Archive for September, 2010
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Good for Canada! For the third consecutive year the World Economic Forum has ranked Canada's banking system as the soundest in the world. That's quite an accomplishment when you think about it in the context of a global recovery from the most severe financial crisis since the Great Depression. But will our future continue to be as bright? It appears it certainly can be, if we enthusiastically embrace the opportunities before us.
In his September 15 remarks to the St. John's Board of Trade, Deputy Governor of the Bank of Canada, Timothy Lane, reported that Canada's economic downturn during the crisis was less severe than other countries for three key reasons: a strong banking system, strong household and business balance sheets and a timely response by government to the crisis that enveloped us.
The good news is that recovery from the crisis is continuing in Canada, as our GDP growth is at pre-recession levels today. And there are other promising indicators:
- Total and core inflation are projected to return to 2% by the third quarter of 2011, when the Canadian economy is expected to return to full capacity
- The Canadian economy is projected to grow by 3.5% in 2010 and 2.9% in 2011, after a contraction of 2.5% in 2009
- Lending conditions for non-financial firms are improving.
However, there is some dampening news as well. Our prospects for long term growth apparently will not be as strong as in previous decades, reflecting other factors facing our economy today.
Not surprisingly, there is the reality of an aging work force, which has been targeted as presenting challenges of change by other department of government include the Finance Department. But in addition, Canadian workers are competing in a global economy with others who are more technically savvy and working on higher tech processes and machinery than we are.
How is this possible in our electronic-obsessed, internet-addicted world? For me, our sound financial leadership is a natural springboard to a myriad of global business opportunities. Yet we need to find more innovative ways to keep up with global workers to compete.
It's Your Money. Your Life. Are you and your family poised to take advantage of economic recovery in a new global marketplace?
The third quarterly tax instalment of the year is due on September 15; the 4th on December 15. (Farmers and fishers are required to make one advance payment on taxes owing for 2010, on December 31).
Many people withdraw money from their savings to overpay their tax quarterly instalments, just to be sure they get a refund next spring. In these market conditions that just makes no sense to me.
I ran across an interesting quote by Author Shauna Carter, who makes a great point, succinctly describing why it is so important for you to use the time value of money to your advantage:
"Why would any rational person defer receiving payment into the future when he or she could have the same amount of money now? For most of us, taking the money in the present is just plain instinctive. So at the most basic level, the time value of money demonstrates that, all things being equal, it is better to have money now rather than later. . . time literally is money – the value of the money you have now is not the same as it will be in the future and vice versa."
So why do intelligent, hard working people willingly fork over 30%, 40%, and even 50% of their gross receipts to the tax department every year with little complaint or fanfare, other than perhaps some frustration and resignation at the whole process?
Why are they so willing to overpay those tax withholdings or quarterly instalment payments, just to get a refund at the end of the year, with no interest for the use of their money in the meantime?
That's just not smart these days, when you could instead be investing in a Tax Free Savings Account, or an RRSP, which could help you win back more of those tax withholdings.
Why not take maximum advantage of the time value of money with astute tax and investment planning? It's Your Money. Your Life.
It's certainly distressing to hear about the large numbers of Canadian high school students dropping out. If you had any doubt that this has big financial implications for future families, tax bases and community supports, check this out: One in five teens quit education in the Globe and Mail.
The Net Worth of those households where the person with the highest income hadno high school diploma was $42,700 in 2005 (latest stats available from Statistics Canada) while those with increased education did much, much better – total net worth for those with a university education was close to $600,000 by comparison.
|Education Level||Net Worth|
|Less than high school||$ 42,700|
|High school grads||$369,000|
|Post Secondary school grads (non-university)||$445,400|
|Post Secondary school‒university||$573,012|
It's your money, your life. Getting an education, at least statistically, equates with more money, more choice in life. It's imperative our high school students know that.
What's the best way to help them experience the peace of mind of future security an education can bring? Your thoughts are welcome!