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Final July, the Canada Income Company (CRA) launched the grocery rebate, a one-time tax credit score. The rebate helped tens of millions of households offset the rising price of groceries, which has spiked within the final two years. In keeping with a report from Statistics Canada, grocery costs rose greater than 9% yr over yr as of April 2023.
The grocery rebate was obtainable to people with incomes of lower than $32,000 or to households with incomes of lower than $38,000. In keeping with the CRA, round 11 million Canadians had been eligible to obtain the fee.
To qualify for the rebate, people ought to have filed a tax return for 2021. Additional, the CRA emphasised households or people who acquired the GST/HST tax credit score can count on to obtain the grocery rebate too.
Single people with no youngsters would obtain $234, whereas these with two youngsters would obtain $467. Whereas inflation stays elevated, there isn’t a announcement by the CRA to offer the same rebate in 2024.
How do you navigate an inflationary atmosphere?
Much like different central banks, the Financial institution of Canada has hiked rates of interest considerably within the final two years to offset inflation. The next price of debt and steep inflation have meant customers now have much less to spend. In reality, the family financial savings price in Canada has fallen from 9.3% within the third quarter (Q3) of 2021 to six.2% in This autumn of 2023.
In periods of inflation, it is smart to decrease discretionary bills corresponding to eating and journey. It’s additionally important to restrict your bank card debt and make common funds to keep away from curiosity costs on these expenditures.
You should create a nest egg
Traditionally, a mixture of upper rates of interest and inflation has translated to decrease company earnings, leading to industry-wide layoffs and financial recessions. Whereas the Canadian economic system continues to be resilient, it’s uncovered to macro headwinds, together with geopolitical tensions.
To outlive an financial downturn, Canadian people and households have to deal with making a nest egg that may provide them liquidity throughout recessions.
One option to constantly increase your financial savings is by investing in exchange-traded funds, or ETFs, that monitor broader indices such because the S&P 500. Within the final 50 years, the S&P 500 index has returned over 10% yearly after adjusting for dividend reinvestments, creating vital wealth for long-term traders.
You’ll be able to achieve publicity to the S&P 500 index by investing in a low-cost index fund corresponding to Vanguard S&P 500 Index ETF (TSX:VSP). The Canadian ETF is hedged to the CAD, shielding you from fluctuations in overseas change charges. Additional, it affords you publicity to a few of the largest firms on this planet, corresponding to Microsoft, Apple, and Nvidia.
Whereas the S&P 500 trades close to all-time highs, the favored index ought to ship inflation-beating returns over time because of the constant enlargement of company earnings and rising gross home product numbers. Given annual returns of 10%, an funding of $500 each month will provide help to improve your portfolio measurement to over $665,000 over 25 years.
