It’s one of those good problems to have. Canadians are sitting on an enormous trove of cash – the byproduct of a pandemic savings boom and a precarious economic state.
For four years now, Canadians have been frantically socking away money in bank accounts and, more recently, in term deposits such as guaranteed investment certificates.
Now, having a gigantic cash buffer may feel right. These are crazy times. The pandemic awakened a fear of the kind of disasters that felt relegated to history. More specifically, the threat of a recession, while diminished compared with this time last year, is very much alive.
But we need not turn into cash hoarders. There are nest eggs, and then there is the financial equivalent of stuffing your kitchen cupboards full of stacks of old newspapers.
Over the past four years, Canadians have built up excess savings of close to $400-billion, or 13 per cent of GDP. It’s an enormous backstop, by any standard.
Long-term money belongs in risk assets – a mix of stocks and bonds, generally speaking, which has a very convincing track record of building wealth over many years.
This presents many investors with a dilemma – how best to get their own excess savings into the market at a time when stocks and bonds are quickly picking up speed.
This year is on track to end on a high note. With inflation continuing to head in the right direction, the prospect of interest-rate cuts has invigorated financial markets over the past couple of months.
The Dow Jones Industrial Average notched an all-time high on Tuesday. The S&P 500 index saw eight straight weeks of gains for the first time since 2017. The S&P/TSX Composite Index is having its best run of the year, up by 12 per cent since bottoming out almost two months ago. And long-term government bond yields in Canada and the United States have seen huge moves downward, which translates to higher bond prices.
What is a cash-heavy investor to do? Wait for a better entry point? Ease your money into the market gradually? Either would be a mistake. Research shows that when you have a lump sum to invest, the best move is to do it is all at once, right away.
That would be a pretty abrupt change for those who have been stuffing their money into savings accounts and GICs for the past couple of years.
That wasn’t necessarily a bad play. For the first time in years, you could make money on cash even after inflation. A five-per-cent yield has been a huge draw.
Since February of 2020, Canadians have shovelled about $260-billion in excess savings – that is, savings over prepandemic levels – into term deposits, including GICs. Another $130-billion sits in demand deposits as of the end of October, according to RBC.
Falling interest rates are sure to take a lot of the steam out of the GIC craze.
But just plowing that money into the market might feel a lot like “buying high.” And isn’t that a cardinal sin of investing? Not necessarily.
The alternatives to investing your money in a lump sum are dollar-cost averaging or buying the dip. A few years ago, Benjamin Felix, portfolio manager and head of research at PWL Capital, ran several scenarios comparing the different options.
Buying the dip involves waiting for the market to decline by 10 or 20 per cent before pulling the trigger. But studies consistently show that the gains you forfeit while waiting for the right moment outweigh the benefits of buying low. This is true even when markets are at all-time highs. Across several different countries, Mr. Felix found this approach trails lump-sum investing by a wide margin.
Other investors may choose to deploy their extra cash in increments over a certain period of time, like a year.
But again, the results here are inferior to investing in a lump sum, about two-thirds of the time. The problem is that it is impossible to know ahead of time when dollar-cost averaging would be a more profitable course. Even when markets are high, it loses out most of the time.
“There is a strong statistical argument to avoid dollar-cost averaging unless it is absolutely necessary from a psychological perspective,” Mr. Felix wrote in a report.
Let’s say you put a whack of money into stocks, only for the market to promptly take a nosedive. It’s certainly possible. You’re probably going to feel pretty rotten about your decision, looking at all your money that vanished into thin air.
That doesn’t mean it was the wrong decision. The stock market is a proven growth machine. Tapping into that force should be the motivation and any delays will probably only hurt you in the long run.
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
