We had another get together of the National Capital Financial Bloggers Association this past week and the regulars were there, but we also had a special guest appearance by Canadian Financial DIY, and he has been added to the prestigious N.C.F.B.A. blogroll in the right hand column. A very interesting chap and with many of the same attributes as yours truly (worked in the same places, from Montreal, etc.,). He also is brave enough to show a picture of himself on his blog (I may one day, but I need to find a top hat and monocle first).

Financial Blogging This Week

Many interesting posts for this week, and let’s start off with our spotlight blogger this week:

• Canadian Financial DIY wrote an interesting tome about a Modest Proposal for Preventing Older Retired People in Canada… I think I am worried now, hope no politicians take this up.
• Michael James writes about Tax Avoidance on New Homes (in Ontario), which may make for an interesting cat and mouse game between the government and it’s HST and builders.
• Preet at Where Does All My Money Go continues his educational series about Indexes (and active vs. passive investing) with The Market versus The Index (in a steel cage match).
• The Canadian Capitalist writes another scathing commentary on Our World-Beating Mutual Fees, seriously folks read this stuff and get the heck away from those high MERs.
• The Canadian Tax Resource is writing some helpful posts in the series Estate Planning 101 and one I enjoyed is Estate Planning 101 – Death, Taxes, and your RRSPs and RRIFs.
• Riscario Insider has an interesting post Preston Manning on Financial Planning, which I enjoyed, but the title is a little misleading.

Victoria Day Weekend

Given it is an early long weekend here in Canada, don’t look for anything on Monday, I will be enjoying a day off, but look for a new video for the weekend enjoyment.

The three-year marathon that was the U.S. Federal election ’08 has finally been completed, and we can get back to normal, but unfortunately, as we can see from a cursory read of some of the Financial Blogs around, what is Normal anymore? Oh, and when does the sprint to 2012 start? Luckily we have a Quebec election to fill our time up with for now.

This Week’s Personal Finance Highlights

• Michael James showed his artistic side giving us a graphical rendition of Market Timing in Pictures that i is missing the Big Cajun Graph where the Sell is on the bottom and the buy is on the top (look at the pictures and you’ll understand that one).
• For my fellow bloggers who might use WordPress, TechCrunch posts this important warning about Fake WordPress Site Releasing Backdoor Code.
• Stats Canada mentions that there still are about the same number of Rural Folk in Canada (6 million) however due to the growth of Urban areas, the Rural folk are now a much lower percentage of the population.
• For we religious folk that might want to make a wager, a bookie in the U.K. has put odds at 4-1 that God Exists, I think I’d put a few quid on that.
• Finally the Canadian Capitalist and a few other bloggers have been looking at Manulife Income Plus: The High Cost of Peace of Mind. The N.C.F.B.A. met last night and there was the usual friendly banter but the discussion around this topic made me very concerned about what new tricks the financial services industry will pull out of their bag in the future? Read these posts carefully (Michael James has some data on it as well).

Truly a classic from 2008. Are houses an investment, or are they merely somewhere where you lay your hat? Given the housing market in Ottawa, it has now more than doubled in value. Still where I lay my hat.

Is my house more valuable than the day I bought it about nine years ago? That is not a bad investment. I base this all on the wacky assessment notice that I got from MPAC . I don’t actually believe the evaluation is a fundamental value that I would get if I sold my house (without taking into consideration all of the associated costs with selling a home). However, it is an exciting number to start with. 

The actual evaluation will not be implemented right away. It will be gradually raised until 2012 when this value will be in place, which is more interesting, since if the housing market in Ottawa remains robust, my house may be worth even more by then? Maybe not, but it is something else to consider in this wacky equation.

Does this mean I will be paying more property taxes? Given that my evaluation has gone up about 11% from the assessment I had in 2005, I think my property taxes will not go up that much in reference to this evaluation, however, my guess is other charges from the City of Ottawa will increase my property taxes by a fair amount this coming year. My first property tax bill arrives sometime in January.

Percentage of Home Ownership

If I am to assume that this evaluation is relatively close to what the market will pay for my house, it does change how much (as a percentage) of my house that I own. Figuring out how much I still owe on my property, I actually own about 60% of my house currently, which is a reassuring feeling, however, it’s not like I can jettison 40% of the house and thus be out of debt. 

The other problem is, all other houses around me are appreciating as well, so the value of my home as an investment is not that great, in that it is unlikely I will move out of it and into a much cheaper house soon.

Gas Below 90 cents a Liter

Speaking of wacky, gas dropped below 90 cents a liter for a while in Ottawa, which is very interesting. The Canadian Dollar has swung like a pendulum, but now with lower gas prices, suddenly, travelling becomes much cheaper than it was going to be six months ago. Will gas prices stay down? Don’t know, but it’s nice to see for now, as it makes running my cars (and snow blower) much cheaper right now.

Stocks Still Dropping

The world continues to be jittery about stocks, and they continue to drop in value for now. Rate cuts continue in most countries trying to stimulate spending, but a lot of folks are just worried and are going to keep their money in their wallets for now, until they are sure their jobs are safe.

More Job Cuts

Rumour has it that my former employer will soon be adding to the employment pool by laying off another 18% of their workforce (I have heard, this is an unsubstantiated rumour), which will make looking for jobs in Ottawa that much more complicated. Not all the job losses will be in Ottawa, but there continues to be a steady flow out.

Our friends at Stats Canada published their Leading Indicators for August 2008 yesterday and things in the Canadian economy seem to be doing ok, not great, but not as bad as some might think.

The most interesting statement made was:

Household demand has remained the most consistent source of growth in recent months. Sales of furniture and appliances grew steadily, helped by a steady housing market. Housing starts rebounded in August. Meanwhile, personal services have become the main prop to growth in services employment. Sales of other durable goods were an exception to the strength in household spending, reflecting slower auto sales over the summer in response to record gasoline prices.

The housing index dropped, which may mean more reasonable housing prices or a slowing of the price increases we have seen, which is good as well.

Speaking of House Prices

The Citizen talks about how new price valuations for homes across Ontario are about to be sent out by The Municipal Property Assessment Corporation. Remember these valuations have been frozen for the past two years, so these new numbers could be pretty darn crazy (given a 20% price increase since 2005 on average in Ontario).

“Residential property values have increased by an average of approximately 20 per cent across Ontario since 2005, when the last assessment update was done. Because of the four-year phase-in, property taxpayers will see an average assessment increase of five per cent next year,” Carl Isenburg, president and chief administrative officer of the Municipal Property Assessment Corporation (MPAC)…

I look forward to seeing this envelope in the mail.

Quick Run Around the Blogs

Some excellent articles this week from other bloggers worth having a look at:

• Michael James writes about the Current Financial Mess and gives a very philosophical view that we are still living good lives, we just need to figure that one out.
• The Canadian Capitalist writes about the implications of the Fall of AIG, a little depressing, but good research as well.