The Rule

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The odds of a big slowdown in the Canadian economy are growing. “The downturn in the energy sector could push the economy close to stagnation during the course of the year,” says Capital Economics guru, David Madani, “particularly if it is compounded by a housing slowdown.”

So far this year manufacturing stats are bad, wholesale trade numbers are awful (worst on record), retail sales are weak and job creation is minimal. Wages are stuck in the ditch, and debt’s quickly rising. The dollar is well below 80 cents, and oil is sub-fifty bucks.

“We have already seen a marked slowdown in business investment generally, but that likely only marks the beginning of a sharp decline,” says Madani. “Based on the past relationship between energy price movements and investment, it seems likely that the worst is yet to come.”

I mention these things not to bum you out, but to remind (in light of little Amanda’s missive yesterday) that today’s cheapo mortgage rates and amped-up realtors do not present a fair picture of where we’re headed. If you’re horny to buy a house, do it the right way. If you own a house, make sure you don’t have a one-asset financial strategy. Which brings us to my Rule of 90.

“I read your blog almost every day,” Patrick says. “The articles are always well written with a sense of humor.” But he wonders about the rule. “I believe it is 90 – age = % you should allocate to real estate.”

That’s correct. Take 90. Deduct your age. The remainder represents the percentage of your household net worth you should ideally have allocated to residential real estate.
“I am curious of your thoughts of two questions I have in mind: does the percentage include the mortgage, so say 90 – 40 = 50%, then 50% represents the price of the home including a mortgage? Also, how does an RRSP count in one person’s net worth. Is it a straight addition?”

The point of this rule is simple. It’s a guideline to not putting too much of your net worth into a single, immoveable, costly, potentially-deflating asset the financing on which will only grow more costly in years to come. At the same time, it’s a reminder you need to be building wealth in the form of liquid, diversified, balanced assets that will inevitably provide you with security and an income stream. Remember the Rule of 90, for example, and you won’t be shoving every dollar you have against the mortgage.

The rule is age-specific for a reason. The older you get, the less exposure you should have to a house and the bigger your wad of financial stuff should be. After all, what everyone needs in retirement is income, not a roof. You can rent one of those.

So, to Patrick’s questions. First, a mortgage is not included in the value of a house. I know this may come as a shock to millions of moist millennials, but it’s called ‘debt.’ When calculating net worth, you add up the assets you possess and then subtract the obligations. So a $500,000 property bought with 5% down and a mortgage of $490,000 (including the CMHC premium), means you have $10,000 of net worth sitting there, not $500,000.

Second, it’s general practice to include all registered accounts (including RRSPs) as assets when calculating net worth. Yes, they’re taxable. But the rate of tax is unknown, since you might cash some in when you’re taking a year off to learn body art, or retire in a low tax bracket. Money built up inside TFSAs, of course, comes out taxless.

Here’s an example: If 40-year-old Patrick had $25,000 in the orange guy’s shorts, $35,000 in a TFSA and $145,000 in an RRSP, plus a house valued of $500,000 with a $300,000 mortgage, he’d have a net worth of $405,000. The Rule of 90 suggests that a max of 50% of his net worth should be in his real estate. So the $200,000 he has in house equity equals 49%.We have a winner!

Now imagine 35-year-old Amanda, who puts $100,000 down on a slanty semi worth $800,000, and has a mortgage of $720,000. That’s all the money she and her squeeze have, so her net worth is reduced to $80,000 (thanks to closing costs). While she should have no more than 55% of her net worth in a house, she actually has 100%. Worse, a 10% fluctuation in house values will reduce her net worth to zero. And she still has over seven hundred grand in debt. Risk. Bigtime.

Of course, by the time you’re a dried-up, wheezy, pruned wrinklie, liquidity is the goal. So a 65-year-old couple should have no more than 25% of their net worth in residential real estate. Thus, if they live in a $400,000 mortgage-less house, they’d be secure with $1.6 million in total financial assets if they were without a pension plan (other than CPP).

.
By the way, projections for Canada’s economic growth this year are going down fast. Looks like we’ll be lucky to scrape by with 1%, with the mess from Alberta spilling widely beyond its borders. Adds Madani: “We fear this slowdown will trigger a disorderly unwinding of household sector imbalances, depressing economic growth even more than otherwise would normally be the case. We still believe that the housing market in particular is overdue for a potentially severe correction.” He says (and I now agree), this will lead the Bank of Canada to another rate decrease. Yikes.

I sure hope the house-lusty virgins feeding on 2% mortgages realize what they’re doing.

But I know they don’t.

211 comments ↓

#1 TurnerNation on 03.20.15 at 6:03 pm

Re. Yesterday’s post: goal of life is being First on a pathetic weblog.

#2 Amanda B. Reconwith on 03.20.15 at 6:05 pm

Foist!

couldn’t resist.

#3 waiting on the westcoast on 03.20.15 at 6:13 pm

Think Alberta has problems… Great article on how 15-20% of Cape Bretons work force is operating out of the oil sands and they are the least skilled… Ergo, first to go…

http://www.financialpost.com/m/search/blog.html?b=business.financialpost.com/2015/03/19/oil-sands-pain-spreads-all-the-way-to-canadas-far-flung-eastern-shores&q=cape%20Breton%20oil%20labour

#4 JSS on 03.20.15 at 6:15 pm

Is company pension part of the net worth equation? RESP as well?

#5 Yogi Bear on 03.20.15 at 6:17 pm

Boomers: please disregard the rule of 90. Your entitled kids want to inherit your house. And you know, the way you’ve screwed every generation before and after you, it’s the least you could do.

#6 MSM-free Zone on 03.20.15 at 6:17 pm

“…..So far this year manufacturing stats are bad, wholesale trade numbers are awful (worst on record), retail sales are weak and job creation is minimal……”
_________________________

Funny, that information is the complete opposite to what my MP, Eve Adams, has been furiou$ly mailing me on a regular basis (at least, furiou$ly until the writ has been dropped).

Hmm….who to believe….top part…or pop tart..

#7 ShawnG in TO on 03.20.15 at 6:18 pm

I know the rule of 90 is an approximation and not a hard measure, but I still feel combining house value with mortgage to a net value is too simple.

Use the 65 year old as an example, Alice has a modest 400k house all paid off, and $1.2mil balanced diversified portfolio in RRSP, TSFA, and other investments. That’s very comfortable living.

Suppose Beth has a 1.2million$ home with 800k mortgage, and same $1.2mil portfolio. that’s very risky.

maybe my example is too extreme?

#8 Kris on 03.20.15 at 6:21 pm

MORE rate cuts? Sounds like a good time to take a longterm loan for investment.

#9 waiting on the westcoast on 03.20.15 at 6:23 pm

Hey Garth – but even with the rule of 90, do you think it makes sense to invest in the Van/For markets given the multiples?

This is where I just cannot rationalize it. I could buy today (even at the crazy numbers) but just don’t see how it makes sense. So when I finally do buy, I will use your rule to determine the appropriate percentage but not until the multiples are closer to a reasonable levels.

If I am wrong, I am moving to some small town in the interior of BC. Of wait, that handle has already been taken… ;-)

#10 Darryl on 03.20.15 at 6:24 pm

Snowboid
what’s the cost of medical down there anyways?

BTW
Does anyone else wonder if smoking man has so much money why does he drink cheap booze?

#11 Vivek on 03.20.15 at 6:26 pm

I happen to have 100% of my net worth in financial assets: 71% Equities, the rest Bonds and cash.

I’m wondering if that’s a problem.

#12 crowdedelevatorfartz on 03.20.15 at 6:28 pm

“House lusty virgins”

Is there any other kind of 1st buyer?

#13 Vanecdotal on 03.20.15 at 6:31 pm

#254 TnT from yesterday

Tried to get this in under the wire yesterday, but didn’t make the cutoff. Wrote it before today’s GT post was up, coincidentally on “The Rule of 90”. He’s also pointing out what that Rule actually means, as you completely (conveniently) overlook in your argument that this couple likely can NOT afford to purchase a home in TO at current pricing based on Garth’s Rule of 90.

It’s not how much mortgage you can carry based on what the bank will approve you for (based on current income), it’s how much can you actually afford inclusive of ALL additional costs of ownership.

Your entire argument hinges on the purchase price being affordable RELATIVE to their current incomes, (which may go up, down or sideways in the future).

My points are not “scare tactics”, they are 100% the REALITY when housing prices become completely detached from local incomes, ESPECIALLY if one is stretching financially and assuming a large mortgage just to get there foot on the property ladder.

… and I am not presently a “basement dweller”, although I certainly have been in the past, and I had a helluva a lot more $$$ to play with, enjoy life, and invest for my future when I was. A LOT more discretionary income.

In the past, when home prices correlated much more closely, (even in large metropolitan urban markets), to average / median local incomes, your argument *may have* once made sense.

This is not the current market / economic climate this next generation is facing. Apples and oranges, we’re in a different world now where the risk: reward ratio is dangerously skewed pertaining to RE valuations in the few remaining hot markets.

#14 Corban on 03.20.15 at 6:32 pm

Can’t wait for this to unwind more. Got a wicked deal on a truck. Looking for a Boler trailer now.

#15 Vanecdotal on 03.20.15 at 6:34 pm

Further to #254 TnT

“Or you can keep renting,
(paying the landlords mortgage)”

*Or* the landlord subsidizes your rent every month while paying for all the additional costs of home ownership especially if the bought their “investment” property during the run-up in the last 5-10 years (depending on location/market).

“keep squirreling your ample incomes away and invest wisely in a diversified portfolio, (check your own past history on how well this is working for you)”

Thanks for asking. My investments (diversified portfolio) have consistently outperformed my RE holding over the last 15 years actually, by a wide margin. The home was bought on a low-ball bid to live in, NOT as a speculative investment, which is a good thing as it’s a cash hoovering black hole… yes, in YVR. Fortunately I have other non-RE investments that offset this.

We will have to disagree on this as while no one can predict the future, your “advice” could be construed as downright reckless in this economic climate as it relates to a young couple just starting out in life in this scenario.

#16 Mark on 03.20.15 at 6:38 pm

“He says (and I now agree), this will lead the Bank of Canada to another rate decrease. Yikes.”

Alleluia! Garth has seen the light! (and it ain’t pretty….for all the reasons that he’s thoroughly explained, especially for RE prices).

But seriously, in terms of asset allocation, I’d personally advocate that the “rule of 90” include the total value of the house, not just the equity. If you use just the equity, this allows for extreme leverage to be justified by having a diversified portfolio outside of the house. (for instance, 10% down on the house, 10% in a stock portfolio, would still satisfy Garth’s “Rule of 90” for a 40-year-old, even though it represents an extremity in leverage!). Leverage is leverage, no matter where it exists on the balance sheet, its still a liability!

So a hypothetical 40-year-old buying with 25% down, should have, at best, following the “rule of 90” 50% of their assets allocated to housing. Not 200% as would be implied by Garth’s interpretation.

I know this isn’t realistic for nearly everyone these days, but then again, houses are so dramatically and disgustingly overpriced in Canada, the past 2 years of declines aside, that there’s no reason why a rational person would buy one until prices come down dramatically more.

#17 Mark on 03.20.15 at 6:40 pm

“Further to #254 TnT

“Or you can keep renting,
(paying the landlords mortgage)”

I was going to respond extensively to that post, but figured, “why bother”, since it had the obvious Realtor troll-phrase-keywords of “paying the landlords mortgage”. When you see those words, well, you just know that the person on the other side of the ether (or on ether) is solidly committed to one side of the argument no matter what, and arguing is pointless.

#18 Carlos on 03.20.15 at 6:48 pm

garth, the rule is a good one but in your example for Amanda, doesn’t she have to split the mortgage in half since she’s only totalling up her assets and the mortgage as a liability?

#19 ILoveCharts on 03.20.15 at 6:52 pm

Anything the matter with being less than the rule of 90? Eg I am 30 and have 0 real estate?

#20 Rule of 90 | Realties.ca on 03.20.15 at 6:54 pm

[…] Source: http://www.greaterfool.ca/2015/03/20/rule-of-90/ […]

#21 Winterpeg on 03.20.15 at 7:03 pm

Hmmm. At age 56, I am at 40% real estate (based on my house tax assessment), so I guess I’d better step up the investing. (my number should be 34%)
Sometimes I consider the “Sell now and Rent strategy but decent rentals are high in the Peg. I do like my hood, and my work is close by which is a huge in the lifestyle factor. I guess if I just need to drink a few less lattes and funnel the $$$ into more TFSA’s which aren’t yet maxed out.
FYI we have no snow here right now and decent temps, amazing for the Peg this time of year. Pothole and street cleaning season here though.
Early Spring selling market starting. Stuff in my hood selling at around the asking price it seems.
Still too high for the kids starting out, or anyone for that matter. It’s not T.O. or Van, but it’s all relative. Just too high.

#22 Ret on 03.20.15 at 7:07 pm

I love the concept of “ownership” that most Canadians have.
Yes, I am the owner of the car officer. I just made my second payment…(on an 84 month loan.) I have the ownership right here.
—————————————
Households need to be stress testing their family finances, but they won’t, because not nice scenarios always happen to other people and would “never” happen to them because ………(Fill in Blank)….. .

“Never,” is not always a long time. Preparing for the worst is empowering and gives you the confidence to deal with the situation in the event that circumstances beyond your control change.

#23 Capt. Obvious on 03.20.15 at 7:12 pm

True stories:

When we moved in, we mandated the few rugs be cleaned and all the window exteriors washed. No problem.
Gutters needed cleaning. Property management arranged to have it done.
In our neighbourhood to live in an equivalent house we’d need to spend $1000 more per month given what we’d put down and the price of houses in this hood.
Our furnace was rattling, LL and property management arranged to have it fixed. (No cost to them as still under warranty.)
Central humidifier wasn’t working. LL had it replaced.
Stove oven stopped working. LL didn’t even bother having it looked at because it was oldish, and got us a brand new one.
Would I buy in this neighbourhood? Yes, absolutely, but when it makes financial sense. Right now it’s cheaper to rent.

#24 Mark on 03.20.15 at 7:13 pm

“Anything the matter with being less than the rule of 90? Eg I am 30 and have 0 real estate?”

In this environment, probably not. But purchased at an appropriate price, to accommodate reasonable lifestyle requirements, and with only modest amounts of leverage (if even), RE can be an important diversifier. In Canada, evidence of inverse correlation between the RE market and the stock market is substantial, so RE exposure can have quite a profoundly smoothing effect on portfolio returns.

Residential RE tends to be fairly correlated with REITs of all types, so as prices become more reasonable (ie: 50% off of current levels, if not more), you should consider picking up some REITs if you aren’t in a position to purchase a principal residence at the time.

#25 Freedom First on 03.20.15 at 7:14 pm

At one time the Boomers were house lusting moist virgins. I’ve been reading some of the comments about Boomers being able to buy houses at 2.5 x’s income by numbnuts that take figures out of context. Many many Boomers lost their houses because the interest rates skyrocketed to historic highs and many had to take 2nd mortgages near 30% to renew. This put their mortgage, taxes, and utilities to a figure above the main breadwinners take home pay, and they lost the house. After the carnage is when I bought my first house, and by that time my net worth was more than the cost of the house, which had gone down 55%, after being renovated and had new appliances added. I am, and have always been, a #’s man. Kill your emotions, expectations, greed, and fear, always go by the #’s, and you will always do well. Whether you were young then or are young now the same principles apply. Fact.

#26 Kilby on 03.20.15 at 7:21 pm

Good time to save your money and build that “cushion” Maybe those with a lot of unpaid for toys should think about the Harley’s, F-350’s and snowmobiles as there will be a big price drop in what one pays for these things soon.

And in Kelowna those $75,000 speedboats and other floating playthings……

#27 Smoking Man on 03.20.15 at 7:22 pm

Rules, Shmoles..

Live it up, baby…..

Our lives are short. And If you chose to be a salad easter, keep healthy, your rewarded with aimlessly waking the halls of a nursing home, not even realizing your diaper needs changed.

No thanks, I see it 3 times a week.

#28 Phil on 03.20.15 at 7:24 pm

>>If 40-year-old Patrick had $25,000 in the orange guy’s shorts, $35,000 in a TFSA and $145,000 in an RRSP, plus a house valued of $500,000 with a $300,000 mortgage, he’d have a net worth of $410,000.<<
–You must mean $405,000? ;-)

#29 Fuzzy Camel on 03.20.15 at 7:29 pm

I say Amanda should go all in. Let it ride, put all your cash in real estate. It never goes down. Best investment you’ll ever make. Garth is just a bearded old coot and doesn’t know what he is talking about. He’s been wrong forever it seems.

Amanda should also lease a really expensive luxury european vehicle, and use the rest of her money to buy mutual funds. She’ll be rich!

#30 down and out on 03.20.15 at 7:32 pm

WOW, rule of 90 ,is it possible for a ninety year old to get a mortgage .I ,of the great unwashed was talking to the NLB ,when the elderly couple ahead of me left with their new mortgage .I could not help myself but ask if there is an age limit on applying and getting a mortgage .Answer was no age limit ,the bank looks at 3 things ,income ,net worth and ability to pay and I could and should get a pre-approved amount in place ,you know, in case I feel the need to ” live a little ” I think her words were to me in my retirement years . Oh ,Great Wise Garth ,what have we as a country done ,I of course being rote educated in math see no escape and soon may jump to the other side of thinking that we cannot raise interest rates except in token little baby steps for fear of falling in a real recession not this dancing around the rim stuff of the last few years. Rule of 90 should be a law not a guide.

#31 HJD on 03.20.15 at 7:41 pm

Interesting blog. A question about your 90% rule. I’m retired with a pension, one that would require about $700,000 earning 7% per year to supply the monthly income it provides. In calculating the % allocated to real estate, the percentage works out better if I include the $700,000 as part of my net worth. Make sense?

#32 Mister Obvious on 03.20.15 at 7:44 pm

#11 Vivek

“I happen to have 100% of my net worth in financial assets: 71% Equities, the rest Bonds and cash. I’m wondering if that’s a problem.”
————————-

Probably not, but it raises an interesting point.

The ‘rule of 90’ says nothing directly about the total value of assets. It merely suggest a sane ratio between real estate and invested liquid assets for varying ages.

Given the price of housing in various parts of the country we can, if we wish, work backward to some absolute number for total asset value.

Obviously, there are boundary conditions. The rule has practical application only between the ages of say, 25 to 70.

It’s unlikely situations will exist where 10% of one’s assets will be in real estate at the age of 80.

But what should the aggregate value of assets be? That’s the $64,000 question. No, wait… $64,000 isn’t nearly enough.

Unfortunately, if you really want to know ‘how much’ the question one needs to ask oneself is “when do I plan to die”.

Personally, I don’t care much for that question so my solution is to have enough so that with any reasonable expectation of return (and inflation), I will never significantly diminish my capital.

This goes hand-in-hand with willing your unused capital to some deserving person and/or agency who can put it to honorable use. That might include your kids but not necessarily, I suppose.

#33 Funky on 03.20.15 at 7:52 pm

Is it any wonder this is the “Top Canadian Personal Financial Blog” with posts like this?

No,I’m not being paid.

#34 will on 03.20.15 at 7:55 pm

Talked to a couple of folks who work in construction in Saskatoon today. The guy has worked in the industry for a long time (20 or more years) and he’s not optimistic. Says developers are cutting right back. Change is afoot in Saskatoon construction.

#35 crowdedelevatorfartz on 03.20.15 at 7:56 pm

@#27 Smokey
They allow you a mirror 3 times a week?

#36 Glengarry Glenn Ross on 03.20.15 at 7:59 pm

A question for our host
Am 48 and have no RE at all and a measly 150k burning a hole in my pocket.
I’d like to invest it for the future with an advisor but just am not sure how safe that is.
What I MEAN IS, WILL I WAKE UP ONE DAY JUST TO HEAR HE’S IN THE CAYMANS WITH MY DOUGH?
In other words, what protection is there for poor people like me who don’t trust these things very much.
Thanks very much garth i advance and hooah.

Deal with a licensed fee-based person who will build a portfolio of assets you own individually. Besides, you have a higher chance of being hit with debris from an old Soviet satellite. — Garth

#37 Yuus bin Haad on 03.20.15 at 8:00 pm

Bien sûr, la mandarine est le nouveau orange.

#38 TurnerNation on 03.20.15 at 8:01 pm

But Dollarama’s stock is at price highs of all time. Earnings out next week shall see if stock is fairly valued.

Dollarstore nation.

#39 Hot Albertan Money on 03.20.15 at 8:02 pm

But the burning question is…Did Patrick buy Life Insurance?

#40 Adam on 03.20.15 at 8:13 pm

After all those years of emergency rates when there was arguably no emergency, and now we have one and our rates cant drop much lower to provide us with the cushion we’ll so desperately need in the coming years. Poloz’s fault? No. A big thank you goes across the pond to the ex-pat who really helped get us in this mess. Let’s hope he stays an ex-pat, I don’t think his home coming will be trumpeted after a multi-year recession caused by emergency rates long after the emergency had passed in this country.

#41 Wildnutter on 03.20.15 at 8:13 pm

#25 Freedom First on 03.20.15 at 7:14 pm

Live is to be lived. Not spent counting beans. You sound like a piece of dry toast with no whiskey to wash it down.

#42 Andrew Woburn on 03.20.15 at 8:21 pm

“A growing number of small-cap companies, historically considered mostly as a source of investment performance, have jumped on the dividend bandwagon.

Today, 324 companies in the S&P 600 SmallCap Index pay a dividend, a 10.2% increase over the start of 2014, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indexes.”

http://www.investmentnews.com/article/20150319/FREE/150319883/small-cap-stocks-go-large-on-dividend-payouts?

#43 Glengarry Glenn Ross on 03.20.15 at 8:23 pm

He says (and I now agree), this will lead the Bank of Canada to another rate decrease. Yikes.

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

Looks like our unregulated realtors will run this country to the ground.

#44 Andrew Woburn on 03.20.15 at 8:26 pm

Like the old song, “The party’s over”.

“Wages have become even more critical as households, still shaken after being caught with too much debt when the recession hit, remain unwilling or unable to tap home equity or let credit-card balances balloon to buy that new television or dishwasher. By not overextending themselves again, Americans are only spending as much as their incomes will allow, meaning that 70 percent of the economy is riding on how fast pay rises.”

“I have been impressed with how reluctant consumers are to increase their debt on especially credit cards,” Richard Curtin, director of the University of Michigan Survey of Consumers, said on a conference call last week. “I wouldn’t expect a sharp increase in credit-card debt, and that’s going to limit spending at the retail level.”

http://www.bloomberg.com/news/articles/2015-03-20/wages-haven-t-been-this-crucial-to-u-s-economy-in-half-century

#45 Mark on 03.20.15 at 8:28 pm

“After all those years of emergency rates when there was arguably no emergency”

There most definitely was an emergency, which remains on-going. The economy hasn’t been able to meaningfully grow and provide prosperity across most sectors for at least the past decade, if not longer. Unemployment, already structurally high even before entering the downturn back in 2007-2008, continues to worsen. And job quality is the worst as its been in almost a generation.

Even top grads in fields such as engineering and the sciences have trouble finding jobs these days, and their productive talents are being wasted. To say that this is anything but an ’emergency’ to the economy is really demonstrating a blissful unawareness of the severity of the situation facing Canadians.

The past 35 years in Canada have been characterized by no realized equity risk premium for Canadian investors. That’s right, Canadian investors haven’t earned anything extra for investing in riskier investments (such as stocks) versus less risky investments (ie: bonds). Excess return has been clearly vested with people who are overly conservative and are not willing to be imaginative or take risk. Our most creative and productive have been forced to leave the country in droves, often to the United States where monetary policy has at least been more accommodative of risk taking.

#46 Mark on 03.20.15 at 8:32 pm

““A growing number of small-cap companies, historically considered mostly as a source of investment performance, have jumped on the dividend bandwagon.”

Really unfortunate since small-caps are where very high ROE’s tend to occur, and investment by smaller business tends to be more efficient than investment by large business. If the small-caps are forced to pay dividends by the capital markets, rather than allocating capital to growth, what does this really say about how accommodating our economy is towards those who want to grow it, grow employment, and create things?

This is just yet another sign of a stock market that is in significant distress in Canada, and an economy which is almost completely unnaccomodative of the individuals and businesses that want to grow when they’re rewarded with a higher valuation merely for paying dividends, rather than investing in accretive growth.

#47 JustMe on 03.20.15 at 8:32 pm

http://download.remax.ca/PR/HMO2015/Report/Outlook2015Final.pdf

“Calgary’s housing market had another year of healthy price appreciation as the average residential sale price has grown and is expected to finish off 2014 with an approximate six per cent gain”

“RE/MAX expects 2015 to be a balanced market”

“Calgary is projected to see a four per cent increase in unit sales and a more modest three per cent increase in average residential sale price”

“The city’s growth is prompting optimism for its housing market in 2015.”

#48 Millenial-falcon on 03.20.15 at 8:33 pm

Not the case in BC, which will now lead the country in growth , vancouver is the new Calgary

#49 Ray Vasquez on 03.20.15 at 8:35 pm

Inflation at 1%. This is just full of crap. Even if this was true, 5, 10, 20, 30 year Canada bonds would be 2.00%, 2.5%, 3.00%, 3.5% at the very least, today.

Long term bonds are supposed to be 3%+inflation so really a 4% 30 year rate is the very least normal not the 1.94%, 1.89%, 1.30%, 0.71%,30, 20, 10, 5 year Canada bond yields today, March-20-2015.

This is so manipulated and artificially done to keep rates, yields down that it is a joke just talking about it.

It has nothing to do with the economy and trying to help it.

Emergency rates, bond yields is a phrase coined by the clueless and spin doctors of today.

Good luck avoiding another big down turn in all markets, guys!

Economic malaise is just another slower, torturous economic, financial way of doing this.

They destroyed the oldest concept of finance, interest paid on money.

George Carlin had it right!

#50 Balmuto on 03.20.15 at 8:37 pm

#39 Adam

“After all those years of emergency rates when there was arguably no emergency, and now we have one and our rates cant drop much lower to provide us with the cushion we’ll so desperately need in the coming years.”

Basically we didn’t want too strong a loonie so we made sure we weren’t too far off the Fed. That was the thinking. But, yeah, we’re out of bullets now. Unless we do QE North.

#51 John in Mtl on 03.20.15 at 8:41 pm

Sir Garth, what, with your experience as an MP and connections to the federal gubment, could you not make a few calls or have a few lunches with those folks and try to reason them to reverse course to save Oh Canada??

We are fast heading toward disaster. This is a bloody shame and a disgrace.

#52 NIRP on 03.20.15 at 8:42 pm

“He says (and I now agree), this will lead the Bank of Canada to another rate decrease.”

——————————————————————-

Just wait until rates go negative. Negative Interest Rate Policy will make debt=wealth.

Nobody in Canada will pay you to borrow money. — Garth

#53 Vanecdotal on 03.20.15 at 9:02 pm

#229 gut check from yesterday

“oh yeah, it’s basically a prison sentence, except you get to pick the wallpaper.”

LOLz! Soooo true. I affectionately refer to my current digs as the “Boat Anchor”.

#54 Retired Boomer - WI on 03.20.15 at 9:03 pm

Freedom First, may i ask you a question?

First a bit of background. I have read, and posted on this site for several years, as have you. We both appear to be rather reasonable in that we hold no debt. I own a home, I believe you used to, but presently rent. (Were I in Canada I likely would as well, the numbers being what they appear).

We both have been dissed as “greedy boomers” over recent times.

My question:

If you could relive your life over today, would you change your financial approach?

My answer: no. thanking you in advance. RB

#55 Nagraj on 03.20.15 at 9:06 pm

Maybe that “disorderly unwinding of household imbalances” has already been “triggered”. If not, and this disorderly unwinding is triggered tomorrow morning, does that mean that tomorrow afternoon we’ll see lynch mobs of unbalanced Canadian householders madly winding rope around the necks of bank employees? Loan officer: “It’s not me! I’m just doin’ my job! I can’t pay my mortgage either! Hang the manager! It’s him!”

Mr. Madani is reasonably clear, cool, and properly cautious (not yelling Fire! tho he smells smoke).

What’s so disorderly about nice folks defaulting on their loan obligations?

Levity aside – I’m beginning to think that there are no solutions to Canadians and Canadian governments being overly leveraged.
Lenders won’t get all their money back. Not even in degenerate Loonies.

#56 Andrew Woburn on 03.20.15 at 9:10 pm

How to make condo developers drool.

“Chinese company builds 57-storey skyscraper in 19 days, in pictures”

http://www.telegraph.co.uk/news/picturegalleries/worldnews/11485389/Chinese-company-builds-57-storey-skyscraper-in-19-days-in-pictures.html

#57 Mark on 03.20.15 at 9:21 pm

“Inflation at 1%. This is just full of crap. Even if this was true, 5, 10, 20, 30 year Canada bonds would be 2.00%, 2.5%, 3.00%, 3.5% at the very least, today.”
..
“Long term bonds are supposed to be 3%+inflation “

Long-term bonds at a real return of 3%? That’s way, way in excess of what government debt historically has yield long-term. Try closer to 1% real return. YoY CPI is currently approximately 1%, trending lower, so long-term bond yields of 2% are completely appropriate in this environment.

The economy can’t even really grow at a real rate of 3%, so how exactly do you figure anyone, nevermind the most creditworthy of borrowers, the government, can afford to pay you a rate that exceeds economic growth? Think about that for a while… Its unsustainable for obvious reasons.

#58 Washed Up Lawyer on 03.20.15 at 9:35 pm

Millenial-falcon on 03.20.15 at 8:33 pm

“…vancouver is the new Calgary.”
************************************

With a softer, gentler rodeo and a resultant massive protest blocking the Burrard Street Bridge.

#59 Cyclist on 03.20.15 at 9:35 pm

That rule needs an overhaul Garth. As Mark notes, it works better for the home”owner” who is carrying a big mortgage. It is also not geopraphically
representative.

#60 The real Kip on 03.20.15 at 9:39 pm

Does that idiot Madani even have a resume? Of course the BoC Will lower interest rates again as has been pointed out by others in the pathetic comment section here.

It’s an election year and the federal government will not allow a recession. They’ll lower rates as much as is required to win the election.

#61 ManyYs on 03.20.15 at 9:40 pm

Garth, would you also share the option from Vanguard folks in regards of the performance outlook for 60/40 portfolio?

“… over the next decade, returns for a balanced
portfolio are likely to be moderately below longrun
historical averages.
Our simulations indicate that the average
annualized returns of a 60% equity/40% bond
portfolio for the decade ending 2024 will be
centered in the 3%–5% range after inflation,
below the actual average after-inflation return
of 5.6% for the same portfolio since 1926. ”

Why would you have 40% bonds? — Garth

#62 DisgustMadeMePost on 03.20.15 at 9:46 pm

Home owners

Ho moaners? *shrug*

1% inflation ? Geez , my favorite bag of rice from Cali is 9.50! now… Guess they’re not checking the exchange.

#63 Waterloo Resident on 03.20.15 at 9:50 pm

Ontario’s manufacturing sector has been dying for decades, so a slowing economy for someone in manufacturing is just a way of life.

I agree with what Garth said yesterday; most likely the housing market WON’T crater, it will simply flatten out. And when that happens their investment won’t rise in value, meanwhile they will be spending double what it costs to rent a place, thus they won’t have the ability to save and invest and make money on the booming equity markets.

Its funny how highly educated professionals are so BOOK SMART yet in life they are SO DUMB.

Garth said: “90 – age = % you should allocate to real estate.” I’m going to write that down on a piece of paper and stick it to my bathroom wall, that way I won’t forget that golden nugget of information.

Here are my golden rules that I made for myself but I’ve chosen to ignore:

– Starting at $2 Million in investment net worth, buy a house with cash at 10% of your total investment net worth (why not). So you go and buy a $200,000 shack somewhere around London Ont, maybe even more remote.
Sell and move to a larger house whenever your investments double in value, so that means you trade up to a $400,000 house when your equity holdings are worth $4 Mil.

Hey, if you got that sort of cash you can play around a little bit and do stupid things like that, if you know what I mean.

#64 Washed Up Lawyer on 03.20.15 at 9:53 pm

My memory is fading. I screwed up the famous words of George Herbert Walker Bush.

It should have read “kinder, gentler” rodeo.

#65 Vanecdotal on 03.20.15 at 9:54 pm

#48 Millenial-falcon

“Not the case in BC, which will now lead the country in growth , vancouver is the new Calgary”

Christy Clark, is that you? Who knew you were a GT follower, that’s great. Maybe we can start turning this provincial train wreck around now, hope you’re taking notes.

Hmmm. BC Stats own Official Government Labour Force research reports would beg to differ with your rosy portrait of the “growing” BC Economy. The accompanying charts are a quick read, quite enlightening and paint a more accurate picture of how BCs economy is actually doing.

Recommended reading: “Labour Force Statistics (Monthly Release)” available here: http://www.bcstats.gov.bc.ca/StatisticsBySubject/LabourIncome/LMIGateway/SpecificPopulationGroups.aspx

From 2013, but relevant: http://www.vancouversun.com/business/2035/Barbara+Yaffe+Economy+jobs+wages+responsible+recent+migration/8875308/story.html

Words like “stagnant”, “hanging on by its toenails”, or “in protracted slow decline” come to mind. The most recent stats would not yet reflect the massive layoffs in the oil patch. Many thousands of the BCers mentioned in this article that left for well-paying work in AB are now coming home to roost, unemployed and accustomed to high 6 figure incomes and the accompanying debt liabilities.

Anecdotally, amongst my peers and colleagues, anyone wanting a better quality of life / lower cost of living has been packing up their families and leaving the Lower Mainland lock stock and barrel in the last 5 years, and often BC altogether, in search for greener pastures. Unfortunately, many left for Alberta, oh, wait.

I do agree Vancouver may well end up just like Calgary… albeit the post Albertapocalypse 2015 Bust version.

#66 HappyJack on 03.20.15 at 9:56 pm

Apparently not only Alberta is having problems with low oil prices, but some States are as well. My son has lived in Alaska going on 20 yrs. and now lives in the Fairbanks area. This is a snip of a chat we had on Skype last night.

No state income tax in Alaska, and no state sales tax. Individual boroughs (counties) have their own sales tax, but Fairbanks isn’t one of them.

[3/19/2015 11:23:51 PM] J.A. (Tony) Martin: This could all change with Alaska’s financial future in question due to the major drop in oil prices.

[3/19/2015 11:24:51 PM] John Martin: I thought only Canada was having problems w/low oil prices.

[3/19/2015 11:26:15 PM] J.A. (Tony) Martin: No, we’re in some serious trouble here in Alaska. Oil revenues have traditionally been 90% of the state government’s budget. Our production is down and prices have fallen off a cliff, so there will be some big changes coming.

[3/19/2015 11:26:58 PM] John Martin: Our gas pump prices are going back up. HLK are at $1.06 per litre. They were down to about $.85 not too long ago.

Ours went back up too.

He also mentioned previously that if the state had a surplus the people would get a cheque, and in some years past it was quite substantial.

Keep Smiling !!

#67 NoOneOfConsequence on 03.20.15 at 9:58 pm

What to say to all those people who say….”Why are you wasting money on rent? You should own your own home.”

Talking about ‘waste’….well….here are some interesting figures for Vancouver: The following are in the same complex “West” – in Olympic Village, in False Creek.

For sale: ($319,000) http://vancouver.craigslist.ca/van/reb/4852499607.html

For rent: $1495 / month http://vancouver.craigslist.ca/van/apa/4936871051.html

Lets call the mortgage a straight wash – we won’t include it, but we will assume 30K down. Lets assume similar utilities.

RENTING: $1495.00 per month + $70 content insurance = $1565 “wasted”

Mortgage Details: $319,000 sell price with $30,000 down. 2.550% 5 year Vancity mortgage.
CMHC calculators (http://www.cmhc-schl.gc.ca/en/co/buho/buho_023.cfm) tell me that the fee is $9103 tacked onto mortgage = $298,103 total mortgage amount.
Vancity payment calculator (https://www.vancity.com/Mortgages/MortgageCalculators/?xcid=pers_megamenu_mortcalc) tells me that my payment is $1343.83 per month. Flip to the Amortization calculator on same banking website – the interest paid over the 5 year term = $35,024 in interest / 60 = $583.73 per month in interest.

OWNING: Mortgage amount: $298,000
Amount of interest paid over term = $35,024.35 / 60 months = $583.73
BC Transfer tax: $4280 / 60 months = $71.33

Interest = $583.73 per month
Condo Fee = $226.00 (est.) per month
Property Tax = $170.00 per month
Water Tax = $84.00 per month
Homeowner insurance: $122.00 per month
Transfer Tax Payment: $71.33

= $1256.33 extra fees paid just cuz you own.

So there you go:

Renting you “waste” $1565.
Owning you “waste” $1256 of a total outlay of $2016 per month.

In this example…you are actually only “wasting” $139 per month by renting.

So don’t let people tell say you waste 100% of your rent…that’s completely false. You actually only ‘waste’ about 10% of your total rent payment in comparison, because owning comes with that many extra costs.

Oh yeah…and you have an extra 760 per month to have fun with.

Any problems or issues – boom, you are underwater.

This is why real estate MUST appreciate – as soon as it doesn’t, the numbers simply don’t make sense.

Did any of you sharp folks spot the mistake? Oh yeah…forgot the effort it took to save up $30K for a down payment!! There’s another $500 per month for five years!!

Now tell me that buying a home at these valuations makes sense….NOPE.

#68 notsure on 03.20.15 at 10:03 pm

I have asked but was told by you Garth to not realize my pension . But as it will apply to the rule of 90 in my opinion. What would you allow, I will be receiving a pension worth 2500. in a couple of years with a paid up house . I have looked on line a tried to figure what others would say it worth , not much info found , to test my standing in your formula .

#69 Vanecdotal on 03.20.15 at 10:13 pm

#67 NoOneOfConsequence

+1

Great post. Don’t forget the lost opportunity cost on that $30k down payment. That and condos as an “asset” class, bought in Van since @2010, even in “hot” areas have largely underperformed since, either seeing actual price declines or barely / or not keeping up with actual inflation.

#70 Andrew Woburn on 03.20.15 at 10:18 pm

Germany’s leading newspaper, Der Spiegel, reports:

“With broad public resistance and a European Parliament majority against it, EU officials are rethinking their positions on the proposed free-trade agreement with Washington. Many fear investor protection rules will wreak havoc on national laws.”

One big concern is the kind of problems already experienced by Canada.

“In 2011, the government of the province of Québec decided to impose a moratorium on drilling for gas and oil under the St. Lawrence River. Canadians have generally been quite open to new fracking technologies, but not when it came to deploying them underneath such an important waterway.

In response, Lone Pine Resources, an American firm, sued for $245 million in damages at an international arbitration court. The company claimed that the decision by the Quebec government to cancel a natural-gas exploration permit for its Canadian subsidiary had been “arbitrary, capricious and illegal.” In its arbitration suit, the company said the decision had been made “without a penny of compensation.” As in all the other cases, Lone Pine Resources explicitly invoked NAFTA’s Chapter 11 investor protections.”

http://www.spiegel.de/international/business/eu-fears-ttif-free-trade-agreement-could-spur-litigation-a-1015013.html

#71 Vanecdotal on 03.20.15 at 10:31 pm

Perhaps before I get called out for bs by the house humpers on what a terrible money-losing investment a Van condo has been in the last 5 years, REBGVs own massaged HPI Frankenumber for Greater Vancouver Apartments: http://www.rebgv.org/sites/default/files/February%202015%20Stats%20Package.pdf

5 Year Change = 4.0% “increase”. In FIVE years. So assuming an ultra conservative annual 2% rate of inflation that’s so far a -6% loss BEFORE adding in all the additional costs of ownership, mortgage interest, fees, and lost opportunity costs on the downpayment.

Yup, Vancouver is Booming! / sarcasm off.

#72 Balmuto on 03.20.15 at 10:35 pm

#57 Mark

“Long-term bonds at a real return of 3%? That’s way, way in excess of what government debt historically has yield long-term. Try closer to 1% real return.”

No, that’s too low – historically it’s closer to 3% than 1%. I believe the long-run average is around 2.5%.

#73 Smoking Man on 03.20.15 at 10:36 pm

My Rule.

Thinking, planning, scheaming, such a waste of time.

Let’s look at this class, what are the mechanisms of a thought.

In our brains, it’s neurons firing off small charges.

Let’s break it down a bit more. Atoms and electrons, you have a centre mass, and orbiting electrons. They’re influenced by external forces, apply heat electrons fly faster, cold, they go slower.

Cold and heat are other combinations of atoms and electrons.

So every thing has a trajectory. Motion.. It’s direction , it’s destiny are pre determined.

In the mini world, there is no thinking, just atoms flying around on a path.

You humans have a demented bielef that your thoughts and actions can change an outcome.

Fools, the second you die is set, nothing you can do to change it by a billionth of a second. Every orbiting electron, influenced by other orbits of other atoms.

Destonology. Bitches..

The path is set, you can’t change it, take your hands of the wheel and enjoy the view.

Dr Smoking Man.

#74 Show Me The Money on 03.20.15 at 10:38 pm

Show Me The Money

Garth you recommend a 60-40 diversified portfolio, should this investment strategy change as rates go up in the US?

Fundamentally, no. — Garth

#75 DreamingInTechnicolour on 03.20.15 at 10:48 pm

1st quarter business results for most companies will be out in less than 2 weeks give or take a few days – YIKES!
Remember the Scots motto “Always Be Prepared”
Expect the lay-off notices may really start

#76 Naga on 03.20.15 at 10:52 pm

Garth, Mondani a Guru, give me a break.

The problem with economists or forecasters is their misuse of statistics and predictive models without understanding underlining assumptions.

Question how many major world class cities have RE prices above those of TO and Van?

How can anyone justify a $2m , 2 Bed apt in Stockholm?

What is the price for same in Zurich?

I could go on but perhaps you could get your buddy Mondani to do some basic research on the topic to compare major cities RE, quality of life, employment, blondes, brunettes, and then try to forecast the future on all parameters…..

On your rule of 90 I bthink it may cause most pain if misunderstood, just like the rule of needing 70% employment income for retirement, great rule for financial advisors but probably not necessary unless one is a life renter without a mortgage free home when retiring.

Naga

#77 Mark on 03.20.15 at 10:56 pm

“No, that’s too low – historically it’s closer to 3% than 1%. I believe the long-run average is around 2.5%.”

http://i.investopedia.com/inv/articles/site/Corpfin78.jpg

Looks to be much closer to 1% over the interval 1900-2000.

#78 Sophia on 03.20.15 at 10:57 pm

If I understand correctly, when you hit 90 you should not own a house, or own one that’s worth $0, or be a billionaire so that the relative value of your house is close to zero. Really? I guess I don’t understand this rule correctly…

#79 Vanecdotal on 03.20.15 at 11:02 pm

Just took a closer look at REBGV’s attached price performance chart and it appears I should revise my previous statement to say “…what a terrible money-losing investment a Van condo has been in the last 8 years,” as opposed to “5”, as according to their very own chart it appears if one bought at the prev. peak @ 2007, they’ve been holding a depreciating asset even longer, exacerbating the loss.

It’s great how they cheery pick which stats to highlight in the opening paragraphs, “accentuate the positive”, as they say. “Lipstick and Eyeshadow” might be more accurate.

There are many examples in my circle that corroborate this, especially those who bought condos or townhomes. There’s an an entire generation in YVR (or 2) may not be able to save enough (anything?) for retirement due to bad financial decisions in many cases stemming directly from a lack of financial education, and a complete lack of publicly accessible RE data transparency and regulatory oversight.

#80 Vanecdotal on 03.20.15 at 11:02 pm

Der. “Cheery” should be “cherry”. Although it kind of works.

#81 Edmontonian on 03.20.15 at 11:04 pm

IN Edmonton the market is sure cooling off. Lots of “for sale” signs coming up even downtown at almost every high-rise, yet there are 6 towers breaking ground with a few more superstructures set to break ground this fall. Even Brad Lamb from Toronto has a project called the “jasper” on 106 street DT Edmonton. Yet a famous financier and great Investment Broker Hilliard Macbeth
(from Edmonton) Says The BUBBLE IS Gonna Burst! http://www.cbc.ca/news/business/housing-market-a-bubble-set-to-burst-hilliard-macbeth-says-1.2784511

#82 Kim on 03.20.15 at 11:20 pm

Thank you Thank you Thank you #67 NoOneOfConsequence & #71 Vanecdotal!!!

I have printed out your excellent rent/buy comparison notes and plan to look at them for a ‘reality check’ whenever I feel tempted to succumb to the family/bank pressures to buy a place in Vancouver.

I rent a Westside apartment that I love for only $1090 per month. It is in a great location and spacious and well-maintained. I feel so much better now to know that I am not ‘throwing my money away’.

Note for Vancouverites looking for cheaper rent: apartment is so cheap because it is in one of those walk-up three-story buildings that are not snazzy on the outside but very big on the inside. No elevator, dishwasher or granite countertops but real hardwood floors and excellent soundproofing and so much space- and so much money left in my pocket every month!

#83 wallflower on 03.20.15 at 11:30 pm

#10 Darryl on 03.20.15 at 6:24 pm
Snowboid
what’s the cost of medical down there anyways?

Heard about broken hip guy tonight… ~ $60K to get him mobile again. No emergency health insurance because he decided the egregious premiums due to his 86 year old carcass too high and he is enormously wealthy anyway… he probably made the right decision.

#84 Realtors 1, Economists and Pundits 0 on 03.20.15 at 11:40 pm

Back in 2009, I was so confident that the emergency rates were just that – a short term emergency measure. The arm chair economist ‘bears’ at the time were referencing the dangers of entering RE with low rates as buyers would soon be shocked by 80’s style interest rate increases.

Vancouver Realtors, that great uneducated, unregulated bunch that they are, put forward the contrarian view that rates would stay low for 5 to 10 years. While it was obviously in their interest to say so, the fact is they were right. We are in our 7th year of low rates, and has Garth has finally admitted here tonight, rates will go even lower.

What a sad commentary that this group got it right, and all those schooled in monetary and fiscal policy got it so wrong. What a sad state of affairs indeed for this country.

The fact is that we have seen a 13 year bull run in places like YVR and GTA, and when prices start their decline, it will be many many years before they get back any fundamental metrics linked to income. Prices are sticky on the way down. So all together, we could see another year or two of increases, followed by some stagnation, followed by years of decline. All told, you are looking at a 15 year play of events. Life is too short to wait around for these macro events to take place.

Rates are low because the economy is in trouble. Buy at your peril. — Garth

#85 Robert agnrw on 03.20.15 at 11:47 pm

We are now in the middle of the Kondracki and winter it is unlikely that you will see a recovery before 2027 I would recommend that you begin stocking up on canned food particularly beans as they appear to be an expensive this time of the year we should all think Stephen Harper for providing us with the opportunity to be able to use weapons in our home

#86 Mister Obvious on 03.20.15 at 11:56 pm

#78 Sophia

“I guess I don’t understand this rule correctly…”
————————–

No, you don’t. Read my post at #32.

#87 Dee on 03.20.15 at 11:57 pm

Hi Garth, one question I’ve always had with your Rule of 90 — I’m 33, so in theory that means 57%. But I currently don’t own real estate (and in this climate, as a Toronto resident, hell no I don’t want to). Would you recommend going heavier into REITs or something like that in the interim? Just not worrying about it? Purchasing a lovely, cheap plot of land in Cape Breton (I kid, …mostly)? Thanks!

#88 Mixed Bag on 03.21.15 at 12:11 am

Interesting… (said in the voice of Montgomery Burns).

My mortgage comes up for renewal next year. Wondering if I should blend and extend, or wait it out? When is the rate drop, then subsequent rate hike, forecast? (As much as these things can truly be forecasted).

#89 Monopoly Guy on 03.21.15 at 12:35 am

Garth’s rule is a good first approximation, but it isn’t one size fits all. Investment strategy depends on life situation, goals, current assets, and risk tolerance. I’m 45, live in Vancouver, and have assets in the 7 digits. Do I think it’s a good idea to invest half of this in real estate? I do not. It’s in a conservative portfolio, managed by a professional, generating a 6-8% return.

My point is, most people with real assets are not anxious to gamble them away on speculative investments. And as our hirsute host is fond of pointing out, if Canadian real estate had a bond credit rating, it would be “CCC” at the moment (i.e. junk).

#90 me on 03.21.15 at 12:54 am

Holy crap self-servatives are looking for that jority again we are toast.

#91 @67 on 03.21.15 at 1:11 am

Oh ya I live across the alley from West. I rent at a 400k condo for 1500 a month parking incl. The strata fees are 300 a month property taxes would be at least 100 a month.And it is rented thru a property management co so there’s another 75 a month So all I know is that the owner has 400k invested and grosses 1000 a month. Dear landlord if you’re reading this thank you for allowing me to smell up your brand new condo.

#92 Topsy-Turvy on 03.21.15 at 1:12 am

Garth wrote> But the rate of tax is unknown, since you might cash some in when you’re taking a year off to learn body art, or retire in a low tax bracket.

It is always strange to hear that at the time of retirement we will be in a lower tax bracket. Financial advisers conveniently forget about time value of money working in reverse in the case of purchase power of the future money.
Who would imagine in 1965 that $10,000 now would have a purchase power of $74,000? Any 30-year old who currently earning less than 137,500 and ready to leave in a range of current $40,000 when he reached 80 actually will be in a higher tax bracket as current $40,000 with 2.5% inflation in 50 years have to be worth (surprise!) $137,484.35

#93 ETF Noob on 03.21.15 at 1:56 am

A little off topic, but who do you trust for ETF quotes? VCN seems to have closed today at 30.03 (yahoo), 30.18 (reuters), 30.20 (bloomberg) or 30.22 (tdwaterhouse and google).

#94 M on 03.21.15 at 2:04 am

Gartho … I am happy you agree with Madani.
You’ve heard from me the first time (as well as of my bottle of Finlandia).
Just because I am a drunken sailor my 2 cents is certainly more valuable than most of the economists’ since they proved (in droves) that they don’t know crap about their profession (99.9%) or they are too dishonest to bring up the bad news (99.99%).
I usually provide a line (or two) of coherent motivation for the 2 cents
:)

#95 Balmuto on 03.21.15 at 2:24 am

#77 Mark

http://i.investopedia.com/inv/articles/site/Corpfin78.jpg

“Looks to be much closer to 1% over the interval 1900-2000.”

Those are returns, not yields. They incorporate price fluctuations that have nothing to do with inflation. The real yield is the nominal yield – inflation expectation (which can be calculated various ways, but the previous year’s CPI change is one standard measure).

Hard to find good data for Canada, but Robert Shiller’s online resource has data on US 10 yr bond yields and CPI data going back to 1871. Backing out previous year’s CPI change from the 10 year bond yield I get a median real yield of 2.53% from 1871-2001. Here’s the link (under long term stock, bond, interest rate and consumption data):

http://www.econ.yale.edu/~shiller/data.htm

#96 Millenial-falcon on 03.21.15 at 2:33 am

#65 Vanecdotal on 03.20.15 at 9:54 pm

Anecdotally vanecdotal , were u laid off or something?

#97 Amigo- so are you telling me prices are shooting up again? on 03.21.15 at 3:09 am

so are you telling me prices are shooting up again? (:

another 15-20% this spring just because of a tiny 0.25% rate cut…..

how is that even possible mathematically……

#98 Kayvan on 03.21.15 at 3:20 am

#67 NoOneOfConsequence

Thank you!
I thought I was drowning in the sea of delusion here alone in Vancity. Nice to know there is someone else out there that gets it.

#99 jane 24 on 03.21.15 at 3:44 am

Garth we are usually in agreement but on this one I disagree.

You do not need 1.6 million to retire if your house, cars and other bills are paid, the kids are gone and you have CPP and social security from the govt. I know that all the RSSP sales guys stuff pushes numbers like these but you don’t need this kind of money.

1.6 million Cdn $ is out of reach for most folk as the bills in life are so high. It scares people and it is not necessary. If you were not the type to go on holiday 4 times a year before you retired, why would you start now when your health is declining.

I retired early last year at 59 thinking that I would try out the finances I had and then pick up a part time job if necessary. I am surprised at:

1. how busy I am
2. how very cheap it is to travel off peak and last minute
3. How little savings I have gone through.
4. how many deals are avail for seniors.

Do I have $1.6 million outside of my house? My govt free money doesn’t start until I am 66 (UK just put the ages up). Yes I do have this amount in assets but I won’t be needing it at this rate. My kids will get lucky. But why work for your kids inheritance, let them make their own money.

#100 TRT on 03.21.15 at 5:06 am

Post #73 Smoking Man

You are wrong. You haven’t heard of Quantum Mechanics? Electrons don’t ‘move’, they disappear and reappear somewhere else spontaneously and randomly. Your view is what they had 70 years ago where they thought the future is predictable…unfortunately or fortunately, there is unexplained randomness in the universe.

Stick to track 9 stuff boss.

#101 Bottoms_Up on 03.21.15 at 8:22 am

#92 Topsy-Turvy on 03.21.15 at 1:12 am
————————————————–
I think you’re missing the point, the examples are “all things being equal”.

The future $137,000 tax bracket is therefore considered to be the same as the current day $40,000 tax bracket (ie, taxed at the same rate as it’s the same equivalent income based on purchasing power).

#102 Bottoms_Up on 03.21.15 at 8:26 am

#87 Dee on 03.20.15 at 11:57 pm
———————————————-
I see it more as advice for those that own real estate, to be sure they are not overweight in it. It’s not really catch all advice for everyone of all ages (ie, I wouldn’t rush out and buy real estate in order to satisfy the equation).

#103 Bottoms_Up on 03.21.15 at 8:29 am

#78 Sophia on 03.20.15 at 10:57 pm
————————————————
Exactly, once you turn 90 you probably shouldn’t own real estate, you should be in liquid assets.

#104 Bottoms_Up on 03.21.15 at 8:49 am

#68 notsure on 03.20.15 at 10:03 pm
———————————————-
I agree with you, you should count the value of your pension as an asset in the rule of 90.

#105 BG on 03.21.15 at 9:07 am

Why would you have 40% bonds? — Garth
—————————————————–

Why not?
Is there another argument than timing the market and assuming the rates will go up soon?

This is a genuine question.
I know your portfolio suggestion has preferred shares ETF in the safe stuff. But don’t they react to Interest Rates movement in the same way as Bonds do?
If they do, why bother using them instead of just bonds?

I have previously explained the best makeup of the fixed-income portion of a balanced portfolio. It includes 50% preferred shares (individual issues and ETFs) and 50% divided between government bonds, corporates, high-yield and inflation-indexed (if the portfolio is large enough). Preferreds are not always correlated to bonds, and given their great yield and tax-efficiency, react positively to a sustained investor demand. — Garth

#106 George S on 03.21.15 at 9:12 am

#68 ” I will be receiving a pension worth 2500. in a couple of years with a paid up house . I have looked on line a tried to figure what others would say it worth , not much info found ”

You can either search for “Canadian Annuity Rates” and find out what the annuity rate would be for your situation and then calculate what lump sum would give you 2500/month or you can get a rough idea for estimating your proportions under the rule of 90 by multiplying 2500 X 12 X20 = 600,000. I chose 20 because annuity rates are about 5% right now.
I guess you should also include CPP and OAC in the same fashion, about 200,000 or so.

#107 Jimbo on 03.21.15 at 9:14 am

Equity(net worth)=assets-liabilities. Therefore net worth =$405,000-$300,000=$105,000. We have a LOSER! What’s with the fuzzy math Turner?

Assets (liquid and real estate) of $705,000 less mortgage of $300,000 is a NW of $405,000. — Garth

#108 Smoking Man on 03.21.15 at 9:51 am

#98 TRT on 03.21.15 at 5:06 am
Post #73 Smoking Man
You are wrong. You haven’t heard of Quantum Mechanics? Electrons don’t ‘move’, they disappear and reappear somewhere else spontaneously and randomly. Your view is what they had 70 years ago where they thought the future is predictable…unfortunately or fortunately, there is unexplained randomness in the universe.
Stick to track 9 stuff boss.
……….

It don’t matter what you label it, the question remains.

My response to you, me thumbing these words.

Are they caused by the sub atomic world, battle of electrons.. Or are my thoughts and actions a direct response to random though, causing atoms to move my thumb.

I’m going with the first.

Now, when someone from academia reads this. Probably going through there head right now.

Who does the basterd think he is. He didn’t pay for an obidance certificate, he’s not worthy to even be allowed into the debate. The nerve.

And my response is, one Texas Micky of JD. I could easily figure out all the secretes to the Universe.

Dr Smoking Man…

#109 BG on 03.21.15 at 9:57 am

I have previously explained the best makeup of the fixed-income portion of a balanced portfolio. It includes 50% preferred shares (individual issues and ETFs) and 50% divided between government bonds, corporates, high-yield and inflation-indexed (if the portfolio is large enough). Preferreds are not always correlated to bonds, and given their great yield and tax-efficiency, react positively to a sustained investor demand. — Garth
—————————————————————-

Thank you Garth.

#110 TurnerNation on 03.21.15 at 10:33 am

Example of kando madness. These large, new but plain jane units at base of building near me are priced using a thoughtless formula of say $600/sq ft x size.

But who’d pay almost 1.3 mill plus closing, land transfer x2, plus kando fees also based upon footage.

http://www.realtor.ca/propertyDetails.aspx?PropertyId=15431474

#111 Franco on 03.21.15 at 10:44 am

I am surprised that Madani still has a job.

#112 young & foolish on 03.21.15 at 11:57 am

“Take 90. Deduct your age. The remainder represents the percentage of your household net worth you should ideally have allocated to residential real estate.”

How does residential rental RE fit into this equation?

Per the formula. Market value less debt determines the net worth portion. As it is an income-producing asset it is not lumped in with the non-producing residential portion. — Garth

#113 Mister Obvious on 03.21.15 at 12:23 pm

#97 jane 24

“You do not need 1.6 million to retire if your house, cars and other bills are paid, the kids are gone and you have CPP and social security from the govt.”
———————————

At first glance this may seem a reasonable assertion but let’s dig a bit deeper:

You and I might be able to count on OAS for most of the remainder of our lives (maybe) but that would probably be a bad assumption for younger people to make. Garth’s advice tends to be more universal.

If, by retirement, you have ignored the Rule of 90 where your home represents half your net worth and the liquid portion is rather modest, your problems could become two-fold.

First, there’s a large amount of wasted capital. You may find life could turn on a dime and money will become far more important than land. But selling a home at an advanced age (and especially into a falling market) will be a very stressful event.

Second, capital in the form of a house will be draining you rather than working for you. People get old and so do houses. Both will start to require expensive lump-sum maintenance. At that point rent will start to seem a lot cheaper than ownership, especially in the major population centers.

Would you rather pay for a new roof, furnace, drainage repair, widows etc. out of your unnecessarily limited cash resources, or, cover that knee replacement with income from spun off from a much larger capital base?

#114 Blacksheep on 03.21.15 at 12:26 pm

Rob # 85,

“We are now in the middle of the Kondracki and winter it is unlikely that you will see a recovery before 2027 I would recommend that you begin stocking up on canned food particularly beans as they appear to be an expensive this time of the year we should all think Stephen Harper for providing us with the opportunity to be able to use weapons in our home”
——————————————————-
Ya…winters in the Klondike can really drag on, but If you took that gun of yours and got yourself some tasty venison, you wouldn’t be forced to eat those nasty beans.

Yuck!

#115 omg the original on 03.21.15 at 12:34 pm

#36 Glengarry Glenn Ross
What I MEAN IS, WILL I WAKE UP ONE DAY JUST TO HEAR HE’S IN THE CAYMANS WITH MY DOUGH?
——————————-

NEVER, NEVER deal with a financial advisor that is not part of a multi-billion dollar company – if there ever is any impropriety they have the deep pockets and reputation at stake to make good.

Now we are talking about improprieties such as running away with your money, not dumb investment advice.

#116 Blacksheep on 03.21.15 at 12:42 pm

Careful Smokey….or they’ll be coming for you.

https://www.youtube.com/watch?v=yWL3Uw7872s

Or are they already?

#117 Nerf Herder on 03.21.15 at 12:44 pm

On the whole concept of Wayne Gretzky’s “go where the puck is going, not where it is,” getting into real estate in 2001 was a great investment.

Now is the time to get out.

But I challenge the commenters to identify the next big opportunity!

As much as I appreciate Garth’s balanced and diversified, it would be also good to have a little of that set aside for gambling on the “next big thing.”

Thoughts?

#118 Mark on 03.21.15 at 12:54 pm

“Those are returns, not yields. They incorporate price fluctuations that have nothing to do with inflation.”

Over the interval of 100 years, presumably, the economy has gone through enough in terms of economic cycles that any speculation (or excess pessimism) towards fixed income is averaged out. Hence, long-term average return = long-term average yield.

My previous point, that borrowers cannot sustainably pay more in real yield than the economy grows over the long term, continues to stand. Even during some of the best economic conditions, 3% real is generally at the upper bound of the capability of a mature economy like Canada to grow — over the long term, real GDP growth more closely resembles closer to 2% real. And obviously much of the return of growth must accrue to the owners of equity, not of debt, in society — the risk takers.

In other words, it seems perfectly reasonable and normal to me that a long-term bond investor only captures, at best, 1-2% real yield (which may be on the high side going forward since we know that returns have been excess to the upside for quite a long time now, leading to excess returns to the owners of debt!). TIPS, which quote real yield directly, trade accordingly. Inflation is minimal these days, there are no massive miscongruencies in the market despite the bizarre claim that inflation is running dramatically higher than official statistics suggest.

#119 Mark on 03.21.15 at 12:58 pm

“A little off topic, but who do you trust for ETF quotes? VCN seems to have closed today at 30.03 (yahoo), 30.18 (reuters), 30.20 (bloomberg) or 30.22 (tdwaterhouse and google).”

I’d use NAV, which is available at Vanguard’s website. Sometimes those websites you question use, for various reasons, either the midpoint of bid/ask, the last trade price, or the bid price, when valuing a security. For instance, TD uses the bid price when valuing a security as this is the number they also use for the purposes of margin account supervision.

VCN isn’t particularly liquid, so the bid/ask spread can be a bit wider than you would see on an uber-liquid ETF like XIU. Pricing will always trend towards NAV.

#120 Victor V on 03.21.15 at 1:21 pm

https://ca.finance.yahoo.com/news/albertans-debt-hangover-090000768.html

A passion for new cars and a generous spirit sunk Albertan D’Arcy George into debt.

The Lethbridge education assistant took a second job at Costco to help pay off the $70,000 in debt he accumulated, but he still struggled with a bank account constantly in overdraft.

“I was car crazy. I really like new cars. I kept on trading and trading, and eventually it caught up to me,” George said. “And I was buying a lot of gifts for people and getting more and more into debt.”

His experience isn’t unique.

A peek into the bank accounts of Albertans show many are carrying large debts, a hangover from years of optimism and confidence in the provincial economy. That could be a problem during an extended oil slump.

“We’ve had boom times here and people are making good money. Unfortunately, with that comes the overspending and people in Alberta seem to like their toys,” said Alberto Rosati, an estate administrator who deals with bankruptcy filings.

#121 Helen on 03.21.15 at 1:41 pm

I hate Vancouver more and more. I’ve never lived anywhere so openly racist. People buying crappy houses for a million $$, how can they have such low standards? I’m trying to make my new life here work but it’s like living in the Twilight Zone with brain washed zombies. I read the blog to remind myself I’m not crazy but every “sold” sign I see makes me wonder…

#122 Mark on 03.21.15 at 1:48 pm

“As much as I appreciate Garth’s balanced and diversified, it would be also good to have a little of that set aside for gambling on the “next big thing.””

There’s a huge demand for monetary stability around the world at the moment, as evidenced by all these crises, spates of government and bank-induced malinvestment, etc. This is why I like the precious metals sector (bullion and miners) as “the next big thing”. Its also a sector which is so universally reviled, and severely underallocated relative to the historical picture at the moment.

I know roadkill are a’plenty for the sector over the past 35 years, but earnings are gaining momentum with collapsed energy and other input costs, and there is significantly growing demand for the end-product. In a lot of ways, it reminds me of the technology sector circa the early 1990s, when the smart folks realized that the Internet would be a “big thing”, but the market still crashed nonetheless in 1992-1993 before growing by leaps and bounds later in the decade.

#123 Robert agnew on 03.21.15 at 1:54 pm

I would not worry too much about saving cash – the Harper peso is going to take a while to recover assuming solar and fusion energy and fracking monkeys don’t take out the oil sands energy business .

Boy Harper is a real incompetent – fear the, Eco protesters , gun control advocates, census takers , scientists and various assorted enemies of the neo reform a cons.

Well at least is can split my income with my beauty model wife, dump dough in the TFSA, and claim my get tax cut. I mighth feel generous enough to tip my foreign worker maid because there is a shortage of low income Canadians cut off from EI benefits who are not willing to work or join the army and fight in Iraq for a small pension if you’re injured.

This country is on the wrong road with el Harpo- he didn’t cause this economic crisis but his jelly brain deficient increasing ideas to wage a 24 hr campaign to keep power is definitely a bust. Harper’s biggest accomplishment is the Action Plan ads and the celebration of 1812 and his appearance on Murdoch Mysteries. I hope he enjoys is 190k pension – he’ll be hard up having to take a low paid job for a few million on the boards of his oil buddies in Calgary

#124 Axehead on 03.21.15 at 2:02 pm

I wonder…who invented the term “Orange guy’s shorts”? Was it you Garth?

#125 Smoking Man on 03.21.15 at 2:28 pm

#114 Blacksheep on 03.21.15 at 12:42 pm
Careful Smokey….or they’ll be coming for you.
https://www.youtube.com/watch?v=yWL3Uw7872s

Ha, don’t worry, I’m on list big time, I watched too many of this guys videos. See below.

In fact it’s because of guys like this, Western gov’t s are racing to create laws like C51. MSM is a joke, the herd, the masses are getting more and more info on line like never before. The machine is losing control of the narrative.

Every returning veteran in USA know who the real King is, and it’s not the guy in the white house. They know everything about building 7.That is truly scarey. If the US govt can’t get the economy humming again, white picket fences for everyone. Then shit will hit the fan.. I assume the push to ban amo sales down there is a hedge of some kind.

Now if you don’t want to end up on the machines shit list. Don’t click the below link. Don’t research the topic, it will come back to bite you one day.

Dr Smoking Man, now a Investgative journalist.

http://www.bollyn.com/videos-by-bollyn/

#126 Leroy Washington on 03.21.15 at 2:45 pm

Canadians are stupid. Deal with it.

#127 Snowboid on 03.21.15 at 2:46 pm

#10 Darryl on 03.20.15 at 6:24 pm…

I can only offer what our US neighbours have told us. Most are retired and 65 or over.

The basic Medicare Plan has no premium, and those around us who have pension benefits that cover Medicare supplements and drugs.

Looking at Blue Cross HMO plans (same company that we pay our supplement premiums to in BC) the premiums for supplements are about $ 127 US per month for two people.

The additional plan for the drugs I am prescribed would cost $ 35 US a month in premiums.

Dental plans are similar in what we pay in Canada so I haven’t included them.

In Canada we pay $ 130.50 CAD a month for BC Medical, and the drugs cost $ 100 CAD a month.

Overall the deductibles and coverage for most services are almost identical.

So overall it is cheaper in the US.

Obviously the picture changes if you are under 65 and don’t have a company plan.

But those people we know in the Phoenix area that are working, whether locals or Canadians, have coverage provided by their employer.

One across the street from us has triple-bypass and a pacemaker implant two years ago, and his company plan covered everything.

#128 Sideshow Rob on 03.21.15 at 2:50 pm

An interesting commentary on Canadian real estate on Bloomberg.
http://www.bloomberg.com/news/videos/2015-03-20/canadian-household-debt-is-concerning-mansharamani

#129 kommykim on 03.21.15 at 2:52 pm

RE: #117 Mark on 03.21.15 at 12:58 pm
I’d use NAV, which is available at Vanguard’s website.

The NAV on Vanguard’s website is always a day or two out of date. Why would you do this?

VCN isn’t particularly liquid, so the bid/ask spread can be a bit wider than you would see on an uber-liquid ETF like XIU.

Trading volume of an ETF has little to do with it’s true liquidity. An ETFs liquidity depends upon it’s underlying stocks liquidity and whether the ETFs market maker is active on the exchange.

#130 Harbour on 03.21.15 at 3:01 pm

Don’t put all your eggs in one basket…
It don’t mean shit anyways if the price of your house drops 30% and you decide to walk.

“If my home decreased in price by 30%, what kind of shape would I be in?”

I have a suspicion that when many home-owners mull the worst case scenario, it goes something like this:

“If my home’s value drops far below what I owe on my mortgage, I’ll walk away from it. Sure my credit will be ruined, but at least I will have my car and my savings, and I’ll purchase again when prices drop.”

Unfortunately this kind of thinking neglects to account for a little-known legal principle inherent to Canadian mortgages: “full-recourse” mortgage agreements.

“Full-recourse” is a Canadian creature largely absent in the U.S., and it is the bank’s secret weapon to ensure they can pick your bones dry when you fall upon hard times. Full-recourse lending allows the lender to pursue borrowers who default on their mortgages. But they don’t just want the house back. They come in search of the full value of the loan.

This means that when your bank goes “Power of Sale” and sells your house out from underneath you — for substantially less than what you bought it for and less than what you owe — you continue to be liable for the remaining balance of the mortgage.

Surprised?

Not only can you lose your house — your mortgage lender has the power to strip you of (almost) everything else you own, and to garnish your future earnings until such time that the original mortgage debt is repaid in full.

This is how they can put the final nail in your financial coffin; this is how they will attempt take blood from a stone. Most importantly, this is new information to a great number of Canadian borrowers.

Your car, your tax free savings account, the money you have in savings and in the stock market; all of this can be seized. In certain provinces, like Ontario, your RRSPs may also be at risk.

So before you play the numbers game tonight, tapping away to calculate your worst case scenario, consider what non housing assets might end up caught in the mix if you default on your mortgage some day.

Only time will tell if Canada is experiencing an unprecedented overvaluation of the housing market. However, if the bubble-bloggers and Bank of Canada are correct, now is the time to develop strategies to shield your other assets from lenders employing full-recourse tactics.

#131 Mark on 03.21.15 at 3:15 pm

“Trading volume of an ETF has little to do with it’s true liquidity. An ETFs liquidity depends upon it’s underlying stocks liquidity and whether the ETFs market maker is active on the exchange.”

That’s true if you have access to the creation/destruction mechanism. But most of us mere mortals (ie: without a few million invested in a given ETF) do not have the ability to rapidly exchange our ETF units for baskets of the underlying securities. Hence, we must look to the liquidity of the ETF itself for an indication of how quickly a position can be unloaded, and what sort of bid-ask spreads will be realistic.

“The NAV on Vanguard’s website is always a day or two out of date. Why would you do this?”

True. Someone who is looking to day-trade ETFs can certainly construct (or otherwise obtain through real-time data on something like a Bloomberg terminal) a real-time NAV of the portfolio and make trading decisions accordingly. But for the rest of us, who just buy and hold ETFs, the number used isn’t terribly relevant. I don’t know how often Vanguard updates, but I know the Blackrock iShares products (ie: XIU, XIC, etc.) have their calculated NAV updated nightly.

#132 Nagraj on 03.21.15 at 3:16 pm

The current Australian gov’t is not havin’ a good time. Chiefly because it’s dithering – it’s not forcing an AUSTERITY budget on the country. It’s dithering because there’s massive opposition on the ground, and it’s not havin’ a good time because there’s considerable pressure by fiscal cons for cutbacks.

But no such qualms in La Frozen Provence. It’s full steam ahead with AUSTERITY! Maybe they’ll outlaw pot-banging, but the Lib MPs will have to do the arresting themselves – the cops are not on board. For starters. Expect a more impressive repeat of 2012 “civil disturbances”.

No doubt the horse-toothed Premier of Ontario and friends will be keeping a close eye on Quebec in April. It’s not as if the ratings agencies weren’t spurring her on to cut spending.

The Snow Whitish new Premier of FINISHED Alberta means to introduce spending cutbacks too. Impeccable timing.

I mention these things surely not “to bum you out.”

I mention them to suggest that maybe Madani’s “disorderly unwinding of household balances” – meaning yas can’t make yer mortgage payment (or ‘lectric bill) – is closer to being “triggered” than nice, well-dressed people think.

Sauve qui peut.

#133 Mark on 03.21.15 at 3:19 pm

““Full-recourse” is a Canadian creature largely absent in the U.S., ”

Not true. Most US states are full-recourse, and even in the so-called “non-recourse” states, only an extremely limited subset of mortgage loans actually qualify for non-recourse treatment. Basically, only first mortgages that were used for purchasing the property are eligible. Nearly everyone in distress over the past 7 years had either refinanced once along the way, had a second mortgage (ie: one of the notorious “80/20” packages), or otherwise was ineligible.

The rest of your comments, of course, are bang-on, at least for those committed to being Canadian residents for the long term.

#134 Nemesis on 03.21.15 at 3:30 pm

#SaturdayCornucopia,Or… #FromTheSublimeToTheCockposterous…

#NoGStringsForYou,Kelowna!…

[CBC] – Strip clubs closing due to lack of demand across Canada, says industry insider: Young men more interested in electronics than live strippers, says Adult Entertainment Association of Canada

…”RCMP in Kelowna told the CBC they don’t have any particular concerns with strip clubs in the city and that they will continue to resource thorough daily inspections of the remaining venue.”…

http://www.cbc.ca/news/canada/british-columbia/strip-clubs-closing-due-to-lack-of-demand-across-canada-says-industry-insider-1.3003202

#HaveTheyNoDecency!?!… #Impostors&Mountebanks!

[CBC] – Fake ‘service dog’ ID brought to heel by proposed B.C. law: BC and Alberta Guide Dogs says more people are getting fake IDs for untrained dogs to benefit from the perks

http://www.cbc.ca/news/canada/british-columbia/fake-service-dog-id-brought-to-heel-by-proposed-b-c-law-1.3003532

#He’sInTheCloset,Harry…

[TheTyee] – Harry Smith Is Coming for Stephen Harper: The 92-year-old anti-austerity campaigner, a UK sensation, sets his sights on Canada.

”We were a generation of people who received nothing and we had to fend for ourselves to improve our standard of living… But it was much easier for us than it is for the young people of today.” – Harry Smith

http://www.thetyee.ca/News/2015/03/21/Harry-Smith-Is-Coming-For-Stephen-Harper/

#BlimeyGov,WhatALoadOfDespicableSpivs…

[Telegraph] – Buy-to-let: bank offers 113pc mortgages – on repossessed flats in Spain: Banco Popular is offering zero-deposit mortgages on Spanish holiday homes in a desperate bid to shift unwanted properties

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11470413/Buy-to-let-bank-offers-113pc-mortgages-on-repossessed-flats-in-Spain.html

[Guardian] – Britain’s obsession with ownership has turned housing into a pyramid scheme

http://www.theguardian.com/commentisfree/2015/mar/19/britain-obsession-ownership-housing-pyramid-scheme

#Upstairs

[NewStatesmen] – Who wants to be a millionaire? Peter Oborne on Tony Blair: Peter Oborne reviews Blair Inc, an investigation into Tony Blair’s financial dealings.

http://www.newstatesman.com/culture/2015/03/who-wants-be-millionaire-peter-oborne-tony-blair

#Downstairs…

[NewStatesman] – Inside London’s twilight world of foreign cleaners

http://www.newstatesman.com/politics/2015/03/inside-london-s-twilight-world-foreign-cleaners

#AndNowForSomethingCompletelyDifferent… #GarthTurner’sMarkusPersson’sNew… #70M$BeverlyHillsCrib… #Or,BuyersRemorseMuch,Chip&Chen?…

[LAT] – More tech industry buyers are snapping up L.A. real estate

http://tinyurl.com/kf7afg3

[NoteToGT: I may have taken some editorial liberties with the Kelowna piece.]

#135 45north on 03.21.15 at 3:39 pm

Adds Madani: “We fear this slowdown will trigger a disorderly unwinding of household sector imbalances, depressing economic growth even more than otherwise would normally be the case. We still believe that the housing market in particular is overdue for a potentially severe correction.” He says (and I now agree), this will lead the Bank of Canada to another rate decrease.

Harper has to be feeling the heat. I mean he has one budget to write before the election. It has to be good. I would say it has to be prophetic.

I see the appointment of Michaëlle Jean as Governor General in 2005 as prophetic. In 2010 she was the ideal person to provide comfort to the people of Haiti after the devastating earthquake there.

http://en.wikipedia.org/wiki/Micha%C3%ABlle_Jean

#136 Mark on 03.21.15 at 3:41 pm

” now is the time to develop strategies to shield your other assets from lenders employing full-recourse tactics.”

Sorry, didn’t catch this gem in my previous comment. Are you really suggesting that Canadians, who entered into mortgage loan contracts with lenders acting in good faith, should be taking steps to facilitate defrauding them of their legal entitlement to full repayment of a mortgage loan? Because that’s what your suggestion, that people should be secreting assets, appears to be suggesting.

That’s just….so wrong!

#137 Millenial-falcon on 03.21.15 at 3:42 pm

#119 Helen on 03.21.15 at 1:41 pm

You should leave, no room for whiners in van

#138 Keith in Calgary on 03.21.15 at 3:47 pm

The easiest way to make yourself creditor proof is to not have any debt. Dooouuhhh………!!!

The second easiest thing to do (if you have the resources and the ability) is to establish a second legal residency offshore in another country that has conditions favorable to your requirements, which is where you park the vast majority of your assets. Of course, if you can afford to do this, you will probably already have significant liquid financial resources and won’t have any personal debt. So…………back to square one.

Don’t get into debt, unless you can get out………and don’t sign a collateral mortgage and be fully aware of the relevant provincial and federal consumer debt legislation that is applicable to your situation.

You can set yourself up to screw the system when the excrement impacts the whirling blades, you just need to study the system in detail first, and do a lot of legwork.

#139 Transplant on 03.21.15 at 3:55 pm

Re #125 Snoboid & US Health Care:

Unfortunately, I believe your friends are misinformed and may also have insurance coverage that could bite them one day.

Medicaid (basic coverage for low income earners or those without income) does not require any premium payment and only a $1 co-pay for office visits. On the other hand, Medicare (basic coverage for the elderly) requires a premium payment of $102 monthly for each participant, in my case automatically deducted from mine and my wife’s monthly Social Security before it is electronically deposited to our bank account. This $102 is not noted anywhere with the deposit information, so perhaps your friends don’t realize they’re paying it.

Medicare pays for 80% of Medicare approved amounts (accepted by most providers except for cosmetic surgeons) and Supplemental insurance covers the remaining 20% which can be considerable. The premium you quote for medical, drug and dental coverage seems implausibly low. My wife and I together, in addition to the above-mentioned Medicare premiums, pay about $800 monthly for the Platinum BC/BS coverage (including dental) in our state with no co-pays except for certain drugs. HMO plans are more restrictive, limiting choice of doctors and facilities, limiting nursing home coverage, etc. The inexpensive insurance your friends have may come back to cost them big one day.

To Canadians the numbers I quoted above may seem high but in 2 1/2 years of intensive cancer treatments at a world-class facility I have yet to pay one cent out-of-pocket except for a one time $750 deductible for a $10,500/month medication. By the way, I checked the Ontario drug plan and this particular medication is not initially covered up there, coverage is only provided for an older drug that no up-to-date practitioner would use.

By the way, the outrageous numbers you read about up there (e.g. Canadian mother gets $900,000 medical bill while visiting Arizona and insurance won’t pay) is balderdash. These numbers are “sticker prices” and no provider expects you to reimburse them that amount. One good thing we have here that Canadians should also have access to are statements we receive for each encounter listing the visit date, service provided, amount billed, amount approved, amount paid and amount you may be billed for. A recent Medicare statement indicated that my facility billed $4,000 for CT’s and MRI and actually was reimbursed only $400. So don’t believe those crazy numbers. Canadians should get similar statements so that they too understand that medical care is not “free” up there.

As I have indicated in a post some time ago, with a family member in a nursing home in Toronto, we know that care up there is anything but “free” and financial planning should take this into consideration, especially as one ages.

#140 Blacksheep on 03.21.15 at 4:16 pm

Smoking #123,

RE: #114 Blacksheep on 03.21.15 at 12:42 pm

Careful Smokey….or they’ll be coming for you.

https://www.youtube.com/watch?v=yWL3Uw7872s

“Ha, don’t worry, I’m on list big time, I watched too many of this guys videos. See below.”

“In fact it’s because of guys like this, Western gov’t s are racing to create laws like C51. MSM is a joke, the herd, the masses are getting more and more info on line like never before. The machine is losing control of the narrative.”
————————————————–
Yes, 9/11…A work of fiction.

The system is definitely scared of the Cattle. That’s why any body with a brain and keyboard is on a list. Also why stuff like C-51 is being rammed through.

I researched all this to death many years back, but sadly now, it’s just boring. (unless there’s something new?) Wake me when there’s a million people, in every major city protesting.
————————————————–
Back to your original topic:

Watch the Video clip I supplied, again.

https://www.youtube.com/watch?v=yWL3Uw7872s

It’s all about your premise, our lives are predestined. Pre-crime, It’s becoming real life. Seems truth, IS stranger than fiction

But I like this path better:

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

I am the decider, of my fate. (nod to G.W.)

#141 Squirrel Meat on 03.21.15 at 4:18 pm

The pot bangers winding it up for 2.0……. see how big balls couillard deals with it this time.

http://montrealgazette.com/news/local-news/students-protest-in-montreal-over-government-austerity-measures

#142 Godth on 03.21.15 at 4:19 pm

Parasites.

“The Price We Pay” | Harold Crooks Documentary

https://www.youtube.com/watch?v=tEQ2VFV8a7A&app=desktop

#143 Washed Up Lawyer on 03.21.15 at 4:26 pm

#115 Nerf Herder on 03.21.15 at 12:44 pm

“But I challenge the commenters to identify the next big opportunity!”
***********************************

Fresh water.

Desalinization plant on the coast of California.

Oh wait, Nestle locked up B.C.’s at $2.25 per millions of litres.

Call Premier Grim Jim in Alberta. He is seeking new sources of revenue.

#144 TRT on 03.21.15 at 4:45 pm

Smoking Man:

Read up on Fermi Paradox today during the day, have a bit of JD tonite, then write a post about what you think about it.

Curious in YVR

#145 Drop to Drink on 03.21.15 at 4:48 pm

Told ya; Dow up 500 after the Fed speech. Float shrink and reach for yield will give us Dow 19k this year. Gotta love it?

Just had a run through After the Crash… A little doomy, don’t ya think?

Seven years ago we had no idea if systemic problems would be addressed. — Garth

#146 Andrew Woburn on 03.21.15 at 4:57 pm

A few days ago we looked a chart posted here that compared growth in total US debts with US GDP growth since 1969. Debt equalled GDP in 1969 but grew to 3x GDP by 2014. It looked like America is partying on the credit card. http://research.stlouisfed.org/fred2/graph/?g=13ZC

I try to avoid Fear of Large Numbers so I decided to find out what made up the 2014 debt of $58 trillion and also what the other side of the coin looked like. Unless it’s your bar bill, a liability usually means you bought an asset.

The St. Louis Fed produces a matrix of all US debt instruments and financial assets. I was able to get detailed numbers for 2011-2014. These were the top 5 debt categories in 2014 adding up to 75% of that $58T.

———————————– A B C
Households & municipalities…….13.5 23% 3%
Federal government debt……….13.0 22% 25%
Nonfinancial corporate……………7.6 13% 21%
GSE’s – Fannie Mae/farm credit…6.3 11% 0%
Unincorporated business………….4.4 8% 10%

Column A is the debt outstanding in trillions, B is the % of total debt and C is the % change since 2011. There were no great surprises. Mortgage related liabilities were about 30% of the total including borrowings by GSE’s (government sponsored entities) like Fannie Mae and Freddy Mac, but had hardly changed since 2011. Federal debt was up by 25% but you knew that. More surprising to me was the bump in lending to non-financial businesses, especially unincorporated’s, since we keep hearing banks aren’t lending to Main Street job creators.

On the asset side, the top 5 categories amounted to 61% of the total.

——————————– A B C
U.S.-chartered bank lending…….10.8 18% 13%
US assets owned by foreigners…10.3 17% 15%
Loans by GSE’s……………………….6.0 10% -2%
Mutual fund assets…………………..4.8 8% 44%
Federal Reserve assets…………….4.2 7% 61%

Bank loans receivable are up by almost the same amount as non-financial business borrowings. Foreign owned US assets are up 15% but that is one reason why the USD is high. Mortgage receivables are flat as expected. The big surprise to me was the pump up in mutual fund assets but, there again, stock prices are also high. The Fed assets of $4.2T are way up but they told us they hadn’t spent the money they “printed” so no surprises there either.

So what does this tell us? Well probably that the US is not yet on the edge of The Debt Apocalypse. The steep slope of the debt growth line is also a bit misleading. The ratio of debt to GDP has not just shot up last week. It was 2.4 in 1990 and climbed to 3.0 in 2003, 3.52 in 2010 and 3.32 in Q4, 2014. The reasons for the relative debt growth would keep a room full of economists arguing for a month but spending faster than you tax would be high on my list.

#147 Broke Dick on 03.21.15 at 4:57 pm

Now imagine 35-year-old Amanda, who puts $100,000 down on a slanty semi worth $800,000, and has a mortgage of $720,000. That’s all the money she and her squeeze have, so her net worth is reduced to $80,000 (thanks to closing costs). While she should have no more than 55% of her net worth in a house, she actually has 100%.
============================
Label me confused???????
Would she be better off with 40K down and 40K invested?

#148 Rory on 03.21.15 at 5:06 pm

Seems a bit too gloomy on oil and CAD $. The FED Bankers see a reduced amount of rate increases this year. Their median estimate for the Fed’s short-term interest rate target at the end of the year now stands at 0.625%, versus the 1.125% level forecast at the end of December. The median projection for the fed funds target at the end of 2016 is 1.875%. That portends a big reversal of USD$, commodities etc…

#149 PBD on 03.21.15 at 5:09 pm

The rule of 90 doesn’t work: A $1m house with a $900k mortgage is counted the same as a paid-off $100k house. As someone commented, extreme leverage is immune to this rule, and it shouldn’t be.

I propose the following revision: financial net worth (i.e. excluding home value) as a percentage of total net worth should be around age minus 45. It can be negative, but should turn positive by age 45.

#150 Snowboid on 03.21.15 at 5:11 pm

#137 Transplant on 03.21.15 at 3:55 pm…

Thanks for noting the Medicare payments, I’ll ask our neighbours about that.

But I didn’t include dental in the Canadian figures.

I also quoted figures for basic Canadian medical and supplementary.

Adding in enhanced dental and drugs would add an additional $ 250 a month CAD.

I also didn’t include Canadian deductibles in the plans. Nor that the coverage for most items is 70% reimbursement, which is not based on actual costs but what Pacific Blue Cross decides.

Dental costs are reimbursed at 75% of what Pacific Blue Cross pays, not what the dentist charges, to a maximum of $ 1500 a year.

I also found out a few years back that certain surgeries is limited to the actual operation, but only the cheapest ‘parts’. For example, cataract surgery where you get coke bottle glasses at no charge, but good intra-ocular lenses are nearly $ 5000 extra.

There are no ‘platinum’ plans in BC that I’m aware of.

I also didn’t mention the general opinion that Canadian taxes are also higher, and Canadian politicians keep telling us most of our tax dollars go to health care.

Where we summer in Canada a $ 125 million dollar private hospital is in the final planning stage on First Nations land. I’m sure platinum plans will be available there.

I’m not sure where you live, but if we could retire full-time to Arizona we would gladly pay $ 1000 a month for medical/dental/drug coverage. My health hasn’t been that hot last few years, and we average about $ 6000 a year for out-of-pocket medical and dental costs. My wife is exceptionally healthy and has had nothing but minor dental work done since we married nearly 45 years ago, so most of the medical/dental costs are mine.

I realize this is off-topic, sorry Professor!

#151 Drop to Drink on 03.21.15 at 5:13 pm

Seven years ago we had no idea if systemic problems would be addressed. — Garth.
>>>>>>>>>>>>>>>>>>>>>

Interest rate suppression, massive QE and deficit spending; a US Fed unable to move rates by 0.25%? Problems not addressed, just pushed out. Still 100% invested though. Gonna ride this baby as far as I dare. I love buybacks. Float shrink is the best thing ever!
Have a good weekend.

#152 Suede on 03.21.15 at 5:14 pm

Rule of the Millenials…

Half your age + 7

#153 Mark on 03.21.15 at 5:19 pm

“By the way, the outrageous numbers you read about up there (e.g. Canadian mother gets $900,000 medical bill while visiting Arizona and insurance won’t pay) is balderdash. These numbers are “sticker prices” and no provider expects you to reimburse them that amount.”

Exactly! There was a young family from out west here that, 26 weeks pregnant, went to Hawaii, experienced some premature labour, and was “confined” to a hospital for the next month. A million dollar bill ensued, which Blue Cross promptly refused to pay. I pointed out probably dozens of times in the various CBC message boards and Facebook comments, that hospitals in the USA deliberately exaggerate their bills in order to negotiate them down, and the insurer’s refusal to pay was merely a negotiating tactic against an intransigent hospital. But even to this day, the family is still trying to raise “money” to pay the million dollar bill, and runs around thinking some US hospital is going to try and recover their (meagre) Canadian assets.

“The second easiest thing to do (if you have the resources and the ability) is to establish a second legal residency offshore in another country that has conditions favorable to your requirements, which is where you park the vast majority of your assets.”

Which you still have to declare to your bankruptcy trustee (if that’s the case), and ultimately disgorge to the bankruptcy trustee for distribution to creditors. Unless, of course, you’re into committing perjury when subject to the compulsory examination by the bankruptcy trustee and creditors under oath.

I would suggest a perjury and fraud rap is far worse for one’s reputation than merely going through the first time bankruptcy process.

#154 Ogopogo on 03.21.15 at 5:30 pm

The Rule of 90 does not mean buying a Kelowna crack shack for half a million dollars either:

http://www.realtor.ca/propertyDetails.aspx?PropertyId=15410318

Contact Devil’s Advocate, Realturd® for more details.

#155 Squirrel Meat on 03.21.15 at 5:32 pm

Drunken aussie takes on the Canadian prairie……….
http://news.nationalpost.com/2015/03/20/australian-moves-to-saskatchewan-and-suffers-horrific-frostbite-after-passing-out-drunk-in-30-c-weather/

#156 Andrew Woburn on 03.21.15 at 5:32 pm

#58 Washed Up Lawyer on 03.20.15 at 9:35 pm
With a softer, gentler rodeo and a resultant massive protest blocking the Burrard Street Bridge.
===========================

Hey, now you’re the one being insensitive. There are people here with Deep and Sensitive Feelings and they just want everyone to know about it. Usually the same people who think that milk comes from supermarkets.

#157 rentin on 03.21.15 at 5:39 pm

I would have thought for sure that the value of the mortgage would be your investment in the 90-age rule. Isn’t the rule about exposure? Leveraging 100k into 1M to invest in the stock market is only 100K in net worth, but you have just multiplied your risk by 10.

Anyway, if a person needs a rule to figure it out, they are already at a disadvantage. Lowest interest rates in years and people borrowing more because of it. Just crazy.

#158 Helen on 03.21.15 at 5:40 pm

#135 Millenial-falcon on 03.21.15 at 3:42 pm

Whiners? Vancouver is full of whiners in prolonged adolecense. It’s shocking how low people’s standards are for themselves. Yes, a move is definitely in my future.

#159 Darryl on 03.21.15 at 5:40 pm

Snowboid and Transplant

Thanks for the informative posts. I don’t think its off topic . This is important info for those who want to bail to the US when lettuce cost the same as a tank of gas.

#160 kommykim on 03.21.15 at 6:18 pm

RE: #129 Mark on 03.21.15 at 3:15 pm
But most of us mere mortals (ie: without a few million invested in a given ETF) do not have the ability to rapidly exchange our ETF units for baskets of the underlying securities.

If you look at level 2 market data which shows the depth of the market, rather than just the top order, you’ll see the ETFs true liquidity.
So, as long as the market for the underlying stocks is open, and the market maker for the ETF is present, then the ETF units will be created/redeemed if needed.

#161 Smoking Man on 03.21.15 at 6:24 pm

#142 TRT on 03.21.15 at 4:45 pm
Smoking Man:
Read up on Fermi Paradox today during the day, have a bit of JD tonite, then write a post about what you think about it.
Curious in YVR
………

No Paradox at all, they’re here, they communicate via the UCC.

Although my thumb is typing the story of the book I’m working on, it’s the Nectonites influencing the atoms and electrons in my head, it’s their story, I’m only the story teller.

¶\÷^® That’s greetings in Nectonite.

#162 The Unkown on 03.21.15 at 7:15 pm

So your rule of 90 applies to real estate. But what about investments like your example balanced and diversified portfolio?

What percentage of your wealth should you have in one if you don’t own real estate (you’re not planning on buying) and you’re in your 50’s?

#163 Blacksheep on 03.21.15 at 7:23 pm

TRT # 142,

“Smoking Man:

Read up on Fermi Paradox today during the day, have a bit of JD tonite, then write a post about what you think about it.

Curious in YVR”
——————————————————
I just posed this question to the ‘superior being’, space dude, but got no reply.

Guess he wasn’t as superior, as he thought he was.

At the pace technology is moving, I think we could slam, head on into the Great Filter in the next 20 years.

Here’s to hoping we are worthy (or lucky).

#164 Victor V on 03.21.15 at 7:48 pm

http://business.financialpost.com/2015/03/20/autocanada-expects-2015-challenges-as-oils-collapse-depletes-buyers-confidence/

Declining consumer confidence in the oil-dependent economy of Alberta dented sales at AutoCanada Inc.’s car dealerships in the first two months of the year, but the company isn’t giving up on its aggressive acquisition strategy.

The Edmonton-based dealership group’s shares tumbled 21% Friday to close at $33.75 after it described the latter half of December and the first two months of 2015 as “very challenging.”

Nearly half of AutoCanada’s 48 dealerships are in Alberta, where 40% of people are deferring major purchases like homes and automobiles as a result of the collapse in oil prices, according to a study by ATB Financial that was cited Friday by AutoCanada CEO Tom Orysiuk.

“With a large percentage of the company’s revenue and profit coming from Western dealerships, and Alberta dealerships in particular, this will pose significant challenges,” Mr. Orysiuk said on a conference call following the release of the company’s fourth-quarter results.

#165 Freedom First on 03.21.15 at 7:48 pm

#54 Retired Boomer-WI

First, I have been reading and appreciating your posts for years. Second, I remember when I was young and some people of my generation also had the same resentments as the young of today against the older people of the day who had all the money. Envy, jealousy, and self-pity are human traits and ageless. As are blame and criticism.

Would I change how I managed my financial affairs? I must answer no, I would not. I am not that bright, so if I think I could have done things better in the past, I better think again, as things may not have worked out as well as they have. I feel blessed, and I am content.

Keep on enjoying your life RB, as I intend to keep on enjoying my life. Love the people who love you, help the people you can, and let the people who try to cut you down just ki$$ your a$$. It works for me.

#166 OMG on 03.21.15 at 7:49 pm

Smoking Man no longer posts from his USA Casino? Any correlation between the declining Canadian Dollar! Piggy banks finaly all gone?

#167 Godth on 03.21.15 at 7:57 pm

#154 Andrew Woburn on 03.21.15 at 5:32 pm

I hear what you’re saying but polemics aren’t required. I live in the country, I hear the cows calling for their (now slaughtered) young every spring – day and night they call. Does that mean I don’t eat beef? Hell no but I’m not ignorant either. I would take down any animal in the right circumstance, and that means you too. That doesn’t mean I would like it or that it was my preference but that’s life. That doesn’t mean some sort of civility, caring, tenderness isn’t appreciated either. The cows next door have a great life, that can’t be said for most, and that goes a long way in my book. I only buy local food as much as possible. Small farmers (can) care in a way that your Costco crap simply can’t. Eating animals isn’t the same as abusing them.

#168 Leo Trollstoy on 03.21.15 at 8:01 pm

Leveraging 100k into 1M to invest in the stock market is only 100K in net worth…

No.

#169 Godth on 03.21.15 at 8:09 pm

#154 Andrew Woburn on 03.21.15 at 5:32 pm
ps. just because I’m listening.
https://www.youtube.com/watch?v=cW1E1ig19cs

#170 tkid on 03.21.15 at 8:09 pm

#145, you are almost there. Amanda has $100,000. 45% minimum of that should be in liquid investments = $45,000.

This leaves $55,000 as a downpayment, but Amanda needs $20,000 for closing costs, so that leaves $35,000 as a downpayment for a house or condo.

#171 Cyclist on 03.21.15 at 8:20 pm

147 PBD – doesnt work for the same reason. If you take out an LOC to buy assets your net worth does not increase but the % of financial assets does. And my age minus 45 gives me 10%. That is dangerously low.

#172 Nora Lenderby (was Sue*) on 03.21.15 at 8:22 pm

People asking, “Do I have to buy a house because of the rule of 90 thing?”

No. But our esteemed host is making allowance for human frailties. His advice is don’t buy a house especially in frothy markets at this time, but if you absolutely can’t avoid it, then limit your risk by following the rule of 90.

Notice that this allows younger people to have a higher proportion of assets in property. They presumably still have an earning future to recover if a loss occurs.

* I have changed my name in deference to another Sue posting here, and with apologies to Click and Clack.

#173 Daisy Mae on 03.21.15 at 8:23 pm

“Garth you recommend a 60-40 diversified portfolio, should this investment strategy change as rates go up in the US?”

Fundamentally, no. — Garth

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

You know, I tell friends the return I get on my investment portfolio — with Garth and Raymond James — and they ARE impressed. Thanks, Garth.

I did not pay you to say that, right? — Garth

#174 Ret on 03.21.15 at 8:29 pm

The Yanceys are coming! The Yanceys are coming! Scott and Amie Yancey!

It’s true. I just saw it on the TV this morning! They’re even coming to my town, Hamilton! This will put Hamilton on the map for sure! They said make money and not even have to pick up a hammer or a paint brush. Hamiltonians love that kind of talk.

But, it is probably only their travelling roadshow trying to sell me a bunch of program materials for big bucks. It also sounds like there might be a tie in with some type of secondary financing to buy those flipper properties too. (Use postal code 14304 to see cities and times)

https://yanceyfreebook.com/event/offer24.php?tr=3409225&mg=&s=1ra4v4k5709pkjni3la2aeo6v1

Check this out. If I take the course, I could be living like this too. Well almost. My wife would fire the camera lady for sure.

http://www.yanceyevents.com/

#175 45north on 03.21.15 at 8:49 pm

Transplant: Medicare (basic coverage for the elderly) requires a premium payment of $102 monthly

Medicare pays for 80% of Medicare approved amounts (accepted by most providers except for cosmetic surgeons) and Supplemental insurance covers the remaining 20% My wife and I together, in addition to the above-mentioned Medicare premiums, pay about $800 monthly for the Platinum BC/BS coverage (including dental) in our state with no co-pays except for certain drugs.

“my wife and I together pay $800 monthly for Platinum coverage”

you mean $400 each?

#176 GenX Confessions on 03.21.15 at 9:18 pm

Well, Garth had me and husband convinced. Put the bonus and the tax return into my TFSA instead killing off the (small) mortgage. Then this rule of 90 comes along. Husband is 40, rule of 90 says 50%/50% and we have 46% RE/ 54% financial assets (TFSAs, RRSPs, cash). So dogs,
1) Put it in the mortgage, get closer to 50/50
2) Put it in the TFSA, better returns
3) I’m overthinking this. I should have another glass of wine.

#177 Nemesis on 03.21.15 at 9:22 pm

#@Ret#172…

…”to staring [sic] in his own TV show”…

Terrifying. Isn’t it.

Never mind. I once had to spend the better part of a week in MarinaDelRey ‘entertaining’ a ComCastPersonality while she did exactly that.

So freaky… even SmokingMan would have packed his bags.

Well. That’s Hollywood for ya.

Seriously, BlogDogz… it’s not for everyone.

#178 Transplant on 03.21.15 at 9:22 pm

#173 45north

Yes, we pay approximately $400 monthly each for FloridaBlue medical, hospital, drug and dental coverage as well as $102 monthly each for basic Medicare, a total of about $500 monthly each.

Keeping in mind that we have no state income tax, cheaper costs for most commodities and an overall lower tax rate, I would say that not having universal health care is not as onerous as most Canadians think. Also, after having practiced medicine for over 40 years and now a patient I would say that the quality of care and availability is excellent. Having said that I would also say that I and most of my countrymen favour making basic healthcare available to all, just not by means of the arcane mess known as “Obamacare”.

#179 Einsturzende Neubauten on 03.21.15 at 9:43 pm

DELETED (Anti-Immigrant)

#180 Smoking Man on 03.21.15 at 9:53 pm

#164 OMG on 03.21.15 at 7:49 pm
Smoking Man no longer posts from his USA Casino? Any correlation between the declining Canadian Dollar! Piggy banks finaly all gone?
…….

Ha, go to last Thursday night posts, woke up with 700 in my wallet with no memory where I got it.

My wee Wyatt had his nuts chopped today, obviously I’m spending time with him today.

I love that little crazy eyed autistic beauty.

Plan was to breed him with Sophie… Once we realized he’s crazy. We made a family decision to chop of his Man hood.

Enough loons in this house hold.

I hate myself for agreeing to do this.

I’ve had him I’m my lap since 4 pm, he’s got these little crys, that make me cry..

At ten pm, he gets his pain killer, I was thinking of splitting it with him. But I love him too much..

Plus, got a fourth oncer of JD hidden in the barbecue..

I’ll be fine

#181 waiting on the westcoast on 03.21.15 at 10:00 pm

171 Daisy Mae on 03.21.15 at 8:23 pm
“You know, I tell friends the return I get on my investment portfolio — with Garth and Raymond James — and they ARE impressed. Thanks, Garth.

I did not pay you to say that, right? — Garth”

But you should… ;-)

#182 Smoking Man on 03.21.15 at 10:10 pm

My wife nails me tonight with a few tears coming down. So embarrassing. I lied, said I was feeling bad about choping Wyatt’s nuts off. He’s dog.

Truth, I was listening to the song, link below.

I was thinking about my late Nephew Mark, when my son’s where carring his casket out of the funeral home. That song was playing.. They play it at the water show at the Bellagio. It’s spectacular, just like he was.

I was thinking his birthday us on Monday, he would have been 29..

He’s Facebook page is Constantly hit with tributes.

On his birth day.. What do you post, Happy Birthday.? Is it realy happy…. Fk

Dogs, enjoy your life, enjoy the song bellow..

Mark. Songs for you, miss you man, your mom and dad.. Still kicked in the gut devastated.

https://youtu.be/SqYG3f4PaWc

#183 Andrew Woburn on 03.21.15 at 11:08 pm

#154 Andrew Woburn on 03.21.15 at 5:32 pm

I hear what you’re saying but polemics aren’t required. I live in the country, I hear the cows calling for their (now slaughtered) young every spring – day and night they call. Does that mean I don’t eat beef? Hell no but I’m not ignorant either. I would take down any animal in the right circumstance, and that means you too.
======================

Jaysus.

I guess some folks don’t do irony mixed with sarcasm.

For the record and to avoid further communication problems, I am a big rodeo fan, at least when I can tear myself away from electrifying innocent wee doggies. Worse, I eat hamburgers with relish and without remorse.

#184 BlackDog on 03.21.15 at 11:12 pm

Human (male, female – no diference). Thats all I half to say.

#185 BlackDog on 03.21.15 at 11:32 pm

Just realized how my last comment could be misunderstood …. What I mean was, don’t trust either.

#186 BlackDog on 03.21.15 at 11:49 pm

Picasso? Ecxuse me I forget your name. Anyway, OMG, Kraft peanut butter at Loblaws 1 Kg was $7.49 today. I’ve never seen it that high before. Kids are vegetarians, but worse they insist on the natural, organic stuff…so Kraft is only good for cookies…still.

#187 BlackDog on 03.22.15 at 12:00 am

seriusly the cost of PB is just a distration. ..just think it is sad everyone is in ‘sauve qui peut’ mode.

#188 Otto Dydaktyk on 03.22.15 at 12:07 am

Newbie question:
If you’re not a landlord, not making money on a rental; if your cash isn’t rotting in GICs or savings accounts; if you don’t own a couple of grow-ops; if you’re debt-free (including mortgage); if you’re not going to buy property in Canada or other overpriced markets, then is it wise to invest 90-100% of your assets into a diversified, balanced portfolio of ETFs along the lines of what Garth, Bogle, Hallam, et al champion?
I mean, how else do you grow your money?
(Sincere feedback appreciated by this old guy who’s finally learning about money.)
Thanks everyone.

#189 chapter 9 on 03.22.15 at 12:24 am

#138 Blacksheep

It’s here and it’s not science fiction or a movie!

The “Future Attribute Screening Technology” or “FAST” deploys multiple sensors to detect and measure cardio,respiratory, eye movements,thermal cameras,body movements,audio,and pheromone levels.

This system has been developed by the US government and Homeland Security and is under going testing with an 81% accuracy rate to date for deployment in airports.
You will be scanned as you wait in line or walk down a corridor to establish a base line and in places where a person would not be subject to normal security screening. Once that has been done you will be asked questions by security while the system analyzes changes in your autonomic nervous system to determine whether their is “the intent to commit a crime”
“FAST” is capable of detecting an enormous amount of medical information from arrhythmias, cardiovascular disease,asthma, respiratory failure,physiologial and psychiatric conditions and even a women’s stage in her ovulation cycle.
FAST cannot detect the presence or absence of weapons but only detects a person’s state of mind.
Bill C-51 could very well open the door for this technology to be rolled out here.
See any potential violations of the Fourth Amendment or the Charter of Rights and Freedom???

#190 Interstellar Old Yeller on 03.22.15 at 1:42 am

#180 Smoking Man on 03.21.15 at 10:10 pm

You can post that you remembered it’s his birthday, that you mourn his death but you also think about the great life he had.

I think everyone who loved your nephew will appreciate knowing he hasn’t been forgotten.

#191 Vanecdotal on 03.22.15 at 2:12 am

#115 Nerf Herder

– 3D printing
– Guns & ammo
– Healthcare, especially anything catering to wrinklies that can be socialized (govn’t funded)
– Greenland rubies
– Canned tuna
– Luxury bum fluff

*Not necessarily in that order. ;)

#192 mdm on 03.22.15 at 3:13 am

creb. com stats went AWOL! just like how Fort McScurray stopped providing housing market and sales stats on their real estate association website….do they not have anything to write home about?? lol…I’m so tired of hot heads bragging about their expensive houses and oil and gas jobs here. It is refreshing to not have to put up with them turning up their noses at people and bopping their hot heads around. …now I see them out of work rushing back their toys from Shuswap in a panic….Tres drole! Be careful who you step on on your way up as you may pass them on your way back down Mr or Ms Calgary hot heads. …bum voyage!

#193 TRT on 03.22.15 at 4:07 am

Blacksheep: good to see another numbers guy on this blog. Enjoy your posts.

I once proposed a theory to NASA scientists about how our ‘sphere of reality’ is created by our collective conscious. The response I got from a lead scientist was they are thinking the same thing. In other words, when people thought the earth was flat, well, it was flat. Crazy eh?!

The Fermi paradox tells us that this is all an illusion. The numbers just don’t add up.

Smoking Man, let’s go beyond electrons into quarks leptons and Higgs bosons. This is an illusion, take it from a guy who used to point huge radio telescopes at Pegasus at age 17.

#194 Adriano on 03.22.15 at 5:30 am

Garth,

US rate hike in June (2017).

So the fed is no longer ‘patient’, but went out of its way to say it’s ‘not impatient’. I’ll leave it to psychologists to charge by the hour for that one.

There is NO US recovery. Just an unprecedented 3.5 trillion dollar expansion of the feds balance sheet, ZIRP for 6 years (and counting), pathetic GDP, sub-prime auto LOL, time bomb student loans, double-digit total unemployment (U-6)…aka (2) part-time jobs replacing (1) full-time job (thx obamacare!). At best, the herd is once again being sold that asset price reflation or the ‘wealth affect’ is real wealth (much like the (dot) com or RE days pre-pop), which pathetically was the explicit goal of QE 1-3 and Op. Twist.

Much like RE in Canada, financial assets could not be where they are without free money. That is why Mother Yellen will continue to be “not impatient”, for “a considerable length of time”. (Ok I lied, that beauty will cost you $100 pls).

I think most with any sense of recent history can agree with your investment thesis, just not at these valuations.

#195 Herb on 03.22.15 at 8:22 am

#190 mdm,

the Quinty and District Real Estate Association (Belleville ON area) has gone missing in action too. Normally they post their “Market Watch” monthly reports around the 10th of the following month. This time they’re still showing January 2015, which of course was (slightly) positive.

#196 Cow Man on 03.22.15 at 8:24 am

Car Loans:
Went in to buy a nearly new car. Had the cash, but the dealer wanted us to finance it to get the negotiated price. 7% down the rest at 6.9%. I was asked what my income was. A verbal statement was all that was needed. Asked the dealer if they wanted an income tax statement. He said not necessary. I can pay off the loan in full after one week. No problem here. Move along folks.

#197 Rusty Venture on 03.22.15 at 8:36 am

Transplant & Snowboid – thanks for posting useful info. Much appreciated.

#198 retired lawyer on 03.22.15 at 8:43 am

#128 Harbour

On “full recourse”.

A mortgage debt is simply a loan from the bank to the borrower, secured by real estate.

Sometimes a bank also requires a guarantor for a loan – including a mortgage.

If you don’t repay the loan in accordance with its terms then, like any other loan, the bank will have the right to recover the money it is owed from you and any guarantor, and will also have the right to sell the property that you used the bank’s money to buy, and apply the sale proceeds against the debt.

If there is not sufficient value in the property to repay the debt then you and any guarantor are still liable to pay the remaining portion of the debt.

That is “full recourse” – a mortgage loan is simply a debt secured by a property.

If you seek to “shield your other assets” as you suggest, you will probably be in breach of the fraudulent preference legislation in your province.

If you think it is unfair to repay money that you borrow you may consider moving to Greece, where that view may find more sympathy than here.

#199 Cat Strange on 03.22.15 at 9:09 am

The panic coming in Canada’s economy is strategic. That is why Mr Harper ‘appointed’ an uneducated , inexperienced bureaucrat to the BOC. Mr Poloz has implemented ‘the burning platform’ strategy well known as the strategy Stephen Elop used to destroy Nokia on behalf of Microsoft.

So far Mr Poloz is on track and doing exactly the right thing by his creator. He is burning Canada to the ground so that a ‘savior’ might sweep in and ‘save the nation’ in it’s darkest hour…soon to come as we close on the election.

Panicking people are so much easier to manipulate during an election cycle. Any experienced business person with an education in business studies can see through this….it’s Business Admin 101.

Like the Nokia example ( and there are many others where a trojan horse was successfully planted at the helm by a close competitor) Canada will be looted and a downtrodden population will realize they’ve been duped.

Canada’s opposition politicians should be aware of what’s happening, the very thorough menace at the core, that will bring this country to it’s knee’s. Mr Poloz is not managing the Canadian economy, he is managing the looting of our resources on behalf of those who would seek to have all without industry, and instead gain the countries riches through political guile. Look for the $C dollar to sink below 40 cents. Watch who emerges with speeches when people have panicked after the bread is swept from their tables.

#200 Retired Boomer - WI on 03.22.15 at 9:29 am

#163 Freedom First

Perfect answer. I agree completely.

#201 Smoking Man on 03.22.15 at 9:38 am

#191 TRT on 03.22.15 at 4:07 am
Blacksheep: good to see another numbers guy on this blog. Enjoy your posts.
I once proposed a theory to NASA scientists about how our ‘sphere of reality’ is created by our collective conscious. The response I got from a lead scientist was they are thinking the same thing. In other words, when people thought the earth was flat, well, it was flat. Crazy eh?!
The Fermi paradox tells us that this is all an illusion. The numbers just don’t add up.
Smoking Man, let’s go beyond electrons into quarks leptons and Higgs bosons. This is an illusion, take it from a guy who used to point huge radio telescopes at Pegasus at age 17.
………

I often refer to the UCC Universal Consouness Consolidater. It’s some kind of force that we broadcast to, and receive messages from. The best reception lies somewhere between 3rd and 4th glass of wine. But it’s always present.

As an example, yesterday taking Wyatt to have his nuts lopped of, I was on the 427.

Boom..in my head a loud message. Danger Ahead.

I elevate my alertness level, checking mirrors, I put down my phone, stop reading Greater Fool comments section.

As I’m rounding the corner where the 401 is, a black car cuts across the lanes, I hit my breaks, he just missed my by inches. Had I not hit my breaks a collision would have happened.

This is how it works..

#202 Ponzif on 03.22.15 at 10:12 am

As I’m rounding the corner where the 401 is, a black car cuts across the lanes, I hit my breaks, he just missed my by inches. Had I not hit my breaks a collision would have happened.

This is how it works..
——————-
Most new cars now have collision detection and warn you.
In the near future, they will automatically brake and avoid an accident.
What then, Dr. Smoking Man?

#203 Ponzif on 03.22.15 at 10:15 am

UCC – Uniform Commercial Code.
That’s what it says on a light switch.

#204 Ben Stellum Steinman on 03.22.15 at 10:20 am

Garth, Can the Fed raise rates by tiny incrementations? Does it have to be .25%? Perhaps they could just raise rates by .05% and so it’s slow enough the market doesn’t have a hissy. Your thoughts?

Nope, won’t happen. — Garth

#205 Broke Dick on 03.22.15 at 11:01 am

#196 Cow Man on 03.22.15 at 8:24 am
Car Loans:
Went in to buy a nearly new car. Had the cash, but the dealer wanted us to finance it to get the negotiated price. 7% down the rest at 6.9%. I was asked what my income was. A verbal statement was all that was needed. Asked the dealer if they wanted an income tax statement. He said not necessary. I can pay off the loan in full after one week. No problem here. Move along folks.
+++++++++++++++++++++++++++++++
and if you are wondering why the dealer wanted you to finance your vehicle purchase, the reason is the lender will give a referral fee back to the dealer for giving them the business. Most likely about $700.

#206 Blacksheep on 03.22.15 at 11:14 am

TRT # 193,

“The Fermi paradox tells us that this is all an illusion. The numbers just don’t add up.”
———————————————–
Interesting take…

So, ‘Horton hears a who’ illusion, ‘The matrix’ version X.X, or something else?

#207 Nora Lenderby on 03.22.15 at 11:22 am

#196 Cow Man on 03.22.15 at 8:24 am
Went in to buy a nearly new car. Had the cash, but the dealer wanted us to finance it to get the negotiated price. 7% down the rest at 6.9%. I was asked what my income was. A verbal statement was all that was needed. Asked the dealer if they wanted an income tax statement. He said not necessary. I can pay off the loan in full after one week. No problem here. Move along folks.

Be careful when doing a deal like this. The salesman is probably getting extra commission for pushing the loan. Make sure the terms are in writing and you can clearly understand the writing.

A silly person I know got a similar car loan. (“Bad credit? No problem!”) He was told after a year the loan would revert to half the interest rate if he kept the payments up to date. Or he could repay in full at any time. After a year, when he went to do the change he was told he was imagining things. Nothing in writing, the salesman long gone.

#208 The Maritimes are FINISHED on 03.22.15 at 11:24 am

http://www.theglobeandmail.com/news/national/how-the-maritimes-became-canadas-incredible-shrinking-region/article23554298/comments/

#209 Retired Boomer - WI on 03.22.15 at 11:26 am

When purchasing a vehicle from a dealer, consider not using the financing idea to negotiate the vehicle price.

Settle on the ‘price’ of the vehicle, then introduce the possibility of financing through the dealer to again lower the price of the car.

Back in 2000 I bought a new Buick. We negotiated the car deal first. Satisfied with that, I offered to let the dealer finance it, as long ass there was something in it for me.
Knowing my credit was good, he was able to put my paper along with two “shaky” buyers to the financing bank. They bought all three deals, but without mine, the other two weren’t going through.

Dealer said was worth $2100 to them so we shared the windfall -lowering my acquisition cost by $1600 from the initially negotiated price.

The money is really made in the finance department, not the sales floor. I have used this negotiating tactic several times.

#210 Squirrel meat on 03.22.15 at 11:28 am

It’s the head teabagger vs. trump so far…..popcorn time.

http://www.nytimes.com/2015/03/23/us/politics/ted-cruz-to-announce-on-monday-he-plans-to-run-for-president.html?_r=0

#211 jess on 03.22.15 at 11:46 am

http://www.thestar.com/business/2015/02/17/a-collateral-mortgage-can-trap-you-roseman.html

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