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November 2011

January 03, 2022

Is Canada's real estate bubble about to burst?

Canadian home prices are now showing many of the signs of a classic bubble, according to a recent report from Bank of America Merrill Lynch.

AdFactoring in record low mortgage rates, the housing market nationwide is at least 10% overvalued, say Merril economists. More importantly, under more normalized interest rates, home prices would actually look about 25% overvalued based on current prices, they estimate.

“In our view, the housing market is one of the most vulnerable sectors to this weakening economic environment, showing classic signs of over valuation, speculation and over supply,” says the report. “We are not calling for an all out rout in the market — but caution is now decidedly warranted.”

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November 30, 2021

Is working out at the 'brain gym' really worthwhile?

After forgetting his PIN number twice in the same week one of my friends has decided his brain is just a bit out of shape.

AdHis solution? Spending several hours on Lumosity, a brain-training program that includes close to 40 games and exercises aimed at sharpening memory skills, improving concentration and thinking faster.

And he's not alone, it seems. Some 14 million people around the world either subscribe to the company's website or have downloaded one of its iPhone apps.

Just as you can tone up your body by lifting weights, the types of games that Lumosity and its competitors like MindSparke and Posit offer are supposed to make your brain stronger and help it work more efficiently. That’s key for all those people who show signs of aging or memory loss.

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Mall Santas taught to 'size up' parents to temper kids' gift hopes

Quick: name a few people that best have their finger on the world’s economic pulse.

1247852_happy_christmasBen Bernanke? Sure. Christine Lagarde? Absolutely. Mark Carney? In Canada and beyond, no doubt.

Yet for all these figureheads, with their inroads on fiscal policy and access to the top economic advisors, would you trust them to take a look at you, up and down, and say how much money you’re worth?

Of course not. That would be offensive. You’d leave that to Santa Claus.

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November 29, 2021

Recession side effect: now, we're smarter shoppers

The great thing about humans, the trait that sets us apart, is that we learn.

1345200_sale_signWe learn that stomping a guy with your football cleat isn’t a good idea. We learn that cheating on your boyfriend, then asking him to tattoo your back, out of your line of sight, won’t end well. And we learn that maybe your Twitter account might be under a little more scrutiny if your dad once scored 894 NHL goals.

As we parted ways with the recession back in 2009, though, the question always was: could we learn from this? Could we reign things in, keep from overspending and ensure … “never again”?

More than two years later, at least by the Bank of Canada’s definition of downturn, how are we doing now? According to a new survey, at least, we’re smarter shoppers, more efficient shoppers and better prepared to hit the malls than we’ve been before.

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Snowbirds face irritating gas station hassle

As the snow starts to fly, thousands of Florida-bound snowbirds are gearing up for the long drive.

AdThe good news: Gas prices are still about 20% less than we’re paying here. Unfortunately, you’re probably going to need stacks of cash to buy it.

Billed as an effort to combat “drive off” gasoline theft, more and more ‘Zip Code-required’ gas pumps are popping up along the highway, warns Dave Hunter, author of Along Interstate-75, a popular snowbird guide.

The ZIP-code pump creates hassles for Canadians as it requires drivers to prepay (no on-the-spot refunds if you guess wrong) or leave a credit card with the attendant before filling up.  

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November 28, 2021

How much should you spend on holiday gifts for your significant other?

Cyber Monday is today, though unless you’re, like, responsible or something, chances are you’re not browsing the Amazons, Best Buys and Chapters’ of the web with gift giving in mind.

Stock-photo-16975754-giving-a-giftWhat’s that mean? For one, it suggests Canadians, short on foresight, will get slapped with regular retail prices when they finally get around to holiday shopping next month.

And with that in mind, it also suggests Canadian couples will face a bona fide budget quagmire when deciding how much to spend on their boyfriends and girlfriends.

What should you hand out, during a sale or otherwise, when shopping for your significant other’s gift? And, coincidentally, how long should a couple be together before holiday gifting is appropriate? Find the answers below.

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Using ­economics to make your ­relationship more successful

In Spousonomics: Using Economics to Master Love, Marriage, and Dirty Dishes, reporters Paula Szuchman and Jenny Anderson attempt to solve some of marriage's stickiest issues by applying the precision of the dismal science to the messiness of relationships.

AdGood luck with that, I thought.

However, while sometimes a bit of a stretch, it is a fun read, assuming you see every relationship having its own little economy, a business of two, if you will, with a finite number of scarce resources that need to be allocated efficiently.

In a chapter comparing economic bubbles to the giddiness of young love, for instance, the authors point out that things change dramatically when the price of something rises far above its actual worth.

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November 24, 2021

Are free samples an effective marketing strategy?

Free samples! Can there be two sweeter words in the English language?

AdGrocery stores like sample giveaways because they distract the kids and get shoppers worked up about getting something for nothing. Consumers have come to expect being flagged by strangers in hairnets. After all, it’s free and, who knows, it might even be edible.

As for the companies supplying the goods? They’re looking for traction, so much so that they’re happy to pay stores a couple hundred bucks a day for the right to sprinkle those cheese squares around.  

"Some stores can't afford not to give out samples," says supermarket analyst David Livingston. "It's something the customer has come to expect."

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November 23, 2021

Will new pooled pension plans boost retirement savings?

Despite the best of intentions, many people spend virtually all the money they have, says economist Richard Thaler, in his book Nudge. 

AdThaler believes that when faced with certain options, most people will consistently make the wrong choice. 

Therefore, when it comes to something as important as retirement savings, all of us need to be coaxed into developing more self-control, willingness to battle procrastination and the ability to handle short-term sacrifices. 

That’s tough to do. For most people, saving for a distant goal such as retirement is a challenge. Setting aside even a few dollars each month is difficult in the years of raising children and buying a home, when the need for cash is greatest.

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November 22, 2021

Just how much do you think our house is really worth?

If you thought deciding to finally sell your home was a tough decision, wait until you try to decide what its really worth.

AdShould you set the price high, expecting prospective buyers will want to bargain you down before closing? Or do you start low to attract attention and get the inevitable discounting over with upfront?

Starting high with the idea that you can always drop it later can be a costly mistake since it can quickly take you out of the market. That's why, notwithstanding their interest in a quick sale, most realtors advise setting a fair price from the outset.  

And just how good a negotiator are you anyway?

Most of us have strong ties to our homes, and they invariably get in the way of the ultimate goal, which is to sell, says Marnie Bennett, a top-selling broker with Keller Williams VIP Realty in Ottawa.

Too often, sellers can unknowingly hinder their sale by making decisions based on emotion rather than logic, she maintains.

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November 21, 2021

Are space heaters a smart way to trim energy costs?

Although snow is still scarce, winter, along with rising heating bills, is definitely here. Can portable space heaters help you save some money, or are the claims just a lot of hype?

AdAlthough once notorious as energy hogs, today’s options include more energy efficient models. But it still depends on how you use them, experts say.

If your heater is equipped with a good thermostat and you don’t heat the room to a warmer-than-normal temperature, it seems you can probably save money by using one in a room you’re in and keeping the rest of the house a bit chillier.

But it all depends. The truth is that electrical heat is almost always the most expensive route overall but warming up one room in big house is a different matter.

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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...