After a sharp 10% appreciation versus the greenback from May through
September, the Canadian dollar is now sitting pretty close to its long-term
fair value, as measured by
purchasing power parity. Many investors are therefore wondering: Can the Canadian dollar break
above its recent highs, or was this just another flash in the pan? In our
view, most of the good news for the loonie is in the rear-view mirror. Here
are six key reasons why the loonie could face further resistance ahead.
There is no denying that technology plays a key role in the U.S. economy,
both in terms of innovation and invention, as well as the available
investment opportunities. Technology is the largest sector in the S&P
500, representing nearly 20% of the market capitalization. The
Fidelity Technology Innovators Fund has taken advantage of this trend, with the Series F posting a 5-year
average annual compounded rate of return of 29.15%, compared with 8.1% for
the S&P/TSX Composite Total Return Index.
With the recently proposed tax reforms, more doors continue to close on
opportunities for income-splitting between spouses. However, there is still
one key strategy – the inter-spousal loan – that can minimize tax where one
person in the couple earns significantly more than the other.
When interest rates rise, investors often look to short-term bond funds as
a way to protect their fixed-income assets. Because these funds only invest
in securities with maturities of five years or less, they are generally not
as susceptible to interest rate movements as longer duration funds. But
that doesn’t mean they can’t lose money, as one reader has discovered.
November is Financial Literacy Month in Canada. And this year’s theme is
“Take charge of your finances: It pays to know.” That little slogan was
never more true than when dealing with personal debt, especially credit
card debt. According to the Canadian Bankers Association, as of December
2016, credit card debt made up about 5% of total household debt. And about
40% of those with credit cards carry a monthly balance. According to a
survey last year by TransUnion, the average credit card debt in the third
quarter of 2016 was $3,954.