The unplan

The cost of money may have just crawled to a 9-year high, but it’s not all misery out there for borrowers. While banks were busy resetting rates higher yesterday after the latest BoC hit, one of them was cutting.

So if you’re shopping for a variable-rate mortgage, check out TD. Effective Friday the rate dropped (!) to 2.75% for a five-year VRM, which puts it at the bottom of the class among the Big Six. But it’s a limited-time come-on – just two weeks – and is available for both new borrowers and renewers.

This begs a question: does it make sense to go VRM in a rising-rate world?

Because most people look at mortgages emotionally, not practically, their answer would be no. But be careful. For example, the best five-year fixed rate at the green bank is 3.44%, which means the variable’s almost three-quarters of a point cheaper. Thus, it will take four more central bank increases before locking into a fixed rate would even start to make sense. The time line for that is probably 12 months out. If Trump blows up our car business, it might be a lot longer. Nobody knows.

But on a $500,000 mortgage, this is significant – $250 a month, or just over three grand a year. If the savings from a VRM-vs-fixed were put into a TFSA monthly and earned 7%, after five years you’d have $18,000 to take out, tax-free, and apply to the mortgage principal.

Besides, history has shown that borrowers who stay with variable-rate mortgages have fared far better over the decades than those who locked in. But try to telling that to most people. They’re not buying. After almost a decade of rates being in the ditch, this tightening cycle is scary. They sweat over every quarter point, often because they’re grossly over-leveraged.

Mostly, though, people have a bad attitude towards mortgage debt. They fret over home loans with rates in the 2-3% range and do silly things like accelerate payments, double up or make pre-payments, throwing all of their cash at paying it off as fast as possible, thinking this is the holy grail. It’s not. Often it’s dumb. And in the current real estate environment, it can actually reduce net worth.

Why take all of a family’s additional cash flow and whack it against a mortgage costing 2.5%, when a balanced and diversified portfolio last year scored well over 10%? (The long-term average is 7%.) If the investments were in a TFSA, for example, all gains would be free of tax. Would it not be better to build up liquid assets for 60 months, then apply the gains to the mortgage principal upon renewal?

And remember the value of diversification. Never, ever put all of your net worth into a single asset since you’ve absolutely no idea what the future will bring. What’s the point of spending years crushing mortgage debt, having no cash to invest in financial assets, only to retire and being forced to sell the house to generate an income stream? How about a serious real estate correction that wipes away gobs of equity after you’ve gambled everything on building it?

A house is not a financial plan. Or a retirement strategy. It’s just one aspect of it. Nor is mortgage debt inherently evil – especially when it’s available (like now) at 3% or less, while the inflation rate is over 2%.

Above all, remember that when a house is paid-off, you’re not ‘living for free.’ In addition to property tax, insurance, maintenance and often monthly fees, there’s the cost of keeping hundreds of thousands of dollars trapped and idle within your walls. This is money that, prudently invested, could double every decade and provide lifetime financial security. So if you do end up with fat equity and no mortgage, consider the potential of borrowing against the house to create a tax-deductible loan that can be used to diversity your assets. Not for everyone, but worth mulling.

So, yeah, rates will go up more. We’re probably half-way through the process. People who bought houses they never should have may well be pooched. Natural selection. But don’t let a gradual increase in the cost of money blind you to the fact mortgages will stay relatively cheap and houses are just places to live. When you get old, you don’t need one. But nobody can live without income.

Keep your eye on the puck.

104 comments ↓

#1 Ben Ben on 07.13.18 at 3:32 pm

Smith Manoeuvre!

No, it’s not. – Garth

#2 Karl on 07.13.18 at 3:36 pm

Garth, I have 250K in equity in my home (all unused – no LOC) with a mortgage that is 460K. Do I do anything with that equity? Or just keep chipping money into my TFSA and do that alone?

#3 X on 07.13.18 at 3:51 pm

And your stick on the ice.

‘So if you do end up with fat equity and no mortgage, consider the potential of borrowing against the house to create a tax-deductible loan that can be used to diversity your assets.’ Garth

How about a post one day discussing at what point, or at what lending rate would it not be worth it to borrow to invest (referring to a non registered investment, for the average Canadian family income, or for the average Greaterfool high income earner), and when it could be beneficial.

I mean now is a little more straightforward, when a balanced portfolio can return 7%, and the lending rate is basically (currently at Green) 3.45% + .5% (yes you can get a better rate if you haggle, but initially this is what you would be offered)

#4 YK on 07.13.18 at 3:55 pm

That’s early today. First I guess?

#5 Dave on 07.13.18 at 3:57 pm

Tax dollars wasted…I live in a city that has 250,000 residents and 7 fire halls. Half the fire halls are brand new and the others slated to be.
Handful of real fires per year but the capital and operational costs are beyond millions.
To justify their existence, they race to every little car accident or other minor incident. An ambulance can do the same job much more cost effectively.
Im certain we can shut down half of these stations without any risk to residents and save tax $$$$$$$.

#6 dakkie on 07.13.18 at 4:14 pm

Canadians Banks caught up in FX price fixing conspiracy

http://www.investmentwatchblog.com/canadians-banks-caught-up-in-fx-price-fixing-conspiracy/

#7 jas on 07.13.18 at 4:16 pm

Above all, remember that when a house is paid-off, you’re not ‘living for free.’ In addition to property tax, insurance, maintenance and often monthly fees, there’s the cost of keeping hundreds of thousands of dollars trapped and idle within your walls. This is money that, prudently invested, could double every decade and provide lifetime financial security.
——————————————————

If only my other half can ever understand it!
Alas, she won’t.

#8 QSC on 07.13.18 at 4:17 pm

GMO (Jeremy Grantham) is an asset allocation firm with a track record of accurate forecasting over the long term. They currently call for negative returns in both stocks and bonds over the next 7 years. Past returns for a balanced portfolio ARE NOT indicative of future returns. Don’t get your face ripped off when both stocks and bonds go down at the same time.

Actually you made that up. The current GMO newsletter – here – says nothing of the sort. – Garth

#9 Brian Ripley on 07.13.18 at 4:27 pm

A house is not a financial plan… nobody can live without income. Garth

In the last 10 years SF Detached Prices are up:​
109% in Vancouver
21% in Calgary
110% in Toronto
WHILE
Employment Earnings are only up:
23% in BC
29% in AB
25% in ON​​

Chart http://www.chpc.biz/earnings-employment.html

This might imply a reason to rent and save rather than buy and suffer the sunk cost burden of long term debt especially if migrating to a higher income jurisdiction is a possible alternative. Earnings across Canada vary dramatically:

Alberta employment earnings are still:
14% above Ontario
16% above the national Canadian average
21% above BC and
24% above Quebec (no typo)

This is not a promotion for Alberta, it is simply a way of looking at the divergence in earnings across Canada. We are not a monolith. We’re a big country with lots of housing cost and earnings differences.

#10 Freebird on 07.13.18 at 4:38 pm

Friday laugh…

https://youtu.be/Euu-fS6WlDQ

#11 Guy in Calgary on 07.13.18 at 4:38 pm

#2 Karl on 07.13.18 at 3:36 pm
Garth, I have 250K in equity in my home (all unused – no LOC) with a mortgage that is 460K. Do I do anything with that equity? Or just keep chipping money into my TFSA and do that alone?
—————————————————————-

Impossible to know with such little information. Need to know age, current holdings, insurance situation, cash flow, if you have a work pension, what retirement looks like to you etc etc.

Garth or anyone giving you advise based on the info you provided would be simply reckless.

#12 mike from mtl on 07.13.18 at 4:39 pm

Someone with a 500k mortgage will most probably not be investing any decent sum. Perhaps a few k.

Wow after ten years might pass 5k woo.

I am sure many potential clients approach your services with basically nothing saved.

#13 NotLegalAdvice on 07.13.18 at 4:43 pm

Does it make sense for me to give down 10 percent on a house worth 800k rather than the 20% to avoid CMHC?

The difference would be $80,000. I would be better off investing this? I get my monthly mortgage payments would be higher, but only by a few hundred?

Hmmmmm….

#14 JonBoy on 07.13.18 at 4:46 pm

I actually took the time to check the “savings” (in interest) if you take the $250/month and apply it against the mortgage. Turns out you save about $1300 over five years, plus you pay down the mortgage an additional $15K so you have a “benefit” of $16.3K.

If you invest it at 7%, you end up at $17.8K in your pocket after 5 years, so roughly $1.5K ahead. At 5% return (a more common number), you are actually just $600 ahead by investing.

So, the question most people have is: what’s less risky and what’s more guaranteed? If you pay down your mortgage, you receive the benefit no matter what (less interest paid, less wasted after-tax dollars). You can’t “lose” by doing this – you’ll always see a benefit.

If you put it in the market, you have no guarantee of 7%. On a good year, you might do 10%, as you noted, but on a bad year, you might lose 10% as well (something I notice you virtually never mention!).

I believe that’s why most people pay down the mortgage instead of investing the extra. The benefit is guaranteed, if not “as good” as decent investment returns. It carries no risk, has a defined benefit and gives them peace of mind about paying down their mortgage early.

As you said, it’s an emotional response, not a mathematical one.

You still have to consider the fact that you CAN lose money in the market. I know plenty that have, myself included, so let’s not pretend that gains are “guaranteed” for any investment, no matter how well you “invest” it. Markets go down and markets go up.

On a side note, thanks for this blog – it’s helped me a ton. Had a discussion just this week with my wife about buying a house (in Vancouver area, or in WA, just across the border) and feel fully informed on why we shouldn’t be buying, what would prompt us to buy and why (in the meantime) we are investing and saving like crazy. I’ve even floated the idea of never buying….which is going to take some time to sink in, on her end.

Nice work, but it’s marred with two assumptions: financial assets fluctuate but real estate does not. Simply untrue, in fact there is much to suggest housing has peaked now that rates are rising. Second, as interest costs increase less of a VRM payment goes to principal and more to interest, shooting a hole in your numbers. – Garth

#15 Dave on 07.13.18 at 5:03 pm

Garth,

Why don’t you address the big issue: Inflation created by the central banks. Cost of living doubles every 14 years. Do people wages keep up with that? Nope.

#16 spaceman on 07.13.18 at 5:06 pm

Why take all of a family’s additional cash flow and whack it against a mortgage costing 2.5%, when a balanced and diversified portfolio last year scored well over 10%? (The long-term average is 7%.) If the investments were in a TFSA, for example, all gains would be free of tax. Would it not be better to build up liquid assets for 60 months, then apply the gains to the mortgage principal upon renewal?

the answer is probably not…
Because #1, we are probably at the top of an equity cycle based on average norms, and netting a 10% gain with a balanced portfolio, over the next 5 years seems unlikely. Paying down a 3% mortgage with extra cash actually makes some sense, provided you are heavy in equities, and need some balance. Mortgages are compound, so if you do the math, paying down the principle actually nets you about a 4.8% savings in interest over 5 years. Also, if your rate resets much higher, you have some opportunity savings to think about. if you have a large balance, and are paying a compounded average rate of 7% for the term, that to me warrants paying down the principle now.

Paying down principle is a guaranteed saving of interest payments, betting on growth of 7% in the market is not… you choose.

I know your not going to like this Garth, but sorry, we don’t all share your opinions…

D.

Go argue with history. – Garth

#17 Stone on 07.13.18 at 5:11 pm

A house is not a financial plan. Or a retirement strategy.

————-

You can’t imagine how many dirty looks I get when I say this to the sheeple around me. Then again, maybe you can imagine it.

Lets say you have $500,000 equity built up in a house. You sell it and invest the funds and average a 7% return. That’s $35,000. Shave off $5,000 for incomes taxes from that as it’s tax efficient income. That leaves $30,000. In most cases, that covers rent, utilities and maybe more (car, groceries, etc). In other words, free shelter plus a bit more. Why is this so hard to understand?

Even with less than $500,000, it still works part of the way.

#18 Karl on 07.13.18 at 5:12 pm

Impossible to know with such little information. Need to know age, current holdings, insurance situation, cash flow, if you have a work pension, what retirement looks like to you etc etc.

Garth or anyone giving you advise based on the info you provided would be simply reckless.

Fair enough, Guy in Calgary.

I am 37. 170K household income (which will rise yearly as my wife gets raises). Both my wife and I have defined pensions. We have 55K in TFSA (balanced portfolio).

Retirement to me looks like the ability to travel yearly at least once or twice. To beable to go out and eat here and there. To have the ability to help my kids out and spoil grandkids. Basically to no worry about money, but in no way do I need extravagance.

#19 Peter McLean on 07.13.18 at 5:20 pm

So you’re saying that someone like myself, first time home owner, not over leveraged on my relatively small mortgage, should invest my money into my TFSA instead of doing lump sums on my mortgage?

Wouldn’t I pay less interest, therefore save money, in the long run by paying down some principle?

#20 oncebittwiceshy on 07.13.18 at 5:24 pm

neo on 07.13.18 at 11:17 am
“Cool story Garth but the 10 year is still sitting at 2.83%. All this Trump inflation talk and interest rate hikes and it still can’t even get over the mendoza line of 3.00% as I’ve said many times. Based on what you’ve written the 10 year should be at least 3.50% by now.”

<<<<<<<<<<<<<<<<<<<<<<<<

Invariably some people look at the recent flattening of the yield curve, particularly between the 2yr and 10yr bond yields and suggest that the 10yr yield is telling us that the mortgage rates will be low for some time.

The problem with that assumption is that they are not looking at the Institutional investors (pension and insurance plans) and understanding what message they are relaying to the market.

The bond market is the largest market in the world and institutional investors are looking for long term security without much capital depreciation. When interest rates climb, long term bonds suffer capital losses in direct proportion to the bond term.

As a general rule, for every 1% increase or decrease in interest rates, a bond's price will change approximately 1% in the opposite direction for every year of duration.

These investors want to be in 20 – 30 yr bonds but the loss would be incredibly magnified on the longest term bonds. 20 – 30% losses for each 1% increase in rates.

The flight to safety is the 10 yr. bond which offers a certain amount of stable returns for outgoing payments and lower capital depreciation. These investors are keeping the 10 yr. yield low and are telegraphing a very large message: “RATES ARE GOING HIGHER”.

It could very well be that we will see an inversion in the yield curve in the not too distant future.

Tread carefully and good luck.

#21 Variable Rate? Beware! on 07.13.18 at 5:28 pm

Beware of variable rates.

As I understand it, the variable rate is at the lender’s discretion.

They’ll increase it nilly willy, no matter what the capital markets or BoC says.

Unless you have the contract state that it is linked to BoC rate, you are at their mercy. Don’t let them do this to you.

There is no history of this happening. – Garth

#22 Ray on 07.13.18 at 5:32 pm

#5 Dave on 07.13.18 at 3:57 pm
Tax dollars wasted…I live in a city that has 250,000 residents and 7 fire halls. Half the fire halls are brand new and the others slated to be.
Handful of real fires per year but the capital and operational costs are beyond millions.
To justify their existence, they race to every little car accident or other minor incident. An ambulance can do the same job much more cost effectively.
Im certain we can shut down half of these stations without any risk to residents and save tax $$$$$$$.
————————————
Can you spell ‘Politics”? Firefighters are becoming /have become obsolete, and they know it. Technology and better building standards has lowered the risk of fires substantially. The monies should be going into the paramedics. The Boomer generation is greying and are having more health-related emergencies. When a 911 call goes out, the Paramedics are sent, but the Fire Department is sent also. When on site, the fire guys stand around and let the Paramedics make all the decisions. But Hey, the Fire Guys can say they made “X” number of calls last month, so you see, WE ARE important. Unfortunately, the Paramedics budgets are controlled by the Fire Department, and the Fire Department got there decades before the Paramedics were around. The Fire Chief figures after all the new fire stations, trucks and BBQs are bought for the Fire Department , then some money will go to the Paramedics.

#23 Lucifer on 07.13.18 at 5:33 pm

Re 14…..spaceman

Cusinctly put space creature.
Nice to know there are still ¶°∆π out there who can think for themselves.
Lucifer considers himself one of those entities.

#24 TurnerNation on 07.13.18 at 5:35 pm

#5 Dave. After a nuclear meltdown two things will remain: cockroaches and public sector unions. :(

#25 Bob on 07.13.18 at 5:36 pm

Premier Doug Ford removed that inappropriate Sex-Ed curriculum from Ontario schools. No more will radical activists, leftists, LGBTQPists and Kathleen Wynee to impose their feminist dictatorship onto Ontarian! No more teachers posing naked for sex-ed classes and parents being harassed by police for trumped up charges. No more perversion in our schools!

Go away. – Garth

#26 Retired in Kelowna on 07.13.18 at 5:40 pm

We have followed Garth’s plan(His Book “The Strategy”) for over twenty years. With our mortgage paid off we re-borrowed against our house on a LOC and invested the $ in our balanced portfolio. Yes – up years and down years but over that time our investment returns were just about spot on the 7% annual average(after fees). We pay only the interest charge which is a write- off for tax purposes. The Strategy has worked well for us, our investment portfolio has grown nicely so I fully endorse this plan from Garth. But do your homework and really assess your risk tolerance. It’s not for nervous Nellie’s when the stock market gyrates. Thanks Garth.

#27 spaceman on 07.13.18 at 6:03 pm

“Nice work, but it’s marred with two assumptions: financial assets fluctuate but real estate does not.”

He was talking about the savings from not paying interest, this had nothing to do with RE prices… i think you missed the point…

I addressed it. – Garth

#28 dosouth on 07.13.18 at 6:14 pm

#5 Dave on 07.13.18 at 3:57 pm says….

Tax dollars wasted…I live in a city that has 250,000 residents and 7 fire halls. Half the fire halls are brand new and the others slated to be.
Handful of real fires per year but the capital and operational costs are beyond millions.
To justify their existence, they race to every little car accident or other minor incident. An ambulance can do the same job much more cost effectively.

I’m certain we can shut down half of these stations without any risk to residents and save tax $$$$$$$.

————————————————–

Sounds like every second city where firefighters have been canonized. You certainly don’t need a 15 ton ladder or tanker racing to a minor incident causing havoc on the way there or more incidents.

Fear of “what if’s” keeps this proliferating. 89% (or more) of most calls for firehalls in BC are medical or traffic assist. Very expensive and you are right, can be served by the people who are supposed to attend. Like police or ambulance.

Most who argue this have a vested interest in jobs or equipment or sales. It is time for a reality check and stop with the fear mongering done when budgets are set.

You wouldn’t happen to live in Kelowna….. just sayin’

#29 Vision on 07.13.18 at 6:26 pm

Interesting article that is costing Ontario, Quebec and Canada.
https://business.financialpost.com/diane-francis/trudeaus-holier-than-thou-tweet-causes-migrant-crisis-now-he-needs-to-fix-what-he-started

#30 akashic record on 07.13.18 at 6:31 pm

Speaking of keeping your eye on the puck:

Minister speaking with accent accuses other minister, speaking without accent to be “un-Canadian”.

Hilarious.

I am thinking and saying this with accent.

#31 For those about to flop... on 07.13.18 at 6:34 pm

It burns 07.13.18 at 12:58 pm
Another for the Flop files found on my area radar.

2808 Wall Street, Vancouver
Bought 12-Apr-2016 $1,990,000
Listed 25 Apr-2018 $2,250,000
12 Jul-2018 $1,880,000
Change: – 370000.00 -16%

https://www.bcassessment.ca/Property/Info/QTAwMDAwMlBLNQ==

///////////////////

Hey Burnie,thanks for keeping an eye on things.

I ran a post on that one yesterday but it is good to have a second set of eyes.

On my blog I put it up with a big pink painted brick wall.

The other day I found a picture of a big pink bulldozer to go with the post that I did on the cheapo that sold on the Westside.

People probably think it’s all feminine until they realize we are talking about objects with blood splatter on them.

Below is my post.

It went a little something like this…

M44BC
/////////////////////////////////

Pink Lemonade Stand in Vancouver.

Featured these guys once before and they either removed it or the contract took its course but now it is up with 100k less for asking.

They purchased it for 1.99 at the detached peak of April 2016 and after the reduction the new ask is 1.88

I could soon be out of a job, but I am not worried as I flip a mean Kangaroo pattie.

Detached has hit the wall…

M44BC

2808 Wall Street,Vancouver.paid 1.99 April 2016 ass 1.76

Apr 25:$2,250,000
May 25: $1,998,000
Change: – 252000.00 -11%

Now asking 1.88

https://www.zolo.ca/vancouver-real-estate/2808-wall-street

https://www.bcassessment.ca/Property/Info/QTAwMDAwMlBLNQ==

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#32 Another day, another free Tesla incentive if you buy my overpriced Ladner house on 07.13.18 at 6:37 pm

SELLERS ARE OFFERING A DISCOUNT OF $45,000 OR GET FREE BRAND NEW TESLA 3. ELECTRIC CAR ENABLES YOU TO GO THROUGH HOV. WAY BETTER DEAL THAN RICHMOND. OPEN SUNDAY JULY 15, 2-4 PM

https://www.jennifermciver.com/listings/mls/R2264405/ladner/holly/4668-66-street

This overpriced POS could be yours for the slick price of 1.19M.

#33 Danny on 07.13.18 at 6:37 pm

Garth “houses are just places to live. When you get old, you don’t need one. But nobody can live without income.”

Yes but there are a vast number of older people who are just pushing their luck living in those many empty room houses…..and with the next fall down the stairs will find themselves needing to move out of their over 40 years residency.
The next wave of baby boomers with all those houses to move out from will be forced to sell….increasing supply.

I know in Etobicoke……the seniors who over the last couple of years sold historically high…..drove the prices of condominiums higher….it’s the chain effect in Etobicoke.

Condos still the last grouping of housing type to show drop in price…..probably because they are…..a smaller foot print……with a smaller ticket price.

Probably the most affected too by speculators and by the new rich seniors of older bungalows.

Not the refugees that Parrot Ford’s government lies about without releasing the facts. Too bad they are still in the election mode…….Slogans but unsubstantiated facts. Prove your points and show some honesty……..and instead why not go after your friends in the Toronto Real Estate Board…..who shed the truth and manipulate the market towards their end…because their wealth is directly linked to high housing prices……based on the usual 5% fee.

#34 Does anyone know? on 07.13.18 at 6:39 pm

Why “BC Nominees LTD” made the panama papers and is a multi-layered shell company that is in the same vicinity of the BC Liberal’s Chinese office & Hong Kong China Consultancy doing some interesting hidden business in BC?

#35 rochmond on 07.13.18 at 6:44 pm

I think you are referring to Richmond, British Columbia

#36 The Real Mark on 07.13.18 at 6:49 pm

“These investors want to be in 20 – 30 yr bonds but the loss would be incredibly magnified on the longest term bonds. 20 – 30% losses for each 1% increase in rates.
The flight to safety is the 10 yr. bond which offers a certain amount of stable returns for outgoing payments and lower capital depreciation. These investors are keeping the 10 yr. yield low and are telegraphing a very large message: “RATES ARE GOING HIGHER”.”

You keep making this claim, yet the spread between long-term (>10 year) and 10-year debt is a mere 5-10 bp in both Canada and the US. (source: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield *and* https://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/ )

Since we naturally would expect some term premium, basically the opposite is being implied. That investors in the long-term bonds believe that rates are not going higher, but are actually going lower.

Hence, what you claim doesn’t really make a lot of sense. If what you claim was present in the bond market, there would be a considerable spread between long-term and short-term debt. Yet the yield curve is basically flat and investors are expressing a preference, if anything, for longer term debt by their willingness to bid the yields down relative to short-term debt.

The implication here is that the economy may very well be heading towards a deflationary recession, and another round of interest rate cuts, probably into negative territory this time, is in the future.

#37 They call him Mr.P - Not messing around - willing to name names on 07.13.18 at 6:50 pm

“I believe the B.C. Liberals were enablers. In terms of the flow of dirty cash”

Horgan won’t rule out naming names and placing blame in money laundering probe as well.

https://globalnews.ca/video/4324597/global-exclusive-former-b-c-illegal-gambling-team-head-blames-rcmp-and-liberal-government-for-inaction-against-money-laundering

This is the greatest scandal to ever rock a province.

And a lot of people, made a lot of dirty money.

#38 Dolce Vita on 07.13.18 at 7:03 pm

“Natural selection.”

“…and houses are just places to live.”

“When you get old, you don’t need one. But nobody can live without income.”
– – – – – – – – – – – – – – – – – – –

Wise words indeed.

In fact, so was the entire Blog today.

#39 Auto Industry Future in Canada on 07.13.18 at 7:04 pm

General Motors (Holden) , Ford and Toyota have all pulled auto production out of Australia. Does the Canadian Auto Manufacturing Industry have a future and will the prognosis improve after Trump is eventually replaced ?

#40 For those about to flop... on 07.13.18 at 7:08 pm

Recent sale report/ Vancouver edition.

This house just sold on the Westside.

3258 w 15th avenue,Vancouver,

Asking 2.48

Just sold for 2.3

Assessment 2.53

This is this realtors 8th sale for the year ,which from what I have seen is pretty good going.

It’s pretty sad that I have only found a couple of guys that go against the grain, and put the results up on their website in real time whether it was the optimum result or not.

Making lots of money without being a slimeball.

You can do it…

2018-02-08 : $2,488,000

https://www.zolo.ca/vancouver-real-estate/3258-w-15th-avenue

#41 Karl B. on 07.13.18 at 7:12 pm

While your advice is sound, it certainly is not for everyone. There comes a point in one’s life where, if you have lived below your means, invested your raises over the years, have a pension that eats away at your RRSP contribution room and you have maxed out your RRSP and TFSA, paying off your mortgage becomes a real option. It’s either that or investing in a non-registered account and I’m not smart enough to figure out my ACB’s and portfolio tax optimization… I’m then getting 3% return on my pre-payments, risk-free (more if we are to believe that rates are going up).

#42 Frank Stammech on 07.13.18 at 7:22 pm

This whole losses on 20 and 30 year bonds is bunk. I remember back in 2010, all so called experts said bond yields, interest rates would be going up.

I bought a wack load of 30 year U.S. treasuries and U.S. treasury strips in April 2010 and rates at 4.55% to 4.67%. I also got a great exchange rate, I only paid 1.019 to 1.021 for each U.S. dollar.

Since then 95% total rate of return or 11.44% per year from capital gains, dollar appreciation and interest made. The easiest $750,000 I ever made. Rates will not be that 4.6%+ for as long as I can see.

#43 Fish on 07.13.18 at 7:31 pm

Garth don’t you think #35 The Real Mark on 07.13.18 at 6:49 pm

really needs some help,

#44 Linda on 07.13.18 at 7:33 pm

‘When you get old, you don’t need one’. While it is true you do not ‘need’ a house, you do need somewhere to live. Global warming notwithstanding, the fact remains that in Canada a roof over one’s head is a necessity.

Which brings me to the whole rent vs. own debate. Garth has laid out the many advantages of renting for the younger set, but be honest. Are you as a renter building wealth by investing as Garth suggests? Or are you living payday to payday? If you are not building wealth, do you want the hassle of renting when you are old (age 65 plus). As far as I am aware, while there are many discounts available to those aged 65 rent isn’t discounted due to age. In fact there have been reports that seniors are the fastest growing segment in homeless shelters, mainly due to not being able to find affordable accommodation. That pesky problem of their income not keeping up with rising prices, don’t you know.

So if you are not building wealth & are not likely to start, owning has the advantage in that it 1) forces you to save, albeit in a one trick asset pony & 2) provides shelter even when prices increase & your income does not.

#45 Keith on 07.13.18 at 8:01 pm

@ #23 TurnerNation

Don’t forget Keith Richards.

#46 Fish on 07.13.18 at 8:04 pm

like previous mentioned in this blog,

Taxes

Job loss

Cuts

higher costs living

Rules and regs

always remain what I believe, until proven, time will tell

#47 just wondering on 07.13.18 at 8:21 pm

Last night you talked about an advisor getting a 1.5% rate on a money market fund which is insurable up to $1 million. Just wondering what the advisor fees would be on that amount?

That depends on the advisor and the portfolio (tax-deductible or not). But this is not an investment, nor meant to be long-term. Just a place to park cash for a while. As mentioned before, GICs and HISAs are poor choices. – Garth

#48 Mortgage Attack on 07.13.18 at 8:22 pm

I thought most people retirement plan is live with their kids. Or work forever. I did ask my coworkers. Was disturbed by their answers therefore I’m here figuring how not to work forever.

#49 just wondering on 07.13.18 at 8:24 pm

last night you mentioned an advisor getting 1.5% on cash parked with an advisor. And insurable up to a million. What kind of advisor fees would that account pay?

#50 oncebittwiceshy on 07.13.18 at 8:25 pm

Mark: “Hence, what you claim doesn’t really make a lot of sense. If what you claim was present in the bond market, there would be a considerable spread between long-term and short-term debt.”

Frank Stammech on 07.13.18 at 7:22 pm
This whole losses on 20 and 30 year bonds is bunk. I remember back in 2010, all so called experts said bond yields, interest rates would be going up.

<<<<<<<<<<<<<<<<<<<<<

Mark and Frank, I seem to be losing you in the understanding of long term duration bonds.

Frank you did very well in long term bonds in 2010 because we have been in a declining interest rate environment for the last 30 plus years.

Understand the inverse relationship in long term bonds and interest rates. When interest rates go down each year of duration reflects the increase in value. In other words, if you have a 30yr duration bond and rates drop by 1% you will make 30%.

The opposite holds true as well, if rates go up by 1% you will lose 30% on that same bond.

Mark, this is why the institutional investor is flooding the 10yr market. They can't afford to lose 30 plus percent on the kind of duration that they actually need to provide member benefits or insurance.

They are not persuaded by the yield difference because the yield is secondary to the possible losses.

#51 ttb on 07.13.18 at 8:29 pm

The only question I have is what to do when it gets closer to renewal time. I have 2 years in my 2.4% fixed rate mortgage and have enough cash to pay almost everything now. But I am afraid that a “balanced portfolio” is too risky (what if it’s down at the time of renewal?). So I am left with stupid “safe” investments (that bring back less than inflation) or doing lump sum payments to pay back as soon as possible.

#52 Tony on 07.13.18 at 8:38 pm

Re: #20 oncebittwiceshy on 07.13.18 at 5:24 pm

In a world where everything is manipulated or virtually everything the bond market is just another causality. I doubt the 10 year will ever get above 3 percent again unless America brings in helicopter money.

#53 kia drivr on 07.13.18 at 8:43 pm

Google: Globe and Mail:

Why firefighters are underworked and overpaid

A nation of $100,000 firefighters

#54 Tony on 07.13.18 at 8:45 pm

I believe the same thing is happening that happened during the reign of Paul Volcker. The U.S. today can not withstand any rate increases but Powell will probably keep raising them. The data is all fabricated to keep rates low whilst raising the Fed funds rate. These are times where you think you’ve seen it all but they come up with more. Every last American is already on to all this and they have been for many, many years. The end result looks to be communism.

#55 Ronaldo on 07.13.18 at 8:48 pm

In the 45 years of being a home owner, I owned a total of 9 homes, 3 of which I built myself, 2 were mobile homes, and 5 were older sfd’s. We also rented in between all of this. I never once considered paying off the mortgage on any of them since I never planned to be in one place for my entire life. How boring is that? I always considered a mortgage as ‘rent’ and my rule of thumb was never to have a mortgage payment more than 25% of my net income. Never considered wife’s income because that could end when you least expect it. (children, no available jobs, etc). This of course required that we live within our means. Not so easy nowadays for most people considering that property prices have far exceeded wage gains. What you could buy for 2.5 to 3 times one annual salary can now take up to 23 times like in the lower mainland for instance. Excess income was invested in a balanced and diversified portfolio. Of course once our sons got out of college and needed financial assistance for further education, our savings had to be put on hold for three years in order to help with their education. Having married early and having the first child by 25, we had lots of earnings years left when they left the nest at 19. I was 45 and my wife 43. Both of them paid 50% and after graduation from Tech School, both were debt free. They are now both very successful business people and we are stressfree retirees now going on 18 years. The key to it all is really living within your means and not getting caught up in keeping up with the Jone’s people.

#56 Nova Johnny on 07.13.18 at 8:49 pm

Another great article Garth. It’s just interesting to note, that due to fractional reserve lending, the banks type the money out of thin air into your account. You then are required to pay them real money that you’ve gone out and earned for interest. if you fail to make the payments they take the actual asset (House) all with money they never had to begin with. I just find that incredible…….

#57 Shawn Allen on 07.13.18 at 8:54 pm

What’s this “we’?

Brian Ripley at 9 noted:

This is not a promotion for Alberta, it is simply a way of looking at the divergence in earnings across Canada. We are not a monolith. We’re a big country with lots of housing cost and earnings differences.

************************************
True and it goes a lot further than that. There are huge differences in economic conditions within each province. In Ontario, in particular, the differences are vast.

Not only are “we” not a monolith, but in economics there simply is no “we”.

We all act almost exclusively in the best interests of ourselves and immediate family. And, Adam Smith taught in 1776 that this was for the best.

When it comes to your financial future, you are on your own. Expect no one to subsidize you or buy local from you unless that happens to be in their best interest.

#58 Ronaldo on 07.13.18 at 9:01 pm

#14 JonBoy

I believe that’s why most people pay down the mortgage instead of investing the extra. The benefit is guaranteed, if not “as good” as decent investment returns. It carries no risk, has a defined benefit and gives them peace of mind about paying down their mortgage early.
————————————————————
Most people are terrible when it comes to money management and for those people it is probably the only way for them to save anything. But now with the ability to have a HELOC, it’s easy for them to draw the equity back out so probably makes little difference.

#59 JSS on 07.13.18 at 9:21 pm

There’s a few other items regarding financial planning that is rarely discussed:

– pick the right spouse who shares the same financial plan as you. If he or she spends like a drunken sailor, then your financial plan won’t work
– retirement planning starts at around 25 years of age. Time for compounding is essential in building wealth
– try not to love your career too much, as your focus will gravitate around your day job, and possibly lack focus and time on investment planning
– wealth is built and maintained when a crisis occurs. Many people lose jobs, which causes them to find diverse methods of generating wealth without working for “the man” forever
– watch trends: everything goes on sale sooner or later.

#60 Bytor the Snow Dog on 07.13.18 at 9:37 pm

#5 Dave on 07.13.18 at 3:57 pm sez, and #22 Ray echoes:
“Tax dollars wasted…I live in a city that has 250,000 residents and 7 fire halls. Half the fire halls are brand new and the others slated to be.
Handful of real fires per year but the capital and operational costs are beyond millions.
To justify their existence, they race to every little car accident or other minor incident. An ambulance can do the same job much more cost effectively.
Im certain we can shut down half of these stations without any risk to residents and save tax $$$$$$$.”

I’m sure I’m recently retired from the city you mentioned. I was intimately involved with the building of this infrastructure. Let me just say that I was 100% ignored when I spoke up agreeing with exactly what you are saying.

When I got my chance to retire, I did.

Don’t hate the player, hate the game.

#61 For those about to flop... on 07.13.18 at 9:39 pm

Pink Lemonade Stand in Coquitlam.

These guys with their latest reduction are only borderline Pink Lemonade,but the ice blocks are melting and so I will follow it and see what happens to them.

I try to spend as much time on Vancouver proper as possible ,but I don’t mind spending a bit of time on Greater Vancouver.

I have noticed the melt is on in Maple Ridge and up until a couple of days ago Piitt Meadows only had one(1) detached sale up in the last 30 days and so that has to cause some consternation and maybe some constipation.

I try to stay out of the valley as much as possible, especially Rabbitsford ,but maybe in time that will change.

Anyway these guys paid 1.22 last July and just whipped out the butter knife and reduced the spread by 50k after already dropping it a 100k.

They would have realized by now that the bread isn’t rising as much as last year.

Another one out that way on Palmdale, that is not at risk of losing any money only waited 7 days before doing a price slash to get under 1.2

The people that can afford to cut the corner off their lottery tickets from long time purchases and take 10% or so of their original ask are cutting the lunches of the people that bought in the last two years.

The sandwiches still taste pretty good,they just have a little less mayonnaise on them…

M44BC

1015 Ogden Street, Coquitlam paid 1.22 ass 1.29

Jun 4:$1,475,000
Jul 12: $1,325,000
Change: – 150000.00 -10%

https://www.zolo.ca/coquitlam-real-estate/1015-ogden-street

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#62 fishman on 07.13.18 at 9:57 pm

I see the Yanks are having a hissy fit & charging 12 GRU (Russian Military Intelligence officers) for hacking the DNC. Old news. It was common knowledge all over town the GRU had hired a bunch of Leningrad university students @ wages $1100/month to “rat f**k” Clinton’s computers. The students were getting drunk afterwards & bragging about all the crazy things they were putting out there. Nobody cared because nobody figured anything would come of it. The budget was just 1 1/2 million. Best money the Ruskies ever spent. The Yanks are on their way to a civil war. If a couple dozen beer drinking, rat f**king Russian students can bring down our western democracy, do we even deserve it?
If I was the FBI or Justice or CIA or whatever I’d be embarrassed to put this out to the public.

#63 jane24 on 07.13.18 at 10:03 pm

Well back from inspecting the work the builder has done to our Southern Italian home. We got about 90% of what we expected so we are thrilled. We can live with the 10% that we didn’t expect. Good going for totally unsupervised charming Italian builders!

Trump is here in Britain for 48 hours. I have read what his actual mouth has said in this time frame and he makes no sense at all. He contradicts himself the next day and then calls his own actual quotes from the previous day, fake news. The guy is nuts but very very entertaining.

Right onto fire stations. I have noticed when I go home that Canada has a lot more fire stations than Britain does but then UK homes are brick and Canadian homes are wooden boxes that burn easily. It is very true that home fire preventions and car construction in crashes are much better than they used to be and there isn’t the call for firemen that there used to be but like everything in Canada, firemen have their expensive turf protected. Here in Britain they are all being retrained as paramedics and then sent out instead of expensive ambulances. Makes sense.

Garth we took advantage of 10 years of low mortgage rates to pay ours off. Yes we could have made more investing in stocks BUT we sleep very well at night and living rent-free makes retirement a doddle. Free home for life has great value for the average human.

#64 Smoking Man on 07.13.18 at 10:13 pm

Hahaha the FBI indights 12 Russans for hacking the DNC emails. What a joke. Total Despiration. Lefty MSM going nuts with this.
The globalists last stand. Steth Rich is all you need to know.

#65 Borrowing from your paid .. on 07.13.18 at 10:13 pm

Off house to invest in a ‘diversified portfolio ‘

Then 2008 Comes along – you now are paying interest on the loan while your investment has taken a Bath

You then ask your advisor , what happened ?

Advisor – ‘we didn’t see that coming , but don’t fret , it will be okay , it’ll rebound ‘

You -‘when ?’

Advisor – I don’t know

Call your doc for a lorazepam Rx

#66 Linda on 07.13.18 at 10:16 pm

#47 – Mortgage Attack – ‘was disturbed by their answers’. I hear you there. The naive belief that ‘the government’ will ‘take care’ of you when you get old; the belief that living on CPP/OAS is going to be one sweet ride; the belief that they will ‘win the lottery’ or ‘inherit a packet from my parents’ etc. Yes, someone WILL ‘win the lottery’ but the odds are very much against it being the vast majority who are depending on that as a retirement strategy. Others will inherit & a nice packet at that but again, the vast majority will not & may even ‘inherit’ the responsibility of paying for the parental care. That same majority will also discover that if they didn’t make an effort to take care of themselves that any ‘government’ provisions will fall far short of one sweet ride. Too many people, not enough funds to go around & even if you stripped ‘the rich’ of every cent there still wouldn’t be enough. All that would do is add to the competition for what benefits are available.

#67 Dean on 07.13.18 at 10:25 pm

Thanks Garth!

#68 Fish on 07.13.18 at 11:19 pm

I was apposlisily done in a 2016,

Next is all new

Good for me,

please note what you NOT here, DONEll
Your words, not mine
don’t mean anything and I mean everything, is DONE
Get with the program, DONE

#69 The Real Mark on 07.13.18 at 11:26 pm

“Mark, this is why the institutional investor is flooding the 10yr market. They can’t afford to lose 30 plus percent on the kind of duration that they actually need to provide member benefits or insurance.”

Except that there’s no evidence of institutional investor preference for 10 year versus 30-year debt. The spread is a mere 5-10 bp for the extra 20 years until maturity, which is peanuts compared to the extra interest rate risk taken.


They are not persuaded by the yield difference because the yield is secondary to the possible losses.”

Except that the 10-year and the 30-year debt is trading at nearly the same yield. So just where is the evidence that the institutional investors have a preference for 10 year paper, ie: bonds that have lower duration, and hence, lower sensitivity to losses in a rising rate environment?

The positioning, at least to me, appears to be that the investors in government debt are fearing *lower* interest rates and are willing to lock their money in for 30 years at nearly the same rate as they lock in for 10 years.

Don’t know what more I else I can say about this to convince you. Maybe Shawn Allen or someone else smart can explain further because I’m basically just repeating myself at this point.

#70 Do NOT invest in ETFs on 07.13.18 at 11:41 pm

But as Saunders explains, the Department of Homeland Security’s definition of “business” appears to be very broad and can include mutual funds or any other investment plans. Saunders cites an Edmonton man who received a lifetime ban from entering the U.S. simply because he was a part-owner in a Colorado building that leases space to a pot dispensary.

#71 WUL on 07.13.18 at 11:41 pm

A couple of points about firefighters (the $100K “layabouts”) being dissed here, if I may.

When there is a car wreck, they reach the scene faster than the cops and the ambulance. They also have the “jaws of life” and can cut the A pillar and the C pillar etc. and peel back the roof of the Audi to extract you while they put out the conflagration of the gasoline.

Meanwhile, the ambulance attendants cannot leave the emergency ward until the patient is admitted.

Note that you will not be hired as a firefighter in Fort McMurray without paramedic qualification. And probably elsewhere.

Also, they are now carrying and administering Nalaxone to save the opioid victims. Probably mandatory.

Quit your kvetching and count your lucky stars. If it is so damn easy and a luxurious a lifestyle, go become one.

Finally, #63 above mentions Lorazepam. I was thinking about commenting on that wonder drug recently. It makes my life bearable.

#72 oncebittwiceshy on 07.13.18 at 11:58 pm

The Real Mark: “The spread is a mere 5-10 bp for the extra 20 years until maturity, which is peanuts compared to the extra interest rate risk taken.”

<<<<<<<<<<<<<<

You do understand that the extra duration/rate risk is with the 30 yr duration bond, right?

#73 Diversified in Oakville on 07.14.18 at 12:04 am

Garth is right on with today’s post! (And I don’t need to suck up.)
Have had a VRM that has been between 1.95 – 2.95% the last 8 years. Cash available to pay mortgage off in balanced ETF non-registered and/or TFSA accounts averaging 8% over the same time frame.
Anyone saying this is a bad idea needs to give their head a shake.
These post’s continue to offer sound advice and alternatives to conventional thinking.
Thanks Garth, your advice has helped me shave years off from when I will retire.

#74 Ponzius Pilatus on 07.14.18 at 12:15 am

Pathetic.
Trump gives the middle finger to May and England.
And he still gets a red carpet treatment by the Queen.
No wonder, their soccer team lost.
Bunch of losers
Get some friking backbone.
Like Merkel.

#75 For those about to flop... on 07.14.18 at 1:29 am

CONFIRMED PINK SNOW

Confirmation has come through on this townhome flip gone wrong,let’s look at the details…

2355 e 41st ave,Vancouver

Paid 961k January 2017

Sold 910k March 2018

Assessment 1.12

So they put 961k in the cookie jar on a brand new townhome ,and roughly a year later when they went to get it back there was only 910k waiting for them.

Couldn’t get enough dough to get near the assessment.

Over 10% hit after expenses or roughly 100k on a relatively new product.

Who stole the cookies from the cookie jar…

M44BC

https://www.zolo.ca/vancouver-real-estate/2355-e-41st-avenue

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#76 JonBoy on 07.14.18 at 1:41 am

Nice work, but it’s marred with two assumptions: financial assets fluctuate but real estate does not. Simply untrue, in fact there is much to suggest housing has peaked now that rates are rising. Second, as interest costs increase less of a VRM payment goes to principal and more to interest, shooting a hole in your numbers. – Garth
—–

I didn’t consider real estate fluctuations because they don’t matter in the analysis. What you owe on your mortgage is what you owe on your mortgage. It doesn’t change with your house value. It changes the VALUE of reducing your mortgage (ie, you might only be gaining $0.90 on the dollar, due to house depreciation) but again, you have to pay off your mortgage anyways, so you still have the impact of every extra dollar you put against the mortgage.

Now, if you’re making a point that you’re “losing money” by paying down a house that’s worth less than you paid for it initially, sure, but you still have to pay the mortgage down regardless, so every dollar counts fully.

My intent was to put hard numbers to what you were saying, so that a person could see the actual differences (in dollars) between adding an extra payment to their mortgage every month or investing that money. I wasn’t trying to dispute anything you said, specifically. As I mentioned, I ain’t buying anything to live in for a while, so I’m fully in agreement with you as to where to put money.

#77 Bobby on 07.14.18 at 2:29 am

Great advice Garth. I agree fully.
Rather than pay down my VRM mortgage I am well invested in retirement funds that return far more at 9%. I plan to retire next year. Even my actuary wonders why anyone would want to pay down such a cheap mortgage.
Ran into a colleague who was recently collapsing his RRSP’s to pay down his mortgage. He said the tax hit gave him piece of mind. What could I say?
Sadly, many Canadians are financially illiterate and it continues to show. Perhaps more financial studies in schools would help. Highly unlikely in the present progressive climate I bet.

#78 Fish on 07.14.18 at 2:54 am

No

Please , FOR MY self,

Thankyou

#79 will on 07.14.18 at 3:26 am

keep your eye on the puck

yeah i can’t remember gretzky’s exact words but it was something like position yourself where the puck is GOING to be. and then shoot the puck TOWARD the net. highly nuanced. i think the idea was that losers chase the puck. winners position themselves to receive the puck advantageously.

#80 Mortgage Free on 07.14.18 at 3:59 am

Re: #25 Retired in Kelowna on 07.13.18 at 5:40 pm
***

We have been doing something similar with a twist (we are a family with several young children living in a mid-sized city). We decided to go mortgage free and paid it off using money from our non-registrered investment portfolio. The cost of our home was relatively low to begin with (below the Canadian average price of a SFH by about 30%). Yet, it is still a very nice family home in a great hood ideal to raise a family (many such cities exist in Canada). Our monthly expenses without mortgage payments and managed according to Mr. Moneymoustach principles (my wife has been a reluctant moustachian at first, very reluctant actually, but eventually got on board as well; the key is to introduce changes to spending habits gradually and leave the less moustachian spouse a bit of spending freedom, but not too much!) are very reasonable and stress free (about CAD2500; the food inflation has been a bitch, but we have have been getting increasingly creative finding best food money can buy in Canada at a reasonable cost; creativity is key here!) Overall we live very well and have many modern luxuries.

That still left us with a good sized six figure portfolio (obviously we have worked quite a bit in our lives to get there), which is all invested in stocks of high quality firms internationally (mainly US, Europe, Asia, just a few Canadian firms). We use a Canadian broker charging us very little for each trade (typically USD0.45), thus we own many firms across industries / geographies, many of which pay excellent dividends in the 2-4% range and have great long term growth prospects with super strong balance sheets. None of the firms we own represents more than 1% of our portfolio; so the firm level risk is practically non-existent. Be careful when selecting ETFs; some of them have incredibly high exposures to just a few firms.

And now the twist. The choices were: A. The Garth way: a balanced portfolio + not rushing to pay down the mortgage; B. a balanced portfolio + paid down mortgage; C. our approach.

We selected C. as 1. we like not being slaves to a bank having many rights over your life buried in the fine print, 2. having such low monthly expenses allows us to go all equity with a much higher long term expected return than a balance portfolio can ever deliver, 3. actually, we welcome market corrections as that is when we do use temporarily moderate (max 10% of the portfolio value) leverage provided by our broker at below the mortgage variable rate with no strings attached to take advantage of those dips, 4. having an all equity portfolio and being otherwise debt free still allows us to gain from leverage (even when we do not temporarily use margin), as balance sheets of the firms we own are all levered, 5. if we are lucky enough and the mother of all market corrections comes shrinking the portfolio by let’s say 80%, then hello HELOC, here we come to borrow a little to load up that truck with all those amazing firms sold for peanuts.

I can tell you folks, having a completely debt free family balance sheet and super low monthly expenses comes with a deeply satisfying feeling I wish every family man could experience. Now, if it were my choice, I would make it even better and rent an adobe and have more money to invest, but my wife really wanted a house she could customize to her liking and from which we cannot be booted (with kids embedded at schools and zero rental availability in our hood these situations become a bit tricky), so I decided her house lust is priceless and needs to be accommodated…

#81 KLNR on 07.14.18 at 8:34 am

Meh, paid off my toronto house last year. Still have another 25 years to invest. Being completely debt free in this city is a great feeling.

#82 Headhunter on 07.14.18 at 9:41 am

#69 WUL on 07.13.18 at 11:41 pm
A couple of points about firefighters (the $100K “layabouts”) being dissed here, if I may.
Quit your kvetching and count your lucky stars. If it is so damn easy and a luxurious a lifestyle, go become one.

Hmmmm pretty long waiting list to become a Fireman or Cop.. such a long list that there are courses now people take “pre application” Fireman friend here in town Lives in South Carolina 2 weeks a month.. just comes back for a few shifts..

Another friend eastern ont.. just retired 57 years old another fireman.. whole family are fireman.. Patriarch got em all in… nepotism at its finest if these jobs were so shit why the years long waiting lists to become one?

Like winning the lottery my friend

#83 QSC on 07.14.18 at 10:19 am

Re: #8 GMO 7 yr returns. I did not make anything up. GMO does not disclose 7 yr returns in its free newsletter. You have to be registered or triangulate from other sources. See https://www.theglobeandmail.com/investing/investment-ideas/article-grantham-forecasts-rough-7-years-for-equities-bonds/ or https://www.advisorperspectives.com/commentaries/2018/02/02/7-year-asset-class-forecasts

#84 crowdedelevatorfartz on 07.14.18 at 10:32 am

@#69 WUL

Thou doth protest too much.

I think most people dont have an issue with firemen.
Its the waste of taxpayer dollars people have an issue with.
And as the majority of workers( taxpayers) begin retireing and all the revenue begins to shrink….. more and more taxpayers will take notice.

Downtown Vancouver. Drunk passed out at a bus stop in front of a retail business with a bottle lying next to him. Bad for business. Checked his pulse. Strong. No major issues. A nice Summer day and he’s sleeping….but the business wants him gone.
Called 911 for the police to pick him up. “Dont send the fire dept! Hes just drunk and passed out”.
VPD sully themselves handling a drunk?
What was I thinking?
TWO ladder trucks with a full compliment of “calender boys” arrive and survey the scene. They dont even touch him and call an ambulance. TWO ambulances show up, sirens screaming.
The drunk wakes up at all the noise. Becomes belligerant when a paramedic tries to touch him. Starts swinging , cursing.
Police are finally dispatched. THREE VPD vehicles arrive. Two cars and a paddy wagon.
Mr Dunk is cuffed, and bundled into the wagon….off to sober up.
10 firemen, 4 paramedics and 6 cops…….. for a drunk passed out at a busstop……….

Our taxpayer dollars at work. I spent 30 years working in downtown Van and this experience is typical.

And you see these wasteful exercises repeated at minor traffic fender benders( with a tow truck driver working cleaning up fluids, glass, etc while everyone else stands around talking.), minor injuries(twist an ankle at a crosswalk send a fire truck or two), on and on and on.

I talked to the brother of a coworker. He’s a fireman in Seattle. He has a normal 9-5 job . His car has a “fireman” decal on it. If there is an emergency in his “district” he may…MAY… get dispatched to attend. The station has two full time firement that drive the ladder truck and the paramedic van. ALL the other “part time” firemen arrive at the scene IF NEEDED. The decal on their license plates allows them to park anywhere near the emergency.
They are paid for attending the emergency and for being on call……….
Intelligent taxpayers dollars coming to a firestation in Canada near you? I highly doubt it.
Too many union dollars at risk. The lobbyists would protest too loudly to “their” politicians. And the TV ads warning of death and doom if their services were cut. ( we wont even talk about the taxpayer subsidized pensions and benefits)

Oh. And whats the deal with firemen all over North America getting into charity fundraising in a HUGE way?
Apparently they have so much time on their hands they can spend hours each work day on fundraising and strategizing? Must be nice.

#85 TurnerNation on 07.14.18 at 10:39 am

The Globalist agenda is coming on so strong and heavy, almost 80% of what’s in the “news” is programming.

Globe Mail today spent many pages selling us on Universal Basic Income, meaning 80% of those on it can sit at home and live on our government money.

The goal is getting off our land, away from self-sustainability and into cites.
One trend people have identified: Veganism.

– Endless vegan protests against Toronto eatery, Antler.
– US computer generated news stories always work it in like “they were a vegan bodybuilder”.
– WeWork popular shared office space provider in every city to offer only ‘vegan’ menu.
– Local leftish rags making it front page:
https://nowtoronto.com/lifestyle/veganism-in-toronto-vegandale-and-beyond/

#86 TurnerNation on 07.14.18 at 10:54 am

Welcome to h-ll – our densified cities. Drug dealers run rampant, police and government will not help. Gold plated salaries at the Govt. Housing Authority I am sure:

https://www.theglobeandmail.com/canada/toronto/article-seniors-in-toronto-community-housing-say-they-are-victims-of-crime/

#87 Leo Trollstoy on 07.14.18 at 11:09 am

Keep your eye on the puck

I’ve already scored

#88 WUL on 07.14.18 at 11:11 am

#80 Headhunter on 07.14.18 at 9:41 am
#82 crowdedelevatorfartz on 07.14.18 at 10:32 am

Good points from both of you.

I’m putting a Post It Note on my computer screen. “Don’t add a comment on Greater Fool when cranky!”

About 83% of my time. I’ll try to calm down. Or, more Lorazepam.

Cheers.

#89 MaxBerniersShorts on 07.14.18 at 11:13 am

#Brian Ripley
Gee, it’s almost like some strange mysterious force not dependent on local incomes is at work in Vancouver and Toronto. Perhaps our host might know what that is?

#90 crowdedelevatorfartz on 07.14.18 at 11:14 am

@#69 WUL
“….they are now carrying and administering Nalaxone to save the opioid victims. Probably mandatory….”
+++++

And administering nalaxone takes so much “training” the govt in BC is handing out $200 Nalaxone kits to every drug addict that wants one.
Please.
About as complicated as using an Epipen for an allergic reaction.
The result. The new needles are removed and used for drugs and the kits are tossed in the garbage……

Our squandered tax dollars at work.

but look on the bright side.
The welfare receiving drug addicts in the Downtown East sideare saved from OD’ing while addicts in suburbia are dropping like fentynal flies……

Chinas covert war on democracy?
What should we do about fentynal in our streets?
The Phillipines Duterte has suspended due process to “deal” with it….

https://www.hrw.org/news/2018/01/18/philippines-dutertes-drug-war-claims-12000-lives

#91 maxx on 07.14.18 at 11:19 am

#16 spaceman on 07.13.18 at 5:06 pm

Perfect example of a bird in hand……completely agree.

Write your own history…….like it. A lot. Done it. Worked like a charm for us. Paid the noose off in under 4 years, then put saving in the cross-hairs.

Never looked back.

#92 Reality is stark on 07.14.18 at 11:46 am

To #82.
How is it that Canadians are so stupid?
We really can’t find ways to reduce public spending?
After 2008 public services should have become cheaper. Wages and benefits should have been reduced immediately for ALL public sector workers.
It is criminal that we borrowed heavily to overpay these workers. All our politicians were weak at the time and should be exposed for their ineffectiveness.
I wish they could all be jailed for being so incompetent.
A typical Canadian tragedy. Now interest rates are rising and debt servicing costs are rising and we are all about to feel the impending poverty.

#93 Capt. Serious on 07.14.18 at 11:50 am

Joy is having enough in TFSA and non-registered assets to pay off the mortgage, but not paying it off because 2.59% fixed until 2021 is too good to pass up.

#94 jess on 07.14.18 at 12:07 pm

collusion & banging the close

IM collusion and “banging the close”

Current allegations against the traders involved in the scandal are focused on two main areas:

Collusion by sharing proprietary information on pending client orders ahead of the 4 p.m. fix. This information sharing was allegedly done through instant-message groups – with catchy names such as “The Cartel,” “The Mafia,” and “The Bandits’ Club” – that were accessible only to a few senior traders at banks who are the most active in the forex market.
“Banging the close,” which refers to aggressive buying or selling of currencies in the 60-second “fix” window, using client orders stockpiled by traders in the period leading up to 4 p.m.

These practices are analogous to front running and high closing in stock markets, which attract stiff penalties if a market participant is caught in the act. This is not the case in the largely unregulated forex market, especially the $2-trillion per day spot forex market. Buying and selling of currencies for immediate delivery is not considered an investment product, and therefore is not subject to the rules and regulations that govern most financial products. ”

ttps://www.investopedia.com/articles/forex/031714/how-forex-fix-may-be-rigged.asp

#95 AGuyInVancouver on 07.14.18 at 12:09 pm

#83 TurnerNation
The Globalist agenda is coming on so strong and heavy, almost 80% of what’s in the “news” is programming…
_ _ _
I hope the aluminium tariffs haven’t driven up the cost of your hat budget too much.

#96 Stonewalker aka Whimp on 07.14.18 at 12:14 pm

#82 crowdedelevatorfartz

You got it right, I work fir the local municipality, work closely with the volunteer fire dept here, since they’re on call volunteer, they’re pretty efficient, but I worked for city of red deer years ago. They went to 3 alarm? Response, like you say, fire, ambulance, cops to every 911 call. It’s supposed to benefit the public, which I’m sure it does on certain calls, like an arsen, assault or something, but their few & far between. Cats in trees and bogus stuff costs a ton.
Departments are always trying to spend their budget, going slightly over so they can apply for a bigger one next year. This is obvious with the RC’s causing riots to get or keep funding. Pretty inefficient, I find that the higher up you get working for the government, the less you work and you make more money, the opposite of what it should be.
It’s sll about capitalizing, make overtime, protect your position, don’t let anyone threaten your position ect. As a tradesman I couldn’t care less about that stuff, or climbing the corporate ladder since this is what I’ll always do.
A good example of this behaviour if tow truck operators. I help a friend that’s a driver, been doing it for years. When they get an insurance job, get every vehicle & worker out on site, charge hourly for every one, call them flagged, support staff, swamped, whatever gets the wage. All trucks on scene getting $120/hr wether their pulling or not. It’s a great bussiness to be in, but is 24/7 your tied to it and on call constantly.
Btw, working with a friend on using his HPO cert to get my house going, hopefully it works out!

#97 you must in 100% equities on 07.14.18 at 12:41 pm

‘I am well invested in retirement funds that return far more at 9%’

……..

lol, no balanced portfolio is ‘far exceeding’ 9%

#98 jess on 07.14.18 at 12:50 pm

…And a lot of made a lot of dirty money.”
=============
… words reframed as “competitors” or racist rants are now locker room talk

https://www.splcenter.org/hate-map
“But Chris Eddy, who didn’t share her husband’s racist views, buried the secret of his past with her husband – too embarrassed and ashamed to tell anyone.

“In the 30 years since then, I’ve had bad anxiety issues over this,” Chris Eddy told Hatewatch.
https://www.splcenter.org/hatewatch/2018/07/06/white-widows-secret-i-was-married-aryan-supremacist

https://www.huffingtonpost.ca/entry/white-supremacists-running-for-office-2018_us_5a7da926e4b0c6726e1285c1

#99 jess on 07.14.18 at 2:54 pm

pizzagate guy update (give someone a inch and they take a mile)
https://www.splcenter.org/hatewatch/2018/07/12/pizzagate-style-vigilante-michael-meyer-under-investigation-multiple-incidents

#100 islander on 07.14.18 at 3:35 pm

https://www.40listings.com/REBGV/R2287389/1103-cottonwood-avenue-coquitlam-central-coquitlam-v3j2t4

Well, they do say, ‘buy the worst house on the best block’, but this is stretching things!

#101 Tony on 07.14.18 at 4:21 pm

Re: #73 For those about to flop… on 07.14.18 at 1:29 am

Probably worth about $850,000 today and falling fast. Things changed when Ford won the Ontario election. China U.S. trade war and the devaluing yuan.

#102 Jimers on 07.14.18 at 4:57 pm

#25 Bob -Ben Levin(L) will be our of jail soon, after serving time on his pedophile convictions.

#103 Oft deleted much maligned stock.picker on 07.15.18 at 6:22 am

G….borrowing against the house is creating debt….which means monthly pmts you didn’t have before you borrowed. Where do the monthly pmts come from and if we have another good dump then how does the debt service affect the ongoing value and income stream.of the portfolio?

Payments are 100% deductible from income tax, and if you can’t service the debt then don’t borrow. Duh. As for a stock market dump, people (unlike you) with balanced portfolios don’t sweat about such things. — Garth

#104 Mazza on 07.16.18 at 12:47 pm

Garth I drove through Belfountain for the first time last Friday – seems like a lovely place! Unfortunate that all the beautiful gardens are marred with NIMBY signs about *gasp* urban sprawl