Canadian Personal Finance Blog

Archive for the ‘Politics’ Category

Stats Canada put out it’s yearly population estimates with the data showing sex and age correlations, and all I can say is I am starting to feel a lot older.

The Median age of a Canadian as of July 1,2009 was 39.5 years (up about 0.2 years from last year and 3.1 years from 1999). This seems to suggest that the statement that the Canadian Population is aging (as a group) is a correct statement. Why are we getting older as a population?

Fertility rates persistently below the generation replacement level, and an increasing life expectancy are the main factors explaining the ageing process of the Canadian population.

Interesting since in my household we have 4 kids, so we have effectively a doubling fertility rate. The guess is that the Median Age by the 2030s may reach 44.0 years old (by then I’ll be in my 60s), and thus we all get that much older.

Working Age Population?

Yes the working age population is getting older (the median is at least) and this comprises the group of folks between 15 and 64 years old (I’d love to retire before 64, but my guess is I’ll be retiring much later than that). The median age in this group is 40.5 years old, which explains why more and more working folks are worried about: Pensions, Medical benefits and retirement savings plans.

Working Age Median

The Big Table

This table I really like because it shows what I kept hearing, that women live longer than men, and from age 50 onward there are more women of that age group than there are men.

What is also interesting to me is that there are over 1,000,000 Canadians 80 years and older and 5,000 of them 100+ years old, wow. All I need to do now is that I have enough money to live that long, and then figure out how to live that long. My firm belief is that death is the leading cause of mortality, but I am willing to listen to counter-arguments.

Where do you fit in this table?

“I told you this would happen…”, seems to be the battle cry from most Financial “Hacks” out there (at least the talking heads that have been appearing on various news outlets for the past few months). “I predicted this would happen 2 years ago…”, or whatever platitude they spout is their self-agrandizing statements.

I Predicted It Too!

Yes, I will even state that things were going to go bad as early as 5 years ago, so I must add myself to the growing list of folks who “… knew this was going to happen…”. I have been saying all along that the whole financial system was going to go in the tank, and I can find postings that said that!

The truest statement from all this rhetoric is this, “Economists and Financial Pundits have predicted 14 out of the past 3 recessions… “, (Anonymous).

I Predicted Other Financial Catastrophes Too!

Anybody who knows me, knows I have been predicting my lay off from my previous employer since about 2001 (so for the past 7 years, until I actually did get laid off), and sure enough I was right.

But was I? There were approximately 17 rounds of layoffs between the period where I started stating in dire terms how I was about to get laid off (how close I was to getting laid off during those rounds, I have no idea) and finally I landed in the “wrong place at the wrong time” and my predication came true. A sensible person might point out that my actual predication “percentage” is approximately 1 in 17 or about 5% to round it to a nice number, however, I eventually was RIGHT!

These Financial Pundits seem to think if they have stated something and it happens, they are experts, but if I state something relatively possible over and over again, it will most likely happen. This does not mean if I keep predicting I will win the Lottery and retire it will happen (but if it does, you read it HERE first!), but if I state that it will Snow in May in Ottawa, eventually one year it will happen (and I will be an Environmental Pundit with extraordinary intuitive powers!).

Give it a Rest, and Who Cares?

I really don’t care who predicted this financial mess, and I can’t see why anyone would be proud if they did (unless they managed to manipulate the stock market to make a fortune, in which case they most likely will get stoned in the Marketplace). Prognostication in any field of endevor is always at best “an educated guess”, but many time ends up simply being a “wild ass guess” instead.

Now, if someone would step forward and say they predicted that the Arizona Cardinals were going to be in the Super Bowl this year, now that would be an amazing prediction!

Leave the predictions to the Gypsies and their Tarot Cards and Tea Leaves, simply plan for the Worst and Hope for the Best is the way to go financially (in terms of prognostication).

Jim Flaherty came through with an interesting and I would say very optimistic Economic Update (mini-budget, whatever), yesterday that took aim at something that all voters love to see under financial siege, Government Agencies and MP’s. 

No Debt Financing?

With some very creative and optimistic accounting the Finance Minister is promising to try to have either balanced budgets or very small surpluses up to 2013, which is very contrary to what most economists are saying is possible in the current economic instability (i.e. Financial Apocalypse). 

Flaherty did couch his optimism with the following cold statement:

“Any additional actions to support the economy will have an impact on the bottom-line numbers in our next budget. These actions, or a further deterioration in global economic conditions, could result in a deficit.”

So he isn’t saying there isn’t going to be deficits, just that there will be measures taken to avoid a deficit if possible.

Take that Ottawa Fat Cats

Not Really an Ottawa Fat Cat

No that is not a real Ottawa fat cat, it’s my cat from when I lived in Kitchener, but he is a good Metaphor for the “Fat Cats” in Ottawa.

Some of the measures against the “Ottawa Fat Cats” taken will be:

• Elimination of the $1.75 per vote allowance to support political parties that receive more than 2 per cent of the vote, staring April 2009. I really like this one, because all of the politicians are howling about it, so it must be a good thing. 
• Wage controls holding increases to public servants, including MPs and senators, to 2.3 per cent for last year and 1.5 per cent for each of the next three years. I really like this one, because the MP’s are mad about this as well, and the public service doesn’t like it either.
• Slash cost overruns on government travel, hospitality, conferences, exchanges and political services, this sounds like something they should have been doing already? What exactly were they doing before this, wait, I don’t want to know the answer to that one, so please don’t answer.
• Provincial equalization payments are gauged to the average GDP growth over a three-year period. Can’t wait to hear Dalton McGuinty tirade about this one.
• No mention of any extra taxes, but since this is not a budget, then I guess nothing has to be mentioned about that (yet).

Some pro-active steps being taken are:

• Giving $350 million in equity into the Export Development Canada and another $350 million in equity into the Business Development Bank of Canada. Interesting, guess I should send my resume in there since they might be hiring soon.
• A scary one for soon to be pensioners is allowing federally regulated pension plans to spend 10 years instead of five to make solvency payments if necessary. This is a slippery slope I think and it could end up like some of the private pensions that are woefully underfunded these days.
• Only allowing seniors to withdraw $7,500 instead of $10,000 from their Registered Retirement Income Funds (RRIFs), which is supposed to slow the cashing in of stocks and mutual funds I guess. 

Good Graphic to Show Canada is Doing Better than Most:

Canada Doing Not Bad with Debt

Jim Flaherty is poised to announce his new budget and instead of the tradition of the finance minister buying a new set of shoes, instead he had his existing shoes re-soled, which I think is a message to say, “Tighten your belts folks, leaner times are ahead” (at least that would be my spin on it). Interesting that he can make that statement given the government is about to announce a $13Billion surplus, which will mostly be used to pay down the national debt (which I agree with as a tactic for using surplus spending, however, I am not happy with the enormity of the surplus itself).

Some new measures may be brought in but it is unlikely to effect (affect?) my wallet too much. The fact that this is the 3rd budget for Mr. Flaherty for a Minority government is quite the achievement.

Stock Options

I have worked in High Tech all of my career, but I think I am one of the few folks who never, ever had a chance to cash in a large amount of stock options for their company. I just never got options until very late in the game and then they became worthless quickly. I state this as a preface (and as a whine as well).

Yesterday I sat down with a couple of co-workers and this topic came up and I was shocked to have them both admit to me the amount of money they “left on the table” with their options. I am assuming they did make some money on options, but the amounts they both quoted me as potential profits they didn’t act on caused my head to spin (well over a million dollars combined).

Why would you leave that kind of money on the table? Here are some of the reasons I know of:

1. The options had not fully vested. In this instance I don’t view that as lost money, since you were unable to do anything about this, and you shouldn’t beat yourself up about this “lost potential money”.
2. I thought the stock would recover. I guess we can see that one, was not a good strategy, in hind sight we can see you should have taken the money and run.
3. I was waiting for the Stock Options Tax changes. That one had me scratching my head, but I guess it’s a valid reason.
4. I bought the stock with my options and then held it to live on dividends and capital gains. That one is the most lethal mistake that I have heard. These people really did lose money on this, because they spent the money on the options and then got nothing for that money. The previous three “mistakes” didn’t lose you real money, it just lost you potential money, this one lost real money.
5. My options were never worth more than a $1000 ever . That is my excuse, I feel like the Eunuch at the orgy sometimes, never got anything out of this whole thing, oh well.

At the end of it all, lost potential money is much like Love Lost, not much you can do about it, so you might as well forget about it.

Any other High Tech Stock Option stories out there?

Computer Perils

So the cogitations and expletives that have been expounded by me in the past few days have been due to my computer being sick. The hard drive crashed yesterday, but luckily not too badly. I will now spend a day or two cleaning up my system, due to my pack rat software installations.

What does this have to do with Financial Planning? I run Quicken on this machine and I have most of my excel workbooks for finance here as well. If this computer had died with no back up, I would have been SUNK. When was the last time you backed up your computer(s)? If you are doing anything on line for your financial well being, you might want to think about that one.

Long Term Mortgage Rates Going Up

If you haven’t locked in long term, it is going to cost you more today to get a long term Mortgage. Most of the major banks are guessing that interest rates will go up in the long term, so they are raising their long term rates to hedge against this. Long term bond yields have been up, and inflation is still above what the bank of Canada wants, so they may be right.

A Sea of Red

No, not my finances, the Liberals rolled to power again in Ontario. What does this mean? Well I think it means John Tory is as much a success running the Provincial PC Party as he was CFL Commizar. Four more years of Mr. McGuinty, wonder if he’ll start off his new term the way he did the last one (with a massive Tax increase)?

How much for a new house?

Well if you don’t live on the Prairies, your new house price is slowing a great deal, however, if you do live on the prairies, that is another story. Where I live the increase is less than inflation, so that is cool, but in Saskatoon, over 50%?!? Holy crap!