A test of your financial knowledge to deal with what awaits in housing, investment and inflation | MCUTimes

A test of your financial knowledge to deal with what awaits in housing, investment and inflation

We have seen an unusually rapid development over the last 18 months, and there is no reason to expect things to brighten up as far as stocks, housing and inflation go.

Mark Blinch / Globe and Mail

The biggest mistake in personal finance is basing your plans for the future on what is happening now.

Periods of stability and calm occur in finance, but not recently. We have seen an unusually rapid development over the last 18 months, and there is no reason to expect things to brighten up as far as stocks, housing and inflation go. Here is a test to see how well prepared you are for the upcoming development:

Billions of dollars have been left in savings accounts by people reducing spending during pandemic locks. If inflation is at 3 percent, as has been the case lately, what is your real return on a savings account?

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Several alternative banks are offering 1.25 percent on savings these days, which means returns after inflation of minus 1.75 percent. We have not seen anything like this in recent years – the best savings rates on the market usually beat inflation.

What is the interest rate that large banks pay into their savings accounts?

The normal rate, as opposed to temporary teaser rates, is typically 0.05 percent. It is a real interest rate of minus 2.95 percent and an annual interest rate of 50 cents per. $ 1,000 saved.

On average, what has inflation looked like in recent years?

The average annual increase in the cost of living over the last 10 years was only 1.7 percent, while the 20-year average is 1.8 percent. If you are a millennial or Gen Xer, you have never seen inflation as intense as now.

Shares rose 29 percent in the 12 months to July 31, measured by the S & P / TSX Composite Index. What is the average annual return of 10 years for the index?

The annual return is 7.7 percent, which is a total return based on both price increases and dividends. A pre-pandemic view for the index: average annual total return of 6.9 percent in the 10 years to 31 December 2019.

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What is a reasonably long-term average annual estimate for stock and bond returns?

In the latest set of projection of return for financial planners to use, the long-term average for Canadian equities was 6.2 percent, 6.6 percent for emerging markets outside Canada, 7.8 percent for emerging markets and 2.7 percent for bonds. These total returns and other assets are reduced by 1.25 percentage points to cover fees.

Which asset is tracked by the best-selling exchange-traded fund for the first half of the year?

Bitcoin. 3iQ CoinShares Bitcoin ETF (BTCQ-T) was ranked first with inflows of $ 1.3 billion, while Purpose Bitcoin ETF (BTCC-T) was fifth with $ 826 million. You wonder about an asset that is still evolving when you put money in bitcoin and do not invest.

The interest rate on a credit card with rewards is typically around 20 percent – by comparison, what is the rate at which you earn bonus points?

Usually 1 percent to 2 percent, which means $ 1 to $ 2 per. $ 100 spent on card; some cards offer up to 5 percent rewards in limited consumption categories.

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How many times has the national annual average resale price fallen on an annual basis since 1980?

Seven times according to data from the Canadian Real Estate Association. Most recently in 2018, when the average price fell 3.9 percent from the 2017 average to $ 490,931.

When the Toronto market crashed in the late 1980s, how many years did it take to surpass the 1989 $ 254,197 price peak?

Prices then exceeded that level in 2002, ie 13 years. Prices are now almost four times higher than they were then.

Discounted five-year fixed-rate mortgages can be obtained for 2 percent or even slightly less these days; when was the last time the rates were above the 3 percent mark?

You only need to go back to the winter of 2019. Discounted five-year interest rates at that time were 3.24 per cent.

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