Plus: is Indigo-ing private? February 12, 2024 Sign Up | View online IN THIS ISSUE 8 min read 👻 Vanished earnings 📚 Privatized bookstores 💚 Greened bills Do you really want to be taking orders from this guy into your seventh decade? Below, we figured out how much you’d need to save to retire at age 50. | 20th Century Fox THE WEEK IN MARKETS Roaring ’20s Redux? Question of the week: the stock market’s clearly exuberant, but is it irrationally exuberant? Ed Yardeni, a famed market researcher, wrestled with this question in a good Bloomberg podcast last week. The S&P 500 is now up 25% from a year ago. (For comparison, the TSX isn’t even up 2% over the same time.) The price-to-earnings ratio (a gauge of how expensive stocks are) for the S&P 500 is now above 25 for the first time in two years; big tech stocks are even more expensive. On the other hand, stocks broadly aren’t anywhere near as frothy as they were in 2021, 2008, or 2000. Yardeni surmised we’re entering into a prosperous period — “the roaring 2020s,” he called it — with new technology bound to boost profits and productivity further. In other words, the recent exuberance might be completely rational. Is he right? Stay tuned. WHAT HAPPENED LAST WEEK IMPORTANT If Tiff had a hammer, he could fix this housing crisis himself. But all he’s got is monetary policy, and it “can’t do everything,” like lower shelter costs. The BoC governor lamented this fact in a speech last week, and his comments were noteworthy because he seemed to be saying, in central-banker-speak, that the BoC might look past rising shelter costs when deciding when to cut interest rates. That’s because the BoC’s goal is to control overall inflation, which has fallen, and to maximize employment, which has started to weaken. For these reasons, the BoC might cut rates sometime this year to boost economic growth even if home prices show no sign of slowing down. Yay? Canadian companies might have to hire more Canadians. Temporary foreign workers (TFWs) now make up 4.4% of Canada’s workforce, which may not sound like much, but Immigration Minister Marc Miller told Bloomberg that he’s reviewing the TFW program because that ratio is enough to drag down wages for foreign workers and Canadians alike. (Economists agree.) There’s a big difference between traditional immigration, which tends to boost spending and wages in advanced economies, and Canada’s TFW program, which floods the job market with low-wage workers who seldom gain enough experience or training to thrive here and who, in their sheer abundance, give businesses like, say, Tim Hortons greater leverage in salary negotiations. INTERESTING Snapchat’s earnings, like its messages, vanish. $SNAP dove 34% on Wednesday after the company reported a quarterly net loss of US$248 million, continuing a rough few years for the app. In 2021, Apple overhauled its privacy rules, which made it harder for social-media platforms to target ads to customers, hurting their revenues. Meta, for one, lost something like US$1.3 billion in 2022 because of the change. But, unlike Snapchat, Meta bounced back after it figured out how to use AI to know whether you’re more likely to click on an ad for a Temu hydroponic planter, say, or a tan coat from a menswear company you’ve never heard of. Is Indigo-ing private? More thana decade ago, book chain Indigo started selling things like patio furniture, pinball machines, and sex toys, in a bid to become Canada’s “cultural department store.” It didn’t work, and profits have shrunk. Now Indigo’s controlling shareholder, Gerald Schwartz, is offering to buy up all the company’s shares at just $2.25 each so he can try to turn things around behind closed doors. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 💰 Quebec spending $870 million on new roof for Olympic Stadium so they can stop putting pots down when it rains. Source 🎙️ Spotify renews The Joe Rogan Experience for US$250 million. Ayahuasca and elk for everyone! Source 🔋 Canada beat China in the lithium-ion battery supply chain ranking! See you at the lithium-ion battery supply chain ranking dance! Source 🐮 Lab-grown dairy was recently approved for sale in Canada. Cows across the land are quiet quitting. Source CRASH & BURN TO THE MOON ✈️ UBC art student flies from Calgary because it’s cheaper than Vancouver rent. Worth it once he gets that art degree. Source 💔 Researchers puzzled by new finding that people earn less after divorce. Now testing new “curses are real” hypothesis. Source 🥽 People upset that US$3,500 Apple Vision Pro doesn’t work with p*rn. Could’ve gotten half a realistic sex doll for that. Source 🥤 Coke introduces raspberry-flavoured Coca-Cola Spiced, which is meant to sound cool and not like a collab with Celestial Seasonings. Source WHO CARES WHAT’S UP THIS WEEK Canada’s Greener Homes Grant wraps up TODAY. Thanks to an outpouring of demand for Canada’s cash-for-retrofits program, which has helped homeowners save an average of $386/month on their energy bill, the government will stop accepting applications today, Feb. 12, at 5 p.m. ET. So, if you want to get your windows replaced before wildfire season summer, sign up for that free cash by EOD. THE BIG IMPORTANT STORY RETIREMENT FIRE Drill: Could You Save Enough to Retire at 50? We Did the Math We don’t have evidence to support this theory, but the savings habits of a large and growing number of millennials seem to have been greatly influenced by four words in a 1999 blink-182 song: “work sucks, I know.” We say that because, while work has been a drag since time immemorial, young and mid-career professionals have increasingly latched onto FIRE — an acronym for Financial Independence Retire Early. The movement, which can be traced to the 1992 book Your Money or Your Life, has become the subject of a gazillion TikTok videos and Reddit posts. Basically, FIRE adherents strive to live cheaply, save a lot, and retire as early as possible. In one famous example, in 2017, a pharmacist waved goodbye to his nine-to-five at age 38 with $1 million banked away; seven years later, he’s still retired and has a reported net worth of $3.672M, thanks in part to compounding investment returns. Which sounds great. And ambitious. So what about retiring at, say, 50? We decided to figure out what it would take for a Canadian to retire at that age. First, some assumptions: For the sake of this exercise, let’s assume that [1] you’re in a committed, saving-for-retirement-together relationship with someone the same age as you are, [2] you already have $52,000 saved (pretty typical), [3] together, you and your partner will need the inflation-adjusted equivalent of $60,000 a year to live on when you retire (which, again, is pretty typical), and [4] you and your partner will die hand in hand, Notebook-style (to reference another millennial cultural touchstone), at age 95, so you want retirement savings to last until then. Our research team ran some numbers based on the assumptions stated above, and, according to their math, you’ll need about $2 million invested* — good luck keeping your retirement money in savings — by the time you retire at 50 to cover your living expenses (food, housing, etc.) until age 95. Does $2M seem high? Well, that estimate is squarely in line with the amount Canadian millennials believe they’ll need to retire, according to a BMO survey out last week. *We accounted for inflation, so you’ll actually end up with more than $2M when you retire, but you’d have the equivalent of $2M in buying power today. Also, we assumed you and your partner will both be eligible to receive full CPP and OAS payments at age 60 and 65, respectively, and we assumed that you and your partner will max out your TFSA or RRSP and get a 7% annual investment return. So is it possible for a non-rich person with bills and groceries to consider to save $2M by age 50? The answer depends, of course, on your salary and expenses, but, for illustrative purposes, the above chart assumes you and your partner have an annual household income of $128,000, which is typical for two Canadians with college degrees. As the chart shows, to hit $2 million by age 50 with that income, you’ll have to be really, really thrifty. Even if you get started at age 25, you’ll have to save more than $54,500 a year, or $4,540 a month, which will leave you with about $4,075 a month to live on after taxes. Here’s the point: It’s a good idea to begin investing as early as possible, since you’ll need to sock away a lot and hitting your goal will get harder the longer you wait. If you’re fortunate, you might be able to sail into the workplace sunset a decade or so before your peers. But try not to freak out if you can’t save tens of thousands of dollars a year right now. Do the best you can, because even if you’re unable to retire at age 50, bowing out of work at age 55 or 60 with a couple million bucks is still a pretty great consolation prize. But even in that case, you’ll still need to invest diligently. To know where you stand retirement-wise, search “retirement calculator Canada” on the web. You’ll find free tools to help you crunch the numbers based on your specific situation. Good luck! OTHER VERY GOOD READS 🥵 What Really Caused the Sriracha Shortage? Two friends whose breakup deprived millions of their favourite hot sauce | Fortune ⛷️ Skiing Is Becoming an Endangered Pastime Will winter, and winter sports, soon become extinct? | The Walrus 👩‍❤️‍👩 Should You Open a Spousal RRSP Account? How to know if it’s right for your relationship | Wealthsimple THE WISDOM OF TWITTER X Everyone is running their cost-benefit relationship analysis… THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Ben Mathis-Lilley (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Nikki Holmes (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (senior lifecycle specialist), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). 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