Archive for category Investing
Double Dip Recession? Will it Happen?
Posted by Top Home Loans in Economy, Investing on September 2, 2010
Fear is the greatest way to manipulate mass groups of people, and the government has the ability to manipulate the public. The government can change consumer confidence, and they can promote growth or recession within the country. Unemployment, as a lagging indicator, has been on its way down signaling that a recovery has been proceeding in the recent months. Also, all key indicators have been positive. Not always as positive as they have been expected to be, but they have always been positive. There is great hope in the markets that we are on the economic road to recovery.
There are also negative aspects that must be considered. Some goods and services, including Canadian housing prices, have been overpriced, and these goods must fall in line before the recovery can proceed full. The amount of positive aspects greatly outweigh the negative aspects, so it is likely that we will see some volatility over the next several months, but a market crash is not something that is expected.
Will the Housing Market still experience a Pullback?
Even if the market and the economy does not experience a double dip, then can micro economies still pullback? The answer is yes; unfortunately, it looks like the pullback in the housing market is a definite reaction to what has been happening recently in the housing market. The only way for the market to resist a pullback is by keeping low interest rates, but mortgage rates have been low for such a long time that it is highly unlikely that these rates will be able to remain at this level.
If the Bank of Canada did keep mortgage interest rates at these lower levels, then it can only cause a repeat of the recession that we have already seen. The best remedy for the overpriced market is to allow for the prices to fall back in line and to keep growth steady. The goal of the market is to allow for consistent slow growth, and with too much volatility, this can cause major damage to investors and the market as a whole.
Do you think that there will be a double dip recession? When do you think that the stock market will decline again? Leave your response in the comments below.
Save your Mortgage from the Bank. Simply Mortgages can Help!
Welcome back!
The Age of Austerity; Sticking you with the Banker’s Bill
Posted by Top Home Loans in General Banking, Investing on June 29, 2010
Last weekend, the G20 met in Toronto to discuss financial decisions for many of the world’s most financially influential nations. The decisions that came from this meeting were to cut in half the deficits of the G20 nations. Initially, the excess spending was to get out of the banker’s recession, but now the governments need to pay the bills.
What will happen next?
Governments have now become internationally responsible to pay down their outstanding balances by fifty percent before 2013. This means that they have to collect this money from somewhere. The first thing the governments need to do is to stop the stimulus spending immediately. This means that there will be no new job creation or job growth via the government.
The second action that the government must take is to begin cutting non-essential services. This can include almost everything from transit to health care to pensions. Cuts will be deep because the amount of money that needs to be raised is quite substantial.
The third element is taxes. Taxes will need to be raised in order to pay down the deficit. This means that money will disappear from the economy quickly and urgently. In an economy where money is debt, by decreasing the debt load of the government, this will decrease the availability of money in society. The lower the debt levels, the less money available for everyone.
Austerity measures are effective for countries that cannot balance their books without extreme actions, but what about those with small deficits. Why are they being asked to reduce their small debts?
The one thing the G20 could not decide on is a bank tax. This means that the banks caused a recession, the governments pay to get us out of the recession, then the people have to pay for the banker’s mistakes.
If austerity plans are correct, and a large majority of the money is puller out of the economy, then do not be surprised if we begin to see some forms of deflation or low inflation.
Austerity means large job cuts and increased taxes.
What do you think of the G20s plans? Are you going to do anything about it?
Save your Mortgage from the Bank. Simply Mortgages can Help!
How to Live off of Investment Income Only
Posted by Top Home Loans in General Banking, Investing, Retirement Planning on June 28, 2010
In 1930, if you had invested $50, today you would have over $10,000 dollars. This money would have grown over 200 times the initial investment amount over the past 80 years. This shows that even with a little bit of money, investments can pay off greatly in the long run. The question is how can we live off our investments?
There are three factors that need to be considered with our investments, income, inflation, and growth. Income is the amount of money you want to take out of your investments annually. Inflation is the amount that currency depreciates over time. Growth is the amount of money that you want your investments to increase in value.
To begin, the average annual return on investment over the last twenty years has been in the 6%-8% range. The next thing is to calculate inflation. In Canada, inflation has remained around the 2% range. This means that you have around 4%-6% income and 2% inflation. You will also want to factor in growth, so 1% is a good estimate. This leaves one with 3%-5% for income.
With a 3%-5% income level, you mus t next calculate how much you want your annual income to be. For example, if you needed a $50,000 income, then you would have to have at least 1,000,000 in the bank at the 5% level, and at least 1,600,000 at the 3% level. This also ranges on how investments are doing as well. Higher returns, can create the need for lower savings. Also, if you need a lower income, then the required investments will depreciate.
At the end of the day, determining your income level, and your return on investment is up to you. The more cash you need, the bigger investments you need to make. Keep in mind that stock investing is not secure, and even big dividend stocks can lose their value.
Do you have a savings goal? How are you working to achieve your savings goals?