The federal government is doing right by seniors in paying them as much as $500 to help with expenses incurred as a result of physical distancing.
The bulk of government financial help in the pandemic has been designed to replace the income of laid-off workers and help their employers survive the economic shutdown. Seniors don’t fit this model.
There has also been a “we’re-all-in-this-together” theme to the government response to the pandemic. Helping everyone but seniors would be callous.
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But there’s an important distinction to be made between helping seniors with their costs, as the feds are doing, and helping them with the investment losses they’ve had in the stock-market plunge of late February and March. So far, and rightly so, the government hasn’t addressed investment losses by seniors.
Many seniors were shocked by how quickly and sharply stocks fell. They feel vulnerable as a result and have been waiting to see what financial support the federal government might offer. The cash payments announced Tuesday may disappoint some, but it’s not the job of government to backstop individual investing losses. If anyone loses money in the stock market, that’s on them.
The financial support for seniors announced Tuesday consists of a one-time, tax-free payment of $300 to people eligible to receive Old Age Security. An extra $200 will be paid to low-income seniors eligible for the Guaranteed Income Supplement.
With seniors facing added costs and hits to their savings from the COVID-19 pandemic, Prime Minister Justin Trudeau said the government will bump payments under old-age security and the guaranteed income supplement by up to $500 for those who qualify.The Canadian Press
The maximum $500 in payments will offset the added costs of living with physical distancing. For example, it costs more to have groceries delivered than it does to shop in person and take advantage of what’s on sale. What this federal money likely won’t do is calm the nerves of seniors whose investment portfolios were exposed to the recent stock-market crash.
The S&P/TSX Composite Index fell about 37 per cent in a little more than a month, which is an exceedingly rough ride. The index has since halved its loss, but the trauma of the decline remains.
Ottawa hasn’t ignored investment losses incurred by retirees. For 2020, the minimum mandatory withdrawal from registered retirement income funds has been reduced by 25 per cent. If a senior has to sell hard-hit stocks or equity funds to pay for a RRIF withdrawal, this move reduces the sting a little bit.
The feds should have waived this year’s RRIF withdrawal requirement entirely. They could still do that, but they’d have to take an additional step of allowing people who already made a RRIF withdrawal to put the money back in without penalty. This would be a huge hassle for all concerned, seniors and their advisers and investment companies, but also a morale booster for retirees who feel they were mugged by the stock market.
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It’s a flaw of our retirement system that seniors feel the pain of stock-market declines as intensely as they do. We’d all be better off if more people retired with defined-benefit pension plans, where cash is paid monthly as long as you live and professional money managers handle stock-market ups and downs.
Without a defined benefit pension, you have to rely on your own investing skills or those of an investment adviser. You need to pay close attention to your retirement investments, notably the mix of stocks, bonds and cash. At all times, you need to be prepared for the kind of stock-market decline we saw recently.
The extent of the stress felt by seniors about their investments recently suggests that they may not have been as conscious of risk as they should have been. They may need to work harder, either themselves or by questioning their adviser, to prepare their retirement investments for big stock-market downturns.
Helping seniors cover extra living costs in the pandemic is compassionate. But helping them with investment losses sends a message that there’s a safety net for people who don’t manage their investments well.
Unfortunately, that’s not true in our retirement system for many people. They have to look after themselves.
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
