’s youth account. It offers 0.05% interest, unlimited transactions and no monthly fee. RBC’s student account is also a good option with similar features for those ages 13 or higher.

No Fees with FinTech

If you’re a student or senior you will likely fall under the category of discounted or no fee accounts. However, the majority of people have to pay monthly and annual fees to their banks. If you are looking to save money, point your attention to digital financial institutions. Companies like Neo and EQ Bank are able to cut many costs for their clients. This is because they spend far less than other banks as they have a completely digital presence. Fintechs avoid fees and also allow for a very comfortable and convenient banking experience through their mobile apps and websites.

Best Canadian Chequing and Savings Accounts

When deciding on what kind of account might be best for you, you need to consider all factors. Coming to a conclusion may not be simple, but even when you do you will likely have to compromise depending on the account type you choose. This is not the case with Neo’s Money Account. It is one the best no fee bank accounts in Canada. There is no need to make a compromise with this account because it combines the best of chequing and savings accounts. The comparatively enormous interest rate is fantastic for your money, and everything is manageable easily through their mobile Neo app.

Canadian Bank Routing, Transit, Branch, Account and Institution Numbers Explained

September 15, 2022 by James Todorov 1 Comment

Although managing your finances may be an everyday part of life, there is a lot of important information that is commonly unknown. Information about your account and bank can be required in multiple situations. If you want to setup a direct deposit you’ll be asked to present your account number and your routing number. These numbers will also be required if you want to move money into a Canadian account. These two examples are common banking actions, yet understanding of what terms like routing and account numbers are is limited. We are here to help you understand the meaning of transit, branch, account, routing, and institution numbers so that you can bank more confidently in the future.

Routing Numbers

Routing numbers are made up of two parts. They are usually 8 digits long and are made up of an institution number and a transit number. Their format on paper is XXXXX-YYY. The X’s correspond to the transit number and the Y’s are the institution number. If the transaction is online then the format flips and a leading zero is tagged to the front, resulting in a 0YYYXXXXX format.

Institution Numbers

To put it simply, institution numbers are unique three digit codes which correlate to a given financial institution. They are used to identify various banks and are the most general of the numbers we’ll be covering. The institution number also makes up one part of the routing number. The institution numbers of some of the biggest Canadian banks are listed below.

Bank	Institution Number
BMO	001
Scotiabank	002
RBC	003
TD	004
National Bank of Canada	006
CIBC	010

Branch or Transit Numbers

It is easy to get confused with this number as some call it a transit number and others a branch number. All you need to know is that they mean the same thing. It is a five digit code which says which branch of the bank the account in question was formed at. Every branch has its own unique transit number and the branch you create your account at is also known as your home branch. The transit number makes up the other part of the routing number.

Account Numbers

An account number is usually a seven digit code which follows the routing number on cheques. BMO, RBC, TD, CIBC, and the National Bank of Canada all have seven digit account numbers. Scotiabank is one case where it is possible to have a number that is either 7 or 12 digits long. Unlike institution numbers and transit numbers, your account number is completely unique to you.

Where to Find Your Numbers

If you are in need of any of your personal numbers, there a few ways to find them. One way is to login to your online banking. From your bank’s website or app you can check your personal details and find out exactly what you need. You can also see your details such as routing number and account number on any paper statements that your bank sends you through the mail. Lastly, if you have a chequebook at home, look at any cheque and you’ll find all the numbers printed at the bottom of it. One thing to note is that on a physical cheque there will also be another number on the bottom. This one simply marks the individual number of the cheque you are handling within the chequebook.

Best High Interest Savings Accounts in Canada

August 4, 2022 by James Todorov Leave a Comment

All of us have long term financial goals. Everybody has something a little more expensive they’ve had their eye on and want to save up for. Sometimes you may just want to grow money that you have but aren’t spending. A high interest savings account is one of the best ways to do this. High interest savings accounts are risk and hands free, all while earning you interest on your money to help you do whatever you can dream.

With the current worldwide economic situation improving as we near the end of the global pandemic, interest rates are rising at many Canadian banks. This means that it is a great time to put your money somewhere where it can appreciate. There are things you have to watch out for though. Many banks’ marketing strategies involve a tactic which temporarily boosts the interest rate of a given HISA (High Interest Savings Account) to make it more desirable. After the first few months the rate decreases to the usual and comparatively miniscule interest percentage. As long as you know that the normal interest rate is still good, you won’t be unpleasantly surprised.

You may be asking yourself why people have regular savings accounts if the high interest counterparts earn more interest. High interest accounts oftentimes have some drawbacks or conditions when compared to normal savings accounts. These can include a limited amount of monthly withdrawals or a minimum account balance.

TD High Interest Savings Accounts

TD has two accounts that fall under high interest. The first offers an interest rate of 0.05% as long as your balance is over $5000. The second account is called the ePremium savings account. It offers 0. 5% but your balance has to be double at $10,000. If you have the ability to maintain such a balance, this account could work for you. The account offers unlimited free online transfers to other TD accounts. Although transaction fees are high with the regular high savings account, if you plan on keeping the money there and not spending it too much, it can work just fine.

RBC High Interest eSavings Account

RBC’s eSavings account offers an interest rate of 0.5%. This is the same as TD’s ePremium account. Both accounts have no monthly fees but RBC has the big advantage of not requiring a minimum account balance. Transfers to other RBC accounts are free and you even get one ATM withdrawal per month, free of charge. If you sign up by August 31 2022 you can get a promotional interest rate of 3.0% for the first three months.

BMO High Interest Savings Accounts

BMO has a fairly simple account called the BMO smart saver account which has similar features to TD’s simpler account. It has the same interest rate of 0.05% and no monthly fees but it beats out TD as it does not present a minimum balance. There is a higher interest option available: The BMO savings builder account has an interesting mechanic. Although it offers a going interest rate of 0.1%, you can earn the bonus rate of 0.6% as long as you invest $200 into the account every month. There is no minimum account balance and as with most accounts mentioned in this article you have one free outgoing transfer per month, every other one costing you $5.

Scotiabank Momentum Plus Savings Account

The Scotiabank savings account is a special type of account. It is a tiered-interest account, which simply means that depending on how long you hold money in the account for you will earn more interest. The tiers start with a 0.35% interest rate. If you leave the money in the account untouched for 90 days then the rate jumps to 0.85%. For 180 days you get 0.9%, for 270 days you get 0.95%. If you wait a full 360 days, you get an even 1%. There is one important thing to note. This offer of increasing interest rates is up to one year and after that period you will only earn a base 0.85%. The account has no monthly fees but it also has no free transactions. Every single one will cost you $5. However, if you are signing up for this account you are likely looking to let the money build unspent so that you can accumulate interest rate during the one year period.

CIBC eAdvantage Savings Account

The CIBC savings account has an interest rate of 0.35% and no minimum balance. It also has a similar gimmick to BMO’s savings builder account. If you deposit $200 every month you get an additional 0.25% of interest. Once again there are no monthly fees. Like with Scotiabank every transaction you make will cost you $5 dollars.

Tangerine High Interest Savings Account

Tangerine’s savings account has a fairly competitive interest rate of 0.1%. This comes at the cost of no monthly fees too. Until October 13^th 2022 new clients can get a promotional interest rate of 3.25% for the first five months. As usual moving money to and from other Tangerine accounts is free of charge. All this makes the Tangerine savings account a good option. However, although they are an online bank, they do not offer interest rates that are as high as their other exclusively digital competitors.

Neo Money Account

Almost all the banks listed above are established big banks in Canada. They offer fairly similar and low interest rates on their Canadian high interest savings accounts. If you are looking for something with higher interest rates, digital finance is your answer. Companies like Neo offer comparatively astronomical interest rates on their savings accounts. The Neo money account has an interest rate of 1.8%. It also has no minimum balance and entirely free transactions. This account is flexible and has attributes of both a chequing and a savings account. If you are in Canada and looking for a no fee account with a great interest rate Neo might be worth your time.

The Verdict

There is no one account that is superior to all the others. Every single one has its own advantages and drawbacks. Tiered accounts like Scotiabank’s momentum plus are fantastic for the first year where interest rate grows and even after that, their rate of 0.85% is quite competitive. If the only thing you are looking for is a high interest, then Neo could be your answer. There are other factors too of course, such as transaction costs. Most typical high interest savings accounts will allow for one free transaction per month, charging after that. Once again, Neo presents an advantage in this category, as they have completely free transactions. However, you may already be a client of another bank. This may make it more convenient to setup a high interest savings account with the same bank to allow for free transactions to and from your accounts.

Refresh Financial – Improve Your Credit Score with Secured Credit Card

May 22, 2022 by Ben 10 Comments

This page was last updated on October 12, 2022

Refresh Financial offers a range of products, services, and tools, including AI-enabled product recommendations, automated credit coaching, credit report and score monitoring, and secured credit cards. By offering financial literacy programs, Refresh helps customers to improve their money management and savings skills to make better financial decisions and achieve their long-term goals. Common situations in which financial literacy helps are using credit cards, managing debt, investing, reducing expenses, purchasing a home or car, sticking to a budget, and saving for retirement.

Refresh Financial and Borrowell Acquisition

Refresh Financial takes a new approach to consumer financing. The company offers loans and credit cards to customers with poor or no credit to aid their credit improvement efforts. Established in 2010, Refresh has offices in Ottawa, Kelowna, and Hamilton. As of January 2021 Borrowell closed the acquisition of Refresh Financial and raised $25 million in funding. All-equity financing was secured by a group of new investors, among which iA Financial Group, BDC Capital, and Kensington Capital Partners. Existing investors such as Equitable Bank and White Star Capital also provided funding.

One of the largest financial tech companies in Canada, Borrowell specializes in digital wealth management, digital banking, and alternative lending solutions. Their online lending platform utilizes AI-powered technology to offer customers product recommendations, free credit scores, predictive cash advances, bill alerts, money management and monitoring solutions. Founded by Andrew Graham in 2014, Borrowell offers a wide range of financial tools and products, including mortgages, credit cards, and personal loans. The platform is backed by a network of mortgage brokers, investment funds, and institutional lenders such as FirstOntario Credit Union and Portag3 Ventures.

Canadian Market for Secured Credit Cards

Refresh Financial and Home Trust are among the few Canadian financial service providers that offer secured credit cards. Targeting subprime borrowers with average and poor credit scores, secured cards function much like standard ones, the only difference being that customers pay upfront cash deposit. The deposit serves as a guarantee for financial institutions should the borrower miss a payment. Issuers can keep the cash deposit when borrowers default on payments.

Essentially, a secured credit card can be a helpful tool to build or rebuild credit. Using a debit or prepaid card or cash to make purchases or pay bills will do nothing in terms of credit score improvement. That is because payments are not reported to the major bureaus. When used wisely, a secured credit card enables borrowers to reestablish credit and demonstrate responsible management to the reporting agencies and financial institutions. Once approved, borrowers can use the card for things like making purchases, paying everyday expenses, or booking a vacation.

Consumers who use their card responsibly build credit over time. Common reasons why this is not happening include having one type of credit only, errors on the customer’s credit report, missed payments, and a utilization rate above 35 percent.

Refresh Financial Products Offerings

Refresh offers a credit builder loan and a secured card, along with a suite of tools for responsible debt management. In addition to reporting customer payments to TransUnion Canada and Equifax, it also features useful financial tools such as score simulators, credit alerts, debt calculators, and goal managers.

Credit Builder Loan

This financial product by Refresh Financial is nothing like a traditional loan. Instead of borrowing a lump sum and paying the principal and interest over the loan term, customers are charged monthly fees plus interest. Basically, this is a form of installment credit whereby customers pay back the full amount in equal installments. The best part is that payments are reported to the major bureaus as proof of responsible debt management.

Customers are free to cancel their loan at any time by logging to their Refresh Dashboard. Once the loan has been cancelled, it cannot be reactivated. Clients are free to withdraw their available funds, and the money will be deposited in their bank account within 10 – 15 work days.

There are two package options for customers to choose from – apply for a credit card and cash loan or take a loan first and get a secured card later. With the first option, customers have access to two lines of credit and enjoy spending flexibility. The main benefit of having two lines is that responsible use shows financial institutions that the borrower can manage both.

Interest rate: 19.99 percent
Loan amount:
$25,000
$10,000
$5,000
$2,500
$1,500

There are further benefits to taking a credit builder loan, one being that customers are assigned a dedicated relationship manager. Relationship managers act as a single point of contact and help borrowers to build a financial plan to meet their long-term goals. The goal is to make the customer’s banking experience more convenient and smoother by bringing expertise across a range of financial solutions. With experience and knowledge of personal banking, borrowing, and credit management, dedicated financial managers offer clients finance-related recommendations based on their needs.

Refresh Secured Card

This card is no longer offered! This card is backed with a security deposit which determines the credit limit. The limit can be as low as $200 and as high as $10,000 depending on how much the borrower is willing to put on hold. The deposit aside, this card by Refresh works just like a standard card, allowing users to make in-store and online purchases while gradually rebuilding credit.

This secured Visa by Refresh Financial is a good choice for borrowers with no or bad credit who are turned down by brick-and-mortar banks. Virtually all applicants get approved as there is no minimum income requirement. This card is a particularly good fit for customers who want to make a small deposit and for people with a history of delinquencies and bankruptcies.

Refresh also offers a handy online calculator to help customers check their utilization rate. Customers with a credit limit of $1,000 and a balance of $400, for example, have a utilization rate of 40 percent. The optimal rate for credit building is 30 percent and should not exceed 35 percent.

Cardholders who pay the balance in full avoid interest charges. There are two options to make payments toward the card balance – either through online banking or via pre-authorized debit. Once the payment has been received, it is first applied to any interest due and then to cash advance, annual card, and other fees.

Interest rate: 17.99 percent
Maintenance fee: $3 per month
Annual fee: $12.95

Summing Up

Overall, Refresh Financial is a good choice for borrowers who got the short end of the stick and need to rebuild credit. Each of their products, the Refresh Secured Visa and credit builder loan are meant to help consumers, with payments being reported to the credit bureaus. Qualifying for a loan or credit card is simple and boils down to the customer’s ability to meet future payments, including product fees and interest charges.