You may have noticed that the Bank of Canada interest rate recently spiked – so what should you do now?
What is an overnight rate? An overnight rate is a rate at which the Central Bank lends money to other banks at the end of each day. It’s ultimately a short-term method of predicting the interest rate that may impact the economy. The Bank of Canada recently increased its interest rate by 75 basis points or 0.75%. This brings the overnight lending rate to 3.25%.
So what does this mean for you? Here are a few things you should keep in mind:
1. Have a solid understanding of your cash flow.
What is your main source of cash flow? Do you perhaps have any opportunities to gain smaller sources of money? These are some questions you should sit down and consider. And if you have a financial advisor, maybe sit down with them and talk to them about it. If you don’t have a financial advisor, maybe it is a good opportunity to start looking for one. In the meantime, now is a good opportunity for you to sit down with your partner, or a family member, to discuss your current financial situation.
2. Ensure that you have an emergency fund.
This is something most individuals do not think about throughout their lives. Although a great way to increase your cash flow is by investing your savings, it is also crucial to have an emergency fund for unexpected expenses. Most experts recommend 3-6 months worth of living expenses set aside.
3. Look for discounts on asset prices.
Discounted asset prices can be a great opportunity to grow your net worth in the long run. As stock prices go down, it is also a good time for you to start investing that money. But, of course, you should purchase what you can and don’t overdo it. It is also important to put aside some money for that emergency fund.
Every person has a unique situation, and ultimately, you should always consider your current situation and the goals you want to achieve. I hope this has helped you and if you have any questions, feel free to connect with us down below!
To learn more about the current Canadian economy and how to get ahead, watch the full video here: