Planning

THE CRISIS

After reading yesterday’s depressing post, Joanne emailed me, upset. “You’d better explain why you said to take CPP at age 60 because Gail Vaz-Oxlade said never to do it, so I didn’t. Frankly I don’t believe you.”

As I said hours ago, most Canadians (a) have no idea exactly what pension income they’ll get and (b) think it’s a lot more than it is. Rampant ignorance of what crumbs retirees actually collect, combined with delusion about what houses will be worth in the years to come, have led 80% of us into a piteous swamp. Young people squander their wealth-building years and old farts close their lids and hope for the best. When it comes to retirement – that quarter century after careers end – it’s a mess.

Seven in ten of us have no corporate pension. Of those who do, most are ‘defined contribution’ plans, typically where an employer will chip in to a group RRSP along with the employee. The outcome is completely unknown, as there’s no certain payout in the years to come. Besides, it’s a registered plan – which means all the money accumulated is taxable. Routinely I see people who have contributed for ten or 15 years, and have built up enough to support them in retirement for maybe two years. Most DCs are a joke. Meanwhile the mutual fund companies who run them make out like bandits.

No, the best plan is your own plan. Self-directed. Here are a few thoughts on ensuring you do not end up living in a used Kia.

First, be careful about RRSPs. As I have detailed here a few times, these vehicles are great for tax-shifting, but not so great for retirement. Use an RRSP to reduce taxable income in the good years and support you during unemployment, sabbaticals or pregnancy. Use them to income-split with your spouse. Or to fund tuition, or maybe a down payment.

But don’t invest blindly in RRSPs for three decades from now. There’s little doubt taxation rates will be higher, meaning you might pay more to cash them in than you collected contributing. Besides, capital gains and dividends earned inside an RRSP end up being fully taxable as income when you cash out. Bad idea.

Second, the best possible move a 30-year-old can make is fully funding her TFSA, and keeping it invested in growth ETFs (one mirroring the S&P, another the TSX, a third holding an index of REITs, for example). Put $100 a week in for 35 years earning an average of 7% (what markets have historically returned) and you have $848,800 at age 65. (Of that $661,000 was compound growth.) If you can’t find a hundred bucks a week for this, then you sure as hell can’t afford a condo.

Third, don’t put cash into savings accounts, term deposits or GICs because you’re afraid of risk. Interest is minimal and after inflation and taxes you’re guaranteed to lose money. But that’s the easy part. The big hurt comes when you get old and realize the real risk in life is running out of money, not losing it.

Fourth, make sure you have a non-registered, self-directed investment account as well as your TFSA. These are the two main supports of future retirement wealth. Strive to build a balanced portfolio (containing fixed income as well as growth assets) and a diversified one (geographically, and tactically). I have detailed elsewhere on this pathetic blog exactly what the weightings should be for various bonds, preferreds, trusts and equity ETFs. I’ve also told you how and when to rebalance these accounts to ensure you routinely harvest gains, selling high and buying low.

If you didn’t print those off and tape them to the fridge, or are new to this blog, tough. You must now read through 1,662 posts.

Fifth, always be aware of the tax bite. Interest, like earned income, is decimated the most. Ditto for collecting rent. These are the worst ways of making money. If you invest in something that goes up in value (like an ETF) there’s no tax on the gain until you sell, and then half of the increase is tax-free. Capital gains tax is 50% less than the levy on money you earn, plus you can deduct losses from gains. Dividends paid by assets you own earn a tax credit and are similarly treated. So, hold things that pay cap gains and dividends in your non-registered account. If you have an RRSP, stick bonds in there.

Six, fees kill returns. Mutual fund fees are ridiculous, especially for equity investing. Use ETFs instead. And if you hire an advisor, pay no more than 1% for a full-service guy who will give you a full plan, plus retirement strategies, tax planning and clean your windows. The fee is tax-deductible, while mutual funds charges are not.

Seven, take CPP early. Don’t listen to the Jar Lady.

Governments can pass laws at any time and if you wait until age 65 (instead of 60) to collect, you could be in for disappointment. Besides, if you collect early and invest the money (best in your TFSA) you’ll end up in better shape. For example, if you get the average $633 a month at 60 and invest to earn 7%, you’ll have $46,215 by 65. If you wait until 65 to collect the extra (a total of $835 a month), you’ll have zero. You’d have to live 20 more years just to equal the investment, and by that time the early-collector would have amassed $185,000 in TFSAs to leave to her desperate hipster grandchildren. Moral: if the government offers you money, take it.

Ditto for free advice.

277 comments ↓

#1 mike on 04.25.14 at 5:47 pm

love the pic

#2 Joe on 04.25.14 at 5:51 pm

Buy a second house rent and in ten years you will make money on the sale..

#3 sam on 04.25.14 at 5:52 pm

Great advice.

#4 Smartalox on 04.25.14 at 5:53 pm

CMHC ‘taking out the trash’, making unpopular policy announcements after 5pm on Friday:

– no more CMHC on second (or later) homes; if you have a CMHC mortgage, you can’t be a borrower, or co-borrower on another, ans expect to get CMHC mortgage insurance.
– no more CMHC for self-employed without traditional income verifications (ie: 3yrs notice of assessments)

Last day for specuvestors and ninjas is May 30.

#5 Role on 04.25.14 at 5:54 pm

How do all that?

#6 Saskatoon-Living on 04.25.14 at 5:59 pm

“Second, the best possible move a 30-year-old can make is fully funding her TFSA, and keeping it invested in growth ETFs (one mirroring the S&P, another the TSX, a third holding an index of REITs, for example). Put $100 a week in for 35 years earning an average of 7% (what markets have historically returned) and you have $848,800 at age 65.”

The only bad paragraph in what was a great post. Those which have grown their TFSA would be better off in individual stocks, but the lemmings whom have no clue and don’t care, stick with the conservative approach. You might just make it to 65.

Most people cannot pick stocks nor do TFSAs have enough room to achieve diversification. — Garth

#7 4 AM Sunrise on 04.25.14 at 5:59 pm

The 60-year-olds who wait until age 65 to collect their CPP are also assuming they’ll live to 65. I’ve been to enough funerals to know that things don’t always work out as planned, not even for perfectly healthy people.

#8 Saskatoon-Living on 04.25.14 at 6:19 pm

Most people cannot pick stocks nor do TFSAs have enough room to achieve diversification. — Garth

In the next few years when a couple can invest $100,000 combined in their TFSAs, being diversified is achievable. Enjoy the weekend Garth.

#9 JBird on 04.25.14 at 6:31 pm

Free money from the gov’t is awesome! I unfortunately have an RDSP because of an accident. The gov’t matches my contributions, starting at 3:1 and dropping to 1:1, depending on family income. I put $50 a week into it and have for 3 years. That’s about $7800 of my dollars and I’ve got $30,000 in there now thanks to the gov’t. Free money rocks. Too bad the investment options for it are funds or GIC’s.

#10 Detalumis on 04.25.14 at 6:31 pm

You are 100 percent right about taking CPP ASAP but whenever I tell anybody to do it they think I’m crazy. Another reason is for dual income couples which are the majority these days, if you wait and collect a higher CPP then you also won’t get any survivor benefits, the most you can collect is one max CPP.

If you take it at 60 you also would have it bumped up when your spouse, who has CPP on their own, passes away. Most people are not aware of the fact that CPP is weighted to benefit stay-at-home spouses this way and get a nasty surprise when they get $5 a month as the spousal beneficiary instead of 60% of their spouse’s CPP amount like a housewife would. It’s a good reason to not want any enhanced CPP plans in my books.

Financial experts never mention this either, not sure why.

#11 TheRealMan on 04.25.14 at 6:34 pm

“I have detailed elsewhere on this pathetic blog exactly what the weightings should be for various bonds, preferreds, trusts and equity ETFs.”

>> http://www.greaterfool.ca/2014/03/31/real-men-invest/

#12 joblo on 04.25.14 at 6:35 pm

Great for 30 year olds,
those older who drank RRSP koolaid & or bought the big house on the hill are
SO SCREWED!

#13 Free Beer Tomorrow on 04.25.14 at 6:36 pm

Great pic. The wife is doing that now with our son :-)

As I said hours ago, most Canadians (a) have no idea exactly what pension income they’ll get and (b) think it’s a lot more than it is. Rampant ignorance of what crumbs retirees actually collect, combined with delusion about what houses will be worth in the years to come, have led 80% of us into a piteous swamp.

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

Unless you won the public servant lottery. Then your CPP is 10 times what the rest of us get !! It is after all – A Canada Pension Plan – it just so happens you got most of it from the taxpayer if you work for the Govt.

#14 ihateharper on 04.25.14 at 6:38 pm

7. Educate yourself….. and DO NOT pay someone to take your money and invest it until it is hers/his. Read, read, read….. Chilton, Borttolotti, Milevsky…even Carrick and Turner.

#15 Accountability on 04.25.14 at 6:42 pm

There is a serious lack of accountability (see here: http://goo.gl/LicfVf ) across the country. Grown adults live their lives blaming every Harry, Dick and Jane for their short-comings and financial blunders.

Highly polarized activist types calling for an entitlement society where everyone can live like millionaires (god given right) are the same groups that call foul when governments try and shore up public debt and responsible financial policy.

There is a lot to be said in regards to an adults ability to be accountable for their own actions and decision. We all reap what we sow – decisions made today will impact our lives in a compounded fashion tomorrow either positively or negatively.

#16 TheCatFoodLady on 04.25.14 at 6:45 pm

Stupid CMHC questions… I put down 15% on a house & after several years of paying on the mortgage, I now have paid off, (down payment & mortage), enough to’own’ 21% of the original valuation. Do I still have a ‘CMHC mortgage’?

How does it work if galloping local appreciation means my ‘equity’ now puts me well over 20%? Still considered a CMHC mortgage?

Because I’m thinking if it doesn’t, any parent who has a CMHC mortgage, won’t be able to cosign with kids & get mortgage insurance.

Not sure how many parents are dub enough to do that – if enough of that, that could frost the market a wee bit.

#17 4 AM Sunrise on 04.25.14 at 6:47 pm

An RE story for an investing day:

General manager of a UPS store moonlights as a real estate agent:

http://vancouver.en.craigslist.ca/nvn/m4w/4420066668.html

This ad IS legit – I used to see his realtor/mortgage broker ads around town.

#18 KommyKim on 04.25.14 at 6:48 pm

RE:Most people cannot pick stocks nor do TFSAs have enough room to achieve diversification. — Garth

Exactly! And since Vanguard came onto the Canadian ETF scene, both BlackRock and BeeMo have dropped their fees on many of their ETFs. (XIC and ZCN now have a paltry 0.05% fee)

#19 T.O. Bubble Boy on 04.25.14 at 6:49 pm

Seven, take CPP early. Don’t listen to the Jar Lady.

Wow – picking a fight with the jar lady!

Better watch it Garth – with the busted ankle, you can’t run away from the angry Jamaican jar lady anymore.
(that’s right – Jamaican… look it up)

#20 Joseph R. on 04.25.14 at 6:52 pm

#6 Saskatoon-Living on 04.25.14 at 5:59 pm

The only thing bad in the paragraph is that REITs are not usually considered “growth stocks” but more like fixed income, as they negatively correlate with raising interest rates, like preferred stocks.

As an opinion, international ETFs would be a better choice: EAFE or emerging markets. Just plain vanilla ETFs, no need of CAD-hedged stuff or low volatility.

#21 Joe on 04.25.14 at 6:54 pm

#4 Thanks for the information about CMHC announcement..
Beautiful….there is proverb if they give money take it…because maybe later won’t be opportunity…

So it just shows you that people who bought houses are already winners!!!
Because now you are not able to use CMHC…..
So who is punished …the new buyers…..and will be slaves renters…I can imagine the smile on some peoples faces…..

#22 Smoking Man on 04.25.14 at 6:55 pm

Wow loads and loads looking at that house in longbranch…

Ying Yang, Old Man, anyone else who saw it… What’s your bet on biding war final price.

I’m going, 680,000
OK, wishful bias, 634,900 is what I’m expecting..

You guys?

#23 Obvious Truth on 04.25.14 at 6:55 pm

Great advice for young and old alike. But it’s still way too hard for most. Most people hope it will just take care of itself.

#24 Obvious Truth on 04.25.14 at 6:56 pm

Cramer just echoed most of this.

#25 OttawaMike on 04.25.14 at 6:56 pm

Where is our resident right wing contributor who refers to himself as “World According to Garth”?

Some exciting Bundy Ranch news:
http://www.npr.org/blogs/codeswitch/2014/04/25/306578018/what-exactly-qualifies-as-racist-anyway

It seems Bundy has failed the right by neglecting to use the correct code words..

Bundy is a racist, on top of being an idiot. Oh, and a criminal. — Garth

#26 T.O. Bubble Boy on 04.25.14 at 6:58 pm

Most people cannot pick stocks nor do TFSAs have enough room to achieve diversification. — Garth

I agree with this one… my best and worst decisions in my TFSA have been individual equities.

Good individual stock choices: Michael Kors, IMAX, and Westport Innovations (on the way up), and BLX (Panama bank).

Bad choices: Bell Aliant (aside from Dividends), INTX (Intersections Inc.).

#27 Justwondering on 04.25.14 at 7:00 pm

What about index funds? ie. TD efunds? low cost etc etc. I know at a certain price (75k invested?) its better to go to ETF’s because of the fees. Also DRIP/SPP stocks. I have both index and different blue chip stocks that pay a dividend. 120k invested. is that a good start? In my late 30’s – 180K left on our detached home in Toronto. no debt (other than house) car paid off. I can’t be doing that bad, right?

#28 ihateharper on 04.25.14 at 7:03 pm

I imagine you’re pretty much preaching to the choir, Mr. Turner. Those of us with the smarts to be reading you have likely taken most of the right steps.

#29 TS on 04.25.14 at 7:05 pm

Canadians don’t believe Garth.

They believe the Jar Lady.

Jesus Christ how sad is that.

:(

#30 LH on 04.25.14 at 7:05 pm

The best deal is to have a cool million in dividend paying stocks and no other income–the dividend tax credit in Canada is amazing! Maybe one day when I’m retired I’ll swap one of my houses for BCE, COS, etc.

LH

#31 Joseph R. on 04.25.14 at 7:09 pm

Bundy is a racist, on top of being an idiot. Oh, and a criminal. — Garth

And a misogynist – He uses women as human shields.

#32 W on 04.25.14 at 7:11 pm

Won’t your dividends on the s&p etf get taxed at your full full marginal rate in your tfsa since its not included in our tax treaty with the USA.

Rabbit tracks. — Garth

#33 TurnerNation on 04.25.14 at 7:12 pm

This. Is. It. Finally Dollarama’s stock price could sprint up to 100. Hockey stick.
This should be a Dollarama blog.
Dollarama has changed the face of Canadian retailing, becoming a category killer and even an anchoring tenant at malls. I shop there. The less I have to see that scion’s smirking face on monitors at Loblaws….

#34 Pounding sand in Peachland on 04.25.14 at 7:18 pm

again I repeat…. IF you can afford to wait, wait to collect CPP. Garth’s concerns of the Feds are condraditory

Show us the math. — Garth

#35 prairie person on 04.25.14 at 7:18 pm

Is the CMHC move just the beginning? Yes, it just affects 3% of CMHC’s portfolio but a cap at 1m is in place, now the absurdity of insuring second houses in a program that was to help people buy a starter home at the low end of the market is gone. Liar loans may be being targeted, yes, of course I work part time for a fast food place but I make 80,000 a year. How loose were these loans that they now have been selected for more scrutiny? The push for this hasn’t come from the PMO. From where is it coming? Flaherty’s successor? A frightened caucus, some of whom may actually be paying attention to what interest rates are being paid outside Canada? Or check out the punishing interest rates the wreckage of Cash Stores has agreed to. Real interest rates not guaranteed by you and me without our agreement tell a very different story than mortgage rates in Canada. Some people out there think lending money right now is high risk.

#36 Sig on 04.25.14 at 7:21 pm

I’m in the 39% tax bracket so taking that CCP or any other pension early means it’s taxable. Wouldn’t it better to take it later, get more, and pay less tax?

Sig

#37 Old Man on 04.25.14 at 7:21 pm

#22 Smoking Man – I wish you the best on the sale of your home, but not a full renovation job as it needs a new roof.

#38 KommyKim on 04.25.14 at 7:21 pm

RE: #25 OttawaMike on 04.25.14 at 6:56 pm
Where is our resident right wing contributor who refers to himself as “World According to Garth”?

I think she has a new handle. Maybe it’s “Free Beer Tomorrow”?

#39 Smoking Man on 04.25.14 at 7:29 pm

Old Man hahaha, you think that’s mine……

Close, very close…. But not mine..

Not ready to retire again just yet.

Give me a number, what’s it going
for…?

#40 Nemesis on 04.25.14 at 7:29 pm

#Planning? #FirstDatesToiletHumour #FridayNightFerrets #AlongCamePolly

http://youtu.be/ddGwvveSXxM

[NoteToGT: SayWhat!? Like, “Hey!”, you chose the LeaderIllustration. Be careful what you encourage.]

#41 Shawn on 04.25.14 at 7:29 pm

Dollarama

Mentioned by TurnerNation at 33

****************************************
Dollarama is one of Canada’s best managed companies. Superb. It’s stock price always looked too rich to me but it was clear they are superb operators.

The IPO was at I believe $17.50 about five years ago. Now $90 and mostly because of earnings per share growth.

#42 suede on 04.25.14 at 7:37 pm

“If the government offers free advice, take it?”

Lol

Garth, you didnt mention window cleaning was included!??

#43 KommyKim on 04.25.14 at 7:37 pm

RE: #36 Sig on 04.25.14 at 7:21 pm
I’m in the 39% tax bracket so taking that CCP or any other pension early means it’s taxable. Wouldn’t it better to take it later, get more, and pay less tax?

If that was your TAX situation, then put the CPP contributions received from age 60-65 in an RRSP and withdraw as needed when you quit working.

#44 Daisy Mae on 04.25.14 at 7:50 pm

#14 ihateharper

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

Who doesn’t? LOL

#45 takla on 04.25.14 at 7:50 pm

Quote’bundys a racist’ come on garth,you don’t even know the man!Being a former Politian you know many on cameras interviews can and are taken out of context to the point that a mans views can be twisted .Upon first reading into this story it seems the property he and his family have been grazeing his cattle on for the last 60 yrs are being persued for photo voltic purposes.Theres always a slant to every story!I know id rather have that man for a nabour than Harry Ried!!

#46 Ronaldo on 04.25.14 at 7:52 pm

Great post Garth. It can’t get much clearer than that.

#47 CMHC drops another bomb on 04.25.14 at 7:53 pm

Breaking news…. Re:         Discontinuation of CMHC Second Home and CMHC Self-Employed Without Traditional Third Party Validation of Income Products

As a result of changes to CMHC’s mandate to contribute to the stability of the housing market, benefitting all Canadians, while effectively managing and reducing taxpayers’ exposure to risk, CMHC is undertaking a review of its mortgage loan insurance business. This is the first set of changes resulting from the review.

As they are not core to CMHC’s insurance objectives, effective May 30th, 2014, CMHC is discontinuing its Second Home and Self-Employed Without Third Party Income Validation mortgage insurance products (both high and low ratio). These products each accounted for a small portion of CMHC’s business in 2013. Consequently, CMHC does not expect the discontinuation of these two products to have a material impact on the housing market. Self-employed Canadians can still qualify for CMHC-insured financing through CMHC homeowner bproducts with validation of their income using traditional methods.

#48 mitzerboy on 04.25.14 at 7:58 pm

garth…are you inspiring to become a saint….the way you help people to be wise with their money.

#49 T.O. Bubble Boy on 04.25.14 at 7:59 pm

$900k House of the Day for Friday, April 25th:

3 Finalists
1) Generic $899k house at Dufferin/Finch.
2) Generic $949k house @ Bathurst/Steeles
3) Generic $999k house @ Eglington/Kipling

WINNER
#3: no renos to speak of, and right up against that magical $1M CMHC limit. Almost the perfect bubble house.

#50 Ralph Cramdown on 04.25.14 at 8:00 pm

Dollarama. Great stores but I would have two problems with being an owner at this price (if they fit my criteria in general, which they don’t): They’ve already got all their best locations and neighbourhoods, so presumably expansion from here will be into more marginal locations at lower gross profit levels. And Walmart has to be watching and planning, for the many neighbourhoods where they compete. Betting on Walmart not to execute takes stones.

But cheers to everyone who bought early and got to here!

#51 damien on 04.25.14 at 8:01 pm

for RRSP you get tax refund at the marginal rate. You pay back about at the average rate when you retire. I doubt average tax rate in 30 years will be higher than marginal rate today.

#52 Shawn on 04.25.14 at 8:02 pm

Government Pension Exaggerations

RY YYZ from late yesterday’s post:

When I see teachers being able to retire after 25 years with a pension that pays something like 70 or 80 % of their best (last few) earning years of their already overinflated pay scale, guaranteed by us regular schmoes who will never see anything like that, it tend to get me a little upset.

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

Well, not to worry because you will never see that. No government pension pays out more than 2% per year so the maximum is 50% after 25 years. Still that is rich but it is not 70 to 80%.

And most government pensions pay 1.4% up to the Canada Pension Plan max and 2% per year after that. It works out to more like 40% after 25 years. That’s very decent but it’s half of the 80% you claim to see.

I told you a million times not to exaggerate.

Apologies for bringing facts to what is clearly an emotional argument.

#53 Ralph Cramdown on 04.25.14 at 8:10 pm

Way off topic, but how does a man explain taking his second consecutive 8-0 loss at the Supreme Court of Canada when he’s appointed five of the eight sitting judges? I could see some sort of some strategy of losing with bad questions back when it was still full of jurists he’d deem as activist pinkos, but when it’s your own team and you STILL can’t get even 1 of 8 to buy your arguments, you’ve either got REALLY bad counsel at the PMO, or you’re too stupid to LISTEN to counsel at the PMO. Either one reflects badly on you, Mr. Harper.

And by the way, losing the Senate reference doesn’t mean we’re doomed to the status quo, just as losing on the national securities regulator and losing on Keystone XL doesn’t mean that. It means you would have to negotiate and compromise to broker a deal. So I guess we’re doomed to the status quo. If you think you’re permanently remaking Canada, you seem to have awfully small, um, goals.

#54 AB boxster on 04.25.14 at 8:10 pm

Excellent post today.

While I do respect the ‘Jar Lady’ Mr. T is correct about taking early CPP.

Now if he would just change his mind regarding using the monopolistic realtards for RE transactions vs other options like FSBO……

#55 Blase on 04.25.14 at 8:17 pm

Garth,

If ever there was a time for you to write two posts on one day, CMHC announcement today is begging for you to write a column. If not, break your sabbath rule and write one tomorrow please! As we speak condo owners are sweating bullets realizing either they sell out at a big loss or they are stuck in a depreciating, tiny asset for the next 10 years!

#56 curious guy on 04.25.14 at 8:18 pm

Fourth, make sure you have a non-registered, self-directed investment account

Question…where do i get one of these…sorry, an investment dummy here…

#57 the jaguar on 04.25.14 at 8:19 pm

Funny how CMHC and the Feds always drop the bombshell on a Friday at 4:30 in the afternoon.
Seconds later their phones all go on call forward.
Like a lover who breaks up with their squeeze and can’t do it face to face so they just send a text or leave a phone message….

#58 :):( Ying Yang on 04.25.14 at 8:22 pm

$575.000

#59 Bobby on 04.25.14 at 8:25 pm

Great post again Garth. Of course, one should always start CPP at age 60.
If I recall there is a graph that shows when, those who collect at 60 and those who wait until 65, will cross in terms of collected benefits. I think it is at age 74.
You’re right, the government can change the benefits at anytime

#60 Aggregator on 04.25.14 at 8:26 pm

Vancouver average gas price hits $1.50/L, a new nominal high according to GasBuddy. Chart

#61 Alberta Guy on 04.25.14 at 8:26 pm

#56 curious guy on 04.25.14 at 8:18 pm

https://www.interactivebrokers.com

#62 Cici on 04.25.14 at 8:31 pm

Awesome advice Garth ;-)

#63 Joe on 04.25.14 at 8:33 pm

May will be the best month for volume and price house…
after this announcement..and bidding wars…
I have to buy another one in May….for cheap money…lol

#64 Montrealer on 04.25.14 at 8:43 pm

Garth can you elaborate on the US witholding tax for stuff inside TFSA. I read that in RRSP you don’t have any but in TFSA you get a certain witholding tax that negates a lot of the gains.

#65 Joe on 04.25.14 at 8:47 pm

gas 1.50 and homes are still cheap …(see CMHC—till end of May…..) buy a house

#66 Brad on 04.25.14 at 8:47 pm

#55 Blase

I agree with you about Garth writing an article for Saturday regarding the CHMC announcement. My big question is, when a person who has a second home and it comes up for a mortgage renewal. Will the banks demand that the borrower come up with additional cash to renew the mortgage, now that the risk has shifted to the banks? Feel sorry for the people who have a cottage. Have fun trying to find a buyer.

#67 Nemesis on 04.25.14 at 8:53 pm

@Ralph/#53…

OffTopic? Hardly. Guess who’s going to have the best… the longest… the last… Laugh? Correct.

#FreeAdvice. #NorthByNorthwest. #WeekEndTrax. #Life. #SoLiveAlready. #Des’Ree.

http://youtu.be/h-CR0TcOf2s

[NoteToGT: Drats! Ever since that latest iOS update, this infernal device insists on punctuating my FauxHashTags. How nefarious is that? I smell a conspiracy!]

#68 Nemesis on 04.25.14 at 9:04 pm

#BonusZen. #Denouement. #MitOrchestra!

http://youtu.be/M5D1aeNB2Bc

#69 Jim Bentein on 04.25.14 at 9:08 pm

De acuerdo (agreed). We’re the couple who moved to a lower-cost country (Mexico), even though we also have very decent savings and cash flow. We own a newish house, which we bought for $70,000 and that’s a block from the ocean. Our property taxes are $85 a year and I’d say overall our cost of living is about one-third of what it would be in a major Canadian city. But enough about us. You rightly talk about the retirement savings crisis. But what about the long-term care crisis Canada faces? How will oldsters who have shot their wad going to pay for care when they’re too old and infirm to care for themselves? The average cost of care is in the several thousand dollar a month range (my father-in-law is paying $6,500 a month in Vancouver). There, another thing to worry about. By the way, long term care here in Mexico costs less than $2500 a month for two people. You can have a live-in caregiver for $1000 a month.

#70 Joe on 04.25.14 at 9:13 pm

Mortgage rate goes up in US….Canada will follow….
Sheepeople buy a house……..CMHC MADE IN CANADA…

Last chance till May….buy a particle board Shack….for 999000 the last moment……help Canadian Economy..please

#71 Retired WI Curmudgeon on 04.25.14 at 9:14 pm

Garth-

Good advice today. AS ALWAYS.

#72 omg on 04.25.14 at 9:18 pm

64 Montrealer – I ain’t no accountant, but here’s my understanding of withholding taxes.

US equities held inside an RRSP are covered under a US-Canada tax treaty and no withholding tax is levied on dividends paid by US corporations. So US dividends come into the RRSP without any taxes being withheld. You have to make sure you have filled out the right forms from your broker to get this exemption.

TFSA and RESPs are not covered under the treaty so dividends paid by US corporations have a 15% withholding tax applied. So if a US equity is paying a 4% dividend it ends up being something like a 3.2% net dividend. You cannot recover any of that – its gone.

If the equity is held in a fully taxable account (its not an RRSP, RESP or TFSA) the withholding tax is applied but you may get some or all of it back through our income tax system, depending on your tax bracket.

Some countries like the UK do not have a dividend withholding tax so if you hold a UK equity the entire dividend comes into the TFSA (and RRSP) tax free.

#73 Joe on 04.25.14 at 9:24 pm

http://www.businessweek.com/ap/2014-04-24/average-us-30-year-mortgage-rate-up-to-4-dot-33-pct

#74 45north on 04.25.14 at 9:32 pm

Smartalox : CMHC ‘taking out the trash’, making unpopular policy announcements after 5pm on Friday:

rather popular. I mean if someone owns two houses then he’s above the average. Much like someone who owns a million dollar house. What Brian Mulcair is going to get up in Parliament and cry on his behalf?

Yes housing is linked to the economy which is of concern to the Conservatives but nothing like the concern of the opposition dragging them over the coals about a CMHC bailout. A CMHC bailout would be subject to intense scrutiny, how big? how many delinquent mortgagors? By definition all public.

#75 Zach on 04.25.14 at 9:34 pm

Or you can do what my parents did and start taking their pension at 55 because they couldn’t afford their jetset lifestyle – despite my mother still working. Then, inherit a bunch of money, enough time save them from their boomer excesses, and sink it into a granite monstrocity in Surrey instead. And be pleased with how well they’ve done.

The irony? They quoted this site to me as a reason not to help me with a down payment on a rural farm.

Keep preaching, Garth…

#76 Old Man on 04.25.14 at 9:36 pm

#39 Smoking Man – $559,000.

#77 Bobs ur uncle on 04.25.14 at 9:36 pm

#64 montrealer

You are correct. Here is a very brief summary

http://www.moneysense.ca/save/tfsa/taxes-on-u-s-stocks-in-tfsas

I don’t understand Garth’s logic on this. He says to plow all $$ into a TFSA to avoid taxes, but if you do, you either need to have all your money in Canadian securities (bad idea) or get any US dividends taxed. IMHO, US dividend securities belong in an RRSP, so TFSA is not the catch-all.

Cue dismissive one-liner in 3, 2, 1…

A $30K TFSA with 30% US stocks paying 4% dividends is $400 of taxable income withheld at 15%. That’s sixty bucks a year. Let’s worry about things that matter. — Garth

#78 AisA on 04.25.14 at 9:50 pm

Pensions…..

Take the money and RUN!!!!!!!!!!!!!!!!!!!!!!!!!!

The blog post….

Tape to fridge!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Easy.

#79 JSS on 04.25.14 at 9:55 pm

One of the best pieces of financial advice I’ve ever read.

And it’s for free.

Thank you sir!

#80 Millennial Falcon on 04.25.14 at 10:06 pm

Garth,
I know as a 28 yr old I should be hoping for a stock market crash so I could rebalance my portfolio and make all my money back and then some , when the market comes back, as would of happend to people who didn’t panic and sell in 2009. But what if the next crash (due to all the QE and money printing) is so severe it takes 20 or 30 years to come back to these market highs,

Ps before you lash me with ur response , just humor us with this scenario

If a market crash took decades to reverse you would have a lot more to worry about, like a job. (Won’t happen.) — a Garth

#81 JSS on 04.25.14 at 10:09 pm

Garth –
Can you please let us know what you think of the Alberta Pension Plan for its government workers, in light of the new changes coming around.

#82 John in Mtl on 04.25.14 at 10:17 pm

@ #52 Shawn on 04.25.14 at 8:02 pm:

“…earning years of their already overinflated pay scale, guaranteed by us regular schmoes who will never see anything like that, it tend to get me a little upset.”

A teacher has an “overinflated pay” ? You’re not a teacher, are you?

And, if you drool over that overinflated pay, you know what to do: become a teacher. Now stop being jealous of your fellow human beings.

#83 Pope Sexsixpackkitten Snugglebums the ???tb (aka Nosty) on 04.25.14 at 10:25 pm

Re: Cliven Bundy. It appears Garth is correct on this, as per: —

“Third. That the people inhabiting said territory do agree and declare, that they forever disclaim all right and title to the unappropriated public lands lying within said territory, and that the same shall be and remain at the sole and entire disposition of the United States; …..”

This unedited clip shows, as usual, the m$m has distorted the reality of Bundy’s remarks on race. There are always two sides to every story.

#84 espressobob on 04.25.14 at 10:28 pm

#56 curious guy

Investing for dummies for Canadians is a good start. Theres no shame in learning! Some never do.

http://www.amazon.ca/Investing-Canadians-Dummies-Third-Martin/dp/0470160292/ref=sr_1_1?ie=UTF8&qid=1398478841&sr=8-1&keywords=investing+for+canadians+for+dummies

#85 Ben on 04.25.14 at 10:40 pm

$848,800 in 35 years time? What’s the present value of that? Not much. Face it, defined benefit is robbing the current generation blind as they pay via company profits whilst they are told they can’t have DB and have to settle for DC. That plus the inter-generational wealth transfer from housing means whichever way you cut it 99% of 30 year olds are stuffed.

How many successful self-funded retirement iterations have we had Garth? Let me count it up. None.

You’ve done the math. Now have the guts to tell the kids how the decks are stacked against them.

#86 spoonfed on 04.25.14 at 10:46 pm

Garth, I appreciate what you are doing here in educating Canadians about the state of our RE market, and I share much of your pessimism. But, your opinions are not balanced and many of them are contradictory.

1st, why are you comfortable projecting historic stock market returns forever into the future when you use fundamental valuation metrics like price/income and price/rent when evaluating real estate? When you use a much more relevant metric to value the stock market like Shiller’s CAPE you’ll find that it’s almost as overvalued as Real Estate.

Let’s just apply the same logic you used in your analysis above with your 7% TFSA example, forget about the fundamental valuations of real estate and do some similar math.
You want to retire in 30 years and you’re thinking about investing in real estate. So, not knowing how else to predict future real estate gains, you use history to make your predictions. Take the average annual house price increase over the last 17 years (5.5% I believe) and project that to your retirement. You decide buy a $500K house. By Garth’s stock market logic, it will be worth $2.5million at retirement and because it’s your primary residence you don’t pay any tax on it.

2nd, RRSPs are not the devil. If you plan to retire young with quite a low taxable income, RRSPs are way better than TFSAs. You make the argument that tax rates will surely be higher by the time we all retire and you lay out a plausible scenario which is just as likely wrong as it is right. Predicting future tax rates is as frivolous as trying to predict future house prices. They say economists are like broken clocks…. right twice a day.

3rd, there are some huge differences between Canada’s real estate market and the US’ before the crash that you seem to keep forgetting about.
– Mortgages in canada are full recourse, so if you walk away you will likely lose everything. That is incentive enough for many people to do everything in their power to pay their mortgage even if it’s under water. The same was not true for most mortgages in the US.
– Lending standards here never got anywhere near as crappy as they did in the US. Just read a little into ARMs, Negative amortizing mortgages and 125+% mortgages. You will not find such things here, at least not nearly to the same extent.
– I don’t know the details, but my understanding is that they overbuilt way more in the US than they have here… I’d like to see some stats on that.

Also, you talk about the falling value of our dollar as a bad thing for our economy, but that is completely wrong…. It may suck for people traveling or buying imported goods, but its heaven for our export businesses which are the backbone of our economy.

Readers, keep reading, Garth has lots of good stuff in here, but don’t forget to think for yourselves once in a while.

Agreed. So long as they don’t think like you. (a) Canadian real estate has averaged less than 3% over the last 30 years, and is dependent on the ability of people to afford it. Equity markets have averaged 7% and that’s mainly based on corporate performance. I’ll stick with the latter as more sustainable and predictable. (b) RRSPs take after-tax income and make it taxable again. TFSAs don’t. (c) A lower dollar jacks inflation and ultimately interest rates. Bad news for your house and your income. (d) Many US states have recourse lending laws and many do not. It made no difference when the market tanked. All Canadian mortgages are rate-adjustable, and we have interest-only borrowings, 0%-down financing and liar loans. Suggest you spend less time typing and more reading. — Garth

#87 Walter Safety on 04.25.14 at 10:56 pm

If governments can change the rules (and they do) you should admit it could happen with TFSA’s.
If the biggest risk is running out of money and as you say most people haven’t a clue and diversification matters, and CPP is a pittance , -why not wait ? In the example , by waiting CPP delivers a Indexed Lifetime Income which increases while waiting at about 4% and then CPI thereafter. There is nothing else like it.
The financial advice industry has a long history of turning security into disaster. Ask a teacher who took a commuted pension, how did that work out?
Your math in the example may be correct until the kids need help or the old car isn’t doing much for the ego.

#88 George S on 04.25.14 at 11:10 pm

One of the problems that people have with their retirement savings is that they were misled for years about how much they actually have to contribute to a pension plan in order to have a decent income when they retire. They were also misled by the mutual fund commission sales people posing as “financial advisors” about what their return on investments would actually be once you deduct the annual outrageous management fees.
One of the reasons federal public servants have a reasonable pension plan is that they contribute way more than everyone else, they are part of a large group so don’t have to individually plan for living past 84, and because the group is large enough they have incredibly low management fees (about 0.1% I think)
Because CPP is deducted from their pension at age 65 you have to include their and their employer’s CPP premiums as part of their pension plan premiums. If you include the employer’s portion of the pension plan premiums altogether the total adds up to about 18 to 19% of their gross income. You would expect to have a fairly good pension after 35 years of doing this.

Because of the high rate of contribution, according to actuaries in 1999 the federal public service pension plan had so much excess money in it that even after the employer under contributing $18 billion during the 1990’s they were allowed to take $30 billion out of it and put it towards the national debt. The 30B was about $70,000 per person in the plan.
Many corporations, provinces, states and municipalities did more or less the same thing, either by way over estimating their investment returns or investing in fraudulently rated securities. (asset backed paper for example) This allowed them to raid the pension plans either by under contributing their share (not the employee’s) or just outright taking the money from the employees and use the money for grossly excess management salaries and benefits or increasing the profit statement of the company. Excessive management pensions and benefits were never part of the original pension plans and were purposely excluded from it so what they did was outright theft.
The original defined benefit pension plans were designed in the 1950’s and 60’s to function at a low rate of investment return (I think the FPS plan was 4%) so until they were raided and destroyed by corrupt and criminal management they were completely fully funded with no financial problems at all.
The idea of putting the maximum in a TFSA every year is a good one and it is an excellent alternative to a RRSP. It will set you up for a really comfortable retirement.

#89 Shawn on 04.25.14 at 11:14 pm

John in Montreal, You Missed

The quote you ascribe to me at 82 was my quote of some poster named RY YYZ from yesterday.

I’m not jealous of teachers, they work hard. I could become a teacher but I can’t afford the pay cut.

#90 Free Beer Tomorrow on 04.25.14 at 11:19 pm

#38 KommyKim on 04.25.14 at 7:21 pm
RE: #25 OttawaMike on 04.25.14 at 6:56 pm
Where is our resident right wing contributor who refers to himself as “World According to Garth”?

I think she has a new handle. Maybe it’s “Free Beer Tomorrow”?

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

Sorry KommyKim but only if I grew a pair of boobs. Nice that your policing Garth’s site though. The Kommy part? :-)

#91 Shawn on 04.25.14 at 11:34 pm

Alberta Government Pensions

JSS asks:

Can you please let us know what you think of the Alberta Pension Plan for its government workers, in light of the new changes coming around.

*****************************************
I am very familiar with this. The changes will affect younger and newer workers. These workers will ultimately see lower contributions deducted from their pay as yes the pension is reduced somewhat mostly in terms of raising the age of unreduced pensions to 60 from 55.

There is minimal impact for anyone over about age 45 who has at least 20 years in the plan. They can still get to their 85 factor although only on their pre 2016 service. This worker can retire at 55 with no reduction on the 20 years service already earned but a big reduction (50% actually, 5% times ten years) on the ten years earned under the new plan. Weighted average that is a 17% reduction in pension for retiring ten years before age 65. Not bad.

The closer one is to retirement today (to their 85 factor) the less the impact.

The 85 factor is totally unsupported by any math it was and is simply a subsidy to those can take advantage of it from those who can’t (late starters in government work and those simply unable to afford retirement even having reached the magic number). Now it will be a 90 factor and minimum age for unreduced pension will ultimately be 60. That is still a gift.

Thousands will still be able to retire on nearly unreduced pensions (or modestly reduced) at ages as low as age 55 and this will still be happening for the next 15 years or so, although some reductions will apply and more each year as we go along.

Again I bring facts to an emotional debate. The Alberta union of public employees say the pension is being gutted, this is not the case especially for service already earned. And for service going forward the 50% share paid by employees is going to be lower than otherwise. Alberta Government employees average somewhere around 12% of pay deducted for pensions with another 12% kicked in by the government. That is huge.

If anything the changes were too kind to older employees as they are minimally hurt and younger people will be subsidizing their pensions for a long time.

I am in favor of DB pensions, but no one who studies the math can really support nonsense like the 85 factor. It needed to be phased out.

Their are other unsupportable features too like pensions based on final years salary instead of the total average over all years with the early years adjusted up by investment returns. Those will need to go as well.

#92 KommyKim on 04.25.14 at 11:36 pm

RE: #83 Pope Sexsixpackkitten Snugglebums the ???tb (aka Nosty) on 04.25.14 at 10:25 pm
This unedited clip shows, as usual, the m$m has distorted the reality of Bundy’s remarks on race. There are always two sides to every story.

He still uses the N word and states that blacks would be better off picking cotton under slavery than be on social assistance today!
Your defense of this man is laughable! Do go on……

#93 Basil Fawlty on 04.25.14 at 11:40 pm

“Vancouver average gas price hits $1.50/L, a new nominal high according to GasBuddy. Chart”

Don’t worry the CPI will not budge.

#94 Randman on 04.25.14 at 11:41 pm

A teacher has an “overinflated pay” ? You’re not a teacher, are you?

And, if you drool over that overinflated pay, you know what to do: become a teacher. Now stop being jealous of your fellow human beings.

No John in MTL

This is how it works …people need to get this through their brains

If you are a teacher ( or anything else) and you don’t like what you get paid…then quit!! End of story!

AS if teachers didn’t know the pay scale when they took their degree..

Cry me a river

#95 KommyKim on 04.25.14 at 11:48 pm

RE: #56 curious guy on 04.25.14 at 8:18 pm
Fourth, make sure you have a non-registered, self-directed investment account
Question…where do i get one of these…sorry, an investment dummy here

Google discount brokerages.
You can have your TFSA, RRSP, and non-registered account there.

#96 Uh Oh Canada on 04.25.14 at 11:49 pm

Here are 5 things that EVERYONE should learn to do:

– How to cook
– How to get along with people
– How to be responsible
– How to work hard
– How to INVEST money

Of course, these are things they don’t teach you in school…(cue Smoking Man) but will benefit you more than anything else.

#97 SCIBADUBADEBUMBADO on 04.26.14 at 12:00 am

In 1988 I purchased term life insurance for myself and my spouse for $500,000 each.
At that time I just purchased a nice 3 bedroom bungalow in Maple Ridge for 85K. That much insurance payout could buy 2 luxury homes in Vancouver at that time.
It seemed like a lot of money to receive if one of us died. Fast forward to 2014 and 500k is not even enough to buy a clapboard townhome.
Why is life insurance such a scam?
Why is it not indexed to inflation? How are we to know if inflation will not rage at 20% and wipe out all life insurance policies?
When you get older you can’t up the policy without paying through the nose for it.
What I am saying is the average person could not possibly see that far into the future, while experienced actuaries have your life and their future profits figured out to a Tee. They know they will pay us the equivalent of nothing if we ever get to even cash the policy.
My policies will expire when I am 70 and cannot be renewed then. So on that date I will be both happy (to be alive) and sad that I did not cash in after paying into it for a lifetime.
I just think that life insurance policies should be indexed.

#98 DUI on Money Road on 04.26.14 at 12:16 am

#52 Shawn on 04.25.14 at 8:02 pm
—————————————–
I have a MIL that is a recently retired teacher of 25 yrs, after having been a stay-at-home mom for 10.

She has a paid for house, but lives alone. Even with her 50% teacher’s pension, she is scraping by to maintain a middle-class lifestyle. Think about that for a moment, someone that is guaranteed $35,000/yr, with no mortgage payment, is finding it tough to maintain a middle class lifestyle in today’s climate.

I keep telling her to move to Thailand.

We need to stop this ‘race to the bottom’. How can whittling away benefits be the right way to go?

#99 DUI on Money Road on 04.26.14 at 12:20 am

#27 Justwondering on 04.25.14 at 7:00 pm
———————————————-
OMG you need to sell your house right now. What are you thinking, awash in liquidity and low mortgage on a Tdot house?

#100 DUI on Money Road on 04.26.14 at 12:22 am

#24 Obvious Truth on 04.25.14 at 6:56 pm
———————————————
Except Cramer said that he believes taxes will be lower in the future, because he believes in the powers that be and in letting history be his guide.

#101 Larry1 on 04.26.14 at 12:26 am

Garth, I’m not convinced by the anti-RRSP argument. Yes, max the TFSA first. Not sure non-RRSP is better. Pay less taxes today, invest more today, with more assets to compound untaxed. Might have to do a DCF model to convince myself. What’s the worst case marginal tax rate in 20yrs? 60%?

#102 Millennial Falcon on 04.26.14 at 12:47 am

Garth,

What accreditations should our fee based advisor have next to their name? , we want the real deal not some hack who took a weekend course on life coaching and getting in touch with your feelings or even better maybe you can recommend me a guy/gal in Vancouver ?!

#103 Linda Mulligan on 04.26.14 at 1:04 am

#52 Shawn – thanks for clarifying, I too wondering if yesterdays post had any proof of claim that teachers get 70-80% of best earnings as didn’t know of any regular DB plan that gave such a high return after only 25 years.

#82 – read #52 again. Shawn didn’t make the statement, he was quoting another poster from yesterday who made the statement & refuting their claim about how much teachers would collect in pension upon retirement.

As for those who continually take pot shots at government employees ‘rich’ DB plans, take heart – the way things are going, no one is going to get to keep those plans. Just as OAS & CPP qualifications can be changed at the stroke of a pen, so too can employee pension plans. Right now in Alberta the government is making changes to the DB plans for government employees. However, they are ALSO passing legislation that will affect private pension plans. In effect, they will make it easier for any private plan to change over from DB to DC. As in, if your plan provider feels they can’t afford the DB plan they can change it to DC, too bad if you object.

As for the public plans, if any of those plans accept an offer to become ‘joint sponsor’ plans (allowing the employees & employers equal say over how the plans are administered) the legislation from Bill 10 which would allow the plan administrators to change the plan from DB to DC will apply because a ‘joint sponsor’ plan is no longer considered a public plan but a private one. Confirmed that little bit of information in conversation with the Alberta Finance department yesterday. I’d say it is a pretty safe bet that Alberta will be following Saskatchewan & ending DB plans for government employees sooner rather than later…..

#104 CHMC No mortgage for second house on 04.26.14 at 1:04 am

If mortgage brokers are not able to renew second mortgages when they come due then look out below cause the house ponzi of Canada will crash so hard it will not be funny. Canada is in the biggest housing bubble with a trillion dollars in sub-prime mortgages backed by the Canadian taxpayers. CHMC should be removed and only the banks should lend people money without the backing of CHMC.

#105 christopher lackey on 04.26.14 at 1:08 am

I know one size fits all works best when addressing a population with hopeless finances but there are infinite possibilities especially for younger people

Tfsas are for maxing growth. Identify some small caps with big potential or underpriced value picks and then witness the magic.

Rsps are a great place to bulk up on your US content, hopefully income
generating, you can stretch these things out forever with rrif minimum payments. I think garths fear of higher taxation is misplaced; if the government’s strapped that bad, hard to imagine them not putting other toxic options in the table like retroactively abolishing tfsas…but why would they penalize the minority who actually took responsibility for the financial security? Especially when all we read about these days are
indignant sob stories of nobody having a pension.

Non reg…blue chip dividends. But with the capital gains rate you can be a bit aggressive too. Not as much as the tfsa.

Dont forget to read lots of books about investing and do your research! And etfs are dope too if you dont have time obvioisly.

Nice weekend everybody

#106 Freedom First on 04.26.14 at 1:29 am

The jar lady is wrong about CPP. I never listen to anything she says anyways, as someone who can’t look after their own health has nothing to teach me. Same thing as anyone who smokes, they are an idiot.

The CMHC changes taking effect on May 30th will goose the spring market until then, and afterwards, the changes are going to have a HUGE profound affect to the negative for the RE market. Anyone who says otherwise either has a self interest in the RE market, or they are in denial of their “housing is an investment” addiction.

#107 Boomorbust on 04.26.14 at 1:30 am

Sorry, but I don’t get the rabbit tracks analogy. Care to explain..

Won’t your dividends on the s&p etf get taxed at your full full marginal rate in your tfsa since its not included in our tax treaty with the USA.

Rabbit tracks. — Garth

#108 Steve on 04.26.14 at 1:38 am

Our first night in our rental. 51,000 dollars in the bank. Out of debt, very sore from lifting stuff. Very very relieved. Ready for tommorow

#109 Cam on 04.26.14 at 1:39 am

How do you recommend putting $100 a week into an ETF without incurring a ~$25 transaction fee?

#110 Happy Renting on 04.26.14 at 1:47 am

Garth, I assume you keep posting your retirement/investing message in the hopes 1) new readers will see it, 2) people you’ve motivated to get their house in order will feel encouraged to see the process through. Like me. It works, thank you for the great advice. :)

#11 TheRealMan on 04.25.14 at 6:34 pm – thank you for digging out that link!

#111 Tom from Mississauga on 04.26.14 at 1:52 am

Maybe 10K TFSA in next federal budget? There could always be a capital gains exemption too. Remember when it was 100K? Cuts into provincial coffers too but the Feds get the credit. Wrote Joe about it today! Everyone should have a non-reg account.

#112 Zoe on 04.26.14 at 2:41 am

It’s all well and good to counsel people to take the money, but only if they can honestly save it. Most people can’t.

#113 Jane24 on 04.26.14 at 3:09 am

What I learned from my parents, now in their 80’s is that there are two halves to retirement. Up to the late 70’s folk do want to travel and buy toys and they can spend a fair amount. After 80 they don’t have the health or will to get out much so just stay home and govt money is quite enough for this stage in life.

When they eventually do hit the nursing home with just CPP and OAS, much of the bill is paid by the tax payer – us. My parents live in a first class nursing home and yes many of their fellow residents who made the mistake of having too much in private funds are indeed paying up to $4000 a month for a room and care that my parents get for free. Sometimes the grasshopper does win in this life and us ants get screwed.

Consequently my husband and I age 60 have arranged the following future. Enough of a basic pension to comfortably pay the bills after 80 should we still be living independently but not enough to pay for for full nursing care. A travel and toy fund to last from 60 to 80 years old. We are just cracking open this fund as I retire on Wednesday.

Fab news on CHMC. What started off as away for low income folk to get on the housing ladder after the war has turned into a taxpayer guaranteed pot for millionaires to build property portfolios. Well worth a column Garth.

#114 juno on 04.26.14 at 4:52 am

http://business.financialpost.com/2014/04/25/cmhc-cutting-back-on-what-it-covers-with-mortgage-default-insurance/

Garth so what does this mean?

What happens to people who has 2 or more houses. Are they grandfathers for a certain period of time or will that be it.

#115 Tony on 04.26.14 at 4:55 am

Re: #2 Joe on 04.25.14 at 5:51 pm

It’s almost a certainty houses will cost less in then years time than they cost today unless there’s a huge run on the currency.

#116 Tony on 04.26.14 at 5:15 am

Re: #10 Detalumis on 04.25.14 at 6:31 pm

Not exactly the poor will get OAS at age 65 while people with more money will be cut off completely. This is what will happen but they haven’t told everyone this yet.

#117 Bob Rice on 04.26.14 at 7:25 am

#27 ”
What about index funds? ie. TD efunds? low cost etc etc. I know at a certain price (75k invested?) its better to go to ETF’s because of the fees. Also DRIP/SPP stocks. I have both index and different blue chip stocks that pay a dividend. 120k invested. is that a good start? In my late 30′s – 180K left on our detached home in Toronto. no debt (other than house) car paid off. I can’t be doing that bad, right?”

I think you’re doing fine! And yes, TD e-series are solid investments… I got into them recently… cheap and if you own the recommended 4, you are very well diversified. At 39, you are in better position than many Cdn.. still, you don’t top a buddy of mine who was mortgage-free by 31! The guy started working at 9! Bought his first car, cad, at 19. Some people have it in them.. How you spend you income is ultimately the most important determinant. I only buy used cars (at least a few years old and at least half of their original new price value).

Millionaire Teacher is probably the best book for a person just starting out in investing… I plans to get my kids to read it when they’re 15.

#118 Darryl on 04.26.14 at 7:58 am

#82 John in Mtl on 04.25.14 at 10:17 pm

John
Tell that to the thousands of Kids that just got out of teachers college and can’t get a job. Everyone would opt to be a teacher if the jobs were there . Cry me the usual teachers river . When someone talks about over inflated pay they mean the whole bundle.
Yes teachers make good money . Yes teachers have the best benefits. ( who else gets health club memberships included) Yes teachers have great hours. And yes , teachers have the best pension .
Admit it and move on .

The pension doesn’t bother me because it was worked in to your negotiated settlement . however , if it is not managed well and runs short don’t come to me for more money.

Enough with the “you don’t know how hard it is for teachers “stuff though. Try the non public sector for a while.

#119 T.O. Bubble Boy on 04.26.14 at 8:38 am

@ #108 Cam on 04.26.14 at 1:39 am
How do you recommend putting $100 a week into an ETF without incurring a ~$25 transaction fee?
——————

A couple of ideas:

Some discount brokers have no trading fees on certain ETFs, inculding iTrade since back in 2011:
http://canadiancouchpotato.com/2011/09/13/commission-free-etfs-arrive-in-canada/

Some brokers (like QuestTrade and others) are more like $5 or $7 for the transaction fee. Now, that still doesn’t make sense for $100 trades, but better than $25.

And, for small purchases, something lie TD E-Series Funds (low MER and now trading fees) can make more sense.

I think certain blogs like the Couch Potato have covered the “when is it cheaper to use e-Series vs. ETF?” question.

#120 T.O. Bubble Boy on 04.26.14 at 8:53 am

@ #106 Boomorbust on 04.26.14 at 1:30 am
Sorry, but I don’t get the rabbit tracks analogy. Care to explain..

Won’t your dividends on the s&p etf get taxed at your full full marginal rate in your tfsa since its not included in our tax treaty with the USA.

Rabbit tracks. — Garth
————————

No.

There is a 15% withholding on US dividends.

But – why would that drive your investing decision?

What Garth is trying to show is how small a difference that makes.

Take $30k in a TFSA, making 4% in US Dividends, that’s $1200 per year. Withholding of 15% is $180 (0.6% of the $30k). You’re probably losing more on trading fees, crappy bank currency rates, etc… in fact, if you’re talking US ETFs, you’ve made 30x more than 0.6% on the changing exchange rates alone over the past 1-2 years.

So – yes, it is a drain on returns… but not significant enough to change an investing decision. Also – if you’re focused more on growth in a TFSA, dividend rate would likely be far less than 4% I used in the example.

#121 Millenial on 04.26.14 at 9:15 am

Surprised to learn cmhc was insuring SECOND homes. Doesn’t this fly in the face of their mandate to simply help provide A home for Canadians? Stupid.

In other news, our leaders have proposed Downsview Park be developed into 7,000 residential units that could house 30,000 people. Is this what Toronto needs? More houses? Is that our problem?

Also, a semi-detached home with a parking pad on a busy one way street not far from Dufferin Mall sold this week for $1.37 million.

#122 TurnerNation on 04.26.14 at 9:17 am

Dollarama expansion, disagree. They just opened Pape/Danforth as the Ma & Pa dollar stores closed up era-over. There used to be 4-5 ones there forever; all gone, retired, whatever.
A new location on the King W club strip, a whole new crowd of tapped out luxury kando buyers. Smart move.
That said a $100 stock price would likely be a top.

– Someone’s bullish on a Canadian city (not Toronto). Fairmont hotel/kando expansion. Things that go Trump in the night?
I love Fairmont, in a recent 4 year period spent total of 3 months living in them in Canada, usually 2 weeks at a time. Amazing, consistent service, food, benefits, amenities. Trade off was long days onsite but worth it.

http://www.theglobeandmail.com/repor…ticle18209108/

The parent company of Fairmont Hotels is considering doing another hotel/condo project in Canada, as it delves further into the residential business

#123 TurnerNation on 04.26.14 at 9:30 am

Walmart: not far away on Bathurst St near Dundas at the old Kromer Radio complex the Toronto ‘leftees’ and Nimbys just shut Walmart and its expansion plans, out. That area has one of the lowest incomes in the city. I wonder if Dollarama will hone in, smaller store footprint.

#124 Jay on 04.26.14 at 9:34 am

For those interested in Garth’s suggested asset allocation:

http://www.greaterfool.ca/2013/11/17/finding-balance/

#125 Bottoms_Up on 04.26.14 at 9:41 am

#108 Cam on 04.26.14 at 1:39 am
————————————-
Easy. Questrade allows you to buy ETFs for free (you only incur transaction costs when you sell).

Or, you save $100/wk, and only buy ETFs twice a year (each purchase around $2600).

Not that hard to figure out.

#126 T.O. Bubble Boy on 04.26.14 at 9:41 am

$900k House of the Day for Saturday, April 26th:

3 Finalists
1) $928k “Impeccably Maintained By The Original Owners” (read: never updated) burbs house near Leslie/Steeles
2) $1M dump in a “prime location” (deep in the heart of Scarborough)
3) $899k “prime location” rental house (read: tear down) near Bathurst/407

WINNER
#2: right at the max CMHC limit, and nowhere near other million-dollar homes… yet priced as a $1M tear-down!

More and more proof that literally EVERYONE IN THE GTA thinks they live in a $1M house.
(what bubble?)

#127 Bottoms_Up on 04.26.14 at 9:52 am

#87 George S on 04.25.14 at 11:10 pm
—————————————
Thanks for that post on the federal pension plan. I would like to add that the government was allowed to raid the plan because contributions were going into general revenue accounts (not being properly tracked or managed as a separate fund). This is why the courts ruled that the pension plan can’t get that money back.

#128 Stickler on 04.26.14 at 10:00 am

@ #92 Basil Fawlty on 04.25.14 at 11:40 pm

“Vancouver average gas price hits $1.50/L, a new nominal high according to GasBuddy. Chart”

Don’t worry the CPI will not budge.

——————————-

Yea, core cpi doesn’t exclude all those silly things like: fruits and vegetables, gasoline, fuel oil, natural gas, intercity transportation, mortgage interest, as well as all indirect taxes.

Who needs those things right!

#129 Ontario's Left Coast on 04.26.14 at 10:03 am

102 DB pensions,

I work for a private sector company with a DB pension plan. Eligibility is based on a rule of 82 (age plus years of service), and it’s not the least bit uncommon to see folks walking out the door with an 80 per cent benefit, fully indexed, in their early 50s. Incidentally, there’s a lot of talk about converting to a DC, but that will only apply to new hires (i.e. Existing workforce will be grandfathered).

I’m a little late to the party, so my benefit will never really amount to much. That’s okay, I’ll commute whatever’s in there as I’ve always secured my own nest egg and never expected anything in the first place.

#130 Potemkin on 04.26.14 at 10:13 am

Oil didn’t go up, still trading in a tight price range, even went down a little. The price of gas at the pump went up, though. It went up in sync at all the stations from all the refiners. That’s free economy for us. Thank you gov, for watching over our interest. We will continue to sleep tight.

#131 learningfromyou on 04.26.14 at 10:25 am

Outstanding post Garth, Great!!!!

These specific steps are the ones I wait for everyday, I cannot fix what banks, government do, more news about them is more of the same, but with this type of posts I can improve my life, I’m not the only one for sure.

Thank Garth.

#132 Two-thirds on 04.26.14 at 10:58 am

Sound advice – already following some of it.

However, there is a blind spot here that it is sure to be evident to others, even Garth admits:

“Governments can pass laws at any time”

So, RRSPs withdrawals several decades down the road are quite likely to be taxed at a higher rate than today’s.

Agreed.

However, why would TFSA withdrawals remain untouched? What is stopping the government from changing or suspending the TFSA altogether?

For now, maxing out the TFSA makes a lot of sense, but the risk going forward may be similar for both it and the RRSP.

Not at all. Government absolutely needs to encourage private savings, hence the TFSA. You get no tax break for contributing, so no tax on withdrawals. RRSPs net a tax credit, hence are fair game for taxation upon cashing in. In my view, TFSAs are untouchable. — Garth

#133 Gloomy Gus on 04.26.14 at 11:03 am

Garth- For example, if you get the average $633 a month at 60 and invest to earn 7%, you’ll have $46,215 by 65. If you wait until 65 to collect the extra (a total of $835 a month),
——————————————————–
Your math is wrong. Take CPP before 65 and the benefit is reduced by .6% per month. So if you were to take at 60 the benefit is reduced by 36%.
Knowing this, if the benefit at 60 is $633 per month then we can conclude that the benefit payable at 65 would then be $989.
$633/.64=$989

Nope. My numbers are correct. — Garth

#134 randman on 04.26.14 at 11:03 am

Of all the idiotic things to say…

“Kenney calls upon fast-food employers to raise wages, employ more Canadians”

Yes…you Canadian small business people need to raise your expenses even more in a difficult market…

If you think this bit of socialistic garbage is bad…wait till
Trudeau gets going ….yes your hamburger will cost north of $30

“A lot of quick-service restaurants, they have a price point beyond which, if you put the labour price up too much, you’re going to either close the restaurant or you’ll decrease employment because they’ll be laying people off….You’re not going to go pay $20 for a hamburger.”

Well let’s just close the place down then so no one works……

Read more: http://www.vancouversun.com/business/Kenney+calls+upon+fast+food+employers+raise+wages+employ+more/9775993/story.html#ixzz300Muvquf
Read more: http://www.vancouversun.com/business/Kenney+calls+upon+fast+food+employers+raise+wages+employ+more/9775993/story.html#ixzz300Lt0Rfp

#135 Brown on 04.26.14 at 11:15 am

Re: #9 Jbird,

Glad you are taking advantage of the RDSP. My understanding is that there are no restrictions as to what type of investments can be held within the RDSP. It may be worthwhile to investigate whether such restrictions actually apply. TD Waterhouse offers an RDSP self directed account. Best wishes.

#136 dosouth on 04.26.14 at 11:17 am

So was this part of a REIT Garth or just bad management?

370 million of RE investment gone….

Nothing to do with investment-grade REITs. — Garth

#137 Son of Ponzi on 04.26.14 at 11:19 am

@ #92 Basil Fawlty on 04.25.14 at 11:40 pm

“Vancouver average gas price hits $1.50/L, a new nominal high according to GasBuddy. Chart”

Don’t worry the CPI will not budge.

——————————-

Yea, core cpi doesn’t exclude all those silly things like: fruits and vegetables, gasoline, fuel oil, natural gas, intercity transportation, mortgage interest, as well as all indirect taxes.

Who needs those things right!
——————–
Another reason not to trust Statistics Canada’s numbers.

#138 Son of Ponzi on 04.26.14 at 11:21 am

Not fair that only Grandfathers get to keep the benefits.

#139 tkid on 04.26.14 at 11:34 am

How do you recommend putting $100 a week into an ETF without incurring a ~$25 transaction fee?

I wouldn’t do $100/month investing. Try a RRSP or TFSA daily savings account if you can’t put the $100 into a self-directed account and leave it there untouched for awhile. Twice a year you make your purchases. It all depends on if you are charged fees for the savings accounts & transfers into the self-directed accounts.

#140 Jensen on 04.26.14 at 11:34 am

Post 106 Freedom First said,

“The CMHC changes taking effect on May 30th will goose the spring market until then, and afterwards, the changes are going to have a HUGE profound affect to the negative for the RE market. Anyone who says otherwise either has a self interest in the RE market, or they are in denial of their “housing is an investment addiction.”

What about the new loophole created? –> buy first home with Genworth Insurance and second home with CMHC insurance and third home with Canada Guaranty Insurance.

Looks like the Cons are helping their friends with the stock price.

#141 BCD on 04.26.14 at 11:36 am

Your smugness is aggravating my eczema condition. . .”the real risk in life is running out of money, not losing it.” How many times must you say this? Losing money and running out of it are not mutually exclusive, one leads to the other. They exist in a symbiotic relationship–meaning that if you are losing money chances are you are in the process of running out of it.

The biggest risk in life has nothing to do with money. . .it’s about being healthy and hoping you live to retirement with some range of physical mobility. Once you are there you will learn to stretch each dollar the way you have to. Necessity is the mother of invention. That $800 iphone I have is great, but I can live with a $200 one easily enough. I’d rather live stress free and have all my pieces of pie accounted for in GIC’s then play roulette just so I can drink more Starbucks in retirement. I am comfortable with 2.5% REAL growth, living a life of frugality, with stress free investments, with no debt outside of a small mortgage. I never feel burdened with anything, outside of completing my 30 years of pensionable employment.

#142 Jensen on 04.26.14 at 11:36 am

And what’s this talk about Grandfathers? What about Grandmothers?

#143 Don on 04.26.14 at 11:40 am

#21 Joe on 04.25.14 at 6:54 pm

#4 Thanks for the information about CMHC announcement..
Beautiful….there is proverb if they give money take it…because maybe later won’t be opportunity…

So it just shows you that people who bought houses are already winners!!!
Because now you are not able to use CMHC…..
So who is punished …the new buyers…..and will be slaves renters…I can imagine the smile on some peoples faces…..
******************************

Joe: Your attempt at using logic is stunning. No follow through in your thought process – cherry picking the headlines from the M$M. You are either too young to know any better and just follow the herd or you are a realtor troll.

My landlord who is a realtor in Victoria…wants me to stay for as long as I want. He leaves me alone as he is worried I will pick up and leave and who will he rent too. 70 – 80 % home ownership. Who will buy your house in the great white north – not exactly Hawaii. LOL LOL LOL LOL. I rent for the mobility, why anchor down in any one place. Moving is not that hard and I have children. When I am ready I will build a house for less than I can buy an old piece of crap or a new piece of crap for that matter.

I have a neighbor who knows that area well and all his friends are struggling to keep up with their houses, values went up and so they bought depreciating tools with the PAPER equity.

If you can’t do the research and aren’t aware of your surroundings…..OUCH! HOUSING TSUNAMI on the way. Am I happy…NO But you can’t fix stupid, ignorant and hormones. To make money one must watch the herd and do the exact opposite when the time is right. Smart people bought and flipped, problem is most people buy and get comfortable (nest) and never flip and are left holding the baggage associated with their choices. The herd mentality can be dangerous.

Where have all the realtors gone….

Good luck with your line of reasoning JOE LOL Keep letting me know what you are doing so I can do the exact opposite.

#144 Porsche on 04.26.14 at 11:54 am

I come here for my daily dose of depression.

#145 airhead princess on 04.26.14 at 11:57 am

DELETED

#146 Linda Mulligan on 04.26.14 at 12:05 pm

#133 – Check the revised CPP figures for taking it at age 60 – total reduction for taking it at age 60 is now 42% when they last revised the rules. IF you wait to take CPP until age 70, it is increased by a maximum of 42%. So the annual hit per year for taking it at age 60 is 8.4%, ditto the annual increase for delaying CPP after age 65 is 8.4%. Admittedly there is a transition period for the changes which is rapidly passing so someone applying for reduced CPP at age 60 today may not lose 42% – I think the full hit takes place no later than 2016.

“If you take it before age 65, your pension will be reduced, by up to 32.4% at age 60.” (Service Canada web site) As I stated. There is zero argument for delaying taking CPP unless you have no self-discipline and spend it. — Garth

#147 Dr. Wu on 04.26.14 at 12:15 pm

If you think this bit of socialistic garbage is bad…wait till
Trudeau gets going ….yes your hamburger will cost north of $30
—-

I used to be suspicious that he might be Ronnie Wood’s son, but when I checked the date his birth and the Stones gig in TO they don’t jive, so it looks like he’s legit.
Anyway what’s the alternative? Harper? He has already reached the pinnacle of his human potential- that was the HST, that alone has earned him seat in Mulroney’s golf cart.
Pierre Trudeau, love him or hate him, remains an icon.
Harper wants to be an icon, but remains a Con.

#148 Ronh on 04.26.14 at 12:25 pm

Garth, the best advice ever! Where were you 40 years ago when I needed such advice?

#149 shawnEdmonton on 04.26.14 at 12:39 pm

Bundy is a racist, on top of being an idiot. Oh, and a criminal. — Garth

This is what you use to silence anyone who disagrees with you, or anyone who wont bow down to big government. You call them a racist. I find your politically correct ideology disturbing.

Here is what I find racist…. the assumption that someone is born with ideology and religion.

That someone is supposed to were a certain clothing because of the color of there skin.

The idea that I should justify the music that I listen to or the food that I eat because of the color of my skin.

The idea that I should be speaking inferior English become I have brown skin.

“I want to tell you one more thing I know about the Negro,” Bundy said, according to The New York Times. The rancher shared the story of what he saw when he drove past a housing project in North Las Vegas. “In front of that government house the door was usually open and the older people and the kids—and there is always at least a half a dozen people sitting on the porch—they didn’t have nothing to do. They didn’t have nothing for their kids to do. They didn’t have nothing for their young girls to do.”

“And because they were basically on government subsidy, so now what do they do?” Bundy asked, before answering his own question in the worst possible way. “They abort their young children, they put their young men in jail, because they never learned how to pick cotton. And I’ve often wondered, are they better off as slaves, picking cotton and having a family life and doing things, or are they better off under government subsidy? They didn’t get no more freedom. They got less freedom.” Racist. Idiot. Criminal. — Garth

#150 Smoking Man on 04.26.14 at 12:43 pm

Fringe Sells.

I can’t believe MSN publications have not added this contact, it’s evident and obvious that their role is to push sanitized teacher friendly stories and always supporting the agendas of the government of the day.

I’m not going to get into all the examples of this. You need to be quite brain dead not to see this.

Alex Jones, millions and millions of followers.. Fringe Yes,

Growing and Growing, while MSN
Shrinking and Shrinking…

It only makes business sence for them to have a section in papers
for fringe….

But like all the schooled, scared of risk.. The ships are sinking and the capitans indecisive…

The model is broken, but like all Canadian company’s, they won’t do it till they see an American to it first..

#151 Shawn on 04.26.14 at 12:52 pm

Government Pensions in General Revenue?

Bottoms up at 127 referred to George S.’s informative post at 87 and said:

#87 George S on 04.25.14 at 11:10 pm
—————————————
Thanks for that post on the federal pension plan. I would like to add that the government was allowed to raid the plan because contributions were going into general revenue accounts (not being properly tracked or managed as a separate fund). This is why the courts ruled that the pension plan can’t get that money back.

*******************************************
Bottom up I laugh at government workers who thought it was a BAD thing when their government pensions came from general revenue with no separate fund set aside.

In fact that was good for the pensioners (and bad for tax payers) it meant that the government owed and would pay the defined benefit and there was no surplus or deficit.

It was only when government pensions started to move to dedicated funds that the concept of deficit or surplus applied to government pensions. After setting up the fund then governments started to be less responsible. Deficits could then be easier shared with employees through higher contributions.

Government pension funds were mostly converted to dedicated funds years ago and the amount of funds the actuaries said was needed for the then existing workers was set aside. Later returns went down and it turned out not enough had been put in the fund. Employees asked for separate funds and got what they wanted forgetting it came along with risks.

Everyone (except maybe George S) seems to think the government is solely at risk for DB plans. No, as George has mentioned the existing government employees have seen their share of pension contributions soar (as in double and triple).

People can bleat about that coming from tax payers too but government workers saw a decline in take home pay as their pension contributions soared.

Government pensions have many problems and some of these are being fixed. In particular contributions have been raised so that most government employees are paying 50% of the share of their own pension and also paying substantial amounts to subsidies older workers and retirees who it turns out contributed too little.

New government workers might prefer DC plans if the government would contribute the same amounts it is contribution to DB plans.

#152 OffshoreObserver on 04.26.14 at 12:55 pm

CPP Application online:

I live in Southeast Asia and turned 60 last August. Therefore, I am entitled to CPP.

I have applied three times online, not including the timed out–after 15 minutes of “inactivity.”

I have been rejected two times because I did not file the signature page.

Well, my good ole Canadian Bank filled out the forms and said I was good to go.

Now I am back in Vancouver for 5 weeks before going back to Asia–Mom’s 90th Birthday and tax returns.

Now, Monday, I am going to deliver all my forms, personally, to the DogF??kers.

I can buy a kindle book from Amazon in 1 click, yet it takes me 6 months to file for CPP.

[BTW, capitalize you annual CPP by 7% and add it to your networth–arguably it is a lower Cap rate because it is risk free and indexed to inflation, whenever that will revisit us.

[In my case, $348/month x 12 = $4,176 per annum. Capped at 7% = Present value of $59,657, infinitely compounding;

[Using the 10 year Cad. Gov. Bond rate of 2.25% as Cap. Rate. PV = $185,600.

[CAVEAT: Since we cannot live forever, by construction, the PV of my pension for 40 years is at the following Cap (discount) rates:

[2.25% I rate, N = 40 years = PV of

#153 Ralph Cramdown on 04.26.14 at 1:14 pm

#134 randman — “A lot of quick-service restaurants, they have a price point beyond which, if you put the labour price up too much, you’re going to either close the restaurant or you’ll decrease employment because they’ll be laying people off….You’re not going to go pay $20 for a hamburger.” — If you think this bit of socialistic garbage is bad…

I think what the restaurant industry spokesman was trying to say is that their business model fails in some places if they pay the prevailing local non-union wage, even in places with unemployment above 5% (such as Victoria) for the quality of labour that they require. And what you seem to be saying is that we must protect the strategic national industry of fast food by importing labour of the required quality for a lower wage, or we’re socialists.

This doesn’t sound much like the “creative destruction” that right wing economists are always trumpeting; more like Marie Antoinette’s famous dietary advice to the poor. Often this kind of thing ends up with a “labour market opinion” consisting of a brick through the restaurant’s window. Just sayin’

#154 Bargains everywhere on 04.26.14 at 1:17 pm

#141 BCD on 04.26.14 at 11:36 am

BCD, I hope you continue to only invest in GICs at 2.5%. That way, the banks will continue to make lots of money and that helps them pay my 4% dividend yield on my shares (in reality, my yield is much higher than that based on cost as I’ve held them for a very long time and dividends have increased substantially over the years).

Also, you’ll be contributing more tax dollars to fund everyone’s CPP as interest income is taxed at a much higher rate than dividends. Thanks!

#155 Mr Happy on 04.26.14 at 1:30 pm

Are people missing the fact that at 60, you apply and start receiving your CPP. Once it starts going into your account, you are free to go back to work. It’s just a little extra income and if you are smart, you’ll invest it like Garth says…

#156 Just the facts Ma'am on 04.26.14 at 1:35 pm

“If you take it before age 65, your pension will be reduced, by up to 32.4% at age 60.” (Service Canada web site) As I stated. There is zero argument for delaying taking CPP unless you have no self-discipline and spend it. — Garth

Service Canada website-For a person who applies for and receives their retirement pension at age 60, this represents a maximum reduction of 32.4% if taken in 2013, 33.6% if taken in 2014, 34.8% if taken in 2015, and 36% if taken in 2016.

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

#157 Keith in Calgary on 04.26.14 at 1:42 pm

The CMHC rule changes will have a direct impact on the market in a big way IMHO…..my rule of thumb always has been, when they say something, assume the opposite of their statement is actually the truth, especially when dealing with the premises put forth in press releases from governments and their institutions.

The intent as I see it in regards to the second homes rule is firstly, to reduce highly leveraged speculation, and that, in and of itself, is a damn good thing. Secondly, it will force parents “helping out” kids (what a misnomer that term is as it applies to RE) to pony up the dough rather than merely swiping a pen on paper.

Funny that few here picked up on Joe Oliver’s comments regarding interest rates, and the fact that we are now a ZIRP nation and will be for the foreseeable next few decades……

As an active investor in bonds, currencies and metals it’s not return on capital that now concerns me, but “return of” capital that matters.

#158 World Traveller on 04.26.14 at 1:50 pm

#33 TurnerNation on 04.25.14 at 7:12 pm

Just don’t buy food there

#159 JarLadyMightBeRight on 04.26.14 at 1:52 pm

If you have big RRSP $$ and you’re retired at 60, you may want to use the time before 65 or 67 or whatever to draw down RRSP $$ at a lower marginal rate. CPP might bump your bracket.

One size doesn’t fit all. DUH.

#160 Millenial on 04.26.14 at 1:55 pm

There was a poster from Garth’s Thursday blog entry, #28 HogtownIndebted on 04.24.14 at 7:12 pm, talking about hospital lotteries not doing so well.

I’ve been watching the Princess Margaret site pretty closely the past two weeks. Last weekend and earlier this week they had a banner that said 95% sold out. Well, that banner was removed on Thursday and you can still purchase tickets as of right now.

I posted a respectful comment about this on their site, it was subject to moderation, and my comment was not approved. I wonder if they’re having trouble with ticket sales? I mean, if the 95% sold out statement was true on Monday, you’d think they’d be done now, right?

I think this may be the last year I play. This lottery may be for a good cause, but there’s no justification for deceitful sales practices, ever.

#161 Nemesis on 04.26.14 at 2:00 pm

#YouCan’tMakeThisStuffUp #WeeKendPotPourri

#ThinkPiece

[Salon] – The New Gilded Age: A bigger con job than the first one

http://www.salon.com/2014/04/26/the_new_gilded_age_a_bigger_con_job_than_the_first_one/

#LetThemEatCake

[LAT] – For Beverly Hills’ centennial, a 15,000-slice cake — of course: Sound excessive? That’s the point, say organizers about the massive designer cake, which features town landmarks including City Hall.

http://www.latimes.com/local/la-me-beverly-hills-cake-20140426,0,5050846.story

#SuperSized

[Nation] – Fast-Food CEOs Make 1,200 Times As Much As One of Their Workers—and They Want to Keep It That Way

http://www.thenation.com/blog/179525/most-unequal-industry-america-also-one-fighting-minimum-wage

#UtterlyBizarre or #FeudalFunForAll

[UK Independent] – Rural communities in uproar as 250 Anglican churches use ancient rules that could leave them facing bills for thousands in repairs

…”At least 250 Parochial Church Councils, who administer Anglican parishes, have registered Chancel Repair Liability (CRL) against 12,000 properties where ancient deeds permit this. Under the medieval law affected landowners, whether or not they are Anglicans let alone Christians, can be liable for repair of their local Anglican church if built before 1536 even though this was not shown in their deeds when they purchased the property.

The potential bills, and crippling legal fees if they decide to fight, has left families struggling to deal with the anxiety and is tearing parishes apart.”…

http://www.independent.co.uk/news/uk/home-news/not-very-christian-rural-communities-in-uproar-as-250-anglican-churches-use-ancient-rules-that-could-leave-them-facing-bills-for-thousands-in-repairs-9289590.html

#PleaseMa’am

[UK Independent] – Girl, 12, writes to Queen to stop family’s eviction from Crown Estate home

http://www.independent.co.uk/news/uk/home-news/girl-12-writes-to-queen-to-stop-familys-eviction-from-crown-estate-home-9291914.html

#162 Aggregator on 04.26.14 at 2:21 pm

At least someone is covering what the United Nations means by everyone must (by force) share common values

Condo hell: Thanks to neighbour disputes, crazy restrictions and incompetent boards, condo dwellers are increasingly finding themselves boxed in

Elizabeth Dyke’s blissful experience with condo ownership lasted for 13 years, right up until her upstairs neighbours ripped out their carpeting and installed hardwood floors. “The very next day, I could hear somebody walking in high heels right from my master bedroom, through the living room, down the front hall and to the door,” says Dyke, a Toronto employment lawyer who had enjoyed condo life so much, she bought a second unit in her building to use as a home office. Nuisance turned to nightmare when Dyke’s neighbours moved out and rented their condo to a dancer, who turned the unit into her full-time dance studio. “It sounded like a jackhammer on your head,” says Dyke. “That’s when I thought, ‘I’m a reasonably successful lawyer and I’m living like this? What’s wrong with me?’ ”

What's wrong with Elizabeth? She just got her first reality of Agenda 21 — the inculcation of chasing numbers (prices) instead of value and quality of life, which is why this yuppie who believes she's a successful lawyer and made a good decision to buy a condo, now finds herself living right below some stripper's dance pole classes. But here's the best part:

For months, Dyke complained of the noise to the property manager and then to the condo board. When the thundering sound of dancing continued unabated, she called police. Instead of addressing the problem, the condo board launched a campaign against Dyke and, according to court documents, accused her of operating an illegal law office in the building.

And that folks is what happens when you try to expose the quality of master-planned communities, that was designed to make you uncomfortable in your own home, so you get out of your condo more often and spend money in the economy to pass time away from that noisy cardboard box you paid $350k for.

Now yous' boxed in. Now yous' can't leave.

#163 Trojan House on 04.26.14 at 2:21 pm

“Second, the best possible move a 30-year-old can make is fully funding her TFSA, and keeping it invested in growth ETFs (one mirroring the S&P, another the TSX, a third holding an index of REITs, for example). Put $100 a week in for 35 years earning an average of 7% (what markets have historically returned) and you have $848,800 at age 65. (Of that $661,000 was compound growth.)”

Here’a great tool: http://www.bankofcanada.ca/rates/related/investment-calculator/

I believe Garth makes an assumption of 2% annual inflation. So the $848,000 is inflation adjusted. Interestingly enough, unadjusted for inflation, at 7% interest over 35 years, the total investment is just over $1.7M! That means over the 35 years, over half of your invested money gets eaten by inflation. 3% inflation eats that by another quarter to about $650,000.

How high do you think inflation will run over the next 35 years?

#164 devore on 04.26.14 at 2:24 pm

#85 Ben

You’ve done the math. Now have the guts to tell the kids how the decks are stacked against them.

The deck is always stacked against you. Welcome to life.

#165 Old Man on 04.26.14 at 2:32 pm

#152 OffshoreObserver – The forms that CPP send out need improvement as I could save the government lots of money using my stealth method. They say approval can take up to 6 months which is nonsense, as was approved in 3 weeks by eliminating the step for direct deposit banking with their method. I went to my bank and they downloaded the bank’s form with a computer, so all was done and verified with the necessary info. I sent it in leaving the government clerk nothing to do but to stamp – approved.

#166 devore on 04.26.14 at 2:39 pm

#86 spoonfed

You make the argument that tax rates will surely be higher by the time we all retire and you lay out a plausible scenario which is just as likely wrong as it is right. Predicting future tax rates is as frivolous as trying to predict future house prices.

Taxes being lower in the future (1-3 decades) is just as likely a scenario as taxes being higher? Have you been paying no attention to the last 2 centuries of history?

Lets turn this around. You make it sound like the higher tax scenario is very tenuous and a big uncertain bet, so your challenge is to describe for us a scenario that is likely politically, economically and socially, where taxes in the future are lower.

Besides, Garth hardly ever said RRSPs are the devil. They play a big role in income splitting and short-term tax deferral, are a good savings vehicle for high income earners, and in some cases where they are very large there are options to drastically reduce tax owing by draining them.

Precisely because the future is uncertain, Garth recommends serious savers take advantage of ALL investment vehicles available to them, and to take advantage of PRESENT benefits they offer.

#167 OttawaMike on 04.26.14 at 2:41 pm

#134 randman on 04.26.14 at 11:03 am
#153 Ralph Cramdown on 04.26.14 at 1:14 pm

http://lmgtfy.com/?q=mcdonalds+profit+loss+by+paying+living+wage

Rand–my little gold licking buddy,
This living wage subject has been beaten to death everywhere. Wages account for 30% of “Rotten Ronny’s” input costs.
Paying a decent wage would marginally affect their profits and might even attract employees who can reliably count change and adhere to basic food safety regulations. As Ralph sarcastically pointed out, shorter fast food hrs. or less locations would be a good thing for our national health

Costco and Germany are 2 examples of decent wages without apocalyptic results. Do a bit more reading and get back to us with a report.

#168 OttawaMike on 04.26.14 at 2:43 pm

#157 Keith in Calgary on 04.26.14 at 1:42 pm

I tried posting the link to that 3 times yesterday.

#169 Blacksheep on 04.26.14 at 2:44 pm

Bundy is in the headlines for challenging the ever overbearing ‘system’ but hurts his credibility by spewing prejudices.
————————————–
“Racist. Idiot. Criminal. — Garth”
————————————–
Racist, yes. Idiot, maybe. Criminal, No.

In conversations with elders, I find some still harbour beliefs / values that should have died off decades / centuries ago with the parties that originated them.

The real concern is not whether this old southern rancher is a racist, It’s whether his children are less racist, and hopefully, his grandchildren eliminate racism from their mindset, altogether.
———————————-
“They didn’t get no more freedom. They got less freedom -Bundy”
———————————-
If you can rise above the prejudice, there is a very telling message in the above sentence.

#170 nomad on 04.26.14 at 3:14 pm

My buddy agreed to buy for 500k the condo he’s been renting (no bedroom open concept double floor near Toronto Star). He told me it was a good deal. BMO came in with an appraisal of 450k…

#171 nomad on 04.26.14 at 3:17 pm

If you haven’t hopped on the housing train, it’s important you invest. Betting both on housing and the stock market is a bad idea. Ideas:

$ZEB Canadian banks. Their price to earnings are between 10 to 14.5, lower than the average.

$ZPR preferred ETF has been going up since last summer. 4.5% yield (taxed in a friendly way).

$ZUB US banks ETF to play the US recovery.

#172 Shawn on 04.26.14 at 3:17 pm

Racist?

Racist. Now there is a loaded word. You call someone a racist, justified or not, and the conversation is OVER.

Who among us can truly say they have never stereotyped another group in society? And if that other group be of a different race, woe betide to us.

So what of the Bundy example?

He used the formerly acceptable word “Negro”. Does that make him racist? Maybe so.

Personally I am no longer completely comfortable even mentioning race as in saying someone is black or Chinese. We are all people first. But if I point out for example that my doctor is black when it’s not relevant, am I racist? Maybe so.

Would I be uncomfortable entering a bar where everyone was of a different race than me? Yes. Does that make me racist? Maybe so.

Bundy wondered if someone was not better off as a slave than being on welfare. His point I think is that long-term welfare can rob a man of his dignity. A man on welfare may have freedom in theory but little real freedom as he has no money to be free with. The welfare families he referred to had food and some shelter but no money for anything else. Are they automatically better off than someone who was a slave but well treated? Maybe such did not exist. And most likely, yes, they ARE better off but is the question not allowed to be asked?

I agree slavery is repugnant because you should not be able to “own” another person. But should we then claim it was the worse of human conditions? Is it worse than jail? maybe not. Worse than welfare, I think yes, absolutely, but is someone who wants to argue the point a racist?

I have read in history where people begged to be taken as slaves because then at least they would be fed. Have we reached the point of political correctness where one cannot even ask if certain conditions today are worst than or equal to slavery? No conversation is allowed because one is labeled a racist and immediately shut down?

By the way, my view is that Temporary Foreign Workers have been treated as basically slaves of a sort. If they don’t get an accelerated path to immigration or a long-term work visa then I think we are taking advantage of these people in an unacceptable way. And perhaps it would also be wrong to give accelerated immigration status in return for several years of low wage work.

I don’t agree with a policy that says you can come here and work for there years but you can’t stay. If we need workers bring in permanent immigrants.

Well there is no point going on. I have said too much and now people can call me a racist if they wish.

#173 Smoking Man on 04.26.14 at 3:33 pm

Little house in long branch up date, reporter smoking man broadcast live from the bidding war zone..

Demographics.

The young under 30’s and the retired are the primary visitors.

The young potential move up buyers vacating condo coffins.

The old downsizing.. Aware of rising energy prices limited income.

The middle 40 to 50 no show, they are in the showoff stage of life.. Won’t be interested in this size house..

List count at 50 cars.. During open house…

#174 Save the internet on 04.26.14 at 3:34 pm

Down fall of civilization when they control too much.
We need free access to internet:

http://www.savetheinternet.com/blog/2014/04/24/wake-internet-time-save-yourself

#175 Grantmi on 04.26.14 at 3:44 pm

#2 Joe on 04.25.14 at 5:51 pm
Buy a second house rent and in ten years you will make money on the sale..

Of course you’re claiming the rental income, and the appreciation increase over the 10 years of your non-principal property on your income taxes… ….. Right, Joe????

#176 pinstripe on 04.26.14 at 3:58 pm

garth has a strong point for rent vs buy.

Canada is starting to experience the consequence from all the condo boom.

http://www.macleans.ca/society/life/condo-hell/

#177 Soylent Green is People on 04.26.14 at 4:04 pm

This is the method I use on Google search to search Garth Turner’s blog here:

{put your search term here}:{put website here}

Example:

mansion:greaterfool.ca

OR

etf:greaterfool.ca

et voila:

https://www.google.ca/webhp?complete=0&hl=en#complete=0&hl=en&q=etf:greaterfool.ca

.

#178 What about CMHC? on 04.26.14 at 4:12 pm

Half-hearted actions, CMHC! Good job on keeping the party going till end of May.

C is gone. F is dead. What about CMHC?

#179 Aggregator on 04.26.14 at 4:15 pm

#134 randman

Well let’s just close the place down then so no one works

That's what's suppose to happen if they can't produce a burger at the price consumers are willing to pay. The problem is: too many companies are addicted to Quantitative Immigration (over 31,000 companies), that was intentionally designed to deflate wages, boost profit/executive pay and avoid major currency devaluation. All this talk about labour shortages and match making is complete BS.

The gov't needs to get out of the private sector and let the market figure out what a burger's equilibrium price is, and if that means closing up shop because the company wasn't willing to slash excessive senior executive pay to invest in training and higher pay for the bottom work force, so be it.

#180 Hawk on 04.26.14 at 4:28 pm

#83 Pope Sexsixpackkitten Snugglebums the ???tb (aka Nosty) on 04.25.14 at 10:25 pm

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

If this guy Clive Bundy, is so stupid as to imagine that people are better off being slaves than welfare recipients, (or that there’s not much difference), surely that in and of itself, is sufficient reason for no one to take anything he says seriously.

I think the real issue here, is not whether this one dude is a malicious bigot …….or merely a foolish senile twit, but rather the fact that people like these are actually take seriously by so many.

#181 Italians love real estate on 04.26.14 at 4:37 pm

Ask anyone of Italian heritage, in the GTA or otherwise including the U.S, who happens to be a millionaire( there are many disproportionately so) how they made their money and guess their response.

No innovations , re invention of any wheels , nor internet based business ideas included.

Ya you got it now.

#182 Smoking Man on 04.26.14 at 4:50 pm

#180 Hawk on 04.26.14 at 4:28 pm

When I saw the partial MSM version I thought what an ass.

Then when I saw the alternative media full speech.

Got a different opinion, it was more of a guy sympathizing with minority people…

When you’re on big brothers shit list they can make a mountain out of a grain of sand

#183 Hawk on 04.26.14 at 4:57 pm

#115 Tony on 04.26.14 at 4:55 am

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

It would be very nice for most people if houses cost less than what they cost today. The problem is the Canadian labor industry has become accustomed to very high wages. Getting the slightest thing made costs an arm and a leg. A custom built shed in Toronto can cost $10,000. Insurance companies calculate that in the event of destruction, to rebuild an average house in Toronto will cost upwards of $300K (i.e. just the building).

As long as dry wallers, plumbers and others are going to make $500 – $1,000 per day, we are unlikely to see house prices fall by much.

Canadian labor is overpaid and changing this culture will be hard.

#184 shawnEdmonton on 04.26.14 at 5:11 pm

I’m sure the people getting welfare are a very diverse group of people, also include corporate welfare.

The only real slaves these days are the tax slaves who pay for welfare through the threat of physical violence from the state.

#185 Old Man on 04.26.14 at 5:12 pm

#172 Shawn – its imperative to put things in context, not from your point of view, but from the foreign workers reality. They don’t see themselves as slaves at all, but rather being paid well, living better, and take pride working hard as compared where they came from. Always remember Canada was built by our ancestors who all were foreigners from distant lands; thus the foreign workers need to be respected too.

#186 Andrea on 04.26.14 at 5:24 pm

Understood. Thanks for the free advice.

#187 Condo Minion on 04.26.14 at 6:02 pm

Hmm, this is a weird economic sign. These guys had 35% of the payday loan business.

http://www.thestar.com/business/personal_finance/2014/04/25/cash_store_runs_out_of_money.html

Why can’t they just get an advance from Money Mart to cover things?

#188 Old Man on 04.26.14 at 6:08 pm

My confessions as a working slave and how one climbs the ladder within any business environment. I worked in a warehouse of a national chain for $1.75 an hour while at university and if management came to me asking if I could work until midnight; never said no and was recognized as a team player. The next step was asked to take different positions such as pulling or packing orders, running the weight machine, shipping, or receiving and never said no and was recognized as a key player now.

Supervisors would go on vacation and I was given the position with a raise in pay and never said no, and my annual working position was guaranteed. Word gets around and the President was told in the executive diningroom about me. I became his personal point man to drive his Lincoln for a wash and gas, or go to Westmount and assemble new pool furniture that had arrived at his residence.

The rewards eventually come when you least expect such, as was given a special offer with but 14 hours of class time. I could now come and go at any time during the week; just clock in and out to be paid with another raise in my hourly rate. The key as a working slave is never say no to work that needs to be done.

#189 Cici on 04.26.14 at 6:33 pm

#19 T.O. Bubble Boy

For what’s it’s worth (probably nothing…what difference does it make anyway?), Gail Vaz Oxlade (a.k.a., The Jar Lady) is Canadian. She was born in Jamaica, but is a Canadian citizen.

#190 Cici on 04.26.14 at 6:41 pm

#188 Old Man

Thanks for sharing Old Man, loved the post. I like your style…I think there is nothing wrong with being a “tax farm slave.” Hard work is always gratifying and rewarding, and makes like meaningful; however, it’s good to pace yourself and take breaks as needed to keep up the momentum. Achieving balance is key, but in general I think you are right: being a YES man/woman is the way to go. If you prove yourself to your boss and superiors and are always there and able to get the job done 100%, you’re likely to enjoy a very successful and fulfilling worklife.

#191 Setting the record straight on 04.26.14 at 6:44 pm

107 AAA Steak on 04.22.14 at 1:06 am

107 AAA Steak on 04.22.14 at 1:06 am

Exactly correct.

Other things equal, any exogenous increase in demand ( e.g. HAM )for one area of a city will also shift demand upwards for other areas.

#192 Cici on 04.26.14 at 6:46 pm

Bundy is a racist, on top of being an idiot. Oh, and a criminal.

AMEN – Thank you Garth for pointing that out to the people that aren’t quite bright enough to figure it out on their own!!

#193 KommyKim on 04.26.14 at 6:51 pm

RE: #90 Free Beer Tomorrow on 04.25.14 at 11:19 pm
#38 KommyKim on 04.25.14 at 7:21 pm
RE: #25 OttawaMike on 04.25.14 at 6:56 pm
Where is our resident right wing contributor who refers to himself as “World According to Garth”?
I think she has a new handle. Maybe it’s “Free Beer Tomorrow”?
********************************
Sorry KommyKim but only if I grew a pair of boobs. Nice that your policing Garth’s site though. The Kommy part? :-)

—————

Naw, that’s just the tiny fascist conservative part of me that I try to suppress. Garth is perfectly capable of deleting posts and does so on occasion.
But I fail to see how speculating on the whereabouts of “World According to Garth” is policing.

#194 Smoking Man on 04.26.14 at 7:05 pm

Johnny Cash is messing with my mind, I’m tempted to put a sofa on the front lawn, coffee table with a a small lamp. Wind chimes, with gargoyle lawn ornaments…

Snap out of it smokey, mind you that is the renters on the south west corner of 38th and James in good old long branch.

I’m afraid to introduce myself with out a Harley, gatho next time you’re on a ride and board…

Go say high to the renters…

#195 Ronnie Singer on 04.26.14 at 7:07 pm

If you have some money in RRSP. Isn’t it better to collect CPP later. Thinking of cashing in your RRSP at age 60 to age 65 . After you exhaust your RRSP you then head to CPP

#196 Obvious Truth on 04.26.14 at 7:28 pm

Just to join the Bundy debate. Listened to him on cnn in the morning a couple of days ago. Don’t have to agree with everything he says but anchor tried to paint a picture of him that wasn’t true and he spoke very well and defended his view. I got the impression that he was for sure opinionated. And strong. But I did not feel he was a hater of any person. Just doesn’t want to be boxed in by correctness as it that to him is inherently unamerican. His freedom to voice and challenge is most important.

My two cents

Don’t lionize an old guy who reminisces about slavery. — Garth

#197 Old Man on 04.26.14 at 7:42 pm

Cash Store Financial Inc. the day money lender has gone bankrupt from coast to coast. The stock is toast.

#198 dave on 04.26.14 at 7:59 pm

Although it’s true that rental income is taxed at your marginal tax rate – smart people claim depreciation on their property. This wipes out paying any tax on your income until you sell or fully depreciate the properties value.

You made that up, right? — Garth

#199 Aggregator on 04.26.14 at 8:08 pm

Looks like big daddy CMHC is in the flipping McMansions business after all

Supreme Court of British Columbia, August 7, 2012

Royal Bank of Canada v. Miller

[3]  The Millers signed a promissory note and executed a mortgage on their home in favour of the bank in 2007.  They did so in order to borrow $3.65 million which they spent on the construction of their home and retiring debt.  The home they built is a large luxurious structure.  The Millers maintain they spent in excess of $10 million in the acquisition of the land, construction, finishing the home, soft costs, and landscaping.  Mr. Miller is a builder and planned to use the home to facilitate the development of a luxury home building business.  

[4]  The bank commenced foreclosure proceedings in December 2010.  By the fall of 2011, the amount the Millers were said to owe the bank was $3.83 million.  Interest was accruing in excess of $15,000 a month.  In September 2011, a master granted an order nisi.  She determined there was no equity in the home.  The period of redemption was set at one day.  The bank was given liberty to list the home for sale forthwith.  The Millers did not appeal.

[5]  Although the home was actively marketed, by May 2012 there was only one unqualified offer received.  It was $1.575 million which was consistent with the assessed value of the property being between $1.13 and $1.49 million as well as an appraisal obtained by the bank.  The offer was made by Canada Mortgage and Housing Corporation.  The only other offer received was for less money and was to some extent qualified.  It was not pursued.  The bank sought approval of the sale to CMHC.  The Millers relied on what, for the most part, were stale-dated appraisals they had obtained which suggested the home could be sold for substantially more than CMHC offered if it were marketed for a much longer time.  The master found those appraisals unreliable and determined the offer to be fair.  She approved the completion of the sale and ordered that the home be vacated by noon 28 May 2012.

#200 AfterTheHouseSold on 04.26.14 at 8:12 pm

#108 Steve
“Out of debt…”

Congratulations on your new found freedom!

#201 Daisy Mae on 04.26.14 at 8:16 pm

#121 Millenial: “Surprised to learn cmhc was insuring SECOND homes. Doesn’t this fly in the face of their mandate to simply help provide A home for Canadians? Stupid.”

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

Yes. Stupid and outrageous. Can’t believe this. Wow! Stupid, stupid, stupid. Dammit!

#202 AfterTheHouseSold on 04.26.14 at 8:21 pm

#183 Hawk
“Canadian labour is overpaid and changing this culture will be hard”.

Shortage of work via slumping sales and slowing economy will be impetus for change.

#203 Smoking Man on 04.26.14 at 8:30 pm

#192 Cici on 04.26.14 at 6:46 pm

I’m a racist too, I hate all of humanity.

Black, white, yellow, beeny heads, I only respect those that can split atoms.

The herd, the programming, ah, I just want to slap em

A fellow rocket scientist was complaining about his tax farm palls are idiots..

Told him, you’re exceptional, for give them for they not know what they do.

Garth, why the fk do you keep protecting me.

Please I have no fear, you bastard….

#204 Jimmy boy on 04.26.14 at 8:31 pm

@TOBubbleboy

#2 is definitely the winner… A piece of junk lot at Kennedy and St. Clair suddenly asking Yonge and Eglinton money? These sellers are smoking steady crack now.

#205 Ret on 04.26.14 at 8:47 pm

You can play the numbers game with CPP, but you can’t with the actuarial numbers.

I had a few friends who felt perfectly healthy at 60 and did not take CPP when they had the chance. They, tragically and totally unexpectedly, did not see their 65 birthday.

Their years of contribution, in the case of one friend who was single, amounted to only a $2500 death benefit for his estate. He was 7 months away from being 65 yo.

A table like this:

http://www.ssa.gov/OACT/STATS/table4c6.html

definitely needs to be part of retirement planning along with a multitude of other factors.

#206 shawn on 04.26.14 at 9:05 pm

Tax Free Rental Income

Dave at 198

Although it’s true that rental income is taxed at your marginal tax rate – smart people claim depreciation on their property. This wipes out paying any tax on your income until you sell or fully depreciate the properties value.

You made that up, right? — Garth

*******************************************
Dave, that sounds correct to me. I know a family in Edmonton that has many buildings and several hundred rental apartments. They told me they have a good tax accountant and have seldom paid income tax. Their rentals are owned through a corporation.

Upon sale there is recapture of depreciation.

Admittedly my knowledge of this is older and anecdotal. I owned two rental houses in the 1990’s but sold both in 2002.

I believe a tax deferred is a tax reduced (in present value).

A corp owning hundreds of buildings earning business income is not germane to an individual collecting rent from a condo or duplex. — Garth

#207 Smoking Man on 04.26.14 at 9:11 pm

#200 AfterTheHouseSold on 04.26.14 at 8:12 paid can08 Steve
“Out of debt…”

Congratulations on your new found freedom!
……..

That’s freedom, holy crap, free money, make a big ass bet.

Done side crockadial tears for the trustee, you win, bet once more.

That’s freedom…

We are all going to dye, sooner that you think, have as much fun as you can.

I know teachers and MSN puts fear into your head, just a controller mechanism..

Sha la la, live for today..

Tomorrow your a courps in a ern or coffin..

Why can’t people see this, 100 years are nothing..

Go for it..

#208 Ralph Cramdown on 04.26.14 at 9:14 pm

#199 Aggregator — Royal Bank of Canada v. Miller

Nice find, Aggregator. Here’s my favourite parts:

“The Millers contended they should be allowed to appeal the order nisi because of an explanation of the workings of the banking system – of this country and others – explained in an article they had found on the Internet. They maintained that, based on the article, for reasons I find largely incomprehensible, they (and presumably all mortgagors in their position) are not indebted to the bank at all. The judge disposed of their contention […] It seems to me, no matter how the banking system created the money the petitioner lent to the respondents, or whether it was transferred to them in cash or digital transfer, it was used to construct their home and, to that end, had a purpose and value.”

So when they borrowed it and used it to buy building materials and pay all their trades, it was money, but now that the bank wants it back, it’s just electrons, fractional reserve banking, Ponzi scheme! Man, I wish there was a reference to whatever article they were trying to use.

“Based on the material that was handed to me this morning, it also appears that some of that money was used to retire a debt to another bank, the HSBC.”

I knew it! Seemingly whenever a developer builds a multimillion dollar, completely unmarketable home and goes bust in the middle or soon after, HSBC is involved. I think they specialize in it. Looks like they avoided being the bagholder this time, though.

#209 Andrew Woburn on 04.26.14 at 9:18 pm

New mortgage rules could derail house price recovery (in UK)

http://www.telegraph.co.uk/finance/personalfinance/houseprices/10788296/New-mortgage-rules-could-derail-house-price-recovery.html

#210 Old Man on 04.26.14 at 9:21 pm

#190 Cici – I must give you the rest of the story as left out the funny part. I am at the back by the pool opening boxes filled with fancy pool furniture. Out comes this girl about my age saying was expecting you, and said are you the maid as need a tool box. She replied that be me and will get it for you. I finished one lavish pool chair, and the maid comes out with a beer and lies down asking me if she could help.

Told her to get inside in case the boss drives up as you look under age for drinking and don’t need trouble. She says her age is close enough and its her work break; then she broke out in loud laughter telling me all is cool as she was the president’s daughter. Dah!

#211 Andrew Woburn on 04.26.14 at 9:47 pm

#163 Trojan House on 04.26.14 at 2:21 pm
That means over the 35 years, over half of your invested money gets eaten by inflation. 3% inflation eats that by another quarter to about $650,000.
How high do you think inflation will run over the next 35 years?
==============================

Usually inflation increases income from investments as well as costs so, other things being equal, the net effect of inflation on purchasing power should be relatively neutral. The real danger of inflation is the impact of income tax on inflated investment earnings.

Back when you could earn 10% on a GIC, at least 7% of that return was to compensate you for the decline in purchasing power resulting from rapid inflation. The catch was that you had to pay income tax on what was really just an inflation adjustment so your capital was actually being taxed away. Finance was well aware of this but still refuses to index investments for inflation.

This means tax exempt and tax-deferred vehicles such as TFSA’s and RRSP’s are vital to preserve capital in an inflationary environment. Another defence strategy is to maximize the use of the divided tax credit.

#212 Nemesis on 04.26.14 at 10:02 pm

@Ralph/#207

TeeHee!…

HSBC? hAH! Amateurs.

Remember these guys?

http://youtu.be/aj3lrroX7_Y

I don’t remember anything.

#213 -=jwk=- on 04.26.14 at 10:02 pm

I paid $18 for a burger combo the other day in Toronto. place was lined up, had to squeeze into a shared table with strangers. The $20 burger isn’t far from normal around here. (Chucks on Yonge st.)

#214 Son of Ponzi on 04.26.14 at 10:19 pm

#164 devore on 04.26.14 at 2:24 pm
#85 Ben

You’ve done the math. Now have the guts to tell the kids how the decks are stacked against them.

The deck is always stacked against you. Welcome to life.
——————–
If your deck gives you trouble, call Mike Holmes.
He makes it right.

#215 Smoking Man on 04.26.14 at 10:20 pm

GAIL WITH THE GOLDEN HAIR
Out in the red rock desert   sitting on the roof of my car
drinking cans of warm beer   watching the sky get dark
Gail and I shot our empties  with an old, rusted rifle
Her golden hair went flying   like a wild, brush fire

#216 Bill Gable on 04.26.14 at 10:27 pm

This one was slipped by on a busy Friday:
It could be tougher for you to get a mortgage next month.

Canadian Mortgage and Housing Corporation is about to make it harder for some Canadians to obtain government secured financing for real estate purchases.

The CMHC says as of May 30th it will no longer ensure self-employed workers without third party income validation and will not ensure Canadians seeking to buy a second property.

The finance department has tightened mortgage rules four times over the past few years to try and weed out marginal buyers and curb excessive speculation in the market.

Link: http://tinyurl.com/nsvxktv

#217 Son of Ponzi on 04.26.14 at 10:30 pm

#207
aggregator and Cramdown tag teaming.
I like it.

#218 Nemesis on 04.26.14 at 10:31 pm

#LateLateSaturdayNightTrax #IgorPrado #FingerStyle #BankingParables

http://youtu.be/JHPT4Zi7QqM

#219 Andrew Woburn on 04.26.14 at 10:53 pm

#212 -=jwk=- on 04.26.14 at 10:02 pm
I paid $18 for a burger combo the other day in Toronto. place was lined up, had to squeeze into a shared table with strangers. The $20 burger isn’t far from normal around here. (Chucks on Yonge st.)
===================

Back when I was a caped crusader for a major national audit firm, I got to talk to lots of people who actually knew business. One told me he would never buy a hotel unless it had already been bankrupt three times. Another successful restaurant operator told me that if your restaurant rent was over 6% of your gross revenue, you probably weren’t going to make it. This probably explains $20 downtown hamburgers. At least these places are appear busy but all bets are off if condos bellyflop.

#220 Smoking Man on 04.26.14 at 10:56 pm

Feeling the rain, feeling the sun…

Knowing the world isn’t ready for your song..

You make up beats, the melody..

They can’t connect, the mortals void of a passage threw the UCC..

I’m insane to a programmed observer…

Why are humans so easy to program……..

I’ve got rid of all friends, or zombies, the walking dead minds.

I need aliens, not the ones who took MH370

They’re new, didn’t know the rules, the other 6 tribes of Grey’s not happy,

A meeting of the Council of the alien congregation is taking place right now…

#221 Aggregator on 04.26.14 at 11:16 pm

#207 Ralph Cramdown

Ya I'd like to see that article too. But, I don't think anybody really knows how Canada's banking system works. It's all based on secrecy if you ask me.

In the Miller's case, it seems CMHC saw some added value in the property and an opportunity to arbitrage the deal — considering how the loan was structured and used for renovations. That home was on the market for two years with one offer from an 'unqualified' buyer and the other described as 'to some extent qualified'.

If RBC sold it below the insured price, CMHC would have had to cover the loss. So, they let it sit on the market and told the judge there were no good offers, but but.. CMHC has placed on offer at fair market value! Priced by some low ball appraiser.

The Miller's also argued that the property should have been exposed to international buyers, which is probably what CMHC did after it purchased the property.

God knows what else goes on behind CMHC's doors.

#222 45north on 04.26.14 at 11:44 pm

aggregator : Royal Bank of Canada v. Miller

that got my attention especially the part about CMHC buying the house. What!

Ralph Cramdown : talking about the money the Millers borrowed:

So when they borrowed it and used it to buy building materials and pay the trades, it was money, but now that the bank wants it back, it’s just electrons, fractional reserve banking,

pretty funny

#223 Ken on 04.26.14 at 11:48 pm

Average RE return on SFH is ~5% for the past 25 years. If you live in downtown Toronto, more like ~7%-10%. Since it’s leverage the upside is higher than investing the market. Plus most people live in their homes for more than 25yrs therefore any correction is more like a blip.

Toronto prices have averaged 5.2%, not 10%. Canadians move every 6-8 years, not 25. – Garth

#224 DMan on 04.27.14 at 12:18 am

I’d love to follow Garth’s financial investment advice, but isn’t starting a financial portfolio today as risky as investing in a house? S&P P/E is historically overvalued at 22x, and margin debt is at an all time high again, so long run returns will be slim to negative. Bonds have been bid up and yet the risk free rate is near zero, so any adjustment higher in rates means bond prices all adjust lower.

So when risk-free interest rates normalize, does that not result in prices for both equities and bonds to drop. And if interest rates are already as low as they can be, is this risk not elevated? Someone tell me where I am incorrect.

#225 Nemesis on 04.27.14 at 12:35 am

@SonOfPonzi/#213

You don’t want MikeHolmes…

You want, “The Charming Cheat” – aka Martin Nash…

You’d be surprised just how far some BurnabyBoyz can go:

http://youtu.be/sl1XJtzGSdE

#226 Berniebee on 04.27.14 at 12:39 am

#190 Cici

” If you prove yourself to your boss and superiors and are always there and able to get the job done 100%, you’re likely to enjoy a very successful and fulfilling worklife.”

And if you continue to prove yourself (even after your divorce), you will have only a worklife.

FWIW- Three pieces of advice:
1 People who routinely use the term “work-life balance” rarely have it.

2 Unless you are psychopathic enough to smile while you kill, you will only enrich your employer with your hard work.

3 The most enriching work experience? Self employment. Not always the most rewarding financially, but always rewarding in terms of empowerment and self esteem. Not to mention that you really do have the nicest boss.

#227 dreamy kyle bass on 04.27.14 at 1:12 am

Listen to 35:40. Kyle bass profited immensely by for Sting us re crash
Hayman Global Outlook Pitfalls and Opportunities for 2014 by Kyle Bass

#228 Kevin on 04.27.14 at 1:36 am

# 204 Ret,

So what’s the problem? They didn’t live long enough to collect CPP, but it also means they didn’t need the money.

#229 Mark on 04.27.14 at 1:51 am

“If RBC sold it below the insured price, CMHC would have had to cover the loss. So, they let it sit on the market and told the judge there were no good offers, but but.. CMHC has placed on offer at fair market value! Priced by some low ball appraiser.”

Actually the property *must* be sold at fair market value by the lender (RBC), in order to establish a valuation to quantify the insurance payout. CMHC will turn around and take legal action (ie: obtain a judgement) against the Miller’s for the deficiency. The Miller’s will likely end up facing a bankruptcy trustee and will be compelled to explain, under oath, their finances.

All perfectly normal. Don’t know why people are running this conspiracy theory crap. The numbers, of course, show that there has been a significant deterioration in the Vancouver RE market (as in Toronto) over the past few years.

#230 Free Beer Tomorrow on 04.27.14 at 2:40 am

DELETED

#231 Tony on 04.27.14 at 3:52 am

Re: #205 shawn on 04.26.14 at 9:05 pm

In all other cities where house prices actually goes up over over decades the idea is to suck the buyer into claiming depreciation thus when the sucker sells it, it puts the person into the top tax bracket from huge capital gains tax. In Edmonton house prices never go up. Outside of Edmonton only a complete idiot or someone already in the absolute top tax bracket would claim depreciation. It works different if it’s run as a business as corporate tax is much less.

#232 Dave on 04.27.14 at 7:26 am

Reply to Garth on #198.

No I’m not making this up… Depreciating the rental property to wipe out your taxable income is fully allowed by CRA. It’s not a free lunch though – when you sell the property you have to recapture the depreciation you have claimed.

Some would say implementing this strategy makes rental income more preferential to capital gains or dividend tax treatment.

Unreasonable depreciation (which this comment suggests, wiping out all rental income) is not allowed by CRA. This is no strategy for the majority of amateur landlords with tenanted condos. — Garth

#233 Stickler on 04.27.14 at 8:14 am

@ #226 dreamy kyle bass on 04.27.14 at 1:12 am

Listen to 35:40. Kyle bass profited immensely by for Sting us re crash
Hayman Global Outlook Pitfalls and Opportunities for 2014 by Kyle Bass

—————–
Thanks for that -> i like his presentations.

#234 Stickler on 04.27.14 at 8:16 am

@ #179 Aggregator on 04.26.14 at 4:15 pm

#134 randman

Well let’s just close the place down then so no one works

That’s what’s suppose to happen if they can’t produce a burger at the price consumers are willing to pay. The problem is: too many companies are addicted to Quantitative Immigration (over 31,000 companies), that was intentionally designed to deflate wages, boost profit/executive pay and avoid major currency devaluation. All this talk about labour shortages and match making is complete BS.

——————————-
Well said!

#235 Ayn Rand Army on 04.27.14 at 8:22 am

Garth, i’m disappointed by your comments re Bundy as an idiot racist criminal.

Are you really on the side of immorality and the corrupt scum bag Harry Reid?

Bundy is a real American, a rugged individualist. Not a populist propagandist sugar coating liar.

Just because he used the words negro, slave and picking cotton in the context to make a point about the welfare state and the high number of blacks in prison or having abortions. There are many poor blacks and whites in the USA today who are a new kind of slave, they’re slaves to welfare system and have no work because there are no jobs, they have no purpose in life and no direction to pursue and many have no hope. Meanwhile, those of us who do still work are also slaves forced to pay heavy taxes to support the welfare-warfare system.

So all he’s saying is dependency on government results in broken families, unplanned pregnancies and crime. Especially for blacks. We all need freedom.

So to dismiss the man’s legitimate land rights issue by simply labeling him a racist is only to deflect the issue and help promote insidious government propaganda.

Imagine if Harper passed a law charging all men with beards $1.50 per month fee to maintain your beard for you, or if not your beard, then lets say your lawn and gardens. Same thing. Its a proper RIGHTS issue.

This is a black patriot who stood beside Bundy during the stand-off. If he was a racist would this guy not notice? Is black man an obvious idiot who’s so dumb he can’t spot a racist? But all us bozos in Canada can? haha

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

I think his issue with race has to to with this concept that is being promoted by blacks who also recognize the problems in the community.

Runaway Slave
http://www.endofinnocence.com/2013/05/runaway-slave.html

The truth is the US seriously descending into a welfare, warfare, police state.

Bundy is a racist. It has nothing to do with his, or yours, nutcase anti-government views. — Garth

#236 Ralph Cramdown on 04.27.14 at 8:36 am

#222 Ken — “Plus most people live in their homes for more than 25yrs therefore any correction is more like a blip.”

Unless you end up being one of the minority. Here’s the bigger risks:
– you have to renew the mortgage every five years, and a correction in the first two, or your poor credit habits any time could scare off your bank, or cost you a higher rate
– divorce, death, disability or job loss could force a sale. Further, divorce and job loss are both more likely at a time of depressed house prices; that’s how the economy and household money stresses work.
– you don’t get the appreciation of the ‘average’ house. You get the return on YOUR house. While some people might be better at guessing the long term trajectories of neighbourhoods, the big factors (transit, gentrification, slumification, new desirable/undesirable land uses nearby) are beyond your control.
– past returns are not necessarily indicative of future results

#237 Ayn Rand Army on 04.27.14 at 8:45 am

Hey Smoking Man, Johnny Cash is the best!

The Man in Black
http://www.youtube.com/watch?v=h-3nWl2NTaE

And one of my favorite JC songs missing from that album,

One piece at a time.
http://www.youtube.com/watch?v=rWHniL8MyMM

enjoy :-)

#238 Ayn Rand Army on 04.27.14 at 8:57 am

Oh, its on volume 2!
http://www.youtube.com/watch?v=EDITY4FEYi4
One piece at a time

#239 Dave on 04.27.14 at 9:05 am

#230 – Tony, you are wrong and that is terrible advice.

Depreciating a rental property is an excellent tax strategy – regardless if the property increases or decreases in value.

#240 HogtownIndebted on 04.27.14 at 9:10 am

Are the Ontario Liberals about to deliver a smackdown against their right wing opponents? (The NDP would be forced to come along, I think)

http://www.thestar.com/news/queenspark/2014/04/26/a_new_opp_could_be_a_lifeline_for_ontarians_cohn.html#

Whether or not people believe real estate will drop, far more know exactly how tight things are on a monthly basis and how little they have done to truly prepare for retirement. Most would leap to support such a plan, imho. A real option is always better than stewing away in fear or false hope.

Tim Hudak, a typical neo-con like Mike Harris who preaches private sector yet has barely had anything but a government trough job his entire life, would not stand much of a chance against this, and it would dominate the agenda and debate.

Prediction:

Any provincial or federal government or opposition party that can pull together a decent plan for supplemental pensions with incremental but mandatory uptake, perhaps with the bonus of returning CPP age to 65 from 67, will have a huge inside track to victory in the next few years.

Things have been boringly the same for too long in terms of denial of our economic realities. I think we may be seeing some major policy shifts in real time very soon.

Even the wimpy, cowardly, bullying Harper boot-lickers have turned tail of late, on elections and their bs ‘target benefit scheme’, which is not so much a plan as an admission that they are way behind the eight ball and grasping at straws.

Mulcair? Trudeau? Bueller, Bueller….?

Anyone listening?

#241 Ayn Rand Army on 04.27.14 at 9:13 am

#204 Ret on 04.26.14 at 8:47 pm

Exactly, that’s why i detest the CPP or any forced public savings plan. I can save and invest on my own and that money i need TODAY!

I’m based in KW area and i know CPP bought shares in RIM. Something i never would have done. So my struggling little business is essentially forced into paying CPP to buy RIM stock, while that money is needed in my own company to pay down massive debts! It’s fcking bullshit and i hate CPP.

I have an ontario corporation and am the sole employee and have to pay both halves on wages income, which i did over the past 7-8 years while i filed SRED claims, but now that i’m done with that project i will never again use the SRED program or pay myself wages. Never.

My income for 2013 was $3500. The max before CPP must be paid.

Next step is leaving Canada over the next few years and starting a new corp in Asia.

Canada’s a great place to retire, not to work. It’s a hostile environment here if you’re a hard worker or wealthy. Fck that noise!

The only way out is to leave. No choice.

The gov. is going to attack me if i stay and i can’t grow my biz here either cuz the costs of living here are way to high.

#242 Ayn Rand Army on 04.27.14 at 9:42 am

#223 DMan on 04.27.14 at 12:18 am

Yes, you are correct sir.

The safe haven is real money PMs. When TSHTF they will appreciate in purchasing power. In five to ten years when there’s blood in the streets, you then sell your PMs and buy stocks and other productive assets.

#243 Ayn Rand Army on 04.27.14 at 9:53 am

Bundy is a racist. It has nothing to do with his, or yours, nutcase anti-government views. — Garth

Well then we can agree to disagree. But i truly appreciate your tolerance of opposing views and the freedom of expression at greater fool.com.

None of us are perfect but most of us have good intentions. You’re a good man G. Thanks.

I enjoy polite anarchists. — Garth

#244 HogtownIndebted on 04.27.14 at 10:13 am

Re: Ontario Pension Plan

I should add: defined benefit plans, however small and however long they take to ramp up, would be the winning formula, per CPP. ‘Defined contribution’ won’t cut it. (When you consider that the alternative to such certainty is more taxpayer-funded ‘defined-benefit’ welfare payments to unprepared retirees, you get a clearer sense of the political realities that will be very persuasive)

The interesting thing will be what will happen if/when different parties put together their own visions competing for this thought space and the public has to sort them out.

(That’s what happens when you are not really a leader, Mr. Harper – others come in to fill the vacuum)

#245 Daisy Mae on 04.27.14 at 10:20 am

#169 Blacksheep: “….Criminal, No.”

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

Is he not allowing his cattle to graze on crown land?

#246 Ayn Rand Army on 04.27.14 at 10:25 am

I enjoy polite anarchists. — Garth

I’m not an anarchist. I believe in limited government and happily delegate to it the use of force for national defense, police and courts for dispute settlement and criminal prosecution and punishment to maintain law and order.

That’s not anarchy, its limited government just as stipulated by the US constitution. Enumerated powers granted to the gov. by the people.

All other functions like healthcare, education, business and trade should be left to the free market and business people who compete to provide economics goods in a level playing field environment where success and efficiencies are driven by competition and profit motive, dependent upon invocation to deliver the best value for money where the only vote that counts is by the consumer spending of money.

Not tax and central planning government.

This is the core of the downfall the world over today. The more socialist the more destructive.

hence hong kong and singapore are the freest and most successful nations year after year. It’s no coincidence.

While the war mongering USA is in free fall.

#247 Ret on 04.27.14 at 10:35 am

Re #204
While I’m on my CPP rant, check out the numbers of males and females alive at 65 and available to collect CPP and tell me why both groups pay the same CPP premiums?

One guess as to which group will collect by far the most in their lifetime after paying the same CPP premiums. It looks like 2-3 years more for females up until the mid eighties life expectancy.

#248 Holy Crap Wheres The Tylenol on 04.27.14 at 10:46 am

#236 Ayn Rand Army on 04.27.14 at 8:45 am
Hey Smoking Man, Johnny Cash is the best!

The Man in Black
http://www.youtube.com/watch?v=h-3nWl2NTaE

And one of my favorite JC songs missing from that album,

One piece at a time.
http://www.youtube.com/watch?v=rWHniL8MyMM

enjoy :-)

………………………………………..

My father had the same Lincoln back in 65! Great song!

#249 Dean Mason on 04.27.14 at 10:47 am

The O.P.P.=Ontario Poverty Plan will be paid out at ages 70 to 75 depending how much the Ontario liberals can squeeze out of people’s pockets.

This is a long term gradual tax grab in disguise. Too bad people are so dumbed down these days that they will find out in the end that the O.P.P. is garbage.

#250 Just the facts Ma'am on 04.27.14 at 10:50 am

Canadians move every 6-8 years, not 25. – Garth
————————————————-
Does this stat only represent home owners or are renters also included in this 6-8 year average.

On my street of 13 houses there have been a grand total of 4 moves over the 8 years I’ve been here. 3 of the 4 moves have been renters. So of the 11 home owners only 1 has moved.

#251 Just the facts Ma'am on 04.27.14 at 10:55 am

Furthermore- 2 rental houses, 3 moves over 8 years-150% turnover
11 owned homes, 1 move-9% turnover

#252 Keith in Calgary on 04.27.14 at 11:08 am

http://www.calgaryherald.com/business/Claire+highrise+project+making+proposal+creditors/9779513/story.html

A large high rise office and residential condo project consisting of two towers in D/T Calgary has gone “mammaries skyward”. SHAW COMMUNICATIONS was to be the anchor tenant with 12 floors………geez……..if you cannot get something to the construction phase with this company taking up 12 floors, the residential condo sales must have been non-existent.

Of course, it’s buried in a small link link the Calgary Real Estate News….errrrr……the Calgary Herald…..

#253 Daisy Mae on 04.27.14 at 11:42 am

#246 RET: “While I’m on my CPP rant, check out the numbers of males and females alive at 65 and available to collect CPP and tell me why both groups pay the same CPP premiums?

One guess as to which group will collect by far the most in their lifetime after paying the same CPP premiums. It looks like 2-3 years more for females up until the mid eighties life expectancy.”

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

So what? Those are just estimates re longevity.

#254 Daisy Mae on 04.27.14 at 11:48 am

My new neighbour is still collecting at 92…and he’s male. :-)

#255 Henry on 04.27.14 at 11:48 am

@-=jwk= #212

“I paid $18 for a burger combo the other day in Toronto.”

As is the case with real estate, Toronto has nothing on Vancouver when it comes to overpriced food. A few years back, it was the $100 hotdog available on Vancouver’s Granville Street that was making headlines:

http://www.cbc.ca/news/canada/british-columbia/100-hot-dog-on-vancouver-menu-1.1217856

More recently, a restaurant in Richmond has made the news for offering a pizza priced at $450 (and no, it’s not two-for-one):

http://www.richmond-news.com/news/steveston-pizza-co-sells-b-c-s-first-450-pizza-1.493830

I think this is really about showing off. When you are buying a $100 hotdog or a $450 pizza you are telling the people around you, look how rich and successful I am! I have so much money I can afford to waste a $100 on a hotdog or $450 on a single pizza! I must be really successful! Meanwhile, how many people are starving in this world. I find this absolutely obnoxious.

#256 airhead princess on 04.27.14 at 12:00 pm

DELETED

#257 Old Man on 04.27.14 at 12:11 pm

I am still waiting for Smoking Man’s latest location report for the missing plane aka MH 370. Smoke I hate to tell you this, but found it myself weeks ago; it was an easy one to find.

#258 Stupesing in Cabbagetown on 04.27.14 at 12:16 pm

#250 Just the facts Ma’am on 04.27.14 at 10:55 am – anecdotal evidence. I live in an apartment building so we’re all renters. There are 14 units on my floor. The woman at the end of the hall has been there for yearly 30 years. I have been here since 1996. My next door neighbour is the newcomer — he moved in 8 years ago. One cannot make sweeping generalizations about renters vs owners from such a small sample.

#259 Aggregator on 04.27.14 at 12:41 pm

#228 Mark

Fair market value is a misnomer, when the only thing that determines value is the accepted bid price on the free market, not what some appraiser thinks it's worth or what the guy down the street sold his for last year. Today's theory of fiar market value is another broken Keynesian ideology that I won't get into right now.

The issue isn't necessary about if the property *must* be sold, as you say, rather how it is sold, who it's sold to and whether a $1.2 trillion taxpayer backed agency whose mandate is to provide affordable housing and protect the value of properties on behalf of MBS and CMB investors should be 'market making'. It seems to me that the way our institutions and laws are setup (at least in the courts view for judicial foreclosure provinces), it doesn't allow for home prices to decline, rather be dictated by 'fair market value', whatever that is.

The Miller's property was on the market for two years until someone submitted an offer below asking price (assessment), but because CMHC didn't want RBC to liquidate the property below what they or the court deems it to be worth (fair market value) they stepped in and purchased the property with taxpayer funds. How can free market price discovery work if the system doesn't allow it?

And if this is all perfectly normal, as you say, what happens when sales tank and every bid submitted is below fair market value? What happens when properties start going into arrears en masse, like in Quebec right now, and inventory starts piling up in CMHC's portfolio? (which by the way, is 19% allocated to Quebec, and the reason why CMHC instructed the Quebec Federation of Real Estate Boards to hide foreclosure data). Who will bid now?

Feb 5, 1976 – CMHC president forecasts stable prices, mortgage rates

Sep 7, 1979 – Higher CMHC fees seen possibility

Mar 5, 1980 – CMHC faces severe losses: secret report

Mar 24, 1980 – CMHC gets aggressive in attempt to sell homes

Dec 5, 1980 – Cut-rate home prices will cost taxpayer close to $100 million

As they say, history doesn't repeat itself, but it sure does rhyme. And if you ask me, it appears CMHC is stuck in a quagmire as the main force behind higher home prices, whose only option now is to i) boost effective demand by providing more insurance for low income individuals to buy at record high prices, adding more risk into the system, or ii) buy up properties to avoid liquidations below fair market value (or one could say not allowing free market participants to buy them at a discount), and pay out claims until their access to capital dries up. Then they ask for a bailout

Sure, everything is normal and stable when it's dictated by public institutions backed by taxpayers. The problem is when they lose control, which they will, they'll take down the entire market (household wealth) with them.

#260 Mark on 04.27.14 at 1:15 pm

“#228 Mark

Fair market value is a misnomer,

Now that I’ve read your post in its entirety, I fully accept your argument that the market, not the CMHC, should be determining “market” values. Hence, when the CMHC bids, it is inflating values.

Obviously prices have fallen quite a bit. But weird thing is, the RE boards are still trying to convince people that they’ve gone up. The trolls are out in full force these days on the various message boards.

#261 the jaguar on 04.27.14 at 1:15 pm

#258 The Aggregator. Please contribute more to this blog. Your views are very interesting. I think you are dead on. More Aggregator please.

#262 Trojan House on 04.27.14 at 1:20 pm

Marxism/Communism/Keynesism/central planning has failed. Just ask the former Soviet Union how it has worked for them. China moved away from it to a more free market economy. One of the only communist states left standing, North Korea, is and has been run by crazy dictators.

Any pension plans are Ponzi schemes. From the US Securities & Exchange Commission web site: “A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.”

Sound familiar?

#263 T.O. Bubble Boy on 04.27.14 at 1:21 pm

$900k House of the Day for Sunday, April 27th:

3 Finalists
1) $899,900 “Prime Lot” sold as-is near Bathurst/Finch
2) $899,900 burbs house near 401/Morningside, chopped up into rental units
3) $895k semi-detached dump in Queen West: ” Ideal Property For Hip Urban Dwellers”

WINNER
Even though $1M basic burbs houses are a ridiculous concept, the winner is without a doubt #3. What a complete joke.

#264 Old Man on 04.27.14 at 1:40 pm

#212 jwk – I see you got ripped off with the $18.00 hamburger, so next time dine at one of my burger establishments in Toronto. Lets keep those royalties flowing into my pocket, and go to A&W instead for the most that costs you less.

#265 Nemesis on 04.27.14 at 1:42 pm

#SillySunday #CulturalOddities #NakizumoSumos

[UK Telegraph] – Sumo wrestlers bring babies to tears at Japan’s Nakizumo festival: Japanese parents believe the ritual will scare away demons and bring their children good health

…”Sumo wrestlers are employed to bring the babies to tears, in order to drive away evil demons…

The sumo wrestlers pull faces, make noises and jiggle the babies, in order to get their child to cry the fastest…

… If the child doesn’t cry, laugh or fall asleep, the referee, or gyoji, puts on his devil mask to speed up the proceedings.

The 400-year-old ritual takes place all over Japan, but is most famously performed by the student sumos of Tokyo’s Sensoji Buddhist temple.”…

http://www.telegraph.co.uk/news/worldnews/asia/japan/10791221/Japans-baby-crying-festival-in-pictures.html

[NoteToSaltyDogz: Hmmm… could this particular practice be employed to exorcise and/or discipline unscrupulous licensed [redacted]™? #BonusSumo: http://youtu.be/QcD0yc7jLDk ]

#266 Just the facts Ma'am on 04.27.14 at 2:10 pm

#257 Stupesing in Cabbagetown on 04.27.14 at 12:16 pm
#250 Just the facts Ma’am on 04.27.14 at 10:55 am – anecdotal evidence. I live in an apartment building so we’re all renters. There are 14 units on my floor. The woman at the end of the hall has been there for yearly 30 years. I have been here since 1996. My next door neighbour is the newcomer — he moved in 8 years ago. One cannot make sweeping generalizations about renters vs owners from such a small sample.
————————————————
of course not. I was just wondering if that move every 6-8 yr stat was for Canadians in general or just for homeowners and not renters.
I would be interested to see what the numbers would be just for homeowners.

#267 Free Beer Tomorrow on 04.27.14 at 2:39 pm

DELETED

#268 Big Brother on 04.27.14 at 3:07 pm

Smoking Man AWOL @ Seneca this weekend. We missed you at the chairmans bar! We had to drop acid in the other test units drinks! You are our interesting test subject! See you next weekend.

#269 Old Man on 04.27.14 at 3:27 pm

#267 Big Brother – The Smoking Man received his envelope from the Brotherhood of the Bell. He is on an assignment for now, as you have been overruled by a higher order. You are a Little Brother in the scheme of things, so get over it!

#270 Smoking Man on 04.27.14 at 4:01 pm

Big brother,

Your timing is off, 200 on access up four card, straight flush, boom 40 to 1

Haha

#271 45north on 04.27.14 at 4:44 pm

berniebee : The most enriching work experience? Self employment. Not always the most rewarding financially, but always rewarding in terms of empowerment and self esteem. Not to mention that you really do have the nicest boss.

I definitely would not have been the nicest boss. I would have burned out.

Ralph Cramdown : you don’t get the appreciation of the ‘average’ house. You get the return on YOUR house.

if your house is your retirement plan , you will not be able to objectively evaluate it

#272 Millenial on 04.27.14 at 4:44 pm

#258 Aggregator on 04.27.14 at 12:41 pm

Best post ever.

#273 Andrew Woburn on 04.27.14 at 5:12 pm

#258 Aggregator on 04.27.14 at 12:41 pm
How can free market price discovery work if the system doesn’t allow it?
============================

“Free market”is so Twentieth Century. We’ve moved on to state capitalism. Just like China. If Quantitative Easing wasn’t about blocking price discovery, what was it about?

#274 Mr. Frugal on 04.28.14 at 8:52 am

The hardest part is realizing that the rules have changed. Twenty years ago, you could make good money parking it in a GIC. Back then $200K looked like an astonomical price for a house. So, if you lived through that time, you might expect real estate to appreciate forever. And you might be holding GICs at 2% and praying for a return to high interest rates.

#275 Dupcheck on 04.28.14 at 12:09 pm

#21 Joe

Your comment is ignorant. Go jar some tomatoes or make some cheese … leave the advice to people that know right from wrong based on facts not from generational anecdotes.

#276 Phil Fischer on 04.28.14 at 1:22 pm

You seem to assume that your CPP income is not taxable in your calculation. It is.

#277 Grant on 04.28.14 at 3:34 pm

Stupid question…

“And if you hire an advisor, pay no more than 1% for a full-service”

1% of what?

1% annually of the assets you have managed. — Garth