Tuesday, 3 May 2011

Conservative Election Majority: Three Implications for Personal Finance & Investing

Yesterday's election results gave the Conservatives a majority. My take on three things that will (not) happen as a result:
  • CPP expansion is dead in the water. Pension "reform" will take the form of the PRPPs. The parliamentary majority that takes the pressure off, combined with the justification provided by opposition of some Provinces, and by "there is no problem" deniers allows the Government to say to the official opposition NDP that more urgent matters concern Canadians. Besides, the problem is not a pressing volatile crisis and will only manifest itself gradually.
  • Banks, insurance companies and financial companies are back on the profits bandwagon. They who benefit from the pension savings flows can rest easy and go back to making steady money. Some of these outfits, where the managers do not take all the money for themselves, will be good investments for individual investors. Corporate tax cuts will help too. (Disclosure: I own some shares directly & ETFs with those shares ... who doesn't in one way or another?)
  • TFSA doubling promises and other deficit-dependent promises won't happen (see several mentioned by Michael James). With a majority, the Conservatives are likely to relax and the economy / financial conditions are not likely to force its hand on deficit-elimination like it did during the (in)famous 1990s when Chretien and Martin did the job that has made Canada's fiscal life good since then. The bureaucrats are more likely to convince the Conservatives those measures would be too expensive anyhow.

1 comment:

Michael James said...

I'm not very optimistic about the budget being balanced soon to trigger some of the Conservative promises.

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