Top savings accounts, Rosenberg’s view of best investments for post-pandemic life, and how to build a better portfolio - The Globe and Mail | Canada News Media
While the pandemic has demonstrated the importance of having money safely parked in a savings account, it has also driven savings rates into the ground.
Interest rates have done some funny things since the pandemic hit hard. Central banks drove their benchmark rates down, and the major banks followed along with their prime rates, used to price home-equity lines of credit and variable-rate mortgages. Bond yields fell then started to rise and then eased back again. Savings accounts have basically gone one way – down.
While this trend applies to big banks, alternative online banks and credit unions alike, the extent of the decline differs a lot. Pay attention if you sensibly want to build up savings to see you through tough times ahead.
Story continues below advertisement
Data gathered by the consulting firm McVay and Associates show that big banks have cut their rates since February by an average 0.65 of a percentage point, bringing the average return on a high rate savings account to 0.38 per cent.
The average rate from alternative banks fell by 0.64 of a point, leaving the average return at a much better 1.44 per cent. Credit unions cut their savings account rates the least on average – by 0.6 of a point. But the average return was just 0.76 per cent, well behind alternative banks.
Alternative banks are your best bet for top rates on savings, then. The good news for safety seekers: Many of them are covered by Canada Deposit Insurance Corp., which means eligible deposits of up to $100,000 in principal and interest are covered. Worried about CDIC’s stability in these uncertain times? In a recent column, I explained why you should have confidence in this federally backed agency.
It’s an open question whether alternative banks can maintain rates at current levels, which means around 2 per cent at best. On one hand, these banks need to be aggressive in attracting deposits they can lend out to other customers. On the other, the weak economy is like a lead weight pressing down on interest rates. There is a much bigger likelihood that rates go lower before they turn around and head back to pre-pandemic levels.
Here are the alternative banks listed in the McVay report as having rates at or above 2 per cent at the time of publishing: B2B Bank, LBC Digital, Motive Financial, EQ Bank, Oaken Financial, Alterna Bank (down to 1.9 per cent as of Thursday) and Peoples Trust.
— Rob Carrick
This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.
Story continues below advertisement
Stocks to ponder
Rogers Communications Inc. Falling profits, dashed expectations and withdrawn forward guidance might look like the perfect triple-whammy of bad news for a company’s investors. But when the source of the bad news is Rogers Communications Inc., investors might want to take a closer look at the opportunity instead. The reason: Although the telecom giant is wrestling with the economic fallout from the novel coronavirus pandemic, it looks like a clear survivor – and the stock can still be bought at a substantial discount to its pre-pandemic levels. David Berman tells us more (for subscribers)
The Rundown
Pandemic? What pandemic? One of the world’s leading growth investors embraces the positive
At Baillie Gifford, a 112-year-old investing partnership in Edinburgh, the short-term outlook doesn’t matter all that much – not even at times like the present, when the short term involves a global plague and the worst economic downturn in decades. The important question is still what a prospective investment will look like in five to 10 years. Baillie Gifford has carved out a niche searching for those rare outperformers. It is one of the world’s leading growth investors, managing or advising on US$290-billion in assets for investors around the world. Ian McGugan spoke with one of its investment managers for insight on how its portfolio is positioned for the future. (for subscribers)
The world will look much different once the pandemic ends. These investments will thrive in it
Story continues below advertisement
What the world looks like when the crisis ends is truly anyone’s guess, but economist David Rosenberg says with 100-per-cent clarity that it is going to look a lot different than it did before. Months of isolation and distancing and fear of a return of the pandemic are going to fundamentally alter lifestyles and will have a profound influence not just on the way we live but how we conduct ourselves in our business and commercial lives. And that means certain investments are going to do very well – while others are heading for big trouble. David takes a look at some of them. (for subscribers)
A concentrated or a diversified portfolio – what strategy is best for you?
With global equity markets materially above their March lows and now trading relatively sideways, it’s a good time for investors to begin thinking about rebalancing and strategically repositioning their portfolios. The Globe’s equity analyst, Jennifer Dowty, shares her insight on how to do just that. (for subscribers)
Investors were slow to see coronavirus’s global spread. Are they again too complacent about the economic risks?
In the days immediately before the COVID-19 pandemic slammed into the global economy, investors were calmly pushing North American stocks to record highs. In hindsight, that level of complacency in mid-February seems difficult to reconcile with the outbreak, considering the ravages already inflicted on China’s society and industry, combined with the fact that the virus had spread around the world. Now, after a blistering rally over the past month from the lows of March, are markets repeating the same mistake? Tim Shufelt takes a closer look (for subscribers)
Four key things to know when building a value investing strategy amid the COVID-19 crisis
Story continues below advertisement
Value investing always involves buying companies with problems. It always involves dealing with the uncertainty that the future will look different than the past. That level of uncertainty can vary significantly over time and it is probably close to an all-time high right now. Jack Forehand of Validea outlines some important things to keep in mind when building a value strategy at a time like this. (for everyone)
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.
