Tax avoidance

Before I turned into a drama queen on Friday and huffed off on my Harley, I affirmed why I host this disgusting site: to help people. It’s why I provide a running commentary on the one asset class with the most influence and danger, real estate. Why I offer guidance on investing and tax avoidance. And why those who come here to mope, bitch and foment revolution can rotate.

My worldview is simple. No systemic financial collapse. No bank failures in Canada. No 80% drop for the stock market. No food riots. No depression or hyperinflation. No bankrupt America.

But neither will there be robust economic growth, a sizzling economy, mucho jobs, fatter house prices or cheap rates forever. What’s coming will be what you see, only less. This will shock more people than you realize. Especially delusionals who think 50 feet of water and a parking spot is worth $550,000.

In the period ahead, when wages are flat, jobs few and Boomers disintegrate, you need a plan. Owning a house isn’t one. Nor is having a pile of gold, or your fortune in GICs. I preach a diversified and balanced portfolio for good reason. Because it works. It saved asses in 2008, it smoothed out the S&P meltdown three weeks ago and it spit out 15% last year.

For anyone who cares, I’ll spell this out better in a future post.

But investing is hard. It takes a set. Tax avoidance it easy. So let’s start simple. Today I have a tip on how to put money into an RRSP, and how to take it out. This is done in the full knowledge that TFSAs are actually better than RRSPs, and that’s where your first fifteen grand should go (but not into savings).

The worst way to make an RSP contribution is the way everyone does – in the last two weeks of February, just to beat the March 1st deadline, claim the deduction on last year’s taxes, and collect a refund in April. Of course this means for an entire year you have overpaid on your taxes, sending more money to Ottawa than the knobs deserve. You’re also putting money into a tax shelter where it can grow faster months later than you should have, and thereby foregoing months of growth.

There’s a better way. Get a tax refund on every single paycheque instead of waiting an entire year. This increases your cash flow, reduces withholding taxes and makes your spouse think you got a raise, which should be a reason the special underwear comes out of the drawer.

It’s easy. Set up a monthly contribution to your RRSP through the bank or your financial guy. Then go to www.cra.gc.ca, click on the first tab on the top left (‘Forms and Publications’) and request T1213, ‘Request to reduce deductions at source.’

Fill it out and send it to your local tax office. They’ll approve it, forward it to your boss, and then the person who figures out your source deductions will reduce them. Suddenly your take-home pay is augmented, and your retirement plan is growing faster. Why would you not do this?

Now, there have been some questions on this blog about how you get money out of an RRSP or a RRIF without paying tax. As you know, all a registered retirement plan does is kick the tax can down the road – it defers the hit instead of avoiding it, as a TFSA accomplishes. For this reason, it makes poor sense to invest in assets that yield lowly-taxed capital gains or dividends inside an RRSP, since it all comes out eventually and is taxed higher, as income. At least 99% of folks do not understand this, and keep equity mutual funds in their RRSPs and GICs outside. Pity.

Anyway, it is possible to transfer wealth from a registered plan into a non-registered one with the use of leverage – the fancy name for a loan. Just borrow some money on a line of credit with interest-only payments and then invest it in a nice, stable balanced portfolio of ETFs, bonds, preferreds, REITs etc. Then take whatever money you need to pay the monthly interest on the loan from your RRSP.

When you do your annual tax return, the money received from the retirement plan is added to your taxable income. But the loan payments (since they’re all interest) are deducted from that income. With a little figuring, you should be able to balance them out, for zero net tax. So what you’ve done is finance a non-registered portfolio with your RRSP money, and it’s cost you nothing to do so. Wealth is, in effect, flowing from one to the other.

Of course, this involves two scary things: (a) borrowing and (b) investing. So if you’d just like to get old and pay more tax, then go for it.

Or, you can lament the way things are and find a blog to take a dump on. Hey, here’s one.

 

142 comments ↓

#1 cognizant on 08.28.11 at 10:05 pm

That last link is way too funny! What is the HA IT admin going to think of all the hits they get tonight and tomorrow! Nice.

#2 Dark Man on 08.28.11 at 10:10 pm

Ok, now how do you make your mortgage tax deductible?

#3 mississaugasold on 08.28.11 at 10:12 pm

Oh my, what an excellent post! This will definitely require some good calculations or a good accountant. Very intriguing indeed.

Thanks!

#4 Snowboid on 08.28.11 at 10:14 pm

Thanks for the information about RRSPs – we have some long-term ones maturing soon (about $50K at over 5% – they have offered 18 mo at 2.050%) so have a meeting with our planner before we head south.

Interesting information on the angels of hell, funny the Canadian website is a bit short on information!

http://www.hamccanada.com/

#5 smartalox on 08.28.11 at 10:15 pm

Garth, what’s the correct method for calculating gains, like the 15% figure that you cite in your post. Is (market value – book value) / book value? When making regular contributions over many months, such as with employer matched RRSPs, where book values may fluctuate over time, how is the book value determined? Can you recommend a resource to help non-specialists understand these calculations better?

Thanks!

#6 vatoDETH on 08.28.11 at 10:20 pm

This is the kind of stuff I definitely want to learn! Thanks Garth!

#7 shanks on 08.28.11 at 10:20 pm

garth that is brilliant….

#8 shanks on 08.28.11 at 10:21 pm

i think my nuts just dropped.

#9 JSM on 08.28.11 at 10:27 pm

Just to be clear, note that one cannot use the assets of their RRSP as collateral for the loan.

So you are using the investment portfolio and, ironically?, your house equity as collateral for the loan.

Nevertheless, this is a very effective strategy and I fully agree on Garth on using this.

#10 Elmer on 08.28.11 at 10:38 pm

I’m not too bright so perhaps you could clarify something for me. I don’t get the point of using this leverage move to transfer money out of your RSP. If you want your money in a non-reg account instead of an RRSP, then why wouldn’t you just contribute it to the non-registered account in the first place?

Because you already have RRSPs or RRIFs, claimed the tax deduction and enjoyed tax-free growth. Was that a real question? — Garth

#11 Jackie on 08.28.11 at 10:39 pm

Thank you, thank you for your hard works and good advise.

#12 Mr. Lahey, Trailer Park Supervisor on 08.28.11 at 10:39 pm

Randy and I caught up to Captain Garth just before he hit Julian and Ricky’s weed fields on his Harley and after a couple of rounds of scotch we convinced him to return to this pathetic blog we all so love. Sorry Smoking Man, we may not make you the head blogger at this time, but stay ready just in case. “Randy, pour me another one. We gotta celebrate Captain Garth being back at the helm”.

#13 martin on 08.28.11 at 10:39 pm

funny!!!

#14 Tim on 08.28.11 at 10:41 pm

I was on the golf course today in Vancouver, and the golf guy in the pro shop said it has been booked solid, $75 a pop, and it is teaming with people. There were two housing on Main st that were sold in less than a week. Not everyone is hurting…

That was insightful. — Garth

#15 Yes, but.... on 08.28.11 at 10:44 pm

You are one of the people saying that interest rates have nowhere to go but up. So when you borrow money to buy stocks and interest rates go up, wouldn’t you then have to achieve ever greater returns to cover your debt service?

Will it be easy to do that? Raising interest rates aren’t exactly conducive to stock prices.

When you say “Then take whatever money you need to pay the monthly interest on the loan from your RRSP”, do you mean you take the money for your debt service out of your RRSP? Wouldn’t that be taxable?

What happens if your equity positions take a haircut while interest rates are rising?

Sigh. — Garth

#16 Makaya on 08.28.11 at 10:52 pm

Garth,

another way to make fairly decent return with limited risks is to do carry trading on currencies. The principle is you borrow money in a currency that cost next to nothing (USD or JPY) and invest it in a currency that pays you to invest in (AUD pays currently 4.75%). With proper diversification between currencies and without leverage, you can easily get a return of 5%. With a bit of leverage, you can get much more. Have you ever thought of doing this as one of your investment vehicle in your balanced portfolio?

No! — Garth

#17 The InvestorsFriend (Shawn Allen) on 08.28.11 at 10:54 pm

WITHDRAW RRSP TAX FREE.

Okay, Garth’s explanation works for me. I can see that working.

If secured line of credit that is interest only has an interest rate of 3%. Then I need to borrow 100k to shield the tax on 3k from my RRSP.

If I want to remove $25k per year from the RRSP I need to borrow $833k on a line of credit.

Under this strategy the higher the interest on the investment loan the more I can take out of the RRSP.

Everything I take out of the RRSP just goes to pay interest on the investment loan.

What about the money I make on the investment line? I have to pay full tax on that ’cause I used the interest dedeuction to shield the RRSP tax.

I dun no, it does not really hang together for me.

But I am no tax expert.

I am just a poor schmuck who has turned a total of $131,679 invested in RRSP into $586,165 (345% in gains) and the money have been invested for a dollar weighted average of less than 12 years. I did that by investing in the “wrong” things, capital gains (mostly) and dividend stocks. At this rate I will owe a LARGE tax bill someday. The larger the better!

No, I am in no hurry to take my money out of RRSP. I will start in about 20 years, when I am required to.

The government has asked me to thank you. — Garth

#18 Habbit on 08.28.11 at 11:00 pm

Thanks Garth for that solid advice. I need all the help I can get and your blog certainly provides plenty. Keep up the good work. Have you considered jumping back into politics? The ruderless Liberals need someone….Just a thought. Take care.

#19 Killer Chicken or Imploding Boomer? on 08.28.11 at 11:00 pm

OK. Now I know where my comments went……..

Please consult with your (trusted unbiased non-commission) advisor and your accountant.

You went spam. — Garth

#20 Devore on 08.28.11 at 11:03 pm

#16 Makaya

another way to make fairly decent return with limited risks is to do carry trading on currencies.

All those people in eastern Europe who took advantage of the currency carry trade and got themselves CHF mortgages no longer believe the risks are limited.

Currency trading is for experts only. Leveraging into it only for the suicidal.

#21 six-figure-renter on 08.28.11 at 11:03 pm

hey Garth great post. how does the T1213 form work when your a sole proprietor?

#22 Killer Chicken or Imploding Boomer? on 08.28.11 at 11:04 pm

17 Shawn – you are a walking tax bomb dude!. Almost $600k with 20 years to go? Prepare to take it without vaseline!

Seriously, you may be one of the lucky few who can benefit from this strategy.

#23 Mike on 08.28.11 at 11:05 pm

Mostly I come here for the pictures, but that was a really good post. I liked your tax advice enough that it convinced me to buy your book.

#24 The InvestorsFriend (Shawn Allen) on 08.28.11 at 11:05 pm

MONEY FROM RRSP AT LOW TAX RATE

Here is the best way I know to get RRSP money out at a low tax rate.

Retire early with no other taxable income (you will need TSFA or non-registered savings to live on, or maybe a working spouse)

Now you can withdraw, in Ontario about $38,000 and your MARGINAL tax rate is only 20%, your average tax rate is lower than that.

That works for me, I got around 40% or more tax deduction on the way in and years of tax-free compounding. In effect the government contributed about 40% of “my” RRSP, and now they would only get back less than 20% on this portion.

#25 Utopia on 08.28.11 at 11:06 pm

#251 Good Luck Utopia said…..

“Good luck, and BTW I have never commented on your posts but I really appreciate your experience and perspective and I suspect we would have a good laugh and good conversation if we ever met!”
————————–
You bet we would “mystery person”. And thanks. Hey, maybe one day Garth will hold a one-nighter somewhere in this country where all the Dawgs can fly in for a meet-and-greet and tie a few on just for the good times. That would be an amazing night! I might even write a speech for the occasion.
————————–

#238 Beach Girl wrote….

“Also like buddy who burns a $3.97 pizza. WOW, I am impressed. Hopefully you gave her a vodka cooler to keep the heat down. She must be really sad or depressed to go for that”
————–
Sad and depressed? Not even close Beach Girl. She was a sweetie with a great sense of humour and lots to say. And about that pizza…I always cook with love. Who cares what it cost when I made it with own hands the old fashioned way?

Is everything about money now?
———————

To #234 Live Under Your Means

Your posts always make me hungry! Maybe it is just the lack of nicotine and all this fresh air but suddenly I have a hankering for mussels and salmon and little red potatoes dug out of the garden. I think my brain is going coastal.(in a good way).

#26 Tripp on 08.28.11 at 11:06 pm

“…which should be a reason the special underwear comes out of the drawer.”

Garth, you owe me an iPad screen protection film.

On a serious note, fantastic post, thank you!

#27 The InvestorsFriend (Shawn Allen) on 08.28.11 at 11:11 pm

MAN UP AND PAY THE TAXES

So you thought “your” RRSP was in fact “your” RRSP?

Well wrong, it never was 100% yours.

In effect the government funded roughly 40% of “Your” RRSP through your tax refunds.

On withdrwal, if you happen to lose 40% to the tax man that seems fair.

Stop trying to squirm out of your tax bill.

Instead invest for capital gains inside your RRSP and grow the biggest fattest pot of money you can and then years later pay your taxes with a smile.

My income tax bill in 2010 (age 50) was higher than my whole income was in 1990 (age 30) and I won’t complain about that at all.

One thing worse than having to pay high income taxes is not having to pay high income taxes.

#28 Utopia on 08.28.11 at 11:16 pm

Oh, and by the way….

Those are some really good ideas, Garth. I am looking forward to the next book.

#29 Utopia on 08.28.11 at 11:28 pm

#20 Devore on 08.28.11

“Currency trading is for experts only. Leveraging into it is only for the suicidal”.
—————————
Man, you said it Devore. Unless you have the stamina of a teen, the patience of a saint, a lightening fast trigger finger and the lifestyle of a vampire with piles of freed-up cash this is definitely not what you want to try for fun. Odds of losing are about the same as those in the casinos. You can make out like a bandit if you get it right but the whiff of a periodic win drives most into critical errors. Even total loss. That is a different kind of investing altogether and it is not for the faint of heart.

#30 vyw on 08.28.11 at 11:36 pm

#24
also factor in CPP, OAS allowance, as early as age 60 and OAS and GIC at age 65.

retire at 55, withdraw $38K a year from RRSP, taxed at 20%, use savings or HELOC to make up the difference

top up after age 60 and 65 to $38K a year but beware that GIC and OAS allowance and OAS to some degree has a clawback.

maybe have an insured annuity to cover any accumulated HELOC and final year expenses.

die broke, pass the house to the kids.

#31 etf fan on 08.28.11 at 11:47 pm

I appreciate the comment regarding the T1213 form. I have used this process and beneffited from paying less tax on each paycheque now for 2 years.

This year, I tried to convince numerous friends and family members to go this route but received excuses from “that doesn’t sound right” to “I just don’t have the time”. One of my friends even works right beside the tax office where we drop the forms off! It only takes 15 minutes! Oh well. Their loss.

Thanks for the informative post, GT. I believe there is a real desire from your readers for more information like this.

#32 HouseBuster on 08.28.11 at 11:53 pm

Should I buy Greek bonds? They are paying 60% interest.

#33 R on 08.28.11 at 11:55 pm

Just trying to understand… So this strategy is only suitable for people who already have an RRSP with a substantial amount?

I have a DCCP through work which seems to have different rules.. I chose this option for some reason which currently eludes me.

#34 Makaya on 08.28.11 at 11:56 pm

@ #20 Devore

Like in every investment, you have to know what you’re doing… I’m not saying this is for everybody!

As garth keeps saying, as long as you’re diversified, you’ll be fine in the long term. That also work for carry trading in currency.

JPY central bank rate is at 0%, the FED rate is at 0.25% and the ECB is at 1.5%.

On the other side of the trade, you have the AUD rate at 4.75%, the Indian Rupie at 8%, Polish Zloty at 4.5%, the Russian Ruble at 8.25%, the south african rand at 5.5%, the mexican pesos at 4.5% and the Turkish Lira at 5.75%. Between all these currencies, you can have a very diversified portfolio…

As far as leverage is concerned, of course you have to use this tool extremeley carefully. In the forex market, if you’re diversified and your leverage multiplier is no more than 2, it is extremely unlikely that your account would be wiped out. This type of investment/trading works best in the “long term”.

I’m not here to sell or promote anything, I was just curious whether Garth had that kind of investments in his portfolio.

#35 cj on 08.29.11 at 12:08 am

Welcome back, Garth. See how much we need you :) A line of creit to offset drawing RRSPs does work well for lowering taxes. Choosing the right stocks/ETFs etc is critical. Get professional advice

#36 a prairie dawg on 08.29.11 at 12:20 am

#15 Yes but…

- – -

Yes, the rsp withdrawal is taxable.

But the ‘interest-only’ payments on the loan to fund the non-registered account you open are deductible.

And the interest on the loan itself is also deductible. (no matter how high the interest rates are)

Properly matched they should be close to even. (Taxes = Deductions)

The stock price and amount of return generated have nothing to do with it. (you’d simply pay capital gains
tax on your gains, which is usually a much lower tax rate than income tax would be on a similar amount)

So what you’ve done is shift registered assets into an non-registered account, avoided the future rsp withdrawal tax hit by doing so, and can look forward to lower tax payments on any future earnings. (ie: future capital gains vs. future income tax)

How close is that Garth?

#37 Junius on 08.29.11 at 12:32 am

Garth,

Great solid advice. I will try the T1213 this year. Never even knew it existed.

Thanks

#38 Nostradamus Le Mad Vlad on 08.29.11 at 1:00 am

-
Re: Vicious Gangs of Keep Left Signs. It is in line with the last link but incl. baby snatchers and Hells Grannies. Avoid all these at all costs — it’s not worth the effort!

A drama queen on this disgusting site prostituting tax avoidance strategies. As long as it’s legal, none of us are going to a slammer.

“. . . first fifteen grand . . .” — Isn’t Harper on record as saying he would double the yearly TFSA if he won a majority? He won a majority, but, oh yeah, he’s a doublespeak con machine. Until he puts up, he’s a liar.
*
Euro Bailout Germany in mass-hysteria? GS or GS Goldman Sachs being Sued everywhere; High Life Icelandic bank tycoon enjoys the good life, and Everything is sweet and happy; McDonald’s Yes, you can earn a Master’s in flipping burgers.

Do regulators need more policing? Dyslexic Banks Sell gold low, buy high (that’s what sheeple do with homes); Breaking Up ain’t that hard, and US Real Estate; Equity vs. Credit Who is the big winner?

Ashes to Ashes Not sure if this is the correct way to dispose of Fukushima’s garbage, and here — 11 min. clip; 17:25 clip Conversation with a Smart Meter man, and Smart Grid is a massive security risk, designed to intrude on people’s lives; GE Crops Officials promoting Monsanto; 2:45 clip UFO over Irene; Irene “This is the STATE telling you to be afraid, be very afraid, of the weather.”

SAF Collection of mini-quakes; Contingency Plans In case something goes AWOL.

#39 skyrider on 08.29.11 at 1:07 am

Cookie Monster, Junius

Re: Ayn Rand… that interview was so funny.

She has some ideas, but she is such a horrible writer, so boring. Many philosophers are difficult to read…jargon, whatever…but she’s the opposite, she just has a few simple ideas that she pounds to death in the most boring way possible.

#40 Young Old fart on 08.29.11 at 1:12 am

Hmmmm…. not sure on this strategy, at least for me…

My rrsp’s hold bonds only. ETF’s, premium bond mutuals and they are maxed out. They are the part of the portfolio that I plan to touch last. WTF would I want to deplete them now?

Our TSFA’s are maxed out as well with mine holding equities and the wifey’s in orange. OMG you say what a waste! Well maybe, but again, my strategy and hers will grow by 5k a year and I never need to worry about that one. Of course these are such a small part of the portfolio for now. Hopefully they will cover the bar tab later….

Then the big basket holding all the stocks, etf’s, mostly dividend payers, mostly banks because as I told the wifey, if the banks go down, we are all f*#&%d anyways.

That being said, I did drop 200k on a junior mine the other day. Rolling the dice but payout should be big…

Of course all that just gets to sit and grow while I live off the fruits of my RE investments.

Sing it Kenny…… “you gotta know when to hold them…know when to fold them…. Know when to f@*k someone over….and know when to run…. you never count on anyone…cuz their all out to screw you… you just keep on makin’ money….. ’til your number ONE”!!!

#41 johnny walker on 08.29.11 at 1:25 am

Garth, when paying the interest only payment through your rrsp are you effectively being initially taxed by taking this money out of the rrsp?

#42 Thetruth on 08.29.11 at 1:31 am

Garth,

Most ‘doomers’ that post here are most likely responding to other blog dogs whose posts reinforce your views. I don’t think it is a personal attack on JUST YOUR view. So don’t take it personally.

On the other hand, there may be some who have made an enemy out of you. Probably people you met personally as i don’t think a blog such as this can create real animosity.

As for me, I’ll just go posting what I feel is real based on what I see and what facts I have to back them up. Not an attack against you… just against the collective opposing view.

#43 Brad in Cowtown on 08.29.11 at 1:46 am

There’s a better way. Get a tax refund on every single paycheque instead of waiting an entire year. This increases your cash flow, reduces withholding taxes and makes your spouse think you got a raise

This is not true.
Although I also recommend this strategy and have done it myself, you are falsely telling people their monthly cash flow goes up in this process, when it does not.

You wrote it yourself in the very next paragraph… “Set up a monthly contribution to your RRSP.”

Exactly – so in order to get the deferral sooner (positive cash flow), you also have to make the contribution sooner (negative cash flow, and obviously the greater amount).

It’s still a smart thing to do, because you are getting the deferral sooner and therefore growing it sooner inside the shelter. But you are also forcing yourself to set aside monthly contributions sooner.

It’s a good thing. For sure. But you certainly won’t feel like you got a raise. Especially when April rolls around and your soulmate is asking why you aren’t getting a fat “refund” anymore.

Sigh. — Garth

#44 Kilby on 08.29.11 at 2:51 am

#14 Tim.
Was just in Victoria for a week and walked down town. Yates St., Government St. (In tourist area near inner harbour) Broughton St.and others…. Dozens of empty stores. Yates St 700 block used to be advertised as the”Fabulous 700 block”, now empty stores, looks like a northern town whose mines have closed. Back home in our leased Vancouver waterfront condo with 40% sold in one tower and 20% in the other….. looks pretty bleak off the golf course.

#45 Being John Malkovich on 08.29.11 at 3:23 am

This post reminds me of the time that I decided to switch my Internet provider from Shaw to Telus. Odd analogy I know. . .and no need to elaborate on the gory details but let’s just say that it was a hell of a lot of work for essentially the same product and in the end I went back to Shaw.

I can’t help but feel that withdrawing money on a line of credit and investing it in the “hope” that all is well and I can gain enough money to pay for the interest that I would be losing etc. by “divining about with RRSP’s” seems like such a bunch of hassle–and in the end for what? Some extra ducats to splurge on a set of false teeth when I retire? I don’t need to drive a Harley/Hummer like you Garth. I just need a roof over my head that’s private and quiet. . .a place where I can garden and walk around in my underwear.

Dude’s gotta sleep at night you know? My investment strategy is more basic–government job with a government pension, a modest housing investment and cash in the bank. So far I am 38 and have no debt aside from 1/3 of my home–the value of which has risen far beyond what I paid and even if the housing market tanked I’d still sell it for more then what I paid. I know, I know, the value is not in my pocket until I sell the house. I get that, but if I sell it I still gotta live somewhere you know? I’d rather close my own doors. All you renters talk about the joy of renting. . .like it’s a club I can’t afford. . .I’ve never rented but it always sounds a bit like you all just swallowed a gulp of Buckley’s when you say how much you love it.

I get what Garth is saying here, I do. . .and I understand the peeps who want to take the risks with the above strategy–and if you can sleep well at night without a cyanide tablet in your cheek even better. To me debt is the enemy–even if it is working and making money for me in some sort of twisted way. I see debt and it reminds me of that guy with horns floating around in a lake of fire.

I’d rather spend now when I can still get it up, have less when I am older and more flaccid. . .and learn to adjust. Why do the women always think it’s only the guys who drive Harleys and Hummers that got things figured out?

Go hug a Maple tree. . .or save a kitty from one. Or relax and just breathe. . .there is more to life then money even if sexy guys like Garth and Kevin O’leary tell you it’s the shiznit. . .besides, excessive interest in wealth and big vehicles usually means you are hiding some other inadequacy.

Just saying is all. . .have a happy ride in the Hummer.

#46 Chaddywack on 08.29.11 at 3:23 am

Just for fun I did a count of listings in White Rock and I noticed that over the past two months almost every house is now suddenly listed over a million and about 90% of them now have a slew of 8′s in the price….I think I’m going to be different and put a row of 4′s!

#47 Marcel on 08.29.11 at 3:42 am

What type of investment would put into TFSA’s or RRSP’s?

#48 Onemorething on 08.29.11 at 3:42 am

What Garth suggests is absolutely doable but now we are talking about four camps 1/Those who have no idea (those not reading this blog) 2/Those who read this but dont understand it (you might be a little slow) 3/Understand it but find it ‘too hard’ to actually do (oh my that’s cool but I’ll do it tomorrow and never will) or finally 4/Understand it, might be doing it or will GET IT DONE IMMEDIATELY!

Out of 100 here’s how it will play out even if they read this blog so excuse #1 from the mix.

#2 – 50
#3 – 48
#4 – 2

This my friends is why the government is not concerned and why they wont shut any loopholes as we dont really care. We have had it too easy and it has already taken us but most dont know it!

Those 2% applaud yourselves for living in the world of reality! You used more than 5% of your brain today.

Good on you Garth!

#49 Andy In Vancouver on 08.29.11 at 3:51 am

Nice advice on tax witholding and registered-account withdrawals! Also thanks for the previous comments on bonds and diversifying. Whenever Bernanke farts, my stock portfolio takes a dump for months. Fundamentals my ass!

And on the referenced piece of real estate, what a deal!
Here in Vancouver, we have:
-tropical weather, white sand beaches, clear warm water to swim in
-cheap booze
-affordable housing
-friendly commuters
-low crime
… this must be the BPOE!

#50 themusicgod1 on 08.29.11 at 3:55 am

“Why would you not do this?”

Because someone has to be responsible and keep the country’s roads paved, schoolchildren taught and. And it won’t be penny-pinching tax-avoiders.

#51 Canuck Abroad on 08.29.11 at 4:12 am

17 / Shawn Allen – I think if you have gains accumulating in the non-tax sheltered account they will be taxed as capital gains which are at half the rate of income. Pension income is taxed at the full income tax rate.

So, the 833k you need to borrow to offset the 25k pension income could generate (at 8%) capital gains of 67k per year. This 67k would be taxed at the capital gains tax rate, which is only half the income tax rate.

I’m not a tax professional, so there’s probably a lot more to it. But it looks pretty good if this is right.

#52 Rob now in Nova Scotia on 08.29.11 at 4:41 am

Garth,

I love the financial advice. I’ve been to 3 of your sessions and have heard you talk about RRSP meltdowns, tax free mortgages and other tantalizing ways to save tax.

I’d love to see a mini series on these topics leaving RE off the table for a while. We all know how that bubble will soon start deflating anyway.

Cheers, Rob

#53 Aussie Roy on 08.29.11 at 6:33 am

Aussie Update

Sure signs that the Aussie housing bubble has popped.

http://www.businessinsider.com/another-sign-that-the-huge-aussie-housing-bubble-is-popping-2011-8

http://www.heraldsun.com.au/news/more-news/house-prices-sliding-in-melbournes-suburbs/story-fn7x8me2-1226123539461

http://www.moneymorning.com.au/20110829/aussie-house-price-falls-start-to-bite.html#more-5770

http://www.news.com.au/money/property/new-home-sales-down-8-per-cent-hia/story-e6frfmd0-1226124413240

A warning to the greater fools

http://www.prosper.org.au/2011/08/18/prosper-affirms-‘don’t-buy-now’-warning/

Bargains on the ski slopes.

http://www.theage.com.au/business/hot-bargains-in-ski-market-20110828-1jgnj.html

Economy is robust, if you are a miner – RBA.

http://www.news.com.au/money/interest-rates/rba-chief-says-economy-robust/story-e6frfmn0-1226123625884

CELEBRITY chef Gordon Ramsay has left a trail of financial destruction with the sudden collapse of his Melbourne restaurants Maze and Maze Grill, which owe $4.6 million to about 100 local hospitality suppliers.

http://www.theage.com.au/entertainment/restaurants-and-bars/mazes-collapse-leaves-creditors-stewing-20110827-1jfr6.html#ixzz1WPdcj7xy

Cost of mortgage payments to high, we can’t afford to educate the kids

http://www.theage.com.au/victoria/strapped-for-cash-parents-push-for-two-years-prep-20110827-1jfs3.html

#54 blase on 08.29.11 at 6:51 am

#46 Chaddywick

4 is the number for death in Chinese.

#55 David B on 08.29.11 at 6:53 am

Word on the street here in Halifax Dartmouth Real Estate people are not doing good at all but commercial building in what is becoming the largest industrial park on the planet is booming …. go figure.

#56 David B on 08.29.11 at 7:02 am

I have come to the understanding that good investments practices is very complex, first y’all need a good job then a good investment person with sound proven advice, good long health, a very good partner, good children who can carry their own loads ….. and of course stay clear of situations that will cause a divorce! And did I mention a lot of luck!

….

#57 Moneta on 08.29.11 at 7:35 am

In the 90s and 00s, we got boomers remortgaging the house to invest in RRSPs. And we know how that turned out for many.

Now we’re going to get boomers remortgaging the house to take that money out of their RRSPs.

Good Luck!

I’ve never heard of anyone taking a mortgage to invest in an RRSP. Source? Moreover, I did not suggest an amortized mortgage as a source of leverage capital. You are smart enough to know why. — Garth

#58 Beach Girl on 08.29.11 at 7:43 am

I appreciate your advice. Will have to read it over about 10 times till it sinks in. But yes, I am getting it.

Reminds me of a young loans officer at the TD bank who told me my plans would not fly. I am sure he is still making his 30K a year. Loser. Went to a mortgage broker. I made out like a bandit. Bought 5 houses all with basement apartments in 2002, same street. With next to zip down. Sold 3 in 2007. Phew, good timing.

In all my years working, I never made money like that. It can be done, and quite easily. Now when I walk in the RBC they salute. Loving the advice.

Unfortunately my accountant of over 25 years died last year. Need a new one. Billy told me me I was one smart cookie. Will retire well, but I come from European stock. We always feel like we are poor. No getting over that.

I am waiting for the next venture, as I agree real estate is not REAL anymore.

#59 Moneta on 08.29.11 at 9:01 am

I’ve never heard of anyone taking a mortgage to invest in an RRSP. Source?
———–
Garth, I never said you said to do that. I’m saying that it’s how many Canadians interpret the play.

I happen to know many people who refinanced at low rates and played the market with the cash.

In another twist… In 2007, a friend of mine took out a huge personal loan to match her RRSP limit and invested it all in commodities and energy because the portfolio needed to beat the 8% rate on her loan. Of course, when the market tanked she called me up and asked if she should sell.

Can’t fix stupid. — Garth

#60 househornyhousewife on 08.29.11 at 9:06 am

Garth,

OK, I am in wholehearted agreement with you regarding making regular payments to your RRSP as opposed to a last minute payment at the end of February. Keeping money that is yours out of the feds’ hands right from the start is definitely the way to go.

However, your scheme of transferring wealth from an RRSP to a non registered portfolio using borrowed funds takes a little more explaining from your part. Here are my concerns about this:

1. You are essentially transferring money you would have paid in taxes to the government (by withdrawing from your RRSP) to the bank (by paying them interest on the loan). HUH ?! I want neither the government nor the bank to have any of my money.

2. Your non registered portfolio now has immediately taxable income. This means that where you were previously able to defer paying taxes on your RRSP returns (since RRSP’s don’t only defer taxes on that initial investment but also on all of the interest that this investment makes) you now have an investment whose returns are immediately taxable.

After this transaction, you will have a loan that you are paying interest on (granted, if you play our cards right, you will manage to pay this interest with money you would have paid to the government in taxes .. but it is still not in your pocket but the bank’s) AND a non registered portfolio whose income is taxable today.

Now if we were allowed to invest more money in a TFSA and you went ahead with this transaction with the new portfolio being a TFSA, then I can see the attraction because not only would you receive the RRSP deduction initially, but you would manage to transfer those funds into an account whose income is tax free as opposed to tax deferred. However, you are still essentially transferring money you would have paid to the government in taxes to the bank (re the financing of the loan).

I have no aversion to borrowing when it is smart to do so but I am not so sure that this plan is really the way to go. I assume that this loan will remain outstanding forever ?

I do understand your argument that tax deferral means paying more taxes over your lifetime since the tax rates will go up and not down (so instead of paying 30% today you will pay 40% tomorrow on that money). But you also have to factor in the fact that the tax money you are withholding from the feds today (by deferral) you can use to your advantage by earning a return .. this reduces this future tax difference.

Also, there is no way that the feds are getting my money any sooner than they have to. There are also other tax planning vehicles that can be used to try to minimize your tax burden in the future since when you retire you will be in a different tax bracket and have certain deductions and credits available to you that aren’t now etc..

Sorry Garth but I am not convinced.

HHHW

1. The bank rents you money and the rent is tax-deductible. How is that bad? 2. Non-registered investments can give you tax-deferred capital gains (no tax until you sell) plus dividends with a healthy dividend tax credit. 3. Money invested in a TFSA does not carry tax-deductible interest. 4. You are not outsmarting the government by deferring taxes, just building up a greater taxable amount. 5. So, don’t do it. — Garth

#61 Sandy on 08.29.11 at 10:03 am

Thank you for this advice. And thank you for continuing to hammer away at us.

I will implement it.

#62 EdmontonJim on 08.29.11 at 10:06 am

One question,

Will the tax deduction form confuse our payroll person, or make more work for my boss? If so it might not be worth it for me.

#63 realitybytes on 08.29.11 at 10:10 am

For most people this amounts to nickle and diming, and is more hassle and risk than the benefit they will recieve.

Unless you are in the top 10% or so, with several hundred thousand or more in your RRSP, and have access to a very large line of credit, AND are a savvy investor or are hooked up with one…

The majority who read this need much more basic advice about where to start. Of course, as a 41 year old with a net worth of about 20K, I’m screwed anyway acording to you.

So from that cold start, and putting 500 or so away each month, what good does the fancy math do?

Nothing. You’re screwed. — Garth

#64 Kevin on 08.29.11 at 10:10 am

Great post, Garth, I’m really glad to see these kinds of topics being covered, I’m anxiously looking forward to see what else you have in store for us. This kind of stuff is really appreciated.

Just 2 quick comments on the topic. Wouldn’t it make sense to still take income straight out of your RRSP, at least until you reach the Basic Personal Exemption? Granted, if you had pension, CPP, OAS, or other income, that wouldn’t leave much room, but if your only income is your RRSP, then you can safely take out the first $10,000 or so tax-free before you’d need to resort to doing the interest/deduction dance you describe.

Secondly, I still think fixed-income has a place in the TFSA. Dividends and capital gains are favourably taxed in unregistered accounts, so holding them in a TFSA is just wasted potential. Interest income is fully taxed at your marginal rate, so I think your interest fixed-income component of your portfolio should be in your TFSA. If there’s still room left after that, then by all mean, top it up with equities or whatever floats your boat, but holding fixed income outside of a TFSA is insanity.

#65 EdmontonJim on 08.29.11 at 10:23 am

One other comment, something Garth doesn’t mention because isn’t as effective as his suggestions I suppose, is timing of RRSP contributions.

If you have a good idea of your carrier path, it makes the most sense to save your RRSP contributions for the times in your life that you are paying the highest taxes. That is, unless you are in the highest tax bracket you will ever be in, it makes more sense to save some room for when you are in that highest bracket.

For example, I take advantage of the RRSP contributions that my employer will match, but I don’t max out my RRSP every year, because I expect to make much more later in my life, when my RRSP deductions will be worth more to me. In the meantime I use that TFSA and make charitible contributions.

As a note to that, charitible contributions are a great tax avoidance tool. Not that they help you save money (you’re still giving it away), but that they ensure that some of your tax dollars (effectively) go to something you believe in. Plus karma/blessings/goodwill/humanity is always a great investment.

#66 Sandpiper on 08.29.11 at 10:30 am

Garth, thanks for shedding some light on the pitfalls of RRSP’s. But, I do have one nagging question.

You haven’t mentioned this so I am wondering if my way of thinking is incorrect. In 25 years when I retire – with a vast majorityin TFSA (though I am concerned the government will resort to some type of changes in the future that makes TFSA less attractive).

Anyways- say I have $60K by age 65 in a RRSP – I withdrawal $10K each year to cover part of my living expenses (the rest made up of CPP + TFSA). I wouldn’t be paying taxes because it would be below the government’s minimum income level and thus tax free. I take out approx. $10K for 6 years and won’t be stuck with the transfer at age 71 and being hit with a massive tax bill.

Does that sound logically or am I way out in left field –

P.S. (before someone makes a comment of eating only dog food on that budget) – my lifestyle if very basic – I am nearly finished with my mortgage payments, and I live in town that really doesn’t require a car to get around – my tastes are simple and a $1,000 wouldn’t be that far fetched.

You are planning on poverty? — Garth

#67 Daisy Mae on 08.29.11 at 10:34 am

FROM YESTERDAY….

256 Killer Chicken or Imploding Boomer? on 08.28.11 at 9:51 pm 247 Daisy – if the good was previously PSTed, and everything was GSTed, how did HST (PST + GST)
increase its price?
**********************

EXEMPTIONS from either tax no longer apply.

Now, ALL goods and ALL services pay HST (PST/GST combined). And this has resulted in a substantial increase in taxation.

#68 Sandpiper on 08.29.11 at 10:38 am

Sorry – that should read, $1,000 per month on expenses. Living simple is a lost concept to most. Living near a lake, canoe / kayak / tent covers summer while x-country ski’s and skates cover winter – what more can you ask for?

Keeping it simple -

#69 george d on 08.29.11 at 10:40 am

Well I just put an offer on a property. I am not going to listen to you anymore garth. I have my muskoka cottage for sale and purchasing a summer home in Olcott Beach in New York. Its about 20 miles from Lewiston border.
My partner sold his cotage on Georgian Bay for $399K.
He just purchased a home in Olcott for 125K. Its 4 bedroom just across from the water. Taxes are 1400 per year. Beer, Wine are 1/2 the price of here in Ontario.
Its a no brainer. Sell here and buy there and put $200 + in the bank.

#70 Kevin on 08.29.11 at 11:04 am

@themusicgod1:

“someone has to be responsible and keep the country’s roads paved, schoolchildren taught and. And it won’t be penny-pinching tax-avoiders.”

So when you file your income taxes each spring, I assume you skip over all the “deductions” and just pay your marginal rate on your full income? You don’t deduct any RRSP contributions at all? You don’t have a TFSA? You don’t deduct any rent, medical expenses, educational expenses, childcare credits, anything? After all, those are all ways of “avoiding” paying taxes, and you seem very concerned about making sure someone is paying for all these roads.

#71 Laurenda on 08.29.11 at 11:04 am

Hi Garth!!

I’ve heard of this T1213 strategy before, is there a way for me to know if I will have *too* much deductions at the source taken off, meaning I will need to pay at tax return time? Or should that be irrelevant??

Also I have a company RRSP where they meet my contribution at 1% of my gross pay… am currently doing 1% myself which an FA friend advised, saying he wouldn’t do more than they are… basically I’m just doing this for:

a. minimal tax benefit, and
b. easy way to get a bit of free money for first home buyers in a couple years

I don’t need a long answer, but is this a stupid idea? Yay or nay.

I have sadly mentioned the T1213 idea to several friends in their mid-late twenties before and all have the same opinion “I like my lump sum return, would likely spend it if I got it regularly”

This is the future.

Sorry for the long post and keep up the great work, you are a beacon of truth, reality and hope sailing in a sea of doom, gloom and scare tactics.

#72 scytale on 08.29.11 at 11:06 am

Have you thought about running for leader of the Liberal Party?

I’ve thought about being consumed naked by fire ants. — Garth

#73 Kevin on 08.29.11 at 11:06 am

@blase:

“4 is the number for death in Chinese.”

He knows. That was the joke.

#74 Peakoilist on 08.29.11 at 11:24 am

Finally got caught up on the weekend blog entries after a great camping weekend on beautiful Lake Erie and would like to say:

Thanks to Garth for allowing everyone to rotate here. Garth, If you really left for a few days, it wouldn’t be pretty..the withdrawal symptoms would be felt across the land..no , I’m not talking about Utopia’s ,although I’m sure in Saskatchewan they’re feelin’ the pain.Good luck Utopia, I’m sure in a few days, things will be smoother.
Some thanks to others on the weekend:

Moneta, for the great posts.

Beach Girl for my LOL moment

Utopia for not having much to say, but then having many good posts as usual(probably keeping the fingers busy)

and Harvard Grad taking the prize for most obnoxious.

#75 Peakoilist on 08.29.11 at 11:37 am

#58 Beach Girl on 08.29.11 at 7:43 am
In all my years working, I never made money like that. It can be done, and quite easily. Now when I walk in the RBC they salute.
====================================
You’re killing me !! too funny!

#76 jess on 08.29.11 at 11:41 am

#53 Aussie Roy
In a press release from 9 August, the Dutch Central Bank (De Nederlandsche Bank, DNB) announced with pride that the Netherlands topped the IMF’s world ranking for foreign direct investment. The total of incoming direct investment was as much as 3,000 billion dollars, while outgoing direct investment amounted to 3,700 billion dollars in 2009, the equivalent of 377% and 465% of the GNP, respectively.

The United States, a country with a national income of more than 14,000 billion dollars, was second on the list with incoming and outgoing direct investment amounting to 2,300 and 3,500 billion dollars, respectively, 16% and 25% of the GNP in 2009. Thus, the ratio of foreign direct investment to total GNP in the Netherlands is 20 times larger than in the US.
http://somo.nl/news-en/dismantle-dutch-fiscal-shelters/view?set_language=en

========
Maybe all those innovative financial products that seem to have produced a lot of misery for most have a creativity bias?

The study, “The Bias Against Creativity: Why People Desire But Reject Creative Ideas,” might validate the frustrations of creative people, Goncalo said.
http://www.physorg.com/news/2011-08-people-biased-creative-ideas.html

computing clouds

IBM is apparently hard at work assembling the largest data array ever, which will utilize the fastest data storage and retrieval system ever devised, allowing for the storage of 120 petabytes of data (120 million gigabytes) using its newly refined GPFS file system that is capable of indexing 10 billion files in just forty three minutes.

#77 Devore on 08.29.11 at 11:46 am

#49 Andy In Vancouver

Whenever Bernanke farts, my stock portfolio takes a dump for months. Fundamentals my ass!

Whether you like it or not, the government and the FED are huge parts of the economy now and their actions have a profound effect, so yes, fundamentals. You need to watch what they do.

#78 Beach Girl on 08.29.11 at 11:47 am

This might sound stupid. I am willing to be called names. But say, a young couple buys a property with a 200 000 line of credit. Rents 1/2 out. Only pays interest on the loan. Which 1/2 is tax deductible. After 10 years. The original 200 000 has depreciated and they are not really paying the 200 000 in 2011 dollars. And with any luck the house went up.

What I am essentially saying is you borrow money now, in 10 years that money is not worth what you borrowed it at. As I am typing this, I fear (moron) in the background

#79 Devore on 08.29.11 at 11:49 am

#50 themusicgod1

Because someone has to be responsible and keep the country’s roads paved, schoolchildren taught and. And it won’t be penny-pinching tax-avoiders.

Oh stop your crying. It is your civic duty as a Canadian taxpayer to remit exactly the taxes you owe, and not a penny more. If the government needs more money, they can raise taxes, instead of relying on your sloppiness and laziness.

#80 Randis on 08.29.11 at 11:49 am

Garth … I am speechless. I consider myself knowing enough in investing and RRSP and TFSA etc. and specialize in tax efficient investment strategies, but your reg-to-non-reg transfer strategy really opens up my eyes and I feel so little and dump now.

Anyhow, thanks for that. I will forever be a student of money and it looks like you are a good coach of that matter. =]

#81 Devore on 08.29.11 at 11:59 am

#60 househornyhousewife

For people who have large RRSPs, they might end up with a too high of an income, and will pay a high tax rate. They might want to melt down their RRSP to reduce future taxes.

Also, if you believe taxes will go up in the future, it might make sense to pay taxes now, rather then defer them. RRSP tax deferral works if you think your future taxes will be lower than your present taxes (maybe you have a very high income?), otherwise you will end up with the same or lower amount of money had you paid taxes all along.

#82 smartalox on 08.29.11 at 12:05 pm

I’m sorry Garth, I might be missing something: How do we pay back the principal on the loan? With gains from the unregistered portfolio? Or should you plow those back into the RRSP and apply the tax refund to the balance outstanding on the loan?

Why pay off a tax-deductible borrowing? — Garth

#83 Victor on 08.29.11 at 12:12 pm

Mortgage refinancing drops under new rules: CMHC

Monday, Aug. 29, 2011

CMHC said that refinance activity fell by almost 40 per cent and has continued to remain around that level since Finance Minister Jim Flaherty made changes to the mortgage insurance rules earlier this year. One of those rules was to reduce the maximum amount that Canadians can borrow in refinancing their mortgages from 90 per cent to 85 per cent of the value of their homes. That rule kicked in on March 18.

Among the other rule changes, Mr. Flaherty cut the maximum term of new mortgages where the home-buyer’s down-payment was less than 20 per cent from 35 years to 30 years.

CMHC said Monday that after the rules took effect purchases of CMHC homeowner mortgage insurance initially fell by about 10 per cent, and by the end of June was still about five per cent below the level of sales before the rule changes.

Canada Mortgage and Housing Corp. says that it has seen mortgage refinance activity drop nearly 40 per cent since Ottawa brought in new rules.

The crown corporation, which must now issue quarterly financial results as a result of a new law, issued its second-quarter results on Monday and they include insight into how Canada’s housing industry is faring.

But CMHC’s profits still rose by $61-million or 19 per cent, to $383-million, for the three months ended June 30 thanks to earnings from mortgage-backed securities, gains from selling financial instruments, and lower expenses.

http://www.theglobeandmail.com/report-on-business/economy/housing/mortgage-refinancing-drops-under-new-rules-cmhc/article2145492/

#84 Devore on 08.29.11 at 12:17 pm

#63 realitybytes

The majority who read this need much more basic advice about where to start. Of course, as a 41 year old with a net worth of about 20K, I’m screwed anyway acording to you.

Just because the fancy math does not work for you, does not mean the fancy math is wrong.

To your point, yes, you are screwed. You have managed to save a grand total of $1000 every year of your working life. If you continue on this path, you will join the millions of Canadians who will retire without a penny to their name, entirely dependent on government handouts to provide for yourself.

Of course, you don’t have to continue on this path. If your income is higher than your basic expenses, you can downsize your lifestyle, life below your means, and start saving some real money.

Or you can just give up, come here and bitch.

#85 Victoria Tea Party on 08.29.11 at 12:59 pm

#44 Kilby

Yep. Downtown Victoria today reminds me of the way things were days before the NDP was finally thrown out of power in BC in 2001.

This socialist enclave, of Victoria, was economically wasted back then. And now that the locals have voted to can the HST, it’ll soon be clobbered all over again. History is never learned when you spend too much sidewalk time frying your brains and guzzling too-strong latees.

The next shoe to drop will be real estate, the only “industry”that keeps the private sector growing here, outside of the “death” industry (old folks homes and burial plots).

THE REAL ESTATE INDUSTRY DILEMMA

The ONLY question about buying and selling homes, for now, is this: With the HST on the way out and the PST on the way back, over the next 18 months or so, just WHAT IS THE FINAL PRICE OF A HOME GOING TO BE ANYWAY?

Who pays the seven per cent? The buyer or the seller? How can the parties legally stiff the government’s tax share in the mortgage documents? How much commission should the realtors be paid? Do mortgage brokers still have a job?

These, and other questions swirl around this nutty province whose Pied Piper-in-Chief is being lobbied by the same gang of anti-HST zombies who now want the BC Hydro “smart meter” program quashed.

Meanwhile the waiting-in-the-wings NDP should be careful what it hopes for because “referendum-itis” now stalks the land.

If the Pied Piper can do it to the Liberals he can surely do it to the NDP.

Best give this place a wide berth for a while. The inmates are changing their meds right now and the fall-out could be, well, crazy.

#86 GregW, Oakville on 08.29.11 at 1:02 pm

Hi Garth, You might find this inspiring?
My wife just sent it to me. It’s a bit long so I’ve found a link to post. Thanks for your blog!
‘You’ve got to find what you love,’ Jobs says
http://news.stanford.edu/news/2005/june15/jobs-061505.html

#87 O.R. on 08.29.11 at 1:39 pm

So what are the criteria for interest payments to be tax deductible?

I assume this is not true of common mortgages and pedestrian personal loans… Does the loan need to somehow be flagged as an “investment” loan or something?

#88 mississaugaboy on 08.29.11 at 1:45 pm

Doing some math Garth, would this strategy about leverage investment borrowing and RRSP work for anyone in any income bracket and at any borrowing rate?

Just trying to come up with basic calculations and I think I understand that basically the interest you have to pay and the RRSP icnome you take out are taxed at the same rate so they cancel each other out.

What you have left is the investments and their incomes/dividends/interest etc. But is there a certain point where what you are left from the investments actually LOWER than what you could end up with if you had just taken out your RRSP at your tax rate?

#89 Kilby on 08.29.11 at 1:46 pm

Victoria Tea Party:
Interesting thoughts about Victoria’s future. With the tax change taking 18 months to come into effect, some will not want to pay the extra HST on their real estate commissions (Which are quite sizeable!) and may elect to wait. This won’t help sales. Couldn’t get over how desolate Yates Street looked!

#90 househornyhousewife on 08.29.11 at 2:24 pm

#66 Sandpiper

$1,000.00 per month living expenses ? That’s quite impressive. Are you factoring in property and education taxes on your home ? heating in the winter time ? every single one of your utilities ? food ? clothing ? maintenance costs on your house ? that odd vacation you might want to take ? .. and you still come up with $12,000.00 a year ? Holy Moly ! Keep in mind that when you grow old you may need to hire someone to come and help out around the house and you may have some additional expenses you may not have counted on (like cab fare to get to that doctor’s appointment). We all want to remain as healthy as we are now forever but the body requires more maintenance as we get older.

#81 Devore

Are there really many people who have too much money in their RRSP’s ? If you figure around $40,000.00 of net income per year required to live “reasonably”, you would need around $800,000.00 to $1,000,000.00 in your RRSP in order to achieve this with income with your minimum RRIF withdrawal. I don’t think too many people will be even in that position and if they are, they can always begin to withdraw earlier than age 71 (if they have a healthy pension say in addition to their RRSP’s).

Garth, thanks for your reply to my post. I still think that at this point in time, this strategy is not a sound one and I would prefer to use more straightforward tax planning such as income splitting between spouses and planning out exactly how much is going into the RRSP (for when I have to take it out).

That being said, I can see using this kind of strategy when I am forced to turn my RRSP’s into RRIF’s if I don’t need that income to survive. In this way I would essentially be using the tax dollars I would otherwise be forced to pay to the government (due to the RRSP withdrawal) in order to “rent funds” (as you say) to finance my own investment projects. This provides added flexibility despite the government forcing me to do something I may not want to do (withdraw my RRSP’s).

The idea is interesting when used in the right circumstances and I thank you for bringing this up.

All the best.

HHHW

#91 Cookie Monster on 08.29.11 at 2:26 pm

#39 skyrider on 08.29.11 at 1:07 am

Cookie Monster, Junius

Re: Ayn Rand… that interview was so funny.

She has some ideas, but she is such a horrible writer, so boring. Many philosophers are difficult to read…jargon, whatever…but she’s the opposite, she just has a few simple ideas that she pounds to death in the most boring way possible.
——
You may find her ideas boring and simplistic but they form the foundation of all societies. The concepts of money and the division of labour, liberty and individual rights on a national level is only 250 years old in the United States. Ayn Rand grew up during the rise of Soviet Russia under Joseph Stalin. I think she know what she’s talking about. She may seem crazy to someone who has it so good and never faced the horrors of tyrannical government and oppression. She witnessed it, she lived it and she identified the roots of it, she knows of where she speaks.

Ayn Rand is still one of the worlds most renowned contemporary philosophers, highly published and quite successful in her works. Her greatest work was ‘Atlas Shrugged’, it is the number one selling book in the United States since published, second to the bible.

Cowardly calling the lady names does nothing to attack her ideology, so be a brave man and take on her ideas, but I know you won’t because her ideas are solid like steel and can’t be overcome so your type resort to character and language assassination and attacks on reason and logic, the foundation of man’s mind.

#92 Cookie Monster on 08.29.11 at 2:44 pm

#39 skyrider on 08.29.11 at 1:07 am
Ayn Rand made a lot of enemies, especially with the Catholic church where the head is highly misogynistic, but not only that she attacked all religions that required believers to take a leap of faith into the supernatural realm of mysticism. The mental disconnect from the realm of reason and logic, from what we know to be true by our senses and perceptions, by reflection, introspection and abstraction, all the mental processes based on rational cognition must be thrown out the window to be a believer in the supernatural. That was the leap of faith that she highly condemned for all religions.

I think she’s right by noticing how irrational some people or some cultures of strong faith can be. There will likely never be peace between Israel and Islam because neither side is very rational. Religion poisons the mind. It’s a false reality that distorted a persons values and decisions. It’s main effect is to make people irrational and Ayn Rand hated it.

#93 Smoking Man on 08.29.11 at 2:51 pm

Garth what you said the other day blew me away, simple yet perfect. The code I live by. Comment was about stop bitching about the water and learn to swim. So true, if you are in a communist, capitalist , zombie or Martian economy, learn to play the game and prosper. Don’t waste your energy on what you can’t change.

Don’t know if you started writing today’s post but you should educate the bubble heads on this one, in china the swap yield curve, has inversed, in fact the biggest spread on record.. Tel them what that will mean to Calgary real estate, so funny last fall was debating on the globe and mail with an ally, whazz up, he was going bonkers on Canadian equities, I was with him but called for a crash in Feb, will the down turn happened in March. Then I called the bottom down to the min on this resent up swing roller coaster.

I don’t have a crystal ball I just watch the bond market. Like you said, very few of your readers don’t even know how to by one.

At any rate if you bubble heads have been reading my posts and tracking my accuracy, I have good news for you. Re Canadian Real estate, The Chinabond market is telling me you will be having your happy dance party very soon…..

Then again been of the booze for 4 days the more sober the less accurate.

it is what it is…………

#94 Moneta on 08.29.11 at 3:41 pm

I think she know what she’s talking about. She may seem crazy to someone who has it so good and never faced the horrors of tyrannical government and oppression. She witnessed it, she lived it and she identified the roots of it, she knows of where she speaks.
——–
Often you have to be careful with the opinions of people who have lived extrems. There’s no one more anti-smoking than an ex-smoker.

Often the reptilian brain just takes over.

#95 O=E+R on 08.29.11 at 3:45 pm

Great advice Garth, much appreciated.

Just filled out a T1213 and raced it down to the tax office.

Outcome=Event + Response

#96 Peakoilist on 08.29.11 at 3:45 pm

#63 realitybytes on 08.29.11 at 10:10 am
So from that cold start, and putting 500 or so away each month, what good does the fancy math do?

Nothing. You’re screwed. — Garth
===================================
Ok that was my LOL moment for today.thanks GT

also wanted to say that with Smoking Man off the booze and Utopia off the smokes, this blog might not be so fun. :(

#97 Moneta on 08.29.11 at 3:46 pm

There will likely never be peace between Israel and Islam because neither side is very rational
——
What does rational have to do with anything?

If there’s only 1 lakefront property and you’ve got 5 contenders who really want it, logically who gets it?

#98 Cory on 08.29.11 at 3:54 pm

I wonder if Carney and the banks had a nice lunch one day and Mark said “look guys, I can’t raise the overnight rate right now or our dollar will rise and affect everyone, including you, can you start raising your bank rates anyways to stop stupid people from living like a rockstar when they can’t afford it? please”

Hopefully more to come and send people into panic, with a dose of reality.

#99 bigrider on 08.29.11 at 4:01 pm

#78 Beach Girl.

They are certainly going to need a lot of luck if they buy today hoping it is oing to be worth more in ten years.

Anyone buying in 2006 in the U.S is shit out of luck based on your simple scenario.

The love of real estate here in the GTA is so deeply ingrained, it’s religion.

#100 Form Man on 08.29.11 at 4:04 pm

#91 cookie monster

Ayn Rand……seriously ? Her theories are nonsense. They have been tried; most recently by Alan Greenspan (and associates) ‘deregulating the banking sector’…………… almost torpedoed the world economy.

In Canada we have Jim Flaherty ( another Ayn Rand disciple ) deregulating the mortgage industry, causing a housing bubble, and creating the conditions for the birth of this blog. We need less ‘ideology’ and more ‘common sense’ in society, not more wingnuts spouting foolish slogans.

#101 Snowboid on 08.29.11 at 4:22 pm

#85 Victoria Tea Party on 08.29.11 at 12:59 pm…

As Garth so aptly puts it – Sigh.

#102 Bill Gable on 08.29.11 at 4:27 pm

For you newbies – this post is the main reason we call it Turner University, around our joint.

You can learn a ton from Mr. Turner – and guess what?
NO AGENDA, other than helping people avoid the financial death traps that await the unwary!

Talk about public service!

And just think Mr. Turner is doing this and manages to make the stuff entertaining as hell, to boot.

Adroit would apply in full measure as well.

Meanwhile— back at the ranch – we moved into another incredible Property – and the owner of the condo we moved out of, has had 3 tours in 2 months!

Vancouver, top end rolling over?

This owner – D-E-A-D in the water – a million bucks – can`t rent anymore because they drop to the bottom of the heap.
That means it will be vacant and costing the owner a FORTUNE. We were being subsidized about $900 a month.

Strange days, indeed.

#103 atidnil on 08.29.11 at 4:45 pm

Thanks Garth. God bless you. I need your advices. I am looking forward to the next posting.

#104 Bill Gable on 08.29.11 at 6:18 pm

Aha!

“Refinancing activity by Canadians dropped 40 per cent after the federal government’s tightening of federal mortgage rules in March, the Canada Mortgage and Housing Corp. said Monday.

The stricter rules were introduced by Finance Minister Jim Flaherty to reduce the total interest payments on mortgages and to speed up the pace at which Canadian buyers are building equity in their homes.”

More> http://tinyurl.com/3pryceh

#105 Devore on 08.29.11 at 6:20 pm

#100 Form Man

Really? And what are these “disciples of Ayn” doing heading central banks? People, just stick to talking about things you know about please, instead of polluting the blog with nonsense.

#106 Junius on 08.29.11 at 6:24 pm

#100 Form Man,

You said, “We need less ‘ideology’ and more ‘common sense’ in society, not more wingnuts spouting foolish slogans.”

Amen. I would also add that we need to learn more from history and understand our own human nature better.

The ideologues refuse to deal with the harsh reality. On the extreme left they see humans as a blank slate who can be conditioned and molded into something different. On the extreme right (like Ayn Rand) they see an entirely rational world which they use to justify inequities and inequalities.

The reality is that we are highly flawed beings with a complicated array of emotions and mental states. We need to base our society on how we are and not on how we wish we were.

#107 EdmontonJim on 08.29.11 at 6:50 pm

Ayn Rand’s theories are rejected by most scholars for the simple reason that they have no basis in reality. There never has been a libertarian objectivist society because it is against human nature.

She ignores the fact that humanity lives and prospers by groups, not individuals, and that all groups have customs and rules. An individual who refuses to submit to the will of the collective is eventually exiled as an outsider.

We used to call true libertarians ‘hermits’ and told our children to stay away from them. Most Post-Rand libertarians don’t seem to be concerned with personal freedom; They just think they should be in charge.

#108 Victor on 08.29.11 at 6:51 pm

Did CMHC support risky borrowing?

John Greenwood Aug 29, 2011 – 5:55 PM ET

In compliance with new federal rules, the Canada Mortgage and Housing Corp. on Monday published its first set of quarterly results, something industry observers say is a good thing.

Among the more salient disclosures contained in the results: refinancing activity tumbled nearly 40% following a move by Finance Minister Jim Flaherty to tighten mortgage rules this spring.

Sales of the CMHC’s mortgage insurance fell by 10% immediately after the changes were introduced, though they have regained some ground since then.

According to the CMHC, these numbers show it’s doing a good job of maintaining a healthy, sustainable housing market.

But Finn Poschmann, vice president of research at the C.D. Howe Institute, is skeptical. “The size of the drop in refinancing is surprising to the point of shocking,” Mr. Poschmann said in an email. “You could hardly have better evidence of the extent to which CMHC practices have been supporting high debt and risky borrowing by homeowners.”

A frequent critic of the organization, Mr. Poschmann argues that CMHC practices have helped inflate housing prices and encourage consumers to take on more debt than they can handle.

Experts say average household debt in this country is sitting at record levels, similar to where it was in the United States before the financial crisis.

Starting in March Mr. Flaherty instituted a number of changes to mortgage rules, including reducing the maximum amortization period for loans qualifying for CMHC insurance to 30 years from 35 years; lowering the maximum amount that Canadians can borrow to refinance their mortgages to 85% from 90% of the value of their homes; and withdrawing CMHC insurance from non-amortizing home equity lines of credit.

Mr. Poschmann authored a report earlier this year which suggested ways the federal government could fix the CMHC, the leading provider of mortgage insurance in Canada. In a letter published on its website, CMHC suggested that Mr. Poschmann’s ideas would only lead to the creation of a system like the one in the United States.

http://business.financialpost.com/2011/08/29/did-cmhc-support-risky-borrowing/

#109 Junius on 08.29.11 at 7:14 pm

#108 Victor,

Thanks for posting.

The 40% number is shocking as Poschmann says.

The irresponsible CMHC rule changes by the current Con gov’t have been a popular rant on this blog for as long as I have been coming here (2009). There is no doubt that eventually the CMHC pay outs to banks will be in the millions of dollars. It is tragic and all too predictable.

#110 Live Under Your Means on 08.29.11 at 7:47 pm

Shoot – Bought 8 pork chops – good price considering – and when I put them in our upright deep freezer noticed some drops of water & did a few hours later. Mentioned it to hubby when he got home from work. Freezer is full. Thanks to neighbours, we managed to transfer everything to their freezers. DH now thinks its the compressor or thermostat. Probably cost more than to buy a new one. We think it is only 10 YO. Planned obsolense? We had my Mom’s 30+ YO chest freezer and it still worked when we gave it to Sally Anne. Had to throw out most of the frozen food during Juan & now after Irene (no power outages) it’s ironic. Not sure it makes any diff what make one buys as there are only a few companies that make them now.

However, willing to listen to any recommendations folks.

#111 Cookie Monster on 08.29.11 at 7:57 pm

The one thing in common with all the Rand haters is that not one of them has even attempted to raise a single idea of hers to destroy it with a sound argument. I’m waiting…. but I won’t wait long, since I know, and you know, that Ayn’s arguments are indestructible.

#112 Nostradamus Le Mad Vlad on 08.29.11 at 8:16 pm

-
Good posts. Was kinda surprised to hear about Victoria (Yates St., Government, etc.) being somewhat empty. Suppose this might have been a reason for the introduction of the HST (with a whole pile of other goodies being added at the same time), plus Gordo went to a Build-Your-Burger conference in ’09 or sometime thereabouts.

Yes kiddies, we have austerity here in Qannaduhh, bought to us by the politicos we elected! Gawd we’re stoopid!
*
9:23 clip Libya — the truth, and 6:30 clip Libya = Cheap labor and commodities for the west; 1:44 clip Bill Hicks, It’s Just A Ride; Gibson Guitars The WH must have nothing better to do than go after musical instruments; Creative Ideas Keep them to yourself, then patent them; Obviously A good example of how the paid-for and controlled m$m turn people away from the realities of life; Copper Stealing lots of it.

North Carolina Due to the hurricane (which has gone now), all gun permits are illegal. The 2nd Amendment comes in here somewhere, but politicos just ignore the legal stuff anyway; Libya The UN plan for Libya leaked, so NATO – US and UN are behind all this destabilization, and this; Zimbabwe and South Africa are both set to Stage 6 now. What is Stage 6? Fukushima Worse than Chernobyl; Hurricanes Politicos are scarier.

The Decade’s Biggest Scams TSA, Homeland Security, etc.; Oh Dear Berkshire Hathaway forgot to pay back taxes. What happens when sheeple do that? lack Magicians are running out of tricks; RBS Good for funding tyrants; Shorting Soars and Chinese person buying 0.3% of Iceland; Missed Rescue on Main St.; Greek Banks join forces as insolvent bank. Makes sense, or duh. Lotsa links.

Market Crash “When European banks crash, they will take the US banks down with them.” wrh.com; Failed Keynesian money printing policies and gold. 29:45 clip; China “By Xinhua’s estimates, the US debt, as of this month, is about US$55 trillion, US$14 trillion in US Treasury bonds.” Is this the reason for the military build-up in the South China Sea? Ralph Nader with the Quote f The Year; Debt Slaves Guess that covers most of NAmerica; UK Economy (green taxes) and Families Worse off; Germany Just Say No to banxters, as Iceland has.

#113 Form Man on 08.29.11 at 8:17 pm

#105 Devore

I rest my case…………..

#114 Cookie Monster on 08.29.11 at 8:30 pm

Like which principle of Ayn Rand’s did Alan Greenspan implement to destroy the US economy/currency?

let’s see now…… it wasn’t the gold standard…. or small and limited government…. ah… it was…

#115 Daisy Mae on 08.29.11 at 8:31 pm

“Good luck Utopia, I’m sure in a few days, things will be smoother.”

***********************

My son quit with help from the patch….and a huge incentive. It was pointed out to him just how much he could save if he quit buying coffin nails and spent that money other ways.

He bought a MOTORCYCLE! And that was two years ago….it did the trick beautifully.

Utopia, you need a really good incentive.

#116 Utopia on 08.29.11 at 8:38 pm

#74 Peakoilist
—————
Wow, thanks. Nice post. I am going on the patch by the way. Can’t seem to get by with zero nicotine. I am going crazy, so I am weakening a little and going with the crutch to help me make it through the day.

Smoking is surely the worst of demons I ever invited into my life. You cannot imagine how much I regret having ever tried the first one. It is a terrible destructive habit.

#117 Form Man on 08.29.11 at 8:40 pm

#111 Cookie Monster

I don’t consider myself a Rand ‘hater’. As a young pup I read ‘The Fountainhead’ and ‘Atlas Shrugged’. I was a fervent believer for a while, and bored my family and friends with my enthusiastic cheerleading of her ideology. With the passage of time (and raising a family), and carefully watching how various economic theories actually work in practice, I have abandoned her ideas as being too simplistic ( and more than a little far fetched….)
I do enjoy the debate however……….

#118 Daisy Mae on 08.29.11 at 8:42 pm

Today I bought a piece of silver jewelry I’d been eyeing for some time…and guess what? I was charged PST/GST. The change from HST back to PST/GST happened overnight.

So, don’t let anyone tell you “it’s going to take two years…” Baloney! LOL

#119 Javier Bardem on 08.29.11 at 8:53 pm

I tried to calculate point number 1 on my own, but couldn’t find accurate or credible enough numbers. I guess that’s my answer…

http://tinyurl.com/3n5rlvl

#120 Form Man on 08.29.11 at 9:01 pm

#114 cookie monster

let us start with de-regulating the financial industry. Greenspan himself admitted after the banking crisis, that he was ‘ shocked’ that bankers ‘put their own greed ahead of the health of the banks they were running’. According to Rand, this shouldn’t have happened………so there you have one idea of hers put into practice by one of her avowed followers, and then thoroughly discredited by both subsequent events, and Greenspan himself……..
your turn…….

#121 Marie on 08.29.11 at 9:05 pm

Thanks for this. “For anyone who cares, I’ll spell this out better in a future post.” I’m reading.

#122 Junius on 08.29.11 at 9:21 pm

#111 Cookie Monster,

In the interest of not taking up any more space on this Blog on this issue I will post a link after my response. I said it many times to you before – she does not understand human nature. Her entire philosophy is based on the presumption that human decision making is based on rational thought. This is how she and her kind justify outcomes that are unjust and inequitable.

Read here, please:

http://www.aynrandcontrahumannature.blogspot.com/

#123 Junius on 08.29.11 at 9:24 pm

#114 Cookie Monster,

Greenspan believed that markets were rational AND moral as a result of his beliefs based on the teachings Ayn Rand.

Could have been more wrong? I don’t think so.

Should we discuss supply siders as well?

#124 Imstupid on 08.29.11 at 9:31 pm

Hi garth I have a question if you could answer please.

I understand the principle you set out in your post but one thing I don’t understand.

Less assume rrsp is 0.
I deposit 10k for the year. I get an intrest only loan what ever 10k interest is. Can I deduct intrest and 10k contribution also? I know withdrawal and intrest balance out. Do I also claim deposit of 10k to reduce current taxes?

That doesn’t even merit an answer. — Garth

#125 Moneta on 08.29.11 at 9:37 pm

In her philosophy of Objectivism, Rand advocated reason as the only means of acquiring knowledge and rejected all forms of faith and religion
———-
Ayn Rand lived from 1905 to 1982. A lot of water under the bridge since she came up with her theories. Science is proving her wrong.

It’s important to know history but it’s also important to understand when ideas have past their due date.

Research in neurology has been showing that our brain needs religion or some form of spirituality. We might be the most intelligent species on this planet but we’re still pretty dumb. We still don’t know much and Ayn Rand and her peers knew even less. She was fighting human nature instead of working with it.

In “Where God and Science Meet” you can read more about it.

You wanted help debunking Rand’s philosophy, I’ve done my part.

#126 CHMC and Canada's housing Ponzi on 08.29.11 at 9:42 pm

Canada’s housing ponzi would CRASH over night if the government would allow FREE MARKETS into Canada and stop/close CHMC. Realtors know it, bankers know it and the world knows it. Canada’s housing is the BIGGEST PONZI in the world and that is 100% fact. The spend spend spend CONservatives are not conservative but rather CONs who HATE free markets. End CHMC and allow Canada to compete with the world. The Housing bubble will distory Canada’s economy since no one has money. Unless the CONs what everyone in Canada to live in an economic prison of debt and thus forced to work like a slave for life? How can Canada compete in the world economy if Canadians need higher wages just to survive in a wage falling world?

http://business.financialpost.com/2011/08/29/did-cmhc-support-risky-borrowing/

#127 Cookie Monster on 08.29.11 at 9:44 pm

#120 Form Man on 08.29.11 at 9:01 pm

#114 cookie monster

let us start with de-regulating the financial industry. Greenspan himself admitted after the banking crisis, that he was ‘ shocked’ that bankers ‘put their own greed ahead of the health of the banks they were running’. According to Rand, this shouldn’t have happened………so there you have one idea of hers put into practice by one of her avowed followers, and then thoroughly discredited by both subsequent events, and Greenspan himself……..
your turn…….
——
Wrong, you should read Ayn Rand’s book titled ‘The Virtue of Selfishness’, she understood human greed in the process of doing good and called it rational self-interest.

#123 Junius on 08.29.11 at 9:24 pm

#114 Cookie Monster,

Greenspan believed that markets were rational AND moral as a result of his beliefs based on the teachings Ayn Rand.

Could have been more wrong? I don’t think so.

Should we discuss supply siders as well?
——
First, Greenspan was a central banker, that alone violates Ayn’s principles on money and banking.
Second, what Greenspan did does not match his own writings from when he was a confidant of Ayn Rands.

Supply side economics? Is that where production precedes consumption, it’s such a strange principle.

#128 Timing is Everything on 08.29.11 at 9:44 pm

This is all swell. But shouldn’t one have a plan and/or strategy before filling out bank and various government department forms?

Is it not true, that one size does not fit all wrt investing?

I’m guessing the T1213 is but one piece of a larger puzzle. And every individual and or family has their own unique puzzle to be put together.

Don’t get me wrong, I appreciate the information, and it’s good…But the T1213 ain’t the mother lode…so to speak.

Did I call it a motherlode? I said it was a way to reduce withholding taxes. Sheesh. — Garth

#129 Bottoms_Up on 08.29.11 at 9:52 pm

#116 Utopia on 08.29.11 at 8:38 pm
——————————————–
Also remember that your lungs have the capability of regenerating themselves. 3-6 months not smoking and they could be like new….(unless you live in Hamilton)

#130 Bottoms_Up on 08.29.11 at 9:54 pm

#125 Moneta on 08.29.11 at 9:37 pm
——————————————-
lol, you’re not serious? Or are you?

How about providing a link to a primary research article?

#131 Utopia on 08.29.11 at 9:55 pm

#92 Cookie Monster said….

“There will likely never be peace between Israel and Islam because neither side is very rational. Religion poisons the mind”.
————————–
Sorry to have to disagree with you a little but only a mere 15% of Israelis are Orthodox or are defined as “religious”. Almost half the population defined as Jewish are in fact secular.

Ironically enough, the largest group of Orthodox Jews (Haredim or Hasidic) shun violence of all kinds and are exempt from military service. This puts a rather large hole in your argument.

You may not know that all other young adults in Israel, both men and women, are obligated to perform military service once out of high school.

One of the problems that Israel faces is that the Orthodox groups are growing much faster than the rest of the population as they tend to have larger families.

With that growth, their level of political influence is increasing and they sometimes control a larger share of Knesset seats than representative of their population.

Furthermore, they often control the balance of power in the very divisive Parliament where so many different parties vie for power. As a result they are in a strong position to influence governing policy.

Another major concern in Israel is the large and growing Arab population. This group represented upwards of a fifth of all people in that country recently and again, the Arab population along with the Druze and Bedouin are growing much faster than the Jewish population.

These present complications for policy makers there over the coming years as Secular Jewish Israelis are in relative decline compared to the other groups. Only immigration has really sustained the relative numbers.

It is clear from demographic charts though that a real and lasting peace accord needs to be established in the region as soon as possible.

Religion and Orthodoxy are in fact weakening the role of the Israeli Defence Forces (IDF) and the growing strength of these groups within the political structure may actually pose a real risk to the countries security in the coming decades.

Just saying…

#132 Cookie Monster on 08.29.11 at 9:57 pm

#116 Utopia on 08.29.11 at 8:38 pm
The best way to quit smoking is the patch for a couple of weeks and smoke marijuana supplements. That’s what I did and it worked. Now I just have to lose weight! Cookie!

#125 Moneta on 08.29.11 at 9:37 pm
Research in neurology has been showing that our brain needs religion or some form of spirituality. We might be the most intelligent species on this planet but we’re still pretty dumb.
—–
That research might be correct, it may very well be evolutionary, but that does not mean we should believe in just anything, Ayn said we need philosophy exactly for the very reason you’ve said.

Read Ayn’s website
http://www.aynrand.org/site/PageServer?pagename=objectivism_nonfiction_philosophy_who_needs_it

#133 Cookie Monster on 08.29.11 at 10:08 pm

Did I call it a motherlode? I said it was a way to reduce withholding taxes. Sheesh. — Garth
—-
I thought is was a load of something.
—-
Garth, FYI, that last post was a joke. I was laughing at your comment, very funny. Personally, i thought it was too complicated to be worth it. I’d rather do the no employment income route instead.

It must be a Cookie Monster thing. — Garth

#134 Killer Chicken or Imploding Boomer? on 08.29.11 at 10:09 pm

67 Dasie Mae – yes I understand that. You asserted
earlier that HST increased the price of everything, but
the tax on your recent bling purchase is the same in
either system.

I am a partner in a small business. The HST is more efficient for us. Now we have to switch back. Thanks.
We have received no instructions how/when to do this.

#135 Timing is Everything on 08.29.11 at 10:19 pm

Did I call it a moitherlode? I said it was a way to reduce withholding taxes. Sheesh. — Garth

No you did not. I hear ya. And I agree. Obviously, I need more help. My wife wants to pay off the mortgage and be done with it in 5 years. I’m thinking, there’s a better plan for us. I guess I need to see more pieces of our puzzle before I commit fairly large sums to it. Most of the times we (wife and I) ‘took a chance’ in our life, we were rewarded well. Maybe I’m just gettin’ old. ;)

#136 Cookie Monster on 08.29.11 at 10:19 pm

#131 Utopia on 08.29.11 at 9:55 pm
Utopia, thank you for that very informative post, I accept everything you say as likely correct, that’s fine, all I’m saying is that it’s best to deal with reality during conflicts and to have both sides with differing world views based on differing religions makes it harder to negotiate peace. It would be easier if there were less things we saw differently.

#137 Utopia on 08.29.11 at 10:26 pm

#44 Kilby wrote…..

“Was just in Victoria for a week and walked down town. Yates St., Government St. (In tourist area near inner harbour) Broughton St.and others…. Dozens of empty stores”
———————————-

Dozens of empty stores? Does not really surprise me. Tourism is down due to all the troubles in Euroland and especially the issues our American friends are grappling with.

Consumption patterns in Victoria itself may have hit a snag too as household and mortgage debt debt eats away at disposable income.

I hate to have to say it but Victoria’s future may be somewhat bleak due to a variety of factors converging simultaneously.

These would be cuts to government if recession materializes, a reduction in tourism revenues, fewer numbers of wealthy buyers heading for retirement (they may not be able to sell their Vancouver homes) and a drop in consumption to compound all the other problems.

Victoria is a very big worry. The stats prove it too.

#138 Utopia on 08.29.11 at 11:02 pm

#129 Bottoms_Up to #116 Utopia
——————————————–
“Also remember that your lungs have the capability of regenerating themselves. 3-6 months not smoking and they could be like new…”
—————————
Is that true? I really, really hope it is. I will ask my doctor. This pack a day habit has been killing me day by day and I really notice it lately when I ride my bike. Guess it has just finally caught up with me.

Quitting smoking is all I think about now. It has got to go.

#139 skyrider on 08.30.11 at 3:10 am

Hello!

Regarding Ayn Rand…I had no intention of attacking her personally. I just find her a boring writer. Yes, she does have a few ideas…some of which are quite noble and interesting…why she chose to write such boring, unengaging novels is beyond me.

I don’t care that she is an atheist, that has nothing to do with my feeling about her. I made no attempt at argument in my post, I merely described my feeling about her. That’s fair enough. I really didn’t know it would set off all these posts…and yet I am glad it did, because people had some interesting remarks, particularly EdmontonJim and Moneta. It is true that nothing has ever been accomplished by one single person alone. And it is also true, as Moneta remarked , that we have a reptilian brain which is not rational and does affect our behaviour. To the other commentators, I also read your remarks and thanks for your efforts.

I should perhaps have chosen my words more carefully. When I said the interview was funny, let me clarify…I was not sitting there scornfully jeering at the foolish Ayn Rand.

I just meant that she said something about her husband…MW was saying, is your husband an industrialist? Does he make money from his art? Do you support him?….along those lines, and she said, I will always take care of him because it is in my rational interest….what rational interest?

She loves the guy…because she loves him, not for what he can do for her, for what he is…I meant funny, like puzzling. I found it oddly touching, to tell you the truth.

I also think many people…native Americans, Chinese railroad workers, navigators of every nationality, and probably many others…would disagree with her characterization of the original American industrialists as…no, not robber barons, but people who did it all on their own with their own sheer talent. Ah, the gilded age…let’s go back. Oops, watch out what you wish for.

Possibly I misunderstand her…my remarks are quite off the cuff. I have no axe to grind with AR.

As for the idea that no government is a good idea, I wonder how that’s working out for Somalia?

I believe it was John Locke, in the 16th century?, who said, “of what use is a new born baby”? Many things which are useless from a strictly rational point of view are, in fact, not useless.

Doestoevsky asked ” when did people ever do anything for rational reasons?” When we look around us, I really do wonder if he wasn’t on to something.

I am not any type of trained philospher. I only read philosphers for fun, and her books are not fun.

I’m sorry not to provide a link, but I recently read that when people have had damage to the area of their brain in which the emotions are centered, they cannot make even the simplist decisions, like to get up in the morning or what to have for lunch.

I also heard that only humans are the only “animals” who can sing and dance. Birds sing, but not together and they cannot create new tunes. Parrots appear to dance, but upon closer examination by scientists, they do not. Chimpanzees do not spontaneously dance, or beat upon drums, unlike human…, well, even babies. I wonder why we have these weird abilities if we’re just rugged individualists?

I realize there is probably a lot I have misunderstood from her. No doubt. But I still say her characters are wooden, the pace is astoundingly slow, and her novels are a bore….at least to me. Apparently, her followers found them compelling and emotionally satisfying.

Some people like apples. Some people like oranges, or even a nice fruit salad.

Anyway, it’s always a pleasure to read the comments here. I hope this clarifies my position on Ayn Rand, if I can be said to have one…which is unlikely!

#140 Tony on 08.30.11 at 3:26 am

#16 Makaya on 08.28.11 at 10:52 pm

A very good point on currency funds. Currency funds haven’t been very popular since very, very few saw the U.S. dollar strengthening back in 2008. Most bet wrong and currency funds are out of favour right now. Going backwards in time currency funds were almost always among the top performing funds.

#141 skyrider on 08.30.11 at 3:41 am

Just realized other people all made the same “points” I did! *sigh* Junius…Moneta…all others.

#142 disciple on 08.30.11 at 10:23 am

And now the truth…
Alisa Rosenbaum (aka Ayn Rand) was, like many of her contemporaries who garnered wide acclaim for writing nonsense fiction, an important peg in the framework of the vast mind control apparatus employed by your real rulers at the beginning of the fascist phase of the last century. As an upper-crusty elite however very cleverly disguised as a simple woman with simple ideas, what lay beneath this facade was none other than the re-engineering of billions of minds into the illusion of individual utopia via appeal to reason. Every man for himself, don’t worry about anybody else unless it is rational. And thus, war and violence is rational and to be desired, destruction of liberty is rational and to be desired, all schools of thought that are not beholden to the State is rational and desired. Stupid, stupid, stupid.

Stop looking for heroes to lead you. Look inside your own hearts, the truth is there…