Unemployment Up, On the Money, Debt and #MoneyTalk

Stats Canada published their Labour Force Survey, August 2016 last Friday and the numbers continue to underwhelm, if not discourage folks. While employment is up 26,000 jobs, unemployment rate is up 0.1% as well, leaving it as 7.0%.

I always look to see what kind of jobs are being created, and this line from the report is quite telling:

Compared with 12 months earlier, employment increased by 77,000 (+0.4%), with all of the gains in part-time work. Over the same period, the total number of hours worked fell slightly (-0.4%).

So more folks working part-time jobs is not a ringing bit of good news for the current economy.  The types of jobs being created is also telling:

There were more people working in public administration, and fewer people working in professional, scientific and technical services.

More admin folks, is that a good thing? For me I am glad there are more folks over 55 finding jobs, but us old folks clogging up the market can’t be good for the young folk looking for work.

Unemployment in Canada

Unemployment for the Past 5 years

CBC Newsworld launched a new show about money, On the Money, looks to have regular contributions from many friends of this humble site. It uses Flash Player for its videos (CBC should really get to HTML 5).

Stats Canada also reported on Household Net Worth this week, and as you might guess there is more debt out there.

The household debt service ratio (seasonally adjusted), measured as total obligated payments of principal and interest as a proportion of disposable income adjusted to include actual interest paid, increased from 14.1% in the first quarter to 14.2% in the second quarter. The interest-only debt service ratio, defined as household mortgage and non-mortgage interest paid as a proportion of disposable income, was 6.3%.

Household sector leverage info

Household Sector Leverage Info

Let the media storm around this data commence!

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My Writings for Week Ending September 16th

Seems to be RESP season these days, but if you have kids, are there any times when RESP Sometimes Doesn’t Make Sense ? Yes, but only in obvious areas that you can already guess about. It is free money after all.

A Money Thought

Have I mentioned that text books are expensive lately ?

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RESP Sometimes Doesn’t Make Sense

RESPs are a great savings tool for parents (or Grandparents) who want to help young folk with the always rising costs of a post-secondary education. With the government add-ons, the whole system really does make sense, if you are planning on helping your children out, but I started wondering would there be a time when putting money into an RESP would make no sense?

There are some very obvious scenarios when savings doesn’t work, like if you are carrying credit card debt, and are having problems “making ends meet”, then putting money in an RESP might not make a lot of sense. Pay off your debt, then get onto the savings bandwagon, with the RESP.

Another interesting scenario I ran into was, what if you have not paid off your own student loans (in Ontario OSAP), by the time your kids are born, should you put money into an RESP, while you are still paying off your own student loans? As with all of these questions, the answer seems to be: it depends.

If you have enormous student loans and cannot keep up enough to make the payment plan set up for you, then maybe an RESP is not a great idea. You should also contact the Student Loans folks and point out that you are having problems paying your loan off.

Typically Student Loans (from the Government) have a relatively low(er) interest rate, and given the automatic 20% kick on for an RESP deposit (up to $2500) you need to do the math on whether you want to pay into the RESP or pay down your loan faster. As I do not believe in the concept of Good Debt, I would suggest paying off the Student Loan First and then try to catch up with the RESP (yes, I know the interest on Student Loans is favorable to your taxes, but it is still money spent on money already spent).


A Building Block to Savings ?

If you have a Student Line of Credit with a bank (that you opened while at school) and that needs to be paid down, I would strongly suggest that you should pay that down before putting money into an RESP for your child. The Banks rates are usually variable in these situations, so a sudden up tick in interest rates could spell disaster in terms of this debt-load.

The idea of paying off student loans, while putting money into an RESP seems like a contrary idea to me, but I am curious to hear what my readers might be thinking in this area?


iPhone 7, High Tuition, Loose Money & #MoneyTalk

Exciting news this week in the technology world, with the iPhone 7 being announced, by Apple. Is there anything new? Two different cameras, no such thing as a headphone jack and some other fun stuff, but nothing earth shattering (which upset investors, so the stock didn’t do its normal jump on the announcement of a new iPhone). It was interesting in the keynote for the launch, the Apple CEO pointed out that the iPhone is the “Gold Standard” for smartphones, and that is true (unfortunately), “Just as Good as an iPhone” is the battle cry of all the smartphone “pretenders”.

The Bank of Canada announced that loose money policies will continue, but they also (optimistically) stated that the economy should turn around soon.

On balance, risks to the profile for inflation have tilted somewhat to the downside since July. At the same time, while there are preliminary signs of a possible moderation in the Vancouver housing market, financial vulnerabilities associated with household imbalances remain elevated and continue to rise

Evidently the new CCB payments will have positive effects on the economy as well? I guess if you give folks tax-free money they will spend it?

Tuition by Area of Study

Tuition Costs by Area of Study

Stats Canada put out their yearly report on Tuition fees, and surprisingly (sarcasm) Tuition fees are up again in their latest survey. The report does have some interesting breakdowns showing that Ontario is the most expensive place to send your kid to school, and that Engineering and Professional programs are bloody expensive as well. The report doesn’t really mention all the funny service fees that are typically part of your tuition bill, or the cost of text books and other things, but still a useful barometer to confirm what I already knew, it is expensive to send your kids to University in Canada.

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My Writings for Week Ending September 9th

Given it is back to school season I continue on with my onslaught about the high price of a University Education in Canada, and remember it is not just fees, it is also Textbooks are too Expensive, as well. If you are fretting about the price of your kids’ backpacks, you really need to read more about the expenses of a post-secondary education.
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Textbooks are too Expensive

The business of post secondary education, and training programs has taken off in terms of profit margins in specific areas.

When I was a student (many years ago), the profit centers for Universities were:

  • Tuition Fees
  • Government Funding
  • Private Funding
  • Gifts from alumni
  • Services on campus
University Costs for RESP

Those Two Books Cost Almost as Much as 1 Term Tuition when I was at School.

There was also another income center which was shared between the professors and the school and that was the sale of Text Books. When I started at U of Waterloo there were not that many texts on computers, and the ones we used were quite expensive, but now the entire text book market has exploded, and the prices have increased a great deal.

Why, is my question, are text books still so darn expensive? The simple answer is, profits, and a captive audience. If a professor makes the textbook compulsory for a course, he is forcing students to either:

  • Buy the textbook new
  • Buy it from a Used Book Store (which many times, is a previous version and may not be up to date, or worse a different text is to be used (which happens a lot in technology courses)).
  • Rent the book ? Yes there are such services out there as well.
  • Find a “boot leg” PDF, or similar “unofficial” version

These textbook costs are on top of the new Large Service fees from Universities, and also the costs of living away from home (if that is the case). Hope you folks are saving, if you plan on helping your kids out with post-secondary education costs.

How expensive can these books be? In the photo in this post, those two books added up to $350.00.



Premium Artisan Automated Investing Profiles™

This seems to be the only thing that has not been used to try to get folks interested in the alleged new FinTech world.

Artisan Weaving Investments

Beautiful Artisan Investing Looms
Image courtesy of worradmu at FreeDigitalPhotos.net

What do I mean by FinTech? Well you might ask, let’s go with Wikipedia’s view:

Financial technology, also known as FinTech, is an economic industry composed of companies that use technology to make financial services more efficient. Financial technology companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.

Artisan Investing™ would imply: Individual or customized (and naturally highly researched), investing plans and everyone likes to feel like they are not just one of the unwashed masses. Your investing would be taken care of in an Artisan way, using only the best techniques, methodologies and investing concepts. The ETFs used in your profile would only be of the highest quality, and only invest in companies that create the highest quality products.

However, if we view the term Artisan as meaning:

a worker in a skilled trade, especially one that involves making things by hand.

then the concept of Artisan Investing™ is completely ludicrous (of course), since FinTech implies automated or “… not made by hand”. FinTech implies using technology to do things well, since Artisan implies using “tried and true old school methodologies”.

Artisan does seem to be getting tacked onto all sorts of products and services, why not “new” financial technologies, as well?


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