POWER PLAY

Winter is coming.  The prairies will be cold.  Which is tough on the battery life of electric vehicles. 

Against this backdrop, our federal government has drafted Clean Electricity Regulations for the provinces, to limit their use of non-renewable energy, which may push more Albertans to purchase electric cars.  Ottawa wants net zero greenhouse gas emissions by 2035, and Alberta thinks it can be done by 2050.  I don’t know which estimate is more accurate, but I do know that Alberta is a wide-open place with a very low density of charging stations and very low winter temperatures that kill rechargeable car batteries. For some people especially, there is risk associated with driving an electric car here in winter.

Electric, solar and other alternative power sources are all great ideas and will be good for our climate - but given the specifics of Alberta and other provinces, we will still need to rely on non-renewables while working hard to make alternatives more practical.

OUR DIFFERENCES WITH AMERICANS

I was pleased to recently attend an RBC conference where I heard from industry leaders in investment and wealth management.  I had a conversation with an American manager - and something that really stood out is just how different the Americans view their economic situation vs. how we view ours.  In a nutshell, the Americans are much more bullish and optimistic. 

They are spending aggressively, for example:  This year’s Black Friday online spending in the United States reached an all-time high of $9.8 billion, up 7.5% from last year.  US shoppers were projected to spend an additional $12 billion on Cyber Monday, an increase of up to 10%.

In Canada, Salesforce reported that Black Friday sales were up 2% from last year. Not as dramatic an increase as on the American side, but still I am concerned that the full negative impact of inflation, and the higher interest rates created by the Bank of Canada, have not yet come home to roost in our country (Bank of Canada Governor Tiff Macklem says that interest rate hikes may be over.  I am not so sure).

Americans do have some legitimate reasons to feel less concerned than their friends north of the border.  As Canadians, we are more vulnerable than Americans to high inflation and interest rates because of our high levels of household debt (you may recall from the June edition of this Journal that Canada is #1 in the G7…but not in a good way).  We are also more vulnerable to hikes in mortgage interest than Americans are - because their mortgage terms are typically 30 years, during which their interest rate is locked in, whereas our rates come up for renewal.   Canadian banks are indeed putting aside more money to cover bad loans.

All of that said, it is possible that Canadians’ strong spending points toward what is referred to as a “soft landing,” meaning a recession that is quite mild.  I still believe, however, that people should be prepared, including by having an emergency fund.  As I said in the August edition of this blog: 

“If you are employed, a recession could mean you become suddenly unemployed; if you are retired, it is still reassuring to know you have extra funds put away, just in case you need them.  Our standard recommendation is that everyone have enough cash on hand for between three and six months of expenses. In volatile, uncertain times like these, we suggest you think of six months as a minimum.”

THE VALUE OF ADVICE

 

We’re here to help you plan for short-term needs including an emergency fund, and of course for longer-term needs, most prominently preparing for retirement - the cost of which inflation has driven up.  New research from Deloitte says that 73% of Canadian households with near-retirees “will need to make lifestyle changes to avoid outliving their savings due to expenses like health care and long-term care costs.” 

That is why your current and future net worth, spending vs. expenses, retirement income planning and tax minimization opportunities should all be reviewed in detail.   The potential viability or practicality of alternate scenarios, such as retiring earlier or later than planned, should also be considered.

We are here to discuss any or all of this with you, at your convenience.

 

MOST LIVABLE CITIES?

 

Speaking of retirement, the Globe and Mail recently published its ranking of “the 20 most livable cities in Canada for retirement.”
Calgary, the only Alberta city on the list, comes in at #10. I would allege Central Canadian bias, except that only three Ontario cities made the list and none from Quebec, and that 15 of the top 20 cities are allegedly in BC.  Victoria claims the #1 spot. 

The measurement criteria were economy, housing, demographics, health care, safety, education, community, amenities, transportation and climate.

Depending on the weight assigned each variable, it could be the mild coastal weather that gives BC a built-in advantage.  The ranking declares that Calgary, for example, has an average of 37 days per year of -15C or colder, while Victoria has a grand total of zero.

Here is the full list:

1. Victoria, BC
2. Oak Bay, BC
3. White Rock, BC
4. West Vancouver, BC
5. North Vancouver, BC
6. Parksville, BC
7. Dieppe, NB
8. Saanich, BC
9. Penticton, BC
10. Calgary, AB
11. Langley, BC
12. Vernon, BC
13. Oakville, ON
14. Colwood, BC
15. Nanaimo, BC
16. Cranbrook, BC
17. Delta, BC
18. Lambton Shores, ON
19. Burlington, ON
20. Kelowna, BC

THIS TOPIC KEEPS COMING UP

These days, there is a certain topic that comes up in every meeting with my retiree clients:  the Canada Pension Plan.  The feds, for all they could do better, have done a great job with the CPP.  Its investment performance is strong.

“The most recent triennial report by the Chief Actuary of Canada confirmed that the CPP is financially sustainable for the next 75 years,” the CPP website reports, with a 10-year annualized net rate of return. Because of the size of the fund ($576 billion), they are able to take advantage of long-term institutional investments that have performed well.

The CPP does what it is supposed to do, which is provide income to retirees or their survivors throughout retirement.  All of that said, it is always wise to consider alternative arguments on their merits.

TAX PLANNING

Generally, the deadline for filing your 2023 personal tax return with CRA is April 30, 2024. If you or your spouse are self-employed, your deadline is June 17.  Regardless of filing date, your 2023 taxes should be paid on or before April 30.

Here is some information to review, to ensure you take advantage of all tax benefits you may be entitled to. 

And a quick note that the contribution limit next year for the Tax-Free Savings Account (TFSA) is increasing from $6,500 to $7,000, which is a modest increase, but good news nonetheless.

WE KNOW WEALTH MANAGEMENT.  WE KNOW YOU EVEN BETTER.

As I revealed in last month’s edition of the Journal, we have a new commitment to you: 

We know wealth management.  We know you even better.

This is our statement of the unique value we deliver to you, our clients.  It is just one element among several expressed in our new brand foundation, which you can find on our newly-updated website.  For more information on this commitment and what it means to you, please contact me, or see the full announcement in the October edition of Jason’s Journal, here.

We have also updated our LinkedIn pages with our new message.  If you are not already connected with us on LinkedIn, please send us a connection request, so you can follow the content that we post exclusively on that platform:

Send Jason a connection request by clicking here.
Send Colleen a connection request by clicking here.

THE FAMILY FILES

As you know, the weather this November has been very pleasant.  As a family, we have been able to ride our bikes longer into the fall than expected.  Cara is also enjoying horse riding once a week, and Jake continues to enjoy soccer - with his dad as assistant coach and only one loss so far this season!

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The greatest compliment we can receive is a referral to someone you care about who would appreciate the same value we take pride in giving you.  If you have someone in mind, feel free to contact me at any time.  Thank you very sincerely.