As Canadians shop for last-minute gifts and search for deals, our Interac transaction data predicts that the busiest shopping day of the year will fall this year on December 22nd.
According to the transaction data, nearly 27.8 million purchase transactions are expected to take place next Friday (Dec. 22), representing roughly 2.7 million more transactions than the same date last year.
While Canadians are still planning to partake in gift giving, hosting, and more this holiday season, they’re feeling the constraints of today’s economic climate. Recent Interac survey* findings reveal that nearly four in ten Canadian shoppers (38 per cent) say they are feeling the pressure to spend during the holiday season even though their finances are tight.
Our survey revealed this phenomenon is felt as well among newcomers to Canada. Nearly seven in ten newcomers (69 per cent) say they feel more pressure to spend money around the holidays now that they live in Canada. What’s more, 71 per cent say their financial stress during the holidays has grown since moving to this country.
Amid rising prices, the holidays can be a stressful time of year. More than two thirds of Canadians (68 per cent) say they’re stressed about at least one aspect of spending during the holiday season and some sources of stress beat out others. Among those who are stressed, our survey shows us that buying gifts (77 per cent), spending money hosting and entertaining family and friends (41 per cent) and giving money to family members (34 per cent) are the top sources of stress.
For newcomers who are experiencing at least some holiday spending stress (82 per cent), spending money travelling to visit family and friends (48 per cent) is a prominent stressor.
As stressful as holiday spending can be, there are ways to make things a little easier:
Plan ahead
Try creating a gifting budget well in advance of any spending plans to help stay on track. Where possible, you can also look for a sale, consider a refurbished item or tap into purchases that make you and those around you feel good. You can also lean on Interac Debit to track your payments easily and take charge of your own money
Share the love, split the cost
When purchasing gifts for loved ones, organizing festive outings or hosting your family and friends, split the cost using Interac e-Transfer. Sharing the cost is one of the best ways to make sure you’re maximizing fun while staying in control of spending.
Embrace experiences
The holidays are a time to get together with friends and family and enjoy one another’s company. Consider sharing in an experience, rather than giving a physical gift. Interac research shows us that feel-good experiences are more likely to deliver happiness than material goods.
Money management is essential to help your savings thrive and benefit your [U.S.] retirement accounts. Discover movements to minimize taxable income.
By Dan Coconate
Special to Financial Independence Hub
Navigating the path to a financially secure retirement can often seem like navigating a labyrinth with no exit. With so many potential strategies and considerations, it’s easy to feel overwhelmed. However, efficient tax management is key to unlocking a financially comfortable retirement.
By adeptly managing your taxable income, particularly through individual retirement accounts (IRAs) [or in Canada, RRSPs], you can pave a clear path through the complexities of retirement planning, positioning yourself for a secure, worry-free future. Understanding the necessary movements to minimize taxable income in a retirement account will help you optimize and maximize your retirement savings.
Contribute to a Traditional IRA
Investing in a traditional IRA can be a smart move to effectively reduce your taxable income. Your contributions may be tax deductible, depending on your income and whether your work’s retirement plan also covers your spouse.
The more you contribute to your traditional IRA within the IRS contribution limits, the more you can reduce your taxable income for the year.
Consider a Roth IRA Conversion
A Roth IRA conversion is a strategic financial decision that can secure tax-free income during retirement. When you convert from a traditional IRA to a Roth IRA, you pay taxes on the converted amount in the year of conversion. [Roth IRAs are the U.S. equivalent of Canada’s Tax-Free Savings Accounts or TFSAs] Continue Reading…
There seems to be some confusion around what to expect for monetary policy in 2024. There’s a strong consensus that cuts are coming, but what is far less certain is how many – and why they are implemented.
Let’s assume that all cuts are of the traditional 25 basis point variety. Since the bank rate is adjusted every six weeks, there will be eight or nine opportunities to adjust it in 2024 in both Canada and the United States.
There are as many as three narratives making the rounds about what might be in store. Each narrative has a combination of rate cuts for monetary policy and corresponding outcomes for the broader economy. I attended a luncheon last week hosted by Franklin Templeton, where senior representatives outlined three possible scenarios with three different narratives accompanying them. A similar perspective was offered earlier this week by the Vanguard Group.
The three narratives are as follows:
#1 We have a soft landing.
The soft landing involves the economy remaining relatively robust, employment remaining strong, delinquency is modest, and rates are normalizing at a level close to but somewhat lower than where they are right now. Most people would suggest that scenario involves no more than two cuts in 2024.
#2 We have a routine recession.
To be more precise, the second narrative involves a garden-variety recession that lasts perhaps a couple of quarters that involves only modest reductions in economic activity over that time frame. Nonetheless, this scenario includes five or six rate cuts to stimulate the economy to the point where things can become stable going forward.
#3 We have a severe recession.
The final narrative involves massive cuts that are made out of desperation to keep the economy from plunging into an abyss. This scenario is not only the most drastic, but also seems to be the least likely. Nonetheless, if things get really ugly, seven, eight or nine rate cuts might be needed to stanch the bleeding. One or more of those cuts might even be for 50 basis points or more.
While I accept the logic associated with all three scenarios, I cannot help but notice that much of the financial services industry is conflating those scenarios in a way that strikes me as being intellectually inconsistent. The financial services industry has long been overly optimistic in the way it portrays outlooks and forecasts. It routinely engages in something I call bullshift, which is the tendency to shift your attention to make you feel bullish about the future.
There can be little doubt that stimulative cuts are positive developments for capital markets. What the industry seems disinclined to acknowledge is that cuts are often made out of desperation. People need to look no further then what happened throughout the entire industrialized world in the first quarter of 2020. Central banks in all major economies cut rates to essentially zero by the end of March of 2020 in the aftermath of the COVID pandemic. At the time it was seen as being both necessary and reasonable, given the severity and breadth of the challenge.
Reining in Inflation
As we all know, inflation became the primary public policy challenge by the beginning of 2022. Central banks needed to take what looked like draconian measures to rein in inflation, which had risen to generational highs and needed to be brought under control lest a sustained period of inflation like what was experienced in the 1970s were to recur. By the end of 2023, inflation is still higher than the high end of the range that is deemed to be acceptable for most central banks.
There is still work to be done, yet many pundits seem eager to take a victory lap, as if a reduction in inflation is somehow akin to bringing inflation under control. Much has been done over the past 20 months, but more work is needed. The admonition that rates will have to stay higher for longer is a very real constraint on economic activity and long-term growth prospects. We head into the new year on the horns of a dilemma. Bond market watchers are now suggesting that rate cuts will come no later than Q2 2024, whereas central bankers are insisting that those cuts will be modest and will only begin in Q3 of 2024 at any rate. They cannot both be right.
It gets worse. Most commentators have taken to suggesting that we will have both a soft landing and five or six rate cuts in the New Year. That strikes me as being fantastic – not to mention intellectually inconsistent. If we have a soft landing, it will likely entail the economy being remarkably resilient as it has been throughout 2023. There is absolutely no reason to have a parade of rate cuts in such an environment.
Stated differently, the financial services industry needs to pick a lane. If it believes we will have a soft landing in 2024, it should also be anticipating a very small number of very modest cuts in the second half of the year. Conversely, if it believes a recession is on the horizon, it should be forecasting multiple cuts only after it is clear a recession is underway. These would likely be needed to stimulate the economy in an environment where inflation will likely be modest as a direct result of economic weakness.
To hear the industry tell it, the economy will remain strong, but we’ll get multiple rate cuts anyway. You can’t have it both ways. I call Bullshift.
John De Goey is a Portfolio Manager with Designed Securities Ltd. (DSL). DSL does not guarantee the accuracy or completeness of the information contained herein, nor does DSL assume any liability for any loss that may result from the reliance by any person upon any such information or opinions.
Jon Chevreau and Canada Podcasts’ Philip Bliss: https://canadaspodcast.com/findependencehub/
By Philip Bliss
Special to Financial Independence Hub
In an age where knowledge is easily accessible, podcasts have emerged as one of the most potent tools for personal development.
Findependence [aka Financial Independence] is a goal many aspire to, but achieving it often requires a solid understanding of money management, investments, and entrepreneurship. This is where podcasts shine, providing a wealth of knowledge and inspiration that can be instrumental in your journey towards financial freedom.
This new tool is particularly valuable in the fast-paced world of entrepreneurship, where the quest for knowledge and inspiration is ceaseless. In this digital age, Canada’s Podcast has emerged as a game-changer, becoming a cornerstone for Canadian entrepreneurial development and a key to enabling Findependence. Let’s explore why these audio/video gems are so critical to the journey of every aspiring entrepreneur.
1.) Education at your Fingertips
Podcasts offer a wide array of financial knowledge, from personal finance basics to advanced investment strategies. By tuning into podcasts, you can learn about budgeting, saving, and investing while going about your daily routine. Whether you’re commuting, exercising, or doing household chores, these audio programs allow you to convert idle time into a valuable learning opportunity.
Some popular finance podcasts like “The Dave Ramsey Show” and “BiggerPockets Money” offer practical advice on budgeting, getting out of debt, and achieving financial freedom. These shows are like having a personal finance mentor guiding you through the intricacies of money management.
2.) Diverse Perspectives and Ideas
Findependence is not a one-size-fits-all goal. Everyone’s journey is unique, and podcasts reflect this diversity. Podcast hosts often bring their personal experiences and perspectives to the table, offering a rich tapestry of ideas and approaches to achieving financial success.
You can listen to real-life stories of people who have achieved findependence, learning from their triumphs and pitfalls. This diversity of experiences can help you tailor your approach to fit your own circumstances and goals.
3.) Investing Insights
For those looking to grow their wealth through investments, podcasts can be a treasure trove of valuable insights. Whether you’re interested in stocks, real estate, cryptocurrencies, or other investment avenues, there’s likely a podcast that caters to your interests.
Podcasts like “Invest Like the Best” and “The Motley Fool” provide deep dives into various investment strategies, market analysis, and expert interviews. By regularly listening to such shows, you can stay updated on market trends and make informed investment decisions.
4.) Motivation and Inspiration
Findependence can be a long and challenging journey. At times, you may find yourself discouraged or unsure about your financial decisions. Podcasts can serve as a source of motivation and inspiration, reminding you of the benefits of findependence and keeping your goals in focus.
Many findependence podcasts share stories of people who have achieved their financial goals against all odds. These tales of perseverance and success can fuel your determination and keep you on track, even when the path seems daunting.
5.) Building a Supportive Community
Podcasts often come with dedicated communities. These communities provide a space to discuss financial topics, share experiences, and seek advice from like-minded individuals. Engaging with these communities can be a valuable source of support as you work towards findependence. Continue Reading…
Let’s face it: When families list their favorite financial planning projects, legacy planning rarely makes the cut. It may feel as if you’re putting the emphasis exclusively on death and taxes, rather than your lifetime pursuits such as building a career, pursuing your personal interests, stewarding your kids into adulthood, and retiring in style.
Then again, I believe the term “legacy planning” is misleading to begin with. It sounds so dry and formal — as if it’s only for uber-rich, multigenerational dynasties, or the tail end of your lifespan.
No wonder most people put off planning for it.
In reality, legacy planning can be worthwhile for almost anyone. And it’s not just for later in life; key aspects of it can help you enjoy a more enriched life today. In today’s Timeless Tip, we’ll cover the possibilities.
What is Legacy Planning?
Instead of treating legacy planning as a tedious, end-of-life chore, I like to think of it as being more like a bonus round of lifestyle planning across four core quests:
Family Ties: Legacy planning helps you keep more of your wealth in the family. Importantly, it lets you define who your family is, in a world where multiple marriages and blended families may more often be the norm than an exception to the rule.
You or your Heirs: Legacy planning can also be defined by what it is not. If your top priority is having enough to enjoy your retirement in style, your legacy planning will differ from someone who dreams of leaving the largest possible inheritance to their heirs.
Charitable Giving: Legacy planning also helps you chart out how and when you’d like to support your causes and charities of interest. Hint: You don’t have to wait until you’re gone to leave a legacy.
Tax Reduction: Even if you’re fine with letting inheritance laws guide how your estate will be distributed, most of us would prefer a tax-efficient transfer. Legacy planning strategies abound here.
How do you define “Family”?
First, let’s address the piece most of us associate with legacy planning: Who gets what stuff after you’re gone? If your estate seems perfectly straightforward, you may be tempted to just let your heirs sort it out. Unfortunately, this can leave you and your loved ones uneasy — not just moving forward, but right now.
Unintended Consequences: Check your provincial inheritance laws, and you may be surprised by what will happen to your assets if you die intestate (without a will). Your preferences may differ dramatically from the government’s.
Unresolved Heirlooms: Resolving which loved ones are to receive which treasured heirlooms and other portions of your wealth, can bring you and your family more peace — today, and moving forward.
The Angst of Uncertainty: Most of us also feel better knowing we’ve done what we can to spare our heirs the pain of having to untangle an unplanned estate at the same time they are grieving a profound loss.
The logistics of estate planning need not be extensive. They can range from essential to more advanced:
Wills: A basic will might suffice if you simply want to ensure particular people directly inherit particular pieces or portions of your estate, as permitted by law — especially when your preferences differ from provincial law.
Trusts and Foundations: You may want to up the ante with targeted trusts to cover additional nuances in your life. For example, trusts can provide for underage heirs, an heir with special needs, or other complexities, such as if your family owns a business in which some, but not all family members are involved. Private foundations come into play if you are interested in increasing the scope of your multigenerational charitable giving.
Insurance: Life insurance is also an often-overlooked tool for providing gap funding to cover taxable wealth transfers, especially when family businesses are involved.
Bottom line, making plans today for your wealth transfer to happen with minimal muss, fuss, costs, and complications can free you to better enjoy your assets throughout your life.
Spending or Preserving?
As we covered in “Retiring Reliably, Leaving a Legacy or Balancing Both?, ” another key question is: Do you want to earmark excess wealth for your optimal retirement, an optimal legacy, or a balance of both? Different lifestyles call for different legacy plans.
You may not think of investment management as part of traditional legacy planning. But you’ll be better at both if you combine forces. For example, if you want to emphasize leaving a legacy, your investment portfolio’s average expected return should exceed your withdrawal rate, so inflation doesn’t eat away at the balance. This usually means keeping more of your investments working in the markets, while also arranging for a way to take out cash on a regular, tax-efficient basis. Continue Reading…
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