One of the problems people who opposed CERB had with the program is that they feared that a lot of people were going to consider CERB as a replacement for their lost income in this pandemic. They worried it might discourage them from looking for work.
If creating a sense of urgency is imperative to ensure that people actively start looking for work, then the upcoming CERB deadline will. The $2,000 monthly CERB income is ending soon, and if people who were receiving CERB haven’t found a way to replace that income, or they are unable to do so before October, they might be in a very difficult situation.
Chances of CERB extension
CERB helped millions of people get through what was undoubtedly one of the most powerful crises in recent history — 8.46 million people, to be exact, because that’s how many unique applicants filed for CERB. But it can’t go on indefinitely, and even the last extension was a very generous move by the government, one that cost it billions of dollars.
But now, CERB won’t be extended. The government is planning to move people who are still out of jobs and still need benefits over to EI. That was the plan originally, but EI wasn’t robust enough to cope with the onslaught of millions of CERB applicants, but now it is. EI is the default system in place to help out-of-work Canadians.
That still doesn’t mean people who can work can also choose not to. And if you qualify for one last CERB cheque, even if you’ve found work, you can put that $2,000 to work for you in your TFSA. So, if you face another loss-of-income crises, you don’t have to rely on the government to help you out, and you have a little set aside.
Investing the CERB
Having your emergency income in a TFSA instead of an RRSP is beneficial because even if you have to tap into that for some reason, you won’t incur any penalty, and you won’t offset your tax bill. One stock where CERB money can really make a difference and that’s still on a discount is goeasy (TSX:GSY). The alternative lender was on a decent capital and dividend-growth streak before the crash.
The company kept up with its impressive dividend-growth rate, even after the crash, and the payout ratio is also stable. goeasy’s yield, though it wasn’t great before the crash, is currently at an adequate 3.16%. The company has a 10-year CAGR of 23.7%. With another decade at this growth rate, a $2,000 investment will turn into a $16,000 emergency reserve. That’s equivalent to about eight months of CERB payouts.
Before CERB ends, make sure you are eligible for EI benefits. Because if CERB ends and you don’t have a job, and there are issues starting your EI benefits, you won’t have an income source. And when you do have an income source, make sure you start saving and investing a small portion of it. You might not have a hefty amount to start with, but with time and power of compounding on your side, you might make up for it.
Speaking of the $2,000 CERB...
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