BJK Financial Group Blog

The Canada Post strike, unfolding during a planned but inconvenient time—the holiday season,  is more than a labour issue, it’s a pivotal moment that could affect how businesses approach shipping logistics in the future, consumers and the Canadian economy at large. As strikes continue to disrupt mail and parcel deliveries, businesses are adapting by switching to other carriers, this is the main cause of economic consequences. 

Situation Break Down: 

For those unfamiliar with the cause of the strike, Canada Post is facing labour action from the Canadian Union of Postal Workers (CUPW), which is advocating for better wages and working conditions. This ongoing strike, now in its fourth week (at the time of writing), has disrupted businesses in their most crucial season, forcing many to rely on more expensive carriers like FedEx, Purolator or UPS.  As businesses invest in these alternatives to keep their operations going, they risk permanently shifting away from Canada Post to avoid future inconveniences and uncertainty to support their customer satisfaction rate. This is especially true for smaller businesses that don’t have the capacity to absorb the costs brought by the strike. Moreover, the strike timing couldn’t be worse. As online shopping grows in popularity holiday shopping businesses and consumers are more adamant to navigate these delays, using the alternative shipping solutions. 

Why this happened:

This Postal Strike isn’t the first one for Canada Post, back in 2018 this also happened because of similar unresolved issues regarding wages, benefits and working conditions. Now the main dilemma is the wage increases for the workers to keep up with rising inflation also including but not limited to : better group benefits such as more paid medical leave, improved protections against technological changes, paid meal/ rest periods and higher short-term disability payments. Global News tells us that “The Canadian Union of Postal Workers (CUPW) described the decision to strike as a “difficult” one, made after more than a year of negotiations with the employer.” On the other hand, Canada Post is navigating significant financial challenges, having incurred losses of $3 billion since 2018, with $490 million reported in the first half of 2024 alone. The corporation has proposed wage increases of 11.5% over four years, additional paid leave, and a shift to a seven-day delivery model as part of its strategy to grow its parcel business and address operational inefficiencies. However, CUPW argues that these proposals do not adequately address workers’ concerns or the risks of potential layoffs. 

Canada Post’s Role in the Economy: 

The Canada Post strike has cost the small- and medium-sized business sector at least $765 million or $76.6 million each business day. At this rate, if the strike is not immediately resolved, it will have cost the sector over $1 billion as of December the 4th, warns the Canadian Federation of Independent Business (CFIB). With companies switching to other corporations this would also up the costs for consumers. This postal service supports major economic functions like delivering government payments, business invoices alongside online retail shipments. In addition to financial losses, rural and remote communities often lack alternative shipping options making Canada Post’s availability essential. 

What’s Next? 

As seen previously, a solution for this issue in 2018 has been to get back the to work legislation. This is when the government passes a law to stop a strike and forces workers to return to their jobs while negotiations continue. It’s usually done to avoid big disruptions, like in mail delivery or public services, but some people think it’s unfair since it weakens the union’s power. This option has always been only used as a last resort and as of right now this has not been one of the main considered solutions. Canada Post has also threatened lockouts to push government intervention which could lead to binding arbitration, this is where unlike previous negotiation the decisions made through negotiation are legally enforceable and can’t be appealed. Enforced solutions were used during the 2011 strike and during the one in 2018 by Prime Minister Justin Trudeau. This time however the Liberal minority government might not be able to impose the back to work legislation as they did with the railway shut down this past august. As a minority they would need the support of at least another party to pass any legislation. The New Democratic Party, specifically Matthew Green (NDP’s labour critic) said: “There is not a scenario where we’ll be supporting the back-to-work- legislation.” Finally, the progress of negotiations can change on a day-to-day basis and these decisions will determine the final consequences for Canada Post, its workers, businesses and consumers. 

As the holiday season approaches people around the world prepare to celebrate in all special ways. Whether it’s lighting a menorah for Hanukkah, decorating a Christmas tree, gathering for Kwanzaa or simply enjoying time off with loved ones it’s all a time of togetherness we need to cherish. However, with all the excitement this season many will tend to overspend getting carried away in the holiday fun. While treating yourself and loved ones is great, overspending as a result of this can lead to financial headaches including credit card debt. The good news? Paying off credit card debt and being more mindful with holiday spendings can set you up for long term financial health. In this blog we’ll discuss the benefits of paying off that debt and a few tips and tricks to help you spend less. 

The Benefits of Paying Off Credit Card Debt

1. Save On Interest: The less debt you carry, the less you’ll pay in interest
2. Boost Your Credit Score: Lower balances and on time payments as well as your spending history are some of the key factors used to calculate your credit score. Having a good credit score will help you get approved for better interest rates and other loans such as mortgages. 
3. Investing In Your Future: The money you save from cutting down debt first can later be redirected towards something in the future such as finally being able to save for the vacation you've been wanting to take.

 How To Pay Off Credit Card Debt 

Now that we’ve presented the benefits of paying off that credit card debt, here are a few strategies on how we can do so. Before coming up with a plan to get rid of accumulated debt or figuring out how to avoid it, it’s important to understand how it came about. First you can start by going over credit card statements and find spending patterns and see if you can cut down on these expenses. Are there areas where you could cut back? Maybe cancel that rarely used gym membership or trade dining out for cooking at home. 

Choosing a Debt Repayment Method: Here are two ways to plan out your debt payments

• Avalanche Method: Focus on paying off the debt with the highest interest rate first while making minimum payments on other debts. Once that’s paid, tackle the next highest interest debt. This approach saves money on interest.
• Snowball Method: Start with the smallest debt first. Once it’s paid, roll the money you were using into paying off the next smallest debt. This strategy builds momentum and motivation.

Pay More Than the Minimum

Making only the minimum payment keeps you in debt longer and costs more in interest. Even small extra payments can make a big difference over time.

Cut Back on Spending

Create a budget to understand your income and expenses. By reducing unnecessary spending, you can free up more money to pay down debt. Try:

• Setting a Goal: Know how much debt you have and set a timeline to pay it off. A clear goal can keep you motivated.
• Tracking Spendings: Writing down how much you spend or even using an app or a simple spreadsheet could help keep you accountable and show you what your areas in need of improvement are.  
• Involving Others: By sharing your goals with either family members or friends they might also be interested in cutting back their spendings or just help you stay accountable and could be interested in trying more budget friendly outings. 

Debt consolidation

 If you're juggling multiple credit card balances at a time, consolidating them into one account could simplify things. There are different options like balance transfer cards or debt consolidation loans that often have lower interest rates, helping you save money in the long run. For example: if you transfer $5000 to a card with 0% interest for 18 months, paying $278 a month could eliminate debt before the promotion ends. It’s equally important to check whether the card has transfer fees and to check all other card terms and conditions before you apply.

Tips for Avoiding Debt in the Future

Once you’ve made progress on paying down debt, it’s important to maintain healthy financial habits. Here’s how:

• Plan for Seasonal Expenses: Set aside money throughout the year for holidays, birthdays, and other special occasions. This reduces the temptation to rely on credit cards.
• Build an Emergency Fund: Unexpected expenses like car/house repairs or medical bills can push you back into debt if you’re not prepared. Aim to save at least three to six months of living expenses as a cushion.
• Re-evaluate Wants vs. Needs: Before making a purchase, ask yourself if it’s something you truly need or if it can wait. 

Final Thoughts…

The holidays should be a time of celebration, not stress. By focusing on paying off that credit card debt and practicing smarter financial habits, you can enjoy the season guilt-free and set yourself up for success in the new year. It’s important to remember that small, consistent changes can lead to big results and can give you the freedom to focus on what really matters.

With Donald Trump back in office following this year’s U.S election, many Canadians are growing increasingly concerned about the effects his plans and policies could have on our country, specifically economically. As the United States is Canada’s largest trading partner and a key player in all global economics, Trump’s proposed tariffs, energy production, and immigration are bound to have significant implications for Canada. 

Tariffs and Trade Relations 

To start, one of the major potential causes for economic disturbances for Canadians stems from the  tariffs  promised to be imposed by Trump and the Republican Party. According to Marc Ercolao, an economist with TD Bank, these tariffs could lead to higher costs for Canadian imports and could bring temporary inflation spikes. For many Canadians inflation is already a major concern and “Tariffs create a negative income hit to Canadians as they pay more for imports, which would feed into a temporary and modest re-acceleration of inflation to the 2.5–3.0% y/y range before roughly reverting back to the Bank of Canada’s (BoC) 2% target by 2026” TD  The sectors most vulnerable to U.S. tariffs include the auto industry, energy, chemicals, forestry, and machinery. For example, our automotive supply chain is deeply integrated with the U.S., with approximately 20% of immediate goods coming from American suppliers. In contrast, industries like agriculture and mineral exports may be less affected, as only about half of their goods are destined for the U.S. market. Canadian businesses are expected to adapt by diversifying supply chains or absorbing some of the additional costs. Now these adjustments might still hurt corporate margins and household incomes. In the worst-case scenario, these tariffs could push Canada’s GDP down by 1.7% by 2028, with even a risk of a recession if Trump brings harsher policies.

Adding to the tension is Canada’s Digital Services Tax (DST), which imposes a 3% tax on revenue earned by foreign tech companies. The U.S. has pushed back, arguing that this tax violates trade agreements, and there are concerns that it could lead to further strain on negotiations between the two countries.

Energy and Resource Sectors

Moving on to Trump’s commitment to expanding U.S. oil and gas production, disregarding environmental impacts —echoed in his “Drill, Baby, Drill” slogan—Desjardins team including Jimmy Jean, Vice-President, Chief Economist and Strategist mentioned the mixed consequences for Canada. On one hand, an increase in U.S. energy output could lead to lower global energy prices, which might hurt Canadian oil producers. Similarly, reduced energy prices often translate to lower corporate profits and wages in Canada’s energy sector, further taking a toll on economic activity. However, experts believe the integrated nature of the North American energy market may provide some relief as they could be negotiated. In particular, Canada’s role in supplying energy and related goods to the U.S. might shield it from the harshest impacts.

Immigration Policies

On to immigration, which is another important area for the Republican Party, where Trump’s policies could indirectly affect Canada. His administration has vowed to significantly restrict immigration and deport millions of undocumented residents in the U.S. While some Canadians worry this could drive more immigrants to move up north to Canada, experts suggest that Canada’s recent tightening of visa requirements for travelers could mitigate a potential surge in immigration. Nonetheless, The American Immigration Council stated: “ It would cost $315 billion to arrest, detain, and deport all 13.3 million living in the United States illegally or under a revocable temporary status”, which could indirectly impact Canada through disruptions to cross-border trade and labor markets. Businesses that rely heavily on immigrant labor will also be forced to downsize and there may also be a reduced demand for Canadian goods and services.

Finally, the adaptability and strategies from Canadian businesses and government policies will also determine how everything will play out and affect Canada. It's also important to note that these predictions are based on all current information and plans from Trump as well as the current market performance meaning it is subject to change. In the meantime, Canadians can prepare by staying informed and proactive with their personal business decisions.  

When it comes to investing, finding that perfect balance between risk and reward can seem very complicated. If you're someone who prefers security over the ups and downs of the stock market, a Guaranteed Investment Certificate (GIC) might be exactly what you’re looking for. In this blog, we’ll discuss what a GIC is, how it works, and other important things to keep in mind before choosing this type of investment. 

What Is A GIC?

The GIC is a guaranteed investment certificate, meaning it offers a guaranteed rate of return after a fixed period of time, most commonly issued by banks or trust companies. This is different from many other investment products such as stocks, bonds, mutual funds, etc., in the sense that the GIC is very low risk. Unlike stocks, bonds or mutual funds, where your gains or losses are based on the market's day-to-day performance, the GIC is not. The GIC rate of return you receive will be disclosed upon purchase, and these rates are affected primarily by the Bank of Canada’s policy rates and the market competition with other banks. The GIC is guaranteed because it is a loan to the banks and after a fixed period of time you will receive your money back and with that a guaranteed personal gain from the interest accumulated. The trade-off here is that GIC does typically have lower returns than high-risk options that do well but if you're looking for security and a guarantee it's a solid choice. Although this investment is not high-risk, it is still important to get all the right information before getting started and make sure this type of investment is right for you. 

Real vs Nominal Return 

 Another component to better understand the GICs is to consider the real vs the nominal return. To start, the nominal return which is the most commonly used to describe a return is simply the face-value interest you’re receiving, meaning if you are told 5 % rate of return that doesn't account for any outside factors meaning your real return could be different. Now the real return, which is what you would really receive, is affected by the growth and profits caused by outside factors, mainly inflation and even potentially deflation. Inflation being where each dollar has a diminishing purchasing power, and deflation the opposite. Here the same nominal return of 5% with a 3% inflation will only give you a real return of 2%, the nominal returns are what most GIC are present as, however the real return is what matters. Besides that, here are a few of the important questions to ask yourself that are recommended by the government of Canada before entering an GIC agreement ": 

What is the term of the product, how and when the interest, if any, is to be paid?

• If the annual interest rate is fixed, what is the annual rate of interest?
• If the interest rate is variable: how they calculate it, any charges that apply and their impact on the interest payable, the dates the investment period begins and ends? (trust and loan companies only)
• If you can cancel the product and how?
• If they can amend a term or condition and if so in what circumstances?
• Any risk associated with the product, including if no interest accumulated?
• Any charges that apply and their impact on the interest payable?
• Whether or not the Canada Deposit Insurance Corporation (CDIC) will insure the product?

CDIC Coverage

 Now focusing on that last question about the CDIC, typically the GIC is covered by the CDIC and it is also one of the few investments that is covered by the Canada Deposit Insurance Corporation. This means that if the bank or the trust company that provided the GIC were to go under or have financial troubles making them no longer able to pay back the client, the CDIC would be able to step in and reimburse the client up to 100,000$ per deposit insurance category for both deposits and interest acquired. The only exception here is for the GIC’s issued by a provincial credit union and caisses populaires which are member-owned financial institutions, which takes on the roles of a typical bank and are the equivalent to credit unions in the United-States. These are not covered by the CDIC but may still be protected by the provincial deposit insurance.  It’s also important to note that GIC’S are not their own CDIC insurance deposit category but are rather deposit products that are held in any CDIC deposit insurance category.  

Finally…

GICs offer a reliable and straightforward way to grow your savings with minimal risk, making them a satisfactory option for newer, conservative investors or even those just looking to balance out their portfolios. While the returns offered may be lower compared to most investments, knowing that you're going to be looking at a steady growth and being often insured by the CDIC brings most the peace of mind to proceed with this option.

Lately, my soon-to-be graduating high school co-op student has been thinking a lot about savings and investing her my future and with that the different types of financial accounts available in Canada. We all know how important it is to save, but navigating through the options can sometimes feel like a maze. Whether you’re saving for your education, retirement, your first home, or even helping a loved one with disabilities, each account has its own specific purpose. But how do they differ? I'll explore the different options below. 

RRSP: The Classic for Retirement. 

Most of us have heard of the Registered Retirement Savings Plan (RRSP), this is tax-deductible at the time of contribution to the account meaning you lower the income taxes you need to pay as long as you remain in the plan. However, it is important to remember that this account does not eliminate taxes but rather defers them to the time of withdrawal for the account. The benefit here is that when you withdraw this amount you’ll be retired and have a smaller income so overall your income taxes will also be lower. A downside for this account is that your contributions depend on your income meaning there is a limit, specifically 18% of your income earned the previous year. " Overall, your savings depends on your income and the tax bracket you find yourself in.  

RRIF: The Transition into Retirement 

This account is called the Registered Retirement Income Fund, it will receive its funds from the RRSP and when that transition happens no more contributions can be made, and investment growth will cease. The money withdrawn from this account is also taxable and will be taxed as income. The requirement for this account is to convert your RRSP to RRIF by December 31st the year you turn 71, however, you can choose to convert your RRSP for withdrawal as early as 55 but here there will be a required annual withdrawal amount. A benefit here is that the RRIF allows you to spread your savings across your retirement years, but make sure to plan carefully if you intend to use this account so you don't outlive your funds. 

LIRA: Retirement Focused Option Like RRSP… 

The Locked In Retirement Account, this option is less flexible as the name suggests, where your funds are locked in meaning you can't withdraw money until you reach the age of 55 without facing severe penalties. The difference and advantage with the RRSP over this one is that you can withdraw money if needed but there will be a withholding tax penalty starting with 10% on 5,000 $ " , whereas with the LIRA you cannot. Similar to an RRSP you will not be taxed on any growth but an advantage of this account over RRSP would be that you and your previous employer can also contribute to this account unlike the RRSP. This account defers taxes on your income and is taxed at a lower rate once the money is withdrawn. 

LIF: The RIF For the LIRA Account

A Life Income Fund (LIF) is similar to a RRIF but specifically designed for LIRA accounts. Once you reach the appropriate age and begin withdrawing from your LIRA, those funds are transferred to a LIF. Like the RRIF, your withdrawals are taxed as income, but you must stick to minimum and maximum withdrawal limits annually. This is also one of the differences compared to the RRIF where there is only a minimum withdrawal and no maximum. These limits can ensure a steady stream of income over your retirement years, though it limits how much you can take out at any given time. In most provinces, these withdrawals are taxed as regular income, which could affect your overall tax planning in retirement by potentially putting you in a higher tax bracket.

RDSP: Special Savings for Disability 

This account is the Registered Disability Savings Plan and is made only for individuals with disabilities and their families to help them save long-term and have that financial security. While the amounts contributed are not tax-deductible like the RRSP, the contributions will grow tax free until they are withdrawn by the beneficiary. Another benefit of this option will be the government contribution opportunity, where the government of Canada can provide a grant based on the contributions made to such an account, besides that there are bonds that the government can also provide for low- and modest-income individuals regardless of private income. " 

TFSA: Flexibility and Freedom 

This account is the Tax-Free Savings Account that offers lots of flexibility, where you can choose to invest in various financial products such as: GIC’s, bonds, stocks, mutual funds and any other investment products. While contributions are not tax-deductible all withdrawals will be tax-free, and this account can be ideal for both short term and long-term investments. Here unlike other accounts, there is no age restriction for withdrawals so this money can be taken out in case of an emergency or kept as savings for any purposes like dream vacation.  

RESP: The student-oriented option 

The Registered Education Savings Plan is made for post-secondary education savings. This one is similar to the RDSP where government contributions such as grants can be made matching personal contributions to the account which can significantly boost savings. Here the contributions are not tax- deductible however any investments and grants grow tax-free until the student begins withdrawing the funds for their education. This account offers an advantage for parents to structure a way to save for their child’s future without the burden of taxes cutting into the savings process. 

FHSA: The First Time Homeowner

 The First Home Savings Account is a newer investment and savings account option that is aimed to help Canadians save for a house down payment. This account allows investments in stocks, EFTs and other assets, and at the time of withdrawal the money for your first home will be tax-free. There are however contribution limits being 8000$ a year or up to 40,000 $ as the lifetime maximum."   Unlike most of the other accounts the FHSA is designed for single use and short-term goals, such as home ownership. 

Ultimately, the best account for you depends on personal financial goals and savings needs. It’s also important to think about how these accounts can work together, many Canadians use a mix of RRSP, TFSA and others to balance their tax savings and investments.