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Email this3:47 pm
November 4, 2014
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I am in no way saying that there will be a recession in Canada, U.S, elsewhere worldwide. I have don't know idea and I am not predicting anything as I am not sure either.
Here is an article at http://www.bloomberg.com/news/.....ssion.html.
The reason we read this article is because if we go in a recession or some type of downturn worldwide or most of the world in 2015, this will likely mean interest rates will stay low as pointed out in this article or as we seen before go lower or stay in a up and down low interest rate range.
Like I said in my prior posts about getting income from GIC's and government bonds, it is a scary time to be in retirement either forced or by choice and be faced with a falling income source or sources. Let us hope that things don't get worse.
Things getting a little better or some stabilization would be nice too but it is more uncertain than I could ever remember.
4:47 pm
October 21, 2013
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I don't know what rates will do or where the economy is going either, but I think one can mislead oneself by looking at interest rates as the only or primary indicator of one's financial viability.
The rate of inflation, the cost of necessities, changes in taxation, political changes, impact of climate change, natural resource extraction, and so on, are just as significant. If interest rates went up to 10% but stuff costs a lot more and the dollar continued to plummet, it wouldn't help. Ukraine has really high interest rates, but I doubt any of us would buy their bonds.
10:38 pm
December 2, 2012
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Greg Franklin said
I am in no way saying that there will be a recession in Canada, U.S, elsewhere worldwide. I have don't know idea and I am not predicting anything as I am not sure either.
Well, people keep going on and on about the USA's economic performance, but the Republican victory in the midterms tells me the people aren't getting the benefits yet.
Europe is looking at it's 3rd recession in 6 years. Some countries, like Greece, Spain, and Italy never left recession.
Nothing interesting from China, their recent plan to grow by selling stuff to their own people doesn't
seem to have helped much.
As oil and the CDN dollar continue to drop, things don't look too good in Canada.
Oil revenue gets squeezed, and for all the people who say that Ontario will pick up in manufacturing,
I don't know how many of those companies are actually still open.
Housing on the way down across the country, except Toronto of course.
Experts now talking about deflation, which will keep interest rates really low.
It's tough being a saver these days.
8:19 am
June 24, 2014
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To be a saver is always tough. If you are many years before retirement, it is always recommended to try to invest (such as index tracking fund).
2:35 pm
September 5, 2013
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I am very surprise that they can even attache a percentage to it. Whether there will be recession or not, normal people shouldn't worry too much because no one can prevent it. As long as you still hold your current job.
That is the reason we should save more for rainy days.
For those people take risks on the risky equity and real estate market, the timing is great deal. Remember that no one caneeds short sell your deposits, but the big guys can short sell your stocks and even your mortgage back security. That exactly for all the people's 50 and above, never play and time this market because we don't have the time to wait for.
3:56 pm
November 4, 2014
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Brimleychen, yes, you are right, this is true about when near or in retirement when you have a short period of time, it is important that you can't afford to take multiple years of losses in equities and other investments.
This is especially true if you don't have a reliable income stream from your investments and other sources that can back you up for 5 years or more. I think I read somewhere that the average market downturn is 18 months.
Brimelychen, good points.
4:03 pm
November 4, 2014
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Martin14, we feel the same way, it does not look like the economies of the world can sustain higher interest rates and economic growth.
Even if people could save hundreds of thousands of in RRSP's and TFSA's which most put their money, they can't live on 2.50% to 3.00%.
Even just 6 to 7 years ago, 4.5% to 5.00% GIC's would build a $3,000 a month income with $750,000, now you need about $1,300,000. This is almost double the savings, investments in just 6 or 7 years.
If you look back to even the start of the 2000, it took much less, $550,000 to $600,000 to create $3,000 a month in interest income. It is getting to a point that we are stuck as we are today. It is not hard, it is very difficult. Sadly, that is our world today.
4:13 pm
November 4, 2014
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Loonie, we are in a worse situation today, things are costing much more for the necessities of life just say 5, 6, 7 years ago but our interest income, GIC's, bonds etc. are paying anywhere from 2.00% to 2.50% less interest rate per year which can translate to at least $600 to $1,000 a month less.
In our case it is $1,530 a month lost interest as income and not reinvested by compound interest. Compound interest would mean $4,471 a month less for us.
If your income sources come in less or are much less than you can realistically seen from past years and inflation is going higher like today, we are in a worse financial squeeze on people's budgets today than 5, 6, 7 years or more ago.
The comparison you made about Ukraine is not a good one because Ukraine is not a developed country. I used Japan as an example which has 0% to 1.70% rates 1-40 years and has gone through real estate, stock market deep downturn with deflation in economic and asset prices but no with commodity and food prices.
Japan is a G7 country and is more closely like us than Ukraine. As for other factors about well financial being, most people are in debt so interest rates impact on savers, GIC, bond, dividend, REIT investors and borrowers much more than these other factors you stated in your post.
Interest rates impact pensions, investments of most types and market values of equities. The fact that inflation is much higher than they state should mean higher interest rates but this is the past and we will not benefit anymore as we once did in the early 2000's, 1990's, 1980's etc.
We have been experiencing this for at least 6 years now and there is no real reason for this to change. I believe they call it financial repression.
Good discussion, Loonie.
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