GIC Wealth | Page 5 | GIC discussions | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
May 12, 2022
1:13 pm
canadian.100
Member
Members
Forum Posts: 560
Member Since:
September 7, 2018
sp_UserOfflineSmall Offline

Loonie said
Inflationary pressures abound and are multiplying like rabbits. The question in my mind is what , if anything, would stop GICs from going to at least 6% this year? I suspect it's beyond the capacity of BoC. Maybe would require legislation, which would likely also be unpopular.

Ever-increasing GIC rates may look good in theory, but the gap between inflation and GIC rates is significantly wider than last year. As long as that gap remains, higher GIC rates will still cost you. We were doing better last year, at least in this household.

I'm annoyed, but still lucky as it is all bonus income for us; we don't depend on it. It's really rough for those who do depend on it as they are the ones who can't afford greater risk or volatility in investments.  

You are correct. Not that long ago, our Minister of Finance told Canadians that it was the right strategy to borrow big and invest (they say "invest" I would use the word "spend") because interest rates were historically low. But that is not the case now and I fear the interest (at current rates) on the Debt will be unbelievably large. We may feel sorry for those who can't afford greater risk or volatility in their investments, but you, I and the "middle class" are in for big tax increases. You can feel sorry for us too. Fed and Prov Govts need more revenue to service the staggering cost of the Debt in addition to their increasingly higher spending - and now we will be drawn more and more into a larger war in Europe as NATO members there become more nervous about Russian threats.

May 12, 2022
3:25 pm
rpotter28
Kingston, ON
Member
Members
Forum Posts: 7
Member Since:
March 8, 2022
sp_UserOfflineSmall Offline

canadian.100 said

If you are hoping for 7% GIC by year end, you must also be hoping for an inflation rate of around 10%. Maybe that is not impossible since inflation in US exceeds 8% and Canada can not be too far behind.  

Come to find out, the inflation measures between Canada and US are not based on the same thing.. But I do agree the system gives a comparable for the economists..

But in my world of Real Estate it's way more. Home renovations labour and material, rent prices, appliances, common home repairs etc etc it's probably more like 15-20%. These are big ticket items, not like a pound of butter going up 8%! Never mind home prices, which is 20% at least.

May 12, 2022
3:38 pm
Loonie
Member
Members
Forum Posts: 8129
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

I'll worry about higher taxes when and if it happens. I think they will have to look elsewhere, fiddle with tax credits, push the debt forward some more and/or look to immigration, cap TFSAs etc. We'll have to see what they come up with. They will also get a lot more HST from inflated prices.

In the meanwhile I'm glad I've been taking tax-efficient sums out of our RIFs. Alas, we still have years to go for one of us. I can't see it ever getting any cheaper to do so. I wish they'd get rid of the mandatory withdrawal schedule. I'm a grown-up; I can make my own decisions about what I need to take out and when..

May 12, 2022
6:00 pm
Bill
Member
Members
Forum Posts: 2994
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

It's not only about being able to make our own decisions, RIFs are comprised of amounts on which taxes have been deferred and the people of Canada doesn't want to wait forever (e.g. maybe until death) for the income taxes on those amounts. So there's a minimum amount every year to make sure those taxes are gradually coming in.

If inflation is 20% I can expect internet, mobile, etc charges to go up the same so the profits available to pay my Bell, etc dividends should also be 20% higher, is the way I figure it.

May 12, 2022
11:01 pm
Loonie
Member
Members
Forum Posts: 8129
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

I am familiar with the theory around the mandatory minimums. I just don't think it's a good policy, and that it likely doesn't hold water in terms of govt coffers. There are too many variables. I think it's just paternalism.

May 12, 2022
11:31 pm
RetirEd
Member
Members
Forum Posts: 291
Member Since:
November 18, 2017
sp_UserOfflineSmall Offline

rpotter28: Home renovation and repair prices are very demand-driven these days. There's a limited number of tradespeople, and that's been diminished for two years by the plague. And people have been staying in their homes rather than moving, too. (There's a lot of real-estate trading, but a surprising amount of it is instututional, and new construction, not renovation.) I don't see inflation in that sector being diminished very soon.
RetirEd

No permission to create posts

Please write your comments in the forum.