Yesterday, the Bank of Canada held the overnight interest rate at 1%, which was anticipated by economist and not something that came as a shock.

To remind you, Mark Carney (the boss at the Bank of Canada, or “Governor of the Bank of Canada” in technical terms), felt that the global economic recovery, while moving in the right direction, there are risks that make everyone a little weary of boosting rates.

In Canada, the recovery is moderate, with activity in the second half of 2010 actually a little worse than expected, but its not all bad.  Household spending (what you and I do) was stronger than the Bank thought it would be, and business investment was even stronger.

On the flipside, net exports (what Canadians are shipping out of the country) were weaker than expected; this was due to poor production performance and our strong (and getting stronger) Canadian dollar.  A strong loonie makes for great cross-boarder shopping, but with the U.S. as Canada’s largest export market, we are getting more and more expensive, as their greenback can’t buy as much as it used to!

The next meeting of the Bank is January 18^th.

In other news, I did get some excellent cross boarder shopping deals last weekend… just saying.  Check for household spending!  We all have to do our part.

I read an article today in the Globe and Mail entitled: “Expecting 10% returns?  It’s time for a reality check”.

So, to start off, when you invest, you hope your portfolio (essentially a basket of investments) goes up, that is, it makes money.  The value of money that increases is your “return” – ie, like the title from the Globe says, if you expect 10% returns, you’re saying you hope your investment rises enough to provide you with 10% more money.

Well, the likelihood that an investment provides a 10% return isn’t really working with today’s reality.  Today, that 10% falls in line with that whole notion your mom or dad taught you, if it sounds too good to be true, it probably is.

Investments can and will grow, but probably not as fast as they did a few years ago.  My husband and I love this show, American Greed, its on msnbc, anyway, its a weekly show that features a different financial “devil” that steals and swindles millions (or billions) of dollars from unsuspecting victims – think Bernie Madoff (don’t know him, I’ll write an article recapping that story soon!).  We were watching it a couple weeks ago, and I couldn’t help but think, yah, the financial crook was just that, a ‘smart’ thief, a greedy SOB, but unfortunately, so were those victims.  Many of them were promised 15-20% returns in 2-3 months, which if you think about it, is just silly.  How, how could you in your right mind think that was a) possible, and further, b) legal!!  Folks, don’t let greed, quick money, or anything else that literally sounds too good to be true, cloud your judgement.  To my surprise, at the conclusion of that episode not one, but two of the victims took blame for their greed, and said that they just wanted the money too bad to listen to their instincts.

Ladies, be ok with 3, 4 or 5% returns, while understanding NOTHING is a sure thing, and just as the money can rise, so too can it fall.

So, no need to rant… just be level headed in your financial decisions, and talk to experts, ask questions, and understand that if you are investing, you have to be ok with some volatility – think high school boyfriends  You survived that, right?!

Easy now.  HST, or Harmonized Sales Tax, is the newest tax to hit Ontario.  As stink as it is we have a new tax, many other provinces have had HST for some time now, and its not as horrific as we might all be thinking.

So what’s the deal?  The 2009 Ontario Budget announced that PST will now be “replace with a more modern, value-added tax” that will also partner up with GST, creating HST starting July 1, 2010.

HST will now be 13%, of which 8% will be Ontario’s portion, and the remaining 5% as the federal portion.   Right now, we pay 13% so that part hasn’t changed.  However, some services where we have only paid PST in the past, will now be exposed to HST – so that, meh, not so good.

The big question people have, is how does this affect home buyers and real estate?  Well ladies and gents, right now, we are only paying GST on lawyer fees and taxes when purchasing a home.  With HST, that will increase by 8%.  Gross.  No way around it.

At the end of the day, HST is coming.  As of July 1, 2010 here is what’s what:

Ultimately, anything you are paying GST on will now be subject to HST, and so you will be paying 13%.

HST will not be charged on the following goods, btw, you haven’t paid PST on these either:

Basic groceries, prescription drugs, municipal public transit, legal aid, most financial services, child care, tutoring, music lessons (rock on!) and residential rates.

And folks, you won’t have to pay the 8% provincial part of HST for the following.  But wait, as if this “HST” has made any of this any easier, I mean, how can you harmonize something, only to break it up anyway for the following goods – whatever – here’s the list!:

Qualified prepared food and bevies under $4, print newspapers, children’s clothing and shoes, children’s car seats, diapers, feminine hygiene products (thanks for realizing this isn’t a luxury!) and books!

For more FAQ on HST – hit up the gov’s site, as honestly – if you’ve read this post this far, god bless you!

No worries, we asked the same question before, and sweets, you won’t be the last!

A bond is a fairly straightforward financial tool.  Governments and companies sometimes need to raise some money, or “capital” (a fancy word for money!).  So, they need some money, that part we get.  And instead of walking over to the bank and getting a loan, they decide that they’d like to issue (sell) some bonds!  If you or I buy the bond, we are essentially loaning money to this company or government for a set period of time.  Once that time comes, the bonds “maturity date”, the company or government you purchased the bond from is supposed to pay you back in full.  I say supposed to, because as we all know, nothing is 100%.  However, there are MANY bonds that are as safe an investment as you can make.

So I just give them money, and then they pay me back later?  That seems kinda lame.

Well, if it were just that, then yes, that is lame.  Except in an effort to sweeten the deal, the company or government that issued you that bond will also pay you interest, so that you earn a little more money for loaning that money in the first place!  There are fancy words that people have dreamt up to complicate things, like calling the interest the “coupon rate” and other such things… but essentially, a bond is a loan you are providing to the bond issuer (company or government), who in turn, promises to pay you back at the end of the agreement, anywhere from less than a year to 30 years!