Yahoo Finance Heard of COLI? Here’s What Every Canadian Investor Needs to Know
Written by Amy Legate-Wolfe at The Motley Fool Canada
There have been a lot of important numbers thrown around for Canadians in the last few years. Interest rates and inflation numbers of course have been some of the biggest headliners. However, there’s another important one to note — one that certainly is important for every Canadian, not just investors, to know.
COLI
What is COLI? It stands for the cost of living index. The COLI is a measurement of the cost of living in different areas of the world, using New York City in the United States as a baseline. This baseline is 100. So if your COLI is higher than 100, you’re living in a high-cost area. If it’s lower, you’re in a lower-cost area.
Using New York as a baseline, Canada is now the 26th most expensive place to live in the world at 66.1 on the COLI. Therefore it is 34% cheaper to live in Canada than it would be to live in New York City. To come up with this number, the COLI looks at all costs of living. From rent and food to utilities and purchasing power. While that’s all well and good, what about when you compare it to the rest of the country?
While the average may be 66.1, things start to change when you go city by city. For instance, the COLI in Victoria, BC, is 77.2. Meanwhile, in Windsor, ON, you could have a COLI of 62.1 in 2023. So, again, depending on where you are, the COLI will certainly change drastically.
Why Canadian investors should care
So far, this all sounds very interesting, but how can this be applied to your everyday life? Apply it to your everyday budget. These days, the costs of just about everything are changing rapidly. Grocery prices and gas may come down, but then housing prices and taxes start creeping up again.
Therefore, when planning your budget it’s a great idea to look at the COLI in your area for guidance. Once figured out, you can plan your budget based on where you live. This will allow you to put aside money for investing, ideally through automated contributions. Not only will you be saving money through the use of the COLI, but you’ll also be making money as well.
A safe stock to consider
If you’re budgeting and trying to calculate your COLI these days, then it’s likely that you’re looking for safety and security in this market — as you should! Therefore, finding blue-chip companies with growth ahead can be a great way to make cash. Add in dividend income, and that’s even better.
Therefore, a safe stock I would consider these days for secure income is Canadian National Railway (TSX:CNR). While CNR stock missed out on a growth investment in Kansas City Southern Railway, it now has plenty of cash on hand. This has been key in this troubling market.
The stock has a stable and safe dividend yield of 2.19%, with shares down 6% in the last year. This, however, was due to lower results from its shipping in recent months. Analysts believe the stock will turn around quickly, leaving room for quick growth with shares down.
Therefore, if you’re looking for income during this time from a stable company with a long history of growth and more in the future, consider CNR stock. And with a strong budget on hand coupled with this dividend stock, you’re sure to see incredible cash come your way in the near future.
The post Heard of COLI? Here’s What Every Canadian Investor Needs to Know appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.
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