Taking Stock with Steele
Read our newsletter below or contact us to subscribe
Taking Stock with Steele is our newsletter where we share our insights and expertise. Our goal is to ensure our clients are well informed. We shift through the noise and only bring important topics of discussion and planning points that are relevant and useful. We believe Knowledge Pays and we want our knowledge to pay for you.
With 2024 fast approaching, now is an opportune time to implement tax planning strategies. While tax and financial planning should take place all year long, there are several actionable strategies to consider that can help you minimize your taxes and align your finances with your short- and long-term goals before year-end deadlines.
There are many signs pointing to high levels of financial pressure for Canadian households...Canadians are increasingly turning to credit cards to make ends meet as inflation and higher interest rates reduce discretionary income to the point that household cash flow turns negative...Show Your Money Who's Boss!
The U.S. consumer price index (CPI), broadly seen as a global benchmark for inflation, consistently fell from 9.1% year-over-year in June 2022 to a somewhat normal 3.0% year-over-year in June 2023. Since October 2022, when U.S. inflation was clearly trending lower and the inflationary European natural gas crisis began to fade away, equity markets and to an extent bond markets, stabilized and generated flat to positive returns. Now that U.S. CPI has begun to tick higher (chart below), investors are once again concerned that inflation may remain elevated for some time.
While predicting the daily winner or loser would certainly help boost one’s rate of return over time, doing so is incredibly difficult. Buying the winner after it wins and selling the loser after it loses may not be the best strategy. Many of the stocks that are temporarily seen in a positive light one year are often seen in a negative light the next. This is because rapid changes in perception are driven by things that are almost unforeseeable (like the COVID-19 pandemic or the start of a war). Because they are almost unforeseeable, they are often not that long-lasting.
The reality is that the stocks that tend to perform the best over time are those with stable businesses that pay dividends and grow them over time. It is the power of slow and steady compounding that lays the base for above average returns.
Reorganizing debt so that interest is tax deductible as an alternative to selling assets to cover debts
As interest rates rise, the natural reaction of many variable rate borrowers is to raise cash, from investments or otherwise, to pay down debt...For those with a low risk tolerance, this is a good way to lock in a relatively high 'rate of return' on these funds...While liquidating your investment portfolio to pay off a potentially high interest mortgage can make sense in many cases, it is worth reviewing if restructuring your debt so that interest is tax-deductible is advantageous in your situation.