Author: Seun Adeyemi

The Low Interest Rate Fallacy: Why You Should Stress Test Your Debt

How low can interest rates go? Even lower, apparently. Last week the Bank of Canada cut the overnight lending rate 25 basis points to 0.5 percent from 0.75 percent. This is the second time our central bank has trimmed interest rates in 2015. While the rate cut in January caught the general public off guard, it was expected by many in the financial world. 2015 has been quite a turbulent year. With interest rates previously stuck at 1 percent for nearly five years and the toll taken on our economy by the hammered price of oil, the growth prospects for the country seemed fairly dim.   While many would categorize this as just the normal ‘market cycles’, you’re probably wondering how this affects the average person. A weak Canadian economy means low interest rates are here to stay for the foreseeable future. However, before you start using your home as an ATM, there are some important things to consider.   What Interest Rates Mean to Families You may be wondering why interest rate announcements get so much media attention and market reaction. Interest rates affect our lives in more ways than you think. Banks set prime rate based on the overnight lending rate. When the Bank of Canada changes the overnight lending rate, the banks are sure to follow. For example, when the Bank of Canada lowered the overnight...

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Market Commentary: Will The Dow Go Off The Rails?

Apparently FedEx and UPS were engaged in merger discussions. The new firm would have been called “FedUP”. This would have been the biggest fail in the naming of a merged firm since the proposed merger between the two computer giants General Data and Digital. The new firm might have been called…well, you figure it out… What FedEx and UPS have in common is both are components of the Dow Jones Transportation Average, which itself has been a source of concern to market observers. According to Dow Theory—and any market theory that has been around as long as this one...

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Thinking of Dipping into your RRSPs to Pay Off Debt? Think Again!

I recently sat down with a middle aged couple who were debating the best strategy to pay off their debts. This couple are high income earners and have diligently contributed into their RRSPs over the years, so they have a sizable amount. They, however, also have quite a bit of debt they have accumulated and were at a crossroads as to how to tackle it. One party insisted on tackling the debt using the snowball method (which I will explain briefly in a moment), but the other party was adamant on taking out a huge chunk from their RRSPs...

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The Dangers of Using Your Home as an ATM

Jake and Sarah, a professional working couple in their early 30 years, decide to purchase their first home. They take out a mortgage with a 25 year amortization, thinking that if all goes well, they’ll be mortgage-free by the time they’re in their mid-50s. Theoretically speaking, they should then have enough disposable income in their retirement years to really “enjoy” this latter part of their lives. Now here’s what really happens. Over the years Jake and Sarah have acquired a “comfortable” lifestyle, drive new cars (financed or leased), eat out quite often, still have student loans and have amassed...

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Market Commentary – Bye Bye Miss American Pie

Bye Bye Miss American Pie Or, has TINA left the building? “U.S. investors continue to follow the printing presses into European and Japanese equities. A record that has been held for nine years is almost sure to fall.” –David Santschi, CEO of TrimTabs Wall Street has always been great at expressing ideas in acronym format. Meet TINA, which applies a label to the one of the main factors propelling U.S. equities prices over the last year or so: There Is No Alternative. That is, Europe, Japan, and China, among others, have been a weak alternative to the U.S. The...

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