Hormones

My big mouth, blogging and failure to genuflect before the prime minister may have doomed my career as an MP, but what the hell. It’s been two years now since the system handed me my ass in the last election and each day that passes makes me regret less what happened.  I stood for something important to me – putting voters ahead of a party – and paid the price. Turn the page.

But there are some things I miss, like the power to change things for the better. My second stint in the House of Commons may have ended in the political sewer but I was juiced to spearhead income-splitting for retired folks, and the creation of the TFSA. And this brings us to today’s topic: What the crap is wrong with you people?

The tax-free savings account is a pure financial gift to Canadians. It allows a couple to put aside $10,000 per year in a place where it can grow, and that growth will never be taxed. You can catch up on missed contributions, which means in a couple of months every family in Canada with two taxpayers in it can have $30,000 in their TFSAs.

So how does this differ from an RRSP, and which comes first?

The big difference is that the registered retirement savings plan is a tax-deferral scheme. So, when you put money in you’re allowed to deduct that amount from current taxable income (good). But when you take money out, you have to cough up that tax (bad). This makes the RRSP a tax time bomb for most middle-class families, since a broad swath of them will be retiring in the top tax bracket.

In fact, a large RRSP can help bump you into a higher tax situation. At age 71, if you haven’t cashed the thing in, you convert it to a RRIF and (by law) must then draw income – and the more income you have, the greater the tax burden. This means a lot of people who squirrel away retirement money for decades end up handing 50% to the feds.

Not so with the TFSA. It’s not a tax-deferral plan, but a tax-avoidance one. No deduction for contributions. No tax on withdrawals. It means somebody retiring in 20 years would want a TFSA with about $500,000 in it because none of the capital coming out would be taxed; none of the income generated by the plan would be taxable; none of the wealth would be included in income for tax purposes; and that means no clawback on your government pension.

Simply put, a TFSA of that size with a 7% rate of return (what the stock market has delivered over 20 years, and a yield fairly easy to obtain right now), would provide annual retirement income of $35,000 tax-free. That’s equivalent to a taxable pension income of more than $60,000. And, of course, you wouldn’t even touch the half-million.

Obviously, the first $10,000 a couple invests should be in a TFSA. So, we’ve just answered that question.

But here’s the problem. Most Canadians are absolutely squandering this gift. They will never grow any reasonable taxless nest egg, secure their retirement or take advantage of the ability to income-split between family members and shelter investment gains from F’s long reach.

Sure, TFSAs have become so popular that almost 40% of us have one. But, we know jack about how to use them. A bank survey three months ago found that 90% of all the money invested in tax-free savings plans in Canada was in savings accounts. Now a new report from BeeMo shows an even deeper degree of financial ignorance. Only one in five know a TFSA can hold a mutual fund. Just one in four know it can have a GIC in it. And a third have no clue at all.

But, of course, you want none of those things. No dumbass guaranteed investment certificates. No hungry mutual funds. No pathetic hi-interest savings accounts. And certainly no dipping into the orange guy’s shorts, or that Ally dude either.

After all, why would you invest in assets with a return so abysmal they don’t even pace inflation, when 100% of your growth will forever be untaxed? Wazzamatta with you? If there ever was a place where you want octane, hormones, adrenaline and some of my steamy cowboy blood, this is it. (See? There was a reason I used that pic)

But by the same token, the point is to make a pile of money and keep it. So junior mining shares, naked calls on Google stock or a mess of bullion futures might be exciting, but that’s more spec than strategy. Which is why my TFSA is stuffed with ETFs, giving great exposure to good sectors of the economy, with rock-bottom costs, non-stop liquidity and lots of diversification.

What does this have to do with our usual topic of real estate?

Everything. A house may soon be so illiquid you hate it. Not only will your equity drain away each month, but you’ll be unable to sell it. If the American experience is any guide, it may take a year, on average, to find a buyer – and almost always at a lower price. And for those slipping into negative equity – like every young couple in the last two years with a 5% down payment – a sale will be impossible without a big cheque on closing day. A cheque they write, not collect.

In the world now unfolding, liquidity will be king. Financial assets will rule. And TFSAs will kick ass.

186 comments ↓

#1 Chaos on 11.11.10 at 10:25 pm

Now do you believe that there are Extra-Terrestials on earth!

#2 Andrew on 11.11.10 at 10:32 pm

Garth do you think the Feds will eventually kill/alter the TFSA if enough people use it to avoid paying tax?

Just thinking out loud, but if a large majority of Canadian couples contribute $10,000+ to their TFSA every year over an average 30 year career that is a lot of personal income tax that will not be going to the government. Will the TFSA be sustainable for the government over the long term?

Doubtful. We already have a retirement crisis brewing. That would just exacerbate it. — Garth

#3 Smokanagan on 11.11.10 at 10:33 pm

Rock solid advice Garth. Already got by $5G saved for Jan 1, unfortunately the only people getting this advice are the enlightened dawgs, this should be on the front page of all the major dailies, instead there will be yet another story about HST backlash and washed up former BC premiers

#4 GoingGagaforGarth on 11.11.10 at 10:40 pm

Dear God!
I nearly fell out of bed with that pic!
Lmao

#5 Herb on 11.11.10 at 10:42 pm

O.M.G. (the picture, not the post.)

#6 GregW,Oakville on 11.11.10 at 10:46 pm

Hi #190 Nostradamus, Thanks for that.
re: your link http://saladin-avoiceinthewilderness.blogspot.com/2010/11/codex-fluoride-auschwitz-monsanto.html

Maybe that’s way if you travel by air now you get special treatment!
They want to keep the wakened people from getting together and organizing to stop the madness in time.

#7 Devil's Advocate on 11.11.10 at 10:47 pm

Garth,

How did you get my picture?

#8 Paul B on 11.11.10 at 10:52 pm

Great advise Garth but you gotta know what your doing cause the banks will steer ya right into a 5yr GIC paying 2.1 if you don’t.

#9 Debt's Dark Embrace on 11.11.10 at 10:59 pm

#2 Andrew on 11.11.10 at 10:32 pm

Garth do you think the Feds will eventually kill/alter the TFSA if enough people use it to avoid paying tax?

Just thinking out loud, but if a large majority of Canadian couples contribute $10,000+ to their TFSA every year over an average 30 year career that is a lot of personal income tax that will not be going to the government. Will the TFSA be sustainable for the government over the long term?

Doubtful. We already have a retirement crisis brewing. That would just exacerbate it. — Garth
……………………………………………………………………..
Like the income trusts they said they would not touch?
Come on Garth, if there is money there to grab, they will grab it. Sooner or later.

Not a chance. — Garth

#10 Devil's Advocate on 11.11.10 at 11:00 pm

I’ll have you all know that my expertise is unmatched and should not be challenged by you trite little minions. I’m “the” gold standard for real estate knowledge.

I find it laughable that some other real estate agents would dare to question what I have to say about the industry. I am not subject to the inquiry of such petty folk.

Please refrain from any such behaviour in the future as I have better things to do with my time then write long winded notes explaining my position that the vast majority of you fools aren’t going to understand anyway.

I’m well aware many of you think I’m a hypocrite for dissing this blog and the mean spirited posters but I’m not. I have perfectly logical reasons for being back here, this is my life.

I mentioned yesterday that most of these posts wouldn’t exist if people would come out from behind their screen names and how you people really really really need my objectivity and feigned arrogance to bring a bit of clarity to your small thinking.

I am a realtor in Kelowna and my name is Terry, I think.

Although there is a huge amount of fiction finely woven into my posts, I do it to entertain you little people. Do not despair, I’m not going anywhere.

Oh, if I do return, do not believe it to be me, it’s an imposter. I am very hurt by the cruel treatment I’ve been recieving from some people on this blog. I will not be returning until after Christmas…at the soonest.
It’s now Christmas in Kelowna if you were wonder why I’m back.

I have always agreed with Garth, he has been wrong quite often, but I have always agreed with his basic premise. I will be back soon, if someone posts under my name, it’s not me.

#11 Cowboy_aka_My_View on 11.11.10 at 11:01 pm

How did you come up with 500k in 20 yrs in a TFSA?

20 years x 10K per year (couple) = 200K x compounded market growth. — Garth

#12 Devil's Advocate on 11.11.10 at 11:03 pm

Good news from Kelowna and my basement, Hulk Hogan is about to get married!

#13 Sasquatch on 11.11.10 at 11:05 pm

Most banks will tell that putting other interest making assets into TFSA’s is not doable. Garth has mentioned using different people to do this for you legally if I am not mistaken.

Banks are out there to make money, not look after their clientele. There are a number of things that can be done financially that banks will say cannot be done. The best thing a person can do is research and find out what the laws are in Canada concerning financial maneuvers.

#14 Devil's Advocate on 11.11.10 at 11:10 pm

I had the blues because I had no shoes until upon the street, I met a man who had no feet.

Don’t you just love that!!!!!!!!!! I get all soft and mushy over that one. Stay tuned, I’ll make sure to send some more to brighten up this blog, cause I know you guys all need me.

#15 Devil's Advocate on 11.11.10 at 11:12 pm

#184 Nostradamus Le Mad Vlad on 11.11.10 at 7:49 pm

#142 Devil’s Advocate — And a perverted sleazebag as well!

“Perverted” may be a little harsh – “perverted sleazebag“, now that just hurts.

I prefer “enthusiastic recreational partner”.

Lighten up and don’t be such a prude. Let’s face it Vlad, a true innocent would not have read between the lines that which you did. ;-)

#16 Devil's Advocate on 11.11.10 at 11:21 pm

Woops… impostor D.A. is back.

Or should I say that imitation truly is the sincerest form of flattery. Or is it parody? I am so confused. Stop, stop this madness I tell you… stop it now. You are driving me craaaaaaaaaazy!

#17 Drew from the peg on 11.11.10 at 11:25 pm

Does it make sense to put money in your RRSP and then put the tax refund you receive inside a TFSA? Does the RRSP make sense anymore?

#18 Devil's Advocate on 11.11.10 at 11:29 pm

Where the hell is that damned sarcasm font

#19 Nick on 11.11.10 at 11:31 pm

Garth, can you recommend a financial institution that will allow you to have a self-directed TFSA without charging a hefty $30 per trade plus commission, plus $100 annual fee?

Of course. — Garth

#20 Devil's Advocate on 11.11.10 at 11:36 pm

I am getting seriously pissed off with people posting under my handle!

I have tried very hard to provide honest professional information to this group and instead people are acting like children.

Seriously I am not coming back! I hope you guys rot!

#21 northern_dirt on 11.11.10 at 11:37 pm

If my investment in a TFSA makes a capital gain and I withdraw the entire amount, will I only be able to put back my initial amount, or the entire amount including the gain?

Also do TFSA’s shelter one from foreign securities withholding taxes?

#22 qqq on 11.11.10 at 11:39 pm

@Devil’s Advocate, just wondering how many shots you got today, looks like 2 double-double…

#23 TaxHaven on 11.11.10 at 11:39 pm

If you can get 7% returns now, you can BET risk, price inflation or a fall in the currency will reduce that. WHO is offering 7% for money now, and WHY?

You’ll need to do even better.

Sigh. How many times do I have to go over this stuff? — Garth

#24 GenXer on 11.11.10 at 11:47 pm

Sasquatch – Opening a TFSA is a blanket account – like opening an RRSP. All of the bank investing arms (aka Waterhouse) will register an account for you and allow you to trade within it. The branch people might tell you different, but it is probably lack of training that is the root of their ignorance.

Drew from the peg – seems to me that RRSPs still make a lot of sense, if you have the excess cash to fill them. They still offer tax free compound growth – and are especially useful if you plan to take any time off within your career. My feeling is that they are the 3rd best vehicle for savings.

I think Garth’s point is that for the average family saving less than 5% of their income, the place to start is to fill the TFSA, as it is completely tax free and liquid – unlike the RRSP.

If you have kids, the RESP provides an excellent second place to invest for their education – the government kicks in a solid contribution, it grows tax free and is taxed at the student’s tax rate when they use it – which is essentially zero. Not a bad deal!

I plan on leveraging both TFSAs and RRSP, as I don’t think $500k is going to be enough to retire on by the time I get around to it.

#25 virginhomebuyer on 11.11.10 at 11:47 pm

Garth, do you rent, own, live in a trailer? I’d be curious to know your residential status.

I bet. — Garth

#26 throwstone on 11.11.10 at 11:51 pm

Mr. Turner

Very well written!

Off to the bank now…Cheers!

#27 Timing is Everything on 11.11.10 at 11:52 pm

20 years x 10K per year (couple) = 200K x compounded market growth. — Garth

Looks good on the whiteboard (theory).
Just gotta wait 20 years to prove it. The rules won’t change in 20 years…Not a chance.

So give up now. Good strategy. — Garth

#28 Elmer on 11.11.10 at 11:59 pm

In order to have 500k in 20 years from 10k/yr you would need an average interest rate of almost 9% each year. That is hardly a likely scenario. My retirement calculations are based on an assumption of only a 4% rate of return. And what about us swinging bachelors who are only limited to 5k/yr?

At 4% you’re not even trying. — Garth

#29 nonplused on 11.12.10 at 12:03 am

I still like the idea of putting the swings for the fence in the TFSA, at least while you are young. Then if one comes in you can buy the stable ETFs, preferred, what have you with the profits and pay less tax. But of course for this strategy to work you’ve got to send at least one out of the park, which most people never do except by luck.

#30 brent on 11.12.10 at 12:05 am

Matt Taibbi has a new blog post out, where he discusses the foreclosure/mortgage fraud system in the USA:

http://www.rollingstone.com/politics/news/17390/232611?RS_show_page=0

I am left wondering how much of this we will see. I know our banks have been busy splitting up and selling the mortgages as MBS (Mortage Backed Securities) but so far I see CMHC backing everything, including yields; it appears to me that it will end up being the average Canadian Taxpayer that ends up on the hook for ALL the underwater houses in Canada in 5 years time.

Your thoughts?

#31 Got A Watch on 11.12.10 at 12:19 am

For those who are wondering about what QE2 is about, and what China is bitching about, Michael Pettis is an American professor living in China for a decade, who runs an excellent Blog (that is blocked inside China, too controversial). He is also in touch with the real world, unlike most “economists” in their ivory towers, he actually trades the markets too.

He has a really excellent lengthy post on US/China and QE2 that is about the best summary of the whole situation I have read: QE2 and The Titanic. Highly recommended.

I saw Stevie “The Economist” Harper on the TV news tonight, I assume he was in Korea. He sounded more vacuous than usual, supporting the US with QE2, he said something like “I don’t know what else they could have done…” he looked tired and sounded rather helpless and not very convincing. I guess being in a conference room with Presidents and Prime Ministers yelling at each other can wear on you.

How about a little truth Stevie, QE2 is all about saving the Banksters at all costs, everything else is just a side effect.

Earlier today, I heard on ‘Bloomberg Business Radio’ a reporter in Korea (from CTV I think) who said “screaming matches were heard coming from the room where leaders are meeting, as security moved reporters back and closed the doors”. LOL that sounds amusing, but it is not good for anyone.

Sounds like they strongly agreed to disagree. ‘Currency Wars’, available now, on XBox, PS3 and PC, worldwide.

Meanwhile, Irish Bond spreads (the difference in interest rates over German Bunds) apparently went orbital in late day trading, there was a report on FT about “lack of bidders” – that means lots of sellers, no buyers. Err, that would be negatively Bullish. Ireland looks to have finally slipped over the cliff edge. Expect the Euro to fall and US $ to rally hard.

I see Calculated Risk Blog has a post about “Report: Discussions underway to assess readiness to activate EFSF for Ireland”. He’s usually sober and tends to understate the case, so that means it’s panic time in Europe.

Gold and silver getting sold hard in Asian trade tonight, not sure if that’s G20 or Ireland, or both, no hard reports I can see scanning various media sites. A hard risk reversal could be forming now.

Exciting times.

#32 Devil's Advocate on 11.12.10 at 12:25 am

blah blah blah blah blah blah blah

#33 realpaul on 11.12.10 at 12:34 am

Great opinion on TFSA’s Garth and thank you :D

I have tried to follow the advice you have given out and have diversified and do have the TFSA in a investors account to hold equities, muts…etc. I am thinking of investing in ETF’s of developing countries EEM, EWX and EET….any thoughts on this strategy?

Aside from that there is our own little universe…HXT , XIU and ZCN.

What do you think of individual country funds…like Singapore, China, India, S.Korea etc?

This is all because I think that our dividends on CDN stocks are paying generally under 6% ( mostly between 4 and 5) but are bound to the N.AM market cycle.

Is this the type of thing you mean by ‘financial asset’?

#34 Angela on 11.12.10 at 12:40 am

“This makes the RRSP a tax time bomb for most middle-class families, since a broad swath of them will be retiring in the top tax bracket.”

I don’t understand this. I thought we’re all screwed because there’s a retirement crisis, some abysmal percentage of Canadians are putting away enough for retirement, etc. Sooooo how many is a “broad swath”? Because i thought way, way more than a “broad swath” were going to have next to nil at retirement, let alone a top tax bracket income. So we’re damned if we do, damned if we don’t; not enough people are putting anything away, and those that are putting away enough are going to be paying 44% tax? Geez, this blog gets more dismal every day.

#35 Devil's Advocate on 11.12.10 at 12:52 am

My buyers went through debt consolidation. Now they have only one bill they won’t pay.

#36 Devil's Advocate on 11.12.10 at 12:53 am

Q: How close was the house for sale to water?
A: In the basement.

#37 Nostradamus Le Mad Vlad on 11.12.10 at 12:57 am


When you (Garth) gave a talk at the Capri Hotel a few weeks ago, there were a few companies selling their wares outside the doors.

One of those companies (if I recall correctly) was Apella, into something called Vanadium. Their stock was selling for around 15 cents, had all their prelim. work done, everything approved, etc.; I was sorely tempted to put $10k worth inside a TFSA.

Didn’t work out at the time, but that’s fine. Our CFP will recommend a few good ETF’s in time to come.

Imagine: We were sitting less than ten yards from Garth but, because you were surrounded by gorgeous young groupies, we old pharts decided to leave you alone!

BTW, iz the pic of Tarzan in drag? Looks remarkably similar to Johnny Weismuller!
*
Link in. Cat and mouse military games starring Canada. The US was conveniently stationed right next to Haiti when the ‘quake shaked, now they are there permanently.

Protectionism coming shortly? Leading to bankrupt countries.

A Solar Cycle Turns out the next few months may be more than a little interesting.

The elites (who know a lot more about what to do with their investments than we do) are bantering on about gold.

European bonds are not in the greatest of health.

Recovery of the Sleeping Dead.

Free Trade is squashing the world, so why is it still used?

Curious A while back, a link said the Chinese (as well as the Russians and US) have developed a cloaking device for their subs., and a nuke-powered Chinese sub, fully loaded surfaced within a mile of US aircraft carrier, and no one even noticed it (until it surfaced).

G-20 at S. Korea. Lotsa things happening — just read between the lines!

Shows why m$m is a dead dinosaur, the ‘net is the way to go.

#38 Timing is Everything on 11.12.10 at 1:09 am

Clueless in Whistler…

“We just don’t feel there’s a market. The real estate market right now is not active enough to continue to sell them,” said Joe Redmond, president of Whistler2020 Development Corporation (WDC).”

“I don’t expect this to be a permanent thing,” Kelly said. “I expect that once we get back into tourist season, we’ll probably be back on the market at some point in early 2011. That’s my hope and consistent with my understanding of how the market works.”

http://www.piquenewsmagazine.com/pique/index.php?cat=C_Frontpage&content=Cc+market+housing+1745

#39 Bill Grable on 11.12.10 at 1:14 am

Say TFSA to most Canadians and they think it’s a minor league for the Argos.

I am shocked and saddened at the OUTRAGEOUS tactics I have seen recently – like 7 year car loans. SEVEN YEARS. 500 a month for a D***E that will depreciate faster than a Junior silver stock from Mexico.

I am really starting to get nervous. What happens when all these fiscal maroons hit the Beach, Mr. Turner?
In the States, Bill Clinton blew the last of their Social Security = how are we here?

Tell us the lovely mix of some of the Provincial Retirement plans, sir.

I suggest, that if Mr. Turner shows you what the Civil Servants pensions are based on, they will think the Bunker will look like a mansion.

#40 Taxpayer like everyone else on 11.12.10 at 1:14 am

“This makes the RRSP a tax time bomb for most middle-class families, since a broad swath of them will be retiring in the top tax bracket.

“In fact, a large RRSP can help bump you into a higher tax situation. At age 71, if you haven’t cashed the thing in, you convert it to a RRIF and (by law) must then draw income – and the more income you have, the greater the tax burden. This means a lot of people who squirrel away retirement money for decades end up handing 50% to the feds.” – Garth

Now Garth, you lament that we are not saving enough for retirement. The top bracket of 46.41% in Ontario doesnt
start until $128K so I doubt that a broad swath of retired
middle classers will be in that. Many people will be in a lower bracket when they retire, and it makes for better planning that way with the RRSP. The real advantage kicks in starting about an ann income of about $65K where the marginal tax rate increases rapidly from 32.29% hitting 43.41% from 82K to $128K, basically the upper middle income earners.

An RRSP that’s too big? Quite avoidable with proper
planning. Nothing to say you cant retire early and draw down your RRSP before other benefits kick in. Higher tax
rates in the future? Definitely a risk.

While RRSP contributions are proportionate to income to the allowed max, TFSA contributions are not, so they are of greater relative benefit to low and lower-middle
income earners, those who may not be in a lower bracket at retirement. Somewhere around $40K in Ontario.

#41 Devore on 11.12.10 at 1:20 am

I’ve been saying this for at over a year. But most people fail at grade school math, not to mention reading comprehension. They simply cannot see past the tax refund from an RRSP contribution. They do not realize this simply represents tax deferral. Possibly they even believe they will be paying less tax after they retire. Ha!

Your first dollar always goes into TFSA. Put stuff in there that you expect to grow like mushrooms. Take the risk there first. Why risk your RRSP money, when government will take half of it for your effort? Why do the work to invest THEIR money for them? Pay the tax man first, then grow it for yourself.

More TFSA benefits: you can take money out of your TFSA at any time, in any amount, for any reason. It is 100% tax free. It does not count towards your income. When you get horny for vulture granite in a decade, you can take money out to make a killer downpayment (or cash buy!), and then you can put it all right back in the next year.

This is an unprecedented gift.

TFSA limits are even periodically inflation indexed, and of course the rules may change in the future, so get as much as you can while the gettin’s good!

#42 Jojo on 11.12.10 at 1:29 am

Defflation????
Longtime financial professional Charles Goyette discussed the continued devaluation of the U.S. dollar, and how he sees this crisis unfolding for the average American. Over the years, the dollar has lost 97% of its purchasing power, he said, and the current rise in the price of gold reflects the fall of US currency. America has a staggering amount of debt–$1.3 million for every family; these debts will be accrued in some manner– typically by fleecing the middle class, he warned.

The U.S. is moving away from being a “free economy” which depends on agreement and produces prosperity, Goyette noted. Instead, we’re seeing a movement toward a “COMMAND ECONOMY, ” he said, which produces shortages, and is run by “coercion,” with resources, production, and consumption directed by a central command such as boards, commissions, and administrators. What has been taking place in industries such as insurance, automotive, banking, and health care are all examples of the “command economy,” he detailed.

While credit card companies are slashing people’s credit and forcing them to save, banks aren’t offering any incentive for savers with their low return rates, he reported. As the dollar continues to be worth less, Goyette advised people to put some of their investments in gold and silver, and also consider other opportunities such as agricultural and natural resources.
The same story with Canadian Dollar,from “Total Control” of economy and RE.
Over the last 90 years, the CAD has lost 96% of its purchasing power. “ANY DEFFLATION”???…

#43 Crash on 11.12.10 at 1:36 am

Part of the problem is it is called a Tax Free SAVINGS Account so the unenlightened masses don’t think past the SAVINGS part. It should be called a Tax Free Investment Account.

#44 Ghost of Tom Joad on 11.12.10 at 1:38 am

Canada launching free-trade talks with India
http://www.theglobeandmail.com/report-on-business/economy/trade/canada-launching-free-trade-talks-with-india/article1796084/

Oh, isn’t Harper the Globalist sweet?! Now let’s see how this is going to work.

Canadian Factory -> pay Canadian $ to employees -> expensive product
Indian Factory -> pay Indian rupees to employees -> cheap product

Result -> Canadian Factory DEAD

Globalism is destroying the west. Folks, don’t trust globalists like Harper the Traitor! Garth, count your blessings that you no longer work with Harper the Traitor.

Folks, listen and learn from the most important man on earth – Alex Jones:
http://www.infowars.com

#45 sk76driver on 11.12.10 at 1:50 am

I have junior mining shares in my TFSA, gold mining stocks. I am up over 40% so far this year…. Once I realized it was a Tax Free INVESTING Account and not just saving. It would have taken years to get this return if I had left it in ING at 2%….. Hey, just checked one of my juniors and it bump 40 % TODAY!!!! Nice!!

#46 Temporary Name on 11.12.10 at 1:50 am

Dear imposter of “Devil’s Advocate”,

You are annoying as all Hell. Please pull up your pants, take the squirrel pelt out of your mouth, and leave this blog.

One or two funny comments as an impostor is amusing but repetition is boring.

#47 Devil's Advocate on 11.12.10 at 1:51 am

I am soooooooo upset that somebody is imitating the master. What a compliment! I really wish I could be half as cooooooooooooooooooooooooooool as that guy or gal or whatever it is.
Thanks for the compliment mister imposter. I looooooooooooooooooooooooove it. Huge sarcasm of course.

#48 Devil's Advocate on 11.12.10 at 1:55 am

Hey blog dogs – here’s something to think about

My life is a joy filled with love, fun and friendship all I need do is stop all criticism, forgive, relax and be open.

Every Cell in my body vibrates with energy and health

#49 Devore on 11.12.10 at 1:55 am

#13 Sasquatch

Most banks will tell that putting other interest making assets into TFSA’s is not doable. Garth has mentioned using different people to do this for you legally if I am not mistaken.

Banks are out there to make money, not look after their clientele.

When I opened a TFSA account with my bank (the evil Scotia Bank), I asked to have it on a self-directed brokerage account, no one blinked an eye, and it was done in less than a day.

People need to stop playing the victim, and educate themselves. Companies are out to make money. You have the money, you have the power. I can’t stand the BS about how companies are only out to screw them. Companies will do what their customers will let them get away with, while showering them with their hard earned money.

#50 Devil's Advocate on 11.12.10 at 1:56 am

Just before I tuck in with my snuggly wuggly.

I am the perfect weight for me

#51 Sultan on 11.12.10 at 2:07 am

Few minor points..

You don’t have to be a tax payer to open a TFSA.. You must be a permanent resident of Canada for tax purposes (meaning you file your annual return in Canada even if you are not paying any taxes, ie low income) and for that reason TFSA is a great tool for splitting assets since the source of the funds is not considered, ie a parent can fund a TFSA for a child who is 18 years (19 in some provinces).. or husband/wife can fund TFSA for a non working spouse..

To hold stocks, ETFs etc. open your TFSA with a Discount Broker of the Bank, as opposed to opening at a Bank Branch.. Same as your Self Directed RRSP.. For example, for TD, that would be TD Waterhouse and not at your local TD branch..

NOTE: Do the paperwork at the right place because even with the same bank, moving a branch based TFSA is big hassle and will cost you money..

#52 An Cat Dubh on 11.12.10 at 2:07 am

I have 10K in my TFSA, and my dad has put money in his, though I have to remind him every year to add another 5K from his “regular” savings account.

#53 Aussie Roy on 11.12.10 at 2:31 am

#7 Devil’s Advocate on 11.11.10 at 10:47 pm

Garth,

How did you get my picture?

You need breast reduction and maybe something added some where else by the looks of your picture. Actually that might just explain a lot. LOL….

Aussie update

RBA controlls interest rates – not those pesky people who lend the banks money, really?.
http://www.theage.com.au/business/nab-ups-rates-by-43bp-20101112-17qif.html

Economics is a science?.
http://www.american.com/archive/2010/november/is-economics-a-science

#54 Devil's Advocate on 11.12.10 at 3:28 am

Sorry, I’ just not at all following your logic. what part of my last three previous posts do you not understand? You can’t just pull thoughts out of thin air and have them compete with the material facts.

#55 confused and a little crazed on 11.12.10 at 4:02 am

guys

i bought 9 k in RBC direct investing . I bought a blue chip stock and it is earning me a yield of 4.9 % plus the fact the stock value has increased 18 % since I bought it. I still believe RRSP is a good thing because when you retire you will be in the lower tax bracket than what you are earning now… so get on it

However I must admit RBC did get me to fill a # of forms . I sure there aare other institutions with less hassle.

good luck

#56 confused and a little crazed on 11.12.10 at 4:03 am

ooops that’s 9k in a TFSA thru RBC direct

#57 TS on 11.12.10 at 5:33 am

#13 Sasquatch on 11.11.10 at 11:05 pm

I don’t think your comment about ‘most banks’ is accurate re: giving clients misleading advice (i.e. not being able to put other interest generating investments in a TFSA). Banks have a range of their own products that they try to sell to you and most have their own discount brokerage divisions – so there is NO reason for a bank rep to mislead anyone.

Our bank rep at TD Canada Trust strongly recommended that we set up a discount brokerage account at TD Waterhouse and move many of our assets into that account (assets that were currently in the TD). She was very familiar with TFSAs and the wide range of investments that can be put into them -including investments NOT offered by the TD.

The account reps at the branch level at most banks are on salary and do not receive commissions or bonuses on what they sell to clients.

After having a few bad experiences dealing with financial planners (many of whom only seem to care about selling mutual funds that offer them the biggest commissions) we are making the switch into managing our own investments.

Back before the last market crash we got some resistance from our planner about nuking all of our RRSP holdings and going into cash. We obviously forced the issue and we were totally out of the market before the big hit came and as a result our RRSPs did not suffer the disasterous drop that many people experienced.

#58 Lucy on 11.12.10 at 5:51 am

I read your blog daily and it’s very good. Excellent analysis and great recommendations. Takes time though.
But someone who has children playing soccer, a measily paying job, aging parents to take care of and a sick husband with cancer does not have time to choose a financial advisor, make wise decisions without knowledge or sometimes money to invest.
I believe you forget about the families with children and grandparents in precarious situations who do not have the time to study the market and barely cook meals.
Sure emotions control the markets but they also come in different varieties and flavors.
What would you do in this situation?

Devote the time you spending reading this blog to finding some help. Should equal out. Good luck. — Garth

#59 Jody on 11.12.10 at 5:55 am

Bonds? I don’t think so, bonds are in a bubble, they are the short of the century. I go with 25% physical metals in my banks vault/home, 25% land, 25% ETF’s and stocks which pay me, and right now, 25% cash. As for buying a house, what I did own in Europe I have sold long ago. I wouldn’t touch real estate in the US, the greenback will crash and everyone will be using it as ass wipe. As for us, well, as long as that stupid dumb ass grinning Harper is in power I’m sure we’ll do whatever we are told, why can’t we get a PM with balls enough to tell the US and EU to go shove it? I hope Harper chokes on a potatoe from PEI (there’s a province that lives off the rest of the country).

Waiting for Ireland to go bankrupt, once that happens the crap will really hit the fan. The world needs to start over, fire everyone who works for government, abolish all taxes, then see what we need, everything is to big and to burecratic, it has to go or guns will come out and Mel Gibson will make an appearence in his road warrior leathers.

Gotta go, I have to melt down the brass truck nuts from the back of my truck into shell casings.

#60 Tripp on 11.12.10 at 6:23 am

Good timing, Garth. The front page on Ottawa Citizen reads “$65 billion PS pension shortfall feared”.
And this is the public sector only…

#61 bullion.bunny on 11.12.10 at 6:30 am

Yes the TFSA is great, but most Canadians are too busy watching idol and too broke to put any money away……..Oh well

#62 Brian1 on 11.12.10 at 6:52 am

Garth, I am sorry but every fool you save only resuts in creating another fool. You are always breaking even. When someone you save sells their house the new owner becomes the new fool.
When someone puts their money in a tfsa the bank takes that money and gambles it on emerging markets with dictatorial governments. If they lose it they say sorry, because you yourself said don’t rely on deposit insurance.

A bizarre comment. — Garth

#63 Waiting and waiting on 11.12.10 at 6:57 am

Keeping the fifty percent tax now and paying fifty percent in tax later allows me to double my returns.
This doesn’t apply to people who will be in a higher tax bracket in retirement, but I doubt many will.

The question is will doubling the returns be worth the loss in OAS. And will the rules change? There have been some whoppers in my short lifetime already to my detriment.

I think I will do the usual when facing uncertainty, diversify.

Also, there are ways to get money in and out of a TFSA, RRSP, and any other account legally. Until they close the loopholes, which brings me back to diversification.

If you know the future, shoot for the moon and/or see a psychiatrist. If you don’t, take appropriate precautions.

#64 Danforth on 11.12.10 at 7:04 am

re: the investment illiteracy mentioned in the post:
They made mistake by calling it a Tax Free Savings Account.

Having “Savings Account” has led many people (including myself, up to six months ago) to think that they were for old fashioned unproductive savings account.

====
In general about TFSA’s,

For those of us who:
a) plan to retire with little RSP and TSFA room unutilized
b) are mortgage free earlier in life (say, mid 40’s – living 4 decades rentfree)
c) have no company pension

Once people are mortgage free (for those who choose to own), you can plow all that monthly money which once went into the house, into some retirement fund.

For those people who can’t do 18% of income for RSP + 5K a year for TFSA because of the mortgage, or perhaps for couples who are single-income for a portion of child-rearing years, they build up investment headroom in one or both places.

Once people are mortgage free, they can catch up on that.

I’m curious to learn what the better strategy will be – committing to the 5K a year every year, and catching up on RSP room a bit later in life (say, mid 40’s), once Mortgage Free.

Or does one let the TFSA headroom build, and you catch up on that later in life.

Yes – this is another version of the old fashioned debate – “does surplus money go to RSP or the mortgage”.

Make mortgage freedom your main goal could end up being a serious miscalculation. — Garth

#65 piazzi on 11.12.10 at 7:06 am

I am not sure why you say TFSA instead of RRSP

for many, it may make sense to do both

do the RRSP, get the refund, put the refund in TFSA, repeat

you sound like you are big on TAX adavantaging the system, doing both RRSP and TFSA may tax advantage some much better

best regards,

piazzi

I said the TFSA comes first. — Garth

#66 Paully on 11.12.10 at 7:26 am

I have had a tax free savings account for way longer than the last two years. It is called a mortgage. I get a guaranteed imputed return with every payment I make. There is no question that each deposit into my mortgage saves me money, whereas a TFSA in a sector ETF will probably make money, but there is no guarantee. I like the idea of the TFSA, but only when I have exhausted the guaranteed imputed return of paying down the mortgage will I then open one.

Shovel money into a depreciating asset. Good luck with that. — Garth

#67 Mikey the Realtor on 11.12.10 at 7:31 am

Hey DA, it looks like there are many on here who would love to be like you and me, we are probably the most important posters on this blog other then Garth being close second. So, dont get upset about the poodles, just hang in there, swing back a shot or two and stick around.

#68 timbo on 11.12.10 at 7:40 am

are you seeing the collapse of sugar and asian markets? Wow!!

http://www.finviz.com/futures_charts.ashx?t=SB&p=h1

#69 Nancy on 11.12.10 at 7:43 am

What are the odds that the TFSA will be cancelled within 5 years? Maybe not “cancelled” outright but whittled away till it’s hardly anything.

Our gov will be starving for tax dollars by then. The cutback ax will chop away anything it can.

Of course, that’s just more reason to stuff TFSA’s now and get what reward you can. (We made 50% on ours in 2009, still grinning about that.)

It will not happen. And the fear of the improbable is no excuse to do nothing today. — Garth

#70 Lead Paint on 11.12.10 at 7:54 am

While DA is annoying, impersonating another user is far worse and an insult to everyone who follows this blog. Garth could you look in to a blog that ties a name to an email address? It threatens the integrity of the forum.

That aside, where is a good resource to find a condo to rent? Craiglist? Rental News?

Interestingly, the Globe has a wonderfully balanced piece today on Chinese investors with an insatiable appetite for GTA houses and condos, which they rent out for a tidy profit. Amazing the Chinese have abandoned every other major western market and apparently (according to the Globe) won’t ever abandon Toronto (and perhaps Vancouver).

#71 Moneta on 11.12.10 at 7:57 am

And this brings us to today’s topic: What the crap is wrong with you people?
———–
Most people don’t have any extra money to save at the end of the month. They might open a TFSA with good intentions but still have no more than a couple of toonies to put in it.

Then you have the next group that has a little bit more to put aside but that is done in a company pension plan which is registered… so not much is left over for them either.

In the final analysis, only the top 10% can put money in TFSA unless everybody sells their house , the second car and lives in a hut. But then they would not have any more money to save because they would cause a housing crash and would be selling at a loss.

#72 David B on 11.12.10 at 8:05 am

Mr. Turner …. your were and are not alone dealing with “King Steve” because in the Kingdom of Steve no voter or taxpayer has a say. These headlines prove it:

Harper says Parliament’s okay not needed to extend Afghan mission
——————-

That means even the rules that would protect housing and jobs mean nothing, we are all on our own, could he find ways to tap into/reduce/tax and find other means to fund his Winds of War machines …. who knows for sure? There is but one man in charge and he will do as dam well pleases at whatever cost.

————–

Sorry for my last post …. just too upset. We are doomed … unless our oppostion finds some backbone to stand tall for our country as our brave troops have>

#73 Danforth on 11.12.10 at 8:12 am

@ #17 Drew from the peg on 11.11.10 at 11:25 pm

Does it make sense to put money in your RRSP and then put the tax refund you receive inside a TFSA? Does the RRSP make sense anymore?

If you’re going to have an investment strategy of doing both RSP and TFSA, then it doesn’t really matter where you get the money from.

You can put your tax return into the next year’s RSP contribution just the same. Then you just increase your monthly TFSA contribution and reduce your RSP contribution, because in March you put a healthy lump sum into RSP.

six of one, half a dozen of another.

Tax returns can be a great vehicle for ‘forced savings’, so long as people have the discipline to invest the money when it comes in (rather than a spending spree/vacation/credit card debt…)

#74 christian on 11.12.10 at 8:19 am

My TFSAs are up 80% since March. Guess in what I’m in invested.

Are you smart enough to take profits? — Garth

#75 WINNIPEGER on 11.12.10 at 8:27 am

http://redtape.msnbc.com/2010/11/in-new-york-a-44-year-old-firefighter-retired-with-a-101000-a-year-pension-for-life-near-chicago-a-parks-commissioner-q.html#tp

USA pension financial DOOM!

#76 ibm on 11.12.10 at 8:48 am

Garth, you to mention ca$h will be king as we’re heading for deflation. you also mention that the USD will not collapse as the US will NOT default on it’s treasuries – stating that they’ll recover from the predicament their in by ‘growth’. i honestly can’t see how they could possibly manage this and most definitely believe they’re close to being royally foobar’d. seriously, i can’t see the US kick-starting their manufacturing industry, creating jobs and encouraging the public to save, can you?!?!?? it’s certainly not going to happen within the next 10 years for sure….

overall, i’d go along with what Jim Powers, Schiff and Max Keiser are telling us:

(a) Govt issued ‘paper’ = [email protected]!t
(b) invest in precious metals and watch them soar in value

So, go ahead. Bet on economic collapse and see what happens. — Garth

#77 bigrider on 11.12.10 at 8:53 am

Starlane homes has a new subdivision of 500 units opening up in Oakville . 9000 pre registered interested parties !

These pretty much means that all units sold before a shovel has even hit the ground. Oh, and prices will be re adjusted higher at the open based on the fact that no one was expecting 9000 pre registrations.

As bearish as I am on housing prices I can tell you the vast majority of people out there are not on board with the opinions in this blog.

Thank God. — Garth

#78 Andrew on 11.12.10 at 8:54 am

Garth another TFSA question for you…

Q: Can you leverage your TFSA assets as collateral against a loan? I don’t see why not… Is this another benefit for a TFSA vs. RRSPs?

No. — Garth

#79 Fractional Reserve on 11.12.10 at 8:56 am

According to Marc Faber, interest rates are going to rise in the next three months. It seems the days of low interest rates are almost over.
http://www.arabianmoney.net/gold-silver/2010/10/13/marc-faber-sees-interest-rates-going-up-within-three-months/

#80 bigrider on 11.12.10 at 9:00 am

Listen, supply of high rise is excessive. Prices of condos extremely vulnerable. A collapse there all but inevitable in T.O
Demand on low rise, however, in the suburbs, outstripping supply of lot availability. Greenbelt was artificail constraint on supply.
Before I get ravaged here, I am extremely bearish on housing pricing as the ratio of incomes to housing affordabilty is one hell of a headwind.
But Garth , the tsunami of interest from buyers for low rise seems to be overwhelming the headwind.

#81 bigrider on 11.12.10 at 9:06 am

Also Garth, as I sat at the back of your seminar on Tuesday night ,the preponderance of whispers among those in and around me was that financial markets were in for another big slide and safety of bricks and mortar still age old.
Again as an individual who owns his home outright, no mortgage, and greater assets in financial assets (40 to 60 split or better) I’m definitely onside with the opinions you express.
I Just may be coming to think that we both share an opinion that is still much too early

Our burden. — Garth

#82 Danforth on 11.12.10 at 9:15 am

@ #61 Paully on 11.12.10 at 7:26 am

Don’t worry about the anti-homeowner crowd.

Having a paid-for house as a place to live is a fantastic idea. Yes, it costs a pile of money.
And so long as its not treated as a retirement plan, then a house is a great thing to own.

And if you get that thing paid off early in life, you have decades of no mortgage/no rent.
In the long run, the math is by no means conclusive that paying rent for 60 years (age 20-80) off the interest proceeds of invested capital is a better deal.

btw – based on past blog postings, I’m gathering Garth is a homeowner himself. Nothing wrong with having RE in the mix.

#83 Art-Vandelai on 11.12.10 at 9:15 am

The 7% rate of return assumed is in my view an optimistic one, especially if one invests in a so-called ‘balanced’ portfolio, of 100% paper assets.

Bonds are yielding somewhere around 3% for the long-term, and equities will require continued P/E expansion (increased risk appetite) to deliver 7%. Average the two and subtract the typical 1% (most mutuals you can buy with $15K are higher) fee from that, and 4% is a lot more realistic for a new long-term expectation. That is, if the economy doesn’t suffer the significant bout of deflation Garth continually refers to.

One thing’s for sure, the next hundred years are going to be significantly different from the last hundred years. Extrapolating past performance into the future is a mug’s game. That goes for real estate, and for commodities too.

There are oodles of good corporate bonds paying 4%. Lots of preferreds paying close to 6%. Many REITs yielding 9%. And many sector ETFs with a good return and high predictability. Suggest you work harder, or find someone willing to. My 40/60 balanced portfolio is up 12% on the year, with a wholly acceptable threshold of risk. — Garth

#84 Incubus on 11.12.10 at 9:25 am

For $500 000 after 20 years would require a compound return of 8,8%.

FV= R * ((1+i)^n-1)/i

R = 10 000
i = 0,088
n= 20

#85 Steven Rowlandson on 11.12.10 at 9:27 am

Re posting #43
You have seen part of the problem.
The problem however is bigger and worse than most people think.

Steven

#86 Moneta on 11.12.10 at 9:28 am

A bizarre comment. — Garth
——-
I agree. Garth’s strategy forever depends on greater fools. A lot of his recommendations are based on zero sum games and not growth strategies.

An example is the bank prefs. Banks issued a whack of preferreds to recapitalize. If you’re disgusted with the real estate bubble, the last thing you’d want to do is help the banks rekindle the fire. And if you buy these prefs when the credit spreads soar, you are making money off a greater fool.

Most of the money people that is being made in this market depends on a greater fool.

If you want to be sanctimonious, be my guest. Banks are the nation`s financial bedrock. You can dis them or share in their success. Actually, it was the greed and social craving of individuals that fueled real estate porn. But believe what you wish. — Garth

#87 Steven Rowlandson on 11.12.10 at 9:29 am

Sorry I mean’t posting #44.

#88 Got A Watch on 11.12.10 at 9:30 am

The TFSA will be entering it’s 3rd tax year on Jan 1. This means you should have at least $15k in there by Jan 3, and that assumes you have made nothing on the first 2 years $5K contributions. What are you waiting for? Garth is entirely correct, the self-directed trading account TSFA should be your first place to park retirement savings. Don’t let the Bank sucker you into a straight TSFA “savings account”, or let them pick some crap in house mutual Fund for you.

I see “Stephen Harper is smiling as he announces a “free trade” negotiation with India.

Well, the rest of us Canadians aren’t smiling, Stevie, unless they like being unemployed. My already sub-zero opinion of Stevie “The Economist” Harper just plunged another 100 degrees. This man is a traitor to our nation, and without a doubt the most incompetent PM in our history. He would sell Canada to the highest bidder, in a heartbeat. I can see no advantage for Canada whatsoever in this “deal” for India, it’s a deal for them. Scumbag.

If I really posted what I think of Stevie, Garth could not allow the comment on a family Blog.

#89 Devil's Advocate on 11.12.10 at 9:47 am

Posts today under the moniker Devil’s Advocate which were impersonations and WERE NOT mine; 7, 10, 12, 14, 20, 32, 35, 36, 47, 48, 50, 54*.

Post today that were mine: 15, 16, 18 .

*

#54 Devil’s Advocate on 11.12.10 at 3:28 amSorry, I’m just not at all following your logic. What part of my last three previous posts do you not understand? You can’t just pull thoughts out of thin air and have them compete with the material facts.

RE: Post #54 Creepy :-0 . Very creepy. My impersonator is pulling quotes of my previous posts from long ago in bid to impersonate me like a long delayed echo landing upon the ears of the audience at some ill fating moment. That is just plain creepy.

#70 Lead Paint Good point. “Integrity without knowledge is weak an useless, and knowledge without integrity is dangerous and dreadful.” (Samuel Johnson 1709-84)

Actually imposter DA… I really could care less about your antics. Really it’s not like you are doing the “Devil’s Advocate” name any more defamation of character amongst the pups and poodles than it already had. I suppose some of those who do understand and appreciate my point of view might be grossly confused by your impersonations of me but those I can address on a one on one basis for most of them are aware of my true identity and how to contact me. The webmaster (strange term – master of the web?) knows which is you and which is me.

“Constantly seek to learn from the people around you – they will teach you more about yourself than anything else.” There is a life lesson here somewhere I am sure.

I suspect you are trying to get rid of me and your plan may indeed work. So please, keep it up.

#53 Aussie Roy Steroids… don’t ya just love ‘em

#90 Timing is Everything on 11.12.10 at 10:48 am

So give up now. Good strategy. — Garth

Easy now. I’m not saying give up…I’m sayin’ that you adapt as you move forward. Sure, use the current (new) rules to your advantage…but be wary along the way…don’t assume the ’20 year plan/formula’ will not have to change. And if it does, so what, make the changes (adapt) and move on. Rules are made (TFSA, income trusts) and un-made, alot of times quickly, with no consultation. Divorice, job loss, illness, disaster, all sorts of ‘incidentals’.
There is no magic formula. You can’t just ‘set it and forget it.’

http://www.thestar.com/article/883317–daw-halloween-massacre-taught-lessons-to-small-investors

It’s never to too late to make a better decision.

#91 Fractional Reserve on 11.12.10 at 10:51 am

On the interest rate front, Marc Faber predicts that interest rates are poised to explode upwards on a global basis. This will wreak havoc on mortgage renewals in the coming years. He says we are no more than three months away from higher rates.
http://marcfaberchannel.blogspot.com/2010/10/marc-faber-sees-interest-rates-going-up.html

#92 Helen on 11.12.10 at 10:52 am

Something is goin on – very popular financial blog is blocked – http://globaleconomicanalysis.blogspot.com/

it has message: ” Blog has been removed
Sorry, the blog at globaleconomicanalysis.blogspot.com has been removed. This address is not available for new blogs.”

Another attack?

#93 Edmontonian on 11.12.10 at 11:03 am

Hopefully Chris “smooth hands” Davies doesn’t visit the site today. Talk about temptation!

#94 Got A Watch on 11.12.10 at 11:05 am

Today’s funny, at FT Alphaville thanks for the laugh FT, a great Blog there.

“REQUEST FOR URGENT BUSINESS RELATIONSHIP”

“Dear Sir,

Good day and compliments. I am Dr (Mr) Benjamin Bernanke, Chairman of Federal Reserve of United States of America. This mail will surely come to you as a great surprise, since we never had any previous correspondence. My aim of contacting you is to crave your indulgence to assist us in securing some funds abroad to prosecute a transaction of great magnitude.

Due to poor banking system in America, many subprime borrowers are not paying back mortgages and banks have lost ONE TRILLION TWO HUNDRED BILLION UNITED STATES DOLLARS ($1,200bn) so far. This calamity has caused much suffering in my country. To help remedy this situation, our president, Mr Barack Obama, has authorised to be spent a sum of EIGHT HUNDRED NINETY SEVEN BILLION DOLLARS ($897bn) on stimulus plus many other good deeds like cash for clunkers. Unfortunately, since that time, we are being molested and constantly harassed by bond vigilantes who do not care that their reckless and vicious behaviour could ruin our hopes and plans.

To this effect, last year I authorised the printing of ONE TRILLION TWO HUNDRED AND FIFTY BILLION ($1,250bn) of United States currency to purchase government securities. To my great shock, this was not enough so I am now buying another SIX HUNDRED BILLION DOLLARS ($600bn).

If you forward a modest sum to purchase Treasury notes then I can buy many more of them with my unlimited printing press and their price will rise. I am absolutely positive that this arrangement will be of mutual benefit to both of us. I can offer you generous interest rate of EIGHT TENTHS OF A PERCENT after taxes.

I want you to immediately inform me of your willingness in assisting and co-operating with us, so that I can send you full details of this transaction and let us make arrangement for a meeting and discuss at length on how to transfer this funds.

Yours Faithfully,

Dr (Mr) Benjamin Bernanke

N/B: Please contact Mr Timothy Geithner on this e-mail address for further briefing and modalities”

LOL

#95 Devil's Advocate on 11.12.10 at 11:07 am

Actually, it was the greed and social craving of individuals that fueled real estate porn. – Garth

Very true… but the banks were only to ready willing and able to publish and distribute for profit parasitically preying upon the vises of the masses promoting them as social virtue. How ironic is that? I saw it with sickened revulsion. Cramming more and more easy credit down the throats of Greater Fools. Watch the film REPO MEN (Jude Law and Forest Whitaker) the synthetic organ supplier/financer depicted in that film is an onimous characterization analogous of today’s banks. Watch that film and think bank as they rip the financed synthetic lungs from the debtors deadbeat body.

“I sincerely believe… that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.” –Thomas Jefferson to John Taylor, 1816. ME 15:23

“It is a [disputed] question, whether the circulation of paper, rather than of specie, is a good or an evil… I believe it to be one of those cases where mercantile clamor will bear down reason, until it is corrected by ruin.” –Thomas Jefferson to John W. Eppes, 1813. ME 13:409

The banks indeed are not your friend. This is the era of the banking industry the culmination of years and years of banking enterprise refining itself to the benefit of itself. There is no social responsibility practiced by the banks. The banks are business which have veiled themselves as social service. This economic crisis is the unveiling of the banks ill deeds such that we are now learning that the emperor truly does have no clothes.

#96 Behind the Numbers on 11.12.10 at 11:09 am

“My 40/60 balanced portfolio is up 12% on the year, with a wholly acceptable threshold of risk. — Garth”

You forget Garth, some of us do not need to take that level of risk necessary to earn a 12% return.

An investor only needs to risk what they need to return.

If you are older and haven’t saved much, I can see the need for a 12% return and the risk associated. If you are young, you may need only to take 2% and end at the same spot.

Bull. After inflation and taxes a 2% return is negative. — Garth

#97 Devore on 11.12.10 at 11:12 am

#68 timbo

are you seeing the collapse of sugar and asian markets? Wow!!

http://www.finviz.com/futures_charts.ashx?t=SB&p=h1

It’s not a collapse. Commodity exchanges are changing some of their rules, so various commodities are experiencing (temporary) downmoves. Silver and gold had their time already two days ago.

#98 LB on 11.12.10 at 11:20 am

Garth, you have promoted investing in Canadian bonds as fail safe.

What are your thoughts on Ireland’s (PIIG) growing predicament today whereby they ARE seeing bond market investors highly at risk?

Appears that there is no such thing as “Too Big to Fail” and all the attempts by world governments’ QE or World Bank or IMF intervention is proving to be merely a means to suck ALL vestiges of any remaining resources into the vortex before an inevitable and systemic crash, well beyond just RE.

Cash on hand as an investment strategy instead of pursuing yield,to protect capital and to protect against deflation seems the only logical counter to this.

#99 Bruce Chase on 11.12.10 at 11:30 am

A long time ago, I cheered as Steven Harper promised not to touch Income Trusts. These handy income vehicles would be a big part of my happy retirement. WELL, I was lied to then. Now we have TFSAs. I own one, invested in stocks. BUT how long will it be before Mr. Harper once again develops a memory lapse and due to extreme need to generate revenue to cover his debts, decides that “just kidding folks, TFSA will no longer be permitted.” They will of course be grandfathered. After all, how could we permit the huddled masses to squirrel away millions of dollars, generating millions in interest and capital gains, and NOT render their share unto HHR Harper? No I’m afraid that this scheme is an endangered species soon to go the way of all too good to be true handouts from the FEDS………sigh

#100 X on 11.12.10 at 11:38 am

re#82-There are oodles of good corporate bonds paying 4%. Lots of preferreds paying close to 6%. Many REITs yielding 9%. And many sector ETFs with a good return and high predictability. Suggest you work harder, or find someone willing to. My 40/60 balanced portfolio is up 12% on the year, with a wholly acceptable threshold of risk. — Garth

Part of the problem is people don’t know where to go or how do do it themselves. Going to the bank isn’t alot of help, generally the bank errs on the conservative side, to decrease the odds of legal recourse from an unhappy customer, or on the side that will make them more profit. Most people don’t have the knowledge to begin to assemble a balanced portfolio on their own, or at least a portfolio that suits there lives and needs.

#101 Moneta on 11.12.10 at 11:47 am

If you want to be sanctimonious, be my guest. Banks are the nation`s financial bedrock. You can dis them or share in their success. Actually, it was the greed and social craving of individuals that fueled real estate porn. But believe what you wish. — Garth
——–

You keep on blaming the individual but it takes 2 to tango.

Yes, the greed did many in, but in this world we’ve created, where specialization is king and most people don’t have the proper knowledge to make sound financial decisions, I don’t believe that many people can truly understand how big the fraud is.

I’ve been conservative and I’m still going to get screwed by our leaders. Because in a crisis like this, 99.9% suffers.

I put more blame on our leaders and the bankers than the individuals because they used the elements of human nature to lead Canadians straight to slaughter. From a top-down approach, they knew people would jump on easy money. I think that is utterly disgusting.

As a leader you have choices. You can bring out the good in people or bring out the bad. They chose the bad and Canada will suffer for this. But people who beleive in “free markets” couln’t give 2 hoots about their country. It’s all about me myself and I for those people.

And you keep on praising our banks. But the reason why they are still standing is twofold:

1. Our government held them back compared to foreign banks. Left to their own devices, they would have merged and done all kinds of crazy things.
2. And despite their being held back, they still managed to get in trouble and need bailing out by our government during the debt crisis.

#102 Moneta on 11.12.10 at 11:54 am

Read this and tell me where the fraud starts and where it ends:

http://www.rollingstone.com/politics/news/17390/232611?RS_show_page=0

It’s systemic and Canada has a tendency of admiring Americans and following in their footsteps.

And by the way, Canadian banks are part of the “consortium” that’s going to be helping Ben and the Inkjets with QE2.

We are so pure.

#103 Contrarian Canuck on 11.12.10 at 11:56 am

Public sector pension bubble. CD Howe figures our total Canadian debt is understated by $65 billion.

How long until the fight to reform public sector pensions materializes?

http://financialinsights.wordpress.com/2010/11/12/public-sector-pension-bubble-is-your-retirement-chained-to-your-home/

#104 Moneta on 11.12.10 at 11:59 am

And by the way I am not being sanctimonious I am just stating reality. I am also part of the problem as I am also making gains off greater fools.

Is it greed or is it survival at this point? When the entire system is built on fraud and Ponzi schemes, what choices do we have left?

#105 To the non savers on 11.12.10 at 12:17 pm

To Moneta
Your obviously not in tune to the public, anyone and everyone can save money, the problem when I look at all the people around me they are too busy buying all the toys and living high, Go into an expensive restraunt and see all the people lined up outside. I traveleed to vancouver and first class was sold out, and the plane was full.

Now there are many Canadians that are trying to make ends meet, like the lady above, but to the rest of you who spend every penny on fast cars and flat screen TVs do not know how to budget and save money.

I have heard to often I am broke, and I walk into a persons house and see a spanking new $1,000 TV and a new blue ray and no TFSA, makes you wonder.

I challenge you to do a budget by budget comparion on what I make and what I spend. I bet I spend less then most people on this blog and live well for doing so.

I also save my money in a tax free account, maybe not 20% like the gamblers but a nice 10% so far this year.
ETF’s
Cheers

#106 Tonya L. on 11.12.10 at 12:17 pm

Lead Paint, Devil’s Advocate

Integrity

1. possession of firm principles: the quality of possessing and steadfastly adhering to high moral principles or professional standards

2. completeness: the state of being complete or undivided (formal)
the territorial integrity of the nation

3. wholeness: the state of being sound or undamaged (formal)
Their refusal to participate in the experiment will undermine its integrity.

Which definition best defines Devil’s Advocate? When someone says “trust me” all the time, isn’t that a sign of them not being trustworthy? Devil’s Advocate is consistently talking about integrity…I wonder why?

#107 Contrarian on 11.12.10 at 12:20 pm

I opened my TFSA this year. Dumped $10K into it. I’m paying $10 per trade because my wife and I combined have a minimum amount required to qualify.

But, you know, there’s something really satisfying about putting money in an RRSP and getting a tax return. You get to see the results right away. The benefits of the TFSA won’t be realized until I take money out of it, which may be a very long time from now (hopefully).

It’s just human nature to have a very poor long term view. Who the heck plan for retirement when they’re 30?

#108 Virgin Invenstor on 11.12.10 at 12:28 pm

Thanks so much for the advice, my wife and I would like to invest but we trust know one, and fear all due to our lack of knowledge. Can anyone give suggestions as to where one might become more educated (web sites books etc.) so as to avoid being one of the fish in the barrel? I believe the advice given on this blog to be great, but I don’t even know where to start. As well I also do not trust a bank further than I can spit, when it comes to protecting us, which is why I ( like the rest of us) should poses the knowledge to protect ourselves. Thanks!

#109 Real Estate Realist on 11.12.10 at 12:38 pm

#87 Devis Advocate

Are you back already?? You have been outed as a fraud by someone in your profession (in the same real estate board) and all you can say in return is that you’ve been around the block a few times….

You better register for the latest Craig Proctor seminar and spout positive about something. You seem a little down.

#110 been there, done that on 11.12.10 at 12:42 pm

The ETF strategy works well. Picked 5 ETF’s at the start of 2009, XEG (energy), XGD (gold), XRE (Reits), XCB (corporate bonds), and XRB (real return bonds). Put a $1000 into each, asked for dividend re-investments and forgot about them. In 2010, I simply re-balanced the portfolio by purchasing more of the ETF’s that had done poorer (dollar cost averaging). Unfortunately the ishares ETF’s now pay monthly and re-buying units is difficult, but eventually it will work out. The $10K has grown to $12,780. The best part is not really having to pay attention to this portfolio and ETF fees are very low in comparison with mutual funds. I may add another sector or two next year.

#111 allisun on 11.12.10 at 12:50 pm

I did not understand the great TFSA until reading this blog today. Thank you Garth. Is a person able to take equity from a mortgage to invest in a TFSA? (Note: I do have my Vancouver Island property on the market for sale at a competitive price in the meantime. Bought in 2006. Love the property but I owe far too much on the mortgage, despite rentals on the same property covering mortgage payments. I know I can always rent somewhere else that is just as nice)

#112 Ontario Joe on 11.12.10 at 12:59 pm

True or False,

Devil’s Advocate said

Actually imposter DA… I really could care less about your antics.

False – earlier in that same post he wrote
“Posts today under the moniker Devil’s Advocate which were impersonations and WERE NOT mine; 7, 10, 12, 14, 20, 32, 35, 36, 47, 48, 50, 54*.

Post today that were mine: 15, 16, 18 .”

He cares a lot.

Later in the same post.

“Really it’s not like you are doing the “Devil’s Advocate” name any more defamation of character amongst the pups and poodles than it already had.”

True. You are the master of disaster.

Last but certainly not least the master said.

““Constantly seek to learn from the people around you – they will teach you more about yourself than anything else.” There is a life lesson here somewhere I am sure.”

True. Too bad you’re not willing to open your eyes to the multiple lessons.

#113 freedom_2008 on 11.12.10 at 1:04 pm

How did you come up with 500k in 20 yrs in a TFSA?

20 years x 10K per year (couple) = 200K x compounded market growth. — Garth

I submitted a comment to above last night, but was not posted here, so let me try a different way again.

By this calculation, people who are in their 30s (or even 40s), don’t have 100K before, but start saving and investing now would still be fine, not doomed.

If they weren’t human, possibly. — Garth

#114 Devil's Advocate on 11.12.10 at 1:13 pm

Hi Mickey

Thanks for your support during these trying times. I am a man of integrity, of course you know that.
“Integrity without knowledge is weak an useless, and knowledge without integrity is dangerous and dreadful.”

I never waver, I cannot be moved.

How are your sales going? Always be closing (remember your abc’s)
Have you memorized those affirmations I told you about? Keep with it. Sell, sell, sell.

Don’t get caught up in all the turnover you see in the sales department. Those people just didn’t have what it takes to succeed like you do. I can tell. You’re a winner. You can do anything you want. You’re a man after my own heart. I feel like I’ve known you for years even though it’s only been a week or so. You and I are such kindered spirits.

Hey, I’ve got this new affirmation that you might like to try out — I am the perfect weight for me
I’ve been feeling a lot better since working on this one. I’ve got a bit of a spare tire you know. It doesn’t really bother me, nothing really does of course. I’m a sales superstar. I’m positive all the time, no matter what. I’m making lemon aid out of lemons right now.

Anyways, enough about me. Watch out for the fake Devil’s Advocate who trys to convince you that being a sales agent is not about selling, getting people to buy.

Remember the gipper!

#115 lonely limey on 11.12.10 at 1:26 pm

@ Virgin Invenstor

Try the following couple of sites to start with. Some good info there. But, as always with the internet, make sure to do further research. Click on “forum” after accessing the second link.

Hope it helps.

http://tinyurl.com/6xqxjj

http://tinyurl.com/327arxs

#116 Moneta on 11.12.10 at 1:28 pm

http://www.ritholtz.com/blog/2010/11/california-muni-bond-fund-shellacking/

Here it comes… The Fed will have to buy up everything!!!

#117 tran, Calgary on 11.12.10 at 1:36 pm

USD is the biggest ponzi scheme.
US is planning to devalue the USD
until its real value equals zero;
hence its 13 trillion(likely more)
debt problem is miraculously solved.

Your meds just came in. — Garth

#118 BrianT on 11.12.10 at 1:42 pm

Now that the public’s money is fully in bond investments, interest rate increases are locked in. IMO most will be shocked by how high interest rate levels will be next spring, so conduct your affairs accordingly.

#119 Moneta on 11.12.10 at 1:45 pm

Corrections…

To Moneta
Your obviously not in tune to the public, anyone and everyone can save money, the problem when I look at all the people around me they are too busy buying all the toys and living high
——
You’re the one who is not in tune.

The average household makes 60K. You try and bring up 2 kids on 60K without society breathing down your neck forcing you into spending.

And anyway, if everyone saves, the economy will be smaller and there will be less money to save. It’s a vicious circle. The cost of living always goes to break even. For the average Joe, income = expenses. It has always been like that, always will be. Saving requires higher incomes and/or discipline and only a small % of the population can do it.

Give people a break. Human beings are social animals. If you study psychology you will understand how hard it is for most people to be a black sheep.

If you put specific stresses on people, you will get specific responses. It is unfair to blame the individual when everything in society was set to make people consume. From advertising, to low rates, to making them feel like fools for not spending… The brain washing is incredible. We are brain washed from the day we are born.

Of course, there are outliers, people who manage to not follow the crowd, but is it because they worked so hard at being outliers or is it something in their genetic makeup or upbringing that makes them different?

#120 dark sad person on 11.12.10 at 1:48 pm

If you want to be sanctimonious, be my guest. Banks are the nation`s financial bedrock. You can dis them or share in their success. Actually, it was the greed and social craving of individuals that fueled real estate porn. But believe what you wish. — Garth

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

CMHC_AR2009_MDA-2005-2010-Highlights.pdf

we find that in the three-year period starting in 2007 to the close of 2010, CMHC’s assets will rise by $173 Billion (from $148 B to 321B) and it’s liabilities will rise by $170 Billion (from $141 B to$311B). This seems to imply that the total injection of money into Canadian banks will be about $170 Billion by the close of this year. What other interpretation is there? Compare this with the earlier figures of $25, 75, 125 billion! Is the bailout amount really this large, and where did all that money actually come from?

The Canadian government didn’t need to pass bills like they did in the USA to rescue troubled mortgage lenders – we already had a crown corporation with the ability to solve this problem. Was it the right thing to do? Yes, in the circumstances. Was it a bailout? Absolutely, despite the prime minister’s assertion to the contrary. A bailout is an investment motivated by rescue, as this certainly was.

These statements are from page 21 of the 2008 report-

http://www.cmhc-schl.gc.ca/en/corp/about/anrecopl/anrecopl_002.cfm

#121 Pat on 11.12.10 at 1:59 pm

#65 piazzi wrote:

“I am not sure why you say TFSA instead of RRSP”

I said the TFSA comes first. — Garth

Not necessarily, e.g. with employer matching contributions. I can think of a few other scenarios.

BTW, the TFSA is an extremely flexible plan. I’d be amazed if it doesn’t undergo some changes. But abolished, no; it’s beneficial to the rich.

I don’t think the rich are too fussed over $5K a year. — Garth

#122 Tre on 11.12.10 at 2:31 pm

Hey Garth you shouldn’t post pictures of your mistress like that online. Aren’t you married?

#123 dark sad person on 11.12.10 at 2:35 pm

Post says RBC doesn’t like “too big to fail” tag

2010-11-11 09:37 ET – In the News

The Financial Post reports in its Thursday edition the inclusion of Royal Bank of Canada on a list of 20 global banks considered “too big to fail” from an international perspective is not exactly a desirable honour. The Post’s Jonathan Ratner, writing in Trading Desk, says that given how much things have changed since the global credit crisis, management will likely try to disassociate the bank from a group that also includes such names as JP-Morgan, Morgan Stanley, HSBC and Credit Suisse. While some may conclude Canada’s other big banks dodged a major bullet, there remains a possibility others will be deemed too big to fail as a result of their importance to the domestic financial system. This could disappoint those who believe a relative capital advantage is right around the corner for Canada’s other major banks

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

Well we’ll fix that!
Let’s just change the wording–

#124 Devil's Advocate on 11.12.10 at 2:50 pm

#104 Tonya L. on 11.12.10 at 12:17 pm
Lead Paint, Devil’s Advocate
Integrity
Devil’s Advocate is consistently talking about integrity…I wonder why?

Because there is so little of it these days. I have nothing to prove on these blogs Tonya L.. “Devil’s Advocate” is provides to me no personal benefit.

When the Berlin Wall was being built a large amount of garbage had accumulated. Prior to the sealing of The Wall East Berlin got together truckload upon truckload of garbage from their side and deposited on the West Berlin side of The Wall. Naturally West Berlin became quite upset about this and commenced filling truckloads of garbage to send back to East Berlin, but before they could cooler heads prevailed.

What West Berlin did instead was to load truckloads of good and clothing to send to East Berlin accompanied by a note which read “Each gives what each has to give”.

Of course one could equally argue one man’s trash is another mans treasure but I do not think that was East Berlin’s intent.

Think about it; there is some relevance. Of course the message will depend largely upon your own bias.

#107 Real Estate Realist on 11.12.10 at 12:38 pm
#87 Devil’s Advocate
Are you back already?? You have been outed as a fraud by someone in your profession (in the same real estate board) and all you can say in return is that you’ve been around the block a few times….

Really? What, why, when, how where and who?

#110 Ontario Joe: I give you high praise on your good logic but simply not so true as you would like to believe. 1. Yes I would rather the imposters comments were not confused as my own, but it is not the end of my world if they are. 2. “Mater of Disaster” I like that. Maybe I will have to reincarnagte DA as Master of Disaster. 3. I’m still learning… after five decades on this planet, two decades in my current vocation, grade school, college and university I am still learning. Education is a bargain at any price. An investment in one’s self is by far the best investment one can ever make – one that can never be taken away and one that keeps paying dividends day in and day out year after year your whole life long – guaranteed.

How about you?

#125 Devore on 11.12.10 at 3:03 pm

#117 Moneta

Of course, there are outliers, people who manage to not follow the crowd, but is it because they worked so hard at being outliers or is it something in their genetic makeup or upbringing that makes them different?

No, just the realization that they are solely responsible for their future, no one will be handing them any gifts, and there will be no bailout for them if they get into trouble. Realizing this, they know they must save money out of their current income, and whatever is left over determines their quality of life. Perhaps a SFH in Vancouver is not possible after all, the car will have to be serviceable for another 10 years, the non-flat panel TV will do just fine until it burns out, the pair of jeans you have now doesn’t have any holes yet, rabbit ears and CBC is all you need on the boob tube, and maybe you’ll have to be the chef for dinner every day, because, you know, you’re not a millionaire.

Hey, maybe if everyone lived within their means our economy would be more stable and predictable too, just not as hot (and then freezing cold) as it is these days, and we wouldn’t have to spend trillions of dollars we don’t have on a wasteful social safety net for everyone because we’re all spending every dollar we earn (and then another .46 on top of that).

#126 brainsail on 11.12.10 at 3:08 pm

Canada’s coming housing bust

http://money.cnn.com/2010/11/12/real_estate/canada_housing_bust.fortune/index.htm

#127 echo on 11.12.10 at 3:21 pm

I went a bit riskier with my TFSA and put $10,000 (my allowable for the last 2 years) into Uranium about 4 months ago (4000 shares of Uranium one), it’s up about 100% and as well they announced a few months ago that they will pay a $1.06 a share special dividend at Christmas time, so I get another $4000 deposited into my TFSA that I otherwise wouldn’t have been allowed to deposit this year:)

Figured Uranium was close to a bottom unlike most of the other commodities

#128 Devil's Advocate on 11.12.10 at 3:23 pm

None of the posts in the last 36 hours were me! They were all imposters. I have been in Palm Springs looking at foreclosures to buy for a group of Kelowna investors.

This is getting dumb.

#129 echo on 11.12.10 at 3:38 pm

Td Waterhouse and Credential Direct have no annual fees on TFSA and Credential only charges you $19 to trade! (TD charges $29)
———————————————————–
Garth, can you recommend a financial institution that will allow you to have a self-directed TFSA without charging a hefty $30 per trade plus commission, plus $100 annual fee?

#130 Debt's Dark Embrace on 11.12.10 at 3:40 pm

#97 Bruce Chase on 11.12.10 at 11:30 am
………………………………………………………………………

I got suckered same as you in the income trust fiasco.
And I share your concerns, the TFSA is just too good to be true and I think they will find a way to tax it.
………………………………………………………………………
A long time ago, I cheered as Steven Harper promised not to touch Income Trusts. These handy income vehicles would be a big part of my happy retirement. WELL, I was lied to then. Now we have TFSAs. I own one, invested in stocks. BUT how long will it be before Mr. Harper once again develops a memory lapse and due to extreme need to generate revenue to cover his debts, decides that “just kidding folks, TFSA will no longer be permitted.” They will of course be grandfathered. After all, how could we permit the huddled masses to squirrel away millions of dollars, generating millions in interest and capital gains, and NOT render their share unto HHR Harper? No I’m afraid that this scheme is an endangered species soon to go the way of all too good to be true handouts from the FEDS………sigh

#131 echo on 11.12.10 at 3:46 pm

My mistake, you have to have $100,000 invested with TD to have them waive the $50 TFSA annual fee, Credential Direct has no fee at all regardless of your balance!

https://www.credentialdirect.com/WhyChooseUs/TopReasons.aspx#rn18

#132 BrianT on 11.12.10 at 3:58 pm

Wow-over 25 BILLION knocked off the value of CSCO in just 2 trading days-good thing upper management got their money out ahead of the rush.

#133 GregW, Oakville on 11.12.10 at 3:59 pm

Hi Garth & All, FYI and good health! 6.6min video to think about. (and from minute 3:50 – 4:05 re vitamin D not fluoride for preventing tooth decay.)
http://naturalnews.tv/v.asp?v=15039E75B735B21D696AB13AEF164567

Don’t let the masses know, the corporations might have a reduced profit at your expense.

#134 DaBull on 11.12.10 at 4:01 pm

#106 Virgin Invenstor

http://www.investopedia.com/
http://www.milliondollarjourney.com/
or
buy Garth’s book.
http://shop.xurbia.ca/products/money-road

Lots more out there, these are probably the easiest for the layman.

#135 Fiendish Thingy on 11.12.10 at 4:02 pm

@#42JoJo

The U.S. is moving away from being a “free economy” which depends on agreement and produces prosperity, Goyette noted. Instead, we’re seeing a movement toward a “COMMAND ECONOMY, ” he said, which produces shortages, and is run by “coercion,” with resources, production, and consumption directed by a central command such as boards, commissions, and administrators. What has been taking place in industries such as insurance, automotive, banking, and health care are all examples of the “command economy,” he detailed.

You left out energy…and water, and food.

That’s what others call “Disaster Capitalism” (see book of the same name by Naomi Klein).

#136 Evangeline on 11.12.10 at 4:04 pm

#92 Got a Watch

now that was funny!

#137 bullion.bunny on 11.12.10 at 4:11 pm

If you want to be sanctimonious, be my guest. Banks are the nation`s financial bedrock. You can dis them or share in their success. Actually, it was the greed and social craving of individuals that fueled real estate porn. But believe what you wish. — Garth

From page four of Eric Sprotts “Don’t Bank on the Banks”

http://www.sprott.com/Docs/MarketsataGlance/11_09%20Dont%20Bank%20on%20the%20Banks.pdf

Looking at the Canadian system more closely, all five Canadian banks are levered at an average of
31:1, which is actually the lowest leverage ratio during the three years that we reviewed. This implies
that if the Canadian banks’ tangible assets were to drop by 3%, their tangible common equity would
effectively be wiped out. Now, that doesn’t mean they would go bankrupt per se, but it does give us an
indication of how little asset prices would have to decline in order to wipe out their tangible common
equity. These leverage ratios worry us because they leave such a razor thin margin for error on the
‘tangible asset’ side of the leverage equation. We are always cautious about investing in companies
that have zero or negative common equity – we’ve seen what happens to public companies that trade
at those levels, General Motors being a good example.

Garth its not about being sanctimonious, its about the facts. The Canadian Banks are far from rock solid, in fact many of the assets they hold are questionable.

#138 Pat on 11.12.10 at 4:17 pm

“I don’t think the rich are too fussed over $5K a year.” — Garth

You know very well that the stakes are not simply $5K year.

What happened to the lifetime contributions (x2 for the spouse) + compounding?

+ gifts for their children so that they can maximize their contributions starting from age 18?

#139 dark sad person on 11.12.10 at 4:48 pm

Merkel refuses to back down over debt burden
by Arthur Beesley and Derek Scally – Irish Times

German Chancellor Angela Merkel is refusing to back down from her push to force private investors to share the burden of the euro debt crisis, which helped send Irish borrowing costs to record levels.

Speaking in Seoul, where she is attending the G20 summit, Dr Merkel acknowledged her demands have upset the markets but insisted it was unfair for taxpayers to be saddled alone with the cost of sovereign rescues. “Let me put it simply: in this regard there may be a contradiction between the interests of the financial world and the interests of the political world,” Dr Merkel said.
“We cannot keep constantly explaining to our voters and our citizens why the taxpayer should bear the cost of certain risks and not those people who have earned a lot of money from taking those risks.”

http://www.irishtimes.com/newspaper/frontpage/2010/1112/1224283151994.html

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

Have to admire Angie-but will she be swayed i wonder-
Germany has a lot to lose if the EUR stays lofty-

The Irish Politicians seem to all be singing the same tune–

http://www.youtube.com/watch?v=sVnKcVOBz0c

#140 Moneta on 11.12.10 at 4:48 pm

Devore on 11.12.10 at 3:03 pm
———
There is a lot of debate about free will and how it works. The decisions we make are based on genetics, the environment, past experiences… When you walk, how often do you think of which foot should go first and how the arms should be moving? Our brain makes a lot more unconscious decisions than conscious ones.

I don’t know what it is about North Americans, constantly thinking they can control everything. I wonder how many people who’ve been blessed with health, brains and good looks ask themselves how rich they’d be if they were born disabled in a poor country.

A lot of people really thought they were going to get rich with their houses. You can judge them all you want but it does not change the fact that for some reason they did not have what it takes to see through the veil. Because if they saw through it, they wouldn’t have done this to themselves.

The real estate bubble was a worldwide phenomenon so obviously there has been some systemic breakdown that makes more than about individuals. Essentially, our system has kept people financially ignorant and is structured in such a way that a small percentage can take advantage of the masses.

Did you read this:

http://www.rollingstone.com/politics/news/17390/232611?RS_show_page=0

And this:

http://www.rollingstone.com/politics/news/12697/64796

They have been out to get the average Joe no matter what. If he spent, they’d squeeze him. If he saved they’d squeeze him.

Look now the BoC is forcing Canadians to get out of the Orange Man’s shorts and to jump on riskier stuff when history and all the books have shown you should be in fixed income after a certain age. You’re a fool if you’re in cash. You’re a fool if you’re in PM. You’re a fool if you’re in equities. You’re a fool if your in fixed income.

#141 Moneta on 11.12.10 at 4:55 pm

Essentially, our system has kept people financially ignorant and is structured in such a way that a small percentage can take advantage of the masses.
==========
I think this is very important because by blaming the individuals we are playing right into the leaders hands.

#142 dark sad person on 11.12.10 at 5:24 pm

Good simple description of real Deflation amongst the masses–

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

Fed’s QE2 Misadventure Costs U.S. Households $4.6 Trillion
by Charles Hugh Smith

The Fed’s Quantitative Easing Part 2 has destroyed $4.6 trillion in household wealth, all to boost the stock portfolios of the top 10%.

The Federal Reserve’s stated goals in launching QE2 were to trigger a “wealth effect” and boost inflation. The net result of their program is a massive destruction of household wealth.

http://www.oftwominds.com/blog.html

#143 GregW, Oakville on 11.12.10 at 5:36 pm

Hi Garth, fyi artical links

Obama Says Federal Reserve’s Easing Wasn’t Aimed at Affecting Dollar Value
http://www.infowars.com/obama-says-federal-reserve%E2%80%99s-easing-wasn%E2%80%99t-aimed-at-affecting-dollar-value/

Barack Obama: We Must Embrace Globalism And The Emerging One World Economy
http://www.infowars.com/barack-obama-we-must-embrace-globalism-and-the-emerging-one-world-economy/

#144 HouseBuster on 11.12.10 at 5:36 pm

Looks like that pic has been photoshopped.

#145 Mikey the Realtor on 11.12.10 at 5:38 pm

#112 DA

Hey DA, nice to see you around, dont worry about the imposter, I can sense him from a mile away.

No sales yet but I have 3 fools, I mean clients lined up. They all want smaller houses but I have been able to convince them that bigger is always better. Anyway, I’m off to pick up one of them for a few showings in my new BMW M5 I just bought, I need to play the part and a nice ride is a must, right?

#146 wetcoaster on 11.12.10 at 5:57 pm

echo,

I went riskier in my TFSA and it’s paid off nicely. Split the $10,000 into 3 juniors, one gold is up 40%, and an oil and gas is up 300%. The third is a tech play thats down abit but should bounce back and was only 15% of the holdings. Can’t thank Garth enough for the TFSA info though I know he doesn’t like the spec stuff.

#147 Get Real on 11.12.10 at 5:59 pm

#137

The Vancouver RE is a huge bubble based on speculation and not on fundamentals. I think that the tipping point will be sudden and a bit surprising, as it has been historically and more recently with the US RE crash.

I have lived in Europe, US and now in Canada and do quite well financially. I really believe that there is a great deal of self-deception and delusion about Vancouver being the “best place on earth”. The taxes are high, in addition to the HST. The infrastructure is deteriorating, and the economic growth fundamentals are dismal.

What is there in abundance is misleading advice from groups that stand to make a profit from it and herd-mentality of the greater fools. Can’t help but say it again that this will not end well

#148 GregW, Oakville on 11.12.10 at 6:09 pm

Hi Garth, still flying?

World Battles The Invasion Of The Naked Body Scanners
http://www.infowars.com/world-battles-the-invasion-of-the-naked-body-scanners/

John Sedat, a University of California at San Francisco professor of biochemistry and biophysics and member of the National Academy of Sciences tells CNet that the machines have “mutagenic effects” and will increase the risk of cancer. Sedat previously sent a letter to the White House science Czar John P. Holdren, identifying the specific risk the machines pose to children and the elderly.

The letter stated:

“it appears that real independent safety data do not exist… There has not been sufficient review of the intermediate and long-term effects of radiation exposure associated with airport scanners. There is good reason to believe that these scanners will increase the risk of cancer to children and other vulnerable populations.”

While the TSA maintains that the body scanning machines are safe, and that the option of the pat-down as an alternative will eventually be withdrawn, scientists continue to speak out over the health hazards associated with the x-ray technology.

Recent accounts from passengers detail the fact that the enhanced body searches are being conducted in public as a way of intimidating others from resisting the scanning machines. They also describe TSA officers in some cases literally lifting travelers from the ground from between the legs and forefully squeezing and feeling around breasts with the fingers and palms of both hands.

As reported by Reuters, parents are now demanding that the procedures be changed for children, after witnesses have described their children’s genitals being touched by men and women working for the TSA.

“At some point the terrorists have won.”

#149 GregW, Oakville on 11.12.10 at 6:34 pm

Hi Garth, fyi atrical

Gonzalo Lira And The Boiling Frog: Effects Of QE2 On The Bottom 80% Of The U.S. Population
http://www.infowars.com/gonzalo-lira-and-the-boiling-frog-effects-of-qe2-on-the-bottom-80-of-the-u-s-population/

#150 jess on 11.12.10 at 6:34 pm

alternative views on why easing isn’t inflationary

“Why pay interest to foreign central banks when you can get the money nearly interest free from your own central bank?

QE2 could set a bold precedent prompting other countries to break the chains of debt peonage and fund their governments with their own national credit.”

Friday 12 November 2010

by: Ellen Brown, t r u t h o u t | News Analysis

http://www.truth-out.org/qe2-its-federal-debt-stupid65050

What is new and different about the Fed buying federal securities directly is that the Fed, unlike any other buyer, rebates its profits to the government after deducting its costs. In 2008, the Fed reported that it rebated 85 percent of its profits to the government. That means that bond financing through the Fed will be nearly interest-free. The interest rate on the 10-year government bonds the Fed is planning to buy is now 2.66 percent. Fifteen percent of 2.66 percent is the equivalent of a 0.4 percent interest rate, a very good deal for the government.
In eight months, the Fed will own more Treasuries than China and Japan combined, making it the largest holder of government securities outside of the government itself. While this trend, too, has been criticized, you could see it as another very good deal. Why pay interest to foreign central banks when you can get the money nearly interest free from your own central bank?

#151 Paul on 11.12.10 at 6:37 pm

#109 allisun

I my be interested in your property. Can you give me the MLS#?

#152 VICTORIA TEA PARTY on 11.12.10 at 6:42 pm

G-20’S FAILURE PRESAGES FURTHER ECONOMIC ANGST

This has not been the US president’s best month has it?

Hot on the heels of losing the Dem’s Congressional edge, to the GOP, last week, today we have more failure, this time in South Korea at the end of the G-20 conference.

Unable to get a free-trade deal with one of his closest allies in east Asia, South Korea, the US was also shuttered out of its campaign to corral China’s currency, the yuan, at that G-20. It simply got no support.

This speaks to a number of issues, but the primary one is empirical decline. It continues unabated and the pace quickens, alarmingly so.

In past meetings the US had a regal presence with the lesser nations bowing and scraping to the Big Alpha Dog.

This week a whipped poodle showed up and the result was pure dross. There was no alchemy, just a leaden joint statement at the end of the conference expressing the need to meet again to sort out this and that currency issues.

China soft-peddled its behaviour in public at that meet. But behind the scenes it looks like it took Obama out to view its brand new woodshed (just lookin’, mind you).

Inspite of its great financial sickness, the US is still trying to get away with hypocrisy: printing up zillions of bucks to “bring back prosperity” to the Homeland, but wanting China to boost its yuan to put it at an economic disadvantage to the US!

After the end of the conference, China told everyone to get stuffed, without exception, by announcing that it will be boosting interest rates to cool its economy. Also, look for accompaying currency import restrictions, something which Brazil is doing to protect its real.

The sum total of everything that occurred this week, in South Korea, is guaranteed to generate currency wars, so feared by the Brazilian finance minister.

China knows what it’s doing. Realizing the implications, it seems to be looking back in on itself preparing for a fiscal/monetary tsunami that will occur if it restricts entry to US dollars, the pound, the euro, and so on.

Stockpiled with resources, and needing to create more jobs and consumerism, China can now spend the next several years doing its thing with no regard to the chaos it will have helped to create outside its borders.

Waiting and watching for shoes, nay hobnailed boots, to drop. Lots of footwear, lots of time.

#153 Nostradamus Le Mad Vlad on 11.12.10 at 7:05 pm


Great posts 2day, but these three stand out . . .

#116 BrianT — “Now that the public’s money is fully in bond investments, . . .”

Hasn’t their been talk of a worldwide bond meltdown / dissolution? Look at what is happening in PIIGS and others. Just wondering, but see gold and silver links further on.

#121 dark sad person — “. . . a list of 20 global banks considered “too big to fail”

— and —

#130 BrianT — “. . . 25 BILLION knocked off the value of CSCO in just 2 trading days-good thing upper management got their money out ahead of the rush.”

If there are 20 banks too big to fail, yet 25 bln. was wiped away in two days, wot’s behind all this?

People don’t make statements like banks being too big to fail on the one hand, while on the other 25 bln. is gonzo in two days.

Other than globalism (thanks Greg W. for posting the link) being a bigger failure than the Hindenberg, does anyone see what’s taking place?

We’re being pulled apart by so much BS happening in tandem, we’re almost certainly a lot closer to shouting timber as the dominoes come falling down.

Garth, is the following reminiscent of conversations F had with you in the HoC? Here.

Serious FF time. “The most likely scenario is a nuclear attack. Two bombs are missing, bombs built by Israel in South Africa and lost long ago.” Iran will be blamed if it actually happens.

0:59 clip China recommends silver for investors, but Suddenly gold has become money again. See what I mentioned above? Things are happening in the blink of an eye.

#154 BrianT on 11.12.10 at 7:21 pm

#140Greg-they just write that stuff and put it on the teleprompter for him-it is possible that guy doesn’t even understand what he is reading. He is a lot smoother than Sarah Palin but IMO he might be just as vacant.

#155 Devore on 11.12.10 at 7:22 pm

#137 Moneta

I don’t buy into that nonsense. Only bored tenured academics would argue whether people don’t have free will because marketing, under whatever guise, is making some choices appear easier and more attractive than others.

We all have free will, and are free to make our own decisions. Those decisions are based on the information available to us. We can choose to obtain as much information as possible about certain subjects to make better decisions. I choose to be better informed about finances and health, instead of pop culture trivia. The decisions I make reflect that. The decisions people watching American Idol make also reflect that. Because they chose to limit the range of decisions available to them, that does not mean they do not have free will.

It is a complicated world we live in, with a very high division of labor. We can’t know everything about everything. We have to delegate. We have to allow others to make certain decisions for us, or to advise us. But the areas and degree to which you do so, is well within your control. In my case, I want to know what is happening to my money, and I want to know what I eat. I spend time researching these areas proportionally to the value I place on them, and on making the right decisions. This means I do not have very much time for American Idol.

The people who do not care what happens to their money allow others to decide for them, and they will rightfully reap the consequences of those decisions. They SAY they care, of course, Who Doesn’t(TM), but their actions indicate otherwise.

Finally, as much as I like Matt Taibbi sometimes, there is too much whining and righteous indignation. Whether as citizens, consumers, customers, employees, workers, students, etc, we all have the power, individually and collectively, to give the middle finger to the system that is Screwing Us(TM). If you believe all the options provided by the system are harmfull to you to one degree or another, then go outside the system. Just because a choice is difficult, does not make it impossible, or remove it from the menu of choices, or imply you have no free will. If enough people make the difficult decisions, there will be change. If you only limit yourself to the obvious easy choices, then they all look alike, it is easy to think you have no free will, and you can complain The Man Is Holding Us Down(TM). The Man does what is good for The Man, just as you should do what is good for you.

Ultimately TPTB have power to impose circumstances and “force” decisions because we let them. We’ve been letting them for generations. We’ve conditioned ourselves to be dependant on them. You can choose to believe that, or you can choose to believe It Is What It Is(TM), that this is the natural order of things.

The system doesn’t keep people financially ignorant. People keep themselves financially ignorant. They fell for the marketing that said wealth and making money is easy, and that we deserve it. Because they believe this, a small percentage can take advantage of the masses. This will end as soon as this belief does. This will end as soon as people stop blaming others for the system being the way it is, and take personal responsibility. We are the society. We individually make it up. We vote for others to represent us. We work for government. We work for corporations. We buy their products. We give them money, we give them power.

I think this is very important, because blaming others perpetuates the system.

#156 Tryingtobepatient on 11.12.10 at 7:29 pm

Dear Garth,

I would appreciate some clarification if you don’t mind. My husband and I have followed your advice on many investment suggestions (gradually got rid of most mutual funds, which is ongoing because of the dsc, bought etfs, preferreds, a few dividend paying stocks, etc.) and have taken out $20,000 to date in TFSA’s. In fact, this year, we are going to eliminate our RRSP contribution in favour of more TFSAs as you suggested.

Today we heard some disturbing news which will affect many people’s retirement planning if it is indeed true. A friend (age 67) has had her CPP blended with her pension after age 65. Her husband died 3 months ago quite suddenly. He had a 60% survivor benefit on his pension, but she only qualifies to receive the survivor benefit on the portion not blended by the CPP. According to her, because she already receives the maximum CCP, she’s not entitled to his survivor benefit. This means that the 60% survivor benefit she had planned so carefully around is compromised.

Can you please comment on this. Is it true?

Thanks again for your valuable advice. I did not make 11% on my portfolio as you did (still getting rid of some dead weight) but I did manage 7.50 % which is a whole lot better than I would have otherwise. Much appreciated!

#157 Mark on 11.12.10 at 7:32 pm

#139, the top 10%’s stock portfolios have lost at least 75% of their value since 2000 when measured in silver, gold, or oil. So things aren’t exactly rosy for them either.

Its the bondowners who have absolutely cleaned up. 30-year bond market and the 10-year would have collapsed if not for QE. But its not stockholders by any stretch of the imagination that are benefitting from these government programs.

#158 Milhous Plumbers on 11.12.10 at 7:48 pm

Some companies e.g. Sunlife charge user fees everytime you make a withdrawl from their TFSA. Others don’t. Finding which do and which don’t is the challenge.
Also if your TFSA contains mutuals you can get hit with hidden fees just shuffling.

#159 MediaWatcher on 11.12.10 at 7:55 pm

There you go Garth….your view is now mainstream!

http://money.cnn.com/2010/11/12/real_estate/canada_housing_bust.fortune/?section=magazines_fortune

#160 DaBull on 11.12.10 at 7:55 pm

#129 echo on 11.12.10 at 3:46 pm

Questrade has no fee’s period, for the basic package.

http://www.questrade.com/

http://www.questrade.com/trading/tax_free.aspx

They have a free webtrader platform but it only gives real time quotes, no level 2 or even 1. If you wanna move up to were the big boys play they have Questrade Pro for just over $100/month. Free if you do over 100+ trades a month. Best trading platfrom I’ve found and I have used both TD and Credential in the past. Give it a try they have a free trial with some play money.

http://www.questrade.com/why_questrade/free_trial.aspx

#161 Min in Mission on 11.12.10 at 7:56 pm

But by the same token, the point is to make a pile of money and keep it. So junior mining shares, naked calls on Google stock or a mess of bullion futures might be exciting, but that’s more spec than strategy. Which is why my TFSA is stuffed with ETFs, giving great exposure to good sectors of the economy, with rock-bottom costs, non-stop liquidity and lots of diversification.

I am not a speculator, so, scratch the first half of the paragraph. I am trying to catch up, due to a 1/2 of a mis-spent century. (but it was fun). Where do I find some info and direction on ETF’s, etc. (assume that this means ‘exchange traded funds’)

Really enjoy reading here, just don’t always understand everything. Great sense of humour though!!

#162 Devil's Advocate on 11.12.10 at 7:58 pm

Mickey my boy,

You’re making me proud. Great choice with the car. Remember not to lie though. The correct term is “the art of disclosure.” It’s all about telling them what is good for you but making sure to omit things that could hurt your chance of getting them to buy, buy, buy.

One of the big reasons I’m on this blog so much talking with spry young fellas like you is I miss the rush. When I make a sale it gives me a buzz. Because I’m not selling anything now, I spend a lot of time educating the dawgs. The only problem though Mickey, is how few of them are eager beavers like you. It does inspire me to fight harder, to use a bigger stick when trying to make my point with them.

I got it Mickey! If you want to learn the real art of disclosure, the kind they taught me 25 years ago when I was with Amway, just review my posts I’ve contributed so graciously over the last number of months. In them you’ll see how I only deal with arguements in part, take things out of context and then lead people down bunny trails that have little or nothing to do with the original point.

Check out how I avoided dealing with the core issues in some of my earlier posts today. One person asked me about integrity and I was able to end up taking the conversation down the path of the Berlin Wall! Brilliant, just brilliant!
I took only a part of their comment and not only pulled in out of context but then baffled them with bullshit, as the old saying goes.

Some other fool mentioned my attachment to my moniker. I completely contradicted myself in public and it doesn’t even bother me a bit! First I strongly defended possesion of my moniker and then when challenged, I said it wasn’t a big deal. You see how to do it? Whatever people say, you just bend and flex and go with the flow. Like water off a duck’s back I always say.

I’m glad you’re sticking with the sales process. Remember that you don’t get paid to show, you get paid to sell. No sale, no money. Don’t let you’re values get in the way. If you’d be like me, you could have values that change with the weather. It’s what I call integrity, and I’m full of it.

#163 Jeff Smith on 11.12.10 at 8:11 pm

>#2 Andrew on 11.11.10 at 10:32 pm
>Garth do you think the Feds will eventually kill/alter the
>TFSA if enough people use it to avoid paying tax?
>Just thinking out loud, but if a large majority of Canadian
>couples contribute $10,000+ to their TFSA every year
>over an average 30 year career that is a lot of personal
>income tax that will not be going to the government. Will
>the TFSA be sustainable for the government over the
>long term?

The truth is, there are less people with enough disposable money to put into TFSA than you think. Since its inception till now, I haven’t put in even a penny. Why? after all the bills and taxes are paid, I didnt’ have any $ left for it. So for a lot of people it’s just a nonissue.

#164 Utopia on 11.12.10 at 8:23 pm

#68 timbo said:

“Are you seeing the collapse of sugar and Asian markets? Wow!!”
——————————————————-

I hope you put in your short positions already Timbo. I am anticitpating a further sell off come Monday on a strengthening US dollar.

#165 Got A Watch on 11.12.10 at 8:30 pm

I see a lot of people seem to be scared to invest on there own. It can be intimidating at first, so start small, and read a lot.

One of the best resources for new traders is Market Ticker Newbie Forums where there are about 1460 posts (threads) that cover just about every question you will have. The ones at the top of Page 1 with the red pins are great places to start.

First thing you will need to do, after some reading, is open a “self-directed” trading account at some Broker. All the Banks have brokerage divisions, and there are several independent ones. I have heard good things about Trade Station and for more advanced traders, Think or Swim (owned by TD Bank) is good for trading stock options, but they are not taking new accounts right now in Canada, since TD bought them out a while back, still “re-organising”. TD also has TD Waterhouse, which might be better for new traders. Desjardins has Disnat, with Stockscores, a system that helps you decide when to buy and sell stocks by rating them with a numeric ‘score’, which can be of great help if you aren’t sure what and when to buy.

RBC has ‘Direct Investing’, I have my RRSP account there, but I have found they charge very high commissions, like $43/trade. BMO ‘InvestorLine’ is easier to deal with, I opened my TFSA account there when it was first started, but they still charge you commission, though it is usually $30/trade. If you have over $100K to put in, the commissions drop down to around $6-$7/trade, but you can’t do that with a TFSA, there are penalties from CRA now for deliberately “over-contributing” to a TFSA.

You might need up to 3 accounts, 1 for your “self-directed” RRSP, 1 for the “self-directed” TFSA, and another general trading account for any money that does not fit into the first 2. Make sure it is “self-directed” when you set it up, or they will just take your money and probably try to sell you some Mutual Funds from the parent Bank, you won’t be able to trade in and out of stocks etc you pick.

“Self-directed” is just that, you make the decisions, which is really the only way to learn. All of them have a ‘paper trading’ or ‘practice account’ option, where you trade with fictional money, just to get the hang of it. That is OK at the very beginning, but you won’t really learn until you have real money on the line.

You will pay higher commissions on the TFSA, as you can only contribute $10K in there now to start it, $15K after Jan 1, per taxpayer, so that’s $30K per couple by January, plus they can be opened for any children 18 or older who have a SIN number. That should be the first place to put the money in. A few of the online brokers like Tradestation will charge you much lower commissions, but they assume you know what you are doing to a greater extent.

There are hundreds of ‘trading Blogs’, most of them specialize in one area, like miners or stock options etc, to help you out as well. Then there are many ‘subscription services’ of all sorts, where you pay a fee for them to recommend trades, again most specialize in one area. I have had mixed results with those, some are good, others not so much.

These days there are just as many free sources of trading info out there, the internet is a great resource. One of my favorites is Bill Cara where there is a vast amount of free info, and a great daily trading Blog. Bill is Canadian, been trading the markets for 40+ years, and he knows of what he speaks. Friendly people there will help you with questions, or come here and ask, you will inevitably have many questions at first.

If you sit around, too scared to make a move, you will never make any money. Yes, there is risk, but life is risky, then you die. There may be just as much risk in keeping money in a plain savings account, or pouring it all into your house to pay off the mortgage.

I could list hundreds of sites and Blogs, but too much info will confuse you. Start off slow, and ease into it, you can ramp up as you gain confidence, and switch over to more sophisticated online brokers later.

Remember, it is YOUR money, no one cares about it more than you do. If you don’t take a strong interest, nobody else will. This is your retirement and future, with no money, you won’t have much of either. If you have larger sums, there are many Funds etc where you give them capital and they trade it for you, but most are only open to “accredited investors” (capital of $2 Million +. Bill Cara has “pooled trading accounts”, where you open a trading account and they actively trade it for you, he has a global team, that option is open if you have $250K + to invest. Obviously, those won’t be any good for a TFSA, or most peoples RRSP, they cater to the more sophisticated people who want to trade the markets but don’t have the time or knowledge themselves, like ‘professionals’ with good income.

I am not associated with Bill Cara btw, but I have a great deal of liking for the guy, his Blog has taught me a lot. His ‘Week In Review’ posted every Sunday is very insightful, the link is on his Blog, he discusses how various markets inter-relate and the outlook for each.

Or, you can hire an ‘advisor’ and have him recommend investments, there are many places around like IPC or TD Waterhouse that can do that, but they always try to sell you their in-house mutual Funds, which are not always the best choice. A real ‘independent’ advisor who will recomment options from many sources are hard to find, not too many out there. If you can’t find one in your area, Garth has said he can help you locate one.

You will probably be also best to talk to a good tax accountant who can help you do things in a way that doesn’t cost you too much tax to be paid needlessly. The wrong way can cost you heavily in extra taxes. I have found accountants are very cheap, compared to lawyers etc, and well worth the cost.
The most important thing I have learned is never to fall in love with whatever you buy. Be ruthless and try not to let emotion get in the way. Approach it as a serious business, because it is. For trading, good ‘money management’ is key, you will always make incorrectly timed trades, so you have to cut the losers short and let the winners run. Losing trades are just part of trading, treat each one as a lesson learned, don’t get depressed when it does not work out, and don’t get overly excited if it does work.

You will see people who say they are “Bullish” or “Bearish” on a stock or a sector. This means they have a bias, one way or the other, and are trying to justify their bias. A trade should just be a trade, nothing more and like the bus, another one will along in a while. It is all about weighing probabilities and selecting courses of action, don’t expect the market to go your way just because you bought into something. It may, or it may not.

Good luck and good trading.

#166 Hiteclowtec on 11.12.10 at 8:30 pm

#106 Virgin Invenstor

The Golden Fleece: Why the Stock Market Costs You Money

and

Towers of Gold, Feet of Clay: The Canadian Banks

by Walter Stewart

http://en.wikipedia.org/wiki/Walter_Stewart_(journalist)

#167 HouseBuster on 11.12.10 at 8:33 pm

#125 echo – When they pay the dividend the stock will go down by the same amount.

#168 nonplused on 11.12.10 at 8:46 pm

Yikes!

http://www.marketoracle.co.uk/Article24222.html

Can’t happen here though.

#169 allisun on 11.12.10 at 8:55 pm

#148 Paul

I am on Craigslist Nanaimo Real Estate For Sale, not on MLS. That was my first post here, wasn’t trying to make a sale on this site, but your interest in the property is appreciated. I love it here but I don’t love my mortgage.

#170 Utopia on 11.12.10 at 8:55 pm

#84 Moneta said……

“I agree. Garth’s strategy forever depends on greater fools. A lot of his recommendations are based on zero sum games and not growth strategies”.
—————————————————-

Hi there Moneta,

I found your comment a little illogical.

What you are saying in effect is that nothing has been achieved by the argument against buying residential real estate at this time because for every winner there is a loser. Therefore there is no net benefit.

I think what you are not considering though is how the consciousness of the overall market has been impacted by some individuals, a few think-tanks and (finally) the media to alter what might have been a much riskier outcome for all Canadians.

The bar was raised on appraising the true risks of cheap interest rates on families and on our national economy and a spotlight was put on the real estate industry and some of the worst pumpers (many of whom could care less about how individuals and families are affected by poor decisions as long as their own paycheque kept rolling in)

This is not a zero sum game at all when you look at the big picture. Canada certainly has outdone itself in levels of personal indebtedness but we are still relatively healthy when compared to other foreign real estate markets.

I attribute part of this success to the efforts of those who have been unrelenting in their criticism of some policy intitiatives that were just wrong-headed and to getting out the message that R/E is indeed set for a decline.

Millions of Canadians have got the message. They do not all read this blog but the media has finally connected with the reality and the message is nonetheless getting through.

Buying and selling will never end completely but those who do invest at a high point will not be as big of fools had nobody started hitting the panic button to begin with.

It is bad for sure…but it could have been much worse.

#171 allisun on 11.12.10 at 9:00 pm

#148 Paul

I posted in October and its 3 houses on acreage. The initial reason for posting was a question: can a person use equity for TFSA? Is this a really dumb question? Feel free to answer both.

#172 Nostradamus Le Mad Vlad on 11.12.10 at 9:21 pm


“Globalism: The choice between global slavery or global revolution. Decide.” wrh.com.

G-20 Squabbles Translation: TROTW won’t do what Obama tells them to!” wrh.com.

Mathematics Pythagoras was late for the party!

Home Prices Fall “The massive property seizure is also due to a desire on the part of financial institutions to eliminate evidence that mortgages were sold and bundled multiple times, to the point where it was almost impossible to know who actually had title to the property.” wrh.com.

6:33 clip “Notice what the video is portraying visually:

“1. Russia and the UK see eye to eye; 2. Russia and China say the US needs to gain approval before the FED printing runs; 3. Germany called the US “helpless”. Watch the global chessmatch … the pieces are moving … watch those alliances.

“Russia/China are together; Russia is lining up with Europe.

“This makes Russia the central axis between China and Europe and she’s playing the game to perfection.” wrh.com.

USPS loss and Chapter 11. The USPS loss may be due to texting and e-mail. Anyone heard how Canada Post is doing?

3:18 clip Crash JPM! How? “Specifically, Keiser said that if everyone buys just 1 ounce of silver, it will force JP Morgan — a giant manipulator of the silver market — to cover its short positions, and drive it out of business.”

Currency Wars “The Fed is a privately held [consortium] of banks. Their actions are not necessarily intended to save us or the economy; their actions are intended to save the banks, to drive up asset valuations so the smart money can get out before the collapse.”

This refers to #130 Brian T’s point about US$25 bln. disappearing in two days. The head honchos know something is about to happen, such as — Not the Great Train Robbery.

More bailouts “MERS is owned by all the biggest banks, and they certainly do not want it to be sunk by huge fines.”

BoE “Yee-HAAAA; we DID IT!” — Bank of Pigland. wrh.com.

China “Is it just me, or has anyone else noticed how, all of a sudden, China has seemed to become the US’s “enemy #1″ after the US didn’t get what they wanted from China at the G20 regarding a possible revaluing of its currency? Just checking.” wrh.com.

Hey there! we’re in the Pacific NW! No fisticuffs here!

Central Banks “Presidents that resisted the central bankers were shot, while others shamefully caved in to their demands. Our current central bank is called the Federal Reserve . . .”

BS from 2001 Masterminded by dubya’s administration. Sheeple actually believed this!

Iran “When a signatory to the NNPT (Iran) follows inspection procedures to the letter and still gets slammed by UN sanctions, who can blame them for not wanting to offer further cooperation?” wrh.com. However — Iran – Iraq.

#173 Trino Tuta on 11.12.10 at 9:29 pm

Damn Garth… that’s a nasty picture! Good job !!

#174 Moneta on 11.12.10 at 9:32 pm

Devore on 11.12.10 at 7:22
——-
Go read more scientific research on the brain and then we’ll discuss.

We are not what we think we are.

#175 Moneta on 11.12.10 at 9:41 pm

This is not a zero sum game at all when you look at the big picture.
—-
I was mostly talking about the markets in the last 2 years. Market tanked by 50% then went back up. Robbing Peter to pay Paul.

If I sell my house today, expecting to buy it back when real estate collapses, all I am doing is making my money off a greater fool. I’m not producing anything, I’m expecting someone to fail.

#176 Right All The Time on 11.12.10 at 9:51 pm

Ya, better pump those TFSAs as that is the only way renters in Vancouver can get some pocket change after missing out for the past couple of years.

For all those Vancouver bears that said a couple days of high sell list ratios meant nothing, I guess you are eating your words…again.

The overwhelming majority of days in October and November have shown extremely high sell list days, contrary to the collapse theory.

Oh I know, ‘sales are stronger in October and November,’February should see the crash,” etc…

Of course, the Olympics have come and gone, as have the new mortgage rules, and the HST, and all that has happened is the market has continued on its steady climb.

Oh and inventory is steadily declining…so much for all those summer 20k inventory parties eh bears?

2011 will mark the THIRD year of waiting for the inevitable decline/collapse/whatever you want to call it depending on the political winds and convenient statistic of the day….

This is getting really pathetic…

#177 Moneta on 11.12.10 at 9:52 pm

Devore on 11.12.10 at 7:22
—–
My son is intellectually handicapped. No matter how hard he tries, chances are he will not be a rocket scientist.

One thing I learned through my experience is that it’s not because people are deemed normal that they can achieve anything.

You are projecting your capabilities and interests onto others.

Furthermore, if no one took risks, we would still be living in caves. It’s amazing the number of discoveries that were made by going out on a limb.

#178 Junius on 11.12.10 at 10:02 pm

#172 Moneta,

While I agree with Devore most of the time I agree with you on this one. I thought his post was naive.

The echo chamber of the MSM has left most of our society unable to act in their own interest. Driven by primal motives from fear to greed to anger they aren’t allowed to think for themselves. Perhaps it is because I have just returned from a short trip in the US which left me deeply depressed about the state of neighbour. The degree of manipulation and ignorance is simply shocking.

#179 garthfan on 11.12.10 at 10:12 pm

Garth, I realize that you are pumped up on the subject of a housing bubble but I wish you would devote a little more time exploring the ways in which Canada differs dynamically (or not) from the US in terms of consumer protection.

For instance, I have heard people assert and you contradict the existence of ARM’s. Can middle class Canadians wake up one morning to find their mortgage payments have reset from say $1200 a month to $2200 a month such as what happens in the US? I have read that you must renegotiate or requalify (?) for your mortgage every so many years. Is this the only mechanism you can be trapped in? Can Canadians receive a notice in the mail that their credit card interest rate is now 29.9% regardless of the fact that they have been paying their bills on time? Are there usuary laws that protect them from my cousin Vito coming to break legs because their jobs have disappeared?

Does the same finanicial services company than provides health care also take care of their retirement funds? I assume so, I assume that is the gov?

What about how the debt mechanisms compare and contrast to say, Ireland or Iceland?

I mean no offense, by your narrative is pretty limited for the most part and not all that comprehensive.

#180 garthfan on 11.12.10 at 10:18 pm

Correction: I have heard differing opinions on risky mortgages but not much of an explanation thereof.

“It’s better to light a candle than to flick your Bic!”

#181 WillyH on 11.12.10 at 10:21 pm

What the crap is wrong with you people?

The tax-free savings account is a pure financial gift to Canadians.
_ _ _ _ _
During your Airport Strip presentation on Tuesday night I listened intently but in disbelief as you outlined the TSFA strategy very quickly. I spent all day Wednesday online researching and realized what a total complete fool I had been. What I thought was just another type of cash only savings vehicle turned out to be (in your words) a “financial gift”! I had even persuaded myself that it was a one time $5K affair, I had no idea it was $5K per year per person! Most of my colleagues were in the very same boat.

Looks like I’ve got lots of work to do re-thinking our investment strategy.

I am wondering if this was some kind of concession attempting to placate all those investors pissed with F’s about face on income trusts?

#182 InvestX on 11.12.10 at 11:09 pm

Moneta: Read this and tell me where the fraud starts and where it ends:

http://www.rollingstone.com/politics/news/17390/232611?RS_show_page=0

It’s systemic and Canada has a tendency of admiring Americans and following in their footsteps.
____________________________________________

Great article about the robo-signing foreclosure fraud. Thanks for the recommendation.

#183 Paul on 11.13.10 at 9:55 am

#169 allisun on 11.12.10 at 9:00 pm

I can’t find it. Can you provide a link?

#184 allisun on 11.13.10 at 6:00 pm

#183 Paul
Craigslist Nanaimo, Real Estate For Sale, October 28th, $579,000. I can send you more photos and details. Go to Craigslist and respond to my posting, then I can email you more details.

#185 Sultan on 11.13.10 at 9:10 pm

Got a Watch..

You are wrong in how you are looking at Account threshold.. If all your accounts, RRSP, Cash or Margin, TFSA add up to 100k for your family, then commission drops to 9.99 at some Bank Brokerage..

However, at TD and Scotia and some other the family threshold is only $50k to qualify for 9.99 commission..

#186 peterpatch on 11.13.10 at 9:59 pm

Here, in a nutshell, is how I am using the TFSA. I am 30 and get RRSP matching through my employer, they match about 60% of what I put in up to $3000 a year. They also have a DC pension which takes a hit on my RRSP contrib. limit. That is my RRSP, the rest of my investments go to the TFSA, I don’t really make enough now to worry about what I would do if I go over the capacity of both. When I get closer to retirement I will have an approx 50/50 split between RRSP and TFSA. At that point the important variables (cpp, OAS, marginal tax rate, capital tax, dividend tax, etc.) will be far more certain then they are now. Nobody knows where these variables will be in 30 years, not even Garth. So once my retirement age is impending (55 ish) I will sit down with a financial planner and decide what will happen, the TFSA will give them a lot of flexibility to decide the rate of withdrawal from the RRSP. The rate of withdrawal from the RRSP can be calibrated such that I get put in the minimum tax bracket and receive maximum government supplied benefits. The TFSA is given immunity from all the tax treatment so I can use that to supplement my “meager” RRSP income all the while enjoying the full glory of the Canadian social safety net. Thanks Garth for helping to make it all possible during your tenure on the hill. ;-)