The clueless

Jen makes big money. “Between four and five a year,” she tells me, “depending on billings.” She’s a anesthesiologist. I had no idea. She has $1 million in cashable short-term GICs at the Royal Bank (paying 0.7%). Phil’s at home (which is worth $2 million) on paternity leave for another five months. He earns a quarter of Jen’s take as an IT guy. No TFSAs.

In their forties, they’re rich by all measures, but financially clueless. Separate bank accounts. No joint assets. Two kids, no wills. Most family wealth is stuck in the name of the person in the 53% tax bracket. Huge income. No pensions. Success in spite of their best efforts to make mistakes.

Yeah, financial planning is hard, like math. But unlike the latter, nobody teaches you about tax shelters, investment assets or income-splitting. You have to pick it up in bank washrooms or on dodgy websites. It’s an interesting society we’re in when people can buy a two-banger house, make five times the average income, hold an esteemed professional position, and know diddly about money. That’s the mission of this pathetic blog. Saving Canada, one confused medical professional and IT dude at a time.

So it’s January, which is a good time to begin. I gave Jen & Phil some lessons in TFSAs (“First, never pronounce it ‘tiff-sa’… so embarrassing… ”) as well as what to do about RRSPs. The first thing to remember is the first place to put money – the tax-free accounts. The full limit has reached more than $100,000 per couple now, which means these are serious vehicles. If this couple keeps theirs topped up for 25 years with growth assets, they should have $1.26 million by the time thirsty underwear days arrive. That will provide an annual income of almost $90,000, which can be withdrawn 100% free of tax. That’s equal to almost $180,000 in earned income – and it doesn’t even mean a clawback of the government OAS/CPP pogey.

“So I should put the GICs in there?” Jen asked. After I recovered, I said no. Never ever waste a great tax shelter on interest-bearing assets. You are anaesthetizing your money, I said. (She got it.)

They also had no real idea of the difference between their TFSAs and RRSPs. Many don’t. They foolishly believe what the names imply – tax-free savings accounts are for saving and registered retirement accounts are for retiring. Silly people. In reality TFSA are for heavy-duty, growth-oriented investing while RRSPs are for tax-shifting – reducing the burden by moving taxable income from one phase of your life to another.

For example, Jen might have pumped money into a spousal plan in Phil’s name years ago, so he could draw it out while on paternity leave. That way she would receive a massive benefit (thanks to her tax bracket) while he could cash the plan in when not working, at minimal cost. Voila. Income-splitting and tax trashing.

Likewise, Jen has a big paycheque now but no assured income after retirement. So instead of drawing dividends from a medical corporation (like her misguided friends), she should take salary, earn RRSP room, then smash her maximum $25,370 annually into plan contributions. In retirement, in a lower tax bracket, she can retrieve the money at a fraction of the benefit she received investing it. Tax-shifting.

Of course, Jen needs to redeem her GICs and have a balanced, diversified, Trump-friendly portfolio put together for predictable long-term growth. She and Phil need to tear down the border wall between them and co-mingle their finances. With a joint non-registered account they can not only attribute at least half the gains to the lesser-taxed spouse, but also protect their family. That’s because with a joint account all assets automatically become the property of the other partner if one person walks in front of a streetcar. Or whispers ‘climate change’ near a Trump supporter.

And if Jen finds she messed up and got locked-in GICs instead of the cashable type, she can always make a ‘contribution in kind’, sliding the existing brain-dead assets themselves into her RSP (or Phil’s spousal). So for moving stuff she already owns into the plan she’ll get a fat refund cheque sent to her by the government. That’s because RRSPs favour the rich, and the more you make, the more you benefit. But don’t tell the deplorables.

130 comments ↓

#1 mitzerboy aka queencitykidd on 01.31.17 at 6:10 pm

garth you made non-fake newz again

#2 I Hate Realtors! on 01.31.17 at 6:12 pm

When is the veil going to be lifted on these scammers? They keep peddling their fake news to the ignorant masses. It seem everyone, including the government and these corrupt real estate boards are trying to artificially keep this market humming along. TREB says it’s a supply issue – ya right, raise the rates and you will see how much supply comes onto the market without having to pave over the green belt!

#3 X on 01.31.17 at 6:13 pm

If Jen and Phil were to move their holdings from their individual non registered accounts, into a joint non registered account, would there potentially be taxes payable, or can the holdings simply be moved into the joint account with no immediate tax consequences?

#4 Doug t on 01.31.17 at 6:13 pm

She makes how much? What a gas

#5 I am the mighty Oz on 01.31.17 at 6:18 pm

#162 Aaron on 01.31.17 at 5:16 pm
Not sure if anyone has noticed this new part of tax returns in Canada: (from TurboTax)

If you’re a homeowner or just sold your home, here are changes that may be most relevant to you:

Sale of a Principal Residence: In years past, the sale of your home (principal residence) didn’t show up anywhere on your tax return unless you had special circumstances (using part of your home as a rental, capital cost, etc.) For 2016 and beyond, taxpayers who sell their principal residences must include information on the sale on their tax returns. Although the capital gain rules haven’t changed – any gain realized from the sale of your primary home is still exempt from tax under most circumstances– CRA now wants the information recorded on your return.

My question is what will the CRA do with the information – this might open the door in the future to tax, as unpopular as it may be

tax rebates for renos on principal residences since 2011(?)
add a tax free gain when selling
maybe the government thinks the non homeowners and non renovators didn’t notice

#6 not 1st on 01.31.17 at 6:25 pm

Jen better not get cocky…

http://www.popsci.com/meet-machine-could-replace-anesthesiologists

#7 Alice on 01.31.17 at 6:29 pm

Looks like real estate agents are fudging numbers again.

https://betterdwelling.com/city/toronto/toronto-luxury-real-estate-grew-but-probably-not-as-much-as-you-think/

#8 Alice on 01.31.17 at 6:30 pm

Gosh darnit, between 4 + 5 figures. I should have been an anesthesiologist. Finance sucks in contrast apparently.

#9 Kevin's Fanzone on 01.31.17 at 6:32 pm

The Surfer Dude’s newest spew is amazing. I feel I need to inform people when I am abroad that Canadian healthcare is far from free. In BC we pay about $175 a month for our free healthcare. Dentistry is not free. Glasses, contacts and prescriptions are not free. Fertility treatments (you know – because our birthrates are falling) is not free. And the list goes on.

Which reminds me. We have tens of billions for refugees and immigrants but ZERO money for Canadians having problems reproducing. WHAT? Who makes these absolutely retarded decisions? Oh right, our Government.
And people are wondering WHY Kevin O’Learly will be the next PM?

This bring us to the latest from the Surfer Dude. For those few who work for a private company and get benefits, the Surfer Dude wants to TAX those benefits. I assume it is so he can pay for the bloated public service who also get FREE BENEFITS courtesy of the taxpayer.

2019 can not come fast enough.

http://news.nationalpost.com/full-comment/john-ivison-millions-of-canadians-will-pay-at-least-1000-more-if-ottawa-taxes-health-and-dental-plans-study-finds

#10 Debtslavecreator on 01.31.17 at 6:34 pm

Way to go Jen
You deserve to make a lot of money and enjoy it
We need more high income earners in this nation
Glad to see a family doing well

#11 InvestorsFriend on 01.31.17 at 6:36 pm

RRSPs favour the rich?

Indeed so. The world favors the rich. It’s good to be rich.

Getting rich is worth striving for. The definition of rich is a moving target but nevertheless…

#12 will on 01.31.17 at 6:48 pm

re: tfsa, we should just call it a TFIA – Tax Free Investment Account. (Tiffeeyah!)

#13 Nemesis on 01.31.17 at 6:52 pm

#TuesdayMischief,Or… #BornToBeRiled… #HogManufacturer’sCorporateImage… #TrumpsPresidentialVisit…

[TheHill] – Trump cancels Harley Davidson factory visit over planned protests: report

…”President Trump’s scheduled trip to a Harley Davidson factory in Milwaukee, Wisc., on Thursday has been cancelled over the likelihood of protests, CNN reported Tuesday.

An administration official told the news network that the plans were scrapped after the motorcycle giant became uncomfortable with the threat of demonstrations.”…

http://thehill.com/homenews/administration/317221-trump-scraps-visit-to-harley-davidson-factory-after-company-became

#14 AK on 01.31.17 at 6:57 pm

The Dude with the 1988 Desktop, may require a Printer as well.

#15 Moses on 01.31.17 at 7:00 pm

Garth TREB just said Toronto housing prices to increase by double digits in 2017. How close are we to having the biggest real estate bubble of any country in history? Just wondering

#16 conan on 01.31.17 at 7:08 pm

It was not too long ago when everyone needed to own a big ass monitor or tv—– Don’t forget the big ass cabinet designed to hold such tech antiques.

My first flat screen purchase was at Best Buy. They were still trying to sell their unwanted Sony Trinitrons. TVs that used to command a couple of grand were now sold by the pound, no takers.

#17 S.Bby on 01.31.17 at 7:09 pm

#9 Kevin’s Fanzone

The taxpayers have to pay for stuff like this:
http://www.cbc.ca/news/politics/civil-servants-share-6b-severance-without-losing-jobs-1.1227689

and this:
http://globalnews.ca/news/3183930/ottawa-has-paid-out-3-7-billion-so-far-to-end-public-service-perk/

It’s a good thing we all live in multi-million dollar houses that we can sell tax free.

#18 TimV on 01.31.17 at 7:14 pm

Okay, payscale.com puts the median anesthesiologist at around $200k, so she must be either highly specialized or working a lot of hours. It didn’t seem right for her’s to be an average anesthesiologist salary for Canada.

Three bills is normal for that job. Add in a Toronto premium. — Garth

#19 jess on 01.31.17 at 7:16 pm

deplorable!

Deutsche Bank fined by regulators over money laundering claims (31 Jan 2017)
Deutsche Bank Fined in Plan to Help Russians Launder $10 Billion (31 Jan 2017)
Deutsche Bank Ends N.Y. Mirror-Trade Probe for $425 Million (31 Jan 2017)
DFS FINES DEUTSCHE BANK $425 MILLION FOR RUSSIAN MIRROR-TRADING SCHEME (31 Jan 2017)
FCA fines Deutsche Bank £163 million for serious anti-money laundering controls failings (31 Jan 2017)

#20 Duncan on 01.31.17 at 7:16 pm

Any thoughts on leaving the extra cash in the corporation (or in an arms length holding company), paying the much lower small business tax rate and maintaining full control over how it is invested and withdrawn (as an alternative to smashing it into an RRSP). That money can then be invested in the corporation and taken as dividends in later lower tax/retirement years.

I know the RRSP contribution is zero tax, but you are also stuck with all of the RRSP withdrawal/withholding tax/RRIF/Annuity malarkey to deal with.

Non-operating small business corps are sitting ducks for being reclassified as passive enterprises and taxed at the highest marginal rate. The CRA knows exactly why you are doing this, and will act accordingly. — Garth

#21 The Totally Unbiased, Highly Intelligent, Rational Observer on 01.31.17 at 7:18 pm

“Or whispers ‘climate change’ near a Trump supporter.”–G.T.

Aha!!! I heard that!!!

The January 20, 2017 inauguration of Donald J. Trump as the 45th president of the United States will bring about a new golden age for the so-called “scientific community” in America. Scientists will no longer be muzzled and forced to support political agendas devised by shameful traitors to the American way of life. Now, scientists will finally be free to come to the right correct conclusions, instead of being forced by man-made global warming thugs to come to all the wrong politically correct conclusions.

Finally, science will be done right again, and will once again become a real joy. Little school children will once again be able to go home and enjoy playing with their toy dinosaurs. No longer will a generation of school children be frightened by shameful adults telling them scary, man-made global warming fibs to mess up their innocent little minds for life. The depressing bad guys who were All Gore and No Good have now been Trumped by a man who is all optimism and sunshine and money and pretty women and common sense. It does not get much better than that for the cause of true science.

But, just how did the man-made global warming scammers come up with their advertised “96% consensus among scientists” that their deliberate, outright fibs had some truth in them? The short and simple answer is that 90% of data is just made up anyway (source: Wally in the Dilbert cartoons). Other, more reliable sources say that 100% of the man-made global warming data was made up. But there is an even deeper and more disturbing aspect. To truly understand it, we need to consider the history of scientists from the very earliest known times. We need to go all the way back to World War II. This historical perspective will help us to understand the true nature of the “scientific” mind and how it operates.

Scientists have always been the slaves of their political masters. During World War II some of the brightest scientists around, the rocket scientists, worked in Nazi Germany for a mean-spirited and vindictive old fart by the name of A. Hitler. They obediently did as they were told, as is the nature of scientists. They worked wherever there was a paycheck. They worked for whoever gave them a paycheck. They did whatever they were told to do for the paycheck. Like scientists tend to do, they made their invention sound innocuous by calling it the A-4. In a Freudian slip, their puppet master A. Hitler called it what it really was: Vengeance Weapon #2, or V-2 for short. The rocket scientists later claimed that they were really shooting for the moon. Usually, they hit London, England instead.

After the war, the luckier rocket scientists were brought to America under Operation Paperclip, where they got to work for their new political masters and serve a better cause. Their Nazi pasts got expunged from the official records, their reputations got retroactively rehabilitated, and they slipped into the history books as space explorers who had just gotten a little sidetracked during the war. They went on to spend billions of American taxpayer dollars on some pointless, artificial, ego-driven, race to the moon that some political hack came up with to get the voters’ minds off his personal affairs–and I do mean his personal affairs.

Less lucky rocket scientists ended up in Russia working for their new political masters over there and serving another bad cause. All the German rocket scientists, wherever they ended up, were relatively lucky, considering that A. Hitler had planned to have them all executed rather than let them fall into enemy hands. Scientists truly are at the disposal of their political masters.

So, we see that scientists do whatever their political masters tell them to do, no matter how morally questionable, for the money. Now where have we seen that sort of behavior before? And what inevitable conclusion does this lead to? That’s right. You guessed it. Modern scientists are just a small subset of those oldest known professionals called prostitutes. The main difference is that, due to the nature of the job, the scientists are forced to sell their minds too as well as their bodies.

Since scientists have done such great and wonderful things for humanity as designing intercontinental ballistic missiles with nuclear payloads, everyone looks up to them with shock and awe. This adulation of those who come up with faster and more efficient ways to kill everyone on earth has led to every scammer and con-artist pretending that his own selfish agenda is based on “science” too. Unfortunately, the cause of true science got set back literally hundreds of years (or at least until January 20, 2017) by some political, man-made global warming scam. Scientists logically and obediently followed the money and did as they were told by their political masters. They produced the “research” that they were paid to produce. They did not want to be blackballed and have their careers ruined by being labelled “deniers,” or even “skeptics,” after their political masters had already decided what “science” results they wanted and had already loudly and firmly and arbitrarily decreed that the debate was already over before it had even begun and that the “science” was “settled.” With all their higher education, scientists are usually smart enough to figure out who they need to please, and what conclusions they need to come to in order to please them, if they want to get any research grants or ever see another paycheck.

One of the truly great things about a president like Donald Trump who is 70 years old is that he has been around so long that he will have so much experience, and know so much, and have so much common sense, that he will not be fooled by all the fake “science” and its hot air. He will look at the cash flows, and know right away what is going on. He will tweak the cash flows. Then, all the cowardly “scientists” who previously were intimidated by all the corrupt politicians will suddenly be able to quietly and discretely and safely shift over to the right and true and good side of the issue and form a 106% consensus that man-made global warming is really just intimidation and not really science at all. In fact, being so practical, and such fast learners, you can expect 102% of scientists to soon make it sound like they were among the 4% of scientists who previously questioned the whole hot air scam.

#22 crowdedelevatorfartz on 01.31.17 at 7:27 pm

“First, never pronounce it ‘tiff-sa’… so embarrassing… ”

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

I know a person at work who says, “Those ‘RissPahs”(RRSP’s) are a scam! The govt is just waiting for later to steal your money”.
He lives pay cheque to pay cheque.
Doesnt have a pot to piss in or a window to throw it out of…..

#23 Mad cow on 01.31.17 at 7:33 pm

Garth, question on having a joint non registered account… Since Jen is earning 4x her husband, could the cra argue that at least 80% of the income should be taxed in her hands? I always thought 2 accounts and a loan at the prescribed rate was needed to avoid attribution rules for income splitting purposes.

#24 AB Boxster on 01.31.17 at 7:38 pm

#18 The Totally Unbiased, Highly Intelligent, Rational Observer

———————
The 98% consensus would have more authority if it came from Dilbert than if people knew the actual source.

http://www.forbes.com/sites/larrybell/2012/07/17/that-scientific-global-warming-consensus-not/#5fe5a54d1690

Global warming may have some validity, but the 98% figure is a work of fiction.
As is the wage gap myth mentioned in a recent blog – you sure blew that one Garth.

Otherwise, excellent article today.

#25 I'm stupid on 01.31.17 at 7:43 pm

Hi Garth

Can you ask one of your wiz partners, how much the Canadian gov’t would lose in tax revenue, if everyone took advantage of all the tax cuts that they’re entitled to.
And you wonder how a highly educated person can have no clue about money. It’s not in the best interest of school boards to teach them about personal finances in high school. Just my opinion!

#26 Keith on 01.31.17 at 7:49 pm

#9 Kevin’s Fanzone:

Take a deep breath, or two or three and relax. There is no politician in Canada stupid enough to introduce a broadly based, four figure tax measure that will be visible on the pay stub. Hitting up the masses requires a more subtle approach, even in a country of financially challenged citizens such as Gaspasser + IT.

This is called a trial balloon, a political tactic that dates back forty years or more. A policy is leaked to the press and press and public reaction is monitored. There are two purposes of a trial balloon. One is to test the waters of a policy change or program under consideration. Clearly not the case here, this kind of taxation would be political suicide.

Second reason is to distract the opposition, the press and the public. Give them something to calculate impacts, clog up question period, fill up the talk radio agenda. It’s a bunch of hot air designed to occupy people minds, give them something to debate about and get hot under the collar while the real work of government goes on. This measure will not see the light of day and will be forgotten within six months.

#27 paul on 01.31.17 at 8:02 pm

15 Moses on 01.31.17 at 7:00 pm

Garth TREB just said Toronto housing prices to increase by double digits in 2017. How close are we to having the biggest real estate bubble of any country in history? Just wondering.
———————————————————-
There is no inventory and getting tighter, The sellers are
in total control. Listing sitting back for 7 to 10 days as the buyers line up with firm over ask offers and 50 to 100k deposit. When this pops the hurt will be massive.

#28 Derkavich on 01.31.17 at 8:11 pm

Hi Garth ,

Is it true TSFA can’t be shared because it is tied to one’s sin ? can my spouse or any delicated person take my TSFA or will government confiscate it?

Thanks Garth

No. — Garth

#29 Victor V on 01.31.17 at 8:22 pm

Trump names conservative judge Neil Gorsuch as U.S. Supreme Court pick

http://www.theglobeandmail.com/news/world/us-politics/trump-supreme-court-judge-scotus/article33853422/

#30 hope & ruin on 01.31.17 at 8:31 pm

Or whispers ‘climate change’ near a Trump supporter.
_______________________

Strange to live in a time when being a supporter of the POTUS gets you mocked. Then again this blog mocked the millennials that elected T2, who is so far left he gave the NDP an identity crisis. We should start looking for the goldilocks politician.

#31 corporations on 01.31.17 at 8:37 pm

how is it misguided to own one? huh? 15% tax bracket, in retirement paid out in dividends as a shareholder, again low tax.

she will get killed in taxes with T2 new top bracket. She should be getting a salary from her corp and dividends in a tax efficient manner. AND she still can own RRSP

Nope. Topic previously covered. — Garth

#32 nbe on 01.31.17 at 8:38 pm

“You are anaesthetizing your money, I said. ”

Statements like these is what makes you so special Garth.

#33 TurnerNation on 01.31.17 at 8:45 pm

Shhh…the less they know; the more taxes paid might staunch ours. And their GICs help bank stock dividends grow.
Tuff-sa.

– Kids, strive for the Sunshine List:

http://www.cp24.com/news/opg-to-boost-executive-salaries-by-6-8m-metrolinx-proposes-100k-boost-for-ceo-1.3264897

#34 'topic previously covered' on 01.31.17 at 8:48 pm

kindly provide the link to the blog. Sorry i disagree as does many CPA, and advisors. Perhaps i’m missing your point

for very high income health professionals it’s a no brainer. Keep in mind selling one’s practice (the shares of the corp) can claim $750,000 of capital gains exception– yet another juicy reason to own one

of course, this all may change as T2 will go feasting. He’s targeting these corp’s FOR A REASON– to stop the tax advantages they provide

#35 yorkville renter on 01.31.17 at 8:51 pm

Can I sell my wife and baby shares of my corporation and award them dividends (to the maximun tax-free amount) in my CCPC?

The wife, maybe. — Garth

#36 ROTFL on 01.31.17 at 9:11 pm

Career planning, for misanthrope docs:

There are six no-patient-contact (NPC) specialties: Rays, Gas, Path, Derm, Ophthalmology, and Psychiatry.

#37 not 1st on 01.31.17 at 9:21 pm

Non-operating small business corps are sitting ducks for being reclassified as passive enterprises and taxed at the highest marginal rate. The CRA knows exactly why you are doing this, and will act accordingly. — Garth

—–

And they should be. They are essentially just running wages through a company. No assets, no expenses, no actual operations, no business risk.

#38 But... on 01.31.17 at 9:26 pm

But… but but…. if you actively invest inside a TFSA you cannot claim any capital losses incurred inside. So, it is all fine and well if you believe the odds of a gain are much higher than of a loss – but if that were a fact, than the market would already have factored that in. If you have a large potfolio, the question becomes whether certain active investments should be done inside or outside the TFSA. On the other hand dividend-paying stocks inside a TFSA does make sense, since dividends cannot go negative. But for those who do not have more savings than what is inside their TFSa, it clearly is too risky to invest much in dividend stocks. And diversification is impossible to with a measly 55k$. Right?

#39 greyhound on 01.31.17 at 9:33 pm

Today’s post is why I keep coming to this site.

#40 Smoking Man on 01.31.17 at 9:53 pm

#35 yorkville renter on 01.31.17 at 8:51 pm
Can I sell my wife and baby shares of my corporation and award them dividends (to the maximun tax-free amount) in my CCPC?

The wife, maybe. — Garth
…..

Garth aside from investing shtick. You should offer tax advice. I pinged my alcoholic account about this. He’s no clue.

I don’t need your investment stuff being the guru predicto-matic ucc visionary. But the tax shit. Sign me up.

I’ll pay 10% of what you save me vs lush boy.

#41 Smoking Man on 01.31.17 at 9:57 pm

Jesus I’m about to have a nervous breakdown. Wifypoo books a trip to Cuba. Cyco coco.

At first I thought cool. DrinkING in the Hemingway bar. I discover no wifi.

No posts no re tweets for an entire week.

Not sure I’ll survive. ..

See how evil she is. She knew it. 7 days of talking to her. With no distractions.

This might turn into a book.

Lord help me.

#42 InvestorsFriend on 01.31.17 at 10:07 pm

But… Seriously?

But… but but…. if you actively invest inside a TFSA you cannot claim any capital losses incurred inside. So, it is all fine and well if you believe the odds of a gain are much higher than of a loss – but if that were a fact, than the market would already have factored that in.

***************************************
Actually, the market is priced based on an expectation of capital gains. Why invest if you expect capital losses?

Generally the market ought to be priced for say a 7% expected return, 2% dividends and say 5% capital gains on average per year but with a WIDE variation around that.

It’s hard to beat the zero taxes in a TFSA. Jees some investors want negative tax… enough… (actually negative tax can happen but I already explained that enough times)

#43 karlhungus on 01.31.17 at 10:10 pm

As a self employed person, why not pay yourself in dividends only and be eligible for full child care benefits from T2

No tax savings as the combo of your corp and personal dividend tax equals the tax on salary, plus you earn zero RRSP room. This is a myth. — Garth

#44 Smoking Man on 01.31.17 at 10:11 pm

Book Title. Dedicated to my kids.

One week with mother on a desert island with no escape.

Oh man. No Internet no GF no twitter.. I’m going to go nuts. How I got sucked into this. No idea. I wanted the Hard Rock on punta cana.

Top less babes on the beach with crap tables near by. I’m niw going to the 3rd world. I’m not happy about it.

Shit you do for your long time bitch….she’s cute, my weakness.

Bitch is dog speak in case any lefty loons pc freaks who don’t realize they have entered a dog blog..

It was said with total endearment and love..

#45 Tony on 01.31.17 at 10:17 pm

Jen and Phil are both victims of the pathetic level of CDIC insurance in Canada. You run out of banks and trust companies very quickly unlike in America where it’s two and a half times what it is in Canada. Granted it may not be honoured anyway. They should have parked most of their money offshore before the reporting rules were changed. Now anything over 10 grand is tracked. Maybe they should consider rare coins and platinum certificates?

#46 John in Mtl on 01.31.17 at 10:18 pm

All you Trumpians are such a deluded bunch. Nothing; NOTHING will change under Trump. On the contrary, it’ll get much, much worse. HRClinton wouldn’t have done any better, both are sold to TBTF-anything. So, saddle up, invest! After all, if U can’t beat them, may as well join ’em while the party continues!

“Irony isn’t a concept with which President Donald J. Trump is familiar. In his Inaugural Address, having nominated the wealthiest cabinet in American history, he proclaimed, “For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished — but the people did not share in its wealth.” Under Trump, an even smaller group will flourish — in particular, a cadre of former Goldman Sachs executives. To put the matter bluntly, two of them (along with the Federal Reserve) are likely to control our economy and financial system in the years to come.”
– From the author of “All the Presidents’ Bankers”.

Go do some interesting reading:
http://www.tomdispatch.com/post/176236/tomgram%3A_nomi_prins,_goldmanizing_donald_trump/

#47 Leo Trollstoy on 01.31.17 at 10:20 pm

Kudos to Jen and Phil. They’re doing fantastic! Garths tune ups are fantastic too.

IT and healthcare are the places to be in Canada if you want a shot at decent $

#48 karlhungus on 01.31.17 at 10:21 pm

No tax savings as the combo of your corp and personal dividend tax equals the tax on salary, plus you earn zero RRSP room. This is a myth. — Garth

I think you are misunderstanding me. I understand dividends and salary are tax neutral, doesnt matter which ones you pick from tax standpoint. My question is, do dividends count as income? Since federal child benefits are based on income, if dividends do not count as income, you receive much more money.

Of course they are taxable income. — Garth

#49 Leo Trollstoy on 01.31.17 at 10:23 pm

For Canadians looking to “beat” taxes. Forget it. You’re in Canada. Just bend over. You can’t take it with you after your dead anyway.

#50 DT on 01.31.17 at 10:23 pm

This blog likes ETFs, they are suggested investments in many blog posts.

On Aug 24/15 the Dow opened down and dropped to 15370 the intraday low. The DIA ETF bottomed at $150.57 when it should have been closer to $153. Other ETFs were trading at half the price of the underlying holdings. Imagine a margin investment getting hit by volatility and then whe your broker sells your ETFs you get 50 cents on the dollar. This isn’t fear-mongering, it already happened.

DIA, the ETF, has assets of US$14.7bn. A 2% discrepancy is $300m.

Things will get interesting when Deutschland Bank implodes. Think supernova for ETFs. Deutsche is the largest ETF sponsor and counterparty.

Some brokers let you build a basket of securities to reflect the underlying, avoiding the ETF risk.

For certain, as long as ETFs are around, some investors will want to use them. Until they stop working.

Buyer beware.

Ill-informed comment. The DIA fund tracks only 30 stocks, and any investor interested in US exposure would want an ETF pacing the S&P500 (over 500 securities). There are far better funds to choose than DIA, and ETFs provide a level of diversification almost all investors are incapable of achieving buying individual securities, thereby reducing risk. — Garth

#51 Shortymac on 01.31.17 at 10:24 pm

Kevin’s Fanzone on 01.31.17 at 6:32 pm
The Surfer Dude’s newest spew is amazing. I feel I need to inform people when I am abroad that Canadian healthcare is far from free. In BC we pay about $175 a month for our free healthcare. Dentistry is not free. Glasses, contacts and prescriptions are not free. Fertility treatments (you know – because our birthrates are falling) is not free. And the list goes on.

Which reminds me. We have tens of billions for refugees and immigrants but ZERO money for Canadians having problems reproducing. WHAT? Who makes these absolutely retarded decisions? Oh right, our Government.
And people are wondering WHY Kevin O’Learly will be the next PM?

This bring us to the latest from the Surfer Dude. For those few who work for a private company and get benefits, the Surfer Dude wants to TAX those benefits. I assume it is so he can pay for the bloated public service who also get FREE BENEFITS courtesy of the taxpayer.

2019 can not come fast enough.

http://news.nationalpost.com/full-comment/john-ivison-millions-of-canadians-will-pay-at-least-1000-more-if-ottawa-taxes-health-and-dental-plans-study-finds

———————————————————-

While I hate this taxation idea, don’t complain about the cost of health care up here.

In the US you could easily pay $1,000/month for a plan with a $10,000 deductible and can suddenly decide “nah we ain’t paying” in the hospital. Might as well hold a knife to your throat, the “free” market indeed.

I’m from the US, where I’ve been uninsured and insured. The standard canadian public healthcare plan is on par with a great US plan, with no surprises.

As to refugees, the free world sat on their hands while the country destabilized and ISIS commits genocide and sexual slavery. Suprise! People don’t want to live there! People run away from imminent death.

I do truly hope that you are never in a situation like they are.

#52 did you check your math? on 01.31.17 at 10:31 pm

Garth,

$25,370 invested in the RRSP, earning 6% annually for the next 25 years (say age 40-65)
will result in $1,475,427

If husband also makes enough to max RRSP, that’s 1.5m EACH.

Are you sure that won’t push them to the top tax bracket? That’s not tax shifting at all… and without the corporation, there will be a lot less flexibility.

Why is using dividends a myth then?

I alluded to 25 years of maxing TFSAs, not RRSPs. — Garth

#53 Funky on 01.31.17 at 10:34 pm

I got as far a # 21 tonight.

I think I’ll go and download some Leonard Cohen. How about “Everybody Knows”

#54 Stock Picker on 01.31.17 at 10:34 pm

Good advice today Garth….although it’s always amazing to me that any two adults of any intelligence could be so functionally stupid as the pair of wazoo’s you describe. Born of the average “doctors arrogance”? No wills? Are they twelve? BTW….income splitting is no more thx to Junior and the gang that couldn’t think straight.

#55 Self Directed on 01.31.17 at 10:41 pm

http://www.moneysense.ca/spend/real-estate/buying/the-smart-way-to-use-b-c-s-interest-free-home-loan/

I will save you the trouble reading…

“”

#56 The clueless - MASHDEX on 01.31.17 at 10:42 pm

[…] Read more here:: http://www.greaterfool.ca/2017/01/31/the-clueless/ […]

#57 Self Directed on 01.31.17 at 10:44 pm

“Don’t increase the purchase price of your house”
“Or have a really, really good reason”

Really? I guess idiots are buying houses in this inflated market.

#58 Terry on 01.31.17 at 10:44 pm

“Or whispers ‘climate change’ near a Trump supporter.”

Good news from Washington today! The Trump administration will be announcing in the next few days that the US will be pulling out of the Paris climate change accord.

A great posting today Garth!

Regards,

Another Trump supporter!

#59 Brooke on 01.31.17 at 10:46 pm

“…by the time thirsty underwear days arrive.”

Garth, this goes down as your best line yet.

Speaking of “thirsty underwear”, thanks for the laugh! I’m dying over here.

#60 Smoking Man on 01.31.17 at 10:58 pm

I really should try and get a job. A feeling of inclusion.

A oppourtunity for a pat on the back by idiots.

Sort of need it.

I’m smoking man. The guy who discovered I Dont care is an hounor by all the creative misfits out there.

#61 Adam on 01.31.17 at 11:00 pm

Nice to see an example of a couple with very high income living in the expensive toronto house everyone on this blog bitches about.

Guess what guys, there are lots of people making this kinda money in the gta. Its where all the jobs are and the reason home prices are high. Big cities pay big bucks. Nobody wants to sell their million dollare housesto go live in smaller towns in canada to be a big fish in a small pond. Its a mentallity that the misers on this blog cant understand. And i gotta say i love seeing peoples heads explode on this blog every month when prices go up.

#62 BillyBob on 01.31.17 at 11:02 pm

Meh. Great salary but give more than half back? No thanks.

Was trying to compare it to my own job. Gas-lady makes a serious error, one person dies. College of P&S circles the wagons, nothing happens. Seen it so many times.

I make a serious mistake, and 450 people die. My every word and action is played in court, and they call it “pilot error” when the reality is ALWAYS far more complex. Thrown to the dogs.

Yet I had to leave Canada to make the same money. I guess docs have better PR than pilots. Helps to control the supply and demand too, I guess. A nation of cartels really.

Just rambling as to how society values different professions.

#63 karlhungus on 01.31.17 at 11:02 pm

Thoughts on this strategy.

Pay yourself dividends, therefore you dont pay into CPP. Take the money you would have paid into CPP and invest yourself within your corporation.

Why? — Garth

#64 karlhungus on 01.31.17 at 11:02 pm

oops, corporation.

#65 Westcdn on 01.31.17 at 11:29 pm

Here is a cautionary tale of being a Do it yourself (DIY) investor/saver. This Canadian guy was set for life if he given the money (2.5 M$ inheritance) to Garth to manage. There is a page break that is hiding some of the story. It seems a minor loss because the context of the story is still intact.

http://ibankcoin.com/raul3/2017/01/31/thefinalyolo-eliminated-apple-shares-explode-higher-completely-bankrupting-degenerate-canadian-trader/

The story is a warning to me to treat option trading as gambling. Time is not my friend in this game nonetheless I took a pot shot Monday. At worst, I will take the shares on expiry of the call option. This going to be one tough school of hard knocks given the resources I have. I have faced worse but I suspect this will be one of those games not worth winning. I won’t know until I try. I have all the real estate I need so… I need to get off my hands – just my nature.

#66 BC RE casino on 01.31.17 at 11:29 pm

revenues from casinos drop in Asia and BC RE rises.
https://betterdwelling.com/chinese-gangs-and-canadian-real-estate-the-odd-correlation/

#67 Doczone on 01.31.17 at 11:31 pm

Garth,

I’m still confused as to why you think that incorporation is not beneficial for high income earning physicians.

My understanding is that if you can leave a significant portion of yearly earnings behind in the corporation, it is essentially another tax deferral mechanism for retirement savings. Of course its not as good a deal as an RRSP because you still have to pay the corp tax rate, but if it is far lower than the marginal rate if you didn’t have the corp, then you are saving at least 20-30% that can grow tax deferred. However, at these levels the the RRSP is usually maxed and the excess income/savings is what we are talking about.

As for the CRA taxing these passive investment vehicles, the right for physicians to incorporate has been negotiated with each province (with slightly different rules in each one) in lieu of other benefits, like pensions. So if the CRA decides to tax these corps, then it will be tantamount to taking away retirement benefits – i.e. would Ontario teachers stand for the CRA taking away their pension plan?

The CRA allows a small business tax rate for operating small businesses, not a big retirement fund for a non-working doctor. Your nest egg will be taxed at the top marginal rate because, after all, it’s a tax avoidance device. Check out GAAR. — Garth

#68 Another mindless doctor on 01.31.17 at 11:43 pm

Wouldn’t keeping the money in the corporation and growing it be better? That’s what I am doing. Drawing dividends for what I need and then letting money grow in corporation. Obviously me and my partner have a fully funded TFSA, RESP and whatever small resp room all filled.

#69 dumpster fire on 01.31.17 at 11:46 pm

#65 YOLOtrade

The reddit thread for this is worth a read for the laughs. My favourite comment:

“It must be nice knowing that you could have just slapped that inheritance into a boring ass dividend stock and been making 6 figures the rest of your life. Hell if you really wanted to troll people you could have gotten a part time job as a barista and driven a Lambo to work everyday.”

(Un)fortunately, this bet appears to be a hoax… The guy was live streaming during the earnings release and accidentally showed his account number, which turned out to be a demo account…

#70 Adam on 01.31.17 at 11:52 pm

I gotta a prediction for you trumpsters too. There is gonna be a general strike within the next four months.

To be honest its not the muslim ban that is the problem. Its the fact that he loves getting his little hands on that executive order pen and gets signature happy. The guy thinks he can sign major shit and it magically happens seemlessly without having to talk to any other dept about implementation. The guy has the worst execution skills possible and thinks he can do it all lightening fast.

just like the debates the more people see him on tv the more they dislike him. Smartest thing he ever did was not hold a press conference for six months.

Between the ban, the aca repeal with no plan, putting up some very horrible people for cabinet positions, his insecurity, russia now capturing usa assets related to the dossier scandle, selling off land in national parks, blowing the meeting with mexico the guy has been a huge disaster.

Hes dealing with things like sime piss poor wannabe dictator so the people will use the ultimate trump card which is the general strike. No need to wait for four years or inpeachment its gonna hapoen. The guy just cant help him self. Im loading up on those qqq snd s&p 3x leverage pro shares tomorrow.

#71 Doczone on 01.31.17 at 11:58 pm

Agreed, incorporation for high earners is a tax avoidance/deferral device. But the provinces have offered this device as a way to build and maintain a nest egg to doctors for years…

It does not satisfy the criteria of being ‘abusive’ in my opinion, as these have always been public negotiations, and governments have plainly stated that these are benefits provided to physicians. I’m no tax lawyer, but I doubt that doctor-corps could be deemed to be violating GAAR.

If the CRA takes this away, then provincial MD associations will be up in arms. They are being assaulted by the provinces already on fees, and now their savings are being eroded. It would be great if they could participate in public sector pension plans in lieu of these structures, but I am very doubtful that would ever happen. I hope the CRA consults with the provinces and thinks hard about this proposition…

Not a proposal. It is current reality. — Garth

#72 karlhungus on 02.01.17 at 12:01 am

Thoughts on this strategy.

Pay yourself dividends, therefore you dont pay into CPP. Take the money you would have paid into CPP and invest yourself within your corporation.

Why? — Garth

Because if you die at 65 and havent taken any CCP your estate loses it all. IF you did what i am suggesting you would keep it all. Also, as you are self employed and contributing both portions of CCP, the numbers bear out that its not that great of a deal compared to what is paid out. Better to invest it yourself.

#73 Rentin on 02.01.17 at 12:06 am

Most people don’t understand incorporated businesses, and so shhhh, everybody stay away.

https://m.youtube.com/watch?v=XEL65gywwHQ

Unless you create a sale able enterprise (hard assets excluded, their is no 750K OTCGE). So individual contractors are not eligible.

#74 Jessica on 02.01.17 at 12:14 am

Love this post-just more proof that behind most 1% is a supporting 99%. Jen will figure it out. I had GICs before I stumbled onto this blog (but at least at 2.5%) a year ago when researching condo values. Now I too track the indexes, and still rent. Thanks Garth

#75 dumpster fire on 02.01.17 at 12:21 am

I was recently looking at the math behind RRSP vs non-registered accounts and found the results pretty interesting. Blog dogs have mentioned before that RRSPs perform better if you will be in a lower bracket in the future, however I found that RRSPs can still outperform non-registered accounts even if you are taxed more (up to a certain extent) as long as you can grow your investments enough.

For a lump sum invested over a long period, your tax rate would need to go up by around 10 points before a non-registered account is more favourable. Of course, this break-even number depends on how much you’ve grown the account and your current rate:
http://imgur.com/QAwBOy7

So, theoretically, if you contributed when your rate was 41% *and* you made YUGE gains then the RRSP would be better as long as your future tax rate is less than 58%.

Here is a graph that shows how much better RRSP will perform than a non-registered assuming the account grew by 400% worth of cap gains:
http://imgur.com/zbkZ5Uy

In this case it’s a wash if your tax rate is 10 points higher or more, but there are some pretty significant advantages if your rate stays the same or lower. I haven’t accounted for dividends here so that should be interesting to look at too.

#76 Chaddywack on 02.01.17 at 1:28 am

Thanks for this timely article Garth.

My wife is a specialist and was mulling over incorporating, but when we ran the numbers we found that having her max her RRSPs and take a salary put us in an almost identical situation as incorporating with far less complexity. We did a double-take on those numbers as all we heard is how incorporating saves way more money than not, but it seems that we were correct.

Doctors during residency are regularly visited by teams of lawyers and accountants who give financial seminars (along with their business cards) and it seems that they generally push incorporation. I don’t blame them as it is in their vested interest to do so, but incorporation is not always the best solution. It also keeps the doctor dependent on a more complex tax arrangement as the associated annual lawyer and accountant fees can run in the thousands!

In the end it’s a personal decision of the doctor what they choose to do, but thanks for providing us with the other side of the issue.

#77 Al on 02.01.17 at 1:52 am

Re: #6 – we need those robotic anesthesiologists in Ontario fast to save our Health Care System from bankruptcy!

#78 Slippery cricket on 02.01.17 at 2:00 am

We just hired two new employees, both late twenties. Both have 10,000 on credit card balance, car payment, and student loan. Now they want to buy a house. I shake my head. School did not teach them anything. Do the parents not give advice. We have financial talks at work…..they are the new focus. Some get it others don’t. The ones that do make changes and appreciate the help.

#79 Nonplused on 02.01.17 at 2:53 am

Garth, where is your “wage gap” with today’s couple?

The wage gap is about as popular as discriminating against gays in our society at this point, and really doesn’t exist anymore except on the fringes. Please stop talking about it as if it is still a real problem. All we have to do is wait for more women to enter the fields of medicine and engineering and it will go away, and they are doing that on mass.

#80 The really clueless on 02.01.17 at 4:25 am

Did President Trump Just Save Western Civilization?

https://www.youtube.com/watch?v=6b0bIEMsHwM

#81 Tom Vernin on 02.01.17 at 7:10 am

You definitely found the dumb money there. Switching from GICs now? Now? After an 8 year bull market? When these people buy, i sell. Thank god for fools.

#82 Tonyw on 02.01.17 at 7:17 am

No clawback on CPP – taxed at your marginal rate.

That’s a clawback if you do not work to keep your marginal rate low. — Garth

#83 Personal finance on 02.01.17 at 8:11 am

Have said this before – should be taught in our high schools . In Ontario it’s offered as an elective , 1 year . That’s a start but it’s not good enough. Two year mandatory course . They make religion mandatory and personal finance an elective ?

She’s an MD,a bright lady . She has had NO exposure to
Personal finance !!

In less than a month she could practically be an expert if she wanted . It’s truly that simple . Anyone can take the csc course !

Canadians have no idea how much they are losing by not investing and doing so PROPERLY . Also with education , the role of an ‘advisor’ changes
Simple math :

With her income she’ll have a $1,000,000 in little time most advisors charge 1% to construct a tax efficient balanced portfolio

Fees -$10,000 yr

Over 10 yrs – $100,000

Good grief . Education!!

Use a fee based advisor as needed

A competent advisor would save this woman $500,000 in taxes over a decade, plus double her principal. Penny wise, pound foolish. Why should a doctor become a financial professional any more than an advisor should learn to practice medicine? — Garth

#84 Health corp on 02.01.17 at 8:19 am

Designed for the rich .

As of TODAY , they remain excellent for HIGH earning health professionals .

They are not a substitute for tfsa or rrsp. This is class of people making so much money they have massive leftover after filling their tfsa /rrsp . Not bad,eh?

Corp benefits are huge . I’d hope no one is denying this ? If so have a chat with a cpa

#85 maxx on 02.01.17 at 8:42 am

#8 Alice on 01.31.17 at 6:30 pm

“Gosh darnit, between 4 + 5 figures. I should have been an anesthesiologist. Finance sucks in contrast apparently.”

They do exist, and some thrive- on steroids. Friends of ours are a prime example- he’s a neurosurgeon at a major hospital with a private practice on the side. She’s an MRI technician. She also runs his private practice administration (at home- tax break) and gets paid by him (tax break). Private billings go out monthly in foot-high stacks- I helped with this not long ago. For some fortunate souls, keeping up with cash flow is a challenge.

Only complaint I’ve ever heard is that they battle fatigue due to the nature of their work, but in their 40’s, they’ll probably keep it going for another decade or two.

I hope their financial advisor is as smart as they are. I think it’s very likely the case.

#86 #83 Garth on 02.01.17 at 8:46 am

Thanks for the response . Certainly understand the need to defend your profession. And thanks for posting my post , hope she reads it

She’s NOT becoming a financial advisor . Not at all . She would be self educating . This accomplishes two things;
-peace of mind as to how that markats work . To not get irrational when markets correct . To understand it’s normal
-to SAVE massive amounts on % based AUM . She doesn’t need it

Her cost and time for self education ?

Most is online – free . I did buy Bogle’s book
Csc course -$1500 . I don’t need it , taking it to increase knowledge . Cost is cheap

Cost and time for YOU to become a medical specialist
– 8 yrs
– cost – do you really want to know ? :)

Bad advice. Doctors are busy people without the time to take the CSC course, which consumes several months and yet does not provide hands-on practical money management instruction. You have no valid argument. Anybody with millions who does not seek professional assistance deserves the outcome. — Garth

#87 Wrk.dover on 02.01.17 at 8:54 am

A victory for Garth’s patience….last nights post convinced my wife to use her utility stock as the bulk of this years TSFA contribution rather than adding yet more GIC ! We are even going to shift that account to a bank, leaving mine at the Credit Union in the spirit of diversification.

My very rural Credit union holds mortgages that are not on five fold overvalued properties though.

The next task is to prepare her to buy the dip when it comes because there are no words clever enough to get her to buy the eight year peak.

We were back at the beach bar for a week, and I won’t have time to read eight days of comments to see if any one has figured out Keystone is for shipping oil north, because Trump.

Anybody?

#88 Garth , you didn't post ? on 02.01.17 at 8:55 am

My rebuttal

Shame on you . Reflects poorly

You were insulted . That wasn’t my intent

Your response was published after sitting in a moderation queue waiting for me to review it. Try not to be a dickhead in future. Reflects poorly. — Garth

#89 ShawnG in TO on 02.01.17 at 9:18 am

it’s one thing to be financially literate and avoid money disasters, it’s a whole different thing to be a financial professional with expertise in tax laws.

sure, csc is easy for the gas lady. while at it she can pick up a few other skills such as carpentry, plumbing, auto mechanic, house construction. that should save her tonnes of money.

#90 Vanrentor on 02.01.17 at 9:19 am

https://betterdwelling.com/city/vancouver/chinas-capital-controls-could-crash-vancouver-real-estate/

Global real estate markets are breaking a sweat, and Vancouver should be no exception. Those same foreign buyers that sent property values soaring around the world are now a little short on foreign currency. New regulations now prohibit the exchange of yuan for real estate, making it tricky to get currency into foreign markets. Without that sweet yuan converted, Chinese buyers won’t be able to continue driving prices, and could have trouble paying for existing property.

#91 LH on 02.01.17 at 9:21 am

Am I reading this correctly? CAD4-5 million!?

No, that’s what you earn. — Garth

#92 LH on 02.01.17 at 9:22 am

I suppose CAD4-5million is “possible” with all the goodies in the cabinet. Fentanyl, Diamorphine, etc.

Or does “4-5” mean CAD400k-500k?

#93 Tony on 02.01.17 at 9:29 am

Re: #89 Vanrentor on 02.01.17 at 9:19 am

This will also leave Toronto and the GTA real estate in the dust. Great news for people that are short Home Capital and Genworth Canada. The Chinese must be the worst value quote “investors” on Earth. The Chinese government is actually saving the citizens of China a fortune by these restrictions.

#94 Slippery cricket on 02.01.17 at 10:01 am

I told the new employee she needs to go to the bank to get a credit line to pay off the $10,000 on the 12% credit card. [email protected] wold only offer 9.7% loan. Then told her she should put money in her TFSA. She also has a car loan. So young people go to the bank and get bad advice and no help to reduce interest. I found her a credit card that has 0% for 12 months and she can transfer her balance to. Why are the parents not teaching finance at the kitchen table?

#95 LH on 02.01.17 at 10:11 am

Garth, you just made my day :)

RE: No, that’s what you earn. — Garth

#96 ShawnG in TO on 02.01.17 at 10:14 am

investment income tax rate for CCPCs for ontario is a punishing 50.17%, not the 15% for business active income. similar for other provinces. also, sale of a passive corporation does not qualify for $750k capital gain exemption.

using person business as a tax shift vehicle has been thought before and the tax loophole is already blocked.

This is exactly what I have been trying to tell docs and others with small business corporations, for years. There is no effective ‘tax dodge’ keeping your funds in a corporation and, instead, a potential tax bomb awaiting you in retirement. The combination of corporate tax paid and dividend tax paid equals the burden carried when salary is taken – plus you get no RRSP room. Always remember the only ones really benefitting from setting up and maintaining corps are accountants. — Garth

#97 FritoPaws on 02.01.17 at 11:13 am

Pretty sure the numbers you’re talking about won’t result in a lower tax bracket in retirement. Having said that, decades of sheltered earnings will be the true benefit.

#98 Self Directed on 02.01.17 at 11:21 am

#61 Adam on 01.31.17 at 11:00 pm
……………………………………………
Adam! Millennial’s are always welcome on the blog!

Yes. A single example. Remember, all those ‘elites’ that have equity built up in their houses for the last decade did nothing to earn it. It was caused by all the house lust going on around them.

Let’s see… if not for the house porn, their next ‘smartest’ investment was GIC’s? C’mon man. Garth’s point is that even the smartest people are money stupid. And you missed the point, so that makes you…

They got lucky on the house, as did all of us… schooled or not, Adam.

#99 Tater on 02.01.17 at 11:42 am

re: 93 Tony on 02.01.17 at 9:29 am
Re: #89 Vanrentor on 02.01.17 at 9:19 am

This will also leave Toronto and the GTA real estate in the dust. Great news for people that are short Home Capital and Genworth Canada. The Chinese must be the worst value quote “investors” on Earth. The Chinese government is actually saving the citizens of China a fortune by these restrictions.
——————————————————————

The folks in China snapping up real estate here don’t really care about value. The goal is to get the assets out of China.

GTA statistics just put a lie to that meme. — Garth

#100 Victor V on 02.01.17 at 11:57 am

‘We’re just roadkill’: Why Stephen Poloz’s jawboning can’t keep the loonie down

http://www.bnn.ca/we-re-just-roadkill-why-stephen-poloz-s-jawboning-can-t-keep-the-loonie-down-1.662183

#101 James on 02.01.17 at 12:23 pm

#41 Smoking Man on 01.31.17 at 9:57 pm
Jesus I’m about to have a nervous breakdown. Wifypoo books a trip to Cuba. Cyco coco.
At first I thought cool. DrinkING in the Hemingway bar. I discover no wifi.
No posts no re tweets for an entire week.
Not sure I’ll survive. ..
See how evil she is. She knew it. 7 days of talking to her. With no distractions.
This might turn into a book.
Lord help me.
……………………………………………………………….
Ha,ha,ha don’t forget to take a voltage converter. I learned that the hard way. Had to purchase one there for my tablet. BTW no good internet and wifi, it is strictly filtered and controlled if you get it. Mine was sketchy at Memories flamenco beach resort. Hemingway’s bar is in Havana La Bodeguita del Medio. From Cayo its about six hours 625 km. Its a dive but I drank some run there for the hell of it. Why the hell are you going to Cuba? Hell I would be going to St. Vincent & Grenadines with your kind of money. What is wrong with you?

#102 James on 02.01.17 at 12:32 pm

#100 Victor V on 02.01.17 at 11:57 am

‘We’re just roadkill’: Why Stephen Poloz’s jawboning can’t keep the loonie down

http://www.bnn.ca/we-re-just-roadkill-why-stephen-poloz-s-jawboning-can-t-keep-the-loonie-down-1.662183
……………………………………………………………………
The loonie is like a cockroach, you can’t kill the dam thing. When is he going to learn that he doesn’t control the loonie. The loonie is loose, out there, and only a Orange man with small hands and big feet can step on it!

#103 westcdn on 02.01.17 at 12:55 pm

Are Putin and his pesky Russians trying to influence the outcome of the French presidential election? Another presidential candidate has been caught stealing cookies from the jar – Fillon. He is the present front runner but his star is falling rapidly due to the scandal. The man in second place, Macron, may be investigated for improper use of public funds. The possibility of Le Pen winning has improved.
http://www.zerohedge.com/news/2017-02-01/french-political-scandal-fallout-fillon-would-be-eliminated-first-round-macron

Clever man that Putin by exposing hypocrisy to champion his preferred candidate (sarc). I wonder if O’Leary is his preferred candidate? (double sarc)

I found this opinion interesting as it meshes with my observations about elites and nepotism. It is not a bad thing to want the best for your children and help them along the way. I, in turn, do not respond well to empty suits or uniforms.
https://www.bloomberg.com/view/articles/2017-01-27/both-france-and-the-u-s-have-a-nepotism-problem

On my 50th birthday, my eldest took me to a Tom Petty concert because she knew he was my favourite musical entertainer. It was the best rock concert, ever, despite having to sit in some prissy bleacher chairs about as far as you could get from the stage. Here is a Tom Petty song I used to charge me up for the day.
https://www.youtube.com/watch?v=nvlTJrNJ5lA

I still don’t care about real estate and my little option play may score big. I have been pushed on my butt and trampled by the herd. I just get up, review and try to go forward again with a different plan. I also know you can go from hero to zero in a hurry. 

#104 Jessica on 02.01.17 at 12:58 pm

I think it’s important to remember there are 2 parts to financial literacy:
1) eschewing debt to accumulate a positive net worth through high earnings/reducing expenses
2) investing that positive net worth intelligently.
Many people that stumble onto this blog have developed the first part of financial literacy, Jen & her husband included. Although my net worth and earnings are substantially lower, I also include myself in this category. Many of us are extremely well educated, which makes a DIY investing education possible, or if you have Jen’s level of investments, finding a reputable investment advisor doable (she found Garth, right?)
Which leads me to the 2nd part of financial literacy. As a culture and society we are woefully uneducated, but the power of the Internet coupled with the generous advice of this blog and others is obviously reaching a sector of us. So “clueless” may be apt in describing this sector only with regards to the 2nd part of the financial literacy equation, and that not for long, as, if you’re reaching out for investing advice, you’re already aware of step #2. I would say rather that “clueless” applies to those with a negative net worth/no savings (step 1), and remain unaware of step 2.
Step 1 must come before step 2, so Jen and husband are already well down the road toward becoming savants of financial literacy.

#105 Victor V on 02.01.17 at 12:59 pm

‘Best gift government has given us’: The long-term power of the TFSA has yet to be fully tapped

http://business.financialpost.com/personal-finance/tfsa/best-gift-government-has-given-us-long-term-power-of-the-tfsa-yet-to-be-fully-tapped

#106 Tater on 02.01.17 at 1:02 pm

Garth, the folks I’ve spoken with in and from China, have viewed foreign RE as a good spot to park money should they ever need to flee. In their worst case, prices here fall 50% but if the authorities come for them in China, 100% of wealth is gone.

#107 For those about to flop... on 02.01.17 at 1:22 pm

DELETED

#108 Mixed Bag on 02.01.17 at 1:31 pm

“That’s because with a joint account all assets automatically become the property of the other partner if one person walks in front of a streetcar. Or whispers ‘climate change’ near a Trump supporter.”

Ha! Tempted to try the latter.

#109 For those about to flop... on 02.01.17 at 1:35 pm

DELETED

#110 Victor V on 02.01.17 at 1:54 pm

Will Liberals Tax Health, Dental Benefits? Trudeau Doesn’t Rule It Out

http://www.huffingtonpost.ca/2017/01/31/liberals-tax-health-dental-benefits-trudeau_n_14532540.html

#111 TRT on 02.01.17 at 1:55 pm

Trudeau lies and gets into power.

Libs = Cons = > corporate masters.

NDP = being infiltrated for next election.

Canada needs a ‘Trumpian’ moment.

#112 Kevin's Fanzone on 02.01.17 at 1:58 pm

http://www.cbc.ca/news/politics/trudeau-electoral-reform-mandate-1.3961736

The Truduhhhh Govt lies again. “Hey lets manipulate everyone with misleading words and then we can cancel our election promise”

Kevin O’Leary 2019

#113 IHCTD9 on 02.01.17 at 2:11 pm

I wish I needed a financial advisor as bad as Jen and Phil do! (A tip of the hat to Phil who has it made in the shade drinking lemonade!)

JESSICA, re your post the other day:

Look at Jen, rich sugar momma wife (probably super hot too) with big education, big paycheque, and big career having kids and keeping a 6 figure IT guy hubby at home to do the child rearing (again, a nod and smirk to Phil). Yeah, a little late in life, but not hard to see why that might be. If Jen can get a family AND a power career off the ground given what must have been a formidable stretch to achieve what she has – then anyone can.

#114 Adam on 02.01.17 at 2:26 pm

Self Directed

Im not a melenial by the way. Were GIC’s good to own in 2008-09? Sure they were. Personally i think its crazy to sit in the market and ride it out when you can simply by when it crashes and it always does. Did you know there has been a recession every single time the republicans have the house and the senate?

Sure house horninesss made people tons of money in the gta just like stock horniness makes people money in the market. High home prices high pe ratios same difference.

Canada and the gta and vancouver are sought after areas to live in the world and thats where the most and highest paying jobs are. And asians do wanna park there money there. Oh yea and living in a house is quite nice. Oh yeah and when you sell it its tax free. Also has a better track record than the stock market. I remember when the dow was close to 20,000 fifteen years ago. Oh jeeze its in the same spot now lol. Houses in areas with jobs are always gonna be good investments. And for everyone buying when its crazy, someone else is always walking away with hundreds of thousands in tax free profit.

The Dow has never before been near 20,000. Stock markets have ‘crashed’ only twice in eighty years, then quickly recovered. Real estate corrections take years to repair. Slow day at Re/Max? — Garth

#115 RyYYZ on 02.01.17 at 2:34 pm

A little financial literacy is not too much to expect, even for a busy professional like today’s topic’s doctor.

Having said that, many people (myself included) are busy and sort of lazy, and we put off doing something about our finances. I let money languish in investments that yielded virtually nothing for years before I finally smartened up and put my money to work. Yes, I had TFSA money sitting in the orange guy’s (no, not DJT, lol) shorts for years before finally going to a self-directed TFSA account filled with ETFs. Probably cost myself ten or twenty thousand bucks that way.

Well, no use crying over spilt milk, but we can avoid repeating the mistakes of the past.

#116 McLovin on 02.01.17 at 2:35 pm

The reference to picking it up in bank washrooms or on dodgy websites….classic.

Hmmm, is Jen on AshleyMadison or SugarAnesthesiologists dot com??

#117 oh boy on 02.01.17 at 2:37 pm

what? ZPR and CPD cut their dividend payments for January again .. how disappointing.

lowest VIX reading today since Dec 2006.. for those interested.

#118 Damifino on 02.01.17 at 2:46 pm

#114 Adam

Thanks for the alternate facts. Someone has to dream them up. Might as well be you.

#119 Reply to #21 on 02.01.17 at 2:52 pm

Again, sir, are you joking? It’s astounding to me that you can hold forth on topics (climatology in particular and science in general) about which you clearly know nothing.

Are you under the impression that climate science is a recent development, and that global warming is a hoax created by the Chinese (as tweeted by Donald Trump)?

Are you at all familiar with the writings of the Swedish physicist and chemist Svante Arrhenius (1859-1927), the Swedish meteorologist Nils Ekholm (1848-1923), the English physicist John Poynting (1852-1914), and the U.S. astronomer Frank Very (1852-1927)? These scientists were among the first to contribute to the literature on climatology and global warming.

Science is a noble calling. People become scientists because they want to study science. Your tirade is laughably absurd.

#120 IHCTD9 on 02.01.17 at 2:54 pm

#112 Kevin’s Fanzone on 02.01.17 at 1:58 pm
http://www.cbc.ca/news/politics/trudeau-electoral-reform-mandate-1.3961736

The Truduhhhh Govt lies again. “Hey lets manipulate everyone with misleading words and then we can cancel our election promise”

Kevin O’Leary 2019
___________________________________

Trudeau is sending the newly appointed, fresh out of high school Cabinet Ministers to do his dirty work! Plus Gould is a no good, dirty Tweet deleter !! :)

I can laugh only because I did not vote for T2, – not to mention he is pretty much doing exactly what all those who did not vote for him said he would do.

Efforts at revenue maintenance will be top priority this year for T2, and Wynnie, while efforts at not paying said maintenance is set to blow the doors off new taxation at the IHCTD9 compound.

#121 IHCTD9 on 02.01.17 at 2:59 pm

Slow day at Re/Max? — Garth

________

LOL!

Bonus points for veiled dark suggestions regarding status of certain recent RE market trends. :)

#122 Balmuto on 02.01.17 at 3:00 pm

“Canada needs a ‘Trumpian’ moment.”

Like it needs a hole in the head.

#123 TurnerNation on 02.01.17 at 3:00 pm

No Fed hike…no BOC hike. Toronto SFH prices will rise another 10-20% this year again.

Neither were anticipated. — Garth

#124 Blacksheep on 02.01.17 at 3:33 pm

Reply to #21 @ #119,

I reply, to your reply, with this blast from the past:
——————————————
Historic Blacksheep Quote:

“gtrz4peace # 241,
“Climate change is REAL. IT IS MAN-MADE”
—————————————
Wow….lots of EMOTION there G4P.

How bout we calm down and have a look at some basic math.

The following is from: M. A. Kominz, Western Michigan University, 2001.

http://curry.eas.gatech.edu/Courses/6140/ency/Chapter10/Ency_Oceans/Sea_Level_Variations.pdf
————————————–
Quote from Kominz pdf:

“For example, about 20 000 years ago, great ice sheets covered northern North America and Europe. The volume of ice in these glaciers removed enough water from the oceans to expose most continental shelves. Since then there has been a sea level rise (actually from about 20 000 to about 11 000 years ago) of about 120 m.”
————————————–
OK, the math.

Glaciers melted raising the sea level 120 M (393 ft) within the last 20,000 years.

120,000 millimetres (120m) divided by 20,000 years
= 6 MM rise in sea level, per year.

Here is why.

https://en.wikipedia.org/wiki/Milankovitch_cycles
—————————————————-
Quote from Kominz pdf:

“This is just the most recent of many, large changes in sea level caused by glaciers, These variations in climate and subsequent sea level changes have been tied to quasi-periodic variations in the Earth’s orbit and the tilt of the Earth’s spin
axis.”
————————————-
Is climate change real?

Of course.

Is it a cyclical, natural event, that last occurred 2,000 to 20,000 years ago, without Man emitting, any Co2.

Is the sea level currently rising at a rate anywhere near, 6MM per year?

Nope.

Please explain why we are all doomed again?”
—————————-
End qoute.

#125 Blacksheep on 02.01.17 at 3:34 pm

Quote, not qoute.

#126 Adam on 02.01.17 at 3:45 pm

Reply #114

My apologies Garth, I was thinking Nasdaq at 5,000 in 2000 and it took 15 years later to get back to 5,000. Boy what a return.

I’m also not a real estate agent lol. Just got my ultrashorts in on the QQQ and S&P risky before some earnings but I have a hunch the next few months are gonna be rocky with this president. Good luck all:)

#127 Smoking Man on 02.01.17 at 4:15 pm

That’s it. Trump will out Smokeys plasma flier.

http://mirrorspectrum.com/info/president-trump-to-imminently-address-public-about-aliens

#128 InvestorsFriend on 02.01.17 at 4:34 pm

Tax Dodge for investing in small corporation

Perhaps there is a tax benefit if earnings are retained in a small corporation and taxed at low small business rate and then used to buy and hold low or zero dividends stocks that are expected to rise over the years. No tax until the gain is realized which could be 20 years if you want.

Probably works okay with a little stable of equity ETFs as well, most of the expected return these days is from capital gains, no?

#129 neo on 02.01.17 at 5:06 pm

Garth,

Seriously, whatever announcement you think Morneau is going to make it better get here before spring because those new regulations from last Fall has done absolutely nothing from the low end condos of the market to the detached two car garages. At least in Milton. January 23rd has come and passed and the natives aren’t restless. They have lost their minds.

#130 Doug in London on 02.01.17 at 5:50 pm

Wow, this post just further proves the need for more financial education in high school.

@DT, post #50:
Yes, August 24/15, I remember it well. How could I forget, it was one of the BEST days of the year! I logged on to my investment account and went on a FRANTIC BUYING BINGE of stocks and ETFs that were ON SALE that day. I logged in at about 3 PM, and wish I got on sooner. That way I could have scooped up more DIRT CHEAP stocks and ETFs! What a memorable day it was! The governor opened up the throttle to 100%, fully open, for a brief period.