Paws up!

These days GICs pay less than 4% in return to locking up your cash for five years. Yeach.

In contrast, as of this morning, our TSX has a gain so far in 2025 of 13.92%. The advance over the last twelve months is 22.65%. Not only does this beat the main US market performance, but Canadian dividends (paid by Canadian companies and funds) garner a tax break. Or you can stuff them in your crazy FHSA to get a tax break on buying these assets and a tax holiday on any profits they make.

What a great country.

But wait. What about risk? Stocks frequently crash, right?

Sometimes, yes. But Bay Street is actually a less scary place than most people think. For example, our major banks have an outsized impact on the Toronto stock market, since they make up a whopping 30% of the index.

Compare that to the heavyweight S&P 500 in the States where one single stock – Nvidia – now accounts for close to 8% of the entire index, and whose price has gone ballistic in recent months. In fact, the tech sector comprises four-tenths of the main US market – including the Magnificent 7 – which exposes it to increased volatility and risk. After all, we’re just getting into what is either a brave AI future or more likely the middle of an AI bubble destined to blow up. (How could it be otherwise when glorified coders are being recruited with $250 million pay packages?)

You want safe, predictable, profitable, tax-friendly and maple-flavoured? Then own the banks. Have you been watching their latest earnings reports? These guys have been hitting it out of the park, despite tariffs, Trump, the trade war, recession threats, real estate meltdown, rising unemployment and Danielle Smith.

Revenue has increased across the board. Earnings are up and, in general, loan loss provisions are falling. The banks have been raking in profits on both retail operations and capital markets. They all have significant international divisions, and healthy mortgage books where default levels are miniscule.

Meanwhile the Bank of Canada appears ready to start reducing interest rates again on September 17th, which should boost loan demand and help the banks plump up assets under management. Remember, for banks loans are assets. Deposits are liabilities. And cheaper rates mean the bankers can pay less to depositors as they loan out that same money to borrowers.

And what about dividends paid by the bankers to stockholders?

• Scotia:  4.6%.
• BeeMo: 4.65%.
• TD: 3.8%.RBC: 3.32%.
• CIBC: 3.9%.

Why would you hold a GIC yielding less than this with interest that is 100% taxable when dividends provide a tax credit and pay you regularly? And you can also reduce risk while bumping up diversification by investing in an ETF delivering Bay Street yields. For example, the Invesco Canadian Dividend Index ETF (PDC.TO) is currently cranking out 4.26%.

Yeah, also better than a GIC. Also tax-advantaged.

Time to think about, and invest in, your home.

Why did Canada get through the Credit Crisis better than America?

Probably the same reason we had far fewer Covid deaths, why we currently have more personal freedoms, why our public debt is in much better shape, why we have universal health care, why there are no troops on the streets or hooded agents stuffing people into vans or mass school shootings every few months.

Admit it. This is a better country.

About the picture: “I have “re-found”” the joy in reading the blog,” writes Mike.  “I started out when I was head hunted to RBC in Toronto in 2008 and was looking for houses. I remember bubbleboy, vulture, sheeple, and squirrel recipes Here are some pics of Whiskey.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/08/28/paws-up/