Does hoarding cash = debt free living?
Debt free living is certainly elusive for many Canadians. We have grown fearful about the volatility of the stock market and the future of the resources industries. As a result, instead of investing they are hoarding cash. According to a recent report from CIBC World Markets:
- Canadians are holding a record $75 billion in extra cash that would have normally been invested
- $75 billion represents almost 10% of the total value of overall personal liquid assets in Canada
- Personal cash positions were at a record high at the end of 2015
- Cash holdings are up 11% over the past year
- The rise in cash holdings is attributed to risk aversion
- People 35 years old and younger hoarded the most money, as a proportion of their total wealth
- Notwithstanding all this extra cash, Canadians have the higher debt per capita of all time and have not allocated any of the cash for debt free living
How can hoarding cash effect your retirement?
Low-yield bonds and heavy debt loads may leave you coming up short in retirement, which is becoming more expensive to fund. According to CIBC deputy chief economist Benjamin Tal, many older people, 60, 65 and 70 need to be in the stock market to get a reasonable return. Just GICs will not do because interest rates are so low. Yet it’s a vicious cycle; the TSX has fallen 6.7% since the beginning of the year and is at a two-year low.
We can help with your debt free living plan
We can’t stabilize the stock market, nor can we positively impact the future of the resource industries. But, we can help with debt. The Ira Smith Team is comprised of professional trustees with a cumulative 50+ years of experience dealing with diverse issues and complex files. Your heavy debt load is something we can manage with immediate action and the right financial plan. You can’t have a carefree retirement dragging around a mountain of debt but with one phone call you can be on your way to a debt free retirement Starting Over, Starting Now. Don’t delay. Contact us today.