The last refuge

The Trumpian trade war continues to roil. There’s a new casualty. Interest rates.

Stock markets coursed higher Tuesday on word the boss of the Fed, America’s central bank, is open to lowering the cost of money as a defence against the damage the nation’s president is doing. In fact, the odds of a cut are raging higher. The market now gives a 56% chance the first chop will come at the end of next month, with 93% odds of a couple of nibbles by the end of the year.

Jerome Powell, Fed head, was the second central banker this week to yak about cuts. Traders took that news, along with statements by Mexican officials that those new tariffs might be avoided, as reason enough to go bargain hunting. So up went Wall Street.

Said Powell: “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 per cent objective.” In fact recent reports of slagging consumer spending have raised concern inflation is retreating as families face higher prices, thanks to the war with China. Meanwhile bond prices have jumped, bond yields shrunk and recession talk expanded. So all it took were a few words from Powell to hold back the tides.

Ironically, the president may get the rate cuts he’s been hounding the Fed about. Cheap money is crack cocaine to the economy, turning debt into consumption and more GDP. Now the White House can hammer on China, bully Mexico and encourage the UK to commit trade suicide, and still have a hopped-up nation. It’s Trumpenomics at work – just like a new attack on tech giants like Google while 19th Century coal companies are coddled. Go figure.

Anyway, it looks certain cheap money is returning. Australia threw in the towel and cut rates this week in the face of a property collapse and retreating economy. Canadian government bond yields, as shown here yesterday, have plunged by about two-thirds since the winter. Five-year mortgage rates are sub 3%. And a couple of days ago Tangerine (owned by Scotiabank) became the first major player to chop its HELOC rate to less than the prime rate. So all this should give you an indication of where things are going.

This is what happens when the two biggest economies in the world, each other’s largest trading partner, get into a spitting contest. Exports drop, domestic costs rise, multinational companies are whacked and five decades of trade liberalization is arrested. So just as globalization raised per-capital incomes across the world, so protectionism brings them back down. At the heart of this has been the dirty little issue of migration. It caused Brexit and the agony of the UK. It elected Trump. It threatens the EU. It’s at the centre of political wins from Brazil to France, Italy and Hungary. And it’s not going away.

‘Nationalism’ was a badge few politicians had the courage to wear since the last great war. But Trump has embraced it, revived its purpose and lacquered on a new coat of respectability. There are many economic and financial implications. The US can afford to be a nationalistic place, erecting walls and barriers, and still offer its citizens a prosperous life. Canada, not so much. With a big nation and a small pop, we need trade to sustain our standard of living. Mulroney saw that forty years ago when he pushed through a free trade agreement with the States. Decades earlier Lester Pearson signed the Auto Pact to secure investment and jobs, while trashing protectionism and walls.

So maybe it’s all changing now, or perhaps just a fad. Too early to tell if Trump’s a harbinger or an anachronism. In the UK it seems nationalism (Brexit) is the last refuge of grumpy old Boomers while younger generations crave the freedom, porous borders and unbridled openness of common markets. Not hard to see who will ultimately triumph. But between now and then, more turmoil, volatility and wild swings. Cutting interest rates just months after a string of nine increases tells you something. Nobody’s driving the bus.

Gulp.

$     $     $

Well, Mike wants some advice and has asked that the following be put out there for comment.

My father is thinking of leaving his freehold home in the next one to three years. He is turning 79 soon and he has a really large corner lot with a good amount of work associated with keeping up the property. My brother just purchased a concrete box in the east end where he works and he told me to maybe look into paying dads rent in a condo and taking over the house and letting him remain the owner.  I have also thought about just purchasing it free and clear.  The house is biking distance to my work (which I love) and is probably worth about $750,000.

I have about $225,000 doing really well this year and I pay about 1000 per month splitting rent with a roommate. I’m just wondering if your blog readers have done or considered this sort of thing and if there are any advantages or disadvantages of how to negotiate this sort of takeover.

The rabble will chime in shortly, Mike, but the first piece of advice is to ignore your brother, who’s obviously thinking about his own inheritance potential. So, just buy it with a small down and a juicy, cheap mortgage. Give your dad the whack of money, get it properly invested and it should throw off about four grand a month. That rents him a great place, buys food and cigars for life and still leaves the principal intact. Get an appraisal. Use a lawyer, of course. Hire your old man an advisor. And never write into a free blog for advice.

145 comments ↓

#1 Harry on 06.04.19 at 3:54 pm

First(?)

#2 What the...... on 06.04.19 at 4:00 pm

Garth…where can I get 4k a month on an investment of $750k? Are you working on the basis of nibbling away at the capital as well as spending the returns?

By my math (which I concede could be wrong), 750k throwing off 4k a month would be a 6% return. That leaves nothing for inflation etc.

He’s 80. Don’t sweat future inflation. – Garth

#3 not 1st on 06.04.19 at 4:04 pm

Interest rate policy shouldn’t exit in a vacuum. Trump is arguing it needs to be adaptive to all sorts of conditions. You might be witnessing the end of silly inflation naval gazing and the fed actually becoming an arm of govt policy which is exactly what it should be. Trumps influence is truly global.

Of course central banks need to be independent and not politicized. That is how citizens are protected from the expedient and shameless who sometimes secure office. – Garth

#4 Shane Difillion on 06.04.19 at 4:10 pm

You can blame anyone you want but the following is true and facts, interest rates were cut to the bone and pushed down by central banks and encouraged by governments, corporations and debt addicted, mortgage debtholders.

Trump and others are just easy targets to blame. The bottom line is they were going to screw everyone anyways. Inflation at 1.6% or 2% is ajoke and you guys know it. Property taxes, water rates, gas prices, insurance rates, electricity prices, food prices etc. all up anywhere from 4% to 12%+. Move from Canada and put your money where they actually pay interest.

#5 Yukon Elvis on 06.04.19 at 4:11 pm

Dow’s up pal. 500 points.

#6 Linda on 06.04.19 at 4:18 pm

‘Mike’, definitely listen to Garth on the purchase of your Dad’s property. You do not want to ‘take over’ the property & pay Dad’s condo fees until he passes, then be faced with familial expectations of sharing the ‘inheritance’. Because those condo/rental fees paid to Dad are highly unlikely to be taken into consideration when it comes to divvying up the estate. Free & clear purchase is the way to go.

As for what your parent may choose to do with the purchase money, that is up to him. Offer the investment advice, but be prepared for Dad to have his own ideas as to what he wants to do with the money. My advice to anyone is never live their life on the expectation.

#7 BobC on 06.04.19 at 4:23 pm

Always with the the doom and gloom about what MIGHT happen because of evil Trump.
What’s changed? Dollar still at .74, housing doing a slow melt back to common sense and the markets are fine.
Down here in the flyover states anybody that wants a job has one, houses being built, businesses are opening, market is up, inflation is low and wages are rising.
But OMG they might lower interest rates a little.
Or OMG prices may rise a tad because evil Trump pushes tariffs to stop trading partners from sucking us dry.
This of course is after getting blasted for lowering corporate and personal taxes.
You might want to stop and smell the roses one day soon. Everything will work out.

#8 mj on 06.04.19 at 4:24 pm

what are the odds Canada will lower rates next meeting

#9 Captain Uppa on 06.04.19 at 4:28 pm

I am similarly wondering about how much down to put on the home I just bought. I can do 20% but holding some money back appeals to me as well.

#10 EB on 06.04.19 at 4:38 pm

Kudos to our gracious host for being willing to bring it up in the first place and for taking on the job of refereeing what will surely be a dispassionate and reasoned discussion. All the same it’s an impossible task since the allowable public narrative is strictly defined before anyone opens their mouths. Contrary positions know better than to set one toe over the line, but the fact is that the determined suppression of discussion (once again *not* intended to refer to Garth) ensures that heartfelt concerns may not be voiced, inconvenient facts may not be cited, and serious concerns may not be aired. This is true in any open venue in nearly any medium now, which is great for the Forces of Good, who will lead the flock to the Millenium as envisaged in any good corporate promo piece.

And so the reaction will fester on in silence. Nothing bad ever came from that kind of smouldering resentment, I’m pretty sure.

#11 OPinCal on 06.04.19 at 4:44 pm

The auto pact was free trade?????? Wtf????

#12 Mike on 06.04.19 at 4:44 pm

Interesting that neither Garth nor Ryan comment on WHY interest rates haven’t normalized……it’s because they can’t!

Western government’s have spent well beyond their means for decades through over promising and vote buying. The last breaths of socialism in Canada, US and EU are being taken and once rates pop and defaults start, look out. I give it til 2024 before we’re all screwed.

#13 Ponnaps on 06.04.19 at 4:54 pm

Nationalism has its place and importance in nation states with 1000’s of years of civilizational history like India for eg.

Not so much in US and Canada with not much of a civilizational nor cultural history to see the need to protect by having nationalistic ambitions…

Immigration should however be tempered with need for skills and compassion for people in need, not driven by political ambition and the urge to be seen as a saviour to the world (yes T2, talking about you)…

#14 Kenny H on 06.04.19 at 4:59 pm

Too bad nations cannot go back to being in control over their own money and but out the BIS/central banks. Too bad they can’t also seize the assets of these bankers and put them on trial for crimes against humanity.

Get real. – Garth

#15 SunShowers on 06.04.19 at 5:15 pm

“So just as globalization raised per-capital incomes across the world”

———————

I think that’s a pretty oversimplified statement.

In RELATIVE terms it’s (mostly) true. Millions of people in China and India have seen their relative incomes nearly double, from an abominable pittance to… whatever double an abominable pittance is.

But in ABSOLUTE terms, globalization hasn’t really benefited anybody except the global 1%, who can outsource to the global poor, pay them a fraction of what would be paid to a domestic worker (pocketing the difference), and expect a medal for their magnanimity towards the developing world.

My statement is correct. – Garth

#16 DON on 06.04.19 at 5:22 pm

Are people cheering that rates HAVE to be lowered to spark economic activity?

This with peak household debt, people already tapping their Helocs. YIKES!

#17 DON on 06.04.19 at 5:29 pm

#64 Howard on 06.04.19 at 8:21 am
Australia kicked off the next rate-cutting party today.
Australia’s central bank cuts rates to record lows as growth sags
https://www.cnbc.com/2019/06/04/australias-central-bank-cuts-rates-to-1point25percent.html
*************************

From the article:
“Australia’s economy has dodged a recession since the early 1990s but is now battling falling home prices, rising unemployment, sluggish consumer spending and lukewarm inflation.

However, Lowe said monetary policy alone will not be enough to boost economic momentum as households were already up to their eyeballs in debt, putting the onus on Prime Minister Scott Morrison to slash income tax and boost spending.”

Sounds familiar? Let the good times roll!?

#18 Ron on 06.04.19 at 5:33 pm

Ironically, the president may get the rate cuts he’s been hounding the Fed about.

————————

Nothing ironic about it, this was his plan all along; hold the economy hostage with tariff talk until a cut becomes necessary.

#19 jess on 06.04.19 at 5:35 pm

First American Financial Corp. Leaked Hundreds of Millions of Title Insurance Records

The Web site for Fortune 500 real estate title insurance giant First American Financial Corp. [NYSE:FAF] leaked hundreds of millions of documents related to mortgage deals going back to 2003, until notified this week by KrebsOnSecurity. The digitized records — including bank account numbers and statements, mortgage and tax records, Social Security numbers, wire transaction receipts, and drivers license images — were available without authentication to anyone with a Web browser.”

https://krebsonsecurity.com/2019/05/first-american-financial-corp-leaked-hundreds-of-millions-of-title-insurance-records/

https://www.classlawgroup.com/wp-content/uploads/First-American-Data-Breach-Lawsuit-Class-Action-Complaint.pdf

#20 Howard on 06.04.19 at 5:51 pm

In the UK it seems nationalism (Brexit) is the last refuge of grumpy old Boomers while younger generations crave the freedom, porous borders and unbridled openness of common markets. Not hard to see who will ultimately triumph.

————————————————-

Funny thing about living organisms. They age. Millennials will, in the not too distant future, be grumpy and old themselves. And like every generation before, their opinions on some things may well change as they age.

And look who’s coming up right behind the Mills! Gen-Z, currently 12-23 years of age, is by many surveys and studies the most conservative generation since the Greatest Generation. They are not as numerous as the Mills, and obviously are many years away from political significance. But their coming of age, combined with the steadily grumpifying Mills, portends an electoral earthquake.

#21 Reximus on 06.04.19 at 5:53 pm

why not just move in with Dad…and look after him like a good family should

#22 LP on 06.04.19 at 5:54 pm

It’s been my observation watching friends and cousins doing real estate business with family that it never goes smoothly…never.

If Dad wants to sell out, help him source a realtor, sit with him, if he wants you to, while he considers offers, research moving companies, go with him to likely rentals, then sit back and stay out of all the decision making. And make sure your brother stays out of it too.

You’ll find your own house when you’re ready and let’s hope your brother lowers his expectations of an easy inheritance.

Or get Dad to hire a property maintenance crew, which is probably less costly and disruptive than moving.

#23 Reximus on 06.04.19 at 5:56 pm

‘Trade wars are good and easy to win ‘…-some idiot on twitter

#24 JSS on 06.04.19 at 5:57 pm

Shall we prepare for a potential interest rate cut in Canada too…coming this year :)

#25 fishman on 06.04.19 at 6:03 pm

Actually Modi was the first successful post war democratic politician to rehabilitate nationalism. The Trumpster was #2.
What do you replace nationalism with. The Soviets solution was to call WWII “the Great Patriotic War”. Nationalism was taken so to speak. Besides it conflicted with the “internationalist” revolution of the proletariat.
“lil potato’s” first call was Canada as a “post national country”. I agree with this part. Not the second part that we all have shared values. Progressive values.
We are not going to progress. We will regress. No one knows when it will stop.
Whats so worrisome to the globalists is that we were here before. The capitalist class were inevitably & logically going to be overthrown by the peasant/worker. Didn’t happen. The men gathered into their nation state tribes & slaughtered one another in the trenches of WW1.
The Trumpster is neither a harbinger or an anachronism. He’s a surfer, caught the tribal populist wave that was building & building. Even if he falls off, that wave is going to pound onshore. Break a lot of things.

#26 NotLegalAdvice on 06.04.19 at 6:30 pm

Definitely ignore your brother. Clearly wants to keep your Dad as Owner on property go guarantee his inheritance.

Get yourself a lawyer, a good one. Once you get an appraisal on your Dad’s property, you can make him a fair offer. Invest his money through Turner Investments, contact Garth on behalf of your Father….no im being serious. If your Dad’s property is worth 775k, you’ll need Garth to help invest properly.

Good luck, may the odds be ever in your favour.

#27 Long-Time Lurker on 06.04.19 at 6:33 pm

Red China’s Tiananmen Square massacre happened today 30 years ago. (June 4, 1989, I think.) I was in high school. My Chinese classmates were all wearing black armbands and were as mad as hell!

#28 DON on 06.04.19 at 6:40 pm

#23 Reximus on 06.04.19 at 5:56 pm

‘Trade wars are good and easy to win ‘…-some idiot on twitter
**************
I take it a Great Great Great man said that!

#29 Earlybird on 06.04.19 at 6:45 pm

#12 Mike
Interesting that neither Garth nor Ryan comment on WHY interest rates haven’t normalized……it’s because they can’t!
EXACTLY!
If such small moves can cause grief in our economy and in households…this is the new normal…sadly…

#30 DON on 06.04.19 at 6:46 pm

#18 Ron on 06.04.19 at 5:33 pm

Ironically, the president may get the rate cuts he’s been hounding the Fed about.

————————

Nothing ironic about it, this was his plan all along; hold the economy hostage with tariff talk until a cut becomes necessary.
***************

I agree. It’s a win in his mind and he is playing against time before his actions come home to roost. He has a 15 month time frame in mind. As long as the US economy lasts until he gets reelected that’s his goal. If he get a second term and the economy falters, he will speak of building the wall to create jobs.

#31 AGuyInVancouver on 06.04.19 at 7:00 pm

#4 Shane Difillion on 06.04.19 at 4:10 pm
You can blame anyone you want but the following is true and facts, interest rates were cut to the bone and pushed down by central banks and encouraged by governments, corporations and debt addicted, mortgage debtholders.

Trump and others are just easy targets to blame. The bottom line is they were going to screw everyone anyways. Inflation at 1.6% or 2% is ajoke and you guys know it. Property taxes, water rates, gas prices, insurance rates, electricity prices, food prices etc. all up anywhere from 4% to 12%+. Move from Canada and put your money where they actually pay interest
_ _ _
I agree, the official inflation numbers aren’t worth the paper they are printed on. How can StatsCan get it so wrong?

It’s not going to be so great for Grumpy Boomers trying to retire with such ridiuclously low interest rates being paid.

#32 palebird on 06.04.19 at 7:03 pm

Wow you seriously believe that Brexit would be a bad thing for the UK?? Wow!! It would be the best thing that has happened to the UK in a long time.Period.

#33 Street Ganster on 06.04.19 at 7:04 pm

Good thing we have that stress test in place to make sure people can deal with rising rates when it looks like they will be falling.

Feet on the street.

#34 X on 06.04.19 at 7:04 pm

‘My brother just purchased a concrete box in the east end where he works and he told me to maybe look into paying dads rent in a condo and taking over the house and letting him remain the owner.’

So you do all the work, pay all your Dad’s rent, and your bother and you split it when your Dad passes. that doesn’t sound fair does it.

Buy it, and do as Garth advised. Then when your Dad passess you get half of his investments, and full ownership of your house.

#35 Tammy Simms on 06.04.19 at 7:10 pm

Inflation is low, B.S. for sure and that is why interest rates can be cut, B.S. for sure. Remember Greenspan deflation scare in 2002 to 2003 more B.S. for sure.

#36 yvr_lurker on 06.04.19 at 7:21 pm

I was at the Chinese Visa office today jumping through all the extra hoops that seem to be in place now. Invitation letters need to say specific things, hotel reservations all in place, need to detail every job you have had since you entered the workforce… much more onerous now than a decade ago when I last applied to go. Must be something to do with Huawei. This will however be my last time I am willing to put myself through this.
The point being here is that Canada I think needs to expand its trade to other places (not just mainly China and the U.S.). What happens if after all these court battles the twinning of the pipeline occurs and all of this heavy crude oil is set to go off to China (which is one of the few places besides the U.S. where it can be refined), and then China decides to for some political reason (like with canola oil) to stop purchases. Then what?

My sense is that we need to give incentives to companies so that we can do the heavy refining in Alberta. Then, build a pipeline east to the Maritimes and we will have more options for exporting our refined product out of BC rather than just mainly China and the U.S. Gas prices would likely be lower. If we did something similar with all of our natural resources we might find that we are less reliant on the friendship and goodwill of specific countries.
I can see both sides of the pipeline debate. But in the end we do need jobs, resources, and a strong economy so that we are not tied to the whims of more powerful countries. Iceland the tiny little country it is has done so well with exploiting for its own use all of its geothermal resources, so that it is less reliant on oil etc…

#37 Smartalox on 06.04.19 at 7:29 pm

REBGV May 2019 Numbers have been published.

Highlights for detached properties:
– Compared to 2018, Median prices are in double-digit (>10%) decline in all areas, except Maple Ridge (down 7%) and West Van (down 7%).

– The biggest declines in median selling prices for detached homes last month are Burnaby (down 18% or $278k) and New West (down 18% or $243k). These figures are more than 20% off May 2017 prices, by the way. Bear these figures in mind if you have a HELOC on properties in either of these areas – the bank may come calling, soon.

Looking at sales and listings, sales are up compared to last month in most areas, consistent with areas where prices are falling. The numbers of listings have also been climbing steadily over the last three months, which appears to be different from the patterns observed in the latter half of 2018, where the number of listings cratered one month, only to surge the next, as contracts expired and were renewed.

And a lot of listings are set to expire in June, by the way, only to be relisted in July. Expect a lot more competition among sellers over the course of the summer, asn price your property accordingly.

And if you’re looking to buy, consider an offer $200k below whatever they’re asking.

Only one more month until July 1st, when property values in the greater Vancouver area are assessed. Ostensibly, assessments are for tax purposes, but for a decade, those surging, year-over-year increases have been a reflection of how Vancouverites (ahem) measure up. With the tide on its way out, you can believe the banks will be checking where the water’s been coldest.

Good Luck!

#38 AK on 06.04.19 at 7:29 pm

“Ironically, the president may get the rate cuts he’s been hounding the Fed about. Cheap money is crack cocaine to the economy, turning debt into consumption and more GDP.”
====================================

This, plus U.S. is trying to get the dollar down without any success.

I believe that the Plaza accord of 1985 is lurking in the near future.

#39 DON on 06.04.19 at 7:30 pm

#29 Earlybird on 06.04.19 at 6:45 pm

#12 Mike
Interesting that neither Garth nor Ryan comment on WHY interest rates haven’t normalized……it’s because they can’t!
EXACTLY!
If such small moves can cause grief in our economy and in households…this is the new normal…sadly…
***************

What happens when the new normal hits a recession?

#40 not so liquid in calgary on 06.04.19 at 7:40 pm

@ OPinCal on 06.04.19 at 4:44 pm

the Auto Pact wasn’t even the first free trade deal between Canada and the US. It all began when we were still a British colony (British North America), in 1855… before we were even a country!

#41 not so liquid in calgary on 06.04.19 at 7:41 pm

@ OPinCal on 06.04.19 at 4:44 pm

Oh, and here’s the link: en.wikipedia.org/wiki/Canada–United_States_Free_Trade_Agreement

#42 not so liquid in calgary on 06.04.19 at 7:46 pm

@ yvr_lurker on 06.04.19 at 7:21 pm

————————————————————————–

On refining our own oil… this country already possesses enough refining capacity to supply herself, secondly, when it comes to refineries, NIMBYism becomes a major factor. Personally, I was rootin’ for our very own nuclear reactor, close to where it was most needed, the oilsands… ah well.

#43 Vb_1978 on 06.04.19 at 7:51 pm

Guess who called today with a follow up email – [email protected] Wants to talk about lowering my (variable) mortgage rate, I’m assuming to fixed.

#44 not so liquid in calgary on 06.04.19 at 7:52 pm

@ DON on 06.04.19 at 6:40 pm
#23 Reximus on 06.04.19 at 5:56 pm

‘Trade wars are good and easy to win ‘…-some idiot on twitter
**************
I take it a Great Great Great man said that!
**************

And must be a stable genius…

#45 will on 06.04.19 at 8:04 pm

#12 Mike said: WHY interest rates haven’t normalized……it’s because they can’t!

I agree Mike. Interest rates that Can’t be normalized Won’t be normalized.

#46 crowdedelevatorfartz on 06.04.19 at 8:08 pm

@#36 yvr lurker
“Then, build a pipeline east to the Maritimes …”
*****

Never happen.
Even with the Lac Megantic train disaster involving oil cars…..
Quebec voters are turning green.
We’d need a coupla years of brutal winters where heating oil and gas were in short supply before they would see the light.

#47 Capt. Serious on 06.04.19 at 8:19 pm

I’ve been calling this since early last year. Trump inherited a roaring economy and he is doing his best to upset it. He’s just stunningly inept.

I doubt the Fed cuts. Unless the jobs numbers start looking horrible, they’ll hold, in my unprofessional opinion.

#48 akashic record on 06.04.19 at 8:19 pm

“So just as globalization raised per-capital incomes across the world”

My bet is that technology does the heavy lifting in per capita income.

You can “globalize” spreading labor cost around the world, where it cost the least, without the productivity increase, based on technology.

#49 hawk on 06.04.19 at 8:19 pm

Hey why is no one talking about the fact that Deutsche Bank could blow up and cause Great Financial Crisis # 2.

Deutsche Bank is way bigger than Lehman!

#50 maxx on 06.04.19 at 8:35 pm

@#46

Oh fgs fartz……ever hear of Manic?

https://www.youtube.com/watch?v=Yqe7xQoILcA

Between this and their natural warmth of character, they’re highly unlikely to freeze……

I believe that they can afford whichever colour of vote they please.

#51 Perry Staloulin on 06.04.19 at 8:41 pm

AGuyInVancouver

This is why as a single man I have cut my expenses to a more sustainable and realistic lifestyle and I don’t miss all the stuff I used to have to do with the misses.

I have a place 800 square feet rented in a small town, water, heat, central air, no debts, an semi old car that is in good condition and runs great and I can cook great things going when I want and retired last year since I sold my house for $650,000 net profit.

I put all of it in OSB’s getting around $18,500 interest per year until 2028 a year plus my C.P.P, OAS gives me another $17,000 a year. My rent, food, insurance, expenses, income taxes come out to only $1,450 a month so I’m golden. This leaves me with around $1,500 a month which I top up my TFSA and savings. I Have a savings reserve of $20,000 saved over the last year or so which is about 14 months of expenses.

My monthly compound interest GIC in my $75,000 TFSA grows by $225 a month which is good for future expenses if needed as it is tax free. This is last resort money only. I never contributed to RRSP’s because of the tax build up for the future.

People have bought too much crap and useless stuff with debt at high rates, credit 8% to 30% interest rates, really dumb idea.

#52 akashic record on 06.04.19 at 8:41 pm

IF (!) global warming is caused primarily by human activity, than an economy, based on globalism, is likely the biggest impact.

For carbon footprint perspective, it is literally an insane system, where resources, by the time they turn into a purchased product at the consumers hand, might be dragged around the globe twice. Fundamentally for cheaper labour cost.

#53 Rexx Rock on 06.04.19 at 8:46 pm

Didn’t I say that the US will cut rates.Maybe some people will wake up and stop drinking the kool aid.QE, printing moneyand zirp so the stock market will rally.Good times!A day trader’s wet dream!Go long or short but not for a long time.

#54 Blacksheep on 06.04.19 at 8:48 pm

Smartalox # 37,

“Only one more month until July 1st, when property values in the greater Vancouver area are assessed. Ostensibly, assessments are for tax purposes, but for a decade, those surging, year-over-year increases have been a reflection of how Vancouverites (ahem) measure up.”
——————————–
Just got my assessment in the Valley.

Its up 13% from 1 year ago, when it bounced 35%, from the year before.

#55 Scott Hyman on 06.04.19 at 8:57 pm

I can see that the U.S. Fed is trying to stop the next blowup in U.S. Corporate debt markets as they grew by double in the last 8 to 9 years by borrowing binge. The U.S. Fed is going to cut rates to save their bacon and their friends with debt ridden activities.

#56 marcus on 06.04.19 at 9:00 pm

Cognitive Dissonance: This is rampant among the Marxists in Canada and similarly among the “Orange Man Bad” losers who reside in Canada and the American left. Globalism is gasping her last bits of air. Clutching itself at the neck signaling the Universal Signal of distress. Trump laid bare his intentions VERY early. “The false song of Globalism” …. ring a bell? 2020 is going to be glorious.

#57 Bdog on 06.04.19 at 9:10 pm

Steerage section was right all along.

#58 ImGonnaBeSick on 06.04.19 at 9:18 pm

#6 Linda on 06.04.19 at 4:18 pm

Linda, you hardly ever get credit for your spot on comments, but I have to say, I think you may be a bit smarter then the rest of us yahoos on here…

#59 Unwashed Deplorable on 06.04.19 at 9:24 pm

We’re driving the bus now….. get outta the way or hop on board

#60 Stratovarious on 06.04.19 at 9:24 pm

Your continuous assault on Trump’s tariff policy seems hypercritical. If he called this a VAT (similar to Canada’s GST) he would be viewed as a liberal icon, since in essence that is really what it is. Furthermore, all of the Green’s should be wearing a MAGA hat in celebration of this move, since it will likely reduce consumption, which seems like a good thing for the planet. The problem of course is that Canada can’t get out of its own way to e.g., build a pipeline or build a competitive industrial base, so the illusion of prosperity is based on RE and weed. I guess that is Trump’s fault as well.

#61 not 1st on 06.04.19 at 9:32 pm

The most dangerous person to Canada isn’t Trump but his name does start with a T. Hopefully people can figure that out in the next few months otherwise Canada is toast.

#62 not 1st on 06.04.19 at 9:40 pm

#52 akashic record on 06.04.19 at 8:41 pm
—-

Blasphemy….

Please pay your carbon tax, borrow some of your GDP and jobs to the world, buy back their junk and do not question the narrative.

#63 Cto on 06.04.19 at 9:41 pm

So Garth.
How many times do you think the FED going to drop. Five maybe six? Bring the US interest rates down to 3/4 or so.
Maybe polozs will drop them down to -0.5. I think he’s up for that. The 5 or 10 million debt junkies in this country would just love him then… he be the life of the party again! He could invite Tal and the whole CREA crew, and kick it down!, with good times back again!!!

#64 Buttercup on 06.04.19 at 9:51 pm

Re: BLOG U post request for resources.

Chris is better suited than most of his scholastic profligates to attempt this. His background is banking, and he’s already tried this once before, throwing books like ‘Poor Dad’ and ‘Wealthy Barber’ at the kids. Mixed results, he reports. So…

“Do you have any suggestions? I can get funding for a class set of the right paper resource, or on line access is a possibility as well. I am thinking of renaming the course – “Things I wish I learned when I was that age”! Any questions, comments or concerns are appreciated!”
—————————-

Garth, Great topic. I’m a bookkeeper and tax preparer who can’t agree more about the lack of financial literacy education in our schools. As I missed the comments section now, would you kindly pass along this comprehensive resource on teaching tax basics, created by a wonderful retired CGA whom I know, and that is aimed at students, and includes teacher materials. I think this is probably more age-appropriate than some of the offerings of others.

https://www.taxdetective.ca/student_workbook.html

Thanks for keeping the blog and comments section going!

#65 Earlybird on 06.04.19 at 9:59 pm

#39 Don
What happens when the new normal hits a recession?

I often ponder this, a point where policy has no effect anymore….a severe recession could bring a bout of deflation, a true correction perhaps without the ability to interfere. Interesting times…

#66 Ass on 06.04.19 at 10:16 pm

Markets are betting on Good Times Again with lower intersect rates. All these bubbles could further inflate for another decade.

#67 Shawn Allen on 06.04.19 at 10:25 pm

Bubble?

#66 Ass on 06.04.19 at 10:16 pm

Markets are betting on Good Times Again with lower intersect rates. All these bubbles could further inflate for another decade.

*******************************
If a bubble never pops, is it a really bubble?

#68 Doug in Londinium on 06.04.19 at 10:39 pm

The beauty of a diverse portfolio is when something unexpected comes along you can take advantage of it. With bond yields dropping, suddenly TLT-NY went up quite a bit so I sold some off for a nice profit. What do I do with the proceeds from this sale? Donald Trump’s next tweet is bound to result in something else going on sale.

#69 Nonplused on 06.04.19 at 10:51 pm

“It’s Trumpenomics at work – just like a new attack on tech giants like Google while 19th Century coal companies are coddled. Go figure.”

Umm, you can’t have Google without coal. That’s still where much of the electricity comes from. Natural gas has crept into first place but I think that is going to end badly and is a terrible waste of this valuable resource. We need it for heat in the winter and as a chemical feed-stock.

Unless and until we get serious about nuclear power, coal will remain one of the underpinnings of our modern economy, along with oil & natural gas.

https://www.eia.gov/tools/faqs/faq.php?id=427&t=3

Looking at this table, you can see what a long way we have to go to implement anything even close to the Green New Deal. Already it seems there are windmills everywhere you look, and they only generate 6.6% of US electric power. Imagine scaling that up to 100%. Now keep scaling because transportation and heating fuels are not included, this is just electricity.

We need something like 20-30 times as many windmills as we have now to come close to replacing fossil fuel consumption. Of course some of that will come from solar but it gives an idea of the scale of the problem.

And of course even if we build 20-30 times more windmills or solar equivalents, we still need the coal plants for cloudy, windless days. The nice thing about coal is you can pile it up on the ground when you don’t need it, then throw it in the boiler when you do. We haven’t found a way to do that with the wind & sun yet.

The carbon fuel era will end someday, and when it does so will Google. It will be lights out for modern society, unless we get really serious about nuclear while there is still time. In fact, many learned people think we are already too late to avoid a grave emergency brought on by energy shortages at some point in the future.

On the plus side, Trump’s EPA has approved regulatory changes that will allow test nuclear reactors to be built with relatively few regulatory hurdles, so the design and testing of Gen IV reactors can begin. Some other countries are already doing this so it is a welcome change. Didn’t hear about that in the news though, did you?

There is a 100% correlation between what we call economic activity and energy consumption. As the economy grows, so does energy consumption. In fact many argue that the economy grows as a result of increased energy availability. Some would argue that the economy is nothing but a large energy dispersion system.

Goggle looks like it is just a bunch of nerds in Birkenstocks playing ping-pong in an office somewhere, but their vast server farms, the internet itself, and even your laptop all require electricity. A lot of it. And that electricity must come from fuels & other sources that are not required for some higher purpose. It is excess energy not required for survival. And that is just for operation of the systems, not factoring in the vast amounts of energy required to build the server farms, internet, and your laptop.

Even Bitcoin is nothing more than transformed energy. It takes a lot of electricity to mine a Bitcoin.

#70 Vision on 06.04.19 at 11:00 pm

Freehold home? Is that not a townhouse? Is$750,000 not expensive? Where is this located? GTA? Vancouver area? What about all this talk about housing continuing to drop? Or has that changed?
I equate townhouses almost the same as condos. You may own the land in freehold , but not the walls you share. As well, isn’t a $525,000 mortgage steep depending what Mike earns? I would assume he must be age 50-60? Everything locked into one asset? At his age?
I guess he expects to inherit.
I say get Dad to sell externally. Not get involved. Continue renting.
Dad can live to 90 and you may not inherit until then.
Half and there are probate taxes. As well ,if Dad has to move to a nursing home, then his savings can deplete real quickly!

#71 Basil Fawlty on 06.04.19 at 11:32 pm

Globalization may have increased per capita incomes, however it also dramatically increased wealth inequality. The middle class has been decreasing, while the number of poor and extremely rich have been increasing. So, on average, one can argue that globalization has been a benefit, but only if one ignores the increase in wealth inequality.

#72 Ponzius Pilatus on 06.04.19 at 11:45 pm

Dolce.
The Italian mini Trump is going to get his ass kicked.
La Bella Italia is is in serious financial trouble.
https://m.spiegel.de/wirtschaft/soziales/staatsschulden-eu-kommission-erwaegt-verfahren-gegen-italien-a-1270798.html

#73 PastThePeak on 06.04.19 at 11:49 pm

#36 yvr_lurker on 06.04.19 at 7:21 pm

My sense is that we need to give incentives to companies so that we can do the heavy refining in Alberta. Then, build a pipeline east to the Maritimes and we will have more options for exporting our refined product out of BC rather than just mainly China and the U.S. Gas prices would likely be lower. If we did something similar with all of our natural resources we might find that we are less reliant on the friendship and goodwill of specific countries.
+++++++++++++++++++++++++++++++++

Sigh…this a fundamental misunderstanding that so many make. Refined petroleum products (gasoline, diesel, jet fuel, etc) are not long-lived. They start to degrade, and have a relatively short usable shelf life (a few months really, depending on shipping and storage).

Thus products are refined either relatively close to end consumption market, or via a massive distribution system that takes the bulk and distributes it quickly (as the USA has with pipelines, but even still there is regional refining).

So it is OK for Alberta to refine for BC and Sask markets, but not really realistic for the east. Similarly, refined products are not made for long sea transport. Canada already refines most for its own market.

Oil on the other hand is quite stable (having existed for millions of years), can be transported anywhere, and stored anywhere. Thus it is *valuable* in this form, especially for export to other countries. Who will refine it in their own markets.

Now, an argument can be made for upgraders to take the heavier oil / bitumen and turn this into lighter oil for export. And maybe more is required to ensure getting the world price for oil **when we have more pipelines**. But first we **need more pipelines**…

#74 mountain guy on 06.04.19 at 11:53 pm

#42 not so liquid in calgary on 06.04.19 at 7:46 pm
I was rootin’ for our very own nuclear reactor, close to where it was most needed, the oilsands… ah well.
—–
Makes too much sense to get all the heat and power you need for mining and refing from nuclear. It’s an old idea I’ve heard rossed around since the mid-1960’s. All that oil sands in Alberta and all that uranium in Sask. .. ah well

#75 Ponzius Pilatus on 06.04.19 at 11:55 pm

Who would have known?
Time to stop blaming Horgan.

https://theprovince.com/news/local-news/sudden-drop-in-gas-prices-across-metro-vancouver-linked-to-global-economic-gloom/wcm/bfc8e87d-586d-495f-abce-c06cfe285a91

#76 PastThePeak on 06.04.19 at 11:56 pm

#55 Scott Hyman on 06.04.19 at 8:57 pm
I can see that the U.S. Fed is trying to stop the next blowup in U.S. Corporate debt markets as they grew by double in the last 8 to 9 years by borrowing binge. The U.S. Fed is going to cut rates to save their bacon and their friends with debt ridden activities.
++++++++++++++++++++++++++++++++

The mistaken thinking by central bankers and politicians everywhere:

“Emergency low interest rates for too long has caused a huge debt load/bubble to develop that could be very dangerous – so we need to lower rates to make things better…”

…you can’t fix stupid…

#77 the Jaguar on 06.05.19 at 12:08 am

https://www.youtube.com/watch?v=Larlotxwl4A

Where is Billy Bob?. If you are out there, please explain the obsession with the landing dignities of Airforce One? Good Lord. Look at the amazing number of ‘views’. Who tunes in to these vids? Never mind that question. Why the excessive interest? Can one land a 747 in a tea cup? I love planes, all plane disaster movies, and especially the connections to planes as they relate to historical /personal /familial connections, such as the Lancaster, Halifax, etc.
I get ‘VerKlempt’ when i think about it..

Forgive the departure. I think I will be in trouble with Garth, but all this business of yields, ebb and flow of historical curves of the financial profile…etc. etc.
Was just thinking about D-Day, and I suppose wandered off to airplane interests.
Bless everyone who bravely gave their lives in such perilous times…

#78 Jacques Pepin on 06.05.19 at 12:14 am

DELETED

#79 the Jaguar on 06.05.19 at 12:17 am

Last word. If you have never seen the movie ‘Memphis Belle’, give it a Netflix/Google Play view.
Values. The way forward. Yikes, I hear Garth coming to push me off stage.

#80 NoName on 06.05.19 at 12:34 am

I quite don’t understand this two graphs but o one of them is tarrifs.

https://fred.stlouisfed.org/series/B235RC1Q027SBEA

vs

https://fred.stlouisfed.org/series/W006RC1Q027SBEA?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=categories

#81 meslippery on 06.05.19 at 12:39 am

15 SunShowers on 06.04.19 at 5:15 pm
So just as globalization raised per-capital incomes across the world”

———————

I think that’s a pretty oversimplified statement.

In RELATIVE terms it’s (mostly) true. Millions of people in China and India have seen their relative incomes nearly double, from an abominable pittance to… whatever double an abominable pittance is.

But in ABSOLUTE terms, globalization hasn’t really benefited anybody except the global 1%, who can outsource to the global poor, pay them a fraction of what would be paid to a domestic worker (pocketing the difference), and expect a medal for their magnanimity towards the developing world.

My statement is correct. – Garth
———————
Yes Your statement is correct.
I submit it also the reason we have Brexit and Trump.

#82 canuck on 06.05.19 at 1:38 am

#51 Perry Staloulin on 06.04.19 at 8:41 pm

Did you have a point to make… other than leaving no doubt why your “misses” isn’t around anymore?

#83 Not So New guy on 06.05.19 at 1:45 am

Of course central banks need to be independent and not politicized. That is how citizens are protected from the expedient and shameless who sometimes secure office. – Garth

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

But who protects us from central bankers who are almost always former Goldman Sachs employees?

At least we can vote for the politicians and fire them when they mess us up

#84 Dolce Vita on 06.05.19 at 2:01 am

#48 akashic record

“My bet is that technology does the heavy lifting in per capita income.”

Total March 2019 GDP, $MM = 1,955,388

As of March 2019 GDP “Tech” Sectors, $ MM, Feb–>Mar growth rate:

Information and cultural industries 58,687 0%
Professional, scientific and technical services 113,999 0.48%

Total = 172,686 or 8.8% of GDP

Largesse in the Total Tech number as that includes making movies among other things.

I’d say maybe on your “bet”, but certainly a very long bet.

#85 Cheap money is returning? on 06.05.19 at 2:34 am

“Anyway, it looks certain cheap money is returning.”

————————————————————————–

I don’t remember cheap money ever leaving, please give us all a break. If economies can’t operate with and 1% and 2% prime rates, then the whole system is a grand joke.

No bullets in the chamber to fire WHEN the next deep recession hits us all. Central banks f%&^d up royally by going far too low and not normalizing a lot sooner.

#86 Captain Uppa on 06.05.19 at 6:20 am

Sales jump of 18.9% in GTA for May. Price increase of 3.6%. Listings down 4.3%.

uppa … Uppa … UPPA!

“While this result represented a substantial increase of 18.9 per cent over the 15-year low in May 2018, it should be noted that the result was still below the average for month of May sales for the previous ten years, which stands at almost 10,300.” (TREB) This was not a good report for the height of the spring market. Prices remain below 2017 levels. – Garth

#87 dharma bum on 06.05.19 at 6:50 am

#21 Reximus

why not just move in with Dad…and look after him like a good family should
——————————————————————–

Because that would be a nightmare.

Mike, take Garth’s advice, and buy the old man out.

But act fast. At that age, the old guy’s brain is deteriorating quickly. I’ve been down that road with my dad. The logic begins to falter, and the stubbornness sets in. They become their own worst enemies, and the family suffers as consequence.

Or, send him packing to live with your “well-wisher” brother.

#88 Zoe Szalinski on 06.05.19 at 6:57 am

Solar Minimum reported confirmed by NASA.

https://metro.co.uk/2019/06/04/sun-reached-solar-minimum-surface-ominously-calm-9805282/

All indications that this cycle of solar activity will last 11 years or longer creating a substantial cooling effect throughout Earth’s atmosphere.

So what will the Truth Deniers do now? The propaganda and lies should be hilarious initially, given that goons like Trudeau says that we can control the weather over Canada by paying higher taxes. 11 years is a long time to hold a lie together. If Climate Barbie is screaming now to make her lies stick, she’ll have to shot out of a cannon during question period to keep her distance from the truth about climate change just being a phony scam to raise taxes.

Anyway, stack that firewood, were in for a long cool down.

#89 dharma bum on 06.05.19 at 7:04 am

#61 Not First

The most dangerous person to Canada isn’t Trump but his name does start with a T. Hopefully people can figure that out in the next few months otherwise Canada is toast.
——————————————————————–

Why do you say that?

Hahahaha!

Canada’s “T” is the world’s best apologizer. He caved to the feminist indigenous pressure, called us a genocidal nation, and apologized.

Such a backbone.

So strong.

We are doomed with this shameful incompetent milquetoast running the country.

#90 Just Sayin' on 06.05.19 at 7:22 am

Everybody has for decades been used to paying the Chinese price for goods. Sure now families are faced with higher prices but they’re also faced with a better outlook for good paying manufacturing jobs.

Do you seriously think new factories will spring up here because Trump has a trade war with China? You are drowning in delusion. – Garth

#91 jess on 06.05.19 at 7:27 am

“It’s Trumpenomics at work”…. well no

A brief history of the ‘unitary theory’ that Trump and Barr are using to resist congressional oversight

https://www.rawstory.com/2019/06/a-brief-history-of-the-unitary-theory-that-trump-and-barr-are-using-to-resist-congressional-oversight/

===========
“The ABC raid took place a week after a former Australian military lawyer was committed to stand trial in the ACT Supreme Court charged over the leaking of documents now known as the “Afghan Files” to the ABC.”

https://www.smh.com.au/politics/federal/police-raid-on-abc-offices-sparks-firestorm-over-press-freedom-and-national-security-20190605-p51utw.html

#92 Steven Rowlandson on 06.05.19 at 7:37 am

“The house is biking distance to my work (which I love) and is probably worth about $750,000.”

Under the 3 years pay rule you will need a 25% down payment and $250,000 per year income.
Do you have a rich employer who will pay $125 per hour for 2000 hours each year for your services?

Pretty big numbers.

#93 crowdedelevatorfartz on 06.05.19 at 8:26 am

@#50 mad maxx
“I believe that they can afford whichever colour of vote they please.”
+++++

Quebec Hydro will save the day? Pfffft.

I was thinking more of winters like this….
How soon you forget.
Je me souvien.

https://www.youtube.com/watch?v=ggqZb8BdXPo

If it wasnt for the hydro crews from all over Canada and the US helping Hydro Quebec crews….they’d still be repairing powerlines.

Lac Megantic should have been the final reason to get endless trains of oil cars rendered obsolete and pipelines built.

But if the Luddites on both sides of Canada get their way in banning pipelines… 10 years from now we will be rubbing sticks together for heat and light.

#94 IHCTD9 on 06.05.19 at 8:40 am

#90 Just Sayin’ on 06.05.19 at 7:22 am
Everybody has for decades been used to paying the Chinese price for goods. Sure now families are faced with higher prices but they’re also faced with a better outlook for good paying manufacturing jobs.
____

Sale at Canadian Tire this week: 230 pc Ti coated drill bits on sale for 29.99. Yes, that’s 230 drill bits for 30 bucks – ***insane cheap***. A good made in the USA/Germany/Japan set of similar size would easily cost 10X that amount.

I needed a good drill a few years back to drill a pile of holes. I bought a US made Cobalt steel bit, 1 pc 1/2″. Cost was ~25.00, for ONE.

Make no mistake, Western manufacturing via manual labour is gone for good. If cheap foreign labour doesn’t kill it all off, automation will finish the job.

I’m still regularly amazed at just how bloody cheap consumer goods are these days. Seriously, go have a look at the Fathers Day CTC flyer.

#95 Captain Uppa on 06.05.19 at 8:41 am

#86 Captain Uppa on 06.05.19 at 6:20 am
Sales jump of 18.9% in GTA for May. Price increase of 3.6%. Listings down 4.3%.

uppa … Uppa … UPPA!

>>“While this result represented a substantial increase of 18.9 per cent over the 15-year low in May 2018, it should be noted that the result was still below the average for month of May sales for the previous ten years, which stands at almost 10,300.” (TREB) This was not a good report for the height of the spring market. Prices remain below 2017 levels. – Garth>>

With all due respect Garth, what about momentum and sentiment and sales trend which you have staunchly professed as being a strong future indicator of performance?

Further, you are concentrating on a short term data range by comparing the entire market and it’s “health” to peak 2017. Did you do the same with equities and the 2008 market crash? I suspect it was more “the market will surge forward again, don’t worry about 2008, it was a blip”.

If you’re going to view long term historical data for stock markets as a future indicator, surely you should do the same for RE.

Facts are facts. My response was more useful than your mindless, misleading drivel of ‘uppa, uppa.’ – Garth

#96 expat on 06.05.19 at 8:44 am

As veterans, the disadvantaged, and the mentally I’ll in this country suffer, T2 gives 1.5 billion to women around the world. Imho there is something seriously wrong here.

#97 crowdedelevatorfartz on 06.05.19 at 8:45 am

@#89 dharma bum
“called us a genocidal nation”
*****

Yeah. I was thinking the same thing.
The Liberal leader seems pretty fast and loose tossing the Genocidal references around.

One day before he flies to France to commemorate the D-Day Landings…. a war against a foe that invented the meaning of the word .

I have a hard time linking the shoddy police investigations involving unsolved murders of hundreds of aboriginal women over 40 years with
“Genocide” ,the systematic , industrial, mass extermination of millions of people in less than 6 years in Europe in WWII.
Or the Congo of the 1990’s where 900,000 people of one ethic group were slaughtered in mere weeks.

But it is an election year and he’s down in the polls, campaigning at a women’s conference in Vancouver so its easy to understand why he did it…
And as serious as the subject is…….

Most of the people there at his speech seemed to be too busy recording him on their smartphones to be actually listening.

#98 NoName on 06.05.19 at 8:46 am

@DV

Whats up with this one, froge eaters can spend all they want, pasta eaters cant?

https://www.dw.com/en/eu-hits-italy-with-start-of-disciplinary-action-over-budget-violations/a-49063144

#99 expat on 06.05.19 at 8:52 am

A national energy strategy that Trump initiated has turned the US into an economic miracle.

Drill baby drill is now the song of a strong country.

What do we have?

Virtue signalling.

Btw, apparently climate change which moved from global warming and is now being renamed to climate emergency was created by Globalists and the Dems/Liberals to move the world back to nuclear power.

The Uranium One debacle with the Clintons was at the heart of this.

Possible?

One thing we know for sure is govt has an agenda based on the parties in power. Trump has thrown a spanner in the hole and the world goes berserk.

If the herd disagrees it normally means the antiherd is correct.

History will tell the real story eventually.

#100 not 1st on 06.05.19 at 9:18 am

Do you seriously think new factories will spring up here because Trump has a trade war with China? You are drowning in delusion. – Garth

—–

American companies operating in china will either decide its not worth it to operate in a country that takes tech and provides no market access and move home with some tax breaks and incentives or to another country like Vietnam or Philippines which are less totalitarian. Mexico has incentive going to get its immigration problem under control to be a beneficiary as well.

None of which creates jobs here. Stop drinking the Trump Kool-Aid. – Garth

#101 IHCTD9 on 06.05.19 at 9:20 am

#75 Ponzius Pilatus on 06.04.19 at 11:55 pm

Who would have known?

Time to stop blaming Horgan.

https://theprovince.com/news/local-news/sudden-drop-in-gas-prices-across-metro-vancouver-linked-to-global-economic-gloom/wcm/bfc8e87d-586d-495f-abce-c06cfe285a91
__

So what’s it down to now? Like 1.50/litre?

Lol – gimmie a break, you guys are drowning in fuel taxes. Highest fuel prices in Canada, and probably all of North and South America. The day will come when it’s 2.00/litre there in BC, and 1.00 here in Ontario.

Your government has the syringe plowed all the way in hooked on RE revenues – as the market slows down (again, thanks to Horgan’s orgy of RE taxes), all of you BC mules out there will take up the slack for your brokeass leadership. You can take that prediction to the bank.

You folks in BC have government supplied auto insurance right? We have privately supplied insurance here in Ontario.

Care to compare rates? :)

#102 Tom Henderson on 06.05.19 at 9:26 am

I think Perry’s point was he is in good financial shape, looks like he is debt free without a mortgage anymore. This is despite low interest rates on investments in his retirement.

Most Canadians are drowning in debt and have to work until they croak. I don’t know it is like Canadians think they are going to get away from paying their debts. They will pay and continue to pay and pay and pay etc.

#103 SunnyDays on 06.05.19 at 9:29 am

At the heart of this has been the dirty little issue of migration.

Not exactly. At the heart of the anti-EU and anti-globalist sentiment is certain national states’ unwillingness to give up sovereignty.

Given that Canada’s prosperity is so trade dependent, then why not give up the CAD and start using USD as a currency in Canada?

#104 Tater on 06.05.19 at 9:32 am

#15 SunShowers on 06.04.19 at 5:15 pm
“So just as globalization raised per-capital incomes across the world”

———————

I think that’s a pretty oversimplified statement.

In RELATIVE terms it’s (mostly) true. Millions of people in China and India have seen their relative incomes nearly double, from an abominable pittance to… whatever double an abominable pittance is.

But in ABSOLUTE terms, globalization hasn’t really benefited anybody except the global 1%, who can outsource to the global poor, pay them a fraction of what would be paid to a domestic worker (pocketing the difference), and expect a medal for their magnanimity towards the developing world.

My statement is correct. – Garth
—————————————————————-

For this to be true, corporate profits should be much higher. The surplus has gone mainly to consumers who pay much less for goods manufactured overseas.

Corporate profits has been robust for the last number of years. Why do you think stocks are near record levels? – Garth

#105 TRUMP on 06.05.19 at 9:34 am

I CAN remember this site’s blog months ago and all the talk was lock-in your rates and interest rates can only go one way .. up up up.

It was gospel at its finest. And now look.

“Forecast tell you a great deal about the forecaster, but they tell you nothing about the future” Warren Buffett.

The BoC raised five times and the Fed raised nine times. Neither has cut on one single occasion. The blog was correct. – Garth

#106 Gravy Train on 06.05.19 at 9:35 am

#51 Perry Staloulin on 06.04.19 at 8:41 pm
“[…] I never contributed to RRSP’s because of the tax buildup for the future[…].” You lose the tax shield and tax-deferred compounding by not using RRSPs.

Let’s crunch some numbers, shall we? Let’s say you’re eligible to make annual contributions of $1,000 to an RRSP, and you decide to do so for 10 years (till 2028). You then collapse the plan, withdraw the future value, and pay tax on the withdrawal. Your pretax rate of return on interest = 2.85% ($18,500/$650,000). Let’s say your marginal tax rate = 40%, so your after-tax rate of return = 1.71% (2.85% x 60%). Now we can proceed.

The future value of your RRSP contributions after 10 years = $11,385.

Here’s the math: $1,000 x ((1 + 0.0285)^10 – 1) / 0.0285 = $11,385

Taxes in year 10 are $4,554 ($11,385 x 40%), so after taxes you’re left with $6,831.

Now, without the RRSP tax shield and tax-deferred compounding, the future value of contributions of just $600 ($1,000 x 40%) over 10 years to an unregistered account = $6,483.

Here’s the math: $600 x ((1 + 0.0171)^10 – 1) / 0.0171 = $6,483

So in this case you save $348 over 10 years by using RRSPs.

For best results, you’ll have to crunch the numbers using your actual marginal tax rate and RRSP eligibility.

#107 Ponzius Pilatus on 06.05.19 at 9:37 am

#94 IHCTD9 on 06.05.19 at 8:40 am
#90 Just Sayin’ on 06.05.19 at 7:22 am
Everybody has for decades been used to paying the Chinese price for goods. Sure now families are faced with higher prices but they’re also faced with a better outlook for good paying manufacturing jobs.
____

Sale at Canadian Tire this week: 230 pc Ti coated drill bits on sale for 29.99. Yes, that’s 230 drill bits for 30 bucks – ***insane cheap***. A good made in the USA/Germany/Japan set of similar size would easily cost 10X that amount.

I needed a good drill a few years back to drill a pile of holes. I bought a US made Cobalt steel bit, 1 pc 1/2″. Cost was ~25.00, for ONE.

Make no mistake, Western manufacturing via manual labour is gone for good. If cheap foreign labour doesn’t kill it all off, automation will finish the job.

I’m still regularly amazed at just how bloody cheap consumer goods are these days. Seriously, go have a look at the Fathers Day CTC flyer.
————-
I don’t buy the crap at Canadian Tire anymore.
Pots and pans are usually sold at 60 to 80% off.
Non stick pans last about a month.

#108 Debbie O'Rilley on 06.05.19 at 9:39 am

What people don’t understand is the Globalism they are talking about today is really global socialism. The Left is their partners with the U.N.

Why else would they want world controlled government. What do you thin the EU was formed. The bottom line is less good choices we have the more we are losers.

#109 Sail Away on 06.05.19 at 9:42 am

So much distrust here. Consider that the brother in the story is not evil and greedy for a moment:

1. The writer gets to live in a SFD near his work while paying his father’s rent on a condo. Not a bad deal.
2. No mortgage is needed. In this depreciating RE environment, why immediately suggest he buy?
3. The house stats maintained properly until the father dies. At that point, part of the inheritance comes to writer and he can decide to buy or not, while having incurred no debt in the meantime.

Skepticism is good, but not everyone in the world is out to screw their family.

#110 Me on 06.05.19 at 9:46 am

(8.58+1.72+4.87+10.21+7.36)/5= % 6.55 that is what $3,847.47 million invested and professionally managed International Equity Fund able to deliver (Manulife Sprucegrove International Equity Fund As of April 30, 2019). Investing 750K I guess may deliver max %3 and inconsistently, if worth investor to read the fine print….that states: “professional money managers are not magicians, they try to be the harbingers but end up being an anachronisms” So Mike, take the true statement here: “never write into a free blog for advice” amen. Ask any money managing bro out there to nail %6 return monthly and listen patiently to what they will say consistently to you!

Every investment asset fluctuates monthly, which is why a balanced and broadly diversified portfolio (no stocks, no mutual funds) is the best option. A 60/40 model has delivered 7% over the past eight years and a good manager can ensure there are steady, consistent monthly distributions while the principal is retained over time. Relying on one mutual fund is a poor strategy. No wonder you are confused. – Garth

#111 Ponzius Pilatus on 06.05.19 at 9:47 am

Re: Ontario car insurance rates
https://www.theglobeandmail.com/globe-drive/adventure/trends/why-ontario-drivers-pay-the-highest-car-insurance-rates-in-the-country/article19522860/

#112 Gravy Train on 06.05.19 at 9:52 am

#51 Perry Staloulin on 06.04.19 at 8:41 pm
“I never contributed to RRSP’s because of the tax build up for the future.” I forgot to mention in my last post that inflation = 0%. If inflation = 2%, then while you’ll have nominal gains, you’ll have real losses—whether you use RRSPs or not. :)

#113 maxx on 06.05.19 at 10:12 am

@ #93

Dramatize much?

Pipelines east would be a complete and utter disaster. Oil is filthy. Toxic. Sick-making. We are bathing in it, complete with the nightmare of plastics we wrap every aspect of our lives in daily. Try to rid yourself of it in the microcosm of your own home. Quite the challenge. Nigh on impossible.

Add in all of the destruction to the earth’s surface as well as the poisonous cocktail of, yet again, petroleum-based garbage necessary to erect and support all of this schlock.

Luddites are rather frightened little peckers who don’t, can’t or won’t look beyond the complete crap of status quo. True progress improves people’s quality of life and last time I checked, health was an important part of it.

NIMBY.

#114 Shawn Allen on 06.05.19 at 10:58 am

RRSP Mistakes

#51 Perry Staloulin on 06.04.19 at 8:41 pm said:

… I sold my house for $650,000 net profit.

I put all of it in OSB’s getting around $18,500 interest per year until 2028 a year plus my C.P.P, OAS gives me another $17,000 a year. My rent, food, insurance, expenses, income taxes come out to only $1,450 a month so I’m golden. …

I never contributed to RRSP’s because of the tax build up for the future.

*************************
The setup described is fine. But I think Perry got bad advice on not contributing to RRSPs.

His current total income is $35,500.

His marginal tax rate in BC is 20.06% If his taxable income rises past $40,707, his marginal tax rate goes to 22.7%. If it rises past $47,630 and all the way up to $81,416 his marginal tax rate would go to 28.2%.

So, he could have contributed to RRSP and now be getting money out at a marginal tax rate of 20.06% or perhaps 22.7% if he had a bigger RRSP and at worse 28.2% and looks like he was never in “danger” of old age clawback.

In his working years he could have got tax deductions at those same levels or higher. If you get a 20% tax deduction and then pay 20% at withdrawal then the math is that the refund has effectively fully funded the tax. The growth on his own net contributions after the refund would be effectively tax free.

A HUGE feature of the RRSP is that if you understand them they encourage you to save money that would in most cases otherwise be spent. Not only do you get money in retirement at a fair or even negative tax rate tax rate (usually return of the percentage of the RRSP funded by refunds or less) . But importantly the savings exist. People who refused to save in RRSP usually did not save at all.

This guy it sounds like got lucky on the house appreciation and then wisely sold. He now is putting money in TFSA and has $75k but it sounds like over the years he saved little. If that was done on the wrong-headed notion that the RRSP would be taxed too high, that seems like a poor strategy.

If he was eligible for guaranteed income supplement then maybe it was wise not to go RRSP route. But who would want to plan for such poverty?

#115 Me on 06.05.19 at 11:09 am

Garth, when I take the job to replace the upholstery of your boat and we make the deal, I manage the risks and pay with my own capital if I underestimated the risk and bare the responsibility & accountability for the factors that affected the profitability/customer satisfaction. Do you have the fine print that says that no matter what you do it is you client who have to be OK with the outcome? Interpretation of that fine print is such: “you asked me to help and I helped to the best of my ability and existing roles”. So the ownership is legally on client but actions and knowledge is “yours”! I believe that is why ordinary people flock to real-estate. If the investment industry could change that they would and we would have the defined contracts for money management with defined befit to the client! But it become impossible when the scale of investment exponentially increasing and potential liability become inconceivable to be covered in the case of the negative outcome. Therefore all money managing arrangements without defined benefit. That is the essence of the fear that grips uninformed and privet them from investing with trust.

So, don’t invest. Live with the outcome. – Garth

#116 The Totally Unbiased, Highly Intelligent, Rational Observer on 06.05.19 at 11:13 am

“It’s Trumpenomics at work – just like a new attack on tech giants like Google while 19th Century coal companies are coddled. Go figure.”–GT

As the famous, mythical, tycoon Jordon Jekko probably said back in 1987, “The point is, ladies and gentlemen, that coal, for lack of a better word, is good. Coal is right, coal works. Coal clarifies, cuts through, and captures the essence of the creative spirit. Coal, in all of its forms; coal for life, for money, for love, and for knowledge has marked the upward surge of mankind.”

It must really suck to have been one of those fraidy-cats who wasted their lives listening to all the chicken littles and chicken bigs who for so many decades have been trying to frighten everyone into thinking that the USA is soon going to run out of energy. Now, it turns out that the only way that the USA could run out of energy is if bad politicians prevent hard-working Americans from mining “good, clean coal” and from drilling for oil and gas.

#117 Captain Uppa on 06.05.19 at 11:16 am

>>My response was more useful than your mindless, misleading drivel of ‘uppa, uppa.’ – Garth>>

No argument there.

#118 IHCTD9 on 06.05.19 at 11:24 am

#69 Nonplused on 06.04.19 at 10:51 pm

There is a 100% correlation between what we call economic activity and energy consumption. As the economy grows, so does energy consumption. In fact many argue that the economy grows as a result of increased energy availability. Some would argue that the economy is nothing but a large energy dispersion system.
___

You can step that up one more notch to our very existence.

I like to think of energy as additional Humans. The economy is the endless pursuit by essentially everyone to make human life easier and better. Fuels and Electricity do work for us when powering machines, and technology. They take over the jobs once done by human hands (and now minds too) freeing us to work on even more technology and finding ever new energy sources etc…

Our population numbers are essentially fused to our ability to access energy, and power ever advancing technology.

It is said that there are 23,000 man hours of labour in one barrel of Oil. It is expected that global oil consumption for 2019 will be ~100 million barrels per day, or about 37 Billion barrels per year. That works out to about 85 Quadrillion man hours per year done by oil energy alone. To do that much work by human labour in one year, you’d need about 408 Billion people working full time.

A typical human can sustain an output of about 75 watts per hour for an 8 hour shift (.075 KWhr). The average household electrical consumption in Canada is 928 KWhr per month. That’s the equivalent of 12,373 hrs of human labour every month, or a staff of 72 people working full time.

Another way of looking at it: If the entire population of the planet worked in an attempt to provide the energy requirement currently covered by oil – how much energy would we produce? You’d have about the equivalent of 696 million barrels of oil after everyone on Earth worked full time for a year. That’s about 53 days worth of Oil.

We’ve loooong passed the point where human labour could possibly sustain our lifestyles. If ever we lost access to cheap energy and technology, it would be either a drastic population cut – or a massive lifestyle reduction, or a lot of both.

#119 IHCTD9 on 06.05.19 at 11:27 am

#113 maxx on 06.05.19 at 10:12 am

True progress improves people’s quality of life and last time I checked, health was an important part of it.
____

Think for a few moments, what your quality of life would be without everything that oil provides for you.

#120 JB on 06.05.19 at 11:30 am

#6 Linda on 06.04.19 at 4:18 pm

‘Mike’, definitely listen to Garth on the purchase of your Dad’s property. You do not want to ‘take over’ the property & pay Dad’s condo fees until he passes, then be faced with familial expectations of sharing the ‘inheritance’. Because those condo/rental fees paid to Dad are highly unlikely to be taken into consideration when it comes to divvying up the estate. Free & clear purchase is the way to go.

As for what your parent may choose to do with the purchase money, that is up to him. Offer the investment advice, but be prepared for Dad to have his own ideas as to what he wants to do with the money. My advice to anyone is never live their life on the expectation.
………………………………………………………………….
My wife’s parents age 63 & 67 decided to sell the family home and downsize to the Condo. My wifes brother was keen on this as the family home represented a substantial asset and we surmised he was looking at the ease of liquid assets in the bank. They sold the home and pocketed about $450K direct into investments. The condo life lasted 1-1/2 years as both of them could not take the communal living with others in such close quarters. Her mother hated the constant traffic in and out of the building i.e. elevators and getting her car in and out of the parking garage and the noises. Her father was bored as he just retired from his job. My wife’s brother was keen on a loan for his own purposes and that idea crashed when her parents hung a for sale sign on the condo. They sold with a small loss, closing costs and RE fees. They now live in a attached adult bungalow community in Ancaster and still have money to invest. Her brother never asked about borrowing money again.

#121 not 1st on 06.05.19 at 11:39 am

#113 maxx on 06.05.19 at 10:12 am
—-

So you have chosen poverty then.

May I ask do you live in BC because solar and wind are all here in the center of the country. We just had 90 straight days of it on the prairies. Where are you going to put the panels and windmills.

One way or another you are getting your energy from the deplorable part of the country and if you think we are going to gladly let low information people like yourself torpedo one industry then beg for another one to replace it, its not going to happen. The comrade Horgan school of logic doesn’t fly in the real world.

#122 JB on 06.05.19 at 11:40 am

#116 The Totally Unbiased, Highly Intelligent, Rational Observer on 06.05.19 at 11:13 am

“It’s Trumpenomics at work – just like a new attack on tech giants like Google while 19th Century coal companies are coddled. Go figure.”–GT

As the famous, mythical, tycoon Jordon Jekko probably said back in 1987, “The point is, ladies and gentlemen, that coal, for lack of a better word, is good. Coal is right, coal works. Coal clarifies, cuts through, and captures the essence of the creative spirit. Coal, in all of its forms; coal for life, for money, for love, and for knowledge has marked the upward surge of mankind.”

It must really suck to have been one of those fraidy-cats who wasted their lives listening to all the chicken littles and chicken bigs who for so many decades have been trying to frighten everyone into thinking that the USA is soon going to run out of energy. Now, it turns out that the only way that the USA could run out of energy is if bad politicians prevent hard-working Americans from mining “good, clean coal” and from drilling for oil and gas.
……………………………………………………………………
I remember a paper we had to write in university on George Orwell’s 1984. The Article was on politics and the Doublespeak. “Good, Clean coal” If you keep saying it eventually someone will believe it.

“For, after all, how do we know that two and two make four? Or that the force of gravity works? Or that the past is unchangeable? If both the past and the external world exist only in the mind, and if the mind itself is controllable – what then?”
― George Orwell, 1984

“Now I will tell you the answer to my question. It is this. The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power, pure power. What pure power means you will understand presently. We are different from the oligarchies of the past in that we know what we are doing. All the others, even those who resembled ourselves, were cowards and hypocrites. The German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives. They pretended, perhaps they even believed, that they had seized power unwillingly and for a limited time, and that just around the corner there lay a paradise where human beings would be free and equal. We are not like that. We know that no one ever seizes power with the intention of relinquishing it. Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power. Now you begin to understand me.”
― George Orwell, 1984

#123 Midnights on 06.05.19 at 11:45 am

Yup bad loans…
https://www.bnnbloomberg.ca/how-one-bad-loan-played-into-eisman-s-short-call-on-cibc-1.1268912

#124 IHCTD9 on 06.05.19 at 11:51 am

#114 Shawn Allen on 06.05.19 at 10:58 am
RRSP Mistakes

#51 Perry Staloulin on 06.04.19 at 8:41 pm said:

…I never contributed to RRSP’s because of the tax build up for the future.

*************************
The setup described is fine. But I think Perry got bad advice on not contributing to RRSPs.

_____

Aye, such a common sentiment. I guess everyone must expect to retire with millions in their RRSPs.

Ms IH and I invested everything into RRSP’s for a couple decades. We’ve received 10’s of thousands of tax dollars back from the government. We’ve also received thousands more in interest – also tax free.

Eventually, we switched and put everything into TFSA’s as we figured in our situation that there was enough in the RRSP’s with 20 years to go to retirement.

Retirement income will not be so massive as to see big income tax rates, and even if there are – it will be near impossible to lose after 40 years of collecting high 4, low 5 figure tax returns, combined with 4-10% tax free gains.

RRSP’s are a great vehicle to get some tax free earnings, and pay less taxes every year – just don’t push it till you have no choice but to pull 80K+/yr out of them come retirement.

#125 Paul Patel on 06.05.19 at 11:55 am

As I shown back in the late 80’s at my local bank branch in Canada, RRSP’s were great for the compounding of interest at 9%, 10% in the bank, GIC’s.

Now, this great compounding is gone by 15 times over the long term . For example, a one time $50,000 in 1989 in a GIC at 10% compounded versus 3% today is $80,525 Versus $57,963.

This is a difference of 37% less in just 5 years. Over 30 years it is a huge difference of about $751,000 or 15.02 times or 15,020%. The tax deduction is small compared to the loss compound interest tax sheltered in the RRSP. This was the main benefit. This is gone for 30 years and even lower, modest rates 20 years now at least at 5% to 6% GIC’s back in 1999 and 2019 today 3% GIC’s.

This is the real disaster for RRSP’s and the tax burden is much higher too today for large RRSP balances 50% to 56% tax rates in Canada.

#126 Penny Henny on 06.05.19 at 11:56 am

#86 Captain Uppa on 06.05.19 at 6:20 am
Sales jump of 18.9% in GTA for May. Price increase of 3.6%. Listings down 4.3%.

uppa … Uppa … UPPA!

“While this result represented a substantial increase of 18.9 per cent over the 15-year low in May 2018, it should be noted that the result was still below the average for month of May sales for the previous ten years, which stands at almost 10,300.” (TREB)

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

ten year average sales for May at 10,300.
May 2019 sales come in at a hair under 10,000.
Neither bad nor good.
Nothing to see here.

#127 crowdedelevatorfartz on 06.05.19 at 11:56 am

@#113 mad maxx

and you accuse me of drama.
You would make our Prime Minister jealous with that anti oil invective.
Enjoy the Alberta equalization payments ….they wont last much longer…..

#128 Tater on 06.05.19 at 12:05 pm

#104 Tater on 06.05.19 at 9:32 am
#15 SunShowers on 06.04.19 at 5:15 pm
“So just as globalization raised per-capital incomes across the world”

———————

I think that’s a pretty oversimplified statement.

In RELATIVE terms it’s (mostly) true. Millions of people in China and India have seen their relative incomes nearly double, from an abominable pittance to… whatever double an abominable pittance is.

But in ABSOLUTE terms, globalization hasn’t really benefited anybody except the global 1%, who can outsource to the global poor, pay them a fraction of what would be paid to a domestic worker (pocketing the difference), and expect a medal for their magnanimity towards the developing world.

My statement is correct. – Garth
—————————————————————-

For this to be true, corporate profits should be much higher. The surplus has gone mainly to consumers who pay much less for goods manufactured overseas.

Corporate profits has been robust for the last number of years. Why do you think stocks are near record levels? – Garth

—————————————————————
Corporate profits are fine, but given how input costs have fallen, they should be much higher if, as SunShowers claims, the 1% are the main beneficiaries of globalization. The reason profits aren’t higher is because consumer prices on many of these goods are much lower in real terms. The winner of globalization has been the consumer, in the aggregate.

#129 not 1st on 06.05.19 at 12:13 pm

I would like to know what is the benefit we are looking for from trade with China. The country is not going to open up, in fact its regressing. They wont let our products into their market. They open coerce and steal from our companies then canablize the product, subsidize it from the state and then try to unleash it on the world. Anybody heard of Huawei before this yr?

They disrupt trade just as much as Trump does. They banned Cdn canola exports months before Trump tariffed them. Sure if they make Walmart junk its no big deal. That’s going to get automated one day anyway but letting them take the lead in tech which is embedded in our comm network is not an option.

#130 James on 06.05.19 at 12:17 pm

#31 AGuyInVancouver on 06.04.19 at 7:00 pm

#4 Shane Difillion on 06.04.19 at 4:10 pm
You can blame anyone you want but the following is true and facts, interest rates were cut to the bone and pushed down by central banks and encouraged by governments, corporations and debt addicted, mortgage debtholders.

Trump and others are just easy targets to blame. The bottom line is they were going to screw everyone anyways. Inflation at 1.6% or 2% is ajoke and you guys know it. Property taxes, water rates, gas prices, insurance rates, electricity prices, food prices etc. all up anywhere from 4% to 12%+. Move from Canada and put your money where they actually pay interest
_ _ _
I agree, the official inflation numbers aren’t worth the paper they are printed on. How can StatsCan get it so wrong?

It’s not going to be so great for Grumpy Boomers trying to retire with such ridiuclously low interest rates being paid.
______________________________________
Funny we have quite a few people working that are over retirement age and don’t intend to retire. They like working.

https://www.csmonitor.com/Business/2019/0524/Where-is-workforce-really-booming-Among-the-oldest-workers?utm_source=pocket-newtab

#131 IHCTD9 on 06.05.19 at 12:33 pm

#125 Paul Patel on 06.05.19 at 11:55 am
As I shown back in the late 80’s at my local bank branch in Canada, RRSP’s were great for the compounding of interest at 9%, 10% in the bank, GIC’s.

Now, this great compounding is gone by 15 times over the long term . For example, a one time $50,000 in 1989 in a GIC at 10% compounded versus 3% today is $80,525 Versus $57,963.

This is a difference of 37% less in just 5 years. Over 30 years it is a huge difference of about $751,000 or 15.02 times or 15,020%. The tax deduction is small compared to the loss compound interest tax sheltered in the RRSP. This was the main benefit. This is gone for 30 years and even lower, modest rates 20 years now at least at 5% to 6% GIC’s back in 1999 and 2019 today 3% GIC’s.

This is the real disaster for RRSP’s and the tax burden is much higher too today for large RRSP balances 50% to 56% tax rates in Canada.
____

Those great returns are gone right across the board – does not matter what investment vehicle you use. You can chose between getting the going rates or zero. It is what it is.

The main benefit of RRSP’s is the tax free deposits, and tax free growth until retirement – you get both no matter what the return.

I’ll agree the tax situation is worse today – but that is why you don’t go hog wild with them, especially now with the TFSA out there as well. Plan well and you’ll pay less tax than you do now on your working years income.

#132 TurnerNation on 06.05.19 at 12:38 pm

Lol @ Gartho busting Captain Uppa for drivel.
I purposely come here for extra drivel with a side of canards. With a cup full of bromide.

My flouride-addled brain can handle only simplistitc banter and sloganeering.
Buck a beer Folks.

#133 Yukon Elvis on 06.05.19 at 12:52 pm

David Rosenberg
@EconguyRosie
Maybe Trump is a genius, after all. What if he finally gets the steep Fed rate cuts he has been demanding? After that, he ends the trade wars, tariffs go to zero, and the stock market surges to new highs — just in time for the 2020 election!

#134 Captain Uppa on 06.05.19 at 1:21 pm

>>Lol @ Gartho busting Captain Uppa for drivel.
I purposely come here for extra drivel with a side of canards. With a cup full of bromide.

My flouride-addled brain can handle only simplistitc banter and sloganeering.
Buck a beer Folks.>>

While I admit my “uppa uppa” comments are drivel, albeit satisfying drivel. My other points are quite factual.

Also, I still don’t really get Buck a’ Beer and why it was so important … to Doug Ford.

#135 Captain Uppa on 06.05.19 at 1:25 pm

#126 Penny Henny on 06.05.19 at 11:56 am
#86 Captain Uppa on 06.05.19 at 6:20 am
Sales jump of 18.9% in GTA for May. Price increase of 3.6%. Listings down 4.3%.

>>ten year average sales for May at 10,300.
May 2019 sales come in at a hair under 10,000.
Neither bad nor good.
Nothing to see here.>>

Everyone keeps changing the goal posts when assessing (poo pooing) RE. It goes from Peak 2017 to ten year and in between.

We don’t do that with stock markets as it’s always “the long horizon”.

*insert Garth comment about it not being a competition, which I agree with*

#136 Ubul on 06.05.19 at 1:51 pm

#71 Basil Fawlty on 06.04.19 at 11:32 pm

Globalization may have increased per capita incomes, however it also dramatically increased wealth inequality. The middle class has been decreasing, while the number of poor and extremely rich have been increasing. So, on average, one can argue that globalization has been a benefit, but only if one ignores the increase in wealth inequality.

It looks like the global per capita income increase was mostly money from Western middle-class, transferred to less developed countries. It was used to substantially expand the labor force, which could increase production and sales of products globally. The profit from the extra volume of production and sales, coupled with decade long ultra cheap access to capital created increased wealth inequality, spiking up the top, into the billionaire class. This new billionaire class also seems to own global virtual monopolies, something that coal mining never had.

#137 Future Expatriate on 06.05.19 at 2:02 pm

Nationalism?

Zieg. Heil.

#138 NoReservationsRequired on 06.05.19 at 2:12 pm

lol. The Federal Reserve is more than happy to use Trump as an excuse. The reality is they are long past the point where there is even a choice about rates anymore. They cannot be raised without the house of cards crashing down. The party was over a long time ago, most just don’t realize it yet. Nothing but storm clouds ahead. Hyperinflation and anarchy are in the long range forecast.

#139 Shawn Allen on 06.05.19 at 3:00 pm

Business Property Tax Emergency in Calgary

CBC radi0 just had a long session discussing how Calgary has over-taxed businesses for years and now with commercial building values downtown plummeting the remaining Calgary businesses are getting tax increases this year of double or triple and even more in some cases. Emergency rebates to alleviate some of the problem this year.

$250 million tax lost due to lower property values apparently.

Calls for cuts to spending. I heard not a whisper though of the simple idea of cutting City staff wages by say 5% or 10%. City workers are generally well paid. They did well in the good times. Why should a cut in bad times be absolutely unthinkable?

I have not heard a ton about who is hurt even mortally wounded by the big office vacancies in Calgary. Big oil can keep paying leases on empty space but their earnings get hit.

Some building owners will be okay if the lease money keeps coming in. Others clearly are not collecting anything close to the former rent levels. Bankruptcies ahead? Bad debt to banks? Fire sales on buildings? Have some REITs been clobbered?

#140 Gravy Train on 06.05.19 at 3:02 pm

#114 Shawn Allen on 06.05.19 at 10:58 am
“The setup described is fine.” I disagree. Perry’s nominal pretax rate of return on interest is 2.85% ($18,500/$650,000). With a marginal tax rate of 20% on interest (your assertion) and inflation of 2%, his real after-tax rate of return is 0.28% ([2.85% x 80%] – 2%). If inflation or his tax rate were to rise, he could experience capital depreciation. He needs to improve his asset mix.

“But I think Perry got bad advice on not contributing to RRSPs.” Agreed.

#141 crowdedelevatorfartz on 06.05.19 at 4:01 pm

@#132 Turnernation
“I purposely come here for extra drivel with a side of canards.
*****

Glad I could help…

#142 Jack Manning on 06.05.19 at 4:33 pm

About Perry, his posted stated that he earns $35,500 a year taxable income but since he mentioned he is getting C.P.P, OAS so he is 65 years or older old so he gets $17,500 personal amount and age amount so he is really only paying 20.00% on $18,000 of his total $35,500 income. It is possible that he could be getting other tax credits and benefits like G.S.T or H.S.T. tax credits etc.

This means his overall tax rate is not 20% but around 10%. Also, he states that he is left with around $1,500 a month put to his TFSA and savings plus interest on top of that. Even with higher inflation and cost of living and possible future cost savings in one’s lifestyle he is still adding $90,000 to $93,000 to his investments in 5 years.

The RRSP’s may or may not of worked out better for him but he could of converted to a RRIF and withdraw $2,000 a year tax free from the pension income tax credit.

#143 Former Navy Chief on 06.06.19 at 7:48 am

#3 not 1st

For your own edification:

– Navel Gazing: excessive contemplation of oneself…

– Naval Gazing: looking at warships, boats and perhaps matelots…

#144 Jake Sanderbaum on 06.06.19 at 12:09 pm

My sister sounds alot like Perry. She is those independent type of person. She is working since she was 16 at babysister and at DQ. She has her own business now and home and she showed me that she has $80,000 in her GIC,ETF TFSA and MIC’s of $300,000 paying 5 to 6% rates. She loves real estate. She is obsessed with it.

#145 Nationalism on 06.06.19 at 7:46 pm

Not sure I understand why the nationalism of individual nation states is bad, but the super nation state of the EU is considered good; is that not just a scaled up version of what people seemingly consider a bad idea? Germany wanted control of Europe under the Nazis. What they could not achieve in controlling other nations militarily they have achieved economically via the EU. I can’t judge the Brits for wanting out.