Are we there yet?

VALUE modified

God, this blog is tedious.

For the past six years it’s blathered on about being diversified and balanced. Don’t put all your money in one place. Make sure you’ve got liquidity. Milk the tax shelters. Don’t buy single stocks or costly funds. Don’t overdose on real estate. Own multiple assets. Don’t fret about America. Buy the dips. Sell the tops. Rebalance.

I’ve written enough on preferred shares, real estate investment trusts, marketable bonds and exchange-traded funds to make your eyes bleed. I’ve given you asset weightings for the essential non-cowboy portfolio, as well as TFSA strategies and even how to get out of RRSPs without paying tax. The Rule of 90 spelled out how to achieve diversification and still own a house, along with financial assets.

This blog, in its own charming (‘you’re screwed’) and pathetic way, has tried to show what risk is. Not losing money. Instead, running out of it. And when it counts the most, we all need income more than we need a house. Therefore, as you can see, we live in a time when most people around you have completely lost their way.

But each time I mulled over the wisdom of having fixed income in your portfolio, or buying preferred shares or REITs when they were on sale, the comment section brimmed with people convinced this site is the financial equivalent of whale bloat. The world’s full of people who do the same thing – buy assets going up and run screaming from those that decline. They just don’t understand why you’d own some bonds when they pay squat, for example, or sell off stocks that rocket.

So, here is a little accounting on a balanced and diversified portfolio, designed to reduce volatility and provide consistent returns. By ‘balance’ I mean owning both safe stuff that pays you (called ‘fixed income’) as well as securities you think will go up (‘growth assets’). The best balance between them, time has shown, is 40/60 for most people.

These days the fixed income side (a wide variety of bonds, plus preferreds) should pay about 5% – or 3.5% expressed as a return on the whole portfolio. Add in the growth portion, and it’s reasonable to expect an overall average annual growth of 7% or 8%. As you know, when stock markets fall, bonds usually rise in value – another good reason to have balance.

As for diversification, that means owning lots of stuff, whether those assets are rising or falling. Establish the right weightings between assets, then rebalance frequently to maintain them. When one shoots up (as US stocks did last year), nip off the growth and buy underperformers (like Canadian stocks in 2013). That’s because a diversified portfolio resembles an engine – with pistons continuously moving up and down. Odds are today’s rock star will be next year’s reject.

For example, in 2013 American equity markets gained about 30% while the TSX lagged badly. So far this year the Dow is ahead a paltry 0.23% and the S&P has gained 2.4%, while the Toronto market has jumped a fat 9.4% in four months. In fact in the past 12 months, one popular ETF which paces Canadian stocks (XIU) has blessed investors with a 20.9% jolt. Small Canadian companies have also been on a tear, a year after being in a funk. So, if you’d bought an ETF giving you exposure (like XCS) when it was unloved in 2013, you’d be 28% ahead right now.

And remember last summer when the Fed announced it would taper its stimulus spending, sending interest rates up and crashing bonds? That put real estate investment trusts and preferred shares on sale. By them, this blog urged. No, sell the losers, the crowd cried.

Of course, investors who held on continued to get cash distributions of about 6% or quarterly dividends of 5%, and those who bought have also seen 9% capital gains for REITS and 6% for preferreds. Hmmm. Tax-skinny dividends and cap gains with a single asset? This is better than a night with Rob Ford.

These are just a few examples of why balance and diversification work. Don’t be a hero. Just construct a thoughtful portfolio and then rebalance often. If you can’t do this, or don’t have the time, hire someone. This portfolio returned 11.5% last year, 10.2% over the last four and 7.3% over the past decade, which included the worst crash since 1932. It means $100,000 invested in 2005 is worth $190,000 today – and you could have slept through 2008.

There’s risk everywhere, of course. Stock markets could flounder for a while, as they did in the past. But other assets will rise. Everything, included inflated houses, will ebb and flow. The only thing you can really count on is me. I don’t know when to quit.

242 comments ↓

#1 girn jas on 05.02.14 at 5:32 pm

:)

#2 Bob Rice on 05.02.14 at 5:33 pm

Canadian economy appears to be doing better than some have predicted…

http://www.bnn.ca/News/2014/4/30/Mining-and-factories-help-Canadas-economy-expand-in-February.aspx

#3 ILoveCharts on 05.02.14 at 5:35 pm

Can I put 100% of my TFSA and RRSP in USD?

#4 CPG on 05.02.14 at 5:36 pm

The following statistics are from the latest credit market summary data table released by Statistics Canada:

On December 31, 2013 the total debt outstanding in Canada (bottom line of the data table) was $5.55 Trillion. For the calendar year 2013 the total debt outstanding in Canada increased by $312 BILLION.

http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122

I think the following song by the Irish Rovers says it all.

http://www.youtube.com/watch?v=6faVxeFnJto&list=RD6faVxeFnJto&index=0

By the way Garth, are you still predicting a 15% drop in the average house price in Canada, or have you revised that number recently?

#5 Willy2 on 05.02.14 at 5:46 pm

The USA is “toast”. As soon as the US starts running a Current Account Surplus then in that case US interest rates will go through the roof as well.

#6 joe on 05.02.14 at 5:49 pm

#..2
And you call this good economy……mining and oil

#7 joe on 05.02.14 at 5:51 pm

#2 I forgot to add…
Mining, oil and particle boards…..= Canadian Economy

#8 Financial Freedom at 40 on 05.02.14 at 6:01 pm

Just construct a thoughtful portfolio and then rebalance often. If you can’t do this, or don’t have the time, hire someone.
******
Done. Doing regularly. Hired.

Took 3 mos to piece together the time, build the spreadsheet, and discuss and understand options with the planner. Well worth the effort. Added to the regular roster of professional health check-ups – dental, medical, now financial.

#9 Lurcher on 05.02.14 at 6:25 pm

I’m waiting for the “floundering”…

#10 Smoking Man on 05.02.14 at 6:28 pm

Ying Yang, Old Man

That miniature bungalow in long branch, 53 James…

My wish full. Call was 680 but said probably go for 639k

Well it went for………..

630

I was closest

#11 Suede on 05.02.14 at 6:37 pm

Balanced portfolios aren’t sexy, but they get the job done.

Like me.

No innuendos here. This is a family blog.

#12 lala on 05.02.14 at 6:47 pm

Lala thinks this is one of your best posts, can I give you a hug!?

#13 Smartalox on 05.02.14 at 6:47 pm

Private mortgage insurers have opted NOT to match CMHC’s recent changes. Perhaps they sense a new niche developing?

http://m.theglobeandmail.com/report-on-business/economy/housing/mortgage-insurer-genworth-opts-not-to-match-cmhcs-cuts/article18402954/?service=mobile

#14 Freedom First on 05.02.14 at 6:50 pm

Garth, “Best Post Ever”

Thank you for all of the wise financial advice over the years on your Blog……..and for not ever quitting, in spite of the “censored” comments you have told us about people requesting permission to do many various obscene sexual masochistic things to your anatomy. And this is not even count your dealing with the daily published comments arguing against your sound financial advice with insanely deviant and sick financial thinking.

#15 Cici on 05.02.14 at 6:55 pm

And please do continue Garth…I know all the lines already, but love to hear to you on repeat everyday. And I love reading the comments section as well.

This pathetic blog is the best part of my day?

#16 4 AM Sunrise on 05.02.14 at 7:00 pm

#3 ILoveCharts on 05.02.14 at 5:35 pm

Can I put 100% of my TFSA and RRSP in USD?

————————————————

There’s an ETF for that – DLR by Horizons, I think? There’s an ETF for everything these days.

#17 lifeisgood on 05.02.14 at 7:02 pm

To : #3 ILoveCharts on 05.02.14 at 5:35 pm
Can I put 100% of my TFSA and RRSP in USD?

YES…!

#18 4 AM Sunrise on 05.02.14 at 7:04 pm

Did anybody catch Stephen Harper’s announcement of a new paid internship program to help fresh grads get job experience in high-demand fields? The examples he gave included energy, skilled trades, tech…and homebuilding!??!?

I guess that RE bubble may hold just a little longer.

#19 Maxamillion on 05.02.14 at 7:04 pm

New drink being served in bars it’s called the Rob Ford, it will mess you up bad. Take Red Bull and everything on the shelf and mix.

#20 Son of Ponzi on 05.02.14 at 7:12 pm

And you could have slept through 2008.
—————–
Slept like a baby through 2008.
Thank you GIcs.

#21 Brian Ripley on 05.02.14 at 7:12 pm

Garth Said: “Everything, included inflated houses, will ebb and flow.”

In London England a new high water mark was hit on the flow. The Daily Mail reports that “A 16,000 sf unfinished penthouse shell gets “snapped up” by an “eastern” European at One Hyde Park in London for £140 million with finishing costs expected in the range of £175 million and a “stamp duty” possibly as high as £21 million.”

http://www.chpc.biz/2/post/2014/05/whale-watching.html

According to the Daily Mail “33 British Homes sell for £1 million or more Every Day”. I added Monty Python’s “Mystico & Janet – Flats Built by Hypnosis” (Youtube) to the post to relieve the tension of waiting for the April Canadian real estate data.

#22 Greg on 05.02.14 at 7:13 pm

Hi Mr. Turner,

Thanks for trying to help as any people as you can with this pathetic blog!

As a former MP, and the Ontario Government now into an election. Have you ever thought of running to be an MPP?

#23 MB on 05.02.14 at 7:14 pm

I’m surprised you never mention momentum investing which has been proven to work for all asset classes. But if people can’t even build a balanced static portfolio, what chance do they have with a dynamic one.

#24 Alexandra Cooper on 05.02.14 at 7:15 pm

Reminds me of the casinos in Vegas. When you’ve done well against the odds, they’ve hidden the cashier’s desk and there’s always a huge line. So you stay and play just a little longer… the house always wins.

It all exploits a fundamental flaw in human nature.

Simple concepts that stick with me

“reversion to the mean”
“nature prefers balance / symmetry” and
“you can teach smart but can’t fix stupid”

#25 T.O. Bubble Boy on 05.02.14 at 7:21 pm

@ #3 ILoveCharts on 05.02.14 at 5:35 pm
Can I put 100% of my TFSA and RRSP in USD?
——————–
yes.

#26 Lala on 05.02.14 at 7:24 pm

And don’t forget the gold, brand new shiny teeth, can I get a hug now!!!

#27 Hurtin' Albertan on 05.02.14 at 7:28 pm

actually the ‘best value’ is 120 km/hr, 0.025 demerit points per km/hr. At 130 km/hr the price is 0.031 demerit points per km/hr. At 140 km/hr the price is 0.029 demerit points per km/hr.

Better keep an eye on the fossil fuel divestment movement, ‘The New Abolitionism’. Besides the moral case for it there is also a financial one: The Carbon Bubble.

If the pope or Norway jump on board look out. Should this catch on Alberta will be toast.

#28 Bob Rice on 05.02.14 at 7:34 pm

“#..2
And you call this good economy……mining and oil”

It’s worked for a 100 years… resource extraction

We don’t (and really never have) made anything… Europeans, Americans and now the Chinese make all the things we like to buy…

#29 CrackHead Conservative on 05.02.14 at 7:40 pm

Please working class slaves of Ontario it is now time to vote conservative for the business elites interests. Voting conservative will allow business interests to change the laws that BENEFIT ONLY THE RICH and punish the majority of you working class losers. Yes you can vote Libs or NDP but they will look out for your working class interests and that wouldn’t help the rich get richer. Once again vote conservatives who will conserve the elites wealth while wasting and spending all of the working class slaves money to the 1%. Why am I telling you the truth? because you working class slaves are so stupid that I can LOL in your face and tell you the truth and you would still vote conservative.

#30 Retired Boomer - WI on 05.02.14 at 7:45 pm

Hon Garth-

Today marks a series of “firsts” for this grizzled boomer.

1st time I have had all our investing monies at one place

1st time I listened to their in-house adviser – who said the same basics you have been preaching

1st time I have EVER had a reasonably “Balanced” portfolio 57% Stocks 40% Bonds 3% Cash

52.3% Index Funds or ETF’s
27.5% Managed Funds
20.2% Individual stock holdings

.14% Annual Fund Costs (Averaged)

I feel ‘settled’ for finally taking (much) of your advice. I wanted to develop a portfolio that delivered to me essentially what the markets delivered, with a few individual stocks, and two managed funds. Will rebalance every 6 months.

Your a pretty sage dude there. Hope the healing is on track, as spring may get here soon, maybe, someday, if it stops raining. Your Harley awaits!

Thanks for all you thoughtful posts

Even a Yank is trainable (mostly)..(Somewhat)..(a little)

#31 Trojan House on 05.02.14 at 7:55 pm

#29 CrackHead Conservative

Your comment is probably the dumbest comment to ever appear on this blog.

#32 Dean Mason on 05.02.14 at 8:00 pm

To CrackHead Conservative #29

All businesses, investors and people with capital should just deplete all their money and buy what they want and let you so called working class pay taxes and take care of us when we have no money left from high taxes and government confiscation.

Wait a minute, then there will be no workers needed anymore because we will all be poor.

Everyone should all stop paying taxes and then see what the socialists will do to run our cities, provinces and country.

What a joke!

#33 Bottoms_Up on 05.02.14 at 8:02 pm

#20 Son of Ponzi on 05.02.14 at 7:12 pm
—————————————–
If you slept through 2008 because of GICs, then you wept in 2009, balled in 2010, slit your wrists in 2011, jumped off a bridge in 2012 and pulled the shotgun trigger in 2013?

#34 john on 05.02.14 at 8:07 pm

Trojan House on 05.02.14 at 7:55 pm
#29 CrackHead Conservative

Your comment is probably the dumbest comment to ever appear on this blog.
—————————————————————–

His comment is a little off the wall like smokingman’s posts but crack head guy is speaking the truth. The Conservative party does not represent the interests of the middle class people.

#35 bigtown on 05.02.14 at 8:13 pm

My recent experience viewing rental condos in Milton with realtors has not been fruitful as of yet. I arrived on time. I was courteous and gentile and did my exclaiming over the granite and the stainless steal on cue….I did not point out that the living dining area was five by five or that the kitchen was a galley or the unit faced the railroad trax. My big error was being informed and knowing the MARKET RENT FOR THE NEW ONE BEDROOMS/ONE BATH are in the $1200 area plus hydro. The realtors tried to convince me that the ones with den were actually priced in the $1375 to $1475 area(the two bedrooms/two baths are in that price range)….like I am deep into my 50’s and I have been checking the market for months. So dear fellow GTA folks I too am like you stuck in a tiny jr. one bedroom in a nondescript area next to the Hwy 27. It is now three years that we have tried to escape GTA …but we are unable to locate a rental in the Milton or Burlington or Oakville area for market rent.

#36 stop lying on 05.02.14 at 8:13 pm

stfu #29

#37 T.O. Bubble Boy on 05.02.14 at 8:20 pm

$900k House Of The Day for Friday, May 2nd

Finalists
1) $899k burbs house near Don Mills & Steeles
2) $899k semi-detached near The Danforth with teeny weeny rooms
3) $949k burbs house near 403/Cawthra

WINNER:
This is a tough one… I’m going for #3 — yet another generic burbs house nowhere near a premium neighbourhood asking near $1M.

#38 Laura on 05.02.14 at 8:25 pm

I am a good saver, but suck at investing! I would love to hire someone (not a bank) to help create a portfolio like is suggested here, but is there a minimum amount of money that one has to have before approaching someone like you, Garth (i.e. $50,000? $100,000?)? I am afraid I don’t have enough of a nest for a seasoned financial advisor to take me seriously.

#39 Saskatoon-Living on 05.02.14 at 8:31 pm

“Nip off the growth and buy underperformers” – Garth

Are you finally endorsing gold stocks?

#40 joe on 05.02.14 at 8:32 pm

#28

So you lacking skills to make anything in Canada, except particle boards shacks …..

So your economy is doing very well…..you right…
be happy and pay rent…..or mortgage…and dig for resources…for the next 100years..

#41 devore on 05.02.14 at 8:33 pm

#34 john

crack head guy is speaking the truth. The Conservative party does not represent the interests of the middle class people.

No political party does. But I bet some party represents YOUR particular interests.

#42 sheane wallace on 05.02.14 at 8:35 pm

Genworth is owned by GE – the same mafia banksters, what do you expect from them when Harpo is gladly insuring their loans?

#43 Hulot on 05.02.14 at 8:37 pm

Meanwhile Vancouver Real Estate keeps going up. Now a Seller’s market.

http://www.bnn.ca/News/2014/5/2/Vancouver-real-estate-edges-closer-to-sellers-market.aspx

#44 Daisy Mae on 05.02.14 at 8:38 pm

Today I noticed CIBC in West Kelowna actually has a table set up just inside the door — decked out with coffee urn, cream, sugar, cups — designed to lure customers to the table — and there, they find a full array of pamphlets. Questionnaires re ‘rent vs buy’ and how they’ll help you buy, touting their 2.89% mortgages, explaining cash back loans….and thruout the bank, there were posters encouraging customers to inquire about their mortgages.

I shouldn’t have been surprised, but I was.

#45 Visitor #9 on 05.02.14 at 8:47 pm

You had mentioned XIU, it sounded familiar,so I had to check my TD waterhouse.
OMIGOSH! I see that I actually own the stuff. I completely forgot. (I’m up 22.52% BTW)

#46 joe on 05.02.14 at 8:48 pm

#35….Try to rent a basement with a view on the grass and smell of the molds for $900/month….
Canadian will tell…nothing wrong with that…..”that’s why we built the basements for”…….
and make an appointment with financial planner….

#47 not 1st on 05.02.14 at 8:52 pm

Garth, look at what these boomer geniuses did. Sold a $2 million dollar house and built a million dollar one instead and invested the other million in a GIC.

http://business.financialpost.com/2014/05/02/like-many-baby-boomers-this-couple-has-oodles-of-cash-but-no-plan-for-it/

#48 Valyrian_Steel on 05.02.14 at 8:54 pm

My portfolio is rockin’.

Garth, I took your advice and bought into REITS when they tanked. Now, I have chosen to buy individual REITS in favour of an ETF like XRE – this is contrary to your advice, but I think I own enough high quality names to have enough diversity in this sector.

And I own a fair bit of other income producing entities – some nice dividend ETF’s, such as ZDV, that pay a decent dividend. I think my portfolio is large enough that I can achieve enough diversification by owning a sprinkling of individual stocks – BCE, CPG, POT, are some of my bigger holdings, which were bought during recent pull backs – BCE bought on Verizon entry into Canada rumours – POT purchased when Russian potash cartel collapsed. These companies tanked on the news and I loaded up. Easy money.

I’m 42 years old, and I think my total haul in dividends and distributions is around $4000 monthly.

Mortgage paid off too. :)

Still have about 100k in cash – thinking of buying some CPD for preferred share exposure. Wish the yield was a bit higher on this one.

#49 TO renter on 05.02.14 at 8:55 pm

#35 bigtown

Have you tried without the filter of an agent/MLS? Check Kijiji, Craigslist, renters websites and classifieds? Builder’s sales offices or their condo website? A lot is not listed by an agent and doesn’t pay an agent to bring a renter. If you go to a builder or property manager directly they may give you a great lease on a unit that hasn’t sold, or that they are quietly renting in a “non rental building”. Check the bulletin board inside the building you like for owners posting for renters (or post your own “wanted” sign) or simply ask the concierge/security. So many solid transactions in rentals fall outside the REALTORS (R) monopoly.

#50 Aggregator on 05.02.14 at 8:57 pm

#18 4 AM Sunrise

Did anybody catch Stephen Harper’s announcement of a new paid internship program to help fresh grads get job experience in high-demand fields?

I seen this one coming when the GG commander-in-chief was touring the world promoting citizenships to students and free this and that in Canada, all paid by taxpayers.

#126 Aggregator on 03.04.14 at 4:19 pm

At least one G&M poster figured it out.

yuknon: Waterloo University, my alma matter, has already sold our most space in its Geology Department to China. As a reward for his service to the Chinese the last President of UW got to be Governor General and was recently over in China selling pipelines for the Conservatives.

Pipelines and jobs for foreign graduates:

Open Text gets $120 million to create 1,200 jobs

WATERLOO — The provincial government is giving $120 million to Open Text Corp. to create 1,200 jobs in Ontario.

Ontario Premier Kathleen Wynne joined Open Text chief executive officer Mark Barrenechea at the company's headquarters in Waterloo on Friday to announce the deal.

The company currently employs 800 people at its headquarters in the David Johnston Research and Technology Park [the GG's foreign recruiting center]. The rest of its Ontario employees are in Ottawa, Peterborough, Richmond Hill and Kingston.

That's pretty much Canada's Action Plan until 2050: Take your money, flood the country with cheap TFWs and students and keep spending to create jobs. And in case you're wondering how successful it's been so far, take a good look at Canada's declining employment-to-population ratio.

#51 Smoking Man on 05.02.14 at 9:10 pm

#29 CrackHead Conservative on 05.02.14 at 7:40 pm

Blog dogs, I introduced the legendary. AK Crackservative

LAUGHINGCON… How the hell you been.

You beautiful loon….

I miss you….

#52 wallflower on 05.02.14 at 9:21 pm

I went HEAVY on Canada and HEAVY on small cap, Canada and global, coming out of 2013 and into 2014. Made the adjustments maybe over several months. Oct/Nov/Dec/Jan. I kept the REITS, the preferreds, the utilities. I am definitely not balanced. No bonds; but, alot of cash (that’s in case the right condo apartment comes available but if it doesn’t, I’m not buying; happy renting and considering even jettisoning the rental for storage and roving for the next one to two years).
US ~5%
Canada ~79%
Global ~16%
Equity 62%
Cash 38%
Mix of ETFs/Funds/Stocks
Feeling very wobbly in an unbalanced kind of way but LOVING my returns so far despite the huge cash piece!!!!!!!!!!!!!!!!!!
Gotta be smart and make adjustments, though. I’ll be reviewing the landscape over the weekend and week coming.

Regarding ORPP. I am self employed and breathing easy. Cannot imagine having to throw in more “double” retirement premiums into the abyss of non-transparent premiums-in, benefits-out models.

#53 Jimmy chong on 05.02.14 at 9:32 pm

with pistons continuously moving up and down. Odds are today’s rock star will be next year’s reject.

Sounds like Garth listens to Crayon Pop’s Bar Bar Bar.
Great video!

#54 TheCatFoodLady on 05.02.14 at 9:32 pm

What is it with you & basements, joe? Basement apartments can be found in other countries as well. Not only do people rent basement space, they also use basement space they own.

A well built & ventilated basement space escapes mold – as long as those living there aren’t pigs. They’re generally available at a lower price point than higher units so can be a useful option for those starting out or down on their luck.

#55 T.O. Bubble Boy on 05.02.14 at 9:41 pm

Just sold the rest of my Berkshire Hathaway today (B class shares @ $129.50). Nice gains from buying back in the $70-$80 range. I will always believe in Buffett, but the stock was running 10%+ ahead of the S&P recently.

Blog Dogs — any suggestions for anything undervalued at this point? Hold $USD in cash until August?

#56 Cici on 05.02.14 at 9:49 pm

Oops, I meant:

This pathetic blog is the best part of my day!

#57 joe on 05.02.14 at 10:04 pm

#54 basement is a cellar….name it properly how it used to be…
Wikipedia information below…
Health risks to basement suite tenants

Some health risks to people who live in basements have been noted, for example mold, radon, and risk of injury/death due to fire. It has been suggested that a basement suite is the last type of dwelling a tenant should look for because of the risk of mold.[3] However, due to demand for affordable housing, basement suites are often the only available housing for some low-income families and individuals, for example in Calgary, Canada.[4]

#58 Mark on 05.02.14 at 10:08 pm

“Can I put 100% of my TFSA and RRSP in USD?”

Mon dieu! Why would you even want to?

On that note, the emerging markets ETFs (VWO or EEM) have done incredibly poorly over the past 6-7 years. Probably time to buy them at this point since they’re so out of favour.

#59 AB Boxster on 05.02.14 at 10:16 pm

#38 Laura,

Laura, just continue to be a good saver and buy safety.
If you are a good saver you don’t need to have to constantly re-balance, manage your portfolio, worry about globalism, etc.
Or the inherent risk of giving your money to a banking investor, which will guarantee your loss.
The game of having to achieve the ‘ever present’ 7+ percent is a necessity for those who don’t know how to save or boomers who never did.
Save enough, get your lousy 3% for 30 years and you’ll do as well as those who save less, and need 7%+.
You’ll enjoy your life far more.

#60 Andrew Woburn on 05.02.14 at 10:18 pm

Chinese anatomy of a property boom on its last legs

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100027199/chinese-anatomy-of-a-property-boom-on-its-last-legs/

#61 realtorguy on 05.02.14 at 10:23 pm

Crack head conservative #29

You are right however I’ll be voting conservative since I make my living selling real estate. Thanks harper as I made a nice chuck of change from the 1plus trillion dollars in mortgages now backed by the taxpayer.

#62 Smoking Man on 05.02.14 at 10:35 pm

Lions Tigers and bears…

You get em young enough. Put a bit of fear in em, feed em. Pat the beasts on the head and you get to play ring master.

What spiritual sence of completion for its owner.

And you humans, especially my detractors.

You all think you got it figured out.

#63 Andrew Woburn on 05.02.14 at 10:37 pm

Rent Too High? Move to Singapore

http://www.nytimes.com/2014/05/04/magazine/rent-too-damn-high-move-to-singapore.html?_r=0

#64 Big English on 05.02.14 at 10:39 pm

A friend just sold one bedroom condo in Vancouver for $510k, $40k under asking, 50+ days on market. Had already bought 2 bedroom condo with partner; feels they over paid for the 2 bedroom condo now.

Over lunch with a mutual friend, condo ‘softness’ was discussed as the new trend. Yet, it was believed that SFH, will continue to rise.

I kept my opinion to myself.

#65 ozy to #38 Laura - see below on 05.02.14 at 10:41 pm

http://www.turnertomenson.ca/

#66 Adrian on 05.02.14 at 10:45 pm

Garth you can’t quit. Where would you go?

#67 Andrew Woburn on 05.02.14 at 10:45 pm

If this doesn’t scare you, nothing will

“Is your job at risk from robot labor? Check this handy interactive chart”

QUOTE: In the second machine age, robots will perform tasks once thought to require uniquely human abilities, like driving our taxis and filleting our fish. But not all jobs will be equally affected by automation. The interactive plot above attempts to sort out the differences.

We compared three variables related to the American workforce: the median wage for various jobs; the number of people employed in those positions in the United States; and the likelihood that these jobs will become automated. The data for this last metric come from a recent study, “The Future of Employment” (pdf). Use the interactive to explore which jobs are most susceptible to computerization, how many people will be affected, and how much money these workers make.

The densest cluster sits at the bottom-right, representing the massive numbers of workers in jobs that are both low-paying and highly likely to become automated. That corner is home to many occupations that are already being automated: cashier, retail salesperson, telemarketer.

http://qz.com/202312/is-your-job-at-risk-from-robot-labor-check-this-handy-interactive/

#68 Smoking Man on 05.02.14 at 10:47 pm

Mrs Smoking Man, thinking she’s doing me a favor by throtling my consumption. She cares.

I’m limited to two glass of wine since Wed.

How many paragraphs since.. 5 and there shit.

Let me drink, let me write, let me smoke, and if I die. I’ll die happy.

She don’t get it….

Revenge for me.

Bacon and eggs every day.. Take that bitch…..

Got a 26 onz hidden in garage… And it’s half gone…..

What a complicated life I have…

#69 saltpony on 05.02.14 at 10:59 pm

Hi All,
I’ve finally got 10k freed out of those nasty GICs from RBC. I opened an online account with TD Direct Investing as per the advice of the Couch Potato Guide. Right now the funds are sitting in no growth money markets.. and I’m going to do this portfolio (MER 0.44%) tomorrow:

Canadian equity= 20% TD Canadian Index-e (TDB900)

US equity: 20% TD US Index-e TDB902)

International equity: 20% TD International Index-e (TDB911)

Canadian bonds: 40% TD Canadian Bond Index-e (TDB909)

Does anyone have any tips to share with me please? It seems straight forward, but sometimes the biggest lessons are learnt after the enter key has been hit.

Thanks for any advice anyone might have.. I’d really appreciate it :)
Saltpony

#70 saltpony on 05.02.14 at 11:00 pm

…oh.. I hold both a TFSA and an RSP in the investment account if that makes a difference..

thanks again,
saltpony :)

#71 TheCatFoodLady on 05.02.14 at 11:05 pm

#57 – “Name it properly how it used to be” meaning basements used to be known as cellars. Cellars still exist in older houses – my grandparents had them & a house one of my brothers owned did. An excavated space below ground, often with a dirt floor & equally often, with ‘fitted rocks’ forming the walls.

A properly built modern basement is a far cry from a cellar. Building code requires proper foundations & moisture exclusion. In Ontario, landlords must ;provide dehumidifiers if the humidity levels are too high. Egress windows have to be a certain size. Do all landlords abide by the building codes & Residential Tenancies Act? Oh, Gawd, no.

If you’re considering renting a basement, do your due diliigence. Check for signs of moisture & mold – the smell of fresh paint can’t cover it all. Is there a sump pump? Check exterior grading.

Be prepared to possibly pay more for insurance though – flooding is a higher risk as is theft. And… the number one reason I’d never rent a basement unit…? No privacy. I hate closed windows or curtains. On the 3rd floor in my building I have blinds for light exclusion when sleeping in summer but they’re rarely used. I can keep my windows open 24/7 – no B&E concerns – not so in a basement.

I’d never dream of asking anyone to live in a cellar but a well done, legal basement apartment can be an option for many if they come at a lower price point.

#72 Son of Ponzi on 05.02.14 at 11:05 pm

#33 Bottoms_Up on 05.02.14 at 8:02 pm
#20 Son of Ponzi on 05.02.14 at 7:12 pm
—————————————–
If you slept through 2008 because of GICs, then you wept in 2009, balled in 2010, slit your wrists in 2011, jumped off a bridge in 2012 and pulled the shotgun trigger in 2013?
—————–
sorry to disappoint.
Still sleeping like a baby, waiting for the BiG BANG.
Looks like the market is ready to pop again.

#73 Smoking Man on 05.02.14 at 11:21 pm

Not easy to be me…

The decomposition of parents, living dead.

The off spring,

Son 1 brilliant creative, wife suppressing it, for fear of losing a milk bone chasing dog.

Son 2 a recovering oxy addict, turned counselor, found the 12 steps, making my life a living hell.

Number 3 his ambition far beyond his ability.

Smoking woman.. Refuses to let me be me till I buy life insurance as a smoking hard drinking wack job….

How can you become a famous writer under these obsitcals.

Ahd… My only salvation

Son 3

#74 espressobob on 05.02.14 at 11:25 pm

“I don’t know when to quit”? DON’T! Can’t stand the thought of flying to Chicago for rehab. An addiction thing.

#75 kim on 05.02.14 at 11:32 pm

RE: Aggregator #50

Does anyone have any doubt that Harper is a sociopath ? His whole party is filled with crazies who want to pursue crazy agendas for small special interest groups. From the federal to the provincial crazies with Mike Harris Jr AKA Tim whodat madman. Canada has to rid themselves from these traitors once and for all.

Wrong blog. — Garth

#76 Peter on 05.02.14 at 11:50 pm

Inflation will inflate the mortgage away. It’s coming after all this QE.

#77 Bobby on 05.02.14 at 11:57 pm

For # 44 Daisy Mae,
I was just up in Kelowna. It is probably because there are soooooooo many condos for sale.
Talked to a realtor, units have been reduced in price and relisted on a number of occasions. DOM of > 100 days is not uncommon.
Great time to be a buyer, certainly not a seller!

#78 Andrew Woburn on 05.03.14 at 12:12 am

Was CMHC’s move to tighten mortgage insurance rules another step towards privatization?

http://business.financialpost.com/2014/05/01/was-cmhcs-move-to-tighten-mortgage-insurance-rules-another-step-towards-privatization/

#79 Karli on 05.03.14 at 12:34 am

Anyone seen this? Comments?
A mutual fund that guarantees a 5% return for 20 years after a five year growth period?

#80 Potemkin on 05.03.14 at 12:54 am

Coming to a place near you…
http://www.expatica.com/nl/news/dutch-news/Low-house-prices-are-leading-families-to-refuse-inheritances-_291497.html

#81 Mike T. on 05.03.14 at 4:51 am

#38 Laura on 05.02.14 at 8:25 pm

you just need to find someone to set it up for you – and they will charge you a fee for the service, then you can pay to get your portfolio re-balanced as needed

also keep in mind, you may not have a lot of $$ today, but in 10, 15, 20 years…..find someone younger than you that sees the potential

#82 Innovation and Modernization Trends in The Banking Industry on 05.03.14 at 5:08 am

Imagine the convenience?

In the EU when you have a savings account, the bank deducts 25% the instant the interest is posted in your account, Yep.

http://en.wikipedia.org/wiki/European_Union_withholding_tax

After that you’re free to riot in the streets, pay VAT on groceries, 2 bucks a liter for gas and a euro to pee and do the quenelle on YouTube

“It can’t happen here”

#83 MEANWHILE IN FRANCE on 05.03.14 at 5:46 am

Almost there. More liquid than a year ago, nicely tucked away in preferred and other nice investments. Thinking long term now.

But real estate is so enticing. The possibilities, the upsides, the projects.
Especially here in Europe. Never mind the skirmish next door. Russians will be Russians.

http://theceliachusband.blogspot.fr/2012/03/la-maison.html

#84 earthboundmisfit on 05.03.14 at 7:07 am

@saltpony
hit the enter key brother – you’ve discovered the best bargain in the money management world. Add new $$$ at no cost.

#85 Darryl on 05.03.14 at 7:47 am

Best pic yet
lol

#86 gladiator on 05.03.14 at 8:06 am

@72 Son of Ponzi:
Whoever uses the phrase “sleeping like a baby” never had a baby.

#87 Bottoms_Up on 05.03.14 at 8:08 am

#69 saltpony on 05.02.14 at 10:59 pm
—————————————-
Instead of dumping all your money in at once, you may want to space it over 6 months. Buy 33% worth now, the next 33% in July/August and the last Oct/Nov.

#88 Bottoms_Up on 05.03.14 at 8:10 am

#68 Smoking Man on 05.02.14 at 10:47 pm
———————————————
SM, be aware that regular drinking causes cancer, and the combination with smoking is essentially guaranteed lethal. That combination essentially increases your risk for throat cancer 100x.

#89 Bottoms_Up on 05.03.14 at 8:18 am

#38 Laura on 05.02.14 at 8:25 pm
—————————————–
You won’t suck at investing if you follow Garth’s advice. Go back and re-read the last year of posts.

Open a TFSA at Questrade, buy ETFs (no transaction fee!) and sit back and watch your savings grow. It’s fairly simple and ETFs will help you be diversified.

#90 Piccaso on 05.03.14 at 8:57 am

Joe,

There’s nothing wrong with basement suites if there built to code.

I’m in a furnished one bdr basement suite, it’s modern and spacious, has large windows, lots of light, a gas fireplace, 6 appliances including washer and dryer, all utilities, cable and wi-fi, my own outside area (bigger than a balcony looking at the back of another apartment or a parking lot) and has a private entrance.

It’s located in a desirable suburb where I don’t feel like a minority and the price is right at $900 a month and no it’s not my mom’s basement.

I looked at walk ups and high rises and I saw older dirty dumpy match boxes asking $1,100 with 2 appliances with water and heat. No thanks.

#91 Smoking Man on 05.03.14 at 9:08 am

#88 Bottoms_Up on 05.03.14 at 8:10 am

All are all going to die one day, I guess what defines you life is how you lived it…

My problem, I hate getting ripped off…..

Say I traded booze, smokes, for a set of Jogging shoes and a yoga mat. Lived in fear and chased safety.

Then I got cancer…. That would be tragic…

But if I got it the way I live now.. It’s draw.. Could have fun with the morphine near the end.

But if I make 80 living this unrestricted, un censored life.

I’ve won……

#92 Macrath on 05.03.14 at 9:32 am

#69 saltpony

A couple of points, they have no cost transactions so buy in slowly . This avoids the trauma of the inevitable market drop after the purchase. The Canadian equity portion need not be in a tax sheltered account. You get a dividend tax credit in a regular account.
Someone in the lowest tax brackets (after combining Federal + provincial tax brackets and rates) can reduce their other taxes payable by receiving dividends eligible for the enhanced dividend tax credit.

http://www.taxtips.ca/dtc/enhanceddtc/negtaxrate.htm

#93 Daisy Mae on 05.03.14 at 9:33 am

#38 Laura: “I am afraid I don’t have enough of a nest for a seasoned financial advisor to take me seriously.”

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

All you have to do is ask.

#94 Smoking Man on 05.03.14 at 9:45 am

I just came from the nursing home.

Pops 97, Mom 92…

Yes the prize of living clean….

Dad doesn’t talk, just smiles a lot, he’s still fit.. They got a tracker on him.. He might as well be on Mars.

Mom, bed ridden, still a full mind, lives in horror, she’s terrified of death. I spend thousand bucks a week getting her dentures repaired, she drops and brakes them every day.. But with out them she can’t talk.

She’s got a hole in her check bone, it was chopped out when she had cheekbone cancer.

Clean living gets you this prize..

Not for me.. 50 years is all you need.. And I got 5 more than that.

Fun Fun Fun from here on in…

#95 WhiteKat on 05.03.14 at 9:45 am

@CiCi
re #15 “This pathetic blog is the best part of my day? ”
re #56 “This pathetic blog is the best part of my day! ”

Are you sure? If so, that’s pretty pathetic (not that I am any less pathetic…just with regard to a different blog). :)

@Laura #38 re: “I am a good saver, but suck at investing! ”

I also suck at investing, but for now I am too busy keeping my Canadian earned and taxed, money hidden from the IRS. Its difficult to invest when you deal with multiple financial institutions and can’t keep more than 50k in each one.

However, learning how to actually invest is on my ‘TO DO’ list, and a thorough review of many of Garth’s past posts is where I plan to start.

#96 T.O. Bubble Boy on 05.03.14 at 10:00 am

$900k House Of The Day for Saturday, May 3rd

Finalists
1) $989k 20ft wide house near High Park
2) $999k 22ft wide semi near Yonge/Lawrence
3) $989k one-bedroom with AWESOME interior house near Mt Pleasant & Eglinton

WINNER:
This is a tough one… #2 is a perfect example of the “$900k house” trend, where the price of almost everything (even semi-detached) gets bid up near that magic $1M CMHC limit. #3 is clearly a tear-down (i.e. selling the lot, not the house).

But, I’m going with #1 as the winner! Another example of GTA bubble fever, where everyone believes their house is worth $1M.

#97 Mr. BigStuff on 05.03.14 at 10:07 am

Awesome advice, as always. Thanks for the reminder:-)

#98 Ralph Cramdown on 05.03.14 at 10:17 am

#79 Karli — “Anyone seen this? Comments? A mutual fund that guarantees a 5% return for 20 years after a five year growth period?”

“Hey kid, gimme a dollar. I’ll hold onto it for five years and after that I promise to pay you a nickel a year for twenty years. I may even pay you a little extra.”

Why not just buy BCE and get your 5% starting in year one?

#99 Ralph Cramdown on 05.03.14 at 10:43 am

#59 AB Boxster — “The game of having to achieve the ‘ever present’ 7+ percent is a necessity for those who don’t know how to save or boomers who never did. Save enough, get your lousy 3% for 30 years and you’ll do as well as those who save less, and need 7%+.”

Your money is making 7%, AB Boxster, and so is Laura’s. You can keep the whole 7% yourself, or you can keep 6% and let the managers of your balanced mutual fund (and their shareholders) keep the other 1% or you can keep 3% and let your banker (and his shareholders) keep the other 4%. The choice is entirely yours. But unless you keep your money in a coffee can under the bed, it’s making 7% for somebody.

#100 matthew on 05.03.14 at 10:52 am

Hello wise and powerful lord of dissent (possible new title??). I have read your blog daily for about a year and a half (except Saturdays but I guess if god took a day to rest you should too). I thought that I would share a tv show with you called “my house your money”. Im sure such a wise man as you has heard of it but I think its just hilarious. Maybe something you would like to write about and I can contribute my own sad little piece to this blog.
Thanks for everything!!

#101 OttawaMike on 05.03.14 at 10:54 am

#98 Ralph Cramdown on 05.03.14 at 10:17 am

BCE is an interesting play that I have been considering lately but I still worry about new spectrum auctions and changes in technology. Probably unfounded fear but speaks to the “don’t buy single equities” mantra.

Historically BCE has done quite nicely.

#102 TheCatFoodLady on 05.03.14 at 11:12 am

#90 – Picasso: That’s a sweet deal!

#103 Mean Gene on 05.03.14 at 11:19 am

Something for the risk adverse:

http://www.saskpension.com

#104 no end in sight on 05.03.14 at 11:19 am

We’re not even close to ‘being there yet”.

http://news.yahoo.com/overheating-london-sets-record-237-million-apartment-sale-152551811–sector.html;_ylt=AwrSyCP1xWNTzRQAS2TQtDMD

Toronto and Vancouver are swamp land compared to the real global epicenters.

#105 no end in sight on 05.03.14 at 11:22 am

BTW…95 Whitekat…..

“I also suck at investing, but for now I am too busy keeping my Canadian earned and taxed, money hidden from the IRS. Its difficult to invest when you deal with multiple financial institutions and can’t keep more than 50k in each one.”

you are so screwed if you think you’re hiding anything.

#106 Doug in London on 05.03.14 at 11:49 am

I’ve learned a lot from this sad but informative and entertaining blog, keep it coming. In more recent times, what I’ve read confirms I’m on the right track. for example in the last half of last year, while many posters complained about how the prices of REITs and preferred share ETFs had fallen, I figured it was a good time to buy. Wow, I didn’t know Boxing Week, and the sales that go with it, could last 6 months. Garth confirmed my ideas, also saying it was a good time to buy. You see what I’ve learned here?
This parallel of different investments going up and down like pistons in a multi cylinder engine is a good one. One thing I’ll add is that engine has a governor, as I’ve said before here, that gives it more fuel if the speed drops below the speed setting, and less if it goes above it. like the governor, YOU should buy more of what’s on sale and less (or even sell some) of what’s pricey.
Garth said: I don’t know when to quit. I say: that really started my day off on the right foot!

#107 ShawnEdmonton on 05.03.14 at 11:56 am

I thought I would ask this question here. Why do architects make so little money compared to other professions. I know an architect with like 20 years experience and is a principal that only makes 90K ?

#108 Dean Mason on 05.03.14 at 12:02 pm

To Son of Ponzi #20

I have a friend and his wife that fell the same way about putting their money in mutual funds, stocks, ETF’s, REIT’s, corporate bonds etc.

Basically anything that fluctuates up or down. They have decided for years to just save aggressively which most people will not do or can’t do.

They earn together gross $112,000 and have no debts, mortgages, credit cards, lines of credit, car loans etc.

They have only one vehicle that is paid off and is only 2 years old.

They only rent a modest 1,200 square foot house which is costs $1,255+utilities a month and they will never buy a house.

They are currently saving $55,000 a year and of that $30,000 is put into RRSP’s and TFSA’s per year, $20,000 and $11,000).

The other $11,000 saved annually is in non-registered accounts that pays for term life insurance $600,000, disability insurance $4,000 a month tax free, medical and health insurance $150,000 and a permanent life insurance policy of $400,000.

The rest is put in non-registered GIC’s of $13,000 a year.

They already have $68,000 in TFSA’s and $395,000 in RRSP’s.

They also have a $54,000 in 18 month GIC’s and higher interest savings accounts for short term liquidity and for a living expenses caution.

They have been doing this for 12 years now and are both 37, 38 years old respectively.

The buy mostly 5 year GIC’s and some 7 year GIC’s and are averaging now 3.35% on all their GIC’s excluding their short term, more liquid $54,000 financial cushion.

They will continue to save aggressively for the next 25 years as this is what they feel comfortable with by not taking principal risk.

#109 joblo on 05.03.14 at 12:05 pm

And you could have slept through 2008.
—————–
#20 Son of Ponzi on 05.02.14 at 7:12 pm
Slept like a baby through 2008.
Thank you GIcs.
———————————————
Keeping GIC’s?
you’ll be waking up every 2 hours crying
as you fail to keep pace

#110 Ralph Cramdown on 05.03.14 at 12:13 pm

#101 OttawaMike — “BCE is an interesting play that I have been considering lately […]”

About me and BCE:

I think it’s a company whose customers are going to keep paying their bills. The annual debate isn’t “will BCE raise its dividend?” but rather “by how much will BCE raise its dividend?’ I like to use it as a stand-in for a reasonably safe income stock or a portfolio of same. Back in the old days, stocks of companies like BCE used to be called widows and orphans stocks, but these days many people think them too risky even though they pay more than safe bonds (even before tax, and much more after tax for a high-bracket investor). In the particular case I quoted (BCE vs. a term annuity that offers 5% in years 6 through 25) I think only a fool would take the annuity, but there’s enough fools out there to justify a national TV advertising campaign. I blame the school system, and no offense intended to anybody who bought that turd.

#111 Grantmi on 05.03.14 at 12:20 pm

Garth-O! What’s your thoughts on this piece from the FP yesterday!

LOWER RATES! WTF!

Canadian dollar seen sliding below 80¢ by Mark Carney’s protege | Financial Post http://bit.ly/SkLzr3

“Not only does the currency need to get undervalued, it needs to stay there for an extended period of time,” Wolf said in an interview at Bloomberg’s Toronto office April 29. At Fidelity, Wolf decides how to allocate $25.8 billion of funds with co-manager Geoff Stein. “It wouldn’t surprise me at all if five years from now we have a Canadian dollar that is below 80 cents U.S., and it may not take five years to happen.”

Wolf, 38, left the Bank of Canada in July after Stephen Poloz took over from Carney as governor. His outlook contrasts with forecasts for a rate increase and a currency no weaker than C$1.14 next year according to the average of analysts’ forecasts compiled by Bloomberg. While Wolf said his “base case” is for no rate change in the next 18 months, he sees wiggle room in the central bank’s stated neutral stance.

Lower Longer

“If there is a move in interest rates over the next 18 months in Canada, in my mind it’s far more likely to be down than up,” he said. “If the Canadian dollar doesn’t do it on its own, the bank will have to act to make it go down. That may be through lower interest rates.”

The prospect of slow economic growth and a possible rate cut instead of an increase means bonds may gain more than most investors expect, Wolf said. Fidelity’s holdings along this theme have included investment-grade and high-yield bonds in Canada and the U.S.

#112 Old Man on 05.03.14 at 12:24 pm

The time to have bought BCE has come and gone. The herd smashed it down to $24.00 with no dividend payment and $billions of cash on hand. I sat back and laughed at these idiots selling out of fear, as was buying large, because knew this giant was going to have a better day. This was the deal of the decade!

#113 Ralph Cramdown on 05.03.14 at 12:24 pm

#107 ShawnEdmonton — “Why do architects make so little money compared to other professions.”

Ayn Rand. Enough wee ones read her book and figured if they learned drafting they’d get the girl. Turns out that the newspaper publisher who also does a great business of “bodice-ripper” novels on the side gets the girl, and all the other newspapers revel in being able to use the phrase in their business sections.

#114 Son of Ponzi on 05.03.14 at 12:37 pm

#107
who needs architects?
All the builders and developers are building are boring carbon copies.
Mass manufactured to maximize profits.

#115 broadway skytrain on 05.03.14 at 12:39 pm

7 ShawnEdmonton on 05.03.14 at 11:56 am
I thought I would ask this question here. Why do architects make so little money compared to other professions. I know an architect with like 20 years experience and is a principal that only makes 90K ?

————————
and the engineers who take the architect’s pretty pictures and design a structure that won’t fall down, and works properly can make 100k while still EIT’s (eng in training)

#116 Mark on 05.03.14 at 12:42 pm

“I thought I would ask this question here. Why do architects make so little money compared to other professions. I know an architect with like 20 years experience and is a principal that only makes 90K ?”

Too much supply chasing far too little demand. Lots of students get into it thinking they’re going to be designing the next high-value mega-complex, when most building is mundane, run-of-the-mill stuff. Construction is notoriously cyclical. CAD and pre-engineered construction has taken away much of the overall ‘work’ involved as large numbers of ‘cookie cutter’ buildings are churned out (mid-sized office buildings can even be ordered as pre-engineered kits!). The Interior Design profession has nipped at their heels using 2-year diploma graduates. And at the very high end, compensation for Civil engineering firms isn’t very high either. Bankers and Realtors often collectively earn more than the engineering and architectural professionals do on a newly constructed building once everything is said and done, with obviously recurring revenue for those groups while the engineers starve.

#117 middling on 05.03.14 at 12:47 pm

#69 saltpony

I did the same thing one year ago as a “test” with the same brokerage. Very pleased with the results. Except I used 25%, instead of 40%, for the bond component because I still have a considerable amount of cash.

Don’t worry about the simplicity of this portfolio. Still new to this but I think simplicity is the point. Just about everything is covered–broad-based plain vanilla is hassle free.

I haven’t yet tried this with TSFA or RRSP. So can’t help out there.

#118 Dean Mason on 05.03.14 at 1:00 pm

To Son of Ponzi #20

If you feel comfortable with GIC’s then stick with them.

#119 DAN on 05.03.14 at 1:03 pm

#116 MARK

You’re dead on. Im a structural engineer and we have the same problem.

I vouched for you once in the RFD forums (created an account and that was my only post), been agreeing with your sentiment for years now. Always wanted to reach out, ignore the idiots on there. Everything from Nortel to housing everything you say is very true, i’ve witnessed it first hand from others aswell.

#120 DAN on 05.03.14 at 1:05 pm

#115 broadway skytrain

100k EIT? 55k if you’re lucky.

#121 Smoking Man on 05.03.14 at 1:16 pm

Everyone with various strategies, plans and schemas…

To be rich is the goal of many..

From experience.
The harder you try, the harder it is.

Ask yourselves dogs, why do you want to be rich…

And if the answer is not, I need
more gambling chips, odds are you will never get their…

When you’re short stacked, all that’s required is an all in bet..

When you’re big stacked, you don’t play every hand..

It’s so simple… But your programming prevents you from risk taking…

#122 NS in Calgary on 05.03.14 at 1:19 pm

#99 Ralph Cramdown on 05.03.14 at 10:43 am

Thanks Ralph. I liked your explanation.

#123 WhiteKat on 05.03.14 at 1:19 pm

@noendinsight, re #105 “you are so screwed if you think you’re hiding anything. ”

Actually, I am screwed, not because I have <50K sums of money in multiple banks, but because my Canadian parents conceived and birthed me in the USA, and USA is the only country in the world (other than the dictatorship Eritrea) to consider those who permanently earn and live outside its borders, regardless of other citizenship held to be slaves …err… I mean 'US tax payers', simply for being born on US soil, unless they formally renounce US citizenship. And since most people never knew this until FATCA, myself included, to renounce after a lifetime of living as a Canadian in Canada, is a very complicated, expensive, risky process.

I would rather take my chances 'hiding' my hard earned, already highly taxed savings, and fighting FATCA in Canada with a Charter Challenge.

If the Charter Challenge fails, and USA takes me down, I will at least die knowing I was true to myself, even if Canada was not. Some things are more important than money.

#124 David McKenna on 05.03.14 at 1:28 pm

How come you promote bonds as fixed income, when many would be better served paying down their mortgage faster? Paying down your mortgage offers an after tax “investment”, it’s guaranteed, there’s no risk of losing principal if rates increase and it reduces risk of trouble if you lost your job / have to take a lower paying job / etc.

The only disadvantage, is you cannot rebalance extra money you paid into your mortgage. The way around this is to stop putting extra into your mortgage and go 100% into equities, slowly rebalancing that way.

Thoughts?

#125 Rob on 05.03.14 at 1:30 pm

#29 Crackhead conservative,” Yes you can vote Libs or NDP but they will look out for your working class interests and that wouldn’t help the rich get richer” LOL yea sure the Liberal and NDP policies of printing money and running massive deficits help the rich through inflation! Why do you think real estate keeps going up? In their vain attempt to help the working poor real assets over the long term rise. I don’t think the poor hold too many hard assets.

#126 John Locke on 05.03.14 at 1:42 pm

Don’t give up hope, Garth – some of us are listening, and more will do so as time goes by and the Canadian real estate balloon slowly loses its allure in the coming years.

In the meantime, many publicly-traded companies on both sides of the border, and internationally, will continue to be even more profitable, and their shares will rise in tandem in the coming years.

For 2014, the year-to-date gain (cash income and unrealized capital gains) on the 7-figure family financial portfolio is 5.93%, which is an annualized rate of return of 18%.

The funds are placed in relatively conservative, well-known, medium to large Canadian and US companies for the most part, plus some international ones, with a few higher cash-yielding investments most people wouldn’t normally consider or know about. The portfolio is structured on a tiered market-volatility risk basis, as follows:

Cash: 5%
GIC’s: 14%
Commercial Mortgage Fund: 14%
Preferred Shares: 3%
Common Shares: 57%
High Yield Bond Funds: 8%

The overall annualized cash yield on the portfolio is 4.2% (including the cash component which yields zero, and the GIC’s at 2%), and as such provides substantial annual income to my parents, while also providing for significant cash-on-demand resources should the need arise (33% of the entire portfolio).

For example, the Commercial Mortgage Fund, which yields 5.1%, is redeemable monthly, and is marked-to-market by the Fund against Gov’t of Canada bond durations and yields that match each of the Fund mortgages and their respective cash streams, and in the 2008 crisis their NAV per unit didn’t fluctuate at all. Why? Because, as you know, in a major crisis there is a flight to safety, and Gov’t of Canada bonds held their value during that time, and thus so did the Fund. This is the type of rock-solid certainty we seek on the cash reserves, while the other 67% of the portfolio is deployed into higher-yielding and more volatile assets. Not that I mind volatility – it all averages out over time, and usually in an upward-sloping direction if you have bought the right securities.

With that in mind, it has also been particularly noteworthy to see that investment patience does pay off (which you have mentioned many times), as many of the interest-rate sensitive holdings have made a substantial comeback since Mr. Bernanke’s statements about QE tapering last May.

2014 looks like it will continue to be a very good year in the markets.

#127 Smoking Man on 05.03.14 at 1:45 pm

#123 WhiteKat on 05.03.14 at 1:19 pm

Get rid of your USA citizenship…now…

Study the diamond market, convert cash to pink…. Small, essaly hidden, transportable…

Don’t hide it in a safety deposit box… Or safe. Drill a 1/2 inch hole in your bricks.. Silicon it in..
Make sure you drill down angle 30 degrees or more.

Then a piece of wood over it. Fix a Hanging planter….

If the bastards come for you, and you need a quick exit… You have it….

Think of it as insurance

#128 4 AM Sunrise on 05.03.14 at 1:45 pm

#116 Mark on 05.03.14 at 12:42 pm

Ah, now I understand why the skyline is dotted with ugly-ass glass towers. Or why a single hulking omni-house can be divided vertically into 5 skinny townhouses (and they’re not the charming skinny-houses you see in Amsterdam).

#129 4 AM Sunrise on 05.03.14 at 1:48 pm

#109 joblo on 05.03.14 at 12:05 pm

Keeping GIC’s?
you’ll be waking up every 2 hours crying
as you fail to keep pace

——————————————

Not if he lives well below his means.

#130 Old Man on 05.03.14 at 1:56 pm

The banks have reached a new low. I was running from bank to bank as keep square with all my sordid bills, and the dreaded parking lot had too many parked cars. This means a long line up with all the old ladies which is a nightmare to say the least. I walk in and to my utter shock just one teller and nobody around, so did the counter check stuff and paid some bills. Then I get the pitch, as they want all customers into offices where investment advisors are waiting to help us. I laughed my head off and walked out; never seen this before as the rest of the herd must have fallen for the bait. Now guess which bank was doing this today.

#131 4 AM Sunrise on 05.03.14 at 1:58 pm

#108 Dean Mason on 05.03.14 at 12:02 pm

Good for them. Because they’re high earners AND aggressive savers, they’re able to build up their savings even at low returns. It’s all about what they want for their future, how much they think it will cost them, and how they will meet those costs.

#132 4 AM Sunrise on 05.03.14 at 2:05 pm

#89 Bottoms_Up on 05.03.14 at 8:18 am

Open a TFSA at Questrade, buy ETFs (no transaction fee!) and sit back and watch your savings grow. It’s fairly simple and ETFs will help you be diversified.

—————————————————

I’ve heard horror stories about Questrade customer service. Ask the BBB, too.

#133 Ralph Cramdown on 05.03.14 at 2:06 pm

#124 David McKenna — “How come you promote bonds as fixed income, when many would be better served paying down their mortgage faster? Paying down your mortgage offers an after tax “investment”, it’s guaranteed, there’s no risk of losing principal if rates increase and it reduces risk of trouble if you lost your job / have to take a lower paying job / etc.”

If you buy a bond and interest rates subsequently rise, you can sell it, book a capital gain and buy something else. You can’t do that if you prepay a mortgage. If you buy a bond and you subsequently lose your job, you can sell the bond to keep making your mortgage payments. You can’t do that if you’ve prepaid your mortgage.

Paying down your mortgage is equivalent to locking in an investment income — but it limits your upside as well as your downside. Also, to the extent it reduces your available cash, it limits your available flexibility. It is most definitely a bet on future interest rates.

#134 Ralph Cramdown on 05.03.14 at 2:08 pm

subsequently fall

#135 Old Man on 05.03.14 at 2:17 pm

Why buy a bank GIC when interest is fully taxable and you end up with a negative return? Better to buy an appropriate bank preferred stock with a higher fixed interest rate and get the bonus of a dividend tax credit.

#136 Ralph Cramdown on 05.03.14 at 2:21 pm

P.S.

If banks are spending their hard-earned money to buy TV commercials suggesting that they’ll send a marching band to your house if you pay your mortgage off early….

Then there’s probably a better move for you than paying your mortgage off early.

#137 bdy sktrn on 05.03.14 at 2:36 pm

#120 DAN on 05.03.14 at 1:05 pm
#115 broadway skytrain

100k EIT? 55k if you’re lucky.
—————————-
ok, you are most likely right, but 100k is the minimum for firms working for the hydrocarbon majors .

#138 T.O. Bubble Boy on 05.03.14 at 2:46 pm

@#136 Ralph Cramdown on 05.03.14 at 2:21 pm
P.S.

If banks are spending their hard-earned money to buy TV commercials suggesting that they’ll send a marching band to your house if you pay your mortgage off early….

Then there’s probably a better move for you than paying your mortgage off early.
——————————-

hahaha – exactly.

Kind of like the “skip a payment” thing… bad ideas get glossy ads.

#139 Old Man on 05.03.14 at 2:49 pm

I had some fun with a bank teller today, as all too often have no time to pick up my credit card billing at the post office, so just throw cash on it instead. I asked her if I owed any money today, and had a positive cash balance on my credit card. Ok, so asked her what interest they were paying on my money – not a penny. I said let me get this straight as if I owe you money you charge me interest, but if you owe me money pay me nothing; she nodded her head that I was getting it. I told her this was a bit crooked like in bankster, and that got her laughing!

#140 HD on 05.03.14 at 3:01 pm

#87 Bottoms_Up on 05.03.14 at 8:08 am
#69 saltpony on 05.02.14 at 10:59 pm
—————————————-
Instead of dumping all your money in at once, you may want to space it over 6 months. Buy 33% worth now, the next 33% in July/August and the last Oct/Nov.

——————————————————-

I am not the only who disagrees with the above advice. But, what do I know?

http://canadiancouchpotato.com/2013/05/31/does-dollar-cost-averaging-work/

Best,

HD

#141 HD on 05.03.14 at 3:06 pm

#92 Macrath on 05.03.14 at 9:32 am
#69 saltpony

The Canadian equity portion need not be in a tax sheltered account.

———————————–

That is only true if all her/his sheltered account (TFSA/RRSP) are maxed out.

Best,

HD

#142 HRD Rapide on 05.03.14 at 3:12 pm

#107 ShawnEdmonton, because historically, architects have always been the lapdogs of of the rich and powerful. They tend to undervalue their skills and abilities, while maintaining they have a strong social conscience and keen artistic sensibilities. All of this conspires to deny them a better income. They feel guilty asking for, or receiving more, because they are too busy making the physical world a better place to live in. Building developers, on the other hand, are not hobbled by such contradictory baggage.

#143 WhiteKat on 05.03.14 at 3:32 pm

@SmokingMan,

I appreciate your advice. And I would dearly love to give up my US citizenship, if USA would let me do it without risk of financial devastation. Unfortunately, the process of renunciation requires you to promise you will be in touch with the IRS, and that you have been or will become tax compliant for the previous 5 years.

To become tax compliant for the past 5 years is risky, complicated and expensive. It is not a matter of simply filing 5 years of 1040’s (I’ve seen the foot high stack of forms average Canadians have had to fill out), but also involves determining HOW to go about it – i.e. which amnesty program to enter if any.

All amnesty programs, except the streamlined program (which not everyone qualifies for) have guaranteed penalties calculated as a factor of net worth for being a bad slave…err….I mean Canadian born on US soil.

Even with no penalties, the filing process is horrendous for someone who has been saving and investing like a typical Canadian. For example, RESPs are ‘foreign trusts’; Canadian mutual funds are ‘passive foreign income corporations’ (PFICs) subject to the most complex and punitive taxation and reporting requirements known to mankind….I kid you not. I’ve had quotes for several thousand dollars per year to do all the mountains of forms required and am aware that a minor footfault (easy to do when even the accountants are confused by all the tax rules) can result in massive penalties.

However, there are some Canadians with US birthplace who are renouncing without telling Uncle Sam about it, in order to obtain the coveted ‘Certificate of Lost Nationality'(CLN) which you can get whether you are tax compliant or not. The CLN can be used to show your Canadian financial institution, that even though you have a US birth place, you are no longer a US citizen. Thus your bank will not send your bank account balances to the CRA to be passed on to the IRS once FATCA is implemented this Canada Day (oh the sad irony).

Personally, I don’t think that renouncing without becoming tax compliant is such a smart idea, as it red flags you to the IRS anyway; its just that IRS won’t know how much money you have in the bank so won’t be able to assess FBAR penalties or taxes; its the penalties for not reporting one’s foreign (i.e. Canadian) bank accounts that Canadians born in USA are freaking out on since that can easily equate to several factors of one’s actual net worth, and most won’t owe any actual taxes anyway due to the ‘foreign earned income exclusion’, and other deductions.

Gold buried in my backyard might end up being my best bet.

#144 WhiteKat on 05.03.14 at 3:36 pm

@SmokingMan,

Hmmmm….was thinking gold, but maybe you are on to something with diamonds. Thanks. I will look into it.

#145 WhiteKat on 05.03.14 at 3:42 pm

@SmokingMan,

You’re alright dude! You are the first one here that actually expressed some empathy with my plight, and referred to the IRS as the bastards that they are for pressuring Canada to sacrifice its US born Canadians. Notice I said pressuring, not forcing, because there are better ways to deal with bullies than by backing down, even when the bully is USA. If we had called their bluff they never would have sanctioned us anyway, and FATCA would have died.

#146 T.O. Bubble Boy on 05.03.14 at 4:40 pm

GENERAL TAX QUESTION (it is tax time after-all):

Which investments typically have Return of Capital in the distributions?

I’d always associated these to REITs and certain funds/ETFs… but it seems that certain individual companies also do this?

#147 Old Man on 05.03.14 at 4:47 pm

#145 WhiteKat – establish a separate legal entity called a numbered company and hide your loot inside the shell. You establish a few officers and appoint them into nice positions, and you become the Chairman of the Board with one common share, but give them more to make things look good. You will hold a Convertible Debenture that will convert at any time or times any amount of common shares up to the balance authorized. Thus with holding one common share you, in effect, control all. LOL

#148 saltpony on 05.03.14 at 5:36 pm

Thanks to everyone for the advice. All of it was very helpful. All monies are transferred out of nasty RBC’s GIC hell. The next set is due in mid June.

In case anyone is wondering what I did, I opened an online account with TD bank following the advice of Canadian Couch Potato (canadiancouchpotato.com). Under “Model Portfolios,” I chose Global Couch Potato option 2.

I was looking for a way to manage my own investments online without becoming a broker and buying individual stocks. It’s called Index Investing — they are good if you have a smaller portfolio; less than $50,000.) Only TD bank offers the e-series (online series.) They have low MERs and no sales people to pressure you.

The blog dogs rock! Thanks again everyone. I’ve learnt this all from the folks on here.
SP

(PS. TD bank website runs better under Internet Explorer or Safari.. crucial links won’t open in Chrome..)

#149 Happy Renting on 05.03.14 at 5:50 pm

#132 4 AM Sunrise on 05.03.14 at 2:05 pm

I’m a new Questrade client, so far their customer service has been all right. Transfer from another broker took a ridiculous 25 business days, though, wonder if that was Questrade getting an interest-free loan from me to lend to their margin borrowers (other brokerage confirmed transaction completed on their end about 17 business days before the money actually showed up in my new account.)

The almost-free ETF purchases are great, though, and I am willing to put up with lesser service and fewer features for the cost savings.

#150 gladiator on 05.03.14 at 5:52 pm

@144 WhiteKat:
Diamonds, if you don’t buy them in bulk from Amsterdam or from the miner (raw), are the worst bet you can make. Read this:
http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/

#151 Happy Renting on 05.03.14 at 6:19 pm

#140 HD on 05.03.14 at 3:01 pm

CCP says in that same article that buying in with smaller chunks is okay if you don’t have the stomach for a big lump-sum buy. If one has to make a single, big bet (say, your whole net worth) there’s more tendency to sit on the sidelines, paralyzed by fear and indecision, or waiting for the next big correction before buying. While historically, DCA underperformed a lump sum purchase, it’s far better than never getting the damn thing built.

#152 Bottom Feeder on 05.03.14 at 6:20 pm

RE: Post # 45 in the “BAD IDEA” Blog.

Regarding the effect of oil prices on Calgary Real Estate: When oil, and more importantly, natural gas prices collapsed in the fall of 2008, the median price of a single family house went from $435,000 to $390,000 in the spring of 2009, a drop of 10%. It slowly climbed up to equal $435,000 again in 2012 and is now $484,000. Oil prices have recovered to about $ 100 bbl and natural gas to $4.70 per thousand cubic feet. This was from $53/bbl and $3.00 per thousand cubic feet 2009. The price of oil and gas definitely did effect real estate.

No question low interest mortgages drove the final prices but that was not all. Very low unemployment also contributed. Anther thing; the 10% drop was just a momentary blip. No one jumped off the roof over this.

The comparison between Houston and Calgary is a tough one but you might check the costs to actually build a house in each city. House building labourers in Houston are mostly from south of the USA border. If they complain about their pay, there is a lineup of people to replace them. Not good, but very true.

#153 Bob on 05.03.14 at 6:25 pm

I have 325K in my rrsp and I am thinking of cashing it in. I believe tax rates will be much higher when I retire so I’m better off paying the tax now. I live in Toronto and was thinking of moving to Alberta to cash out since they don’t have a provincial tax. Any opinions?

#154 4 AM Sunrise on 05.03.14 at 6:28 pm

#143 WhiteKat on 05.03.14 at 3:32 pm

Just out of curiosity, what was your parents’ rationale for birthing you in the US? Asian parents have been doing this for 40 years, so that their kids may one day get a green card and therefore better opportunities. Nowadays US immigration officers are very tough on pregnant women tourists from Asia.

#155 OttawaMike on 05.03.14 at 6:29 pm

#150 gladiator on 05.03.14 at 5:52 pm
Agreed on Questrade.

Took me a long time to get my account established but wait times seem to be short to their call centre and they sure beat the fees charged by some of the bank brokerage houses.

I still have my banking with one of the big 4 and they now want to charge me for any statements from my closed investment account. I told them ” that’s precisely why you guys lost my trading account”

#156 Happy Renting on 05.03.14 at 6:33 pm

#148 saltpony on 05.03.14 at 5:36 pm

Congratulations on taking the initiative to learn and get your portfolio together! I’m on the same journey, it’s work but I am excited to see the outcome.

Thanks, Garth, for never quitting on us!

#157 Macrath on 05.03.14 at 6:44 pm

#141 HD
That is only true if all her/his sheltered account (TFSA/RRSP) are maxed out.
——————————————————–

So no tax credit and you can`t claim any losses against capital gains. Is the tax deferral of an RRSP worth it in the long run for Canadian equity investing ?
I`ve always maxed out so I never had to think much about it.

#158 Pope Smartypants Snugglebums the 666lb (aka Nosty) on 05.03.14 at 6:56 pm

#62 Smoking Man on 05.02.14 at 10:35 pm — “You all think you got it figured out. Bacon and eggs every day . . . Fun Fun Fun from here on in…”

I don’t got nuffink figured out! For whatever time I have left here, each day is a new adventure. When I wake up, I’m either alive here, or in the next worlds. In any case, I’m always alive!

#169 PoltawaDiva on 05.02.14 at 4:06 pm — No side is without faults or greed. Possibly you missed the last four sentences of the first link, Re: Ukraine. To repeat:

“Crash of 1907 followed by WW1
“Crash of 1929 followed by WW2
“Crash of 2008 followed by WW3

“Any questions?”

“In The Year 2000 There Were Seven Countries Without A Rothschild-Owned Central Bank. They were Afghanistan, Iraq, Sudan, Libya, Cuba, North Korea and Iran.

“In 2006 Putin had paid off Russia’s debt to the Rothschilds. Russia’s financial dependence on the Rothschild financiers was now over. […Managed Conflict is the goal and the means on the road to World Government…].”

Hungary recently paid off its loans to the IMF, and subsequently tossed the private-for-profit central bankers out, yet nary a word was said about it. The reason why Iraq, then Libya were trashed was (a) Sadaam was about to drop the Petrodollar and switch to either the Euro or Yuan, and (b) because Libya had a public non-profit central bank.

Both countries are in swell shape now in this violent, warring classroom of a planet. If Russia is such a menace, which it isn’t, then why does NATO have so many bases surrounding it? Why is there so much opposition to Crimea rejoining Russia, when it voted en masse to do so? Who will benefit from war, as someone always does? Here and here, plus US / NATO war crimes in Ukraine and Benghazi are further examples.

The west will be countries full of McJobs shortly, with sheeple dependent on govts. for handouts. For further info., see #67 Andrew Woburn on 05.02.14 at 10:45 pm — “Is your job at risk from robot labor? Check this handy interactive chart. In the second machine age, robots will perform tasks once thought to require uniquely human abilities, like driving our taxis and filleting our fish. But not all jobs will be equally affected by automation.” and #114 Son of Ponzi on 05.03.14 at 12:37 pm — “Mass manufactured to maximize profits.”

#159 Bottom Feeder on 05.03.14 at 7:06 pm

#153 Bob

Hate to say this Bob, but Alberta does have a provincial income tax. We don’t have a provincial sales tax and that must be what you are thinking of. We also pay GST.

You should calculate what your marginal tax rate is right now compared to what you think your marginal tax rate will be when you retire before making that kind of decision. Perhaps Garth can help with that.

B.F.

#160 Smoking Man on 05.03.14 at 7:27 pm

Beauty post and links vladster.

#161 Daisy Mae on 05.03.14 at 7:27 pm

#126 John Locke: “Don’t give up hope, Garth – some of us are listening….”

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

Yes! It’s your JOB as a financial adviser, to save us from ourselves. ;-)

Some of us will never fully understand finances and the art of investing, but we’re trying…it’s slowly sinking in.

#162 WhiteKat on 05.03.14 at 7:32 pm

@4 Am Sunrise re: #154 “Just out of curiosity, what was your parents’ rationale for birthing you in the US?”

My Canadian born and raised parents had moved to US when my father was offered a job teaching at a US university. I was conceived and born while they were living there, but the marriage did not work out, and mom moved back home to Canada with me when I was a baby.

I’m what they call an ‘Accidental American’: someone born in USA to non-American parents, but who left USA as a young child.

#163 Daisy Mae on 05.03.14 at 7:32 pm

#129 4 AM Sunrise
#109 joblo: Keeping GIC’s? You’ll be waking up every 2 hours crying as you fail to keep pace.
——————————————
Not if he lives well below his means.

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

No sense making life harder than it has to be, Sunrise.

#164 Old Man on 05.03.14 at 7:39 pm

#153 Bob – you must be joking about a total disposition all at once as the taxman will love you for such a generous donation. You will then become a member in good standing of the greater fool club.

#165 Ayn Rand Army on 05.03.14 at 8:09 pm

Ontario actually has one of the lowest tax rates.

http://www.ey.com/CA/en/Services/Tax/Tax-Calculators-2014-Personal-Tax

whitecat, i saw your posts but didn’t say much cuz i knew you had the right idea already, say nothing and lay low and fight back if you must, Do not volunteer anything nor comply. You will just make yourself a target.

Gold and silver is much better than diamonds. Buying anything is the easy part, it’s the selling later that must be considered most and PMs are universal and simple.

#166 Smoking Man on 05.03.14 at 8:14 pm

The essence of a real man…..

Is it money and toys.. Don’t think so.

The trophy wife and real estate. Ah nope.

It’s got to be the fast car…. No.

Is it the spirt of I give no shit, say what I want, when I want, consequences, what’s that..
Willing to take a shot in the face for it..

Yup, that’s it…. It’s all that matters….

Cause bad men win when you say nothing, it takes a bad man to beat a bad man….

#167 Suede on 05.03.14 at 8:15 pm

You folks over there in Ontario will not be Wynne-ing when her policies go through.

oly moly her strategies are coocoo

#168 Son of Ponzi on 05.03.14 at 8:18 pm

#153 Bob on 05.03.14 at 6:25 pm
I have 325K in my rrsp and I am thinking of cashing it in. I believe tax rates will be much higher when I retire so I’m better off paying the tax now. I live in Toronto and was thinking of moving to Alberta to cash out since they don’t have a provincial tax. Any opinions?
———————-
Even better, move to Lichtenstein. They have no tax at all.

#169 Son of Ponzi on 05.03.14 at 8:25 pm

I think some posters on this blog are GIC haters.

#170 Son of Ponzi on 05.03.14 at 8:28 pm

# 153
never take a poster with the handle BOB seriously.

#171 Old Man on 05.03.14 at 8:37 pm

#146 T.O. Bubble Boy – its the amount in box 42 which is the one that waste my time on looking for where it fits as cannot remember; same mistake year after year.

#172 Smoking Man on 05.03.14 at 8:45 pm

#165 Ayn Rand Army on 05.03.14 at 8:09 pm

Try taken a gold chuck through the machines at the airport….

Ding, Ding, Ding….

Diamonds,?

Smoking Man always a head of the machine…..

#173 4 AM Sunrise on 05.03.14 at 9:03 pm

#163 Daisy Mae on 05.03.14 at 7:32 pm

No sense making life harder than it has to be, Sunrise.

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

What’s “hard” for one person is “joyful simplicity” for another. There’s all kinds of everything in this world and it’s all good.

#174 Dan from Richmond Hill on 05.03.14 at 9:05 pm

#158 Pope Smartypants Snugglebums the 666lb (aka Nosty)

“Why is there so much opposition to Crimea rejoining Russia, when it voted en masse to do so?”

I am from Eastern Europe and I believe you know nothing about former URSS/Russia. You should be happy that you never had to do with such kind of “free elections” and “en masse” voting.

#175 Chickenlittle on 05.03.14 at 9:10 pm

These comments are great! I’m enjoying reading them.

Old Man:

You’re cracking me up tonight!

Whitekat:

That’s too bad! S.o.B US government! I can’t wait to hear the excuses I hear from the Americans next time I go down and bring this subject up.

#176 John on 05.03.14 at 9:19 pm

OttawaMike on 05.03.14 at 6:29 pm
#150 gladiator on 05.03.14 at 5:52 pm
Agreed on Questrade.

Took me a long time to get my account established but wait times seem to be short to their call centre and they sure beat the fees charged by some of the bank brokerage houses.

I still have my banking with one of the big 4 and they now want to charge me for any statements from my closed investment account. I told them ” that’s precisely why you guys lost my trading account”
—————————————————————–

Good for you as I did the same thing. Bankers are true useless scum . Hey bankers are much like realtors and mortgage brokers. WOW I just figured it out. Anyhow it’s funny to see the big four lower trades once everyone moved to Questrade.

#177 Mark on 05.03.14 at 9:19 pm

“works properly can make 100k while still EIT’s (eng in training)”

Civil EITs at $100k? Sounds like nonexistium. Unless they have a butt-load of prior experience and are merely EITs because they came from a foreign land and need the Canadian ‘experience’ to qualify.

#178 Ayn Rand Army on 05.03.14 at 9:20 pm

I hear ya SM, i know diamonds are a big thing these days especially for the super rich who need to park a lot of money our of the system and or need portability like you say but whitekat i think just needs safety from the system within Canada.

if needed she can always trade pms for diamonds.

#179 Andrew Woburn on 05.03.14 at 9:43 pm

#153 Bob on 05.03.14 at 6:25 pm
I have 325K in my rrsp and I am thinking of cashing it in. I believe tax rates will be much higher when I retire so I’m better off paying the tax now. I live in Toronto and was thinking of moving to Alberta to cash out since they don’t have a provincial tax. Any opinions?
================================

What you are really trying to save is the difference between the current income tax rate and what you are afraid it might be in future. Let’s say your current projected retirement tax rate is 30% and you are estimating 50% in future. So if we are looking at $65K differential which seems very high to me, is it worth uprooting yourself to Alberta for $65K of theoretical savings which may not happen?

Garth brought up an interesting RRSP stripping approach which is totally legal but takes time. His idea was to borrow money to buy a conservative investment, say a dividend paying stock. The important thing is that the interest on the investment be deductible for tax. Each year you withdraw an amount from the RRSP equal to the deductible interest so you net the income from the withdrawal against the deductible interest. The investment pays dividends which you can put into your TFSA. Over time you empty your RRSP or if there is still a balance left at 71, you can continue the strategy with a RRIF. To me this looks like a much better strategy that crashing your RRSP today.

I have assumed you are a salaried employee. If you are self-employed, you may have other options so talk to a tax professional.

#180 Smoking Man on 05.03.14 at 9:46 pm

When I’m all through if I haven’t been what they think I should be
If the total isn’t high enough when they figure me
When I grow old if there’s no gray from worry in my hair
What do I care what do I care
What do I care just as long as you were mine a little while
When the road was long and weary you gave me a few good mile
What do I care if I miss a goal because I make a slip
I’ll still be satisfied because I tasted your sweet lips
What do I care if I never have much money
And sometimes my table looks a little bare
Anything that I may miss is made up for each time we kiss
You love me and I love you so what do I care
[ guitar ]
What do I care just as long…

#181 nonsense rules on 05.03.14 at 9:56 pm

123 Whitekat….

“I would rather take my chances ‘hiding’ my hard earned, already highly taxed savings, and fighting FATCA in Canada with a Charter Challenge. ”

Total waste of time as you will not pay tax in two countries under the treaty…..you must however disclose and file as per your primary residence…not such a big deal and way cheaper than the fines the IRS can impose and collect. A Charter Challenge will not protect you….as the law had already been decided. The CRA would do exactly the same if the situation was reversed…in fact the rules for a Canadian deciding to expatriate themselves are even more onerous than those that apply to Americans. Look into the Departure Tax…and Deemed Disposition.

#182 Pope Sexballoon Snugglebums the 666pm (aka Nosty) on 05.03.14 at 10:00 pm

#174 Dan from Richmond Hill on 05.03.14 at 9:05 pm — Noted.

SMan — The UCC?

#183 Nemesis on 05.03.14 at 10:02 pm

#”NoMistakesInTheTango.”

http://youtu.be/F2zTd_YwTvo

#184 Chickenlittle on 05.03.14 at 10:23 pm

Saltpony:

Good for you! I am dying to do this myself but I want to start with more money than I have at the moment. Keep up with updates, please!

T.O. Bubbleboy:

I agree with your choice. The first one looks like they went to Pier 1 and bought all the typical dark wood furniture they could find, regardless of how tacky it is.

Everyone has the same stuff: the same dark wood, stainless, granite….YIPPEE. Its not even nice anymore.
…………………..

So…is everyone excited to go to the polls?!?

FML….Larry, Curly, and Moe would be better choices than what we have to pick from.

#185 Bottoms_Up on 05.03.14 at 10:41 pm

#169 Son of Ponzi on 05.03.14 at 8:25 pm
———————————————-
GICs only make sense if you have so much money you literally don’t know what to do with it all.

They’re better than stuffing money under your mattress, but you still lose to inflation, so why would you ever buy one?

#186 AB Boxster on 05.03.14 at 10:41 pm

#99 Ralph

Your thoughts are pretty accurate in today’s world.
But I think today is the anomaly.
There was a time in the not too distant past that bonds, and other secure investments paid a fair rate of return and were not influenced by stupid government policy.
At the same time market returns were reasonable and based on company value.
People saved much of their income, got a fair return for their savings. No one had or needed a ‘balanced portfolio’ , there were no such things as a investment advisors, there was little worry about whether Greece was solvent.
You believe that with knowledge and smarts, in today’s world, that you can make 7% over 30 years. Fair Enough.
I believe the entire game is now rigged, so why waste your time.

Time will tell.

#187 Bottoms_Up on 05.03.14 at 10:54 pm

#140 HD on 05.03.14 at 3:01 pm
—————————————-
The recommendation does not stem so much from a “dollar cost averaging” stance as one from “sell in May and walk away” stance–where markets seem to do poorly from May to fall.

If stock markets are at or close to all time highs, and we have entered May, my perspective is that one has a better chance at buying more shares over the next six months than they do today.

That’s just based on my limited experience of following the stock market for 10 yrs, and if I had a whack of money to invest all at once right now, I wouldn’t put it all in right at this moment.

#188 Bottoms_Up on 05.03.14 at 10:56 pm

#132 4 AM Sunrise on 05.03.14 at 2:05 pm
——————————————–
Who needs customer service when it’s DIY investing?

They have been great at responding to emails over the past two years. So possibly someone needing tight interaction with their trading company may not want to go with a discount brokerage, but for us average joes they offer a great service.

#189 Bottoms_Up on 05.03.14 at 11:04 pm

#108 Dean Mason on 05.03.14 at 12:02 pm
————————————————
Thank you for showing me what life is like without kids.

#190 Andrew Woburn on 05.03.14 at 11:26 pm

#150 gladiator on 05.03.14 at 5:52 pm
Diamonds, if you don’t buy them in bulk from Amsterdam or from the miner (raw), are the worst bet you can make. Read this:
http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/
=========================

Thank you, gladiator for that terrifying article. I have never seen anything before that demonstrates so clearly how we are led by the nose by advertising. I pride myself on independent thinking but I was definitely roped in by the “Diamonds are forever” trope. It makes me wonder how much else of my belief system is a deliberate plant.

#191 still waiting on 05.03.14 at 11:47 pm

If the “private insurers” are 90% backed by the
federal government how, in the name of all that is holy,
are they private?
Private profit, public liability?

#192 al on 05.04.14 at 12:18 am

Are TFSAs creditor proof?

#193 Tony on 05.04.14 at 12:41 am

Re: #70 saltpony on 05.02.14 at 11:00 pm

Hold the American stocks that pay dividends in the RSP not in the TFSA.

#194 WhiteKat on 05.04.14 at 12:59 am

@Ayn Rand Army #165 and Chicken Little #175

Stop, you guys are making me tear up. I think my job might be done here.

@nonsenserules #181, I take that back, my job ain’t done. You said: ” Total waste of time as you will not pay tax in two countries under the treaty…..you must however disclose and file as per your primary residence…not such a big deal and way cheaper than the fines the IRS can impose and collect. A Charter Challenge will not protect you….as the law had already been decided. The CRA would do exactly the same if the situation was reversed…in fact the rules for a Canadian deciding to expatriate themselves are even more onerous than those that apply to Americans. Look into the Departure Tax…and Deemed Disposition.”

Seriously dude, you speak total nonsense. I don’t even know where to begin to try to educate you, but I will give it a quick try.

First of all, the tax treaty does not eliminate double taxation on those whom the US considers to be US tax payers on their Canadian earned income. A Canadian will be taxed on non-earned income (such as pensions, investment income, unemployment insurance, disability pensions). He/she will also be taxed on the gains from TFSA’s, RESPs, and RDSPs. RRSPs have a special exemption as per the tax treaty, but ONLY if you remember to file a certain form every year with the IRS. Capital gains on the sale of your PRIMARY residence are taxable (with a 250K exemption). Canadian mutual funds, besides being useless as Garth continues to point out, are treated as ‘passive foreign income corporations’ and subject to bizarre, complicated reporting and punitive taxation which actually wipes out all the gains.

You are correct that the cost of coming into compliance is definitely less than any penalties that might be assessed if a Canadian with US birth place is discovered, BUT, even the Canadian government has admitted that it will not collect penalties on behalf of the IRS for those who were Canadians at the time the penalties were assessed.

As for the Charter Challenge being useless because the law has already been decided…LOL. Have you not heard of the Canadian Charter of Rights and Freedoms? (thank you Pierre Trudeau!) Just because the current Harper government thinks it can make laws that conflict with the Charter, does not mean that those laws are written in stone and cannot be overturned by the Supreme Court.

What do you mean the CRA would do the same thing if the situation were reversed? Did you know that we don’t have citizenship based taxation in Canada? We don’t tax Canadians who live and earn permanently in other countries. Only the USA does (and Eritrea, but Eritrea is much kinder and only applies a 2% tax). Interestingly, Canada kicked the Eritrean diplomat out of Canada in 2012 when Eritrea tried to pressure its diaspora living in Canada to pay up the 2% tax.

#195 UVZ on 05.04.14 at 1:08 am

#185 Bottoms_Up

“They’re better than stuffing money under your mattress, but you still lose to inflation, so why would you ever buy one?”

In the event of a bank “bail-in”, you’d wish you stuffed the money (if in excess of $100k) under your mattress, inflation and all…

A asteroid attack is more likely. — Garth

#196 WhiteKat on 05.04.14 at 1:22 am

@Nonsenserules,

A couple other points. Unless one lives a VERY simple life (for example, no RESPS, TFSAs, investment income, pensions, RRSPs, mutual funds, very few bank accounts as each one over 10K requires a ‘foreign bank account report’), the process of filing is EXTREMELY complicated and thus very expensive, not to mention full of potential for foot faults which equate to penalties. For example, failure to file a ‘foreign bank account report’ equates to a 10,000 fine per account per year for NON-willfull non-filing. Do it on purpose and say good bye to whatever is in the account and then some.

As far as your suggestion that it is more difficult to expatriate from Canada, why would one even need to bother since Canada does not tax Canadians who permanently live and earn outside its borders. The reason people like myself are considering renouncing US citizenship is because USA chases us around the globe for life unless we do….big difference from how Canada treats its citizens who don’t live in Canada. If indeed it is more difficult to renounce Canadian citizenship, which I have a hard time believing, since there is little reason to do it, it is kind of a moot point.

Ok, I am done now. LOL.

#197 WhiteKat on 05.04.14 at 1:34 am

Sorry Garth, just couldn’t let this go. Like you, I don’t give up easily.

@nonsenserules, I had a quick, like 30 second google look at ‘departure and deemed disposition’ as you suggested, and realize that we are talking apples and oranges. I am a speed reader, so did not take time to absorb it all in, but can see that this is referring to someone who has lived a life in Canada, thus has assets in Canada (home, TFSAs, etc), so this has to be dealt with when they physically leave and take residence in another country.

This is not the same thing as US considering those who have never even lived a life in USA, to be US tax payers simply for having been born on US soil, and thus subjecting them to US tax rules throughout their lives outside USA, as well as an exit tax on their CANADIAN assets upon formal renunciation regardless that they never physically or economically had a life tied with the USA.

#198 WhiteKat on 05.04.14 at 2:02 am

re: #187

I made a mistake (yes it happens once in a blue moon)

re:
“As far as your suggestion that it is more difficult to expatriate from Canada, why would one even need to bother since Canada does not tax Canadians who permanently live and earn outside its borders. ”

Obviously if one EXPATRIATES, one is no longer living in Canada…DUH…but I think anyone who read my other comments, gets what I was getting at. I hope.

#199 Dr. Talc on 05.04.14 at 2:19 am

@#158 Pope Smartypants Snugglebums the 666lb (aka Nosty) on 05.03.14 at 6:56

“In 2006 Putin had paid off Russia’s debt to the Rothschilds. Russia’s financial dependence on the Rothschild financiers was now over. […Managed Conflict is the goal and the means on the road to World Government…].”

—-

Why doesn’t Gazprom sell gas for rubles instead of dollars or euros? They talk about it but since 06, they haven’t.

‘In a war there are TWO sides fighting.’
-Bill Hicks

#200 Flawed on 05.04.14 at 4:13 am

US recovery? Hmmmmmm…….I’m no economist but:

http://moneymorning.com/ext/articles/wealthandpoverty/new-study-shows-average-american-pays-8577-for-welfare.php?iris=205888

#201 JB on 05.04.14 at 7:46 am

As simple as it seems, people are still doing the exact opposite, being convinced by realtors and banks that the best thing they can do is to BUY.

Why is that? What is wrong with them? For Garth, it has been six years in giving advices for free, yet people don’t listen to him.

#202 Ralph Cramdown on 05.04.14 at 8:54 am

#186 AB Boxster — “There was a time in the not too distant past that bonds, and other secure investments paid a fair rate of return and were not influenced by stupid government policy. At the same time market returns were reasonable and based on company value.”

When was that, a three month period in the mid-’90s?

War, inflation, currency debasement and disruptive technologies have been more or less continuous since humans began writing stuff down, and during the brief interludes between, investors often got complacent and underpriced risk, while telling each other stories about spectacular profits to be made in whatever field was catching the public’s fancy that decade. Dreamers and charlatans sold garbage to the public, and some companies were valued at stupid multiples while others languished. The popularity of different styles of valuation and investment waxed and waned, taxation, accounting and disclosure rules changed and you could always find three pundits willing to go on the record predicting inflation, deflation and “uncharted territory.”

http://www.theguardian.com/news/datablog/2011/jan/13/interest-rates-uk-since-1694

#203 Ralph Cramdown on 05.04.14 at 9:21 am

#200 Flawed — “US recovery? Hmmmmmm…….I’m no economist but”

That article is an IQ test. If you can’t spot at least five blatant mischaracterizations, comparisons of two numbers which aren’t comparable etcetera, then there’s no way you should be managing your own investments.

They KNOW that the kind of person who reads and believes an article like that is an idiot, easily separated from his money. That’s why in the “related articles” (i.e. ads) sidebar are listed such gems as “Investing in the ‘Miracle Material’ that Will Change The World” and “How to Find the Best Penny Stocks and Avoid the Losers.” If your favourite investing and money sites show ads for penny stock newsletters or precious metals, go elsewhere.

#204 Dean Mason on 05.04.14 at 9:38 am

To #189 Bottoms Up

At least they are responsible for themselves and are not having kids to live off the government which is us poor taxpayers.

It is a sad society today that in order for people to afford having kids the government has to steal from others and bribe people with others people hard work, sweat and blood.

Everyone makes their own choices in life but those that are financially responsible and take care of themselves and their family are always getting the short end of stick.

If you want to have kids, pay for everything they need and want with your own money not from others.

After all, you decided to have kids not anyone else. The socialists want kids that are poor, dumbed down and have a bleak future depending on the government.

#205 Ayn Rand Army on 05.04.14 at 9:58 am

I’m not as up on all the details of FATCA and FBAR as you but i have been following it for years and had looked into IRS tax filing details back in January when i was considering maybe working in the US (with Tesla Motors) but could not believe what i found.

Namely this, anyone is deemed a resident alien and must file a US tax return with FBAR if residing within the US for more than 31 days in any given year, and of course if working there automatically requires it and the FBAR which is full disclosure of all global assets. And since i am coming to value my privacy more and more these days, any disclosure such as FBAR would be a big step back for me from the direction i want to go. (looking to expatriate or at least become non-res cad in coming years)

From IRS website, you are resident alien if,

31 days during the current year, and
183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:

http://www.irs.gov/Individuals/International-Taxpayers/Substantial-Presence-Test

The IRS are literally the worst thugs in the world who make all mafias seem like powerless little aggravators.

If you have dual US CAD citizenship, i don’t know if it would be effective, but i would suggest maybe opening new investment and bank accounts in Canada purely on your CAD citizenship and lie about your place of birth if asked.

Since i think you can’t deal honestly with these thugs and their new rules and you can only fight back by hiding and lying to them and if caught you must keep fighting and hiding assets….. and stick with charter challenge etc…

I’m sure you know of the Issac Brock society,
http://isaacbrocksociety.ca/

And i read somewhere months ago too that there was a very reputable CAD lawyer who was making a stand at the federal level, i think he was even advising Jim Flaherty but couldn’t find it easily but I’m sure it’s referenced on the IBS’s website.

Good luck

#206 rosie "moving forward" in the knowledge that, "this won't end well" on 05.04.14 at 10:14 am

“I told my son he could have some friends over.”

http://www.dailymail.co.uk/news/article-2619792/He-told-having-friends-Teen-promoted-Project-X-style-MansionParty-parents-house-Twitter-causes-70-000-worth-damage-2-000-up.html

#207 T.O. Bubble Boy on 05.04.14 at 11:21 am

$900k House Of The Day for Sunday, May 4th:

Finalists
1) $899k house near Yonge/Finch “Renovated & Upgraded Top To Bottom” (i.e. threw some granite countertops in the bathroom)
2) $899k generic burbs house near Dufferin/407 in Vaughn
3) $899k nicely reno’ed house near Bloor/Ossington, but still 18ft wide with a 4×4 patch of grass for a backyard

WINNER:
#2 wins – if all 1980’s burbs houses like this are worth $900k+, then literally all of Mississauga, Markham, Vaughn, etc. are millionaires!

#208 UVZ on 05.04.14 at 11:30 am

Re: Bail-ins

“A asteroid attack is more likely. — Garth”

Garth, I agree it is a low probability event, but why did F bother to make this move?

http://business.financialpost.com/2013/04/02/ottawas-bank-bail-in-plan-targets-certain-liabilities/

#209 WhiteKat on 05.04.14 at 11:32 am

@Ayn Rand Army,

Thanks so much for sharing your thoughts and suggestions. Yes, I am very familar with the isaacbrocksociety website, and have written several posts there. It is a great place to go for Canadians concerned about this latest attack on the sovereignty of Canada by the USA, not to mention those most directly affected by FATCA and USA’s CBT laws.

A few Brockers, as we call them, have recently created an incorporated Canadian non-profit organization called ‘The Alliance for the Defence of Canadian Sovereignty’ whose immediate objective is to fund a legal challenge to oppose changes in Canadian laws that would impose the U.S. FATCA law on all people in Canada. Once a website for this organization is set up, donations will start to be accepted.

http://isaacbrocksociety.ca/2014/04/28/alliance-for-the-defence-of-canadian-sovereignty-adcslalliance-pour-la-defense-de-la-souverainete-canadienne-adsc-is-established-in-canadaest-creee-au-canada/

#210 TheCatFoodLady on 05.04.14 at 11:36 am

#207 – T.O. Bubble Boy: generic isn’t the word. I was looking at the photos of #3 – all that lovely ‘open concept’ – love to see if the few beams I can see have been properly doubled up. If not, what’s holding the second floor load?

A poster mentioned ‘Your House/My Money’ within the last few days. I actually caught a few episodes of that last week; one especially made me gag. Mommy thinks the best way to teach her 19 year old, part time retail worker is to ‘help’ her buy her own place. The kids can’t even pick up after herself & has nothing to out down. Yeah… I wasn’t impressed with any of the episodes – parents trying to force their adult kids into places unsuitable for their age/stage in life & in many cases, admitting they want to keep the kids tied down. No thanks.

Flip shows – do nothing but convince me of the need for qualified, experienced home inspections. Buy cheap, put in minimum work & money – lipstick on a pig territory & try to flip for a healthy profit. And the Greater Fools line up – not seeing past the sexy, shiny finishes…

#211 WhiteKat on 05.04.14 at 11:44 am

@AynRandArmy,

The lawyer you are referring to is constitutional lawyer Peter Hogg, who warned the Conservative government many months ago in an unsolicited multi-page letter, that a FATCA IGA was likely unconstitutional on several grounds but particularly article 15 which prohibits discrimination based on national origin. Peter Hogg did not want to be involved in the litigation himself, so
another leading constitutional lawyer, Peter Arvay, was retained by Brockers, to develop a legal opinion regarding the feasibility of winning a Charter challenge (funded by an 18K donation raised in a mere 6 days).

Based on Mr. Arvays legal opinion, we are now proceeding with the next step to raise funds for the Charter Challenge.

#212 WhiteKat on 05.04.14 at 11:46 am

ooops….that would be Joe Arvay (not Peter).

#213 BCD on 05.04.14 at 12:11 pm

Province newspaper had an article this morning. Prices of homes up, sales up, and demand up in Surrey, Langley and Abbotsford. . .with new hotspots over the next few years predicted to be Abbotsford out east.

How’s that crash coming Garth? You are starting to sound more like a doomer then anyone else on this board, and I am starting to think this is really just another doomer blog.

I read the story. I pity you. — Garth

#214 Andrew Woburn on 05.04.14 at 12:18 pm

MILLENNIALS READY TO PLAY KEY ROLE IN HOUSING MARKET RECOVERY (in US)

In contrast to predictions from some futurists that the Millennial generation, born 1982-2003, will be content to be lifelong renters, BHGRE’s survey found home ownership still ranked as young Americans’ most important definition of personal success. Overall, three-fourths of those surveyed named home ownership as an indicator of having succeeded financially, more than seven times the number who named other major expenditures such as taking extravagant vacations, buying an expensive car, or owning designer clothing. Even among those living in the Northeast or in cities, seventy percent identified home ownership as the best indicator of having made it financially. This is fully in line with earlier studies by Pew Research that found home ownership was among the top three priorities in life for members of the Millennial generation.

http://www.newgeography.com/content/003259-millennials-ready-play-key-role-housing-market-recovery

#215 Ayn Rand Army on 05.04.14 at 12:21 pm

Proof that FATCA is a weapon of intimidation. Senators McCain and Levin suggest halting FATCA negotiations with Russia to try and force them into non-military compliance with US demands in Ukraine.

http://isaacbrocksociety.ca/2014/04/29/latest-from-carl-levin-on-russia-and-fatca/#more-28284

Also, interesting are demands from Washington DC to Washington state for removal of anti-Obomba highway signs. Wash state says FU NO way and will rather secede first.

http://rense.com/general96/obsigns.html

#216 Shawn on 05.04.14 at 12:23 pm

PAST PERFECT?

#186 AB Boxster on 05.03.14 at 10:41 pm said

There was a time in the not too distant past that bonds, and other secure investments paid a fair rate of return and were not influenced by stupid government policy.

At the same time market returns were reasonable and based on company value.

People saved much of their income, got a fair return for their savings. No one had or needed a ‘balanced portfolio’ , there were no such things as a investment advisors, there was little worry about whether Greece was solvent.

You believe that with knowledge and smarts, in today’s world, that you can make 7% over 30 years. Fair Enough.
I believe the entire game is now rigged, so why waste your time.

Time will tell.

*******************************************
Let me guess you are under 20 and also just discovered that the tooth fairy is not real.

The world you describe never existed.

Giving up is hardly a wise strategy.

Warren Buffett was asked yesterday how he would approach investing if he were starting out today.

He said he would do the same as he did.

To the extent that markets are rigged or manipulated that simply makes for more chances to buy low and sell high.

If the markets were perfectly efficient and never rigged we could all buy a balanced set of index funds (which for most people IS the best idea).

I have made a lot of money in stocks and the amount of time I spent fretting about rigged and manipulated markets is zero.

#217 The American on 05.04.14 at 12:25 pm

At #123: WhiteKat… GEEEEEEEZUUUUUUS. Get over it already. You’re a grown man, and from the sound of it, you’re an older grown man. So you were born in the U.S. and have this headache of dual citizenship. RENOUNCE it already and get over it. And I don’t want to hear this lame-ass excuse I ALWAYS hear from Canadians of how *hard* it is to renounce it. B.S. It take 20 minutes of your time, $0 to do it, and its DONE. Otherwise, quit your bitching about having dual citizenship. Obviously, you’re gaining something from it, or you wouldn’t continue to have it. So, pay the tax, or drop it. It really IS just that simple.

#218 Aggregator on 05.04.14 at 12:37 pm

#185 Bottoms_Up

They’re better than stuffing money under your mattress, but you still lose to inflation, so why would you ever buy one?

Not if you buy these. There's already ways to buy some in Canada. You just won't see banks promoting it, as converting your declining domestic currency into an appreciating currency isn't a low-risk high-return savings strategy (anchoring really) the government would want many Canadians aware of.

#219 Herb on 05.04.14 at 12:44 pm

#150 Gladiator,

thanks for your Atlantic ink on the diamond market. Everyone should read it.

The “invisible hand” of the Great God Marketplace working in an exemplary manner: controlling supply and creating demand.

#220 AB Boxster on 05.04.14 at 12:54 pm

#202 Ralph
Yes the system has been gamed and rigged forever.
But at what period has government actively intervened to force rates low either though B of C rate or spending trillions buy back bonds and keep rates artificially low.
Even during the late 70s and 80s, inflation was high, but interest rates were high too. Savers had a chance.
Rates are held artificially low, inflation is much higher than the ‘official’ CPI, housing is stupidly unaffordable and personal debt has ballooned.

Savers have been sacrificed for Wall Street and the massive debt of government.

High rates then were, as are low rates today, a government construct. — Garth

#221 Old Man on 05.04.14 at 1:24 pm

#217 Aggregator – I buy mine at Continental Currency Exchange.

#222 UVZ on 05.04.14 at 2:16 pm

#202 Ralph Cramdown
#215 Shawn

Re: #186 AB Boxster

What Boxter is referring to is an era when “risk-free” investments were less risky than they are now.

Fixed-income types (e.g. seniors) put money in them and could generate decent income with which to live.

That era actually existed a couple of decades ago.

I don’t understand why you are attacking Boxter.

Because he is simplistic and wrong. That ‘era’ existed only because governments were fighting high inflation with high interest rates. It was 100% the result of intervention in the marketplace, and when inflation came under control, rates plunged. — Garth

#223 Daisy Mae on 05.04.14 at 2:22 pm

#171 Old Man: “its the amount in box 42 which is the one that wastes my time…..

#172 Smoking: “Try taken a gold chuck through the machines at the airport…Ding, Ding, Ding….”

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

Why must our lives be so complicated? LOL

#224 T.O. Bubble Boy on 05.04.14 at 2:28 pm

Yikes – I had forgotten how bad our HELOC addiction is:
http://whispersfromtheedgeoftherainforest.blogspot.ca/2014/04/holy-heloc.html

“… {in the U.S.}, HELOCs amount to 2.9% of GDP, and only reached 5% at the peak of the U.S. housing bubble. In Canada, though, that figure is 14%, and is up from 12% in 2012, showing that even though Canada’s economy has grown, the pace at which homeowners tapped their properties for cash grew even faster.”

#225 Rainclouds on 05.04.14 at 2:28 pm

“The latest calculations from The Economist suggest that house prices in Canada are overvalued by 76% and 31% when measured against long-term average rents and incomes respectively.”

http://www.economist.com/news/americas/21601521-canada-has-not-learned-every-crisis-lesson-maple-resting-laurels

#226 Flawed on 05.04.14 at 2:34 pm

That article is an IQ test. If you can’t spot at least five blatant mischaracterizations, comparisons of two numbers which aren’t comparable etcetera, then there’s no way you should be managing your own investments.

They KNOW that the kind of person who reads and believes an article like that is an idiot, easily separated from his money. That’s why in the “related articles” (i.e. ads) sidebar are listed such gems as “Investing in the ‘Miracle Material’ that Will Change The World” and “How to Find the Best Penny Stocks and Avoid the Losers.” If your favourite investing and money sites show ads for penny stock newsletters or precious metals, go elsewhere.
*******************************

Nice psychiatric speech but I was merely pointing out that the US is not recovering and that 100 million citizens are receiving some kind of govt hand out.

I would argue your “idiot” theory. Sites are not making money from advertising anymore because people like me and most others just “turn it off”. I don’t even look at ads anymore. So I don’t even know what ads were there. Apparently you looked at all of them.

#227 Andrew Woburn on 05.04.14 at 2:38 pm

Further to my post re the coming automation of jobs, an interesting battle is taking place in London where the subway system is about to be paralyzed by a second multi-day strike. The issue is the replacing of 250 manned ticket offices with automated ticket dispensers. Ticket machines are already in general use on the system so these disputed offices are simply the last to go.The transit union involved claims 1,000 jobs will be lost.

This raises the question of how Canadian organized labour will react to the acceleration in automation. Reaction to date seems muted perhaps because relatively few people have yet realized how fast the train is coming. Businesses involved in export or in fending off imports probably have no choice, automate or die. I assume therefore the battleground,if there is one, will be in domestic businesses where services cannot be outsourced such as supermarkets and in government services. Given the appalling optics of the Temporary Foreign Worker program, I would not expect the Conservative government to extend much help to displaced unskilled workers. Does anyone know if the NDP or Liberals have developed any coherent policy on this issue?

http://www.ft.com/intl/cms/s/0/e486d3fc-d392-11e3-b0be-00144feabdc0.html#axzz30lq6Xs3g

#228 TheCatFoodLady on 05.04.14 at 2:38 pm

I’ll second the ‘thank you’ to Gladiator, it was indeed a fascinating article, especially the details of the marketing campaigns. Gem stones & jewelry have enormous markups & if you think about it – where can you buy them second hand? Easy answer – pawn shops.

I never liked diamonds; booooooooooooring. The Main Squeeze does & over time has bought himself two rings he really liked at pawn shops. When I compared the carat weight, style, gold content of ring etc. to retail – he paid roughly 25% of retail value by going to pawn shops. If they make money on that – it indicates the ‘real’ value of jewelry.

I have a few shiny rocks – not diamonds & bought them the same way for similar price savings. The only other place I’ve seen jewelry for sale in estate sales & auctions & the owners/heirs get peanuts compared to retail price.

#229 gladiator on 05.04.14 at 3:14 pm

Happy to contribute interesting info about diamonds.
Funny thing is, the article is more than 32 years old: written in 1982. Check the link to see for yourself.

#230 Andrew Woburn on 05.04.14 at 3:17 pm

#208 UVZ on 05.04.14 at 11:30 am
Re: Bail-ins
“A asteroid attack is more likely. — Garth”
Garth, I agree it is a low probability event, but why did F bother to make this move?
http://business.financialpost.com/2013/04/02/ottawas-bank-bail-in-plan-targets-certain-liabilities/
================================

For better or worse, depending on your conspiracy quotient, central bankers have decided to try to harmonize international banking regulation. This was part of Canada’s obligation to match the standards proposed by the International Bank of Settlements, the central bank of central bankers. The IBS wants to send a signal that governments cannot be automatically expected to bail banks out so bank creditors can expect to be “bailed in”, i.e. have their debt converted to shares.

The marketers of doom and dubious economics as discussed by #203 Ralph Cramdown, would like you to believe the bail-in legislation means government is coming for your chequing account. What it actually means is that certain classes of bank debts can now be forcibly converted to bank common shares if necessary. Investors in these debts are aware of the risk.

#231 UVZ on 05.04.14 at 3:52 pm

#229 Andrew Woburn

Well-put. Thank you.

Since I became aware of it, I have wondered about the impact the “bail-in regime” on smaller banks and credit unions under certain market/economy conditions.

#232 UVZ on 05.04.14 at 4:08 pm

#219 AB Boxster

“…inflation is much higher than the ‘official’ CPI…”

Anecdotally speaking, my personal CPI basket is completely out of whack with — and much higher than — the “official” CPI.

The only time I seem to agree with the “official” CPI is when buying consumer electronics and when encountering the usual made-in-china, Dollar Store and McD’s Happy Meal-type items.

I can understand that an employer or purchase price negotiator would naturally embrace the “official” CPI to keep a lid on costs.

#233 devore on 05.04.14 at 4:18 pm

#208 UVZ

Garth, I agree it is a low probability event, but why did F bother to make this move?

Why do you take out insurance against fire on your house?

#234 UVZ on 05.04.14 at 4:28 pm

#232 devore

Not to get into the weeds: Asteroids (Garth) and fire (you) are not the same risk tier.

http://business.financialpost.com/2014/02/07/bail-in-bonds-riskier-than-previously-thought-sp-warns/

Remember, these things didn’t exist a few years ago.

Beyond stupid. There will never be a bail-in of consumer accounts in Canada. Go worry about climate change and gluten. — Garth

#235 UVZ on 05.04.14 at 5:08 pm

“Beyond stupid. There will never be a bail-in of consumer accounts in Canada. Go worry about climate change and gluten. — Garth”

Not worried about consumer accounts in Canada (i.e. your asteroid analogy). Not worried about climate change or gluten either.

I am mostly worried about more billboards with beaming real estate agents on them. I don’t think I can take much more of those.

#236 Andrew Woburn on 05.04.14 at 5:17 pm

#205 Ayn Rand Army on 05.04.14 at 9:58 am
anyone is deemed a resident alien and must file a US tax return with FBAR if residing within the US for more than 31 days in any given year

From IRS website, you are resident alien if,
(A) 31 days during the current year, AND
(B) 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
============================

The AND is very important here. Both conditions have to be true before you become taxable. According to the IRS example, if you average 120 days a year or less in the US, your score is less than 183 days, you do not meet condition B and you do not need to file.

If you do have to file as a non-resident alien, you only have to pay tax on US-source income.

“Nonresident aliens are only required to pay income tax on any income that is earned or otherwise realized from a U.S. source. They do not have to pay tax on any foreign-earned income.”

http://www.investopedia.com/articles/tax/11/tax-tips-for-non-residents.asp

Before this change in rules, people could live in the US for 182 days a year every year. I used to have a client that lived on a sailboat and spent five months in Canada, five in the US and one in Mexico so he was never resident anywhere for tax purposes. Governments don’t see the humour in this.

It seems to me that only snowbirds need to worry about this rule but if they stumble into the net they probably need to file a return even if it is nil. From what I recall, the US penalizes failure to file a return even if there is no tax to pay.

#237 Herb on 05.04.14 at 5:18 pm

#229 Gladiator,

of course. While it might be nice to know the latest developments, it would be more of the same. As the French proverb says, “The more things change, the more they stay the same.”

#238 SHarper on 05.05.14 at 6:04 am

The federal Liberals with Paul Martin as finance minister balanced the budget in 1997 and ran surplus budgets every year afterwards until they were defeated by the federal Conservatives in the 2006 federal election.

Paul Martin ran surplus budgets as federal finance minister.

John Manley became the finance minister after Paul Martin, and Manley ran surplus budgets.

Paul Martin became the prime minister and he had Ralph Goodale as his finance minister. Goodale ran surplus budgets.

All of these surplus budgets from the time the federal budget was balanced in 1997 to the time that the federal Liberals were defeated in the 2006 election were used to reduce the accumulated federal debt. This was not merely reducing the deficit. It was the running of budget surpluses that were used to reduce the debt every year.

When the federal Liberals were defeated in 2006 they left the Conservatives with an annual surplus of $13 billion. If there was no change in the amount of the surplus then that would have meant $13 billion every year that could have been used to reduce the federal debt.

The federal Conservatives brought in a reduction of the GST from 7% down to 5%. That greatly reduced federal tax revenues and made it much more difficult to continue running surplus budgets, and much more difficult to continue reducing the federal debt every year.

#239 Vermithrax on 05.05.14 at 1:11 pm

#148 saltpony –> You got it right–don’t hesitate! I setup the exact same portfolio about 3 years ago. It’s very much in line with what Garth constantly recommends here. Very, very happy with it! Just stick with it, set up auto contributions, forget about it, and then rebalance at year’s end (only after you get the annual dividends from the 4 different funds) if something strays too far off the allocation. Most online articles say rebalance if something is 5% off. I rebalance usually using new money. Then spend your time laughing and ignoring anyone who says America will fail, buy gold, GICs are good, or bonds are terrible. I ask those people what their net worth is and it usually sucks completely or is non-existent.

#240 Pete on 05.05.14 at 2:32 pm

April YTD Unit Sales – Oakville
2010 2011 2012 2013 2014
Reported In
Apr-11 1245 1091
Apr-12 1113 1215
Apr-13 1238 1086
Apr-14 883 949
Apr-15 772 ** **extrapolated based on 2013-2014 adjustment

Looking at the MLS Oakville April YTD unit sales numbers. 949 units sold YTD Apr-14 compared to 883 in April-13. Nice little jump of 7.5% – markets hot, hot, hot. Except that in April 2013 1086 units were reported, so 200 odd units have mysteriously “disappeared” making the 2014 numbers look so much better. Even though only final sales (all conditions removed) are supposed to have counted.

In fact as far as we can see, it looks like the Oakville market peaked in 2010, teetered in 2011/2012, and has been in a rather serious decline over that past two years.

Not that this would ever have been described this way by the RE cartel…

#241 Pete on 05.05.14 at 2:36 pm

Sorry spacing on table screwed up. Here is an attempt to make it more legible

April YTD Unit Sales – Oakville ———–2010—2011— 2012—2013—2014
Reported In
Apr-11—-1245—1091
Apr-12————1113— 1215
Apr-13——————–1238—1086
Apr-14—————————–883—949
Apr-15————————————772* *extrapolated based on 2013-2014 adjustment

#242 grtz4peace on 05.05.14 at 4:06 pm

Hi Garth – Do you have the “chutzpah” to print this?

A very insightful article on how the 1% and “upper class” has carefully, systematically participated and/or in some ways engineered the LOOTING of the middle and working classes in North America (and now a model for worldwide).

It talks about real estate too: http://www.alternet.org/economy/how-rich-stole-our-money-and-made-us-think-they-were-doing-us-favor?page=0%2C1

Speaking of real estate, renting is not always best for everyone. I am hearing more and more “San Franciscso” type of nightmare stories — friends on fixed incomes who had long-time rental agreements being forced out as their places are “gentrified” and used as “fix and flips.” These are then brought up to “Market” rent levels, which is often not even rent average working families can afford. Two families I know are being forced to leave where they have lived for decades. And this is BC, not San Francisco.

As you say, it’s a mess and won’t end well. But we will argue the causes of this “bubble” disease with any of the far-right “I got mine” types on this blog.

We are all in this together.