Happy Friday from BMWM!
Get ready to say goodbye to August and say hello to September. We are confident that many parents are eager for their kids to go back to school and get back to their usual routines. This is a good time to remind you that the government will match 20% of contributions up to $2500 per-year per-child to a Registered Education Savings Plan (RESP) to assist with college or university expenses. There are exceptions and limits to an RESP plan, but they are generally quite beneficial. Let us know if you would like more information on this.
After a steady increase from March through July, markets have returned to some volatility. Much of this is caused by market uncertainty around interest rates and inflation, along with more realistic expectations surrounding the economy. This most likely will cause slower economic growth. While interest rate increases aren’t great for variable rate mortgages or people trying to get into the real estate market, it does help our investments. In recent years, interest rates have been extremely low. Prime rate was as low as 2.45% in 2020 and has increased to 7.2% at time of writing. What does this mean for us? This is an opportunity to rebalance our portfolios and increase our positions in fixed income. GICs and bonds have increased in yield which means we can effectively take less risk and improve our performance. For registered investments such as RRSPs and RRIFs, increases in bonds will not create negative tax implications. Bonds and GICs may not be as beneficial in non-registered investments, and this should be considered before purchasing. As each client is different, these factors are being accounted for as we rebalance and shift our target asset allocations. Currently, we are adding more bonds to our models.
The Current Account (click here to read) covers Donald Trump surrendering at Georgia’s Fulton County Jail, FIFA opening a case against the Spanish soccer president, the Brics inviting six more countries to join its emerging market group, and Michael Jordan being the richest basketball player of all time.
We want to take a moment to thank our summer student Jacob for another summer’s work! His last day is Friday, September 1st, after which he’s going back to school for his final year.
Taylor’s word of the week is quiescent, meaning “a state or period of inactivity or dormancy”. For example, a hyperactive dog who has tired himself out and fallen asleep has become quiescent.
Have a wonderful weekend,
Brenda, Betina, Taylor, Matty, and Jacob