Thought of the Day - November 3 - Savings Might Just Save the Day

A lot of attention has been paid to the financial risk takers during this pandemic - people buying new houses, investing in the stock market, purchasing luxury goods, and starting up new ventures. Their enthusiasm, along with government subsidies, has kept the economy ticking over: house prices up, stock-market largely recovered, cars/boats in short supply, and some businesses thriving. But there is also a significant percentage of folk who have curbed spending, taken their profits, and resisted the current wave of largess.

Moreover this year Canada has seen the largest GDP reduction since the great-depression. A third of workers are unemployed or on government wage-subsidies, Canadian's still have one of the highest household-debt levels in the western world, and our Federal government's debt (yet alone the provinces) are at the highest level since WW II.

But . . . the light at the end of the tunnel might just be the folk who are bracing for hard times. As of September, people across Canada have added $127 BILLION to their savings since the beginning of the year. It is this money, not gov't bailouts, not infrastructure projects, not discretionary spending, not get-rich schemes, that will save our way of life.

In short, while you are going to get almost nothing for your savings - indeed inflation is ahead of the average interest rate - restraint is actually heroic work that could be vital in the months and years ahead.

Cheers

Cliff