The gift

Just 13 more sleeps until you can shovel another six grand into your TFSA. Unless, of course, you live in BC. Sadly 70% of people in that confused province say they just don’t have the money to max their contributions. And we all know why.

A decade ago when the elfin deity known as F agreed with me and created the TFSA it seemed like a piffle. Just $5,000 – hardly enough to make a difference to your financial future. But, lo, this pathetic blog disagreed and suggested you max the sucker out, keep it invested in growth stuff, and never withdraw to buy hardwood, Jimmy Choos or a trip to Cuba.

So here we are. The cumulative limit in a few days will be $63,500, or $127,000 for a couple. If you and your squeeze max that and each add six grand a year for the next 30, achieving a 6% growth rate, the retirement egg will be $1.73 million. That will generate $120,000 in tax-free income for the rest of your lives without diminishing the principal, nor reducing your government CPP and OAS pogey. To achieve the same result, you’d need to have RRSPs of at least $2.5 million – which would mean high-paying jobs throughout your entire career.

This is why you must have a TFSA, keep it fully funded, and eschew any silly investment like a GIC.

So how are we doing, as a nation of anxious, financially-stressed beavers?

Notso good. At least according to the latest Big Bank survey (this one from BeeMo). Almost 70% of Canadians have opened a TFSA, mostly at a bank. However over 80% of this money is earning almost nothing, being in HISAs or GICs barely pacing inflation. That’s a long-term fail. And while the total amount people have salted away here has increased a lot (23% in a year), the average is just $27,000, or only half the allowed amount.

Ignorance is also rampant. A third don’t know the contribution limit, while 40% think this is merely a glorified savings account to be used for emergencies (like new snow tires). The main reason for not taking advantage of this gift horse is, as mentioned above, a lack of funds. So, while seven in ten Canadians think they can afford a house, 43% believe they can’t find a hundred bucks a week for their future. Lesson: you reap what you sow.

If this is you, smarten up. There are compelling reasons to stop aggressively paying down your mortgage or renovating the guest bathroom, and direct the money into a TFSA instead.

First, this is the most democratic and universally accessible tax shelter Canadians have ever had. Unlike an RRSP, it matters not what you earned last year – everyone is gifted the same contribution room annually. And it adds up, since the room never expires. Furthermore, you can gift money to your spouse or adult children, and have it grow in their accounts free of tax and with zero restrictions on withdrawals. Sweet.

Also unlike RRSPs, money coming from a tax-free account is not considered income. So people with defined-benefit pension plans, for example, should stuff their TFSAs since the cash stream thrown off in retirement won’t kick them into a higher tax bracket. Another reason to hate government workers! In fact, for most people the taxless aspect of the TFSA is of the greatest benefit since there’s no impact on CPP or OAS. That $120,000 flowing annually to a couple with a $1.7 million TFSA pool won’t result in any clawback of government benefits, while some poor schmuck with a much smaller RSP gets dinged. Unfair? You bet. But everyone has an equal opportunity to accomplish this.

In fact, when you get to be an oxygen-sucking, Depends-wearing, walker-grasping wrinklie, the TFSA party can continue. RRSPs expire at age 71 and must be turned into vehicles throwing off fully-taxable income. But TFSAs are timeless. Contributions and untaxed withdrawals can continue until you drop, then your spouse can take over the account and use it to impress her new boyfriend. Just ensure your partner is listed as the ‘successor holder’ since being a ‘beneficiary’ means current assets must be sold (and then transferred to his/her plan, without tax).

A final big advantage over the RRSP is the ability to pull out funds, then stick them back in when circumstances allow. The only rule is that a withdrawal in one year cannot be made up until the next. So try to time that for December (now) so you’ll have all of the next year in which to make up for the transgression.

In short, if you don’t take full advantage of this tool, you’re kneecapping yourself. TFSAs are not for saving money. Not for GICs or bank accounts. They are not emergency funds. Not for vacations. And not for ignoring. The younger you are, the more powerful the impact. If you do nothing else in 2019 but focus on filling up this one single vehicle, it will be a successful year. Your mortgage can wait. So can the quad, the bike, the RV, the sled or the soaker tub.

Do this. Even in BC. Hell, especially there.

145 comments ↓

#1 n labixa on 12.18.18 at 4:38 pm

Thanks for the reminder on “successor holder” designation on TFSA. Need to do this for both myself and my wife’s accounts.

#2 Scruffy on 12.18.18 at 4:44 pm

Excellent advice Garth. You are a national treasure. Keep up the excellent blog and dispensing of invaluable advice. I direct all my friends and family to your blog.

#3 HoweStreet.com on 12.18.18 at 4:45 pm

Ross Kay on HoweStreet.com Radio:
Canadian Real Estate Board 2019 Prediction Wildly Inaccurate.
Bank of Canada admits it is two years late.

https://www.howestreet.com/2018/12/17/canadian-real-estate-board-2019-prediction-wildly-inaccurate/

#4 Madcat on 12.18.18 at 4:52 pm

It’s only a matter of time before big brother disallows contributions based on unused contribution room from previous years… So top it up while you can!

Yes, top up, but not for this reasons. Accumulated room will not be erased. Ever. – Garth

#5 patty twinkle toes on 12.18.18 at 4:53 pm

Me and wonderful wife live in Halifax.
We live in a modest home with small mortgage.
When my wife wanted to move into a bigger home with a bigger mortgage, i talked her out of it and suggested she follow suit and invest in ETFs in self directed accounts like i have been for the last 6 years…she jumped on board and recently thanked me for having talked some sense into her…she’s amazed that the ETF’s are paying her dividends and she didn’t believe me when i told her that they will pay you. Unlike me, she doesn’t look at her portfolio at all, she gets emails of when the dividends are getting paid out and tells me..thats it.
Both of our TFSA’s and RRSP’s will get maxed out again in 2019…we will continue to purchase low cost, broad based ETFs that pay dividends and get reinvested every year…but theres a kicker: will be purchasing them on sale in 2019.
There’s only two of us in the house…and its 1800 square feet, more than enough room for 2 people. A lot of people get roped into the bigger, better, “i deserve it”, mentality when buying houses and other crap in life and should invest the money elsewhere. Some our friends think we are nuts and say “You gotta enjoy life”, like we’re living in a cave, eating Kraft dinner over a fire every night. We go on 3 trips every year while our friends are scraping by, not able to to do SFA cause their money is tied up in large mortgages and LOC for renos….who’s really enjoying life??? Ive tried numerous times to talk sense into them, but ive given up and don’t bother anymore…i just nod my head and say “oh yeah, great idea, buy it”.Our portfolios are down 20k right now…all red…ITOT and XUU were the last to go. I am not worried…i am thrilled. Stay the course, tune out the noise

#6 crowdedelevatorfartz on 12.18.18 at 4:57 pm

Unfortunately when people hear of Fortress and the debacle THAT has become and then see the market meltdowns of the past few weeks…..The last thing they’re planning on doing is stuffing hard earned cash with an investment advisor that may be “advising” you to invest in crap based on a huge commission ( Fortress) NOT on your best interests.
And a few years from now, if convicted, the Fortess people will receive a slap on the hand for financially ruining how many lives?
Canadian “justice”…….

There’s a reason a lot of Canadians don’t invest a….trust and lack of serious jail time for convicted white collar workers being but two.

And 6% a year , while hoped for, is somewhat pie in the sky these days.
My balanced and diversified portfolio is at a loss for the year and I’m sure I’m not alone.

But I know its a long term investment so I’ll ride it out.

As for “Joe Average” who doesn’t have two dimes to rub together……TFSA’s and RRSP’s are so far beyond reach they ignore the advertising.

Fortress was a sinkhole for investors, and the alarm was raised here two years ago. Investors who wanted a big yield and did not do their homework must accept some responsibility. No advisor I know was pumping that stuff. As for returns, a 6% return is well within historic norms – so when you get a year in which markets correct it’s a time to invest, not to moan. So stop it. – Garth

#7 YVR 60% crash on 12.18.18 at 5:06 pm

“your spouse can take over the account and use it to impress her new boyfriend.”

————————–

OMGhee …. God help us!

#8 Waiver on 12.18.18 at 5:08 pm

Anyone know if you can change an existing TFSA with a beneficiary designation to a successor holder without removing the money and setting up a new account?

Of course. Just tell the hosting institution. – Garth

#9 [email protected] on 12.18.18 at 5:25 pm

Right now… it’s hard to tell what the toxic asset is

Does anyone know what the toxic asset is these days ?

https://www.cnn.com/2018/12/18/business/alan-greenspan-stock-market-party-over/index.html

Alan Greenspan: Investors should prepare for the worst

His best-before date was more than a decade ago. Failed to call the housing bubble before it blew up and ate America. Ignore the guy. – Garth

#10 common sense on 12.18.18 at 5:29 pm

Let’s take a poll….Is Powell raising rates tomm or not?

Either way he is trapped…Yes means more hurt.

No means the confidence
“game” of the FED leak holes.

I say he raises. Tomorrow and the next year will be fun!

#11 Alex from Edmonton on 12.18.18 at 5:33 pm

Hi Garth,
Would a spousal loan be a good way to pay off a common-law spouse’s student loans while keeping assets separate in case things ever fall apart?

#12 young & foolish on 12.18.18 at 5:47 pm

I love financial assets …. but I am worried about the economic imbalances exacerbated by cheap money since 2008. It feels like we’ve been living through a “fake” recovery where only the top levels of society have been benefiting while main street plebs, governments, and even corporations have been wallowing in increasing levels of debt. Noted Janet Yellen:

“It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority.”

My idea of a healthy economy and of real and sustainable economic growth includes the 99%. Extremists pouring out of the right & left all around the globe suggest more serious trouble is on the way.
No “blood in the streets” …. yet, just on the market indices.

#13 Maple on 12.18.18 at 5:47 pm

I was thinking about putting the 6k in my TFSA to a high interest savings account earning 1.60%. Mainly because I saw how much the markets have tanked this year (all my index funds that I bought in Jan 2018 are in the red currently). But you are right, Garth, I should be investing when the price is low, especially when I still have 30 years until retirement. No TFSA funds will be going to any savings accounts next year!

#14 DD on 12.18.18 at 5:48 pm

With TFSA awareness and underutilization data like that, little wonder our PM got away with slashing them by almost half in 2016. Sad.

#15 yorkville renter on 12.18.18 at 5:50 pm

with the market down, does it still make sense to pull TFSA $$$ to stuff the RRSP as a tax avoidance strategy?

#16 SmarterSquirrel on 12.18.18 at 5:52 pm

Given the holidays are upon us and since Garth called this article “The Gift”, it only makes sense that people look at one of the reasons why they don”t have enough money to max their TFSA every year… giving gifts!

I asked a family member what they think they spend on gifts every year. The answer was “oh about $500”. Then I went through a pain staking exercise (https://smartersquirrel.com/tis-the-season-to-spend-on-gifts ) asking in detail about every possible gift giving event and moment in a year, once we got over $5,000 spent on gifts they wanted to stop counting, feeling sick to their stomach.

Like most people, I’m happy to give and receive gifts, but I also make sure I’m maxing out my TFSA. I think a lot of people grossly underestimate how much they spend on gifts all year long and I bet a lot of people spend more money on gifts in a year than what they put in their TFSA.

It’s worth taking the time to at least really understand what you are actually spending on gifts every year and compare that to how much you put in your TFSA every year. The reality of where your money is going may surprise you!

#17 Geoffrey on 12.18.18 at 5:55 pm

The TFSA is a gift indeed! Thanks for the reminder and the invaluable planning advice provided.

#18 Guy in Calgary on 12.18.18 at 5:58 pm

#11 Alex from Edmonton on 12.18.18 at 5:33 pm
Hi Garth,
Would a spousal loan be a good way to pay off a common-law spouse’s student loans while keeping assets separate in case things ever fall apart?
—————————————————————

Why go the spousal loan route instead of just paying off the debt? The advantage of a spousal loan is avoiding income attribution on investments, not consolidating debt. You would effectively be charging your spouse 2% on their debt and the interest you earn would be taxable to you. It makes no sense.

Quite frankly if that is an issue you should probably not get married.

#19 crowdedelevatorfartz on 12.18.18 at 6:02 pm

“Investors who wanted a big yield and did not do their homework must accept some responsibility. No advisor I know was pumping that stuff. As for returns, a 6% return is well within historic norms – so when you get a year in which markets correct it’s a time to invest, not to moan.”
+++++

Most people are financially uneducated and either trust advisors who were friends, relatives or they came recommended .
Myself included.
Investors may not have time for “doing their homework” nor, if I’m paying thousands of dollars per year in fees for someone to strategically invest my money for me ….why should I?

Poor advisors.
Eventually costing the investor everything or years of lost investment potential.
This blog helped me realize that my previous adviser was dumping far too much of my portfolio into the same crap. Very little diversity. Very high fees.
That’s was my homework.
I was lucky.
I moved before it was too late but I wasted precious years trusting a piece of sh!t who was screwing me with commissions while poo pooing my questions and concerns….Eventually I had enough and moved…

But every time I hear a story like Fortress I think of how it affects the reputation of the entire industry….and scares off hard working, decent people from investing in nothing but GIC’s , Bonds and bullion.

My former “adviser” still has a large clientele and still grinds out the PR sales BS with apparent impunity. But he looks great in a suit.

Moaning or not I have seen many ups and downs in the Market over the past 50+ years and have every intention of investing(maxing) in TFSA’s and RRSP’s this coming new year….I’m just not expecting a 6% return….

#20 Matt from BC on 12.18.18 at 6:04 pm

Hi Garth, I have been a daily reader since the spring of 2018 and look forward to your daily posts. I have a question about TFSA vs RRSP that i am yet to see covered in depth. What are the income thresholds where RRSP’s (and spousal) make more sense then TFSA’s? I am 30 and have an income of 160k (100k pensionable), my wife stays at home. I have 7% going into a DC Pension plan, and 6% matched profit sharing in medium cap company stock that i can put either in an RRSP or TFSA or Taxable and pull out twice a year. In this situation which account should we be putting the money into? The RRSP tax savings are huge, percentage wise but the idea of the TFSA earnings not effecting OAS or future tax rates down the road is very appealing. We are almost paid off on our principal residence (job loss fears lead to paying it off over all else), have a cashflow positive rental home (sub 300k detached in the OK) and are switching gears to investing more. Early retirement is a priority for us as my industry (oil) likely will be crushed before im a wrinklie. What should I concentrate on? TFSA? How much is too much for RRSPs?

#21 cecil1 on 12.18.18 at 6:07 pm

Its time government did something substantial to benefit Canadians and THEIR financial security:

Turn the RRSP into a TFSA.

The TFSA should be quadrupled for a start.

People earnings should only be taxed once. Ever.

#22 Pat on 12.18.18 at 6:08 pm

Hi Garth,

A question for you. I’m a recent immigrant to Canada (came here Oct 2016). Is someone like me entitled to use the full TFSA cumulative limit of $63,500 next year, or will I only be allowed to use the total of limits the years i’ve been in Canada – 2016, 2017, 2018 and 2019.

Thanks!

Only the years you have been a resident. – Garth

#23 Alessio on 12.18.18 at 6:11 pm

My $63K is in a almost 4% GIC locked for 5 years with tangerine. Almost $15K tax free profit! Beats the markets which past few years were negative. Not saying I don’t have market funds. Have non reg ETFs balanced with wealthsimple and all RRSPs are in balanced portfolios. But to put everything into markets is not good. It gives then takes gives then takes and it’s not like people have lots of money to invest forever they need it usually within 10 years and the last 7 years wasn’t a real market so wouldn’t use it as a proxy.

The markets were not ‘negative for the past few years.’ You have no credibility with a statement like that.- Garth

#24 Toronto_CA on 12.18.18 at 6:12 pm

Bad day for oil!! Especially in Alberta. Yikes.

This can’t be good for the oilpatch workers.

#25 Im stupid on 12.18.18 at 6:12 pm

# crowdedelevatorfartz

I get your point, all financial advisors should have fiduciary duties with respect to their clients.

Ruining someone financially should be punished based on the final outcome. For example if you’re scammed out of your life savings and decide to commit suicide, that should be murder. Harsher penalties are needed but I think dealing with a CIPF insured firm that doesn’t buy mutual funds meets the needs of most.

When I stopped trading and was looking for someone to invest for me I chose Garth. Not because he provides better returns or better advice then others but because I feel he could be trusted. I think in finance trust is key. I also agree with you that trust is probably preventing many from investing.

#26 Reximus on 12.18.18 at 6:14 pm

Merry Christmas Garth and The Turner Family

#27 Pavel Bure on 12.18.18 at 6:19 pm

The average is 7%

S&P 500 Index
Year Annual % Change
2018 -4.77%
2017 19.42%
2016 9.54%
2015 -0.73%
2014 11.39%
2013 29.60%
2012 13.41%
2011 0.00%
2010 12.78%
2009 23.45%
2008 -38.49%
2007 3.53%
2006 13.62%
2005 3.00%
2004 8.99%
2003 26.38%
2002 -23.37%
2001 -13.04%
2000 -10.14%
1999 19.53%
1998 26.67%
1997 31.01%
1996 20.26%
1995 34.11%
1994 -1.54%
1993 7.06%
1992 4.46%
1991 26.31%
1990 -6.56%
1989 27.25%
1988 12.40%
1987 2.03%
1986 14.62%
1985 26.33%
1984 1.40%
1983 17.27%
1982 14.76%
1981 -9.73%
1980 25.77%
1979 12.31%
1978 1.06%
1977 -11.50%
1976 19.15%
1975 31.55%
1974 -29.72%
1973 -17.37%
1972 15.63%
1971 10.79%
1970 0.10%
1969 -11.36%
1968 7.66%
1967 20.09%
1966 -13.09%
1965 9.06%
1964 12.97%
1963 18.89%
1962 -11.81%
1961 23.13%
1960 -2.97%
1959 8.48%
1958 38.06%
1957 -14.31%
1956 2.62%
1955 26.40%
1954 45.02%
1953 -6.62%
1952 11.78%
1951 16.46%
1950 21.78%
1949 10.26%
1948 -0.65%
1947 0.00%
1946 -11.87%
1945 30.72%
1944 13.80%
1943 19.45%
1942 12.43%
1941 -17.86%
1940 -15.29%
1939 -5.45%
1938 25.21%
1937 -38.59%
1936 27.92%
1935 41.37%
1934 -5.94%
1933 46.59%
1932 -15.15%
1931 -47.07%
1930 -28.48%
1929 -11.91%
1928 37.88%

#28 Reynolds531 on 12.18.18 at 6:25 pm

#11 Alex if you gotta ask that you shouldn’t be getting married.

#29 Kelowna on 12.18.18 at 6:28 pm

“Especially in BC” – absolutely agree especially with a provincial government who is determined to destroy the economy, is completely mismanaging the housing crisis by assuming adding taxes are the answer and refusing to support getting our energy to tidewater to fund our transition to a greener economy!
Nice not to have snow here but aside from the weather, BC is not the place to be these days!

#30 Barb on 12.18.18 at 6:36 pm

Your gift, GT, is the abject clarity in how the message is delivered.
Thank you for what you do for us.

Season’s greetings to you and yours, from me and mine.

#31 SunShowers on 12.18.18 at 6:42 pm

Wages have barely budged in decades, but be sure to throw all that money you’re not making into a TFSA!

Just stop drinking. – Garth

#32 SpaceX Alert on 12.18.18 at 6:44 pm

A US military satellite under a National Security Mission will be launched tomorrow at 9:07 EST. The SpaceX website should show the launching live. Are they getting ready for something dire?

#33 Guy in Calgary on 12.18.18 at 6:46 pm

#23 Alessio on 12.18.18 at 6:11 pm
My $63K is in a almost 4% GIC locked for 5 years with tangerine. Almost $15K tax free profit! Beats the markets which past few years were negative.
—————————————————————-

I do not believe that this is 4% per annum. It is likely 4% over the 5 years which is $2520 not $15,000. No bank is giving you a 23.81% 5 year return on a GIC. Markets were also not negative.

#34 crossbordershopper on 12.18.18 at 6:50 pm

your opinion of tfsa is fine. and factually correct TODAY. One thing that i have learned about Canada since I was born here is that Government changes its mind. It does that when they need money. Why would they change income trusts(lost lots money), corporate class share changes(stupid), now tinkering with CCPC’s.
If you think in 30 years with Liberal governments running deficits till the end of time, that they will not be asking Mr. Saver that they will not incorporate some asset means test for government cheques or significant taxes for savers, your naive.
My dad remembers john robarts saying in 1961 that this new pst of 3% was for infrastrucure.
we gladly pay 13% on everything today and dont even bat an eye.
honestly I would rather take my changes in America, I know they might change the rules down there, but at least I have a gun and a change. Here I have no gun and no chance.
Go ahead and save, you will see that future government in 30 years will simply take it from you or dilute it to irrelevency for the greater good of society.
Like the christian song goes, I can only imagine, actually we cant imagine, we fought communism and instead we will of come full circle and embrace a weird sort of socialism where we become all equal, #metoo, the envionment etc is all part of the new social order that we will all bear witness.
I am pesonally not going to save in a TFSA and instead enjoy a nice steak with peppercorn tonight, and litterly eat all my money and enjoy it, while you can all save money and do without until your in a retirement home, pissing in your diaper not knowing your name eating mash potatoes. Since many in society will have no teeth or have dietary restrictions.

The TFSA, like the RRSP, will never be cancelled. If you don’t wish to save, good luck. But do not dissuade others from doing so with your fearful bleating. – Garth

#35 For those about to flop... on 12.18.18 at 7:34 pm

Pink Pumpkins being carved in Coquitlam.

Got time to bang out a few more Pumpkin Posts before I shut up shop for a week or so and start next year with my third season of Pink Snow Posts.

Featured these guys before having trouble with their purchase in Coquitlam.

The details…

30 1705 Parkway Boulevard ,Coquitlam

Paid 1.1 June 2016

Originally asking 1.24

Now asking 999k

Assessment 1.08

So these guys have been at it since August 2017 and still no luck.

Expired close to a month ago at 1.18 and they come back on the market today at 999k.

While they have been messing around, 300k has come off the bottom of the Vancouver detached market,although you can’t get anything as new as this yet.

Not much product moving,the market has turned into a parking lot…

M44BC

Aug 28:$1,249,000
Mar 14: $1,196,000
Change: – 53000.00 -4%

https://www.zolo.ca/coquitlam-real-estate/1705-parkway-boulevard/30

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

#36 Surfing Pikachu on 12.18.18 at 7:36 pm

-“Prove it-Garth”.

I was surfing along the shore of Cinnabar Island battling LV 255 Missingnos, but here I am to prove that Kathleen Wynne’s Liberals are anti-free speech.

My friend didn’t film the incident as he was watching TV when they stormed his door, but a blogger named BlazingCatFur had Toronto Police visiting him because the Toronto District School Board made a false complaint that he threatened to commit arson against the school board, not the location, but the school board, an entity.

My friends, Kathleen Wynne Liberals play the victim card at every turn.

Arson is a crime. Cops hunt criminals. How is that Wynne’s fault? – Garth

#37 IM in C on 12.18.18 at 7:51 pm

Easy to say — put your money in your TFSA , but don’t buy GIC’s. Trouble is, I don’t have much of a clue what to invest in, and I suggest the vast majority of people out there don’t know what to invest in either

So learn. – Garth

#38 Fluorine on 12.18.18 at 7:58 pm

Heya Garth,

Are the TFSAs opened up with you at Raymond James successor holder ones?

Cheers,

~Flu

Of course. – Garth

#39 AFD on 12.18.18 at 7:58 pm

—120,000? Where does that number come from? 1.73Mx4%=69,200. For money to last I thought it was the 4% rule?

There is no such rule. A balanced portfolio should average 6-7% over decades, so take the income thrown off. – Garth

#40 will on 12.18.18 at 7:58 pm

#9

“His best-before date was more than a decade ago. Failed to call the housing bubble before it blew up and ate America. Ignore the guy. – Garth”

I agree 100%. Pay no attention to Alan “I didn’t see it coming” Greenspan. Sorry Mister Chairman, you don’t get to “not see”. I can make that claim because I am merely a deplorable but you don’t get to say that. You were the Chairman of the Federal Reserve. Therefore you see everything.

#41 yvr_lurker on 12.18.18 at 8:01 pm

#33 Guy in Calgary

I do not believe that this is 4% per annum. It is likely 4% over the 5 years which is $2520 not $15,000. No bank is giving you a 23.81% 5 year return on a GIC. Markets were also not negative.
—————————————–

I don’t know about the 4%, but I just put a 62K RESP for my 14 year old in a tangerine 4 year GIC at 3.35% (per annum). Look it up. Decent rate, no tax for in his hands at the end, and have no worry about Mr. Market vapourizing what we have saved for 14 years. If I had longer than a 4 year horizon might have been more of a risk taker, but must admit have little faith that the markets will improve over the next few years. To do better like Garth says I would take his 6% estimate subtract 1% management fee, some additional amount for mers or whatever, and be left with probably about 4.5% per year provided in best case scenario…. why bother with that risk over a 4 year time frame… this year would have been a -6% loss…

#42 -=jwk=- on 12.18.18 at 8:04 pm

#23 Alessio on 12.18.18 at 6:11 pm
My $63K is in a almost 4% GIC locked for 5 years with tangerine. Almost $15K tax free profit! Beats the markets which past few years were negative.
—————————————————————-

I do not believe that this is 4% per annum. It is likely 4% over the 5 years which is $2520 not $15,000. No bank is giving you a 23.81% 5 year return on a GIC. Markets were also not negative.

———————————-

They do indeed offer 3.5% five year GIC’s @ tangerine with no fees as well. We consolidated all of our retirement funds in 2008, immediately got creamed and are now sitting at +22% over the last ten years. That’s barely inflation, we could have got GIC’s at 5.5% back then too….

Surely you did not sell in 2008. Since then markets have gained 60%. – Garth

#43 crowdedelevatorfartz on 12.18.18 at 8:06 pm

@#25 I’m stupid
Your explanation was far more eloquent than mine. Total agreement.

@#26 Pavel

Excellent “proof” of returns. Well done! If only you played in the Stanley Cup finals with such perseverance Vancouver would have won……..

I have every intention of maxing out my TFSA and RRSP’s this Spring…I’m just a bit more pessimistic than most….”Glass half empty” and all that.

#44 CMV on 12.18.18 at 8:20 pm

Moving back to BC soon from Oregon after being gone a decade and had been planning to take advantage of this once we land… But just learned that without CAD residence, I can’t backdate the contribution. Oh well, we’ll take what we can get!

#45 Calgary Cowboy on 12.18.18 at 8:21 pm

What is meant by RRSPs expire at age 71 and must be turned into vehicles throwing off fully-taxable income?

Exactly as stated. At 71 RRSPs become RRIFs with minimum annual (taxable) payouts. – Garth

#46 crowdedelevatorfartz on 12.18.18 at 8:22 pm

@ 31 Sunshowers
“Wages have hardly budged in years…”
++++++

Depends on where you are and what you do.
Govt workers seem to have had “cost of living ” increases on a pretty regular basis AND they have guaranteed pensions to count on.

Private sector trades are raking in the dough.
My income has increased 35% in the last 5 years due to hard work and bonuses……and no I’m not Bullsh!tting.

Salaries/wages arent all based on “social justice” , “empowerment” and an Arts degree …..sometimes, unfortunately, ….. its just dirty , hard grinding …….work…..that gets you ahead.

#47 tccontrarian on 12.18.18 at 8:28 pm

“The Gift” – just as I was looking at this:

https://www.caranddriver.com/rivian/r1s

I’ve already sent in my deposit ($1,000 only) – the rest will be funded from my precious metals investments.
That’s what I call “going Green”!

TFSA: a good vehicle for sure, and I do have it fully funded.
However, a margin account gives way more flexibility to do other fancier things (shorting, options, leverage, etc). I see them all as tools in the tool-box. Each and every one has it’s purpose as the situations arise.
Most of my friends have their TFSA at a bank – and think anything to do with ‘stocks’ is crazy-risky. I’ve given up!
My only response now is, “everything you do, or not do, carries ‘risk'”… and leave it at that.

TCC

#48 AFD on 12.18.18 at 8:37 pm

—120,000? Where does that number come from? 1.73Mx4%=69,200. For money to last I thought it was the 4% rule?

There is no such rule. A balanced portfolio should average 6-7% over decades, so take the income thrown off. – Garth

———————————-

And I gathered that to keep the principle I needed to account for 3% annual inflation leaving only 4% (aka Trinity Study).

Was that a mistake?

Worrying about inflation in 30 years is a big mistake. – Garth

#49 Bottoms_Up on 12.18.18 at 8:44 pm

Sorry Garth, government workers don’t earn enough after tax after pension contribution earnings to afford a middle class lifestyle, kids AND to fund a TFSA. Just ain’t happening.

#50 crowdedelevatorfartz on 12.18.18 at 8:46 pm

@#131 Crazyfox
“Everything’s gone soft….”
++++
There’s a blue pill that can help…….

#51 reynolds531 on 12.18.18 at 8:51 pm

We need a Canadian backdoor Roth strategy. To convert RRSPs to tfsas.

#52 Linda on 12.18.18 at 8:54 pm

#31 ‘Sun showers’ – I’ve heard the wage argument for not saving so often. I say ‘bah’ to it. All one need do is pay oneself first. Think of a payroll deduction that flows into your TFSA/RRSP or savings account. Think of that deduction as a ‘tax’ – you only touch it in true emergencies & do what you can to turn to it as a last resort. Because here is the thing with salary increases. Like tax refunds, most people promptly spend the increase or refund. Case in point – my hubby got a nice promotion with a substantial raise. His coworkers were amazed when he didn’t promptly go out & buy a second car, because we’ve only ever owned one vehicle at a time. In their eyes, we were horridly deprived & should immediately take steps to buy something we never have needed. Have there been times when a second vehicle would have come in handy? Yes. However, the inconvenience of having to work around the occasional (as in, maybe once a year) scheduling conflict was hardly worth tying up thousands of dollars in a depreciating asset – not to mention the extra cost of fuel, insurance & maintenance for said depreciating asset.

Saving isn’t difficult. What is difficult is changing the behavior that any extra income should be spent instead of saved. Doesn’t mean you can’t ever spend, just means you need to find a balance between spending & saving.

#53 Toni on 12.18.18 at 8:58 pm

Hi Garth, could you tell what minimum amount is required to receiving services such as those you offer to your clients?

Thanks again for the financial education with your fun twists. You’d do a fabulous teacher..too!!

#54 Shawn Allen on 12.18.18 at 8:59 pm

Annoying Question of the Day.

TFSA Gift. Gifts cost money. Who is paying for this gift?

Money can be gifted to a spouse who can then invest it in a tax-free account without attribution. – Garth

#55 akashic record on 12.18.18 at 9:32 pm

Thanks again for the TFSA.

#56 AACI Home-Dog on 12.18.18 at 9:33 pm

trying to sell this “plan” to all my 35 – 40+ aged friends that are self employed; with no company pension, to get them off the idea that CPP will be enough to take care of you. It can be a tough discussion, being so personal in nature. And most are just getting by as it is, so no $$ to spare. (it’s not big city housing costs causing it here, though).

#57 Peter on 12.18.18 at 9:40 pm

Speaking of gifts Garth, I would like to be able to make a small contribution to your blog. Monetize this place with a paypal link for those that want to donate.

Merry Christmas

Thanks sincerely, but I prefer to maintain the status quo. Please give your money to a family that needs it, or the SPCA. – Garth

#58 Shawn Allen on 12.18.18 at 9:51 pm

I meant REALLY Annoying Question

From 54: Annoying Question of the Day.

TFSA Gift. Gifts cost money. Who is paying for this gift?

Money can be gifted to a spouse who can then invest it in a tax-free account without attribution. – Garth

***************************************
At the risk of getting body slammed or whatever, my question is based on today’s Post that seems to describe the TFSA as a gift from the government to all those who use it to save taxes. Which is true, it is a gift.

The annoying and I suppose rhetorical question is:

Who will pay the cost of this gift?

As with RRSPs, capital gains exemptions and many other measures, the feds call it a ‘tax expenditure’. So, you pay. – Garth

#59 OttawaMike on 12.18.18 at 9:54 pm

Smokingman yesterday:

Faith Goldy?? Come on dude, you are scraping the bottom of the barrel. she attended Havergal college, let her parents pay her legal bills just like they paid her tuition.

She recites white supremacy propaganda such as the the 14 words and RAHOWA chants.

Faith is not someone that any reasonable person should be backing. The most frightening aspect of her mayoral candidacy was that areas of Etobicoke and Scarborough gave her 5%+ of the votes.

#60 DON on 12.18.18 at 10:09 pm

#29 Kelowna on 12.18.18 at 6:28 pm

“Especially in BC” – absolutely agree especially with a provincial government who is determined to destroy the economy, is completely mismanaging the housing crisis by assuming adding taxes are the answer and refusing to support getting our energy to tidewater to fund our transition to a greener economy!
Nice not to have snow here but aside from the weather, BC is not the place to be these days!
**************

The market was FOMO’d to the extreme by unethical enablers and was destined to collapse under its own gluttony. With the lack of money laundering and the fact that prices have gone too far north of affordability people can no longer afford to buy. How can prices keep going before most everyone gets priced out and then the frenzy dissipates even more as fear takes hold.

Bankruptcies are increasing as of the latest report.

There is no pill for such hangovers this time. Even lowering interest rates won’t help when the average home is way past reasonable and then the repairs come (aka quick construction).

https://www.cbc.ca/news/canada/british-columbia/housing-market-enters-mild-recession-1.4950649

Is this it…announcing a mild recession for 3 years…??? And in that three year period everything will be alright in the economy? I saw a similar headline in Australia a couple of months back. Now they are basically crapping their pants.

In Victoria, there is talk of prices stagnating for years, even though they are currently un-affordable for first time and young home buyers. Who wants to be saddled with that much debt. This is done! Welcome back late 80s in BC and 90s in Toronto.

#61 DON on 12.18.18 at 10:18 pm

#57 Peter on 12.18.18 at 9:40 pm

Speaking of gifts Garth, I would like to be able to make a small contribution to your blog. Monetize this place with a paypal link for those that want to donate.

Merry Christmas

Thanks sincerely, but I prefer to maintain the status quo. Please give your money to a family that needs it, or the SPCA. – Garth
*************

The Good Man.

Cheers,

#62 rc99ar on 12.18.18 at 10:23 pm

TFSA market value 37k. Book value 88.4k. Variance giveth and taketh away. No regrets, all cheap tangible book value, illiquid, small cap Canadian stocks. Though my strategy may change as I learn. If I’m alive in 2034 that’s my last year as a resident. When the highest wage you can make is lowering your tax bill, that’s the job to take. I’m 38, Afghanistan vet (Reserves so no DB pension for me) 3kids, 7th generation in Canada. I no longer feel a sense of duty or obligation to pay to a country that villainizes me for my sex, race, religion, or income. Maybe I can land somewhere that the next 7 generations will be free individuals instead of servants to the collective…… wine and greaterfool shouldn’t mix.

#63 Diversified in Oakville on 12.18.18 at 10:24 pm

Thanks for the advice on a previous blog to set up our TFSA’s as successor beneficiaries. Did that, check. Fill up both with 6k each in early January, check.
Why people come to the underbelly of this blog to ‘dis you, I will never know.

#64 Diversified in Oakville on 12.18.18 at 10:27 pm

Meant to type successor holder.

#65 Phylis on 12.18.18 at 10:36 pm

Skipped to the end of the comments today. When a significant other cant see the forrest throught the trees, do i need to seek counselling? Just rhetorical. Need a little xmas vent. Thx.

#66 Glengarry Girl on 12.18.18 at 10:39 pm

Years ago we made the mistake as small business owners to invest in Laboured Sponsored Funds pushed by RBC Dominion Securites. Both husband and I contributed $5000 each a year for several years. Admittedly we did it for the Tax break, we were young and believed them to be a good investment. What did we know, that’s why we trusted an advisor. In the end we lost big time. They went from $5000 to $1300, the Government allowed the Fund Manager to lock them during their decline so clients couldn’t cash out. Lesson for me was that I don’t trust investments that the Government is pumping. Also I don’t trust that financial planners have your best interest in mind. RBC sold these investments because the fees they got were worth it to them. During the years of watching these investments decline I was charged fees by RBC. In the end I guess I appealed my case to a manager with articles and evidence suggesting that this was irresponsible and was returned $1200 in Fees. I wonder how many people had this same experience. It also might explain why many of us are skeptical of the Governments intentions when it comes to taxes or changing the rules down the road. I know for a fact that they changed the terms on the LSF that I bought. There are many like me that have experienced loss of money in Markets and in Housing that know it can happen so we Save and Invest coming from that experience. I’m cautious and often read comments here, from Garth too, calling people like me foolish. I’m writing this just to give some perspective as to why some of us don’t Trust. I wouldn’t think of calling people foolish if they loose a significant portion of their retirement funds in a market correction. I understand that they are just doing what they think they should. But I do think it’s irresponsible to tell people that they can’t loose. Investors do have the option to move into Cash during these times of volatility, it’s not a bad strategy. The financial advisors “stay the coarse” sounds a lot to me like real estate agents “buy now or get priced out forever” it’s in their interest for you to do this.

LSVC funds were always junk and I cautioned against them repeatedly when they were available. As you admitted, they were for tax breaks only, not investment potential. As well, when you buy assets from [email protected] bank you are dealing with a salesperson, not an advisor. Next time do your homework. – Garth

#67 stage1dave on 12.18.18 at 10:41 pm

#25 I’m Stupid;

I’m with you on the apparent lack of punishment for some of these outright fraudsters, and I’ve thought for many years there should be a severe penalty for stripping people of (in many cases) their life savings. Many are at an age where they simply can’t go back to work to replace it, or even back to work, period.

A prison term is hardly sufficient, methinks. Hey, if they’ve been living off other peoples’ money most of their adult lives, why continue that charade?

Since the punishment must fit the crime, once convicted they must be deprived of all ability to possess (let alone alone accumulate or invest) capital. That way they will get to experience a bit of what their former clients experienced, or are experiencing, or shortly will.

Furthermore, perhaps we (as a society, or community) can find a way to make certain these crooks get a chance to not just taste, but gulp the misery they have inflicted on others.

Nothing like a few years on the street and hanging out in soup kitchens and homeless shelters to make ’em realize the error of their ways…or at least scare the living hell out of the next ponzi scheme imagineer! A condition of their sentence could be the absolute prohibition of cash…don’t breach yer recognisance, or its another 90 days. Besides, they might even get to meet a few of their former clients in the food line…

(now THAT would be the basis for another great reality TV show…we’ll call it “payback”…besides, I’m tired of watching programs about someone whose forgotten to take out the garbage for the last 25 years)

Btw, just thinking out loud here…people get addicted to all kinds of things; maybe a “cash” addiction should be treated the same way (especially if you’re stealing it from someone else) in as far as removing the addictive substance from the individual; and imposing substantial penalties if a convict is caught with it in his/her possession.

And yeah, I’m aware of the separate sociological issues/urges of peer groups/power/public esteem, etc; but there’s psychologists to treat those maladies.

Or there should be…

#68 Diversified in Oakville on 12.18.18 at 10:42 pm

Thanks for the advice on a previous blog to set up our TFSA’s as successor holder. Did that, check. Fill up both with 6k each in early January, check.
Why people come to the underbelly of this blog to ‘dis you, I will never know.

#69 IHCTD9 on 12.18.18 at 11:01 pm

tccontrarian on 12.18.18 at 8:28 pm
“The Gift” – just as I was looking at this:

https://www.caranddriver.com/rivian/r1s

I’ve already sent in my deposit ($1,000 only) – the rest will be funded from my precious metals investments.
That’s what I call “going Green”!

——-

A 754-hp electric SUV that does 0-60 in 3.0, goes 400+ miles on a charge, it only costs $73K; and it’s not built yet?

Hopefully that deposit is refundable…

http://thecapitolist.com/questions-about-shady-car-company-plague-mayfield-in-sd17-race/

#70 boomorbust on 12.18.18 at 11:14 pm

High percentage of quality replies lately Garth. Good on ya, thought you were getting bitter with all the dummy comments and might give up on the rest of us.

#71 Rentin on 12.18.18 at 11:19 pm

Garth,

What the magic number where CRA decides that my TFSA is used for professional purposes?

I use my TFSA for high growth assets. Its a bit unfair that when the growth is “too good”, then the CRA steps in and decides to make it taxable.

#72 Mel on 12.18.18 at 11:26 pm

Let me be in defense of BC. Look, it is all a matter of how you live, and spend.

I rent, and my BC government stopped Landlords from adding another 2% above inflation. So, like me, my rent is cheaper then AB…or another province. What is not to like! If you have rented here long term, you are ahead, and have some increase protection. We called it rent control.

In 2020, my health premiums are going to 0.
About Alberta pipeline. Well, if you are going to have it built over your town water supply. Are you going to say, hey, bring it on!

Power cost here in BC is affordable, because we do not have transmission charges like AB.

Houses will collapse here for sure. History will make sure of it. When it does, it could be on my shopping list.

Until then, I sit in a rent controlled condo. Invest in TFSA, and can’t wait for Dow to collapse to at least 10,000.

Sit and wait for opportunities. They are coming.

Happy joyful 2019!

#73 For those about to flop... on 12.18.18 at 11:31 pm

Less than assessed.

Just came across this one on my travels through the decaying Pumpkin Patch.

The details…

17446 Hillview Pl,Surrey

Assessment 2.25

Now asking 1.64

So it’s now on the market 35% less than assessed value.

Could change with the new assessment in the mail shortly.

A lot of Vancouver speculators are gonna need oxygen masks when they open that brown envelope.

Brown envelope equals brown shorts, and I’m not talking about the UPS guy either…

M44BC

https://www.zolo.ca/surrey-real-estate/17446-hillview-place

#74 TheDood on 12.18.18 at 11:47 pm

#60 DON on 12.18.18 at 10:09 pm
__________________________

Current RE issues are exacerbated by an irresponsible, corrupt, timid media that simply passes on word for word communication from their big sponsors (RE cartel) for consumption by the dumb and dumber populace.

I can’t speak for the rest of the country, but here on the west coast, there seems to be no end to the number of dummies willing to over pay for RE.

#75 Travis on 12.18.18 at 11:48 pm

#31 SunShowers on 12.18.18 at 6:42 pm
Wages have barely budged in decades, but be sure to throw all that money you’re not making into a TFSA!

Just stop drinking. – Garth

*******

Stop drinking, alcohol costs so much more in Canada than other countries. It’s a huge source of tax revenue for our government for a reason. Stop frivolous spending. Save any way you can.

Save a month’s pay. That gives you a security blanket in case the water heater or your car breaks down.

Save three months’ pay. You’ll feel more secure. Go take some night classes, get a specialization that is useful to your boss. Or quit and get a better paying job elsewhere once you have expanded your skill-set.

Once you have a better job (or pay), save six months’ pay. Be creative with how you invest your money, open a small business, a side hustle. Take more classes, get an even better job. There’s lots of work out there, people need people who are willing to learn and work in specialized trades. The data on well-paying jobs is a series of google searches away.

Save a year’s pay. The dividends start to really roll in, reinvest those. It’s easier to save now that you are in a higher paying job. Other people now complain about stagnant wages, you’re looking to hire skilled workers. It’s not an easy road, but there you are.

#76 millmech on 12.18.18 at 11:50 pm

Speaking of gifts Garth, I would like to be able to make a small contribution to your blog. Monetize this place with a paypal link for those that want to donate.
Merry Christmas
Thanks sincerely, but I prefer to maintain the status quo. Please give your money to a family that needs it, or the SPCA. – Garth

I adopt a family every Christmas through the local food bank, and made sure that the family can have a happy and memorable Christmas, as for the SPCA picked up and dropped off Costco sized bags of dog and cat food.
It is a very emotional and humbling experience to help out those less fortunate than us whether they be people or pet, please give generously!

#77 Karlhungus on 12.18.18 at 11:56 pm

Bad advice as a financial planner to advise a nearly 7% withdrawal rate. You would outlive your money.

Withdraw what you earn. Simple. – Garth

#78 Ray on 12.19.18 at 12:03 am

A case can be made, by looking at the S&P 500 chart over the past 45-50 years, that the current curve is at the top of the long-term channels, and this last red quarter could be the start of a “correction” to the bottom of the channels. If this scenario is true, this could bring the S&P 500 into the 1,750 range by this time next year. The US/World has never had a president as divisive or disruptive as Pres.Trump before. The more I look at the chart, the more plausible it seems given Pres Trumps attitude towards global trade tariffs. Could Pres.Trump be the catalyst that reduces the global economy by 40%-50% in the next year?

#79 GoldnSilver on 12.19.18 at 12:04 am

Interesting times. I think there is something fundamentally wrong with the US economy. Someone is trying to hoodwink the masses into believing everything is just wonderful. I think not. Time will tell.
A few months back I could see this coming. Several alternate web sights were leaving little crumbs indicating that the rate hikes were soon to come to an end or if not, a pause. I was going to post but like most, would fear looking foolish if they just continued upward.
However fear set aside, I think they are done. Maybe a hike tomorrow, but that’s it. I could not see how they could possibly be hiking into a declining economy. And declining it is. Real fast. Look at stocks. But they could easily turn up. However housing a huge economic driver is tanking fast. So this I think will sink the economy in very short order. I may be wrong in my call, but no fear now. just calling what I see.

https://www.cnbc.com/2018/12/18/federal-reserve-wont-raise-interest-rates-this-week-larry-lindsey.html

#80 jane24 on 12.19.18 at 12:28 am

TFSAs and their like are only timeless tax-free treasures as long as the govt involved doesn’t need the money and changes the rules of the game on you. I’ll give you an example.

Here in the UK up to a few years ago women were set to receive their state pensions at 60 years old. Then the govt noticed that there were a lot of these women born in the 1950s and that it would cost the govt billions that said govt didn’t have. The idea was passed to raise the retirement age of these women to the same as men of that generation – 66. Seems fair enough but the change was made so rapidly that the affected women didn’t have enough time to change their life plans to organise work till 66 plus many are either married to retired men or caring for grandkids and aged parents so cannot return to work. Case before the British Supreme Court as we speak.

Lesson for me, never trust a govt to stick to its rules for a generation. Never let a govt know too much about your financial position.

#81 Ustabe on 12.19.18 at 12:30 am

@Smoking Man
Q Clock message, they asked me to pass it on to you. Your social media has been compromised. I offered to be your source going forward.

Hey jimmy those pants looking real good on you

T̴̛̠͑̃́͠ḫ̭̠̯͙͎͚̲̀ͨ̇ãͫ̾͊̅͟͏̦̦̺̞̮ͅn͇̫͕̟̺̻̉̓̾̌͜͟͞k͍̪͍̰͎ͥͮͥ̽͞s̷͖̺̘͓̪̩̰͚ͪ̅͘͟ͅ ̅̑̓̅̄҉͍̹̭̪͈͓̹͡j͈ͤ̽ͨű̢̠̠͎͖͓̿s̛͈̙͚ͣͬ̈́͋̏̌̆t͎̪͇͓͋͋̒ͅ ̥̹̖̓̇͘g̞͈̅̓̍̿ͧ̚͠͡o͍̳ͬ͟͠t͕̪̻͑ͧͦe̴͙̠̝̲͈̥̬̿͊ͪ̏ͤ̔̇̏͠ͅm̡̱̲̌͌͛ ̬̳̗͚̾͊ͨ̂̽̊t̲̦͚̬̒̊̎̃͡ͅo̓̿̔͛̍̌͢ͅd̷̡̖͓̜͍̹̳̘̮̣̀̎ͧ̌̒̾a̸̭̼͈͉̫̞̙̗ͣ̈́͆͌̄ͤͭ̽ͥ͢y̩͓̖͔͂̊ͭͨͣ͐̋̐͘͡

Run it through the blue decoder, the yellow ones have been compromised by Hannity, he left his in a cab and they got it.

#82 rc99ar on 12.19.18 at 12:35 am

@pavel bure. You are leaving out the dividends. Plus it should be CAGR, not average. Total will be close to %10. More if you move the start point 5 years in either direction, 1929 was funky.

#83 IHCTD9 on 12.19.18 at 12:37 am

#52 Linda on 12.18.18 at 8:54 pm

#31 ‘Sun showers’ – I’ve heard the wage argument for not saving so often. I say ‘bah’ to it. All one need do is pay oneself first.
——

Amen to that. Ms. IH and I have paid ourselves first since day one. There was a period of time when our chequing account plowed into overdraft almost every month, but we danced our way through without touching the automatic withdrawal we had set up for investments. We have never missed a “payment” in 20 years so far.

Of course, we live a lifestyle that allows for the savings to happen. We don’t make huge dollars, and you’re right – you don’t need to.

Speaking frankly though, I’m the last guy that needs a pile of cash to retire. I can live CHEAP, and do it with a smile. There are many (Men at least) like me out there that are pretty much going to get by no matter what happens.

BUT, even though I have no plans to blow hundreds of thousands in my retirement years on fun stuff, having a pile of cash still has great value to me. I like that Ms. IH will not have to compete with the cat for sustenance after I’m gone. I like that the kids will get a nice chunk someday. I like that when our health fails, we’ve got options. I like that we should not ever be a burden on someone else in our golden years. I like that if I see someone who I care about that is in a real pickle, that I can help in a very rare and significant capacity.

I don’t give a rip about travelling, fancy houses, and most things one might expect of a retired guy lifestyle. For me, the real value of money is not turning it into a new F350 diesel (even if I do let that happen just once :) ), but much more what it can do for you and your loved ones on a human level, and the security of having built your independence amidst the swirling hurricane of BS we all live in.

This is all presuming SHTF does not happen and wipe us out beforehand of course.

Too bad I’ve never made any inroads with the young guys I work with using this speech. They tell me they can’t afford to invest…

#84 Nonplused on 12.19.18 at 12:43 am

Unfortunately for me, most of the money I have to put in a TFSA is either in a cash account (so I would have to pay tax when I transferred the assets) or my corporation (so I would have to pay tax when I transferred the money). Fortunately I am also between gigs so this might be the year to do it. Keeping the tax rate as low as possible is worth more than a 7% annual return with your adviser, at least in the year you do it. Probably not over the long term though.

The best financial decision I ever made was probably marrying my wife. Sure she took 6 years off to raise our child but by the time he was approaching grade 1 I made the second best decision which was to buy a house that was right beside the before and after care and across from the school. That meant the third best decision was possible and that was she could go back to work. That has added a lot of resiliency to our family as my income has been ok’ish but unpredictable. And she mostly works from home now! Thank you VPN! Whoever created VPN has probably done more to save the planet from the scourge of plant nourishing CO2 than even Al Gore. The days of “rush hour” may someday finally be behind us. Of course some jobs require an office say like the dentist or the radiologist, but they don’t have to be downtown.

PS if you have exposure to downtown office space I’d probably reduce it. I predict that “peak office” has already occurred. Why pay for transit, parking, real estate, clothes, bought lunches, etc. when your employees really only need a high speed internet connection? That they pay for themselves? I watch my wife work sometimes and she’s on the phone and sharing screens with people all over the country. And I’ve worked remotely myself, over a distance of 3000+ miles. It’s pretty seamless. Google Home isn’t going to do anything like what VPN is going to do.

Ya, I know VPN is not new, it’s been around for years. But adoption as a full time arrangement is finally gaining momentum as the internet has finally become capable of reliably handling the traffic. This is the real reason GM is in trouble, not self driving electric cars. GM is a leader in that field too but they realize in 10 years people won’t be driving unless they have to physically be there. Most office workers won’t.

#85 Smoking Man on 12.19.18 at 2:32 am

DELETED

#86 BillyBob on 12.19.18 at 3:44 am

Yeah, I’ve raised this before. But I’ll be maxing my ISA (UK version of TFSA) for sure this year.

What I find pitiful is the discrepancy in contribution limits. TFSA set to increase to what, 6,000? The contribution limit for 2018-19 in the UK is £20,000 or about 34,000 CAD. So in one year you can contribute roughly half of the lifetime limit of the TFSA since 2008. (To be fair the ISA is a set yearly limit, not cumulative from previous years or rolled over to future years.)

Canada needs to up its game, big time. Just remember it was JT’s government who chose to decrease the limit when it comes time to vote next year. Gotta keep everyone “equal”.

Equally poor.

#87 Susan Lynn on 12.19.18 at 5:33 am

Ditto #61!

#88 Frank The Tank on 12.19.18 at 6:45 am

If you don’t like the TFSA, you won’t like anything and it pointless to argue with you.

#89 Red_falcon on 12.19.18 at 7:09 am

Investing is like school. If you copy the right people you’re bound to succeed.

:)

#90 Y. Knott on 12.19.18 at 7:17 am

#32 SpaceX Alert on 12.18.18 at 6:44 pm

A US military satellite under a National Security Mission will be launched tomorrow at 9:07 EST. The SpaceX website should show the launching live. Are they getting ready for something dire?

– Likely just routine maintenance. The U.S. has several constellations up, and satellites get old, fail or are superseded by newer technology and need replacement.

The “space cameras” as an example, can read a license plate from orbit, which one U.S. General remarked would be very good if we were being attacked by license plates. Logically, the lower their orbit (“LEO” – Low-Earth Orbit), the more detail they could see. But there’s still a small amount of atmosphere even up there – and ploughing through it week after week, the satellites slow down, fall out of orbit and burn-up on re-entry; almost all satellites do this. They all have some fuel aboard, and rocket motors to keep their speed up, but eventually that fuel runs-out and then they’re coming down (which happens to space stations too, like Mir). So then they have to be replaced.

Most of the traffic to the International Space Station including the astronauts, goes by Russian rocket; so why doesn’t the U.S. save itself a coin-or-two and get the Russians to launch all their space traffic? – well, the U.S. doesn’t want Russia to get an opportunity to examine their spy satellites in detail – and most of them end-up spying on Russia anyways – so the U.S. launches those themselves.

Indeed, you’ll notice that all the big countries (China, Russia, France &c) have their own space launch capability; this is why. And it helps (as North Korea showed us last Summer) that “launching satellites” is an above-board excuse to develop really powerful rockets – which are pretty useful for hurling nooooks at each other, should we decide to do that some boring afternoon.

#91 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 12.19.18 at 7:46 am

Um…wow…not sure what to say…..

Toronto has just “achieved” 95 homicides, 6 shootings in the last 24 hours.

https://toronto.citynews.ca/2018/12/18/4-shootings-including-1-homicide-in-15-hours-in-toronto/

The city that is so divided into groups that despise each other seems bizarrely to be working together towards the goal of 100+ murders…..so sad. The quality of life there is going down the toilet.

Christmas in the GTA :(

You locals think as more people in your region and province grasp what the GTA is really about, this won’t help pull the rug out from under your real estate bubble?

Then you’re dreaming.

(Hopefully in a room with a lock and a security guard at your front door in a gated community or condo tower in Toronto. With a weapon at your side and a medic alert bracelet)

#92 NYCer on 12.19.18 at 7:53 am

Hi, just wanted to confirm, is “successor holder” only applicable to TFSA or does it also apply to RRSP and non-reg accounts etc?

#93 maxx on 12.19.18 at 8:20 am

#6 crowdedelevatorfartz on 12.18.18 at 4:57 pm

“There’s a reason a lot of Canadians don’t invest a….trust and lack of serious jail time for convicted white collar workers being but two.”

And I’m one of them. I’ve seen far too many lose their life savings (parents, close friends, etc) and I’m sure as he// not interested in losing mine. I didn’t schlep to work for decades to then have “up and down” years with my savings in retirement. I only want a single direction – with guarantees. I want to take off on vacations and not even have to think about what my cash is doing.

Opaqueness and mismanagement have been rampant and rather than invest, I’ve gone the route of doubling and tripling down on savings, maxing out RSPs, TFSAs and, oh, the horror, buying non-registered GICs.

The day I get a written performance guarantee along with 100% principal protection is the day I invest.

Nothing less.

Trust is next to impossible to recover once lost, even though there are undoubtedly great and trustworthy people in the industry.

Tons of (potential) investors like me will likely sit permanently on the sidelines, watching the show.

I agree 100% with fartz – I also agree with Garth – this is a problem……a very tough nut to crack.

#94 Tater on 12.19.18 at 8:27 am

#21 cecil1 on 12.18.18 at 6:07 pm
Its time government did something substantial to benefit Canadians and THEIR financial security:

Turn the RRSP into a TFSA.

The TFSA should be quadrupled for a start.

People earnings should only be taxed once. Ever.
—————————————————————-
Your earnings ARE only taxed once. Why should the money you earn from investing be exempt from taxes?

#95 Remembrancer on 12.19.18 at 8:43 am

#15 yorkville renter on 12.18.18 at 5:50 pm
with the market down, does it still make sense to pull TFSA $$$ to stuff the RRSP as a tax avoidance strategy?
————————————————————
Market pricing up or down is really not a factor in this scenario if you aren’t using the $$ to do a reno, go on your 3rd trip of a lifetime this year or buy the ‘Vette, for, well, because…

Lets say you sell / buy at the same price on the same day the same securities then what you have to do is factor the RRSP contribution impact to reduce your taxable income for this year, what that windfall is and what you do with it against the eventual taxation of income + any appreciation in the RRSP on withdrawal vs. all winnings being tax free in the TFSA…

IMHO if the RRSP deduction drops you down past one or more of those magical surcharges (including in ON the medical one for example) and income bracket levels that save you significant pre-tax $$ then it may make sense – but you need to manage the TFSA withdrawal this year and (re) contribution next year, say of the tax refund – if you’re making enough money for that though why aren’t you maxing both TFSA and RRSP contributions and/or getting tax planning advice from a professional who can see your exact situation?

For us common folk, the rule-of-thumb I believe on this blog is to max TFSA first then go RRSP especially if you expect to make more money/be taxed more in the future, the RRSP room is more lucrative later at some max earnings stage – the post-retirement tax savings on TFSA withdrawal are the swinger…

I look at it as TFSA is first money to contribute yearly and last money to spend in retirement…

#96 Glengarry Girl on 12.19.18 at 8:45 am

Glengarry Girl #66

LSVC funds were always junk and I cautioned against them repeatedly when they were available. As you admitted, they were for tax breaks only, not investment potential. As well, when you buy assets from [email protected] bank you are dealing with a salesperson, not an advisor. Next time do your homework. – Garth

I’ll be as respectfully as I can to you Garth as I read your blog daily. Your response kind of stings and insinuates that I was some blind irresponsible invester when the reality is I’m very informed and I do learn from my mistakes. My point is even informed responsible people get burnt. I think it says a lot about my capability to understand how dishonest the LSVCs were and to back it up with evidence enough that my fees were reversed for 7 years. I’m doing more than ok rejecting the Stay the Coarse advice. At the time we bought the LSVC funds we already had significant savings in RSPs. We were on our way to paying off a higher value house mortgage by age 40. We were working our small business while raising 3 kids. I was not dealing with a RBC bank Branch advisor we were paying a Dominion Securities advisor fees to advice us. Our RSPs had really underperformed over 15 years, and I know that this is the case with many people. The LSVC funds were sold to us and many of our self employed friends as a great tax break AND investment, otherwise I wouldn’t have purchased. I have always done my homework, so that comment really dismisses the bigger picture. Many people are like me, fiscally responsible and have been burnt by advice and the Government changing the rules and moving the Goal posts. I value what you do and thIs platform is an excellent way for all to share and to learn. I have already made up for my losses and I haven’t done it with a diversified TFSA. My point is that there are people here, like me, that are for good reason skeptics of the Stay the Coarse and the future plans of the Governments taxation of our nest egg. Time will tell, but to call us loosers in the 5th inning is short sighted.

#97 Change the rule please on 12.19.18 at 8:52 am

#57 Peter on 12.18.18 at 9:40 pm
Speaking of gifts Garth, I would like to be able to make a small contribution to your blog. Monetize this place with a paypal link for those that want to donate.

Merry Christmas

Thanks sincerely, but I prefer to maintain the status quo. Please give your money to a family that needs it, or the SPCA. – Garth

******

aargh !

#98 David Paquette on 12.19.18 at 8:57 am

A breathless Bill Morneau bursts into Justin’s office somewhere on Parliament Hill and says “the Albertans are revolting!” Justin responds “Yes I know. If only they would embrace climate change and gender equality and act more Canadian (central) then I might like them better.”

I am irked by the elitist defenders of the status quo who wrap themselves in the Canadian flag to justify their actions and statements. I think a problem with Canada today is Politians are too good at converting wants into needs regardless of unintended consequences.

I see Ontario is proposing now provincial income tax for those who earn less than 35K$ per year. What are they trying to do? – make Ontario a have not province again. Ps. Thanks for the loans…

Rant over.

#99 Remembrancer on 12.19.18 at 9:09 am

#32 SpaceX Alert on 12.18.18 at 6:44 pm
A US military satellite under a National Security Mission will be launched tomorrow at 9:07 EST. The SpaceX website should show the launching live. Are they getting ready for something dire?
———————————————————
This is more a SpaceX gov contracts finance story then a something dire… A national security mission is more likely a new mil-comms or camera sat then a exotic energy particle beam weapon for the subterranean lizard overlords…

#100 The Real Mark on 12.19.18 at 9:13 am

#84 Nonplused on 12.19.18 at 12:43 am

It’s amazing how you can read this blog for years, write some of the longest comments over those years, and yet still understand absolutely nothing.

Blows my mind.

#101 Paul on 12.19.18 at 9:30 am

77 Karlhungus on 12.18.18 at 11:56 pm
Bad advice as a financial planner to advise a nearly 7% withdrawal rate. You would outlive your money.

Withdraw what you earn. Simple. – Garth
———————————————————————————————
Better than the other way around,

#102 Crazyfox on 12.19.18 at 9:57 am

#50 crowdedelevatorfartz on 12.18.18 at 8:46 pm

They wear off. :(

#103 dharma bum on 12.19.18 at 9:59 am

#34 crossbordershopper

Since many in society will have no teeth or have dietary restrictions.
——————————————————————–

You mean we we will all become just like West Virginians?!

https://cdn-s3.si.com/images/Brent%20Burns%20toothless%20smile%20SI344_TK1_00197.JPG

http://mix957gr.com/top-toohtless-states-wha-huh/

https://www150.statcan.gc.ca/n1/pub/82-625-x/2010001/article/11087-eng.htm

#104 SimplyPut7 on 12.19.18 at 10:09 am

The cumulative limit in a few days will be $63,500, or $127,000 for a couple. If you and your squeeze max that and each add six grand a year for the next 30, achieving a 6% growth rate, the retirement egg will be $1.73 million. That will generate $120,000 in tax-free income for the rest of your lives without diminishing the principal, nor reducing your government CPP and OAS pogey. To achieve the same result, you’d need to have RRSPs of at least $2.5 million – which would mean high-paying jobs throughout your entire career.

—————-

Hopefully the Conservatives will increase this and get everyone off this obsessive need to own speculative real estate and to be in debt to lenders who take great pleasure out of keeping people poor.

Also Buffett has fallen out of love with Home Capital, probably realizes there won’t be a bailout and doesn’t want to be part of the fall.

https://www.bloomberg.com/news/articles/2018-12-19/buffett-s-berkshire-to-substantially-exit-stake-in-home-capital?utm_source=google&utm_medium=bd&cmpId=google

#105 n1tro on 12.19.18 at 10:18 am

Don’t forget the other gift from the government…namely the RESP for people with liabilities….I mean children.

Put in $2000 and get $500 for free while getting a refund! My son isn’t even 2 yet, and he has $6K in his account from contributions and appreciation. :D

As for people saying they got no money for the TFSA. If setting aside $100 a week is difficult, maybe you need to re-evaluate your life choices and make necessary changes.

#106 dharma bum on 12.19.18 at 10:23 am

#59 OttawaMike

Faith is not someone that any reasonable person should be backing.
——————————————————————–

She is kinda hot, though. In a skanky sorta way.

#107 For those about to flop... on 12.19.18 at 10:29 am

I don’t have time to come up with a snappy intro.

Too busy doing the Christmas rush.

No I’m not talking about buying presents, I’m talking about trying to finish a four year build in four days, just so the owner can sit down for one meal on the 25th and then we go back in the new year to fix all the deficiencies because the work got rushed at the end.

Second year in a row.

Not all rich people have brains…

M44BC

“Top 50 Manufacturing Titans in the United States.

President Trump wants Apple to move all its manufacturing to the U.S., repeatedly warning that he will slap tariffs on Apple products in an escalating trade fight with China. He might be onto something because the economy is generating factory jobs at an impressive clip, growing3.1% over the first 21 months of his administration. This made us wonder what the best American manufacturing companies are regardless of where they locate most of their facilities.

We took IndustryWeek’s ranking of the 50 best manufacturers in the U.S., which looks at financial performance across several different indicators to uncover the strongest companies. These include profit margin, sales turnover and return on assets, among other metrics. Our visual lets you immediately digest the rankings across several different industries, focusing in particular on revenue and profitability.
We would argue that profitability is the single most important thing to measure. These are the top ten manufacturers in IndustryWeek’s list ranked in order of net income ($B).

1. Apple: $48.35B

2. Altria Group: $10.22B

3. Nike: $4.24B

4. NVIDIA: $3.05B

5. Northrop Grumman Corp.: $2.02B

6. Sherwin-Williams: $1.77B

7. Illinois Tool Works: $1.69B

8. Lear Corp.: $1.31B

9. Westlake Chemical Corp.: $1.30B

10. Dr. Pepper Snapple Group: $1.08B

Apple is clearly in a class of its own with net income approaching $50B last year. To be fair, that figure includes income across its multiple businesses, including App Store purchases, iTunes and device sales. Microsoft, Oracle and Cisco each have multi-billion dollar business models with profit margins over 20%. But the combination of revenue and profitability at Apple, together with the other technology companies in our visual, clearly indicate where the big bucks are to be made.

The tech setor isn’t the only manufacturing sector with revenue exceeding $100B. Petroleum and coal companies remain massively profitable, albeit at much tighter margins. Exxon Mobilactually generates the most revenue of any company at $244B. Chevron and Phillips 66 both hold their own at $142B and $105B, respectively. Auto manufacturers likewise crack the $100B mark, but GM deserves special mention for its negative profit margin of -2.65%, one of only five companies in our visual that’s actually losing money.

Speaking of losing money, GE is still in these rankings because the numbers come from 2017. GE is a case study in how easy it can be for major companies to fall from grace. The company’s stock has plummeted throughout 2018, and as of this writing is now trading at $7.10. Andcolumnists are now publishing serious articles wondering if the company will even survive, much less make it back into the Dow.

All of this goes to show that manufacturing, like any of industry, is prone to ebbs and flows. Only time will tell if GE will be around long enough for next year’s rankings to come out.”

https://howmuch.net/articles/america-best-manufacturers-2018

#108 Remembrancer on 12.19.18 at 10:33 am

#59 OttawaMike on 12.18.18 at 9:54 pm

Even a lipstick Nazi-cosplayer should still be called out regardless of her upbringing and in Goldy’s case especially so…

#109 NoName on 12.19.18 at 10:34 am

Every once in a while I get in this “mode” that I know what am doing, but very next moment reality hits me hard. After reading how climate change will finish us all, while many are drowning and struggling with debt, it is kind of comforting to hear that people have no money to spend on guns, because sinister messages is being spread on a faceboock russians. Now I wonder in todays age of social media will this histrionics diziz ever be curable, many people seems to be suferes of it. Luckaly for me I don’t have to venture far from my desk and this comment fund my self in surreal twilight zone of internet. As a doom is encroaching upon us I can only say lets party like there is no tomorrow.
This is going to be great, I can hear this music blasting from basement I guess wifie is already learning new danve moves.

Press Play
https://www.youtube.com/watch?v=nMsacoc9DnQ

#110 Smoking Man on 12.19.18 at 10:34 am

What? RBC snooping our private facebook messages.
So this tells me a lot. T2 to watch closely yellow vests.

Police state in the making you loyal subjects to the UN

https://www.finextra.com/newsarticle/33141/royal-bank-of-canada-named-in-facebook-privacy-scandal

#111 Shawn Allen on 12.19.18 at 10:52 am

A man walks into a Bar… I mean an Investment Office

So, a man walks into an investment office with $6000 to invest annually and his marginal tax rate is 40%.

He can invest in TFSA at said 6% for enough years to get to Garth’s $1.73 million TFSA. Truly excellent. No impacts of CPP and old age tax.

Or he can borrow $4000 and invest $10,000 each year in RRSP and pay back the $4000 loan with his 40% tax refund. His net cost $6000 plus a few bucks in interest for the month or so until he gets the refund. I will ignore this bit of interest.

At the same return this will grow to $1.73 times 10,000 /6000 = $2.88 million.

Suddenly this looks good. If his net tax on withdrawals net of impacts on CPP and and old age and everything else is 40% the two strategies are dead equal.

If he can manage to get it out at less than 40% net tax (net of all impacts on CPP and old age too) it is better than TFSA. If he faces higher tax than 40% which could well happen, the TFSA works out better.

This is the math. I love both TFSA and RRSP.

Study the math. It’s no joke.

#112 Godth on 12.19.18 at 10:52 am

it’s always refreshing to listen to, or read, intelligent people that appreciate the uncertainties of the theories and models that we live with. let’s not get started on economics.
Joe Rogan Experience #1216 – Sir Roger Penrose
https://www.youtube.com/watch?v=GEw0ePZUMHA

Climate Projections: A World on Borrowed Time
https://www.globalresearch.ca/climate-projections-a-world-on-borrowed-time/5655053
“Humans live in a perennial realm of perceptions, dreams, myths and legends, in denial of critical facts. Existentialist philosophy offers a perspective into, and a way of coping with, what otherwise defies rational contemplation. Going through their black night of the soul, members of the species may be rewarded by the emergence of a conscious dignity devoid of illusion, grateful for the glimpse into nature for a fleeting moment: “Having pushed a boulder up the mountain all day, turning toward the setting sun, we must consider Sisyphus happy.” (Albert Camus, The Myth of Sisyphus, 1942).”
We may survive the Anthropocene, but need to avoid a radioactive ‘Plutocene’
https://theconversation.com/we-may-survive-the-anthropocene-but-need-to-avoid-a-radioactive-plutocene-84763

#113 ozy - do u really believe this? on 12.19.18 at 11:00 am

TSFA is a mess. Scam from a moral perspective. We don’t charge you tax on profits yet. Rules will change in 20y and you will PAY TAX. Same as the GOVT changed the rules overnight with REAL ESTATE and raped the landlords 1991 to 2017 in subsidizing tenants. Garth, stop playing this so innocently, show people the dirty cash. NO TSFA.

Wanna show your character? Do a campaign against inflation and money printing by same GVT. And tax on inflation when you sell your other properties. Do a campaign to offset inflation (the real one, not the FAKE one from GOVT) from capital gains and paying tax only on appreciation after removing inflation and money printing. GO you have work to do

#114 Guy in Calgary on 12.19.18 at 11:12 am

#41 yvr_lurker on 12.18.18 at 8:01 pm
——————————————————-

I looked it up. Honestly the rates are good but it is not per annum.

1 Year
Guaranteed Investment
3.10%

1.5 Year
Guaranteed Investment
3.15%

2 Year
Guaranteed Investment
3.20%

3 Year
Guaranteed Investment
3.30%

4 Year
Guaranteed Investment
3.35%

5 Year
Guaranteed Investment
3.50%

#115 Pat on 12.19.18 at 11:35 am

Thank you Garth, much appreciated!

—————————-

Hi Garth,

A question for you. I’m a recent immigrant to Canada (came here Oct 2016). Is someone like me entitled to use the full TFSA cumulative limit of $63,500 next year, or will I only be allowed to use the total of limits the years i’ve been in Canada – 2016, 2017, 2018 and 2019.

Thanks!

Only the years you have been a resident. – Garth

#116 Frank on 12.19.18 at 11:45 am

Can one change the beneficiary designation to successor holder for RRSP’s too?

#117 Guy in Calgary on 12.19.18 at 11:54 am

#71 Rentin on 12.18.18 at 11:19 pm
Garth,

What the magic number where CRA decides that my TFSA is used for professional purposes?

I use my TFSA for high growth assets. Its a bit unfair that when the growth is “too good”, then the CRA steps in and decides to make it taxable.
———————————————————–

I believe it has to do with the frequency of trading not the growth. Trade too often and you are running a trading business = TAX.

#118 yvr_lurker on 12.19.18 at 12:16 pm

#104
Good for looking it up. But,
it is the interest rate per annum. Read

https://www.tangerine.ca/en/products/TFSAs/tax-free-guaranteed-investment/

Current Interest Rates
Current per year interest rate as of today’s date.

The 3.35% for a four year GIC for an RESP is decent, and will be no essentially zero tax in his hands when he is 18.

#119 James on 12.19.18 at 12:48 pm

#110 Smoking Man on 12.19.18 at 10:34 am

What? RBC snooping our private facebook messages.
So this tells me a lot. T2 to watch closely yellow vests.

Police state in the making you loyal subjects to the UN

https://www.finextra.com/newsarticle/33141/royal-bank-of-canada-named-in-facebook-privacy-scandal

___________________________________________
Not that I give a damn due to the fact that I don’t have anything to hide from the Feds. I am quite comfortable and set for life. They can plainly see my business transactions, taxes and growth equity as well as my property. I have earned it and it is mine other than their cut. Being a good catholic boy I recalled Matthew 22:21 Jesus said “Render to Caesar the things that are Caesar’s; and to God the things that are God’s.” I get the point that the Feds and especially T2 whom is running out of social cash give always is looking to maximize his next freebie in order to save his miserable butt. Banks snooping into Facebook accounts, Meh, with all of the Facebook fallout lately who posts anything of personal interest anyway. If you do then you’re an idiot! Now if I recall Old Man you have stashed away your millions upon millions of hidden ill got earnings from the Feds in the Caribbean somewhere on an Island to avoid taxes. “You should be concerned” You posted it here! It is good thing you’re never coming back to the Great White North again. Good luck in future the Republic of Gilead.

#120 Gregg in Victoria on 12.19.18 at 1:05 pm

#20 Matt from BC (30’s, $160k income, STAH wife – what’s best – invest in RRSP or TFSA?)

No brainer here, Matt. Max RRSP first, but into a Spousal Account. You get the tax break and your wife pays taxes on withdrawal at her (presumably) much lower tax rate.

Then max your TFSA’s. At your income you can certainly afford it – maybe with a trip or two less to Timmies!

#121 Crazyfox on 12.19.18 at 1:14 pm

I love TFSA’s. Great tool, wonderful cap gain tax dodge and to go long as Garth suggests is wise because its a sure thing. That is… if we have 30 years. For TSFA’s to work, one has to assume the world will still have a functional world economy and for the first time in my life, I see a more than slim chance that there won’t be one.

Its not because we don’t have the means to avoid crisis… we do but some of our collective human values are misguided, our education is inferior and as a consequence we lack collective common sense. World leaders are failing us (look at the murderers and thieves running oil producing nations as an example) but who put them there, the masses are failing too. Bear with me, I will explain.

In the last couple months I’ve refreshed what I’ve already known concerning climate change. I’m a nerd that way and knew we had a problem beforehand. A link like this quick 3.5 minute animation for example:

https://www.youtube.com/watch?v=hlVXOC6a3ME

… I take for granted that people know this stuff but its clear to me now that we don’t. When I say we’ve lost 75% of our Arctic sea ice volume for example, people don’t believe it, they challenge that information that has been around since collecting satellite data. How can we do this, deny facts to suit our own beliefs? What defines a cult, do we belong to one? Belonging to the cult of denial won’t end well. Here, another quick animation, 19 seconds, readers have time.

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

Bears repeating, by this trend, the Arctic ice cap is gone in 13 years. A couple back to back El Nino’s and some wind and sun and its gone somewhere between 5 and 10. From there, winter shortens by a couple weeks, possibly overnight. By 2045, going on a month. We’re Canadians, we live in higher latitudes, we’re supposed to know what that means.

Throughout the process, especially after Ice free summers in the Arctic the chances of heatwaves hitting the Arctic and Greenland go way up. Jet streams will slow dramatically as we lose our temperature gradient and these heatwaves could be quite intense not lasting days but weeks.

We are talking about some predicted 2.5 C warming globally on top of where we will be with rapid permafrost melt releasing methane spread out over 5 to 10 years, the greatest warming will be over the Arctic itself where methane concentrates, so its a nasty feedback loop and it could be quick, occurring within a 10 year period that follows ice free Arctic summers.

Most of the ice sheets in the world will destabilize from a new normal like that. What follows is Sea Level Rise will be unexpected and rapid, giving some 75% of the world’s ocean coastline populations little chance to retreat in an orderly fashion. Let your imaginations run wild with that just a little. Everything we take for granted today, economy, trade, security, its gone. With rapid SLR comes earthquakes, volcanoes, its already biblical before then but it just goes from bad to worse.

What I’m trying to say is, climate change risk is not next century here but this one, with major Arctic methane release possibly in as little as 15 to 20 years and rapid SLR within 20 to 25… its really all about just how much Methane release potential there is there and how severely weather will react to an ice free Arctic summer. I don’t know the answer to that fully, I’m not a scientist… but it has already begun, and when I hear a 40 year scientist most Canadians know talk about methane ball park projections in this way (8 minute mark):

https://www.youtube.com/watch?v=zRQvxLuvtX0&t=101s

#122 Crazyfox on 12.19.18 at 1:27 pm

Don’t get me wrong…. I don’t want to turn this blog into a climate change blog, no one else wants that either. But, when I hear a highly intelligent, wise, experienced financial planner with great abs talk about the merits of 30 years of accumulated contributions I can’t help but think, “great idea all through the last millennium, wise advice, if only TFSA’s had existed then but today? Will there be a system 30 years from now…”

There’s a growing chance that our systems of commerce and trade in 30 years won’t exist, everyone will be broke or dead or both or well on their way. That chance existed on the fringe with the threat of nuclear war but now… there’s a slow moving train wreck everyone can see coming and its moving faster than most realize, save those who belong to the cult of denial, ignorance and instant gratification blind to it all.

I mean hey. We can’t just stop planning for the future, that makes no sense, we need to think about the long game but we had better start planning for a war on top retirement, a war that is here now, a war that I think takes precedence because its a war for survival. Its a war against climate change and that takes us into a war against propaganda, ignorance and concentrated wealth that won’t change polluting ways willingly, we are in a fight, a dog fight for survival. We’ve always been in this fight but this time its different.

People have to collectively change the way we consume, educate, communicate and invest. In some respects, we have to change what we value. If we don’t we won’t make it. The story of humanity has always been a fight for survival, nothing has changed but the parameters are different. There’s way more of us now and the stakes are higher because the threat is global; global threat needing global effort and nowhere to run if we lose this war.

I mean, look at BNN Bloomberg’s “2018 story of the year” :

https://www.bnnbloomberg.ca/canada-s-energy-crisis-bnn-bloomberg-s-2018-story-of-the-year-1.1185885

20 years from now the story of the year will be the devastating effects of climate change, the desperate attempts to stop it and the oxygen leaving the room from all the voices questioning why something wasn’t done 20 years ago. So much to learn, so little time.

#123 Newcomer on 12.19.18 at 1:33 pm

#84 Nonplused on 12.19.18 at 12:43 am

You are not wrong. I have run a remotely staffed office with a half dozen employees plus contractors for 20 years now. I haven’t found a single downside, and the company has saved hundreds of thousands of dollars. Although I never make a secret of it, I would guess that 80% of our clients are unaware that, other than a shared receptionist, none of us are actually at the downtown office.

#124 Shawn Allen on 12.19.18 at 2:20 pm

Buffett and Home Capital

I was surprised he is selling because I know I remember Buffett talked about being basically a permanent investor in Home Capital.

But then I was reminded how share holders rejected Buffett’s second investment of 20% in Home Capital after the price rose. The price was ONLY up because of Buffett’s first 20% investment and his credit line he gave them.

I am sure I said at the time that shareholders were dumb to reject that second 20%. They slapped Buffett in the face. Guaranteed he did not like it. Here he totally rescued the company and they rejected his second purchase because it now looked cheap AFTER he and he alone pushed the price up by rescuing the company.

So, when shareholders rejected the second 20%, the promise of sticking around long term no longer applied.

It is hard to say if Buffett had any influence on them offering to buy in a pile of shares at $16.50. In any case it resulted in a perfect exit strategy.

Buffett felt less welcome and so he is gone. What fool shows Buffett the door, ever?

P.S. in looking back at old comments from 2017 I see that Blacksheep was one who totally understood the halo that Buffett placed upon Home Capital back then.

#125 They Are On It on 12.19.18 at 2:23 pm

#119 James – The latest news is our Feds are on it, and located the Smoker’s account, and he has another one too. They are going through all the transactions, and sooner or later it will be curtains. The ATM withdrawals in Cali are next on the list.

#126 Ogopogo on 12.19.18 at 2:26 pm

Christmas has come early this year: The Fed has raised rates, as predicted. Only two more increases forecast for 2019, but with any luck conditions will warrant more increases.

Let’s hope this also pressures Canada to raise rates and continue to deflate our grotesque housing bubble.

#127 Tater on 12.19.18 at 2:27 pm

59 OttawaMike on 12.18.18 at 9:54 pm
Smokingman yesterday:

Faith Goldy?? Come on dude, you are scraping the bottom of the barrel. she attended Havergal college, let her parents pay her legal bills just like they paid her tuition.

She recites white supremacy propaganda such as the the 14 words and RAHOWA chants.

Faith is not someone that any reasonable person should be backing. The most frightening aspect of her mayoral candidacy was that areas of Etobicoke and Scarborough gave her 5%+ of the votes.
—————————————————————–

Smokey claims to be a Proud Boy, he doesn’t have a problem with white nationalists because he is one.

#128 Jack Morgan on 12.19.18 at 2:37 pm

Is the bubble popping? This article was written in September,2018:

https://www.forbes.com/sites/jessecolombo/2018/09/05/disaster-is-inevitable-when-americas-stock-market-bubble-bursts/#6d6f71b81b82

Specifically check out the comments on FAANG stocks near the end of the article and take a look at their most recent charts.

#129 Godth on 12.19.18 at 2:37 pm

#121 Crazyfox
i’m appreciating everything you’re saying and agreeing with you excepting two niggling points that are really one.
you need to appreciate that these things aren’t future anymore, but present: the first arctic blue ocean event trend is actually 2022/3 The Arctic Blue-Ocean-Event (BOE). When? Then What? https://www.youtube.com/watch?v=E-QfKjOzfFg&t=7s

…and Copernicus just had to change their scale last week to show more contrast in the methane release imagery, it was looking like a bloodbath with the old scale contrast. Comparing Methane Levels from Copernicus, MetOps, and Ground Data: 1 of 2
https://www.youtube.com/watch?v=rVK8nAQP88k&t=1s
we’re already over 1.5 degrees but for the aerosol masking effect.
the time for talk is long over, we need to prepare for impact. https://news.un.org/en/story/2018/09/1018852
now we’re really going to find out what we’re made of.
https://www.youtube.com/watch?v=mxKVUD5Q_7w&t=440s
…and then there’s trump.

#130 AGuyInVancouver on 12.19.18 at 2:41 pm

How many people have DB pensions these days that make RRSPs less appealing? Unless you work for the government, most Gen Xers, let alone Millenials, will never have that problem.

#131 n1tro on 12.19.18 at 2:53 pm

#122 Crazyfox on 12.19.18 at 1:27 pm

Don’t get me wrong…. I don’t want to turn this blog into a climate change blog, no one else wants that either. But, when I hear a highly intelligent, wise, experienced financial planner with great abs talk about the merits of 30 years of accumulated contributions I can’t help but think, “great idea all through the last millennium, wise advice, if only TFSA’s had existed then but today? Will there be a system 30 years from now…”
————————————-
But you have with all your posts and links in the last few days. So if shit is hitting the fan right now and we got 30 yrs left, we shouldn’t be investing? Instead dump all our extra money into a bottomless pit known as the Paris Climate Accord while China and India keep on doing what they are doing? Maybe we should just all kill ourselves to lower our carbon footprint to zero?

What is your point other than perhaps reading your own posts and coming to the conclusion how smart you are over the rest of us?

#132 Penny Henny on 12.19.18 at 2:58 pm

#100 The Real Mark on 12.19.18 at 9:13 am
#84 Nonplused on 12.19.18 at 12:43 am

It’s amazing how you can read this blog for years, write some of the longest comments over those years, and yet still understand absolutely nothing.

Blows my mind.

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

OUCH!

Brdwy was that you?

#133 Year Ending Conference on 12.19.18 at 2:59 pm

The PM is having his traditional ending press conference and turned it off. For the first time looked carefully at his methodology. A reporter would ask a simple question that needed a simple answer. He simply goes on and on forever to the point of utter confusion, and really doesn’t answer the question directly at all. What was the answer? It beats me.

#134 Guy in Calgary on 12.19.18 at 3:00 pm

#118 yvr_lurker on 12.19.18 at 12:16 pm
#104
Good for looking it up. But,
it is the interest rate per annum. Read

https://www.tangerine.ca/en/products/TFSAs/tax-free-guaranteed-investment/

——————————

So TD offers 3% for a 5 year term and Tangerine apparently offers 28%. I felt compelled to call… and was vindicated!

#135 Shawn Allen on 12.19.18 at 3:01 pm

Warren Buffett and Home Capital

I made a longer posit on this and accidentally posted it to the July 24, 2017 daily blog as I did some research there.

Shorter version: Home Capital shareholders rejected Buffett’s seond 20% investment back around September 2017. This was an insult after he had totally and single-handedly rescued the company with his first 20% purchase in May (not requiring a vote) and negotiated the price for the second 20% at that time.

If he got 40% he had promised to stick around as an investor for the long haul.

Insulted he was and now gone he is.

Very dumb of Home Capital shareholders to have voted down the second 20% investment. I believe I said so on this blog at the time.

#136 Where's The Money Greedeau? on 12.19.18 at 3:06 pm

RE: Crazyfox

Well your doomer facts are all well and good, BUT, your bleeting on here is wasted on me.
Why don’t you head down to the oil producers/miners of the world and tell them!
They are the ones to be able to produce the most change.
No? Put your money where your mouth is. I want to see you down at their offices EVERY day shouting from the rooftops if it makes so much sense to you.
Thought so.
NWO carbon tax envisioned by Martin Strong and Greedeau, his ticket to UN seat: https://quadrant.org.au/opinion/doomed-planet/2015/12/discovering-maurice-strong/.
Why don’t YOU pay my carbon tax for me if it makes so much “sense” to you.
I put my money on you getting some kind of reward for this.
Enough!!!!!

#137 Piet on 12.19.18 at 3:09 pm

Thanks for the reminder, Garth. Since we didn’t have much income this year, I am going to cash in $6000 of RSP money tomorrow to be transferred to the TFSA on January 1st. Ditto for my partner. Happy solstice!

#138 SimplyPut7 on 12.19.18 at 3:29 pm

#122 Crazyfox on 12.19.18 at 1:27 pm

I’m more worried about Alberta not facing the music and realizing they need to invest in industries outside of oil and gas than I am about climate change.

As long as big car companies are serious about EVs, we are probably looking at the last generation of gasoline vehicles. Audi E-tron will be available Q2 2019, BMW already has their i-series vehicles on the road.

Solar panels will continue to get cheaper and more investment in certified passive houses will reduce our dependency on coal, oil and natural gas for heating our homes.

Also, CBC admitted the best thing the planet can do to reduce CO2 emissions is not be born – not reduce your dependency on gasoline cars nor becoming vegan.

https://i.cbc.ca/1.4924131.1543439669!/fileImage/httpImage/image.jpg_gen/derivatives/original_780/11-things.jpg

#139 Godth on 12.19.18 at 4:07 pm

#136 Where’s The Money Greedeau?
the planet doesn’t give two hoots what you think, or about the NWO (when hasn’t empire tried to conquer the known world), ridiculous carbon taxes which are only an extension of the status quo that monetizes everyone and everything to game in markets; it’s called neoliberal economics and you’re fully invested.
civilization is only possible with stored food (grain). the majority of the grain growing areas are in the interior of large continents which will heat up much more than the coasts in summer. what are you planning to eat now that it’s started to fail due to drought, heatwaves and flooding around the planet? this will only increase as we’re locked into more than 2 degrees global temp. increase at over 400 ppm co2 and now methane is increasingly being emitted as the arctic warms 3 times faster than the rest of the planet. check agricultural yields around the globe for 2018, it’s not hopeful.

#140 Where's The Money Greedeau? on 12.19.18 at 4:58 pm

#119 James on 12.19.18 at 12:48 pm
#110 Smoking Man on 12.19.18 at 10:34 am

What? RBC snooping our private facebook messages.
So this tells me a lot. T2 to watch closely yellow vests.

Police state in the making you loyal subjects to the UN
++++++++++++++++++++++++
More like vassals of the US….MX Technologies https://craft.co/mx-technologies
They’ll get way more info this way….

#141 yvr_lurker on 12.19.18 at 5:40 pm

#134

So TD offers 3% for a 5 year term and Tangerine apparently offers 28%. I felt compelled to call… and was vindicated!

—————–

Huh???????? I’m afraid you still don’t understand

For example look at

https://www.ratehub.ca/gics/gic-rates/non-registered/5-year

There for a five-year term it is spelled out that on a 5K GIC with manulife you get 3.6% PER ANNUM, and they write EXPLICITLY on this site that (since no compounding occurs) you get $900 total interest after five years. Completely consistent with 5000 * 0.036 * 5 . Interest rates are almost always listed as per-annum…

#142 ll on 12.19.18 at 7:57 pm

# 34 – “Go ahead and save, you will see that future government in 30 years will simply take it from you or dilute it to irrelevency for the greater good of society”

Maybe that’s the idea!!!

#143 cropgrower on 12.20.18 at 5:47 am

Good lord…..you guys trying to figure out how to calculate a 5 year gic is hilarious.

#144 Sergio on 12.20.18 at 12:22 pm

Thanks Garth, Isnt CRA supposed to send me a TFSA balance every year together with my income tax report? they do it with RRSP, but I cannot find anything about TFSA, and I kind of lost track of all my 9and my wife) TFSA contributions since 2009. Also, can you recommend a good TFSA calculator? I see different ones online but some look outdated…thanks

#145 Mattl on 12.20.18 at 12:31 pm

Thats unfortunate that 10mm home sales are soft but I’m sure glad I won RE. Markets are a mess and while the last 9 years have been great, gains from the previous few look like they are about to be taken back. Personally I love whats going on, should create a good buying opportunity. Wonder what the FIRE people are thinking, a few years of zero growth combined with zero income to contribute in down markets is going to put a lot of stress on those that think retiring in your 30s with a million is a good idea