Canadians in More Debt than Greeks?
The Certified General Accountants of Canada (CGA) released a study today showing a trend by Canadians toward investing in riskier assets, leaving them more prone to market fluctuations and financial stress.
The study reveals a steady decline in investments by Canadians in ‘safe’ assets over the past 20 years. For example, stocks and mutual funds accounted for 19.2% of all household assets in 2009 – more than double that of 1990. Low-risk investments, such as cash and deposits, accounted for 12.3% of household assets compared to 18% two decades ago.
Canadians are living dangerously on credit, more so than their counterparts in other OECD countries. According to CGA study highlights published in today’s Financial Post
, Canada ranked number one among 20 OECD nations with regards to debt-to-financial assets ratios. The Slovak Republic placed second – followed by Greece
. The United States came in fourth.
A study finding noted by the Wall Street Journal
estimates that approximately 39% of total household assets in Canada are potentially sensitive to a correction in the real-estate market.
It’s a warning to Canadians that, despite signs that the recession is behind us, now is not the time to take on more debt than we can afford.
Before becoming a homeowner, consider how much you can afford to pay each month. Consider locking in your mortgage rate
if you cannot afford even a small increase in your monthly payments. With interest rates almost guaranteed to rise in the next year, avoid using unsecured credit to make a down payment on a home; otherwise, you might be writing the ideal recipe for a personal debt crisis.
Posted by CENTUM Canada
on May 11, 2010