Welcome to June 2025
As June begins, I am enjoying a European trip for the first three weeks. I am connected through my secure hot spot with the office and the financial news. Although we did a cruise last year, this one is on a new ship called Sun Princess. And the technology in the ship and how you book excursions, shows, meals…etc has all become more complicated. It took a while to figure it all out. And even now after a few days of using it, the technology doesn’t always work, so you have to be flexible. Kind of like our economy and financial markets these days.
Watching the tariff negotiations is like watching tennis. Every time you win a point and think you can hold serve, the volley comes back and it seems like not much progress has been made. Then there is AI (artificial intelligence). Taking the world by storm to make our lives better, but bringing lawsuits over unlawful use of trademarked images and information. Sometimes it is best to ignore the noise and stick to the basics of life – invest safely, enjoy life – whatever that means for you – family, faith, travelling, reading, etc.
But for those of us financial junkies these are exciting times. And for those who want to follow along here are some things to watch:
Interest Rates
The official reason that the Bank of Canada and Federal Reserve did not lower rates is that they are waiting to see the full effects of tariffs. Well, they know it is bad for both counties, the only question is where they end up and how bad it will affect the economy. Most economists think it will bring on a slight recession.
US Bond Market Sales
The real reason the decision makers have not dropped rates to cushion the certain faltering of the economy is that they can’t. There have been two US government bond sales in the past month and both have been underwhelming. In fact, the 30-year US bond has gone up substantially. Most countries are borrowing at record levels and intelligent investors are starting to ask if there will be sufficient appetite to fund all the irresponsible borrowing. The US debt rating was lowered and more will follow. This is the big story because it may put a halt to lowering interest rates and have the potential for them to rise.
Real Estate Market
The real estate market in BC has seen continued increases of listings and lower sales – the exception to this is the Fraser Valley that saw a slight uptick in sales for May. The prices are mostly holding – officially down 4 to 5% from a year ago.
In Alberta, the listings are also growing, albeit at a slower pace, and sales are steady. Values are slightly up in Edmonton and Calgary from a year ago.
The US real estate market is in a similar malaise.
Investment Advice
As always, we like MIC shares. We now have two of our own – Pioneer West MIC and Bridgecrest MIC. Ask us which one is suitable for you. As a reminder we have six products that we provide for investors – GICs, MIC, REIT, DMI, Limited Partnerships, Equity Investment in Projects. The risk and return go from lowest to highest in this order. If you want to learn more about any of them, call the office to set up an appointment in person or by phone or zoom.
June Quiz:
This is a couple year old investor quiz from the US regulator (SEC – Security Exchange Commission) but it is still relevant today. As you might have guessed, I got a perfect score. See how well you do: https://www.investor.gov/additional-resources/spotlight/investing-quizzes/June-2023-quiz
Financial Literacy Segment
1. Spend less than you earn
While it might sound obvious, one of the first rules you should adopt is around your spending habits that you can't out-earn poor spending habits. A family earning $1 million a year and spending $1.1 million is still broke. Set aside something every month for the future. Future-you will thank you. As my favorite Aunt and Uncle told me decades ago “if you take care of the pennies the dollars take care of themselves.”
2. Take advantage of employment retirement plans
If you're employed at a company with retirement benefits, you should participate in the options offered at your job. Also, ensure you are contributing enough to get any employer's matching contributions to set yourself up for success and if possible, maximize your annual allowable limits for both your RSP, TFSA and RESP.
3. Diversify your investments
When it comes to planning for retirement, it sometimes doesn’t occur to people that there are many different investment options. To be wealthy by retirement age, it is wise to diversify your investments. Drake offers six different investment types based on risk and within those six product types we have many different companies to invest with. By far the most important diversification comes from not having most of your money in a single company.
4. Ignore the financial circus
When you're on the quest to build your net-worth and long-term wealth, it's important to filter out advice that might sound too good to be true. Tried and true advice based on academic principles doesn't make the news — it's boring, but it works. Keep your investments simple and stick with stuff that has a proven track record. It's really hard not to build wealth that way over time.
5. Take a different approach when you're young
If you start out your retirement planning in your 20s or 30s, Taking a different approach that could yield good results. "When you're young, invest nearly 100% of your retirement money in MIC or REIT. Take advantage of being young and having a long-time horizon before you need your retirement funds.
Higher risk than MIC or REIT can be risky investments for older workers, but the market will bounce back if the portfolio has a long-time horizon. Our MICs have always outperformed stocks and bonds over long enough periods.
6. If you are older, you need safety
When we get closer to our retirement years our time horizon is shorter and so we can’t afford to make any mistakes and lose money. If you have a sufficiently large portfolio then GIC should make a good part of your investment mix. MIC and REIT shares are the only other investment we recommend for elderly people depending on their risk profile and investment experience.
May 15 2025 News Release | CREA Statistics
US Long-Dated Debt Faces Crucial Test in $22 Billion Auction - Bloomberg
Florida's Home Price Drops Are a Grim Warning for American Real Estate - Business Insider
Sincerely,
Norm Holmes | Vice President