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In the realm of personal finance debt is a double-edged sword. Understanding the fundamental differences between good debt and bad debt is essential for making sound financial decisions.  Debt can be a valuable tool for building wealth but can also cause stressful financial situations. In general, good debt can help individuals increase their overall net worth or generate an income stream over time. Good debt is associated with acquiring an asset that has the potential to grow in value, such as a mortgage. Taking out a mortgage to buy a home allows individuals to build equity as the property appreciates in value, making it a strategic long-term investment. Once the debt has been paid off, the owners cash outflows will decrease. This will, in turn, allow the owners to reallocate these funds elsewhere to continue to grow their net worth. In addition, it will provide them with another resource to pull equity from, if needed. Bad debt is associated with non-appreciating assets or expenses that do not contribute to one’s financial growth. Credit card debt would be a primary example of bad debt. The high interest rates on credit cards can often turn manageable debt into a financial burden, which has the potential to cause financial stress. Understanding the differences between good and bad debt is essential for making informed financial decisions. When taking on debt there are several factors to evaluate. Do the potential long-term benefits outweigh the risks involved? To manage debt efficiently, individuals should create a budget that outlines their income, expenses, and debt. This will help individuals be more aware of their spending and borrowing in the future. Approaching debt strategically can be a stepping stone to financial success and can help facilitate important life milestones. It requires a careful balance and commitment to responsible financial management. By understanding the differences between good and bad debt, individuals can take a proactive approach to adopting financial habits that will point them in the direction of financial success.

In January, the North American equity markets saw positive momentum with the S&P-500 advancing ~+1.7% and the S&P-TSX by ~+0.5%. This increase stems from the market’s expectations that the Central Banks will pivot to cure rates sometime this year.  In contrast, fixed income markets lost some of the gains made over the last couple of months as investors scaled back on their optimism.  2–10-year bond yields advanced for most of the month on both sides of the border. Source: Bloomberg The Bank of Canada and the US Federal Reserve held their policy meetings this month and decided to hold interest rates at current levels. Both banks acknowledged that they are determining at which point a reduction in interest rates maybe be feasible, however, as of now, it remains too early to start the easing cycle.  Investors’ expectations that rate cuts would start as early as March received push back from the US Fed chair, Jerome Powell, who stated that he does yet not think the Central Bank will have enough confidence on the inflation rate trajectory to start the rate cuts that soon. Investor skepticism was evident on the decreased probability of interest rates (implied by the Fed Funds Futures data) by March this year in the range of 5.25%-5.50% increased to ~85.0% as of 5th February from ~11.5% as at the end of December 2023 (See Figure 1). Figure 1. Target rate probabilities for March 2024 Source: The CME Group Better-than-expected economic data also corroborated the Central Bank’s guidance that the economy remains resilient enough to conclude the inflationary pressures. Stats to note: Inflation in Canada was in line with the expected +3.4% in December (reported in January), however, advanced from +3.1% in November (reported in December). Inflation in the US advanced to +3.4% in December (reported in January) from +3.1% in November (reported in December) and was ahead of expected +3.2%. The unemployment rate in the Canada remained flat at +5.8 % in January - against expectations of an increase to +5.9%. The unemployment rate in the US remained flat at +3.7% in January - against expectations of an increase to +3.8%. Source: Bloomberg While better-than-expected economic data is reducing the extent of rate cuts expected by markets, it is also improving the sentiment that the economy may avoid a severe economic contraction that can be typical after an interest rate hike cycle. Overall, we maintain our expectations of a constructive outcome for the year while remaining aware of the gap between markets expectations and the Central Banks’ actions. We are also considering that geopolitical tensions and elections across several key geographies across the globe could be a source of volatility.

Don’t be surprised! It may feel early in the year, but tax season is just around the corner. You may be wondering, how can I keep more of my hard-earned money in my pocket, instead of the government’s? There are many ways to reduce your taxes, there are several tax credits available to Canadians. Take into consideration some of the following options: Registered Retirement Savings Plan RRSP contributions can help to reduce your taxes owing. Make sure you have enough contribution room in order to avoid over contribution tax! Your available RRSP contribution room can be found on your Notice of Assessment. You can contribute to an RRSP until the end of the year you turn 71. The deadline to contribute for the 2023 tax year is February 29, 2024. Spousal Registered Retirement Savings Plan You can contribute to your spouse’s or common-law partner’s spousal RRSP; however, this means you must have available contribution room for this deposit as well! You can contribute to your spouse’s plan until the end of the year when they turn 71. Another important thing to keep in mind with spousal RRSPs is the 3-year attribution rule – meaning if a withdrawal is done from this account within that calendar year plus the following 2 years of the deposit, the withdrawal amount is attributed back to the contributor’s taxable income. Similar to the RRSP, the deadline to contribute for the 2023 tax year is February 29, 2024. First Home Savings Accounts The Federal Government started a new program in 2023, the First Home Savings Account. This program is designed to help individuals save for their first home. The contribution limit for 2023 is $8,000, and qualifying contributions are tax deductible, if they were made by December 31, 2023. Charitable Donations Cash donations made to an eligible charity can be claimed on your income tax. Typically, up to 75% of your net income can be claimed. There is a 15% credit for total donations up to $200; a 29% credit for total donations over $200 (that are ineligible for the 33% credit); and a 33% credit for total donations over $200, where your net income exceeds $246,752. Multigenerational Home Renovations In 2023, we saw the launch of a new tax credit, the Multigenerational Home Renovations. Eligible individuals can claim up to $50,000 in qualifying expenses for each qualifying renovation that was incurred after December 31, 2022 (but before the completion of the renovation). You can receive a tax credit of 15% of your costs; and the maximum credit is $7,500. Every person’s situation is unique, and there are other tax credits not mentioned above that may apply. We can work with you and your accountant, bookkeeper, or tax preparer to create a plan that works for you. Contact one of our Financial Advisors today to review your situation and see how we can help! Allison Martin is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613.258.1997 or visit ofarrellwealth.com to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

North American equity and fixed income markets rallied in December 2023, as expectations that the Central Banks stopped interest rate hikes for this cycle increased. In monetary policy meetings held during December, the Bank of Canada and the US Federal Reserve decided to keep policy rates unchanged at +5.0% and +5.5%, respectively. This was the third consecutive meeting where the outcome was to maintain interest rates. Consequently, the positive sentiment prevailed in the capital markets as investors increased their expectations that interest rate hikes are now behind us. It is noteworthy that price action ensued despite continued caution expressed by the banks on inflation. Stats to note for the month of November (reported in December): Inflation in Canada was at +3.1% (higher-than-expected +2.9%) and in the US was at +3.1% (in line-with-expected +3.1%). The core inflation was higher-than-expected in Canada (+3.5% against expected +3.4%) and was in line in the US (+4.0% against expected +4.0%). Unemployment data in Canada advanced to +5.8% from +5.7% (expected 5.8%) and declined in the US to +3.7% from +3.9% (expected +3.9%). This mixed data could not dent market enthusiasm as investors determined that while it could be bumpy in the near term, the overall trajectory of inflation remains downwards. Furthermore, if unemployment numbers do not decrease (which could raise concerns of hard landing) or upshift (could imply renewed inflationary pressures) significantly, progress on inflation should be enough to support the markets. We also note that the US Fed Funds Futures are now discounting about six rate cuts by the Federal Reserve during the year 2024 starting as early as March (see Figure 1). We believe that such a scenario could unfold if the economy contracts significantly. Given the evidence from economic data so far suggests the contrary, the positioning of the fixed income market appears to be taking a pessimistic view of the economy, which could cause a bumpy ride for the asset class, in our opinion. The dot plot after the December meeting indicates the Federal Reserve authorities expected only three rate cuts during 2024 (see figure 2). Figure 1: Fed Funds Futures - expected number of rate cuts and implied policy rates (%) (as of 29th December 2023) Source: Bloomberg Figure 2: Fed Funds Target Rate – Median, % (December 2023 meeting) Source: Bloomberg Price action in equity markets was lopsided as a handful of stocks carried most of the weight of the indices in the year 2023, resulting in a high expectation for them to deliver on the earnings front. Should earnings expectations from these mega caps prove to be high, equity markets could also be bumpy in 2024. The geopolitical risks across the globe have continued to simmer, however, they have not adversely impacted the markets. Given that 2024 is an election year in many of these geographies, uncertainty could stay high and be a source of volatility. Despite some potential bumps along the ride, we think the positives should outweigh the negatives over the course of the year. Our optimism stems from our expectations of continued easing of inflation, normalization of policy rates, and broadening of market performance through 2024. We wish our readers a very Happy New Year!

As we head into the New Year it is important to get off to a good start. We often make resolutions about getting healthy which includes eating better, exercising more and leading a more balanced lifestyle. Have you ever considered making resolutions about your financial health? In the Chinese calendar, 2024 will be the year of the Green Wooden Dragon, a symbol considered to be the most powerful in Chinese astrology, standing for energy, strength, and power. The 2024 zodiac year will be a year of prosperity. A symbol is represented only once every 60 years. Today I will share some tips and what investments mistakes to avoid in order to meet your financial resolutions for 2024. Do’s ·         Have clear investment goals. ·         Find an advisor whose goals align with yours. ·         Decide your risk tolerance. ·         Build and diversify your portfolio. ·         Monitor and rebalance your account. Don’ts ·         Let your emotions rule. ·         Chase Trends/Hot Tips. ·         Try to time the market. ·         Focus on the short term. ·         Misunderstand risk. ·         React to the media. ·         Forget about the fees. ·         Constantly watch the market/your investments. ·         Neglect to start investing. Defining your investment goals, finding the right advisor and actually getting started are the first three steps in creating a successful plan. If you are looking to get started in investing or would like to review your current investment and financial goals reach out to us today to start the conversation. Cynthia Batchelor is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613.258.1997 or visit ofarrellwealth.com to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

By Allison Martin, Financial Advisor of Assante Capital Management Ltd. We are halfway through December, and the holidays and New Year are fast approaching. It is easy to become preoccupied with the hustle and bustle of the Christmas season as we shop for gifts for our loved ones and get together with friends and family. Let us take the time to reflect on one of the true meanings of the Christmas season: giving. We tend to get wrapped up in giving to those closest to us - friends, family, colleagues, or teammates. It is important not to forget those in our community, those less fortunate, and those who no longer have family with them or nearby. Have your neighbour over for coffee or just pop by to say hello. There are often social get togethers, programs, or Christmas meals put on by local groups. This is an easy and meaningful way for our community to come together, enjoy each other’s company, and make new friends in what can be a difficult time for many. You could also consider donations to local organizations or charities, like food banks or service clubs that help those who may have fallen on hard times. 2023 certainly has been tough for many people in our own communities. High inflation costs and rising interest rates have made it difficult to ensure there is enough food on the table or presents under the tree. Donations do not have to be monetary; often organizations struggle with finding enough volunteers or help during these busy times. Your time is often just as valuable as financial assistance. It is also a good way for those who want to help but may not necessarily be able to financially. We are lucky to live in a community that takes care of each other. We can continue to care for and support each other by buying from local businesses. We have such a wide array of small businesses in our area, so take the time to go out and see what they can offer you and your loved ones this holiday season. Time flies by so quickly. Take the time to slow down, relax, and enjoy spending quality time with your families and friends. We wish you all a very happy holiday season and a healthy and prosperous new year! Allison Martin is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613.258.1997 or visit ofarrellwealth.com to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

November was nothing short of Christmas for investors who have been waiting for constructive price action. North American equity and fixed income markets both gained after the ‘Higher for Longer’ narrative in the markets was lessened by expectations of the Central banks policy rate hikes being done for this cycle, reversing the draw down of the past three months. Market participants brought forward the expectations of the first rate cut by the US Federal Reserve from June 2024 to March 2024 (See Figure 1). Incoming economic data pointing towards a softening economy put together with a benign inflation picture ignited market enthusiasm. This is even though the US Federal Reserve chairman, Jerome Powell, said that he is not confident if the policy rates are restrictive enough to bring inflation rate back to 2%. Figure 1: Earlier Policy rate cut expectations have increased. Source: Bloomberg Statistics Canada reported that headline inflation in Canada dropped to +3.1% (expected +3.14%) in October (reported in November) from +3.8% during the previous month. As per the Bureau of Labor Statistics, headline inflation in the United States fell to +3.2% (expected +3.31%) during October (reported in November) from +3.7% in the previous month. Tight labor markets, which have been a cause for concern for the Central Banks due to their capacity to fuel inflation for longer, have also showed signs of relaxing on both sides of the border. The unemployment rate in Canada advanced to +5.7% (expected +5.61%) in October (reported in November) from +5.5% in the previous month. More recent reports suggest unemployment further increased to +5.80% in Canada. The unemployment rate in the United States advanced to +3.9% (expected +3.79%) in October from +3.8% in the previous month. The constant flow of supportive economic data intensified the expectations of a rate cut sooner than expected and led to a swift decline in bond yields across the yield curve (see Figure 2 and 3). Figure 2: US Yield Curve – 31 October 2023 to 30 November 2023 Source: Bloomberg Figure 3: Canada Yield Curve – 31 October 2023 to 30 November 2023 Source: Bloomberg We like to highlight that price action in the fixed-income markets once again seems to be at odds with the message from the United States Federal Reserve Chairman, who has maintained that more evidence is required before concluding that inflation is on a trajectory to be back to their target of +2.0%. Given this backdrop, we think the current set-up is ripe for more volatility as markets once again seem to be defying the message from the Central Banks. As the adage goes – “Never Fight the Fed”. That said, we think the overall outlook for risk assets remains favourable despite the expected volatility. Our optimism stems from inflation continuing to go in the right direction and our expectations of more favourable readings in the coming months as the ‘Shelter’ component of inflation calculations continues to roll over. The labour market has begun to soften and in absence of any major uptick in unemployment, the expectations of a ‘soft landing’ could continue to outweigh the conversation on ‘hard landing’. Lastly, valuation of most companies has continued to reflect caution for the most part of the year, suggesting a large part of the markets might not be trading ahead of fundamental realities. We wish our readers a Merry Christmas and a very Happy Holiday Season.

By Sarah Chisholm, Financial Advisor of Assante Capital Management Ltd. 2023 has been a challenging year for many households. Budgets are being squeezed with high interest rates and the rising cost of living. As Christmas approaches, consider an alternative approach to gift giving. Use 2023 as an opportunity to prioritize meaning over monetary value. Do your parents really care how much you spend on them, or are they more focused on the quality of time that you spend together over the holidays? Do your friends really want gift cards, or would they prefer something unique? Here are three alternative low-cost gift giving options to consider. 1. Books 2. Photos 3. Dates Books offer an escape on long dark winter days. In Iceland there is a tradition of gifting books at Christmas time, so much so that the publishing community calls it Jolabokaflod, or the "Christmas Book Flood.” Gift a book that you have recently read and truly enjoy. Explain to the recipient what you enjoyed about the book, or why it might be of interest to them. For kids give gifts that you read as a child or books have been developed into film that you could watch together later. Books do not need to be expensive. Buy gently used books throughout the year or gift from your personal collection. Focus on the meaning and not the cover price. Photo prints are truly meaningful in this age of digital media. It is so easy to post photographs to social media, but how often do you get a physical print? Take the time to print photographs as gifts. Photos of grandchildren for grandparents and group photos for friends. Put a personal note on the back of the photograph, or have your child decorate a simple frame. Pictures hung on the wall or stuck to the fridge with a simple magnet will bring ongoing joy to the receiver. A small token to smile at and a cute grandchild to brag about to guests. Don’t bother with a card, write your greetings on the photo. Spend time together. For friends and family, call them early and explain you would like to spend time with them instead of giving a physical gift. Depending on your budget consider taking them out for lunch or a coffee date. For a more budget friendly option, have them over to your place for lunch or coffee, go for a walk together, or spend time volunteering for a cause of their choice. For loved ones far away, skip the mailed gifts and instead pick up the phone. Spending time together is priceless. For Christmas 2023, step away from the expensive gift cards and the stress of buying “things”. Pick meaningful options that don’t require a set dollar value. Give friends and family advance notice about your plan, they may also choose the same path. Imagine the relief a friend might have knowing that they don’t need to buy you a $25 gift card – that instead you would be excited for a coffee date or a suggestion for a new book to read. Sarah Chisholm is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613.258.1997 or visit ofarrellwealth.com to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

By Sarah Chisholm, Financial Advisor Do you have any funds set aside as an emergency fund? Have you updated your emergency fund amount to keep pace with inflation? How much should you have set aside? What are the benefits of an emergency fund? When there is a serious sickness or injury, death in the family, job loss, or an unexpected major expense an emergency fund is an important backstop to protect your family. Cash could be used to pay rent while you are on the job hunt. If a loved one is hospitalized the emergency fund provides flexibility to cover the missing pay cheque and cover additional costs such as hospital parking fees, extra daycare costs and time off work to be with your loved one. An emergency fund provides you with flexibility. It reduces your stress in an already stressful time. How much should I have saved in my emergency fund? A good starting point is setting aside three to six months of expenses, but is this achievable? An emergency fund does not need to cover all your monthly expenses. Instead, the fund should replace your fixed costs such as food, housing, and transportation. Discretionary expenses such as eating out, gifts and clothing can often be eliminated in the short term. Other outflows such as contributions into retirement savings accounts or education savings accounts can also be paused – take care of the emergency first – then re-start the retirement savings. Run the numbers to see what 3-6 months really looks like for your family. What if I have existing consumer debt? Work towards paying off your consumer debts and making sure those credit card balances get paid off in fully monthly. As you pay down the balances – you are making more credit available – which could be used as a last resort for emergencies until your cash emergency fund is created. Can I earn interest on my emergency fund? With interest rates being so high, make sure that the high interest savings account you are using provides a competitive interest rate. A financial advisor can often build your emergency fund into your Tax-Free Savings Account or Non-Registered account using a high interest savings fund that is safe and liquid. Keeping the emergency fund separate from your daily banking account can also reduce the tendency to spend your emergency fund on non-emergencies. Can I insure the risk? Some emergencies are health related – a disease or injury can cause time off work and a death will change a family immediately. Consider using insurance along with an emergency fund to protect your family. Disability Insurance and Critical Illness coverage can provide protection from loss of earnings or a life-threatening condition. Health benefits can also provide access to paramedical practitioners to help recover from injuries or drug coverage to ensure a safe recovery. Life insurance provides a lump sum to the beneficiaries which can be used as desired, potentially to pay off a mortgage, create a buffer for a grieving period or create funds for a child’s future education. Chat with a trusted financial and insurance advisor to discuss your risk coverage needs and existing coverage. What if I already have an emergency fund? Congratulations! This gives you the flexibility to start planning for short term and long-term goals. Try creating a sinking fund for large purchases. Set aside funds monthly and when the fund is big enough, take the vacation or buy the new furniture, then start rebuilding the fund for the next big purchase. For retirement consider increasing your contributions to your Registered Retirement Savings Plan or Tax-Free Savings or putting extra funds towards your mortgage to pay it off sooner. Still not sure where to start, consider chatting with a financial advisor to look at your unique situation and create a personalized strategy.

Where can you find an asset that provides both protection and diversification for your retirement plan? Something that will provide a lifetime of protection? Consider Whole Life Insurance. Normally, we think of life insurance for our short- and medium-term needs. We use personal life insurance to cover our liabilities and provide income replacement for our family if we pass away unexpectedly. In business, we use key person coverage to protect our revenue generators and share buyout coverage for our business partners. To provide even stronger foundations, we pair life insurance with living benefits such as Disability Insurance and Critical Illness Insurance to protect ourselves in case of serious injury or disease that has major impact on our lives or our ability to work. Remember that term insurance is temporary in nature, and when the policy renews, the premiums can become exorbitant, and many people cancel the policies at renewal. What is Whole Life Insurance? Whole Life Insurance provides protection for life and is permanent. It covers the short and medium term needs above, as well as your long-term needs such as tax coverage, estate equalization, funeral costs and more. The insurance company will pay the death benefit regardless of when you pass away. The death benefit can be paid directly to your named beneficiaries which provides you a level of privacy in your wishes and allows the death benefit to by-pass probate. Whole Life Insurance Policies create asset diversification within your investment portfolio. A policy has an immediate estate enhancement value (death benefit) and grows a cash surrender value over time. How does the death benefit grow? When premiums are deposited, the insurance companies pool the life insurance premiums into a large investment account. Premiums go in, investment income grows the account and death claims come out over time. Each year, if the investment returns are higher than expected and the mortality is lower than expected, a dividend is distributed to all the policy holders. Most policies are structured so that the dividend is used to purchase additional permanent life insurance – in this way your death benefit and cash values grows over time. The cash value provides asset diversification for your retirement. The cash value can be leveraged as a tax efficient source of income for retirement. It can pair nicely with the RRSP, pension, TFSA, rental properties, business dividends and other sources of income you have built up for retirement. Protection and asset diversification are two of the many positive attributes of Whole Life Insurance. So, why doesn’t everyone have Whole Life Insurance? The simple answer is that Whole Life Insurance is typically more expensive, is a long-term investment and premiums are much higher than term insurance. Take the time to review your insurance needs and strategies with a trusted insurance advisor. Often a combination of term and whole life insurance will allow you to achieve both your short-term and long-term goals. Review your plan regularly, as your insurance needs will change over time. Sarah Chisholm. Financial Advisor Assante Capital Management Ltd. Sarah Chisholm is a Financial Advisor with Assante Capital Management Ltd. Please contact her at (613) 774 - 2456 or visit www.ofarrellwealth.com to discuss your particular circumstances prior to acting on the information above. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Insurance products and services are provided through Assante Estate and Insurance Services Inc. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.

By Sarah Chisholm, BA Financial Advisor, O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. Life insurance is all about risk mitigation. It’s about protecting your loved ones financially if something should happen to you unexpectedly. There are so many insurance products out there that it is often difficult to sift through policies and find the one that is right for you. Insurance companies aren’t always great at being clear about which insurance plans are best for each individual client. Here are a few things you should know about life insurance and some tips on how to pick the policy that is right for you. Insurance companies are for profit businesses Insurance companies make their money off calculating risk. Typically, the more likely you are to die the higher your insurance premiums will be. Insurance companies group people into different categories of risk (ex. non-smokers, smokers) and they know how much they need to charge in premiums based on calculating the risk of death for each grouping of people. A smoker will typically pay 3-5 times more in insurance premiums than a non-smoker because of statistical data that indicates that smokers are more likely to die sooner than those who don’t smoke. When it comes down to it insurance companies do protect you in case of unexpected death, but they are also in it to make money. The best policy is the longest you can afford As a general rule, the longer the policy the better. A Term 20 insurance policy will cover you for 20 years with a fixed premium that will not increase. A Term 10 policy will provide you with the same coverage but only for 10 years. At this point if you wanted to keep it you would face a premium increase. Term 10 policies are cheaper than Term 20 because there is less risk involved for the insurance company. A Term 10 policy might cost you $20/month while a Term 20 policy would be $30 or $35/month. While paying $20 for the same coverage might seem attractive in the short term, the issue comes up when it is time for it to be renewed. At the ten year mark it is certain that your insurance premiums will go up as you will be a decade older and if you decide to keep the original policy it could cost you as much as 3 to 5 times more premium. One option is to apply for a new policy altogether but there is no guarantee that you will be healthy enough to qualify for a new policy ten years down the road. This is why paying a bit more for a longer-term policy is better than saving $10-$15 a month for a shorter policy. You end up paying less in the long run and are guaranteed the insurance pay-out for longer should something happen to you unexpectedly. In certain situations, it might also a make sense to buy a Term 65 (which guarantees you coverage until you are 65) or Term 100 (which guarantees you coverage until you are 100). However, these policies are more expensive because it poses more risk for the insurance company. Buy young It may seem counter-intuitive to buy life insurance when you are in your 20s, have no money and likely no dependents to look after if you pass away. However, this is the best time to buy life insurance. Unless you have a health condition it is likely that you will be in the best shape of your life and as a result your insurance premiums will be at an all time low. Think long-term. If you buy a Term 20 insurance policy when you are 25 it will last until you are 45. In that time are you likely to have built a career? Gotten married? Had a family? Probably. Therefore, it is good to get locked into a plan young. It will never be cheaper to get insurance than right now. The most important part of buying insurance is understanding your options. A good financial advisor will typically look at how much debt you have, what your annual income is and if you have children or a spouse to calculate the amount of insurance you need. Using this information, they will be able to advise you on the insurance product that works best for your situation. There is no reason to go into a meeting with an insurance agent blind. Know what your needs are and what you are willing to spend before you buy into a policy to avoid getting trapped in an agreement that is not in your best interest.

It was Halloween month for investors as expectations of higher interest rates and for longer led to continuation of spike in bond yields across the US yield curve, with yields rising relatively higher at the long end than the short end. The month started with economic data tracking somewhat better-than-expected, exacerbating the narrative, and resulting in the US 10-year bond yield touching the 5% mark at one point. Like the fixed income asset class, the equity markets bore the brunt of rising yields too and closed the month in red. The Canadian fixed income investors had some respite as yields dropped at the short end of the curve. The rise in geopolitical tensions after the conflict in the middle east added to investors’ concerns. However, the sliver of hope returned around the actual Halloween when reports of softer economic data suggested the centrals banks are probably done hiking interest rates in this cycle. The Institute of Supply Management’s (ISM) US Purchasing Managers’ indices (PMIs) for Manufacturing and Services were both higher than expected for the month of September (reported in early October). The Manufacturing PMI index was at +49 (expected +47.9) and the Services PMI Index was at +53.6 (expected +53.5). However, the indices for the month of October (reported in early November) showed deceleration with Manufacturing PMI at +46.7 (expected +49) and the Services PMI at +51.8 (expected +53). The unemployment showed increase on both sides of the border with the US unemployment rising to +3.9% in October from +3.8% in September and Canada unemployment increasing to +5.7% in October from +5.5% in September. The Sahm Rule Recession Indicator signals start of recession if the three-month average unemployment rate is +0.50% above its low in the previous 12 months. Given that the low reading of unemployment in Canada was at +5.0% and in the US was +3.4% during the previous twelve months, the indicator suggests the much-anticipated recession might be around the corner (See figure 1). Figure 1: Sahm Rule Recession Indicator and US Recessions Source: Bloomberg As per Statistics Canada, the Canadian economy stalled for the month of July and August at +0.0%. Preliminary estimates suggest the GDP might contract for the month of September, i.e., the Canadian economy might be on track for contraction in the third quarter of 2023 after having contracted by -0.2% in the second quarter. Two consecutive quarters of GDP contraction meets the definition of a technical recession. Bank of Canada and US Federal Reserve kept the policy rates steady in their latest policy meetings. This put together with the more recent reports of softer economic data in the US fueled the narrative that the Central Banks are done hiking rates. Recessions are disinflationary and reduce the appetite of central banks to increase interest rates and cause more economic pain. The initial reaction of these developments has been a return of risk-on sentiment in the markets. We would like to highlight that the story of year 2023 thus far has been that of flipping narratives between hope and despair with broader markets largely trading range bound. We think a more decisive constructive move in the markets will follow when investors are confident that they can begin to peek towards the other side of the cycle. The recent developments suggest such a point is approaching, however, is not here yet. We think the markets still need to navigate through two risks in the near-to-medium term. First, the risk of policy error - central banks drew a lot of flak being stuck on the transitory inflation narrative for too long and therefore let inflation go out of control before starting the rate hikes. While unemployment has started to increase in recent months and consumer confidence is on a decline, suggesting the higher interest rates are perhaps beginning to bite, we think central banks are likely to err on the side of caution before indicating any pivot on the policy front. This increases the risk of policy error, i.e., keeping financial conditions tight for too long. Second, the reset of earnings expectations – a recessionary period is likely to coincide with corporate earnings downgrades, which is generally a headwind for stock markets in the short term. Nevertheless, we think broader markets already reflect a lot of caution and therefore maintain our cautiously optimistic stance on the back of our expectation that we are closer to the end of policy rate hikes.