Rising inflation worries Canadians, but investment accounts and financial advice offer steady growth
Many Canadians are worried about the economy, according to the latest BMO Investment Survey.
Amid economic uncertainty, the survey revealed a generally positive year for investors, with Tax-Free Savings Account (TFSA) values reaching record highs.
Respondents indicated they are seeking financial advice more frequently in response to the challenges they now see in the wider economy.
Brent Joyce, chief investment strategist and managing director at BMO Private Investment Counsel, stated, “It was a good year for many investors, with stocks and bonds both performing well in 2024, likely increasing account values for many Canadians.”
He added that while economic headwinds, such as tariffs, remain a concern, there is room for major markets to grow in 2025.
Joyce also noted that the Canadian stock market and economy often behave independently, with markets tending to “climb a wall of worry.”
The survey showed 63 percent of respondents worry about a potential recession in the next 12 months, while 48 percent expect the economy to weaken further.
Only 19 percent anticipate improvement. Rising prices and cost of living dominate concerns, with 67 percent reporting inflation is negatively affecting their finances.
Additionally, 61 percent believe inflation is high and expect it to increase further.
The survey revealed that 44 percent of Canadians spend an additional $100–$300 monthly on basic expenses, while 38 percent report spending over $300 more.
Robert Kavcic, senior economist at BMO Capital Markets, noted, “While trade concerns are significant, global economic growth is expected to continue, and underlying Canadian economic growth could improve in 2025 barring sustained tariff actions.”
On inflation, Kavcic added that price growth appears to have stabilized around the Bank of Canada’s target, and further modest interest rate reductions are expected in 2025.
The survey highlighted a significant increase in TFSA values, with the average account balance reaching $44,987 in 2024, an 8 percent rise from $41,510 in 2023.
Canadians plan to contribute an average of $6,500 to their accounts this year, slightly below last year’s $6,606 and the peak in 2022.
TFSA Growth Over the Years
|
Year |
Average Account Balance |
Average Contribution |
|---|---|---|
|
2024 |
$44,987 |
$6,499 |
|
2023 |
$41,510 |
$6,606 |
|
2022 |
$38,046 |
$7,434 |
|
2021 |
$34,917 |
$6,513 |
|
2020 |
$30,921 |
$6,783 |
Source: BMO Investment Survey
Boomers hold the highest average TFSA values, with balances exceeding $72,000, far surpassing younger generations:
|
Generation |
Average TFSA Balance |
|---|---|
|
Gen Z |
$13,779 |
|
Millennials |
$32,204 |
|
Gen X |
$47,210 |
|
Boomers |
$72,211 |
|
Over 71 |
$64,653 |
Source: BMO Investment Survey
Canadians are increasingly seeking professional financial advice, as highlighted by recent survey findings.
A majority of respondents, 56 percent, indicated that seeking financial advice has become more important given the current market conditions.
This shift reflects growing awareness of the value of professional guidance in navigating economic uncertainty.
The survey also revealed a notable increase in satisfaction with financial advisors.
A significant 89 percent of participants stated that their advisor is helping them achieve their financial goals, marking a 7-point rise from the previous year. This growing confidence underscores the pivotal role advisors play in fostering financial security.
Furthermore, 79 percent of respondents reported experiencing financial growth when using an advisor, representing a substantial 12-point increase over last year.
