Wusses

BABY modified

“Last fall,” says Viki, “an older man noticed the look of depression on the faces of my partner and me as we walked out of a presentation centre for pre-construction townhomes. He told us about your blog and we have been addicted ever since. We ditched the idea of buying and simultaneously the depression of house hunting. It has since been transferred onto our parents who of course think we are useless.”

Wow. Dejected, vulnerable virgins ambushed by some old dude who whispers a pathetic blog URL then melts into the night. The growth of an unhealthy online obsession. Finally, wholesale rejection by your entire family for unclean thoughts. What’s not to love about an email like this?

“We are 28, we make a combined 150K before tax, and we rent a condo downtown for 1,600. We have saved almost 200K and we have no other debts or monthly payments and now need to figure out what to do with our money that is sitting there wasting away. Should we just invest it all? Thanks for shedding the light on those of us who don’t know any better than what we grew up with.”

Well, this is a common question posed by those young people who get it. In a country where house lust has been goosed by lax bankers, minimal deposits, cash-back mortgages, RRSP-downpayments, government insurance, media drooling plus teaser 1.99 home loans – and where financial illiteracy is endemic – most kids are lost. Once five years of university clicks in and they figure out buying a $400,000 condo with 5% down and $390,000 in debt is lunacy, they’re stumped. What now?

I hate to generalize, but that won’t stop me. The kids – Millennials, GenY, or whatever – are insanely conservative. It’s fascinating how people who have never sustained losses fear risk. No wonder 80% of TFSAs now sit in savings accounts or other cash equivalents. And you can tell from all the bank advertising that GICs have made a big comeback, despite appalling rates of return and punitive taxation. Ironically, during a half-decade when balanced portfolios were throwing off double-digit returns annually, those among us with the longest time horizon – people in their twenties – were acting like little old ladies with hankies up their cuffs. (Did I just generalize again?)

Why?

One reason may be nobody teaches this stuff. You’d think money management and basic investing would be de rigeur, but parents are way more concerned with French immersion because they seek a certain je-ne-sais-quoi.

Beyond that, today’s crop of newbie grads saw the market crash of 2008-9, when stock values temporarily plunged by about 55%. And while the bounce-back was relatively swift and dramatic, many of them had Boomer parents who panicked and sold into the teeth of the storm, cementing their losses. So, while you can’t fix stupid, you can apparently teach it.

There’s even a term for it now. ‘Recession babies’ describe an army of US Millennials who are too freaked out to invest in financial assets and also real estate, having witnessed what the housing bust did to their families. A recent survey of this group (born after 1977) found 46% of those with $100,000 saved said they would never be comfortable with any equity investments and 52% of those in their thirties swore stocks would never be a part of their retirement plan, despite the fact nothing (including housing) has shown better consistent, long-term returns.

Where do these people have their money? In cash. Astonishingly, over 50% of kids today consider a savings account to actually be an investment vehicle, despite returns less than inflation, and taxes double those on assets returning capital gains or dividends. It’s probably not just ignorance leading to this choice. It’s fear.

Maybe it’s the result of fat student debt incurred to get a degree which is no longer a ticket to income. Maybe it’s a lousy job market and a stuttering economy. Maybe it’s the Boomers, themselves asset-starved, hanging on to the good jobs. Maybe it’s fear of loss when you have little. Or perhaps it’s just inexperience, mistaking the 2008 correction for something epochal.

Whatever, Viki. Rise above.

You’ve already decided jumping onto this housing gasbag at the 11th hour is a suicide move, posing the greatest current risk to your two hundred grand. You probably also realize this will not right itself quickly or easily. Thus, investing in the meantime makes a great deal of sense – so long as you abide by the holy trinity. Balance. Diversity. Liquidity.

In the days to come I will give you my Millennial Portfolio. For the love of God, do not share it with your parents.

167 comments ↓

#1 Keith on 05.14.14 at 8:01 pm

Garth, the Talmud recommends 1/3 cash, 1/3 real estate and 1/3 in business (lets say equities) for asset allocation. Does that work for you?

#2 Dr. Wayne's Son on 05.14.14 at 8:05 pm

I am first, you Assclowns….

#3 vip_saint on 05.14.14 at 8:09 pm

Nailed it. Yup…its the fear of loosing your hard earned money in stocks which is also keeping me out of the market. Looking forward to your next post for the Millennial Portfolio

#4 Rick Fast on 05.14.14 at 8:09 pm

FIRST!

#5 Syd Cixel on 05.14.14 at 8:10 pm

Is the housing market so weak that banks are now offering 1.99% rates? Are the banks that desperate for new mortgages?

#6 Vamanos Pest on 05.14.14 at 8:13 pm

Yes Vicki, invest it. And have whatever it is you usually save every month automatically contributed to your investment account. Over time, this will smooth out your average cost.

Also, remember, you are trying to ACQUIRE investments. You should HOPE markets go down not up. (If you were actively trying to acquire, say, art over time, would you be hoping that it went up in price as you were trying to buy it? Of course not. In the acquisition phase of investment, the dips really have no meaning because, yes, the number you see online when you check your account is lower, but the price you’re paying for those investments will also then be lower. So at your stage there really is nothing to fear. You’re either going to be seeing nice gains, or getting more investments “on sale”. Win, win.

#7 Fred on 05.14.14 at 8:13 pm

Last!

#8 Lawless1 on 05.14.14 at 8:16 pm

Wow! This post is exactly our situation…except we don’t even have close to 200K yet thanks to the dead weight of student loans which, incidentally, helped to prevent us from contributing to the gas bag in Vancouver prior to finding this blog.

#9 shane on 05.14.14 at 8:17 pm

Garth, when do you expect the 15 % drop in housing prices next year?

#10 sam on 05.14.14 at 8:22 pm

first

#11 Nemesis on 05.14.14 at 8:22 pm

#CatNip #FasterThanLight #PoliticalGenies

@CatFoodLady

HearYeHearYe… in accordance with HM QE II’s instructions, and by virtue of the office temporarily granted to me to by HM, I do hereby pronounce and declare that, henceforth, TheCommoner previously known as CatFoodLady shall enjoy the Title, Styles, ArmorialBanners, Privileges & such other Honours, including – but not limited to – CommodiousGrace&FavourLodgings and such other AristocraticEmoluments as are befit the rank of:

DameCatFood GC [Grand Cross of the Most Excellent Order of the British Empire].

By RoyalCommand, Ms. SherylCrow shall perform a little something in your honour, DameCatFood:

http://youtu.be/raSb13MX1mc

@SmokingMan

Of course it’s possible. It’s how KPAX got here. I thought everyone knew that.

http://youtu.be/EnLHHVSeMe4

[NoteToRalph: Perhaps we could resolve recent disputatious assertions if we agreed on “CunningSOB”. Just a thought. After all, where would ForrestGump be if he hand’t been in exactly the right place at the right time?]

#12 moneymike on 05.14.14 at 8:22 pm

Aw but I want it now..

#13 hohoho on 05.14.14 at 8:26 pm

> … By elimination, we must conclude that he was a political genius …

well Sarah almost got her hands on the nuclear football, and she’s got no charm, connections, fortune or brains :-O

#14 PK on 05.14.14 at 8:27 pm

Go Habs Go!

#15 Dean Mason on 05.14.14 at 8:28 pm

My friend makes $100,000 a year and rents a $1,875+utilities a month house in North York.

He maxes out his RRSP of $18,000 a year and takes most of the RRSP income tax refund of $5,500 putting it in a TFSA every year.

He buys 75% in 4.10% provincial strip bonds and 25% in 3.00% GIC’s.

He saves an additional $2,500 a month and buys dividend paying stocks and REIT’s which are in the 4.40% to 4.75% yield range in his non-registered account.

He also built up a $25,000 cash reserve fund paying 2.05% for short term needs that come up.

He has a 3 year old car, no debts of any type. He told me he has no interest in buying a house.

#16 sideline sitter on 05.14.14 at 8:34 pm

I look forward to it, Garth!

I’m in a similar boat as Viki, and while I’ve told my in-laws to relax on housing, my wife gets nervous when I say we’ll take our big chunk of change and invest it.

I’ve squeezed out a third to invest, but I’d rather get to 80%. So far I’m up, bit I know the wife will freak if it goes down, even when I call it a great time to buy!

#17 Laz on 05.14.14 at 8:40 pm

Thank you Garth! This is just what I’ve been waiting for. Just sold my condo and will soon have an extra 100,000. I was looking into buying something bigger, before a coworker introduced me to your blog… and saved me. Just renewed my rental lease and would love to know where to be investing my money. This Millennial will gladly take all the advice she can get!

#18 mitzerboy on 05.14.14 at 8:40 pm

Amen to that Garth…

#19 omg on 05.14.14 at 8:42 pm

You Can’t Fix Stupid but You can Teach it

While US Millennials have caught the conservative bug, Canadian Millennials have learnt from their parents that there is no investment like real estate.

Canadian Mill’s boomer parents have ridden the ride of demographics for the past 30 years and done spectacularly well in RE.

Conversly Boomers have done spectacularly bad in equities – jumping on the dot com bandwagon, riding the Dow and TSX for a decade of no gains from the late 90’s to 2010, and getting sucked into 2.75% loaded mutual funds.

So what’s a Canadian Mill to do based on observing the parents? – buy real estates (remember, it never goes down in Canada) and shun the equity market (it never goes up, at least after you pay 2.75% mutual find fees).

What’s a smart Mill to do? – just the opposite.

#20 Sam on 05.14.14 at 8:44 pm

Simple.

Buy when you are ready.
NO one can “time” the market.
So take control of what you can control and leave the rest.

Simple

#21 Holy Crap Wheres The Tylenol on 05.14.14 at 8:45 pm

Can hardly wait to see what we parents shouldn’t see! Our time was different, our investments much more simple, our problems were more socially complex! We really can’t compare apples to oranges, so this oughta be interesting Garth. I have to say my investment tactics have changed over the last 45 years, you must adapt and relearn and or rethink how to invest and get maximum ROI.

#22 Jose on 05.14.14 at 8:45 pm

Garth,

what’s the difference between balance and diversity ?

#23 The Big Owe on 05.14.14 at 8:45 pm

Ladies and Gents

99.999% chance I give you the real smoking man

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

An his absolute best work ever

“A handbook for human ownership- A Manual for new Tax Farmers”
http://www.youtube.com/watch?v=k67_imEHTPE

#24 My Life is a Pile of Shit on 05.14.14 at 8:49 pm

You can’t blame anyone for cutting losses in a bear market, during which you can’t know if the losses are temporary, or epochal as in Dow 1930s, Japan 1990s, or Nasdaq 2000s. It is imprudent to think all bear markets will rebound in a year. The financial markets have a way of changing behaviour once you have learned it. (I was not in the market during the Credit Crunch, because I couldn’t stand the volatility even before it.)

#25 crowdedelevatorfartz on 05.14.14 at 8:50 pm

My boss confided that he pulled all his money out of the stock market a few years ago and it sits……in cash.

Risk vs reward.

An expensive lesson in our inadequate preparation for saving, investing and retirement….

Most people will never get it.

#26 TurnerNation on 05.14.14 at 8:51 pm

That’s fine leave investing to the big boys and girls.
Though many younger people are busy trying to inject liquidity into dark pools. (This is also fine.)

#27 Aggregator on 05.14.14 at 8:52 pm

The best advice I can give millennials is this.

I know, I know. It's different this time.

#28 Freedom First on 05.14.14 at 8:53 pm

Yes, people selling into the market crash of 08-09. I saw the faces of the people who panicked. Ugly. I didn’t say anything, but you just know when people are not properly balanced, diversified, and liquid, and know nothing of re-balancing, and that financial literacy keeps the emotions in check, as emotions are the biggest motivator of making insane financial moves. Herd emotions screw you at the top of markets, when the herd buys, and at the bottom of markets, when the herd sells. No exception. And when markets are rising the financially literate are re-balancing, and when the markets crash, it is a feeding frenzy for the financially literate. Always.

For myself, I am recently overweight cash right now. Cash is King during market corrections, and is my personal comfort zone at times. Having the cash at market peaks, can pay huge huge dividends. I am ready for the overdue correction. Feeding time.

#29 crowdedelevatorfartz on 05.14.14 at 8:54 pm

@#2 Dr. Wayne’s Son

Hilarious! And truly eloquent!

#30 John on 05.14.14 at 8:55 pm

Can’t wait to see that portfolio… That’s the issue many face: where to keep money while we wait for some housing correction and saving for larger downpayment.

#31 JS on 05.14.14 at 8:55 pm

#10 The Big Owe on 05.14.14 at 8:45 pm
Ladies and Gents

99.999% chance I give you the real smoking man

You are over confident, Big Owe, and incorrect. He slipped up one time on this blog by spilling too much personal info that led me to his true identity, courtesy of UOG. Feel free to read through the comments section of the last thousand or so posts to see if you can find his error…

#32 Yes please on 05.14.14 at 8:56 pm

This would be very much appreciated, and any advice is useful; it is a tricky time for people in their late 20s, I find that there is talk of another small correction coming and at the same time there isn’t much choice other than investing.

They say you should be more aggressive when your younger, so what mutual fund or portfolio at CIBC would you recommend ;)

#33 Mister Obvious on 05.14.14 at 8:57 pm

I very fortunate to have been fully invested during the global financial crisis of 2008. Why? because now I feel I’m ready for anything.

I lost a ton of money in 2008. But ‘lost’ is really not the correct word, is it? What happened was a ton of my money went shy and hid in the closet for a while. But within a year it came back out bolder than ever.

My advisors at the time told me to stay the course and resist the urge to sell into a falling market. And resist I did. It was not easy but it was the right thing to do. A handful of my acquaintances did sell in a panic. They never fully recovered.

I’m here to testify that Garth is right. Balance Diversity and Liquidity are your best friends. Yield is also another good pal of mine I like to give credit to from time to time. Namely, those times when dividends and disbursements are paid out.

To be quite honest I don’t even know what’s holding the financial markets at their present position. I believe a sizable correction is due quite soon (but not another 2008). I expect it. I know people who will welcome it. For example, money managers who are waiting for valuations to improve before putting parked money to work.

So should I sell everything now? Of course not. That is entirely foolish and unnecessary thanks to Messieurs
Balance, Liquidity and Diversification. Oh yeah, and my old buddy Yield.

Ya gotta love those guys.

#34 Ryan on 05.14.14 at 8:59 pm

150k? Cry me a river..christ

#35 keelaboi on 05.14.14 at 8:59 pm

#2 Dr. Wayne’s Son: only ‘ass-clowns’ post “first”.

#36 Shawn on 05.14.14 at 9:01 pm

No One is Buying 3% Treasury Bonds?

Rexx Rock at 17 says:

The ten year treasury will stay below 3% so countries will invest in the stock market and not buy treasuries.

******************************************
Low prices on ten year Treasury’s (currently about 2.54%) indicates SOMEONE wants badly to buy them.

Yes the Fed is buying, but now they are cutting back on buying.

I believe pension funds and others are still buying hand-over-fist.

You will know there is a lack of interest in buying 10-year Treasuries if and when the yield climbs back over 4% or 5%.

As far as countries the following link shows they are still buying treasury bonds. (Though it is not clear if it is the country itself or is it investors within the country)

http://www.treasury.gov/ticdata/Publish/mfh.txt

#37 Early Spring on 05.14.14 at 9:04 pm

Thank You GT!!! This is about the same scenario as we are in, looking foreword to see your play book and what we can do with it. Good job good sir!!! Saskatoon loves Garth!!!

#38 Son of Ponzi on 05.14.14 at 9:14 pm

Garth, the Talmud recommends 1/3 cash, 1/3 real estate and 1/3 in business (lets say equities) for asset allocation. Does that work for you?
———————-
Readers of the Talmud tend to be financially astute.
So, following it’s advice seems to be a wise decision.
Garth’s blog vs. the Talmud.
Take your pick.

#39 Saskatoon-Living on 05.14.14 at 9:16 pm

I hope your Millennial Portfolio is better than the 40% fixed income, 60% stocks (comprising of growth, international, US, and CDN equities) with a 7% annual return makes you a millionaire by the time you’re 64 gospel you’re used to preaching.

Now when did I ever tell you to buy stocks? — Garth

#40 Smoking Man on 05.14.14 at 9:19 pm

#24 The Big Owe on 05.14.14 at 8:45 pm

Sorry bud….. I wish I had half the communication skills Stevie has.

But he is probably one of my first
fans from my globe and mail days..

And I quote him…

Smoking Man, you have an incredible life force.. You are inspiring…. And he does pop in here from time to time.
Wow….
Him back then, Nic Pizzalotto writer for true detective…

Hell, if I just keep this shit up, I don’t need to go to all the trouble
of getting my book out there. My ideas are getting out.

My fans are doing it, and I don’t even break a sweat…

#41 Old Man on 05.14.14 at 9:19 pm

I blame the old ladies with their binoculars as they are always watching things. This substantial park in Ontario has a bandstand with a stage, and the city has just gated it. Apparently there has been inappropriate behaviour which occurs after hours or in the dark on the stage. Perhaps a bit of romance, or a couple of student actors practicing for a debut? Yes, just a couple of university students role playing for Romeo and Juliet.

#42 takla on 05.14.14 at 9:23 pm

Will be sittin on the TFSA and PM’s for the time being.The market just seems to have topped and is sputtering …to much risk for minimal return on investment.And I sure as hell don’t want to lose my short investing dollar.
News out of Europe indicates there may be more stimulis on the way added to pressures of higher U.S interest rates and yellen indicated at the last meeting that stimulis may be on the table again in the U.S.
Metals have recently made a double bottom and had good gains today.Most people don’t realize the Au to Ag has historically been around the 15-1 ratio,today 67-1 if we get a run the metals are looking for large gains.Remember Ag is an industrial metal{think solar} as well as has been used for 6000 yrs as currency of last resort with no counter party risk.There are many options out there to invest your hard earned ,after tax dollar,a 25 % allocation to the metals may be prudent at this time…of course I may be wrong..

#43 Brian Ripley on 05.14.14 at 9:26 pm

The animal spirits are raging. “Christie’s racks up $745m in one night (a record) and the bubble keeps inflating.”

When I saw that, I had to check the Sotheby Auction share price BID and its anagram BDI (Baltic Dry Index) to see if there is any divergence going on. Yup there is; I mashed up some charts here:

http://www.chpc.biz/history-readings/exit-through-gift-shop

Some art prices are hitting new highs as commodity shipments head south.

#44 Retired Boomer - WI on 05.14.14 at 9:28 pm

Viki-

At age 28 YOU are DEBT FREE with $200?K saved! Way to go!!!!

Invest 80 – 90% of that into Stocks, REITS, for the long term. The balance could be in Preferred’s or intermediate term bonds. Don’t forget a nice FAT Emergency fund, too.

Wow, at 28 no debt you are VERY RARE!

Don’t blow your freedom of mobility on property just now.

We never really know tomorrow until it is here. Live well

#45 Suzie Q on 05.14.14 at 9:33 pm

Ba ha ha ha ha “for the love of God, do not share it with your parents”

That’s why I can’t stop reading this blog, right there!

#46 Lana on 05.14.14 at 9:36 pm

I have some big decisions to make, and maybe people here can give me their opinions. I’m about to sell my house to my grandson, and will have about $70,000 profit. My EX will get 70,000 also. I am trying to decide what to do next. I am raising my 16 year-old grandson, and probably have another 2-3 years of employment at a good job–about $30.00/hour. My decision is whether to buy a smaller house/condo/semi, or to rent. I am getting advice on both sides of the argument.

#47 sheane wallace on 05.14.14 at 9:37 pm

CMHC:

http://www.youtube.com/watch?v=Xk3j6g50Krs

#48 Babblemaster on 05.14.14 at 9:40 pm

#9 shane

“Garth, when do you expect the 15 % drop in housing prices next year?”

———————————————————-

Garth, not unreasonably, expected a drop shortly after
2008. Of course, it hasn’t worked out that way. Bottom line is nobody can tell if, or when, it’ll drop.

#49 Jen on 05.14.14 at 9:49 pm

@ Lana,

“I’m about to sell my house to my grandson, and will have about $70,000 profit. My EX will get 70,000 also. I am trying to decide what to do next. I am raising my 16 year-old grandson, and probably have another 2-3 years of employment at a good job–about $30.00/hour.”

Surely you’re not selling to a 16-year-old? Assuming you’re selling to a different (adult) grandson, much more information is needed to give any sort of input. You gave no information regarding your assets, debts, plans, goals, etc., all of which are very important. One bit of advice I can give without any further information is: be VERY careful when entering into a monetary and legal transaction with family members.

I have a rule for that. — Garth

#50 Smudgekin on 05.14.14 at 9:52 pm

I do invest Garth but I don’t trust the snotty suits that run the markets. Too much is opaque so they can siphon. I don’t believe they’re as bright, as well positioned or as well prepared as they like to think they are.
They’ve bred the culture of double digit yields and now if you work for a large corporation that’s all it’s about. Everything comes second.

#51 Smoking Man on 05.14.14 at 10:04 pm

#32 JS on 05.14.14 at 8:55 pm99.999% chance I give you the real smoking man

You are over confident, Big Owe, and incorrect. He slipped up one time on this blog by spilling too much personal info that led me to his true identity, courtesy of UOG. Feel free to read through the comments section of the last thousand or so posts to see if you can find his error…
……….

Considering I’m usually smashed out of my skull when I post, and I almost never slip up should give you a clue on how powerful and my mind is… I just watched the video link of Stevie a Burlington boy.

He must come here quite a bit.

I’M Saving self exposure for the book launch…

By Nice please…

#52 Pope Squashed Squid Snugglebombed the 666tr (aka Nosty) on 05.14.14 at 10:10 pm

If you’ve got it, flaunt it. Is this going a tad too far?

It is well known that dogs chase cats. Not this one. Toddler on a tricycle is attacked by Butch the Dog, then Fritz the Cat comes to the rescue. Video starts automatically.

Unplugged “More large corporations have decided that the electric power grid is unreliable and are planning to unplug from it and generate their own electricity.”

#142 Smoking Man on 05.14.14 at 12:03 pm — “Einstein and Hawk are Wrong….. Period.”

“There is not the slightest indication that nuclear energy will ever be obtainable. It would mean that the atom would have to be shattered at will.” — Albert Einstein, 1932

You have a point, SMan!

#53 Bobbo on 05.14.14 at 10:16 pm

Housing overpriced. PE ratios creeping higher. I would say waiting and having cash is the way to go right now. This is not the time to be jumping in.

#54 statsfreak on 05.14.14 at 10:17 pm

Garth Darlin’
I am a devoted fan & happy to drink whatever flavour of koolaide you are handing out today. Please never retire!
:o)))

#55 Dean Mason on 05.14.14 at 10:18 pm

My friend in my previous example told me about a letter he received last week from the broker/agent that leased him his house about investing in MIC’s that are paying a 12% total return for 18 month terms.

I would not personally invest in MIC’s especially that they want a minimum $20,000 investment.

I told him be very careful and try not to overshoot for yield and risk.

#56 Smoking Man on 05.14.14 at 10:28 pm

I have an I credible idea, actually experiment. I’m going to sell tee shirts on my blog.

Two types…. 100 only. Fk all I need is an other business… Booze and Smoking making even simple ambition exhausting.

One tee shirt will read, I’m a Smoking Man Fan. Sell it for a dollar..

Second tee shirt will read.
Smoking Man is a Psycopathic Piece of Shit. Price 10 bucks…

50 of each…. Curios as to which one will sell out first…

Then try and figure out what it means..

Then share my findings in a creative yet technically brutal expression of thought..

#57 gut check on 05.14.14 at 10:33 pm

” It’s fascinating how people who have never sustained losses fear risk. ”

More fascinating is how you don’t count living in stress & poverty for 4 years while foregoing full time income in pursuit of a degree that ends up being worth no more than a Hobbies section in a resume and staring down a 15 year $50,000 loan repayment for your troubles as ‘sustaining losses.’

(run on sentence? you bet. I wasn’t an English major. :) )

#58 Suggestion on 05.14.14 at 10:44 pm

Just a suggestion for the upcoming “Millennial portfolio” article, Garth:

Please address the case in which many of ourselves find now: we grew up through 2008 meltdown and squirreled away our money. We now have a nice chunk to invest (say 100 grand). We get your point on diversification, long-term averages, etc.

But the point is that we are putting a huge chunk RIGHT NOW, when the markets are bubbly. We are not averaging over many months, where one month hit is not so painful. We are going all in.

We can’t easily withstand a massive loss on a bulk of our investments in one shot.

Thanks.

– GenXer

#59 Harley Rider on 05.14.14 at 10:48 pm

Perhaps have them post the plan on how to make 150k and saved 200k. It’s too late for me but if I can teach my kids that plan…I’d be happy. Perhaps some economic outpatient care?

#60 G-Dawg on 05.14.14 at 10:49 pm

200 K is an easy 16 grand income a year in any average portfolio of high quality dividend paying Canadian stocks ( dividends and gains rolled in) … I talking Rogers and BCE….TD Bank…..real no brainers. Max out the TFSA’s and don’t look at ‘The Home Section’ in the paper or watch HGTV again. This is almost enough to retire ‘forever’ in some sweet sunny spots around the world. Don’t write in again and mention you’ve bought a crap hole in TO…..or I’ll find you and beat you with a used tube of suntan lotion.

I had dinner with a 6 grade school teacher in Texas tonight……she says they are teaching financial literacy as part of the curriculum now……there’s hope for a new generation….unfortunate this one is road kill.

#61 Roy on 05.14.14 at 10:52 pm

$1,000/month rent for 248 sq. ft.
http://www.vancouversun.com/Housing+affordability+fine+micro+living/9838952/story.html

Vancouver Sun continues Agenda 21 propaganda campaign with the new things young people in cities should be happy to accept

Note bottom of the article it appears to be a piece disguised to promote property sales of micro-suites

Apparently Canada is an up-and-coming global leader in cramped living. Who would imagine in such a vast country that is relatively unpopulated

# people/sq. mi

Japan: 873
Hong Kong: 18,000
Canada: 9

Hmmm… Canada is 100x less dense than Japan, but we are striving for micro-suites only three times as big. Another sad reflection on how enormously brainwashed and controlled we are.

And this at the same time large numbers of SFH houses on the West Side sit empty

#62 ozy - FRACTIONAL RESERVE IN CANADA on 05.14.14 at 11:01 pm

Garth – all your blog debating could be resumed to THIS root-cause, do you agree:

While all of Canada’s money is created by the government through deficit spending, if “money” is thought of as the combination of issued money and bank-created credit, then presently, the Bank of Canada “issues” less than 5% of Canada’s money, with the remainder (95%) being “created” by commercial banks through the process of fractional-reserve banking.[19]
http://en.wikipedia.org/wiki/Bank_of_Canada

#63 Nemesis on 05.14.14 at 11:02 pm

#BonusCatNip #GlorifiedErrandBoyz #DoubleIndemnityStopLossPolicies #TuesdayAfternoon?

You’re OnlyHuman, DameCatFood GC:

http://youtu.be/YhxjNYvJbgM

Might be TemporarilyScarce, SaltyDogz [Hey, STFU – you’re not supposed to applaud. NoteToGT: SomeAudiences are, like, so difficult. But not all? Right?] – still, with any luck…:

http://youtu.be/bPLWBhNW3FM

#64 Mr Buyer on 05.14.14 at 11:05 pm

Maybe it’s fear of loss when you have little. Or perhaps it’s just inexperience, mistaking the 2008 correction for something epochal.

For myself…

Yes, Yes, and Yes. BUT breaking 50 has brought the realization that my time is running out and I find myself forced to be brave and smart (as always due to necessity rather than choice). This is not easy with a history containing slightly more than a few episodes of profound cowardice and stupidity.

#65 Willy2 on 05.14.14 at 11:07 pm

I DO hope your portfolio is DEFLATION proof …….

#66 Mishuko on 05.14.14 at 11:25 pm

I feel like an excited little schoolboy wanting to go learned me something new!

#67 Lala on 05.14.14 at 11:28 pm

(\__/)
(=’.’=)
(“)_(“)

#68 High Plains Drifter on 05.14.14 at 11:30 pm

My last posts were meant to mimic the Cassandra, who warned Caesar on the way to the Senate. But no, first go to Gaul on the other side of the Rubicon fifteen years before the fateful day in the Senate. I make the case that there are armies on the other side of the Ribicon. Laugh it off, bet red at roulette but bet on low interest rates to move those armies nearer. Crazy but game theory gave me gold last Dec. but now the dear girl is in Canadian bonds. The Eastern Med and Africa gave my globe trotting gal a bit of a nervous tic.

#69 Saskatoon OMG on 05.14.14 at 11:31 pm

also in same situation in Saskatoon. RE here is a complete fiasco, propped up by the city drastically increasing lot prices over the last few years. I want out and in the meantime appreciate GTs sound advice.

#70 Aaron30 on 05.14.14 at 11:34 pm

Older mill born in 83′ here.

Building a “diversified, liquid, portfolio” sounds like such a tall order I don’t even know where to start. RE does appeal for its simplicity.

I am eagerly awaiting tomorrow’s post.

#71 Valleyboy on 05.14.14 at 11:40 pm

Garth,
not all of us young ins are old ladies. Some of us actually are very Riskey almost too risky and partially dumb. unfortunatly we dont have the luxery our parents did at our age to have 15 percent handed to us. Now that the market is getting to peak levels maybe it’s time to take some profits out and play it safe for a bit. But that would make me an old lady.

#72 Jon on 05.14.14 at 11:40 pm

Invest in the Habs, they are going to the top!!

Whooooooooooooo ole!

#73 Son of Ponzi on 05.14.14 at 11:48 pm

“There is not the slightest indication that nuclear energy will ever be obtainable. It would mean that the atom would have to be shattered at will.” — Albert Einstein, 1932
—————–
Why would anyone need more that 640 K?
Bill Gates.

#74 Still Cheap on 05.15.14 at 12:27 am

#34 Mister Obvious

I was in the same boat in 2008. Sold my house in 2007 and pocketed just under 200k. Got an independent financial advisor to “advise” me on my investments – and lost almost 50% the next year. It would have been worse but I fired the advisor so I didn’t have to keep paying his fees.

That was the start of my long lesson in investing. Despite the chest pains, I didn’t panic and sell – it took awhile but got back up to my original investment and then some. Now with a lot more experience and knowledge under my belt (thanks, Mr. T! et al), I’ve now got a nice portfolio that I could retire on. But, I just signed on for a 3 year contracting job, so will hang in a bit longer.

Even though I’m a boomer (right in the middle of the pack), I’m looking forward to GT’s recommendations. Never too late to learn something new.

#75 Brian on 05.15.14 at 12:46 am

Speaking about financial illiteracy, the results of this survey are shocking:
http://www.theatlantic.com/international/archive/2014/05/the-danger-of-financial-ignorance-do-you-understand-money/361851/

#76 Flint on 05.15.14 at 1:05 am

Looking forward to it, Garth. I started reading your blog when I was fresh out of university, making barely above minimum wage, and it really got me thinking about my financial future instead of just trying to mitigate the past.

Changed up my career path and what I was doing with my money, and I find myself in a similar position to the couple in today’s post, albeit ineptly invested.

#77 Waterloo Resident on 05.15.14 at 1:15 am

Everyone keeps asking: “When do you expect prices to go down, so that we can finally buy one at a reasonable price?”

The problem is that as long as there are people waiting and waiting to buy, and are willing to buy as soon as prices drop 2 or 3%, then prices will never fall because as soon as they do, readers here at this blog flock down and bid up those same houses, up 15 to 25%.

Simple.

My true feelings is that next year interest rates will be a full percentage point lower than they are right now, and houses will be 15% more expensive than they are right now.
And the year after that 10% more expensive.

Sorry but that’s just the way I see things going here in the K-W area of Southern Ontario.

#78 Happy Renting on 05.15.14 at 1:23 am

A survey considered those born 1978 and later (so, as old as 36) to be Millennials? That date range seems to reach just a bit too far back. Did they need to include some Gen X just to actually have enough survey respondents with $100k?

Viki and partner are doing exceptionally well for their age, nice to hear about 20-somethings prospering.

#79 Keith in Calgary on 05.15.14 at 2:20 am

It’s all about “return of capital”……………not “return on capital”…………

Criminally corrupt western governments have all set up the electorate for negative interest rates and asset confiscations thru “bail ins” and other mechanisms which will eventually have to be employed to keep the banking cartels and the 1% alive……..because QE has failed dramatically………as any learned person knew it would.

The stock market recovery Garth speaks about is a sham…………if they didn’t print trillions of dollars in the last few years, your RRSP’s and pensions would still be worth shit. Having said that, they still are of course…….it’s you that just thinks they aren’t.

Buy certain commodities, keep some cash on hand, get a safe, and stick in full of the aforementioned items, keep a little cash spread around in various banks, hold foreign currencies in banks offshore hat are not doing business in your country……..keep most of your net worth in the safe or out of the country.

Learn how to operate a firearm and shoot at distances. Buy some guns, and lots of ammo……….

Read your history.

Survive.

#80 ILoveCharts on 05.15.14 at 2:25 am

The banks are delusional. I’m filling out an RBC survey and it asks:

“*Please choose the statement that best describes your current situation:
1) I am a first time homebuyer and plan to buy my home soon.
2) I am renting and saving for a down payment.
3) I own my home and I am planning to sell.
4) I own my home and I am planning to renovate.
5) My mortgage is up for renewal soon.”

What about: I am renting, could make a down payment five times over and I’m happy to keep renting!

#81 Squish on 05.15.14 at 3:00 am

#21 Sam said:
“Simple.
Buy when you are ready.
NO one can “time” the market.
So take control of what you can control and leave the rest.
Simple”

—-

You can’t time the market, but it doesn’t take magic powers to look at very general macro trends… to see when the price of something is at an extreme high and to sit tight a little while until it mellows (putting your money somewhere else – liquid – in the meantime). Acquiring a little basic information and using it to make a decision is certainly something you can “control.”

#82 Longterm on 05.15.14 at 3:02 am

#45 Retired Boomer – WI on 05.14.14 at 9:28 pm

You nailed it. $200,000 at 28! Outstanding.

I ran it through my longterm dividend calculator. If they bought dividend artistocrats [an ETF or the top 15 dividend artistocrats in the US], reinvest all dividends and saved no more money, they’d have about $1.4 million in capital and be earning about $240,000 a year in dividends in 20 years at age 48. Life of riley.

In 30 years at age 58, capital of $15.2 million and nearly $5 million per year in dividend income.

Or they invest the $200k, add $2000/month for the next 20 years and retire with $3.1 million in capital and $520,000 per year in dividend income.

I’ve not taken out taxes for the above but some would be sheltered, if some dividend earners were Canadian the dividend tax credit would help. In any event, even if reduced by 1/3 for taxes these two are set if they don’t bugger it up.

Millenials take heed. Time in the compound interest equation is your greatest asset. Don’t waste it.

#83 Edmontonian on 05.15.14 at 3:30 am

Peter Schiff admits there is a Housing Bubble in Canada… but the US is worse-again… very smart man-he called the housing & economic crash about 1 to 1 1/2 years before the crash of 2007-2008! https://www.youtube.com/watch?v=NRICTqXW_v8#t=67

#84 Londoner on 05.15.14 at 4:27 am

“The kids – Millennials, GenY, or whatever – are insanely conservative.”

They’re not the only generation that’s “insanely conservative” in Canada.

Good times in the days ahead as millennials cash in their GICs in a move to get balanced, diversified and liquid. Even better days for those that benefit from the sale.

Fyi – for all you new millennial pref investors, there’s a pretty good site out there that explains the difference between fixed reset, floating reset, deemed retractible, etc. Also has a free YTC calculator. Watch out for the convertability clause. Happy trading.

#85 Lana on 05.15.14 at 7:26 am

Jen (#50) “Surely you’re not selling to a 16-year-old? Assuming you’re selling to a different (adult) grandson, much more information is needed to give any sort of input. You gave no information regarding your assets, debts, plans, goals, etc., all of which are very important. One bit of advice I can give without any further information is: be VERY careful when entering into a monetary and legal transaction with family members.

I have a rule for that. — Garth”

I wasn’t very clear, sorry. My 30 year old grandson is buying the house the same way a stranger would be…I had it assessed, a house inspector is coming this Saturday, and my grandson has a pre-approved mortgage for $280,000…about what my house was assessed at. Everything will be legal. He wants this house for several reasons, some of which are sentimental, granted. I have a good Investment Manager whom I trust, so have about $50,000 in diversified portfolios.

Fear of renting: Lack of freedom to do what I want. Many landlords have lots of rules…and I don’t like rules. Putting my money in someone else’s pocket.

However, I’ve been thinking of renting for a year or so and see if houses come down…then buy something small and modest. But will I be able to get a mortgage at 68 years of age…a single woman? Will I be able to afford rent once I’m living on my investments and pension only? What if the rent goes up?

So my family is encouraging me to buy something small, and advice on this blog is to not buy at all, but to rent. Coming to this blog is part of my research before making a decision. I have about 2 months to figure it out. Maybe less. Thanks for your response, Jen.

#86 Ralph Cramdown on 05.15.14 at 7:51 am

#39 Son of Ponzi — “Readers of the Talmud tend to be financially astute.”

Limited wardrobe, five or six kids and a rusty old Buick Roadmaster or Ford Taurus wagon to ferry them all around in? Not what I aspire to.

Take some advice on real estate investing from a more down-to-earth type:
https://www.youtube.com/watch?v=Pl7BVr36bbs

#87 thebarold on 05.15.14 at 8:47 am

It’s interesting you point out recession babies. I would consider myself a GenX but non-typical – I grew up during the recession. But not the 2008-9 but the 1990’s. My parents were leveraged to the eyeballs in real estate and I witnessed first hand the effect the leverage had on not only family wealth but the family itself. (Parents divorced, destroying even more value in the process).
Fast forward a decade or two and I still can’t bear the thought of debt, even though I could have paid off a condo a few times over, so I’ve missed that Nortel party.

That being said, having no debt, a decent portfolio makes me think like a millennial – I also ‘invest’ in travel, food and generally life, rather than cars and houses.

#88 Sheane Wallace on 05.15.14 at 8:49 am

78 Waterloo Resident
………………………………..
You are most likely correct.
It seems we have past the point of no return.
More mortgage loans by banks is inflationary.
We need to produce more credit/money to pay or the government and banks go bust.
With ZIRP it is a vicious cycle, you need more credit to pay old credit and there is no possibility of rate increase as we are already far indebted and cannot handle it.
There would be no meaningful rate increase, even with soaring inflation so we will see stagnating incomes, increasing prices (assets and commodities, food) due to inflation and the decline of the $h..ty dollar.
If you have paid your house hang in to it. You won’t lose much. You could sell and immediately invest in foreign equities/diversified portfolio.
This is the smartest idea.
Stay away from bonds. Bond markets are rigged. They are ‘reducing’ the bond purchases while 10 Y treasuries yield is declining? Excuse me.
It is becoming ridiculously stupid manipulated market.
Deflation is not possible in mid to long run, it could be only temporary and is just an excuse to print more.
Savers: you’re most certainly screwed.
Buying a house in Waterloo/Kitchener area might not be a bad investment at all.

#89 Ralph Cramdown on 05.15.14 at 8:52 am

#21 Sam — “Buy when you are ready. NO one can “time” the market.”

Maybe not in the sense of picking the very tops and bottoms. But you don’t have to do that to come out ahead. Buy stuff when it’s cheap, and avoid buying it when its expensive. This applies at the grocery store, the bank, the car store, the stock market and in real estate. People who do this come out ahead of people who don’t.

Just because something is cheap doesn’t mean it won’t get cheaper, and pricey markets can get pricier. But that doesn’t matter unless you’re under time constraints, and most people aren’t, even among those who think they are.

#90 Ralph Cramdown on 05.15.14 at 9:00 am

#59 Suggestion — “But the point is that we are putting a huge chunk RIGHT NOW, when the markets are bubbly. We are not averaging over many months, where one month hit is not so painful. We are going all in.”

If you’re uncomfortable doing that, don’t do that.

Pick a time period (one, two, four years?) and promise yourself that you’ll faithfully invest 1/x of your current savings + whatever your monthly saving is in to the stock market every month. Or set up an automatic monthly investment of that amount into a very low fee bank equity mutual fund. At the end of the time, you’re fully invested without having taken the risk of going all-in at the top.

Alternatively, buy a good value fund or teach yourself value investing and buy value stocks yourself. Even if you think markets are “bubbly” (all of them?), there’s always some countries, sectors, industries and companies that are cheap and unloved.

#91 Leigh on 05.15.14 at 9:01 am

Hi Garth, I figured you’re the one who could give me an educated answer to my question with honesty and wit so here it is!

Why on earth would banks want the mortgage business at 2%-3% rates where they’re offering the same rate through GIC or TFSA accounts themselves? How do they make their money? Yes the mortgage loans might be insured and supposedly risk free, but is it at all worth fighting for it? Couldn’t THEY invest all this money in stock market or what have you and get much better returns albeit some risks?

Mortgages are considered ‘relationship products.’ If you deal with the bank for your home loan, odds are you will go there for a TFSA, RRSP loan, bank account or mutual funds. Loss leader. — Garth

#92 Shawn on 05.15.14 at 9:02 am

Long-term at 83- Buy a new calculator.

The Book blink says sometimes you know something is wrong just at a glance. Indeed.

#93 Shawn on 05.15.14 at 9:05 am

Ozy at 63 – sue whoever taught you that banking (and all banking is fractional reserve) is evil or any kind of problem at all.

#94 Daisy Mae on 05.15.14 at 9:15 am

“One reason may be nobody teaches this stuff. You’d think money management and basic investing would be de rigeur, but parents are way more concerned with French immersion because they seek a certain je-ne-sais-quoi.”

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

Stupid, isn’t it?

#95 Just the facts Ma'am on 05.15.14 at 9:28 am

I would be interested to know how financially secure the blog dogs here are.
We’ve heard endlessly that debt to income ratio is 164%, and that is not including a mortgage.
So my question to all is what is your debt to income ratio?
And more importantly what is your debt compared to assets.

Debt to Income-0%

Debt to Asset-2.5%

#96 Mr. Frugal on 05.15.14 at 9:29 am

Garth,

We parents need to start doing a much better job of getting kids interested in investing. My 18 year old son just setup a direct investing account. I made a few suggestions about what to invest in but he made the final decisions. The other thing we need to do is get off their case about what is “expected”. I would like them to finish school and find a decent job but I’m not going to tell them what to do and I won’t hold their hand.

#97 Financial Freedom at 40 on 05.15.14 at 9:52 am

# 79 Happy Renting

A survey considered those born 1978 and later (so, as old as 36) to be Millennials?

—–
Depends on whether you refer to Coupland, Foote, Stats Can etc.

Generally I have taken Gen X to be 1965-1980. But I think it depends a bit on the generation of your parents and what sort of economic conditions you graduated into – as much a set of shared experiences, influences and mindset as a birth date range.

So at the edges of the date ranges (i.e. 78) it may be whatever cohort you identify most with.

#98 gladiator on 05.15.14 at 10:04 am

@95 Daisy Mae:
You are so right on the French immersion thing!
My parents made sure that I know many things about geography, physics, biology, history, that I speak French and read a lot of Russian – in addition to my mother tongue, which is not English. They taught me to be honest, hard-working and friendly. While these are good things, they missed teaching me about family finances, debt, about looking for and seizing opportunities, about how to choose and develop a good career, etc. The latter ones are far more important to everyday life. This quote is quite true: “What good is to be able to quickly solve a crossword, if you can’t earn more than minimum wage?” (I just made it up, actually)
Although my squeeze and I speak advanced French, we decided to send our kids to an all-English school. We’ll focus on preparing them for the real life, not on them knowing too much crap they will never use. Mind you, they will have a sizable amount of general education/knowledge, but I won’t stress too much if they can’t differentiate Monet from Manet.

#99 Buy? Curious? on 05.15.14 at 11:00 am

Whoa! Check out the wisdom from #91 Ralph Cramdown on 05.15.14 at 9:00 am! Warren Buffet, is that you?

Ralph Cramdown….that sounds familiar….let me google the name. Holy crapola! This guy is a gawdamn real estate wizard! A Gandalf of Finance to my Frodo of practical knowledge! For some reason, I thought you were the fat guy from the early sitcom, The Honeymooners, who played a stressed out bus driver who would make empty threats of domestic assault. Good to know you are no where near that guy! (Effeminate sarcasm implied)

https://www.youtube.com/watch?v=lXuueMP0oNA

Garth, great post. That’s the meat and poutine of this blog. Be cool and stay in school.

#100 Detalumis on 05.15.14 at 11:01 am

I wish we would stop with the fricking generation this and that, generations don’t exist except in a family context. The life experiences of a homogenous geographic cohort can turn within one or two years, and are completely varied depending on which family you happen to be born into. Being Donald Trump’s kid ain’t the same as being born to Lakisha in the projects in Camden N.J.

My favourite is when you turn 49+ that’s when they lump you marketing-wise into the senior category. You could be a doctor, lawyer or vice president in a major bank but you and Nana there in the LTC home, are one and the same.

#15 dean there your 100K friend cannot possibly save 2,500 a month, pay the rent and save 18K his RRSP on that income, the math won’t work. You wouldn’t have any money for groceries.

#101 sciencemonkey on 05.15.14 at 11:03 am

@99 gladiator
That’s a really good sentiment. When I was 17 in 2001, my gov-worker boomer parents told me I should study whatever I like, things will work out and I will have a good career. This of course turned out to be horrendously bad advice for millennials. Of course I take responsibility for my choice, I should’ve thought harder about my future career.

#102 Shawn on 05.15.14 at 11:05 am

Stange days indeed

My Mother never told their’d be rates like these.

#103 Blacksheep on 05.15.14 at 11:05 am

“Why on earth would banks want the mortgage business at 2%-3% rates where they’re offering the same rate through GIC or TFSA accounts themselves? How do they make their money? Yes the mortgage loans might be insured and supposedly risk free, but is it at all worth fighting for it? Couldn’t THEY invest all this money in stock market or what have you and get much better returns albeit some risks?”
————————————
Remember:

Mortgage $’s get created from nothing, based on the mortgagors credit and signature.

“THEY” / the banks, collect 2-3% for facilitating the mortgage.

No, they can’t invest Mortgage $’s elsewhere because it doesn’t exist.

#104 Saskatoon-Living on 05.15.14 at 11:08 am

Now when did I ever tell you to buy stocks? – Garth

March 30, 2014 post: Real Men Invest

http://www.greaterfool.ca/…/real-men-invest/


Nope. I’ve repeatedly counseled against individual equities for people with less than a million to invest. — Garth

#105 Retired Boomer - WI on 05.15.14 at 11:17 am

#90 & #91 RALPH CRAMDOWN

Both good advice to Viki & her significant other. At 28 with 200K languishing in a savings account, to get into the market (value, growth, dividend ETF, REITS.. I don’t care). Yes, dollar cost average into it over a year or, two. It’s a no-brainer for two 28 yr olds debt free, and making 150K.

They are “automatic millionaires” in about 12 years if they get going now. (based on past performances averages) even if they NEVER saved another dime!

What’s not to like here? Save reasonably, and they HAVE changed their family tree.

#106 april on 05.15.14 at 11:35 am

#78 – the more home prices increase the less the demand as less people can afford to buy or are willing to pay the price. That’s the way I see it.

#107 Italians love real estate on 05.15.14 at 11:48 am

Looks like them financial markets have started the much anticipated ( and inevitable) “correction ”

No such thing for real estate prices in T.O as they are higher and only going higher !

#108 Nicole on 05.15.14 at 11:48 am

Is the earnings taxable if you transfer shares in kind to TFSA account from your ESIP account.

#109 Aggregator on 05.15.14 at 11:51 am

CREA: Canadian home sales pick up in April

-National home sales rose 2.7% from March to April.
-Actual (not seasonally adjusted) activity stood 0.3% below April 2013 levels.
-The number of newly listed homes climbed 2.9% from March to April.
-The Canadian housing market remains in balanced territory.
-The national average sale price rose 7.6% on a year-over-year basis in April.
-The MLS® Home Price Index (HPI) rose 5.0% year-over-year in April.

As I mentioned before, CREA is tightening its grip with data as no actual number sales number was released to the public. From here on the market shall be dictated by percentage and HPI index points and average prices based on smaller sample sizes and presales counted as resales.

And here's another problem related to national data: Teranet's sales pair count.

Toronto's sales pairs now account for 31.6% of the composite 11 index. Why is that? Teranet's methodology explains:

One attractive method of assigning weights is based on the statistical distribution of the sales pairs in the geographical area of interest. This can be done by calculating the average annual percentage change of the price of each property and then “tallying” all changes in different classes. This allows the determination of the  experimental probability distribution of the sales pairs (also known as probability histogram). Properties whose annual percentage change is more frequent in the set are most probable to occur and thus are assigned higher weight than those that belong to a class with lower count of properties. The probability measure is thus the weight that can be applied. This methodology can also be used to filter out sales pairs that show highly improbable annual sale price change.

So guess what? Cities with the most flipping, bidding war and 1.99% mortgage activity are rewarded with a higher weight in the overall index, thus, at this rate Toronto will be 35% or 45% of the national index in a few years time while other Canadian city's pole position in the divisor is reduced because they're not meeting Teranet's annual percentage gain quota.

And in case anyone is wondering why Toronto is so special in this index, here's a reminder of which company the Ontario government privatized its land registry system to for the next 50 years.

The Teranet-Ontario Partnership

That's why I give up on Canada's housing data. Everything is controlled.

#110 tkid on 05.15.14 at 11:53 am

Lana #86, if you are in your sixties (with a grandson and only 2 – 3 years left to work this is likely) you cannot afford a house unless you can pay cash for one and the house works out to only be of 30% of your net worth.

If you are in your fifties, the house should be 40% of your net worth.

If you need a mortgage to buy the house, you cannot afford the house.

#111 chapter 9 on 05.15.14 at 11:58 am

#95 Daisy Mae
#99 gladiator
The federal/provincial governments in 2012 spent $2.4 billion on French in this country in one year.
Sure would buy a lot of new equipment for hospitals rather than having to have a bake sale to raise money!!!

#112 Old Man on 05.15.14 at 11:59 am

#104 Blacksheep – its a marketing tool or carrot if you will, as once they have you in the fold will go for all your other business for the rest of your life.

#113 Derek R on 05.15.14 at 12:03 pm

#101 Detalumis on 05.15.14 at 11:01 am wrote:
I wish we would stop with the fricking generation this and that, generations don’t exist except in a family context. The life experiences of a homogenous geographic cohort can turn within one or two years, and are completely varied depending on which family you happen to be born into. Being Donald Trump’s kid ain’t the same as being born to Lakisha in the projects in Camden N.J.

That’s worth repeating. Maybe the Boomers did have an easier time than the Millennials on average but I’d still rather be a rich Millennial than a poor Boomer any day.

Being born into a rich family beats being born into a rich generation. But we can’t choose our family or our generation so we just have to play the cards we’ve been dealt.

#114 Basement Dweller on 05.15.14 at 12:16 pm

So the market is in a bubble…. what will stop it?
One would think we have had interest rates more or less at the same level for over a year now but prices climb??
Who is affording to spend a million on a home??
It seems there are tons of people looking

This is ridiculous !!

#115 Bottoms_Up on 05.15.14 at 12:18 pm

#15 Dean Mason on 05.14.14 at 8:28 pm
——————————————
also sounds like he has #1 no life, and #2 no dependants

#116 BCD on 05.15.14 at 12:33 pm

The advice on this blog just keeps getting more and more out of touch with the real picture.

Renters are salivating for a dive in prices so they can get affordable homes on the cheap. . .but credit is getting cheaper and cheaper. . .%1.99. . .and now this:

http://www.cbc.ca/news/business/average-house-price-rises-7-6-to-409-708-in-canada-1.2643843

News flash: Just because you are fiscally responsible doesn’t mean that your money is better than everyone else’s.

Rising prices mean rising risk. You wouldn’t buy stocks at record levels, so why are houses different? Besides, the goal of life is not simply to own real estate, unless you don’t have one (a life). — Garth

#117 Bottoms_Up on 05.15.14 at 12:35 pm

#47 Lana on 05.14.14 at 9:36 pm
————————————
Go with Garth’s theory, your biggest risk is running out of cash, so minimize your expenses and maximize your long-term cash flow. Instead of selling the house, could you rent it out for monthly income?

#118 Shout Out to the Plumber on 05.15.14 at 12:37 pm

How/where do I learn to invest? I don’t have enough $ to hire Garth according to his golden rule of 1% monthly payment fee, which equates to a minimum $150/mnth, or minimum of $150K invested.
No debt, but have kids, full-time job, home paid off, and a nice wad of cash. Garth, how come you didn’t call back? Can’t you see my potential?

#119 happity on 05.15.14 at 12:38 pm

Greatest recent global demand for $ USA treasuries is Belgium, they just bought 1/3 of their gdp in a couple months.

You’ll just have to wait in line garth…

#120 Blacksheep on 05.15.14 at 12:38 pm

Old Man # 113,

“#104 Blacksheep – its a marketing tool or carrot if you will, as once they have you in the fold will go for all your other business for the rest of your life.”
——————————-
I felt no need to regurgitate what Garth, already covered here:
——————————-
“Mortgages are considered ‘relationship products.’ If you deal with the bank for your home loan, odds are you will go there for a TFSA, RRSP loan, bank account or mutual funds. Loss leader. — Garth”
——————————-
I chose to share information that neither Garth or now, you have. Poor Leigh is obviously confused by the copious volumes of disinformation on this blog lately and I felt someone should tell her the truth.

#121 Aj on 05.15.14 at 12:42 pm

It’s really cool that Viki emailed in about this. We’re the same age, have a good paying job with lots of cash saved up – so I can completely identify. Your point on french immersion is dead on where I am at. Can’t stand why that is so important, especially here in Ottawa. The scary part is that parents do this so their kids can have a job with the Feds……same jobs where they are handling finances and budgets. But I’ll digress from my views on Fed Public Service bilingualism requirements.

Viki – you and your partner seem pretty cool and our generation has to stick together, so my best advice is to hone in on investing it and growing it. At the very least, wait for any sort of housing drop in the near future if your looking to buy a home.

Very interested in seeing the Millennial Portfolio Garth – Not saying I will follow it to a T per say, but I am always hunting for smart ways to grow what I have and I have noticed there is nothing reputable out there aimed at our generation for investing (or at least I haven’t found it) as everything these days is geared to the 55 plus crowd. That is all and good, but if we are the ones getting the torch passed onto, I would at least like to do it with a couple of dimes in my pocket.

#122 Bottoms_Up on 05.15.14 at 12:51 pm

#96 Just the facts Ma’am on 05.15.14 at 9:28 am
—————————————————-
The 164% ratio is “debt-to-disposable-income”.

There will be many people much lower than that (0% like yourself), and many people much higher (300-400%).

I’m not sure this ratio is the best statistic for assessing ‘impending doom’. As long as those families in the 300-400% range can continue to service their debts (and hopefully pay their debts down over time), the party goes on.

This is the way it has worked for many years, people have largely been saved by the increasing value of their homes.

#123 Son of Ponzi on 05.15.14 at 12:52 pm

#87
#39 Son of Ponzi — “Readers of the Talmud tend to be financially astute.”

Limited wardrobe, five or six kids and a rusty old Buick Roadmaster or Ford Taurus wagon to ferry them all around in? Not what I aspire to.
————–
I guess Rothschild had a rusty old Buick Roadmaster at one time.

#124 sciencemonkey on 05.15.14 at 12:58 pm

Garth, please! Everytime someone says the stock market, you automatically interpret it as buying individual stocks. From now on just assume that stock market = broad market mutual fund or ETF.

#125 Mister Obvious on 05.15.14 at 1:12 pm

#86 Lana

“Fear of renting: Lack of freedom to do what I want. Many landlords have lots of rules…and I don’t like rules. Putting my money in someone else’s pocket.”
————————————

Go for professional management in a well maintained purpose-built rental building. Then landlords, property managers and tenants all play by the same set of predefined rules which are published for all to see.

Strictly avoid ‘mortgage helper’ suites and condos owned by underwater speculators who are itching to get out. There be dragons.

The ‘pocket into which money is placed’ will be yours via rental subsidy. Capitalization rates on rental properties are quite low at the moment.

That is to say, long time holders of residential rental buildings are wondering what happened in recent years. They were used to long waiting lists for apartments that earned them money.

Now they value good, reliable tenants who stick around for a while and cause few problems during the long wait for an improved economy.

#126 Old Man on 05.15.14 at 1:21 pm

I need to thank the Toronto Star, as yesterday they had the moral courage to out Caesar and the Minister of Injustice aka Peter The Great. They both lied to parliament and the citizens of Canada with their faux attack on our chief justice Beverley McLachin. The message they spun was ridiculed, so they were forced to reform it. Shame on them!

#127 jess on 05.15.14 at 1:33 pm

“short termism”

platforms
see BlackRock signals bond trading shake-up
By Michael Mackenzie in New York

http://www.marketswiki.com/mwiki
/BlackRock_Inc.#cite_note-4

Attorney General’s broader investigation into what the Attorney General has called “Insider Trading 2.0.”

http://www.ag.ny.gov/press-release/ag-schneiderman-announces-agreement-blackrock-end-its-analyst-survey-program-worldwide

http://www.ag.ny.gov/pdfs/blackrock.pdf
http://www.nytimes.com/2014/01/09/business/blackrock-agrees-to-stop-pursuing-nonpublic-views.html?partner=rss&emc=rss&_r=1

#128 Just the facts Ma'am on 05.15.14 at 1:34 pm

#123 Bottoms_Up on 05.15.14 at 12:51 pm
#96 Just the facts Ma’am on 05.15.14 at 9:28 am
—————————————————-
The 164% ratio is “debt-to-disposable-income”.

There will be many people much lower than that (0% like yourself), and many people much higher (300-400%).

I’m not sure this ratio is the best statistic for assessing ‘impending doom’. As long as those families in the 300-400% range can continue to service their debts (and hopefully pay their debts down over time), the party goes on.
—————————————————-
My thinking exactly. I also think that debt to assets a much more telling number.
Lets say I make 50k/yr and I am in debt for 500k.
This would mean I am at 1000% debt to income.
BUT if I owed 2 Million of whatever, then who cares if I’m at 1000%.

But I still think that 164% includes mortgages, helocs, etc.

#129 Just the facts Ma'am on 05.15.14 at 1:36 pm

My thinking exactly. I also think that debt to assets a much more telling number.
Lets say I make 50k/yr and I am in debt for 500k.
This would mean I am at 1000% debt to income.
BUT if I owned 2 Million of whatever, then who cares if I’m at 1000%.

Owned, not owed.
So close yet so far.

#130 Somble on 05.15.14 at 2:02 pm

To all these optimists, what makes you think that there is going to be a market correction. We live in Canada, a country, that thrives on immigrants. Immigrants bring hot cash so house prices are increasing rather tha down.
This time it’s different.

#131 Steve French on 05.15.14 at 2:02 pm

https://www.youtube.com/watch?v=s8rR7E6NfY4

Sometimes Smoking Man thinks it’s a shame

When he gets feeling better when he’s feelin’ no pain…

#132 Ralph Cramdown on 05.15.14 at 2:08 pm

#124 Son of Ponzi — “I guess Rothschild had a rusty old Buick Roadmaster at one time.”

If you think the various Rothschild scions are good at managing money… THEN LET THEM MANAGE SOME OF YOUR MONEY, right along with theirs. I don’t have any money with them now, but I would, and I may in future.

http://www.ritcap.com
http://www.ritcap.com/significant-shareholdings

On the other hand I can show you a lot of talmudic scholars who think that G-d doesn’t allow them to carry things around outside on Saturdays, except they’ve discovered an exception which involves a long bit of unbroken string. These guys I wouldn’t trust with a plug nickel.

http://www.torontoeruv.org/principles/

Warren Buffett is acknowledged as having a pretty good track record. Does that generally reflect well on investment managers from Nebraska?

#133 bdy sktrn on 05.15.14 at 2:21 pm

#108 Italians love real estate
Looks like them financial markets have started the much anticipated ( and inevitable) “correction ”
————————————————-

this one may make the ‘crash’ level.

when wal mart hurts things are getting tight.

#134 frank le skank on 05.15.14 at 2:27 pm

#84 Edmontonian on 05.15.14 at 3:30 am
Peter Schiff admits there is a Housing Bubble in Canada… but the US is worse-again… very smart man-he called the housing & economic crash about 1 to 1 1/2 years before the crash of 2007-2008!
===========================

And like Goldmember.. he likes goooooooooooooooold!!

#135 Retired Boomer - WI on 05.15.14 at 2:29 pm

I just love a market sell-off day. Even when it’s a mere 1% gets the weak hands to panic and “sell” even faster.

So, time to start thinking of those limit orders to buy those ETF’s at a lower price. Same idea works for individual stocks if that’s for you. (Both are for me). You can never call the top or the bottom, but you CAN make a bit of money on the wear down, or up, or buy lower and hold.

Better than the casino and the odds are better too. Besides, they pay a dividend that can exceed a bond!!

#136 Dean Mason on 05.15.14 at 2:32 pm

To # Bottom Up 116

First of all he is only 24 years old and secondly, you are the socialist that likes people who have many kids and then the state, government is responsible, sucker taxpayers have to pay for almost everything.

Being in debt and being a financial loser depending on others is the life you can keep.

#137 not 1st on 05.15.14 at 3:10 pm

Don’t worry Garth, we will carry you guys down east for a while yet.

http://business.financialpost.com/2014/05/15/economies-of-oil-rich-provinces-not-only-best-in-canada-they-are-best-in-world-conference-board/

#138 Old Man on 05.15.14 at 3:10 pm

Canada issued 5 new stamps today of greatness and the one is of this fishing village called Old Town Lunenburg. Kind of looks like a classy place to retire on the shores of Nova Scotia.

#139 ILoveCharts on 05.15.14 at 3:21 pm

Garth’s post last night inspired me. Before I went to bed, I put in a wide range of buy orders to build a diversified portfolio of ETFs. (CAD and USD, Equity and Bond ETFs.) I also threw in a few individual stocks as gambling money.

After today… I’m feeling like wussing out and just selling them all and pretending it never happened.

What to do when housing and stocks are both in a bubble?

#140 BCD on 05.15.14 at 3:45 pm

#101 Detalumis on 05.15.14 at 11:01 am

#15 dean there your 100K friend cannot possibly save 2,500 a month, pay the rent and save 18K his RRSP on that income, the math won’t work. You wouldn’t have any money for groceries.

________________________________________

A lot of people that are heavy savers are so cheap they don’t eat food—they live completely on the good feelings they get from looking at their online bank accounts. I don’t keep these people as friends, but many of them visit this blog daily.

#141 Shawn on 05.15.14 at 3:59 pm

BlackSheep You Misunderstand Banking

At 104 you said:

Remember:

Mortgage $’s get created from nothing, based on the mortgagors credit and signature.

“THEY” / the banks, collect 2-3% for facilitating the mortgage.

No, they can’t invest Mortgage $’s elsewhere because it doesn’t exist.

*******************************************
Okay Blacksheep, imagine you just took one million dollars and opened a small bank.

I walk in and request a loan for $10 million.

No problem you say and you make an entry on your books showing I owe you $10 million and you electronically place $10 million in a new checking account for me.

So far so good, $10 mllion has been created from nothing.

Next day I write a cheque and buy an appartment building.

The seller deposits the cheque in his bank.

His bank comes to your new bank to make good on the cheque.

What is you next step?

And why, please tell, do banks ever pay money on deposits if they can simply conjure up money to loan as you suggest?

There is a certain amount of truth to the money from nothing story, but you have carried it too far and forgotten that banks need deposits and they pay for them.

#142 Son of Ponzi on 05.15.14 at 3:59 pm

GM recalls 2.7 million cars.
Total this year is 11 million.
Guess the US taxpayer will have to step to the plate again, soon.

#143 Enthalpy on 05.15.14 at 4:20 pm

Cant wait to see it!

#144 rosie "moving forward" in the knowledge that, "this won't end well" on 05.15.14 at 4:25 pm

When cash isn’t king.

http://www.marketwatch.com/story/the-biggest-mistake-a-retirement-investor-can-make-2014-05-15?dist=afterbell

#145 Son of Ponzi on 05.15.14 at 4:27 pm

#134 Ralph,
My train of thought is more like this.
If you survive 3000 years of persecution, the next financial crash will be a cinch.

#146 Nuke on 05.15.14 at 4:30 pm

Reading the Globe this morning. The real estate market is about to explode after the last couple of tepid years and there is no personal debt crisis as interest rates are not going anywhere.

#147 G-Dawg on 05.15.14 at 4:39 pm

“How/where do I learn to invest? I don’t have enough $ to hire Garth according to his golden rule of 1% monthly payment fee, which equates to a minimum $150/mnth, or minimum of $150K invested.
No debt, but have kids, full-time job, home paid off, and a nice wad of cash. Garth, how come you didn’t call back? Can’t you see my potential?”

1) quit drinking or drugs of any kind

2) save every dime until you’re 100% clear-headed

3) go to the library every night and read every book in the finance section

4) wait until two or three years have until you are in charge of your mind

5) reduce temptations and triggers by spending 100% of your time with your family to learn whats important and whats not

6) reduce your exposure to all the idiots you have ever known…including family members

7) two/three years of this will make you a beginner investor……good luck with the journey…..earning ( for the majority of us) real wealth is a process a not an event.

8) Barring that…make a sex tape and sell it to TMZ

#148 Stickler on 05.15.14 at 4:53 pm

Now when did I ever tell you to buy stocks? — Garth

What about your advice to buy bank preferred shares?

Fixed income. — Garth

#149 calgary Phantom on 05.15.14 at 5:02 pm

Garth,

As per your advice i loaded up with REITs and PREFs last fall. And have seen considerable gains in price and have collected monthly payments all along.

Just wanted to say thank you for the advice.

#150 BCD on 05.15.14 at 5:04 pm

Looks like the spin-doctors are hard at work right before the market correction reassuring us about “confidence”. I called it last Friday. . .I was a week off. . .might happen tomorrow. . .markets shedding some points today.

http://www.cbc.ca/news/business/blackrock-s-larry-fink-calls-for-more-long-term-thinking-1.2644081

#151 Derek R on 05.15.14 at 5:10 pm

#143 Shawn on 05.15.14 at 3:59 pm wrote:
The seller deposits the cheque in his bank.

His bank comes to your new bank to make good on the cheque.

What is your next step?

Generally, your bank points out to his bank that his bank’s customers have also written checks to your bank’s customers for $9 million, so the net owed is only $1 million. The simplest thing it can do is to ask his bank for a $1 million loan until tomorrow — which his bank grants automatically at the interbank loan rate. No money changes hands. And tomorrow it could just as easily be his bank that owes your bank money. So the size and direction of these loans changes daily.

And why, please tell, do banks ever pay money on deposits if they can simply conjure up money to loan as you suggest?

Why indeed when they can conjure up cheap loans from their fellow banks or from the central bank. Well, the thing is that they still charge each other a small amount of interest to do so. So if they can persuade the punters to lend them money at even lower rates than that, why wouldn’t they?

#152 espressobob on 05.15.14 at 5:31 pm

#141 I Love Charts

Investing is for the long term! Don’t worry about short term moves or corrections. You can always ‘average in’ over time. Bubble?

#153 UVZ on 05.15.14 at 5:46 pm

“In a country where house lust has been goosed by lax bankers, minimal deposits, cash-back mortgages, RRSP-downpayments, government insurance, media drooling plus teaser 1.99 home loans – and where financial illiteracy is endemic – most kids are lost.”

As much as I like this blog, this statement is too wide in scope for me.

I don’t have the empirical data and here is my non-quantitative take:

Government insurance leads to lax bankers, cash-back mortgages, and media drooling plus teaser 1.99 home loans.

Financial illiteracy drives RRSP-downpayments.

Government transfer payment structures drive minimal deposits (assuming deposits = savings).

So: If the government insurance was not there, all but the low savings rate would not exist because the market would self-correct. The people would learn from hard experience rather than a screwed up, artificial economic environment.

#154 Dan from Richmond Hill on 05.15.14 at 5:50 pm

What is wrong with French immersion ?

#155 TheCatFoodLady on 05.15.14 at 6:24 pm

#95 – Daisy Mae: Many graduates of French Immersion programs can now claim they’re bilingually, fiscally, financially illiterate.

#97 – Mr. Frugal: My 24 year old, living pay cheque to pay cheque, east coast spawn has been ‘investing’ for a few years. He’s seemingly a student of the School of Learning the Hard Way. He’s about to take the second of the two Canadian Securities exams so should know better about a LOT of things. He genuinely believes there’s a valid place for GICs in peoples’ portfolios. He’ll learn – I hope.

#126 – Mr. Obvious: Excellent point about many landlords, both large & small, wanting to have & keep good tenants. Our new building managers get that – big time – & the REIT that owns the building is also catching on that ‘small spends’ help keep tenants. Each of our two buildings has a community garden – only four units participating at our building but we’re having a blast. We cleared off a buried concrete pad & swept it so little ones can play safely & we’re getting a picnic table for it. The result? This end of the building, between the community veggie garden, large perennial border, (my baby!), play pad & surrounding lawns looks clean, manicured & attractive to current tenants & potential new ones… all for a low investment on the part of management.

Good, reliable tenants my find all they have to do is ask if they want an amenity that’s low cost & will benefit many. Everybody wins.

#156 Shawn on 05.15.14 at 6:30 pm

Bank Deposit Costs

Well let’s assume that all bank deposits originate from bank loans. (which may be true)

Those deposits can easily flow to any bank.

Each bank needs deposits or needs to borrow from someplace to fund its loans.

The fact is that the Central Bank tends only to loan out money in emergencies. Banks generally have deposits at the central bank not loans from it. More like loans to the central bank.

Banks compete to get loan customer with a low loan rate and compete to get deposits with a high deposit rate. (high these days is quite low).

Remember the bank of England articles posted here?, they confirmed banks compete on rates.

They need a spread of about 2% to 3% to cover their costs and still make a decent profit.

Their average net (bottom line) profit on loans is in the order of 1% to 1.5%. Since they only operate with about 10% common equity that leverages up to an ROE of 10% to 15%.

Banks are generally pretty profitable but they are far from infintely profitable.

People forget fractional reserve banking means that a dollar that is loaned out comes back and is loaned out again, but each time it comes back it is a deposit upon which interest is often payable.

Banks (together with their customers) create money, called deposits and deposits earn interest.

#157 Mike T. on 05.15.14 at 6:31 pm

‘“THEY” / the banks, collect 2-3% for facilitating the mortgage. ‘

I do not believe that to be accurate. You say the bank creates the $$ for mortgages from nothing…..sort of true. The bank creates an obligation to sell the debt when it creates a mortgage. They do not collect the full 2-3% though, most of that will be paid to the debt purchaser, leaving the bank with the difference.

I know that with CMHC (CHMC?) the risk is removed for the bank thus the incentive is to create as many loans as possible….but I still do not think it is correct to state banks create $$ from nothing.

Privately owned central banks on the other hand….South Sudan had their chance and blew it.

#158 Nemesis on 05.15.14 at 6:35 pm

#MischiefForMensches

http://youtu.be/aQQsBjOrNMY

#159 Lana on 05.15.14 at 6:54 pm

Thanks for the various advice. I’ve copy pasted all advice, and will do the “pros/cons” decision making process. I can’t rent the house out. I’m required to sell so my ex gets his fair share. My son-in-law is a mortgage broker and I can get a pre-approved mortgage. He says the mortgage payments are around $1100/month, which is lower than I’ve been able to find for rentals. But there is a lot to be said for future cashflow. Once my grandson is on his own, I think I’ll move to Uruguay or Panama. Or live in a trailer park. Again, thanks. You are a great bunch of caring people.

#160 Entrepreneur on 05.15.14 at 7:20 pm

Having two languages and with all the arguing, that will only divide Canada…a bad marriage you know won’t last long.

Neighbour next door (paid off) sold her place far less than she thought she would get. She is renting a basement suite right now. The older flippers are renting the place out to a young couple. Are we not suppose to encourage young people to start small then move up when life improves? Debt is the forerunner in this world, just the opposite what life should be. A correction is needed as right now debt is king.

#161 Dean Mason on 05.15.14 at 7:43 pm

To BCD #142

My friend is a salesperson so he did get paid employment expenses, a year end bonus and 3.25% annual raise which worked out to $1,700 a month or $20,400 for 2013.

It looks like his annual $100,000 income is his base salary and commission only.

I calculated this based on the information he gave me.

Yearly rent+Utilities is $2,100 per month, $25,200.

Yearly income taxes, C.P.P., E.I., $22,400.

Yearly RRSP contribution $18,000.

Yearly TFSA contribution $5,500.

Yearly savings, investments in non-registered account $30,000.

Yearly employment expenses $2,700 which is mostly gas. He uses a company car and does not use his car to go for work.

Personal food $3,600 a year

Personal car insurance, gas, maintenance a year $3,300

Clothes, personal necessities, internet, phone, clothes etc. $1,560

Income taxes on year end bonus, pay raise, employment expenses is $8,140

According to my calculation his income and expenses, taxes balance.

It is called budgeting and you should try it some time. Dave Ramsey swears by it.

He said that people would make fun of people like us.

#162 Jen on 05.15.14 at 8:56 pm

@ Lana,

Sorry not to get back earlier! There’s a lot of good advice here for you, but only you cand decide for yourself.

I personally still wouldn’t sell to a family member, even if I were getting fair market value. What if the house needed a major repair just after selling? Even if you weren’t legally liable it still might affect your relationship with your grandson and potentially “poison the well” with other family members, and I’m not sure if it would be worth it. Again, only you can know for sure.

If you are already to retire, I certainly would not recommend a mortgage. This is particularly true if you are going to be living off of the proceeds of your house along with your CPP, but even if you have a decent pension you may live a long time and need all the money you can get. Retirement is not the time to be paying off debt.

Lastly, don’t think of renting as throwing your money away- you are paying for a roof over your head, and you are paying for the privilege of not having to pay to maintain the property or the grounds, which can be very expensive and a lot of work. You may appreciate this as you get older. If you have a mortgage, you are already paying interest to the bank, which is certainly not money in your pocket, either.

I wish you all the best! If you do end up retiring out of country, let us know how it goes- I may be interested! :)

#163 Dean Mason on 05.16.14 at 12:05 am

My friend just wanted me to clarify something. He said this year he is taking $2,040 which net of income taxes from his $3,356 pay raise and taking a long awaited vacation that he has not had in 4 years.

He gets 2 weeks off a year in May so he will be packing soon.

#164 Godth on 05.16.14 at 3:05 am

Young people ‘feel they have nothing to live for’
http://www.bbc.com/news/education-25559089

“The research found that long-term unemployed young people were more than twice as likely as their peers to have been prescribed anti-depressants.

One in three (32%) had contemplated suicide, while one in four (24%) had self-harmed.

The report found 40% of jobless young people had faced symptoms of mental illness, including suicidal thoughts, feelings of self-loathing and panic attacks, as a direct result of unemployment.

Three quarters of long-term unemployed young people (72%) did not have someone to confide in, the study found.”

I’m investing in antidepressents and organ harvesting. Fuck the losers.

#165 Mike in Surrey on 05.16.14 at 4:57 pm

#15 Dean, what is you point of view that a person makes 100K and lives like making $15 an hour? My old boss’ net worth was 30 Million Dollars and drives an old truck worth $1500; and lives like making $15 an hour also. Another friend of mine net worth over 10 Millions, and spends a quarter Million Dollars a year.

#166 Dean Mason on 05.17.14 at 2:33 pm

To Mike in Surrey #167

Debt is another tool for them like using taxes to make people think that they are actually getting something of value when in fact they are fooling themselves.