Money How a Rate Hike Could Help Investors

19:19  19 june  2017
19:19  19 june  2017 Source:   fool.com

Loonie spikes after optimistic speech by Bank of Canada official

  Loonie spikes after optimistic speech by Bank of Canada official The Canadian dollar shot up Monday after a senior Bank of Canada official's speech talking up the positive health of the economy apparently had the market eyeing the possibility of an interest rate hike. The loonie had been trading near its Friday close of 74.26 cents US, but surged to 75 cents US after a prepared speech by Bank of Canada senior deputy governor Carolyn Wilkins was posted on the central bank's website.The Bank of Canada is due to make its next interest rate decision on July 12. The bank has not boosted its key overnight rate in seven years.

Most investors sit on one of two sides: either the rate hike was overdue, or it is still too soon. We need to ask ourselves what a rate increase would mean for Canada and how we as investors can make money from this situation. While a decline in borrowing will not help the overall economy, it is

How changing interest rates impact HEDJ investors . Why a Fed hike may result in capital gains for HEDJ investors . Hedged ETFs reduce currency fluctuation risk, but still have interest rate risk. Hedged ETFs for high interest rate currencies like the Brazilian Real would be very high cost.

Last week, investors saw U.S. Federal Reserve chairwoman Janet Yellen raise the overnight interest rate in the United States. Although the markets moved on the news, nothing too drastic happened. Most investors sit on one of two sides: either the rate hike was overdue, or it is still too soon. We need to ask ourselves what a rate increase would mean for Canada and how we as investors can make money from this situation.

For Canadians investing in the stock market, there is a domino effect which involves a lot of different business and investment drivers. Although no rate hike has yet to be announced by the Bank of Canada, it is worth noting that the 10-year Government of Canada bond rates have increased from a yield of approximately 1% a year ago to a yield closer to 1.5%. The yield has increased by 50 basis points or by 50%, depending on how we want to look at the situation.

Why the Bank of Canada looks ready to start raising interest rates again

  Why the Bank of Canada looks ready to start raising interest rates again For the first time since oil prices crashed, strong job growth has the Bank of Canada worried about inflation, meaning higher interest rates are comingRY.PR.

Our Mission: Helping the World Invest — Better. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts With that in mind, here's how a Federal Reserve rate hike could affect your bottom line.

If the Federal Reserve raises interest rates , here's how it could impact the price of gold. When interest rates are hiked the U.S. dollar appreciates, which leads to gold moving lower. Investors have sought gold recently because it is seen as a safe haven, there isn’t much interest in the fixed-income

The first and most obvious effect the increase in rates will have is a higher cost of borrowing for Canadians who have taken on debt (both unsecured and mortgage debt). This will translate to higher revenues for Canada’s lenders. Next, higher rates could lead businesses to reconsider undertaking new projects as the higher cost to borrow may mean projects will no longer meet the higher hurdle rates.

While a decline in borrowing will not help the overall economy, it is important to understand what that means for the current profitability for any one of Canada’s lenders. As loans are paid back, the cash inflows then become available for dividends and share buybacks as less money will be required to expand the balance sheet. While a number of Canada’s big banks have an adequate divide between the payout and retention rates, the fact of the matter is that these companies may need less capital to lend out while having additional cash flows to return to shareholders.

Caution: Mortgage Rates Could Start Rising ‘As Soon As July'

  Caution: Mortgage Rates Could Start Rising ‘As Soon As July' Canada’s economy is red-hot these days. And that’s the principal reason why Canadians could see mortgage rates rising before the end of the year. In the first quarter of this year, Canada recorded a 3.7-per-cent annualized pace of economic growth, the strongest among G7 countries. Canada added 77,000 full-time jobs in May, and over the past year, the country has seen total jobs increase by 1.8 per cent, faster than population growth. When an economy strengthens, there is less slack and inflation typically picks up. When inflation picks up, central banks raise interest rates.So far, inflation has been tepid in Canada. But every sign points to that changing soon.

That’s something investors need to take into account, since sticking with long-term bond funds that could fall farther in price at subsequent rate hikes could inject too much risk into a portfolio. How To Start Planning For Your Future Beyond Work - The Scary Truth For Retirees | 2/16/2018.

How to Invest in Stocks. Start Investing with 0 a Month. Investing Knowledge Center. Learn Options Trading. With that in mind, here are six ways the Federal Reserve's expected rate hike could affect your financial life.

Bank of Montreal(TSX:BMO)(NYSE:BMO) is currently trading at a very reasonable 11.5 times trailing earnings while offering investors a dividend yield close to 4%. Although investors typically don’t want to invest in a shrinking pie, the market may already be pricing in a contraction in Canada’s banking sector. Investors will have to be patient to see how Canada’s banks respond to the challenge.

The good news for the day-to-day operation of Canada’s biggest lenders will be that higher rates will lead to higher margins when considering the difference between the rate banks offer savers and what is charged to borrow money for any lending product. Although 25-50 basis points is not a lot, the reality is that 50 basis points is still 50% more than the 1% yield offered just one year ago. For long-term shareholders in Canada’s biggest banks, things may improve as we move forward.

Canadian retail sales top April forecasts

  Canadian retail sales top April forecasts Canadian consumer spending in April was stronger than expected, which economists say lends weight to the Bank of Canada's recent suggestions that interest rate hikes could be on the way. define("homepageFinanceIndices", ["c.deferred"], function () { var quotesInArticleFormCode = "PRMQAP"; var config = {}; config.indexdetailsurl = "/en-ca/money/indexdetails"; config.stockdetailsurl = "/en-ca/money/stockdetails"; config.funddetailsurl = "/en-ca/money/funddetails"; config.etfdetailsurl = "/en-ca/money/etfdetails"; config.recentquotesurl = "/en-ca/money/getrecentquotes"; config.

Discover five ways that a Federal Reserve interest rate hike could impact international investors in emerging markets. A Look at How the Federal Reserve Could Impact Investors . The only solution may be to let its currency fall in value, which could help exports but hurt investment.

Investors and traders can prepare for rising interest rates by making these savvy investments This guide will help you protect – and even grow – your money after an interest rate hike .

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Canadian dollar tops 76 cents US as Poloz comments raise spectre of rate hike .
The Canadian dollar gained three-quarters of a cent and hit its highest level in four months on Wednesday after Canada's central bank head hinted in an interview that rate hikes could be coming sooner rather than later. define("homepageFinanceIndices", ["c.deferred"], function () { var quotesInArticleFormCode = "PRMQAP"; var config = {}; config.indexdetailsurl = "/en-ca/money/indexdetails"; config.stockdetailsurl = "/en-ca/money/stockdetails"; config.funddetailsurl = "/en-ca/money/funddetails"; config.etfdetailsurl = "/en-ca/money/etfdetails"; config.

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