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Personal Investor: How does your mobile bank measure up?

A recent evaluation of mobile banking has revealed that the Bank of Nova Scotia takes the top spot, while credit unions still lag behind their larger counterparts. Surprisingly, TD Canada Trust, once a leader in the mobile bank industry has slipped down in rankings to 17th place. The list of the other top 16 banks can be found in the original article. The study ranked banks based on the available services, usability, results and support.

Could your loved ones figure out your finances if you died?

You might gain a great deal by having several investment accounts, but if you were to suddenly pass away, your family might not benefit from your careful investing. While it isn’t a topic we like to consider, it’s important to plan for and ensure that your family can find and make sense of all the accounts you have which make up your estate. One solution may be a new company called Onist that will consolidate and keep all your information for a nominal yearly fee. This may breach some of the agreements you have with your financial institutions, so it’s important to speak to a professional to help advise you on the best approach for you and your situation.

What should young Ellis do with a $500,000 inheritance?

A young engineer-in-training, who has no credit card debt or student-loan debt, questions what to do with a recent $500,000 dollar inheritance. A sound philosophy for the money is to use the rule of thirds. One-third to investing for the future, one third towards paying back the past by purchasing property and the final third to do something fun. He can still budget the income he currently makes while dividing up his inheritance in a practical as well as an enjoyable way.

Key Takeaways:

Invest a third in a non-registered investment account for future retirement savings, or as an emergency fund.
Use the second third as a down payment on a home with a mortgage for the remainder.
Follow your dreams with the remaining amount by doing a bucket list activity, making a charitable donation, upgrading your education or something else that’s amazing.

“Invest for the future, pay back the past, and live for the now.”

Startup pension option could save small-business owners, workers from worry

Currently, the gap between how much Canadians need to save for retirement vs what they are actually saving is $3 trillion. This number is expected to rise to $15 trillion by 2050. One of the reasons is that 70 percent of Canadian workers (up to 90 percent in the private sector) are working without a pension. Establishing a pension plan is challenging for many businesses both in terms of costs and management, and so a new program by a startup may be the answer. It allows even the smallest companies to outsource pension planning for their employees. All the plans are flexible and can be customized to any employee’s needs. Using services like these may help reverse the ever growing Canadian pension crisis that seems to be getting worse every year.

Canadians Shopping In The US To Pay A New Tax For Going Over Their Spending Limits

Beware frequent border shoppers. Canada is imposing a new surtax on goods purchased in the United States, and brought back into Canada. It is based on how long shoppers were in the U.S., and how much they purchased. This new tax is in addition to the tariffs American president Trump has recently levied. The Canadian government, and trade experts, expect the new fees will discourage cross border shopping and promote renewed interest in Canadians keeping their spending in Canada.

Rates are rising and I am rethinking all my money decisions

Rising interest rates have caused some to rethink how they plan to spend, invest and save going forward. After many years of low interest rates, the strategies that worked well in the past, like variable mortgage rates, should be re-examined. Previously, the only way to earn a decent interest rate was to invest in financial markets and take on increased risks. Investors may soon be able to look at savings accounts, but you’ll need to shop around for the best rates. Higher rates should also lead to different investment strategies due to increased corporate earnings and the effects of rates on certain industries. For fixed income, like bonds, a shorter maturity may make more sense especially if you need to sell before they mature. After living in a near-zero rate environment, we’ll need to make adjustments for a rising rate one.

Key Takeaways:

In a low rate environment, the only way to earn money was to invest in financial markets, which comes with added risks.
Better growth tends to increase the number of jobs, improve wages and consumer confidence, but also inflation, which can lead to even higher rates.
Rising rates can cause valuations (measured by price-to-earnings multiples) to fall, which is why sectors like utilities or real estate, which are thought of as bond substitutes, tend do poorly when rates rise.

“We’ve never been in this kind of ultra-low rate environment before, which means we’ve never been in this kind of rising rate environment, either. It’s important to remember that the reason rates are rising, not just here, but around the world, is that the global economy is improving.”

What to know about owning a cottage with friends or family

As vacation property prices rise, co-ownership of vacation properties is becoming more common. Before purchasing a property, you should have a valid legal agreement drawn up regardless of whether you are entering into the deal with family members or friends. The agreement should cover areas like transferring the property, exit strategies, dividing time spent at the property, and the decision-making process to name a few.

Highest, lowest real estate transfer taxes across Canada (INFOGRAPHIC)

A recent study outlines the cost of land transfer tax (LTT) across Canada for first-time home buyers and repeat buyers. When purchasing a home, LTT is a tax paid upon closing, which cannot be mortgaged. Out of all the cities in Canada, Vancouver, Toronto and Victoria rank as the top three with the highest total LTT sums paid. Calgary ranked 22nd with 0.1% LLT as a percentage of home price.

What the Bank of Canada rate hike means for your mortgage and savings account

Canada’s strong economy has prompted the central bank to up its interest rate by .25, making the overall rate 1.5 percent. The quarter of a percentage point increase proved to be a cue for Canada’s other primary banking institutions, which intend to follow suit. The bump is concerning to those Canadian households with high debt loads as variable rate-mortgage owners’s interest payments will rise as a result of the rate increase. However, there is a plus side for savings account owners as rates improve.

Key Takeaways:

The Bank of Canada’s decision to up the interest rate .25% to a total of 1.5% is reflection of Canada’s current economic stability.
The rate hike will mean higher borrowing costs for those with a variable-rate mortgage.
Canada’s highest profile banking institutions are upping their prime rates too, so savers should see some positive movement.

“Rates are slowly on the way up, but remain relatively low historically. On balance, it’s still probably a positive for the average household, for the average business.”

Personal Investor: Bank of Canada keeps savers on the sidelines

Although the Bank of Canada just upped the interest rate to 1.5%, a nod to the stabilizing and steady-moving Canadian economic outlook, it is still lower than the inflation rate, which remains at 2.2. Because the gap remains, savers should consider their investments carefully. As the economy slowly gets stronger, it is expected that rates will go even higher. To that end, it’s important for savers to keep investments in short-term investments as the gap between short and long-term yields continues to flatten, and be ready to move when higher rates finally come.