Life on Credit

The art of borrowing money

What Is Driving up the Prices in Cottage Country?

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It is mainly Canadians living in urban areas that are driving up prices in the cottage industry, including knowledge workers, seniors, and young families with children. Amidst the pandemic, cottage prices increased by 11.5 percent in 2020, and this trend is expected to continue in 2021. More and more people are choosing to relocate to small towns and rural areas and are buying all sorts of properties, including cabins, chalets, and farmhouses. For many of them, the most important thing is to have a stable internet connection as many are working remotely.

What Figures Tell

While home sales skyrocketed by over 31 percent in November 2020, cottage properties gained in value because of increased demand. Ontario is leading when it comes to price gains, with an increase of close to 30 percent in some places and hikes of 15 percent in Moncton, Montreal, and Ottawa. The recreational property industry is booming in Ontario, with home prices skyrocketing in North Muskoka (17 percent), Haliburton Highlands (28 percent), Gravenhurst (44 percent), and Rideau Lake (25 percent). The prices of recreational homes in Quebec also saw significant gains, with increases by 36 percent in Sutton and 27 percent in the Laurentides. According to senior economist Robert Kavcic working for BMO Capital Markets, the trend is expected to continue in 2021.

Inventory levels have hit record low levels due to increased demand, with buyers from Quebec and Ontario relocating to the countryside. A recent report by Royal LePage confirms this, pointing to the fact that real estate agents in more than half of the regions (54 percent) report increased demand for cottage properties. The report also shows that more retirees are choosing to relocate, with 68 percent of regions seeing a significant increase compared to 2020. Because of the surge in demand, the prices of waterfront properties are up by 13.5 percent to about $498,000, the average price of recreational homes standing at $453,000

In British Columbia, the biggest gains are in Kimberley/Cranbrook (over 27 percent) and Whistler (18.3 percent). Condo prices have also increased by 15.5 percent.

Why Are Prices Going Up

As many businesses, restaurants, hotels, and recreational venues remain closed or are operating at reduced capacity, people don’t really need to be in cities and in a walkable area. It is also true that people are willing to invest more in real estate because they are spending more time at home due to social distancing measures, restrictions set in place across Canada, and lockdowns. As experts note, there are currently two categories of buyers – the first is the worried buyer who believes that the pandemic is never going to end. The second group comprises all those who can do their job from anywhere and have already been working remotely for quite some time. There are other reasons for the recent price hikes, but the main one is that many people are rethinking and re-evaluating their lifestyle, as Vancouver realtor Faith Wilson notes. From shifting to digital and shopping online to changing family and travel plans and health and safety concerns, consumer behaviour is changing which has a significant impact on the real estate market. More people are buying waterfront and ski-hill properties but many are also opting for conventional homes in the countryside. As Royal LePage owner in East Kootenay Philip Jones notes, what they are looking for is raw land.

The ongoing pandemic is certainly driving the exodus to the countryside, with an increasing number of families reappraising urban living. The global health crisis turned the lives of many upside down, from working and schooling to shopping and travelling. Cities where many were born and spent their whole lives now feel like claustrophobic and dangerous places because of repeated lockdowns and tightening and easing of measures. This results in a growing uncertainty as to when and if this will ever going to end. For many, buying a cottage property is like having a place to walk around and breathe, somewhere you don’t stay locked day in and day out. People need more space as their homes have become so central to their lives, with many working, looking after children, exercising, and shopping from home. Cities have long attracted people for the fact that there is plenty to do and crowds of young people socializing. Closures and social distancing simply put socializing on hold. Other factors why people consider relocating to the countryside include distance from family and friends in their community, overcrowding in cities, and lack of gardens.

For others, living and working alongside people who are not following Covid-19 guidelines and social distancing rules is also a factor. There are people moving to the place they grew up to be close to family members and friends. High property prices in metropolitan areas are also forcing many out.

With lockdowns due to recurring outbreaks and waves, more and more people need to be closer to nature. The main reasons impacting purchasing decisions are wanting to have access to a garage or a parking space, to live closer to green spaces, have a pet-friendly home, live in a bigger home, and have a garden. The experience of lockdown in a thirty-story, 2-bedroom condo has made the decision to relocate much easier, especially for those who don’t even have a balcony. Young families with small children are also moving to the countryside to spend lockdowns in more specious properties and to avoid antisocial behaviour due to pandemic fatigue. This is also an option that many families with vulnerable members consider, including those with chronic conditions. Walking along empty streets in cities that look completely deserted feels depressing for many and is forcing them to escape to the countryside. People have all sorts of reasons to relocate, and many have already done that, driving up prices in the cottage country.

2020 Canadian Economic Outlook

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Canada’s economy is on its way to a modest recovery due to capital inflows and growth in consumption and housing investment and a stronger real estate market. At the same time, a more limited growth is expected due to a mix of global factors such as Europe’s future after Brexit and trade uncertainty at the international level.

Top Performing Sectors and Industries

The fastest growing sectors and industries in 2020 are expected to be transit, subway, and train car manufacturing, cannabis production, and telecommunications networking equipment manufacturing. The list of top performing sectors also includes foreign currency exchange services, and online auctions and e-commerce. These sectors are expected to experience the fastest growth of over 11 percent.

The transit, subway, and train car manufacturing sector has experienced ups and downs over the last couple of years. Volatility can be explained by lower commodity prices and cyclical purchases. In 2019, the sector saw an increase in revenues of 31 percent, and revenues are projected to increase by 12.2 percent in 2020. Companies in the sector offer repair services and produce new freight cars and trains, rebuilt trains, new passenger cars and trains, parts, and new locomotives. The telecommunications networking equipment manufacturing sector experienced steady growth over the past five years and is expected to expand further. Businesses operating in this sector manufacture products such as parts, base stations, switchboards, and telephone sets.

Real Estate

Economic growth is also fueled by a healthy real estate market, especially in cities such as Ottawa and Toronto. Toronto is one of the fastest growing cities in North America, one of the main reasons being immigration. While the residential market has shrunk after the introduction of the mortgage stress test, home prices and sales are expected to stabilize. Ottawa is also performing well and will experience economic growth in 2020. This can partly be explained by migration from other regions and a strong housing market.

The industrial real estate market is also vibrant as evident from the low vacancy rates across Canada, especially in the Greater Toronto Area and Vancouver. Rental rates have increased due to high demand. The office building sector is also a healthy market, especially for downtown properties. This can be explained by the fast growth of the technology sector and a healthy labour market. Rental housing is also in demand as more and more people choose to downsize, including millennials and baby boomers. Demand is also higher for condominiums than single-family units mainly due to affordability, downsizing, growing populations, and increasing urbanization. In the retail sector, there is less demand for power centres, regional malls, and outlet centres. One of the main reasons is the growth of e-commerce.

There is also demand for senior housing as more and more older people choose to move to senior communities with high-end amenities. Developers, however, face major challenges such as regulations and policies and high costs. In 2017, the FPT Seniors Forum Ministers published a report according to which the majority of seniors prefer to live in senior communities but face challenges such as availability and limited access for mobility aids. The report reveals that many senior homes lack safety features, lighting, railing, ramps, and steps.

Possibility of Recession

In December 2019, Express Employee Professionals conducted a survey interviewing some 585 human resource professionals, decision-makers, and businesses. Of them, 46 percent believe that Canada is unlikely to enter into recession during the next 2 years. Still, 20 percent of respondents foresee a recession in 2 years, 18 percent believe that recession will hit in 1 – 2 years, and 12 percent see it coming in 6 months to 1 year. While growth will remain modest, experts share the view that recession is not expected in 2020. The main factors that fuel growth are residential investment, a vibrant housing market, and a strong job market. The real estate market experienced a decline between 2018 and mid-2019 mainly due to higher interest rates, the impact of the mortgage stress test, and restrictive policies introduced in Ontario and British Columbia. In 2019, the slowdown was offset by the creation of over 360,000 jobs in 10 months. Some 78 percent of businesses owners interviewed by Express Employee Professionals shared that they found it hard to fill job vacancies. Indeed, the unemployment rate in Canada has fallen to historic lows. Wage growth is mainly the result of labour shortages.

According to experts, Canada is unlikely to enter into recession at a time when wages are on the rise and unemployment rates are low unless the U.S. is hit by recession. In 2020, the U.S. economy is expected to grow by 2 percent, driven mainly by rising wages and a healthy labour force. Investment will also boost growth as businesses benefit from tax policy changes.

Labour Market Outlook and Jobs

In August and September 2019, Canada’s economy created about 81,000 and 53,000 jobs, respectively. Employment levels remained steady in all provinces and territories and increased in Nova Scotia and Ontario. While the economy added some 400,000 jobs in 2019, Canada is likely to face a tight labour market because more people are about to leave the workforce (late boomers) than enter the labour market (school graduates). Experts predict that from 2026 on, some 100,000 workers will leave the workforce on an annual basis. Immigration will result in a growth rate of 0.7 percent, and the share of immigrant workers will increase from 24 percent to 30 percent by 2040.

Labour Shortages by Province

A number of positions are in demand in Canada, including licensed practical nurse, welders, industrial electricians, and software engineers. Demand for jobs varies from province to province, however. According to the Newfoundland and Labrador Labour Market Outlook 2020, some 3/4 of job vacancies will be in sectors such as healthcare, government services, education, and social science, and equipment, transportation, and trades. Other jobs in demand include administrative, finance, and business occupations and service and sales occupations. Positions that are expected to experience the fastest growth are in sectors such as management, service and sales, utilities, manufacturing and processing, and health. Alberta will also experience labour shortages by 2025, including positions such as transit and motor vehicle drivers, home support and childcare workers, and medical technicians and technologists. Experienced professionals will be in demand across industries such as healthcare, computer and information systems, and transportation and construction.

The aquaculture, horticulture, and agriculture sectors are also expected to experience labour shortages, including positions such as supervisors and operators. In British Columbia, demand for workers exceeds supply as well, especially in sectors such as administration, finance, and business, sales and service, and equipment operators, transport, and trades and related. Other industries that are expected to face labour shortages include government, community, social, and law services and education, management, and healthcare. The sectors with the largest number of job openings include administration, finance, and business (167,000) and service and sales (187,000). Educational counselors, teachers, nurses, and wholesale and retail managers are also in high demand. In addition to high skilled occupations, businesses are looking to hire kitchen helpers, food counter attendants, and cashiers.

Immigrant Workers

Canadian companies are also looking to hire foreign workers and offer work permit visas. Production, manufacturing, packaging, harvesting, fruit picking, and agricultural businesses are offering jobs across Canada. Foreign workers are offered jobs such as delivery driver, packer and picker, and general farm laborer. Other positions include forklift operator, security guard, textile factory worker, and baby doll maker. The construction industry is also hiring workers such as plumbers, welders, painters, and electricians. The hospitality industry is looking to hire waiters and receptionists. Accountants are also in demand.

Financial Markets and the Banking Sector

According to Deloitte Canada, a number of factors have a negative impact on the banking sector, among which changing work patterns, climate change, changing demographic trends, and a significantly reduced banking capacity. This means that only financial institutions that have differentiated capabilities and capabilities of scale will stay competitive.

When it comes to financial markets, Canada’s equity has grown by 18.3 percent in 2019, following countries such as Australia, Taiwan, Germany, the U.S., and New Zealand. In 2020, experts predict slightly better returns for Canada compared to 2019. Financials, materials, and energy make for about 60 percent of key stock. In 2019, the top performing industries on the Toronto Stock Exchange included technology, financials, utilities, and airlines. Experts predict that in 2020, top performing sectors will include technology, airlines, financial services, and electrical equipment and utilities. Companies with the best performing stocks will include Enghouse Systems Limited, Cargojet Inc., Kinaxis Inc., and Equitable Group Inc.

motusbank – Meridian Credit Union Creates a New National Bank

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A subsidiary of Meridian Credit Union, Motus Bank features a suite of financial products, including mortgages, personal loans, investment solutions, and savings and checking accounts. As a full-service digital bank, it will soon introduce banking services tailored to the needs of business customers. Motusbank is a Canadian federally chartered bank that opened doors in 2018 and is headquartered in Toronto, Ontario. It is also a member institution of the Canadian Deposit Insurance Corporation.

The idea behind the new bank is to offer customers across Canada the opportunity to access all services and products and to manage accounts online. In fact, virtually everything can be done by phone, mobile app, and online. The new bank is customer-oriented and offers checking and savings accounts with no monthly fees.

Meridian Credit Union

As Canada’s third largest credit union, Meridian offers personal and business financial products and online banking services. Individual customers are offered a selection of checking accounts, including U.S. dollar, senior, electronic, and limitless. Meridian also features youth, advantage, and high-interest savings accounts. There is an array of credit cards to choose from, with cash back, U.S., travel, and Visa benefits. Lines of credit, personal loans, and fixed and variable rate mortgages are also available. Travel insurance and mortgage protection are also offered as well as investment solutions such as registered retirement income funds and tax-free savings accounts. Business customers also benefit from a wealth of financial products, including business U.S. dollar checking and small business checking accounts. In addition to cashback credit cards, customers are offered business lines of credit, loans, and mortgages, and equipment financing and leasing. Meridian also features cash management and investment solutions and business planning assistance.

Competitors

Unlike financial institutions that have shareholders and pay profits, motusbank has members and the main goal is to offer personalized service, competitive rates and pricing, and the option to access all products online, including mortgages, investment solutions, lines of credit, and more.

Why Choose motusbank

This new full-service digital bank features a selection of investment, borrowing, and savings solutions with competitive rates. Given that Motus has no physical branches and associated overhead costs, customers enjoy affordable interest rates on mortgages and personal loans. Another benefit is the fact that decisions on applications for loans, mortgages, and other products are made quickly.

Personal Loans and Other Borrowing Solutions

Personal loans come with low interest rates that can be as low as 5.15 percent, and members can borrow up to $35,000. Secured lines of credit feature even lower interest rates (3.75 percent) to help customers secure financing for major purchases. It is quick and easy to apply, and customers only need to provide their social insurance number and information such as housing and family status and employment type. They are also asked about the amount required and the loan purpose, i.e. vacation, investment, home repairs, debt consolidation, or recreational vehicle, boat, or vehicle purchase. Motusbank also features fixed and variable rate mortgages with affordable interest rates that can be as low as 2.90 percent. 5-year fixed rate mortgages come with an interest rate of 3.09 percent. In comparison, Scotiabank offers an interest rate of 5.34 percent on the same type of mortgage, and the Bank of Montreal offers 3.54 percent. Secured home equity lines of credit also feature a low rate of just 3.75 percent. CIBC, for example, offers a rate of 3.95 percent on secured credit lines.

Savings and Checking Accounts

Motusbank also features a selection of checking and savings accounts, including RRSP, TFSA, and high interest savings accounts. Customers who choose to open high interest savings accounts can enjoy a rate of 2.25 percent. Savings accounts offer multiple benefits such as the option to make unlimited withdrawals and purchases, free-of-charge access to ATMs, no banking fees, no minimum balance requirements, and no monthly account charges. Motusbank also features checking accounts with no monthly fees, and customers enjoy unlimited Interac e-transfers. There are plenty of reasons to choose this type of account over products offered by other banks. The account has no minimum balance requirement and allows for unlimited bill payments and debit purchases. Another benefit is that every dollar earns 0.50 percent interest. Customers are free to make mobile check deposits and are offered 25 checks free of charge. Those who are travelling to the U.S. can access cash through the Cirrus or Accel ATM networks.

Investment Products

Motusbank also features investment solutions such as 5-year RRSP guaranteed investment certificates, 18-month TFSA GICs, and 18-month GICs. The 5-year RRSP GIC, for example, comes with a competitive interest rate of 3.25 percent, which makes it a good addition to a balanced investment portfolio. In comparison, CIBC offers non-redeemable 5-year RRSP GICs with an interest rate of 1.25 percent. Opening an account is quick and easy, and customers are asked to provide details such as personal information, term and length, and renewal option, i.e. reinvest in the same term or payout to the account. The bank features additional benefits such as tax free options, choice of non-registered and registered plans, and a low minimum investment of just $100. Terms vary from 1 month to 5 years.

Online Banking and Features

The online banking platform of motusbank offers convenient features to access and monitor investment accounts and view e-statements. Customers are free to download deposit forms and transactions and filter and sort accounts. Notifications, alerts, and secure messaging are also available. Depositing checks is also quick and easy and can be done from the customer’s phone. There is also an option to set up mobile alerts. The mobile app offers convenient features that allow customers to transfer money, make bill payments, and check account balances, including savings and checking accounts and tax free savings accounts. Mobile Bill Pay is a convenient feature that allows users to make bill payments and access more than 10,000 payees. The app can be used on Android and iOS devices.

The Money Mover service featured by motusbank offers customers the option to transfer large amounts of up to $10,000 daily and is free to use. Money is transferred within 3 business days. Users are also free to set up recurring and future transfers through the mobile app or online. Motusbank also features Interac payments to transfer amounts of up to $3,000 a day, and money is deposited immediately. Customers can make an unlimited number of transactions up to $10,000 a month.

The bank’s contact centre offers assistance to members and can be reached by dialing its international or toll free number. While the bank is fully digital, the fact that it is customer-centric means that the emphasis is on customer service. Motusbank also places an emphasis on safety and security, and all deposits are insured by the Canada Deposit Insurance Corporation.

Finally, the new bank also offers advice and practical information across a host of different topics related to borrowing, investing, and saving. The goal is to help customers learn more about dealing with debt, planning for retirement, preparing financially for a new child, and choosing the best investment solution. Other topics include home improvement loans, choosing between variable and fixed rate mortgages, down payments. The bank also features handy online tools such as mortgage prepayment calculator, savings calculator, retirement planning calculator, and loan and line of credit calculator. These online tools help customers figure out what size of mortgage to apply for, whether their monthly payments are affordable, and other important issues.

The Small Business Tax Reform in Canada

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The proposed reform aims to introduce changes and eliminate tax loopholes that allow self-employed people to pass income to spouses and other family members. This is a hot topic in Canada as a recent Ipsos poll shows that 55 percent of respondents support the reform while 44 percent oppose the changes, especially small businesses. Making changes to the tax law to deal with vague and obscure language sounds like a good idea, but is it so in reality?

Justifications to Implement New Measures

The reform targets self-employed Canadians and the loopholes they use to reduce their tax burden. The focus is on investment portfolios and capital gains. Proponents claim that the new tax reform can help reduce income sprinkling. Income sprinkling enables self-employed persons to divert income to children and other family members by way of paying dividends, wages, and salaries. According to a report by the Department of Finance, this is a common practice, and about 50,000 small businesses in Canada use sprinkling to pay less in taxes. This is also a way to benefit from passive investments, a practice that the proposed measures aim to limit. This can be done by means of a reasonable test to find out whether children, spouses, and other family members participate and actually contribute to the family business. The pay, whether in the form of wage or salary, is reasonable only if it is comparable to the pay another person would get for the work done. When it comes to capital gains, profits generated through the sale of real estate, stocks, and securities fall in this category. In the view of liberals, diverting income in the form of capital gains gives unfair tax advantage to CCPCs. At present, businesses are free to sell shares to another company and thus avoid taxation. Passive investment is also an issue for Liberals. Income generated through an investment portfolio falls in this category. It is different from active income generated through business operations. The problem with passive investments is that businesses benefit from a significantly lower corporate tax compared to active income.


In addition to small business owners, certain professions take advantage of this to reduce their tax burden. These include physicians, lawyers, farmers, and others. The planned reform is targeted at farming families that distribute profits and work responsibilities to pay less in taxes. Physicians also oppose the new measures, and this can be explained by the fact that most of them are incorporated. A report by the Canadian Medical Association proves this. Again, this is a way to pay less. Some physicians support the tax reform but believe that the best way to implement it is through a transition plan.

Proponents note that the goal of the new measures is to establish a fair tax system for everyone. This can be done by closing gaps that offer tax advantages to those incorporated as a Canadian controlled private corporation. At present, the tax system encourages well-paid Canadians in the high-income bracket to use CCPC to reduce their tax rate and increase their net income. The new measures are also expected to increase government revenue to help vulnerable members and communities and citizens marginalized at the fringes of society. And while Prime Minster Justin Trudeau and Finance Minister Bill Morneau noted that this is not the main goal, a tax reform is one way to increase government revenue.

What Opponents Say

Opponents, on the other hand, point to the fact that the proposed changes place an undue burden on small businesses, especially those planning to expand or invest in new products, services, or operations. And many businesses would be affected as figures by Statistics Canada show. Out of 1.17 million employers operating in the country, small businesses account for 98 percent of employers or 1.14 million. More than 50 percent operate in Quebec and Ontario. Opponents also point to the fact that the new tax reform targets small businesses such as corner stores, garages, bakeries, and florist shops, and not just lawyers, doctors, and other professionals in the high-income bracket. Small businesses such as coffee shops, landscapers, family restaurants, roofing businesses, electricians, and plumbers would be affected. And while the proposed reform is not expected to destroy small businesses, the new measures might discourage many from starting a business. At the same time, small businesses are the backbone and driving force of the Canadian economy.


Opponents also warn that cutting tax benefits means less revenue for small businesses. This often goes hand in hand with fewer benefits, basic or reduced health insurance, longer working hours for employees, and layoffs. The government counters this argument by pointing out that businesses with an annual income of $150,000 CAD would be impacted the most. The same goes for self-employed individuals with extra income after making the maximum contribution to their tax-free savings account or registered retirement savings plan.

Salaried Employees vs. Small Business Owners

Proponents believe that the way things are, small businesses get unfair tax advantage over persons working regular salaried jobs. Opponents to the reform, on the other hand, argue that running a business is a costly endeavor. A lack of paid leave is also an argument in favor of more lenient taxation for small businesses. They suffer further disadvantages such as no guaranteed salary, no guaranteed vacation and pension income, etc. To sum it up, the main downsides of running a small business are fewer free benefits, less security, and lack of regular income stream. Proponents to the tax reform counter this argument by explaining that entitlement to state benefits is not a justification to offer tax advantages. Self-employment also offers advantages in the form of financial rewards, especially when it comes to independent contractors. Many large businesses choose to work with independent contractors instead of hiring employees, which is, by itself, a long-term commitment. Basically, it is less expensive to hire a contractor than an employee. To this, contractors are required to supply their own equipment, tools of trade, mobile devices, computers, laptops, software, etc. Independent contractors are also allowed to deduct business-related expenses for taxation purposes. This is yet another way to increase financial rewards.

Finally, whether the new measures are fair or not is a difficult question to answer. Tax experts draw attention to the fact that there are too many exemptions and exceptions in the current tax code. Even if the new measures come into effect, there is plenty of room for improvement.

Money and Motivation: Is Your Consumer Behaviour Driving You into Debt?

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There are a number of strategies you can make use of to find out what your “financial” personality is like, so that you can get out of debt and start learning some responsibility. Statistics show that household debt is skyrocketing, reaching new and new heights year after year. Consumer debt comprises around 30% of the total debt.

Market Principles vs. Individual Principles

We live in an age when supply is almost endless. We can buy practically anything we can imagine, and in wondrous variety at that. When you think of the traditional supply and demand graph, you would expect demand to plummet. Perhaps this can be seen as a challenge to the age-old economic principle. Not only is demand not plummeting, it is rising and rising and the state of debt testifies to this. It seems we want things so much that we no longer care that we can’t afford them. However, we should be careful when we assume that macroeconomic principles transfer to microeconomic ones. In other words, market principles do not always reflect individual ones.

Personality Balance Sheet

Experts advise debt-ridden consumers to create what they call a personality balance sheet. The idea is to make a list of your personality traits as they relate to your behaviour as a consumer and define them as advantageous or disadvantageous. What motivates most of your purchases? Granted, this is a difficult question to answer. There are many factors that motivate purchases apart from personality traits, such as age, sex, even location. Naturally people in sparsely populated areas will have a whole different set of criteria when it comes to purchasing goods or services compared to people from big cities.

How Commercials Influence Behavior

Before you can understand how your personality may be driving you into debt, you have to understand the psychology of advertising. What are producers actually going for when they advertise their products? You may have wondered how they possibly get returns on commercials, what with there being so many. Advertising’s main function is informative, true, but it also serves to educate. By advertising expensive luxury products, they work on your system of values, artificially creating demand for something costly and prestigious that you don’t need. If you are especially vulnerable to that sort of “propaganda”, as would be someone with low self-esteem who wants to be respected and admired, you’ll fall for this. You may take out a loan to get the latest BMW or Mercedes model instead of sticking with your trusted Volvo or Pontiac.

If you tend to be on the impulsive side, make sure you stay far from temptation. Take all your credit cards out of your wallet, do not go into stores if you don’t actually NEED anything, and even curb window-shopping. This is not going too far. Do you want to get out of debt or don’t you?

Main Money Personality Types

According to experts, there are several money personality types – the spender, hoarder, avoider, and amasser.

  • Spenders tend to buy on impulse and buy things they don’t need, whether jewelry, groceries, or anything else. They find it difficult to prioritize and save for a rainy day. Spenders are often knee-deep in debt.
  • Hoarders, on the other hand, usually have a budget and prioritize their purchases and long-term and short-term financial goals. For hoarders spending on travel, dining out, magazine subscriptions, and entertainment is a waste of money (and time). Hoarders usually have an emergency fund and prefer to save for college education, retirement, or just in case.
  • The avoider tends to put off things like paying bills on time or doing taxes. He has a hard time saving, planning, budgeting, and dealing with financial matters. This money personality type has a nonchalant attitude towards financial planning and things like retirement income, investment, or insurance. If you are an avoider, it is a good idea to talk to a professional to get in control of your financial life. Always shop with a list, create a budget, and stick to it.
  • The amasser is a different story – for him money means power and enhanced self-esteem. Lack of money, on the other hand, may result in depression and poor self-esteem and feelings of worthlessness and failure. The money monk is the exact opposite, feeling that money and consumption are the root of all evil. A steady paycheck or inheritance money will actually make him feel insecure.

There are three more personality types – the flyer, security seeker, and risk taker. The risk taker, for example, tends to make risky investments such as real estate investment trusts, options, currency trading, and high yield bonds. Risk takers aren’t too worried about financial matters and details. They actually get excited about potential returns, risk, and possibility. Security seekers, on the other hand, prefer low-risk investments such as bonds, savings accounts, and certificates of deposit. They like to be prepared for anything, be it a natural disaster, depression, or apocalypse and humankind vanishing from the Earth. Security seekers usually have an emergency fund for a rainy day. For them, life is about careful planning, budgeting, and saving for the future. The flyer also has a distinct way of thinking. He feels content and happy with life as it is. The flyer has a nonchalant attitude toward financial matters and as long as he is independent, free, and making his own choices, that’s all that matters.

A Final Word to the Wise

At its core, consumption is a social habit. We buy what others buy or encourage us to buy, even though we may not realize it. It follows that you should surround yourself with positive people who realize that there is more to life than shopping.

Canadian Dollar – Post-Election Strategies for Making Money Trading USD/CAD Currency Pair

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Experts warn that the Canadian dollar will remain weak over the coming months, with oil prices going down and revenues falling. Canada is one of the world’s largest oil producers, and lower oil prices certainly pressure the currency down. Another reason why the dollar is sinking further is the business unfriendly policies adopted by the liberal government. Truly, the government is committed to investing in waste water treatment, building bridges, repairing roads, and infrastructural improvements that will benefit engineering companies and the construction industry as a whole. At the same time, the government’s decision to run a deficit means a weak dollar, and experts warn that more debt also means larger interest payments and a weaker currency.trading

Making Money Trading USD/CAD

How to make money from Forex trading is a question that many investors ask post election and given the weakened external demand. The first thing to do is to learn more about Forex rates, current stock market trends, and how perceptions of government policies affect rates. If investors see the liberal party as spend-progressive, then they will be confident that the market is doing well. But this is just part of the puzzle. When it comes to currency trading, many believe that the loonie has further to weaken and fall due to falling gold prices and revenues of giants such as Kinross, Goldcorp, and Barrick. The economy of China, one of Canada’s trading partners, is also slowing down. As a commodity currency, the loonie has been affected by a combination of factors, among which risk sentiment, commodity prices going down, and China’s economy.

Investing in Assets and Currency Hedge Funds

Some Forex experts recommend buying into USD/CAD as long as most investors continue to sell. At the same time, a falling Canadian dollar, combined with low oil prices means that US assets increase in value if priced in CAD. The opposite is also true – US assets are worth less when the loonie is rising. Investors who are worried about the fact that the Canadian dollar will increase in value may want to look into currency hedge funds like iShares S&P 500 Index ETF CAD-Hedged. Others choose not to hedge and limit their US exposure to no more than 10 percent. Still others choose to invest in healthcare, technology, and consumer-oriented companies in the US and hedge their currency exposure. The goal is to reduce potential risk when investing abroad. Currency hedge funds promise significant payoffs and to this end, they follow market trends through computer algorithms. In some cases, currency hedge funds take bearish or bullish positions and report gains at a time when companies trading emerging-market assets report losses. In any case, the ultimate goal is to realize consistent returns. To this, currency hedge funds that focus on CAD to USD usually use advanced strategies and algorithms to follow the movements of currencies with significant trading volumes.

loonie

USD/CAD Trading and Other Instruments to Make Profits

Crude oil is an important factor that affects the Canadian dollar. The reason is that oil prices are denominated in USD. The fact is that there is a strong USD – CAD negative correlation and the same goes about the price of oil. This means that when oil prices go down, USD/CAD goes down and USD weakens. The opposite is also true – USD/CAD rises when oil prices go down and USD strengthens. If you think that oil is going to rally more than USD/CAD will go down, then you may want to purchase both. By the same logic, sell both if you think that USD/CAD is going to decline compared to oil. Another idea is to invest in options on the futures and spot markets. This is a low-risk type of investment.

When there is no clear up or down trend, one option is to rely on hit and run trading in the hope of making small profits. In this case, you may want to pay close attention to trends and look for a small pull back and a bullish trend. When you spot a reversal pattern, then it is time to buy. Such strategies could be useful when the situation on the Forex market is unclear. When there is uncertainty about the direction in which the market will go, some experts recommend using Nadex spreads and the Iron Condor strategy to trade options. Nadex spreads can be used in a flat or downwards market while an upwards market requires credit spreads. Note that when you use Nadex spreads, there are time limits as well as a ceiling or floor level. Investors who use the Iron Condor technique buy the lower spread and sell the upper in the hope of making significant profits.

If You Have $10,000 Would You Put Them in a TFSA

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A tax-free savings account is a flexible and convenient savings solution that helps Canadians to earn tax-free income. This product can be used together with other investment vehicles such as registered education and registered retirement savings plans.

The Basics

There are multiple benefits to opening a TFSA, one being that consumers’ savings grow in a tax-free way while withdrawals and investment income are also tax-free. The fact that TFSAs allow flexible withdrawals is a further benefit for individuals. Another benefit is that there are no lifetime contribution limits to worry about provided that you are eligible. Finally, contributions to your TFSA account will have no effect on other government-provided benefits such as the Goods and Services Tax credit, Old Age Security, and others. With lifelong eligibility, this investment solution can be used at any age, whether you are a young professional or close to retirement.

What if You Are in the Middle Tax Bracket

Canadians with a high income level benefit from the new threshold or contribution limit ($10,000). Those who contribute the maximum will save about $3,800 in taxes over a 10-year period. With savings of about $5,000, those who fall in the middle tax bracket are making contributions of about 1/5 of their pre-tax income. At the same time, finance and tax experts point to the fact that the new contribution limit offers more flexibility, whether you are in the middle income bracket or have a more limited income. Even an income of $50,000 or lower makes the tax-free savings account a better alternative to the RRSP because TFSAs help save on taxes. Canadians who are about to retire may want to look into this option as well provided that they trim other investment solutions such as RRSPs and RRIFs.

In fact, the new limit is designed to benefit middle class couples. A couple in their early 40s, for example, is expected to accumulate savings of over $1 million over their lifetime, plus estate worth over $650,000. This is provided that both partners have an annual income of about $80,000 and aim to retire at the age of 58. Finance expects base estimates on a 3.5-percent real estate growth and 2.2-percent inflation. In general, a tax-free savings account is a good solution for young couples and professional in their early 30s if they are saving toward retirement or big-ticket items and other major purchases. Upper-class individuals will obviously benefit from the new limit, but the new measure is also designed for public service employees and teachers with defined benefit pensions and contributions they rely on. Young adults, on the other hand, may choose not to use RRSPs to save toward retirement altogether because of the tax issues associated with RRIF and RRSP withdrawals.

Is This Good News for Retirees?

Statements by the federal government indicate that retirees will be the major beneficiaries of the new contribution limit. To this, seniors may want to move cash from their RRSP or registered retirement income fund to a tax-free savings account. There are multiple benefits to doing this, one being that higher contributions reduce income tax. While many Canadians believe that it is not advisable to make RRIF withdrawals before the age of 71, this is not the case, especially for consumers with a registered retirement income fund. The fact is that individuals may benefit from early withdrawals by reducing their tax bill. In addition, there are estate planning benefits.

Some people are concerned that additional income will trim the benefits because they will be left with more taxes to pay. The good news is that this would be so only during the first couple of years once they retire. Then their taxable income becomes lower. The reason is that less cash in a registered retirement income fund means less money to which the minimum withdrawal applies. And while retirees pay more in taxes during the first couple of years, experts point out that there are several mitigating factors to take into account. One is that account holders pay at a 31-percent marginal tax rate which is lower compared to contributions from previous years. Thus Canadians benefit from the fact that they pay less in taxes on withdrawals.

Conclusion

There are plenty of benefits to opening a TFSA now that the contribution limit is set higher. All Canadians who are at least 18 years of age are allowed to contribute up to the limit and thus accumulate significant balances. These balances are not only conserved in a tax-free way but grow with time. Finance experts also point to the significant estate planning benefits offered by TFSAs. If one of the spouses was a RRIF holder and passed away, then the other spouse would suffer a major tax hit if they made RRIF withdrawals. With tax-free savings accounts, holders face less risk even if they make withdrawals early in retirement. And if you have $10,000, it is worth opening a TFSA and contributing up to the limit because this is a sheltered account. Some finance experts even advice customers to contribute to their grandchildren’s and children’s TFSAs in case they’ve already maxed out their own accounts. This is perfectly legal to do and yet another way to maximize your savings.

Is It a Good Idea To Save Money?

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There are plenty of reasons to save for a rainy day, especially if your income is low or average. If you don’t have a stable job but are paid commissions or bonuses or have a seasonal job, this is yet another reason to save to be financially independent. The unfortunate truth is that bad things and emergencies can happen to everyone.

Why Save Money

It is a good idea to have an emergency fund to meet unexpected expenses and pay for basic necessities in case of loss of income or loss of employment. At the same time, the decision to save or not also depends on the current economic situation. When rates are at historic lows, which is the current situation, savers are literally punished and pay to keep money in their checking and savings accounts. At the same time, inflation is eating away their savings and many choose to keep their money under the mattress.LOC27

Is Borrowing Better Than Saving

Again, this depends on the current economic situation and interest rates. In some cases, taking out a low rate loan is a cost effective solution and more people can afford to borrow. They have more cash to spend on everyday and big-ticket purchases and improved purchasing power results in higher inflation and economic growth. The recent drop in oil and gasoline prices is one of the main reasons for the current state of affairs. When the pace of inflation eases over a longer period and interest rates are still low, this is a good time to borrow at a low cost.

Is It Always Good to Have an Emergency Fund

This depends on your income level, whether you have additional sources of income, number of children and household members, your age and short- and long-term financial goals, retirement goals, and other factors. There are some arguments against having an emergency fund, and one is that most financial institutions which advertise savings accounts offer a low rate of return. In this case, having an emergency fund is a particularly bad idea if you hold multiple, high-interest debts. Debt balances sitting at 15, 20, or 30 percent will cost you dearly, regardless of the earn rate on your savings account. Holding cash in a savings account may make sense but this depends on the amount deposited, the earn rate, and the state of the economy. Many consumers opt for a savings account because of the fact that this is a liquid, low-risk product. There are other ways to invest free cash such as bonds, stocks, certificates of deposit, money market accounts and riskier investment strategies such as Forex trading. In general, consumers save money to meet unforeseen expenses, pay for home and car repairs, and other major repairs. It is also a good idea to have an emergency fund in case of a sudden job loss due to an accident or another unfortunate event. Many people save for retirement, but there are better ways to grow your money than opening a savings account. Some people also use their emergency fund to pay for vacations and to make a down payment for a vehicle or house but again, this depends on inflationary pressures and rates and this is not what emergency funds are meant for.

How to Make Sure Your Savings Are Not Eaten Away by Inflation

LOC26There is no straightforward answer to this question but basic investing tips can be of help. When inflation is high, your savings are menaced because interest rates are also low. Unless you are offered a high-interest savings account, the purchasing power of your money is steadily declining. One way to protect your savings against inflation is to take more risk with the goal of getting higher returns. Financial advisers recommend investment strategies that are medium-risk and bring higher returns. One option is to invest in inflation-bearing bonds and the best part is that you benefit from tax-free returns. The rate also increases over time. Another option is to invest in stock but this is a riskier solution for seasoned investors. You may want to look at alternatives, for example, stock and shares ISA which is one way to secure income from shares and stock. It is also a relatively safe investment vehicle that brings inflation-beating returns. Basically, this is a type of ISA that allows some degree of flexibility. The returns depend on the types of investments customers choose to buy. Some businesses pay regular dividends and offer the opportunity to get decent returns. There are other investment vehicles such as annuities, mutual funds, commodities, equity, and others. Other options to protect your savings against inflation include money market mutual funds, savings bonds, corporate stocks and bonds, state-sponsored tuition plans, and education IRAs. You can also look into investment vehicles such as treasury notes, bills, and other securities and exchange-traded funds.

Conclusion

Whether it is a good idea to save or borrow depends on many factors, including your personal and financial circumstances and the state of the economy and global financial trends. One way to protect your savings when inflation is high is to use different investment strategies such as dollar cost averaging, portfolio diversification, and allocation of investments. Some investment instruments are safe and low-risk but bring low returns. They are also more liquid meaning that customers are allowed to withdraw their money without penalty and at any time. Other instruments are riskier or less liquid and offer higher returns. Whether it is a good idea to save depends on your financial goals, i.e. early retirement, buying a new vehicle, a college fund for your kids, and so on. Think of your mid-term and short-term goals as well (holiday purchases, travel, paying off debt faster, etc.) Saving can also help become financial independent and live a stress-free life.