Happy Friday and Happy New Year from BMWM!

 

January is here, which means it is time to contribute to your RSPs and TFSAs. Please send Matty your Notice of Assessments for Tax Year 2021 at matthew.grieder@rbc.com if you have not yet done so. We will send more detailed information regarding contributions later on in January.

 

Global equity markets have bounced around this week but are generally in positive territory to begin the year. Canadian stocks, as measured by the S&P TSX Composite, ended at a 2.25% gain on the week, while US equities put together a positive trading day and week as of Friday close. The unemployment rate in the US reported this week fell to 3.5%, which is historically quite low when compared to the average 5.73% between 1948 and 2022. While some question the amount of people actively seeking work, the data point nonetheless supports a stable economic backdrop and may result in the US Federal Reserve being less inclined to soften its policy on rate hikes. It is our opinion that interest rates in Canada and the US will stay higher for longer than people think or want, and as a result, we continue to favour bonds over equities through the end of this year. We reserve the right to change our mind of course, but this is what the data and current credit environment supports.

Further to market discussions, we had a thoughtful debate this week with a long-time client on the concept of aging. Since it is our mission to complete a financial plan / MyGPS with every household, we always discuss the longevity assumption: aging to at least 95. This assumption is often met with a chuckle or scoff. Now, we can appreciate that not everyone will live to this age…but what if you do? Did you know that 25% of Canadians who are 60-years-old today can expect to reach the age of 98! We want to have this discussion with you because the risk of outliving your savings may be greater than leaving too much behind. To further this conversation, we have provided an article on "Aging in Place", which is the resounding preference for Canadians. Almost 100% of respondents stated this as their intention to a recent survey (results included in the article). We welcome your thoughts on this matter, as always.

 

Taylor’s word of the week is emphatic, meaning “showing or giving emphasis; expressing something forcibly and clearly”. For example, children are emphatic about repeating the Disney Land experience.

Have a great weekend,

 

Brenda, Matt, Matty and Taylor