A little touch of the Irish on
🍀 St. Patrick's Day🍻 !
Your a VIP <<First Name>>
.... and you're in my VIP Club. Instead of traditional advertising, every month I am giving away something fun to my VIP's (past, present and future clients); you're one of them! There's no catch - I'm spending my advertising dollars on you. I'll be sending mortgage, insurance or investing news, keeping in touch, and offering you a cool giveaway.
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Enter the Givaway
Giving away 1 gift card for $50. Everyone will be entered in the draw for the gift card. Draw will be on March 15th (In time for St. Patrick's Day) , and notified shortly after by email.
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Brief Update on Current Market Volatility
We want to take a moment to update you on our thoughts related to the coronavirus and its impact on the financial markets, and, ultimately, on your personal financial situation.
Going into this New Year, many stock markets around the world were trading near all-time highs including major indexes in the US, Canada, UK, and Australia. In fact, since the end of The Great Recession in 2009, many stock markets around the world have seen a doubling or tripling in price. In the US, for example, the S&P 500 index, a broad measure of the stock market, saw its price increase from under 700 in March 2009 to over 3,300 this month, according to data from Yahoo! Finance.
Of course, markets don’t go up forever. Sometimes, they just flatline for a while as company earnings catch up with stock price valuations. Other times, they see violent drops that make big headlines, like the “Black Monday” stock market crash on October 19, 1987 that was felt around the world.
Today, the coronavirus is triggering a steep stock market selloff around the world. As of this writing, major market indexes in the US, Europe, Japan, and Australia are down 10% or more from recent all-time highs, according to The Wall Street Journal.
Top investor Warren Buffett famously wrote, “It's only when the tide goes out that you learn who's been swimming naked.” Well, the tide is going out. The good news is, as stewards of your financial well-being, we prepare for situations like this even though we never know what may trigger them.
Three Keys
Here are three keys we’d like you to keep in mind as we work through the unfolding virus situation and its impact on you and your financial situation.
First, fear is a natural reaction. We’re human and as humans, we’re hardwired to react to situations that threaten us. In this situation, we have a double whammy of fear. There’s the virus that can cause us bodily harm and the market reaction that can cause us financial loss.
Related to the virus, nobody knows how bad the situation will get. All we can do is take appropriate precautions and trust that researchers will find a way to eradicate it sooner rather than later.
By contrast, your reaction to the financial markets is something within your control. We know it’s no fun seeing your portfolio drop. But we also know market volatility is normal and expected. The key is to zoom out and look at the long-term big picture.
Your investments are designed to support your long-term objectives, not today’s needs. And just like in farming, where we know there will be some lean years when Mother Nature doesn’t cooperate and other years when there’s a bumper crop, the financial markets are similar. Financial markets react to shocks to the system and we are seeing one now.
In situations like this, our job is to bring perspective, to help you see that swift market drops are not unusual. And yes, the headlines are scary and they can bring our “fear” instincts to the surface. We believe the best response is to acknowledge what you’re feeling, reach out to us if that would be helpful, and have confidence that we are on top of the situation.
Second, we are closely following the situation and will make adjustments as warranted. Sometimes, situations like this create opportunities for you. For example, as prices drop, we may have an opportunity to “rebalance” your portfolio and shift your asset allocation. This means we might be able to “sell one thing and buy another” as a way to get your portfolio back to a desired mix that is most appropriate for you.
Third, be prepared emotionally for more volatility. In today’s financial markets, many trades are triggered automatically by algorithmically driven computers. Once certain “technical levels” are reached, these computers, often run by large hedge funds, start selling (or buying) indiscriminately. And many of them are programmed to “trigger” based on the same technical levels. This “piling on” can lead to very eye-popping volatility—both on the downside and upside.
And keep in mind that in the short term, market movements can be heavily influenced by fear and computerized trading, while in the long term, they tend to reflect broader-based economic trends. As investors, the challenge is to not let the difficulties of the short term prevent us from reaping the potential benefits of sound, long-term investing.
Here to Help <<First Name>>
Your financial well-being is our number one objective. We continue to work hard behind the scenes to monitor this unfolding situation and recommend actions as appropriate. If you have any questions about your specific situation, please contact us. We are here to help. Thank you for your continued trust and confidence.
Continue to my blog for sources
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Residential Market Commentary - A little less stress in the test
The federal government has announced its response to the rising chorus that has been calling for changes to the mortgage stress test. It is small but it is, generally, being well received.
Starting in April the qualifying rate for the stress test on insured mortgages (usually those with less than 20% down payment) will be based on the weekly median 5-year fixed insured mortgage rate, plus 2%. At the time of the announcement that would have been 4.89% (plus 2%). That is 30 basis points lower than the currently qualifying rate of 5.19% (plus 2%) which is based on the posted 5-year fixed mortgage rates at the Big Six banks.
The change will help address a key concern about the current stress test, which was implemented in 2016. Critics have complained that the big banks are artificially inflating their posted rates because those rates are used to set mortgage prepayment penalties.
Actual contract rates have been falling for some time so the stress test rate has been moving further and further out of sync with real mortgage costs. Using the new formula will allow the stress test to move as the market moves.
The federal banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), says it is considering the same benchmark rate for its stress test on uninsured mortgages (that is, those with more than 20% down).
As of right now, the new formula will only make a small difference, lowering the income requirement on a $300,000 mortgage by about $1,500. Most market watchers see it as being most helpful to buyers who are right on the cusp of being able to pass the stress test.
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What I have been reading this week.
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For a full list of facts and numbers go here to download a pdf for your records
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A powerful savings tool during your working years
When you invest in a TFSA, did you know:
• You are never taxed on the growth you earn.
• You are not taxed when you make a withdrawal.
• If you are at least 18 years old, you earn new contribution room every year.
• Contribution room is cumulative, you can make extra deposits if you have not maxed out in previous years.
• If you make a withdrawal, your contribution room is regained the following year.
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February Inferno's Gift Card Winner
Congrats to Sandra G. who had never been and reported that it was wonderful.
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| Your Personal Guide to Mortgages booklet has now been updated to reflect the changes for 2020. This guide is free to download if you are looking for a new mortgage, a second mortgage or to refinance your current mortgage. If you know any one that might be looking for a new house - please pass this along. Also if you know of any real estate Agents that would be interested, please pass this along. I have had many compliments on the booklet and how nicely it lays out the process from pre-approval to move in day. Just click on my face and it will take you to the downloadable and shareable pdf. I hope you enjoy the read. |
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Questions on your Insurance, Mortgage or Investments? Do you need to review your insurance to ensure you are fully covered? Please email me or call me today.
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