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February 2013

February 28, 2022

How much does having a car really cost?

It's hard to believe that your driving costs outweight your annual grocery bill.

But according to a new report by the Canadian Automobile Association (CAA) -- it's true.

In fact, the study found that the annual ownership costs for a compact vehicle are about $9.500 while the average Canadian spends about $5,400 on their yearly grocery bill. Now that's food for thought.

The study also discovered that four in five Canadians polled underestimate the cost of owning and operating a motor vehicle. And six in 10 underestimated that cost by $4,000 or more.

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Should thrift stores be limited to people in need?

You make a good salary and can afford to shop and buy new clothes at retail. But you really enjoy shopping at a particular thrift store, where you find great bargains even though you sometimes buy items that you really don’t need.

And there's the rub. If you buy something at that thrift store, and lots of middle class people do,  you’re probably taking it away from someone who needs it more than you ... and can afford it way less than you can.

Tough, a deal is a deal, and should be available to anyone who happens to find it. Or are you putting the screws to someone you don't even know and making their life just a tad more miserable in the process?

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February 27, 2022

Credit cards: the good, the bad and the ugly

206579_2170Credit cards can be your best friend or turn into your worst enemy if not used responsibly.

Getting your first credit card is a big deal when you're coming of age. But learning how to use them responsibly is something that requires a little bit of maturity and a little bit of credit card know-how.

"Credit cards are powerful tools to help build credit and financial skills," says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc. "Unfortunately, they can also be dangerous if not used responsibly."

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Where your emotions can really get you into trouble

Can feeling sad lead to poor financial decisions? Probably, say researchers — largely because it makes you think short term, seeking immediate rewards rather than focusing on larger rewards you might realize down the road.

In one study, participants were shown one of three short video clips before being asked to make several  choices between receiving cash today and larger amounts at points in the future, ranging from one week to six months. They were told that some of them would actually be given the rewards they chose, so they should choose carefully.

One of the videos depicted the death of a boy’s mentor, another concerned an unsanitary toilet, and the third was about the Great Barrier Reef.

If participants in the sad condition always take less money for nearer events than further, it suggests that they don’t want to wait for future events. 

However, if they only take less money for immediate rewards but not for those where two weeks is the nearer event, it would suggest that sad people are biased to get something right now.

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February 26, 2022

Are payday lenders simply a necessary evil?

The Ontario Ministry of Consumer Services is going after payday lender Cash Store Financial Services which operates 200 outlets in Ontario alone: branded as InstaLoans and The Cash Store.

At issue is whether the company has violated Ontario's Payday Loans Act, which limits the fees that can be charged by payday loan companies.

Similar questions have been raised in Manitoba where certain outlets have started offering high-interest lines of credit, which also appear to fall outside the province's payday loan rules.

Payday loans are designed to tide borrowers over until their next pay cheque. The amount you can borrow is usually limited to 50% of net pay, at incredible interest rates that make credit cards look like a real bargain.

These loans then trap borrowers in a cycle of mounting debt. Charges escalate when the borrower is unable to repay the loan at the end of the month, or can repay but immediately needs to borrow the same amount again.

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February 25, 2022

Do you have a plan to save your money?

348608_2617It's always good to have a plan -- especially if you want to save money.

You can always expect the unexpected that can sometimes sideline your anticipated savings goals like car repairs, house repairs, rent hikes, tax increases and uncovered medical expenses.

But whether you're saving for a rainy day, your retirement, education or a vacation it is always a good idea to have a fixed savings plan in place to help you reach your goal.

A new report by BMO Bank of Montreal found that many Canadians have a savings goal in mind but are falling short of that goal due to lack of planning.

For instance, the survey found that Canadians plan to save on average about $9.859 this year but 31 per cent have no plan in place to help them reach their target goal.

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Maybe the bull market isn't dead after all

A few years ago, veteran market strategist Laszlo Birinyi told the New York Times that we were in the early stages of a classic bull market. Since then, the S&P 500 has returned more than 50%. 

In fact it's up some 124% off the lows and is nearing nearing record highs.

And that's not about to change anytime soon, he says: “The bull market probably has between a year and three years to go. I can’t time it. I can only point out the trend.”

And he's not alone in that view. What the big rally hasn't done is cause stock valuations to hit nose-bleed levels that put the bull market at risk, says Jeffrey Kleintop, chief market strategist at LPL Financial.

"There might be some ups and downs, but we will likely have another leg up in this bull market," says Kleintop. "Bull markets end at higher stock market valuations."

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February 22, 2022

Mutual funds a popular RRSP choice

Decisions, decisions.

Registered Retirement Savings Plan (RRSP) season is upon us and there are a wide range of investment options available from which to choose.

So how do you plan on making these important investment decisions?

Well, one of the more popular investment choices seems to be mutual funds for RRSPs, according to a new report by BMO Bank of Montreal.

The study revealed that 72 per cent of Canadians say they hold mutual funds within their RRSP, and that mutual funds make up about one-third (31 per cent) of all holdings held in RRSPs.

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February 21, 2022

Canadians still penny pinching

PennyIt appears Canadians aren't ready to stop pinching their pennies quite yet.

In what could turn out to become a long goodbye, a new BMO Bank of Montreal report has found that many consumers are not ready to bid farewell to the beloved one-cent piece.

In fact, 73 per cent of those polled in the survey conducted by Pollara expect retailers to continue to accept pennies for their purchases at the check-out counter.

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Millennial investors sour on financial advisors: report

Millennial investors are more skeptical of financial advice than older generations even though it's the latter group that's been hit hardest by market gyrations, according to a recent survey by Accenture.

The survey of digitally savvy U.S. investors also showed that they're more determined than their predecessors to learn how to get things right.

Many perceive financial advisors as salespeople who push products that enrich their firms rather than their clients. As a result, they were four times more likely than baby boomers to say they were unwilling to act on the advice of a financial advisor without first consulting other sources.

Over half admitted taking financial advice from someone other than an advisor — including family, friends and social media contacts — in the past two years.

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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...