# How are you preparing for coming inflation?



## Lakedweller (Apr 3, 2009)

Are you buying gold as a hedge against monetary inflation? 
Are you reducing debt at the expense of future investment?
Will global stimulus cause global inflation? If every country is experiencing inflation, will we notice?
This is an excellent forum to discuss how the average family is preparing for the post recession period.

I know I have doubled my mortgage payments and started diverting new investments into gold and gold stocks (while maintaining my existing balanced portfolio of stocks and bonds).
What else are you doing?


----------



## CanadianCapitalist (Mar 31, 2009)

Lakedweller said:


> Are you buying gold as a hedge against monetary inflation?
> Are you reducing debt at the expense of future investment?
> Will global stimulus cause global inflation? If every country is experiencing inflation, will we notice?


I wrote a couple of posts on this topic. Warren Buffet says there is "potential" for high inflation in the future. Past experience indicates that gold and commodities are a hit-or-miss in terms of an inflation hedge. Equities are an effective long-term hedge. Real estate & commodities might perform well. The only clear loser will be traditional government bonds that currently yield less than 4%. Real return bonds are the almost perfect hedge against inflation but the real yields are typically low.

*Investing in a period of high inflation*
*Investing in an Inflationary World*


----------



## FrugalTrader (Oct 13, 2008)

Lakedweller said:


> Are you buying gold as a hedge against monetary inflation?
> Are you reducing debt at the expense of future investment?
> Will global stimulus cause global inflation? If every country is experiencing inflation, will we notice?
> This is an excellent forum to discuss how the average family is preparing for the post recession period.
> ...


I also have a post coming up next week about this topic, stay tuned!


----------



## Lakedweller (Apr 3, 2009)

I'm always waiting with baited breath! Thanks as always.
It has been hard to find good academic knowledge on hyperinflation. I'll pass this on for your late night reading...
http://www.shadowstats.com/article/hyperinflation.pdf
The preceeding is a American report written by a career economist who argues that we are part of a much larger cycle, one that began in 1933, when Roosevelt decoupled from the gold standard. He says that inflationary recession is in place, that the banking solvency crisis has opened the first phase of monetary inflation, and that hyperinflationary depression remains likely as early as 2010. Interestingly, this report was written almost one year ago, with many of his predictions beginning to unfold. I’ll be interested to hear what you guys think. Warning, this is a long, academic read, but well worth the effort.


----------



## mfd (Apr 3, 2009)

From an investment perspective I haven't changed anything. When the increased inflation comes I plan to put as much money as I can into bonds when the rates are right. 

My primary focus right now has been the same as yours Lakedweller. I want to pay down my mortgage as fast as possible. I've increase my biweekly payments and putting in lump sums. I'm also considering breaking my mortgage and locking in for 10 years. I know variable rates always perform better but I like knowing what my mortgage payment is every month.


----------



## ethos1 (Apr 4, 2009)

Lakedweller said:


> Are you buying gold as a hedge against monetary inflation?
> Are you reducing debt at the expense of future investment?
> Will global stimulus cause global inflation? If every country is experiencing inflation, will we notice?
> This is an excellent forum to discuss how the average family is preparing for the post recession period.


Yesterday the US government posted their latest unemployment numbers being at the level they were back in 1983, even though right now we have very low inflation and money for practically zero

In 1983 when I was in my 30's, interest rates were high, mortgage payment ridiculous, we had little money and even lesser investing opportunities like today, as well being from the old school, leveraging was something not often considered.

My advice is to take advantage of the low rates pay off all debt including motgages as fast possible, max on TFSA & RRSP's.

Funny, and I dont have the true meaning to this, but when you have no debt, it is really surprising how the nature and money gods work in your favour.

Less stress, more productivity, better family life along with improved personal health and outlook on life - all that from my own experiences


----------



## Financial Highway (Apr 3, 2009)

Although I think inflation will be a big problem in the future, I still think we have sometime to go to get there. Probably one of the best things you can do right now is pay down the mortgage like MFD and lakedeweller mention. With low interest rates most of your money will go towards principle payment and reduce your payments when we get back to high interest rates. 

Free money finance had a good guest post on how to deal with inflationary periods.


----------



## seven3 (Apr 4, 2009)

I agree with the others advice above about paying off the mortgage, etc. I'm also looking into allocating part of the fixed income portion of the RSP to a real return bond etf (XRB)....but haven't looked into the details of how that performs yet.

With the low interest rates, it is tempting to leverage a bit in the short term though....


----------



## Lakedweller (Apr 3, 2009)

I wondered whether someone would bring up the concept of inflationary dollars paying off a locked in mortgage faster. I really don't understand the idea, but I'll try and explain it: Some people suggest that inflation makes the amount of dollars you are earning increase while the value of your mortgage is constant, leading you to be able to pay more of it off. This must be assuming the mortgage is locked at a fixed rate for the whole life of the mortgage.
I don't necessarily agree with the idea, because inflation also causes all of your other expenses to eat up your ability to pay your mortgage. But I'd like to hear from a Professional on this.


Which brings me to the next question of all of you. With mortgage rates the way they are, a 10 year mortgage (the life left in my mortgage) rate is under 5.5%. Would you lock in?


----------



## mfd (Apr 3, 2009)

Lakedweller said:


> I wondered whether someone would bring up the concept of inflationary dollars paying off a locked in mortgage faster. I really don't understand the idea, but I'll try and explain it: Some people suggest that inflation makes the amount of dollars you are earning increase while the value of your mortgage is constant, leading you to be able to pay more of it off. This must be assuming the mortgage is locked at a fixed rate for the whole life of the mortgage.
> I don't necessarily agree with the idea, because inflation also causes all of your other expenses to eat up your ability to pay your mortgage. But I'd like to hear from a Professional on this.
> 
> 
> Which brings me to the next question of all of you. With mortgage rates the way they are, a 10 year mortgage (the life left in my mortgage) rate is under 5.5%. Would you lock in?


I'm already considering it. I wouldn't do it at 5.5% but my mortgage broker seems to think that with competitive pressure the 10 year rate will get into the low 4's. At that rate I don't care what variable is I'll lock in for 10 years.


----------



## CanadianCapitalist (Mar 31, 2009)

Lakedweller said:


> Which brings me to the next question of all of you. With mortgage rates the way they are, a 10 year mortgage (the life left in my mortgage) rate is under 5.5%. Would you lock in?


I have a guest post on this very topic on Monday. Ben, an astute reader, will point out in the post that this might be one of those rare occasions when it might be better to go fixed rather than variable because the spread between the two is very small at the moment and inflation has the potential to increase in the future. 

A quick check at Invis shows that variable is 3.3% compared to 5-year fixed at 3.99%.


----------



## MoneyEnergy (Apr 5, 2009)

Although we've been having a nice bear market rally that has been given a bit of a boost with the seemingly positive G20 outcome, I still think big inflation is ahead.

I wrote a couple of posts about the prospect of hyperinflation - which, although much more extreme, is sort of the same way of thinking about the problem.

*How To Protect Your Wealth From Hyperinflation
Will Hyperinflation Come to Canada?*


----------



## Jet (Apr 5, 2009)

I've been focusing on paying off debt. So tired of that millstone.

My mortgage is up for renewal next month and I'm going for a 5-year fixed rate for peace of mind.


----------



## MoneyEnergy (Apr 5, 2009)

Has anyone else paid any attention to the prognostications of analysts like Gerald Celente regarding the financial crisis? Celente's been right before on a number of trends - he's a market research and trends forecaster, not an economist, but from what I understand the Trends Research Institute has a hefty data analysis system, they can analyse more than 300 moving variables in all sectors - food, spending, economy, clothes, everything - globally. Anyways listening to more than one interview with Celente has kept me up at night a few times.

Peter Schiff is another great analyst with lots to say about coming inflation.


----------



## refutor (Apr 5, 2009)

Financial Highway said:


> Although I think inflation will be a big problem in the future...


my question is when? should i be concerned about paying creditcard-like interest rates when my mortgage is up for renewal in 2012? i realize that forecasting stuff like this is like forecasting the weather...


----------



## mfd (Apr 3, 2009)

refutor said:


> my question is when? should i be concerned about paying creditcard-like interest rates when my mortgage is up for renewal in 2012? i realize that forecasting stuff like this is like forecasting the weather...


Probably in 1 to 2 years and in 1 to 2 years the answer will be in 1 to 2 years.

When you go to renew in 2012 you definitely won't be getting 4% mortgage rate but then again I'm no economist....

Question: have the economists finally decided we are in a recession or are they still on the fence like they were for 2 years ?


----------



## CanadianCapitalist (Mar 31, 2009)

refutor said:


> my question is when? should i be concerned about paying creditcard-like interest rates when my mortgage is up for renewal in 2012? i realize that forecasting stuff like this is like forecasting the weather...


When we got our first mortgage in 2003 (a fixed-rate at 5.3%), the conventional wisdom was that it would be the lowest mortgage rate we could get in our life. Well, it is much lower now  So, who knows what will happen in the future?


----------



## OnlineHarvest (Apr 6, 2009)

CanadianCapitalist said:


> I have a guest post on this very topic on Monday. Ben, an astute reader, will point out in the post that this might be one of those rare occasions when it might be better to go fixed rather than variable because the spread between the two is very small at the moment and inflation has the potential to increase in the future.
> 
> A quick check at Invis shows that variable is 3.3% compared to 5-year fixed at 3.99%.


I would imagine that the discussion of variable vs fixed must depend on whether a mortgage holder has a "Prime minus" or "Prime plus" product. For those who have "Prime minus" products, one would be paying significantly more interest if we locked in today with a fixed product. However, if I was in the market today for a mortgage rate, my risk tolerance would convict me to find the lowest fixed rate possible.


----------



## SRQinvestor (Apr 6, 2009)

*Bank "Rate Reset" Pref Shares*

I have no mortgage or debt, kids are gone and now looking for conservative income producing investments. I have been reading a lot about the current issues of "rate reset" bank pref shares. Two things I would like feedback on 1)are these as good as they look for current income, particularly after tax? 2)With the "spread" provisions for renewal are they somewhat hedged against inflation? tks


----------



## Dylan (Apr 7, 2009)

I just heard about this site and was interested in what others thought of the author's arguments. The author, Daniel Amerman, suggests that you should take on debt rather than pay it off in inflationary times. He says don't pay off your mortgage (!) and instead invest that money in commercial real estate or other real assets such as precious metals or commodities. 

There's three free instalments available in the minicourse. Very interesting reading. 

I can't post the link, so instead google "turning inflation into wealth", and click on the top link which refers to the minicourse.


----------



## Bullseye (Apr 5, 2009)

I think any meaningful inflation is years away, if it will even become a problem at all. 

Before inflation can even get back to the target (2-3%) set by the central bank, economic growth would first have to recover enough to suck up the massive slack capacity we currently have. Inflation generally happens when supply exceeds demand, and currently demand is far below supply. 

So for inflation to become a problem, you have to believe that the government actions will work very well, and that economic growth will enter a boom again. If this is what you truly believe, then the best way to profit would be to take on a fixed rate loan and buy equities with it. The equities will rise in value with economic growth, while growing inflation will lower the real value of your debt. 

Of course, if the measures don't work, and we have continued low inflation, or even deflation, this wouldn't be a very good idea!


----------



## Rickson9 (Apr 9, 2009)

Lakedweller said:


> Are you buying gold as a hedge against monetary inflation?
> Are you reducing debt at the expense of future investment?
> Will global stimulus cause global inflation? If every country is experiencing inflation, will we notice?
> This is an excellent forum to discuss how the average family is preparing for the post recession period.
> ...


Inflation is highly likely. At the moment my wife and I have invested a lot of money into the stock market at these pessimistic prices. We also hold some cash on the sidelines just in case mortgage rates spike and home prices fall.


----------



## maelstrom (Apr 10, 2009)

we spent the past year paying off debt, down to just the mortgage and we're slowly stockpiling groceries/health stuff.


----------



## somecatchyprase (Apr 6, 2009)

*deflation vs. inflation*

Both sides of inflation or deflation debate have valid points. Over the long run, inflation should prevail. 

Governments will not stop printing money anytime soon. If and when current bailouts fail, the political solution will be to print even more. Politicians need to be seen as "doing something" about the crisis. Politicians don't really care about the long term implications of their policies, they cannot see beyond the next election.

Recently bought gold and silver, for the first time in my life. Not concerned about price dips in the near term, I'll gladly hold and add to my position. Also looking at some natural resource/commodity funds.

Don't like real return bonds. The returns on these bonds are based on statistics which are easily manipulated. CPI doesn't included energy and housing. Ridiculous, as these two items account for a very large portion of the average persons income. Have a look at this link:

www.shadowstats.com


----------



## MoneyEnergy (Apr 5, 2009)

I've talked about How to Protect Your Wealth from Hyperinflation on my own site. This is a continually fascinating topic for me.

Just last night I was watching the famous "Crash Course" by Chris Martenson. Excellent (but long) very clear (and slow) explanation of the financial dangers ahead. The economy the US is in right now (and the rest of the world by default, due to world reserve currency) is only an experiment barely 37 years old, going back to Nixon's removing the gold standard.

Yea, yea, yea, I thought I already knew the whole story too - I've read about it so many times. But this guy draws the lines together in a wholly illuminating way.

It's already pretty clear that the only outcomes are (1) the US defaults on its debts or (2) They use extra inflation to take care of them and de facto cause a monetary "collapse" (however incremental that collapse might be). 

So it's reaffirmed for me the need to buy gold and at least pay off my debts etc. If you have the option of getting your mortgage paid off anytime soon, I would highly recommend working towards doing that, so you own free and clear.


----------



## MoneyEnergy (Apr 5, 2009)

Also, there's the fact that the way inflation in the US has been calculated has changed a few times since the 1980's. There are bizarre adjustment and assumptions that go into the calculation of today's CPI that really make no sense from the point of view of a person paying for daily living. ShadowStats estimates the real current inflation (ie., debasement of the USD) is about 13% (not the 5% they report). 

There are also incentives to report inflation as lower, because they need to subtract it from nominal GDP in order to arrive at real GDP. So GDP numbers reported always reflect what the supposed inflation rate is. If you use real inflation numbers, US GDP has been negative for a while.


----------



## Jon Chevreau (Apr 4, 2009)

When you say RRBs, do you prefer buying the Government of Canada (or Quebecs) directly or using the iShares ETF? I know Mackenzie and TD have RRB funds but imagine you'd lost quite a bit of their thin yields to fees.


----------



## CanadianCapitalist (Mar 31, 2009)

MoneyEnergy said:


> Also, there's the fact that the way inflation in the US has been calculated has changed a few times since the 1980's. There are bizarre adjustment and assumptions that go into the calculation of today's CPI that really make no sense from the point of view of a person paying for daily living. ShadowStats estimates the real current inflation (ie., debasement of the USD) is about 13% (not the 5% they report).


Perhaps. Around year 2000, the debate was entirely different. The discussions then were on how CPI overstates inflation. The CPI basket is an average and your situation may be entirely different. That is the way it is and there isn't much we can do about it.


----------



## Rickson9 (Apr 9, 2009)

*Video*

http://cosmos.bcst.yahoo.com/up/fop...elEnable=1&infopanelEnable=1&carouselEnable=0


----------



## Jon Chevreau (Apr 4, 2009)

I look at RRBs and TIPS in my column in the papers today: http://www.financialpost.com/opinion/story.html?id=6697aabe-8340-44ac-b503-9a18083ae10d

One of the sources quoted is Zvi Bodie, author of Worry Free Investing, a book which advocates putting the bulk of a portfolio in TIPS (if you're American) or RRBs (if you're Canadian.). Most of the interview is posted at my blog today: 
http://network.nationalpost.com/np/...flation-linked-bonds-zvi-bodie-interview.aspx


----------



## FeeOnly.ca (Jun 4, 2009)

There's an elephant in the room that the industry isn't talking about.

Interested in eliminating inflation risk in retirement?

Interested in eliminating stock market risk in retirement?

Interested in eliminating longevity risk in retirement?

Would you like a worry-free pension similar to the one your MP enjoys?

Do you know you only have one option?

It's called an "Inflation-Indexed Life Annuity"

_“You cut the cheque to the insurance company and then for the rest of your life you don’t have to worry about anything,” says Otar. “You get lifelong income indexed to inflation—no market risk, no longevity risk, no inflation risk.”_ 

story link: http://www.canadianbusiness.com/my_money/planning/article.jsp?content=20090201_20007_20007&page=1


----------



## CanadianCapitalist (Mar 31, 2009)

FeeOnly.ca said:


> It's called an "Inflation-Indexed Life Annuity"
> 
> _“You cut the cheque to the insurance company and then for the rest of your life you don’t have to worry about anything,” says Otar. “You get lifelong income indexed to inflation—no market risk, no longevity risk, no inflation risk.”_


What about counter-party risk? What happens if the insurance company fails?


----------



## Jon Chevreau (Apr 4, 2009)

I believe one source did mention inflation-indexed annuities in the column, in the bit comparing them to politicians' personal pensions.

Here's what someone at Twitter said: [email protected] Problem is TIPS use gov't estimates of inflation. Good start, but investors should add other hedges


----------



## FeeOnly.ca (Jun 4, 2009)

Jon Chevreau said:


> I believe one source did mention inflation-indexed annuities in the column, in the bit comparing them to politicians' personal pensions.


That was me Jon, Graham here. There simply are no other directly linked total CPI inflation hedges. 

Counter party risk is resolved by the industry association (Assuris) that backs the payments (to insured levels) in the unlikely event an issuer fails. Spreading the risk across multiple insurers also reduces counter party risk. 

Graham Cook
Composite Finance Inc.


----------



## Jon Chevreau (Apr 4, 2009)

I did ask Zvi Bodie about whether the government's "rigged" consumer price indexes [designed for people who don't eat or heat, as Don Coxe once quipped] meant in effect that RRBs and TIPS may not deliver quite as much inflation protection as one hopes. But he didn't seem to view this as a problem.


----------



## Mockingbird (Apr 29, 2009)

CanadianCapitalist said:


> What about counter-party risk? What happens if the insurance company fails?


I believe only 3 insurance companies have gone bankrupt here in Canada.
In 1990, non-profit organization "Assuris" is created to protect Canadian policyholders in the event that their life insurance company should fail. According to the site, the annuities are protected "up to $2000 per month or 85% of the promised Monthly Income benefit, whichever is higher". Perhaps some assurance


----------



## FeeOnly.ca (Jun 4, 2009)

*A very important but little known fact:*

Inflation-indexing and/or Escalating Annuity payments (increasing benefits) are terms of the policy and continue under the protection offered by Assuris.

From the Assuris web site under Annuities:

_"Increasing Annuity

For any policy that calls for increasing or decreasing benefits over time, the amount of benefit in-force at the date the company fails will be used to determine Assuris protection. After transfer, the protected benefits will continue to change in accordance with the terms of the policy." _


----------



## tojo (Apr 20, 2009)

I backed up the truck on some floating rate prefs a few months back when they were virtually being given away. I've kept myself debt-free (this is the key to building wealth, nevermind keeping up with inflation). Have a large part of my portfolio in dividend growing stocks, which tend to grow their dividends somewhat during inflationary times. Will also look into real-return bonds. Someone mentioned using fixed-reset prefs as a hedge against inflation - don't count on this as they will be called when rates get up high .


----------



## Jon Chevreau (Apr 4, 2009)

Anyone familiar with David Ranson at Wainwright Economics? He argues gold is a better inflation hedge than TIPS/RRBs. Also argues both stocks and bonds get hurt by inflation and the way to hedge against that is to include some gold.


----------



## el oro (Jun 16, 2009)

Watch this video to understand what's happening and what will happen.

"Dynamic of the Economic System Collapse" http://www.youtube.com/watch?v=tVOaBWf4AmQ

We're currently in deflationary mode but when hyperinflation hits, it's going to be rapid. The banks are still holding 80-90% of the $$ that governments have printed and haven't ruled out printing more!!!! The purpose of hyperinflation will be to burst the credit bubble so interesting times ahead, imo.

The coming inflation will not be due to an economic recovery. No, this inflation will be a currency event. I'm trying to hold as little fiat currency as I need to and putting the rest into certain investments.

Physical gold, imo, is the safest bet. It will never go bankrupt. Certain countries are accumulating it in small amounts so as not to bid up the price too rapidly. I'm not a big fan of silver right now even though the gold to silver ratio is relatively high today. If I were older and just wanted to preserve my buying power, I'd own gold bars. But since I'm young and stupid I'm going for a grand slam. So, in early 2011, my portfolios will either be worthless or 5x or so larger... that is if I have the guts/discipline not to sell too early.

Technically, gold could fall to the mid 800's due to a short-term USD rally but it's a good time to start a position for the long-term because as I said before... when inflation hits, it'll hit fast.

Plenty of things will serve as a hedge. Choose the one(s) that you're most comfortable with.


----------



## canadianbanks (Jun 5, 2009)

CanadianCapitalist said:


> Past experience indicates that gold and commodities are a hit-or-miss in terms of an inflation hedge.


Are you talking about your own personal experience or in general historical terms? Can you give me an example of when didn't gold perform as inflation hedge?


----------



## Jon Chevreau (Apr 4, 2009)

In my blog today I note that it sure feels like the purchasing power of a $20 bill these days is about the same as a $10 bill was maybe a decade ago:

http://network.nationalpost.com/np/blogs/wealthyboomer/archive/2009/07/09/the-power-of-20-bucks.aspx


----------



## CanadianCapitalist (Mar 31, 2009)

canadianbanks said:


> Are you talking about your own personal experience or in general historical terms? Can you give me an example of when didn't gold perform as inflation hedge?


http://globaleconomicanalysis.blogspot.com/2007/02/is-gold-inflation-hedge.html


----------



## Jon Chevreau (Apr 4, 2009)

My column today looks at whether inflation-linked bonds or gold is a better hedge against possible hyperinflation:

http://www.financialpost.com/opinion/story.html?id=4f3b487f-447a-459f-8768-c3465ac514c4


----------



## dogcom (May 23, 2009)

I have to say I always read and enjoy your column Jon Chevreau.

I am not a goldbug but gold holds value as money in deflation and holds value in a high increasing inflation or hyper-inflation environment. Other then that you don't need gold which is most of the time.


----------



## hardy (Aug 5, 2009)

Definitely I think investment in Gold during recession period is really great because when dollar drop then gold rises.Inflation can not stop at any time.Value of money decreases very fast but income of people are not increasing so fast

___________________________________________________
I am working as a web designer in a website hosting company


----------



## Underworld (Aug 26, 2009)

Noob question: Is there a link between inflation and interest rates?


----------



## FeeOnly.ca (Jun 4, 2009)

For an illustration of the link between inflation and interest rates (with nice graphics) start here:

http://www.bank-banque-canada.ca/en/monetary_mod/mechanism/index.html


----------



## Shayne (Apr 3, 2009)

No too worried about it, but I do want the mortgage paid in four years!


----------



## Underworld (Aug 26, 2009)

Thanks for the illustration feeonly. It made sense.

So why are we heading towards inflation?

Is it - low interest rates + never ending money printing and borrowing from the US?


----------



## Andrew (May 22, 2009)

Underworld said:


> Is it - low interest rates + never ending money printing and borrowing from the US?


You got it. Every G8 government is expanding the money supply to fund government deficits.


----------



## Rickson9 (Apr 9, 2009)

Underworld said:


> Thanks for the illustration feeonly. It made sense.
> 
> So why are we heading towards inflation?
> 
> Is it - low interest rates + never ending money printing and borrowing from the US?


Here is both doomsday scenarios:
http://cosmos.bcst.yahoo.com/up/fop...elEnable=1&infopanelEnable=1&carouselEnable=0

And something more recent:
http://cosmos.bcst.yahoo.com/up/fop...elEnable=1&infopanelEnable=1&carouselEnable=0


----------



## Robillard (Apr 11, 2009)

I'm not terribly worried about US inflation in the near to medium term, and I'm not doing anything to hedge against it right now for several reasons.

US unemployment is very high, even higher when you consider the number of discouraged workers on the sidelines. This implies that the output gap is wide. I wouldn't expect inflation to be a major problem until the output gap closes, "full employment" returns, and the US economy is working above long-term capacity. There is a similar situation in most developed countries.

The central banks have accumulated lots of securities, especially the Federal Reserve, which has been buying mortgage-backed securities. This suggests to me that they have, at least in the near term, lots of ammunition for reducing the money supply if they need to contract it (by selling bonds). Central banks also have a lot of credibility as inflation fighters, and inflation expectations, for now, are fairly low.

I expect that new regulations on banks will probably require them to hold more capital and de-leverage a bit, thus preventing them from going wild with new lending. Banks may also be reluctant to greatly expand their lending since many of them are still overextended from the credit crisis. Those that were bailed out will want to repay governments before expanding lending significantly.

And finally, there is still lots of potential for long term price level containment by shifting more manufacturing to low-wage countries, such as India, China and other countries.


----------



## Jon Chevreau (Apr 4, 2009)

My blog today discusses three ways fixed income investors can deal with inflation:

http://network.nationalpost.com/np/blogs/wealthyboomer/default.aspx


----------



## gemma119 (Apr 6, 2009)

*Explanation Please!*

Floating Rate Preferred Shares

Floating Rate Preferred Shares pay a dividend based on the prime rate and provide tax-efficient income for non-registered portfolios. Compared to pure interest income, such preferred shares are taxed far less harshly because of the dividend tax credit. If the Bank of Canada boosts the prime rate and banks increase their prime rate in response, the dividend income on these shares will rise, as will its capital value. Palombi's current favorite is the BCE Preferred Series, which pay 100% of the prime rate
Are these different kind of prefered sahaes than what would be offered in CPD Claymore ETF. 
Thanks


----------

