The latest Canadian Consumer Price index data (for March) has been released and I know that you will all be hurrying to your spreadsheets to determine what the actual increase in your cost of living is. Right?
If you dine out more than the average, tipple an adult beverage more than the average or drive more than the average, you likely have a higher cost of living than the average and that is an important factor to consider when you are forecasting your lifestyle costs into the future.
And it is not just what you consume, it is where you do your consuming:
If you are consuming in Newfoundland, New Brunswick, Ontario and / or BC, it is costing you more than the average.
If you are getting an average annual return of 6% after fees and taxes on your investments and your cost of living is rising at 2%, your real return is 4%.
However, if your cost of living is increasing at 3% per year, then you are going to have (over time) a lower real return (3% average annual return) and when compounding this over 30 to 40 years, it will have a significant impact.
Just like the fees you pay for wealth and investment management. Do you know exactly what fees (including hidden MER fees) you pay?
(for more discussion on fees, see our High Rock Introductory Webinar)
It all adds up.
Furthermore, the Bank of Canada's core inflation data, where they look for trends in their specific measures of Consumer Prices:
They are all well below the 2% lower band of their target, so those of you concerned about the cost of servicing your debt can be comfortable in knowing that the BOC will not be raising rates anytime soon.
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist