Moister math

Jason has $19,000 in his CIBC chequing account earning 0.05%. “That sucks,” he says, and it does. But there are tens of billions of dollars in Canadian bank accounts on any given day losing money, even with inflation at just 1% (which is 20 times more than Jason is earning).

Maybe you should flip this cash into your TFSA and invest it, I said. Crickets. Then, “How?” he asked.

This 32-year-old has two uni degrees and now works for the federal government in a responsible position wielding semi-judicial powers over citizens’ lives. He has an apartment, a steady GF and a DB pension. Life is good. But J’s a case study in the financial illiteracy that permeates society. When banks are the only place you learn money stuff, and [email protected] is always selling you into GICs or mutual funds, no wonder so many people are pooched. No wonder they see gambling on real estate as the only way to get ahead when their liquid assets lie comatose and softly bleeding in a bank vault.

Jason can open an online trading account with CIBC Investor’s Edge, for example, buy a clutch of ETFs and pay $6.95 per trade. He could try one of the robos, like WealthSimple, where an algorithm invests for him and he pays an annual management fee of 0.5% on his twenty grand plus embedded ETF charges. He could throw his cash in with his mom’s and use her fee-based advisor, paying 1% and getting an actual human to help with tax planning plus decisions about cars, houses and personal relationships (seriously). Or he can go to the bank, get free help and end up with mutual funds costing 2.5%.

Any of those are better than what he’s doing. So, I’m giving the moister a few ETF names (he only needs four) with which to build a balanced and diversified portfolio inside his tax-free account. If he just keeps his hands off them (no silly trading when Trump blows up or the markets correct), and shovels in the yearly max, the result will be sweet.

The math is simple. Start with twenty grand in the TFSA and add a hundred bucks a week. Assuming a 7% annual return (consistent with the past few decades) by age 62 Jason’s TFSA will contain $747,000, of which $556,000 will be tax-free growth. If he retires with his gold-plated, federally-kissed defined-benefit pension, he could draw more than $50,000 a year from the tax-free account to supplement his monthly retirement allowance, still retain the $747,000, be entitled to CPP and OAS without the extra fifty grand being added to his income and taxes.

So if a moister like him learned nothing else, it would be this. Stop saving money and invest it instead. Empty your savings account, cash in all GICs and put the dough into a handful of cheap, liquid, efficient, diversified ETFs. Open only one account – a TFSA – and make the maximum annual contribution ($5,500). Tell mom you don’t want cash for a condo down payment, but you’ll kindly accept a cheque for $52,000 to fully fund your tax-free account. PayPal wold be fine, too. No bitcoin, though.

As for the current moister investment of choice, things just keep getting worse for real estate. A new poll finds 86% of the 25-30 crowd think property is a great investment, despite the fact anyone buying today is probably going to lose money for the next decade. The evidence is everywhere. Even the realtors are screaming it…

Over the next two or three years interest rates will rise slowly, steadily and painfully for those with fat mortgages and skinny equity. The bank stress test will likely be in place this October, just in time for the next round of mortgage increases. By the end of 2017 the price drop in the GTA from April highs could be 30%. Maybe more. That would equal the US housing bust’s low point and approach the 1990 crash, from which the market took 14 years to recover. There will be no major community in Canada immune from higher loan costs, less credit or falling equity. Anyone who buys now with all their savings and big leverage will wish for a do-over.

Yeah, it’s not an easy time to be 32. But it never really was. Three decades ago mortgages cost 12%. Nobody could buy with 5% down. So houses were cheap. But back then there were no TFSAs, online trading accounts or wealth-builders like exchange-traded funds. Inflation was 7% (not 1%). Unemployment was 50% higher.

So, Jason, we inhabit an aberration. The cost of money, like inflation, will go back up. Real estate will come down. The economy will continue to expand and financial assets should do well. But never before have so many people been so indebted, so deluded, nor so willfully imprisoned in their homes. The world, in short, will be the oyster of the liquid, the flexible and the free.

Best start today. Now you know how.

134 comments ↓

#1 JimmyTwoTeeth on 08.17.17 at 5:04 pm

First?

Bah, who cares. Quality comments only, please.

#2 DOWNTOWN on 08.17.17 at 5:04 pm

Million dollars on browns line
https://www.realtor.ca/Residential/Single-Family/18255572/1-WHALEY-DR-Toronto-Ontario-M8W2N2-Alderwood

Hurry! only been up for 3 months. Im sure they are just waiting for the right offer.

#3 SimplyPut7 on 08.17.17 at 5:05 pm

Thank you for picking Vaughan as your proof prices are falling.

Where’s Tony the Gino?

#4 Jackfruit Special on 08.17.17 at 5:06 pm

Hi Garth, Added to XIC today like you have been suggesting to add maple. It is a slight proxy for more shiny metal too which has been on a winning streak lately. It’s a good time to be Canadian and buying maple on weakness.

#5 TurnerNation on 08.17.17 at 5:07 pm

500,379th?

Got gold? ! Bitcoin is kaput.

#6 M on 08.17.17 at 5:11 pm

Thank you Garth! I visit because I like to know what G is thinking about these days… I really enjoy learning and reading and the entertaining views from you! Love coming! Perhaps one day I will aspire to be able to contribute in such a meaningful way to the lives of others through writing…very inspiring!

#7 Jungle on 08.17.17 at 5:20 pm

Amazing how so many people (especially professionals) lack financial literacy.

My career is not too impressive, but almost a combined 2 decades of smart financial planning, investing, and spending less than we earn has resulted in a very fortunate (but self engineered) situation.

#8 the ryguy on 08.17.17 at 5:21 pm

Thanks Garth..and chance a guy can get the names of those 4 ETFs you were talking about?

#9 Shawn on 08.17.17 at 5:21 pm

At his age he really only needs 1 ETF.

VFV

He should buy as much of it as possible every year of his life for as long as financially possible.

One day he will realize he’s rich.

Now what?

#10 Danny on 08.17.17 at 5:22 pm

All you say is so true about the real facts of the housing market….yet this morning on CBC radio…the Toronto Real Estate Board used the latest survey about millenniums hoping to own real estate as another sales pitch …..which obviously is misleading the public once again for their own invested bias and unethical statement that housing prices are going up.
Why couldn’t CBC….simply not report the “hurry up and buy now “…sales pitch….part of the story?
Emailed CBC….about this and asked them to provide balance to the story about real estate trends….and speak to you Garth.
I hope they will.

#11 Let the Bubble Fall Down and Wet my Tears on 08.17.17 at 5:24 pm

It looks like Trump and Poloz are competing for currency wars.

$50,000 today will probably be worth 1% in 40 years, like how the value of the US dollar fell 97% in purchasing power since 1913.

#12 Millennial Investor on 08.17.17 at 5:29 pm

Would love to know the 4 ETFs you recommended, Garth.

#13 Spaccone on 08.17.17 at 5:30 pm

Have been trying to get my younger siblings to save in order to invest inside the TFSA for a few years. The first time I mentioned it I even offered to match whatever they invested.

The result…zip zero zilch nada…as I mentioned in a prior post about being/becoming more cold-blooded my thinking for many people is that sometimes a lost cause is a lost cause…they just have to trudge through the discovery/learning process themselves.

#14 Chandru Vasandani on 08.17.17 at 5:32 pm

Dear Blog Dogs,

This commentary/interview by Ross Kay is a must listen, please listen to the complete interview, start to finish. The interesting facts about Real Estate and how numbers are being manipulated to look good always, forward it to your friends, family and do good:

SECRETIVE CHANGES TO BENCHMARK HOME PRICES

http://www.howestreet.com/2017/08/14/secretive-changes-to-benchmark-home-prices/

#15 The Technical Analyst, CSTA, CPD on 08.17.17 at 5:36 pm

Garth, you really need to break down the MF bias.

Not all mutual funds are 2.5%, that’s Class-A shares. Class-O or Class-F shares are as little as 0.30%, that’s ETF MER cost with the added “anti-herd” market downside protection.

You may say “but wait, most MF’s don’t beat the index, yes that is true, most ETF’s don’t either. And MF’s will best ETF’s in a correction”.

Why pay more for ETF’s?
Why lose more money in ETF’s?
Don’t follow the herd. Invest.

#16 Smoking Man on 08.17.17 at 5:36 pm

Jason has two degrees and works for the feds.

Cool I need a go to person to get up on the correct pronunes to use when addressing weirdos.

In Ontario and California that’s jail time if you screw it up. Sis? Miss? Zoon? Loon?

I need help with this.

#17 yorkville renter on 08.17.17 at 5:40 pm

People get it when Buffet says “invest in what you understand”, but you don’t know what you don’t know, so they end up buying Real Estate.

sad.

#18 blahblah on 08.17.17 at 5:41 pm

Not really related to the blog piece. If the comments are reverse sorted i.e. latest first, then the first to post doesn’t win. Also refreshing will bring the latest comments as opposed to going to the end to see any new comments…just a thought

#19 Greg on 08.17.17 at 5:50 pm

So what were the 4 ETFs and their ratios to each other?

I’m in a very similar situation… Screw buying a condo or house for now. Hoping this bubble crashes HARD!!!

#20 crowdedelevatorfartz on 08.17.17 at 5:56 pm

Damn Millenials….. getting all the good govt jobs and pensions………..a pox on them all!

#21 Wrk.dover on 08.17.17 at 5:57 pm

Now that’s a post!

#22 Parksville Prankster on 08.17.17 at 6:01 pm

@ #8
My two cents? If I had to pick 4 to balance out?
ZDM – EAFE
XSP – US
XIC – Canada
ZAG- Short term Bonds (use the ZPR in your taxable account)

#23 Penny Henny on 08.17.17 at 6:02 pm

oh goody. no more suck up to Garth comments. phew

#24 Suede on 08.17.17 at 6:14 pm

If you’re going to park money, Manulife gives 0.9% interest.

#25 Gordon Gecko on 08.17.17 at 6:23 pm

I like ZWU for the dividend. it gives me some inane pleasure to get monthly dividend and know that Trudeau won’t be giving any part of that to the asylum seekers.

#26 Sebee on 08.17.17 at 6:23 pm

Have they not done a Frankenumber stunt to Unemployment figures over the 3 dacades you quote Garth? Or has the methodology always remained the same, +/- 50,000 jobs to be adjusted at later date as needed?

#27 Gordon Gecko on 08.17.17 at 6:25 pm

Because it’s in the TFSA. I forgot to mention that.

Otherwise I’m a fan of US stocks. Canadian ones not so much. That’s just my opinion.

#28 Priced Out in the GTA on 08.17.17 at 6:40 pm

“So, I’m giving the moister a few ETF names (he only needs four) with which to build a balanced and diversified portfolio inside his tax-free account.”

?????

You’re not going to share what they are?
I was reallt hoping to know what you consider good at this time.

#29 Sidera on 08.17.17 at 6:55 pm

3PaB6nXxbviw75D5Qbz3bgKjT58tVyfkxT

#30 Ian on 08.17.17 at 6:59 pm

Stock market got smoked today, December gold up $11.

Don’t forget a little percentage of a precious metals ETF in your balanced portfolio mix doggies.

#31 eating quinoa in Vancouver on 08.17.17 at 7:10 pm

The best investment I ever made was courtesy of my mom, 47 years ago. I was 14. She had been a long time chain smoker, having started at age 14 in England when she started working full time in a factory.
She said she would buy me a five year $50 Canada Savings Bond that I could cash in at age 19 if I promised not to start smoking, like my three older siblings had done.
I said ok, and never smoked. Fast forward to today and over the years I’ve lost three people in my life mainly because of smoking (and diet). My mom was age 59, my husband was 49 and my sister was 69. All gone, far too soon. I am grateful every day that I made the pact I did. My mom had a limited education but she was very smart and taught me some valuable life lessons, especially that one which I did for financial gain which ended up reaping far more valuable assets.

#32 rental property math on 08.17.17 at 7:16 pm

So much anger on this blog. I think it’s from missing the boat on buying RE.

#33 jess on 08.17.17 at 7:18 pm

other reasons why real estate is popular

The Financial Action Task Force, headquartered in Paris, is led by representatives from thirty-seven nations.

In 2007, the task force issued a report about the use of real-estate projects for money laundering. The report makes note of several red flags. It warns of “complex loans” in which businesses “lend themselves money, creating the appearance that the funds are legitimate.” It also warns of the use of offshore shell companies and tangled corporate legal structures, especially those in which third parties are hired to administer a company and conceal its true ownership.

=========
batumi tower

http://www.newyorker.com/magazine/2017/08/21/trumps-business-of-corruption

#34 AB Boxster on 08.17.17 at 7:24 pm

My vote:

Put equal amount in the following:
-XSP
-XIC
-XPF
-XRE
-XSB

Your welcome iShares.

#35 Guy in Calgary on 08.17.17 at 7:27 pm

For that small of portfolio in a TFSA can probably use 3 ETF for now. As you save more and start utilizing various accounts, that will change. For now here’s my 2 cents for a 20k TFSA:

20% VSB
20% VCA
60% VXC

Can also do 10% VSB and 10% XCB for fixed income if you want corporate bonds as well. Best to keep it simple though. Also be wary of your risk tolerance.

#36 4 ETFs on 08.17.17 at 7:29 pm

The 4 ETFs are:

ZCN in your TFSA or Taxable
ZEM in your TFSA (not too much)
VIU in your TFSA or RRSP
ZSP in your RRSP

If you’ve maxed out, add some DCP in your taxable (but never put preferreds in your TFSA or RRSP)

IMO if you’re under 40 and are contributing regularly don’t bother with bonds.

Or just buy MAW104 in your RRSP if you don’t want to rebalance. And sign up for Qtrade btw. Best customer service 7 years running. You’ll be surprised how much you need it.

#37 Last Chance on 08.17.17 at 7:30 pm

I am a 40 year old with 65K in RRSP’s that have done nothing. After reading Garth’s blog for years, I’m looking to get into something that at least pays me more then my advisor. Are there any tricks to getting the funds out of the place currently holding them and into a simple self directed account?

#38 Algonquin Settler on 08.17.17 at 7:45 pm

Sending this off to my kids.

Garth, I wonder if you would be kind enough to one day write about one, or both, of my situations.

The first is that of a SAH (stay at home) mom/wife. I’ve just released the fledglings, after 22 years with them, and 22 years out of the workforce. CPP? ROFLMAO! Maybe 4 full years of working 2 jobs in the brutal 80s, and Free Trade 90s. Spousal RRSP? Barely over 5 figures, since the one (average) income supported the whole family. (Although I have a 38% gain over 18 mos. in the account from some active DIY trading.) Started it to decrease tax owing due to rental income one year. Both have TFSAs, I trade in those, his is a few grand, mine equivalent of the Sp RRSP. Mine came from some rental income.

The second situation is that my husband is 10 years younger than I. I see a fair amount of financial/retirement planning when the husband is the older spouse (and main or only breadwinner), but nothing when a SAH wife is the older spouse.

I am somewhat financially savvy. Budgeted for years, in charge of all financial aspects of our lives, including investments, and I’ve managed all aspects of our two, cashflow positive rentals (niche market). Saw those as part of my retirement planning. (No 20% down on either, one gifted equity, the other assessed above purchase price plus our sweat equity reno. Both 5 years into mortgages. Enjoying non-amateur landlording.)

I’m trying to wing it, but everything is advised based on older husbands, or working wives, or doctors with SAH wives, able to throw money at their spouse’s account. Squat for planning for blue-collar, older wives.

#39 Algonquin Settler on 08.17.17 at 7:49 pm

Just to add, I am attempting to return to the workforce. Prospects are grim after 22 years out, but we have awesome kids (with TFSAs, and have worked since 14).

#40 jess on 08.17.17 at 7:55 pm

Among about 40 Indo-Canadians named in connection with the investigations by police and Indian media …Bhola, was one of the most wanted fugitives operating the drug trafficking racket in India, which indulged in manufacturing and smuggling of pseudoephedrine, methamphetamine and heroin into Europe, US, Canada and other countries.In addition to using non-resident Indians living in Canada, Bhola, police allege hired Chinese and Vietnamese nationals for making drugs and shipping consignments to North America.At the time of his arrest police seized millions in drugs at his hideouts, 35 passports, including eight Canadian ones and a US-made visa imprint machine.

Bhola was arrested after another Indo-Canadian drug smuggler, Anoop Singh Kahlon detained in early 2013, allegedly fingered him as the kingpin of the international syndicate.
‘India is asking Canada to help it track down the assets of key members of a multi-million-dollar international drug syndicate that was operating from the state of Punjab. India’s Enforcement Directorate (ED) moved a ‘letter of request’, under the Prevention of the Money Laundering Act, seeking details of properties owned by the accused in Punjab’s multi-crore synthetic drug racket in Canada and UK, local media said.’

‘In the letter of request, the ED also provided a list of the persons who are suspected of having bought properties in Canada and UK from the proceeds of the crime.
http://www.asianpacificpost.com/article/8048-drug-racket-funneled-profits-canada.html

#41 conan on 08.17.17 at 7:55 pm

Today’s Elephant in the room question.

Are the the US markets going to give up all of their recent gains? Meaning, Trump effect goes to zero.

On a temporary basis, it may be possible if he goes to zero. But US economic fundamentals are solid, as witnessed by the Fed’s tightening. I would maintain my American weighting. — Garth

#42 Hans on 08.17.17 at 8:10 pm

Not sure if you are aware (likely that you are but I’ll mention it anyways) – you’re name dropped in Sean Cooper’s “Burn Your Mortgage” book. He espouses a different view of real estate than you do, out of curiosity, does he have to get your permission to name drop or is this something that he can do without your okay to do so. You’re listed only as a “real-estate blogger” which makes me wonder whether Sean actually still lives in his basement to save money or whether he actually isn’t aware of the wider portfolio of descriptions that would more accurately describe your background (such as former politico, financial planner, author, bringer of real estate tears, master of pun insults, etc.).

Never heard of the dude. Is he still smouldering? — Garth

#43 Vanrentor on 08.17.17 at 8:28 pm

#37 Last Chance on 08.17.17 at 7:30 pm
I am a 40 year old with 65K in RRSP’s that have done nothing. After reading Garth’s blog for years, I’m looking to get into something that at least pays me more then my advisor. Are there any tricks to getting the funds out of the place currently holding them and into a simple self directed account?

————

Go into a bank (I use a TD Direct Investing location) and they will help you set up an account and transfer everything over. They won’t give you investment advice but they help you with the paperwork.

#44 Willy H on 08.17.17 at 8:36 pm

“By the end of 2017 the price drop in the GTA from April highs could be 30%. Maybe more. That would equal the US housing bust’s low point and approach the 1990 crash, from which the market took 14 years to recover.”
___ ___ ___ ___

Considering that GTA and GVA residential housing had reached even dizzier heights* than the American housing a bubble one would expect an even more precipitous drop. A little market Yin-Yang!

Returning to 2016 market values does not constitute a crash (in my opinion) when affordability has been a serious issue for at least 3-5 years in most major markets.

*this spring prior to the beginning of the correction.

#45 n1tro on 08.17.17 at 8:37 pm

@ #37 Last Chance

If you try to move your rrsps as is and they are mutual funds to another account, you will be paying a fee for them to do the paperwork. Maybe you can convert your funds to cash, then move it to your own SDRSP account.

#46 espressobob on 08.17.17 at 8:42 pm

It’s not about outperformance as an individual, but matching the indices as a retail investor.

Globally weighted contrarians play the markets. We take advantage when opportunities present themselves.

Some do so by market capitalization, others by equal weighting.

Who is to say which angle is better?

#47 Mark on 08.17.17 at 8:42 pm

Just how does the economy “expand” when RE has been driving most of the economic activity over the past decade, and RE is set to fall as a significant chunk of GDP?

What industry is waiting in the wings to pick up the slack and provide demand to keep Canada out of significant recession and out of deflation?

Anyone?

80% of the economy is not real estate, and housing ain’t going to zero. Untwist your shorts. — Garth

#48 Pillboy on 08.17.17 at 8:55 pm

No things that are worth it in life ever comes easy. Those who are inquisitive, ask questions, and constantly seek out information end up ahead.

I have some close friends who like to question why I haven’t bought a place with my lady yet. The last time “building equity” came up, I gently said that for me the two aren’t the same. Things got quiet real fast…and I followed up quickly with, “it’s not the right time because I’m early in my career and I don’t know what city I’ll end up in”. That seemed to do the trick, and everyone relaxed.

Some of them know that I’ve been investing during my high school and university days, yet they all seem too scared to invest in equities because it’s too unfamiliar. Everyone starts somewhere, you just have to ask the right questions and seek out information.

#49 Smoking Man on 08.17.17 at 8:57 pm

#300 Johnny Boy on 08.17.17 at 3:28 pm
#267 Smoking Man on 08.17.17 at 11:22 am

BTW do you still support DJT?
Just asking?
…..

Absolutely. His unwavering support for individualism, entrepreneurs, jobs for fatherless black kids in inner cities. Thank Ben Carson for that. Love that guy, he cares and gets Trump.

Lower taxes for risk takers.

Stick with the criminal pedophiles at the DNC, hang your reputation on that sinking ship. Knock yourself out, make sure your kids study the ONT sex ed curriculum written by a convicted child porn addict. Globalist agenda to turn normal boys into trans girls. The only way they can get control.

Do you really want to keep dancing with me, cut your losses and take a hike?

Go back the collective and ask for advice you pathetic suck up to the machine.

#50 crowdedelevatorfartz on 08.17.17 at 8:59 pm

@#37 last Chance

Tough one.
I had to do the same thing a few years ago.
My “advisor” was a lazy, useless, lying, piece of sh$t that had milked me for years on high fee mutual funds and shitty, locked in, money losing investments.
He was making more per year on my money than I was.
Testicular removal surgery with a dull rusty spoon would be too kind for him.
Needless to say my low fee and “balanced and diversified” portfolio is doing fine now.
Educate yourself, read this blog…… and dump that loser…..

#51 Garth jr on 08.17.17 at 9:02 pm

http://m.huffingtonpost.ca/ben-myers/toronto-and-vancouver-housing-is-going-to-get-even-pricier_a_23078111/

You know who Ben Myers is, right? — Garth

#52 paracho on 08.17.17 at 9:05 pm

I think a TFSA should be fully utilized along with a self directed RRSP…I maximized both of mine .
A few of my holdings include
PFF
CPD
XSP
ZPR
PGX

some of the above pay montly dividends .

#53 Bob on 08.17.17 at 9:06 pm

750k in 30 years will have the purchasing power of 100k today. Fools Gold. Cryptocurrencies is the only game in town.

#54 Garth jr on 08.17.17 at 9:11 pm

https://www.google.ca/amp/www.architecturaldigest.com/story/eminem-is-selling-his-detroit-area-home-for-less-than-half-of-what-he-paid-for-it/amp

This should be an eye opener for all the idiots in Vancouver /Toronto that think prices can never fall…this house is 17,500 sq.ft on almost 6 acres and has lost over half its value. But hey, why wouldn’t u want to own a 1500 sq.ft crackshack in east van on a 4000 sq.ft lot for 3 million right?

#55 Starbucks social contract on 08.17.17 at 9:19 pm

As an act of reparation for your grande privilege you drink my overpriced latte in my elitist global safe place for the genderless, raceless trans-moderns, that I generously and proudly redistribute as tall virtue signalling to lift the spirit of the oppressed and as a phat dividend for the shareholders.

Together we overcome the cruel oppression of the past and build the future where we are all one. Step by step, one black Americano after the other.

#56 acdel on 08.17.17 at 9:28 pm

Every so often you hit one out of the ballpark Garth, this is exactly what many need to do, good one!

#57 Cottingham a bargain on 08.17.17 at 9:32 pm

#51 Garth jr on 08.17.17 at 9:02 pm
http://m.huffingtonpost.ca/ben-myers/toronto-and-vancouver-housing-is-going-to-get-even-pricier_a_23078111/

You know who Ben Myers is, right? — Garth
——

What difference does it make who he is or what industry he is in. The argument he lays out in the article is aound and well reasoned.

Guess you both missed the latest census data. — Garth

#58 Pete from St. Cesaire on 08.17.17 at 9:50 pm

“I am attempting to return to the workforce. Prospects are grim after 22 years out, but we have awesome kids (with TFSAs, and have worked since 14).”
——————————————————–
Yep, slim indeed, when they ask you what you’ve done in the last 22 years and you tell them “I’ve raised wonderful children”, they’ll say “oh, OK so…, you’ve done nothing”

#59 Pete from St. Cesaire on 08.17.17 at 9:56 pm

“Cryptocurrencies is the only game in town.”
——————————————————-
Here’s their weakness: You see, Bitcoin’s strength (and what provided interest in it in the first place) is that there is only a limited quantity of them that will ever exist. They can’t be printed to infinity. However, if other cryptocurrencies take hold and over take Bitcoin in value or popularity it will be the death of Bitcoin (and all cryptocurrencies) since it will then become evident that although Bitcoin is limited as to quantity there is no limit to how many new cryptocurrencies can be created. Some people already know this (at least subconciously) but since Bitcoin has remained the dominant one by far the reality of it has not yet sunk in. If people are willing to just jump to the next fashionable cryptocurrency that comes along Bitcoin will become worthless. Who wants to miss the boat on the next big thing? Who wants to be stuck with something that is falling out of fashion? Who wants to stay in Bitcoin if another crypto is overtaking Bitcoin in price appreciation. The real reason behind the big push on etherium, Litecoin and some others is an attempt to destroy Bitcoin.

#60 YVRTechGuy on 08.17.17 at 9:58 pm

I often wonder what the archeologists of the future will conclude when they discover all these strangely-shaped slabs of polished granite, all with similar sized holes in them.

They’ll soon conclude that they were a symbol of great wealth in our civilisation, but will they make the link with low interest rates? Particularly as we no longer document events in stone, but rather on tiny pieces of silicon.

#61 Cristian on 08.17.17 at 9:58 pm

“A new poll finds 86% of the 25-30 crowd think property is a great investment, despite the fact anyone buying today is probably going to lose money for the next decade.”

The thing is, they have not lost the money yet. When they will, they will believe.

#62 the Jaguar on 08.17.17 at 10:03 pm

Special post for ‘Another Albertan’ – 08/17/2017 2:45pm.

You never let me down. Just missed your insights. Not sure the ‘good old days’ will ever return until enough pipeline politics, frac economics, and a realization that the whole world is not quite yet equipped to function on an electric grid sink in worldwide. My tribe arrived southern AB around 1886. Helped put out the ‘big fire’ in Leduc in 1947. There are other places. But none of them are as sunny, as entrepeneurial, as hardworking, as inventive, and with the survival instincts of of this province. Floods, Wildfires, we are still standing.
Another Albertan…just one of many. Everyone elses’ mileage may vary……

Best.

#63 Leo Trollstoy on 08.17.17 at 10:04 pm

Any more than 1 uni degree is useless and indicates a failure to launch

Unless your passion is becoming faculty you’re just trying to extend your childhood

#64 Smoking Man on 08.17.17 at 10:10 pm

Andrew Shear. Patrick brown. Goblusts suckers. Canada is doomed. Get out if you can.

Only difference between them and T2 the color of the ties they wear.

#65 Happy Housing Crash Everyone! on 08.17.17 at 10:17 pm

57 Cottingham a bargain on 08.17.17 at 9:32 pm
#51 Garth jr on 08.17.17 at 9:02 pm
http://m.huffingtonpost.ca/ben-myers/toronto-and-vancouver-housing-is-going-to-get-even-pricier_a_23078111/

You know who Ben Myers is, right? — Garth
——

What difference does it make who he is or what industry he is in. The argument he lays out in the article is aound and well reasoned.

Guess you both missed the latest census data. — Garth

You stupid shyster. No one cares about what another shyster thinks of the housing market. Everyone knows housing is CRASHING. Speculators who are a big driver of the housing bubble are trying to cash out before they lose it all. Throw in stress test and higher interest rates = continued housing crash. Everyone including Garth thought prices would be sticky. They CRASHED 30% in just 3 months. Prices can crash another 30% in the next few months. Anything now is possible. Happy Housing Crash stupid shysters. :-)

#66 AK on 08.17.17 at 10:29 pm

“(no silly trading when Trump blows up or the markets correct)”
——————————————————————-
Actually, It’s the Democrats that keep blowing themselves up, each time they are handed a bullet.

#67 Smoking Man on 08.17.17 at 10:32 pm

DELETED

#68 Timberr on 08.17.17 at 10:37 pm

Looks like RBC has bumped up their fixed rate mortgages again…a fixed fiver (closed) is now @ 3.24%

https://twitter.com/RateSpy/status/895292356815147008

#69 Tony on 08.17.17 at 10:40 pm

Re: #5 TurnerNation on 08.17.17 at 5:07 pm

I’m hoping the stock market crashes and all the margin calls roll in (could see the major exchanges close for a 2 week span) so I can buy gold for under $1,100 U.S. an ounce. In the meantime I might have made The Money GPS on youtube a lot of money, so far.

#70 IHCTD9 on 08.17.17 at 10:43 pm

“If he retires with his gold-plated, federally-kissed defined-benefit pension…”

——

In the words (er… word) of the Spartan Ephors to Philip II of Macedon:

“if”

#71 A deprlorable waste of space dust on 08.17.17 at 10:44 pm

#67 Smoking Man on 08.17.17 at 10:32 pm

DELETED
….
Ah the wisdom, the eloquence, the intelligent insight…

nah just the johnny walker gibberish from the trumpoholic teabagger

#72 Ex-Cowtown on 08.17.17 at 10:44 pm

From BNN:

http://www.bnn.ca/realtors-brace-for-next-mortgage-crackdown-amid-shadow-banking-fear-1.827890

Laird provides the following example:
A family with an annual income of $100,000 with a 20 per cent down payment can currently afford a home worth $792,813 (based on a 2.64 per cent mortgage rate and accounting for property tax and utility costs).
If stress-tested to qualify at 4.64 per cent, that same family would afford $146,579 less home.
Laird sees three potential consequences of a more stringent stress test: borrowers may turn to family for loans to qualify for the property they want; some will adjust their expectations; and some simply won’t buy.

+++++++++++++++++++++++++++++++++++

Laird misses the obvious fourth alternative: house prices will drop.

We’re not talking rocket appliances here.

#73 steerage steward on 08.17.17 at 10:48 pm

Garth has posted almost every day for 10 years.

Was pleasantly surprised to hear him alone moded so many comments.

Would be easier if we registered, there was a Mod team, etc.

Like to think this website could only happen in Canada, not just because our housing market is the most overvalued.

Because only in Canada can so many people with so many different opinions get along

#74 IHCTD9 on 08.17.17 at 10:50 pm

#13 Spaccone on 08.17.17 at 5:30 pm
Have been trying to get my younger siblings to save in order to invest inside the TFSA for a few years. The first time I mentioned it I even offered to match whatever they invested.

The result…zip zero zilch nada…as I mentioned in a prior post about being/becoming more cold-blooded my thinking for many people is that sometimes a lost cause is a lost cause…they just have to trudge through the discovery/learning process themselves.
—–

I love it when I see wisdom taking shape. Don’t throw your pearls to swine, you can’t make ’em drink.

#75 Tony on 08.17.17 at 10:54 pm

Re: #59 Pete from St. Cesaire on 08.17.17 at 9:56 pm

Exactly correct short term but all of them will rise exponentially long term until the government does something about the cryptocurrencies as a whole.

#76 Smoking Man on 08.17.17 at 11:02 pm

Deleted you prick.

Garth you of all people know my love hate relationship with DM

So this TFW recruiting firm reaches out. Not sure how to type the accent in the phone call.

Sr you are prefiCT for a job in new york

Same thing I was doing at the tax farm on bay street except this one was for the nyc desk. Same company.

My last gig the manager said to me with terror in his eyes great job thanks. Thinking he dogged a builllet after the business told him that’s Smoking Man. Nope.

So they submit my resume. Ha. That head hunting corp lost preferd status.

I’m famous and can still wonder into a rub and toug with out attracting to much attention.

Love life.

#77 Greater Fool on 08.17.17 at 11:12 pm

Buy Bitcoin!
BTW, rent prices here in Victoria for 1 br went up by 20% in a year.
But wait inflation is “only” 2%…..

#78 paulo on 08.17.17 at 11:21 pm

Still holding My Call: 18 month’s from market top March
2017-

Interest rates for well documented first mortgage borrowers not less than 7%

GTA, Single family detached, semi- -50%
semi,strata with dirt under -55%
high-rise condo/strata -60%
AREAS north of hwy 7,east of Hwy 48 and West of the
Mississauga town line:
Single Family Detached,Semi – 55-60%
semi,strata with dirt under – 60-65%
high-rise condo NRV

Price appreciation: will struggle for 2 decades to attain
compounded increases matching annual inflation
rates

5 Year Outlook On Mortgage Rates, First Money in high single digit,more likely low double digit,with significant
liquidity issues and iron clad underwriting.

silly season is over,and after the banks recover,and the politicians have been executed over the current real estate fiasco both will be loath to allow history to repeat.

#79 failure to FANG on 08.17.17 at 11:32 pm

#63 Leo Trollstoy on 08.17.17 at 10:04 pm

Any more than 1 uni degree is useless and indicates a failure to launch

Unless your passion is becoming faculty you’re just trying to extend your childhood

=====

No wonder you don’t work at Google or other FANG companies.

#80 Spectacle on 08.17.17 at 11:38 pm

“But never before have so many people been so indebted, so deluded, nor so willfully imprisoned in their homes” Garth Turner 2017 ( the Honourable)

I wonder if the Mexican Nation Will actually be eager to build and Pay for That Wall. Hmmm

#81 Mark on 08.17.17 at 11:41 pm

“80% of the economy is not real estate, and housing ain’t going to zero. Untwist your shorts. — Garth”

You’d be surprised at how much of the economy is leveraged to a sector in which over 70% of Canadians are owners.

When Canada’s tech sector fell apart, circa early 2000s, it was enough to cause the Bank of Canada to run by the standards of the time, an extended period of abnormally stimulative interest rates. Canada’s tech sector in the early 2000s, as gloriously as it had grown at the time, was a mere rounding error in size and impact of employment compared to the contemporary RE market.

Just imagine how badly they’re going to need to stimulate with the housing market now undeniably falling, credit tightening up to consumers.

So my question remains, what gets the comatose Canadian economy, without a big growth sector, out of this deepening deflationary funk?

Of course housing’s contribution to GDP will never literally going to zero, but if activity in the sector drops by half, that’s 10% removed from GDP just in the direct housing sector alone. To say nothing of loss of activity in spin-offs, particularly in consumer consumption, travel and tourism, etc.

#82 Smoking Man on 08.17.17 at 11:53 pm

DELETED

#83 Freedom First on 08.17.17 at 11:53 pm

#49 Smoking Man

Perfectly said Smoke. Not all of us are blind. Sadly, too many are. Global insanity at its worst.

#84 Millmech on 08.17.17 at 11:55 pm

69 Tony
I got a good friend sitting on lots of gold he bought six years ago,still another what six plus years before he breaks even on his rock collection.
68 Timbers
Death by a thousand cuts,add the rate hike,the banks own top up hikes and the stress test of two percent I can easily see qualifying at seven percent by next year at this time.The stress of hold high six figure mortgages coming up for renewal in a few years at close to ten percent should make for interesting times.

#85 Gravy Train on 08.18.17 at 12:18 am

#39 Algonquin Settler on 08.17.17 at 7:49 pm

“… I am attempting to return to the workforce. Prospects are grim after 22 years out, but we have awesome kids (with TFSAs, and have worked since 14).”

Whether you’re searching for a job in your field, changing careers, or just trying to figure out what you want to do for the rest of your life, I highly recommend the 2017 edition of the book What Color is Your Parachute? by the world-renowned career counselor Dick Bolles.
https://en.m.wikipedia.org/wiki/What_Color_is_Your_Parachute%3F

Read every chapter, and learn every lesson! Don’t skip a single page, and memorize the book if you can! Live and breathe this book until you have your dream job!

The Holland Codes party exercise alone is worth the price of the book.
https://en.m.wikipedia.org/wiki/Holland_Codes

Sadly, the author passed away this year at the age of 90. Here is his Web site: http://www.jobhuntersbible.com

Well, Flop, how did I do? Am I doing some good in the world? :)

#86 Algonquin Settler on 08.18.17 at 12:26 am

#58 Pete from St. Cesaire on 08.17.17 at 9:50 pm
“I am attempting to return to the workforce. Prospects are grim after 22 years out, but we have awesome kids (with TFSAs, and have worked since 14).”
——————————————————–
Yep, slim indeed, when they ask you what you’ve done in the last 22 years and you tell them “I’ve raised wonderful children”, they’ll say “oh, OK so…, you’ve done nothing”
—————

Well bless your heart. Raising children doesn’t cause previous skills to evaporate, it develops more. My employment background is full cycle bookkeeping, in payroll, etc. Since my education and earliest employment was pre-desktop computers, unlike many of today’s “bookkeepers” and assorted accounting clerks in small business, I don’t have to rely on pretty pictures on a computer screen to keep books or pay people. I actually know what and where the software is posting, each side of the transaction. I know what a debit and a credit is. I know how to fix what those people screwed up, or forgot, or didn’t understand. Over 25 years ago I made $30/hr installing the precursor to accounting software that is used today, entering the accounting histories of businesses, and training their staff how to use it. Years ago I worked in an accounting office, where I had, at one time, 9 bookkeeping clients and 11 payroll clients, sprinkled through a variety of industries.

Not to mention (while raising children and caring for 2 dying family members) 5 years keeping the books for a family agricultural business for free, and 5 years of successfully managing our own rental units from top to bottom. Marketing, research, screening tenants, keeping the books, preparing rental schedules and tax returns to CRA, appearing before the Landlord Tenant Board when tenants get goofy ideas (hint…I win because I have digested the rental law of my province).

Yeah, I’m useless to the world. So much so that I was recently asked to stand in an election for a local board, which I declined

#87 Frank on 08.18.17 at 12:37 am

#38 Algonquin Settler on 08.17.17 at 7:45 pm

Sending this off to my kids.

Garth, I wonder if you would be kind enough to one day write about one, or both, of my situations.

The first is that of a SAH (stay at home) mom/wife. I’ve just released the fledglings, after 22 years with them, and 22 years out of the workforce. CPP? ROFLMAO! Maybe 4 full years of working 2 jobs in the brutal 80s, and Free Trade 90s. Spousal RRSP? Barely over 5 figures, since the one (average) income supported the whole family. (Although I have a 38% gain over 18 mos. in the account from some active DIY trading.) Started it to decrease tax owing due to rental income one year. Both have TFSAs, I trade in those, his is a few grand, mine equivalent of the Sp RRSP. Mine came from some rental income.

The second situation is that my husband is 10 years younger than I. I see a fair amount of financial/retirement planning when the husband is the older spouse (and main or only breadwinner), but nothing when a SAH wife is the older spouse.

I am somewhat financially savvy. Budgeted for years, in charge of all financial aspects of our lives, including investments, and I’ve managed all aspects of our two, cashflow positive rentals (niche market). Saw those as part of my retirement planning. (No 20% down on either, one gifted equity, the other assessed above purchase price plus our sweat equity reno. Both 5 years into mortgages. Enjoying non-amateur landlording.)

I’m trying to wing it, but everything is advised based on older husbands, or working wives, or doctors with SAH wives, able to throw money at their spouse’s account. Squat for planning for blue-collar, older wives.

———————————————————-

I can’t add on the job front, possibly a business might fit your situation. Outside of that, you had an impressive gain for 18 months.

Active DIY trading can work when the market is moving up, you eventually lose everything quickly as well. The second issue is gains are taxed as regular business income. CRA is even claiming business income inside TFSAs with trading.

I suggest a book called Excess Returns, on Amazon. It is a study of the investment approach of every publicly available investor with a record of returns greater than the market. The simple conclusion was that every one of them were a variant of Warren Buffet’s approach itself a variant of Benjamin Graham’s approach from his book Security Analysis.

As long as you can handle the volatility, all equity portfolios provide the best 15+ year long run returns. To the present, the US market has provided the best long run performance. ETFs are best until you can evaluate a business from its filings and morningstar data. Small value ETFs of US companies such as XXM.b , JKL and others have lower P/E and P/B to reduce the impact of the inflated market presently.

#88 Ponzius Pilatus on 08.18.17 at 12:38 am

Smoking Man deleted at around 10:30 again.
You can set your clock on this.
A conspiracy theory for sure.

#89 Steve French on 08.18.17 at 12:41 am

Smoking Man- you always having Johnny Cash on the buds out in the gazebo with a whisky right?

This may be interesting for you…

cheers,
SteveO

—————————–

“A message from the children of Johnny Cash:

We were alerted to a video of a young man in Charlottesville, a self-proclaimed neo-Nazi, spewing hatred and bile. He was wearing a t-shirt emblazoned with the name of Johnny Cash, our father. We are sickened by the association.

Johnny Cash was a man whose heart beat with the rhythm of love and social justice. He received humanitarian awards from, among others, the Jewish National Fund, B’nai Brith, and the United Nations. He championed the rights of Native Americans, protested the war in Vietnam, was a voice for the poor, the struggling and the disenfranchised, and an advocate for the rights of prisoners. Along with our sister Rosanne, he was on the advisory board of an organization solely devoted to preventing gun violence among children. His pacifism and inclusive patriotism were two of his most defining characteristics. He would be horrified at even a casual use of his name or image for an idea of a cause founded in persecution and hatred. The white supremacists and neo-Nazis who marched in Charlottesville are poison in our society, and an insult to every American hero who wore a uniform to fight the Nazis in WWII. Several men in the extended Cash family were among those who served with honour.

Our Dad told us, over and over throughout our lives, ‘Children, you can choose to love or hate. I choose love.’

We do not judge race, colour, sexual orientation or creed. We value the capacity for love and the impulse towards kindness. We recognise the suffering of other human beings, and remain committed to our natural instinct for compassion and service.

To any who claim supremacy over other human beings, to any who believe in racial or religious hierarchy: we are not you. Our father, as a person, icon or symbol, is not you. We ask that the Cash name be kept far away from destructive and hateful ideology.

We choose love.

Rosanne Cash
Kathy Cash
Cindy Cash
Tara Cash
John Carter Cash

August 16, 2017

‘Not one of us can rest be happy, be at home, be at pease with ourselves, until we end hatred and division.’ – Rep. John Lewis.

———————-

#90 Ponzius Pilatus on 08.18.17 at 12:41 am

You say RE wil go down.
But predict higher interest rates.
What gives?

#91 westcdn on 08.18.17 at 1:22 am

I was thinking more about making the comment section of this blog more useful. I use the “Find on Page” to follow topics and responses. It seems to me if we want threads, we should use a hashtag with our comments and respondents would use it.

We should be policing ourselves – not GT although there is a role for an umpire and owner.

#92 James MF on 08.18.17 at 2:57 am

Garth, today’s is an example of the blog entries I’m looking for. I suggest including a link to the Millennium Falcon on the sidebar:

http://www.greaterfool.ca/2014/05/15/the-millennial-portfolio/

[email protected] got me into mutual funds and reading the above blog entry got me out in less than 12 parsecs.

#93 JaketheSnake on 08.18.17 at 3:57 am

Can’t you Smoking Man scrotal clingers understand that the ideology he promulgates vis-a-vis social policy is a directly countervailing force against the depravity and pathology of Liberal social agenda so as to prevent the destruction of civilization as we know it and the rape and pillaging of young boys’ minds and bodies?
You Liberals are truly a diseased bunch.

Don’t get me wrong….Conservatives are just as sickening with their willingness to murder and rape and pillage third world babies for monetary gain and to curry favour with U.S. warlords, Republican and Democrat alike.

Tory times are tough times…..Liberal times are licentious times. What to do?

#94 Investor Man on 08.18.17 at 7:38 am

Looks like stocks will take a hit today because of another Islamic terrorist attack in Europe.
Thoughts are with the victims – obviously that is more important than stock prices but something to be aware of nonetheless.

#95 TurnerNation on 08.18.17 at 8:44 am

After my morning ablutions I am flouridated, chlorinated, and caffinated. Rubbed some aluminum based gunk underarm. Vigorous breakfast chewing prompted any mercury based filing to release their daily payload, plus in the fish I ate.
But it’s all science right! Trust our new gods (scientists).

So what’s next. We’ll hear no more chatter on Syrian immigrants. No the recent world events replete with realistic enough looking photos and convincing actors is causing a re-write of His Story: all old plaques and statues must go. I saw an image on TV it must be true.

Our mind controllers take to airwaves and remind us of “our values” = keep being sheep. Thanks guys.

Now we get heart cringing stories of the next wave: “economic/political migrants” via USA. Hospitals will overload. All part of the Agenda.

While we ourselves still get the white gloves (latex) treatment legally trying to exercise freedom of travel at the border.

Sit back and watch ….they got one h-ll of a plan for us.
NOTHING in this world is left to chance.

#96 Trumpocalypse2017 on 08.18.17 at 8:53 am

Trump is now retreating into a corner of his bunker.

The most dangerous time imaginable is now upon us.

Prepare.

Leave developed urban areas.

Now.

#97 maxx on 08.18.17 at 9:33 am

“The world, in short, will be the oyster of the liquid, the flexible and the free.”

Beautifully put.

Just imagine…….how good this extraordinary feeling is for a person’s health and longevity.

It’s not at all about good diet, nor a phenomenal exercise program, although they do contribute mightily. It does however fall squarely into that intangible component of good morale and a happy life, which is a little trickier to achieve with boulders of debt on your back.

It costs nothing apart from discipline in saving and investing prudently, which, after a few months you practically don’t even notice – except for a continually rising bottom line.

Most importantly, and the driver for all of this, is developing the conviction that at today’s forced prices, re is the worst money pit ever and that realtards are mainly cheap, emotional manipulators.

Arriving at retirement without financial worry is exactly like exiting the cage of fiscal enslavement to feel like you’re on vacation – every single day.

Money is finally, finally working for you – not you for it.

#98 Ole Doberman on 08.18.17 at 9:47 am

Looks like condo inventory keeps piling up in Calgary, there was 24 listings here now 28.

Still way over priced stuff though

#99 Ponzius Pilatus on 08.18.17 at 9:59 am

#95 TurnerNation on 08.18.17 at 8:44 am
After my morning ablutions I am flouridated, chlorinated, and caffinated. Rubbed some aluminum based gunk underarm. Vigorous breakfast chewing prompted any mercury based filing to release their daily payload, plus in the fish I ate.
But it’s all science right! Trust our new gods (scientists).

So what’s next. We’ll hear no more chatter on Syrian immigrants. No the recent world events replete with realistic enough looking photos and convincing actors is causing a re-write of His Story: all old plaques and statues must go. I saw an image on TV it must be true.

Our mind controllers take to airwaves and remind us of “our values” = keep being sheep. Thanks guys.

Now we get heart cringing stories of the next wave: “economic/political migrants” via USA. Hospitals will overload. All part of the Agenda.

While we ourselves still get the white gloves (latex) treatment legally trying to exercise freedom of travel at the border.

Sit back and watch ….they got one h-ll of a plan for us.
NOTHING in this world is left to chance.
——————-
Not that I agree completely.
But well written comment.
That’s why we should keep the comment section.

#100 Victor V on 08.18.17 at 10:03 am

The increase in the annual inflation rate from June’s 20-month low of 1.0 per cent matched analysts’ expectations and likely gives the central bank room to raise interest rates again this fall after a July rate hike.

http://www.bnn.ca/canadian-inflation-ticks-higher-in-july-on-higher-gas-prices-1.833324

#101 n1tro on 08.18.17 at 10:26 am

#59 Pete from St. Cesaire on 08.17.17 at 9:56 pm

Cryptocurrency…and its demise

Your hypothesis is only valid if the assumption being made is that Bitcoin or any other crypto has no utility. For Bitcoin and Ethereum, this is not the case. If more cryptos gets adopted it just means Bitcoin’s value comes down to something more reasonable. I’m sure world governments will come up with their own cryptos in the future, as soon as they figure it out. Politicians arent the sharpest tool in the shed so give it some time.

#102 Pre-retiree on 08.18.17 at 11:11 am

In relation to the last few days discussion about the comments on this blog, I thought this was most appropriate:

https://en.wikipedia.org/wiki/On_the_Internet,_nobody_knows_you%27re_a_dog

#103 short the tsx on 08.18.17 at 11:11 am

i’m back…:)

if she can break this level it would be crazy good..

every dog has its day

#104 Smoking Man on 08.18.17 at 11:15 am

#89 Steve French on 08.18.17 at 12:41 am

Starting a new movment. The masculine right.
Males only,any skin tone. Lefties nazis and kkk not welcome.

Mission statement.
Juvinial behavior that makes femanizs hate us more.

#105 Moike on 08.18.17 at 11:16 am

Oaken (Home Capital) GICs? CDIC Insured.

Given the situation with the GTA, these should be ok as long as you’re under 100 large (interest included), right?

#106 John of Grant on 08.18.17 at 11:30 am

#53 Bob

750k in 30 years will have the purchasing power of 100k today. Fools Gold. Cryptocurrencies is the only game in town.
——————————————

would need 7% inflation for 30 years for that to be true.

#107 Gravy Train on 08.18.17 at 12:07 pm

#92 James MF on 08.18.17 at 2:57 am

“Garth, today’s is an example of the blog entries I’m looking for. I suggest including a link to the Millennium Falcon on the sidebar:
http://www.greaterfool.ca/2014/05/15/the-millennial-portfolio/

[email protected] got me into mutual funds and reading the above blog entry got me out in less than 12 parsecs.”

You do know that a parsec is a unit of length, not of time, right?

#108 FLHTK on 08.18.17 at 12:08 pm

I literally just transferred my td web broker account over to wealth simple….we shall see how it goes for a year or 2 and to see what the growth portfolio brings…..i do have 30 years to invest….

#109 SilverSon on 08.18.17 at 12:16 pm

#32 rental property math on 08.17.17 at 7:16 pm

“So much anger on this blog. I think it’s from missing the boat on buying RE.”

I think it’s from so many people f’ing up the economy for everybody else by making stupid choices, borrowing well beyond their means, and by generally thinking with their pants. Remember this is Canada – when such a large number of people make irresponsible decisions, we all pay for it one way or another.

#110 RC on 08.18.17 at 12:18 pm

“So, I’m giving the moister a few ETF names (he only needs four) with which to build a balanced and diversified portfolio inside his tax-free account.”

Can you please share these fund names with us?

#111 Stan Broock on 08.18.17 at 12:18 pm

80% of the economy is not real estate, and housing ain’t going to zero. Untwist your shorts. — Garth

————————
My simple calculations show minimum 15-20 %, maybe 30 % of the real GDP disappearing when housing crashes to median historical prices.

What really do we have besides housing, financial services and other services related to it?

Not much. We are not an economic powerhouse, but rather a resource colony.

#112 BS on 08.18.17 at 12:39 pm

Must read this and take the quiz.

How to Know You Are in a Mass Hysteria Bubble – Scott Adams Blog

History is full of examples of Mass Hysterias. They happen fairly often. The cool thing about mass hysterias is that you don’t know when you are in one. But sometimes the people who are not experiencing the mass hysteria can recognize when others are experiencing one, if they know what to look for.

http://blog.dilbert.com/post/164297628606/how-to-know-youre-in-a-mass-hysteria-bubble

#113 Victor V on 08.18.17 at 12:44 pm

http://business.financialpost.com/news/economy/canada-inflation-shows-signs-of-pickup-in-july-key-takeaways/wcm/c80d5d12-c6b5-40f3-acfa-05956c20d7b4

Bank of Canada Governor Stephen Poloz raised interest rates for the first time in seven years on July 12 and said inflation that’s being held down by temporary factors will move back towards his 2 per cent target. The Governor also said future policy moves depend on fresh data that informs the inflation outlook.

Economists expect a further hike in October.

RBC Economics: A September rate hike can’t be totally ruled out, but we think a move in October is more likely when the bank refreshes their economic projections.

Douglas Porter, BMO chief economist: The modest uptick in core inflation fits nicely with the Bank of Canada’s view that underlying trends will gradually pick up over the next 12-18 months. And while trends remain low, recall that the BoC was willing to hike rates in the face of the lows for core, with the view that these trends would turn higher in coming months. By the same token, the still-low pace of headline and core inflation suggests there is certainly no urgency to move quickly (i.e. at the September meeting). Barring a major shock, we believe an October rate hike remains on track.

#114 Mark on 08.18.17 at 1:02 pm

“The increase in the annual inflation rate from June’s 20-month low of 1.0 per cent matched analysts’ expectations and likely gives the central bank room to raise interest rates again this fall after a July rate hike.”

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/cpis01a-eng.htm

Month-over-month, inflation (or deflation) was 0%. Okay, they are comparing, YoY, to a particularly weak July last year. This does not imply an acceleration of inflation, which would necessitate a rate hike. And even at that, they’re eons away from hitting the 2% target rate per their mandate.

The big question is why are Poloz et al willing to pursue rate hikes clearly not supported by the available data? Various other indicators are clearly indicating that there’s no risk of lift-off in the Canadian economy any time soon. If anything, a stock market that can’t even sustainably breach nominal levels of over 9 years ago, an incredibly employment market, and now, a rapidly deteriorating highly leveraged housing market is screaming of the necessity for rate cuts. With talk of rate hikes bordering on being ludicrous.

#115 Ace Goodheart on 08.18.17 at 1:07 pm

It used to be that when someone did something useful, they were paid. They could then go out and buy something useful from someone else, who had also provided either a good or service to them.

That was really the nature of an economy. Selling and buying.

We seem to have gotten away from that. What we have now is people who provide useful items, being taxed into the stone ages.

The people who earn the most income, do not appear to do anything at all.

The best “jobs” (ie, to produce useful items for consumption) are actually fully funded through tax revenue and government borrowing. These employees also do not seem to provide useful services or products anymore.

At the base of this giant monster of people not doing anything useful, is still the people who produce useful things. All of what exists now, exists basically on their backs.

Now I hate politics, I do not find myself anywhere on a political spectrum and I don’t identify as left or right. I prefer to be a realist, and just examine facts, and provide probable outcomes, which I then use to invest money and earn a living.

What I see right now in North America, is top heavy societies on the verge of collapse, with those in power having really no power, and no control and no idea that the collapse is actually about to occur.

When you have a real estate market that consists of banks purchasing houses from other banks, with people being basically title placeholders with no equity and under massive mortgage obligations, a stock market consisting of massive amounts of debt being sold as assets, and governments that cannot, under any circumstances, fund themselves out of tax revenues, or that show any likelihood of ever being able to do so in the foreseeable future, what we have is the recipe for a massive collapse.

All it takes really is one little spark. People have to distrust the system.

So have a look at some videos of what just happened in Charlottesville, VA. Basically an armed attack, with police standing back and watching, while people were assaulted and killed. We find that the persons responsible came armed with automatic weapons, pistols, one guy pulls out about five semi automatic hand guns including a “Glock” from his pants and clothing, and then a knife “just because”, while laying an automatic rifle on his hotel bed.

That sort of stuff basically makes one think “gee we probably can’t trust the system anymore”.

Anyone who still trusts the system after watching what happened in Charlottesville is likely a little slow, perhaps not the sharpest knife in the drawer. The system stood back and watched, and the protesters were much better armed.

Hell, there was no system. That event was the equivalent of watching chaos descent somewhere in sub Saharan Africa. The police and army run away, armed mobs take over and lots of people die.

We all had better hope that this system that we all love to hate, doesn’t collapse around us. Either than or we all better have our savings in Chinese currency.

#116 aa6 on 08.18.17 at 1:39 pm

#111 Stan Brock.. It is what I realized as well, without the housing bubble, economically Canada is a nation with resources, such as nations like Angola and Indonesia.

Countries like Germany have many multinational corporations. With vast amounts of industrial capital invested. And their corporations have built brand value, intellectual property, global distribution and sales networks.

Those corporations and areas where they are based have built up human capital, through the experience that is gained working and competing at that level.

Canada could have like an assembly plant for these multinational corporations. But then so can nations such as Hungary and Vietnam.

#117 BS on 08.18.17 at 1:50 pm

#115 Ace Goodheart on 08.18.17 at 1:07 pm

So have a look at some videos of what just happened in Charlottesville, VA. Basically an armed attack, with police standing back and watching, while people were assaulted and killed.

The police have been ordered to stand down by the left mayors or governors. This is happening across the US in left run states. It is their way of punishing Trump voters and resisting Trump. Allow the Alt Left hate groups to attack anyone who may be a Trump voter with no police intervention. The end result was the left protester’s death by a nut bar nazi but the root cause was the local government allowing the fight to start and then progress until someone was killed.

This is also taking place across California. What the left wants is chaos right now. They think it will help them win the next election or somehow get Trump impeached. Most rational people can see right through it.

The Left in the US are out of ideas and all they have is opposition to Trump and ANY policy Trump supports regardless of its merit. Hilary ran on that and lost. You would think they would have learned by now.

#118 Rational Optimist on 08.18.17 at 1:57 pm

42 Hans on 08.17.17 at 8:10 pm

Sean Cooper, ugh.

But that reminds me that I meant to link to this “Millennial’s guide to early retirement”: https://www.treehugger.com/slideshows/culture/millennials-guide-early-retirement/

On the first page it acknowledges ‘…Many of our ideas come from a Canadian finance blog called “The Greater Fool,” written by Garth Turner, as well as Tony Robbins’ book, “Money: Master the Game.’

I have to admit I didn’t actually read the whole “guide.”

#119 nick on 08.18.17 at 2:48 pm

He did the math
He did the moister math
The moister math
It was not much of a smash
He did the math
It fell behind in a flash
He did the math
He did the moister math

You just won free sprinkles for life. — Garth

#120 Smartalox on 08.18.17 at 3:05 pm

@Ace #115:

I heard the audio on that video that you referenced, while someone else watched it. What struck me about the guy with all his guns, and a knife, “just because”, was the sense of fear in his voice.

I think that he really felt that he was heading into a life-or-death situation, and was terrified. Now ‘fear of the unknown’ is a natural reflex, but this guy I felt, was on the verge of panic.

The other thing that surprised me was that this guy had no sense that this rally WASN’T going to be a bloodbath. He really didn’t expect it to end peacefully.

This made me wonder about how profoundly isolated from reality he was, with no expectation that the rule of law or moral decency or underestimation, on the part of his opponents, would keep him safe. Clearly he had no expectation that he would be safe.

How do you get to that point? Radicalization. This is what happens when you simmer for hundreds of hours in the echo chambers of one’s particular interest groups on the internet: you start to lose objectivity, become hysterical and paranoid.

Other commentors suggested that those that went armed to Charlottesville, did so in order to intimidate. I came away thinking that they were the ones that were intimidated.

#121 Stan Broock on 08.18.17 at 3:15 pm

#116 aa6 on 08.18.17 at 1:39 pm

Countries like Germany have many multinational corporations. With vast amounts of industrial capital invested. And their corporations have built brand value, intellectual property, global distribution and sales networks.

Those corporations and areas where they are based have built up human capital, through the experience that is gained working and competing at that level.

————————————-

Pretty correct view of the reality.

What leading/economic powerhouse countries have in common:
1. Vast industrial and financial capital
2. Vast intellectual capital/knowledge/know how
3. Intelligently build and efficient infrastructure
4. Sustainability
5. Proximity to major and diverse markets
6. Ability for people with skills to complete proper education, find proper career and fund suitable lifestyle.
7. Consensus in the politicians/think tanks and media on common rules and policies that build the backbone of the society and are never-ever-violated.

In Canada/North America the rules are build by the rich/the elite.

While the elite of US controls the world, the elite in Canukistan is with ‘village smart’ deep provincial mentality.
Canadian elite cares about:
1. Sports (they want to buy hockey club)
2. Cheap labor
3. Conforming media
4. Full government support including enjoyment of cozy oligopolies.

The sheppard mentality. The know how to milk a caw and they want caws, not citizens.

If you look around in GTA you will find none of the qualities that make a country an economic powerhouse.

The financial powers are pretty much local and representation of past resources and cheap labour exploitation.

I laugh when I read in the media that GTA is becoming high-tech Mecca.

——————————

Canada could have like an assembly plant for these multinational corporations. But then so can nations such as Hungary and Vietnam.
———————————
I see no valid arguments for us/Canadians to look down on nations like Hungary, Vietnam, even Romania.

There is absolutely no bases for such high confidence/superiority complex that we are brainwashed into.

#122 Stan Broock on 08.18.17 at 3:16 pm

cow and cows damn it

#123 Dissident on 08.18.17 at 3:42 pm

Thanks for this post Garth. I know this (now), but I wish I had known this when I was 26 and started my first full-time job. I don’t think schools do enough to educate young people about their financial futures. Not at all. Not everyone gets the memo! Not everyone’s parents are wealthy or have sane investing habits (i.e. a mom who doesn’t invest, only in silly GICs vs. a dad who speculates too much in stocks – not a great combo! Haha…). Not everyone is born into a pile of money. And not everyone knows how to protect and save their money from the time they start making it.

#124 jess on 08.18.17 at 4:00 pm

Steve Bannon, chief White House strategist, removed from role

White House press secretary issues statement saying chief of staff John Kelly and Bannon ‘have mutually agreed’ that today would be Bannon’s last day

#125 isuckless on 08.18.17 at 4:02 pm

DELETED

#126 crowdedelevatorfartz on 08.18.17 at 4:24 pm

@#96 Trumpocalypse2017
“Leave developed urban areas”

*****

You first

#127 Wrk.dover on 08.18.17 at 4:50 pm

Scored a good cloth baseball cap at thrift today.

Says….

In dog beers, I only had one.

#128 maxx on 08.18.17 at 5:02 pm

#39 Algonquin Settler on 08.17.17 at 7:49 pm

“Just to add, I am attempting to return to the workforce. Prospects are grim after 22 years out, but we have awesome kids (with TFSAs, and have worked since 14).”

You deserve a medal. Bravo!

#129 MF on 08.18.17 at 5:02 pm

#121 Stan Broock on 08.18.17 at 3:15 pm

So go move there. What’s stopping you?

MF

#130 MF on 08.18.17 at 5:11 pm

Sound advice but hard to follow for the average person.

At some point there will probably be a wife in the picture, possibly kids. He will have to fend off pressure from everyone under the sun to buy. The expenses he incurs from rent, food, life in general will make it too tempting to dip into his savings.

If there is any correction -which is a certainty- he will have to stomach watching his net worth fall against that backdrop. If housing resumes it’s upward trajectory, the correction will be even more painful as guilt sets in.

Not an easy thing to do, psychologically.

MF

#131 Russ on 08.18.17 at 6:06 pm

Wrk.dover on 08.18.17 at 4:50 pm

Scored a good cloth baseball cap at thrift today.

Says….

In dog beers, I only had one.
=======================

I have a tee-shirt with the same statement written on it.

Best worn with my cloth ball cap the states, “The beatings will continue until morale improves”

The Baths (BVI)

#132 White Crock BC on 08.18.17 at 7:52 pm

I didn’t know Jack Daniel’s and Kool-Aid was a drink.

#133 nick on 08.19.17 at 10:32 am

“You just won free sprinkles for life. — Garth”

In this market, I think ill build a Hansel and Gretel house with those.

#134 Prince Polo on 08.20.17 at 10:59 am

#13 Spaccone on 08.17.17 at 5:30 pm
Have been trying to get my younger siblings to save in order to invest inside the TFSA for a few years. The first time I mentioned it I even offered to match whatever they invested.

The result…zip zero zilch nada…as I mentioned in a prior post about being/becoming more cold-blooded my thinking for many people is that sometimes a lost cause is a lost cause…they just have to trudge through the discovery/learning process themselves.

===============================
Spaccone,
I’ll be your sibling. Please send the matching investment to RBC, TFSA # xxxxxxxxx
:)