October 25, 2022Money Education Financial literacy Economy Good reads Professionals Commentary In the news News Trending Weekly update Weekly commentary
What's Happening Today - October 25
The Bank of Canada is set to raise interest rates again tomorrow. The mindset of central banks has been made pretty clear. All of the major central banks are willing to sacrifice growth/employment to bring down core inflation. This means that the outlook for global demand continues to look dim. The good news?
The market is way more efficient and forward-looking than any of us. A lot of this has undoubtedly been priced in (all you have to do is look at your September statement to have that reaffirmed).
Will there be more pain?
Possibly, yes. But when I say the market is ahead of us, I’m not saying days or weeks. On average the market has a 6 – 9 month jump start on economic news. It’s a future predictor and staying invested has time and time again proven to be the best method.
In the UK, Rishi Sunak becomes Britain’s third prime minister this year, and the first person of color to be elected into the role. The former finance minister faces major economic headwinds, political turmoil, and war just 3000 kilometers East of his country. Not a great starting point for the new PM, but he is committed to fixing the mistakes of his peers and leading the country out of tough times ahead.
Speaking of tough times. Now might be a great opportunity to make sure your finances are in order.
Here are the four basic stages of a person’s financial lifecycle. No two people are the same, but there are some similarities:
- Early career – This is where you’re starting out. Investing for the future isn’t a priority at this time. It’s finding your way, living in the moment, and discovering how budgeting will help get you past living paycheck to paycheck. Starting an automatic deposit into your investment accounts and dollar-cost averaging thru major market corrections (like now) will go a long way toward financial freedom or a large purchase.
- Dependents – This is when an RESP might be the next account you open. It’s hectic, it’s new, it’s exhausting. (my coworker thought I had a black eye, but no, it’s just the lack of sleep). Debt management is critical, and these rate hikes are crushing any hopes of buying that new (blank). Protecting your income and your loved ones thru the use of insurance is likely more important than saving for retirement.
- Growth – You’re in your prime earning years, and you’re gearing up for retirement. The kids have left the nest and you notice disposable income has increased. This is a great opportunity to add to very low prices in virtually all asset classes.
- Retirement – Time to control your expenses again. But fortunately, you’re no longer driving to work, hitting up the daily coffee shop, or eating out for lunch as often. You may see a few more discounts, and you have more time to cook at home. Your monthly expense bill has likely decreased. But will it be covered? Instead of a steady, bi-weekly deposit to your bank account, you now have money coming in from everywhere; pensions, CPP, OAS, retirement accounts, and maybe some rental income. Is it enough?
If you have any concerns in whatever stage you’re in, financial planning is a big part of our business, and it’s an included service. Sometimes it’s nice to get peace of mind. Give us a call, and get your road map drawn out.