Category Archives: economy

Four ways low interest rates affect you

by

Leave a comment

The Bank of Canada has been promising lower interest rates for a while, but again it disappoints. There are four reasons that you need to be wary of the current interest rates:

First, the lower interest rates are going to cause investors to not be able to get good returns on their safe investments. If you have investments in them, you cannot expect to get better returns for quite a while thanks to the enormous hesitation to increase interest rates.

Second, you now need to save more money for your retirement, because thanks to having less returns on your investments, you will not have as much money in the future. Even your pension might be affected, as defined-benefit pensions will not be able to meet their obligations thanks to all of the uncertainty out there.

Third, those who are heavily in debt have the risk of losing their jobs due to low interest rates, which are really just signs of global softness.

Finally, the housing market is continually at risk, with fewer people able to afford housing even though interest rates are low.

Interest rates will likely remain low well into 2013, maybe increasing by only one percentage point, so these problems will remain.

The finances of Canadians are mostly on the right track

by

Leave a comment

 

The finances have Canadians are definitely on the right track as we look back at them on this Canada Day weekend. While some areas have improved, others have gotten worse. On the positive side, the net worth of Canadians has continued its rise, as have real estate gains and the Toronto Stock Exchange. The Canadian dollar is also increasing in value against the Euro and US Dollar. Canadians may have one of the lowest savings rates of OECD countries, but they still have less debt than most others, so this may account for the lessened need to save. Even the Canadian federal government is doing well, with continued surpluses while other countries, like the United States, have huge deficits. In fact, the Canadian government has continued to post budget surpluses of 1% since the 1990’s. One slightly negative thing is that the appreciation of the Canadian dollar has led to worsened stock market returns from the United States, but the Canadian economy or Canadian dollar cannot really be blamed for this. All in all, Canadians are doing better with their finances on average than those in many other nations, and Canadians all have something to be proud of this Canada Day weekend.