Trust

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So what did we learn from the #DontHave1Million slugfest here on the weekend?

Simple. If the kids had lots of money they wouldn’t be Tweeting. They’d be buying houses. For the aggrieved it’s not actually about the wealth disparity, or the stupid price of real estate. It’s that they deserve more, because they’re better educated (so, smarter) than the wrinklies. Hence the unfairness.

This useless social media campaign does underscore some valid points, however. First, the gap between The Few and The Most is yawning larger every day. Wealthy people in Canada (with over $2 million in investible assets, outside of real estate) make up about 1% of the population. They own stuff – businesses, financial assets and a relatively small amount of property. The rest of the people hold debt, with the bulk of their net worth in a house. It’s a self-inflicted penury.

Second, the bulk of the population is crippled by financial illiteracy (thus the fetish over real estate, “At least I can see it”) and riddled with mistrust. Read the comment section of this pathetic blog for a few days (have a few scotches first) and see what I mean. People don’t trust banks, realtors, CEOs, immigrants with nice cars, stock markets, central banks, politicians or financial advisors.

Because The Most are so indebted and mistrustful, and their kids have such unfulfilled expectations, don’t expect much to change. The gap will grow wider. Best decide which side you wish to be on.

After thirty years of writing financial books, giving financial lectures, doing financial journalism, creating financial TV shows, and trying financial politics, I started a financial advisory practice, to help people make it. Some do. A 29-year-old couple who wrote me three years ago (I published their cynical letter here) brought a bottle of champagne to my office a month ago, on the week they became millionaires. Not because they own a $1.1 million house with an $850,000 mortgage, but because they now have seven figures in their investment account, and no debt. They’ve ‘retired’, after tripling their net worth in 40 months – by saving and obsessively investing.

As I’ve said so often, real estate brings debt, obligation and immobility. In the future it could also bring large losses and illiquidity. Reasonable people should strive for diversity and balance in their financial lives, keeping taxes low, investing in growth assets and seeking out useful advice. This is why the #DontHave1Million movement is puerile and pouty. If you can’t afford a house in Vancouver, screw it. Concentrate on what you can do – like building your wealth, and your options.

Justin wrote me last week: “Hey Garth, I am looking for an investment advisor/manager and know there are pitfalls within the investing industry. I am looking to be steered in the right direction to start investing but have no idea where to start. Any recommendations or advice would be incredibly appreciated as to where to find a fiduciary advisor or to start a portfolio. PS thanks for getting rid of my house horniness.”

It’s a question I’m asked a lot, but seldom answer, for obvious reasons. This blog isn’t a commercial for my day job. But here are a few points to keep in mind when looking for an advisor for those of you who don’t come here for news about mortgage rates or hormones.

  • Don’t pick a salesman when you really want an advisor.

People who get paid by selling you stuff may have a hard time putting your interests in front of their own. That includes your best-friend high school bud who now sells mutual funds, the sweet lady with the RESP folder after you had a baby, the insurance guy you met recently or [email protected] They all get paid commission on things you buy, so how do you actually know the decisions they make are in your best interests?

Best seek out a fee-based advisor who refuses to sell anything and collects zero commission. The relationship should be as with your lawyer or accountant – you pay a management fee equal to a small percentage of your assets in return for unconflicted help.

  • No hidden commissions or fees. No backend sales charges. Don’t pay more than 1%.

Don’t hire someone who is paid on a transactional basis – making money per trade. That’s just an incentive to churn your account with needless activity. Never buy a mutual fund with a DSC (deferred sales charge) which diminishes over time. This is nothing but a mutual fund prison. Face it – if the asset was good, then they wouldn’t need a tawdry gimmick to keep you invested in it. And any fee-based advisor charging more than 1% is too expensive or needs a new Porsche.

  • It’s not all about performance. Don’t hire a hero.

Amateur investors think the only thing that matters is how fat the annual returns are. Wrong. The first goal of an advisor is capital preservation, and a stock-flipping cowboy who made 28% last year could end up losing 28% of your money next year. Find somebody with a balanced and diversified approach, who is happy to get you a predictable annual return (7% is reasonable these days), and who doesn’t throw around performance numbers when you first meet.

  • The best approach is a holistic one.

An advisor should take the time to know all about you, your job, kids, house, pension, parents, spouse, health, dog, siblings and goals. It’s the only way to come up with a plan (and you should have a written investment plan given to you before you start). Saving money through tax avoidance can be more effective and less risky than trying to score on investments, for example. Knowing what the future demands might be from growing children or aging parents will help guide the strategy now. If the guy doesn’t ask when you first meet, walk.

  • Trust, or you’re wasting everyone’s time.

Yeah, this is the hardest thing. Human nature tells you nobody cares about your money as much as you, which is true. But most people know little about investing, tax law or macroeconomics. So, you can follow the herd, spend all your money and get a mortgage, or you can get some help and aim for 1% status. Maybe you’ll make it. Maybe you’ll buy a house. But the odds are you’ll have more choices and find greater financial security.

This also makes you far sexier. So there.

179 comments ↓

#1 Derek R on 04.19.15 at 1:21 pm

Excellent stuff, Garth! And here’s a tip on the cat issue: your cat is always plotting to kill you if it’s awake.

#2 West Coast on 04.19.15 at 1:31 pm

Thanks Garth. As you say, “reasonable people should strive for diversity and balance in their financial lives, keeping taxes low, investing in growth assets and seeking out useful advice.”
BTW your points on choosing a good advisor are excellent. This is a crucial step in wealth management (even if you think you don’t have much to manage!).
I have followed your advice over the years and am debt free, invested and feeling fine. And yes, I do own property, but it is a minor part of my portfolio.
Thanks again.

#3 vancityboomer on 04.19.15 at 1:32 pm

Thanks Garth. You helped me find my current advisor years ago

#4 chuck guild on 04.19.15 at 1:37 pm

Good afternoon folks,in the 99 percent bracket with house for sale now for 3 years looking to retire on 33,000 a year and spend 2 months traveling 1st class of course. Enjoy your blog and use your tips Thanks for working sundays
at this point not trying to help kids or parents too much but have recommended you for their advisor

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#6 Darryl on 04.19.15 at 1:41 pm

Early today Garth

#7 Drill Baby Drill on 04.19.15 at 1:45 pm

Dear Pathetic Blog : it looks like the oil market is starting to flatten out in the mid $50 USD range. I am not sure this is such a good thing however because there really is a need to shake out the O&G industry from the weaker players including the service co.’s. This mid $50’s scenario may make it possible for marginal players to hang on. I would have preferred the oil pricing fall to $40 and stay there for 1 quarter then slowly rise back to the $60’s. This I believe would ultimately provide a much healthier scenario for the Alberta market to build on. As it stands now if the past few weeks hold several marginal players will have faint hope and continue over producing to the detriment of all producers.

#8 Andrewski on 04.19.15 at 1:47 pm

When it comes to investing, slow & steady always wins the race Garth. Keep up the great work you do!

#9 Victor V on 04.19.15 at 1:49 pm

http://business.financialpost.com/personal-finance/family-finance/allentuck-saturday-april-18

In B.C.’s Lower Mainland, a couple we’ll call Jon and Frances, each 33, are raising three children, twins aged 10 months and one three years old, on Jon’s income, $4,590 a month before tax. Stock dividends and various child benefits add $1,025 a month for total, pretax income of $5,615 a month. After tax, they have $4,605 a month to spend. They want to move to Vancouver.

Frances’s choice to be a stay-at-home mom is part of the couple’s decision not to use daycare or nannies. But parting with one spouse’s income for a decade or more makes it hard to buy a single-family home and move out of their rented quarters. An average house in greater Vancouver is beyond reach.

“My concern is that we won’t be able to buy a house in Vancouver and plan for retirement with my present salary and obligations,” Jon says. “Can we ever own a house in that market?”

#10 ShawnG in TO on 04.19.15 at 1:51 pm

Great article! Thank you Mr T

To be a great advisor takes education, experience, research, and they provide a great deal of value to you. They deserve to be paid.

The key is to align your interest with theirs — they get more money when you do well. Then the motivation is there to help you grow.

#11 Retired Boomer - WI on 04.19.15 at 1:52 pm

Hon. GT-

By far, the BEST advice I have read here in a long while.

Not about real estate, not about the economy, oil, or shivering wrinkles.

This is about all of us “YOU’S” merely trying to set about on that weird road called “investing.” Yeah, we ‘save’ as well, for the emergencies for the car replacements etc.

‘Saving is destined to be spent, at an unknown time in an unknown quantity. I figure this is short 5 yrs or less $$.

“Investing” is what one starts thinking about, and doing maybe in their 20’s, 30’s, or even later, but think of going at this with intentions of winning if you start in your 40’s, 50’s, or 60’s.

Great Advice, now wonder your blog is so good.

#12 TurnerNation on 04.19.15 at 1:55 pm

Went to a kando open house for fun. Worn, no locker or parking. No view. With closing costs and land taxed would be $350,000. 475 square feet of madness.

#13 Larry B on 04.19.15 at 1:55 pm

[email protected] does not get commission to sell you products. They may get a promotion or a raise but they don’t get commissions.

Big difference, right? — Garth

#14 North Burnaby on 04.19.15 at 1:55 pm

Just sold my condo for a net profit of $50,000 wohoooo… What should I do with all these money now, Garth?

#15 Joe Schmoe on 04.19.15 at 1:56 pm

Well worth hiring a fee based advisor.

I was too cheap pre-2008, but life got in the way and I felt I could not keep up with managing our families accounts.

My time was far better earning money/playing with the kids than figuring out how to manage it.

You do learn with an advisor…the good ones tell you what they are doing and why.

Garth is being humble, but he has a really good team. The growth targets he mentions are real.

#16 LTL_FTC on 04.19.15 at 2:00 pm

I’d say one scotch, one bourbon, one beer for yesterday’s comments.

#17 Logical Realtor on 04.19.15 at 2:00 pm

Oh, pity on Garth’s poor readers and the financially illiterate hordes, he understands so little about why housing is the only investment you will ever need.

It is simple math. Let a trusted realtor explain it to you, blog dogs.

The pathetic Leafs just lost the top draft pick and the Connor McDavid sweepstakes.

Using the CREA HPI index, this guarantees another 52 years of losing teams for the Leafs, until at least 2067.

The same index also guarantees at least 20 more years of 10-20% annual gains in investments in Toronto real estate.

So, be smart and sell your seasons tickets, and buy a mortgage at these wonderful rates.

Now, that wasn’t so hard, was it?

:)

GOOooooooooo Oilers!!!!!!!!!

#18 Fed-up on 04.19.15 at 2:09 pm

#4 Logical Realtor

The same index also guarantees at least 20 more years of 10-20% annual gains in investments in Toronto real estate.

——————————————————————————-

Lol that gave me a good laugh.

Cheers dude.

#19 waiting on the westcoast on 04.19.15 at 2:12 pm

The thing I have noticed from the comments in yesterday’s post is a lot of “shoulds”.

The world doesn’t owe us anything, we need to find a way to share our skills/gifts with the world in a way that allows us to live well. I am considering purchasing farmland on Vancouver Island. Would I rather have 20-50 acres close to Vancouver, sure, but that doesn’t fit with my other parameters – so I ADAPT…

Don’t define the world, adapt to it. Success is made on finding the gaps and filling them not wishing for the way things should be….

#20 Now I'm Confused on 04.19.15 at 2:14 pm

I was thinking it was Jim and Vesha but it must be Kimmy and Tom if they visited your office.

#21 TurnerNation on 04.19.15 at 2:26 pm

We are a second world country.
We are not a second world country?

http://www.cbc.ca/news/business/ford-s-2-5b-engine-plant-to-be-built-in-mexico-1.3038131

“Ford Motor Co said on Friday will spend $2.5 billion to build a new generation of fuel-efficient engines and transmissions in Mexico, creating 3,800 jobs.

Ford said it will build a new engine facility within its engine plant in the northern state of Chihuahua.”

….

And…isn’t it nice women are treated with respect in our culture. It’s what we are fighting for overseas we are told? We are not like “them”??

http://www.cbc.ca/news/canada/montreal/ottawa-senators-fan-katie-kerrick-harassed-at-habs-game-1.3039078

#22 DanInCalgary on 04.19.15 at 2:30 pm

Sæll Garth, from Höfn, Iceland! I live the opposite of most of the people you preach to, I’ve converted and become an extremist in the other direction. I have a job that lets me work and travel, so I actually don’t own or rent. My storage bill is about $190 a month.

My question for you, since I’m having a Brennivin (no single malt) and staring out over the mountains and sea, is how much they started with and how aggressive they had to be. I would rather not comb the vault to find out while on the road.

I am worried about the “risk” of losing money since I am young-ish, however a retirement of wandering the globe full time is intriguing.

As usual, love the blog. Even take the time to read every 3-4 days when I’m overseas! I find it relaxing to be honest. Yes, like the rest of your weirdo followers…

#23 Realtor007 on 04.19.15 at 2:45 pm

The best way to invest is to buy a house, use the equity from it to buy financial assets when the stock market crashes, in the mean time pay into the mortgage and portfolio with left over money. When the market crashes go in big, start paying into the HELOC immediately, write off the interest and get a nice tax return, rinse and repeat for 30 years and you become rich.

If you have a $100k in cash the bank will give you nada to buy investments, if you have $100k equity in your house yo can pull out about 80% of it to invest.

It’s true that you will carry debt all your life but without leverage nobody made it unless they won the lottery. Manage the debt and the riches will come.

#24 [email protected] on 04.19.15 at 2:46 pm

The twitter/Social Media slacktivism isn’t something I have ever paid much attention to.

Why? Because it goes nowhere. Sure it gets a day’s worth of coverage in the mainstream media. But so what?

And on that whole thing, I moved to Sask because that’s where the jobs were/are. Generations of people have been doing this for a long time. If you make below avg industry salary, and live in a big city(and are house horny in particular and *need* to buy a house), move. It’s not hard and the adventure in it all can be a lot of fun.

I’m happy renting and saving(soon to be investing), and I do appreciate the advice today. Thanks for that.

Someday I may get a wee little house, but that’s a while off yet. Debt scares me. I’m debt-averse. It’d be ideal if I could pay for the thing in cash. The Tiny House movement people have been doing this for quite a while. Seems interesting.

#25 Suede on 04.19.15 at 3:08 pm

Be a doer

Not a don’t doer

Don’t complain until you finally got the cojones to put some skin in the game

#26 Jay on 04.19.15 at 3:13 pm

It isn’t easy to make good decisions. Good decisions feel bad while you’re making them.

I’ve saved tens of thousands of dollars in the past couple years, and it’s the right thing to do and it’ll feel great later. Right now, however, it feels like we’re dirt poor. I’m telling my wife for the 50th month in a row, “it’s going to be a tight one this month”

The thing is, then comes the pay-off. Saving for college sucked. Working my ass off in college sucked. Heading to the hinterlands to get that first good job sucked. The pay-off from that will last a lifetime. Likewise, saving sucks, but play your cards right and it will mean a simple life later.

On the other hand, there are things you just won’t get. I’m never going to get that foursome with Neve Campbell, Alicia Silverstone, and Jennifer Aniston. That’s just not a thing that’s within my powers. Likewise, a house in a hyperinflated market just isn’t going to happen. If I want a house, I’ll have to buy in a less inflated market. Sometimes hard work will get you through. Other times, you have to set your sights on the achievable.

#27 David W #1 on 04.19.15 at 3:25 pm

Love this post. Thanks for getting away from RE

Re your comment “The best approach is a holistic one”.

I retired 5 months ago. A few months later my Union, probably the largest non-Gov in ON, put together a seminar re retirement.

Went there and within 5 min I realized the presenters (not part of the union) were doing a sales pitch. I decided to see what their “Pitch” was. It was Fear. Fear of you haven’t saved enough, invested enough and the biggest fear, Inflation is going to destroy your Mil savings in 20 years.

I know enough to know a pitch when I see one. Plus there stats favoured their pitch.

They offered a “Free” consultation and I signed up and took their glossy brochure. Next morning I got 3 texts asking to arrange an appt.

Decided to look through their required “Consultation” mentioned in the brochure.

I was stunned !!. Tax returns, Assessments, Employee Benefit Statements, Insurances, Pensions, Loans, Wills and all registered and non-registered investment statements.

Replied NO THANK YOU. Wanted to ask if a DNA sample might be required.

Warning people. You supply this info on a “Free Service” they own your info.

#28 Nagraj on 04.19.15 at 3:26 pm

Jezebel is built like Marilyn Monroe, and she’s sittin’ in her window. She’s all dolled up. She’s thinkin’ ahead – she wants to impress the guys who are ridin’ up to take over the palace.
Somebody shoves her. She goes SPLAT on the pavement.
The aforementioned guys get blood splattered on their horses. Men are so prissy – they don’t like their horses gettin’ blood splattered on ’em. So they just ride on into the palace.
Jezebel’s abandoned carcass gets eaten by stray dogs. (Most of it.) (For some reason they didn’t eat her feet.)

I only dare to bring this up because so far today the blogdogs’ comments amount to lollipops rainbows and roses.
And because, to me, the SPX kinda looks like Jezebel sittin’ in her window.

[To whom it may concern: don’t get caught kickin’ the neighbour’s dog, you’ll regret it. You’ll regret dissin’ the neighbour’s kids more, much more. Do restrict yourself to “Nice doggie!” and “Yer kids are great.” Or keep yer yap shut.]

#29 hohoho on 04.19.15 at 3:29 pm

> … If you have a $100k in cash the bank will give you nada to buy investments, if you have $100k equity in your house yo can pull out about 80% of it to invest.

If you have a $100k in cash you can put 100% of it to invest. Plus if you have $100k equity in your house you in reality have a lot less due to transaction costs … etc.

#30 waiting on the westcoast on 04.19.15 at 3:35 pm

#26 Jay on 04.19.15 at 3:13 pm
“It isn’t easy to make good decisions. Good decisions feel bad while you’re making them.”

So very true! But be open to your dream… Unexpected things do happen… ;-)

#31 Ralph Cramdown on 04.19.15 at 3:45 pm

To triple your money and hit a million in 40 months, you’d have to start with $333,000, add $12,050 per month to it, make 9% on it, and avoid or defer all tax.

At that rate of return and accumulation, it would have taken them 25 months to accumulate the $333,000.

How many couples in their late 20s can save five figures per month?

You too can get into the 1% by assets, folks. Just start off WAY ABOVE the 1% by income for your cohort, with a good sized lump already, and don’t screw anything up!

“The gap will grow wider. Best decide which side you wish to be on.”

This I agree with. But I don’t think it’s within the ambit of most young people to cross that gap, no matter how hard they’re willing to work. The higher cost of higher education and the crummy job market for people currently in their 20s make it very difficult for professionals. Even if you’re top of your class in law school and marry the boy who came second, the two of you will likely start with a six figure debt. And the recent tax skew toward labour and away from capital won’t help. Those who already have are quite advantaged compared to those who first need to accumulate.

Thanks to their prodigious saving habit the couple had about $500,000 when I met them. The annualized average return on a 60/40 portfolio was north of 10%, and they now have a million. You’re right. They’re not typical. Now you know why. — Garth

#32 Realtor007 on 04.19.15 at 3:47 pm

#29 hohoho on 04.19.15 at 3:29 pm

If you have a $100k in cash you can put 100% of it to invest. Plus if you have $100k equity in your house you in reality have a lot less due to transaction costs … etc.

———————————–

If you have a house you can pull the equity AND keep the house, with a $100k in cash all you have is that cash to invest, a 2 for 1 deal, that was the point of my comment.

What are these very expensive transaction costs you speak of?

#33 Marco on 04.19.15 at 3:49 pm

@Realtor007

Are you for real?

#34 boonerator on 04.19.15 at 3:56 pm

Thank God for renting.
If wrinklies (like me) must keep owning their paid for houses, consider what can happen if those test results come back bad. Shadow on the lung, spot on the pancreas…. Do you want your survivor to both grieve and think of how to get monthly income out of the house?
Liquidate and rent, then worry only about your own mortality, not burdening your spouse.

#35 Champers on 04.19.15 at 3:59 pm

Garth, What kind of Champagne did they buy you?

I think they bought it for themselves. — Garth

#36 Ray Vasquez on 04.19.15 at 4:11 pm

To Ralph Cramdown #31

My uncle lives in Hamilton living in one of his building’s unit and now saves $10,000 a month from his remaining 9 rental units.

It is now paid off completely after 18 years and a 30% down payment. The building is worth double now.

The $10,000 goes in REIT’s, preferred shares, foreign bonds and stocks, zero coupon bonds and various other ETF’s etc.

In about 10 years doing this, starting at $7,000 a month and increasing that yearly, he now has about $1,500,000.

#37 Marco on 04.19.15 at 4:20 pm

@Realtor007

I’m not an investment professional but that scenario you suggest seems a bit risky.
My common sense tells me that 2 for 1 scenario only works if the house keeps appreciating. If and when prices fall that 100 g’s can vanish faster then you can say underwater mortgage.

Cheers.

#38 Realtor007 on 04.19.15 at 4:24 pm

#33 Marco on 04.19.15 at 3:49 pm
@Realtor007

Are you for real?

————————-

Absolutely, leverage is the only way most people will have money, how many people do you know who buy RE in cash? investments are no different if you want a nice size portfolio.

#39 DisgustMadeMePost on 04.19.15 at 4:35 pm

As I’ve said so often, real estate brings debt, obligation and immobility. In the future it could also bring large losses and illiquidity. Reasonable people should strive for diversity and balance in their financial lives, keeping taxes low, investing in growth assets and seeking out useful advice…

___________

Re-read the post today. Will probably re-read it a couple more times.

My head knows the words above are true but my heart is having a harder time accepting. When you didnt grow up with money around or even with financially literate parents/relatives, you do what you know. Work for your money. What a novel concept, making your money work for you.

Please no snickering. All some of us ever knew was buy a home and earn interest in a saving account.

Just a thanks, Garth.

I appreciate your continued attempt to educate.

#40 Victor V on 04.19.15 at 4:46 pm

For those who tweet and want to amplify Garth’s blog today, you can retweet his message here:

https://twitter.com/garthturner/status/589851695250673665

#41 redcurlygirl on 04.19.15 at 4:52 pm

Hey Garth, thanks to your advice and books over 7 years ago we’re close to being millionaires as well!

Read Money Road when we sold in T.O. and moving to Calgary, decided to rent and thanked you in person for saving us about $400 00 when you came to give one of your pep talks. Met with a fee-only, no sales financial advisor that I found in Money Sense magazine, got all the funds all over the place dumped and consolidated and tax savings info, maxed out the RRSP and TFSA each year, and still managed to enjoy the ski vacations, trips to Maui, Vegas and Palm Springs and Costco runs.

You had a great comment about wealth-it’s whats left after your debts are paid. When you wrap your head around fact that houses aren’t an investment but for the majority of years a HUGE debt..it changes how you think you’re wealthy.

I have no rental guilt.And I DON’T live in a basement! In fact I boast about it that I live in an upscale C-town neighbourhood walking to yoga and coffee and pubs but only pay for the housing that I need now. You CAN live the lifestyle that you think you crave for a lot less! It does’t take a million like the moist millenials think it does.

I remember that Sam Walton from Walmart used to drive a rusted beat up pickup truck to all his stores…true smart “wealthy” people know what to put their money in and depreciating assets isn’t one of them.

Keep doing what your doing!

Please please come out with a new no nonsense book for these moist millenials though..hard to find some basic canadian info for these 20 year old nieces and nephews who can’t fill out forms, figure out taxes and basic interest rate math or how credit cards work..what happened to good ole “math of investments” in Grade 13?

#42 BG on 04.19.15 at 4:53 pm

A nice big beard will make you sexier too.

Even hipsters wear it these days.

#43 Setting the Record Straight on 04.19.15 at 4:55 pm

@mark
“Here’s a suggestion — perhaps people in Ottawa are mortally afraid of personal bankruptcy, as it may cause one’s government security clearance to be revoked.”

I think you are reversing cause and effect.

Once again, how do you explain Vancouver prices relative to the rest of Canada? Low interest rates, CMHC,
house lust, are constants, not variables.

Bloggers suffer from xenophilia.

#44 Victor V on 04.19.15 at 4:56 pm

#23 Realtor007 on 04.19.15 at 2:45 pm

If you have a $100k in cash the bank will give you nada to buy investments, if you have $100k equity in your house yo can pull out about 80% of it to invest.

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

Put that $100K into a margin account and get flexible access to additional funds to leverage your investment. Moreover, the interest on the loan is tax deductible.

http://www.rbcdirectinvesting.com/investment-account-margin.html

#45 Freedom First on 04.19.15 at 5:06 pm

Yes. Almost everyone has to earn a living. It is my responsibility to do my research/homework, and find the people who are well worth the money I am paying them for their service. Being unaware/ignorant in any category of your life is going to cost you dearly, financially or otherwise. I enjoy and have a great deal of fun in always placing my own Freedom First in every area of my life, and, the rewards are priceless. The second most rewarding thing I have found in my life, without a doubt, is in helping others.

#46 Ralph Cramdown on 04.19.15 at 5:10 pm

#36 Ray Vasquez — “My uncle lives in Hamilton living in one of his building’s unit and now saves $10,000 a month from his remaining 9 rental units.”

My hat is off to your uncle, who must own the most profitable dedicated rental building in Hamilton.

#47 shane on 04.19.15 at 5:15 pm

Garth, when you manage locked in funds is it possible to take a monthly income from a locked in fund if you make money

#48 HD on 04.19.15 at 5:15 pm

#26 Jay on 04.19.15 at 3:13 pm

“On the other hand, there are things you just won’t get. I’m never going to get that foursome with Neve Campbell, Alicia Silverstone, and Jennifer Aniston. That’s just not a thing that’s within my powers.”

—————

Yet, so many people don’t seem to understand that. Doesn’t matter if you are mother Theresa, ain’t gonna happen. Period. Get over it, move on and focus on what you can control/change.

Best,

HD

#49 Setting the Record Straight on 04.19.15 at 5:21 pm

@Nora
“If this is really true, my dear, you’re going to get a very nasty shock. If your generation doesn’t go out and vote (yes, actually participate in your democracy, instead of just taking advantage of it), you will be irrelevant.

This “I don’t vote” attitude is just silly – it’s basic passivity and pretend-cynicism-sophistication. It’s also facile and lazy. You have to think, compromise, make a choice.

For goodness sake get off the couch every few years, at least the walk to the polling place will do you good.

And if that doesn’t convince you, please read this post by a popular left-wing British blogger (I bet you can’t be bothered, though)”

Electing new politicians over and over again and expecting different results is a definition of insanity.
The problem is the State, not who is currently running it for their own benefit.

#50 Darryl on 04.19.15 at 5:23 pm

#34 boonerator on 04.19.15 at 3:56 pm
Thank God for renting.
If wrinklies (like me) must keep owning their paid for houses, consider what can happen if those test results come back bad. Shadow on the lung, spot on the pancreas…. Do you want your survivor to both grieve and think of how to get monthly income out of the house?
Liquidate and rent, then worry only about your own mortality, not burdening your spouse.
————————————————————
Very good plan except for the kids. Until they are stable and on their own the house is for more than just for the couple.

#51 james on 04.19.15 at 5:28 pm

“Thanks to their prodigious saving habit the couple had about $500,000 when I met them”

Those are outliers, plain and simple. I can’t think of too many jobs where a 26 year old couple could scrape up 250k in savings. Barring family wealth, I can’t see how they managed this. Graduating university at 22 with a BA/BCom/BEng is not going to give 250k by 26.

Short of a couple who graduates with a BCom and works for the banks doing trading, I can’t see how they pulled this off. Maybe spectacularly successful sales people, realtors, but even then…

Most professionals aren’t even done school by that age. The majority of my students in law school are 26-29 and flat broke. Many have previous degrees, some came in from industries like finance or health because they weren’t making much.

Dentists and doctors don’t start earning much until their 30’s. Same with most people with PhDs in STEM.

#52 DEEZRAZNS on 04.19.15 at 5:31 pm

Anyone know a few based advisor in Saskatchewan?

#53 Setting the Record Straight on 04.19.15 at 5:35 pm

“We are run by a new world of neo-comms neo-communists or banker-communists, not neo-cons.”

Neo cons are ex Trotskyites.

#54 BS on 04.19.15 at 5:44 pm

Realtor007:

If you have a $100k in cash the bank will give you nada to buy investments, if you have $100k equity in your house yo can pull out about 80% of it to invest.

Only a Realtor could offer such incorrect advice.

1. Dear Mr. realtor Google ‘margin account’. You can borrow another $100K if you have $100K from any brokerage at a very low rate which is tax deductible.

2. If you have 100K in equity you cannot take out 80% of that in a HELOC unless the value of the property is only 100K and there is no mortgage on the property. Even then you can only take out 65% in a HELOC. Of course $100K properties don’t exist. If you had 100K in equity in a more realistic $500K valued property (or higher) it would already be at 80% LTV and you could not get a HELOC at all.

#55 Happy in Kelowna on 04.19.15 at 5:54 pm

Garth, You have written in the past that people with $1 Million in investible assests were considered the wealthy 1%. Now you say it is $2 Million. I have read the $1 Million figure elsewhere too. Have things changed?
Thanks

#56 Dividend Man on 04.19.15 at 5:56 pm

What is the “I don’t have a million” movement really telling you? The underlining economics as the entry level purchasers are now “priced out” of the market. This stops the move up ladder for homes or condos, prices have now PEAKED.

I have returned,
Dividend Man

#57 Made in BC on 04.19.15 at 6:10 pm

“My concern is that we won’t be able to buy a house in Vancouver and plan for retirement with my present salary and obligations,” Jon says. “Can we ever own a house in that market?”

++++++++++++++++++++++++

On $5600 pre tax a month?

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

This is Vancouver BC not Vancouver WA.

#58 Mark on 04.19.15 at 6:11 pm

“Once again, how do you explain Vancouver prices relative to the rest of Canada? Low interest rates, CMHC,
house lust, are constants, not variables. “

In a previous post, I theorized that there is a particular speculative culture in Vancouver, especially around the precious metals mining industry. The inversion of which, is speculation in housing.

If/as the precious metals stocks start moving upwards again, look for a lot of the hot speculative money to come out of housing speculation (the current driver in prices, not “HAM”), and back into the junior mining stocks.

Toronto’s “headline” industry, OTOH, the banking sector, is providing huge amounts of cashflow to its Toronto-based participants (employees, shareholders, etc.). So the price to average income multiple isn’t nearly as severe, but the banking sector may still be overheated in the historical scheme of things.

I’m not holding any of the above out as “fact”, but its certainly a theory worth examining as a possible answer to your question that has some support in the data. “HAM” has practically no support in the data so we can easily discard that ‘theory’.

#59 Sebee on 04.19.15 at 6:34 pm

Anyone know color of Garth’s car(s).

#60 kommykim on 04.19.15 at 6:34 pm

RE: #29 hohoho on 04.19.15 at 3:29 pm
If you have a $100k in cash you can put 100% of it to invest. Plus if you have $100k equity in your house you in reality have a lot less due to transaction costs … etc.

And that’s exactly what Realtard007 is hoping for. As long as he sells a house, he gets a commission which is why he cannot be trusted.

#61 Millmech on 04.19.15 at 6:46 pm

#31
Lots of 20 something’s can if they go into a growing well paying career.My last plant the average wage for tradesman was with overtime $150.000 in the lower mainland.No one wanted the apprenticeships as work was too “hard or dirty”, they still have four positions to be filled last time they tried to get me to come back.Lots of millenials becoming high paying librarians( I personally know of three taking this career)onmly one is taking the trade route.This is why they are where they are.

#62 Senta on 04.19.15 at 6:53 pm

I still remember the comment some one made to me 25 years ago, which was important in helping me become financially independent.
Its not about much you make, but how much you keep and how well you invest.
In a country like Canada tax avoidance is key.

#63 Realtor007 on 04.19.15 at 7:18 pm

Marco,

The house does’t have to appreciate at all, the HELOC is taken out based on the value at the time, if the house is worth $500k today and $500k in 5 years it has no affect on the HELOC. 500x.8=$400k, how much you take will depend on how much you can afford to service on a monthly basis. Even if the house depreciates a little you’ll still be ok.

There are 2 risks in the strategy, one is that the HELOC gets called in ( small chance of that happening) and the other is that interest rates increase drastically and you may have a hard time servicing the monthly Interest payment ( small chance of that as well)

Last week I read on the NP that people are using this strategy right now, IMO this is a NO NO at this time, I used this strategy in 2010 and since then just been paying the HELOC and mortgage down and I also invest monthly into ETF’s, when the next crisis hits ( and it will) I will be ready to liquidate my HELOC again and start buying bargain basement prices as the masses unload at warp speed.

I’m counting on at least 6 more crashes of at least 30% each in the next 30 years.

#64 Kreditanstalt on 04.19.15 at 7:23 pm

If it’s all so simple please explain to everyone how, looked at in the long run over years and decades, living standards (- debt, job insecurity & hours worked) have been dropping since about…1971.

#65 1% fee calculation on 04.19.15 at 7:24 pm

I have have a house (apprised recently $850K, for mortgage renewal and HELOC), $100K mortgage, $200K investment in RRSP, TFSA accounts, no other debt.

What would be the 1% advisor fee in this case?

#66 Nora Lenderby on 04.19.15 at 7:36 pm

#49 Setting the Record Straight on 04.19.15 at 5:21 pm

Electing new politicians over and over again and expecting different results is a definition of insanity.
The problem is the State, not who is currently running it for their own benefit.

I’d say that the present Canadian Federal government has produced different results in a number of areas. Certainly there appears to be no plausible attempt to stop excessive lending for mortgages.

Perhaps it’s deliberate. Get a large segment of the population addicted to house debt, then throw them a few crumbs to get re-elected.

More likely they just don’t care enough, people are easily bribed with their own money, and I’m just being a silly old lady.

I am reminded of the late Margaret Thatcher (the former British PM, not the cat). Some British people were always hot for housing, but her government really pushed a lot more poorer people into home ownership in the belief that they would thenceforth always vote Conservative.

Once you’ve got them hooked they have to become more economically active or lose their precious stuff.

#67 rower on 04.19.15 at 7:40 pm

#39 Absolutely!!!

We read Garth’s blog and books and take things one step at a time.

#68 Mac on 04.19.15 at 7:50 pm

So much for real estate “always going up”. I just finished an inspection on a property in Calgary this afternoon and the Realtor told me the seller bought it two years ago for $650,000 and is now selling it for $620,000. That sucks. Being a home inspector has really turned me off of buying at these nosebleed prices. All I see are money pits for half a million plus. No thanks.

#69 cramar on 04.19.15 at 7:51 pm

Wealthy people in Canada (with over $2 million in investible assets, outside of real estate) make up about 1% of the population. They own stuff – businesses, financial assets and a relatively small amount of property. The rest of the people hold debt, with the bulk of their net worth in a house.

————

Well that’s an exaggeration, Garth. Implication is that 99% of the population has debt. No so! Many are like me. No debt but will likely never have $2MM in investments (well maybe if I live long enough). I wonder really what percentage of people are debt free? Probably a low percentage, but I know lots of wrinklies, and pre-wrinklies who are debt free.

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

After thirty years of writing financial books, giving financial lectures, doing financial journalism, creating financial TV shows, and trying financial politics, I started a financial advisory practice, to help people make it. Some do. A 29-year-old couple who wrote me three years ago (I published their cynical letter here) brought a bottle of champagne to my office a month ago, on the week they became millionaires. Not because they own a $1.1 million house with an $850,000 mortgage, but because they now have seven figures in their investment account, and no debt. They’ve ‘retired’, after tripling their net worth in 40 months – by saving and obsessively investing.

————

Here’s an idea for a new book, “Sell your house, and be wealthy.” I don’t think any financial book has that angle. Trouble is, it will only work for Van, GTA, and a few others. Limited audience. Too bad, it would be a great idea.

Congratulations to this couple and you! They are the “poster child” for what you have been saying. This blog needs more examples like this to show the house horny that the mortgage-less way works. Just telling a couple not to enslave yourself to an $850k mortgage is nowhere near as effective as real examples of those who made it to the Promised Land of Wealth.

#70 OttawaMike on 04.19.15 at 8:00 pm

#21 TurnerNation on 04.19.15 at 2:26 pm

We need to buy those auto jobs. Cons are not rolling over so no new auto plants for you Canada!

#71 Shawn on 04.19.15 at 8:03 pm

I help people pick stocks if they want to go that route. Still, I can’t disagree with fee based approach suggested.

#72 Realtor007 on 04.19.15 at 8:07 pm

#54 BS on 04.19.15 at 5:44 pm
———–

I know what a margin is and there is a specific reason I didn’t even mention it, margin calls come swiftly, I dont trust them hence why I would never use them, FYI, most equity margins offer a 3 for 1 and some even more.

My $500k example was made on the assumption the house was paid off, otherwise you’re right.

#73 mishuko on 04.19.15 at 8:08 pm

Had a few [email protected] try up sell me some cc’s. Or how I should open an rrsp saving account (not the broker type).

I know they aren’t paid by comission but the do have quota

Durp.

But I didn’t know having a liquid portfolio made you sexy too!

Sign me up.

#74 Joe2.0 on 04.19.15 at 8:12 pm

The power of brainwashing via TV shows, local newspapers, radio and the internet really dawned on me today as two of the neighbour hood kids 9-10 were having a conversation about houses and what they will buy.

The RE pumping machine is a finely tuned monster that devours all generations.
Fueled by fictitious facts spewing fear tactics.

The Banks are in on it.
The medias in on it.
Our politicians are in on it.
Immigrations in on it.
Your parents are in on it.

The sheeple don’t have a chance.

But I stick by my convictions based on a ton of data.
There’s hope out there basement dwellers.

Come Oct there’s going to be a very nasty economic shakeup.

Keep you powder dry and hang on.

#75 totalinvestor.com on 04.19.15 at 8:13 pm

Look who made the news :)

Buy vs. Rent: If You’re Thinking About Buying a House, You Need to Read This

http://totalinvestor.blogspot.ca/2015/04/buy-vs-rent-if-youre-thinking-about.html

#76 250k by 26 on 04.19.15 at 8:19 pm

#51 james on 04.19.15 at 5:28 pm

“Thanks to their prodigious saving habit the couple had about $500,000 when I met them”

Those are outliers, plain and simple. I can’t think of too many jobs where a 26 year old couple could scrape up 250k in savings. Barring family wealth, I can’t see how they managed this. Graduating university at 22 with a BA/BCom/BEng is not going to give 250k by 26.

—–

My son is on his way for $250K savings by 26 – a year away.

But he has had an exceptional ride, started working professionally at 16, got his BA debt free, by then purchased all his gears to run his business. His clients are top Canadian/US companies, part of his income is in USD, and by now he worked with 3 of the top 4 world’s largest company in his field (as independent). He is savvy business man, but sporting fancy German car, extensive wardrobe and private club membership. Beside making good revenue, he is also a keen self-directed investor. By the way, he has one of those”useless” degrees and makes his money with what used to be his hobby. On the other hand, he lives half-time at home, half-time at his girlfriend or business travels.

So it is not impossible – just extremely rare.

His older sister’s story is the more typical: BA, two post-grad “useful” degrees, studying day and night and they also did not come cheap in terms of money, she has started to dig her way out of debt, starting her practice.

They are both extremely dedicated – the only difference is in what their passion was.

#77 Smoking Man on 04.19.15 at 8:33 pm

DELETED

#78 The Portfolio Trader on 04.19.15 at 8:36 pm

Hi Garth,
I have been reading your blog for a few years now. I don’t live in Canada but in a country similar to Canada, the only difference being your temperature goes to Max -50 degrees and here it goes to Max +50 degrees..also we have great beaches and sharks and spiders and snakes ..eer.. i will stop now!

I ventured into algorithmic trading and the result being “www.theportfoliotrader.com”. You have become a mentor, in terms of my financial enlightenment, to me. I was wondering whether you would be kind enough to browse through my website (www.theportfoliotrader.com) and let me know what you think of it? I will buy you a single-malt(Amrut Fusion)/beer/maple-syrup/whatever when I am in Canada or if you are visiting here!

#79 Nordcom Flatinrea on 04.19.15 at 8:49 pm

Garth,

With inflation going up suddenly in Canada, will this increase the value of the miners in XIU, making it a good investment for 2015?

Also,
Does this mark a turning point in preferreds where they may have finally started to bottom? Thank you Sir!

#80 Leo Trollstoy on 04.19.15 at 8:49 pm

If/as the precious metals stocks start moving upwards again, look for a lot of the hot speculative money to come out of housing speculation (the current driver in prices, not “HAM”), and back into the junior mining stocks.

That didn’t happen in the last mining boom.

Unfounded speculation.

#81 Smoking Man on 04.19.15 at 8:52 pm

My son invested in this, I have granite, I have a balanced portfolio, I have a house in 416..

Idiots , your all going to die..

Better to chase the secrets of the universe. I uncovered one, in a massage parlor in Atlantic City of all places , go figure

Drink , spend , live your lives, they’re all short.

Never be afraid of Judgment.what others think of you.. That’s a heavey anchore for any pilot, lets face it ,we all want to fly.someone told us flying is bad. Now go get my coffee.

Why can’t I get through to anyone. I’ve more or less solved this writing mistry, spelling shit.

What the hell is missing.

#82 Mark on 04.19.15 at 9:12 pm

“That didn’t happen in the last mining boom.

And when was that? 40 years ago?


Unfounded speculation.

Not true.

#83 Leo Trollstoy on 04.19.15 at 9:26 pm

They are both extremely dedicated – the only difference is in what their passion was.

And difference in luck.

#84 Junk Yard Dog on 04.19.15 at 9:43 pm

A bit dated. Not sure if it’s been posted already.

http://www.moneysense.ca/directory-of-fee-only-planners

Wondered why you weren’t on the list, Garth?

Because it’s a list of people who do not manage money or have long-lasting clients, but sell their advice by the hour. This is what I give away. — Garth

#85 Lolz on 04.19.15 at 9:47 pm

Garth seems to have doubled down on not getting it

So sure this couple Garth “met” was saving what must have been 3X the average income per month to hit a million. So what?

It’s still legitimate to protest against the extraordinary govt intervention in the housing market and the fact even basic shelter is overpriced

I applaud the protestors to drawing attention to the implications of poor policy

Actually they’re tweeting that it’s unfair they can’t afford a house in our most expensive city. Yeah, big protest. Like saving the climate or ending war. How many migrants drowned today? — Garth

#86 SagaRenter on 04.19.15 at 9:51 pm

Garth,
I really appreciate your blog. I want to follow your advice but where does one find fee based adviser in TO? I want to invest 10% of my salary but don’t know where to start.
I have talked to investors group guy who wanted me to take out 100k loan to invest it..but i didnt go for it.
Many thanks for breaking it down for a newbie.

#87 Squirel Meat on 04.19.15 at 9:55 pm

#84 Junk Yard Dog on 04.19.15 at 9:43 pm

A bit dated. Not sure if it’s been posted already.

http://www.moneysense.ca/directory-of-fee-only-planners

Wondered why you weren’t on the list, Garth?

Because it’s a list of people who do not manage money or have long-lasting clients, but sell their advice by the hour. This is what I give away. — Garth

——————————————————–

The first one offers financial advice followed by divorce counseling!
Hilarious!

#88 Nosty, etc. on 04.19.15 at 10:00 pm

#81 Smoking Man on 04.19.15 at 8:52 pm — “Idiots , your all going to die … Drink , spend , live your lives, they’re all short.”

I was listening to Dire Straits’ Heavy Fuel when I read your post, SMan. Bang on!

Similar to the Canadian actor who died of complications from a brain hemorrhage a day or two ago (he was 48), I was 44 when the stroke happened in Sept. 2000, in a coma for 14 days with no life support. Theoretically, I’m not supposed to be here, but what the hell — my exit strategy didn’t work out as planned!

I’m partially blind in both eyes and paralyzed down the right half of my decaying, decrepit body now, but we’re both retired and our investments are zooming ahead, so we will not be parasites on the federal or prov. govt. teats.

Great post — Cheers!

#89 Junk Yard Dog on 04.19.15 at 10:01 pm

And I thank you for doing so. Thanks for constantly dropping your daily nuggets of wisdom and making investing interesting!
If you could recommend a field of financial education to pursue, based on level of happiness, fairness to clients, level of income and ability to increase general financial knowledge, what would you choose if you could start all over again?

Change nothing. — Garth

#90 cramar on 04.19.15 at 10:01 pm

#81 Smoking Man on 04.19.15 at 8:52 pm

Why can’t I get through to anyone. I’ve more or less solved this writing mistry, spelling shit.

What the hell is missing.

—————–

Credibility!

#91 Lolz on 04.19.15 at 10:01 pm

@garth

What you see as unfair I see as drawing attention to the implications of extraordinary govt intervention in the housing market. These protests are simply a symptom of the underlying illness. Entirely predictable.

One could argue this blog is similar in that regard. I would similarly applaud your efforts as well.

#92 Karma on 04.19.15 at 10:10 pm

#45 zedgt87 on 04.17.15 at 7:25 pm
“Couldn’t agree more. You laid it out perfectly, I was a little shocked that Garth was mocking them. This is the exact prime demographic for entering real estate and starting families. Instead housing inflation has completely pushed them out of their local markets and they are (rightfully) mad. This isn’t about entitlement.”

Why does it matter that these older millennials are the “exact prime demographic for entering real estate and starting families”? IMO, it doesn’t.

It doesn’t because someone else owns the house and doesn’t want to sell unless they get their price. That’s their choice as the owner. And if I was in the seller’s position, I would do the same thing.

You, or the government, can’t force people to sell their homes… Therefore, it’s irrelevant who (and what age) the wishful buyer is.

#93 Ontario's Left Coast on 04.19.15 at 10:33 pm

#45 Freedom First

Sorry to sound unappreciative, but I thought it would be helpful to point something out… Do you realize that you chime in every couple of days and say the EXACT SAME THING? We get it, okay? You have been diligent, invest wisely, avoid marriage and help others. Now, would you please help the rest of us change the damn channel?

#94 Ralph Cramdown on 04.19.15 at 10:35 pm

#92 Karma — “It doesn’t because someone else owns the house and doesn’t want to sell unless they get their price. That’s their choice as the owner. And if I was in the seller’s position, I would do the same thing.

You, or the government, can’t force people to sell their homes… Therefore, it’s irrelevant who (and what age) the wishful buyer is.”

Ah, but we do the opposite. We keep their property taxes low by charging a land transfer tax for buyers. In some places we let them defer property taxes entirely. Elsewhere they can get a provincial tax credit for them. Subsidies for the heating bills. The city sends somebody around to shovel the end of the driveway if the snowplow blocks it. Meals on Wheels and home care so the poor dears can stay in their drafty and inefficient, but well located three bedroom homes 50 years after the last kid moved out and five after the husband died. Because it’s cheaper, you see, to plan for them to “age in place” when you ignore the costs to the rest of society, or even to their own sanity.

#95 Smoking Man on 04.19.15 at 10:36 pm

#88 Nosty, etc. on 04.19.15 at 10:00 pm
#81 Smoking Man on 04.19.15 at 8:52 pm – “Idiots , your all going to die … Drink , spend , live your lives, they’re all short.”

I was listening to Dire Straits’ Heavy Fuel when I read your post, SMan. Bang on!

Similar to the Canadian actor who died of complications from a brain hemorrhage a day or two ago (he was 48), I was 44 when the stroke happened in Sept. 2000, in a coma for 14 days with no life support. Theoretically, I’m not supposed to be here, but what the hell — my exit strategy didn’t work out as planned!

I’m partially blind in both eyes and paralyzed down the right half of my decaying, decrepit body now, but we’re both retired and our investments are zooming ahead, so we will not be parasites on the federal or prov. govt. teats.

Great post — Cheers
…..

Sucks man, but lucky for you, you still have a mind, its a beauty. Love your perspective on shit, you get it.

My dad, 97 can still run a Marathon, but. He’s gone.

Wish I was a real Nectonite, so I could help you.

#96 PM on 04.19.15 at 10:45 pm

#31

So they doubled their money in the last few years? BFD, who didn’t? A monkey throwing darts at the newspaper stock market section since 2008 has doubled his money.

Saving 500K by 30 is a bigger accomplishment. I’d like to hear the secret to that: Be a doctor and save 100K per year.

#97 Victor V on 04.19.15 at 10:46 pm

#89 Junk Yard Dog on 04.19.15 at 10:01 pm

And I thank you for doing so. Thanks for constantly dropping your daily nuggets of wisdom and making investing interesting! If you could recommend a field of financial education to pursue, based on level of happiness, fairness to clients, level of income and ability to increase general financial knowledge, what would you choose if you could start all over again?

Change nothing. — Garth

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

What, if some day or night a demon were to steal after you into your loneliest loneliness and say to you: ‘This life as you now live it and have lived it, you will have to live once more and innumerable times more’ … Would you not throw yourself down and gnash your teeth and curse the demon who spoke thus? Or have you once experienced a tremendous moment when you would have answered him: ‘You are a god and never have I heard anything more divine.’ — Nietzsche

#98 Smoking Man on 04.19.15 at 10:52 pm

#90 cramar on 04.19.15 at 10:01 pm
#81 Smoking Man on 04.19.15 at 8:52 pm

Why can’t I get through to anyone. I’ve more or less solved this writing mistry, spelling shit.

What the hell is missing.

—————–

Credibility!
….

Why is that important? Oh ya , the teachers lessons

#99 BS on 04.19.15 at 11:13 pm

Realtor007

I know what a margin is and there is a specific reason I didn’t even mention it, margin calls come swiftly, I dont trust them hence why I would never use them, FYI, most equity margins offer a 3 for 1 and some even more.

My $500k example was made on the assumption the house was paid off, otherwise you’re right.

Margin calls come if the portfolio value drops and for no other reason. HELOCs will also get called if the house value drops.

Your example was for $100K not $500K. You also claimed 80% could be taken out on a HELOC where the maximum is 65% for a HELOC and 80% for a HELOC and mortgage combined. Don; they teach this stuff to you in Realtor school?

Just another reason nobody should trust anything a realtor says. In most cases not only do they blatantly lie but they also have no clue what they are talking about.

#100 Victor V on 04.19.15 at 11:22 pm

Bankrate study on why millennials are staying out of the stock market and the financial implications of staying on the sidelines.

https://ca.finance.yahoo.com/video/why-most-millennials-arent-investors-152703100.html

#101 CMHC on 04.19.15 at 11:25 pm

We, the CMHC, can no longer help people wanting to buy a detached home in Vancouver or Toronto. You see, the average price is over $1 Million and we don’t insure those.

However, these homes are selling like crazy right now. Too bad you missed out… We are not responsible for foreign inflows.

#102 Tiger on 04.19.15 at 11:41 pm

Collateral Mortgage, or Collateral Damage?

https://www.youtube.com/watch?v=Mz-hdBzmj1k

#103 Keith in Calgary on 04.19.15 at 11:49 pm

The spouse and I left our rental condo to go to the mall yesterday afternoon, and on the way back home we decided to drive thru the Altadore section of SW Calgary. We often find it hilarious to look at the growing number of the infills under construction, and those still going begging for buyers. For those of you who are not aware, Altadore is prime “inner city” Calgary, where spec builders tear down the perfectly good bones of older homes sitting on huge lots, and put up those disgusting cardboard side by side attached duplex for twice the price, while ripping up the street in front for the city services, creating a washboard like effect when you drive down the street. Looks like “LEGOLAND” in this area now…………..

As it was nice yesterday (10 degrees and sunny) the open house signs were out in full force.

One street had 17 homes for sale over 3 blocks. We counted 13 open houses in our short tour, and saw the realtor sitting in the living room or at the kitchen island in about 10 of them, waiting for someone, just anyone, to park outside and walk thru. This is in one of the nicest and what was once most desirable places to live in town during the boom…….now, it’s a bust.

Not a single false line up of pre-paid Ham in sight.

#104 Snowboid on 04.20.15 at 12:07 am

#55 Happy in Kelowna on 04.19.15 at 5:54 pm…

Based on the first trip to our Kelowna grocery store after returning from Phoenix, I can understand why it must be $ 2 million.

#105 jim on 04.20.15 at 12:11 am

Garth,

YOu have everything wrong on this site.

Lately I have made trip from Washington – Seattle up to Toronto…driving and visiting towns and cities ..

Economy is booming…Seattle…rents skyrocketing..houses over million,,,Vancouver the same..Camloops, Edmonton , Calgary…Manitoba…up to Toronto…
Hotels are full, restaurants full, people having jobs…,
everyone in rush….
The best economy I have ever seen!!!!in years..

Question…what you talking about….!!!!
Chinese buyers…everywhere from Vancouver to Toronto!!!! REal estate is hot…people sitting on tons of cash!!!!!
put glasses on your eyes!!!!!!!

Economy is booming…
We are going into the nice and big inflation…

you should advise …Buy a house if you can!!!!!!
Do not fool people ,,,hard working people…!!!!!

#106 Karma on 04.20.15 at 12:40 am

#282 Lady in Red on 04.19.15 at 12:44 am
“Yes, there are many millennials who feel entitled but these people are simply stating that with hard work, they still have no future in their own communities. You are so stubborn when it comes to your thoughts (vs the truth) on YVR/YYZ housing so your point of view on this shouldn’t really surprise me. BTW, I’m a FT working millennial who owns a west-coast home that is now worth almost 2.5x the amount my husband paid 10 years ago) Just 10 years ago young professionals could afford homes in safe neighbourhoods. Does that help you understand why people are frustrated?”

So sell the house and take the money and run. Then you’ll be part of the solution rather than part of the problem. Because some other millennial deserves the house your husband bought 10 years ago more than you do… Don’t be so selfish…

#107 Freedom First on 04.20.15 at 12:43 am

#93 Ontario’s Left Coast

I think you need someone to help you understand all of my Posts solid advice instead of being fixated on taking a small part out of context. Also, if you don’t like reading my comments, then ignore me. No charge.

#108 Karma on 04.20.15 at 12:49 am

#285 Rebecca on 04.19.15 at 1:08 am
“Think you missed the mark on this one, Garth. Millennials here are pointing out how unbalanced our real estate market is in Vancouver when our average working professionals can’t afford our average homes.”

Garth didn’t miss the point. You missed his point, which is: Twitter doesn’t solve their problem and makes them look like entitled whiners. Which I agree with.

My buddy mentioned he went to an open (sh!tbox) house in E. Van on Saturday. There were multiple offers and it sold over listing. He obviously complained. I told him to stop even looking for a house since he’s not even married and has highly variable income (i.e. dependent on monthly sales).

To me, it’s unfathomable for him to even start looking for houses when a) he’s not financially stable enough (although his GF is), b) house prices are high in that area, c) doesn’t have a legitimate need for a house, d) isn’t even married, thus increasing the risk of an ugly financial break up.

#109 googooga on 04.20.15 at 1:03 am

Garth,

I see you as more of a guru than an advisor or salesman….you go guru!

#110 Mountain Man on 04.20.15 at 1:26 am

Best photo ever!

#111 Money Coach on 04.20.15 at 2:06 am

#87 Squirel Meat

There are significant financial decisions to be made in the event of a divorce. Many people benefit from financial counsel during life transitions.

#112 nonplused on 04.20.15 at 2:41 am

1% of Canadians have $2mil+ in investments outside their house? I don’t believe the number is that high. I better Google it.

The 1% might have an average of $2mil, but my guess is the 0.0001% seriously screw the average numbers up.

This website http://www.freedomthirtyfiveblog.com/resources/median-and-average-net-worth
says 1% of Canadians have $1mil or more in investable assets outside their house. I guess the average could still be $2mil, but that’s because a few people have a bil.

But the really sad news is that on average the 1% don’t even have enough to retire. If they were in government bonds, they might be getting $40,000 a year in taxable income. So they have to eat principle, which goes faster and faster. Or stretch for yield into riskier investments. Riskier investments are, well, riskier. You’ll be writing some of that off, no matter how hard you try and avoid it.

#113 VanCity D-Man on 04.20.15 at 3:20 am

Hi Garth, funny picture. You’ve got nothing to worry about. You have Bandit. Lol

#114 I'm stupid on 04.20.15 at 6:55 am

I think the problem with Canada is that the savings rate is non existent. How can an employee negotiate a fair wage when he cannot afford to miss a paycheque?

#115 Brian Romanchuk on 04.20.15 at 7:03 am

If you are about to get audited by the CRA, I would recommend using the term “tax planning” rather that “tax avoidance”. Avoidance is a “somewhat nebulous activity” (KPMG 2014 tax guide) which is covered by the General Anti-Avoidance Rule. The rule gives the CRA the power to look through transactions that have no economic purpose other than reduce taxes by exploiting unintended gaps in the tax system.

The CRA can probe whatever it wishes, but tax avoidance is legal while tax evasion is not. Remember that legislative changes have made accounting firms like KPMG into agents of the CRA, and their clients do not have confidentiality or protection. — Garth

#116 Detalumis on 04.20.15 at 7:05 am

#94 we pay for services for “poor dears” because the miniscule support hours provided by home-care provided by the taxpayers are 1/3 of the cost of the cheapest LTC bed, that is why. They expect family to do the rest and if you have none, it’s hasta la vista.

The attitude people have to the elderly disgusts me.
I am doing caregiving for a neighbour who would have been dumped out of the hospital onto his porch to die if I hadn’t have noticed, nobody else seemed to care, I don’t even live on the same fricking block. After seeing the horrible way seniors are treated in the hospital if they don’t die fast enough, I have come to the conclusion that Emmanuel Ezekiel is entirely correct when he wrote the Atlantic article, “Why I hope to die at 75” and was torn to pieces for speaking the truth.

On one hand we have all this bull crap about planning to live until 95 and on the other hand we will have double the number of elderly requiring care in less than 15 years and a society that hates them. So yeah, my plan will be to invoke “Carter vs. the Attorney General” and just check out. I sure as fk don’t expect any neighbour to give a minute’s thought to me when my time comes. That’s the way the current batch of little shts were raised – it’s all about me, me and more ME.

#117 Boomer and Proud of It on 04.20.15 at 7:41 am

Sadly, another boat of migrants has run into peril overnight, and at least three more people have died.

And according to the whining, entitled millenials and their enablers like Ralph Cramdown, you are apparently responsible for their deaths, Garth.

I never would have guessed that if I had not read the comment section here.

How do you live with yourself?

#118 Victor V on 04.20.15 at 8:10 am

https://ca.finance.yahoo.com/news/bank-canada-head-sees-no-now-more-insurance-025456827–sector.html

TORONTO (Reuters) – Bank of Canada Governor Stephen Poloz, who has described a shock January interest rate cut as “insurance”, said in an interview he didn’t see the need for more insurance now, the Wall Street Journal reported on its website on Sunday.

“We’ve got the right monetary policy,” Poloz told the newspaper. “It gets us home.”

He also said the Bank of Canada would only consider further rate cuts if the economy underperformed the central bank’s outlook.

#119 fancy_pants on 04.20.15 at 8:12 am

“Canadian home prices inflated by more than 25%, Economist magazine warns”

Nothing new for us here, and perhaps even for mainstream now but it is unfortunate that people have lost faith in a gov’t that continues to indirectly support and encourage debt, debtors and expensive RE and so continue to pile it on. Let’s give a round of applause to the BofC for creating such a playing field.

http://www.theglobeandmail.com/report-on-business/top-business-stories/canadian-home-prices-inflated-by-more-than-25-economist-magazine-warns/article24025676/

#120 Nagraj on 04.20.15 at 8:21 am

I can’t resist replying to #48 HD who mentioned, of all people, Mother Teresa.

One fine day MT was in a hurry to fly to Europe. It’s a propeller plane she’s got. She’s sitting inside looking at her watch and asking what the delay is. She’s told that one of her attendant nuns hasn’t boarded yet. MT says Too bad, I can’t wait, and orders the pilot to go. The pilot starts up the plane, the plane lurches forward a bit and stops.
Now what?! exclaims the impatient MT.
Well, the tardy nun had been standing in front of the plane, right next to a propeller, chatting cheerfully away to a friend. She certainly wasn’t expecting the plane to move until she was aboard.
When MT was informed that the plane had stopped because one of her nuns was lying on the tarmac decapitated – MT crossed herself, said “God’s will be done”, ordered the pilot to resume take-off without any further delay.

Cool.

#121 Kevin on 04.20.15 at 8:31 am

Garth,
I think the financial industry has done itself the most damage by providing poor investment and absurdly high fees. After all a real estate agent only changes a 5% commission once, while mutual fund salespeople charge clients 2.5-3% annually in perpetuity.
Thanks for keeping me entertained.

Simple. Don’t buy mutual funds. — Garth

#122 Brian Romanchuk on 04.20.15 at 8:43 am

Re #115
My point is semantic. The way you use avoidance was correct – until the General Anti-Avoidance Rule came into effect.

“Tax Avoidance” now has a specific meaning in the Canadian tax system – anything that runs afoul of the GAAR. Although technically not illegal, something is “avoidance” only if the CRA reverses the way you have accounted for something and you have to pay taxes based on the economic intent of the transaction (according to the CRA).

Tax planning or tax minimization are where you reduce taxes and you are not able to be challenged under the GAAR.

#123 Nora Lenderby on 04.20.15 at 8:54 am

#93 Ontario’s Left Coast on 04.19.15 at 10:33 pm
#45 Freedom First

Sorry to sound unappreciative, but I thought it would be helpful to point something out… Do you realize that you chime in every couple of days and say the EXACT SAME THING? We get it, okay? You have been diligent, invest wisely, avoid marriage and help others. Now, would you please help the rest of us change the damn channel?

No need to get shouty, dear. If FF doesn’t have anything else to say, that’s Mr. T’s kindness to let him vent.

Remember there are new visitors to this particular tar pit every day and until they experience the full variety of opinion they won’t become quite so educated. You never know when Mr. FF might save some poor lad from a fate worse than death.

#124 Daisy Mae on 04.20.15 at 9:06 am

“It’s that they deserve more, because they’re better educated (so, smarter) than the wrinklies. Hence the unfairness….”

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

So basically, what you’re saying is that they’re spoiled brats?

#125 Mak the investor on 04.20.15 at 9:08 am

Friends. Stay away from DSC. I am in the process of getting out of DSC and it hurts. You have to pay to get your money back. It’s the most stupid thing you can do.

My advice based on what I’ve learnt as an investor. Read a lot. I started with The Lazy Investor. You will find plenty of material. Focus on Value at the correct price.

I believe in having an advisor as finance is not my primary profession. But the moment your advisor utters the words Mutual Fund. Here is what you should do:

Shields up Scotty.
Red Alert.
Ensign take us out of here.
Warp 9.9.
Engage

:)

(A start trek fan.)

#126 LL on 04.20.15 at 9:19 am

….”So the odds are still overwhelming the Fed will raise rates for the first time in six years in a few months”….

So the odds are still overwhelming the Fed will raise rates for the first time in six years in a few months.

Everybody wants to know when the Fed will raise rates.

Rightly so. It will be the first rate hike in nine years (!), and the market could throw a fit.

People are going nuts trying to figure this out. There are linguists who dissect every syllable that comes out of Janet Yellen’s mouth, looking for clues.

I’ll show you an easy and more accurate way to glean the future.

There’s a market called the fed funds futures market. Traders use it to bet on what the fed funds rate will be in a given month.

In other words, fed funds futures traders …..

http://www.caseyresearch.com/articles/why-the-fed-will-chicken-out-and-not-raise-rates-until-at-least-2016

The latest view is the Fed rate will rise in September. Seems reasonable. — Garth

#127 Ralph Cramdown on 04.20.15 at 9:22 am

#116 Detalumis — “we pay for services for “poor dears” because the miniscule support hours provided by home-care provided by the taxpayers are 1/3 of the cost of the cheapest LTC bed”

That kind of narrow cost-benefit analysis is exactly my point. First off, any senior eligible for LTC shouldn’t be living alone, period. Seniors’ residences and assisted living fit in between there. Second, when we cost the living at home option, we don’t factor in the two+ weeks/year in hospital and the ambulance trips to emergency, which wouldn’t be required in LTC.

And it doesn’t factor in quality of life. Seniors spending most hours home alone because of limited mobility, with little human contact (most of their friends are already dead, family living far away). Wondering whether they should still drive, or worse yet knowing they can.

And they take up too much space. Rooms that don’t get opened for months. Basements that haven’t been visited in years. All while the place slowly deteriorates, with astronomical heating bills because of 50 year old windows and oil heat. Why update the place when it’s probably lot value bulldozer fodder?

We, via our government, have no plan for this. Hospitals, though government funded, appear to be independent fiefdoms of their administrators and fundraisers. Ditto with seniors’ residences and LTC, both private and public, and the coordinating agencies that supposedly manage ancillary services such as homecare.

So we have senior house blockers (living in far too much house, unable to take care of it any more, and demanding subsidies to do so), bed blockers (in hospital acute care beds while not acutely ill, but not well enough to return home, won’t move to LTC or no space available, etc.), and tax blockers (angling for yet more subsidies, not means tested, at the expense of wage earning taxpayers).

The next twenty years should be fun, as the older and sicker boomers start to need these poorly coordinated services. A train wreck we could see coming for a generation, while the Federal government balances its budget and wags its finger at the provinces, funders of health budgets, for not balancing theirs.

Best to move to Alberta; it has the youngest population.

#128 Ralph Cramdown on 04.20.15 at 9:35 am

#117 Boomer and Proud of It — “And according to the whining, entitled millenials and their enablers like Ralph Cramdown, you are apparently responsible for their deaths, Garth.”

Buddy, in my neighbourhood, entitlement is wanting a place near the subway so your personal servants don’t need to take the bus. And those people ARE whiny, because if they’d worked harder, they’d be able to afford live-in servants like the rest of the neighbourhood.

It takes a lot of work on my part to keep my attitude from devolving to “Let them eat cake.”

#129 HD on 04.20.15 at 9:41 am

@#120 Nagraj on 04.20.15 at 8:21 am

http://en.wikipedia.org/wiki/Mother_Teresa#Criticism

“Allegations have been made that she knowingly accepted donations from disreputable sources. It was said that in one notorious case she knew or ought to have known that the money was stolen; and that she accepted money from the autocratic and corrupt Duvalier family in Haiti, which she visited in early 1981.”

“She was also criticised for her view on suffering. She felt that suffering would bring people closer to Jesus. At a press conference during her October 1981 visit to Washington D.C, Mother Teresa stated, “I think it is very beautiful for the poor to accept their lot, to share it with the passion of Christ. I think the world is being much helped by the suffering of the poor people”

Best,

HD

#130 Holy Crap Wheres The Tylenol on 04.20.15 at 10:07 am

Best seek out a fee-based advisor who refuses to sell anything and collects zero commission. The relationship should be as with your lawyer or accountant – you pay a management fee equal to a small percentage of your assets in return for unconflicted help.

No hidden commissions or fees. No backend sales charges. Don’t pay more than 1%
_____________________________________________
Or we could just listen and learn from your pointers!
Your words of wisdom often come up in an investment club I am a member of with some old guys. We do this for fun. One of my buddies is worth much more than all of us together (there are 5 of us). We are all between 64 and 70 years old. We have seen it all! Our Buddie that is 70 is the oldest and most wealthy of all of us. Used to be a publisher and made all of his money when people read paper. Now its all tablets or i Phones.

#131 torontorocks on 04.20.15 at 10:08 am

#116 Detalumis you’re absolutely right about these shits now. I was looking around for some flats this weekend and I can only say that the level of entitlement (call it selfish, self serving or inconsiderate) is astounding. They’ve had their asses wiped for them for so long and are instagram and facebook all-stars that they think their whole world is one apple commercial. And we’re not talking about 50 year olds versus 20 year olds. We’re talking 45 year olds versus 35 year olds.

#132 Daisy Mae on 04.20.15 at 10:09 am

#86 SagaRenter: “…but where does one find fee based adviser in TO? I want to invest 10% of my salary but don’t know where to start. I have talked to investors group guy…”

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

*sigh* Garth lives and works in Toronto. And, stay AWAY from Investors Group!

#133 Broke Dick on 04.20.15 at 10:14 am

They’ve ‘retired’, after tripling their net worth in 40 months – by saving and obsessively investing. -Garth
==================================

I applaud the couple for saving obsessively and deciding to retire at such a young age. Though I do recall that on many an occasion Garth ridiculing those who “save obsessively” and also those who decide to retire at a young age.

First you save the money so you can then invest. Dick. — Garth

#134 Setting the Record Straight on 04.20.15 at 10:30 am

@ Marco on 04.18.15 at 8:47 pm
@Daisy Mae

“True. Our federal government is seriously lacking…but we didn’t have to or need to bite.”

I agree that we didn’t have to or need to bite but the government isn’t lacking. Housing prices in Canada were starting to correct in 2008.
Letting it correct would have been a great thing and we wouldn’t be where we are today.
Unfortunately Harper and gang had to orchestrate maneuvers to avoid a recession and get the consumer buying houses and propping up the economy, which gave him his majority, and smiles on homeowners faces. This has created a massive property bubble especially in desirable cities in Canada.
Now it seems it will fall under its own weight.
Design by Harper.

&&&&&&&&
Remind me – what were your Liberal and NDP friends saying about these policies at the time?

#135 Sheane Wallace on 04.20.15 at 10:37 am

why food costs significantly more lately (30-40 % in a year!, no deflation here):

According to CBC:
https://youtu.be/yXgGau7t5jw

it is due to the weak Canadian dollar, single handedly sunk by Steve Poloz aka the idiot in charge of BOC.

Send him you bills with request for refund.

And stay away form the CA dollar.

#136 Setting the Record Straight on 04.20.15 at 10:38 am

@shawn allen

*****************************************
Good post. And I would support their God-given human right to storm the shores of any country that does not have the decency to allow them in or to help out the situation in their homeland.

We have some right to private property in our houses and we have some right as a country to set immigration rules.

But I think BOTH of those rights are subject to those who HAVE being willing to pay taxes and to support a society that allows a chance for those with little or nothing.

$$$$$$$$
How noble of you to suggest they have the right to storm the borders of any country to which they desire entrance.

How generous for you to suggest others must pay taxes at levels you deem appropriate.

If you feel your taxes are insufficient, donate to the government. Or donate to charities of your choice.

#137 Josh in Calgary on 04.20.15 at 10:58 am

Folks, Garth “gets it”. These people who #DontHave1Million are the ones that are missing the point. If housing is over priced then rent and buy financial assets with your extra money. If these people did have one million dollars they would most likely plunk it all into a house … which is why they don’t have the million dollars to begin with.

Is it unfair that houses cost too much? Probably. But life is full of all sorts of fairness (if your mother told you life was going to be fair she was doing you an injustice). You have two choices. Sit there and pout about it, or figure out the best path forward. In this case Garth is quite clear that the best path forward is learning to invest in a balanced portfolio.

Rent what’s too expensive to own, and own what pays you the best risk adjusted rate of return.

#138 NoName on 04.20.15 at 11:12 am

press play

http://finance.yahoo.com/news/while-companies-thrive-workers-get-left-behind-145833728.html

#letmetakeselfie

#139 Leo Trollstoy on 04.20.15 at 11:18 am

But the really sad news is that on average the 1% don’t even have enough to retire. If they were in government bonds, they might be getting $40,000 a year in taxable income.

Why would they have much government bonds at all?

Only the poor and middle class would do that.

#140 Lol on 04.20.15 at 11:30 am

@137

That would be all fine….if tax dollars weren’t backing the housing prices via massive govt intervention

It’s silly to suggest housing and an investment portfolio are mutually exclusive. I have a balanced portfolio and own a home in vancouver. I know others that do as well.

I still think it’s legitimate to protest poor policy though, particularly using govt agencies to prop up the housing market. Chances are this bubble never deflates. Fiat is cheap. Talk is cheap. Plenty of polymer out there to make new fiat after all. Plenty of talking heads to jaw bone rate hikes for the next decade

#141 Lillooet, BC on 04.20.15 at 11:53 am

#86 SagaRenter on 04.19.15 at 9:51 pm
Garth,
I really appreciate your blog. I want to follow your advice but where does one find fee based adviser in TO?
[…]

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

Judging from your question, it might be easy to assume either you are either a qualified damn fool or an illiterate.
Isn’t Garth one of the best??? Give you head a good shake!!!
+++++++++++++++++++++
BTW:
Today’s temperature in Lillooet, BC is 22 C
– x in miserable Toronto?

#142 PMgeo on 04.20.15 at 12:00 pm

#58 Mark on 04.19.15 at 6:11 pm
If/as the precious metals stocks start moving upwards again, look for a lot of the hot speculative money to come out of housing speculation (the current driver in prices, not “HAM”), and back into the junior mining stocks.
——

I work in precious metals exploration in Vancouver. I don’t see any particular overlap between the precious metals retail investor and the investor involved in speculating on Vancouver RE markets. In particular, the young speculative investor (the very one buying up condos at insane prices) seems to eschew mining stocks completely in favour of tech and other sectors – investing in mining is an old man’s game.

I seriously doubt there’s a negative correlation between Van RE and precious metals. Although I wish there were: I’d get a raise and cheap(er) housing in one go.

#143 cramar on 04.20.15 at 12:01 pm

I just got a letter from the TD bank inviting me to partake of a Home Equity Flexline with a special deal to save on set-up fees. They must be getting desperate for new mortgage money. Reading the fine print, to get reimbursed for set-up fees you have to actually use the credit and maintain it for a period of time. No getting it just for potential emergency use! Tempting however to use for investment purposes.

#144 what bubble ? on 04.20.15 at 12:57 pm

Canada Manufacturing New Orders is at a current level of 48.85B, down from 59.36B last month and down from 62.79B one year ago. This is a change of -17.70% from last month and -22.19% from one year ago
http://ycharts.com/indicators/canada_manufacturing_new_orders
is that an indicator or something unimportant that can be again easily ignored and there is economic growth and balanced budget waiting for us next year as we’ve been promised?

#145 Shawn Allen on 04.20.15 at 1:36 pm

Storming Hoard and Taxes

Number 136 set out to set me straight

How noble of you to suggest they have the right to storm the borders of any country to which they desire entrance.

How generous for you to suggest others must pay taxes at levels you deem appropriate.

If you feel your taxes are insufficient, donate to the government. Or donate to charities of your choice.

**************************************
Actually, we have to collectively pay enough tax to insure no one starves or otherwise becomes so desperate that they storm our shores or even our houses. Desperate people will do desperate things. We don’t set the tax rate for this purpose it set by necessity by need.

I plan to pay plenty of taxes. A high income will see to that although as a business person and investor I have many tax breaks. Still, I think I will pay quite a bit.
In the RRSP the taxman is my approximate 40% partner and I have done very well for the tax man. (My 60% share grows tax free but that is another story)

#146 CP on 04.20.15 at 1:37 pm

Any thoughts Garth?

http://www.huffingtonpost.ca/2015/04/20/bank-fees-rising-canada_n_7099356.html

#147 BCD on 04.20.15 at 1:43 pm

#19 waiting on the westcoast on 04.19.15 at 2:12 pm
The thing I have noticed from the comments in yesterday’s post is a lot of “shoulds”.

The world doesn’t owe us anything, we need to find a way to share our skills/gifts with the world in a way that allows us to live well. I am considering purchasing farmland on Vancouver Island. Would I rather have 20-50 acres close to Vancouver, sure, but that doesn’t fit with my other parameters – so I ADAPT…

Don’t define the world, adapt to it. Success is made on finding the gaps and filling them not wishing for the way things should be….
______________________________________________

Millenials are a good bunch and they are not whining, they are working their asses off because they have to work twice as hard as previous generations for far less.

Anyone with kids in this “game” will understand that it is not all about a “balanced portfolio”, 7% returns every year, yadda, yadda, yadda.

I fear my kids will not be able to live and work in the community where they grew up because they won’t be able to afford to live here. This means that my wife and I have already had the discussion about moving/leaving (and we don’t even live within 70KM of Vancouver!). Perhaps we should all move to the Yukon and populate the tundra?

You folks without kids try to understand that I don’t want to live my life like a nomad, renting and moving, with some money portfolio that is the “holy grail” of my existence. I want my kids, and my kids kids to play around me in yards that my family can OWN and in a climate/region that I have come to love. I want to enrich the lives of the people I love by helping them buy things that they need/want, a car, their first house. I want my children to work in THEIR community and earn a place to live. I don’t expect anyone to give it to them.

This is not about a generation being entitled. This is about the failure of our government to create conditions where their OWN citizens are not alienated from the neighborhoods they grew up in.

#148 H on 04.20.15 at 1:43 pm

The IMF sounds the alarm in Washington that sky-high debt ratios and aging populations are a dangerous mix, leaving the world prone to the ‘Japanese’ diseases of deflation and atrophy
____________________________

Interesting. I have suggested this is the case on this blog for years, and have been dismissed. Seems as the though the IMF agree.

Japan has been stuck on “0” rates for coming up on 20 years now. Canada and USA are closing in on the 10th anniversary

#149 Mike S on 04.20.15 at 2:28 pm

“But most people know little about investing, tax law or macroeconomics”

Why do you need to know about macroeconomics?

Nowadays it seems that absolutely nobody knows that …

#150 waiting on the westcoast on 04.20.15 at 2:30 pm

Can someone tell me how the quarter point cut did anything to help Canada… All I see is a significant price jump for imported goods.

Interesting that Poloz is now saying the US economy may be stronger than previously estimated…. I guess he didn’t see my comments on this blog. ;-)

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/economy/stephen-poloz-just-quashed-any-hope-of-another-bank-of-canada-rate-cut&pubdate=2015-04-20

#151 pwn3d on 04.20.15 at 2:32 pm

To anyone who knows the answer (maybe Garth) but the Financial Post has commented a few times that Canadian banks are buying bonds in the EU for mortgages, is that accurate? If so aren’t they making a killing on the spread right now? I always assumed it was Canada bonds they were buying. Which is still a big spread but nothing like the 0 they can get overseas.

#152 happy renter on 04.20.15 at 3:03 pm

hey Garth

Got a family member, he’s about to be a doctor, she’s a nurse with a young baby. Here’s the crazy part, inspite of living in student housing they graduated with quite a bit less than 100 grand in student debt.

Knowing they’re going to be 1%er i’ve forwarded many of your bests posts to them!!

PS our tennats pay our rent

#153 Freedom First on 04.20.15 at 3:06 pm

#147 BCD

Sorry to break it to you BCD, the world does not care what you and your kids and your kids kids want. Try counting your blessings and not your worries, like, you live in Canada, and not a 3rd world country. Good grief, Canadians! You sound like spoiled rich kids to the 3rd world countries.

#154 hohoho on 04.20.15 at 3:36 pm

> … If you have a house you can pull the equity AND keep the house … a 2 for 1 deal, that was the point of my comment.

If you pull the equity (ownership stake) you are in fact renting the house. The “owners” are the banks who can kick you out if you don’t pay. There is no free lunch 2 for 1 deal.

#155 Shawn Allen on 04.20.15 at 3:42 pm

Canadian Banks and Europe bonds

pwn3d on 04.20.15 at 2:32 pm

To anyone who knows the answer (maybe Garth) but the Financial Post has commented a few times that Canadian banks are buying bonds in the EU for mortgages, is that accurate? If so aren’t they making a killing on the spread right now? I always assumed it was Canada bonds they were buying. Which is still a big spread but nothing like the 0 they can get overseas.

****************************************
Did you mean our banks SELL bonds in Europe paying maybe no interest or even charging people money on a bond that normally would pay interest?

There would be currency risk

But yes Canadian banks normally make good money. That’s why they have been fantastic investments.

The profits have been mostly because of high switching costs. Once with a bank we put up with fees because it is a pain to switch banks. But this may be changing.

Banks deal in the ultimate commodity, money. Absent switching costs or barriers to competition it should be a low profit business by nature.

#156 cramar on 04.20.15 at 3:45 pm

#147 BCD on 04.20.15 at 1:43 pm

You folks without kids try to understand that I don’t want to live my life like a nomad, renting and moving, with some money portfolio that is the “holy grail” of my existence. I want my kids, and my kids kids to play around me in yards that my family can OWN and in a climate/region that I have come to love. I want to enrich the lives of the people I love by helping them buy things that they need/want, a car, their first house. I want my children to work in THEIR community and earn a place to live. I don’t expect anyone to give it to them.

————–

All valid and good, except for one statement there. It would be better for parents and grandparents to enrich their young ones lives by teaching (and through example) that material possessions do not lead to a happy fulfilled life. Having a rewarding career, a loving family with a happy marriage, gratifying relationships, and health & fitness are more important than physical possessions.

#157 Mike S on 04.20.15 at 3:49 pm

“Thanks to their prodigious saving habit the couple had about $500,000 when I met them. The annualized average return on a 60/40 portfolio was north of 10%, and they now have a million. You’re right. They’re not typical. Now you know why. — Garth”

Why would anyone want to retire before the age of 30?

Sure assuming they have 1.5M and use a safe withdrawal rate of 4% they can live on 60K (inflation adjusted, or slightly more) per year. but why do they want to do that?

Do they hate their job?

What 30-year-old doesn’t? They want to create their own experiences and employment. Money = freedom. — Garth

#158 waiting on the westcoast on 04.20.15 at 3:58 pm

#147 BCD

“This is not about a generation being entitled. This is about the failure of our government to create conditions where their OWN citizens are not alienated from the neighborhoods they grew up in.”

Hey – I have three kids, 1 wife, 1 ex-wife, a PT dog and some chickens. Lived in my current acreage for 7 years. You don’t need to buy to have stability.

I grew up on a large acreage/farm in Langley… Does that mean that I should have a right to have that same life… Does a cod fisherman’s son have a right to fish if the stocks dwindle (I know many would argue so)? The answer is the market dictates what is valuable, who is valuable (at the moment), what skills are needed, etc. Better find a way to met those needs.

If your kids desire to own a house is greater than their desire to live in downtown, the answer is clear. If the answer is both, get an extra job and take on the debt… Dumb move by my estimation.

#159 Leo Trollstoy on 04.20.15 at 4:27 pm

Why do you need to know about macroeconomics?

You don’t. People pretend to understand it so they can appear sofisticated. To the wealthy, they just sound like idiots.

#160 Leo Trollstoy on 04.20.15 at 4:29 pm

Why would anyone want to retire before the age of 30?

Why not? Lots of things to do. Lots of places to visit.

#161 Leo Trollstoy on 04.20.15 at 4:31 pm

I want to enrich the lives of the people I love by helping them buy things that they need/want, a car, their first house.

That’s not enriching their lives.

Sorry to break it to ya.

#162 Brunett43 on 04.20.15 at 4:32 pm

Canada’s Housing Market Finally Makes It To Top Of Most-Overvalued List
http://www.huffingtonpost.ca/2015/04/20/canada-housing-overvalued-the-economist_n_7102338.html

#163 Mike S on 04.20.15 at 4:36 pm

“What 30-year-old doesn’t? They want to create their own experiences and employment. Money = freedom. — Garth”

Well, I don’t. and I wouldn’t quit my job even if I had 5M$ (I would have some headache trying to manage that money though)

Didn’t really get what they are trying to create, but you have one thing right “money equals freedom” and it seems that this couple sold theirs too cheap working in the work they hate for the last couple of years …

You don’t have too many friends, do you? — Garth

#164 Willy H on 04.20.15 at 4:38 pm

Thanks to their prodigious saving habit the couple had about $500,000 when I met them. The annualized average return on a 60/40 portfolio was north of 10%, and they now have a million. You’re right. They’re not typical. Now you know why. — Garth

___ ___ ___

Would love to know their combined annual income!

#165 BC_Doc on 04.20.15 at 4:49 pm

Back in 2006/7 I decided to go the Do It Yourself investor route. I’ve done lots of reading over the years– books by Bogle, Bernstein, etc. My favourite website is bogleheads.org. I also enjoy articles from canadiancouchpotato.

The more I read, the more I realize the best plan is a simple plan. I really like the “Two Fund Portfolio.” Put 60% into VXC-T (Vanguard Total Stock Market excluding Canada) and 40% into VAB-T (Vanguard Canada Aggregate Bond), add money when you have extra cash, rebalance every year or two. Save 20% of your income every year from age 20- 60 and you’ll be a happy guy or gal in retirement.

It’s not rocket science– it isn’t all that difficult. If you’re too lazy or too disorganized to take it on yourself, then finding a fee for service advisor is the way to go. And the advisor should be willing to sign a fiduciary agreement.

#166 Hurtin' Albertan on 04.20.15 at 5:01 pm

“And any fee-based advisor charging more than 1% is too expensive or needs a new Porsche.”

What about the concept of you get what you pay for? If my advisor is a holistic and trustworthy advisor, provides returns that are several % higher than benchmark and is doing a good job of protecting capital, but is charging 2% is this too expensive?

I want the best service I can afford but I do not want to be gouged. How do did you come up with this 1% max. recommendation?

Because it is fair and adequate. Ask your guy to lower his fee. — Garth

#167 Mike S on 04.20.15 at 5:08 pm

“You don’t have too many friends, do you? — Garth”

Why? Because I like what I do?

Your example is another extreme, just the opposite of the 100% debt house horny

It sounds as they went to study and work in something they hate (but pays good), and lived extremely frugally while doing it just to stop doing that. What is the point of that?

#168 Victor V on 04.20.15 at 5:14 pm

Vancouver named unhappiest city in Canada

http://www.vancitybuzz.com/2015/04/vancouver-unhappiest-city-canada-life-satisfaction-survey/

It’s a Monday morning, the sun is shining and the spring birds are chirping, but walking down Georgia Street during the morning commute you don’t see many smiles. If you’ve lived here all your life, you may be surprised to learn that this is not the norm – Vancouver is in fact the least happy city in Canada.

In a survey released this week, Statistics Canada revealed that of 33 census metropolitan areas in Canada, Vancouver ranks the lowest in life satisfaction.

#169 OffshoreObserver on 04.20.15 at 5:38 pm

This is H.A.M. : http://www.courts.gov.bc.ca/jdb-txt/SC/15/05/2015BCSC0590.htm

#170 Leo Trollstoy on 04.20.15 at 5:42 pm

Well, I don’t. and I wouldn’t quit my job even if I had 5M$

Good for you.

Sorry you’re so sour on people who don’t want what you want.

#171 BCD on 04.20.15 at 6:07 pm

#161 Leo Trollstoy on 04.20.15 at 4:31 pm
I want to enrich the lives of the people I love by helping them buy things that they need/want, a car, their first house.

That’s not enriching their lives.

Sorry to break it to ya.
__________________________________________

You, and the other guy with this opinion missed the point. It ISN’T about money and buying “material possessions”. It’s about living and working in a community and sharing those experiences with my children. I could care less about a car and a house, but these are two things necessary to live and work in a community, and they represent a significant amount of the focus of individuals who pay taxes and are otherwise contributing members of society. Unless of course you are a priest, or a pop can collector, or a nun. What’s your point? If everyone was a cowboy and my kids needed a horse to survive I’d consider helping them buy a horse as enriching their lives.

You are smoking man aren’t you?

#172 Boomer and Proud of It on 04.20.15 at 6:08 pm

I am totally fine with these measures, if this is what happens in the budget. The smart get richer.

We deserve it. If the whining, entitled, loser millennials want to make things different, maybe they can put their narcissistic stupid phones down for eight minutes to vote for something different.

Oh, I forgot – they are too “busy” “socially engaging”, checking twitter and facebook for that…..

Enjoy the second world conditions you’re about to get, millennials. Too bad, so sad, that you weren’t born earlier. Boomers will mostly be dead in twenty years, so there’s your revenge. But you’ll spend the rest of your lives turning Canada back into a developing nation.

#173 willworkforpickles on 04.20.15 at 6:12 pm

…..An advisor should take the time to know all about you, your job, kids, house, pension, parents, spouse, health, dog, siblings and goals….and the cat who’s plotting to kill you.

#174 everythingisterrible on 04.20.15 at 6:36 pm

#172 Boomer and Proud of It
More like spending it trying to fix the absence of planning and dumb decisions you all made to ensure you got maximum life comfort from minimal education and work ethic. You’re welcome.

#175 Brunett43 on 04.20.15 at 6:50 pm

Could use some imput. I’m new at investing. Of my net assests, the only debt I have is my mortgage which is $70,000 @ 2.45% variable interest open which is less than 6% of my net worth. The property is worth $250,000. Last year I made 11.49% on my investments, have averaged between 8-11%. I’ve maxed out my TFSA’s. Question since I’m getting a good return, should I pay off the mortgage using some capital gains or some TFSA funds. I’m 55 retired, I have 2 sons still home and paying a little bit of rent. I would like to keep the money invested, but I would also like to be mortgage free! My other concern is that I think there will be a correction soon, so should I scoop out some of the gains now?

#176 The return of the broke homeowner: Between 2006 and 2014 9.3 million homeowners were foreclosed on, received a DIL or short sold. » Dr. Housing Bubble Blog on 04.21.15 at 1:39 am

[…] “(GreaterFool) This useless social media campaign does underscore some valid points, however. First, the gap between The Few and The Most is yawning larger every day. Wealthy people in Canada (with over $2 million in investible assets, outside of real estate) make up about 1% of the population. They own stuff – businesses, financial assets and a relatively small amount of property. The rest of the people hold debt, with the bulk of their net worth in a house. It’s a self-inflicted penury. […]

#177 Nick Roerich on 04.21.15 at 9:25 am

The link below explains how TRUST was eroded at a very fundamental level between generations … which then set up the current global economic and financial predicament [UNRESOLVABLE].

“Beatniks and Baby Boomers: First Generations To Break
Away From Parental Control and Cultural Traditions”

http://cosmicconvergence.org/?p=2703

#178 Ogopogo on 04.21.15 at 4:51 pm

Garth, I’ve just read this in the Financial Post:

“The new change is effective as of Jan. 1 this year, meaning Canadians who have maxed out their TFSA for 2015 will now have another $4,500 of room they can use.”

http://business.financialpost.com/personal-finance/tfsa/federal-budget-2015-ottawa-boosts-tfsa-account-limits-by-82-to-10000-a-year?__lsa=8044-cfa2

Does this mean a couple could transfer $9,000 into a TFSA as early as tomorrow? I thought the increase wouldn’t kick in until 2016.

It’s great news, but is it accurate?

Yes, it appears so. — Garth

#179 tom on 04.21.15 at 6:30 pm

World is changing

Perspective from a car forum

http://forums.vwvortex.com/showthread.php?7156006-Went-for-a-walk-today-image-heavy