Interest rates are staying put
On October 25, the Bank of Canada made its much-anticipated announcement on interest rates—no move for now. This was widely anticipated, in part because the Bank had already raised its key rate (the overnight lending rate) twice in recent months. The first time was in July, and the second in September. That means the rate will stay at 1.00%, which is still remarkably low by historic standards.
Those earlier increases were generally viewed as a good thing. Canada’s economy had experienced strong growth for eight months straight well into the summer, and higher rates were viewed as necessary to prevent inflation from building up a head of steam. But that doesn’t mean the Bank’s decision to hold rates is a bad thing. The outlook for the Canadian economy remains strong, and government finances are in better shape than had been expected, thanks to higher tax revenues. In addition, the Bank’s decision sent the Canadian dollar down on currency markets, which is generally positive for exporters—the cheaper our dollar, the more competitive our products are internationally. When you throw in the uncertainty surrounding NAFTA, based on recent pronouncements by the U.S. government, it’s even more important for our export industries to win overseas clients through a cheaper dollar.
Fine for the economy, but what about me?
The consensus among economists is that over the longer term, interest rates are probably going to rise gradually. In part that’s because they’re already so low, but there are other reasons as well. Economic growth is expected to continue, inflation is trending up, and Canada’s housing market has been hot for a very long time.
When it comes to your personal finances, then, it’s advisable to keep an eye on interest rates. As we’ve noted before in other Oaken Updates, higher rates will make mortgages more expensive. That’s an especially important consideration if you, or perhaps your children, are looking to get into the property market for the first time. You might want to save more for a downpayment, or reconsider the size of house you can afford.
In addition, higher rates will mean better returns on bonds and GICs. That’s great if you’re a saver. Returns have been extremely low for the better part of a decade, and a gradual increase in rates should be welcome news for retirees and others who rely on fixed-income investments to fund their lifestyles. And finally, if you are carrying a lot of debt—in the form of mortgages, loans, credit card balances—you should be aware that higher rates mean higher payments. Now might be a good time to re-examine your debt load to make sure you can afford it two or three years from now.
A new look for CDIC
The Canada Deposit Insurance Corporation (CDIC) launched a new look recently, in tandem with a publicity campaign which aims to raise awareness of the Corporation and its role in our financial system. The centrepiece of their new appearance is an eye-catching new sign, as shown below:
You’ll notice this sign displayed on the premises and product brochures of all CDIC member institutions. It’s an important thing to look for when you’re choosing a financial institution to invest with, because it’s a symbol of security. CDIC insures deposits (such as savings accounts and GICs) held by its members for up to $100,000. That means even if a member institution is not able to meet its financial obligations, CDIC will do so up to this limit.
Increased protection with Oaken
As you’ll know by now, all Oaken GICs and savings accounts are eligible for CIDC coverage through both member issuers, Home Bank and Home Trust Company. And, as we’ve noted before, you can extend your protection well beyond the $100,000 limit with us. This can be done not only by establishing separate Oaken accounts with both Home Bank and Home Trust Company, but also by making joint investments. For example, that means one household with two adults can make several CDIC-eligible investments through Oaken, which is often more than enough protection for most people.
Brain fitness: fact or fiction?
One effect of the explosion in computer apps in recent years is a corresponding explosion in wonderful claims about what those apps can do for us. A case in point is the boom in “brain exercises”. Almost non-existent 20 years ago, apps and companies promoting games, puzzles and memory boosts for the brain are now commonplace on the internet. And while their marketing pitch may vary, almost all of them draw on the idea of a “workout” for the brain that’s the cognitive equivalent of physical exercise like going to the gym.
But does the brain actually work like that? Can you really exercise your synapses and lobes the way you exercise your biceps, triceps and hamstrings? Let’s see what science says.
A healthy mind in a healthy body
According to a recent study from the School of Public Health at University of California, Berkeley, “research about brain training has been underwhelming”. So much so, that a group of 70 experts in the fields of neuroscience and cognitive psychology released a statement through Stanford University’s Center on Longevity, cautioning people against claims made in favour of it. It said that many assertions are “exaggerated and misleading”, and noted in particular that most studies supporting “brain training” covered only a short timeframe. That’s significant, because while it’s true that games and exercises can give a boost to cognitive ability, there’s nothing to suggest that the effects will last. That’s not to say that brain training doesn’t work. The evidence simply isn’t strong enough to prove that it does.
So what to do about keeping your mind sharp? It seems that physical exercise—a body workout—may be one of the keys. Other possible avenues to long-term brain health include:
- A healthy diet (especially foods rich in antioxidants)
- Good sleep (important for so many things, including mood and emotional health)
- Social engagement (family, friends and volunteering can make a difference)
- Overall good health (weight, cholesterol, hypertension—all can have an impact)
In other words, a generally healthy lifestyle, which can include a few daily puzzles or quizzes, is probably the best way to keep your brain in shape—without the need for fancy online “brain workouts”.
It’s showtime again!
For many of us, fall is a great time for slowing down and enjoying things like galleries, museums and exhibitions. And we’re involved in two events coming up that we’d like you to know about.
The first is this coming weekend, at the Toronto ZoomerShow, which is celebrating its 10th anniversary this year. Taking place the Enercare Centre at Exhibition Place, this edition of the show will run from 10am to 5pm on Saturday, October 28, and then from 11am. to 5pm on Sunday, October 29. Free tickets, compliments of Oaken, are available here. This show provides access to Canada’s leading lifestyle expo for those 45 and up. You can catch great entertainment from a variety of performers, and in between you can browse the hundreds of exhibitor booths that are the heart of the show, from Lifestyle and Travel to Finance and Health & Fitness. And of course, we very much hope to see you at our Oaken booth for a chat, as well as a chance to win in our regular draw. This time, the prize is a Dyson vacuum cleaner, so clear your schedule and and zoom on down!
National Women’s Show
Our second fall outing will be at the National Women’s Show, also in Toronto. Running from Friday, November 10 through Sunday, November 12, this show will take place at the Metro Toronto Convention Centre, which is conveniently located downtown. Billing itself as a “showcase for fashion, food and fun”, the event offers mini-makeovers, cooking demos, travel ideas, home reno exhibits and much more. There’ll also be a main stage featuring entertainment and celebrity guests, and hundreds of booths, including our own. Tickets are on sale now, and for a $5 discount on each pair of tickets, simply click here, choose the 4th option, and then enter the promo code “shopping” on the next page. We’d love to see you and your friends drop by to say hello, and we’ll be holding a draw for you to enter as well. The prize will be the same as at the ZoomerShow—another Dyson vacuum cleaner.
Recent contest winners
And just in case you’re convinced you’ll never win, here are two people who recently did, simply by entering one of our draws. First up is Wilcox Chang, who won a $500 GIC in our regular in-store draw for Q3, which ran from July through September. And joining him is Vernon Jing, who dropped by our booth at the MoneyShow in Toronto last month. Vernon is also now the proud owner of a brand-new $500 GIC. Congratulations to both!
As it’s one of our favourite times of the year again, here’s some reading material to accompany those pumpkin spice lattes…
- Tips from the Cleveland Clinic on how to keep your brain in tip-top shape.
- Interest rates and the loonie explained, courtesy of the Financial Post.
- An interesting summary by Metro News of the changing face of retirement in Canada and its implications for financial planning.