On guard for thee

BEAR modified

In my home town yesterday people lined the street in droves, wearing every tacky thing in their wardrobe – so long as it was crimson or had a maple leaf. Dogs sported red bandanas. The tourist horses sprouted little flags from their halters and harnesses. Down the main street a few old cars carried old politicians, the MP included. Then a band. And the cake. This year it was about ten feet square, hauled by a Jeep and covered in chocolate hockey players. The proud baker walked behind, her pony tail flipping. A thousand people marched with her to the park, where it met its Waterloo.

While we celebrated Canada Day, the world spun. The people in Greece has a crappy time. The prime minister there flip-flopped. First he sent a letter to the Euro gods says his country would accept a deal like the one he’d walked away from. Then he gave a speech condemning it and asking people to vote it down on Sunday. Meanwhile the economy disintegrated hourly.

American stock markets shot higher, now that it seems more certain Greece will blink. More importantly, the numbers just keep improving for the US economy. A private jobs report showed companies boosted their payrolls in June by 237,000 workers, the most in six months. This comes after 280,000 more positions were created in May. And when the official government report comes out Thursday it’s expected to show 233,000 new hires.

This is the longest, strongest run for job creation in decades. It also came with news Wednesday that manufacturing expanded again in June, which demonstrates the internal strength of the American economy. Global demand may still be weak and the high US dollar is a barrier to exports, but it doesn’t matter. Consumers are happy with more jobs and higher incomes. They’re buying cars, houses, iPhones and dishwashers. Only the fruitloop doomers still insist the government’s lying and America’s in trouble. Americans disagree.

All this is remarkable for two reasons. Oil prices have collapsed (there was a huge drop on Wednesday), decimating the US shale fracking industry. And the Fed is about to raise interest rates for the first time in a decade. Both of those are negatives for the market, and corporate profits. But certainly not enough to dent a market that added almost 50% in just three years.

Yesterday I moaned a little about the situation here. US household debt is falling steadily, and here it bloats a little more each month. Our economy shrank for the last four months, and theirs expanded. The Fed will raise rates at least once this year, maybe twice, while the Bank of Canada head says our economy would have croaked without his recent cut. Canadians love houses. Americans own more stocks. Home ownership here is at a record high. There it’s at a 30-year low.

None of this I say to dis Canada. I adored the parade. The cake. The patriotism. I was beyond proud to sit in the House of Commons for nine years. I love my country.

But we’re probably going in the wrong direction, and the reward for that will be years of a subpar economy. This week’s oil tanking, plus raging wild fires in the western provinces, the mounting drought in BC, recessionary GDP stats and a 79-cent dollars are all sapping strength. The contrast with the US is stark. A few years ago our currency was worth more than the greenback, our arrogance was on display in Vancouver and you could buy a nice, distressed house in Phoenix for 70% off. My, how the tables have turned.

Well, this pathetic blog doesn’t run the country, so we have to deal with the hand dealt. Soon we’ll be swallowed up in a federal election campaign, the consequences of which could be dire. If you think the world looks askance at us now, just wait.

So, what to do?

For starters, the growth portion of your balanced and globally-diversified portfolio should be twice as weighted outside of Canada as within. These days about 17% Canadian, 21% US and 18% international is about right. And while having roughly a fifth of the assets in US$ is always a good idea, you can buy exchange-traded funds that give you American exposure but are purchased in loonies.

As for the fixed-income part – the safe stuff – put half in rate reset preferreds (paying 5% these days, with a big tax credit), and the other half in bonds. If you don’t understand why you should have bonds, revisit what took place Monday. When equities swoon (it happens), bonds usually go in the other direction. They stabilize and anchor a portfolio, tamping down volatility as well as your emotions. Just make sure you have the right kind.

Of course, given what may lie ahead politically, you should also flesh out your tax shelters. Today, for example, a couple can have more than $80,000 contributed to their TFSAs, but only a small fraction of people do. Make sure you’re among them. If you can’t afford higher mortgage payments, lock in now. But if you have money to invest, and the confidence to do so, then grow it until the mortgage renews, then make a big payment. If you don’t own real estate, wait. If you do, and all of your net worth’s in there, get out. If you work in the oil patch, find new work. But not as a realtor.

Despite the above, I say again, it’s a hell of a country.

My Canada Day was great. Far better than the MP’s.

101 comments ↓

#1 NoName on 07.01.15 at 6:07 pm

Greece and goldman sachs who woud know.

http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html

#2 Paper Bag over My Head on 07.01.15 at 6:09 pm

Blog Dogs, I need advice please. Downtown Victoria, BC.

Sell the rental condo now? or Hang-on for a couple of years hopefully softening the loss?

So 10 years ago [email protected] said get GICs. So I did and nothing happened. Then I stuck it in mutual funds and lost money through MERs etc. So decided real estate might be a good way to go, and bought a rental condo at the height of the market. Five years later it still rents at a profit, but my margin of profit is getting close to zero as water/sewer/gas/taxes creep up. At this rate, I be paying to own an “investment”, which is beyond stupid. The mortgage (variable 5-year) is up for renewal this month.

I bought it for $214k with a $47k HELOC downpayment. Currently owing is $158k. Will sell for $165k now. Basically the math leaves me with the $47k HELOC debt for a bad investment decision. Do I swallow it and sell, or wait a bit? It’s in downtown Victoria in concrete building, but tonnes of product (small condos) continue to flood the market and I don’t think I’ll ever get back to cost even though it’s a structurally sound, well-maintained building with a fat reserve fund. Good long-term tenants. The building itself isn’t the problem, it’s the market, pending recession and rising cost of living. So do I hang on? or get it gone.. but when? Now? This fall after proposed rate drop? Next spring?? Wait it out? If I do sell, can I carry the loss against future gains? For how many years?

Just an aside.. since I’ve started reading this blog, I’ve followed its advice absolutely chucking money into TD e-series indexed funds. Also just opened a trading account with TD bank for EFTs, and once I hit the $100k mark in the e-series, I’ll transfer over to EFTs (currently it’s at $41k). Is this smart? What is the best way to move from e-series to EFTs?

I’ve gone back to living on $1k per month though I make good money ($60k) in the health sector. I have a defined benefits pension. I’m 50. Financially single. No other debts (well.. home condo in same building, $850/month PITH + condo fees — 12 years left on that), no car, no kids. Still have room to fill RRSP and TFSA for 3 years before I top those out, so no gains available there.

So Blog Dogs, have at ‘er. Any advice or viewpoints would be greatly appreciated. Thanks.
PBoMH in Victoria

PS. Thanks Garth for all your years of study, service and experience and generously sharing it with fellow Canadians. A Happy Canada Day indeed.

#3 Leroy Washington on 07.01.15 at 6:11 pm

Canada: goodbye and good riddance. Filth.

Leroy.

#4 GreeceIsADistraction on 07.01.15 at 6:26 pm

German Fourth Reich?

http://www.forbes.com/sites/panosmourdoukoutas/2015/01/22/greeces-net-debt-is-18-of-gdp-not-175-whats-germanys/

#5 Ben on 07.01.15 at 6:32 pm

Arse fell out CAD a little more today. It’s not pretty:

https://ca.finance.yahoo.com/echarts?s=CADUSD%3DX#symbol=CADUSD=X;range=1y

I’ve got some savings in it. Now I know why they call it the Loonie.

#6 Freedom First on 07.01.15 at 6:38 pm

“Happy Canada Day!” everyone.

I feel blessed to have been born in Canada. A country where one can live well, and even become wealthy without owing anyone a dime. Debt and overhead can kill you, or will for sure keep you from living a Freedom First lifestyle. I see that world wide the majority of people still follow a self induced lifestyle of slavery. In debt they trust. Fact.

#7 saltpony on 07.01.15 at 6:41 pm

#2 Paper Bag over My Head

I really like that term “financially single.”

People ought to realize weddings are not actually about love, but solely and wholly about signing complete responsibility for another human’s financial obligations, wants, decisions, debts (even covert, like gambling, crack or shopping habits) and desires (including previous and pending spawn, however cute and adored they may be) for life.

The wedded person is now withdrawn from the societal kitty (qualifying for welfare, disability, student loans etc) and firmly cemented to your own private kitty, for life.

You can’t chuck them back into the societal pool once you’ve wed. Regardless of gender, in the event of a disintegrating union, the one who makes more will bleed “until death do you part”. It’s the only wedding ceremony tenet that forcibly endures.

For life.

#8 Dee on 07.01.15 at 6:41 pm

Spent the afternoon down at the Evergreen Brickworks enjoying local-made food and beer. Didn’t overhear a single conversation about real estate. The most refreshing day in Toronto in a long time–maybe the writing truly, finally is on the wall…

#9 Victor V on 07.01.15 at 6:42 pm

http://www.theglobeandmail.com/report-on-business/nearly-half-of-canadians-forced-to-retire-earlier-than-planned-poll-shows/article25219041/

The Angus Reid poll found a wide divergence between public and private sector employees. Private-sector workers were more than twice as likely to say they were struggling in retirement as public sector workers – 22 per cent versus 12 per cent.

“It’s fairly systemic,” said actuary Malcolm Hamilton, also a pension expert. “Almost all the rules Ottawa creates for retirement savings favour public sector workers. There is nothing accidental about it.”

#10 hank on 07.01.15 at 6:44 pm

#3 Leroy Washington

Dear Sweet Leroy,

You must have been dumped by a hot Canadian the way you whine on and on about it.

Go get a hug from your mother and spare us your pain.

Happy Canada Day to All including Leroy’s Canadian ex-wife! Welcome home Babe.

#11 S.Bby on 07.01.15 at 6:46 pm

#2 Bag Head:
If you’ve been reading this blog for any length of time, you should already know what you need to do.

#12 Interstellar Old Yeller on 07.01.15 at 6:54 pm

Happy Canada Day, Garth and blog dogs!

#13 Hhhhhh on 07.01.15 at 7:01 pm

The data should be good. This happens in late cycle data in jobs and wage gains. YoY numbers rolling over.

GDP for 2015 coming in at 1.7-1.9% not stellar.

#14 Ben on 07.01.15 at 7:03 pm

God I love a real-estate hard luck story. Just think of all the young people you’ve subsidised during that time Paper Bag. Here’s my suggestion: work, generate wealth, get paid a cut of that and then save it. Try to get others to do this and Canada will be fine.

#15 Brydle604 on 07.01.15 at 7:06 pm

Happy 148th Birthday CANADA

And Greetings to Garth and the Blog Dawgs.

Found on the internet

“Explanation Of The Greek Bailout”
It’s a slow day in a little Greek Village.
It is raining and the streets are deserted.
Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a 100 Euro note on the desk, telling the hotel owner he wants to inspect the room upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the 100 Euro note and runs next door to pay his debt to the butcher.
The butcher takes the 100 Euro note and runs down the street to repay his debt to the pig farmer.
The pig farmer takes the 100 Euro note and heads off to pay his bill at the supplier of feed and fuel.
The guy at the Farmers’ Co-op takes the 100 Euro note and runs to pay his drinks bill at the taverna.
The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him “services” on credit.
The prostitute then rushes to the hotel and pays off her room bill to the hotel owner with the 100 Euro note.
The hotel proprietor then places the 100 Euro note back on the counter so the rich traveller will not suspect anything.
At that moment the traveller comes down the stairs, picks up the 100 Euro note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything.

No one earned anything.

However, the whole village is now out of debt and looking to the future with a lot more optimism.

And that, Ladies and Gentlemen, is how the bailout package works…..

#16 David McKenna on 07.01.15 at 7:09 pm

You mention rate reset preferred, XPF does that have rate resets? Or is ZPR best? XPF has US exposure, albeit hedged.

#17 Henry Stelland on 07.01.15 at 7:20 pm

Happy Canada Day everyone! Since 2000, I have seen how interest rates have started to come down.

So what did I do, loaded up my RRSP’s in 6.2% government bonds and strip bonds.

Greenspan talking down rates in 2003 about deflation, so what did I do, buy some more government 5.5% to 6% bonds, strip bonds.

Their intention was clearly to lowered interest rates through the decade, even though interest rates were supposed to go up but they did the opposite and boy did they drop so I got some more 5%+ government bonds, strip bonds.

The last time I topped up my RRSP’s, TFSA’s, RESP’s, with these was back in 2009, 2010, 2011, 2012, 2013 with 4.20% to 4.9% yields.

Now, these at 3.00% to 3.45% yields at most, they are saying they are going up again so we will see.

The sooner they go up past 4% to 4.5% the better. I think it will take years for this to happen. I don’t see 6% yields coming back.

#18 Victoria Real Estate Truth on 07.01.15 at 7:22 pm

#15 Brydle604

Er, I think the hotel proprietor is out the 100 Euros since the German took it back but the prostitute considers her debt resolved. Duh!

#19 Obvious Truth on 07.01.15 at 7:23 pm

It’s a hell of a country. You bet!

Everyday we read about good folks coast to coast trying to navigate seemingly endless amounts of financial advice. We hear their personal stories and gain insight into their lives.

Some work regular day jobs. Others run small businesses. Some starting out while others have past their working years. We hear from lawyers (who may be past their prime) and day traders. Even couch potatoes and realtors. Heck aspiring writers come here.

Wherever you go its always about the people, their perspectives and relationships.

There is no shortage of opportunity in this great land. There never will be. Perhaps the recent letter posted by smoking man sums it up best. We in Canada actually get to act for ourselves and towards others as we wish. Freedom!

It’s just not the case in too many places and for most in the world its nothing but a dream. Fantasy.

We get to help others. At home and abroad.

Go Canada Go!

#20 kommykim on 07.01.15 at 7:27 pm

RE:#2 Paper Bag over My Head on 07.01.15 at 6:09 pm
Also just opened a trading account with TD bank for EFTs, and once I hit the $100k mark in the e-series, I’ll transfer over to EFTs (currently it’s at $41k). Is this smart? What is the best way to move from e-series to EFTs?

You can hold both ETFs and eSeries. This is what I’ve done. It makes the rebalancing math a tiny bit more complex, but not much. For example, I hold both the VUN ETF and TDB902 in the same portfolio for my USA exposure. When doing small contributions or regular rebalancing, I use the eSeries. When TDB902 gets a bit large, I sell most of TDB902 and buy more VUN. This keeps my trading fees low.

#21 Fiona on 07.01.15 at 7:31 pm

Hi,
I am wondering if anyone can clarify something from Garth’s July 21 entry (re-produced below), from which I have 3 questions.

“The number of assets depends on the amount you have to invest. Ideally the safe stuff would include government bonds (7%), corporate bonds (4%), inflation-linked bonds (3%), high-yield bonds (3%) and preferred shares (18%). Canadian growth assets would equal 17% (5% REITS, 12% equities), with the US at 21% and International, 18%. Ensure you have 20% or so of the total in US$, and there’s no issue holding a little cash (5%) and a completion ETF for alternative asset exposure (4%). So, the total weighting in the Dow and S&P, for example, would be 13% or less.”

Can anyone clarify for me the following?

1. “ensure you have 20% or so of the total in US$”. question: 20% of what? 20% of the total amount? 20% of the equity portion? 20% of the US equity portion?

2. “So, the total weighting in the Dow and S&P, for example, would be 13% or less.”
question: where did 13% come from?

3. “a completion ETF for alternative asset exposure”. question: what alternative asset exposure are we talking about?

Thanks!

#22 Hawk on 07.01.15 at 7:32 pm

Happy Canada Day to All

#23 kommykim on 07.01.15 at 7:37 pm

RE: #16 David McKenna on 07.01.15 at 7:09 pm
You mention rate reset preferred, XPF does that have rate resets? Or is ZPR best? XPF has US exposure, albeit hedged

Also, no dividend tax credit for the foreign dividends earned from XPF. About 60% of the income received from XPF last tax year was classed as foreign income. So unless you hold XPF in your RRSP or TFSA, ZPR is probably the better bet even though it’s less diversified as it holds only Canadian preferreds.

#24 Paper Bag over My Head on 07.01.15 at 7:38 pm

Got it. Sell. When??

#25 Andrew on 07.01.15 at 7:50 pm

I can’t be the only one who noticed Garth refers to Canada Day as yesterday throughout this post?

Have to assume this was intended for tomorrow…

#26 ANON on 07.01.15 at 7:51 pm

Mmmm…. cake! Now that’s what I’m talking about!
Now back to squirrel stew recipe #132. With pita.

#27 Alex G. on 07.01.15 at 7:55 pm

Garth, as always, great post today.

I was just wondering, all of my ETFs are purchased on the TSX (some CAD-hedged some not). Given the current economic outlook (which is in constant flux of course) do you think that it makes more sense to buy the same ETF CAD-hedges or not. There are many that would qualify for this, but for simplicity sake, let’s just compare XUS.TO vs XSP.TO. If, part of my diversified portfolio, I need to get some more S&P 500 exposure currently (as I am re-balancing) would it make more sense to buy more XSP.TO or XUS.TO? Or 50% of each to have a “mid-point” currency hedge?

Any insight from anyone would be most welcome.

Happy Canada day!

#28 Victoria Real Estate Update on 07.01.15 at 8:02 pm

Canadian 5-year fixed mortgage rates will start moving higher this fall, as Garth has said.

The US Fed will move as planned.

Fixed rates in the US will move higher and Canadian fixed rates will follow.

This will happen even though the BoC will not be raising their rate this fall.

Price corrections are already underway in several Canadian markets, despite emergency rates.

House prices fall as rates rise.

It may not happen immediately after Canadian 5-year rates begin to move higher this fall, but soon enough we will see falling house prices in every major Canadian city.

#29 RayofLight on 07.01.15 at 8:20 pm

My wife and I have been fortunate in being able to travel. We have visited all of the continents. Every time we return back to Canada, we feel blessed. Every Canadian alive has won the geographic and geologic lottery of life. Being Canadian, and being alive to-day means you are the 1%. Please don’t dismiss this, because there are at least 100 people right now, worldwide, that would love to trade you their problems for yours.

#30 james on 07.01.15 at 8:23 pm

“We in Canada actually get to act for ourselves and towards others as we wish. Freedom!”

I’m not even sure what that means. Last time I checked, the criminal code prohibited quite a few things, including recreational drug use. Nor can we act towards others as we wish, for we have criminal and civil sanction for battery, assault, and even offensive comments (e.g., ‘hate’ speech).

Try renovating your house or making any improvements to land without a permit from a municipality.

More freedom than other places, but less freedom with each passing year, it seems.

#31 JPR on 07.01.15 at 8:30 pm

Happy Canada Day!

I’ve been happy to rent a great condo in downtown Vancouver for the past 4 years, but now I’ve decided to relocate back to my small hometown in Southwestern Ontario. House rentals seem to be non-existent, but there’s plenty of decent houses for sale in the $150,000 – $250,000 range, which I can easily afford a minimum of 20% down payment for. If I end up taking on a ~$150,000 mortgage in the next few months, would a 10-year term @ 3.84% likely be the safest choice? I realize these numbers are puny compared to the usual Toronto/Vancouver prices being discussed here, and I would love to continue renting, but it doesn’t seem to be an option here. At least with real estate prices this low, I could still afford to be setting aside $2,000/month for investments.

#32 sideline sitter on 07.01.15 at 8:39 pm

Weather aside, greatest country in the world!!!

#33 Linda on 07.01.15 at 8:45 pm

I’ve heard that if one owns property in the USA beyond a certain dollar amount that their estate might be in the sights of the USA government. Apparently this also applies to investments. Not a problem while alive, but die & suddenly your entire estate (not just the USA portion) becomes taxable. I’m not sure of the amount required before the rule applies – I think you have to have at least $100,000 (US) dollars or more in eligible assets. And that it is the government who decides upon the evaluation of the assets in question, which is a nice touch. Nope, you don’t have to be a citizen of the USA for this law to apply. All you have to do to qualify is to own enough USA based assets.

You might wish to do some research next time before you start typing. — Garth

#34 bigtown on 07.01.15 at 8:45 pm

My first wedding cost ..well nothing. My dad gave me a large bottle of Johnie Walker Black Label. The Minister blessed us.

The second wedding was just as frugal. There was no alcohol and the reception was in the in-law’s basement. The preacher was a family friend.

I tend not to spend on marriages or divorces. There are more useful ways to fuel the economy. Also babies tend to eat on a daily basis.

Frugality is its own reward. Canadians over the age of 50 will be able to remember when Canada was a well-managed young country with little or no debt and very small and limited social programs.

When the depression hit Canada in the 1930’s people held on for dear life and the government in their wisdom bailed out the railroads’ bond payments and felt no shame at seeing starving babies. When there were no jobs, we shut the door to immigrants. We were a tight run ship and Canadians in large numbers who shared those times in the 20’s and 30’s must feel alien in the changed dominion that now rules.

I am a young boomer of 60 and can remember how people in the 1970’s bought houses on minimum wage. It was possible because we kept more of our income and there was more stability in jobs.

#35 LP on 07.01.15 at 8:48 pm

Just a few hours ago we drove across the bridge at Campbellton NB from Quebec. I finally feel entirely free to loudly and proudly say Happy Canada Day to one and all. What a great country this is!

#36 Happy in New West on 07.01.15 at 9:02 pm

#2 Paper Bag Over My Head

S. Bby is right. The fact that you are writing means that you know what you have to do. I can tell you that if it was me I would sell, now, for as much as you can get (and it may not be $165K). The condo is getting older, special assessments coming up, lots of new units on the market that will be more attractive for a renter unless you lower the rent – you aren’t going to recoup your loss. And you have no guarantee that your tenant is staying. Once you go into the red on the rent, you aren’t getting that back, either. I know, I know, it is hard to look at sunk costs and not want to hang on, but you still have time to lock in the HELOC at a decent rate. That might not be the case in a few years.

And by the way – you planning on staying in your second condo forever? Are you in the hole on that one, too? Before I worry about using your losses against future gains I’d minimize the losses on both of the units. Right now you are just doubling down.

Oh, and the mortgage on the “home” condo? That’s a debt. Look at it this way – if you come on hard times and you are renting, you can move in with family or a friend and stop paying rent on the old place. Mortgage on a condo? not so much.

Congrats on getting into the indexed funds, though. Listen to Garth; you know what to do , and you don’t need some anonymous internet poster like me to tell you!

I’m off to grab a coffee down by the quay and watch the fireworks over the Fraser later tonight. Happy Canada Day to all the blogdogs and especially to Garth – your advice has certainly made my life a lot better this year!

#37 Karma on 07.01.15 at 9:10 pm

#4 GreeceIsADistraction on 07.01.15 at 6:26 pm
“German Fourth Reich?

http://www.forbes.com/sites/panosmourdoukoutas/2015/01/22/greeces-net-debt-is-18-of-gdp-not-175-whats-germanys/

You’ve been BS’d. Do you really believe Germany has more (net) debt than Greece? Do you know what “Net Debt” is? Particularly since they literally have no cash… lol

#38 Henry on 07.01.15 at 9:12 pm

“This is the longest, strongest run for job creation in decades.”

Yep, unemployment in the U.S. dipped to 7.3 percent, but only 62.7% of Americans of working age are in labor force. The lowest since February of 1978. So the job participation rate is back to what it was 37 years ago. Something is wrong here!

Actually unemployment is 5.4%, and my statement is accurate. — Garth

#39 Victoria Real Estate Update on 07.01.15 at 9:18 pm

#2 Paper Bag over My Head

Sell now.

As Garth has said, Canadian 5-year fixed mortgage rates will begin to move higher this fall even though the BoC will not be moving its rate this fall.

In Canada first-time buyers must (basically) qualify under the 5-year fixed rate. As that begins to move higher this fall we will see Victoria’s condo market weaken even more over time.

Don’t miss the opportunity to get a deal done while 5-year rates are at historic lows.

You have admitted to making a bad decision to buy when you did. Don’t make a bad situation worse by not taking advantage of the opportunity that you have right now.

In 5 years you will be looking at substantially higher 5-year rates. Your carrying costs will be much higher.

Take the loss and get rid of the responsibility and headache. Ask Garth to help you invest any money you may have in a balanced portfolio.

#40 Smoking Man on 07.01.15 at 9:21 pm

I have to admit.. Canada’s not bad..

But the winters suck..furthest South to retire in is Windsor…

But, its time to move south west and establish a retirement strategy that doesn’t involve snow and cold. Still haven’t had the right conditions for boating yet.

Anyway..Happy CAD Day… Like me its going South

#41 Bby604 on 07.01.15 at 9:22 pm

Drought in bc ? What drought ?

#42 LJ on 07.01.15 at 9:23 pm

Garth, you should clarify the 20% US dollar remark.

The best advice would probably be that 20% of all holdings should be denominated in USD. That means that if you are holding a US equity fund that is un-hedged (basically bought in USD and trades in USD), then that holding would count towards the 20%. Things like USD “savings” accounts (even with Canadian banks) or USD Bonds (un-hedged, again), would also go into the same bucket. Or, USD cash (if you want to call that an “investment”).

Should be pretty simple. Basically look for the un-hedged funds/ETF’s.

Simple. Keep a max of 20% of your balanced portfolio in US$-denominated assets. — Garth

#43 Panhead on 07.01.15 at 9:41 pm

#10 hank on 07.01.15 at 6:44 pm
#3 Leroy Washington

Dear Sweet Leroy,
You must have been dumped by a hot Canadian the way you whine on and on about it.
Go get a hug from your mother and spare us your pain.
Happy Canada Day to All including Leroy’s Canadian ex-wife! Welcome home Babe.

———————————————————-
Naaa … fork him …

#44 jess on 07.01.15 at 9:43 pm

familar ringing?

$72 billion debt : population 3.6 million?

87 Puerto Rico debt deals= $61 billion.
$1.4 billion in fees for the “arrangers”

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

#45 Obvious Truth on 07.01.15 at 9:46 pm

#30 james

It’s all part of the freedom!

I don’t have to fear those who will try to take it away.

Until I suppose you get the conch. Then I either move or accept my neighbour will have a grow op, or be beaten for it and have to live in a mould infested home because the guy I bought it from neglected ventillation during that under the table reno.

#46 slick on 07.01.15 at 9:48 pm

#2 paper bag
How long are you gonna hold this hand grenade with no pin?
slick

#47 Karma on 07.01.15 at 9:53 pm

#41 Bby604 on 07.01.15 at 9:22 pm
“Drought in bc ? What drought ?”

You don’t pay attention much, eh?

https://www.biv.com/article/2015/6/metro-vancouver-closely-watches-plummeting-reservo/

http://www.cbc.ca/news/canada/british-columbia/salt-spring-drought-turns-summer-into-battle-zone-for-apple-farmer-1.3133588

http://www.comoxvalleyecho.com/news/local-news/water-flows-to-reservoir-drop-to-a-trickle-1.1982995

http://www.vancitybuzz.com/2015/06/water-supplies-low-vancouver/

Geez… Change your handle…

#48 Cyclist on 07.01.15 at 9:55 pm

Met some new folks on a ride today. taken thurs-fri off,
goin to vist family at the lake. life is good…..

Happy Canada Day garth and thanks for your continued work on this blog.

#49 Karma on 07.01.15 at 9:58 pm

US car sales annualized at 17.1 million in June. Best quarter since 2005…

http://www.td.com/document/PDF/economics/comment/USVehicle_Jun2015.pdf

#50 yeg_guy on 07.01.15 at 9:59 pm

Question re: preferreds as fixed income. I have 3 separate issues from banks in Canada, issued last spring.

After the Poloz rate drop earlier in the year, they are down 8-9%. If BOC cuts once or twice more, I’d hate to see the capital loss on these. I understand you say to hold them for yield, but they are already down 2 years worth of dividends.

They seem to be moving in sync with the Canadian Equitiy portion of my portfolio, not against it, like say bonds.

Comments?

#51 Captain Oblivious on 07.01.15 at 9:59 pm

#18 Victoria Real Estate Truth, the hotel proprietor paid off his debt to the butcher, Duh!

#52 Smudger on 07.01.15 at 9:59 pm

Guess what depending on where you live everyone thinks they’ve the best country, Greeks included.
Wonder if ye First Nations and Quebecers are all waving crimson?
We need that US thing where no president sits more than two terms.

#53 Hopey_not on 07.01.15 at 10:04 pm

No more REITS in the portfolio?

Yup. Max 8%. — Garth

#54 NewlyKonfused on 07.01.15 at 10:05 pm

Garth, you should clarify the 20% US dollar remark.

The best advice would probably be that 20% of all holdings should be denominated in USD. That means that if you are holding a US equity fund that is un-hedged (basically bought in USD and trades in USD), then that holding would count towards the 20%. Things like USD “savings” accounts (even with Canadian banks) or USD Bonds (un-hedged, again), would also go into the same bucket. Or, USD cash (if you want to call that an “investment”).

Should be pretty simple. Basically look for the un-hedged funds/ETF’s.

Simple. Keep a max of 20% of your balanced portfolio in US$-denominated assets. — Garth

Does this mean I should go and open a USD savings account at my bank and buy enough USD’s to make up 20% of my portfolio? Or do I convert CAD to USD and buy US Index ETF’s? This is new to me.

#55 Bob Dog on 07.01.15 at 10:11 pm

http://bc.ctvnews.ca/quiz-could-you-pass-the-canadian-citizenship-test-1.2439120

Got 90% on the CTV-BC Canadian Citizenship Test and I’m from Ontario. I have to admit I spent half the day applying for software engineering jobs in the USA. Im going to be hoisting cheap beers with Leroy by January. I have no stomach for bidding wars on million dollar crack houses.

Imagine getting paid with 1.30 dollars and no arrogant BCer’s to deal with.

#56 Cyclist on 07.01.15 at 10:14 pm

18 truth – the hotelier used the 100 to pay the butcher so he is square as is everybody else. simple balance sheet exercise. Previously they all had a $100 receivable and a $100 payable. All now zeroed. it’s really an example of liquidity, with the tourist loaning money at zero percent.
Duh.

#57 Financial Freedom at 40 on 07.01.15 at 10:17 pm

A brief history of rate reset preferreds
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20150401/RBGIYIELDHOG

#58 Llewelyn on 07.01.15 at 10:17 pm

If the USA economy is as strong as the MSM would have us believe I am curious why the rate at which the hourly wage paid to the average non-supervisory worker in the USA increased at less than 2.4% per annum between 2009 and 2015.

Over the past year the hourly wage for non-supervisory workers in the USA increased from $20.52 to $20.98.

It is worth noting that over 50% of the average increase in hourly wages was eaten up by increased taxes and health care insurance.

The net gain in annual take home income realized by the average non-supervisory worker in the USA since 2009 has been less than $3,200.

I would hazard a guess that the source of all the good economic news from the USA will not be found within the ranks of the general labour force.

I do not dispute that the economy in the USA is showing signs of improvement but there is very little evidence that ordinary workers are receiving their appropriate share.

The exact same situation exists in Europe were wages paid to the general workforce have remained stagnant or have declined.

I realize that your blog is aimed a people who have money to invest today. However it does not seem prudent to allow a very small portion of the population to rig the game in their favour for much longer.

#59 Drill Baby Drill on 07.01.15 at 10:18 pm

“Speaking of Alberta, wildfires there (did I mention climate change?)”
Blog please understand forest fires in northern Alta have nothing to do with global warming. This blog has definitely jumped the shark.

#60 devore on 07.01.15 at 10:21 pm

#47 Karma

I’m sure no one at Nestle is worrying about any droughts as they suck down the water table for free.

#61 Leo Trollstoy on 07.01.15 at 10:30 pm

Happy Canada Day!

Everything’s coming up Milhouse!!

#62 fiona on 07.01.15 at 10:40 pm

Garth,
Can you clarify why “the total weighting in the Dow and S&P, for example, would be 13% or less.”

“The number of assets depends on the amount you have to invest. Ideally the safe stuff would include government bonds (7%), corporate bonds (4%), inflation-linked bonds (3%), high-yield bonds (3%) and preferred shares (18%). Canadian growth assets would equal 17% (5% REITS, 12% equities), with the US at 21% and International, 18%. Ensure you have 20% or so of the total in US$, and there’s no issue holding a little cash (5%) and a completion ETF for alternative asset exposure (4%). So, the total weighting in the Dow and S&P, for example, would be 13% or less.”

Seems clear to me. — Garth

#63 Gag me on 07.01.15 at 10:41 pm

Why doesn’t anyone off an ETF for a balanced portfolio for 1% or less? Wouldn’t it make sense

#64 Mr Blobby on 07.01.15 at 10:44 pm

re #50 yeg_guy

I always laugh to myself when I hear Garth refer to preferred shares as “safe stuff”. it is disingenuous at best.

Prefs pay you handsomely to own them and are far more stable than common stock. If you buy blue chippers and hold them for income, what’s not to love? — Garth

#65 Karma on 07.01.15 at 10:58 pm

#126 NoName on 07.01.15 at 1:43 pm

“So tell us more about that uber drive to airport, was it a realtor(r), driving it and trying to solicit some new business?”

LOL! I had one of those. It was his first night trying it out! I had only 2 pints in me at that point, so I was able to hold back my laughter still… If it was after 3, I may have started to lose my self-control though..

#66 Llewelyn on 07.01.15 at 11:03 pm

One more tidbit

In April 2015 8,826,000 Americans were recorded as earning their income from self employment.

I May 2015 9,142,000 Americans were recorded as earning their income from self employment.

By my calculations an additional 316,000 Americans became self employed between April and May 2015. No information was provided on the average income realized by those who joined the ranks of the self employed

While this could be interpreted as a sign that the environment for entrepreneurs has improved it does cause one to ask where big business was hiding during this period.

Check out our stats. Worry about them. — Garth

#67 SiM on 07.01.15 at 11:48 pm

Thanks..
Happy Canada Day.

#68 Goldman Sucks on 07.02.15 at 12:16 am

#1
Greece and goldman sachs who woud know.
http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html
—————-
Goldman featured prominently in the 1929 collapse.
Looks like the fleece the investors again.

#69 Goldman Sucks on 07.02.15 at 12:26 am

#29 RayofLight on 07.01.15 at 8:20 pm
My wife and I have been fortunate in being able to travel. We have visited all of the continents. Every time we return back to Canada, we feel blessed. Every Canadian alive has won the geographic and geologic lottery of life. Being Canadian, and being alive to-day means you are the 1%. Please don’t dismiss this, because there are at least 100 people right now, worldwide, that would love to trade you their problems for yours.
——–
Obviously, you did not travel to Germany, Holland, Austria, Switzerland or Scandinavia.

#70 Rexx Rock on 07.02.15 at 12:27 am

To be a true Canadian is to be house poor and live paycheck to paycheck.You need to have strangers live in your basement to survive to pay the high mortgage ,long commutes,saving and getting 1% because the central bank wants everyone to be debt ridden and to have a high cost of living.High immigration so to lower the wages and the standard of living.Rising taxes every year to add to burden.This is the Canada I know.Happy Canada day!!!

#71 Christopher Lackey on 07.02.15 at 12:29 am

As much as we spend the other 364 days being a nation of tortured, self-loathing, passive aggressive, dysfunctional ignoramuses, today we can forget about markets and real estate for a day and just give thanks for how blessed we are. As much as cynical politicians and corporate entities exploit our collective identity to harvest cheap propaganda, we know who we are and who we will never be. Thank you Canada for everything you have given and f all the haters by the way this IS the land of unlimited opportunity.

#72 waiting on the westcoast on 07.02.15 at 2:06 am

#58 & #66 Llewelyn…

Re: US labour not getting paid well….

Just wrapped up my best month since July 2007 in the US. While the summer of 2008 still had some high numbers, they were lower YoY.

Since I aggressively restructured my businesses during the recession in the US, I have had little push back on wages. I increased wages about 15 months ago by $1/ hr (~10%). My guys have been pushing for another increase this year.

The point is that many in the US were just happy to have work and kept their heads down. As things have continued to improve, more opportunities exist and people start either pushing for more or leaving for those other opps. As an owner, I have had to reevaluate what I am willing to pay to keep some great people. For the bulk of that window of time, I was able to grow my business without labour $$$ pressure.

I love doing turnarounds and I am sure that the next 2-3 years will bring some great opportunities in Canada.

#73 Steve French on 07.02.15 at 2:29 am

Folks Canada is in danger of losing a true national treasure.

Smoking Man is planning on moving from Long Branch to Sunnyvale California.

#74 Linda on 07.02.15 at 2:35 am

Try TaxTips.ca – US Estate tax may be payable by Canadians. It appears from the article published January 2015 as per the site I visited that there is at least the potential that this could occur. However, it depends on what would be included in the overall valuation of any estate in question. Mention is made of exceptions for Canadians due to a tax treaty & it would seem from examples given in that article that most people would not have to concern themselves unless their estate had at least $6 million US or more in eligible US assets.

#75 Bubu on 07.02.15 at 3:19 am

#4 GreeceIsADistraction

Did you even pay attention to the Source of this article?

… Panos Mourdoukoutas ,CONTRIBUTOR…

Nuff said !

#76 Tony on 07.02.15 at 5:03 am

Re: #31 JPR on 07.01.15 at 8:30 pm

Take a variable rate mortgage as interest rates in America will turn negative just like in Europe. The Bank of Canada rate should fall to zero later this year.

#77 Llewelyn on 07.02.15 at 7:23 am

Believe me Garth I look at the Canadian labour statistics every month for a sign that things are improving. You are 100% on the money when you say Canadian citizens should be concerned with the lack of job creation in key sectors.

Between May 2014 and May 2015 the Canadian labour force expanded by 192,300 workers. On the surface this increase looks encouraging.

On further analysis however only 8,000 workers were added in the Goods- producing sector while 184,300 workers were added in the Services-producing sector.

Within the Services-producing sector 126,600 workers (68.7%) were added to the educational services and health care and social assistance components. These are two sectors that rely heavily on government transfers.

Between May 2009 and May 2015 the Federal and Provincial governments borrowed over $100 billion to stimulate the Canadian economy and all they have to show for it is a net gain of 8,000 workers in the Goods-producing sector over the last 12 months. I hate to think what might happen when our governments are forced to curtail their spending spree.

Comparisons with Greece might be a stretch but our governments seem to have charted a course headed straight towards a fiscal cliff. At some point they have to initiate a change in direction.

We have a Federal election coming up on October 19. It is time for all representative governments to stop gilding the maple leaf and to start addressing the true state of our economy.

We can handle the truth!!

#78 The American on 07.02.15 at 8:49 am

Tony, you’re back… And just as ignorant as ever. Negative interestnrates aren’t coming to the U.S. Oh, did you see the latest jobs report? UE now at 5.3%. Also, you claimed a year ago the CAD would be worth more than the USD by this time. How’s that working out for you? $1 USD buys $1.26 CAD now. LMFAO!!!

#79 Nagraj on 07.02.15 at 9:01 am

Another one of GT’s dramatic photos from THE TWILIGHT ZONE!
Here, Ladies and Jellybeans, we see DUDLEY DORIGHT’s butch sister on her way to a bear-riding race with Putin. (For $37US you can buy a Putin-riding-a-bear doll.) Cue the WILLIAM TELL OVERTURE.

#58 LLEWELYN
Indeed, Labour wage stats have gone out of vogue. I’d like to see a graph of the purchasing power of the average Canadian wage since 2008 – with the top 10% excluded from the chart. Hours Worked data is helpful too. (This morning’s FP: “Why Canadians are getting richer . . . ” – Canadians are so rich and happy that PanAm Games ticket prices are 25% off.)
Academic definitions aside, Canada is already in Recession. Seems to me that GT’s bearishness re the Can economy is actually understated. Seems to me that Bay Street is presently simultaneously incontinent and squealing for rate cuts.
Seems to me that Dudley Doright’s dyke sis might be flogging a dead pig. But let’s enjoy our MSM riches.

#80 Bottoms_Up on 07.02.15 at 9:04 am

#9 Victor V on 07.01.15 at 6:42 pm
—————————————-
Its easy to make news stories out of apples to oranges comparisons. Public sector employees are forced to save 15% of NET income in their pension funds. This money is then managed by top professionals. Of course they will have decent funds for retirement.

#81 I'm Still Around on 07.02.15 at 9:49 am

Happy Canada Day Garth and all the blog dogs!

#82 Dominoes Lining Up on 07.02.15 at 10:02 am

Here’s news about something that will tip over the housing market all on its own in due course:

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/nearly-half-of-canadians-forced-to-retire-earlier-than-planned-poll-shows/article25219041/

Big domino coming up when these people are all clamouring to sell to pay for their thirsty underwear……..

#83 Bottoms_Up on 07.02.15 at 10:14 am

#59 Drill Baby Drill on 07.01.15 at 10:18 pm
——————————————————–
Sure, droughts in Alberta could very well be due to climate change and global warming.

What is your evidence that it isn’t related?

#84 Canadaduh on 07.02.15 at 10:15 am

Crappy time in Greece? You must be reading the National Postal… with 60 euros anyone could enjoy the sun, beautiful sea and vistas of a country that has more to offer in 1 km than all of Canada has. I think that 300 km cloud that has covered most of the gta has clouded our brains here

Tried to swim yesterday at the “beaches” and I look like I have pink eye and my face looks like Seal. Maybe I should work more instead and renovate my club med shack. Ill feel better after i get some granite on my toilet seat.

Harper said we are lucky im not sure who hes talking about but its not the maple leafs nor rob ford

#85 EnglishInCanada on 07.02.15 at 11:14 am

What am I missing?

Zerohedge today: “Americans Not In The Labor Force Soar By 640,000 To Record 93.6 Million; Participation Rate Drops To 1977 Levels”

Over 76 million Americans – 20% of the population – are Baby Boomers now entering retirement. You are missing that, as well as a rapidly shifting employment environment. This does not mean the US recovery has stalled. It has not. — Garth

#86 Rainclouds on 07.02.15 at 11:27 am

#55 B Dog
“I have no stomach for bidding wars on million dollar crack houses.”spent half the day applying for software engineering jobs in the USA. Im going to be hoisting cheap beers with Leroy by January”

I presume you’re not moving to the Bay Area?

Doubt the eloquent Mr. Washington stoops so low as to waste his valuable creative time “hoisting beers” .

Based on his finely crafted observations, prodigious vocabulary and grammatical brilliance I see him as a Single Malt brooding intellectual type…………. like GT:-)

#87 Karma on 07.02.15 at 11:38 am

Craziness… Up to 22% annualized rate for margin accounts in China. Good luck with that…

http://www.bloomberg.com/news/articles/2015-06-30/hidden-china-stock-debt-revealed-in-online-loans-at-22-interest

#88 Sideshow Rob on 07.02.15 at 11:38 am

Very weak US employment data. 250k left the workforce. Interest rate hikes are off the table this year. Rate hike first quarter of 2016. Really. They aren’t kidding this time.

#89 pbrasseur on 07.02.15 at 12:13 pm

Take a variable rate mortgage as interest rates in America will turn negative just like in Europe. Tony

How are things over there in Moronistan?

#90 fiona on 07.02.15 at 12:37 pm

In case anyone is interested, I figured out the “13% or less” comment (reposted below). Garth is adding up the equity portion of the portfolio (56%) and then adding on cash (5%) and alternative assets (4%), giving a total of 65%. He is then taking 20% of that figure which equals 13%
I don’t think this was clear at all. It’s also wrong, considering his 3% in high yield bonds will be in US$ since you aren’t going find it available in CDN$.

“The number of assets depends on the amount you have to invest. Ideally the safe stuff would include government bonds (7%), corporate bonds (4%), inflation-linked bonds (3%), high-yield bonds (3%) and preferred shares (18%). Canadian growth assets would equal 17% (5% REITS, 12% equities), with the US at 21% and International, 18%. Ensure you have 20% or so of the total in US$, and there’s no issue holding a little cash (5%) and a completion ETF for alternative asset exposure (4%). So, the total weighting in the Dow and S&P, for example, would be 13% or less.”

Give it up Fiona. There’s nothing complicated about it. Of the today 21% US exposure only 13% is large cap. — Garth

#91 fiona on 07.02.15 at 12:45 pm

Garth,
thank you. I still think it may have saved us all some time of you had said that in the first place. thanks though.

In case anyone is interested, I figured out the “13% or less” comment (reposted below). Garth is adding up the equity portion of the portfolio (56%) and then adding on cash (5%) and alternative assets (4%), giving a total of 65%. He is then taking 20% of that figure which equals 13%
I don’t think this was clear at all. It’s also wrong, considering his 3% in high yield bonds will be in US$ since you aren’t going find it available in CDN$.

“The number of assets depends on the amount you have to invest. Ideally the safe stuff would include government bonds (7%), corporate bonds (4%), inflation-linked bonds (3%), high-yield bonds (3%) and preferred shares (18%). Canadian growth assets would equal 17% (5% REITS, 12% equities), with the US at 21% and International, 18%. Ensure you have 20% or so of the total in US$, and there’s no issue holding a little cash (5%) and a completion ETF for alternative asset exposure (4%). So, the total weighting in the Dow and S&P, for example, would be 13% or less.”

Give it up Fiona. There’s nothing complicated about it. Of the today 21% US exposure only 13% is large cap. — Garth

#92 Karma on 07.02.15 at 12:56 pm

“Soos is not among them. As the co-author of a recently published 810-page doorstop entitled Bubble Economics: Australian Land Speculation 1830-2013, which I have not read, because there are limits to what I am willing to do for this job, Soos and his co-author Paul Egan blame two decades of rampant domestic speculation as the reason for the rise in residential prices.”

Sounds applicable to Vancouver…

http://www.vancouversun.com/opinion/columnists/Pete+McMartin+Australia+bubble+bursts+Vancouver/11180738/story.html

#93 Armando on 07.02.15 at 1:30 pm

I wonder what Garth is going to say when his balanced portfolio is Down 30% sometime in next couple of years? I guess I will have to stay tuned to find out! Not that Real Estate will turn out any better…

A balanced portfolio did not approach that decline even in 2008-9. Since there is no repeat of that event coming, you will be waiting a long, long time. — Garth

#94 Ronnie Ron on 07.02.15 at 1:32 pm

Is it possible to have a balanced portfolio without a fixed-income component? Store enough blue chips and perhaps you’re good to go.

100% equities/etfs

The reason I ask is that for Muslim clients, Shariah law prohibits the concept of interest. Dividends in blue chip stocks could be a nice substitute

Without fixed income, it is not balanced. You can buy strip bonds, preferreds or other assets that should be acceptable. — Garth

#95 Waterloo Resident on 07.02.15 at 2:05 pm

CHINA’S ECONOMY HAS FALLEN a huge amount this past year, probably in the double-digit range.
No kidding:

http://www.hellenicshippingnews.com/chinas-may-thermal-coal-imports-collapse-41-on-year-to-6-48-mil-mt/

When a country’s energy imports fall 41%, that usually translates in a 1:1 ratio to their overall economy, so that translates into a major slowdown for the Chinese economy, at least a 30% decline.

No wonder their stock market bubble is beginning to pop.

#96 Smoking Man on 07.02.15 at 2:44 pm

#88 Sideshow Rob on 07.02.15 at 11:38 am
Very weak US employment data. 250k left the workforce. Interest rate hikes are off the table this year. Rate hike first quarter of 2016. Really. They aren’t kidding this time.

I don’t read the headlines , that just a sales pitch for an interest.

After 8:30 today, Job Numbers magical, the Bond Market found Bids Prices up, yields down. USDCAD lost a cent.
That tells me the market don’t think a rate hike in US is on the table in the emidate future.

Which is disappointing. My interviews for California went great. I’m betting on a 1.30 USDCAD.

Expecting an offer at any moment.

#97 Nagraj on 07.02.15 at 2:48 pm

some of the Canada Day posts here read as if GT had called for submissions to a Gr.7 essay contest: “What Canada Day Means To Me”

WHAT CANADA DAY MEANS TO ME by Nagraj
Canada is all about cannibalism and incest and every perversion known to mankind.
Lying and cheating and stealing and house-buying is also widespread.
Fear always stalks the land 24/7, like Harper.
Canadians are very polite for two reasons; one reason is the grumpy old Queen of England, the other reason is that if you’re not polite the police will take you away and do things to you.
Canadians are unclean because soap is so expensive, as is water. Food is pricey. (Hence the baby BBQs.) (“Children roasting on an open fire/ Tiny tots, their noses all aglow” is popular year round in Canada.)
On Canada Day we get a holiday from shoplifting because the stores are closed.
Best of all, on Canada Day the nation celebrates survival by dancing its rubber boots version of the Flamenco.

Nagraj

#98 S.Bby on 07.02.15 at 4:25 pm

US mortgage rates edge up a bit.

http://www.news1130.com/2015/07/02/average-us-rate-on-30-year-mortgage-rises-to-4-08-per-cent-15-year-rate-up-to-3-24-per-cent/

#99 Ronnie Ron on 07.02.15 at 5:07 pm

“Is it possible to have a balanced portfolio without a fixed-income component? Store enough blue chips and perhaps you’re good to go.

100% equities/etfs

The reason I ask is that for Muslim clients, Shariah law prohibits the concept of interest. Dividends in blue chip stocks could be a nice substitute

Without fixed income, it is not balanced. You can buy strip bonds, preferreds or other assets that should be acceptable. — Garth”

Sadly, strip bonds and preferreds are also not permissible. Since it cannot be balanced, perhaps a DRIP would be the closest match.

Preferreds pay dividends, not interest. Strips are purchased at a discount to face value, thus do not pay interest. — Garth

#100 Mister Obvious on 07.02.15 at 5:56 pm

Holy moly! The people have spoken. Again.

First it was the trouncing of the Alberta conservatives by the socialist hoards. Now it’s the decisive defeat of the proposed lower mainland transit tax levy.

I voted NO, but I didn’t do so lightly. I spent some time mulling over the pro and cons. I came up with mostly ‘cons’, a term which I think succinctly sums up the thrust of the plebiscite itself.

Up to this point, the lower mainland’s ‘Translink’ organization has proven itself entirely incompetent at managing public dollars. They have done nothing to instill confidence that will change in any way.

But it goes further than that. The mantra is always the same: Another million people are coming to the lower mainland and we must provide the buses they will certainly be needing when they get here.

Lord knows, we’ve already got the condos in place. Let’s finish the job, eh?.

I don’t buy it. I don’t want to pay for a billion dollar subway from East Vancouver to UBC to whisk students to history class. Now, I have nothing against students or the study of history but these endless demands on the public purse have to stop somewhere.

Could it be it’s not really about students? Could it be it’s more to do with condo development along yet another billion dollar corridor. Yeah. That gets my vote.

#101 ElGarthoMagnifico on 07.02.15 at 8:33 pm

“Can’t afford to lose a cent”, she says. Meanwhile gramma draws 2500 a month like a boss. Then depletes the capital, and wonders what happened. Life is so unfair, she must think, while some 30 year old still works at the mall for min wage despite his degree, waiting to get his life started. Greedy ass boomers, lol. So typical.