Trust

SONY DSC

Kelly says she’d like to talk with her friends about this stuff, “but they’ve all been suckered into Vancouver area condos and ‘high interest savings accounts’, so that’s obviously no help.”

It’s a common complaint. Where do you go to get some indie thought about investing? After all, the bank’s in the business of selling you stuff. So are the mutual fund sharks. And the credit union. Don’t even think about an insurance or real estate guy. And your parents just want you to be little copies of them, with a mortgage. No wonder so many young people end up being schizophrenics, bouncing between dead-end savings accounts and high-risk, leveraged condo units. Both are really bad choices.

“I kind of feel like an idiot wasting all these years, but I’m an 80’s kid that has actually squirreled away money by renting and not trying to live like a rock star,” says Kelly. “I have a decent job (~60k/yr), no debt and 50k in the bank excluding RRSPs, but I’ve been completely ignorant to investments. I’ve read your posts a few times but I can’t shake this lost in the woods feeling of ETF’s, and I’d rather do it right than get in over my head. What would you suggest for someone like me, that isn’t comfortable going full speed ahead with ETF?”

Kelly says she’s mostly worried about doing this herself. “I know that in starting out I’ll need help, and it will cost a percentage for managing a portfolio, but how do you go about finding someone that is competent in this?”

Well, first let’s discuss timing. Not a day goes by without newbies asking me if this is a good time to invest. Because we all now live on Internet time, when a full day is considered long-term and your Twitter feed never stops, people bounce around from headline to headline. This blog is a perfect example. It’s full of weirdos who ardently believe what just happened (Obama’s speech, ISIS, Ebola, bank layoffs, MH-17, mid-term elections, Fukushima) will alter the entire future. They’re wrong. They bury money, fear risk, buy gold, market-time – and lose.

Kelly’s young. The time horizon is long. And the world will continue to grow while she moves through her life. The doomers almost always end up being incorrect, as the last six years have so richly proven. It happened again this past week.

When growth slows more than people like, they kick it. Since 2008 the large central banks have been quietly coordinating monetary policy, to stave off deflation, support expansion and jobs. On Friday China chewed up interest rates, for example, chopping deposit and lending rates. In Europe the central bank boss, Mario Draghi, was crystal about what he’s got in mind: “We will do what we must to raise inflation and inflation expectations as fast as possible, as our price-stability mandate requires.”

And what does that mean? Cheap money, yes. Plus, central banks buying up assets to create demand and, ultimately, inflation. It’s what the US Fed did for the past four years, before ending its stimulus program in October. The results in America: unemployment went from 10.2% to 5.8%, corporate profits flowered, real estate prices recovered by half and the stock market increased 160%. I have no doubt Europe will be another Cinderella and China will plump, while the US advances its recovery. In other words, all the people waiting on the sidelines since 2008 – waiting for another 2008 – are fools. It ain’t coming.

But there are always risks. Monetary engineering brings volatility, as does the growing mountain of global debt. People overreact. They buy stuff that goes up and run screaming when it falls. This is why you need balance and diversity in any portfolio. The balance is between growth assets (based on stock markets) and safe stuff (called ‘fixed income’). The diversification comes from various assets (like real estate investment trusts, preferred shares, bonds and equity ETFs) and also geography (Canada, the US, international, emerging markets).

Normally, for example, stocks and bonds move in the opposite direction. When the Dow swoons, money flows into the safety of bonds, pushing their prices up while stock values decline. If you own both, you have a built-in hedge, and need not sweat over timing. Finally, all portfolios should be liquid, giving you the flexibility to avoid serious risk if necessary, or jump on a serious opportunity. Five-year GICs are not liquid. Soon neither will be condos.

With fifty grand, Kelly should not be paying an advisor, not giving the bank fat mutual fund fees. She should not be trying to time investments that will stay in place for years, if not decades. And the first place she should invest is inside her TFSA, where all gains will remain free of tax.

The process is simple. Open an online brokerage account. Establish a TFSA and a non-registered (or ‘cash’) account. Transfer your funds. Do what I recommended in a post several weeks ago:

“So divide the TFSA money into five piles, putting equal amounts into ETFs (exchange-traded funds) that mirror (a) the S&P 500, (b) the TSX 60, (c) a basket of preferred shares, (d) real estate investment trusts and (e) a Canadian bond index. You can use iShares products, or Vanguard, BMO exchange-traded funds or others. But these five will give you safe (preferreds and bonds) as well as growth (equities and commercial real estate).”

For example, using iShares, you’d buy XIU (Canadian stocks), XSP (US stocks), XPF (preferreds), XRE (real estate trusts) and XSB (short bonds). As your funds grow, you can add lesser weightings in XEM (emerging markets) or XCS (small-cap Canadian companies). When you get to $150,000 or so, it makes sense to pay someone 1% to manage this growing nestegg, rebalancing it, giving you tax avoidance advice and gaining further diversification.

Of course, this is but an example. There are lots of other exchange-traded funds around, and they’re getting cheaper (even though costs are already a small fraction of what a mutual fund charges). There are also advisors who’ll take on a smaller portfolio, but the fees can be brutal. Besides, you don’t need one.

If you get the right asset allocation and – above all – stop reading damn financial blogs, you’ll soar.

144 comments ↓

#1 Pat on 11.21.14 at 7:49 pm

“I recently tried to refinance my mortgage and I was unsuccessful in doing so,” said Ben Bernanke.
Hm maybe there is something to all this

#2 Jimmy on 11.21.14 at 7:49 pm

Fuuurrssttt!

#3 Andrewski on 11.21.14 at 7:54 pm

Prudent advice Garth, valuable to many. “It’s not timing the market, it’s time in the market.”

#4 Mike on 11.21.14 at 7:59 pm

… Watch when P/E ratio on the SP500 gets around or hopefully below 10, then it makes sense to get fully invested. Until then I’d say stay more on the safe side. Asset prices across the board are insanely pricey right now.

That was funny. The last time the P/E ratio was at that level was 1985. — nGarth

#5 Happy Renting on 11.21.14 at 8:02 pm

Early/mid-October. If you didn’t take that entry point you were either not paying attention or too scared. It’s funny how Garth is getting commenters saying they’ve been waiting for an entry point, when we just had one a month ago. Figure out why you didn’t take any action at that time and fix the barrier so it doesn’t impede you again.

#6 Londoner on 11.21.14 at 8:04 pm

If you’re worried about the short term, load up on the fixed income now while the stock indexes are flying. Wait for the slight pull back in equities and then go all in. The Santa Clause rally will carry you into Q1 next year. Don’t think of it as trying to time the market. More like re-balancing before you begin. Good luck!

#7 VanDammeCouver on 11.21.14 at 8:05 pm

” giving you tax avoidance advice and gaining further diversification.”

Might wanna be careful on that language, I know CRA doesn’t like ‘tax avoidance’ advice. I think they prefer the term ‘tax planning.’

Avoiding tax is legal. Evading tax is not. — Garth

#8 TEMPORARY® Foreign Prime Minister on 11.21.14 at 8:05 pm

Nice, simplified financial advice for the escaping offspring of new empty-nesters.

Now if they could only discontinue (un-)reality cable TV, stick to streaming video, and invest the $70/month saved into their investment portfolios.

#9 Happy Renting on 11.21.14 at 8:07 pm

Oh, and become a blog dog to have “people” (though I do wonder about some of the posters, sometimes) to talk to about this stuff. It’s not easy finding friends not sucked into mainstream thinking. You get to enjoy the smart and insightful commenters and learn to scroll past the others.

#10 Marco from Van on 11.21.14 at 8:12 pm

Great post. This worked so well for me. Spend most of my week travelling worldwide running my business unit of a Silicon Valley based company while renting in van. Making well into the 1%’er territory (excluding stock options in a Bain capital investment) on my total compensation, making great returns on my portfolio and living on the back of my subsidizing landlord who rents me a $2.5m house in kerrisdale (Vancouver west suburb) for a pittance that my investments pay 3x on a yearly basis. I have no debt and add to “the pot” every year.

Why would I EVER trade this for a mortgaged, mutual fund investing life, I don’t know. Next year I may move to San francisco or I may not, depending on what I want, not depending housing markets and exit/entry fees…

I rent EVERYTHING while building structural wealth (eg. the money I make works for me & family first, not for banks / creditors).

I save to buy, NEVER BORROW TO BUY.

Btw. My English is not my best language – so apologies if the prose isn’t perfect, I speak 4 other languages better.

#11 VanDammeCouver on 11.21.14 at 8:14 pm

“Avoiding tax is legal. Evading tax is not. — Garth”

Avoiding tax is impossible, minimizing it is not. Even legal transactions can be challenged if they were undertaken for no other reason than to void taxes. Hence the General Anti-Avoidance Rule.

http://www.cra-arc.gc.ca/gncy/lrt/vvw-eng.html

http://www.cra-arc.gc.ca/E/pub/tp/ic88-2/ic88-2-e.html

I think we’re having a semantic argument, but it’s pretty clear in the CRA publications.

Investing inside a TFSA is avoiding tax. You lose. — Garth

#12 deaner on 11.21.14 at 8:15 pm

Hey, on the topic of CRA and tax ‘planning’, why do I never see any discussion of tax havens such as Cayman Islands or Lichtenstein on this blog?

Obviously people aren’t going publicly discuss that they do illegal or borderline things, but given how much of this blog is about advocating policy and calling BS I’m surprised it just never comes up.

Do people just think there’s nothing that can be done or that it’s no big deal?

#13 Marco from Van on 11.21.14 at 8:16 pm

Oh, my wife is my biggest partner in this and so proud of our thinking when challenged by our lesser enlightened marble licking aquanitamce circles (our friends bought into this way back).

Just thought I’d save the monitoring (resident) realtors from wasting their time telling me I need to buy a house so my wife “loves” me more ;-)

#14 Tripp on 11.21.14 at 8:32 pm

Interesting article about money printing:

http://www.washingtonpost.com/business/austrian-currency-scandal-shines-light-on-the-enigmatic-industry-of-money-printing/2014/11/14/aabef40c-69f0-11e4-a31c-77759fc1eacc_story.html

#15 Vancouver right? on 11.21.14 at 8:36 pm

Millionaire teacher, great book for the newbs!

#16 espressobob on 11.21.14 at 8:37 pm

Kelly, read some books on index investing. You will be glad you did if you intend to engage DIY investing. It’s not rocket science.

One caution, DON’T SPECULATE! And leave the economic overview to a pro like Garth.

#17 devore on 11.21.14 at 8:39 pm

#1 Pat

“I recently tried to refinance my mortgage and I was unsuccessful in doing so,” said Ben Bernanke.

US banks aren’t really keen on lending money to unemployed people.

#18 Mark on 11.21.14 at 8:52 pm

I personally find that too many people are fixated on the news when it comes to investing. They make brash decisions, based on whatever they happen to have heard on TV that particular day. Material that is so often wrong or misleading that they’re just dooming themselves to failure.

Probably the worst (and saddest) cases are those of the middle aged people I know, who, frustrated with their brokers, fired them and now take their “investment” advice from CNBC or BNN. I cringe when I hear people close to retirement using BNN-talk like “baggers”, or “risk-adjusted returns”, as though they really have a clue what any of that terminology really means. Inevitably its a lot of tears a few years later when their portfolios are loaded up with the crap commonly pushed by those talking heads (ie: Kevin O’Leary) and they’re even closer to retirement.

#19 Ilona on 11.21.14 at 8:53 pm

This could be a good way to start for a novice: New Wealth Management Service from Questrade

Don’t know if they also give advice about what should go where (registered vs. non-registered accounts), but there’s so much info online, should be easy to find :)

Be careful of the robo-advisors. — Garth

#20 VanDammeCouver on 11.21.14 at 8:53 pm

Investing inside a TFSA is avoiding tax. You lose. — Garth

Come on Garth, I’m married, do you know how often I’m told I’m wrong? Can’t you tell me I’m right, I haven’t heard that in loooooong time.

Lol

#21 not 1st on 11.21.14 at 9:03 pm

“The results in America: unemployment went from 10.2% to 5.8%, corporate profits flowered, real estate prices recovered by half and the stock market increased 160%.”

Don’t forget that pesky sovereign debt which went from 9 trillion to about 20 trillion.

#22 Russ L on 11.21.14 at 9:07 pm

Hi Kelly,

In case you missed it, Garth provided an example of the ETFs for your portfolio on October 30, “Joy”.
Remember the balance: 60% equity & 40% bond
http://www.greaterfool.ca/2014/10/

Another good read is
http://canadiancouchpotato.com/model-portfolios/

I am a lucky one, not quite a 1% on income (like yourself) but I will be there before I’m sixty in a few years, on the invested asset side. This is only because I started in my 20s with RRSP. Compounding works wonders.
I would already be there if I knew of Garth’s wisdom many years ago

(and thanks Garth, for the spell check feature)
Now if you can just find one for grammar… your vs. you’re

#23 james on 11.21.14 at 9:09 pm

#10 Marco from Van

Why on earth would you live in Vancouver if you have the option (and funds) to live in the Bay area? It’s cold, pretentious and riddled with property crime.

You sound a little douchey, to be honest. You might try to tone down the bragging a little. Sorry, I am typing this with only one hand as I bench press 400lbs with the other one.

#24 james on 11.21.14 at 9:12 pm

#20

“Be careful of the robo-advisors. — Garth”

Have nothing but good things to say about Wealthfront so far. I’m not sure if they are available in Canada (as I speak 20 languages, own ten swiss bank accounts and run eight Silicon Valley companies from my crack shack in Oakland).

75k free of management fees so far, and they handle rebalancing automatically. Sure better than the idiots at Manulife Financial who bet a large portion of my CBA RRSP fund on Blackberry a few years back. No catastrophic losses with the roboadvisor yet.

#25 Gary on 11.21.14 at 9:12 pm

House prices tied to China’s economic growth
http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Vancouver+housing+prices+tied+China/10399964/story.html

Finally, maybe Garth will admit the influence of rich Chinese in the Vancouver market.

Of course there is an influence. But foreign buyers are not responsible for $1 million shacks. The locals did that. — Garth

#26 Alero01 on 11.21.14 at 9:20 pm

Good advice, Garth. You’ve graciously advised her about what she should expect a competent financial advisor to do for her once she needs one, i.e. once her portfolio hits $150,000. However, I don’t see that you answered Kelly’s question about how to find such a person when she is ready for one.

Be patient. — Garth

#27 TS on 11.21.14 at 9:21 pm

Don’t agree with Garth here.

If can get an advisor from say RBC Royal Dominion or TD who manages your account and gets you a portfolio consisting of preferreds, ETFS, REITs and none of those high fee Mutual Funds and it makes you sleep easier not managing your own money, then do it.

I work 42 hours a week, kids to take care of and oil changes to remember. I have enough on my plate without scouring the Internet looking for which REIT fund I should invest in.

The advice was for those with small portfolios, where an advisor’s fee would be burdensome. You evidently don’t have time to read, either. — Garth

#28 Cato the Elder on 11.21.14 at 9:26 pm

5% unemployment rate? C’mon Garth. The government lies about everything else, why wouldn’t they lie about statistics that make them look bad?

Weapons of mass destruction? Syria chemical weapons? You can keep your current healthcare plan? NSA is not spying on American citizens? The US does not torture people?

I mean, the list goes on and on.

The current rate is approaching 25% and will continue getting worse. Much of the current administration, as well as the general culture amongst politicians (both in the US and in Canada), is that they can somehow ‘divinely’ create jobs by decree from the pulpit. It does not work that way and never has.

http://www.shadowstats.com/alternate_data/unemployment-charts

It is nearly impossible at this point for things to remedy themselves. It requires the pervasive mentality of ‘interventionist’ politicians to RELINQUISH CONTROL which is something they are either incapable of or don’t want to do.

Only free markets can fix things. Reduce government spending. Reduce taxes. Reduce regulation. Let entrepreneurial drive and ambition fill the void.

A complete collapse is the only solution at this point. A steady, slow progression into poverty is not enough to jostle the minds of the people into waking up from their stupor.

This will come courtesy of our new overlords the Chinese. Just watch and wait. It’s coming.

What will the catalyst be? Simple. One major delivery of physical gold bullion not being supplied to China. Once this happens, there will be no more point in maintaining the illusion that China is not the preeminent power in the world.

#29 mark on 11.21.14 at 9:41 pm

Are most people disciplined enough to keep to any of this or even learn it first? And when they get enough are they willing to know who to trust? Humans are usually self defeating.

http://www.idiottax.net/2014/11/in-defence-of-financial-planners-well.html

#30 Cato the Elder on 11.21.14 at 9:42 pm

Re: last post #179 None

Again, you didn’t bother looking into it yourself. Don’t watch the videos I showed you. Find out yourself. Do you know how money is created?

How can ANYONE argue with someone without researching the facts? I will never know. It’s something I don’t do. I am embarrassed anytime I purport to know what I’m talking about without researching ALL sides of an issue.

Disagree with me, that’s fine. But at least present your argument in the form of evidence.

Conspiracy? Of course! Conspiracies simply mean a group of people COLLUDING to advance their own interests. That happens ALL THE TIME. Your local gas stations on the corner do it when they all make their prices the same. Why wouldn’t bankers?

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

Re: last post #184 Josh

I honestly feel for your position on the issue. You are probably a good person, like most, that simply think it’s a matter of ‘changing management’ that is the problem.

Unfortunately, history has PROVEN that is not the case. People are susceptible to bribery, or even when they ARE principled, can be manipulated or misled under the guise of ‘protecting the consumer’.

It is best that we simply do NOT give government this power in the first place.

Regulatory capture is a very real phenomenon. Big business can afford to hire lobbyists to harass politicians EVERY DAY to get their way. They can also donate to candidates from every party, so they get their way no matter who is elected. Sometimes, even well meaning people like yourself will lobby a politician, but the eventual legislation is modified in such a way to benefit certain businesses.

You need to realize this. It will ALWAYS be this way.

Here’s Milton Friedman and it doesn’t matter if you agree with him as a person or not, his explanation is true:

https://www.youtube.com/watch?v=BUvUtqTmd5c

Now, if we’re talking about ‘what is government’s role’ in the economy, I will tell you the main rule that would protect consumers:

Laws against FRAUD

Almost everytime a consumer has been wronged it is the result of fraud – a company misleading it’s customer. Fraud is ILLEGAL in a free market. The government SHOULD have the ability to police this. It is one of the only things they should concern themselves with.

See, by protecting us against fraud, businesses don’t have to jump through all kinds of loopholes to create products, services, and jobs. There is no prior restraint as to what they can do. But if they HURT consumers in this way, the government can step in. This transforms the government into an impartial referee, instead of what we have today which is a BIG BULLY that pushes down small businesses to help bigger players.

#31 Retired Boomer - WI on 11.21.14 at 9:46 pm

Wonderful column Garth. I waited a LONG time before I accepted the ETF concept.

Here in the US where I am a Vanguard customer, I see the majority of their INDEX funds are the same costs as their ETF’s. (Yes, their mutuals have a minimum investment level usually $3,000 -and up- while the ETF’s does not).

Who can really explain the advantages of the ETF over the mutual funds? Since I have been a buy & hold investor with regular inputs, the no transaction fees mutuals always held an edge over the ETF.

Since I don’t plan to sell trade at anytime, why would I care? Curious to understand the practical differences between them.

Enlighten the ignorant one, Garth.

#32 Obvious Truth on 11.21.14 at 9:51 pm

This sounds so easy. But 99% of people don’t get it and are afraid.

It’s as easy as entering a sports pool.

Love hearing young people figuring this out.

#33 Capital One on 11.21.14 at 9:52 pm

Excellent post tonight Garth. I’m going to bookmark it for posterity and share it when needed.

#34 Purrpurrjones on 11.21.14 at 9:59 pm

Just buy, beutel goodman CDN balanced and Mawer Balanced and call it a day.

#35 earthboundmisfit on 11.21.14 at 10:01 pm

With all due respect to the bearded wonder, of whom I am an avid reader and admirer …… read a couple of books, follow a couple of blogs and you won’t need to pay someone 1% (1% of a $1,000,000 portfolio = $10,000.00/annum) Better in you jeans than theirs. Truly, it’s not rocket science.

Go for it. Good luck. — Garth

#36 OlderbutWiser on 11.21.14 at 10:04 pm

Very good news from TD Waterhouse. They will have US dollar RRSP and TFSA accounts by the end of the month. No more need for FX washing of trades and dividends paid on US stocks in these accounts will now remain in USD. All I can say is, about time!!!!

#37 Spectacle on 11.21.14 at 10:10 pm

Re:
#23 james on 11.21.14 at 9:09 pm
#10 Marco from Van

“Why on earth would you live in Vancouver if you have the option (and funds) to live in the Bay area? It’s cold, pretentious and riddled with property crime.

You sound a little douchey, to be honest. You might try to tone down the bragging a little. Sorry, I am typing this with only one hand as I bench press 400lbs with the other one.”
*********************
Thanks for the Laugh, on a Friday night #23 James !

But it was a little difficult since I too was at the gym like yourself . While I was also blogging , wearing lululemon, drinking a late, signing a mortgage, being really humble, and living in Vancouver all at the same time! But I digress. My thanks for the blog as usual garth.

Peace all…..

#38 Nemesis on 11.21.14 at 10:16 pm

#Trust… #TexasStyle!,Or… #SomeOfYouAreProbablyReallyCelebrating… #YourChoiceOfWisconsin&Arizona!*… #OthersMayBeCallingU-Haul… #ToEnquireRe:OneWaysToAustin,RightNow…

“Don’t jerk it… just squeeze it… Look right down the barrel and keep both eyes open…”…

http://youtu.be/XfBImxhVWTw

[NoteToEmigrantExpatriates: Congratulations LawfulAliens and/or, HeavenForfend, UndocumentedMigrants… You!, yes, You! may now qualify for TemporarySpecialExemptions to UncleSam’s ICE supervised ForeignRepatriationVacations… Some restrictions may apply. Offer subject to availability. No purchase necessary. Hand drawn facsimiles are acceptable. One entry per household. NoteToGT: Hey, it’s the SillyHour… AllAudiences are entitled to a laugh, right? Was it good for you, too!?!]

#39 Capital One on 11.21.14 at 10:25 pm

Garth – a question along the same vein.

Any suggestions for kids just starting out? 0 dollars saved, but have their first job. e.g. pay yourself first and here’s how to invest small amounts in a balanced portfolio.

Thanks,
CO

#40 Blacksheep on 11.21.14 at 10:25 pm

“The advice was for those with small portfolios, where an advisor’s fee would be burdensome.”-Garth
—————————————–
Thanks Garth,

I normally ignore this stuff but like this, very simple, self administered plan.

I also want to thank you for tolerating my / our multiple off topic discussions, I’m back in the housing market so the blog gets boring and enjoy the distraction.

#41 jag on 11.21.14 at 10:33 pm

#23 James

“Sorry, I am typing this with only one hand as I bench press 400lbs with the other one.”

Laughing my ass off. Nice.

#42 Mark on 11.21.14 at 10:41 pm

“Who can really explain the advantages of the ETF over the mutual funds? Since I have been a buy & hold investor with regular inputs, the no transaction fees mutuals always held an edge over the ETF.

Since I don’t plan to sell trade at anytime, why would I care? Curious to understand the practical differences between them.

For starters, its easier to get credit against ETFs than it is mutual funds. Need to borrow some money at 2%? Dirt simple if you have XIU or the Vanguard equivalent in a margin account. But to do the same with, say, traditional mutual funds, your options will be considerably more limited.

ETFs can be sold literally within seconds. Traditional mutual funds can only be bought or sold once a day. Probably not a concern to you. Likewise, investors with large holdings of an ETF can redeem the ETF units the underlying shares, in a tax-free transaction. While mutual fund investors can only buy or redeem through the mechanism provided by the sponsor and no possibility exists for a tax-free in-kind redemption.

Most of these ‘advantages’, with the exception of the ability to gain credit against ETFs vs. mutual funds, probably don’t mean much to smaller investors. But they do exist nonetheless and may be meaningful to some.

#43 Smoking Man on 11.21.14 at 10:41 pm

I’ve lost the love of writing..

But not drinking. I’m addicted to that weightless feeling you get.

When my heart broken son’s were carrying my nephews casket to the waiting Hurst soft music was playing in back ground.

Con Te Partiro. It’s a popular tune thats played with the water show at the Bellagio. It’s spectacular, just like him.

The kid was a freek of nature. Brilliant, succesful. Yet not one soul on this planet had one ounce of jeliousy, animosity to his accent in the corporate world.

Goes completely against human nature.

This kid was special…

His name is Mark.

How many missing Marks are out there..they could have been in the world Trade Centre on 911, MH17 , or just a homeless bastard that could not beg enough for a bottle and jumped in font of a subway.

Humanity is one sick species.

Don’t know where I’m going with this…

F-en hammered and at home…

#44 waiting on the westcoast on 11.21.14 at 10:42 pm

Who is Cato the Elder and why does he haunt us?

Great post tonight Garth… I have made most of my money participating in riskier ventures. I have been building a more balanced portfolio now based on all of the advice I have picked up here over the past year.

Have you thought about discussing more venture oriented investments (obviously outlining the significant risks)? It might make for an interesting discussion…

#45 For those about to flop... on 11.21.14 at 10:43 pm

Re#35
If I was fortunate enough to have a million dollars ,I would pay someone 10grand to manage it in a heartbeat.

#46 Marco from van on 11.21.14 at 10:49 pm

Living in the Bay Area is about the same cost as van (rents a little higher against income a lot). Van/Canada was a career stepping stone for me personally and a great place for my kids to enjoy a few years.

Bottom line is not bragging (I lift 800lbs with my middle leg, will try with hands now that you got me thinking of it) but the liberty that a rental and investor philosophy brings vs. a leveraged debt / mortgage one…

The bragging may be stylistically implicit… Not much different from the blatant pro RE
Crap that flies around… You got the point on that ;-)

#47 rwm on 11.21.14 at 10:51 pm

Hi Garth,

You have said multiple times in your blog posts over the years to never have all your savings in registered accounts. Even tonight you advise opening a TFSA and non-reg account. When does it make sense to start stuffing money in a non-reg account? My wife and I (age 30 and 34 respectively) have maxed our TFSA’s this year and have about $40K total between each of our RRSP’s. We have a balanced 60/40 portfolio divided among the four accounts in ETF’s. After we make our 2015 TFSA contributions, should we ignore our available RRSP room and shovel savings into a non-reg account? I don’t believe the tax benefit of a spousal RRSP applies to us as we both earn about the same amount of money ($160K household). We are a bit torn between using up the RRSP room and starting non-reg trading accounts. Thanks for all the free advice you give, it has been invaluable to us.

#48 NoName on 11.21.14 at 10:59 pm

interesting pbs documentary and post article regarding MF industry and how mres and fees are eroding future earnings.

pbs always makes good documentaries, retirement-gamble, it talks about mutual funds mers and fee, and explains how fees are eroding future earnings. (52min)

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/

and this

http://business.financialpost.com/2014/02/06/mutual-funds-are-as-canadian-as-hockey-housing-and-snow-the-big-question-is-why/

“…mutual fund assets surging from $25 billion in December 1990 to $426 billion in December 2001 to more than $800 billion in 2012.”

mer’s, fees and trailers cha ching

#49 Smartalox on 11.21.14 at 11:00 pm

1% fee on $150,000?

My advisor had been telling me he couldn’t go to a flat fee with less than $500,000 in my accounts. I’d called around and found that to be pretty consistent amongst CFPs.

Recently my manager came back with a proposal for me of 2.3% per year, on assets of about $360,000.

My question is this: there’s obviously a minimum cost for professional management, but what’s really reasonable?

As I stated. 1% is enough. — Garth

#50 Smoking Man on 11.21.14 at 11:01 pm

A dead Jewish kid, A dead Palistinine kid.

Dead because shit happens. Because bad men that know best do shit.

There parents crushed, there communities want revenge. The wasting of life continues, kids blown up.

Thank god even though I don’t belive in you.
I’m an Alien…..you spared me from a human perspective.

Love you god. It’s the bozze talking.

#51 Mike S on 11.21.14 at 11:04 pm

“When you get to $150,000 or so, it makes sense to pay someone 1% to manage this growing”

Why?
Anyone who can grow his net from 50K to 150K, which probably takes more than 5 yr (assuming adding 10K per year and 7% return) can just continue the good work

no?

#52 Max Jones on 11.21.14 at 11:05 pm

Since we tend to lament on doom and gloom issues here is a great web site which aggregates day by day job losses.

http://www.dailyjobcuts.com/

In case you missed it on Nov 4, 2014 there is a report of IBM axing 50,000 in India. Wow – 50,000.

Given that IBM has off shored many consulting jobs this is an indication of their declining importance to corporate and government America. Or perhaps just that the IT industry is maturing to the point where hordes of young minds are no longer necessary to keep this industry afloat. It’s starting to look like politicians won’t be able to use the mantra of new and innovative technology as a growth driver for employment.

http://wraltechwire.com/as-ibm-reportedly-cuts-50-000-india-jobs-ceo-replaces-global-services-leader/14146112/

#53 Sheane Wallace on 11.21.14 at 11:19 pm

Inflation at 2.4 %, despite decline in gas prices.
Food inflation at 2.8 while interest rates are zero.
I actually got 1 cent monthly interest on 4 k USD deposit in a Canadian bank. 1 cent.

Strongly negative interest rates, what would happen if oil reverses direction and goes higher?
5 % inflation?

There would be no interest rate increase by Fed in 2015, it is game. Poloz caused the dollar to dive from 96-98 to 89 cents. He will not increase interest rates which is a crime and a theft, the sheeple will be convinced that we are lucky to avoid deflation.

And yes gold should go down. As the news of inflation higher than expected actually strengthens the CA dollar today…

#54 Nemesis on 11.21.14 at 11:20 pm

#RocketScienceForAmateurs!…

http://youtu.be/7Ty0SvrQSu4

[NoteToGT: “Go for it. Good luck.” — Hon.Garth; Words of wisdom… especially when we allow that even the Pro’s have their off days… so just imagine what a bad for an amateur is like… or, “Why Relying on BeginnersLuck to SaveTheDay is seldom a WinningStrategy”… NoteToSmokingMan: LifeIsShort – YouOnlyThinkYou’reTiredOfWriting: http://youtu.be/BMwOEkTmTyQ ]

#55 Mister Obvious on 11.21.14 at 11:21 pm

#35 earthboundmisfi

The 1% fee is tax deductible on non-registered accounts. In my case, it turns out that my financial managers get that instead of the CRA.

In addition, they take care of dozens of headaches and tricky decisions that would otherwise be mine alone to deal with. Worth every cent.

But I am thinking of buying $100K of advanced diagnostics equipment and specialized tools so I can work on my own car. That could save me upwards of 500 bucks a year.

#56 Mel on 11.21.14 at 11:28 pm

Okay, so you are against buying a home at all time high, and yet, you are telling people to buy stocks at all time high?

So, you are basically saying that all that money printing around the world will bring new prosperity in the near future.

When exactly do you think the world will be in a position to pay for all that money printing? Debt used to be seen as a curse, I guess this time we are celebrating debt. More of it, means better future for all of us. This is how we create long term wealth.

2008 was a reminder that you cannot keep inflating assets through speculation and debt. Today we have more of it. May I suggest that you are going to be wrong in the future, and 2008 experience was a wake up call as what not to do. We have learned nothing, and when the day comes, losses will be bigger than the one we experienced in 2008/2009.

We all make our own decision how to protect our savings, and hopefully make it grow. I will not use to speculate on all time high housing or stocks.

Then don’t buy individual stocks. I don’t. — Garth

#57 kellen on 11.21.14 at 11:29 pm

Wow, I wouldn’t have believed my email turns into a post! Sorry for the readers, I’m a guy named Kellen, not Kelly, but for the sake of things in this post I’ll gladly be a Kelly, haha!

I wrote that at wits end last night, part of the 50k is 34k sitting in a TFSA, so step one is at least ready. I think this weekend is going to be one of [email protected] and getting some things in order.

Looks like I have a lot more reading to do!

Thank you again Garth for not only taking the time to read my mail but going beyond a simple reply!

I changed your name and sex to protect you. Now you will need an Amazonian escort. — Garth

#58 Smoking Man on 11.21.14 at 11:36 pm

Parents of the dead sons and daughters.

What is the word you can dignify the pain they feel.

Can’t find it on true and trusted university of Google.

Dogs I need a word..good luck…..

#59 Ontario's Left Coast on 11.21.14 at 11:38 pm

Excellent advice, Garth; thank you. Just to throw my two cents’ worth in, I happily turned my taxable portfolio over to the wealth management division of one of the chartered banks for ongoing management. I’d rather not see the ~1% fee leaving the pile at the end of the day, but it’s tax deductible and I believe they’ve more than made up for it through their calls on asset weightings , dollar movements and tax efficiency . Ten years in and very satisfied overall… I know enough to recognize that, if I was running the thing, I’d likely be sleep deprived and down on my luck! Good luck to all!

p.s. Smokey, very sorry to hear about your loss.

#60 Nemesis on 11.21.14 at 11:41 pm

#BonusOddities… #EspeciallyForGrievingSmokingMen… #TrustMe…

http://youtu.be/ZrZlhD0Oeto

#61 LadyInWaiting on 11.22.14 at 12:00 am

This is a little off topic, and back into the realm of the “real” real estate news. I am a data-oriented person and I am questioning the issue of low inventory that seems to be the latest RE meme. When I look at Vancouver listings I see very few listed, livable properties below $1 million, but many, many over $5 million (~220 properties). Is the lowish inventory mentioned by RE boards just a function of combining the higher inventory in the higher prices with the very low inventory at the low end? Is this another aspect of market fragmentation?

#62 LadyInWaiting on 11.22.14 at 12:03 am

Sorry that included Vancouver and West Vancouver.

#63 FP on 11.22.14 at 12:04 am

Garth, thank you very much for today’s post. It was tremendously helpful and relevant to us. Have a wonderful weekend and please keep up the good work!

#64 Jon B on 11.22.14 at 12:06 am

#10 Marco from Van
Wow, what spectacular bragging. Save the creative writing for the dating sites next time.

#65 Mike S on 11.22.14 at 12:07 am

“I have no doubt Europe will be another Cinderella and China will plump”

Any doubts about Japan?

There are better places to invest. — Garth

#66 Mike S on 11.22.14 at 12:21 am

“There are better places to invest. — Garth”

What about diversification? 3rd country by GDP

Not saying to buy their currency (can short it if anything)

But one should own Japanese stocks (as part of the international component)?

#67 Entrepreneur on 11.22.14 at 12:24 am

As reported by the editor in the local newspaper that the stats reported are only the ones looking for work or found a job. The ones who dropped out of the system, that are no longer on paper, are not on the stats for reporting for job numbers. They are not in the system.

“We reap what we sow.” Think about it, think about it in a bigger pitcher. As a whole, we should have respect for everyone. If not, we “reap what we sow.”

#68 OlderbutWiser on 11.22.14 at 12:37 am

#58 Smoking man, the word is devastated. I know…..we lost our son too….

#69 OlderbutWiser on 11.22.14 at 12:49 am

#48 NoName, many thanks for the Frontline documentary. It was well worth the time to watch. Bogel is a genius. He blew me away showing the effect of Mer’s over the lifetime of your ownership of mutual funds. So glad I ditched mine a long time ago.

It was also very evident that financial education is sorely lacking in North America. This will not end well.

Everyone should remember the comment made that the mutual fund industry is the only industry where you, the individual, put up 100% of the money, you take 100% of the risk and you only get 30% of the return. Understanding this….is the first step to your financial freedom.

#70 Waterloo Resident on 11.22.14 at 12:55 am

Garth’s quote: [ “For example, using iShares, you’d buy XIU (Canadian stocks), XSP (US stocks)” ]

might I suggest something a little bit better:

Instead of XIU, try HXU ( 2 times the TSX index ).
Instead of XSP, try HSU ( 2 times the S&P 500 ).

Now here is something to think about:
Every 7 to 10 years we enter a new recession.
The last recession was in 2008, so what does that tell you about the timing of the next one if its almost 2015 now?
Stocks normally crash about a year before the start of a new recession, so what does that tell you about the currrent state of the stock bull market?

My feelings: If you are heavily invested in stocks, that might be a very dangerous thing within the next year or two.

#71 nonplused on 11.22.14 at 1:06 am

Well this post will be off topic, ranty, and somewhat depressing. But unfortunately I don’t post anywhere else and I need an outlet so ignore if you are wise.

Human nature has come to bother me a lot. A lot of things happen in our live because parents and also just not knowing what to do or being stupid.

One of the worst things that happened to me from the perspective of being an observer and somewhat participant.

I was taking my daughters skiing. At that time they were twining the highway in that area but everything was still on 2 adjoined lanes. A Jeep passed me with 3 young people in it and also passed the car in front of me, and that car was the lead car.

A few minutes later, around the bend, on the bridge, the jeep had collided sideways with a semi, and 2 of the 3 young people were dead it turned out. A great effort ensued to save the remaining girl including trying to figure out how on earth you start a smart car so we could get it off the bridge so Stars could land their helicopter. They were new at the time.

I left my girls in the car the whole time playing video games on their DS, didn’t want them to see that, am very disturbed I did. Another good reason to always have at least a half a tank in the winter.

Anyway, I gave my name to the police, and it has bothered me to this day. I never took a video, wasn’t that familiar yet with that aspect of phones and this wasn’t a smart phone. But it did have a camera and I took many photos that in my opinion proved the Semi was in the middle of the road before the accident and the driver of the jeep probably moved right to avoid the semi and hit the snow bank causing him to spin.

The semi driver of course could admit no wrong.

And then the snow plow showed up before the ambulance and removed all of the tire tracks! I suppose to make sure the ambulance could get through but to no point we needed airlift from Stars. I hope the cops had already documented the situation because they never asked for my witness which would have included photos.

Point I am trying to make is people are not smart and they are not honest. That’s why the world is filled with evil. It’s not the devil trying to deceive you, he doesn’t exist. It’s the truck driver trying to avoid responsibility for killing 2 24 year olds because you were driving too fast for the conditions and not in your lane. That’s where evil comes from. The evil comes from our own decisions we won’t live up to. We have met the devil, and he is us.

And that’s why banking doesn’t work either. Banking can’t function unless the bankers are accountable. Which they are not.

#72 Tony on 11.22.14 at 1:15 am

Re: #65 Mike S on 11.22.14 at 12:07 am

Europe doesn’t create facades or tell fairy tales like America so their stock market will crater and crash no matter what they do. China is being more truthful than in the past. America is the new Japan circa about 1980 to 1985 where anything you read you just disregard as folklore.

#73 Tony on 11.22.14 at 1:32 am

Re: #57 kellen on 11.21.14 at 11:29 pm

Hedge yourself while it’s still cheap when the music stops the market will be closed for two weeks to a month before it reopens. The carnage will be colossal. The definition of a ponzi. Physical gold and physical silver will outperform all other investments long term except some small juniors on the Venture Exchange. That’s a given.

#74 VanDammeCouver on 11.22.14 at 1:46 am

As I stated. 1% is enough. — Garth

Please clarify Garth. You use ETF portfolios that probably average 0.2% MER, so you’re telling me you charge an advisory fee of only 0.8% to your clients to make that total 1%??

Investors cannot avoid embedded ETF charges, but the good news is they’re generally miniscule. You can then hire someone for 1% annually, tax-deductible, to look after the portfolio for you, to provide tax advice, retirement planning strategies and give you help with everything from buy/lease decisions to insurance, real estate or your kids’ education. Or you can do it yourself. I actually don’t care. — Garth

#75 Lillooet, BC on 11.22.14 at 1:56 am

A lot of great advice, Garth.

Meanwhile, in British Columbia, people are paying a million-plus for houses in Vancouver, while an American billionaire (and husband of Walmart heiress) owns a ranch “the size of Luxemborg” with 30 lakes. If the Millenials only knew how badly they were being screwed by the 1%, they’d be outraged:

from CBC Nov. 21, 2014:
“The Douglas Lake Cattle Company is trying to restrict access to more than 30 lakes on a spread the size of Luxembourg. ”

http://www.cbc.ca/news/canada/british-columbia/b-c-outdoorsmen-risk-criminal-records-in-david-vs-goliath-battle-to-keep-lakes-public-1.2844031

#76 Mark on 11.22.14 at 1:57 am

” Is the lowish inventory mentioned by RE boards just a function of combining the higher inventory in the higher prices with the very low inventory at the low end? “

I’d suggest that “lowish inventory” has more to do with the FSBO trend, as well as distressed homeowners handing their keys back to the bank and/or abandoning the properties. Rather than legitimately low inventory.

For instance, where I am, the house across the street was sale for 6 months, and mysteriously, out of the blue, the for sale sign disappeared, and is sitting vacant/empty. The current owners, to put it lightly, are trailer trash, and it is doubtful if they brought any meaningful down-payment to the table before skipping town.

#77 Jordy on 11.22.14 at 2:48 am

Good advice, balanced is the way to go. I would add that there are obvious imbalances for contrarians to profit from when sentiment is wildly negative, ie the reit & pref selloff. Right now the small cap energy stocks are down 50% or more, I like to reserve a modest portion of the portfolio say 10% and pick up the beaten up sector either through an etf or selected stocks.

#78 earthboundmisfit on 11.22.14 at 6:54 am

@45 For those about to flop …..
Allow me to show this in a different light. Assume no employment pension. The million dollar portfolio (invested and diversified as recommended by Garth, the Couch Potato, John Bogle et al) is there to spin off a retirement income of 40k – 50k per year. Does saving the 1% / 10k not now seem a little more significant?

#79 NoName on 11.22.14 at 6:56 am

#66 Mike S on 11.22.14 at 12:21 am

“There are better places to invest. — Garth”

What about diversification? 3rd country by GDP

Not saying to buy their currency (can short it if anything)

But one should own Japanese stocks (as part of the international component)?
_____________________________________

mike s read this

http://www.gurufocus.com/global-market-valuation.php

#80 earthboundmisfit on 11.22.14 at 7:01 am

And if I may, one further suggestion / recommendation: “Pensionize Your Nest Egg” by Prof. Moshe Milevsky (York University) and Alexandra Macqueen.

#81 liquidincalgary on 11.22.14 at 8:10 am

there are IIROC fee only planners in calgary; however, they also want a fee for each buy, each sell, etc.

The management fee should cover all costs, including trading charges, on accounts of a reasonable size (such as $150,000 or more). — Garth

#82 Millenial on 11.22.14 at 9:09 am

Hey Garth,

Recently, net buyers of the S&P500 are only small individual investors and the companies themselves. High net worth private clients, hedge funds, and other large institutions are net sellers.

These companies have an inherent conflict of interest in executing huge buybacks, as many of the employees concurrently execute stock options and sell their stock. I consider this manipulation of the markets. Am I suggesting to not invest, no, but keep your eyes wide open at all times.

“In mid-August (2014), about 25% of nonelectronic trades executed at Goldman Sachs Group Inc., excluding the small, automated, rapid-fire trades that have come to dominate the market, involved companies buying back shares. That is more than twice the long-run trend, according to a person familiar with the matter.”

Source:
http://online.wsj.com/articles/companies-stock-buybacks-help-buoy-the-market-1410823441

If, as you call yourself, you’re a Millennial then the last thing you should worry about is market timing. Just get invested, in a balanced way, and devote your time to maturation. — Garth

#83 Daisy Mae on 11.22.14 at 10:45 am

#49 SMARTALOX: “Recently my manager came back with a proposal for me of 2.3% per year, on assets of about $360,000. My question is this: there’s obviously a minimum cost for professional management, but what’s really reasonable?”

As I stated. 1% is enough. — Garth

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

If advisers were less greedy, they’d have more clients…and we wouldn’t be muddling along on our own.
Garth never blows his own horn but charges 1%…

#84 J.R. Ewing on 11.22.14 at 10:56 am

Has anyone had any experience with TD Direct Investing International (Internaxx) and care to share it with all of us blog dogs here?

#85 Daisy Mae on 11.22.14 at 10:56 am

#55 Mr Obvious: “But I am thinking of buying $100K of advanced diagnostics equipment and specialized tools so I can work on my own car. That could save me upwards of 500 bucks a year.”

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

You’re joking, right?

#86 Daisy Mae on 11.22.14 at 11:14 am

#69 OlderButWiser: “Everyone should remember the comment made that the mutual fund industry is the only industry where you, the individual, put up 100% of the money, you take 100% of the risk and you only get 30% of the return. Understanding this….is the first step to your financial freedom.”

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

Exactly. Why, oh why, do we have to learn everything the hard way? Stay away from Investors Group!

#87 Doug in London on 11.22.14 at 11:54 am

One thing to keep in mind with investing is, while we probably won’t have an all across the board sale like in 2008-09 any time soon, sectors go on sale periodically. Last year at this time it was REITs, preferred shares, and electric utility stocks. Now the sale is on oil and gas stocks. If you don’t know which ones to buy (and I don’t) then try buying XEG. It’s gone up in the last few days but if it drops to near $16 again it’s probably a good time to buy. How do you know a sector’s on sale? A good guide is to read the comments on this blog. When you read a lot of negativity about that sector it’s time to buy. Is there a future for oil and gas? I worry about it every time I fill up at a petrol station. Oh, what’s that noise I hear? It’s the gas furnace running!

#88 [email protected] on 11.22.14 at 12:11 pm

Thanks :) I learn so much reading here.

For example, using iShares, you’d buy XIU (Canadian stocks), XSP (US stocks), XPF (preferreds), XRE (real estate trusts) and XSB (short bonds). As your funds grow, you can add lesser weightings in XEM (emerging markets) or XCS (small-cap Canadian companies). When you get to $150,000 or so, it makes sense to pay someone 1% to manage this growing nestegg, rebalancing it, giving you tax avoidance advice and gaining further diversification.

I want the tax and diversification advice now too.

#89 crowdedelevatorfartz on 11.22.14 at 12:12 pm

@#71 nonplused

VERY well said.

#90 SWL1976 on 11.22.14 at 1:02 pm

Haha great post great advice for many, and best of all you can’t argue with the price

Cause if you could we would

Have a great weekend

#91 VanDammeCouver on 11.22.14 at 1:25 pm

Investors cannot avoid embedded ETF charges, but the good news is they’re generally miniscule. You can then hire someone for 1% annually, tax-deductible, to look after the portfolio for you, to provide tax advice, retirement planning strategies and give you help with everything from buy/lease decisions to insurance, real estate or your kids’ education. Or you can do it yourself. I actually don’t care. — Garth

No I was just curious Garth, cause I think that’s an excellent and very fair price. I just wanted clarification that’s all. Can investors still deduct that 1% if the funds are primarily invested in RRSP’s & TFSA’s?

Advisory fees are deductible for non-registered accounts only. However fees coming out of an RRSP are not considered as income and leave tax-free. Thus, in effect, the government subsidizes them similarly. — Garth

#92 Mike T. on 11.22.14 at 1:36 pm

#71 nonplused on 11.22.14 at 1:06 am

Thank you for sharing.
I’ve been at the scene of a police incident before as well. What I believe I saw happen, and what the official story became, were not related, similar to what you described.

I haven’t been the same since.

#93 Bon Vivant on 11.22.14 at 2:21 pm

Garth is on point. Five major asset classes and if you’re in your 20’s and 30’s just sit back, don’t pay attention to the market volatility and watch it grow much larger 20 years from now.

Free Scotia iTrade ETF’s
http://www.scotiabank.com/itrade/en/0,,4200,00.html

QuestTrade Free ETF’s
http://www.questrade.com/trading/services/free_etf

How fast your TFSA will grow in 30 years
http://www.thingsyouwontlearninschool.ca/the-desk/what-is-a-tfsa-and-what-should-i-do-with-it

Great TFSA Calculator from CRA
http://www.tfsa.gc.ca/cal-eng.html

Happy Investing People.

The hardest part is actually starting. Then it’s being able to not let the fluctuation bother you.

For that, keep coming back to GreaterFool for piece of mind from GT.

#94 Mark on 11.22.14 at 2:40 pm

“might I suggest something a little bit better:

Instead of XIU, try HXU ( 2 times the TSX index ).
Instead of XSP, try HSU ( 2 times the S&P 500 ).

Absolutely not better. That’s leveraged, and those particular funds suffer the “constant leverage trap”. Additionally, they are not very tax efficient, and have a myriad of other problems.

All but the most sophisticated of investors should stay away. And sophisticated investors, once they really understand how the products work, probably would want to stay away as well.

#95 Mark on 11.22.14 at 2:44 pm

“There would be no interest rate increase by Fed in 2015, it is game. Poloz caused the dollar to dive from 96-98 to 89 cents. He will not increase interest rates which is a crime and a theft, the sheeple will be convinced that we are lucky to avoid deflation.”

Poloz isn’t the smartest tool in the shed, but he did not cause the dollar to drop. Rather, speculators did, in driving the USD$ up, and by taking irrational short positions against the CAD$ that are almost certain to be proven to be unprofitable as Canada’s deflation deepens with the housing decline.

The Canadian economy isn’t even strong enough to support the current 1% rate, and that’s before any major decline in housing prices has occurred. As the price declines continue and accelerate, well, even 0% as a BoC policy target may very well be too high. The cue for a Canadian sort of QE most likely.

#96 Retired Boomer - WI on 11.22.14 at 2:45 pm

#71 NONPLUSED

Sorry for your experience in seeing such a highway trauma. Yes, from the scene it may be both the semi as well as the Jeep were both somewhat wrong. Semi lane crowding, Jeep driving too fast for conditions, and failure to have their vehicle under control.

It becomes a problem of basic physics when a smaller vehicle collides with a larger one -the smaller loses!

It is often very difficult to determine who was MORE at fault from the aftermath scene. If we are to believe statistics however, the largest majority of car-Semi crashes the car driver is determined to be “at fault.”
That said, when people die, or are maimed for life, does the ‘larger blame’ really matter?

We forget when we share the road with others, we need to drive assuming they don’t always know what they are doing. Often times that assumption is very accurate!

-cheers-

#97 Nomad on 11.22.14 at 2:56 pm

I opened an RESP for my 6 month old. Put 2.5k in ZCN, an ETF from BMO. 200 companies. In 20 years it’ll pay for school. 2.6% dividens. It might drop 25% in 2-5 years if canadians default on their mortgages, impacting banks, but 5 years after it’ll get fixed.

Colleagues think RESP is a an acronymn for a medical issue. They save for their kid with ING for a 0.6% post-tax return. People are more interested in YouTube than investing.

#98 Mark on 11.22.14 at 2:57 pm

“Investors cannot avoid embedded ETF charges”

On some of the bigger ETFs with low MERs, securities lending revenue (revenue the fund receives when it lends out shares to short sellers in exchange for 104% cash collateral) actually is almost enough to pay the management fees. Hence, the effective MER in such cases may be zero or pretty darn near such.

Of course, most brokers don’t reimburse you even so much as a dime if your shares in your account are lent to short sellers. Some brokers will even replace your tax-preferred dividend with a non-tax-preferred “payment in lieu of dividend” if your shares are lent out by them.

#99 Luc on 11.22.14 at 3:10 pm

Garth, what do you think of Tony Robbins’ portfolio strategies in his new book, Money: Master the Game.
http://moneymasterthegame.com/

Since when is he a money guy? — Garth

#100 devore on 11.22.14 at 4:23 pm

#99 Luc

Garth, what do you think of Tony Robbins’ portfolio strategies in his new book, Money: Master the Game.

Generally, you’re not going to learn anything useful about investing from a person who refers to it as “playing the game”.

#101 Mark on 11.22.14 at 4:52 pm

“Okay, so you are against buying a home at all time high, and yet, you are telling people to buy stocks at all time high?”

Stocks are not at an all-time high, generally speaking, and are a fraction of their all-time high valuations in the 1999-2000 era. A good chunk of the TSX trades at or even less than depreciated ‘book’ value, particularly in the O&G and Gold mining sectors. The index is implying earnings of 12%/annum with no multiple expansion, unlike housing which is only implying around 3-4% at best, with a high probability of future multiple contraction. There’s a heck of a lot of value in stocks, particularly the TSX today. Particularly as investor enthusiasm actually is revived from a comatose state insofar as the TSX is concerned.

#102 Eatin' Bonbons on 11.22.14 at 5:02 pm

Smoking Man:

Having suffered a similar shock with the passing of my sweet nephew… One word, it’s a feeling that now describes me and some others among the family and closest friends… BROKEN

My sincere and heartfelt sympathies for your loss.

#103 Giovanni di Bicci on 11.22.14 at 5:09 pm

Garth, what do you think of Tony Robbins’ portfolio strategies in his new book, Money: Master the Game.
http://moneymasterthegame.com/

Since when is he a money guy? — Garth
___________________________________

Aren’t we all? ;-)

#104 Retired Boomer - WI on 11.22.14 at 5:18 pm

#42 MARK

Thanks for the reply. I never thought about those aspects.

#48 No Name

I thought that PBS Documentary “The Retirement Gamble” was quite on target. Yes, minimizing your investment “costs” will increase your earnings.
A ‘good’ Asset allocation, such as Garth’s 5 ETF idea, and LEAVING THE DAM THING ALONE will help much more.

Simply re-balancing to your original asset allocations once each year is sufficient.

No need to over complicate a good basic idea, start now!

#105 Mister Obvious on 11.22.14 at 5:21 pm

#85 Daisy Mae

Yep, I am joking.

But my example makes just about as much sense as overseeing your own investment portfolio if you are not already a professional money manager.

The guys who figure they’re saving 1% by going it alone are doing the equivalent of two things:

1. Trying to service their modern, fuel injected computer controlled car with a box of socket wrenches purchased from Sears in 1972, and…

2. Doing far more work than they need to while assuming a crap-load of extra risk.

By the way, did you know you can do your own appendectomy at home? Damn straight! There a kit you can buy online with all the stuff you need: scalpel, sutures, clamps and local anaesthetic.

Yeah, I’m kidding.

#106 Happy Renting on 11.22.14 at 6:10 pm

#97 Nomad on 11.22.14 at 2:56 pm

In my experience, most new parents are aware of RESPs and that they should set them up, but if they aren’t sucked in by an expensive group plan they’re often in the arms of [email protected] They have no clue those two avenues are sub-optimal but have not much interest in learning about investing. And it’s not very light conversation when meeting a new acquaintance and admiring each other’s babies.

I picked ZCN for the RESP, too. I’d love it if you could max out the lifetime matching limit in the first year… Imagine how much schooling you could pay for if your account started with $43k when your kid was a few months old. Would only be the well off and financially literate to take advantage of something like that, though.

#107 Obvious Truth on 11.22.14 at 7:08 pm

#82. What about pension funds and their allocations. Did you get the memo from japan.

When should one plan on buying? After everyone else?

Hedge funds really? Last I checked they all bought baba.

Hedge funds and machines just give a guy like me opportunity.

Good etf coversation today. Investing can be easy.

#108 JSS on 11.22.14 at 7:31 pm

my favorite etf’s for RESPs are a combo of: CDZ, ZEB, and XSP.

#109 YYZ-PPT on 11.22.14 at 7:36 pm

Hey Garth/anyone,

For the ETF setup is there any advantage to buying the US or foreign equity etfs that are USD denominated? (eg. VXUS, SPYV, EAF). Or, is it better to hold the funds that are in Canada?

Thanks!

#110 Jordy on 11.22.14 at 8:00 pm

The big question is how do you find someone that is competent when you have no expertice in the field? It’s not just financial, its everything. If you are too lazy and not interested in learning the basics, your new roof is going to leak, your furnace is going to be too small, your ceramic tiles are going to peel off, your “new” house is going to have smoldering aluminum wiring. There is no excuse anymore, not to know better.

#111 Smoking Man on 11.22.14 at 8:35 pm

Ground hog day don’t have the same thrill. Like eating a San Francesco hot stake sandwich with no taste buds.

I’m going to Area 51 next weekend. Find me an Alien with time travel technology. I need to try..

I’m not use to having a puzzle that I can’t figure out fast.

I’ve attacked odds that most would consider Imposable and won huge almost every time.

It’s different now…

#112 Roland on 11.22.14 at 9:07 pm

Garth, world growth is anemic, despite the Fed, BoJ, BoE, BoC and ECB all doing a massive QE or negative-real-rate tag-team to give a absolutely staggering amount of free money to the global investoriat.

Isn’t it a bit naive on your part to ignore the sort of internal and external pressures and conflicts which are likely to arise from a continuation of current trends, which have created a very lopsided distribution of income and wealth in and across societies?

Perhaps what you think of as “normal,” is nothing more than a rather peculiar and transient little epoch.

The doomers, as you say, are almost wrong. However, it is worth bearing in mind that they only need to be correct on a single occasion.

#113 Daisy Mae on 11.22.14 at 9:27 pm

#53 Sheane Wallace: “Inflation at 2.4 %, despite decline in gas prices. Food inflation at 2.8 while interest rates are zero….”

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

A head of iceberg lettuce at Walmart, well over $2? All we have to do is boycott. We have the ‘power’. We just need to use it.

#114 JimH on 11.22.14 at 9:54 pm

#21 Not first

You say the US debt is “about $20 trillion”?

On June 30, 2014, public debt held by the public was approximately $12.6 trillion or about 74% of Q1 2014 GDP.
Intergovernmental holdings stood at $5.1 trillion.

The combined public debt is about $17.6 trillion.

About $6.0 trillion (~50%) of the debt held by China (People’s Republic of) and Japan… About even shares per country.

You debt freaks never take a breather to consider debts versus assets, do you? Even [email protected] (lower case intensional) always considers assets when looking at you askance over your liabilities! But that seems to bee tboo much of an effort for, doesn’t it!

I have estmated the assets of the US Government (bless its avarce little heart) of at excess (and ‘excess’ is not too strong a word) at over $200 trillion.

The few $trillion gobbled up by China and Japan is not at all as scary as you might imagine, and, come to think of it, do you imagine for a second that they are so much more stupid than yourself not to have considered a safer haven?

Give your head a shake, then reevaluate your favorite bookmarks!

#115 ronh on 11.22.14 at 9:56 pm

Garth is proved right again. Love the song.

http://howestreet.com/2014/11/no-one-told-you-when-to-run-you-missed-the-starting-gun/

#116 JimH on 11.22.14 at 9:57 pm

Pls excoose
Tyoose on the road and the ipad sucks

#117 JimH on 11.22.14 at 10:15 pm

#94 Mark
At last; you make some sense.

2x and 3x leveraged ETF’s have their place; but only at the hands of very experienced and nimble traders (and never, ever in the hands of investors… I assume you can figure out the difference).

The math is simple, and is best illustrated by a 2x bull ETF.

Just suppose it ws bought at $10, and the market takes a 20% down correction. Your shares are now down about 40%… $6

Now, to break even, the shares have to gain $4 or about 66%.

Down 40%; need 66% up to break even; down 50%, you need a 100% gain to break even.

I like to play the TNA and TNZ ETFs once in awhile as a pure and simple gamble… Because that’s all it is, and with never more than 5% (usually much less) of a very considerable portfolio… (None of your business… Just as yours is of no interest to me).

#118 Ogopogo on 11.22.14 at 10:25 pm

Comical RE moment of the weekend. An advertorial in the Financial Post on “How to co-buy a home with your friend in Canada’s expensive market”. Read the comments for a refreshing take-down of the “article”.

Garth, you’re aptly quoted in the top comment! Looks like us blog dogs will not let the shills get away with anything these days.

http://business.financialpost.com/2014/11/22/how-to-co-buy-a-home-with-your-friend-in-canadas-expensive-market/

#119 JimH on 11.22.14 at 10:30 pm

#111 Smoking Man

Area 51???

Really? Forget it! Nothing to see!
Lol

#120 robert james on 11.22.14 at 11:01 pm

#113 Daisy May If you want to boycott something, may I suggest that you boycott the disgusting “Made in China” toxic garbage .. People use the crap for a year or two, if it lasts that long and then it ends up in the landfill and then they go buy more Made in China crap and the process is repeated..You can buy good stuff,,made in Europe,USA or Canada but it will cost more but be worth it because it will last 10 times longer.. I bought all my Xmas presents from a potter in Westbank a few years ago and everyone was happy.. I would love to see someone open up a store that only sold Non-Chinese made merchandise.. It would cost more but well worth it…I think they would make a killing ..

#121 Mark on 11.22.14 at 11:12 pm

“2x and 3x leveraged ETF’s have their place; but only at the hands of very experienced and nimble traders (and never, ever in the hands of investors… I assume you can figure out the difference).”

Not really. Those folks use futures, which are far superior in every aspect possible if a leveraged position is desired. The “leveraged” ETFs have no place in portfolios, period, and the marketing of them to less sophisticated investors or novices (ie: the BNN-watching crowd) is quite unfortunate.

Not sure what your ‘make sense’ comment was all about. I am extraordinarily clear and concise when I post here.

#122 JimH on 11.22.14 at 11:41 pm

#121
Really?

You don’t really read a post before you blurt out a gushing irrelevant comment, do you?

Trading is a very different proposition than investing.

Sorry….. I really did assume that you knew the difference! My apologies.

#123 David McDonald on 11.22.14 at 11:55 pm

Re olderbutwiser-36
That’s great news that TD will create USD RRSP’s. The exchange fees are a real impediment to holding US stocks. I learn interesting things reading this blog!

Re financial advisors
I had a young advisor from RBC whom I trusted. He quit when his bosses pressured him to create trades to generate more fees. When he told me that I decided to do my own investing.

#124 ozy -you're doomed on 11.22.14 at 11:59 pm

hardworking guy should never had the worry of his money loosing value year by year….

so, if this is all you can do (work INSIDE the controlled system), instead of attacking the root-cause -> hahaha, you’re doomed fellas! doomed

#125 Cato the Elder on 11.23.14 at 12:07 am

Re: #114 JimH

Incredible that your analytical skills could miss their unfunded obligations. I don’t blame you, I blame our public schooling system that teaches us to trust official statistics and never delve beyond the superficial:

http://www.forbes.com/sites/realspin/2014/01/17/you-think-the-deficit-is-bad-federal-unfunded-liabilities-exceed-127-trillion/

127 TRILLION DOLLARS.

And that’s JUST WHAT WE KNOW OF. Who knows of all the backend, secret deals that have been struck by America’s shadow government (CIA, NSA, etc.) in all their clandestine operations around the world. They probably owe a lot more than that.

#126 JimH on 11.23.14 at 12:22 am

Fantastic post today, Garth!
ETFs have come a long way since their introduction, and I (finally) have come to agree that there is now no really good reason to own individual stocks.

When I first started trading, our commisions were over $55/for the first 1000 shares. Retail investors had a tough time (impossible time) creating a balanced and diversified portfolio, and those who tried found it a second career! Some won, most lost and gave up.

I now hold 8-10 ETF positions and 1-2 CEF multi-sector bonds in rollover and magin accounts (I treat them both more or less equally; so far, my descendants seem to be clever enough to handle the tax consequences.)

Your advice is golden, and I would encourage the younger readers to consider it seriously.

#127 Andrew Woburn on 11.23.14 at 12:28 am

Bitcoin believers and fed bashers won’t like this.

“Private money vs totally-public money, plus some history”

http://ftalphaville.ft.com/2014/11/21/2049012/private-money-vs-totally-public-money-plus-some-history/

#128 Harbour on 11.23.14 at 12:38 am

Mark your a 3 dressed up as a 9

#129 Hoser McGee on 11.23.14 at 1:07 am

Kelley, at her tender age, should be buying a Camaro convertible and living on a beach drinking tequila. Plenty of time to get suckered into the investment meme. Kelley darlin…bang your life away…while reading about business on the beach somewhere…….live your youth dear…it only comes around once. Once you get saggy and sober….you can make money then.

#130 Bob on 11.23.14 at 1:51 am

Here’s our situation…

Late 40’s, 2 kids (both under 8)
130k & 38k annual income
500K mortgage
60k loan
No savings
50k in defined contribution pension
2,500 /month mortgage & property taxes
1,100/month consolidation loan payment
1,000/month for food
$800/month car lease payment
$800/month daycare
$200/month cable internet phone
$150/month electricity
$100/month gas
$100/month utilities

Comparable rental would be around $2,500 min
House value $550k

The wife wants to stay in the house that’s comfortable and “home” but it needs a lot of work – roof, foundation, siding, etc. etc. I want to sell, rent a cheap place in the neighbourhood and pay off debt as fast as possible and then save as fast as possible. How can I convince her that this is a good idea?

#131 gold bug on 11.23.14 at 2:07 am

DELETED

#132 Johnny D on 11.23.14 at 2:41 am

http://www.leaderpost.com/business/Klump+says+housing+bubble+bunk/10399949/story.html

This guy knows what he’s talking about. The CREA is always right about these things.

#133 Ilona on 11.23.14 at 11:26 am

#109 YYZ-PPT

For the ETF setup is there any advantage to buying the US or foreign equity etfs that are USD denominated? (eg. VXUS, SPYV, EAF). Or, is it better to hold the funds that are in Canada?

Depends on in what account, how much money you’d need to convert and if you can do it cheaply. For example, in RRSP converting 10K+ using Norbert’s Gambit – worth it. Here’re my recent notes on the subject:

1) http://canadiancouchpotato.com/2014/09/12/foreign-withholding-taxes-in-international-equity-etfs/

In comments:

in general US investors pay lower rates of withholding tax on overseas equities than do Canadians. VXUS would certainly be less expensive in an RRSP than XEF or ZEA (excluding currency conversion).

The all-in cost of XEF (that’s MER + foreign withholding tax) should be quite similar to what we estimated for ZEA in our white paper: about 0.67% in both an RRSP and a TFSA. VEA would be cheaper than that in an RRSP, and approximately the same in a TFSA.

VEA is actually the most tax-efficient choice in RRSP

2) http://canadiancouchpotato.com/2014/02/20/the-true-cost-of-foreign-withholding-taxes/

From example of the total cost breakdown:

in RRSP, 

USD ETFs: VTI 0.05%, VEA 0.31%, VWO 0.49%
CDN ETFs: VUN 0.44%,  VDU 0.90%, VEE 1.05%

3) http://canadiancouchpotato.com/2014/01/16/currency-exposure-in-international-equity-etfs/

This is a confusing idea, so an example will help. 

4) http://www.moneygeek.ca/weblog/2014/07/14/q-should-you-worry-about-currency-exchange-rates-moneygeeks-portfolio/

Similarly, there’s no significant difference between buying Canadian listed ETFs vs. buying U.S. listed ETFs. If you buy U.S. listed ETFs, it means you have to convert the Canadian dollar yourself before buying, whereas buying the Canadian listed version means the ETF will convert your currency for you. Either way, you convert your currency to buy U.S. assets. [but ETF can do it much cheaper]

(We have XEF in my husband’s RRSP for developed countries, I have some DEM and VEE in my RRSP for emerging markets. Now in the process of converting ~12K to USD, was gonna buy VWO, but might end up buying Alibaba – still regret it that didn’t buy after IPO… :))

#134 Cow Man on 11.23.14 at 11:32 am

Sir Garth:
Just today I realized that you are probably doing your fellow Canadians more good with this blog, than you could have if you retained your seat in the House. Strange how that worked out for the best for every one involved.

#135 LP on 11.23.14 at 11:46 am

#130 Bob on 11.23.14 at 1:51 am
*************************

You’re up obviously very late, or woken up early, worrying about this I think. And if that’s the case, believe me when I tell you I used to be that way trying to convince my husband to look ahead into the future.

Why not do what I did? Start working backwards in your budget from the standpoint of being already retired. Plug in anticipated costs of the very same line items you mention but allowing for a reasonable, and conservative, inflation. Then ask yourself, will your planned retirement income cover those expenses? Do you have the time left on your current trajectory to amass the needed retirement funds?

Then give that worksheet to your wife without comment except to say that you want her suggestions for meeting those obligations. It worked in our case and it might work for you.

If all else fails, then book some time with a good financial counsellor; a disinterested third party can provide the right advice that doesn’t “take a side” and makes the bitter medicine easier to swallow.

#136 crowdedelevatorfartz on 11.23.14 at 11:49 am

@#99 Luc

Tony ROBBINS!?!?!?!?
aka Lurch.

https://www.google.ca/search?q=lurch+addams+family&biw=1440&bih=766&tbm=isch&imgil=ktiSqMbMAuDFXM%253A%253B_d-y-9UPxFVffM%253Bhttp%25253A%25252F%25252Fwww.fanpop.com%25252Fclubs%25252Faddams-family%25252Fimages%25252F6160640%25252Ftitle%25252Flurch-photo&source=iu&pf=m&fir=ktiSqMbMAuDFXM%253A%252C_d-y-9UPxFVffM%252C_&usg=__d5LQuj9ytNZg7TRXAJ-Cs6rJF48%3D

You’re joking right?

The only way Tony made his millions was from gullible schmoes that flocked to his “seminars” about the “power of positive thinking”.
Now he’s flogging a book about money…..wow!
Does he still wear that silly headband?

#137 crowdedelevatorfartz on 11.23.14 at 11:56 am

@#130 Bob
Wow! $4400/month in loan payments alone!
Then the childcare, food, internet, etc kick in.
Brutal.
Well I dont think you need us to tell you what to do.
The financial reality is slowly crushing you into a corner.
Time for a major change.

#138 chapter 9 on 11.23.14 at 11:56 am

#114 JimH
Taking a closer look at Canada’s financial picture the total indebtedness of Canada’s Governments=$4.1 trillion.
Direct debt=$1.2 trillion
Debt Guarantee’s=$0.33 trillion
Program Obligations=$2.24 trillion
Contingent Liabilities and Contractual commitments=$0.28 trillion
Break that down per TAXPAYER =$243,476.00 or per PERSON $117,948.00 or 230% of the GDP.
Our population is on par pretty much with the state of California!

#139 Doug in London on 11.23.14 at 11:57 am

@Hoser McGee, post #129:
It actually makes more sense to start saving and investing young while time is on your side. Take advantage of compounding of your investments, it’s said quite rightly that compounding is the eighth wonder of the world. You’ll find that as you get older there’s a lot of age discrimination out there so, even if you’re experienced it’s not assured employers will want to hire you. I’m 54 now, pretty much retired, and am I EVER GLAD I started saving and investing while young. Have a look at this posting to see what I mean:
http://www.mrmoneymustache.com/2014/11/11/are-you-giving-the-shaft-to-your-future-self/
By the way, who says you need an expensive Camaro convertible to go to a beach? I’ve driven cheap cars, including econo box rental cars to beaches in many countries. I actually took a city bus to Bondi Beach in Sydney, Australia. While many of you poor suckers froze last winter, I spent 7 weeks in Australia where it was summer, all because I saved and invested so I would have both the money and time off to travel. Kelly, you’re on the right track, keep up the saving and follow Garth’s advice.
Who says you can’t have your cake and eat it too? Get 2 cakes! What do I mean? You can have a lot of fun on a sensible budget and still save a decent amount of money. That’s a win-win situation.

#140 rosie "moving forward" in the knowledge that, "this won't end well" on 11.23.14 at 12:28 pm

This is pretty good advice for all age groups.

http://www.marketwatch.com/story/in-retirement-a-big-house-can-lead-to-the-poor-house-2014-11-22?mod=MW_story_more_headlines

#141 Vancouver Minority on 11.23.14 at 1:02 pm

Garth you can deny the reality of the west coast as much as you want. The fact is that HAM will push up Vancouver real estate forever. China is not getting to be any more better place to live and all who can are leaving it’s problems behind.

Here is a professor and a white guy to boot who thinks we should even rename the whole province after a Cantonese expression Gold Mountain.

http://www.cbc.ca/the180/excerpts/2014/11/20/does-british-columbia-need-a-new-name/

#142 Blacksheep on 11.23.14 at 2:01 pm

Chapter 9, JimH, Not 1st, Cato

“Our population is on par pretty much with the state of California!” – Chapter 9 # 114.
——————————————–
Canada is a sovereign, currency issuer.

California is a state, currency user.

This difference means, absolutely everything. There is much stress over sovereign debt because of misleading comments from the Obama / Harper types :

“Our federal government has only so much $’s to spend, just like your households”

I can tell you after much research, it’s just not true, but unfortunately the perception must be maintained to keep society in line. I suggest people on the ball enough to be concerned about sovereign debt, dig a little deeper to find out what MMT is about and really give a chance.

It will change your perspective on all things $ related.

#143 Bryce Burnett on 11.24.14 at 2:11 am

People – have you all forgotten why the GST was instated in the first place? What was this tax supposed to accomplish? Why has this tax remained in existence? When the Chretian (spelling) government was campaigning for office his promise was to eliminate the GST as soon as he was elected ( was in the Red BOOK). Why was that promise not kept and governments since has maintained the GST? Because the tax has become a cash cow. For those of you that can’t remember the GST was instated to pay down the National DEBT. As a business man I know that I must eventually pay down my debts (the sooner the better) to be viable. Why should our governments be any different? Infact they should be setting a good example, sadly the opposite is true.

#144 Jim B on 11.25.14 at 11:26 am

A fine post, Garth, however you didn’t actually tackle one of Kelly’s questions: “What would you suggest for someone like me, that isn’t comfortable going full speed ahead with ETFs?”

It seems to me that even buying ETFs through an online broker is (or sounds) complicated and scary to a novice investor, particularly in relation to mutual funds, which they know (or think they know) somewhat better. Is a “share” the same as a “unit”? How much should I pay? Should I buy a “round number” of shares? What’s a “limit order”? What’s a “market order”? And so on.

I would suggest an even simpler portfolio than you lay out, foregoing for the time being exposure to preferreds and REITs, made up of a handful of no-load, low-cost index mutual funds. TD’s e-series funds, for example, sport MER’s in the 0.33%-to-0.50% range, pretty close to those of most plain vanilla index ETFs. Plus there’s no pricing issues for newbies to deal with; the price you pay is the end-of-day closing price, period. Minimizes the second-guessing (hopefully).

And I would also suggest that novices seek out two (and only two) financial “experts” (the two I began following back in the 1990s): Garth Turner and Gordon Pape. One conservative and cautious, one somewhat less so. A winning combination, as I’ve found over the past couple of (rather turbulent) decades.