Rebel, rebel

Barry called yesterday. Out of the blue. “Blog reader,” he said. Of course those two words allow anyone into the magic Kingdom of Garthonian wisdom. So, I said, whatsup?

“My TD bank guy tells me I can’t set up a mortgage inside my RRSP. He says CMHC just changed the rules so only new houses apply.”

That’s BS, I replied, in depth. They just don’t wanna help you. Walk.

For those who don’t know, yes, you can put a mortgage on your house (or your cottage or rental property) inside your RRSP. That way you actually make payments to yourself, instead of the banking oligarchs. How cool and rebellious is that? (BTW, the banker Barry spoke to was simply ignorant – plus they didn’t want him to do it.)

Now that interest and mortgage rates are on the rise, there’s more appeal to doing it. Up to this point, with sub-3% home loans available everywhere, it made more sense to float your house with cheap bank cash and use your own retirement funds to achieve much higher returns inside a financial portfolio. However, with posted mortgage rates nudging the 4% mark, an RRSP mortgage may be a way to finance a property as well as invest money.

So how does it work?

Not simple, nor cheap, nor easy set up and maintain, but possibly worth the effort.

First, find a lender willing to host what’s officially called a non-arm’s length mortgage. The best bet will be one of those less-than-blue-chip guys like B2B Bank or Canadian Western Trust, because the last thing the Big Six want is for people to create their own borrowings. Second, you need money in your self-directed RRSP to use to finance the house. Duh.

Then there’s the set-up. That will involve having the property appraised for mortgage purposes, staying within established LTV (loan-to-value) parameters, paying your lawyer to draft the mortgage and funding the administrating bank. This will cost a few thou. The big expense comes with mortgage insurance which is required by law. The cost will be up to 4% of the face value of the mortgage, which is (obviously) a lot. But no getting around this.

It’s important to understand the mortgage you’re creating isn’t something you can diddle with, even though you’re both borrower and lender. For starters, it must be a reasonable amount – so no 0%-down. Also you can’t grant yourself a 1% mortgage rate. In fact, you can’t even use the rate your bank is offering everybody else – it must be the posted one, devoid of any discount. However, since the interest you pay is to yourself, this isn’t necessarily a bad thing.

You can’t miss, skip or ignore payments. If you do, your RRSP can actually foreclose on your house (as strange as that sounds) through the trustee which administers it. Payments can’t be late, nor can you decide to pay yourself more or less in a single month. In fact, the mortgage can’t even be paid out early without incurring the same penalty as would be collected by an evil commercial lender.

On the plus side, all these mortgage payments you make into your RRSP aren’t considered contributions and don’t affect your ability to generate more space through earned income. The cash paid into the retirement plan accumulates, of course, and can used to buy other assets, achieving greater diversification.

As mentioned, this strategy can finance a house, your ridiculous money-losing rental condo or a commercial property. In fact, a non-residential use is probably the best. That way not only do you pay mortgage interest into your own retirement plan, but you can deduct that same interest from taxable income. And since commercial loan rates are w-a-y higher than residential ones, this is a big win. Take that, Bill & Justin.

So, there you go, Barry. Not for people who want simple or easy. But sweet for those happy to make 4% on their money, or wanting to turn an RRSP into an endless tax deduction. Also ideal for anyone who hates their bank.

114 comments ↓

#1 Smooth Sailing on 07.17.18 at 5:04 pm

Can someone reiterate what you’ve outlined here with numbers?

#2 ryan on 07.17.18 at 5:13 pm

First

#3 none on 07.17.18 at 5:14 pm

first

#4 crowdedelevatorfartz on 07.17.18 at 5:20 pm

I hate my bank

#5 DON on 07.17.18 at 5:20 pm

Great information Garth.

Will have my significant other read tonight. She will be all over this… It is nice to have a reasonably wife, makes for a somewhat reasonable life.

Thanks for sharing your information and wisdom.

After ten years I am still picking up bits and pieces of information. Best forum in the world…that I am aware of.

#6 Matt on 07.17.18 at 5:30 pm

This is really outstanding, but I’ve never heard about this before. Can you do a follow up post explaining the mechanics a bit more?

From your description it sounds like: A. you have a well funded RRSP, and you have to move some or all of it out of mutual funds and into cash which becomes the principal of the loan. B. you pay mortgage payments back to your RRSP. C. the officiating bank gets a cut of the payments?? D. Once the payments are made back to your RRSP you can continue to invest them as per normal.

How would this work with the first time homebuyer’s programme? This is treated like a bond issuance from the perspective of your RRSP? Can you do a hybrid bank/RRSP loan if your RRSP isn’t sufficient to cover the full house price?

Great stuff!

#7 Smoking Man on 07.17.18 at 5:30 pm

161 A J on 07.17.18 at 4:41 pm
#158 Smoking Man

Not everything is about money. Clearly you sold your soul for profit and gains a long time ago. Greed is one of the seven deadly sins remember? Not that you’d care though. Cause, jobs, jobs, jobs! What will you have left when your economy crumbles? Because it will one day. Not everything goes up. But, keep making excuses and covering your eyes. Whatever helps you see past this train wreck of a President.
……

There are those who subscribe to Marxist doctrine and those who Dig Ayn Rand.

If history teaches anything there are millions of dead following Marxism and Millions lifted out of poverty who societies go with Rand.

I can sleep well at night knowing the difference between the two and know its not even a contest

Just because your useless teachers never invented a widget and took it to market , they make a living sucking on the teet of the creatives and industrious. Natrualy they will spin Maxism.

The greed you say I have is required to create more things that benefit mankind. And the more of it Marxist take the less good I can do.

Trump is Ayn Rand disciple and I can get passed his shitty decorum.

Dr Smoking Man
Phd Herdonomics.

#8 Sideshow Rob on 07.17.18 at 5:32 pm

Would it be possible to do the same thing with a locked in pension account? My rrsp is small but my locked in pension is large and extremely virile. It would give me some interesting options if it was legal.

Yes. – Garth

#9 Westcdn on 07.17.18 at 5:38 pm

I am a laggard with this blog. Nothing I have written hasn’t been mentioned before but reinforcement/rote can be useful. On the topic of HELCOs, I recently started to play a game with my nonregistered investment account, my TFSA and my secured HELCO.

I borrow cash from Helco and deposit it into my nonregistered account then to buy equities – usually ones that play a dividend although I do speculate for capital gains. Previously, I split my Helco into personal and investment subaccounts to keep the CRA happy. Thus the cash borrowed from the investing subaccount becomes tax deductible. I later Transferred in Kind (TIK) my winning equities from my nonregistered account to my TSFA following the CRA regulations specifically regarding the disallowance of capital losses.

I can then use the dividends collected in the TFSA for investment or personal purposes. I accomplish several small but tidy goals. I have created a small source of tax free income, made Helco borrowings tax deductible and kept my capital losses in my nonregistered account to be used against other capital gains. My nonregistered investment account becomes a proving ground to vet shares to be transferred via TIK. I have only been playing this small game for a few years as todays Governments are forcing me to be tax efficient without cheating. The 10% elite have other and better methods available to minimize societal taxes. But from what I read; a few hundred dollars a month can make a difference for the 90% rest of us.

A couple of personal caveats

1. Transfer quality assets to a TFSA. You want a reliable and steady stream of income from a TFSA. Capital gains are secondary but I would never turn one away. Rule of thumb, 50% gain – sell 25% (25 % loss- start looking for something else)
2. I use technical analysis only to prove I am wrong
3. Borrowing to invest returns is fun when you win and more painful when you lose. When you are on the wrong of a trade, the debt remains but the asset doesn’t
4. Time can be your worst enemy – treat it like Trump.

#10 Stan Brooks on 07.17.18 at 5:41 pm

Great, we just found another way to borrow for the mortgage, this time from your RRSP. House price to the moon?

That house is everything, remember. Too bad you can;t take it with you when you leave.

I am surprised that such ‘loophole’ exists, no doubt the french villa guy will close it promptly and replace it with a plan provided by his company.

https://economyandmarkets.com/economy/demographic-trends/death-dream-part-1/

In Japan house prices increased 4.6 times for 13 years until their collapse by 70 % in another 15 years. Kepp going down.

I guess they are making more land in Japan.

Considering that most houses in Vancouver and Toronto have increased 6-7 times since 15 years ago I can only guess what the market will look like as it dives in the decades ahead.

Note: Japan was not kicked out of NAFTA, they have much better relationship with US than us.

We are a sitting duck with the fingers in the outlet and an applauding behind.

Absolutely mind-blowing stupidity.

#11 David Pylyp on 07.17.18 at 5:43 pm

Thank you for an articulate and step by step explanation.

#12 Danny on 07.17.18 at 5:45 pm

Garth……Thought that the magic Kingdom of Garthonian wisdom would be interested in Ontario Government….new wisdom on our housing market condition in response I received (or did not receive )……below :

ANSWER
“Ontario fully supports legal immigration and continues to fund a wide range of services to refugees and newcomers of all backgrounds”
 
All the best,
Stephen Warner
Constituency Assistant
Christine Hogarth MPP

 QUESTION
 
To: Hogarthco, Christine
Subject: Unprecedented high prices for housing – how can you help?
 
MPP Hogarth
 
Is it true that Premier Doug Ford is blaming immigrants for the lack of affordable housing?
 
I have been looking at the Real Estate Market for the last 3 years to buy a condominium and based on my experience it is speculation by people of wealth that are buying up condos to flip. The Tridel Development at Bloor Street West and Islington Ave is a prime example. The last tower was sold in less than a week and according to the salesperson there,  they were surprised as to how many multiple purchases were happening.
 
Perhaps it is foreign money, not immigrants? 
 
As one of your constituents, I hope you can clarify this matter for me?
 
Also will speculators be taxed by your government because they are using housing as a business investment ?

#13 [email protected] on 07.17.18 at 5:48 pm

How about outside RRSP, can I borrow from myself?

#14 Stan Brooks on 07.17.18 at 5:49 pm

#8 Sideshow Rob on 07.17.18 at 5:32 pm
Would it be possible to do the same thing with a locked in pension account? My rrsp is small but my locked in pension is large and extremely virile. It would give me some interesting options if it was legal.

Yes. – Garth

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

This will be the absolutely stupidest thing to do.

Instead of investing your RRSP to get 7-8 % yearly and pay 5 % on the mortgage (for a gain of 3 % +) you prefer to pay yourself to a gain of 0?

Plus you transfer after tax money (interest payments on mortgage) to RRSP without getting back the deduction?

Absolutely ridiculous idea.

Are you much better investment than the world markets? And where does the diversification go?

Hell, you could be better buying these guaranteed looser government bonds that yield 3 % with cost fo living increasing at 8 %,

Horrible, horrible idea.

#15 Smartalox on 07.17.18 at 5:54 pm

How is this plan affected by the ‘Rule of 90’?

If you’re 45 years old, have an RRSP and a house, and assume no other assets, should the value of the mortgage that makes up your RRSP be 45% or less?

#16 Stan Brooks on 07.17.18 at 5:59 pm

#7 Smoking Man on 07.17.18 at 5:30 pm

You have absolutely no f…ng clue about Marx’s work. Have you red ‘Das Kapital’?

Absolutely magnificent theoretical analysis based on the reality of the late 19th century.

The fact that his theory was bastardized by the communists and the so called ‘socialists’ does not change the value of his original work.

The current reality in the western world has nothing to do either with socialism or communism but with oligarchy/kleptocracy.

If you think that Obama with his education and health care plans is a socialist you need some serious professional help.

Ann Raid is great but a little outdated and naive, living in ideal world with no nations or empires.

In both cases/Marx/Raid you need to translate idealism to reality.

All implementations fail in one way or another.

#17 Dolce Vita on 07.17.18 at 6:00 pm

Rebel Rebel, how could they know?
Hot tramp, I love you so!

-Garth, I could not resist (n.b., I left the dress, mess, boy, girl, parts out).

Great post.

– – – – – – – – – – – –

#1 Smooth Sailing

The RRSP principal becomes the mortgage amount. You pay that back as a conventional mortgage with interest. The interest you payback is added to the RRSP principal; hence, you are paying yourself interest and not the bank).

Apparently TD Waterhouse does these but I cannot confirm.

Somebody online has a reasonable math calc. but devoid of other costs which Garth described above (e.g., trustee cost, mortgage insurance) – see their “Property 3” example near the bottom of the page:

https://www.whichmortgage.ca/article/rrsp-mortgages-118724.aspx

#18 Stan Brooks on 07.17.18 at 6:00 pm

sorry Rand, I wrote Raid.

#19 CJB on 07.17.18 at 6:03 pm

I tried this RRSP mortgage as well and my lender said it was only on new home purchases now as the rules have changed. Garth could you share what lender would help set this up with an existing mortgage? Thanks

#20 Dolce Vita on 07.17.18 at 6:04 pm

#7 Smoking Man

Rand described Objectivism as “the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute”.

#21 Reynolds531 on 07.17.18 at 6:05 pm

This used to be much more popular, but the banks have done everything in their power to smother it.

#22 Tony on 07.17.18 at 6:07 pm

Very few have that kind of money in their rrsp. It might work out for one third of Canadians who live outside of southern Ontario and the greater Vancouver area. Also if your rrsp is all in U.S. funds you’ll have to pay to convert it back to Canadian.

#23 Smartalox on 07.17.18 at 6:08 pm

2nd question: does anyone care to theorize the tax implications of this strategy for dual citizens?

My wife is a dual (US-Canadian) citizen. We’ve been advised that if we were to buy a home as our principle residence, the title should be entirely in my (Canadian citizen) name, otherwise a sale with her name on the title could trigger US Capital gains tax.

My wife has an RRSP, which is permitted under the tax treaty, where tax is avoided on investments and growth inside the RRSP, but taxed on withdrawal.

Having a principal residence titled in my name makes my wife uneasy; could she retain a right to the house title if she were to hold a mortgage on the property, and avoid triggering US taxes as she would on any RRSP investment?

#24 jess on 07.17.18 at 6:10 pm

Ontario Premier Doug Ford says former B.C. premier Gordon Campbell will lead an independent inquiry into the province’s finances and issue a report by Aug. 30. The NDP says the provincial auditor general already provides such analysis.

Campbell will be joined on the inquiry by forensic accountant Al Rosen and former senior federal bureaucrat Michael Horgan, and each will earn $50,000 for their work, Fedeli said.

Ford lauded the men as the “most qualified experts in Canada” to do this work and said it will help provide answers on what went wrong with the province’s finances, while the audit will shed light on how the government can fix those issues.
================================
THE GORDON CAMPBELL ERA: 2001-2010
(15 Falsehoods, 20 Boondoggles, 18 Scandals)
https://thetyee.ca/Opinion/2017/04/10/BC-Liberal-Falsehoods-Scandals-Whole-List/

#25 Victor V on 07.17.18 at 6:12 pm

Fed’s Powell says gradual rate hikes are the best path ‘for now’

https://www.bnnbloomberg.ca/fed-s-powell-says-gradual-rate-hikes-are-the-best-path-for-now-1.1109281

Federal Reserve Chairman Jerome Powell said the central bank will continue to gradually raise interest rates “for now’’ to keep inflation near target amid a strong U.S. labour market.

The Federal Open Market Committee, the Fed panel that sets interest rates, “believes that — for now — the best way forward is to keep gradually raising the federal funds rate,” Powell said in prepared testimony before the Senate Banking Committee.

“We are aware that, on the one hand, raising interest rates too slowly may lead to high inflation or financial market excesses,” Powell said in the text of his remarks Tuesday. “On the other hand, if we raise rates too rapidly, the economy could weaken and inflation could run persistently below our objective.’’

Powell addresses Congress with the underpinnings of the U.S. expansion looking solid. Unemployment stands close to an 18-year low and inflation is around the Fed’s 2 per cent target, though some sentiment indicators are starting to flash warning signs over escalating trade disputes. He will appear before the House Financial Services Committee Wednesday.

#26 Dolce Vita on 07.17.18 at 6:13 pm

#7 Smoking Man

I was an Objectivist (still am) before I learned that Ayn Rand existed – it was logical to me.

Then I read Atlas Shrugged many years after it was published.

Still after all the free love/flower generation, rock & roll, disco, grunge, me, etc. decades having transpired, I agree with most of her ideas especially the:

-Reason
-Individualism

parts.

Both sorely lacking today in the jingoist, lefty “aren’t I a good little boy/girl/whatever” social media virtue signaler in need of nursemaiding from others (they still have not learned how to self-actualize…they think that others will do that for them).

#27 Garry Glenwood on 07.17.18 at 6:14 pm

Garth, Could I put a Car Loan in my RRSP as well?

#28 Reximus on 07.17.18 at 6:22 pm

Rand described Objectivism as “the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute”.

===

Alan Greenspan finally realized she was an idiot

#29 Sideshow Rob on 07.17.18 at 6:25 pm

#8 Sideshow Rob on 07.17.18 at 5:32 pm
Would it be possible to do the same thing with a locked in pension account? My rrsp is small but my locked in pension is large and extremely virile. It would give me some interesting options if it was legal.

Yes. – Garth

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

This will be the absolutely stupidest thing to do.

Instead of investing your RRSP to get 7-8 % yearly and pay 5 % on the mortgage (for a gain of 3 % +) you prefer to pay yourself to a gain of 0?

Plus you transfer after tax money (interest payments on mortgage) to RRSP without getting back the deduction?

Absolutely ridiculous idea.

Are you much better investment than the world markets? And where does the diversification go?

Hell, you could be better buying these guaranteed looser government bonds that yield 3 % with cost fo living increasing at 8 %,

Horrible, horrible idea.

Thanks to Garth and Stan for your input. In my situation it seems to make sense. First off there are no tax consequences. The money will come out tax free and is paid back with after tax dollars. It’s a wash. Right now I am paper wealthy and property poor. So if I do buy a house, my mortgage essentially becomes the fixed income component of my portfolio. Win win.

#30 Dolce Vita on 07.17.18 at 6:25 pm

#16 Stan Brooks

All implementations fail in one way or another.

– – – – – – – – – – – – –

Always easy to throw rocks at glass houses.

Better to stand for something, than nothing Stan.

#31 Reality is stark on 07.17.18 at 6:29 pm

This RRSP/mortgage gig has been available for years, surprised so few aware of it. Gets back to the basic financial illiteracy of the average Canadian.
Lately this blog reminds me of the lyrics, “I had a dream about buying some land if I could get off the booze and the one night stands”.
I wouldn’t touch the stuff only because the government taxes the hell out of it and everyone here knows how much I love government.
Leave their goddamn hands off our money!

#32 Mike in Airdrie on 07.17.18 at 6:40 pm

Garth do you still need mortgage insurance if you put more than 20% down on the property and your RRSP mortgage is less than 80% FMV?

Yes. – Garth

#33 Dolce Vita on 07.17.18 at 6:52 pm

#28 Reximus

Alan Greenspan finally realized she was an idiot
– – – – – – – – – – – – – – –

Yet another revisionist.

Per Wikipedia:

In a congressional hearing on October 23, 2008, Greenspan admitted that his free-market ideology shunning certain regulations was flawed.

When asked about free markets and Rand’s ideas, however, Greenspan clarified his stance on laissez faire capitalism and asserted that in a democratic society there could be no better alternative.

He stated that the errors that were made stemmed not from the principle, but from the application of competitive markets in “assuming what the nature of risks would be”.

– – – – – – – – – – – – – – –

And exactly what thought process did you go through to arrive at “idiot” from “…in a democratic society there could be no better alternative” in regards to the “free markets and Rand’s ideas” question?

#34 Steven Rowlandson on 07.17.18 at 6:55 pm

Keep it simple and straight forward. Don’t mess with your life or retirement savings. Lose it and you are done son.
You don’t owe it to others to make them rich and yourself a slave for the sake of a roof over your head. Obey the 3 years pay rule, it was devised for your protection.

#35 Andy on 07.17.18 at 6:55 pm

Hi Garth,

Can you do this with a LIRA as well?

#36 Bennethor on 07.17.18 at 7:08 pm

I did this about 15 years ago. Steady as she goes as a bond portion of RRSP portfolio. It also works nicely as monthly payments can be set to automatically buy ETFs etc within self directed RRSP. Reduced gains to market for sure but growth steady and not volatile. The right fit for me I suppose but not for everyone…

#37 Kelsey on 07.17.18 at 7:09 pm

#16 Stan Brooks

Even though Marxism has failed disasterously everywhere it’s ever been tried and is responsible for around 100 million deaths in the 20th century, I suppose it just hasn’t been done right yet? Is that what you mean when you say it was “bastardized” by Communism, as if totalitarianism is not a natural consequence of trying to implement Marxism? Maybe if you were in charge of the socialist planned utopia everything would be amazing?

Meanwhile, capitalism has lifted billions out of abject poverty and created the greatest standard of living every known to man.

#38 Rick Fast on 07.17.18 at 7:13 pm

You mention this is tax deductible, is that against income i.e. t4 or only from other investment income?

Income is income. So long as a mortgaged proposal flows cash it is permissible. – Garth

#39 crowdedelevatorfartz on 07.17.18 at 7:14 pm

@#126 Dave
“Like, older people can drive 5 speed?”
+++++
Like, apparently older people can drive 6 speeds and if you stare at the picture again, you might see the number six.
If you can’t perhaps it was the “new math” and the politically correct sex Ed lessons that used up the teachers busy day…..

Here’s some help for your overwhelmed Millenial brain to recognize the number “6”.

https://www.youtube.com/watch?v=4-usguSrIpM

#40 Reximus on 07.17.18 at 7:15 pm

What a total douche the US has as a Pres “no Collusion” lol

#41 Mark on 07.17.18 at 7:15 pm

How about I bought a house 5-10 years ago at half the price instead of investing in markets and renting and call it a life. This is just getting ridiculous now with all these blogs buy no rent no buy no invest no buy no rent no move to PEI.

#42 Shane Gallant on 07.17.18 at 7:22 pm

Garth, i have alot of locked in rsp does this mortage still apply can i use my locked money?

Yes. – Garth

#43 For those about to flop... on 07.17.18 at 7:24 pm

CONFIRMED PINK SNOW

These guys just had to eat the expenses ,but since it was a downtown condo flip gone wrong ,and people are looking for evidence that the segment is starting to cool ,I will present it.

The details…

1607 950 Cambie Street, Vancouver

Paid 1.017 June 2017

Sold 1.010. May 2018

So basically 1% less ,and then if we do the general 5% for expenses and not worry about opportunity costs, then we are looking somewhere in the vicinity
of 55-60k

Not the hardest clip around the ear I have seen ,but it is only looking like recently that that the game has changed slightly in this segment.

Yaletown condo loss in the books.

We don’t know how this is going to play out, but stuff that wasn’t happening before is happening now…

M44BC

1607 950 Cambie Street, Vancouver .paid 1.01June 2017 ass 1.00

Apr 17:$1,099,000
May 18: $999,900
Change: – 99100.00 -9%

https://www.zolo.ca/vancouver-real-estate/950-cambie-street/1607

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

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

Feel free to make a donation.

Flop For Fox Fund…

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

#44 AB Boxster on 07.17.18 at 7:25 pm

Re: Self directed mortgage

I have done some pretty detailed numbers on this strategy (holding mortgage in rrsp) vs investing in rrsp and paying mortgage interest to the bank.

In general I have found that over 10 years one will come out slightly better with the self directed rrsp.

The benefit of this as I see it, really is that because you are using the mortgage as the non equity portion of your portfolio, you can have a pretty safe investment given you are paying your self.
I mean a 4-5 % return, risk free, is pretty good. (Just be sure you make your payment s to yourself.

Secondly, you borrow the funds from your your rrsp so you pay interest back to yourself, rather than to the bank. That would feel really good if you don’t like banks.

Finally, if you need to get out of the mortgage or change the terms, you pay a penalty. But guess who you pay it to. Yourself.

Also, I’m not sure why it would not make sense to just write the mortgage as a 1 year open mortgage. Posted bank rates for 1 year open range from 4.5 to 6.5%. Then at anytime if you need to pay it off, you can, and there should be no penalty as the mortgage is open.

#45 Nonplused on 07.17.18 at 7:30 pm

The thing about this trick that some comments have already covered is that there aren’t very many people who have enough money in their RRSP to do this and also have a mortgage. This is because you can only contribute so much a year to an RRSP, so it takes 20 years to put a mortgage type amount in there (not counting whatever gains have accrued). By then the mortgage is likely paid off (unless you live in YVR or YYZ).

But I’m not sure it offers any real advantages anyway. Sure it’s nice to think you are “paying yourself” instead of the bank, which is true, but unless the rate of interest is higher than what the funds would otherwise return in a balanced portfolio the portfolio isn’t really getting ahead. And it really doesn’t reduce risk much either, because these days the risk of job loss for most people is much greater than the risk of losing a ton of money in a balanced portfolio. And the job loss risks are going up with the trade wars not down. If you lose your job and can’t make the payments to yourself, you still have to sell and make the RRSP whole. I suppose you could “cash out” the RRSP but doing that all at once is financial suicide from a tax perspective.

So all and all, I would say this strategy doesn’t make sense for those rare people who could do it and isn’t available to most people anyway because they don’t have enough saved in any event to pull it off.

Probably the real purpose of the thing was so you could write mortgages to other people if you had the money and wanted to invest that way, not to yourself if you don’t.

#46 KLNR on 07.17.18 at 7:41 pm

@#7 Smoking Man on 07.17.18 at 5:30 pm

ironic how rand spent her final years on something she loathed – social security.

#47 Reynolds531 on 07.17.18 at 7:41 pm

So bear with me…

I buy a huge house. House values plummet. I decide to walk away, keys in mailbox. CMHC makes my rsp whole for the entire amount of the loan.

They try to collect the shortfall from me to pay….me.

Doesn’t that cook yet noodles?

#48 Linda Stephens on 07.17.18 at 7:44 pm

We did a mortgage in our RRSP for our primary house way back when mortgage rates were 6% to 6.5%, early 2000’s.

We paid off the house in 9.5 years and it was a good thing. Believe it or not our mortgage broker did it for us. We were able to buy another property 3 years later that we did pay off in 2013. Glad we did.

We rented out that place for 8 years now and topped up our RRSP’s, TFSA’s. We have a bunch of strips at 4% to 5%, good quality investment grade, government.

In all, we never had a mortgage with the major 5 Canadian banks and I still don’t know why you would need to. It all worked out for us. We rent for $2,500 a month and we collect $6,500 a month for both places.

We have $500,000 in RRSP’s, $135,000 in TFSA’s, $60,000 reserve savings, $350,000 in non-registered dividend paying stock, corporate bond ETF’s, no debt. It’s all working out at 51, 52 years old.

We are in a $3,000 a month surplus every month and about another $50,000+ a year in gains from our financial investments. Our 2 properties will grow on average the historical 4% to 5% a year over the next 20 years+ so we are all good.

These high pie in the sky returns in recent years are over.

#49 For those about to flop... on 07.17.18 at 7:45 pm

CONFIRMED PINK SNOW.

This was a major hit I got to show you guys in real time thanks to Dirty Shyster, and now the confirmation is complete and so let’s take a peak.

The details…

Paid 2.15 April 2017

Sold 1.77 May 2018

So roughly 18% difference between the numbers equals a 23% loss.

We could tag them for opportunities lost and they would join the infamous over 25% loss club ,but I’ll just leave that alone as they just took a 500k whack to the ribs.

Speaking of ribs,don’t listen to relatives at Barbecues.

You are there for the steak ,not the sizzle…

M44BC

Sold on May 2 2018 for 1.77 Dirty Shysters

7720 Malahat Ave,Richmond. Now 1.89

Paid 2.15 April 2017

Were Asking 2.09

1.99

7720 Malahat Avenue, Richmond

Jan 23:$1,998,000
Apr 9: $1,898,000
Change: – 100000.00 -5%

https://www.zolo.ca/richmond-real-estate/7720-malahat-avenue

https://www.bcassessment.ca/Property/Info/QTAwMDA1V1pZSA==

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

Feel free to make a donation.

Flop For Fox Fund…

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

#50 DR on 07.17.18 at 7:58 pm

Can you use the RRSP arms length mortgage to finance your primary residence if it is paid off and then invest the money in a balanced portfolio, writing off the interest?

No. – Garth

#51 Smartalox on 07.17.18 at 7:59 pm

Could this plan be used in conjunction with another, conventional (i.e.: BANK) mortgage?

If I have a large mortgage, on a house that has lost enough value such that the bank’s mortgage is worth more than the value of the home, can I get an RRSP mortgage to cover the difference?

This assumes that the value of my RRSP is enough to cover the shortfall in the LTV in the bank’s mortgage?

As a secondary, unconventional lender, can I then charge a higher interest rate on my RRSP mortgage?

No. LTV limits still apply. – Garth

#52 MSM-Free Zone on 07.17.18 at 8:13 pm

#24 jess on 07.17.18 at 6:10 pm
“…..Ford lauded the men as the “most qualified experts in Canada” to do this work and said it will help provide answers on what went wrong with the province’s finances, while the audit will shed light on how the government can fix those issues………”
– The Tyee
______________________________________

Gordon Campbell? Seriously? Most qualified? At what? Manufacturing Weapons of Mass Deception?

A brief history of Drug Fraud’s ‘most qualified expert”…..

“….Campbell and the Liberals had won the election with a New Era platform pledging “a comprehensive audit of the province’s finances within 90 days” of forming government……..”

“……On May 25, 2001, nine days after winning B.C.’s biggest-ever legislative majority, Campbell appointed a commission to conduct “an independent review of the province’s fiscal situation.” Heading the panel was Gord Barefoot, a chartered accountant and executive at B.C. Gas Inc (later renamed Terasen), which along with its affiliates and subsidiaries contributed about $40,000 to the B.C. Liberals in the five years leading up to the 2001 general election…….”

“…….Incoming premier Gordon Campbell misled British Columbians when he claimed the NDP had left his government financially in the hole. In fact, documents Will McMartin gained through a freedom of info request showed the NDP had left a $1.5-billion surplus, a figure eventually confirmed by B.C.’s auditor…..”

Drug Fraud. For the Sheeple

#53 Bytor the Snow Dog on 07.17.18 at 8:14 pm

@MF- I’m sure there was a point in your rebuttal….somewhere.

@A J- We’re sorry, it just wasn’t Her Turn.

#54 For those about to flop... on 07.17.18 at 8:15 pm

CONFIRMED PINK SNOW.

This house in Richmond was sold in late January but perhaps unbelievably to some the confirmation has only come through now.

I reached out to the realtors on the blog but got the silent treatment and so I only just found out now as well.

The details…

4260 Coventry Drive, Richmond.

Paid 2.83 May 2017

Sold 2.68 January 2018

500k less than original ask.

So the house was built in 2014, so it wasn’t an old heap of crap ,but it didn’t stop them from eating 300k in stale crumpets.

They had a plan but it like a crumpet it had lots of holes in it.

300k hit?

Maybe they are toast…

M44BC

4260 Coventry Drive, Richmond

Sold on January 20 2018

4260 Coventry Drive, Richmond paid 2.83 May 2017 ass 2.58 asking 2.79

Feb 21:$3,180,000
Aug 23: $3,060,000
Change: – 120000.00 -4%

https://www.zolo.ca/richmond-real-estate/4260-coventry-drive

https://www.bcassessment.ca/Property/Info/QTAwMDA1WExSQQ==

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

Feel free to make a donation.

Flop For Fox Fund…

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

#55 islander on 07.17.18 at 8:18 pm

#7 Smoking Man
https://ari.aynrand.org/blog/2017/11/06/the-anti-intellectuality-of-donald-trump-why-ayn-rand-would-have-despised-a-president-trump

https://en.wikipedia.org/wiki/Ayn_Rand

Trump may be an admirer of Ayn Rand, but I doubt the feeling would have been reciprocated!

#56 peteinto on 07.17.18 at 8:27 pm

RRSP mortgage. Jeez looks like the the man ie the banks still call the shots even though its your money. Except for the tax.

#57 Flint on 07.17.18 at 8:27 pm

Garth, could you run another indepth buy vs rent and invest post? I know you’re probably sick of them but I’d like to see it again with rates doing what they’re doing and market uncertainty.

I have a cousin making a bad choice, buying a 1 bedroom condo in Etobicoke. The rise has been meteoric but I feel like that ship has sailed and am not so great at articulating myself these days.

#58 figus makum on 07.17.18 at 8:32 pm

What are the current odds that President Trump will place tariffs on Canadian made autos before the mid-term elections?

Today, President Trump clarified that he “misspoke” in Helsinki and what he meant to say was in fact a double negative. ……which is improper English grammar, but it is proper Russian grammar.

Coincidence? I think not.
But what do I know? Я ничего не знаю

United States has it’s own “Manchurian Candidate” posing as the President.

#59 Smoking Man on 07.17.18 at 8:41 pm

islander on 07.17.18 at 8:18 pm
#7 Smoking Man
https://ari.aynrand.org/blog/2017/11/06/the-anti-intellectuality-of-donald-trump-why-ayn-rand-would-have-despised-a-president-trump

https://en.wikipedia.org/wiki/Ayn_Rand

Trump may be an admirer of Ayn Rand, but I doubt the feeling would have been reciprocated!
…..
Pure speculation. His shit decorum appeals his loyal base. I’m sure he could act more statesmen like if he thought he could gain from it. The more he gets MSM and the established gravy train to attack him. The stronger he gets. #walkaway is all you need to know. Red wave in the midterms.

What matters is getting everyone working and creating new opportunities for workers and entrepreneurs.

#60 232 on 07.17.18 at 8:46 pm

RENTING ISN’T FOR EVERYONE

In response to yesterday’s post, I’ve made a scenario in Excel: sell my house and invest all my equity into a diversified portfolio @7.5%. Then I’ll contribute with $550/month to my portfolio (this is the difference between my mortgage+taxes vs. renting a similar home). I plan to retire in 16 yrs from now once the kids are out. The other option is to keep my house and my current mortgage, and sell it when I’ll retire. In order to retire with the same wealth as a diversified portfolio would bring from the above scenario, my house would only need to go up in value @3.1%/year.
In other words, my house only needs to increase 3.1%/year for the next 16 yrs in order to achieve the same a diversified portfolio would bring me. (which is ridiculous as my parents’ new built increased 7.75%/year for the last 14 yrs. If I were to average 7.75% for the next 16 yrs, my RE wealth would more than double that said diversified portfolio would bring in)

Yes, I did not include any repairs/maintenance/upgrades/etc costs. And here’s why: my custom home is 1 year old, so it won’t need too much maintenance in the first decade. It’s full of upgrades and was built by a reputable builder my father works for (which helped me get the house for a lot less than what they were going for 1 year ago, and allowed me to sell my previous home for top $) and I know it was built well as I already knew almost all trades. Plus, I was able to make multiple upgrades at cost, directly paying the trades. During its build, I’ve visited the house daily, supervising its progress. In the future, when things would require maintenance, I won’t sweat it as a lot of my friends (and family members) work in construction and I would be able to get these things done for cheap. At the same time, I am knowledgeable and skilled enough to performs most of these fixes/upgrades myself as well. (Renting is not free as there are moving costs every time you get kicked out, instead of maintenance costs)

What about the house being an illiquid, slow moving, asset? That only depends on the location & the house. Mine is a two minute walk from two new public schools. It’s on a main, yet quiet, street (due to 40km/h school zone, so drivers prefer a parallel street), so snow gets cleaned multiple times the second it hits the ground. My large lot (and the neighborhood) is mature with big trees (most in the 30′-80′ range), so I don’t have to deal with the sun/wind problems like most new homes. I love all the wildlife that it brings. The house itself is nothing short of spectacular, and fits in well with the rest of the expensive neighbouhood. My garage easily fits all three cars so I don’t need to ever clean snow in the morning. My neighbours are amazing as well and keep their property in perfect condition (as they are owners and not renters). Ohh, and they only have one party per year. House is 4 minute drive from two separate 401 ramps, so one can easily communte anywhere from London to Big Smoke’s downtown under 1 hour. (this seems a lot now, but in 2 years, once fully autonomous cars are available, 1 hr will be nothing; thanks Netflix!). There are three prestigious universities and one collage, all within 10-20 min drive.

Most importantly, I do need the space as I’m raising offspings and taking care of my wife’s parents. Soon I’ll finish the walkout basement for my parents to move into. None of our parents would want to be with us if we were renting as they hate the idea of constantly moving. (Yes, we are those good children who take care of our aging parents. And no, we’re not doing it for the money, as they have no savings. Irresponsible? No! It’s because they came to Canada late in their life, and didn’t have time to go back to school, but rather sacrified their bodies in crappy low-paying jobs; their priority was to put us through school. So taking care of them now is the least we can do.)
Also, no matter how hard I try to convince my wife of scenario #1, she is set on us owning, rather than renting. Plus, I love yard work; and it comes with a happy wife!

So, to summarize, I love the location where we’re at: school is right besides us; neighbourhood is beautiful; the house fits us well now & in the future; there’s never snow on my street and traffic is sparse & slow; the local trails are breathtaking; neighbours are fantastic.

And after doing the math mentioned above, I wouldn’t be ahead with renting (not in my case at least). But then I would have to put up with multiple risks such as: eviction notices, worrisome wife, aging parents weathering away far from us, constantly moving my offsprins to different schools. Did I mention I hate moving?

Sure, for Jeff it makes sense to rent in a location where they love, given where he is in life. Downtown is beautiful, as long as you’re single or only with your partner. As soon as you add rascals into the mix, the costs go up quickly. Plus, who wants to raise children downtown?

My advice I always give to my friends and family is this: do what makes you & spouse happy, and whatever allows you two to sleep at night. For me, is owning a home (eventually), while for others is having a nice big portfolio and don’t mind moving.

So for me, owing makes sense as I have an amazing new house, and I’m not worried about stuff breaking. Ohh, and it’s worth half the average Toronto POS. My wife and I have amazing, sought after, careers (notice I’ve said careers and not jobs) so job loses don’t worry us as we would find similar jobs within days.
For people buying POS in Toronto (or condos), for ridiculous prices, they are doomed. Most people can’t fix anything so they have to hire expensive trades to do the work. So yes, for these people I would have to agree with Garth and recommend renting as owning a house will ruin them.

#61 For those about to flop... on 07.17.18 at 8:47 pm

CONFIRMED PINK SNOW

This house in West Vancouver held out for a long time but in the end they took the loss and hopefully they can now get on with their lives without too much trauma.

The details…

6236 summit Avenue, West Vancouver

Paid 1.51 April 2016

Sold 1.4 May 2018

This case was one of my earliest after I noticed that something wasn’t right in my
neighborhood and then expanded my study city wide.

They picked it up in April 2016 and had it back on by October and the recently finally exited the market after perhaps realizing the assessment of 1.7 was a pipe dream.

180k punch in the philtrum.

They bought at the Summit…

M44BC

Sold on May 10th 2018

6236 summit Avenue, West Vancouver paid 1.51 April 2016 now asking 1.46
Assessment 1.70

Oct 26:$1,688,000 <2016
Jan 29: $1,649,000
Change: – 39000.00 -2%

2017-01-29 : $1,649,000
2017-05-15 : $1,850,000
2017-06-28 : $1,599,000
2016-10-26 : $1,688,000
2018-04-03 : $1,468,000

https://www.zolo.ca/west-vancouver-real-estate/6236-summit-avenue

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

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

Feel free to make a donation.

Flop For Fox Fund…

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

#62 Lost...but not leased on 07.17.18 at 8:55 pm

City of Vancouver recently created a new OCP for over 400 properties in East Van(for higher density)

POLI-SCI BS 101 was to claim that this addresses future needs.

However…MR. OBVIOUS sez:

—- that COV did the usual “dog days of summer” trick to do dirty deeds prior to summer break in August.

—That COV VISION party will likely be part of the Left Wing purge in 2018 civic elections.

—In a declining market….these 400+ property owners will get nailed via “Highest and Best Use” designations which will drive up their property taxes in 2019….leaving them prey to developers.

—At minimum…COV will have the civic gov’t equivalent of Federal Reserve…cash cow via OCP changes.

#63 ExCSR on 07.17.18 at 9:06 pm

Worked for one of the Big 6 in the early 90s. Back then they wouldn’t allow a mortgage in a LIRA or Locked-in RRSP (exact same thing) on the theory that it was ex-pension money and they could be sued if it lost money. However, they had no problem with people (mostly Real Estate agents) holding third party 2nd and 3rd mortgages in a regular Self Directed RRSP accounts. Common to see rates in the 20 to 30% range back then. No restriction on the rates that could be charged on third party non-first mortgages.

Left banking and don’t know what the current regulations are.

Once it’s set-up not too bad, you pay your regular RRSP annual administration fee and the discount brokerage charges you another say $300 a year for administering the mortgage. Pretty reasonable fees to collect, process and post 12 monthly payments.

#64 Richard Freanere on 07.17.18 at 9:08 pm

This seems to be the same thing but we borrowed against our house back in 2000 and got a 5 year 7.5% mortgage.

It was for 50% of the value, $200,000 and we paid it off it 5 years. The $200,000 was placed in many government strip bonds 6.4% to 6.6% in our RRSP. It is now worth $850,000 but by 2030 to 2031, it will mature worth $1,356,991.

We paid $47,560 in total interest. My investment dealer said the interest paid is not tax deductible but we would make so much compound interest for 30 years+ it will be well worth it and rates would fall for years. He was right and that is why more good advice from him our Canadian bank shares have increased 4 times in value from our $1,500 monthly investments worth $900,000 in non-registered money now. I retire next week at 55 years old just in time from my mill job and Trump’s tariffs caused a 100 employee layoff in my department.

We sold the house for $450,000 net profit and moving to east coast to be with family buying a $250,000 house. Pension just transferred to LIRA $400,000 now in GIC’s and grows to $477,291 by 2023. I don’t trust the company pension plan and $$1,650 a month pension, max 3% annual COLA it brings.

#65 For those about to flop... on 07.17.18 at 9:16 pm

CONFIRMED PINK SNOW

O.k so the guys who hate my guts on the blog would have worked out by now that I am catching up on my homework,just bear with me while I transfer the information to the people that want it.

Let’s have a look at what happened with this Westside flip.

The details…

3569 KING EDWARD AVE W VANCOUVER.

Paid 2.6 April 2016

Sold 2.5 March 2018

230k karate chop to the coconuts.

Couldn’t get ask.Couldn’t get assessed.

People pretending nothing happening,must be possessed…

M44BC

Sold on March 1 2018

3569 KING EDWARD AVE W VANCOUVER paid 2.6 April 2016 ass 2.86 now asking 2.65

Aug 28:$2,999,000
Dec 24: $2,880,000
Change: – 119000.00 -4%

https://www.zolo.ca/vancouver-real-estate/3569-w-king-edward-avenue

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

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

Feel free to make a donation.

Flop For Fox Fund…

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

#66 ColemanCountry on 07.17.18 at 9:16 pm

The guilt is too much. I bow out of the Surrey Mayoral race.

#67 Reaching 2008 declines in BC on 07.17.18 at 9:22 pm

BC home sales decline 33% year over year in June.

I’m hearing that July numbers in BC so far are some of the worst on record. What do you think?

#68 Dave Ahem on 07.17.18 at 9:35 pm

Not possible. Mortgage refinances are no longer eligible for insurance from CMHC or CG or Genworth and self directed mortgages must be insured to guarantee the rrsp (the lender) is repaid in the event of foreclosure.

Also, CMCH does not create policy, OSFI and DoF do and they changed the rules for mortgage insurance almost 2 years ago. B2B has no ability to allow your RRSP to lend without assurance either. The risk to the RRSP would be too high.

Don’t do these anyway. The rate paid is the return and you’ll guarantee yourself a return easily achieved in a balanced portfolio but destroy your cash flow paying used car rates on your biggest liability.

#69 For those about to flop... on 07.17.18 at 10:16 pm

CONFIRMED PINK SNOW

Let’s see what happened to this Eastside flip down in Smartalox’s neck of the woods.

The details…

1821 UPLAND DR VANCOUVER.

Paid 1.7 May 2017

Sold 1.6 June 2018

185k backhander to the broccoli…

M44BC

Sold early June 2018 1.6

1821 UPLAND DR VANCOUVER paid 1.7 May 2017 asking 1.78

https://www.bcassessment.ca/Property/Info/QTAwMDAwM0ZGVg==

https://www.zolo.ca/vancouver-real-estate/1821-upland-drive

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

Feel free to make a donation.

Flop For Fox Fund…

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

#70 FLHTK on 07.17.18 at 10:18 pm

This sounds sweet!

#71 For those about to flop... on 07.17.18 at 10:32 pm

CONFIRMED PINK SNOW

Welcome to Surrey was good enough to help me show you this one in real time and now it is in the record books.

I thought the sale price was 3.8 ,maybe one of my sausage fingers hit the wrong key.

The details…

2006 Whyte Ave,Vancouver.

Paid 4.05 January 2016

Sold 3.9 April 2018

After expenses 370k slap to the meat and two veg…

M44BC

Sold April 2018 for 3.9 WTS

2006 Whyte Ave,Vancouver. Paid 4.05 January 2016 ass4.31 2017

On 3.98

https://www.zolo.ca/vancouver-real-estate/2006-whyte-avenue

https://www.bcassessment.ca/Property/Info/QTAwMDAwMDU1Qw==

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

Feel free to make a donation.

Flop For Fox Fund…

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

#72 MF on 07.17.18 at 10:33 pm

Bytor the Snow Dog on 07.17.18 at 8:14 pm

Yeah there was and in case you missed it I will say it again:

Your comparing of the migrant situation in Toronto with that of Italy’s was flat out wrong/incorrect.

You basically tried to use the awful tale of human suffering currently occurring in Italy (which will have severe economic and social ramifications) as a cheap way of voicing your discontent of Toronto, a city flourishing with zero similar issues, by equating the two.

It was dumb.

MF

#73 Bobby on 07.17.18 at 10:51 pm

For #24 Jess,

Using the Tyee as a reliable source of facts is questionable at best. I think many will agree, it is a toss up who is loopier, the Tyee or the Centre for Policy Alternatives.
If each had their way, people would give every dollar they earned in income to the government in taxes. I don’t either group has heard of common sense, let alone has any understanding of basic economics.
Your post gave me a good chuckle.

#74 will on 07.17.18 at 10:54 pm

Smoking Man #59

“Pure speculation. His shit decorum appeals his loyal base. I’m sure he could act more statesmen like if he thought he could gain from it. The more he gets MSM and the established gravy train to attack him. The stronger he gets. #walkaway is all you need to know. Red wave in the midterms.”
____________________________________________

Agreed.

#75 Waiverless on 07.17.18 at 11:54 pm

You’re on fire today Flop. Keep up the good work my friend.

#76 For those about to flop... on 07.17.18 at 11:57 pm

E.T,must buy expensive phone…

M44BC

“The iPhone X Index: This Chart Shows How Ridiculously Long You Have to Work to Get One.

Be honest—where do you keep your smartphone at night? Is it on the nightstand? Having a smartphone is now an essential part of modern life, and many people wouldn’t leave home without it. And among smartphone makers, Apple is laughing at critics who thought people wouldn’t pay more than $1,000 for a phone. The ubiquity of smartphones and their ever-increasing price tag got us thinking about global inequality—how long do people have to work to afford such an expensive device?

We found the data for our visualization from UBS Group, a global investment bank headquartered in Switzerland. UBS looked at how many days someone would need to work in several cities to afford on iPhone. There are two key underlying assumptions. First, you can find different promotions for buying an iPhone at various stores, and UBS did the research to determine the average price in each location. And second, UBS’ calculations are also based on an average workday of 8 paid hours. We decided to make things more interesting by converting the figures to hours. We stack ranked the results of our analysis by the color-coded continent in which each city is located, ranging from high-to-low. This lets you easily see how purchasing an iPhone X can be used to measure the cost of living around the world.

Top 10 Cities Where People Have to Work the Longest to Afford an iPhone X
1. Cairo: 1066.2 hours

2. Mumbai: 917.8 hours

3. New Delhi: 804.2 hours

4. Kiev: 708.6 hours

5. Jakarta: 651.6 hours

6. Mexico City: 637.5 hours

7. Nairobi: 577.7 hours

8. Istanbul: 567.7 hours

9. Lagos: 508 hours

10. Buenos Aires: 470.1 hours

Top 10 Cities Where People Have to Work the Least to Afford on iPhone X
1. Zurich: 38.2 hours

2. Geneva: 47.5 hours

3. Los Angeles: 50.6 hours

4. Miami: 52.3 hours

5. Nicosia: 54 hours

6. New York: 54.1 hours

7. Chicago: 55 hours

8. Toronto: 63.5 hours

9. Montreal: 63.7 hours

10. Luxembourg: 64.5 hours

The most interesting fact about our visualization is how it demonstrates inequality both within and between continents. In Europe, for example, most of the cities on the left side are in the East, and most of the countries on the right are in the West. Similarly, in the Americas, workers living in North America like Los Angeles and Miami have a much easier time affording an iPhone X than workers living in Latin America, in places like Lima and Buenos Aires.

Now look across the visualization and compare continents. See how many cities in Asia require 200 to 300+ hours of labor before the average worker can afford the iPhone X? That roughly compares to many of the cities in Eastern Europe and Latin America. This is direct evidence confirming something people already know to be true. Apple’s brand appeals to people living in advanced economies where there’s plenty of WiFi and 4G LTE networks. Egyptians living in Cairo would have to work 1,066.2 hours. That’s more than 26 weeks! Clearly not Apple’s target demographic.

There’s another insight in our visualization hiding just beneath the surface. On average, people have to work days and days to afford an iPhone, maybe even several weeks. A lot of people get a new phone each year, so let’s extrapolate our visualization into the future. In all likelihood, Apple will get the equivalent of months of labor over the course of the average person’s lifetime–maybe even years of labor– in exchange for a smartphone. And here’s the thing: people camp out for days to be the first to buy Apple’s products. Clearly, Apple is delivering on its brand.”

https://howmuch.net/articles/hours-work-buy-iphone

#77 yorkville renter on 07.17.18 at 11:57 pm

An interesting idea for Commercial…

Can I extract $$$ from a commercial property that has an LTV of 40% and pay it back to my RRSP if a CORP owns the property?

The $$$ would go to the corp, correct? But the payments would go back into my RRSP?

Slightly confused – little help?

#78 cultural elitist on 07.18.18 at 12:19 am

@#7 Smoking Man

There are those who subscribe to Marxist doctrine and those who Dig Ayn Rand.

If history teaches anything there are millions of dead following Marxism and Millions lifted out of poverty who societies go with Rand.

In broad strokes, you’re right of course. Capitalism as a whole has lifted billions more people out of poverty than socialism. But might I suggest a more nuanced approach? Say what you will about Marx, he was a first-rate economist (in his day). Rand was not.

Both Rand and Marx go wrong when they try to merge social theory with economic theory, but at least Marx was a serious economist. Rand was just a novelist who popularized a social-Darwinian view of human-nature that appeals to egotists with weak analytical skills.

Ayn Rand was a terrific novelist, I’ll give her that. I’ve read a few of her novels, and they are hard to put down. Easy to side with her protagonists, who are capable, entrepreneurial and heroic in their way. But it’s all fiction .

Her hyper-individualistic view of society has never — could never — exist! There is no society that ever was or could be as individualistic as she portrays human nature to be. The empirical reality is that humans co-operate at least as much as we compete. Her social theory is therefore weak and her economics (what there is of it, based on her social theory) is laughable.

Like Rand, Marx was a first-rate polemicist (the Communist Manifesto is really compelling). But he was also a first-rate analyst of economic conditions in his day. He was an empirical economist, meaning that he got his hands on lots of data, and he was the first to glimpse economic patterns in a broad sweep, and develop a historical economic theory (which is still being developed to this day). His books are full of detailed economic analyses. He didn’t miss much, although he did have a tendency to force interpretation into his pre-existing models.

For example, Marx’s socio-economic theory was flawed, when he exaggerated the antagonism between the worker and the and the owners of capital, and made this the basis of his theory of capitalism. He mis-represents the goal of the worker — which is to someday “make it big” himself. This is the fundamental engine of capitalist growth (and destruction), which Marx missed entirely.

Marx’s theories were often flawed, but at least he was a serious economist. Ayn Rand’s popularity says more about our hyper-competitive and simplistic winner-take-all culture than it says about her actual economics. There are lots of more serious proponents of capitalism who are better foils for Marx. Maybe Schumpter or Keynes?

#79 Ponzius Pilatus on 07.18.18 at 12:34 am

#35 Andy on 07.17.18 at 6:55 pm
Hi Garth,

Can you do this with a LIRA as well?
————
Sorry Buddy,
But the LIRA no longer exists.
All EUROS now.

#80 Sloucho Marx on 07.18.18 at 5:03 am

#7 Smoking Man on 07.17.18 at 5:30 pm

There are those who subscribe to Marxist doctrine”

The only Marxist doctrine worth subscribing to comes from the great Groucho, “I wouldn’t want to be a member of any club that would have me as a member”

#81 Oft deleted much maligned stock.picker on 07.18.18 at 5:24 am

Trump is solving the foreign buyer problem by driving his crash cart into the Chinese stock and forcing a loss in value of more than two trillion dollars rquivelant and counting. Auctions in Sydney….once a clone of Vancstupid are going unsold….crickets…..unheard of a year ago.

https://www.reuters.com/article/us-australia-economy-housing-insight/going-going-gone-for-australias-house-price-boom-and-some-investors-smell-trouble-idUSKBN1K8007

Hotels and businesses in Asia and Africa are saying a China business crash in orders is already down 15%. What will happen when cash in hand runs out. PBOC has strangled banks to close the books on making loans to preserve cash. The other shoe to drop has been the two trillion that PBOC has torche’d supporting the Yuan…so. As not to lose face…..so Asian you know.

When do foreign property holders hold a forced sale auction in Vancouver? Soon enough I’ll bet. This is a trifecta if bad news for locals who try to compete by borrowing ….rising rates….ouch! No buyers…..ooohh that hurts…..a thousand listings a month pouring out…..yikes that’s as bad as a Trudeau Grope…..sphincter pulsations when that boogie man comes around.

Foreign buyers will be recovering cash….locals will be hamstrung by existing. They got the fruit….we got the rind…scrambling for the same lousy dime. Winning!??

#82 Honey Dripper on 07.18.18 at 6:57 am

Great free advice, if anyone here actually implements it please report back with your progress. One more reason this is Canada’s #1 personal finance blog.

#83 GTANotForever on 07.18.18 at 8:31 am

I’ve heard of people purchasing homes to flip under a REIT structure. Does this make sense?

#84 James on 07.18.18 at 8:48 am

#7 Smoking Man on 07.17.18 at 5:30 pm

161 A J on 07.17.18 at 4:41 pm
#158 Smoking Man

Not everything is about money. Clearly you sold your soul for profit and gains a long time ago. Greed is one of the seven deadly sins remember? Not that you’d care though. Cause, jobs, jobs, jobs! What will you have left when your economy crumbles? Because it will one day. Not everything goes up. But, keep making excuses and covering your eyes. Whatever helps you see past this train wreck of a President.
……
There are those who subscribe to Marxist doctrine and those who Dig Ayn Rand.
If history teaches anything there are millions of dead following Marxism and Millions lifted out of poverty who societies go with Rand.
I can sleep well at night knowing the difference between the two and know its not even a contest
Just because your useless teachers never invented a widget and took it to market , they make a living sucking on the teet of the creatives and industrious. Natrualy they will spin Maxism.
The greed you say I have is required to create more things that benefit mankind. And the more of it Marxist take the less good I can do.
Trump is Ayn Rand disciple and I can get passed his shitty decorum.

Dr Smoking Man
Phd Herdonomics.
__________________________________________
Ha,ha,ha old man you are truly delusional. Hey how did you like that last minute spin on words with you master yesterday? His staffers must have been shitting themselves. Call in the spin doctors please.
BTW dont call yourself a Phd as you would have to have been schooled by an accredited teaching organization in order to get that title.

http://www.wktv.com/content/national/488453881.html

#85 ALFRED E. NEUMAN on 07.18.18 at 8:53 am

Excellent Forbes article re USA Gen-X’ers regrets about buying ‘way too much house’ when rates were low and it was vogue to keep up with the Joneses:

https://www.forbes.com/sites/megangorman/2018/06/30/friends-girls-and-the-impact-on-how-gen-x-and-millennials-view-housing/#3cb6551a7f41

#86 Oft deleted much maligned stock.picker on 07.18.18 at 9:06 am

DELETED

#87 RE_Investor on 07.18.18 at 9:16 am

oh yeah! the 70’s and Bowie:

Doo doo doo-doo doo doo doo doo
Doo doo doo-doo doo doo doo doo
Doo doo doo-doo doo doo doo doo
You’ve got your mother in a whirl
She’s not sure if you’re a boy or a girl
Hey babe, your hair’s alright
Hey babe, let’s go out tonight
You like me, and I like it all
We like dancing and we look divine
You love bands when they’re playing hard
You want more and you want it fast
They put you down, they say I’m wrong
You tacky thing, you put them on
Rebel Rebel, you’ve torn your dress
Rebel Rebel, your face is a mess
Rebel Rebel, how could they know?
Hot tramp, I love you so!

#88 Dissident on 07.18.18 at 10:18 am

If ever there was a case of the snake eating it’s own tail…this has to be it. This is beyond my comprehension. I need visuals.

#89 Dissident - a millennial living the dream on 07.18.18 at 10:31 am

Speaking of investment portfolios and renting – a female ex-co-worker of mine, is essentially retired at age 33, living off her dividends and renting.

She lives off the dividends of a $1.5 mil portfolio, comprised of an only-child inheritance from grandma, a juicy divorce settlement and a very juicy sexual harassment/assault lawsuit…

(lucky for her, it was caught on the elevator camera and the dude was a Bay Street fat cat who had a litany of other sexual abuses to his name; the company just paid for his boo-boos with their corporate insurance – cha-ching – so basically, ladies, you’ll only get a big pay day if there’s concrete and corroborated evidence; anything some creep does to you sans witnesses is basically money down the toilet and you get to pay for your own therapy.)

She, her two kids, and her new fiance (I introduced them to each other, thank you very much), now rent instead of owning, and she lives off her dividends. (He runs his own business).

Now, wouldn’t you call that a very fortunate/smart Millennial thing to do? We should all aspire to the same, minus the sexual harassment/divorce/grandma passing parts…

#90 NoName on 07.18.18 at 10:54 am

Very interesting, best and worst exampy of home bias, kind of.
Some time ago sweden indroduced sent private social security, there was a default selection and also people were able to build their own portfolio, difference in rate of return is mind boggling.

https://imgur.com/a/08cdpgE

#91 Ex-Republican on 07.18.18 at 11:05 am

#74 will on 07.17.18 at 10:54 pm

Smoking Man #59

“Pure speculation. His shit decorum appeals his loyal base. I’m sure he could act more statesmen like if he thought he could gain from it. The more he gets MSM and the established gravy train to attack him. The stronger he gets. #walkaway is all you need to know. Red wave in the midterms.”
____________________________________________
Agreed.

…………………………………………………………………….
Me thinks that the red wave wilst only be of thyn Republicans blood! I would expect a royal thrashing at the polls. Not for Trump but his acquiescent supporters. the King shall be shackled and Blue blood wilst reign.

#92 jess on 07.18.18 at 11:05 am

incompetence ergo ego
looking strong isn’t the same as being strong

slip : slippery: forked tongue
would (nt’) be Russia

the best treaty EXTRADITION
In the United States, cases that strictly involve just laundering are punishable by a maximum of 14 years in prison.
For financial institutions, even just neglecting to report activity that might be laundering can carry up to five years. (so really how many were charged with this in the usa?)

a pattern of journalists / investigators /witnesses end up dead

As a journalist for the newspaper Novaya Gazeta, Shchekochikhin investigated apartment bombings allegedly directed by the Russian secret services and the Three Whales Corruption Scandal which involved high-ranking FSB officers and was related to money laundering through the Bank of New York.

Shchekochikhin died suddenly in July 2003 from a mysterious illness a few days before his scheduled departure to the United States, where he planned to meet with FBI investigators. His medical documents have been “classified” by the Russian authorities. The symptoms of his illness fit a pattern of poisoning by radioactive materials and were similar to the symptoms of Nikolai Khokhlov, Roman Tsepov, and Alexander Litvinenko. According to Litvinenko and news reports, the death of Yuri Shchekochikhin was a politically motivated assassination.[1][2] Shchekochikhin died suddenly in July 2003 from a mysterious illness his illness fit a pattern of poisoning by radioactive materials and were similar to the symptoms of Nikolai Khokhlov, Roman Tsepov, and Alexander Litvinenko.
========================
Shchekochikhin died suddenly in July 2003 from a mysterious illness (poisoned)
Sergei Yushenkov was shot dead near his house in Moscow on 17 April 2003,
Terkibaev was killed later in a car crash in Chechnya. Politkovskaya fell violently ill and lost consciousness after drinking tea.
Yushenkov also investigated the alleged involvement of the FSB in staging the Moscow theatre hostage crisis through their agent provocateur Khanpash Terkibaev, the only hostage taker who left the theater alive and allegedly guided the terrorists to the theater. In the beginning of April 2003 former FSB Aleksander Litvinenko gave information about Terkibaev (“the Terkibaev file”) to Sergei Yushenkov when he visited London. Yushenkov passed this file to Anna Politkovskaya.[4] A few days later Yushenkov was assassinated. Terkibaev was killed later in a car crash in Chechnya. While flying south in September 2004 to help negotiate with those who had taken over a thousand hostages in a school in Beslan (North Ossetia), Politkovskaya fell violently ill and lost consciousness after drinking tea. She had reportedly been poisoned, with some accusing the former Soviet secret police poison facility.[6][7]
Assassination
Sergei Yushenkov was shot dead near his house in Moscow on 17 April 2003,

#93 IHCTD9 on 07.18.18 at 11:14 am

#89 Dissident – a millennial living the dream on 07.18.18 at 10:31 am

…anything some creep does to you sans witnesses is basically money down the toilet…
_______

Young guys:

^ These are the kinds of female thought processes you want to run from at top speed.

Ladies like Diss and her Pal just aren’t worth the risk no matter what they bring to the table.

#94 Bytor the Snow Dog on 07.18.18 at 11:50 am

72 MF on 07.17.18 at 10:33 pm sez:
“Bytor the Snow Dog on 07.17.18 at 8:14 pm

Yeah there was and in case you missed it I will say it again:

Your comparing of the migrant situation in Toronto with that of Italy’s was flat out wrong/incorrect.

You basically tried to use the awful tale of human suffering currently occurring in Italy (which will have severe economic and social ramifications) as a cheap way of voicing your discontent of Toronto, a city flourishing with zero similar issues, by equating the two.

It was dumb.

MF”
—————————————————–

I compared? I must have written a ton of invisible words.

Koo Koo.

#95 SoggyShorts on 07.18.18 at 11:56 am

#89 Dissident – a millennial living the dream on 07.18.18 at 10:31 am

Now, wouldn’t you call that a very fortunate/smart Millennial thing to do? We should all aspire to the same, minus the sexual harassment/divorce/grandma passing parts…

Winning the lottery THREE times and investing it instead of blowing it all:
Fortunate? Yes.
Smart? Sure, why not?
Something to aspire to? I’m not sure how since you said “minus the money making parts” unless you mean getting engaged to someone who owns a business…?

#96 Dissident on 07.18.18 at 12:17 pm

#93 IHCTD9 on 07.18.18 at 11:14 am

For your information, IHCTD9, I was being *PAINFULLY* cynical with that comment, ok? All’s fair in love and war, buddy. You do something illegal, you better hope you don’t get caught by the justice system, or by an elevator cam proving without a doubt that yer guilty. So err on the side of caution, and don’t do it. Just ask Bill Cosby and Harvey Weinstein how that worked out for them.

And that’s from personal experience. Why should any woman endure sexual assault and not get a pay day? Wouldn’t you demand the same? Short answer: she shouldn’t. Period. Don’t get me fired up. NEXT.

#97 Dissident on 07.18.18 at 12:29 pm

#93 IHCTD9 on 07.18.18 at 11:14 am

Also, thanks for completely missing the main point of my post – that it’s very cool to be able to live off the dividends of a managed portfolio at age 33. Jealous?

Furthermore, I’m not going to respond to any imbecilic posts like yours, or anyone else’s. You can flounder in the steerage section with the other dotards. Thanks for opening your mouth and dispelling all doubt of your mental capacity.

#98 Nutz on 07.18.18 at 1:13 pm

just further evidence this world is gone nuts. if it’s driven by greed, it’s been invented

#99 A J on 07.18.18 at 1:20 pm

For everyone in the comments talking about Rand and Marx, there’s another author who is relevant in this situation: Orwell – “The real question is whether capitalism, now obviously doomed, will give way to oligarchy or democracy.” This quote by him feels so relevant to the situation in the United States. Capitalism has given way to many disaffected people who will either pine for totalitarianism or socialism. Either way, capitalism in the United States has created an enormous gap in quality of life and income for Americans. It’s no wander many cling to Donald Trump, no matter what idiotic things he does, or they cling to democratic socialism to even the playing field.

#100 Aaron on 07.18.18 at 1:25 pm

From the post, it’s clear that you can’t go low on the interest rate that you charge yourself. On the other hand, if you can afford it, is there any advantage of going high on what interest rate you charge? E.g. instead of charging yourself 3 or 4% would it be better to charge 6 or 7% to increase the amount of money you can funnel into the RRSP?

You wouldn’t be getting the tax advantages of normal RRSP contributions, but it seems like it might be a good way to shovel more funds into your RRSP where they can grow tax free for several years before you need to take them out again (at which point they’d be taxed, but perhaps at a lower rate than during the interceding years?). Perhaps this would be an option that’s best for people who are out of TFSA and RRSP space?

You have no choice on the rate. It must be equivalent to the posted rate at chartered banks for the term selected. – Garth

#101 mike from mtl on 07.18.18 at 1:26 pm

#90 NoName on 07.18.18 at 10:54 am

Very interesting, best and worst exampy of home bias, kind of.

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

Ouch. Though to be fair not unique. UK investors can have 50% in FTSE, Canadian too in TSE. USA can be almost 100%, for them even wrose they got their asses handed to them from 2000-2002 & 2008-9. Flat return for more than a decade.

#102 Dissident - Toronto Life pushing RE x 2 on 07.18.18 at 1:36 pm

It’s interesting to note that given the stagnant and slumpy state of Toronto RE right now, Toronto Life has TWO real estate-themed issues on stands now:

A ‘special Real Estate issue’

https://pocketmags.com/toronto-life-magazine/real-estate-2018

And a very obnoxious July cover – “Don’t hate me because I’m 27 and own a house in Toronto”

https://pocketmags.com/au/toronto-life-magazine

Talk about ‘strategic marketing’ – the RE cartel must have paid Toronto Life big bucks to push their product, during this low point, two times over, and fan the flames of house lust, particularly in the “moister” demographic…are they desperately trying to save the market with some smug titles? Get millennials jealous of each other? Stimulate envy? Start some bidding wars? I can only guess…yes.

I wonder what propaganda they’re pushing under that obnoxious cover. It’s just kinda lame and desperate.

#103 IHCTD9 on 07.18.18 at 2:13 pm

#96 Dissident on 07.18.18 at 12:17 pm

Why should any woman endure sexual assault and not get a pay day?
___________

Should all other victims of all other crimes also get a “pay day”?

No?

Read between the lines guys.

#104 KLNR on 07.18.18 at 2:38 pm

@#102 Dissident – Toronto Life pushing RE x 2 on 07.18.18 at 1:36 pm

___________________

Can you really claim you ‘own’ a house when you’re paying a mortgage to a bank?
Still just renting.

#105 Dissident on 07.18.18 at 2:52 pm

#95 SoggyShorts on 07.18.18 at 11:56 am

Yes, all three ‘lottery wins’ are themselves unfortunate circumstances – therein lies the irony. Nobody should actually aspire to endure those events, but rather, to achieve the end result, which I imagine is pretty nice. It’s interesting because of the odd circumstances, happening to one person.

#106 cultural elitist on 07.18.18 at 3:13 pm

@#99 – AJ
Good to point out that comment by Orwell. That was a long time ago (the 40s?). He’s in good company with this view, but here we are in 2018, still waiting for the denoument, wryly commenting on financial blogs. Weird, huh?

#107 Dissident on 07.18.18 at 3:23 pm

Obnoxious Toronto Life issue:

https://torontolife.com/real-estate/found-way-beat-market-buy-house-age-30/

Lol – “we’re chipping away to create the charm we wanted” – says a couple who bought a crappy row house off sketchy Dupont with a 30-year mortgage – “we have no intention of moving for a long time”. Lol, no, you won’t be.

I’m so glad I bought in 2012. I’d be in the same boat if I hadn’t. And I’m not even sure I’d want to upgrade to a detached house today. Might just sell and rent a larger, newer space and invest the profits. It’s definitely an option. I mean, look at this article. It’s not encouraging at all – the cover is grossly misleading. I’m struggling to understand how these people think they are #winning in their 70 year-old, 2-bedroom bungalows in the outskirts, after plundering their RSPs. 100% RE propaganda, pure bias. Sorry guys, I kinda don’t envy you at all.

#108 James on 07.18.18 at 3:23 pm

#99 A J on 07.18.18 at 1:20 pm

For everyone in the comments talking about Rand and Marx, there’s another author who is relevant in this situation: Orwell – “The real question is whether capitalism, now obviously doomed, will give way to oligarchy or democracy.” This quote by him feels so relevant to the situation in the United States. Capitalism has given way to many disaffected people who will either pine for totalitarianism or socialism. Either way, capitalism in the United States has created an enormous gap in quality of life and income for Americans. It’s no wander many cling to Donald Trump, no matter what idiotic things he does, or they cling to democratic socialism to even the playing field.
___________________________________________
OMG Animal Farm to the max! The pigs did not actually work, but directed and supervised the others. With their superior knowledge it was natural that they should assume the leadership. George Orwell

#109 Lost...but not leased on 07.18.18 at 3:35 pm

#81 oft deleted much maligned stock picker.

Good points..

Most of Chinese wealth was generated through drumm roll…”Real Estate”.

The joker in the deck is people do not realize one can NOT actually have freehold title to PRC land..”the People” own it…thus its a “lease”

The trickle down economics will be these parties international holdings….we have seen AnBang foreclosed on…as well as major soccer club.

The Chinese investors are caught between a rock and a hard place..they have (i)their own Gov’t (ii)as well as host international nations that are under pressure for more transparency on domestic RE ownership .

The natural response is to lay low. Then what?

IMHO, the market is at the cusp of a major correction…but who will tip it further ? It could be PRC(unlikely)….Chinese expats(unlikely) or natural economic forces . That leaves domestic buyers as the MAIN source of air in the bubble.

We’ve already seen the warning signs of not only flatlining…but price drops…especially in the crucial RE parameter of Condo market.

Back to PRC…if the RE bubble collapses…how will PRC react to what effectively are its holdings?

#110 Tater on 07.18.18 at 3:51 pm

#109 Lost…but not leased on 07.18.18 at 3:35 pm
#81 oft deleted much maligned stock picker.

Good points..

Most of Chinese wealth was generated through drumm roll…”Real Estate”.

The joker in the deck is people do not realize one can NOT actually have freehold title to PRC land..”the People” own it…thus its a “lease”

The trickle down economics will be these parties international holdings….we have seen AnBang foreclosed on…as well as major soccer club.

The Chinese investors are caught between a rock and a hard place..they have (i)their own Gov’t (ii)as well as host international nations that are under pressure for more transparency on domestic RE ownership .

The natural response is to lay low. Then what?

IMHO, the market is at the cusp of a major correction…but who will tip it further ? It could be PRC(unlikely)….Chinese expats(unlikely) or natural economic forces . That leaves domestic buyers as the MAIN source of air in the bubble.

We’ve already seen the warning signs of not only flatlining…but price drops…especially in the crucial RE parameter of Condo market.

Back to PRC…if the RE bubble collapses…how will PRC react to what effectively are its holdings?
—————————————————————-

If they need to get cash back into China a 6 month repatriation holiday should do the trick. A no questions asked on any funds returned to China policy would be an excellent way to get needed capital back.

#111 jess on 07.18.18 at 4:21 pm

Dark Money is a book that will not make you laugh bobby.

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

U.S. Treasury moves to protect identities of ‘dark money’ political donors

WASHINGTON (Reuters) – The U.S. Treasury said on Monday that it will no longer require certain tax-exempt organizations including politically active nonprofit groups, such as the National Rifle Association and Planned Parenthood, to identify their financial donors to U.S. tax authorities. ”

“It is important to emphasize that this change will in no way limit transparency,” Mnuchin said. “The same information about tax-exempt organizations that was previously available to the public will continue to be available, while private taxpayer information will be better protected.”
===================================
Ontario judge’s ruling wipes out section of Income Tax Act limiting political activity by charities -cbc

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

the supreme court rules against Montana, ordering it to comply with the Citizens United decision.

Dark Money: how a documentary became a political thriller

In a shocking new film about the influence of corporate finance in US politics, a film-maker and a journalist uncover a nefarious, far-reaching web

https://www.theguardian.com/commentisfree/2018/jul/18/dark-money-democracy-political-crisis-institute-economic-affairs

#112 darkselling on 07.18.18 at 5:25 pm

Commercial rates aren’t “way higher”.
I’m a commercial lender and our “A” priced loans would come in at ~3.61% for a 5 year loan right now. Compare that to a sub 80% conventional LTV residential loan and there’s not much difference. 10 year would be ~3.79 which is actually less than a conventional 10 year residential loan.
I’m going with a 155 and 165 spread over the applicable 5 and 10 year GOC.

That said, I like the idea of doing a RRSP loan.

#113 Rhett on 07.19.18 at 2:12 am

Here’s what it is for those who did not get the article:

Before:
RRSP in Bank (must be self-directed) $300,000
if your house has only $200,000 in mortgage, your RRSP can be the mortgagor (you still have $100K to invest in other stuff)… plus fees, lawyers, the works…. there’s always that.

The interest can only be tax deductible if this is in an income producing property – rental pretty much.
That makes it a really good double-edged sword… which I think many people here miss. Earn the interest, tax deferred, and at the same time (the same amount of interest) deduct it in your regular income!!!

New rules:
CMHC/Genworth/Other Insure-nanigans will not do it if you already have a rental property (REFINANCE) – $200 to anyone who can point me to the right bank who will do this for me as a refi.

You can only do it now in newly bought property – in this case you would need to put 20%++ because it is an investment property. I own a rental property currently, so I have a hard time refinancing my own property with my own money (using the exact same method that worked just fine before). WOW! Banks and government are really there to help you! Why, it’s for our own good! Isn’t that fantastic!

Why in the world would you use your money when you can borrow it from them, so they can earn from you!

In summary, and all seriousness, they make it hard baby! And if you really think you have lots of money in your RRSP – think again, it’s just there to boost your confidence level! HAHAHA! I mean seriously, if you do the math, the NET you can get from your RRSP is about 60% TOTAL, and that is WITH A LOT OF PLANNING Ahead! You got lots of money there, you croak, cha-ching for the gov’t coffers, you’re in the highest tax bracket!

I do have a plan to get it all…. but then again, LOTS Of planning.

TFSA Baby… you should be able to do this here as well, SDTFSA, the rules says you can pretty much do here what you can put in your RRSP… but wait, NO BANK does this, it’s TOO GOOD TO BE TRUE….and yes, think about this, they can easily change that with a slight of pen… now taxable! Chaching!

#114 Aaron on 07.20.18 at 6:24 am

Not sure that you look at comments on these older posts. ..

You say that you can’t pick your interest rate and have to go with the posted interest rates. Could you get around that a bit by claiming that you’re a horrible credit risk and thus not eligible for the prime rate, but rather the rates they give to risky clients? That or pick the chartered bank with the worst rates…

However this is still bouncing around the bigger question. Is it to your advantage to seek a higher interest rate when doing this in order to indirectly place more money in your RRSP if you’ve maxxed out your other options? Or is the cheaper interest rate a better option?