The outlier

MOWING

Those who think this is an anti-property site, as opposed to simply being a dog blog gone bad, are wrong. Real estate is fun. You can buy it even without money. It’s big and showy. You get to park in front of it. It can impress your friends. Chicks and mothers dig it. You can look rich even when you’re drowning in debt. You can nest. And, of course, it always goes up.

I get it. This is a one-strategy nation. Buy a house. Pour everything you’ve got into it. Hope for the best. But as real estate swells, so does risk. So the message here is one of balance. It’s perfectly okay to buy a house if you need one, want one, and (especially) can afford it. But the more of your net worth you pour into a single asset, the more you’re rolling the dice.

Here’s John. “Long-time reader of your blog,” he says, which suggests he has no life. “I wanted to run a financial question by you.”

“My wife and I recently bought a new house. We live in small town Ontario, house price is $370,000. We own our house with no mortgage, which we are selling. After realtor fees should be netting $270-$280k.

“Wife and I are both 31, two young kids at home and have investment assets between our TFSA and RRSP’s of approx $150,000.

“Question is how much should I be putting down on our new house? Rate is a 5 year fixed at 2.44%. I want to put down as much as I can and pay our mortgage off quickly, but with a rate at 2.44% I know this isn’t the smartest financial choice…but living without a mortgage has been great!

“We also have car loan at 4.99%, would you recommend paying this off with our equity and adding it to our mortgage balance?”

Hey, hipsters & wanton metrosexual, tattooed urban cool people with no money but social relevance, did you catch that? Here’s a young couple with (a) two screamers, (b) a house, (c) no mortgage debt, and (d) $150,000 in liquid assets and investment savings. This is what happens when you make sensible decisions, like living in a place where houses are still homes instead of futures contracts. In a setting like that you’re able to find what this pathetic blog is all about. Yes, balance.

So what should John do? Let’s revisit the Rule of 90. Simply put, deduct your age from ninety to arrive at the percentage of your net worth that should be stuffed into a single asset, namely residential real estate. In this case, J and squeeze will have $275,000 flowing from their house sale, plus $150,000 in financial assets for a net worth of $425,000. For age 31, that’s a great achievement in 2016 when most people’s lives are measured in debt.

So 90 less 31 is 59, which translates into $250,000 of their NW that – as a maximum – should be held as house equity. That would increase their financial assets to $175,000, and end up giving them a mortgage of $120,000. At 2.44% for a five-year fixed mortgage, it’s a measly $533 a month, or about what the average 416 Vespa-rider spends on weed.

Over five years the $175,000, invested in a balanced portfolio pumping out a modest 6%, would become $235,000, giving them a $60,000 lump sum to throw against the mortgage. So they’d end up with the same level of financial assets, a weensy $60,000 mortgage, and the ability to borrow that amount against their equity to top up the portfolio (if they’re comfortable with the added risk), creating a tax-deductible mortgage. Or they could just enjoy having a ridiculously low mortgage rate while their portfolio grew at double the pace, ensuring that they grew more diversified every year.

The car loan? Just pay it. Why squander money that can make money paying off debt on a depreciating asset?

The point’s simple. Balance. This is not the time to be holding all of your wealth in a single asset class, especially one house at one address in one city. Owning real estate is fine, but not when that’s all you’ve got. Eventually everyone grows to understand it’s cash flow, not a paid-off property, that gives peace and happiness.

See? This blog is about the meaning of life.

165 comments ↓

#1 Tuxedo on 08.09.16 at 6:16 pm

Did I beat Jimmy?

Finally another smart young couple!

We also just sold our house. Renting for a while now and investing the proceeds. It’s sure nice to generate some income on the $200k+ in freed up equity!

#2 Fiat on 08.09.16 at 6:17 pm

Financial Rule No.7: Ignore anyone who uses the word ‘fiat’. — Garth

—–

Does it mean that Turner Investment is not charging clients in fiat currency? How about the ice cream at the general store?

It’s called ‘money.’ — Garth

#3 Babu on 08.09.16 at 6:21 pm

Is this real life? FIRST!

#4 T.O. Bubble Boy on 08.09.16 at 6:25 pm

HEY BLOG DOGS!

It’s been a while… I still read this blog regularly, but post (and check on comments) far less frequently.

1.5 years ago, went from renter back to owner (detached house in Toronto), but kept the balance Garth preaches. I’m almost 40, so less than 50% of holdings are in the house.

There are times that I regret buying an overpriced moneypit in this bubble city, but I sleep well at night because we’re mortgage free and still have tons of financial flexibility (and my wife is much happier owning a home).

So — take it from me, I’m still the ultimate house pessimist, but being in balance is a great feeling

#5 Mark M. on 08.09.16 at 6:25 pm

#100 – JP – “US Fed hikes coming. US economy is starting to take off leaving the schittbots scratching their heads…”

2 to 3 rate hikes to come this year, right JP? So let’s tease this out, do you think she’ll raise at each meeting, including the one 6 days before the election? Maybe she’ll raise twice next month? Or do all three in December?

Really interested to know how you think 3 rate hikes are likely this year, or are you amending your already amended rate hike call?

My call remains unchanged, no rate hikes this year or next. An economy growing at 1% after eight years of emergency interest rates and trillions of QE is not actually healthy, despite what Garth, The American and WalMark would have you believe.

The Fed’s next move is a rate cut, can’t wait to hear the explanations provided here for it.

#6 Jay on 08.09.16 at 6:28 pm

First!

#7 Jim on 08.09.16 at 6:33 pm

FIRST!!

#8 NarPar on 08.09.16 at 6:36 pm

As the ole adage goes, cash is king…

#9 Frank on 08.09.16 at 6:43 pm

Having a financial net worth of $400K while taking time off to raise 2 kids isn’t just sensible decisions. It’s either outside help or a 1% income. Questionable example to highlight balance.

I’d like to see you recommend the same to a pair of doctors in YVR.

#10 Kat on 08.09.16 at 6:43 pm

That was informative thanks.

#11 broader mind on 08.09.16 at 6:51 pm

Garth ,I think your ice cream is melting in this heat.

#12 JSS on 08.09.16 at 6:52 pm

Sounds like this guy hired an expensive realtor

#13 Canadian in LA on 08.09.16 at 6:58 pm

I didn’t follow your advice threw almost 100% of my net worth into real estate over three years back in 2010… I now have a USD$1.0in debt and USD$2.2mil in a small SoCal real estate portfolio even while I rented. I took a huge gamble and it paid off.

To make changes in life, sometimes you just need to take the plunge… Even if it goes against conventional advice. Love your advice, but to keep doing the same thing for the rest of my life didn’t seem like a good option.

#14 pedal to the metal on 08.09.16 at 7:00 pm

It’s true – not all homeowner’s are carrying a mortgage – bought our first home in 2002, hour north of Toronto – we attacked our mortgage like it was some type of money sucking beast and won the battle! Mortgage free, it’s an amazing feeling to owe no one (yes, there are expenses in home ownership but manageable). We have shelter which was the primary reason to buy. We see $2,500.00 in savings each month that can be parked towards incredible vacations, building a hefty nest egg or simply trying to help others who are less fortunate. Cheers to an amazing article Garth! There are some out there that bought – and for all the right reasons.

#15 nonplused on 08.09.16 at 7:02 pm

Ok, this post explained one thing I was always unclear on about the rule of 90, which was whether it was equity or the total value of the house to use in the calculation. Answer is equity.

Interestingly, that implies that if you have a paid for house you should borrow against it to invest as you approach retirement, unless your nest-egg is huge. The other option if you have an expensive house is to downsize, and I think that makes sense for most retired people.

The other question not addressed by the rule of 90 is what percentage of your assets should be invested in your Harley? Or is that just a cost of living thing like food, clothes, your kid’s braces, your wives’ implants, tattoos, your divorce lawyer, etc.?

Economics is hard.

#16 Basil Fawlty on 08.09.16 at 7:02 pm

http://thetyee.ca/Opinion/2016/08/08/Chinese-Politics-Canadian-Real-Estate/

Interesting article and comments on money fleeing China.

#17 Brazil ex-pat on 08.09.16 at 7:09 pm

Mark – Fed Hike ONLY if the bond market pops this fall.

#18 46 and 2 on 08.09.16 at 7:12 pm

Financial Rule No.7: Ignore anyone who uses the word ‘fiat’. — Garth

I agree, and financial rule number 8 is never buy one :)

I had a Fiat 131 once upon a time that ruled my finances.

#19 S.Bby on 08.09.16 at 7:14 pm

What do you think about Fiat cars?

#20 Kat on 08.09.16 at 7:16 pm

There must be a lot of unsatisfied mates as many of you seem to be in a race to be first.

#21 F.dover on 08.09.16 at 7:24 pm

If he pays for the car in full, that money has now earned 4.99% tax free.
I refused a 0% loan on a new car, so the dealer was forced by law to knock 8% off of the big cheque I wrote him, effectively re-embursing me for the hidden cost of what 0% car loans actually cost. Of course he did not disclose that discount information until the pen was in my hand…top secret in the industry you know…
208,000 km and 15 years later, it is still a sweet paid for car, as it was since day one.

#22 Ray Skunk on 08.09.16 at 7:31 pm

Fiat talk: Mrs Skunk has a Fiat. Well, it’s Fiat in name but a Chrysler product, built in Mexico. That’s pretty par for the course these days though, even with some more upmarket brands. Anyway…

Sticker price 3 years ago – $27k.
We paid $12k for it. It has 20,000km on the odo and is pretty much near new condition. Costs $35 to fill the tank. Oil changes the happy side of $50. A cheap-to-run appliance with just the right amount of quirkiness she desires.

I like to think in terms of financial decisions, this was a good one. Let the previous owner eat $15k of depreciation. Oh, and it’s not a Kia.

#23 Insurance Guy on 08.09.16 at 7:40 pm

Do you value the house at what you would hypothetically be able to sell it for, or what you bought it for? I bought in Toronto in 2009, no mortgage. Was onside with rule of 90, but houses around me selling for over double what I bought, I am no longer within the rule.

#24 Dr. Nonplused, Phd., Economics, Psychology, and Gender Studies on 08.09.16 at 7:46 pm

From #2

“Financial Rule No.7: Ignore anyone who uses the word ‘fiat’. — Garth

—–

Does it mean that Turner Investment is not charging clients in fiat currency? How about the ice cream at the general store?

It’s called ‘money.’ — Garth”

This whole argument is growing rather tiresome. Of course the money we use now is fiat money but that is only a problem if the Central Bank is not judicious in issuing the money, or if for some reason the social agreement that we all accept it as payment breaks down. Money is just a score card to figure out what things are worth compared to other things. Really just an accounting thing.

So a Coke is worth anything from 50c to $2.00 depending on when and where you buy it, and a house in Canada maybe $200,000 to $1,000,000 also depending on when and where you buy it. Houses are not as congruent a product as a can of Coke, so the range will be wider, but in the end of the day all money is is a way to keep track of what a house or car or Coke or your hourly wage or what your dentist charges relative to the economic value of other things.

In the old days they used to do that with gold, silver and copper but that was because anti-forging technology wasn’t where it is today. For a lot of years the mints have been able to more or less keep ahead of the counterfeiters to the point where counterfeiting 50’s and 20’s probably isn’t worth the effort. Big transactions go mostly through the banks electronically and committing a fraud there is also serious stuff.

Unless a central bank resorts to just printing money, they can control its value through a process called “monetization”. How does monetization work? Let’s look at a mortgage. It is true that when a bank lends money for a mortgage they literally create most of the money out of thin air (except for a reserve meant to cover bad loans), but that money is backed by the asset, that being the house. You have to pay the money back or they take your house. Your house just became money.

It’s no different than trading chunks of gold, silver, and copper for cans of Coke, but a well run fiat system can enable much freer economic transactions between the millions, maybe billions of different things we now transact. Everything from a gummy bear to a 747.

Of course printing unbacked money causes hyper inflation but this is why modern central banks don’t do it. All the new money is against some kid of security, be it a house or a bond or something. They put an asset on the balance sheet when they create the liability (the money is a liability for a bank).

This is also why Bitcoin is such a scam. Sure, it has a certain level of social acceptance, but it’s only value is in it’s scarcity, and privacy. When you hold a Bitcoin you hold something that is not backed by any assets. When Bitcoin collapses, which it will, you will find that you really didn’t own anything. It’s just an electron. Whereas when you hold a dollar sure there is some question as to it’s value but you own a part of what ever the issuing banks own. That could be pennies on the dollar if the bank mismanaged things, but with Bitcoin you are going to get electrons on the dollar.

So let’s stop with this fiat verses coin thing. The only difference in a well managed system is that fiat currency represents a claim on your mortgage or car loan or that tv you bought on visa, whereas with commodity based currency you actually have possession of the commodity. Fiat currency is far more flexible unless somebody starts just printing it without an asset backing.

In our times the great fear is that the assets the central banks are buying are of questionable value. Can the governments service their debts? But until those assets need to be written down the money is good.

#25 jay on 08.09.16 at 7:57 pm

Macallum is in China flogging real estate again.House price’s will never drop if this continue’s .http://archive.is/aVzmY

#26 Freedom First on 08.09.16 at 8:05 pm

FIRST…

#27 not 1st on 08.09.16 at 8:09 pm

If you take gold to the Belfountain, I am sure you will get served.

Probably get to see the bunker too.

#28 WUL on 08.09.16 at 8:16 pm

Hon. Redoubtable, M.P., P.C., CPGA Pro:

I seriously need your help. It goes beyond my woeful, over-extended and hopeless financial situation here in Alberta.

The Yips have spread from my putter to every club in my golf bag, including my Mashie.

Can you help? Do Lewenza or Rowat golf?

I beseech you.

Yours,

Forlorn at the Fort McMisery Golf Club

#29 Nelley on 08.09.16 at 8:19 pm

Over 4000 days since a major hurricane hit the US mainland-since 2005-when Al Gore and Goldman successfully sold the sheep on the climate change/carbon credit scam. According to the “experts” we would be experiencing massive, unprecedented hurricanes in size and frequency. Oh well-at least the central bankers are infallible.

#30 BOOM! on 08.09.16 at 8:32 pm

Wow, married, 31, 2 kids, house, money, AND a plan!

Fabulous!! I was 31 once. I don’t remember having money, or a plan, but it has worked out well, despite myself. So, there is life after marriage, and kids, too.
Always knew that, just so few figure things out that early.

I guess we were too busy with wars, inflation, hot cars, bad weed, and parental advice to match.

Ah those were the days! the 70’s.

#31 Metaxa on 08.09.16 at 8:38 pm

I refused a 0% loan on a new car, so the dealer was forced by law to knock 8% off of the big cheque I wrote him, effectively re-embursing me for the hidden cost of what 0% car loans actually cost. Of course he did not disclose that discount information until the pen was in my hand…top secret in the industry you know…

As someone who has dabbled in the car business (as an investor only) I’d sure like to know what law you refer to.

How it really works is taking a 0% loan out means two things.
1) You will be with the automaker’s finance arm, period.
2) You will pay more (list price) for the car than if you financed any other way.

You see the teaser price sure but look harder and that price is only for “well qualified” buyers. Someone taking on a 0% auto loan isn’t well qualified.

All a dealer wants is to get units off the plan. The plan is the master lease that allows him or her to have millions of dollars in inventory. Each day a car sits on the lot it costs interest on the plan. Dealer doesn’t care how you finance beyond he would like you to finance via the dealership for the kickback. 0% or 4.99%…it simply does not matter to the dealer.

All dealerships want is to remove inventory from the plan.

…and if all you got was 8% off MSRP I sure wouldn’t be bragging about that online or anywhere, the salesperson can do that without even talking to the sales manager or finance. Hint: they make you think they have to go talk but really it just lets you stew in the cubicle, its to warm you up for the finance office.

That is where the money is made, finance, used cars, service dept, new cars, parts. In that order.

Deal with any one of them and the dealer principle is making money no matter how you think you did.

#32 David McKenna on 08.09.16 at 8:42 pm

Garth – where is this small town that they live?

#33 Moron Face on 08.09.16 at 8:42 pm

If the election were held today, Trump would win fewer than 150 electoral college votes. Trump may go down in history as one of the most badly defeated presidential candidates.

#34 Nemesis on 08.09.16 at 8:46 pm

“But the more of your net worth you pour into a single asset, the more you’re rolling the dice.” – HonGT

#TheSamePrincipleAlsoAppliesToPoliticalCapital,Or… #ConfuciusSay… #”TheStrengthOfANation… #DerivesFromTheIntegrity… #OfTheHome.”

[G&M] – Ottawa opens arms to Chinese students, tourists and workers

“Eager to woo waves of new Chinese students, temporary workers and travellers, Ottawa is petitioning Beijing to triple the number of cities where people can apply for Canadian visas.

With Prime Minister Justin Trudeau expected in China at month’s end for his first state visit, the Liberal government is trying to pry open a larger door to Chinese visitors that can swell university enrolments, place foreign talent in high-tech jobs and bring in new investment cash – even if that means adding to housing demand at a time of overheated home prices.

John McCallum, Canada’s minister of immigration, refugees and citizenship, landed in Beijing Sunday for meetings with senior Chinese officials at the country’s ministries of foreign affairs and public security. He asked for approval to quickly open new visa application centres in five secondary Chinese cities: Chengdu, Nanjing, Wuhan, Jinan and Shenyang. Those could open as soon as next year.”…

http://www.theglobeandmail.com/news/world/ottawa-pushes-china-to-boost-visa-application-sites/article31328849/

#35 Freedom First on 08.09.16 at 8:54 pm

See. This Blog is about the meaning of life-Garth.

Garth knows.
………………………………………………………….

Freedom……..Priceless. I am just not that bright, so I know, for sure, that I have been Blessed.

#36 Context on 08.09.16 at 8:56 pm

#5 Mark M: – If the FED cuts rates what will happen to the housing market in Toronto?

#37 Linda on 08.09.16 at 8:57 pm

The ‘rule of 90’ helps to simplify decisions. The only caveat I’d have with it is for those who have 1) purchased their home before prices went berserk & 2) have a paid off home with potentially inflated value. All homes are only potential value – until actually sold, the evaluated figure is nothing but a figure on paper. You might get that value or you might not.

The point is that as the potential value of the mortgage free asset increases, one may run the ‘risk’ of violating the ‘rule of 90’. My view is that as long as you are putting the funds you would have been using to pay a mortgage towards building financial assets (TFSA/RRSP/investments) then the ‘rule of 90’ would only apply if & when you decided to sell.

#38 Freedom First on 08.09.16 at 8:58 pm

#26 Freedom First

Thank you #26 Freedom First, Yes, I always come first.

#39 Victor V on 08.09.16 at 9:05 pm

Just received notice that Newt Gingrich will be debating at The Munk Debates again. The resolution will be: be it resolved that Donald Trump can make America great again. This should be a fascinating one. The date is September 30th.

#40 White Privilege on 08.09.16 at 9:13 pm

Anybody see this CIA war monger interview with Charlie Rose?
http://www.zerohedge.com/news/2016-08-09/former-cia-acting-director-and-hillary-supporter-we-should-kill-russians-and-iranian

This guy endorsed Clinton just last week.

This guy, POS, Mike Morell (not Moral) is a zionist and charlie rose is CFR.

The deep state is coming off the rails and are no longer being covert in their scheme for global control. WW3 is coming soon if the USA does not rise up and shut this shit down!

USA needs to recapture their government OF the people, BY the people, FOR the People.

or we are head on into wwiii

#41 TurnerNation on 08.09.16 at 9:26 pm

SELL all Rural Ontario real estate.

– I predict mandatory “Green audits” will come and render most older, rural home unsaleable without massive renos.

– Ontario is on track for a Cali-styled debt refi and austerity measures will cripple rural first responders.
– For this reason, rural insurance policies will be tinged with unobtainum. They’ll know a foundation or body is all that’ll be left after you dial nine eleven.

– Agenda 21 pushing us into cities; rural will be held as UN-mandated preserved zones and wind farm tracts.

– During next credit crunch banks will vice onto rural tracts and homes – lending maybe 50% of assesed (and illiquid values)

– (Ditto: expect more suspicious fires – and insurance hikes – due to this)

– Spike in already high rural unemployment and drug addictions with concomitant crime rates.

– **Mandated electric cars (remember the Peoples’ Car?) , with limited charging stations, will limit range to rural areas to all but those elites who pay carbon taxes or full size Tesla (150k). **

– Ontario shuttered the Northland Express train service a while ago.

– Ontario’s record and criminally high electricity rates (for a 150-year old technology, really?) and bans on “carbon” heating methods will limit rural populations.

#42 Brian Ripley on 08.09.16 at 9:29 pm

I updated my employment rate chart:
http://www.chpc.biz/earnings-employment.html#Rate

Calgarians are setting new employment rate lows. Torontonians are trending down and Vancouverites are on an upswing… maybe a point or so before they break out to the upside, I suppose it makes sense, but my updated Housing Starts chart has the metric for construction activity (employment source) in an opposite trend:
http://www.chpc.biz/housing-starts.html

Starts in Calgary are up 31% M/M and up 17% Y/Y while Vancouver starts are down 29% M/M and down 7% Y/Y

#43 Metaxa on 08.09.16 at 9:31 pm

@ #32 David McKenna

Garth – where is this small town that they live?

It really doesn’t matter, almost any “small town” will give you multiples of that same story.

Sure it takes the better part of a morning for me to get to Seattle or Vancouver but my small town is vibrant, full of culture, shopping is nearby, fresh spot prawns and Dungeness crab are plentiful and my prices in the liquor store are exactly the same as the big city guys.

We have relatives in Ontario, they live in Dundas…small town but surrounded by beauty and everything well within reach.

But for both of us, one family west, one east, the amount of time not dodging crime, grime and traffic time is well worth the few things we give up not living in the Big City.

New neighbours next door…refugees from Vancouver. He just sits on his new to him deck and giggles as he overlooks the creek and revels in the quiet.

Making 9/10ths of his previous while spending 5/10ths on housing, food and such.

Life is good.
Life in Canada is good.
Life in small town Canada is gooder.

#44 Fiat on 08.09.16 at 9:34 pm

Financial Rule No.7: Ignore anyone who uses the word ‘fiat’. — Garth

—–

Does it mean that Turner Investment is not charging clients in fiat currency? How about the ice cream at the general store?

It’s called ‘money.’ — Garth

Sweet.

You can make it sound so simple and innocent as if there was nothing to think about it and as if you had nothing to do with advising about investing.

Yet you have “Financial Rule No.7” about it?

#45 Trump urges followers to assassinate Hillary! on 08.09.16 at 9:44 pm

Nothing to look at, move along everyone.

It makes perfect sense he would have so many supporters here……………………

#46 Letterkenny on 08.09.16 at 9:48 pm

Didn’t think Garth would use my email for his post, but pretty cool…thanks for the advice! Following your advice got my portfolio out of 100% Canadian stocks into ETF’s a few years ago.

#47 Mark on 08.09.16 at 9:52 pm

“Dealer doesn’t care how you finance beyond he would like you to finance via the dealership for the kickback. 0% or 4.99%…it simply does not matter to the dealer.”

Indeed. So its basically a matter, for the consumer, to figure out the dealers’ implied cost of financing on a customer with a certain credit quality. And discount the offer accordingly for an all-cash offer.

Typical market rates of finance are on the order of 4-5%/year for high quality auto borrowers. So if the “0%” financing was available for 5 years, 8% may have actually yielded the dealer a higher present value on the sale, than available with the “0%” deal.

Of course the best way to ‘finance’ a car, or really, any “non-investment” is to have investments, sell them, buy the item, and then borrow money (at investment-secured rates!) to replace the investments. Voila, tax-deductible interest! But an understanding of the ‘math’ and how to properly compute a net present value on any deal for which “financing” is an integral part of the overall offering is an important skill to have in one’s financial toolkit.

My call remains unchanged, no rate hikes this year or next. An economy growing at 1% after eight years of emergency interest rates and trillions of QE is not actually healthy, despite what Garth, The American and WalMark would have you believe.

I tend to concur. The US labour market is a disaster, especially for college grads. Much of the alleged growth in jobs was due to Obamacare, which created significant incentives for employers to reduce full-time staff to part-timers as much as possible. Employment quality has been the pitts for much of the past 15 years, and there is no end in sight absent structural reform. And most of the ‘good’ jobs, particularly in IT, have gone to foreign nationals on an alphabet soup of worker visas. Not to the hoardes of US citizens qualified for them.

#48 I'm stupid on 08.09.16 at 10:02 pm

Hi Garth

How do you value a pension in the rule of 90? If you counted an rrsp in the net worth a defined pension should be counted in some way.

Not really. You neither own nor control it. — Garth

#49 Smoking Man on 08.09.16 at 10:10 pm

These lefty organizations run by morons.

Few weeks ago I said short Twitter
http://www.breitbart.com/tech/2016/08/09/twitter-plans-sublet-part-san-fransisco-hq/

The Toronto Star laying people off.. Hum let me see. Your in a business that requires advertising revenue from other business.

Yet most of your editorial content is against business. Duh.

What do think is going to happen..

Twitter a mad lefty outfit trying to attract advertising revenue from business.

I’m I the only one that sees this.

#50 Ignorance Is Bliss on 08.09.16 at 10:21 pm

Why are they only netting $280K on a $370K house sale?

That is the price of the house being purchased, not sold. — Garth

#51 Interstellar Star Stuff on 08.09.16 at 10:22 pm

#49 Smoking Man on 08.09.16 at 10:10 pm

These lefty organizations run by morons.

Few weeks ago I said short Twitter
http://www.breitbart.com/tech/2016/08/09/twitter-plans-sublet-part-san-fransisco-hq/

The Toronto Star laying people off.. Hum let me see. Your in a business that requires advertising revenue from other business.

Yet most of your editorial content is against business. Duh.

What do think is going to happen..

Twitter a mad lefty outfit trying to attract advertising revenue from business.

I’m I the only one that sees this.

hey smoker dude.. ergodan and putin are kissing n making up.. so what’s the scoop..

#52 Nelley on 08.09.16 at 10:23 pm

More and more evidence coming out (contrary to MSM spin) that Crooked Hillary is suffering from serious mental and physical health problems-should be very interesting debates (if they aren’t cancelled).

This is below even this blog’s questionable standards. Stop it. — Garth

#53 wally on 08.09.16 at 10:24 pm

Re car loan discussions:

I am not an insider, but, I know from experience that it’s possible to make a deal for a deep discount off advertised AND 100% financing at 0% rate. Just have to find a model you can live with that a dealer is having trouble moving enough of.

Doesn’t take a genius to figure out one good reason……banks will loan idiots like us hundreds of thousands at 2.4%.

What kind of rate will they give a major regional division of a company whose market cap might be 12 figures?

I’ll speculate that the ‘cost’ for subsidising the financing package for five or six years is a fair bit lower than that 2.4% mortgage. Maybe 1.6 to 2%? Maybe lower?

#54 Mark on 08.09.16 at 10:29 pm

“Not really. You neither own nor control it. — Garth”

I see plenty of reason to be skeptical of long-term pension solvency, but should we extend the same logic to all trusts that we can invest in? XIU is a trust (legally a “mutual fund trust”), and by “owning” units, I am merely a beneficiary. Should I, or shouldn’t I count my XIU allocation against my net worth for the purposes of “the rule of 90”?

I would say to the previous poster, if he wants to include the value of a DC plan, he should obtain an estimate of the commuted value, multiply by the pension plan’s solvency ratio if less than 100%, and include that number accordingly as part of one’s net worth.

“The point is that as the potential value of the mortgage free asset increases, one may run the ‘risk’ of violating the ‘rule of 90’. “

But what about the high probability of the asset decreasing in value? Usually houses depreciate, not appreciate.

XIU units are negotiable securities the holder can liquidate instantly. A pension benefit is not. That was absurd. — Garth

#55 I believe nothing they tell me on 08.09.16 at 10:32 pm

DELETED

#56 Fiat on 08.09.16 at 10:32 pm

Earlier today, when the BOE tried to purchase another £1.17 billion in bonds, this time with a maturity monger than 15 years, something stunning happened: it suffered an unexpected failure which has rarely if ever happened in central bank history: only £1.118 billion worth of sellers showed up, meaning that the BOE’s second open market operation was uncovered by a ratio of 0.96. Simply stated, the Bank of England encountered an offerless market.

Whatever the reason, and however the BOE will try to justify this striking failure, Mark Carney has a major problem on his hands: according to last week’s announcement, the BOE hopes to increase its holdings of government securities by 60 billion pounds ($78 billion) to 435 billion pounds over the next six months. However, if today is any indication, it will fail.

http://www.zerohedge.com/news/2016-08-09/bank-england-suffers-stunning-failure-second-day-qe-goodness-knows-what-happens-next

#57 I believe nothing they tell me on 08.09.16 at 10:44 pm

Oops must of hit a nerve

This is not a gold blog. — Garth

#58 Ace Goodheart on 08.09.16 at 10:49 pm

Makes sense to a point. But I’d like to know where he’s living. Right now properties outside of the GTA are really going down in value fast.

It’s a great time to buy a cottage though. Never seen prices like this before and stuff is sitting on the market for more than two years.

Not sure if this is a symptom of overpriced GTA real estate (no one can afford cottages?) but wow, cheap stuff out there indeed. All the folks who bought million dollar empty lots in Muskoka back in 2010 must be kicking themselves. You can buy entire private islands now for under 400K. Not sure what is happening, but this is very interesting.

#59 Context on 08.09.16 at 10:57 pm

#41 TurnerNation: I was angry when the government cancelled the Northland Express leaving out of Union Station in the morning. I was planning a trip to connect to the Polar Bear Express going to the edge of the Arctic Circle to have lunch with the natives and go for the boat ride being offered.

#60 Smoking Man on 08.09.16 at 10:59 pm

#51 Interstellar Star Stuff on 08.09.16 at 10:22 pm
#49 Smoking Man on 08.09.16 at 10:10 pm

These lefty organizations run by morons.

Few weeks ago I said short Twitter
http://www.breitbart.com/tech/2016/08/09/twitter-plans-sublet-part-san-fransisco-hq/

The Toronto Star laying people off.. Hum let me see. Your in a business that requires advertising revenue from other business.

Yet most of your editorial content is against business. Duh.

What do think is going to happen..

Twitter a mad lefty outfit trying to attract advertising revenue from business.

I’m I the only one that sees this.

hey smoker dude.. ergodan and putin are kissing n making up.. so what’s the scoop..
……..

Pipe lines and prosperity. Thinking the coup was another misadventure by NEOCONS.

#61 Marc Faber in Chiang Mai on 08.09.16 at 11:08 pm

“Marc Faber is a gold-pumping joke. — Garth”

Garth Turner how about a humble apology ?

Hang on – you and humility – what on earth was I thinking of ?

There is a certain level of arrogance there in your style Garth that some of the more sensible people here have taken note of.

You do not like it much when people do not agree with your own version of wisdom perhaps ?

#62 MinInMission on 08.09.16 at 11:13 pm

10 to 12 years ago, “Awesome Lady” and I bought a house. Late in our lives and at the beginning of our relationship. We got pre-approved @ the bank and bought a house, with mortgage, at less than 1/2 the maximum we got approved for. Paid for it in about 8 years. Prices have more than doubled. We should actually sell and take the money, but, there isn’t enough explosive to get her out of here!!!

#63 Linda on 08.09.16 at 11:13 pm

Mark – reasons why a house might depreciate in value:
1) no maintenance is done; 2) the area the property is located in is deemed undesirable due to unmaintained properties, elevated crime rates, poor access to services etc.; 3) economic forces such as deflation or a popping asset bubble. A well kept, maintained structure located where people want to live will keep its value or potentially increase in value. The key word is potential. Houses can have a high assessed value, but just because someone deems the house is worth one million dollars does not mean that is the sum you will receive if you put it on the market.

#64 cash on 08.09.16 at 11:16 pm

1. If they recently bought a new house, why are they buying another new one (with a mortgage)?

2. Are they really paying $100K for realtor fees and taxes?

3. How can you tell what they should do if you don’t know how much they paid for the newest house?

Tell them to stay put ans top moving around.

#65 Rabbit One on 08.09.16 at 11:38 pm

Rule of 90

I would suggest different measure -entire real estate exposure to include mortgage debt.

Who has $100K liquid asset with $1.5MM townhouse, 1.2M mortgage, house equity of $300K.
He is only 66% in R/E exposure.
If he is 24 years old, no problems?

He is taking on much more risk being in $1.2MM in debt, compare to only $450K net-worth.
His real exposure to Real estate is $1.5MM of his total net-worth of $1.6MM.

How about a person with $2MM house with $1.5MM mortgage / HELOC.
$30M in liquid cash in accounts?

When houses cost millions of dollars and most people save not more than half mil, rule of 90 looks a bit off.

#66 macroman on 08.09.16 at 11:42 pm

Yo Turner Nation #41, you bumped into Smoking Man at the Seneca, didn’t you.

You obviously can’t slam the Jack as well as he…

#67 Rabbit One on 08.09.16 at 11:44 pm

** sorry, duplicate errors **

Who has $100K liquid asset with $1.5MM townhouse, 1.2M mortgage, house equity of $300K.
He is only ***75%*** in R/E exposure.
If he is ***25*** years old, no problems?

#68 the other white meat (pork) on 08.09.16 at 11:57 pm

Hey Garth, your 6 percent return is a hell of a lot better than our BC Public Pension Plan Return of 0 percent as of March 31st. How would you like to manage an extra 26 billion?

#69 NoName on 08.09.16 at 11:59 pm

off topic but interesting, to me anyways

http://varianceexplained.org/r/trump-tweets/

trupm tweets compared from android and iphone.

#70 Shawn on 08.10.16 at 12:12 am

People Who Point Out that Money is Fiat…

Financial Rule No.7: Ignore anyone who uses the word ‘fiat’. — Garth

****************************************
I totally agree with that rule.

One can only feel sorry for all those who worry that the U.S. dollar, for example, is based on trust rather than Gold.

If it were possible, one might want to call an intervention on misguided folks who worry a lot that money is fiat.

In 2008 a lot of people predicted hyper inflation in the U.S. due to printing of fiat currency.

It did not happen.

Instead the U.S. dollar is very strong and new houses can be had for under $200k.

Fiat alarmists also seem often not to realise that while a stock is measured in dollars, it is not an investment IN dollars (like a bond). It is just measured in dollars. If the value of a dollar falls the REAL purchasing power value of a stock or house could be maintained. A house can be measured in a different currency if you wish.

Houses are measured in dollars but are not an investment IN dollars.

Yeah a U.S. dollar has lost like 92% of its value since 1915. So what? Only a fool kept cash in a mattress for a 100 years.

Money should be a SHORT term store of value. Not necessarily a long term store of value. Since there are many other investments to preserve value in the long term.

Money is also the medium of exchange and a unit of measure.

People keep forgetting that they don’t have MONEY in a house or a Stock. Rather they have a house or a stock that is worth a certain amount of money.

There is in fact zero money IN the stock market.

#71 RW_Z on 08.10.16 at 12:21 am

“This is what happens when you make sensible decisions”

Having $425000 worth of assets at 31 is not called “sensible decision-making,” it’s called being born to the right parents.

#72 Jim on 08.10.16 at 12:21 am

Garth’s OK, it doesn’t matter what they say about him.

But I come here to read The Smoking Man.

#73 Jim on 08.10.16 at 12:29 am

Moron Face on 08.09.16 at 8:42 pm
“If the election were held today, Trump would win fewer than 150 electoral college votes. Trump may go down in history as one of the most badly defeated presidential candidates.”

Aren’t you afraid using the Electoral College like that to usurp democracy would cause a civil war?

#74 Shawn on 08.10.16 at 12:35 am

House Value versus House Equity

If you own a house. You have invested in the FULL value of that house not just the equity you put in.

If you own a million dollar house with a 900k mortgage, that is VASTLY different from owning a $100k house free and clear.

Your net worth bounces around as the value of the million dollar house bounces.

Any rule of 90 applied to house equity versus house value is deeply flawed.

#75 Jim on 08.10.16 at 12:37 am

Interstellar Star Stuff – Ergodan and Putin are worried about that Western lead coup.

#76 Jim on 08.10.16 at 12:41 am

Fiat is just one kind of money.

#77 boonerator on 08.10.16 at 12:56 am

How do you value a pension in the rule of 90? If you counted an rrsp in the net worth a defined pension should be counted in some way.

Not really. You neither own nor control it. — Garth
====================================

I don’t understand the issue. I have a DB pension that pays $x per month, set at the time of retirement. The COLA varies each year but the pension as agreed on does not.
The last report from the corp showed it to be in good financial shape realizing a 5-6% return.

I realize that the pension corporation could go bankrupt and leave me with nothing. But, considering they are invested in a very broad swath of the economy, if they go belly up, would that not be just another sign of financial armageddon?
In which case, I’d be more worried about my stocks of ammo and canned goods.

So how do we consider the value of a DB pension? I thought it was a contract between me and the Pension Corp that can’t be changed. What am I missing?

#78 Russ on 08.10.16 at 1:07 am

Garth says,
“See? This blog is about the meaning of life.”

https://www.youtube.com/watch?v=Qbnv6eHKjCQ

the end of the clip was foreboding… “I think it’s a little early to be forcing roles on it…”

Pardon the subtitles, it’s all I got at short notice.

#79 Metaxa on 08.10.16 at 1:24 am

I am not an insider, but, I know from experience that it’s possible to make a deal for a deep discount off advertised AND 100% financing at 0% rate. Just have to find a model you can live with that a dealer is having trouble moving enough of.

That will only happen if the manufacturer is giving hidden rebates to the dealer.

So instead of the rebate being advertised, on the hood so to speak, so the consumer knows its there, the money is a dealer incentive instead.

I’m in no way implying that your deal didn’t happen. I am adding to it that the dealer got paid.

Trust me on that.

#80 NEVER GIVE UP on 08.10.16 at 4:43 am

I landed at YVR today. Pulling my luggage 2 guys were talking quite loudly behind me about YVR Real Estate.

So I joined in agreeing with him that it is whacko!
He said he just sold his 500 Sq Ft 1 Br. Condo in downtown for $500,000.00. He lucked out. He said he is moving to a cheaper place.

He says even with the $500k in his pocket he can’t come out ahead by buying more so he is picking up stakes and taking his a$$ out of the Province.

He doesn’t read this blog but he knows what is going on. He agrees that Government made the mess for their own gain and the correction has to happen. Just not on his dime.

Nice when government policy encourages hard working Canadians to LEAVE the province.

Message to Christy: Get the crash over with so we can go on living again.
A recent Province Newspaper poll of 9000+ people…71% said they want a crash of 50% or more! Don’t disappoint Christie!

#81 Eddie on 08.10.16 at 5:55 am

IMO, one of the better blog posts in the past weeks. Way too much doom&gloom coming out this week.

#82 Zen Headspace on 08.10.16 at 6:45 am

#50 Ignorance is Bliss

“Why are they only netting $280K on a $370K house sale?”

That is the price of the house being purchased, not sold. — Garth
——————————————————————-

I had the same question. John’s writing was unclear, and could have been easily misinterpreted. So, to be clear, the house they just bought is what costs $370,000.00. The house they are selling will net them around $275,000.00.

It’s also confusing because those little six-figure numbers look like the commissions and closing costs in Vancouver!!!

#83 GPS Ger on 08.10.16 at 7:21 am

<>

I thought #5 ‘parts’ would be higher. Is there any source to this?
Note: I made the sentence into numbered bullets, but it is intact otherwise.

“That is where the money is made:
1. finance,
2. used cars,
3. service dept,
4. new cars,
5. parts.
In that order.”

#84 pBrasseur on 08.10.16 at 7:34 am

It is not about what asset classes you own or how many of those you have, it’s about the quality and intrisic value of whatever you own.

Basic fact in Canada is that intrinsic value of houses is much lower than current market price.

You get rich by owning true value.

#85 NoName on 08.10.16 at 7:53 am

#77 boonerator on 08.10.16 at 12:56 am

So how do we consider the value of a DB pension? I thought it was a contract between me and the Pension Corp that can’t be changed. What am I missing?

—–
i had db with my previous employer and some point db plan got canned, and dc plan was given to all employees, what was accumulated in db stayed but all new contributions went to dc, aka glorified rrsp.
calculation for my db pension stayed same but monthly payout went from 3700$ a month at age 65 down to 700.

#86 AfterTheHouseSold on 08.10.16 at 7:59 am

Might be hope for Alberta yet?

http://business.financialpost.com/news/energy/crude-oil-to-carrots-geothermal-makeover-eyed-for-albertas-old-wells?__lsa=e8ae-9a42

#87 Mr. Frugal on 08.10.16 at 8:02 am

#52 Nelley on 08.09.16 at 10:23 pm
More and more evidence coming out (contrary to MSM spin) that Crooked Hillary is suffering from serious mental and physical health problems-should be very interesting debates (if they aren’t cancelled).

This is below even this blog’s questionable standards. Stop it. — Garth
_____________________________________

Yes, Hillary is suffering from a serious mental illness. It’s called liberalism.

#88 CTO on 08.10.16 at 8:06 am

Garth
As you joke about the vespa riding self-entitled millennial debt junkies wanting and get it all, at this very early stage of their life and the likelihood of them facing hash reality when the hammer comes down, I wonder if it will be them or …“us”?
Maybe it will be us prudent savers paying the “helicopter government” to shield them from the consequences as has always happened in their generation.
Can you do a piece on how you think this might play out?
I, as a 40 something X gen person have worked very, very hard to build a savings and pay off a house that we would not have purchased if we had to go substantially into debt.
I need to shield my family and myself from a government that will methodically confiscate the results of my hard work and sacrifice when these spoiled kids hit a brick wall.

#89 masterofthetelecaster on 08.10.16 at 8:11 am

Hello Garth
I would like to know where buy low and sell high comes into your philosiphy?
I imagine this would come into play if one is to rebalance ones portfolio. One of the reasons I have opened investment accounts for my kids is so that they may over time come to identify cycles.
I whole heartedly agree a diversified balanced portfolio should be the bases of their financial being and I appreciate you pointing out the difference between investing and speculating but in my limited understanding there will be times that come where speculating would be as low a risk as investing but with more upside.Thanks

#90 CTO on 08.10.16 at 8:12 am

#58 Ace Goodheart
“now properties outside of the GTA are really going down in value fast.

It’s a great time to buy a cottage though. Never seen prices like this before and stuff is sitting on the market for more than two years. ”

Ace,
can you tell me your experiences?? as I have seen somewhat similar ones up in the Muskoka north of Toronto area, some properties sitting forever.

#91 fancy_pants on 08.10.16 at 8:25 am

pumping out a modest 6%

the only way everyone makes 6% in this economy is the gassing of the money supply. IMO, all the warnings on RE are equally relevant towards the stock market. both are bloated. be careful what you wish for.

If you deny the one, you have to deny the other b/c the expanded money supply is gassing all the ‘casinos’. Inflation is not biased. Great effort has been taken to suppress and cloak inflation for now but hard assets will become the champion in due time.

#92 Andrew t on 08.10.16 at 8:31 am

#76 Jim on 08.10.16 at 12:41 am
Fiat is just one kind of money

It’s the only one I care about, Daddy-O.

#93 Smoking Man on 08.10.16 at 8:37 am

Oh, O, More problems in the house of Killary.

Number 57

http://www.thegatewaypundit.com/2016/08/wow-breaking-video-julian-assange-suggests-seth-rich-wikileaks-dnc-source-shot-dead-dc/

#94 Nelley on 08.10.16 at 8:57 am

#93Smoking Man-I was gonna post that but I figured Garth Turner would get too upset.

Nothing upsets me. But I respect the large readership of this blog too much to allow it to descend into tinfoil conspiratorial lunacy. — Garth

#95 Shawn on 08.10.16 at 9:05 am

Pensions and Net Worth

#77 boonerator on 08.10.16 at 12:56 am asked about this:

How do you value a pension in the rule of 90? If you counted an rrsp in the net worth a defined pension should be counted in some way.

Not really. You neither own nor control it. — Garth

He then asked:

So how do we consider the value of a DB pension? I thought it was a contract between me and the Pension Corp that can’t be changed. What am I missing?

******************************************
You are not missing anything.

A retired person with a pension has a higher net worth than a similar retired person with no pension.

It’s hard to measure but clearly there is a value there.

To think otherwise is to suggest that your net worth declines if you buy an annuity. (And declines by the full value of the annuity purchase as if you lit the money on fire.) Not logical.

My point is simple. Never count on wealth you do not possess. There are many (and growing) instances of pension benefits being altered, reduced or eliminated. A future pension benefit is a vastly different thing than an investment account or RRSP that a person controls directly, and can count on. Obviously. — Garth

#96 fancy_pants on 08.10.16 at 9:55 am

picture revealing the TINA ( “there is no alternative”) effect in action? It is here –

http://www.cbc.ca/news/business/stock-market-economy-different-1.3713961

with ZIRP, yield-seeking money is bubbling RE and stocks alike

#97 Blockchain on 08.10.16 at 10:12 am

#24 “When you hold a Bitcoin you hold something that is not backed by any assets.”

WRONG. You are totally clueless as to what blockchain is. A public ledger as opposed to a private one. Bitcoin is a trading platform and eliminates speculators on money and foreign exchange, and eliminates the need for collateral security.

And of course you don’t seem to understand the underlying fallacy behind expansionary monetary policy, which is that commercial banks are unnecessary to the economic system. Blockchain applications (such as Bitcoin) ELIMINATE the need for middlemen monopolies (such as private bankers).

Slavery to convention, is conventional slavery.

#98 Ace Goodheart on 08.10.16 at 10:15 am

RE: #90 CTO

“Ace,
can you tell me your experiences?? as I have seen somewhat similar ones up in the Muskoka north of Toronto area, some properties sitting forever.”

There is a cottage on our lake, which is listed for $250,000 ish, and has been on the market for three years. We are about 20 minutes out of Gravenhurst, biking distance to Bala.

I have noticed places on Six Mile Lake and Gloucester Pool listed for the low $300’s that sit on the market for years. It is now possible to purchase land in the super popular three lake Joe, Rosseau and Muskoka chain for around 300K and it is not selling. I found an entire Island for sale, with a cottage and boats included in Six Mile Lake for $299,000.

I have not seen prices like this in my adult lifetime. Six Mile used to have an entry point of $600K and so did Gloucester Pool. You could not purchase a sliver of waterfront on any of the three lake Muskoka chain for under $900K. This has all changed and I don’t really understand why.

For us it isn’t a big deal. We’ve had our cottage for years, paid almost nothing for it, and have no intention of selling it. But for someone who just came in with a large mortgage and thought their million dollar piece of Muskoka waterfront was a rock solid investment, this must be really hurting.

#99 Bat Flipper on 08.10.16 at 10:27 am

So, the advice here is that anyone in Toronto or Vancouver shouldn’t own a house unless they have 500K to 1M in the bank. I would think the vast majority do not even have a few thousand to cover an unexpected expense and would go belly up if their monthly bills went up a hundred or a few hundred a month. So is Main street able to handle a shock to the market? No. A bump in unemployment, interest rate hikes, recession, cost of living hike, etc could spur a rush to the exit. Alberta is a good example of what may happen, prices are sticky but falling, in Toronto/Vancouver if there is a shock.

#100 YVR to LAX on 08.10.16 at 10:27 am

Left YVR for Cali in 2006 – housing was too expensive relative to salary! My timing was not great, as I had to live through a brutal recession. Something I remember that may be worth thinking about. Prices here spiked at the end of their big run-up and as the prices went up, people were finding all sorts of creative ways to make their payments. As soon as prices turned they quickly gave up. Keep a close eye on delinquency rates.

I don’t wish what’s coming on anyone, I spent 8 years holding onto jobs by my fingertips and only in the last year have started to feel job security again. My income is now back to where it was 10 years ago.

My one win is that in 2008 while the market here was cratered – I bought a small house in Irvine. Thanks Garth, you were right way back when.

#101 James on 08.10.16 at 10:28 am

Dan Rather, formerly of CBS Evening News, took to Facebook in a scathing rant after Donald Trump implied that people with guns could stop Hillary Clinton as president from appointing anti-gun judges.

“When he suggested that ‘The Second Amendment People’ can stop Hillary Clinton he crossed a line with dangerous potential,” Rather wrote in his post Tuesday night. “By any objective analysis, this is a new low and unprecedented in the history of American presidential politics. This is no longer about policy, civility, decency or even temperament. This is a direct threat of violence against a political rival. It is not just against the norms of American politics, it raises a serious question of whether it is against the law. If any other citizen had said this about a Presidential candidate, would the Secret Service be investigating?” Your dam right they would. If you said anything even slightly interpreted as a vailed threat your ass would be in solitary quicker than a New York minute.
Donald J Trump is a certified whack-job and I for one would never sleep at night with a lunatic the likes of Trump with his finger on the nuke button. As for Smoking Man don’t bother with your drivel you toothless old man, this isn’t about liking Clinton it is about the safety of any citizen that would loose there first amendment rights if they disagree with Whack-Job Trump. Given the power of the United States government no free citizen on earth would be safe from his reach. Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Since you like videos so much here is one to remind you of the hand on the button.
https://www.youtube.com/watch?v=QHmH1xQ2Pf4

#102 Context on 08.10.16 at 10:32 am

#98 Ace Goodheart :- You guys are concentrating on the properties that are listed because your missing at least a thousand or more in the greater area that are being rented out which are hidden.

#103 Damifino on 08.10.16 at 10:34 am

#80 NEVER GIVE UP

“Message to Christy: Get the crash over with so we can go on living again.”
————————————–

I’d be interested to know.

If you were Chritsy and wanted to bring on an immediate RE crash in Greater Vancouver, what precisely, would you do (besides what’s already done) that is realistically within your power?

#104 Bram on 08.10.16 at 10:35 am

Hot damn…
An East Van neighbour of mine is trying to set a record for this neighbourhood, it looks like:

https://www.realtor.ca/Residential/Single-Family/17264341/40-E-48TH-AVENUE-Vancouver-British-Columbia-V5W2C6

Seriously, for that money (5.2M), you can live in Shaughnessy on a large plot with mansion.

If he gets it… wow. (2 months too late, maybe?)
The house is nice enough, new, and the lot is 50% wider than standard. But still… that price!

#105 Shawn on 08.10.16 at 10:37 am

Can You Count on a Pension?

My point is simple. Never count on wealth you do not possess. There are many (and growing) instances of pension benefits being altered, reduced or eliminated. A future pension benefit is a vastly different thing than an investment account or RRSP that a person controls directly, and can count on. Obviously. — Garth

**************************************
Yes, there are many instances of pensions being altered, reduced and in very rare cases even eliminated.

Certainly no one can count on the pension rules for future service staying he same. Even governments may reduce benefits relating to years you have not yet worked.

But many pensioners can count on the value of pensions already earned. Almost any Canadian government pension including teachers pensions can be counted on. Even if there are ever reductions to government pensions already earned they would be minor such as reduced inflation coverage.

And I think if you have a pension from the likes of CN rail (it’s fully funded) you can count on that.

NOTHING in life is 100% guaranteed really. But a pensioner receiving a government pension should not spend any time worrying about that.

I think such a pensioner is right to feel insulted if they are told that their government-backed pension is anything less than a wonderful financial asset. (Just try pricing out a similar annuity to see the value.)

#106 Who luvs ya baby on 08.10.16 at 10:40 am

#94 Nelley on 08.10.16 at 8:57 am
#93Smoking Man-I was gonna post that but I figured Garth Turner would get too upset.

Nothing upsets me. But I respect the large readership of this blog too much to allow it to descend into tinfoil conspiratorial lunacy. — Garth

The resident alien took it there a long time ago….

#107 Penny Henny on 08.10.16 at 10:40 am

#58 Ace Goodheart on 08.09.16 at 10:49 pm
Makes sense to a point. But I’d like to know where he’s living. Right now properties outside of the GTA are really going down in value fast.
——————–_____________________

Not true Mr Ace. Niagara region is booming (relatively speaking)

#108 Capt. Serious on 08.10.16 at 10:54 am

@ #97 Blockchain

The more likely scenario is existing companies are going to use blockchain to reduce their costs. That’s pretty much what every technology does for corporations. Blockchain will be no different.

#109 Joe Schmoe on 08.10.16 at 11:09 am

1) Cars – http://www.carcostcanada.ca…get the dealer cost, look at available incentives, pick the best value. You can take the lease/loan rates and the lowest cost. You don’t have to pick one or the other. Don’t disclose your intent to finance negotiate purchase price then do what you want.

2) Rule of 90 -People on this blog are treating it like tax law. It’s a conservative indicator of balance. Swinging around this rule happens, but be mindful of the risk.

#110 tkid on 08.10.16 at 11:16 am

#77 I realize that the pension corporation could go bankrupt and leave me with nothing. But, considering they are invested in a very broad swath of the economy, if they go belly up, would that not be just another sign of financial armageddon?

No. It means the nitwits who manage the company, or the nitwits who manage the pension, have completely fluffed things up and left the pension-holders high and dry.

Look at the workers from Nortel and Stelco. Their pensions should be rock solid, even if the companies were not. Yet the pensioners will be lucky to get 1/4 of what they were promised. And yet the world has not suffered financial armaggedon.

My pension came out with a statement a few years ago. They were implementing new reductions in pension for anyone who retired early to ensure that ‘everyone received their fair share.’ Translated, that means my pension is underfunded and if I get the chance, to roll the damn thing into a LIRA.

Lots of pension funds are now underfunded. Including one’s pension in one’s net worth is foolish because you are relying on the pension to be able to pay you what you were promised.

#111 Context on 08.10.16 at 11:19 am

Is there anyone looking to buy a condo in the sky at the top of this bubble market in Toronto? Lets hear from you and give us the reasons why as we need to know your logic.

#112 Context on 08.10.16 at 11:38 am

Nationally, Trans Union said the non-mortgage consumer debt was $21,850, a 2.89% increase from a year ago. The delinquency rate rose to 2.72% nationally, a 3.59% increase from a year ago.

#113 mishukoe on 08.10.16 at 11:42 am

few months back my sister decided to put down on a condo that isn’t built yet.

I gave Garth’s words of ‘if you can’t piss in it don’t do it’.

I also relayed other concerns… ‘what if you get laid off? what if you get a new job? what if the value declines to less than what is owed on the mortgage?’

well apparently my sister’s company is having a round of lay-offs. 50 or something like that over the next few months and now her employment status is in the air.

I can’t wait to give them the big smug I told you so.

I’ll leave it at that. I tell my family I have the best intentions no matter how much you don’t want to hear it. I’ve been right more than I admit. I decided to stop since it’s talking to a wall.

Instead I put my money where my mouth is… MMLP’s back in NOV instead of getting into a mortgage. instead of the flaccid returns of RE I got myself a real rager of a return. reducing the position as I go along.

what a ride… keeping a tad position to stay hard.

#114 cto on 08.10.16 at 11:46 am

98 Ace Goodheart

Re: cottage prices sitting

Same here…noticed many cottages sitting on market for long long time.
It must be the highly leveraged City folk cant get loan to buy recreational…?

Can you comment on this Garth???

#115 Crowdedelevatorfartz on 08.10.16 at 11:48 am

@#103 Damfino
“If you were Chritsy and wanted to bring on an immediate RE crash in Greater Vancouver, what precisely, would you do (besides what’s already done) that is realistically within your power?”
********************************************

Lose the next election to the NDP? :)-

#116 darkselling on 08.10.16 at 11:49 am

Does your pension comment apply to those with a DC?
I’m 37 and have about $150k in a DC plan with a major financial institution that I work for. I choose (among a list) what to put the funds into, how to allocate, etc. If I quit my pension (I think) is transferable since I paid into it and the company matched.

#117 TurnerNation on 08.10.16 at 12:05 pm

Ah Keg income fund raising their monthly payouts.
Explains menu price hikes. Transfer of wealth.

Now, a burger +beer there is $27-28 plus tax and tip. Only in Kanada.

#118 Nelley on 08.10.16 at 12:09 pm

#101James-talk about lunatic theories-the guy was obviously referring to voting against Crooked Hillary-jeez.

#119 lololololheadshaker on 08.10.16 at 12:13 pm

http://www.theglobeandmail.com/news/world/ottawa-pushes-china-to-boost-visa-application-sites/article31328849/

Garth…looks like the Feds want to broaden the tax base….the new application form probably tells them that in addition to the visa, they must purchase a YVR property which comes with a 20% visa tax….

#120 Noel on 08.10.16 at 12:25 pm

This is what happens when you make sensible decisions, like living in a place where houses are still homes instead of futures contracts.
_________________________

Yeah, but those places are also super boring, with few job prospects and filled with conservative leaning people. Life’s too short to waste in a place you hate, if you can afford to live somewhere better.

#121 Shawn on 08.10.16 at 12:29 pm

Bitcoin and Blockchain

#97 Blockchain on 08.10.16 at 10:12 am said:

WRONG. You are totally clueless as to what blockchain is. A public ledger as opposed to a private one. Bitcoin is a trading platform and eliminates speculators on money and foreign exchange, and eliminates the need for collateral security.

And of course you don’t seem to understand the underlying fallacy behind expansionary monetary policy, which is that commercial banks are unnecessary to the economic system. Blockchain applications (such as Bitcoin) ELIMINATE the need for middlemen monopolies (such as private bankers).

Slavery to convention, is conventional slavery.

****************************************
I have been hearing about bitcoin and Blockchain for several years.

I recently purchased a book the Blockchain Revolution by Don and Alex Tapscott.

Before this book I did not understand what the Blockchain was.

After reading the chapter in the book that tries to explain it I was not much enlightened.

The Tapscotts are big fans.

I get that it is a public ledger. But is seems to guarantee privacy while being open and public which seemed contradictory to me.

Our friend above who thinks that commercial banks are unnecessary and that speculation and collateral can be eliminated seems to be a zealot.

Whatever Blockchain is I think we can be virtually certain that it will not ever replace commercial banks. It might be used by banks but it surely will not replace banks.

Blockchain could have a future as a way to transfer and store DOLLARS. Bitcoin itself has no future.

#122 Grey Dog on 08.10.16 at 12:46 pm

Ace Goodheart, has just Muskoka gone the way of the lack of popularity like golf courses? Aunt married into a family with lots and lots and lots of waterfront on Lake Rosseau no idea when they originally bought possibly 1940s. Back in the good ol days of Wigwasson and Rosstrevor lodge etc. Boats cruised along, kids learned to waterski, THEN…as one generation passed, Cottages were being sold to NHL hockey players, one after another, no longer pleasant cruises coasting along to see if Goldie and Kurt were sunning themselves but, SERIOUS BOAT RACES, new boats each year, racing morning, noon, and night.

PLUS IT TAKES SO LONG TO GET THERE!!! Crawling north, car packed to the gills with food and cramped kids, where is the fun in that. Heaven help you if you left something at home, shopping was too far away.

Yes the peace and joy of the cottage with every other one enduring the never ending tear downs and renos next door.

We can barely maintain our home not alone a second property! Going up in the spring to find porcupines and mice had a great time while you were away. A cottage will NEVER be in my future!

#123 Shawn on 08.10.16 at 12:47 pm

Peer to Peer Lending

Speaking of the fanciful notion of the elimination of commercial banks.

Peer to Peer lending strikes me as an incredibly dumb idea.

Perhaps the main reason that banks exist is that people are not dumb enough to lend to their neighbours and peers.

If you lend to your neighbour you lack the ability to do a proper credit check, you lack diversification and you lack the ability to foreclose. Banks provide all that.

Peer to Peer lending sounds like a romantic and misguided notion of eliminating those dastardly banks. (You know, the same dastards that lend mortgage money at 3% and are the grease of the economy).

If you watch that old classic, It’s A Wonderful Life, starring Jimmy Stewart you will learn that a bank basically IS peer-to-peer lending but via a safe intermediary. (And yes, banks are intermediaries between owners of deposits and owners of loans, even though yes, the banking system creates deposits)Eliminating the intermediary eliminates the safety. Dumb idea.

If you have the opportunity to lend money through something described as peer-to-peer lending, just don’t.

#124 Johnny Boy on 08.10.16 at 1:08 pm

#93 Smoking Man on 08.10.16 at 8:37 am

Oh, O, More problems in the house of Killary.
Number 57

http://www.thegatewaypundit.com/2016/08/wow-breaking-video-julian-assange-suggests-seth-rich-wikileaks-dnc-source-shot-dead-dc/
__________________________________________
Wow you guys amaze me. Is there a reptilian government? Is Elvis still alive? Where is the lost city of Atlantis? 911 an inside job? Always looking for the conspiracy. Get a life buddy.

http://www.dailymail.co.uk/news/article-3732239/Did-murdered-DNC-staffer-leak-20-000-party-emails-Conspiracy-theories-abound-Wikileaks-steps-forward-offer-20k-mystery-death-27-year-old.html

#125 CJBob on 08.10.16 at 1:21 pm

#121 Shawn on 08.10.16 at 12:29 pm
I recently purchased a book the Blockchain Revolution by Don and Alex Tapscott…

Blockchain could have a future as a way to transfer and store DOLLARS. Bitcoin itself has no future.
_________________
I borrowed the book from the library and reached the same conclusion. Based on the recent comments here though we’re among the few who don’t have tinfoil over the windows. Not having to register before commenting has implications.

#126 bdwy sktrn on 08.10.16 at 1:48 pm

#102 Context on 08.10.16 at 10:32 am
#98 Ace Goodheart :- You guys are concentrating on the properties that are listed because your missing at least a thousand or more in the greater area that are being rented out which are hidden.
—————————————–
makes good sense to me.

i know that when i want to rent out a suite i am always sure to get lots of good pictures (lighting!), write a clear and positive description , clearly lay out the costs and what is not included (utils etc.) and then hide it really well in the dark web so you or anyone else can’t see it. \
very logical.

i plan to do the same when it comes time to sell the 604 shack. i figure i can get 1.6 on mls with or without a realtor.

but i’m sure to get 2+ if i hide the listing so it is invisible to all.

thanks for the valuable info old man!

#127 Shawn on 08.10.16 at 1:52 pm

Pensions

tkid said:

“Look at the workers from Nortel and Stelco. Their pensions should be rock solid, even if the companies were not. Yet the pensioners will be lucky to get 1/4 of what they were promised. And yet the world has not suffered financial armaggedon.”

********************************************
Almost all pensions became under-funded when interests rates fell which automatically meant that the amount of money needed to fund a pension rose. These solvency calculations are VERY conservative in that they assume ALL the money is invested in bonds. That was never the intention.

After Nortel went bust the law was that all investments HAD to be switched to fixed income. This reduced the risk of low equity returns by locking in low bond returns. This required lower pensions. If the pensioners had a vote they might have voted to stay invested in a balanced manner.

Nortel pensioners got big pension cuts now when if the law was different they could possibly have got much higher pensions now in return for a risk of lower pensions later.

The law also allowed some (perhaps many) pensioners to escape with fully funded commuted values prior to the plan going bust. That was unfair to the remaining pensioners and added to the problem. Commuted values of pensions should be illegal because they allow some people to take away the full value risk-free while leaving others with the risks associated with the market and the company solvency.

Maybe commuted values are okay on government pensions where there is essentially no risk due to the government sponsor. Should definitely be illegal on risky corporate pensions.

#128 Oslerscodes on 08.10.16 at 1:52 pm

Hmmmm. Looking for a family home in a year or three. Taking into account the rule of 90 in reverse:

Present non-RE assets: 1,600,000
My age (I won’t disclose hers): 40
Max % net worth real estate: 50%
Maximum purchase price (based upon 25% down payment): 6,400,000

So a slice of shoreline on Lake Joe ($400k) plus 4 bedrooms with a rental suite in Leaside.

#129 bdwy sktrn on 08.10.16 at 1:55 pm

#104 Bram on 08.10.16 at 10:35 am
Hot damn…
An East Van neighbour of mine is trying to set a record for this neighbourhood, it looks like:
———————————-
5.2 mil !!!!! someone is a tad off on their estimate!

uber premium eastvan houses have recently started selling in the 2+ mil range. this guy figures he’d just skip over the 3’s and 4’s and go straight to the 5’s

even though it’s close enough to toss your empties from your deck to the ‘west side’ it will not get over 3m.

#130 Sheane Wallace on 08.10.16 at 1:58 pm

#117 TurnerNation on 08.10.16 at 12:05 pm
Ah Keg income fund raising their monthly payouts.
Explains menu price hikes. Transfer of wealth.

Now, a burger +beer there is $27-28 plus tax and tip. Only in Kanada.

————————-

Mark’s ‘deflation’ in action. It will go up to 37-40 (burger + beer), give it 2-3 years.

#131 TurnerNation on 08.10.16 at 2:23 pm

Let’s all buy Kaputs on TeckB.

#132 Context on 08.10.16 at 2:30 pm

The two main items that killed Muskoka Lakes were the traffic problems and property tax assessments that were going through the roof as on an equal value basis were much higher than Toronto. It was the end of good times when the Cleves sold out as they could see the writing on the wall.

#133 tkid on 08.10.16 at 2:30 pm

#116 Does your pension comment apply to those with a DC?

Yep. Think of a pension as the gravy. It’s nice to have, but don’t rely upon it. Don’t use a pension as the reason why you don’t put aside about 10-20% of your income every year into RRSP/TFSA/Non-Registered accounts.

*10-20% seems like a high % when you are young and have frak-all in income coming in, but it’s what you need when you get old.

I’m 37 and have about $150k in a DC plan with a major financial institution that I work for.

Is that $150k your contributions, or what you figure your plan should be worth?

If I quit my pension (I think) is transferable since I paid into it and the company matched.

Find out for definite. Mine says up to the age of 54 I can roll my pension into a LIRA or transfer it.

#134 Sheane Wallace on 08.10.16 at 2:34 pm

Blockchain is misunderstood, over-hyped and has no future.

Nobody in their right mind would trust a central repository for all financial transactions and accounts.

I won’t. And my banks would not either. Or else it won’t be my bank any more.

There is already SWIFT for inter-bank transfer of funds.

#135 Smoking Man on 08.10.16 at 2:53 pm

#101 James on 08.10.16 at 10:28 am
Dan Rather, formerly of CBS Evening News, took to Facebook in a scathing rant after Donald Trump implied that people with guns could stop Hillary Clinton as president from appointing anti-gun judges.
……………………
Dan Rather?

You’re a celebrity worshiper too, who would have known.

Trump gets zillions of death threats a day. He cracks a joke and all you lefties are out to hung the bugger.

Seen you all in Action with Rob Ford.

I have zero respect for your type…

#136 GarthAlwaysBlocksMe on 08.10.16 at 3:07 pm

Isn’t this hysterical? Bernanke says July 2017 for next rate hike!
http://www.cnbc.com/2016/08/10/former-fed-chairman-ben-bernanke-says-janet-yellen-and-the-fed-are-not-going-to-be-raising-interest-rates.html

And guess what? As nations continue their currency wars and lowering of interest rates there will be no meaningful correction in housing market. Additionally, with over $13 T of sovereign debt with negative yield….government is creating a bubble in the stock market as investors have no where to go. Don’t believe me: it is no real secret why stock markets are at all time highs and yet corporate earnings have been declining for 2 years.

#137 Penny Henny on 08.10.16 at 3:07 pm

#126 bdwy sktrn on 08.10.16 at 1:48 pm
#102 Context on 08.10.16 at 10:32 am
#98 Ace Goodheart :- You guys are concentrating on the properties that are listed because your missing at least a thousand or more in the greater area that are being rented out which are hidden.
—————————————–
makes good sense to me.

i know that when i want to rent out a suite i am always sure to get lots of good pictures (lighting!), write a clear and positive description , clearly lay out the costs and what is not included (utils etc.) and then hide it really well in the dark web so you or anyone else can’t see it. \
very logical.

i plan to do the same when it comes time to sell the 604 shack. i figure i can get 1.6 on mls with or without a realtor.

but i’m sure to get 2+ if i hide the listing so it is invisible to all.

thanks for the valuable info old man!

—————————-___________________

Broadway you still don’t get it do you.
You don’t hide it on the deep dark interweb to get more, you do it to get less.
Repeat after me. Less is more.

#138 Bram on 08.10.16 at 3:08 pm

#117 TurnerNation on 08.10.16 at 12:05 pm

Now, a burger +beer there is $27-28 plus tax and tip. Only in Kanada.

Any restaurant running at full capacity, with wait lists, should increase prices.

Not increasing prices when demand exceeds supply is really bad business practice.

#139 Moron Face on 08.10.16 at 3:17 pm

Trump will lose Utah, Georgia and Florida – all very Republican friendly states. He will lose by one of the largest margins in the electoral history of the United States.

#140 Moron Face on 08.10.16 at 3:18 pm

Trump is “crash landing” the Republican party. What’s left of the Republican party when he is finished will take more than a decade to put back together again.

#141 Moron Face on 08.10.16 at 3:19 pm

The S&P 500 and the global stock market will rally significantly after the election. All of the “scared” money will rush back in. S&P 500 to 4000.

#142 Ace Goodheart on 08.10.16 at 3:22 pm

RE: #120 Noel

“Yeah, but those places are also super boring, with few job prospects and filled with conservative leaning people. Life’s too short to waste in a place you hate, if you can afford to live somewhere better.”

Totally agree. Have lived in various backwater locations in Ontario and while the housing is cheap, there are significant problems with employment and the weird behaviours/conservative attitudes of the locals. I have found entire streets where everyone is related to everyone else. I’m talking extreme conservative attitudes, stuff that I just can’t stomach. I can’t do it. Toronto is my home for the forseeable future, unless I ever decide to move out West (though not likely as I don’t like Vancouver and there’s really nowhere else).

RE: #122 Grey Dog:

“A cottage will NEVER be in my future!”

Yeah I understand you completely on that one. As I said, we got ours for almost nothing and we don’t owe anything on it. We also got a boat for like a grand, that works but is 30 years old, one of those old Chevy V6 jobs that used the Astro Van engine. Fast, fun, sucks gas like you wouldn’t believe though, and if it breaks, throw it away and find another one.

The cottage experience in a nutshell: Owning a substandard building that is going to have serious structural problems (they don’t usually have proper foundations, ours moves around each winter and in the spring we have to go underneath and shore it up), serious insect and rodent problems (right now it is being eaten by carpenter ants, has two large hornet nests in the attic, has mice and various other unidentifiable creatures) and very sporadic electricity service (if there is a thunder storm, power goes out for three days…we dragged an old 1990’s diesel VW golf up there with a rusted out body that still runs. Fill the tank with diesel with a Jerry can, start her up, hook up to an inverter and we can run the water pump and refrigerator – not kidding, that is our “generator”).

If you are really nuts and want to experience a sobering awakening as to the benefits of indoor plumbing, city water, reliable utilities and the reasons why we have building codes, buy a cottage.

#143 rainclouds on 08.10.16 at 3:26 pm

#109 Joe Schmoe

Yup, used Car cost a couple of times. $300 over manufacture price with all incentives and financing.

First Went to the showroom and test drove a few models, had to take a shower after listening to the showroom weasels “pricing”

Next Sent out the request Via Carcost to the dealers on the web, bids come back from the fleet dudes as opposed to the predators on the retail floor.

We had a good laugh when he asked if I wanted the 0% 60 month financing. Duuuh of course.

Best part is when (post sale) he handed me off to the showroom sharks to run through the features…they were pleased:-)

Only an idiot, masochist or somebody who likes to grind would go the traditional route.

PS: Portfolio punched through an all time high. Moved up 120k from Brexit fallout to present, Thanks GT!!

#144 Brazil ex-pat on 08.10.16 at 3:27 pm

#130 Sheane Wallace on 08.10.16 at 1:58 pm
#117 TurnerNation on 08.10.16 at 12:05 pm
Ah Keg income fund raising their monthly payouts.
Explains menu price hikes. Transfer of wealth.

Now, a burger +beer there is $27-28 plus tax and tip. Only in Kanada.

————————-

Mark’s ‘deflation’ in action. It will go up to 37-40 (burger + beer), give it 2-3 years.

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

It also explains why we stopped going there years ago. 26 bucks for prime rib and fried onions? Veggies are extra in Canada you know……

#145 Bram on 08.10.16 at 3:40 pm

#129

Dunno, 2.5 seems way too low.
2 mo ago or so, I saw a tear down on 33′ two blocks east of there go for 2M.

So that makes the 50ft lot a 3M lot, and no way you can build that house plus lane way for under 1M.
So 4M seems doable, even considering a 20% drop after foreigner tax.

#146 jess on 08.10.16 at 3:41 pm

SWIFT does not facilitate funds transfer: rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other.

FIGHT OVER LIABILITY

Fri May 20, 2016 3:17pm EDT
Related: Tech, Cybersecurity
Special Report: Cyber thieves exploit banks’ faith in SWIFT transfer network
..The BDA-Wells Fargo case is unusual in that one bank took its correspondent bank to court…
=====
Unveil Blockchain Supply Chain Project
Banking giants Bank of America and HSBC have teamed up with the Singapore .

#147 Smoking Man on 08.10.16 at 3:44 pm

#139 Moron Face on 08.10.16 at 3:17 pm
Trump will lose Utah, Georgia and Florida – all very Republican friendly states. He will lose by one of the largest margins in the electoral history of the United States.

#140 Moron Face on 08.10.16 at 3:18 pm
Trump is “crash landing” the Republican party. What’s left of the Republican party when he is finished will take more than a decade to put back together again.

#141 Moron Face on 08.10.16 at 3:19 pm
The S&P 500 and the global stock market will rally significantly after the election. All of the “scared” money will rush back in. S&P 500 to 4000.
………………..

Wishful Bias…..

#148 Nemesis on 08.10.16 at 4:11 pm

“My point is simple. Never count on wealth you do not possess. There are many (and growing) instances of pension benefits being altered, reduced or eliminated. A future pension benefit is a vastly different thing than an investment account or RRSP that a person controls directly, and can count on. Obviously.” — ElPredictoGartholomew

#FunnyYouShouldSayThat,Or… #PostmanPatIsNotAmused…

[Telegraph] – More than 90,000 Royal Mail told their final-salary pension is ‘unaffordable’ and may close

…”More than 90,000 Royal Mail staff have been warned that their final salary pension is “unaffordable” and could be shut down, as experts warn a raft of other private companies will follow suit.

Royal Mail has written to employees telling them their “gold-plated” pension scheme may be closed because a deterioration in financial market conditions means it is likely to become too expensive to run beyond 2018.”…

http://www.telegraph.co.uk/news/2016/08/10/more-than-90000-royal-mail-told-their-final-salary-pension-is-un/

#149 Context on 08.10.16 at 4:12 pm

#137 Penny Henny :- Buying and selling a property is a different matter. Never sell unless it is listed with an experienced agent keyed to market value and make sure the closing is done with a good lawyer because the last thing you need are complications. Buying a property can locate a bargain, but let a good lawyer execute the agreement of purchase and sale with the closing. Use a law firm with numerous lawyers as their insurance policy is bigger and this covers any mistakes that can be made.

#150 Smoking Man on 08.10.16 at 4:21 pm

This world is getting more insane by the minute.

You can walk into a bar a say, Black Lives Matter. Someone might punch you.

You can walk into a bar a say, White Lives Matter. Someone might punch you.

You can walk into a bar a say, All Lives Matter. Someone might punch you.

If you want to stay safe.

Walk into a bar a say, No Lives Matter.
No one will give a shit.

#151 James on 08.10.16 at 4:29 pm

#135 Smoking Man on 08.10.16 at 2:53 pm

#101 James on 08.10.16 at 10:28 am
Dan Rather, formerly of CBS Evening News, took to Facebook in a scathing rant after Donald Trump implied that people with guns could stop Hillary Clinton as president from appointing anti-gun judges.
……………………
Dan Rather?

You’re a celebrity worshiper too, who would have known.

Trump gets zillions of death threats a day. He cracks a joke and all you lefties are out to hung the bugger.
Seen you all in Action with Rob Ford.
I have zero respect for your type…
……………………………………………………………..
The feeling is mutual!

#152 BOOM! on 08.10.16 at 4:35 pm

Everybody is ‘worried’ that Trump is ‘crashing’ the Republican party.

I’m worried that Hillary is ‘crashing’ the democratic party.

BOTH parties have selected their fates by their policies / followers.

Republicans, the so-called ‘conservatives.’ The same old cut taxes, increase corporate welfare bologna they have been selling since before the financial crisis. They then embraces the Tea Party movement… Exactly what did that bring? Donald T. Rump to wit, er, make that twit…

Where are the Nelson Rockefeller moderates in the republican party today? Are they all dead?

Hillary. Not sure what to make of this one. Democrats have changed since being spurned by Big Labor in the late 60’s over Viet Nam. The young decided to get their money from the same sources as the Republicans, and we can see where that has left big labor today – no where.

Who would a working man vote for today?

Yup, neither party as far as I can see. Time to invest ones time and efforts elsewhere, there is nothing “there” for us.

#153 bdwy sktrn on 08.10.16 at 4:43 pm

#145 Bram on 08.10.16 at 3:40 pm
#129

Dunno, 2.5 seems way too low.
2 mo ago or so, I saw a tear down on 33′ two blocks east of there go for 2M.

So that makes the 50ft lot a 3M lot
——————————————–
over here off the drive 1.6 for a 33′ teardown and 2.2m for a 50’er seems like the recent highs.

i guess we are just the ghettos compared to an address so close to the west side you can smell the grey poupon!

#154 gold leverage? on 08.10.16 at 4:45 pm

DELETED

#155 bdwy sktrn on 08.10.16 at 4:45 pm

You can walk into a bar a say, Black Lives Matter. Someone might punch you.

You can walk into a bar a say, White Lives Matter. Someone might punch you.
———————————–
look at what racism has done – so tragic.

http://lolworthy.com/funny/black-labs-matter/

#156 Smoking Man on 08.10.16 at 5:06 pm

#155 bdwy sktrn on 08.10.16 at 4:45 pm
You can walk into a bar a say, Black Lives Matter. Someone might punch you.

You can walk into a bar a say, White Lives Matter. Someone might punch you.
———————————–
look at what racism has done – so tragic.

http://lolworthy.com/funny/black-labs-matter/
……………………..

All the race baiting going out there is driven by the parasites in MSM, you know, real estate always goes up.

What is magnificent about trumps campaign, he is bringing to the surface the true ugly face of MSM.

And the vial aggressive mean-spirited left for all to see.

The snowflakes push inclusion while they practice exclusion.

James just lives on here to attack me on a daily basis. He must be scratching the left side of his head wondering why I don’t just ignore him like all other sensible people.

I ain’t exactly normal, proudly so might I add….

#157 wally on 08.10.16 at 5:21 pm

79 Metaxa – the way it was explained to me by the sales manager was that ‘head office’ was subsidising the interest costs for financing, and none of these costs trickled down to dealer level….. I figure this cost them something at or below 2% per annum with today’s loony rates. I guess they suck it up because it’s cheaper than the cost of not moving cars and scaling back production.

So, what I was told by the business manager at the dealer was that the only difference between 100% financing and cash payment is who signs the cheque, or whose account the electronic transfer comes from.

Frankly, I trust most of you guys as far as I can throw you, so, I don’t know whether that’s the truth, but, it sounded plausible.

FWIW this company did not have its own finance arm, in Canada they were partnered with one of the major banks.

#158 Smoking Man on 08.10.16 at 5:35 pm

Currency wars on. Just in.

New Zealand cut its Official Cash Rate by 25 bps

#159 Shawn on 08.10.16 at 5:40 pm

A DC Pension is basically an RRSP

#133 tkid on 08.10.16 at 2:30 pm responded to 116:

#116 Does your pension comment apply to those with a DC?

Yep. Think of a pension as the gravy. It’s nice to have, but don’t rely upon it. Don’t use a pension as the reason why you don’t put aside about 10-20% of your income every year into RRSP/TFSA/Non-Registered accounts.

***************************************
A DC pension is every bit as reliable as an RRSP. It’s your money and you have some control over it wile you are working (some choice of investments). You have TOTAL control of it after retirement or separation from the funding company. It’s basically like an RRSP except the employer funds it (fully or partly). It’s not fully self-directed during the employment phase however but can be upon retirement.

Sure, agree, fund your RRSP as well.

But the original statement was that a (DB) pension is not part of your net worth. I disagree with that. But a DC pension is certainly part of net worth since it is an individual account and does not die when you do.

#160 Shawn on 08.10.16 at 5:55 pm

Here’s A Reason To Like Pensions

Imagine you have $5000 a month pension income and are retired. How much of that will you feel comfortable spending. I would guess most retirees would be comfortable spending pretty much all of that knowing that every month for life comes a new $5000. And if its a joint life pension, it continues until the death of both spouses although often reduced by a third on the death of the first to die.

Now, imagine that you instead have $1,200,000 in an RRSP. At 5% that will also kick of $60k per year or $5000 per month.

But NOW how much of that are you comfortable spending? If you are under age 71 you likely incur tax on every extra dollar you take out to spend. You are not sure how long the money will last. Now you may feel guilty spending your $5000 per month. You may end up spending more like $2500.

A lot of savers have trouble learning to spend rather than save in retirement.

So I like the pension for guilt free spending. For me RRSP money remains untouchable until age 71 since I prefer to keep it growing tax free. Or at least untouchable until I hit a year where my marginal tax rate is pretty low on any withdrawals. Even then I find it hard to think about drawing down an RRSP after decades where the goal was always to built it up. Yes, I hope to create a huge “tax bomb” the bigger the better. The only thing worse than having to pay a ton of taxes is … not having to because of low income.

#161 Ace Goodheart on 08.10.16 at 7:39 pm

RE: #143 rainclouds:

“PS: Portfolio punched through an all time high. Moved up 120k from Brexit fallout to present, Thanks GT!!”

I’m up 14% overall from this time last year (August 10th, 2015). Recession, what recession? Investment strategy? Purchase high quality, beaten down stocks with lots of upside potential. I’m digging into oil companies right now. If all goes well I should be able to run another 14% upwards this time next year. People forget we all drive cars and everything is made out of plastic. Oil is not worthless.

#162 RedditAdvice on 08.11.16 at 8:37 am

Here’s some advice Garth would love: https://www.reddit.com/r/ontario/comments/4x1lj6/lottery_curse_claims_another_victim_with_ontario/d6cadea

Yes, but paying car payments is stupid if you have the cash … Unless you want some 8 year 2% loan hanging over your head.

Realistically if you’re young I’d pay off a house first, pay off your mode of transpo next. Invest for your kids after that, and then circle back to clean up your life (renovations, education for yourself, etc) and then what’s left over split between long term retirement savings and generally dicking about.

Paying off a 2.4% mortgage instead of investing for your children is completely irresponsible, and illogical. — Garth

#163 darkselling on 08.11.16 at 11:18 am

#133, thanks for the respond.

#116 Does your pension comment apply to those with a DC?

Yep. Think of a pension as the gravy. It’s nice to have, but don’t rely upon it. Don’t use a pension as the reason why you don’t put aside about 10-20% of your income every year into RRSP/TFSA/Non-Registered accounts.

*10-20% seems like a high % when you are young and have frak-all in income coming in, but it’s what you need when you get old.

I’m 37 and have about $150k in a DC plan with a major financial institution that I work for.

Is that $150k your contributions, or what you figure your plan should be worth?

If I quit my pension (I think) is transferable since I paid into it and the company matched.

Find out for definite. Mine says up to the age of 54 I can roll my pension into a LIRA or transfer it.

#164 darkselling on 08.11.16 at 11:25 am

#133, THANKS FOR THE RESPONSE

#116 Does your pension comment apply to those with a DC?

Yep. Think of a pension as the gravy. It’s nice to have, but don’t rely upon it. Don’t use a pension as the reason why you don’t put aside about 10-20% of your income every year into RRSP/TFSA/Non-Registered accounts.

*10-20% seems like a high % when you are young and have frak-all in income coming in, but it’s what you need when you get old.

WE DON’T DO RRSPS BUT HAVE MAXED OUT TFSA’S AND HAVE OTHER FUNDS IN OTHER INVESTMENT VEHICLES. 2 PRIVATE COMPANIES THAT WILL QUALIFY FOR CAP GAINS EXCEPTIONS WHEN SOLD AND THEN FUNDS WILL BE MOVED INTO TFSA OR RRSP. I EXPECT TO BE AT A HIGHER TAX RATE IN THE FUTURE AND WHEN RETIRED THAN I AM TODAY SO MIGHT CONTRIBUTE DOWN THE LINE

I’m 37 and have about $150k in a DC plan with a major financial institution that I work for.

Is that $150k your contributions, or what you figure your plan should be worth?

I’VE LIKELY CONTRIBUTED CLOSE TO ~$100K-120K AND HAD SOME RETURNS OVER 10 YEARS.

If I quit my pension (I think) is transferable since I paid into it and the company matched.

YEAH, LOOKED AT OUR BOOKLET, IT’S TRANSFERABLE TO A LIRA, TO ANOTHER PLAN WITH ANOTHER COMPANY OR I CAN LEAVE IT UNDER THE COMPANY DC PLAN. IF I’M 50 I CAN UNLOCK 50% THE ACCOUNT.

OR

TRANSFER TO THE GRS PERSONAL PLAN RRSP
TRANSFER TO ANOTHER REGISTERED PLAN
LEAVE IT GROWING
RECEIVE LUMP SOME CASH PAYMENT

Find out for definite. Mine says up to the age of 54 I can roll my pension into a LIRA or transfer it.

#165 Robert on 08.11.16 at 3:33 pm

#104 – that’s incredible.

I can’t believe that house is listed for $5.2M. Such an ugly house. Love the concrete back yard, crappy two tables behind the garage and junky bungalow house as a neighbor. And it’s not even on the West Side. If that sells for asking Vancouver is even more toast than I thought.

https://www.realtor.ca/Residential/Single-Family/17264341/40-E-48TH-AVENUE-Vancouver-British-Columbia-V5W2C6