Log In
Register
Home
Topic RSS
Facebook
Twitter
Email this6:21 am
February 7, 2019
Offline
Inflation is up December 2023 to 3.4% vs December 2022 but the Consumer Price Index has been rather stable through 2H2023 ...
| CGO |
9:14 am
November 5, 2022
Offline
It's interesting that there has seemingly never been a story about how those who have a decent amount of cash on hand, are benefitting from the higher interest rates on things like GICs and HISA promos.
9:32 am
September 11, 2013
Offline
It's true, in general the narrative is about negativity, focus on the indebted instead of the solvent, it's hard times, etc, guess that's what sells.
Many folks on here, including some who have made clear the extra income really helps, have seen their interest income soar in the last year or so, so good news!
9:51 am
January 3, 2009
Offline
InterestThis said
It's interesting that there has seemingly never been a story about how those who have a decent amount of cash on hand, are benefitting from the higher interest rates on things like GICs and HISA promos.
You're only "benefiting" until you have to buy something.
Also, none of the measurements used by governments or business reflect my reality. My costs always go up much more than these measures aren't intended for individuals imo anyways.
10:16 am
January 12, 2019
Offline
InterestThis said
It's interesting that there has seemingly never been a story about how those who have a decent amount of cash on hand, are benefitting from the higher interest rates on things like GICs and HISA promos.
- Not so ⬆
I've seen two or three such articles in the last few months on BNN, FP, etc.
- Dean
" Live Long, Healthy ... And Prosper! "
10:41 am
October 13, 2023
Offline
For the most part, the only thing I really use the national average for is to calculate indexed benefits such as CPP or the company pensions. The provincial number would be more applicable from an effect on expenses point of view, but even that may not be reflective of a person's personal cost of living.
11:25 am
November 18, 2017
Offline
Those higher interest rates have not quite caught up to inflation, vastly increased my rent and will drastically reduce my benefits this year.
RetirEd
11:47 am
December 22, 2022
Offline
InterestThis said
It's interesting that there has seemingly never been a story about how those who have a decent amount of cash on hand, are benefitting from the higher interest rates on things like GICs and HISA promos.
Because they hate savers. Spending and credit card debt drives the economy.
11:52 am
November 8, 2018
Offline
The Rock said
Because they hate savers. Spending and credit card debt drives the economy.
Higher the interest rates, more money I have for discretionary spending. 🙂
7:14 pm
November 5, 2022
Offline
My expenses have gone up a lot less than the amount brought in from the additional interest from the higher rates. Its obviously dependent on each person's expenditure profile.
With enough of the correct investments and controlled expenses, one can stay ahead of inflation, to a point.
7:56 pm
April 27, 2017
Offline
InterestThis said
My expenses have gone up a lot less than the amount brought in from the additional interest from the higher rates. Its obviously dependent on each person's expenditure profile.
With enough of the correct investments and controlled expenses, one can stay ahead of inflation, to a point.
Its not about “amount”. Its about %. Because in addition to expenses going up the money in your account has been devalued by the same percentage.
All in all, one can just about beat inflation right now in a TFSA account but in taxable accounts most of us are losing money in real terms.
8:05 pm
March 30, 2017
Offline
mordko said
Its not about “amount”. Its about %. Because in addition to expenses going up the money in your account has been devalued by the same percentage.
I can see some prefer to look at $amount while others prefer %. When talking about a small amount, $ makes more sense, otherwise % is a more meaningful measure.
Some just look at their annual income vs expense, and dont take into account the purchasing power of their principle being eaten up over time. Just think of anything u bought 20 years ago, vs how much they cost now. The only things that I can think of that has not changed much in price are milk and basic personal computer. Oh TV prices actually drop !
8:06 pm
November 5, 2022
Offline
mordko said
Its not about “amount”. Its about %. Because in addition to expenses going up the money in your account has been devalued by the same percentage.
All in all, one can just about beat inflation right now in a TFSA account but in taxable accounts most of us are losing money in real terms.
That is wrong.
Don't agree at all, it depends on specifics. If you take new behaviors and adjust your expenses that makes a big difference.
And increasing one's own fees as well in terms of employment.
There are plenty of people who've figured out how to keep their expenses basically flat, but most people don't even want to hear about it.
And it also depends on which investments you choose, and your chosen tax bracket.
So what most people say on this subject is false, but hey, that is the way it goes.
8:11 pm
November 5, 2022
Offline
The prices of most tech has dropped astronomically over the years, for example.
Price of clothes has dropped massively.
Of course housing has gone the other way.
But if you play your cards correctly, its possible to benefit from an inflationary environment.
And that is in terms of % not just raw amount.
Some people have almost tripled their real net worth since the beginning of the pandemic, and it is still accelerating.
8:50 pm
April 27, 2017
Offline
Yes, Bill Ackman did alright.
Do you happen to eat every now and then? How about paying property taxes? Any form of transportation? Alcohol? Use health and personal care products? If you consume goods in any of these categories and a few others then you expenditure could only stay flat by you consuming less. Which is great but it still reflects that the real value of money dropped.
By the way, the price one pays for tech has not dropped “astronomically”. My cellphone costs a lot more dollars today than it did 10 years ago. Its just that when they are calculating CPI, they are accounting for the 2024 phone being better, so supposedly I bought more phone with more money.
That said, the one who is wrong is you and it has nothing to do with your personal inflation rate. If you compare by how much your earned interest went up vs expenditure in dollar terms, you are ignoring the effect of inflation on your capital. Which is shrinking in real terms. Sad but true.
The effect is more noticeable over longer periods of time. 100 year old $100 bill was equivalent in value to $1,759.56 today. Conversely, if you put $100 in a HISA 100 years ago and spent the interest, your HISA balance shrunk to less than 6% of what you used to have. In real terms.
4:25 am
January 9, 2011
Offline
Inflation being up in December, as it was in the US, should not be a surprise. In terms of some food, there are some seasonal pricing effects especially in Canada, plus the lag between wage push inflation (remember some of those 2023 % wage increases) and cost increases as a result. Then January sometimes is a month for some price increases, some of them indirectly caused by governments.
In terms of deposit interest rates not keeping up with inflation, they never have except (a) now and (b) back in the 80's when prime rates and inflation started dropping from astronomically high levels and GIC rates were high. However there's 'gross' and 'net' interest. Until tax filing, we all tend to talk only about the rates we get, ie; 'gross' interest.
The main accomplishment of almost all organized protests is to
annoy people who are not in them.
4:51 am
September 11, 2013
Offline
Agree that looking at it without also considering loss of capital's purchasing power and the tax hit to your interest income is just wishful thinking.
4:59 am
April 6, 2013
Offline
Inflation has been trending down.
The 2023 monthly CPI numbers cgouimet posted show that the price of the CPI basket was actually lower in December (158.3) compared to the four months before (158.7, 158.5, 158.6, and 158.8).
5:00 am
November 8, 2018
Offline
mordko said
Its not about “amount”. Its about %. Because in addition to expenses going up the money in your account has been devalued by the same percentage.
All in all, one can just about beat inflation right now in a TFSA account but in taxable accounts most of us are losing money in real terms.
Let's talk about hypothetical person who has a decent amount of cash on hand, enough to earn income from HISA and 1yr GICs alone. That person retired few years ago. In January 2021 he realized that his household budget balanced itself, based on that year interest rates.
Fast forward to January 2024. HISA and 1yr GIC rates doubled for many FIs, while inflation, even if it were in fact 10% annually, is not there yet.
At this moment of time income from his savings account can beat inflation.
In the long run, inflation will catch up with income from savings and that person will start feeling loss of purchasing power. You are right about devaluation.
But, at the long run, that person and we all will be dead.
If your objective is to die rich, take risks.
If that retiree objective is not to outlive his money and die with ideally just above $0 in net worth, then he could be just fine without taking risks. Even with devaluation of principal.
if you put $100 in a HISA 100 years ago and spent the interest, your HISA balance shrunk to less than 6% of what you used to have.
If/when they invent medicine extending life expectancy to 150-180 years, then that would become a real concern for retirees or about to be.
5:39 am
March 30, 2017
Offline
InterestThis said
The prices of most tech has dropped astronomically over the years, for example.
Price of clothes has dropped massively.
Not sure where u buy ur clothes, but my North Face down midlayer that I bot 7 years ago is now double the price (comparing sale price to sale price)
As for tech drop astronomically, not true either. Phone prices have gone up every year, so is audio stuff. Like i said before, only main stream non gaming computers and TVs have gone down in real price inflation adjusted.
If you believe high interest income will offset the erosion of your puchasing power by inflation, you better change your belief soon.
Please write your comments in the forum.