By tradition, the first newsletter of the year is about helping set you up for a productive year in personal finance. To start with, check out a list of pandemic-themed resolutions that Globe personal finance editor Roma Luciw and I came up with for the Stress Test podcast.
Next, let’s look at some worthwhile forecasts, lists and tips for 2021.
21 money tips for the year ahead
Lots of good suggestions here for managing your money better and staying well-informed about money matters.
13 ways to improve your finances
Not just a list, but a lot of tips on how to actually make these suggested improvements work for you. From the Savvy New Canadians blog.
Housing market predictions for 2021
A look at what could be ahead for mortgage rates, house prices, the condo market and more in the year ahead.
Seven-figure mortgages the new normal?
A Toronto mortgage broker talks about the factors driving up the number of million-dollar mortgages in the city.
What’s ahead for the economy
The annual Charts to Watch list from Maclean’s is always worth a read. The charts for 2021 will tell you a lot about the pandemic, government deficits and the financial health of households.
The pandemic in chart form – where we’ve been and what’s ahead
RBC Economics has assembled 21 charts covering things like trends in remote work, stockpiling cash and use of cash versus plastic to pay for things we buy.
The biggest investing risk in 2021
People who manage pension funds, endowments and other big blocks of money say the biggest portfolio risk in the year ahead is negative interest rates.
Top investing trends of 2021
For investors who buy individual stocks. Sectors to watch and avoid.
BlackRock’s chief strategist for Canada on how to invest for 2021
Thoughts here on whether the traditional 60-40 portfolio of stocks and bonds needs to be adjusted for today’s financial market conditions.
Most popular stocks, ETFs and mutual funds
Morningstar Canada lists the stocks and funds its readers looked up most often in 2020.
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Guest Q&A
Our first guest of the year is Jessica Moorehouse, host of the Mo’ Money Podcast, a public speaker and a holder of the Accredited Financial Counsellor Canada designation. She’s currently pursuing the Certified Financial Planner designation after having completed the Canadian Securities Course. I asked Ms. Moorehouse to focus on what’s ahead for personal finance in 2021.
Q: What will you be telling people to do with their money in 2021 that you might not have mentioned or emphasized in previous years?
A: The one thing I’ve been putting much more emphasis on is protecting yourself financially. It’s never been more important to have a financial plan and be prepared for when calamity happens. Many scientists are predicting another pandemic in the future, and even if that doesn’t happen in our lifetimes, there are a myriad of other catastrophes that could occur. So, what does protecting yourself look like? It means saving up an emergency fund. I know my emergency fund is a big reason that I’m not as anxious this year as I could have been (and I’ve been pretty anxious). Also, make sure you are properly protected with insurance and an estate plan. Make sure you have a debt-repayment plan for any debt you have. And lastly, make sure you don’t wait to do all of this. You’ll never regret taking the time and effort to put all these things in place, but you will regret putting it off until it’s too late.
Q: Can you suggest any personal finance or investing apps that you think are helpful for getting more control of saving and spending?
A: When it comes to budgeting, I’m a spreadsheet person. So I usually point people to some helpful and cost-effective spreadsheets (like the ones I have listed on my website). That being said, I’ve worked with a number of clients who loved using YNAB (You Need a Budget). There’s a whole community of people who use that app and help each other reach their goals, which I think could be what many people are looking for. In terms of investing, I’m a big fan of robo-advisers for easy yet low-cost passive investing. I also really love the app Passiv to make it easier to become a self-directed investor.
Q: A lot of data show that Gen Z and millennials were hit hardest by the pandemic in a financial sense – can you offer one or two encouraging suggestions especially for these groups to help them keep their finances on track?
A: This hopefully should be a big wakeup call that everyone, absolutely everyone, needs to take their finances seriously. So what I say is take this time as an opportunity to fix what needs to be fixed. It’s okay if you’ve made mistakes in the past; you can change course for the future. If you don’t have an emergency fund, it’s not too late. Make that your No. 1 priority to save up right now. It’s okay if you were laid off and feel ashamed that you’re not working, when other people look to be unaffected career-wise. I was in your shoes, and I remember that feeling of shame and fear of not being able to catch up like it was yesterday. This is temporary. You will work again. Things will improve. You will be able to catch up.
Q: Will 20- and 30-somethings be OK decades in the future if for the time being they’re unable to save or invest much?
A: Of course they will. But I’m an optimist. Which may actually be surprising since I’m a millennial, and we haven’t had the easiest ride thus far. But being a millennial in her thirties, I can look back onto my twenties and see how much progress I’ve made and confidently say that those hard times don’t last forever. Of course, there are so many things in the world we can’t control, but I like to focus on what I can. And with saying all that, although once we’re going through a really rough time, we will get to the other side. This pain and struggle won’t last forever. Your present does not and should not define your future.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
Free answers to legal questions from licensed lawyers via a website called CoSquare. You can also browse questions and answers on a wide variety of topics, including real estate. Lawyers pay to promote their answers on the platform.
The money-free zone
A song I like these days is Isn’t It a Pity by George Harrison. Great covers by Nina Simone and Galaxie 500, too.
What I’ve been writing about
- Four ways your personal finances will be tested in 2021
- The baby boomer’s guide to managing a TFSA, RRSP and other investments using online broker apps (for Globe Unlimited subscribers)
- The inflation trap facing people holding bonds, GICs and savings (for Globe Unlimited subscribers)
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: How to survive the gig economy • How to get out of debt • Is now the right time to buy a house? • Crisis-proof your finances • Does investing change during a pandemic? • Can you afford to live downtown? • The cost of kids • Should you move back in with your parents?
- ✔️ A 10-point pandemic personal finance checklist: Create a "wartime" family budget; stop worrying about bank deposits; clean out your big-bank savings account; get relief on car payments; get preapproved for a mortgage; WFH? Save $1,000 a month; save, save, save; build resilience by not anxiety-buying; consider the cost of mortgage deferrals; get ready for the second wave of financial distress.
- 📈 Investing: The case for a tight portfolio of big blue chips dividend stocks; robo-advisers beat human advisors (and they’re thriving), why online banks that are better than the branch; is it time to invest your 2020 TFSA; don’t get your mortgage at a bank; why it’s so hard to invest in preferred shares; stock up on stocks to retire early; and are you following the 10-year rule with your investments?
- 💰 Saving: Food waste is wasted money; why you might regret that SUV and find out if CAA is worth it; juice your PC Optimum points; how an ex-Bay Street lawyer got out of debt; blindly easy tweak to your retirement investments to survive economic downturn; should you buy that latte?
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob Carrick