Bay Street bullish, Canadians less so

Canadians remain guarded about their financial wellbeing, despite a steady stream of positive news bolstering the market, according to the latest Russell Financial Health Index (RFHI) — an online calculator that gauges the overall financial health of investors on a quarterly basis.

The index fell to 48.50 points from April to June 2009, down from 49.99 points in the first quarter of 2009, and declining every quarter since posting 50.65 points in the fourth quarter of 2008.

“Perceptions of financial health have been impacted by the realities of rising unemployment, pay cuts, and uncertainty regarding a sustainable market recovery,” said Irshaad Ahmad, president and managing director of Russell Investments Canada Limited. But given that equity markets tend to improve ahead of an economic recovery, there are likely better days ahead for Canadian investors, he added.

Having sufficient income for a desired lifestyle remains the top concern among investors, followed closely by anxiety about the financial impact of the loss of a spouse or partner, and mounting apprehensions about having enough assets or inheritance to bequeath to beneficiaries. The ability to retain a reliable source of income and afford an active and healthy lifestyle are some other active concerns plaguing Canadians.

“Perhaps some people are starting to realize the long-term reality of how the current market conditions will affect them as they get older, in addition to the potential impact on others around them,” Ahmad noted.

Each RFHI score is the result of analyzing variables that include physical health, personal finances, unexpected events and financial planning. Respondents are also asked questions related to how prepared they feel to ride out changes in their long-term investment performance before and during retirement.

(07/23/09)