Because you have no idea what happens next, do what most Canadians don’t. Have a Plan B.
So, don’t buy a house with 5% down (or 50% down, for that matter), if this leaves you with no liquid assets. Big risk. Don’t put your whole TFSA in one security. Never own just one (or five, or even 10) stocks. Don’t put your pension at work into corporate shares. Double risk. Don’t set up a portfolio without balance, because when equities fall, you need bonds to rise. Don’t wait until real estate prices fade before you sell. Don’t invest only in Canada. Never buy a house with your boyfriend.
Recent events should convince everyone to plan for change. For example, panic is rife in Cowtown, while horniness envelopes YVR. One of those emotions is misplaced. Oil may be surging to a recovery, but then it might be ready to collapse. Most people worry about the inflating price of food (I saw a head of lettuce yesterday for $3.99), while the central bank is freaked about deflation. Job losses in the last six weeks have been at least 50,000, yet the government says unemployment is falling.
This is a financial fog, and the more you prepare for trouble, the happier you will be. Trust me. I’m always expecting disaster, and yet look how cuddly and mellow I am. Yes, I have a Plan B. Some of it I already shared, like the upscale urban house that I rent while putting my money to work. The LL takes all the property risk (and it’s considerable with a $2 million house), while my dog gets to enjoy an opulent lifestyle and I get subsidized.
Well, the greatest Plan B in this country comes with income replacement. Remember all the crap hurled at me last weekend by the loser Boomers and wrinkly retirees when I suggested OAS – our national welfare program for seniors – was unsustainable? What a great example of how people who gave scant thought to their futures react when faced with the inevitable and the logical. The fact is that anyone who hits 65 and needs five hundred bucks a month from the government to get by failed to plan (assuming no special needs. Being a fool doesn’t qualify.)
Well, this brings me to RRSPs. They are desperately out of favour these days, and for good reason. Sticking money into a retirement plan does not save taxes, it just kicks them down the road. If you’re a 30-year-old, the odds of being taxed more in 35 years than you save now with an RRSP contribution are about 100%. That’s what makes these things into tax bombs. It’s why you don’t want to end up in retirement with a fortune in RRSPs. Besides, at age 71 you need to convert them into income-paying RRIFs, and that could easily shove you into an even-higher tax bracket.
So, RRSPs are no longer for retirement. But they’re great for Plan B – income-shifting.
This is a big deal because there are a lot of job losses coming. Not just the oil guys. Bank workers, too, Retail employees. Fifty-five-year-old Boomer executives who will never work again. Our slowing economy is a fact. In addition, there are no longer careers. People are less defined by their work, and move through phases of employment. Everybody should expect times when you’re idled, yet have bills to pay.
This is where an RRSP actually works better than a TFSA. Money deposited into your tax-free savings account grows smartly (unless in a brain-dead GIC), and you can access it when you need capital – but this comes from after-tax income. With an RRSP the money you deposit earns you a tax refund, so it becomes pre-tax cash. If you could take it out again on the same basis, that would be huge advantage.
And you can, of course. The idea is simple – invest in an RRSP during years when you are working, then cash it in when you’re laid off, fired, incarcerated, pregnant or on sabbatical. The money taken from an RRSP is added to your taxable income in the year of the withdrawal, just as it’s deducted from income in the year you contribute. So if you put $10,000 in while in the 40% tax bracket, you get a fat refund, but if you withdraw when you’re unemployed you probably don’t have to pay it back. Ever.
Maybe you never plan on losing your job or having a baby, but such things happen to most people. Those who socked away money in an RRSP when working ended up paying less tax and then had a pile of money to access when the paycheques stopped. If withdrawals are done in small amounts (under $5,000), the withholding tax is minimal (10%, or 5% in Quebec) and can be recouped on the next tax return.
You can contribute to an RRSP without cash, by the way. If you have any assets, like ETFs or mutual funds, they can be moved inside the plan and will still earn you a tax refund (although you will be taxed on gains already made). Or you can borrow money for the contribution, then use the refund to repay a chunk of it. You can open a spousal plan, reap the tax deduction and use it later to fund a mat leave. And inside any RRSP, of course, you should have a saucy little mix of growth assets, REITs and marketable bonds.
Okay, so I know this is boring. I promise not to write about RRSPs the rest of the year. Just don’t yell at me again. Especially you old whiners on the dole.
259 comments ↓
FIRST !!!!!
I love Jerry Potts
But they have dogs!, so they are ok.
OH no this is not boring but thanks for reminding and advising us …
So your plan B is to live in a 2 million house and watch the carnage?
So what number plan is the one where you bail to the bunker in the boondocks?
my mama says you have a heart of gold garth
“So, RRSPs are no longer for retirement. But they’re great for Plan B – income-shifting.”
Indeed great for high income earners who are young, as a Plan B
But income shifting is especially good during this election year. One can shift income from this irresponsible government to some future time, after H is gone
Let them figure out how to balance that budget without some of your high margin income (which is taxed the most)
Hey Garth, thanks a million for the missing piece of the puzzle! (Some of us have problems connecting dots).
In response to yesterday’s posts
“The Daily Mail reported:
” … a team from the Wake Forest University School of Medicine in North Carolina are examining 275 children with regressive autism and bowel disease – and of the 82 tested so far, 70 prove positive for the measles virus … the team’s leader, Dr Stephen Walker, said: ‘Of the handful of results we have in so far, all are vaccine strain and none are wild measles.
This research proves that in the gastrointestinal tract of a number of children who have been diagnosed with regressive autism, there is evidence of measles virus. What it means is that the study done earlier by Dr Wakefield and published in 1998 is correct.
That study didn’t draw any conclusions about specifically what it means to find measles virus in the gut, but the implication is it may be coming from the MMR vaccine. If that’s the case, and this live virus is residing in the gastrointestinal tract of some children, and then they have GI inflammation and other problems, it may be related to the MMR.””
http://articles.mercola.com/sites/articles/archive/2012/01/24/new-evidence-refutes-fraud-findings-in-dr-wakefield-case.aspx
Job losses from oil’s collapse not showing up in the data — yet
http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/2015/02/06/job-losses-from-oils-collapse-not-showing-up-in-the-data-yet&pubdate=2015-02-06
I cordially request more articles about boomer parasites.
please check your numbers before writing! in quebec there is also 16% withholding on rrsps. on top of the federal.
“For a single withdrawal from RRSP funds held in the province of Québec, there will also be 16% provincial income tax withheld.” so, 21% below 5 grand. 26% above.
http://www.taxtips.ca/rrsp/withholdingtax.htm
Is it true that you can make up to a 25,000 contribution in one year and just claim it as you wish to make your taxes smaller.ie declare 5k for the next 5 years?
El foolio del bueno
This is an archival shot from South Side Johnny’s.
Baby boomers
http://www.vernonmorningstar.com/opinion/letters/289037661.html
Hey, what happens to rents in the event of deflation
So you’re saying as a 30 year old, I could sock money into an RRSP and withdraw it at 35 if I find myself laid off? No penalties?
One look at that lot, and Plan B should be handy.
http://www.planb.ca/
Good post. Glad to see the old chutzpah back. I was worried you might be going soft on us earlier this week.
The jobs report is a joke. Tons of people got “self-employed” …
It will just get worse from here on.
Garth,
please share a picture of the damage your dog does to the hardwood floors in your 2 million dollar uban mansion.
Please and thank you :)
Just a house, actually. The dog vacuums. — Garth
I thought the middle class here was one of the richest in the world?
http://ottawacitizen.com/news/local-news/target-employees-in-tears-as-unruly-mob-demands-better-deals
Canadians suck. Nothing but a bunch of self-entitled cry babies.
Not boring stuff Garth. People need to know.
Cheers
Here’s an interesting, albeit lengthy paper from 2004:
DEFLATION AND MONETARY POLICY IN A HISTORICAL PERSPECTIVE: REMEMBERING THE PAST OR BEING CONDEMNED TO REPEAT IT?
Authors: Michael D. Bordo Andrew Filardo
http://www.nber.org/papers/w10833.pdf
“What a great example of how people who gave scant thought to their futures react when faced with the inevitable and the logical. The fact is that anyone who hits 65 and needs five hundred bucks a month from the government to get by failed to plan”
What a great statement, yet they all the boomers point their fingers at millennial’s and say we are spoiled and entitled, – don’t we know they walked 10 miles in the snow to school everyday? uphill both ways! What a joke.
“This is a big deal because there are a lot of job losses coming” Garth yup. LOTS. Good strategy with the RRSPs. Most Canadians likely don’t have too much of anything to cash in………. sadly. Simplify life and expectations is one place to start. Whatever happens good or bad, it’s all happened before. It’s never different this time.
#267 Yogi Bear (from yesterday)
that’s it??!
wha???!?
Quit crapping on the boomer who sold his house 10 years ago following your advice ace.
Thanks Garth. Another tip on RRSPs for business owners- instead of paying into work insurance, put the money in your RRSPs instead. That way, you can invest and keep the gains and take the funds out during a bad year.
I went after RRSP”S over my lifetime like a dog in heat. Used them exactly how Garth says to use them over a few decades. Tax refund: 42%. Tax paid on withdrawl: 25%. Income earned per year in plan 5-15%. Payday.
TFSA’s the same, TFSA horny. TFSA is the best gift to Canadians since the RRSP’s. Garth convinced F to give it to us. May F rest in peace. Good one Garth.
Debt sucks. All debt sucks. Debt on one all in asset like a house sucks the worst. High risk. People have got lucky, there is no doubt of that, but it does not take away from the fact it is extremely high risk. That plan has caused more bankruptcies than everything else combined. Warren Buffett’s words. Backed up by “Greater Fools” throughout history. Fact.
I have investments which, when I sell, I want to protect as much as possible… ie: want to pay the least tax. Since I don’t need the tax refunds now I haven’t contributed for a couple years. I am planning on topping up the accumulating room in my RRSP’s when I finally sell said investments. I never thought of it before but someone suggested the idea.
Boring …. yes, but reinforcing that I have done everything right for the last 30 years. No mortgage, no debt, no corp. pension but maxed RRSPs and TFSAs…plus non-reg. ….. 7 figures and three years to go. Just enough to keep both me and significant other under the clawback. And, thanks to Prof. Milevsky and Ms. Macqueen, no need to pay you or anyone else 10K/annum to run it for me. But….thanks for all you do to try and educate the masses. You’re a good man Mr. T.
Just a bunch of hard workin’ guys… And no eHarmony…
#9
Hey setting the record straight.
.. you need a transplant to clear yer brain…
http://www.iflscience.com/health-and-medicine/woman-becomes-obese-after-fecal-transplant-overweight-donor
The point about ’55 year olds who will never work again’ is a reality which scares me. That older age bracket often sees challenges getting hired.
I’m early forties, and doing fine – but still have a massive chunk to go to earn my retirement number. If I keep banking aggressively, and seeing returns, I’m targeting to have enough to retire at age 55. I’ll see in 10-15 years if I meet the target. But I think targeting age 65 to have that nest egg in place is risk laden and foolhardy.
The ability to make those same powerful contributions in those later years is fraught with risk, with the difficulty that age bracket sees in securing employment. Hope to dodge the Wallmart greeter, or Home Depot hardware aisle work in those years!
Australia shocks markets and lowers rates
That picture needs a caption…
“Fort McMurray, AB. yesterday”
wait…so if i have zero income…and i take out 5000 from rrsp…i still have to pay 10% tax?!?!?
but come tax return time…the government gives me this 500 bucks back???
is this right?
Wow. Check out this video. It actually tells us that a house in Toronto will grow from $500k to over a million in 25 years.
http://www.theglobeandmail.com/report-on-business/video/drawing-conclusions-is-renting-really-a-waste-of-money/article22832602/
[b]#28 saskatoon on 02.06.15 at 8:00 pm
#267 Yogi Bear (from yesterday)
that’s it??!
wha???!?
[/b]
Well there is a lot of statistical modeling (regional extrapolations, seasonal adjustments, etc) and more detailed questions (industry, type of work, demographics, etc), but in a nutshell, yes. The sample size is around 55,000. Net differences from one period to another are how they inform us if there were job gains or losses between those periods.
and this is the same for 15,000 as well?
i would get 1500 back at tax time?
A top research scientist … (CDC) … uncover data manipulation by the CDC that obscured a higher incidence of autism in African-American boys.
http://www.naturalnews.com/046535_MMR_vaccines_autism_CDC_whistleblower.html
(It is off topic, I know, but three uninformed comments yesterday prompted me).
#9 Setting the Record Straight: “In response to yesterday’s posts. “The Daily Mail reported: ” … a team from the Wake Forest University School of Medicine in North Carolina are examining 275 children with regressive autism and bowel disease…”
**********************
Did I miss something?
#42 saskatoon on 02.06.15 at 8:21 pm
and this is the same for 15,000 as well?
i would get 1500 back at tax time?
No. You would get 1500 less whatever tax you would owe on $15,000 of income.
But that assumes your only source of income was your RRSP withdrawal.
#24 Time is #1: “Not boring stuff Garth. People need to know. Cheers”
********************
Yes, it needs constant re-enforcement. ;-)
Great Post Garth!
I have plan A and B looked after, maxed out TFSA and RSP’s for both me and the better half.
A question on my plan “C” for the blog dogs.
My mortgage is due for renewal April 1, which I will renew at 2.15% – 5 year variable. I can pay it off, however that money is working just fine in a diversified non-registered account. I have the option of taking an additional $200,000 as a HELOC at 3.35%, and my thought is to invest 100% in several dividend and growth ETF’s, deducting the HELOC interest and over 5 years average a 5-7% net/net return. Flaws in my reasoning? Suggestions for tax efficient EFT’s?
Enjoy the weekend!
and … as much as I loathe the Harpocracy that has been destroying this country for the past ten years, I would likely have voted for you, again. I detected an inclination to put the P back into PC.
[…] Source: http://www.greaterfool.ca/2015/02/06/plan-b-3/ […]
In addition, there are no longer careers. People are less defined by their work, and move through phases of employment. Everybody should expect times when you’re idled, yet have bills to pay.
This is very much the truth, yet I feel mainstream attitudes have been slow to embrace it. It calls to mind an article posted in yesterday’s comments (#50 waiting on the westcoast on 02.05.15 at 8:24 pm):
http://www.bloombergview.com/articles/2015-02-05/sorry-millennials-we-re-out-of-the-jobs-you-want
Millennials shy away from sales jobs due to unpredictable, unstable, but often very good pay. If you can create your own stability, you can thrive in this sort of pay structure. Money goes into RRSPs in boom years, come out in lean times. Being able to tolerate (and self-mitigate) income uncertainty could be an invisible advantage to earning better pay.
It does require one to discard the “spend it if you’ve got it” mindset, but we’re all in this unstable employment world, whether apparent to us or not.
Since stocks usually outperform bonds in most years, why bother investing any money at all in bonds?
#40 Uh Oh Canada
this video is a classic.
it will be studied 200 years from now in a class called “history’s dumbest people: how and why”
#40 uh oh
So a house will double in value in 25 years? Pretty certain everything will be since that is actually less than inflation, more like 1.5% compounded. so support that houses have terrible ROR
Let the OAS flaming begin.
The Canadian economy is invincible. Seriously. The oil downturn is temporary and will lead to higher prices within a year as demand begins to catch up to supply. Why do you think trading volumes on oil have spiked recently? The bottom is in. The smart money is buying while the spec’rs are going short and getting creamed. Oil companies are laying people off now to reduce costs and keep investors happy. They are not in trouble (well not the large ones, the small guys with no cash reserves are screwed). Alberta added 14000 jobs in January – this is proof that low oil prices do not matter. What layoffs? They all have new jobs by now, just look at the numbers. Alberta’s growth will not be stopped. Yes house sales are down but that is because people get scared easily, sales will recover and prices will continue upward indefinitely. As people reach the upper limits of their debt capacity banks will simply let them have more debt – this will not end, ever. You cannot sink an economy if the populace of said economy has access to unlimited funds. People can carry huge debt loads into retirement, it doesn’t matter – I imagine that one day debt will be passed down from parents to children, creating infinite interest payments and massive profits for banks. The future generations are screwed, but that’s okay, because they can just pass the buck to the next generation… forever. I read this blog daily, the investment advice Garth gives is gold – and if banks didn’t have the ability to lend unlimited amounts of cash to every person with a pulse I would agree that our economy is in trouble, but that is not the case. Can someone pass the caviar? Don’t worry about the bill, I’ll put it on my card.
PLAN C: Save money. Stop paying Bandit to vacuum. lol
PLAN D: Buy a beater. Wrap up the lease on the Hummer.
PLAN E: BUY shares in U-haul for the out of LUCK workers on the move.
PLAN F: Learn how to use MoneyGrams, cash advances and Certified Cheques to beat bank fees and negative interest cash grabs. Plan G: …………………..
@#47 Diversified in Oakville
Thanks for the question, I’m in a similar boat in wanting to leverage the house equity.
I live mortgage free, but have considered leveraging that equity to to invest, see more growth than interest cost after tax deduction, and thereby accelerate the nest-egg growth.
I’m just weary of pitfalls on this, and how to best administer it all.
Tips are appreciated, or GT, a future column?
Canada 5, 10, 30 year bond yields are up but are still ultra low…………..0.75%, 1.43%, 2.01%.
As for RRSP’s and income taxes, they are already finding ways to replace RRSP taxes.
New land transfer taxes, higher water, electricity, gas costs which boosts HST, GST and a 17% HST, GST is coming soon.
Alberta could get a sales tax of 3% to 5% if it gets desperate.
Higher property taxes, infrastructure, municipal levies, taxes and new carbon, energy, environmental taxes are coming.
Ontario with their ORPP is a new way to replace RRSP’s tax revenue.
“I cordially request more articles about boomer parasites.”
~~~~~//~~~~~
+1 me too – me too!
I want to hear how they are the scum of the earth, lazy good for nuthin’s. Would rather smoke a joint than join the army.
Remember “hell no we won’t go”.
Also the originators of “if you wanna fight, stick your head up your arse and fight for air”.
Or try getting a job at 20 something when there’s more competition for said job than could ever have been imagined ten years previous.
Oh yeah – piece of cake those years were – tell me about it.
A few survived to try to make this a better place. The rest became politicians and lawyers.
Not my fault.
If you have a large RRSP, you can cash in the entire plan and pay only 25% tax on it by moving abroad. Indeed you can do this for any size of RRSP, but it is probably not worthwhile for a small plan unless you are planning to retire abroad anyway.
Not sure why more people don’t consider this, it seems a no brainer if you are stuck with a Canadian pension. You can always move back in a couple years if you don’t like it.
OAS was promised to retirees for a long time now. So how is it irresponsible to account for this when doing retirement planning? When I look at the amount of tax I have paid over my lifetime, and some of the things the govt has spent MY tax dollars on that I do not agree with (and in fact makes me quite angry), such as foreign military adventures, it makes me all the more determined to collect some of it back any way I can. Garth, I agree with most of what you write, and thank-you for your efforts, but I think you are wrong on this issue.
Mr. T,
Before you finish with RRSP’s totally do you have any current thoughts on RRSP mortgages That is holding your mortgage within your rrsp.
As a fixed income portion does it still make sense?
A
Not at these rates. — Garth
Rumours abound that even Lord Blaack has his finances structured so that he is under the $71,000 clawback threshold!
You forgot plan, C, D, F, G and so on..
Plan G: Join Garth’s new budget Book club. First read is:
Zen and the Art of Motorcycle Maintenance Quotes by …
http://www.goodreads.com/…/175720-zen-and-the-art-of-motorcycl...
Goodreads
162 quotes from Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values: ‘The place to improve the world is first in one’s own heart and head a…
Diversifying among asset classes is great financial advice, but you must also diversify geographically. Do NOT hold all your assets in one country.
Ask any Cypriot and they will tell you all about political risk and bail-ins.
Our Western government are sinking deeper into fiscal trouble. Our central banks are zero bound and out of ammo to respond to the next crisis. It’s prudent to place some purchasing power beyond the immediate and easy reach of your home government. This protects against your wealth being trapped in the country should capital controls be declared, or from outright asset seizure that can strike without warning.
No? You don’t think so?
Bank bail-ins (aka legal looting) stand on legal grounds by legal precedent in the U.S., Canada and the U.K.
A joint paper by the U.S. federal Deposit Insurance Corporation (FDIC) and the Bank of England (BOE) dated December 10, 2012 shows, that these plans have been long in the making, that they originated with the G20 Financial Stability Board in Basel, Switzerland, and that the result will be to deliver clear title to the banks of depositor funds making banks the legal owners of depositors funds as soon as they are put in the bank.
Here is the fact: When you make a deposit at your bank your money becomes the bank’s, and you become an unsecured creditor holding IOUs or promises to pay.
Under ordinary circumstances this is not a problem, even as a unsecured creditor to the bank you can get your funds back on demand, however if the sh*t hits the fan and your systemically important bank with commingled accounts in a global web of debt gets in trouble, your funds on deposit will be at risk.
Absolutely false. — Garth
Mr T.
Before you totally finish with RRSP’s do you have any updated thoughts or comments on RRSP mortgages.
That is holding a mortgage within your own RRSP.
Does it still make sense as a fixed income part of a portfolio?
One advantage to this is that terms for early payment, or paying out the mortgage, or changing the rate, can be extremely expensive with the banks and would not be an issue if the mortgage was in your own RRSP.
Also, as many workers are now self employed and collect dividends rather than income, RRSP contribution space can be small.
Plus, just not paying interest to the banks feels like a good idea.
Thoughts?
http://www.cbc.ca/news/business/job-figures-show-oil-price-drop-hasn-t-sunk-employment-1.2946449
“The job numbers Friday gave a hint that Alberta’s economy was weathering the slowdown better than we thought, as the province still managed to add 14,000 jobs.”
We will be saved by the jobs created for building and selling condos. Thank goodness the Alberta economy has been diversified into real estate development.
“Recent events should convince everyone to plan for change. For example, panic is rife in Cowtown, while horniness envelopes YVR. One of those emotions is misplaced. Oil may be surging to a recovery, but then it might be ready to collapse. Most people worry about the inflating price of food (I saw a head of lettuce yesterday for $3.99), while the central bank is freaked about deflation. Job losses in the last six weeks have been at least 50,000, yet the government says unemployment is falling.”
Had to double check, though I had switched back to my ZeroHedge window…
Thanks for this advice.
I have, in fact used RRSPs exactly as you have stated. They are VERY handy when unemployed and strapped.
My wonder is about what the “retirement age” will be when I finally reach it. At 32, I doubt that it will be 67 or even in the 70s range.
The real question will be, will the ageist principles that you state here still apply? (Executives who are 55 and will never work again). I sort of hope not. I don’t in any way look forward to retiring. I like working. It gives me a purpose beyond my after-work pursuits. I hope to continue it until a very ripe old age(or death). That may not be realistic, but in some form it may.
As you say, there are no careers. Maybe it’s possible to work for life. (And be extremely comfortable in old age thanks to the investing advice you give.)
#61 mnpr
“OAS was promised to retirees for a long time now. So how is it irresponsible to account for this when doing retirement planning? Garth, I agree with most of what you write, and thank-you for your efforts, but I think you are wrong on this issue.”
———————————————————-
I think Garth’s point is that demographics make the current OAS (ponzi) scheme unsustainable. In Japan they increased the contributions of workers, raised the age of qualification and reduced the benefits. Expect the same to happen here.
#BeforeTheInterWebsA… #CowBoyCouldGrowOld… #WaitingForHis… #MailOrderBrideToArrive.
http://youtu.be/J15eDRgo59E
#Vs.TheLoneProspector… #Discovers’TheMotherLode’
http://youtu.be/1CVm2XlbDb0
#11 Yogi Bear on 02.06.15 at 7:35 pm
I cordially request more articles about boomer parasites.
————————————————-
And I cordially invite you to contact all the “Boomer parasites” who may have named you in their wills and let them know exactly how you feel about them. Deal?
According http://www.cbc.ca/news/business/canada-surprises-with-35-400-new-jobs-in-january-1.2947496
Canada added more than 35 thousand new jobs in January alone.
Where did you get your number of 50 thousands job lost?
The jobs stats were disappointing. Net paid employment dropped and most new positions were PT. — Garth
Re: RRSP Mortgages
Garth – Not at these rates.
________________________________
But with an RRSP mortgage don’t I have the option to set the mortgage to an Open Mortgage type?
Comparable bank rates for these right now are at 6.75%.
Does this not make sense?
Will be disallowed. Must be prevailing market rate. — Gsrth
I`m pretty sure the sign is still up at southside johnny`s
I am a reader from Australia needing advice regarding finding a preferred share ETF, in order to complete my balance portfolio as per Garth’s suggestion.
The Australian stock market does not have an ETF to cater for preferred shares (or preference shares). I cannot find a equivalent to say the XPF on the Toronto stock market.
The closest ETF I can find is the UBS IQ Research Preferred Australian Share Fund (ASX code: ETF). But it only holds ordinary shares (not the hybrid preference shares) in preferred companies.
Other ETFs that are targeted for high yield is a possible alternative, such as Vanguard’s VHY or iShares’ IHD or Russell’s RDV.
The complete list of ETF products on the ASX is here:
http://www.asx.com.au/products/etf/managed-funds-etp-product-list.htm
So what should I do:
1. Purchase a whole bunch of preference shares from the large cap companies e.g. the top 20? This is costly due to more transactions.
2. Go with Vanguard’s VHY, iShares’ IHD and Russell’s RDV.
3. Set up an international share trading account with my stockbroker and just purchase what’s available on the US stock market e.g. iShares PFF U.S. Preferred Stock ETF?
4. Other suggestions?
Any advice, particular those familiar with the Australian stock market, would be greatly appreciated.
#26 everythingisterrible on 02.06.15 at 7:54 pm
What a great statement, yet they all the boomers point their fingers at millennial’s and say we are spoiled and entitled, – don’t we know they walked 10 miles in the snow to school everyday? uphill both ways! What a joke.
============
What do you think boomer parents said about and to their long-haired, dope smoking offspring obsessed with sex and “jungle music” who had no respect for age, tradition or authority and didn’t even have the decency to wear hats while walking in the street? It’s the circle of life, dude. Your turn will come.
#55 AllClearInCalgary
“I imagine that one day debt will be passed down from parents to children”
————————————————————
https://www.justlanded.com/english/Japan/Japan-Guide/Property/Introduction
“Property prices in Japan are so high that mortgage terms of 100 years are commonplace. These multi-generation mortgages are indicators of what foreigners should prepare for if they enter the Japanese property market.”
Kevin O’Leary’s rant about how unless a BA is today on the radio. Well did he piss off alot of people..
Good thing they keep me away from radio, I would have hit squads of men and with HI Octave voices after me in mass.
Forget about ZIRP (zero interest rate policy). The new trend is NIRP (negative interest rate policy). This is already happening in Europe, where mortgages with negative interest rates are available in Denmark. The longer you hold the mortgage, the more they pay you! This way real estate truly can increase forever.
I do not have too many nice things to say about rrsp’s.
I had to juggle my finances in order to stay below the oas clawback number, but I still took a big hit by passing the lowest tax bracket where all the senior social entitlements are at full value.
I pay too much tax and I will never be able to get any of the social entitlement that were promised me. IOW I have been screwed by the government ;policies.
I don’t give a rip about future generations, it is important to look after self first. No one cares about the seniors.
rrsp bad. tfsa excellent.
“The fact is that anyone who hits 65 and needs five hundred bucks a month from the government to get by failed to plan”
What a disgusting statement.
I’m afraid you have lost touch with realities.
No wonder you can’t make predictions involving human feelings….
Drop the ad hominem and tell us what’s wrong with the statement. — Garth
@For those about to flop: you got it! Just don’t forget that it’s there :)
What a story – http://www.dailymail.co.uk/news/article-2943251/Homeless-Heathrow-look-holiday-truth-middle-class-couple-living-airport-losing-500-000-home.html
even found a job in Canada wow!
That picture gave me daja vu
I was reviewing my self directed RRSP today which this blog gave me the courage to set up last year and while I didn’t follow Garth’s advice perfectly I am still up 9.1% on the year with another month of hopefully gains. I think I got lucky and perhaps a little skill was involved. I am looking forward to adding a fat chunk re-balancing here in a few weeks. I have learned a lot in a short time and will continue to learn as I go.
The first time I ever bought stocks was just before the tech bubble burst and I lost on a ‘can’t lose’ stock recommended by my Uncle. The second time I got the courage to take a shot was Sept 08 playing with penny stocks. Guess how that turned out?
Let’s just say I have come along way
We are listening Garth, but we are the few. I was once a financial moron and a bad business deal left me almost bankrupt about 11 years ago. Let’s just say there is no better way to learn about a plan B than a brush with bankruptcy. I think it has also prepared me for the next financial roller coaster that lies ahead.
Big thanks Garth, and thank you to all the blog dogs out there who keep this site interesting
I don’t know what I don’t know, but I want to find out
Garth, if someone has left over contribution room, is it possible to withdraw and contribute to an RRSP, in the same tax year…..?
#51 Nacho Cheese
Balance and uncertainty. You never know when you’ll need the money.
#53 Chris
If you’re too lazy to calculate an exact compounding rate, you can use the rule of 72 to approximate multiplier required to grow 100%. (72 / # of years)
71 Realist on 02.06.15 at 9:33 pm
I think Garth’s point is that demographics make the current OAS (ponzi) scheme unsustainable. In Japan they increased the contributions of workers, raised the age of qualification and reduced the benefits. Expect the same to happen here.
=================
Can’t disagree with the overall conclusion. However boomers are no more financially literate than their offspring. They believed government when it said they were entitled to OAS and it was affordable. Millennials believe CREB when it says houses always go up.
OAS has never been presented to the public as a mark of shame. Financial planners automatically wrap it in to retirement planning. Provincial governments give early retirees a bridge loan to cover until OAS kicks in. Only people who worry they aren’t going to get any see it as the moral equivalent of dumpster diving. The bad news that you have to wait till 67 has somehow obscured the good news that it’s because you are going to live longer.
Garth, I am a total groupie to your blog. Your points are presented with a mix of dry humour that I find totally compelling. While the rest of Canada says pass the kool-aid, we actually have a sensible conversation on this blog….except for smoking man…I don’t know exactly what he’s smoking. ….ps. Don’t stop blogging. …
#82 pinstripe
I pay too much tax and I will never be able to get any of the social entitlement that were promised me.
I don’t give a rip about future generations, it is important to look after self first. No one cares about the seniors.
————————————————-
Great attitude there pinstripe. Ever think you might be giving seniors a bad rap?
Knock Knock… You’re not the only one paying too much tax and being screwed by the government.
Count your blessings having to shift money to pay less tax is a far better problem than having NO money.
#57 Danforth
Keep in mind, since you have to live somewhere, your house equity is already returning rental value; though don’t forget to subtract home ownership expenses out of that.
#85
What a story – http://www.dailymail.co.uk/news/article-2943251/Homeless-Heathrow-look-holiday-truth-middle-class-couple-living-airport-losing-500-000-home.html
even found a job in Canada wow!
___________________________________
Crazy story! now I know why airports are so busy!
The sardines have gone to pinstripes grey matter..but likely he’s just a troll.
its remarkable the government had been able to postpone the finacial crisis. Band-aids have turn to out right lies by Stats Can. What else can the possibly do?!? Seriously?!?
Since stocks usually outperform bonds in most years, why bother investing any money at all in bonds?
Because bonds usually move in the opposite direction of stocks, thus lowering your portfolio’s volatility, thus lowering your chance of panicking during a severe downturn and hitting the sell button at the worst possible moment.
Garth
Plan B is to wear cramp-ons and hockey pants when you take the dog for a walk in icy conditions! Any more titanium inserts in your legs and you will never get thru a TSA checkpoint!
RRSP is good to buy REITS and bonds. 100% taxable assets. Prefer dividend and growth stocks in my TFSA.
Did you peek at a few dozen stocks today? 10 year yield went up 6% which made our insurers keep going. Industrielle Alliance up 4% (2.8% dividend). Manulife still going after a 3 days run (3% dividend). ZUB ETF (US banks) up 2.2%. Market believes rates are coming up in June, since job numbers where good (again). Makes sense
Even in Canada, stocks having good days. HomeCapital had a run from 40.5 to 44.5 in a few day (10%). Big boring banks are also coming back up. Did you know CIBC pays a 4.2% yield?
False oil rally? “It’s a Trap!” Who knows. Enjoy the weekend and this week wins. As coworkers fester in debt for a shitty house in a bad Toronto neighborhood, I collect hundreds of dollars from bank dividends and industrials. So can you.
@#47 Diversified in Oakville
@#57 Danforth
Borrowing against home equity to invest does have benefits, but not without risk. All borrowed money carries risk whether the loan is in the form of a HELOC, margin account, credit card, cash from a seedy guy, etc.
In simple terms, banks can only loan you an amount equal to a portion of your assets, in this case your house. If the assessed value of your home declines, the bank may recall a portion of their loan (if you have borrowed more than they now wish to loan you). Additionally, it is all well and good to assume an average investment return of 5-8% annually, but average rates are calculated over decades. Consider the worst case scenario: What if the timing is such that your portfolio is down 20% when the bank comes calling for their money back?
Leverage always equals risk. Ask yourself how much risk are you willing to take on? How would you deal with a worst case scenario? Back in 1929 people resorted to jumping off of bridges when they over-leveraged to invest in the stock market prior to the crash…
Along with financial gains to be made by leveraging debt to invest, there can be tax advantages as well. Interest on loans used strictly for investing in equities outside of registered accounts is tax deductible. Loan interest is not tax deductible if funds are used to invest in RRSPs or TFSAs, or into bonds or GICs. Read up on the Smith Manoeuvre if you are interested in learning more about borrowing against home equity to invest.
The 1929 comment was extreme, but you were doing okay until the reference to the Smith Manoeuvre. Don’t touch that with a barge pole. — Garth
Balance is as boring as this frozen country, TSFA is like poker game without paying the casino, all in one asset that’s the way to go kids, you live only once.
Everyone has a plan until they get hit by debt evaporation.
Hugs,
BigD
http://www.cbc.ca/news/business/energy-companies-on-the-ropes-as-investors-look-for-deals-1.2946269
Let’s do a little thought experiment. Let’s say you have a machine in the basement that can print perfect CDN $20 dollar bills. Anything you want, you can buy. Are you going to borrow money? Of course not, you don’t need to.
But what if you had a strategic reason for borrowing? Say you want a house but you don’t want the RCMP wondering where the cash is coming from so you take out a big mortgage. No worries, you can always print more cash.
You get ambitious and buy a vacation property in a foreign country. The new mortgage is in a foreign currency but you don’t care because you can just print more CDN and convert it whenever.
A global financial crisis comes and the domestic and foreign mortgage holders demand immediate repayment. The wrinkle is the forex markets are refusing to trade your CDN for the foreign currency. You easily pay off your domestic mortage but you can’t print the foreign currency so you lose your vacation property.
The US has a big printing machine in its basement so why does it borrow money if can just print it? There are many strategic reasons but a big one is to control the amount of money in circulation. When the US government sells bonds, it is to take money out of the economy, not to finance operations.
It seems an article of faith on the loopier goldbug sites that the Chinese will bankrupt the US by demanding payment on their $4 trillion of US securities. You cannot bankrupt a country that prints its own money and only borrows in that currency.
Greece, on the other hand, no longer has a printer. It cannot print either Euros or drachmas to repay its debts. It has to earn Euros by exporting to other Eurozone countries and/or refinance on terms agreeable to its creditors.
“Since stocks usually outperform bonds in most years, why bother investing any money at all in bonds?”
Actually bonds have outperformed stocks over most of the past 35 years in Canada. The realized equity risk premium over the past 35 years has been non-existent. I don’t expect this to continue into the future, especially as interest rates rise, but equity performance for the TSX-index constituent equities has been quite poor for much of the investing lifetime of contemporary Canadians.
“but you were doing okay until the reference to the Smith Manoeuvre. Don’t touch that with a barge pole.”
There’s nothing wrong with the “Smith Manouevre”. There’s everything wrong with the way it is implemented by DIY’ers and overly aggressive ‘advisors’ who counsel people to push the leverage to the extreme. Properly and conservatively implemented, the SM aids in diversification, reduces portfolio volatility by introducing counter-cyclical assets, and reduces the overall burden of taxation.
The strategy involves systematic mutual fund withdrawals that no longer work. It is not another term for leverage. Your comment is wrong. — Garth
To add to the above for #47 and #57:
1929 was indeed an extreme example to illustrate how much emotion can affect people when it comes to investing. It is important for all to consider how a decline in housing prices or stock markets would affect them. Both will happen at some point.
Of course, if one keeps a balanced and diversified portfolio then risk is lowered and average returns are highly attainable (hear, hear!). Using leverage wisely can be a prudent way to help one’s investment strategy.
And as far as smith manoeuvre goes, good call on the barge pole :) In the strictest sense, it is a questionable strategy. However, I first learned about borrowing from a HELOC to invest from the Smith Manoeuvre, and that is the part of the strategy worth paying attention to for #47 and #57. Reading online posts about it helped me to learn more about the tax implications of borrowing to invest regardless of whether a HELOC is used.
At the end of the day, keep things simple.
Thanks for the comment Garth, and for the humorous and informative blog. I’ll leave it at that lest I stir up trouble!
In reply to the quackery posted by #9 – setting the record straight. This is a critique of your link:
http://owndoc.com/diet/gaps-scam/
Don’t believe the crazy anti vaxers.
“Job losses in the last six weeks have been at least 50,000, yet the government says unemployment is falling.” Alberta supposedly “created” 17.5K jobs in the most brutal month in recent memory?
Your sentence really stands out in your today’s post. Why not take it further? It is unlikely that statisticians are making these up – that is, it is unlikely that they plug in some made up numbers. It is more likely that the assumptions in the models are unable to handle what is actually happening on the ground, but how is that?
This, by the way, is mirrored in the US as well. Today, they reported just 1.9K job losses in the same sector when a quick count of announced layoffs from Bloomberg documents at least 19K losses in January. If you look at the comments in response to these findings, lay people are laughing their heads off. And so they should be.
What then might be going on?
Is it political interference that drives these errors? That just seem completely unlikely (thought Garth could offer an insider perspective). Everyone on this board is an expert in some area and others rely on this expertise. Imagine your boss walks up to you and asks you to make up numbers, assessments, etc. How likely is it that you would and that everyone would too? Very remote chance of that happening.
So, the alternative is that the models cannot handle extreme volatility. Think black swans and fat tails.
One only has to notice the extreme currency swings, extreme commodities swings, and the swings in the the stock market (some days as much as 400-700 points intra-day!?) – do any of those resemble anything close to stability of the financial markets that underpin and drive the economy? One needs not to be an expert to recognize the patterns of increasing instability and volatility.
Garth talks a lot about a diversified portfolio – one of the tenets of the modern portfolio theory are assumptions regarding normal distribution. Skews and irregularities (e.g., extreme liquidity going nowhere) are not part of the models, that is these do not meet the assumptions of normal distribution. What can go wrong? Look at the models of employment/unemployment, their assumptions versus our known reality – do they measure up? Will diversification theory hold when everyone screams sell everything?
We are living with a complex self-reinforcing and dynamic financial system that cannot predict its’ own behavior. Don’t count on models to hold, especially given the obvious example of today’s headlines.
#91 Estrella on 02.06.15 at 10:36 pm
Greaterfool.ca: Chicken Soup for the basement dweller.
#47
You probably know this, but just in case.
Whatever money you take from HELOC, you can fix for a period of time, say two years, and pay less interest on it then you would if it was revolving.
If revolving is 3.35%, then fixed rate would be (i’m guessing here) something like 2.75%.
@35
More info for you
http://globenewswire.com/news-release/2015/02/02/702199/10118172/en/Studies-Show-that-Vaccinated-Individuals-Spread-Disease.html
Garth,
No mention of RRSPs and income splitting. Do RRSP withdrawals not qualify for pension income-splitting and would that not possibly reduce taxable income substantially?
RE: #39 saskatoon on 02.06.15 at 8:20 pm
wait…so if i have zero income…and i take out 5000 from rrsp…i still have to pay 10% tax?!?!?
but come tax return time…the government gives me this 500 bucks back???
is this right?
That is correct. Your bank will do the dirty deed on behalf of the government.
@#44, in reference to #9:
It may be a bit facile, but it seems to me that if the study refers to testing of a group of children who were ALREADY positive for autism and upset bowels for vaccine residue would seem to be a classic case of selection bias. I’d like to see the detection rates for a control group of non ASD, non-upset bowel vaccine recipients (or general population, for that matter) but the unedumacated wouldn’t know the difference.
Withdrawing up to $5000 from an RRSP a 10% withholding tax is made at source; if you make additional withdrawals at the same institution, the percentage of withholding will not remain at 10% but increase accordingly based on the total amount removed during the calendar year as determined by the institution.
I believe it should only be 10% for each amount of $5000 or below withdrawn. However the institutions do not always see it that way. Please be aware and due diligence is in order.
I was going to ask why, if one can withdraw $25k to buy real estate (or even potential estate), or go to school to get an mba or phd, or a plumber’s ticket, WHY can you not withdraw up to say $50k tax free from your RRSP to finance starting one’s own new business venture, with repayment terms similar to the first time home buyer’s plan.
I mean, how are the major political parties not jumping on this in an election year?
Of course, if you lost your job in 2014, you can withdraw 25k from your rrsp, and eventually get your taxes back, and then you don’t have to worry about not paying it back.
Meanwhile, my non rrsp holding, 70-something parents are in the process of launching of launching a business while using CPP and OAS, to bridge the gap until the business generates any profit.
I like contributing to my RRSP and sticking my tax refund in my TFSA. I do need to beef up my TFSA, though. Planning to switch my emphasis to the TFSA soon until it’s maxed.
I think you’re being a bit unfair on RRSP’s Garth. The only time you lose out is if your withdrawal tax rate is higher than your contribution rate. In all other cases you gain, even in the situation you mentioned of bring forced to draw down at age 71.
What most folks don’t appreciate is that your own contribution to your RRSP and their growth is tax free upon withrawal. If you do the math you will find the ‘tax you pay on withrawal = the tax refunds you got plus their own growth.
Your original tax refunds are really a loan from the CRA which you invest on their behalf in your RSP.
The ‘tax bomb’ you pay on withdrawal is just you paying back that loan and its growth. Your own contributions plus their growth are effectively tax free, and you get an added bonus if your withdrawal tax rate is less than contribution rate. If contribution tax rate equal withrawal tax rate then the math shows your RRSP is the same as a TFSA.
“…you were doing okay until the reference to the Smith Manoeuvre. Don’t touch that with a barge pole. — Garth”
Curious to know why you don’t like the SM.
Is there any fundamental difference from using HELOC to invest in balanced portfolio?
Calgarian with an observation, rush hour traffic from the deep south has been very light since the middle of January, no employment number facts. Last time I noticed this was 2008/9 when oil prices collapsed.
Damn they killed Yvonne on bansheee.
My call, the big ass Indian is going to get his ass kicked by hood. More of a tourcher then a kill.
This show is right up with True Detective.
Only TV I watch… Till TD
Thank you for the straight talk. Much appreciated.
…”I saw a head of lettuce yesterday for $3.99″…
Of course lettuce is expensive in Canada in Dec, Jan, Feb. Perishable veg. has to be brought in from California during the winter and the dollar is down to it costs. Starting in mid march you’ll start to see canadian veg in the stores and it will be (a bit) cheaper.
“Since stocks usually outperform bonds in most years, why bother investing any money at all in bonds?”
Interesting question. Of course, people will say, “when stocks go down, bonds go up”, but if you’re not selling any time soon …. how does it matter?
“…demographics make the current OAS (ponzi) scheme unsustainable”
Careful, just imagine what other schemes (TFSAs?) might also seem unsustainable in the future. 30 years is a long time. Maybe by then, if you have been a good saver/investor, the NDP will make sure you get no benefits period.
“Kevin O’Leary’s rant about how unless a BA …..”
Poor guy, all he can ever think/talk about is money. A real one-trick-pony.
Ask any experienced property manager. They will tell you that cats and kids damage property; dogs do not. Of course, this depends on the human.
I recently immigrated to the USA, right before the big oil crash. Got my $ out of Canada just in time, but still have RRSPs and a TFSA. My TFSA is useless here as I will be taxed on any income so I think I will cash it out. Is this the right approach?
“As for RRSP’s and income taxes, they are already finding ways to replace RRSP taxes.”
If you’re “little people” you’re on the hook … but if you’re a big fish, the government will “look the other way”. Will this still be the case in 20 years time? What will society morph into as this wealth inequality continues unabated? Consider this as you contemplate how quickly 60’s hippies turned into 80’s lawyers and CEOs.
Why do you no longer discuss RRSP meltdown strategies?
#61 mnpr
“OAS was promised to retirees for a long time now. So how is it irresponsible to account for this when doing retirement planning?”
———————————–
The Feds ‘promised’ that income trusts would not be taxed. Then they were.
In British Columbia, it was ‘promised’ that there would be no HST. Then there was.
Last fall it was promised that Canadian troops were not going to have a combat role against ISIS. Today, they’re in like Flynn.
It was promised in BC that our half billion dollar aluminum-hulled ‘fast ferries’ would set the world trend for decades to come.
This was claimed even after the disastrous experience the Scandinavians had attempting precisely the same thing. The ferries failed dismally and were sold soon after completion for scrap at pennies on the dollar. It wasn’t different here.
Do you see a trend? Politicians very sincerely want their promises to become reality, but ‘reality’ very often fails to cooperate.
We all hope to receive OAS and I’m sure bureaucrats hope it can be made available. ‘Hope’ is the operative word. To count that hope as an essential plank in one’s retirement plan is certainly risky if not actually irresponsible.
It’s something akin to believing you’re guaranteed a piece of your parent’s estate. Maybe. I’m sure they ‘hope’ so. But things change don’t they? Sometimes rapidly. Oil… Alberta…
The odd thing about society today is that the vast majority run with the herd and do not want to accept any form of change or anything different than the NORM.
For example: Garth Turner is a very intelligent man, but simply for the fact that he had a slightly different view than the rest and didn’t want to be just one of the ‘boys’, he was run out of town.
Like #9 ( Setting the Record Straight ) ‘s link has shown, there really is a cause-and-effect link between Autism and the immunization shots we give to our children. But just try to bring that up on a site like the Globe and Mail and the vast majority of people will skin you alive.
Same thing for Water Fluoridation, and the same thing for Canada’s housing bubble: Just try to bring up a point of view that is slightly different than the culturally accepted ‘NORM’ and you will be skinned alive and hung up to dry as a warning to others to NOT think differently than the herd. THAT is why we have such a massively insane housing bubble, it is because no one DARES to think there is a bubble because they have been brought up to ‘go-with-the-herd’ mentality and never to question. And when the bubble finally does pop, then it is these vast majority of lemmings who will perish as they fall off the debt-cliff to their doom.
As I read all the dismal news and feel less and less secure…I am secure in the fact that I can diversify, live simple but well, but most of all I can move and control my cost of living and job prospects.
I do not wish for others to suffer, our collective disengagement from reality and our political environment is what caused this. To think it will be different because you are embracing debt is plain nutty. Yes debt can be leveraged to one’s paper benefit but it cannot be realized by all at least not in the current system.
And then there’s our governments all of which should not even remotely think they deserve to get voted back in. Most should just outright resign. Manipulating the press and the numbers in the background. Governments should be administering within the law and only challenge them for public good and not ideology.
#95 99 bottles of beer on 02.06.15 at 10:50 pm
”The sardines have gone to pinstripes grey matter..but likely he’s just a troll.”
—————————————–
Basement dwelling troll. Likely a millennial.
Hi Garth.
Would you care to elaborate on why exactly the Smith maneuver is to be avoided? Worked for some people who were on their million dollar journey. In not biased towards any opinion. Thanks.
“OAS has never been presented to the public as a mark of shame. Financial planners automatically wrap it in to retirement planning.”
My financial planner actually didn’t count it; she said if it still exists by the time I am 67 it will likely have changed in such a way that my benefit would be entirely clawed back. This has been my experience with most other tax credits, and I wanted to plan conservatively in any case, so that’s what we did.
#47 Diversified in Oakville — “My mortgage is due for renewal April 1, which I will renew at 2.15% – 5 year variable. I can pay it off, however that money is working just fine in a diversified non-registered account.”
If you borrow to buy a place to live in, the interest isn’t deductible. If you borrow to invest in something whose gains are taxable (i.e. not in an RRSP), it is. So if you sell your investments, pay off your mortgage, give a new mortgage for the same amount and invest the proceeds, your mortgage interest goes from not being deductible to being deductible. Ask your tax expert if you’re unsure.
If you do this, deal with a mortgage broker and please let the blog know how it goes. Many lenders, it seems, would rather lend to those who are up to their armpits in debt than to those who don’t need the money, and prefer purchase money mortgages to equity take-out mortgages.
Just hand over 150 layoff where I work and another 250 more. in the weeks to come. The old guys are all getting their pink slip, Company want to get younger, while the older guys whom thought they can work forever are being let go. Its starting to happen to several other companies as the they revamp.
“The fact is that anyone who hits 65 and needs five hundred bucks a month from the government to get by failed to plan”
What a disgusting statement.
I’m afraid you have lost touch with realities.
No wonder you can’t make predictions involving human feelings….
Drop the ad hominem and tell us what’s wrong with the statement. — Garth
________________________________________
I’ll take a stab at that question. Your statement, Garth, assumes that “planning” is the sole and ultimate determinor of financial independence and, of course, it is not. While a good “plan” may indeed make a difference to those who have the opportunity to accumulate and invest wealth, there remains a large swath of the population for whom such opportunities seldom if ever materialized. A good example is that of single mothers who spend their working lives in menial jobs to support their children, as indeed my own mother did. And there are many, many other examples. By arguing that these people failed to plan, you fail to recoqnize that without the necessary circumstances to build wealth, a plan by itself may have no value. And by not recoqnizing that, you sort of suck at being able to assess the bigger picture outside you rather narrow social class interests.
If you go onto http://www.dailymail.co.uk there is an article about a middle-class boomer couple living at Heathrow Airport. They are homeless after a sting of bad financial decisions including working in Canada!!
After a lifetime of well paid work they ended up at 71 and 61 retired with a mortgage and debts but little pension. They are complaining that the welfare system they paid into all their lives won’t help them.
Adult children from two expensive divorces don’t seem to be helping out. A sobering tale.
1.2k of comments follow the article and some of them are worth reading too.
From left to right:
That man is holding something like a beaver, then for sure a cat, and a black Lab retriever…
Lucky them! All I have is a big terry-clothed stuffed dog beside me at night in my crammed rental bachelor pad in 604… thanks to Emperor Haute Couture and the poodles at BoC who took us here & now in this economy.
On second thought: I have no debt and a diversified portfolio… maybe it’s time to upgrade to a stuffed Emperor for comfort ?
Check this out the Banks in Canada being sued Mybe Wiliam Abram was right ????
http://www.silverbearcafe.com/private/02.15/suethebank.html
Bogus, tinfoil story. — Garth
Garth lives in another world like many people. in hamilton and other cities, effectively all seniors need the oas and probably half need the gis. Does garth know that some 1.7 million canadian seniors are dirt poor, who live on 1500 month from the goverment. They have no savings, never did and never will. They live hand to mouth like they have done all their lives for a variety of reasons. Firstly, they come from a poor family, poor families have no money, they dont push or have the money for education to better position yourself in the workforce. There are no good paying jobs in hamilton, the factories have closed, its just retail and such at minimum wage. no one pays more than minimum wage in hamilton, -like myself, because you dont have too. everyone gets a cheque from the goverment and is subsidized. years pass with low rent,
Garth wants low rent, come to stoney creek, $650 for a 2 bedroom i can get you. quiet town, just retired people and single welfare moms and people on disabilities.
no gang bangers to worry about.
so you retire eventually with nothing, thats it nothing, so you continue to get a cheque from the goverment in another name.
why save in that world? it doesnt mean anything, so you do without and save 10 grand, 50 grand for your life? why? you still live in the apartment, your kids are still not going to university, and your still going to the same hospital, and the same grocery store and the same church.
money is worthless in a socialist utopia of hamilton and other cities.
Yes, i know people go on vacations, these people dont, kids go to school, their kids dont, people drive nice cars, where these guys drive 10 year old clunkers that get them around.
yes you guys talk about rrsp, dividend paying stocks, and real estate values, they talk about the looser leafs.
but you miss the big one, you are stressed out and go to work everyday, and they dont.
if you expect little, recieve little then there is no incentive.
People who need help should get it it. Everyone should not receive welfare just because they turn 65. Seems just. — Garth
#123 CD
not sure this is entirely true:
hydroponics?
greenhouses?
My RRSP saved my financial butt when it comes to pension income.
When I started work 45 years ago you had to spend 10 years with a company to get vested in their pension plan. This never happened until my final gig with Unilever.
In fact one company I worked for had a “contribution free” plan and all that did at the time was limit my RRSP headroom. I got bupkus when I resigned.
I always maxed out my RRSP and that money will be there for me when I need it. It makes up for most of the first 15 years of lost pension time (although a couple of companies did give me back my contributions and got my RRSP started.)
Drop the ad hominem and tell us what’s wrong with the statement. — Garth
********************************************
The statement seems to make the assumption that people are going to earn a certain level of income, be financially literate and not be the victim of any major life accident.
Which is just not true for a lot of people. Have they failed to plan?
The point has always been that giving people money simply because they get old is bad public policy. — Garth
DELETED
Garth, seems to me this post title alludes, above all, to the Moscow (or Munich) Summit…
It seems that some days blog comments take a simple post and try to make it confusing.
Planning your finances starting n your 20’s is important. It’s in your twenties folks. You should be grown up enough for that. The better you plan the more you will be able to handle anything life throws at you. Cause it will throw a lot your way. Even at the best of times.
Doing things right the first time always pays off. Ask mike Holmes. do your homework. Ask tough questions. I
“The US has a big printing machine in its basement so why does it borrow money if can just print it?”
———-
Printed money is worthless.
Completely unrelated, it has been noticed that a cake becomes very valuable when someone takes the cake promising to give it back with a cherry on top of a cherry on top, adding up to many cherries. Mmmmm, cake…
So if CRA states the RRSP withdrawal rates are:
10% (5% in QC) on amounts up to $5,000;
20% (10% in QC) on amounts over $5,000 up to including $15,000; and
30% (15% in QC) on amounts over $15,000.
Now say I lose my $60k/yr halfway through the year. I then decide to take $25k from my RRSP.
Is the following simplified accounting correct?
($5k * 0.10) + ($10k * 0.20) + ($10k * 0.30) = $5500 taxes automatically withheld
($60k / 2) + ($25k – $5.5k) = $49.5k taxable income
Excellent post, Garth… and definitely not boring. In my own case, I’ve been maxing my RRSP contributions since I was in my mid-twenties. I’ve been thinking a lot lately about how I will probably get hooped some day, so am looking into an RRSP-first strategy where I retire about 10 years early and draw things down long before the government stuff etc. kicks in. After that, I would switch focus to rely upon the non-registered nest egg, TFSA and such. Have any of the dogs looked into this strategy? Cheers and good weekend to all from the sunny shores of Lake Huron!
By the way, today’s photo is pathetically hilarious!
Thanks for that Garth.
Now it looks inevitable that interest rates are going up this summer. This is not good for bonds or equities. Maybe it’s time to hoard cash.
Remember the ’80’s.
garth….when we get to negative interest rates, can what your loosing be used as a deduction on your income tax…….just wondering.
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#82 pinstripe on 02.06.15 at 10:11 pm
“I pay too much tax and I will never be able to get any of the social entitlement that were promised me.”
—
Getting really tired of reading about your outrage at not receiving all that was ‘promised’ to you. If you were dumb enough to believe some opaque government pledge from the 1950s, then your abject disappointment and frustration is deserved.
#142 crossbordershopper on 02.07.15 at 8:23 am
“Garth lives in another world like many people. in Hamilton…”
—
Stop trashing Hamilton, you one-trick pony. It’s the same thing week after week. It’s a perfectly good city with a proud past, and it’s inhabitants are doing their best in a period of great change.
Garth’s theory of responsible investing makes sense. It is also supportive of the Ontario Governments plan to create a retirement plan for citizens. It is near impossible for the majority of individuals to have multiple contingency investment plans open to governments.
Even large, multinational, capable corporations are giving up on defined benefit plans. General Motors, pension legacy costs and bankruptcy. How the mighty have fallen.
Secondly, it is near impossible for an individual to be indifferent, to the financial suffering of others, close to them.
I am the poster child for getting it right and wrong.
I started my RRSP in my early 20s in the late 70s. Maxed it out every year and invested it. For my personal knowledge I did the Canadian Securities Course, condensed 6 months, by correspondence and scored in the top 15%.
By the mid 80’s started my own business, equipment leasing for businesses. Business was good. Started a Freedom 55 Plan and every month my company paid into it $850.00.
By 2000 things where looking pretty good. Two investment plans, a house and a condo at Front and George. Then disaster struck. 9/11 and took out my main funding partner. To make matters worse I had just done a deal for $285,000 for another company in the World Trade Centre I was still on the hook for. It cost around $30,000 a month to carry my office. Some had been with me from the beginning 18 year before.
We all thought business would come back in manufacturing, super computers and RD stuff. While my main funder rebuilt they thought maybe 12 to 14 months for business to start again. So I carried my staff from my personal finances. Yup retirement investment. Huge mistake.
Within 14 months, Enron happened, investor confidence fell, my DOT com, a million a month in equipment evaporated. I had a balance to my financing, didn’t want any one industry to be more than 30%. There where still my manufacturers and retail.
Then government instead of spurring the economy with manufacturing used real estate. Kicked out generous raises to the public sector because uno they buy stuff. The raising Canadian dollar hammered most of my manufacturers out of business. Canada’s own CIT, the world’s largest nonbank lender was thrown under the bus even.
I continue to rebuild and work everyday. Luckily, my inspiration has always been the old guy still working because they want to.
Point is retirement savings, which span decades, with events beyond an individuals control should be carried by a body which can with stand uncontrollable events. Uno it’s a bit CREEPy out there. Uncontrollable changes in: Culture, Resources, Environment, Economics and Politics.
P.S. In the meantime I follow Garth’s balanced approach. Last night my son tells me he opened a TFSA at his bank a year ago. He works part-time and has saved $600.00. I was proud of his foresight. Then he ponies up but it doesn’t pay much 1.5%. What a disservice by the bank they didn’t even tell the young guy there where other options…… not nice.
I’ve noticed that Cowtown rentals are trending downwards. There was a time when you needed to show up with your cheque book for a damage deposit…. but now I see listings sitting on Kijiji and RentFaster since the beginning of January.
*Although Jan-Feb is not an ideal time to find a renter, it was not like this at the beginning of 2014. They would be gone within a day.
Both can be true. And they probably are.
That being said Millenials are the generation that has the numbers to stand up to the boomers. Once they’re tired of posting selfies on snapchat maybe they will?
Gen X doesn’t have the numbers, much too small, but at least, was lucky enough to get some of the scraps before they got sucked up by the boomer machine.
You guys are really screwed. Education is a requirement yet it also involves debt that will take 10-20 years to pay off.
Entry level jobs pay nothing, quite literally as you are ‘interning’. And the job you may get, will eventually either be done offshore or by AI.
Rents are out of this world expensive considering your salaries. Owning a home? Forget about it. Maybe a crap condo.
And the boomers haven’t even started demanding their new hips, knees, increased CPP etc..
Good luck guys, you’ll need it!
#150 Skube – your taxable income is the amount you took out of the RRSP (and your wages); withholding taxes on RRSP withdrawals just count towards your taxes paid, like an instalment payment. They don’t reduce your taxable income.
@#151 Ontario’s Left Coast
On the surface, it seems to me that a person retiring early with three pots of money (RRSP, TFSA, Unregistered), should draw down the RRSP first. The RRSP taxes all the growth, so to let it grow till you’re 70 is another decade+ of taxed money. Let the untaxed (TFSA) or lesser taxed (Unreg) sit there longer.
Depending on how deep your pockets are and your planned retirement lifestyle and drawdown rate, the trick is to keep to the RRSP drawdown within the lowest tax bracket, and if you want to live richer, then dip into the other two pots.
Garth, you’re often not shy with your editorial pen in banishing unproductive comments.
For the sake of public health, could you banish the anti-vaxxer comments? Tx!
houses are a better hedge against inflation than rrsp
you can’t rent a portion, or live in an RRRRRRRSP – it’s just a GOVT scam to help the upper klass (the modern oligarchy) – we all know there corruption everywhere in corporate world – how many major arrest have you noticed….
why the assets of the so called rich are not being scrutinized for legal source of income
for the rest of folks, God gave us HOUSE!
#108 len on 02.07.15 at 12:07 am
“Job losses in the last six weeks have been at least 50,000, yet the government says unemployment is falling.” Alberta supposedly “created” 17.5K jobs in the most brutal month in recent memory?
………………………………………………………………………
and out of those job losses the last 6 weeks, how many were contractors which don’t even show up on the radar
Remember, your friendly realtor is here for you, and only you. They have all the knowledge, and they’re going to keep it that way.
http://www.thestar.com/business/2015/02/06/realtor-scrambling-after-threats-by-board-to-cut-access-to-mlsmclean-said-he-was-unable-to-comment-as-its-not-my-baby-and-broker-tom-bosley-said-via-email-that-hes-out-of-town.html
I have suggested for a long time that the Feds could probably save a whack of $$$ if they were to simply combine the OAS and GIS into a single program based on income. Why have 2 programs, one that gives all us oldies cash and THEN figures out how much more you “should” get? But I am thinking it might be even more fair and frugal to take several credits/programs, incl OAS, GIS, the child tax credit, GST/HST credit, etc etc (all those other credits in your tax package) and turn them into one single tax credit based on income. I realize we would be creating a minimum income standard (not really my cup of tea) but surely it could eliminate numerous credits/programs. It would also not recognize net worth, but then our tax system is based on income, not net worth.
#164 VanIsle Retiree
>>It would also not recognize net worth, but then our tax system is based on income, not net worth.
Comment earlier about the early retiree, looking to draw down his RRSP early. The unregistered and TFSA would be there once the government money kicks in.
This allows such a person to qualify for OAS and GIS, since taxable income is really low.
Then again – these are structural considerations which let those with comfortable money ‘game the system’.
We need to be acutely aware of how fortunate we are in Canada.
I was recently reading about various taxation models in different countries.
1) Think of a Wealth Tax, where you’re taxed for simply HAVING money. Those investors need to see returns to compensate for inflation, and the wealth tax, before growing their nest egg.
2) Inheritance Tax. A person passes, with a pile of money in the bank, or perhaps a house paid for with after tax money. Often the inheritance tax is inverse to the degree of relationship. If you leave an estate to someone outside the immediate next of kin, they might be parting with double-digit tax rates….say 30%. And that is money which is already taxed when it was earned. Double dipping by the state.
A person earns 100 units in whatever currency. They’re left with 70. Then they leave that 70 to someone after death, and they part with 20. Thankfully Canada eliminated its inheritance tax decades back.
Let’s just banish the anti-vaxxers period.. so we don’t waste tax dollars treating people who shouldn’t have gotten sick unnecessarily.. then we’ll have more money for OAS!
The walking fellow scored big time. Great story! Now he can buy a house too!
http://www.foxnews.com/us/2015/02/07/michigan-who-walks-21-miles-to-and-from-work-given-new-car/?intcmp=latestnews
I agree VanIsle (which is a wonderful place), combine GIS and OAS.. a needs based program… nasty shit sometimes happen.. I have no problem helping folks out.. current OAS claw back level is too high… Heck I never even knew what OAS was til reading about it here!.. I thought it was the GIS..crazy having both
Danforth # 162,
“For the sake of public health, could you banish the anti-vaxxer comments? Tx!”
——————————————————–
Strongly disagree.
My kids are adults so have no dog in the fight, but do not wish to be part of a ‘censored’ blog. Let critical thinkers state (respectfully) their views and let Dogs smart enough to find their way to Garth’s fine blog, figure out issue’s for themselves.
The Gov’s starting to push thought control already, we certainly don’t need it here.
Too bad. This is not a public health blog. — Garth
Sure sounds like Calgary…
http://www.telegraph.co.uk/finance/oilprices/11397855/Aberdeen-is-paying-the-price-for-oils-decline.html
#131 Waterloo Resident
If you throw a deck of cards into the air enough times, eventually a Royal Flush will appear, perhaps 4 in a row. This study is not statistically significant. The anti vaccines supporters will use anything that sounds sciency to promote the cause. The same way the Eco-maniacs will use “science” to discredit energy projects. The Keystone Pipeline issue is blatten trade protectionism, and Obama will not approve it. He wants the audience of the rich progressive liberals for his post presidency lecture tours to keep his $ ball rolling. My point ? Pseudo science is everywhere, and it is used best by the people who don’t really care about science, but rather, money & power. The favorite phrase of the pseudo science argument is “According to scientists” or “According to published science” with no names, no recognized respected institutions
This is who’s buying all the condos!… which probably means big time mortgages…which may not be a good idea…. like the couple living in Heathrow airport after multiple divorces.
http://calgaryherald.com/life/homes/condos/recently-single-demographic-fuels-townhome-market
IMO, Plan B is too late and far too little.
The way the political environment is unfolding in alberta, it is mandatory to go to Plan C, D and even E
The latest gimmick is to have a survey so that the people in alberta provide feedback on what is needed to keep the social benefits in place. ;however, The survey is such that the end result will be what th govt policy makers want in the first place. the entire survey is a waste of taxpayer money.
I did notice that universal health care has become health care. What happened to “universal”? Higher tax is coming too.
regardless what happens in alberta. it is obvious that the tax rate will increase. With that in mind, anyone putting fresh money into rrsp is a FOOL. It is better to store the money in a peanut butter can and claim to be a poor person but use all the social entitlement available. Pay no tax whatsoever.
the other day someone here had some RESP questions.
I found this to be helpful.
http://www.theglobeandmail.com/globe-investor/investor-education/the-right-way-to-withdraw-resp-funds/article22846702/
#It’sBiggerThanYouThink… #Shell
GamesCorporations,Or… #TransnationalCapitalInTheSpaceOfFlows[NYT] – Towers of Secrecy: Stream of Foreign Wealth Flows to Elite New York Real Estate
…”On the 74th floor of the Time Warner Center, Condominium 74B was purchased in 2010 for $15.65 million by a secretive entity called 25CC ST74B L.L.C. It traces to the family of Vitaly Malkin, a former Russian senator and banker who was barred from entering Canada because of suspected connections to organized crime. Last fall, another shell company bought a condo down the hall for $21.4 million from a Greek businessman named Dimitrios Contominas, who was arrested a year ago as part of a corruption sweep in Greece. A few floors down are three condos owned by another shell company, Columbus Skyline L.L.C., which belongs to the family of a Chinese businessman and contractor named Wang Wenliang. His construction company was found housing workers in New Jersey in hazardous, unsanitary conditions.”…
http://nyti.ms/1Ipjg2z
I kind of not get it when I read that if you have the same income level in retirement than you had in your working life, RRSP are only delayed tax.
When I contribute to RRSP, my tax refund is based on my marginal rate, while when I retire, my tax will be on the average one… How could this not be highly advantageous?
And in my particular case, since I already get all my refunds on the maximum tax rate, there’s no way I will have to pay more tax on a % basis than what I contributed right ?
Cox says customers have misconceptions about the $70-million “employee trust” announced when Target Canada said it would seek creditor protection. The fund guarantees 16 weeks of pay to all employees unless they choose to leave before the end of the “notice period.”
“A lot of people are under the impression that we get that 16 weeks’ pay when we’re done. It’s not true. We’re already into our severance period — it’s a working severance.”
The above truly means you can do anything you want to the minions of our society…
I have a special request.
I request that a nighttime curfew be implemented on this blog.
My bedtime starts at 800 pm the latest (alberta time) and with my morning coffe at the coffee shop I don’t start reading this blog till about noon. with so many posts I am not able to read everything and miss some good pointers.
“The strategy involves systematic mutual fund withdrawals that no longer work. It is not another term for leverage. Your comment is wrong. — Garth”
Hmmm, maybe we are talking about something different. The “Smith Manouevre” I’m familiar with, the term apparently coined by Fraser Smith, a late financial advisor from BC, is that one takes a HELOC or similar against a significantly paid-up house, and uses the proceeds of such to invest in additional assets. Which, in turn, yield cashflows which are used to make payments on the non-tax-deductible mortgage. Essentially converting non-deductible consumer debt into fully deductible business investment debt.
So are we talking about something different here when the words “Smith Manouevre” are spoken of? Or do you simply hate what I described above because it happens to be ripe for advisor abuse, bad execution, advisor conflict-of-interest, excessive risk taking, etc.?
All of the above. This is a discredited, failed strategy. — Garth
“Too bad. This is not a public health blog. — Garth”
—————————————————–
If I’m honest Garth, at this point, one could question it’s validity as a real-estate blog.
I’ve been here from the start (archives) and lived first hand, the whole RE going down scenario, but not if the system intervenes, reality. Like it or not your blog has morphed into something much bigger (more important?) than originally advertised.
Critical thinker’s form the blog collective.
The very nature of your audience leads to the pushing of PC boundaries and unconventional conversations, all while you attempt to keep the unruly pack inside the topical fences.
I consider this a good thing.
Post or delete, it doesn’t matter as this is really meant for your eyes more than the blog.
Smoking Man, this could be your Plan B.
http://www.kijiji.ca/v-bar-food-hospitality-jobs/city-of-toronto/server-needed/1049788210?enableSearchNavigationFlag=true
#9 on setting the record straight
I hope they start testing all the (fake)products
http://scienceblogs.com/insolence/2012/08/03/15-years-of-promoting-quackery/
—
What is in in? Label lies and the self regulating
A.G. Schneiderman Asks Major Retailers To Halt Sales Of Certain Herbal Supplements As DNA Tests Fail To Detect Plant Materials Listed On Majority Of Products Tested
Cease And Desist Letters Sent To GNC, Target, Walgreens And Walmart As Most Store Brand Supplements Were Found To Contain Contaminants Not Identified On Ingredient Labels; Just 21% Of Supplement Tests Identified DNA From Plant Species Listed On Labels
Schneiderman: Mislabeled Consumer Products Pose Unacceptable Health Hazards
http://www.ag.ny.gov/press-release/ag-schneiderman-asks-major-retailers-halt-sales-certain-herbal-supplements-dna-tests
The New York agency’s results come after testing by the Centre for Biodiversity Genomics at the University of Guelph produced similar results.
“It is disappointing that over a year later the attorney general’s researcher reached similar conclusions, demonstrating that the industry has failed to clean up its practices,” the cease-and-desist letters read.
The investigation came on the back of a 2013 New York Times article, which revealed a widespread problem of labelling fraud in the vitamins and supplements industry. The article noted research that found as much as one third of supplements tested did not contain the ingredients listed on their labels.
….”carefully worded ads promoting unproven nutritional therapies. Worse, some of these can be harmful. For example, people have suffered liver damage from green tea extract that is so severe that they have needed a liver transplant. And the frequency of harm from dietary supplements is on the rise.
“Those findings mirror a similar study of black cohosh supplements conducted at Stony Brook University medical center last year. Dr. David A. Baker, a professor of obstetrics, gynecology and reproductive medicine, bought 36 black cohosh supplements from online and chain stores. Bar coding tests showed that a quarter of them were not black cohosh, but instead contained an ornamental plant from China.
Dr. Baker called the state of supplement regulation “the Wild West,” and said most consumers had no idea how few safeguards were in place. “If you had a child who was sick and three out of 10 penicillin pills were fake, everybody would be up in arms,” Dr. Baker said. “But it’s O.K. to buy a supplement where three out of 10 pills are fake. I don’t understand it. Why does this industry get away with that?”
=================
COOL
Country Of Origin Labeling. COOL requires meat marketers to tell us whether the meat they sell is a product of the USA, China or Whereintheworldistan.
read more @
http://www.truth-out.org/buzzflash/commentary/jim-hightower-a-corporate-coup-d-etat
“When I contribute to RRSP, my tax refund is based on my marginal rate, while when I retire, my tax will be on the average one… How could this not be highly advantageous?”
If you make more in retirement than you do now. This could happen if you have a pension plan as well as a large RRSP.
“And in my particular case, since I already get all my refunds on the maximum tax rate, there’s no way I will have to pay more tax on a % basis than what I contributed right ?”
If your entire RRSP contribution is at the top marginal rate, that’s right, unless the tax brackets change.
Pinstripe: I thought old folks didn’t need to sleep as much.. ya know up at 4am and all to slop out the barn ‘n what not…
This blog should come with a label – contents not what they seem, reader beware, the twilight zone awaits
# 179
“The strategy involves systematic mutual fund withdrawals that no longer work. It is not another term for leverage. Your comment is wrong. — Garth”
I did read the book and a web site (milliondollarjourney), I was even considering it – I did not see that investing in mutual fund is somewhat of a requirement for the SM.
People doing it and some of them are making their financing, investment holdings information publicly available, as far as I could tell they are mostly in stocks, ETFs.
There is one particular (financial adviser) guy with a modified version of SM where I saw references to mutual funds.
How is SM discredited strategy if the investment portfolio is not made up mutual funds?
#181 Penny Henny on 02.07.15 at 2:59 pm
Smoking Man, this could be your Plan B.
http://www.kijiji.ca/v-bar-food-hospitality-jobs/city-of-toronto/server-needed/1049788210?enableSearchNavigationFlag=true
…….
Judging by the current staff, I’m shit out of luck.. My man boobs not quite up to snuff. All current ones our on plan D
http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html?hp&action=click&pgtype=Homepage&module=photo-spot-region®ion=top-news&WT.nav=top-news&_r=0
Interesting story about the couple living at the airport in London. Sad obviously but you have to give them credit for being innovative. I hope that many house obsessed Canadians don’t end up in that boat. Seems that many people haven’t learned yet that even at zero percent the banks always want their money back. And those guys play hardball, not really soft and fuzzy when you owe them.
https://ca.finance.yahoo.com/news/u-jobs-market-seen-firm-despite-slowing-economy-005222816–business.html
WASHINGTON (Reuters) – U.S. job growth rose solidly in January and wages rebounded, a show of economic strength that put a mid-year interest rate increase from the Federal Reserve back on the table.
Nonfarm payrolls increased 257,000 last month, the Labor Department said on Friday, outstripping Wall Street forecasts.
At the same time, data for November and December was revised to show a whopping 147,000 more jobs created than previously reported, bolstering views consumers will have enough muscle to carry the economy through rough global seas.
“A mid-year lift-off in the interest rate is fait accompli … there was good news on many fronts,” said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo.
#137 observer on 02.07.15 at 4:59 am
Just hand over 150 layoff where I work and another 250 more. in the weeks to come. The old guys are all getting their pink slip, Company want to get younger, while the older guys whom thought they can work forever are being let go. Its starting to happen to several other companies as the they revamp.
=====================
According to personal contacts and published information, Britain is already “no country for old men” i.e. over fifty-five, at least for job seekers. It is logical that this will happen (has happened?) in North America as the pool of decent jobs shrinks and technology obsoletes skills ever faster.
This sounds great if you are an ambitious 30 year old but a 25 year career is not a long time to build a retirement income that will keep you going till you are ninety. That is why it is a double tragedy and criminal stupidity on the part of government to lead so many young people to mortgage their working lives to a doomed over-priced one-asset strategy.
People who need help should get it it. Everyone should not receive welfare just because they turn 65. Seems just. — Garth
***********
Agreed
Is it political interference that drives these errors? That just seem completely unlikely (thought Garth could offer an insider perspective). Everyone on this board is an expert in some area and others rely on this expertise. Imagine your boss walks up to you and asks you to make up numbers, assessments, etc. How likely is it that you would and that everyone would too? Very remote chance of that happening.
*********************
LOL – really???
CBC just posted an article on John Baird and I believe if the comments are correct the fluff writer used to work for Harper. In my own job you do as told to some extent to keep your job.
Plan B, yeah I have one most don’t have it. Don’t get too attached to this frozen land. It will eat you alive, if you are a emigrant somewhere from EU keep your connection back home, make some money, return and enjoy the rest of your live.
Just curious if you could comment on this Garth.
I’m 53, I already have a sizeable RRSP. I could withdraw $20K from RRSP every year for the forseeable future without going into next tax bracket. The money would then be earning income outside of an RRSP. So, would it be better to leave it invested inside RRSP or take it out and invest it in a taxable environment. I’m retired and live off my balanced portfolio and my yearly income is increasing over time so I’ll never be in a low income situation to realize any tax breaks.
Thank you.
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speaking of welfare how about those raters
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Tuesday, February 3, 2015
Justice Department and State Partners Secure $1.375 Billion Settlement with S&P for Defrauding Investors in the Lead Up to the Financial Crisis
Attorney General Eric Holder announced today that the Department of Justice and 19 states and the District of Columbia have entered into a $1.375 billion settlement agreement with the rating agency Standard & Poor’s Financial Services LLC, along with its parent corporation McGraw Hill Financial Inc., to resolve allegations that S&P had engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs). The agreement resolves the department’s 2013 lawsuit against S&P, along with the suits of 19 states and the District of Columbia. Each of the lawsuits allege that investors incurred substantial losses on RMBS and CDOs for which S&P issued inflated ratings that misrepresented the securities’ true credit risks. Other allegations assert that S&P falsely represented that its ratings were objective, independent and uninfluenced by S&P’s business relationships with the investment banks that issued the securities.
The settlement announced today is comprised of several elements. In addition to the payment of $1.375 billion, S&P has acknowledged conduct associated with its ratings of RMBS and CDOs during 2004 to 2007 in an agreed statement of facts. It has further agreed to formally retract an allegation that the United States’ lawsuit was filed in retaliation for the defendant’s decisions with regard to the credit of the United States. Finally, S&P has agreed to comply with the consumer protection statutes of each of the settling states and the District of Columbia, and to respond, in good faith, to requests from any of the states and the District of Columbia for information or material concerning any possible violation of those laws.
http://www.justice.gov/opa/pr/justice-department-and-state-partners-secure-1375-billion-settlement-sp-defrauding-investors
#78 Andrew Woburn
you make good point,
But I think time will show that the boomers really did ride the gravy train, built by their parents (silent generation) and financed by downloading debt and problems onto generations after – gen x, y, millennial etc.)
I know you don’t like the ZeroH guy but this is worth a read.
http://www.zerohedge.com/news/2015-02-07/canadian-housing-market-6-simple-charts
All of those graphs have previously been posted here. Typical Zero. — Garth
#9 Setting the Record Straight on 02.06.15 at 7:34 pm
Please leave science to the scientists. Every study must be peer reviewed before there is a global consensus on the findings. You have been sadly duped by a skilled charlatan.
The author of the Wake Forest study stated the following when asked whether the measles vaccine (MMR) might actually causes autism: “That is not what our research is showing,” said Stephen J. Walker, Ph.D., an assistant professor of physiology and pharmacology at Wake Forest University Baptist Medical Center.
http://www.wakehealth.edu/News-Releases/2006/Wake_Forest_Researcher_Warns_Against_Making_Connection_Between_Presence_of_Measles_Virus_and_Autism.htm
#139 jane24
What a dumb story. They have made themselves homeless, rather than live in an affordable part of UK. But for them, only south coast and London are good enough, it’s what they deserve. They still have money coming in, more than many people get by on. Out of the 1400 pounds monthly, they pay out 300 to store their furniture, because “it’s not worth anything” so they don’t want to sell it or give it away.
They could live just fine like normal people if they moved north, where they can rent a place for a few hundred, and have enough money left over.
@162
Garth, you’re often not shy with your editorial pen in banishing unproductive comments.
For the sake of public health, could you banish the anti-vaxxer comments? Tx!
*******
I take it you do not want to hear about the contamination of polio vaccines in the 50s. Nor about the debate whether the contamination is increasing
cancer rates for millions.
Why should you assume something is risk free?
Neither equities nor bonds nor cash is risk free.
You pick a combination that seems reasonable in light of what you know.
Pay your money, take your choice. But if you own your own body, it should be your choice.
Nobody has the right to spread communicable disease. So, to maintain public heath, you are being eradicated. – Garth
#124 young & foolish
If you can spot the problem in “but this is our forever house” or “we plan to live here 10-15 years”, then your question answers itself. You can’t predict when you will fall critically ill, or get laid off, or forced into early retirement, or when your husband will find a younger model and divorce you.
Then again, you could just read the dozen other comments people have already contributed to the subject, or you could live up to your name.
Commenting solely on the piece, you sound exactly like what was happening here in the US before the crash. I’ve been lurking (reading) for quite a while. The endpoint of what is about to happen in Canada is an unknown. The probable scenarios are not very pretty.
You will be fine I’m sure but I wish the best of luck to anyone stuck in the property trap.
Devore ,why are you so condescending all the time.
Did you have an extra bowl of Bitchie for breakfast?
Lighten up a bit.
#182 Blacksheep: “Too bad. This is not a public health blog. — Garth”
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If I’m honest Garth, at this point, one could question it’s validity as a real-estate blog.
**********************
The point is…this blog is about finances. Not public health.
#203 devore:
“#139 jane24 What a dumb story. They have made themselves homeless, rather than live in an affordable part of UK. But for them, only south coast and London are good enough, it’s what they deserve. They still have money coming in, more than many people get by on. Out of the 1400 pounds monthly, they pay out 300 to store their furniture, because “it’s not worth anything” so they don’t want to sell it or give it away.
They could live just fine like normal people if they moved north, where they can rent a place for a few hundred, and have enough money left over.”
***************
I agree. This is a dumb story. No need for it. Pathetic as hell….and paying to store furniture is almost always stupid. No sympathy here!
#200 everythingisterrible on 02.07.15 at 5:56 pm
#78 Andrew Woburn
you make good point,
But I think time will show that the boomers really did ride the gravy train, built by their parents (silent generation) and financed by downloading debt and problems onto generations after – gen x, y, millennial etc.)
========================
Not only do I agree with you, that’s what I tell my kids. The boomers were born on third base and thought they hit a triple. North America had all the goodies the rest or the world needed and automation barely existed. Jobs were usually plentiful and well-paid, at least in the many unionized businesses. Houses were small and sparse by today’s standards but affordable. Energy was so cheap, nobody conserved it.
I disagree that the silent generation built it and boomers wrecked it. Few boomers hit their forties much before 1990 and hardly anybody influences politics or corporate policies before that age. They didn’t start the debt juggernaut, their parents did. They just assumed it was normal. Questionable financial tools like leveraged buyouts with junk bonds were already in place. Credit cards were common if not as abused. The “fly now, pay later”mentality was well established. The maturing boomers just believed this was normal. Meanwhile politicians across the developed world discovered the wonders of half-Keynesian economics: the half where you borrow money, not the half where you pay it back.
I don’t begrudge my parents’ generation their good times. Far too many didn’t survive to enjoy them. As to the “undeserved” wealth of the boomers, let’s see how much of it survives the coming housing readjustment.
I tell my kids to stop grousing about a forty year old flash-in-the-pan and start worrying about what’s coming next. There are two billion hungry Chinese and Indians who want lunch and they are going to eat yours if you don’t learn to make sandwiches. I also tell them to become politically active. There is no economic solution to the extreme income inequality that is developing, only political ones. If millennials ignore politics, they will be automation’s roadkill. Guaranteed.
Chris in Nanaimo at 118 debunked RRSP tax bomb myth
What most folks don’t appreciate is that your own contribution to your RRSP and their growth is tax free upon withdrawal. If you do the math you will find the ‘tax you pay on withdrawal = the tax refunds you got plus their own growth.
*******************************************
I will take a tiny break from my self imposed exile to respond to that.
Chris is 100% correct.
The tax on your net cost or net share of the RRSP (net of refund) will actually be NEGATIVE if your marginal tax rate is lower in retirement. And for many or most the marginal tax rate WILL be lower since taxable income will be lower and so the marginal tax rate will likely be lower even if tax rates rise.
For those making over $70k in retirement the old age clawback applies and can add 15% to the marginal tax rate. Even with that the tax on your net RRSP contributions is likely to be minor. And with income splitting many will avoid that.
What people simply forget is that about 35% of “their ” RRSP was never theirs it represents the refund that has partly funded the RRSP and that, with growth, will fund usually more than 100% of the tax.
Chris is 100% correct but people can believe what they want about this tax bomb myth.
Your beliefs will not change the Math.
Soldier on Chris, but you will get little support here.
#180 pinstripe on 02.07.15 at 2:39 pm
I have a special request.
I request that a nighttime curfew be implemented on this blog.
”My bedtime starts at 800 pm the latest (alberta time) and with my morning coffe at the coffee shop I don’t start reading this blog till about noon. with so many posts I am not able to read everything and miss some good pointers.”
You’re quite the comedian. 92 yrs old, yeah right!
Who do you get to tuck you in at night? Make sure you eat your Arrowroots before hitting the sack. This will keep you regular and in shape to read the posts. And make sure you have a good stock of Depends too. Wouldn’t want to have any accidents at Timmies would we?
http://www.google.ca/trends/explore#q=deflation
Data for February just in. As a reminder, we are on the 7-th!!!
The tide has turned, now it is only a question of how bad.
Someone else posted under my username Nomad.
I guess there’s no way to prevent that.
I am compromised. Packing my gear. Abording mission.
This is the last reply from Nomad.
I’ll leave you with this post that came through on FinViz:
“The Canadian Housing Market In 6 Simple Charts”
http://www.zerohedge.com/news/2015-02-07/canadian-housing-market-6-simple-charts
Since the vaccination discussion is the subject de jour… The point is not if vaccines are effective, necessary, dangerous or whatever. It’s about the right to have your OPINION. Even the freedom “fighters” of Zero Edge turn out to be tyrannical at heart when this comes up… it’s amazing. Having any say in what someone else has to be injected with runs against any slim concept of self determination. It’s akin to the ISIS attitude. “Our god is the best and you believe in him or die”.
And, also, Garth, forcing someone to get treatment against their will is against the law. Still.
My advice for the people who are against vaccines, if they ever face being mandated to have them. Just press the buttons this society knows best. Money. Go to your doctor with a document for him to to sign that he assumes full financial responsibility in case something goes wrong.
#141 think were in trouble – We were sold out long ago and many of our current and former leaders should be tried and convicted of treason.
#66 Zen – Governments don’t write and pass legislation with no intentions of using it
I have a hard time understanding how people cannot see what is all unfolding right before our eyes. The dumming down of society has been highly effective and I feel we have passed the point of no return with regards to fair play in business and politics. Now our best bet is to hope for the best but expect the worst.
Personally I wouldn’t get too attached to all those numbers in your portfolio for change is blowing in the wind… And one needs not be a weather man to know which way the wind is blowing.
The herd has been lead estray and with all the distractions in our modern world I don’t see humanity coming together in any meaningful way. The ones pulling the strings will simply play us all against each other and continue to whittle at our liberties and freedoms until we have been broken to accept our new fate…
Debt servitude to the few and perpetual war on terror
Garth, thanks for the Plan B info. I’m living the life. I hoped to work another 5 years but my oilpatch consulting job temporarily came to an end with the price collapse. Just finished putting two kids through college (one at UBC, one at U of A in Edmonton). They are both off the payroll for now. I have a shortage of cash because I built a retirement home in BC and have a mortgage on it until I’m ready to sell out of Calgary. Sooo, the RSP is my source of income for now. Too early to be pulling from it but hey, things could be worse. Meanwhile, trying to cuts costs, no Caribbean vacations, just time a the cabin. Time for a dark rum and coke.
#217 I could not agree more. And just take a look at what the Obama administration is doing over the Ukraine. He wants a fight and Putin is the man who will give it to him. Very disturbing. Merkel is dead set against conflict. One possible reason is because they had a world war in their front yard and are only too aware of the destruction wrought. Does not matter what side you are on. The present us administration will probably go down in history as one of the worst. And there is Harper, just like a little lap dog, barking and snapping. What is he going to do when push comes to shove? Embarrassing, like most Canadian PM’s.
I often make reference to university of Google.
But I really should give this pathetic blog it’s due..
About 3 years ago you dogs introduced me to Hunter S Thompson.. I read all his shit..
Then last year one of you, gave me Charles Bukowski…
Thank you…
My dream, life’s goal of writing a meaningful book, saddled with a huge handy cap..
I now beilive it’s posable.. Although I can make tens of thousands a day.. It’s nothing compared to getting your soul on paper.
Easier than you think..
Wish I found this love of writing when I was in my prime..
Now I got good, buy it’s not exactly hard..
That’s life
#210 Andrew Woburn
#217 SWL1976
Powerful stuff. Keeps me coming back to this blog. Something about that Pacific air aids in your thinking, I guess. I need some more time on Malaspina Strait staring out at Texada from just south of Powell River. Paradise.
#217
” The dumming down of society has been highly effective and….”
_______________
Indeed.
#215 Ollie on 02.07.15 at 9:25 pm
Everyone has a right to have an opinion. You can claim that water at STP (Standard Temperature and Pressure) boils at 50C.
Your opinion would of course be wrong …it’s 100C.
No one is being forced to submit against their will, but actions do have consequences. Your act of self determination can result in a tragedy for yourself and those around you.
The great Justice Oliver Wendell Holmes stated, “The most stringent protection of free speech would not protect a man in falsely shouting fire in a theatre and causing a panic. … The question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger”.
We know these bacteria and viruses pose a clear and present danger to the un-vaccinated.
You may be too young to remember the ravages of Polio. Remember the names Jonas Edward Salk and Albert Sabin. They saved the lives of millions worldwide and their vaccines have virtually eliminated the disease from the Earth.
“Setting the Record Straight” made a comment about the contamination of polio vaccines in the 50s. The contaminant is called Simian Virus-40. It was not present in the Sabin oral vaccine. In 1998, an exhaustive study carried out by the US National Cancer Institute clearly indicated that those exposed to SV-40 had no higher rates of Cancer than those who were not. The same study was replicated in Sweden … same results.
Some refuse the vaccine by choice, others because they are too young to receive the full amount and are therefore innocent victims of your selfish act of self determination. Herd immunity does provide some protection to the un-vaccinated but it’s not 100% effective. In other words, you get to play the lottery with the lives of others as well as your own.
I recently listened to an anti-vaccination advocate speaking on “The Nightly Show”.
When asked why we should not accept the MMR vaccine, her response was …“Did you know that the vaccine manufacturers stand to make $40 billion on vaccines this year.” If we use her logic … Boeing aircraft made $51 billion in aircraft sales in 2013 ….. you better cancel that vacation.
She then went on to claim there was an industry wide conspiracy …… which was debunked by Snopes ..
http://www.snopes.com/medical/disease/cdcwhistleblower.asp
No medical procedure is without risks. No disease is without risks. This is where you balance personal freedom with social responsibility.
The Flu, for example kills thousands every year in North America …… some years hundreds of thousands.
You don’t need to take the flu shot … but your choice could cost you or the nice old lady next door her life.
Sadly, it’s not an exaggeration. Take a course in Epidemiology and you’ll know why.
> … he assumes full financial responsibility in case something goes wrong. …
should people who would like to op out of vaccines assume full financial responsibility for all ensuing costs (medical or otherwise) including for people who are infected by them?
and how about if someone who is infected by a person who op out of vaccines dies? would that constitute involuntary manslaughter or criminal negligence??
Shawb Allen @ #211
Thanks, the maths is straight forward for RRSP’s. It’s just folks forget about their original CRA ‘refund’ when looking at the tax they pay on withdrawal. The ‘refund’ isn’t. It’s a loan.
And the effects of tax on contribution and withdrawal are explained at the link below.
All explained in pretty pictures here :-
http://www.michaeljamesonmoney.com/2014/03/debunking-rrsp-myths-with-pictures.html
Danforth #161
—
Thanks for your advice, greatly appreciated. Cheers and take care!
“When it comes to the vaccination debate, people are just as likely to be influenced by anonymous Internet comments as they are public service announcements from health agencies.” ….. “That kind of blew us away,” lead author and marketing expert Ioannis Kareklas said. “People were trusting the random online commentaries just as much as the PSA itself.”
http://www.torontosun.com/2015/02/05/people-trust-vaccination-info-from-anonymous-internet-comments-study
http://healthland.time.com/2014/03/04/nothing-not-even-hard-facts-can-make-anti-vaxxers-change-their-minds/
Looks like the authorities have got themselves a well earned credibility issue. Brian Williams anyone?
Hmmmm, tide must be turning. Even my older ‘buy a house before its too late’ parents were asking what the heck is going on … Seems they saw a news story about how Canadians are buried in unsustainable debt, jobs being lost and MP’s jumping ship.
Half of Americans cannot afford their house.
See link below:
http://www.realtor.com/news/half-americans-cant-afford-house/?MID=2015_0206_WeeklyNL_2010-13&RID=9476509&cid=eml-2015-0206-WeeklyNL-blog_1_cant_afford_homes-blog_finance
If Americans cannot afford their homes where homes cost half of what they are in Canada, I hate to see the stats for Canadians.
Yet Canadians ( in Toronto and Vancouver) keep buying.
#217
But your ending is kind of sad… I think it ends a little differently … the common man always stands up in the end and will fight. Not so the chosen ones. They run, are caught and hung. So it goes through history. And then we are on to another cycle..
Globalism has resulted in a very dangerous practice – that of outsourcing pharmaceutical and vaccine manufacturing.
Would you take a flu shot made by this guy – Wi Poi-Sun Yu – whose factory is probably side by each with the factories producing melamine contaminated baby formula, toxic drywall, and deadly dog treats ?
And Wi Poi-Sun Yu has got his hands into the natural products market too. Years ago hubby was having a little trouble sleeping. He opted for natural Chinese herbs ( Sleeping Buddha) from the health food store rather than a scrip. They worked like a hot damn.
Sadly……
“… 3/6/1998 Examination of a sample of Sleeping Buddha; 90 mg capsules by Seattle District found 1.24 mg of undeclared Estazolam. Estazolam is in the prescription drug class of benzodiazepines and is a C-IV schedule drug. If consumed during pregnancy; the drug can cause serious adverse effects on the developing fetus; including congenital malformations and depression of the central nervous system.”
http://www.accessdata.fda.gov/cms_ia/importalert_173.html
What to do?
Spent some time the last couple weeks travelling southern ontario.
People are out being active and doing their driving from place to place.
Malls are pretty full of people. But hardly anyone is walking around with a bag. Not shopping. Nobody in the actual stores.
Heard a realtor on the radio. It’s turning into a buyers market he says. Inventory is way up. So list your home now or risk not getting top dollar was the shtick.
They will spin everything.
http://www.bloomberg.com/news/articles/2015-02-06/a-stealth-war-with-currencies-as-weapons-silent-killers
(Bloomberg) — The global currency war is threatening to prove a silent killer.
So says David Woo, head of global rates and currencies research at Bank of America Merrill Lynch in New York.
While some question the existence of any conflict — arguing that falling exchange rates merely reflect efforts by central banks to spur lackluster domestic economies — Woo expresses concern.
“There is a growing consensus in the market that an unspoken currency war has broken out,” he said in a report to clients this week. “The reason why this is a war is that it is ultimately a zero-sum game — someone gains only because someone else will lose.”
The standard view on war-mongering is that by easing monetary policy, central banks from Asia to Europe are hoping to weaken their currencies to boost exports and import prices. Trade rivals then retaliate, creating a spiral of devaluations as witnessed in the 1930s.
@ #223 Industrial Guy on 02.08.15 at 12:53 am
“Take a course in epidemiology and you’ll know why.”
for sure. Take 2 minutes, everyone. Find out just how reliable a tool an Epidemiological study is:
https://www.youtube.com/watch?v=hiheiR-6c0U
#227 Sky on 02.08.15 at 2:08 am
“… people are just as likely to be influenced by anonymous Internet comments as they are public service announcements from health agencies.” ….. “That kind of blew us away,” lead author and marketing expert Ioannis Kareklas said. “People were trusting the random online commentaries just as much as the PSA itself.”
She might be blown away by that, but the guys getting the research money to study us humans and our brains are not.
“They’ve” got armies of people out there on comment boards for that very purpose. Who are they? Governments, specialized firms, and private interests as well as your run of the mill corporate baloney artists (marketers) More stories about this are starting to break. (you might already know this, but others might not)
They just changed the word ‘propaganda’ to the term ‘public relations.’
I see this couple bought this Vancouver house as an “investment” . Wow I wonder what level of math went into that investment analysis .Good luck guys. I I hope you have money to burn.
http://www.theglobeandmail.com/life/home-and-garden/real-estate/four-unit-kitsilano-home-sells-on-fourth-listing/article22852056/
I think this sums it up.
http://www.theglobeandmail.com/report-on-business/video/drawing-conclusions-is-renting-really-a-waste-of-money/article22832602/?click=sf_globefb#video1id17035003
#193 Andrew Woburn
“…a 25 year career is not a long time to build a retirement income that will keep you going till you are ninety.”
“…so many young people to mortgage their working lives to a doomed over-priced one-asset strategy.”
Thank you for your contributions to this blog. You nailed it. Powerful and very sobering. I truly hope that every young person reading this stops, pauses long enough to really think about this and absorb this message.
https://ca.finance.yahoo.com/blogs/pay-day-/cash-flow-debt-keep-canadians-from-saving-for-200757249.html
The reasons people choose not to contribute to an RRSP can vary. Jason Abbott, a Toronto-based certified financial planner, says negative market news like the kind we’re seeing now in relation to oil and gas, often have a dampening effect on overall investment levels.
Meanwhile, those who are inclined to investigate options for their money can easily become paralyzed by the options and vast array of information available to them over the Internet.
“Ten years ago, investing was a lot simpler,” Abbott said. But, there’s no doubt, the biggest impediment to retirement savings these days comes down to cash flow.
“Those people who make it a priority to pay themselves first find a way to do it,” said Abbott.
For too many others, he added, “It just falls through the cracks.”
According to a 2014 TD survey, the majority of Canadians (82 per cent) feel so burdened by debt that saving for the future was no longer a priority. Keeping up with everyday financial demands – from paying the mortgage to covering the costs of childcare — was the top impediment to saving.
Half of Canadians surveyed said they don’t feel like they can afford to put aside part of their paycheque every month to savings. Slightly more (53 per cent) said they can’t afford to lock their money away for the long term.
garth,
you aren’t censoring equitably!
;)
Crowd-sourcing the airport dwellers!
http://www.telegraph.co.uk/news/newstopics/howaboutthat/11398731/Middle-class-couple-forced-to-sleep-at-Heathrow-flooded-with-offers-of-support.html
#214 message to Nomad
Hello. I posted under Nomad. Didn’t realize it was taken. You may resume it’s use.
I apologize
I am blown away that you are blown away.
We are being lied to and manipulated daily by governments, NGO, special interest groups etc… So, no surprise nobody trusts them any more than an anonymous comment in cyber space.
#158 Nerf Herder on 02.07.15 at 11:13 am
I’ve noticed that Cowtown rentals are trending downwards. There was a time when you needed to show up with your cheque book for a damage deposit…. but now I see listings sitting on Kijiji and RentFaster since the beginning of January.
*Although Jan-Feb is not an ideal time to find a renter, it was not like this at the beginning of 2014. They would be gone within a day.
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Yep. My other observation is noticeably less body count at Market Mall.
I usually go there after work on Friday and the last couple weeks I’ve noticed a somewhat dramatic difference in numbers. You can even get parking close to the entrance.
Realtors scrambling after threats by board to cut access to MLS
http://www.thestar.com/business/2015/02/06/realtor-scrambling-after-threats-by-board-to-cut-access-to-mlsmclean-said-he-was-unable-to-comment-as-its-not-my-baby-and-broker-tom-bosley-said-via-email-that-hes-out-of-town.html
The Toronto Real Estate Board is threatening to cut off a vital lifeline — access to the Multiple Listing Service — for realtors who continue to push the information envelope by offering sold data of homes on public websites.
The move is largely seen as aimed at a new, tech-savvy generation of realtors who believe that all MLS data — and especially sales histories of homes — should be readily accessible online, as it is on popular U.S. sites like Zillow.com and Trulia.com, which allow folks to do more of their own research.
TREB did not respond to requests for interviews.
#36 Danforth on 02.06.15 at 8:15 pm
“The point about ’55 year olds who will never work again’ is a reality which scares me. That older age bracket often sees challenges getting hired.
Hope to dodge the Wallmart greeter, or Home Depot hardware aisle work in those years!”
Very smart. I have no doubt that you will dodge those draughty doors.
Realtors scrambling after threats by board to cut access to MLS
http://www.thestar.com/business/2015/02/06/realtor-scrambling-after-threats-by-board-to-cut-access-to-mlsmclean-said-he-was-unable-to-comment-as-its-not-my-baby-and-broker-tom-bosley-said-via-email-that-hes-out-of-town.html
Can someone help me understand negative interest rates?
I get that if you take out a mortgage of -1% rate and deflation is -3% per annum then you are actually paying a net +2% rate.
What I dont understand is why anyone would buy a GIC or bond at negative rates. Why not just keep money in the denominated currency, is that not the same as a 0% GIC?
I saw RBC is offering -0.2% for short term (1-29days) GIC, why would you not prefer to hold cash?
Thanks
Daisy # 208,
“The point is…this blog is about finances. Not public health.”
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May I politely suggest: You, adhere stringently to the rules, and I, continue to post what ever the hell I like and we, let Garth decide if it sees daylight.
Thanks for the response.
#248 Catalyst: I saw RBC is offering -0.2% for short term (1-29days) GIC, why would you not prefer to hold cash?
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Easy! Because [email protected] recommends the GIC!
Garth et al:
We are coming up to Valentines Day. See Valentines day is the most special day for me. It was on that day in 1985, that the Oncologist told me that I could stop chemo and to go away for 3 months. See how things go.
Now it is 30 years in remission….Thanks to the Doctors/Nurses at the Juravinski Cancer Clinic in Hamilton. I have some aches and pains, and some scars that may never go away, but I am here and enjoying every minute, with my wife and my kids and my dog. You can have all the wealth in the world, but your health and your family are the most important things in your life…
Cheers to everyone!
the milleniels best be very careful what the wish for. the pot with the social benefits is empty and the chances of increasing tax and cutting benefits is a sure thing in the near future.
there are many multi millionaires that structure their finances that make them poor on the books, and are able to take advantage of evey entitlement available. many of these same people spend up to six months out of the country too. why are the millienilums not addressing this type of issue?
I suggest this blog present a commentaryon how much money is needed for retirement to provide a steady stream of money when NO social ;entitements are available. I am sure that will be a wake up call for the millenilums.
Add up all the taxes and fees (fed, prov, mun,) that could be taken off a stream of money.
The govts make every benefit available until a person applies to use one.
“I saw RBC is offering -0.2% for short term (1-29days) GIC, why would you not prefer to hold cash?”
They have too many bytes (of the octet kind), while the debt in circulation as legal tender is too little and too hard to get a hold on physically in those quantities.
Serious question (honestly), those who don’t have zero-th world problems, should they diversify in pennies also? I suppose pennies could make a comeback during deflation.
#245 Victor V on 02.08.15 at 11:50 am http://www.thestar.com/business/2015/02/06/realtor-scrambling-after-threats-by-board-to-cut-access-to-mlsmclean-said-he-was-unable-to-comment-as-its-not-my-baby-and-broker-tom-bosley-said-via-email-that-hes-out-of-town.html
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Where is the competition bureau now?
Cowering in Harpers Closet?
My prediction… not a word until after the election.
Gotta keep house prices up or were gonna lose a few votes….
167 Danforth said :
Thankfully Canada eliminated its inheritance tax decades back.
==========================================
upon death, the CRA deems you to have sold all assets at fair market value. they state you do this during the final minute of life
Competition… The reality in our country is there is only limited competition.
As soon as a business sees that they can buy an edge by lobbying government or donating some cash to the campaign fund of some low middle or high level politician then all rules are thrown out the window in favor of preferred access to government friends.
Just look at the taxi industry.
If you only knew how much money was kicked up to municipal politicians to keep out competition and limit the amount of taxi plates….
What possible benefit to society is there in limiting taxis.
The drivers want to have a business but are left to being tenant workers as they cannot afford the $100 to 500k buy in for a plate.
The customers lose because they are forever waiting for a cab on Friday night.
In what business does government dictate how many competitors can there be.
Restaurants? Factories.
In the taxi business is it easy to get away with the under the table payoffs because of the cash nature of the business.
In Edmonton before 1997 Taxi plates were $100 per year for anyone who could pass the chauffeur’s exam. On weekends there were twice as many taxis on the road as on week days just like Bars have twice as many waiters on during weekends when they are busy.
Edmonton then had the greatest taxi service and it was affordable because owners were not paying off $200k mortgages for a $2.00 piece of tin.
Now most of the plates are in the hands of large owners.
In Vancouver and other cities where the business has matured in its corruption, all plates are in the hands of a few owners who dictate all the rules regarding access to new plates.
I find it astounding that this kind of theft of our time and money goes on unchallenged!
When Mulroney can be caught with a 300K bag of cash from a hotel room exchange, you can bet your booties that virtually all politicians are getting some payoffs somewhere.
Its a dirty world out there… , at least make a little noise that you don’t approve.
#230 palebird on 02.08.15 at 6:44 am
#217
But your ending is kind of sad… I think it ends a little differently … the common man always stands up in the end and will fight. Not so the chosen ones. They run, are caught and hung. So it goes through history. And then we are on to another cycle..
*************************
Well said!
It does look slightly dire, but this has always occurred throughout the history of humankind. Hence the bad king followed by a good. When push comes to shove people rise up. Modern society always believes it is different from those of the past. To some degree this is always correct – are technology has advanced but I do not believe human nature has – at least not in all pockets. Our society suffers from recency – a theme our blog host has pointed out many times before.
My grandparents were from the war generation, they saved and then bought. They didn’t make large credit purchases in the years before retirement. Then knew how to change their oil on their car and many more things that now people pay for.
“Ten years ago, investing was a lot simpler,” Abbott said. But, there’s no doubt, the biggest impediment to retirement savings these days comes down to cash flow.
Yeah, two years after the dotcom crash had taken the NASDAQ down 66% from its highs, three years after 9/11, in the glorious reign of George W. “I try not to get involved in more than two simul-, simula… uh same-time land wars in Asia” Bush. Good times, investing-wise.
Read investment books from any period in history, and it was always a shit show at the time, even if the long term charts make you ask “what were they complaining about?” There have always been goldbugs warning of imminent financial collapse, Jehovahs Witnesses at the door saying the volcanoes and earthquakes mean Jesus will be back next week, and slick salesmen trying to sell you Florida swampland, Penn Central bonds or deeded land on the moon.
The biggest impediment to retirement savings has ALWAYS come down to cash flow. That’s pretty much an accounting identity.
House prices are coming down for sure, at least in Ottawa where I have my eye on a corner of the market.
A house was listed there for 2 years now. Pretty expensive by all standards. Just came down $100,000 now but still way overpriced in my opinon.
A slow but inexorable descent. Fine with me. Not planning to buy there before a few years.