Many observers are worried about the return of higher interest rates. It will cost more, they warn, to renew a mortgage, or get a car loan. It may create a stock market downturn because the cost of borrowing (for corporations) will increase.

But is there any sort of silver lining to watch for in a higher-interest rate environment? Save with SPP took a quick look-see.

Noted Globe and Mail columnist Rob Carrick sees a couple of good things about higher rates.

First, he writes, “one thing higher rates can do is tamp down inflation, which lately hit a 30-year high at 4.8 per cent.” A higher rate, the article continues, may “encourage saving and discourage borrowing, and in turn spending,” all factors that slow the growth of inflation.  In fact, those of us with greyer hair remember a time when the federal government tried to wrestle inflation to the ground by limiting wage and price increases to six per cent in year one, and five per cent in year two! Those rates now look sky-high, but at the time, you could get a Canada Savings Bond that paid interest in the teens.

Carrick notes that higher interest rates may stop the runaway growth of housing prices, and feels might prompt more of us to pay off our record-high household debts. “Higher rates should be a prompt to reduce debt levels and thereby put households in stronger shape for financial challenges ahead,” he writes.

Finally, Carrick reports, higher interest rates will be a boost to savers. “Rates for savers have been suppressed by the Bank of Canada as part of its efforts to support the economy. When the central bank starts raising rates, savers will gradually receive a better return on their money,” he notes.

Over at Sapling, writer Victoria Duff makes a similar argument.  She notes that higher interest rates actually make things easier for large pension funds and insurance companies.  “Retirement funds, insurance companies and educational endowments benefit from higher interest rates, as does anyone who depends on bond investments for his income. These funds, as well as banks and other lending institutions, can meet their target investment returns through more conservative credit quality portfolios,” she explains.

Also important, she writes, is that countries with higher government-set interest rates “attract investment from other countries,” which can strengthen their currency. Similarly, governments that issue bonds to pay down debt will get a better return, which ought to help them retire debts more quickly, she notes.

Finally, higher interest rates are great for anyone shopping around for an annuity. According to the Get Smarter About Money blog, “if interest rates are high when you buy your annuity, your annuity payments will be higher than if interest rates were low. That’s because the financial institution predicts it can earn more (through higher rates) by investing your money.”  This is a complicated thought, but an important thing to know. If you are thinking of buying an annuity when you retire, your monthly income from it will be higher if interest rates are high at the time of purchase. Monthly income is lower if interests are low at the time of purchase.

Members of the Saskatchewan Pension Plan can, at retirement, choose to convert some or all of their savings into one of many annuity options. All of them are designed to provide you with monthly income for life, and there’s also an option that provides lifetime income for your spouse should you die before they do. Annuities are a great way to ensure you don’t run out of money before you run out of time to spend it! Check out SPP today!

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By Sheryl Smolkin

Building on the old adage that a picture is worth a thousand word, in this edition of Best from the Blogosphere we direct you to video channels and specific personal finance videos you may want to follow regularly.

First of all, keep an eye on the series of videos from Saskatchewan Pension Plan, and in particular this one, which clarifies issues raised in a recent quiz posted on savewithspp.com. Other video blogs discuss how to become a member of SPP, how to start a company plan with SPP and why fees matter to your investments.

Money School with Preet Bannerjee tackles a whole range of topics including Employer Matching Retirement Contributions. Are you leaving money on the table?

Only buying a house is a bigger financial commitment than buying a car. The message in this humorous Get Smarter About Money video blog is that you have to look at the cost of ownership from operating costs, insurance, maintenance and financing to understand the big picture.

The Globe and Mail’s Rob Carrick is featured in the “Carrick Talks Money” series of video blogs. If you can’t figure out whether or not your investment advisor is making money for you, take a look at Where can I find out how much I’ve made or lost since I opened my investment account?

And last but not least, Bridget Eastgaard from Money After Graduation discusses two ways to pay off debt in The Debt Avalanche vs The Debt Snowball. Find out which is the best approach for you!
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Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

You’ve been diligently socking away money in a Registered Educational Savings Plan (RESP) since your child was a toddler and in a few short weeks she starts university. Getting at the money can be a little more complicated than simply taking out money from your savings account. To help you through the process, this week we feature articles and blogs exploring all things relating to RESP withdrawals.

Mike Holman on Money Smarts discusses RESP withdrawal Rules and Strategies for 2015. He says there is one withdrawal rule to get out of the way – you are only allowed to take out $5,000 of accumulated income in the first 13 weeks. After 13 weeks, you can withdraw as much accumulated income (including educational assistance payments) as you wish.  However, there are no limits to withdrawals from the contribution portion as long as your child is attending school.

Bankrate.com blogger Jasmine Miller also writes about How to cash out your RESP. Because the government stipulates that financial institutions must follow “due diligence” to ensure RESP funds are being used for a child’s education your bank may want to see a copy of your child’s acceptance letter before releasing funds or they may take you at your word. Therefore she says it’s a good idea to keep all documentation and receipts.

The Investing for Me blog Withdrawals from RESPs notes that RESP withdrawals can generally be made to cover tuition, room and board, school supplies, computers and transportation as these are all eligible educational expenses under the Human Resources and Skills Development Canada (HRSDC) criteria. However, guidelines for withdrawals from a Group RESP account are governed by the plan’s contract or prospectus and group plans may have more restrictions than family or individual plans.

But what if your child doesn’t continue her education? Get Smarter About Money explains that if your child doesn’t continue her education after high school, there may be financial costs and tax consequences. But you have these four available options:

1. Keep the RESP open – your child may decide to continue her studies later,
2. Transfer the money to another beneficiary,
3. Transfer the money to your RRSP,
4. Close the RESP.

In Need to use an RESP this fall? Back to school starts now, Rob Carrick covers some of the same territory as the blogs noted above. However, he says one more consideration in filling out the RESP withdrawal form is where you want the money to go. You can have it sent to your chequing account, or your child’s account. He has the money from his son’s RESP paid into his and his wife’s joint account, and then he pays tuition and residence bills via Interac online.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

By now we have all taken the leap from the old year to the new, but during the transition, some of our favourite bloggers analyzed the year gone by and offered suggestions for the days and months ahead.

In 2014, Mark Seed at My Own Advisor made some financial predictions. In  2014 Financial Predictions Final Update he revisits these predictions as compared to how things actually played out. He forecasted that the Dow Jones Industrial Average would finish the year at 16,700 but in fact it rose to 17,823.07. He also suggested that the Canadian Dollar would end the year at $0.90 compared to the US Dollar but by December 31^st it had dropped to $0.86. But he did correctly anticipate dividend increases from Fortis, Telus, Walmart and AT&T.

On Boomer and Echo, Robb Engen asks What Will It Take For You To Save More This Year? He suggests the 52-week money saving challenge that was all the rage in 2014. Save $1 in week one, $2 in week two, $3 in week three, and so on until you have about $1,400 saved by the end of the year. Or, increase the degree of difficulty and try to put away $10 in week one, $20 in week two, $30 in week three, and so on until you’ve saved nearly $14,000.

Adam on Modest Money offers 3 Reasons to Start Small with Online Investing. By starting small you can get comfortable with both your broker and the investment tools offered and also decrease your risk.

Retire Happy blogger Sarah Milton proposes boosting your financial fitness by creating a positive relationship with money, making good money management a habit and cutting yourself some slack.

And finally, as part of the Masters of Money series on Get Smarter about Money, Rob Carrick asks Dividend stocks for retirement income – can you handle it? A well-chosen portfolio of dividend stocks can reasonably be expected to give you a far more generous annual cost of living increase than even an indexed pension, while also delivering solid long-term capital gains. But the bottom line is that they are still equities and if the bottom falls out of the stock market it could take your investment portfolio with it.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.