OTTAWA – Recent consumer data was shows an alarming majority of Canadians continue to spend their grocery budget on groceries, despite the advice of financial experts to buy grocery stocks instead.
“Canadian food prices are sky high, as is the stock performance of Canada’s grocers,” says Certified Financial Advisor Christine Simons. “Yet despite all this publicly available data, consumers continue to engage in wasteful and foolish spending buying food, when they should be buying stocks for Canada’s tripology of publicly traded grocery megacorporations like Loblaws, Sobeys, and Metro.”
University of Calgary business professor Samuel Cole says Canadians’ insistence on buying food over food stocks is a classic example of what he calls “low financial literacy behaviour,” explaining that when given a windfall of cash, a person with high financial literacy invests their money in appreciable assets like real estate and stocks, while a person with low financial literacy spend their money on consumable goods that quickly depreciate in value like vegetables and bread.
“Food is a consumable with low to no ROI and has an extremely high rate of spoilage,” says Cole. “From a financial standpoint, spending money on food, especially in this climate, is extremely irresponsible.”
“Food is a sunk cost, whereas food retailers’ stock is soaring,” echoes Megan Van Keegan, a high-net worth portfolio advisor. “I often give this example to my clients: if you had $1000 dollars and bought $1000 dollars of Loblaws stock at the start of the pandemic, you’d now have $1580 dollars. But if you took that $1000 dollars and bought $1000 dollars of food, all you’d have is not starving.”
“People really need to sit down at the kitchen table and do the math… assuming they have a kitchen. Or a table,” adds Van Keegan.
Van Keegan suggests one possible solution for Canadians looking to nourish their bodies while offsetting the so-called “financial suicide” of buying groceries would be to buy a small plot of land and build a community garden, and then sell the land to developers to turn into a Shoppers Drug Mart.
When asked about their poor investing habits, Canadians said they were receptive to the advice from experts.
“I’d love to buy grocery stocks, I hear they’ve been doing great,” says Guelph resident Debbie Chung. “This month I was going to invest $800 in Loblaws, but then I went to Loblaws and bought some eggs, a loaf of bread, and a single carrot and only had $6 left. Oh well, maybe next month. It’s not like these prices are going to stay this high forever right?
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