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Are ETFs a good investment for an all-weather portfolio?
– moneysense.ca
It’s true short-term bank savings accounts and guaranteed investment certificates (GICs) seem relatively safe from both stock meltdowns and precipitous rises in interest rates, but now there’s the added scourge of rising inflation. Even if you can earn 5% annually on a GIC, if inflation is running at 6%, you’re actually losing 1% a year.
Are ETFs a good investment for an all-weather portfolio?
It’s tempting to throw your hands up and retreat to those much-praised asset allocation exchange traded funds (ETFs). You can use these types of investments to simulate the classic pension mix of 60% stocks to 40% bonds through Vanguard Canada’s VBAL or similar ETFs from rivals, including iShares’ XBAL and BMO’s ZBAL…
The one inflation tool you need for your finances
– moneysense.ca
But first, let’s back up a bit. In December, the year-over-year rate of inflation in Canada was 6.3%, and prices for everyday expenses like groceries and gas continue to climb. Inflation decreases the value of a dollar over time (because as prices rise, you can buy less with the same amount of money). The Bank of Canada (BoC) has raised interest rates many times in the past year in an effort to tame inflation. That means it costs more to borrow money, but here’s the good news: You can also earn higher interest on your savings.
You may want to take advantage of the especially high rates on high-interest savings accounts…