Insulation

STUPID 1 modified

When Bandit and I come to a street corner in small-town Nova Scotia, any oncoming vehicle stops. When we get to a corner in Toronto, I swear the cars speed up. It speaks volumes about the two societies.

In places where a nice house costs $220,000 and stress is modest, there’s a sense of community. People don’t run each other over. Where houses cost a million or two, it’s war. Competition. Self-interest above all, since life is so draining. Besides, you’ll never see that person again.

Last week this blog was more cathartic than usual. But it’s hard to ignore the news. Most people are like those speeding drivers – desperate to get somewhere despite the danger posed to others. When it comes to money, speed is debt. The more people want something they can’t actually afford, the greater the obligation they’re willing to swallow. The more peril we all face.

So now household debt’s at a new record as the savings rate falls, house prices in the GTA and YVR rise, incomes stagnate and the jobless rate advances. You and I both know there’s no quick fix. Mortgages amount to $1.2 trillion, and they’re decades-long. Unless the economy improves fast and dramatically (unlikely) this will not end well.

What can you do to insulate yourself?

Be a debt contrarian, of course. Don’t borrow. But if you already did, and have a honking big mortgage you can’t afford to renew at twice the rate, or that might overwhelm your equity if house prices give up 20%, best to trash it. You can do this in a methodical, organized fashion while still building wealth and net worth. I have three suggestions.

But don’t pay down mortgage debt in the wrong way, which is to throw cash at it with increased monthly payments or lump sums on the anniversary date. That’s the common wisdom from people who should really be fabricating eavestroughs instead of giving financial advice. For example, it’s usual to read pablum like this:

Since mortgage payments are made with after-tax dollars, putting extra money down on a debt with an interest rate of 3.49% is equivalent to getting a guaranteed, risk-free return of over five per cent for most taxpayers. If your mortgage rate is higher, your return would be higher too.

Wrong. All you’re doing is paying off debt on an asset that’s probably going to stagnate, or even fall in value. That’s hardly ‘risk-free.’ If real estate does not grow in value, how is the mortgage different from a car loan – the repayment of which isn’t building wealth? Worse, mortgages are amortized – with interest payments front-end loaded – as opposed to the simple interest charged on consumer loans.

However, reducing mortgage debt is a worthy goal since it will become more costly to carry in the future, and the debt could be against an asset that’s worth less as time goes by. However, when home loans can be had in the 2% range, as now, making lump-sum payments ain’t the way to go. Here are better options:

(a) Invest money during the term, then make a payment at renewal.

In an era when mortgages can be had for the inflation rate, this is essentially free money. Meanwhile a balanced and diversified portfolio of ETFs, preferreds etc. has been performing consistently well – averaging just over 10% during the past five years and 7.4% for the past decade. So, a couple with $60,000 in two TFSAs invested in this fashion  should see it grow to about $150,000 (with annual contributions) after five years. Take that and dump it against the home loan. You’ll be far further ahead.

(b) Get a weekly mortgage.

The principle of reducing the principal is simple. By paying a little more consistently you reduce the amortized interest and trash the mortgage years earlier. But be careful.

The only weekly mortgage to get is one whereby you make 25% of the normal monthly payment every seven days. In the course of a year you’ll have proferred the equivalent of one extra monthly payment, but done it in a fashion that reduced the accumulating interest more rapidly. This is not an onerous thing, and shouldn’t prevent you from being virtuous, continuing to brim your TFSA with yummy assets.

(c) Make it deductible.

Americans can benefit from writing off mortgage interest from taxable income. So can you.

Lots of people have mortgages and investment portfolios concurrently. If that’s you, consider cashing in your financial assets to trash your home loan. Next, borrow against your house in the form of a secured HELOC (you can get 65% of the equity as a line of credit and other 15% as an amortized loan) and invest the money, buying back your ETFs, real estate trusts and bonds.

Now, once again, you have an investment portfolio, a house and a mortgage. But this time 100% of the interest on your home loan is deductible from your income for tax purposes. If you financed it with a home equity LOC, make interest-only payments, so every dollar spent will reduce your income tax bill.

You can’t control the reckless, myopic self-interest of others. But you can protect yourself when they blow up. You might even enjoy it.

238 comments ↓

#1 North Burnaby on 03.15.15 at 2:15 pm

There are mixed reports as to whether houses in Vancouver rose or fell in value in Feb 2015..

#2 T.J.BONES on 03.15.15 at 2:22 pm

Sir Garth: i don’t enjoy any debt.

#3 GTA Engineer on 03.15.15 at 2:28 pm

Garth,

Paying off that 3.5% mortgage *is* the equivalent of getting 5% returns. Putting lump sums against the mortgage reduces the interest paid in subsequent payments (and, correspondingly, increases the principal paid down) so the return is there. Whether the home is depreciating or not is immaterial to the discussion. Putting lump sums against the principal saves interest, building equity faster, and ultimately is the equivalent of an investment return.

Secondly – trashing your mortgage and replacing with a HELOC isn’t quite the nirvana you may be communicating. Common mortgages are approx. 2%, and HELOCs are 3.35% (prime+0.5). You’re replacing 2% non-deductible debt with 3.35% deductible debt. That 3.35%, assuming you’re in a 40% marginal tax bracket, becomes effectively 2% (3.35%*0.60) – effectively the same as the mortgage. Not worth the time for most people to set this up..

Only a weekly-pay mortgage has an effective and continuous reduction in amortized debt. Lump sum annual payments are far less effective in building wealth than a portfolio held within a tax shelter. As for a deductible mortgage you neglect the fact that capital is removed from non-producing equity and transferred into a nicely-producing portfolio, all the while reducing the income tax you pay. Stick with engineering. — Garth

#4 Squirrel Meat on 03.15.15 at 2:32 pm

Germans solved that problem…..

http://news.nationalpost.com/2015/03/13/hamburgs-world-changing-invention-when-peeing-in-public-watch-out-for-walls-that-pee-back/

#5 JO on 03.15.15 at 2:39 pm

Look for at least one more rate reduction and should oil be in the 30s and gold in the 900 s in August as is very likely, you will see Canadian QE by September or October as they desperately try to keep the ponzi alive. A few years ago the BofC analysts published an analysis on QE and concluded that it had mixed results and high risk. That won’t stop the radicals running the show from trying to save this corrupt system.
We live in creditism, not capitalism.
No matter what they do, it is a matter of time before the housing market tanks.
JO

#6 OttawaguyRenting Worried but not too worried still a worrier but look on the brightside on 03.15.15 at 2:40 pm

Sign things are out of control –
Open House in my hood –
http://www.royallepage.ca/en/property/ontario/ottawa/49-spruce-st/2867054/mls944462/

$459K

I would say this is listed 100K above market “VALUE”
Reason being?
The lady that owns it bought the SFH for $1M after it sat on the market for 4 months with price reduction.
NOW
she wants bigger money for this spot.

THIS is WHY people drive fast. :)

#7 H on 03.15.15 at 2:42 pm

QE 4.

Unveiled Wednesday.

#8 Corey J on 03.15.15 at 2:47 pm

Everyone knows that you need to piss parallel to the substation fence.

If you don’t now you do!

#9 Insulation | Realties.ca on 03.15.15 at 2:52 pm

[…] Source: http://www.greaterfool.ca/2015/03/15/insulation/ […]

#10 LL on 03.15.15 at 2:52 pm

Squirrel meat – It’s probably works for dogs too!

No more problema! :)

#11 Babblemaster on 03.15.15 at 2:57 pm

Rates are NOT going up. Wish they were, but they’re not.

#12 Mike T. on 03.15.15 at 3:05 pm

#258 46 and 2

Good answer.

I would have accepted ‘after their DMT escapades at Area 52’ as well.

#13 Broke Dick on 03.15.15 at 3:08 pm

When Bandit and I come to a street corner in small-town Nova Scotia, any oncoming vehicle stops. When we get to a corner in Toronto, I swear the cars speed up. It speaks volumes about the two societies.
++++++++++++++++++++++++++++++++++++
Exactly! This city is full of pricks!
That is why over the next year or two I plan to sell my Etobicoke bungalow and move to the Niagara region. I’m thinking Welland, west side. My bungalow should net me $650,000 after all fees and with that I can purchase a comparable home, fix it up the way I want, for $250,000 and invest the difference.
The reason I’m thinking Niagara region, or more specifically Welland, is because I want to be somewhere that has more of a small town feel, a city/town that is not too big or too small, it’s climate is about as good as you are going to get in Ontario and it is close to the border.
So my question to all is do you know of another south Ontario city that I should be considering and does anyone have any thoughts about Welland.
Thank you all.

#14 Porsche on 03.15.15 at 3:09 pm

#6

Half a mil for 1/12 of an egg carton

Come on Canada…. give your head a shake.

#15 GTA Engineer on 03.15.15 at 3:11 pm

As for a deductible mortgage you neglect the fact that capital is removed from non-producing equity and transferred into a nicely-producing portfolio, all the while reducing the income tax you pay. Stick with engineering. — Garth

———-

The deductible mortgage example in your blog post described sell existing investments and rebuying them with home equity. It didn’t suggest using any additional home equity for additional investments. If that’s factored in, then yes I concede you have a point – you can do better with your equity in a balanced portfolio than sitting as dead equity.

However, if we’re just talking about restructuring investments to make interest tax-deductible (as your blog post described), a 40% marginal tax rate is the approximate break-even point with today’s mortgage and HELOC rates. If your marginal rate is lower than this, it’s better to stick with the mortgage since the higher interest on the HELOC won’t be compensated by the tax deduction.

————–
Only a weekly-pay mortgage has an effective and continuous reduction in amortized debt.
————–

This is not specific enough to be accurate. Accelerated weekly *or* biweekly has a benefit over non-accelerated weekly/biweekly/monthly payments. However, accelerated weekly has a benefit of just about a single weekly payment over the course of the mortgage – hardly “effective” or “continuous”

#16 GTA Engineer on 03.15.15 at 3:13 pm

I should have said in the previous post:

However, accelerated weekly has a benefit *over accelerated biweekly* of just about a single weekly payment over the course of the mortgage – hardly “effective” or “continuous”

#17 Squirrel Meat on 03.15.15 at 3:16 pm

Is there anything not found on the internet?

Dog.
https://www.youtube.com/watch?v=N8fwtkC5UJU

Man.
https://www.youtube.com/watch?v=iwKlFkX65Zs

#18 Squirrel Meat on 03.15.15 at 3:18 pm

Excessive debt explained.

“There are three kinds of men. The ones that learn by readin’. The few who learn by observation.
The rest of them have to pee on the electric fence for themselves.”

― Will Rogers

#19 H on 03.15.15 at 3:23 pm

Wednesday at 2pm.

She signals to raise, this will be the investment for the next 5 years of biblical proportion.

SPXU

(Short S&P 500)

As corporations can no longer get 0% loans to buy back shares, to drop the float, to raise EPS, the S&P will get whacked.

Add in the USD which will create further pressure on the profits, the SPXU will benefit in Spades.

#20 not me on 03.15.15 at 3:24 pm

While your advice may be sound, do you honestly think that people who can’t scrape 25% for down payment are going to have $60K sitting in TFSA or anywhere else for that matter? Most buy only because they can qualify for the minimum required payments. If they could put away more money they would have done it and avoided the ‘need’ for high mortgage in the first place.

It requires discipline to not spend every extra $ on crap that is not needed. But how many times do you see that extra x-mas bonus or performance bonus being used towards reducing debt, saving or investing? More $ = more new toys because ‘we only live once’.

This blog is not for ‘most people.’ It is designed to protect you from them. — Garth

#21 46 and 2 on 03.15.15 at 3:31 pm

Just looked at my last month’s bank statement and made the mistake of getting cash out of another banks machine ($3.00 transaction fee)….seems to me the charters should forget about lending money and just accept deposits and hose all Canadians and retailers with service charges. No risk, all upside, bank machine fees are borderline illegal (if averaged out)….life’s good.

#22 The empty caveat on 03.15.15 at 3:41 pm

One little thing about Garth’s wise advice — by all means have the invested money in liquid form (that is, available) at term day, if you risk being underwater should the price of the asset go south.

I’d rather pay down OR invest in high-liquidity stuff only until I am safely in the black even in the face of a 25% price drop.

#23 The American on 03.15.15 at 3:49 pm

At #11: Babblemaster, rages will assuredly be going up in the U.S. When Fed pushes them up no later than June this year. GUARANTEED. Now, having said that, if rates don’t go up in Canada, then Canada is screwed royally. Guaranteed. If rates do push up in Canada (and I’m willing to bet my left nut on it), then Canada is screwed. It’s a bleak outlook for the Canadian economy for about a seven years to a decade… at least.

#24 The American on 03.15.15 at 3:50 pm

Rages = rates (from my previous post). Love autocorrect. Ugh.

#25 Freedom First on 03.15.15 at 3:54 pm

The last paragraph sums up my way of seeing things very well.

I do try to help people who ask for it, but as Garth and many of the Blog dawgs know, everyone wants financial security, but few are willing to change their ways to achieve it.

#26 JO on 03.15.15 at 4:03 pm

#11- rates WILL eventually move up regardless of what the BofC wants. Not this year in Canada but sooner rather than later
They do NOT control rates. The BofC only influences the short term rates and they hope/expect their actions to filter through the yield curve. We are more likely to face sharply higher rates in 3-5 years due to loss of confidence in government to pay back the incredible debt load as the debt fuelled economy struggles and taxes do not bring in enough. This is much more likely than inflation driven rate increases

So go ahead and play the great Canadian roulette game where the bond market will win sooner rather than later

No doubt by 2020 the world will come to realize that government bonds are NOT “safe” or low risk

JO

#27 Harbour on 03.15.15 at 4:05 pm

The Dot-com Bubble

By early 2000, reality started to sink in. Investors soon realized that the dot-com dream had devolved into a classic speculative bubble. Within months, the NASDAQ stock index crashed from 5,000 to 2,000. Hundreds of stocks such as Pet.com, which once had multi-billion dollar market capitalizations, were off the map as quickly as they appeared. Panic selling ensued as the stock market’s value plunged by trillions of Dot-com Bubble dollars.

The NASDAQ further plunged to 800 by 2002. One former high-flier, Microstrategy, slid from a lofty $3500 per share to a pitiful $4 per share, Cisco declined 86%, Amazon went from 107 to 7 dollars per share, Nortel accounted for more than a third of the total valuation of the TSX, employing 94,500 world wide went from C$124 to C$0.47 and bankrupt.

The U.S. economy experienced a post dot-com bubble recession, which forced the Federal Reserve to repeatedly cut interest rates to stop the bleeding. Hundreds of thousands of technology professionals lost their jobs and, if they had invested in tech stocks, lost a significant portion of their life savings.

Needless to say, the New Economy theory was proven wrong. What is sadly interesting is how bubbles will continue to occur in the future. When they do occur, foolish investors will continue to convince themselves that “this time is different!”

#28 The American on 03.15.15 at 4:08 pm

This sums it all up nicely…
http://www.mybudget360.com/canada-housing-bubble-canadian-real-estate-bubble-set-for-bust/

#29 Retired Boomer - WI on 03.15.15 at 4:12 pm

“Be a DEBT contrarian. Don’t borrow.” Smart Advice.

Paying down the credit card debt (highest interest) first is probably wiser than throwing a few extra bucks on a mortgage, but you probably knew that already.

There is a strategy called the ‘debt snowball’ where you pay off the smallest debt first, then the next smallest, adding the freed up money to the debt snowball. This works I used it 20 years ago.

Yesterday somebody had a comment on having FU money in case you get turfed. Wise advice, especially in these times.

A little stash of cash gives you that FREEDOM, it need not pay all the bills, but gives you a bit of breathing room.

Things getting visibly slower here. Idle Frac Sand cars building up on area sidings. Fewer want ads locally. The oil patch woes spread to cow country. (sigh)…

#30 Happy Renting on 03.15.15 at 4:13 pm

“Debt contrarian” – I like it!

——-

It’s taken more than a year, but I’ve come up with a less mundane nickname. I’ll start posting under “Interstellar Old Yeller” (and be prepared if this ever does become a dog blog.)

#31 Retired Boomer - WI on 03.15.15 at 4:15 pm

Rate Hike? Betting on Yellin not moving until Fall at the early, and then the token .25 move up.

#32 Suede on 03.15.15 at 4:22 pm

Does CRA care if that HELOC investment is in equity market ETF’s?

There has to be a reasonable expectation of dividends/interest income and not just capital appreciation I believe.

The question is do you have to prove this to them.

from: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/221/menu-eng.html

“Claim the following carrying charges and interest you paid to earn income from investments:”

“…most interest you pay on money you borrow for investment purposes, but generally only if you use it to try to earn investment income, including interest and dividends. However, if the only earnings your investment can produce are capital gains, you cannot claim the interest you paid.”

Yes, it qualifies for interest-deductibility. No test required. — Garth

#33 Moses71 on 03.15.15 at 4:24 pm

Rates won’t change significantly nor consistently until post election maybe to protect the cons?
Decreasing housing prices here in Calgary seems to benefitting those out priced in the market prior and not hurting anyone except those who count their wealth on their roof over their heads and those who overpaid and now need to split cuz of the job situation here. Too bad many haven’t diversified their “wealth” nor accounted for inevitable “balancing” in the economy.
After all, where in Canadian history did housing prices not decline and jobs/economy not recess? So this must be what “they” were talking about when “they” relay economic “cycles”? Ahhhhhhh

#34 Squirrel meat on 03.15.15 at 4:36 pm

And the beat goes on……

http://www.theglobeandmail.com/life/home-and-garden/real-estate/price-isnt-everything-in-a-hot-market-speed-counts/article23417345/

#35 Victor V on 03.15.15 at 4:39 pm

http://m.theglobeandmail.com/life/home-and-garden/real-estate/price-isnt-everything-in-a-hot-market-speed-counts/article23417345/?service=mobile

As for Mr. Centner in Toronto, he had never actually heard the term “bully offer” before, but agent Ronit Barzilay of Harvey Kalles Real Estate Ltd. advised the couple not to wait a week for the night scheduled for reviewing offers by listing agent Cailey Heaps Estrin of Royal LePage Real Estate Services Ltd.

The Centners didn’t know it but within hours the first bully offer had already been made at the full asking price. Owners Gina and Peter Schafrick turned it down. Typically, a “pre-emptive offer,” as real estate agents sometimes call them, comes with a large premium above the asking price so that sellers won’t be tempted to hold out for the offer night.

The Centners offered $1.9-million, or $105,000 above the asking price. The Schafricks quickly accepted.

Mr. Centner acknowledges that the deal didn’t come together without some angst. He and his wife never fight, he says, but that night over dinner she had to persuade him to push ahead. “We had a huge fight,” he says with a laugh. “I couldn’t wrap my head around it.”

#36 1drs on 03.15.15 at 4:43 pm

I don’t have a mortgage. I do have a balanced , diversified portfolio. What really concerns me is the federal government and the possibility that they will try to save the house horny by taxing my investment income to subsidize their mortgages. I believe that its only a matter of time before Stevie and his pals do this to keep the party going and hold onto power. If the Cons don’t form government , will either of the other two contenders resist the temptation to tax the savers or are we doomed because we are different from the rest of the herd ?

#37 Hot Albertan Money on 03.15.15 at 4:45 pm

Lots of people have mortgages and investment portfolios concurrently. If that’s you, consider cashing in your financial assets to trash your home loan. Next, borrow against your house in the form of a secured HELOC (you can get 65% of the equity as a line of credit and other 15% as an amortized loan) and invest the money, buying back your ETFs, real estate trusts and bonds.

Great post Garth, I’ve just bookmarked it for future reference.

Anyway, for the above scenario, is there a magic number that makes this move worthwhile?

Does it only work if your investments are more than your mortgage, or can (should) everyone do this regardless of the assets:mortgage ratio?

#38 mark on 03.15.15 at 4:48 pm

“63 square metres of the Australian dream. 1 bedroom and an external laundry and bathroom to remind you of colonial times.” Can Vancouver or Toronto beat this for stupidity?

http://www.idiottax.net/2015/03/mortgage-regulation-australian-style.html

#39 Obvious Truth on 03.15.15 at 4:48 pm

When I was a kid we rode our bikes recklessly all over Toronto. Preferred downtown.

Cars always took care. The only people who stopped us were cops. Asked where we lived and if our bikes were registered.

Not only were they registered but we had bicycle licences. From bike safety day done each year at school. Elmer the elephant showed up each year to make it happen.

They Told us to cool it a little and went on their way.

Bring back Elmer.

#40 Brydle604 on 03.15.15 at 4:49 pm

This documentary explains how the American home owner continued to get into debt to maintain their life styles, as the 1% continued to widen the gap in earnings.

http://ffilms.org/inequality-for-all-2013/

Robert Reich

#41 takla on 03.15.15 at 4:54 pm

Or,,,you could rent,throw away ALL credit cards,buy all consumeables with cash and the surplus $$ goes towards the portfolio/investments as you can afford them.
Avoid the middle man/avoid banksters and protect what excess free time you can cause the clocks ticking for us all..

#42 Irish Stew on 03.15.15 at 5:02 pm

Garth gives advice that makes sense, but diverting from it won’t kill you.

As noted above regarding the HELOC, it is the right thing to do – but if you don’t do it you can still live.

I enjoy the blog and thank Mr Turner for the advice.
If you don’t follow it that is your decision, as regardless what you do – you have to be accountable for your own funds.

#43 Ray Vasquez on 03.15.15 at 5:12 pm

To #11 Babblemaster

Canadian housing prices are not continuing to go up over the next 7 to 10 years at least.

Look at other economies that have a low inflation, disinflation, deflation, low growth, economic malaise, faster growing older population type scenario.

It is not going happen, too bad.

#44 Nemesis on 03.15.15 at 5:22 pm

“What can you do to insulate yourself?” – HonGT

#AvoidSurrey,Or… #InsistOnKevlarSiding…

[CBC] – Surrey drive-by shooting riddles house with bullets

http://www.cbc.ca/news/canada/british-columbia/surrey-drive-by-shooting-riddles-house-with-bullets-1.2995943

#SmallTownLife… #Ain’tWhatItUsedToBe,Or… #WTF?NoChetwyndChainsawMassacreThisYear!?!…

[CBC] – Chetwynd chainsaw carving competition could be on the chopping block

http://www.cbc.ca/news/canada/british-columbia/chetwynd-chainsaw-carving-competition-could-be-on-the-chopping-block-1.2995874

#45 markymark on 03.15.15 at 5:29 pm

KEY HIGHLIGHTS CANADA
Only 12% of Canadian housing analysts believe the decline in oil prices will result in a decrease
in existing house prices across the country.
A survey of Canada’s top real estate analysts and economists asked for their forecast on oil prices’
impact on Canadian resale housing values in 2015. Thirty eight percent of respondents indicated
that the decline in oil prices would not influence the value of Canadian homes. Only 31% felt Alberta
real estate would be negatively affected, while 12% felt the oil price decline would result in a drop
in housing prices nationally.
RBC Global Asset Management calculated that Canadian house prices may actually be 4%
undervalued.
A clear majority – 94% of Canadian housing analysts believe that two-variable valuation studies like
the Price-to-Rent Ratio, Price-to-Income Ratio, Price-to-Inflation Ratio, Debt-to-Income Ratio,
Average House Price in Canada versus Average House Price in America Ratio have limited predicative
power. RBC concluded that these studies have major shortcomings, but they believe the least flawed
method is a House Price to Carrying-Cost Ratio, which shows that the average home financed in
Canada with a variable-rate mortgage is actually 4% cheaper than it should be.
Nearly two-thirds of housing analysts in Canada believe there is less than a 5% chance of a major
housing correction over the next five years.
Real estate economists and analysts were asked what they thought the probability of a 20% drop
in Canadian resale house prices in the next five years (from year-end 2014 levels). Sixty three percent
of survey respondents felt there was less than a 5% chance the market would suffer from a major
correction between now and 2019.
The Bank of Canada and many others believe that there is no overbuilding in Canada.
Housing starts in Canada have been broadly in line with demographic demand according to the
Bank of Canada. As stated by Urban Futures, Canada needs 1.9 million new primary residential units
over the next decade, or approximately 190,000 units per year. Ten of the 11 forecasts for 2015
construction starts included in this report are forecasting activity below that level.
4 |

This data is from Ben Myers Fortress Real Developments, any comments garth?

Yes. Ben’s scared. — Garth

#46 Vanport on 03.15.15 at 5:34 pm

Hey Garth, what about a strategy for those who already own a house with no mortgage in a hot market like Vancouver/Toronto? I’ve been offered an insane amount on my home $2.5M+ and debating whether to sell and rent or keep on truckin

The only reason not to sell is because you expect more. Remember what happens to the greedy. — Garth

#47 John on 03.15.15 at 5:34 pm

To # 36 1drs:

I share your concern. I have a manageable mortgage, but most of my assets are in a balanced diversified portfolio. I’m terrified that the government, to “save” those that binged on houses that they couldn’t afford, will bail them out and people like us, who were responsible, will foot the bill. In some ways, I don’t blame those that are house horny – it seems that they’ll always win, no matter what. Remember that responsible people are a minority in this country and will always be outvoted by the irresponsible.

#48 Washed Up Lawyer on 03.15.15 at 5:36 pm

I have been dropping in and out of CBC’s Cross Country Checkup over the last hour because the topics are Canadian housing prices and debt.

It has been painful because of the obligatory, insufferable advertisement featuring the insufferable Peter Mansbridge.

I spent a lot of time in remote parts of Alberta in which my lifeline was CBC radio and I grew to love it. Now with the blogosphere, and this blog in particular, I can keep abreast of the real news (including Ebola and Building 7) without the claptrap. I do not listen to CBC radio anymore.

Thanks Garth and Dogs.

#49 46 and 2 on 03.15.15 at 5:53 pm

I have been dropping in and out of CBC’s Cross Country Checkup over the last hour because the topics are Canadian housing prices and debt.

It has been painful because of the obligatory, insufferable advertisement featuring the insufferable Peter Mansbridge.

I spent a lot of time in remote parts of Alberta in which my lifeline was CBC radio and I grew to love it. Now with the blogosphere, and this blog in particular, I can keep abreast of the real news (including Ebola and Building 7) without the claptrap. I do not listen to CBC radio anymore.

Thanks Garth and Dogs.
================
I will admit to missing the old CBC (radio). I felt it was one thing that kind of tied us all together as one.

#50 deductable on 03.15.15 at 5:57 pm

(c) Make it deductible.

———-

I love the idea of making the remaining portion of mortgage ($200K) tax deductible. I have over $500K LOC, based on the equity. I have been playing with the idea of using the LOC to invest, I would not use it for anything else.

Isn’t this basically the Smith Manouvre, though?

Absolutely not. — Garth

#51 clos on 03.15.15 at 5:58 pm

The heloc may make the most sense for tax deductions. BUT having a heloc make your mortgage a demand/ collateral mortgage. It puts you at risk that the lender will call the loan in at once, or make you pay to top up equity. Also makes it almost impossible to switch.

http://www.mortgagewisefinancial.com/mortgage-information/conventional-vs-collateral-mortgages

In the real world that won’t happen. If it did, pay the borrowing off with your liquid assets. — Garth

#52 AB Boxster on 03.15.15 at 6:00 pm

CBC Cross country checkup today.

Topic – Interest rates and price of housing in Canada.

One of the experts was a guy from a ‘credit counselling service.
His advice, since no one is saving anymore best to put as much money as possible into your home, condo etc as they are great saving instruments and will appreciate.

Whaaat!

#53 hank on 03.15.15 at 6:04 pm

Retired Boomer WI and Freedom First

Ok… Enough already with the self-congratulatory drama. Take a leaf out of SM’s book who tempers his successes with icky reality ..”The kid lost $15k today..” This is an impressive example of humble fatherhood; teaching and guiding his son in spite of the Jack-soaked demons with which he struggles. Or GT’s, who devotes hours of his time to public service despite his wealth. When the jowly wigheads won’t let him play in the oak laden halls of Canadian democracy, he hits the internet, continuing to serve.

However, the two of you act like a couple of healthy guys in a packed cancer treatment waiting room congratulating themselves out loud for not being in the same boat as everyone else sitting there. “Thank God I don’t have cancer, because I’ve done things right. I look after me. I am number one. I live an abundant lifestyle few get to enjoy. This won’t end well [for the rest of you]… blah blah…” I wonder if your respective successes have more to do with the era in which you happen to be born than actual financial acumen.

So… now that you both have everything sewn up, PLEASE TRY TO BE HELPFUL TO THE REST OF SOCIETY .. or at least, DON’T POST THE SAME Self-Congratulatory MESSAGE CONTENT OVER AND OVER. ENOUGH ALREADY!!!!! and for goodness sake, stop with the squirm-inducing sucking up, RB.

Please be sensitive to the nearly unsurmountable obstacles and trials facing others visiting here. Exhausted two-income parents struggling to keep their families intact. Divorced fathers servicing a life-time of debt for a house they have no right to enter. Mid 50s couples with no savings. Older women facing it alone. The freshly laid off. The young superbrights dwelling in the unfinished basements of student debt eyeing up splendent granite-lined promissory condos in YVR and GTA, completely ignorant to how far they will get sucked up the sphincter of financial abyss.

I’ve been reading this blog for going on 4 years now. You guys are both beyond annoying on this forum; that is, regarding your inability to connect with and advise anyone outside your cohort. Urging people in the above situations to Think Only Of Themselves And Their Freedom is so grossly insensitive. Would you really say that to the father with the autistic boy? Or to the post-menopausal check-out gal at Walmart with the bad hair-dye job? And promising them “It won’t end well,” is beyond cruel. Just hand them a rope already.

PS. Retired Boomer. If I read “this won’t/can’t end well,” once more at the end of your posts, I will gladly poke my eye out with a blunt stick; you are most welcome to help.

Ouch indeed. But no doubt, your ilk will rise to your defence.

#54 Love my Kia on 03.15.15 at 6:06 pm

Yes, I live in an ‘affordable’ community as well where life is on the slower side. With that being said, nobody takes into account the astronomical property taxes I pay to live in an ‘affordable’ home. Thunder Bay’s taxes for an affordable property are equivalent to that of a million + dollar crib in Vancouver. We have so much urban sprawl here that providing municipal services costs a lot more to service many areas that are laid out like semi rural locations. Estate sized lots are everywhere and its rare to find a building lot with less than 50 foot frontage. That along with being in the middle of nowhere to attract outside populations for conventions and special events add up to a perfect storm for taxpayers. There is no safe haven anywhere in this country for reasonable real estate even in those so-called affordable communities.

#55 batt519 on 03.15.15 at 6:13 pm

#13 Broke Dick
Check Paris ON. Not too far from anywhere that matters and it’s a very nice place.

#56 Whoo Whee! on 03.15.15 at 6:15 pm

Some bad aim, and there won’t be a third generation to learn why liquids + electricity are bad.

#57 Julia on 03.15.15 at 6:19 pm

I don’t know where in Toronto you guys live or work to make comments to the effects that we are all rude or “pricks”.
I have made Toronto my home for work reasons for 12 years now. Came here reluctantly but now, I would not leave this neighbourhood – if I decided to sell my house I could not afford another here but lets park that for now.
Most people are kind, personable and friendly. You can’t take a walk in the neighborhood without stopping every 5 minutes to chat.

Drivers being rude and not stopping? Would point out that often they are not from the area and are using our streets to bypass on their way downtown. Same for downtown drivers. A lot of mid owners do not even drive downtown.

Lets not generalize.

#58 BS on 03.15.15 at 6:19 pm

27:

Needless to say, the New Economy theory was proven wrong.

The New Economy theory wasn’t proven wrong. It was just the equities were in a bubble and too expensive by any metric. As it turns out the internet has had a profound effect on changing business and the economy. It was just the equities were so ridiculously over valued even those that were (and still are) successful industry leaders proved to be a poor investment at the time. After prices corrected the proven businesses became very good investments.

The same goes for real estate today. Most of the high demand areas today will continue to be desirable, we will still welcome immigrants and we will still need houses and condos for people to live but like the dot com bubble it does not justify paying any price because there will be future demand and the trend in prices is up. At some point that price becomes too high. With RE we passed that point a long time ago. At some point like the dot com stocks there will be a buying opportunity.

#59 Andrew Woburn on 03.15.15 at 6:21 pm

My uncle used to have a friend in a small town who ran a gas station. A neighbour’s dog began peeing every day on one of his gas pumps. The neighbour utterly refused to listen to his complaints about the dog’s nasty habits.

One day my uncle was visiting the gas station. The dog approached as usual. “Watch this”, said the owner.

After his usual ritual sniff, the dog cocked his leg and began to relieve himself on his favourite pump. He immediately began howling and continued for at least 60 seconds until his bladder ran dry.

As the dog ran away, my uncle saw that his buddy had wired up an electric cable to a steel plate attached to the pump base. The dog never came back.

#60 james on 03.15.15 at 6:23 pm

#48 WUL

I listened to CBC too.

Benny Tal sounds a little more realistic than before, saying he thinks prices “will not go up from here.” Any correction will be a “soft landing” that may take 10-15 years and we will barely notice it.

He also said that the 163% debt to disposable income ratio is not meaningful and that the condo market is a “stabilizing force” in places like Toronto.

He wants secondary lenders to be more regulated, but says they are a very tiny part of the real estate market now.

All in all, Benny seems to think we are just fine.

And he has a much more sultry, come-hither voice than Garth does.

So…..this sheeple is convinced, I’m goin’ with Benny…………

Benny works for a sultry mortgage-granting bank. I don’t. — Garth

#61 debt on 03.15.15 at 6:25 pm

With debt levels at record highs even if the boc doesn’t ever raise rates don’t you think the banks will start upping rates on their own in order to keep profits increasing. Garth any comments?

Fixed rate mortgages will certainly increase, as they are determined by bond yields. The prime is linked to the BoC rate. — Garth

#62 Julie K. on 03.15.15 at 6:26 pm

After my blue-collar grandparents passed away (mid/late 90’s), the “kids” were left to deal with the estate including a garage sale and ultimately the sale of the family home.

During this process, close to 200K of plain old fashion dollar bills stashed in plastic Safeway bags was found tucked into the studs of the unfinished basement walls, between shelves of canned beets and pickles.

Rumors had been swirling in the family that this was exactly what the old folk were doing with their $$$ – but the (grand)parents never spoke of the practice definitively to the kids.

My grandparents did not trust banks, governments or financial advisors. Perhaps a behavioural by-product of living through the dirty 30’s.

Starting to think maybe, just maybe, they were on to something.

Like what? Depreciating currency? — Garth

#63 Interstellar Old Yeller on 03.15.15 at 6:32 pm

#46 Vanport on 03.15.15 at 5:34 pm

Geez, $2.5M? Hello, retirement! Take the money and run!!!!!!

#64 BS on 03.15.15 at 6:34 pm

46

Hey Garth, what about a strategy for those who already own a house with no mortgage in a hot market like Vancouver/Toronto? I’ve been offered an insane amount on my home $2.5M+ and debating whether to sell and rent or keep on truckin

I big part of the answering that question is what is your net worth? If you have a net worth of $10 million or more and like the house then maybe staying is no big deal. But, most people in your situation have almost all of their net worth in the house and do not have a significant portion in other liquid assets. If that is your situation of course you should sell.

If you knew someone who had $3 million total net worth would you advise them to buy a $2.5+ million house right now? Of course not. That $2.5 million is enough of a nest egg rent a similar house and retire with the left over income from investments.

#65 Calgary Renter on 03.15.15 at 6:39 pm

So Garth is that 10% per year guaranteed? Not likely. I thought it was only the unregulated realtors that promised such things. If that’s the case then Dow 30k is right around the corner. You don’t honestly believe that will happen without the fed doing QE 4,5, and 6 do you?

The current bull market is already 6 years old and valuations are stretched. I’d say a serious correction and under performing assets should be expected. So with every single asset class overpriced, no matter where you put your money it will be at risk.

So I have a couple questions for you.
1. Would you suggest any sort of hedge for currency risk? If the Canadian dollar recovers it could pretty much off set any gains on US equities.

2. Do you believe in selling calls to buy puts in order to protect against a correction?

I know your typical response is diversification but what about limiting exposure at a time like this. I don’t know anyone that wants to sit back and watch gains evaporate. I’d like to hear something more than the same old diversification answer. Thanks.

Then go elsewhere. It works. And that’s precisely why a properly-weighted portfolio is designed to mitigate risk and provide more dependable returns. BTW, nowhere have I ever promised specific returns. All one can do is look at past performance and judge today’s conditions. The portfolio I favour has returned 7.4% over the past decade. If you think the next decade will be worse, I feel sorry for you. — Garth

#66 Andrew Woburn on 03.15.15 at 6:39 pm

Garth is right on about the comparison of stress levels in big cities to towns. One quick test is the speed with which people behind you lean on their horns when the traffic light turns green. In Vancouver, this seems to be after about 10 nanoseconds and happens at least once every time you drive downtown. After two years in Nanaimo, it has happened to me once and I’m betting it was someone from Vancouver racing for the ferry.

In Vancouver if people smile at you in the street and say hello, you assume they’re panhandlers. Here they are just average people being friendly. I’m not even sure we have beggars her as I have never seen one.

#67 BS on 03.15.15 at 6:45 pm

60:

Any correction will be a “soft landing” that may take 10-15 years and we will barely notice it.

A correction that lasts 10 to 15 years will be noticed by home owners who want to sell. Those who wish to move or must move will find out they are stuck in their house located in the wrong city or their condo which is too small because their down payment and equity paid off to date has evaporated and they need to cough up 6 digits just the get out.

When prices are rising those closing costs, property purchase taxes and real estate commissions seem insignificant when you want to sell. When prices stop rising they are a killer. When combined with even a soft landing of eroding prices over 10 to 15 years you don’t think that will be noticed? Good luck.

#68 kommykim on 03.15.15 at 6:52 pm

RE: #62 Julie K. on 03.15.15 at 6:26 pm
Starting to think maybe, just maybe, they were on to something.

Gawd. Being a gold bug would have been smarter. At least if the house burned down, the melted bars would still be worth something.

#69 Andrew Woburn on 03.15.15 at 6:57 pm

#49 46 and 2 on 03.15.15 at 5:53 pm
I will admit to missing the old CBC (radio). I felt it was one thing that kind of tied us all together as one.
============

I agree. When I lived in Toronto it was the only thing that reminded me that Canada extended beyond Windsor and Kingston. Now I hardly ever listen. It just doesn’t feel the same.

#70 A Yank in BC on 03.15.15 at 7:03 pm

#19 H on 03.15.15 at 3:23 pm

Wow.. don’t get out much, do you. History has shown that betting against the S&P 500 has always been an extraordinarily bad bet, especially over such a long time period. Your advice is foolhardy, at best.

#71 Andrew Woburn on 03.15.15 at 7:04 pm

#26 JO on 03.15.15 at 4:03 pm
No doubt by 2020 the world will come to realize that government bonds are NOT “safe” or low risk
==================

We’re there already. Unfortunately, the global debt binge is based on supposedly bullet-proof sovereign debt now fraying at the edges.

“(Bloomberg) — Government debt can no longer be considered a risk-free asset for banks, and international regulators should consider changing the existing legislation, the European Systemic Risk Board said.”

Draghi-Backed Report Says Sovereign Debt No More a Risk-Free Bet

http://www.bloomberg.com/news/articles/2015-03-10/draghi-backed-report-says-sovereign-debt-no-more-a-risk-free-bet

#72 Piccaso on 03.15.15 at 7:06 pm

Groceries for single person today, everything I bought was on sale

tv dinner – 2.99
tv dinner – 2.99
pizza – 4.99
pizza 4.99
paper towel – 2.49
bread – 3.49
Jumbo cereal – 6.99
jumbo cheetos – 4.99
bag of rolos – 3.19
bag of rolos – 3.19
jam – 3.79
beef soup – 1.99
old spice – 3.99
coffee cream – 2.99
6 diet coke – 3.69
2 liter milk – 4.65
————————
$63.23

We care, why? — Garth

#73 Habs76-79 on 03.15.15 at 7:08 pm

#11 Babblemaster.

It may not matter if rates go up or not. Odds are over the course of a mortgage they will though. But if you have too much debt, mortgage debt being a killer as well as maybe taking on too much other debt, HELOC’s, too large of car loans, credit card debt etc. even if rates stay low you can still be screwed if you must manage said debts with multiple incomes, say a wife and husband combined incomes to just tread water. Or if you are single having to take on too many hours or jobs just to keep afloat.

If one or more of you lose a good job and have to settle for a lesser job, if one or the other of you get sick and must quit a job, if due to one of you being sick the other must quit a second job to be at home, or if one or both of you must come to the aid of a parent who may be sick or near broke due to their issues, YOU ALL CAN STILL BE SCREWED! regardless if interest rates stay low or not.

If you have a mortgage that is under water, good luck paying it off by selling your house. Low rates or not.

Simply this. living beyond one’s means often happens in life for most. Living beyond ones means for much too long and much too high above one’s means will mean a financial and likely emotional, relational train wreak coming your way.

Garth notes diversification, he talks of the toxicity of too much and wrong kind of debt. His words come for free to each of us, we all should than him.

CASH (incl. real, growing investments) = FREEDOM
CREDIT and it being DEBT = Obligations.

Neither the two shall meet.

Proper credit may have its place in one’s life. But even at near zero interest rates it’s still an obligation and that takes from your financial future and that includes a mortgage on a primary residence.

#74 4 AM Sunrise on 03.15.15 at 7:11 pm

In Quebec, if a car and I (a pedestrian) are approaching a corner, the car will ALWAYS speed up. I see it as a courtesy – the faster they get out of my way, the easier it will be for me to cross, and the faster they get to where they’re going. Win-win. This only happens on quieter secondary streets; they still obey traffic laws on the main streets.

#75 Hank on 03.15.15 at 7:12 pm

#59 Andrew Woburn on 03.15.15 at 6:21 pm

WTF!!!!??????

Your uncle is a total a$$hole to stand by and watch that happen. Cruel beyond words.

Hankering to join FF and RB in the ol-timer insensitive club?

#76 Frankie D on 03.15.15 at 7:14 pm

I agree with this entire post, however a couple of weeks ago you mentioned getting a HELOC for investing against your mortgage wasn’t a good idea for most people. Who should and who shouldn’t be taking this advice??

If you are upset by short-term volatility or cannot afford temporary loss, don’t borrow to invest. — Garth

#77 Mark on 03.15.15 at 7:18 pm

“Isn’t this basically the Smith Manouvre, though?

Absolutely not. — Garth

This comes up a lot. And I still can’t reconcile how Garth can be so against the “Smith Manoeuvre”, but write a piece that effectively advocates a form of leveraged investing which is, at least to my understanding of the so-called “Smith Manouevre”, identical.

Please do explain further. Because lots of us are just scratching our heads on this one. Of course Smith advocated literally carrying the leverage to one’s grave, which is fairly problematic. And a few other defects in his philosophy were present. But what really is the difference between what is advocated in this post, and what Smith advocated??

“Does CRA care if that HELOC investment is in equity market ETF’s?

There has to be a reasonable expectation of dividends/interest income and not just capital appreciation I believe.

There could be an argument made that certain ETFs, particularly those which, by design, exclusively hoard Gold/Uranium/Silver/Oil/collectibles/etc., rather than invest in active businesses, would not be eligible investments for interest deductibility.

Of course, if one has any non-trivial exposure to such in one’s portfolio, worrying about deductibility is probably the least of their concerns.

The SM is dependent upon investment returns to afford loan payments. I have never advocated that as it does not factor in risk and volatility. A simple ax-deductible borrowing made for investment purposes has nothing to do with Smith. — Garth

#78 Sue on 03.15.15 at 7:20 pm

#54 Love my Kia on 03.15.15 at 6:06 pm

Thunder Bay? Well your taxes are probably only a few hundred dollars more than mine (out in the unfashionable part of the Eastern Spiral Rim of Ontario) with comparable property prices but you do have a bus service.

#79 3s on 03.15.15 at 7:21 pm

In Sydney, Australia if you indicate to change lanes the other cars will immediately speed up and close the gap, the FOMO (fear of missing out) is palpable – even if it means missing out on a bite out of a stinking steaming turd.

I wonder if this is a common cause – read and weep…

http://www.macrobusiness.com.au/2015/03/tale-one-first-home-buyers-success/

#80 Balmuto on 03.15.15 at 7:22 pm

Very interesting G&M article this weekend on the shale oil business:

http://www.theglobeandmail.com/report-on-business/deep-in-the-heart-of-the-texas-oil-boom/article23461734/

The killer paragraph is this one:

“From virtually no production five years ago, the Eagle Ford now pumps out 1.7 million barrels a day – a stunning growth record propelled by years of high crude prices and advances in technologies such as horizontal drilling and hydraulic fracturing. By comparison, Alberta’s oil sands sector produces just over two million barrels a day.

From zero to another Alberta oil sands in five years – and that’s just one shale formation. Any wonder why the price of oil is where it’s at now?

And as I’m typing this, WTI has taken another leg down to a $43-handle. Look out below.

#81 Sue on 03.15.15 at 7:29 pm

#4 Squirrel Meat on 03.15.15 at 2:32 pm

On the subject of hydrophobic pee-repellant. You can buy ‘Never Wet’ from Home Despot. It’s fabulous for running shoes :-)

Contrary to what my critics believe, this is not a pee blog. Thank you. — Garth

#82 calgaryballoon on 03.15.15 at 7:35 pm

Falling home prices don’t help those that couldn’t afford them in the first place. That’s the conundrum. At least in Calgary it’s playing out that way. Why? Because the falling prices are on homes around 500k-800k and the over one million luxury market. If you’re a poor slob looking for a $200k-$250k condo, forget about it. People downsize and still need a place to live so the cheapest real estate is still ultra hot and flies off the shelf. So those at the bottom get no help from what’s happening now. If anything it’s worse because those downsizing are putting upward pressure on the 250k-350k market which is killing the little guy that isn’t an making big oil bucks or has to support a family on a single income etc.

Rents are also sticky at the lower end. Sure the $5000/month places are dropping. How is that helping Joe Blow with a disabled wife and a couple kids just struggling to make it month to month.

What do people that aren’t upper middle class or higher do? What’s some guy supporting a family on 40k/year going to do? The low interest rates are killing them because people on the low end can’t afford to borrow. The people that take the most advantage of low rates and borrowing money are the rich. Hence the rich get richer. This game is rigged going up and going down.

#83 Samantha on 03.15.15 at 7:37 pm

Let me start by stating that I believe we are in a huge RE bubble in Toronto and Vancouver. However some posters here naively think that there’s deflation going on in housing and in the general economy.

Unfortunately the cost of pretty much everything is going up, and fast. Here are some major expenses everybody has:

Shelter (cost of owning and renting both up significantly)
Food (huge increases across the board)
Clothing (up)
Insurance (up)
USD (up, up, and away)
The only exception is oil/energy but I’m not sure this will last much longer.

The thing that is dirt cheap is money, so everybody borrows well beyond their means.

Look at some of these recent detach sales in and around my neighbourhood. The houses I’ve listed below were selling in the $800K-$850 range (3 bedrooms) towards the end of 2011 (this is about 3 years ago):

248 Ranleigh Ave (25 x 148 Feet) – Bedrooms: 3 Washrooms: 4 – $1,355,000

290 Briar Hill Ave (25.5 x 133.25 Feet) – Bedrooms: 3 Washrooms: 2 – $1,315,000

301 Jedburgh Rd (25 x 125 Feet) – Bedrooms: 3 Washrooms: 2 – $1,305,000

It looks like a blow off top, but what do I know I’ve called the housing top for many Springs in a row now.

I pity the fools buying at these prices, but I’m not convinced it’s time to sell yet :).

#84 Squatter on 03.15.15 at 7:42 pm

#3 GTA Engineer:
trashing your mortgage and replacing with a HELOC isn’t quite the nirvana you may be communicating. Common mortgages are approx. 2%, and HELOCs are 3.35% (prime+0.5). You’re replacing 2% non-deductible debt with 3.35% deductible debt. That 3.35%, assuming you’re in a 40% marginal tax bracket, becomes effectively 2% (3.35%*0.60) – effectively the same as the mortgage. Not worth the time for most people to set this up..

Only a weekly-pay mortgage has an effective and continuous reduction in amortized debt. Lump sum annual payments are far less effective in building wealth than a portfolio held within a tax shelter. As for a deductible mortgage you neglect the fact that capital is removed from non-producing equity and transferred into a nicely-producing portfolio, all the while reducing the income tax you pay. Stick with engineering. — Garth
——————————————–
GTA Engineer, you are right. If people sell their investments and then rebuy them, they have NOTHING more invested. So this strategy only pays off if their tax bracket is over 40%. Stick with your good advice.

The engineer’s analysis depends on 2% mortgages, at a time when most people are at 3% or above. Audience stats also show a large number of this blog’s readers (strangely) are in the 50% tax bracket. So a loan at prime plus a half actually costs 1.675% which is half the burden of the non-deductible debt. For folks like this, it’s an option they might wish to consider. — Garth

#85 Piccaso on 03.15.15 at 7:42 pm

We care, why? — Garth

……………………………………………………………………….

Just saying…

What you been PREACHING on this useless pathetic blog since the loons dive

#86 Finland is FINNISH on 03.15.15 at 7:44 pm

Piccaso, nice touch with the diet coke. You just made me feel better about my diet :).

#87 Squirrel meat is best on 03.15.15 at 7:44 pm

#72 Piccaso on 03.15.15 at 7:06 pm

Groceries for single person today, everything I bought was on sale

tv dinner – 2.99
tv dinner – 2.99
pizza – 4.99
pizza 4.99
paper towel – 2.49
bread – 3.49
Jumbo cereal – 6.99
jumbo cheetos – 4.99
bag of rolos – 3.19
bag of rolos – 3.19
jam – 3.79
beef soup – 1.99
old spice – 3.99
coffee cream – 2.99
6 diet coke – 3.69
2 liter milk – 4.65
————————
$63.23

We care, why? — Garth
————————————

You forgot your veggies!! $10 head of lettuce missing. Mom is not gonna be happy.

#88 Squirrel meat on 03.15.15 at 7:45 pm

#81 Sue on 03.15.15 at 7:29 pm

#4 Squirrel Meat on 03.15.15 at 2:32 pm

On the subject of hydrophobic pee-repellant. You can buy ‘Never Wet’ from Home Despot. It’s fabulous for running shoes :-)

Contrary to what my critics believe, this is not a pee blog. Thank you. — Garth
——————————————
Hydrophobic paints and surfaces are very very cool…. and not just for pee!

#89 Piccaso on 03.15.15 at 7:53 pm

You forgot your veggies!! $10 head of lettuce missing. Mom is not gonna be happy
…………………………………………………………………….

Got enough veggies in the freezer, plus tv dinners have green beans,
lol

#90 Ret on 03.15.15 at 7:56 pm

#!3 Small and not so small towns in southern Ontario -Simcoe to Niagara.

Simcoe-14,000 people, small hospital,4-5 car dealerships, 10 miles from Port Dover’s beach, Walmart (huge), Superstore, a downtown core, kind of isolated from a major center.

Port Dover- Nice but not much there but the
basics.

Virgil- Between St. Catharines and Niagara-on-the-Lake in the heart of wine country. Close to border.

Brantford- A good size with lots of newer homes. 70 miles from border. The Casino killed the downtown area. Okay shopping. Maybe there is a focus for the town. Just don’t ask me what it is.

Hamilton-High crime rates, property taxes, home and auto insurance rates. Lots of police in the downtown core for a reason. Local government obsessed with getting a $850M LRT and the poor. A clapped out industrial town with fewer decent people left every year. More criminal activity in Westdale, Dundas, Ancaster and Stoney Creek every year. On-going bank, variety store and pharmacy drug hold-ups across the city.
Bottom line-Don’t!

St. Catharines-Really nice and cheaper than even Hamilton for comparable properties. Lots of shopping, cultural activities, two hospitals, nice people, Brock University, Port Dalhousie pier and carousel, Grape and Wine Festival, on the QEW- a much more stimulating place to live than Welland.

Niagara Falls- the passport thing for Americans coming over for the day, really hurt businesses. Seedy areas surround the downtown. Not much happening. A few newer surveys. Thousands of Torontonians down for the day every weekend in the summer add to the chaos.

Port Colbourne, Fort Erie, Dunnville, Wainfleet, Stevensville -Good news-‘cheap!” Bad news- “for a reason.” Nice people but very limited choices for an active lifestyle, shopping, medical needs.

#91 Juanito on 03.15.15 at 7:56 pm

#4 Squirrel Meat on 03.15.15 at 2:32 pm
Germans solved that problem…..

http://news.nationalpost.com/2015/03/13/hamburgs-world-changing-invention-when-peeing-in-public-watch-out-for-walls-that-pee-back/

————————
Kind of a neat article and a good use of hydroponic materials… Unfortunately, the whole concept is undermined by simply aiming at a 45 degree angle from normal to the wall.

#92 MSM-free Zone on 03.15.15 at 7:56 pm

“…..When Bandit and I come to a street corner in small-town Nova Scotia, any oncoming vehicle stops. When we get to a corner in Toronto, I swear the cars speed up……..”
_________________________

Calgary used to be the same in the early 80’s, at a time when the Deerfoot Trail ended south at Glenmore Trail.

Back then, freshly migrated from the nation’s capital to Alberta as one of Ralph Klein’s original ‘go home Eastern bums’, it was a little unnerving for me to walk up to any street corner on 4th St. NW and have four lanes of traffic come to a stop just for you.

Fast forward 35 years to 2015 where, in most major Canadian cities, red lights, stop signs, speed limits, and turn signals are merely only suggestions; a society that is now all about ‘me’ instead of all about ‘we’, where the worst of mankind now routinely float to the top in supposed positions of public trust (can you say PMO or OPP?)

Sad, truly sad.

#93 Vancouver..world class shithole on 03.15.15 at 8:03 pm

School audit?
Not sure why the Liberals are cutting back on schooling ..and wanting more uneducated immigrants coming in.
http://www.vancouversun.com/audit+Vancouver+school+board+projected+million+budget+deficit/10884285/story.html

Perhaps it has something to to with the huge increase of 20 cents ..to $10.45 an hour minimum wage?

Seems the rich are getting richer & the poor are getting poorer.
..and the liberal government seems to want an uneducated population ..to appease their appointed corporate friends?
..at the same time they do a quick 6 figure cash grab/pension for themselves (and their appointed friends before being voted out.)
A 40% increase shortly after they were elected?
Translink – 500% increase in wages in their first closed door meeting ..and they do not have to report to anyone.

Government would be happy with 45 people living in an 800 sq. foot shack..all taxpaying & paying 40% of their daily wages /time ..taking overpriced transit

Why isn’t anyone asking for an audit of Translink?

As a “litmus test”,.. check the Craigslist jobs in Vancouver, then check Seattle..
We’re going down a shithole fast!

#94 Dan on 03.15.15 at 8:04 pm

Oil just made a new 52 week low – it could be another brutal week for commodities with FOMC and a possible rate hike on tap.

#95 deductable on 03.15.15 at 8:08 pm

I love the idea of making the remaining portion of mortgage ($200K) tax deductible. I have over $500K LOC, based on the equity. I have been playing with the idea of using the LOC to invest, I would not use it for anything else.

Isn’t this basically the Smith Manouvre, though?

Absolutely not. — Garth

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

Ok.

My investment portfolios are mostly in registered accounts, it would not make sense to cash them in to trash the home loan.

What would be my best choice?

Thanks!

#96 rainclouds on 03.15.15 at 8:10 pm

#66
Do you do “the full Nanaimo” When u r over here in the big smoke clogging up downtown and generally pissing us off?

Coined in the 80’s for nanaimo mayor Frank ney . Comb over, checked pants, white belt and shoes, shirt unbuttoned a few from the top. Glamorous:-)

#97 Rabbit One on 03.15.15 at 8:12 pm

>#61
>Fixed rate mortgages will certainly increase, as they >are determined by bond yields. The prime is linked to >the BoC rate. — Garth

That’s is true. But what I wondered is : currently there is almost none risk premiums added on Canadian mortgage rates.

For example, low downpayment, second and third properties, type of jobs mortgagee are employed, Canadian economy forecast, etc etc.

All are getting less than 3% on 5 years fixed.

If considered “Risks”, lenders can (or should) go higher fixed mortgage rates based on risks, not merely based on Canadian long term bond rates.

I haven’t seen this happeningfor last 10 years or so here.

#98 Obvious Truth on 03.15.15 at 8:35 pm

#19 H

Everyone knows she will raise. June. September. Whatever. It’s likely baked in. The usd is your clue. Speed of that rise is a little scary. Just hope it’s overdone and comes back a bit.

Im on the other side. If you’re waiting for the announcement you are likely late.

Oil tanking. Again. Very good for most of the consuming world. I know that’s hard to believe. Also good for earnings.

Very bad for Canada. The speed of the decline feels unprecedented. A 30 handle before earnings and the write downs could be sobering.

#99 Karma on 03.15.15 at 8:38 pm

Yikes… depression and stress is looming in Alberta…

“That has prompted a jump in the number of people using the Leduc & District Food Bank, located about an hour south of Alberta’s capital.“Probably 80 per cent to 90 per cent of the people we’re seeing have been laid off,” Ms. Reynar, the food bank’s executive director, said in a telephone interview.”

http://www.theglobeandmail.com/report-on-business/economy/jobs/jobless-rate-climbs-economy-sheds-jobs/article23443790/

#100 meslippery on 03.15.15 at 8:39 pm

#13 Weather wise I am thinking Leamington, I know corn on the cob is up to three weeks sooner than York Region.
Also with the pull out of Heinz you might find a bargain.

#101 wallflower on 03.15.15 at 8:39 pm

Since June, I have airbnb’d, homestay’d, and about to wimdu, my way from Toronto to Thunder Bay to Vancouver to Sarasota by road and then to Budapest via flight. The latter is two weeks in the future so my comments might change but for now… having left the GTA, born in Toronto, multi-generation Toronto, and having been increasingly disappointed in many things about Toronto but getting to a point of clear and present disdain for the GTA, I now know empirically that my sense about Toronto was not a case of ennui or stress. Quite simply, Toronto sucks. Which is why I find the escalating RE prices fascinating. I propose that the value and substances of lives of Torontonians has degraded via house-sucking marrow, to the bones. It is so in the bones, it is so deep, the psyche of behaviour because of this, that it has become a zombie city. Rob Ford was iconic for this.
Everywhere I have been (including Vancouver), people communicate pleasantly, open doors for strangers, drivers remind me of Toronto circa 1968, … Vancouver offers so much more to delight that nerves can be defrayed more easily, and, contrary to what Garth has maintained, there is a clear and present vacancy rate in Vancouver (making it more drive-able and less squeezed/pressed) that is not clear and present in Toronto – I saw house after $5M house in the Van ‘hoods I walked in which nobody lived. Nobody. (These are not second homes for Canadians; they have large China tigers and other paraphernalia on their walkways.) If all that offshore money relocated their persons into those houses, along with families, overnight, it would be blood on the streets. If they stay away, it’s better for the traffic/people flow. The blog comments about Vancouverites being rude or drivers bad… well, you don’t know rude/bad. Check out Toronto. There is a significant difference. Thunder Bay should be a holiday destination for all Torontonians who would like to reclaim their joy of driving, if just for two days. Vancouver should be a holiday destination for all Torontonians who like to cycle on city streets (ditto for Sarasota and surroundings). And then, as for all those cities and towns throughout the USA, well, how can we possibly square the RE reality of Toronto with any of them? I sit in a 3B/2B 1957 concrete construction (solid) house on a 90 ft by 140 ft in the middle of a leafy urban neighbourhood that my host bought for $40K 3 years ago and renovated for ~$20K. World ranked beaches are less than 20 minutes drive. The largest mall built in the USA in the last 4 years is 5 minutes drive. Bicycle paths abound. Everybody speaks English and it is culturally diverse. Finally, there is never snow nor ice. There is nothing I understand about Toronto RE prices. There is nothing I understand about the lure of Toronto. I just spent 45 minutes on the phone with both GO and TTC people trying to square how to get from Pearson to a destination via transit infrastructure….. ha ha ha ha ha …. comedy material. And so, so, so sad. I read that the new Pearson-Union rail line will charge $27.50. That just cracks me up. What world class city has urban transit that charges that amount into the city centre?

#102 Blogbitch on 03.15.15 at 8:42 pm

Our tax accountant cautions against using a HELOC for investment unless you can prove beyond a shadow of a doubt that you have used it for investment purposes. Hhhmmm… This has me thinking…

Exactly as I stated. — Garth

#103 seeker on 03.15.15 at 8:43 pm

I too listened to cbc today. The baseball game analogy made sense, if 300000 homes are over a million dollars and only 30000 people in toronto make over 270,000 then a lot of people are over their heads in debt, only acting rich. Of course, a banker would say we are not in trouble, and promote the condo market, he made no sense but was given way too much air time.

#104 Smoking Man on 03.15.15 at 8:44 pm

Gartho, I have no idea how you keep writing, witty, Smart ass and informative posts 6 days a week.

How do you do it man, do you hit the bottle, first thing in morning.

Look at my gift, the writing that is, unless I prime my brain cells with some wine or JD I draw blanks. I can’t write simple sentences. I draw blanks.

I’m wondering, is this my brain screwing with me, a phyop of sorts. The bastard refuses to allow my thumb to type less it gets what it wants.

It’s almost like my brain is black mailing me. All afternoon was thinking about something cool to write, brain was saying not until I get my fix loser.

I made the bastard suffer all afternoon, but I caved, into first glass of wine.

That’s why I can thumb the above words.

I don’t how you do it..

#105 deductable on 03.15.15 at 8:46 pm

When we get to a corner in Toronto, I swear the cars speed up. It speaks volumes about the two societies.

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

Cars are speeding up, because in Toronto there seem to be an anti-green wave implemented when it comes to co-coordinating traffic lights.

It seems like city of Toronto programs the lights for cars to never make it to the next one in time, even with the maximum allowed speed on that section of the road.

It’s so bad, it can’t be accidental.

Must be some misguided “green” policy to force more people to ride one of the most pathetic subway system of the G7, at the expense of burning more gas at red.

The Toronto subway is so overloaded that every day during rush hours at Yonge and Bloor station about ten TTC stuff with police forms a cordon to prevent people getting pushed off the platform.

Accidentally this is the intersection where Toronto’s first “megatower” an 80-storey condo is under construction.

#106 Andrew Woburn on 03.15.15 at 8:47 pm

#75 Hank on 03.15.15 at 7:12 pm
#59 Andrew Woburn on 03.15.15 at 6:21 pm
WTF!!!!??????
Your uncle is a total a$$hole to stand by and watch that happen. Cruel beyond words.
=================

People were not nearly as exquisitely sensitive in the Fifties as they have become today. Men were men and dogs were dogs and PETA hadn’t been invented.

On the other hand the gas station owner could have just shot the dog in those days and no one would have complained except the owner. As the owner had refused to act responsibly he would not have got much sympathy.

I apologize that my little anecdote upset you so much. Perhaps a grief counsellor can help.

#107 Alberta is FINISHED on 03.15.15 at 8:48 pm

Oil under $44 now and doesn’t look good. Can’t wait until it’s under $40. Watch oil stock take a bath when they report next Q #’s. More lay offs are a coming. BTW no one wants you mad cow beef? Alberta is FINISHED.

#108 gut check on 03.15.15 at 8:54 pm

#13 Broke Dick
I’ve always wondered why no one likes Belleville. Did you look in to it and if so why isn’t it on your list? (Too far from the States? what’s with everyone wanting to be close to the States, esp. now)

Anyway, there’s also Gananoque. I’d say Kingston but the housing here is awful – absolutely not interesting or even that affordable anymore (for what you get). Also there’s an out and out assault on the senses going on five years now – machinery and noise EVERYWHERE, all the time.

#109 Alberta is FINISHED on 03.15.15 at 8:55 pm

Karma on 03.15.15 at 8:38 pm
Yikes… depression and stress is looming in Alberta…

“That has prompted a jump in the number of people using the Leduc & District Food Bank, located about an hour south of Alberta’s capital.“Probably 80 per cent to 90 per cent of the people we’re seeing have been laid off,” Ms. Reynar, the food bank’s executive director, said in a telephone interview.”

http://www.theglobeandmail.com/report-on-business/economy/jobs/jobless-rate-climbs-economy-sheds-jobs/article23443790/

____________________________________

These typical spend spend spend waste waste waste so called conservative voters go broke after getting laid off for a month from a $150k job? Really. Alberta RE is toast as many home owners will be bankrupt before they can sell. How do conservatives who spend and waste more money then libs and ndp combined call themselves conservatives? Just change name to CONs for the wasting, spending and stealing liars they have become.

#110 Souvlaki Express on 03.15.15 at 8:57 pm

When we get to a corner in Toronto, I swear the cars speed up.

—————

In Athens drivers actually try to maim pedestrians.

#111 Ralph Cramdown on 03.15.15 at 9:03 pm

#101 wallflower — “I read that the new Pearson-Union rail line will charge $27.50. That just cracks me up. What world class city has urban transit that charges that amount into the city centre?”

The fare is a stupid price. Any couple will find a cab cheaper and more convenient unless they live next to Union Station.

But tourists and travellers are soaked all over. From the main train station in Rome, you can get a train to the airport or one to Naples. Same price. 30km vs. 230km

#112 saskatoon on 03.15.15 at 9:06 pm

garth,

does this work for any loan?

say a LOC, instead of a HELOC?

In theory, yes. — Garth

#113 Squirrel meat on 03.15.15 at 9:07 pm

#91 Juanito on 03.15.15 at 7:56 pm

#4 Squirrel Meat on 03.15.15 at 2:32 pm
Germans solved that problem…..

http://news.nationalpost.com/2015/03/13/hamburgs-world-changing-invention-when-peeing-in-public-watch-out-for-walls-that-pee-back/

————————
Kind of a neat article and a good use of hydroponic materials… Unfortunately, the whole concept is undermined by simply aiming at a 45 degree angle from normal to the wall.
———————————-

Indeed…. but would a drunken urinator figure that out!

Cool materials finding their way into lots of uses.

#114 Ralph Cramdown on 03.15.15 at 9:08 pm

#102 Blogbitch — “Our tax accountant cautions against using a HELOC for investment unless you can prove beyond a shadow of a doubt that you have used it for investment purposes.”

I think the key is not to intermingle investment and non investment borrowing from the same account. Don’t use funds from the same HELOC (or credit card, or whatever) for both investment and consumption, or the CRA will disallow all interest deductions.

#115 Squirrel meat on 03.15.15 at 9:09 pm

#107 Alberta is FINISHED on 03.15.15 at 8:48 pm

Oil under $44 now and doesn’t look good. Can’t wait until it’s under $40. Watch oil stock take a bath when they report next Q #’s. More lay offs are a coming. BTW no one wants you mad cow beef? Alberta is FINISHED.
——————————————————

Isn’t it past your bedtime?

#116 Sue on 03.15.15 at 9:13 pm

#100 seeker on 03.15.15 at 8:43 pm
“I too listened to cbc today. The baseball game analogy made sense, if 300000 homes are over a million dollars and only 30000 people in toronto make over 270,000 then a lot of people are over their heads in debt, only acting rich…”

Isn’t it interesting that there is now media attention to the subject? Up until a little while ago it appeared to be just the Economist and the Hon. Mr. T’s munificent organ, (as illustrated above).

#117 meslippery on 03.15.15 at 9:14 pm

#108 Belleville, Kingston and Gananoque.
You think you are going east, but its quite a bit north as well. Windsor west and south.

#118 Retired Boomer - WI on 03.15.15 at 9:16 pm

#53 Hank

I am sorry you find my posts uninteresting, unhelpful, and a bore.
Well, that pretty well describes me. Yes, at 63 I grew up in different times than now, but not SO wildly different.
Didn’t bother finishing college, the dropouts already had the jobs, and the cost / benefit ratio I could not justify.

Having a big mouth, and not afraid to work, I went to work. Got married, had a family, still have that perfect bride after 41 years of good & bad times. Mortgage on 1st home 8.25% a few years later they were 18% for a time.
So, a boomer who competed in the biggest generation for a job, rising home prices, and wages that basically haven’t gone anywhere (other than inflation adjusted) since 1978.
We got to see our women enter the workforce, beginning in the 70’s, and our hours increased to ‘afford’ life. In the 80’s -90’s most of us expand our debts to ‘afford’ life. Oh, throw in educating the kids, and splitting time with aging and ill parents. Good job got exported. I worked in transportation all my life. Still LOTS of jobs there. Sandwich generation before the dam thing had a name.

So, Hank tell me what I ‘missed’ that is such a hell of a burden for your generation? I don’t now your age, education, income and frankly it doesn’t much matter.
Canada and the U.S. are very similar in many ways. Our respective governments screw us equally well, and the total tax take is remarkably close.
Neither country is in tall clover at present, we are recovering from the worst down turn since the 1930’s and not out of it yet. Still more recovery needed, and jobs!!

Sorry you find my posts so annoying – don’t read them

#119 Alberta is FINISHED on 03.15.15 at 9:27 pm

Shale oil is the reason why the oil sands will be shut down in an orderly manner. Alberta is FINISHED and I don’t say it because I want to be mean. I say it because it is reality and I know conservatives hate facts, truth and reality. Saudi Arabia which can produce oil the cheapest understands the new reality and is pumping oil out before it becomes unneeded. Canadian oil sands are now worthless. Technology has made oil sands worthless. Alberta is FINISHED.

http://www.theglobeandmail.com/report-on-business/deep-in-the-heart-of-the-texas-oil-boom/article23461734/

#120 Sydneysider on 03.15.15 at 9:39 pm

#79 3s

“In Sydney, Australia if you indicate to change lanes the other cars will immediately speed up and close the gap”

That is absolutely true.

#121 Godth on 03.15.15 at 9:50 pm

Where’s Utopia? We need Janus.
http://www.imdb.com/title/tt2384811/

#122 4 AM Sunrise on 03.15.15 at 9:50 pm

#101 wallflower — “I read that the new Pearson-Union rail line will charge $27.50. That just cracks me up. What world class city has urban transit that charges that amount into the city centre?”

Frankfurt airport to Frankfurt main train station: EUR 13, 11 minutes…still under $20.

That’s the most expensive place I can think of.

#123 Nemesis on 03.15.15 at 9:52 pm

#ForAndrew&Ralph… #”As for Nosty, Shhhhh….”

https://youtu.be/SR5BfQ4rEqQ

#124 Brydle604 on 03.15.15 at 9:53 pm

Investors in for ‘sticker shock’ with fee disclosure rules
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/investors-in-for-sticker-shock-with-fee-disclosure-rules/article23465629/

#125 Smoking Man on 03.15.15 at 9:54 pm

Nosty,

This may be the JD talking, in between my wife rationing my two wines per evening on a work night, not knowing there lies a treasure trove of Jack carefully hidden in my compound at camp long branch.

Putin, say he wants to come out with 911 or far fetched UFO disclosure, what would completely destroy the power structure thats hidden behind the curtains of Western power.

The MSM would simply egnor it, it hits ulternative media, but MSM would just call em tin foil.

So now he’s missing, the drama a curiosity builds.. He’s still missing..

Then the Kremlin calls a news conference, every Western MSM outlet would be broadcasting live at the press conference.

Then boom…. Something is disclosed.

Or, the teniticals of the machine are so vast, we find out he died.

My thinking, it’s either one or the other.

#126 Paul on 03.15.15 at 9:55 pm

Tell him boomer, you knock him down i’ll make sure he does not get up. Lol

#127 meslippery on 03.15.15 at 9:59 pm

#117 Retired Boomer WI
WI is that Wisconsin?
I too have worked in transportation all my life.

#128 BlackDog on 03.15.15 at 10:02 pm

@Wallflower re: @101

Here is a little hint.

If you actually expect someone to read your comments, then you need to use paragraphs. The reader needs a break between points to properly parse and understand whatever messages you are trying to convey.

Of course if you enjoy rambling on to yourself, and don’t care whether or not others read your jumble of words and sentences, then never mind what I said in the preceding paragraph.

#129 ruralrick on 03.15.15 at 10:06 pm

As a long time reader of Garth I would like to point out that there was a time (admittedly long ago) when throwing money at the principal on mortgage renewal was recommended by our esteemed host. Times change. We have to as well.

The cost of borrowing dropped and investment returns rose. It pays to be au courant. — Garth

#130 BlackDog on 03.15.15 at 10:06 pm

arghh… I meant #101 not @101

#131 rosie "moving forward" in the knowledge that, "this won't end well" on 03.15.15 at 10:10 pm

#13

Niagara Region is a nice place to retire to but don’t just move anywhere that’s cheap. Check out the real estate market throughout the area. Believe me, certain areas are cheap for a reason. If your coming from the GTA you will soon discover that the region lacks many of the amenities you may be used to. Do your homework.

#132 Rod Reynolds on 03.15.15 at 10:13 pm

I’m about to get mathy.

Scenario A: We own a house, and we independently (a bad bet made at Vegas, let’s say) owe 1M at an interest rate of 3.5%, amortized over 20 years.

Scenario B: We buy a house with a 1M mortgage with an interest rate of 3.5%, amortized over 20 years.

I think it’s clear that Scenario A and Scenario B are equivalent from a financial perspective. ie. when looking at our total net worth, in both cases we’re fully exposed to the equity changes in the value of our house and we have this cash flow stream we have to pay off, ie. it doesn’t matter that in scenario B the CF stream is paying down the house. If we focus on Scenario A, the existence of the house has no bearing on whether it makes sense to pay off the stream of cash flows (ignoring portfolio construction concerns…). So all we have to worry about is this stream of CFs that we owe. Now, we’re in Scenario A, and imagine we get a 1M bonus at work and we were told we could invest risk free at 5%. Well, if we take that, our after tax CFs would be sufficient to cover the CF stream we owe. OR we could simply pay off that 1M we owe with a lump sum payment. So it seems to me that since paying off the 1M with a lump sum accomplishes the same thing as we would accomplish if we were able to invest at a risk free 5%, then paying the mortgage off really is the same as earning a risk free 5%. What am I missing Garth?

#133 Suede on 03.15.15 at 10:18 pm

Wallflower,

Would it kill you to hit enter every few lines so Ppl don’t just skip your post. Eyes like time to relax.

#134 joblo on 03.15.15 at 10:20 pm

“That has prompted a jump in the number of people using the Leduc & District Food Bank, located about an hour south of Alberta’s capital.”

An hour south of the capital?
Yah, if your walking, another lazy Mop and Pail reporter light on research.

Unbelievable MSM?

#135 Cyclist on 03.15.15 at 10:21 pm

“Worse, mortgages are amortized – with interest
payments front-end loaded – as opposed to the simple
interest charged on consumer loans.”

My understanding is that canadian mortgages are compounded semi-annually, while consumer loans are
compounded monthly. Now if you are talking about the length of time to pay back the loan, then yes,
mortgages are front-end loaded compared to shorter
terms loans. An extra payment near the start has a
large effect on the remaining amortization. However,
the extremely low rates now available lessen the front-
loading effect.

In other words, I am correct. — Garth

#136 joblo on 03.15.15 at 10:25 pm

“That has prompted a jump in the number of people using the Leduc & District Food Bank, located about an hour south of Alberta’s capital.”

Yah, if your walking, try 15 minutes, another lazy Mop and Pail reporter light on research.

Unbelievable MSM?

#137 SWL1976 on 03.15.15 at 10:28 pm

Sir Garth, your free advice is awesome

I have often told Islanders from the wet, but not so wet coast this winter, that if they tried crossing the street like that in TO they would be run over in an instant

Also I flew from cow town to hog town on Friday on a plane that was less than 20% full. I also couldn’t help but notice the strange streaks in the sky after landing. I know full well the difference between contrails and chemtrails folks… for all the people still in disbelief

Anyways, as much as I disagree with it all…

Such a clever plan to fool the sheep

#138 Porsche on 03.15.15 at 10:30 pm

#118 Alberta is FINISHED

The Saudi’s are also shutting down shale… so much for that theory. lol

#139 Pooch on 03.15.15 at 10:34 pm

#106 Andrew Woburn on 03.15.15 at 8:47 pm

“…could have just shot the dog in those days…”
“Men were men and dogs were dogs… ”

Dog shooting? really? And that defines a man?

Would you shoot Bandit if he peed on your tree/post/bush?

#140 Pooch on 03.15.15 at 10:34 pm

..or just electrocute his penis instead?

#141 Brydle604 on 03.15.15 at 10:35 pm

Investors in for ‘sticker shock’ with fee disclosure rules

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/investors-in-for-sticker-shock-with-fee-disclosure-rules/article23465629/

#142 None on 03.15.15 at 10:37 pm

Mortgage payment frequency is irrelevant. The goal is to minimize the time between when you get paid and when it goes on your mortgage.

If you get paid monthly: the financially optimal method of mortgage payment is monthly NOT weekly.

Yeash – math people.

#143 Ralph Cramdown on 03.15.15 at 10:41 pm

#118 Alberta — “Shale oil is the reason why the oil sands will be shut down in an orderly manner.”

Bondholders are the reason why it won’t be.

Cash cost of oil sands extraction is still below most shale plays, excluding the capital costs to originally build the mine. If the operator can’t service the debt, the bondholders find themselves with a handful of sticky mess rather than clean paper, but they’ll do something with it.

That’s what happens when a sunk cost turns out to have been to big for an otherwise good idea. e.g. “Although the satellites and other assets and technology behind Iridium were estimated to have cost on the order of US$6 billion, the investors bought the firm for about US$25 million.”

Shale breakeven:
http://www.bloomberg.com/news/2014-10-17/oil-is-cheap-but-not-so-cheap-that-americans-won-t-profit-from-it.html

#144 Squirrel meat on 03.15.15 at 10:42 pm

#136 SWL1976 on 03.15.15 at 10:28 pm

I also couldn’t help but notice the strange streaks in the sky after landing. I know full well the difference between contrails and chemtrails folks… for all the people still in disbelief
—————————————————-

LOL, so what are they spraying, LSD? Could explain a lot about TO!

#145 gut check on 03.15.15 at 10:48 pm

#116 meslippery on 03.15.15 at 9:14 pm
#108 Belleville, Kingston and Gananoque.
You think you are going east, but its quite a bit north as well. Windsor west and south.

true – but come on. what are we talking here? you’d still need the same coat for the -20 in belleville or -17 in Windsor. I mean in all seriousness….

#146 Vivek on 03.15.15 at 10:49 pm

I have a question: if the Canadian Dollar has gone down -20%, does it mean that equity value and the loan value has gone down too, in contrast to the same amount being invested in US Index or International Index funds?

#147 Walter Safety on 03.15.15 at 10:53 pm

#13 , Welland ? You need to get out more.
Fergus, Stratford, Fonthill, Grimsby, Orangeville,Arthur,

#148 Leo Trollstoy on 03.15.15 at 10:56 pm

#101 wallflower

TLDR;

Textual vomit.

#149 Roial1 on 03.15.15 at 11:06 pm

Every thing that you had to say tonight is sooooo true.

But!

How do you tell when you are at a corner in Lunenburg ——–

IF YOU CAN’T FIND IT! The corner that is.

Twenty feet of snow will do that.

Life’s good out here in snowless Lotus land.

#150 deductable on 03.15.15 at 11:07 pm

The SM is dependent upon investment returns to afford loan payments. I have never advocated that as it does not factor in risk and volatility. A simple tax-deductible borrowing made for investment purposes has nothing to do with Smith. — Garth

————

What if you capitalize your investment loan payment?

#151 Fed-up on 03.15.15 at 11:14 pm

#105 deductable on 03.15.15 at 8:46 pm

When we get to a corner in Toronto, I swear the cars speed up. It speaks volumes about the two societies.

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

Cars are speeding up, because in Toronto there seem to be an anti-green wave implemented when it comes to co-coordinating traffic lights.

It seems like city of Toronto programs the lights for cars to never make it to the next one in time, even with the maximum allowed speed on that section of the road.

It’s so bad, it can’t be accidental.

Must be some misguided “green” policy to force more people to ride one of the most pathetic subway system of the G7, at the expense of burning more gas at red.

———————————————————————————

Yes it does seem as if we have “anti-synchronized” traffic lights all over the GTA.

I think the word Toronto is Iroquois for, “Impede forward movement”.

#152 kommykim on 03.15.15 at 11:18 pm

RE: #75 Hank on 03.15.15 at 7:12 pm
#59 Andrew Woburn on 03.15.15 at 6:21 pm
WTF!!!!??????
Your uncle is a total a$$hole to stand by and watch that happen. Cruel beyond words.

I suspect it’s a BS story. It would be a VERY stupid thing to do at a gas station. A little spilled gas, a spark from the electrically charged pump, and whoosh the owner’s business is gone.

#153 Ontario's Left Coast on 03.15.15 at 11:19 pm

SM 104… “Gartho, I don’t know how you do it…”

Where to begin?

Possesses actual intelligence
Actually has something to say
Brain not fried from self-abuse
Absence of narcissism
Not delusional
Has a command of the English language
Has a clearly defined agenda
Doesn’t believe he’s from another planet

Do I need to go on or does that cover it for you?

#154 meslippery on 03.15.15 at 11:21 pm

#87 Squirrel meat
Dont understand bought on sale 2 litres of milk $4.65
No frills 4 litres of 2% $3.97

#155 Squirrel Meat on 03.15.15 at 11:26 pm

#148 Ontario’s Left Coast on 03.15.15 at 11:19 pm

SM 104… “Gartho, I don’t know how you do it…”

Where to begin?

Possesses actual intelligence
Actually has something to say
Brain not fried from self-abuse
Absence of narcissism
Not delusional
Has a command of the English language
Has a clearly defined agenda
Doesn’t believe he’s from another planet

Do I need to go on or does that cover it for you?
———————————————————
Has two degrees in English literature it seems….likely helps.

#156 Squirrel Meat on 03.15.15 at 11:28 pm

#153 meslippery on 03.15.15 at 11:21 pm

#87 Squirrel meat
Dont understand bought on sale 2 litres of milk $4.65
No frills 4 litres of 2% $3.97
————————————-
I’m not the one with shopping list… that was picasso higher up ! lol

#157 Andrew Woburn on 03.15.15 at 11:35 pm

#96 rainclouds on 03.15.15 at 8:10 pm
#66
Do you do “the full Nanaimo” When u r over here in the big smoke clogging up downtown and generally pissing us off?
=============

No, we just moved from West Van and white belts haven’t been in style there since at least the eighties and, even then, only with the kind of stockbroker who flaunted gold chains and chest hair. Though I suspect, somewhere in a closet, Jimmy Pattison still has one or two of the really nasty check jackets he used to like.

#158 meslippery on 03.15.15 at 11:37 pm

# 144 Right now Windsor +5 Kingston -2

#159 The Greatest Fool on 03.15.15 at 11:39 pm

Re: “If 300000 homes are over a million dollars and only 30000 people in toronto make over 270,000 then a lot of people are over their heads in debt, only acting rich.”

The other explanation is that there are >> 30,000 individuals earning >270K.

I am skeptical of the validity of the income statistics. A massive influx of offshore money flows into YYZ daily and none of it is captured by StatsCan.

Also not captured is unreported self employment income (think of all those tradespeople earning cash).

Business owners’ retained earnings in their corporations are not captured.

The list goes on.

Doubtless some fools are indeed getting into debts that will bankrupt them if interest rates were to rise sharply (unlikely).

But the majority of homebuyers do not fall into that category. They are richer than you think.

#160 yurla on 03.15.15 at 11:44 pm

Funny you said that: “That’s the common wisdom from people who should really be fabricating eavestroughs instead of giving financial advice.” Because in eavestroughs business it is all the same. They fabricate them, slap them on the house with no plan or minimal understanding in mind of how it should work, and call them self’s professionals. It is ridiculous, eavestrough haven’t changed from 1970s but 45 years later there are very few people who know how to make them work. And there are many, many highly paid professionals doing that. And it is not that they are just brainless. Very often they are just careless. Show up collect the payment and never to be seen again.

#161 Max on 03.15.15 at 11:47 pm

#72 Piccaso above.

To lose some weight I went LCHF, it worked. More so, it seemed that if I avoided food which came in a box I’d still lose weight. Then I discovered boxed wines – apparently the exception to the above. I’m saving plenty compared to those VQA wines found here in BC – wine certified to not be rotgut. Besides boxed wine stacks more neatly than bottles.

As for housing I like my box to be affordable. Here in Tsawwassen, south of Vancouver, single family homes are now priced from $609,900 to $5,900,000. At least $100,000 higher than last spring. The cheaper one will be a tear down. The expensive one does not even have a view of the ocean. So I’ll continue to rent and avoid buying over taxed VQA BC wines.

And why is gasoline here at $123.9 when WTI has fallen to $44? At 119.2 liters per barrel, that just 46 cents Canadian per litre for the oil. The other 78 cents? – refinery, distribution and taxes. My guess is that taxes is more than 50 cents. Hard to vote YES on the upcoming plebiscite to let them increase the sales tax to 7.5% just to pay for more bridges which I don’t use. If only I could buy gasoline in a box. [sigh]

#162 BS on 03.15.15 at 11:49 pm

103: I too listened to cbc today. The baseball game analogy made sense, if 300000 homes are over a million dollars and only 30000 people in toronto make over 270,000 then a lot of people are over their heads in debt, only acting rich.

Most of those 300,000 houses over $1 million were bought prior to the bubble or for those that changed hands recently were bought by buyers who made gains from other properties bought prior to the bubble. In other words the people buying these houses today are mostly using proceeds from houses they just sold, plus some added debt, and it is not so much about income.

Bubbles work like Ponzi schemes where they need ever increasing valuations to continue. That’s why anyone who thinks this can go on forever is sadly mistaken, regardless of what interest rates do. Once it stops going up it quickly heads in the other direction because the market runs out of sellers making money who can buy the more expensive houses. It also gives first time buyers less urgency to get in now if prices are forecast to drop or even be flat.

#163 deductable on 03.15.15 at 11:53 pm

Yes it does seem as if we have “anti-synchronized” traffic lights all over the GTA.

I think the word Toronto is Iroquois for, “Impede forward movement”.

——————

It should be a criminal offense, the majors of the GTA should be legally responsible.

Traffic lights without programming green wave rob people’s time, their gas, the public’s investment in roads by sabotaging the capacity and put further stress on the environment.

#164 BlackDog on 03.15.15 at 11:58 pm

@Ontario’s Left Coast re# 152

Why don’t you just get on your knees while you are at it.

Having said that, I would agree with all but two on your list.

#165 Chris in Nanaimo on 03.16.15 at 12:18 am

#66 Andrew Woburn. ‘I’m not even sure we have beggars her as I have never seen one’

Take a walk down Commercial street…

#166 Andrew Woburn on 03.16.15 at 12:18 am

138 Pooch on 03.15.15 at 10:34 pm
#106 Andrew Woburn on 03.15.15 at 8:47 pm
“…could have just shot the dog in those days…”
“Men were men and dogs were dogs… ”
Dog shooting? really? And that defines a man?
=========

Of course not. That was sixty years ago and it was my uncle’s buddy, not me. They’re all dead now. Anyway, only bad people have guns, everybody knows that.

I regret I wasn’t there to save the poor wee doggie but I have since lived in enlightened times. Today if I were put in the position of that nasty gas station operator, I would of course lovingly wipe the pee off the gas pump every day without complaint and perhaps even knit the doggie a cute little sweater to keep it warm while it was improving my property.

#167 devore on 03.16.15 at 12:18 am

#46 Vanport

I’ve been offered an insane amount on my home $2.5M+ and debating whether to sell and rent or keep on truckin

How much would you pay for your house? Can you afford to buy your own house? No? Then you’re living in a house you cannot afford. Take your lottery winnings and move on.

#168 Nosty, etc. on 03.16.15 at 12:21 am

#124 Smoking Man on 03.15.15 at 9:54 pm — “So now he’s missing, the drama a curiosity builds.. He’s still missing … Then boom…. Something is disclosed.”

Guess all sides hold an element of truth, but one should keep in mind that Russia and Iran inked a deal a while back that Russia would build eight new nuclear power plants in Iran (remember Three Mile Island? A newer version).

The fact is, SArabia and Iran despise one another (two different sets of Muslims), and the Saudis have given Israel permission to use their airspace to attack Iran, and Russia would probably use that as an excuse to flatten SArabia. With the fracking industry being shut down in NAmerica, the oil barons would make out like bandits.

What happens to SArabia? Well, if Russia dispenses with them, it opens up a whole new range of possibilities for Iran and Iraq. China is also doing the same thing in Pakistan. Noddin’ Yahoo may be on his way out in Israel via their elections anyway, and even the Mossad said a week or so back that Iran did not have any nuke WMD.

This whole thing is being driven by the neocon – zionist movement, so Putin may well have bitten the big one, but no doubt he has left instructions of what to do. Don’t forget a new reserve currency — this world stuff is far more interesting than Cdn. RE!

#169 Piccaso on 03.16.15 at 12:26 am

#153 meslippery

Sorry 4 litres of 2% for $4.65 at Sobeys… the milk wasn’t on sale.

#170 Rabbit One on 03.16.15 at 12:34 am

#145 Vivec
>I have a question: if the Canadian Dollar has gone >down -20%, does it mean that equity value and the >loan value has gone down too

My understanding, it is quite opposite on the loan.

Same for low interest rates, R/E price looks like up,
but in fact it is down in real vaue term.

#171 DisgustMadeMePost on 03.16.15 at 12:51 am

#87 Squirrel meat is best on 03.15.15 at 7:44 pm

Geeez… Forget about your debt killing you, your diet is on track to accomplish that!

#172 devore on 03.16.15 at 1:01 am

#91 Juanito

Unfortunately, the whole concept is undermined by simply aiming at a 45 degree angle from normal to the wall.

Yeah, I always carry around a protractor for those times I need to pee in a back alley.

The concept is cool not because of the unfortunate backsplash, but because the hydrophobic paint sheds the liquid so it doesn’t stain it.

#173 Babblemaster on 03.16.15 at 1:21 am

#23 The American
#43 Ray Vasquez
#73 Habs76-79

———————————–

Folks, you all make some good points. However, look at the indebtedness of Canadians both privately and, through the generosity of the Feds, publicly. We simply can’t afford higher rates. Garth has been talking about higher rates for years. He told us that the bond market would force higher rates. Well, it hasn’t happened. The central banks, world-wide, are cooperating to keep rates down. And, while it seems that houses can’t go any higher, well who knows. The market has continued to surprise the naysayers (me included) for the last several years. The Feds are invested mightily in high house prices. They’ll do whatever it takes to keep them high. They still have some tricks up their sleeves.

#174 Musty Basement Dweller on 03.16.15 at 1:45 am

Interesting article in today’s Globe and Mail about how many of these new residential towers that we see going up will end up being rented. (to losers who don’t own real estate like me).

http://www.theglobeandmail.com/report-on-business/economy/housing/canadas-rental-unit-landscape-witnessing-a-resurgence/article23465600/

Guess with the big guys renting these out en masse this will mean more competition to the smaller scale “investors” who like to by a few condos and rent them out as they make lots of money and gain lots of equity.

Looking forward to the increased selection.

#175 too much taes on 03.16.15 at 1:54 am

#104 Smoking Man on 03.15.15 at 8:44 pm

Gartho, I have no idea how you keep writing, witty, Smart ass and informative posts 6 days a week.

How do you do it man
————-

He is educated.

#176 Nagraj on 03.16.15 at 2:56 am

#53 Hank
” . . . a couple of healthy guys in a packed cancer treatment waiting room congratulating themselves out loud for not being in the same boat as everyone else sitting there . . . ”

Wouldn’t be the first post to properly attack some of the ABSURD bourgeois smugness that shows up here.

If memory serves, it’s at the end of “Of Human Bondage” where Maugham writes, “All the world is a hospital” to which I add – yes, and some of us is sicker ‘n others.
And I can’t recall who said that “true justice is always poetic”.

Which brings me to both Smoking Man and some “metalhead’s” website: the “metalhead” had this up today: a theatre poster: Fed Theatre Program Presents “WAITING FOR A RATE HIKE” by Samuel Beckett, directed by Janet Yellen. [Smoking Man’s drama: “Waiting for Putin and Nectonite Cavalry”.]

Which is almost as funny as Bandit speaking into his iPhone6 in hushed tones. Or ” . . . this is not a pee blog. Thank you.”

Anybody care for Pinter’s “The Dumb Waiter” ?

#177 Freedom First on 03.16.15 at 4:31 am

#53 hank

We all have our own hardships to deal with. Life is hard. I have found that how well and how much I am able to help others is directly related to how well I look after myself in every way. hank, I don’t think you are worthy of washing my jock strap. Grow up.

#178 earthboundmisfit on 03.16.15 at 6:51 am

@13 Broke Dick
Welland is the welfare capital of Canada. If you do go, stay on the north side.

#179 OttawaMike on 03.16.15 at 7:16 am

Paging Smoking Man,

What is your take on the FOMC meeting this week?

I say no June rate increase, judging by the low US inflation.

Low rates for the next millennium and beyond!

US rates will rise in 2015. I have no idea why people here are obsessed with arguing otherwise, or even caring that much. — Garth

#180 OttawaMike on 03.16.15 at 7:31 am

US rates will rise in 2015. I have no idea why people here are obsessed with arguing otherwise, or even caring that much. — Garth

Why argue?

With all due respect Garth, you called a hike in 2010.

Rates will stay low and Canadians will continue to borrow, Van and GTA will continue into the stratosphere and our govt. will do nothing about it with an election looming.

I suggested in 2010 rates would rise in Canada. They did. This year the Fed will increase for the first time in six years. The Bank of Canada will inevitably follow, but not in lock-step. Whether rates rise or fall a quarter or half point is moot, actually. You should worry far more about jobs and debt. — Garth

#181 Alberta is FINISHED on 03.16.15 at 7:38 am

Porsche on 03.15.15 at 10:30 pm
#118 Alberta is FINISHED

The Saudi’s are also shutting down shale… so much for that theory. lol
_________________________________

Wow you must be from Alberta? Do you suffer from mad cow? Do you not understood what you wrote? If Saudi Arabia is shutting down cheaper to produce shale oil then Canadian oil sands are finished. Did you read about the shale oil BOOM in Texas where they are producing 1.7 million barrels a day? Here is a post from another poster early on today .
___________________________________
Very interesting G&M article this weekend on the shale oil business:

http://www.theglobeandmail.com/report-on-business/deep-in-the-heart-of-the-texas-oil-boom/article23461734/

The killer paragraph is this one:

“From virtually no production five years ago, the Eagle Ford now pumps out 1.7 million barrels a day – a stunning growth record propelled by years of high crude prices and advances in technologies such as horizontal drilling and hydraulic fracturing. By comparison, Alberta’s oil sands sector produces just over two million barrels a day.

From zero to another Alberta oil sands in five years – and that’s just one shale formation. Any wonder why the price of oil is where it’s at now?

And as I’m typing this, WTI has taken another leg down to a $43-handle. Look out below

ALBERTA IS FINISHED

#182 jess on 03.16.15 at 8:39 am

“63 square metres of the Australian dream.”

Homes for The people who live on sinking pacific islands e.g. Maldives. Although, the new president has been put in jail.

First democratically elected leader of Maldives jailed for 13 years on terrorism charges
The Independent‎ – 2 days ago

Jon Henley: The last days of paradise
The Guardian‎ – Nov 2008
The president of the Maldives wants to buy a new home for his people. But where could they go? Jon Henley explores the options.

#183 crowdedelevatorfartz on 03.16.15 at 8:40 am

@#62 Julie
“Starting to think maybe, just maybe, they were on to something….”
+++++++++++++++++++++++++++++++++++

Hoarding money in the basement?
Are you nuts?

A fire would have taken everything.
Or like a guy in Vancouver years ago that had patiently squirrelled away $250k in $20 bills safely tucked in his bedroom desser drawer……..kids broke in and stole it……
Quite a legacy. Years of hoarding and their Grandkids spend it after their dead.

#184 crowdedelevatorfartz on 03.16.15 at 8:45 am

@#72 Picasso

Now I know why you can still type after you died.
You ate tv dinners, cheetos rollos and washed it all down with diet coke( a wise dietary choice considering all the other toxins you’ve consumed).
Whats the Old Spice for?
A PAR-Tahy of one?

#185 The American on 03.16.15 at 9:17 am

At #173: Babblemaster, you said, “… look at the indebtedness of Canadians both privately and, through the generosity of the Feds, publicly. We simply can’t afford higher rates… And, while it seems that houses can’t go any higher, well who knows…”

I know! I know! Rates are going up, baby. Guaranteed. Your use of “logic” is concerning. Try to apply your same use of reasoning to Americans eight years ago when we all were chugging along swimmingly and then all of a sudden rates pushed upward, in part to stop the mass credit orgy in the streets (only far worse per capita in Canada, through your ‘responsible’ banks LMFAO), resetting on millions and millions of variable rate mortgages (which is all you basically have in Canada, for the most part). Yeah, happened in the U.S., and it’s definitely going to happen in Canada. If rates don’t push up, then the Canadian economy is *really* *really* *really* *really* *really* *really* *really* screwed for at least a decade. Pick your poison, but I’d recommend making the choice sooner than later.

#186 HD on 03.16.15 at 9:22 am

@ #206 Happy Renting on 03.14.15 at 7:22 pm

Marathon? Good for you!

I’m signed up for a few shorter races in Toronto, but after a health-induced, long absence from running my finish times will not be anything Garth wants this blog to be associated with.

Garth, let me know is there’s another blog out there deserving of ridicule and I’ll carry a banner advertising them, instead. ;)

———————————

I ran my first one in Victoria last October.

I got hooked.

It is very hard on the body indeed so I will probably be running as long as my health will allow me to.

Anyone who can work up the discipline to train for a long distance race (10k, 21k, 42k) has my utmost respect.

So good for you!

Best,

HD

#187 Nuke on 03.16.15 at 9:25 am

Welland has one thing going for it. The re-purposed Welland Canal and The Welland Flat Water Centre,(Pan-Am funded) The town itself is pathetically under serviced compared to other Niagara region gems. But there are great old houses that are cheap (under $150k).

As for Halifax, I concur with Garth. When jogging in Halifax, I have had drivers ask if I’ll be crossing at the intersection so they know to slowdown!?!

#188 Mike L on 03.16.15 at 9:36 am

Calgary Death Watch – First hand

My wife flew back to Calgary today (we live in Texas) and she was on the look out for any Calgary/Canada economic slowdown signs so she is asking around…

Sign #1: Cabbie says – 6 months ago airport/downtown fares were constant, now there is a 1-2 hour dead period between fares.

Sign #2: Downtown Hotel International restaurant manager says – They are averaging 10 customers per day now.

More to follow…

#189 Broke Dick on 03.16.15 at 9:43 am

#108 gut check on 03.15.15 at 8:54 pm
#13 Broke Dick
I’ve always wondered why no one likes Belleville. Did you look in to it and if so why isn’t it on your list? (Too far from the States? what’s with everyone wanting to be close to the States, esp. now)

Anyway, there’s also Gananoque. I’d say Kingston but the housing here is awful – absolutely not interesting or even that affordable anymore (for what you get). Also there’s an out and out assault on the senses going on five years now – machinery and noise EVERYWHERE, all the time.
++++++++++++++++++++++++++++++++
Being close to the boarder is not a deal breaker by any means. One big plus of looking at Niagara region, in my mind, is that winter is just a little shorter there and I’m trying to stay away from snow belt areas.

#190 Kris on 03.16.15 at 10:00 am

In Burlington (west of Oakville), entry level detached home 2200sqft listed for 720k this past week. Thought that’s too inflated, because similar homes were selling for low 600s less last year. Anyways, one of my friends called the agent out of curiosity – Turns out they had multiple offers, the place was sold in 2 days.. for 750k. The market is beyond all reasonable limits, it’s like nothing I’ve seen my entire life.

Even if things drop 20% or 30% from these levels, is that really back to longterm normals? Probably not.

#191 Diaz on 03.16.15 at 10:27 am

Hi Garth,

So does this mean I can literally take a HELOC, dump it in my RRSP (if room allows) on Questrade and trade? Get a refund on top of that; would that work?

Also, the interest that can be deducted, is the interest on the HELOC or the interest on the original mortgage loan? I don’t understand if the latter is doable considering nothing there changed

Interest on money borrowed for registered accounts is not deductible. — Garth

#192 crazed and a little confused on 03.16.15 at 10:36 am

Hi garth,

do you still recommend the self direct mortgage…the one where you use all of your RRSP to fund a large portion of your mortgage . but you had to pay admin fees, proprty asssessment . you are literally setting up your rrsp as a trust …separate entity / bank . then paying back to yourself.

thanks for any advice.

Not in this rate environment. — Garth

#193 Capt. Obvious on 03.16.15 at 10:38 am

Bill Bernstein (a pretty smart dude) said recently:

Bill Bernstein: Well, I would say that the expected return of a balanced portfolio is the lowest it’s been in financial history. We’re looking at 3 or 4 percent on stocks, and we’re looking at zero percent on bonds. Those are real inflation-adjusted figures.
Source: etf.com interview

I would say those are conservative numbers and would be prudent to use when planning. Watch your savings rate kids. If things turn out better, great, but expecting more is probably wishful thinking.

#194 Karma on 03.16.15 at 10:43 am

Regarding Garth’s point of people in Toronto being in a rush/stressed, you may find this an interesting read…

“Why Your Brain Hates Slowpokes”

http://nautil.us/issue/22/slow/why-your-brain-hates-slowpokes

#195 Retired Boomer - WI on 03.16.15 at 10:55 am

#127 meslippery

WI would in fact be Wisconsin. It’s where I started, and where I am ending (so far). In between let us add in Michigan, and New York as former places off residence.

Throw in places I have been well 46 of 50 covered, and 7 Canadian provinces. Yeah, a few miles…

#196 Rational Optimist on 03.16.15 at 10:55 am

182 jess on 03.16.15 at 8:39 am

Some more light reading on Maldives, for the curious: http://www.bbc.com/news/world-asia-21595814

#197 Squirrel meat on 03.16.15 at 10:56 am

#171 DisgustMadeMePost on 03.16.15 at 12:51 am
#87 Squirrel meat is best on 03.15.15 at 7:44 pm

Geeez… Forget about your debt killing you, your diet is on track to accomplish that!
———————
That’s picasso with the worrisome diet. I’m fine with squirrel meat and I eat my veggies.

#198 gut check on 03.16.15 at 11:02 am

@ #189 Broke Dick

I hear you – staying out of the snow and trying to get the most out of the non-winter months is important to me, too – however short of moving to Victoria where there’s likely too much rain for me I’ve kind of given up hunting for that in this country. What I personally wish to find is a little community where people aren’t zombie like and they cherish entrepreneurship, cooperation and common sense over stupidity like Bylaws.

If I could find that place I wouldn’t mind a little more snow.

#199 Cookie on 03.16.15 at 11:07 am

PAA Research’s say 15% of insured mortgages are issued to canadians with a score below 700, at a rate of 2-3%.

Video source: http://www.bnn.ca/Video/player.aspx?vid=571036

#200 Herb on 03.16.15 at 11:37 am

#108 Gut Check,

I’ll tell you why we looked at Belleville for three years and passed it by. Property taxes are way higher than Ottawa or Toronto, services such as road repair and snow clearance are limited, the tap water tastes so chemical you don’t want to drink it, the Bay of Quinte is beachless and shouldn’t be swim in anyway, the housing stock is either 30 years of delayed maintenance or McMansions, and it’s overpriced because “everybody wants to live there.” (Disclosure: we did put in offers on three houses in these three years, but refused to feed greed.) Shopping and entertainment are limited, but the natives are friendly, like most smalltown folk.

There is Prince Edward County, which is nice in summer, but it’s pricey because once upon a time everybody who had made it in Toronto just had to have a farm or build a mansion there. Property taxes are much lower than B’ville, but it’s wells and septic systems, and a liter of gas to get a liter of milk, plus splendid isolation in winter.

We also looked at Cobourg and Port Hope, but passed them by for similar reasons. And the possibility of getting into or out of these places by anything but car is extremely limited.

#201 Victor V on 03.16.15 at 11:45 am

http://www.theglobeandmail.com/report-on-business/economy/housing/canadas-rental-unit-landscape-witnessing-a-resurgence/article23465600/

Fears that the condo market might be hitting its peak have also pushed more builders to consider rentals.

“To some extent the interest is being driven by condominium developers who have seen sales slow, and they see apartments as an alternative way to feed the machine they’ve built,” apartment broker Mr. Lobo said.

Already this year two condo projects in Toronto have converted to rentals after being snapped up by institutional buyers.

“The rental market is really hot right now. It’s sizzling,” said Joe Cordiano of condo developer Cityzen Development Group, which received an unsolicited offer from an institutional investor to convert a downtown Toronto condo project to rental. The company is now considering other rental projects after receiving other offers from investors, he said.

Even Toronto’s “condo king” Brad Lamb has turned to the rental market, recently selling a $90-million condo project called the Bronson in Ottawa to an investor. When Mr. Lamb unveiled the project in 2013, Ottawa’s condo market was booming, but it has cooled off amid a glut of new construction.

“By the time we had closed on the project the market had shifted significantly,” said Ben Myers of Fortress Real Developments, which was financing the project. “A lot of projects came in on a few years and it was just too much.”

#202 old gringo on 03.16.15 at 11:45 am

Not sure when Mexico’s new oil laws will start to affect North America supply, however, it is coming on like the wind.Never explored for 100 years and billions of barrels at $20 per barrel
Among the seven companies that have been authorized into the data rooms, after paying fees, are Exxon Mobil, Chevron Corp., Shell, Ecopetrol SA and BG Group PLC, the commission said. A total of 30 companies have shown some interest in the process short of paying for entry into the data rooms, the commission said.

Mr. Zepeda said the shallow-water round is in an area of the Gulf of Mexico where there already is significant oil production, and where costs are less than $20 a barrel, making them attractive even in the current environment of depressed prices.

A later phase of the bidding round this year involving shale-rock formations and so-called tight oil that is complicated and expensive to extract will be trimmed back to include only the most attractive areas due falling oil prices, Mr. Zepeda said. The commission, along with the Energy Ministry, will decide by March or April which areas will be trimmed, he added.

#203 Balmuto on 03.16.15 at 11:52 am

US equities (unhedged) are such a no-brainer for any Canadian investor right now. Once again, when US equities recover, the C$ fails to recover with them. Trading flat to the US$ today while the S&P 500 is up over 1%. When US stocks are down the C$ gets trashed. It’s like a free put on the market.

#204 Babblemaster on 03.16.15 at 12:21 pm

#185 The American

If rates don’t push up, then the Canadian economy is *really* *really* *really* *really* *really* *really* *really* screwed for at least a decade. Pick your poison, but I’d recommend making the choice sooner than later.

——————————————-

I agree that low rates are a “really” massive problem, or at least a symptom of a massive problem with the economy. However, I don’t see a scenario where a sitting government will raise rates. The Harpets have repeatedly kicked the can down the road for the last several years. They are NOT motivated primarily by what’s good for the country. They want to be in power and will do whatever they can to stay there. Any other party will do whatever they can to get there. In an election scenario, a platform of higher rates would guarantee political obscurity.

#205 Nerf Herder on 03.16.15 at 12:26 pm

Toronto police using housing as one of their platforms on why their higher wage is justified:

http://www.theglobeandmail.com/news/toronto/swelling-ranks-of-toronto-polices-2014-sunshine-list-raises-alarms/article23469816/

And correct me if I’m wrong, but housing is a hidden inflation that is not part of the “inflation rate,” which I always found odd.

#206 Fed-up on 03.16.15 at 12:55 pm

#163 deductable on 03.15.15 at 11:53 pm

Yes it does seem as if we have “anti-synchronized” traffic lights all over the GTA.

I think the word Toronto is Iroquois for, “Impede forward movement”.

——————

It should be a criminal offense, the majors of the GTA should be legally responsible.

Traffic lights without programming green wave rob people’s time, their gas, the public’s investment in roads by sabotaging the capacity and put further stress on the environment.
——————————————————————————

I completely agree, it is indeed criminal especially when you consider the taxes that have been paid to address this issue over the past 5 decades.

#207 AfterTheHouseSold on 03.16.15 at 12:58 pm

#13 Broke Dick
“That is why over the next year or two I plan to sell my Etobicoke bungalow and move to the Niagara region. My bungalow should net me $650,000 after all fees… So my question to all is do you know of another south Ontario city that I should be considering…”

I think you need to refocus your attention on the more important issue at hand and that is to sell your bungalow now and crystallize those gains. A bird in the hand is worth two in the bush. You are assuming that the market will remain the same or better in a couple years time. That is a big gamble to take especially if you are near retirement. Don’t be greedy. Take the money and get invested in the balanced portfolio now and rent for the next year or two that you need to stick around. You can use that time to think about where you want to live.

If you have been reading this blog for awhile, you should already be aware that the real estate market is eroding and job losses are growing, the economy is sinking. If you think that this doesn’t affect you, think again.

Your personal situation my be good but how about that of your neighbours? Are they mortgaged to the hilt, saddled with debt, lost their job, on the verge of divorce, in poor health, elderly and unable to cope? Any of these may result in distress sales in your area. These become your new comparables. Goodbye $650,000!

We sold two and a half years ago, which in hindsight looks to be within six- eight months of peak in central Ontario. The invested proceeds of our house and our savings has been chucking off monthly income that exceeded our take home pay so we retired at ages 55 and 56, a formerly inconceivable idea to us.

We rent but not a fixed address, instead have opted to rent in 30-60-90 day increments as we travel around north America. (Temporarily sidelined in Ontario as my MIL took a spill.) A waterfront rental for the summer will not be too hard to take!

Selling the house has set me free, hence my moniker. And all because we stopped buying lottery tickets and cashed in the jackpot that we were already sitting on.

#208 Doug in London on 03.16.15 at 1:05 pm

@4 AM Sunrise, post 122;
Yes, I also think $27.50 is excessive. I thought the 14 AUD (about the same in $CDN) to get from downtown to the airport in Sydney was pricey, now I think it’s not that bad. In Bangkok I recall paying about 100 Baht (about $4 CDN) to get from downtown to the airport.
When going from downtown to YYZ, I use the TTC if there’s time, cost 1 token or $3.

#209 estrella on 03.16.15 at 1:29 pm

However doing what you suggest in this post leaves you also having to deal with an capital gains on the investments that you initially sell. This is something to consider although less than regular taxable income. I was considering that after rebuying the investments, the earnings could allow more money free to invest in a TFSA. (investment gain is not directly linked to TFSA, but indirectly linked). ….

You have to pay the taxes at some point anyway, and you might was well use this as an opportunity to rebalance. Anyway, capital gains taxes are 50% less than tax on income. — Garth

#210 Victor V on 03.16.15 at 1:30 pm

http://business.financialpost.com/2015/03/16/odds-of-another-bank-of-canada-rate-cut-rise-as-oil-and-jobs-outlook-dims/

For David Watt, the Bank of Canada missed a chance to fortify the economy against the collapse of oil prices when it refrained from cutting interest rates this month. They’ll make up for it next month, he says, and he’s not alone.

Governor Stephen Poloz, who unexpectedly cut rates in January, will ease again by mid-year, according to the median estimate of a Bloomberg survey of economists conducted March 6 to March 11. Watt, chief economist at the Canadian unit of HSBC Holdings Plc. and among the most bearish Canadian forecasters, expects a 25 basis-point cut next month to 0.5%, and another in May. That would put borrowing costs at the lowest since 2010.

“The realization will be, we should have done what we can to backstop business confidence when we had an earlier opportunity,” Watt said. “You just get another month where businesses get somewhat more cautious and business investment plans get delayed further.”

#211 Porsche on 03.16.15 at 2:05 pm

GM moving manufacturing of Camaro from Oshawa back to Michigan

Weird with low loonie?

#212 Headline Alabama on 03.16.15 at 2:12 pm

@ #19 H

So shorting S&P is an even better bet for 18-Mar 2pm now that it is up 21.80 today?

#213 Timing is Everything on 03.16.15 at 2:26 pm

#198 gut check

“[W]hich Canadian city really is the rainiest, the snowiest or the windiest? And where is the sunshine capital?

David Phillips, Environment Canada’s Senior Climatologist, and the nation’s favourite weather guru, has analyzed 30 years of recent weather data for Canada’s 100 largest cities.”

http://tinyurl.com/l2qz577

#214 4 AM Sunrise on 03.16.15 at 2:38 pm

This is why women are stereotyped for being financially illiterate: http://www.flare.com/culture/fashion-math-how-much-do-fashion-people-really-spend-on-clothes/

Quick summary:

Annual gross income: $50,000+
Rent: $940
Student loan: $360
Food, clothing and entertainment: way more than me, but probably within her means.

An article like this doesn’t allow for her to say, “not only do I treat myself, I also put $$$ into my TFSA and RRSP!” even if she is a diligent saver/investor.

And I don’t necessarily fault her for the $100 shoes if they last forever (and some quality shoes do).

Some young lady reading this is probably wondering if she’s spending “enough” to keep up.

#215 devore on 03.16.15 at 3:05 pm

#205 Nerf Herder

And correct me if I’m wrong, but housing is a hidden inflation that is not part of the “inflation rate,” which I always found odd.

Rent is included in CPI. Assets are not. Nothing odd about that.

#216 Jeff in Moose Jaw on 03.16.15 at 3:05 pm

#72 Piccaso

Where’s the bacon?

#217 46 and 2 on 03.16.15 at 3:13 pm

Shale oil is the reason why the oil sands will be shut down in an orderly manner. Alberta is FINISHED and I don’t say it because I want to be mean. I say it because it is reality and I know conservatives hate facts, truth and reality. Saudi Arabia which can produce oil the cheapest understands the new reality and is pumping oil out before it becomes unneeded. Canadian oil sands are now worthless. Technology has made oil sands worthless. Alberta is FINISHED.
===============================
Come on dude….Alberta is FINISHED? One thing I can assure you of is the resilience/intelligence and work ethic of my province. We are going to take it on the chin (yet again) but much like my home team the Flames, don’t count us out and we find a way to win.

#218 TurnerNation on 03.16.15 at 3:30 pm

#72 Picasso I’d rather eat those paper towels than most everything on that list.

– Dollarama stock punched a new high today.

#219 Vanecdotal on 03.16.15 at 3:31 pm

#234 valleyrenter

Thanks for the heads up, I was not aware of this one. Holy over-supply batman! There appears to be YEARS of condo inventory for sale in White Rock currently, it would be great to see what the actual absorption rate is, gee if only the public had access to actual market data…

On a related note, (yet) another nearby new tower, Avra, states they’re sold out on their website, yet a quick mls search shows 12 units for sale right now. You can also still register to buy a “sold out” unit on their website. Wth? Are the mls listings all assignments? Or is this bs advertising? It’s like the wild freakin’ West, you can say just about anything to flog a product as long as it’s RE, apparently.

I have noticed over recent years that the newest high and mid rises in WHite Rock do not appear to have high occupancy, some such as the 2 Mirimar Village Towers completed in 2009 seem to be @ 50% occupied year-round, using the totally unscientific anecdotal “any signs of life, lights – on or off in the same units day after day” method.

There are similarities to the Coal Harbour post 5pm ghost-town syndrome here.

Chat with many local business owners and they will likely express disappointment that recent development has not produced the increase in patronage they were anticipating. Which would corroborate that either there is an oversupply of condos in the immediate area that remain unsold, or that IF they have been sold, they may not be occupied. As always imho, just my observations.

#220 Vanecdotal on 03.16.15 at 3:32 pm

Meant “#234 valleyrenter” from Friday’s post.

#221 Piccaso on 03.16.15 at 3:39 pm

#216 Jeff in Moose Jaw on 03.16.15 at 3:05 pm
#72 Piccaso

Where’s the bacon?
……………………………………………………………………….

Can’t afford bacon

#222 Oil Is Sticky on 03.16.15 at 3:53 pm

From zero to another Alberta oil sands in five years – and that’s just one shale formation. Any wonder why the price of oil is where it’s at now?

And as I’m typing this, WTI has taken another leg down to a $43-handle. Look out below

ALBERTA IS FINISHED

——-

I would say that with minimum wage at 10 bucks-ish and gas at $1.20 with oil at $43……and taxes just going up up up up up in SCAMCOUVER……..I think BC is finished.

#223 OMG on 03.16.15 at 4:28 pm

Above Photo,
Smoking Man and his Son planning the next great investment?

#224 jess on 03.16.15 at 4:29 pm

196 Rational Optimist

so where would 300000 people go
a state within state ?

…”Keep, ancient lands, your storied pomp!” cries she…

The new commodity? citizenship
“Malta wants your talent, not your money. Your networks, not your accounts,” he told an audience in New York last year.
Passports for cash: the countries selling citizenship to tax havens (12 Mar 2015)

Passports for cash: the countries selling citizenship to tax havens
http://www.maltatoday.com.mt/news/national/50730/forget_the_talent_passport_buyers_wont_move_to_malta_says_iip_head

=
…. the state of new york is buying back Hurricane Sandy homes?
http://nypost.com/2013/11/19/state-buying-back-sandy-homes/

http://www.washingtonpost.com/news/energy-environment/wp/2015/03/16/the-melting-of-antarctica-was-already-really-bad-it-just-got-worse/

#225 Squirrel meat on 03.16.15 at 4:31 pm

221 Piccaso on 03.16.15 at 3:39 pm

#216 Jeff in Moose Jaw on 03.16.15 at 3:05 pm
#72 Piccaso

Where’s the bacon?
……………………………………………………………………….

Can’t afford bacon
———————————
Suggest ditching the rolos for bacon.

#226 Mike on 03.16.15 at 4:34 pm

Ft Mac sales info is finally in… OUCH!

http://www.msn.com/en-ca/money/topstories/fort-mcmurray-housing-sales-plunge-as-low-oil-prices-persist/ar-AA9PlBW

#227 Bottoms_Up on 03.16.15 at 4:54 pm

#72 Piccaso on 03.15.15 at 7:06 pm
———————————————–
Old spice and paper towels are not ‘groceries’. Actually, most of the items on your list I wouldn’t even consider to be food, other than perhaps beef stew and milk.

Looks like you just spent about $50 on sugar, refined sugar, salt and plastic packaging.

#228 4 AM Sunrise on 03.16.15 at 5:25 pm

#226 Bottoms_Up on 03.16.15 at 4:54 pm

Yes, they are “groceries” in CPI-land: http://www23.statcan.gc.ca/imdb-bmdi/document/2301_D59_T9_V1-eng.htm

Paper towels would be “paper products” and the Old Spice would be “toiletry items”.

Me I’ve been scooping up Shopper’s Drug Mart’s Simply Food items. As Loblaws puts more No Name and President’s Choice products on the shelves, stores have to mark down their Simply Food stock in a hurry to make room. I got 1 kg of frozen fries for $0.49. I haven’t seen the humble (real) potato at a humble $0.20/lb in ages.

#229 Renter's Revenge! on 03.16.15 at 5:47 pm

@226 Bottoms_Up @72 Piccaso: “Looks like you just spent about $50 on sugar, refined sugar, salt and plastic packaging.”

It wasn’t a comment about the cost of living, it was a comment about the cost of giving up on life :P

#230 aL Pacino on 03.16.15 at 5:55 pm

#211 Porsche on 03.16.15 at 2:05 pm
GM moving manufacturing of Camaro from Oshawa back to Michigan

Weird with low loonie?

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

Why would you deal with canadian commie terrorist unions and $40 hours labour when you can get the same for $20 down south..capish

#231 X on 03.16.15 at 5:58 pm

What, the RE industry misleading investors…..my apologies if this has been previously posted:

http://landlordrescue.ca/what-is-torontos-condominium-vacancy-rate-not-1-thats-for-sure/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+LandlordRescue+%28Landlord+Rescue%29

#232 Smoking Man on 03.16.15 at 6:04 pm

#179 OttawaMike on 03.16.15 at 7:16 am
Paging Smoking Man,
What is your take on the FOMC meeting this week?
I say no June rate increase, judging by the low US inflation.
Low rates for the next millennium and beyond!
US rates will rise in 2015. I have no idea why people here are obsessed with arguing otherwise, or even caring that much. — Garth
……

I missed it, my must refer to me as Dr Smoking Man. :)

Fed nuts are in a vice, spike and have credibility and destroy the recovery, prolong, lose face. Talk devosh, not sure that’s spelt right, lowers the USD and helps recovery. And crushes it’s credibility.

The CEO of Galap poll said, us status are fudged.. Imagen that.

#233 46 and 2 on 03.16.15 at 6:09 pm

From zero to another Alberta oil sands in five years – and that’s just one shale formation. Any wonder why the price of oil is where it’s at now?

And as I’m typing this, WTI has taken another leg down to a $43-handle. Look out below

ALBERTA IS FINISHED

——-

I would say that with minimum wage at 10 bucks-ish and gas at $1.20 with oil at $43……and taxes just going up up up up up in SCAMCOUVER……..I think BC is finished.
======
I have no idea how it is that Vancouver keeps on rolling. Sure, there is immigration $ pouring in (internal and external) but there is only so much of that to go around, the levels of debt must be obscene.

#234 macroman on 03.16.15 at 11:13 pm

#72 Picasso, that grocery list is a wonderful profiler.

Eating that crap you’re above 250 pounds, thus the diet coke.

You’re single because you like to paint?

Sorry, just trying to roll like Garth

#235 Armando on 03.17.15 at 11:38 am

Garth’s plan to convert non-deductible to tax-deductible interest is spot on (especially in Canada where taxes are so high). But I’m not so sure its such a “no brainer” to compare plunking money into a Balanced Portfolio to paying down your mortgage. A Balanced US Portfolio (50% S&P 500 Index Fund + 50% Total US Bond Index, rebalanced yearly) returned 5.36% Compound Annual Return from 2000 to 2014 (inclusive). That’s good, but as Garth has noted that was with nasty 25%+ declines in 2002/2003 and 2008/2009. These returns also benefited from the secular trend in continually lower interest rates. At current high stock valuations and low rates, a US Balanced portfolio is priced to deliver around 2% per annum over the next 10 years, with what I’m sure will be some nasty ups and downs (check Jeremy Grantham for the prospective return numbers). That’s a lot closer to the rate you’d be “making” by paying off your mortgage, and without the painful ups-and-downs to boot!

(a) I have never recommended a 50/50 portfolio. (b) Nor would I recommend a US-assets-only mix. (c) Nor would I rely only on bonds for the fixed-income portion. A 60/40 portfolio with more geographic diversification delivered 7.4% over the last decade. — Garth

#236 Armando on 03.17.15 at 12:46 pm

Garth, I’m not saying you recommended a US only portfolio, nor am I disputing your previous performance numbers. I’m just saying that US stocks (and those of a great number of other countries) have been “juiced” by Central Bank manipulations putting them into overvalued mode, and that the global run of ever lower interest rates can’t continue for much longer. Bottom line: Balanced Portfolio returns of the type you favor may not be as juicy going forward….

We shall see. Lots of good stuff around (REITs, preferreds, recovering international markets). Every year most people moan and fret, while investors with a balanced approach advance. — Garth

#237 bybgardener on 03.17.15 at 4:29 pm

Starting to look at how we will fund our retirement in ~ 5 years from now. We both have RSPs, TFSAs and a joint non registered investment account. Given that I am 5 years older than my spouse and can collect CPP when I turn 65, what order/ratio do we pull funds from our accounts to fund our retirement? Do we take a blend of funds from RSPs and non registered accounts to minimize the taxes? Do we alternate taking funds out of our TFSAs with making TFSA contributions. IE withdraw $ 10 000 in 2020 and then contribute $ 15500 in 2021? Any help would be appreciated.

Then stop being cheap and hire some help. Everyone’s situation is unique and asking a blog for advice that personal is dumb. — Garth

#238 H on 03.17.15 at 4:51 pm

You will NEVER see interest rates below:

4%
3.75%
3.50%
3.25%
3.0%

Again. Ever ever. Here we go. Rates are heading up. Melt up.

But first they drop to 2.75%

Oh well, perhaps a year from now a prediction of higher rates will be correct. Till then people can continue to re negotiate lower. Keep payments the same and build equity. Safely. Like its been for the past decade.

Free of 40% currency swings and nail biting of what Yellen might say.