Market crash: What does it mean for us?
As Toronto's main stock market index plunged to its lowest point in almost a year Monday, investors everywhere cringed. But for the average Vancouverite, what does it mean?
According to Vancity investment director Michael Atkinson, there's a hard lesson to be learned. "Governments, as well as individuals, need to be careful about the amount of debt they hold," he said. "You need to make sure that too much debt versus not enough income isn't a problem."
Following eight years of university, Katie Maximick racked up about $50,000 in student loans. "It's stressful when your debt is as high as mine," said the 27-year-old, adding debt played a role in her decision not to pursue a PhD and has hindered her ability to start a RRSP.
Atkinson said the market crash, a reaction to the European and U.S. debt crisis, won't affect the average individual in a major way, but keeping an eye on interest rates is important for those trying to pay off debts.
While rates will likely stay low for the time being, he added it's hard to predict if or when they will change, something investors, homeowners and students repaying loans will also need to monitor.
Atkinson's advice comes on the heels of a Bank of Montreal report that showed 40 per cent of Canadians were financially unprepared to deal with emergency.
According to economists, the rule of thumb is to have an emergency fund set aside "equal to three to six months of your income" in the case of unexpected financial hardship.
Amy Elderkin doesn't have much of an emergency fund set aside, but she does have an RRSP she started at 23.
"I know that I really can't touch it, but in a worse case scenario . it makes me feel good," said the 27-year-old entrepreneur.