Transcript: Personal Finance in a Low-Interest Era | Sep 05, 2019

Nam sits in the studio. She's in her early forties, with shoulder length curly brown hair. She's wearing glasses and a black blazer over a pale blue blouse.

A caption on screen reads "Personal finance in a low interest era. Nam Kiwanuka, @namshine, @theagenda."

Nam says ECONOMIC TURBULENCE ON
THE GLOBAL STAGE IS ONE THING.
HOW IT MIGHT IMPACT EACH OF US
ON A PERSONAL LEVEL, IS ANOTHER.
HERE TO GIVE US SOME PERSPECTIVE
ON THAT:
RONA BIRENBAUM, CARING FOR CLIENTS...

Rona is in her late thirties, with long straight chestnut hair. She's wearing glasses, a black blazer over a pale blue blouse, and a thin golden necklace.

Nam continues AND DOUG CARROLL, PRACTICE LEAD
IN TAX ESTATE AND FINANCIAL
PLANNING WITH MERIDIAN CREDIT UNION...

Doug is in his late fifties, clean-shaven, with short graying brown hair. He's wearing a gray suit, gray shirt, and gray plaid tie.

Nam continues WELCOME TO YOU BOTH.

Rona says THANK YOU.
GREAT TO BE HERE.

Nam says IT'S VERY NICE TO HAVE
YOU BACK, RONA.
AND DOUG, THIS IS YOUR FIRST
TIME.
NICE TO HAVE YOU HERE.
SO I'M GOING TO... BEFORE WE
START THE CONVERSATION, I WANT
TO GET TO KNOW YOU A BIT BETTER,
AND I'LL ASK YOU A QUESTION
THAT'S KIND OF RUDE IF I WERE TO
ASK IT AT A DINNER PARTY.
RONA, I'LL START WITH YOU.
WHAT DO YOU DO?

The caption changes to "Rona Birenbaum. Caring for Clients."
Then, it changes again to "Context is key."

Rona says I HELP
PEOPLE MAKE REALLY SOUND
FINANCIAL DECISIONS IN ALL
ASPECTS OF THEIR LIFE SO THAT
THEY CAN FEEL SECURE AND ENJOY
THEIR LIFE.

Nam says DO PEOPLE COME TO YOU
WHEN THEY HAVE A FINANCIAL
PROBLEM, OR DO MORE PEOPLE COME
TO YOU WHEN THEY'RE TRYING TO
GET THE LAY OF THE LAND?

Rona says A LITTLE BIT OF BOTH.
PEOPLE ARE QUITE MOTIVATED TO DO
SOME FINANCIAL PLANNING WHEN
THEY HAVE A BIG DECISION TO
MAKE.

Nam says SUCH AS...

Rona says SUCH AS RETIRING, WHEN TO
RETIRE, BUYING A HOUSE, HAVING A
THIRD CHILD... THOSE KINDS OF
THINGS.
DECIDING HOW TO ACCEPT THEIR
SEVERANCE PACKAGE.
AND THEY'RE TIME-CONSTRAINED AND
IT'S A BIG DECISION AND THAT'S
REALLY MOTIVATED PEOPLE TO GET
THE ADVICE.
AND THEN THERE ARE JUST SOME
OTHERS WHO FEEL A LITTLE BIT, I
GUESS, INSECURE AND AFRAID THAT
IF THEY DON'T DO SOME PLANNING
NOW, THEY MIGHT REGRET IT IN THE
FUTURE.
SO THOSE ARE THE TWO MAIN TYPES
OF...

Nam says YOUNG, OLD?

Rona says ALL OVER THE MAP.
ALL OVER THE MAP.

Nam says DOUG, WHAT DO YOU DO?

The caption changes to "Doug Carroll. Meridian."

Doug says I'M MORE IN A
SUPPORT ROLE.
I'M KIND OF A DEGREE REMOVED
FROM THE DIRECT RELATIONSHIP.
I CERTAINLY DO SEE PEOPLE AND
HAVE THOSE KINDS OF
CONVERSATIONS WITH PEOPLE WHO
HAVE NEEDS OF VARIOUS TYPES
FINANCIALLY, BUT MY ROLE... I
WORK WITH MERIDIAN CREDIT UNION.
I SUPPORT THE FINANCIAL ADVISORS
WHO IN TURN HAVE MEMBERS THAT
THEY'RE DEALING WITH.
SO MY BACKGROUND IS IN TAX AND
ESTATE PLANNING.
AND WHERE THERE ARE ISSUES THAT
COME UP WHERE PEOPLE NEED A
LITTLE BIT MORE OF A SOUNDING
BOARD ON THOSE TYPES OF THINGS,
THEN OUR ADVISORS THEN CONTACT
ME AND I'LL HAVE THE
CONVERSATION WITH OUR ADVISOR OR
DIRECTLY WITH THE MEMBER AND
SOMETIMES IN PERSON, SOMETIMES
OVER THE PHONE, WHATEVER'S GOING
TO FIT THE SITUATION.

Nam says WE HEAR A LOT IN THE
NEWS ABOUT THE LACK OF FINANCIAL
LITERACY THAT SOME PEOPLE MIGHT
HAVE.
FROM YOUR EXPERIENCE AND FROM
THE PEOPLE THAT YOU HAVE SPOKEN
TO, WHAT DEGREE DO YOU FIND?
RONA, I'LL START WITH YOU.

Rona says I THINK
FINANCIAL LITERACY IS A WHOLE
LOT BETTER THAN IT WAS WHEN I
STARTED IN THE INDUSTRY 30 YEARS
AGO.
AND THE WORK THAT THE MEDIA HAS
DONE HAS A LOT TO DO WITH THE
IMPROVEMENTS IN FINANCIAL
LITERACY.
THAT BEING SAID, ON THE OTHER
SIDE OF THE COIN, THERE'S SO
MUCH INFORMATION NOW THAT
CONSUMERS ARE OFTEN NOW CONFUSED
AS TO WHAT APPROACH IS THE
OPTIMAL ONE FOR THEM.

Nam says GIVE US AN EXAMPLE.

The caption changes to "Rona Birenbaum, @Caring4Clients."

Rona says SO AN EXAMPLE WOULD BE, YOU
KNOW, THERE ARE SOME... SOME
INDIVIDUALS THAT MIGHT SAY, OH,
YOU SHOULD BORROW TO INVEST,
OKAY?
AND YOU CAN MAKE ALL SORTS OF
CASES AROUND WHY THAT MIGHT BE A
GOOD IDEA.
BUT THERE ARE A LOT OF REASONS
WHY THAT ISN'T APPROPRIATE.
AND SO CONSUMERS HAVE TO BE
SAVVIER NOW IN TERMS OF LOOKING
AT THE SOURCE OF THE INFORMATION
AND WHERE THE BIASES MIGHT
EXIST.
SO THERE'S A WHOLE LOT OF
INFORMATION, WHICH IS GREAT, BUT
FIGURING OUT WHAT IS MOST
RELEVANT TO THEM AND WHAT WILL
BE IN THEIR PARTICULAR INTEREST,
I THINK THAT IS THE CHALLENGE
NOW.

Nam says DOUG, WHAT ABOUT YOU?

The caption changes to "Doug Carroll, @realtirement."

Doug says I THINK THAT
IT DEFINITELY HAS GOTTEN A LOT
MORE PROMINENCE OVER THE LAST,
WELL, 20 YEARS OR SO, BUT
CERTAINLY SINCE WE HAD THE
ECONOMIC DOWNTURN IN '08, '09,
THERE WAS A LOT OF FOCUS THAT
THEN WENT ONTO, DID WE GET INTO
THAT SITUATION BECAUSE OF
INDIVIDUAL OR WIDE LACK OF
FINANCIAL LITERACY.
AT THE SAME TIME, I THINK
THERE'S A PRACTICAL ASPECT OF IT
THAT WE CAN'T EXPECT EVERY
SINGLE PERSON TO HAVE A DEEP,
DEEP KNOWLEDGE OF ALL ASPECTS OF
FINANCIAL LITERACY.
IT DOES COME BACK TO THE
FINANCIAL ADVISORS TO TAKE A LOT
OF THAT ON, TO FIND WAYS TO
COMMUNICATE IN AN EFFECTIVE WAY
SO THAT THEY CAN MAKE BITE-SIZE
COMPONENTS THAT PEOPLE WILL BE
ABLE TO ACT ON AT A PARTICULAR
POINT WHEN THEY NEED TO HAVE
THAT INFORMATION.
SO APPLYING IT IN THE SITUATION
AS OPPOSED TO SAYING, HERE'S AN
ENCYCLOPEDIA.
GO READ THIS THE NEXT SIX MONTHS
AND WE'LL HAVE A CONVERSATION.
IT NEEDS TO BE TARGETED.

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Nam says IT SOUNDS LIKE PEOPLE
ARE MORE AWARE OF WHAT'S
HAPPENING RATHER THAN FINDING
OUT THAT LAST MINUTE THERE'S
NOTHING REALLY THEY CAN DO ABOUT IT.

Rona says ABSOLUTELY.
I THINK EVERYBODY KNOWS YOU NEED
TO SAVE FOR RETIREMENT.
IT'S NOT EVEN... IT'S ASSUMED
NOW.
THERE ARE A LOT OF THINGS THAT
PEOPLE DIDN'T KNOW THAT ARE NOW
KIND OF TABLE STAKES AND
EVERYBODY IS KIND OF AWARE OF
THEM.
SO YOU MAKE A REALLY GOOD POINT,
DOUG, AND THAT IS, WHAT ADVISORS
CAN DO IS THEN GO DEEPER AND,
YOU KNOW, INTEGRATE ALL OF THE
VARIOUS COMPONENTS OF FINANCIAL
DECISION-MAKING.
SO, FOR EXAMPLE, WHAT THAT MEANS
IS, WELL, IF I BORROW AND I TAKE
THIS TYPE OF MORTGAGE, WHAT
IMPACT IS THAT GOING TO HAVE ON
MY ABILITY TO SAVE, YOU KNOW,
FOR MY CHILDREN'S EDUCATION?
HOW IS THAT GOING TO IMPACT MY
TAX SITUATION?
SO IT'S THE INTEGRATION OF ALL
OF THESE THINGS, WHERE A LOT OF
THE POWER IS IN THOSE INDIVIDUAL
DECISIONS.

Doug says I THINK THE
KEY WORD THAT YOU SAID THERE IS
THE INTEGRATION BECAUSE, WHEN
YOU LOOK OUT ON THE INTERNET,
YOU CAN FIND INFORMATION FROM
VERY CREDIBLE PLACES THAT, ON
ITS OWN, YOU SAY, WELL, THAT'S
GREAT INFORMATION, AND THEN
THERE'S SOMETHING ELSE WHICH IS
ALSO GREAT INFORMATION.
BUT WHO IS GOING TO MARRY THOSE
THINGS UP TO MAKE SURE THAT THEY
APPLY IN THAT PARTICULAR
CIRCUMSTANCE.
AGAIN, IT COMES BACK TO THE
ADVISOR, IT COMES BACK TO THE
PERSON.
BUT WHERE IT SEEMS A LITTLE BIT
OUT OF REACH FOR THAT PERSON IN
THEIR OWN CIRCUMSTANCE, THAT'S
WHERE ADVISORS CAN STEP IN AND
SAY HERE IS HOW YOU USE THAT
INFORMATION INSTEAD OF HAVING IT
AS A BUILDING BLOCK ON ITS OWN.

Nam says YOU WORK AT MERIDIAN.
WHAT'S THE DIFFERENCE BETWEEN A
BANK AND CREDIT UNION?

Doug says ESSENTIALLY
THEY'RE BOTH BANKING OPERATIONS,
SO THERE'S LOANS AND DEPOSITS.
IT TAKES THE MONEY IN...

Nam says MERIDIAN IS A CREDIT
UNION, RIGHT?

Doug says MERIDIAN IS A CREDIT UNION.
AND A CREDIT UNION IS
COOPERATIVE ORGANIZATION.
A BANK, AS WE PRETTY MUCH
UNDERSTAND IN CANADA, THE
SCHEDULE A BANKS, IS THAT
CORRECT?

Rona says YES.

Doug says ARE OWNED BY
SHAREHOLDERS.
WHEREAS CREDIT UNIONS ARE OWNED
BY THE PEOPLE WHO MAKE USE OF
THEIR SERVICES.
SO THE PEOPLE WHO HAVE CREDIT
AND GET LOANS DO HAVE A SAY IN
THE ORGANIZATION AND VOTE ON WHO
THE BOARD IS GOING TO BE.

Nam says THE BANK OF CANADA
LOWERED THE INTEREST RATE.
HOW IS THAT GOING TO IMPACT
CONSUMER BEHAVIOUR?

The caption changes to "Rate unchanged."

Rona says IT DEPENDS
ON THE CONSUMER.
SO IF WE'RE TALKING ABOUT
SENIORS THAT ARE RETIRED, THE
EFFECT THAT IT'S GOING TO HAVE
ON THOSE PEOPLE IS ONE OF
CONTINUED FRUSTRATION.

Nam says WHY?

Rona says BECAUSE, YOU KNOW,
INDIVIDUALS THAT ARE IN THEIR
70S AND UP TEND TO NAVIGATE
FOR A LOT OF RIGHT REASONS TO
FIXED INCOME INVESTMENTS, AND
BECAUSE THEY'RE SAFE, THEY
GENERATE THE INCOME THAT THEY
NEED, SAFE FROM A CAPITAL
VOLATILITY STANDPOINT.
YOU KNOW, THESE INDIVIDUALS
REMEMBER THE DAYS OF 15 percent GICS
AND THEN 10 percent GICS, AND THEY
WERE FRUSTRATED AT 10 percent GICS
AND THEN THEY WENT DOWN TO 8 percent
AND LOOK AT WHERE WE ARE AT NOW.
AND A LOT OF THOSE INDIVIDUALS
HAVE BEEN KIND OF WAITING,
WHETHER IT'S TO PURCHASE AN
ANNUITY OR WHETHER IT'S TO BUY A
LONGER-TERM, A LONGER-DATED
FIXED INCOME INSTRUMENT, THEY'VE
BEEN WAITING FOR RATES TO GO UP
SO THEY CAN LOCK IN.

Nam says SOME WOULD ARGUE THAT
A LOT OF THESE INDIVIDUALS WERE
ABLE TO BUY HOUSES WHEN IT WAS
MORE AFFORDABLE, SO MAYBE THEIR
WEALTH IS IN THEIR HOME OR...

Rona says AGAIN, IT'S DIFFERENT.
THE PEOPLE THAT WILL BE
FRUSTRATED ARE THE ONES THAT
HAVE INVESTMENT ASSETS THAT ARE
FUNDING A PORTION OF THEIR
RETIREMENT INCOME.
SO YOU CAN'T EAT THE BRICKS OF
YOUR HOUSE.
SO YOU'VE GOT TO HAVE LIQUIDITY.
AND THAT LIQUID CAPITAL NEEDS TO
GENERATE A RETURN.
AND IF GICS ARE PAYING 2 percent AND
INFLATION IS 2 percent AND THE 2 percent THEY
EARN ON THEIR INVESTMENTS ARE
PRE-TAX, THEY ARE LOSING
PURCHASING POWER EVERY YEAR.
SO THEY'RE FRUSTRATED AND
THEY'RE SEEING THEIR... THEY'RE
ACTUALLY SEEING THEIR CAPACITY
TO FUND THEIR LIFESTYLE DECLINE.
THE YOUNGER SET, ON THE OTHER
HAND, ARE GENERALLY NET
BORROWERS, NOT NET ASSET
ACCUMULATORS, THEIR EARLY YEARS.
SO FOR THEM, THE LOWER INTEREST
RATES ARE QUITE ATTRACTIVE.
BUT AT THE SAME TIME, THEY CAN
BE A BIT OF A TRAP...

Nam says WHAT DO YOU MEAN BY THAT?

Rona says THEY CAN BE A BIT OF A TRAP
IN THE SENSE THAT IT CAN
ENCOURAGE OVERBORROWING,
OVERLEVERAGING.

Nam says BECAUSE MONEY IS CHEAP
TO BORROW?

Rona says THAT'S RIGHT.
IT ALSO TAKES AWAY FROM THE
FOCUS OF HOW YOUNG PEOPLE OVER
TIME CAN REALLY BUILD WEALTH,
AND THAT IS NOT THROUGH
BORROWING BUT THROUGH INCOME
GROWTH AND FOCUSING ON CAREER
MANAGEMENT AND INCOME GROWTH.
SO IT DISTRACTS FROM I I THINK
SOME OF THE MORE IMPORTANT STEPS
AND FOCUSES THAT YOUNG PEOPLE
SHOULD BE THINKING ABOUT.

Nam says WOULD ANYBODY BE HAPPY
ABOUT THIS?

Rona says YEAH, BORROWERS.
SO ANYBODY GETTING A MORTGAGE OR
ANY KIND OF TRADITIONAL... NOT
CREDIT CARD BORROWERS BECAUSE
THOSE RATES HAVE BEEN 19 percent AND
THEY'RE STILL 19 percent.
SO WE'RE TALKING ABOUT ACCESS TO
THE HOUSING MARKET.
BUT, YOU KNOW, THE THING IS
THAT, EVEN THOUGH RATES ARE AS
LOW AS THEY ARE, WE'VE GOT A
PROBLEM OF, YOU KNOW, REALLY
STRONG APPRECIATION IN REAL
ESTATE THAT HAS STILL LOCKED
THOSE YOUNG PEOPLE OUT, BUT NO
MATTER HOW... I MEAN, THE RATES
WOULD HAVE TO BE NEGATIVE IN
ORDER FOR SOME MILLENNIALS TO
ACTUALLY GET INTO THE REAL
ESTATE MARKET.
SO THEY'RE PLEASED ON THE ONE
HAND THAT THEIR COST OF
BORROWING IS UNDER CONTROL, BUT
ON THE OTHER HAND THEY SAY,
WELL, IT'S NOT GOING TO HELP ME
ANYWAY BECAUSE I'LL NEVER SAVE
UP THE DOWN PAYMENT, WHICH IS
WHY THE FOCUS ON INCOME
GENERATION BECOMES SO IMPORTANT.

Nam says DOUG, I'D LIKE TO GET
YOUR VIEW: HOW WILL THIS IMPACT
CONSUMER BEHAVIOUR?

Doug says I THINK THE
ONE HAND AND THE OTHER HAND IS A
REALLY GOOD WAY OF THINKING OF
IT, AND I WOULD ADD ON ANOTHER
HAND, IT'S ALMOST LIKE AN
OCTOPUS. YOU HAVE DIFFERENT
MODES THAT YOU'RE IN AT
DIFFERENT STAGES IN YOUR LIFE.
SOMETIMES YOU'RE A SAVER,
PRINCIPALLY A SAVER. SOMETIMES
PRINCIPALLY YOU ARE A SPENDER
ONCE YOU GET OUT PAST YOUR
INCOME EARNING YEARS AND
THEN YOU'RE SPENDING INTO
YOUR RETIREMENT YEARS.
YOU HAVE ALL THESE DIFFERENT
MODES.
IT'S GOOD AND BAD TO EVERY
PERSON IN DIFFERENT PARTS OF
THEIR LIVES.
IT SHOULD NOT NECESSARILY
INFLUENCE WHAT PEOPLE DO,
WHATEVER THE INTEREST RATE
ANNOUNCEMENT MIGHT HAVE BEEN,
WHICH WAS TO STAY AS IS RIGHT
NOW.
BUT THE FACT THAT IT... IT
BRINGS ATTENTION TO THE FACT
THAT INTEREST RATES DO MOVE UP
AND DOWN.
IT ALLOWS PEOPLE TO THINK, OKAY,
WELL, WHERE AM I?
WHAT KIND OF A USER AM I IN THE
ECONOMY?
AM I A BORROWER OR HOW MUCH OF
MY ACTIVITY IS BORROWING-RELATED
OR HOW MUCH OF IT IS
SAVING-RELATED?
HOW MUCH OF IT IS GETTING A GOOD
EDUCATION.
THAT'S WHAT GETS LEFT BEHIND AT
TIMES, IS THAT PEOPLE ONLY THINK
IN TERMS OF THE DOLLARS AND
CENTS OF THINGS, BUT SOMETIMES
YOU HAVE TO INVEST IN YOURSELF
COST-WISE TO GET THE PROPER
EDUCATION, TO KNOW THAT YOU ARE
GOING TO BE ABLE TO PROVIDE FOR
YOURSELF LATER OUT IN TIME.
THERE'S ONLY SO MUCH YOU CAN
REDUCE COSTS.
YOU CAN ONLY GET DOWN TO A BARE
MINIMUM, AND THEN AT THAT POINT,
THE ONLY PLACE TO GO IS TO
INCREASE THE REVENUE, TO
INCREASE YOUR CAPACITY TO ADD
THINGS ON THE UPSIDE.

Nam says I GUESS IT'S ALSO
HARDER TO CHANGE YOUR WAY OF
LIFE LATER ON BECAUSE YOU'RE
ACCUSTOMED TO LIVING A CERTAIN WAY.
AND ALSO WHEN WE'RE ANTICIPATING
THESE CHANGES IN THE INTEREST
RATE, IT HAS TO BE STRESSFUL FOR
SOME PEOPLE BECAUSE IF IT WAS TO
GO UP, IT WOULD MEAN SOMETHING
ELSE FOR THEM.

The caption changes to "Watch us anytime: tvo.org, Twitter: @theagenda, Facebook Live, YouTube."

Rona says IT WOULD.
I THINK THEY SHOULD BE MORE
WORRIED ABOUT FALLING INTEREST
RATES THAN RISING INTEREST
RATES.
AND I THINK THAT'S TRUE FOR
ALMOST EVERYONE, AND THAT'S
BECAUSE FALLING INTEREST RATES
REFLECT A WEAKENING GLOBAL
ECONOMY.
HERE IN CANADA SPECIFICALLY
WHAT'S HAPPENING IN THE CANADIAN
ECONOMY.
BUT IN THE EVENT THAT THERE'S A
KIND OF A GLOBAL RECESSION,
RATES EVERYWHERE ARE GOING TO
DECLINE.
WHAT THAT MEANS IS THAT BUSINESS
WILL CONTRACT.
THAT'S A BIGGER ISSUE BECAUSE
CERTAINLY IF YOUR BORROWING RATE
GOES DOWN 1 percent, YOU'RE GOING, WHOO
HOO!
IF YOU LOSE YOUR JOB, IT DOESN'T
MATTER HOW LOW THAT INTEREST
RATE IS, YOU CAN'T AFFORD TO PAY
IT.
SO DECLINING INTEREST RATES ARE
EXCITING FOR A WHILE FOR THE NET
BORROWERS, FRUSTRATING FOR THE
SENIORS, BUT THE BIGGER PICTURE
IS, IS WHAT DOES IT SAY ABOUT
THE ECONOMY?
SO YOU'VE GOT EVEN THE OLDER
PERSON, THEY COULD HAVE
BOOMERANG KIDS.
THEIR CHILD LOSES A JOB, HI, MOM
AND DAD, I'M BACK AT THE FRONT
DOOR.
THAT'S GOING TO HAVE AN IMPACT
ON THEM.
IT'S ALSO GOING TO HAVE AN
IMPACT ON THE GENERAL PSYCHOLOGY
OF SOCIETY.
SO WHAT DOES THAT MEAN FOR
MENTAL HEALTH?
WHAT DOES THAT MEAN FOR
PRODUCTIVITY AT WORK IF YOU'RE
WORRIED ABOUT LOSING YOUR JOB,
ET CETERA, ET CETERA.
I THINK A LITTLE BIT MORE FOCUS
SHOULD BE ON THERE AND PREPARING
YOURSELF FINANCIALLY FOR THE
POSSIBILITY AND THE LIKELIHOOD
OF AN ECONOMIC DOWNTURN.

Nam says PLANNING AHEAD.

Rona says PLANNING AHEAD.

Nam says CANADA HAS ONE OF THE
HIGHEST LEVELS OF CONSUMER DEBT
IN THE WORLD.
DOES THIS WORRY YOU, DOUG?

Doug says I THINK THAT
ON AN INDIVIDUAL BASIS... YOU
HAVE TO LOOK AT IT YOURSELF.
BECAUSE STATISTICS CAN LEAD YOU
IN THE WRONG DIRECTION.
THAT IS OBVIOUSLY A STAT THAT'S
BEEN QUOTED FOR A LONG TIME.
I DON'T KNOW WHAT THE FIGURE IS.
SOMETHING LIKE INCOME-TO-DEBT IS
170 percent, SOME KIND OF RATIO...

Nam says IT SOUNDS TERRIBLE.

Doug says IT SOUNDS TERRIBLE.
IT SOUNDS VERY LARGE.
BUT EVEN SO, ON AN INDIVIDUAL
BASIS, IF YOU HAVE YOUR HOUSE IN
ORDER, IF YOU KNOW WHERE THE
SOURCE OF INCOME IS COMING FOR
YOU, HOW STABLE IT IS, IF YOU
HAVE YOUR SPENDING UNDER
MANAGEMENT, YOU'RE GOING TO HAVE
TO SPEND LARGE AT SOME POINTS IN
YOUR LIFE, PARTICULARLY WHEN
YOU'RE GOING TO SEND YOUR KIDS
OFF TO POSTSECONDARY SCHOOL.
IT'S GOING TO COST YOU AT THOSE
TIMES, AND SO MAYBE YOU HAVE TO
GET INTO SOME CONSUMER DEBT TO
GET THERE.
BUT MAKING SURE THAT YOU'RE
CONSCIOUS OF THE STABILITY AND
SOURCE OF YOUR INCOME, HOW WELL
YOU ARE IN YOUR WORK, AND THEN
MAKING SURE THAT YOU KEEP
ALIGNED WITH THE EXPENSES THAT
YOU HAVE, THAT YOU DON'T OVERDO
IT.
NOT TO BE BORING AND JUST
CONSTANTLY SIT INSIDE YOUR
LIVING ROOM AND NEVER LOOK OUT
THE WINDOW.
BUT YOU HAVE TO BE AWARE OF
THOSE THINGS.
AND IF YOU'RE AWARE OF THAT,
EVEN IF YOU DO HAVE A LARGE
PERCENTAGE, BUT YOU'VE PLANNED
OUT, YOU'VE LOOKED OUT INTO THE
FUTURE AND SAID, "I'VE GOT A
ROUTINE OF ACTIVITY.
I HAVE MY SAVINGS PRACTICES,
BEHAVIOURS THAT I CAN CONTROL.
I CAN'T CONTROL THE ECONOMY
OVERALL.
BUT I CAN CONTROL WHAT I DO.
IF I LIVE WITHIN MY MEANS RIGHT
NOW, THEN I'M ABLE TO SAVE
TOWARDS THAT FUTURE," AND THERE
WILL BE THOSE TIMES YOU HAVE
HIGH DEBT RELATIVE TO WHERE YOU
ARE.
IF TIME ROLLS ON, YOU WILL HAVE
PLANNED.

Nam says THERE IS A CHANCE THE
U.S. FED WILL CHANGE RATES AGAIN
AND CANADA WILL PROBABLY FOLLOW SUITS.
HOW WILL THAT CHANGE THE WAY
CONSUMERS CHANGE IN THIS SOCIETY?

The caption changes to "Looking ahead."

Rona says THAT'S HARD TO SAY.
PEOPLE'S BEHAVIOURS ARE, I
THINK, DRIVEN BY TWO THINGS: I
THINK THE MAJORITY OF PEOPLE'S
CHOICES AND THOUGHT PROCESSES
ARE BASED ON WHAT'S HAPPENING TO
THEM IN THE IMMEDIATE.
A LOT OF THE EMPLOYMENT GROWTH
AND INCOME GROWTH RIGHT NOW IN
CANADA IS SMALL BUSINESSES.
SMALL BUSINESSES STARTING AND
HIRING.
AND SO LOW INTEREST RATES FOR
THOSE BUSINESSES IS EXTREMELY
HELPFUL.
AND A LOT MORE MILLENNIALS ARE
IN THE SELF-EMPLOYMENT MODE OR
CONTRACT MODE, AND ORGANIZATIONS
THAT CAN FLOURISH IN A LOW
INTEREST RATE ENVIRONMENT TO BE
ABLE TO KIND OF PROVIDE THOSE
OPPORTUNITIES ON THE CAREER SIDE
IS GOING TO BE HELPFUL FOR THEM.
THEY ARE SEA FEELING OPTIMISTIC
ABOUT THE FUTURE... THEY'RE
FEELING OPTIMISTIC ABOUT THE
FUTURE, THEY'RE LESS LIKELY TO
TAKE THAT KIND OF EMPLOYEE JOB
THAT'S A LITTLE BIT MORE SECURE
BUT THEY HATE AND CONSIDER
SOMETHING THAT HAS A LITTLE BIT
MORE CAREER RISK BUT THEY FEEL A
BIT MORE SECURE BECAUSE OVERALL
THEIR FINANCES ARE IN ORDER,
THEIR DEBT COSTS ARE MANAGEABLE,
ET CETERA.

Nam says DOUG, WHAT WOULD YOU SAY?

Doug says I WOULD SAY
AS AN INDIVIDUAL, LIKELY MOST
PEOPLE WOULD LOOK AT A CHANGE IN
THE INTEREST RATE AND SAY,
THAT'S BIG HIGH-LEVEL ECONOMY
STUFF, AND THEY MAY NOT REACT
DIRECTLY.
I THINK MOST PEOPLE WOULD NOT
SAY, INTEREST RATES HAVE
CHANGED, THEREFORE I'M GOING TO
CHANGE WHAT I'M DOING TOMORROW.
BUT THE FACT THAT IT'S CHANGED,
BECAUSE IT'S REFLECTIVE OF WHAT
VERY LARGE CENTRAL BANKS ARE
LOOKING AT THE ECONOMY OVERALL
AND REFLECTING WHAT THEY THINK
IS THE APPROPRIATE INTEREST RATE
WHICH WILL TRY TO KEEP THINGS
STABLE, AS AN INDIVIDUAL THEN,
YOU LOOK AT YOUR HOUSEHOLD AND
SAY, OKAY, WHAT ARE THE THINGS
THAT I HAVE?
YOU CAN'T GET RID OF THE
NECESSARIES.
YOU CAN TRIM BACK ON THE
DISCRETIONARIES AND MAYBE YOU
SAY THOSE LUXURIES, WE WILL SKIP
IT THIS YEAR.
WE WON'T HEAD ON THAT VACATION.
YOU DON'T HAVE TO MAKE THAT
DECISION IMMEDIATELY WHEN THE
INTEREST RATE ANNOUNCEMENT IS
MADE BUT I WOULD BUCKET THOSE
THINGS IN CATEGORIES OF
NECESSARIES AND DISCRETIONARIES.
LOOK AT THE ONES AT THE TOP
FIRST TO MAKE SURE YOU'RE TAKING
CARE OF YOURSELF AND HOUSEHOLD
AND GENERALLY ENJOYING LIFE.

Nam says I'LL GIVE YOU 20
SECONDS FOR THE NEXT QUESTION
FOR BOTH OF YOU.
WHAT'S YOUR BEST ADVICE TO
PEOPLE AS THEY LOOK AHEAD TO
LOWER INTEREST RATES?

Doug says I WOULD SAY THAT YOU WANT TO
BEST UNDERSTAND WHO YOU ARE,
WHETHER YOU ARE A SAVER, WHETHER
YOU ARE A BORROWER, AND MAKE
SURE THAT THE ACTIVITY THAT YOU
ARE PRINCIPALLY INVOLVED IN YOU
ALIGN YOUR CHANGES TO THAT PART,
THAT MAIN PART OF YOUR ACTIVITY.
SO IF YOU ARE PRINCIPALLY A
BORROWER AND THE INTEREST RATES
GO DOWN, MY INCLINATION IS TO
SAY, PAY DOWN YOUR MORTGAGE, IF
YOU CAN, AND THEN YOU'LL RELEASE
MORE MONEY LATER ON THAT YOU
COULD THEN PARTICIPATE IN
GROWING MONEY.
SO WHO ARE YOU?

Nam says RONA?

Rona says DO SOME FINANCIAL PLANNING.
ONE OF THE MOST POWERFUL PARTS
OF FINANCIAL PLANNING IS
SCENARIO DEVELOPMENT.
SO WHAT IS MY FINANCIAL
TRAJECTORY IF INTEREST RATES ARE
STABLE, IF THEY FALL, IF THEY
INCREASE, AND WHAT IS THE RIPPLE
EFFECT OF THAT?
AND WHEN YOU START TO SEE THE
FUTURE PLAY OUT IN FRONT OF YOU,
IT HELPS YOU MAKE DECISIONS
TODAY.
NONE OF... I MEAN, NOBODY HERE I
THINK WILL TRY TO MAKE AN
INTEREST RATE PREDICTION.
WE THINK IT WILL GO DOWN, IT
WILL GO UP. WE THINK IT WILL
GO UP, IT WILL GO DOWN.
SO LOOKING AT A VARIETY OF
POSSIBLE TRAJECTORIES IS REALLY
IMPORTANT.
AND THEN YOU CHOOSE A PATH THAT
SEEMS MOST PRACTICAL.

The caption changes to "Producer: Meredith Martin, @MeredithMartin."

Nam says WELL, RONA AND DOUG,
THANK YOU SO MUCH FOR BEING HERE
AND FOR YOUR VALUABLE INSIGHT.
I THINK IT'S GOING TO ALLOW A
LOT OF US TO PLAN AHEAD.
WE APPRECIATE YOUR TIME.

The caption changes to "Subscribe to The Agenda Podcast: tvo.org/theagenda."

Both guests say THANK YOU.

Nam says THANKS.

Watch: Personal Finance in a Low-Interest Era