Crash course

JEEP

Quietly, days ago, the feds let slip the mount you can put into a TFSA next year. No surprise. It remains at $5,500, or eleven grand for a couple. That means you and your squeeze, so long as you were 18 years old six years ago (I barely qualify), can stuff a combined $62,000 into your tax-free accounts by next year.

And so you should. This is more important than contributing to an RRSP, even though there’s no tax deduction for doing so. It beats the pants off leaving a pile of money in your savings or chequing account, or even a ‘high interest’ product which attracts people who signal in parking garages or wear bicycle helmets.

As the years roll by, the TFSA will become the single most important financial tool you have. Especially when F eliminates the deficit (he claims by 2016) and doubles the annual contribution limit. Seriously. He said that.

The logic is simple: All investing inside the TFSA yields tax-free growth. But unlike similar growth inside the RRSP, these gains can be taken into your hands completely tax-free. In other words, the money is not added to your annual taxable income, which will have big implications when you retire. That’s because government benefits for old farts are decreased as income rises. So RRSP withdrawals count, but TFSA withdrawals don’t. This alone is reason enough for everyone to want hundreds of thousands inside their TFSAs in the decades to come.

Sadly, if most people continue on their current path, they will fail. As I have told you, about half of us have opened a TFSA, but half of those people have nothing in there. So, about a quarter of Canadians actually have made deposits, and 80% of those are in interest-bearing junk, like GICs or HISAs. Hard to believe, but apparently true: roughly 5% of people are using their TFSAs the correct way. As the guy who suggested to F (when he still listened to me) that the tax-free accounts should be created, I am crushed. Good think I am currently inventing a financial cattle-prod.

Just so you remember how this works. TFSAs are a right of residency. If you live here you get to put $5,500 a year into one. You can income split by funding the TFSA of your spouse or your kids (over 18). No profits will be taxable, which means you are a complete fool for putting the funds into a savings vehicle paying you 2%. By the same token, losses inside a TFSA are not deductible, which means you’re equally a fool for loading up on junior uranium stocks or oil patch start-ups.

Like RRSPs, your contribution ‘room’ accumulates. So if you didn’t put in the full amount in a previous year, you can make it up later. You can hold multiple TFSAs, but the total amount invested can’t exceed your personal limit. Money can be taken out at any time, but you must wait until the next calendar year to put it back in. If you add too much, you’ll be penalized by the CRA, which will send you a nasty little incomprehensible note, and charge outrageous interest until you come onside (1% a month).

The [email protected] won’t tell you this, but your TFSA can be transferred to a self-directed online brokerage or another institution anytime you want. Mostly she won’t tell you it should be stuffed with growth-oriented assets like equity ETFs, and not her revolting GICs. Or that a tax-free “savings account” was never intended for financing trips to Cuba or getting the dog spayed, but will form the backbone of all successful retirements within twenty years.

By the way, I mentioned TFSAs are great for splitting income between spouses. But in the event your relationship blows up, be careful how you deal with the account. When marriages fail, the feds will left you transfer tax-free TFSA money to your thieving, blood-sucking spouse as part of the asset distribution. But don’t do it. That would mean you are giving away contribution room from the past you can never reclaim. Instead just withdraw money and hand it over. Then next year you can fill up the TFSA once again.

Don’t use a TFSA to save for your kid’s education. That what RESPs are for, and the feds will give you free money for doing so. If you decide to make an RRSP contribution, then ensure you use the refund to fund your TFSA, not buy lingerie (there are exceptions). Ensure you name a beneficiary for your plan and remember that your spouse can inherit the money and add it to his or her account without a tax hit.

There is no lifetime contribution limit. And no age limit – you can still sock money into this even after you turn 71 and are forced to deflower your RRSPs. You can contribute whether you’re working or not. Gains made on money you give to your spouse’s plan will not be attributed back to you, regardless of when you did so (spousal RRSPs require three years to achieve that same).

Your TFSA can be used as security to get a loan. There’s no departure tax on a TFSA if you leave the country, but withdrawals you make while gone can’t be made up in the future. You can transfer a personal TFSA to a company-sponsored plan (many firms are now contributing) without penalty. And, of course, anyone with a juicy government defined-benefit pension plan, with little RRSP room as a result, should pig out on TFSA contributions. The more people on this blog detest you, the more successful you will have become.

So there it is. The single-best financial tool you’ve got. Misunderstood, misused or abused by 95% of the population. Which means nobody should be surprised how this all turns out.

198 comments ↓

#1 Willy Nully on 11.24.13 at 6:43 pm

Thank you Garth

TFSA is great, just hope government will not change laws so they will tax it some time — I think they WILL

#2 Love tfsa on 11.24.13 at 6:56 pm

I’ve got $48,300 in my tfsa thanks to the stock market!

#3 Toronto Condo's crashing to the ground on 11.24.13 at 7:06 pm

In the wake of the DOC’s documentary yet again another glass panel from an over priced condo has fallen. This is just the tip of the iceberg with the condo problems in Toronto. Realtor scum will have to spin and lie real hard to con a victim(buyer).

http://toronto.ctvnews.ca/pane-of-glass-falls-from-downtown-highrise-1.1557899

you can watch it here http://www.cbc.ca/doczone/episodes/the-condo-game

#4 Sleepless in Victoria on 11.24.13 at 7:08 pm

Garth,

I foolishly pulled all of my TFSA money out of my e-series funds and into the safe haven of a ‘high interest savings account’ (still within TFSA) back in September in anticipation of a correction due to the then-sure-thing beginning of the taper. That taper did not materialize and since then I’ve been watching the indexes soar to new nights. Classic example of the costs of attempting to time the market. Now I’m afraid to re-buy the index funds because the taper is still just around the corner and, well, aren’t we due for a large correction when that does inevitably come?

I done goofed.

#5 I'm stupid on 11.24.13 at 7:12 pm

Hi Garth

Just had a few things to say.
I did the numbers I’m 33 with a maxed out tfsa. (You know this because I’m your client) If I continue to max out at 5500 per year until I’m 63 at a return rate of 6% I would have accumulated over 600k.

What in your opinion, would it take for the gov’t to start taxing these suckers once the numbers get really large? The reason I ask is because an off shore bank account is essentially a tfsa without limits and we all know what CRA does if your caught with one.

#6 [email protected] on 11.24.13 at 7:13 pm

I think people shy away from TFSA and RRSPs because they think it is difficult to grow their money, ie. they don’t believe that putting money today will somehow grow, ie. an investment and rate of return.

Remember the first year the TFSA was introduced, some smart folks took advantage of the weak definitions of TFSA and amassed millions very quickly.

#7 Victoria Real Estate Update on 11.24.13 at 7:23 pm

Some people think that Victoria’s housing market has never crashed. This is simply false.

Victoria house prices crashed -52% from 1981 to 1986 (see ninth chart).

Victoria house prices crashed more than any other Canadian city in the 1980s. Let’s compare:

Vancouver: -49% (81 to 85) (eighth chart)
Edmonton: -49% (79 to 84) (fourth chart)
Calgary: -46% (81 to 86) (third chart)

Victoria’s housing market has already corrected 10-15% from its 2010 peak. It’s alarming that this 10-15% correction took place in an environment of falling 5-year mortgage rates. Now that 5-year rates have stopped falling, house prices in Victoria will experience bigger price declines.

Canada’s housing bubble is much larger than the 2006 US housing bubble (see first chart, first chart, second chart, third chart, first chart, second chart, second chart).

Many US housing markets crashed as a result of the (smaller) 2006 US housing bubble:

Las Vegas: -58%
Phoenix: -55%
San Francisco: -47%
Los Angeles: -42%
San Diego: -43%

Canada’s major housing market correction/crash will not be the same as the US crash. It will be Canadian-style, not US-style. Canada’s total correction/crash will be either more or less than the US crash.

Girls and guys, house prices in Victoria are still deep in bubble territory even though a 10-15% price correction has taken place so far. Much bigger price declines are on the way. If you buy now it will negatively impact your financial well-being for many years. Housing bubbles always burst and the resulting major price correction/crash always causes many years of extreme financial distress to many of those who bought near the peak.

Rent for now and avoid this negative outcome.

Until next time – Cheers!

#8 Jackofall on 11.24.13 at 7:24 pm

Garth what on earth is going on with REITs? Low rates re here for the intermediate term yet they continue to get slaughtered. Any insights?

Major ETF is down 6.3% this year and has a 5% yield. That’s a slaughter? — Garth

#9 totalinvestor.com on 11.24.13 at 7:48 pm

The Condo Game of Toronto

http://torontosnews.blogspot.ca/2013/11/toronto-condo-game-airs-thursday-nov-21.html

#10 Also Love the TFSA on 11.24.13 at 7:48 pm

Can’t agree on the junior oil and gas. I’m up 55K to 35K on the wife with her boring ETFs. Go me!

#11 Toronto_CA on 11.24.13 at 7:51 pm

Yay to be part of the 5% using it correctly! I’ve coached my friends to open up TFSAs that allow them to purchase ETFs rather than keeping them in low interest savings accounts.

As countless have mentioned, the branding of this retirement vehicle when it was launched was a colossal failure. Not just regarding the penalties about withdrawals and contributing in the same year, but by calling it a “Savings Account” and having the talking heads describe it as a perfect place to put your emergency savings, etc. rather than a place for growth investments.

Ugh.

#12 Shawn on 11.24.13 at 7:51 pm

THE ONLY FINANCIAL PLAN NEEDED

The financial industry suggests that everyone needs a financial plan. Most will give you a free one — as long as the key plank in the plan is handing that planner as much money as you possibly can to invest for you at a fee.

The only financial plan I have ever followed is the following:

Maximize government tax-assisted savings:

Pensions
RRSP
RESP and,
TFSA.

I use them all…

Then I invested any of that that I controlled into mostly stocks, but carefully chosen stocks and made sure I had some cash too to allow extra investing on market crashes.

Do this and (with good advice if, like most people, you cannot do it on your own) and you can’t help but retire rich.

Less than 5% of us ever will. Some will not be in a position to, some will just not do it.

#13 My brain is my biggest investment on 11.24.13 at 7:52 pm

Bicycle helmets? You obviously haven’t cycled in Vancouver where people learned to drive in 28 different countries. I’m protecting my noggin thank you very much. I want to live to actually use my TFSA money.

#14 Jackofall on 11.24.13 at 7:59 pm

Garth what on earth is going on with REITs? Low rates re here for the intermediate term yet they continue to get slaughtered. Any insights?

Major ETF is down 6.3% this year and has a 5% yield. That’s a slaughter? — Garth
_________________
Referring more specifically to U.S. Mortgage REITs – REM as an example!

Why would you buy that? — Garth

#15 TFSA temple on 11.24.13 at 8:01 pm

Given TFSAs are still a relatively new development, has Canada modified its existing tax treaties with other countries to ensure that the withdrawal of cash from a Canadian TFSA does not attract tax in other jurisdictions?
If I retire to the U.S. or Europe will I be required to pay tax on my withdrawals in those countries? It would certainly cause me to rethink my retirement plans, if I do.

#16 WhiteKat on 11.24.13 at 8:04 pm

You absolutely should NOT have a TFSA if you:

– were born in the USA even if you left as a young child, and your parents are Canadian

– hold a green card

– regularly visit the USA and meet the substantial presence test

– were born outside USA to one or more American parents even if you never lived in USA

– are a naturalized American citizen regardless whether or not you hold Canadian citizenship

If any of these describe you, you are a ‘US person’, and your TFSA is considered a taxable ‘foreign trust’ by the IRS.

Even worse, Canadian financial institutions are now actively preparing to report all accounts of ‘US persons’ to the CRA who will in turn pass the account details (including balances) over to the IRS. These include all accounts for which a ‘US person’ has signing authority, even joint accounts held with a Canadian-only spouse.

IRS will look at the account balances given to them by the CRA and compare them to the reports that you should have been filing (called Foreign Bank Account Reports). If you have not been filing these annual FBARS or the numbers don’t match, expect a HUGE bill in the mail calculated as a factor of account balance.

The reason that Canada is preparing to hand over the banking details of 1 million Canadians who are also ‘US persons’ is because of a new American law called FATCA. If financial institutions world-wide refuse to comply to FATCA, USA will withhold 30% of all US sourced payments to those non-compliant financial institutions.

Within the next few weeks, expect an announcement from our Canadian government that it has signed an IGA (intergovernmental agreement) with the USA for FATCA, although Canada does not get anything positive for itself by signing, other than to avoid the punitive punishment for not agreeing to FATCA.

#17 Smoking man on 11.24.13 at 8:09 pm

Mark Pugash, a spokesman for Toronto police, said privacy reasons prevented him from commenting on the incident. Mayor Ford was charged in 2008 with assaulting and uttering death threats against his wife, Renata Ford, but the charges were dropped due to “inconsistencies” in Mrs. Ford’s statement.
……..

That’s from a young chic reporter at the national post. The young hate the fat basterd.

So ford lost It in 2008, these people kill me.

Men are animals they need training, back in the day.

I threw TV sets out the bed room Window, I smashed expensive China. But eventually my wife made me a well behaving dog.

Something my teachers failed miserably at.

Guys we all got to get it under control, now if your a dude and you never chucked a TV when your woman passed you off, you where never a dude to start off with.

#18 Torontocondobubble on 11.24.13 at 8:13 pm

#7
those graphs for Victoria, etc, were adjusted for inflation. Case Shiller index is nominal (not adjusted for inflation). So not really apples to apples comparison :)

#19 KommyKim on 11.24.13 at 8:20 pm

RE: #6 [email protected] on 11.24.13 at 7:13 pm
Remember the first year the TFSA was introduced, some smart folks took advantage of the weak definitions of TFSA and amassed millions very quickly.

What loop-hole did they exploit?

#20 KommyKim on 11.24.13 at 8:26 pm

RE:Major ETF is down 6.3% this year and has a 5% yield. That’s a slaughter? — Garth

XRE is down 11.69% YTD with 5.08% yield.
ZRE is down 10.71% YTD with 5.25% yield.

Which REIT ETF lost only 6.3%? Be nice to check out and find out the reason why the big differences.

#21 HogtownIndebted on 11.24.13 at 8:35 pm

Oh, my…….just finished watching The Condo Game on CBC.

This looks very, very bad.

Glad I sold my solid as a brick 1960s condo and am renting now.

Some of the most telling parts of the documentary:

The “window wall” glass format of most Toronto condos is not well tested at all, creating many problems like mold, not just falling glass.

The not very bright at all Diane Francis saying our real estate and condo market is okay, “we dodged the bullet”.

The fear factor that is keeping so many condo owners from publicly proclaiming their problems, lest it dampen buyer demand.

The couple who seemed grateful they dumped their downtown Toronto condo with only a $20,000 loss.

The sheer inability of condo boards to deal with their most pressing issues.

The moronic stupidity of wannabe tax – cutting (and time thieving while talking with drug dealers on the city clock) Rob Ford and his supporters and accomplices like Doug Holyday, and how this type of city hall is forced to play nice with developers because it is desperate for their fees since taxes are too low on residents.

City planner Jennifer Keesmat saying we are at a tipping point, and looking quite grim.

Forget Abbotsford, Garth. I wouldn’t pay 30% of list for any of these units built recently.

This condo scene is much worse than thought, and will make Vancouver’s leaky condos from a few years back look like a minor trifle.

#22 wendi1 on 11.24.13 at 8:36 pm

Why would the government end TFSAs if so few people make so little tax-free money from them?

Most of us have RSP contribution room – if the government ends TFSAs, RSPs will be filled to the brim, leading to decreased revenues in the year the govt does it.

I think this is not a high risk.

It is zero risk. — Garth

#23 Smartalox on 11.24.13 at 8:37 pm

So here’s a TFSA question: if my TFSA balance is $30k this year, and I withdraw $20k for something, can I re-contribute the full $20k next year AND another $5500?

Or can I only contribute to the 2014 limit of $31,000?

Withdrawals can be made up in full in succeeding calendar years, plus new contribution room. — Garth

#24 PoltawaDiva on 11.24.13 at 8:39 pm

#15 WhiteKat:

The filing of FBAR – I undersatnd that if the balance in all of your accounts is under $50,000, you don’t have to file. Is this correct, or did I miss something?

#25 Valyrian_Steel on 11.24.13 at 8:41 pm

Wife and I have about a total value of 60k between both of our TFSA’s – will be a wonderful 71k of tax free goodness come January, stuff full of REIT’s dividend producing ETF’s and stocks. My lovely wife has about 250k in her RRSP while I have a paltry 50k in mine thanks to the darn pension adjustment – but that is a small price to pay for a juicy DB pension I guess. Another 250k in our non-reg investment portfolio. 150k sitting in cash (don’t hate us Garth, it will be put to work soon).

Paid for house and recreational property. Thanks to some decent incomes, no debts (or kids) we are saving about 8k every month. We are 41, net worth within shouting distance of 2 million (a lot of real estate price appreciation has helped, but it is all mortgage free now).

Its not all financial train wrecks out there folks…. don’t hate us, we have worked our asses off for the last 20 years.

#26 JSS on 11.24.13 at 8:43 pm

Would XRE constitute being an “equity ETF”?

#27 bill on 11.24.13 at 8:51 pm

Thanks Garth.Informative as usual.
I see in the Sunday Vancouver Sun that Vancouver Coastal Health is getting into the condo biz.
3000 [?] condos and a 28 storey tower.Maybe.
It will be on the former Pearson Hospital site roughly 57th/58th and Cambie/Heather streets.
I have a bad feeling about this.

#28 Retired Boomer - WI on 11.24.13 at 8:54 pm

LOVE those TFSA accounts, or here below the 49th they are known as ROTH accounts.

Basically no tax deduction for putting in the dough, but no taxes on the way OUT later (which is huge!!)

Stared our ROTH’s back in 1994. Today each has over 100k in there. (No we couldn’t do the max allowed all the time, life got in the way).

They will be the last thing spent down during retirement.

We CAN move money every year to these accounts from our taxable 401K accounts as we are both retired. Only need to pay the taxes due, so we shift what we can each year while still remaining in the 15% tax bracket. So we pay 15% now then, tax free in future years.

Gotta love the tax guy who allows you to shift away his future bite! Why not make it work for you for a change?
Hey, if you’re gonna save, save it the smartest way you can, and invest it for growth.

There is NO do-over in retirement!

The growth over time IS your security!

#29 DaleFromCalgary on 11.24.13 at 8:56 pm

#4 – No tapering by the U.S. Federal Reserve will happen anytime soon. Tapering means interest rates will normalize and the U.S. government debt will make a moonshot. The American markets will then crash as the Boomers can finally get interest-paying investments at 5%, enough to live on, instead of scary stocks that bounce up and down like yoyos. The Fed tried to bluff the paperhangers (bankers and brokers) last September, and now they’re trying it again with talk of tapering next March. The problem is their talk is being recognized as the bluff it is.

There will only be one safe haven when the end game finishes. That’s why JPMorganChase went long on physical gold, China is importing record amounts of bullion, India banned private imports of gold, and France banned buying physical gold with cash or transporting it through the mails or out of the country. The true price of physical gold in Canada is $1,300+ (based on kitco.com’s buy price).

Tapering will take place in 2014. The Fed will not raise rates until at least 2015. There will be no market crash. Gold is dead money. — Garth

#30 [email protected] on 11.24.13 at 8:59 pm

#18

http://www.financialpost.com/personal-finance/tfsa/story.html?id=2138002

http://www.andrewcmacdonald.com/blog/2009/10/21/tfsa-abuse-three-loopholes-to-vanish/

#31 recharts on 11.24.13 at 8:59 pm

Bitcoin is indeed a new phenomenon.
The way I see it is this: till it gets to a wider acceptance and larger use it will be a currency that will help you avoid taxes and hide transactions that you don;t want the government to see them. A barter currency as CRA called it.
Because there is no economy or government to sustain it it will need a little more time to be reliable but it will get there.
At that time, when it gets there the governments around the world will need a way to either break it or tax it. By “break it” I mean discredit it. Security problems might be revealed but Bitcoin 2 will be around the corner and it will be a smooth and flow less transition.

#191 Canadian Watchdog on 11.24.13 at 6:55 pm
#189 HAWK

That’s certainly the trend, but I’m beginning to get a sense that Gen Y may revolt against fiat currency and stocks and move into the latest speculative savings vehicle that just moved into the number five spot for top payments in world.

If this trend continues and grows to its long-term potential, it will eventually have an impact on RE, bonds and stocks. Some of you will laugh, but keep in mind what social trends have taught us about expoential growth within a short time frame.

Bitcoin is a complete gamble. The potential for catastrophic losses is ever-present. — Garth

#32 Obvious Truth on 11.24.13 at 9:18 pm

#25

Look up XRE on yahoo finance. Near the bottom on the left hand side you’ll see holdings. Shows you what’s in it. Riocan and H and R are the top holdings. Theses are the equities or stocks you would be buying.

Great conversation on the blog today.

Must be early for the doomers.

#33 Son of Ponzi on 11.24.13 at 9:20 pm

If the loophole chasers would use their ingenuity to help find a cure for cancer.
The mind boggles.

#34 jan on 11.24.13 at 9:22 pm

[email protected] means what again ??????????????/

#35 Toronto_CA on 11.24.13 at 9:24 pm

Did the Blog Dogs see this article:

http://www.thestar.com/business/personal_finance/2013/11/23/shoeshine_millionaire_myth_still_holds_a_warning_for_the_ages.html

Interesting read for the Star of all places. It sounds like what we’ve been saying, but maybe a little bit doomier than Garth would like. Not painting a nice picture for people who speculate in Real Estate.

#36 recharts on 11.24.13 at 9:29 pm

Bitcoin is a complete gamble. The potential for catastrophic losses is ever-present. — Garth
You wish!
I clearly said that it is good for barter. Why do you have to discredit everything that you don’t agree with?

Where is the danger when the commerciant does not want to pay taxes and he would sell his stuff in bitcoins. I don;t want to pay taxes either and I will buy bitcoins and pay him.
He will get something else with those bitcons and everybody is happy.
Bitcoins is a transit currency, barter currency and so on. Not proper for investment or keeping your money in that currency on long term. NOT YET!
But when it will be you will see many financial parasites (like banks) disappearing.

PS: don’t try to play the “if we don’t pay taxes…” card because I am not going to buy that. The governments around the world over tax us for lots of things that should not be taxed in the first place.

Are you a tax evader? — Garth

#37 WhiteKat on 11.24.13 at 9:32 pm

@PoltawaDiva re: comment #23

You have to file FBARs if the total value of all your ‘foreign’ accounts (aka Canadian accounts if you live in bank only in Canada) is over 10K at any point during the year.

FATCA requires your financial institution to report on your accounts if your aggregate balance is 50K or more.

#38 T.O. Bubble Boy on 11.24.13 at 9:32 pm

TFSAs are a great, great thing. Everyone should thank Garth for saving them thousands upon thousands in taxes. I’ve managed to climb past $36k for my TFSA balance, or more than $10k in tax-free gains (and I see that others are far beyond that).

Just be sure to watch out for riskier investments, as the losses are not claimed like they could be in a non-registered account.

A house is where you live, but a TFSA is where you invest.

#39 Ripped on 11.24.13 at 9:49 pm

Canadian REITS crashed in May and are bouncing along the 52 week lows. But look at a 5 year chart.

Example XRE:

http://www.stockwatch.com/Chart/Advanced.aspx?action=go&time=5&symbol=XRE&region=C

Some crash. They look tasty to me. — Garth

#40 Ripped on 11.24.13 at 9:56 pm

Some crash. They look tasty to me. — Garth
………………………………………………………………..

or is that just the first crack in the armour? Hmmm

Look at the cash flow of the underlying assets. — Garth

#41 Jackofall on 11.24.13 at 9:58 pm

Garth what on earth is going on with REITs? Low rates re here for the intermediate term yet they continue to get slaughtered. Any insights?

Major ETF is down 6.3% this year and has a 5% yield. That’s a slaughter? — Garth
_________________
Referring more specifically to U.S. Mortgage REITs – REM as an example!

Why would you buy that? — Garth
_____________________
Because the yield is titillating and I don’t know any better.

#42 Stan on 11.24.13 at 9:59 pm

Garth I am a TFSA believer. But I have to agree with WhiteKat. I recently found out the US considers me a citizen, even though I have not lived there since I was a child and have Canadian citizenship since the 70s. Now in my 50s my TFSAs and my child’s RESPs are considered off-shore accounts and I am considered a tax cheat hiding money. FATCA is scaring a lot of Canadians.

#43 Party On Garth on 11.24.13 at 10:03 pm

The Feds need to work on getting tax treaties in place for foreign dividends in TFSA’s. The tax on non-Canadian dividends sucks.

#44 Julia on 11.24.13 at 10:07 pm

#16 Smoking man on 11.24.13 at 8:09 pm
Last sentence.

Garth, you know I love you dearly but you really have to see that these kinds if statements are really offensive. Why must women tolerate them when other groups needn’t? In fact, I would think that most men would find the idea that to be a real man you should be chucking TVs in anger at your partner offensive as well.

#45 economictsunami on 11.24.13 at 10:10 pm

So, many are failing to save and invest for their retirement; intend to carry a mortgage/ debt into their sunset years?

Too large a demographic cohort to be enslaved in debt; would surely kill our economy.

Memo To The New York Times: If Toronto’s Condo Market Is Dizzying, Montreal’s Should Make You Nauseous…

https://businessincanada.com/2013/07/10/new-york-times-if-torontos-condo-market-is-dizzying-montreals-should-make-you-nauseous/

Also check out Reguly’s peak (oil) demand article…

#46 Bob Rice on 11.24.13 at 10:13 pm

Garth, I’ve been strongly advised NOT to park any investment other than GICs and HISA into a TFSA account if I need to access my cash within 2 to 3 years (at which time my wife and I will be likely buying a property – we rent now)

We’re taking sort of a “middle road” approach: 50K of TFSA room will consist of a 3% 1 year GIC and $11K (as of Jan 1) into an TD e-Series fund (mix of US and Cdn indexes). We will need to access that cash and we cannot afford to loose any capital as it is our nest egg for our home purchase. It might be extended to 4-year window, but 3 is more likely.

I just don’t think that an ETF (or something similar) is prudent because, as I understand it, those investment vehicles advantages’ are maximized with long-term growth approach.

Am I off-base? Anyone? Not sure what else we can do. The house purchase decision isn’t going to change.

Gee, I wonder who ‘advised’ you to go with a GIC or savings account? — Garth

#47 Party On Garth on 11.24.13 at 10:18 pm

It would also be nice if we could hold our own mortgage in a TFSA. I believe right now that is not considered a qualified investment.

Even if you have a mortgage that small, why would you put a 3 per cent asset in a TFSA? — Garth

#48 Don't hate me because I'm beautiful. (and wealthy) on 11.24.13 at 10:19 pm

Should I borrow at 3%(on my TD waterhouse brokerage account) and buy ETF’s paying 5% dividends?

#49 Herb on 11.24.13 at 10:20 pm

#18 KommyKim,

there was no prohibition or penalty for overcontributing initially, so some smart folks dropped bundles into their TFSAs and collected the gains tax-free. That’s why the 1%/mt penalty on overcontributions was introduced.

#50 World According to Garth on 11.24.13 at 10:24 pm

And for those of you who STILL believe in this Global Warming/Climate Change Conspiracy (invented to TAX you – like they do in BC – Bring Cash Carbon Tax Scam)

http://www.theguardian.com/world/2013/nov/23/us-storm-winter-floods-california-nevada

#51 Victor V on 11.24.13 at 10:28 pm

http://business.financialpost.com/2013/11/21/condo-payments-eat-up-over-half-of-this-womans-income-should-she-sell/

At the age of 38, Lisa, as we’ll call her, finds herself in the vise of wage compression and rising living costs. Her salary has declined in the last year and mortgage payments, fees and taxes for her downtown Vancouver condo now cost her $2,149 a month, which works out to more than half of her $3,758 monthly take home income.

#52 Peter on 11.24.13 at 10:33 pm

Ok, I withdrew money from my TFSA earlier this year, then replaced it and added the yearly allowed contribution on top of that. Did that out of ignorance; any fix for that or just pay the fine?

They are coming to get you. — Garth

#53 Bob Rice on 11.24.13 at 10:34 pm

“Gee, I wonder who ‘advised’ you to go with a GIC or savings account?” — Garth

Is an ETF advisable to a 2 to 3 year window then if we need to liquidate that cash for a home purchase? I thought this approach (ETF investing) was long-term (for retirement).

Is that a serious question? There are thousands of exchange-traded funds, with varying degrees of risk. — Garth

#54 Victor V on 11.24.13 at 10:35 pm

#46 Don’t hate me because I’m beautiful. (and wealthy) on 11.24.13 at 10:19 pm

Should I borrow at 3%(on my TD waterhouse brokerage account) and buy ETF’s paying 5% dividends?

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

I’m with Waterhouse too and have the same margin interest you are referencing given I borrow over $100K in the President’s Account.

The setup works great for me and I sleep at night as I have chosen solid blue chip stocks (banks, utilities, REITS, life insurance co’s etc).

This year, between cap gains and dividends, I’m up 9% in that margin account, so making out like a bandit paying just 3 points.

And don’t forget, the margin debt is tax deductible, so once you factor that in, the return is even better.

Not for everyone to do what I’m doing, so either get a good advisor or make sure you can handle a few bumps along the way.

#55 Not 1st on 11.24.13 at 10:43 pm

Is TFSA marginable?

#56 Bob Rice on 11.24.13 at 10:47 pm

Yes, Garth, it is a serious question. I’m here to learn. I admit I’m not the most informed “investor”.

I would gladly invest in an ETF that would earn more than a GIC or similar. We are just worried about capital loss given that it’s a short window. I realize that long term it is the way to go…

#57 CalgaryHappyRenter on 11.24.13 at 10:51 pm

Blog acronyms for newbies: https://docs.google.com/document/pub?id=1EVlDhkf7qkUsihOM5HdNfECc6sahkF2iOn7G8vXqiL4

#58 Victor V on 11.24.13 at 11:02 pm

#54

No.

#59 stef on 11.24.13 at 11:11 pm

Agree with most of what you say, however my TFSA is filled with ‘high risk’ portfolio(i.e. junior uranium and medical gadgets that i don’t understand) , true that i might loose my shirt without being able to claim it…that would suck! (obviously that is not the goal) But it has also been my strongest growth stocks in the long run, don’t want to be taxed on my 200% gains (yeah right). My gains from not taxing strong gains outweights my losses.. My advice is that if TFSA represents a small portion of your investements….go for gold (not actual gold!)!

#60 I'm stupid on 11.24.13 at 11:12 pm

#54 Not first

No

#61 WhiteKat on 11.24.13 at 11:13 pm

@Stan, re: comment #41

Unfortunately, most Canadians have never heard of FATCA, and most US chattel (err….I mean ‘US persons’) have never heard of FBARs, and don’t even know they are considered to be US tax payers. This is because the USA is the ONLY country in the world (except for Eritrea) that taxes those it considers ‘US persons’ regardless where they live and regardless where they earn their income.

Yes, many Canadians with ‘US person’ status are very scared right now. However, the majority is still blissfully ignorant of the coming train wreck!
My fear is that for many ‘US persons’, the first time they will hear about their US tax payer status, FATCA, and FBARS will be when [email protected] asks them about their US status, and they reply ‘born in USA’.

#62 45north on 11.24.13 at 11:16 pm

HogtownIndebted: I just finished watching The Condo Game on CBC.

me to

it sounds like a total disaster in the GTA! Thousands and thousands of condo units in the planning, building and built stage.

– problems are covered up because owners don’t want to sabotage the prospects of selling them!

– purchase documents and governing law are very complicated, beyond the ability of even very educated and bright people

– the developers retain lawyers to deal with complaints, every lawsuit is a chance to bill more hours!

– the Ontario Municipal Board limits the authority of the City – therefore the City’s responsibility is also limited. This is huge! To a large extent this is the responsibility of the Province of Ontario. Rob Ford’s clown act is a distraction.

#63 Ralph Cramdown on 11.24.13 at 11:22 pm

#42 Party On Garth — “The Feds need to work on getting tax treaties in place for foreign dividends in TFSA’s. The tax on non-Canadian dividends sucks.”

Don’t hold your breath. Those treaties are reciprocal deals; don’t tax our retirees’ foreign earnings and we won’t tax yours. Since few other countries have a TFSA equivalent, they’d be giving away tax revenue for nothing in return.

But there are countries which don’t tax dividends to foreigners, sometimes only for certain industries. Do your homework, find some gems.

#64 Regretful on 11.24.13 at 11:22 pm

A couple of buddies loaded up on junior mining Zenyatta Ventures which ran from 61 cents to 5 bucks! Tax Free. They both made out like bandits. I didn’t buy. Another double bourbon on ginger to soothe the pain. If you got time on your side and a gambler at heart why not buy a few hundred thous of a junior and let it ride. The upside is zero but in the case of V.Zen the upside was bigger than almost any other investment out there. Blew housing away. Find a winner like ZEN in your TFSA and you are a rock star at the cocktail party compared to someone who bought a house last hear for 900 grand now worth 890 grand.

#65 Walter Safety on 11.24.13 at 11:23 pm

If you don’t register your dog why would you register your money?
Anyone remember the “interest income deduction”?governments change the deal all the time don’t plan on tax free anything.

#66 Andrew Woburn on 11.24.13 at 11:25 pm

#41 Stan on 11.24.13 at 9:59 pm

I recently found out the US considers me a citizen, even though I have not lived there since I was a child and have Canadian citizenship since the 70s.

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

I once did research on behalf of a US citizen client on how to get out of paying US tax on Canadian earnings. In his case, the only answer was to formally renounce his US citizenship according to the procedures laid down by the US government. Presumably this option is still open to you if US citizenship is not otherwise valuable to you.

#67 Son of Ponzi on 11.24.13 at 11:27 pm

I worked for 30 years, and maxed out on my RRSP contributions every year.
Now I’m early retired and withdraw funds at a much lower tax rate.
Am I stupid?

#68 45north on 11.24.13 at 11:33 pm

smoking man: Guys we all got to get it under control, now if your a dude and you never chucked a TV when your woman passed you off, you where never a dude to start off with.

Al Pacino’s TV scene:
http://www.youtube.com/watch?v=qi_cUdf1zr8

#69 Bob on 11.24.13 at 11:34 pm

Garth,
I know you don’t like mutual funds but what about the Mawer funds? They have great returns every year and low mer. I have $25k I’m thinking of investing in both the Canadian and International Mawer funds. I did a quick research and Mawer funds have better returns than most ETF’s. Your thoughts please.

#70 Kyla on 11.24.13 at 11:40 pm

Hi! I am a 27 year old recent engineering grad (~2yrs). I have a “good” govt job with db pension and my husband has rrsp matching at his job whic he maxes out. We are both paying student loans off (I pay $850 per month). I could pay more off my loans but I really want to learn how to correctly invest my money so that when i have more i know what to do with it. Due to our wages and pensions I think tfsas are the way to go. I have been reading this and other blogs for the last month and reading all comments because I want to learn as much as possible. I have looked at some books in the library but they seem dated. The problem is I don’t really know where to start. I think etfs are the way to go but do I just open up a tfsa at td and go with the e series or a discount brokerage like questrade? Do you guys know of any good books or guides or should I just put in my 400 per month to start and see where it takes me? Or should I wait until I know what I am doing? I really just don’t want to end up a sucker! Thanks Garth I am learning a ton so far!

#71 KG on 11.24.13 at 11:44 pm

No instructions required. Its not symmetrical.

#72 KommyKim on 11.24.13 at 11:45 pm

RE: #51 Peter on 11.24.13 at 10:33 pm
Ok, I withdrew money from my TFSA earlier this year, then replaced it and added the yearly allowed contribution on top of that. Did that out of ignorance; any fix for that or just pay the fine?

At this point, it’s almost too late. You are penalized 1% per month so you should have withdrawn the money you “replaced” immediately. Doing it now would save you 1%. Doing it 6 months ago would have saved you 7%.

RE: #35 recharts on 11.24.13 at 9:29 pm
But when it will be you will see many financial parasites (like banks) disappearing.

Hahaha! Very funny. You don’t think the investors in the new BitCoins will not want to earn profits? Hahaha! You crack me up!

RE: #43 Julia on 11.24.13 at 10:07 pm
#16 Smoking man on 11.24.13 at 8:09 pm
Last sentence

Only a fool breaks his own stuff in a rage. I learned this when I was five. SM still hasn’t learned it.

#73 recharts on 11.24.13 at 11:55 pm

#35 recharts on 11.24.13 at 9:29 pm

Are you a tax evader? — Garth
No sorry, I can’t help you.

PS: the commerciant has to pay taxes. I pay them indirectly.

I’ll take that as a yes. Shame on you. — Garth

#74 el Rafa on 11.24.13 at 11:56 pm

Can non-permanent residents also use TFSAs and RRSPs? I’m here on a work permit and will be staying for a while, possibly becoming a permanent resident in the near future.

#75 not 1st on 11.25.13 at 12:00 am

So I can use my TFSA to secure a car loan, but I can’t margin it? Sounds more like a home to me.

#76 Bat 21 on 11.25.13 at 12:06 am

Peoples Bank of China has announced it is going to stop stockpiling foreign-exchange reserves.Bulk is made up of U.S. dollars. Helps keep the U.S.dollar up,yuan down been great for China’s exports. But that country is shifting directions. The other shoe to drop! China will start their own “tapering” buying U.S. debt. The result will be more expensive imported goods and high interest rates. Good luck federal reserve!!

#77 Jerry on 11.25.13 at 12:12 am

I am a non-resident Canadian now and have been for more than twenty years. On the day I return to reside permanently in Canada is my TFSA allowance:

-the same as yours?
-$5500?
-Zero until I have been back for more than one year, then $5500?

No.2 — Garth

#78 Bobby on 11.25.13 at 12:12 am

For #68 Bob,

Also have a look at PHN, Phillips Hager and North. Call them directly.
I have found them to be excellent.

#79 detalumis on 11.25.13 at 12:18 am

Never make future decisions based on current tax laws. The feds made spousal RRSPs virtually useless when they added pension splitting for example. What they do in other countries like the UK and the US is use assets when determining eligibility for stuff like uber cheap LTC. I can see the same thing happening here when it comes to getting GIS and other retirement benefits.

Today TFSAs are already taken into consideration if you ever had to go on welfare, you need to cash them in so I can see the same thing happening in the future when it comes to them being included in income. They will just change the rules from using “income” to “assets” to cover their backtracking. No way will it fly politically to have 1 million in a TFSA and collect GIS for example.

#80 AB Boxster on 11.25.13 at 12:34 am

Gee I don’t know Garth,

Why do most people not actively invest in financial instruments in their TFSA’s?

Maybe it’s because the equity markets (like equity ETF’s) and most financial instruments created today are just a scam.
Maybe it’s because high frequency trading makes up over 70% of all trades so the chances of using logic and knowledge ‘play the markets’ is impossible.
Or maybe it’s the insider trading that is now the rule rather than the exception.
Of perhaps the efforts of groups like Goldman to manipulate resource prices, or Enron to
manipulate power prices or oil prices, makes actual fair pricing of commodities impossible.
Or maybe it’s companies like twitter that have pathetic earnings but are pumped as ‘great investments’ so fundamentals that once mattered mean nothing.
Or maybe the manipulation of gold or oil prices by governments or massive pension funds or traders, or just little old Bre-X.

Or maybe that most investors believe that their financial advisor actually has a legal responsibility to act in the best
interest of the client, when this just legally ain’t so.

Or maybe its because the amount of tax you can actually save using a TFSA is so miniscule, but the risk you take of losing your principal is
so high, based upon the Vegas Like nature of these investments, that people are saying enough of the stupidity.

Or maybe it’s the same reason the there is trillions of free contribution space in RRSP’s.
Perhaps people don’t have any money.

My advice.

Save more than you spend.
Rent, don’t buy now. That boat passed 10 year ago.
Do everything possible to preserve your capital.
Everyone wants a piece of your pie.
If you have no control over where you store your pie (e.g. equity markets – Yes ETF’s too, etc.) you will lose your pie.

And yet the world moves on, with you or without you. Fear is a debilitating thing. — Garth

#81 Kreditanstalt on 11.25.13 at 1:00 am

TFSAs? Banks are proxies for Revenue Canada.

I’m not by any means sure I even want all my funds in the banking system, where they can be monitored and regulated, potentially wealth-taxed, where my assets can be compared with my “earnings” by government and where my total net worth is easily accessible to the tax man.

#82 Sideline Sitter on 11.25.13 at 1:30 am

Question for the peanut gallery (and you too, Garth)

My wife and I have saved a boatload of $$$ this year (the joys of renting!), and we want to invest it right.

I’m going to liquidate my TFSA near the end of the year because what I selected are expensive mutual funds and I want ETFs.

I’m debating taking the proceeds (which are a little better than the max contribution) and buying RRSPs, as I’ve got LOTS of room.

I want to then take my big savings for the year, and a touch of the tax refund to buy back into my TFSA in January.

Would love to get some feedback… good idea? bad? am I missing something obvious? Seems almost too good to be true, no?

#83 Cdn Govt According To Herb on 11.25.13 at 2:09 am

Here are a few Herb. I don’t feel like posting 5000 articles. Why don’t YOU tell us how with 60% of every dollar we spend going to taxes and with 20% of the workforce being Govt workers…..we are getting GOOD value. Please tell us Herb. 80% of us overtaxed Cdns are listening.

http://opinion.financialpost.com/2013/05/16/beyond-our-means-government-debt-tops-1-2-trillion-and-spending-is-still-rising/

http://ca.news.yahoo.com/blogs/pulseofcanada/canada-public-sector-workers-too-much-money-161555677.html

http://www.taxpayer.com/

http://www.cfib-fcei.ca/english/article/5039-public-sector-pensions-unsustainable-and-unfair-canada-s-pension-tension.html

#84 TRON on 11.25.13 at 2:16 am

Can you sell a stock (at a loss) from a cash account, take the loss and buy the stock back in your TFSA with the proceeds from the sale of the stock?

#85 Infused with Opiates on 11.25.13 at 2:27 am

66 SOP – no, that is the way they are supposed to work. Enjoy retirement!

#86 Freedom First on 11.25.13 at 2:41 am

Best article ever on TFSA’s Garth. Thank you again for your idea of the TFSA, and thank you F for pushing it in. I am maxed and invested since day 1. TFSA, and RRSP, are both very, very sweet for Canadians who know how to use both correctly, and Garth has spelled out on his blog, for free, on how to maximize ones benefit of each of them.

To the people who are worried about the TFSA being tinkered with, i.e. future taxes etc., relax, you worry too much. When RRSP’s came on the scene, people were spouting the same kind of futuristic nonsensical scenarios about them. Follow Garth’s advice, live financially stable and let go of worry, or, go all in with your one leveraged ass. Myself, I prefer not being vulnerable to 1 asset. As always, remember…..Freedom First.

#87 Tony on 11.25.13 at 2:50 am

Uranium has been a stellar performer over the past month with ticker symbol U moving up about 14 percent. The smart money will of course be short oil with the news out of Iran. This could spell the end for Alberta real estate.

http://www.marketwatch.com/story/oil-falls-sharply-after-iran-nuclear-deal-2013-11-24

#88 Longterm on 11.25.13 at 3:04 am

#76 Jerry

While what Garth says is correct – you are eligible for $5500 for the year you return regardless of when – only some of the people at CRA seem to know this.

I returned to Canada in April of this year after a decade in the UK. I rang up CRA to ask them how to get my TFSA limit for 2013. First the tool I spoke to tried to tell me it was not a ‘T1 question’ and that I needed to speak to the CRA International Tax Office. I had already spoken to them about the issue and they told me to ring the T1 tax [i.e. resident] tax help line. After I told the CRA person this she put me on hold then came back and quoted me this CRA document

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/lgbl-eng.html

Specifically this line:

‘no TFSA contribution room will accrue for any year throughout which you are a non-resident of Canada.’

I told her that ‘throughout’ meant the entire year and thus if I returned in any given year I wasn’t a non-resident throughout the entire year and thus was eligible for the $5500 contribution space for 2013. She vociferously argued I was wrong, to the point of becoming irrate with me.

I told her she was wrong and that I wanted to speak to a manager, she claimed this wasn’t possible but said I could have the question referred to a CRA tax technician to look into it. I requested this and the tax technician phoned me back the next day confirming that I was correct and eligible for the $5500 TFSA space for 2013.

I have subsequently sent CRA a letter stating the date I came into Canada as a ‘returning resident’ and requesting them to send me a statement or some other confirmation of my 2013 TFSA contribution limit. I’ve not heard from them yet.

You’d think this situation was uncommon, but it probably involves tens or hundreds of thousands of people a year so you’d think CRA could get their act together and train staff in how the rules work.

So be sure to stay on top of it and hound them until you get confirmation of your limit for the year you decide to return.

Good luck.

#89 Dean Mason on 11.25.13 at 3:46 am

#75 Bat21

Buy some Chinese Yuan. Did you forget that China is still run by a Communist government?

Gold was supposed to be 3,000 U.S. dollars an ounce and silver was supposed to be 70 U.S. dollars an ounce by now in 2013.

Other countries like Brazil and Mexico are issuing their bonds in U.S. dollars at lower interest rates compared to their own higher interest rates domestic bonds.

Brazil 10 year U.S. Dollar bonds 4.54% versus 12.49% 10 year Brazil bonds in Brazilian Real.

Mexico 10 year U.S. Dollar bonds 4.07% versus 6.17% 10 year Mexico bonds in Mexican Peso.

By the way, Chinese’s government bond yields are rising as their 30 year bond is 5.10% when it was about 4.50% just a few months back.

Interest rates are rising everywhere, Mainly 5 year to 30 year maturities so Russia, China, India, Brazil, South Africa etc. BRICS nations will pay more interest on their debt too, not just the U.S.

#90 Frustrated Kiwi on 11.25.13 at 4:26 am

#4 Sleepless in Victoria
Why does it have to be all or nothing? Put some back in now, some in month, etc. Then learn about rebalancing and never try market timing again. (Just my 2c – some enjoy market timing, which is basically gambling. I find it too stressful.)

#91 Deb on 11.25.13 at 5:50 am

There are many people who refuse to have U.S. or international holdings of any kind in their TFSA’s because of the 15% withholding tax levied on gains of any kind. The result is a TFSA which is 100% Canadian, in a world in which Canada represents roughly 4% of total global capitalization.

Will we ever see a day when the U.S. and other foreign governments give tax treatment to the TFSA in the same way it treats non-registered accounts, RRSPs and RESPs, and do away with this strange and annoying withholding tax?

#92 WhiteKat on 11.25.13 at 7:36 am

@AndrewWoburn (and Stan) re: comment #65

Yes, tbe only way Stan can end his US taxpayer status is to formally renounce US citizenship. However, part of the renunciation process is to confirm tax compliance for the past 5 years. Catching up on back filing opens a whole pandora’s box of complications one of which is risk of huge penalties.

Canadians just waking up to their ‘US person’ status are in a no-win situation if our government decides to pass over their banking information to the IRS, which appears to be what they are getting set to do.

#93 espressobob on 11.25.13 at 8:27 am

#89 Deb

The withholding tax on US holdings is with regard to dividend. Its more like 30%, however if you fill out a W-8BEN form which is provided by your discount broker, this can lower this nasty tax to 15%.

Not really a big deal. Global diversity in ones tfsa has its advantages.

http://www.theglobeandmail.com/globe-investor/personal-finance/financial-road-map/foreign-dividend-withholding-tax-and-your-tfsa/article10767173/

#94 Herb on 11.25.13 at 8:54 am

#81 World According to You,

OK, I read your links. I asked you to back up your contention that only 16% of government workers are front line. Here is what your links establish.

The first: that governments run deficits and debts. Gee, had already heard rumours of that.

The Second: that public sector workers make too much in pay and pensions according to a “conservative think-tank”. Not a word about the percentage of front line workers.

The Third and Fourth: that Conservative think-tanks, such as the Canadian Tax Payers Federation and the Federation of Independent Business (“Powered by Entrepreneurs”), believe that Canadians pay too much in taxes. No kidding! Actually is a fact, but irrelevant to your argument.

I asked you for proof for what you wrote as fact, and you come back with fact-less factoids you consider proof. Well done, Friend Neandercon! The CCP is proud of you and awards you an ideological star.

#95 NoName on 11.25.13 at 9:53 am

Company that I work for as of Dec will stop DC ret. plan and move cancel matching RSP. OK that is not new thing, what is interesting to me is that mfc who will take care new DC plan only offer us RPP and RSP, no word mentioned about TFSA wonder why…

#96 NoName on 11.25.13 at 9:55 am

Correction DB will be caned not DC.

#97 Julia on 11.25.13 at 9:58 am

#67 45north on 11.24.13 at 11:33 pm

Love Pacino! And notice even the raging Pacino calmly took the TV, he didn’t throw it at her.

#98 TurnerNation on 11.25.13 at 10:04 am

Windchill of -10 in Toronto already.
#worldclass – everyone wants to move here!

I wonder if H’s immigration worker program brochure, wages, offers a crash course in lock de-icing fluid, for those who will man Timmies in BF Sask. for low balaclavas, ice scrapers, block heater hookups, hypothermia charts?
Best place on earth.

#99 George on 11.25.13 at 10:06 am

From the Vancouver Sun yesterday:

“Unlike in Metro Vancouver, Young says, Hong Kong newspapers run front-page stories almost daily about the fast-rising non-resident purchases of Hong Kong properties. And most of the Hong Kong media coverage zeroes in on the effects of wealthy Mainland Chinese buying up so many Hong Kong condos and houses.

This week Young was picking up on Vancouver Mayor Gregor Robertson’s comments in Hong Kong this month, in which the mayor claimed Mainland Chinese people have nothing to do with Vancouver’s record-breaking property prices.

Robertson told the South China Morning Post the assertion that they do is “ridiculous.” Judging from the East Asian news media, it sounds like Hong Kong readers couldn’t believe what they were hearing from the Canadian mayor’s mouth…

Young dug up information that suggested 75 per cent of Metro Vancouver homes in one recent year were sold to Mainland Chinese (see below).”

http://blogs.vancouversun.com/2013/11/24/in-hong-kong-vancouver-real-estate-is-big-news-for-the-same-reason/

There is no statistical proof in that story. The foreigner myth lives on. The reality is Van prices are high because Van residents are nuts enough to pay them. — Garth

#100 TurnerNation on 11.25.13 at 10:08 am

More mind control from our rulers.
Don’t mention the pending TTC fare hike, Rogers raised rates this year again, and the litre of 3.25% Neilson milk at Loblaws which went from 3.19 to 3.49, and my TD renters insurance rose 42% over two years (never a claim!) so I ditched theirs.

“A major drop in the price of gasoline and declines in several other goods and services pushed down Canada’s inflation rate to 0.7 per cent last month, adding further justification to the Bank of Canada’s reluctance to raise interest rates any time soon.”

#101 TurnerNation on 11.25.13 at 10:13 am

In the news today…

“Equitable Bank, a wholly owned subsidiary of Equitable Group Inc., has launched the Equitable Bank home equity line of credit (HELOC), a powerful new tool that enables homeowners to get more out of their mortgage combined with a line of credit.

“We designed our Home Equity Line of Credit so that it would be a true financial liberator for Equitable Bank’s Single Family residential customers,” said Andrew Moor, President and CEO. “After working with our mortgage broker partners, we believe this will become a choice for Canadians wishing to use the equity in their homes on an economical basis to fund what’s important to them. Be it a child’s education, a renovation, a major purchase or the cash flow needs of the self-employed, we’re proud that the Equitable Bank HELOC stands ready to assist our customers in reaching their personal goals faster.”

Equitable Bank’s HELOC is a revolving line of credit, secured by an Equitable collateral mortgage.””

#102 nonnnnn on 11.25.13 at 10:33 am

Ahh the YTFSA, another “idea” from the pen of elites like the “honorable” Mr.Turner designed to fleece wage earners to the benefit of those with investments.

Actually it allows wage earners to save free of tax. But thanks for the comic relief. — Garth

#103 ozy - Disconnected from reality on 11.25.13 at 10:34 am

TSFA is a nice designed, but useless vehicle

like the one upside down

with houses and living cost so expensive nowadays, there’s no money left to heftily contribute to TSFA…

a totally useless instrument – unless it helps banks and govt when retirees dump all in there and mutual funds salesman or gic banks take advantage at a rate 3 times lower than inflation

buy a house, and live grandly – and if it appreciates, the houseless TSFAs will freeze

what a shame product

If you’re employed, and can’t find $5,000 a year to invest in your future, you’re doing something wrong. — Garth

#104 Dual Citizen in Canda on 11.25.13 at 10:39 am

#65
Good luck with that if the US determines that you are trying to revoke US Citizenship for the purpose of tax evasion. They will make it VERY difficult for you.

#105 Dual Citizen in Canada on 11.25.13 at 10:42 am

I’m a dual Citizen living in Canada and have $25 in my TFSA, just to save bank fees. Looks like I will need to terminate this and find another qualifying account to save that $4 a month. :-)
“No TFSA for you, come back 1 year” (wishful thinking)

#106 Bottoms_Up on 11.25.13 at 10:52 am

#87 Longterm on 11.25.13 at 3:04 am
——————————————
The CRA is indeed brutal and needs a complete overhaul, including competent staff and tracking systems.

I’ve been dealing with an ‘estate-in-law’ and the CRA lost proof (twice) that we paid back-taxes on the estate. How can they lose track of payments that have been made to specific outstanding debts?

#107 CAAMP Panic on 11.25.13 at 10:57 am

https://twitter.com/search?q=%23CAAMP2013&src=hash

CAAMP members are worried about possible more restrictions imposed to the mortgage industry. They are now trying to put the cred card debt under spot.

#108 Bubbles on 11.25.13 at 10:59 am

Can anybody explain what popped the RE bubbles in Netherlands and Norway?
At lest Norway is a rich country (very rich actually), why did their prices started going down?

#109 Smoking man on 11.25.13 at 11:00 am

#96 Julia on 11.25.13 at 9:58 am#
67 45north on 11.24.13 at 11:33 pmLove Pacino! And notice even the raging Pacino calmly took the TV, he didn’t throw it at her.
………….

Get over it already, TV went out the Window, not at wife.

Good thing she ducked….. Just kidding…:)

#110 ponerology on 11.25.13 at 11:26 am

“If you decide to make an RRSP contribution, then ensure you use the refund to fund your TFSA”. It’s like you read my mind:)

I read somewhere that income from a TFSA does not count for income purposes when calculating EI or OAS benefits. Strikes me as a rather large loophole.. at least the EI part.

Not a loophole, just common sense. Contributions do not yield a deduction from taxable income, so why should distributions be counted as income? — Garth

#111 joblo on 11.25.13 at 11:37 am

TFSA’s….Hmmmm?
Why do Income Trusts come to mind?
Who can you trust?

TFSAs will be here long after you’re gone. — Garth

#112 Canadian Watchdog on 11.25.13 at 11:49 am

#107 Bubbles

Austerity and financial contagion is what popped Norway and Netherlands' housing bubble. Otherwise they would have just kept blowing their bubble even bigger, like we are now.

#113 TnT on 11.25.13 at 11:50 am

#52 Bob Rice

For those who NEED their TFSA to sit in CASH pending a large purchase then have a look here.

http://www.peoplestrust.com/high-interest-accounts/todays-rates-3/

No fees, online banking, HISA TFSA that pays 3%

This has been paying 3% since 2009.

I know people make fun of this but IF you need to SIT in CASH then what’s wrong with a guaranteed 3% no fees?

Only people who do not know better ‘sit in cash.’ — Garth

#114 TnT on 11.25.13 at 11:52 am

Great site from Service Canada

http://www.servicecanada.gc.ca/eng/services/pensions/cpp/retirement/index.shtml

Create a Service of Canada account and access your pension details.

This will show you what to expect at retirement and then add your OAS.

Plan accordingly :)

#115 Julia on 11.25.13 at 11:57 am

#108 Smoking Man

Textbook warning signs of an abuser
“Breaking objects
An abuser may break things, beat on tables or walls or throw objects around or near the victim. This behavior terrorizes the victim and can send the message that physical abuse is the next step.”

http://www.northwestern.edu/womenscenter/issues-information/relationship-violence/warning-signs-abusive-person.html

It’s no joke. Many women live in constant terror. For these women, TFSAs are the least of their concerns. A friend of mine just left her husband because he smashed a mirror in rage. Scared the shit out of her. Packed her bags and left.

#116 Buy? Curious? on 11.25.13 at 12:05 pm

According to an index from YouthfulCities, Toronto was named the best city in the world for young people. You know why? Because our mayor is cool. He gets drunk and stoned like the rest of us. I wonder if he’s thinking about buying a condo soon.

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

#117 Nemesis on 11.25.13 at 12:07 pm

@George/#98…

Outstanding link, George! – my favourite takeaway from Ian Young’s piece?…

“…. There’s no unassailable proof that mainland money fuels Vancouver home prices, mainly because Canada provides no data on foreign property ownership.

However, there’s enough statistical and anecdotal evidence to make a strong case. It’s far from a ridiculous assertion.

The most comprehensive look at the phenomenon was undertaken in 2011 by Landcor Data Corp, which went through every sales document for luxury properties sold the previous year to find buyers with Chinese names spelt only in mainland fashion, with no Westernised names. The luxury threshold was set at C$3 million for houses in Vancouver’s premier Westside district, and C$2 million for apartments in the satellite city of Richmond.

The methodology was imperfect, but its results? Astounding. Seventy-four per cent of all buyers fit the mainlander profile. “…

Regardless, George – you’re going to have about as much luck peddling that argument here as Galileo did persuading Cardinal Vincenzo Maculani that HelioCentrism was ScientificFact, vs. ‘heresy’. To wit:

“There is no statistical proof in that story. The foreigner myth lives on.” – HonGarth

Never mind, George… when Galileo’s ShowTrial had concluded he nevertheless had the audacity to mutter, “And yet it moves.”… and, as it happens, would ultimately have the last/best laugh when:

[NYT] – Vatican Science Panel Told By Pope: Galileo Was Right

http://www.nytimes.com/1992/11/01/world/vatican-science-panel-told-by-pope-galileo-was-right.html

It only took 359 years…

On the BrighterSide, I’m quite certain that our MagnanimousHost will come around sooner than that.

#118 sciencemonkey on 11.25.13 at 12:08 pm

Garth, I am a Canadian-US dual-citizen and I have just gotten into tax-compliance with the US. The TFSA is great in Canada, but it is not considered tax-free by the IRS. Who can I talk to for tax advice regarding the TFSA?

#119 Shawn on 11.25.13 at 12:09 pm

Defined Contribution Pension versus TFSA

Noname at 94 said:

interesting to me is that mfc who will take care new DC plan only offer us RPP and RSP, no word mentioned about TFSA wonder why…

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

Probably because TFSA is not usually considered a pension plan, but you raise an interesting point.

For most jobs with any kind of pension, a TSFA at $5500 is too small. Say the pension is shared with employer, that is only $2750 each for you and employer, too small.

TFSA are not meant to be group plans… Possibly not even allowed to be group plans.

Pension gives tax deduction now but is taxable on withdrawal. That works out EXACTLY even, a wash if the tax rates (including loss of other benefits) are exactly the same at contribution and upon retirement. Theory is tax rates are lower in retirement diue to lower income. In paractive , maybe not considering things like old age pension claw back.

If a company contributed to a TFSA, they could deduct that for tax, but it would have to be added to your tax bill.

If a company used your TSFA for pension it means you can’t use it on your own.

It’s too easy for you to withdraw from a TFSA…

Overall the idea of a company using TFSA for pension is a non-starter.

#120 happity on 11.25.13 at 12:09 pm

How it all turns out is a tfsa is just another looser for F’s bail in plan, you know page 144-5 2013 written budget plan.

There is no bail-in plan as you understand it. — Garth

#121 Banks' cash reserve on 11.25.13 at 12:23 pm

from what I understand the banks keep increasing their cash reserve about the limits they are required to and despite the fed’s expectations that the money will be pumped into the economy.
Two questions:
1. is there any limit beyond which the banks will have to stop piling cash?
2. what is it going to happen with this cash in the end/ What is it their plan if they don’t lend the cash now when the interest rates are low. Do they expect that people will be more willing to borrow when the interest rates go up?

thanks
[email protected]

#122 Mixed Bag on 11.25.13 at 12:25 pm

#144 OttawaMike on 11.23.13 at 11:39 pm

Wow.
Conrad Black and Smoking Man are one and the same. I have long suspected the faux spelling and grammatical errors were a coverup of SM’s true identity:

http://fullcomment.nationalpost.com/2013/11/23/conrad-black-the-salvation-of-rob-ford/

—————–
No, no resemblance. But thank you for posting the link to this piece. It was beautiful. I can say, with little hyperbole, that I love Conrad Black’s writing.

#123 Banks' cash reserve on 11.25.13 at 12:26 pm

#110 Canadian Watchdog on 11.25.13 at 11:49 am

#107 Bubbles

Austerity and financial contagion is what popped Norway and Netherlands’ housing bubble. Otherwise they would have just kept blowing their bubble even bigger, like we are now.
——————————-
Can you be more explicit?
At least in Norway’s case I understand that they are not in trouble at all, financially speaking.

#124 sciencemonkey on 11.25.13 at 12:38 pm

@104 Dual:
Sounds like RBC. Recently they’ve made a change where if you’ve got any kind of investments with RBC direct investing, that counts towards the multi-product rebate. You don’t need that token TFSA anymore to save the $4.

This whole US tax thing is burdensome. :( Related to my above post, if there is no clear way to take advantage of a TFSA as a dual-citizen, then I won’t use one.

This raises a question about tax treatment for allocating investments between an RRSP and an open account. If the 3 main investments are CDN preferred shares, CDN equity, and worldwide (~50% US) equity, what should go in the open account? My guess is open account preference is for the order I wrote them above.

#125 Going long term: 50% gold -50%government bonds on 11.25.13 at 12:39 pm

I am seeing that Gold and Bonds seem to move in opposite direction.
My bet is that Gold is going to surge in the case of an acute global recession. Right now the recession is mild and chronic with inflating bubbles in RE and stock market.
According with many observers China, India and Russia are stocking gold.
Interesting read:
http://www.resourceinvestor.com/2013/02/04/the-bernanke-shock-and-germanys-gold-repatriation

China’s restless regarding the greenback is also notorious and I think that many countries’ bankers do not sleep well when they think at their USD reserves and their value.

These being said I would like to secure for a long term my money. I am not going to make any bet and put my money into stock market right now.
My plan is to put 50% in CAD bonds and 50% in Gold.

What do you guys think of such a plan. My target is minimal risk on long term with promising gains if my bet against dollar and on gold will succeed. If it fails at least this distribution will keep my money safe.

Your plan = guaranteed losees. — Garth

#126 T.O. Bubble Boy on 11.25.13 at 1:15 pm

@ #90 Deb on 11.25.13 at 5:50 am
There are many people who refuse to have U.S. or international holdings of any kind in their TFSA’s because of the 15% withholding tax levied on gains of any kind. The result is a TFSA which is 100% Canadian, in a world in which Canada represents roughly 4% of total global capitalization.

Will we ever see a day when the U.S. and other foreign governments give tax treatment to the TFSA in the same way it treats non-registered accounts, RRSPs and RESPs, and do away with this strange and annoying withholding tax?
————————–
There is no withholding on capital gains from US or Foreign ETFs etc… only on income/dividends.

#127 brainsail on 11.25.13 at 1:18 pm

“Chinese buying up California housing”

http://www.cnbc.com/id/101225345

#128 Mister Obvious on 11.25.13 at 1:18 pm

#114 Buy? Curious?

“…Toronto was named the best city in the world for young people. You know why? Because our mayor is cool. He gets drunk and stoned like the rest of us….”
——————————

But really, isn’t the true measure of the man evident in the consummate class he shows as he refers to the plenitude of his wife’s genitalia in public?

That effectively ‘out-Bubbas’ any rural Texan redneck. No wonder he’s still so damned popular.

#129 rosie "moving forward" in the knowledge that, "this won't end well" on 11.25.13 at 1:29 pm

Here you go conspiracy mongers. Is there no shame? http://blogs.marketwatch.com/themargin/2013/11/25/jamie-dimon-makes-a-right-royal-dinner-at-buckingham-palace/

#130 Stickler on 11.25.13 at 1:29 pm

@ #83 TRON on 11.25.13 at 2:16 am

Can you sell a stock (at a loss) from a cash account, take the loss and buy the stock back in your TFSA with the proceeds from the sale of the stock?

—————-
As I understand…To claim the loss you can’t re purchase the stock until 30 days passes (even if you re buy it in your tsfa or rsp)

You could buy a sector ETF if you cant wait the 30 days.

IE sell potash, then buy “MOO”…or sell then buy a competing company.

#131 Going long term: 50% gold -50%government bonds on 11.25.13 at 1:38 pm

Your plan = guaranteed losees. — Garth

Anybody else?

I should have specified at the end of my post that I know Garth’s opinion and I need other opinions. I will make that a habit from now on.

While Garth might feel that it would be against his interest to explain his opinions I am positive that we the others can post our opinions without soliciting business from each other. In other words free and uninterested advice.

Tks
[email protected]

The reasons are self-evident. There is no global recession, but a recovery. Gold will be dead money, and fall further. Interest rates will rise, cutting the capital value of bonds. It’s hard to imagine a worse strategy. — Garth

#132 Chinese leaving Toronto RE on 11.25.13 at 1:45 pm

Off to the u.s…….. More reason toronto prices are doomed…

HAM is leaving the cold….

http://www.cnbc.com/id/101225345

Love the one line where they say price doesn’t matter….. Buying everything in sight…. Sounds like here a few years ago. Lol

#133 IM in C on 11.25.13 at 1:46 pm

@107
http://www.bloomberg.com/news/2013-11-24/norway-poised-to-relax-bank-rules-to-fight-house-price-deflation.html?source=Patrick.net

This explains why Norway’s housing market ballooned; and more importantly, shows that when faced with a hard landing, govenments will relent and do what it takes to re-inflate the gas bag.
But it’s different here in Canada !!

#134 bdy sky on 11.25.13 at 1:55 pm

UNITE!!!

RISE UP!!!

REVOLT!!!

http://www.antiquedoorknobs.org/

http://www.survivorsofgruesomedoorleverimpalementinjuries.org/

#135 happity on 11.25.13 at 1:55 pm

There is no bail-in plan as you understand it. — Garth

Garth, you do realize that once you give a bank your money it is no longer your property, you loaned it to them. They only keep 5-10% of what you loaned them and in turn loan that out, you know, for example to folks buying real estate they can’t afford. They then multiply their doom by using this debt as collateral to gamble in the unregulated derivatives market because they can’t make money with interest rates so low so long.

So banks don’t have assets, but debt that is leveraged to historic proportions.

And it isn’t different here in Canada, the quadrillions in derivatives are like a tape worm that has infected everything.

So your tfsa is very readily used to bail in the bank, it’s not your property.

No Canadian bank will fail. But it sounds like you might. — Garth

#136 Canadian Watchdog on 11.25.13 at 1:59 pm

#121 Banks' cash reserve

Fresh off the press…

Norway Poised to Relax Rules to Fight House Price Deflation

Norway is moving closer to easing mortgage lending standards as the nation’s deflating property market prompts concern among lawmakers that existing regulations are too tight.

Real estate prices, which have doubled over the past decade and touched a record high this year, are now dropping faster than the central bank had predicted. The Conservative-led government, which won power in September, says it’s now looking into raising the amount banks can lend to borrowers to 90 percent of a property’s value, from 85 percent previously, in an effort to support first-time buyers.

That's exactly what all governments will do in order to temporally avoid a crash, because self-deflating a housing bubble at a time when global GDP is declining is political and financial suicide. So just kick the can and leave the debt for millennials to pay.

#137 Holy Crap Wheres The Tylenol on 11.25.13 at 2:02 pm

#15 WhiteKat on 11.24.13 at 8:04 pm
You absolutely should NOT have a TFSA if you:
– were born in the USA even if you left as a young child, and your parents are Canadian
– hold a green card
– regularly visit the USA and meet the substantial presence test
– were born outside USA to one or more American parents even if you never lived in USA
– are a naturalized American citizen regardless whether or not you hold Canadian citizenship
If any of these describe you, you are a ‘US person’, and your TFSA is considered a taxable ‘foreign trust’ by the IRS.

This sounds interesting hmmmm. So I left Canada in 1964 with my parents whilst living in Florida. Dad was aerospace engineer working in Coco Beach area. Parents both Canadian by birth, they never took out US citizenship. I never took out US citizenship. We were residents only in the 1960’s. I did however attend a US university, had a work permit, graduated and applied to the US air force where I was scooped up quickly. Was trained in California airbase near Sacramento. Paid by the US air force (a mere pittance.) Then for most of my air force career got stuck in Da Nang 6252d Tactical Wing overseas. Most of my military career wasn’t even in the US. The only item I ever had to do was to swear and oath to the United States to defend and honor. Was discharged with honors and promptly returned to North America where I came back to Canada on a job offer. So never became an America Citizen although citizenship was offered upon my return to USA I declined. Back in the day it was one or the other couldn’t have dual for some particular reason.
So whats the scoop with a TFSA for me?

BTW the last time I filed a 1040 was over 40 years ago!

#138 Toronto_CA on 11.25.13 at 2:08 pm

“Meanwhile, overall consumer debt, including mortgages, continues to grow. In the third quarter, Canadians owed $1.36 trillion, up from $1.3 trillion a year earlier.”

So total debt is up 4.6% from last year Q3, but GDP is up less than 2% and wage growth about flat as well?

http://www.cbc.ca/news/business/canadians-carry-more-debt-but-pay-it-off-survey-finds-1.2439042

#139 [email protected] on 11.25.13 at 2:09 pm

The reasons are self-evident. There is no global recession, but a recovery. Gold will be dead money, and fall further. Interest rates will rise, cutting the capital value of bonds. It’s hard to imagine a worse strategy. — Garth
Again, that is your view, well known and unsupported by numbers.
QE is still going on, EU is still cutting interest rates and BoC can’t rise their interest rate because of your “recovery”

#140 [email protected] on 11.25.13 at 2:16 pm

#131 IM in C on 11.25.13 at 1:46 pm

@107
http://www.bloomberg.com/news/2013-11-24/norway-poised-to-relax-bank-rules-to-fight-house-price-deflation.html?source=Patrick.net

This explains why Norway’s housing market ballooned; and more importantly, shows that when faced with a hard landing, govenments will relent and do what it takes to re-inflate the gas bag.
But it’s different here in Canada !!
—————————-
That was the very article that made me rise this question
The articled explain what drove the prices up but not what is driving them down. High debt to income ratio does not fly, Canada’s most expensive cities are worse that Norway in this respect.

#141 economictsunami on 11.25.13 at 2:17 pm

Oil economies brace for major shakeup in energy sector when flood of Iranian oil hits market…

http://business.financialpost.com/2013/11/25/oil-economies-brace-for-major-shakeup-in-energy-sector-when-flood-of-iranian-oil-hits-market/?__lsa=3a55-32c7

#142 Ralph Cramdown on 11.25.13 at 2:18 pm

Bonds, gold… and tuna?

Your portfolio is half of the “Permanent Portfolio,” look it up. It may suffer from showing its performance typically from the early seventies, so including gold’s best decade ever.

30 seconds with Google Finance indicates that a portfolio 1/2 TLT and 1/2 GLD would be down over 20% in the last 12 months. Seems to me that up until a few years ago, gold and bonds were both moving up. Regardless, there’s no growth in the portfolio. Good luck.

#143 bdy sky on 11.25.13 at 2:21 pm

#125 brainsail on 11.25.13 at 1:18 pm “Chinese buying up California housing”

http://www.cnbc.com/id/101225345
——————————————-

in other news, Vancoouver home prices have pushed beyond even the reach of wealthy offshore investors, primarily asian. While there are no hard numbers, the leap in prices of 2+million properties largely seen to be a result of ham.

ham vs ham!

#144 Smoking man on 11.25.13 at 2:22 pm

#120 Mixed Bag on 11.25.13 at 12:25 pm#144 OttawaMike on 11.23.13 at 11:39 pm

Wow.Conrad Black and Smoking Man are one and the same. I have long suspected the faux spelling and grammatical errors were a coverup of SM’s true identity:http://fullcomment.nationalpost.com/2013/11/23/conrad-black-the-salvation-of-rob-ford/

—————–
No, no resemblance. But thank you for posting the link to this piece. It was beautiful. I can say, with little hyperbole, that I love Conrad Black’s writing.
……………….

Ha a tree hugger at the Toronto Star just trashed Black. This elite lefty writer completely owned by the climate change criminals.

I hope Black rebuttals this little worm of a man.

http://www.thestar.com/news/gta/2013/11/25/conrad_black_comes_to_rob_fords_rescue_hume.html 

#145 Cdn Govt According to Herb on 11.25.13 at 2:30 pm

SURPRISE SURPRISE – ask a Govt worker for PROOF they are giving us “value for our money” and what do we get:

NO – you the overworked overtaxed working poor taxpayer, you take time out of YOUR DAY to prove WE are doing a good job for YOU by stealing all your money in the form of taxes

Can you expect anything less from an overpaid overpensioned pencil pusher?

———————————————————

#93 Herb on 11.25.13 at 8:54 am

#81 World According to You,

OK, I read your links. I asked you to back up your contention that only 16% of government workers are front line. Here is what your links establish.

The first: that governments run deficits and debts. Gee, had already heard rumours of that.

The Second: that public sector workers make too much in pay and pensions according to a “conservative think-tank”. Not a word about the percentage of front line workers.

The Third and Fourth: that Conservative think-tanks, such as the Canadian Tax Payers Federation and the Federation of Independent Business (“Powered by Entrepreneurs”), believe that Canadians pay too much in taxes. No kidding! Actually is a fact, but irrelevant to your argument.

I asked you for proof for what you wrote as fact, and you come back with fact-less factoids you consider proof. Well done, Friend Neandercon! The CCP is proud of you and awards you an ideological star.

#146 Knickerbockers Knosty on 11.25.13 at 2:32 pm

#63 Regretful on 11.24.13 at 11:22 pm — “A couple of buddies loaded up on junior mining Zenyatta Ventures which ran from 61 cents to 5 bucks! Tax Free. They both made out like bandits.”
— and —
#101 nonnnnn on 11.25.13 at 10:33 am — “Ahh the YTFSA, another “idea” from the pen of elites like the “honorable” Mr.Turner designed to fleece wage earners to the benefit of those with investments.”

“Look at the cash flow of the underlying assets. — Garth”

Buy low, sell high. Harvest the profits into Garth’s 40-60 plan, possibly modifying a little. Worked (and continues to work) for me.

#147 World According to Garth on 11.25.13 at 2:37 pm

The reasons are self-evident. There is no global recession, but a recovery. — Garth

BAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

I need to change the name to “Canada Only According to Garth”.

The EU is MELTING DOWN. Japan is in a 40 year old recession. How’s Afrideath doing these days? Overbuilt China is going to fall down any day now. The middle east is more like Middle Death. And the US? Manufacturing continues to drop like a stone and the only reason there is a “blip” in “some home price increases” is because Euro money is bailing and moving to the US !! Many more cities are going to be “BANKRUPT” in the coming months.

Now I’m no “economist” but I don’t think HEALTHY and BANKRUPT are in the same room.

I liked the part about “I’m no economist”. — Garth

#148 not 1st on 11.25.13 at 3:22 pm

Garth, step back and take a real look at this economy and tell us honestly this seems healthy and sustainable.

1. You have massive government stimulus debt buying equities.

2. You have dumb money chasing internet start ups again ala 1999

3. You have mom and pop now starting to put money into the market for no reason other than to not be left out.

4. You have record low interest rates fueling housing bubbles and construction and unaffordable consumer spending.

5. Emerging economies with more than 50% GDP related to local construction projects like malls and apts with no people.

6. A commodities bull that is likely to turn sharply bearish

7. Corporate profits coming from brutal efficiency gains, not growth.

You as a man of intelligence cannot sit there and say with a straight face all of this is good and equals a strong sustained recovery.

Not a strong rcovery, but absolutely ongoing. I regret you are not participating. — Garth

#149 Kazimieras on 11.25.13 at 3:49 pm

Great crash course :)

I thought you’d appreciate some more crashing – CBC today decided to post that former Ottawa Sentator, Mike Fisher, (not to be confused with the corrupt Sens) has been trying to sell his house… with a 205k drop in total home price. Apparently even mega homes are not safe :)

http://www.cbc.ca/news/canada/ottawa/mike-fisher-carrie-underwood-s-former-home-drops-in-price-1.2439101

#150 Son of Ponzi on 11.25.13 at 3:55 pm

#145
“I’m no economist”
And that is a good thing, me thinks.

#151 Nemesis on 11.25.13 at 4:07 pm

Yikes… so much going on – so little time. Let’s begin with… @Homme du Tabagisme/#16…

Leaving AngerManagementIssues aside for the moment – the TrulyJuicy element of your comment is the mis-identification of Toronto Police’s peripatetic Mr. Pugash as ‘spokesperson’…

Let’s just say that calling Mr. Pugash a SpokesPerson would be rather like labeling Shakespeare a Scrivener.

His actual title is UnitCommander: Corporate Communications… and NotSurprisingly for someone working at that level [think BP/Tepco, et al after their worst crises], Mr. Pugash comes with a history of sorts:

[UK Telegraph] – Police pay £600,000 to settle BBC libel action

http://www.telegraph.co.uk/news/uknews/1409557/Police-pay-600000-to-settle-BBC-libel-action.html

Still, when the PeasantsAreRevolting or worse, the SIU’s breathing down your neck…

[G&M] – Ontario SIU head singles out Toronto police chief for lack of co-operation

http://www.theglobeandmail.com/news/toronto/ontario-siu-head-slams-toronto-police-chief-for-failing-to-address-co-operation-concerns/article14019879/

… nothing but the best will do…

Unless, that is, your departmental budget won’t quite stretch to cover a GeneralAtomics MQ-9 Reaper [2013 FlyAway Cost USD16.9M]… in which case, you’ll just have to settle for a modified Cessna:

[GlobalTV] – Documents show Toronto police own Cessna aircraft outfitted with surveillance camera

…”Meanwhile, councillors are surprised the city has a plane.

“I’ve been a city councillor for 20 years and frankly this is the first I’ve heard of it,” Councillor Joe Mihevc said at city hall Wednesday. “I’d like to know what it’s used for, how it’s in the public interest and to have a full and frank discussion as a city over the use of this kind of technology.”…

http://globalnews.ca/news/893081/documents-show-toronto-police-own-cessna-aircraft-outfitted-with-surveillance-camera/

Alas… ‘Twas ever thus for Transparency & FullDisclosure… Which, needless say, are two things those VeryNaughtyBankers at RBS would rather not have to deal with today:

[UK Independent] – RBS ‘drove businesses to collapse before stripping their assets’

…”Royal Bank of Scotland is facing an inquiry by banking regulators into allegations that it drove firms to collapse in order to buy back their assets at rock-bottom prices.

A report into the bank’s “unscrupulous” treatment of small businesses has been passed to the Financial Conduct Authority by the Department for Business, Innovation and Skills. Last night the FCA said it was examining the allegations made but would not comment further.

The Business Secretary Vince Cable said some of the allegations were “very serious”, adding he was waiting for an “urgent response as to what actions have been taken”.

The development is yet more bad news for the banking industry following revelations of poor governance at the Co-operative Bank, whose former chairman the Rev Paul Flowers has been arrested over the purchase of class A drugs.”…

http://www.independent.co.uk/news/uk/politics/rbs-drove-businesses-to-collapse-before-stripping-their-assets-8960879.html

UtterlyAppalling!… Which is no doubt what recently divorced billionaire MediaTycoon Rupert Murdoch thought upon awakening to HeadLines depicting his former spouse’s VeryTony HankyPanky…

SaltyDogz… your MondayZen:

[UK Independent] – Relations between Tony Blair and Rupert Murdoch ‘collapse’ after claims of meetings with ex-wife Wendi Deng

http://www.independent.co.uk/news/uk/politics/relations-between-tony-blair-and-rupert-murdoch-collapse-after-claims-of-meetings-with-exwife-wendi-deng-8960921.html

Which brings us nicely back to Homme Du Tabagisme’s studies in behavioral science; to wit, I really wouldn’t want to be Tony this morning… as, given Cherie Blair’s NotoriousPenchant for staging TitanticTantrams there probably isn’t going to be a functioning television in so much as one of their [now] seven homes by this evening…

[UK DailyMail] – Blairs paid £1.35m in cash for home number SEVEN: Splashed out on a four-storey Georgian townhouse

http://www.dailymail.co.uk/news/article-2272239/Blairs-paid-1-35m-cash-home-number-SEVEN-Bought-storey-Georgian-townhouse-son-Nicky.html

[NoteToRosieMovingForward: “Is there no shame?” Truthfully, Rosie – in those circles? Very little, if any. But we can always Hope.]

#152 Shawn on 11.25.13 at 4:14 pm

Uninformedity?

Happity at 134 said:

Garth, you do realize that once you give a bank your money it is no longer your property, you loaned it to them. They only keep 5-10% of what you loaned them and in turn loan that out, you know, for example to folks buying real estate they can’t afford.

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

Happity, your revelation to garth” about how banks work is a revelation in the same way that finding out how babies are made is a revelation to a 10-year old.

Banks have always been as you describe.

Did you think they should hold onto your money in a safe and pay you interest for the priveledge of that and also give you the easy ability to spend your money via cheque or electronically and do all the book keeping on that for you?

Yes, a deposit at abank is a loan to the bank, one which is however protected by bank regulations and federal deposit insurance.

If you don’t want your money loaned out, keep it in a safe.

#153 TnT on 11.25.13 at 4:20 pm

#147 not 1st

When Garth Turner is happy, the stock market goes up. When he kicks butt, it pays dividends.

/ripped from Chuck Norris

#154 angela on 11.25.13 at 4:28 pm

BREAKING NEWS China drops 2 bombshells ……..BYE BYE us dollar , so does this mean no Taper ???
http://www.bloomberg.com/news/2013-11-20/pboc-says-no-longer-in-china-s-favor-to-boost-record-reserves.html
http://www.reuters.com/article/2013/11/21/china-crudeoil-idUSL4N0J62M120131121

#155 Musty Basement Dweller on 11.25.13 at 4:33 pm

Front page of the province is full page car advertisement today. What a sad state of affairs for mainstream media. But I guess it’s a little less revolting than seeing a condo king on the front page .

#156 Herb on 11.25.13 at 4:59 pm

#144 Government According to Hisself,

I’m going to suggest that the CPC retrieve that ideological star. You’re not supposed to show what an idiot you are while engaging in propaganda. That casts a shadow over the right wing message.

And nice change of talking points at #146.

#157 Ronaldo on 11.25.13 at 5:22 pm

Bob #68 – if Mutual funds with low mers are of interest you may want to check out. http://Www.phn.com.

#158 You Win on 11.25.13 at 5:44 pm

Ahh the YTFSA, another “idea” from the pen of elites like the “honorable” Mr.Turner designed to fleece wage earners to the benefit of those with investments.
———–
the prize for most ignorant comment of the day

STOP LOOKING AT FEAR PORN

it is ruining your life

#159 recharts on 11.25.13 at 5:48 pm

You as a man of intelligence cannot sit there and say with a straight face all of this is good and equals a strong sustained recovery.

Not a strong recovery, but absolutely ongoing. I regret you are not participating. — Garth
——————
“Yes he can!”

On another note:
Garth, my favourite RE idiot, “zilber” likes to say to reply opponents when he argues with them: “you did not enjoy the free money that the banks lended all these years”

http://tinyurl.com/l5gjl3v

That is his “decisive reply” as you like to ironically call it :D.

I just wonder how that argument of him can hold when he has no idea about the context of the person he is replying to. Let’s say a guy is just out of university or he just landed here two three years ago etc etc etc.

By the same logic how is your argument (like zilber’s) valid in the above context?

#160 Ralph Cramdown on 11.25.13 at 5:50 pm

#153 angela — “pboc-says-no-longer-in-china-s-favor-to-boost-record-reserves.html”

Running a trade surplus means they have to do something with all that money. Maintaining a peg to the USD severely limits what ‘something’ might be.
http://en.wikipedia.org/wiki/Impossible_trinity

“china-crudeoil”

Funny quote: “China is the only country in the world that is a major crude producer, consumer and a big importer. It has all the necessary conditions to establish a successful crude oil futures contract”

Why funny? Well, the NYMEX isn’t exactly a big consumer of cocoa, nor a producer. I guess the USA as a whole would be two out of three.

The requisites for a successful futures contract are transparency, rule of law, trades in a reasonable currency, liquidity, and open during money’s business hours. Note that these are co-dependent. A lot of people think the Yuan is being pegged artificially high versus the USD. China has been mumbling about letting the peg slip. If the ratios between oil/USD/CNY slips, it isn’t going to be oil/USD that moves. So what grade of moron would trade a 6 month forward contract for oil/CNY?

#161 According with Garth this did not happen on 11.25.13 at 5:53 pm

#153 angela on 11.25.13 at 4:28 pm

BREAKING NEWS China drops 2 bombshells ……..BYE BYE us dollar , so does this mean no Taper ???
http://www.bloomberg.com/news/2013-11-20/pboc-says-no-longer-in-china-s-favor-to-boost-record-reserves.html
http://www.reuters.com/article/2013/11/21/china-crudeoil-idUSL4N0J62M120131121
——————–
I was just assuming this would happen (actually I was quoting people smarter than me :d )
http://www.greaterfool.ca/2013/11/24/crash-course/comment-page-3/#comment-272672

#162 Sideline Sitter on 11.25.13 at 5:56 pm

So… no feedback on my plan in post 81?

It’s the one where I liquidate my TFSA on December 15th, put the proceeds into my RRSP, and then take the tax return and some extra cash to max out my TFSA again.

Anyone? Anyone? Bueller? Bueller?

#163 [email protected] on 11.25.13 at 5:57 pm

#135 Canadian Watchdog on 11.25.13 at 1:59 pm

#121 Banks’ cash reserve

……
That’s exactly what all governments will do in order to temporally avoid a crash, because self-deflating a housing bubble at a time when global GDP is declining is political and financial suicide. So just kick the can and leave the debt for millennials to pay.
—————–
Everybody keeps quoting the same article which actually explains their plan to avoid the bubble.
None of you explained what caused the change in buyers’ sentiment.
All the factors available here in Ca were available there as well. The most important, low interest rates. is still in place. So ..what made the consumers turn the ship in the opposite direction?

#164 jess on 11.25.13 at 5:58 pm

Canadian banks to be compelled to share clients’ info with U.S.
Starting July 1, banks must look for markers that identify accounts belonging to Americans

The European Commission signalled today that the war on massive corporate tax avoidance has begun with Ireland, the Netherlands and Luxembourg, in the cross-hairs as the main facilitators in the European Union

the Parent-Subsidiary Directive
hybrid loans, double non-taxation etc…
http://europa.eu/rapid/press-release_MEMO-13-1040_en.htm
======================
http://qz.com/150315/here-is-our-best-approximation-of-where-the-worlds-tax-havens-are/
http://www.icij.org/blog/2013/11/lobbyists-havens-icijs-guide-offshore-systems-defenders

#165 Ralph Cramdown on 11.25.13 at 6:08 pm

Oops, artificially low. But you either get the idea, or you don’t.

#166 [email protected] on 11.25.13 at 6:11 pm

#141 Ralph Cramdown on 11.25.13 at 2:18 pm

Bonds, gold… and tuna?

Your portfolio is half of the “Permanent Portfolio,” look it up. It may suffer from showing its performance typically from the early seventies, so including gold’s best decade ever.

30 seconds with Google Finance indicates that a portfolio 1/2 TLT and 1/2 GLD would be down over 20% in the last 12 months. Seems to me that up until a few years ago, gold and bonds were both moving up. Regardless, there’s no growth in the portfolio. Good luck.
——————————

You seem inclined to believe that calm waters are ahead of us. My opinion is that we are in the eye of a big storm.
During the first major turbulence one of these two assets will surge. That is the exit point. Perhaps I should have not said “long term”

Your basic premise is flawed. There is no giant storm coming. — Garth

#167 jess on 11.25.13 at 6:26 pm

Remember those World Bank staffers and the slogan carbon as “the currency of the 21st century”

trading in rights to pollute

china
http://www.reuters.com/article/2013/11/25/us-china-carbon-idUSBRE9AO07E20131125

Warsaw, Poland — carbon credit market
climate activists here say it is a “false solution” pushed by bankers and bureaucrats according to professor Patrick Bond, who says negotiators should instead emphasize cutting emissions and paying climate debt.
http://truth-out.org/video/item/20250-climate-activists-carbon-trading-a-false-solution-pushed-by-bankers-and-bureaucrats

=
Carbon credit fraud firms closed
Insolvency service winds up companies that sold older people worthless certificates for millions of pounds in total
Carbon cowboys. VAT carousel fraud. Double-counting. Hackers. A fake bomb scare in the Czech Republic’s carbon registry. Phishing via fake carbon registry websites. Invented carbon credits. Overvalued carbon credits. Boiler rooms. Imaginary baselines. Auditors with conflicts of interest.

The list of scams in carbon markets is long and the cost in Europe alone is in the order of €15 billion. In an excellent recent article for The Atlantic, journalist Ryan Jacobs highlights fraud in the forest carbon markets…”
http://www.redd-monitor.org/2013/10/17/carbon-trading-is-a-con-mans-dream/

http://www.theatlantic.com/international/archive/2013/10/the-forest-mafia-how-scammers-steal-millions-through-carbon-markets/280419/

==============
The Carbon Cowboy

http://sixtyminutes.ninemsn.com.au/stories/8495029/the-carbon-cowboy

#168 [email protected] on 11.25.13 at 6:36 pm

Your basic premise is flawed. There is no giant storm coming. — Garth
———————–
So is yours: recovery. There is no recover happening.

Take the blinkers off. You have been sadly misinformed. — Garth

#169 Victor V on 11.25.13 at 7:05 pm

#112

Recommending People’s Trust? Ironic.

http://www.thestar.com/business/personal_finance/2013/11/09/peoples_trust_warns_clients_about_security_roseman.html

“The company is responsible for safeguarding personal information and did not do so. Further, there is no warning at the website about this.”

Moffatt admitted responsibility for hackers getting into the database. The company’s systems were supposed to be tested for security later this month.

“We regret what happened. It shouldn’t have happened. It won’t happen again, since we have emptied the database,” he said.

Peoples Trust is talking to computer experts and plans to run security tests more often in the future. It also plans to publicize the incident soon.

#170 lolwat on 11.25.13 at 7:14 pm

The Recovery™ ©

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A123600001&f=M

A.k.a. fuel efficiency. I saw two Teslas today, by the way. — Garth

#171 Shawn on 11.25.13 at 7:23 pm

STILL WAITING FOR RECOVERY?

Babblkes at 166 said:

There is no recover happening.

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

So you are suggesting it is already complete then I assume? Because there has been a heck of a recovery since early 2009, so it is either still happening or it is finshed. To suggest there has been no recovery is to be willfully blind.

To be clear, my view is a ton of recovery has already happened and there is more to come.

#172 lolwat on 11.25.13 at 7:24 pm

>A.k.a. fuel efficiency.

Nope. Hint#1: what is the best selling vehicle in the US?

#173 Ralph Cramdown on 11.25.13 at 7:26 pm

#164 [email protected]“You seem inclined to believe that calm waters are ahead of us. My opinion is that we are in the eye of a big storm.”

So bet accordingly. But know that gold and T-bonds would both go to about zero, and the man with the biggest posse and the biggest guns will take what he will.

I love the goldbug theory that society is going to collapse back to the age of chivalry, where all paper assets are wiped out, but nobody takes by force, and gentlemens’ words are their bonds.

#174 lolwat on 11.25.13 at 7:30 pm

The Recovery™ © Part 2: QE 4lyf

http://i.imgur.com/t9uG1zn.png

Profit preannouncements for months not yet passed? You’re a funny guy. Why not show a chart of the actual profits from Q3? Or the equity market that reflects them? I thought so. — Garth

#175 Shawn on 11.25.13 at 7:33 pm

TSFA to RRSP

160 Sidelkine Sitter said:

So… no feedback on my plan in post 81?

It’s the one where I liquidate my TFSA on December 15th, put the proceeds into my RRSP, and then take the tax return and some extra cash to max out my TFSA again.

******************************************
If you can max out both RRSP and TSFA, do it. Both are huge tax avoidance plans.

The attraction of the RRSP is not in the refund which upon withdrawal you will find you will efectively have to pay back with “interest” equal to the growth in your RRSP (assuming same tax rate at withdrawal after accounting for impact on soicial benefits).

The attraction of RRSP is tax-free compounding on your share of the RRSP. Your share is what you put in after deducting the refund impact.

Only problem is a 40% refund when uou transfer TSFA to RRSP is not going to be big enough to replace 100% of the TFSA dollars moved plus you need to cough up another $5500 next year.

Best bet is probbaly to maximuse TSFA first and then do RRSP to the extent you can. max both if you can a and also RESP. You need a large income to do it though…

Thank goodness I am here to clarify all this.

#176 Canadian Watchdog on 11.25.13 at 7:39 pm

#161 [email protected]

None of you explained what caused the change in buyers’ sentiment.

When household debt to disposable income is above 200% and as high as 250%, there is no buyers’ sentiment as lenders are in full control of demand via credit.

#177 RetardedHorse on 11.25.13 at 7:46 pm

I have 75 Bitcoins in my account, netting me ~65k. Thankx for the advice Garth! …. OH wait, the post was about TFSA’s. Sorry guys, sucks to be you.

#178 Devore on 11.25.13 at 7:55 pm

A.k.a. fuel efficiency. I saw two Teslas today, by the way. — Garth

Fleets have become more efficient, yes, but not by 50% in the span of 3 years (looks even slightly worse when adjusted for population growth). That graph also starts at 0, unlike many graphs you will come across which intend to mislead you.

In “dark” economies (such as China), outside analysts often use transportation loading estimates as a proxy for economic activity, when official growth number cannot be trusted. Railroads tend to to well in recoveries, for example.

#179 live within your means on 11.25.13 at 8:02 pm

#105 Bottoms_Up on 11.25.13 at 10:52 am

Sad, but who hasn’t had problems when dealing with the CRA.

#180 Cici on 11.25.13 at 8:20 pm

#69 Kyla

You definitely haven’t been reading Garth’s blog long enough if you think that getting into ETFs with no prior knowledge and a trying to build a portfolio in increments of $400 is a good idea. But fortunately, it’s not impossible (the latter part, but do to it right, you are going to need to do some basic research).

Go back and read about asset allocation, diversification and rebalance (i.e. November’s “finding balance” and other such posts). You’ll want exposure to bonds and equities, and diversification among at least three sectors (international, US, and Canadian equities).

Because you have a small amount to invest, you may be better off starting out with TD’s e-series funds, because there is no commission when buying and selling. Your other option is a discount brokerage, like Questrade, which allows you to purchase ETFs without commissions (but there are commissions on sales, so be careful).

If you don’t want to read “dated” books, read Rob Carrick from the Globe and Mail, check out the Globe and Mail, and check out the Canadian Couch Potato site.

Here’s a short and sweet article from Rob Carrick to START you off on the journey:

http://www.theglobeandmail.com/globe-investor/investment-ideas/gen-y-the-investment-world-is-ready-for-you/article15574040/

Remember, keep it simple at the beginning until you get a handle on it, and don’t rush in before you have an idea of what you are doing.

#181 Nemesis on 11.25.13 at 8:20 pm

“I saw two Teslas today, by the way.” — HonGarth

I hear they’re Smokin’Hot, AuldPol. Was the FireDepartment there as well?

MyBad. Nem’s WaggishInstincts being irrepressible after a Heineken…

Addendum: Last ‘O The MondayZen…

TrustMe, SaltyDogz… it’s a TopicalTreat… especially for those of you who, starved for further news of DarwinTheIkeaMonkey, were hoping for further JuicyRevelations on the SwedishRetailEmpire [which, as any of IKEA’s LockedOut RichmondEmployees could likely tell you, is NoJungleForOldMonkeys]…

[SMH] – Ikea executives embroiled in spying scandal

…”In a statement, Ikea acknowledged that an internal investigation, conducted after the media revelations last year, had uncovered ”regrettable practices, contrary to our values and ethics standards”. That inquiry resulted in the dismissal in May last year of four directors of the French unit, including the head of risk management, and an overhaul of the company’s code of conduct.

The people said to be the targets of spying included store employees, union leaders and job applicants and dated back as far as 2008. The surveillance was also said to involve stores in at least nine locations in France, including Avignon, Grenoble, Reims and Tours.

At least one labour union, Force Ouvrière, is suing the company for ”fraudulent use” of its members’ personal data.

”This is a first-rate example of how protecting one’s identity and privacy is getting harder and harder to do, as technology gets ever more sophisticated, even in Europe, where privacy has been elevated to almost a sacrosanct principle,” said Christopher Mesnooh, a partner at Field Fisher Waterhouse in Paris.”…

http://www.smh.com.au/business/world-business/ikea-executives-embroiled-in-spying-scandal-20131122-2y0rm.html

[NoteToSelf: Surveillance included ‘cranky’ customers, too. Perhaps Toronto could interest IKEA in one of their ModifiedCessnas?]

#182 Cici on 11.25.13 at 8:21 pm

#69 Kyla

Oops, the second reference to the Globe and Mail should actually have been a reference to the Financial Post.

#183 Herb on 11.25.13 at 8:33 pm

#143 Smoking Man,

to clear up any possible misunderstanding, which set of “climate change criminals” are you referring to, the climate change warners, or the deniers?

#184 AB Boxster on 11.25.13 at 8:51 pm

Re:Going long term: 50% gold -50%government bonds

Garth is right about bonds, but only if you own bond funds or if you sell before the bond reaches maturity.

You only buy a bond for the interest not the capital appreciation
If I buy a long term bond face value of $100 and interest at 3% who cares where interest rates go?

Sure, rates can go to 10% and my bond ‘market value’ will go down. But, hold that bond to maturity and you get you $100 back plus the interest you were promised.
You only lose if you sell the bond for less than you paid.

You only lose opportunity cost. You never lose on the bond.

Regarding Gold, read ‘Empire of Debt’ or the ‘New Empire of Debt’ by Bonner and Wiggin. It is an excellent overview of why gold will be king and the people holding paper money will suffer.

Oh and by the way, right now China, Southeast Asia and India are all massive purchasers of gold billion. (not Mining companies, or certificates or ETF’s – hard bullion.) Picking it up for a song at current prices.
Whereas here in the western world we look to overvalued financial markets and real estate.

I guess they have it all wrong.

You like 3% guaranteed investments on one hand and a wildly volatile and speculative asset on the other. Good luck with that. — Garth

#185 Rexx Rock on 11.25.13 at 8:51 pm

The reality is Vancouver house prices reflect what people can afford,same as Toronto,Calgary and Victoria.People make high wages so they can afford higher prices.The poorer people are left with condo’s and townhouses.Thats it.

Household income in Vancouver is significantly less than in Toronto or Calgary. — Garth

#186 Doug in London on 11.25.13 at 8:51 pm

@Jackofall, post #8:
That means one thing and one thing only, that REITs are still on sale.

#187 [email protected] on 11.25.13 at 9:00 pm

174 Canadian Watchdog on 11.25.13 at 7:39 pm

#161 [email protected]

None of you explained what caused the change in buyers’ sentiment.

When household debt to disposable income is above 200% and as high as 250%, there is no buyers’ sentiment as lenders are in full control of demand via credit.
—————————
Do you think that 200% will be the limit for Canada as well?
What would be the coresponding average price in To and Vancouver for that percentage?
I wonder what is the average debt to income ration for Vancouver and Toronto at this point.

All I could find is this
http://www.rbc.com/economics/economic-data/pdf/household.pdf

Which says we are at 150% Canada wide. Considering the big differences between the big cities and the rest of the country I am very tempted that we are very close to 200% in these two cities

#188 Derek R on 11.25.13 at 9:24 pm

#178 Cici on 11.25.13 at 8:20 pm gave good advice to #69 Kyla.

Good stuff, Cici. I always enjoy reading what you have to say.

#189 Bottoms_Up on 11.25.13 at 9:29 pm

#81 Sideline Sitter on 11.25.13 at 1:30 am
————————————————
Garth talks about a similar ‘move’ in his book. However, you’ll only be allowed to contribute a certain amount to your TFSA next year, such as possibly only 2-year’s worth ($11,000). You can’t catch up all the years at once….so it will take you awhile to build up your TFSA again to what it’s currently at.

#190 Retired Boomer - WI on 11.25.13 at 9:36 pm

Hon. Garth –

Reading the later comments today, so many self described “experts” advising on Gold, Bonds, and even GIC’s (If I understand these posts accurately).

From my standpoint, these right now seem almost a guarantee to loose money, or at best a seat at the casino table, certainly not what I would call “investing for the long term.”

Perhaps I don’t understand the concept of investing at all.

Whatever I have been doing for the last 25 years have seemed to work for this idiot. After all, retirement should be a time free of economic worries about how you pay for the stuff in your new life mode, or some sudden financial emergency.

Despite the verbal abuse heaped upon you, thank you, for your sound practical advice. Now hope some ARE listening.

#191 Kilby on 11.25.13 at 9:37 pm

#170 lolwat on 11.25.13 at 7:24 pm
>A.k.a. fuel efficiency.

Nope. Hint#1: what is the best selling vehicle in the US?

Ford F-150? Harley Davidson? Ford F150 Harley Davidson Special?

#192 Kyla on 11.25.13 at 9:56 pm

Hey Cici:
Thanks so much for taking the time to reply. I know 400 per month is not a lot but as I really want to get in the habit of saving and investing. once my student loans are paid off in a few years and i am making more money i will be able to invest 1500 per month. I have read that article you linked but will reread it!
This whole thing seems so daunting right now and I don’t want to give up! I also do not mean to sound ignorant in regards to “dated” books but maybe I am just reading the wrong ones. If you have any suggestions please forward them!

#193 AB Boxster on 11.25.13 at 10:19 pm

Retired boomer

Anybody with a pulse could have made money investing over past 25 years. Heck I even made a schwack of money without trying. If I sold my house today , even with a 30% correction, I am way ahead. But I won’t delude myself into thinking that my real estate brilliance or market trading strategy got me here.

The DOW in 1980 was under 1000 points, today its over 15,000. But that’s normal right.?

The fact that from1958 -1982 , the DOW hovered around 800 points was obviously the anomaly. Was the market a good investment then?
Could you have made money in that market?

But it must be different now, right?
Just like housing, it must be worth what it costs, because , how could it not be? That it takes 7 times average income to afford a home when the historical norm is 3 times, is normal, well because it must be.
I’m convinced.

Garth, no I am not happy with 3% Bond. I would much rather it be 5% which it would be if government were not penalizing savers in order to keep a lame hope for global recovery.

Gold? – read ‘Empire of Debt’

#194 Capital One on 11.25.13 at 10:29 pm

#151 Shawn

Brilliant – well put.

#160 Sideline Sitter

I don’t see anything wrong with that strategy. Just be aware that you will only get x% of your money back in a tax refund (x% being the tax rate you’re paying on the last dollar you earn). So, to get to where you want to be when this is over, you’ll have to find (100% – x%) of the money you took out of your TFSA to re-inflate your TFSA. Plus next year’s $5,500.

CO

#195 WhiteKat on 11.25.13 at 11:25 pm

@HolyCrapWhere’sTheTylenol re: comment #136

Yours is an interesting question. Have you ever told your bank that you had a SSN or any US connection? If not, and your birthplace is not in USA, you are probably fine. By work permit, do you mean green card? If you held a green card, and never formally terminated it, my understanding is that you are still a ‘US person’ for tax purposes. However, if your bank does not know about your green card, and you don’t tell, then you are likely safe. Its the poor suckers with the Canadian passport that has a US birthplace that are in trouble, since banks will likely start asking for Canadian passports in order to be able to open a new account or prove that an existing account is not a ‘US person’ account.

If you want more opinions, come on over to isaacbrocksociety.ca where you can find out everything you NEVER wanted to know about FATCA and USA’s unique to the world policy of taxing ‘US persons’ wherever they reside, and regardless where they earn their income.

#196 Cici on 11.26.13 at 1:24 am

#190 Kyla,

Hi again :-)

I just read the Wealthy Barber, the Wealthy Barber Returns and The MoneySense Guide to the Perfect Portfolio. They are all good reads, and the last two are more up-to-date (the Wealthy Barber Returns is an update to the original Wealthy Barber, but both editions are very valuable).
The MoneySense Guide to the Perfect Portfolio is a nuts and bolts guide tailored to Canadians that costs just under $10. It will teach you the basics of index investing, and provides recommendations for building your portfolio at the back. There are good portfolio recommendations for people who are just starting out too. If you are able to put aside $400 per month, you should be able to amass a nice little sum in due time.
Keep it simple at first, but do read the whole guide. There are important elements you may be tempted to skip, but I don’t recommend it.
My next read is going to be The Millionaire Teacher, and then some of the Bogle Books, and I’m currently working on The Intelligent Investor. But I’m kind of a reading maniac, I don’t think you need to get that obsessed right away :-)

#197 sideline sitter on 11.26.13 at 1:24 am

thank you for the feedback, 173, 187 and 192!

I have the $$$ to replenish/max my TFSA, and will do so in January. however, I’m under the impression that I can take the entire TFSA out on Dec 15th and then put it all back in January 2nd.. am I wrong?

#198 Capital One on 11.26.13 at 7:47 am

#195 sideline sitter

That is my understanding as well.