Plus: A mid-career finance guide June 17, 2024 Sign Up | View online IN THIS ISSUE 8 min read 🍏 An AI for iPhones 🎥 A dashed media deal 🗺️ A midlife money plan Midlife is a time when you may find yourself making chocolate pudding at 4 a.m. for your kid. It’s also the first time you might find yourself earning a solid income. We explain below in the Big Important Story. | Nickelodeon THE WEEK IN MARKETS Are Tech Stocks Too High? Since last October, stocks have been, to use a technical term, absolutely ripping. The ripping largely continued this week (outside of a little softness on Friday), mostly thanks to an encouraging U.S. inflation report and an Apple product launch (more below). But one thing that’s giving some investors pause is that five jumbo tech companies — Amazon, Apple, Google, Microsoft, and Nvidia — have been responsible for more than half of the S&P 500’s gains this year. The so-called Big Five now account for 27% of the S&P, the most concentrated the index has been in decades. And so the fate of the stock market (and many people’s savings) rests, to a large degree, on their performance, hence much of the worry. Is the concern justified? Goldman Sachs, among others, says nah, at least not as long as the Big Five keep shovelling in mountains of cash. But will their earnings be enough to keep beating investors’ expectations? Put differently: are these companies really winning the economy? We’ll have to wait until next earnings season for any answer to these questions. THE WEEK IN ONE NUMBER 34,000 The number of Canadians who missed a mortgage payment in Q1 — a nearly 23% increase from last year. It’s not a scary-big number, but the jump suggests owners are feeling the strain of high interest rates. WHAT HAPPENED LAST WEEK IMPORTANT Apple finally gets in on (Open)AI. Apple has been accused of falling behind on AI, but, as Ben Thompson of Stratechery argued, it might have actually nailed the timing — arriving late enough to learn from Google’s and Microsoft’s mishaps but early enough to function as AI training wheels for its enormous customer base to… do what, exactly? Help you avoid double-booking lunch. Find a photo buried in your camera reel. Summarize emails. Prioritize notifications. In other words, shortcuts for daily life. Apple Intelligence will be powered in part by OpenAI’s ChatGPT tool, and critics argue that the deal will turn iPhones into a trojan horse for Sam Altman and Co. by giving them access to a treasure trove of user data. No cash is changing hands in the deal. It’s a convenient arrangement between two tech behemoths, and markets loved it. After the announcement, Apple’s stock hit a record high. Canada’s big banks keep getting bigger. National Bank, Canada’s sixth-largest bank, announced Tuesday that it will buy Canadian Western for about $5 billion. The Big Six oligopoly currently holds about 93% of banking assets in Canada, and this deal comes just months after Royal Bank of Canada acquired HSBC Canada for $13.5 billion. The concentration in the sector has been great for bank profits, and a bit less great for average Canadians. We overpay for banking services by billions each year, or about $250 per person, according to one consultancy report. INTERESTING Paramount is back on the block! One of the most high-stakes soap operas in Hollywood this year has been whether Shari Redstone, daughter of late media baron Sumner Redstone, will give up the keys to her family’s media empire, Paramount (Paramount+, Nickelodeon, MTV, CBS, etc.), while it’s still worth something. (Its value has fallen by about 90% since the early aughts.) In May, Sony and a partner walked away from a US$26-billion acquisition deal. Then, last week, after months of haggling, Shari shocked media insiders by nixing an almost finalized agreement to merge Paramount with Skydance, a production company led by fellow nepo baby David Ellison, son of Oracle’s Larry Ellison. “Shari got spooked,” a source told CNN. So the acquisition drama continues! And the next bidder is yet another nepo baby, Seagram heir Edgar Bronfman! What can the Swedes teach us about building homes? It takes about 11 months to build a home in Canada, while a Swedish factory can now do it in 30 minutes. How? The New York Times recently toured Lindbäcks, an innovative maker of wooden modular apartments that has taken advantage of Sweden’s housing codes, which require builders to put in more work upfront to prove that their designs are safe but give developers greater latitude to throw up units once the designs get the A-OK. Even with all the prefab homes Sweden is building, it still has a bit of a housing crisis, but the country’s house-price-to-income ratio, at 104%, is far less dire than Canada’s 138%. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 💸 Average rent listing in Canada hits all-time high of $2,202, but if you’re cool the landlord might take $2,201. Source 🧯 Kia recalling 463,000 Tellurides because the seats catch fire. Until then, tell yer ride to bring a fire extinguisher. Source 🍄 Scientists discover a fungus in the ocean that can eat plastic. Great Pacific Garbage Patch to rebrand as restaurant. Source 🏒 Oilers playoffs net Edmonton tons of revenue. Promises not to spend it on more Nathan Fillion Pavilions. Source CRASH & BURN TO THE MOON 🛒 Costco Canada selling driveway security poles to prevent car theft. Might not work but gives your armed guards something to lean on. Source 🛻 Tesla threatens man with $50K fine if he sells Cybertruck that won’t fit in his parking space. Anyone have a vacant Cybergarage? Source 🐘 New study shows elephants call each other by unique names. Might one day even assign each other contact photos. Source 🚢 Another billionaire plans to visit the Titanic in a little submarine. Shipwreck’s billionaire-eating plan is working! Source WHO CARES THIS WEEK ON THE PODCAST THE BIG IMPORTANT STORY FINANCE 101 A Simple(ish) Five-Point Money Plan for Mid-Career Canadians Back in May, we launched a three-part series about how to think about your finances at different stages of life. In the first installment, we shared personal-finance advice for early-career folks in their 20s. This week, it’s time for Part Two: using hallucinogens to recognize patterns in the night sky that will help you win the lottery. Kidding! Don’t try that. What we’re actually going to talk about are five keys to your MID-CAREER (age 30ish to 50ish). [1] Keep working. Nose to the grindstone, pal. Almost no one makes much money in their 20s. It’s just a fact. That changes as you enter your mid-career, which is when most Canadians reach their peak-earning years. This period is also when education really starts paying off: the incomes of people with a secondary degree and those without tend to diverge at around age 34, with university graduates earning as much as 74% more than those with no higher education. Regardless of how much education you have, if you feel your income hasn’t risen much since your 20s, it might be time to change things up if you’re able — switching jobs is a fairly reliable way to boost your wages. [2] Get insured, and not just through your job. A lot of people start families in their 30s and 40s. If that’s you, it means it’s time to think about life and disability insurance, since you’ve got dependents who you presumably do not want to end up in some sort of Annie, hard-knock-life scenario if something bad happens. Term life insurance is the way to go for most people, since it’s usually reasonably priced and will give your beneficiaries a predetermined chunk of cash in the event that you, well, die. [3] Avoid taxes (but not in the way you might think!). OK, so you’re already saving diligently and working toward your goals, right? Well, one way to turbocharge your efforts is to contribute to tax-advantaged savings programs that the government created to incentivize folks to sock away money — like a Registered Education Savings Plan (RESP) or a First Home Savings Account (FHSA). Based on our calculations, using an FHSA to save for a downpayment could, thanks to the tax breaks and investment returns, help grow your money by almost $20,000 more than if you stuck your cash in a high-interest savings account. [4] Save 20% of your pre-tax income. Personal-finance pros generally agree that if you save that much, you’ll likely make good strides toward your retirement goals. As a rough target, some people try to save twice their annual salary by the time they turn 35 and three times their salary by 40. You can use a retirement calculator to get a better idea of your goals and needs and to gauge whether you’re on track. [5] Admit to yourself that you need to care about bonds. The great divide between youth and middle age is the moment you start thinking more about bonds than new music. (Is Rihanna still around? Is Animal Collective still cool? We have no idea! We’re bond people now!) You’ll want to be mostly invested in stocks, since they’ve historically grown the most. But financial advisors typically suggest midlifers hold some boring ole bonds too (or at least bond ETFs). That’s because as you age, your portfolio has less time to recover from market drops, and bonds, with their predictable interest payments, usually offer a smooth ride. How many bonds you should hold depends on your risk tolerance. Some asset managers suggest bonds should make up about 20% of your portfolio until you reach your 50s, while more conservative advisors suggest a mix of 30% bonds and 70% stocks throughout your 30s, then gradually shifting more into fixed income after that. But, again, it all depends on your risk tolerance. Got it? We’ll wrap up this series in the coming weeks, so be on the lookout. —Ben Mathis-Lilley OTHER VERY GOOD READS 🎨 Your Cubicle Escape Plan How to semi-retire years before most Canadians. | Wealthsimple Magazine 🏠 Where Can You Afford to Rent? A (not-exactly hopeful) interactive tool to explore Canada’s rental crisis. | CBC 🧑‍💻 Spreadsheet Superstars Inside the Microsoft Excel championships. | The Verge POSTS OF WISDOM No matter how well Apple Intelligence works, no Apple product will ever surpass the dongle. 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), Clare Douglas (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (senior lifecycle marketing specialist), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Disclosures: Contributors to this newsletter own shares in Amazon, Google, and Microsoft. 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