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Surviving the present, investing in the future: Gen Z’s financial balancing act – MoneySense
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But Gen Z is also the most digitally savvy generation yet, quick to adopt budgeting apps, mobile wallets, and investing platforms. The result is a generation redefining what it means to manage money in Canada today.
By the numbers
Workers of all ages have to contend with stagnant paycheques and irregular work alongside a surging cost of living, but Gen Z is doing it as the youngest workers in the country.
A recent report by fintech company KOHO paints a pretty grim picture for young Canadians. According to their numbers, only 41% of Gen Z are employed full time and nearly 20% are unemployed. With an average monthly income of just $1,083, it’s no surprise that nearly half expect to take on more work in the next year—and only 29% say they feel financially stable.
Unsurprisingly, there’s not a lot of wiggle room in Gen Z budgets. Respondents report forgoing investing, savings, and luxuries like travel to cover the basics, and many are also cutting their discretionary spending (52%) or borrowing from family (28%) to do so.
These findings won’t come as a surprise to labour market watchers, but here are some numbers that might: According to the findings from a recent survey by the National Payroll Institute (NPI), Gen Z workers save an average of 11% of each pay cheque, higher than any other generation. And 30% of Gen Z respondents reported saving $10,000 or more in the past year alone.
Here’s another stunner: A recent TD survey showed 68% of Gen Z are investing consistently, and more than any other age group in Canada.
Compare the best TFSA rates in Canada
Young investors
According to the survey, only 49% of Canadians feel like they’re investing enough, but there’s a clue in the data about the disparity between Gen Z investors and other workers. A full 45% of respondents cited a lack of confidence in their investment knowledge as a factor.
Gen Z, on the other hand, isn’t waiting for an appointment with a financial advisor to make their investment decisions. They’re getting advice from social media, podcasts, and TikTok—and then they’re downloading investment apps and opening tax-free savings accounts (TFSAs).
Put simply, young investors are using young peoples’ tools to educate themselves and put money away for the future.
Paycheques and portfolios
Few would choose to go back to the stresses of their early career, especially now, while wages stagnate and the cost of living soars. Yet Gen Z is, if not thriving, at least surviving—and despite a financially challenging environment, they’re finding a way to build their investments. They want paycheques and portfolios. Here’s how they’re doing it.
Gen Z is using budgets to identify and reduce discretionary spending. They understand that even small amounts add up if you save regularly, so “nice to haves” can wait. As a digitally native generation, Gen Z is comfortable using resources that are freely available to them—like podcasts and social media—to educate themselves. Then, importantly, they use financial apps and go online for investing, starting with leveraging tax-advantaged accounts like TFSAs and first home savings accounts (FHSAs).
Gen Z understands the maxim, “Pay yourself first.”
A new financial culture
Gen Z is entering adulthood at a time when housing is less affordable than ever, wages often lag behind rising costs, and debt loads are increasing at a worrying pace. Yet, rather than retreat, many are finding creative ways to take control—embracing digital tools to budget and invest, relying on debit and mobile wallets to manage everyday spending, and supplementing incomes with side hustles or gig work.
While the challenges are real and persistent, this generation’s willingness to learn, experiment, and rethink traditional approaches to money shows that they are not just surviving difficult conditions, but laying the groundwork for a new financial culture.
While the financial road ahead may be uncertain, Gen Z’s adaptability, digital savviness, and determination suggest they’re well-equipped to carve out a stable future—and could reshape what financial stability looks like for the generations that follow.
Get free MoneySense financial tips, news & advice in your inbox.
Read more about Gen Z:
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Keph Senett
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AI Is Due for a Dot-Com Bubble Burst: Expert | Entrepreneur
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Henry Blodget, once a star tech analyst during the late 1990s and early 2000s, sees “striking parallels” between today’s artificial intelligence boom and the pre-crash exuberance of internet stocks, he writes in a Substack post.
He attributes the AI surge to massive infrastructure spending—estimated at over $400 billion this year—and ballooning valuations for giants like Nvidia, which have pushed equity markets near peak levels previously seen only during the dot-com bubble.
Blodget says that while the internet was transformative, the 1990s bubble wiped out many companies and shocked even the best survivors. Similarly, he warns that the scale of today’s AI investments could amplify the impact of a downturn, with repercussions not just for tech but across the commercial real estate and startup sectors.
Related: OpenAI CEO Sam Altman Says Older Workers Need to Embrace AI — or Face Losing Their Jobs
But he draws important distinctions from the dot-com era: much of the current AI investment is now private, which could protect retail investors if a bust occurs, and many projects are financed by the cash flows of tech giants rather than by debt.
While he’s not sure exactly when it will happen, Blodget believes the AI bubble is real: overhyped valuations, rapid capital inflows, and questionable profitability echo the warning signs of the late 1990s.
People like OpenAI’s Sam Altman also agree that the artificial intelligence industry is in a bubble, but history reminds us that bubble bursts often have winners who survive and leave competitors in the dust.
“Barnes & Noble, Walmart, and other massive retailers that initially pooh-poohed the Internet never caught up with Amazon,” reminds Blodget. “Executives who dismissed e-commerce and other Internet trends as ‘fads’ were soon relieved of command.”
Blodget writes that, “Before a bubble bursts, it’s a boom,” adding that booms can last for many years. “So if your plan is to just sit out the current AI craziness, you might want to consider the other kind of risk you’re taking — the risk of missing out while everyone else races ahead.”
Related: In the Age of AI, These Skills Will Keep Marketers Essential
Henry Blodget, once a star tech analyst during the late 1990s and early 2000s, sees “striking parallels” between today’s artificial intelligence boom and the pre-crash exuberance of internet stocks, he writes in a Substack post.
He attributes the AI surge to massive infrastructure spending—estimated at over $400 billion this year—and ballooning valuations for giants like Nvidia, which have pushed equity markets near peak levels previously seen only during the dot-com bubble.
Blodget says that while the internet was transformative, the 1990s bubble wiped out many companies and shocked even the best survivors. Similarly, he warns that the scale of today’s AI investments could amplify the impact of a downturn, with repercussions not just for tech but across the commercial real estate and startup sectors.
The rest of this article is locked.
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David James
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Citizens JMP Maintains a Buy Rating on BeOne Medicines (ONC)
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BeOne Medicines Ltd. (NASDAQ:ONC) is one of the top high growth international stocks to buy right now. On September 9, Citizens JMP analyst Reni Benjamin reiterated a Buy rating on BeOne Medicines Ltd. (NASDAQ:ONC) and set a price target of $348.00.
On August 29, BeOne Medicines Ltd. (NASDAQ:ONC) announced positive topline results for Sonrotoclax in Relapsed or Refractory Mantle Cell Lymphoma (MCL), stating that the study met its primary endpoint of overall response rate (ORR) and exhibited clinically meaningful responses in rare B-cell lymphoma with considerable unmet need.
Management added that BeOne Medicines Ltd. (NASDAQ:ONC) would submit the data to global regulatory authorities for their review and potential approval.
Domiciled in Switzerland, BeOne Medicines Ltd. (NASDAQ:ONC) is a global oncology company that discovers and develops affordable, accessible, and innovative treatments for cancer patients.
While we acknowledge the potential of ONC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.
Disclosure: None. This article is originally published at Insider Monkey.
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Surviving the present, investing in the future: Gen Z’s financial balancing act – MoneySense
[ad_1]
But Gen Z is also the most digitally savvy generation yet, quick to adopt budgeting apps, mobile wallets, and investing platforms. The result is a generation redefining what it means to manage money in Canada today.
By the numbers
Workers of all ages have to contend with stagnant paycheques and irregular work alongside a surging cost of living, but Gen Z is doing it as the youngest workers in the country.
A recent report by fintech company KOHO paints a pretty grim picture for young Canadians. According to their numbers, only 41% of Gen Z are employed full time and nearly 20% are unemployed. With an average monthly income of just $1,083, it’s no surprise that nearly half expect to take on more work in the next year—and only 29% say they feel financially stable.
Unsurprisingly, there’s not a lot of wiggle room in Gen Z budgets. Respondents report forgoing investing, savings, and luxuries like travel to cover the basics, and many are also cutting their discretionary spending (52%) or borrowing from family (28%) to do so.
These findings won’t come as a surprise to labour market watchers, but here are some numbers that might: According to the findings from a recent survey by the National Payroll Institute (NPI), Gen Z workers save an average of 11% of each pay cheque, higher than any other generation. And 30% of Gen Z respondents reported saving $10,000 or more in the past year alone.
Here’s another stunner: A recent TD survey showed 68% of Gen Z are investing consistently, and more than any other age group in Canada.
Compare the best TFSA rates in Canada
Young investors
According to the survey, only 49% of Canadians feel like they’re investing enough, but there’s a clue in the data about the disparity between Gen Z investors and other workers. A full 45% of respondents cited a lack of confidence in their investment knowledge as a factor.
Gen Z, on the other hand, isn’t waiting for an appointment with a financial advisor to make their investment decisions. They’re getting advice from social media, podcasts, and TikTok—and then they’re downloading investment apps and opening tax-free savings accounts (TFSAs).
Put simply, young investors are using young peoples’ tools to educate themselves and put money away for the future.
Paycheques and portfolios
Few would choose to go back to the stresses of their early career, especially now, while wages stagnate and the cost of living soars. Yet Gen Z is, if not thriving, at least surviving—and despite a financially challenging environment, they’re finding a way to build their investments. They want paycheques and portfolios. Here’s how they’re doing it.
Gen Z is using budgets to identify and reduce discretionary spending. They understand that even small amounts add up if you save regularly, so “nice to haves” can wait. As a digitally native generation, Gen Z is comfortable using resources that are freely available to them—like podcasts and social media—to educate themselves. Then, importantly, they use financial apps and go online for investing, starting with leveraging tax-advantaged accounts like TFSAs and first home savings accounts (FHSAs).
Gen Z understands the maxim, “Pay yourself first.”
A new financial culture
Gen Z is entering adulthood at a time when housing is less affordable than ever, wages often lag behind rising costs, and debt loads are increasing at a worrying pace. Yet, rather than retreat, many are finding creative ways to take control—embracing digital tools to budget and invest, relying on debit and mobile wallets to manage everyday spending, and supplementing incomes with side hustles or gig work.
While the challenges are real and persistent, this generation’s willingness to learn, experiment, and rethink traditional approaches to money shows that they are not just surviving difficult conditions, but laying the groundwork for a new financial culture.
While the financial road ahead may be uncertain, Gen Z’s adaptability, digital savviness, and determination suggest they’re well-equipped to carve out a stable future—and could reshape what financial stability looks like for the generations that follow.
Get free MoneySense financial tips, news & advice in your inbox.
Read more about Gen Z:
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Keph Senett
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Want to Retire One Day? Avoid 3 Common Retirement Mistakes | Entrepreneur
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Retirement remains a far-off — and in some cases, unattainable — goal for many Americans.
About one in four adults over age 50 said they expect to never retire, according to an AARP survey. That’s perhaps not surprising given that Americans believe they’ll need $1.26 million to retire comfortably, per Northwestern Mutual.
In a new report from Bank of America, 68% of employees said that saving for retirement is their No. 1 financial goal, though working toward it often comes with significant challenges.
The research, which surveyed nearly 1,000 full-time employees who participate in 401(k) plans and 800 employers who offer a 401(k) plan, revealed that the average employee doesn’t start saving for retirement until age 30 and wishes they had more retirement education (33%).
Employees’ top expected sources of retirement income were as follows, per the survey: 401(k) or 403(b) (85%), Social Security (75%), checking or savings account 53%), IRA (38%), taxable brokerage or investment account (24%).
Related: How Much Money Do You Need to Retire Comfortably in Your State? Here’s the Breakdown.
Baby Boomers are retiring at a rapid rate, setting a record number of retirees in 2024 that allowed Gen X to outnumber them in the workforce for the first time, GOBankingRates reported.
On average, Boomers began saving for retirement at age 34; now in their 60s and 70s, one in four of them don’t feel on track to retire, according to the Bank of America survey. Additionally, only two in 10 Boomers said they completely understand their Social Security benefits.
Rising healthcare costs in retirement present another hurdle, as only 34% of employees said they’re saving and investing for future healthcare expenses, despite current research showing that a 65-year-old couple could need as much as $428,000 in savings to cover their retirement healthcare expenses.
Related: How to Start Thinking About Retirement Before You Plan to Retire
Respondents said the main reason they don’t save for health care is that they can’t afford it, but many who have access to an HSA through their employer also don’t understand the tax advantages and rollover process.
When employees across generations were asked to reflect on what they would have done differently to prepare for retirement, they cited three common mistakes: not starting to save at a younger age (49%), not taking full advantage of their employer’s 401(k) match (35%) and not paying off debt sooner (36%).
Image Credit: Courtesy of Bank of America
“The modern employee wants help with their broader financial goals,” Lorna Sabbia, head of workplace benefits at Bank of America, said. “Employers should consider additional resources to support their workforce in ways that bolster their long-term goals while also helping them tackle short-term challenges.”
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Amanda Breen
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Stock news for investors: Groupe Dynamite Q2 profit jumps to $63.9M on strong sales growth – MoneySense
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The fashion retailer, which operates under the Garage and Dynamite banners, says its profit amounted to 56 cents per diluted share for the quarter ended Aug. 2, up from 38 cents per diluted share in the same quarter last year. On an adjusted basis, Groupe Dynamite says it earned 57 cents per diluted share, up from an adjusted profit of 40 cents per diluted share a year earlier.
Revenue for the 13-week period totalled $326.4 million, up from $239.1 million a year ago, while its comparable store sales rose 28.6%.
In its outlook, Groupe Dynamite says it now expects comparable store sales growth between 17.0% and 19.0% for its full year, up from earlier expectations for between 7.5 and 9.0%. It also raised its expectations for its adjusted earnings before interest, taxes, depreciation and amortization margin to between 32.0% and 33.5%, up from earlier guidance for between 30.3% and 32.3%.
Roots reports $4.4 million net loss in Q2 despite summer marketing campaigns
Roots (TSX:ROOT)
Numbers for the second quarter (all figures in USD):
- Loss: $4.4 million (down from $5.2 million loss a year earlier)
- Revenue: $50.8 million (up from $47.7 million a year earlier)
Source Google Roots Corp. offered some buzzy marketing campaigns and brand collaborations over the summer in hopes of driving traffic to the retailer but still wound up reporting a loss during the period.
The Toronto-based apparel maker said Wednesday its second-quarter net loss narrowed to $4.4 million compared with a $5.2-million loss a year earlier. The result for the period ended Aug. 2 amounted to a loss of 11 cents per share for the quarter compared with a loss of 13 cents per share a year prior. Meanwhile, second-quarter sales reached $50.8 million, up from $47.7 million.
Roots CEO Meghan Roach told financial analysts on a conference call Wednesday that it is typical for the company to generate about 30% of its sales in the first half of the year, often leaving it with a loss as it heads into the fall and winter.
However, the second-quarter results this year came in spite of tense trade relations between Canada and the U.S., which have made shoppers more cautious. “Despite the dynamic global operating environment, Roots continues to build positive momentum as we head into the second half of the year,” Roots chief financial officer Leon Wu said on the same call as Roach.
Much of that momentum has come from direct-to-consumer sales, which include corporate retail store and e-commerce sales. In the second quarter, direct-to-consumer sales totalled $41 million, up 12.7% from the year before. Direct-to-consumer comparable sales growth was 17.8%.
Wu saw the increase as a reflection of customers responding well to the company’s spring and summer collections as well as its recent marketing campaigns. The campaigns helped Roots increase engagement and made the brand feel more accessible, Roach said. Included in the campaigns were instances where Roots transformed a parking lot into nature-inspired spaces for golf and tennis.
The company also hosted a pop-up in Toronto to promote a summer capsule collection with ginger ale maker Canada Dry. The collection included hoodies and graphic tees featuring Canada Dry’s logo and vintage advertisements.
“Together, these collaborations amplified brand heat, reinforced our heritage positioning, and extended our reach for authentic Canadian cultural moments,” Roach said. “We will continue to use selective partnerships and experiences to build that brand perception and support full-price sell through into fall.”
Transat A.T. reports $399.8-million Q3 profit, revenue up from a year ago
Transat A.T. Inc. (TSX:TRZ)
Numbers for the third quarter (all figures in USD):
- Profit: $399.8 million (up from a loss of $39.9 million a year earlier)
- Revenue: $766.3 million (up from $736.2 million a year earlier)
Source Google Transat A.T. Inc. reported a net income of $399.8 million in its latest quarter compared with a loss of $39.9 million in the same quarter last year, as its revenue rose 4.1%.
The parent company of Air Transat says the profit amounted to $9.97 per share for the quarter ended July 31, compared with a loss of $1.03 per share a year earlier.
On an adjusted basis, Transat says it had a loss of 28 cents per share in its latest quarter, compared with an adjusted loss of 93 cents per share in the same quarter last year.
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The Canadian Press
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Prenups can be an uncomfortable topic, but a big help in the event of heartbreak – MoneySense
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There’s a certain stigma that can come with a prenuptial or cohabitation agreement, which outlines the fate of a couple’s assets if their marriage or common-law relationship were to end. Some might argue it signals a lack of trust or endurance of the relationship. But the conversation doesn’t have to turn sour, experts say.
Most professionals will recommend a prenup for couples with a wealth disparity, or if one of them is bound to inherit money from family, and even in situations of second marriages, to make clear the division of assets.
From assets to expectations, prenups set the ground rules
But with more people getting together later in life, many already own assets such as a home, vehicle, or have larger investments and savings. Prenups could preserve those assets and keep a record of what each spouse brought into the marriage or cohabitation, said Aimee Schalles, a lawyer and co-founder of Jointly Solutions Ltd., an online prenuptial and cohabitation agreement platform.
“We’re of the view that prenups are for everybody,” Schalles said. “We think even people who don’t have much can benefit from having some clarity in documenting what their arrangements are, and at least what they’re bringing into the relationship.”
Usually, a divorce follows the default provincial family law in the absence of a legal prenuptial agreement.
Holly LeValliant, estate and trust consultant at Scotiatrust, said while she doesn’t always recommend a prenup to all her clients, splits can be hard without a preset agreement. “You don’t marry the same person you divorce,” she said. “You can end up in a situation where you may regret later not having those conversations.”
LeValliant said prenuptials require both partners to disclose their complete financial picture. Hiding assets and debt could make the agreement invalid. The partners also need to each seek independent legal advice, she added.
Have a personal finance question? Submit it here.
Prenups protect assets and offer financial peace of mind
While prenups are primarily made to protect each person’s assets, it can also help avoid having to take on your partner’s debt. In most provinces, what people bring into their marriage remains theirs, including debt, Schalles said. “If you came into a relationship with a lot of student debt, in most provinces, that would be yours to keep and your responsibility to pay,” she said.
But like assets, debt can accumulate interest—which the partners may have to share. That can be avoided with a prenuptial agreement.
The timing of these agreements is also really important, experts say. For example, a prenuptial agreement can’t be drawn up a day before the wedding, which could lead to one person feeling pressured to sign the papers without a choice or time to find a lawyer.
“The courts look at issues like: When was the wedding planned? Had people travelled into the wedding? Have invitations been sent out?” said LeValliant. “If you’re putting too much pressure on that party where they feel like they have no choice but to sign, it may be a void agreement.”
A flexible prenup grows with your relationship and circumstances
How the conversation about a prenuptial agreement goes might depend on how the subject is brought up.
Talking about a prenuptial is essentially an extension of financial planning, said Blair Evans, assistant vice-president of tax and estate planning at IG Wealth Management. “Sometimes, having a financial discussion is daunting, but the more financial discussions that you do have with your partner, generally, they become less daunting,” he said.
Schalles said the storytelling method could help get through the hard part of bringing it up. “Unfortunately, almost everybody knows someone who’s been through a bad split,” she said.
One way to bring up the word “prenup” without conflict could be sliding it in during financial check-ins. “It could be to say to your partner: ‘Hey, you know, do you remember our friend Jonathan and that horrible split that he had a few years ago and how much stress it caused him and his ex-wife? I don’t want that for either of us,’” Schalles said.
She added: “If we are to find ourselves in this situation, I would prefer for us to have a plan in advance so we don’t find ourselves going through what they went through, because everybody agrees that that’s ugly.”
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The Canadian Press
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$70B Anglo-Teck merger faces Ottawa review, shareholders react positively – MoneySense
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The companies have proposed the deal as a “merger of equals,” even though Anglo American is worth more than double Teck, as plans include sourcing upper management and board representation roughly equally between the two.
The deal would also see company headquarters of what would be known as Anglo Teck move to Vancouver, as proponents look to sell Canada on the benefits of the deal that will attract regulatory scrutiny.
“We think this is a hugely compelling opportunity for Canada,” said Teck chief executive Jonathan Price in an interview Tuesday. “We will be creating the largest head office in Vancouver, and it really is unprecedented to see a company of the size of Anglo American moving its global headquarters.”
Price is set to become deputy CEO of the combined company, while Anglo American chief executive Duncan Wanblad and chief financial officer John Heasley would move to Vancouver to maintain their roles at Anglo Teck. Teck chair Sheila Murray will be chair of Anglo Teck, while board seats would be equally split between the two companies.
Merger faces Ottawa review under Investment Canada Act
The deal will be subject to review by the Investment Canada Act, which can be used to block deals deemed not in the national interest. BHP Group’s attempted takeover of PotashCorp (now Nutrien) was halted in 2010 after the government found it wasn’t a net benefit. Canadian Industry Minister Melanie Joly said in a statement that the federal government will address several issues as it considers the merger, including the combined firm’s pledge to have its senior leadership based in and reside in Canada.
The deal also includes about $4.5 billion in spending commitments to Canada over five years. It’s not clear how much of that spending is new, but Price said the combined company would also open the potential for more development in the country going forward. “As a larger company with a bigger balance sheet and much greater financial resilience, we will have the ability to invest in some of the larger projects here in Canada, for example, the likes of Galore Creek, that would be very difficult for a smaller company to handle.”
Anglo Teck would maintain its listings on the London and Johannesburg stock exchanges and also apply for listings on the Toronto and New York stock exchanges. The plan is to keep the company incorporated in London, which would mean the S&P/TSX composite index would lose Teck from its listings, since companies need to be based in the country to be included.
Keeping the company incorporated in London is both for technical reasons, and allows for wider exposure to capital, but shouldn’t take away from the deal meaning a move of the company, said Wanblad in the interview. “Without a doubt, you know, this is absolutely going to be a Canadian company,” he said.
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Teck investors left with 37.6% and no takeover premium
There have been long-standing concerns about Canadian mining giants getting snapped up by larger foreign rivals, including then-Xstrata buying Falconbridge in 2006 and the following year Vale buying Inco and Rio Tinto buying Alcan.
Teck itself was subject to a proposed US$23 billion takeover by Glencore in 2023, only for the company to end up buying Teck’s coal business for US$7.3 billion after a protracted fight. Anglo American is no stranger to being a takeover target itself, as BHP Group made a US$49 billion offer just last year that ultimately fell through.
Anglo’s proposed deal with Teck would see Teck shareholders get 1.3301 Anglo American shares for each class A and class B share they own. Anglo also plans a roughly US$4.5 billion dividend to its shareholders to help balance out its value compared with Teck, but Anglo shareholders will still own about 62.4% of the combined company, while existing Teck shareholders will hold 37.6%, on a fully diluted basis.
The deal comes without a premium for Teck shareholders, and as the company struggles with operational issues at its massive Quebrada Blanca (QB) project in Chile, but Price said it still makes sense for investors. “Teck shareholders will get exposure to what will be one of the largest and highest quality copper-focused companies in the world.”
Combining the two companies could also mean about US$800 million in pre-tax annual synergies, plus a significant boost to the value at QB because it could be run in tandem with the nearby Collahuasi mine that Anglo part-owns.
The issues at QB, which Teck further outlined just last week, has put short-term pressure on the company’s stock price, said National Bank analyst Shane Nagle. “At current prices, shares are pricing in a significant reduction in the near-term operating outlook, which we believe is far too punitive given the quality of Teck’s underlying portfolio.” He said he’s not surprised to see interest in Teck given its challenges, but with the company now in play there’s likely to be several interested parties willing to pay a premium for the company’s portfolio.
Teck and Anglo shares rally on merger news
So far, shareholders of both companies seem pleased with the deal. Teck’s shares were up more than 14% in midday trading on the Toronto Stock Exchange, while Anglo American’s were up more than 8% on the London exchange. The deal has a US$330 million break fee, while the companies say they expect the merger to be completed in the next 12 to 18 months pending regulatory and shareholder approvals.
A two-thirds majority vote by Teck’s class A and class B shareholders, voting as separate classes, is required to approve the deal, while a majority vote is needed by the Anglo American shareholders.
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The Canadian Press
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Should you sell stocks you inherit? – MoneySense
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How are stocks taxed when you inherit them?
When a spouse or common law partner is a beneficiary, assets can be transferred to them on a tax deferred basis. So, for this section, we will assume a non-spouse beneficiary.
For non-spouse beneficiaries, inheriting stocks usually triggers tax consequences at the estate level, not for the individual. The estate settles any taxes owed before distributing the after-tax proceeds to the heirs.
A registered account like a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) is fully taxable based on the account value. The market value of the account on the date of death is considered income to the deceased. The tax is payable on their final tax return. Income or growth after that is taxable to the beneficiary:
- If the estate is named as beneficiary, it will pay the incremental tax.
- If an individual beneficiary is named, they will pay the tax on the post-death income or growth accrual.
A tax-free savings account (TFSA) is tax-free at death, but likewise, income or growth after that is taxable to the beneficiary (estate or individual).
A non-registered account is subject to capital gains tax on death, with the market value minus the adjusted cost base of each stock resulting in a capital gain (or loss, if trading at a lower value). Once again, subsequent income is taxable.
Since a non-registered account cannot have a beneficiary, the resulting tax is borne by the estate. If a stock is sold for a capital gain, post-death growth is also taxable. But if a stock is transferred to a beneficiary as part of their inheritance without selling it, that does not trigger tax on the post-death growth. Instead, the recipient’s cost base for their future capital gains purposes would be the market value at the time of the death.
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Do you have to sell stocks you inherit?
Stocks are often sold to pay tax and estate costs, with the net cash proceeds transferred to the beneficiaries. An executor may sell all of the estate assets regardless to reduce the risk of the market values declining to prevent being responsible for the estate losing money.
However, the executor of the estate can choose to transfer assets in kind—or as is—to a beneficiary. This can include stocks that were owned previously by the deceased.
As a result, a beneficiary can end up with a stock inheritance.
What to do with an inheritance of stocks
The question then becomes whether to keep stocks if you can sell and transfer cash, or to transfer stocks in kind.
From my perspective, inheriting an asset is unintentional. It is one thing to buy Canadian Pacific Railway shares on purpose but keeping them just because someone else bought them is questionable.
It is like inheriting someone’s clothes. If they fit and they are nice, maybe you will keep them. But if they are the wrong size and out-of-date, why wear them? Stocks need to be the right fit for your portfolio, and you should be careful about keeping them simply because you inherit them.
Should you keep the investments at the same financial institution?
Some beneficiaries like to maintain continuity. This can include keeping the same investments in the same place. In some cases, with an investment advisor, and in other cases, in a self-directed account.
An advisor is obviously motivated to encourage the beneficiary to keep the account with them. If there is an existing relationship, this can be a good reason to maintain continuity—but if there is not, an investor should not just keep the account as is just because. They should decide consciously to maintain the relationship and interview the advisor just like they would if they were selecting a brand-new one.
And if the account is a self-directed account and the beneficiary has little to no investing experience, they should be careful about trying to step into the shoes of the deceased. Not everyone is meant to be a do-it-yourself investor. You are not obligated to make the same financial decisions as someone who left you a stock inheritance.
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Tax implications of selling stocks after you inherit them
When you receive an inheritance of stocks, the market value upon the death of the deceased was already taxed. If the stocks were held in an RRSP, RRIF, or TFSA, the appreciation in the stocks until the time of transfer would also be taxed to the estate or beneficiary.
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Jason Heath, CFP
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Cash vs. stock: MEG shareholders face stark choice in takeover battle – MoneySense
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Under an amended offer announced Monday, Strathcona is offering 0.80 of a share per MEG share it does not already own. Its earlier overture was a combination of cash and stock. The latest offer is worth $30.86 per share, up from its earlier bid valued at $28.02 per share.
The Cenovus offer would see MEG shareholders choose between $27.25 in cash or 1.325 Cenovus common shares for each MEG share, subject to certain limits.
Strathcona claims MEG deal hands Cenovus the upside, not shareholders
Strathcona is calling the Cenovus deal “lopsided” and the MEG board’s sale process “broken” for accepting that offer.
“Congratulations, MEG board—you are in first place in the last 20 years for leaving the most amount of money on the table for your shareholders. You win the prize,” Strathcona executive chairman Adam Waterous said in an interview Monday.
Waterous noted Cenovus’ stock jumped 10% in the days following news of its deal with MEG, but typically an acquirer’s share price would fall after such an announcement. Waterous says that equates to a $3.9-billion gain in Cenovus’ stock market value that MEG shareholders are mostly not able to enjoy, as they would only own 4% of a post-takeover company.
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New bid highlights choice between short-term cash and long-term gains
Under the Strathcona deal, MEG shareholders would own 43% of the new entity.
“These are two radically different paths. One is a cash exit, leaving Cenovus a $3.9-billion gain,” Waterous said. “And the second is you’re not getting off the train, you stay on the train and you try to capture that over time.”
The new offer expires on Oct. 20. MEG and Cenovus did not respond to a request for comment on Monday.
MEG’s board has raised concerns about Strathcona’s majority shareholder—Waterous Energy Fund, which Waterous runs—selling its stake after the takeover. Waterous said he’d be in it for the long haul and there is no intention of exiting after a potential deal closes. He said Monday that his fund would be willing to enter into a lockup agreement not to sell the shares if MEG were to support its bid.
Waterous slams MEG board, says Cenovus deal will be a business school case study
The Cenovus deal must be approved by a two-thirds majority vote by MEG shareholders expected to be held on Oct. 9. Strathcona says it intends to vote its 14.2% interest in MEG against the deal.
“I have not spoken to a single MEG shareholder who is happy with the MEG board deal with Cenovus,” Waterous said. “This is going to be taught in business schools about boards of directors’ dereliction of fiduciary duty.”
Cenovus and MEG have side-by-side oilsands properties at Christina Lake, south of Fort McMurray, Alta. Strathcona also has operations in the region, and Waterous said a combination with his firm would offer similar benefits.
MEG shares rose two per cent, or 58 cents, to $28.93 in early afternoon trading on the TSX. Cenovus stock fell nine cents or about half a percentage point to $22.02, while Strathcona fell 62 cents, or 1.6% to $37.80.
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The Canadian Press
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