The sure thing

GIRLFRIEND modified

Marie hates risk. So, at 61, when she found a company that would pay her a 5% return – guaranteed – she jumped at it. Poor Marie.

“But it’s for twenty years,” she told me, trying to make her case, “and it’s guaranteed. I don’t need to worry. I can’t afford to lose anything, you understand.” Poor Marie.

There are nine million actual and soon-to-be wrinklies in this country. The banks and mutual funds companies have been salivating at the prospect. This is a generation of financial illiterates (like their offspring) who grew up in a time of inflation, expansion and easy real estate money. They saw houses give awesome returns for two decades, and when that ended, GICs and Canada Savings Bonds paid up to 19%, before real estate rekindled.

In other words, they could build some wealth, even being wusses.

Now on the cusp of a retirement that could last far, far too long, with meagre financial assets, they’re looking for another sure thing. The big financials are only too happy to help scared and foolish people like Marie.

I have two examples for you. One routine, one extreme.

Here’s a big mutual fund making this pitch: “As millions of Canadian baby boomers approach retirement, having a stable and secure retirement income will be a key issue for them. Low interest rates mean that fixed-income investments generate little return, while many investors are wary of volatility in equity markets. We’ll help Canadians deal with these challenging times by providing a dependable cash flow in retirement as well as the potential for continued growth in their investments.”

Stable and secure income. Dependable cash flow. Wow. Sign me up.

So, here’s what this product does. The mutual fund company takes your money and for five years invests it in “an actively-managed, diversified portfolio of income and growth investments.” (Where have I heard that before?) Then, after five years of growth, the fund pays the investor “for the next 20 years an annual cash flow equal to 5% of the investor’s initial investment, or the market value at the 5-year anniversary date, whichever is greater. The cash flow is guaranteed by the Bank of Montreal.”

Huh? Wait a minute.

This means if I hand over $100,000 and let the fund/bank invest it in a balanced and diversified portfolio for five years, given usual and historic rates of return (7%), at year 5 it should stand at $141,000. Now I get 5% of that for 20 years, or $7,050, and then hope to croak.

After 20 years I’d have collected $140,000. But if I’d just invested the $100,000 myself in the same portfolio, waited five years and then collected the annual 7% growth on the $141,000, I’d collect $9,870 a year. After 20 years I’d have received income of $197,400, and still have the $140,000 left. So, you can be a chickenliver and turn $100,000 into $140,000 over twenty years, or be an investor and have 300% more.

See what the word ‘guarantee’ does to people? It liquefies brains.

Paul Hecht knows that. The Toronto Re/Max agent is busy building a career for himself as a motivational speaker, flogger of US real estate and ‘guaranteed government investments’ that pay up to 18%. Wow. Sign me up, baby.

CANINVEST 1 modified

Hecht just held a series of dimly-lit hotel speeches in Richmond, Surrey, Burnaby and North Van and is apparently involved in the launch of a web site called ‘CanInvest Wealth,’ described as “Canadians Making Double Digit Returns!” It was registered in Arizona a few weeks ago, expires in a year and earned this online warning:

This site is using an anonymous service – which prevents us from identifying the site owner. This can sometimes be just so that the owner does not receive spam, but be aware that many scam sites use this as a method to hide their identify. If this is an ecommerce site – we would suggest you confirm the business address with the website owners.

The website has been newly registered with a short life expectancy, which follows the pattern used by many fraudulent and fake selling websites. Please be vigilant and take extra care before providing any payment information.

Why would Mr. Hecht need to hide this way when he’s been openly claiming he can turn couriers and housewives into ‘everyday Real Estate Millionaires™’? (If you want to be a millionaire, just click here.)

Probably because his Vancouver-area newspaper ads say, “Earn 18% interest per year Government Guaranteed,” through “Government Investment Certificates, On Sale Now.” I mean, what can be safer or more guaranteed that the Government, right?

Except that this is not our government. Those certificates are actually tax liens on foreclosed US properties – an alternative method desperate local American authorities use to try and collect delinquent property taxes. People buy these certificates hoping properties will be redeemed or they might assume title to the land if it remains abandoned, collecting interest in the meantime commensurate with the large risk involved.

So, if you’d like to be a millionaire or make 18% a year, then be at Day’s Inn on Macleod Trail in Calgary on Wednesday at 2 pm or 7 pm. In fact Paul will be holding nine sessions around Calgary all week.

You’ll find him unbelievable. And that’s a guarantee.

171 comments ↓

#1 DAN on 05.04.14 at 4:34 pm

early surprise, FIRST

#2 ben on 05.04.14 at 4:43 pm

Second

Damn

#3 devore on 05.04.14 at 4:44 pm

#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.

Do you believe today’s return are not fair? Pretty sure back when bonds paid 15% most investors thought that was too low and they could get better returns somewhere else. The fact is risk-free money has never produced a high rate of return, nor should it ever.

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

Still are. There are always overvalued overyhyped stocks, scams, insider trading, fraud, but also opportunities value investors look for.

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.

There were also no such things as computers, air bags, instant global communications, ATMs, velcro, etc. Greek solvency is still irrelevant to 99% of the people not living in Greece. The reasons for the erosion of the middle class have nothing to do with investment advisers or portfolios or markets.

I believe the entire game is now rigged, so why waste your time.

The entire game has always been rigged, and always will be. Also, it’s always stacked against you. Welcome to life. As a person who needs to generate enough income to get me through today, and through potentially decades of retirement, I need to deal with what is. It is a waste of time dwelling on what should be ideally, or how unfair life it. I live in reality, not fantasy. It does not mean it is right, or just or fair. But it is, and you have to figure out how to make it work. Or, feel free to stick your head in the sand.

#4 FED-UP on 05.04.14 at 4:56 pm

Is ANYONE honest anymore? Are there any people left on this miserable earth that can do their job right and not screw people over just for worthless (it’s true…) pieces of paper? If any E.T’s are reading this blog, beam me up Scottie, get me out of this place, quick! It ain’t getting better as the years go by, that’s for sure….Unbelievable is WRONG, pretty soon UNLIVABLE wil be more like it!

#5 joe on 05.04.14 at 5:15 pm

Looks like beautiful financial paradise and particle board is on the edge of collapse….
buy CMHC house….this CMHC scam is running like energized bunny….wondering how long….

#6 Retired Boomer - WI on 05.04.14 at 5:16 pm

Nice Scam work there. Oh, I meant the Bank of Montreal, not the real estate lien holder guy.

Easy money? Rob a Bank. OOPS, that’s dumb money.

Easy money is mostly a myth, but it CAN be done if you have both the guts (intestinal fortitude), and time. If you are already a wrinkly boomer -too bad in the main, you could work lounger, or sell that overpriced house.

Like most idiot Boomers you will buy used underwear, and eat kibbles N’ bits to stay in your house until dragged lifeless from it.

AS they say you can’t fix stupid, but you can use it to your advantage. Way to go Banksters!!

#7 Smoking Man on 05.04.14 at 5:17 pm

#4 FED-UP on 05.04.14 at 4:56 pmIs ANYONE honest anymore? Are there any people left on this miserable earth that can do their job right and not screw people over just for worthless (it’s true…) pieces of paper? If any E.T’s are reading this blog, beam me up Scottie, get me out of this place, quick! It ain’t getting better as the years go by, that’s for sure….Unbelievable is WRONG, pretty soon UNLIVABLE wil be more like it!
…….

Get the back of the line…

#8 Mark on 05.04.14 at 5:21 pm

Sounds like the whole “income trust” modus operandi all over again, where people are induced to invest in low-returning assets with “promises” of apparently high current yield.

Thankfully “F” (RIP) put an end to those scams before the Canadian economy was devoured. Although he sure took a lot of flack as the sector subsequently collapsed, not because of the tax changes, but because the underlying companies were a giant pile of turds.

Probably the most shocking thing about the “income trust” fiasco was that so many people, particularly seniors/elderly, were willing to just throw caution to the wind and invest in such scams without even reading the financials. Many “professional” financial planners even positioned such investments as “fixed income” in portfolios, as though they were guaranteed bonds (when in fact, they were highly risky and low-returning equities!).

#9 Mark on 05.04.14 at 5:25 pm

“Do you believe today’s return are not fair? Pretty sure back when bonds paid 15% most investors thought that was too low and they could get better returns somewhere else. The fact is risk-free money has never produced a high rate of return, nor should it ever.”

Considering over the past 35 years, there has been no realized equity risk premium in Canada, returns to owners of fixed income have been more than generous. If anything, GIC, bond and savings account investors have had it extremely good, while investors in stocks have suffered excessive risk and no incremental return for their efforts.

The fixed income bubble and excess returns on fixed income have also inflated a housing bubble, which is now in the process of collapsing.

#10 gladiator on 05.04.14 at 5:51 pm

And if the mutual fund sucks and delivers zero return for all those 5 years, it will just pay you back the 100k: 5k per year for the next 20 years after this initial period.
Wow! Do people really fall for this? How did BeeMo fall this low?

#11 Toronto_CA on 05.04.14 at 6:15 pm

>Then, after five years of growth, the fund pays the investor “for the next 20 years an annual cash flow equal to 5% of the investor’s initial investment, or the market value at the 5-year anniversary date, whichever is greater. The cash flow is guaranteed by the Bank of Montreal.”<

What am I missing here? Aren't they just promising to return the capital over 20 years? Is the guarantee that they will not lose your initial investment in the 5 years before the annuity starts? I'm confused.

#12 bill on 05.04.14 at 6:15 pm

Thanks Garth
hmmmmm. extravagant claims…. and guaranteed you say?
sounds like a guaranteed loss of savings to me…reminds me of that brad lamb pitch a while back.
another wallet weevil. where has the bug spray got to ?

#13 Flawed on 05.04.14 at 6:17 pm

Garth where are all these wrinklies homes that you said were going to be selling in droves two years ago? Are we just so focused on Vancouver and GTO that we don’t see what’s going on around us in the rest of the country?

Demographics will have a proud impact for the next two decades. — Garth

#14 Nemesis on 05.04.14 at 6:26 pm

#ProfessorZambini&Ghosto! #RoadToUtopia

Having seen the ‘PaulHecht’ pitch once or twice before, SaltyDogz… I thought you might enjoy a BehindTheScenes peek at how it actually works:

http://www.tcm.com/mediaroom/video/435605/Road-To-Utopia-The-Movie-Clip-Zambini-Ghost-O.html

#15 AB Boxster on 05.04.14 at 6:33 pm

#devore

The fact that it is rigged is the problem.

You choose to participate in the system, because you believe you can be successful in it. Perhaps you can, perhaps not.
There are many with far more dollars and influence, than you, playing.

Others just decide not to participate in the rigged game.
It’s why most American voters gave up on voting a long time ago.
The system is bought and paid for by corporate lobbyist, so what’s the point in voting?

Garth often says it’s because of fear and stupidity.
I think that people are generally honest and decent, and just refuse to play in a system the rewards dishonesty, ignores criminal fraud and unethical actions and exploits the trust and lack of knowledge of clients and complexity of the business.
The fact that they try to play and fail, is hardly surprising.

That the options for people today are:

1. Play in the rigged system
2. All of the above

is the real crime.

Clean up the system, and people will play.

#16 Old Man on 05.04.14 at 6:58 pm

There are only two things guaranteed in life which is death and taxes. The grim reaper and the taxman are both looking for me, so maybe its time to split and hide in Mexico.

#17 Ralph Cramdown on 05.04.14 at 7:01 pm

#14 AB Boxster — “Clean up the system, and people will play.”

The underlying idea here is that the rich people (say the 0.1%) WANT the little people to play (i.e. own stocks). I think there’s a lot of rich people who are perfectly happy to have the little people stick their money in GICs, houses, gold and a debt fuelled lifestyle, while the big fish just keep accumulating ownership of all the stuff that pays.

I think the system, if anything, is rigged in favour of savers who invest, be they big or small, given all the favourable tax treatment of dividends, capital gains and registered funds versus salary income.

#18 Musty Basement Dweller on 05.04.14 at 7:03 pm

Garth or any blog readers, do you have faith in the Teranet price index?

I don’t waste my time reading the Real Estate Cartel / Main Stream Media news releases crafted by the cartel and was wondering if the Teranet information seems solid to you?

#19 Dean Mason on 05.04.14 at 7:07 pm

I remember when interest rates started to drop 19 to 20 years ago by quite a bit that many people were happy they could get lower mortgage rates.

Now those same people are finding it difficult to retire now and in 7, 10, 15 years etc.

Our family saw the pattern or trend of falling interest rates and just boosted our savings aggressively and invested longer term maturities.

People actually believed that they would get 19%, 15% or even 9% to 10% interest guaranteed for the rest of their lives.

The more people called us cheap, the more we saved and never looked back.

$1,000 a week for the next 1,820 weeks compounding at 4.00% or higher a year is fine by us.

RRSP’s, TFSA’s, RESP’s, LIRA’s, non-registered etc. is all being topped up.

No mortgage, line of credit, credit cards, car loans etc. and piling up cash and compound interest for the next 35 years.

The more you can avoid getting sucked out of your pocket just means you are way ahead of the game.

By the way, the rising cost of living impacts the financially challenged , financially too optimistic and financially delusional by way more than those that look after their money.

#20 Mark on 05.04.14 at 7:09 pm

” think there’s a lot of rich people who are perfectly happy to have the little people stick their money in GICs, houses, gold and a debt fuelled lifestyle, while the big fish just keep accumulating ownership of all the stuff that pays.”

Ironically, GICs, houses, gold, and that debt fuelled lifestyle, at least for much of the past decade, has provided a higher return than most of the so-called “stuff that pays”. But I don’t expect this will be the case going forward.

#21 Mark on 05.04.14 at 7:14 pm

“Garth or any blog readers, do you have faith in the Teranet price index?”

The Teranet index uses linear approximation/interpolation for price changes, hence, it is effectively a lagging indicator of price movements.

For instance, let’s say that a house went up for 5 of the past 6 years since it was sold. And was sold recently into the minor declines we’ve been seeing across the GTA and Canada.

The Teranet index linearly distributes the price gains over all of the past 6 years. Hence, if one compares Teranet year over year data, it will appear as though prices actually went up in that 6th year.

Therefore, Teranet data won’t appear to be in decline until well after the decline has been going for a few years. And likewise, Teranet data will under-state price rises in a bull market proceeding a long bear market.

The recent slowing/flattening of Teranet data is a lagging indication that RE prices are now in decline. Consistent with what most people (except the deluded or hopelessly conflicted-of-interest) see in the GTA with prices falling.

#22 Mark on 05.04.14 at 7:19 pm

“Our family saw the pattern or trend of falling interest rates and just boosted our savings aggressively and invested longer term maturities.”

But will you have the foresight/tenacity to get out of the long-term bonds before the rate cycle starts to hurt your results seriously? Most, unfortunately, will remain married to such trade.

And what’s a modern alternative to such trade? Is gold really as inversely correlated to long-term debt as some say it is?

#23 Musty Basement Dweller on 05.04.14 at 7:27 pm

Re: the Teranet price index, thanks Mark that seems to make sense.

#24 Mishuko on 05.04.14 at 7:27 pm

I rode past the TREB building today and was tempted to do a value added service of enriching their land with nitrogen…

On that note, the bmo annuity is more like lend them money interest free then they will pay you the principle back over 20 years (assuming you even live that long) for no premium on the loan. Brilliant.

#25 Shawn on 05.04.14 at 7:42 pm

Rigged in Our Favour?

Ralph says:

I think the system, if anything, is rigged in favour of savers who invest, be they big or small, given all the favourable tax treatment of dividends, capital gains and registered funds versus salary income.

*****************************************
Absolutely true. Anyone who can invest each year eventually can get far ahead due to all the tax breaks.

Lower Middle Class pays the shot. If that is you, you need to find a way to bust through. (Or give up and go on Welfare)

Be the tenant farmer, or invest to ultimately own the farm.

AB Boxster has apparently made his choice to be a worker bee forever rather than an owner / investor.

Well, to each his own.

#26 Mark on 05.04.14 at 7:45 pm

“Re: the Teranet price index, thanks Mark that seems to make sense.”

Yeah, the Teranet people aren’t lying. Nor is the TREB when they claim that prices have gone up in the GTA. The problem is that of interpretation.

For instance, ask an average person in the GTA if the price on their individual house went up. Chances are, they’ll tell you, “no”. However, the TREB can claim that prices went up because TREB’s members have largely shifted to selling at the higher-end segment of the market. The FTB’s mostly having dropped out in the past year due to demand exhaustion and the much tighter CMHC subprime credit rules. It was this shift, the change in the “sales mix”, that drove the increases in the ‘average’ price as reported by the TREB, not actual increases on any individual houses contained within the altered “sales mix”.

Of course, try and explain the shifting “sales mix” to most RE agents, not particularly familiar with statistical analysis, and their eyes will glass over. At least in places like Regina, the RE board was honest enough to explicitly warn their members that the shifting sales mix could lead to drawing rather erroneous conclusions from the raw data. Such integrity is unfortunately lacking from other RE boards.

#27 BCD on 05.04.14 at 7:50 pm

#17 Ralph Cramdown
I think the system, if anything, is rigged in favour of savers who invest, be they big or small, given all the favourable tax treatment of dividends, capital gains and registered funds versus salary income.
___________________________________________

Sounds more like famous last words to me. . .

I find it interesting that the bank was phoning me like CRAZY in the months before the 2008 WFC. They were constantly trying to get me to reinvest in more “growth oriented” (read here: higher risk) stuff. Interestingly enough the phone is ringing off the hook again–maybe they are sensing there is hardly any real skin in the game.

#19 Dean Mason on 05.04.14 at 7:07 pm

The more people called us cheap, the more we saved and never looked back.
_________________________________________________

I am on your level because I consider myself a decent “saver”, but I have always hated “cheap peeps”. Sorry, there is a limit to frugality. When you feel like you have to start rotating bike tires and washing/re-using paper towels then life becomes too much of a chore. In the end you can’t take any of it with you. if you get a terminal disease before you are old and grey you are going to wish you spent some of all that savings. I think life is all about balance. Find what makes you happy and splurge on that–then cut back elsewhere. I think people’s money goes down the drain bigtime on fancy cars and poor eating habits (alcohol, eating out etc.). Just eating a big bowl of oatmeal a couple of times a day can save you a ton of money long term–and it is healthy for you as well.

#28 TurnerNation on 05.04.14 at 7:56 pm

Finally a picture of Smoking man on the blog

#29 Romeo Jordan on 05.04.14 at 7:56 pm

Check out http://www.yattermatters.com latest comments from this realtor…he’s been on the bullish side overall (hate to say that he’s been right thus far) and in is latest diatribe he’s basically saying that he’s starting to see overseas money hunt for a bid.

anyone collaborate that point of view?

#30 Freedom First on 05.04.14 at 8:00 pm

Garth, what can I say, except it is very good to have you write your blog exposing the many financial sharks by name, along with their various scams, who are all hell bent on fleecing the gullible and financially illiterate for their own self-gain. Thank you Garth, it makes me feel all warm and fuzzy to know you are making the greedy parasites burn publicly on a very hot seat.

Garth, hope your bionic appendage is healing well into a real kick ass Karma dispenser.

#31 Aggregator on 05.04.14 at 8:02 pm

*CHINA MAY HOLIDAY NEW HOME SALES FALL 47% Y/Y TO 4-YR LOW

PRC will flinch. The next round of stimulus (more ghost cities) in t-minus…

#32 WhiteKat on 05.04.14 at 8:02 pm

@TheAmerican #217 from yesterday’s post, With all due respect (actually zero as you are a very rude person), you have NO CLUE what you are talking about. Come visit us over at isaacbrocksociety dot ca, and get educated, or are you going to tell me that a whole grass roots movement has formed based on misinformation.

By the way, I’m not a man.

#33 Dean Mason on 05.04.14 at 8:05 pm

We see people wasting money all the time overpaying from coffee to lunch, dinner to cars, insurance, taxes, utilities, grocery shopping to banking fees etc.

Wasting $10 a day plus a 3.00% annual cost of living increase for the next 40 years adds up to much more than most people think.

In TFSA’s it would be $584,000 and in RRSP’s it would be $768,000 which includes the annual RRSP income tax refunds.

A family member of 4 people and that is $2,336,000 in TFSA’s or $3,072,000 in RRSP’s.

Most people in Canada that can’t save money is because they don’t know how to handle their money properly.

Take financial responsibility for yourselves and stop putting all the blame on savers, investors, wealth builders.

#34 Domino on 05.04.14 at 8:14 pm

Garth, I am familiar with this product and you are misrepresenting it. The money grows for 5 years to, say, $141,000 (to use your numbers) which is then guaranteed. Marie starts receiving her $7050 but the balance keeps growing the same way it did in the first 5 years. If it were to appreciate by exactly 5% as soon as the payments start, Marie would receive her $7050 every year and her $141,000 would be available to her intact at the end of 20 years. And if it were to grow by more than 5% per year after the payments start, Marie would have more than $141,000 in her account after the 20 years are over. This is a great product and that’s why BMO is behind it. Marie, you did alright and I hope Garth will admit his mistake.

Factor in that the fund/bank distributions are return of capital which reduces the ACB, expectedly to zero over 20 years. — Garth

#35 TheCatFoodLady on 05.04.14 at 8:19 pm

#13 – Flawed:

Many boomers won’t sell their homes until they’re forced to or even past that point; in terms of their own financial good. Recent polls have made it clear boomers are determined to keep their homes. Most think they can age in place until ‘the last minute’ – whatever that happens to be in their mind.

Some may be financially perfectly capable of doing just that. I believe Garth is most concerned about those who are not nearly as well prepared. Right now the oldest boomers are 68 or so. Most are able to do their own yard work & minor home maintenance… as well as heavy housework. Other than getting a little slowed by aging, finding they’re stiff in the mornings & on damp days – they’re fine.

But when they need to – can they afford someone to cut grass, plough the driveway, do the heavy housework? These aren’t expensive as stand alone items but all together – it adds up. Combine there with medical costs that aren’t covered & many may reluctantly decide to sell… within a short time period.

Many are sitting on 3-4 bedroom suburban homes that haven’t been updated in decades. You don’t want to know how many 80s style homes I routinely clean for people. I’m sick of shell shaped sinks, burgundy fixtures, corroding brass, teal carpets, etc. And wallpaper. How do you think potential buyers feel? All they see is more money they have to spend, if they’re looking for ‘move in ready’.

How many younger buyers want a place in the suburbs where major systems are past due for upgrading? Insulation, roofing, repaving, etc… it adds up fast.

It’s the smart seniors who have already sold or are selling now. Even if they don’t strictly ‘need’ the money right now, by extracting ready equity & investing it, they’ll have it if/when needed.

#36 randman on 05.04.14 at 8:24 pm

Fed-up #4

No

Sadly discussing this very thing with friends the other day

#37 Mark on 05.04.14 at 8:37 pm

“in is latest diatribe he’s basically saying that he’s starting to see overseas money hunt for a bid.”

I’d have to disagree on this, as there is very little evidence of ‘overseas money’ even being involved in the GVR (or GTA) real estate market.

Now, I know, that might sound absurd, with all these “overseas-ish” looking people around (read: Asians), but nearly all of them are Canadians, with mortgages, just like other Canadians.

#38 Andrewski on 05.04.14 at 8:39 pm

Please read Glen Hecht’s earnings disclaimer, hilarious!

http://www.caninvestwealth.com/earnings-disclaimer/

#39 Dean Mason on 05.04.14 at 8:40 pm

To BCD #27

They called us cheap but it does not mean we are cheap.

We live quite well and save quite a bit. We are just proactive and financially smart with all our financial decisions.

#40 AB Boxster#25 Shawn If you think by buying shares in any company that you are an owner, you've fooled yourself. You'll never own the farm by buying shares in it. If you were to create your own company, then you are the owner. That's what I do. on 05.04.14 at 8:44 pm

#25 Shawn

If you think by buying shares in any company that you are an owner, you’ve fooled yourself. You’ll never own the farm by buying shares in it any more than you will buy working for it.
But if you were to create your own company (or own your own farm) and invest in it and yourself, then you truly are the owner.
That’s what I do.

#41 Mark on 05.04.14 at 8:55 pm

“If you think by buying shares in any company that you are an owner, you’ve fooled yourself. “

But that’s what ownership is — ownership. Your 100% ownership in a small business exposes you to a plethora of risks that are not present in a 0.0001% ownership of a large business. You may or may not be accordingly compensated with a higher return. A disproportionate number of small businesses fail, while short of nuclear war, a diversified portfolio of ownership interests in companies through an index fund will not fail in any meaningful fashion.

Many people, quite frankly, aren’t equipped with the skillsets to manage small businesses. Those who are, probably would be better advised to leverage their skills towards the management of a larger business. There’s nothing wrong with advising the incapable masses to simply invest in pro rata ownership of the businesses of others. Much better to do that, than to fail as a small business owner and be left with nothing.

#42 Domino on 05.04.14 at 9:01 pm

Factor in that the fund/bank distributions are return of capital which reduces the ACB, expectedly to zero over 20 years. — Garth

#43 Firebird on 05.04.14 at 9:06 pm

What is ACB as Garth notes?

#44 totalinvestor.com on 05.04.14 at 9:07 pm

May the 4th be with you

http://i61.tinypic.com/29kzvvo.jpg

#45 Sheane Wallace on 05.04.14 at 9:11 pm

DOW could hit 20 k, probably in 2015.
Other emerging markets/Brazil might increase by 50 % by 2015.

Housing in Ca will go up another 5 % and then flatline and then nosedive.

Inflation would be 10+ in the next 6 years, could be 15 % + at the peak.

They will try to keep housing market from imploding by keeping interest rates low and this will kill the dollar.

If interest rates are what the market deserves they should be north of 6 % now and north of 12-15 % at the peak.

We can’t afford these rates.

With inflation rising, government lies and suppressed rates gold will soar to 5000. Oil to 300+.
In the next 5-6 years.

#46 Shawn on 05.04.14 at 9:16 pm

Bought the Farm?

AB Boxster at 40…

*******************************************
Good for you for owning your own business. That can often work out very well.

Most people can’t do that and for them buying shares is a good alternative.

Owning shares is very different than owning the whole business. I have done both and have and am making money in both.

You are in Alberta. Consider the following Gains on several Alberta businesses that I have been following and sometimes owning since 1999.

Stantec is up 2,441% (the best stock I have followed)

Melcor is up 520%

Canadian Western Bank is up 657%

A few National companies that operate in Alberta

Canadian National Railroad is up 688%

Canadian Tire is up 364%

There were however some Alberta companies that I followed and owned that went broke

Visionwall was one. Westaim also I think went bust.

There was nothing rigged about these losers. They were small companies and poorly managed. Not every investment works out.

My overall portfolio return is 597% since the start of 2000. I am sure there was substantial luck involved. But I worked extremely diligently at it.

#47 Mark on 05.04.14 at 9:17 pm

“We can’t afford these rates.

With inflation rising, government lies and suppressed rates gold will soar to 5000. Oil to 300+.
In the next 5-6 years.”

Canadians most certainly can/could, if gold was $5000 and oil at $300. After all, we are extensive producers and owners of the assets. Of course, ownership of such assets generally isn’t vested with the over-leveraged RE-owning crowd.

$5000 gold means Barrick would easily be a $150B+ company (if not higher, remember Nortel was worth in excess of $300B!!). $300 oil would multiply the stock prices in the Alberta oilsands likely 10-fold. Very positive for the Canadians who had the tenacity to invest rather than put all their chips into minimal historical growth housing.

#48 TheCatFoodLady on 05.04.14 at 9:19 pm

#27 – BCD: Planned indulgences; that’s how we do it on a very limited income. We don’t care about how we appear to our neighbours, family or peers. We purchase items or services to suit OUR needs – period. Most of our furniture is second hand – solid but decidedly not ‘in style’. That applies to most of our household ‘stuff’. Look, our place is for our comfort & serves as a base for our little outings & adventures.

Few people can ‘have it all’, so why try? Is anyone really going to be that impressed, except for the bank flunkie calculating future returns on interest you’re stuck paying on debt to aquire all that stuff?

We’re more than happy to be skinflints when it comes to stuff that doesn’t matter to us so we can afford the little indulgences that make life enjoyable for US.

#49 Babblemaster on 05.04.14 at 9:26 pm

Actually, she would have $141,000.00 left over. Not $100,00.00. Even better!

#50 Nemesis on 05.04.14 at 9:29 pm

#Death&Taxes #Mexico

@OldMan/#16

Death&Taxes? Correct. But, to be sure, I’d only worry about one of those. TrustMe.

http://youtu.be/RjMEzBMiTJ4

Mexico? MuchoGusto!!!… if you’re in the right frame of mind, OldMan… you can have some VerySerious fun down there:

http://youtu.be/VqomZQMZQCQ

http://youtu.be/Qk4GDuzZAM8

#51 Suede on 05.04.14 at 9:31 pm

#45 Sheane Wallace

Dow is within 10% of 20k in CAD. Get with the program – this is old news.

Interest rates at 15% sometime soon? not likely. Unless the price of assets are rocketing higher weekly.

#52 Nemesis on 05.04.14 at 9:33 pm

#46Erratum

FinalMexicoLinkShouldHaveBeen:

http://youtu.be/KD55dkiX_ZQ

#53 Bob Rice on 05.04.14 at 9:42 pm

This looks scary… comments?

http://www.theglobeandmail.com/report-on-business/chinas-looming-debt-bomb-shadow-banking-and-the-threat-to-growth/article18409275/

#54 Real estate reality on 05.04.14 at 9:46 pm

There is a lot of suckers in Calgary, especially when it comes to real estate.

But it makes a lot of sense to buy real estate if you live in Calgary…you only realize it when you live out here why its so appealing. So here are the secret reasons:

1. The weather sucks so your more inclined to stay inside…4 month summers and 8 month on/off winters

2. Going out is expensive out here, and there is limited choice. You have the fast food restaurants in the suburbs which are cheap but that’s not really going out, restaurants in some main centers, and the movie theaters…everything inside and the obvious alternative is to stay in your house.

3. The chances are you have to drive everywhere (also the chances are with the heat on blasting)…from the suburbs, or your taking the train in the cold so again the easy alternative is to just stay in.

In summary you stay in and look for a bigger place where you can spend most of your life when living in Calgary…everyone here drools over housing, they can’t help it.

#55 4 AM Sunrise on 05.04.14 at 9:46 pm

#188 Bottoms_Up on 05.03.14 at 10:56 pm

Who needs customer service when it’s DIY investing?

———————————————-

OK, I’ll admit the horror stories I hear were from 4 years ago. Maybe they’ve cleaned up their act since. I stopped keeping track because I ran away screaming and never looked back. They included:

– charging interest when no interest was accrued
– charging fees when the customer did not do activities that were supposed to trigger fees
– not reversing those fees (or taking a good long time to do so)
– some kind of error in switching between currencies

I’m a DIY investor, too, and I rely on my brokerage to NOT eff up, especially when I am vigilant-diligent about not effing up myself.

But I repeat, maybe they’ve cleaned up their act since.

#56 Son of Ponzi on 05.04.14 at 9:52 pm

Maybe I should change my handle to
“Son of Hecht”.

#57 Old Man on 05.04.14 at 9:52 pm

#52 Nemesis – I will have the amazona women waiting for me, as are going to teach me to ride hard. Now go and eat some cake.

#58 saskatoon on 05.04.14 at 10:05 pm

#47 Mark

guess it depends what you mean by “we”…but the canadian government certainly isn’t an “extensive owner” of gold.

1965: 1012 tons of gold
Today: 3 tons of gold

Garth will probably think this is awesome.

However, I think it just puts the taxpayer more at risk.

#59 Chickenlittle on 05.04.14 at 10:05 pm

http://topdocumentaryfilms.com/maxed-out/

I watched this documentary today. It came out in 2006and its about debt, particularly credit card debt. It was so interesting seeing the Las Vegas agent pump houses. I wonder where she is now?

One thing that bothered me was the lack of common sense people had regarding their credit card debt. As much as i felt sorry for them i couldn’t help but feel like they were the ones responsible for their problems. A little common sense and self control go a long way, for them AND for myself.

It made what you chirp about non stop, Garth, more real. I didnt know it was THAT bad! And we are in WORSE shape debt wise than they were!

#60 Roger_Home_Inspector on 05.04.14 at 10:11 pm

#4 FED-UP on 05.04.14 at 4:56 pm

It’s sad but I’m with you, you can’t trust anyone, even the people who are “on your side”.

Quick anecdote. I inspected a 2 year old town home today with a walkout basement. Should be pretty straight forward. Then I look at the elevated deck at the rear and red lights and alarm bells start going off in my head. Two things stand out right away that are very dangerous; the ledger is lagged to the brick veneer and the outlying beam is bolted to the sides of the support posts. Deck is about 12 feet off the ground. Not good.

Before I can convey in full my concerns, the agent representing my clients (the buyers) jumps into the conversation and announces “This deck had permits pulled!!!” They then go on to say that if permits were pulled my concerns are unfounded. Let’s just move on ’cause there’s nothing to be seen here.

I still advise the clients that they have a professional and reputable deck contractor come in for a second look, permits or not. The suspect conditions are major safety concerns in any elevated structure.

The agent (who again I’ll remind you represents the “best interest” of this nice couple) insists continually that there is no issue. Finally, I do the obvious and ask to see the permit. They hesitate. But they indicated earlier they had a copy, so it’s a reasonable request, right? They can’t really say no can they?

Eventually, the agent goes out to their base model leased Audi and bring in the permit. The current owner who built the deck did in fact have a permit. Problem is, they never had any of the required inspections completed and the structure did not match the plan details that were submitted at the time of permit issue. Oops.

I point this out to the agent in private to save them from looking like such a huge dink when I finally have to state the obvious. The agent said that they knew the inspections weren’t done, but they never said that they were. They simply replied (truthfully I guess) that permits had been obtained for its construction. They never said that the inspections and occupancy portions had been completed. They thought that “just having the permit was good enough”.

I smiled a smile of embarrassment for them. I then asked if they wanted to break the news or if I should. They did it. How very big of them.

A perfect example of why you can’t trust people- even those who claim to be on your side. Especially if they are earning a commission based on your decisions and the Audi lease payment is due.

#61 Sheane Wallace on 05.04.14 at 10:18 pm

#51 Suede on 05.04.14 at 9:31 pm
#45 Sheane Wallace

Dow is within 10% of 20k in CAD. Get with the program – this is old news.

Interest rates at 15% sometime soon? not likely. Unless the price of assets are rocketing higher weekly.
………………………….

Measuring DOW in Ca dollar?
Wow

I said interest rates should be 15 % or more at the peak of what is coming (they were 21 % at the peak in the 80-es/Volcker’s era)

I did not say that they would be 15 %. Governments will keep interest rates, this will kill the currencies and cause run on stocks and specially on gold.
Run away from bonds.

The inflation will kill us, we can not simply increase M1 4 times and have no inflation. It is coming.

#62 Andrew Woburn on 05.04.14 at 10:18 pm

#4 FED-UP on 05.04.14 at 4:56 pm
Is ANYONE honest anymore? Are there any people left on this miserable earth that can do their job right and not screw people over just for worthless (it’s true…) pieces of paper?
==================================

There are, but I think it depends to some extent on where you live. I have lived in two major Canadian cities and two smaller ones and my sense is that honesty still lives in smaller communities. As a long time big city boy I have been amazed at the simple honesty I have found in Nanaimo in buying a vehicle and in auto and home appliance repairs. I think small town people have a long term investment in each other and in their reputation. City dwellers seem to see their fellow citizens as obstacles and nuisances. Drivers honk at you 5 nanoseconds after the traffic light changes. Overcrowded people push and shove. A bazaar mentality sets in where any lie that gets you the sale is good enough and you’ll never see the customer again anyway. People just stop trusting each other.

The difference was clearly illustrated for me a few years ago when I was helping my son drive his old pickup truck from Saskatoon to Toronto. It was a bitterly cold December day and we couldn’t keep his truck warm despite blocking the radiator solid with cardboard. In a near blizzard at four in the afternoon we pulled into a busy Canadian Tire store in a small Saskatchewan town. The service manager pulled the truck into a service bay right away. Twenty minutes later a mechanic came out and explained that he had locked our heater control full open with a piece of wire and it should hold us until Toronto. They wouldn’t take any money because they said they hadn’t really done anything. When’s the last time that happened to you in Toronto or Vancouver?

#63 Cyclist on 05.04.14 at 10:29 pm

27 BCD

“When you feel like you have to start rotating bike tires…”

BCD a decent tire can run you $50, a better one $80. The rear also wears much faster, so yeah I rotate
them. If one starts to tear or gets a gash I also save the remaining good one, even if its not a comestic
match. I also like to repair inner tubes at least twice
before I toss them.

Oh and riding my bike is healthy.

#64 joblo on 05.04.14 at 10:31 pm

Kanada same boat as Japan.
No/low growth, devaluing currency to compete on exports, aging population, low birth rate blah, blah, blah
Economy needs/loves cheap money
Low interest rates to infinity.
Bring em on MORE Financial SURE THING’s

#65 Smoking Man on 05.04.14 at 10:31 pm

With the assistance of Old Man, a True detective…. I will be posting a long essay on what really happened to MH370.

Thanks for the links old man..

It’s long, if it hits the reject button on here, will be posted on my blog.

Hint, War of the Worlds..

#66 Aggregator on 05.04.14 at 10:31 pm

#53 Bob Rice

I'm just reading through the PBOC's newly released shadow banking report now. It's the same thing like last time: It's too complex to assess and too big of a problem deflate, so the solution may be to do more of the same and build more ghost cities and stock copper to the moon.

All central bankers and govt's are in denial. They'll never defeat the business cycle by throwing more paper at it.

#67 Bottoms_Up on 05.04.14 at 10:42 pm

Garth I’m glad you wrote this post on how ridiculous it is to set our sights on a 5% return as the gold standard. As you have quote here frequently, and history has proven, that profession investors have easily obtained 7% per year over the history of the stock market.

And here’s the CONS, pushing for a race to the bottom, setting up for an attack on the public service pension plan, trying to change the accounting rules from factoring in 4.1% rate of return down to 1%:

“The government is assuming – indeed, guaranteeing – a 4.1-per-cent rate of return on the plans’ investments compared to the fair value accounting in the private sector, where rates of return for similar investments are closer to one per cent.”

“The plans are in the best shape they have ever been. The Canadian taxpayer is not going to have to pay an extra dime,” said Ron Cochrane, co-chair of the joint-union management National Joint Council.”

http://www.ottawacitizen.com/business/Public+sector+pensions+targeted+leadup+auditor+general/9806107/story.html

#68 will on 05.04.14 at 10:47 pm

Yeah that BeeMo contrivance sounds like an annuity to me. Steer clear of that for sure.

#69 Investment Advice on 05.04.14 at 10:49 pm

Moshe: Do you drink beer?
David: Yes
Moshe: How many beers a day?
David: Usually about 3
Moshe: How much do you pay per beer?
David: $5.00 which includes a tip
Moshe: And how long have you been drinking?
David: About 20 years, I suppose
Moshe: So a beer costs $5 and you have 3 beers a day which puts your spending each month at $450. In one year, it would be approximately $5400 …correct?
David: Correct
Moshe: If in 1 year you spend $5400, not accounting for inflation, the past 20 years puts your spending at $108,000, correct?
David: Correct
Moshe: Do you know that if you didn’t drink so much beer, that money could have been put in a step-up interest savings account and after accounting for compound interest for the past 20 years, you could have now bought a Ferrari?
David: Do you drink beer?
Moshe: No
David: Where’s your Ferrari?

#70 Wait, What? on 05.04.14 at 10:49 pm

#54 Real estate reality on 05.04.14 at 9:46 pm

You can go Downtown in Cowtown and oh wait?

Right, you stay inside, that darn +15 pathway connects buildings all over DT.

Okay, just get a bigger home with a mountain view.

#71 Bottoms_Up on 05.04.14 at 10:50 pm

#55 4 AM Sunrise on 05.04.14 at 9:46 pm
———————————————–
I’m fairly certain they’ve cleaned up their act. Been with them almost 3 years, lots of trades, no problems. And they are always quick to respond via email (1-2 days).

#72 sheane wallace on 05.04.14 at 10:54 pm

#58 saskatoon
……………………………..
So the government sold 1000 tons of gold to suppress gold prices at 350-400 $/ounce.

Today it is at 1300. Loss of at least 30 billions USD.
No questions asked.

Look at what is happening in Switzerland (they sold 1000 tons out of 2000) and are now demanding investigation and mandatory allocation of 20 % of foreign reserves to gold that banks and government can not touch.

#73 sheane wallace on 05.04.14 at 10:59 pm

#47 Mark
……………………………
The resources are owned by corporations, not by countries.

Corporations will become richer.

And what I really meant is that money will become worthless and depreciate, not that commodities will explode and everything else will maintain current price levels.

#74 sheane wallace on 05.04.14 at 11:02 pm

#47 Mark

correct,
If gold goes to 5 k Barrick and GDX will increase 6-7 times and GXDJ 12-15 times.

Do you hold GDXJ? How many have it? I do.

Gold at $5,000? In your dreams. — Garth

#75 Mark on 05.04.14 at 11:11 pm

“guess it depends what you mean by “we”…but the canadian government certainly isn’t an “extensive owner” of gold.”

Au contrarie my friend. The Canadian government has an entitlement to approximately 30% of the profits of Barrick, Goldcorp, Kinross, among a plethora of other gold mining firms that collectively own many thousands of tons of gold. By way of the power of corporate income taxation. They also hold taxation power over hoardes of executives, engineers, and other employees of the same.

In light of such, there is no reason for the Canadian government to physically hold the yellow metal to receive the benefits of a higher gold price.

Much like, in real estate, it can be said that 30-40% (if not more) of the cost of a contemporary building goes straight into the coffers of government through taxes on land, taxation of construction labour, capital gains on the sale of land, and taxation of builder profits. Additionally, the government collects extensive tax on mortgage interest paid.

#76 Mark on 05.04.14 at 11:14 pm

“The resources are owned by corporations, not by countries.”

Last time I checked, government, at least in Canada, gets to take 30% of the net production of these alleged resources just in corporate income tax alone. Not to mention other direct royalties. Without taking any of the downside risk.

#77 Waterloo Resident on 05.04.14 at 11:15 pm

For anyone promoting gold stocks, look at the 5-year chart of GDXJ and I think you’ll change your tune pretty quickly. The trend is down, not up.

http://finance.yahoo.com/q/ta?s=GDXJ&t=5y&l=on&z=l&q=l&p=&a=ss&c=

Now compare THAT to the 5 year chart of UPRO:

http://finance.yahoo.com/q/ta?t=5y&l=on&z=l&q=l&p=&a=ss&c=&s=upro&ql=1

#78 sheane wallace on 05.04.14 at 11:19 pm

Gold at $5,000? In your dreams. — Garth
……………………
You mean they will confiscate it first at artificially suppressed prices and then devalue the currencies?

I frankly don’t care as I don’t hold gold.
But yes, gold could hit 5k.

But, of course, it won’t. — Garth

#79 Mark on 05.04.14 at 11:19 pm

“correct,
If gold goes to 5 k Barrick and GDX will increase 6-7 times and GXDJ 12-15 times.
Do you hold GDXJ? How many have it? I do.

No GDXJ here. Why would I pay a US-based trustee a fortune to passively manage junior gold stocks and lose out on the Canadian-sourced dividend tax credit when such firms eventually produce?

Additionally, I personally only buy producers. Junior non-producers are too risky with most not sitting on economic deposits. I trust the management of the mid-tier and high-tier mining firms to selectively acquire juniors if projects prove to be worthy. Yes, some people play the junior game and do well, but that’s really over my head.

#80 Spaccone on 05.04.14 at 11:25 pm

#13 Flawed on 05.04.14 at 6:17 pm

Some may be able to carry the charade on further or much better as their adolescent kids are still living with them or returned to live with them for the short to medium term under the lure of cheaper living expenses, while subsidizing their parents to varying extents.

It’s only a matter of time until the shoes drop. How many of them will want to continue on in high negative cash- and time-flow large suburban homes once one or both of their parents pass on given the monetary, time, and psychological costs of utilities, perpetual maintenance/repairs/improvements, property tax, insurance, lifeless communities…).

#81 Happy Renting on 05.04.14 at 11:28 pm

So here’s the link to that 5%/20 year investment, explaining how it works.

http://www.ci.com/g520/howitworks.jsp?lang=EN

It very clearly says “potential final payment” at the end of year 25. Potential. Meaning there could be zero final payment. You are not guaranteed back your initial investment.

The website also calls the 5% “cash flow”, not “interest”. It alludes to the 5% being return of capital by talking about “tax efficient cash flows for non-registered accounts.”

The only benefit I can see to this set-up for the investor is that a professional is managing the money for the first five years. That professional is promising a return of at least 0%. In some cases I can see how that’s better than a financial illiterate doing it themselves.

Of course if you had, say, the internet and Google, you could do a little research, buy a five-year strip bond that matures for the initial principal amount, invest the remainder of the principal in growth equities, thus guaranteeing at least the initial principal is available at the end of year 5. At the end of year 5, take whatever money there is and GOC bond-ladder it so 5% matures each year for the next 20 years. Benefit: you get the (paltry) interest from the GOC bonds during years 6-25, which the mutual fund version probably eats via MER. You’re guaranteed SOMETHING at the end of year 25 as final payment.

Okay, I’m being a little flippant, suggesting it’s as easy as that. But to ensure you’re not eating Fancy Feast in your old age, isn’t it worth a little leg work to make sure your money stays yours?

#82 sciencemonkey on 05.04.14 at 11:28 pm

On owning companies as a pro rata shareholder, I like the idea. My talent enriches the equity of my employer, so it’s nice to know that I can take extra money and turn it into my equity in a basket of businesses. (Assuming I can negotiate a high enough salary to allow me to save; in today’s overpopulated and automated world, there is an overabundance of labour supply. I worry that soon many won’t be able to climb out of the wage slave hole.)

What’s depressing is that my efforts will always be dwarfed by those who are born into rich families. On the other hand, I shouldn’t ignore the advantages I had that let me get where I am now.

I also like the idea that being a disciplined saver now leads to more rewards later. With a recent raise I’ve been able to save+invest 30% (18% RRSP + another 12%) of my gross income, all while living as a SINK (single income no kids) couple. We’re comfortable, but it means there are limits on electronics and hobbies, and eating out and alcohol. I would like to save more, but the cuts would start to take the joy out of life.

#83 OttawaLuke on 05.04.14 at 11:29 pm

Uhh is anyone else concerned with the number of realtors attacking their wives recently here in Ottawa? I know the market is slow but…

http://www.ottawasun.com/2014/05/04/vicious-knife-attack-injures-woman-and-her-daughter

#84 Happy Renting on 05.04.14 at 11:30 pm

Oh, and that incredibly long post doesn’t even include what I really wanted to say. Does anyone read about this mutual fund and feel reminded of GOB Bluth (Arrested Development) turning a $100-bill into 100 pennies? That’s the mental image I’m getting now (including the people scrambling to scoop up the pennies!)

#85 sheane wallace on 05.04.14 at 11:30 pm

#76 Mark

come again.

Net production vs. corporate profit. And BTW Corporate taxes are 15 % in Canada.
Shareholders earn the lion share of the profit, not governments.

If you have the time to research and build basket of companies and the expertise and appetite for risk you are absolutely correct in what you do. I do the same in the energy sector.
I prefer to pay the ETF management fees for gold shares.

Do you agree that the government has lost over 30 billions in selling the gold? I think they did.
………………….

#77 Waterloo Resident

The trend is your friend until it is not.

Gold stocks up 15-20 this year alone.

#86 sheane wallace on 05.04.14 at 11:36 pm

#79 Mark
absolutely correct on the canadian tax dividend, gdxj/US based equities are good for RRSPs.

#87 sheane wallace on 05.04.14 at 11:39 pm

But, of course, it won’t. — Garth
……………………………….
it certainly will and we both know it. We just can’t agree on the time frame.
……………………………….

#88 Andrew Woburn on 05.04.14 at 11:40 pm

#53 Bob Rice on 05.04.14 at 9:42 pm
This looks scary… comments?
==========================

Nobody is happy about China’s situation but the country may not be as ready to collapse as it might first appear based on what I read on credible sites like the South China Morning Post. Most of China’s internal debt is owed by state owned enterprises so the major risk of default is from one government pocket to another. The main debt exposure of foreigners seems to be the trillion or so US dollars borrowed through Hong Kong to invest in business and real estate but it seems unlikely that the Chinese government would let this all go into default given that they are sitting on $USD 4 trillion in reserves.

The Chinese real estate market is sliding but as I understand it, equity to mortgage debt is usually high, often as much as 50% and again the debt is internal.

Economists who have studied the so-called “Asian tiger” economies say that slowing Chinese growth simply follows the trajectory that Singapore, Japan and South Korea have followed before and is inevitable at this point in its development. Japan had to move away from producing cheap manufactured goods to higher tech and higher value products and China must learn to do the same. Since the country has no shortage of money or brains, it is likely they will master this transformation.

Obviously a slowdown in Chinese demand for resources will affect Canada in the short term but I am more concerned about the prospect of political instability in China. The country has a long history of insurrection. Foreigners may have little exposure to the internal debt crisis but not so the new Chinese middle class. If their
aspirations are crushed big problems could follow. On the other hand crisis could create positive political change. To me the biggest risk is that a beleaguered Chinese government could seek to distract its critics by fomenting a war.

#89 sheane wallace on 05.04.14 at 11:45 pm

DELETED

#90 AACI home-dog on 05.05.14 at 12:03 am

That 5% guaranteed may not be compounded every year also, which would be a big difference, after even the first 5 years…

#91 Obvious Truth on 05.05.14 at 12:08 am

I’d like to take the 100k from beemo and offer them that deal.

#92 gmc on 05.05.14 at 12:21 am

Check this out, this chart will blow you away, we are a crazy lot, we are out of this world for housing prices, we are scwerer, good thing CHMC is at 1.2 trillion, wow who is going to apy for that.
good luck all

http://investmentwatchblog.com/this-chart-is-a-hair-raising-picture-of-canadian-home-prices-that-makes-the-torrid-excesses-of-the-us-housing-bubble-look-banal/#MqrwSDw5zKP7gVCu.99

#93 Fort Mac Flatlander on 05.05.14 at 12:30 am

#3 devore

A little harsh, but sometimes a person needs a cold glass of water in the face. Virtually all financial education for some reason falls under the responsibility of parents and the best we can do is try to survive and break the cycle. Well said.

#94 fisheman on 05.05.14 at 12:31 am

Canada selling off it’s gold is an interesting story. That came about when Reagan got elected. The CIA persuaded him that the USSR”s major source of foreign exchange were gold, oil & diamonds. The lock is in on diamonds but they figured that if they could drive the price of oil & gold down they could break the country. The English, Dutch, Norwegians & us among others started selling & with Barrick shorting itself got the Au down to $350. Oil went to $19. Enough years go by, the Ruskies run out of foreign exchange & no cash flow helps topple the system.
I wonder what Putin”s thinking now? Beaten up first time, their fault. Taken down a second time, my fault? The BRICS are faltering, Ukraine will get much worse & even though I”ve got my 10% in Maples, (double Garth’s recommendations for age) a $5000 Au world will mean a much crankier & meaner & poorer uncle to the south.

#95 Bernie Brunet on 05.05.14 at 1:13 am

#63 Cyclist
Patching tubes? You ole skin flint.

Seriously, BCD’s tire rotation comments are relevant only to those of us who don’t ride $1,000 “new rider” bicycles, complete with $80 tires. For some perspective, Cosco’s Michelin tires for my Chevy are $93. Those of us who are uninterested in the present day bike fashion show, know exactly what BCD’s point is.

BTW I raced road bikes seriously as a teenager. Paid $240 (Gasp!) for a real racer with sew up tires. I now ride an $80 bike with $15.99 tires. I don’t rotate, and my rear tube has at least four patches.

#96 Fed-up on 05.05.14 at 1:23 am

@ #64 joblo on 05.04.14 at 10:31 pm

Kanada same boat as Japan.
No/low growth, devaluing currency to compete on exports, aging population, low birth rate blah, blah, blah

—————————————————————————

Except Japan has a “real” economy with hundreds of world class multinational corporations .

#97 Setting the Record Straight on 05.05.14 at 1:38 am

“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”

Damn, you mean I have to plan for an asteroid attack?

#98 The American on 05.05.14 at 1:39 am

@32: WhiteKat, there you go again, silly. Sending me to a website that is full of what ifs (geeeesh, talk about misinformation, right?!). No wonder you think the way you do. You read that hypothetical garbage, chucked full of misinformation and “what ifs” all day. I’ll refrain from being “rude,” as you put it, if you’ll simply renounce your U.S. citizenship, do us all a favor, and stop your constant whining about it because it really is just that simple. YOUR problem, WhiteKat, is you want your cake and eat it too, all the while telling everyone else why you’re the victim. It’s exhausting and quite unattractive. It isn’t rude to point out when someone is so self-righteous and insipid that he/she/it wants to do nothing more than blame the world for their woes. Like I said, get over it. And if you aren’t man, you must be a child.

#99 Setting the Record Straight on 05.05.14 at 1:43 am

Regarding legislation affecting those who are dual citizens, I suspect the Canadian government may be counting on a successful charter challenge.

#100 World Traveller on 05.05.14 at 2:40 am

The GTA is world famous again

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

#101 Jc on 05.05.14 at 4:27 am

Around the 35 minute mark Kyle Bass gives his view on Canada as China’s butterfly effect. Worth watching the whole video.

http://m.youtube.com/watch?feature=youtu.be&v=VBPZ58dzjfE

#102 Buy? Curious? on 05.05.14 at 4:55 am

Garth, an excellent piece as to why one should park their money in a house!

Using your example, if that person was to put $100k as a downpayment into a rental property, the income stream would be continous.

A house on a good is the way to go!

https://www.youtube.com/watch?v=KtS5ZP-iF7Y

#103 saskatoon on 05.05.14 at 6:48 am

#75 Mark

but these companies don’t pay taxes in gold…they pay taxes in CAD.

there is a BIG difference between possessing physical gold, and having the power to tax companies that mine it.

#104 TimV on 05.05.14 at 7:12 am

One other observation about the G5|20 — in the event that initial investment returns are low, you will be locked into basically a low return fixed-income portfolio (this is how BMO protects itself — so their 5% guarantee may actually be worth very little depending on how “low” is defined, which is hopefully in the prospectus). So if, for some reason, equity markets tank over the next 5 years, the probability of receiving $0 as the final value after 25 years increases dramatically.

More likely, the strategy the buyer would have preferred (in the event of a stock market crash over 5 years) would be to maintain a 70/30 (or whatever) equity/income split.

#105 Dean Mason on 05.05.14 at 7:54 am

To #81 Happy Renting

5 year strip bonds are not yielding that much. Canada 5 year strip is 1.60% at best and provincial strip bonds are yielding at best 2.40%.

The highest 5 year GIC’s are paying 3.00% to 3.05% so it would be better to have a compound interest GIC at 3.05% for 5 years.

This would require $86,051.81 to have $100,000 maturing in 5 years versus $92,370.11 or $88,817.84 for Canada, provincial 5 year strip bonds worth $100,000.

#106 2CntsCdn on 05.05.14 at 8:00 am

Honey! Start the car ……. our future will be ok if we get our butt’s over to the Day’s Inn by 7:00. I told you something would come along and everything would work out OK. This nice man has figured out a way. Why do people worry so much! sheeesh! Oh … and grab the cheque book.

#107 WhiteKat on 05.05.14 at 8:23 am

@TheAmerican #98 You wrote:

“@32: WhiteKat, there you go again, silly. Sending me to a website that is full of what ifs (geeeesh, talk about misinformation, right?!). No wonder you think the way you do. You read that hypothetical garbage, chucked full of misinformation and “what ifs” all day. I’ll refrain from being “rude,” as you put it, if you’ll simply renounce your U.S. citizenship, do us all a favor, and stop your constant whining about it because it really is just that simple. YOUR problem, WhiteKat, is you want your cake and eat it too, all the while telling everyone else why you’re the victim. It’s exhausting and quite unattractive. It isn’t rude to point out when someone is so self-righteous and insipid that he/she/it wants to do nothing more than blame the world for their woes. Like I said, get over it. And if you aren’t man, you must be a child.”

Typically, when people cannot or refuse to engage in intelligent debate, they resort to lower level forms of argument as described in Graham’s Hierarchy of Disagreement outlined from bottom(low level argument) to top(high level argument) as follows:

Name-Calling: Sounds something like, “you are an ass-hat.”

Ad-Hominem: Attacks the characteristics or authority of the writer without addressing the substance of the argument.

Responding to Tone: Criticizes the tone of the writing without addressing the substance of the argument

Contradiction: States the opposing case with little or no supporting evidence.

Counterargument: contradicts and then backs it up with reasoning and/or supporting evidence.

Refutation: Finds the mistake and explains why it’s mistaken using quotes.

Refuting the Central point: Explicitly refutes the central point.

TheAmerican, if you take a look back at the many comments I have written in the last couple of Garth’s posts (and past posts as well) you will see that most of my writing falls into the upper levels of the hierarchy.

Where do YOU think YOUR comments fit in?

#108 WhiteKat on 05.05.14 at 8:51 am

It looks like Ottawa Real Estate Board is trying to ensure they are being honest and mistake-free with their reporting. This update appears on their April listings: “Ottawa, April 11, 2014 – Due to an input error when collecting our March statistical reports, the stats we previously released were found to be incorrect. This error caused us to under-report the number of units sold, consequently affecting the average sales prices. We have now rerun the reports and have provided you with the correct, updated statistics for the month of March 2014. We have put procedures in place to ensure that this will not happen again. We sincerely apologize for any inconvenience this may have caused. ”

I’m curious to see what the April numbers were like. Of course I can trust them completely.

#109 Old Man on 05.05.14 at 8:55 am

Caesar needs to take the blue pill or is it the pink one, as Huffington Post has a breaking story. Caesar appointed a Senator in 2010 whose background is fraudulent. Another attempt by the Cons to reform the Senate.

#110 2CntsCdn on 05.05.14 at 9:34 am

#101 Rexx Rock
“With many Canadian cities with average house prices over $500,000 it shows the true wealth our citizens income have risen over the last 10 years.Celebrate that we can afford to pay high priced homes,it means our economy is still going strong.”

Citizens of Canada. Cel-e-brate good times! Come on! Have a cel-e-bra-tion. That’s the spirit Rex. You know…. come to think of it …. my neighbor has a BMW in his driveway …. he must be rich. And I know this other guy! ….. he bought a loaded full size pick up truck … and then went on a vacation ….. I think Canada’s going to be OK after all.

#111 TO Renter on 05.05.14 at 9:37 am

Successful estate sale, $$M property, original house, in the family since the ’60s, in C12 (location location location – subway, 401) sold for asking, to a Russian.

Whew. It actually took enormous effort, and was a nail-biter, so feel fortunate and relieved. The massive renos and rebuilds done in the ’80s and ’90s to the original ’50s stock are languishing on the market (aka unloved), they used to change hands, at ever escalating prices, like mad 5 years ago. List prices now inching down as they put them on and off the market season after season. If not delisted in frustration, then resorting to leasing them out.

Demographics for the area have half the residents with Persian or Cantonese/Mandarin as their 1st language. They are never home, the mansions stay empty, you only see activity a few weeks/months a year. No discernible real roots or ties to Canada, purely business, transient investors. The changes in the area have been quite profound. It feels like shell game or illusion though, and the bubble is definitely deflating in that RE area of areas, you have to be on the ground and an insider to see it though.

Feel good about the “peak” sale for my remaining war baby parent who is is reinvesting a reasonable one quarter of the proceeds in a lovely, 50 years-younger place, same number of beds, north of TO, and a better mortgage-free lifestyle.

Meanwhile, I sold in ’12 and rent, and did not jump at the chance to inherit and sit on a rare-air property at what all signals to me say is around the top of a cycle. Calling me house-frigid would be a compliment. Need a few of us to balance out the horny.

#112 miketheengineer on 05.05.14 at 9:41 am

Garth et al:

I found a really really bright LED flashlight, that costs ~ 5 bucks and similar to a Maglight…all aluminum construction, etc. For the price, you can’t beat it…and the delivery is include. Takes about 2 weeks to get it from Amazon.

I liked it, thought you might too…! I got one for my spouse and mother, I liked it soo much

http://www.amazon.ca DELETED

Not a torch blog. — Garth

#113 Pastbeyond60 on 05.05.14 at 9:43 am

@98The American
Do you understand what the American Revolution was fought over? You are now doing the same thing. There is a beautiful symmetry in all of it. How you began is how you will end. It is all about wanting your unfair share. The Brits wanted it from the Americans now the US wants their unfair share from the world. You are better than this.

#114 Dan on 05.05.14 at 9:58 am

Demographics will have a profound impact for the next two decades. — Garth

So I’ll have to wait 20 years before I can start looking? That’s an awfully long time……

Obviously it will be protracted, and has already commenced. Don’t be a dink. — Garth

#115 Cyclist on 05.05.14 at 10:01 am

95 Bernie – what’s a “new rider” bike? I’ve ridden carbon fibre since the last millenium. Also have a cyclocross bike with discs. I’ve never had tubulars, and try to ride a couple of masters racers. Some of those guys are still Cat 2s, and a few ex-pros. If I’ve got my legs, I can wheel-suck a group of Cat 3s.

#116 gallstone politics on 05.05.14 at 10:13 am

A government relying on KIJIJII postings for data? No wonder the CMHC relies on the multiple listings reports.

http://www.theglobeandmail.com/report-on-business/economy/jobs/ottawa-adjust-labour-data-raising-questions-about-national-skills-shortage/article18457198/

Is this also why the toxic BOC gov Prozac Poloz has set policy by boozy conversations with union leaders? Civil service workers just ain’t doing thier jobs…..just sitting around watching porn and taking long lunches….and then filing ‘reports’ on our Craigs List economy.

For years governments tracked newspaper help-wanted ads as an indicator of labour market conditions. This is nothing but an updated version of the same research. — Garth

#117 Brad in Van on 05.05.14 at 10:13 am

WhiteKat and Pastbeyone60 you both have fallen off the cliff of reality. WhiteKat with all due respect you do come across as a whiner and a person who buys into a lot of conspiracies. So I have to agree with The American on this one. The American has a point that you derail a lot of the discussion based on your personal problems having dual citizenship and it is not the first time you post about it. I did not realize our nationalistic sense of importance until moving back to Canada four years ago. I have posted before of our family’s quality of life in the US having been superior to here and it riled a buch of my fellow countrymen to call me a traitor. How pathetic is that? Pastbeyond60 I do not see your point about the American Revolution. How are the Americans trying to take their share from the world? The account for nearly a quarter of the global GDP. The world economy wouldn’t exist as we know it without the Americans. As I have always said it is time to show a little appreciation. I have lived in the US and they are the best neighbors we’ve ever had (lived in two other countries too). Americans get beat up day in and day out for no reason other than inferiority complexes that show through from other countries who ultimately move in the direction of the US. If you review Canadian economic policy, for the most part Canada has always put up a fight as to why the Americans are wrong but ultimately our policy moves in their direction. So either we have no balls at all or we basically fight as contrarians so we can prove we are different.

#118 Detalumis on 05.05.14 at 10:19 am

#35, #48 Catfoodlady I think you are quixotic you say you don’t care about stuff and appearances, which is a good thing, and then you go on about your clients with out of date bathroom fixtures! I think your clients are all older than boomers, they sound like 80 year olds whose kids are paying the bills to help them “age in place” because they refuse to move out. People in their 60s would not be hiring a cleaning lady and then having outdated decor everywhere.

It’s also a huge mistake and something advertisers do, to assume that people magically transform on a certain birthday. I am never going to get a curly grey perm and take up playing bingo and buying lottery scratch tickets. I’m never hanging out in a Florida trailer park. If people wanted to stop selling me stuff the minute I turned 50 that is their loss, don’t cry to me about the economy then. I have different life experiences than the old ladies that preceded me so their past behavior does not predict my future one.

#119 Retired Boomer - WI on 05.05.14 at 10:54 am

Detalumis # 119

I believe you have mis-interpreted what CATFOODLADY was trying to convey in her posts at 35 & #48.

Respectfully suggest you re-read them, and the posts to where they refer.

Best

#120 WhiteKat on 05.05.14 at 11:11 am

@BradinVan #118

I am not a whiner, but a fighter for Canadian sovereignty and for the rights and freedoms of ALL Canadians, not just the ones who were not born in the USA. With the acceptance of FATCA, hidden in the current omnibus bill, a dangerous precedent is being set which will hurt ALL Canadians. The bill is being rammed through parliament with little debate, despite strong, loud protests by the NDPs, Liberals and Green Party.

I am one small person, but am not afraid to do my part to be a voice for 100’s of thousands of Canadians deemed ‘US persons’ and tax cheats by the USA, who are too afraid to speak up for themselves. I know of many people in a similar boat as me who are literally sick with fear over USA’s current extraterritorial overreach forcing FATCA down the throat of not only Canada, but every country in the world under threat of economic sanctions. These are NOT the actions of a good neighbour.

For me, it is not for myself that I spread the word wherever I can; it’s about the voiceless ones too afraid to speak out for fear of losing everything they have worked their entire lives for. Its about doing whatever I can, in my small little way, to help protect our Charter of Rights and Freedoms for which I will not stand idly by and watch the Canadian government turn into a worthless piece of paper.

It does not bother me in the least that some people find me annoying and whining, because for every one of them, there are many others who are actually listening and getting the message; a message that our Canadian government does not want you to hear.

Do some research on your own. Nothing I have written is a conspiracy theory. I can back up every single thing I have written with facts and statistics, but as you say, have taken up too much of Garth’s blogs (sorry Garth, thanks for your patience).

If you or TheAmerican, or anyone else, want to have some genuine, intelligent debate on the subject, take me up on my offer to visit us at isaacbrocksociety.ca.

#121 WhiteKat on 05.05.14 at 11:14 am

ooops, please excuse the extraneous ‘not’ in prior comment which should have read:
“I am not a whiner, but a fighter for Canadian sovereignty and for the rights and freedoms of ALL Canadians, not just the ones who WERE BORN in the USA.”

#122 Mixed Bag on 05.05.14 at 11:14 am

#69 Investment Advice on 05.04.14 at 10:49 pm

I like that one. Will have to remember it the next time someone does one of those “if you stop your daily Starbucks habit” lines. We humans will always find something else to spend that $5 on, if we don’t consciously and pre-emptively divert it.

(Which is what I’m doing now, brown-bagging more frequently, and diverting that saved money towards the second vehicle fund, as baby #3 is on the way, and need a vehicle which will fit three car seats.)

#123 WhiteKat on 05.05.14 at 11:22 am

In Ottawa, its the second time, in just over a month, that a local real estate agent has attacked his wife. Are things worse in the housing market than we know? (@BradInVan: not a conspiracy theory, just an coincidence I thought people would find interesting)

According to the Ottawa Sun: An Ottawa real estate agent is in custody after his wife and daughter were attacked in the family home late Saturday night. Detectives searched the upscale home, looking for what has been described as a butcher knife. The woman had several cuts, including deep serious lacerations, while he daughter had her finger cut off. Saturday night’s knife attack is the third violent domestic incident in Ottawa this year. April 2, 2014: Realtor Christopher Heare stands accused of taking a baseball bat to his wife in an attempt to kill her.

#124 Nemesis on 05.05.14 at 11:24 am

#Tierra y Libertad! #Pantalla Motociclismo Extraordinaria! #La Policía de la Ciudad México

…in eager anticipation of OldMan’s arrival, HardRiding champions of the Revolution mount a spectacular Cinco de Mayo display… on Harleys!

http://youtu.be/k62NLOcZvmo

#VivaZapata!

http://youtu.be/ziG6f-vN2iA

#125 fred rubner on 05.05.14 at 11:33 am

Latest News Release

The April resale market slow to bloom

Ottawa, May 5, 2014

Members of the Ottawa Real Estate Board sold 1,420 residential properties in April through the Board’s Multiple Listing Service® system, compared with 1,569 in April 2013, a decrease of 9.5 per cent.

http://www2.ottawarealestate.org/home/NewsInformation/LatestNewsRelease.aspx

#126 maxx on 05.05.14 at 12:10 pm

“See what the word ‘guarantee’ does to people? It liquefies brains.”

No argument there, however, that magical term is especially effective with the legions that have lost serious coin, if not life savings to the disingenuous, unscrupulous, opportunistic and greedy.

Therein lies the real challenge for both the frightened investor, aka “chicken liver” (LOL, haven’t heard that one in ages!) and also the decent, honest investment professional (that would be you, Garth). Very tough nut to crack.

#127 the ugly truth on 05.05.14 at 12:22 pm

#118 Brad in Van

“I have posted before of our family’s quality of life in the US having been superior to here and it riled a buch of my fellow countrymen to call me a traitor. How pathetic is that? ”

The Canadian reaction to anyone thinking someone is showing them up is one of envy, jealousy and covetous hate. I travel away a lot…especially in winter…and everyone I have contact in Canada reacts withe that same self righteous ‘hate you for your success’ attitude when we see them again. The people who act the worst are the people who think of themselves as ‘elite’…the dentists, doctors and petty civic officials’. We’ll show up with a smile and a happy hello and what we get in return are grinding teeth, pinched eyes and pursed lips…..the envious looks at our foreign styles and suntans are laughable.

Your right though….mention the lifestyle upgrade we get when living in a place like Texas…with all the cheap food, transpo, zero tax, cheap steaks, cheap housing ,sunshine and outdoor fun…..whoa…..you might as well have kicked them in the nutz!

I have long said that the envious and covetous greed inherent in Canadian culture is why we have this race to the bottom in real estate, leased cars and personal debt. And for god sake don’t mention the price of cheese in the US….this item alone is enough to create a paroxysm of hand wringing and hair fire.

You’ll almost never have a conversation with a Canadian that doesn’t start with “What do you do?”….then ” Where do you live?”….then degenerates into what they have planned for their next vacation ( to match yours of course) and then on and on about ‘me too’…until you have to excuse yourself and walk away. If I wanted to join a caste system I’d move to India.

Is the national insecurity a reason why there is such a high number of road rage incidents? Ever wonder why Canadians in well though of areas hate new immigrant ‘monster houses?’ Its because it makes the rotting pre-war bungalow they inherited from grannie look like a shack….and they can no longer bellow that they live in ‘such and such’ a neighborhood.

#128 Nemesis on 05.05.14 at 12:26 pm

#Trending #Today’sBest:PotPourri

“The crack cocaine of the private equity industry”

[Pando] – LEAKED: Docs obtained by Pando show how a Wall Street giant is guaranteed huge fees from taxpayers on risky pension investments

http://pando.com/2014/05/05/leaked-docs-obtained-by-pando-show-how-a-wall-street-giant-is-guaranteed-huge-fees-from-taxpayers-on-risky-pension-investments/

“Everything they were doing, hideous as it is, is all completely legal.” – Amy Aquino, Sunset Square Neighborhood Assn.

[LAT] – Return of ‘mansionization’ has some L.A. homeowners grumbling

http://www.latimes.com/local/la-me-mansionization-20140505,0,7129755,full.story

[Xinhua/ChinaDaily] – Forum trends: No house, no marriage?

“I am a Westerner with a Chinese girlfriend. We plan to get married later this year.

Her parents required a substantial payment up-front (we are talking six digits) to allow me to date her. I still haven’t met them. When I do, another 10K rmb is expected as some kind of “booking fee” for the meeting. There is also pressure from them for me to buy a dwelling (of course), which apparently will be in her name only.

Interestingly, my GF – who, by the way, only reluctantly goes along with all this extortion – has explained to me that her parents themselves feel under pressure from their relatives to make sure their eldest daughter is “married right”. They will lose face if the husband is poor, from the wrong background or seen to have provided an insufficient overall dowry.” – Richard

http://www.chinadaily.com.cn/opinion/2014-05/05/content_17482343_2.htm

#129 rosie "moving forward" in the knowledge that, "this won't end well" on 05.05.14 at 12:26 pm

By 30, seems a bit optimistic.

http://www.moneyaftergraduation.com/2014/04/30/30-financial-milestones-you-need-to-hit-by-age-30/

#130 Ray Skunk on 05.05.14 at 12:38 pm

#124:

Wow. I need to get this guy to present my offer when putting in a mega-lowball in a Toronto bidding war.

#131 Brad in Van on 05.05.14 at 12:44 pm

WhiteKat then please give the blog something intelligent to discuss. Your personal matters are of no concern.

#132 Carol on 05.05.14 at 12:45 pm

To TheAmerican and BradInVan,

Re: Your replies to WhiteKat and Pastbeyone60, ‘you both have fallen off the cliff of reality’ type comments, please do some research on what is going on and hidden in Canadian Bill C-31. You might even listen to the House of Commons Finance Committee meeting tomorrow where there will be continuing discussion on the implementation for IGA for FATCA that was buried in the bill. You are not hearing about this as things are very much hidden / not in the mainstream media except snippets here and there.

Then, perhaps you will realize that they are speaking for many more than themselves:

I (and on behalf of other US Persons in Canada to whom I have spoken), who am (and we who are) CANADIANS but now referred to by the Harper Government as “Americans who happen to live in Canada*” or “US taxpayers resident in Canada”, request your prompt review of this submission.

*Many of these Canadians chose to become naturalized Canadian citizens, for myself in 1975 — they ARE Canadians.

*Many of these Canadians were born and raised in this country, never registered with the US, never lived or worked in the US, never had any benefit from the US — only Canada. One of those (and many just like him) is my 40-year old son (and other Canadians) born in Canada to US citizen parents. My son happens to have a developmental disability and, as he would not understand the concept of “citizenship” (as in US citizenship-based taxation), he cannot renounce his so-called automatically acquired U.S. citizenship at a U.S. Consulate and further must not have the influence of anyone else to do so. The U.S. Department of State / U.S. Consulate regulation is also that for a person with a ‘mental incapacity’ (which would also include someone with age-related dementia), a parent, a guardian or a trustee for that person does not have the RIGHT to renounce U.S. citizenship on that person’s behalf, even with a court order. This segment of Canadians is ENTRAPPED into U.S. citizenship and will have, yearly, the responsibilities and cost of administration for U.S. tax returns and account reporting each year at great U.S. professional tax accounting (and often U.S. tax law) expense. They ARE Canadians.

*Many of these Canadians were born in the U.S. to Canadian parents, returning to Canada as infants with their parents days later, or as children. They have always been and what should only be – Canadians.

I hope you will take up Whitekat’s suggestion to come to IsaacBrockSociety.ca or to MapleSandbox.ca, do some research and open your minds to what is happening by the complicity, now, of the Canadian government in allowing local CANADIAN ‘foreign financial institutions’ and the Canada Revenue Agency become arms of a unilateral extra-territorial US tax law. To do this, people the US deems ‘US Persons in Canada’ (much larger than just US citizens, including “accidental Americans”) become second-class to any other in Canada no matter where they were born or where their parents / grandparents were born. Something quite wrong with this.

In fact, my focus (and included in the persons WhiteKat and PastBeyond60 are advocating for) is on speaking up for those who are actually ENTRAPPED into US citizenship they may never have been registered for — born in Canada, raised in Canada, never registered as US births abroad, never lived in the US,never had any benefit from the US. The US Consulate regulations say that a person with a ‘mental incapacity’ (including such things as developmental disability and even age-related dementia) cannot renounce their *supposed* US citizenship as they do not understand the concept of citizenship and must have no influence in making such a decision. A parent, a guardian or a trustee of such a person does not have the RIGHT to renounce on such a person’s behalf, even with a court order.

I hired a Washington, DC nationality / immigration lawyer to confirm my son’s US status and give possibilities for his renunciation. Result was that my children were US citizens from the moment of their births. And, straight from the US Department of State:

DOS persons he talked with have “sympathy” for such cases. However, the developmentally disabled person will have to have FULL understanding of what he’s doing; if any question of lack of comprehension and grasping meaning and importance of ramifications, they could NOT approve such a case. From DOS point of view, US citizenship is precious and they have therefore established fundamental requirements for “compelling reason”. Even though there is the risk that a person’s financial resources could run out before his/her life was over, they will never approve a renunciation for financial / economic reasons. DOS has NEVER had such a renunciation case approved due to “compelling circumstances”. Bottom line: “compelling reason” in their regulations is not helpful to my son’s case. I could sue – persons he talked with at DOS are SURE no one would ever win such a case as the courts view the discretionary action that DOS has would take precedence.

I hope you are a step or two in your thinking above the closed minds of the commenters at the recent Associated Press article that I was interviewed for: http://news.yahoo.com/more-renounce-us-citizenship-deny-stereotype-162509477.html

Essentially, it seems the US is shooting itself in the foot. There will be blow-back to that country.

This is a complex issue to get your heads around. Please try instead of the knee-jerk reactions of many.

#133 Pre-Retiree on 05.05.14 at 12:49 pm

This post is not related to the subject discussed today. But a Nobel Prize Winner economist reiterates what Garth continuously repeats here.
Buy a house if you can afford one, and if you want one for personnal reasons other than making money. Other than that, realize that:
1) the house will not increase in value substantially over time, if at all
2)the house should not constitute all of your assets because of reason 1)
See the link below.

http://www.fool.com/investing/general/2014/05/02/the-uncomfortable-reason-your-home-is-not-a-great.aspx#.U2YYnaug2L0.twitter

#134 Jimmy on 05.05.14 at 12:52 pm

Doomed. Garth. Doomed.

Well-Heeled: The Smart Girl’s Guide to Getting Rich
Lesley-Anne Scorgie

Listening to her on talk radio right now.
RRSP is best. Not one word about TFSA.
Talk to an investment advisor who can recommend mutual funds if you are just starting out.

At least she said your vehicle doesn’t appreciate.

All women calling in with female host.
First one with no uterus that called in, giggle giggle, brought up TFSA.
Leslie: Experts say invest in registered plans.
Not wise to go outside of registered plans because of tax.
Better than dividend paying things as well.

Giggle giggle.

So sad.

We should be able to send Garth a few bucks into a paypal account for his time.

#135 Ayn Rand Army on 05.05.14 at 1:20 pm

#121 WhiteKat on 05.05.14 at 11:11 am
OMG i can’t believe people have the nerve to attack you over this. They don’t sound like idiots to me so i assume they must work for the system and are being willfully blind or paid to be. Especially the American, You ain’t no John Wayne, bitch. lol

#124 WhiteKat on 05.05.14 at 11:22 am
OMG, that’s horrible. See, Stress kills.

#136 WhiteKat on 05.05.14 at 1:23 pm

@#132, BradInVan, LOL. If I actually discussed my PERSONAL concerns – as opposed to the concerns of 1 million Canadians deemed ‘Americans living in Canada’, and ultimately the concerns of ALL Canadians (whether they realize it or not) who are about to lose important Charter Rights – then you might actually find THAT interesting.

#137 Enthalpy on 05.05.14 at 1:32 pm

shouldve just let it all ride on APPL.

#138 Pope Nosty Snugglebumd the 666ce on 05.05.14 at 1:49 pm

“An asteroid attack is more likely. — Garth”

Fy Mear Dellow, please be careful what you wish for, as you may just get it!

#139 2CntsCdn on 05.05.14 at 2:00 pm

#128 the ugly truth
RE:#118 Brad in Van
“I have posted before of our family’s quality of life in the US having been superior to here and it riled a bunch of my fellow countrymen to call me a traitor. How pathetic is that? ”

And I totally agree with your average Canadian “size you up “conversation. So true. A friend once described us Canadians as lobsters cooking in a pot ….. we all want to suffer together and grab and hold back the ones who can get out. We all say we want the good life, all the “stuff” we’re supposed to want …. but we hate people who actually achieve it. I’ve been lucky enough to do fairly well in the last 8-10 years … and go to great measures to play it down and am very quiet about my situation because I know I’ll get flack from friends. And some will say “well what kind of friends are they then?” I know …… but that’s just the way most people are these days. And people I know who actually are in a similar financial situation to me make me barf with arrogance, bragging and show-off-manship. So I just keep quiet, do my thing and try not to smile too much : )
I think it was Einstein who said “It’s important to have goals, but they shouldn’t be people or things”.

#140 Just the facts Ma'am on 05.05.14 at 2:10 pm

this ones for you Smoking Man
http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/leadership/eight-writing-strategies-for-people-who-say-they-cant-write/article18091805/

#141 chickenlittle on 05.05.14 at 2:22 pm

The American:

“(Whitekat) wants her cake and eat it too.”

What “cake” are you referring to?!?

You seem like a government stooge. Whatever the government says is gospel.

If I were her I’d be freaking out too!! The IRS is crazy. You can murder someone and get 5-10 years, but screw with the IRS and you’ll never see daylight again. Uncle Sam wants his money and he wants it NOW!!!
Its like one of those rich kids who sees a poor kid with a toy: the rich kid has EVERYTHING but scream and cried bc he wants the poor kids toy and he wants it NOW!!! Waaaa!!!!

#142 chickenlittle on 05.05.14 at 2:23 pm

Screams and cries*

#143 Blacksheep on 05.05.14 at 2:36 pm

In my opinion, the big picture is being missed by the unfortunate victims of uncle sam enforcing his tax reach beyond US soil.

Is it because the US needs the funds? Of course not, they are a sovereign in control.

This policy is precedence setting for future actions, you expats are just collateral damage. When it comes to taxation, perception is everything.

A global currency, requires global taxation.

Good luck fighting it.

#144 Mark on 05.05.14 at 2:46 pm

“Do you agree that the government has lost over 30 billions in selling the gold? “

No, I don’t agree. Governments, especially governments with taxation power over most of the world’s gold industry, have no business holding gold. Especially since it is an inanimate asset class that provides no utility for its owners.

If private individuals want to hold gold, great, they should. But for governments to impose the ownership of gold (or US dollars, or any other non-producing asset) onto its citizenry is something akin to communism.

#145 devore on 05.05.14 at 3:10 pm

#127 maxx

Therein lies the real challenge for both the frightened investor, aka “chicken liver”

The “frightened” investor is like a broken-hearted lover, except one moves on with his life (at least in 99% of cases), the other never recovers. Funny how logic and sense seems to be completely awol for most people when it comes to money.

#146 Piccaso on 05.05.14 at 3:11 pm

U.S. shorting home builders

http://finance.yahoo.com/news/doublelines-gundlach-recommends-shorting-homebuilders-172256046.html

#147 Happy Renting on 05.05.14 at 3:19 pm

#129 Nemesis on 05.05.14 at 12:26 pm

Sorta sounds like that Richard guy is being majorly scammed. Engaged but hasn’t even met the parents (who he’s forked over big money to?) I’m expecting a follow up essay detailing how the fiancée disappears, finds a new boyfriend who must pay six-figures “to her parents” to date her, and Richard’s money is nowhere to be found.

#148 Andrew Woburn on 05.05.14 at 3:44 pm

We’ll have to stop picking on the kids.

“Thanks to the Recession, Millennials Are Actually Pretty Frugal”

http://mashable.com/2014/04/26/millennials-consumer-habits/

#149 WhiteKat on 05.05.14 at 3:48 pm

@BradInVan, and TheAmerican,

How’s this for conspiracy theories, and whining about personal issues:

“NDP MPs Murray Rankin and Nathan Cullen speak to reporters in Ottawa on Monday, May 5, 2014, to outline concerns about the Foreign Account Tax Compliance Act. iPolitics/ Matthew Usherwood.

With the concerns of constituents filling up their inboxes and voicemail, on Monday the NDP repeated their demand that the Conservatives remove a recently-signed tax agreement with the United States from the omnibus budget bill. ”

http://www.ipolitics.ca/2014/05/05/get-fatca-out-of-the-budget-bill-ndp-urges/

#150 Cdn Flier on 05.05.14 at 3:51 pm

I intentionally avoid RE discussions at work because more people treat RE ownership as a religion. Once in a while, I get trapped, especially when someone wants to ‘school’ me on the merits of home ownership over renting. I’m not against home ownership; in fact, I’ve made some profits over the years of moving from place to place while enjoying my career in the military. I’ve been burned too. The prevailing attitude is RE always goes up and you can lose your shirt in investments. It’s amazing that smart people at work can be so stupid when it comes to money. Luckily our pension plan will save a lot of my colleagues from financial ruin. My advice: don’t tell people you’re renter. They’ll only pity you and try to ‘help’ you.

#151 Opinated on 05.05.14 at 3:55 pm

WhiteKat

I see you have a lot to vent. Hostility againts those who disagree with your whinnig. A lot to hide. A victim attitude. A denial approah to your issues. I could sympathize but it is now rather becoming annoying. I amsure you know better places ( blogs) where to vent your personal issues. Thanks

#152 Old Man on 05.05.14 at 4:02 pm

#125 Nemesis – you just come to Mexico and will have the Amazonas ride in for you. They will rope your hide and drag you along the streets, and leave you in the field for the scorpions dinner meal. I have one Amazona leaving for Tapalpa on a short vacation as am finding her a hacienda for a few days, and your name will be mentioned.

#153 Stickler on 05.05.14 at 4:23 pm

@ #140 2CntsCdn on 05.05.14 at 2:00 pm

#128 the ugly truth
RE:#118 Brad in Van
“I have posted before of our family’s quality of life in the US having been superior to here and it riled a bunch of my fellow countrymen to call me a traitor. How pathetic is that? ”

And I totally agree with your average Canadian “size you up “conversation. So true. A friend once described us Canadians as lobsters cooking in a pot ….. we all want to suffer together and grab and hold back the ones who can get out. We all say we want the good life, all the “stuff” we’re supposed to want …. but we hate people who actually achieve it. I’ve been lucky enough to do fairly well in the last 8-10 years … and go to great measures to play it down and am very quiet about my situation because I know I’ll get flack from friends. And some will say “well what kind of friends are they then?” I know …… but that’s just the way most people are these days. And people I know who actually are in a similar financial situation to me make me barf with arrogance, bragging and show-off-manship. So I just keep quiet, do my thing and try not to smile too much : )
I think it was Einstein who said “It’s important to have goals, but they shouldn’t be people or things”.

—————————–

Sounds like you live in Vancouver or Toronto…

A large swath of Canada is NOT like that. (in a good way)

#154 Mixed Bag on 05.05.14 at 4:34 pm

Smoking Man, this may help your writing:

http://www.savethecat.com/

Don’t let the URL fool you. Read the Beat Sheets to get an idea.

#155 frank le skank on 05.05.14 at 4:46 pm

#128 the ugly truth on 05.05.14 at 12:22 pm
… everyone I have contact in Canada reacts withe that same self righteous ‘hate you for your success’ attitude when we see them again.
——————————————
Holy stereotype eyyy!! Not sure what you’re talking aboot! The irony is that you, and the people you describe, are the same. A bunch of stereotypical assholes!!! These assholes have global presence.

I find TheAmerican is pretty accurate in his rants.

#156 brainsail on 05.05.14 at 5:08 pm

FATCA… stay tuned for the Canadian government’s announcement of a similar reporting structure for its citizens living in foreign countries.

“Myth No. 2: Some claim that U.S. citizens living overseas will become outcasts in the international financial world.”

“FACT: FATCA withholding applies to the U.S. investments of FFIs whether or not they have U.S. account holders, so turning away known U.S. account holders will not enable an FFI to avoid FATCA. We expect that many, if not most, of the governments implementing FATCA through IGAs will require their financial institutions to identify and report on all non-resident account holders, not just U.S. account holders.”

“Those governments agree with FATCA’s policy objectives, and want to facilitate the collection of information about the offshore accounts of their own residents. For example, 19 countries have already announced a pilot project to exchange account information about each other’s residents that will be collected by the governments in line with FATCA’s due diligence and reporting procedures. FATCA is quickly becoming the global standard for automatic information exchange and we expect the number of jurisdictions that choose to implement the same reporting procedures for all offshore accounts to continue to grow.”

http://www.treasury.gov/connect/blog/Pages/Myth-vs-FATCA.aspx

#157 Aggregator on 05.05.14 at 5:14 pm

CMHC just released its annual report. Ontario now makes up 46.6% of CMHC's insurance-in-force and British Columbia is 19.9%, together two cities in Canada now account for 66.5% of CMHC's portfolio! This was a big jump.

More details soon.

#158 Derek R on 05.05.14 at 5:19 pm

#150 WhiteKat on 05.05.14 at 3:48 pm wrote:
How’s this for conspiracy theories, and whining about personal issues:

“NDP MPs Murray Rankin and Nathan Cullen speak to reporters in Ottawa on Monday, May 5, 2014, to outline concerns about the Foreign Account Tax Compliance Act. iPolitics/ Matthew Usherwood.

With the concerns of constituents filling up their inboxes and voicemail, on Monday the NDP repeated their demand that the Conservatives remove a recently-signed tax agreement with the United States from the omnibus budget bill”.

Ignore the naysayers, WhiteKat. FATCA is an important issue for many unfortunate Canadians. I am very glad that I do not have to worry about getting taxed by the IRS because of an “accident of birth” but I sympathise with those who do and I think that it’s important that you spread the word so that people who are badly affected know something about it.

Please carry on.

#159 BCD on 05.05.14 at 5:21 pm

Subtract “Old Man” and “Smoking Man” comments off this blog (they are the same person) and you have a lot fewer comments. I never read them. What kind of buffoon moonlights as two different personas?

This troll probably lives under a bridge somewhere and is using some public library computer to pretend he is someone he is not. Why won’t Garth tell us how many people Smoking Man is posting as? Each post carries an IP signature so clearly he knows that SM is posting nonsense as someone else.

Smoking Man, or Old Man, or whatever you call yourself, Joe, and Joe 2.0 (I suspect that’s him too) don’t quit your day job as a crack addict.

#160 Derek R on 05.05.14 at 5:24 pm

#149 Andrew Woburn on 05.05.14 at 3:44 pm wrote:
We’ll have to stop picking on the kids.

“Thanks to the Recession, Millennials Are Actually Pretty Frugal”

http://mashable.com/2014/04/26/millennials-consumer-habits/

Agreed. My kids are all pretty careful with their money — much more so than I was at their age — and it’s not because I taught them to be. So I can only guess that it’s something they learned from the Recession.

And I’m proud of them for it.

#161 Blacksheep on 05.05.14 at 5:28 pm

# 144, Should read “precedent.”

#162 Save the children on 05.05.14 at 5:31 pm

House warming at a brand new “corn flake box” north of Mississauga. House proud newlywed millennials up to their eyeballs. Not enough front lawn width to park my car on the street. A mud bowl all around since it was farmland, if not a swamp, a year ago. House has rampant temperature and moisture control problems. Interior finishes feel like they’ll disintegrate with normal use, so I handled everything gently. Stainless fridge and granite though, fake stone accents on front – enough to momentarily blind the uninitiated. Checked out MLS – half a million. Stomache has felt queazy ever since. Adding earnest prayers to CMHC + Tarion.

#163 saskatoon on 05.05.14 at 5:33 pm

#145 Mark

i have to disagree: gold does have utility.

however, your second point is interesting: governments have no intrinsic business forcing public ownership of gold–otherwise, it is communistic.

anyone out there care to retort this?

#164 WhiteKat on 05.05.14 at 5:44 pm

@152 Opinionated,

Did you see my comment #150?

Do you think all the emails and phonecalls that the NDP MPs have been bombarded with of late are from whiners too?

Is that why they had that press conference today – to talk about how there are so many Canadians with a “victim attitude” and “in denial”?

Might the government soon be announcing free mental health care for us all? – whoohoo!

#165 TheCatFoodLady on 05.05.14 at 6:00 pm

#119 – Detalumis: When I referred to out of date styling in homes, I was talking about out of date in the eyes of buyers who want the current iteration of ‘move in ready’. My personal tastes are all over the place & if I were buying & wasn’t crazy about certain fixtures & finishes… hey, as long as they work I can live with them.

#166 Smoking Man on 05.05.14 at 6:34 pm

#160 BCD on 05.05.14 at 5:21 pm

Just Two, ha

I’m a writer you buffoon…

#167 -=jwk=- on 05.05.14 at 6:42 pm

#123 Hey Mixed bag, you looking to get a Corolla? Popular with the 3kids crowd, affordable and reliable too!

Pics :
https://www.google.ca/search?hl=en&site=imghp&tbm=isch&source=hp&biw=1482&bih=872&q=corolla+3+car+seats&oq=corolla+3+car+seats&gs_l=img.3..0i24.3256.10660.0.10818.35.13.8.14.18.0.84.944.13.13.0….0…1ac.1.42.img..7.28.996.Uq24jNt3Ajc

#168 AK on 05.05.14 at 7:55 pm

#1 DAN on 05.04.14 at 4:34 pm

early surprise, FIRST

#2 ben on 05.04.14 at 4:43 pm
Second

Damn
====================================

You clowns need to get a job…

#169 wallflower on 05.05.14 at 8:45 pm

so sick of whitecat
Ultimate Whiner
Issues are one thing.
Whining is another.
At any rate, easy solution.
Skip the Whitekat posts and pray Whitekat does not change monikers. Enjoy Garth’s blogs and his posters, elsewise, even Smoking Man, even opaque Nemesis.

Boycott Whitekat.
Like it.

#170 Paul on 05.06.14 at 7:16 am

Pete, you’ll be paying a boat load of taxes on the money you’ve invested from the sale of your home. This was conveniently left out of Garth’s calculation….don’t assume a net 75k, that is misleading.

(a) Taxes on dividends and cap gains are more than reasonable, (b) someone else who doesn’t know what return of capital is. — Garth

#171 Paul Hecht on 05.06.14 at 11:15 pm

Dear Mr. Turner,

Paul Hecht here.

Thank you so much for an article that has drawn attention to the plight of investors who are misinformed and/or have unbelievable information given to them through many different sources.

I am familiar with your writings and have also spent my career dedicated to helping Canadians from all walks of life by giving them every opportunity to succeed and have a better life in Canada through safe, secure and reasonable investing strategies.

Some of which it appears that you might be mocking and/or sarcastically berating. Ironically, when people have approached me in the past for input or advice and your name has come up, I have defended portions of your advice, as I believe in gathering all the information first and then making an informed conclusion from it.

Even though we may not agree on everything, I have never mocked you personally or put you down. I don’t even know you. In effect that would mean that you do not know me either. Nor do you know my education, my background, my experience or what I actually teach.

From your article, it had appeared that you had attended one of our presentations. We went back and checked the registrations and your name was nowhere to be found.

I am sure, out of professionally courtesy, you would have introduced yourself, or at least given me a heads up about the article. Yet, I realized had you been at the actual presentation you would have known how “believable” the information was and that it was in fact – factual, and exactly as stated.

So the only conclusion that was left is that you made an article out of innuendo, speculation and/or opinion.

I have spent my career and life standing for all that is good for Canadians. I also had respect for you. I am however, disappointed that you chose to attack me without actually finding out all of the facts before you blogged your opinion.

It also appears that both of our websites are based outside of where we live. One of our domain servers is located in the US. Just like yours which shows up in California and another one in Europe. I’m sure it’s not because you’re not trying to hide Garth, even though it does make a good story.

So in summary, I would like to extend a personal invitation for you to actually attend a presentation, or even for a coffee or tea. I too, wish only to help Canadians have the right information to make informed investment decisions, which is exactly what I have been doing for almost 20 years now.

All the best Garth,
Paul Hecht