Canadian Personal Finance Blog

The Royal Bank published a report effectively saying, “Relax, it’s only a bump in the economy“, with a forecast that things economically will not be as bad as first predicted.

The full economic report by Craig Wright the Head Economist at RBC is actually a nice read, with a province by province break down of what the predictions for the coming few months might be.

Being a bit of an inflation zealot I did think the following paragraph is quite interesting:

The RBC report forecasts that Canada’s core inflation rate will likely trend higher this year though remain below the Bank of Canada’s two per cent target. Mitigating factors that have pushed the inflation rate lower, such as the impact of the rising Canadian dollar in 2007 and the retail discounting that Canadian companies have had to offer to compete for market share, will start to dissipate through 2008. By 2009, RBC expects the inflation rate to average close to the two per cent range.

This seems to imply that the rise in Gasoline price will either have subsided or have been absorbed into the economy (or maybe it might drop?). Interesting prediction, I don’t agree with it, I think it is an overly optimistic view.

For Ontario, a little more gloomy:

Ontario is labouring through its softest patch since the early-1990s recession.The provincial economy likely contracted in the first quarter and should
recover only gradually through the remainder of the year.

I think I agree with that sentiment as well.

It’s always important to read these kind of reports to understand the Macro Economy around you, even when you are someone like me who looks closer at the Micro-Economic conditions.

Happy 4th of July

To our American cousins and neighbours we wish a happy 4th of July, and hope you enjoy blowing things up and the Boston Pops.

Happy 141st birthday Canada, you don’t look a day over 85! Yes, I am taking today off, to enjoy Family and Fireworks, back to the daily posts tomorrow folks!

Canada at 150?

Given for Canada’s 100th birthday we had Expo67 (the greatest World Exposition ever, I’d like to say), what is Canada going to do for it’s 150th anniversary? Anybody know?

And Now a Large Flag

Happy Birthday Canada

Wow, now given most of the budget was kind of blah, but there were a few things that affected me personally:

• RESPs are now 35 years in life, which is good to hear (I think). Does this mean my kids can lounge around the house claiming they are getting ready for University?
• More money for the Canadian Student Grant system, which is good, if my kids can get the money, I hope.
• They are paying down the National Debt which is not just for me, but still a good thing to do.

The TFSA A Real Interesting Twist on Things

This was the big funky twist that I didn’t see coming, and neither did most other financial pundits, but it looks and sounds like an interesting idea. Here in a nutshell is what this little financial jewel is (from the Budget 2008 web site):

Tax-Free Savings Account (TFSA)

Canadians need all the help they can get to save money.

The TFSA will allow Canadians to watch their savings grow tax-free throughout their lifetimes.

Canadians can contribute up to $5,000 every year to their TFSA and carry forward unused room to future years. There is no lifetime limit and no tax on investment income earned, including capital gains.

The TFSA can be used any way you like—for example, to buy a new car, pay for an emergency, finance a child’s wedding or bankroll a dream family vacation.

The Canadian Capitalist points out that this account can be used for Income splitting as well, good idea! Now all I need to do is find $5000 a year I can invest… hmmm….

So do you put your money in your RRSP first until it is full and then you put your left over moneys in your TFSA, or vice versa? Interesting question, any theories out there? Who will be the first financial institution to have a TFSA account? Self Directed, of course! Do you put money in your TFSA instead of paying down  your Mortgage?

Election?

Not likely, if the Liberals, BQ or NDP brought down the government on the basis of this budget, I think they’d look pretty darn foolish (but then again, we are talking about politicians too).