What to really worry about


The US will not implode, apparently, so let’s move on to stuff that matters. To Jenny, that means finding out why her investment fund sucks.

“I’ve put money into this thing for the past three years, and I might as well have hidden it in the stupid blender my mother-in-law gave me. I read this blog and you’ve been pushing a balanced portfolio non-stop. So I’ve got the Scotia Cdn balanced fund, and nothing’s happening. Why Garth?”

Chill, Jen. This is not a Garth problem. The Scotiabank Canadian Balanced Fund has delivered a sucky 1.81% annual return over the last three years. That compares with just over 8% a year if you’d simply invested instead in a mix of 60% global equity index and 40% Canadian bond index. Why the fat difference? Two reasons.

First, putting you money only into Canadian assets is like trying to find culture in Calgary. Don’t expect goose bumps. This country accounts for about 4% of global markets, and yet 70% of all investors here have 100% of their money in Canadian assets. Bad choice. The TSX is up 6% this year. The S&P is ahead 21%. Markets in the UK and Germany have added 14%. The Nikkei has jumped 40.6%. Sticking your cash into a fund with that narrow a focus is bound to disappoint.

Second, fees. While this mutual fund has delivered 1.81% a year, it’s been charging you 2.03% just to own it. That’s called a MER, or ‘management expense ratio’ – a fee embedded into the fund you can neither escape nor deduct against taxable income. In means, of course, the bank is making more money than you are – which is why Scotiabank earned $1.8 billion in profits in the last three-month period and hiked its dividend. Yes, Jenny, you are far better off to have equity in the bank than own a bank fund.

A superior option: ETFs, or ‘exchange-traded funds’. They’re like mutual funds, but lack a highly-paid manager who lives in a $3.2 million house with caesarstone counters and drives a new Boxster, so there’s no big MER. (With many equity funds, by the way, these fees can range as high as 3%. On segregated funds, over 5%. Yikes.) Unlike mutual funds, ETFs trade on the stock market so they’re very liquid. Plus, they pass through dividends from underlying companies owned by the fund. A way better choice.

In fact, fees are something everybody with money should worry about. Mutual funds are probably the most common culprit (there are 33,400 of them), and rake in the greatest amount (Scotiabank alone makes about $1.2 billion a year in fund fees). But the pillage of your money hardly ends there.

Insurance fees might surprise you. Even shock. A salesguy peddling fear, guilt and greed (the three reasons people get insurance) who sells a whole life policy with a face value of a million could walk away with a commission cheque for $60,000. And guess where that comes from? Then there are those mortgage investment corporations now all the rage among GIC refugees who think mortgages are safe. These folks are often yield pigs who completely misunderstand the risk they’re taking in return for getting 7% or more in the form of interest. I wonder if they know why the mortgage brokers pushing them are so richly rewarded with up to 8% in direct fees.

Financial advisors? Make sure you understand how someone is paid (plus their qualifications, experience, track record and client satisfaction) before you sign up. Ninety per cent of advisors are actually salespeople (including all the nice bots in the banks) who are compensated by the companies whose products they sell you. Yup, mostly mutual funds.

(By the way, be very careful about DSCs – deferred sales charges. Many mutual funds come with a back-end load, meaning there’s an extra fee charged if you cash out of them early – typically within seven years. Most marriages don’t last that long, so this is ridiculous. In essence it’s a mutual fund prison.)

The trouble with advisors paid by commission? The guy may be fantastic, but do you really know if decisions are made in your best interest, or for the cheque he receives? A fee-based advisor avoids the potential conflict of interest, and is paid based on how much you’ve invested. But never pay more than 1% (a year) of your portfolio. Another no-no: compensating an advisor based on your investment returns, so the more you make the more she gets. All this does is incentivize your advisor to take risks in order to chase returns. And who needs an advisor when you can be a day-trading, stock-flipping, gonzo, cowboy fool on all your own?

By the way, try to make any fee you ever pay deductible from your taxable income. Advisor fees are. Fund fees are not.

So, Jenny, either be damn proud you helped Scotiabank boss Rick Waugh earn $11.2 million last year, or do something about it.

Which will it be? Thought so.


#1 Bob on 10.14.13 at 8:43 pm

The Canadian Federation of Municipalities warns: “Housing costs and, as the Bank of Canada notes, household debt, are undermining Canadians’ personal financial security, while putting our national economy at risk.” “The high cost of housing in Canada (is) the most urgent financial issue facing Canadians.”

Read more: http://www.vancouversun.com/business/Barbara+Yaffe+high+cost+home+ownership/9034906/story.html#ixzz2hkMkVVA7

#2 JayBee on 10.14.13 at 8:44 pm

Should’ve got into insurance sales…

#3 NYCer on 10.14.13 at 8:50 pm

Great advice on diversification across different markets.

#4 Jimmy on 10.14.13 at 8:50 pm

First to say Happy Thanksgiving!

Calgary culture?
We have lots of Nensheep.

#5 Randy on 10.14.13 at 8:55 pm

How’s that for Security !!

#6 Sideline Sitter on 10.14.13 at 8:57 pm

Garth – I’ve been sitting on a BIG PILE of cash, have recently read “Millionaire Teacher” and am going to be selling my mutual funds in my TFSA to buy ETFs (I’m also going to put the TFSA money, which is maxed, into my RRSP and put the tax return into more ETFs)… but I have one question:

– Do I need a US Trading account to buy US ETFs? Same question for Asia and other jurisdictions.

Li’l help?

#7 Retired Boomer - WI on 10.14.13 at 9:02 pm

Sound Advice. I really like the low cost Index type funds / ETF’s.
Where else can I invest at .10 basis points a year?

Sorry you got the old hose there Jenny, it’s called “the learning curve” and seems most of us have paid some “stupid tax” along the way.

Insurance? Yeah, just got done shopping the annual cars/ home/ umbrella thing. Same coverages, different carrier I get to keep almost $500 a year. Carriers are rated the same financially as well. Figure I just ‘earned’ $500.
Good days wages!

#8 earlybird on 10.14.13 at 9:08 pm

If so many are house rich and retirement poor, when that generation decides to cash out, I would speculate the banks will do well with all the money flowing from real estate to the markets. Invest in the banks, not through them. Calgary has a half a million brand spankin new blue hoola hoop in the sky, how’s that for culture! ; )

#9 Steve on 10.14.13 at 9:11 pm

Does anyone on here have some global equity funds to recommend?

#10 Marie on 10.14.13 at 9:12 pm

I’m still amazed at how many on this blog and others say they are regular readers but still manage to equate the advice of a diversified PORTFOLIO to a single balanced fund. The basic tenet or advice to educate yourself (from various credible sources) and making sure you understand what you’re doing with your hard earned money BEFORE you invest/spend it will not only help avoid costly mistakes but make you MORE MONEY.

#11 Freedom First on 10.14.13 at 9:15 pm

I hope Jenny reads today’s post Garth. Very nice of you to inform her of everything you have been posting on a regular basis, which she obviously missed. I see that a lot on your blog Garth, so I am not surprised about Jenny’s antics. Jenny, consider the last 3 years an extremely cheap lesson. You probably don’t even know how lucky you are to have gotten off so easily with your financial illiteracy Jenny, and you still have 1 wheel left on your bike too. Garth has been very kind to you today in his message. I am not as kind, so: “Time to grow up and learn Jenny”. You, and you alone, are responsible for your finances, so pay attention to what Garth writes. He is a very good financial mentor. Just look at the top of the page here, see the “Top Canadian Personal Finance Blog” award. Garth earned it, so do you feel silly yet Jenny? That is okay young lady…..just learn. We all want you to win. Especially Garth.

#12 advisoroutthere on 10.14.13 at 9:17 pm

6 of one kind and half a dozen of the other.

I get paid trailer fees by fund companies, big deal, i do think that at least I work for them.

Unlike the big banks, they are salespeople.

I also do lots of life and health insurance as well. I think if you were to compare it to real estate agents, financial advisors actually work for their money and they are highly regulated by mfda, osc, fsco. We have compliance to follow and so on and so on.

If you sit down with a client and give them advice and say they have $500,000 to invest, do you charge them $5,000 (1%) to consult with you?

and do you mail them a bill monthly annually?

What is your billing system?

A fee-based advisor should charge nothing for advice and consultations, for an asset allocation plan or a wealth forecast, for opening accounts, setting personal financial strategies or tax minimization. The only charge should be for the actual management of assets – designing, building, monitoring and rebalancing accounts. A 1% annual fee is collected in twelve small monthly amounts from the portfolio. — Garth

#13 Obvious Truth on 10.14.13 at 9:17 pm

I keep wondering why my insurance guy won’t stop pedalling this investment that returns 7% mostly in real estate but you have to turn it into a policy and borrow against it.

Told him I wouldn’t touch it till CRA ruled on it. Don’t care that they have currently no real ruling. We’ll see when people try to collect. Told him if my layer read the prospectus and contract he would think it was criminal.

Also I only buy investments that are liquid. More than 1milliom shares a day eft, security or bond fund.

I’ve heard only 2% of people ever collect on a life insurance policy. Told my salesman that I will only buy term until I don’t need insurance anymore.

That doesn’t dissuade him though. Guess the fat fees keep him trying.

Don’t let sales people determine how you invest Jenny. No matter how hard they try. Bottom line is that you have to learn about your own money and how to make it work for you and not Rick and his oligopoly club. His business only works if everyone that passes go pays him 200. I say keep it for yourself and buy a railroad. CP looks good. Garth can give you a good transports eft. Looks like they want to make new highs.

#14 Bob on 10.14.13 at 9:20 pm

“By the way, try to make any fee you ever pay deductible from your taxable income. Advisor fees are.” – Garth

Garth, how much of these advisor fees are tax deductable? Let’s use the $1 million example. Your return is 7%. The advisor fees would be $10,000, right? So how much of this $10,000 would be deductable?

In a non-registered account, all of it. But for portfolios over $1 million, fees should be less than 1%. — Garth

#15 Alcoholic on 10.14.13 at 9:23 pm

not pushing reit’s anymore? should i dump mine and cut my losses?

They are but one part of a balanced portfolio, and pay you to own them, often as taxless return of capital. You sound like you understand little about investing. Get help. — Garth

#16 Kothar on 10.14.13 at 9:29 pm

Why are MERS and advisor fees subjected to sales tax in Canada? In a TFSA or RRSP they should be sheltered from any kind of tax! Also in TFSA if we have US dividends paid why do we Canadians have to pay a withholding tax to the IRS? Do they not recognize the tax free part of this account and if not why doesn’t F do something about it.

There is no GST on financial fees. When HST is collected, different story. — Garth

#17 not 1st on 10.14.13 at 9:42 pm

“This country accounts for about 4% of global markets.”

Boy did you gloss over this one.

Jenn, the truth is that the CDN market has only moved a few % in the past few years is because we did not inject monetary stimulus into our economy. All those other countries did and it found its way to the stock markets. Thats it. None of those countries are doing better than Canada and Garth is disingenuous in not pointing that out.

No stimulus? You jest. — Garth

#18 advisoroutthere on 10.14.13 at 9:43 pm

So then is this done under iiroq or mfda platform?

I am considering going the route you currently do.

Which regulators are you under

IIROC. — Garth

#19 Obvious Truth on 10.14.13 at 9:48 pm


You’ll get no sympathy here. Are you really trying to justify your fees by comparing them to an advisor?Gluskin Scheff charges less than you and they are super educated smart guys.

Tell us the percentage of those that collect on a life policy and your commission for locking people into mutual fund hell.

All insurance products suck except for term life at times when needed. Like when it’s cheaper than mortgage insurance.

Told my sales guy that I wouldn’t give him a measly 200 a month because I’d rather give it to charity and get the deduction. It’s a better investment for me, I help someone and he gets nothing.

Stick to the sales script. You’re part of the oligopoly. No 200 for you. Community Chest took it away.

#20 [email protected] on 10.14.13 at 9:50 pm

Regarding the 1% annual fee could there be any additional fees that the client is responsible for and to consider? ie. ETF MERs, other account fees, trading fees?

No trade fees, set-up fees or admin fees. Most ETFs have small embedded costs. — Garth

#21 Cyclist on 10.14.13 at 10:03 pm


#22 Walter Safety on 10.14.13 at 10:03 pm

I guess insurance sales people know more about people than Smoking Man. $60,000 payday.

#23 LadyInWaiting on 10.14.13 at 10:11 pm

I have seen several posts regarding fee-based advisers, but not much advice about how to find one. Also, it is not clear that those of us with less than $500K to invest (or even < $100K) would benefit. In which case, there is no possibility for wealth accumulation. This is the group you fear for most. Mr. Turner, on one hand you excoriate many for their lack of saving and planning, but the advice offered (specifically investment) on this site is geared toward the "haves".

Anyone with $150,000 or so to invest should investigate a fee-based advisor. — Garth

#24 NoName on 10.14.13 at 10:20 pm


Interesting read “How the .0001% Made its Money”

#25 Ralph Cramdown on 10.14.13 at 10:24 pm

Not all mutual funds have high fees (though most do). Vanguard’s and TD’s e series are notably low.

Not all ETFs have low fees, though most are lower than funds’. ETFs are the flavour of the decade so far, so everybody’s starting up 10 or 20 and hoping to gather enough assets. And if you’re looking at US, foreign or global funds, you have to decide whether to go with a (currency) hedged fund or one that isn’t. Decisions, decisions, decisions.

One thing that’s true even though all the financial professionals say it: Always read the prospectus. (They say this to cover their assets. They don’t really want you to). Reading your first one or two will be painful, but after that you will probably figure out what is boilerplate (and can be quickly skimmed) and what isn’t and needs to be examined closely.

#26 [email protected] on 10.14.13 at 10:25 pm

Are fpsc.ca, iafp.ca searches for fee-based advisers recommended?

#27 frank on 10.14.13 at 10:26 pm

Should one invest 100K or pay down their mortgage 100K?

#28 Big Sexy on 10.14.13 at 10:36 pm


Don’t do it! TFSA= tax free, and RRSP = tax-deferred.

Keep that TFSA full, then fill your RRSP, then whatever money is left over, put in non-reg account. Lather, rinse, repeat every year.

#29 T.O. Bubble Boy on 10.14.13 at 10:48 pm

“I’ve put money into this thing for the past three years, and I might as well have hidden it in the stupid blender my mother-in-law gave me. I read this blog and you’ve been pushing a balanced portfolio non-stop. So I’ve got the Scotia Cdn balanced fund, and nothing’s happening. Why Garth?”

I agree with some of the other comments here — how can someone who frequents this blog (and emailed Garth) NOT at the very least be in ETFs by now!?!?!?

Come on people! It isn’t that hard. Just open a trading account and read some basic research from Garth and others (even the Couch Potato, as long as you know how to re-balance).

The U.S. indexes are up over 20% this year (more if you are un-hedged to the $CDN), and you just missed it!

VTI is up almost 22% YTD (plus 4%-5% currency gains).
VXUS up almost 9% YTD (plus currency gains).
Even XIU is up about 4%, plus dividends.

#30 Victor V on 10.14.13 at 10:50 pm


Pay down the mortgage, then remove the 100K as a HELOC (you’ll get a good rate given it’s secured) and THEN invest it.

Now, not only can you make a return on your investment, but you also get to deduct the HELOC interest against your taxable income.

#31 T.O. Bubble Boy on 10.14.13 at 10:52 pm

@ #9 Steve on 10.14.13 at 9:11 pm
Does anyone on here have some global equity funds to recommend?

Stay away from funds, unless they are low-cost ones like TD E-Series. Instead, look at diversified ETFs like CIE (TSX) or VXUS. In general, Vanguard ETFs tend to have very low fees, so maybe just focus on those.

#32 Shawn on 10.14.13 at 10:52 pm

NO Sales Tax on Financial Fees

Regarding 16 Kothar, I have a related question.

Why are MERS and advisor fees NOT subjected to sales tax in Canada?

I mean why is it okay for sales tax to apply to cloths and diapers and cars but not to financial fees?

It’s despicable how most people with money fight tooth and nail against paying their fair share of taxes.

It makes absolutely no sense to charge sales tax on haircuts and not on financial advice.

It’s the first thing I will change when I am elected Prime Minister. Second thing I will do is raise corporate tax rates and tax on high incomes. Both will hurt me but it’s fair. REITs will pay income tax too.

Personal investment capital is already after-tax. The gains are then taxed. Tax all the fees as well? Glad you are not in charge of anything. — Garth

#33 Jon B on 10.14.13 at 10:55 pm

All this talk about funds, fees, returns and yields. Let’s get real. If you want lots of money: EARN IT. I know, it’s not nearly as easy as day trading or hoping forces outside of your control will produce a big return for your gamble on a few ETF’s or Scotia bank mutual funds. The heavily indebted gen Y has been told easy money is only a few mouse clicks away. Hard work is an old man’s game. Getting a good paying job or running a successful company never enters the picture. That’s why this generation is largely screwed. Time to change the mentality. Garth you give this “7% return balance portfolio” far too much ink.

Investing is no substitute for working. It just enhances it. — Garth

#34 Smoking Man on 10.14.13 at 11:09 pm

Robert Shiller said it well accepting his Nobel Peace prize, In equality needs to be fixed, and it can.

It won’t be.

Record amounts of Canadians getting turkey from food banks.

Self employment, only way, money from wages, so old fashioned

#35 Future Expatriate on 10.14.13 at 11:14 pm

Hey, if Jen grinds up her cash in the blender, will it be liquid?

#36 geogar on 10.14.13 at 11:16 pm

This in a province where it seems . 1) cyclical potash is the norm. 2) Immigrants are filling a good majority of service sector jobs. 3) A fairly big number of folks work across the border to the left ( not political) .

#37 live within your means on 10.14.13 at 11:17 pm

A highlight of our day was a Skype chat with friends in Bordeaux with whom we spent 4 days this summer. I’ve been corresponding w/her weekly for a few years.

Hubby & I are so fed up giving money to certain family members on both sides of our family. No more.

#38 Victor V on 10.14.13 at 11:18 pm

More than half the 118 residential condos in the 65-storey luxe project at Bay and Adelaide Sts. have yet to sell. And buyers of more than 200 of its 261 condo-hotel suites haven’t finalized their deals. Thirty-eight have launched a more than $40 million lawsuit claiming they were victims of “an investment scheme and conspiracy.”

Last week a Toronto realtor tried to auction off his 950-square foot hotel suite after seeing about a dozen of the units languish on the Multiple Listing Service. He was offered $550,000 — a third of the $1.6 million Talon is now asking for a similar suite.

But Trump Toronto is doing just fine, insists Labatte, compared to all the other luxury hotels that have opened here the last few years, among them the Four Seasons in Yorkville and the downtown Shangri-La and Ritz-Carlton.


Nothing to see here. Move along, everything is “just fine”.

#39 real estate savvy on 10.14.13 at 11:24 pm

I just love it when I see that Canadians on average invest 70% of their savings in Canadian investments. And the reason I love it is the very low returns you indicate they have achieved vs the US and other country’s equities this year.

Canadians are totally obsessed with Canada, it is “the envy of the world” said the Globe and Mail last year. And Canadians loved that – and they believed that completely. We are special. A pity they didn’t ask the world.

The Canadian RE collapse is on its way. The Economist in a survey of about 18 countries reported recently that Canadian houses are overvalued by 74% (on rents) and 30% (on income).


Of course Canadians don’t believe TE (which doesn’t have a dog in the race), they believe their realtors (who do). Why? The latter tell them what they want to hear and make them feel special.

And that is another source for my amusement coming fast down the pike.

Why am I so amused? Mainly because Canadians loved the American recession. They hyped it, exaggerated it, delighted in it. And this nonsense with the debt ceiling, which is currently going on in the US, Canadians are insisting that the US will collapse as an economic power because it will default on its external debt. Despite what you tell them to the contrary.

They want it that bad. The saliva is dripping down their chins as they contemplate it.

I have front row seats for the RE spectacle, popcorn, drinks and all.

#40 Sideline Sitter on 10.14.13 at 11:24 pm

#32 said “If you want lots of money: EARN IT.”

I have… but, now what do I do with the money (well into six figures) that’s languishing in the bank?

shouldn’t my hard-earned money now work for me??!

#41 D-Dawg on 10.14.13 at 11:39 pm

Fee base advisors. Great advice but hard to put into practice if you only have a modest six figure portfolio. Not too many of the FBA want to deal with joe six pack.

#42 Shawn on 10.14.13 at 11:41 pm


Personal investment capital is already after-tax. The gains are then taxed. Tax the fees as well? Glad you are not in charge of anything. — Garth

Okay, right. I forgot that that haircuts, diapers, cloths cars, gasoline and new houses are subject to sales tax because those things come out of pre-tax income because they are all tax deductible? Have I got it right now?

Don’t make me angry or I will also, when I become Prime Minister, start to phase out all the tax-assisted savings plans that coddle us rich folks like (dare I say it?) TFSA, also RRSP, Pensions contributions and RESPs.

It’s the lower middle class that get stuck with HUGE taxes because the rich and the poor get deductions. The rich can use some of these deductions clipped back.

You’d almost think the rich were making the rules.

You’ve lost it. — Garth

#43 Inglorious Investor on 10.14.13 at 11:42 pm

Mr. Turner, I’m sure you serve your clients very well. And fee-based advisors who work under the bank-broker model and who charge a nominal 1% fee of invested assets per annum are a much better option than the financial advisors who function within the truly Byzantine model of the mutual fund industry.

But let’s clear up a few things about fee based advisors based on my own experience.

While fee-based advisors charge only 1%, there can be other costs. For example, sometimes, even fee-based advisors will invest in mutual funds, not just ETFs. These mutual funds carry separate MERs in addition to the advisor’s fee.

During the time that I was with a fee based advisor, I was indeed charged HST on the management fee.

All in all, my annualized costs to be with the advisor was over 1.9%, not 1%.

As you say, only fees attached to non-registered investments are tax deductible.

Fees are charged independent of portfolio performance. Though during the 2008/2009 turmoil, some managers did temporarily waive their fees as clients jumped in droves.

Most advisors––fee-based or not––are not actual fiduciaries. This means they do not legally have to act for the sole benefit of their clients. This leaves the door open for them to benefit financially at their clients’ cost. The mutual fund industry and the bank-brokers are dead-set against making advisors fiduciaries because of the inherent conflict of interest that exists between the clients’ best interests and the advisor’s benefit. Why? Because if you remove the conflict of interest problem, this would shut the door on other sources of income, as spelled out in the client agreement. Read it carefully!

While your advisor is likely legally only an advisor, and the performance of your portfolio is legally your responsibility, you, as the client, do not have direct access to your portfolio/accounts. All transactions must be done through the advisor. So, they take control of your money, but shoulder none of the actual legal responsibility for your portfolio’s performance. That’s not to say they don’t care, but if push comes to shove, it’s on you, not them.

Advisors typically don’t trade or time the markets. They set up a well-diversified portfolio with a range of products and let it run until it needs to be rebalanced. This means your portfolio will generally shadow the index. Rather than active management, you will ride the ups and downs of the markets. In order to keep costs down, they may opt for more passively-managed funds, which again leave you at the mercy of market volatility. Their strategy is to ride out the volatility in the hopes that, in the long run, they can achieve the desired average returns. The soundness of this approach is debatable, with both pros and cons. But mostly it’s because this approach costs less and most portfolio managers can’t time the markets anyway, but then no one can consistently, so I would not judge them too harshly on this point.

That said, most ‘investors’ would do better with a fee-based advisor than on their own because most people just don’t have a clue. And, as I said above, fee-based advisors are far superior to the sales hacks in the mutual fund business. Just know all the facts before you put your money and your future financial health into another person’s hands.

Sounds like you chose your advisor poorly. — Garth

#44 MiniMe on 10.14.13 at 11:42 pm

Come on people! It isn’t that hard. Just open a trading account and read some basic research from Garth and others (even the Couch Potato, as long as you know how to re-balance).The U.S. indexes are up over 20% this year (more if you are un-hedged to the $CDN), and you just missed it!VTI is up almost 22% YTD (plus 4%-5% currency gains).VXUS up almost 9% YTD (plus currency gains).Even XIU is up about 4%, plus dividends.

On what economic grounds are these 20% up based?

#45 Inglorious Investor on 10.14.13 at 11:53 pm

“Sounds like you chose your advisor poorly. — Garth”

Let’s just say he wasn’t right for me.

#46 Inglorious Investor on 10.15.13 at 12:03 am

“Investing is no substitute for working. It just enhances it. — Garth”

True words of wisdom, Sir.

#47 omg on 10.15.13 at 12:16 am

#6 Sideline Sitter – “Do I need a US Trading account to buy US ETFs? Same question for Asia and other jurisdictions.”

Slow down Sideline Sitter.

Sounds like you’re pretty interested in doing your own investing and some people think this is the only way to go. But you really need to educate yourself if you are going to do it yourself. Based on your questions, sounds like you need to do a lot more homework before you cash out your mutual funds. Maybe you could use a full service broker to get you into some EFTs while you learn a bit more about investing for yourself.

1) do lots of reading about investing, not trading (and read real books about investing, not blogs – there are a lot of crazies out there that have blogs. Nothing wrong with this blog but many of the comments are crazy). A couple of good books to start with “Stocks for the Long Run” and “Random Walk Down Wall Street”. Also check out some really basic books, can’t recommend any, but likely lots at the library. Read about some of the greatest investors of the last few decades – Buffett, Templeton, Ichan, Graham, Bogle.

2) the online discount brokerage accounts offered by Canadian banks allow you to invest in Canadian and US equities – so for example if you open an RBC Direct investing account you can buy ETFs offered on the US exchanges. RBC, BNS and BMO (and some others) offer segregated accounts which allow you keep US dollars in the account when you sell a US equity, so you do not incur currency exchange fees. Online brokers usually offer practise accounts for free.

3) As for buying overseas ETFs – what you really mean is buying region specific ETFs that are traded on US or Canadian markets (for example check out iShare’s or Vanguard’s family of funds – they have several region specific ETFs. Vanguards fees are about the lowest going. iShares are not too much higher.)

#48 Saskatoon-Living on 10.15.13 at 12:27 am

Yawn. Yep, 50+ be conservative and stick with dividends and ETF’s. If you’re younger, pick individual stocks. More risk = greater reward.

#49 Nosty in Knickersville on 10.15.13 at 12:44 am

#44 Inglorious Investor on 10.14.13 at 12:05 am — “That’s why I said in a previous post, “pray for free energy.” Energy is the basis for EVERYTHING. When energy is cheap, life is good and easy. When energy is scarce, life is hard and short. ”

Hi I.I., supposedly there are quite a few sources of free, or low cost energy around. Possibly that is why hydro and gas bills are going through the roof, in Europe and here. Article.

#97 Smoking Man on 10.14.13 at 3:53 pm — “One bad link by a user and Gratho goes to the slammer. Harpo Democracy” — Yep, too true. Life is short and sweet, so Here today, gone tomorrow — that’s me!

Don’t fuggedaboud this, ‘tho and combine it with everything else that’s happening, such as this. Remember Hungary told the IMF to get lost? Plus Dress Rehearsal. Salud!

#50 real estate savvy on 10.15.13 at 12:52 am

#44 disagrees with Garth that he chose his advisor poorly.

He prefers “Let’s just say he wasn’t right for me”. This sounds like another boy who got plenty of trophies from mom for coming 17th.

If something goes wrong – not me, I didn’t choose poorly. Even thought the results turned out badly, “Let’s just” let me off the hook.

Part of the reason why North America is ailing – far too many under 40s feel so entitled and feel zero responsibility for anything.

When these under 40s speak, it is “Me and so and so went to…”. Apart from that being poor grammar – Me doesn’t went to anywhere, it is poor form putting yourself first. It is so and so and I went to…. But it is amazing how few parents corrected their children. They just let them wallow in their self indulgence.

The above is the main reason for Canadians, when things go wrong, to stretch their waggling fingers out pointing in all directions except moi. And most preferably the fingers face south.

The prognosis is not good.

#51 Soylent Green is People on 10.15.13 at 1:34 am

I think I have whiplash between following Garth’s blog and Chris Hedges… i.e.

The final days of empire give ample employment and power to the feckless, the insane and the idiotic. These politicians and court propagandists, hired to be the public faces on the sinking ship, mask the real work of the crew, which is systematically robbing the passengers as the vessel goes down.

The mandarins of power stand in the wheelhouse barking ridiculous orders and seeing how fast they can gun the engines. They fight like children over the ship’s wheel as the vessel heads full speed into a giant ice field. They wander the decks giving pompous speeches. They shout that the SS America is the greatest ship ever built. They insist that it has the most advanced technology and embodies the highest virtues.

And then, with abrupt and unexpected fury, down we will go into the frigid waters.

The last days of empire are carnivals of folly. We are in the midst of our own, plunging forward as our leaders court willful economic and environmental self-destruction. Sumer and Rome went down like this. So did the Ottoman and Austro-Hungarian empires.

If we had any idea what was really happening to us we would have turned in fury against Barack Obama, whose signature legacy will be utter capitulation to the demands of Wall Street, the fossil fuel industry, the military-industrial complex and the security and surveillance state.



#52 valley renter chick on 10.15.13 at 1:52 am

what is the best way, in your opinion, to find a good fee-based advisor?

#53 Buy? Curious? on 10.15.13 at 1:52 am

Poor Jenny. If she bought a house back in 2008 when this blog started, she would have earned 26% on her money (reported by Garth a few days ago). I’ve got all my eggs in two baskets, my house and one stock (though on Thursday I’m buying some GE stock). How will I fare in 2020? Pretty good. Not the billionaire a seasoned financial analyst would suggest I become but I’m not going to be spending my vacation time over the next 35 years camping either.


#54 Tipler on 10.15.13 at 2:09 am

Garth did you take that picture from outside one of the bike lanes in Vancouver? It’s a classic

#55 Tony on 10.15.13 at 2:45 am

It could have been good advice but the problem is the future era will be much worst than the 1929 to 1954 era or the 1968 to 1982 era in terms of return. Believing any run on the U.S. dollar will only be short term i’d be looking at long term corporate Canadian bonds such as Loblaw Companies Ltd. 6.050 06/09/2034
Loblaw Companies Ltd. 5.900 01/18/2036

with the assurance Canadian interest rates will only go lower in the future.

#56 Bob on 10.15.13 at 3:50 am

Nobel prize winner warns of ‘bubbly’ home prices in the world caused by the feds policies.


#57 Dean Mason on 10.15.13 at 4:37 am

To Shawn #1

When you are Prime Minister you will tax 100% everything so there will be no money left to tax and the rich, middle class, poor will not exist.

We will all starve because why would any person work, save and invest in anything because the answer is tax, tax, tax.

The western world has the richest poor people in the world. Poverty is a business today.

#58 Dean Mason on 10.15.13 at 4:40 am

Correction, it is to #41 Shawn if the number does not change.

I correct my mistakes unlike you.

#59 Frustrated Kiwi on 10.15.13 at 5:10 am

Just updated our investment spreadsheet with the most recent quarter. Average of 7.2% return since 1994 (with some rather wild swings along the way :-) ). I’m sure others have done better but it does rather validate Garth’s 7% number that seems to meet with a lot of skepticism around here. Sorry if it seems like boasting – is not intended as such, simply adding a data point to the mix.

#60 Mr. BigStuff on 10.15.13 at 6:04 am

Is there a filtered list of fee-based advisors you speak of, for Southern Ontario? Google sucks in this regard

#61 young & foolish on 10.15.13 at 7:14 am

So, my advisor recommends I buy some securities … no trading fees? ETFs, no fees? Bonds, again, no fees?

#62 Stephen on 10.15.13 at 7:31 am

I’ve been a DIY investor for a couple of years, and I totally understand why Garth consistently recommends getting a fee-based advisor. Too many people drastically underestimate the time and effort that it takes to become a competent investor. But the biggest obstacle is that most people simply don’t have the aptitude and/or interest to do it themselves.
However, it is a fact that there are not enough fee-based advisors in Canada. There are probably fewer than 200 in total, and they are concentrated in Ontario, with a few in Montreal and Vancouver. Most people in Atlantic Canada or the Prairie provinces are stuck with the prospect of finding and dealing with someone via telephone and internet. I’m a big fan and a big user of technology. But still, it’s definitely easier to get to know and trust someone a little easier when meeting them in person, instead of via FaceTime or Skype. I don’t know what the solution is, but somehow we have to move the investment industry more quickly towards a fee-based model. Otherwise, people in my neck of the woods are stuck with bank salespeople or Investors Group. And it’s costing us big bucks.

#63 TurnerNation on 10.15.13 at 7:32 am

And Scotia took over ING – that last bastion of banking freedom (CIBC owns Presidents Choice bank). Leaving us with the Big 6. No change to the order.

You know I was going to write a specific and detailed rebuttal to this weekend point:

“Be thankful for freedom and mobility. Stuff we take for granted. ATMs that work, banks on every corner, deposit and investor insurance, free heart surgery, bridges that stay up (except in Quebec), regulated markets (except unregulated realtors). An open country, since that takes courage and confidence. That I can write this blog and still be employable. And unincarcerated”

Showing how we here in Kanada are living in one of the most-mind-controlled and corrupted countries, politically and corporately. Didn’t want to scare the dogs. Maybe I will.

(Eat your heart out China, with your Corporate Socialism. Won’t any longer hear a peep out of H re. “China’s human rights record”. Bet on it.)

#64 advisoroutthere on 10.15.13 at 7:44 am


mr obvious truth,

it’s obvious to me you are a hack do it yourself investor. Good for you, I can see by your comments if you were a pro you wouldn’t be doling out your free advice regarding suitable investments for Jennie. You don’t know her risk tolerance, and if she were to follow your “advice” and buy cp and transport etf’s she could sue you if it didn’t work out for her.

Garth’s business model is not a one size fit’s all. If you were to put all the piece’s together, the average canadian doesn’t have enough investable assets for a guy like Garth to manage their investments for them. If Garth’s fulltime business was giving out advice for free and managing a 75,000 portfolio. Garth would realize he won’t make enough money to realize a profit in this business.

He would then go back to a different business/ business model.

Garth does make sense in his case for a fee based advisor.

However for most people who have 25,000 to 75,000 you would put him out of business.

#65 maxx on 10.15.13 at 7:50 am

#1 Bob on 10.14.13 at 8:43 pm

Not surprised with this article….however, mitigating realtor fees and land transfer tax will never improve affordability as these are but a drop in the bucket of the cost of buying a home. Lowering the bar to even more debt is simply perpetuating the problem. Dumb.

Slowly raising rates is the ONLY way for the real economy to regain traction.

#66 Stoopid Idiot on 10.15.13 at 8:05 am



#67 Ralph Cramdown on 10.15.13 at 8:54 am

#64 maxx — “Slowly raising rates is the ONLY way for the real economy to regain traction.”

Have you (or anyone else) got some sort of theory to explain this? I don’t have any formal economics education, but I’ve read a lot, and none of it has said that investment is higher or growth faster if rates are raised. My understanding is that corporations strive for a certain return on equity, that higher interest rates on borrowed money would depress that, and so the hurdle rate for return on invested capital to reach a target return on equity goes up, making them less likely to invest in a given project (i.e. spend money, grow output and the economy).

Likewise, higher rates would shift marginal individuals’ desires from stocks to bonds, lowering their desire for IPO stock offerings, making it more difficult for companies to raise equity. It would also shift marginal individuals’ preferences from spending to saving, or to paying down debt.

And all this would be GOOD for the economy?

#68 In the cold from Toronto on 10.15.13 at 8:55 am

#6 Sideline Sitter: you can buy US based ETFs using most (if not all) online investment tools provided by Canadian banks. You will be charged a currency exchange fee (3%) for buying US funds in the process -but you’d incurr this charge anytime you buy something from the US anyway.

BMO allows you to have USD in your RRSP account, so you don’t have to worry about paying a second currency exchange fee when you sell the ETF.

ishares (on its US website) lists many country specific ETFs. make sure you’re looking at the US site ( us.ishares.com, and not the Canadian one (ca.ishares.com).

Good luck!

#69 Canadian Watchdog on 10.15.13 at 9:13 am

Goooo Caaarney! Make Canada proud you Goldmanite bastard.

London leads the way as UK house prices hit all-time high of £247,000

The Office for National Statistics said that prices in London have soared 8.7 per cent in the past year, with the East Midlands seeing the second highest increase, 3.8 per cent. Only Scotland has seen a fall, 0.7 per cent. On average, prices in August were 3.8 per cent higher than the previous year at £247,000 – topping the previous all-time high recorded in January 2008, just after the credit crisis started to erupt. Prices are averaging £256,000 in England, £185,000 in Scotland, £164,000 in Wales and £130,000 in Northern Ireland. Prices for "pre owned dwellings" average £248,000 against £223,000 for new builds.The milestone will fuel fears about a new housing bubble, given the spike in demand for a home fuelled by the Government's new Help to Buy cheap credit scheme.

You see folks, they didn't hire Carney because of his macroprudential and forward guidance polcies, rather because he can blow asset bubbles better then anybody else in the world! Those London boys must have said: "My goodness young chap Carney, how in the world did you manage to get Canadians so broke and make them think they're so rich!. We want this too!."

Britain can gain from China’s empire builders

Simpler visa rules, and Chinese funding for landmark building projects, are easy to like. Overall Chinese tourist spending, according to Barclays, grew an annual 22 percent in the second quarter of 2013. Meanwhile, property developers are putting their ambition, and their access to credit, behind redevelopment of Royal Albert Dock and the Crystal Palace in London and the Manchester Airport complex. It is hard to see how these initiatives pose threats to sovereignty, or security. They will help Britain fund its trade and budget deficits, however, and may lead to more useful investments, say in high-speed rail.

In fear of social unrest from household debt collaping, the Queen has now adopted China's if you build it, they will come policy in order to save her sovereigns. And that includes Canada.

Will it work? Time will tell.

#70 live within your means on 10.15.13 at 9:14 am

OT – hubby worked 2-1/2 days this weekend at home on a pilot project. He & a contract guy have to provide 88 Windows 8 tablets to school kids who will take them home at night. Oodles of concerns – how to stop the kids visiting porn sites & doing so many things to hack the system. A lot of kids are hackers. Hubby had 5 tablets on the table at a time & he and the contract guy were on the phone constantly sharing info.

Hubby can retire in a couple of years, but does not want to sit at home. He may open his own co. He’s a very smart tech dude.

#71 T.O. Bubble Boy on 10.15.13 at 9:16 am

@ #43 MiniMe on 10.14.13 at 11:42 pm
Come on people! It isn’t that hard. Just open a trading account and read some basic research from Garth and others (even the Couch Potato, as long as you know how to re-balance).The U.S. indexes are up over 20% this year (more if you are un-hedged to the $CDN), and you just missed it!VTI is up almost 22% YTD (plus 4%-5% currency gains).VXUS up almost 9% YTD (plus currency gains).Even XIU is up about 4%, plus dividends.
On what economic grounds are these 20% up based?

The comment was not meant as a statement on the economy… if this person was invested in Canadian equities anyway (via the poorly performing Scotia Fund mentioned in the post), why not be in a lower cost investment with the same holdings???

I completely agree that the 20%-25% gain in U.S. markets over the past year doesn’t align with single-digit earnings gains (mostly from cost cutting vs. growth), which is why everyone should re-balance after a run like this year has seen.

#72 T.O. Bubble Boy on 10.15.13 at 9:20 am

@ #59 Mr. BigStuff on 10.15.13 at 6:04 am
Is there a filtered list of fee-based advisors you speak of, for Southern Ontario? Google sucks in this regard

Check out MoneySense – they just published a list of Fee-only Planners/Advisors:


(or, just ask your blog host Garth)

#73 T.O. Bubble Boy on 10.15.13 at 9:22 am

@ #51 valley renter chick on 10.15.13 at 1:52 am
what is the best way, in your opinion, to find a good fee-based advisor?
same as #59 Mr. BigStuff… try Garth or moneysense.ca

#74 Buy? Curious? on 10.15.13 at 9:24 am

Hey Garth! In Toronto, why is it that condo prices are taking a beating in value yet SFH’s are continuing to appreciate? Here, let me tell you so that you don’t wear out calculator or get a paper cut.

It’s because condos are the new Slums. The majority of condo owners are speculators or rookie owners. As they grow out of them or need steady income, they’ll be desparate to unload them or just happy to rent them out. As the quality of renter goes down, *ahem* so does the value. After a few years, people will start to do anything to get a house in the city, or alternatively, on a commuter line.

It’s just a theory, but it’s why I put my money where my mouth is.

Who wants to bet that SFH in Toronto will appreciate another 30% in 7 years?


The supply of condos is almost infinite. The ability to build SFHs in an urban area is constrained. — Garth

#75 T.O. Bubble Boy on 10.15.13 at 9:25 am

@ #27 frank on 10.14.13 at 10:26 pm
Should one invest 100K or pay down their mortgage 100K?

Depends on your situation… for most people, they are already over-invested in Real Estate, so locking up even more net worth in that single asset just concentrates the risk even more. However, if you happen to be one of the few that has far more in investments vs. a house, maybe paying off the mortgage could make sense.

Look up Garth’s “Rule of 90” for guidance on allocation to RE.

#76 NoName on 10.15.13 at 9:39 am


I have to disagree with you “However for most people who have 25,000 to 75,000 you would put him out of business.”
I think that automatic rebalancing and honest advisor is best for young families with small portfolio. Advisor can charge yearly small flat fee to set portfolio alocation that suits customers need and direct them I right direction how to grow portfolio and networth. I can see problem my theory and older people with their “micro-networth” where time is not on their side. If Muhammad Yunus, figured it or microcredit I can’t see why this micro-networth wouldn’t work.

#77 recharts -Some (re)fresh(ing) numbers on 10.15.13 at 9:47 am

TO Condo sales MTD: 350.
1/2 month gone.
If we exclude the Thanks Giving weekend this comes to ~30/day->max 850/Oct
That would mean -25% YoY since the Oct 2012 sales were: 1141 (adjusted)
The Oct 2012 sales were down -14% YoY
Is the Toronto Condo market crashing??
I am really curious if the market will rebound for the second half of this month.

#78 Holy Crap Wheres The Tylenol on 10.15.13 at 9:54 am

Was watching CNN yesterday and they went over this again and again. China states the U.S. fiscal failure warrants a de-Americanized world. Sure and we replace it with what? China, Russia, oh what the hell why not Vanuatu.


#79 robert james on 10.15.13 at 10:33 am

Some aging parents in China are not happy with their kids…..http://www.castanet.net/news/World/100522/Aging-parents-in-China-sue-for-careh

#80 Squatter on 10.15.13 at 10:33 am

China states the U.S. fiscal failure warrants a de-Americanized world.
Sure, let’s start playing the Chinese national anthem only at all hockey, baseball and football games ;-)

#81 Blacksheep on 10.15.13 at 10:37 am

“But never pay more than 1% (a year) of your portfolio.”
“A 1% annual fee is collected in twelve small monthly amounts from the portfolio. — Garth”
Subtle Garth.

That’s the way most fee-based advisors work, sparing clients an annual bill or the need to write cheques. — Garth

#82 sciencemonkey on 10.15.13 at 10:48 am

The question is, can you create a profitable business that serves as a 1% fee-based advisor to the great unwashed with only five-figures to invest? If someone has $20,000 to invest, is it hard to set up a balanced portfolio with a yearly rebalance for a fee of $200? Would said unwashed hordes be horrified by the thought of paying for help, and be deaf to the fact that they are currently already paying through high mutual fund MERs?

Anyway, I want to re-ask a question I posed a few days ago. My company does 5% RRSP matching (10% total). I will have another 8% added automatically so that I can be disciplined about my savings. It’s with a mutual fund guy who sells front-load funds, but does not charge any front-load. For those who desire, at the end of the year all funds are sold and the money is transferred to a self-directed RRSP. In this case, is it better to buy the mutual funds, or a basic interest-paying investment?

#83 Obvious Truth on 10.15.13 at 10:49 am

It’s telling to me that the majority of your post is about fees and making money for yourself. You’re even trying to help Garth make more.

You obviously missed the monopoly reference. And the learning about your money part.

It’s also clear that ETFs and people learning about their money as I suggested doesn’t sit well with you.

Have you checked out the scotia balanced fund? What do you think of the risks in the fund? Has anything in there become illiquid in the past?

Investing is always about risk management. High fees are a part of managing risk. A variety of ETFs is a great way to manage risk reward. It’s also a clearer way to know what you own and have liquidity. Illiquidity is another risk. This is what the blog is about. An exchange of ideas. It’s how people learn.

Good people like Garth teach people how to do this and most would be glad to have him take care of things even when they have learned the ropes.

If you would get your mind off fees you would see that there are fantastic investing opportunities for people of all risk tolerances out there. Balance and diversification can be done without a mutual fund.

Myself,I love it when people like Jenny start asking questions. It tells me that young people are thinking. I love the current generation of youngsters that never watch TV. They ask a lot of questions.

Tell us about the fund. What can we learn from the advisor out there?

#84 Ralph Cramdown on 10.15.13 at 10:51 am

#75 NoName — “I think that automatic rebalancing and honest advisor is best for young families with small portfolio. Advisor can charge yearly small flat fee to set portfolio alocation that suits customers need and direct them I right direction how to grow portfolio and networth. “

It’s best for the family but it’s hard for the advisor to turn a buck. Customer acquisition costs are high (what, you thought Garth was spending a few hours a day on this blog as a labour of love?), customers want you to have a nice office for the one day a year they decide to “visit their money,” they want a human to answer the phone, and they only ever want to speak to their advisor two days a year, at the exact same time: When the market drops 10%, and the last business day before RRSP season ends.

#85 Daisy Mae on 10.15.13 at 11:19 am

#61 Stephen: “However, it is a fact that there are not enough fee-based advisors in Canada…..”


Garth is a fee-based advisor with offices in Ontario. Altho’ I may never meet him in person, he is very accessible via e-mail and phone….he also has weekly ‘conference calls’ to all his clients keeping us informed. And, of course, we have this blog!

Distance should not be a deterrent.

#86 rosie "moving forward" in the knowledge that, "this won't end well" on 10.15.13 at 11:44 am

More HAM please, we’re getting hungry. http://www.nanaimobulletin.com/news/227084891.html

#87 maxx on 10.15.13 at 11:45 am

#66 Ralph Cramdown on 10.15.13 at 8:54 am

Everything you say makes sense… all of it.

However, TPTB have evolved far too much of an economic “all or nothing mentality”. A healthy economy results in a range of attractive investing options, including some for the risk averse.
We have become too comfortable with/addicted to the increase in money velocity, because money is cheap, which does not provide flexibility for the inevitable bad times (too much accumulated debt).
And far too much of the nation’s wealth has migrated out of the hands of the general population. (Large corps. are sitting on mountains of cash, and most of that cash should be in the hands of the general population, being spent).
People and business now turn on a dime like panicked schools of mackerel on the slightest rumour, real or imagined, because there is too much systemic risk.
Small wonder- many are in investments that keep them up at night and the rest believe that markets are as transparent as mud. Can’t really blame them, with money scams hitting the press on a weekly basis.
Slow interest rate increases needn’t cause damage nor fiscal paralysis. It’s a choice.

#88 NoName on 10.15.13 at 11:48 am

@ ralph

You are funny…


#89 Drill Baby Drill on 10.15.13 at 11:53 am

Garth – “Calgary a Cultural Wasteland” I am paraphrasing you but really ? Please visit us and I will take you to some of the finest restaurants and orchestrations you will ever experience. What is that old saying again Oh yes “those who live in glass houses”. Garth your economic sense and understanding is excellent please stick with that.

A sensitive cultural defence from a guy named ‘Drill Baby Drill.’ Love it. — Garth

#90 Joe on 10.15.13 at 12:20 pm

Canadian Balanced Fund at Scotia is junk, worst than GIC. Any real advisor will not indorse it to you. I had one, after 2008 I took 3 years to come close to before 2008 value.I moved to local credit union where they doing just fine :60/40 spilt with over 20% outside Canada Scotia advisors I met were poorly trained and selling products they get commission on. Your best interest is not theirs.

#91 heineken on 10.15.13 at 12:28 pm

thank god you help all these wayward individuals.
keep up the great work garth.
your are only shining light

#92 arit on 10.15.13 at 12:30 pm

Hello Garth,

The nice lady at the bank scheduled a meeting with me this week.
She wants me to buy the “Scotia Market Powered GIC” with all my life savings.


Has anyone used this? What should I beware of?


#93 Holy Crap Wheres the Tylenol on 10.15.13 at 12:47 pm

China telling the USA to clean house?
China is totally at the United States mercy and there is little they can do about it. That 1.7 trillion dollars in Treasury bonds helps keep down the value of their currency making them a cheap source of labor and exporter of cheap goods. If they were to say drop the dollar as the reserve currency, then the value of their currency would go up, leading to more expensive exports for their country and a decrease in their trade surplus.
As far as cleaning house at least the US has a house.
When cleaning of the house… what was that verse??? “Let he among them without sin cast the first stone” The Chinese have their own issues.



#94 Joe on 10.15.13 at 12:52 pm

Arit, go for the meeting and tell her that you want to buy Scotia Bank dividend paying stock instead…then take a picture of her reaction.

#95 Mister Obvious on 10.15.13 at 12:59 pm

#73 Buy? Curious?

“…condos are the new Slums. The majority of condo owners are speculators or rookie owners. As they grow out of them or need steady income, they’ll be desparate to unload them or just happy to rent them out”

I think there’s more than a grain of truth to this. In Vancouver there are a handful of rental only buildings going up within a sea of nearly completed for-sale buildings.

Perhaps somebody sees the writing on the wall? A commercial landlord who owns an entire brand-new building has a strong incentive to keep it maintained, welcoming and tenanted with quality people.

Individual reluctant-landlord flippers have no such concern. They instead need someone to help mitigate their mistake while they make other plans. Definitely not a recipe for quality living.

#96 Old Man on 10.15.13 at 12:59 pm

#91 arit – First of all beware of nice ladies who work for any bank, and suggest you run quickly for the exit looking for another door. Things must be getting tuff for the highschool budgets, as today they held a carwash, as have given up waiting for a heavy rain. I went in as they were raising money for athletic socks based on donations, so gave the kid $5.00; he asked if I wanted any change. I was tempted, but am not a Smoking Man. The team did a great job, and drove out honking my horn at the gals on the street who all waved me a good-bye.

#97 Obvious Truth on 10.15.13 at 1:30 pm

Isn’t new monthly money an automatic source for rebalancing. Doesn’t have to be complicated. If advisors can grow the pot then the 1% gets bigger.

#98 pbrasseur on 10.15.13 at 1:32 pm

First, putting you money only into Canadian assets is like trying to find culture in Calgary. Don’t expect goose bumps. -Garth

Talk about enforcing stereotypes! Garth I believe you should visit Calgary more often, you’ll be surprised!

Even I know better and I’m from Quebec :-)

#99 Canadian Watchdog on 10.15.13 at 1:35 pm

The fact that stocks aren't even correcting on the possibility of default goes to show how much denial is out there. It is times like this when one has to ask if their money is a good or stupid place.

Just as they sang and cheered before the crash of 1929… nothing but blue skies do I see

#100 Tony on 10.15.13 at 1:41 pm

Re: #88 Drill Baby Drill on 10.15.13 at 11:53 am

From what i’ve seen in Calgary it’s some backwoods hillbilly land where everyone cries about the cost of living but is oblivious to anything going on in the real world outside of their province.

#101 not 1st on 10.15.13 at 1:49 pm

#92 Holy Crap Wheres the Tylenol on 10.15.13 at 12:47 pm

Do not worry, there is a plan for all that housing and it will follow the wests model from the late 1800s.

At that time, more than 75% people lived a self sufficient agrarian lifestyle and had no desire to move to cities to get a dirty factory job. So what did the elites do? The crashed the price of commodities and cranked up the inflation so people couldn’t survive anymore and had to go to work. Same model will be applied in China and those places will get filled with indentured wages slaves with big mortgages.

#102 Ralph Cramdown on 10.15.13 at 2:29 pm

#86 maxx

maxx, I still don’t understand. If cash is overly concentrated in the hands of corporations and the wealthy people who disproportionally own them, how does raising interest rates not benefit them (as they are typically lenders) and cost the bottom 80-90%, as they are typically borrowers?

I think you’re putting the cart before the horse. Yes, a healthy economy usually provides decent investment opportunities across the risk spectrum (though I don’t know of any research that says it has to or usually does, just personal experience). But I don’t think we’re in a healthy economy. It’s improving, and it’s far better than it was at peak unemployment, but it still sucks — for small business, the marginally employable, the unemployed and especially job-seeking youth. It sucks for bondholders, too, but shouldn’t we focus on improving things for those on the cusp between contributing to society and not, and assume that things will get better for the bondholders in due course when things improve for employees at the margin?

If it costs the unemployed (through reduced job prospects), costs the indebted, and benefits only some of the upper middle class (those who are risk adverse and without significant debt) and the affluent retired, but disproportionately benefits the rich, all with an overall negative effect on economic growth (for reasons I outlined in my prior post), how is it good economic policy?

#103 Roial1 on 10.15.13 at 2:30 pm

I am sure you have seen this before, but maybe not?

Cashtration (n.): The act of buying a house, which
renders the subject financially impotent for an indefinite period.

Like, forever.

#104 Old Man on 10.15.13 at 2:32 pm

I see some of you were talking about life insurance, and although don’t know much will attempt to address this issue, subject to any changes that I might not be aware of with changes, as life insurance is complex, so will keep it simple, as might save a few lives with my rant. There are three general areas to focus upon; 1) personal; 2) group; and 3) business. I will not discuss 3), as there are few insurance agents even with a C.L.U. degree that can give any advice in this regard, as this is specialized and the same goes for 2). Those that are in business with a company, or a partnership needs expert advice because if a death occurs there might be huge consequences with taxation and financial burden.

Lets go to personal life insurance, as the main reason to have it is to create an immediate estate while young to protect your family unit with earnings and annual investments over time to create your own wealth estate. Now the insurance agent wants to sell you a whole life policy, and perhaps throw on a limited term rider which is costly, and in no way give you the proper coverage that you need. The hidden purpose of selling whole life is for the insurance company to build up capital reserves, and to motivate the agent to sell it.

I recommend without condition 5 year renewable term to buy the most for the least cost, and throw on two options for double indemnity and disability, as every 5 years the cost rises a tiny bit, but so does your earnings. Now will give you the hidden motivation for selling whole life by the agent instead of term, and it is all about commissions, and capital reserves. This will be a ballpark scenario: The agent selling whole life will pocket during the first 3 years about 125% of your premium and 2% thereafter, but with term just say 25% and 2% thereafter – get the picture now?

Group plans are not permanent and what happens if you change the career path, the company goes south, or you get a permanent layoff? There might be an option, whereby the insurance company will convert the face value into a non-par whole life policy for you; such a deal – not. I will bring in another factor at this time that concerns a young family, whereby the wife might be a stay at home mom, or working. The wife must be insured as she is a valuable asset, and the beneficiary designation must be crossed to each other for the sake of the children.

Here is the wild card, as have you checked with a group or private life insurance plan the beneficiary designation? I recommend the death benefit never be to Estate that goes through a Will, as this might have consequences. It is my opinion that a beneficiary be a person or persons, as the proceeds on death are tax free and immune from creditors.

#105 Nemesis on 10.15.13 at 2:43 pm

Diversification? Rebalancing? ETF’s?… How depressively sensible. So predictable. So conventional… and naturally, to play the game at all presupposes that one has already accumulated more than a few Toonies.

NeverYouMind though, SaltyDogz – for there are a veritable plethora of exciting alternative investment strategies/media for the financially challenged which our host has negligently failed to draw to your attention.

And some of them are particularly attractive from a Vancouver BasementDwelling Renter’s perspective…

“I thought about raising pigs, but with traditional farming, the profit margins are very low. With cockroaches, you can invest 20 yuan and get back 150 yuan,or $3.25 for a return of $11!” – Mr. Wang Fuming, JinanRoachKing

[LAT] – Cockroach farms multiplying in China


#106 Wally on 10.15.13 at 2:53 pm

Why don’t more financial advisors offer a fee per hour service, like other business professionals do (lawyers, accountants). ie) no commissions, no percent-of-portfolio just an hourly rate?

And tell you what? — Garth

#107 Canadian Watchdog on 10.15.13 at 2:56 pm

Bloomberg: Shiller Views U.S. Stocks as ‘Highly Priced’ Chart of the Day

For those who have a hard time understanding what 'overpriced' means, who also continually look at that massive dot-com bubble on every chart in order to justify today's P/E ratios as a good buy; here is an adjusted chart showing where we are historically . P/E Ratio adjusted for Greater Fools

And that's adjusted with a manipulated CPI index, meaning in in the real world, P/Es could be in the high 20s or 30s.

Latest headlines:


Shiller actually said stocks are expensive, but not over-valued. — Garth

#108 Drill Baby Drill on 10.15.13 at 3:00 pm

#99 – Tony
Calgary has the highest per capita of persons with advanced education in ALL of Canada. Look it up on StatsCan. Now let’s talk about “Hillbillies” Tony. Do you really want to compare resumes ?

#109 Wally on 10.15.13 at 3:09 pm

>>> And tell you what? — Garth

Tell me what to do with my money, what ETF’s to invest in, or maybe I should pay down my mortgage.

#110 Victor V on 10.15.13 at 3:25 pm


What makes renting really work for us is that we have the discipline to save the savings. We’re experiencing a 33 per cent cash flow saving between owning and renting the same unit. It’s only been two months, but so far there hasn’t been any trouble putting that away. As usual, I recommend automating the savings. You’ll barely feel it, especially if you could afford the potentially higher outlay of the mortgage and other costs associated with ownership.

While I have no idea whether the stock market or Toronto condo market will do better over the next 10 years, the deck certainly has the appearance of being stacked against this pocket of real estate. I realize many renters may not save the savings, and that is a key factor to weigh when making your own decision.

#111 Macrath on 10.15.13 at 3:27 pm

” But the pillage of your money hardly ends there.”

Try to get your hands on some EUROs. The Banking gangsters clip 4% or more. Thinking of retiring in Europe ? not likely !

How much do the big 6 Canadian Banks rake in with Forex fees alone?

#112 Old Man on 10.15.13 at 3:29 pm

#105 Wally – all banks will do it for free with so-called wealth experts, and for laughs did this once with a lady, as needed a laugh one day. I destroyed her in a NY minute, and she was in a state of shock when I left as kicked her under the bus for the fun of it all; nope they know nothing. Mr. Turner is an expert with knowledge and integrity who is the real deal as a fee based guy, so need I say more?

#113 walk on 10.15.13 at 4:18 pm

@ #62 TurnerNation: “And Scotia took over ING – that last bastion of banking freedom (CIBC owns Presidents Choice bank). Leaving us with the Big 6. No change to the order.”

Not correct… LOBLAWS owns PCF. CIBC provides the banking back-end systems for PCF.

Good advise today, Garth. TD e-Series well balanced have been working well for me the last few years until I have a large enough portfolio to switch over to ETFs.

#114 jj.gibbons on 10.15.13 at 4:31 pm

Mutual Fund (and ETF) MERs in Ontario include HST. It’s a $600 million ripoff.

#115 jess on 10.15.13 at 5:15 pm

Canadian Watchdog

Dr hudson says: The UK housing policy ‘Help to Buy’ – a 15% underwriting of loans under £600,000 is a technique to re-inflate land prices. A 15% rise will bail out the bad loans UK banks have made. Meanwhile the tax…

figure 20. shares of net wealth held by bottom 50% and top 10%
page 48 of 106

#116 Smoking Man on 10.15.13 at 5:17 pm

#106 Canadian Watchdog on 10.15.13 at 2:56 pm

Nothing will say in sighting Insident than food stamps drying up.

Obama going all in.

Might not play out like his handlers think.

Be afraid, very afraid, avoid travel in USA where food stamps population is high.

This whole play is by design to destroy the tea party, I’m saying it’s a good plan, but has not been though threw.

Could back fire huge.

#117 gtaguy on 10.15.13 at 5:29 pm

Lot of comments about china…. This seems very interesting.

London becomes the first centre for trading in investments in Chinese yuan.


Will Toronto and others follow?


#118 maxx on 10.15.13 at 5:45 pm

#101 Ralph Cramdown on 10.15.13 at 2:29 pm

Agree completely that we’re nowhere near a healthy economy.
Even with all of the government support business receives (outright cash, tax incentives and employment tax credits), hiring resistance persists and IMHO, that is more of a problem than gentle, incremental rises in rates.
I’m not convinced that continued low rates is having much effect at all in creating jobs.
I too, believe in trickle down, but am not much of a fan of “stand pat and do nothing” decades-long failures.
If people had more to spend, the economy would find traction, slowly at first, but the jobs would follow.
A bit chicken and egg, I know, but the main effects of low rates I see are consumer retrenchment and increasing debt.

#119 Old Man on 10.15.13 at 6:02 pm

#115 Smoking Man as still have women at the Seneca Casino in Niagara who want you to come clean, so on the record are you married or not? They will ask me who is that woman, and will say it is his wife, and tell me nonsense as too many women are on his arm at the casino walking with him. Smoking Man be watchful for Daisy Mae, as she might go on an attack. :)

#120 jess on 10.15.13 at 6:16 pm

We’re joined by the four former intelligence officials who went to Russia last week, and we believe they’re the first Americans to meet with Edward Snowden who have come from the United States, and they came to give him an award for integrity in intelligence. Our guests are Ray McGovern, a former CIA analyst; Thomas Drake, who worked for the NSA; Coleen Rowley, former FBI agent; and Jesselyn Radack,


#121 JSS on 10.15.13 at 6:26 pm


hee hee…

#122 Devore on 10.15.13 at 7:53 pm

#88 Drill Baby Drill

Please visit us and I will take you to some of the finest restaurants and orchestrations you will ever experience.

Culture is not something you can manufacture with a handful of transient restaurants.

U want fries with that? — Garth

#123 Smoking Man on 10.15.13 at 7:54 pm

#118 Old Man on 10.15.13 at 6:02 pm#115

Smoking Man as still have women at the Seneca Casino in Niagara who want you to come clean, so on the record are you married or not? They will ask me who is that woman, and will say it is his wife, and tell me nonsense as too many women are on his arm at the casino walking with him. Smoking Man be watchful for Daisy Mae, as she might go on an attack. :)

Tell them I’m gay. For their own protection, my wife’s a loon when it comes to stuff like that.

She was born in the hylands of Scotland,she can handle a sword.

FYI Sat 26 grass roots day, Halloween party there, I’m going as Indiana Jones.

#124 Devore on 10.15.13 at 8:07 pm

#100 not 1st

At that time, more than 75% people lived a self sufficient agrarian lifestyle and had no desire to move to cities to get a dirty factory job. So what did the elites do? The crashed the price of commodities and cranked up the inflation so people couldn’t survive anymore and had to go to work.

I don’t follow from A to B. How is someone self-sufficient forced to move to a city for work because prices change?

People moved to cities because they wanted more than subsistence living.

#125 Canadian Watchdog on 10.15.13 at 8:16 pm

Shiller actually said stocks are expensive, but not over-valued. — Garth

Umm, ok. So buy a basket of stocks and rate sensitive assets because it's the best deal in town? What's the downside risk on price action and how much are you being paid to hold that risk? Not only that, but in the event of a default, correlations would break: is your portfolio protected against stocks, bonds and rate sensitive assets declining at once? If you're fully invested and don't use options, chances are, no.

My point was, comparing today's P/Es to periods when interest rates were declining by 100-200 beeps at a time is a terrible way to value risk versus returns, and even more so when the Fed has removed risk from being priced into assets. Chart

Take a good look that chart and understand what 0% interest rates means. If the Fed can't force an expansion of consumption and private credit anymore, while real wages decline, then all that's left is more gov't spending on social transfers, infrastructure and other economic stimuli.

Now read the latest headlines and think how likely more gov't spending is.


Even if the debt ceiling isn't a catalyst, and stocks rebound, it'll just be something else in a short time.

#126 Habbit on 10.15.13 at 8:38 pm

#65 stoopid idiot Good link, thanks. What we don’t know won’t hurt will it? No response from anyone here. What’s up with that?

#127 Cici on 10.15.13 at 8:38 pm

#23 LadyInWaiting

I agree with you. I think Jenny was trying to do the right thing: Didn’t want to get reprimanded for leaving the funds in a GIC or savings account, but didn’t have enough savings to create a diversified ETF portfolio, had heard about the TD E-series and thought the Scotia funds would be close to the same thing.

In any case, I think making investment mistakes can be a great way to learn. And you are right, Garth’s advice is more directed to the haves than the have nots, but hey, it’s not his fault that the economy’s lagging and wages along with it. His personal mission is to help save the middle class by urging those with real estate to sell out and invest the profits before they get slaughtered. And, he’s trying to help future generations of potential investors save their virgin fesses by not becoming mortgage debt slaves.

#128 Waterloo Resident on 10.16.13 at 1:18 am

The U.S. is going to default on Thursday,
trust me on that.

#129 Andrew on 10.16.13 at 1:19 pm

Hi #53, Buy Curious,

That 26% gain on the house since 2008 is only 4.7% compounded, before taxes, transaction and mortgage interest costs. Taking interest and transaction costs into account, and assuming a (generous) 20% downpayment, the return falls to 2.1% compounded.

I’m not saying this as a “haha, you were wrong to buy in 2008!”, because I bought in 2006 and experienced a similarly poor rate of return. Not that my mutual funds did much better, but I consider both “investments” a valuable learning experience. Learning experiences are like character-building exercises… they’re never particularly fun.

#130 ironman on 10.16.13 at 4:02 pm

i’m wondering how much money one needs to have a diversified etf portfolio

#131 espressobob on 10.16.13 at 7:57 pm

#130 ironman

Not sure what amount of cash you dealing with and most discount broker accounts charge a fortune for a single trade if you have less than 50k. There might be a solution to this if you ckeck out Questrade.


As far as a diversified “equity” ETF goes you might want to take a gander at ‘XWD’. A one stop shop solution, but no fixed income in this product! Do some homework.