BMO Investment Survey: Concerns About the Economy Emerge, Despite Rising TFSA Values

63% of Canadian investors are concerned about the potential for a recession in the next 12 months, counter to consensus economic forecasts

TORONTO, Jan. 20, 2025 /CNW/ - Amid a challenging economic environment, many Canadians are increasingly concerned about the future of the Canadian economy, according to the latest BMO Investment Survey. While Canadians are concerned about the macroeconomic situation, the survey also reveals it was a generally positive year for investors, with Tax Free Savings Account (TFSA) values on the rise and reaching record levels. With higher TFSA values, respondents also indicated they are seeking financial advice, especially during these uncertain economic times.

"It was a good year for many investors with the two main asset classes, stocks and bonds both performing well in 2024, likely helping to increase account values for many Canadians," said Brent Joyce, Chief Investment Strategist and Managing Director, BMO Private Investment Counsel. "While economic headwinds, including the prospect of tariffs may be a concern for Canadian households, we still see room for the major markets to continue making gains in 2025. For investors, its important to remember, the Canadian stock market is not the Canadian economy, and it is often the case that markets climb a wall of worry."

Economic Headwinds and Inflation

The survey reveals how Canadians see the economy performing in 2025, with 63 per cent of respondents expressing concern about the potential for a recession in the next 12 months, while only 28% were not concerned about a deeper economic decline. Almost half (48%) believe the economy will weaken over the next 12 months, while only 19% expect the economy to improve. 

Rising prices and the cost of living continue to be top of mind for Canadians, with over two-thirds (67%) of Canadians indicating inflation is having a negative impact on their current financial situation. Canadians are also expressing concerns about rising prices in the future, with 61 per cent saying inflation is currently high and they expect prices to continue increasing.

The survey quantifies how much extra Canadians are spending on basic living expenses due to inflationary forces, and found:

• 44% say they are spending an extra $100-$300 a month.
• 38% say they are spending over $300 a month extra.

"While the trade concerns are front and centre for many Canadians and should be taken seriously, global economic growth is expected to continue and we expect underlying Canadian economic growth to improve in 2025, barring serious and sustained tariff action," said Robert Kavcic, Senior Economist, BMO Capital Markets. "On the inflation front, recent data also indicates price growth has stabilized around the Bank of Canada's target. Canadians can expect the Bank of Canada to continue to reduce interest rates modestly further in 2025."

TFSA Values Hitting New All-Time Highs

Canadians are continuing to utilize their TFSA accounts, with values hitting record highs, sitting at just under $45,000, an increase of 8% over last year, according to the survey results. Canadians also indicated they are planning to contribute an average of $6,500 to their TFSA this year, which is a slight drop from $6,600 last year and below the high-water mark set in 2022.

	TFSA Current Account Balance	TFSA Contribution Estimate by End of Year
Year	$ Mean	$ Mean
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
2019	28,214	5,332
2018	27,053	4,826

TFSA Values by Generation

The total value of TFSAs held by Canadians varies significantly among the different age groups, according to the latest results. Boomers hold a significant lead over younger generations, with the average TFSA values for Boomers exceeding $72,000.

Generation	Average TFSA Current Account Balance
Gen Z	$13,779
Millennials	$32,204
Gen X	$47,210
Boomers	$72,211
Over 71 years old	$64,653

The Value of Advice

More Canadians are seeking advice from their advisors, especially when it comes to the challenges investors are currently facing when making investment choices. According to the latest survey results:

• 56% say it is more important to seek professional financial advice during the current market conditions, while only 8% believe it is less important.
• Almost nine-in-ten (89%) believe their advisor is helping them meet their financial goals, which is an increase of 7 percentage points over last year.
• Almost four-in-five (79%) say they have seen financial growth when using an advisor, an increase of 12 percentage points over last year.

Study Methodology

This study was conducted by Pollara with an online sample of 1,500 adult Canadians aged 18 years and above.  This research was conducted from November 8th to 18th, 2024. While margin of error cannot be calculated on a non-probability sample, for comparison purposes, a probability sample of 1500 respondents would have a margin of error of ±2.5%, 19 times out of 20.

Disclaimer

This message is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Investments should be evaluated relative to the individual's investment objectives, risk tolerance and professional advice should be obtained with respect to any circumstance.  

About BMO Financial Group 

BMO Financial Group is the eighth largest bank in North America by assets, with total assets of $1.41 trillion as of October 31, 2024. Serving customers for 200 years and counting, BMO is a diverse team of highly engaged employees providing a broad range of personal and commercial banking, wealth management, global markets and investment banking products and services to 13 million customers across Canada, the United States, and in select markets globally. Driven by a single purpose, to Boldly Grow the Good in business and life, BMO is committed to driving positive change in the world, and making progress for a thriving economy, sustainable future, and inclusive society. 

SOURCE BMO Financial Group

Media Contact: Aaron Sobeski, Toronto, [email protected], [phone]