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moneysense.ca, 9/09/10
This and That: Interest rates, Charles Ellis and more…
Before we jump into this week’s collection of links, a quick reminder that you can also read my posts in your favourite reader or have it delivered via e-mail.
Charles Ellis, the author of Winning the Loser’s Game, explains in the following video why he thinks indexing is an appropriate strategy for pretty much every investor out there.
- The Bank of Canada decided to increase interest rates by 1/4 percent this week. In the statement accompanying its interest rate decision, the Bank noted the “unusual uncertainty” surrounding its economic outlook. The chartered banks increased the Prime Interest Rate to which consumer loans and variable-rate mortgages are linked to 3 percent.
- With interest rates heading up and bond yields dropping, Larry MacDonald wonders if this is one of those periods in which it may be better to go with a fixed-rate mortgage.
- The Globe and Mail reported today that the newly created Canadian Employment Insurance Financing Board has recommended a 8.7 percent hike in employee and employer EI premiums for the 2011 calendar year. While on the subject of EI, the temporary program that extends benefits by 5 weeks for all employees and up to 20 additional weeks for some employees will soon expire.
- I agree with Canadian Couch Potato that pretty much every portfolio needs some bonds. Here is a rundown on how to choose a Canadian bond index fund.
- I never did get around to reading This Time is Different: Eight Centuries of Financial Folly. Balance Junkie, on the other hand did and reviewed it here.
- Remember Labour-Sponsored Investment Funds? Money Smarts Blog takes us down memory lane by sharing an important investing lesson he learned through buying these lemons.
- Canadian Financial Stuff pointed out that new rules on RESP withdrawals may cause cash-flow problems. Don’t let it deter you though. The RESP is still a great way to save for a child’s education.
- The less you trade, the better your portfolio will be (on average). Michael James wrote about one more reason why you may want to trade less.
- Preet of Where Does All Your Money Go? is writing a new column for Globe Investor. You can find his first column on how stock picking contests are encouraging kids to treat investing as gambling here.
- Million Dollar Journey featured a guest post on what to do if your insurance premiums are about to jump.
Have a great weekend everyone!
moneysense.ca, 9/09/10
Ahhh memories. Thanks for the link.
I think Larry’s link should say ‘fixed’ rather than variable.
Mike
Ellis is a smart guy. Thanks for the mention.
My only concern is that the RESP becomes a Save-Only device, given how the “rules” are being set up. Thanks for the mention, have a great weekend!
Thanks very much for including my book review. Enjoy your weekend!
[...] This post was mentioned on Twitter by Canadian Capitalist, 2 Cents. 2 Cents said: RT @CCapitalist This and That: Interest rates, Charles Ellis and more… http://bit.ly/9zcH6i -> Thanks for the mention! [...]
I think it’s always better to have a variable rate mortgage. If you get a fixed rate mortgage, that means that you think that the banks, with their departments full of underwriters and other bean counters, are totally wrong on their interest rate spread calculations.
It’s kind of analogous to buying an index fund versus an actively managed fund, where the variable rate is an index fund and a fixed rate is an actively managed fund – but in this case you’re betting against the smartest guys in the business rather than with them.
Thanks for the weekend reads and clip!
@Phil: I’d personally still pick a variable-rate mortgage as well because there is still a 1.5% spread between a VRM and a 5-year FRM. Someone with a $250,000 mortgage can save at least $2,500 even if the BoC increases rates twice. After that who knows what will happen.
Thanks for the link CC!