By Cynthia Batchelor, BCom, Financial Advisor O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. With school just around the corner, you may wonder ‘how do I get funds out of my child’s self-directed RESP for post-secondary education’? One question that often comes up is does the withdrawal amount need to equal the cost of the school tuition, books etc. The answer is NO. No one is auditing what the money that is withdrawn is spent on. It can be used for rent, transportation, utilities, tuition, books, or food. Q: How do I get money out of a self-directed RESP? A: Once your child has enrolled in post-secondary school (university, college, trade school), they are entitled to withdraw up to $8,000 in Education Assistance Payments (EAP) from the RESP in their first 13 weeks of full-time school. This portion of the payment is from the growth and government grant inside the plan and is taxable to the beneficiary (child). They can also withdraw any amount of Post Secondary Education (PSE) from the plan. This portion of the payment is your capital and is not taxable. After the first semester, there are no restrictions on withdrawals for full time studies. Part time studies (Specialty Courses/Programs) are restricted to $4,000 per program/semester. (Note: the Canadian government recently changed legislation to these increased numbers in 2023.) Q: What constitutes proof of enrollment? A: A letter from the Registrar of the school, a copy of your child’s timetable with their name, student number, and school name. Q: What if a beneficiary does not pursue post-secondary education? A: There are several options: o You can wait – the plan can remain open for 36 years o You can choose a new beneficiary – in an individual plan, this can be anyone, but if it is not a sibling under 21, the grants must be repaid. In a family plan, the CESG can be allocated to other family plan members, if over $7,200 then excess grant needs to be repaid. o You can roll the RESP to your RRSP – the grants will be returned to the government; the capital can be withdrawn, and the income can be rolled into your RRSP – so long as you have the room to a maximum of $50,000 per contributor. o You can withdraw contributions anytime from the plan – however when you do so, the grants will be repaid to the government. o You can withdraw earnings and growth – an Accumulated Income Payment (AIP). If all beneficiaries have reached the age of 21 and are not attending post-secondary education, and the RESP has been in existence for at least 10 years, you can make an AIP payment – it is taxable at your marginal tax rate plus a 20% penalty tax. o You can roll the RESP to an RDSP – if the beneficiary has become disabled, you are able to move the accumulated income to an RDSP on a tax deferred bases with no 20% penalty.

The North American equity markets continued to trade in a “Goldilocks” fashion during the month of July driven by economic data that supported “soft to no landing” narratives. The headline inflation rate in the US dropped to +3.0% (expected +3.1%) from +4.0% and in Canada fell to +2.8% (expected +3.0%) from +3.4%. The labour market stayed strong with unemployment rates in the US and Canada at +3.6% and +5.4%, respectively. Declining inflation and strong labour markets were consistent with improving consumer confidence readings on both sides of the border. The Conference Board’s Consumer Confidence Index for the US has been on the upside for past two consecutive months and the Nanos Economic Mood Index in Canada has been on a rise this year. Resilient economic data put together with better-than-expected improvement in inflation numbers strengthened the case that perhaps the inflation problem can be solved without having to incur severe economic damage in the form of rising unemployment and GDP contraction. The annualized US GDP numbers for the second quarter were at +2.4%, ahead of expected +1.8%, and indicated acceleration from the +2.0% observed during the first quarter. The Canada GDP, on the other hand, showed deceleration during the second quarter (estimated at +1.2% annualized) after having registered annualized growth of +3.1% during 2023’s first quarter. In absence of any further deterioration, the Canada GDP appears on track to register annualized expected growth of ~+1.7%-1.8% for the year 2023. The Bank of Canada again started increasing interest rates with a +25 basis-points hike and the US Federal Reserve also delivered a +25 basis-points hike, citing persistently high core inflation numbers. Both the central banks indicated that future hikes will be contingent on the incoming data, keeping the flexibility on policy rates trajectory. The above backdrop implies that the market should start to put more stock in the economic datapoints over the central banks’ language, given their emphasis on dependency on future datapoints. Therefore, indicators suggesting lower inflation and continued economic growth should be received favorably by the markets and vice versa. The growth in Canada appears to have slowed over the past couple of months and in the US appears to have picked up again after contracting for some time. The US ISM Manufacturing and Services PMIs (Purchasing Managers’ Index) – Business New Orders Indices, have both shown improvement in the recent past (See Figure 1). The ‘New Orders’ component typically leads the headline index suggesting improvement in the manufacturing activity ahead. A reading of above 50 indicates the activity is expected to expand and a reading of below 50 indicates the activity is expected to contract. Figure 1: ISM Manufacturing and Services – Business New Orders Index Source: Bloomberg Given that the experienced economic slowdown is not as severe as one would have expected after a steep increase in interest rates and a deep inversion of the yield curve, the question now on investors mind is – does this means that the recession is cancelled, or has it not yet arrived because of the time lag in monetary policy action and its impact on economy? The authority on determining and declaring recessionary periods, NBER (National Bureau of Economic Research), looks at a variety of factors before declaring any period as a recessionary period. The most important factor is ‘significant decline in economic activity that is spread across the economy and lasts more than a few months’. Typically, it is safe to say that economy is in a recession if two consecutive quarters of negative GDP growth is observed. In practice, the NBER typically classifies any period as a recession long after it has passed, therefore, indicators that suggest economy might be in a state of contraction/expansion are the only reliable inputs for investors to position themselves. Given that the most recent leading indicators suggest manufacturing sector might be turning around while services sector continues to hum along, the expectations of fading recession risks are not far-fetched, in our opinion. That said, we also think it is early to entirely dismiss the probability of the lagged effect of monetary tightening beginning to show on economic growth. Looking ahead, we stay cautiously optimistic with eyes on what the balance of incoming economic data is telling us.

The North American equity and fixed income markets foreshadowed differing views in June. Equity markets advanced even in face of hawkish comments from the Central Banks. The yield curve inversion deepened on both sides of the border suggesting an increased risk of a recession as the Central Banks continued to emphasize a need to do more. The Bank of Canada restarted hiking interest rates during the month and the US Federal Reserve chairman, Jerome Powell, reemphasized that the committee foresees at least two more hikes this year. Stronger-than-expected economic data raised hopes that a potential recession can probably be avoided and simultaneously reduced expectations of any immediate pause in the rate hikes and any potential cuts later during the year. The headline inflation in Canada aligned with expectations of +3.4% during the month of May (reported in June), down from +4.4% in April (reported in May). In the US, the headline inflation was at +4.0% for the month of May (reported in June), down from +4.9% in April (reported in May) and expected +4.1%. The US inflation number (to be reported on 12 July) is expected to fall to +3.1%. While these numbers indicate movement in the right direction, the progress has been slower than what the US Federal Reserve would like. Layer on a very strong labor market, we have a Fed committee that is prepared to err on the side of caution as any premature hints of a policy pivot could blunt the impact of policy measures taken thus far. The monetary policy works with long and variable lags, and the lag seems to be longer this time. The housing starts, building permits, new home sales, durable goods orders, and the conference board’s consumer confidence numbers were all better-than-expected during the month, indicating economic reacceleration instead of a slowdown as one would have expected after the rate hikes over the last year. The US unemployment rate declined to +3.6% in June (reported in July) from +3.7% in May (reported in June). Half-way through the year, the Central Banks’ fight against inflation is still dragging on. Nevertheless, the equity markets price action in June was more broad-based in the face of better-than-expected economic momentum suggesting equity investors believed the inflation problem can be solved without having to incur substantial economic damage. We believe there is some merit to this narrative. The Fed has consistently pointed to core inflation and tight labor market as reasons for concern. Core inflation has remained stubbornly high between +5.3%-to +5.6%, year-to date. The job markets are exceptionally strong with 1.6 job openings for every unemployed worker in the labor force. It is noteworthy that the ‘shelter’ component of inflation constitutes about ~35% weight of the headline inflation and ~43% weight of the core inflation. This component has been on an increase for most part of the last couple of years but has begun to level off recently. As per Apartmentlist.com’s rent estimates and vacancy index, the year-over-year growth in rents is back to historical levels and vacancies have been on a rise. (See Figure 1). Figure 1: CPI Urban Consumers Shelter Index and Apartmentlist.com’s median rent and vacancy Index, year-over-year % Source: Apartmentlist.com, Bloomberg We think as the shelter component of the headline inflation calculations begins to factor in more recent growth rate in rents, the core inflation numbers should also begin to moderate. Moderating inflation numbers coinciding with healthy economic data in coming months could strengthen the narrative that a potential recession could be avoided and thus support risk assets. That said, the risks remain that impact of monetary policy tightening begins to show with a lag and the Fed continues with hawkish posture even as inflation recedes due to strong labor markets. The second-quarter earnings season and the economic data over next few months with bring more clarity and set the tone for markets.

The month of May witnessed yet another recalibration of market participants’ expectations in a year where frequently changing narratives have dominated the price action thus far. Stripping away the impact of mega-caps in the S&P 500 Index, where the frenzy for artificial intelligence has pushed valuations to dizzying heights, the broader US equity market is in fact in red during the first five months of 2023 (See Figure 1). In our view, the year-to-date price action of the broader market reflects abundance of caution, given frequent and abrupt shifting of expectations around inflation and central banks’ interest rate policy. Figure 1: Broader US equity market has traded cautiously. Since the hint of a pause by the US Fed chairman last month, the US Personal Consumption Expenditure Core Price Index (PCE), the Fed's preferred measure of inflation, came in at +4.7%, ahead of expected and last months reading of +4.6%. Earlier, the headline inflation in Canada came in at +4.4%, much ahead of expected +4.1% and last month’s reading of +4.3%. The readings for the ISM Manufacturing and Services PMI (Purchasing Managers’ Index), leading indicators of future manufacturing and services sector activity, also advanced from previous months and unemployment in the US dropped to +3.4% for April (reported in May). In Canada, higher-than-expected inflation and stronger-than-expected GDP growth also brought back expectations of rate hikes restarting. These macroeconomic datapoints have corroborated to suggest that the economy is chugging along just fine and perhaps expectations of a rate pause and/or a cut are premature. The economic data supporting a hawkish stance of central banks and escalating risk of a US default as the debate around raising the US debt ceiling approached deadline amidst political brinkmanship, had created a perfect storm for the broader markets in May. The past few days brought respite to the wary markets after comments from a few Fed officials indicated that the Fed might be willing to pause the interest rate hikes and wait and watch the macroeconomic data evolve for some time. This was upended by the Bank of Canada, which raised policy rates by 25 basis points to +4.75% citing persistent excess demand in economy. Nevertheless, we note that ISM Manufacturing and Services PMI data for May (reported early June) showed signs of cooling off, and US unemployment rose to +3.7%. As per CME Group’s data, the target rate probability for a 25 basis-point hike during the June Federal Open Market Committee meeting increased from +8.5% as on May 5th to +64.3% as on May 26th and had dropped to +25.3% as on June 2nd. More importantly, the probability of no rate cut by the end of the year increased from +0.1% as on May 5th to +36.1% as on June 2nd, indicating market participants are warming up to the message that the expectations of rate cuts during this year are unwarranted as inflation remains too high and the economy is resilient enough to withstand the rate hikes. The price action during the last month validates our stance that near-term caution is warranted, given choppiness of the incoming economic data put together with differences in central banks’ outlook and baked-in expectations of equity and debt market participants. In our view, diminishing friction between market participants’ expectations of rate cuts and central banks’ guidance is a constructive set up for risk assets. We think the broader markets could start to climb the wall of worry during the second half of the year if central banks display restraint while inflation cools off in fits and starts and the economy keeps chugging along.

By Cyndy Batchelor, FMA, BCom Financial Advisor, O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. ETFs (exchange-traded funds) are a popular investment option among investors seeking portfolio diversification. In this article, we'll break down what ETFs are, their advantages and disadvantages, and how to get started with them. What are ETFs? ETFs are investment funds traded on stock exchanges, just like stocks. They typically hold a basket of assets, such as stocks, bonds, or commodities, and aim to track the performance of a specific market index or benchmark. A variety of ETFs are available, from broad-based index funds to sector-specific funds. Advantages of ETFs ETFs have a low cost. Unlike traditional mutual funds, ETFs typically have lower expense ratios, which means investors can keep more of their investment returns. Additionally, ETFs provide diversification, allowing investors to easily invest in a variety of assets with just one fund. Similar to stocks, they can also be traded throughout the day, allowing investors to buy and sell shares as they see fit. Disadvantages of ETFs One potential disadvantage of ETFs is that they can be complex. Some ETFs may invest in complex financial instruments, which beginners and casual investors may struggle to understand. Additionally, while ETFs are typically low-cost, some specialty ETFs can have higher expense ratios, which can eat into returns. How to Get Started with ETFs To get started with ETFs, you'll need an investment account and an understanding of your investment goals and risk tolerance. As soon as your account is set up, you should evaluate your wealth plan. We highly recommend contacting a financial planner to help you decide which ETFs are right to include in your portfolio. Before investing in ETFs, it's important to do your research and understand the risks and benefits. Consider your investment goals and risk tolerance and talk to a financial advisor if you have questions or concerns. In conclusion, ETFs provide low-cost diversification, ease of trading, and flexibility, making them an ideal option for casual and experienced investors alike. With research and a solid investment strategy, you can use ETFs to achieve your wealth goals. Cyndy 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 Andrew Goetz Financial Advisor, O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. As we’ve discussed in a prior article (See Tax-free First Time Home Savings Account), the Canadian Government has created an innovative way to save money for first time home buyers. It's called the First Home Savings Account (FHSA) and you are eligible if: - You are between 18 and 71 years of age - Are a current tax resident of Canada - Have not lived in a home you or your partner have owned for the past 4 calendar years - The objective for opening the account must be to save for a qualifying home in Canada Individuals can contribute to these accounts to the tune of $8,000 dollars per year and $40,000 over a lifetime. FHSA can be a huge advantage for the average person looking to buy a home. This fund sees “the best of both worlds” meaning that contributions to the FHSA are deductible from your yearly income tax and investment growth within the account is also tax free. How does this compare to TFSAs and RRSPs? Well, it's pretty interesting. Wealth inside your TFSA grows tax free to a maximum contribution of $88,000 lifetime (as of 2023). The problem is you cannot deduct TFSA contributions from your income tax. From an RRSP perspective, any contributions up to your personal yearly limit can be deducted from your income tax. However, any growth inside the account will be taxed upon withdrawal. That’s where we get the idea of the newly introduced FHSA being the ideal combination of both worlds. It combines the benefits of a TFSA and an RRSP into one account. Of course, a tool this powerful has drawbacks— the contribution stipulations and limits discussed earlier in the article. So, the question is, where does one put their money? These three accounts are designed to work together to provide you with more contribution room, more tax savings, and more opportunities for investment growth. However, the answer is that each person's situation needs to be assessed accordingly. Are you planning to buy your first home or haven’t owned one in 4 years? You’ll want to reap the benefits of the FHSA. Unfortunately, if you already own a home, you won't be eligible for the FHSA. In that case, an investment strategy that fits your income, risk tolerance, and time frame should be implemented in your RRSP and TFSA accounts. Investing in a home is one of the biggest financial decisions you'll ever make. With so many options available, it can be overwhelming to figure out which path is right for you. That's why it's important to work with a financial advisor who can help you navigate the complex world of home buying and investing. They can help you decide which options are right for your unique financial situation and long-term wealth goals. We welcome questions so please reach out! See our ad in this week’s North Dundas Times and follow us on Facebook @OFarrellWealth. Andrew Goetz 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.

During April, the North American Capital markets traded back and forth between investor optimism and concerns. With one eye on the US Federal Open Market Committee (FOMC) decision after their meeting on May 3, the developments during the month and their read through on the potential future trajectory of policy rates dictated the price action. A decline in headline inflation from +6.0% in February (reported in March) to +5.0% in March (reported in April) in the US and from +5.2% in February (reported in March) to +4.3% in March (reported in April) in Canada helped investor sentiment. The markets later pulled back with more regional bank failures in the US increasing investor concerns of a potential contagion, only to be helped again by the better-than expected reported earnings by a few mega-caps in the index. Overall, the price action during the last week of the month helped equity markets end in green. On May 3rd, the US Federal Reserve Chair, Jerome Powell, announced a 25 basis-points policy rate hike, in line with market expectations but stopped short of explicitly announcing a pause to the policy rates hikes. Nevertheless, the use of language such as “close to a pause or maybe even there” and “possibly at sufficiently restrictive levels” led industry participants to believe that a pause might be announced as soon as the next meeting in June. While this was in line with the market expectations, we think equity markets reacted poorly as on the balance the message was perceived as hawkish. The US Federal Reserve Chairman re-emphasized that the committee is sticking to the goal of bringing inflation back to 2% and rebutted any expectations of a rate cut during the year. The message is at odds with fixed-income market expectations that are baking in ~59.8% probability (as on May 4th) of an interest rate cut as soon as during July meeting (Source: CME Group). The news flow of regional banks failures in the US has continued unabated and added to investor angst over the past few weeks. The Fed chair stated that the overall financial system is sound and the recent regional bank problems are supportive of the Fed’s objective of bringing down inflation by further tightening financial conditions. In other words, the central bank is prepared to let markets endure some pain while it awaits inflation to get close to the 2% goal before it even considers a rate cut. Reduction in availability of credit, leads to destruction of demand and thus helps bring back the demand-supply imbalance. The risk in this approach is that the tightening could worsen to the level of a credit crunch which would lead to a severe recession. Thus far, markets have traded consistent with the expectations of a mild recession or a soft landing. The Fed chair further pointed out that inflation as measured by the ‘core services ex-housing’ is still too high and the committee would like to see it receding before even considering a rate cut. The bad news is that the measure typically declines during a recession (See Figure 1) and the good news is that with interest rates now at 5.25%, the Fed has ammunition to help the economy should a recession ensue in the quest to bring this inflation measure down. Figure 1: Inflation typically declines during a recession Overall, we think the reduction of the gap between market expectations and the Fed’s guidance is fraught with more bank failures and crisis scares in the short-term. While peak policy rates do make a case for adding some risk to the portfolios, an overall defensive position makes sense to navigate through the near-term volatility at this stage of the cycle, in our view.

The financial market developments of the last month strengthened the thesis of a potential hard landing that had gained ground during February. However, the expectations of year end policy rates being higher flipped again during March after the collapse of a few regional banks in the US and signs of stress developed in a few international banks. As implied by the Fed Funds Futures, the expectations of the year-end policy rate that stood at ~4.47% on January 31st, rose to as high as ~5.55% on March 8th and fell to ~4.35% on March 31st. The yield on the US 10-year treasury jumped from ~3.50% on January 31st to ~3.99% on March 8th and dropped again to ~3.47% on March 31st, indicating the uncertainty in the fixed-income markets (Source: Bloomberg Finance L.P.). As we see it, the confusion in fixed-income markets stems from the Federal Reserve's persistent hawkishness even as cracks emerge in financial markets. While keeping inflation under check is one of the primary goals of the central banks, the stability of the financial system is paramount. As the risk of deposit flight from the US regional banks gathered pace, the Federal Reserve announced the availability of additional funding through a new Bank Term Funding Program (BTFP) to shore up depositors’ confidence in the banking system. Historical evidence suggests that such support measures are typical at the end of a policy rate hike cycle as the damage from higher interest rates begins to show. The fixed income markets discounted this probability by pushing down yields across the yield curve during March (See Figure 1). However, on March 22nd, the US Federal Reserve decided to push through the 25-basis point rate hike despite emerging cracks in the financial system. Figure 1: Yields have dropped across the curve During a transitional period of high policy rates, falling but still high inflation, and a slowing economy, uncertainty and therefore volatility is inevitable in financial markets. The central banks have a tightrope to walk on as premature signalling of an end to the tight monetary conditions might prove counterproductive and keeping policy tight for too long increases the risk of recession. Leading indicators such as the Institute of Supply Management’s Manufacturing PMI (Purchasing Managers’ Index) and Services PMI are showing signs of a decelerating economy (the central banks’ desired path to bring down inflation). Lagging indicators such as unemployment and job openings, while still strong, are beginning to show the effects of higher interest rates. The ISM Manufacturing PMI declined to 46.3 in March from 47.7 in February. The ISM Services PMI dropped to 51.2 in March from 55.1 in February. The ratio of total job openings to unemployed workers in the workforce also dropped from 1.96 at the beginning of the year to 1.67 as of the end of February (Source: Bloomberg Finance L.P.). In line with our expectations, the various inflation measures are also improving. US headline inflation fell to 6.0% in February (reported in March) from 6.4% in the previous month, and the Canadian headline inflation fell to 5.2% in February from 5.9% in the previous month (Source: Bloomberg Finance L.P.). Overall, we believe the signs of a slowing economy and stress in the financial system indicate policy rates are close to reaching their peak. We expect the tone of central banks to get incrementally less hawkish in the coming months. This should prove to be a tailwind for risk assets, in our view.

By Cyndy Batchelor, FMA, BCom Financial Advisor, O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. How many times have you received a phone call to have your ducts cleaned, a text from the Revenue Agency or an email claiming you have an inheritance in the past week? Recently my mom was targeted by what is referred to as the “Grandparent Scam”. She received a phone call and the caller said “Hi Grandma it is me”, to which she of course replied with one of my kids’ names. Now having some personal information, the caller was able to hold a conversation with her. He told her he was in trouble and needed her to send funds immediately to be bailed out of jail for being caught with his friend who had pot in the car. Luckily, my mom is tight with her money and had the presence to tell “my kid” to call his dad to meet him at the police station. My grandfather immediately phoned my son to ensure all was indeed ok (it was!) and relay the story. My kid delightfully informed my parents that since pot is now legal, he would never have been arrested for having it in a car (even I did not think of that!) and if they were carrying enough pot to be arrested then $1000 was not going to get them out of jail. In the meantime, we have now extended our safe word to my parents – I let them know if they ever thought my kids (or us!) were calling to ask for the safe word. If we cannot deliver the safe word, then it is not us on the other end of the phone. This is only one type of scam that is currently being used. You may get asked to provide advance payment for services, have your credit cards or other personal information used without your consent or knowledge, or end up the victim of a romance scam. Remember, if something seems too good to be true, it likely is. If someone you meet online asks for money or personal information, it is time to abandon ship. What can you do to protect yourself? Credit Monitoring - there are several free credit monitoring sites, sign up and check frequently Malware and antivirus protection on your devices Don’t store your credit card information on any sites (this includes vendors) Use complex passwords & clear your browser history Don’t click on any links in texts or emails and review senders Create a safe word Don’t use unsecured public Wi-Fi You should also ensure you have a Trusted Contact Person on file with your financial institutions. A trusted contact person (TCP) is someone your advisor can reach out to if they are concerned you are being financially exploited or are making poor decisions because of diminished mental capacity. For example, they may notice transactions or financial decisions that are unusual based on your past behaviour. If you need to add or update a Trusted Contact Person, please reach out to your Financial Advisor. Cyndy 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.

After a positive start to the year in January, the month of February jolted financial market participants out of complacency as macroeconomic concerns made a comeback. Investors had to make a quick adjustment from expectations of a ‘soft-landing or no-landing’ scenario to a potential ‘hard landing’ scenario and the retreat was most pronounced in the best performing areas of January. In a classic case of ‘good news is bad news’, the stronger-than-expected economic data put together with hotter-than-expected inflation measures renewed investors concerns that expectations of policy rate pivot might be premature. The apathy towards the hawkish message from the US Federal Reserve Chair, Jerome Powell, soon disappeared as jobs and inflation data corroborated the earlier message that the Central Bank’s work is far from over. The headline inflation number in the US was at +6.4%, though down from +6.5%, but higher than expected +6.2%. The Fed’s preferred measure of inflation indicated by the US Personal Consumption Expenditure Price Index also jumped to +5.4% against the expected and prior number of +5.0%. This, along with better-than-expected retail sales of +3.0% month-over-month against the expected +2.0%, and lower-than-expected jobless claims at ~192k against the expected ~200k, provided support to the notion that consumer demand is still healthy, and the job market remains too strong. In Canada, however, the headline inflation number reported during the month tracked better and fell to +5.9% from +6.3%. Taking note of the recent data and continued hawkish message from the US Central bank authorities, the equity and fixed income markets retreated after investors discounted the possibility of more rate hikes and higher interest rates for longer. This was evident from the probability of interest rates (implied by the Fed Funds Futures data) by the end of this year in the range of 5.25%-5.50% increased to ~38.5% as of the end of February from almost negligible as at the end of January (See Figure 1). The bond yields jumped by ~40-to-60 basis points in the US and ~40-to-48 basis in Canada across the 2-yr to 10-yr tenures. Figure 1: Target rate probabilities for December 2023 The higher the interest rates and longer they stay at the level, the more strain there is on economic activity, ultimately leading to an economic recession. Given that the monetary policy tightening works with long and variable lag, the case for recent strength in economic data to dissipate can be made, in our view. A few leading indicators (e.g., Consumer Confidence and The Institute for Supply Management's Purchasing Managers’ Index) are already signalling a contraction ahead. We believe the softening of economic data coupled with receding inflation could prove to be a tailwind for risk assets. Nevertheless, the pace of change of narrative from January to February underscores our belief that the path ahead is likely to stay bumpy for some time and therefore we advocate staying selective in risk asset exposures.

By Sarah Chisholm, BA Financial Advisor, O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd. At first the concept of a retirement number seems simple enough. A specific sum of money or a ratio of previous income to tell you how much you need for retirement. Unfortunately, there is no universal number or ratio that you can use. Every retirement cashflow is very much unique to the individual and their family. Take a moment to consider, if you and your spouse went to a local restaurant and ordered dinner what would the bill be? What if your neighbors went to the same restaurant and ordered dinner? Would their bill be the exact same? That would be extremely unlikely as people have different food and drink preferences. Retirement planning needs to be customized to the individual or family; there are too many variables for a one size fits all number or ratio. Of the many variables it is important to consider: lifestyle expenses, life expectancy, sources of income and risk tolerance. For lifestyle expenses, consider: 1. What do I currently spend on my lifestyle expenses? 2. What will I do with my free time in retirement? Will I be travelling or investing in a new hobby? 3. Are there legacy goals I would like to achieve while living or in my estate? 4. What impact will inflation have on my cost of living during retirement? Understanding your projected expenses in retirement helps give you a framework for your retirement planning. Another major piece is life expectancy: 1. At what age will I retire? 2. Am I currently healthy? 3. Do I have a family history of longevity? Health can impact both the length of your life and the cost of maintaining your lifestyle. Poor health could result in high long-term care costs, or it could mean a shortened life expectancy. What does retirement look like if you live to age 80 versus if you live to age 95? Will I have health benefits coverage? No one has a crystal ball, but planning around different scenarios will build a buffer into your retirement plan. Now that you have an idea of your expenses and the length of your retirement. How will you fund your retirement plan? 1. What income will I have in retirement? 2. Am I entitled to any government pensions or social benefits or workplace pension? 3. What investments can I draw on or what assets can I sell? Analyzing your expected Old Age Security benefits and your Canada Pension Plan income can be a enlightening process. Did you realize that your CPP entitlement is based on your CPP contributions throughout your working career whereas OAS is a residency-based benefit? What other investments or assets will you have in retirement? Are you contributing to a Registered Retirement Savings Plan or a Tax Free Savings Account for retirement? Will you generate cash flow through rental properties? The growth in your investment accounts will depend on your investment approach. What fixed income/equity allocation do you hold and what are the expected returns? What contributions are you currently making to your investments, and do you need to increase those contributions to secure your retirement plan? Retirement is a period to relax and enjoy the fruits of your labor. Make sure you prioritize planning for your retirement so that you can truly find that peace and serenity. Consider sitting with a trusted financial advisor to track down your retirement “number.” 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.