Advertisement
Full-time office spaces are over—but what does that mean for REIT investors? Canadians are divided on the promise of a new retirement income product; the TSX Composite tops 20,000 for the first time; and we look at how rising yields might affect your portfolio.
“A recent poll by Leger and the Association for Canadian Studies has found that 82% of Canadian respondents who have worked from home during the pandemic have found the experience to be very or somewhat positive, while just 20 per cent want to return to the office every day.
“Only 17% described working from home as somewhat or very negative.”
And, as has been suspected for many months, we might be looking towards hybrid workplaces in the future.“Almost 60% of those surveyed said they would prefer to return to the office part-time or occasionally, while 19% said they never want to go back.
“The top three reasons for preferring to continue to work from home were convenience, saving money and increased productivity.”
Employers might have to give into these employee “demands” because…“Some 35% of those surveyed in Canada agreed with the statement ‘If my superiors ordered me to go back to the office, I would start to look for another job where I can work from home’.”
Canadians are looking for flexibility. We might very well work from home one day, and then work from our offices the next. What does that mean for investors? Many REITs are concentrated on office space. And a hybrid-work future means we won’t be seeing the death of the office. However, office REITs might have to update their resume and approach. And they will face competition. With white-collar workers heading up those tower elevators for important meetings, perhaps many companies will no longer need the conventional desk-per-headcount setup. Could that mean the offices of the future will consist only of meeting rooms? WeWork, the company that offers flexible and satellite office space, has struggled during the pandemic, as their offering is not exactly work-from-home friendly. But they believe a hybrid work space is the future—where “employees have the ability to work in different spaces, including corporate offices, coworking spaces (such as WeWork), public spaces and from home.” What about picking up that coffee and other retail? In a hybrid future, those lineups at Tim Hortons and Starbucks could continue to be on the short side. The continued loss of food-court traffic and other local businesses (including restaurants) might be an ongoing theme. And that loss of business might have more of an effect on employment recovery prospects. In the early days of pandemic, we reported in this space on how retail workers faced the full (and perhaps unfair) brunt of economic hardship. That theme continued throughout the pandemic. They did not, and do not, have the luxury of working from home. As a freelance writer and blogger, I’m more than happy to be staying home, with homemade coffee, while dressed in shorts or sweatpants. Maybe Walmart will be a main benefactor of the hybrid workplace? I just love that stock. I’m guessing that it is also ready for the hybrid workforce. We’ll keep an eye on this very interesting recovery story.
“While a tontine revival could make sense around the world—the pension and longevity trends are almost universal—they make particular sense in Canada. The authors state they “believe that Canada has a dearth of products for hedging personal risk, compared to the U.S. market.’ They know of no Canadian insurance company that offers a true deferred income annuity (DIA or ALDA), nor do they offer a variable income annuity or equity-indexed annuities with living benefits: all available in the U.S. The closest we have are segregated funds, and they really aren’t that great as far as guaranteeing lifetime income.”
All said, the Longevity Pension Fund is not a tontine (call it a modern tontine if that makes you happy); it is more like a pension model that is a mutual fund. While there are underlying investment assets, the secret sauce is the mortality credits. From the post on my site, and an explanation offered by Purpose CEO Som Seif…“It is based on what they call Longevity Risk Pooling. The difference between the required return on the fund (net 3.5%) and the income paid to investors (6.15%+) is because when people buy, they get their income, but as some people redeem/pass away earlier, they leave behind in the pool their returns on their invested capital (they get their unpaid capital paid out upon death or redemption). These returns left behind reduce the total return required to provide the income stream for all investors.”
Stay tuned. Jonathan Chevreau will be back next week with a dedicated post on this new retirement offering. While there is more research to do, I am in the camp that this pension/mutual fund has the potential to be a game-changer for Canadian retirees.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
This advisor isn’t losing any sleep over the markets. In fact, looking back at 2024 and forward into 2025,...
Car loan interest rates can be as confusing as a complicated recipe, and just as daunting to navigate. This...
Buying your first car in Canada is like any other major purchase. Ask a lot of questions, not just...
Bitcoin’s value surpassed the USD$100,000 mark in late 2024. Here’s what could affect bitcoin and other cryptocurrencies in the...
Which ETFs should you invest in? Which ones best suit your risk tolerance? What about personal ethics? Check out...
A tax-free savings account (TFSA) is a fantastic way to earn money on your savings, without having to pay...
The Canadian government is sending out the last carbon rebate of 2024. See who’s eligible and how much you...
Sponsored By
Simplii Financial
Sponsored By
Simplii Financial
