Happily ever after

KIDS modified

Donna’s husband died fifteen years ago. Smoker. “Too early,” she says. “He never listened.”

Sam left the house and fifty thousand in RRSPs, so Donna – with only her government pension – invested the rest for a monthly income stream. Grand total: $425,000. “Don’t take any risks,” she told the advisor (whom I know). “I can’t afford to lose a cent.” But it seemed like a big pile of money to her, so she rented a nice place and drew off $2,500 a month – from a portfolio making just 4%.

For seven years he told her to lighten up. For seven years she would not. “No way,” Donna said, “will I ever outlive it.” Then 2008 happened. Her portfolio dipped by a third (while the stock market sagged 55%). Against the advice of her guy, she cashed in, crystallized the losses and put the remainder – now less than $200,000 – into a savings account at the bank. “Good move,” [email protected] told her. Her plan was to keep it safe, and dip as required

Last year Donna, now in her early eighties and quite healthy, ran out of money. The savings account is empty. Credit cards are maxed. She has to move into the kind of place she thought only downscale people lived. “I guess I am one,” she said this week when she called for help (her son reads this pathetic blog). It was wrenching when she cried.

Her mistakes were simple and common. Donna thought losing money was the greatest risk to guard against. It wasn’t. She allowed her emotions to overrule logic, selling at the worst moment. And she didn’t trust anyone with her money as much as herself. Now she’s old and poor.

You can be young, impoverished and happy. But never so at the end of your life.

This is sad, but destined to be common. There are over nine million Baby Boomers in Canada, and more of us turning 65 every year than at any other time in our history. Some are rich – about 5% of the cohort has a million in addition to their real estate. Most aren’t, with seven in ten devoid of corporate pension plans, the bulk of their net worth in real estate, and scant financial literacy.

This might not be a serious problem if we weren’t at a dangerous point in the economic cycle. But, alas, the perfect storm is gathering. Peak house means more and more net worth has been sucked into a single asset, even as the economy slags. Interest rates will be rising in the years ahead, impacting the market, reducing equity and scaring off buyers. Commodity prices have slumped, with oil back at the mid-$50 mark and a 79-cent dollar. The savings rate has tanked and 93% of people have not maxed their TFSAs.

So what are they thinking? That houses are safe, and the only thing they need own? Oh dear.

Well, as I pondered Donna’s situation a new poll on this subject popped up from Angus Reid. And it’s a shocker. We’re a little more screwed than we all thought, even without the Canadian economy now trying to slide into recession. The pollsters found 48% of retired people say they were forced to stop working by circumstances – usually job loss. Of that group almost a third said they “are struggling” to make ends meet. Another 46% report they get by, but can afford only essentials. In other words, about three-quarters are living meagre or deficient lives. Some retirement.

Half of these folks fear they’ll end up like Donna, outliving their money. They’re probably correct. But there’s more. The pollsters included working people, too, finding 74% of them are also worried they’ll deplete money before they exit life.

And this: among the retired, 57% say government pensions are their main source of income. That’s an average monthly payment of $618 for CPP and $564 for OAS, or $14,200 per year. Yikes.

So, here’s a concrete example of what happens when a government engineers low interest rates, and the central bank boss says he wants to encourage more citizens into real estate. People stop saving. They increase borrowing. They flock to houses, inflating prices and increasing debt. Everybody’s risk rises, especially in a society where the number of retired people will go from 6.4 million today to 15 million over the next two decades.

The politicians can ignore a few hundred thousand Donnas. They can’t look away from millions of them.

If I were, say, 30, this would scare me a lot.

198 comments ↓

#1 TurnerNation on 07.02.15 at 6:01 pm

Sweeden just lowered their rates? Finnished.

#Smokingmen there.

#2 Derek R on 07.02.15 at 6:04 pm

That’s a very sad story. But an increasingly common one.

#3 banksters on 07.02.15 at 6:06 pm

The govt wants to enslave us to debt. Why
1. They all own bank shares so make themselves rich
2. Since u own a mortgage no social uprising…too much too lose
3. Goos e the home depot economy come on Garth get with the plan…

The south and gold shall rise again

Heehaw

#4 Dee on 07.02.15 at 6:07 pm

I’m 33. And yeah, that scares me. What also scares me is how many of those my age and younger still haven’t started a career–in part because the older ones aren’t leaving jobs, in part because the GFC took jobs away for a while, etc etc there’s a whole litany of reasons but whoever you want to blame, it happened.

So the younger ones aren’t earning, and the older ones pissed it all away, and as one of the lucky few making a decent salary, I wonder how long before I’m paying for just about everyone in the country to live.

It’s the flipside of what Garth is saying: “The politicians can ignore a few hundred thousand Donnas. They can’t look away from millions of them.”

Well, we can afford to take care of a few hundred thousand Donnas. We can’t afford to take care of a few million of them.

Should be a fun decade up here.

#5 Saskabush on 07.02.15 at 6:12 pm

How do you turn this around? You are a mouse squeaking it’s loudest at a herd of buffalo charging headlong right for the cliff.

All you can do is squeak and hope you don’t get trampled.

But don’t worry … a ¼ point drop in the bank rate will save the day!

Squeak! Squeak!

#6 LJ on 07.02.15 at 6:15 pm

All, thanks to the Boomers…

#7 I'm stupid on 07.02.15 at 6:19 pm

Shame on Donna’s son. I’m in a similar situation with my mother. The only difference is that my brothers and I deposit 1k a month each in her bank account. It’s the best money I’ve ever spent. She’s happy and gets to go to Disney land with her grandkids and lives with dignity. It’s a small amount to pay for someone who has given me unconditional love my entire life.
Or I could’ve just bought a sports car while my mom was living on cat food!

#8 S.Bby on 07.02.15 at 6:19 pm

The ironic thing is that it was a real estate collapse that caused the 2008 stock market mess in the first place. But people think real estate is safer than the stock market.

#9 Mike S on 07.02.15 at 6:23 pm

” And she didn’t trust anyone with her money as much as herself. Now she’s old and poor.”

This is good as long as you know what you are doing. If you trust yourself, this should be because you did your homework

Then again she had an adviser, and still didn’t listen to him.

You just can’t replace financial education. This is one reason I take the time to get as much financial education as possible.
The other of course, citing Adam Smith, is:

“however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own”

#10 totalinvestor.com on 07.02.15 at 6:23 pm

Whether interest rates go up or stay low there will always be losers, it’s a no win situation for many.

BTW Happy 4th of July to our neighbours.

http://tinypic.com/r/s25nqu/8

#11 Leroy Washington on 07.02.15 at 6:24 pm

Canadians are in for a world of pain in 2016 once interest rates start to rise, and your housing prices fall. Good luck with that!!!

Leviticus 18:17 “Do not have sexual relations with both a woman and her daughter. Do not have sexual relations with either her son’s daughter or her daughter’s daughter; they are her close relatives. That is wickedness.”

Americuh!!! God bless the U. S. of A.!

That was just weird. — Garth

#12 Andrew on 07.02.15 at 6:27 pm

Garth,

I’ve been following this blog a few months and it helped me with setting up my initial ETF portfolio. I followed advice from one of your older blogs to stick to the following 5 types of ETF: 20% Canadian Equity, 20% US Equity, 20% REIT, 20% Short-Term Bonds, 20% Preferred Shares and if you want some risk to buy some emerging markets.

The advice was as long as you maintain these ETF’s and re-balance, that you can expect a 7% long-term return. Awesome, I bought.

However, I still follow your blog closely and it is a bit disconcerting when I see you fairly constantly recommending certain percentage ownership of things. Like you said yesterday, I believe, to only have 8% in REIT’s and you often talk about being globally diversified (which that portfolio is not). I find it hard to stick to this long-term portfolio when I see recommendations for other portfolio percentages, thinking I’m doing something wrong.

Your advice seems to change based on the current economic environment, which completely goes against the “buy and hold” preach I initially bought into.

So which is it? Pick a path and stick with it regardless of other advice or change the portfolio based on the current global economy?

I’m not an emotional investor at all and am happy to ride the waves, it’s just tricky to stick to your guns when people are advising otherwise left, right and centre.

Never did this blog recommend a 20% REIT weighting. Far too much. And where is your international exposure? — Garth

#13 robert turpin on 07.02.15 at 6:30 pm

this post puts a human face on retirement planning and helps us appreciate the consequences of our choices.Garth,you are helping us avoid these pitfalls if we take the time to listen.Thank you very much for your public service way beyond what some current MP s offer.Canada needs more civic minded people like you.

#14 Mike S on 07.02.15 at 6:31 pm

“If I were, say, 30, this would scare me a lot.”

You mean NDP scares you?

here is one solution, take from these boomers that do well (the 5%) and from the workers, and from the corporations, and distribute it to the 95%

Should work right?

#15 ShawnG in TO on 07.02.15 at 6:33 pm

how many of those “forced retired” still have a mortgage to carry? and what do you do at that time? cash your rrsp etc to save the house?

someone will probably cry “age discrimination!” if we ban mortgage for people over 55. but how many people do it and put their retirement in jeopardy?

#16 Godth on 07.02.15 at 6:36 pm

Oh please, give it up. It’s all broken. Math doesn’t lie, humans never stop though. Collapse isn’t an event, it’s an ongoing process that’s been happening for decades. Diddling numbers to fit whatever ideology or delusion you happen to prefer won’t change anything. Get real.

#17 Shawn on 07.02.15 at 6:37 pm

And the Lesson Is?

That Donna never should have sold the house and become a renter? With the benefit of hindsight we now know that the house would have increased in value (a lot, in those 15 years). She could have avoided the rent and even with other house costs came out WAY ahead.

Maybe could have taken in a boarder if needed.

Selling and renting is not a great idea if you are a terrible investor / client like Donna.

One plan does not fit all.

Sad story.

Carry a house and survive on $14K a year? I am so glad you are not a financial advisor. — Garth

#18 zee on 07.02.15 at 6:41 pm

You always show the extreme of any situation?

My dad and all his friends have retired and they are all doing fine. I am sure this is the case for millions of other retired folks as well.

#19 Mike S on 07.02.15 at 6:47 pm

“Your advice seems to change based on the current economic environment, which completely goes against the “buy and hold” preach I initially bought into.

So which is it? Pick a path and stick with it regardless of other advice or change the portfolio based on the current global economy?

I’m not an emotional investor at all and am happy to ride the waves, it’s just tricky to stick to your guns when people are advising otherwise left, right and centre.”

Andrew,
the advice Garth gives is different depending on circumstances. boomer with 1M$ would not invest the same way as millennial with just 10k$

There are tons of other considerations, like taxes. if you want to do it yourself, you need to learn more. Otherwise hire an adviser …

#20 Adam on 07.02.15 at 6:48 pm

#12 – Andrew

Garth, I believe he was talking about this blog post:

http://www.greaterfool.ca/2014/11/21/trust-4/

I guess he never noticed you said “divide your TFSA money” and instead he thought you meant divide your entire portfolio.

#21 Greg on 07.02.15 at 6:50 pm

Acceptable collateral damage apparently.

#22 Andrew on 07.02.15 at 6:52 pm

Never did this blog recommend a 20% REIT weighting. Far too much. And where is your international exposure? — Garth

This was from your blog post entitled “Trust” on November 21 2014 and is what I followed:

“So divide the TFSA money into five piles, putting equal amounts into ETFs (exchange-traded funds) that mirror (a) the S&P 500, (b) the TSX 60, (c) a basket of preferred shares, (d) real estate investment trusts and (e) a Canadian bond index. You can use iShares products, or Vanguard, BMO exchange-traded funds or others. But these five will give you safe (preferreds and bonds) as well as growth (equities and commercial real estate).”

For example, using iShares, you’d buy XIU (Canadian stocks), XSP (US stocks), XPF (preferreds), XRE (real estate trusts) and XSB (short bonds).”

Unless I am misunderstanding what “Putting equal amounts…” means, then that would be 20% into each of the 5 types of ETF, no? There is no international exposure here as far as I can see.

That post referenced a TFSA, not an overall multi-account portfolio. — Garth

#23 Catalyst on 07.02.15 at 6:53 pm

If Canada slashes its rate while US is increasing and USDCAD goes to 1.30 as BofA predicts, wont this prolong the drop in CAD housing?

CAD houses have gotten 30% cheaper by the end of the year, just not for Canadians.

#24 Risk tolerance on 07.02.15 at 6:53 pm

This is really a matter of risk tolerance.

It is not appreciated properly for what it is.
Garth also seems to look at it as if it was just a matter of financial education. It goes beyond education, being smart or logical.

People are psychologically wired differently: that’s why we have a large variety of people, including large variety of approaches to investing or finance in general.

I, for one have probably higher risk-tolerance than the average Garth club members – it literally pains me the risk-less and for this reason boring approach of the handful of ETFs.

In a weird way, almost feels like the fear of loss this lady felt – except not for the principal, but the fear of loss of potential profit.

#25 EarlySpring on 07.02.15 at 6:54 pm

So what does a guy do who is 28? Debt free. Averaging annual income of 125-135K a year, with great job security, 50K in government pension(3yrs), 75K in personal rsp, and a max’d out TFSA with 10k cash, in six months another 10k added is the plan. I eff’d up a bit of my TFSA when I was young and nieve at 24 listening to two 55 year old investors who had huge money on a penny stock, I figured I would put 15k down on it, so stupid. But your right garth, it frightens me as to where we are going as a nation. I am trying to build a balanced portfolio like you speak of. Come next tax rebate I plan to have a solidified plan for my TFSA and another 10k for it. But what else can a guy be doing? My girlfriend and I are debt free, combined make 210k, rent for 1350 a month. We are trying to create plans and love hearing thoughts and tips from intelligent people, blog dogs and tips for us? I know we are lucky to have what we got but I don’t want to screw up these young years to gain on some compounding interest over the next 30 years. Thanks guys and girls

#26 Mister Obvious on 07.02.15 at 7:09 pm

You can be young, impoverished and happy.
————————-

It’s true. I knew some people like that. Those that have lasted as long as myself either changed their ways or else didn’t and have now arrived at a difficult and unhappy stage of life.

Myself I was young, impoverished and ticked off about it. Your proverbial angry young buck, I suppose.

Life improved dramatically when I stopped living paycheck to paycheck and had saved enough money to allow me the freedom to walk away from intolerable job situations.

You don’t necessarily even have to quit a bad job. You only have to know that you easily could if you wanted. It really does make all the difference.

That’s what wealth is for. Not stuff. Choice.

#27 The specifics on 07.02.15 at 7:11 pm

#12 Andrew

“Your advice seems to change based on the current economic environment, which completely goes against the “buy and hold” preach I initially bought into.

So which is it? Pick a path and stick with it regardless of other advice or change the portfolio based on the current global economy?”

=======

Andrew, this is the fundamental shortcoming of this blog.

This blog will always stay fundamentally at theoretical level – don’t expect to discuss the specific ETFs, timing which one to buy and sell, when.

Getting down to these exact specifics is where Garth is making his living – it is just what it is – with all the logical consequences.

#28 Renter's Revenge! on 07.02.15 at 7:22 pm

She could’ve put it all in TransCanada Pipelines stock and spent the 4% (and rising with at least inflation) dividend. They don’t call it a “widows and orphans stock” for nothing. Just sayin’. Balanced portfolio of equities and bonds with weightings appropriate for the individual yadda yadda…

#29 joblo on 07.02.15 at 7:24 pm

“If I were, say, 30, this would scare me a lot.”
If I was say, 30, I would get out of this country as it is so screwed, why stay?

Wasn’t it just yesterday or day before a celebration of Kanada? All the gushing blah blah, what BS.

#30 Mark on 07.02.15 at 7:31 pm

I’ve never understood why the mentality of banks being a place to ‘store’ one’s money, rather than being counterparties and one being an unsecured creditor has persisted.

Is it our education system that somehow treats the whole idea of bank failures as being verboten? Is it propaganda by the CDIC that runs on TV during economic turbulence that people buy into? What is it? Banks seem to enjoy a sort of status as unsecured creditors to people who lend them money that literally no other industry in Canada enjoys.

At least when the railways ran Canada, they invested billions of their own paid-in capital and retained earnings (basically bankrupting themselves for a generation), provided an irreplaceable service (transportation of people and goods), and facilitated what was an early banking system to boot. What do contemporary “banks” do? Practically nothing.

#31 Nazir Samminat on 07.02.15 at 7:32 pm

I can understand how people feel about having low income and savings at any age.

We used to be like that until we realized that we can’t afford a certain lifestyle and we downsized after I lost a better full time paying job.

Basically, after 2.75 years looking for a house, we can’t afford one and said forget about it. It is not worth the stress and worry.

We rent a house for $1,200 month utilities included. I work 2 part time jobs, 50 hours a week, Monday to Saturday making $50,000 a year. We have no benefits at work.

Amazingly, I was surprised we have saved quite a bit in 2.75 years, $19,000 in RRSP’s, and $25,000 in TFSA’s, $3,000 in RESP’s, $7,000 in savings account.

We are both 30 years old and are also debt free. We will do everything in our power to stay that way.

We will continue to be careful and take care of our finances. If we can save even 80% of what we have done in RRSP’s and other accounts like the last 2.75 years then accumulating 1.25 to 1.5 million by retirement is a real possibility.

We have 2 kids 6 and 7 years old which my wife takes care at home. It makes no sense to pay $1,000 or more a month for daycare and we want to have them at home not with strangers.

#32 Mark on 07.02.15 at 7:33 pm

“She could’ve put it all in TransCanada Pipelines stock and spent the 4% (and rising with at least inflation) dividend. They don’t call it a “widows and orphans stock” for nothing. “

It could’ve been put in Barrick which at one time had similar metrics till the dividend got chopped in half and the stock lost 80% of its value. That’s why a balanced portfolio is somewhat less risky than even sticking it all in the bank as ‘cash’. And generally higher returns to boot.

#33 Brunett43 on 07.02.15 at 7:36 pm

#11 Leroy Washington

Leviticus 18:17 “Do not have sexual relations with both a woman and her daughter. Do not have sexual relations with either her son’s daughter or her daughter’s daughter; they are her close relatives. That is wickedness.”

Americuh!!! God bless the U. S. of A.!

Are you saying that Americans are all inbred…hmmm…I thought so!

#34 Freedom First on 07.02.15 at 7:38 pm

Sad story about Donna. This is a wake up call for sure.

If an individual is financially illiterate, it is critical to financially educate oneself at a young age, or, if unable to do this for whatever reason, find a financial adviser as per Garth’s guidelines, and let them manage your finances for you.

Unfortunately, the majority of financial idiots are unaware that they are financial idiots. And, as you can see from this Blog on a regular basis, the financial idiots are everywhere. Financial idiocy is like a virus, and there is many people who are spreading it on purpose. Garth has shown us who many of them are guilty of this travesty.

#35 Millenial on 07.02.15 at 7:38 pm

Sad story, Garth. Let’s hope her son is helping her out (and that maybe she’s got more than just one kid).

In Asian cultures it’s deeply ingrained that children take care of their ageing parents. Seems like a much better system than counting on government or the stock market.

Anyway, Garth, we’ve got a lot more to worry about than just inflated real estate prices here in Canada. Federal funds rate have been 0-0.25% for almost 7 years; rate hasn’t up in almost 10. What we’ve got here is the biggest misallocation of capital in the history of mankind.

#36 Smoking Man on 07.02.15 at 7:38 pm

#1 TurnerNation on 07.02.15 at 6:01 pm
Sweeden just lowered their rates? Finnished.

#Smokingmen there.
…….

You got to be logical. For interest rates to go up, you need jobs and growth…wage growth.

zillion boomers who have money and are hording it for retirement..where is the grouth going to come from.

Our youth will never pick up a sign and protest, hey we are getting shafted on the pay check. .. But they will hold up a climate change sign… “Save the Trees, Emasculated soft Men frightend of confrontation.”

Teachers did number on em, especially prioritys.

I’m 55 years old, I just turned down a 200k fulltime gig at the tax farm. Why because its not enough. I would be forced to shut down my side business and my trading would be seriously restricted. And oh, no defind pentions.

Screw that.

Pretty bold move on part.. In life everything boils down to a bet. I’m thinking even at 55 I got more gigs I’m me.

If I’m wrong. Hire someone ambitious young fool to build out my small companies. Pay em nothing. Through in a green pease membership as the Christmas bonus they will love.

But I despise kiss asses and non entrepreneurs.

Obviously this mind set is counter culture to the current educational system.

And lets not forget the commies at city hall, queens park, and soon Ottawa.

I can’t stay here….my head will explode.

#37 not 1st on 07.02.15 at 7:39 pm

Stock indexes and ETFs didn’t even exist 15 years ago Garth, so what would you have her invested in? Nortel?

Mutual funds, of course. At the time they were the best option, combined with fixed income as per today. You sound bitter, possibly constipated. — Garth

#38 Freedom First on 07.02.15 at 7:40 pm

oops….. should read: ….many of them who are guilty…..

#39 not 1st on 07.02.15 at 7:45 pm

25 EarlySpring on 07.02.15 at 6:54 pm

—-

Get some kids

#40 GTA Observer on 07.02.15 at 7:49 pm

#25 Mr. Obvious

Money indeed is for choice. Where I come from, that’s called “‘F–k you’ money.”

#41 Leo Trollstoy on 07.02.15 at 7:51 pm

If I were, say, 30, this would scare me a lot.

I wouldn’t be worried a bit. 35 years of compounding a balanced portfolio? That’s insane money. Retirement assured.

Now if I were 55 and had a house with a giant mortgage, well, THAT would scare me a lot.

#42 observer on 07.02.15 at 7:52 pm

Is that the sound of the debt bubble popping or just the rate-cut trial balloons?

#43 espressobob on 07.02.15 at 7:54 pm

Donnas mistake was the fact she decided not to listen to her advisor. Ouch. Things might be different had she done so?

[email protected] or a commissioned advisor (salespeople) on the other hand aren’t worth a pile of beans in terms of advice.

A fee based advisor on the other hand can provide a decent strategy moving forward. No trailers, commissions or yearly maintenance fees. Moreover a quality advisor can save an individual from themselves!

#44 not 1st on 07.02.15 at 8:01 pm

To achieve a multi million dollar stock portfolio in 35 years, only couples can probably do it and it would require investing all of the one person’s wage while the other all goes to just living.

Thats assuming no kids or mat leave or job loss or forced retirement and both working all the way full time. Only place I know of you can get that is the fed govt.

#45 TRT on 07.02.15 at 8:03 pm

If I was 30…

I would get one foot into another country. The aging baby boomers are going to be stuck in Canada because of our plummeting loonie. Their pensions won’t go far abroad. Haha.

And good luck getting young professionals needed on other countries to pay for their healthcare.

Blame the politicians…create a mechanism to sentence past ones in the future.

#46 TRT on 07.02.15 at 8:03 pm

And Oh,

Canada cutting rates after the next meeting.

#47 Mathew on 07.02.15 at 8:05 pm

Also people are living longer but the amount of health care dollars is being shared by more and more patients and paid by less and less taxpayers. Think the government is going to take care of those medical expenses when you get older? Think again!

#48 omg the original on 07.02.15 at 8:08 pm

The politicians can ignore a few hundred thousand Donnas. They can’t look away from millions of them.

If I were, say, 30, this would scare me a lot.
——————————

What will the duplicitous, self serving politicians do when the Boomer hoards come a knockin’ over the next couple decades.

Whatever it takes to remain elected of course.

Which means taking care of us whining, voting Boomers.

But where to get the money and where to cut;

Raise corporate taxes – and further erode Canada’s competitiveness against emerging markets??? – suicide move for any politician.

Cut social programs – no cuts for the great hoard of Boomers who have nothing better to do than be politically active and vote. So cuts will have to be focused on the sub-Boomer crowd until enough Boomers croak off to tilt the electorate.

Reduce government DB pensions to retired Boomers – ha, ha, you are hilarious.

Increases in personal tax – now were are talking – nail the affluent GenX and Millenials. Most of them have no option other than to work in Canada and support us Boomers. Hopefully they do not learn how to vote.

Great to be a Boomer, just wish it didn’t mean being so F’in old.

#49 Investorz on 07.02.15 at 8:16 pm

Take 10 minutes to look at freehold houses in Toronto on Realtor.ca.

Start looking at Parkdale, still an unpleasant place to live, then move on to the area around Bloor and Dufferin.

It’s mad. The number of 1.3-1.8 million dollar houses will blow you away. Now look for a 750k house. The inside is old and even nasty.

Even with low rates, something isn’t right.

#50 Prince Charles on 07.02.15 at 8:17 pm

I hope everyone had a great Canada Day.

https://www.facebook.com/sun.king.9/photos/a.785277398186822.1073741826.785277364853492/785279471519948/?type=1

#51 anotherstabbinginsaskatoon on 07.02.15 at 8:19 pm

I’m from Saskatoon and I invested in knives and triangular push ups. Renting is a risky venture here, no large subdivision to escape from reality to run off to. I wouldn’t die in a condo if I was selling jib in one so I took a loan from the bank and prepped for when my time comes. I’m not afraid of them. The banks though, they scare me. Thanks to The G Mans sound advice I will rent with my head held high while I take a blade to the kidneys. I ain’t joking. I wish I would’ve started a business making body armor from metal scales. For people like me who just want to work and have something to show for it without getting stabbed. Falkniven, Spyderco, Cold Steel you name it. I’m gonna need it. House prices will slide 60% by the end of this thing. We Canadians reinvented stupidity. The enemies are not at the gates they are in our cities. Robbin and Stealin. RIP Mac Dre. Long live The G Man! Peace

#52 omg the original on 07.02.15 at 8:20 pm

#17 Shawn
That Donna never should have sold the house and become a renter? With the benefit of hindsight we now know that the house would have increased in value (a lot, in those 15 years).
————————————-

Shawn – you have fallen victim to a normal human frailty – giving advice with the benefit of perfect 20/20 hindsight.

Nobody knew house prices would go up as they have in Canada over the past 15 years.

Normal expected increases in prices is about the inflation rate.

But to try to eat and maintain a house on $14k/yr – you just can’t do it.

Property taxes of anywhere from $2500 to $3500.

Upkeep of $2000 to $5000/yr.

Utilities of $2000 to $4000/yr.

Of course she could have gotten a board – just what most seniors dream of.

When she sold it made prefect sense with the information at that time. Unfortunately she got cold feet when the equities market cratered and she’s paying for it now.

#53 Linda on 07.02.15 at 8:27 pm

Forced retired is a reality, it is true. For some, it is job loss – & I fear too much insistence on getting another job as good as or better than the one that was lost. Which for older workers might not be that easy – perceived as too expensive to keep & too expensive to hire. I’m not saying try, I’m just saying be realistic & don’t turn down a ‘lesser’ position. I’ve seen this time & again – those already employed seem to have a much better chance of finding another (better) position. Those not employed have a best before date & the longer one goes between employment the harder it gets to find anyone willing to hire you.

Also, there is the issue of ill health. Sadly, not all of us are going to live a robust, healthy life right up to age 90 plus. Illness or accident will prevent some from being able to work.

Regarding the youth of today, all I can say is stuff every dollar you can into a TFSA & try to ensure most if not all of those funds are not just cash. Dividends & growth in a balanced portfolio is pretty much the only way to go if you don’t want a poverty stricken old age. Or even a relatively young age. I’ve an acquaintance, age in their 40’s. Cancer has knocked that person out of the workforce – their main concern is staying alive – during what is generally considered some of the best earning years for educated individuals. The person in question might or might not have to worry about outliving their money but I’m pretty sure that given a choice, they would be more than happy to work for another 20-30 years.

#54 omg the original on 07.02.15 at 8:30 pm

So had a chat with my Bro inlaw in Sask that sold a good portion of his farm a couple years ago.

He didn’t want to sell, but got some ridiculous multiple of assessed value for it.

Of course this offer came after year after year of great weather and bumper crops.

Now things are a bit different.

Last year was an OK year but not bumper.

This year shaping up to be a real disaster unless they get rain real soon.

As he says, it reminds him of some of the years on the 1970s when he was a kid. So dry they just left the crops on the field – nothing to harvest.

The climate goes in cycles – the problem is that the cycles are so long nobody that makes the business decisions are around for more than one cycle.

#55 bigtown on 07.02.15 at 8:31 pm

I won’t comment on Smoking Man’s grammer or spelling issues but have to agree the Boomers are hoarding cash. Today I started imagining Mr. Poloz cutting the interest rate again and the loonie getting hammered. It really is reason enough to cut back to the most basic essentials. The income or return on investments is modest and you see Greece and Puerto Rico going into insolvency being tight seems appropriate.

#56 JSS on 07.02.15 at 8:35 pm

Re. #32 Mark on 07.02.15 at 7:33 pm

There is a big difference between investing in common shares of TransCanada Pipeline and Barrick Gold.

#57 TurnerNation on 07.02.15 at 8:43 pm

What about mandatory HarperCare premiums in the future? I’m sure US HMO corps are itching for my corpse. The corps.

#58 AfterTheHouseSold on 07.02.15 at 8:44 pm

#22 Andrew
blog post “Trust” 21 November 2014

Garth, Thank you for addressing Andrews questions regarding this post. My two late twenties millenials had the same questions as Andrew as it seemed to conflict with post “The Millenial Portfolio” 15 May 2014 which laid out the weightings of each etf.

They are buying XIN for their international exposure (which took a nice dip last few days). These two posts are golden Garth, a great opportunity for people to get started investing!

#59 observer on 07.02.15 at 8:44 pm

14 Mike S on 07.02.15 at 6:31 pm

“If I were, say, 30, this would scare me a lot.”

You mean NDP scares you?

here is one solution, take from these boomers that do well (the 5%) and from the workers, and from the corporations, and distribute it to the 95%

Should work right?
==============

Here’s a better solution, for the people who work in other countries and pay taxes to the other countries, but reap the benefits in Canada. Stop them, make them pay taxes here as we’ll as the other country

I do, when I work in the STATE, I pay taxes in the USA and also taxes in Canada.

#60 Christopher Lackey on 07.02.15 at 8:46 pm

Well, the advisor did what he could.

All the tidbits of wisdom (of varying quality) on here are good, but the most important is to take a long term view, no matter how old you are. The worse it drops the more idiots sell the harder it snaps back. Its never different this time. TSX, S&P, banks, whatever, all up triple digits from the depths of the financial crisis plus dividends (notice the seven years)

#61 wizard sleeves on 07.02.15 at 8:51 pm

The richest generation in history who pillaged the system still come out as failures. There is little hope for most Millenials who will have to pay for this bullsh*t.

#62 Karma on 07.02.15 at 8:53 pm

#18 zee on 07.02.15 at 6:41 pm
“You always show the extreme of any situation?

My dad and all his friends have retired and they are all doing fine. I am sure this is the case for millions of other retired folks as well.”

How do you know some of his friends aren’t quietly struggling? Old people have pride and will hide their hurting in front of people they know.

#63 gut check on 07.02.15 at 8:57 pm

So at what age do we stop calling it “being fired” and instead saying we were “forced into retirement?”

#64 TurnerNation on 07.02.15 at 9:01 pm

Good thing ‘simulated’ is no longer here with her macabre advice.

#65 not 1st on 07.02.15 at 9:02 pm

Mutual funds, of course. At the time they were the best option, combined with fixed income as per today. You sound bitter, possibly constipated. — Garth

—-

I had those in the 90s and they returned exactly zero. Even had an advisor and all he every did was send me a note sayings it will all come back, but it didn’t.

And I am bitter after seeing your recommendation to buy preferred again. I’ve ridden two of these stocks down in the past few years. They aren’t solid at all, most are susceptible to interest rates and resets.

Then you bought badly. I was right. Bitter old guy. — Garth

#66 Kilby on 07.02.15 at 9:08 pm

#6 LJ on 07.02.15 at 6:15 pm
All, thanks to the Boomers…

Not all of us, we keep reading about all the Boomers who threw their money away on trips, boats, RV’s etc….We saved as did most of our friends, all in 60’s, not many rich but able to pay our own way AND help our 20 to 30 year old kids with school and a few emergencies….

#67 Tiger1960 on 07.02.15 at 9:18 pm

So Donna,s husband never listened ?
And Donna as well!
Look how that worked out for her!

#68 Llewelyn on 07.02.15 at 9:20 pm

As I understand it ETF’s became a popular alternative to mutual funds for their lower feue structure, tax advantages and the ability to by and sell throughout the day.

Considering that sizable corrections in the value of assets contained within an ETF usually occurs quite quickly the enhanced liquidity of an ETF seems attractive.

What I am having trouble understanding is how ETF’s that include derivatives can avoid liquidity crisis similar to the financial crisis of 2008.

If large institutional investors get caught in another liquidity crunch due to leverage what will protect the value of ETF’s with derivative components? Will small investors holding ETF’s with derivative components be able to liquidate in time to avoid an evaporation of their assets.

I know a meltdown is extremely unlikely but there is something about the clever application of derivatives that
still scares me. Any thoughts?

#69 Roial1 on 07.02.15 at 9:23 pm

“Great to be a Boomer, just wish it didn’t mean being so F’in old.”

Now there is a solid truth.

BUT!

As long as you are breathing,

It’s always a “nice day”.

#70 Smoking Man on 07.02.15 at 9:24 pm

You all remember that thing , movie script I was meant to addition for..send in a video..of the shit script.

Bahaha, at Senica last Saturday. I blanked out, or all I can remember was ordering a shot after wine 7.

I just discovered not 20 min ago a video on my phone, additioning for that role….a self video.

Holy crap….hallarious and scary…I’m going to delete it shortly. Funniest was when I was attempting to UN zip my zipper while filming, while betting the director I was more of a man. and fell crashing to the floor. All you hear is me laughing like a mad man. With the ocational ouch and moan. Where the $&-$#&-%/is my phone.

But now I’m really worried about what lerks in the deleted folder of the Greater Fool Deleted Suppositorie.

Time to take down the drinking just a tad.

That was an eye opener..

#71 Freedom First on 07.02.15 at 9:24 pm

#37 not 1st

You sound bitter, possibly constipated. – Perfect!

#72 Whyusohappy on 07.02.15 at 9:27 pm

1. Gree e votes yes, markets take off fed raises rates and canada needs to folollow… Housing market gets a mini scare
2. Greece votes no, 300 billions are written off, a little bit of credit crunch, nobody is le ding for a while, rates are negative we get a little recession in canukistAn … Houses are failing with no demand for a while
Both scenarios boising is 20% off by next spring! Pick o e!

#73 Linda on 07.02.15 at 9:32 pm

#60 – how you end up being forced into retirement isn’t the issue – the issue is not being able to find another job, even a ‘lesser’ position when you are still willing & able to work. ‘Being fired’ has always implied fault on the part of the person being fired. ‘Laid off’ is still ‘being fired’, albeit with some possibility of being re-hired by the company once business picks up again. Forced into retirement usually implies either being laid off with no possibility of being re-hired or some life event – usually illness or accident – that prevents one from being able to continue to work in the position they previously had. For some, that translates into not being able to work due to taking care of someone else – spouse, child, parent – which depending on circumstances is definitely a full time job, except you don’t get any holidays or days off.

#74 Mark on 07.02.15 at 9:38 pm

“What I am having trouble understanding is how ETF’s that include derivatives can avoid liquidity crisis similar to the financial crisis of 2008. “

Your thought are quite valid. Usually its a pretty good idea to stay away from such products, as the reason for using the derivatives is less-than-wholesome and actually serves to remove important characteristics (such as currency diversification) in a portfolio.

Unfortunately these ETF products, including, but not limited to, double and triple leveraged ETFs, currency hedged ETFs, and even relatively bizarre products such as the VIX ETF, or the ETFs of gold or oil futures — are aimed heavily at “retail” investors who really don’t know any better. Staying away from the gimmickry can protect you from a lot of problems.

#75 Mark on 07.02.15 at 9:41 pm

“There is a big difference between investing in common shares of TransCanada Pipeline and Barrick Gold.”

Neither company is particularly well managed. Each sector has its proverbial “day in the sun” at some point in the overall cycle. The example was merely to illustrate the absurdity of recommending a single, particularly in-vogue security at a given time, rather than a more diversified portfolio (diversified in terms of asset classes, and strategies!).

#76 John in Mtl on 07.02.15 at 9:47 pm

@ #74 Mark on 07.02.15 at 9:38 pm

“What I am having trouble understanding is how ETF’s that include derivatives can avoid liquidity crisis similar to the financial crisis of 2008. “

Your thought are quite valid. Usually its a pretty good idea to stay away from such products, as the reason for using the derivatives is less-than-wholesome and actually serves to remove important characteristics (such as currency diversification) in a portfolio.

So, how do you identify those “products”? Those derivative schemes do scare me also… if it turns out I don’t have enough information or education once I start on my self-directed investment journey.

Lesson one, kid: stop reading Mark. — Garth

#77 John in Mtl on 07.02.15 at 9:50 pm

Well, I’m sure glad I “wisened up” a few years ago and started putting money away for old age. Getting a better position at work (and higher salary) sure did help though!

Boomer on not, there comes a time when you have to “hoard” money for the future, lest you end up like Donna.

#78 Randy on 07.02.15 at 9:59 pm

Where’s the Boom, Bust, Echo guy ?

#79 Cash is King on 07.02.15 at 10:01 pm

Alas, I see this problem far too often. Included in my employment responsibilities is to administer our cities heating assistance program. My city is the one with the lowest housing prices in Canada and a diminishing big 3 footprint.

In the past we rarely received assistance phone calls from anyone over the age of 60. In the past 2 years we now see this scenario. Wife with a paid for house; spouse has passed on; savings gone; house repairs falling behind, CPP, OAS and the survivor portion of the husband’s pension, if she’s lucky. Behind in the hydro, gas, furnace and water tank rental and property taxes. She does not want to sell the house (Too many memories) Unable or ashamed to ask the children for assistance. They may not have the funds to assist anyway.

If the hubby’s survivor pension does not place her over the income limit, we prevent the disconnection of the hydro and/or gas, pay some or all of these arrears. Send her to another government agency for the property taxes (that agency is already tapped out) and tell her we cannot help her again for 12 months. She will call again in 8 months, be shut off in 9 months and will finally break the news to the kids that she is out of options.

House sells for far less than what it should due to lack of repairs and the 1990’s styling. Balance of the story will be similar to Donna’s. House cash placed with [email protected], she moves to a $1,000 month high rise in a better area of town at the kids urging and she slowly runs out of money.

#80 experienced.optimist on 07.02.15 at 10:04 pm

Tonight’s lesson on funding retirement is something that I have been wanting to address for some time. Such a broad range of issues. When I retired in 2007 I had investments in a DC plan that was well managed, RRSP’s and Spousal RRSP’s , managed in a self directed account. But what does one do when the market starts tanking right at the time you want to start withdrawing funds (SWP). And not knowing how long it will take the markets to rebound and then make up lost time and money. What would this lady’s adviser have advised at the time if she retired right at the start of a major correction, not years in advance as the article suggests and required funds to begin her retirement. In my case , right or wrong , I went very conservative to avoid losses for the up coming years of withdrawal requirements. I did miss the rebound that stared occurring around 2009, 2010 and am still conservative. But I did very well on the dot com bust rebound so that was OK.

About the time I retired I came across a spread sheet from some investment group that presented charts showing various scenarios of what happens to retirement funds invested in a basic balanced portfolio at the time of a market crash. The withdrawal rate was , I believe around 4%, but the charts showed the results of what would happen if the market went down by a large percentage at various stages of retirement. Needless to say it was not good if the funds started to be used up right at the beginning of retirement with a major downturn. These scenarios got a lot better the further out into retirement one was, when a downturn occurred.

I tried Google to try and find this or a similar chart but came up empty.

Garth, you present the balanced investment strategy very well and I was a believer long before I found this blog. But I think you also miss out that a lot of us are already retired or are just getting there and information is also needed on developing Systematic Withdrawal Plan (SWP) ideas. Not all of us are in the accumulation phase any more and not all of us plan on leaving large estates. We just want to get to 90+ and be healthy without running out of money.

Then stop trying to time the market. A balanced portfolio lost 20% in 08-09 and bounced back entirely within a year. You should have snoozed through it. — Garth

#81 Scumop on 07.02.15 at 10:07 pm

This boomer won’t be protesting for us to go out Greek style with inheritable pensions for 44 year olds. I’ll be working until I can no longer shake a mouse at the screen. Its what I must do for going into technology as a code grunt, and marriages which cleaned me out. Pay has fallen over the last 15 years by 50% or so due collapse of industry I was in. Coder = commodity labor.

No matter. I have the brains and knowledge to make the best of it, unlike Donna. So though my monthly dip might be nickels and dimes, the flow will never stop. And so long as I have spare nickels and dimes now, they feed the ETFs.

I’m learning to drink.

#82 Smoking Man on 07.02.15 at 10:11 pm

Oh one more story from Senica.

It was Sunday morning. Or Wend morning. I was hung over huge. Senica mailed me these 25 dollar coupons for table play. I have one for every week in the summer.

Typically I go to the ruolett table. Put it on Red or Black . they give me a 25$ chip if I win.. Then I do it again
If I win, I’ve paid for my gas..

We were leaving, and I remembered the coupon. My wife is checking out.. So I walked toward the table.

I lost 1000/Bucks night before.

As I’m walking toward it.. Green is in my mind. 00 zeros .that’s what I’m betting on..clear as day in my mind.

I get to the table and place the 25& coupon on black. My logic , lost money, go 50 50 and make gas money..

The little white ball lands on green 00.

That my friends is the UCC at work..

Never use logic to second guess it.

#83 Keith on 07.02.15 at 10:11 pm

Sam died fifteen years ago, in his sixties?
Paid for house. Commendable
No life insurance outside of mortgage insurance.
No company pension.
RRSP’s of 50k.

For a guy living and working in Canada at the time he was doing so, he did way worse than his peers. Most of his generation had a company pension, opportunities to buy real estate on one income at modest prices, and received wage/salary increases above the rate of inflation for many years. Sam missed a lot of opportunities, and exhibited poor planning.

Donna didn’t listen to her advisor, had no long term plan in place, timed the market during a crisis and ran out of money.

These people are a lesson to young people everywhere about how a comprehensive, long term financial plan is essential to success. Sam and Donna did some things right, but left out too many elements of a proper financial plan and failed to educate themselves so that they could get the best out of their advisor. Sad time for Donna.

#84 LL on 07.02.15 at 10:14 pm

Ooopppssss…..

They just say on the news that interest rate will go higher…but …not in September, no… it will be in ….January!

I knew they will say/do something like that!

(And in January they will say IR will go higher in March…et bla…bla…bla…bla!)

#85 Renter's Revenge! on 07.02.15 at 10:15 pm

Re. #56 JSS on 07.02.15 at 8:35 pm

Re. #32 Mark on 07.02.15 at 7:33 pm

There is a big difference between investing in common
shares of TransCanada Pipeline and Barrick Gold.

Not according to Mark there isn’t.

“similar metrics” bwahahaha!

Come to think of it, had she gone all in on BCE, Donna could’ve been living 25% “higher on the hog” with it’s 5% (and growing with at least inflation) dividend.

Why are people so scared of owning businesses?

#86 MikeK on 07.02.15 at 10:15 pm

And then there’s the children of those broke wrinklies; already over investesd in real estate doing the right thing by supporting their parents and in-laws, thereby impacting their own retirement plans. Wait, that’s me.

#87 gladiator on 07.02.15 at 10:18 pm

Would this be the next step in Canadian pension reform?

http://www.gettyimages.co.uk/detail/news-photo/eskimos-ending-an-elderly-persons-life-by-throwing-them-news-photo/541321977

Garth, this is a legit pic. Delete?

#88 Panhead on 07.02.15 at 10:23 pm

#63 gut check on 07.02.15 at 8:57 pm
So at what age do we stop calling it “being fired” and instead saying we were “forced into retirement?”

Bud of mine who worked for a large telecom for 40 years was called into a meeting along with everyone else in his department. They were told to take a buy out or be willing to be placed “climbing poles” again and not necessarily anywhere near where they live. They got the message and all signed up. My bud wasn’t ready to retire as is putting 2 kids through university. Now he wasn’t technically fired … but …

#89 Boris Dumplesworth on 07.02.15 at 10:26 pm

Garth

Could this Greece leaving the euro thang lead to WW3……if the Greeks leave the euro and fall into the arms of Putin and the Ruskies gets their long sought after Naval base in Pirraeus…..consequences could be dire….after all WW1 was started by an obscure European aristocrat getting shot by a common criminal in Sarajevo!

http://www.theguardian.com/world/2015/apr/07/alexis-tsipras-flies-to-moscow-speculation-greek-bailout-vladimir-putin

“Russia has expressed interest in Greece’s transport sector and the ports of Piraeus and Thessaloniki.”

#90 Get Serious!!! on 07.02.15 at 10:26 pm

Are you freakin kidding me she blew through 200,000 in a year! She deserves to be a pauper I have no pity for her unless she’s claiming dementia for crying out loud I could live on that much like a King for at least 5 years if I didn’t work and double that like she had that would be close to 10 – 12 years and I eat good food not KD it’s called using your brain! If people simplified their lives they would find life much more enjoyable instead of being so gall darn greedy!!!

The time frame was seven years. — Garth

#91 Sam on 07.02.15 at 10:29 pm

Donna’s you should be crying why you gave birth to a son like that who not there for you now. What a country!

#92 not 1st on 07.02.15 at 10:31 pm

#71 Freedom First on 07.02.15 at 9:24 pm

You sound bitter, possibly constipated. – Perfect!

—-

Yup, but I haven’t sworn off women yet.

#93 Washed Up Lawyer on 07.02.15 at 10:33 pm

Dear 30 Somethings,

Can I weigh in with some inconsequential and inane advice with respect to retirement?

As a former “gun crank”, the biggest mistake I made with respect to retirement was selling my fine collection of sporting firearms, handloading equipment, powders, bullets, primers and brass. Then I let my PAC or PAL (the licence necessary to acquire firearms) expire.

The Missus would not sign my application form for a renewal. She spotted some deficiencies in my makeup. I still love her a ton.

Harvesting venison is an age old tradition here in Alberta. Mmmmm, backstrap (hunting term for sirloin).

If you are young, get licensed and head out to the breaks of the Red Deer River northeast of Drumheller. Fat waddling Mule Deer all day long.

Ask a farmer if you can hunt on his land and he will ask you to shoot four of them. Rats with hooves.

Sorry Garth, but this is the best damn gun crank blog ever.

WUL

#94 Mark on 07.02.15 at 10:35 pm

“So, how do you identify those “products”? Those derivative schemes do scare me also… if it turns out I don’t have enough information or education once I start on my self-directed investment journey.”

It’ll be disclosed in the prospectus, and in the holdings. For instance any time you have ‘leverage’ in an ETF, by definition, you have some sort of counterparty risk. The word ‘currency hedged’ is also a “code-word” for derivatives — usually currency futures, forwards, or swaps.

“Lesson one, kid: stop reading Mark. — Garth”

Really unfortunate and completely uncalled for that you’d say something like that. Its your blog, but that’s no reason to treat contributors nastily.

“There is a big difference between investing in common shares of TransCanada Pipeline and Barrick Gold.”

Every business has its proverbial ‘day in the sun’, and eventually its moments of darkness. Investors preserve and grow their wealth by being diversified and balanced, rather than going all in on an individual security. The point I made was that its dangerous to not be diversified. Diversification and rebalancing are some of the few “free lunches” out there.

#95 Drunk Actuary on 07.02.15 at 10:42 pm

Damn, Shangai stock market is literally collapsing right now

#96 Walt N Pond on 07.02.15 at 10:43 pm

Is the Smoking Man a transcendentalist?…read below and decide!

“Among the transcendentalists’ core beliefs was the inherent goodness of both people and nature. They believe that society and its institutions—particularly organized religion and political parties—ultimately corrupt the purity of the individual. They have faith that people are at their best when truly “self-reliant” and independent. It is only from such real individuals that true community could be formed.

#97 Jezebel Pike on 07.02.15 at 10:56 pm

#80 experienced.optimist on 07.02.15 at 10:04 pm

You raise some good points…thank your stars you were not a Japanese investor recently retired in 1990 when the bubble burst….20 years of stagnation…basically you lost your shirt (or Japanese fundoshi loin cloth if you will) between the ages of 65-85…the market bouncing back recently came a bit too late for some!

You don’t understand what a balanced portfolio is, do you? — Garth

#98 Leo Trollstoy on 07.02.15 at 10:58 pm

Lesson one, kid: stop reading Mark. — Garth

Bingo. We have a winnah!

#99 Shawn on 07.02.15 at 10:58 pm

ETFs were invented in Canada

not 1st on 07.02.15 at 7:39 pm
Stock indexes and ETFs didn’t even exist 15 years ago…

****************************************
Agreed they are relatively new and not many existed 15 years ago.

ETFs were first traded on Toronto in 1990. There was one called HIPs (Hundred Index Participation units). The other early one was, I believe TIPS

http://app.tmxmoney.com/etp/articles/madeincanada

For some reason Canada does not celebrate this innovation. Even the TSX gives almost no detail.

https://books.google.ca/books?id=APjzmEqsL04C&pg=PA71&lpg=PA71&dq=ETFs+invented+in+Canada+HIPs+TIPs&source=bl&ots=GIhDn4X6nR&sig=4k0j6_IQ4hnnNm_Vx76iRNrN2OM&hl=en&sa=X&ei=KfqVVZ3RJ4idNtKRsvAD&ved=0CCQQ6AEwAA#v=onepage&q=ETFs%20invented%20in%20Canada%20HIPs%20TIPs&f=false

#100 Leo Trollstoy on 07.02.15 at 11:00 pm

Why are wage slaves so scared of owning businesses?

Fixed that for you.

#101 Doug in London on 07.02.15 at 11:00 pm

@LJ, post #6:
Boomers have nothing to do with, and aren’t to blame for the reason some people, like Donna, sold their portfolio when it was cheap. At that time they should have been cashing in their fixed income investments (which dropped little or not at all) and been on a frantic buying binge of those DIRT CHEAP equity funds. Those who missed that Boxing Week blowoff fire sale in 2009 had other buying opportunities, like stocks in 2011, REITs in 2013, and preferred share ETFs right now, just to mention a few in recent times.

#102 Jezebel Pike on 07.02.15 at 11:01 pm

#70 Smoking Man on 07.02.15 at 9:24 pm
You all remember that thing , movie script I was meant to addition for..send in a video..of the shit script.

Bahaha, at Senica last Saturday. I blanked out, or all I can remember was ordering a shot after wine 7.

I just discovered not 20 min ago a video on my phone, additioning for that role….a self video…”

Very unoriginal…..this sounds like an out-take from the Hangover movies….were Mike Tyson and his tiger in the video?

#103 Spectacle on 07.02.15 at 11:07 pm

In response to :

#25 EarlySpring on 07.02.15 at 6:54 pm
So what does a guy do who is 28? Debt free. Averaging annual income of 125-135K……. But what else can a guy be doing? We are trying to create plans and love hearing thoughts and tips from intelligent people, blog dogs and tips for us? I know we are lucky to have what we got but I don’t want to screw up these young years…..”
—————-
Great start: can’t ascertain what careers you have, beware, career security is a very tough thing to be assured of!

Life comes down to risk management.

I’ve got a baby boy due any day now, and I understand from the last 9 months of helpful advice ( um, not so much actually) that it’s really a “do it for yourself” world. If your fundamentals ( reading baby books, or reading Garths blog , both=fundamentals) of risk management are adhered to, in creating your plan!

Tonight’s blog indicates how Not to do things: so plan your work, and work your plan. You sound wise enough to seek and learn from advice, that’s good.

Start a business, learn, because after all, creating and planning a balanced and diversified, liquid portfolio , is exactly like running a business. Dividends and rewards come from that.

Do write in with your stories : some of us are interested in hearing creative success stories, like yours will be.

Regards all,

#104 old gringo on 07.02.15 at 11:12 pm

Greece is a very small problem………..China and its stock market is the bull in the china shop.
watch out

#105 not 1st on 07.02.15 at 11:24 pm

Donna’s solution was so simple. 15 years ago, the housing market hadn’t even begun to pick up. She should have sold the house, taken $100k and bought a small 1 BR condo and invested the rest. That should hve brought in n easy $1000 a month, plus her pension plus cpp and OAS and she would be smiling and then dipped into the RRSP for a few hundred a month. yeah, she won’t be livin like a princess but she would be doing alright.

#106 young & foolish on 07.02.15 at 11:25 pm

What does it mean to be “financially illiterate”?
Is there a more idiotic term? Was it invented by mutual fund managers?

#107 not 1st on 07.02.15 at 11:26 pm

#104 old gringo on 07.02.15 at 11:12 pm

Greece is a very small problem………..China and its stock market is the bull in the china shop.
watch out
—-
I don’t know any one who owns stocks in china.

#108 NotAGreaterFool on 07.02.15 at 11:26 pm

Just weeks ago the Big O would not speak about the prospect of a recessions.

Today Bank Of America said Canada is already in a recession (likely).

Where is the Big O today? Crickets….

When election campaigning starts, it will be too late to deflect and ignore.

#109 young & foolish on 07.02.15 at 11:30 pm

” The pollsters found 48% of retired people say they were forced to stop working by circumstances – usually job loss. ”
So much for working into your retirement years …

#110 Harmon Chan on 07.02.15 at 11:30 pm

#105 not 1st on 07.02.15 at 11:26 pm
#104 old gringo on 07.02.15 at 11:12 pm

Greece is a very small problem………..China and its stock market is the bull in the china shop.
watch out
—-
I don’t know any one who owns stocks in china.”

Google butterfly effect, although you may start to tremble….

#111 Smoking Man on 07.02.15 at 11:32 pm

#96 Walt N Pond on 07.02.15 at 10:43 pm
Is the Smoking Man a transcendentalist?…read below and decide!

“Among the transcendentalists’ core beliefs was the inherent goodness of both people and nature. They believe that society and its institutions—particularly organized religion and political parties—ultimately corrupt the purity of the individual. They have faith that people are at their best when truly “self-reliant” and independent. It is only from such real individuals that true community could be formed.
….

You got it wrong, I’m much more supreme.

That’s a lable, how dare you..an us and them thingee.Very Bad in the art of Herdonomics.

I’m just a drunk who has vivid day dreams..that’s it.

I belong to no tribe.

That’s what makes living tolerable.

#112 Doug, sober in London on 07.02.15 at 11:39 pm

@Drunk Actuary, post #95:
Keep your eyes open, a buying opportunity may be coming soon!

#113 John in Mtl on 07.02.15 at 11:44 pm

@ #89 Boris Dumplesworth on 07.02.15 at 10:26 pm

if the Greeks leave the euro and fall into the arms of Putin and the Ruskies gets their long sought after Naval base in Pirraeus…..

Hahaha! Mr Putin is way smarter than that. Quit beleiving all that presstitute lamestream media BS.

#114 Hap on 07.02.15 at 11:56 pm

China’s stock market down 30%.

Garth , let me guess, your response is it can’t happen in USA economic Renaissance land right?

Moar popcorn here yee hear eye.

#115 Interstellar Old Yeller on 07.02.15 at 11:58 pm

#64 TurnerNation on 07.02.15 at 9:01 pm
Good thing ‘simulated’ is no longer here with her macabre advice.

We don’t need her here today. Donna’s story and the comments (especially Cash is King #79) are depressing enough.

#83 Keith: I wonder how much bigger the portfolio would have been if Sam hadn’t smoked and spent only half that money (on booze, gambling, whatever) and invested the other half.

Well, living in downscale accommodations won’t impress your friends but the government pension and various programs will help keep Donna housed and fed. If you’re used to a better lifestyle and more financial independence, though, this is a huge blow to ego and spirit.

What, if anything, were you able to suggest to her, Garth?

#116 kommykim on 07.03.15 at 12:00 am

RE: #68 Llewelyn on 07.02.15 at 9:20 pm
I know a meltdown is extremely unlikely but there is something about the clever application of derivatives that
still scares me. Any thoughts?

Don’t buy ETFs that use derivatives. Buy simple index ETFs instead.

#117 Andrew on 07.03.15 at 12:07 am

#58

Thanks for pointing that post out I hadn’t seen that one. Looks like I need to move some stuff around as I wasn’t aware the post from Trust was part of a multi account portfolio. Lost a good chunk on REITs over the last month or so sadly so I’ll try and keep what I can of that for now.

I just wanted a simple portfolio I can stick to for the long term. By any chance do you know specific ETFs to buy to match the portfolio Garth suggested in the Millenials portfolio?

#118 Ponies for the unwashed masses on 07.03.15 at 12:10 am

#107 not 1st on 07.02.15 at 11:26 pm
#104 old gringo on 07.02.15 at 11:12 pm
Greece is a very small problem………..China and its stock market is the bull in the china shop.
watch out
—-
I don’t know any one who owns stocks in china.
————————
Obviously, you’re not Chinese.
Get on with the program, comrade in training.

#119 Linda on 07.03.15 at 12:33 am

#45 – re advice to get a foot in another country with the implication that way one can avoid dealing with (paying for?) a growing population of impoverished seniors – you might want to check out aging populations by country. Most of the world has a rapidly rising portion of their population as seniors. There was a really good info graphic which showed in colour percentage of aging population by country/continent. There were not that many places where the senior population was not estimated to grow rapidly over the next couple of decades.

#120 Linda on 07.03.15 at 12:47 am

Further to aging populations world wide, just checked out a site – nation master – which listed countries with highest percentage of aged populations. Most numbers were as of 2009. Japan (no surprise) still holds the #1 spot for having the highest percentage of seniors overall. Canada was #21 on the list.

#121 young & foolish on 07.03.15 at 1:04 am

“You got to be logical. For interest rates to go up, you need jobs and growth…wage growth.”

Haven’t you heard? America is booming!

#122 Retired Boomer - WI on 07.03.15 at 1:32 am

Well back from that summer vacation to lake Erie, where we met our friends from Afton, NY. Nice little (old) tourist trap spot on lake Erie near Ashtabula and Erie, PA.

While I don’t ‘do’ tourist traps it was a hoot. The pub crawl was a challenge but, we earned the tee shirts!

Then up to Buffalo to visit my old boss. Old is the keyword, she turned 82. Hubby croaked off, lives in an assisted living facility in West Seneca, NY. Expensive at $4800 a month, but she can handle it. Good investor for years a balanced portfolio, too, at 65% stocks 35% Bonds. She will NOT be a Donna…well maybe should she live to 110. The adult dementia was evident in the short term memory loss.

Perhaps that is why I still smoke, drink, and feel unusually studly at times, do NOT want to see 82, except on my speedometer.

You don’t need a TON of money when you live for the determined exit. I’ll let you know if I live to regret my choice. In the meantime, why don’t most bars in OH stock brandy?? Heathens….

#123 Tony on 07.03.15 at 1:58 am

I think you can blame the lazy millennials for most of this. No demand for anything has resulted in low interest rates which is bankrupting the seniors resulting in deflation from both ends of the age spectrum.

#124 Tamsen on 07.03.15 at 2:12 am

“not 1st on 07.02.15 at 11:26 pm

#104 old gringo on 07.02.15 at 11:12 pm

Greece is a very small problem………..China and its stock market is the bull in the china shop.
watch out.
—-
I don’t know any one who owns stocks in china.”

Shanghai stock market down 20% in the last 5 days …

http://blogs.barrons.com/emergingmarketsdaily/2015/06/26/china-stocks-tumble-shanghai-down-20/

#125 Carpe Diem on 07.03.15 at 2:27 am

>100 Leo Trollstoy on 07.02.15 at 11:00 pm

> Why are wage slaves so scared of owning businesses?

> Fixed that for you.

Easy. It isn’t that easy!

Accounting, corp fillings/annual reports, HST, CRA, Salary or Dividends, T4’s/T5’s, etc!!!

As a wage slave, you only have to pay taxes and your annual tax return ain’t that hard. You can enjoy life.

Having to both file personal and corporate taxes and all the above, can become overwhelming.

You make more but unless you have an exit strategy maybe it ain’t worth it!

Me, I’m figuring out the exit strategy and my exit!!!

#126 greg on 07.03.15 at 2:29 am

As a person in their 30’s i agree that we should be afraid. All of these unprepared baby boomers can only mean higher taxes.

Besides maxing out TFSA’s what else can i do?

Thanks for all you do!

#127 Longterm on 07.03.15 at 2:51 am

#107 not 1st on 07.02.15 at 11:26 pm

I don’t know any one who owns stocks in china.

____________

Maybe true but there are many of us. Sold half my China etf ten days ago when up 115% in 8 months and the other half is still riding and hovering around 100% up. If it drops another 10% I’ll sell the second half, or it might bounce. Either way, easiest money I’ve made in a year or two.

#128 Mister Obvious on 07.03.15 at 3:44 am

#106 young & foolish

What does it mean to be “financially illiterate”? Is there a more idiotic term?
——————————

Perhaps you have a point. A better term would be ‘functionally innumerate’.

A ‘functionally illiterate’ person would be someone who perhaps knows the alphabet and can recognize basic words or phrases but is unable to fully comprehend a newspaper article or write down a cohesive sentence. I believe there are a few such people who comment on this blog from time to time.

A ‘functionally innumerate’ person is one who is familiar with natural numbers and perhaps simple integer addition and subtraction but fails to comprehend ratios, percentages, exponentials and orders of magnitude.

You know… people who confuse ‘millions’ with ‘billions’ cause they sound kinda the same. I get the feeling they also visit here occasionally.

You could make a reasonable argument that the term ‘financially illiterate’ should make way for the more accurate term ‘functionally innumerate’ which is largely what this blog has been battling against for years.

How many years? I just can’t seem to count them.

#129 The American on 07.03.15 at 4:17 am

…and there it is. Canada headed for recession. Duh. http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com//investing/canada-is-already-in-a-recession-says-bank-of-america-and-the-loonie-is-set-to-get-hammered

#130 dosouth on 07.03.15 at 6:19 am

#7 I’m stupid on 07.02.15 at 6:19 pm – lost for words here. Someone who took action and invests in family. Your mom is very lucky and raised a great bunch of kids…well done and made me smile and glad there are still people like you around.

#131 Steve French on 07.03.15 at 6:31 am

Just socked away another $1380 from my fort-night paycheque.

Saving $3,000 per month, like clockwork.

No debt and renting.

I’m building my nestegg. But I’m still holding back on moving into the market.

Garth says don’t try time the market, but my spidey sense says something is amiss in the “UCC” as Smoking Man would say.

Everything is oversold and everyone is pickling in debt.

Greece is starting to look like a disaster and Lagarde is worried about the precedent for the other PIIGS.

Shanghai has lost $3 trillion in 2 weeks.

What’s the problem with holding off to October to see what Janet does? Market ain’t gonna go up by much, if anything, and if things go bad, it sure could fall by a lot.

There’s rumbling and flashes on the horizon.

Get ready.

Winter is coming.

And there’s a darkness on the edge of town.

#132 Llewelyn on 07.03.15 at 8:17 am

Over the past few months I have noticed that a return of 7.0% per annum has become a minimum standard for balanced investment portfolios. Constant reinforcement creates expectations for both investors and the institutions earning their living selling investment instruments.

There is a strong whif of hubris in the air these days that could become intoxicating for both sides of the investment game.

What I have observed over the years is that once the management of companies, politicians, government employees, investment advisors, financial institutions and citizens planning for retirement embrace a minimum standard everyone becomes judged by this standard.

Nortel, Enron, Worldcom, Tyco, Bernie Madoff are just a few examples of how hubris evolved into avarice and how self confidence evolved into a confidence game.

Real estate became attractive by evaluating historical increases in market value. Leverage combined with escalating property values created a reason to purchase as much house as you could afford.

The history of escalating stock indexes supports the purchase ETF’s, mutual funds or other instruments.

My concern is that once minimum expectations become ingrained within the general population avarice has a tendency to feed on confidence.

Every player in the game wants to be seen in the best light possible and unfortunately the greedy usually become blinded by all this light. (Apologies to ‘The Boss’)

People can expect whatever they hope for. The reality, as I have stated often, is that a balanced and globally-diversified portfolio returned just over 7% during the last decade, which was one of wild swings and the worst market drop in 80 years. This, then, is not a bad benchmark for long-term investors. It certainly does not mean a steady 7% annually or .6% monthly. If you can’t live with fluctuations, then you have other things to worry about. Like Donna. — Garth

#133 Danforth on 07.03.15 at 9:14 am

Some are rich – about 5% of the cohort has a million in addition to their real estate.

If you don’t have a company pension, isn’t having 1M + a mortgage-free residence at retirement age simply being “on track”, and not especially rich?

‘Rich’ is relative. They are. — Garth

#134 AfterTheHouseSold on 07.03.15 at 9:25 am

#117 Andrew
“I just wanted a simple portfolio I can stick to for the long term. By any chance do you know specific ETFs to buy to match the portfolio Garth suggested in the Millenials portfolio?”

“The Millenial Portfolio” 15 May 2014
Weightings for your portfolio

“Trust” 21 November 2014
Check out Garths “examples” of ETFs. My millenials have bought these “examples” (wink wink, nudge nudge) for their portfolios along with XIN for their international exposure. They have also been buying CPD (on sale!) as part of their preferred weighting.

Of course you will have to decide what is best for you.

#135 Obvious Truth on 07.03.15 at 9:38 am

Nobody in their thirties even contemplates running out of money at eighty.

A truly sad story which is likely more the norm than we think.

So hard to make decisions in times of stress. It’s why you start early and make your whole family aware of how the finances are organized.

#136 Maybe on 07.03.15 at 9:48 am

I had a dream about you last night Garth. I think it is a sign.

#137 Holy Crap Wheres The Tylenol on 07.03.15 at 9:56 am

#36 Smoking Man on 07.02.15 at 7:38 pm
#1 TurnerNation on 07.02.15 at 6:01 pm
Sweeden just lowered their rates? Finnished.
#Smokingmen there.
…….
You got to be logical. For interest rates to go up, you need jobs and growth…wage growth.
zillion boomers who have money and are hording it for retirement..where is the grouth going to come from.
Our youth will never pick up a sign and protest, hey we are getting shafted on the pay check. .. But they will hold up a climate change sign… “Save the Trees, Emasculated soft Men frightend of confrontation.”
Teachers did number on em, especially prioritys.
I’m 55 years old, I just turned down a 200k fulltime gig at the tax farm. Why because its not enough. I would be forced to shut down my side business and my trading would be seriously restricted. And oh, no defind pentions.
Screw that.
Pretty bold move on part.. In life everything boils down to a bet. I’m thinking even at 55 I got more gigs I’m me.
If I’m wrong. Hire someone ambitious young fool to build out my small companies. Pay em nothing. Through in a green pease membership as the Christmas bonus they will love.
But I despise kiss asses and non entrepreneurs.
Obviously this mind set is counter culture to the current educational system.
And lets not forget the commies at city hall, queens park, and soon Ottawa.
I can’t stay here….my head will explode.
____________________________________________

Smoking Man just read your previous notes re: Going to California. If you have been good enough to fool them into hiring you make sure you have an iron clad contract. The guys in California are sharks and they will not tolerate sub-par grammatical communicative interaction. Please start using a spell checker and grammar checker. Your vernacular while entertaining here is taken with a grain of salt. The California clique of commerce are a pretty savvy group of elite’s and your verbiage is not conducive to business interaction. Well as I said before good luck with “the gig” and keep us posted on your SoCal adventures.

#138 JimH on 07.03.15 at 10:00 am

#114 Hap on 07.02.15 at 11:56 pm
“China’s stock market down 30%.
Garth , let me guess, your response is it can’t happen in USA economic Renaissance land right?”
===========================
What a silly comment! Can you read a chart?
Are you aware that the Shanghai market shot up 150% over the past year? By what possible stupidity can you compare that kind of a speculative bubble to the USA.
Take off your blinders! If you manage to clear your head, your ass might eventually follow.

#139 Obvious Truth on 07.03.15 at 10:13 am

What’s with all the market crash insight on here lately.

You guys and gals do realize that most people are likely down to even this year. And you’re not the only ones who know about Greece, China and rate hikes.

The down draft will likely happen when you folks are all in and managers have had to chase performance.

Just market dynamics.

As illustrated here today. In the end it’s about learning how to properly handle and manage your finances over decades. Not being afraid of them.

I would venture an educated guess that even traders don’t trade their whole book. They likely just allow for opportunity within it.

But if you are a saver you are at least doing better than most. You just have to figure out the rest.

Garth has many times written about what you should really fear. He likely sees it a lot and sees more coming. Sadly it’s often too late for him to help.

#140 TurnerNation on 07.03.15 at 10:27 am

Lil black Monday coming? I’m ready :-p

#141 Chris on 07.03.15 at 10:31 am

Most of what I’ve read about forced retirements seems to imply that it is largely due to layoffs, cutbacks, or age discrimination, but a big part of the risk is also from health issues. Both my parents had to retire early because of health issues, and my wife’s mother did as well. And only one of the three was in a blue collar type of position. Your consistent advice to start saving early, and not just in houses, is right on the money… it’s not really possible to confidently assume you’ll be able to keep working after 55.

#142 Grantmi on 07.03.15 at 10:33 am

Records RE sales broken in Dopecouver!

first time 4 straight months of over 4,000 homes sold.

http://bit.ly/1GUbb08

Record numbers buying at record prices. What can possibly go wrong? — Garth

#143 Danforth on 07.03.15 at 10:34 am

‘Rich’ is relative. They are. — Garth

I define ‘rich’ as having enough money invested to live a comfortable lifestyle including senior care, for the balance of your life, without having to work a job for employment income.

So, if you’re 23 years old and have 500K, you may be in a great place, but you still have to work for money to have enough buffer. Hence, not ‘rich’.

#144 Daisy Mae on 07.03.15 at 11:03 am

#105 Not First: “….taken $100k and bought a small 1 BR condo and invested the rest….”

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

Those increasing strata fees and ‘special assessments’ which occur quite often could have wiped her out. Condos are too risky.

#145 Smoking Man on 07.03.15 at 11:09 am

#137 Holy Crap Wheres The Tylenol on 07.03.15 at 9:56 am
#36 Smoking Man on 07.02.15 at 7:38 pm
#1 TurnerNation on 07.02.15 at 6:01 pm
Sweeden just lowered their rates? Finnished.
#Smokingmen there.
…….
You got to be logical. For interest rates to go up, you need jobs and growth…wage growth.
zillion boomers who have money and are hording it for retirement..where is the grouth going to come from.
Our youth will never pick up a sign and protest, hey we are getting shafted on the pay check. .. But they will hold up a climate change sign… “Save the Trees, Emasculated soft Men frightend of confrontation.”
Teachers did number on em, especially prioritys.
I’m 55 years old, I just turned down a 200k fulltime gig at the tax farm. Why because its not enough. I would be forced to shut down my side business and my trading would be seriously restricted. And oh, no defind pentions.
Screw that.
Pretty bold move on part.. In life everything boils down to a bet. I’m thinking even at 55 I got more gigs I’m me.
If I’m wrong. Hire someone ambitious young fool to build out my small companies. Pay em nothing. Through in a green pease membership as the Christmas bonus they will love.
But I despise kiss asses and non entrepreneurs.
Obviously this mind set is counter culture to the current educational system.
And lets not forget the commies at city hall, queens park, and soon Ottawa.
I can’t stay here….my head will explode.
____________________________________________

Smoking Man just read your previous notes re: Going to California. If you have been good enough to fool them into hiring you make sure you have an iron clad contract. The guys in California are sharks and they will not tolerate sub-par grammatical communicative interaction. Please start using a spell checker and grammar checker. Your vernacular while entertaining here is taken with a grain of salt. The California clique of commerce are a pretty savvy group of elite’s and your verbiage is not conducive to business interaction. Well as I said before good luck with “the gig” and keep us posted on your SoCal adventures.
……..

Not everyone is capable of decrypting my Nomenclature. I should be fine. I only use it here.

#146 TurnerNation on 07.03.15 at 11:21 am

Remember this. The elites have said a new wage, $15. Communist minimum guarantee.

From BNN website today: new contract for Pearson airport fuellers, workers can reapply to old position 30% lower pay amount.

#147 Bottoms_Up on 07.03.15 at 11:37 am

#7 I’m stupid on 07.02.15 at 6:19 pm
—————————————————
In your lambasting of Donna’s son, you are both assuming that he can afford to care for his mother, as well as that Donna was a worthy mother.

#148 Bottoms_Up on 07.03.15 at 11:45 am

#25 EarlySpring on 07.02.15 at 6:54 pm
————————————————–
Sounds like you’re doing more than fine. You can save too much you know, especially with a DB pension.

You’re 28. Consider taking some time and money and travelling the world.

#149 john on 07.03.15 at 11:45 am

Garth is the supreme leader of -normalcy bias. It’s going to bite you!

I live in the world that it. Not the one you fear. — Garth

#150 Mike T. on 07.03.15 at 11:45 am

This is a good time to differentiate between man made rules and Universal rules

you can walk away from the man made rules any time you choose

the Universal rules follow you everywhere

our keepers know the difference, they are very clever

#151 Lillooet,BC on 07.03.15 at 11:48 am

#17 Shawn on 07.02.15 at 6:37 pm
And the Lesson Is?

That Donna never should have sold the house and become a renter? With the benefit of hindsight we now know that the house would have increased in value (a lot, in those 15 years). She could have avoided the rent and even with other house costs came out WAY ahead.

*********************
or she should have moved to Lillooet,BC

#152 Mike S on 07.03.15 at 11:52 am

“Here’s a better solution, for the people who work in other countries and pay taxes to the other countries, but reap the benefits in Canada. Stop them, make them pay taxes here as we’ll as the other country

I do, when I work in the STATE, I pay taxes in the USA and also taxes in Canada.”

Cool.
Now , how do you enforce that?

Canada is not the US. From the very same reason people that say the government would never raise rates in Canada are very funny

#153 Fiona on 07.03.15 at 11:54 am

How the hell can I max my TFSA’s if I have a surplus of maybe, 50-75$ a month?

#154 Andrew Morgan on 07.03.15 at 11:55 am

I don’t think Donna’s financial position is anything to cry about today. The *real* tragedy here is she and her family having to manage the premature passing of Sam, 15 years ago. There is also the sizable matter of whatever opportunities Sam never lived to pursue in his golden years.

After Sam died, Donna had the opportunity to live pretty high off the hog and do as she pleases. She was free from the usual problems of sub-standard housing,
poor health, messy divorces, unsatisfying employment and the folly of worshipping money. Hopefully she made & maintained diverse friendships and enjoyed hobbies.

Now in her 80s, Donna needs to be thankful for everything she has (and had), for having family, and for at least having the foresight to know whatever sizable bundle of unsecured debts she racked up would one day (now) be blown away in bankruptcy. There is no remaining shame in welshing on loans extended by greedy banks & credit card companies. I hope she made the most of her credit limits.

Financially, Donna (in her late 60s) was wise to sell the house after Sam died. In 2000, nobody knew the biggest housing bubble *ever* was just around the corner. In 2008, many people thought the 55% stock market plunge was a harbinger of worse things to come — so parking the money in the bank was probably not as bad an idea *then* as it appears *now*. Hindsight is always 20-20. Donna’s only real mistake was living, say, $500/month too high off the hog during those 15 years.

If she now tones down her tearful resentment towards living within her “downscale” means, appreciates what the Canadian government does for its seniors, remains active and continues to avoid loneliness she’ll be fine. There are countless millions of other people who never did (and never will) have things as good as Donna did and still does.

All the money she woulda-coulda-shoulda had at this
point wouldn’t have done as much for her today as many would think. Money really *isn’t* everything.

#155 Garth the Savior on 07.03.15 at 12:04 pm

Garth has many times written about what you should really fear. He likely sees it a lot and sees more coming. Sadly it’s often too late for him to help.
————–
Garth can only lead you to the water.
From there the choice is your’s : Drink or drown.
Choose wisely.

#156 Mike T. on 07.03.15 at 12:06 pm

how is that march back to $65 going for oil?

this is not secret information….oil is made as a bacterial by-product

we’ll never run out, ever

#157 cramar on 07.03.15 at 12:10 pm

Well, if Donna’s portfolio dipped by a third because of 2008, what was her “safe” investments in? Had to be a bad exposure in the stock market!

Back in the early 2000s my mother was in a similar situation, but with less than Donna’s treasure. I got control of her finances and put it all it into bonds—nothing but bonds in her name! I told her investment guy, don’t talk to me about stocks. I don’t trust the stock market after 2000, so find me the highest grade bonds paying the highest interest rates. I was not interested in capital gains, but in not loosing capital and maximizing her income stream. Most of her bond portfolio was earning 6-6.5% (and some of it still does). The panic of 2008 came and some of my friends were moaning that their mutual funds got creamed, and started selling out. Not much happened to my mother’s portfolio, except it went up in value. The income still rolled in.

She died a few years ago just shy of 98, and wasn’t even remotely close to outliving her finances. She went to her grave proud of her smart son.

“Well, if Donna’s portfolio dipped by a third because of 2008, what was her “safe” investments in? Had to be a bad exposure in the stock market!” Incorrect, of course. Equity markets slumped by 60% and a balanced portfolio declined by half that amount and recovered six years sooner. All she had to do was ignore it, and wait. You mom’s bond strategy, of course, no longer functions – and taxes on interest are twice that of capital gains and dividends. — Garth

#158 Nagraj on 07.03.15 at 12:20 pm

#51 ANOTHERSTABBINGINSASKATOON invests in knives and triangular push ups.

I myself, unfortunately, am too old and lazy to invest in any sort of push up. But if I weren’t too old and lazy, I would. (“Prepped for when my time comes” had me laughing out loud, deserves a prize for dramatic tension. Hello Eugene O’Neill.) (I can’t believe you’re from Saskatoon.)

I’m sorry that #93 WASHED UP LAWYER sold his gun collection. (Also sorry about your obstreperous Missus.) Years ago I walked into a gun shop in Virginia, bought a classic six-shooter along with a box of explode-on-impact cop killer bullets. No questions asked.

Which, past KNIVES and GUNS, gets us to POISON. And quasi-DEATHS via CURSE and SLAVE LABOUR:
That phony princess in GT’s Alptraum photo is either Snow White, Sleeping Beauty or Cinderella.
[Snow White got suckered into biting into a POISONED apple, Sleeping Beauty suffered a DEATH CURSE (at her Christening party via ticked-off fairy Carabosse) and Cinderella couldn’t get a union membership.]

Amazed that some posters remembered banned EUTHANASIA fan Detalumis.

“Happily Ever After” is Grimm reading.

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

[Did anybody else see that RT video of thousands of protesters in Madrid yesterday, many getting mercilessly beaten by the police?]

Old&Poor: poverty comes in more than one flavour. A joyless life might be the worst sort of poverty, money or no.

#159 Rational Optimist on 07.03.15 at 12:27 pm

124 Tamsen on 07.03.15 at 2:12 am

“Shanghai stock market down 20% in the last 5 days …”

China is less than a third of the FTSE Emerging Markets Index, which in turn is a fraction of your portfolio.

#160 Sam on 07.03.15 at 12:29 pm

I have never commented on anything, anywhere. The time has come, I need to thank Garth for his efforts and advice. Also, Smoking Man, thank you for posting the letter from Hunter Thompson. Read it twice.

#161 Smoking Man on 07.03.15 at 12:59 pm

#160 Sam on 07.03.15 at 12:29 pm
I have never commented on anything, anywhere. The time has come, I need to thank Garth for his efforts and advice. Also, Smoking Man, thank you for posting the letter from Hunter Thompson. Read it twice…
…..
Boy did Thompson set the bar high.
It took me 5 reads before I got it.

In a nut shell. What he’s saying is;

What works for one dog, will be a disaster for another dog and vs versa.

Every dog has to find its own fire hydrant to pee on.

Hench, that s why my Forex mojo is not shared.

#162 IM in C on 07.03.15 at 1:09 pm

Garth
If you think about it carefully, interest rates will not be going up . They will be going down.

#163 Leo Trollstoy on 07.03.15 at 1:10 pm

If you envy them, they’re richer than you.

#164 cramar on 07.03.15 at 1:57 pm

#157 cramar on 07.03.15 at 12:10 pm

You mom’s bond strategy, of course, no longer functions – and taxes on interest are twice that of capital gains and dividends. — Garth

Yes, the same bond strategy may no longer function the same today, but the point is it would have worked just as well for Donna.

I had a feeling you would bring up the taxes on interest income issue. That is only a issue if a person has a bigger income, and actually pays taxes. I did her taxes every year and with seniors & disability deductions, and assisted housing discounts, most years she paid no tax. So it was irrelevant whether income is derived from which source. In the beginning she even qualified for GIS. The latter few years she paid a minimum (few hundred) in tax, so moving out of interest-bearing bonds wasn’t worth it.

#165 Herb on 07.03.15 at 2:05 pm

Imagine, a real estate broker telling it like it is!

http://www.oasisrealtyottawa.com/blogs/gord_mccormick/archive/2014/08/24/why-are-so-many-ottawa-listings-overpriced.aspx

#166 SWL1976 on 07.03.15 at 2:08 pm

Just getting caught up here on my favorite blog to find leads as to what is really going on out there. I spent almost a week out on the coast with no phone, internet, or connection to the outside world except for what I could see and hear with my ears and eyes and UCC of course.

Good to see Nosty came back and TunnerNation is on quite a roll, and Smoking Man is still Smoking Man. If you are heading to Cali SM bring water as BC is hot, hot, hot, and dry. Cali must be full on tongue out panting eating dust sandwiches.

Thanks all for the great read and the insight as to how things are going to unfold

Can money be printed to infinity?

#167 Tina Sharma on 07.03.15 at 2:16 pm

To #157 cramar

I am a tax accountant and personal finance coach and many people don’t understand how income taxes really impact their finances.

Bonds are taxed as regular income like wages, salary, C.P.P, OAS, annuities, overtime pay, yearly bonuses, RRIF income, RRSP income etc. etc.

The main difference in interest income and all alike I listed above in retirement or when someone does not have employment or working income at any age anymore is you don’t pay C.P.P, E.I. and any other deductions that you would pay at work that are a given like union dues, dental and other benefit deductions like disability, life insurance etc.

This could be anywhere from $2,000 to $4,000 a year depending on your workplace and if you are earning the maximum C.P.P, E.I. earnings according to income tax laws, CRA.

So income taxes on interest is already lower than when someone is working or has employment income.

In your case with your mother living off bond interest, she was paying more income taxes but unless she was making a real decent income of $60,000 or more, she would not of saved that much in relation to her investment amount.

At most, maybe she would save $4,000 to $6,000 a year in income taxes here in Ontario if she had an income of $45,000 to $50,000 a year. Assuming at 6% bond yields, she would of had about $600,000 invested which would of given $36,000 a year in annual interest plus assuming $14,000 a year in C.P.P, OAS.

Most people that really save with capital gains and dividend income is those that earn close to $100,000 a year or more.

However, dividend income being grossed up by 30% to 45% can take away OAS clawbacks that have to be taken into account making someone lose as much as the whole current OAS $6,500 a year.

Annual income tax savings

#168 psydney on 07.03.15 at 2:22 pm

Re: #11 This is why I read the comments… for their pure entertainment value! :D

#169 Tina Sharma on 07.03.15 at 2:23 pm

Continuation to cramar #157

Annual income tax savings say $20,000 on a $90,000 income can easily become $13,500 or less which due to OAS being taken away.

It is still a substantial amount of tax savings but is much less than most people think or were promised to save when getting inaccurate tax advice.

#170 Holy Crap Wheres The Tylenol on 07.03.15 at 2:41 pm

Above photo, just asked my granddaughter who is this princess. Without missing a beat she says “Thats Princess Ariel. Ha just learned something new on your blog from a ten year old!
Guess who is getting ice cream after dinner!

#171 Holy Crap Wheres The Tylenol on 07.03.15 at 2:44 pm

#161 Smoking Man on 07.03.15 at 12:59 pm
#160 Sam on 07.03.15 at 12:29 pm
I have never commented on anything, anywhere. The time has come, I need to thank Garth for his efforts and advice. Also, Smoking Man, thank you for posting the letter from Hunter Thompson. Read it twice…
…..
Boy did Thompson set the bar high.
It took me 5 reads before I got it.

In a nut shell. What he’s saying is;

What works for one dog, will be a disaster for another dog and vs versa.

Every dog has to find its own fire hydrant to pee on.

Hench, that s why my Forex mojo is not shared.
__________________________________________
Smoking Man I bet a lot of your Forex trading is contemplated during your Casino binges! But what ever your doing must work! Keep up the trips to Niagara Falls for sure!

#172 Realtor007 on 07.03.15 at 3:05 pm

Calgary RE just hit bottom, a short window of opportunity for people who wanted to take advantage.

http://calgaryherald.com/business/real-estate/the-worst-may-be-over-for-calgary-resale-housing-market

Vancouver RE hot as ever and climbing, none of this is good news for the blog but the truth has to be revealed at times.

http://business.financialpost.com/personal-finance/mortgages-real-estate/vancouvers-hot-housing-market-shows-no-sign-of-easing-as-prices-and-sales-hit-fresh-records

In Calgary sales are down 18%, prices are falling and DOM has almost doubled. In Vancouver there were record sales at record prices. This is a real estate market about to blow up. And you are a shill. — Garth

#173 Smoking Man on 07.03.15 at 3:06 pm

#171 Holy Crap Wheres The Tylenol on 07.03.15 at 2:44 pm
#161 Smoking Man on 07.03.15 at 12:59 pm
#160 Sam on 07.03.15 at 12:29 pm
I have never commented on anything, anywhere. The time has come, I need to thank Garth for his efforts and advice. Also, Smoking Man, thank you for posting the letter from Hunter Thompson. Read it twice…
…..
Boy did Thompson set the bar high.
It took me 5 reads before I got it.

In a nut shell. What he’s saying is;

What works for one dog, will be a disaster for another dog and vs versa.

Every dog has to find its own fire hydrant to pee on.

Hench, that s why my Forex mojo is not shared.
__________________________________________
Smoking Man I bet a lot of your Forex trading is contemplated during your Casino binges! But what ever your doing must work! Keep up the trips to Niagara Falls for sure!
……

Going to be hard to do from Santa Monica.

Mind you, no offer yet. Then getting the TN Visa on pure bull shit.

Ah small details..

#174 NEVER GIVE UP on 07.03.15 at 3:17 pm

#65 not 1st on 07.02.15 at 9:02 pm

Then you bought badly. I was right. Bitter old guy. — Garth
—————————————————————
How exactly does a neophyte get good advice.
Rather specific advice.
I was confused as well with preferred shares.
They seem to start around $25. but where they wind up is anybodies guess.
I figure the banks are probably the safest?
Some of us do not have portfolios large enough to warrant an advisor.

As I have said often, you buy preferreds for income (5% on average) and tax efficiency (dividend tax credit) and not for capital gains. They are a long-term hold in the fixed-income portion of your portfolio. If your portfolio is small, buy a preferred ETF. — Garth

#175 TurnerNation on 07.03.15 at 3:47 pm

Smoking man..was that you outside smoking around 3:30 today…

#176 rosie "moving forward" in the knowledge that, "this won't end well" on 07.03.15 at 3:49 pm

Seems like some of these hipsters get it. Maybe a bushier beard and skinny jeans will help you to draw in some more young hep-cats.

http://www.moneyaftergraduation.com/2015/07/02/10947/

#177 Don Sammuel on 07.03.15 at 3:51 pm

To #167 Sharma and cramar #157

I can see why people would say it no longer works to us most or all bonds in a senior or retiree’s portfolio.

It is difficult to get anything more than 3% to 4% at most for longer term higher quality bonds.

we saw after 2002 that interest rates were going below 5.5% to 6% range so I started to buy some longer term bonds at 5.5% to 6.5% with 29 to 32 year maturities. These are good until 2031 to 2033 so we are still receiving that $4,200 interest a month.

We retired ages 55 in 2006 and now have 75% in these bonds which represents half in RRSP’s and half in non-registered.

The other 25% is in REIT’s and dividend paying investments. This brings in about $15,000 in dividend and REIT income a year in all non-registered accounts.

Our C.P.P. and OAS are another $28,000 a year. Our total tax bill last year was $6,000 which is not quite low almost $94,000 of household income.

#178 Don Sammuel on 07.03.15 at 3:55 pm

I meant to say $6,000 on almost $94,000 a year income is quite low!

Our investments have grown with dividend reinvesting and buying new investments REIT’s, bonds, dividend paying investments by 67% in the last 10 years.

This is all after income taxes and our expenses, cost of living. Even with inflation, this is still 40% net.

#179 Holy Crap Wheres The Tylenol on 07.03.15 at 4:11 pm

Just got off the phone with a buddy of mine who wants me to come up to his place in Orillia next week for some cottage life. He has had this place on the market for 144 days so far this year, zero bites, zero not even anyone interested in looking. Have been there before its a beautiful little bungalow in a place called Sophie’s Landing. He is asking $589,900 for a discretionary summer home, a cottage! He isn’t even right on the lake. He doesn’t really need the money but does not want to walk away from it either . He owns it outright but wants to get his cash out as he knows whats coming. He had it listed last year too. No bites. He said it is sad up there when you want to get out it takes a long, long time to find the right fish!

#180 Squirrel meat on 07.03.15 at 4:17 pm

Cowboy Spendshi – great guy, if he’d just steady up a bit on the annual tax increases..

https://scontent.xx.fbcdn.net/hphotos-xat1/v/t1.0-9/11401526_10155954814675107_5283193933765496485_n.jpg?oh=fbad922e5b40dd143e8d15ddf7bc7211&oe=561D9A1A

Harpo, JT, Fur Face- none of them can ride a horse like our purple knight.

#181 Squirrel meat on 07.03.15 at 4:28 pm

Cowboy season…

http://calgaryherald.com/gallery/gallery-politicians-convene-in-calgary-for-the-stampede-parade

#182 Mike S on 07.03.15 at 4:46 pm

“Thanks for pointing that post out I hadn’t seen that one. Looks like I need to move some stuff around as I wasn’t aware the post from Trust was part of a multi account portfolio. Lost a good chunk on REITs over the last month or so sadly so I’ll try and keep what I can of that for now.”

The post you refer to was from November 2014
Since then you lost very little, as the small capital loss in XRE, was almost offset by distributions

Even so, since last November Garth posted the correct weightings several times, and you could have had a good capital gain on these REITs say in Jan/Feb/April if you were simply to take down the weighing from 20% to 4-10%

#183 Victor V on 07.03.15 at 4:46 pm

It’s time to rethink Canada’s tax grab on older people:
http://trib.al/hDX5vRc

#184 Mike S on 07.03.15 at 4:53 pm

“I just wanted a simple portfolio I can stick to for the long term. By any chance do you know specific ETFs to buy to match the portfolio Garth suggested in the Millenials portfolio?”

With Garth’s permission let me share the following EXAMPLES:

http://canadiancouchpotato.com/model-portfolios-2/

http://www.canadianportfoliomanagerblog.com/model-etf-portfolios/

Keep in mind that these are only examples and your specific situation needs to be considered before recommending any portfolio to you

Also keep in mind that different investor advisers don’t necessarily agree on the correct weightings of some asset classes, especially for REITs and Preferred shares

#185 Vamanos Pest on 07.03.15 at 5:02 pm

Donna’s story is sad, but I struggle to have sympathy as the entire situation is of her (and her husbands) own making.

Was her husband still working until he died? If not, what was the plan if he hadn’t died? The pensions and the nest egg were light for one person, was the plan that it support 2 people any better? If he was working, where was the life insurance. As a sole bread winner, it’s on you to protect your family.

Then, what did she think would happen to a nest egg initially producing 17k a year, when she was withdrawing 30k per year? It doesn’t take anything more than common sense to know that wasn’t going to work.

Finally the panic sale of the portfolio: first off, it’s hard for me to figure out how she lost that much. After 7 years of withdrawals, at 4% returns to that point, she should have had around 300k left (just kind of estimated in my head, would welcome correction on that if I’m way off).

If she was invested with a low risk strategy, she lost ~30%. That seems a little heavy to me (losses should have been more like 20%). At any rate, 200k with 30k a year withdrawn and virtually zero return? Ran out exactly on schedule. So what did she think was going to happen?

Sorry, I just find it hard to have sympathy when an outcome that is totally predictable years in advance plays out exactly as expected.

#186 Millenial on 07.03.15 at 5:07 pm

Hey Garth,

I’ve been thinking about Donna’s predicament all day today, and then I realized the solution, it’s so obvious. She should buy a $5 Lotto Max ticket for tonight’s draw, it’s a $50 million dollar jackpot. She would be laughing all the way to the bank!

#187 Ret on 07.03.15 at 5:12 pm

I am hearing that a number of manufacturing concerns around Hamilton elected to work the statutory holiday and to take another day of this week off in lieu of Canada Day.

So much for the “I love Canada” Day. Game it so you can go shopping at the mall! Do Americans do this for the July 4th stat. holiday?

#188 sixtyfourk on 07.03.15 at 5:44 pm

Re: Andrew #117

As Mike says in #184, if you are new to investing and want to keep it simple, have a look at the Canadian Couch Potato portfolios.

If you click a few links there, you’ll see their simplest Vanguard ETF based portfolio for a 60/40 split is:

Fixed income (40%): VAB
Canadian Equity (20%): VCN
US and International equity (40%): VXC

VXC is about 50% US equity (so 20% of your portfolio) and 50% international equity.

It doesn’t get much easier than this portfolio. It does not contain any PREF shares, REITs or Real return bonds.

#189 Andrew on 07.03.15 at 5:52 pm

#184

With Garth’s permission let me share the following EXAMPLES:

http://canadiancouchpotato.com/model-portfolios-2/

http://www.canadianportfoliomanagerblog.com/model-etf-portfolios/

Keep in mind that these are only examples and your specific situation needs to be considered before recommending any portfolio to you

Also keep in mind that different investor advisers don’t necessarily agree on the correct weightings of some asset classes, especially for REITs and Preferred shares

_____________________________________

Thanks Mike,

I’ve actually followed Garth’s recommendation in his post entitled “The Millennial Portfolio”. Had to find the relevant ETF’s but I largely knew suitable ones already.

Now I have a pretty straightforward portfolio that I can keep topping up monthly and re balancing when needed.

I’m only 26 with $40,000 invested, so if I play my cards right I’m hoping to amass a healthy amount over the next 30-40 years. Just got to keep the wife on board with not buying a house whilst living in Vancouver. Easy for now but I suspect in 5-10 years when we have amassed a big potential down payment she will be beating on the door. Doesn’t help when her parents are Boomers whose house has more than doubled in 10 years here.

#190 Godth on 07.03.15 at 6:17 pm

#179 Holy Crap Wheres The Tylenol on 07.03.15 at 4:11 pm

Boo-hoo. I really feel sorry for him. Real estate around here is pretty stagnant everywhere outside of Van. Prices aren’t dropping though, the real estate just sits on the market until it expires…and then reappears.

Boo-hoo boomers, boo-hoo. F’in’ wah. No generation has had it easier on this planet and none will ever again – wah.

#191 Smoking Man on 07.03.15 at 6:24 pm

#175 TurnerNation on 07.03.15 at 3:47 pm
Smoking man..was that you outside smoking around 3:30 today…
…..

By the Duke, yes.

#192 Big English on 07.03.15 at 9:12 pm

Is it wrong as a happily married man with two lovely children to say out loud, I may love Nancy?

I do have a single friend in Vancouver, renting, invested, manager at a ISIT firm, athletic, in to running with no sense of smell or taste I’m willing to pimp out and live vicariously through.

Let me know and I can forward details.

#193 Tiger on 07.03.15 at 10:27 pm

TO Don Sammuel,

we saw after 2002 that interest rates were going below 5.5% to 6% range so I started to buy some longer term bonds at 5.5% to 6.5% with 29 to 32 year maturities. These are good until 2031 to 2033 so we are still receiving that $4,200 interest a month.
—————————————————————
CAN U PLEASE TELL ME WHAT KIND OF BONDS YOU BOUGHT ?

Not exactly relevant, as such yields are gone. Unless you like Greek debt. — Garth

#194 4 AM Sunrise on 07.04.15 at 1:11 am

#49 Investorz on 07.02.15 at 8:16 pm

It’s mad. The number of 1.3-1.8 million dollar houses will blow you away. Now look for a 750k house. The inside is old and even nasty.

Even with low rates, something isn’t right

I can say the same thing about some parts of North Vancouver. Seems like every SFH is pushing $1.2 million and beyond. I get it – it’s a family-oriented area with a low crime rate, forest at your doorstep and bears walking around your backyard if you’re really lucky, but still, $1.25 million and the listing is basically telling me that I can knock it down and rezone? P.S. The Trans-Canada Highway is buzzing right at the doorstep.

http://www.realtor.ca/Residential/Single-Family/15336068/1562-E-KEITH-RD-North-Vancouver-British-Columbia-V7J1J5

#195 Randy Smith on 07.04.15 at 8:19 am

Greek debt or bonds are way more than 5.5% to 6.5%.

Their yield curve is 2 year 35.29%, 5 year 23.80%, 10 year 14.89%, 15 year 12.88%, 20 year 11.63%, 30 year 10.73%.

The Greeks wish they could pay 5.5% to 6.5%.

Foreign bonds have currency risk factors that one must be cautious of but for example India has 5 year 7.99% and 10 year 7.80%, 15 year 8.16%, 24 year 8.12% rates.

I am assuming that 5.5% to 6.0% bond rates in 2002 where Canadian and provincial, corporate bond rates.

#196 Tanner Swanson on 07.04.15 at 10:11 pm

I don’t understand anything about bonds, ETF’s, stocks, REIT’s, mutual funds etc., investing that is.

My husband passed away at 55 years old in 2014 and left us with a $200,000 RRSP, no mortgage or debts, a $950,000 life insurance policy, a $125,000 LIRA, $75,000 in RESP GIC’s.

I am 54 years old. I spoke with my life insurance adviser and I bought some 25 year term certain annuities which I am receiving since 7 months a go, $1,600 a month, $4,800 a month total from 3 different life insurance companies.

The $200,000 RRSP was put in a 3.2%, 7 year compound interest GIC which will be $249,335 at maturity.

The $125,000 LIRA was put in a 15 year GIA at 3.4% compounded and will mature at $206,400.

Luckily, I have my own RRSP originally $156,000 in a 3.75% GIC maturing in Januray-2016 being worth $187,522 and a decent company pension paying me now $1,200 a month.

All my extra money will be used to top up my TFSA’s as I have none.

I retired just last month as I have a modest lifestyle and my 2 daughters education is paid for the next 3 years.

I am currently able to save $2,600 a month which does not include any interest from my RRSP’s, LIRA’s, GIC’s etc.

In 10 years, this will hopefully grow to a $325,000 in TFSA’s and non-registered money. This will give me a nice amount of money until I can get my C.P.P., OAS too.

I regret that you have been so ill-served by life insurance salesguys. — Garth

#197 Bill Bradford on 07.05.15 at 9:43 am

To Tanner Swanson #195

I think that you have a simple plan and it may not be the best one but is pretty middle of the road. You seem like you want a steady Eddie, safe, investment that pays out every month.

You look like someone who wants to sleep at night and can’t stomach principal, market value risk.

You have a steady income of $4,800 a month which is not even close to being all taxable like interest, RRSP income, RRIF income, pension income etc.

Using non-registered money, term certain annuities means the principal portion is not taxed and so going by the numbers above, $950,000 is principal and $490,000 is interest over the next 300 months.

So $1,633 a month or $19,200 a year is taxable and $3,200 a month or $38,400 is not taxable. This is means that only 34% is taxed, not 100% of your annuity payments.

Tanner, you have not done your income taxes having all 12 months annuity payments so you should be paying alot less income taxes than when you were working.

You would pay probably about $10,500 a year less in income taxes than you think you will. This is because $38,400 annuity payments annually are not taxable income.

This will probably mean you can save an extra $875 a month or have $440,000 because of adding interest earned in 10 years and not $325,000 than you first thought.

According to the info that you have shown above, your RRSP’s, LIRA, GIC’s are averaging out about $18,800 a year in interest which is not bad.

However, your GIC maturing in 2016 will earn less interest, this will bring your total interest to $17,500 at 2.5 % to 2.6% 5 year GIC rates at best.

Tanner, you did not mention about your husband’s survivor C.P.P. benefits.

This could be about $400 to $500 a month more income depending on your late husband’s income over the decades he was working. You will get this based on your information that I read above.

You should apply right away before losing anything more.

#198 Victoria Real Estate Update on 07.05.15 at 3:28 pm

. . . . . . . . . . . . . House Prices. . . . . . . . . . . . . .
. . .Percent Above/Below June 2010 Price Level. . .
. . . . . . . . .x = Canada, * = Victoria. . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .x. .
+20% . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+15%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . x . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+10% . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . x . . . . . . . . . . . . . . . . . . . . .
+ 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
….0%. . . x*. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . *.. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . *. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . * . . . . . . . . .
-10%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
———————————————————————————-
. . . . . . .Jun. . . .Sep. . . . . . . . Jan. . . .May. .
. . . . . .2010. . .2011. . . . . . . 2014. . .2015. .