<h1>Young Couple Doing Family Finances At Laptop At Home</h1>Andrey Popov
I'm 100 per cent in favour of enhancing the Canada Pension Plan, and I believe the higher benefits that will be paid out in the future are a win for future retirees. But there are others who believe it's unfair to have everyone pay more in CPP premiums to help certain groups save more for retirement.
Check out this hardline argument: "Responsible Canadians should not be forced to have larger pay cheque deductions to fund social programs that support the careless use of financial resources by others who accumulate 'stuff' instead of stock." To this I say that there's more to the issue of inadequate retirement savings. A smaller slice of the population has access to company pensions, and expensive housing is squeezing family budgets.
Other CPP skeptics are against the idea of government forcing people to save for retirement. Business doesn't like the higher premiums to come. Canadians are hugely in favour of CPP reform, though. Three in four said they said they support expanding the CPP in some form, even if it meant higher costs for workers and employers.
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The death of investment
Returns from a diversified portfolio of stocks and bonds are falling, and the trend is expected to continue. That means people planning for retirement will have to work longer, save more or take on more investment risk.
Planning a trip will make you happier
I normally avoid this sort of list, but I like the suggestions made here because I can actually imagine them working. A few are kind of money-related, like planning a trip..
Fresh thinking on hot housing
How do people who sell real estate market think soaring house prices can be tamed? A real estate agent in Toronto suggest targeting blind bidding, where people bid on a house without knowing what others are willing to pay. She says this results in houses selling for more than they would in a transparent bidding process.
Don't take retirement advice from John Oliver
A smart critique of TV personality John Oliver's well-received rant about investing for retirement, which was featured in last Friday's edition of Carrick on Money. Who's right here? Oliver is, and so is this article staying he left a few things out.
Retirement can be depressing
A link is drawn here between a lack of financial planning for retirement and the anxiety a lot of retirees feel. Alarming factoid: Men over 70 have the highest suicide rate of any demographic group in the United States.
Why index investing works
I notice a growing number of investing pros who are questioning the strategy of index investing, where you buy exchange-traded funds or mutual funds that replicate major stock and bond indexes. I think indexing makes great sense, and this blog post explains one of the reasons.
Today's featured financial tool
The exchange-traded fund screener on the ETF Insight website has just been upgraded. Now, it includes the total cost of owning a fund as determined by adding the commonly referenced management expense ratio (MER) to the more obscure trading expense ratio (TER). Info on TERs can be hard to find, so this is a real service.
Ask Rob
The question: "I am a 22-year-old college student in Milwaukee, I work full time in the summer and worked at an internship where I have saved up $20,000 (U.S.). I do owe student loans but don't have to start paying them for another 1.5 years. I don't need a safety net of cash at this point since my parents have told me to invest my cash and if I ever need a safety net I can borrow from them interest free. I was thinking about a robo-adviser possibly, but want more opinions. If you were in my age, with $20,000 in cash, what would you do to maximize my future?"
My reply: In your place, I'd put the money in the savings account with the highest interest rate I could find and then figure out what my financial goals were. If had near-term plans to get married, travel or buy a house, I'd keep the money in cash. I'd also give strong consideration to paying down the student loan. If I decided to invest long-term for retirement, I'd give the robo-adviser option some serious thought. Note: I wrote this column on Gen Y financial planning to help people work through questions like this.
Do you have a question for me? Send it my way. Questions and answers are edited for length.
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Rob Carrick