A generation of Canadians are getting their first taste of the economic blight known as inflation
As noted in a recent column, inflation has become a force in our lives for the first time in ages. We don’t yet know if it’s temporary blip or something longer-lasting. But for now, prices are rising at levels well beyond the modest 1 to 2 per cent range we’ve seen in recent decades.
Let’s help each other out in tracking where inflation is happening. Send your inflation stories to me at rcarrick@globeandmail.com – what you bought, how much it cost and how much you paid previously. I will also create a Twitter hashtag to track inflation stories – #inflationalert. I’ll gather up intel from readers and show it to you in a future newsletter.
In my column on inflation, I suggested we try a kind of contrarian consumption in the second half of the year. Where possible, avoid buying things that are rising in price more than usual. Creating a database of goods and services that are experiencing inflation can help with this.
One area where we’ll be challenged to avoid inflation is restaurant meals. The cost of takeout and meals and booze on the patio seems quite a bit higher than in pre-pandemic days. You can avoid restaurant inflation by eating at home, but haven’t we all had our fill of that in the lockdowns of the past 15 months?
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Rob’s personal finance reading list
Mr. C. loses $120,000
Soaring stock markets have rewarded almost every decision made by do-it-yourself investors in the past 15 months or so. As a reminder of the risks in DIY investing, especially when done in an aggressive way, check out this case study from the Ombudsman for Banking Services and Investments. It’s about an investor who didn’t understand how margin investing – using money borrowed from your broker – can turn against you.
Should you buy your own pension fund
A collection of views on the Longevity Pension Fund, a new mutual fund product that is designed for people concerned they will run out of money in retirement. You get a set payment monthly for as long as you live, but with some give and take that is well-discussed in this post.
The small city price advantage in housing is fading
More discouraging news for aspiring homeowners. Prices in small Ontario and B.C. cities are still lower than in Toronto and Vancouver, but the gap is shrinking at a fast clip.
A view from the emergency room on moving to cities with cheap housing
A 65-year-old who recently moved to New Brunswick from Ontario with his wife had a mishap involving a fall from a ladder. Check out his emergency room wait time. Ouch.
Tell Rob
In a recent newsletter, I said I’m fine with spending money on coffee outside the home. A few readers called me on that, saying this spending can add up to a serious amount of money. To me, enjoying a coffee at a café is a social thing with value in terms of relaxation and enjoyment. Show me anyone’s budget and I’ll find a small recurring expense that could be eliminated to save money. Now for a 58-year-old reader’s defence of coffee spending. “I used to subscribe to the school of thought that by foregoing my wife’s and my Starbucks skinny venti lattes (X-hot) per day, I could add about $5,000 ($13/day x 365 = $4,745 after tax) to my RRSP savings and perhaps retire a year earlier than otherwise. Then I realized that our relaxation, conversation and connection with each other while drinking those lattes is worth as much as or more than weekly couples counselling sessions that we might otherwise need (e.g. 50 x $130/session = $6,500). Coffee … it’s cheaper than therapy.”
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
Investing in exchange-traded funds? Here’s how to get the facts you need to make a sound choice for your portfolio.
The money-free zone
What would a summer music playlist put together by financial planners sound like? Check for yourself in this list issued by FP Canada, which oversees the certified financial planner (CFP) designation in Canada.
ICYMI
What I’ve been writing about
- Inflation is starting to look like the biggest threat to your financial health
- A financial shock is coming for those who jumped into the housing market during the COVID-19 pandemic
- ETFs for investors who want out of holding individual bank stocks
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: – H6
- 🎧 Catch up on Stress Test: Are your parents giving you money? • Why it’s time to stop shaming the renting lifestyle • Is now the right time to buy a house? • Why are young Canadians leaving the cities they love? • Eating in: How COVID has shifted our food spending • Crisis-proof your finances? • Can you afford to live downtown? • The cost of kids
- ✔️ The housing file: The housing boom is ripping apart the financial fabric of Canada • Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars • Big city housing affordability is over – now what? • She sold her Toronto house to retire somewhere cheaper, but it didn’t work • How young adults and the whole country win with a tougher mortgage stress test for home buyers • Can’t afford your house? It’s likely not your fault
- 📈 Investing: Robo-advisers have grown out of the novelty stage. Here’s help in finding one right for you • The 2021 ETF Buyer’s Guide: Best Canadian equity funds • The 2021 Globe and Mail online brokerage ranking: Who’s best for investing … and answering the phone • Are these the stock market returns of a lifetime? • On the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness
- 💰 Your money: The five most important numbers for checking the health of your personal finances • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? • There’s a cost in money, isolation and family stress when seniors choose to remain in their own private homes • Taking CPP early can cost you $100,000 and limit your long term options • Fleeing the city for the suburbs? Watch out for higher property taxes, more cars and other costs
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