Economics

From 2020 to 2030, when the older baby boomers will be 64 to 74, America’s elderly are projected to face an income shortfall of at least $400 billion, including at least $45 billion in 2030 alone. This shortfall will affect every aspect of these retirees’ lives including their ability to provide adequate shelter, food, clothing and the basic necessities of life for themselves in their so-called “golden years”.

Many people believe that just blindly turning their life savings over to their bank, financial institution or financial advisor will produce the results they so desperately need to live their desired lifestyle as they age. This seems to be a very popular view with very contrasting results as many of these institutions choose to pour client investment capital into well diversified mutual funds.

However, one can find plenty of statistics that support the fact that approximately 75 to 80 percent of mutual funds under-perform the stock market returns in a typical year. Of course there is no such thing as a typical year and the real performance of funds varies greatly.

Now I know people spend less during a recession; however, most recently I was quite surprised to come across this article published in the Edmonton Journal here are a couple of the highlights I found.

•  A record trillion dollars of cash sitting on the sidelines in Canada!
• 10 trillion dollars of cash sitting on the sidelines in United States!
• The worst thing to do is: leave money in cash balances that pay LESS than 0 after inflation and taxes!

Enjoy!

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With a record trillion dollars of cash sitting on the sidelines in Canada, and 10 times that much in the United States, it’s arguable households aren’t taking enough risk to get a decent return on their money.

Derek Holt, vice-president of Scotia Capital Economics, says the worst thing to do is to leave too much money in cash balances that pay less than zero after inflation and taxes.

Holt and colleague Karen Cordes startled Bay Street Monday when their Capital Points letter revealed Canadians are sitting on a trillion-dollar mountain of cash, or $635-billion if you don’t count less-liquid term deposits. Either figure is “astoundingly massive,” Holt says, and in line with the US$3.5-trillion to US9.6-trillion parked in cash in the United States.

Planning for your future and retirement relies on preparing the right kinds of long term investments. Everyone needs to have an investment for their future to ensure financial sustainability, and there are many different types of long term financing investments to choose from.

We both know that you will not be able to work forever. There will come a time when you will no longer be able to work, due to health problems or simply aging. So, what will you do for an income when the time comes to retire? This is why planning your long term investments carefully is so important.

Perhaps you enjoy the security of simply relying on government policies and programs to take care of your future needs, but this is not a realistic plan. Take a look at what has happened in the United States to the Medicare and social security programs – It is scary! Social security is in serious trouble. Though politicians are currently working to repair the problems, chances are that in another twenty years, or less, there will be little to nothing left in the social security budget.

By Misty Harris, Canwest News Service

Cast member Rachel McAdams attends a promotional event for the upcoming movie 'Sherlock Holmes' during the 40th annual Comic Con Convention in San Diego July 24, 2009. Following the follicles of such celebs as Rachel McAdams, Rihanna and Solange Knowles, all of whom have shortened or shaved their hair in recent weeks, Canadian stylists report women are cropping their coifs in scissor-dulling numbers.
The Bank of Canada has declared the hairiest days of the recession over, but those holding the household purse strings are nonetheless cutting back — literally.

The US banking industry continues to face extraordinary challenges and the bad news just seems to never stop.  For example, the following is from Bloomberg news and just published yesterday:

Aug. 14 (Bloomberg) -- More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank's equity and threaten its survival.
The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 percent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full.

It’s hard not to keep a close on eye on oil sand profits in Fort McMurray on a daily occurrence, as they directly influence the “boom or bust” times in Alberta. After poor showings for most of 2008 and early 2009, second quarter profits are starting to bear fruit. CNRL, Inter Pipeline and Flint Energy Services all swung to a Q2 profit compared to losses in the same period last year.

Carrying personal debt can be a scary and intimidating financial tool to many people mainly because most of the world does not understand how to use debt to their advantage. There are actually two types of debt: good debt and bad debt. Most people are scared of debt because they only know about bad debt and do not understand what good debt means.

Bad debt comes in the form of credit cards, lines of credit, loans on automobiles, and other ‘things’ that over the long term become a liability on our financial score card. I consider a personal residence mortgage a bad debt because it takes money out of your pocket each and every month

Good debt comes in the form of credit cards, lines of credit and loans that are used to purchase investments that over time put money in your pocket and increase in value. This additional revenue in turn becomes an asset on your financial score card. I consider a mortgage on a rental property that produces monthly cash flow a good debt.

The HST will hit right when the recovery is slated to be in full swing

For Immediate Release

Vancouver / July 27th  - The Real Estate Investment Network (REIN™), a Division of Cutting Edge Research Inc. is Canada’s leading real estate research, education, and consulting organization. 

On July 1, 2010 the provincial governments will be instituting the Harmonized Sales Tax (HST) to replace the separate PST and GST. Although this is deemed by many to be a boon for the provincial economy and most business owners, it will have a severe impact on the real estate industry.   "The Lower Mainland is already the least affordable housing market in Canada and now, with the additional costs of the HST added on top, home ownership becomes out of reach for even more" says Don R., Campbell, President of the Real Estate Investment Network and author of the best-selling books Real Estate Investing in Canada 2.0 and 97 Tips For Real Estate Investing.    

Good for “Most” Businesses but Real Estate Investors and Renters will Lose

Searching for positives in the current debt-ridden economy seems almost hopeless. Everywhere we turn, markets are falling, people are losing their jobs, and companies are filing for bankruptcy. Will the financial bubble that seems to have burst over our heads leave some legacy of lasting value? Realistically speaking, we are witnessing the worst global economic slowdown in a generation. <--break->Markets of all types and sizes around the world have sharply contracted. The question to ask ourselves is this: Is this really happening, or do we just think it is? Or, perhaps more importantly, have we been led to believe by the media, those around us, and our financial advisors that what is happening is all bad news?

The massive growth of the hedge fund industry from $39 billion in assets at the end of 1990 to $1.9 trillion at the end of 2008 indicates that the industry far exceeded itself. Clients have been disillusioned, as the average hedge fund lost 17.7% in from January to November 2008, according to Hedge Fund Research.

We're now more than halfway through a year that everybody knew was going to be brutal.

The winds of a global recession, a tight credit environment, unemployment and cautious consumers have joined forces to cloud the Canadian economy.

As bad as it is, Alberta has still managed to be in just a little better shape than many other parts of the country.

It's that Alberta attitude: Never let them see you sweat. Grin and bear it. That can-do spirit permeates the province's economy --and a big factor, too, is our oil and gas industry.

Sure, there have been victims; plenty of companies who fought the good fight have lost. But it could have been a lot worse.

Early on, economic experts forecast that Alberta wouldn't be hit so dramatically by the downturn and that it would be among the first regions to come out of it.