Opportunity: Canadian Dollar Stabilizes, Somewhat

Things have started to turn around for the Canadian dollar in the second quarter of 2025. It hit a 22 year low in January of 2025. Investors and property owners, who have been swooning at the high burn rate in their travel plans and property maintenance abroad, may wish to consider recent more positive trends and consider some risk mitigation opportunities now that the dollar is stabilizing somewhat.  

"In Canada and other Organisation for Economic Co-operation and Development (OECD) countries,î reports Statistics Canada's Education Indicators in Canada: An International Perspective, 2012, "it is evident that employment prospects increase with educational attainment.î And it would seem Canadians are well educated and becoming better educated all the time. According to the pan-Canadian report ó the fourth of a series that applies international standards ó the proportion of Canadians aged 25 to 64 with the equivalent of college and university completion increased to 51% in 2010 from 40% in 2000. At the same time, the number of those 25 to 64 who did not complete high school decreased to 12% in 2010 from 19% in 2000. Break it down even further, in 2010, 92% of Canadian aged 25 to 34 had completed at least a high school education, compared with 82% for those aged 55 to 64 "reflecting change in attainment patterns.î These rates were higher than the average for the 34 OECD-member countries. As you might expect, the employment rate tracks higher for those with higher education. In 2010, reports Education Indicators in Canada, Canada's employment rate for adults aged 25 to 64 who had competed college diploma and certificate programs was 81% and for those who had completed university and advanced degrees was 82%. By comparison, the employment rate for those Canadians aged 25 to 64 who not completed high school was 55%. For upper secondary graduates, the employment rate was 72%. Certainly, in terms of spending on education, Canada is no different than other OECD countries. "With 6.1% of its GDP allocated to educational institutions in 2008,î says the report, "Canada devoted about the same share of its wealth as the OECD countries on average (6.2%).î Where Canada differs is on the relative portion of money that goes toward "tertiaryî education vs primary and secondary. Says the report: "In 2008, 40.2% (2.5% of 6.1%) of the share of GDP that Canada invested in education was allocated to the tertiary sector. Among the OECD countries, Canada, along with the United States (36%) and Chile (35.8%), allocated the largest share of education spending to tertiary education.î Certainly on the basis of educational institutions' expenditures per student, post-secondary education gets the largest share of financial resources in Canada. In 2008-09 fiscal year, expenditures per primary school student was $10,758; for a secondary school student, $11,489; and, for a university-equivalent student, $31,103. Another interesting difference, the report points out, for primary and secondary education, the compensation of staff ó particularly teachers ó accounted for the largest proportion of expenditures at 77.4% and 62.4%, respectively. At the tertiary level, staff compensation ate up 63.1% of expenditures and teacher compensation 36.2%. Capital expenditure ó that is spending on the construction, renovation and major repair of buildings ó accounted for 10.5% of tertiary-education expenditures, vs 9% for the OECD and 7.2% for primary and secondary. Do you think Canadian universities spend too much on capital expenditures to the detriment of accessible tuition fees? See this month's poll  

Your responsibility to pay income taxes is not going to go away, so you should know how to prepare your annual tax return. How about making a tax preparation course part of your "back to schoolî plans? There are three reasons to learn tax preparation. First, it is an important life skill: the more you know about your tax filing rights and opportunities, the more you are the master of your money. Second, it gives you the skill to help others with their taxes, should you wish. Third, if you work with a financial services professional, you'll get more bang for each dollar spent because you'll ask knowledgeable questions. To earn more and keep more, you need to know how to do three things: Keep more of the first dollars you earn; Hold onto to your dollars longer; Ensure your dollars have purchasing power when you need them. Your return on investment can be significantly enhanced when you work with a professional advisory team, including a tax and an investment professional. Those well-trained professionals will not only prepare and file your returns, but also work together to plan your investment strategies. Your tax advisor ó who is your tax educator and advocate for your tax-filing rights ó will work with your financial advisor, the steward of your family's money. Together, you and your team can work to make sure you pay only the correct amount of taxes on your income and your capital throughout your life cycle. So, do consider taking an income tax course as part of your personal development. Even if you plan to pass your tax preparation along to a pro, you'll be better able to ask important tax questions of all your financial advisors. This will lead to more purposeful decisions about your investments. Investing in your tax knowledge, in other words, will increase your return on investment. It's Your Money. Your Life. Be prepared to speak to a professional when you have a "triggerî question, that is, when there is a life events, financial events or economic events that may trigger the need for you to make a decision. How do you choose a tax and a financial advisor? Tune in next week when I'll share an interview checklist. If you're wondering how you will find time in your busy schedule to do a tax preparation course, consider the Knowledge Bureau's great series of income tax and corporate tax courses by e-learning. Do check that out if you are interested. Evelyn Jacks is president of Knowledge Bureau, which offers bookkeeping and income tax preparation courses within its curriculum. You can also offer financial education books to your clients or family members. For more information, click here.  

There are two things you can't avoid ó death and taxes ó and, in both cases, it pays to be prepared. In fact, there are many things you can do to ensure that, should your life end suddenly, your affairs are in order and you have reduced the emotional and financial stress for your loved ones. ï Do you have an up-to-date will? If the answer is, "No,î it is time to sit down with a lawyer to formulate the disposition of your estate and determine whom you wish to administer the estate. ï Have you chosen an executor? You will need an executor or estate trustee as well as someone who will assume guardianship of minor children or pets who might survive you. What qualities should your executor possess? You want someone who: is trustworthy, understands the role and responsibilities of an executor, is aware of your wishes, exercises good judgment, is financially responsible, lives in the same province, if not the same city. Be sure to ask your choice of executor and guardian if they are willing to accept the responsibilities of administering your estate. Nobody likes a surprise! It is always a good idea to choose an alternate ó in case your first choice is unable or unwilling to carry out the duties. Remember that being an executor is a huge responsibility, not an honour! ï Do you have a list of assets and liabilities? While working with your lawyer to prepare your will, you might want to provide a complete list of assets and liabilities. Assets include: bank accounts; credit cards; registered and non-registered investment accounts, life, disability and health insurance; real estate holdings; and, benefits and pensions to which the estate may be entitled. Liabilities include: mortgages; loans; credit card debts; and, personal debts. ï Have you planned your funeral? There are a number of advantages to planning your own funeral. Not only does it allow you to express your wishes, but it also relieves the need for your loved ones to make decisions at a difficult time and reduces their emotional stress. Plus, if you travel, should you die away from home, the funeral home will make the arrangements for transporting the body home, cremation at the place of death, whatever your wishes. Before meeting with a funeral director prepare a list detailing your vital statistics: first and last names, date and place of birth, current address, marital status, next of kin, parents' names and places of birth. Then meet with a funeral director to make arrangements. Note that the prearrangement/prepayment of your funeral does not lock you into dealing with that funeral home at the time of death. Most plans are transferable to other homes. Additionally prepayment provides inflation protection and alleviates the financial stress on the family at the time of bereavement. Finally, gather together all your legal documents and give your executor copies of the will, your list of assets and liabilities, your funeral arrangements and your legal certificates (birth certificate, donor card, etc.). Doing this will save your executor hours of time tracking down the information and posthumously will earn you a big "Thank you!î Next week: The role of the executor Patricia Cocker, B.A., CFP, is a Certified Professional Consultant on Aging and a qualified Credit Counsellor who helps clients organize their financial paperwork in four areas: money management, income tax preparation, financial records management and after-funeral care. Patricia is also a Knowledge Bureau graduate. Additional Educational Resources: Use of Trusts in Tax and Estate Planning and Death of a Taxpayer courses.  

Although economists were delighted with the creation of 34,000 jobs in August, the result of an increase in part-time work, there was nothing to celebrate if you are between the ages of 15 and 24. According to Statistics Canada's Labour Force Information,  employment among youths fell by 22,000 in August and was down by 72,000 (2.9%) from a year ago. The youth unemployment rate rose by 0.5 percentage points to 14.8% in August. StatsCan's "Labour Force Surveyî tells us the average employment rate from May to August for students aged 15 to 24 was 47.9%, down from 49.1% last summer. So, who gained from those 34,000 jobs created? It seems the over-55 group benefitted most. According to StatsCan, employment among women aged 55 and over increased by 46,000 in August, bringing year-over-year gains to 97,000 (+7.1%). The unemployment rate for this group fell by 0.9 percentage points to 5.2% in August. The number of employed men aged 55 and over rose by 16,000 in August, the first notable increase in four months. Compared with 12 months earlier, employment for this group has increased by 104,000 (6.2%). But sadly, Statscan notes, "the robust year-over-year employment increase for both men and women aged 55 and over was, in part, the result of population aging.î Employment among those aged 25 to 54 was virtually unchanged in August at 47,000, up 0.4% from a year ago. "The trend pace of job growth is not inconsistent with the broader picture of modest economic growth,î writes TD Bank Group economist Francis Fong. "Just shy of 157,000 net jobs have been added this year (about 20,000 a month), which equates to around 1% employment growth. In turn, this is fairly consistent with the roughly 2% pace of economic growth we have seen over the last three quarters.î Additional Educational Resources: Financial Recovery in a Fragile World and Elements of Real Wealth Management.    

"Uncertainty has eclipsed the world economy for a long time,î noted Jennifer Blanke, senior director and lead economist of the World Economic Forum as she introduced the WEF's Global Competitiveness Report 2012-2013 on the WEF website.  "The overshadowing sovereign debt crisis in Europe, the risk of a weak recovery in the U.S., combined with the slowdown of economic growth in China and other emerging economies has cast a cloud over the global economy,î she continued. "Within such uncertain times, a higher level of competitiveness is the best strategy to ensure resilience and sustained prosperity.î So, in it annual Competitiveness Report, the WEF assessed the "competitiveness landscapeî of 144 economies, Canada among them. The WEF defines competitiveness as "the set of institutions, policies and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy.î Since 2005, the WEF has based its analysis on the Global Competitiveness Index (GCI), which measures "12 pillars of competitiveness.î Those pillars are divided among three subindexes: basic requirements, efficiency enhancers and innovation and sophistication factors. Countries are ranked on their overall score, as well as their score in each of the subindexes. How did Canada score? Not strong enough to make the Top 10 and off two positions from last year but it still ranked a respectable 14 in the overall standings with a 5.27 score. (Top-ranked Switzerland scored 5.72.) In the basic requirements subindex ó which measures the pillars institutions, infrastructure, macroeconomic environment and, lastly, health and primary education, considered key factors in factor-driven economies ó Canada ranked 14, with a score of 5.72. In the efficiency enhancers subindex ó pillars five through 10: higher education and training; goods market efficiency; labour market efficiency; financial market development; technological readiness; and, market size ó Canada ranked sixth with a score of 5.41, key for efficiency-driven economies. But in the final subindex, which measures innovation and sophistication, as the title suggests, and is considered key for innovation-driven economies, Canada ranked 21 with a score of 4.74 ó which would seem to indicate the areas in which Canada needs to pull up its socks. "Although Canada continues to benefit from highly efficient markets (with its goods, labour, and financial markets ranked 13th, 4th, and 11th, respectively), well-functioning and transparent institutions (11th), and excellent infrastructure (13th),î said the report, "it is being dragged down by a less favorable assessment of the quality of its research institutions and the government's role in promoting innovation through procurement practices. "In a similar fashion, although Canada has been successful in nurturing its human resources compared with other advanced economies (it is ranked 7th for health and primary education and 15th for higher education and training),î it continued, "the data suggest a slight downward trend of its performance in higher education (ranking 8th place on higher education and training two years ago), driven by lower university enrollment rates and a decline in the extent to which staff is being trained at the workplace.î What countries did make the Top 10? Here are the overall rankings: Switzerland, for the fourth consecutive year, Singapore Finland Sweden The Netherlands Germany United States United Kingdom Hong Kong Japan "Looking forward,î says the WEF, "productivity improvements and private sector investment will be key to improving global economies at a time of heightened uncertainty about the global economic outlook.î   Additonal Educational Resource: Distinguished Advisor Conference  

Statistics show us that median family incomes decline in our retirement years to about 80% of our incomes in our mid-50s. But a recent Statistics Canada study tells us that personal consumption makes no such adjustment. In fact, seniors in their 70s consume 95% of what they consumed 20 years earlier. So, if consumption exceeds income, asks StatsCan, how do retirees manage to maintain their standard of living? In an August Economic Insights entitled "Financial Well-Being in Retirement,î Sébastien LaRochelle-CÙté looks at the role accumulated household wealth plays in allowing retired seniors to enjoy their golden years. "For many seniors, a declining employment income stream does not necessarily signal financial pressures,î he writes, "because they have built up a stock of wealth.î LaRochelle-CÙté looked at household wealth as the total value of real estate holdings and sources of financial wealth such as savings accumulated in investment funds and retirement savings plans, minus outstanding debts. Conventional replacement income considers only family income, which includes employment income, income from private pension plans, retirement pension income and personal income. He looked first at financial wealth excluding the net worth associated with the principal residence, and second at all forms of wealth including the principal residence. In the first instance, he writes, "The average value of the annual income of individuals aged 65 to 74 was 8% higher than income values obtained from the more conventional definitions used in replacement rate studies.î Take the older age group, 75 to 84, and the accumulated financial assets added an average of 20%. Add in lifetime income from the principal residence, and the measurement advances further. For the 65-74, it was 15% higher; for the 75-84, it was 35% higher. "Thus,î LaRochelle-CÙté concludes, "when financial wealth is taken into account, the ëadjusted' income becomes similar to the average income of individuals aged 45 to 64, whose financial well-being is based largely on employment income. It is, therefore, possible that asset accumulation can play a significant role in maintaining seniors' level of consumption, at least for those in the generation born immediately before the baby boom.î Therein is the caveat. The baby boomers, who are just entering retirement, are not included in the statistics. The work and savings habit of this generation could affect future results. Also, notes LaRochelle-CÙté, "the contribution of financial wealth to overall income for higher-income individuals likely differs from that for lower-income individuals.î   Additional Educational Resources: Elements of Real Wealth Management and Tax Strategies for Financial Advisors.