Boom Bust Report: A New Year Update
It is hard to believe a new year has begun. First, some housekeeping as it is that time of year.
RRSP: The deadline is Friday, March 1. SaskWorks will be sold out long before that date so please contact ASAP if interested. The current tax credit for SaskWorks is 32.5% over and above the RRSP deduction to arrive at your total tax savings.
TFSA: The limit has increased to $6,000 for 2019.
As you may have noticed the stock market has had some difficulties of late. This is my attempt at humour. More like the stock market is having convulsions1. Of course, everyone focuses on the stock market because that is what the media shows us. Debt markets are what is most important and where the fireworks are.
Think about debt in its simplest terms. In one Australian community of 13,240 households2, 4,711 are currently experiencing mortgage stress3. I only quote this information as it is current, but this mortgage stress is not limited to Australia. Canada also has mortgage holders with significant debt and rising interest rates as do much of the rest of the world4.
Debt’s impact is not confined to just mortgages. Car sales5, unfunded pensions6, stalled productivity growth7, defaulted student loans8, etc. Companies that borrowed to buy their own shares back are now reaching record levels of debt “diverting capital from productive long-term investment to further inflate a financial bubble”9.
As this is coming to a head, almost silently in the background gold and silver have been steadily climbing. You will see an increase on the year-end statement and prices continue to reach milestones. This form of downside protection or insurance is doing just what it should.
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a. https://www.livemint.com/Money/QW87Zzt7I4nKODqW6lQZpK/Biggest-worry-for-traders-They-dont-know-why-stocks-are-mo.htmlb. https://www.nbcnews.com/business/markets/dow-jones-plummets-second-straight-day-nasdaq-flirts-correction-n919136