How COVID-19 has changed Canadians’ shopping habits

Financial pros share real talk on managing your cash flow, and even making room for the occasional reward, while the pandemic continues to cause uncertainty around our jobs and income. The post How COVID-19 has changed Canadians’ shopping habits appeared first on MoneySense.

How COVID-19 has changed Canadians’ shopping habits

I’ve always enjoyed online shopping, but COVID-19 has put us in some uncharted economic waters that are difficult for many and has limited much of Canada’s non-essential shopping to the internet. Should we be cyber-spending right now? Canadians are still buying, just differently than they did before. Being physically distant has impacted how much we’re spending, what we’re buying and why.     

Shopping in survival mode

According to , an advice-only Certified Financial Planner with Money Coaches Canada in Vancouver, BC, most people have cut spending back to necessities. Bridge explains: “Extra-curricular activities, eating out, entertainment and events have all been cancelled.” As well, caution and the conditions of physical distancing have Canadians holding back on making most big-ticket purchases, he says. It’s difficult to buy and sell houses, RVs or vehicles while physically distancing, and Canadians prefer a stable economy before investing in costly items—and “nobody knows how long this will last, or what the economy will look like after the pandemic.”

Many have no choice but to preserve cash flow in survival mode simply to pay for essentials and are struggling to get by, while others, like healthcare workers, have no time to spend money. 

Boredom busting

At the same time, Toronto’s , an accredited personal financial counsellor, says she’s noticed some Canadians are shopping online for things to treat themselves in an attempt to ease frustration and boredom. “Those who are privileged to still have their full income haven’t changed a lot in how much they spend; just where they spend it.” she says. 

What are people spending on right now? Moorhouse says restaurant take-out and meal kits aren’t being bought as often as before Coronavirus. She’s seeing more money going towards self-care (including psychotherapy), home décor to beautify our surroundings, and kitchen items for the increase in cooking and baking at home. Moorhouse also reveals her work on clients’ budgets surprisingly doesn’t show a big increase in grocery bills. She rationalizes we’re stocking up each time we buy essentials, which can feel more expensive than frequent trips to the store for only a few items.   

Bridge has noticed an increase in buying gear for outdoor activities, especially bicycles and the cost to get them serviced or tuned; small home improvement materials; gardening items; and, of course, . He also points out an increase in buying online entertainment, like streaming movies, online gaming and even some gambling. 

“We’ve recently bought an above-ground pool and a propane fire pit for outdoor family time,” says Kyla Cornish of Cranbrook, B.C., who agrees with the financial pros’ assessments. Like a lot of parents, she says her online shopping is focused on keeping her two kids entertained at home now and through the summer. 

In Toronto, Heather Jones took to the Internet to purchase some inexpensive arts and crafts supplies for herself. “Tracking the package gives me something to look forward to, and completing the craft gives me a feeling of accomplishment,” she says. 

Overspending can still happen

Quarantine boredom and frustration can easily lead to overspending online. And without clear plans for where your money goes, spending can quickly exceed income, creating debt that could become unmanageable. 

If Canadians are watching their wallets, should we be splurging on occasional treats for ourselves to make quarantine bearable? Definitely, Moorhouse says. “If your overall financial plan is solid with bill payments covered and proper savings accruing, buy what pleases you.” 

And while it may seem counterintuitive, Moorehouse says online shopping can help to reduce impulse spending temptations you might experience when shopping in physical stores. “Shopping online gives us time to think about our spending,” she expands. “There’s no sense of urgency; no immediate sale or last item on the rack we don’t want to miss. There’s less pressure to buy when you can think about it and return to that website tomorrow.”

To prevent your online spending from exceeding the amount of cash you have available for discretionary purchases, Bridge recommends before you shop, ask yourself:

“Do I need this?”

Bridge acknowledges the psychological benefits of a reward, so you don’t necessarily have to limit your buying to food and supplies. He advocates setting goals and rewarding your achievement within your means. 

“Can I get it cheaper or free elsewhere?”

Neighbourhood buy-and-sell groups, Kijiji and Craigslist have discount or even free items. Treating yourself doesn’t need to be costly. 

“Will buying this bring me closer to my goals?”

This question can halt any spending spree. If you’re saving for an important long-term goal, impulse buys can delay your progress. Bridge suggests reviewing current expenses to find some “mad money” to use for online shopping urges; trim things like subscriptions or apps you don’t use and can cancel; renegotiate phone, cable or Internet packages. 

MORE ON COVID-19:

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  • Where to find and apply for COVID-19 financial relief
  • Financial help for students and recent grads affected by COVID-19
  • What’s the best way to get relief from car payments during COVID-19?

The post How COVID-19 has changed Canadians’ shopping habits appeared first on MoneySense.

Source : Money Sense More   

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The right way to sell stocks during COVID-19

Just like you wouldn’t (or shouldn’t) buy stocks in an indiscriminate way, you don’t want to unload your entire portfolio, as you’ll still need some investments to grow as the market climbs higher. Here’s how to liquidate parts of a portfolio without putting your future at risk. The post The right way to sell stocks during COVID-19 appeared first on MoneySense.

The right way to sell stocks during COVID-19

It’s becoming increasingly likely that the economic recovery from COVID-19 will be , which is not good considering that 3 million have been laid off over the last two months. Since the crisis began in Canada, MoneySense has been telling readers to with their portfolio holdings and not sell, and that’s been good advice—the S&P/TSX Composite Index is up 34% since March 23, while the S&P 500 has climbed by 30%. 

While we still think people should stay invested, rebalance their portfolios and continue to save, knowing how difficult things may be financially for people over the next few months, there may come a time when you need to trade in your stocks for cash; though it’s great to have government programs like the Canada Emergency Response Benefit, for many people, the $2,000-a-month payment won’t be enough to make ends meet.

Selling stock isn’t as simple as it may seem. Just like you wouldn’t (or shouldn’t) buy stocks in an indiscriminate way, you don’t want to dump a bunch of companies without some idea of what it is you want to sell. You also don’t want to unload your entire portfolio, as you’ll still need some retirement savings and you’ll want those investments to grow as the market climbs higher. So, what is the best way to liquidate parts of a portfolio without putting your future at risk? 

Start with your winners

The first place to start is to look at which stocks or funds have done well for you over the years. If you’ve made money off a company, then now might be a good time to take some profits. 

Of course, a security’s performance will be largely dependent on when you bought in, but if you’ve been investing for, say, five or 10 years, there’s a good chance at least something you hold has made you money. This is especially true if you own a business that’s done well through the pandemic. Walmart, for instance, is up 56% over the last five years, while Shopify, which just became Canada’s largest company by market capitalization, has climbed by 2821% since listing in May 2015 and it’s up 88% year-to-date. 

Brad Couttes, a financial advisor with Vancouver’s Nicola Wealth, also suggests looking at your gold holdings, which is an asset many people own as a way to hedge against a market decline. It’s up 42% in U.S.-dollar terms over the last five years, and up about 15% since March 18. 

Keep in mind that you don’t need to sell it all; if you put $100 into a stock five years ago and it’s now worth $200, pare that investment back to your original investment amount. “Maybe you have too much in one sector or asset class and so it could make sense to trim a bit from here or there,” he says. 

Sell the stocks you don’t like

It’s also important to think about which of your holdings will rise, either now or after the pandemic ends. If you’re bullish on a particular company, even if it’s taken a hit over the last two months, then keep that around. “In a perfect world,” says Couttes, “you wouldn’t sell the things that will continue to go up.” 

However, if you’ve lost confidence in a company you own—maybe you think its business model won’t adapt to a new post-COVID-19 world, or it’s in a sector, such as oil and gas, that could struggle in the years ahead—then consider selling it off. These companies may have taken a loss, and perhaps you’ll need more cash than what you can get by selling a loser, but if you don’t think that holding will help you in the future, then let it go. 

Consider the tax implications

What you sell will also depend on what account you’re selling from. If you’re lucky enough to have money in RRSPs, TFSAs and non-registered accounts, consider starting with the latter, says Coutts. “The non-registered account is the best place to start, because the RRSP and TFSA have significant tax benefits that can help your money compound for retirement,” he says. 

Keep in mind that if you sell a stock that’s climbed in value, you’ll need to pay tax on half of the capital gain. (If you’re in the highest tax bracket, that means you’ll pay around 25% tax on the total gain.) If you sell a stock that’s declined in value since the time you bought it, you’ll receive a capital loss. Since capital losses offset capital gains, it may be possible to sell a balance of winners and losers so that you end up paying no additional tax. 

The next place to sell from is a TFSA, as you won’t be subject to any withdrawal-related taxes. Remember that if you do take money out of the account, you won’t be able to recontribute what you’ve removed  until January 1 of next year. 

An RRSP withdrawal should be a last resort. For one, you’re removing money you’ve earmarked for retirement, which is not something you typically want to do. Secondly, if you pull money out prematurely, you permanently lose contribution room. Finally, any money you withdraw will be taxed at your marginal tax rate. A lost job could cause your income to fall this year, which could put you in a lower tax rate, but you’ll still have to pay something on the RRSP withdrawal. 

As well, withdrawals are subject to withholding taxes, which is money paid to the Canada Revenue Agency to ensure they get their cut of your withdrawal. (They don’t want you to spend the money and then not have enough to pay them.) How much tax you’ll have to pay depends on how much you remove—it’s between 10% and 30% of your withdrawal—and, while the CRA may give some of it back if you’ve overpaid them, they won’t return those funds until April 2021. 

As you can see, you must think carefully about how to liquidate your stocks, but hopefully the selling will be temporary. As soon as the economy recovers and your financial situation improves, you can get back to buying again. 

MORE FROM BRYAN BORZYKOWSKI:

  • What P/E can tell you about a stock, and what it can’t
  • Should investors worry about suspended guidance?
  • What to make of this quarter’s “earnings season”
  • What do recent stock market gains really mean?

The post The right way to sell stocks during COVID-19 appeared first on MoneySense.

Source : Money Sense More   

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