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• May 2, 2022

If you're starting to get stressed out by soaring inflation and the cost of living seemingly spiraling out of control, you're not alone, according to a new survey from TD Wealth.

According to the 2022 TD Wealth Survey, surging inflation topped the list of personal finance concerns for 87 per cent of Canadian respondents, followed closely by the cost of living at 84 per cent.

Those concerns were particularly pronounced among young Canadian survey respondents. In fact, survey respondents under the age of 35 reported being significantly more likely to be concerned about nearly every aspect of their personal finances than older generations, including everything from housing, to interest rates to job security.

“With soaring inflation, continued market volatility and rising rates, layered with a weary society slowly emerging from the pandemic, we're seeing increasing levels of financial stress among Canadians and retail investors alike,” said Brad Simpson, Chief Wealth Strategist, TD Wealth.

Simpson said that with inflation driving up the cost of everything from groceries to gas, combined with market volatility and rising rates, TD Wealth Financial Advisors are seeing increasing levels of financial stress among Canadians and retail investors alike.

The survey results paint a picture of younger Canadians feeling worried about the future.

The survey found that younger Canadians are significantly more likely than older generations to be concerned about: housing prices (80% vs. 54%), rising interest rates (71% vs. 49%), market fluctuations (71% vs. 66%), their salary/earning capacity (67% vs. 43%) and job security (47% vs. 24%).

For those respondents under the age of 35, their top post-pandemic priority is saving for a down payment on a home, while older Canadians (over the age of 35) said their top priority was going on a vacation. Paying down debt was the second-highest priority for all survey respondents (18%), followed by investing/trading in the stock market to generate more income (16%).

More than half (56%) of survey respondents said that rising inflation had forced them to revisit their investments strategy, while nearly six-in-ten (58%) of respondents said they regretted not starting to invest at an earlier age.

Younger Canadians have never seen anything like this

"Inflation has risen to a thirty-year high, something younger Canadians have never experienced before," said Beata Caranci, Senior Vice President & Chief Economist, TD Bank Group.

"These folks are also at an earlier stage of their careers, with likely lower levels of wealth and income relative to older generations, making the rising costs for everyday household items more unnerving—particularly for those facing higher debt service costs due to rising interest rates."

In April, the Bank of Canada raised its benchmark interest rate by half a percentage point to 1%. The Bank of Canada said inflation is being driven by “rising energy and food prices and supply disruptions, in combination with strong global and domestic demand.”

Although TD Economics expects inflation to slow under the weight of higher interest rates and improved supply chains, Caranci said inflation will still remain on the high side into 2023.

"Canadian households should be prepared for an economic phase marked by higher interest rates and higher inflation," she said. "However, this is also the phase of the business cycle that requires precision—and a little luck—from the central bank as they try to orchestrate a soft landing."

Why it's important to take a long-term view

Simpson said that while he expects this rise in inflation to be temporary, he noted it's an important reminder for Canadians to remain focused on their long-term financial goals, understand their risk tolerance, and connect with a Financial Advisor who can support them.

"You want to focus on how you're going to invest for the next 30 years, not the last," he said.

TD Bank Group commissioned Leger to conduct an online survey of 2,341 Canadians, weighted by age, gender, region and income, using Leger's online panel. Responses were collected between February 17 and 28, 2022. The margin of error for this survey was +/-2.0%, 19 times out of 20.

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