Jim

SENIORS modified

The old guy two doors up died yesterday. “So much wrong with him, probably a blessing,” a neighbour said. He had lung cancer. Today the oxygen guys were there taking back their canisters.

Jim’s wife died years ago. No kids. Just a woman who came and looked after him in the unrenovated 1920s mausoleum of a home with a beater car outside. During the Christmas ice storm, Jim’s power was off for five days and he couldn’t afford a motel. The lady next door paid for it.

I heard Jim left his house to his caregiver. It should sell for about one million.

Real estate has a powerful, emotional and blinding influence on many people. Had Jim sold a few years ago, his million wouldn’t have cured his disease, but it would have made life softer. More care, time in warmer places, a modern and convenient home, less stress. That he chose instead to live hard and die in his old bed speaks volumes.

I can’t help but believe a generational shift will make guys like Jim more rare and strange. Not only has housing been turned into a transient commodity with people moving on average every six years, but unrelenting increases in retirement costs mean the need for life-long income is escalating. What people need isn’t a paid-for house, but cash flow. The two are becoming mutually exclusive.

Two things reinforce that. The average SFH in 416 is now $942,066. It’s not the same as the average $1.2 million in Vancouver, but the number is 15% higher than a year ago. Sales are flat compared to last year, underscoring the fact we’re all suspended in the midst of a giant gossamer housing gasbag that cannot last. It means every month more and more personal net worth is funneled into a single asset, making people less diversified and more dependent.

Second, for exactly this reason, real estate is now seen as a retirement play by a growing mass of the population. This week a Sun Life survey found a quarter of Canadians say they plan on financing their after-work lives by cashing in their houses. Even more interesting, most people say the biggest chunk of their retirement income will be coming from the government. Yup, that paltry average $600 in monthly CPP and $530 in OAS. This should tell you how prepared they are.

Over six in ten of us have no pension plan. And I’ve told you repeatedly about the disaster which is most Canadians’ personal finances. RRSPs are withering. Most TFSAs are in cash. Debt’s out of control. Savings are paltry most places and negative in BC. Plus brain-dead GICs remain the asset of choice. What are these people thinking?

Actually, they aren’t. They have a one-track financial strategy, which is get a job, find a house and pay it off. It would have worked for Jim, who moved into the home where his wife was born – because he won the inflation lottery. But those days are done.

Even the Sun Life dude gets it.

“The fact is that many people don’t have access to pension plans at work. Many also do not have significant personal savings, making home equity more attractive. But real estate is a volatile asset class and can’t be counted on to sustain high values forever. It is really quite striking how fast home equity can disappear. One needs to really think through whether that strategy will work and whether it will be enough.”

Not only are current housing values unsustainable, for all the boring reasons this blog yammers on about endlessly, but nobody should underestimate the impact of the Boomer sell-off to come. Surveys are inconsistent, but the last three have indicated that (a) 24%, (b) 32% or (c) 50% of the wrinklies figure they’ll have to trade the house for income. I suspect the final number will be even higher, but that won’t be known for a decade or so.

Imagine the impact of that kind of real estate liquidation on major markets, likely concurrent with a normalization in interest rates. Where will the buyers come from to hand over massive capital gains to the old farts who saved little and invested less? It’s a stretch for anyone who’s 55 today with the bulk of their net worth in one address to believe they’ll cash out at same price when they turn 65. And yet so many have no alternative.

Unless they chose as my poor neighbour did. I imagine his home will soon be rubble.

206 comments ↓

#1 First on 02.19.14 at 8:42 pm

First !

#2 TurnerNation on 02.19.14 at 8:43 pm

Greetings from Blog Dog lounge #5. Shall foist this post.

#3 Matt Hughes on 02.19.14 at 8:52 pm

I’ve prepared my preliminary sales report on the week of Feb 10th – Feb 16th for the GTA. The gist is:

Avg detached home* price: $951,339.78 +12.9% (98 sales +12.6%)
Avg apartment* price: $368,277.05 +3.0% (111 sales -21.8%)

https://recomp.ca/blog/weekly-summary-feb-10th-16th-2014/

#4 Unknown Marketer on 02.19.14 at 8:52 pm

Great post as usual…but the picture is actually more telling… The world won’t provide preferred pricing..I can hear the yells now ;)

#5 DigDeep on 02.19.14 at 8:54 pm

I heard the Sun Life “dude” quoted today. I snickered to myself and said “Garth is going to roll with this.”

Meanwhile in Ottawa, Minto Suites Hotel is converting up to 400 rooms into furnished or unfurnished, premium rentals. They must be reading your blog.

Thanks for all you do.

#6 Sheane Wallace on 02.19.14 at 8:55 pm

House is a place to live, not an investment, it is a liability not an asset.

Of course banks need you to think otherwise so they can make money out of you.

By the way, why do we need private banks? They are too big to fail anyway so no risk, ready to be bailed by the government, banks offer some basic account management services and bill payment services at high cost and their investment service frankly speaking suck.
What do you expect from CSCs with zero investment experience who try to sell you one of the bank mutual fund with expense ratio of 1.2-2 %?

I guarantee that an alternative of basket of vanguard (for example) managed ETFs with expense ratio of 0.1-0.15 % will way outperform the bank’s offer with practically no management.

So why for we need banks then, for wire transfers? Western Union is way cheaper and their exchange rate is far better than the bank’s.

#7 Sheane Wallace on 02.19.14 at 8:58 pm

And they skim 2.5 % on that 3 % mortgage loan leaving you with 0.5 % generous interest on their GICs

#8 will on 02.19.14 at 9:00 pm

Laughed all the way through this one Garth. I like the part about the guys coming to pick up the oxygen canisters.

Anyway – exactly! When are all these people planning to sell these houses they consider retirement investments? When they are 65? 70? 75? Only if they have to? We all know it will be too late then if they have to.

#9 Sheane Wallace on 02.19.14 at 9:03 pm

And I am not even speaking about LIBOR, Foreign exchanges manipulation, London whales, front-running customer’s trades (certain banks have zero trading days with losses in a quarter) , commodity market cornering and manipulation, naked short selling, bankers jumped out of high rises with fines but NO ONE IN JAIL! A yeah and CDS (credit default swaps), mortgage based security and god knows what other derivative crap.

#10 Linda Mulligan on 02.19.14 at 9:08 pm

Let us say Boomers do decide to cash out their houses to fund their retirement. Let us say that only 10% of Boomers do that. There are about 9 million Boomers in Canada as per Statscan. So if 70% own homes that is about 6.3 million home owners. If 10% of that group sell to fund their retirement, that is 630,000 homes. Thing is, some surveys are stating up to 24% of Boomers plan to use their house as a retirement fund. Which if they can sell & get a million plus great for the seller, but I don’t see 630,000 buyers willing to shell out a million plus for the 10%, let alone 1.5 MILLION (@ Boomer ratio of 24%) buyers willing to shell out for Boomer’s homes. If the sellers are desperate to sell then prices are going to drop. Plus, how far can the Boomer drop the price? If they figure they need X amount of dollars to live out their ‘golden’ years & can’t get it from selling the house, where does that leave them?

#11 Bob Rice on 02.19.14 at 9:11 pm

lets not forget that the ravenous parasites that are their children will probably expect money for all sorts of things like home purchases! So maybe their kids will buy up those homes!

Anyhow, my folks are in this position right now… they’ve hung on to their home for at least a few more years than they should have… they will be selling soon.

#12 ILoveCharts on 02.19.14 at 9:11 pm

“The BC government has just raised the Property Tax Transfer exemption for first time home buyers from $425,000 to $475,000.”

The BC Government just decided to throw another log on the fire for the sacrifice of the virgins.

#13 airhead princess on 02.19.14 at 9:15 pm

We all know there are plenty of people starving inside their ‘million dollar homes’. Thank the cover up by the city that allows a senior to defer the property tax and stay behind the veil of misery. We all know that seniors and the working middle class are the fastest growing cohort at food Banks……you can have your food grant delivered….and make an appointment to show up after work. Yes…people are miserable and it’s getting worse. After school sports sign ups like hockey….down 90% in the past ten years. And food costs are going up….for a whole lot of reasons. The hand puppet BOC governor couldn’t have picked a worse time to pander to his union pals in Ontario,

http://www.zerohedge.com/news/2014-02-17/15-reasons-why-your-food-prices-are-about-start-soaring

We know that certain million dollar postal codes ( such as the ‘rich’ areas of Richmond) are reporting that huge numbers of kids are showing up at school unfed. People are tapped out….only the elites civil servants are still driving their glossy SUV’s with confidence. Vancouver…with its huge and growing ghettos will descend into chaos. I suggest Robson Square as a good place to set up the guillotine.

#14 len on 02.19.14 at 9:16 pm

Very sad story today – it was good to hear that the man had at least someone who took care of him.

No doubt, most people nearing retirement are counting on the proceeds from their house but this does not have to lead to liquidation. Reverse mortgages are touted as the next best thing. Kids who are counting on inheriting may be surprised though. Of course, reverse mortgages may slow the deluge but eventually someone will have to sell leading to lower comps and thus lower appraisals. The demographics will play out over a long term.

Short term, who knows: YoY sales of single houses are down in Calgary so far for February; inventory is lower and prices are climbing higher. Fits the pattern.

#15 Min in Mission on 02.19.14 at 9:23 pm

I have some “wrinkly” friends. OK, lots of my friends are “wrinklies”!!

One pair has decided to make a “life changing decision”. They are selling their house and moving to a condo in Abbotsford. Apparently they are tired of looking after the yard.

I believe that they need the money.

Awhile ago, the husband had told me that his pension was being reduced. I understand that it has been reduced more than once. His pension may well be gone. The company he worked for is gone.

His wife only worked part-time at low level jobs.

I am willing to suspect that they didn’t plan for retirement. They were counting on the pension for the bulk of their income. They do not seem to have much else.

They are not alone!!

#16 Willdaman on 02.19.14 at 9:32 pm

This provides a stellar example of how attached people are to their houses. I am not inclined to believe the boomers will all be heading for the exits, with a huge chunk staying in their homes till the bitter end.

Depending on their circumstances, those strapped for cash can look to a Heloc or reverse mortgage to fund them till the end (to the chagrin of their greedy kids who might be looking for a house inheritance). This to me would seem more palatable to a generation who have grown up worshipping home ownership and sneering at renting.

Even if a chunk of boomers were to sell their homes, the boomer generation spans some 20 years, so I would expect a pretty large staggering of when these homes would hit the market.

As an aside, I still find it remarkable that Garth and others point to some very good future-looking data points to justify their thesis on why the housing market is doomed, yet only provide backward looking justification as to why they view the stock market as a sure fire way to make 7% over the long term into infinite and beyond.

Where did I tell you to invest in the stock market? — Garth

#17 omg on 02.19.14 at 9:36 pm

One Last RANT About Buying Versus Renting – ever spiralling upward municipal TAXES and FEEs

Here in Victoria we have had an increase in city taxes AND fees of 40% over the past 6 years. Of course the politicians like to talk up how taxes have been kept below inflation – but the duplicitous slime balls have been loading-up the fee side of the municipal bill with things that used to be covered under property taxes. So while property taxes have just kept pace with inflation, fees have gone up by over 200%.

Of course the media never picks up on this, they are hard pressed to even get the numbers from the city’s press release correct.

Add to this horrendous increase in property taxes/fees, the fact that we have crumbling infrastructure and pet projects of the politician (like the new bridge that is now looking more like a $120 million bill as opposed the originally estimated $65 million bill). Then add the proposed sewage treatment plant at an estimated $400 to $800 annual bill per household. We are on pace to see property taxes/fees to more than doubled in a decade.

I expect the same thing is happening across Canada.

And the thing is since incomes are stagnant landlords cannot pass all these increases in taxes along to tenants. The money is just not there.

End of Rant, thank you.

#18 thedoubter on 02.19.14 at 9:37 pm

I heard the BC Provincial Government is going to crawl back the home owner grant for house over $1.1 million and give no grant over $1.2 million. Nice move to get more money.

#19 prairie person on 02.19.14 at 9:40 pm

Cautionary tales? Maybe?
30 years ago I was at a party. There was an economist there. He told me that he’d just sold his house because prices had risen beyond anything sensible and he was getting out at the top and he’d buy back in when prices fell. He urged me to sell. I’m glad I didn’t.

I was working in the USA and a Brazilian joined us. I didn’t understand about inflation. The purchasing power of the dollar had been pretty stable for quite a while. He told me that a friend of the family was a wealthy rancher, had wanted to retire, sold everything and planned on living on his proceeds. Two years later, he was a beggar. The money was worth next to nothing.

Neither situation may have any application to today. As Garth has said, rampant inflation from QE hasn’t appeared. There’s even some concern about disinflation.The forces that drive inflation don’t seem to be working, at least with regard to housing. Japan has tried inflating and the current evidence is that it isn’t working. Maybe you can allow the 1% to siphon off the liquidity in the economy but if the 99% aren’t getting the money, there’s no driver for an economy bases on consumption. However, it all makes me nervous. If Russia’s hockey team can’t even make it to the finals and Canada’s figure skaters don’t get gold, anything is possible. Like open warfare in Ukraine. And everything goes to hell in a handbasket.

#20 Linda Mulligan on 02.19.14 at 9:45 pm

#15: so if the pension is reduced or even gone & the house is being sold to fund their retirement, the big questions is whether it will be ‘enough’ to fund your friends for the rest of their lives. Depending on what is left over once the house sells & the condo is bought plus what their life expectancy might be – if they are already in 70+ age bracket & they net $500,000 plus after the house is sold & condo is purchased, maybe – through they’d better be good at budgeting. Say they are 70 & live to 90 – $500,000 divided by 20 is only $25,000 per year to live on. Though they will still have the condo as a potential asset if push comes to shove – that is, if anyone is willing to buy it 20 years down the road.

#21 not 1st on 02.19.14 at 9:47 pm

Are CPP and OAS clawed back if you are receiving dividend income?

#22 Mark on 02.19.14 at 9:48 pm

With extremely few jobs created in Canada outside of the public sector (okay, the oilsands replaced Nortel), who’s going to even have the money to lend these seniors for the reverse mortgages and such? Nevermind actually buy the houses at the inflated values? Unless something drastically changes which gets the under 35 crowd into the workforce, housing is in deep trouble. The market cannot be indefinitely supported by young civil servants and the relatively uncommon young private sector people. There’s simply not enough of them. And the public service/government spending is going to have to be slashed dramatically to take care of the CMHC’s $900B of subprime mortgage loan guarantees.

#23 TS on 02.19.14 at 9:50 pm

Maybe you can snag Jim’s caregiver Garth.

You’re not getting any younger…..

I’m fine, actually. — Garth

#24 KG on 02.19.14 at 9:51 pm

Oh, looks like we now ten year out. I better (for the current sidewalk rich house) buy the snow blower that I had been putting off thinking I could move to a better one (without sidewalk) in next couple of years.

#25 not 1st on 02.19.14 at 9:53 pm

I used to work for a major utility who had their own 35 storey office building. On the main floor was the lobby, admin desk, elevators and access to u/g parking and a gym. Nice setup.

On my 3rd or 4th day I was checking it all out over lunch hour and guess what I found way in the back corner of the main floor….a mortgage outlet for a local credit union. It was just a one or 2 person operation, but the message was clear, everyone, the govt, your company, your MIL, your bank all want to get you roped into a mortgage as soon as possible.

#26 marquis de sale on 02.19.14 at 9:54 pm

just watched 2 back to back “jar Ladies”. Both about young hornies stuck in house poor oblivia. wonder if she reads this pathetic blog? her accent is kingstonian.

#27 Just some guy on 02.19.14 at 9:54 pm

That is a sad story about your neighbour and there is a much sadder story to come. I suspect that the people who have not been able to provide for their retirement, choosing instead to buy expensive real estate, will have to cut corners on maintenance. Those houses that they are forced to sell may be in very poor shape.

#28 T.O. Bubble Boy on 02.19.14 at 9:55 pm

Something is seriously wrong with people’s perception of risk when they’d rather die in a $1M house while “living” on $1000/month from the government than enjoy at least a little bit of what $1M can provide.

Can people not do math? Rent would be a max of say $2500-$3000/month ($30k-$36k per year). Even if the house money earns zero, you can still pay for 30 years of rent!!!

#29 Mr. Reality on 02.19.14 at 9:57 pm

Anyone watching what is happening to the market in the US? How about plunging mortgage apps, sinking starts and record student loan debt bubble ever inflating. First time home buyers are are disappearing. Boomers sell and the first timers abstain, then all hell breaks loose in pricing.

Mr. R

#30 Detalumis on 02.19.14 at 9:58 pm

Don’t assume Jim was poor, many of these old people that live in falling down houses are mentally ill and/or cheap, not poor. I live in a senior area and the retired pharmacist across from me had a home like that with racoons in the roof, the old lady kitty corner from me lived lived Norma Desmond. The telling part is where the neighbour pays to put him in a motel and he leaves the estate to “the caregiver”.

I routinely help a guy like this in my neighbourhood, his house is a dump inside but he actually has 100K+ in income. After day surgery I had to stay over and look after him as he was too doped up. I brought him meals over for weeks afterwards. I take him over to the mall 5 days a week as he doesn’t drive. He never once says thank you for anything and I doubt he will leave me a penny, that will go to the long-lost relatives.

#31 Linda Mulligan on 02.19.14 at 9:59 pm

#17 OMG – all North American municipalities have an ever growing infrastructure deficit. Newer cities like Calgary (not even 150 years old yet) are grappling with aging infrastructure. Older cities like Montreal have bridges that are literally falling apart & graft/corruption did nothing to help. Replacing infrastructure like roads, sewers, water mains, repairing/upgrading water & wastewater treatment facilities etc. neither cheap nor an overnight job. Takes years to do & as soon as you replace or repair the most urgent the next most urgent job is now the priority. Plus the infrastructure has to keep on functioning throughout the repair or replace time frame. People say municipal workers too slow/expensive & say contract it out – already being done & contractors cut corners to make money, so the repair or replace job wears out faster.

#32 not 1st on 02.19.14 at 10:00 pm

Garth, its time to talk U.S. again on some posting because the events on the ground are changing rapidly. Housing is slowing and new buyers have learned their lessons and want to rent instead.

On top of that, the U.S. is going to have to contend with a major tech bubble that has blown to epic proportions. In 2000 when it burst, it took down the greater economy so the same thing can happen again.

http://www.businessinsider.com/facebook-is-buying-whatsapp-2014-2

#33 Mrs Riverview on 02.19.14 at 10:00 pm

Garth, you were and are right. I was wrong. Have taken your advice over the last year, made big changes. Thank you for all you do. Sincerely.

#34 Linda Mulligan on 02.19.14 at 10:05 pm

#21 – CPP is not clawed back, only OAS & only if your total net income (per person) is over something like $63,000 per year already. Total net income would of course include any income received from dividends & the like.

#35 Paul on 02.19.14 at 10:10 pm

23 TS on 02.19.14 at 9:50 pm
Maybe you can snag Jim’s caregiver Garth.

You’re not getting any younger…..

I’m fine, actually. — Garth
———————————————————————–
Hey Garth are you a snowflake lol

#36 Linda Mulligan on 02.19.14 at 10:11 pm

#21 – actually just looked it up, for 2013 the net income you have to have before OAS begins to be clawed back is $70,954. OAS is fully clawed back once your net income is somewhere between $114,000 to $115,000. Most Canadians are never going to see that kind of net income in retirement & remember, the clawback is based on individual income, not household income. IF you have ‘too much’ income & you have a spouse with lower income, you can income split with your spouse & avoid the clawback that way.

#37 Victor V on 02.19.14 at 10:14 pm

http://www.theglobeandmail.com/news/national/rcmp-charge-missing-toronto-financier-with-43-million-mortgage-fraud/article16972349/

The RCMP has filed fraud charges against a Toronto Islamic financier who went missing after he allegedly pocketed $4.3-million in mortgage payments from Muslim homeowners and used the money to buy himself gold bars, silver coins and electronics.

Omar Kalair portrayed himself as a trailblazing entrepreneur who, as a middleman, could offer mortgage arrangements to devout Muslims who believed that they were forbidden under Islamic law from making interest payments.

Mr. Kalair’s two federally registered firms, UM Financial Inc. and UM Capital Inc., collapsed two years ago, leaving more than 170 homeowners in the lurch…

“The long and short of it – we are alleging it was an elaborate fraud,” Sgt. Rolling said.

UM Financial effectively served as a buffer between Muslim homeowners and Credit One, a credit union. The deal was that UM Financial would help clients buy their homes and be repaid monthly – including service premiums – over long periods.

“It was a complex investigation,” Sgt. Rollings said. “The investigators that were assigned to this file had to go through several steps, production orders, to get information and find the paper trail.”

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

Fraudsters + Credit Union = 170 unhappy homeowners

#38 frank le skank on 02.19.14 at 10:18 pm

#36 Linda Mulligan on 02.19.14 at 10:11 pm #21 – actually just looked it up, for 2013 the net income you have to have before OAS begins to be clawed back is $70,954. OAS is fully clawed back once your net income is somewhere between $114,000 to $115,000. Most Canadians are never going to see that kind of net income in retirement & remember, the clawback is based on individual income, not household income. IF you have ‘too much’ income & you have a spouse with lower income, you can income split with your spouse & avoid the clawback that way.
===============================

I really really really hope I have this problem when I retire!!!

#39 fleetwoodboy on 02.19.14 at 10:29 pm

#20 Of course that 500k can be invested to give a healthy annual income. The capital shouldn’t errode too much.

#40 Grantmi on 02.19.14 at 10:29 pm

#23 TS on 02.19.14 at 9:50 pm

Maybe you can snag Jim’s caregiver Garth.

You’re not getting any younger…..

I’m fine, actually. — Garth

How old is the caregiver??

I’m divorced and looking for a sugar mamma to take CARE of me! (Because my ex is sucking me dry every month, with nothing but cat food money left!)

#41 Linda Mulligan on 02.19.14 at 10:33 pm

#38 Frank – wouldn’t we all like to have ‘that problem’ in retirement. Heck, I’d like to have it now when I’m working. However wishing won’t make it so & unless I win many millions via a lottery, having a net income of $70,000+ in retirement is just not going to happen as far as I’m concerned.

#42 X on 02.19.14 at 10:34 pm

As much as I want the RE madness here to return to reality, the only thing I see changing it is higher rates. Hopefully the US unemployment rate will continue to improve and rates will increase a little earlier than mid 2015.

#43 Victor V on 02.19.14 at 10:36 pm

#21

Here is a good article on how you can earn $50K in dividends and pay no tax.

http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/dividend-investing/you-do-the-math-almost-50000-in-earned-dividends-0-in-tax/article4599950/

#44 Hawk on 02.19.14 at 10:38 pm

Hmmm $942,066 divided by $1.847 (current exchange rate of the Sterling) = 510,052 pounds.

LOL – Holy cow, when some dudes last year compared Toronto to London, England (world class and all that) I had a hearty laugh…………..but I guess it’s even funnier now that its coming true, well price wise anyway.

What-ho Jenkins, we are in the same league as Blighty now, even a notch above. Smashing ole’ chap, absolutely smashing :-)

#45 Linda Mulligan on 02.19.14 at 10:41 pm

#39 – & what pray tell are the people in question going to live on while waiting for the $500,000 to spawn ‘investment income’ for them to live on? Does not sound like what they have for pension income would cover basic cost of living for a year, hence some of the $500,000 would have to be used to pay for food, utilities, condo fees etc. Plus can they actually get 5-7% ROI that they can use for income every year off what they invest & even more important, can they keep from dipping into the capital? Keep in mind most ‘big’ lottery prizewinners are broke within a year – selling the house isn’t like a lottery but having all that cash in easy reach may trigger that spending spree trigger same as a lottery win seems to do.

#46 Boomer21 on 02.19.14 at 10:42 pm

Question for any blog dogs who follow individual stocks. Anyone following GrafTech on the NYSE? Graphene/Graphite/carbon electrodes. Interesting company especially the application of carbon electrodes in flat panel displays, smartphones and LED lighting. Any thoughts? Sorry to be off topic Garth:)

#47 not 1st on 02.19.14 at 10:55 pm

So Jim could have sold his house, invested the proceeds and collected $50,000 tax free dividends per year plus another $12,000 per year in OAS/CPP without clawback and lived out his final years on a nice beach somewhere.

Instead he chose to sit in his house and waste the opportunity. I am sure the caregiver will be selling that house as fast as a sign can go up.

#48 Sheane Wallace on 02.19.14 at 10:56 pm

Look at market action today, another day of world markets small decline and as Ca dollar dropper 1-1/5 % against major currencies I have capital gains and my portfolio is up 1%?

Hello? And I own taxes for this?

#49 Sheane Wallace on 02.19.14 at 10:56 pm

I owe taxes for this?

#50 Tim on 02.19.14 at 10:57 pm

The seniors can sell their houses to all of the twenty something’s making 30k per year

#51 Sheane Wallace on 02.19.14 at 10:59 pm

#44 Hawk
——————————————-
300 k UK pounds will buy nice 2 bedroom town house in Wimbledon.
One would make twice the Ca salary as a consultant in the City,

I am making the move next year. No competition/no legal foreign workers as in harper-lang.

#52 Willdaman on 02.19.14 at 11:03 pm

Where did I tell you to invest in the stock market? — Garth
———————————–

Umm am I wrong to characterize investing in ETF’s as investing in the market? Are the underlying holding not part of the market?
Sorry I used the phrase “stock market” if you’re hung up on semantics, I meant the broader equities, bonds etc. market.

Right. Stocks. Bonds. Whatever. — Garth

#53 Chickenlittle on 02.19.14 at 11:04 pm

I took the dog for a walk today. I counted 16 “For Lease” signs in downtown Oakville.

Even in a place with “money” like Oakville something is happening.

I did ask one lady why one store was closing and she said that rent was too expensive.

—————————————

#13 airhead princess:

” I suggest Robson Square as a good place to set up the guillotine.”

LOL!!!

#54 Victor V on 02.19.14 at 11:05 pm

Can you really afford that house?

http://www.theglobeandmail.com/report-on-business/video/video-carrick-talks-money-can-you-really-afford-a-house/article15734548/

#55 Porsche on 02.19.14 at 11:07 pm

#40 Grantmi
How old is the caregiver??

I’m divorced and looking for a sugar mamma to take CARE of me! (Because my ex is sucking me dry every month, with nothing but cat food money left!)
———————————————————

Welcome to the club and with Child support you can forget about owning. There’s just no way.

#56 Willdaman on 02.19.14 at 11:08 pm

@45
#39 – & what pray tell are the people in question going to live on while waiting for the $500,000 to spawn ‘investment income’ for them to live on?
—————————————

There are lots of investments that kick out monthly distributions. E.g $500k invested in a REIT with a 6% annual yield will produce $2500 a month.

#57 blase on 02.19.14 at 11:11 pm

This is the most depressing comments thread today. I’m going out to lunch, enough doom and gloom to last me a month!

#58 Nanocarbon on 02.19.14 at 11:21 pm

Boomer 21

I don’t think they are in the business you think they are in.

Here is a company that is…but you missed the move on it

http://www.appliedgraphenematerials.com/investor-relations/detailed-share-price/

Anyway, see this…

http://www.ft.com/cms/s/0/9f7d2974-5d94-11e3-95bd-00144feabdc0.html#axzz2tpRRldI4

Probably best to stick with what you know.

#59 DocInWaitingRoom on 02.19.14 at 11:28 pm

Cant say where or who but city worker friend of friend who is planner said they were looking at budget etc for 40% drop in home values…

Enjoy the ride

#60 Sheane Wallace on 02.19.14 at 11:30 pm

#57 blase

………………..

Life sucks. In harper-land.

#61 Cici on 02.19.14 at 11:36 pm

#23 TS – You should change your name to BS!

Garth is like fine wine, he gets better and better with age.

#62 DocInWaitingRoom on 02.19.14 at 11:38 pm

I agree with poster above. Forget about 40% loss in property tax already even Toronto shows bad planning, pot holes size of miniature sink holes, desperate transit talks, property tax increases, missed garbage collection, branches still littering yards, and more.

If this city cant even afford to patch pot holes its not looking good. Cost for dedicated pot hole machine 400k. Fire a few councillors heck replace them with internet polls out they all go and we can fix road holes instead of making construction crooks rich and increase traffic repaving yearly.

Give me a few years cheques to save and im off again! Somewhere bright and warm

#63 Waterloo Resident on 02.19.14 at 11:39 pm

For any Boomers who are thinking that they will work well into their 80’s; think again.

Jim Henson, the man who created ‘The Muppets’ died at age 53. Just a few days ago Jim’s son ‘John Henson’ died at age 48. You see, very few people are making it to the young age of 55 anymore, forget about 65. So believe me, over the next 10 years we are going to be witnessing a massive avalanche of Boomers literally dropping dead at work.

#64 sideline sitter on 02.19.14 at 11:41 pm

renting rules! saving TONS of cash every month, and maxing out my wife’s and my TFSAs, topping up RRSPs, and living a great life with no property tax, maintenance, utilities or snow shoveling!

writing this while on holiday in the Caribbean!

#65 april on 02.19.14 at 11:48 pm

#59 – and where in the world are you located?

#66 Smoking Man's Old Man on 02.19.14 at 11:57 pm

TS #21

None of us are exempt from aging and illness. Your comment is in very poor taste considering Garth is giving of his time and knowledge to try and help as many as he can, reach a adequate level of financial well-being.

#67 Ontario's Left Coast on 02.20.14 at 12:00 am

Smokey, don’t leave us hangin’. How’s the book coming along?

#68 Longterm on 02.20.14 at 12:01 am

#32 not 1st on 02.19.14 at 10:00 pm

If more people are renting in the US then buy Blackstone – now the largest owner of residential property in the US and still buying thousands of houses a month.

Tech bubble? Not even close. There might be a bubble forming but it’s no where near rupturing. Same goes for biotech. Mom and dad investor hasn’t even gotten started yet. Pick up an ETF for each, set a trailing stop and enjoy the ride. I’m up 56% on the former and 116% on the latter and still rising, trailing stop set at 10% below highest high.

#69 Longterm on 02.20.14 at 12:06 am

#45 Linda Mulligan on 02.19.14 at 10:41 pm

You can’t be serious? You can invest $500k and easily earn 5% yield with little risk and the dividends start rolling in the month you buy. $2000+ a month basically tax free with the dividend tax credit. Buy dividend producing etfs that hold assets with rising dividends and you can look forward to 7-10% increase in the dividends every year plus a few percentage points of capital appreciation of the underlying asset. I’ve set my aging parents up with this from their modest $340K house sale preceeds. They now rent and the investment income of $16K pa with little risk supplements their government prensions and my dad’s work pension. And they still have a slowly growing nest egg. Easy as pie.

#70 Sorry on 02.20.14 at 12:11 am

The disconnect for Canadians is what is expected and what will be delivered.

The picture on the outside of the box is not what is contained inside.

Lots of Canadians have massive expectations of the future.

Most have no clue about the reality.

If Canadians really knew about how crappy things are going to get, they might stop saying that they are “sorry” and do something about it.

The biggest lie of all, “you can have it all”.

The politicians live or die by this lie.

I’m sorry to say, that your future doesn’t look anything like the picture on the box.

By the time you figure it out, it will be too late.

RIP Jim, your work is done.

#71 RayofLight on 02.20.14 at 12:17 am

# 46 Boomer 11
Re Graftec (GTI.N)
You are buying a story only. The Price Earnings Ratio(PE) is around 60. The growth is anemic. Compared to this, Lotto 649 is a safer “investment”

#72 Suede on 02.20.14 at 12:22 am

HA!

Here in BC the herd’s ears were hearing music.

The provincial budget will excuse property tax on homes (aka condos) up to $475,000 instead of the previous $425,000

You know what that means.

Mortgage brokers are getting an extra 1% of $50k!

First time buyers rejoice, you can spend an extra $50k to save $11k!

CEEEEEELEBRAAAAATE GOOD TIMES, COME ON!

#73 VHNWI on 02.20.14 at 12:24 am

#40 Grantmi
Dude,Your Ex is not sucking you dry every month, your kids are. Don’t blame her!
Married or not your kids, your home, and other half are are the #1, 2, 3 drainers of wealth in that order.
Man up! Deal with it

#74 Questions on 02.20.14 at 12:25 am

#8, will, you disgust me.

#75 Cowpoke on 02.20.14 at 12:30 am

10 billion people are going to die in the next 100 years and there isn’t anyway way of saving them.

Bitch and complain all you want!

So, don’t worry, be happy!

And don’t get swindled.

#76 Infused with Opiates on 02.20.14 at 12:31 am

8 Will – when my FIL passed away I got to call for pickup of his oxygen apparatus. I didnt find it very funny.

#77 Vamanos Pest on 02.20.14 at 12:32 am

#16 Willdaman

Wow. Do you really not know the difference between a balanced portfolio and “the stock market”?

But since you brought it up, the “long term” return of the S&P 500 is actually roughly 9.5% (since 1900). To put that in perspective, a time frame that includes the Great Depression, Black Monday (1987), the tech bubble, the 2008-2009 global financial crisis, and every stock market panic you, your father, your grandfather and great grandfather could name STILL returned 9.5% over the long term. To put that in perspective, $1000 that indexed the S&P for the last 113 years would be worth over 28 MILLION today (Note: this is without stock picking, this is just “buying the market”). A thousand bucks worth of gold over the same time period would be worth about 60 grand. Housing is hard to say due to lack of data the fact that nominal price increase is not all profit (maintenance, property tax, etc), but suffice to say a 1000$ home in 1900 ain’t worth 28 million today.

So you see, the reason people make historical arguments for a portfolio that includes growth assets such as stocks (diversified in the form of ETFs) is that history tells us over the long term it will outperform EVERYTHING.

You want a historical argument against real estate? How about highest household debt in history? How about lowest 5 year period of interest rates in history? How about the highest ownership rate in history? How about the highest average price to average (median) income in history? How about the United States from 2007 to 2010? How about the average down payment of 7% (on average 93% of every house bought in Canada is with borrowed money!). Must I go on?

All of these are historical arguments that would predict a downturn. The problem isn’t that the argument isn’t being made, it’s that you’re not listening.

#78 Willdaman on 02.20.14 at 12:44 am

Where did I tell you to invest in the stock market? — Garth
———————————–

Umm am I wrong to characterize investing in ETF’s as investing in the market? Are the underlying holding not part of the market?
Sorry I used the phrase “stock market” if you’re hung up on semantics, I meant the broader equities, bonds etc. market.

Right. Stocks. Bonds. Whatever. — Garth
—————————————–
What does your response even mean??

I’m getting tired of reading the comments from the muppets here who parrot everything you say (particularly the phrase “this will not end well”)… Nobody actually knows what’s going to happen, all we can do is put out our best guesses. I’m actually ok with you deflecting most of my questions I’ve asked in the past, it goes to show that you don’t actually have all the answers and people should be thinking critically for themselves, especially when others may have differing views than you.

#79 Infused with Opiates on 02.20.14 at 1:00 am

45 Linda – it sounds like the couple Min knows will collect one CPP and 2 OAS – lets say $1500/mo. Assuming your net of $500k, if yeilding just over 5% they can draw $3k per mo for the next 25 years. If they invest just 5K/yr for that time at the same rate, they will have $250k saved again. Of course inflation would have an effect.

#80 TurnerNation on 02.20.14 at 1:07 am

Just checking futures. Here I sit, tried to short and only started….

Kandos:
http://www.torontolife.com/informer/toronto-real-estate/2014/02/19/condo-window-walls-six-figures/

Well that was it – scotch fueled posted. $300 later lol.
Blog dog lounges #4 and 5. Kicking crass and taking names. #barringtonLife

Ever wonder why amplifiers have knobs names Gain, Presence (whom, your choice), Sustain? Apply these to real life…ffd to 2:55:

http://www.youtube.com/watch?v=9Q8n4oWClu8

#81 NotAGreaterFool on 02.20.14 at 1:12 am

The average SFH in 416 is now $942,066. It’s not the same as the average $1.2 million in Vancouver, but the number is 15% higher than a year ago.

WOW! To the uninformed this says, buy now or be priced out forever as prices just go up.

Will the FEDS let this implode or will they invoke more measures?

#82 Role on 02.20.14 at 1:21 am

Has anyone really been far even as decided to use even go want to do look at small house monies?

#83 Kingarthur on 02.20.14 at 1:23 am

Garth: You have unleashed the doomers again. Folks, Canada is not Argentina or Zimbabwe! Wake up and smell the coffee, but avoid the purple Kool-Aid!

#84 House O Cards on 02.20.14 at 1:32 am

When we let the government go ahead on NAFTA and exporting our good paying jobs in exchange for cheap imported goods, we voted on a lower standard of livinig . You cant have one without the other, and now we have the TPP ( look it up) being negotiated behind closed doors , that is described as NAFTA on steroids.

#85 Vanguy on 02.20.14 at 1:33 am

I’m 28, and was never taught about finances. Can you explain to me what “Most TFSAs are in cash” means? Is that money in TFSA collecting interest?

#86 World according To Garth on 02.20.14 at 1:43 am

Where did I tell you to invest in the stock market? — Garth
——————————————-

Garth donts: gold, RE, Cash

Garth Do’s: balanced portfolio (stocks, bonds and other “stock market type” paper). No?

#87 HAWK on 02.20.14 at 2:10 am

#51 Shean

I agree, anyone able to relocate to better opportunities abroad should do so. Its getting too crazy out here.

#88 Mark on 02.20.14 at 2:19 am

” Forget about 40% loss in property tax “

Good. Because property taxes in Canada are not generally linked to property values. Although property owners tend to get grumpier about taxes when prices are in the dumps.

#89 Fortune500 on 02.20.14 at 2:32 am

Obviously this is anecdotal, but my mother and her partner have recently done exactly what you predict. They mostly had their savings in their home, not a lot, but a few hundred thousand. They sold last month and have signed the lease to a cute little house in a bedroom community outside of Toronto. Their CPP/OAS and his minor pension leave them enough to cover rent and other costs and enjoy their low-key lifestyle. The house money is now invested.

The rental is close to the beach in the summer, and low-maintenance all year round. They will be taking their trailer van south to warmer pastures during the rest of the year. She is at the upper end of the Boomer wave, and certainly not rolling in it. She couldn’t be happier.

#90 Happy Renting on 02.20.14 at 2:33 am

#30 Detalumis on 02.19.14 at 9:58 pm

Out of curiosity, what drives you to spend so much of your time helping a neighbor who can afford to hire help and won’t even say “thank you”? I genuinely want to hear your thoughts and feelings about this. I ask because for years I’ve been volunteering at a charity for the “less fortunate”. Some are truly needy and grateful, but a surprising number are entitled and hugely lacking in gratitude or motivation to do anything more than suck up all the well-intentioned handouts and government money they can get their hands on. Some days I worry that my efforts just perpetuate the problems we think we’re addressing.

#91 Freedom First on 02.20.14 at 2:55 am

Excellent post Garth! Unfortunately, I have seen too many singles/couples with the exact same RE mindset as poor Jim. Sorry to read about his lung cancer, that is terrible, I know, lost my Dad to lung cancer in his early fifties, chain smoker all his life from an early age.

Your blog, Garth, and my life experiences keep reinforcing what you tell us regularly, that it is financially and life ruining if we do not learn to take our emotions out of our financial decisions, so we can think clearly and sanely to make fiscally prudent and wise decisions that is based on sound financial principles.

Garth, I was thinking lately about the use of annuities. I know there is different options, from passing on a certain income to a spouse, having it indexed to inflation or not, and just the simple life annuity paying a set amount until you die, leaving nothing whether you live to 110, or die after only 6 months collecting. Plus other complexities involved. Also, now with TFSA, people could have substantial amounts to have an annuity in a TFSA, although, I believe an annuity do get a more favourable tax treatment than regular income. I read that about age 70 is the sweet spot for buying an annuity? Do you think you could cover this some time in a post Garth? Thank you either way!

#92 Sherri on 02.20.14 at 2:57 am

Renting is the way to go, but it’s not easy with two kids and a dog. Our landlord wants to sell after only being here 10 months, last house only one year. Home owners don’t seem to be long term rental people….. It’s not like renting an apartment. .. Just frustrated as I know I will get pressure to buy from hubby because of this. Thanks for letting me vent! Hope your leg is healing well, Garth.

#93 World According To Garth on 02.20.14 at 3:04 am

Ukranian Independance !!

http://armstrongeconomics.com/2014/02/19/western-ukraine-declares-independence/

Good thing we live in Kanaduhhhh with freedom and democracy where our govt listens to us and there is no corruption (which is what started the civil war there). Kanaduhhhh where taxes are fair and we have honest govt paper pushers who believe in public service not a taxpayer funded group of “lottery winners” making $114,000 dollars a year while granny works at timmies and china mart till she dies.

Oh wait :-(

I guess I should stock up on pop bottles for cocktails?

#94 bdy sktrn on 02.20.14 at 3:21 am

his million wouldn’t have cured his disease, but it would have made life softer. More care, time in warmer places, a modern and convenient home, less stress. That he chose instead to live hard and die in his old bed speaks volumes.
————————————–
95% of the very wrinkled around here follow this path.
they NEVER sell. they go out feet first if at all possible.

next door to me is a 75yr old , wife passed, lives alone in a good size house worth a mil. he was a janitor, never had much money, lives a simple italian life, doesn;t need much. i have told him he could be rich and live the (very) high life until he dies if he sells now. he says “where am i gonna go?” 50 yrs in one home leads to a certain attachment it seems.

19/20 seniors round here hold on to the house until the bitter end, squalor or not.

#95 Edmontonian on 02.20.14 at 3:22 am

In edmonton here we are seeing some great solid little fixer uppers coming to market in some nice mature little convenient areas! Prices down about $100,000 from2007! http://www.realtor.ca/PropertyDetails.aspx?&PropertyId=14077193&PidKey=1938762553

#96 Happy Renting on 02.20.14 at 3:38 am

#13 airhead princess on 02.19.14 at 9:15 pm

We know that certain million dollar postal codes ( such as the ‘rich’ areas of Richmond) are reporting that huge numbers of kids are showing up at school unfed.

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

This wins most depressing comment of the day. So wrong.

#97 Tony on 02.20.14 at 3:56 am

These boomers will be selling their houses for peanuts as the market will have more than crumbled by then. A principle residence tax will be brought soon before the Canada Pension Plan goes insolvent.

#98 Tony on 02.20.14 at 4:05 am

Re: #53 Chickenlittle on 02.19.14 at 11:04 pm

Oakville is one of the poorest cities in all of Canada where the average age of vehicles on the road is 20 plus years. The average worker spends more time in line at the food bank than they do working. That in a nutshell is Oakville a city where poverty abounds.

#99 Tony on 02.20.14 at 4:10 am

Re: #46 Boomer21 on 02.19.14 at 10:42 pm

I just search for short sales because I don’t want to get greedy. I’m complacent with only doubling my money. I also bought deeper out of the money puts on the S&P 500. Betting on the S&P 500 dropping to 400 this year.

#100 Aggregator on 02.20.14 at 4:24 am

There it is…

Canada’s Government Makes Rare Venture into U.S.-Dollar Bond Issuance

Canada’s government is making one of its relatively rare forays into the world of foreign-currency bonds this week, revealing plans to issue a U.S.-dollar-denominated bond into a global market has lost some of its appetite for Canadian bonds.

It would be the first so-called Yankee bond from the Canadian government since February 2012, and its third in five years.

The finance department said the bond is being issued to help fund and diversify Canada’s foreign-exchange reserves and meet foreign currency requirements, but did not provide any additional details.

Market sources said the bond will have a maturity of five years and will likely be about $2 billion in size. The February 2012 issue was $3 billion.

Yes $2 billion in size that will be deposited into the Finance Ministry's special EFA account with the Bank of Canada, of which later will be monetized into tens of billions more in debt.

"As you know, we in Canada have not been fans of quantitative easing unlike the United States and elsewhere," —Jim Flaherty.

And then they wonder why Canadians can't save.

#101 Tripp on 02.20.14 at 6:38 am

#36 Linda Mulligan on 02.19.14 at 10:11 pm

“…between $114,000 to $115,000. Most Canadians are never going to see that kind of net income in retirement…”

Linda, unfortunately you are right. Actually most Canadians don’t make that as a family with two working members in their prime working years.

#102 Deb on 02.20.14 at 6:55 am

The majority of Canadians, unfortunately, view CPP and OAS as a core source of retirement income rather than as a supplement to retirement income from other sources (such as personal savings in RRSPs, TFSAs, work pensions, ect.). How this collective delusion came about, I do not know. What I do know is that after doing some simple calculations, most people are shocked to discover how little retirement income CPP and OAS will actually provide. Better to do the rough calculations at the age of 18 (rather than 59), and plan accordingly.

#103 yann on 02.20.14 at 7:50 am

re: #59, DocInWaitingRoom’s post.

Enlightening that they are looking at such a high (40%) possible drop in property prices. Wouldn’t mean a similar drop in taxes, as they are based on a city-selected ‘mill-rate’.

If the aggregated value of all properties in town drops, City government just has to adjust their mill-rate (higher) to allow them to get the same yearly tax revenues.

There’s a lot of troubling things going on, and makes any sensible, caring person worry. For ourselves, for our kids, for our fellow citizens.

Media in Canada is pretty poor at reporting relevant and important items. UK media does a much better job, documenting and discussing things like how the repression of interest rates is hurting anyone with savings. You don’t see any of that here.

#104 James on 02.20.14 at 8:52 am

Will the FEDS let this implode or will they invoke more measures?

Whats is wrong with you people. That’s exactly why RE won’t implode. A small temporary correction. Ie a sneeze.

#105 Louis on 02.20.14 at 9:25 am

“What people need isn’t a paid-for house, but cash flow. The two are becoming mutually exclusive.”

Having a paid for house can be one part of the cash flow equation… It just can’t be the only part.

My house is fully paid. My city and school tax amount to 5k$/year. Even if you factored in maintenance, it’s nowhere close to what I would paid monthly if I rented.

Could I sell and make more with the cash, after factoring inflation, than what I save in rent ? That is open to debate… I could sell for 500-600k$ after closing cost. Renting something similar would cost me 2k$/month. The big difference is one is after tax money (rent) while the other (investment revenu) is taxed at various level. Also, even if I could make 7%… I would need fixed income. I can’t pay rent on a good month and not pay when the market is down.

You have much to learn. You could generate $3,000 a month in taxless income and preserve your capital. Yes, live for free. — Garth

#106 In the Sprawl on 02.20.14 at 9:27 am

A coworker cancelled on me for dinner the other night because her real estate agent demanded she be at the house she and her husband are selling. Turns out, she had to wait outside for some couple to complete a second viewing, who were evidently likely to present an offer.

I told her on the telephone to tell the agent to do his job and receive the offer, and meet about it tomorrow to discuss (I had invited to have them over to dinner to shut her up complaining about the fact that the agent wouldn’t let them use the kitchen). Huh, turns out the offer was irrevocable only until 9:30pm- two hours after the viewing. (Evidently, within that time they signed back and forth a couple times, the sellers in the kitchen and the buyers in the driveway in the drizzle- I guess signing on the hood of the agent’s car?)

Absolutely bizarre to me. To say nothing of the fact that the place is an overpriced townhouse with about-to-explode maintenance fees built from pressed cornflake boxes with brick veneer pasted on top. To say nothing of the fact that they are now claiming to have “made” forty thousand on the place, which they bought three years ago, forgetting about the agents’ fees ($16,000 or so); mortgage penalty (they “have to” rent somewhere else so are not porting, and are very much the 5-year-fixed type of people); oh, and all the interest that they’ve paid…

To say nothing about those things…why would an offer not be irrevocable for at least 24 hours? It’s just a house, and what is the agent going to do, call all of the interested parties who would love nothing more than to get into a bidding war for a crummy town? Don’t the buyers realize they’re the only ones as stupid as this?

Another gem: the first offer was evidently “insulting.” It was 95% of ask! If that’s “insulting,” I really wonder what the vendors from whom I’ve bought have said about me…

#107 Ben on 02.20.14 at 9:42 am

With humble respects to “Old Jim”…

Having done so, I can assure you that getting rid of a lifetimes worth of possessions is a HUGE amount of work. I did so while younger and healthy and can’t imagine doing so when ill or infirm.

A life threatening illness completely consumes one’s sense of control.

EVERYTHING little thing in life is impacted by the threat of imminent death. Continuing to live in a familiar place that perhaps harbours cherished memories of happier times is not a luxury for some, it’s an effort to hold on.

And sometimes that’s all that they have left.

While his financial burden obviously could have been eased greatly by selling, NO ONE has the right to criticize “Old Jim” for the hard choices that he made at a very very difficult time of life.

Yours is a financial blog…I totally get that.

But for some people…life is not just about money.

#108 rosie "moving forward" in the knowledge that, "this won't end well" on 02.20.14 at 9:44 am

#78 Willdaman

If you want specific advice on investing, pay for it. Hope you like my handle.

#109 Paully on 02.20.14 at 10:08 am

I am shocked to read that people sitting on such huge assets would choose to live in poverty and squalor rather than liquidate and live the rest of their years richly off of the sale proceeds. Home ownership has become a cult.

#110 gladiator on 02.20.14 at 10:12 am

This is who we should take example from: professionals who prove they are worth their well-deserved pay:
http://www.zerohedge.com/news/2014-02-20/number-days-which-jpm-lost-money-all-2013

No, the markets are not rigged. Whaddya talking about?

#111 High Plains Drifter on 02.20.14 at 10:17 am

Owning one upper end condo would have taken me down a perdition that Garth so well describes. The gamblers solution, buy another, more expensive condo on a two yr. futures style contract and start praying the outer world will bring it’s fruit to you. The details of how one scores are situational, just like in a hockey game. Still, at six decades in, I have a mortgage that will be paid in full when I am just a bit older than 90. Now the bank is a full partner in my fate. With some of the money from sale of first condo, make a large enough down payment, combined with a 35 yr. amortization, to ensure monthly nut does not exceed 80% of rental comparables. Next, sing that old song,”if that’s all there is my friend, lets keep dancing, let’s break out the booze my frienddd and have a ball, if that’s all, there is”. Next chapter, when your oversight mad employer is getting ready to act, you show em, who’s the boss?

#112 DocInWaitingRoom on 02.20.14 at 10:22 am

Property taxes are intimately tied to values. I guess a 100k apartment owner should pay the same as a 10 mill villa in your mind?
Good thing it works like Buffet asked

Check here
http://wx.toronto.ca/inter/fin/tax.nsf/tax?openform

#113 T.O. Bubble Boy on 02.20.14 at 10:22 am

Bitcoin $130 this morning!
http://bitcointicker.co/

That’s just about a 90% drop in 3 months (from $1200+ at the end of November).

#114 Willdaman on 02.20.14 at 10:26 am

@#77 Vamanos Pest

You cite CURRENT conditions that spell trouble for the housing market. I’m not saying those are right or wrong (I’m inclined to believe those factors do indeed spell trouble, but for markets primarily outside Toronto and perhaps Calgary/Vancouver).

I’m saying Garth and others on here refuse to acknowledge that there are just as many factors that one can cite as to why we’re currently in unprecedented times with respect to the financial markets as well (eg QE being the biggest in my view, more high speed algorithm trading, etc. etc.), therefore looking backwards at as a predictor for future performance has limited utility, if any. In the long term, who know this could all be a blip and in 100 years starting from this point the market could deliver 10% annualized returns…but I really don’t give a sh*t about that long of a time frame, I’m more concerned about 5, 10, 20 years down the road.

If we’re at a market crest right now and things stagnate or drop off for the next couple of years then how will that impact returns in my time frames? For the sake of argument let’s say we’re at a crest, like before the tech bubble and 2008 bloodletting. Let’s keep it simple, some quick back of the napkin math:

1 share of SPY bought before the tech bubble in Sept 2000 = $150, today it’s worth $183…there’s been ~$30 in divies collected along the way but you’re looking at a pretty miserable return over some 13 years.

1 share of SPY bought in Oct 2007 before the 2008 crash = $156, collected ~$15 in divies along the way, 7 year time span.

Obviously I picked peaks at times before crashes to illustrate my point, and I’m not saying that we’re in for a market crash now, I’m just pointing out that since, in my view, we’re in uncharted waters for the market, it’s possible for things to go either way…and to exclude that possibility (which some of you do), is a bit ignorant.

I’ve got mid 6 figs invested and i’m the last guy that wants a downturn, but I would be a fool not to mitigate against the possibility.

What do you not understand about a ‘balanced’ portfolio? All you talk about are US equity markets. — Garth

#115 Penny Henny on 02.20.14 at 10:30 am

Garth- 50% of the wrinklies figure they’ll have to trade the house for income. I suspect the final number will be even higher, but that won’t be known for a decade or so.
——————————————————
Yeah, but even if you are right. By that time the average SFH in 416 will be 1.4M

#116 Son of Ponzi on 02.20.14 at 10:34 am

#13 airhead princess on 02.19.14 at 9:15 pm

We know that certain million dollar postal codes ( such as the ‘rich’ areas of Richmond) are reporting that huge numbers of kids are showing up at school unfed.

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

This wins most depressing comment of the day. So wrong.
———————-
Happy renting:
Reality is not always pretty.
Richmond with the second highest RE in Canada has a very high child poverty rate.

#117 Louis on 02.20.14 at 10:36 am

You have much to learn. You could generate $3,000 a month in taxless income and preserve your capital. Yes, live for free. — Garth

Enlighten me then :)

How would you take 500-600k$ cash and generate a stable tax free 3000$ monthly cashflow.

For bonus, point don’t use RRSP and TSFA because I got both of them maxed out already.

Balanced, diversified portfolio turning out cap gains and dividends in the non-reg account with fixed income sheltered, and a monthly income stream structured as return of capital. — Garth

#118 Willdaman on 02.20.14 at 10:40 am

#108 rosie
If you want specific advice on investing, pay for it. Hope you like my handle.
__________________

Who’s asking for specific advice on investing? I only asked Garth to elaborate on an answer I thought was gibberish.

My other questions flow from stuff that Garth puts out there…think one of my last queries was in response to Garth posting that he doesn’t like rate reset prefs, and I essentially asked why that is, whether that means he likes fixed perpetuals. Perhaps that is asking for “advice on investing”? I dunno, but Garth is the one that put it out there so I assumed it was fair game to ask for a justification.

Garth may be an oracle to the muppets, but to me he’s just another data point who provides some good thought provoking views. I guess my problem is that I need to be more comfortable with the fact that this isn’t really a Q&A forum, I’ll try to just shut up and watch from the sidelines from now on.

#119 Daisy Mae on 02.20.14 at 10:47 am

With regard to mortgage renewals, be on the alert. Banks/credit unions will not necessarily contact you when it’s time to renew. They will allow the existing mortgage to continue at the old rate.

With rates around 3% as opposed to the previous 5-6%, you lose and they win.

#120 Vangrrl on 02.20.14 at 10:59 am

#87: It means money just sitting in a low interst savings acct, I believe. But you can have anything in a TFSA- ETFs, index funds, etc. They earn more.
#91 & 94: Agree, the attachment people have to their houses, their neighbourhood, gets stronger over time. Very few people, even if when they were younger planned to retire elsewhere, are able to let go of material possessions and move or travel. My parents are in their mid 70s, were immigrants (from diff countries) so there was a time when they were adventurous and left everything behind, but now sit in a paid-for townhouse in frigid Ontario and only spend 2 mths a yr in the Mediterranean where my mum has a place. The day will come when the travelling back and forth will be too much. I’m resigned to the fact I’ll be the one dealing with selling the Ontario home and cleaning out my dad’s stuff (bit of a hoarder). My brother tries to talk to them about making a decision to move overseas permanently (without losing his temper). My dad is stubborn. My mum lets him make all the decisions (or in this case none).
They have a flat overseas, family there, kids to help them organize, and are still relatively healthy and mobile and THEY won’t make this final, important decision. Not surprised at all there are so many elderly sitting in crumbling homes.

#121 Penny Henny on 02.20.14 at 11:01 am

#78 Willdaman on 02.20.14 at 12:44 am

My sentiments exactly.

#122 Derek R on 02.20.14 at 11:01 am

#85 Vanguy on 02.20.14 at 1:33 am asked:
Can you explain to me what “Most TFSAs are in cash” means? Is that money in TFSA collecting interest?

Almost. It’s money in a bank account in a TFSA collecting interest.

#123 Ydnew on 02.20.14 at 11:11 am

I have known many Jims and Jimettes. It was as much watching them struggle to live in houses that they could not afford as Garth’s advice that made us decide to sell our house and rent. I don’t envy the people in or old hood – even the ones who have spent a fortune on renos – who are having to deal with the city’s crumbling infra structure, ancient trees and high taxes in this dreadful winter. Moving was a wrench after so many years, but we don’t regret it one bit.

#124 Linda Mulligan on 02.20.14 at 11:14 am

OK, so even a modest 340K investment apparently can generate monthly income, enough to cover costs & even grow a nest egg. Excellent news. So I have to ask – IF that is all that needs doing, why hasn’t everyone who owns a house sell, invest & start living off the monthly income from the tax free dividend? Surely if it is that easy & if the income is guaranteed then anyone without an emotional attachment to their old stomping grounds would sell, invest & relax immediately. Heaven’s, depending on who purchases they might even work some deal to rent in their old stomping grounds & keep the connections etc. that living for a lifetime in the same place might have provided….. I don’t know, guys. Sounds way too good (& easy) to be true. IF it is so easy & the income flow so easy, why is it that there are all these trained financial folks who are not living that way? Surely they know this stuff & would be taking advantage of it – yes, they’d have to get their initial investment pool together but from all I can gather, most of them are not doing as suggested here. Why not, if it is that easy to generate income tax free?

It is neither easy nor guaranteed. But keeping hundreds of thousands in home equity, the bulk of your net worth, generating no income, is hardly wise. Most people are financial illiterates who get their investing ‘knowledge’ from the bank or their realtor. They are headed for a far less comfortable life than they could otherwise have. Sounds like you’re on that well-worn path. — Garth

#125 bdy sktrn on 02.20.14 at 11:36 am

are you ready to expect good things from your money?
– vancity

this tv ad runs 1000x on cbc ctv global in van

if you look closely you can see my house in it – still wating for a cheque!

and can women curlers just missed a shot in the 8th – could cost the game

#126 Tony on 02.20.14 at 11:42 am

Re: #124 Linda Mulligan on 02.20.14 at 11:14 am

Because it takes money to hedge long positions as all that’s left in the market now is short sellers and day traders. You also have to remember when the share price nosedives a huge reduction in the dividend is almost a certainty.

#127 cramar on 02.20.14 at 11:45 am

#10 Linda Mulligan

There is one flaw in your analysis. With 6.3 million boomers owners, you are assuming that every one has a value in the million dollar range. Only a fraction of these live in the big RE markets like TO and Van that have stupid RE prices. In reality, many live in other areas. For example, there is an older couple down my street here in Leamington who want to move across the road to the retirement home. Their house has been up for sale for many months, with no takers. It is a detached bungalow with a detached garage, new furnace and kitchen cabinets. The asking price is $165k. No takers because people who live in the big cities haven’t clued in that they could sell their million dollar property, buy a $160k house in a retirement area and invest the difference. Then spend their winters in FL until they also need that retirement home funded by their investments.

#128 bdy sktrn on 02.20.14 at 11:47 am

oh and the house featured in the commercial is yet another one in which a 94yo senior held on in squalor until the very end. btw this is near dt van – each and every one of these seniors could move 45 min away and buy a mansion for 50% of selling proceeds – and live off the rest , but it’s NOT about ownership or RE , it’s about not wanting to change.

btw – huge sweeden miss, canada back in contention for gold

#129 airhead princess on 02.20.14 at 11:47 am

“#96 Happy Renting on 02.20.14 at 3:38 am

#13 airhead princess on 02.19.14 at 9:15 pm

We know that certain million dollar postal codes ( such as the ‘rich’ areas of Richmond) are reporting that huge numbers of kids are showing up at school unfed.

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

This wins most depressing comment of the day. So wrong.”

I agree….but the fact is that its true and more widespread than is being reported. It is not just in ‘inner city’ neighborhoods that poverty and hunger is extant. The ‘urban myth’ that seniors are eating cat food is laughed at by the richly paid elite unionized amd pampered civil servants….except it is backed up by the good folks at the food banks who see the extensive poverty among seniors and the working poor every day. Canada is a land of misery behind closed doors. Too many people are over stretched by massive mortgages, personal debt and taxation to eat properly. You want to see depressing….go past the Gospel Mission in Vancouver and note the side door where ‘families with children’ are lined up so that the kids don’t have to wait with the hundreds of insane derelicts sleeping along and entire two blocks waiting to get in. Just for a laugh go by City Hall and check out all the fine automobiles in the reserved lot.

#130 -=jwk=- on 02.20.14 at 11:48 am

@ sherri #92

You need to find a long term landlord. Renting from a flipper rarely works well. We rent from a realtor who owns 20 houses and has owned ours since 1986. No worries about a sale anytime soon :)

You need to interview your landlord, ask for long term references, visit the houses, note the condition of yard, house, upkeep etc.

#131 bdy sktrn on 02.20.14 at 11:51 am

re – richmond poverty

if daddy is in guangzou making 500k , and mom and kids live in steveston making 0, then those kids are counted in the poverty numbers , right?

#132 recharts on 02.20.14 at 11:55 am

#113 T.O. Bubble Boy on 02.20.14 at 10:22 am
Bitcoin $130 this morning!
http://bitcointicker.co/

That’s just about a 90% drop in 3 months (from $1200+ at the end of November).

That is because so called investors misunderstood the use of this currency.
They are now paying for their stupidity

As I said before, DO NOT HOLD BITCOINS, use them to pay or to transfer money. It is common sense logic.
The value of this currency is given by the number of the quasi simultaneous commercial transactions that are on their way at the moment when you buy the currency

In other words, considering the limited number of bitcoins you might have more or less people trying to buy the same number of available for sale bitcoins
The merchant should vary its price according with the let’s say USD/Bitcoin exchange rate. There is no assets backing up bitcoins. If you hold the currency you expose yourself to these sort of variations you just noticed above

There will be a time when by a larger adoption the number of transactions (the demand) will be constant and the currency will be more stable but there is a long way to there.
So far like with any other asset the so called investors (read speculators) jumped on the asset without understanding its true nature and (I am happy to say that) now they are paying the price.
Give bitcoins some time and try to understand its nature and the technical things behind it

#133 bdy sktrn on 02.20.14 at 11:56 am

huge steal 2 by can in the 9th

gold medal all but assured.

#134 TEMPLE on 02.20.14 at 11:59 am

#90 Happy Renting on 02.20.14 at 2:33 am

Out of curiosity, what drives you to spend so much of your time helping a neighbor who can afford to hire help and won’t even say “thank you”?…Some days I worry that my efforts just perpetuate the problems we think we’re addressing.

I am jumping in on this because I wonder the same. I’ve spent lots of time (and money) volunteering in mostly thankless positions and it is true that most people are not overly thankful about it. However, I am happy to be able to make a difference, even if few notice. And sometimes I do meet people who are genuinely grateful, which is really pleasing.

Anyhow, I think the world needs people like you who volunteer and/or work to make things better. At the very least, the Golden Rule comes into effect and maybe a few other people pick up on your lead.

TEMPLE

#135 recharts on 02.20.14 at 12:02 pm

#107 Ben on 02.20.14 at 9:42 am
With humble respects to “Old Jim”…

Having done so, I can assure you that getting rid of a lifetimes worth of possessions is a HUGE amount of work. I did so while younger and healthy and can’t imagine doing so when ill or infirm.

A life threatening illness completely consumes one’s sense of control.

EVERYTHING little thing in life is impacted by the threat of imminent death. Continuing to live in a familiar place that perhaps harbours cherished memories of happier times is not a luxury for some, it’s an effort to hold on.

And sometimes that’s all that they have left.

While his financial burden obviously could have been eased greatly by selling, NO ONE has the right to criticize “Old Jim” for the hard choices that he made at a very very difficult time of life.

Yours is a financial blog…I totally get that.

But for some people…life is not just about money.

Exactly my sentiment!
By picking Jim as an example Garth showed a good dose of cynicism.
There are other values that a house provide.
Garth don;t forget: you are not rich till you have things that money can’t buy.
That is Health,Love,Family and so on…

He had none. Poor choices. — Garth

#136 Ry YYZ on 02.20.14 at 12:05 pm

#63 Waterloo Resident on 02.19.14 at 11:39 pm

Well, at least that takes care of the problem of retirement planning. Maybe I shouldn’t bother, just spend it all now?

#137 None on 02.20.14 at 12:13 pm

#13 airhead princess on 02.19.14 at 9:15 pm

….only the elites civil servants are still driving their glossy SUV’s with confidence. Vancouver…with its huge and growing ghettos will descend into chaos. I suggest Robson Square as a good place to set up the guillotine.

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

Great choice of name!

#138 Ralph Cramdown on 02.20.14 at 12:19 pm

#114 Willdaman — “I’m saying Garth and others on here refuse to acknowledge that there are just as many factors that one can cite as to why we’re currently in unprecedented times with respect to the financial markets as well (eg QE being the biggest in my view, more high speed algorithm trading, etc. etc.), therefore looking backwards at as a predictor for future performance has limited utility, if any. […] I’m just pointing out that since, in my view, we’re in uncharted waters for the market, it’s possible for things to go either way…”

I find this “unprecedented times” and “uncharted waters” talk annoying. If predicting “the markets” is too difficult, then focus on the micro, not the macro.

There is a wide variety of companies with easy to understand businesses which make money year in and year out, and mail some of it to shareholders four times a year. Some of those companies are cheap right now, and some of them are expensive. If you buy a diversified portfolio of the cheap ones and stop caring so much whether they’re cheaper or more expensive next month, things will probably work out well for you. If you occasionally sell the shares which get expensive and use the money to buy more cheap ones, and you reinvest dividends and add some money every month from your day job, it’s hard NOT to grow a substantial sum.

There are other investing strategies which require more work, or less, and may be more affected by what the Fed says. But there’s absolutely nothing “uncharted” or “unprecedented” about buying solid dividend payers cheap. The process is pretty much the same as it was fifty years ago, excepting some changes in accounting standards.

“The markets” are a place you go when you want to buy or sell shares. For most people, the less buying and selling they do, the more money they’ll make. There is, however, a vast industry attached to “the markets,” the financial services industry. Fees and commissions are rich, so there’s a lot of people trying to convince the public that shares should be bought and sold more often, or that owning individual shares is old fashioned and owning a fund is the thing to do, or that the whole affair is too complicated for amateurs and best left to specialists. Further, there are other industries that compete for the same dollars people invest in stocks, such as banks, real estate and the ever present gold bugs. These industries benefit from making the stock market seem scary and dangerous. And there’s people who see stocks as a lottery, and buy companies that have never made any money, or make ridiculously little money. The newspapers run stock picking contests and the winner is inevitably somebody who’s parlayed a couple of junior resource plays into a huge return, so some people think that’s the way to go.

At the end of the day you ARE getting paid to take a risk, so if you’re uncomfortable about daily four and five figure fluctuations in the value of a six figure portfolio, there’s not much to be done about it (except maybe checking less often).

#139 Bottoms_Up on 02.20.14 at 12:22 pm

What is wrong with our society when the most tantalizing debates surround how to scratch our way to providing for ourselves and saving (hopefully) just enough money to fund a few decades of old-age existence??

Shouldn’t the right to a decent life exist in a civilized, progressive society?

Have we lost our way?

Of course. Most are greater fools. — Garth

#140 BCD (D for Doomer) on 02.20.14 at 12:30 pm

I bet if you asked this man he would say he chose to live out his last days in his home to keep whatever remaining dignity he had intact. He was in “his” home, which meant he was still the master over it—as sick as he was. I’ve seen it over and over again with elderly dying in their home. You can take a lot away from the elderly, but usually their homes are old and worth a few bucks, and THAT is why they keep them and die in squalor—to gain that bit of dignity and respect they wouldn’t have in an old folks home fighting over a one bedroom corner with a view of someone else’s back yard. With this wealth he was able to secure someone to look after him and reward them. This is what life is about. You reward the ones who look after you, you die with whatever dignity you have. Surprising Garth, that for an older fellow you can’t see through this. There is a time for good investment advice and there is a time to respect the decisions of the dying.

The choice is not between living in your own squalor and a retirement home. Jim might have enjoyed a decade in a lovely condo, on the beach or in the south of France. Don’t be a drama queen. — Garth

#141 bdy sktrn on 02.20.14 at 12:37 pm

#134 TEMPLE on 02.20.14 at 11:59 am
#90 Happy Renting on 02.20.14 at 2:33 am

Out of curiosity, what drives you to spend so much of your time helping a neighbor who can afford to hire help and won’t even say “thank you”?…Some days I worry that my efforts just perpetuate the problems we think we’re addressing.

I am jumping in on this because I wonder the same.
——————————

ditto here – can’t you find someone who needs the help and isn’t a dickhead about it?

you could be doing good, helping a prick helps nobody. let ’em rot. spent your efforts on the truly needy.

#142 Grantmi on 02.20.14 at 12:41 pm

#73 VHNWI on 02.20.14 at 12:24 am

Man up! Deal with it

Oh! I’m dealing with it.. trust me!

But that’s why I’m looking for a sugar mamma to take care of ME!!!! If this caregiver hit the jackpot with a free home she got. She’s a MILLIONAIRE! hashtag_WINNING!!

#143 yo on 02.20.14 at 12:51 pm

I agree, the rise in property prices have distorted people’s decision making. My parents are knee deep in property, refuse to sell and pretty much fund their retirement using credit lines on their property. My father is approaching 70 and refuses to sell. However, when the news that the gov’t was cancelling the investor program ( my dad lives in North York), I could see his face was worried.

Bottom line, if your relying on your whole life on one thing, that can change very quickly – you probably should sell. It won’t end well. Too many people even with $1M homes have taken out so much credit lines on their property, the “value” has already been lost. The real sad thing is the banks/gov’t just made it too easy to borrow off your home. You can borrow off your credit line online easier than writing this email.

#144 tkid on 02.20.14 at 12:52 pm

Shouldn’t the right to a decent life exist in a civilized, progressive society?

Sure, but who told you that life would come without lifting a finger or firing up a grey cell or two? If you listened when you were younger, you put aside a set amount each month to save up, and worked hard to ‘get ahead’. You kept out of debt, didn’t open up helocs to fund the bi-yearly vacations, drove a car into the ground, and kept out of the malls.

I’ve got every sympathy in the world for someone who did all, that but life handed them a hard knock or two, and now they struggle as seniors to make ends meet. But the vast majority of Boomers coming up for retirement have done everything wrong, and won’t take the steps needed to fiscally salvage their retirement. Hell, a great many of them still have mortgage debt and don’t know how little they’ll get from CPP and OAS.

I can’t afford to fiscally salvage their retirement for them, I just do not have the cash to pay the taxes needed to finance their needs. I’m already paying out 40% of my CPP contributions towards their pittance of a government pension. How much more do you want?

#145 Kingarthur on 02.20.14 at 12:59 pm

#78 Willdaman on 02.20.14 at 12:44 am

Garth: “oracle to the muppets” LOL! I must be one of those old guys in the balcony boxes…

#146 JD on 02.20.14 at 1:00 pm

Interesting research quoted in the New Yorker, about how great enthusiasm, like the media, CHMC, and the Realtor mirage, may actually predict a downturn:

“In a provocative new analysis, Oettingen and her colleagues have suggested that public displays of positive thinking may even predict downturns in major macroeconomic outcomes. They used a text-analysis program to measure the tone of articles in USA Today between 2007 and 2009, and found that especially positive articles predicted a downturn in the Dow Jones Industrial Average between a week and a month later. The researchers also analyzed all twenty-one U.S. Presidential inaugural addresses between 1933 and 2009, and found that Presidents who waxed optimistic about the future saw a rise in unemployment and a slowdown in economic growth during their terms in office. It’s perhaps too strong to suggest that positive thinking, alone, produced these large macroeconomic changes, but the staggering results in this most recent paper are consistent with more than a decade’s worth of studies in Oettingen’s lab.”

http://www.newyorker.com/online/blogs/currency/2014/02/the-powerlessness-of-positive-thinking.html

(Here is the research: http://pss.sagepub.com/content/early/2014/02/04/0956797613518350.abstract)

#147 Son of Ponzi on 02.20.14 at 1:03 pm

re – richmond poverty

if daddy is in guangzou making 500k , and mom and kids live in steveston making 0, then those kids are counted in the poverty numbers , right?
—————
Right!

#148 World According To Garth on 02.20.14 at 1:12 pm

Bitcoin is not $130. Only mt gox is. Thats like saying Lehman collapsed so all banks collsed. This is what happens when slaves read the main slime media. It’s been around $600 for two weeks.

Bitcoin $130 this morning!
http://bitcointicker.co/

That’s just about a 90% drop in 3 months (from $1200+ at the end of November).

#149 nonietsche on 02.20.14 at 1:21 pm

i’ll be one of those beggar seniors in a few years, so i’ll be looking to buy a duplex up north, bancroft comes to mind shortly. having just come back from the santiago , cuba area again [5th year] i’m finding some daring canadiens building houses for apprx $ 10.000 land incl. of course you can get homes for as little as $ 3-4 thousand,a small pension and you can live like a king in the sun for the winter, the catch is that the home will be in a cubans friends name, greater fools? not sure , the point i’m trying to make is that there are way’s to live on the cheap and have some fun in the old days. my friend went one step further and married a younger lady and lives there for the winter and come back in the spring to the cottage, 10 years on all is good.

Bancroft? Seriously? — Garth

#150 Enthalpy on 02.20.14 at 1:34 pm

I dont know if I should be happy or sad that Ive just started my career , have just started to save and have become wise to these principles.
I sure wish I had 300k right now ;)

#151 Chickenlittle on 02.20.14 at 1:36 pm

Cici re yesterday:

I forgot to ask you something: when you downsized to pay off debt, did anyone give you a hard time?

When we downsized so I could go back to school, my cousin (who has a sugar daddy) came over and made fun of where we lived saying it wasn’t good enough and we could do better. Well, yes we could have but then we would have been living unecessarily beyond our means. I told her in one year I saved 15k for school and 2 trips based on the money we saved by living there. Well that still wasn’t good enough!

Having said that, she spent 10 years in school, has no degree, and her parents paid for it ALL.

Gotta love those entitled B!*#@es….

#152 chapter 9 on 02.20.14 at 1:37 pm

What are people thinking!!! A buddy of mine sold his business five years ago made some coin enjoys his life and has been renting a great house, works part time, having fun. Debt free! Bill is 57. Yup got the itch. House hunting, houses are an investment!! Size of the mortgage ballpark $550,000 plus. I gave him your site.
Dr. Phil is booked up!

#153 airhead princess on 02.20.14 at 1:41 pm

“137 None on 02.20.14 at 12:13 pm

#13 airhead princess on 02.19.14 at 9:15 pm

….only the elites civil servants are still driving their glossy SUV’s with confidence. Vancouver…with its huge and growing ghettos will descend into chaos. I suggest Robson Square as a good place to set up the guillotine.

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

Great choice of name!”

Obvious response from one of the bottom feeder civil service elites who fear the day when they find themselves outed for their greed, avarice and shameful behavior.

#154 Cici on 02.20.14 at 1:46 pm

#78 Willdaman

Very simply put, Garth’s response to your statement: “Sorry I used the phrase “stock market” if you’re hung up on semantics, I meant the broader equities, bonds etc. market” really means “WTF?? Your trying to define the stock market in terms of broader equities and bonds…Yeah, whatever buddy.”

Here’s the lingo you need to understand the message on Greaterfool. When we talk about “stock market investing,” we’re talking about trading individual company stocks. ETFs is about broad-market investing, similar to index investing = less volatility and risk through greater diversification. And the bond market is the bond market. Bond themselves are a whole different asset allocation category.

If you take three people, each of which has invested $100,000, but person 1 is totally invested in individual stocks, person two is totally invested in bonds, and person three is totally invested in a diversified balance of ETFs, their portfolio returns will be DRASTICALLY different.

Now, moving on to the popular “this won’t end well” idiom, if you really want to understand what this means, read the bottom section of the post by #77 Vamos Pest.

Hope this makes things clearer. You can learn a lot from Garth if you take the time to understand his message.

#155 Kingarthur on 02.20.14 at 1:51 pm

Vancouver Ranked Top In North America By Mercer Quality Of Living Survey

http://www.huffingtonpost.ca/2014/02/19/vancouver-three-canadian_n_4816798.html

Just saying….

#156 Humpty Dumpty on 02.20.14 at 1:52 pm

Zzzzombie Nation..

http://banoosh.com/blog/2014/02/12/19-statistics-drugging-america-almost-crazy-believe/#sthash.aDzi4JdA.dpuf

#157 KommyKim on 02.20.14 at 1:57 pm

RE #118 Willdaman on 02.20.14 at 10:40 am
I guess my problem is that I need to be more comfortable with the fact that this isn’t really a Q&A forum, I’ll try to just shut up and watch from the sidelines from now on.

If you want more of a Q&A type forum about investing head on over to http://canadiancouchpotato.com/

one of my last queries was in response to Garth posting that he doesn’t like rate reset prefs, and I essentially asked why that is

I would think one of the reasons would be that the issuer has more control of rate reset prefs. ie: The issuer will decide whether to Call or Reset which is usually to the detriment of the investor. Therefore reset prefs with generous reset terms get called and ones with crappy terms for the investor get reset.

#158 T.O. Bubble Boy on 02.20.14 at 1:57 pm

@ #132 recharts on 02.20.14 at 11:55 am
#113 T.O. Bubble Boy on 02.20.14 at 10:22 am
…..
So far like with any other asset the so called investors (read speculators) jumped on the asset without understanding its true nature and (I am happy to say that) now they are paying the price.
Give bitcoins some time and try to understand its nature and the technical things behind it
————————

Completely agree — I have said a few times on this blog that I see a future for some kind of next generation “Bitcoin v2.0” as a real-time fund transfer / payment platform, but not at all for the current incarnation of Bitcoin as this kind of magical crypto-currency and store of value.

#159 happity on 02.20.14 at 2:03 pm

“he won the inflation lottery. But those days are done”

The days of digital investments in a world of massive printing, leverage and rehypothecation that have emancipated any collateral will soon be done.

Zero evidence that will happen. — Garth

#160 fixie guy on 02.20.14 at 2:03 pm

#19 prairie person : “Cautionary tales? Maybe?
30 years ago ….. he’d just sold his house because prices had risen beyond anything sensible ….. purchasing power of the dollar had been pretty stable for quite a while. ”

Honestly, I couldn’t ready any further. That was more ‘tale’ than ‘cautionary. Thirty years ago the country had just come off a decade in which inflation twice exceeded 12% and spent most of it over 8%. Far from a market top, housing was crushed by the resulting mortgage rates. Thirty years ago a family member bought a decent two story starter in a city of over 150,000 for $14K.
Google first.

#161 Nemesis on 02.20.14 at 2:16 pm

Egads, clearly, today’s narrative could use some ComicRelief…

In that vein – how many SaltyDogz have ever wondered what that prolific correspondent & NigerianGentleman who keeps emailing them with enticing FX offers actually looks like?

Well… wonder no more:

[Aljazeera] – Nigeria president suspends central bank chief: Lamido Sanusi

…”Nigeria’s President Goodluck Jonathan has suspended the central bank governor who announced that billions of petrodollars were missing from government coffers.

Lamido Sanusi, the internationally-respected governor, could not immediately be reached for comment after the president’s announcement on Thursday.

But a statement from the president’s aide said: “Mallam Sanusi Lamido Sanusi’s tenure has been characterised by various acts of financial recklessness … inconsistent with the administration’s vision of a Central Bank propelled by the core values of focused economic management.”

Last year, Sanusi reported that $50bn worth of oil sold by the state-owned Nigeria National Petroleum Corporation (NNPC) had not been paid to the government…

…Sanusi was named as the Central Bank Governor of 2010 for both the African continent and the entire world, by the prestigious Banker magazine.”…

http://www.aljazeera.com/news/africa/2014/02/nigeria-president-suspends-central-bank-chief-201422010910369304.html

…or, even better, the BurkaCladden Saudi ‘Princess’ who miraculously contrived to FlimFlam her way into Knightsbridge:

[UK Telegraph] – Self-styled Saudi ‘princess’ wins dispute over multi-million pound Knightsbridge properties: Sara Al Amoudi, dubbed ‘Vamp in a Veil’, wins High Court battle after being accused of lying her way to a £14m property empire

…” The Saudi “princess” who was accused of being a “prostitute” and lying her way to a £14m property empire has triumphed in her High Court battle against two London property tycoons.

Sara Al Amoudi, dubbed “the vamp in the veil”, was said by property tycoons, Amanda Clutterbuck and Ian Patton, to be a “fake” who tricked them into transferring six multi-million-pound Knightsbridge properties into her name “at nominal cost.”

Ms Al Amoudi maintained throughout a month-long High Court hearing that she was the runaway daughter of a billionaire Saudi sheik.

She insisted she had received “millions of pounds in suitcases” from her mother, whilst facing claims that she was in fact “a penniless prostitute from the Yemen” masquerading as royalty…

[and best of all, this stunning example of BritishJurisprudence:]

…As to her identity the judge said she had found it “unnecessary to determine whether the alleged representations as to her identity, status and source of wealth were false.”…

http://www.telegraph.co.uk/news/uknews/law-and-order/10650683/Self-styled-Saudi-princess-wins-dispute-over-multi-million-pound-Knightsbridge-properties.html

[NoteToSmokingMan: As regards CharacterDevelopment you will no doubt appreciate the importance of slathering on the subtext when it comes to naming them – especially when you’re striving for comedic effect… e.g. President Jonathon Goodluck, or PropertyDeveloper Ms. Amanda Clutterbuck and her Barrister, Stuart CakeBread? TeeHee!]

#162 Tony on 02.20.14 at 2:33 pm

Re: #138 Ralph Cramdown

There’s always the little juniors in the Athabasca Basin. Skyharbour Resources Ltd seems to be the best bet of all of them in my opinion at this time or if you can get the shares at 11 cents or cheaper. Ps if you want a pure manipulated stock try Yellow Media on the TSX or Kane Biotech out on the venture exchange. Both are the same story they just trade shares back and forth from within the company trying to lure all the suckers. There’s no SEC up here so once the “heat” was off of Yellow Media after their fourth quarter earnings came out the shares magically jettisoned back to 25 bucks a share.

#163 Ben on 02.20.14 at 2:36 pm

#135 recharts on 02.20.14 at 12:02 pm

#107 Ben on 02.20.14 at 9:42 am
With humble respects to “Old Jim”…

Having done so, I can assure you that getting rid of a lifetimes worth of possessions is a HUGE amount of work. I did so while younger and healthy and can’t imagine doing so when ill or infirm.

A life threatening illness completely consumes one’s sense of control.

EVERYTHING in life is impacted by the threat of imminent death. Continuing to live in a familiar place that perhaps harbours cherished memories of happier times is not a luxury for some, it’s an effort to hold on.

And sometimes that’s all that they have left.

While his financial burden obviously could have been eased greatly by selling, NO ONE has the right to criticize “Old Jim” for the hard choices that he made at a very very difficult time of life.

Yours is a financial blog…I totally get that.

But for some people…life is not just about money.

Exactly my sentiment!
By picking Jim as an example Garth showed a good dose of cynicism.
There are other values that a house provide.
Garth don;t forget: you are not rich till you have things that money can’t buy.
That is Health,Love,Family and so on…

“He had none. Poor choices. — Garth”

I think that’s a sad and disappointing reply, Mr. Turner.

You know of only ONE choice that “Old Jim” made…to live and eventually die in the home that he once shared with his late wife. And if you take the time to think about it, you don’t even really know why he made THAT choice unless “Old Jim” shared his tale with you personally.

You have no idea what “choices” Jim may have made that could have affected his health. Lots of non-smoking, healthy-living people get cancer and die. Even though I don’t know Old Jim, I’d be willing to bet that getting cancer wasn’t a “choice” on his part.

You have no idea who may have loved Old Jim in life, nor do you know where they were during his decline and eventual death. Life and relationships can be very complicated, especially when you know that you are going to die. To suggest that his alone-ness was due to a “poor choice” is callous.

You have no idea why Jim appeared to have no family present during his decline and eventual death. Perhaps his wife was unable to bear children or he was unable to father them? Or perhaps he had children or siblings who died. It happens all the time. Are those the “poor choices” to which you refer?

EVERYBODY has a story, Mr. Turner.

Just because you don’t know their tale doesn’t mean that they made “poor choices” as you mistakenly state.

As I always say….before you criticize anyone, walk a mile in their shoes.

That way…you’ll be a mile away…and you’ll have their shoes! : )

Preachy sanctimony aside, he made a poor choice. — Garth

#164 Vamanos Pest on 02.20.14 at 2:42 pm

#114 Willdaman

First off, a well reasoned response. Thank-you.

I would say that the argument I made for a housing correction is in fact a historical argument in that, for example, household debt is higher than it’s ever been IN THE PAST. I see it as a recognition of the current state of affairs in historical context. But I think our disagreement here is removed from fact or even opinion, to that of perspective, which I think we can both live with.

Also, I chose the > than 100 year time frame (I fully agree this is a ridiculous investment timeframe in the context of a human lifespan) for 2 reasons: in your initial comment you said “long term”, so I’m guilty of some hyperbole there. But also, in historical data for prediction, the more data you use, the more precise prediction can be. We agree that no one knows, but historical data can give us likelihoods. So 100 years of data suggests it is unlikely that the S&P, for example, would be down over any 5 year period, and this can be said with more confidence than if the same statement was made based on 20 years of data.

Finally, your comments on buying into a peak I fully agree with. (Although, I don’t agree with the market being in “uncharted territory”. The mother’s milk of stock prices is earnings, and while price-to-earnings is frothy, it’s nowhere near uncharted. Again, if we’re talking uncharted, I have to mention housing). There are ways to mitigate this risk. I use diversification (income assets TEND to do well when stocks are doing poorly), regular contributions (on a schedule vs timing the market), and rebalancing so that stuff that’s under performed is purchased at these lows, while profit taking on stuff that’s outperformed.

(I’ve reduced “stocks, bonds, whatever” to “stuff”…as Garth cringes.)

#165 Still learning on 02.20.14 at 2:46 pm

#85,
I see #122 took a stab at that but, I thought maybe I can go a little deeper as, at one time, I was at that stage of learning this stuff too. And this is a blog where we help each other invest and learn right? (as opposed to doom and gloom and tearing each other apart?)
TFSAs, RRSPs are registered saving accounts. This means the Gov keeps tabs on them and they are designed for specific tasks that the Gov tries to encourage. Like saving for retirement.
You open these accounts (usually) with a bank. But, there are different ‘types’. I have one TFSA that is nothing but a savings account. Money goes in (to die a slow and painful death) and the bank pays interest. Its a plain jane savings account that only holds C$.
I have another that is termed an IETFSA with CIBC. That is an Investors Edge TFSA (Investors Edge is what they call their online brokerage site.)
What I am trying to say is that the IETFSA is a brokerage account, an account that can hold cash, bonds, stocks, ETFs, mutual funds, GICs etc. When Garth says, ‘Most TFSA’s are in cash’ he is talking about the first type of account. Most people just open a TFSA bland savings account. Good for saving (not really…) but, bad for growth (really bad!) The interest is terrible and so the nut will basically not grow. In fact, it will shrink because of inflation.
Now, the idea of a TFSA (Tax free savings account) is that any growth in that account is tax free. Who cares if growth is tax free if there is no growth.
That is where the brokerage TFSA comes in (in my case a IETFSA.) I put money in and use that to buy stocks, bonds, ETFs, what have you. Any growth that occurs (and there is growth) is tax free. Any dividends, capital gains etc. are not taxed.
If these assets where in a regular brokerage account, then I would have to pay tax (15%?) on any dividends. If I sold a stock or ETF for a profit, I would pay capital gains tax. In a TFSA, you don’t.
If you don’t invest in financial assets you should and a TFSA is probably the best way to do it for a young person, personal circumstances aside…

Thanks Garth for providing such an entertaining forum to discuss this stuff! Get well soon!

#166 Obvious Truth on 02.20.14 at 3:08 pm

#133

Was hoping for double gold for both ladies teams on ice but the hockey girls now need to steal 2 late in the game.

Go Canada Go!

#167 Network Admin on 02.20.14 at 3:10 pm

> #160 Still learning
> If these assets where in a regular brokerage account,
> then I would have to pay tax (15%?) on any dividends. … In a TFSA, you don’t.
Just FYI, in some cases there may be tax (like withholding tax on U.S. dividend stocks). See this for details: http://www.theglobeandmail.com/globe-investor/investor-education/how-to-avoid-withholding-tax-on-us-dividend-stocks/article1367786/

#168 happity on 02.20.14 at 3:13 pm

“Zero evidence that will happen. — Garth”

The only reliable correlation with the rise in the USA stock market over the last 5 years is the rise of the feds balance sheet.

There have been 100s of fiat paper currencies that are no more with a history rhyming with today’s global central bank and gov actions.

Incorrect. Check a chart of corporate portability, productivity or employment gains. — Garth

#169 BCD (D for doomer) on 02.20.14 at 3:19 pm

I bet if you asked this man he would say he chose to live out his last days in his home to keep whatever remaining dignity he had intact. He was in “his” home, which meant he was still the master over it—as sick as he was. I’ve seen it over and over again with elderly dying in their home. You can take a lot away from the elderly, but usually their homes are old and worth a few bucks, and THAT is why they keep them and die in squalor—to gain that bit of dignity and respect they wouldn’t have in an old folks home fighting over a one bedroom corner with a view of someone else’s back yard. With this wealth he was able to secure someone to look after him and reward them. This is what life is about. You reward the ones who look after you, you die with whatever dignity you have. Surprising Garth, that for an older fellow you can’t see through this. There is a time for good investment advice and there is a time to respect the decisions of the dying.

The choice is not between living in your own squalor and a retirement home. Jim might have enjoyed a decade in a lovely condo, on the beach or in the south of France. Don’t be a drama queen. — Garth
__________________________

My assumptions are more on point than yours. You are assuming that everyone wants to travel and spend retirement in some exotic locale, but the truth is when you are old you are less ambitious and adventurous…in fact you may even be “tired” and in ill health and weary of travel and health insurance etc. My dad said it best “help your kids when they are young, because when they are old they won’t need money”. Youth may be wasted on the young, but money is often wasted on the old. Jim did the right thing and left what he cherished to the person that probably wiped up his bloody sputum and helped him to stand and pee (if you have any personal experience of what cancer does you would know this). The aid deserved his fortune. To say he “forgot” about the motel paying neighbour is not to understand the whole story.

Drama queen. — Garth

#170 happity on 02.20.14 at 3:20 pm

Buffet has already cashed out of the USA stock market renaissance, Soros has too and is actually betting it will crash.

But go ahead, make their day, give them your money.

#171 BCD (D for doomer) on 02.20.14 at 3:33 pm

Drama queen. — Garth

Life is dramatic. Get with the program. My regards to old Jim for doing what he wanted. I prefer to spend my remaining time and energy chasing women and pursuing their smiles and affections. If money is what “steels” your manhood have at it. All the money in the world doesn’t amount to a gorgeous romantic escapade.

#172 Ralph Cramdown on 02.20.14 at 3:40 pm

#155 Kingarthur — “Vancouver Ranked Top In North America By Mercer Quality Of Living Survey”

Understand that winning that survey is actually losing.

From the article: “The quality of living index is used by companies to help determine compensation for their employees working abroad.”

How much are we going to have to pay Jones if we post him in _____ for five years, to keep him from quitting?

Wonder why salaries in Vancouver are low compared to elsewhere? This survey is part of the answer.

#173 Shawn on 02.20.14 at 3:46 pm

What The?

It’s alwasy hard to know what to make of many of the comments.

There is a core group of doomers out there.

Another group wedded to strange catch phrases like “a house in not an investment” or even a house in not an asset”. Or they think stocks are a zero sum game.

Many people would be well served to emulate those more successful, be it Garth, Warren Buffett, the guy down the street who owns a big rental real estate portfolio (with tons of equity) or the business owners in your community or whomever. Spouting doom and fearing fiat currency is not about to make you wealthier.

If Garth’s goal is education, it seems clear there is much work left to do.

#174 None on 02.20.14 at 3:59 pm

#153 airhead princess on 02.20.14 at 1:41 pm

Obvious response from one of the bottom feeder civil service elites who fear the day when they find themselves outed for their greed, avarice and shameful behavior.

——-

I agree! Minimum wage for everyone, even less for govt people! Seriously, you do realize that civil servants are just normal folks doing jobs right? Nurses, office workers, cops, etc? They are hardly the evil lords of the manor you make them out to be. Sounds to me like you are bitter towards *anyone* who might be doing better than you. It’s a great trick to attach the word “elite” to anything you don’t like (or “activist” when they are doing something you don’t like). Good job con bot.

#175 Really? on 02.20.14 at 4:16 pm

#63 Waterloo Resident

You can’t possibly believe people are no longer living past 55 based on one example of family tragedy. Obviously illogical. There is no evidence for anything but longer life spans.

#176 Aggregator on 02.20.14 at 4:22 pm

I don’t like long dated Canadian govt bonds anymore. Dumped.

#177 Steven on 02.20.14 at 4:26 pm

The average SFH in 416 is now $942,066.
Divide by 6000 man hours equals $157.01 per hour to safely buy the average house in the 416 area. That is 14.27 times minimum wage to get started in life.
Some how I can’t see 14 or 15 guys and their women clubbing together to buy such a property and live in it at the same time. If these real estate prices continue Canada won’t. Who knows, Canada might become a source of economic refugees.

#178 Aggregator on 02.20.14 at 4:32 pm

Car trouble on the rise, study says

For the first time in 16 years, automobile reliability has shifted into reverse, according to the latest J.D. Power U.S. vehicle dependability survey.

The annual report, released Feb. 12, surveys 41,000 owners of three-year-old cars and trucks and the biggest complaint about 2011 models centred around engine and transmission problems. Those complaints helped feed a decline in quality to 133 problems per 100 vehicles from 126 last year. This was the first increase in the average number of problems since 1998.

Hey Ralph, how about that auto dry brake technology, huh? StatsCan 2011 retail automobile CPI revised to +XX% y/y adjusted for quality. No inflation here.

#179 Almost A Boomer on 02.20.14 at 4:32 pm

With a million dollars Jim could have lived in one of the best retirement home money can buy. Unfortunately, many people wait until they are too sick and/or old to make lifestyle changes that would greatly improve their quality of life, if not the quantity. Very sad.

#180 airhead princess on 02.20.14 at 4:43 pm

“I agree! Minimum wage for everyone, even less for govt people! Seriously, you do realize that civil servants are just normal folks doing jobs right? Nurses, office workers, cops, etc? They are hardly the evil lords of the manor you make them out to be. Sounds to me like you are bitter towards *anyone* who might be doing better than you. It’s a great trick to attach the word “elite” to anything you don’t like”

Gee is it just me or am I smelling the stinky sewage of De-Nial? I wasn’t instrumental in the governments recent pronouncement that civil service salaries and perks have gotten away from us….this in the recent budget. Examples of trough wallowing and gorging are a regular feature of most daily papers…..ignoring the truth is not going to make it go away. That fact is that civil servants are a net burden on the taxpayer and that ever higher taxation is caused by increasing civic service wage and perk demands…..that you can find in any media…….but we’re all just con bots right….when we out the truth about the one sided gluttony?

I am actually one of the 1% everyone hates….. one of the even more rarefied .85% ‘ers actually…and hold no envy for the low life who sponge off the people. I just think the truth should be the same for everyone….not just an elite group of civil service gougers who strip the flesh from those who can’t protect themselves from the elitist assault.

Those you mentioned are making 5 to 10 times the average wage in Canada…and receive perks and pensions 99% of the Canadian population will never enjoy. Minimum wage for the elite starts at $100,000 p/a….I wouldn’t call that minimum wage. Taxes could be reduced by 50% if the bloated salaries of the elite were reduced by the same amount.

#181 Derek R on 02.20.14 at 4:43 pm

#165 Still learning on 02.20.14 at 2:46 pm wrote
I see #122 took a stab at that but, I thought maybe I can go a little deeper as, at one time, I was at that stage of learning this stuff too.


If you don’t invest in financial assets you should and a TFSA is probably the best way to do it for a young person, personal circumstances aside…

Nice explanation, SL. Thanks for spending the time to expand on my one-liner !

#182 Blacksheep on 02.20.14 at 4:56 pm

Garth, these deceased souls you’ve chose as examples, were born into times of frugality.

Ghosts of the market crash of 1929, the ensuing depression and the second world war, would have undoubtedly left lasting impressions on their young minds.

Security trumps lifestyle for anyone stung buy economic chaos. The ‘pay the house off’ (all debts?) so no one can take it away mantra, just got refreshed via the GFC in the US.

Was in LA strolling the Venice board walk with my family spring 2009 and witnessed an average middle class family, clearly living in the back of a U-haul cube van, eating breakfast, with bits of their furniture and possessions in plain view.

They looked pretty much like us.

You can show graphs and math defending your reasoning but fear is a powerful emotion.
The instant liquidity that your suggested investments offers, is its Achilles heel.

The stock market crashes for a few days, fear sets in and people bale. A week (or an illiquid few years) later it fully recovers. The bad thing about RE is also the good thing about RE.

It liquidates slowly allowing cooler heads to prevail (like circuit breakers on indexes?) This is not to say RE cannot lose value, it can and will, sometimes harshly,
it just takes years to swing (5+ so far) the masses minds so, those paying attention could hit the exits (5 yrs to early) first.

The stock market (businesses) just like the housing market (earth and sticks), requires inflation of the money supply to maintain it’s upward trajectory.

Any body that has not realized by now, that deflation with a capital ‘D’ is the real threat, just isn’t paying attention. The challenge is trying figure out, with all the variables involved, what is going to hold value or deflate the least?

#183 :):(Ying Yang on 02.20.14 at 5:15 pm

Smoking Man found! He is sitting by the pool watching old ladies in their bathing suits. I hope he is having fun in Yuma Arizona. At least he isn’t in a dam cubicle on the 40th floor of an shitty office tower in this snow and sleet!
Go Smoking Man looking forward to some pages from the new book.

#184 BCD (D for Drama Queen) on 02.20.14 at 5:37 pm

@#180 Airhead Princess
I am actually one of the 1% everyone hates….. one of the even more rarefied .85% ‘ers actually…and hold no envy for the low life who sponge off the people. I just think the truth should be the same for everyone….not just an elite group of civil service gougers who strip the flesh from those who can’t protect themselves from the elitist assault.
_____________________________________
You are not fooling anyone. Anyone who talks and writes the way you do is clearly not a member of the 1% (neither is Smoking Man, seriously, does anyone actually read his posts?) You are more likely an unemployed and disgruntled Marxist with Marley dreadlocks and a silent rage. You own a well-worn copy of Das Kapital in that hemp purse you insist on carrying everywhere because the bongo drums are too heavy and those peace sign and a pot leaf imprints on the pigskins get you nasty looks from campus cops–who give you the Big-Bert-wtf-eyes every time they see you walk by. I mean, I dig it, I do, I used to be a Communist too. . .that’s why I work for Big Brother now.

Talking about putting a guillotine in Robson Square? Harsh much? And using sweeping generalizations to describe normal government employees—read here—moms and dads who run this countries services (as well as the term “elitist”) as if we are a bunch of African warlords raping and pillaging the taxpayer from every orifice–Bunkham of the purest pedigree.

I suggest you have a long session with some BC bud and Pink Floyd’s Dark Side of The Moon—really, your “chill-meter” needs a reset.

#185 Ralph Cramdown on 02.20.14 at 5:38 pm

Car trouble, eh Aggregator?

How’s this for inflation in the auto sector?
http://thechronicleherald.ca/wheelsnews/1187914-nissan-micra-msrp-under-10k-asks-which-manufacturer-can-match-it-or-even-wants-to

#186 None on 02.20.14 at 6:13 pm

#180 airhead princess on 02.20.14 at 4:43 pm

Those you mentioned are making 5 to 10 times the average wage in Canada…and receive perks and pensions 99% of the Canadian population will never enjoy. Minimum wage for the elite starts at $100,000 p/a….I wouldn’t call that minimum wage.

=====

5 to 10 times the avg salary? Avg salary in Canada is about 48k. So civil servants make 5 to 10 times this? On average not a chance. Clearly, there are high level govt executives that make this, but you act as if a salary 5 to 10 times the avg wage is normal for civil servants. Not quite. In fact, thank your private sector for these large costs for executives since that’s the cost to lure them away from big business. Now, I won’t disagree if you mention that performance of govt executives leaves a lot to be be desired for their salaries, but frankly, seems like that’s the case in private sector executives as well these days.

Sure you are a Con Bot – “not just an elite group of civil service gougers who strip the flesh from those who can’t protect themselves from the elitist assault” – seriously? What is that, a Con talking point word for word? Keep in mind one of the most pampered and well paid/pensioned areas are politicians and their political staff, whom are not civil servants per se. If the Harper Govt things civil servants need to have their pay/pensions scaled back, perhaps he should also look at what Parliamentarians get. 6 years of work and a 28k pension at age 55? Far too generous. I agree fully with higher federal contribution to pensions by civil servants and MPs – the changes there are very good changes. However, the way you present things you make it out to be that every admin assistant in govt makes 100k and gets a 100k pension for life. Not quite.

And speaking of stripping flesh, I don’t see the Cons braying for blood over Bay Street salaries, in fact, they are happy to give corporate subsidies/tax breaks that bring corp tax rates below income tax rates. I understand that corporations create jobs, but don’t forget that corp subsidies are a burden on tax payers too.

Civil servants as a net loss to tax payers? That’s like saying that civil servants don’t pay taxes. Ridiculous. Simply put, it costs money to run a corporation and Govt has the same sort of structural needs, etc. They need accountants, admin assistants, cops, etc. These cost money. I’m fairly certain you can’t get a burger flipping job with Gov.

Or, are you just blinded by right wing hate of unions and civil servants that you just see them all as 100k avg a year fat cats?

#187 David w on 02.20.14 at 6:50 pm

Can someone explain Garth’s 15 rule for buying vs renting? Thanks

#188 NoName on 02.20.14 at 6:54 pm

After reading Mr. Turners post about old man at first i was bit (insert word), then i remember this joke.

An old man is sitting on the park bench crying. Another old
man sits down next to him and says, “Mister, what’s the
problem?”
The old man wipes the tears from his eyes and explains, “I’ve
got this beautiful, 35 year old wife, and all she wants to do is
make love from the moment I walk in the door till the moment
we go to sleep and then when we wake up again.”
“So, what the hell is the problem?”
“Mister, you don’t understand… I forgot where I live!”Another old
man sits down next to him and says, “Mister, what’s the
problem?”
The old man wipes the tears from his eyes and explains, “I’ve
got this beautiful, 35 year old wife, and all she wants to do is
make love from the moment I walk in the door till the moment
we go to sleep and then when we wake up again.”
“So, what the hell is the problem?”
“Mister, you don’t understand… I forgot where I live!”

#189 A Yank in BC on 02.20.14 at 6:54 pm

#170 happity

Gee hap.. thanks for all the free advice. I’ve never been much for trying to time the market though. A fool’s game. But you go ahead. Give us your money.

#190 World According To Garth on 02.20.14 at 6:57 pm

Oh…………so…………you mean like like how ALL COUNTRIES around the world print digital money out of thin air and charge INTEREST for it? No interest or transaction fees on Bitcoin last I checked.

All currencies are digital and backed by nothing. All currencies are backed by the faith of those that use them. That is why bitcoin will succeed because tax hungry entitlement useless govt paper pushers are going to destroy govt digital currencies with their corruption and greed (Ukraine, Thailand, Spain, Argentina, Greece, Iceland – the only country with the guts to JAIL the bankers, Mexico and on and on) are seeing what corruption and greedy govt’s are doing. Can’t happen here though right?

—————————————

#158 T.O. Bubble Boy on 02.20.14 at 1:57 pm

@ #132 recharts on 02.20.14 at 11:55 am
#113 T.O. Bubble Boy on 02.20.14 at 10:22 am
…..
So far like with any other asset the so called investors (read speculators) jumped on the asset without understanding its true nature and (I am happy to say that) now they are paying the price.
Give bitcoins some time and try to understand its nature and the technical things behind it
————————

Completely agree — I have said a few times on this blog that I see a future for some kind of next generation “Bitcoin v2.0″ as a real-time fund transfer / payment platform, but not at all for the current incarnation of Bitcoin as this kind of magical crypto-currency and store of value.

#191 World According To Garth on 02.20.14 at 7:01 pm

Snivel Servants DONT pay taxes. You can only pay tax on wealth that is generated. Useless pencil pushers are paid with taxes and do not generate wealth they only steal it.

——————————————-

Civil servants as a net loss to tax payers? That’s like saying that civil servants don’t pay taxes. Ridiculous. Simply put, it costs money to run a corporation and Govt has the same sort of structural needs, etc. They need accountants, admin assistants, cops, etc. These cost money. I’m fairly certain you can’t get a burger flipping job with Gov.

Or, are you just blinded by right wing hate of unions and civil servants that you just see them all as 100k avg a year fat cats?

#192 nonietszche on 02.20.14 at 7:08 pm

garth my man, you do know that the bancroft area is famous for it’s motorcycling roads don’t you?

cheers pete

#193 Aggregator on 02.20.14 at 7:24 pm

#185 Ralph Cramdown

Under 10k? Wow! Does it come with a cowbell and paved roads?

#194 airhead princess on 02.20.14 at 7:27 pm

“And speaking of stripping flesh, I don’t see the Cons braying for blood over Bay Street salaries, in fact, they are happy to give corporate subsidies/tax breaks that bring corp tax rates below income tax rates. I understand that corporations create jobs, but don’t forget that corp subsidies are a burden on tax payers too. ”

I guess its redundant at this point to infer that government is not a corporation and as such produces nothing of value. The only ‘profit’ government workers produce is that which they take from the citizen.

An earlier post suggested that I might be a Marxist for accusing civic servants for gouging the taxpayer….well that’s just the liberal class warfare spin I hear daily on the CBC.

There isn’t a single civic servant position that can’t be contracted out at half the current salary. If the two hundred thousand dollar cops pay got cut…you think they would still work for $100K? If the $150K firemen got halved…do you think they wouldn’t show up? If they didn’t we could could bring in guest workers from well trained international labor pools who would be happy to do the work for a fifth the cost to taxpayer.

The taxpayer should be king in this country not an elitist social society of unionists and grabhanders.

And boy oh boy do I wish I could hit the bongos……

“You are more likely an unemployed and disgruntled Marxist with Marley dreadlocks and a silent rage. You own a well-worn copy of Das Kapital in that hemp purse you insist on carrying everywhere because the bongo drums are too heavy and those peace sign and a pot leaf imprints on the pigskins get you nasty looks from campus cops–who give you the Big-Bert-wtf-eyes every time they see you walk by.”

#195 Nemesis on 02.20.14 at 7:34 pm

@Ralph/#185

You HedonicPopulist SaltyDog, you!… on the flip side of that coin:

[Forbes] – 10 Most Expensive Cars Of 2014: Keeping Up With The 1 Percent

…”It’s the definition of a First World problem, but for some people it’s irritating to buy a powder-blue Rolls-Royce Phantom, only to find someone at a neighboring horse farm bought a powder-blue Rolls-Royce Phantom, too.

Maybe a Hennessey Venom GT, for a suggested retail price of $1.2 million, would represent a step ahead of the Joneses. Hennessey says its 1,244-hp Venom GT set a Guinness World Book-sanctioned record time of 13.63 seconds from zero to 300 kilometers per hour, or 186 mph, in January 2013.

However, anyone who wants to buy one better move fast, pun intended. The company plans to build a total of only 29 units, and 11 have already been sold, including just five in the United States.

No. 1 on our list of the 10 Most Expensive Cars for 2014 is the Lamborghini Veneno Roadster, which retails for $4.5 million — if you can get one. Lamborghini says it plans to build only nine of them in 2014.”…

http://www.forbes.com/sites/jimhenry/2013/12/19/10-most-expensive-cars-for-2014-keeping-up-with-the-joneses/

#196 Obvious Truth on 02.20.14 at 7:36 pm

#170. Bet most people on here that make money are on the same side as buffet and have given him their capital. Soros is a hedge fund manager. He could have blown out of that hedge. His filings don’t show you what he’s doing tomorrow. Many people here probably share many of his longs.

If you have some worry about the world you too can hedge. Garth gives that formula out for free.

How bout them girls!!!!

#197 None on 02.20.14 at 10:27 pm

#194 airhead princess on 02.20.14 at 7:27 pm

There isn’t a single civic servant position that can’t be contracted out at half the current salary. If the two hundred thousand dollar cops pay got cut…you think they would still work for $100K? If the $150K firemen got halved…do you think they wouldn’t show up? If they didn’t we could could bring in guest workers from well trained international labor pools who would be happy to do the work for a fifth the cost to taxpayer.

========

There you go, Con speak for pay everyone as little as possible! Lets race to the bottom everyone!

Love it, bring in cheap foreign labour to make sure CEO wages are high. Is that just for public sector jobs or private too?

You and your cherry-picked stats, 200k cops, etc. This is not the avg, but of course all you want to do is rile up hate.

You say you are in the top .85%, and you are hated by most. I’d imagine its because you’d love to see everyone below you make as little as possible. You say civil servants exploit the people, sounds like its only okay if you profit from it.

#198 Snowboid on 02.20.14 at 10:28 pm

#194 airhead princess on 02.20.14 at 7:27 pm…

“…There isn’t a single civic servant position that can’t be contracted out at half the current salary…”

While you may be correct that some salaries (none in my past experience, though) may be less for a contractor, you conveniently leave out the fact private companies usually like to make a profit – you know to cover their overhead (like the corporate pencil-pushers).

I can assure with first-hand experience with a major BC contracting out exercise about ten years ago, there were no cost-savings by contracting out.

In fact, almost every ‘privatization’ exercise undertaken by the BC Libs has resulted in hefty additional costs borne by the BC taxpayers.

You certainly are a princess clodpate.

#199 None on 02.20.14 at 10:35 pm

#191 World According To Garth on 02.20.14 at 7:01 pm
Snivel Servants DONT pay taxes. You can only pay tax on wealth that is generated. Useless pencil pushers are paid with taxes and do not generate wealth they only steal it.

——————————————-
That is so ridiculous. So MPs dont pay taxes either? So nurses steal wealth too?

You pay taxes on income not wealth. So civil servants dont buy things or services thus contributing to the economy? You sure are angry.

#200 None on 02.20.14 at 10:39 pm

#198 Snowboid on 02.20.14 at 10:28 pm

In fact, almost every ‘privatization’ exercise undertaken by the BC Libs has resulted in hefty additional costs borne by the BC taxpayers.

——–

She would say It is okay if private sector screws taxpayers, thats the hand of the free market.

#201 meslippery on 02.20.14 at 11:28 pm

airhead princes
I am actually one of the 1% everyone hates….. one of the even more rarefied .85% ‘ers

Must be slumming with the great unwashed.

#202 Kingarthur on 02.21.14 at 1:25 am

Snowboid: I was going to reply to aptly named The Airhead Princess, but you nailed it: “CLODPATE” Hilarious and accurate.

#203 Linda Mulligan on 02.21.14 at 12:22 pm

Sorry Garth, but I’m not locked into using my house to fund my retirement, nor am I locked into a Big Bank portfolio management scheme (though they did try to lure me in). My RRSP is maxxed out, ditto my TFSA (& that is in lovely shape as is stocks etc. & the market increases are giving me a very ROI). No mortgage debt, either as we paid off the house back in 1998.
Thanks for confirming that the sell the house, invest & generate tax free income etc. is NOT easy or guaranteed as other posts seem to imply. I just couldn’t see how that course would not be followed by anyone who read about it if it were so easy or guaranteed. You stating that there is risk as with any strategy is I think a needed reminder to those who read your blog to do their research & think about what their risk tolerance might actually be.

#204 World According To Garth on 02.21.14 at 3:52 pm

Yes. I am angry. I’m pissed off at govt STEALING and WASTING my money. That is a bad thing?

If EVERYONE worked for the govt, where would the money come from to pay everyone professor? And pretend we DO NOT have royalties from shit in the ground like Germany for example. A country that makes and exports things.

And as usual……..the cherry picking of the nurses and fireman. You guys just don’t give up? Less than 10% of USELESS paper pushers are front line.

So lets have it genius paper pushers? Sharpen those pencils. If EVERYONE worked for govt, where would the dough come from to pay everyone?

EXACTLY. Govt works DONT pay taxes.

————————————————–

#199 None on 02.20.14 at 10:35 pm

#191 World According To Garth on 02.20.14 at 7:01 pm
Snivel Servants DONT pay taxes. You can only pay tax on wealth that is generated. Useless pencil pushers are paid with taxes and do not generate wealth they only steal it.

——————————————-
That is so ridiculous. So MPs dont pay taxes either? So nurses steal wealth too?

You pay taxes on income not wealth. So civil servants dont buy things or services thus contributing to the economy? You sure are angry.

#205 World According To Garth on 02.21.14 at 3:57 pm

Yes because “The Shittiest Wettest Overpriced Place On Earth” does not have ANY corporate corruption right? No one ever is under investigation right?

OH WAIT !!!!!!!!!!!!!!!!!!!

BC Rail
BC FAST FERRIES
SNC LAVALIN
PORT MAN TOLL BRIDGE (how did that 17 day 6 BILLION DOLLAR HOLIDAY work out for ya’ll? Can I offer you TWO BRIDGES?)

and on and on and on and on

#200 None on 02.20.14 at 10:39 pm

#198 Snowboid on 02.20.14 at 10:28 pm

In fact, almost every ‘privatization’ exercise undertaken by the BC Libs has resulted in hefty additional costs borne by the BC taxpayers.

——–

She would say It is okay if private sector screws taxpayers, thats the hand of the free market.

#206 Bill Gable on 02.21.14 at 10:09 pm

Mr. Turner: Incredibly moving and rather upsetting, at the same time – this post makes me shudder to think how many folks are like Jim.
(The imagery was just about too much for me, and gives me great concern for the future).
I tend to be bearish anyway, but man, this was lovingly crafted,and is a very cautionary tale.

Mr. Turner – Harper’s loss has been OUR gain.