Inflation is a problem but we’re still adding to our net worth, despite higher costs of capital and consumer goods.
That is the upshot of the latest quarterly report on the net worth or wealth of Canadians. We saw the total value of our holdings – that’s assets minus liabilities – rise by a quarter of a trillion dollars in Q2 of this year.
And we seemed to be getting help from both sides. The value of our holdings was going up while we were borrowing less, no doubt a result of rising interest rates.
We sold off mutual funds and used the proceeds to buy things like term deposits which are offering higher interest rates these days and we benefited from our holdings exposed to rising global equity markets which dramatically outpaced the TSX.
And one other factor – something that is adding upward pressure to our interest rates – is federal government borrowing. It hit its highest level in two years and the cost of servicing that debt is rising sharply because we are rolling over or retiring old, cheaper treasuries with higher priced ones.
