As the snow melts and the first blooms of spring make their appearance across Canada, we are quickly reminded on how fast the first 3 months came and went for 2024.

Our newsletter will focus on the following topics:

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First Home Savings Account (FHSA)
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Where is my (Flying/Self Driving) Car and Personal Robot Assistant?

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Spotlight on Safety Nets
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The Economy and Interest Rates (Again)
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First Home Savings Account (FHSA)

The Canadian Government recently announced a new program to help individuals purchase their first home. The FHSA allows up to $8,000 of contributions each year, that accumulate should you not use it all. Contributions are considered a tax deduction when made, and no tax is paid once the funds are used. Think of it as a tax-free component on your downpayment.

Important tips and considerations:

Establishing your FHSA: A FHSA account must be open to start the accumulation of contribution room.
Transferring Funds: You can transfer money from your RRSP or SpRRSP into the FHSA. Note you will not receive an additional tax deduction if you do this.
Utilization: Proceeds that are used, do not have to be repaid. Unused proceeds can be transferred back into your RRSP or SpRRSP.
Complimentary: This program can be used in conjunction with the RRSP home buyer’s plan.

Where is my (Flying/Self Driving) Car and Personal Robot Assistant?

The world is awash with news on artificial intelligence. A number of articles in Bloomberg point out that it takes time for companies and individuals to adjust to any new technology. It took decades for the electrical grid to be rolled out in North America. It took several years for businesses to decide that the improved Windows operating system of 1995 was worth the investment. It has taken many years for “apps”, to move from just being “Angry Birds” to providing useful solutions.

Surveys of business executives show that few believe AI will have a significant impact on their business in the next 2 years. Most believe that it will have an impact in the next 3 to 5 years.

There are many AI startups today. They face a number of constraints with the two biggest being:

Gaining access to the powerful processors is expensive
A lack of AI experienced computer specialists

The demand for AI processors is causing more companies to explore designing and building their own, but also for existing chip companies to create more efficient designs, increasing the amount of data that can be processed. Costs will come down over time.

The second issue will also take time to solve, but the need for expertise will drive on the job learning and increase training at universities.

It is not just large companies developing human-like robots, but even smaller ones like Vancouver based Sanctuary AI who are developing a humanoid robot called Phoenix.

But as Tesla can attest, skills like cleaning or driving, are much more complex that we think and take a vast amount of training for machines. One of the potential uses for humanoid robots would be to do tasks that are dangerous or boring for people. This will take longer than we expect, and cost more than companies want.

Spotlight on Safety Nets

Whenever we get in our cars for our daily commute or for a road trip, we expect to smoothly arrive at our destination. And while this usually happens, it is not guaranteed. Which is why a friend of Jacks always has an easily accessible emergency pack in her car, containing blankets and other items should she be stranded for a prolonged period in a cold eastern winter.

We often explain financial planning as creating a road map helping you to reach your goals. A good road map will consider possible bumps in the road and have a safety net available. A large proportion of people will suffer a critical illness, such as cancer, by age 65 and over 5% will experience some form of disability. While we hope nothing ever happens, sometimes it does. Insurance solutions exist to help preserve your finances should life throw up a roadblock and we can help you understand your options and what structure makes sense.

The Economy and Interest Rates (Again)

We came across the following chart from Bloomberg on expected interest rates, economic growth, unemployment and inflation for America:

We could quibble about the details, but generally the expectation is that rates will decline, the economy will grow, employment will remain strong and inflation will continue to moderate. Inflation numbers can be sticky, sometimes because of assumptions made to create a measurement. Home ownership being one difficult component to measure.

In Canada, headline inflation decreased again in February, keeping inflation within the Bank Of Canada’s target range for the second straight month, which is the first time that has happened since 2021.

BMO Global Asset Management produced a research paper outlining 6 reasons for Investors to be optimistic.

We felt that the most powerful point made concerned equity market returns after the US federal reserve begin to cut rates. When the economy is not in a recession, as illustrated by the grey line, the S&P500 index of companies tends to generate strong returns. The blue line highlights returns when rates are cut because of a recession:

We are also seeing broad cross section of companies (not just the AI darlings) report good earnings and increasing share prices.

As we conclude our newsletter, we at Beacon Wealth Partners wanted to wish you and your family a happy Easter long weekend. As always if you have questions please let us know!

Jack Fournier B.Sc, FMA, CIM®
Portfolio Manager | iA Private Wealth
Insurance Advisor | iA Private Wealth Insurance Agency
700-609 Granville St. Vancouver, BC
p: 604 895 3348
jack@beaconwealthpartners.ca

Travis Kidson, B.Sc, CFP®, CIM®
Portfolio Manager | iA Private Wealth
Insurance Advisor | iA Private Wealth Insurance Agency
700-609 Granville St. Vancouver, BC
p: 604 895 3486
travis@beaconwealthpartners.ca

This information has been prepared by Travis Kidson and Jack Fournier who are Portfolio Managers for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Managers can open accounts only in the provinces in which they are registered.

iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

Insurance products are provided through iA Private Wealth Insurance Agency which is a trade name of PPI Management Inc. Only products and services offered through iA Private Wealth Inc. are covered by the Canadian Investors Protection Fund.

Beacon Wealth Partners is a personal trade name of Jack Fournier and Travis Kidson.