Hi Again!
Welcome to a new Weekend Reading edition: Oops, they did it again (Bank of Canada) edition.
You know I had to include this, ha.
First up, a few recent Weekend Reading articles in case you missed them!
Based on the market turning sour for 2022, is there a new safe withdrawal rate lower than 4% to consider?
Is there now a growing alternative to only investing in stocks?
Weekend Reading – Oops, they did it again (Bank of Canada)
You know, I just put this Britney Spears song on loop in my head all weekend…
On Wednesday this week, The Bank of Canada (BoC) announced another modest increase in its key interest rate, continuing a torrid climb upwards in monetary policy. Higher interest rates are however, a necessary evil.
Here’s how we got here, key milstones in bold:
- October 2018 – the rate was 1.75%. Very low in fact, and it remained unchanged until COVID hit us all.
- March 4, 2020 – the BoC cut its key interest rate by half a percentage point to 1.25% triggered by pandemic concerns; days before the World Health Organization declared a global pandemic.
- March 13, 2020 – the BoC lowered lending to 0.75% – it was an unscheduled announcement (which is rare).
- March 27, 2020 – another key interest rate occured, to 0.25%, a record low; when quantitative easing (i.e., central bank buys government bonds) occurred to stimulate the economy as the pandemic spread.
- October 2021/Fall 2021 – Not that we were out of the pandemic woods, by any stretch, but signs were indicating that our central bank would eventually raise rates – people were put on notice.
- March 2, 2022 – after freezing the interest rate for almost two years, a slight bump in rates occurred to 0.50%, that included more hints that rates would eventually go higher.
- April 13, 2022 – another rate hike was made, by a half a percentage point to a full 1%.
- June 1, 2022 – the hints were over (!), the BoC raised its key interest rate by another half of a percentage point to 1.5%.
- July 13, 2022 – this summer, rates were pumped higher again by a full percentage point, marking the largest single rate hike since August 1998 from what I know about…
- Sept. 7, 2022 – and the fun keeps going….The Bank of Canada rose its key interest rate by another 0.75% bringing the tally up to 3.25% and highlighted there is even more to come!
- Oct. 26, 2022 – and oops, they did it again…another raise, this time, 50 basis points. Nailed it!
Through all this interest rate noise of course, it is frustrating to hear political leaders vent about inflation and do what they do best – make things political.
One particular political leader was recently quoted in saying:
“The inflation target alone can’t be the mandate. It should also consider maximum employment.”
Sure, I guess.
But the primary mandate of The Bank of Canada is actually monetary policy. I’m not making that up. It’s actually readily accessible information:
Source: https://www.bankofcanada.ca/publications/annual-reports-quarterly-financial-reports/annual-report-2020/mandate-and-planning/
No doubt more political drama will ensue as politicians continue to argue over what is or is not a “self-inflicted recession”.I recently wrote about some things you might want to consider, what I’m considering for sure, to navigate this next recession cycle.
More Weekend Reading…
Rob Carrick shared some great Canadian dividend paying stocks – ready for the taking yielding over 6% (subscribers only). The usual suspects are there: Canadian banks, pipelines, telcos and insurance companies. I liked his summary:
“Still, all the stocks mentioned above have increased their dividends over the past five years by annualized rates that range from 10 per cent for AQN to 4.2 per cent for CM. If you’re going to buy stocks on sale, a record of dividend growth is a good place to start your research.
Very much aligned to Beat the TSX stocks for 2022 in fact.
Dale Roberts with MoneySense wrote about the ultimate guide to the couch potato portfolio.
Joe from Retire by 40 shared his cost of living – how much does it cost to live a modest lifestyle?
Although Joe’s math is in U.S. dollars, he arrives at a number most Canadians could probably retire on, just fine, once all debts are paid off of course. I profiled that monthly spend number in this retirement case study below:
How much do you need to retire on $6,000 per month?
As a follow-up to the TINA vs. TARA Weekend Reading post above, what asset class is more attractive now? Stocks or bonds? A Wealth of Common Sense shares some thoughts.
Dividend Growth Investor, one of my favourite U.S. sites, shared the list of U.S. dividend aristocrats as of October 2022.Check out his post for the impressive return history as well:
Source: Dividend Growth Investor.
Kudos to Our Life Financial with this impressive September 2022 dividend income update:
- “Total dividends received for September $3,451.19
- This works out to $115.04 every day (even on weekends) or when compared to a 9-5 job that’s $21.57/hr
- It’s an increase of almost 52% over last September
- We’ve earned a total of $26,873 in dividends this year which is 77% of our $35,000 goal”
Dividend Daddy is an inspiration, not just because he went to Italy recently (nice pics):
- “I earned $155.41 every day from dividends ($4,662.42 / 30 days).
- I earned $26.49 per hour from dividends (assuming a 9-5pm job).
- I earned $6.48 every hour of every day of the month from dividends.”
A reminder like Our Life Financial, like Dividend Daddy and many other dividend investors, I own many dividend stocks that rock and you can too! You can take advantage of my deep lifetime discount with Dividend Stocks Rock (DSR). Head on over to the top of my Deals pageandto save awhopping 33%on your DSR subscription– making sure you only own dependable dividend growers and performers during any market cycle.
I’m off to the Ottawa REDBLACKS game today, and taking in an Ottawa 67s hockey game this weekend too.
Have a great weekend!
Mark
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
