The cure

COW1

The Doctor is in. Here, read this TIME issue from 1975 and shut up. Nurse practitioner Amy Zon will be with you shortly.

First up, Louise. Spill it, colleague.

Hello, Garth. I discovered your blog a few months ago, and I don’t know what I’d do without my daily dose of The Greater Fool. I would love to be featured on the blog. I’m a 29-year old physician, with an annual income in the mid six-figure range. On the personal side, I have ~30K in a TFSA (index funds) and no RRSP.  I also have personal debt in a line of credit (mostly from medical school), a significant amount in the low six figures.

I purchased a 1-bedroom + den condo in the GTA almost exactly 4 years ago, and I don’t think the value has increased much.  I estimate that I could sell for around 220K.  Mortgage debt hovers around 155K.  I am terrified of the future possibility of a special assessment, and there’s rumours of another condo going up right beside the current building.  The latter would greatly affect my property value (current view from my unit is completely unobstructed).

I’m single, no kids, no pets, but would love more space.  I’m considering selling, using the equity I have in the condo to pay off a significant portion of the LOC, and start renting a townhouse instead.

My current costs for housing are around $1350 per month.  This includes mortgage payments, maintenance fees (most utilities included), property taxes, and hydro.  For the properties I’ve been looking at to rent, the average price is 1650-1850 per month, excluding utilities.  That would make total costs around 1800-2000 per month.

Because I am currently single, but my situation could change in the next 5 years or so, I don’t think it would be a smart idea/time to buy; my needs could easily be different in the near future.

Is it a better idea to continue owning the condo, slowly increasing the equity but running the aforementioned risks of a special assessment/value drop, or bite the bullet, sell, and start renting but at significantly higher monthly cost?

This is easy. Sell and rent. First, you’ve been sitting on seventy grand in equity for four years which has provided a zero return. In fact, with the potential of a special assessment and a new building about to suck the view and lower your equity, there’s too much added risk. Even if you sell now, paying the realtor commission, you’ll likely sustain a loss – non-deductible.

Thus, renting lowers the risk, adds marginally to your overhead, frees up dollars to invest, allows you to move into a larger unit and unencumbers your sorry life. And it must be a sad existence of unzipped cabana boys at Club Med and too much blow. After all, you’re an MD earning “mid six-figures” with over a hundred grand in debt, a cruddy suburban condo and just $30,000 in a TFSA. Where’s the cash going? Louise, please tell us you’re not a psychiatrist.

Next!

My name is Carson and I’m a long time reader of the blog and I’ve recently been thinking about doing some leveraged investing, and had some tax interpretation questions I was wondering if you could help me with.

I’m 29, an engineer making $85k, don’t own a home, and have $40k in investment savings (between RRSP & TFSA). I’ve been preapproved for a 2.99% LOC for 1 year (which goes up to Prime + 2.99% after the year) and I figured this was a decent rate to use in leveraged investing. I don’t have a home (and therefore no HELOC), so I don’t think I’ll be able to find a much better rate than this to use in the short term.

I understand that the interest on money borrowed to invest is tax deductible, but I am wondering if this is still the case if I invest within a TFSA. I get the sense this would not be allowed, but have not been able to find a definitive answer.  I have room in my TFSA to hold this entire amount, so I figure this will be the better place for it regardless of my question.

Forget it, Carson. Bad idea. Sure, leveraging (borrowing money) to invest can be a great strategy if the funds come cheap, you have a long-term horizon, enough experience as an investor to understand and swallow the risks and do it in a non-registered account. No, interest on a loan taken to fill your TFSA is not deductible from income.

And this is a bad rate deal. Sure, 2.99% is nice if you can invest for a 7-8% long-term annual return, but when it pops to 6% in a year, even with tax-deductible interest, it’s way too tight a spread. There’s no guarantee any portfolio will advance predictably year after year, and if 2016 turns out to be a 0% period while you are forking over 6%, odds are you’ll despair and fold.

A young, single guy making your money should be able to save consistently. Do it. And direct every dollar into the tax-free account, in the assets and weightings I have outlined. I don’t care how cute [email protected] is. Stay away.

Next!

I’m Amil. We recently had a new addition to our family and I’ve heard of RESP’s, how do they work?

What would be the best way to save for his education and to save for my son in general?  Also I’m not sure whether there are other things that we should be considering such as life insurance, a will and anything else that would be important to set up if anything were to happen to my wife or me.

Ah yes, a new parent. Swimming in hormones and endorphins. Plus a sudden gush of obligation and protectiveness. It’s why the Baby Vultures who circle maternity wards with their RESP brochures do so well. It’s red meat time for all the insurance salesguys who swoop in and sell you policies which 90% of the time are cash-sucking, life-long albatrosses. So, be careful.

In terms of RESP, yes, you should start one. But not one of the BV variety. Ensure yours is a self-directed plan, which you can open through an online brokerage, at the bank or with an advisor. Fill it with good, diversified, growth-focused ETFs, since the time horizon is long. Apply for the government grant, which adds 20% annually to a $2,500 contribution from you. The funds grow tax-free and can be taken out by the kid once he/she starts post-secondary schooling. If they fail you miserably and become a teenage rock god worth $1 billion, a good chunk of the money can be rolled into your RRSP if you have room.

As for insurance, stick with term. It’s cheap, flexible and all you need in the case of an emergency. Compare rates online, and remember the cardinal rule: never buy coverage from your cousin who failed the community college Hot Tub Maintenance Technician course and is now an insurance expert.

Next!

192 comments ↓

#1 TurnerNation on 07.29.15 at 4:36 pm

Home Capital stock halted from trading. Grim news just out. Falsified data by commissioned sales people? I never….

HGC.TO

But we are not like USA was??

#2 gladiator on 07.29.15 at 4:52 pm

Mid six-figure to me is (999,999 – 100,000) / 2 = 899,999 / 2 = 449,999.5 ~ 450k per year.

Not too bad for a 29 year-old physician.

I can only say Congrats!

#3 Anthony on 07.29.15 at 4:55 pm

Oh how I love the “Dear Garth” posts.

Louise is single? Seems like a bright woman, I hope she makes the right decision and ditches the box in the sky

#4 raisemyrent on 07.29.15 at 4:59 pm

I had the same question as my fellow engineer (the same few things actually) but it took me all of 5 mins on the CRA website to determine what Garth responded.

that doctor must have some serious monthly expenses….

I like this Dr. Garth mode.

#5 Forzudo on 07.29.15 at 5:06 pm

Good, simplified, to-the-point advice.

Don’t forget that the RESP withdrawals are added to the university student’s income; however, that impacts most full-time students very little.

Before you consider leveraging for investment, look at the problems faced by the Chinese middle-class right now. You don’t want to get caught with your pants down on a margin call.

#6 DJG on 07.29.15 at 5:17 pm

I think when some people say mid six figures they mean something like $150k. Stupid, yes, but no worse than the people who say “could care less” instead of “couldn’t care less” or can’t tell the difference between they’re and their.

#7 polecat on 07.29.15 at 5:20 pm

Great, possible election start this weekend, thank’s Steve, I’m voting green out of spite now.

#8 gladiator on 07.29.15 at 5:21 pm

@ DJG:
I thought this might be the case, but math is the only science where ambiguities have no place.

6-figure numbers will always be between 100,000 and 999,999.
This is one of the few things I am totally sure about.

#9 ApplePi on 07.29.15 at 5:22 pm

@ #5 Fortuzo. I believe that only the grant portion gets added to their salary as income. You have already been taxed on the deposit as RESPs aren’t like RRSPs.

#10 Jiao on 07.29.15 at 5:26 pm

DELETED

#11 Mf on 07.29.15 at 5:27 pm

Mid six figures? She must be a brain surgeon.

http://www.theglobeandmail.com/life/health-and-fitness/health/how-much-are-canadian-doctors-paid/article7750697/?service=mobile

Most doctors take home pay is about 150k (give or take obviously). I think The poster above me is correct.

MF

Way low. — Garth

#12 WallOfWorry on 07.29.15 at 5:27 pm

Garth…really? 6% in a year will be the cost to borrow?
Even with this “strong” (I think that has been the term you have used) US recovery, GDP is still less than 3%, IMF has downgraded global GDP growth, the massive debt of all nations (US in particular) at 19 Trillion, (yes, Trillion) would absolutely crush the economy interest rates rise anymore than a few basis points. Isn’t the reality that we will see low interest rates for the forseeable future? I do agree with your approach to importance of diversification but I think you are continually going to an extreme to try and make a simple point.

The bank quoted P+3. Argue with them. — Garth

#13 Freedom First on 07.29.15 at 5:28 pm

A doctor, engineer, and parent. All young. Very good they are seeking financial help now, as anybody with any income can end up in a financial $h!t$torm. I too, studied, worked hard and enjoyed life when I was younger, which is all good. You don’t have to work hard when you get older. I don’t, and I enjoy life more than ever. Freedom is priceless. Trust me.

#14 Zinc Whiskers on 07.29.15 at 5:28 pm

Her income is ~ $500K and owes over $100K on a line of credit…?

#15 Sanj on 07.29.15 at 5:30 pm

Hey Garth, love this blog concept. Hearing the stories from people all over Canada and your advice is a great read!

#16 Victor V on 07.29.15 at 5:30 pm

Home Capital Group Inc. Provides Additional Disclosure Regarding Broker Suspensions and Revises Material Change Report

http://finance.yahoo.com/news/home-capital-group-inc-provides-202900732.html

The Company immediately commenced a thorough investigation of this allegation including the reliability of other information submitted with the loan applications. The Company retained independent professional advisors to guide the investigation, which was overseen by independent directors. The investigation determined that falsification of income information had occurred but that there was no evidence of falsification of credit scores or property values. The brokers associated with the mortgage applications were identified and during the period of September 2014 to March 2015, the Company suspended its relationship with 18 independent mortgage brokers and 2 brokerages, for a total of approximately 45 individual mortgage brokers.

#17 Victor V on 07.29.15 at 5:31 pm

http://www.theglobeandmail.com/report-on-business/international-business/us-business/fed-expected-to-push-ahead-with-rate-hike-plan/article25749468/

The U.S. economy and job market continue to strengthen, the Federal Reserve said on Wednesday, leaving the door open for a possible interest rate hike when central bank policy makers next meet in September.

Following a two-day policy meeting, Fed officials said they felt the economy had overcome a first-quarter slowdown and was “expanding moderately” despite a downturn in the energy sector and headwinds from overseas.

The central bank nodded in particular to “solid job gains” in recent months.

#18 Mf on 07.29.15 at 5:31 pm

Great advice as always Garth. Carson’s question was something I have been wondering too. Thankfully I did not leverage my investments in April since everything has gone down down since then. Great time to start lol oh well I’m not fazed in the least.

MF

#19 LH on 07.29.15 at 5:33 pm

Dear Garth

I am a 31 year old trader, low 7 figures pre-tax at the tax farm. Historically 80%+ of take home has been saved, levered, and invested primarily in C01 real estate. While that has done well, I am woefully underweight equities. How much of a portfolio do I need before I can safely take a sabbatical and homeschool the 4 (and counting) kids?

Work is a blast but I am concerned that the golden time for education is now (their ages 1-6). Dream is to pack them all to the IMO like Alex Song. Wife stays at home (without her none of this would be possible)

Yes I know, first class problems.

#20 Victor V on 07.29.15 at 5:35 pm

Home Capital cut ties with dozens of mortgage brokers over falsified documents

http://www.theglobeandmail.com/report-on-business/economy/housing/home-capital-cut-ties-with-dozens-of-mortgage-brokers-over-falsified-documents/article25762694/

Trading was halted on Home Capital Group’s stock after the company revealed late Wednesday that it cut ties with dozens of mortgage brokers because of an investigation revealed they had falsified documents about borrowers’ incomes.

The details of the internal investigation, which began last fall, were made public at the request of the Ontario Securities Commission, the company said.

Home Capital, which through its subsidiary, Home Trust, is one of Canada’s largest alternative mortgage lenders, said it had hired external investigators last fall after an “external source” alerted the company to problems with some mortgage applications submitted by several brokers. Investigators found evidence that brokers were falsifying the income statements for borrowers, although the company said there was no evidence that brokers had faked credit scores or property values.

#21 LH on 07.29.15 at 5:36 pm

Re 2 gladiator
Don’t you mean 100k+999k /2 = approx 550k?

#22 Ray Skunk on 07.29.15 at 5:37 pm

Yeah, put me down in the mid-six figure confusion camp too.

$500k a year and worried about a special assessment?

Unless she meant $150k or thereabouts… I’m with DJG on this one!

#23 Trophy Hunting Dentist on 07.29.15 at 5:41 pm

Hello Garth,

I’m a middle aged dentist, currently earning in the mid six-figure range just like Louise.

I recently liquidated my $55,000 hair transplant savings account so I could enjoy a once in a lifetime hunting trip.

I am looking to refresh this account, after I deal with some expected upcoming legal costs that may require me to get a HELOC on my Minnesota home.

Do you recommend ETFs for me, and would my HELOC legal expenses be tax deductible potentially?

Quid pro quo, I am happy to throw in some bridge work and whitening for you in return for your help with my finances.

P.S. I hear you have some trouble with nuisance posters on here. (Mark, Smoking Man etc..) I am a very adept and sleuthy stalker and could end your poster woes with a couple of well placed longbow shots from just across the border in Seneca.

http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/11767119/Cecil-the-lions-killer-revealed-as-American-dentist.html

#24 Estrella on 07.29.15 at 5:41 pm

So September it is! Let the games begin!!

#25 WallOfWorry on 07.29.15 at 5:44 pm

Garth….post #8…my question is simple. Do you really believe that the global economy can support the increase in rates you are suggesting? If so, how do you reconcile the significant debt, coupled with low GDP?

#26 Estrella on 07.29.15 at 5:45 pm

A physician in ontario, unless a specialist returns average 200-250 k I believe. If specializing ,surgeon,cardiologist etc prob 400-450k.

Don’t know many docs, do you? — Garth

#27 Drill Baby Drill on 07.29.15 at 5:51 pm

I call BS on her mid 6 figure wage statement. Medical Doctors in Canada make $225K to $350K per annum (not including specialists). She is too yong to be a specialist nor to be near the max.

#28 gladiator on 07.29.15 at 5:55 pm

@ LH:

No. 6 figures start at 100,000.
The range is between 100,000 and 999,999.
The mid-range number is 450k.

#29 james on 07.29.15 at 5:57 pm

A 29 year old doc might not be pulling in all that much. Med school takes a long time, plus interning/residency (or whatever they call it in Canada). I remember a dentist telling me that dentists don’t start making money until their mid to late thirties, because of the long education and the necessity to buy into a practice.

Having said that, she is fine long term. Physician compensation is rising at 7% a year. Completely unsustainable, and a major drag on the health care budgets of the provinces. (It might even be one of the largest components in Ontario). It is so lucrative that more American docs are trying to come up here, as GPs in Ontario make substantially more than the average GP in the USA.

Ditch the condo, rent. Your income is high compared to the average Canadian, and your job is in no risk of being outsourced. However, that 70k could have been put to better use.

#30 gladiator on 07.29.15 at 5:58 pm

Garth, so she really is making 450k???
Care to disclose what field of medicine she works in and I will make sure my 2 kids study for that really hard.

Will buy you a nice bottle of Hennessy Richard when each of them starts their career.

We certainly get easily distracted around here. — Garth

#31 Sean on 07.29.15 at 6:07 pm

People asking about how she still has debt; consider the possibility she just started working, or that she originally started with a larger debt that she is in the process of paying down (in which case the low amount invested would make sense, depending on the interest rate of the loan).

#32 Shamus McPick on 07.29.15 at 6:08 pm

Garth…you have a winner selling the concept of security through broad diversification to frightened people who don’t understand risk and have no financial education…but is Modern Portfolio Theory doomed to the scrap heap of economic theory?

It wasn’t long ago Charlie Munger said ” The Efficient Frontier was rapidly going the way of the dodo bird’. He was talking about specializing….imagine….an evolving financial spectrum acting like the Galapagos Islands where returns from individual companies far outpace the systemic inefficiencies of index investing and thrown Modern Portfolio Theory into the ocean with the dinosaur bones.

‘http://www.investopedia.com/terms/e/efficientfrontier.asp’

DEFINITION of ‘Efficient Frontier’

A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a given level of expected return. Portfolios that lie below the efficient frontier are sub-optimal, because they do not provide enough return for the level of risk. Portfolios that cluster to the right of the efficient frontier are also sub-optimal, because they have a higher level of risk for the defined rate of return.

#33 Stick a fork in ontario on 07.29.15 at 6:11 pm

If that doc is making 500k a year as a rookie gp, then ontario is royally screwed. Ontario is soon to go bankrupt from health care alone. Where should I move to? Ontario is done.

#34 Frank on 07.29.15 at 6:13 pm

Everyone is freaking out over this doctors salary.

Who cares what you think is true. Pretend it is and look at the case study as presented.

#35 Mf on 07.29.15 at 6:14 pm

Way low. — Garth

That’s what I think about my salary too!

#19 LH

Damn. I wish I had a job like yours (seriously). Do you work in an institution? Or are you a day trader who works from home?

Mf

#36 Tony on 07.29.15 at 6:25 pm

Re: #17 Victor V on 07.29.15 at 5:31 pm

One quarter percent rate increase around May of 2016 then QE4 followed by a half percent move down to zero or zilch to avert a repeat of the ’29 crash.

#37 Unhinged Loon on 07.29.15 at 6:26 pm

Hey Garth, here’s my story:

I’m 29, unemployed and on powerful self prescribed psychoactives. In fact, I just came off of a 2-day Jimso weed trip.

The instructions I thought were coming from the Dark Lord were actually the Muppet Movie running on TV and Midnight Train on Z106.7 FM at the same time. Turns out that Christian child I sacrificed was the neighbor’s Douglas Fir. My demonic possession was actually a case of diarrhea.

The voices tell me I should invest in real estate or potentially forever lose out.

Thanks in advance.

#38 Forzudo on 07.29.15 at 6:34 pm

#9 ApplePi

Both the government grant portion and the accumulated interest portion are added to the post-secondary student’s income for the RESP withdrawal year(s).

You are correct, the parents’; grandparents’; et cetera principal contributions are not added to the student’s income upon RESP withdrawal:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/resp-reee/pymnts/p-eng.html

#39 betamax on 07.29.15 at 6:39 pm

#23 Trophy Hunting Dentist

LOL. Too funny, especially the P.S.

#40 Finances eh! that reminds me on 07.29.15 at 6:43 pm

https://www.youtube.com/watch?v=CIbHiWvRl6M

#41 Sid on 07.29.15 at 7:00 pm

After reading this article, I ask you Garth. Is Home Capital inc Canada’s version of the US loan provider Countrywide Financial?

http://www.montrealgazette.com/Home+Capital+says+ties+with+mortgage+brokers+after+discovery/11252229/story.html

#42 Dave in NS on 07.29.15 at 7:01 pm

Never buy a condo. Ever.

When you cannot control your fixed costs you are doomed. My condo fees jumped to over $1/ sq. ft and my condo was unsellable. Even ion downtown Toronto. Location, location, location my ass.

Oh, did I mention special assessments? There were 2.

I sold it, (at a loss, of course) but I walked funny for 2 years.

Rent….

#43 Brydle604 on 07.29.15 at 7:03 pm

#33 Ontario is done.
Ontario is the most indebted non Sovereign borrower in the World now.
Ontario and Quebec total debt is $500 Billion
Come to B.C. New Mines, LNG, Site C dam, Movie industry, High Tech, diversified economy, doing better than other Provinces, and great weather.

#44 Andres on 07.29.15 at 7:06 pm

#16 Victor V

When I briefly flirted with buying a condo right out of school in 2008 I went to a mortgage broker and to RBC. The broker somehow managed to get me a pre-approval $60,000 higher than RBC would give. I don’t think they could have done that without a little creative accounting, as looking at the numbers myself after the fact I wasn’t sure how I could possibly service those numbers.

#45 Steve French on 07.29.15 at 7:10 pm

Folks the correct answer for a “mid 6 figure salary” is $550,000.

Not too many of you blog dawgs graduated from high school calculus did you.

Sheesh.

#46 Julia on 07.29.15 at 7:12 pm

RESPs: We have one in our self directed investment account with our bank for our child. You don’t have to “apply” for the grant, it comes automatically monthly based on the month’s contributions.

An easy way to add to it? We transfer the UCCB directly as soon as received. Free (taxable) money from our dear Government. Makes no dent in childcare anyway.

#47 Retired Boomer - WI on 07.29.15 at 7:14 pm

Garth,

Really liked tonight’s Q & A type post. That uniform wit of yours gets especially ‘sharp’ in this quick answer style.

Great Fun, informative correct answers, and a slice of life to be enjoyed, and entertaining to a good many dogs here. ARF!!

Noticed a big Subprime lender has “issues” wow, glad we never had that (Ha, Ha) in the US.
Hey, where’s that idiot LeRoy Washington when ya need him?

#48 Steve French on 07.29.15 at 7:17 pm

And as a range I would estimate between $400,000 to $700,000.

By the way how on earth does a 29 year old doctor & public servant make that much money? It’s more than the Prime Minister.

Christ almighty what would they do with it all?

Blow it all hunting for endangered species?

Ontario is going broke on health care costs alone.

I’m pleased as punch that I just squirrelled away another $1,425 from my fortnightly paycheque. Mr. Consistency. Another acorn saved for the coming winter.

#49 nonplused on 07.29.15 at 7:22 pm

Mid 6 figures might mathematically be $499,998 but its a figure of speak not a mathematical term.

6 figures means over 100k. “Mid six figures” means somewhere around $150k. Once you get over 200k you don’t use the term “6 figures” anymore, because you are well beyond the first 6 figure benchmark, saying “6 figures” wouldn’t be enlightening. But so few people make that much money that I am not sure there is a colloquial expression for it. If there is, it’s “flying first class” or “executive suite”.

Speaking of hot tub technicians, I am getting to be a bit of a pro. If you are in the market, don’t bother to buy one with a build in stereo or tv. The speakers, even marine grade, barely last a year. Then the power supply goes. My stereo still works, amazingly, but I gave up on the built in speakers and wired it to some outdoor speakers mounted outside the tub. And it’s running on an old 12 volt battery as the power supply yup it’s fried too.

#50 Louise on 07.29.15 at 7:27 pm

To clear up the confusion about my income (such a fuss, everyone!), its ~ 300K. No, I’m not a specialist.

I do have a lot more money in my corporation. The outlook isn’t all that bleak :D

#51 TurnerNation on 07.29.15 at 7:28 pm

Nice double bottom on oil. Caught it yest. am.
USO had hit my target.

#52 nonplused on 07.29.15 at 7:29 pm

PS it’s also why you don’t hear people talk about “7 figures”. The difference between $1m and $9.99m is so large as to render the expression uninsightful, and so few people make 7 figures that it isn’t a benchmark or part of the language. Instead we call them “banksters”.

#53 nonplused on 07.29.15 at 7:39 pm

So I propose the following legend to understand gen-x talk about income:

Barista – $10/hour
Glam-girl – up to $65k/y for that receptionist with the low cut blouse.
6 figures – $100k, the first point you’ve “made it”.
Mid 6 – $150k, highly specialized work
Management – 200k
VP – 300k to 500k
Executive – 7 figures
Private Jet – insanely rich

#54 dutch4505 on 07.29.15 at 7:41 pm

for the past ten years my CDN brother in law has said that the USA and not Canada has sub prime lending. How many people are using their lines of credit to lend down payments to potential buyers in Canada? Is HOME CAPITAL a sub prime lender? Any info would be helpful.

#55 Hanna Simpson on 07.29.15 at 7:41 pm

The U.S. 30 year bond yield is up today but just shy of 3.00%, 2.999%.

How long it will stay in the 3’s is just a matter of time will tell.

The high so far in 2015 is 3.25%. Just to give an idea of where they have been, just back in February this year, 2015, it was 2.35% and as high as 4.8% back in 2010.

#56 Smoking Man on 07.29.15 at 7:51 pm

#50 Louise on 07.29.15 at 7:27 pm
To clear up the confusion about my income (such a fuss, everyone!), its ~ 300K. No, I’m not a specialist.

I do have a lot more money in my corporation. The outlook isn’t all that bleak :D
………..

That sucks… Just on my forex USDCAD trade from may to today.

1.6 Million. Only had 50k of real money at play at any given time.

Which I told anyone that was listening a few months back how to do it. When to do it.

This is why some love me here, and others want to shoot me with a bow and arrow.

#57 bdy sktrn on 07.29.15 at 7:52 pm

#50 Louise on 07.29.15 at 7:27 pm
To clear up the confusion about my income (such a fuss, everyone!), its ~ 300K. No, I’m not a specialist.
—————
and you are ” terrified of the future possibility of a special assessment” on a 200k condo?

what’s up with that?

#58 lee on 07.29.15 at 7:52 pm

You can just check the Sunshine list for doctor salaries.

#59 Joe Schmoe on 07.29.15 at 8:03 pm

People are fascinated with Doctor income.

https://www.cma.ca/En/Pages/specialty-profiles.aspx

read a couple…I think the CMA also has a summary somewhere on the site.

~450-650k is pretty average for a specialist.

#60 Smoking Man on 07.29.15 at 8:04 pm

#23 Trophy Hunting Dentist on 07.29.15 at 5:41 pm

Just make sure you have good aim and not hit any blog dog fans.

In the pic. Doing what I do best.

http://dyslexicsmokingman.blogspot.ca/2015/07/fans.html

#61 TurnerNation on 07.29.15 at 8:06 pm

Like I always say the Party Elite are tremendously compensated.
The rest of us? On yer bike.
You get bike lanes and rickshaws.
Tag this: #greenwashin

http://notable.ca/new-vancouver-translink-ceo-job-posting-lists-a-320k-salary-plus-bonus-and-critics-arent-happy/

Then there’s Whistler who can no longer afford their hydrogen powered buses and refuling.
Hydrogen is trucked (!) across country for them.
The perfectly good diesel old buses? Tool of evil.

#62 bdy sktrn on 07.29.15 at 8:06 pm

#43 Brydle604 on 07.29.15 at 7:03 pm

Come to B.C. New Mines, LNG, Site C dam, Movie industry, High Tech, diversified economy, doing better than other Provinces, and great weather.
————————
also
govt surplus, best outdoors (esp boating, hiking and skiing), tourism hot, steady econ, lower food costs, best weed (shhh!), and no salt on cars.

#63 raisemyrent on 07.29.15 at 8:06 pm

#45 Steve French on 07.29.15 at 7:10 pm
Folks the correct answer for a “mid 6 figure salary” is $550,000.
Not too many of you blog dawgs graduated from high school calculus did you.
Sheesh.

indeed (well, $549,999.50). no calculus needed, more like a number line.

alas, the whole story unravels. She has a corporation and pays herself. Garth wrote about this some time ago; taxes are unavoidable is what I recall being the conclusion, having looked at that myself a couple of times. Perhaps he offered some advice on his email back to you.
next step is getting Garth to filter prospective dates out of all the interest generated by your situation (money + single). hot sometimes means successful. sexism is a double-edged sword I guess.

#64 Yuus bin Haad on 07.29.15 at 8:11 pm

I’ve come to skipping the “letters” editions – today you lost me at “mid six-figure range”.

#65 Julia on 07.29.15 at 8:16 pm

#49 nonplused

Actually, in finance/banking, “mid” means 4 to 7. Mid 6 figures being $400,000 to $700,000.

#66 Hickster on 07.29.15 at 8:17 pm

If you live in SK, an RESP gets you 20% from the federal gov and another 10% from the provincial gov, a total of 30% for anything up to $2500 annually. That’s $750 free money from gov every year, per kid.

It’s a no brainer, nothing gets you guaranteed 30%, nothing. It is without a doubt the best investment available in the country.

If you’re not convinced, consider that you can make a combined family plan, since that is $750 for each kid. When using it for school, you can distribute it however you want. Junior #1 needs $2500 for welder school and #2 need $15,000 for med? No problem, does not have to be distributed equally. If don’t use it, you get back the principle (and all gains), and you give back gov portion (and gains). But here’s the kicker……if you need only part of it, you can use the government portion first and still take back the rest of your own investment (and gains). It is literally a no lose situation.

#67 Sosuke Aizen on 07.29.15 at 8:20 pm

“Thus, renting lowers the risk, adds marginally to your overhead, frees up dollars to invest…”

Louise has about $130k in LOC (“low six figures”), and $155k in mortgage, for a total debt of $275k. Her salary is $150k (“mid six-figure range”). That is why she can’t immediately pay off her debts, and a special assessment — probably no more than $20k — is a concern. (If you think her “mid six-figure range” means $500k, then you have to presume her “low six figures” in LOC means $300k.)

Renting will increase her housing cost by $7800, or 48%, per year. Although she can still afford it, it is more than a marginal increase.

Don’t tell her to sell the condo and invest the money. What money? The condo fetches $200k*, and her debt is $275k. She can throw in the TFSA (2% tax-free return, yipee!) to pay off most, but not all, of her debt. But she won’t be an investor.

*A pending or unpaid special assessment reduces market value accordingly. Also, banks don’t finance condos with a special assessment pending (banks avoid uncertainty). Without bank financing, there will be very few buyers.

#68 Daisy Mae on 07.29.15 at 8:21 pm

“As for insurance, stick with term. It’s cheap, flexible and all you need in the case of an emergency.”

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

Decreasing term? The value of the policy slowly decreases as your assets increase over the years….until finally, you don’t need it, anymore. Very economical. Available if and when you need it.

#69 Rainclouds on 07.29.15 at 8:23 pm

Buddy’s wife works for the City of Van. I almost soiled myself when he told me she makes 100k as a front line manager at their call center, in addition, pension payout just jumped big time. 3 Yrs ago she was making 40k as a clerk. Private sector would have contracted the whole mess out. Good for her, not so good for the average schmuck paying taxes to finance Gregor’s social agenda.

In other news 2 friends were whining about the “special assessments” on their Condos. one DT the other on the North Shore. DT is the second hit in 2 yrs.

Fast forward to the time when this house of cards implodes. Pitchforks and bonfires…………..

#70 Nagraj on 07.29.15 at 8:25 pm

I, Nagraj, personally don’t give a rat’s ass about the financial health and welfare of some youngish Fraeulein Doktor stuck in a stupid condo on the outskirts of stupid Hogtown. Ditto f youror Kit Carson the plumber who’s the same age as that Fraeulein Louise.
Hey, Carson! Why don’t you get Louise’s phone number and phone her up every night singing Chevalier’s “Every little breeze whispers Louise.” [Give her a chance for a break from those “unzipped cabana boys”.]
Any female (or other) blogdogs around here who’d like to digress on Mr. Turner’s “unzipped cabana boys”?
Yes indeed we’re easily distracted around here.

I, Nagraj, would rather be homeless and begging on the streets of Scarberia than be a dentist. Gad, what a Satanic “profession”. Anybody know what the suicide rate is for dentists? Jesus had perfect teeth, and sends ALL dentists straight to hell when they die. No exceptions. (I hasten to add that this is not true for veterinarians.)

Finally, what’s up with “Louise, please tell us you’re not a psychiatrist.” Psychoanalysissyphobia? What skin is it off your old nose, Gartho baby, if she were? Your blog provides excellent money advice for free which is rather COMMIE SOCIALIST DIPPERISH of you, isn’t it, and yer gonna need psychoanalysis when you realize you’ve “inadvertently” voted NDP due to your parapraxis. HA HA HA

Finally finally speaking of plumbers (“engineers”) societies sporting outhouses and horse-drawn carriages lacked much of nothing that Condoronto for example couldn’t do without today like the 401 parking lot . . .
They have an excellent sewer system in hell, there’s no plumbing or traffic in heaven.

#71 Visitor Number 9 on 07.29.15 at 8:27 pm

I make an 8 figure salary…unfortunately there is a decimal point involved.

#72 Hickster on 07.29.15 at 8:28 pm

#50 Louise

Nice work making $300 as a GP. That’s quite a bit more than most GP’s make. I barely make more as a specialist, and you had 3 fewer years of training. I applaud you.

I have a question though – what have you found doing the math on the invest via corp in pre tax income vs invest with TFSA in post-tax income? Garth thinks the latter is better, however his assessment left out several significant financial benefits of the corp, likely due to unfamiliarity with them. My math shows corp investing wins because of significantly larger amount that can be invested (at least $60-70 grand more per year for me). What do you think?

#73 Bondgirl on 07.29.15 at 8:31 pm

I completely agree that Toronto real estate is overvalued and needs to correct. What I’m trying to figure out is when that will begin and how long it will take for prices to normalize. I’m reading that the recent oil crash and the loonie’s dive are both good for Ontario’s economy as we are a net importer of oil from the west (ie what’s bad for Alberta is good for Ontario), and of course a cheaper loonie = more exports (assuming that the US does recover as everybody is expecting it to). So, the narrative goes that laid-off oil patch workers will migrate eastwards (ie to Ontario) where jobs are slowly being created. (for eg, this: http://blogs.windsorstar.com/news/windsor-playing-a-role-in-ontarios-resurgence-construction-group-says) Plus, the Ontario govt is planning to provide economic stimulus through it’s infrastructure projects (which will use Canadian labour and resources). So, my question is: if Ontario manages to improve its economy over the coming years, why would real estate values drop?

#74 Mukadi on 07.29.15 at 8:32 pm

I guess Canada is paying MDs $500K in order to avoid fake bills:

http://www.clickondetroit.com/news/michigan-cancer-doctor-farid-fata-pleads-guilty-to-16-counts/28087698

#75 pwn3d on 07.29.15 at 8:39 pm

#50 Louise on 07.29.15 at 7:27 pm
To clear up the confusion about my income (such a fuss, everyone!), its ~ 300K. No, I’m not a specialist.

I do have a lot more money in my corporation. The outlook isn’t all that bleak :D
——————
You’d think a MD would be a little more precise with their numbers, that’s hardly mid 6’s.

#76 Charles on 07.29.15 at 8:40 pm

Garth,
Long time addicted to your blog.
Bought a property (we moved) in the States, 1/3 of Toronto crazy prices. Promised my self to stop reading your blog but I can’t. Any advice?

#77 Retired Boomer - WI on 07.29.15 at 8:45 pm

#41 Sid
#54 Dutch 4505

It would appear that HOME CAPITAL is a sub-prime lender.
Classed as an alternative lender, one must understand what “sub-prime” really is. Well, you can seek Wikipedia
…. think FICO score under 640.

Real World definition:

1. Can’t Afford to pay attention

2. Can’t Afford a down payment on a “free lunch”

3. Stated Income Loan (See: Liar’s Loans)

Various articles have intimated that 12% of the loans made last year had fraudulent elements. Well Then, I guess that makes at least ONE Canadian Lender in the Fradulent Bankster wanna-be category.

Now, shall we guess where these perhaps Toxic Mortgages were sold? Oh, go on GUESS!!!

This does NOT mean to imply that all these loans will ‘go bad” one day.

This DOES indicate the market for Real Estate is oversold, and dangerous presently – in my opinion.

Sell, if you are considering a sale.

Do NOT immediately repurchase.

I HAVE seen this movie before, ending hurts the unwary!

#78 family beagle on 07.29.15 at 8:46 pm

My seven year old is so cute–she says she would just die for an ‘sfh’ in ‘yvr’ at ‘2.5%’, and a pony. She is on her way with 200k views singing happy birthday to a plastic gold fish, which nets her 2k US per month from youtube. She will be seven figures by the time she has one. She’s learning young that pretty pays and ugly dies of starvation. My eldest (9) is going to Kardashian Summer Camp with plans to become a realtor/web personality/lawyer/sex change doctor, in that order! I explained that being a doctor can sometimes be icky. She says not that kind of doctor, she’s going to be a real doctor, like the ones who prescribe drugs and make lots of money, but only if she gets bored selling houses. Such a smart child. She is our light. They are all voting NDP, because their teacher says if you don’t, you are a bad person. Shame, shame on all you haters and negative people out there. Well, i have to run to cstco, we are having a big party for Caitlin’s coming out one week anniversary. Yeah! If you don’t know who Caitlin is, you are a hater. It’s important to encourage children to be who they imagine they are, and not label people because they are different. Otherwise is just child abuse. If you have a boy, encourage him to have a sex change, and start the therapy early. He could grow up to be a hater. Having girls is the bestest ever. We are all bff’s and get to look pretty and make lots of money. Hey, when my seven year old advises to “buy RE”, it’s probably too late for you. Tra la.

Jennie,
mom first, friend second, realtor, then a wife.

#79 pwn3d on 07.29.15 at 8:46 pm

#53 nonplused on 07.29.15 at 7:39 pm

Mid 6 – $150k, highly specialized work
Management – 200k
VP – 300k to 500k
Executive – 7 figures

imo:
mid 6 is not 150k
management is 100-200
VP is more like 100-500
c-suite is 400-2m

of course this assumes the company is a decent size

#80 bigtown on 07.29.15 at 8:59 pm

It continues to be all about retail…Jones New York is tetering and Whole Foods’ (colloquially known as WHOLE PAYCHECK) recent quarter shows bad numbers. There is a quiet Revolution in LADIES footwear happening which will remove STILETTOS from the shelves…notice your mall in the coming months.

In a market that is subsidized Supply and Demand determine the price of goods or commodities unlike Canada which is regulated by the GOVERNMENT’S MARKETING BOARD’S mechanism which SETS prices. Subsidized markets favour consumers whereas MARKETING BOARDS favour FARMERS and there is no price discovery as PRICE DISCOVERY is removed by the INVISIBLE hand of the CANADIAN GOVERNMENT. Easy to see how TPP has no truck with our MARKETING BOARD philosophy.

#81 JacqueShellacque on 07.29.15 at 9:11 pm

At a work gathering on Friday, found out that a colleague (who can’t make more than 70k at the most) has gone in with 2 in-laws on a 730,000 waterfront property on Lake Ontario, Golden Horseshoe area. What I thought was most incredible was his description of purchasing equities as “risky”.

#82 gladiator on 07.29.15 at 9:17 pm

LH:
you are right – the mid point is 550k, not 450k. I was calculating the distance to the mid point, not its value.
Dummy me.

But now I am even more eager to know what type of physician job pays such dough!!!

#83 Tom from Mississauga on 07.29.15 at 9:25 pm

Hi Carson
Open a margin acc’t at discount online brokerage with your bank. Deposit $5K, invest $10K in an ETF, make monthly deposits. Watch it go!
Good luck

#84 Richie Rich on 07.29.15 at 9:30 pm

DELETED

#85 Ronaldo on 07.29.15 at 9:42 pm

#76 Charles on 07.29.15 at 8:40 pm

”Garth,
Long time addicted to your blog.
Bought a property (we moved) in the States, 1/3 of Toronto crazy prices. Promised my self to stop reading your blog but I can’t. Any advice?”

First review the list in the attached link and if you can check off 10 items, you are indeed a blog addict. After that get in touch with Mark, Shawn and Smoking Man and arrange to have a session to see if you can come up with a solution. Good Luck to you.

http://yakezie.com/5882/lifestyle/you-might-be-a-blogging-addict-if/

#86 Washed Up Lawyer on 07.29.15 at 9:47 pm

Can the doctors commenting tonight (Louise? Hickster?) tell us what the annual CMPA premiums look like these days? Must be hefty. Curious only because 30 years ago I was doing some defence work for docs in malpractice suits.

As an old backwoodsman (now a backwardsman), can I make an attempt at sagacious analysis of the depraved killing of Cecil (Cyril?) the lion? This sorry episode has all the trappings of a “canned” hunt. In a canned hunt, the trophy is guaranteed. With a proper investigation, it may well emerge that he was emailed photos of the animal he could kill before he determined his price point.

The lion was collared as part of a research project (students? professors? from Oxford if memory serves). It is unlikely that the Brit biologists took the tracking receivers home with them. To gather data, it would have made more sense to leave the tracking devices in the hands of locals.

The magnificent creature had may as well have been tethered to a post or in a corral awaiting the arrival of the dentist. He was no Karamojo Bell. (Wikipedia)

Walter Dalrymple Maitland Bell (1880–1954) aka Karamojo Bell , the African big game hunter, soldier, decorated fighter pilot, sailor, writer and painter.

#87 liquidincalgary on 07.29.15 at 9:49 pm

i know of at least one cancer specialist (no, not a surgeon), who bills out at $600/hr.

hospitals get into bidding wars when the appropriate candidate presents his/herself.

#88 Interstellar Old Yeller on 07.29.15 at 9:50 pm

Fun read tonight! Only disagreement is about the Club Med cabana boys. As a single, 29 yr old MD, Louise can get that shizz for free!

#89 Cici on 07.29.15 at 10:02 pm

And it must be a sad existence of unzipped cabana boys at Club Med and too much blow. After all, you’re an MD earning “mid six-figures” with over a hundred grand in debt, a cruddy suburban condo and just $30,000 in a TFSA. Where’s the cash going? Louise, please tell us you’re not a psychiatrist.
___________________________________________

LOL, so funny…but not so fast, Garth! We shouldn’t be too hard on her…she’s probably only been out of school for four years, has huge loans to pay back, has saved up $40K, and invested in the condo (which arguably was a pretty modest purchase considering that many people with less than half of her annual salary are leveraging up on real estate that’s five to eight times more expensive).

I agree will all of your advice, but think we should mention to her that after the sale of the condo, and once a huge payment has been made towards the tens of thousands in student loan debt, she will see a nice new monthly inflow resulting from the lower debt service charges. According to my calculations, she’s probably paying at least $1,000 a month (but probably more) in debt service charges, right?

#90 Hickster on 07.29.15 at 10:07 pm

#82 gladiator

Most surgeons make that. Also radiologists, gastroenterologists, ophthalmologists, although those three are vastly overpaid due to quirks in historical billing.

#91 S.Bby on 07.29.15 at 10:07 pm

#43 Brydle604 on 07.29.15 at 7:03 pm

Come to B.C. New Mines, LNG, Site C dam, Movie industry, High Tech, diversified economy, doing better than other Provinces, and great weather.
————————

Yup.
Until the BIG ONE hits.

#92 Steve on 07.29.15 at 10:25 pm

I just used leveraged investing for the fist time last june. Borrowed 100K with B2B Bank about 6 weeks ago and invested immediaely in two funds (with Fidelity). Interest rate of 3.6%. No reimbursment of the loan. I just pay back the interest (about 300$/month). Well, 6 weeks later, I have 105,540$ in my account. And it costed me 450$ so far…

Risky though. But I can live with the risk.

#93 crowdedelevatorfartz on 07.29.15 at 10:40 pm

I’m not sure which part of todays’ photo is so disconcerting…..the Freudian overtones(undertones?)….. or my severe lactose intolerance causing musically embarassing flatulence…….

I’ll stop now before “deleted” becomes my fate.

#94 Investorz on 07.29.15 at 10:49 pm

The big story today, is that HomeCapital brokers were Falsifying income! Now how juicy is that news?

We’ve been speculating forever, hoping, thinking real-estate is crazy, but no proof, nothing tangible…. right?

And now, a first crack. Risk in the system black on white.

Check in google finance the symbole HCG.
Then look at that symbol on Twitter and you’ll find… interesting ‘conversations’ between ‘all is good Barry Schwartz’ and a chicken farmer.

#95 Got milk? on 07.29.15 at 10:50 pm

This picture reminds me of yesterday at Walmart saw chocolate milk guess what the 1 litre has shrunk to 750ml in BC anyway same price wouldn’t that be 25 percent inflation?
The good news is I don’t drink chocolate flavoured milk just noticed because the containers looked odd. After all that’s where they put all the off color milk to hide it that’s what a woman who worked at the plant said anyway so I’ve been suspicious ever since lol.
also noticed in the valley the traffic is worse than ever even lineups at the border see no slowdown and people at Walmart lineup down the isles on a Wednesday for a moment I thought it was Saturday seeing carts piled high those house ATMs are still running strong from what i see and gas is up at 1.26 a litre for regular and 1.40 for premium diesel 1.14 so it’s all good seems people got endless credit! I’m mocking for those that don’t understand!

#96 Trumped Varmint on 07.29.15 at 10:50 pm

Garth, straightforward solution for the Louise situation here.

Conduct an orderly and legal bidding war, amongst the great unwashed rabble on this blog, for this fair maiden’s hand in marriage. The winning bid should easily cover any special assessment. The winner gets a 5 year contract to sign on as at home husband. At end of 5 years, husband goes on waivers and process is repeated. Rinse and repeat every 5 years.

This is a win-win-win.

Louise gets the loot and and handsome galoot.
The winner gets a 5 year term with a bread winning wife and lives as a trophy husband….and most importantly,
Garth gets a 5% finders fee which is fair and equitable for proffering this socially beneficial service.

#97 Trumped Varmint on 07.29.15 at 10:56 pm

#92 Steve on 07.29.15 at 10:25 pm
I just used leveraged investing for the fist time last june. Borrowed 100K with B2B Bank about 6 weeks ago and invested immediaely in two funds (with Fidelity). Interest rate of 3.6%. No reimbursment of the loan. I just pay back the interest (about 300$/month). Well, 6 weeks later, I have 105,540$ in my account. And it costed me 450$ so far…

Risky though. But I can live with the risk.”

Totally meaningless unless you cash out…remember Kenny Rogers. ya never counts yer money sitting at the table…..

#98 millenial1982 on 07.29.15 at 10:58 pm

Woah, folks. How many of Canada’s brightest and wealthiest financial experts does it take to figure out a mid six figure income here?! As if most of us have nothing better to do…

#99 Drill Baby Drill on 07.29.15 at 10:59 pm

#93 crowdedelevatorfartz
Freudian overtones(undertones?)…..

I think you meant uddertones.

#100 debtified on 07.29.15 at 11:00 pm

Louise knows exactly what she meant. Like most of us, she conveniently rounded up. To be fair, she did say “mid six-figure range”. Key word is “range”. Regardless, this was not the point of the whole lesson to be learned here. People get distracted too easily, as always.

In case you are not not making as much as Louise and you live in Ft.Mc., looks like you may be having problems paying your debt: http://www.bnn.ca/Video/player.aspx?vid=667712

#101 Bottoms_Up on 07.29.15 at 11:18 pm

#6 DJG on 07.29.15 at 5:17 pm
———————–
There are reliable sources that show what the average physician makes. They earn gross in the ballpark of 300-400k, but then need to pay admin salaries and overhead out of that. Add on income taxes, and take home pay might be 100k to 150k. Not bad.

#102 Obvious Truth on 07.29.15 at 11:20 pm

At least they are asking the questions….

Good on them. It’s really not that easy for most people to figure all of this out.

They will all get there. Keep reading.

Louise. Don’t make us refer you to the specialist known as the jar lady!

#103 saskatoon on 07.29.15 at 11:22 pm

sigh…

socialized medicine.

envisioned by tommy douglas, hardcore eugenicist and “greatest canadian of all-time”.

1933 master’s thesis entitled: “Aspects of the Subnormal Family”

#104 OXI in GREECE !! on 07.29.15 at 11:26 pm

http://www.marketwatch.com/story/fed-keeps-rates-unchanged-september-rate-hike-not-ruled-out-2015-07-29

No Rate Hike in Spring

Not Rate Hike in Summer

And coming to a FED meeting near you there will be no FED hike in September…..

#105 45north on 07.29.15 at 11:28 pm

Family Beagle: Jennie,
mom first, friend second, realtor, then a wife.

yep

#106 omg the original on 07.29.15 at 11:32 pm

Brydle604 on 07.29.15 at 7:03 pm
#33 Ontario is done.
Ontario is the most indebted non Sovereign borrower in the World now.
Ontario and Quebec total debt is $500 Billion
Come to B.C. New Mines, LNG, Site C dam, Movie industry, High Tech, diversified economy, doing better than other Provinces, and great weather.
———————

Brydle, – seriously???? You must be a real estate agent because everyone else that lives in BC want FEWER PEOPLE coming here not MORE.

THE TRUTH IS:

It RAINS in BC from September to May.

We will once again have a SOCIALIST government run buy the same CROOKS that ran the government in the 1990s. Mind you right now we a CONSERVATIVE government calling themselves LIBERALS, and they are a bunch of CROOKS.

The government will soon legislate the 100 MILE DIET so that you can only eat potatoes and 6 month old apples all winter long. And pay $16/lb for locally raised organic beef.

Yes the SKIING is amazing, when its not rained out or fogged out – and so long as you $500/day to ski.

Even non-rush hour traffic is insane.

And 40% of the streets will soon be designated BIKE lanes.

So all you easterners stay away. Save your money and just go to Florida for 3 weeks each January.

#107 Bob Santarossa on 07.29.15 at 11:33 pm

Disagree about Louise.

If she sold she would net $53,000 after real estate and lawyer fees.

Her costs increase a minimum of $450/month is she sells and then rents (current = $1,350/mo. and rent = $1800/mo, minimum).

To break even (i.e., earn the $450/month back in interest) she would have to invest the $53,000 at a simple interest rate of 10.2% (= $450 x 12/$53,000).

Unlikely she will find a 10.2% simple interest rate nowadays.

Of course, she could invest the $53,000 in an RRSP and get some of that back in income taxes but that depends on her tax bracket. Maybe the required interest rate is a few % points lower to break even.

If her job is secure and she is young enough, stay put and ride the 2015 recession out, if there is one, and probably to 2019. By then the real estate value will have regained the losses.

#108 omg the original on 07.29.15 at 11:36 pm

Charles on 07.29.15 at 8:40 pm
Garth,
Long time addicted to your blog.
Bought a property (we moved) in the States, 1/3 of Toronto crazy prices. Promised my self to stop reading your blog but I can’t. Any advice?
————————————–

Ya, this blog is strangely compulsive.

I have been on it since 2009 and have sworn off it several times but can’t do it.

Worse thing out there ‘tho.

Some of the commenters are pretty good and some really make me feel smart (and sane).

#109 Bottoms_Up on 07.29.15 at 11:49 pm

#45 Steve French on 07.29.15 at 7:10 pm
—————————————
She said mid six figure range. Range is the key word. Range, combined with mid, indicates somewhere between 300k-600k. I have friends that are physicians. This is their gross salary, they have lots of other expenses, no benefits and no pension. I’d be curious to know what her net income is.

#110 SWL1976 on 07.29.15 at 11:52 pm

#23 Trophy Hunting Dentist

Now that post made me chuckle

WUL

Is this you?

#111 cramar on 07.30.15 at 12:59 am

In reference to that pathetic semi Garth headlined yesterday, I wondered if you get any parking for $688,000 (X2)?

It is interesting to contrast this “beyond fixer,” to something I found for sale in my area. For a mere $500k, you can get this modern Custom, with 5BR, a 5-car garage, on 1 acre of land! Tempted myself.

http://www.realtor.ca/Residential/Single-Family/15356925/458B-MERSEA-RD-21-LEAMINGTON-Ontario

Message to Lousie. Must suck to live in TO and live in a tiny box stacked among other boxes. Our area is trying to attract doctors. With a doctor’s income, you could afford a real house worthy of a doctor such as the above.

#112 Chaddywack on 07.30.15 at 1:31 am

Ok. Seriously, who cares about this whole “mid-six figures” thing. I’ve never seen such a silly debate on a comment board. Let’s focus on something more important.

Guys, get Louise’s phone number.

My spouse is a doctor. Highly recommended.

#113 att on 07.30.15 at 1:36 am

Why does someone making $300k a year have so much trouble saving money? Our incomes combined amount to less than half of that and we have a net worth of about $600k.. only a few years older than poor Louise. Maybe Cabana boys on only odd days and read blogs on the other ones?

#114 TB on 07.30.15 at 1:38 am

http://www.theglobeandmail.com/report-on-business/economy/housing/californian-short-seller-targets-home-capital-group-canadian-real-estate/article25715455/

“A mix of money laundering, speculation and low interest rates.”

And no reporter blinked an eye…..yet the globe and Mail has spelling mistakes in headlines for god sakes…..what is going on here??? I feel like I’m in a car with a bunch of people and the driver is clearly asleep at the wheel and no one but me seems alarmed…

#115 BC Guy on 07.30.15 at 1:50 am

In other news: Harper to announce election this Sunday.

Let the games begin. Time for regime change. Remember the Robocall scandal, the TFW scandal, cuts to Old Age Security, Joe Oliver calling pipeline protestors “terrorists” … what else?

I’m hoping for a minority government with Mulcair as PM. Ideally, I’d like to see proportional representation.

And oil bounced up today. Had to.

#116 Kamilopea on 07.30.15 at 2:22 am

Sorry, don’t know what BV stands for in this context. Help.

#117 eddy on 07.30.15 at 2:52 am

Canada is a Tinpot Dictatorship

https://www.youtube.com/watch?v=1Mpe0Q_K0tQ

#118 Carpe Diem on 07.30.15 at 3:39 am

I’ve been in Vancouver over the last 2 weeks for a death in the family.

Very sad.

The highlight of my last 2 weeks (it’s been a mess) was meeting a blog dog! This is a first time for me!!! He was talking and I cut him off and he confirmed he was reading the GF site. We laughed!

Now .. as for Richmond(BC) … where I’m staying with family friends … It is much more Asian than when I lived here 10 years ago.

But it’s nice. People are nice. Skytrain gets you to downtown in 20 mins.

If I wasn’t living in Ottawa, I’d live in Richmond. But then again, being under sea level might not be wise …

Oh then again, the debt to live in a nice place is CRAZY in Richmond or Greater Vancouver.

Prices are crazy.
Debt loads are crazy.

I won’t forecast what will happen.
But from what I see, nothing good can.

People are sheep and being led for slaughter.

And then will be slaves.

#119 Steve French on 07.30.15 at 4:18 am

– DELETED – (too awesome of a post for the general public to see)

#120 Steve French on 07.30.15 at 4:21 am

http://dyslexicsmokingman.blogspot.ca/2015/07/fans.html

Lol Smoking Man really does chat up the ladeze at Seneca… but how much did you pay those hawties to pose with you…

#121 Londoner on 07.30.15 at 6:19 am

#63 raisemyrent

taxes are unavoidable is what I recall being the conclusion
_________________________________________

Tax, like any other expense, should be minimized in order to maximize retained earnings. For some, offering services through a corporation provides an efficient structure to avoid incurring taxes that would otherwise be payable should the person receive their compensation as salary. Remember tax evasion is illegal, tax avoidance is not.

#122 Jessica Olette on 07.30.15 at 6:38 am

Canada’s debt is around $615 billion and has around 35 million population.

This comes out to $17,571 debt per Canadian.

Ontario and Quebec’s debt is around $490 billion and has around 22 million population.

This comes out to $22,272 debt per Ontario and Quebec resident.

This is about 27% higher and less than $5,000 per resident more debt.

They have more debt but it does not seem really bad as many are painting it to be.

#123 BillyBob on 07.30.15 at 6:39 am

A physician in ontario, unless a specialist returns average 200-250 k I believe. If specializing ,surgeon,cardiologist etc prob 400-450k.

Don’t know many docs, do you? — Garth

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

I do.

Most GP’s could be replaced with a computer program that asks you yes/no questions until it arrives at the treatment of either an appropriate medication or referral to a specialist. GP’s are not paid 300,000 in Ontario. Gross that, perhaps, but after even the most careful management of overhead, whether own practice or clinic, no way to net that. It is simply not that lucrative to be a GP, hence why so many med students go into specialties. (Opthamologists have one of the best deals going: billing the same as 20 years ago for procedures that now take a fraction of the time with modern technology, so several can be performed in one day. Hence ophthalmology is exceedingly difficult to get into).

It’s easy to say people are distracted easily, but I think it’s more the fact that the story doesn’t quite add up that has people piqued. Even Garth wonders where the money went, if the income is accurate. Advice doesn’t make much sense otherwise.

Louise posted last night and confirmed an income of $300,000. — Garth

#124 Jessica Olette on 07.30.15 at 7:03 am

The U.S. has around around an 318 million population and $18.1 Trillion national debt.

This works out to a much higher $57,000 debt for every American.

#125 Jessica Olette on 07.30.15 at 7:17 am

Mexico has a $9.1 trillion national debt and 122 million population.

This is even much higher $74,590 debt per Mexican.

#126 Ehsan on 07.30.15 at 8:23 am

Hello

Interesting that not many people responded to your generous offer to focus on answering financial questions. I have one:

Me and my wife will move to Belgium soon. We have about 200 K all liquid in TFSA (50 K) RRSP (20K) and the rest in non registered accounts thanks to your advises. The money is invested 50% in diversified Canadian assets, 20% US, and the rest is cash savings. We are very confused that what we should do with it? Should we collapse and go? Should we file tax each year in Canada? We do not plan to come back soon (if anytime), nor we plan to buy house in Belgium (or any other place if that matters). We like to keep our assets though as we invested with not short term horizon. So wonder what is the consequence of moving out of Canada for people like us? (an idea for a post?)

We just want to have access to this money later without tax headache. I am Canadian Citizen and she is PR in Canada and European national.

Thanks a lot for any help and insight.

#127 Bill Needle on 07.30.15 at 8:43 am

Mr. T …

I like this tone! Direct, Poignant and Fresh. Obviously you watched too many episodes of SCTV and read far too many Charly Brown comics.

#128 Ballingsford on 07.30.15 at 8:43 am

A question on your RESP comment. If my son decides to become a rock star, I thought I’d only have tp pay the 20% back and only pay capital gains on any money earned and not have to pay any tax on the amount I contributed.
is my understanding not correct? Why would I worry about RRSPS room? I’d likely go the TFSA route.

You are allowed to roll contributions made into an RESP into your RRSP, maintaining tax-free status on them plus the accumulated growth to a limit of $50,000, if (a) the plan has been open at least a decade, (b) your kid is at least 21 and not seeking more education and (c) you have the contribution room in your retirement plan. If you transfer to your TFSA, the growth is taxable plus you face a 20% tax hit. — Garth

#129 sue on 07.30.15 at 8:51 am

#37 Unhinged Loon
Thanks for the full on belly laugh first thing in the morning.

#130 Llewelyn on 07.30.15 at 9:24 am

I find it interesting that Carson used a target return of 7-8% to measure his potential net return after incurring a debt to invest. I feel it is important to remind potential investors that the rate of return on investment always includes an inflation component. Before investing it might be useful to examine the historical rate of return on investment of 7.0% quoted many times on this blog to determine what portion of this average rate of return was inflation related.

Many readers of this blog have noted that the reset rates of preferred shares were significantly lower than the rate at time of issue. Other readers have commented on the historically low rate of sovereign and corporate bonds. The Dow Jones average on January 2, 2015 was 17,832 and yesterday it closed at 17,751. It seems clear to me that low inflation is having a significant impact on the rate of return that might be achieved from any form of balanced portfolio in 2015. When you can borrow money at less that 3.0% you do not have to offer potential investors one penny more.

The advice Garth gave to Carson regarding the narrow spread between the cost of borrowing and the possible rate of return should be placed on every investor’s desk. It is difficult to achieve a reasonable rate of return on investment without inflation and when inflation begins to increase the cost of borrowing in all forms will rise accordingly.

Garth seems confident that a historical rate of return of 7.0% per annum from a balanced portfolio can be maintained in the foreseeable future and he certainly has the credentials to make that assessment. I have no idea what is actually in the ‘balanced basket’ he is referring to but most components on the shelf of opportunity are inflation based and do not seem to be offering a rate of return even close to 7.0% over the past year.

I understand that a one-year snapshot is no basis for a long-term investment strategy but find it difficult to see how an average return of 7.0% per annum can be achieved without a substantial increase in inflation.

There is a historical relationship between interest rates and inflation and in this very prolonged period of low interest rates I sense that the average rate of return on any ‘balanced basket’ has adjusted downwards and will only increase with a rise in inflation.

One fact seems clear and that is we are living in very interesting times!!

#131 JSS on 07.30.15 at 9:26 am

Suncor raises dividend

Cenovus cuts dividend

#132 Smoking Man on 07.30.15 at 9:39 am

#120 Steve French on 07.30.15 at 4:21 am
http://dyslexicsmokingman.blogspot.ca/2015/07/fans.html

Lol Smoking Man really does chat up the ladeze at Seneca… but how much did you pay those hawties to pose with you…
……

Are you forgetting I’m an ordained Dudest Priest. Need I say more…

You sponsored me… Stop drinking it’s affecting your memory.

#133 GRU on 07.30.15 at 9:41 am

OMG, the blog dogs sound like Minions today.

#134 Ballingsford on 07.30.15 at 9:45 am

#128. Thanks for the response Garth!

#135 Ole Doberman on 07.30.15 at 9:51 am

Can this be the canary in the coal mine?

http://www.cbc.ca/news/business/mortgage-lender-home-capital-cuts-ties-with-45-brokers-for-bogus-documentation-1.3173659

Gartho was right all along about sub prime in Canada.

What will the fall out be. It was just like in the US – no one suspected until the proverbial SHTF.

#136 CalgaryPotato on 07.30.15 at 10:00 am

How does rent and invest the difference work, when renting will cost $500 more than the cost of ownership?

Sure she’ll get her initial equity back, but even with that invested she won’t make enough to cover the difference.

And why don’t you post stories from normal people in normal situations. Hearing people making $300K worried about the possibility of a condo assessment is making this the ultimate first world problems blog.

#137 Bottoms_Up on 07.30.15 at 10:08 am

#121 Londoner on 07.30.15 at 6:19 am
————————————————–
Garth did a good post on this awhile back about doctors setting up corporations. Ultimately, there is no way to avoid paying a chunk of tax. Tax is paid out of a corporation once it ceases operations.

So you can avoid as long as you can….until you can’t.

#138 Smoking Man on 07.30.15 at 10:09 am

20 and 30 year us Treasury bonds on fire…

Bond market is telling Yellen, we don’t beilive you..

Damn, she’s going to mess up my bet.

I need another 4 cent spike in the USDCAD to make this the best short term trade ever.

#139 Redman on 07.30.15 at 10:11 am

Garth, I have a question on Louise’s situation. With mid-six digit income, she really should be paying of the mortgage, right? Single and no kids, she really could pay that off in a year or so.

#140 Sheane Wallace on 07.30.15 at 10:21 am

#130 Llewelyn

Inflation and Growth are 2 different things. Narrowing the spread between cost of borrowing and rate of return shows that economy is not growing well in nominal terms (maybe the proverbial deflation that you can’t see anywhere except in the price of oil in USD), Inflation in food prices is rampant.

What we clearly see is peak credit and the only way around it is inflation. I expect sound inflation with low real growth until debt to GDP goes down significantly. Give it 10 + more years. In essence prolonged clearing of the crap from the big credit bubble. This is for the normal world/US.

For us in Canada the time frame might be the same but the degree of imbalances and slack to clear will drive much higher inflation and weaker loonie.

To remind everyone – we have not even started to address the debt issue, on the contrary, we confidently
(confidence influenced by CMHC and BOC, in essence government policies) continue to pile on debt.

Maybe there is nothing else left in our economy except housing and FIRE, after the oils slump?

I don’t have the numbers to judge but is sounds pretty likely.

Our manufacturing is non existent except producing things like potato chips for US.

If commodities do not pick up (it could be the case in the next 10 years) we are in big trouble with huge debts and growing and no real economy.

Smart money in USD end Euro might be buying very cheap commodities 7-10 years form now, if the UDS/Euro financial repression policies persist.

7 % + return (nominal) comes from dividends (3-4 %) + growth (1-2 %) + inflation, 7 % + returns look like pretty sound bet.

#141 Bill Needle's Assistant on 07.30.15 at 10:33 am

Garth, let me try:

#126 Eh-san – this is a Canadian site for the finacial literacy of Canadians. I would advise you to find a Bearded Belgium Blogowner for finacial consultation …but in my opinion… you are far too heavy in Canadian investments, and have too much cash kicking around. And good luck trying to drop the ‘Eh’ handle now that you’re not one of us anymore.

Next!

#142 Daisy Mae on 07.30.15 at 10:35 am

#57: “…..and you are ” terrified of the future possibility of a special assessment” on a 200k condo?
what’s up with that?”

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

I know someone who, unfortunately, took out a Reverse Mortgage for $100,l000 to pay her ‘leaky condo’ assessment.

#143 JimH on 07.30.15 at 10:52 am

#122 Jessica Olette
Enjoyed you post, but there is some confusion in your comparative analysis of per capita debt.

Your numbers are basically correct for the USA, where the per capita debt is running around $57K US.

However, this figure reflects the TOTAL US Government debt.

Your figure of $615 Billion for Canada’s debt reflects Canada’s EXTERNAL debt only, and the actual figure reported is $612 Billion (CAD) or around $795 Billion US.

Canada’s TOTAL government debt is running at about 86.5% of GDP; and rising. (The USA is running at about 102%)

Canada’s GNP as of December 2014 was $1,787 Billion (US). If Canada’s TOTAL government debt is 86.5% of GDP, then Canada’s TOTAL government debt is running at about $1,545 Billion (US).

This works out to a per capita debt of about $46,818 (US) per Canadian; Not as high as the American per capita debt, but not quite as rosy, either, when we compare apples to apples!

http://www.tradingeconomics.com/canada/indicators

#144 Daisy Mae on 07.30.15 at 10:53 am

#95: “…..at Walmart saw chocolate milk guess what the 1 litre has shrunk to 750ml in BC anyway.”

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

Everything is shrinking…even the 2015 Telus phone book. People giving up their landlines are not listed. ;-)

#145 johnk on 07.30.15 at 10:56 am

My daughter chose not to go to uni for an expensive nearly useless bachelor’s degree so we cashed out her RESP. The 20% withholding tax was a bit of a surprise to say the least.

#146 Investorz on 07.30.15 at 10:59 am

Garth:

“An anonymous letter was sent to the board of HomeCapital to warn them of brokers cheating on borrowers’ income”

I just heard this from the CEO on the conference call from HomeCapital this morning. It’s live now, maybe you’ll have to read the transcript.

We’ve been speculating for a while on this blog, but to me, it looks like our “First Real Fact” of mortgages being given to people who can’t afford it (according to risk models).

#147 Londoner on 07.30.15 at 11:01 am

#126 Ehsan

Why would you keep your investments in Canada if you don’t plan to return? More importantly, why did you invest with a long term view of Canadian assets if you were going to leave in the short term?

If you cut all your residential ties to Canada and become a non-resident then you don’t get the dividend tax credit and your broker will apply a non-resident tax on your non-registered investment income (on behalf of the CRA of course). You will also have to check with the CRA whether they will consider you a resident, non-resident or deemed resident, which is what determines how you need to file taxes in Canada. Finally, if your spouse wants to maintain their PR status then be prepared to apply for a renewal every 5 years with a visit to back to Canada to pick up the card.

#148 Bob Santarossa on 07.30.15 at 11:05 am

#126 Ehsan

Ensure tax treaty between Belgium and Canada; otherwise, you can be double taxed by both countries. I am moving to Italy (tommorow) and did this. Typically CPP and OAS ought not to be taxed by Belgium. As long as you have T3, T4 and T5 from Canada, Belgium will not tax if like Canada – Italy treaty. Ensure you show Canada residency by keeping bank accounts, drivers license, Canadian Passport etc. This for your dual citizen wife.

#149 Sharon Bone on 07.30.15 at 11:08 am

Liar Loans a big thing with CDN Mortgage Brokers. Home Capital suspends all relations with 45 companies. What happens to the loans now that they’ve been proven to be false statements?

http://business.financialpost.com/investing/home-capital-group-inc-says-45-brokers-suspended-after-discovery-of-falsified-income

No problem….the brokers now start fudging the bsmt suite rental numbers to make up the difference….CMHC never verifies the applications anyway.

#150 onpar on 07.30.15 at 11:11 am

Hey Louise!
First off, do you like coffee?
Second, here’s my story. Like you, I purchased a 1 BR + Den condo in downtown Toronto (in 2010.) I sold it last year for just $5K above what I paid. However, during my stay there we received a special assessment. My share was $10K. I sold last year to move into a rental and have since topped up my TFSA, RRSPs, and continue to add to my non-registered account.
There is so much more I could tell you.
Which brings up my third point: do you like coffee?

#151 JimH on 07.30.15 at 11:15 am

my post #143
“Your figure of $615 Billion for Canada’s debt reflects Canada’s EXTERNAL debt only, and the actual figure reported is $612 Billion (CAD) or around $795 Billion US.”

Should read “$471 Billion (US)”. Sorry.

#152 BillyBob on 07.30.15 at 11:15 am

Louise posted last night and confirmed an income of $300,000. — Garth

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

Sure, so why the angst of carrying a mortgage that apparently only represents about six months income or why the big student debt still when it could be paid off in a few months? Meagre savings. Disconnect between a student loan that screams new GP and the income level stated. (Childhood friend is a GP in Napanee, which is my source of typical billing levels in ON). It doesn’t all quite add up.

Whatever, the advice to dump the condo and invest is still sound. Just saying there are more questions raised than answered. If the income is 300k/year and that is all there is to show for it, there is a spending problem, which would have to be addressed before anything else.
Or she will just be yet another professional living beyond her means, like most doctors (and yes, pilots! lol) that I know.

#153 Saskatchewanite on 07.30.15 at 11:16 am

#66 Hickster on 07.29.15 at 8:17 pm
If you live in SK, an RESP gets you 20% from the federal gov and another 10% from the provincial gov, a total of 30% for anything up to $2500 annually. That’s $750 free money from gov every year, per kid.
*********************************************
Thanks for that info! Our self-directed family RESP is with Questrade and they don’t offer the SK grant. Isn’t the SK grant income tested anyway? For anyone out there looking to open an RESP, we learned the hard way that you need to check this table to see if your institution actually offers ALL the grants: http://www.esdc.gc.ca/en/student_loans/resp/promoters_list.page
We initially opened our RESP with TD Waterhouse (because we liked their e-series funds) but then found out they only offer the BASIC CESG. I’m pretty sure some of the grants are income tested, so you may not need to worry about those ones. And the Alberta grant was cancelled earlier this year, due to their economy tanking, no?

#154 Londoner on 07.30.15 at 11:17 am

#137 Bottoms_Up

I remember the post but I disagree with the conclusions. There a differing views on how corporations can be used to avoid taxes. Consider Garths history in the CRA when you read that post. Just saying.

Saying what? That I know more than anonymous you? — Garth

#155 Saskatchewanite on 07.30.15 at 11:34 am

To #66 Hickster and anyone else:
I’m trying to understand how to CATCH UP on missed RESP contributions from past years: Contribute $2500/year per child [in order to get the maximum annual grant ($500/yr/child)!] But if you contribute $5000 per year, you can catch up on past grants missed: Contribute $5,000 and CESG will give you $1000 (20% of 5K), that makes up for 2 years of missed contributions, right there! Don’t contribute more than $5K per year per child b/c they won’t gv u grant money on any contribution over 5K in a given year.
Am I right?

#156 BillyBob on 07.30.15 at 11:34 am

#126 Ehsan

Ensure tax treaty between Belgium and Canada; otherwise, you can be double taxed by both countries. I am moving to Italy (tommorow) and did this. Typically CPP and OAS ought not to be taxed by Belgium. As long as you have T3, T4 and T5 from Canada, Belgium will not tax if like Canada – Italy treaty. Ensure you show Canada residency by keeping bank accounts, drivers license, Canadian Passport etc. This for your dual citizen wife.

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

No need to prove residency if the investments are domiciled in Canada. CRA won’t need to be convinced to tax you! Absolutely retain a tax lawyer to obtain proper advice on structuring your affairs, and – I can’t stress this enough – ensure they have expertise in expat tax affairs, not just domestic law. It won’t be cheap but will be the best money you ever spend. Most tax accountants and financial advisors are clueless outside of the Canadian borders.

And reduce the Canadian exposure already!

#157 waiting on the westcoast on 07.30.15 at 11:58 am

Q1 revised up 0.6% and steady growth in Q2 opening up opportunity for Fed tightening in September. SM – your trade likely will pan out… If you executed on it. ;-)

http://www.bloomberg.com/news/articles/2015-07-30/u-s-economy-picked-up-in-second-quarter-after-better-2015-start

#158 Llewelyn on 07.30.15 at 11:59 am

#140 Sheane Wallace

Dividends are tied to corporate profits and I am not convinced that China and other emerging markets will continue generate the profits achieved over the past five years. I like your confidence but many of the highest flyers are sitting on cash not paying juicy dividends. Any correction in the value of dividend based baskets will affect the net rate of return. Without a crystal ball I have no idea where stock markets around the world might be in five years and using a rear view mirror to assist with predictions seems a bit sketchy to me.

Growth over the last year has hardly set the world on fire and as a result my jury is still out. The USA announced GDP at 2.6 % but the primary contributors to this growth are being fuelled by a $550 billion deficit. I will have to see evidence of real growth, not debt infused growth, before I buy into a significant recovery scenario.

Inflation seems pretty close to zero unless all government sources are telling porkies. If they are lying about inflation it will be hard to accept other data at face value. Even the Federal Reserve seems confused why economic growth in the USA has not triggered some inflation.

I understand the importance of maintaining confidence for the investment and real estate industries but remain concerned that confidence building information is being generated by players with a clear vested interest.

My point was that if real economic growth, excluding the influence of debt, is only 2.0% and inflation remains close to zero your scenario of a net return of 7.0% seems a bit optimistic. I may prove to be completely wrong but it represents my interpretation of the world as I view it today.

#159 Pre-Retiree on 07.30.15 at 12:12 pm

@58 Lee:
You are wrong. Most physicians are paid through OHIP and not on salary so there is no Sunshine list for them.

@#29 James:
Also, physicians’ income is not increasing by 7% annually. Did you read the news lately? Paid attention to anything Wynne is busy doing with health care?

BTW, the point of the discussion today is not physicians’ income. It is not easy to become a physician and it is expensive too with many years of not earning a lot and not having much of a life outside of medicine. Ditto for the last part for many years after too.
Some are jealous of a mid-6 figure for a physician, others envy a 7-figure income for a trader and the smarts and guts of SM. So, why not just focus on yourself, with improvements in your financial lives, if needed, with the help of this blog?

BTW, physicians’ income is not the point of the discussion today.

#160 Distracted on 07.30.15 at 12:18 pm

This is second hand information, but a good buddy of mine is a family doctor. On several occasions has told me that is is almost impossible to make more than 400k a year. And if you opt for decent working conditions (9 hour days, 5 days a week, 48 weeks a year) you’re doing well to make 250k. He emphatically insists to discourage ANYONE from going into medicine for money, that they’ll be miserable, and that if you have the smarts and work ethic to become, and work as, a doctor, you’d be successful and have a similar income doing virtually anything.
(I know his spiel pretty well, because he tends to go there a lot. Pretty sure he has HUGE regrets about becoming a doctor.)

#161 Louise on 07.30.15 at 12:19 pm

“Sure, so why the angst of carrying a mortgage that apparently only represents about six months income or why the big student debt still when it could be paid off in a few months? Meagre savings. Disconnect between a student loan that screams new GP and the income level stated. (Childhood friend is a GP in Napanee, which is my source of typical billing levels in ON). It doesn’t all quite add up.”
====================================

Meagre PERSONAL savings. I have significant savings in my corporation.

It all adds up just fine. I pay myself a salary of only a portion of my total corporation income. Yes, I could pay off my entire LOC, but that would mean paying myself more salary and as such, more taxes come off. Once the condo sells (*cross fingers*) and I cut my debt in half, I plan on slowly paying off the rest of the LOC in the next 1-2 years.

====================================
“Whatever, the advice to dump the condo and invest is still sound. Just saying there are more questions raised than answered. If the income is 300k/year and that is all there is to show for it, there is a spending problem, which would have to be addressed before anything else.
Or she will just be yet another professional living beyond her means, like most doctors (and yes, pilots! lol) that I know.”
====================================

I live well below my means….cheap condo. ~ 8 year old car, very limited fancy clothing. Dine out infrequently.

====================================
“I have a question though – what have you found doing the math on the invest via corp in pre tax income vs invest with TFSA in post-tax income? Garth thinks the latter is better, however his assessment left out several significant financial benefits of the corp, likely due to unfamiliarity with them. My math shows corp investing wins because of significantly larger amount that can be invested (at least $60-70 grand more per year for me). What do you think?”
====================================

To me it definitely makes more sense to keep more money in the corporation and invest it there. Eventually drawing the money out is another conversation….

====================================
“Can the doctors commenting tonight (Louise? Hickster?) tell us what the annual CMPA premiums look like these days? Must be hefty. Curious only because 30 years ago I was doing some defence work for docs in malpractice suits.”
====================================

Initial monthly fees very high, but quite fair after reimbursement. I think I pay less than $100 per month when all is said and done.

#162 Godth on 07.30.15 at 12:23 pm

ETF Trading Volume Eclipses US GDP
http://www.zerohedge.com/news/2015-07-30/etf-trading-volume-eclipses-us-gdp

Good news.

Human domination of the biosphere: Rapid
discharge of the earth-space battery foretells
the future of humankind
https://collapseofindustrialcivilization.files.wordpress.com/2015/07/pnas-2015-schramski-1508353112.pdf

https://www.youtube.com/watch?v=FsqJFIJ5lLs

#163 Pre-Retiree on 07.30.15 at 12:28 pm

In my opinion, Nagraj and #150 Onpar both win the “Post of the day” award.
Good luck with your first date with Louise, Onpar!

#164 Sensibilly on 07.30.15 at 1:06 pm

Doctors make on average more than some gross…but take home is lower than others.

http://www.theglobeandmail.com/life/health-and-fitness/health/how-much-are-canadian-doctors-paid/article7750697/

#165 Bob Santarossa on 07.30.15 at 1:36 pm

#156 BilyBob

Do not where you are getting info. from, suggest you read Tax Treaty before saying domiciled and what in the treaty is considered Residency – the definition is detailed.

My info. from Italian Ministry of Finance Rep. in Vancouver, their Revenue Canada.

And your source is?

#166 Rational Optimist on 07.30.15 at 1:56 pm

95 Got milk? on 07.29.15 at 10:50 pm

The Kiwis are going to save us from our backwards supply management schemes, and then your milk’s price will move according to market forces.

#167 Ballingsford on 07.30.15 at 2:07 pm

#128 another question and this regards your response. Is the 20% tax hike about equal to the 20% that the gov’t contributed and this is how I pay it back?

#168 Blogbitch on 07.30.15 at 2:12 pm

Garth,
Love the format of this post. Straight up advice that is easy to understand. Do more posts like this, please!

#169 TurnerNation on 07.30.15 at 2:16 pm

Run for office this blog says?

Sure check brain at door. And instantly get your own file at CSE. I’m spooked out.

http://m.thestar.com/#/article/news/canada/2015/07/30/video-shows-conservative-mps-reading-from-identical-script.html

#170 Ehsan on 07.30.15 at 2:23 pm

#148 Bob Santarossa

We did not plan to go Belgium and we do not plan to come back to Canada (does not mean that it may not happen). I invested with long horizon as it is the only way that diversification and balancing would work (I did not want to trade).

#171 Jerry Holston on 07.30.15 at 3:04 pm

Home Capital stock price was up 4.03% yesterday and is up 13.56% today.

#172 gut check on 07.30.15 at 3:36 pm

#160 makes the best argument for socialism that I’ve ever heard, to be honest.

#173 Smartalox on 07.30.15 at 3:53 pm

A few people have posted about Home Capital’s recent revelations, see the article here:

http://www.theglobeandmail.com/report-on-business/economy/housing/home-capital-suspended-mortgage-brokers-after-anonymous-tip-last-fall-company-officials/article25776197/

BUT nobody mentioned what I thought was the most interesting part of the article:

In many cases, the borrowers actually worked at the companies listed in their employment letters, but earned less than they claimed. “Some of the letters had been altered, where an employee who actually made $64,000 a year reported making $84,000,” Home Capital CEO Gerald Soloway told a conference call with analysts.

Home Capital said in the past it had simply checked whether the name on the letterhead matched the name of the employer listed on the borrower’s credit bureau and then accepted the documents without contacting the employer to verify the income. The practice met the standards of mortgage insurance companies, including the federal government’s Canada Mortgage and Housing Corporation, the company said. It now takes extra steps to verify a borrower’s income, including calling a company’s human resources department and senior executives.

So the Canadian Mortgage Industry’s standard, good enough for CMHC is to not ACTUALY VERIFY applicants’ incomes, opting instead to merely confirm that information on the letter matches the name on the application.

No opportunities for abuse with these loopholes, right? No NINJA loans in Canada, right?

Why are all those warning bells ringing?

#174 JG on 07.30.15 at 4:19 pm

Garth,

I don’t know what to say about that picture. I don’t know if it is cute or obscene. Kinda mirrors RE in Canada today….confusing.

:)

#175 cramar on 07.30.15 at 4:30 pm

#160 Distracted on 07.30.15 at 12:18 pm

(I know his spiel pretty well, because he tends to go there a lot. Pretty sure he has HUGE regrets about becoming a doctor.)

—————

Sounds like he became a doctor for the wrong reasons. I thought people became doctors because they want to make a difference in others lives. Real life and death differences. Silly me!

#176 Mark on 07.30.15 at 4:43 pm

“7 % + return (nominal) comes from dividends (3-4 %) + growth (1-2 %) + inflation, 7 % + returns look like pretty sound bet.”

Indeed. The TSX index, with most of the cyclicals beaten to smithereens, is still trading at a P/E of 15, which, absent any growth at all (real or otherwise) implies a return close to 7% (1/15).

If real GDP growth is even 0% (ie: GDP just grows with inflation), then that’s another 2% tacked on. Add in some real growth, and the implied return of Canadian equities is easily in the historic range of 10-12%/annum.

That’s not to say that we can’t see more multiple compression, or even negative earnings growth over the next few years. But the fundamentals are in place for very handsome total returns from the TSX index over the next number of years after the past ~8 years of stagnation, and no real growth since the 2000 Nortel apex.

The real losers in the next phase of the cycle will be the bond owners, owners of US stocks (particularly financials), and US dollar owners. Rising rates are lethal to the financial industry for the opposite of reasons that falling rates created the extremities in bloat.

As always, timing is difficult.

#177 Reddy on 07.30.15 at 4:45 pm

Our ‘ex’doctor had a sign in her waiting room:

‘Accepting new patients

Due to unforeseen circumstances, your wait time for your scheduled appointment may be an extra two hours’

That sign was there for over a year. How long could this be unforeseen? We’ve since switched to a doctor who sees us at the time of Appointment

#178 Harry Stumbles on 07.30.15 at 4:57 pm

“In terms of RESP, yes, you should start one. But not one of the BV variety. Ensure yours is a self-directed plan, which you can open through an online brokerage, at the bank or with an advisor. Fill it with good, diversified, growth-focused ETFs – ”

OMG…how wrong can you be? If the RESP self directed Plan has an 18 year time horizon then ETF’s are the low growth obstacle in your path. Look instead at great dividend paying stocks that have been growing their dividends since inception. BCE…TD….BNS…EMA….look at issues like KEG….ZWH….REI….that pay high dividends that you can reinvest as they march higher. All the stocks mentioned have far better 18 year performance records than any ETF. An ETF is for parking money you don’t know what to do with.

I went the spec route and put all my RESP funds in individual gold stocks. At the end of my sons time in uni he had a large surplus left over after paying for everything due to golds long term advance from $250 and ounce to well over $1700 when he graduated.

There’s blood in the streets…this is a time to invest…not crawl under a rock and die. Everybody said gold was dead when I went into the market too…..just like now. And what about the other badly beaten up commodities….like Uranium….sounds far fetched now…unless you understand the fundamentals. Do you really think Cameco will do nothing over the next 18 years?

Gambling is not investing. — Garth

#179 LOL Canada on 07.30.15 at 4:59 pm

#173 Smartalox

If lenders are insured, they will do the ‘minimum’ verification. Whatever the government says the ‘minimum’ verification is to complete.

Why would they do anything more?

What would be smart is if CMHC was connected to CRA, and income was verified by CMHC automatically. Check with CRA, get income confirmed, and good.

Don’t know why they rely on paystubs and job letters.

#180 zedgt87 on 07.30.15 at 5:01 pm

lol that cover photo is freaking gross!

#181 Suede on 07.30.15 at 5:36 pm

a majority of Canadians are such commies and haters.

Who cares if she makes $300k+. You shouldn’t be asking why and how she does and be jealous of it.

You should be figuring out how to attract her and lock her down. UGH.

Americans praise each other when they make it. Canadians tear you down.

Come on blog dogs, smarten up

#182 takla on 07.30.15 at 5:49 pm

re#180 photo is gross….
We did that as kids growing up on the farm.We kept the tits clean daily and our holstiens lived better lives then the people in the downtown east side of Vancouver.
Best to drink it fresh ,warm,and full of cream….mmmmm

#183 Investorz on 07.30.15 at 6:08 pm

Energy layoffs continues. Same with US oil companies.

Where does an oil worker go work outside Alberta? Anything he can fallback onto in Ontario?

#184 JimH on 07.30.15 at 6:22 pm

#178 Harry Stumbles on 07.30.15 at 4:57 pm
“… ETF’s are the low growth obstacle in your path. Look instead at great dividend paying stocks that have been growing their dividends since inception. BCE…TD….BNS…EMA….look at issues like KEG….ZWH….REI….that pay high dividends that you can reinvest as they march higher. All the stocks mentioned have far better 18 year performance records than any ETF. An ETF is for parking money you don’t know what to do with.”
===============================
Your post literally brought me to tears! ETF’s that have been around 18 years? You’re kidding us, right?

Your “Investment Advice” smacks of ignorance, stupidity, irresponsibility and pure unadulterated phoneyness.

I’ll stack my recent annual year growth records on my favorite basic Schwab ETF’s against your examples any day; and they have unbelievable liquidity, diversification, low-risk and are in US dollars!

Look SCHA, SCHM, SCHG, SCHV, and SCHH. I also love Guggenheim’s RYH and RYT for my sector concentration on health and tech.

Preferred’s? PGX and PFF provide nice stability at +6%.

Harry? You’re an ignorant fraud!

#185 Mark on 07.30.15 at 6:24 pm

“What would be smart is if CMHC was connected to CRA, and income was verified by CMHC automatically. Check with CRA, get income confirmed, and good.”

The root of the problem here is that the loans being insured by the CMHC and by Home Capital are subprime loans. Loans that could not be fully secured, over what is predicted to be the typical cycle of long-term housing prices, entirely by the collateral of the house itself.

Income comes and goes. I personally don’t believe the mortgage fraud, as alleged, is all that pervasive in the economy. What I do believe is that the buyers of much of the past decade have been buying with incomes that have been drastically inflated by factors, such as the housing bubble, or the government bubble, that won’t repeat themselves in the future.

In other words, the CMHC who was underwriting these mortgages for 25-40 year amortizations, was making commitments based on highly cyclical income that probably were at their long-term peaks. Either inflated incomes in the FIRE sector/public sector, or inflated incomes in the resource sector.

A rational insurance schema would recognize that certain occupations have greater risks to income than others, and would adjust accordingly. CMHC’s insurance rules were anything but rational. Actually to call CMHC subprime mortgage insurance, “insurance”, is an abuse of the word ‘insurance’, as ‘insurance’ typically implies the payment of a premium calibrated to the actuarial risk of an event occurring. Not the one-size-fits-all approach of the CMHC where they don’t differentiate between a dentist and a drywaller. Nor do they differentiate between a house in Winnipeg, or one in White Rock. At best there’s a limited black-list of properties CMHC won’t insure, but that’s pretty much the extent of CMHC’s risk discrimination practice.

Last, but not least, CMHC doesn’t differentiate based on age. Which is another problem for obvious reasons.

#186 Nagraj on 07.30.15 at 6:29 pm

about that picture with the kid gettin’ milk from the source

Pasteurizing milk knocks out about half its nutritional value. Homogenizing it knocks out another half. Skimming it: growing kids NEED the natural fat content of milk to properly process milk proteins. Put what’s left in a little plastic garbage bag and be aware that it takes app eight minutes of just DAYLIGHT to kill app 80% of whatever nutritional value’s left.
If you’re into milk (some people aren’t) for kids the only acceptable milk in regular supermarkets is whole milk in an opaque carton.
We drank fresh unpasteurized milk from OUR cows on the farm – I (perhaps unfairly) don’t trust commercial organic milk.

The price of milk and cheese in this country is an international embarrassment, and a national disgrace.

Now I see that some of yas dumbf–k stupid safisticated big-yap s–t-head city slickers don’ git GT’s picture. We drank milk in the barn while the milk was still warm – out of a tin cup but in the B-‘s barn their toddlers did indeed get it right from the cow (for fun, not regularly – yas don’ wanna git booted by a cow).

For those of you who are offended or titillated by the picture, buy yerselves a big box of coffee whitener and eat that powdered paint all up with a spoon, add some artificial sweetener (rat poison), and go jogging on the Lakeshore under the Gardiner at rush hour. Admire the condo towers.

Essentially we have no dairy farmers in Canada, we have tariff milkers (Mulroney had that quite right) and quota queens. The Sicilian mafia sends its bilingual boys over here just to take notes at meetings of the OntarioMilkMarketingBoard. It’s one thing for Bay Street to rip off . . . and quite another for governance to coolly deprive the nation’s children of standard protein. What can you say about a country that grossly overprices milk?

#187 jess on 07.30.15 at 7:12 pm

look back

District Attorney Vance Announces Sentencing in $100 Million
“Operation Broken Brownstone,”
massive mortgage fraud scheme conducted through a corrupt loan origination company called AFG Financial Group, Inc.

http://www.dfs.ny.gov/about/press/pr100921.htm

—————————–

GOVERNOR CUOMO ANNOUNCES TWO ADDITIONAL MORTGAGE COMPANIES SIGN ON TO COMBAT “ZOMBIE PROPERTIES”

Industry Best Practices Will Help to Curb Blight, Reduce Taxpayer Costs, and Shore up Property Values

13 Mortgage Companies Representing Approximately 70 Percent of the NY Market Have Now Agreed to Adopt Zombie Property Best Practices

Governor Andrew M. Cuomo today announced two additional mortgage companies – First Niagara and Carrington Mortgage – will adopt a set of best practices to help combat the neighborhood blight and economic damage caused by vacant and abandoned “zombie properties.” With today’s announcement, a total of 13 banks and mortgage companies representing approximately 70 percent of the New York market have now agreed to adopt these best practices.
Health Care Fraud Takedown
More than 240 arrested, charged with $712 million in false Medicare billings.
https://www.fbi.gov/news/stories/2015/june/health-care-fraud-takedown/health-care-fraud-takedown

http://www.dfs.ny.gov/about/press/pr1507091.htm
—————————-
Hector Hernandez, a Miami-area real estate developer and owner of Great Country Mortgage Bankers, his business partner and a senior mortgage underwriter each pleaded guilty to a FHA Mortgage Fraud Scheme. The mortgages written by Great Country Mortgage Bankers caused losses of $64 million to the Federal Housing Administration (FHA).

http://mfi-miami.com/2015/07/miami-banker-pleads-guilty-to-64-million-fha-mortgage-fraud-scheme/http:

#188 cramar on 07.30.15 at 7:15 pm

#186 Nagraj on 07.30.15 at 6:29 pm

It’s a wonder that the parents are not arrested for child endangerment. The gubmint claims it has to protect the public against consuming raw milk because you might get all manner of frightening diseases.

#189 lawboy on 07.30.15 at 8:18 pm

As I see other posters have pointed out, that 29 year old physician obviously means mid 100,000s when s/he says ‘mid six figures’. At 29 they only have a year or two of practice and if they really made 400-500k they wouldn’t be writing to Garth for advice on what to do with their 200k home that is encumbered with a 150k mortgage. Lol.

I’m sure s/he knows better, but I guess “mid-6 figures” has a nicer ring to it?

My pet peeve: news media reporting on “double digit negatives” when the temps drop to -20. Uhh, it’s been double digit negatives since it was -10.

#190 takla on 07.30.15 at 8:51 pm

someone famous once said ” All politians should be limited to 2 terms,the First in government and the second in prison”.
Seeing as CMHC is a crown corp. of the gov. of Canada whomever was incharge of this cluster-uck should be sent to the ISIS front line with a pee-shooter.
I guess the officials in charge drank the same Kool-Aid as ALL the greater fools out there and believed that property prices never go down so why have checks in place to verifiy income on applicant loans.

I imagine there will be more revelations in short order of liar loans exposed as this bubble collapses

#191 Bob Santarossa on 07.31.15 at 8:18 am

#170 Ehsan

Same as you with investments. Issue is not long term of inestments. If you buy a place in Europe then you need to inform yourself about a tax treaty between Canada and where you will buy. Residency complex definition per treaties and determines taxation. Italy capital gain exemption not like Canada and get taxed. So you see why important.

If you are not buying then no worries. You are a Canadian on vacation.

These tax treaties are meant to also catch tax dodgers and money laundering.

#192 Harry Stumbles on 07.31.15 at 1:02 pm

“Preferred’s? PGX and PFF provide nice stability at +6%.

Harry? You’re an ignorant fraud!

6%…woo hoo….there’s another sucker hiding under the bed getting sub inflation returns and eating cat food in his old age.

That’s ‘rich’ ignorant fraud btw.