The doomed

Lost in the swirl of events this week – Sir Carney, America’s housing renaissance (hey, Phoenix prices are up 20.4%) and the on-again fiscal cliff theatre – was Monday’s jacking of a tax shelter Canadians love to abuse. This deserves a few words, especially since the increase in TFSA contributions was dissed by a bunch of financial advisors who couldn’t manage a sock drawer.

The change was simple – you can put in 10% more next year. That means a husband and wife’s combined annual limit is $11,000 in 2013, and the total of contributions to date, since the TFSA was invented by a pathetic failed politician, is $51,000. If you can, you should do this. There are many reasons why the tax-free savings account (despite its name) is rapidly becoming the main vehicle for financing the future.

Yes, I know you get a tax deduction for sticking money into an RRSP, and you don’t with a TFSA. But seriously, this is like sex. Without that instant gratification, who would go through with long-term stuff like kids or retirement planning?

After all, by putting money into an RRSP you’re making it taxable again. This doesn’t ‘save’ anything that you’d otherwise have to pay to the government. It merely delays it until a future date when paying will hurt as much. Maybe more. Given the fact our national debt just hit a new record, do you seriously think personal tax rates won’t be swollen in two decades? Are you willing to risk it?

Remember that all withdrawals from an RRSP down the road are taxed as income, at your marginal rate. Not so with TFSAs, which can be looted without any tax consequences. Besides, you can have a fortune tucked inside a TFSA thirty years from now paying you big bucks, and it won’t even be counted as income or cause a claw-back in any of your geezer benefits. Meanwhile investments inside a TFSA grow just as quickly as in an RRSP, and you can stuff them both with the same cool stuff. Never forget, too, that you can contribute to tax-free accounts in your name, that of your spouse and your 18-year-old kids and later force them to give it all back to you, plus the non-taxable gains. This is called ‘income-splitting’. And ‘divorce without custody’.

But there are two problems.

First, shockingly few people get it. There are 8.2 million Canadians who have opened tax-free accounts over the past four years. But almost six million of them couldn’t scrape together $5,000 last year to max out. Worse, eight in ten actually put savings in their tax-free savings accounts. They believed TNL@TB and stuck their money into high-yield (LOL) deposits or those hideous GICs. Squandered. Totally.

Just another six million bricks in that giant retirement crisis wall so many people are headed for. Millions of us have yet to learn the basic lesson of modern finance: you’re way more likely to run out of money than you are to lose it. The biggest risk lies in desperately trying to avoid risk.

The second problem, tons of folks reading my comments will think I’m being elitist. They might believe the financial advisors quoted in media articles this week pooh-poohing F’s TFSA sweetener who said this is little more than a suck-up to the 1% among us. “This is Mitt Romney-eque in its public policy implications in that while you could argue that it is good public policy in principle, in practise most people will say this is neither here nor there because they can’t afford it,” said advisor John DeGoey, who is normally a smart guy. Another, Kurt Rosentreter, said his clients under 45 are too busy diddling with their mortgages to save anything.

Comments like this should scare you. A generation ago people aged 45 were saving 12% of their incomes and building liquid assets, helped along by fat interest rates. Today, middle-aged adults are often still dragging around student debt and have bought absurdly-priced houses with the lowest down payments in history. No wonder most are screwed; that only a quarter of people can find five grand a year to invest; or that a houseageddon awaits when mortgage rates normalize. As for financial literacy, forget it. When known advisors pee all over a tax shelter enhancement, it’s done. We’re doomed. Save yourself.

In a society where 70% of people are homeowners, only 40% of Boomers have saved a hundred thousand and almost eight in ten have no pension, you can see where this is headed.

If you’re a middle-aged, middle-class, employed person who can’t find $5,500 next year to invest, ask yourself why. I already know.

207 comments ↓

#1 Mojo on 11.27.12 at 9:43 pm

Garth,
what do you think about the notion that the feds said they would only increase the TFSA limit to keep up with inflation? Has it really moved up 10% in 4 years? Could there be other motivations behind the increase?

#2 Etown Guru on 11.27.12 at 9:46 pm

Fuuuurrrrrsssssttt!!!!

#3 Daisy Mae on 11.27.12 at 9:47 pm

“This deserves a few words, especially since the increase in TFSA contributions was dissed by a bunch of financial advisors who couldn’t manage a sock drawer.”

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

LOL How damn difficult can this be? What IS the problem?

#4 Tron on 11.27.12 at 9:53 pm

If you’re a mid 20’s and working, put $13.60 a day into a TFSA invested in high risk/high return stuff. You’ll be a free man who is in control of his own destiny…let your friends spend their $13.60 at Starbucks.

#5 Soldatthetop on 11.27.12 at 9:57 pm

Garth, look at this listing, a garden shack in North Toronto for $650k

http://mls.ca/propertyDetails.aspx?propertyId=12608745&PidKey=-1824946302

#6 Westcoaster on 11.27.12 at 10:00 pm

There will be many who respond to your last line with something like “I just don’t have that kind of money”. My guess is that significantly more than 50% of those people still see it as a priority to a) have their daily double shot Starbucks latte b)angst over what subtle tinting they want in their granite counters c) can’t see themselves doing without their pedicures and/or their $100+ hairdresser appointments d) all of the above.
These are the same people who will wake up one morning and realize that their financial cupboard is bare and will extend their hand expectantly and with a full sense of entitlement.

#7 Extron on 11.27.12 at 10:02 pm

Thank you Garth. Starting in 2013 our family can now put 22,000 dollars away from CRA, for ever. Yet when I mention this to others they just don’t understand the logic. I can start the young ones off on the right path and if needed they can “pay us back” if the missus and I run into a spell of bad luck in the future. And no, not much goes into the LISA ( low interest savings accounts)

#8 Tim on 11.27.12 at 10:03 pm

I liked the piece about Spain. I know France is much better positioned than Spain, but with their bond rating being downgraded, do you see a significant correction in real estate? Will we ever be able to afford the south of France?

#9 Tim on 11.27.12 at 10:04 pm

Hi Garth.

Thanks for the heads up on the TFSA.

#10 Chickenlittle on 11.27.12 at 10:08 pm

Can you post something on how to find a good advisor, besides yourself? I want to start investing, but I do not know where to go. I do not trust any bank that will give out $600,000 mortgages with 5% down, so why would I ask them for advice? Maybe Smoking Man will know….

#11 Smoking Man on 11.27.12 at 10:10 pm

Got to tell you Garth, I played financial advisor today, a newly recruited tax farm slave who came here from Israel was asking me about investing. Showed him preferds, commercial mortgages and trading strategy.

He is buying re instead. In Miami, that window was better few years ago. I loaded up on preferds. I like em.

But dude spent the whole day with my blood on fire.

Reading about the tweeting Brampton students. They are now forced to write an apology letter for having there privacy breached.

If anyone out in la la land knows any of the students or parents involved please push them to my blog, I have a pre written letter of apology they can use as a template.

My lawyer made me remove 2/3 of it.

#12 Randy on 11.27.12 at 10:11 pm

Support the Underground Economy…haha

#13 Chickenlittle on 11.27.12 at 10:13 pm

Can you do a post on how to find a good financial advisor? I’d like it to be you, but you like amazons and I’m just a spinner….
All joking aside, please do!

#14 Chickenlittle on 11.27.12 at 10:15 pm

HUH?!? Why is my first post showing up NOW? I think Smoking Man put something in my drink…

#15 AK on 11.27.12 at 10:18 pm

I will be adding the $5,500.00 into the following 3 securities on January 01, 2013.

T – GEI
T – GRT
N – USB

#16 detalumis on 11.27.12 at 10:20 pm

Really you can predict that geezer benefits will remain in their present form ad infinitum, wow that’s good. They already use TFSAs as assets for welfare and GIS is geezer welfare with a more palatable name so the poor dears can feel morally superior to the younger welfare bums that they love to vilify. In the U.K. the equivalent savings vehicle is counted as an asset when determining your contribution to long term care.

I predict that within 10 to 15 years we will see a major change to geezer payments with cuts to the uber cheap drug programs, and GIS payments and LTC contributions based on assets and not solely income. How about that.

I would never make any financial decisions based on current tax laws, I have been burned too many times.

Sure, base decisions on laws that don’t exist. Smart. — Garth

#17 AK on 11.27.12 at 10:22 pm

#10 – “Can you do a post on how to find a good financial advisor? I’d like it to be you, but you like amazons and I’m just a spinner….
All joking aside, please do!”

Read “The Intelligent Investor”, by Benjamin Graham. You don’t need a financial advisor.

#18 Mister Obvious on 11.27.12 at 10:23 pm

I was having trouble putting into succinct words the essential lesson I learned from Garth Turner. So, if you read nothing else this year, read this…

” Millions of us have yet to learn the basic lesson of modern finance: you’re way more likely to run out of money than you are to lose it. The biggest risk lies in desperately trying to avoid risk.”

The day that sank in everything changed…

#19 Bottoms_Up on 11.27.12 at 10:26 pm

Starbucks is NOT the reason why people can’t save $5000/yr. Starbucks offers some of the best coffee around, and you can get a coffee there for under $2.

#20 mark on 11.27.12 at 10:30 pm

“If you’re a middle-aged, middle-class, employed person who can’t find $5,500 next year to invest, ask yourself why.”

Basically 100 bucks a week. I’m sure most people fritter away double that much without realising it.

#21 Lou Lou on 11.27.12 at 10:35 pm

“In a society where 70% of people are homeowners, only 40% of Boomers have saved a hundred thousand and almost eight in ten have no pension, you can see where this is headed.”
According to this there will be a lot of broke retirees in the next 10-20 years. My husband thinks we are poor but with almost 300,000 in RRSP’s , another 340,000 in savings including TSFC’s, no mortgage on our acreage property 10 mins. from a major Canadian city, 2 out of 4 kids finishing their apprenticeships this year and our education savings intact, I think we will be OK? Now here’s hoping for a real-estate crash so our sons can buy low priced homes in the next few years.

#22 Smoking Man on 11.27.12 at 10:39 pm

People don’t have money for TFSA cause they don’t make enough.

Learn to sell……..
Learn to negotiate……..
Learn to deal make……….

For all other related activities plenty of dogs around to do the grunt work.

They,re cheep

#23 Cory on 11.27.12 at 10:40 pm

Lets be honest, while TFSA’s are of benefit to the common folk, they are really meant to capitalize the banks.

Nothing is ever done to help the little guy….they only make you feel like it is.

Deposits are bank liabilities not assets. Amazing. — Garth

#24 salonist on 11.27.12 at 10:43 pm

u.s.

“Fiscal battle over mortgage deduction”

http://money.cnn.com/2012/11/27/real_estate/housing-mortgage-interest-tax/

#25 Victor V on 11.27.12 at 10:43 pm

163 Silver Birch Avenue – BEACHES

http://themashcanada.blogspot.ca/2012/11/sold-163-silver-birch-avenue-beaches.html

This is a cute house on a good street in the Beaches.

It is 4+1 bedrooms, 4 bathrooms on a 49.91 x 118.5 foot lot.

It was first listed in September for $1,849,000.

Guess buyers thought that was too high because the price was dropped at the beginning of November to $1,769,000.

Again, it didn’t sell so they dropped the price 4 days ago to $1,699,000

It has now sold….For $1,670,000.

#26 bono1 on 11.27.12 at 10:44 pm

Garth, does this mean we should stop putting money in RRSP’s and instead put it all toward TFSA’s? or should we do both TFSA’s and RRSPs?

#27 Smoking Man on 11.27.12 at 10:45 pm

In a society where 70% of people are homeowners, only 40% of Boomers have saved a hundred thousand and almost eight in ten have no pension, you can see where this is headed.- Garth said that.
……………………..

Oxicodin addiction……….

#28 GTARealEstateCorner on 11.27.12 at 10:48 pm

I’ve been following this blog for a while and while it seems many people can’t stand Smoking Man, I don’t know why but I feel sorry for him. It actually pains my heart when I read his posts. He’s probably a decent guy who just had some major issues in life, ended up on the wrong side of the financial tracks. BUT that doesn’t give anyone the right to constantly belittle him. Please leave him alone and let him be. His posts are completely harmless and if it helps him deal with his issues, so be it. Buzz off folks. Live and let live!

#29 ApplePi on 11.27.12 at 10:50 pm

@mark: Agreed.

@AK: Why those three securities?

#30 Victor V on 11.27.12 at 10:51 pm

Drug busts in Kelowna…what is happening to the land of milk and honey?

http://www.theglobeandmail.com/news/british-columbia/police-bust-ecstasy-super-lab-in-okanagan-four-face-charges/article5748778/

#31 TRT on 11.27.12 at 10:54 pm

#16 Datalumis

Pension Payments (GIS) based on assets and not annual income…nice idea —> coming within 10 years!

Already in place for Provincial Social Assistance payments.

#32 periwinkles on 11.27.12 at 10:55 pm

Garth thanks for the two-fold – RE & retirement, rethink for the herd. As for Carney who cares. The rat jumped the ship without walking a plank. The Brit Civil Service is old boy network and the displaced will be all daggers.

#33 Outta here on 11.27.12 at 10:55 pm

What about those of us with two DBP’s in the family? Should we also be putting money into TFSA’s? I’ve been plonking all available $’s onto the mortgage and LOC.

You’re not breeding, are you? — Garth

#34 dam on 11.27.12 at 11:00 pm

#26 bono1

It certainly depends on your marginal tax rate. Why not mixing both ?

#35 AK on 11.27.12 at 11:03 pm

#29 – ApplePi

“Why those three securities?”

All 3 companies will be growing their dividends in the future.

#36 TurnerNation on 11.27.12 at 11:04 pm

As I like to joke, TFSA stands for
Turner Free-Stock Account. Or, as H sees it:
a Turner-Free Stock Account.

#37 Richard and Zeus on 11.27.12 at 11:21 pm

Drug busts in Kelowna…what is happening to the land of milk and honey?

Underground economy because people are so overtaxed paying for 100 000 useless guvmint paper pushers they need to do other things to make up the shortfall…..

#38 Paully on 11.27.12 at 11:24 pm

I don’t really understand today’s picture. Can anyone explain it to me?

#39 John in Mtl on 11.27.12 at 11:30 pm

#31 TRT
#16 Datalumis

Pension Payments (GIS) based on assets and not annual income…nice idea —> coming within 10 years!

Already in place for Provincial Social Assistance payments.

Would this discourage people to save then? May as well put the cash in a paper bag under the mattress. Sure, it won’t grow but its safe from the gov’t telling you you’re too “rich” to get fair retirement entitlements.

John

#40 ben on 11.27.12 at 11:32 pm

What is a non cowboy portfolio?

#41 Canadian Watchdog on 11.27.12 at 11:33 pm


BMO Launches Silver Deposit Program

What does Scotia, TD and BMO know that Canadians don’t?

#42 Julian on 11.27.12 at 11:33 pm

As a newish reader to this blog, can someone please explain the celeb status of Smoking Man….

#43 Mic D'angelo on 11.27.12 at 11:35 pm

How about making a law saying you must save at least $3,600 per year/ $10 a day per taxpayer or you will pay this in annual income taxes or future benefit cuts indexed CPI equivalent. The only exception I would accept as reasonable is you would have to prove to the CRA that your income and reasonable necessary expenses would not able you to save this amount.If a couple saved $3,600 each for $7,200 a year and earned a long-term 4.00% annual interest rate over 35 years it would be worth $530,296.02 tax-free.This is a bare minimum so welfare, GIS, Old age security and other provincial benefits would not be abused by financially irresponsible Canadians. The working poor, disabled, ill who really need these safety nets would not be punished and have future benefits. Governments put these benefits in place to help people who struggle and not have piling budget deficits paid by all Canadian taxpayers.Adults who decide to act like children should be treated like children.Canadians,governments and our income tax and benefit system would all be better for it. Fair is fair, punish the financial irresponsible and not the financial responsible. I am tired of the jealous,irresponsible, childish attitude that if people saved money from their intelligence and hard work that we should pay more tax every year.Family sticking together is what is missing in today’s society.

#44 Smoking Man on 11.27.12 at 11:41 pm

#28 Gtarealestecorner

Please don’t feel sorry for me. Your assessment is dead wrong. You just can’t read between the lines.

People hate me, yet 100’s and 100 of complimentary emails.

It’s like this, if your in a poker game and you have a huge stack, you play safer than if short stacked.

I try and shock the youth on here who have no money to go all in an take risks, don’t follow the rules the machine what’s you to play by, in a global economy things that worked before , like diplomas, and obidiance will get you nowhere.

If your big stacked, and old, and not me. You listen to Garth. Hang on every word, the guys a good shit and knows things.

So if you find me rude, and my comments offensive, they are ment to be.

Every year it gets harder to make loot, I am giving youth a map, a mind set required to take it to the next level.

I just hope your an old bastard, cause if you are young and you feel this way, you are so screwed.

#45 W on 11.27.12 at 11:43 pm

Would you recommend the vanguard emerging market index fund as a possible investment for a TFSA provided you don’t need the funds in the short term?

#46 Cory on 11.27.12 at 11:46 pm

Deposits are bank liabilities not assets. Amazing. — Garth

———–

Really? Interesting. What is it classed as on the balance sheet when they lend out my cash I’ve deposited?

#47 Aaron - Melbourne on 11.27.12 at 11:50 pm

Doomed in Melbourne

http://www.theage.com.au/business/slump-looms-as-a-third-of-new-home-sales-abandoned-20121128-2ad95.html

#48 Smoking Man on 11.27.12 at 11:50 pm

#42

Rumour has it, it’s the broken package.

#49 Soylent Green is People on 11.27.12 at 11:52 pm

Celeb status? Like Stephen Haeper enjoys?

http://Www.unseatHarper.ca
.
.

#50 Josef on 11.27.12 at 11:53 pm

The KING of CONDO’s was on Charles Adler last night!! Real estate Condo King Brad Lamb, was saying no way, no how, prices won’t be coming down, and right now prices and sales are flat. He was also saying that Condo’s in Toronto are an excellent investment and that there is a HUGE demand!!! They can’t build them fast enough. He also said and I paraphrase this ‘prices only come down during recessions’, as well as according to him the real estate bubble has been talked about since approx. 1998.

Now, I’m no economist, or financier, rather just a simple engineer but I have been reading this blog for a while now, and YES!! sometimes I was FIRST!! Oh Yeah!!

But I KNOW BALONEY WHEN I HEAR IT, and that lamb was full of it!!!

#51 GTARealEstateCorner on 11.27.12 at 11:54 pm

#42 Julian
Sure. Smoking man or SM for short is infamous for his posts since they are contrary to what Garth and most of the readers think. Additionally, his posts are usually riddled with spelling and grammatical errors, he’s more often drunk than not when writing so his posts rarely make sense and he belittles everyone on here for being “tax farm slaves” or people who get taken advantage of the truly wealthy like himself. Now, many people get annoyed at him, many find him entertaining but almost everyone does not take him or any of his claims seriously. I stand apart and actually feel sorry for him. He’s probably had a tough life, never had any money but using the anonymity of the internet to create an alter ego to deal with all his issues. It’s kinda sad but if this helps him cope with his life challenges, then let him post is what I say.

#52 T.O. Bubble Boy on 11.27.12 at 11:57 pm

@ #5 Soldatthetop on 11.27.12 at 9:57 pm
Garth, look at this listing, a garden shack in North Toronto for $650k

http://mls.ca/propertyDetails.aspx?propertyId=12608745&PidKey=-1824946302

_______________________

The “Vancouverization” of Toronto is now complete.

The only thing left would be HAM Helicopter RE Tours, after that, it is straight downhill.

#53 TRT on 11.27.12 at 11:58 pm

#39 John

“Would this discourage people to save then? May as well put the cash in a paper bag under the mattress.”

..Or in another country ;)

HAM currency has appreciated by 12.6%. Once this correction is done, look out..its like Richmond is on sale (+ 12.6 currency appreciation)…kinda like Black Friday.

Surrey prices still going crazy…now match Ladner and Point Roberts…approaching Seafair area of Richmond! What gives…I still think immigrant demand.

#54 Richard and Zeus on 11.28.12 at 12:00 am

BMO Launches Silver Deposit Program

What does Scotia, TD and BMO know that Canadians don’t?

Just a way for BMO to steal from you with silver they don’t have. Merrill tried it once…. Got fined. Us pee ons would do 20 yrs in the US if we tried it. Besides….gold and silver are a joke. You cannot go around paying for stuff with gold or silver. You can’t…..the infrastructure does not exist. And if TSHTF…..bullets will be worth more than gold.

#55 sluggo8 on 11.28.12 at 12:01 am

“Deposits are bank liabilities not assets. Amazing. — Garth”

Correct but a TFSA is declared a savings product and can be hypothecated and pledged as collateral and that’s really what it’s all about. Freeing up collateral for the banks. I guess the IMPP could only go so far. What next, maybe declaring gold a tier 1 asset? You may have to change the faq’s if they do that.

#56 kreditanstalt on 11.28.12 at 12:05 am

There’s no way – US housing “recovery” notwithstanding – that the engine can be re-started.

NOTHING is going to pay you “big bucks” 30 years from now.

And even if something somehow does, those will be NOMINAL bucks. But the inflation will be REAL…

#57 Boomer21 on 11.28.12 at 12:11 am

#42 Julian, don’t worry about it. Smoking Man is only a celebrity in his own mind! Pay attention to what Garth says. Canadian Watchdog posts some good stuff, so does beach girl but she seems to be on hiatus right now. Pay attention to Garth’s advice and take all of the other comments with a grain of salt or at least have a good laugh.

#58 Davey Boy on 11.28.12 at 12:26 am

Actually there is a 3rd problem with TFSAs.

I, in my financial wisdom, contributed the full amount yearly for my spouse ( she was apparently allergic to work or having a job, but was good for happy endings :)) Anyway, she eventually used her TFSA moneys to fund a divorce lawyer. Nothing like having you hard earned money work hard against you….

#59 Hoof-Hearted on 11.28.12 at 12:28 am

GARTH..

re: Censorship on Carney post?!?

At your end ……or intercepted somewhere in between?

At least say DELETED if its the former and not the latter.
If it’s the latter…OMG !

This is a conspiracy theory-free zone, especially when it comes to that. — Garth

#60 wwwStratege on 11.28.12 at 12:30 am

Hey Garth, can you provide some reference about TFSA ‘divorce without custody’ ? I have not found any documentation about this aspect. Thank you

#61 Davey Boy on 11.28.12 at 12:36 am

#27 Smoking Man

Too Funny!!!!!

#62 Over in Australia on 11.28.12 at 12:44 am

I have a friend in Phoenix, he tells me the rise in prices is not from purchases from locals but “investors” thinking they are getting a bargain.

#63 Brad in Cowtown on 11.28.12 at 12:58 am

Deposits are bank liabilities not assets. Amazing. — Garth

Holy cow man. Finish the REST of that sentence. Jeez.

#64 Canned Goods and Buckshot on 11.28.12 at 1:03 am

Tim #8

The $Can is relatively high vs the Euro.

http://finance.yahoo.com/q/bc?s=CADEUR=X&t=5y&l=on&z=l&q=l&c=

What are you waiting for?

http://www.french-property.com/vp/nv/ds/poitou-charentes-charente-confolens-maison-de-maitre/id/3725/fp/http:%7C%7Cwww.french-property.com/

#65 Buy? Curious? on 11.28.12 at 1:11 am

Keep posting Smoking Man! You’ve got some quality stuff in that over-ripe melon of yours!

A tribute to Smoking Man!

http://www.youtube.com/watch?v=PAK4gYYMzJU&feature=plcp

#66 Don on 11.28.12 at 1:34 am

My sister-in-laws friend recently put an offer down on a house in an average Victoria suburb for approx, knowing that prices may go down a little. But in an offer, sellers countered higher 20K and she bit as she didn’t want to move two times…How How How, can you not be conscious of your surroundings. Unfreak’in believable – a willing slave for life!

#67 Don on 11.28.12 at 1:39 am

Geezus _ I am spelling like smoking man.

2nd attempt:

My sister-in-law’s friend recently put an offer down on a house in an average Victoria suburb for approx, 500K even after being informed that prices may go down a little after January. Put in an offer, sellers countered 20K higher and she bit, as she didn’t want to move two times…

How How How? can you not be conscious of your surroundings. Un-Freak’in believable!

#68 Chica on 11.28.12 at 1:54 am

“Remember that all withdrawals from an RRSP down the road are taxed as income, at your marginal rate.”

The last part is incorrect. Mr G makes $110,000 and contributes $10,000 per year to RRSP. Marginal tax rate in ON 43.4%. 10 years later he retires and withdraws $100,000 (before commencing any pension). He pays about $26,600 in taxes. Tax savings of $17K from difference between marginal (43.3%) and average (26.6%) tax rates. Even better with income splitting. Even better if tax brackets are adjusted with inflation.

RRSP wins in most cases, for most people. It may not be the better option for those who expect large income (esp. pension) at retirement compared to what they are currently making. Bottom line – until you have secured comfortable retirement (or are very young), go for the RRSP option.

Furthermore, TFSA’s are not recognized in the US (unlike the Roth IRA’s in Canada, after which they were modeled). The reason for this is the extra withdrawal flexibility TFSA’s have (I wonder if the “inventor” took this issue into account).

#69 Mackie on 11.28.12 at 2:45 am

I think saving $5,000 for a lot of people is very difficult. Yes, they should be able to do it, but the reality of life, increasing cost of living, kids etc. does add up for families. Especially those families who have not seen any real increase in pay for many, many years. The rich, however, have no problem putting away $5000 -$10,000 a year. Who benefits from this move? No doubt Harper’s rich buddies. That’s not to say regular folks like us can’t play the game and get in on the action. But unlike, what Garth suggests. It ain’t easy. My wife and I are mortgage free and still struggle to save enough. I can’t imagine what those with big mortgages and debts face.

#70 Picasso on 11.28.12 at 2:49 am

TFSA ?

I can’t remember the last time I saw any interest on my monies in my bank account.

I think the withdrawl fee was more the last time I took $200 from an ATM

#71 new canadian on 11.28.12 at 2:59 am

#23 Cory
“Deposits are bank liabilities not assets. Amazing. — Garth”

Balance sheet is simply: Assets + Receivables = Liabilities + OE
So deposits are increasing both Assets and Liabilities. But in these corrupt times, only US has 60 trillion unfunded liabilities, who knows what Canada owes. So it’s easy to ignore liabilities and look at the money under assets.

So I agree that TFSA (or any other gov’t program asking you to deposit money to bank) is designed to make banks better off.

#72 Freedom First on 11.28.12 at 3:10 am

You’re not breeding are you? …….that is “priceless Garth:)”

I read some of the advisers dissing the TFSA. Unbelievable! The TFSA is one of the biggest gifts ever to Joe Public!

That so many Canadians are not taking full advantage of the TFSA is merely another sad sign of how many Canadians are financially incompetent. They are causing serious harm to their financial futures, by their present lifestyles and lack of being able to think. Canadians have been deftly brainwashed and herded into financial suicide. Sadly, I see them arguing with your sane advice Garth, with this herd mentality insanity. We are screwed………oh well……I am simply grateful for my maxed out TFSA contributed to every Jan. Gladly Garth, there is the heartening comments of posters thanking you for your advice. Well done Garth, and thanks for your part in the TFSA:)

Over and over again, Garth, you post the dire financial straits the boomers, and all the adult? age groups are in, in so many of your posts. And yet, the idiocy of some of the comments to do with the

#73 Beach on 11.28.12 at 4:27 am

It would be styled ‘Sir Mark’ not ‘Sir Carney’. Should he receive a peerage, ‘Lord Carney’ would be appropriate. However, as Conrad Black’s strugggles with the Nickel Resolution as wielded by Jean Chretien made clear neither is a likely designation for the guv.

#74 Realist on 11.28.12 at 4:32 am

>>The biggest risk lies in desperately trying to avoid risk.

It makes much more sense to buy into a stock market bubble and make a few percent in dividends than to hold back and keep your capital safe when the (inevitable) crash happens. Or not, perhaps.

But then you make your money ‘advising’ people how to invest, so you’re no more likely to be objective about this than a RE agent will be in advising about the housing market.

Not that you care (obviously), but I sell nothing, collect no commissions and advise nobody to own individual equities. Capital in no-yield, illiquid, tax-mashed assets like GICs is hardly safe. But, good luck. — Garth

#75 DA2 on 11.28.12 at 4:49 am

I read on twitter today “Dubai risks inflating property bubble with easy terms and lowest rates ever. Banks slashed interest rates to the lowest on record and reduced downpayment requirements…..” Sound familiar? So…. Carney is a genius?

#76 Picasso on 11.28.12 at 5:00 am

and you want to pay $400K for these 2 story shoe boxes 1.5 meters apart in Edmonton?

http://www.edmontonjournal.com/business/Edmonton+housing+market+slow+2013+CHMC+says/7617542/story.html

#77 Longterm on 11.28.12 at 6:56 am

Some people in Canada are starting to sound like the Brits I live amongst. Stop moaning about TFSAs being there to benefit the rich or capitalize banks.

If the TFSA didn’t exist you’d moan that only the rich can avoid tax and you can’t. Yet TFSAs do exist and people bitch and then find more reasons to moan when the limit is raised. Unbelieveable. Get with the programme and max the TFSA. Set-up an automatic withdrawal from your bank account into the TFSA every two weeks, with that money then DRIPed into a selection of ETFs.

Priorities for your money: Max your TFSA, pay rent / mortgage, pay property tax and utilities, buy food, pay for transport. Everything else is a varying degree of luxury so have a long hard look at where you waste your after tax dollars. If you can’t find the money then for the majority of employed Canadians you are making excuses and lying to yourself.

To be clear that I’m not a 1%er telling the poor what to do. I living in London, one of the most expensive cities in the world. My wife and I rent a one bed flat for a price that would make your eyes bleed, we have a child and we make a combined gross income of about $60,000 CDN. Yet we save about $14,000 CDN equivalent in our ISAs [UK equivalent of a TFSA], take three months off each year to a warm country and a couple of trips in the UK every year. It isn’t that hard so stop making excuses.

#78 Laura on 11.28.12 at 8:33 am

Quick question: I maxed out my TFSA. Where should I put my money now? The bank and my parents are all telling me different answers. Thanks!

The two worst sources of information. — Garth

#79 Kevin on 11.28.12 at 8:42 am

Given the fact our national debt just hit a new record, do you seriously think personal tax rates won’t be swollen in two decades?

Uh, yes, actually. Why not? That was exactly the case 20 years ago, in 1992. We had record debt. You could have issued the same question. Yet here we are, 20 years later, with still more debt, and if I’m not mistaken, federal income tax rates are actually lower today than they were in 1992.

So maybe it’s not a foregone conclusion after all?

You forgot the HST. — Garth

#80 Kevin on 11.28.12 at 8:47 am

But almost six million of them couldn’t scrape together $5,000 last year to max out.

That’s $10,000 per couple, and that’s not exactly chump change. Not during a period of record personal debt, record home prices, skyrocketing expected future tuition demands for your kids, and the potential for needing to bail out profligate Boomer parents, trundling into the phase of their life where they need help wiping.

Not to mention, some of us are trying desperately to pay off our mortgages as quickly as possible while rates are low, before they inevitably normalize and start eating a bigger chunk of our monthly bacon.

Besides, unused contribution room carries forward forever, so what’s the rush? It’ll be there waiting for us when we finish off the mortgage.

Putting all your net worth in a house means a dangerous lack of diversification. — Garth

#81 JAGHamilton on 11.28.12 at 8:47 am

“In its Q2 2012 Housing Market Outlook Report – Ontario Region Highlights, CMHC provides insightful market data on a number of Census Metropolitan Areas (CMA) across the province. Of note is the Toronto market whereby the year-over-year Q3 increase of 42% in multiple starts (including condominium units) has outpaced the demand for MLS® Sales, which dropped by 14.1% over the same period. “

#82 maxx on 11.28.12 at 8:50 am

#3 Daisy Mae on 11.27.12 at 9:47 pm

“This deserves a few words, especially since the increase in TFSA contributions was dissed by a bunch of financial advisors who couldn’t manage a sock drawer.”

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

“LOL How damn difficult can this be? What IS the problem?”

Bingo, and well put. Highlighting that, especially as children, we need a seriously healthy dose of financial education both at home and school so that we can take over the helm of our basic finances and thereby future wealth. It is not rocket science, and makes a world of difference to the fiscal health of not only individual citizens, but perhaps more importantly, that of the nation.

#83 Kevin on 11.28.12 at 8:51 am

Remember that all withdrawals from an RRSP down the road are taxed as income, at your marginal rate.

Right. Which will be much, much lower than your marginal rate today.

Why would you be in a higher bracket without a job than you were when you were shuffling off to a cubicle for 40 hours a week? When we sever our ties with the suits who pay us $80,000/year, that stream of income goes to zero, plummeting us down the bracket ladder, into the basement, where RRSP withdrawals will count for almost nothing.

Between the basic personal exemption, the age benefit, the preferential treatment of pension income, and the likelihood that OAS will keep getting nudged out until the qualifying age is a few months west of “death,” that RRSP income will be virtually untaxed.

You have low expectations. Pity. — Garth

#84 House Horny Housewife on 11.28.12 at 8:53 am

Hi Garth,

Are you serious ?!

“Millions of us have yet to learn the basic lesson of modern finance: you’re way more likely to run out of money than you are to lose it. The biggest risk lies in desperately trying to avoid risk.”

Honestly ?!

1. You’re way more likely to run out of money than you are to lose it.

I guess that all depends on who you are isn’t it ? If you are someone who saves appropriately and have a planned retirement, meaning that you know more or liess how much your retirement will cost you, then I doubt your first statement is accurate.

And losing money is extremely easy to do. People do it each and every day. Taking on extreme risk with your money is called gambling and gambling with my future retirement is really not something I or most people are interested in doing. Whether gambling on the stock market or gambling in a casino, extreme risk is still gambling.

2. The biggest risk lies in desperately trying to avoid risk.

Now there’s a good idea. If you are risk averse by nature, why not risk everything and lie awake at night wondering if you will have any money left to eat when you retire. People should be free to take on as much risk as they are comfortable with and no more.

What happens when you talk one of your clients into taking way more risk than they are prepared to take and they lose money as a result (and don’t tell me that risk doesn’t sometimes produce a loss of funds) ?? Do they simply say, “Oh well, it’s only money !”

Avoiding risk is not the horrible thing you make it out to be. People who have bought expensive homes that they cannot afford and who have nothing put away for the future are taking on a HUGE risk. They are investing in real estate, which may or may not make them a return in the far future when they have to sell. What about them ? If most of them had avoided risk, Canada would not be in the mess that it’s in today. According to your credo, they should be all set because they aren’t avoiding risk but rather embracing it.

What you say makes no sense at all and I imagine you mean that you have to take on a certain amount of INVESTMENT risk or you will get nothing in return. How much risk you are prepared to take on depends on your nature. Some of us work damned hard for our money and we don’t want to see it pissed away in an instant so we do avoid risk. I for one am guilty as charged.

Show me a good opportunity with historically good returns that is convenient to invest in (meaning I don’t have to spend my days watching it and possibly having to pull it out before it loses money) and I’m there with bells on.

All I hear from financial people these days is, “You have to invest for the long term and you should not get hung up if your investment is not making anything today because on average over time your investment will bring in at least a 7% return” … after 4 years of hearing this, I am getting sick and tired of it. The way things are going, in order for their statement to hold true, my investments will have to earn 20% per year over the last few years leading to retirement. How likely is that ? Why don’t we cut the B.S. already ?

Does the government want people to save for retirement ? Then give them an easy option to make a better return on their money. Make it truly attractive to save and make it real for them to understand how important putting money away for the future really is. $11,000.00 per year in a TFSA will bring you nothing but the bare minimum at retirement.

If one projects today’s returns into the future, you have to have way more principal saved up at retirement in order to fund a decent lifestyle, otherwise, you risk eating well into your principal well before you croak. Therefore, you can either take risk with your money and win big or lose big. Or you can save MORE now invest wisely and have more principal later.

Yes RRSP’s are taxable in the future but you get to keep the money you would otherwise have paid to the government NOW in order to invest it and make a return on it over your career up until retirement.

That’s about 30% of 18% of your income that you get to keep now and pay later. If you have a family income of $100,000.00 per year, that’s $5,400.00 per year over the course of your entire working life that you get to say “borrow at zero interest” (what most call a refund) in order to invest and make a return on. In addition to your 18% that is also earning a return. If you were to shove THAT into a TFSA, you can then give the government back their money and keep the interest or return that you have made on it over the 20 or so years … and you don’t have to pay it back all at once, of course, since you would withdraw from your RRIF gradually over your retirement so a good part of that “borrowed money” would still be earning you a return.

What the heck is wrong with THAT ?!

In contrast, a TFSA is not taxed in the future … well OF COURSE NOT because it is taxed TODAY. The only benefit you are getting is that the interest or return earned on this account is tax free. Wow, $10,000.00 – $11,000.00 might earn you what ? 6% – 9% over time ? .. so on that $600.00 or so per year that you start with which will gradually grow to what ? $25,000.00 per year in interest towards the very end ($10 – 11K x 20 years with whatever future interest rate, compounded annually) you get to keep … ehrr not that much.

Agreed that it is better than nothing and it is definitely something in an arsenal portfolio. But RRSP’s are not the pitfall you seem to think they are just as TFSA’s are not the panacea you decry them to be. Each has its strengths and weaknesses and one has to consider each accordingly and apply them to one’s UNIQUE situation.

HHHW

You seem not to understand longer lives today, especially for women, dictate considerable capital at retirement. A low-yield world means those whose primary goal is to avoid risk run the higher risk of simply running out. So I hope you have a bundle. Two more points: it is not the government’S role to provide for you. Additionally, your assertion that I talk the people I care for into high risk is beneath you and patently wrong. Apologize or find another blog. — Garth

#85 pbrasseur on 11.28.12 at 8:54 am

TFSA are clearly the absolute best way to save money in Canada.

Saving is important, in fact as a top priority it should be far more important than buying things, such as a nice car or a nice house.

This sounds old fashion and probably is. But it’s true and coming years will show exactly why, chances are it won’t be pretty.

Good news is, if YOU understand that you can invest early in things that will pickup value (such as shares of great companies now selling at a discount) when the millions who are not saving enough finally get the drift…

Trust me, it’s a mathematical certainty, get the drift they will.

#86 Kevin on 11.28.12 at 8:55 am

A generation ago people aged 45 were saving 12% of their incomes and building liquid assets, helped along by fat interest rates.

Right. They could also buy a SFH with enough bedrooms for their 2.3 kids, within spitting distance of the office/factory, for around 2x their annual income.

They could also get a degree for far less than today. Not that they needed it, as there were plenty of blue-collar jobs available that paid a living wage, straight out of high school.

But hey, they had expenses we don’t have today, like long distance calling fees, and they actually had to PAY for their daily dose of news, so I’m sure it all balances out. We have no excuse.

It’s all about choices. Stop moaning. — Garth

#87 Kevin on 11.28.12 at 9:01 am

Besides, you can have a fortune tucked inside a TFSA thirty years from now paying you big bucks, and it won’t even be counted as income or cause a claw-back in any of your geezer benefits.

Hang on, you just finished saying we shouldn’t count on tax rules remaining stationary for 20 years when making assumptions about how RRSP income will be taxed, but you’re confident that 30 years from now, the rules for TFSA’s will remain unchanged? If we really are at a record national debt level, and you’re all but certain that marginal tax rates will climb skyward to reign it in, why wouldn’t you also fear that billions of dollars in untouchable TFSA’s would also make a tempting target for a bankrupt government?

Do you really trust Justin Trudeau’s successor to keep his/her hands off the $1.2MM in your and your wife’s TFSAs in 2042?

Tax rates may well rise but in a country with a brewing retirement crisis, I highly doubt shelters will be gutted. — Garth

#88 Victor V on 11.28.12 at 9:02 am

RELIST/PRICE DROP #2- 161 High Park Avenue – HIGH PARK

http://themashcanada.blogspot.ca/2012/11/relistprice-drop-2-161-high-park-avenue.html

$1,149,000 January 2012
$897,000 April 2012
$849,700 November 2012 [Unsold]

#89 Boomers Uber Alles on 11.28.12 at 9:03 am

Oh C’mon Garth,
people cant save 5k a year?
why?

Because :
64% Employed people make $29k a year!
13% tax on everything ( better than 45% in whereveristan)
Highest Insurance premiums in the world
Highest cost of Wireless services in the world
Most expensive habitat for humans (housing)
Maybe ONLY country where banks charge you for having an account, because you must have it.

And All above insanely defended by government laws to protect 1% its shareholders.

But so far we are lucky as we are not charged with 13% tax for cleaning snow from sidewalk..

Also walking and crossing the streets are free so far.

#90 Pootie on 11.28.12 at 9:09 am

Thanks so much for showing me where my priorities should be. After selling our house (money pit) a year ago, I now see retirement as possible. I will be maxing my TFSA.

#91 Bigrider on 11.28.12 at 9:26 am

#80-Kevin.

Well said and Garth’s comment about not moaning about it is also accurate but “about choices’ ..give me a break Garth, choices for the post boomer generation are bleak.

Hopefully Kevin, you have parents like mine who behaved responsibly, lived humbly and accumulated net worth during all those fat years.

Some for you maybe?

#92 Bigrider on 11.28.12 at 9:29 am

Meant #86 Kevin not #80

#93 Herb on 11.28.12 at 9:30 am

#89 Boomers Über Alles,

and that’s a good part of the truth! But remember that you fund the maintenance and clearing of roads and sidewalks through the property taxes you pay even as a renter.

#94 live within your means on 11.28.12 at 9:37 am

#77 Longterm on 11.28.12 at 6:56 am

To be clear that I’m not a 1%er telling the poor what to do. I living in London, one of the most expensive cities in the world. My wife and I rent a one bed flat for a price that would make your eyes bleed, we have a child and we make a combined gross income of about $60,000 CDN. Yet we save about $14,000 CDN equivalent in our ISAs [UK equivalent of a TFSA], take three months off each year to a warm country and a couple of trips in the UK every year. It isn’t that hard so stop making excuses.
………………….

You don’t state what your paying for your 1 bed flat nor where in London. Haven’t been to London since 1970. Stayed at a Cdn. gal’s 1 bed flat for 10 days close to downtown. She was away on the continent. We both worked for External Affairs (now Foreign Affairs). Another EA gfriend did the same at the same time. In 1970 EA had to subsidize most EA staff housing in London & the continent.

Not sure if it’s the same now, but had to put in coins in bedroom & bathroom heater then. It was Easter.

I’m skeptical how 3 can live well on $60K Cdn in London, take off for 3 months to warm clime, save $14K, etc. Please enlighten me as I believe UK taxes are high.

#95 Herb on 11.28.12 at 9:43 am

House Horny Housewife,

take it from me as fact that Garth does not talk his clients into risky investments. You are wrong there and should apologize on that point.

#96 NoName on 11.28.12 at 9:50 am

Interesting read…

http://goo.gl/SDGC5

_______________________________________
Divided States of America (spiegel online)

Does this sort of stonewalling already signify the collapse of a representative democracy? Naturally, an opposition party’s role must be to fight the government’s policies. Nevertheless, such deep-seated opposition as there has been in the Obama years is unprecedented in the last few decades of American politics. Many bills were never even put to a vote in Congress, because the Republicans, more frequently than ever before, threatened to use or did in fact deploy the so-called filibuster, a delay tactic with which votes on legislation can be completely obstructed. In the last five years, Republicans in Congress have used the filibuster a record-breaking 385 times, or as much as it was used in the seven decades between World War I and the end of the administration of former President Ronald Reagan in 1989.

According to a current study, since 2007 Republican lawmakers have tried to torpedo more than 70 percent of all bills before they were even put to a vote. This applied to only 27 percent of proposed legislation in the 1980s, and only 8 percent in the 1960s. “This level of obstruction is extremely unusual,” Norman Ornstein, a congressional scholar with the American Enterprise Institute, a conservative think tank, told Newsweek. “And the core of the problem is the GOP.”
___________________________________

#97 TurnerNation on 11.28.12 at 9:51 am

#41Canadian Watchdog

They know retail investors will cross a huge bid/offer spread for their illiquid physical holdings. With equity spreads shrinking there’s a new game in town.

Globe reports National Bank’s laid off 50 equity market markers/Pro traders this week. The spread is dead.

Come on Son, Metals are commodities!!

#98 Buy? Curious? on 11.28.12 at 9:52 am

Holy Cow! The Smoking Man tribute video is in the triple digits of views! You weren’t lying when you said,

#44 Smoking Man on 11.27.12 at 11:41 pm
“People hate me, yet 100′s and 100 of complimentary emails.”

You’re like Brad Pitt but shorter, older and Soberly Challenged with pants that are slightly too big for you.

Tell us another way “The Machine” beats us all down into submissive taxing farmer slaves.

Did you like the video?

http://www.youtube.com/watch?v=PAK4gYYMzJU

#99 Ret on 11.28.12 at 9:54 am

Lots of retirees get the GIS and they own their homes outright in Toronto. They get money out of a basement rental suite, babysit or do odd jobs under the table etc. and live quit well.

If you don’t own a home, line up for a subsidized seniors’s apartment.

Lots of people work for cash in Canada to avoid paying income taxes, E.I., and CPP premiums and and then line up to collect GIS as retirees. They are triple rewarded for not disclosing income.

GIS recipients could own a million dollar home in Toronto or ?000 acres of farmland in Saskatchewan. If they have a low declared income at pension time, they get the GIS as needy seniors.

In the US, your Social Security is based on your declared income over your working career in each quarter with no GIS to backstop your sad story. If you cheat the IRS, you screw yourself at pension time, plain and simple.
It all sounds sooo un-Canadian.

GIS reform is long overdue. (Ditto CPP disability benefits which are another huge scam in too many cases.)

#100 Centre-ville on 11.28.12 at 9:55 am

@Boomers Uber Alles

Crossing the streets is free and it isn’t, these days, at least in Montreal.

The local police is more likely than ever before to hand out tickets for jaywalking, here. Even when there is absolutely, positively no traffic. They have days when they make it an objective to hand out x amount of tickets and in fact turn it into a full-scale operation, just for crossing the street when there are no cars.

This is obviously not done to protect you – from what, non-cars? non-cars not running you over? – but rather to amass money. So, kind of a tax, really. An extra tax on not getting run over by imaginary cars. A tax on a “what if” scenario. Imagine that. God forbid adults were treated like adults and left to look both sides before crossing a street, right?

I actually manage to max out my TSFA. Despite living in Montreal and being taxed on imaginary threats.

(For the record, I haven’t gotten a ticket for jaywalking. I just find it preposterous that other people would. $52 a pop, if I’m not mistaken. $52 less to invest in your TSFA. For something that never even happened. Insane. Nevermind fancy lattes, crazy web connection prices and the likes…)

#101 Herb on 11.28.12 at 10:00 am

#73 Beach,

a knighthood or peerage is inevitable in that job. Since Carney will be a British citizen, he could accept either as a British citizen without a faretheewell to the Government of Canada.

#102 DonDWest on 11.28.12 at 10:02 am

It’s all about choices. Stop moaning. — Garth

So what choices and freedoms does my generation enjoy over that of the baby boomers? Care to explain. I don’t consider being able to shovel money (if you somehow manage to have it) in a TFSA the equivalent of affordable housing and being able to get a good job without college. . .

#103 live within your means on 11.28.12 at 10:14 am

#78 Laura on 11.28.12 at 8:33 am
Quick question: I maxed out my TFSA. Where should I put my money now? The bank and my parents are all telling me different answers. Thanks!

The two worst sources of information. — Garth
…………..
Elder sis (70 next yr) has a very small co. pension & small amount in RRSP’s in mutual funds. She spent 1 hr with her local young, female RBC manager yesterday. BM was so friendly & didn’t intimidate her. Manager advised her to open an RBC TFSA account, buy GIC’s, etc. !!!!

#104 salonist on 11.28.12 at 10:19 am

“Most Canadians invest with their heart”
“The report also found that many Canadians are unaware of how to make an investment and lack the confidence to do so.”

http://www.montrealgazette.com/business/Most+Canadians+invest+with+their+heart+survey/7620961/story.html

#105 Ralph Cramdown on 11.28.12 at 10:21 am

#78 Kevin

You’ve got some choices to make. Either you can cut the budget/increase the income to start saving some real money, as in maxing out the TFSA and RRSP every year and then some, or you can just go for broke, pay the morgage, save nothing and let the kids apply for grants and loans to pay for uni. Doing it your way, saving up for the kids’ education but little else, really IS being a tax farm slave; you’ll pay the most taxes, get the fewest government benefits and have a penurious retirement.

#106 To be considered by many posters on 11.28.12 at 10:33 am

My favourite Garth comment so far? “You’re not breeding, are you?”

For most posters, please consider simply adding the comment at the bottom of your post. It will save Garth some time.

#107 County Living on 11.28.12 at 10:35 am

Hi Garth,

We have a disabled son who started receiving his small pension. As we understand it, he can only have so many assets or income before it grinds down his pension.

Can we contribute to a TSFA in his name, and have the account build up, without it hurting his pension?

Then later, could he withdraw from his TFSA account without hurting his pension?

Thanks!

Yes, at age 18. — Garth

#108 DR. WAYNE on 11.28.12 at 10:37 am

#2 Etown Guru on 11.27.12 at 9:46 pm

Fuuuurrrrrsssssttt!!!!

Sorry a$$hole … you’re seeecccooonnnddd !!! Is the rest of your life like that?

#109 Mackie on 11.28.12 at 10:48 am

In my view, the key to successful investing in a TFSA is to invest in high risk equities that pay off big time. That way, it’s not how much you put in every year that you benefit from the most, but the profits you make that you don’t have to pay taxes on. If you double, triple your money in a TFSA, you pay no tax on those profits. If you do that in a non TFSA or even an RRSP, the gov’t is going to take close to half. So TFSAs are especially good for high risk investments (whatever that definition means to you.) Your high-risk may be low-risk to me.
I should also add that if people put as much effort into where they are investing their money as they put into buying a new gas range, their definition of high risk would change. When you take the time to know a little about the companies you are investing in, they are not so high risk anymore.
I still think that if you can find enough money, the smart thing to do is to max your RRSP and use the return to top up your TFSA. Easier said than done when that Alaskan Cruise or vacation in France looks too good when you get your RRSP refund back.
just my 2 cents

#110 JustTryingToProtectEquity on 11.28.12 at 10:54 am

#88 Victor V

One could argue that the house on High Park Boulevard was listed too high to begin with. But, you’re right, there is definitely a trend downward in the High Park, Bloor West Village area. A beautiful home on Glenlake was listed for $1.2M. It showed very well on a block that had recently sold 4 homes all at around $1.1M. When they didn’t get any interest, they lowered it by close to $200K. No offers. They took it off the market. Presumably to sell in the spring?

#111 Whitey on 11.28.12 at 11:04 am

Garth, I don’t disagree with the value of the TFSA, but is it not possible that like trusts, some day the Feds may decide to do an about face on the TFSA and try to gain revenue from it?

No, unlikely. If more people are not encouraged to save we face a fiscal and social crisis the government will be forced to respond to. — Garth

#112 Kevin on 11.28.12 at 11:06 am

@Ralph (105):

“Either you can cut the budget/increase the income to start saving some real money, as in maxing out the TFSA and RRSP every year and then some, or you can just go for broke, pay the morgage, save nothing and let the kids apply for grants and loans to pay for uni.”

We have a household income of $160,000 and have no kids. Our mortgage payment is $2,200/month and we’ve been throwing an extra $2,600/month at it for a couple of years now. We only tuck $100/month into our TFSA’s and haven’t added anything to our RRSP’s in several years (current combined balance is around $150,000).

We have no other debt except for the mortgage. We only have 1 car (’05 Mazda 3), paid for, with almost 300,000 km on it. I take the bus to work.

I could post my whole budget here for you to critique, and for sure there is a little fat we could trim, but on the whole, we’re not living high on the hog. We’re taxed through the nose. Our property taxes are approaching $5,000/year. We live in Ontario and pay $1,200/year for the health tax (sorry, “Premium”). We’re responsible adults, so we have adequate life and disability insurance. Groceries, maybe $600-700/month for the two of us. It all adds up!

Paying double your mortgage, and saving little, is a truly dumb idea, as you will likely discover. — Garth

#113 DonDWest on 11.28.12 at 11:09 am

Anyways Garth, when are you going to quit beating around the bush, and tell us what exactly are the guaranteed 7% investments per year you continuously mention?

Inquiring minds want to know. For if that is indeed the case, I’ll just take out a billion dollar loan from RBC at 4% and throw all that money into these investments for a net profit of 30 million a year.

Who said ‘guaranteed’? — Garth

#114 Soylent Green is People on 11.28.12 at 11:12 am

How does Mark Carney’s wife square in her eco-warrier head the 1% things her husband does?

Diana Carney has expressed sympathy for the anti-banking Occupy movement and suggested that global financial institutions are “rotten or inadequate”.

She has described the notion that humans should halt all consumption to save the environment as a “good point” but “very hard given the way our societies function”, and has also lamented the “relentless exhortations to buy and the fact that much of our sense of self is tied up in our possessions”.

Mrs Carney, who met her husband, Mark, at Oxford, is vice-president of Canada 2020, a Left-wing think tank, and reviews environmentally-friendly products. The couple, who have four daughters with dual British-Canadian citizenship, live in Rockcliffe Park, Ottawa, one of Canada’s richest enclaves where their neighbours include ambassadors and executives. Mr and Mrs Carney bought their home for £800,000 in August 2003, but its value is believed to have risen substantially. Records suggest that they made £95,000 of improvements in 2009.

http://www.telegraph.co.uk/finance/economics/9704385/New-Bank-of-England-Governor-Mark-Carneys-wife-an-eco-warrior-who-says-banks-are-rotten.html

#115 Rural Rick on 11.28.12 at 11:18 am

#107 County Living
You should know about this.
http://en.wikipedia.org/wiki/Henson_trust

#116 tkid on 11.28.12 at 11:19 am

HHHW, your analysis of RRSPs vs TFSA are completely wrong.

You put money in the TFSA first, RRSP second. Why? Because any money you generate in the TFSA comes out without any taxes. That’s income that does NOT get taxed.

I’d rather pay taxes now than later – taxes later are going to be more, not less. If TFSAs had been around when I started saving for retirement I would have gone with TFSAs instead of RRSPs and I would have started at 14 years of age, (this is when I started working) instead of 24 with RRSPs, as TFSAs have no withdrawal restrictions. TFSAs can act as a retirement fund, education fund, house fund, car fund, vacation fund … lots of potential for the young.

There is no advantage to RRSPs that TFSAs do not have except TFSAs are not sheltered from welfare and dividends from US companies are subject to US withholding tax.

Does the government want people to save for retirement ? Then give them an easy option to make a better return on their money. Make it truly attractive to save and make it real for them to understand how important putting money away for the future really is.

Migawd, the handholding we Canadians demand from our government. “Be our Nanny!”

You want to make saving for retirement attractive for Canadians? Here’s my suggestion: the government makes you live on cat food for a month if you haven’t got X amount of dollars saved up for every decade that you’ve worked. The lesson? If you don’t save some money, this is your food budget as a retiree.

$11,000.00 per year in a TFSA will bring you nothing but the bare minimum at retirement.

$11,000 per year (or $916 monthly) in a TFSA over 20 years at 4 percent interest gets you $335,000. 6 percent gets you $423,000. 8 percent gets you $540,000. Tax free. Tax free, when you are at 25 percent income tax makes that $423,000 seem more like $528,000. This isn’t chump change.

But I only get $5500 in a TFSA. $458 at 4 percent is only $167,000, 6 percent is $211,000, and 8 is $269,000. Is this chump change?

Plug and play with figures in the calculator at http://www.math.com/students/calculators/source/compound.htm

#117 Kevin on 11.28.12 at 11:20 am

Paying double your mortgage, and saving little, is a truly dumb idea, as you will likely discover.

It’s a tradeoff, obviously, and we’ve weighed the risks. We’re in our late-30’s, and at the current pace, we’ll have the house paid off by age 41 or 42, freeing up $5,000/month which we will use to catch back up with our RRSP’s and TFSA’s.

Is $150,000 in RRSP’s at age 38 really considered “little?” Based on some of your blog posts, Garth, I was under the impression we were already in better shape than at least half of people 20 years older than us, trying to retire.

#118 Steven Rowlandson on 11.28.12 at 11:27 am

Government debt and real estate price inflation will be the financial and or physical death of Canada and the United States.

#119 Al on 11.28.12 at 11:28 am

Here’s an example of how people with no money can start an actual TFSA with stock/bond exposure. As many of you that started to look at this probably realized, the minimums and maintenance fees and trading commissions make this process hard to make it profitable. Here’s what I did:

1) Open a TD waterhouse account, you can do this at the branch or online. If you don’t have a TD account, you need to go to the branch to deposit money in it.

2) Select the fully electronic option (e-statements). You now have free TFSA with no yearly fees.

3) Buy TD e-series funds. e-series funds are the lowest cost index funds in Canada. Since you are in a TD Waterhouse account, they charge no trading commissions to purchase them.

4) I’m not telling you which funds to buy because I don’t know you but a mix of equity/bond funds.

Presto, you have a real TFSA that’s free from fees.

I’m sure there are variations on this but I like this route as e-series funds have the lowest expenses.

Buying a fund (or anything else, like real estate in Detroit) just because it’s cheap is almost always a bad idea. There are far better options. — Garth

#120 Ralph Cramdown on 11.28.12 at 11:47 am

#112 Kevin
We’re taxed through the nose.

Of course you are! The tax system isn’t fair, but it’s understandable. Your mission, should you choose to accept it, is to study this chart…
http://www.taxtips.ca/taxrates/on.htm
…and figure out how to move your income over time from the boxes with the high numbers into the boxes with the low numbers. After you’ve maxed out your TFSA, of course. What’s your RRSP doing? Would it be more productive if it held a mortgage on your house? How can you structure things so that money you borrow is for investment purposes, thus tax deductible, rather than for your primary residence? Tax deferred is tax saved. You can learn about all this stuff online or at the library or the bookstore, or you could seek professional help, but I’d bet you could restructure things for a net benefit of thousands a year, easily.

#121 dv8 on 11.28.12 at 11:53 am

Surprise: Right After The Election, New Home Sales Tumble From Downward Revised Two Year High.
Better buy a house in the states
http://www.zerohedge.com/news/2012-11-28/surprise-right-after-election-new-home-sales-tumble-downward-revised-two-year-high

#122 Daisy Mae on 11.28.12 at 12:07 pm

38Paully: “I don’t really understand today’s picture. Can anyone explain it to me?

*********************************
Drinking the Kool-Aid
From Wikipedia, the free encyclopedia

“Drinking the Kool-Aid” is a metaphor commonly used in the United States and Canada that refers to a person or group holding an unquestioned belief, argument, or philosophy without critical examination. The phrase typically carries a negative connotation when applied to an individual or group. The basis of the term is a reference to the November 1978 Rev. Jim Jones Jonestown Massacre where members of the Peoples Temple were said to have committed suicide by drinking Flavor Aid (not actually Kool-Aid) drink laced with cyanide.

#123 LazyJason on 11.28.12 at 12:24 pm

#107 County Living

Have you set up an RDSP (Registered Disability Savings Plan) for your son yet? The Feds allow for you to backdate the contributions as well as the grant and the bond aspect too. I’ve had mine for just over 2 years and have contributed about $2500 of my money so far and the Feds have kicked in $12,000. It’s a great program but has some rules and regulations to follow but otherwise it’s a great plan.

#124 Smoking Man on 11.28.12 at 12:26 pm

#98 Buy? Courious?.

I thought it was hilarious.
YODA said lots of room for improvement. He’s a tough sell.

#125 Just Park It on 11.28.12 at 12:29 pm

One question – if a very overwhelming number of Canadians are facing a stark future financially – guess who will actually be holding the bag – yep – savers. Our supposed democratic system is based on appeasing the masses – you can’t have the masses get thrown on to the street, with no food in their bellies…they will go after the easiest source – the savers. Have money in any type of account (TFSA) and they will have a crafty way of hitting you where it counts.

Someone always has to pay – the old saying of stuffing money in your mattress may actually be a great idea!!

#126 Tony on 11.28.12 at 12:37 pm

Surprise: Right After The Election, New Home Sales Tumble From Downward Revised Two Year High

http://www.zerohedge.com/news/2012-11-28/surprise-right-after-election-new-home-sales-tumble-downward-revised-two-year-high

I told everyone on this blog this would happen.

#127 Just Park It on 11.28.12 at 12:56 pm

A fool-proof plan on saving – the 10% rule… after you cover all your fixed expenses (mtg,rent,insurance) skim 10% after that – have it automatically withdrawn and deposited into a savings account – and the remaining income for the month you cover your variable expenses aka (food, clothing, ent…) the system works for even the most budget challenged.

#128 Buy? Curious? on 11.28.12 at 12:57 pm

Ok, Smoking Man, I won’t comment on any more of your posts.

Thanks for being a good sport and thank you too, Garth. You’ve been a fair monitor with a great sense of humour with an overall objective to help those who wish to help themselves.

Though I did make a video for you too. Not my best work but I’m just getting used to the iMovie program.

http://www.youtube.com/watch?v=6FUjbzBs_SI

#129 passion8_one on 11.28.12 at 12:58 pm

“If you’re a middle-aged, middle-class, employed person who can’t find $5,500 next year to invest, ask yourself why. I already know.”

The problem lies in the definition of middle class. I know people making combined incomes of over $200K claiming to be middle class and others making combined $60K. Two very different situations.

We make a combined income of $75K and we are considered middle class. We are not. I have come to the realization that it is NOT income that determines your lifestyle, but your geographical location. Living in Vancouver, I cannot afford a middle class lifestyle OR $5K for a TFSA. Even though I commute 1 hr away from the city core, SFH are still average price of $700K. I did not buy one of these homes. I worked my butt off working 3 jobs to save a 10% downpayment on a home, invest in some stocks (that grossed 17% yoy until they exploded and thankfully I got OUT before that – no brilliant strategy, just dumb luck, and start a RRSP.

Then I got married and had kids. It was downhill from there. No time for second jobs. Hubby had to quit is his job for 6 months and switch career fields when our 18 month was BEATEN at daycare! Can you imagine picking your baby up with scratches all over his face, black eye and bleeding teeth marks? I refused to take him to daycare and hubby had to quit his job. He now works eves & w/ends in a lower paying job. You do that kind of thing when you have kids.

We take transit, we have no cellphones, and as I age I refuse to pay $60 for a tub of moisturizer. Family vacations are spent in tents surrounded by RVs. Our children do not lessons/activities/etc…and we are hammered by other parents about it. I receive grief for cutting my children’s hair. There is nothing laudable about living within your means anymore. When I cycle to the mall, I am the “strange mother”…we are ostracizing by society bc no one wants to admit that which we represent. The truth that our standard of living has declined rapidly.

We have received 0% raises in the last 3 years yet look at the real inflation of milk, gas, etc over that time.

Everyone here is always commenting that is the CHOICES people make that cause the debt and problems. That is not always true. I do not have granite countertops or buy into materialism…in fact, I believe it is this trait which has caused a lack of ambition for my husband and I to earn more. We never needed anything fancy. I’m one generation away from “dirt farmers”…and I’ve come a long way. Just poor geographical location (I was born here, I didn’t know better) and bad timing.

#130 Ret on 11.28.12 at 1:00 pm

The best chart showing marginal tax rates and total fed. and prov. taxes payable that I have found. (Does not include health surtax in Ontario)

Click on your province, then go to table #1. The charts print clearly if you choose to.

Easy to understand info at a glance. Great for tax time.

http://www.taxplanningguide.ca/tables/

#131 :) :( Ying Yang on 11.28.12 at 1:12 pm

TFSA???

Why not take a tax trip!
Spread it around small amounts.
British Virgin Islands, the Cayman Islands, Switzerland, Lichtenstein, Monaco, The Isle of Man, Andorra and for those more risky travelers Vanuatu.

#132 Johnny Boy on 11.28.12 at 1:17 pm

#98 Buy? Curious? on 11.28.12 at 9:52 am
Holy Cow! The Smoking Man tribute video is in the triple digits of views! Nice work Buy$ Curious? Very entertaining! Perhaps a cut from Ghost Rider with Johnny Blaze bursting through the screen on fire!

#133 Tony on 11.28.12 at 1:19 pm

Re: #45 W on 11.27.12 at 11:43 pm

No, $5,500 is gambling money, pocket money the idea is to try to turn 5 grand into 500 grand.

#134 FullofFear on 11.28.12 at 1:21 pm

Garth says “We’re doomed. Save yourself.” But can we? If a lot of people are going to be in trouble financially, who is going to help them out? Those who aren’t in trouble. Unless you believe that Canada will cease to be a country that takes reasonable care of the sick and elderly, those who have save themselves, will also be required to save others. Being liquid and diversified isn’t going to save you from that. But being mobile just might. If you have that home in Spain that Garth talked about the other day and are willing to leave Canada, then you might just be able to save yourself. But be careful you don’t jump from the frying pan into the fire. And don’t be surprised when the government tries to take some of that money you want to leave with. The Gold-Guns-God crowd that Garth constantly makes fun of, advice their followers to put that money is the place of refuge now … before it gets ugly.

Liquidity, diversification, and *mobility*. That’s how you really save yourself.

#135 Lostinthewilderness on 11.28.12 at 1:22 pm

For all who can’t find 5k for the TFSA, this should be enough to raise your anger level against the Canadain tax system.

http://www.theprovince.com/news/Feds+must+after+rich+hide+wealth+abroad/7620280/story.html#axzz2DXStf1nY

#136 Van guy on 11.28.12 at 1:36 pm

No bubble here,

6159 dunsmuir cr Richmond
1.51M assessed
BRAND NEW. includes HST
2351sq on 4300sq~ lot.
1.06M sold
started 1.55 dec 2011
1.38 1.28 1.2. sold 1.06 nov 2012.

Prime terra nova area.

#137 Stoopid Idiot on 11.28.12 at 1:41 pm

http://www.jsmineset.com/

The most endangered species on the planet is on two legs and known as pensioners.

The worst financial problem is a national secret.

It is the real financial condition of pension funds after FASB’s permission to value worthless paper at whatever you wish to value it as.

Exclusive: Calpers triggers legal fight with bankrupt San Bernardino over pension debt
4:31am EST
By Tim Reid and Peter Henderson

LOS ANGELES (Reuters) – America’s biggest public pension moved aggressively against the bankrupt city of San Bernardino, California, on Tuesday night over the city’s decision to halt payments to the fund.

The move laid bare a high-stakes battle shaping up between Wall Street and state pension funds over how they are treated when cities run out of money.
The powerful California Public Employees’ Retirement System (Calpers) filed a legal motion declaring its intention to sue San Bernardino for millions of dollars in pension arrears, a move that the fund has never before had to make in a municipal bankruptcy.

San Bernardino, a city of 210,000 about 60 miles east of Los Angeles, filed for bankruptcy protection on August 1. Since then, it has halted its bi-weekly, $1.2 million payment to Calpers, saying it wants to defer any payments to the fund until fiscal year 2013-2014. Calpers says the city is already $6.9 million in arrears since August.

The San Bernardino bankruptcy is fast emerging as a precedent-setting case over how creditors, especially Wall Street bondholders and insurers, are treated in a municipal bankruptcy, because never before has a city seeking bankruptcy halted payments to Calpers or threatened its historical primacy as a creditor.

More…
.

#138 aggie on 11.28.12 at 1:58 pm

May I interject to say I find Julian rather annoying and condescending? His/her comments interrupt the flow as I read down through the comments, distracting me enough to cause me to jot this note. I do believe I feel sorry for J, who has perhaps had limited life experiences. All language communicates, whether learned out of a book or along life’s journeys. I’m grateful for SM’s perspective; it lends balance to the comments. Well, I guess in that regard, J’s does the same. Makes one realize — and celebrate — what a mixed bag we human beings are. Heaven forbid we become homogenized milk!

#139 GTARealEstateCorner on 11.28.12 at 2:01 pm

#44 Smoking Man

Awesome post Smoking Man! I think it’s great that there are people like you who have a different opinion and stand up for what they believe. Don’t listen to anyone who belittles you. Haters will always hate. No one should judge you for what ever happened to you or your circumstances in life. Keep posting and sharing and don’t let anyone ever stop you :)

#140 live within your means on 11.28.12 at 2:03 pm

#100 Centre-ville on 11.28.12 at 9:55 am

Where I live, it’s a common saying, beware going over the speed limit the last few days of the month. All the cops have a monthly quota.

#141 Bill Gable on 11.28.12 at 2:03 pm

People may have trouble finding five grand or anything for the TFSA, as per Mr. Turner’s guidance – but people can still come up with hundreds of bucks to see past it rock stars like Bruce Springsteen. (*He and McCartney played Vancouver this past week).

They can still find money for toys – (*think Black Friday) – and yet they all remind me of the saw – “Growing old is not for the faint of heart” – and when these spendthrifts hit the wall – they will come whining to Ottawa to save them.
You can bet the prudent Turnerites will see tax increases and all manner of fun engineering to give the boot to us careful folks.

As far as Real Estate Sales go.

Most of my affluent friends have given up on Vancouver. Three people I know have bought in the States – and that trend is accelerating. Vancouver sales are stuck in 1st gear.

The prices in Phoenix are UP 20.4% YoY.

I think that people are crazy to move next to Mexico – but – people make moves and think of the consequences after they have their foot in the glue pot.

#142 GTARealEstateCorner on 11.28.12 at 2:04 pm

#57 Boomer21 on 11.28.12 at 12:11 am

Hey Boomer, totally agree that Garth rocks! Give Smoking man a break though alright? He’s a decent guy, just needs the blog the deal with his demons. We all got’em and we all deal with them in different ways. Not saying I’m all good or anything but it’s easy to spot someone who hasn’t had an easy life.

#143 Bottoms_Up on 11.28.12 at 2:05 pm

#123 Just Park It on 11.28.12 at 12:29 pm
————————————————
No, they will come after savers through inflation. Therefore stuffing money under your mattress is a horrible idea.

#144 Bottoms_Up on 11.28.12 at 2:06 pm

#127 passion8_one on 11.28.12 at 12:58 pm
———————————————–
Can you pick up and relocate to a town with a much cheaper cost of living and retain similar jobs?

#145 Bottoms_Up on 11.28.12 at 2:09 pm

#116 Kevin on 11.28.12 at 11:20 am
—————————————–
I would say you’re doing pretty darn good. And being able to free up that much money at such a young age in a few years is like winning the lottery. Most families younger than you are looking at having mortgages into their late 50’s and 60’s.

#146 Johnny Boy on 11.28.12 at 2:12 pm

#127 passion8_one on 11.28.12 at 12:58 pm
Agreed! You and your husband are doing what most caring parents should be doing. Taking care of your children first. Middle class definitions should definitely be linked geographically as well. As far as choices it is easy to talk about choices when you are raking in $150K a year or more and that may not include your partners $$. Those people can afford for others to take care of their children. Can’t say I agree with that one.

#147 Bottoms_Up on 11.28.12 at 2:16 pm

#70 Picasso on 11.28.12 at 2:49 am
—————————————–
TFSA is for INVESTING, not saving.

#148 Canuck Abroad on 11.28.12 at 2:17 pm

94 LWYM – “…I’m skeptical how 3 can live well on $60K Cdn in London, take off for 3 months to warm clime, save $14K, etc. Please enlighten me as I believe UK taxes are high…”

$60k Cdn would put you in the 20% tax band after deductions, so Longterm would pay max $12k tax, leaving $4k/month to spend. Health care is covered by NHS. School is free if you choose. Food is cheaper than Canada. So the only big expense is rent. If you can keep a grip on that you can have a pretty nice existence.

Three months vacation is sweet.

#149 Bottoms_Up on 11.28.12 at 2:20 pm

#42 Julian on 11.27.12 at 11:33 pm
——————————————
For those of us that have been here a long time, he’s on par with Nostradamus Jr. He will eventually get himself banned from the site. But he does offer the occasional nugget of street-hardened wisdom.

#150 Old Man on 11.28.12 at 2:21 pm

#129 Ying Yang – Hong Kong is a better base because this special territory will sign no agreements, and a bank in Hong Kong will hoop the investment money elsewhere for income flowing back to Hong Kong all tax free. The problem is how to repatriate money back to Canada legally, because if one can’t just forget it all.
It is not worth the effect or the risk to cheat the Tax Man or you might end up serving time.

#151 DondWest on 11.28.12 at 2:24 pm

#127 passion8_one

True enough, our parents generation moved to “where the jobs are,” but I’m starting to realize for our generation the key is to move “where the real estate is”. . . Jobs are a secondary concern and carry less of an impact on living standards.

Ideally, you want to move to where the jobs are and the real estate is, but that may be unrealistic. The truth of the matter is I would have higher living standards flipping burgers in Yarmouth, NS than I would keeping my “middle class job” in Halifax, NS.

The problem is just getting that burger flipping job (full time) in Yarmouth, NS is a rather tall order, but if you can pull it off. . .

#152 Patiently Waiting on 11.28.12 at 2:43 pm

#127passion8_one on 11.28.12 at 12:58 pm

We make a combined income of $75K and we are considered middle class. We are not . . . Living in Vancouver, I cannot afford a middle class lifestyle. . . I worked my butt off working 3 jobs to save a 10% downpayment on a home . . . We take transit, we have no cellphones . . . I refuse to pay $60 for a tub of moisturizer . . . Our children do not lessons/activities/etc . . . There is nothing laudable about living within your means anymore. When I cycle to the mall, I am the “strange mother” . . . The truth that our standard of living has declined rapidly . . . We have received 0% raises in the last 3 years yet look at the real inflation of milk, gas, etc . . .
—————————————————————–

Thank you for your honesty Passion8. You are telling the truth about the realities of what many “middle class” families are facing today, as the middle class is disappearing in North America. Unfortunately many more will be facing this “middle class” reality as the housing bubble unwinds. Best of luck to you and your family :-)

pw

#153 Ralph Cramdown on 11.28.12 at 2:55 pm

#129 :) :( Ying Yang — Why not take a tax trip!
Spread it around small amounts.

Nice! An alternative strategy for people who hate their kids but are too young to get a reverse mortgage.

#154 Seven Stars and Orion on 11.28.12 at 2:57 pm

All I want for Christmas is for the soap opera brigade to shove off. Never thought I would write this, but starting to think of DA’s posts as comparatively erudite and enlightening.

#155 Sasquatch on 11.28.12 at 3:05 pm

I said it before, and will again. my generation will need to work until we die.
I do not say this as a joke. I mean it literally. my generation will die working, or die homeless shortly after no longer being able to work.

#156 1DRS on 11.28.12 at 3:15 pm

Cory #23
Picasso #70
A TFSA is not a Bank product. It is a Government program. If you choose to put your TFSA into a bank GIC or “high interest” savings account you will receive less than inflation rates in return. The proper way to do this is with an on-line trader such as Qtrade or iTrade. Using these platforms to buy ETF’s that return dividend income can make a huge difference in the amount of money you end up with. My SO and I have our TFSA’s maxed out and welcome the $11000 improvement. Our goal is a free trip to somewhere warm and sunny every year for the rest of our lives , paid for by dividend income from our TFSA’s. I can tell you that right now that goal is just about reality and the future will just be about the quality of the hotel and flying first class.
I learned these amazing techniques here, on this blog, for free. They work. You should pay more attention and try to understand that its not all about the comments section, its about the free financial lessons given by Garth that anyone can make use of. You might also try reading his books.

#157 Arthur on 11.28.12 at 3:26 pm

It is impossible for any future government to tax withdrawals from a tax free savings account. All they could do is end future tax free growth, so it would basically become like money invested in any other investment that isn’t an RRSP/RESP. This is still very unlikely.

#158 Stoopid Idiot on 11.28.12 at 3:28 pm

But, good luck. — Garth

I have enjoyed on average 40% return YOY with this service, I’ve been with John for twelve years. I and the Misses have topped out our TFSA and will continue to do so until we need these monies (someone on this pathetic Blog said these were a gift, I agree). I did not have an RRSP until I left an employer of thirty years (before I was 55) and moved those pension monies into a self directed RRSP & LIRA. I may be of the Tim Foil Hat crowed but law’s can be changed. I’m of the belief that in time RRSP’s, Company’s and Large Pension fund’s will be required to have a weighting of government bonds and or treasuries. I could be wrong but I’m just wired that way. I’m also entertaining paying the penalties and liquidating my RRSP’s as I believe that regaining the losses can be done (not really total losses as the deferred wasn’t mine to begin with but the gain will be penalized) . I guess the bottom line is to try and collect as much as those entitlements I have paid into since starting my working career at 16 years old and never once collect U.I. or Comp. I’m also of the belief that we will not get those benefits if we own homes as we may be forced to go with a revers mortgage. The only real comfort I have is having assets the government does not know about. So my biggest investment has been the physical ownership of gold and silver coins that I will sell in my Golden years when a few extra bucks are needed. Remember RHOSP’s? (I think that was the acronym?) or the 500K capital gains tax free for investing in Canadian companies? The one thing about been wrong is maintaining the ability to pay for one’s own mistakes…. I guess I’m just Stoopid. Garth if there is a strategy to optimize this process I’d buy the book

GSA’s Top Ten

Undervalued based on current/expected output/reserves and special situations; GSA sees potential to double within the next 2-3 years based on existing projects, without an increase in gold price.

http://www.goldstockanalyst.com/

Independent audit:

http://www.goldstockanalyst.com/audit.lasso

Long Gold & Silver

#159 eagle eyes on 11.28.12 at 3:51 pm

#127 passion8_one on 11.28.12 at 12:58 pm

“When I cycle to the mall, I am the “strange mother”…we are ostracizing by society bc no one wants to admit that which we represent. The truth that our standard of living has declined rapidly.”

I believe that most people just spend beyond their means. In fact you are not the strange mother, but rather the real mother. It is so sad but true that our standard of living has declined. I grew up in Vancouver Westside and now I can’t even afford the gas to go there living in Richmond. Ditchmond as they used to call it was for the lower class, who couldn’t afford a house in Vancouver. My Dad used to say, “why would anyone want to live there. It is so humid there and the land is not solid. One day it will all be underwater.” Lots could be picked up for $50,000, and you could pick up a hammer with a buddy and build a house for your family, then in turn do the same for him. It is so sad to see young families even struggling to find shelter now. That is why I am so angry at F and C. Can’t they see the suffering they have caused?

#160 Regan on 11.28.12 at 3:58 pm

Herb and Garth, nowhere does HHHW say you steer people irresponsibly to high-risk investments. She’s just disagreeing with you, as have several other people. I think she’s quite right to cite the well-known fact that when people have higher-risk investments than they are comfortable with they tend to bail when things look bad, often at the worse possible time. Is the math just too fancy to explain why high risk is actually less risk? Because I’d also like to add that there’s a degree of irrationality to the advice that the most secure way to ‘make choices’ in my spending and retirement is to take a higher risk route to investing. The theory is that higher risk yields higher rewards, but that IS just a theory. No one can predict the future. Sometimes risk yields loss (more of the time, actually, by definition), and depending on the timing of your lifespan, it can be impossible to recover from some losses.
For example, my last stock market ‘nest egg,’ duly put aside in my mid 20s (during the giant stock bubble, yay) has still not recovered despite my dutiful buy-and-hold, minimize fees etc. etc. strategies. What the YOY return on that money will eventually be is unknown as yet, and will depend on things like when I have to cash it in because I need it.
And that need is a key factor when considering how to invest – withdrawals are not for frivolous choices, and the less money you have overall means you have fewer choices about taking bad losses just to make it through. So, even when market risk is the same, your personal risk is different depending on circumstances.
The math of risk can assume an infinite number of iterations to balance risk and reward. The reality is far more limited and how limited that is depends on who am I and my financial situation.
The real problem is poverty, not bad investing. People chase money with investments because they can’t earn enough, employers don’t provide pensions anymore, corporations pay an increasing smaller portion of public expenses, personal savings gets you next to nothing, and individual debt is piling up. Beyond individual attempts to ‘beat the herd’ there’s the public policy reality that on average we can’t sustain our lifestyles the way we’ve been going. Dealing with broader, more fundamental solutions to that issue is perhaps another discussion, but surely worth a mention when you already know you have to limit your $5000 savings challenge to middle-aged, middle-class, employed people. And everyone else can do what, exactly?

You can start by not buying stocks. — Garth

#161 gladiator on 11.28.12 at 4:01 pm

Hey, I am on Smoking Man’s side too.
I am too schooled and I can see what a devastating effect it had on me: I was conditioned to serve the master, follow the rules and follow the path that is trumpeted everywhere: get a job, get a job, get a job… All this – while I see my peers taking risks and having household annual incomes in the mid-200s to low 300s Gs and they are not doctors, lawyers or bankers, and without North-American education – just immigrants who came here for a better life and boy do they have it! (To give you an idea what they do – a couple are both consulting programmers, the guy in another couple has his own construction/reno team and wife works in retail sales, another couple’s husband is a consulting software architect and wife works in retail sales, etc.)
As I wrote here before, I am busting my arze to get out of this vicious loop and set myself free, which is not easy with 2 kids and a wife in the process of setting up her own business – I will be extra careful – but I will succeed or fry trying.
Smoking Man’s words are a huge encouragement and reminder to me that I am a slave and I must get free from this job thing. They are like Red Bull – they give me wiiiiings. Even though he brags and drinks and calls us bubbleheads, I don’t care about these – I get what I need from his words and until I work for myself, I will agree to be called a bubblehead, because I am one.

A saying I live by and which humbles me: “If you are so smart, why are you so poor?”. So, are you smart? (And don’t give me the crap about “wealth” being your family, friends, good health, life experiences, etc. – I have all these; what I mean is your bank account)

#162 tkid on 11.28.12 at 4:04 pm

Diana Carney has expressed sympathy for the anti-banking Occupy movement and suggested that global financial institutions are “rotten or inadequate”.

This must make for some interesting conversations at the Carney dinner table. No wonder she has the Brit media all agog.

#163 :) :( Ying Yang on 11.28.12 at 4:10 pm

#152 Ralph Cramdown on 11.28.12 at 2:55 pm

One of my kids is in Bahamas already, one in USA, one in TO and the other works the world in Civil Engineering mostly middle east now. So whats the point?

#164 Extron on 11.28.12 at 4:13 pm

Speaking of books, when is the next one out?

Just in time to save us all. — Garth

#165 Coho on 11.28.12 at 4:18 pm

#123,

One question – if a very overwhelming number of Canadians are facing a stark future financially – guess who will actually be holding the bag – yep – savers. Our supposed democratic system is based on appeasing the masses – you can’t have the masses get thrown on to the street, with no food in their bellies…they will go after the easiest source – the savers. Have money in any type of account (TFSA) and they will have a crafty way of hitting you where it counts.

Good point. I’ve made this very point a number of times. There are people who can save heaps (and don’t) and those who really can’t because they just don’t have the earning capacity. What is disturbing yet typical is the demonization of regular people and/or the working poor — that it’s their fault if they don’t save the million or two to finance a 30 year retirement.

We’re only as strong as the weakest link in the chain. The ‘least’ among us will drag down the rest. Each of us might like to think we live in a bubble. We worked hard, got some breaks, saved some money. We did our part to save for retirement…so hands off Mr. Government. But, for many reasons it doesn’t work out that way for everybody. Things will be reset to the lowest common denominator. We can no more detach ourselves from our financially ‘lesser’ brethren than our country can from a global economy. We’re all affected, so it would behoove us to stick together and have some compassion for each other rather than blame bicker and bitch.

#166 Old Man on 11.28.12 at 4:19 pm

Lets get serious about this offshore business to save some taxes, as leave all this up to others because it is no pie in the sky, unless you are a crook. In Canada we are fortunate as there are numerous ways to save taxation legally. But you must educate yourself, and for those with big money find a fee based financial advisor if you cannot do it alone.

There is no way any Canadian has to cheat the Tax Man to establish a prudent portfolio for now and into the future, and my daddy always had a saying – son you get what you pay for in life, and if you don’t know how find someone who does with intelligence, integrity, the knowledge to do you well.

I said a banker; a stock broker; a real estate guy; or how about a mutual fund salesman; perhaps a lawyer for investment advice. My daddy laughed his head off and said hell no to them all.

#167 Southern Ontarian on 11.28.12 at 4:25 pm

#155 1DRS:

No! Earn no Canadian dividends in your TFSA! You want to earn interest, all of your interest, in your TFSA. Earn your dividends in your taxable accounts, and try your best not to pay any taxes at all.

Garth, maybe this could be an interesting topic for a blog post one day: what types of assets to keep where, assuming that we will have all been really smart and not only made the $5500 deposit to our TFSAs on January 1, 2013, but will be socking money away to invest in a taxable account.

#168 Stoopid Idiot on 11.28.12 at 4:26 pm

No, unlikely. If more people are not encouraged to save we face a fiscal and social crisis the government will be forced to respond to. — Garth

Garth… this type of incentive places a demand on the Canadian dollar and contracts M3 thus strengthens the Can Do… would this be correct?

#169 ignorant schoolteacher on 11.28.12 at 4:31 pm

I can easily put aside 5500 a year (been adding 5K to my TFSA every January for the past four years) but have no ide what to do/who to talk to in order to get at least a little bit more than 0.8 or so percent RBC is giving me.
5% on my 150K savings would indeed pay for a nice vacation so please advise me and who knows – I might even send you a postcard one day :-)

#170 Just Park It on 11.28.12 at 4:34 pm

One thought always crosses my mind – your told to save when your young so you can live life when you retire …wtf does that mean… work you @ss off for the first 40 years and with a pile of cash you can sit in your retirement home, your depends full of *&^* and greedy relatives just counting the days down when you croak…I say – live for today – kick a few bucks to the side but no one knows what tomorrow brings..I have 2 friends who passed away in their late 30’s – you never know –

Never let a day go by without telling those you love – that you love them..

Man do you ever have a lot to learn about being 60. — Garth

#171 Des on 11.28.12 at 4:50 pm

Garth-I’ve been good. Got out of RE last year and couldn’rt be happier. Now a renter in Van with a couple hundred in savings and a job with a pension (not likely to be there when I retire). Now the bad part-I’m utterly risk adverse and can’t seem to get away from investing in GICs. How do I break the curse?

Stop doing it yourself. Emotion is paralyzing you. — Garth

#172 daystar on 11.28.12 at 4:52 pm

#138 GTARealEstateCorner on 11.28.12 at 2:01 pm

SM is a fictitious character of a scribe who comes here to develop his character and further strengthen his craft through interaction. Its imaginative, creative and inspirational and in that context, I like it!

#173 Longterm on 11.28.12 at 5:09 pm

#94 live within your means

I live in Streatham Hill in South London, zone 2/3 if that means anything to you. Rent is £950 plus £93 for council tax [paid by occupiers not the owner as with property tax in Canada] so that costs us £1043 [about $1670 CDN for 450 sf] then electricity is about £100 a month [we have no gas in our building though most people do], internet is £6.49 a month, landline £13 a month and my mobile with 100 minutes, 250 texts and 50 MB of data is £10, same for my wife. So all in for a roof over or heads and utilities we are about £1200 a month which is approximately $1920 CDN.

Canuck Abroad is correct. After that there is food, definitely cheaper than Canada, booze is way cheaper, NHS is free, most museums are free, the streets of London are free. However public transport is expensive and so is our van insurance and petrol.

With the equivalent of $60,000 CDN [about £37,500] earned roughly £20k to me and £17,500 to my wife]. The first £8100 we each make is tax free then 20% on the reminder plus National Insurance of about 7.5% and that is it. So I net about £16,100 and my wife £14,400. So our combined net is £30,500. My income is self-emplyment income so I am able to claim most of my van costs [we don't use it much for personal tansport]. Every winter we either sublet our flat or give it up, put our stuff in a storage garage at £90 a month, and go travelling. So our rent and utilities last year totalled about £1200 x 9 months = £10,800 plus £270 for storage.

So from our net income of £30,500 take out the rent and utilties and stroage we paid of £11,070, plus £8750 in our ISAs [$14,000 CDN] left behind £10,680. About £5500 of this was food, booze, clothes, personal grooming etc for 9 months, which left us with £5000 for a few weeks in Calgary with family and then 2.5 months in the Yucatan [we rented a house in Merida for £600 / $1000 US a month and travelled around the Yucatan [this whole trip including airfares was £4200] plus a couple of short summer breaks to Wales, the Lake District etc.

So yeah, not that hard. We just prioritize the ISAs, where our money grows tax-free, and the travel and we don’t own much crap. Over the years of travel and linving abroad we’ve learned that stuff just takes up space and costs money to store and just slows you down. I value travel and experience [I've been to 42 countries and summitted over 50 mountains] over flat screens. But we could choose to not travel and then spend the £5000 from travel on gadgets. What we spend it on isn’t the point. What is the point is that we don’t make much but we make active choices about how much we spend and on what, which still allows us to save and invest and have a pretty experience-rich life. Anyone can do the same.

Max that TFSA.

#174 eddy on 11.28.12 at 5:28 pm

“Diana Carney has expressed sympathy for the anti-banking Occupy movement and suggested that global financial institutions are “rotten or inadequate”

And she didn’t mention that they are ‘private’ in ownership, which is the root of the problem. ‘Rotten or inadequate’ can be fixed, ‘private’ will Never be fixed

‘Private’ banks with global reach, like RBC, have hundreds of thousands of shareholders and are publicly traded, not to mention tightly regulated. How is this a problem compared to central banks which are often instruments of partisan governments? — Garth

#175 Old Man on 11.28.12 at 5:42 pm

#169 ignorant schoolteacher – you are missing the point, as do not concentrate on the rate of return, but rather the net return after taxes. Why make any deposits to RBC, when you can buy a preferred share with the same bank paying so much more with a dividend tax credit which is a hard credit against taxes payable?

I know married retired couples with big incomes, and with all their legal deductions have portfolios set up in such a way with perfection that they pay no taxes at all, as the tax credits will wipe out taxes payable; not not many can do this, but a few know all the tricks, as have seen it.

#176 JuliaS on 11.28.12 at 5:54 pm

They decided to raise the TFSA limit. They decided not to raise the TFSA limit. They decided the account will be tax free. Tomorrow they’ll decide it’s not tax free, or they’ll choose to tax savings in general (regardless of their location) to encourage “hoarders” to spend, as it’s been proposed by many senile politicians all over the world following the 2008 crash (but not implemented, thank god).

Poor savers are looking for a place to put their money. Do I give it to person A or person B? Do I put it into account A or account B?

How about I “keep” the money. What’s the tax rate on money in hand? What’s the withdrawal penalty of a wallet? What’s the term deposit duration of a fire-proof safe?

Money in a bank a liability and not an asset? Well, if that bothers you, don’t put it in an effin’ bank! Money you have is no one’s liability.

If you want to limit your visit to Starbucks, please make sure the money saved doesn’t go to crooks who spend it at Starbucks on your behalf before telling you economy’s broke and the money is gone.

#177 arctodus on 11.28.12 at 6:06 pm

This blog is rapidly and steadily deteriorating…..

Most of ya’ll have your heads so far up your posteriors that you would not know your own salvation if it stepped out to take a bullet for you.

There is no economic recovery stateside and anyone who says there is, is either a snake oil salesman ..or a fool…and there are a hell of a lot of both in this day and age.

The USA and the western world is in rapid decline (and no this does not mean we will be speaking mandarin any time soon…..750 million chinese will starve out over the next 30-50 years not to speak of India and Asia at large).

We hit the energy wall years ago now and with it any hope of further “economic growth”…..

I mean seriously are you all a bunch of children? How in the world do you think the last 100 years of economic growth actually happened…..you honestly think that economic growth is the result of human wishful thinking and Walt Disney enterprises?

Energy you fools was the reason…..and that is now done with (and no, bakken oil shales and arctic drilling will not even cause the bobsled to hell even a momentary reduction in velocity).

The predicament we are in is just that…a predicament….with no solution that any of you will like.

What it does require is a steely gaze and the ability to stop acting like self entitled 5 year olds who think the world was made for them……

But hell we are canadians right…most of us born post WWII…. ARE 5 year olds…and may the fates have mercy on us all

That was helpful. — Garth

#178 zeeman1 on 11.28.12 at 6:07 pm

Garth, what’s the big deal?

We already paid tax on the money we put into a TFSA, and the interest rate is below inflation.

Isn’t the only benefit that you can use it as a very limited tax shelter?

Also, can’t the government seize a TFSA if you owe them any back taxes?

You don’t put TFSA money into a savings account or a GIC. And pay your taxes. — Garth

#179 LIVE WELL OVER YOUR MEANS on 11.28.12 at 6:17 pm

Spend it all my friends!!!!
The banks gives you money, take it.
Got pre-approved for a credit card, a car or a boat?
Buy them on credit!
Do everything on credit. Max your cards, your HELOC.
Need a vacation? Charge it!
Got behind on your mortgage? Who cares! Charge it!
There will be a time when you cannot pay back.
It is not your fault!
The banks made you!
Ensure you stuffed enough cash aside, then go bankrupt. Hide all those toys.
In as little as 30 months go at her again!!!!
Need proof?
I’ve done it twice already.

It’s not the banks you’re wounding. — Garth

#180 bigstick on 11.28.12 at 6:21 pm

@ Longterm, you budget will look much different when you add a couple of kids. When I was a student (not long ago) my girlfriend and I were living on a $20K/year budget, which included savings, trips abroad, dining out, a car… the whole deal.

#181 JuliaS on 11.28.12 at 6:36 pm

#177 arctodus

Industrialization and utilization of oil had enabled us to manufacture durable goods, grow food and sustain life at virtually no cost, yet thanks to the fiat revolution, bankers kept us working as hard to earn living as if we were still riding around in horse buggies and plowing by hand. In collusion with the governments, they have confiscated most of the benefits of industrialization by baking credit into growth and making monetary transactions mandatory.

Barter all you want, but make sure to borrow enough cash into existence to pay taxes along the way. Pay rent on government currency even if you don’t use it. If you don’t, the government will borrow for ya to stimulate the economy and all that other good stuff they typically do.

And now they give us a way to save money! How kind of them! They’re clearly looking out for us, those selfless saints, bless their hearts!

Every single time I come into my bank (RBC) they remind me to open a TFSA! They want to help me, see! Next thing you know, they’ll be firing all of their CEO’s and staffing the branches with volunteers, serving hot soup right by the ATM! Saints, I tell ya!

#182 Grim Reaper/Crypt Speculator on 11.28.12 at 6:54 pm

TFSA etc.

Naaahhh

I am into the UNDERGROUND Economy….Get it….?!?

Either that or pass myself off as a condo investor who flips condo assignments…Gov’t has an unofficial IMMUNITY policy (aka desperation to juice the ABOVEGROUND economy)

bwhahahahahaha

#183 Ralph Cramdown on 11.28.12 at 6:57 pm

Overheard at a bank:

– I’d like to use these funds to start a TFSA
– Why certainly, sir. High interest savings with bonus interest, or a GIC?
– Well, um, have you got anything with a bit more pep?
– Excuse me?
– Higher interest, I mean.
– Oh, well we’ve got a 3 year GIC with an escalator, paying 2.4% in year 3. Is that what you had in mind?
– No, I was thinking more along the lines of preferred bank shares. I hear they’re paying 5……
– GET OUT OF HERE YOU PERVY SICKO! WE RUN A RESPECTABLE BANK, NOT A BUCKET SHOP!

#184 InLimbo on 11.28.12 at 7:13 pm

My parent’s generation: fresh off the boat in the 60s/70s, McMansion with no mortage in the 905, grade-school education, vacation every 5-10 years, lunches ALWAYS made at home, shopped at Bargain Harold’s, BiWay, Honest Ed’s, Sears warehouse, Flea Market, “espresso” and latte’s made at home 99.99% of the time using a moka, ordering KFC or veal sandwiches every few months was considered ordering out, anytime I spend money they say it’s money thrown away (ie spending money on fast food/take out, occasional “toys” for myself…ie tools, etc)

Current generation – denies themselves few “luxuries”, new iPad/computer gadget every year or so, *Bucks/Tim’s every day, fast food and eat out every week, high-end gym memberships, $1,500 espresso machines, latest fad clothing brands, $1,000 wardrobes every time they step out of the house, only want new houses or cars, ….too lazy to refine or go on.

#185 InLimbo on 11.28.12 at 7:17 pm

Sorry, also, the past generation moved up and saved for the McMansion over a generation (my parents started off in a relative’s basement, then an apartment over a storefront)…the current crop want the McMansion right off the bat.

#186 Canadian Watchdog on 11.28.12 at 7:39 pm

TFSA financial transaction tax? Could be one day. Watch out.

#187 Vamanos Pest on 11.28.12 at 7:40 pm

2 schools of thought:

“safe” assets (like GICs, bonds, etc) earn interest, taxed hard. these should therefore be in the TFSA to maximize the tax break on the returns. higher risk stuff (stocks) should be outside of tax shelter as the returns are capital gains and dividends, both of which get preferential tax treatment anyway, AND since the risk is higher, and one could actually take a loss, the capital loss can be written off (if and only if invested outside of tax sheltered accounts) on taxes to lessen the pain.

alternatively, the highest risk stuff (stocks) should offer the highest potential return, and therefore is a no brainer to have the investment with the highest return sheltered from taxes.

I find both arguments make some sense but lead to opposite strategies.

Thoughts?

#188 live within your means on 11.28.12 at 7:50 pm

TOT – I love this flash mob video – Ode to Joy. Beethoven’s 9th Symphony. Fabulous. Check out the little children copying the orchestra leader. I used to do that as a young child too. Grew up with classical music.

http://www.youtube.com/v/N33y0619EJg

#189 Vamanos Pest on 11.28.12 at 7:54 pm

Garth, good post but I have an issue with the fourth paragraph. You said RRSPs can be taxed “again”. Not exactly true as it was never initially taxed. The word “again” implies, well, “again”, as if it was taxed before.

Also, you said taxes will be higher. Isn’t that a little bit of, as you said in a comment section recently, protecting oneself “from laws that don’t exist”.

Finally, even if taxes go up, income in retirement should go down. No mortgage, no saving for college for the kids, no hockey skates every year for the kid(s), etc. So to actually pay more tax in retirement on RRSP money than I would now, the current middle tax brackets would have to be raised to above the current highest tax bracket.

Admittedly, it’s all kind of moot, as the answer to TFSA or RRSP is BOTH. I max out the RRSP every year, and with the tax savings I max out my TFSA.

#190 a prairie dawg on 11.28.12 at 8:15 pm

All of Canada’s largest banks have resumed raising dividends, but it remains unclear whether they will return to the pattern of increasing payouts every two quarters.

http://business.financialpost.com/2012/11/28/canadian-banks-who-will-raise-their-dividends/

#191 live within your means on 11.28.12 at 8:20 pm

#184 InLimbo on 11.28.12 at 7:13 pm

I’m 2nd generation also. Most of my friends in Mtl. were 1st generation refugees. We all worked our butts off for anything we ‘wanted’ as our parents couldn’t afford any extras. I paid for all my clothes other than school uniforms. Took apart my eldest bro’s slacks & made a pair for myself. Had a couple of rich kids make fun of me in HS cause they didn’t conform to the typical colour at the time. My grandma in DK became a seamstress when her husband died at sea. I sewed beautiful clothes for myself & others for many years in my spare time, until fabric & Vogue patterns became too expensive. Now it’s a chore as I have trouble threading a needle. Ain’t old age great.

#192 live within your means on 11.28.12 at 8:34 pm

PS to my post about Beethoven’s 9th flash mob. I have an external speaker on my PC which is amazing in it’s sound quality. I love all those flash mobs.

#193 Herb on 11.28.12 at 8:52 pm

#160 Regan,

What happens when you talk one of your clients into taking way more risk than they are prepared to take and they lose money as a result …

– HHHW @ #84

Perhaps HHHW chose her words poorly, but there is nothing conditional or “iffy” about saying “… when you talk one of your clients into taking more risk …” She is implying that he does. On the basis of personal experience, I can assure her that he does not. It’s up to her whether she apologizes or not, but what she implied is is wrong.

#194 Daisy Mae on 11.28.12 at 9:09 pm

#46Cory
Deposits are bank liabilities not assets. Amazing. — Garth
———–
“Really? Interesting. What is it classed as on the balance sheet when they lend out my cash I’ve deposited?”

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

You can walk into the bank any moment on any day and WITHDRAW your deposit. I call that a ‘liability’.

#195 Daisy Mae on 11.28.12 at 9:29 pm

#84 HHH: “Additionally, your assertion that I talk the people I care for into high risk is beneath you and patently wrong. Apologize or find another blog. — Garth”

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

Wow! HHH is off by a country mile. Garth does NOT set us up for high risk. Anything, but! He is very protective, careful and cautious.

I haven’t waded thru your long post, but you’re way off base if this is what you believe.

#196 Daisy Mae on 11.28.12 at 9:47 pm

#103 Live within your means: “Elder sis (70 next yr) has a very small co. pension & small amount in RRSP’s in mutual funds. She spent 1 hr with her local young, female RBC manager yesterday. BM was so friendly & didn’t intimidate her. Manager advised her to open an RBC TFSA account, buy GIC’s, etc. !!!!”

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

Wasn’t that clever? She listened to the nice lady at the bank….?

#197 Daisy Mae on 11.28.12 at 9:50 pm

#104salonist: “Most Canadians invest with their heart”
“The report also found that many Canadians are unaware of how to make an investment and lack the confidence to do so.”

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

So…they need a financial advisor. Duh!

#198 craig on 11.28.12 at 9:58 pm

Add in the tsunami of the very frail demographic
with overwhelming health conditions straight ahead,
it’s beyond worrisome.

Heard a rumble just now on CTV that our favorite
Finance Minister may be getting ready to depart.

#199 live within your means on 11.28.12 at 10:30 pm

#103 Live within your means: “Elder sis (70 next yr) has a very small co. pension & small amount in RRSP’s in mutual funds. She spent 1 hr with her local young, female RBC manager yesterday. BM was so friendly & didn’t intimidate her. Manager advised her to open an RBC TFSA account, buy GIC’s, etc. !!!!”

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

Wasn’t that clever? She listened to the nice lady at the bank….?
……………….

Yep. Love her dearly but not worth my while explaining a few things to her. Plus, she’s been a shopaholic since her 20’s. She was your ‘Princess’.

#200 Derek R on 11.29.12 at 12:13 am

#23 Cory on 11.27.12 at 10:40 pm wrote:
Really? Interesting. What is it classed as on the balance sheet when they lend out my cash I’ve deposited?

Steady on with the assumptions, Cory. Banks never lend out the cash you’ve deposited. If you want that to happen you need to deal with uk.zopa.com, http://www.prosper.com or the like. Instead Banks use your cash deposit as reserves to cover loans that deadbeats might not pay back. That’s why they are able to repay your deposit without having to call their borrowers to say, “Sorry pal, Cory wants his money back so I’m calling your loan in right now”.

And yes, Garth is quite right. When you save money with a bank it’s an asset on your balance sheet but it’s a liability on the bank’s balance sheet. Likewise when you borrow money from the bank, it’s a liability on your balance sheet but it’s an asset on the bank’s balance sheet. That’s why banks want to make as many loans as possible with as few deposits as they can get away with. More assets, fewer liabilities.

#201 randman on 11.29.12 at 2:00 am

“You can walk into the bank any moment on any day and WITHDRAW your deposit. I call that a ‘liability’.”

Again Daisy Mae in your attempt to suck up to Garth you are wrong!

If you try to withdraw say $10000 cash on a Friday afternoon without giving them notice…good luck!

Please start your brain motor before you engage the clutch!

#202 Toon Town Boomer on 11.29.12 at 4:08 am

Chickenlittle on 11.27.12 at 10:08 pm
Can you post something on how to find a good advisor, besides yourself? I want to start investing, but I do not know where to go. I do not trust any bank that will give out $600,000 mortgages with 5% down, so why would I ask them for advice? Maybe Smoking Man will know….

I would also like to know how to go about this.

#203 Daisy Mae on 11.29.12 at 11:10 am

#201 RANDMAN: “If you try to withdraw say $10000 cash on a Friday afternoon without giving them notice…good luck!”

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

“On a Friday afternoon”? Of course, they need notice. But you will get your money.

#204 Daisy Mae on 11.29.12 at 11:16 am

#201 RANDMAN — you just have to use a little bit of common sense. Okay?

#205 Daisy Mae on 11.29.12 at 11:22 am

#201 RANDMAN — Also, while Garth is quite capable of taking care of himself, defending someone who is often being unfairly attacked isn’t my idea of ‘sucking up’.

#206 Longterm on 11.29.12 at 12:16 pm

#180 bigstick

I already have a kid. We are stopping at one.

#207 DM in C on 11.29.12 at 1:45 pm

Apologize or find another blog. — Garth

Haven’t seen an apology, so guess HHH is in the dust bin.