Riverbeds are like interest rates

The Ritcey Report

September 28, 2016

One of the consequences of Nova Scotia’s severe drought is the virtual collapse of our province’s recreational sport fishery, a $76-100 million industry. While totally unpredictable, the parallel between dried up riverbeds and dried up interest rates could hardly be more compelling.

The head of the Nova Scotia Federation of Anglers and Hunters, Ian Avery, says the province’s 70,000 recreational fishers have nowhere to fish for trout and salmon: “When you go to any of the major rivers, you can literally walk across these rivers without getting your feet wet, whereas, normally you would be in knee-deep water.”

As with rivers, so with interest rates.

Interest rates in Canada averaged 5.95 percent from 1990 until 2016, reaching an all time high of 16 percent in February of 1991. Right now the deposit rate is 0.25 percent and the bank rate is 0.75 percent. A $250,000 deposit in the Accelerator Account of one of Canada’s leading chartered banks yields 1 percent annually. Ouch!

Our rivers in Nova Scotia are, sadly, drying up. And so, equally sadly, are the opportunities for Canadians to earn a compelling rate of interest from their hard earned savings. What to do?

Truth is, there is no easy answer to this challenge. But, in what has been called a no growth/slow growth economic environment, we at the Ritcey Team like to think we are pretty good at anticipating the worst. It’s fundamental to how we operate. And while we are neither miracle workers nor clairvoyant, our approach to wealth management is essentially defensive – certainly since 2008.

Our wealth management process, with the collaboration of our wealth specialists — encompasses portfolio management, financial planning, tax minimization, insurance, retirement planning, estate and trust counsel and much more – is framed in a very simple way. It is designed to shelter our clients from choppy waters. And it is designed to enable them to sail full steam ahead in times of calm.

Warren Buffett is not, so far as we know, an angler. But his attitude towards money remains true to this day: Rule 1: Don’t lose it. Rule 2: Never forget Rule 1. Put another way, one of the best ways to make money in a low interest rate environment is by protecting and preserving what you’ve got. That’s what we do.