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Good afternoon, everyone. Stocks are having a rough day, partially due to calls by AI industry leaders to slow down the pace of technological development. We’re covering that in more detail here.
In today’s newsletter:
BMO cuts commission fees
Fixed mortgage rates go up
Apple jacks up iPhone Duo prices for Canadians
Job hopping in Canada still pays off
Young people eager to put investing on cruise control
— Leah Golob
BMO introduces commission-free trading
The Big Five are starting to slash commission fees. BMO InvestorLine will become the first self-directed brokerage owned by one of Canada’s Big Five banks to offer commission-free trading on all stocks and ETFs as of Sept. 14. BMO is also eliminating account administration fees and lowering options trading costs. The move puts BMO in closer competition with fintechs Wealthsimple and Questrade, which already offer commission-free trading. It could help BMO attract younger investors who see trading fees as a roadblock. However, one finance professor warns that investors may benefit more from better services than a cancellation of trading fees. “If it leads them to trade more, they make more mistakes.”
High bond yields drive fixed rates up
Fixed mortgage rates are climbing. Canada’s Big Banks finally raised their fixed rates last week as rising bond yields pushed up their funding costs. Dozens of lenders, in fact, raised fixed rates by about 10 to 15 basis points as the five-year Government of Canada bond yield, a key benchmark for fixed mortgage rates, hit a 27-month high. Some deals are still hanging around, with online brokers such as True North Mortgage and Ratebuzz offering fixed rates near or below four per cent for insured mortgages. “Lock in pronto,” says mortgage expert Robert McLister. “It’s hard to brag about the rate you almost got.”
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Canadians will pay a pretty penny for the iPhone Duo
Canadians may have to fold on higher iPhone prices. Apple’s entry into the foldable phone market with the iPhone Duo is expected to push the devices into the spotlight, creating more mainstream appeal. But the starting price for Canadians is nearly 10 per cent higher than in the U.S. The phone will retail for between $2,999 and $4,799 in Canada before tax, compared with a starting price of US$1,999 south of the border, which translates to CAD$2,760. One economist says that Apple bets that Canadians eager for the premium phone are less price sensitive than U.S. consumers, “and therefore [Apple] can get away with jacking up the margin a little bit more.” Tariffs aren’t actually to blame here — the phones are built in China and treated as Chinese products.
Switching jobs could be worth the risk
Job hopping is paying off. While the U.S. job market is in “low hire, low fire” mode, Canadians who switched jobs saw their base pay grow 5.6 per cent year over year in August, up from five per cent in July, according to research from payroll firm Automatic Data Processing. By comparison, base pay for workers who stayed with their employer grew just three per cent. The payoff was even higher when overtime, bonuses, and tips were included. Gross pay for job switchers rose 9.6 per cent compared with 4.4 per cent for those who stayed. Still, with Canada losing over 40,000 jobs in August, experts recommend having another role lined up before jumping ship.
The Coast FI formula circling the internet
Young people are doing the math on when they can stop retirement savings. Google search interest in “Coast FI” — the “FI” stands for “financial independence” — is up 50 per cent from last year. Whereas the Financial Independence, Retire Early (FIRE) movement encourages extreme saving early in your career so you can retire early, Coast FI calculates when you’ve invested enough that compound growth could carry your savings to your retirement goal without another contribution. For many, the goal is to hit that number so they can take a lower-paying job, go on work sabbaticals or try their hand at entrepreneurship.
According to The Wall Street Journal, the formula is: Coast FI = Retirement savings goal / (1 + r)ᵗ
r = rate of return on investments
t = number of years until retirement
Still, no one has a crystal ball to predict the future of stock markets and inflation, so don’t put all your faith in the formula.
Employers have a need for speed. According to a study on the freelance platform Fiverr, those who took more than 10 minutes to reply to a potential client were 30 per cent less likely to get hired. (The Peak, Gift Link)
A Venmo no-no. Among 1,000 Gen Zers who covered a group expense, 76 per cent say they weren’t fully reimbursed, and 55 per cent say it caused tension or soured their relationships. Almost half (47 per cent) say they’ve gone into debt to cover group expenses. (The Cut, Paywalled)
The best credit cards for wealthy Canadians.
Boomers move close to Mom and Dad — real close. A generation that once rebelled against their parents is now joining them in their golden years, as longer lifespans mean parents and their adult children qualify for senior living at the same time. (The Wall Street Journal, Gift Link)
Think you can’t negotiate bills without leverage? Even if everyone in your small town uses the same internet or phone provider, you can still negotiate by highlighting your loyalty, asking for special rates or requesting to speak with the retention department.
