The new financial roadmap for Gen Z and young Canadians + MORE Jun 19th

Young people don’t need another slew of statistics telling them their financial lives will be different from their parents’ generation. They need a plan. 

Education is expensive, homeownership is delayed, careers have evolved. There’s a new set of milestones for financial adulthood, and timelines have changed. The first goal for young people starts when they land a job, according to Chris Merrick, principal at Merrick Financial and a fee-only financial planner in Toronto.

As soon as you get a paycheque, you need to draft a budget. “Budgeting is more of a tool than a chore,” Merrick said. “The new normal is that a budget is less of a sign of financial struggle, it is more like financial literacy, because cost of living, housing is higher. Just winging it is much harder.”

Budgeting means lifestyle trade-offs early on

You can use an app or just draft up an Excel spreadsheet, he said. Your method doesn’t matter as much as what the budget represents—restrained spending…

Financial services company Wealthsimple announced Thursday that it will start offering a new form of investment based on real-world events. The product is called prediction market trading and it’s gaining increasing popularity around the world. Here’s a breakdown of how it works, what’s driving its growth, and what investors should beware of.

What are prediction markets?

Prediction markets allow investors to bet on the outcome of real-world events like whether Canada’s inflation rate will rise in a particular period, who will win an election, or which team will come out on top after a sporting match. The topic they’re betting on usually has a fixed number of outcomes and poses a yes-or-no question.

Investors put their support behind one of the outcomes by purchasing corresponding contracts, usually for less than $1. The more people who bet on one of the outcomes by purchasing a contract, the higher the purchase price will be. If a “yes” contract is available for purchase at 40 cents, that suggests there’s a 40% chance of the event happening…

At the time of writing, the S&P 500 is up 10% year to date and nearly 30% over the past year. These gains are happening despite war in the Middle East, oil chaos, slow to no GDP growth, increasing inflation, and a soft labour market. How is this possible? In my view, there is only one reason the markets continue to gain: artificial intelligence (AI). 

This isn’t the first time AI has had a disproportionately positive impact on the markets. In 2022, the S&P 500 was down nearly 20%, its worst year since the financial crisis and fourth-worst in its history. The pandemic and aggressive interest rate hikes hit all industries. Tech, led by Apple, Alphabet, Amazon, Meta, Nvidia, and Tesla aka The Magnificent 7, suffered the greatest losses. The fear of recession was prevalent. And then, on November 30, 2022, Open AI launched ChatGPT. It became clear very quickly that this early version of generative AI would revolutionize how we live and work. 

In 2023, the Magnificent 7 and other large-cap tech companies—particularly the companies that design, build, and use the computer chips that make generative AI possible—had a tremendous run, powering the S&P 500 to nearly 27% returns and wiping out the previous year’s losses…