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Spending on credit and debit cards cratered in the spring, then came on strong. What were people buying in the pandemic? Stats from the electronics retailer Best Buy offer some perspective on how buying habits were affected by being stuck at home.

One lesson is that the cocooning we’ve done in the pandemic has its costs. We’re all cooking more, right? That trend drove a 200 per cent increase in freezer sales at Best Buy in 2020, and a 140 per cent increase in bread maker sales.

Another lesson is that spending a lot of time at home results in people dwelling on the shortcomings of their house, condo or apartment. Take air quality, for example. Best Buy says humidifier sales jumped 110 per cent, while air purifier sales increased 55 per cent. A lot of washing machines also stopped making the grade. Sales of these appliances jumped more than 100 per cent.

There’s also an interesting trend of people making very practical and, um, flaky buying decisions.

With dentists off limits for a while as a result of physical distancing, sales of electric toothbrushes and other oral care appliances jumped 100 per cent. Good call, there.

But Best Buy also reported strong sales of “smart furniture,” one example being coffee tables and end tables with built-in cooling drawers. What, you can’t walk to the fridge? Drone sales surged more than 60 per cent – does flying your drone qualify as travel when the economy is locked down?

Working at home had obvious benefits for electronics retailers. Monitor sales jumped 150 per cent and sales of printers, networking equipment were up as well.

This is the final newsletter of 2020. Happy holidays. Stay safe, stay well and let’s hope for a much better year ahead.


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Rob’s personal finance reading list

Inequality and those billions sitting in cash

A smart take from the Financial Times on what happens when the money parked in savings by people who weren’t spending as much during the pandemic flows back into the economy. Consumer spending will be important in the recovery. “But it also raises the possibility of one stratum of society struggling to get tables at reopened restaurants while another struggles to feed its children.”

How ETFs are under and overrated

A provocative look at ways investors over value and underrate exchange-traded funds. Gets you thinking.

All about pay-as-you go car insurance

The pandemic has meant a lot of us are driving much less. If you find yourself driving fewer than 9,000 kilometres annually, you might be able to save money through the Canadian Automobile Association’s pay-as-you-go MyPace program.

The 411 on robo-advisers

Unbiased basics on how robo-advisers work. A helpful complement to the latest Globe and Mail robo-adviser guide.


Guest Q&A

Writer Max Fawcett took a look at the financial stress on the middle class recently and made a conclusion that struck me as both smart and bold. If we want a healthy middle class, we may need to break our addiction to home ownership. To hear more about this, I invited Mr. Fawcett to do a guest Q&A. Here’s an edited version of our exchange:

Q: First off, how do you define the middle class in a way that resonates with people?

A: It’s funny – it seems like almost everyone has their own definition of what the middle class is (and isn’t). So while there are definitely metrics I could lean on like median household income, I tend to define the middle class in more holistic ways. I think of the middle class as being that group of people that works for a living, but can weather a period where they aren’t working. I think of the middle class as those who send their kids to postsecondary, and who believe in the value of education and knowledge. And most importantly, I think of the middle class as those who want their kids to have better and more fulfilling lives than they did – and have the means to help set them on that path.

Q: Your article, which is great, talks about the sacrifices the middle class has made to own homes. Tell us about some of the financial sacrifices – what aren’t we doing because of how much money we’re pouring into our homes?

A: In markets like Vancouver and Toronto, house poverty is a very real phenomenon. I’m a stubborn (and stubbornly proud) renter, but I have lots of friends who have had to postpone vacations, eat out less often at restaurants and cut back on other discretionary spending. I even have a few friends who have decided not to have a second or third child because they couldn’t afford the extra space. That’s an astonishing sacrifice.

Q: You talk in the article about “breaking our addiction to home ownership” to live a more sustainable life. How would this work? Renting instead of owning, multi-generational living, smaller homes, more condo living?

A: I’m a big fan of renting. Especially for younger people, I think the flexibility and freedom that it offers are worth so much more than anything ownership can provide. That becomes more true with each passing day, as our economy becomes increasingly volatile and careers and workplace arrangements change overnight. I grew up in co-operative housing in Vancouver, and I think that’s another option that governments should be looking very hard at. But I’m particularly fascinated these days by the idea of multi-generational housing – and I think COVID-19 has really shown us its value. There are other cultures where multi-generational housing is more common, and I think we can learn from that. Generally speaking, grandchildren benefit from being around their grandparents more often, and vice-versa. So do the parents in between, who get more time to themselves and more freedom to work, play and relax. And I think we’ve all seen the importance of keeping our senior citizens closer to their families, and as far away from care homes as possible.

Q: How do you get people to rethink home ownership when the surge in home prices in the past 12 years is the greatest financial success many people have ever experienced?

A: That’s a tough one. It’s like trying to convince all the people who have jumped into the stock market this year and had huge success picking and trading stocks that they might want to take some money off the table. When all you’ve experienced is success, it’s really hard to imagine failure, much less prepare for it. And, of course, young people today tend to have parents in their ears talking about the virtues of home ownership, because they too have done incredibly well on their homes, especially if they live in the Greater Toronto or Vancouver areas.

Government can play an important role, but it has to be more than talk. It has to include investments in new programs that expand the range of housing options and alternatives for Canadians. And if they want to ban HGTV from the airwaves, that definitely wouldn’t hurt.

Q: What do you make of what’s happened with real estate in the pandemic? Prices have soared, but some people are moving to smaller communities with cheaper housing. Is that a move toward a more sustainable middle class?

A: The initial surge in prices in places like Vancouver and Toronto was both weird and entirely understandable. People were suddenly working together from the same home, and I’m sure many realized that it was either time to buy a bigger place or find a divorce lawyer. With interest rates cut down to the floor, people could afford more house. I’m not sure any of this was, or is, particularly good for the middle class. But I think the longer-term impacts of the pandemic could be a different story. If the work-from-home movement becomes a more permanent state of affairs, people living in Canada’s more expensive cities could easily decide to move to the exurbs or a completely different community. They’d save money, create space, and buy time for themselves – and who wouldn’t want that?


Today’s financial tool

Readers have pointed out a couple of resources for people who want to keep track of capital gains and adjusted cost base for stocks and ETFs held in taxable accounts. One is AdjustedCostBase.ca and the other is the investment portfolio tracking spreadsheet offered on the Measure of a Plan website.


The money-free zone

Some of the best music I heard in 2020 is on a soul-gospel compilation called The Time for Peace is Now. Track Four – Keep Your Faith to the Sky, by Willie Scott & The Birmingham Spirituals – is sublime.


ICYMI

What I’ve been writing about
  • Why people resist delaying CPP retirement benefits: ‘They think the risk is dying early, but it’s actually the opposite’
  • Rate-wise, this may be a once-in-a-generation chance to buy a home
  • The home seller’s dilemma: Where to stash all that cash to keep it safe? (for Globe Unlimited subscribers)

More Rob Carrick and money coverage

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