poses a serious threat of enticing Canada’s skilled workers to move south
cities. Photo by Saul Loeb/AFP via Getty Images files Article content It isn’t uncommon for the average Canadian to have a home country bias when it comes to their portfolio holdings, but that could change given the recent rally in the S composite and a rocketing loonie that makes foreign investments look much more attractive.
But perhaps our wandering eye might go even further given the upcoming immigration changes in the United States. There’s a looming and serious threat of our neighbour enticing Canada’s skilled workers to head south to capitalize on superior opportunities to build their family’s wealth and dramatically improve their current financial well being.
Article content In particular, we see three factors that may be just enough to tip the scales in convincing Canadians to make such a move when these changes come into effect.
More opportunities Canada appears to be going all in on non producing assets such as real estate, with residential investment accounting for a whopping 54 per cent of GDP growth in Canada in Q1 and 10.3 per cent of total GDP. This surpasses the 9.3 per cent garnered from business investment on non residential structures, machinery and equipment, and intellectual property.
Article content Other important areas such as research and development are also being ignored. Canada is the only country in the G7 where R as a percentage of GDP has been on the decline over the past decade, according to Organisation for Economic Co operation and Development (OECD) data, and that has only gained tremendous downward momentum over the past five years. are already seeing the benefits of diversifying their economies into highly competitive and disruptive sectors such as technology, robotics, automation and renewables. Simply look at the number and size of the tech companies within the S 500, representing 27.5 per cent of the index, whereas tech accounts for 10.3 per cent of the S composite and is dominated by one company: Shopify Inc.
Article content Lower taxes The Biden administration may be increasing tax rates, but it is at a level that wouldn’t apply to most Canadians considering a move south. Therefore, the tax advantages could be quite significant for high income earners.
Looking ahead, we think material tax hikes are on the horizon, especially if the Liberals finally get their much desired majority government, since someone beyond the Bank of Canada has to pay for the record breaking deficits. Provincial and municipal governments are facing similar challenges, which could result in education and health care cuts concurrent with those tax hikes. company private health care and education plans extremely enticing.
Cheaper homes I recently read that the city of Hamilton is now more expensive than Los Angeles. Think about that for a second. cities, even those that are booming like Austin, Tex. for a fraction of the cost, or get a lot more home for the same price.
Article content More On This Topic Why value stocks deserve a spot in your investing lineup Why investors should be wary of the Great Build Back Better Bubble of 2021 : Where to look for hidden value in a market gone mad Wealthsimple valuation should be a wake up call for big banks and traditional money managers Portfolio diversification is one thing, but actually moving one’s entire residency is another. administration might just be the catalyst Canadians need to seek warmer jurisdictions.
, CFA, is a portfolio manager at Wellington Altus Private Counsel Inc. (formerly TriVest Wealth Counsel Ltd.), a private client and institutional investment firm specializing in discretionary risk managed portfolios, investment hermes belt reversible replica
audit/oversight and advanced tax and estate planning.
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