The big R

WOMEN COVERS modified

Risk. It’s a topic we return to often on this blog because it surrounds us. Marriage is a risk. So is the stock market and childbirth. Real estate is risky, just like driving on the 401 or the Coquihalla. Borrowing is a risk, like teenagers. Or taking advice from helo parents. The biggest risk for most people is probably running out of money.

These days I’d say debt is one of the evils to avoid. Let me give you some examples.

Below is the amount of debt US investors are shouldering as they take part in the ongoing stock market party. It’s called ‘margin’ and it has a nasty way of piling up to new heights just before the music stops. Notice the peaks in the chart below – record borrowing just before the dot-com bubble burst, then again before the mess in 2008, and today.

This does not mean the Dow is going to shed half its value (a 15% correction sometime soon is more likely, before the next move up), but it does mean any meaningful dip in prices will mean lotsa margin calls – as the value of borrowed securities falls below the debt outstanding. Nasty.

MARGIN modified

Now, below, is the amount of debt your neighbours, brother-in-law and the girls at work have. (I’ve run this chart once before, but it bears staring at again.) On Friday we learned that accumulated mortgage debt in Canada has soared past $1 trillion, and that while the pace of borrowing has slowed down a little, every day, week and month, Canadians owe more. It’s at about 164% of disposable income, which is just shy of the record we set three months ago.

Also on this chart you will see CREA’s Frankenumber, giving a representation of the increase in house prices over the past nine years. That’s the reason the debt numbers have exploded. Like ever-more-costly stocks, people borrow more to buy what is increasing in value. But unlike stocks, real estate loans are far bigger, represent vastly more leverage and are against assets which can’t be sold in two seconds.

DEBT ETC modified

Finally, I can write all day about how delusional the indebted people of Vancouver are, how detached homes in 416 have increased 15% in a year yet ‘experts’ claim there’s no bubble, or how the housing market in Halifax just imploded in a warning for all, but you’re sick of me. I can feel it.

So here is a graphic little story of Sayed and Anna he told me in an email that arrived as I was having the Amazons work on my foot. “I’m trying hard not to be house horny, but I’m failing miserably,” he says. And Sayed wonders if a humble young couple making $370,000 a year will ever be able to afford a home.

“I’m 30, wife to be is 32. I work in medicine making approx 250k a year, she works in sales making approx 120k a year – depending on commission. We have no debt. We have saved about 350k, none in RRSPs. We live downtown, but I commute out to suburbia daily to work. She goes to meetings all over and travels a lot. We don’t really want to move to the suburbs but we want a place big enough for a family (her clock is ticking), which seems almost impossible (unless you put everything into a house) with our income in the city. This seems ridiculous with our income, because if we don’t feel comfortable buying a 3 bedroom place or a detached house in the downtown area – who the hell can? The market is not making sense in my opinion.

“Now we are thinking of A – buying a condo downtown for around 1 million. B – buying a detached house (again ~1 million). Now here is where it gets interesting – if we buy a property our parents will gift us 300k but if we buy nothing, we get no gift. So we are essentially doubling our net worth but putting ourselves at risk for a real estate crash – and eliminating our diversification. We’re of course getting tons of pressure from our boomer parents to buy a house.

“So what do you think we should do? Suck up the risk and buy? If you think we should rent – how much monthly should we be spending on rent, and will that get us a family sized place downtown?”

Self-indulged snowflakes with no idea how perfect their lives are? Or a serious warning to people who make a third as much and have mortgaged themselves to their corneas? Do the people around you who have bought houses with less attention than they put into a new pair of yoga pants have any idea of how much risk they’re taking? And how is any of this much different than financial investors pigging out on debt so they can chase stocks higher?

Advice for Sayed and his ticking squeeze? I already dictated my response and sent it off.  What’s yours?

279 comments ↓

#1 Stephen Covey on 03.14.14 at 7:14 pm

Fuurst!

Stop it. — Garth

#2 www.totalinvestor.com on 03.14.14 at 7:23 pm

Happy Birthday Garth.
How’s the leg healing?

#3 living_in_surrey on 03.14.14 at 7:29 pm

We are in similar situation with little more income and savings and we are considering buying in suburb. However we can’t justify buying even in suburb in BC so my advice would be to hang on and keep renting for next 6 months. Market is already getting interesting and in few months you should be able to get a deal even if not the best (which would take couple of years) and still get 300k from your folks.

#4 Trojan House on 03.14.14 at 7:36 pm

Question is, how does a 30 year old make $250K, even working in medicine? At 30, he must be barely out of med-school! I know docs make a lot of money, generally speaking, but geez! $250K @ 30, not bad.

However, it just goes to show you that someone may be book smart yet at the same time be financially illiterate.

One other comment: Grow a pair of b*%s and make your own decisions – you’re 30 year old for goodness sake!

#5 The greatest fool on 03.14.14 at 7:37 pm

It did seem like a dilemma until I read about the 300K gift… at which point it becomes a no brainer. Buy the house and get on with your life. You have plenty of time to save and invest in a diversified portfolio.

350K is not a lot of money by Toronto standards but with a 600Kish downpayment you should be able to comfortably afford a house in the low 1′s and still be able to put enough away on the side.

#6 Trojan House on 03.14.14 at 7:38 pm

Question is, how does a 30 year old make $250K, even working in medicine? At 30, he must be barely out of med-school! I know docs make a lot of money, generally speaking, but geez! $250K @ 30, not bad.

However, it just goes to show you that someone may be book smart yet at the same time be financially illiterate.

One other comment: Grow a pair and make your own decisions – you’re 30 year old for goodness sake!

#7 May on 03.14.14 at 7:40 pm

First world problems.

#8 Ralph Cramdown on 03.14.14 at 7:41 pm

Buy the house, collect the gift, sell the house. They won’t disown you if there’s grand kids.

#9 diggstown on 03.14.14 at 7:43 pm

I would ask him if 300k is the value of his and his wife’s enjoyment of life.

It appears he is happy and has options right now.

#10 johnny d on 03.14.14 at 7:48 pm

1. Take all your money and put it into a single stock. Might I recommend Air Canada (ac.b)

2. Watch the riches roll in.

3. Buy house for cash

#11 Éric on 03.14.14 at 7:53 pm

Rent… Invest your money in something ultrasafe such as HydroQuébec bonds or Hydro Manitoba. They are liquid and when you need the funds, they will be easily available.

Find a house that you could easily rent for three years. Such houses, (large three bedroom downtown) are impossible to rent out. (everyone wants to own)

There is no sense in putting your folk’s money at risk for a house at this point. Let them keep the money and their offer will still be open when the market crashes.

When it does drop… Start throwing lowball offers… Initially sellers will be desparate until the market stabilizes…

#12 jean on 03.14.14 at 7:53 pm

So you told them to buy, right? With 350k saved and a 300k gift, they will have only a 350k mortgage on a $1 million house, which is less than one year’s combined gross income.

The amount of their down payment puts them in a vastly different position to the usual buyers with 5% down. They just need to target a neighbourhood that is likely to weather the downturn better than others (eg prime TO near a subway), plan to hold it for a decade, and not get divorced.

#13 Daisy Mae on 03.14.14 at 7:53 pm

“…if we buy a property our parents will gift us 300k but if we buy nothing, we get no gift.”

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

Whatever you decide, this ultimatum leaves me cold — “Do it my way, or no way”?

#14 Jus wonderin' on 03.14.14 at 7:54 pm

Are these folks related to Dwayne from Hamilton?

#15 Daisy Mae on 03.14.14 at 7:57 pm

“If you think we should rent – how much monthly should we be spending on rent, and will that get us a family sized place downtown?”

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

Unlikely.

#16 jan on 03.14.14 at 7:58 pm

WHY DON’T YOU ALLOW ME TO TALK ABOUT HIS RIP OFF AT COAST CAPITAL ??????????

Because it’s libellous. — Garth

#17 Waterloo Resident on 03.14.14 at 7:59 pm

Want to see a chart that shows you that now is the time to RUN away from stocks:
http://www.marketmonograph.com/goodman119/free.asp
Check out the chart named “SMART MONEY INDICATOR”, that one is flashing out a huge ‘SELL’ signal right now.

#18 Retired Boomer - WI on 03.14.14 at 8:00 pm

Tis the 14th Happy Birthday to our wrinkly bog host. In the US your AARP card validates today. Don’t know if there is a CARP card similar, but suspect so.

At 50 remember you’re 2/3 done my man. Now, hobble on down to the funeral parlor for an estimate.

Sayed, start looking for the house, but expect to be ale to drive a monster of a deal on a 1.3 suburban home with room for kids, and be in no hurry to buy prices are shaky.

#19 takla on 03.14.14 at 8:04 pm

they should stack 80% cash in their TSFA and buy some worthless relics[20%]gold stocks some of which by the way are up over 30 % since jan 1st.I d hate to be holding stock thru this weekend with whats happening in Ukraine/Russia/china .Precious metal charts look good with the instability happening in world events.Then id renegotiate with the parents to hold that offer for a yr or two as the property price correction continues.time to reduce risk!!

#20 AisA on 03.14.14 at 8:08 pm

They can afford to escape…….

AND THEY WANT TO SETTLE DOWN IN THE ARCTIC?????

Boggles the mind. It’s madness I tell you.

#21 bill on 03.14.14 at 8:11 pm

Happy 65th Garth!!!
you look far younger..must be the clean living and good attitude…
Thanks again man!
sayed take the loot and get real picky. take your time and spin it out.
you know: to far, to close, dont like the neighbours,funny smell….
if the Parents get antsy just say we dont want to make a fast decision with all that loot of theirs.
and while its [the valuta] is just sitting around : do what Uncle Garth would do and invest it wisely.

#22 BramptonSux on 03.14.14 at 8:12 pm

We’re considering borrowing on margin against our well-managed balanced portfolio to investment more into the portfolio. 7% annual returns minus interest at prime, plus the interest is tax deductable. Our advisor says none of this clients have ever considered it. Are we delusional to think that only home owners can leverage?

#23 jan on 03.14.14 at 8:14 pm

#17 jan on 03.14.14 at 7:58 pm
WHY DON’T YOU ALLOW ME TO TALK ABOUT HIS RIP OFF AT COAST CAPITAL ??????????

Because it’s libellous. — Garth

OkAY SIR. I will remove his last name next time i post.
Please don’t let me down because I’m losing my mind over this and don’t what i will do if i can’t share it with others.

#24 EvilTwinInEdmonton on 03.14.14 at 8:14 pm

BUY

#25 will on 03.14.14 at 8:15 pm

The parents don’t say you have to buy a McMansion. Take the 300 grand but buy the shackliest shack you can find. Maybe a dumpster somewhere north of Whitby, and commute. Put all your savings into it. You make a ton of money. Combine that with a diet of KD, and you will have a ton of money saved up in no time. Get the wife preggo asap. She can still work for another 9 months.

#26 jan on 03.14.14 at 8:16 pm

How I got robbed at Coast Capital Savings …Burnaby

The above credit union unfairly charged me nsf of $45 twice after having made mistake of putting my deposited funds in the wrong account.
Money was deposited into my savings account and not checking account and they refuse to admit that.
They also have two different stories regarding how the last deposit was made………
They ( at the bank ) said i did it online and not physically in branch and the main office does admit i did it at the branch but says they can’t do anything because the account is now closed.
They closed my account against my will yesterday, pretty conveniently i would say considering circumstances.
Also, i wasn’t able to access my banking website for banking because the security code hasn’t worked on it which they will also not admit.
The bank manager ( RICK LARDIZABAL ) humiliated me publicly and effectively robbed me of my savings.
Dear FIC, i am just a small little guy with no power going against a big canadian bank but make no mistake, I will make it my life’s mission to assure financial losses for this evil enterprise and am willing to fight them to the end.
They make me want to hate this country and its rip off ways.
I am planning to stand outside that bank with big banners alerting others of this disgusting business and its thieves.

#27 Mark on 03.14.14 at 8:17 pm

“a humble young couple making $370,000 a year” …

Another one of these examples of a “humble” couple making $370,000 a year .

Now that would put them in the top one percent of Canadian income earners …. or close to it.

They want to buy a property worth about one million and if they do they will be given a gift of $300,000 from their parents.

This leaves a mortgage at about 200% of their yearly income. ($700,000 mortgage on a $370,000 yearly income).

Actually less than 200%.

Life is so tough for these people …. wow … most Canadians could only dream of this sort of ratio.

Cry me a river for the other 99%.

Stupid examples.

#28 Shawn on 03.14.14 at 8:19 pm

Debt to Income Ratios

Referring to mortgage debt…

It’s at about 164% of disposable income, which is just shy of the record we set three months ago.

*****************************************
Oh dear!, that’s a LOT higher than what some call the rule of thumb of 3 times income which is only err 300% of income. wait a minute…

The chart is misleading due to inconsistent right and left hand scales. A common ruse by those who wish to mislead.

Is a trillion a lot? can’t tell without context…

Of course debt to income rises when interest rates fall. Called supply and demand. Cheaper money, more demand…

Buy banks stocks and go back to sleep…

#29 TakingResponsibility on 03.14.14 at 8:21 pm

Advice: Just Do It! Get the money gift and buy, buy, buy.
Make the wife happy. Make the parents happy. Make the Seller happy.

YOLO, right Doc? (or is that you only die once…?)

I hope everyone in your type of position happily buys. Buy, buy, buy. Now is the right time to buy.

#30 Don on 03.14.14 at 8:21 pm

I think the answer would be obvious if the $300K was falling out of the sky. It’s not. It’s in the pocket of loved ones. I wouldn’t feel any better blowing their money than I would my own right now. How much risk are these parents putting their own retirement plans at to offer this money?

#31 T.O. Bubble Boy on 03.14.14 at 8:21 pm

Buy a $650k house in the burbs in cash (near schools you want and/or near parents for free babysitting), then HELOC a tax-deductible investment loan to diversify back into other assets.

Then, since there is no mortgage to pay and incomes are so high, put a TON away while you figure out the kids part.

#32 Shawn on 03.14.14 at 8:25 pm

Jan, that $45 times two is not worth so much anger to you or the bank. They probably should have reimbursed.

Indeed you should protest outside with a banner, it should be fun. You may get a refund yet.

#33 jan on 03.14.14 at 8:32 pm

Thank you very much Garth
Best wishes to you and your significant others.

#34 TnT on 03.14.14 at 8:33 pm

Rule of 90

Age 90 – Age 30 = 60% into their house

They have 650 000 cash so 60% of that can be used for Down payment = 390 k

390 k as a down payment would only be using 40 k of their own money as the 300 k was a gift.

I recommend a fixer upper around the $700 to $800k mark, use $390 K as down payment and put some sweat equity into the home before they start family.

PS… best to rent in your choice of neighborhood before buying just to ensure its a good fit.

#35 zee on 03.14.14 at 8:36 pm

hi Garth
H-bday. Yours today and mine tomorrow.

Can you explain why the amount of new mortgages is almost half of what it was last year but sales and prices are up. I think I know why but want to see what you have to say about it.

#36 G Michael Peacock on 03.14.14 at 8:37 pm

Come on garth!!!!
Average gross toronto takehome, Less than $100000.
If this is true….then I say buy a great 4 bdrm bung in the rouge for 700000, pay off remain mortage in 1 yr. Live in metro.

#37 triplenet on 03.14.14 at 8:38 pm

I shared your story with my business associate.
He said that the reason we have a winter residence in Costa Rica and an airplane is because people like Sayed need our advice.
We too are entitled to our entitlements.
Say hi to Sayeds parents.
……..and take his pulse.

#38 FormerSaskie on 03.14.14 at 8:38 pm

If the house you buy now loses signficant value in a falling real estate market will that loss of value bother you? If so, then wait a while to buy.

You are asking for advice so my guess is that you are not comfortable with being pressured into buying now. Consider how your quality of life will be affected when you are making big payments on an asset that is falling in value.

#39 Smoking Man on 03.14.14 at 8:53 pm

Ha GARTH hit 50.

First come the reading glasses.

Then, then. You look down, hello, yo. I’m talking to you. Coma.

Dorothy will reasure you, it’s OK Honey..

Ha. It’s not OK….

#40 Goldygoldbug on 03.14.14 at 8:54 pm

You always seem to think the debt level of Canadians is so dire yet you continue to pass off the Americans and their government dept as no big deal. If you are paying attention you will see that the tide is turning against your U.S. The rich of the world are dumping the dollar and even the Euro is getting the safe bid against your worthless U.S. fiat. You may get your 15% correction you predict for now but that will only keep the retail investor on the sidelines and they will not get caught this time. You should go on a vacation and mix amongst Americans and ask them how things are going in their city( which I have done recently) and see how great this U.S. recovery is going. Only economists like yourself pay attention to the Wall Street BS and not what is being experienced by the average working stiff. Canadians are envied by Americans for our healthcare system and our banking system. They have no faith in their government and that is more dangerous than any number you preach about how indebted Canadians are.

#41 Dienekes on 03.14.14 at 8:56 pm

@10 johny
You figure AC.B will have a great 3,&4 quarter this year?
Dumped mine bought FCU

#42 Frustrated Kiwi on 03.14.14 at 8:58 pm

Absolutely don’t buy a condo. In any normal market a condo is a depreciating asset (because land is a small portion of the cost). It is possible to have a condo price crash without the rest of the market – Auckland had one about a decade ago. Last I saw, Vancouver condo prices hadn’t moved anywhere in real terms for about five years. Finally, sounds like you don’t want to raise kids in a condo – the transaction costs on moving are huge and often underestimated.

Consider starting working on kids right away. Tell the folks that you are and that you don’t want the stress of buying affecting your chances. That should keep the $300k on the table. Also, imagine if you bought the suburban home and found yourself in the small minority who can’t have kids. Rattling around in a big home reminding you of it – why take the (small but unnecessary) risk? Kids are great and younger is better for parenting.

If you do buy then buy the cheapest home you can see yourself living in for at least five (if not ten) years. You can move up if the market corrects or you have saved enough.

My 2c.

#43 Keith in Calgary on 03.14.14 at 9:07 pm

My honest advice ?

Seriously ?

If I was 30 and making $250K a year in medicine I wouldn’t have to chase skirts. They’d be coming after me.

Do not breed, for that is an immediate 18 year mortgage all it’s own, get divorced from your two legged debt anchor as soon as physically possible, and enjoy your younger years.

I didn’t get married until I found a truly intelligent woman……and that was when I was 41. Went thru over 100 in 10 years (that was fun) and eventually found one without trying. I’m almost worth a million now, completely liquid, no kids ever, and no mortgage.

Wanna trade ?

#44 DreamingnTechnicolour on 03.14.14 at 9:16 pm

Canadians should get ready…

http://www.mississauga.com/news-story/4410107-new-zealand-raises-interest-rate-to-2-75-per-cent/

#45 what a bubble? on 03.14.14 at 9:21 pm

Garth, can you explain what is this:
http://m.research.stlouisfed.org/fred/series.php?sid=WMTSECL1&show=obs&
Does that mean that foriegners are selling US Treasury Securities in massive amount? Looks strange…

#46 eat pie on 03.14.14 at 9:22 pm

Jan
If thats the worst thing to happen to you, then consider yourself extremely lucky! Life is far to short. Have a few drinks

#47 Nemesis on 03.14.14 at 9:23 pm

#FirstWorldProblems #OfferedWithoutComment

http://youtu.be/hFuLSB73ciU

http://youtu.be/avWKXAg330o

#48 Calgary Conditional Owner on 03.14.14 at 9:24 pm

I have bad news for you, Sayed: you won’t find what you need in your residential status. If your fear of doing anything in life is so paralyzing as you described, owner or renter, you’ll always be miserable. Don’t take money from your parents, it will be an obstacle on your becoming a man (meant as a decision-making, don’t-get-orders-from-others adult).

#49 gtaguy on 03.14.14 at 9:25 pm

Seriously, these are the people asking advise from Garth? They make $370k a year, have $350k saved and parents willing to chip in $300k and worried about a possible 10-20% correction on a house and in their early 30′s. Even these people are thinking of a house as an investment and not a place to live. They are young who cares about a short term 10-20% correction when they are planning to stay long term and make that kinda income. Besides if Toronto corrects it will probably bounce back faster than other markets in Canada.

Just bought a place in Burlington. Yeah I know house prices may correct. But I didn’t plan on flipping my house every 5 years or so. So I think long term I will be just fine.

#50 withdraw today, avoid the run on 03.14.14 at 9:25 pm

Jan, maybe you should complain to higher levels at that bank, later the government, later , ‘Coast Capital sucks’ videos on youtube or whatever

#51 I'm stupid on 03.14.14 at 9:27 pm

They’re best move would be to wait until the winter to buy with a 90 day closing. This will allow them to save another 100k making their total savings and down payment 750k. Buy something worth 1millon, with a 250k mortgage then pull 500k out as an investment loan. This will give them a 750k mortgage, diversification and one mama of a tax deduction, that they need given their respective tax brackets.

#52 pinstripe on 03.14.14 at 9:31 pm

http://www.edmontonjournal.com/business/commercial-real-estate/Lamphier+Signs+pointing+Melcor/9620160/story.html?__lsa=05bb-4bcf

#53 MrHulot on 03.14.14 at 9:31 pm

Rent, but tell the parents you bought, pocket the 300K, buy gold, his and hers Mercedes and one crazy weekend in Las Vegas. You can keep this charade going on forever.

#54 Panhead on 03.14.14 at 9:33 pm

#27 Mark on 03.14.14 at 8:17 pm

Cry me a river for the other 99%.

——————————————————————-

I’m pretty shure that’s in the Ukraine …

#55 sasquatch on 03.14.14 at 9:33 pm

Sayed, my man, RENT A HOUSE. Yes, believe it or not, a house can be rented. With your income; a really big nice house for WAY LESS than buying.

You keep your diversity, still be able to put money to the side, no financial risk, and still have a big fancy place for 8 babies. What is not to like.

#56 Smoking Man on 03.14.14 at 9:49 pm

What is self, it breaths, eats, goes to bathroom.

Everything else is acting, playing a role.

What influences our role, the characters we play in life. We are all made of the same star stuff.

Yet, some end up on skid row, others ceo of big banks.

It’s all self worth.. If you think of yourself as less than, you will adopt the character.

Walk around with the attitude your shirt is perfume, you will go far.

It’s simple yet so hard for normals to understand.

#57 Windsorhouse on 03.14.14 at 9:51 pm

I’m in a similar situation where my wife and I make $400,000 combined per year. We want to buy on the lakefront in Oakville but should we delay? We have no kids yet but wife wants like 4 so income will drip to $300,000. Our risk is she works at the same place as me and we could both get let go but the bright side is we are with the provincial hydro utility…so unlikely. She got a job right after high school in the mailroom and moved up while I had to get a degree. She’s 27 and I’m 33 so many earning years ahead I hope. Any advice?

Use more adjectives. — Garth

#58 Vangrrl on 03.14.14 at 9:53 pm

Happy birthday Garth!
Her clock is ticking?? She’s 32. Not to mention there is plenty of evidence these days that older fathers increase the risk of kids having autism, bipolarism, schizophrenia, etc. So it’s not just her problem. But really, chill out. Better yet, adopt. Make a difference in an unwanted child’s life instead of just adding to the stupidity (which is too easy really :).

#59 Ilona on 03.14.14 at 9:57 pm

1) Buy a 2-bedroom stacked townhouse near Eglinton West subway and Allen Road (the best of both worlds): http://www.rp4u.ca. Last time we checked, they still had two units with roof top patios for $450K. Nice community (we’ve been living here for almost 16 years), the project is mostly sold out to young professionals who work downtown but want more space for the money. With parking and locker included and at $380 per square foot with future Eglinton LRT, the prices will go up for sure (even when they drop everywhere else).

2) Invest the rest of the money. Live there for 5 years, have one child, see if you’re willing and able to have more. Sell it to my daughter for $500K+ – she should be out of medical school by then, debt-free, and hopefully would still want to live near us (and yes, we’ll provide the downpaiment – as our parents did for us.)

3) Buy a bigger house of your dreams – and whatever you do, enjoy your life! :)

#60 Not an economist on 03.14.14 at 9:59 pm

Compared to the general population of Canada, how many standard deviations from the mean is this couple in terms of household income?

Same question again, but compared to other Canadian couples in their early 30s.

I’m sure both of them worked hard to get their careers to this point. It’s not their fault our economy is structured the way it is. I bear them no ill will whatsoever.

But while perfect equality is indeed a laughably stupid idea for many reasons, an inequality this large is – in my opinion – an injustice. I’m not talking about these two in particular, I’m talking in general.

While I’m sure Garth asked us what we think Sayed should do as a thought exercise intended for our benefit, I find the question offensive given how obscenely large the income figures are. Sorry. I genuinely believe that given Sayed is a doctor he has no fears whatsoever of losing his job or taking a pay cut. Unlike many others his age, he will not be discriminated against, he will not be outsourced, he will not ever have to type up a resume or be asked to “market himself” as if he was a product and not a person. He basically doesn’t have to ever account for that kind of risk.

The question of whether he should buy a home, take the parents’ 300 grand, and knock up wifey right away is immaterial. As long as he keeps his conspicuous consumption in check, he really can’t go wrong. Save 10% of that massive income and get advice from a quality fee-based financial advisor, and you’re set for life.

I loved the pic tho, that’s DEFINITELY something I can relate to.

#61 Hickster on 03.14.14 at 10:05 pm

@ Trojan House

Question is, how does a 30 year old make $250K, even working in medicine? At 30, he must be barely out of med-school! I know docs make a lot of money, generally speaking, but geez! $250K @ 30, not bad.

That’s pretty standard for specialties. I finished residency recently as well, at just past 30 years. I make about as much as him and his wife together. Those are the Canadian rates held down by government pricing. In the US add 40 – 80%.

#62 Mark on 03.14.14 at 10:10 pm

“my wife and I make $400,000 combined per year.”
“Our risk is she works at the same place as me and we could both get let go but the bright side is we are with the provincial hydro utility…
“She’s 27 and I’m 33 so many earning years ahead I hope. Any advice?”

Yeah, bank every last dollar you can, because that sort of compensation is completely unsustainable. There are enormous numbers of very qualified professionals who could do your jobs for probably half as much who are probably beating on the doors of wherever you work trying to find your job. Seriously, how much do you really know at 33?

#63 James on 03.14.14 at 10:12 pm

#49 gtaguy

Why on earth would you not want a 20% discount on a house? I have to laugh when people say “if you are holding long term then price doesn’t matter”. It certainly does.

You can do a lot with that amount of money, such as fund vacations to escape the horrible weather.

#64 Smoking Man on 03.14.14 at 10:25 pm

DELETED

#65 Ret on 03.14.14 at 10:26 pm

They obviously see Toronto RE as a risk free, ever appreciating asset. With $650 down, they should go all in and be thinking $1.5M.

They might get a big surprise down the road but they have extraordinary incomes for their age so why be concerned?

I am concerned about the parent’s situation. Parents who gift money to their adult children who are in relationships, need to consult a lawyer to do a little CYA (Cover Your A$$ets?) if it all blows apart.

Gifting $ is not the way to do it. The gift will be on the table if these two decide that they don’t really like each other down the road. The Court will decide who ultimately gets some or all of the $ that you fronted that son or daughter with.

When we were consulting a lawyer regarding our PoA’s, Will, etc., he wisely did a quick overview of what had to be done to keep the family fortune (yeah, right) intact in the event that we ever gave any money to our child for any reason.

Basically any “loans” formally documented and witnessed, have to be cleared before any divorce determination of net assets. Your son or daughter will get your money taken out of the pile as it was an their outstanding debt still owing to you.

If the money goes to buy a house for the couple to both enjoy, I suspect that the situation may be greatly different and all assets will be considered joint property, loan agreement or not. See a lawyer. Definitely see a lawyer if you live in Quebec.

The courts don’t question the interest rate, payment terms, renewal dates/terms, etc. but whatever is agreed to has to be followed to the letter with a verifiable paper trail.

I’m not sure about how lawsuits, insurance claims, business losses etc. against the son/daughter would affect gifted funds. I regret that I didn’t ask.

The advice regarding the potential risk of cash gifts/loans to offspring was well worth the $500 alone. As a parent, I would be seeing a lawyer to get legal advice on how to properly set this up, if at all, before I handed over any money for any purpose.

If the parents have other children not getting equal funds at the same time, this could get real nasty. A helpful parental financial assist can quickly escalate into a family war when there is money on the table and other siblings feel slighted.

Good legal advice doesn’t cost, it pays.

#66 Dan on 03.14.14 at 10:36 pm

Easy! Buy a house in Montreal’s west island it’ll be half of what you pay in English Canada, and wait for after the elections chances are that it’ll be even cheaper deals to pick after the PQ goes into office. Added bonus: we need doctors here too + the politics are always interesting!

#67 351 Cleveland on 03.14.14 at 10:38 pm

My advice: Grow a pair, man up and stop the 1%-er narcissistic drama. If you decide to buy, be an adult and don’t take money from your parents. Shameful to even consider it with your income.

#68 Happy Renting on 03.14.14 at 10:40 pm

Congrats, Sayed and Anna, for being in a good situation.

More information would be helpful.

1) Are you both crazy risk-averse?
2) Do you parents need that 300k for retirement? That’s not just play money for them?
3) Does the 300k come with strings?
4) Is your 250k income prior to expenses for your practice (if any), or unstable (gov’t might reduce funding for what you do, or you can’t realistically practice for decades, etc.)?

Assuming no to all the above, it strikes me that you really want that house, you’re almost ready for it (seriously, sign the marriage contract before you buy a $1M+ asset together), and you’ve got money. You’re just afraid of buying an overpriced house, or buying then having the value crater.

The fix for those two fears: buy in the upper end, where there are deals (I think Garth cited the $1.5M+ range, which isn’t very heavily populated because people need to have real money at that price, not just CMHC guarantees.) And look for something in an uber-desirable neighbourhood (e.g. Forest Hill, Leaside, Rosedale), detached if at all possible. Detached in an in-demand area will hold its value the best.

Lock in at 3% for five years, then scale back your lifestyle and save and invest like mad. Wife works at least one more year before getting pregnant. DO NOT get divorced, stop working, or panic sell when the market corrects. Plan to raise your family in that house.

For goodness sake, make use of tax shelters (RRSP and TFSA). Unless you wife isn’t taking a year of mat leave per child and you plan to have nannies raise your children, her income is going to drop soon. Shelter yourself from some tax. What you pay each year in taxes is more than what many families take in as gross income.

Or, you could just do what Ralph Cramdown (#8) suggested. Man is wise. :-)

#69 Not an economist on 03.14.14 at 10:50 pm

#63, James

My man, the time value of money and opportunity cost are ignored by many when making calculations, leading to erroneous conclusions even for those few that are willing to make financial decisions on rationality instead of emotion.

I like you, James, so I want to share the names of a couple of great books that you might enjoy.

1. Why smart people do dumb things with money (psychology of finances)
2. Freakonomics (a fair bit of fluff for entertainment, but also some very very useful explanations for how certain things work)
3. Garth’s latest book (basic philosophy of personal finance, some saucy socio-economic commentary applicable to us Canadians, and some very entertaining demagoguery that makes some good points)

P.S. Garth, when is your next book coming out?

#70 Smartalox on 03.14.14 at 10:55 pm

And suggested spelling correction: in the first paragraph, might I suggest “Or taking advice from HELOC parents.”

Possibly more apt, particularly if there’s a 300k ‘gift’ being proffered.

#71 ValleyBoy on 03.14.14 at 10:56 pm

Well first off 30 and making 250 k a year and wife 120k. And bragging about getting 300k probably after getting out of med school with the bill fully paid by Mom and Pop.
First Give the 300 thousand to a charity and tough life out on a single income of 250 k while your partner stays home. But if this article is real and you have to ask for help when you have 650000 to put down on a house. Please consider taking less income from our finacialy overburdend healthcare system. Besides you got into medice for the joy of helping others not the cash right ?

#72 Trojan House on 03.14.14 at 11:00 pm

#61 Hickster

“Those are the Canadian rates held down by government pricing.”

Yeah, it’s no wonder we’re paying billions (rising exponentially every year) for healthcare in this country when new doctors, barely out of med-school, and without the many years of experience and wisdom of much older doctors, can make a 6-figure salary. Sorry the government is holding you back.

#73 degress dont buy inteligence on 03.14.14 at 11:02 pm

250,000 a year and he cant figure it out? please someone slap him.

#74 to_be_frank on 03.14.14 at 11:06 pm

My advice would be to transfer $25k each to individual RRSP accounts, which will result in tax relief of $20k+ between you. If the gift from your parents is not time limited, then rent and bide your time until price sanity returns to the market. When the time is right, cash in on the gift and buy, and consider augmenting your down payment with an RRSP withdrawal of $25k each under the Home Buyers Plan. If the parental gift is now or never, then I would use the spreadsheet Etienne graciously provided in yesterday’s post to assist in making a decision of whether to rent or buy. Factor in the gift, and a potential worst case capital loss on the property over a realistic holding period, say 30% over 10 years and mortgage rates averaging 3% more than they are today, or whatever you think is reasonable. If you could find a place for $700k that met your needs, then you could avoid a mortgage altogether, and the parental gift would amount to 50% of the purchase price.

#75 Brian Ripley on 03.14.14 at 11:07 pm

Well if investment cycles are any clue to timing, it may not be the time to buy real estate (even if the parents want to give you part of the down payment) in the hottest markets of Canada at the same time the stock market is at a cyclical high as well. Chris Kimble make a good case for caution:

http://www.chpc.biz/2/post/2014/03/rhythms-and-rhymes.html

Too many peaks at the moment not the least of which is margin debt that Garth provides a chart of above.

Older readers will remember that in the stock market slump in the early-mid 1970′s realtors spent a lot of time in coffee shops complaining about no-bid listings. When markets go concurrently bad… it gets ugly and can stay so for a significant period.

#76 Jon on 03.14.14 at 11:09 pm

Use 300k gift from mommy and daddy buy 450k condo, and keep cash invested, even if the market drops 30 percent sure they lose money but can upgrade to that million dollar pad for only 700k. Why do they need a house or three bedroom place with no kids? Keep current money invested.

#77 RichHill - RichVale Girl on 03.14.14 at 11:09 pm

С днем рождения!

#78 Dr.NickRiviera on 03.14.14 at 11:09 pm

It would be interesting to hear stories of average Canadian families who earn average family incomes (80-90k) barely scraping by. Why is it that every story on here is a couple making a combined income north of 300k+?

Enough about the top 5% already!

#79 Cici on 03.14.14 at 11:13 pm

HAPPY BIRTHDAY GARTH

and thanks for taking the time to post on this VERY SPECIAL day ;-)

Here’s a Harley story I hope you will love:

https://ca.shine.yahoo.com/blogs/pets/dachshund-left-shelter-heartbreaking-note-reunite-owners-181200430.html

Have a Most Lovely Day with Dorothy and the Amazons, and hope that ankle is healing fast and furious!

#80 tony bologny on 03.14.14 at 11:14 pm

Central banks around the world are now printing money virtually out-of-thin air, virtual money, in order to provide the requisite liquidity that severely stressed capital markets require. This money, however, never reaches the economy-at-large. It is instead fueling asset bubbles in global stock markets sparked by the speculative frenzies induced by the bankers’ excess credit.

#81 Nemesis on 03.14.14 at 11:14 pm

#TheBiggerR

http://www.youtube.com/watch?v=RVDyoCWz0vM&feature=share&list=PL210BD296981F9245&index=6

[ATimelyLiteraryAllusion:...“Many things I can command the Mirror to reveal,” she answered. “But the Mirror will also show things unbidden, and those are often stranger and more profitable than things which we wish to behold. What you will see, if you leave the Mirror free to work, I cannot tell. For it shows things that were, and things that are, and things that yet may be. But which it is that he sees, even the wisest cannot always tell. Do you wish to look?” NoteToSaltyDogz: Apologies. Far too much time spent this week immersed in the LookingGlass on your behalf. Unfortunately, sometimes the LookingGlass, "...also looks into you." Be well, Doggies.]

#82 Carpicker on 03.14.14 at 11:16 pm

First.

#83 jan on 03.14.14 at 11:21 pm

#46 eat pie on 03.14.14 at 9:22 pm
Jan
If thats the worst thing to happen to you, then consider yourself extremely lucky! Life is far to short. Have a few drinks

Its not the worst thing that ever happen to me, its just one of those things that put me over the edge.
When you consider the state of our economy and the way banks become rich at the back of us taxpayers by the way of cmhc and others it is exactly what makes my blood boil.
Do you blame me ?

#84 Vamanos Pest on 03.14.14 at 11:32 pm

Easiest one yet Garth.

Take the 300 grand and buy a house. Get over the 1 million CMHC limit to get rid of all the high-leverage hordes and find some value (which you can with the 300k from parents) Sales are WEAK in this price range and you’ll have bargaining power. The mortgage will be manageable (about 4-5k a month depending on how high-end you go) which is totally serviceable on your >30k per month income).

DON’T use your 350k portfolio. Your returns will vastly outpace the 3% you’ll pay in interest. And, keep contributing regularly (even after paying the grotesque mortgage, you should have money to spare to invest)

Risk? In a correction, you could go down a lot, but you wouldn’t be in trouble as far as refinancing or anything, so if your plans are long term, you’ll be fine.

#85 45north on 03.14.14 at 11:38 pm

Sayed when you say “our parents” you mean her parents – I don’t want to get personal but I’m assuming you and Anna have different parents.

Her parents like me bought 40 years ago, prices steadily rose, we have done quite well. They are their life experiences: a house equals security, wealth and children. Unexamined beliefs. The fact that you on this blog means that you are examining them. The die is cast Sayed. You are the man you are.

#86 Cici on 03.14.14 at 11:50 pm

#26 Jan

If it’s any consolation, I hate Coast Capital, and I too had a similar incident-but with Royal Bank (who I also hate). I was a student at the time, and the budget was tighter than tight. I put a stop payment on a cheque, and not only did they charge me twice, they let the cheque go through, and then tried to tell me that it was my fault (it was the only cheque I had even written within some two-month period, and they still couldn’t get it right). They only reimbursed one of the stop payment charges…I had to pay them a fee for them to not stop the cheque!

I didn’t have the money or time to fight it, and after several calls to several managers to no avail, I pulled all of my money out of that useless bank and closed my account. I will NEVER open an account or a mortgage with that institution again…no matter what!

Sorry, I know that’s not the most helpful answer…but if you have the time I would try to go through the ombudsman or a regulator, or get a lawyer if you have the money and the PROOF that the fault was not yours.

If not, pull your money out of the credit union, but please put down the protest signage – people will just think you’re a wingnut, so rather than getting your desired message across, you will just freeze your ass off and embarrass yourself for nothing.

If you can’t hire a lawyer, there must be some consumer protection agency in Burnaby that can hear and take on your case. Search consumers protection agency on the net, or try to find free legal aid if you qualify.

#87 Blacksheep on 03.14.14 at 11:52 pm

Shawn # 162, on 03.14.14 at 6:23 pm

“A bank’s lending capacity is limited by its debt and equity capital and not so much by cash on hand.”
———————————————-
In Canada banks are not constrained by capital reserves in any way (in the context of lending) due to 0% reserve requirements.
———————————————–
“Yes the banks TOGETHER with their borrowers and depositors can increase the money supply. Wealth is not however instantly created. Nor is inflation.”
———————————————–
We are discussing the banks ability and every day practice of creating ‘new broad money’.

The ignorant (unknowing) Cattle have no idea their signature triggers the above action, which undeniably, expands the money supply and by the law of demand and supply, is inflationary. Leave the term “wealth” out of this discussion as none is created.
———————————————-
“Banks do slowly but surely increase the wealth of their share owners, as do all profitable businesses.”

Agreed, share holders (investors) deserve ROI, but this talking point only attempts to confuse the actual discussion at hand.
———————————————-
“Dooming about “revelations” about banks and the money supply will not make you rich. Investing steadily in bank shares (eventually) will.

Winners Win and Losers Lose… Which path to follow?”
———————————————
No one exposing this secretive, yet highly relevant topic, is “dooming” anything.

Once one understands how this system works,

one realizes investing in bank shares my well be the smartest thing, one can possibly do.

Far to many simply don’t understand, our system needs to expand. We NEED new debts, to create new money expansion, as the fed can only carry the ball for so long.

You on the other hand have repeatedly attempted to hide these facts, now brought to us by the Bank of England.

I’m following the path of truth, can you make the same claim?

#88 Aaron30 on 03.14.14 at 11:54 pm

Mark #27 and Not an Economist #60

I totally agree. I am 30 (turning 31 soon) and this example is miles away from my reality (or any of my friends). I really can’t relate (or care) about this guy’s “problems”.

I would like some more representative examples from Garth.

-Aaron

#89 jan on 03.15.14 at 12:07 am

#56 Smoking Man on 03.14.14 at 9:49 pm
What is self, it breaths, eats, goes to bathroom.

Everything else is acting, playing a role.

What influences our role, the characters we play in life. We are all made of the same star stuff.

Yet, some end up on skid row, others ceo of big banks.

It’s all self worth.. If you think of yourself as less than, you will adopt the character.

Walk around with the attitude your shirt is perfume, you will go far.

It’s simple yet so hard for normals to understand.

Beautiful my man.
I had always low self esteem and i can totally relate.

#90 Dr. Bunsen Honeydew on 03.15.14 at 12:11 am

Ask your parents if their $300K gift to you can go into a diversified conservative liquid portfolio while you rent shelter with the income thus generated.

If they say no, they don’t deserve the money any more than you do.

#91 FRB on 03.15.14 at 12:12 am

Years spent in school and can’t make a decision. Smoking Man is right about the school system

#92 Vancity on 03.15.14 at 12:21 am

Hmm… why does it sound like the 300k from the parents is “free money” in the sense that you don’t need to be prudent with the money?

#93 rp1 on 03.15.14 at 12:39 am

Take the 300k and use it for the down payment on a detached house, because that is what’s best for your immediate family. Pay the mortgage, but invest your own money.

#94 bob on 03.15.14 at 12:48 am

@27 Mark. re: Cry me a river. Stupid Example.

I think you’ve missed the point. Read Garth’s article again. He was using this example to show how a couple with brains is worried about investments and diversification and a huge mortgage. The article used the example to ask the question
Do the people around you who have bought houses with less attention than they put into a new pair of yoga pants have any idea of how much risk they’re taking?

My advice to Sayed – if you want to buy on emotion, buy the darn real estate, you can “afford it”. But buying now is not a good time, as per Garth’s points on diversification, etc.

And if you are as prudent as and moral – don’t take the parent’s money. When you wife has kids, count on her income as zero. So you’ll make 250K before expenses and taxes… and even if you incorporate, you’d need a way to get the money out (maybe pay your wife)…. it still means a decade before you pay off the house on a 700K mortgage.

Or, save and rent a nice big house for the next 3 years. Bigger down payment, less interest.

#95 Mean Gene on 03.15.14 at 12:59 am

Poor little muffins.

#96 Grantmi on 03.15.14 at 1:12 am

#5 The greatest fool on 03.14.14 at 7:37 pm

350K is not a lot of money by Toronto standards but with a 600Kish downpayment you should be able to comfortably afford a house in the low 1′s and still be able to put enough away on the side.

Are you f@cking kidding me! $350K is not a lot of money by Toronto standards!

What Planet do you live on???

#97 groovin123 on 03.15.14 at 1:15 am

#43 : Keith in Calgary.

CLASSIC. So, so true.

#98 Spectacle on 03.15.14 at 1:30 am

Thanks Garth, birthday cheer too !

Um…Sayeed, please surrender any medical credentials you have: your not fit to make decisions that affect & effect human life/health! No, really, were serious here.

1) Take the $600k , use it as 20 deposits on 20 bits of real estate that you finance. Lose the #{%|>€£ family money like a chump .

2) learn a life lesson like rarely seen in Canada, as the implosion takes its grip. Enough said.

#26 Jan. Thanks for sharing with consideration. Pick your battles in life my friend. Perhaps get friends to do a fake tv crew deal with cameras etc, you with a banner a few times, but stay off of their property while doing it. Make it fun & funny, share the story again ( no names! ) .

Regards all

#99 shocked! on 03.15.14 at 1:57 am

Real Estate is not the enemy…it is often an integral part of a solid financial plan. If purchased wisely, it can offer not only monetary rewards, but also priceless intrinsic worth…from my vantage point, it is obvious that Sayed is comfortably able to both afford a home and continue investing in other ways…a tasty recipe for diversification!…and a wise way to minimize risk.

#100 MEANWHILE IN FRANCE on 03.15.14 at 2:27 am

Take a year off, travel the world. Jobs will be there when you get back. Get a perspective.

That’s what I would do. Actually, going on year 3.

#101 Lola on 03.15.14 at 2:37 am

Tried to google a picture that I saw another day in a mortgage broker’s (whose name I forgot) blog: “Stay debt-free and carry cash!”, but found this post instead (seems to be more fitting to the described scenario):

http://www.torontorealtyblog.com/buyers-resources/mortgage

Nobody buys a house in cash, and even if somebody had $1,000,000 in a suitcase, he wouldn’t buy a $1,000,000 house; he would buy a $3,000,000 house and hold a $2,000,000 mortgage.

With interest rates as low as they are right now, and banks and other financial institutions lining up to hand out money to borrowers, it’s no wonder why our real estate market is so strong!

My advice to all those prospective property buyers: Don’t waste any time—get a pre-approval NOW! How else do you know WHERE to start, WHAT houses to start looking at, if you don’t know WHAT mortgage amount you can get approved for?

Mortgage Basics

Ask yourself a few preliminary questions:

How much is your current rent?

Can you afford more than that per month?

How much money do you have for a downpayment?

Can your parents help you with a loan?

Do they have equity on their house they can “gift” to you?

Do you have an RRSP you can use?

A very basic rule of thumb for mortgage calculations is the following:

Every $100,000 of mortgage carries for a $600/month mortgage payment.

Example: a $300,000 mortgage means you will make an $1800 mortgage payment each month.

#102 Freedom First on 03.15.14 at 2:43 am

That is a very good question you have put in front of us Garth. All I can come up with for an answer is this:

I truly believe that Anna is so “Hot” that Sayed’s been so stimulated by his “houselust” for her, and that Anna has reciprocated with her “houselust” for Sayed, and in turn, poor Sayed has so overdosed on “house lust” with Anna that the wiring in Sayed’s brain has been so repeatedly short circuited, Sayed can no longer think for himself. Whatever Sayed and Anna do, Sayed’s brain will start functioning normally again once his “houselust” has been satisfied, and he realizes he has a multi-million $$$$$$$ mortgage, a housewife, and several kids. Most unfortunately, right now, Sayed can not see he has no problems.

Sorry Garth, best I could do. Hope you had a great birthday!

#103 saltpony on 03.15.14 at 2:49 am

I don’t have any financial thoughts for Sayed and Anna; they don’t actually have any real problems… They’ve got a set of options available with different value solution sets attached to them. Maybe I’d say this to them? Enjoy the best life you can. If family is important, and raising a family is important, and respecting the wishes of you elders is important, and being close to work is important, then go buy a house in the suburbs. If they do stay in the city clinging to that cherished adult city lifestyle, Sayed must remember that no one plays T-ball amongst $1M condos.. his kids won’t have neighbourhood friends. Once a month they could get the grandparents to sit while they book a beautiful downtown hotel room, try a new restaurant and take in a show.

I work in Cancer Care and thanks to my wonderful, tough and brave patients, I am reminded daily that living a good life is really the ultimate goal of being alive. I see people in their 30s and 40s lying on the white stretcher, yellow and gaunt. The quality of life is not so good at this point.. And then I think of the problems I’ve had.. like being dumped, or being fired, or losing my wallet or being bored or getting a speeding ticket… and I think.. these are all PRIVILEGES OF ABILITY. I am able to have these problems. These are actually very good problems to have and I can make choices to change the outcomes..

It’s not wealth that is important. It’s having choice and being able to participate fully in life that is important. Wealth is a tool that gives us broad choices and options. That is what Sayed and Anna have.

If you have health and you have choice (both supported by wealth), you will be able to live a good life.

xo
Saltpony

PS. Happy Birthday Garth,
9 weeks since you and the sidewalk had words. I hope the ankle is starting to set nicely. Get some coconut oil ($10, grocery store – aroma free, so you don’t smell like a coconut ha ha) and start rubbing your ankle like this: Lie on your back and raise your ankle up higher than your heart. Rub it, starting at your toes, stroke the foot, ankle and calf ending at the knee, in the direction of toe to knee. Do it yourself by lying on your back and bending your knee towards your chest or have someone do it for you twice a day. Knee and ankle higher than heart. Touch and gravity moves passive lymph out of there and speeds healing. Touch is amazing. Sorry; I know it’s unsolicited advice, but it’s good advice and it’ll heal tighter and faster if you do this. (My experience? 14 broken bones, numerous soft tissue injuries extreme skiing and racehorses and now public health care — Just like finance, they don’t teach this stuff in school.)

#104 Jane24 on 03.15.14 at 3:12 am

Easy – get out of Canada. Buy the house in the States or somewhere warm.

if this scenario is not a warning of where Canadian RE is heading, I don’t know what to say.

#105 Onthesidelines on 03.15.14 at 3:56 am

Who gives a shit about people making that kind of money in today’s world. Your example is irrelevant and offensive to most people who are trying to make ends meet.

As for risk, you left out the most important element which makes risk scary: control. Yes, many activities can be risky but the risk becomes more acceptable when one has a degree of control in mitigating the level of risk. The fear that most people have of financial markets is that no such control exists when one’s life savings are in the hands of others with an unknown level of integrity and knowledge.

You would be of more service to your readership if you were to accept that such fear exists and will not go away anytime soon, and give advice to ordinary folks with ordinary incomes on how to still be able to get ahead without having to exceed the level of risk they are comfortable with.

#106 late learner on 03.15.14 at 4:07 am

#5 The greatest fool on 03.14.14 at 7:37 pm
It did seem like a dilemma until I read about the 300K gift… at which point it becomes a no brainer. Buy the house and get on with your life. You have plenty of time to save and invest in a diversified portfolio.

350K is not a lot of money by Toronto standards but with a 600Kish downpayment you should be able to comfortably afford a house in the low 1′s and still be able to put enough away on the side.
___________________________________
His wife wil not have the same income when the baby/babies arrives.
And even if she goes back to work, babies/children cost and nanny is expensive.

#107 Stickler on 03.15.14 at 7:26 am

How about:

Self-indulged snowflakes with no idea how perfect their lives are

*AND*

a serious warning to people who make a third as much and have mortgaged themselves to their corneas

#108 Stickler on 03.15.14 at 8:03 am

…just because you can afford to pay $600 for a pair of socks doesn’t mean you should.

The 1 detail missing is -> Is it the parents expectation that they gift $300k and the snowflakes put in $300K as well?

Because if the parents gift $300k and the snowflakes go and buy a $400K condo there might be trouble.

…Why not move to the US and make $400K/year, pay less taxes and get a way nicer house for less money. That’s what many do.

#109 maxx on 03.15.14 at 8:14 am

Garth, you have done more than anyone ever has to help people understand money and become fiscally healthy.

You are one awesome soul.

#110 I'm stupid on 03.15.14 at 8:47 am

101 saltpony

Nice post!

#111 Sean on 03.15.14 at 9:01 am

Advice for Sayed.. keep renting, but put together a proposal wherein you snag the $300k for cash flow positive investment properties. Put $100K down on each of 3 multiples out in the nether regions of the COTU… beyond where you can see the smoke. Of course, while logical and sound, this is very unromantic.. your gambit will probably fail, and you’ll be left alone and destitute.. except for the $250k a year.

#112 Dude Duderson on 03.15.14 at 9:23 am

I guess I’m still trying to rap my head around the part where two people who make 350k a year don’t feel any shame about taking a 300k ‘gift’ from their parents.

#113 Sean on 03.15.14 at 9:25 am

#28 Shawn on 03.14.14 at 8:19 pm

———

Shawn, I hate to use such harsh language, but you are such a weenie! Please do yourself a favor and read the following entry on the branch of philosophy know as Relativism.. http://en.wikipedia.org/wiki/Relativism

Every comment you have ever made on this blog goes back to your fundamental lack of understanding of this concept. Relativism isn’t meant to paralyze the thinker, rendering him unable to make a single positive statement. It is a relevant concept when trying to allow for biases in observation. It is not relevant in all cases, especially when examining simple, quantifiable linear relationships.

So, in this latest example… debt to income… your philosophy biases you against any absolutes. You desperately need to reconcile the facts (absolutes) with your world view (relatives) so you turn to the “reason”.. low interest rates. The fact that people want or can have more debt at lower rates does not change the problem… nor does it negate the effects of debt being at absolute highs (in relative terms of course, per capita, hah).

In your example, then, debt just magically goes down once rates rise? Unfortunately, this doesn’t hold water… demand for new debt may indeed drop, but for the unfortunate holders of existing debt, debt in fact continues to increase, as the interest burden grows. This continues until something breaks.. as in the prior examples.. tech bubble, housing bubble, etc.

#114 TurnerNation on 03.15.14 at 9:28 am

A million dollar kando? For $5000-6000/mo about 1500sq feet of kando can be rented at Ritz Carleton or Shangri-La hotels, in Toronto. 5*.

$300,000 would buy up to 60 months (5 years!) of trouble free rental living. But I bet the grands want a bambino. House up or get out – love ain’t free son.

#115 Brutus on 03.15.14 at 9:33 am

BEWARE THE IDES OF MARCH

Just heard the Ukrainian ambassador to Canada on CBC radio this morning describing his expectation that there will be a full blown shooting war with Russia and Ukraine is attempting to raise a contingency force of 60,000 soldiers asap.

They and their allies, Canada included, plan to disregard the outcome of tomorrow’s referendum, floating instead the idea of a “legal” referendum to be held later.

Will the Russians hold off to wait for that, while they conduct intensive military exercises just a few kms away and are planning to waltz in after tomorrow’s “victory”? What do you think?

Talk about your Black Swan event :(

Today also marks the anniversary of the day in 1939 that Germany invaded Czechoslovakia.

http://www.smithsonianmag.com/history/top-ten-reasons-to-beware-the-ides-of-march-8664107/?no-ist

Many of us in this world may soon wish we were flying aboard Malaysian Airlines, somewhere, anywhere, rather in the political and financial world that is about to unfold.

#116 Julia on 03.15.14 at 9:34 am

“the girls at work” haha! Just how old are you Garth? The last time I heard that phrase was my mother talking about her work life back in the 1950′s. Or was the last time actually on an older episode of Mad Men, like before they got to 1960. Maybe you picked it up from some conservative caucus meeting banter.

#117 Ralph Cramdown on 03.15.14 at 9:38 am

“It would be interesting to hear stories of average Canadian families who earn average family incomes (80-90k) barely scraping by.”

“Your example is irrelevant and offensive to most people who are trying to make ends meet.”

“Cry me a river for the other 99%. Stupid examples.”

The first ten or twenty stories about non-poor households that spend all they earn (or more) are entertaining, as we judge ‘em for spending too much on coffees, or interest charges, or telecom bills, or car leases, vacations or hockey camp. After that, they all sound the same. And don’t teach us any lessons because THESE FAMILIES DON’T HAVE MUCH MONEY TO INVEST.

Sentence them (or the blog readers who are interested) to a year or two with the jar lady or Mr. Money Moustache. IF they develop the willpower and self-denial to accumulate a surplus, we can talk about what to do with it.

Sayed’s case is interesting because he has money, and thus choices on where to invest it. If it bugs you that he’s sitting on so much so young, just pretend he’s 55 and forget about the biological clock bit.

#118 I'm stupid on 03.15.14 at 9:40 am

I can understand the frustration this couple is feeling. The problem isn’t income as they make a ton. It all comes down to interest rates.

With interest rates being so low it allows lower income households to buy things they couldn’t normally afford. They can own nicer cars, bigger homes and live way beyond their means. This is because they finance everything and make monthly payments. In the short term this works well for them because they have more than they could normally afford. In the long term they get wiped out under the pressure of increased debt.

Now look at high income earners. They don’t use credit for discretionary spending. This means they pay for everything with actual money but are in competion with for goods and services with individuals that couldn’t afford the goods or services without cheap credit. In the short term they are priced out even with high incomes. In the long term they’ll be fine.

Think of interest as a scale. The rate of return must equal the risk. With monetary intervention keeping interest rates artificially low the scale is unbalanced. Now the market is trying to correct it self by price appreciation. You can see this with rising prices in consumer staples. Your gas is more, groceries cost more etc etc. This occurs because profit margines increase as consumption rises. This occurs because short term demand overwhelms supply.

There is only one of two outcomes in this environment.
1: a correction rebalances the market. This will happen when households reach they’re debt limit and can no longer afford to take on new debt

2 a rise in interest rates. This will have the same effect as scenario 1.

The point is that it’s a race to the bottom at this point. The outcome will gut the middle class in this country as it did in the rest of the western world. We were late to the party but don’t be fooled party we will.

#119 Bottoms_Up on 03.15.14 at 9:52 am

Please Garth that is one of the easiest solutions, they want a house and family, they will have $650k cash to put down, and will end up with a mortgage of 400k, close to their yearly family income.

No brainer (even if prices crash 50% they are still above water).

Obviously this is a personal choice and not made simply by “what path forward maximizes my family’s net worth”. It’s emotional, and based on a gift of cash and wanting to raise a family.

#120 Tiger on 03.15.14 at 9:55 am

Smoking man !
Ignorance is bliss, they will smell you from a long ways away, like a sewage treatment plant!
I know you are tihs.

#121 Hickster on 03.15.14 at 10:05 am

# 71

“Yeah, it’s no wonder we’re paying billions (rising exponentially every year) for healthcare in this country when new doctors, barely out of med-school, and without the many years of experience and wisdom of much older doctors, can make a 6-figure salary. Sorry the government is holding you back.”

1) Those salaries are after residency, not med school.
2) I’m assuming you think rationally and can predict the results if government policy reflected your sentiments in this post. I can therefore only conclude, that you have a great love for wait times and it would please you to lengthen them greatly.

#122 Shawn on 03.15.14 at 10:12 am

Bank Reserves and Money creation

Blacksheep at 85 responded to me

In Canada banks are not constrained by capital reserves in any way (in the context of lending) due to 0% reserve requirements.

***************************************
I don’t take issue with much of the response… we agree buy bank shares … borrowing increases deposits therefore money supply (but I am not sure it increases inflation)

In the part of the response

#123 Shawn on 03.15.14 at 10:18 am

Bank Reserves

Blacksheep at 85

In Canada banks are not constrained by capital reserves in any way (in the context of lending) due to 0% reserve requirements.

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

Do not confuse the cash reserve (an asset) which may be 0% legally with the capital reserve or capital ratio (invested debt and equity on the liability and equity side of the balance sheet, which is regulated at around 8% and which is THE constraint that prevents a bank from lending endlessly. They generally don’t like to issue new shares and so they tend to grow with retained earnings.

Also you ask if I seek truth, yes I seek truth, justice and fairness along with seeking to get stinking rich.

#124 Shawn on 03.15.14 at 10:22 am

I’m a Weenie

Sean at 115 called me a weenie followed by some words about relativism and argues that points I never made are wrong.

Sean, that is Mr. Weenie to you.

I saw your post, and ignored of course the link.

Feel better?

#125 Daisy Mae on 03.15.14 at 10:43 am

#75 Jon: “Use 300k gift from mommy and daddy buy 450k condo, and keep cash invested…”

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

This plan sounds good.

I also feel you should take #64 Rets’ advice to heart re ‘gifts’ and possible legal ramifications.

You don’t need a 3-bdrm anything at this point in time.

#126 Steven on 03.15.14 at 10:48 am

And Sayed wonders if a humble young couple making $370,000 a year will ever be able to afford a home.

Garth if two people earning that kind of money can’t buy a home then Canada has had the biscuit.

#127 Conservatives HATE democracy and freedom on 03.15.14 at 10:53 am

Brutus on 03.15.14 at 9:33 am
BEWARE THE IDES OF MARCH

Just heard the Ukrainian ambassador to Canada on CBC radio this morning describing his expectation that there will be a full blown shooting war with Russia and Ukraine is attempting to raise a contingency force of 60,000 soldiers asap.

They and their allies, Canada included, plan to disregard the outcome of tomorrow’s referendum, floating instead the idea of a “legal” referendum to be held later.

Will the Russians hold off to wait for that, while they conduct intensive military exercises just a few kms away and are planning to waltz in after tomorrow’s “victory”? What do you think?

Talk about your Black Swan event :(

Today also marks the anniversary of the day in 1939 that Germany invaded Czechoslovakia.

http://www.smithsonianmag.com/history/top-ten-reasons-to-beware-the-ides-of-march-8664107/?no-ist

Many of us in this world may soon wish we were flying aboard Malaysian Airlines, somewhere, anywhere, rather in the political and financial world that is about to unfold.
—————————————————————–

The Conservatives are a bunch of tax and spend spend spend right wing crack heads who are supporting Neo-Nazi in Ukraine . The Conservatives HARE democracy which is why they hate a legal referendum. Conservatives are crack smoking crack heads and this has been proven to being true.

http://rt.com/news/us-aid-ukraine-illegal-202/

#128 Daisy Mae on 03.15.14 at 10:57 am

#85 CiCi: “If not, pull your money out of the credit union, but please put down the protest signage – people will just think you’re a wingnut, so rather than getting your desired message across, you will just freeze your ass off and embarrass yourself for nothing.”

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

I agree, #26 Jan — just let it go. Chalk it up. The only person you’re hurting is yourself. This sort of things happens all the time, to all of us, sooner or later.

#129 crowdedelevatorfartz on 03.15.14 at 11:21 am

@#26 Jan
Coast Capital is a Trust company not a bank.
But instead of splitting hairs.
Why don’t you complain to the media, an ombudsman, your local MP, etc., etc., etc…..
How much money are you talking about? A hundred bucks? A thousand bucks?
If they’re going to take your money then make them pay in THEIR time by sending letters to the chief executive officer, the vice president, etc.etc.etc …… Every letter you send them requires someone to read and respond…..

#130 crowdedelevatorfartz on 03.15.14 at 11:28 am

Back to the topic at hand.
Sayeed should rent in the inner city for at least a year. He might find that they hate living downtown. I think most parents would appreciate a married couple that is cautious with their cash than someone who jumps at the first offer of “free” money.
Nothing is free, there are always strings attached…..

#131 Ralph Cramdown on 03.15.14 at 11:30 am

#115 Brutus — “[Ukraine] and their allies, Canada included [...]“

Don’t get the wrong idea, Brutus. That cool nine figure cheque that Harper wrote to the Ukrainians wasn’t foreign aid, it was to swing a few wobbly domestic Federal ridings with a lot of ethnic Ukranians. And perhaps to cock a snook at Dalton McGuinty, showing him the better way to do such things.

The only principle driving the Harper Government’s foreign policy is domestic electoral advantage.

Since you were last here claiming a NATO treaty with Ukraine entitled them to mutual defence (that was you, wasn’t it?) I’ve seen claims elsewhere that the Budapest Memorandum provides for same, but it doesn’t (and Ukraine wasn’t even a signatory). The Ukranians are up the Don River without a paddle.

#132 crowdedelevatorfartz on 03.15.14 at 11:32 am

As for the quote in the photo at the top.
True.
However, I have yet to find a woman that will not relinquish “control” of the sheets after a Dutch oven….
Just sayin.

#133 Alex n Calgary on 03.15.14 at 11:33 am

We’re not tired of hearing about housing, but I am tired about hearing of the top 1% of people in their age category for income, more people making ludicrously more then anyone else I know at that age, sounds fishy again..

#134 Paully on 03.15.14 at 11:44 am

Run! Leave the $300k! It is a trap! Do you honestly think that will be the end of it? Next they will be picking the neighbourhood, then the house. Then they will choose the schools your kids can go to, the club you have to join, the car you drive, etc. Seriously dude, tell them that they cut the cord when you were born! If you take the dough, they will never stop trying to run your life! Move across town or better still, across the country! You don’t need that kind of baggage!

#135 BillyBob on 03.15.14 at 11:50 am

QUOTE:

“I can understand the frustration this couple is feeling. The problem isn’t income as they make a ton. It all comes down to interest rates.

With interest rates being so low it allows lower income households to buy things they couldn’t normally afford. They can own nicer cars, bigger homes and live way beyond their means. This is because they finance everything and make monthly payments. In the short term this works well for them because they have more than they could normally afford. In the long term they get wiped out under the pressure of increased debt.

Now look at high income earners. They don’t use credit for discretionary spending. This means they pay for everything with actual money but are in competion with for goods and services with individuals that couldn’t afford the goods or services without cheap credit. In the short term they are priced out even with high incomes. In the long term they’ll be fine.”

——————————————————————
This is a very insightful comment, and sums up my own situation exactly. I am what you could call a high income earner, a Canadian living overseas who had to leave due to lack of employment in my field in Canada. (God bless all those TFW pilots flooding in from Europe to work for Sunwing and CanJet!) On a net income level I make about as much as this couple combined. (Lower gross, but no income tax.)

This is not bragging. I would much rather be employed in Canada and living at home. But I cannot afford a home in one of the major centres, not by any sort of sensible financial metric. Why? Because I am competing on price with the many making a fraction of my income, who are able to “afford” their highly leveraged monthly payments.

So I patiently wait for the inevitable. Some times it seems more like the interminable. I have a theory that these enormous sums of money that people are taking on as mortgages are only possible because to most, they are just abstracts. They have no real concept of how long they will need to pay down their 400, 500, 600,000 dollar debts.

But when the money is actually in the bank, it’s harder to part with, when the value for money just isn’t there. Ironic.

Eventually, the emperor will be revealed to have no clothes. But mass hysteria takes time to heal.

#136 anotherdoc on 03.15.14 at 12:00 pm

Sayed, I have recently been where you are now. Fast forward 10 years and 2 kids. Wife never went back to work and I bet yours won’t either. That’s a 30% drop in income and an increase in expenses for the kids, etc. It seems like you are rolling in now, because you are. Things are going to tighten up a bit when the kids come.

1. Don’t buy the condo! You will just move to a house in 3 years anyway and waste money on moving expenses, etc.

2. Don’t waste money! Sounds obvious but it’s the best advice I ever got. Make a budget and write down everything you spend for 3 months so you know where it goes. Consider what that is going to look like once you have kids. Save 10% every month in a low cost, balanced, diversified portfolio. Put another 10% every month against the mortgage of the house you are going to buy. Despite what others on this blog advise, you will buy.

3. Buy a house near good schools (you need to seriously research this). Consider what getting kids to and from school is going to be like everyday for the next 10-20 years.

4. Buy a house near your work. A young family will seriously reduce your free time. Don’t spend it commuting.

5. Buy a house near (but not too near) your parents. Free babysitting on short notice is worth more than you can imagine.

6. Other than your house, pay cash for everything from now on. No more car loans. That 70k beamer is going to be a lot less appealing when it costs 5 months of your after tax pay.

7. Get an accountant with experience in your situation.

8. Stay away from financial advisors, insurance salesman, boat salesmen, and recreational real-estate, and probably a few other things. If you need advice start with MDM or a low cost, fee only advisor.

9. As was said on a blog post last year. “Enjoy, the game is won.” Just get yourself organized as above.

10. Not sure what to say about the 300k gift. Rarely do gifts of that size come without strings. Consider carefully…

#137 Old Man on 03.15.14 at 12:13 pm

It appears that Caesar is going to the Ukraine as a poster boy or a war consultant; here is hoping he took his depends with him. I have seen the latest military stats, and all are focused on Crimea, but this maybe not the end game. Putin has moved massive forces and military hardware around other areas. Why?

#138 r1200c on 03.15.14 at 12:17 pm

WOW… there are so many red flags in this story, I don’t know where to start…
First… him being 30 and yet to be married to a 32 YO clock ticking salesgirl that makes 120K… Geez – what could possibly go wrong there… lol
I bet she’s real purtee too and likes shiny expensive things… She did bag herself a doc making a quarter mil a year – fresh out of school… (yes – he probably graduated a few years back and paid off his student loan, bought the BMW and put away 350 K – but he is still a newby…)
Now his own parents don’t trust him enough to give him cash out right without a caveat that it should be locked into Real Estate… tells plenty of his character and decision making equity – that and he asks blogs how to make his life changing decisions… (he calls it research – with we all know it’s cowardice).
Statistically, he has less than a 50% chance to still be married in 6 years.
She’ll split with some dude name Ricardo she considers a real man who doesn’t let his parents dictate what they do and whom she can truly respect and love… that and his Nicaraguan accent is irresistible…
Poor doc will be left paying out 50% of net worth and spousal support (over and above the child support) since she will have quit her lucrative $120K sales job peddling pharma drugs just to have his kid(s)… he can look at forking over $3500/month for 15 years or so… a bit less after that…
So long story short – buy the condo with 20% down (condos are so much more practical for single dads…) – and invest the rest (it’ll come handy for the split).

#139 $300k if you buy - YES on 03.15.14 at 12:43 pm

He would not fill me with confidence as a doctor if he has difficulty making this decision.

Clearly, he should buy if the parents are giving $300k on condition that he buys a house. It’s a no-brainer.

Alwyn

#140 chapter 9 on 03.15.14 at 12:55 pm

#134 Paully
Your right!! Don’t take the cash! The potential for guilt trips down the road ain’t worth it. You will never hear the end of it!!

#141 Waterloo Resident on 03.15.14 at 12:59 pm

Forget about worrying about a 10% correction in our housing market, instead start worrying about the 30% drop our stock market is going to have come Monday if the Russians have started moving their forces into the REST of Ukraine as it appears that they are doing. That’s the main reason why I got the heck out of the market a few days ago, and good thing too.

If Monday comes and there is a Russian military incursion into the Rest of Eastern Ukraine, then the market selloff will start off slow with a 3 to 5% decline, but it will quickly accelerate to a 10 to 15% decline by the end of the day. And what will come after that will be another week or two of sea-sawing declines as it will become very clear that either the NATO forces or NATO plus America will soon become dragged into the conflict in that region.

Let us just HOPE that this does not happen this weekend , because if it does, then ‘HELLO NEW DEPRESSION, GOODBYE CANADIAN JOBS’.

As useful as your other posts. — Garth

#142 Infused with Opiates on 03.15.14 at 1:04 pm

26 Jan – as many bloggers have noted, this battle doesnt seem worth it. But I do want you to take a close
look at things. I deal with two credit unions and a big
five bank of the colour blue, and my issues with any of
them have been so minor they are forgotten. This is because I have established relationships with the
account managers at each institution. One phone call can make things either go away or be corrected in some form.

Also, despite coast caps size ($12B assets), it is still a crediy union of which you are a member and therefore a shareholder in some form. This does give you some access to “higher ups” and board members.

If you contact a board member, dont complain about the money, complain about the service and how the CU made the error and wont rectify it. Explain you would have concerns having a larger account there. Whatever you do dont whine.

#143 Just sayin on 03.15.14 at 1:45 pm

Make a deal with the gifters. Wait a year and if house prices fall they gift you $400,000 and you can do what you want with it. If housing prices stay the same you buy a house and only get $200,000.

#144 Penny Henny on 03.15.14 at 2:03 pm

Just came across this today. Truly a great calculator.
I think I can retire!!!
http://financialmentor.com/calculator/best-retirement-calculator

#145 Daisy Mae on 03.15.14 at 2:30 pm

#105 OnTheSidelines: “The fear that most people have of financial markets is that no such control exists when one’s life savings are in the hands of others with an unknown level of integrity and knowledge.”

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

It’s incumbent on investors to seek out a financial advisor they trust. Clients have control over their portfolio — it’s definitely there, because they are subjected to a series of questions to ascertain their comfort level and investment knowledge. Their portfolio is based on that info. Questions and concerns are just a phone call away.

#146 Smoking Man on 03.15.14 at 2:32 pm

Old Man

Ceaser and big bird are a joke, I get a visual of a couple of goofs in a pinto at a traffic light, revup its engine to race a camaro.

What are these guys doing. What audience are they sucking up too.

#147 I'm stupid on 03.15.14 at 2:41 pm

135 billybob

I hope it helps explain the feeling of poverty despite making a lot of money. I felt the same way until I realized what was going on. Good luck!

If you’re smart you will leave your money over seas so it can grow tax free until you need it. Just make sure it’s in a stable country. Buying Realestate in certain countries gives you automatic citizenship. As a citizen you’re protected unless you violate certain laws. Not that I know anything about such things.

#148 Rob on 03.15.14 at 2:53 pm

#67 Happy Renting on 03.14.14

Excellent advice, the only thing I’ll add that there is an intangible to owning, as an alternative they could do what my wife and I did, buy a small (got an unbelievable deal on it) rental property and rent elsewhere, owning deals with the need to feel like you own something real and renting allows you to live in a great location for about half the money

Good luck and please update us Garth

#149 Ralph Cramdown on 03.15.14 at 2:55 pm

#118 I’m stupid — “Think of interest as a scale. The rate of return must equal the risk. With monetary intervention keeping interest rates artificially low the scale is unbalanced.”

So bond prices are too high? Then surely the bondholders would sell, and reap a windfall. Conversely, anyone buying these overpriced bonds today is lending at a return that doesn’t compensate for the risk? Expecting to lose money, or not gain as much as they’re ‘entitled’ to? That would make today’s bond buyers irrational.

Maybe they were rational before the Fed’s recent intervention? Except that thousands of them bought bonds backed by subprime mortgages, at interest rates which didn’t compensate for the risks.

So if the bond market is paying irrational prices now, and was paying irrational prices before, what balances the scales, normally, so that risk matches the interest rate?

I’m afraid I disagree with your assessment. The ‘risk’ (in a probabilistic sense) of a bond default or inflation can’t be calculated. The best that market participants can do is guess, and generally only in an ordinal rather than a cardinal sense (e.g. I think Greece is a little more likely (2007) to default than Germany, a lot more (2009), a bit more (2014)).

How are rates ‘artificially’ low if EVERYBODY knows that the Fed’s thumb is on the scale, so to speak, and the fed has been TELLING everyone that it’s thumb is on the scale, and this is what the Fed has been doing for decades, and there’s plenty of action in the bond market every day with all participants knowing this?

#150 Daisy Mae on 03.15.14 at 2:55 pm

#129 Crowded: “Every letter you send them requires someone to read and respond…..”

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

Not necessarily will you get a reply. Trust me. Just learn from thess experiences, and don’t place yourself in the same situation again.

#151 Nemesis on 03.15.14 at 4:11 pm

#SillySaturday #OkieChariots #SnowBoidFantasyRide

“It is actually not that loud.” – Terry Denomme, Editor Canadian Hot Rods Magazine

[Province] – Osoyoos man’s custom 1964 Buick Riviera wins car world’s biggest prize at Detroit Autorama

…”Launier’s winning custom vehicle is a two-seater coupe with an 850-horsepower turbo engine and six-speed manual gearbox.

The 6.2-litre Chevrolet LS-series V8 is mounted up forward between the front wheels, but the twin turbochargers, waste gates, and associated plumbing are located in the rear deck compartment.”…

http://www.theprovince.com/Osoyoos+wins+coveted+custom+prize+Detroit+Autorama/9600986/story.html

#152 Old Man on 03.15.14 at 4:14 pm

#26 jan: – the solution to your problem was simple from day 1, as you made a mistake. The said Credit Union is chartered under the authority of FICOM, and these are the people that your problem and evidence documented should have gone to. In fact I would have made a personal appointment with the appropriate officer to get action; been there and done it as love to kick butt.

#153 jess on 03.15.14 at 4:27 pm

the Iowa story “is what happens when we don’t pay attention.” read about the men of Atalissa.
http://www.desmoinesregister.com/section/ATALISSA

http://truth-out.org/opinion/item/22494-the-story-of-atalissa-highlights-americas-long-term-care-problem

#154 TheCatFoodLady on 03.15.14 at 4:28 pm

A lot of blatant resentment being directed Sayed’s way, not to mention judgement & jealousy. Love the way some have decided, (do you know her maybe?), that Anna is a bling loving, status seeking broad, ready to dump Sayed & cost him big time.

I saw some sneers about how a higher education didn’t mean he knew anything. The man isn’t sure about a major financial decision & asked. Medical school isn’t a post grad in finance & speaking for myself, I’d rather a doctor willing to admit they don’t know something & either find out or send me to someone who does than one who pretends to know everything.

I wouldn’t be prepared to answer his question based on the little info available here. He has a highly portable qualification & I’m not sure about his gf – maybe she can move in her current job or a similar one. But the first question would have to be – are they committed to staying where they are? They may be for personal & professional reasons – fair enough. Clearly millions choose to live there already.

They have a nice chunk of change saved – again, we don’t know the details of that money – how it’s invested. The only thing that jumped out at me was no RRSPs. If marriage & children are in the cards – time to correct that. If she plans on mat leave at some, the money will come in handy.

The parental gift – we don’t know which set of parents is offering that – maybe both split evenly or distinct amounts… we know it’s based on the condition of buying a home – period. Potential trouble written all over that one because as several have pointed out such a gift often comes with very expensive guilt strings. But again – we don’t know the families, the parents… really hard to judge.

There’s no rush to decide on buying; if anything I’d wait until after marriage. Sayed seems reluctant to move to the burbs but finds downtown expensive. More relevant to the decision about where is how they think they might want to raise their child – suburban lifestyle, downtown living with or without a nanny or grandparental help?

No, I’d set up a solid financial plan first – fee based advisor. I’d also pay close attention to what anotherdoc is saying.

To me the big take away here is – if a higher income earning couple is fearing affordability, is willing to consider options & ask others for their opinions… what des that say about those earning far less who dive into murky housing waters without checking the depth first?

#155 I'm stupid on 03.15.14 at 4:36 pm

#149 Ralph Crampdown

I understand the argument you’re trying to make but it’s flawed. Here’s why:

The majority of bond holders are institutional investors, Pension plans that are mandated to hold a percentage of the portfolio in the bond market, or the top 30% of earners that seek balance. It’s a guessing game like you said. I can bet that no one with a debt ratio of 164% has any bonds or investments in Canada, but they do have homes. Since they have homes they can borrow at a rate that doesn’t represent actual risk it’s called a Heloc. Then CHMC makes lenders whole. How else can a person who makes 500k with 25% down get the same rate for a mortgage as a person with 5% down making 50k? When asking for the same size mortgage. In the above scenario does the risk seem equal?

#156 gtrz4peace on 03.15.14 at 4:54 pm

# GoldyGoldBug:

From your moniker it seems you may be a “hold golder and stock up on toilet paper” person — but we are American and agree with your assessment that very disturbing things are happening in our country. Particularly regarding what is left of what they called “democracy”. The takeover of the environment by fossil fuel companies who can sue you to ensure a pipeline destroys your water supplies, the turning back of the Voting Rights Act, the continued kookiness of the nutty Republican right wing.

That said, the indebtedness and rising inequity in society are happening HERE just as there. And the only difference is Canada is further behind in the process.

The process can be turned around. Will it, is another issue.

#157 happity on 03.15.14 at 5:12 pm

The USA economic renaissance is 70% consumer spending, check.

USA stock market rising, check.

But why then are pretty much all the retailers closings stores and laying of 10k’s of people?

Something rotten….

I think it’s you. “(Reuters) – U.S. retail sales rebounded in February and new filings for jobless benefits hit a fresh three-month low last week, suggesting the economy was regaining strength after an abrupt slowdown caused by severe weather.” — Garth

#158 Assumptions on 03.15.14 at 5:21 pm

It has been interesting to see how the blog dogs here differ in how they manufacture assumptions about not only this couple and their parents but also about everyone’s personalities, preferences, proclivities, hopes and fears.

There’s a few TV series script writers among them, methinks.

Alwyn

#159 Assumptions cont. on 03.15.14 at 5:24 pm

The blog dog comments remind me of the English teacher’s advice to her students trying to decide on a subject for their essay, “Write what you know about”.

Alwyn

#160 Julie on 03.15.14 at 5:27 pm

I don’t understand the hostility shown towards this couple and other readers in higher income brackets. Just because you have a good income or lots of savings doesn’t mean you automatically know how to best handle matters to ensure you keep/grow that money. I enjoy reading letters from readers in all different financial situations, whether or not I can personally relate. You can learn from everyone.

#161 Son of Ponzi on 03.15.14 at 5:36 pm

Sayed,
First of all, I suggest you change your name to something that sounds British, like Reginald or Fitzgerald.
Worked for me.

#162 Brutus on 03.15.14 at 5:55 pm

The global geopolitical black swan is almost here.

News from the last hours:

http://www.thestar.com/news/world/2014/03/15/russia_occupies_ukrainian_village_gaspumping_station_outside_crimea.html

The Russians will recognize the referendum results and move in. Kiev will say no to those results, and has already said the Crimean parliament has no authority (just today). Shots have already been fired. Where is the big change or concession that will prevent escalation? Nowhere.

It is interesting to consider with so much effort, so many satellites and observation intelligence systems focussed on the Indian Ocean and South China Sea looking for that aircraft whether the ability of the West to monitor Russian activities is in any way reduced. It almost sounds like a plan, if you were a conspiracy type.

Something, maybe more than one, is coming that will take all the hot air out of real estate lust and this incredibly overvalued market, and make us grateful for what we do have.

#163 Andrew Woburn on 03.15.14 at 6:07 pm

#162 Shawn on 03.14.14 at 6:23 pm
Money Supply and Wealth
Andrew Woburn at 86 (supported by Blacksheep at 112) reveals:

Anyone who thinks a bank’s ability to lend is limited by the amount of cash deposits on hand or that central banks control the money supply should read this.

*****************************************
But what is your point? Banking has worked that way for a very long time and the economy benefits greatly.
===========================

I don`t really have a dog in this fight. My point is that a lot of people, perhaps the overwhelming majority, think central banks print all the money (and they should all just stop it right now!). They also seem to be unaware that the money supply can actually contract which is deflationary. The impact serious deflation could have on the financial position of heavily indebted Canadians is even more frightening than the debt itself. Therefore I hoped hearing an explanation direct from the Bank of England might clear up confusion.

#164 someyoungguy on 03.15.14 at 6:13 pm

I have enjoyed the commentary on low interest rates as it relates to consumer spending. Despite making a large income, I often feel relatively poor compared to others who make half or less. The reason is I have no non-mortgage debt whereas others spend everything they make to keep up on car payments, furniture payments, boat payments, time-share payments, expensive handbag payments, and the list goes on. In my city it seems like everyone drives a brand new german car and spends 2 weeks in Hawaii in the winter. There’s NO WAY they can afford it.

#165 Andrew Woburn on 03.15.14 at 6:15 pm

Blackstone’s Home Buying Binge Ends as Prices Surge

QUOTE: Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm. After investing $8 billion since April 2012 to buy 43,000 homes in 14 cities, the company has narrowed most of its purchasing to Seattle, Atlanta, Miami, Orlando and Tampa.

Interesting they think they can still get acceptable ROI in Seattle. Anyone have any thoughts on this.

http://www.bloomberg.com/news/2014-03-14/blackstone-s-home-buying-binge-ends-as-prices-surge-mortgages.html

#166 Snowboid on 03.15.14 at 6:26 pm

#151 Nemesis on 03.15.14 at 4:11 pm…

Nice wheels, but still looking for a ‘driver’ mid-60s Lincoln.

Like this, but about 10K less:

https://phoenix.craigslist.org/nph/cto/4364399339.html

#167 nomad on 03.15.14 at 7:07 pm

You guys should watch “How China Fooled the World”.
http://www.bbc.co.uk/programmes/b03w7gxt

There’s a big part about real-estate in China.
Most people make 10k a year but a good size 2 bedroom is 600k. Only the rich are buying apartments, as investment.

#168 Daisy Mae on 03.15.14 at 7:20 pm

#136 AnotherDoc: “Buy a house near (but not too near) your parents. Free babysitting on short notice is worth more than you can imagine.”

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

Yes! That is our dream, as grandparents! We’ve raised our kids…and now we’re eager to raise yours! LOL

We don’t want free time to pursue our interests, to travel. We want to be tied down….all over again.

#169 Trojan House on 03.15.14 at 7:21 pm

Re: Garth’s reply to #157

The weather, yes, it is always the weather’s fault.

#170 jess on 03.15.14 at 7:33 pm

162 Brutus

why philippines and madagascar blocked land grabs

guns and butta
http://www.telegraph.co.uk/news/worldnews/asia/china/10332007/China-to-rent-five-per-cent-of-Ukraine.html

#171 jess on 03.15.14 at 7:38 pm

https://theconversation.com/democratise-companies-to-rein-in-excessive-banker-bonuses-24436
…”The position of shareholders is no different from that of a trader or a speculator. Shareholders provide a very small proportion of the risk capital of banks, as evidenced in Table 1.”

“Andy Haldane, Executive Director for Financial Stability at the Bank of England, has stated that the average duration of shareholdings in the US, UK and European banks “fell from around 3 years in 1998 to around 3 months in 2008. Banking became quite literally, quarterly capitalism”.
http://www.bankofengland.co.uk/publications/Documents/speeches/2011/speech525.pdf
================
Jerry Brown, California officials sued over mortgage settlement money

The plaintiffs are represented by Neil Barofsky
http://www.sacbee.com/

#172 Waterloo Resident on 03.15.14 at 7:44 pm

Job creation is tied to economic growth, and worldwide economic growth is tied to oil production growth. Due to something called ‘PEAK OIL’, global oil production stopped rising in 2005 and has been flat ever since.

That is why no net new jobs are being created, and why young people are having such a hard time finding a job.

Global interest rates are also set to just slightly above what global economic growth is, so that means somewhere between 0% and 1% for all central banks.

NOW THIS IS THE BIG PROBLEM: Since 2012 global oil production has started falling, that means that interest rates will soon go NEGATIVE (something that is theoretically impossible), and job creation will soon start to go NEGATIVE also.

So instead of young people reporting that they are having a hard time finding a job, soon you will hear of young people who once had a job, but now they will be reporting that they have lost those jobs and cannot find another. This is something we are now beginning to hear a lot more about in jobs reports in the recent 2 months.

Remember: PEAK OIL, and how oil production is connected to economic growth and job growth.

If you want to watch a video on how all of this will soon spell DISASTER for our economy, then watch these 2 videos:

Must watch!!! Peak Oil and Economic Contraction
https://www.youtube.com/watch?v=auHJlWwwTKk

Peak Oil: A Staggering Challenge to “Business As Usual”
https://www.youtube.com/watch?v=umBRR2gi4xY

When you watch those videos you will realize that not only with your youth NOT be able to buy houses at today’s prices, they won’t even be able to hold onto the few part-time jobs that they have now since the global economies will be shrinking in 2 or 3 years time, not growing. And Canadian bank-of-Canada interest rates will be around 0.25%, not the 1% they are now.

Sorry if all of this upsets you Garth, because it upsets me too, I really was looking for interest rates to go up, not down.

#173 Old Man on 03.15.14 at 7:44 pm

Some comments for Sayed and Anna as there are not enough facts to ascertain a correct response. The first thing you need is a complete assessment by a fee based advisor to determine if your paying too much taxation with a review of investments and to look at the overall going forward. Why purchase a house as a capital investment when Real Estate is screaming bubble? Now if your planning a future family a condo is out, so think detached in a few years to purchase at a discount and determine your definition of core by looking around at all options with care. There will come a time that the wife will become a stay at home mom with a loss of income. You might consider incorporating yourself if you have not already, as in this way your wife could earn a salary by giving her administration to do at home in several areas such as buying the office supplies, making phone calls, and doing stuff on the home computer; dentists do this all the time.

#174 Daisy Mae on 03.15.14 at 7:54 pm

#164 SomeYoungGuy: “Despite making a large income, I often feel relatively poor compared to others who make half or less….”

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

Because you’re ‘living within your means’. ANYONE can go into heavy debt to keep up with the Jones…

Keep doing what you’re doing.

#175 Smoking Man on 03.15.14 at 8:06 pm

I dislodged an organ in a volley of rabid coughing. I look and feel like crap.

Minding my own business sitting at bar by elevator at Seneca.

One after an other, chics hitting on me. Wtf

Is it a full moon. Every slight movement like someone shoving a nife in my guts.

#176 Happy Renting on 03.15.14 at 8:14 pm

#154 TheCatFoodLady on 03.15.14 at 4:28 pm

I agree that we shouldn’t be busting Sayed’s balls over not being a financial whiz. His training is medical. If he’s a good doctor then, well, he can pay an expert to educate and advise him. Lots of people aren’t even proficient in one field, so if he’s got the doctor thing down then he’s doing pretty well.

Sayed – just call Garth up and ask him to take you on as a client, already. You trust his opinion or you wouldn’t be asking for his advice. Your family has enough income and assets to make it worth both your whiles.

Re: other commenters assumptions about Anna. I guess the insinuation is that Sayed could be marrying another doctor also pulling in 250k pa, so she must be a parasite because her income is lower. I don’t know this couple personally, but for us regular people in Toronto, a partner who has assets and earns enough on their own to support your family is a catch (financially). And yes, 120k pa is more than adequate in Toronto, all you high rollers!

#177 PoltawaDiva on 03.15.14 at 8:17 pm

On the eve of the Crimean referendum, if you are confused as to the issues and historical background, it is no wonder. The media has not been very helpful.

This explains the Ukraine/Russia relationship, historical and otherwise:

http://www.aim.org/special-report/russias-war-on-ukraine/

#178 jess on 03.15.14 at 8:22 pm

look back

http://www.bloomberg.com/news/2013-12-22/fake-profit-e-mails-at-agfeed-s-farms-back-fraud-claims.html

======

A China Fraud Dissected: Part 3 AgFeed’s Trusted Advisors Protiviti and Latham & Watkins
Company executives and directors like to believe they can purchase a posse of “trusted advisors”. Instead, they’ve often only bought a gaggle of self-interested auditors, lawyers, and consultants. But to whom does each of those vendors owe loyalty?

http://retheauditors.com/

#179 Daisy Mae on 03.15.14 at 8:32 pm

#83 Jan: “When you consider the state of our economy and the way banks become rich at the back of us taxpayers by the way of cmhc and others it is exactly what makes my blood boil. Do you blame me?”

*******

No. But it IS

#180 Daisy Mae on 03.15.14 at 8:35 pm

#83 Jan: “When you consider the state of our economy and the way banks become rich at the back of us taxpayers by the way of cmhc and others it is exactly what makes my blood boil. Do you blame me?”

*******

No. But it IS survival of the fittest. Always. So, suck it up. And be careful the next time.

#181 gladiator on 03.15.14 at 9:02 pm

@103 saltpony:
God bless you, beautiful soul. You know life and I wish you a long and enjoyable journey on this little planet called Earth. Love you. gladiator.

#182 Old Man on 03.15.14 at 9:08 pm

#166 Snowboid: – are you thinking about buying a car in USA? Knew this gal in Toronto who went to visit her mom in Palm Beach who spent the winter months in the sun. One day her mom said lets buy a couple of cars, so her mom wrote out a check for two new Benzs like it was pocket change. The daughter drove it back to Toronto, and at the border was nailed by customs for taxes and duty on her gift.

#183 Adross the pond on 03.15.14 at 9:10 pm

I would be happy to wager that a ‘no strings attached’ $300k gift that MUST be used for real estate is not as ‘no strings’ as advertised.

#184 Nemesis on 03.15.14 at 9:37 pm

@SM/#175

“One after an other, chics hitting on me. Wtf[?]” – SM

Unlike your RecreationalOrgans, SM… your admirers are actually working the room.

Speaking of which, you really must take better care of yourself.

@SnowBoid/#166

Sweet! Just don’t volunteer to chauffeur it on any Dealey Plaza motorcades… unless you have it modified by Hess & Eisenhardt first: http://tinyurl.com/p7wtqar ]

#185 AlbertaGuy on 03.15.14 at 9:45 pm

Invest the 350 at 5% pays most of rent. Build up a war chest. Take the 300 gift and uy 1m house for 750 cash when market corrects.

#186 NoName on 03.15.14 at 9:47 pm

https://d4l3.com/dreams

interesting read, exact opposite of said and anna…

#187 Anotherdoc on 03.15.14 at 9:47 pm

#168 daisy Mae

Raising children is a daunting task. Grandparent support, especially in emergency situations, is greatly appreciated and in my view improves the well being of the ENTIRE family. Sorry for your family to hear that you are so lazy.

#188 tkid on 03.15.14 at 10:13 pm

Ok, Sayeed and Anna, here’s the advice:

Get yourself a good financial advisor.

Get yourself a good accountant.

Start socking money away in RRSPs and TFSAs. What is left over can be designated house-money.

DO NOT TAKE THE $300,000 FROM THE PARENTAL UNITS. There are always strings attached.

#189 Old Man on 03.15.14 at 10:31 pm

#187 Anotherdoc: – I hope your view of your patients is not as narrow, as Daisy Mae made a good point within context. She will most likely babysit on the rare occasion or in an emergency, but not to be on standby for her kids as a habit; see not lazy in this equation at all but frankness which is a virtue.

#190 Spaulding Hastings Esquire on 03.15.14 at 10:38 pm

Leverage and Real Estate..only way to go!
Russia Ukraine situation has tons of wealth heading to London, U.S.,Swiss Real estate with Canada next up.
Safety 1st. (Preservation of capital)
So no correction, next leg up.

Smoking Man, must be the musk oil smell of your shirt.

#191 Snowboid on 03.15.14 at 10:53 pm

#182 Old Man on 03.15.14 at 9:08 pm…

Done it before, it’s an easy process – saved nearly $ 13K on our last purchase, including tax, duty, RIV fee/inspection and DRLs.

#184 Nemesis on 03.15.14 at 9:37 pm…

Funny, the armour would have come in handy on our last trip to Mexico!

#192 Jon on 03.15.14 at 11:02 pm

Sayed do what you want. Many familys insist on giving accept if you want or have to to keep the family unit together. Live at lower lifestyle do some charity work have some kids, it doesnt matter, you make enough that unless you over extend and screw it all up you will have a good life. Dont try and keep up with your doctor friends in ten years with simple living you will be wealthy just have some kids it is a great gift. If you play your cards right you can retire in your fifties.

#193 JimH on 03.15.14 at 11:11 pm

#162 &etc. Brutus
Jeez, man; turn off the TeeVee and get out of the bunker!

Crimea goes to Russia; Ukraine gets to keep Chernobyl.

It’s a done deal. Get over it.

#194 A Yank in BC on 03.15.14 at 11:14 pm

Lots of advice.. most of it well-meaning. I sure hope Garth will reveal what his was.

#195 Andrew Woburn on 03.15.14 at 11:48 pm

#168 Daisy Mae on 03.15.14 at 7:20 pm
#136 AnotherDoc: “Buy a house near (but not too near) your parents. Free babysitting on short notice is worth more than you can imagine.”
**********************
We don’t want free time to pursue our interests, to travel. We want to be tied down….all over again.
————–
#187 Anotherdoc on 03.15.14 at 9:47 pm
#168 daisy Mae
Sorry for your family to hear that you are so lazy.
============================

This circle is hard to square. You are lazy if you don`t babysit your grand kids and pretty much doomed to bondage if you do. Once you start, how do you stop? We saw this coming and left town before the first grandchild came. Selfish? You bet, but when you are 65+ how much healthy time do you have left?

If you are one of nature’s grandparents whose hearts leap with joy at the sound of rug rats warbling, enjoy. However many of us, male and female, felt blindsided and shackled by the reality of parenthood and we ain’t going back there.

Not everyone is thrilled to be a parent even though one is obviously a bad person to say this out loud.

The simple fact is that for every one of us who was thrilled to be a parent there was at least one more of us who was distinctly unthrilled. We are not allowed to ever say this in public. Legions of naive young people become parents without a clue what they are stepping into. They assume all those heartwarming parent/child sitcoms reflect real life.

#196 veej on 03.16.14 at 12:00 am

HAM sales in Vancouver

Garth,

Over the past few years I commented on this blog about the significant affect wealthy/corrupt Asians were having on Vancouver’s RE market and you constantly dismissed it as fear mongering and racism. At the time I had been to several open houses and not only been the only Caucasian at each of them, I was the only person speaking English. Well, fast forward to today and after the IIP is killed and Vancouver West side sales this month are well below half of february

#197 airhead princess on 03.16.14 at 12:47 am

The big diff brtween margin and mortgage is that margin is backed by assets….mortgage by debt. ….apples and oranges. You can liquidate your account to pay margin……you can’t sell your house at the click of a mouse. Margin is gambling with money you do have…..mortgage is gambling with money you don’t. Margin is never more than what your account can be sold for……mortgage is a dead crow around your neck for life no matter what its worth…..so….I wouldn’t confuse the two.

Also…don’t forget that the couple described have a certain ethnic sound to thier names…..the parents aren’t giving them $300K…..its family money…it belongs to the entire family….same as the family drivers license…the family car……etc….ownership for an ethnic might only represent one sixteenth of an estate….which they can never access as personal wealth.

The way it works is that each son will take a certain number of family members from the home as the parents buy the first ..second..third boy a house…..They will then designate a memeber as the responsible one in that household to take charge of the finances…..they each of the household members gets an ‘allowance’ and gives their entire paycheque to the family in order to invest as the family grows larger and more members are brought over from the oedl country. These ‘homes’ resemble motels in construction as well as occupation….new house added whenever the rooms are bursting with bodies and married couples produce more babies……..at which time a new house is purchased for the overflow.

#198 Tony on 03.16.14 at 3:06 am

Re: #157 happity on 03.15.14 at 5:12 pm

You’ll see more stores closing and more layoffs all the result of bogus American accounting. Why J.C. Penny may go bankrupt… some recovery.

#199 Linda Pearson on 03.16.14 at 6:13 am

#187 Anotherdoc on 03.15.14 at 9:47 pm
#168 daisy Mae

Raising children is a daunting task. Grandparent support, especially in emergency situations, is greatly appreciated and in my view improves the well being of the ENTIRE family. Sorry for your family to hear that you are so lazy.

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

Whoa there bucko; climb down off your high horse! Daisy Mae wasn’t talking emergent situations, just the attitude that grandparents should be available whenever the kids’ parents want them to be.

Our two youngest grandchildren (ages 3 and 5) are here right now; that’s why my husband and I have been up for two hours – the little rug rats take their halves of the beds out of the middles. As much fun as it is to have them occasionally, neither of us feel compelled to have them much more often than we do. We did our stint of parenting and what’s more, raised our own kids to recognize that the responsibility of their care belongs to their parents.

Grandparenting is wonderful but it’s not a drop-what-you’re-doing fulltime job.

#200 H&R Blockhead on 03.16.14 at 7:35 am

Big salary. Flush with cash.
Bank of Mom and Dad.
Free advice?
Typical.

#201 economictsunami on 03.16.14 at 7:47 am

Speaking of risk, in an environment of both repeated government and central bank interventions (nee incentives) used in order to paper over the excesses of the financial services sector, one has to wonder when the outsized speculative moves in markets will come to an end; with real price discovery vs unencumbered risk will reflect true macroeconomic fundamentals.

Such as in the crude market, as final crude related product demand sags but futures pricing remains at a far loftier level.

Crude Headed to $80s? Massive Speculative Positions vs. It’s the Economy Stupid:

http://tinyurl.com/o8qbtk6

And it just wouldn’t be Sunday unless I took a weekend swipe at The US Fed…

The fallacy of Fed ‘profits’ (and ‘losses’):

http://blogs.reuters.com/macroscope/2013/02/20/the-fallacy-of-fed-profits-and-losses/

#202 Detalumis on 03.16.14 at 8:46 am

#136 anotherdoc “wife never went back to work”, then you are silly, my dentist is married to a heart surgeon and she took barely a month off work for mat leave then went part-time for a couple of months then full-time, did that with both kids. Dentists these days make more than GPs what with implants and such, check out the stats.

Men sure love the “big breadwinner thingie” and never choose a wife based on her earning capacity – all except my dentist’s husband of course. Now he’s a smart man.

#203 TJ on 03.16.14 at 8:53 am

#43 Keith – Amen brother

Sayed- With manipulative parents like these, and pressure to buy coming from all sides, I’d say to buy but to make your reservations clear to everyone up front. It’s a win-win for you personally. If the can is kicked long enough or hyperinflation kicks in, the property value goes up and you win. If the obvious happens, and China’s epic crash puts the world in a tailspin and the Cdn mkt finally implodes I would suggest there is a value in being able to say “I told you so”, especially to manipulative parents, so again you win. Basically you’d have carte blanche for the rest of your life to ignore your parents “suggestions”. Anytime they’d try to influence you in any way you can remind them of the $300k they pissed away with their horrible advice the last time they tried to meddle in your life.

It’s time to cut the umbilical cord Sayed. Teaching your parents a tough life lesson, and then holding their mistaken advice over their heads for the rest of their lives will finally set you free!

#204 Mark on 03.16.14 at 9:16 am

#195-Andrew Woburn

You act as though being a parent was thrust upon you, like a case of shingles. You and other parents had choices, made the wrong ones I guess, then everyone suffers, especially your unwanted kids. The responsible thing for people with your mindset to do is sterilization. Talk about things you can’t say in public.

As for grandparent help. The nonnos and nonnas on both sides split the care for our 2 year old in half, two days a week each and would love to do more. I’m lucky, but most importantly, my daughter is loved and properly cared for.

#205 Ronaldo on 03.16.14 at 9:29 am

#136 Anotherdoc -

”5. Buy a house near (but not too near) your parents. Free babysitting on short notice is worth more than you can imagine.”

Am a grandparent as well and have been placed in that situation as well with the grandchildren and not such a big deal in emergencies but I had to draw the line with the two golden retrievers. If you make the big bucks be prepared to pay for these things and don’t expect that the grand parents are going to be at your beck and call whenever you need them. Further, if part of your economic plan is to locate near but “not too near” your parents, you better have a plan for when they decide to move further “but not too far” from you.

#206 Daisy Mae on 03.16.14 at 10:00 am

#187 Anotherdoc:#168 daisy Mae “Raising children is a daunting task. Grandparent support, especially in emergency situations, is greatly appreciated and in my view improves the well being of the ENTIRE family. Sorry for your family to hear that you are so lazy.”

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

What kind and how many ‘emergencies’ are we talking about?

#207 Blase on 03.16.14 at 10:01 am

I wish people would stop blaming the housing bubble on low interest rates. CMHC is the only thing to blame. Get rid of it and the housing market becomes ground zero.

#208 Daisy Mae on 03.16.14 at 10:03 am

#189 Old Man:#187 “Anotherdoc: – I hope your view of your patients is not as narrow, as Daisy Mae made a good point within context. She will most likely babysit on the rare occasion or in an emergency, but not to be on standby for her kids as a habit; see not lazy in this equation at all but frankness which is a virtue.”

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

Thank you, Old Man. Exactly my point — we’re not on standby. Period. How selfish of Anotherdoc to think otherwise.

#209 Daisy Mae on 03.16.14 at 10:08 am

As a matter of fact, AnotherDoc, I will be looking after four grandkids this summer for a 10-day period, two of which are preschoolers….

Idiot!

#210 Daisy Mae on 03.16.14 at 10:12 am

#191 Snowboid: “#182 Old Man Done it before, it’s an easy process – saved nearly $ 13K on our last purchase, including tax, duty, RIV fee/inspection and DRLs.”

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

Are you gonna tell us how? ;-)

#211 Daisy Mae on 03.16.14 at 10:20 am

#195 Andrew: “This circle is hard to square. You are lazy if you don`t babysit your grand kids and pretty much doomed to bondage if you do. Once you start, how do you stop?”

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

Exactly. Might I also mention, AnotherDoc, seniors do not — repeat, do not — have the same level of patience or stamina. Or has that ever occurred to you? Duh!

#212 Daisy Mae on 03.16.14 at 10:32 am

#199 Linda Pearson: “Whoa there bucko; climb down off your high horse! Daisy Mae wasn’t talking emergent situations, just the attitude…”

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

Hope AnotherDoc is taking all this to heart! ;-)

#213 Daisy Mae on 03.16.14 at 10:37 am

#204 Mark: “I’m lucky, but most importantly, my daughter is loved and properly cared for.”

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

Just not by you….

#214 Nemesis on 03.16.14 at 10:42 am

#PartTimePoochies #TryBeforeYouBuy #WetCoastWalkies

“These are people that otherwise can’t have a dog full-time. So they’re getting to have their dog fix without having the full responsibility of owning it, which is good for a lot of people.” – Gavin Flett

[CBC] – Part Time Pooch makes dog sharing possible in Vancouver

…”A man from Vancouver, B.C., has come up with a solution for dog lovers who are not quite ready to commit to a hound of their own.

Gavin Flett, 38, launched the dog-sharing website Part Time Pooch less than two months ago, allowing dog lovers to borrow pooches from dog owners. Owners pay a subscription fee to use the website, but those borrowing dogs pay nothing.

“For years I’ve been listening to people say things like, ‘Oh I just want to take a dog for a walk,’ or ‘Why can’t I just have a dog sometimes?’” said Flett, who added, “Hey, it’s Vancouver, right? If this catches on, I might even build a site for busy bachelors who want the wife experience without the permanent commitment or the upkeep.”…

http://www.cbc.ca/news/canada/british-columbia/part-time-pooch-makes-dog-sharing-possible-in-vancouver-1.2574002

[NoteToGT: I may have taken some liberties with the copy.]

#215 Kyle on 03.16.14 at 10:42 am

Garth,
The book, Capital in the twenty-first century is getting an awful lot of buzz, indicating that inequality is going to keep rising for a long time to come. I understand (haven’t read it yet), that it also explains why house prices continue to rise… I’d be interested in your thoughts on what you think the best approach for the 99% is given things may not move back to the norm…

http://mobile.nytimes.com/2014/03/12/business/economy/a-relentless-rise-in-unequal-wealth.html?referrer=

#216 Kyle on 03.16.14 at 10:51 am

P.S. With their income, I think they should buy a reasonable size detached house that fits their budget, but only after they have a kid (or two). They may find that after having a kid they too would want to live in the suburbs, so there will be less of a trade-off to make when life’s priorities shift from your own to your children’s. They may also find their spot in the city is just fine for kids, and waiting until the kid is in the house / condo might give some time for a correction to occur (win-win). The truth is, you don’t HAVE to move BEFORE you have a child…

#217 shawn on 03.16.14 at 10:55 am

Money, Money Supply and Wealth

Andrew Woburn at 163 in response to me

***************************
Andrew, the article you had posted from Bank of England on the nature on Money is excellent.

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneyintro.pdf

Worth studying for all interested.

I would only quibble at the notion that a $20 bill is a liability of the central bank. I see it as no one’s liability though all accept it for goods, services and taxes. Buffett calls dollars claim checks on goods and services. No particular person owes me something for my $20 but all are willing to accept it.

Central bank will only change a wrinkled $20 for a freshly printed one, not a real liability in my mind.

I will check your other article on money creation as well and post the link again when I have read it.

None of it will change the fact that banking is good and there is nothing nefarious or harmful about fractional reserve lending. In fact it has been a boon to society since invented. And it’s not a secretive process either. Just one that few understand.

#218 Daisy Mae on 03.16.14 at 11:09 am

#204 Mark:

These two sets of grandparents are competing with each other. And you’re playing both sides against the middle.

#219 Nemesis on 03.16.14 at 11:24 am

#BonusZen #TheFiveRegulations

“We can save 300,000 yuan in this way. It is not a small number for us. I have to work many years to earn 300,000 yuan.” – Mr. Mao

[ChinaDaily] – Divorce cases rapidly up, property tax to blame

…”The number of divorces has a year-on-year increase of 40 percent and reached 39,075 in the first three-quarters of this year in Beijing. Beijing Youth Newspaper reported…

…Executive vice president of Beijing Marriage and Family Construction Association Li Ziwei thinks that the unusual rapid growth in cases of divorce has something to do with the “Five regulations of the domestic real estate market” published in February to cool down the country’s over-heated property market.

According to the “Five Regulations,” people who sell an owner-occupied home that is not the only home he or she has owned for no less than five years, the owner has to pay 20 percent of their individual income tax. Affected by the policy, many families who have a second home choose to have a divorce to avoid the high tax.”…

http://usa.chinadaily.com.cn/china/2013-10/29/content_17066822.htm

#220 pinstripe on 03.16.14 at 11:36 am

I had a tough time putting this into words. Garth has alluded to this for a long time and now that rope is too short something has to give. As the coffee shop talk goes, “we are in a hellava fix”

http://www.cbc.ca/news/business/how-low-will-canadian-inflation-go-perhaps-too-low-for-comfort-1.2574700

#221 yetanotherdoc on 03.16.14 at 11:37 am

#168 daisy Mae
#195-Andrew Woburn

When I had my kids, and asked for some help from my mother, it was “nope, it would cut into my social life and I retired for a reason”. For the record, I have a great nanny and this would be helping the nanny out sometimes when I’m not at home. And my mother retired somewhere in her early 50s.

My grandmother raised my brother and I full-time without help while my parents worked. She was 60 was I was born. I remember her chief grievance was that her daughter, my mom, liked going out with her friends more than staying home with the kids. Most of my friends were also at grandparents while parents worked. There weren’t a lot of daycare, nor was there the need.

Now most kids are in daycare, because the boomer generation is all about the “me, myself and I” mentality and their entitlements and grievances. As I recall, one of the chief reasons that humans live well past their fertility years until most other animals was that were was a huge survival benefit for the young due to care by grandparents. The current set of boomer grandparents ignore all of this…ignore that their parents, the silent generation , were often the ones that helped them out with the kids. Sound like a trend?

#222 Vangrrl on 03.16.14 at 11:39 am

#195 Andrew: Kudos for your honesty.

#223 Worried realtor on 03.16.14 at 12:20 pm

Spaulding Hastings Esquire on 03.15.14 at 10:38 pm
Leverage and Real Estate..only way to go!
Russia Ukraine situation has tons of wealth heading to London, U.S.,Swiss Real estate with Canada next up.
Safety 1st. (Preservation of capital)
So no correction, next leg up.

Smoking Man, must be the musk oil smell of your shirt.
—————————————————————–

It’s ignorant realtors like you that give smart realtors a bad name. Russia/Russians would NEVER invest in Canada for fear of getting assets seized . In fact I know wealthy Russians who have been selling RE in both Canada and US.

#224 Infused with Opiates on 03.16.14 at 1:03 pm

136 Another doc – you said your wife never went back to work. Why do you need babysitting/daycare?

#225 Shawn on 03.16.14 at 1:04 pm

Solution for the 99%

Kyle at 215 asks Garth:

I’d be interested in your thoughts on what you think the best approach for the 99% is given things may not move back to the norm…

****************************************
Here’s my thoughts on the matter.

“Do as the Rich do”

Be an owner not a loaner

Invest in businesses.

Realize that stocks are ownership of business. Analyze the business and not the squiggle on the screen (run screaming from any hint of advice that uses “technical” analysis).

Read Warrens Buffetts annual letters starting from 1965 (now available in a book form on Amazon). Repeat the reading annually.

Read the Intelligent Investor by Ben Graham.

Think

Be positive.

Spend less than you make.

#226 Daisy Mae on 03.16.14 at 1:16 pm

#221 YetAnotherDoc: “The current set of boomer grandparents ignore all of this…ignore that their parents, the silent generation , were often the ones that helped them out with the kids….”

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

If you want children, take responsibility for them. Don’t expect others to do it for you.

#227 Daisy Mae on 03.16.14 at 1:20 pm

#204 Mark: “You and other parents had choices, made the wrong ones I guess, then everyone suffers, especially your unwanted kids.”

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

And how about you? Expecting others to raise your child for you? Maybe YOU shouldn’t have had children?

#228 Son of Ponzi on 03.16.14 at 1:32 pm

#225
the rich get richer by selling books on “How to get rich”.

#229 Son of Ponzi on 03.16.14 at 1:35 pm

Nem,
dog sharing.
Next up: wife sharing.
“As long as there is a buck to be made, somebody will try to make a buck” – Adam Smith

#230 Son of Ponzi on 03.16.14 at 1:37 pm

Or Grandparent sharing.
Maybe we become a sharing society after all.
As long as there is a buck to be made.

#231 Shawn on 03.16.14 at 1:49 pm

The 1% versus the rest…

Knowing that the 1% and the 0.1% and the 0.01% are so much wealthier than the 99%, and much more so than the bottom 50%, and much much more so than the bottom 20% there are two basic reactions and paths in life.

1. Strive to move up and become the top 50%, then top 20%, top 10%, top 1%, top 0.1%… In other words join the 1%.

2. Take the attitude that since “you can’t join ‘em, beat ‘em” . Rant jealously about the top 1%, blame the 1% for your problems, advocate higher taxes for the 1% (which may be justified, but won’t help you join them).

Choose your path… It’s never too late to change paths especially on behalf of your kids or nieces and nephews.

#232 jess on 03.16.14 at 2:00 pm

admit one lie to cover up the other lie

http://www.telegraph.co.uk/news/worldnews/europe/france/10696264/Hollande-ex-minister-hid-2-million-in-Isle-of-Man.html

#233 2or3orsometimes7 on 03.16.14 at 2:05 pm

Yet another another doc here. I think what the original poster meant that it’s nice to have *occasional* help with kids available. I would never in a million years, ask my parents to be the sole care providers during the day time. I would, if they lived closer, ask for an evening babysit once a month so that I didn’t need to spend $100 on a sitter who watches tv as the kids are asleep for most of the night. Or one saturday for a few hours while my spouse is away for a conference or on call, so that I might have a shower and an hour to myself (and again not have to fork over $80 for a professional sitter. My kids are small so I can’t trust a 12 year old girl to take care of them).

#234 2or3orsometimes7 on 03.16.14 at 2:10 pm

Also, the occasional help is invaluable when one of the parents gets the flu, or needs to take a child to the walk-in, etc.

#235 Spaulding Hastings Esquire on 03.16.14 at 2:16 pm

#223 Worried realtor:
“Russia/Russians would NEVER invest in Canada for fear of getting assets seized . In fact I know wealthy Russians who have been selling RE in both Canada and US.”

HUH?

Deteriorating economic data coming out of China & upcoming meeting of the Federal Reserve this week further reducing monetary interventions pave the way for inflows into RE.

#236 Soylent Green is People on 03.16.14 at 2:19 pm

Sayed, you and yr Anna should focus on getting pregnant first.

—> 32 is already over the hill in terms of egg age

If you can’t get pregnant, better to find this out where you are living right now then in an expensive house/condo where you’ll have no need for the extra room for years

…. as it could take a long time to adopt and/or go through infertility treatments.

WORK ON BABY FIRST, in case you can’t pop one out free!!!!

.

#237 Victor V on 03.16.14 at 2:19 pm

So you are bankrupt, does that mean you can’t buy a house?

http://business.financialpost.com/2014/03/15/so-you-are-bankrupt-does-that-mean-you-cant-buy-a-house/

#238 TheCatFoodLady on 03.16.14 at 2:27 pm

Now that Kias & cruises, free storage lockers & parking for a year are passe in the the condo sales game; here’s an elegant solution that takes care of a few problems in one fell swoop.

DESIGNATED GRANNIES! Just as condo owners in some developments can partake of a carshare program, they can now sign up for the ‘careshare’ service. Every 40 or so units is assigned a senior or senior couple available for child care duties if you want to shop, hit the cultural scene or have drinkie poos with your friends. Said senior couples are carefully screened from a criminal & medical point of view & offered a small condo unit as compensation for their troubles. Grateful parents are free to tip them.

There ya go! Child care dealt with. Indigent seniors handled.

Damn! I should run for political office somewhere…

#239 Son of Ponzi on 03.16.14 at 2:41 pm

Shawn,
You assume that leaders are made, not born.
I believe the jury is still out on this case.

#240 espressobob on 03.16.14 at 2:43 pm

#225 Shawn

Invest in businesses.
…………………………………………………………………

Good point, but most of those 1% folk learned how to start and operate a business! The smartest ones I know aint to shabby at investing either. Just a thought.

#241 Ilona on 03.16.14 at 2:55 pm

#221 yetanotherdoc on 03.16.14 at 11:37

As I recall, one of the chief reasons that humans live well past their fertility years until most other animals was that were was a huge survival benefit for the young due to care by grandparents.
______________________

True that – my daughter told me about this (and other interesting studies on the subject) that she learned in her Evolutionary Biology glass. Prooflink:

http://www.npr.org/blogs/krulwich/2013/12/16/251672253/why-we-need-grandpas-and-grandmas-part-1

In support of Docs, I was also raised by grandparents and helped by grandparents to raise our daughter and looking forward to becoming a helpful grandparent.

Wanted to write a separate post about all those comments that mention strings attached, cutting the cord and teaching parents a lesson, but too sad today. We came from Donetsk, Ukraine 20 years ago. Found jobs, sponsored our parents, bought a house so they can live with us (my mom moved out 10 years later, in-laws decided to stay). So happy they’re with us, but we still have extended family and friends back in Ukraine, and I don’t know wether to envy or pity those who never had to worry about the basic thing like survival…

#242 Nathan on 03.16.14 at 2:59 pm

http://www.greaterfool.ca/2014/03/14/9365/#comment-292280

Can we mock you mercilessly if you’re wrong tomorrow Waterloo?

(Sorry got the wrong link in the first comment).

#243 Trojan House on 03.16.14 at 3:03 pm

Hey, if they buy a condo in Ottawa at Soho Champagne, they’ll get a Mercedes CLA!!! Check it out:

http://sohochampagne.com/

Where do I sign up?

#244 Mark on 03.16.14 at 3:24 pm

#213, #218, #227- Daisy Mae

I work 6 days a week, my wife works 4 days a week, in this economy it’s what’s required. When we’re not there, our parents are and we’re greatful for it. My daughter loves hanging out with them, and they can’t get enough of her. The grandparents aren’t played against each other, they just each want time with her.

At 2 years old my daughter speaks in full sentences, counts to 20, can identify every letter of the alphabet, is learning Italian and is generally at the level of at least a 3 year old. That’s because no matter who is caring for her, they only have her to look after, and they love her like only a parent or grandparent can.

I’m grateful, they’re grateful and my daughter is grateful. Everybody wins.

#245 Anotherdoc on 03.16.14 at 3:25 pm

#233 2or3orsometimes7

You are correct in assuming that I meant occasional help from grandparents. It is unrealistic and unfair to expect them to provide full time or even part time childcare for free. Daisy Mae, I apologize for calling you lazy as that clearly is not the case. It sounds like you have a handful there. I responded impulsively when I thought you were criticizing the notion of expecting occasional help from grandparents. I underestimated how important that help can be when I started a family and was hoping Sayed wouldn’t make the same mistake.

#246 Anotherdoc on 03.16.14 at 3:33 pm

224 infusedwithopiates

I didn’t say I needed daycare or babysitting. Just occasional help. For example, if my wife gets sick, who is going to take care of the kids while I’m at work?

#247 Pope Snugglebums the 666st (aka Nosty) on 03.16.14 at 3:35 pm

#137 Old Man on 03.15.14 at 12:13 pm
– and –
#177 PoltawaDiva on 03.15.14 at 8:17 pm
– plus –
#193 JimH on 03.15.14 at 11:11 pm

“It appears that Caesar is going to the Ukraine as a poster boy or a war consultant; . . . Why?”

“Crimea goes to Russia; Ukraine gets to keep Chernobyl.”

Good column in The Okanagan Sunday today by a local writer. He explores the similarities of Quebec and Crimea, one (Quebec) having an upcoming election then a separation vote, the other having a vote on separation (independence), yet the western govts. won’t let the Crimeans have a say in their own matter.

Indeed, why? Is it because Putin tossed the private-for-profit central banks a year or two ago? The west is very good at imposing double standards under the guise of ‘freedom’, but in fact is austerity via debt slavery to the IMF.

#219 Nemesis on 03.16.14 at 11:24 am — [ChinaDaily] – Divorce cases rapidly up, property tax to blame”

Same in Kelowna with one difference — the eekonnomeee sucks big time. Children are the one of the greatest sources of info., and they are the ones hurt by this.

#248 Happy Renting on 03.16.14 at 3:49 pm

#238 TheCatFoodLady on 03.16.14 at 2:27 pm

There should be a surcharge if the designated grandparents can’t give unsolicited advice or criticism on your parenting, lifestyle, career, finances, or love life. :)

#249 TheCatFoodLady on 03.16.14 at 3:50 pm

Raising kids IS tough – a lot tougher than a lot of experienced parents often let on. Pregnant with my first one, I read too many books that made it sound, (no matter what parenting philosophy they espoused), that it was a matter of organization yet being flexible at the same time, maintaining a sense of humour & many, many nostrums that in reality for my kids – were flat out wrong.

There were many, MANY times when I was sure having become a parent was a huge mistake. I did not do well with certain stages of childhood. Thankfully, the age/stages I had trouble with were age/stages were my ex-husband excelled. I applaud those who know right off the bat they’re not meant to be parents & refuse to bow to societal pressure. I applaud those who flat out state they were not ‘natural’ parents; we’re not all in possession of the instincts.

Throw up your hands in horror here – I find newborns boooooooooring. Even my own were. You bet I was thrilled when they met the milestones & they were reasonably cute but I started having a lot more fun when they hit the ‘terrible twos’. I also loved the teen years.

Parenting, kids, grandparents & available help – those areas of life are as diverse as housing & finance are for families. Many young families don’t live near grandparents. When they do, those grandparents may still be at work or caring after THEIR aging parents.

And just as some parents thoroughly enjoy, (or seem to), every phase of parenthood, some enjoy frequent, hands on grandparenting. If their child rearing styles mesh with the parents – perfect. Quite often, it doesn’t.

Care is a personal decision based on available assets, including finances, APPROPRIATE family willing & able to help, decent child care of your choice that’s not family & life circumstances. I don’t have grandkids yet but am looking forward to it. It’s unlikely my future grandchildren will not live in the same city with me so time with them, (exhausting though it may be), is something I’ll be eager to experience.

Just hope my young adult brats feel able & stable enough to produce grandkids while I’m still young enough to show the grandkids all manner of ways to get into trouble! That shouldn’t be hard – I never really did grow up.

#250 Pope Snugglebums the 666st (aka Nosty) on 03.16.14 at 4:05 pm

It seems the results are in, and the people have spoken.

#251 Nemesis on 03.16.14 at 4:27 pm

#В інших новинах #Люди говорили #SillySunday #PartayTimeInSimferopol

http://youtu.be/jzzD5I4929o

[NoteToSonOfPonzi: Rumour has it that Mr. Flett has already purchased the domain name, "HalfTimeHoochie". NoteToGT: I know, that's not Ukrainian - but I didn't have time to OverDub it... and the visuals fit. Sue me. http://tinyurl.com/o4tsx43 ]

#252 rosie "moving forward" in the knowledge that, "this won't end well" on 03.16.14 at 4:28 pm

This kid thing today is like politics and religion.

#253 Linda Pearson on 03.16.14 at 4:37 pm

#233 2or3orsometimes7 on 03.16.14 at 2:05 pm
*********************

And I hope that out of that few hundred dollars you are “saving” throughout the year, that you can find it in your heart to drop a hundred or so your parents’ way so that they can go out for dinner on you.

#254 shawn on 03.16.14 at 4:48 pm

Be the 1%

Ponzi at 229, being a leader is neither a necessary nor a sufficient condition to join the 1%.

Saving 10% annually and investing in businesses (stocks with some diversity) is the surest course. Learn to live with the volatility. Rebalancing can be good too.

#255 Son of Ponzi on 03.16.14 at 4:53 pm

#250
the people have spoken.
———————-
Markets in Asia are opening soon.
Let’s see what the markets are saying.

#256 Snowboid on 03.16.14 at 5:19 pm

#210 Daisy Mae on 03.16.14 at 10:12 am…

Here’s a start:

http://www.auto-broker-magic.com/Canada_Import.html

Pretty well the same process, except we emailed the paperwork to the border and took the registration information to our ICBC broker.

Our costs were:

Purchase Price $35,760.64
Duty $2,181.40
Aircon $100.00
GST $1,902.10
PST $2,662.94
RIV $218.40
Prov Inspection $145.00
Remove tint* $115.00
DRL $495.00

Total Cost in CAD: $43,580.48

* (Front window tint too dark for BC law)

At the time, the same car with options and extra custom work, would have a Canadian MSRP of almost $ 60,000.00

Could have likely struck a deal around $ 57,000 – so I figure we still saved almost $ 13K.

Key is to make sure the warranty is valid in both countries.

#257 jan on 03.16.14 at 5:30 pm

#207 Blase on 03.16.14 at 10:01 am
I wish people would stop blaming the housing bubble on low interest rates. CMHC is the only thing to blame. Get rid of it and the housing market becomes ground zero.

100 % TRUE

#258 espressobob on 03.16.14 at 5:35 pm

Like Warren Buffet didn’t have humble beginings?

http://en.wikipedia.org/wiki/Warren_Buffett

Still get a good laugh at his view on gold!

#259 just an observation on 03.16.14 at 5:41 pm

HUH?

Deteriorating economic data coming out of China & upcoming meeting of the Federal Reserve this week further reducing monetary interventions pave the way for inflows into RE.

Huh?
What dope are you on ??????

#260 Vlad the Inhaler on 03.16.14 at 6:07 pm

@#247 Pope Snugglebums the 666st (aka Nosty)

Indeed, why? Is it because Putin tossed the private-for-profit central banks a year or two ago?

—-

This is disinformation for the naive. Central banks didn’t get ‘tossed’. Putin’s father was NKVD. KGB agent Vladimir Putin is second generation untouchable elite bank agent. Hitler put on a similar show for the naive children who to this day look up to him as some kind of hero, but he was an agent to. How do you know Hitler died in a bunker?, and details of Nazi camps?, and Germans did put bullets in the back of the heads of thousands of Polish POWs at Katyn ? The Russians told you so. The Russians told you so. The Russians told you so. Suffice to say the Russians haven’t stopped lying.

#261 2or3orsometimes7 on 03.16.14 at 6:16 pm

#253 Linda Pearson

Unfortunately my parents live far away. They are still working in their professional well paid careers. I certainly do gift them ‘just because’, but more importantly, we share a great emotional bond. I’ve dropped everything to help them navigate the medical system, and they in turn have readily come to help in the few instances where we didn’t have a choice. When I offered money in return, they brushed it off, and I don’t think they feel like I am taking advantage of them.

#262 don on 03.16.14 at 6:43 pm

Shawn I am sorry but some of us are talking monetary policy and the creation of the super rich(they are directly related) as a morality issue only. The simple fact is if everybody invested not everybody body would get rich. There is simply not that kind of wealth in existence, hence the complaints as to how wealth is distributed.

#263 Alistai on 03.16.14 at 6:57 pm

Wait for a correction, then cash in on the parental gift. I wish I had their problems. If the parents have placed a best before date on the gift, one wonders what other strings are attached. My mother-in law offered to give us her house. The catch? She and father-in-law AND my wife’s nephew (their grandson, nearing adulthood, whose parents abandoned him to the grandparents almost at birth, long story) get to live with us. For as long as they last. And the nephew is just 15, so he will last about 25 years longer than me. It took me about 1 millisecond to reject that offer. Family “gifts” are often not worth the oxygen it takes to express them. Tread carefully.

#264 Daisy Mae on 03.16.14 at 7:18 pm

#234 2or3orsometimes7: “Also, the occasional help is invaluable when one of the parents gets the flu, or needs to take a child to the walk-in, etc.”

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

Of course, grandparents are available in such ‘emergency’ situations.

But we have lives, too, ya know? DO NOT take us for granted. Okaaay? ;-)

I’m finding the younger X and Y generations seem to be so full of themselves. Wow!

Rant over…

#265 gut check on 03.16.14 at 7:35 pm

#221
My experience is similar to yours. Extra bonus you might want to watch out for: My boomer parents leave the country each winter which means my elderly and infirm grandfather has only myself and my husband to help him with his needs. They seem to believe that since they never asked me to step in that it is my choice to take on the role and I can and should stop any time I want to. *sigh*

#266 gut check on 03.16.14 at 7:41 pm

I should have read more of the comments before I responded above. I cannot believe how the suggestion that grandparents might be available for childcare is being reacted to by some of the grandparents!!! Just wow.

and here are the rest of us falling all over ourselves to explain that no one meant they’d roll up every morning, dump the kids out of the car and screech off to work without so much as a thank you. It goes to show how well trained Gen X has become and also how ferociously the Boomers guard their right to their “ME” time.

honestly. wow, just wow.

#267 Infused with Opiates on 03.16.14 at 8:05 pm

221 yetanother doc

“Now most kids are in daycare, because the boomer
generation is all about the “me, myself and I”
mentality and their entitlements ”

No I think that is just you. You make good coin as a
doc. Why isnt one parent at home?

Many boomers are still working…….maybe because one stayed at home while the kids were young.

#268 Daisy Mae on 03.16.14 at 8:24 pm

#265 Gut Check: “They seem to believe that since they never asked me to step in that it is my choice to take on the role and I can and should stop any time I want to. *sigh*”

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

THIS is totally unfair. You’re allowing yourself to be a doormat. Do not be a doormat. Your parents could, perhaps, make an effort to find temporary ‘assisted living’ accommodations for him.

#269 Daisy Mae on 03.16.14 at 8:30 pm

#266 Gut Check: “It goes to show how well trained Gen X has become and also how ferociously the Boomers guard their right to their “ME” time.”

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

What do we grandparents owe you? We’re entitled to our ‘me’ time ’cause we’ve done our time.

#270 Vangrrl on 03.16.14 at 8:42 pm

What an interesting thread. I love this debate! I really enjoyed your comments, Daisy Mae.
# 214: I reckon the guy would make far more money with a ‘part time husband’ thing given that with women supporting themselves these days, and often having more extensive networks of friends, women do much better on their own than men, at least when you get into the late 30s and 40s.
# 234: A woman’s eggs lose quality after 25, yes, but 32 is in no way over the hill. I recall reading that in Canada more women get accidentally pregnant in their 40s now than teens do (!) because the hey let down their guard thinking they can’t get pregnant- because of the constant scare tactics like ‘It gets so hard to conceive after 30.’

#271 Dupcheck on 03.17.14 at 8:55 am

Wow, these couple makes a lot of us other professionals in the same age feel underpaid big time. Seriously, move elsewhere or keep complaining. At 370k/ year, cry me a river. Do not be too greedy, there are people that do not have a job. Now that is a problem. What these two have is the case of being spoiled.

#272 gut check on 03.17.14 at 9:00 am

Daisy Mae #268 and then #269:

“THIS is totally unfair. You’re allowing yourself to be a doormat. Do not be a doormat. Your parents could, perhaps, make an effort to find temporary ‘assisted living’ accommodations for him.”

“What do we grandparents owe you? We’re entitled to our ‘me’ time ’cause we’ve done our time.”

How can you have both of these thoughts in your head at the same time?

You recognize that it is unfair for them to saddle me with the extra care of my grandfather (by just leaving him – not asking me to help, not getting a schedule together, certainly offering to pay me) but you think it’s totally FAIR for them to not lend a hand when I needed it as a struggling single mom who at one point couldn’t even afford to buy a new umbrella I was so poor?

I mean, isn’t it really my GRANDFATHER’s problem that he isn’t able to look after himself? Shouldn’t my parents be able to say “I’ve done my time!!” and just walk away?

Lucky for them, they see all of it your way: “We’ve done our time!” they cheer as they go on yet another cruise.

#273 gut check on 03.17.14 at 9:01 am

* oops, that should have been “certainly NOT offering to pay me”

#274 None on 03.17.14 at 11:13 am

#269 Daisy Mae on 03.16.14 at 8:30 pm
********************
What do we grandparents owe you? We’re entitled to our ‘me’ time ’cause we’ve done our time.

============================

Spoken like a true boomer – done your time. From what I’ve seen your parent’s generation (my grandparents) helped and helped and helped with childcare, etc. but of course, you guys could not possibly return the favour! Nope, us Gen X’s just need to work harder right? You make parenting sound like a trial that you could not WAIT to get rid of…

So, how would you feel if your kids said no way Mom, you’re on your own, yeah I know you are 90 and can’t do anything for yourself, but hey, we put our time in too.

Frankly, I’m shocked at how quickly Boomers forget the pain of being parents, and just fall back on the old adage of “if you can’t handle kids, don’t have them” or “geez in my day we took care of our kids…no daycare for them!”

Here’s a tip, the world has changed a lot, and younger parents need help, not due to many things that are their fault. You need 2 jobs these days to keep food on the table, etc.

#275 Enthalpy on 03.17.14 at 12:24 pm

370k combined?

why do I even bother trying? At that income and savings/with the potential gift. It doesnt really matter what they do.

#276 yetanotherdoc on 03.17.14 at 12:31 pm

#269 Daisy Mae

My mother left my 85 yo grandmother alone by herself while she took a cruise, but tells my brother and I that she is on some sort of business/philanthropic trip. (Sound familar, #272 gut check?) My grandmother ends up in hospital and I spend 48 hours trying to track down my mother where she said she was going to be because she had POA. I had to deal with it. You can see the typical boomer mentality…If I had your mentality, I should have said “not my problem, I’m too busy with the kids.”

Should I give up my medical practice for 4 years to raise the kids? Good luck on coming back into practice after that. You might as well tell me to pack up and go home to be a housewife…hint…try and tell that to my husband and you’ll get a response like #202 Detalumis.

#277 None on 03.17.14 at 12:50 pm

#269 Daisy Mae on 03.16.14 at 8:30 pm
********************
What do we grandparents owe you? We’re entitled to our ‘me’ time ’cause we’ve done our time.

============================

I will also note, I’m not bitter, I accept that boomers (my parents) are just pretty inward focused a lot of the time. What I get tired of, however, is hearing them remind my generation that we just must be doing something wrong since we are not as far ahead as their generation was at that age.

#278 freedom on 03.18.14 at 3:06 am

if you make 250 k a year in Ontario literally half of that income is stolen by government in taxes CPP, govrrnment pension plan and EI, take home pay would be roughly 150 to 160k, which isn’t to far to what power engineers in northern alberta make in a year, who have only gone to school 1 or 2 years versus 10 years for a doctor.

What bothers me is that people are upset with average people making this much money. Its not even that much money, compared to successful business owners or astute investors. Its usually the socialist type of person who feels envious and jealous of such people.

Anyways if I was the guy I would just save my money and continue to rent. His parents money is his money anyways. He should look at investing with money managers that specialize in acquiring under valued foreign assets including foreign properties.

#279 Keith on 03.18.14 at 6:54 pm

The comments. Wow. Talk about jealous.

Good on this young man for getting in and through medical school in a specialty no less (explains the income).

And I get his concern. He doesn’t want to be risking money needlessly.

And I also suspect I know where the gift is coming from. If you’re Indian/Arab/etc., the gift is essentially dowry, marriage present, family startup fund all rolled into one.

The questions I would have is this:

1) What will the wife do after you have kids? Can you really count on her income?

2) What kind of lifestyle do you want? Even at nearly $400k of family income, there’s a strong element of keeping up with the joneses. And unfortunately, your set of Joneses are med school buddies who all have similar incomes.

3) How often are you willing to move? Your housing needs may change based on your family and professional needs.

4) Do you really want to take the parents money? If all you’re going to end up doing is taking care of them financially, down the road, maybe it’s better to leave the $300k with them.

Assume you put $250k down and take on a $750k mortgage. That works out to a mortgage payment of less than $4.2k per month @3% rates. But of course, that’s going up. So better to budget $5k per month. That’s not ideal, but manageable on your post-tax income alone. But you won’t have much beyond the house. $7k leftover for all other expenses and savings.

So really, all the flexibility you have is coming from the wife’s income. So it really comes down to how much your wife will want to work after the kids come. And if she’s not, how much in house or lifestyle are you willing to sacrifice to ensure that you don’t end up house poor even with a $250k income?

——

Finally, to those criticizing his fiancee as some wealth-seeking charlatan. Please. How many 32 year old chicks you know make six figures? In that bracket, she is most assuredly not just another a pretty face.

Also, a doctor marrying another doctor is assuredly a recipe for divorce with the schedules they have. If you have a demanding gig, far better to get a spouse with more flexibility to help run the home better.

Good luck to Sayed and Anna.