Told you.

POOODLE modified

If you were waiting for the Liberal politicians in Ontario or Ottawa to save your retirement, forget it. In fact, write off governments entirely. You’re on your own, baby.

The feds and the country’s largest province made a weird statement Tuesday, announcing they “have reached an agreement to work together to achieve their mutual goal of improving pensions for Canadians.” Some agreement. Ontario will delay implementing its own pension plan. And Ottawa will try again to reform the CPP. The odds of that happening are close to zero, since any reform of the pension system means more personal and business tax. Way more tax.

Now I hate to be a told-you-so. But I told you so.

In 1995 I wrote a feisty little book called “2015: After the Boom. How to Prepare for the Coming Retirement Crisis.” The point was simple – I forecast that twenty years hence truckloads of Boomers would be shuffling off into wrinkledom, abysmally unprepared to finance the next decades of their lives. The reason? They were house-horny and failing to build up what everyone ultimately needs – assets that pay you income. Cash flow.

And here we are. 2015 plus one. As forecast, we have a crisis.

Did you catch the Broadbent Institute report issued yesterday? Half of all Canadian couples between 55 and 64 have no corporate pension plan. Of those who are pensionless, 80% haven’t saved or invested enough to avoid some form of poverty in retirement. “The vast majority of these Canadians retiring without an employer pension plan have totally inadequate retirement savings,” it says.

Worse, half of the people without pensions (which is 50% of everyone in this cohort) have enough money saved to finance themselves for just a year. One year. Incredible. Thus, we will have a mess of people (especially women) soon slipping below the poverty line – Boomers, who the moisters here love to paint as the most financially-favoured generation ever. The one they want to emulate.

“This new data on retirement savings and gaps in support makes one thing perfectly clear – we have a retirement-income crisis on our hands that requires urgent government action now,” says the Institute’s director. But there’s no government action possible. Changes to the public pension plan – which haven’t been determined yet, let alone enacted – take decades to result in increased benefits. So neither Trudeau’s enhanced CPP nor Ontario’s new scheme will be in place to help any wrinkly. Yikes.

And there’s more. Nearly half of Canadians just surveyed by Ipsos Reid said they are within $200 of not being able to pay their monthly bills.  A quarter of them are already running behind. And 31% said an increase in interest rates – any increase – would hurtle them towards bankruptcy.

Meanwhile nobody can live on the current government pogey. The average CPP payout is about $7,500 a year for men and under $6,000 for women. OAS is only $6,800 annually. So, run the numbers. If you have no set pension (and 70% of working people today don’t), you’d better plan on heaping a major pile of liquid assets by the time the next generation squeezes you out of a job.

Of course, most people don’t. They have houses, instead.

That might be okay if those Boomers (and others) had the good sense to cash in their chips as they head towards their thirsty underwear and sex pill days. But they don’t. More and more, as housing appreciated in many markets, people concentrated their net worth into a single asset. So while their nominal wealth may have increased, they don’t have any more money. In fact, usually less.

Moreover, houses root people. What may make sense during the child-rearing years (so little Alphonse can grow up with his gang) becomes a liability when you age. Suddenly the thought of selling, moving and hauling all your crap around is overwhelming. So real estate turns into a psychological burden. People end up living on KD and shutting off rooms just so they don’t have to move. Folks with hundreds of thousands in equity live in poverty. Such a human failing.

Anyway, you have time to change all this (unless you don’t).

The latest CREA stats show people in the GTA or the Lower Mainland have done well with real estate over the past year. In Alberta, not so much. Elsewhere, housing is often stuck in the mud. However, mortgage rates are still low, governments are still pumping houses and the media is transfixed with property greed. Rest assured this will not be the case five years from now, or three. Or maybe even one. If you’re in your sixties or fifties, with the house as your biggest single asset, this could be the best, or even the last, chance to maximize.

So go ahead. Find some idiot moister who doesn’t believe a mortgage is ‘debt’, willing to borrow epically to buy your hideously inflated unrenovated asset at the peak of the market, believing it will go up forever. Then invest the money prudently to throw off enough income to lease a better abode, and be assured of lifetime cash flow.

Or, you can turtle and wait for Justin to save you.

Let us know how that works out.

213 comments ↓

#1 TurnerNation on 02.16.16 at 5:40 pm

I call today Take Profit Tuesday.

#2 Doug t on 02.16.16 at 5:47 pm

Retirement hahahahahah – most will work till they can’t live anymore -soooooo might as well live it up right now cause what is in store is not pretty

#3 Smartalox on 02.16.16 at 5:47 pm

Where can one obtain a copy of your tome from 1995? I’d love to get a sampling of some of the other past predictions of the future.

#4 Penny Henny on 02.16.16 at 5:51 pm

If you were waiting for the Liberal politicians in Ontario or Ottawa to save your retirement, forget it. In fact, write off governments entirely. You’re on your own, baby.

Thank Dog!

Ontario Pension Plan would hurt the poorest as they would no longer qualify for GIS.

Hate Wynne. Hate her. She loves to smile when she is lying.

#5 piccaso on 02.16.16 at 5:52 pm

“Meanwhile nobody can live on the current government pogey. The average CPP payout is about $7,500 a year for men and under $6,000 for women.”
…………………………………………………………………..

A year? I’m toast after 26 weeks, maybe shorter because the first two weeks I never got anything.

#6 Smartalox on 02.16.16 at 5:52 pm

Apparently the campaign to elect Jeb Bush forgot to renew the domain registration for http://www.JebBush.com. Luckily, Mr. Trump was nice enough to do it for him. Oops.

Of course, some will swear it was a false flag operation, a Bush staffer loading up a bogus front page, just to score free global twitter buzz for a fourth-place candidate, but that would never happen, right?

#7 Nemesis on 02.16.16 at 5:53 pm

“You’re on your own, baby.” – HonGT

#YouCanSayThatAgain,Or… #BCFinanceMinister’Stymied’ByRisingPrices…

[G&M] – B.C. tables balanced budget that targets “overheated” real estate market

…”However Mr. de Jong said the cause of rising real estate prices is not clear, and announced a string of disclosure requirements to address concerns about foreign ownership and the use of bare trusts to avoid taxation. Home buyers will be required to disclose their citizenship, but Mr. de Jong said he is not sure that data will lead to any changes.

“We encourage people to come to British Columbia to invest and we are going to continue to do that. . . We’ll see what the data shows.”…

http://www.theglobeandmail.com/news/british-columbia/bc-budget-2016/article28765064/

#InOther,’Unrelated’News…

[G&M] – Real estate storm on B.C.’ s Bowen Island pits [Offshore] developers against residents

…”Zuo Zongshen, a Chongqing-based billionaire who made his fortune selling motorcycles in China and last year bought 49 per cent of Vancouver-based floatplane operator Harbour Air, has filed a petition with the Supreme Court of British Columbia, as has landowner Shu Lin Dong, alleging the municipality “breached its duty of procedural fairness.” Private docks are also an issue elsewhere in B.C.: Lululemon’s billionaire founder Chip Wilson angered the chief of the Sechelt Indian Band on the Sunshine Coast with plans for a 2,498-square-foot dock.”…

http://www.theglobeandmail.com/report-on-business/real-estate-storm-on-bc-s-bowen-island-pits-developers-against-residents/article28771810/

#8 John on 02.16.16 at 5:56 pm

SECOND. MAYBE.

#9 Leo Trollstoy on 02.16.16 at 5:58 pm

WalMark Hate to pile on but I am pretty sure he was really bullish on the TSX market index about two years ago. Something about it being much cheaper than the U.S. markets as I recall.

yeah I remember that. good thesaurus. bad investor and job seeker. shame

#10 Bob on 02.16.16 at 5:59 pm

One thing that may count against your prediction…

The millennial generation is much larger than the boomer generation. Millennials will also get older and start families. They will all need housing.

Won’t this be a factor in the future?

Good. They can buy it, shoulder massive debt and finance the Boomers. Ultimate irony. — Garth

#11 Penny Henny on 02.16.16 at 6:00 pm

Meanwhile nobody can live on the current government pogey. The average CPP payout is about $7,500 a year for men and under $6,000 for women. OAS is only $6,800 annually.-GT

There is another safety net available, GIS.
Not a great life, nothing to strive for but why do you always exclude it?

Because you must be destitute to collect it. Is that the goal of anyone here? — Garth

#12 gumboot princess on 02.16.16 at 6:00 pm

I live mid-island on Vancouver Island and I have noticed plenty of house construction of late. Most of it seems to be on those little empty lots that sat unwanted for months and months. They seem to be larger homes that grab a nice ocean view. Many of the workers’ trucks have Alberta plates.

It has been raining (I won’t lie to you – deluging, really) but the upside is the snowdrops and daffodils are blooming.

#13 Nelson Minglertine on 02.16.16 at 6:02 pm

Second!!

#14 Arb Watson on 02.16.16 at 6:03 pm

but but real estate always go up….

#15 Rick on 02.16.16 at 6:05 pm

I really feel sorry for those idiots who voted Liberal; thinking the government would save them. Actually, I’m not:) Elections have consequences:) Oh wait, I forgot… everything is Harper’s fault:)

#16 ILoveCharts on 02.16.16 at 6:06 pm

Surprised you missed the big story of the day:

From BC: “Budget 2016 introduces a new full exemption from the property transfer tax on newly constructed homes (including condominiums) priced up to $750,000. This exemption will save purchasers up to $13,000 on a newly constructed home”

Non-event. — Garth

#17 Joe on 02.16.16 at 6:06 pm

Hey Garth
You’ve been predicting a crash since you started this blog but it never seems to happen. Instead it just keeps going up and interest rates won’t even approach their long term averages for the foreseeable future. With so many people with skin in the game, the inept politicians don’t want to do much because they are afraid of people losing equity. Based on this, can’t you see why o many people are reluctant to cash out.

To be accurate, I am not forecasting a crash (as stated often), but a declining market. Those who do not take capital gains in their hands are trading that for risk. Good luck. — Garth

#18 Shawn on 02.16.16 at 6:06 pm

Crisis is in the Eye of the Beholder?

Worse, half of the people with pensions (which is 50% of everyone in this cohort) have enough money saved to finance themselves for just a year. One year. Incredible.

***********************************
So half the people with a pension (aka lifetime income) are not sitting on an extra year’s worth of cash?

There is no crisis for these people.

I’d worry more about the half without pensions… especially the portion thereof that did not unexpectedly win the house price lottery.

Typo – ‘without’ pensions. And never assume a pension is lifetime, defined benefit. Most are simply RRSPs organized by an employer. — Garth

#19 Jimmy on 02.16.16 at 6:10 pm

Numero Uno!

#20 Victoria Real Estate Update on 02.16.16 at 6:10 pm

“So go ahead. Find some idiot moister who doesn’t believe a mortgage is ‘debt’, willing to borrow epically to buy your hideously inflated unrenovated asset at the peak of the market, believing it will go up forever.”

Those same brainwashed moisters will learn the same lessons that Americans did as house prices in Canada inevitably fall to depths that no Canadian economist or housing “expert” has predicted.

Many Amrican moisters are choosing to rent instead of buy after having experienced first-hand how destructive it is to think that mortgage debt is good debt.

Canadian moisters have a lot to learn.

#21 Shawn on 02.16.16 at 6:14 pm

Survivorship Bias

We sometimes hear that stock indexes and mutual funds suffer from survivor bias. The loser companies and loser mutual funds are not in the index. They died.

Survivor bias also applies to boomers and the generation before that.

Remember not all boomers bought a house. (Ownership has never been above about 70% so I think that tells you, not all bought)

Not every boomer got a job with a pension or even much of a job at all.

There are boomers who were single Moms on welfare. Some of those worked hard raising kids but accumulated squat.

As for the generation before the boomers a lot them literally did not survive World War II.

The youngest boomers got out of high school in the late 70’s and early 80’s or graduated college in the early 80’s just in time for record unemployment and stagflation.

The notion that all boomers had it easy and got pensions is nonsense.

Of course a lot of boomers did well. But there is a good chunk like at least 20% maybe 40% who have accumulated the square root of squat in any kind of assets.

#22 Prairieboy43 on 02.16.16 at 6:15 pm

Where is “Freedom 55 Guy”. London Life selling this product to everyone in the 80-90’s? All these boomers saw the ads. No one bought. Some have made it. Most not. Now what happens to this Crisis? Gen X & Y carry the load????

Looked 10,800 listings in Edmonton & Area this week. Additional 800 listings in a week. April/ May/June Gong show.

PB43

#23 BeSmartRich on 02.16.16 at 6:17 pm

Yup. It is really time to sell for all lucky people in BC and Ontario who did extremely well through holding their houses for a while. Many evidences are supporting that the current pricing is not really sustainable.

Good luck!

BeSmartRich

#24 Jim Bob on 02.16.16 at 6:18 pm

99 little bugs in the code
99 little bugs in the code
Take one down, patch it around,
127 little bugs in the code.

100 buckets of bits on the bus
100 buckets of bits
Take one down, short it to ground
FF buckets of bits on the bus

#25 Lulu on 02.16.16 at 6:20 pm

Tiny house will be the solution to the retired boomer, seriously, cash in right now at the peak, buy a piece of land up north or far east, build a tiny house and live your life till the end of it, travel whenever you can and invest accordingly. Who needs a mc mansion when you retire or semi-retire, as a matter of fact, even middle ages people should do that as well.

Never depend on the government, they just want your money and suck it all out from you hard earn money. Pick a good advisor is your best bet.

#26 waiting on the westcoast on 02.16.16 at 6:23 pm

Wow – totally describing my parents… They live on the minimum (with a house that is now worth about 1.2-1.3M). Have a massive acreage and big house but cannot let it go…

Ironically, they love to travel (and do so by doing into their loc or my sister and I fly them on points) but cannot wrap their minds around letting go of the house. It’s become their anchor (for better AND worse).

#27 Chris in Nanaimo on 02.16.16 at 6:25 pm

I just brought one of your books Garth! 2015 Retirement update.

…..In a thrift shop….Dodgy photo of you the front looking like it was taken in the 80’s.

Oh and it was 50% off green tag day….Score!

$1.50……better be bloody worth it….;-)

#28 Square Peg on 02.16.16 at 6:26 pm

In my office some of the grey-hairs are thinking about retirement, but finding themselves woefully unprepared. One guy is talking about taking what little savings he has and putting it towards buying a rental property. Now. In Edmonton. Actually, worse, in St. Albert, where property prices are about as high as you get in this province without being next door to an oilfield.

When I suggest cashing out the big property he already owns here, investing the money and renting a condo or something, it’s all “Why pay someone else’s mortgage?”

Nobody that age seems to trust the stock market, and would much rather be chasing down deadbeat tenants and fixing drywall into their nineties, anchored to this frostblasted hellscape of northern Alberta instead of living it up with an investment-based retirement in Panama.

All you can do is shake your head.

#29 YVR2YYZ on 02.16.16 at 6:27 pm

I just can’t understand why downsizing to something more manageable and having liquid money as you become a wrinkle is so difficult. Why are North Americans so emotion-consumed in materialistic goods and more notably their walls, crown-moulding, and fences to separate them from the world of which they partake in everyday.
Perhaps wrinkles are in denial. Denial that they are in the latter part of their lives and should want to live it stress-free without financial burden – or perhaps they actually like living in a I-have-no-pension-but-I-live-in-a-home-worth-a-million-dollars. I’m 36 – looking to my elders my goal should be living in a million dollar house with all the lights off, eating frozen food, and people feeling sorry for me because I just sit inside watching the tube. Forget that – how about I live off-grid, invest/save $, enjoy the wilderness and my health and call it a day? :) Happy- Me!

#30 Hollerdongs on 02.16.16 at 6:29 pm

Oh great, half my pay isn’t enough. Now I get to fund other peoples poor life choices (even more)? Go Canada!

#31 acdel on 02.16.16 at 6:30 pm

You have said it many times; personally I only wish I came along your blog a few years back, interesting times ahead!

Good Post Garth!

#32 common sense on 02.16.16 at 6:31 pm

My question is this….

I’ve saved, invested, lived within my means,sacrificed, have no defined pension plan and the OAS will only slightly enhance what I have yet I worry…

Those who have done the “right” things are going to somehow, some way “bail out” those who have not if the government isn’t going to…

Wealth Tax? Means test? Where is the short fall going to come from?

Why should I or anyone else bail out someone who likely made 2-4 times more yearly than I did and blew it all away?

Why?

#33 old stock Canadian on 02.16.16 at 6:36 pm

Once Bernie Sanders win the presidency, Canadians want to fully annex Canada with the US.

#34 tundra pete on 02.16.16 at 6:38 pm

My wife calls me this afternoon while I’m still at work and tells me she got a call from somebody about a dog they had that they didn’t want. My wife and I work with animals so I said no problem, I’ll stop by there on my way home.

I stopped by and the pup is probably only 8 weeks old and is stuck in this unheated room with a bowl of some animal guts for food and I swear is hypothermic. I pick him up and put him right in my coat as the people are saying that had I not picked it up they would have shot it. I reserve judgement, just happy I have the dog.

I’ve got him in my lap now, toasty warm, and he just looks up at me and licks my hand. My heart is as warm as his little paws. He will be going to a humane society tomorrow where he will be neutered, given his vaccinations and adopted to a caring family. To hell with everything else, today was a great day!!

#35 Post Boomer on 02.16.16 at 6:40 pm

I love this blog. Sane explanations and intelligent commentary about so many unspoken or unacknowledged economic dynamics. A focus on value, balance, prudence and real world investing.

But I’d really love to hear a believable argument that there’s some future upside given the general economy, the threat of ZIRP/NIRP, and the lack of local political will to address the $5 Million house flippers who are pricing out the people who actually contribute to our economy, doing the work and paying the taxes.

I might be done. I’m 44 and have worked and lived in Canada (Vancouver) all my life. Paid taxes, saved, had kids. Is there no upside to paying into this here anymore? I’m fortunate that I’ve invested in myself and my career so that I can get a Visa to work in the US or Europe if I want. I’m beginning to reluctantly acknowledge that is no point to paying into someone else’s party here in BC anymore.

The only growing economic activity left is selling Lamborghini’s to teenagers so they can learn to drive. And selling debt to each other. Or the $ laundry.

Oh yeah, the one major industry that works around here and actually builds things pays no tax. (construction – a black market for labour).

Garth, a voice of reason about real estate, I don’t see you challenge the established players (Rennie, Lamb, et al) and their view that foreign money does not undermine the feasibility of the economy. (I mean the non-legitimate real estate “investors”, not talking about tax paying immigrants or refugees who are actually invest, live and work here and have a stake in the future.)

But wait, Christy Clark will fix it with $350 Million of social housing. http://www.bcbusiness.ca/real-estate/are-young-people-really-leaving-vancouver

Great. Now people are so disenfranchised and disconnected from any long-term viability in the economy that we need social housing for the middle class, which is just another socialization of the hidden costs of whoring ourselves out to foreign money. (other costs: healthcare for new, non-tax paying residents, tax-base destruction, non-payment of property tax, empty neighborhoods, lack of reinvestment in business and infrastructure, blah, blah) Seeing and reading about these issues everyday dulls me to the consequences.

More social housing, It’s Just Another Tax. Just like no interest on savings is a tax and CPP/EI is a tax, with no payback. I’ll get an instant 30% lift on my income in the US, lower tax and predicable mortgage options (30 year stable interest schedules versus biting nails that Canada will raise rates if I recommit to the housing market.)

My wife and I both work and get paid well in executive positions, working long hours. And we can’t afford this place. What was feasible 10 years ago is now a dream.

Its getting impossible to attract engineers, scientists, researchers, doctors, bureaucrats, baristas, entrepreneurs, brick layers – name the profession – to this region because even lawyers and accountants can’t afford this town. This is destroying local businesses and of course the tax base that funds things like social housing. Everyone (who lives here) loses. Left or right leaning.

I really want to be wrong about this but I cannot see a single optimistic trend to attach to working and paying tax here in Vancouver.

Is this Cancun-economy the only exit strategy available to politicians trying to deal with the mass exit of Boomers from the working economy? What’s left for those who still a have 20 or more years left to contribute? Is there a good reason to stay?

This is a sincere question.

#36 JackDracula on 02.16.16 at 6:43 pm

http://www.theglobeandmail.com/opinion/a-crisis-in-vancouver-the-lifeblood-of-the-city-is-leaving/article28730533/

I have quite a lot of friends who left Vancouver, and this insane RE market.

#37 MF on 02.16.16 at 6:43 pm

#29 YVR2YYZ on 02.16.16 at 6:27 pm

What do you mean you don’t understand it?

It’s driven by pure greed. These people would rather eat dog food in their chitty McMansion and “realize gains” before they “pay someone else’s mortgage” Or downsize.

So far these idiots have been rewarded by our “economy” and central bankers who are clueless about what to do next.

MF

#38 Bytor the Snow Dog on 02.16.16 at 6:44 pm

I just don’t get it. Any senior not cashing out on a paid off house ANYWHERE (but especially in YVR or YYZ) is simply a fool.

Cash out, take your money and live somewhere cheap.

Even here in Windsor-Essex where we have had nowhere near the RE appreciation other areas of the country have had, it is our strategy to do this.

[SHAKIN MAH HEAD]

#39 Ryan on 02.16.16 at 6:44 pm

Is it me or is this blog getting darker and darker with each post?

Not that I disagree with that sentiment. When smart money is betting on deflation (Fairfax guy), or on some water crisis(Big short movie guy), I’m feeling naked and vulnerable with my 5 etf portfolio.

#40 S.Bby on 02.16.16 at 6:46 pm

My immediate neighbours are all widowed ladies who have lived in their houses for 50+ years. They will never sell until they are carried out. The one guy who is left says he and wife will get a live in nurse to help them when they can’t manage on their own. When they finally do sell, the houses will be blown down and mansions for Chinese will go up in place.

#41 45north on 02.16.16 at 6:49 pm

loosely on topic: Brison says millennials will staff next ‘golden age’ of public service

http://ottawacitizen.com/news/national/brison-says-millennials-will-staff-next-golden-age-of-public-service

a quote from the article: Linda Duxbury of Carleton University’s Sprott School of Business has studied generational differences for a decade. She says millennials want less hierarchy, fewer rules, meaningful work, good working relationships, respectful managers, autonomy, recognition for their work, flexible schedules, open communication, tolerance for risk-taking, and fewer barriers to innovation.

lets’ start with less hierarchy. Right now the Federal Government has a big problem in the form of shared services: Why Shared Services Canada is struggling

http://ottawacitizen.com/business/local-business/circuit-overload-why-shared-services-canada-is-struggling

shared services is all about hierarchy. It’s really why it was formed – to create a single hierarchy. It was not to save money. It is never going to save money. And there is a dead obvious way to address the problem: delegate responsibility back to the departments. For instance back to Agriculture Canada where I spent 30 years. Which brings us to the Liberal Party. I suspect that it’s all about hierarchy. I mean after a while it was dead obvious that the Conservative Party was all about hierarchy which is why it created Shared Services.

If you’re Scott Brison it’s very easy to hire a thousand bright eyed millennials but it’s very hard to actually make a work environment with less hierarchy.

Here’s my ideas: responsibility for IT, email, whatever can be delegated back to the departments. It can be done carefully and with deliberation. Best practices can be shared across departments. Similar departments such as Agriculture Canada and Natural Resources can share systems. Parts of Agriculture such as Policy where security is important can adopt the security of other departments such as External Affairs or Defence.

A goal of Information Technology within the Federal Government should be to foster industry that is competitive in North America and the world. Easy to say, hard to do. Detailed knowledge and experience with the IT infrastructure of the United States Government is a dead obvious way of being competitive in North America and the world. ( like I said, hard to do )

#42 offwiththeirheads on 02.16.16 at 6:50 pm

#3 Smartalox on 02.16.16 at 5:47 pm

Where can one obtain a copy of your tome from 1995? I’d love to get a sampling of some of the other past predictions of the future.
——————————————————————- Amazon.ca http://www.amazon.ca/gp/offer-listing/155013826X/ref=tmm_pap_used_olp_sr?ie=UTF8&condition=used&qid=1455666426&sr=8-1

#43 Godth on 02.16.16 at 6:55 pm

Yeah, nobody can afford the future – that’s the problem which is, in fact, a predicament. Go Boomers go! FU millenials! Lobster dinner for the winner and eat dirt for the last.

#44 same old same old on 02.16.16 at 6:57 pm

even a clock is right twice a day…………a house will be the best investment of anybodys life…… why sell if you need a place to stay and make 8% a year? stocks are very uncertain……

An investment that is not crystallized is called a possession. And where did I suggest stocks? — Garth

#45 rk usa on 02.16.16 at 7:01 pm

don’t forget in addition to CPP and OAS there is the Guaranteed Income Supplement (GIS) for low income seniors

your single guy with CPP of $7,500 would get almost $5,000 GIS annually in addition to OAS of $6,800

money drawn from a TFSA is not considered income so it would not reduce your GIS payout if your only source of income

#46 crowdedelevatorfartz on 02.16.16 at 7:02 pm

Ok Garth
So as I head into my “golden years” of “thirsty underwear” and blue pills…..

What amount of money should a “retired” person have invested in a balanced portfolio to earn say 45k gross per year on top of their CPP and OAS?
600k? 750k?

#47 davikk on 02.16.16 at 7:16 pm

Things Are Coming Unglued for Canadian Investors, Sentiment Hits Worst Level since March 2009

http://investmentwatchblog.com/things-are-coming-unglued-for-canadian-investors-sentiment-hits-worst-level-since-march-2009/

#48 Ken on 02.16.16 at 7:20 pm

I’ve got an RRSP gripe and TFSA too. I’m a self-employed guy. Which means some years are good. When I have good year it would be good to allow an RRSP contribution which will carry forward indefinitely. Some of those good years are far apart. Sure TFSA and then RRSP. The simpler the better. Folks would save more

#49 Linda on 02.16.16 at 7:24 pm

#5 Picasso – the current ‘maximum’ CPP is just over $13,000 per year. Gross, not net. In order to get it you must have paid into CPP for a minimum 39 out of 47 years between ages 18 to 65. You must not collect prior to age 65. You must have paid in ‘the maximum’ for all 39 out of 47 years. You DO pay tax on your CPP, though if it is all you have for income, you will get the tax back. CPP is the defined benefit pension plan all working Canadians have access to – if they live long enough to collect. Most take it at age 60. You lose a whack for taking it early. I think after this year the hit is 36% off the top for taking it at age 60. It used to be only a 30% hit, but the last set of reforms ended up with people getting less for taking it early.

#50 Mary Thompson on 02.16.16 at 7:29 pm

To Common Sense #32

I am hearing that Trudeau and the Federal Liberals want to increase GIS for a 2 person household by $10,000 a year.

This means that they can both can earn $2,100 a income tax free OAS, GIS and still get other lower income current benefits, free dental, free prescriptions, clothing, food, housing allowances etc. from all 3 governments, Federal, Provincial, Municipal.

No such proposal has been made. Why anyone would want to be poor enough to collect GIS is beyond me. That is a failure. — Garth

#51 Dig Deep on 02.16.16 at 7:29 pm

It is not the sum of one blog. It is the sum of many blogs.

Affordability of anything in the future will be based on wages. In one of these blogs, (perhaps many), Garth has spoken of this. Wage pressure. Downward.

“If something cannot go on forever, it will stop.” – H. Stein

#52 Get out of YVR on 02.16.16 at 7:32 pm

RE #33 Post Boomer

I totally share your sentiments. Made the decision last year to sell and bank the profit. Now relocating to Europe because the market is bigger and their socialism cheaper.

Public service sector in Europe doesn’t get paid nearly as much as the same services in BC. Speculation with real estate is pretty much done since 2008 and the cost of living is affordable.

Vancouver and Lower Mainland is done. It was a great place 20 years ago but it is no longer attractive now. 20 years into the future and Vancouver will resemble Shanghai more than Seattle.

My kids won’t be able to compete there and I can’t build up anything of value for my grandkids. It’s too late. Let ’em have it.

Just who is going to pay for those high priced public sector services and THEIR pensions? Not me!
Firefighters making 6 figures and retiring with full pensions at 55? Where in the world? Give me a break.

#53 mark in bc on 02.16.16 at 7:34 pm

cpp, oas, gis, investments, bsmt suite rental, walmart greeter, home depot guy or girl…what ever it takes!

what’s with the doom??

my parents are considered poor, have a house, car and enough pensions to do what ever they want, but they’re old and don’t care to travel, don’t want to move cause they think they need space for the kids still?

as for the Crazy Van RE going up 30% in a yr? it could drop in half and people should still be happy. I’m an hr away from Van and get to complete with those rich idiots for houses out here? House on our street had 11 offers & sold in 1 day for 5% over asking??

my prediction: 2016 in BC will be ok, after that hold on to your hats

GT I enjoy your blog!

#54 acdel on 02.16.16 at 7:35 pm

#34 tundra pete

Good on you and your lovely wife!

For some, life is what one does not accumulate!

For those who are the opposite, no judgement, go for it!

#55 Nemesis on 02.16.16 at 7:39 pm

#InOtherNewsDogEatDog,Or… #YouCan’tMakeThisStuffUp…

[TheHill] – Clinton barks like a dog to taunt GOP

…”Hillary Clinton barked like a dog on Monday to taunt Republicans for not telling the truth.”…

http://thehill.com/homenews/campaign/269503-clinton-barks-like-a-dog-to-taunt-gop

#56 Good Grief! on 02.16.16 at 7:48 pm

More doomer talk.

The homeowners with suites that generate cash income and qualify for the GIS and have a pad overseas have nothing to worry about.

It’s the working stiffs that have to worry. Ever increasing MSP premiums, ICBC rates, taxes, commutes, etc.

#57 Tundra Pete's New Dog on 02.16.16 at 7:49 pm

Thanks Tundra, sounds good. But, umm, what does “neutered” mean?

#58 wayne2yerGarth on 02.16.16 at 7:51 pm

I learned how to ‘retire’ like my grandfather did…work until the day you die…sitting around spending money will only shorten your remaining years

#59 Good Grief! on 02.16.16 at 7:51 pm

No such proposal has been made. Why anyone would want to be poor enough to collect GIS is beyond me. That is a failure. — Garth

Who thinks they are poor? Just good global income and asset planning :)

#60 Mary Thompson on 02.16.16 at 7:54 pm

Taxing people that have more money, property and financial success and income will make everyone else that did not save, invest or made poor life, financial decisions feel better.

The liberals and NDP are for punishing and teaching a lesson for those that think they can have more and keep it.

This is why this blog maybe harder to exist as more left-wing, socialist polices keep growing.

Where do you think all the debt and deficits came from. It is a bunch of unsustainable promises and compound interest paid on those unsustainable promises that keeps digging the debt hole and tax pile deeper and deeper.

Broadbent Institute is just a plow to make us more like socialist Europe and Greece. How is that working out? They have a big mess worse than us.

#61 Panhead on 02.16.16 at 7:54 pm

#27 Chris in Nanaimo on 02.16.16 at 6:25 pm
…..In a thrift shop….Dodgy photo of you the front looking like it was taken in the 80’s.

Oh cummon now Chris, don’t leave us guessing, at least tell us what his hair was like …

#62 Rick on 02.16.16 at 7:56 pm

common sense on 02.16.16 at 6:31 pm; because you should be punished for saving. The government wants as many people as possible dependent. To better control you:)

#63 Grantmi on 02.16.16 at 8:02 pm

I’m going to start buying shares in Nestlé stock… makers of Purina Pet food.

lots of cat food going to be consumed.

#64 Gus Bar on 02.16.16 at 8:02 pm

Lets boil this down, the government over taxes people, so that they can’t afford children or food, and then accuses them of not being able to save for retirement, and the answer to that is to jack up taxes on the same people who are $200 p/m away from bleak shivering starvation?

http://business.financialpost.com/news/economy/nearly-half-canadians-within-200-a-month-of-being-unable-to-pay-bills-poll-finds

I suggest to the Trudeau Liberals that the only place they’re going to find any more money is to put a transaction tax on pay day loans, where the people are lining up to put food on the table the third week of every month. Maybe Trudeau Liberals could grab a transaction fee or a ‘green tax’ on bags at the food bank counter.

Theres plenty money to be made charging camping fees for the people living in the parks. Seniors could be made to rent their dentures.

#65 Metaxa on 02.16.16 at 8:06 pm

#15 Rick writes:
I really feel sorry for those idiots who voted Liberal; thinking the government would save them.

Rick, I didn’t vote Liberal thinking they would save me, I voted Liberal to be saved from the Steven Harper Conservative Party of Canada. The sooner you and folks that think as you do realize that, look up the true meaning of conservatism and practice it then the sooner you get to kick the kid to the curb and get that elusive power back. Harper was and remains a neo-liberal policy wonk…history will not be kind to him.

Back on topic:
there seems to be a lot of extremes here today, you either are well balanced, fully aware and acutely ready to deny “Them” any favour or you are not, ready to eat dog food in your old age.

Seems to me no one is aware of the vast majority of us somewhere in the middle. Modest home that suits our needs, modest investments that coupled with the OAP and CPP will allow us to continue to live as we are accustomed.

And you know what? If my neighbour or fellow Canadian needs a little bit more of what I’ve got I’ll be happy to help out as I can.
Because I am a Canadian, not a Trump style Internet millionaire.
Find someone, anyone ELSE whose fault it is and bellow it at full volume. Doesn’t matter if it a home owner, a Chinese person, a Millennial, whatever.

That is divisive, accomplishes nothing at all.

#45 RK USA has some very insightful thoughts in his/her post. Take advantage of ALL programs available.

#66 common sense on 02.16.16 at 8:08 pm

$61 Rick

I agree…

Well they know what is in your RRSP, TFSA, an idea of your house worth (I own outright). As I work in the USA, they know what is in my bank accounts…

No place to hide unless it’s in valuables, cash, etc.

What a freakin world…punished for doing the right thing.

I’d love to die with my last check bouncing AND a huge credit card debt/tax bill due with no savings…

#67 John on 02.16.16 at 8:11 pm

A little while ago a tiny, white shack was listed for sale in VAN, @ $2,398,000; the photo went viral around the world. Well shockeroo, just read that the shack sold for $102,000 over asking or $2,500,000. So who believes this is all the doing of little maple beavers? A report circulating today, noted that VAN and GTA housing are still climbing but when removing those two from the equation… we have a .3% decline yoy for January. It’s loonie-tunes time or something.

Foreign buyers are not to blame for Canadians’ bad financial choices. — Garth

#68 Warren - the lagging indicator on 02.16.16 at 8:15 pm

In an attempt to be helpful and alleviate any concerns with respect to Preferred shares, I would suggest that in this environment, one should not pick individual Prefs ( remember Dundee and Brookfield Renewable Energy Partners) but rather your favorite an index ETF. There are so many on sale right now, especially of the rate reset variety, that you would amass an index worth anyways. I have been selling on each of these run-ups and re-buying lower as I have previously advised. This alleviates the depressing felling of loss many are experiencing right now and replaces it with a hope for lower prices to accumulate cheaper. I figure eight bucks to be the near bottom on ZPR as that is where my final buy lot is positioned. The FED will raise rates this year and Canada will follow 8 to 12 months later. You will be very happy, trust me. I also suggest that you do not sell during the impending run up in prices but rather hold for about three years and then slowly shift toward a more heavy weighting in perpetuals. I will let you know when it is time, ok. Be calm, happy, confident and buy… your later self will love you.

#69 JSS on 02.16.16 at 8:17 pm

So, Shawn, do you still think MEPP is a good pension plan?

#70 Mary Thompson on 02.16.16 at 8:18 pm

To rick #61

People need to stop sugar coating it. They are just plain thieves and crooks. Taxes, levies, fees etc. is just a form of government confiscation, taking away money, property by force.

A burglar that comes in steals from a house and then donates the sale of those proceeds say 75% to a charity. This is government.

#71 jaybee on 02.16.16 at 8:19 pm

I dunno Garth, I’m happy my parents hung on to their real estate, and paid it off.

My boomer parents have no corporate pension, with jus a modest stream of rental income (from 6 units), and an even more modest stream of dividend income.

They’re mortgage free on the house, and the income property, and now they’re starting to collect dividends from a low six figure Canadian dividend portfolio (250k).

I’m not worried about them. They have their RV, and motorcycles. Those kids will be ok.

#72 salonist on 02.16.16 at 8:22 pm

Even the rich can qualify for Guaranteed Income Supplement — here’s how

http://business.financialpost.com/personal-finance/tfsa/even-the-rich-can-qualify-for-guaranteed-income-supplement-heres-how?__lsa=e229-4df4

#73 zentao on 02.16.16 at 8:23 pm

“Or, you can turtle and wait for Justin to save you.
Let us know how that works out.”

There is no “us”…We will all be “crew”. If you have savings then you will end up losing them to taxes in order to support the herd. It is already too late to avoid this outcome; the question is whether you can protect your assets in order to avoid having everything confiscated “for the good of the many”.

History is rife with examples of this methodology and the first step this time will be eliminating cash. This step is well underway in EU and will be shortly coming this way.

Anyone noticing how long simple transfers are now taking between bank accounts? How about even internet bill payments? HST will soon be appearing on many transactions.

#74 Victoria on 02.16.16 at 8:24 pm

DELETED

#75 Dave on 02.16.16 at 8:28 pm

Trudeau scares me. I bet we’ll start hearing whispers of Canada”s credit rating being downgraded

#76 Alpo Prime Cuts Can't Be That Bad on 02.16.16 at 8:29 pm

If I have to fall back on Alpo I’ll splurge on the Prime Cuts. The nutritional analysis isn’t that bad although I might need a fiber supplement.

Crude Protein (Min) 10.0%, Crude Fat (Min) 3.0%, Crude Fiber (Max) 1.5%, Moisture (Max) 80.0%

#77 What Matters on 02.16.16 at 8:32 pm

Foreign buyers are not to blame for Canadians’ bad financial choices. — Garth

Correct.

But…

Foreign buyers are to blame for the lack of choices. Especially for younger (<55) people who now cannot afford to live in their own country.

Foreign buyers are responsible for the co-opting of political leadership and policy that does not work in the best interests of locals.

All incorrect and unproven. And there are innumerable places to live in this country. — Garth

#78 LP on 02.16.16 at 8:32 pm

#34 tundra pete on 02.16.16 at 6:38 pm
***********************
Thank-you, Pete!!! And, bless you.

#79 Told you. - Realties.ca on 02.16.16 at 8:34 pm

[…] Source: http://www.greaterfool.ca/2016/02/16/told-you/ […]

#80 Cory on 02.16.16 at 8:38 pm

There is just something very wrong with this country. I admit, I am quite concerned over the future of Canada. We are managed by incompetent governments at every single level with such shortsighted power seeking self serving agendas that it will be almost impossible for it to be corrected.

There are just too many stupid people out there. When you have people “buying” houses that don’t know about interest rates or how simple interest is even calculated, leveraging up to nosebleed levels thinking they are the smartest thing since Pong was created, we are in for big trouble.

Someone with some guts has go to lead and correct this incredibly disastrous mentality. Savers are punished daily and subsidized the moist ones for years now through low interest rates. So to say the government is not going to save anyone is not true. They already are by this fact alone.

In our own lives, we are prudent, responsible, and do the right things and we are savers so we can prepare for the years you speak of in your blog tonight. However, even we are having a hard time saving because of never ending pocket picking by all levels of government as well as the 4th level of government called the banks continually picking our pockets with outrageous fees. But that’s Canadians for you. Whine and cry yet do nothing but get out voted by those who don’t have or want to work and are entitled to everyone else’s money.

Add to this, the prudent savers cannot get a good return in the markets…none of them… because of many reasons, one of which is computer trading (HFT). Can’t win in real estate, can’t win in the markets, can’t win in business since these governments are so against business. Then they wonder why we have a crisis in the making.

I have never seen such a mess in all of my life. Vancouver proud of the fact housing is ridiculously priced not due to economic factors but simply policy and financial engineering actions, low interest rates, CMHC, etc. Stoke the fire. Yet don’t realize this illusion is more harmful than beneficial since workers, even those that make good money, can’t afford to live there. We would move there, we are well established, but we never would if we were to buy. We would definitely rent (as we do now) so “landlords” could subsidize us but other than that, forget it.

Add to it we have premiers attacking other provinces pointing out perceived flaws, blocking pipelines with moral superiority front and center even though every single person who claims they’re against oil and gas is a hypocrite whether they want to be or not.

Molson had it right “I am Canadian”!!! too bad nobody else feels that way in this country.

#81 learningfromyou on 02.16.16 at 8:38 pm

Thank Garth for this post.

Just to close the chapter about the little house in Vancouver mentioned before.

http://www.cbc.ca/news/canada/british-columbia/vancouver-teardown-real-estate-1.3449869

It was in the news this morning.

It was on this blog last week. — Garth

#82 Hamcouver on 02.16.16 at 8:44 pm

#35: totally agree. We are a family with three children and it is increasingly difficult to see any future for our family in Vancouver. We will not buy an overvalued shack but renting is increasingly difficult as almost all properties are only for rent for a year prior to demolition. Neighborhoods on the westside are empty and la king any sense of community. The city is rapidly losing its charm and becoming the Monaco of North America.

So move. You will not change anything by moaning. — Garth

#83 Scumop on 02.16.16 at 8:44 pm

#62 Grantmi
“lots of cat food going to be consumed.”
————————-

Nope. Too expensive.

Dog kibble is where its at. Around $1.25/kg. No cat food beats that for value. A frugal retiree could live on less than 0.5kg. In summer, add a dandelion salad as a side dish. Its certainly in my plans.

Walmart sells kibble. Could be a good investment.

#84 Craigster on 02.16.16 at 8:46 pm

I know three people who are exactly as Garth describes in my local community (commuter/retirement location approx 45 mins from Vancouver)… as follows:

aged between 60 and 70, they cannot afford retirement but no longer want to work, though (bluntly) they have to. One individual downsized to a condo in Van, then when he’d spend the capital he realized from the sale of his house, downsized again to live on a boat and now supplements his government pogey with shifts in local retail outlets at the age of 71. He’s not complaining.

The other guy sold out in YYZ a couple of years back and moved here (he’s originally local) and his tale is far more cautionary/salutary as you wish. Despite ringing the bell in YYZ and selling for over $1million, he moved here to find prices rocketing as young families escaped the downtown core and ended up spending over $800 on his retirement place. So he has a lot less K than he thought he would have, and not very much pension outside aforementioned government pogey. Thus he, in his mid-sixties, is going to have to go out and look for work. And you guessed it, he doesn’t want to. Oh, and did I mention they just cancelled his last gig?

Ugly. But not as ugly as doing something you hate all your life just for the pension and ending up rich, bitter and twisted. You choose.

#85 Kreditanstalt on 02.16.16 at 8:48 pm

“…failing to build up what everyone ultimately needs – assets that pay you income. Cash flow.”

Sorry. Not only the Boomers’ problem. Everyone’s.

“Safe” and “investment” are oxymoronic.

Speculating is all that is left. RISK cannot be avoided.

#86 acdel on 02.16.16 at 8:51 pm

#57 wayne2yerGarth
Yep, they say retirement is over rated; many die within a few years of it due to boredom or have developed debilitating diseases because of their work environment.
My old friend at 90 young has never stopped working or playing; his greatest passion at 90, water skiing, yet he smokes a few stogies a day and loves his whiskey; go figure!

#87 Nemesis on 02.16.16 at 8:54 pm

#Woof!ThatReallyBites,Or… #Ebony&IvorySeptuagenarianRocker… #[email protected]

“Maybe it’s the fact that we are younger than Sir Paul and it’s a new generation… and we really club when we go out.” – Rapper “Bow Wow”

[Independent] – Sir Paul McCartney ‘turned away from Grammys after party’

“In a video captured by TMZ (who else), Sir Paul can be heard incredulously telling fellow hopefuls Foo Fighters drummer Taylor Hawkins and singer Beck, “How VIP do we gotta get? We need another hit guys!” as security refuses the trio entry to the bash at the Argyle in Hollywood. Sir Paul was particularly peeved as earlier in the week his bid on a well publicized Canadian residential property [a Vancouver WestSide “TearDown”] was similarly thwarted.”

http://www.independent.co.uk/news/people/sir-paul-mccartney-turned-away-from-grammys-after-party-a6877161.html

[NoteToGT: Liberties may have been taken…]

#88 Fiendish Thingy on 02.16.16 at 8:58 pm

Great blog today; I’m counting the days til I retire 4 years from now at age 62. I’ll have both a U.S. and small BC pension, SS, small CPP, income from our 401k. OAS will be our play money… The last piece of the puzzle will be to vultch a nice detached home with the cash from the sale of our California home, using the rule of 90, thereby eliminating rent/mortgage from our retirement budget.

Patiently waiting for the market to melt in the lower mainland…lots of for sale signs going up in the past two weeks in the Albion area of Maple Ridge…

#89 tough luck on 02.16.16 at 9:01 pm

I’m sorry to advise you but Toronto property values will just keep rising as long as mortgage rates rise gradually. If your mortgage is $700000 today at 3 percent that is 20000 or so a year in interest. In five years if rates are 1 per cent higher and the mortgage balance about $120000 lower which it should be then interest will be about $22000 or so a year for a new five year term. But so to incomes will have risen a bit. Even if not, $2000 or so more a year in interest is negligible to most. It’s a Starbucks coffe a day. If principal didn’t come down there would be a problem. But banks know as rates rise so do incomes and so come down principal amounts. If you can’t afford a house in Toronto now trust me you will not be better off in five years. Even if prices come down 10 per cent, will you not still be priced out? Look at it this way, if I buy a $1,000,000 house with a $900,000 mortgage in ten years I’ll have about 500000 left to pay, but in inflation adjusted dollars that’s only really like $250000 today. This is completely manageable to most people who would buy in Toronto. Even at 5 percent that is an easy mortgage for most since wages should be higher. There will be individual hard luck stories but on mass the above will apply and that’s what sets prices – the masses. Sorry for the bad news. I hear Belleville is nice.

#90 Herb on 02.16.16 at 9:10 pm

#59 Mary Thompson,

please remember that the greatest debt creators we’ve had in the recent past were named Mulroney and Harper, and they were neither Liberals nor “socialists”.

BTW, nice, new, innocuous-sounding name for a robowriter.

#91 Conspiratard on 02.16.16 at 9:23 pm

US high yield default rate pushing 4% – when that has happened in the past, 10% is not far behind. Then huge trouble.

Justice Scalia was found dead with a pillow over his head.

What links these things – a femanazi overthrow in the works!

Coincidence? I think not.

I think not.

#92 Nemesis on 02.16.16 at 9:23 pm

#MineIsBiggerThanYours,Or… #Jeb’sIdReloadsForSouthCarolina…

[NewRepublic] – With Jeb flashing his gun on Twitter, the GOP race enters Freudian territory.

…”It’s hard to interpret this tweet as anything other than a response to the constant emasculation that Bush has suffered at the hands of Donald Trump. The real estate mogul has spent months cutting Bush down with insults that suggested the former Florida governor was less than a man.”…

https://newrepublic.com/minutes/130023/jeb-flashing-gun-twitter-gop-race-enters-freudian-territory

#93 LL on 02.16.16 at 9:25 pm

…”Zuo Zongshen, a Chongqing-based billionaire who made his fortune selling motorcycles in China……..

Looks there is lots of money to do in China compare to Canada!

When I was in first year grade at school, we could bought for .25 a little card with a Chinese on the picture card. The goal was to help them.

Time has changed..now they are buying us……..

Get over yourself. — Garth

#94 Freddie on 02.16.16 at 9:35 pm

The reality is that there will be no retirement for those that have not saved. It’s back to the future. Retirement as we define it today is really a post WWII invention. Before, people worked until they could not work anymore, then they died a year or two after that.

When 65 was picked as the magic retirement age, the average guy kick the bucket at 67.

Those you saved, or were lucky enough to keep a work place pension will be a minority.

#95 Tom on 02.16.16 at 9:36 pm

People can’t save as much as they have to pay more taxes as governments get bought by unions…having to pay more for salaries and benefits and to cover shortfalls in guaranteed pensions

#96 fancy_pants on 02.16.16 at 9:37 pm

don’t you love socialism? lived your life right? the gov’t will find your stash. majority rules. why work? just do cash for life.

https://ca.news.yahoo.com/blogs/dailybrew/cash-for-life-guaranteed-annual-income-gaining-205504354.html

#97 joblo on 02.16.16 at 9:49 pm

To you codgers going on and on the government this, the government that. (Brainwashed cradle to grave thinking.)
Your government has no solutions.

Look old coots, for once and for all the Elites run the show, Government’s are puppets, until the Elite figure out another way to get paid it ain’t gettin any better.
Accept it.

#98 cramar on 02.16.16 at 9:50 pm

#11 Penny Henny on 02.16.16 at 6:00 pm

Meanwhile nobody can live on the current government pogey. The average CPP payout is about $7,500 a year for men and under $6,000 for women. OAS is only $6,800 annually.-GT

There is another safety net available, GIS.
Not a great life, nothing to strive for but why do you always exclude it?

Because you must be destitute to collect it. Is that the goal of anyone here? — Garth

—————

Yes, a worthy goal! At least as far as the Taxman’s eyes is concerned. Theoretically, if a Millennial were really smart, they’d live within their means, max out TFSA contributions, and invest wisely within. Then when they reach retirement age, they have a huge revenue-generating machine that is sheltered from tax. As far as the Taxman is concerned they are in poverty and quality for CPP, OAS, and GIS as well.

Theoretically. Assumes things will remain as they are for many decades. And realistically, Millennials are not about to do it.

#99 Karl hungus on 02.16.16 at 9:56 pm

Why are you complaining about people bringing up GIS? I thought this blog was about smart financial planning ? Which includes avoiding taxes along with reducing reported income a la tsfa. You’re talking out of both sides of your mouth.

No complaint from me. But trying to score on GIS as an alternative to actually saving and investing is kind of pathetic. — Garth

#100 Brazil ex-pat on 02.16.16 at 10:01 pm

#15 Rick on 02.16.16 at 6:05 pm
I really feel sorry for those idiots who voted Liberal; thinking the government would save them. Actually, I’m not:) Elections have consequences:) Oh wait, I forgot… everything is Harper’s fault:)

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

ALL govt’s are corrupt, stupid or both. That is why we left Canada. Brazil is not much better but the food is awesome the weather is great and the women….well you just let your imagination run wild.

#101 Smoking Man on 02.16.16 at 10:04 pm

Nothing like a fever being taken down in the back yard with some warm 18 year old scotch.

The snow on the roofs, bushes and grownd makes the sky look blacker than it is.

Wish you dogs could have one day in my life.

#102 Shawn on 02.16.16 at 10:09 pm

Alberta Management Employees Pension Plan

JSS on 02.16.16 at 8:17 pm cryptically asked me:

So, Shawn, do you still think MEPP is a good pension plan?

*****************************************
It would be helpful to remind me when I ever mentioned MEPP on this site (I was more likely to mention its non-management and much larger and less lucrative sister, the Alberta Public Service Pension Plan.)

It would also be helpful to know what is meant by “still”. Has something changed?

MEPP is the Alberta government management employees pension plan. It is basically of the gold-plated variety. A full 2% of average highest five years salary for each year worked. I believe it may have a normal retirement age of 60 but with no reduction for early retirement at age 55 if age and years of service add to 80. (Well, yes there is a reduction in that you don’t get the 2% for the years not worked, but you get no reduction for being 55 and having a life expectancy of close to five years longer than a 60 year old.)

There is partial inflation indexing.

Basically this is a typical-in-many respects (but a bit more golden) government pension plan that foolishly promised risk-free benefits to retirees based on risky projected returns. In theory the contributions of the worker and the government over the years would have fully paid for the pensions today. But returns have been lower than expected and people have lived longer than expected.

This pension, like most government plans offered early retirement based on magic numbers which have no basis in math. It also based its pension on five year average salaries, something especially beneficial to managers.

This pension plan like most government pension plans has been scrambling to keep up by raising contributions for workers and the government (a process started over ten years ago).

Under the terms of the pension, not a penny was taken from any retiree. Others are left to make up the slack.

#103 Shawn on 02.16.16 at 10:19 pm

Averages are True but misleading

“When 65 was picked as the magic retirement age, the average guy kick the bucket at 67.”

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

Probably true, but COMPLETELY misleading. (Sorry, sometimes the spirit of Mark seems to flow through me and I start to have a pathological need to correct everything I see.)

A lot of people then died well before 67 and in fact before age 60. Not a few died in infancy and never ever contributed to any pension plan.

Even at the time of the earliest pensions it was expected that some meaningful proportion of people would go on to collect it for a couple decades.

We’ve always had a least a few people living to 85 and 90.

People dying at average 67 did not mean the average person who had reached 65 and started collecting only then collected for two years.

And it certainly did not mean that no one collected for 20 years. Some did.

Anyhow, what has that got to do with TODAY’s pensions? Nothing.

#104 Bottoms_Up on 02.16.16 at 10:22 pm

#94 Tom on 02.16.16 at 9:36 pm
—————————
Please post supporting evidence for your claims.

#105 cramar on 02.16.16 at 10:24 pm

#85 acdel on 02.16.16 at 8:51 pm
#57 wayne2yerGarth

Yep, they say retirement is over rated; many die within a few years of it due to boredom or have developed debilitating diseases because of their work environment.
My old friend at 90 young has never stopped working or playing; his greatest passion at 90, water skiing, yet he smokes a few stogies a day and loves his whiskey; go figure!

——————-

Naw! I say working for a living is over rated! Unless you love your job and your job is your mission in life. But working just to earn a living is another matter. As is working just to occupy your life. I don’t know how many times people have told me that they don’t want to retire, because they don’t know what they would do with their life! I am aghast! No wonder some people die soon after retirement.

I even have a neighbour that got a job as a cashier at a grocery store, not because she needs the money, but because she has nothing better to do with her time. I know many others who go through retirement life accomplishing nothing.

Retirement years are the best of my life! So many exciting things to do. So many things to accomplish. So little time in a day!

#106 Smoking Man on 02.16.16 at 10:24 pm

Sunshine is when you promised the wife we are joining a gym in the morning just so she would give up the last hidden bottle.

She has two weddings this year.. chicks will understand going from a size 11 to a 7 in 4 months.

I look at her . It all looks good to me. But woman is all I’m saying.

Woman your nemesis not dudes . Other bitches .

#107 Big Dipper on 02.16.16 at 10:24 pm

Oh yea, the conservative line about the evils of public pension plans. Haven’t heard this one for awhile. Of course the usual misrepresentations and fear mongering. A couple with fully contributed CPP’s and both collecting OAS will pull in about $40,000/a from the much despised government plans. Not bad, particularly if you live in a fully paid house….

Public pensions and have lifted thousands seniors from poverty. Unlike the crazy casino of stocks and bonds, the retiree has the government OAS or CPP guaranteeing a monthly payment. Paying into CPP is not a tax – it is a contribution. The performance of the CPP fund has been outstanding. Mostly because their economy of scale allows for investment never available to the average retail investor.

In this time of low wages, uncertain employment and contract work, increasing the CPP makes a great deal of sense. Ignore the conservative fear mongering and their warped ideology.

#108 westsider on 02.16.16 at 10:26 pm

Vancouver Westside again. House on West 22nd, 45 x 122, asking $3.1 mill. sold for $4 million.Buyer bid almost $1 million over asking. The world has gone mad!!!

#109 house-horny vs portfolio-horny on 02.16.16 at 10:27 pm

I forecast that twenty years hence truckloads of Boomers would be shuffling off into wrinkledom, abysmally unprepared to finance the next decades of their lives. The reason? They were house-horny and failing to build up what everyone ultimately needs – assets that pay you income.

===

That’s hardly the most important reason.

The more likely main reason is the concentration of wealth, which makes the income for the most people either stagnating or decline.

With stagnating or declining income borrowed money is used to maintain previously established lifestyle, which generates demand. The “previously established lifestyle” even a generation ago, used to include among other things: a) owning the roof above your head b) savings, investment c) reasonable pension (public and private combined).

Corporate pensions evaporated, together with the bonus and raise. Even full time, payroll jobs on a large-scale.

People working in the fields with a few remaining – now – “perks” are politically, ideologically pitted against the growing army of “have-nots”, demanding that everybody should lose all the benefits, “in the name of fairness.”

With incomes declining or stagnating (while the price of most items continued to grow), people had to make a decision: put their declining extra money into real estate or a portfolio.

Most people did chose real estate.
The reasons are complex and include that it is seemingly easier, less time consuming than investing. Let’s not forget, that reasonably inexpensive self-directed brokerages, ETFs are relatively new.

People had no idea if they should follow Obama’s advice after the financial collapse and they should buy into securities, administered by the bailed out financial institutions – or try to “play safe” with real estate.

Not to mention, that lenders themselves preferred for collateral a shitty real estate property, over any beautiful investment portfolio, no matter how the 6% return seems like a no-brainer.

By the way, plenty of voices warn that it is unlikely that the growth of the markets will yield the “usual” 6% return – what investors got used to – in the next decade.
We will see only from hindsight, whether “this time is not different”.

Which, of course, puts pension funds in a difficult position, from a different angle.

Bottom line: the majority of Canadian families no longer have, what used to be the “G7 income”, while the “cost of G7-living” did not decrease, just the opposite.

Without consumption on borrowed money the Canadian economy would have collapsed already, exactly the same way, as removing oil revenue from the economy. Which was using cheap borrowed money probably as much as housing.

House-horny = disaster of Canadian economy is hardly a balanced, sophisticated diagnosis.

Blame society all you wish, but your fate still rests within your hands. Nobody else’s. Too many choices have been poor ones. — Garth

#110 S.Bby on 02.16.16 at 10:29 pm

Got home from work and wife says she had two realtors at the door today wanting to list our house. That’s a record for one day.

#111 Bottoms_Up on 02.16.16 at 10:30 pm

#89 Herb on 02.16.16 at 9:10 pm
———————–
It’s also a dead giveaway when they use the word “socialists”.

#112 Marco on 02.16.16 at 10:33 pm

Garth,

I can’t help but feel that so many Canadians have put themselves into Financial ruin that the Gov will have no choice but to step in and save them all.

It’s a damn shame really. I work my ass off and invest like its my business and this is the perception I’m left with.

What’s a 30 y/o to do…

#113 acdel on 02.16.16 at 10:33 pm

#101 Smoking Man
Nothing like a fever being taken down in the back yard with some warm 18 year old scotch.

The snow on the roofs, bushes and grownd makes the sky look blacker than it is.

Wish you dogs could have one day in my life.

—————————————————————–

Yep, know what you are talking about, fortunate enough to live close to the Rockies. Fortunate enough not need a fortune to experience what you just have, life is good! Scotch up!

#114 William of the north on 02.16.16 at 10:39 pm

…. thirsty underwear…
made me laugh enough….. that I may need a pair!

#115 acdel on 02.16.16 at 10:40 pm

#105 cramar

Good point!

To each their own, some aspire to your view points while others do not! If I ever make it to 90, what a ride it would be to be towed behind a 350 hp boat, enjoying the waves, sucking on a stogie and enjoying the evening with a few shots of whiskey, shhh, let me dream.

#116 delusional in bc on 02.16.16 at 10:48 pm

In the sleep suburb of Vancouver, about a 40 mins drive away, I witnessed the sale of 2 homes (I am sure the value was over 500k) in about 2-3 weeks time. I guess buyers were pushed to make the purchase before the new down payment of 10% on homes of 500k came into affect.

Christie Clark should not be so smug.

#117 Shawn on 02.16.16 at 10:51 pm

Bankers Behaving Profitably…

Banks are subject to increased competition… But for the most part customers stay with their bank as it is a pain to switch. THAT and NOT oligopoly explains their high profits.

Banks still inexplicably use and store a LOT of paper and as they automate that then they can cut costs…

Did you notice that most of us no longer use much actual cash? And cheques are becoming obsolete. Elimination of cash and checks will lower costs for banks. Banking machine numbers will be reduced. (Already the banking machines are thinking of forming a union to protest the elimination of their functions).

I was looking at RBC’s report and bonuses are almost as large as salaries. Those can be cut if needed. They can cut people and or bonuses almost at will due to automation.

Think about how much personal and incremental work goes into managing each additional mortgage after it is set up. That’s right, basically zero, no human intervention if the payments roll in on time.

People complain about late fees and penalty interest. But without NSF cheques and late payments there would be no incremental work per customer. Deadbeats are hugely costly and regular payers who never enter the bank are enormously profitable.

My conclusion is that banks will be profitable for a long time to come.

#118 So move on 02.16.16 at 10:53 pm

So move. You will not change anything by moaning. — Garth

===

Very funny small-c solution.

How is moaning about house-horny habits working out?

Quite well. — Garth

#119 Freeman on 02.16.16 at 10:53 pm

I have a question to ask the well-informed readers here:

– If Saudi Arabia and Turkey send in 150,000 ground forces into Syria, and Russia uses massive weaponry to wipe out at least half of those numbers, eliminating 75,000 of those ground forces; do you think the U.S. will intervene and send in their own forces into Syria to protect the Turkish and Saudi military?

Do you even think the U.S. would care?

I myself don’t think so, I think that there is an election coming and the president would not want to risk starting a big confrontation with Russia over that.

I think that the removal of 75,000 Turkish and Saudi Troops wouldn’t even be mentioned on the nightly news.

What is your opinion?

I ask this because from the nice performance of the stock market the past few days it looks as if Saudi Arabia could get nuked off of the face of the planet and no one would really care, the stock market probably wouldn’t even notice.

I do have to admit that I am relieved, I thought that the conflict over there would send oil soaring, but I guess I was wrong.

There is going to be massive war-games played there in 2 weeks time; 20 countries and almost half a million troops. I don’t think they would be planning war games if they were planning an invasion, or at least I sure hope they don’t. I think that the stock market’s optimism is showing that they think all of this war talk is just a bunch of hot air and no one is going to be invading anyone anytime soon.

Meanwhile Garth is correct, it is all but 100% certain that the Fed will be raising rates again this March 16 as the Fed Fund futures prices indicate here:

http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

That is so good because if the Fed was to bring in negative rates it would make the U.S. dollar crash and I’m 100% in the U.S. dollar and i don’t want to lose money, that’s why I hope they do raise rates (as indicated).

#120 Hockey Stick on 02.16.16 at 11:02 pm

It’s speculation. By Canadians. And now everyone who can fog a mirror wants in. Reminds me so much of the .com era. It’s really quite unnerving. Shortage of land, (YVR must be one special friggin city) foreign buyers (cuz they don’t buy elsewhere!), buy now or be priced out, etc., it’s NOT different here. No one is thinking rationally. My neighbours who were on track to live within their means had a conversation with [email protected] who told them they can leverage waaay more than their comfort zones at these enduring low rates (it’s all about the monthly payment) so it’s time to move up and buy that house…which they will now try to get for god knows what at least an hours drive away for a crack shack on a flood plain in competition with other middle income families all believing they too deserve grass and a back yard for the kiddies. Screw the future. All because of low rates, easy credit, and now rampant speculation. This will not end well. Crazy times.

#121 Mark on 02.16.16 at 11:06 pm

“That is so good because if the Fed was to bring in negative rates it would make the U.S. dollar crash ”

Negative rates would collapse lending. A lending collapse is very much currency-positive. Nobody owns the USD$ or USD$ bonds for the interest coupons at this point as they are mostly beneath officially ackowleged inflation.

The question is, if every central bank in the world cut into negative territory, who would suffer the least amount of deflation? Over the long term, the US needs to return to being an exporter. China an importer. Therefore, in a worldwide negative rate environment, fundamental reversion for currencies is likely, and the CAD$ should do reasonably well in such circumstance on account of Canada’s substantial investment in export capacity and historic export position.

#122 Brian on 02.16.16 at 11:15 pm

What a jip to live in this country now. Sux. Wish I lived in the US.

#123 jane 24 on 02.16.16 at 11:15 pm

I retired at 59 and am now 61. I tried for Freedom 55 but failed. We have a tiny corporate pension, some early govt pensions and savings.

I have lost count of the number of working folk who have asked what I do all day? The answer is whatever I want. My days have never been fuller but full of the stuff that I have always wanted to do and this stuff doesn’t need to be costly either to make me happy.

We downsized the house 2 years ago to one that is easy and cheap to run as Garth is right if you leave it too late the move becomes too overwhelming. At our age you want to minimise house costs not increase them. You adjust to small spaces and it encourages you to avoid collecting crap.

What am I planning on doing today?

Book 2 cheap senior railcards to London for Monday as one of our 2016 goals is to see one world class museum per month.
Visit new grandkid and annoy his new mother
Start to lay a garden patio myself.
Do some hobby mosaic for said garden.
Meet with friend this evening to invent new cocktail as we both have lots of bottle bits left over from Christmas. Drink all the experiments.

So many Canadian friends are dead miserable right now.
Life costs too much and the future looks like it will cost even more. Simplify your life to what you really want out of it. You only go around once. Enjoy every day both pre and post retirement.

#124 Bram on 02.16.16 at 11:29 pm

#89 tough luck on 02.16.16 at 9:01 pm
in ten years I’ll have about 500000 left to pay, but in inflation adjusted dollars that’s only really like $250000 today.

It’s understandable to expect inflation to help you out with debt. (After all, we’ve only known inflation in our lifetimes.)

But it is also wrong to expect it!

Look it up: in 19th century, there were more years with deflation than there were years with inflation.

Deflation may very well hit us again in 21st century, and stay for a very long time. And this, my friend, makes paying off principle a lot harder not easier, as the years go by.

So thread carefully with debt load.

Bram

PS: Here you can see how common deflation used to be in the 19th century:
https://www.minneapolisfed.org/community/teaching-aids/cpi-calculator-information/consumer-price-index-1800

#125 Suede on 02.16.16 at 11:34 pm

#32 common sense

Why should people who took risk and failed be rewarded while you ‘did the right thing” and get squat?

Dude…

That’s how democracy works. It’s for the masses. Become to big to fail.

Like Quebec, Bombardier, an auto company, a home owner, etc…

#126 acdel on 02.16.16 at 11:37 pm

#123 jane 24

Good for you; enjoy your life, the hell with what other’s think. Too many get caught in this trap! You may not have the resources as Smoking Man but in his dyslexic ways he is teaching us something about enjoying life; resources or not, make the most of it. My 90 year old friend could teach us all alot. Goodnight dawgs!

#127 sealclubber on 02.16.16 at 11:57 pm

#123 jane 24 on 02.16.16 at 11:15 pm

Visit new grandkid and annoy his new mother

I aspire to do this someday.

#128 house-horny vs portfolio-horny on 02.16.16 at 11:57 pm

Blame society all you wish, but your fate still rests within your hands. Nobody else’s. Too many choices have been poor ones. — Garth

===

It’s not about “blaming society”.

Decreasing TFSA limit might have a profound impact of large number of individuals – though they didn’t vote for it.

Free-trade agreements have far-reaching consequences virtually to all individuals in North America. The details of the latest one was kept secret from the individual citizens, before it was signed. The all-mighty individual decisions can catch-up later with all the consequences. No need to blame anyone, just suck it up, your fate rests only in your own hand.

With your logic, maybe to become a refugee or worst during history is simply the result of “poor individual choices”.

Entire families, communities vanished – all because suddenly they all started to make “wrong individual decisions”. Awesome.

#129 The American on 02.17.16 at 12:03 am

At #82: Hamcouver, if you think Vancouver is the “Manoco of North America,” then you really need to get out a lot more. It’s a backwater town mostly consisting of posers who live hand-to-mouth. No *real* money there. A few late model cars and fake handbags on every shoulder doesn’t constitute a “Manoco.”

#130 juno on 02.17.16 at 12:11 am

Sounds like my buddy who is a landlord. His place is sub-zero (Doesn’t turn on the heat at all)

I’m surprise his pecker doesn’t freeze and fall off. Can’t afford to heat up is huge 3800 sqft house. The Gas bill was too expensive so he has to save somehow.

For a person who has a 1.6 million dollar house, sure lives like a street person.

#131 prairiegopher on 02.17.16 at 12:15 am

Yeah right, Justin will save us! He’s too busy being a glam boy. He doesn’t care unless he can get his mug in front of a camera.

#132 kommykim on 02.17.16 at 12:24 am

RE:

#24 Jim Bob on 02.16.16 at 6:18 pm
99 little bugs in the code
99 little bugs in the code
Take one down, patch it around,
127 little bugs in the code.

100 buckets of bits on the bus
100 buckets of bits
Take one down, short it to ground
FF buckets of bits on the bus

I get the 0010 verse but not the 0001.

#133 West Coast on 02.17.16 at 12:35 am

Please – Let’s remember that the City of Vancouver is 115 km sq. while the City of Toronto is 639 km sq.
The City of Vancouver covers a very, very small area (which, by the way, does not even include the UBC endowment lands).
Because of extremely restrictive land use restrictions , there are many more SFHs on the ‘west side’ than exist in most urban areas in North America (or the world). However, because of the small land area, there are relatively few houses or lots available in Vancouver and they are currently in great demand.
And no , the prices in the City of Vancouver are not going to collapse and yes if you own a SFH in Vancouver and don’t have sufficient ‘cash flow’ for your golden years it does make sense to sell, invest and rent and/or move to a less expensive area. Best to do this while you are still able to deal with complex issues.
Garth’s message is all about planning, balancing your assets and understanding ‘cash flow’.
Thanks again Garth………you’ve saved my goat a number of times over the years…………..

#134 Entrepreneur on 02.17.16 at 12:39 am

It feels like a stab in the back by Christy Clark and de Jong in the website by #7 Nemesis and # 36 Jack Dracula. Read the comment section of these websites; people are angry and really upset. Our B.C. leaders are not listening to the people who voted them in, and most importantly, it is time for them to do the right thing. Avoidance is not the answer.

For people who voted for the Liberals to get hid of Harper: People voted against Harper. At the beginning of the election campaign the NDP were ahead but some were afraid of that and sided with the Liberals to avoid the NDP from winning. A crafty move and it worked. For a long time, federally it has been between the Conservatives and the Liberals (pushing the NDP out). One can hear the bias views to steer voters away from the NDP.

I am a little upset with Christy Clark and de Jong (Liberals) right now but election is around the corner.

It is so sad how people treat their animals and that puppy said “thank-you, you saved me” by licking your hands. The original owners showed no respect to the puppy and the puppy felt it. Right on #34 tundra pete.

Years ago, my puppy ran along my bicycle (with other bicycle riders) but after a mile I picked my puppy up so she could ride on the handle bars. She licked my hands with relief. They know who loves & respects them.

#135 NEVER GIVE UP on 02.17.16 at 12:43 am

Unless interest rates are on a 100 year cycle, I figure they really will not go up in any meaningful way.
The trend has been downward for the last 36 years.
This has facilitated the transfer of wealth from Savers to Corps and by accident RE speculators.
Is should really be known as the “Greatest Theft of wealth from Seniors in history”.

https://www.google.com/search?q=historical+interest+rates+graph&tbm=isch&imgil=nvUiaZzr5I3F-M%253A%253Be_8BQmlUZzR13M%253Bhttp%25253A%25252F%25252Flakeridgevarealestatenews.com%25252Fchannels%25252Factiverain%25252Ftopics%25252Fbuying_a_home&source=iu&pf=m&fir=nvUiaZzr5I3F-M%253A%252Ce_8BQmlUZzR13M%252C_&usg=__6HHebo3kZZGpjUL-k1XCJgRyyeM%3D&biw=1536&bih=768&ved=0ahUKEwiRzOnWiP7KAhWKPCYKHSq2DiUQyjcIJg&ei=XQXEVtGpEIr5mAGq7LqoAg#imgrc=QsU3m40gX6qm1M%3A

Whats to say the Wall Street/fed/Washington Cabal hasn’t decided that they will keep interest rates down indefinitely.
They can do whatever they want. Market forces be damned.

#136 Harold Kindle on 02.17.16 at 12:44 am

Absolutely, there is no mobility in this country, people put down roots and would rather die than move. Living in the US it wasn’t uncommon to have neighbours move in and out of states like the whole place is one giant home base, nobodies uncomfortable anywhere, why so in Canada?

“Suddenly the thought of selling, moving and hauling all your crap around is overwhelming. So real estate turns into a psychological burden.”

I threw that idea under the bus many years ago, my wife and I sold the house, biggest on the block, put all our stuff in a storage locker, including the car, and went traveling, home schooled the kid the Distance Education. We went north south east and west on the profit wee made off the house and kept the principal safe. We had a blast, we had a life, we had what the average Canadian can’t dream of , freedom. Try it some time. The experiance had an effect on the rest of our lives. Since then we’ve never been bored again, no more boring jobs, short term contracts only, traveling around the world, right now we live in a small Air B&B in Thailand, without a care in the world.

We have very lucrative jobs, no tax burden, heaven. When we tire of Thai food and sunshine we ‘ll go somewhere else. The kid is grown through university, happy as a clam. Did we miss hockey camp and all that BS, nope. The security of a ‘career and a house’ is all in your mind. Get a life, sleep when your dead.

#137 Leo Trollstoy on 02.17.16 at 1:12 am

#98 cramar on 02.16.16 at 9:50 pm

now that’s a plan!

#138 Leo Trollstoy on 02.17.16 at 1:19 am

#89 tough luck on 02.16.16 at 9:01 pm

dunno why Vancouver and Toronto home prices continue to rise. weird

#139 AB Boxster on 02.17.16 at 2:51 am

#107 Big Dipper on 02.16.16 at 10:24 pm
A couple with fully contributed CPP’s and both collecting OAS will pull in about $40,000/a from the much despised government plan
———————————————–
Rarely will any couple pull in that much.
Maybe 28 k. (2×7000 Cpp+ 2X6800 OAS)
Oh and then when 1 of the couple dies they get to live on 14K.
Whoohoo!

#140 Calgary Rip Off on 02.17.16 at 3:09 am

so if you dont have a mortgage, you have rent.

At the Stars Lottery House they asked me and wife what we liked. I told them no mortgage. “Hmm, no one has ever said that,” she told us. “Yeh Im one of the thousand mortgage owners. No mortgage is all there is to like about this house.” She looked at me in disbelief.

http://www.calgarysun.com/2016/02/16/plunging-rental-rates-in-calgary-open-up-new-opportunities-for-working-poor

“These units may be $900, but many people can only afford $600 a month. And then they have to pay for food, and other costs.”

Unless you are a student or with family, dont come to Calgary unless you make 6 figures. Minimum $1400/month for a decent place unless you are a single person.

And Garth wonders why people own mortgages in Calgary.

#141 Mark on 02.17.16 at 3:46 am

“I was looking at RBC’s report and bonuses are almost as large as salaries.”

True. Yet you have the audacity to accuse Bombardier’s management of being incompetent.

Do you really think that RBC couldn’t replace every last one of its employees, at least at the management level, with the sheer numbers of Canadians who would gladly work for such compensation and would love to take those jobs (because they’re stuck in lower paying positions elsewhere)?

The difference here is that Bombardier operates in a business for which they basically had to bet the entire company to remain competitive. Bombardier’s management dynasty will lose most of their wealth if they do fail. While Canadian banks, in contrast, have a far easier environment to operate in, implied government subsidy of several billion per year (ie: what is the true cost of all that CMHC insurance they use), and very little execution risk in comparison.

Deadbeats are hugely costly and regular payers who never enter the bank are enormously profitable.

There are pretty significant fees applicable to the deadbeats. And the higher risk segment of the market actually lends itself to higher realized spreads, even after the defaults are backed out of the equation.

Do a Google search for “Glacier Credit Card Trust” sometime, and read the reports generated that arise out of the Canadian Tire credit cards. The numbers are quite eye-opening to say the least. For December, 2015, the portfolio yielded 20.73% annualized, with annualized write-downs of 5.71%. That’s over a 15% net yield, from a group of individuals who, at least as far as Canadian banking go, are a pile of deadbeats. I would submit, on the strength of that data, that the traditional “deadbeats” are in fact hugely profitable for Canadian lenders.

http://s2.q4cdn.com/913390117/files/Investors-Monthly-Performance-Summary-2015-12.pdf

#142 What about 50% that do have pensions? on 02.17.16 at 3:58 am

The END RESULT of the Broadbent Institute report is predictable and really, in the common domain for about 3 years (I have posted about this before).

You need only look at the StatCan: Canada Income Distribution by Age Group report for 2013.

65 yrs and older age group (5.29 million people in 2013):

– 50.5% making $25,000 and over (2.67 million people)
– which means 49.5% making below $25,000 = CPP+OAS is their main source of income plus a few thousand $ more from other sources.
– 34.5% (1.82 million people) making $35,000 or more.
– 19.1% (1 million people) making $50,000 and over.
– 7.6% (400 thousand people) making $75,000 and over.
– and the 1% for that age group (51 thousand people) make $200,000 and over.

You basically have 50% “haves” and 50% “have nots” in the 65 yrs and older age group.

I disagree that government will do nothing.

Retirees vote and when 2.7 million of them are struggling financially (and understatement at $25K per year or less), government will react…how, is anyone’s guess.

#143 Gus Bar on 02.17.16 at 4:21 am

“loosely on topic: Brison says millennials will staff next ‘golden age’ of public service”

Brisons full of crap. The civil servants are the biggest moisters of all since they have no fear of market gyrations. The civil servants have all got monster mortgages which are being paid off well into a civil service lumps 80’s because they never retire, only go back in on contract and double dip for the second pension, double pay and second pension contributions. The kids will never get these peoples jobs, ever.

#144 juno on 02.17.16 at 4:47 am

#123 jane 24 on 02.16.16 at 11:15 pm

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

Although I’m not retire yet (mabey in 7 years) with a nice gov pension.

I get 5 weeks of holiday + TimeOff days another 18 days.

Cashed in my houses, and now renting. Invested in American Bucks collecting divident …

In the last couple of years my family has been booking vacation a all over the place. You only live once and you have to do it before you get too old. Because travelling takes alot more energy than you think

Went to china, south east asia, disney florida, california and even the equivilent in Japan. Dive in the great barrier reefs. Climb to the basecamp of Everest in katmandu. Hiked the anpura trails. Did the west coast trail, and the HSBC trail form cypress to whistler.Went in the outback of australia and almost died.

Planning to spend a month in Europe and hopefully egypt next year if things get better.

Closer to the end of my life I would like to take the train across canada. And RV back through the USA.
Still so much to do and see.
Want to create an adventure Blog

I comes down to this if you don’t have the cash your restricted to what adventures you can do.

I see too many people wait too long until they get sick and are forced to retire. Its not for everyone, but I’m trying to live life while I’m still living and not rot away in the cellar just dying away

#145 juno on 02.17.16 at 5:00 am

#123 jane 24 on 02.16.16 at 11:15 pm

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

Although I’m not retire yet (mabey in 7 years) with a nice gov pension.

I get 5 weeks of holiday + TimeOff days another 18 days.

Cashed in my houses, and now renting. Invested in American Bucks collecting divident …

In the last couple of years my family has been booking vacation a all over the place. You only live once and you have to do it before you get too old. Because travelling takes alot more energy than you think

Went to china, south east asia, disney florida, california and even the equivilent in Japan. Dive in the great barrier reefs. Climb to the basecamp of Everest in katmandu. Hiked the anpura trails. Did the west coast trail, and the HSBC trail form cypress to whistler.Went in the outback of australia and almost died.

Planning to spend a month in Europe and hopefully egypt next year if things get better.

Closer to the end of my life I would like to take the train across canada. And RV back through the USA.
Still so much to do and see.
Want to create an adventure Blog

I comes down to this if you don’t have the cash your restricted to what adventures you can do.

I see too many people wait too long until they get sick and are forced to retire. Its not for everyone, but I’m trying to live life while I’m still living and not rot away in the cellar just dying away
============
Like your post, the shortage of land thing always gets to me.

I remember doing research on G4 technology and remember that the technology if first release in areas such as Japan. The reason why is simple. They have a large population base per square foot there. Their terrian is surround by water and mountain in the middle. The Island is small compare to vancouver island.

Just to give you a piece of mind Japan’s population is 350 per sq km

hong kong 6000 / sqkm
singapore 7700

Canada is …..drum roll….. 4

in fact only three country has less population per sq km than Canada.

http://data.worldbank.org/indicator/EN.POP.DNST

hate to say it someone is blowing wind up somebody’s b-hole…

#146 Honey Dripper on 02.17.16 at 5:02 am

You sound overly cranky today. One day they will listen!

#147 juno on 02.17.16 at 5:11 am

this chart is scary

So looking at it over 80% of the people will be over 60 years of age by 2036, probably 75% by 2020

http://www.statcan.gc.ca/pub/91-520-x/2010001/ct048-eng.htm

#148 fancy_pants on 02.17.16 at 7:22 am

and another 7000 bite the pink slip…
http://www.cbc.ca/news/business/bombardier-job-cuts-1.3451335

economy is going into the $hitter but T2 is too busy saving the rest of the world
http://www.huffingtonpost.ca/keith-beardsley/trudeau-deficit_b_9226722.html

#149 PhD Candidate on 02.17.16 at 7:27 am

Bombardier is going to be axing 7,000 jobs this year. Is that a good thing for Canada? Maybe they can all become police and fire fighters and teachers and bus drivers. More likely they will flee canada to USA.

#150 George S on 02.17.16 at 7:54 am

“And never assume a pension is lifetime, defined benefit. Most are simply RRSPs organized by an employer. — Garth”

Yes, in the 80s and 90s when market returns were high many places converted their pension plans from DB to defined contribution (DC) which is a euphemism for “good luck on your own”. They pointed you in the direction of a reasonable mutual fund provider and The employer’s matching contribution up to 5% of your salary and its growth was locked in (in a separate account) until your retirement when you had to buy a lifetime annuity with it. You still managed it but with very few exceptions you had to buy a lifetime annuity with it.
My wife’s pension was changed over in the late 80s. Using a mutual fund company with a low management fee she was able to have an average net rate of return of 6.4% since then, about what Garth says to expect minus the management fee.
Why people have problems in a DC plan is that they don’t contribute enough and they make bad decisions in investing. The usual contribution rate of 5% with a matching 5% from your employer is not enough. You need to contribute at least another 5% and really should contribute 8% more. And now that we have TFSAs put the income tax refund into a TFSA.
If you have a plan like this or a DB plan you have to realize that when you die there is nothing left except maybe a small cash payout to your estate for funeral expenses.

#151 Freeman on 02.17.16 at 8:19 am

WATERLOO IS ON FIRE !!!

Quote: “In Waterloo, Ontario, the property market is red hot.
Dubbed “Canada’s Silicon Valley,” the city of just 140,000 people is drawing interest from real estate investors far and wide. Waterloo is around 70 miles west of Toronto and is home to a Google office as well as two universities and “dozens” of startups.
One-bedroom apartments in a new development being pitched to investors are going for CAD$270,000 while a two-bedroom will run you CAD$340,000. Rents in the building are as high as $2,000/month.
Vacancy rates are running at just 1.5%.

http://www.zerohedge.com/news/2016-02-16/calgarys-housing-market-collapses-while-three-alarm-blaze-burns-next-door-vancouver

Guess I’m lucky to be renting a 3-bedroom house here in Waterloo for only $1,300 per month ???

#152 James on 02.17.16 at 8:55 am

#148 fancy_pants on 02.17.16 at 7:22 am

and another 7000 bite the pink slip…
http://www.cbc.ca/news/business/bombardier-job-cuts-1.3451335

economy is going into the $hitter but T2 is too busy saving the rest of the world
http://www.huffingtonpost.ca/keith-beardsley/trudeau-deficit_b_9226722.html
……………………………………………………………………
I laugh so hard every time I see this guy now, what a joke Justin Trudeau is. He couldn’t run a 7/11 let alone our country. Actually the owners of 7/11’s at least understand P&L statements. He wants to be the poster boy, the one who saved the world, he is aspiring too hard to raise above his father’s legacy. Just to let you know he didn’t have to go too far to get above his father’s world image. His legacy will be known as the selfie taking idiot Prime Minister of Canada. Man I do feel sorry for all of those young millennials that voted this piece of crap into the position he now leads. Nope on the other hand, I’m going to enjoy the next four years watching Canada sink further into debt. You can spend what you don’t have!

#153 zee on 02.17.16 at 9:19 am

Hey

SunLife just came out with a survey that showed that 80% of retired folks are happy in their retirement. It also showed that they needed less in their retirement years.

This does not support your view.

No, it says some survey respondents are lying. — Garth

#154 Shawn on 02.17.16 at 9:24 am

When Something is Obviously Wrong, check again

#147 juno on 02.17.16 at 5:11 am said:

this chart is scary

So looking at it over 80% of the people will be over 60 years of age by 2036, probably 75% by 2020

http://www.statcan.gc.ca/pub/91-520-x/2010001/ct048-eng.htm

***************************************
And look it appears there are zero toddlers. Oh wait, this is not the age breakdown of the population. This is the age at death.

And it tells a positive story, not a negative one.

75% over age 60 by 2020. What were you thinking in believing that?

#155 Q2 Class 4-4-6-4 on 02.17.16 at 9:54 am

Garth –

What you are really saying is that anybody who isn’t a professional athlete, movie star, corporate executive or government employee (at any level) is screwed. Well, surprise surprise! I saw this coming years ago, with all the silly talk of retiring boomers leading to a labour shortage. Perhaps there’s a government worker shortage, with their fat indexed pensions, early retirements and medical coverage blah blah blah, but not in the private sector where, as you acknowledge, pensions are non-existent.

At some point a clever politician will realize the real chasm in Canada – and elsewhere – isn’t between the 1% and the 99%, but between the public sector and the private sector, and he (or she) will ride to power on the issue. And then maybe, just maybe, there will be meaningful reform of pensions in Canada, and the egregious demands of the (overpaid and underworked) public sector will be brought to heel.

I’m not holding my breath.

#156 cramar on 02.17.16 at 10:02 am

#115 acdel on 02.16.16 at 10:40 pm
#105 cramar

Good point!

To each their own, some aspire to your view points while others do not! If I ever make it to 90, what a ride it would be to be towed behind a 350 hp boat, enjoying the waves, sucking on a stogie and enjoying the evening with a few shots of whiskey, shhh, let me dream.

————-

Nice dream! If you ever see him doing this again, call in the press.

I collect stories of the elderly enjoying life, especially functionally fit ones. One of my favourites is former Winnipeg resident Jaring Timmerman who passed away in Nov. 2014 at 105. He didn’t start competitive swimming until a snowbird at 78 and holds several world records. He even establish a new category for age 105-109. My kind of guy!

http://www.winnipegfreepress.com/local/Winnipegs-Jaring-Timmerman-swimming-world-record-holder-dies-at-105-281694661.html

#157 Mr. Frugal on 02.17.16 at 10:05 am

Someone must have informed Notley and her destroyers that Alberta is part of a democracy. I guess there is a glimmer of hope after all!!!

http://www.therebel.media/breaking_the_press_gallery_supports_the_right_of_journalists

#158 Marcus on 02.17.16 at 10:10 am

Canada is going full American retard. http://www.zerohedge.com/news/2016-02-17/bombardier-thanks-canada-1-billion-bailout-firing-7000-people#comments

#159 SunShowers on 02.17.16 at 10:10 am

Blame society all you wish, but your fate still rests within your hands. Nobody else’s. Too many choices have been poor ones. — Garth

————————————————–

You make it sound as if today’s workers themselves chose to not have DB pensions. Not quite the case.

Many choose to pickle themselves in debt and play real estate roulette instead of saving and investing for the future, using the tools they have been handed. — Garth

#160 A Canadian Abroad on 02.17.16 at 10:15 am

#140 Calgary Rip Off “Unless you are a student or with family, dont come to Calgary unless you make 6 figures. Minimum $1400/month for a decent place unless you are a single person. And Garth wonders why people own mortgages in Calgary.”

Today, $1400/mo will get you a newer 2bdr condo in downtown Calgary. $1650/mo for a brand new 2bdr condo. You don’t need 6 figure income as much anymore, but there are VERY FEW JOBS in Calgary right now.

Rent has really come down and so have condo sales.

#161 hope & ruin on 02.17.16 at 10:26 am

hmmm……another article on G&M about Canada losing more auto investment to the US and Mexico. Not that this counts as news anymore.

But I think it is relevant given all the talk by our leaders on “the future” “generational projects” “next gen tech” and all the other buzz words T2 & co. throw around.

It’s not about today, it’s about tomorrow. A nice little side-step to ensure their policies are not evaluated based on their results now but on some imagined future result.

Gerry Butts executed this exact same strategy in Ontario 10 years ago. Look at Ontario today, to see the Canada of tomorrow. Massive debt, declining manufacturing base, huge deficits.

Supposedly, we will be the manufacturers for the future economy. Carbon controls, renewables, biotech, etc. These are all very important and useful technologies in the coming years. Legitimately exciting times for those in tech industries.

But I have to wonder. As those technologies mature and we still aren’t competitive globally, will we lose out of that manufacturing too? After making all these investments?

At what point do we deal with the issue that we simply aren’t competitive in manufacturing? Instead we cling to the hope that one day things will look brighter. The future is where we will shine. hope & ruin.

#162 Siva on 02.17.16 at 10:36 am

Is Canadian real estate in a bubble?

http://youtu.be/Z2ywBTELubs

#163 common sense on 02.17.16 at 10:42 am

Anyone recall last week when I asked Mr. Turner if the Fed will raise rates?

Well, all the requirements are filled as of today…low unemployment, inflation targets, markets back to record highs, etc…

What will be the excuse not to if they don’t?

Any excus

#164 common sense on 02.17.16 at 10:46 am

#154 Excuse me, not back to record highs…

#165 zentao on 02.17.16 at 10:56 am

This story is from 2012; I’m awaiting the latest reports from these pension funds – particularly OTPP. This is the tsunami that is rapidly approaching; the only solution will be greatly increased taxes on those who are working and/or have savings:

“This figure is not included in current government debt figures. Last year Ontario taxpayers contributed $1.4 billion to the Teachers’ Fund in regular contributions, plus an additional $525 million in top-up payments to be allocated towards the multi-billion shortfall…These top-up payments are now also happening across the board for police, university faculty, hydro workers, the military and other public sector employees.”

http://business.financialpost.com/personal-finance/retirement/teachers-pension-plan-ceo-offers-dose-of-reality

There was an article detailing how pension funds are very busy in the GTA housing market since they are desperate for returns to support their ever-growing deficits.

#166 Canmex on 02.17.16 at 11:40 am

#46 crowdedelevatorfartz

Depends on how long you plan/expect to live, doesn’t it. $750,000 at 6% yield will pay you a lifetime pretax income of $45,000 and still allow you to leave the money to your grateful kids (or your cat). 6% requires taking some investment risk. You could buy an annuity which avoids any risk – the payout rates are published and you can look them up on the internet, but that means the cat gets nothing in the end. If you’re not worried about the kids or the cat, or you are already getting on in years, you won’t need as much. Buy a financial calculator and play around with it. Or learn to use Excel. Don’t forget inflation and taxes.

#167 Smoking Man on 02.17.16 at 11:49 am

#161 hope & ruin on 02.17.16 at 10:26 am
hmmm……another article on G&M about Canada losing more auto investment to the US and Mexico. Not that this counts as news anymore.

But I think it is relevant given all the talk by our leaders on “the future” “generational projects” “next gen tech” and all the other buzz words T2 & co. throw around.

It’s not about today, it’s about tomorrow. A nice little side-step to ensure their policies are not evaluated based on their results now but on some imagined future result.

Gerry Butts executed this exact same strategy in Ontario 10 years ago. Look at Ontario today, to see the Canada of tomorrow. Massive debt, declining manufacturing base, huge deficits.

Supposedly, we will be the manufacturers for the future economy. Carbon controls, renewables, biotech, etc. These are all very important and useful technologies in the coming years. Legitimately exciting times for those in tech industries.

But I have to wonder. As those technologies mature and we still aren’t competitive globally, will we lose out of that manufacturing too? After making all these investments?

At what point do we deal with the issue that we simply aren’t competitive in manufacturing? Instead we cling to the hope that one day things will look brighter. The future is where we will shine. hope & ruin.
……………

Next federal election will be 100% Tory Blue Majority.
T2 100 days in with star power at the moment could not help the cause in the whitby provincial election.

Liberals will be finished. Butts will move to china. Oh I just tweeted him.

Asked if he is still hell bent on de industrializing Canada. I don’t anticipate a response.

Well maybe a CRA audit, that’s how these parasite liberals roll.

#168 crowdedelevatorfartz on 02.17.16 at 11:51 am

@#151 Freeman

Waterloo?

A crossroads and farm in the middle of Belgium named after a battle 200 years ago which Napoleon lost due to his constant distraction with having leeches applied to his painfully swollen hemmeroids…..
A battle that generated so many casualties on both sides that the price of false teeth( extracted from the dead) sold in London dropped more than 50% and remained low for over a decade……
Waterloo…… a “village” in Ontario’s hinterland that few have seen much less thought about unless to compare it to a battle.?
Waterloo……..a parable of what may be about to happen in Vancouvers’ real estate market?

#169 SunShowers on 02.17.16 at 11:56 am

Many choose to pickle themselves in debt and play real estate roulette instead of saving and investing for the future, using the tools they have been handed. — Garth

——————————————

Yes, absolutely true.
Many because, as #109 said, they are trying to maintain the same standard of living people had before other, more generous tools (DB pensions, raises, etc) were taken away.

Perhaps our poorest choice has been passivity in the workplace.

“God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.” — Garth

#170 cramar on 02.17.16 at 12:01 pm

#123 jane 24 on 02.16.16 at 11:15 pm

I retired at 59 and am now 61. I tried for Freedom 55 but failed. We have a tiny corporate pension, some early govt pensions and savings.

I have lost count of the number of working folk who have asked what I do all day? The answer is whatever I want. My days have never been fuller but full of the stuff that I have always wanted to do and this stuff doesn’t need to be costly either to make me happy.

We downsized the house 2 years ago to one that is easy and cheap to run as Garth is right if you leave it too late the move becomes too overwhelming. At our age you want to minimise house costs not increase them. You adjust to small spaces and it encourages you to avoid collecting crap.

————–

Last job at 54. At 65 decided to downsize. Actually ended up lateral sizing. Bought a fixer in a retirement town and spent the next 3 years renovating. Estimate my wife and I spent 10,000 hours on this house. If that wasn’t enough decided to renovate an Airstream trailer—4 months nonstop.

————–

Visit new grandkid and annoy his new mother
Start to lay a garden patio myself.

—————

Go fur it! I have two 15-year old identical-twin granddaughters who are into sports. This year it is competitive volleyball. I’m hoping to arrange a family get-together this summer and you gave me an idea for a generational (beach?) volleyball game. Three generations. Maybe I should insist that everyone do 20 pushups for a warm-up. Got to see how good these grasshoppers are!

Had 5 patios at our former house. Have two now with one more coming this year. Part of renovation to this house back in 2014 was to order 9 tons of dirt and 11 tons of stones for landscaping. Hauled all of it myself with a wheelbarrow. At age 67 I was hauling all this stone in the heat of the summer. Never again (I hope)!

#171 Smoking Man on 02.17.16 at 12:08 pm

Huge explosion near parliament buildings in Ankara.

I give you the false flag that will send Turkish and Saudi troops across the Syrian boarder only to be slaughtered by Russian air strikes in hopes of getting Nato Back UP.

ww3 is on people.

http://www.telegraph.co.uk/news/worldnews/europe/turkey/12161828/Ankara-explosion-Blasts-heard-in-central-Kizilay-in-Turkish-capital.html?utm_source=dlvr.it&utm_medium=twitter

#172 pinstripe on 02.17.16 at 12:11 pm

The consequence of the AB Boom

http://www.cbc.ca/news/business/auto-loan-debt-transunion-1.3451682

#173 CHERRY BLOSSOM on 02.17.16 at 12:11 pm

BC Provincial Budget: I happen to know that good old Christie has spread BC’s debt out over the next 30 years. She has continued to do this since she got into office. This is why her first Minister of Finance quit. She does this so she can say she has a balanced budget. She is a gangster that was not even elected by the people this time.

I told you a while ago that automobiles would be the next achilles heel and it is happening. The next wave will be people just going to their banks and handing in their over maxed credit cards. The we can all start shooting each other. Beef Jerky, Tuna Cottonelle (Actually just use pages from old books) and head for the hills.

#174 Sean on 02.17.16 at 12:16 pm

https://www.youtube.com/watch?v=bhFHIlwCSq0

#175 Brazil ex-pat on 02.17.16 at 12:23 pm

And of course nothing like the price of gas jumping 12% because the price of oil went up a buck…..one of the many reasons we left rip off Canada.

http://www.gasbuddy.com/GasPriceMap?z=11&lng=-122.78290791015627&lat=49.25091671370406

Oh….and the Cdn dollar went up too. So why did the price of gas go up? Oh that’s right…..tax and rip me off. I’m Canadian.

#176 IHCTD9 on 02.17.16 at 12:29 pm

#25 Lulu on 02.16.16 at 6:20 pm
Tiny house will be the solution to the retired boomer, seriously, cash in right now at the peak, buy a piece of land up north or far east, build a tiny house and live your life till the end of it, travel whenever you can and invest accordingly. Who needs a mc mansion when you retire or semi-retire, as a matter of fact, even middle ages people should do that as well.

Never depend on the government, they just want your money and suck it all out from you hard earn money. Pick a good advisor is your best bet.
___________________________________________

Yep, as many others have noted, now is the time for folks in To. and Van. who have hit the house lottery to exit or risk it all. I’m talking about those who are still carrying a big mortgage to own them. Bail now, or forever be kicking yourself in the ass – “opportunity knocks once in a lifetime Yo!”

Do what Lulu says, find a quiet corner of the Country where there are nice trails, good fishing, and lots of spruce and rock, and low taxes. Live your life in financial comfort, and pass a nice inheritance off to the kiddies.

#177 Snowboid on 02.17.16 at 12:40 pm

#175 Brazil ex-pat on 02.17.16 at 12:23 pm…

In the meantime gas is down to $0.44 CAD a litre here in Phoenix.

While taxes do account for some of the difference, it’s obvious there is a larger profit going to Canadian refineries, etc than in Arizona.

When asked at a neighbourhood get-together last weekend why Canadians put up with these unfair price differences, all I could reply was we are collectively stupid.

Any other country in the world and there would be massive protests in the streets, and politicians heads would roll!

Instead we Canadians sit back, passive and meek, and allow this swindling to continue!

#178 GenxX on 02.17.16 at 1:04 pm

Garth is right, everyone is in big trouble.
The boomers have first voted a government that will steal from younger generations anything that can be taken.
Sadly, due to the crazy human nature, that will not be enough and they will become poor anyways.
The wide majority of the people will suffer, none is safe.

#179 Rates Change Everything on 02.17.16 at 1:12 pm

When the central planners turn rates upside down and real interest rate returns slide many deviations lower then the current historical lows, then what?

Gretzky rates may on the way Garth, it’s either that or the largest bond, equity & real asset implosion in over a century. The global economy is structurally and technically broken, there is no way out. Valuations across asset classes are topped out, entitlements unmanageable.

Where do you value real estate or equities and more importantly bonds when Gretzky rates become reality in Canada and the rest of the OECD realm.

O.99% 5year fixed by 2023 & real property ascends another 50%. Add another decade on the amortization scale for the “new” buyers and the rise in real property value will be even sharper.

The hardest future reality to envision right now is not one where assets go down, plummet and stay there, the yield curve of many sovereigns is expressing this emerging truism. Though a future where assets double from here truly seems unattainable or impossible, to keep the world spinning in tune boomers and kin need growth in the symbiotic indebtedness and growth to continue forward.

Or do we believe that real rates double from the current lows, devastating ever asset in it’s respective path, which eventuality will prevail in the coming years?

If I had to guess, the one that serves the status quo by ensuring market participants keep their deeds and other meaningful assets at elevated levels, buoyant and feeling plentiful opportunities while lurching inflation forward.

The strategic course to enhance and propagate the velocity of money has yet to be uncovered.

Future economic frameworks will change the real asset values across the board, a revaluation is possible in ways currently not widely perceived.

The catalyst(s) will soon be revealed, sadly for many asset holders, extreme down swings in various assets and instruments are commensurate to an emerging solution.

1/3, 1/3, 1/3 ….Cash, Equities, Real Property.

Careful my friends… stay thirsty.

#180 Shawn on 02.17.16 at 1:26 pm

Mark and Bombardier

I should not bother responding but Mark said:

“The difference here is that Bombardier operates in a business for which they basically had to bet the entire company to remain competitive.”

***************************************
From 1965 to 1980 Berkshire Hathaway watched as its competitors continued to invest in textiles and ultimately went out of business.

Berkshire invested modest amounts back into textiles (even buying one competitor – Waumbac Mills (spelling?) but mostly took out what cash it could and diversified the company into stock investments. property insurance, Blue Chip Stamps (reward stamps business which it then had buy Sees Candies and the Buffalo News.)

The point is a company does not HAVE to continue to invest in a losing industry. Nor does it HAVE to hire one of Canada’s most able CEOs (Paul Tellier) only to have him leave because you don’t actually let him run the company.

Mark also implies that Royal Bank currently way over-pays its employees and implies it is poorly managed. This despite its steady record of 18% ROEs.

It is remarkable how Mark refuses to let a lack of knowledge or logic or facts stop him from spouting off on every topic under the sun.

Mark may not be aware that Bombardier was once very heavily into the business of finance and lending (look up Bombardier Capital) including loans on mobile homes but blew its brains out in that business as well. The banking business in Canada is open for business with dozens of highly profitable lenders. Bombardier had MANY choices other than wasting capital in an industry known to require government assistance.

It’s incredible that someone would argue that Bombardier is not poorly managed.

#181 Shawn on 02.17.16 at 1:36 pm

Gas Price Complaint

#175 Brazil ex-pat on 02.17.16 at 12:23 pm said:

And of course nothing like the price of gas jumping 12% because the price of oil went up a buck…..one of the many reasons we left rip off Canada.

****************************************
Gasoline was up 20 cents per liter in Edmonton this morning. There will be complaints.

But you will search in vain for anyone who thanked the competitive market for pushing gasoline down to 57.4 cents in Edmonton which it has been for a eek. And probably under 60 cents for close to a month.

You’d “almost” think there was more to the price of gasoline than oil prices.

At 57.4 cents gasoline was 54.7 cents before GST and 31.7 cents before the 10 cent federal tax and the 13 cent provincial tax.

So the oil industry itself was getting 31.7 cents to find oil, produce oil, ship oil to a refiner, refine oil to gasoline, truck gasoline to a retailer and run the retail operation. Praise be to the mighty capitalist (and it’s partner, government) system for THAT kind of efficiency.

Also I thought we were investors here, not mere victims. You are free to buy shares in gasoline retailers or in integrated oil companies or in oil producers. The world is your oyster, why be a victim?

#182 Keith in Calgary on 02.17.16 at 1:46 pm

Brad Lamb, the proverbial RE optimist is in the news today saying he is postponing two Alberta condo towers. One in Edmonton and one in YYC.

Says they “will” be built at some point……of course…….even the pyramids got finished eventually.

Article, also mentions his other two projects here in YYC are 40-50 % sold, and only one is under construction at present.

#183 Smoking Man on 02.17.16 at 2:03 pm

Obviously Chris Carter is a blog dog fan.

Season fanaly trailer x files.

http://comicbook.com/2016/02/17/the-x-files-my-struggle-ii-trailer-features-the-smoking-man/

#184 SquareNinja on 02.17.16 at 2:04 pm

#21 Shawn on 02.16.16 at 6:14 pm

Very interesting info. and insight! Thank you!

#185 Investorz on 02.17.16 at 2:13 pm

Sales of condos fell 38 per cent in Calgary according to Altus Group Ltd.

Makes my ETFs look real good!

#186 Victor V on 02.17.16 at 2:46 pm

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/personal-finance/mortgages-real-estate/toronto-condo-king-brad-lamb-delays-alberta-projects-amid-oil-slump-the-situation-is-is-worse-than-2008&pubdate=2016-02-17

The pain in Canada’s oilpatch is extending to one of the country’s biggest real-estate magnates.

Lamb Development Corp. is delaying construction of two condominium projects in Alberta as the slump in the price of oil guts jobs and housing demand. The 36-story Jasper House and 45- story North will be delayed at least a year.

“The situation in Alberta is worse than 2008,” said Brad Lamb, known as Toronto’s condo king and for his humorous billboard ads depicting his face on a sheep’s body. “This is a unique event that is annihilating anywhere in the world that produces oil.” Executives at Fortress Real Developments Inc., which partnered with Lamb on the projects, declined to comment.

#187 jess on 02.17.16 at 2:56 pm

Every year, workers in Ontario file thousands of successful claims against bosses who owe millions of dollars in unpaid wages and entitlements. But when the Ministry of Labour orders employers to pay up, the overwhelming majority do not comply, data obtained by the Star shows.

http://www.thestar.com/news/canada/2016/02/16/sweet-dream-turns-sour-for-victim-of-wage-theft.html
==========

Federal Reserve Bank of Minneapolis President Neel Kashkari—

“”The biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy,” Kashkari said in in a speech at the Brookings Institution in Washington.

Read more: http://www.politico.com/story/2016/02/break-up-big-banks-neel-kashkari-sanders-219343#ixzz40SOm6yFj

Read more: http://www.politico.com/story/2016/02/break-up-big-banks-neel-kashkari-sanders-219343#ixzz40SOekjPe

#188 Parsonage on 02.17.16 at 2:58 pm

Round 1 to Ezra:

http://www.NotleyIsABully.ca

#189 Mortgage Rates Up Again on 02.17.16 at 3:17 pm

From the mortgage broker desk in Toronto, Scotia just raised their Variable to AT PRIME! Yes, AT PRIME

NO DISCOUNT !!

#190 Roasted Lamb . Extra Tzatziki. on 02.17.16 at 3:19 pm

http://business.financialpost.com/personal-finance/mortgages-real-estate/toronto-condo-king-brad-lamb-delays-alberta-projects-amid-oil-slump-the-situation-is-is-worse-than-2008

#191 Hope & Change (Canada) on 02.17.16 at 3:24 pm

#172 pinstripe on 02.17.16 at 12:11 pm
The consequence of the AB Boom

http://www.cbc.ca/news/business/auto-loan-debt-transunion-1.3451682

The consequence of the AB boom is that between 2005 – 2013 my family was able to earn AND save a life changing amount of money and experience.

And of course that has been repeated for thousands of other families from all over Canada.

So there, not all bad news!

Boom / Bust are just normal business cycles. I learned about them in first year at university.

After we moved out of AB in early 2013 we bounced around for almost 1 1/2 year between Montreal, California & NY, trying to find the next thing to keep us busy.

We’re currently in Manhattan taking advantage of the easy money dished out by Silicon Valley and the strong US$.

When that’s over (as everything must end at some point) maybe we can take a break for a few years and join Brazil Ex-Pat in Rio.

#192 Brazil ex-pat on 02.17.16 at 3:24 pm

#181 Shawn on 02.17.16 at 1:36 pm
Gas Price Complaint

#175 Brazil ex-pat on 02.17.16 at 12:23 pm said:

And of course nothing like the price of gas jumping 12% because the price of oil went up a buck…..one of the many reasons we left rip off Canada.

****************************************
Gasoline was up 20 cents per liter in Edmonton this morning. There will be complaints.

But you will search in vain for anyone who thanked the competitive market for pushing gasoline down to 57.4 cents in Edmonton which it has been for a eek. And probably under 60 cents for close to a month.

You’d “almost” think there was more to the price of gasoline than oil prices.

At 57.4 cents gasoline was 54.7 cents before GST and 31.7 cents before the 10 cent federal tax and the 13 cent provincial tax.

So the oil industry itself was getting 31.7 cents to find oil, produce oil, ship oil to a refiner, refine oil to gasoline, truck gasoline to a retailer and run the retail operation. Praise be to the mighty capitalist (and it’s partner, government) system for THAT kind of efficiency.

Also I thought we were investors here, not mere victims. You are free to buy shares in gasoline retailers or in integrated oil companies or in oil producers. The world is your oyster, why be a victim?

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

Canadians ARE victims. Oil is a nation OWNED (taxpayer owned) natural resource but the only people that benefit are the employees of Govt. Canadians should enjoy cheap gasoline prices but they don’t. One of many many reasons we left.

#193 TurnerNation on 02.17.16 at 3:28 pm

BBD’s news today marks bottom in filthy TSX.
You buy now. Special price for you.

#maple

#194 Tiger1960 on 02.17.16 at 3:28 pm

170 cram are
U are 99% of the people!
Thanks!

#195 Hope & Change (Canada) on 02.17.16 at 3:33 pm

#189 Roasted Lamb . Extra Tzatziki. on 02.17.16 at 3:19 pm
http://business.financialpost.com/personal-finance/mortgages-real-estate/toronto-condo-king-brad-lamb-delays-alberta-projects-amid-oil-slump-the-situation-is-is-worse-than-2008

Geez, he’s been working on the 6th and 10th project for at least 5 years. It’s perfectly located next to a bottle depot which means you’ll get to know on a first name basis all of the residents from the drop in center.

#196 jess on 02.17.16 at 3:35 pm

http://www.bloomberg.com/news/articles/2016-02-03/u-k-s-tax-deal-with-google-wasn-t-just-about-offshore-havens
http://www.taxjustice.net/2016/02/16/why-google-and-other-multinationals-are-still-not-paying-their-fair-share-of-corporation-tax/
=============
investor disputes
By Nick Dearden Monday 15 February 2016
Think corporate tax avoidance is bad for Britain? With TTIP it could be about to get even worse
Under new trade deals being negotiated by the Government, US corporations would be able to challenge British tax laws in secret tribunals
….” under new trade deals being negotiated (including TTIP) the British government’s ability to introduce certain taxes could similarly be challenged by US-based corporations.

The research that Global Justice Now has released today shows that foreign investors – usually multinational corporations – have already sued at least 24 countries from India to Romania in tax-related disputes. To do this, they use something know formally as an Investor-State Dispute Settlement (ISDS), a sort of secret court system only accessible to foreign corporations, which is embedded in hundreds of trade agreements.

The British government will promise tax is exempt from TTIP. But we’ve heard this before. Almost all trade agreements have tax “carve-outs”. But they have failed to stop the cases. As one veteran arbitrator has written, “In an investment dispute, the very legitimacy of the tax is put into question.”
e.g. vodafone
India sends renewed £1.4bn tax notice to Vodafone

#197 Billybob on 02.17.16 at 3:38 pm

From zero to Hero.
Garth my wife works at the big ruthless bank part time.
My saying for years has been”There’s no retirement” and is becoming so true for many.
Was listening in my shop on the Radio yesterday about the MANY problems we face. BC middle class have been killed with inflation and high housing costs and how they plan to make BC /Van more affordable. Well I fell down laughing…anyone with the IQ bigger then their shoe size can see that it is Gov policy that created the mess. Never ending money flow and interest rates at emergency lows… BIG distortions have taken place.
I run a business and see the real cost of living were as Walmart and China has given us sense that inflation has been minimal. Shrinkflation and quality has gone to shit.
We are in pretty good shape as I had some for sight.
A RE paid and 7 figures savings no debt or loans..
JUST looking for yield as you said.
Bought $250k XEG and CPD yesterday and thinking about moving to SAmerica.
Best to all we need it.
Government is not the answer it IS THE PROBLEM.
Look up the incredible waist. ASHOLES

#198 Billybob on 02.17.16 at 3:48 pm

#181 Shawn on 02.17.16 at 1:36 pm
My sentiments EXACTLY Shawn.
If ya care to email your info to connect would be cool.
NP if no. We are on the launch pad out of stupid land as well.
[email protected]

#199 Mark on 02.17.16 at 3:56 pm

“Bombardier had MANY choices other than wasting capital in an industry known to require government assistance.”

So in Shawn’s world nobody should ever take any risks in the Canadian economy? Nobody should get involved with a line of business that requires that the entire company be bet? Everyone should just look for slow and steady earnings growth?

The problem with that supposition is that little would get done in the economy, other than very low risk stuff. There’d be little employment of innovators. We’d all be still riding on horse and buggy because in such world, nobody would be willing to take the risk of investing in auto manufacturing. As it stands, this anti-risk mentality has been significantly responsible for creating the contemporary housing bubble while large numbers of Canadian innovators go underemployed or unemployed for lack of capital.

Bombardier, like most companies, has had its missteps. I’m sure we can go back into the history of the Royal Bank and see plenty of missteps as well. I do find it rather unfortunate that you’ve twisted my comments concerning labour market economics into some sort of extension of your personal vendetta against me. Really says a lot about your character Shawn, to be running your mouth off like that, making uncalled for blanket claims that I’m wrong. I can defend myself here somewhat, only limited by the time I want to waste on you and how much arthritic pain my fingers can tolerate. But Bombardier’s management, who are diligently executing to the best of their ability, can’t. If you don’t understand the nature of accounting, particularly for large-scale R&D projects with very large deliverables such as aircraft, its probably best that you don’t comment further.

#200 Shawn on 02.17.16 at 3:56 pm

Alberta Mortgage Delinquencies Figures Not Budging!

The November figures for 90 day mortgage delinquencies are out today.

http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf

Albertaone mortage in 345 is delinquent by 90 days.
has edged up from 0.028 to 0.29%. So just one mortage in every 345 is 90 days delinquent.

Possible explanations:

1. Few job losses in Alberta?

2. Job loss came with severance and so impact will be later?

3. Borrowed on line of credit and credit card to pay mortgage?

4. Went to see Bank and they said, no problem. Take four months off from paying then come back and see us and we work out some other “arrangement” to make sure your mortgage does not have to get officially marked 90 day delinquent. It’s not delinquent if we ALLOW you to skip payments.

I pick door number four as the explanation for basically no increase in 90 day delinquencies in Alberta. Nada. Despite unemployment almost doubled. Door number 3, borrowed on the line of credit, also deserves an honorable mention as a possible reason.

In Canada mortgage delinquency numbers have never been an indication of anything. — Garth

#201 Keith in Calgary on 02.17.16 at 4:21 pm

#191 Brasil Ex-Pat said……….

“Canadians should enjoy cheap gasoline prices but they don’t. One of many many reasons we left”

——————————————-

LOL……..with regular gas at “my” preferred Petrobras station in Rio on Avenida Atlantica at R$ 3.75 +/- per litre………..($1.35 CAD +/- per litre)…………are you sure about that ?

I am starting to think you really don’t live there at all based on the many glaring inconsistencies in a lot of your posts here.

#202 MoneyDriven on 02.17.16 at 4:28 pm

RE #33 Post Boomer

That was very nicely written article. I totally agree with you. I dont make anywhere near your executive salary but above the 70 K average as a computer eng. I can significantly improve my living standard by moving to Seattle. 1.5 in pay scale, lower taxes and affordable surrounding. There is not a single day that goes by that I dont consider moving out of Vancouver. It’s simply transformed from nice clean city to unaffordable city with limited to no opportunity to advance career-wise nor having house/family/dog/2.2 kid.

#203 Shawn on 02.17.16 at 4:31 pm

Mortage Delinquencies

In Canada mortgage delinquency numbers have never been an indication of anything. — Garth

*************************************
That seems true, at least in recent years.

But why is that? Some of those who live pay cheque to pay check will surely be unable to make the mortgage payment not so long after a job loss. Single income families. Feeding the kids and paying the light bill has to take priority and that may use up most of the EI in many cases. (drywall munchers aside)

Delinquencies did peak in Alberta at 0.84% in January 2011 (Unemployment was lower then) we are at 0.29% in November 2015.

The banks are extending and pretending.

Severance and UI is helping too. But if the unemployment rate keeps rising then severance and EI starts to run out. Delinquencies should rise.

#204 You're Nuts on 02.17.16 at 4:32 pm

So this is why my parents didn’t buy me all the toys the cool kids had – financial stability. Thanks Mom and Dad! Looks like it paid off in the long run.

#205 SquareNinja on 02.17.16 at 4:36 pm

#198 Mark on 02.17.16 at 3:56 pm

That’s true… I agree with you, Mark. It’s only the big risks and risk-takers that advance society.

On the other hand, for the no-risk-takers, I still think bubbles are good for us overall. It’s not good for those who got in near the peak and lose it all when the bubble pops… but… bubbles are actually good!

What bubbles do is promote infrastructure spending. I don’t think Toronto would have as many amazing high-rises as it does today without the recent real estate bubble.

#206 MF on 02.17.16 at 4:38 pm

#200 Keith in Calgary on 02.17.16 at 4:21 pm

This is not directed towards Brazil-expat specifically, but any ex pat will always embellish how good life is wherever they are because it justifies their decision.

We’ve had ex pats from Thailand, South America and Europe on here. Always the same story.

MF

#207 waiting on the westcoast on 02.17.16 at 4:39 pm

Mark – I think you are missing the point re: Bombardier. Taking risks is good. Poorly choosing those risks and poorly executing on those risks while taking massive amounts of tax payer money is incompetent.

Someone earlier was asking whether the US will significantly enter Syria… I don’t think so. It appears to me that the US wants to keep the Mideast in a state of flux and therefore weak. They will only seriously enter conflict when they feel one group starts looking you too powerful in the region and would have potential to consolidate it into a strong bloc that could harm US sea-lane and energy interests.

#208 MF on 02.17.16 at 4:48 pm

#196 Billybob on 02.17.16 at 3:38 pm

Congrats on the accomplishments. You sound a lot like my parents with RE paid off and savings to boot.

You are correct about government policy distorting everything with bubbles everywhere. Interest rates should have risen in 2012 both here in the US. Now the BOC and Fed are trying to backtrack. I really have lost confidence in their policy, and I believe they do not know what to do next and are scrambling.

MF

#209 Leo Trollstoy on 02.17.16 at 5:08 pm

The difference here is that Bombardier operates in a business for which they basically had to bet the entire company to remain competitive.

lol winner of dumbest post of the day! lol

#210 Nemesis on 02.17.16 at 5:11 pm

#WorkingGirlsUnite,Or… #Seriously?…

“A lot of people think we’re just a brothel, we’re just hookers and all we know is how to have sex and we don’t know anything about politics. But that’s not true,” said Entice Love, a prostitute and member of the group “Hookers 4 Hillary.”

[Politico] – ‘Hookers 4 Hillary’ goes all out in Clinton fundraising push

…”Love said that she has been offering bonus services to clients who are willing to donate money to Clinton: “When we party, I give free time if you donate to ‘Hookers 4 Hillary’ – money,” said Love, who works at the Moonlite Bunny Ranch in Mound House, Nevada. “I tell them ‘Hey, if you pay an extra thousand and donate that portion to ‘Hookers 4 Hillary’ I’ll give you a free hour,’ and they do it.”

She said in the past two weeks, three clients have agreed.”…

http://www.politico.com/story/2016/02/hookers-for-hillary-clinton-fundraising-219397

[NoteToGT: Personally, I rather doubt that the BC Liberals are going to have much luck next year with their “CallGirls4Christy” spots… But that’s just me.]

#211 waiting on the westcoast on 02.17.16 at 5:42 pm

Gold… Is it really all that it is cracked up to be???

http://www.cnbc.com/2016/02/17/the-problem-with-using-gold-to-hedge.html

#212 Keith in Calgary on 02.17.16 at 6:20 pm

#205 MF……

Agreed, but, the difference here is that anyone living there would not post the things he has, as they are quite blatantly incorrect to anyone with a modicum of time on the ground.

#213 zudnic on 02.19.16 at 12:33 am

I don’t feel sorry for the boomers who didn’t prepare for retirement. Saving for retirement has been drilled into the heads of most people over the last 30 to 40 years. Everyone knows about all the easy retirement tools, that have been advertised all over the place the last 30 to 40 years. I’m 43 now, my parents in their nearing 70. I was told by teachers to start saving back in high school. They even said save now, put a little every year in a mutual fund, etc. You’ll have a million dollars when you retire. Well that was back in the 80’s when a million still had some purchasing power!

The problem now, as money continues to get cheap, boomers feel they need more. The safest investments, like a GIC, max out at $100k, and you need lots of cash to reach that amount. The second safe bet, a term deposit, but even a million, doesn’t generate much cash flow on todays interest. Even a millionaire with todays cost of living is screwed without a pension!