Last week was stock market nastiness at its worst. Prepare for the possibility of more to come.
How, exactly? Veteran financial planner Rona Birenbaum has some thoughts. In a blog post written at the end of the worst week for stocks since the financial crisis of 2008, she offered advice to working people, those approaching retirement and those who have already retired.
You hear a lot of platitudes when markets fall about stocks “going on sale” and such. Ms. Birenbaum gives you concrete steps to take if stocks lapse into a bear market and/or we have a recession caused by the spread of the coronavirus.
I know from years of experience that retirees and those on verge of retirement worry especially about stock-market declines. Ms. Birenbaum sensibly suggests having enough bonds, bond funds or cash in your portfolio to support your cash flow needs for the first five years of retirement. That way, you don’t have to sell stocks or equity funds that have plunged in value to cover your living expenses.
Any retirees out there who are full of regret for having too much exposure to stocks in their portfolio? Ms. Birenbaum says it’s important to understand that that your retirement date is not the end of your investment time horizon. Having stocks in your portfolio will help your retirement savings keep growing through your retirement years.
Finally, some advice applicable to all generations: Build up emergency savings. Having cash on hand to deal with interruptions in your income or investing setbacks isn’t just good personal finance – it also gives you peace of mind in uncertain times.
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Rob’s personal finance reading list…
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Pension expert Alexandra Macqueen on the mistakes people make when deciding whether to keep or leave their defined-benefit pensions. That’s the best kind of pension – money for life.
Which banks deliver ethical investing options?
More than ever before, I’m hearing a buzz these days about socially responsible investing, which means investing in companies that do well according to environmental, social and governance measures. Interested in what your bank has to offer in the way of socially responsible mutual funds? Here’s some scoring of Big Five bank offerings.
Q: My RRIFs, invested in GICs earning 2.5 per cent to 2.7 per cent, now require an annual withdrawal of $13,900 for me, an 80-year-old. The meagre return only offsets a small portion of the annual minimum. My daughter opines that GICs are a top-notch, safe investment, but I am not as confident. Is there a better, equally secure alternative?
A: The only safe alternative to a GIC that I can of is a high-interest savings account held within your RRIF. There are many different high-interest accounts, but only a small subset offer an RRIF option. Examples: Tangerine, with a rate of 1.1 per cent, and Achieva Financial, at 2.3 per cent. GICs might be your best bet if you prioritize safety and are willing to look at alternative banks, trust companies and credit unions for the best rates.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Five things investors should know about managing their accounts in wild markets (for Globe Unlimited subscribers)
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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
