Weekend Reading: Bank of Canada Rate Hike Edition

The Bank of Canada is widely expected to raise its key interest rate for the first time in nearly seven years when it meets next week (July 12th). Strong economic growth and job numbers have paved the way for the central bank to finally signal a rate increase, even if it’s just a moderate 25 basis points.

What this means for borrowers is that if and when the Bank of Canada increases its key rate, banks quickly follow suit by raising their prime rate, which currently sits at 2.7 percent. Prime rate is linked to variable rate mortgages and lines of credit, so borrowers should expect those to rise accordingly.

Bank of Canada Interest Rate Hike

The interest rate on our home equity line of credit is prime plus 0.50 percent, so we’re preparing for that rate to increase to 3.45 percent from 3.20 percent. The impact on our cost of borrowing should be negligible.

Our mortgage, on the other hand, was locked-in last fall at a 2-year fixed rate of 2.19 percent. We’ve seen an uptick in interest rates on fixed-rate mortgages, so that’s something we’ll keep an eye on next year as we get closer to renewal.

This Week’s Recap:

On Monday I started preparing for the Game of Thrones premiere with A Lannister Should Always Pay His Debts.

On Wednesday Marie asked if your assets under management were really being managed by your financial advisor.

And on Friday our ‘Ask a Career Expert’ segment looked at negotiating a job offer with a sample script.

Weekend Reading:

Ben Carlson shared his thoughts on the extreme early retirement movement, saying he prefers a balance between delaying gratification and enjoying yourself now:

“Thinking in terms of extremes doesn’t mesh well with my personality. I need balance in my life. I don’t want to feel guilty every time I spend money on myself or my family. I’m definitely a proponent of using a high savings rate and delaying gratification but forsaking all else for the sole purpose of saving every last penny doesn’t sound very enjoyable to me.”

I agree with Ben’s thinking on this topic. As a general rule, not working is better than working. That’s why we all love the weekend, after all. But if you can find meaningful work that you enjoy, then Monday’s aren’t all that bad.

Here’s one of those examples of extreme saving. A blogger by the name of Mr. 1500 quit his job at 43 after accumulating a net worth of more than $1,800,000. Read his journey to freedom here.

Michael James reviews Enough: True Measures of Money, Business, and Life by Vanguard founder John Bogle.

Sears is requesting permission to halt its retiree benefit payments as the company seeks protection from its creditors while it restructures.

The power of social media: How two 17-year-olds helped the fidget spinner go viral — and made $350,000 in six months.

A good rundown of the arguments for and against the banning of mutual fund trailer fees. The arguments for banning embedded commissions are all about protecting investors. The arguments against it are about protecting a trillion dollar industry’s profit margin.

American author and investor advocate Dan Solin weighs-in on Canadian banks, saying they don’t return our love and loyalty.

Finally, here’s one retirement savings rule you should never ignore.

Have a great weekend, everyone!

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1 Comment

  1. Beth on July 9, 2017 at 6:31 am

    What I found interesting about Ben Carlson’s article is the point about most ERE and FIRE folks hating their jobs (or even careers), and how early retirement doesn’t necessarily mean they aren’t working but that they are now free to pursue work they love and on their own terms.

    I was recently “re-structured” and now hate the job I used to love. People keep telling me not to stress, just smile and nod and collect my pay cheque, but I’m thinking of taking a new job (even if it means taking a pay cut), or walking away entirely and starting a freelance business. The experience is teaching me a lot about what financial freedom means to me.

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