The needy (2)

The Doctor is IN. No income sprinkling in this practice. Open 7/24. Never a vacation. Relationship counselling a specialty. We also do canines. Who’s first?

“Best blog ever,” says Jason, straining credulity. “Now will stop the ass kissing. Been resisting to write, partly of fear to be made an example of, but heck all your answers are awesome. So…

“Married with children under 5, us, just under 40. Household income $350K, split $250/100K approx. I own the business that pays me, it is “illiquid” in equity/shares, worth a few million on paper in family trust. We have saved in diversified financial/liquid investments about $650K. No house, just rent for $3200.

“Now my landlord wants to sell. Offering us to buy for $1.1MM. Doesn’t make sense to me. My landlord even admitted he is selling cause he is financing me to live there. Maintenance is about $700+ alone. Found another comparable rental, but obviously not guaranteed for long term with family. So there is risk of convenience to have to move again. I don’t want to buy… yet…as I don’t factor in illiquid assets into rule of 90 I assume either, think market is still frothy if anything, and plus taking on a whole lot of debt/risk, when I already have tied up illiquid equity in my company isn’t responsible.

“Just waiting to build up more net worth in liquidity by saving before buying a house, which in Toronto will be close to $3MM based on location/size I’d expect. Are we thinking about this the right way? Anything I’m missing here?!”

Let’s recap. Earn $350,000. Have saved $650,000. Own a business worth millions. Married. Kids. Rent for $3,200 a month in Toronto, presumably in a  place which suits you. And mortgages are now available at 2.8% or less.

Just a thought, but you may have drunk too deeply of the GreaterFool Kool-Aid. In other words, buying may not be such a bad idea. Do the math. First, talk the LL down to a better price. If he’d take $1.1 million, then he’ll probably take $950,000 with no conditions and a short close. Put 20% down, so with closing costs this eats $200,000 – still leaving you a fat, liquid nestegg.

Basic carrying costs will be $3,500 (mortgage) plus $700 (insurance and property taxes), for a total of $4,300. Yes, that a grand more than you’re paying now, plus any renos you’re considering, but you are buying into one of the most stable markets (Kingdom of 416) in the land. More importantly, you can afford it. Maybe you can even divert some of that trust fund cash to help swing the deal. And waiting for a price collapse in the heart of the GTA would be a bad strategy. As this blog’s often said, SFHs in demand hoods within T.O. won’t be losing half their value. Or a quarter. Unlike poor Markham or Mississauga.

So buy this place, build more equity, then move into the $3 million house. You deserve it. We’ll bring the beer.

Now, here’s Niall & squeeze – two young people, rich with time and love, poor with treasure. But trying.

“I can’t think of any way to compliment you and be clever so I will opt for sincerity and just tell you that I very much enjoy your blog. I used one of your recent posts to (mostly) convince my wife that we should continue to rent in the GTA. Thanks for your insights.

“Here’s the question. We don’t have much saved after a long time in school but starting to see the rewards after all the hard work. I am looking to invest money in both registered and nonregistered accounts and have heard a great deal of good about so-called portfolio ETFs (like VBAL). To my naive POV they seem tolerably similar to your proposed ‘Millennial ETF Portfolio’. What are your thoughts? I’m not afraid of rebalancing ETFs, although I would have to work out exactly how to buy a preferred share if I did things myself. Thanks in advance. Sadly no dogs in my condo yet.

The first place to start is your TFSAs. Fill them to brimming before you dump money into a non-registered account. As for RRSPs, consider your income levels. Remember that RRSP room accumulates – you earn it and own it forever, ’til used. So why not save it until you and she are making bigger bucks, then pull the trigger for a bigger tax bang?

As for a one-size-fits all, balanced-portfolio ETF,  it’s an okay option when your accounts are relatively small, when you lack the time to rebalance routinely, or just don’t have the skill , knowledge and steely emotional demeanour necessary. The downside of depending on a single asset, no matter how diversified, is that besides being wedded to one provider you’re surrendering the ability to tailor the portfolio. Also the weightings may not be quite appropriate.  VBAL, for example, is made up of 7 individual ETFs and holds 40% in bonds – too much. No prefs. No REITs.

But, hey, this is a big step up from the fee-drenched mutual funds or a brain-dead GIC the [email protected] will stick you with. As you gain more wealth, grab more flexibility.

Now, Meg. “I hope this email finds you doing well and that you’re not too exhausted from dealing with moisters asking for “permission” to buy homes they can’t afford ;) ,” she says.

“My question relates to retirement. You speak a lot about not putting most of your eggs into a one asset strategy, and having a diversified liquid portfolio – and you even have spoken about the breakdown of how much to approximately have in fixed vs. liquid assets based upon your age. However, what about those of us who are trying to follow your Gospel and want to think about retirement…how does an early 30 yo couple figure out how much they actually need to save for retirement? And when trying to figure that out, would you EVER recommend building in any conservative assumptions for inheritances? Perhaps this type of question is too open ended, or reserved for clients, but I figured I’d ask anyway.”

Why not? Clients of fee-based advisors have this kind of discussion when they first sign up. Incomes, assets, marriages, real estate, kids, siblings, parents, jobs and pensions – all of this at some point has to fit into a plan for the future. Without one, life’s a total gamble. Wow, look at the damage one divorce can bring.

How much do you need to retire? The answer’s simple: enough to live on during the entire period after you quit working. Maybe 30 years. The trouble is future economic conditions, including inflation, are unknown. Plus, corporate pension plans are withering and being steadily converted into market-based assets. Relying on your CPP, OAS and a corporate group RRSP is probably a bad idea.

Meg, the Internet is bristling with ‘retirement calculators’, and some of them are actually worthy. As stated, though, it’s your spending that matters most. If you have a family income of $200,000 at age 65, then you’ll be desperately unhappy trying to live on $80,000. So supplement government pogey and private pensions with your own nestegg. Ten times your salary at retirement makes sense to me. Let’s review this at, say, 60.  I’ll be here. Sheesh.

81 comments ↓

#1 To Jason on 07.23.19 at 4:31 pm

Jason, do not buy, wait for the next recession, in the meantime just rent. It makes way more sense too pay too much rent for a few more years than to buy something now that will drop in value; even if the drop will only be 10 percent, which is highly doubtful, that loss in much bigger when compared to rent. Furthermore, if you buy now, at the peak of a nega hubble, you are contributing to enriching a boomer landlord class of (typically) greedy speculators who have not provided any meaningful contribution to society, in fact the opposite – just for that reason, stay on the sideline.

That was weird. – Garth

#2 Nate on 07.23.19 at 4:35 pm

I have to make note of something here. You say that a seller would willingly accept an offer at $950,000 for a property listed at $1.1 million. How are prices not on the decline in Toronto? Thats an approximate 13.5% drop between list price and theoretical sale price. That doesn’t jive with your belief that Toronto will never experience a drop in price of 25%. At the price you suggested, the drop is already halfway there. You also fail to indicate why a seller would ever be motivated to take a haircut of $150,000. Is he being altruistic? Or is the market softer than you seem willing to acknowledge and in a market as rock solid as the 416.

Private sale. No commission (5% reduction). Motivated seller. Lots of bargaining power here, it seems. – Garth

#3 Shawn Allen on 07.23.19 at 4:35 pm

Mortgage Delinquencies

#89 SunDays on 07.23.19 at 3:01 pm
#76 Shawn Allen on 07.23.19 at 10:18 am

Agreed that the delinquencies figures are a lagging indicator. But that does not mean they should never be looked at or that the publisher should not keep them up to date or that they should not be questioned when they look absurdly low.

Scott Terrio, consumer insolvency expert in Toronto, has the answer for you:
“Almost every single homeowner that files either a bankruptcy or a proposal with us is current on their mortgage. Almost always.”

https://twitter.com/ScottTerrioHMA/status/876841282219495424

**********************************
Thank you. He also talks about extend and pretend.

I have long thought that the banks may be complicit in keeping official mortgage delinquency figures down. Can’t make the payment? No problem they often allow skip a payment or three if you ask. If it’s sanctioned by the bank then, viola, a non-payment is no longer a delinquency. Or let’s extend your 20 years remaining back to 25 lowering your payments.

And arguably complicit is when you lose your job but simply take money out of a line of credit or even a credit card to pay the mortgage. In effect the bank pays your mortgage and you are not delinquent.

But at some point if/when/as house prices stop rising and or decline then some newer home owners have less reason to keep treading water. At some point delinquency figures should rise. How can they not when they are literally one in a thousand in Ontario?

So, I watch… and watch… and watch… ten years now…

We are apparently a couple years out from peak house price in Toronto. Could my wait soon end? (Perhaps right around the time they find the treasure on Oak Island?)

#4 TRUMP on 07.23.19 at 4:36 pm

SELL ALL YOUR ASSETS!!!

and BuY GOLD and GOLD STOCKS!!!

The world is about to implode on itself. Debt, war, famine, global warming, you can’t even trust the WEED farmers anymore. SNC sleeping with the enemy.

ALL YOUR ASSETS WILL soon be worth nothing and GOLD will be your saviour.

#5 Shawn Allen on 07.23.19 at 4:38 pm

I meant voila or however you spell that with proper accents. But Viola might be happy about it too.

#6 John on 07.23.19 at 4:49 pm

Why so down on Markham Garth?

Been there. – Garth

#7 Linda on 07.23.19 at 4:52 pm

‘Meg’ – what you will need in retirement really depends on what kind of lifestyle you want & how well you have prepared. Being debt free upon retirement makes a huge difference to how much income you may require. If you have already done all the travel & toy acquiring you wanted & are debt free to boot, the amount you will need is a lot lower than if all the partying is yet to come. Be realistic. If as Garth says family income is $200,000 at 65 (presumably post tax) & that amount is what is required to live the lifestyle you desire then that is the retirement income you must aim for. Regardless of your desired financial goal, start building now. Decades pass faster than you think & delay just means it will be that much harder to achieve your goals.

#8 Hogtown Harry on 07.23.19 at 4:54 pm

“Just waiting to build up more net worth in liquidity by saving before buying a house, which in Toronto will be close to $3MM based on location/size I’d expect. Are we thinking about this the right way? Anything I’m missing here?!”

Something doesn’t add up about this tale. If he states a house would be close to 3 million based on the location and size he desires then why would be be happy with a 1.1 million home that is barely a lot in an area that would command 3 million dollar homes?

Gotta start somewhere. Zero to $3 million is a stretch. – Garth

#9 Small_town_steve on 07.23.19 at 5:35 pm

Why don’t Canadian banks offer 30 year mortgages like they do in the US? I just read you can lock in for 30 years at 3.84%

The Canada Interest Act. – Garth

#10 Dolce Vita on 07.23.19 at 5:42 pm

#7 Linda

I agree. $200K/yr for retirement, that’s a large amount. Reasonably lavish lifestyle I’d say esp. if after tax.

————————————

Garth, you’re gung ho. Me, not so much that they can achieve $200K/yr retired if they are 40ish now.

1. Rule of Thumb 4% withdrawal from an accumulated principal sum when retired per year: $200k/0.04 = $5,000,000 set aside by retirement for that $200K/yr.

2. If $5 MM is the amount to be accumulated, then using a Sinking Fund calc. at 6% to age 65, they need to set aside about $90K/year, annual compounding. Took them say 20 years to get the $650K they have now = $32.5K/yr. Their current savings pattern falls short by about $60K/yr. More of a shortfall if they buy that house as expenses increase per year.

I’d say that business better be worth a lot more than a few MM for a $200K/yr retirement fund at age 65.

Another way to look at it:

Rule of 72 based on 6%/yr = 12 years to double an amount. They are 40. The $450K left over after buying a home becomes $900K by age 52. Another 12 years after that and it becomes $1.8 MM at age 64.

Well short of the $5MM or so needed for $200K/yr based on current savings and savings amount.

Again, that business better be worth a lot, like at least $3MM or they’re not going to make it to that $5 MM or so needed for $200K/yr.

#11 Reximus on 07.23.19 at 5:48 pm

that picture lol…we get that all the time except it’s a baby racoon and our tabby cat waiting at the back door

#12 IHCTD9 on 07.23.19 at 5:51 pm

#7 Linda on 07.23.19 at 4:52 pm
‘Meg’ – what you will need in retirement really depends on what kind of lifestyle you want & how well you have prepared. Being debt free upon retirement makes a huge difference to how much income you may require. If you have already done all the travel & toy acquiring you wanted & are debt free to boot, the amount you will need is a lot lower than if all the partying is yet to come. Be realistic. If as Garth says family income is $200,000 at 65 (presumably post tax) & that amount is what is required to live the lifestyle you desire then that is the retirement income you must aim for. Regardless of your desired financial goal, start building now. Decades pass faster than you think & delay just means it will be that much harder to achieve your goals
——-

Yep. I look at our paltry 100k (compared to the GF faithful) net after tax income as more than enough, but the truth is between investing, tuition, feeding an emergency fund (I know, I know…), and charity, about 40k of that never hits our bank account. Been about that 40% ratio or worse for the last 21 years, so life has just “evolved” around the reduced income like it was never there.

So being realistic for us means saying about 60k gets the job done, in the past it was considerably less even. This number is comfortable too, house paid for, several toys bought, 2 kids raised, no debt of any kind. 60k, and that’s maximum.

If all goes well, our retirement income should be about 95k. It’s not 10x our gross, but it will nonetheless be about 60% more than what we’ve structured our lives around for decades.

It’s definitely a highly personal calculation, one size does not fit all.

#13 Yukon Elvis on 07.23.19 at 5:54 pm

The Canada Interest Act. – Garth
…………………….

Could be changed with the stroke of a pen. Like the tfsa contribution reduction or the B20 stress test. Poof. Gone like that.

It exists for a reason. Never been in government, have you? – Garth

#14 Axehead on 07.23.19 at 5:56 pm

Depending on the business, Jason could rent a condo for work and move his family to a more sane location to live, like maybe London. Less time with family but again, depends on the business. And he writes off rent, travel, meals, a Jays game here and there.

#15 Shawn Allen on 07.23.19 at 6:00 pm

Why no 25 / 30 year locked in mortgages?

#9 Small_town_steve on 07.23.19 at 5:35 pm
Why don’t Canadian banks offer 30 year mortgages like they do in the US? I just read you can lock in for 30 years at 3.84%

The Canada Interest Act. – Garth

***************************
With respect, I don’t think it is the Bank Act which requires all mortgages to be open for repayment after five years. (Which agreed could make banks reluctant to offer longer fixed rates)

Despite this, we do have some 10 year and I think even longer locked in rates so the Bank Act is okay with that I believe.

10 year mortgages used to be prohibitively expensive but lately I understand there are some good rates.

I believe the difference is that in the U.S. rules from the federal mortgage insurers (or some regulator) require all mortgages to be open with minimal repayment penalty right from the start. Banks can’t take that risk except by selling off / securitising the loans. So they do.

For various reasons there is not enough of a securitisation market in Canada to allow much the same thing. Some of the reasons relate to rules around what mortgages can be securitised at all and which types will be done through government agencies.

Bank of Canada governor Poloz recently lamented the lack of innovations in Canadian mortgages over his entire adult life.

25 year locked in and yet reasonably open mortgages would eliminate the purported need for the stress test. But it might push house prices even higher.

#16 Shawn Allen on 07.23.19 at 6:03 pm

Whoops I notice Garth said Interest Act. I thought previously he said Bank Act.

Well, perhaps I can be enlightened on the particular clause of the Interest Act that prevents longer term locked in mortgages. (And again, we do have some ten year fixed)

The Act was designed to prevent borrowers from being indentured by long-term, fixed-rate debt, allowing all contracts to be broken at the five-year mark or earlier. In a declining rate environment this greatly advantages borrowers, and vice versa. By the way, there are no fixed 10-year mortgages, as all become open after five and can be exited or repaid. – Garth

#17 45north on 07.23.19 at 6:10 pm

Shawn Allen: I meant voila or however you spell that with proper accents

two ways:

voilà

voilà

the first is ascii code and the second is html code

#18 SmarterSquirrel on 07.23.19 at 6:11 pm

Garth,

I disagree with 10x salary at retirement. Considering most people spend most of what they make no matter how much they make, I suggest having enough at retirement to replace your salary inflation adjusted. Consider any CPP you will get and reduce your annual amount needed by that. Chances are you’ll need a lot more than just 10x your current salary. Unless you just want to get by, but if you want to travel and enjoy and not count your pennies then you’ll need more.

#19 Bill Grable on 07.23.19 at 6:11 pm

Mr. Turner – as a 70-year-old – may I offer a piece of advice for your blogdogs?

Make sure you balance your WORK LIFE and having a ‘life’.

Trust me, life goes by very quickly, and working six and seven day weeks, will hurt when you reach a certain age.

It’s like you tell us about investing.

BALANCE.

Trust me, Mr. Turner is right on.

#20 Stone on 07.23.19 at 6:15 pm

Meg, the Internet is bristling with ‘retirement calculators’, and some of them are actually worthy. As stated, though, it’s your spending that matters most. If you have a family income of $200,000 at age 65, then you’ll be desperately unhappy trying to live on $80,000. So supplement government pogey and private pensions with your own nestegg. Ten times your salary at retirement makes sense to me. Let’s review this at, say, 60. I’ll be here. Sheesh.

———

Does 10 times salary at retirement apply at any age or just 60-65? What if you’re in your 40s with 10 times salary invested and want to retire to something other than working? Is that a stretch?

#21 Dolce Vita on 07.23.19 at 6:17 pm

PS:

Forgot to mention that at their historic savings rate of $32.5K/yr and at 6% compounded annually, they will accumulate by age 65 (if 40 now):

$1.8 MM.

Rule of 72 on the $450K ($200K down payment used), twice, yields another $1.8 MM by age 64 or so.

About $3.6 MM in total circa 65 yrs old.

Short of the $5MM or so needed for $200K per year (before tax). Business needs to sell for at least $1.4 MM to get to $5 MM and NOT $3 MM (MY BAD).

Still, a consistent 6% per year return for the next 25 or so years is optimistic as I see it. AND their historic savings rate will be lower with increased costs due to the purchase of that home.

Why I think their business needs to sell for at least a few MM, maybe $3 MM or more??? when they retire to get $200K/yr (before tax).

A whack more if $200K/yr AFTER TAX. With an MTR of about 40% – they have a snow balls hope in Hades.

#22 John on 07.23.19 at 6:25 pm

Jason,
We are in an eerily similar situation, just a few years older (slightly over 40), lease $3300 east of GTA, rent signed until the summer of next year. Roughly same salary, somewhat equally divided between me and my wife, slightly more in financial/liquid assets.
For what is worth, we are waiting until Dec/Jan/Feb to see what will be available on the market then, maybe earlier if there is serious talk of nixing the stress test. We are looking for a fixer-upper/dated house in a good/mature neighborhood that we like, max 1 mil. From what I have seen they tend to go for a discount that is more than the value of the upgrades/renovations. Seems like people don’t have the cash to do the reno and prefer to buy picture-perfect houses and have a higher mortgage.
No idea where the market will go from here. Markets are impossible to predict, especially for 1-2 years periods, even more for markets that are heavily dependent on gov rules & regulations. However, if you have the cash available there are some ways to benefit from a discount now (20+% down, private sale, a house that requires some renovations). Such discount might diminish the blow if the market collapses.
I think viewing the house as an investment, part of your portfolio, it’s a mistake. House is a place where you live and feel good. If you’ll be lucky enough to not lose its value over the time you’ll stay there, even better.
Finally, don’t overestimate the return and safety of your financial assets. This blog preaches the X% return of a balanced portfolio, that Bear Stearns collapse was a singular event never to repeat etc.. However, there were periods, long ones, in which the stock market had 0% returns and nothing scares me more than investment professionals saying that “this will not happen again”, it’s like a guarantee it will happen again.
Good luck.

If he listens to you, he’ll need it. The stress test will still be there next year, and as for your mistrust of financial portfolios, they have outperformed real estate for decades. The key is balance, and equating investing with stocks destroys your credibility. This blog has never advocated diving into equities. Shame on you. – Garth

#23 Dolce Vita on 07.23.19 at 6:38 pm

PS, PS:

Good advice as usual Garth.

You should start making a list of all the MSU’s.

At the end of the year publish the Top 10 and let, we the Steerage Section, vote online for our favorite.

Prize & Punishment:

The winner has to find you a new “heritage” property to renovate.

(“heritage” in quotes since in Italia, we have horse races older than Canada, e.g., Il Palio).

Yes, I know Garth time for Buonanotte e Ciao d’Italia*.

*Wondering about what all the weather histrionics from Canada & the Excited States of America are all about…that’s been my weather for the past month and a half…near every, bloody day (24,000 Btu/hr in a 70 sq.m. apartment barely keeping up).

For the heat and humidity challenged wishing to vacation in Italia:

May, September the best months to come (never August due to elevated heat and all of Italia is on vacation that month, no one left to serve you, more tourist locals to compete with for AirBnB, etc., etc.).

#24 Believe it or not ... on 07.23.19 at 6:42 pm

Had a flyer from this place delivered to my house by Canada Post today …
https://throughconversation.com/save-my-marriage/

(just in case someone wants a second opinion from Garth’s relationship counselling.)

#25 Shawn Allen on 07.23.19 at 6:44 pm

Longer Term Fixed Mortgages

By the way, there are no fixed 10-year mortgages, as all become open after five and can be exited or repaid. – Garth

**********************
Agreed. The last think I want is a 25 year rate with a massive massive interest differential penalty to break it at say year 6. But with our existing 10 year fixed rates the borrower has the option (per the Act you mention) but not the obligation to repay refinance at year 5 but can stay on the ten year fixed for the full ten years. Excellent as long as the initial rate was reasonable. For whatever reason it seems our banks are lately offering reasonable 10 year fixed (open at 5) mortages but not the 25s.

Thanks for your patience with my comments. I may disagree at times but I am always sincere. Also it should be known, I am a dog owner.

As I understand it in the U.S. the borrower has the option to stay fixed for 30 years or on minimal fees to finance to a lower rate or pay it off early. Best of both worlds.

If rates increase the borrower stays put. If they decrease she can refinance to a lower rate at a small fee. Heaven. It is made possible by regulations and the securitzation market I believe.

In the end after looking into why Canada can’t do something similar, the best answer I can come up with is “Because that’s just the way we always do it here in Canada”. Excuses like Investors would not buy the securitised mortgages (yet they do in the U.S.).

Or perhaps the best answer to why we can’t have 25 year fixed rate but open mortgages at low rates like the U.S. is “Nobody knows”.

#26 Vampire Studies (doctoral thesis) on 07.23.19 at 6:51 pm

74 Seebe (previous blog)

Some reading that may interest you

https://en.wikipedia.org/wiki/Royal_Proclamation_of_1763

#27 Trojan House on 07.23.19 at 7:17 pm

Seems odd to me but why are most of the people writing to Garth asking financial questions, seem to be the ones that earn a 6 figure income and have a least 6 figures saved up? And usually before they are 40.

Makes you wonder how they got to that position in the first place when clearly they are not that smart financially.

Inquisitiveness brings rewards. It’s the ones who think they know everything who lag. – Garth

#28 Linda on 07.23.19 at 7:25 pm

IHCTD9 – I’m finding that the amount I ‘need’ to live on has gone down considerably over the years. Once the mortgage was paid off & the desired toys acquired & paid for the actual day to day living expenses (despite inflation) are less than my income by more than I expected. The issue isn’t money, it is time management. I could really use that ‘beam me up, Scotty’ technology & even then, I think that I’d still end up having to pick between conflicting events in order to be able to enjoy them properly. It is indeed a wonderful life:)

#29 Troy McClure on 07.23.19 at 7:34 pm

Garth is too nice to say it, but if you’re making $350K a year and need to ask a blog for free advice, you might want to hire a financial adviser. Garth can probably put you in touch with one.

#30 bellend on 07.23.19 at 7:45 pm

“Ten times your salary at retirement makes sense to me.”
take home or pretax? I’m assuming take home.

#31 Valerie Johnson on 07.23.19 at 7:51 pm

It does not matter if you lock in 5 years, leave it variable or locked for 10 years or 30 years your mortgage. If you are in debt and you keep refinancing using your property as an ATM machine, you are a financial loser. They already took all the interest you would of paid with $500,000+ over valued, inflated housing prices, $400,000 versus $900,000, 7.8% versus 2.8% mortgage rates.

It is all prepaid interest plus don’t forget all the extra property taxes, home insurance, higher assessment property taxes, much higher CMHC premiums etc. your paying because of overvalued, inflated housing prices.

It is done, they already milked the cow of all it’s milk. They removed your future savings and retirement savings and they make you think you got a great deal.

#32 yvr_lurker on 07.23.19 at 7:56 pm

If this couple with the 350K combined salary and the business, and with 650K saved, can’t “afford” in Garth’s eyes to buy a house at 1M then the rest of the deplorables earning far less are &*%^&&. Clearly they can buy this place comfortably and have nothing to worry about (save a business failure). This is a no-brainer.

I don’t see how Garth says that one would be desperately unhappy living on 80K when one was earning 200K before retirement. Big salaries are needed to support big mortgage payments, college tuition, helping kids get started with downpayments etc… when all these big expenses are done, I estimate for my little family that we can live pretty well for about 100-120K per year in retirement. We have been practicing this for 5 years; for me saving 60% of my take-home and living off the other 40%. taking trips to south-east asia and central america where it is cheap. I can live happily on the 40% and not feel slighted. No need for fancy cars, the latest cell-phone, fancy clothes, stupid club memberships, or a dumbass cruise where the most complicated thing one does each day is decide what to eat at the fancy dinners… none of this appeals to me… much rather take a trip with a back-pack (but with some upscale stuff) to somewhere remote, interesting, and not too expensive.

#33 Ace Goodheart on 07.23.19 at 8:35 pm

RE: the Jason thingy: Landlord willing to sell him a house that he already lives in, for $1.1 million. Comparable houses selling for $3 million.

Yeah, Jason, you are kind of a smart dude. So go get a calculator. Subtract $1.1 million from $3 million and see what you get.

See that big ol’ number? Yeah, I thought you would.

Now go buy your landlord’s house. You will be glad you did.

In other, odder news, it turns out that a lot of the cottages on my lake are actually owned by dead people.

Yes, that is true. It is a phenomena known as the “dead cottagers’ society”.

What happens is, the old dude or dudette takes his or her last breath of fresh wilderness mixed with outboard exhaust and bear poop, and leaves a teary eye enducing, 24 pack a weekend, outdoor plumbing 1950s cottage to, like about 40 people.

Uncles and Aunts. Little children. Cousins. Second and third cousins. Brothers and sisters in law. Grandma, grandpa. Great grand dad didn’t have a will. Let the fun begin.

This situation can go on for years. We have one cottage that apparently has been in dispute for 19 years, as various groups of relatives sit down (with a case of 24) over the weekend (and between bouts of water tubing and late night skinny dipping) to discuss what to do about the situation.

Odds are, nothing will be decided. And another summer of the Dead Cottagers’ society will go past, with kids swimming on the floating dock and relatives getting smashed on the shore around the bonfire.

Each year the get togethers, initially held to discuss how to sell and split up the cottage proceeds, have less and less to do with that particular topic, and more and more to do with just relaxing, taking in some time by the water, and drinking copious amounts of the local fire water.

Maintenance can become an issue. Three years ago, long-dead great grandma’s cottage, on shaky foundations for many years, let go during the spring melt (ie torrents of water gushing under and around the cottage) season, causing the old rotten, carpenter ant infested building to slide down a hill, over a dock and come to rest finally in the middle of Uncle Joe’s favorite fishing spot.

There was a great discussion amongst the relatives as to whether or not they could just use it as a “water cottage”. However, once the extent of the ant infestation was made clear, it was determined that the building would have to be torn down. Fortunately, this was quite easy as it was already sitting in the lake. So it was towed back to shore (water access), dragged up a hill and dumped in a low lying area at the back of the lot.

The 40 or so relatives who “own” the land (or have weak claims to it) now use it as a camping spot.

Dead cottagers societies.

To make things less fun for your relatives, if you happen to be about 110 and you own a little spot up in Muskoka somewhere, and you think you might not make it to 111, write a will.

Leave the cottage to someone. Or other.

Otherwise, your memory will be celebrated each year by a bunch of drunken relatives coming up to your cottage to “decide” what to do about it. And never, ever actually deciding.

#34 Steve-0 on 07.23.19 at 8:36 pm

Garth, where does retained earnings fit into the TFSA / RRSP / Unregistered pecking order? Any chance of doing a post for us business owners that don’t trust financial advisers? It would probably piss off your millennial following showing us ways to reduce taxes (I am assuming that’s a good thing).

#35 Grunt on 07.23.19 at 8:42 pm

Niall & Squeeze,

See all that cardboard box junk at your condo concierge desk you pass everyday? Don’t do that. Forget an Amazon deal on a new 55″ LED. Tho old TV you’ve got still works? Keep it. Besides who catches much broadcast TV these days? Channel the money into a monthly TFSA. You’ll be streets ahead of your neighbors.
And besides the courier companies do a terrible rough job handling those TVs.

#36 Interstellar Old Yeller on 07.23.19 at 8:50 pm

Let’s review this at, say, 60. I’ll be here. Sheesh.

We should be so lucky! Though if you keep up the blog until then think of how grumpy Dorothy is going to be about that!

#37 Another Deckchair on 07.23.19 at 8:51 pm

To Meg:

Do lots of reading. There’s a growing cohort of younger people looking for financial independence.

Do lots of reading – but maybe start here:

http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

and figure it out for yourself. There’s lots of good and bad advice out there, so, really, do your homework. It’s a path to enlightment that not as many as should go down.

Good luck!

#38 TurnerNation on 07.23.19 at 9:39 pm

950,000 buying? Nonsense. $31000 land transfer tax (or 22000 first time buyer). (I know blog post did say after closing costs)

https://www.ratehub.ca/land-transfer-tax

His first year will be spent renting from the Land transfer taxes.
And they’ll want another $4000 property tax.
OH the bank will take another $20000 first year’s interest.

That’s $55,000 of CASH out the door just moving in and staying a year

Drops to about $25,000 next year.
But Muh Equity I’m building. Sure.

#39 Vik on 07.23.19 at 9:45 pm

VBAL, for example, is made up of 7 individual ETFs and holds 40% in bonds – too much. No prefs. No REITs.

For simplicity sake, would it make sense to hold 80% in an asset allocation growth ETF(80%Eqt+20%FixInc) and 20% in a pref ETF? I’m taking into account that the growth ETF holds REITs

#40 Lizard Man on 07.23.19 at 11:19 pm

How much do need to retire. There’s no straight answer. If you were a teacher for 30 years and your last cheque was $85,000 you’re likely screwed in after tax dollars so you double dip. In other words you can’t retire because likely lived the high and leased new cars and live in a multi million dollar house with a mortgage on it. So, civil servants rarely retire, they dig themselves deep holes and suck life through a straw .

Now, for the smart money strategy. You build a stock portfolio and gradually adjust to additional income balance in the years before your retirement date. You’ve alwave always had a 60/ 40 mix, growth and income to schieve the virtuous cycle of free cash flow into growth equity. In the twenty five/30 years similar to a teacher you now have a house paid for and several millions in the portfolio.

Ten years before full retirement you’ve been working a lot less and have started to reduce the RRSP incrementally, taking out you’re tax deferred savings at lower income tax, and you use that to continue to stuff your TFSA. This is where your non ref accts are rocking with froth stocks, utility, banks, pipes, reits, all paying monthly, quarterly, semi annually and annual dividends cash flowing into your tax managed multi million dollar acct.

By now your so savvy an investor you’ve kicked all thoughts of advisors to the curb. You’ve educated yourself. You know how to read a balance sheet. You get your news from conferences calls not the crap on Global or CTV.

There it is, your working life, envying civil service pensions but realizing they have nothing compared to tot, they’re locked in to a fully taxed income that will never grow. You have growth that keeps doubling and tripling while raising dividends in a tax efficient dance of Joy.

#41 Lizard Man on 07.23.19 at 11:20 pm

How much do need to retire. There’s no straight answer. If you were a teacher for 30 years and your last cheque was $85,000 you’re likely screwed in after tax dollars so you double dip. In other words you can’t retire because likely lived the high and leased new cars and live in a multi million dollar house with a mortgage on it. So, civil servants rarely retire, they dig themselves deep holes and suck life through a straw .

Now, for the smart money strategy. You build a stock portfolio and gradually adjust to additional income balance in the years before your retirement date. You’ve alwave always had a 60/ 40 mix, growth and income to schieve the virtuous cycle of free cash flow into growth equity. In the twenty five/30 years similar to a teacher you now have a house paid for and several millions in the portfolio.

Ten years before full retirement you’ve been working a lot less and have started to reduce the RRSP incrementally, taking out you’re tax deferred savings at lower income tax, and you use that to continue to stuff your TFSA. This is where your non ref accts are rocking with froth stocks, utility, banks, pipes, reits, all paying monthly, quarterly, semi annually and annual dividends cash flowing into your tax managed multi million dollar acct.

By now your so savvy an investor you’ve kicked all thoughts of advisors to the curb. You’ve educated yourself. You know how to read a balance sheet. You get your news from conferences calls not the crap on Global or CTV.

There it is, your working life, envying civil service pensions but realizing they have nothing compared to tot, they’re locked in to a fully taxed income that will never grow. You have growth that keeps doubling and tripling while raising dividends in a tax efficient dance of Joy.

#42 Tanisha on 07.23.19 at 11:27 pm

We are in a similar situation as this couple however our income is $475k/year and we have saved approx $2 million. My wife and I are 26 years old and have no debt and 2 children.
Even though we can afford to buy we refuse to pay more than something is worth so we rent.

#43 Smoking Man on 07.24.19 at 1:38 am

DELETED

#44 Smoking Man on 07.24.19 at 2:55 am

Roger waters missed it. My hero as a kid.
Now I’m old and a drunk I see shit.

https://youtu.be/uOAyOqi_KyE

#45 earthboundmisfit on 07.24.19 at 5:47 am

Why so down on Markham Garth?
Been there. – Garth

Priceless!! Absolutely priceless!!

#46 TRUMP on 07.24.19 at 6:51 am

We shouldn’t judge others

#47 Hogtown Harry on 07.24.19 at 7:30 am

#39 Lizard Man on 07.23.19 at 11:19 pm

“. So, civil servants rarely retire, they dig themselves deep holes and suck life through a straw .”

Not the ones I know cowboy and I am married to one. All my civil servant friends retired with great pensions. The ones who retired like a principal buddy of mine and who kept working part time, still in education, was to keep from being too bored. Others I have known who double dip can’t resist the money of a pension and a salary. Some did it for a couple of years after they were pension eligible as a transition into retirement. None of my friends did it because they have lived the high life and had to double dip to survive.

#48 Howard on 07.24.19 at 7:33 am

#31 yvr_lurker on 07.23.19 at 7:56 pm

Big salaries are needed to support big mortgage payments, college tuition, helping kids get started with downpayments etc…

———————————

When the hell did this become a quasi-mandatory thing for parents to do??

You’ve listed it like it’s become as much an obvious part of parenthood as providing food.

#49 Hogtown Harry on 07.24.19 at 7:36 am

#32 Ace Goodheart on 07.23.19 at 8:35 pm

“Yeah, Jason, you are kind of a smart dude. So go get a calculator. Subtract $1.1 million from $3 million and see what you get.See that big ol’ number? Yeah, I thought you would.Now go buy your landlord’s house. You will be glad you did.:

Hey Ace, you’re kind of a smart dude too. Do you think this landlord is so benighted as to sell Jason a $3 million dollar home for 1.1 million? Further, this 1.1 million dollar rental is probably not in a $3 million dollar neighbourhood. 1.1 million can’t even buy you a tear down in a good 3 million dollar neighbourhood.

#50 dharma bum on 07.24.19 at 7:52 am

#27 Linda

I’m finding that the amount I ‘need’ to live on has gone down considerably over the years. Once the mortgage was paid off & the desired toys acquired & paid for the actual day to day living expenses (despite inflation) are less than my income by more than I expected. The issue isn’t money, it is time management.
——————————————————————-

When I packed it in to take early retirement (no pension – totally self funded), all my friends and colleagues freaked out. Most of the criticism stemmed from underlying jealousy, but the common thread was that I would be bored out of my skull, run out of money, become an alcoholic, not know what to do with my time, etc.

I can tell you from personal experience that time has never seemed to fly by faster now that I don’t have to slog it out in a hellish corporate cesspool any longer.

Like Linda says, I have to manage my time now in order to get all of the things done that I set out to do.

Psychologically, it’s a like a miracle (I don’t believe in “miracles” but I can’t think of any other word to explain the difference in my outlook since dumping the wage slave routine).

If debt is gone, house is paid for, and you don’t spend frivolously on useless crap, 10 times income is way more than enough to live a luxurious life style. And by “luxurious”, I mean not having to get up at the crack of dawn to work for someone else’s interest, but rather wake up when you wake up, brew some freshly ground coffee, read Garth’s blog at your leisure, have a nice relaxed breakfast, do a couple of hours of yoga, have a long late morning shower, work on a project (or 20), read interesting books, indulge in your hobbies, go for long hikes, ride your motorcycle with a clear mind and a smile on your face, take a road trip here and there, do your own gardening, renovate your own bathrooms, start a little business, see your (grown) kids, cook spectacular dinners (while sipping wine in the middle of the week), work out regularly, visit friends often, declutter your environment, and more.

The best and most rewarding things in life do not require the spending of huge sums of money. Sure, one needs to pay their dues and establish themselves financially in the earlier years (learn to be fiscally disciplined, eschew debt, save, invest, pay off a primary residence, etc.), but then the rest is simple if you can resist the lure of mindless consumerism.

#51 dharma bum on 07.24.19 at 8:06 am

#36 Another Deckchair

Your advice to read MMM is very good.

The Mustachian lifestyle is somewhat extreme, and not necessarily achievable for most (depending on their early life jobs, vocations, trades, professions, and intelligence levels), however, his underlying principles of what makes life worth living, and how to manage time, money, and lifestyle are truly excellent!

I am an adherent, advocate and proponent, and have been since the inception of his blog.

MMM convinced me (I have had personal communication with Pete Adeney) that I was financially and psychologically ready to give up wage slavery and start living.

Oh, and he is originally a Canadian.

#52 milly on 07.24.19 at 8:53 am

Hi Garth!

I have a question about RRSPs. We have maxed our tfsa’s and have money we need to invest but can’t decide if we should use unreg or rrsp.

“So why not save it until you and she are making bigger bucks, then pull the trigger for a bigger tax bang?”

It’s hard to tell the future and future earnings, so at what income do you think contributing is worth it once the TFSA’s are maxed? For reference, age 28 making 80K each approx right now. Not sure if now is good at this income, or if we should wait for “maybe” larger salaries.

If you have no tax owing this year, then save some RRSP room for use later. Odds are you will be earning more in a decade than now. – Garth

#53 Penny Henny on 07.24.19 at 9:06 am

Best retirement calculator, EVER!

https://financialmentor.com/calculator/best-retirement-calculator

#54 IHCTD9 on 07.24.19 at 9:42 am

#27 Linda on 07.23.19 at 7:25 pm

IHCTD9 – I’m finding that the amount I ‘need’ to live on has gone down considerably over the years. Once the mortgage was paid off & the desired toys acquired & paid for the actual day to day living expenses (despite inflation) are less than my income by more than I expected. The issue isn’t money, it is time management. I could really use that ‘beam me up, Scotty’ technology & even then, I think that I’d still end up having to pick between conflicting events in order to be able to enjoy them properly. It is indeed a wonderful life:)
____

That’s good to hear, I more or less expect the same thing for me – less costs even though things are pretty cheap already (less the $ commitments previously mentioned).

I think I could handle having too many things I want to do and trying to jam them into my “retirement schedule” list :).

#55 Vampire studies on 07.24.19 at 10:12 am

51 penny – thanks!

#56 Mattl on 07.24.19 at 10:25 am

#18 SmarterSquirrel on 07.23.19 at 6:11 pm
Garth,

I disagree with 10x salary at retirement. Considering most people spend most of what they make no matter how much they make, I suggest having enough at retirement to replace your salary inflation adjusted. Consider any CPP you will get and reduce your annual amount needed by that. Chances are you’ll need a lot more than just 10x your current salary. Unless you just want to get by, but if you want to travel and enjoy and not count your pennies then you’ll need more.

————————————————————–

This is probably decent advice for lower incomes, that rent, and have highish monthly costs. But asking someone to save the inflation adjusted income from their high earning years is overkill.

In my own situation, a large portion of take home today goes

#57 Mattl on 07.24.19 at 10:30 am

#54 Mattl on 07.24.19 at 10:25 am
#18 SmarterSquirrel on 07.23.19 at 6:11 pm
Garth,

I disagree with 10x salary at retirement. Considering most people spend most of what they make no matter how much they make, I suggest having enough at retirement to replace your salary inflation adjusted. Consider any CPP you will get and reduce your annual amount needed by that. Chances are you’ll need a lot more than just 10x your current salary. Unless you just want to get by, but if you want to travel and enjoy and not count your pennies then you’ll need more.

————————————————————–

This is probably decent advice for lower incomes, that rent, and have highish monthly costs. But asking someone to save the inflation adjusted income from their high earning years is overkill.

In my own situation, a large portion of our take home today goes to the house, our daughter, and saving for retirement. More then 50% of our takehome goes to these. Further, effective tax rate of a hair under 40%. These costs are going to fall dramatically in retirement. If I have my current salary in retirement with no mortage, kids out of the house, and no retirement savings transfers I wouldn’t know what to do with the money.

This is one reason I believe folks should buy and pay off a house. Eliminating 3-5K after tax in retirement is huge and changes what you need to have to retire comfortably.

Not exactly. Capital sitting in home equity might be saving on expenses but it’s generating zero income and also comes with property tax, maintenance, insurance and other operational costs. For many people, deploying the money to provide cash flow while renting is a far better option. Do the math. – Garth

#58 Response to Dharma B, Post #49 on 07.24.19 at 10:30 am

That is a really thoughtful response and it has been my experience too. The key thing that has been born out in my experience is that I have more control over how my time is spent. I think that it is misguided to consider wealth as the end goal. Wealth is only really of help if it allows me to do what I want.

#59 Sail Away on 07.24.19 at 10:54 am

The problem I’ve found with retirees, early or otherwise, is they lose their sense of priority and become unreliable.

Could be the ganja, too. Their consumption goes way up.

I tried not working for 4 months and didn’t get anything done since there was no deadline. Couldn’t stand it. Going back to work was a big relief.

#60 Renter's Revenge! on 07.24.19 at 11:01 am

For many people, deploying the money to provide cash flow while renting is a far better option. Do the math. – Garth

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

Always do the math!

#61 Sail Away on 07.24.19 at 11:10 am

#32 Ace Goodheart on 07.23.19 at 8:35 pm

Re:cottages

————————————-

Haha- you’re right on point! We have a couple of these in the family and no longer even try to pretend to decide anything. Sometimes they’re used for temporary housing, sometimes vacant, sometimes AirBNB rental, but the get-togethers are the best part. The ownership question will never be decided.

#62 Dave Ahem on 07.24.19 at 11:13 am

Garth,

Just had a baby, working with TD Waterhouse to open an RESP. Going to put in the $2500 once they get it together (Been 3 weeks, still waiting…)

What do you recommend given that we are limited to $2500 plus the grant in 2 months? I do ETF Couch Potato in all my personal stuff and my wife does TD E-Fund Couch Potato but with a much larger balance.

We plan to be aggressive in these early days but does it make sense to put small amounts like $750 into four different things? Is there a decent single fund solution?

#63 Penny Henny on 07.24.19 at 11:23 am

Meg, the Internet is bristling with ‘retirement calculators’, and some of them are actually worthy. As stated, though, it’s your spending that matters most.-Garth

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

For those who are closer to retirement a worthwhile plan would be to start tracking ever dollar you spend (also the significant other) for a period of a year.
This is how I determined I had enough F-You money and tricked my former employer to constructively dismiss me and then settle for damages.
Knowing how much and what you are spending on will give you a much more accurate picture of how much you’ll need in retirement.
Any retirement calculator that estimates your spending based on pre-retirement earnings is just taking the lazy way out.

#64 My Take on 07.24.19 at 11:34 am

#46 Howard – You must place things in context. All children are birthed by the parents. Now when it comes to inheritance or helping them out what does this mean? These children are really part of you and the wife, so your all in this together.

#65 Jesse on 07.24.19 at 12:36 pm

#38 Vik on 07.23.19 at 9:45 pm
VBAL, for example, is made up of 7 individual ETFs and holds 40% in bonds – too much. No prefs. No REITs.

For simplicity sake, would it make sense to hold 80% in an asset allocation growth ETF(80%Eqt+20%FixInc) and 20% in a pref ETF? I’m taking into account that the growth ETF holds REITs
************************************

VBAL seems to lag big time. MAW104 is the only all-in-one solution I’d consider (and hold in my TFSA).

Consider: 40% UPRO / 60% TMF to accelerate your retirement earnings.

#66 Penny Henny on 07.24.19 at 12:39 pm

#60 Dave Ahem on 07.24.19 at 11:13 am
Garth,

Just had a baby, working with TD Waterhouse to open an RESP. Going to put in the $2500 once they get it together (Been 3 weeks, still waiting…)

What do you recommend given that we are limited to $2500 plus the grant in 2 months? I do ETF Couch Potato in all my personal stuff and my wife does TD E-Fund Couch Potato but with a much larger balance.
/////////////////

TD E-Fund is great for smaller balances. Buy in with as little as $100 and no commissions. Gets the money working quicker (eg. cash birthday gifts, Christmas gifts, etc)

#67 Sail away on 07.24.19 at 1:09 pm

#33 Steve-0 on 07.23.19 at 8:36 pm

Garth, where does retained earnings fit into the TFSA / RRSP / Unregistered pecking order? Any chance of doing a post for us business owners that don’t trust financial advisers? It would probably piss off your millennial following showing us ways to reduce taxes (I am assuming that’s a good thing).

—————————————–

Tax/compensation strategy through a company has to be specific to the person, company and industry, so it would be hard to find any universally-applicable strategy. It’s interesting to some of us but probably dead boring to most.

#68 Sail away on 07.24.19 at 1:23 pm

#61 Penny Henny on 07.24.19 at 11:23 am

This is how I determined I had enough F-You money and tricked my former employer to constructively dismiss me and then settle for damages.

—————————————-

You sound morally bankrupt, untrustworthy and selfish. Why would you ever think that defrauding your employer is something anyone wants to hear? Are you proud of this sleazy maneuver?

If you were one of my past employees and I saw this type of commentary, I’d hire a private investigator to track your social media boasting and start a lawsuit to regain the stolen funds.

People like you deserve zero respect.

#69 BlorgDorg on 07.24.19 at 1:57 pm

#60 Dave Ahem

TD e-Fund in an RESP, with the securities from the Couch Potato strategy, but weighted more heavily toward equities (I do 25% each).

Make sure it is in a Waterhouse RESP account, not a TD “term RESP” account — more flexibility to move to ETFs later when there are more funds. Make sure it is a family account if you (might) have multiple kids.

Rebalance periodically (I do it when the CESG is deposited and there is cash). Adjust the weightings as the kids get older.

#70 JB on 07.24.19 at 2:09 pm

#57 Sail Away on 07.24.19 at 10:54 am

The problem I’ve found with retirees, early or otherwise, is they lose their sense of priority and become unreliable.

Could be the ganja, too. Their consumption goes way up.

I tried not working for 4 months and didn’t get anything done since there was no deadline. Couldn’t stand it. Going back to work was a big relief.
…………………………………………………………….
My father did the same thing retired from his job after 40 years with the company. Full pension, health benefits, he is set for life. Stayed at home for about 7 months and drove my mother insane. Now works part time for another company in a similar work position. They are very flexible with him. Takes off four to six weeks every year an goes back to Italy with my mother. Comes home refreshed and ready to work. My mother has all of her neighbours and friends that she developed over the 40 years that he just worked. His problem was that he had no friends outside of his work and no hobbies other than his grandchildren. The issue is the family is scattered all over so he can not see them as much. He has purpose now to his life but at a pace he sets. è felice

#71 expat on 07.24.19 at 2:27 pm

I see the gold and silver pumpers are showing up in full force these days.

Yawn….

I think I’ll get up and move my doorstops around….

Let’s see – buy a semiconductor etf which represents the real economy or buy a brick to hold my bathroom door open..

Difficult choice it seems

#72 TheDood on 07.24.19 at 2:36 pm

#66 Sail away on 07.24.19 at 1:23 pm
#61 Penny Henny on 07.24.19 at 11:23 am

This is how I determined I had enough F-You money and tricked my former employer to constructively dismiss me and then settle for damages.

—————————————-

You sound morally bankrupt, untrustworthy and selfish. Why would you ever think that defrauding your employer is something anyone wants to hear? Are you proud of this sleazy maneuver?

If you were one of my past employees and I saw this type of commentary, I’d hire a private investigator to track your social media boasting and start a lawsuit to regain the stolen funds.

People like you deserve zero respect.
______________

Is unfortunate that many live their lives a certain way. Still, without knowing the context behind the scenario, it’s easy to sit and judge. With corporate greed now an accepted societal norm, why expect different from an employee? Follow the leader ………..

#73 Mattl on 07.24.19 at 3:06 pm

Not exactly. Capital sitting in home equity might be saving on expenses but it’s generating zero income and also comes with property tax, maintenance, insurance and other operational costs. For many people, deploying the money to provide cash flow while renting is a far better option. Do the math. – Garth

—————————————————————

I get that, but I suspect that renters on the whole don’t save anymore that home owners. The renter that puts aside every dollar saved from owning is a myth IMO.

Don’t know about others but I’m looking forward to 30-40 years mortgage free. And if I want to deploy that equity in retirement we will sell and rent.

My point is valid, renters will need more income in retirement

#74 jess on 07.24.19 at 3:25 pm

median household income in Kitchener Centre is the lowest in the region at $63,001.27 annually.

https://www.cbc.ca/news/canada/kitchener-waterloo/1-in-10-people-in-kitchener-centre-used-a-food-bank-last-year-1.5221522
==============
food bank use is up across the province, the report found, with a three per cent increase over 2017.

Riding with highest food bank use per capita in Nation’s capital, according to Feed Ontario

https://www.ottawafoodbank.ca/riding-with-highest-food-bank-use-per-capita-in-nations-capital-according-to-feed-ontario/

#75 Tater on 07.24.19 at 3:46 pm

#63 Jesse on 07.24.19 at 12:36 pm
#38 Vik on 07.23.19 at 9:45 pm
VBAL, for example, is made up of 7 individual ETFs and holds 40% in bonds – too much. No prefs. No REITs.

For simplicity sake, would it make sense to hold 80% in an asset allocation growth ETF(80%Eqt+20%FixInc) and 20% in a pref ETF? I’m taking into account that the growth ETF holds REITs
************************************

VBAL seems to lag big time. MAW104 is the only all-in-one solution I’d consider (and hold in my TFSA).

Consider: 40% UPRO / 60% TMF to accelerate your retirement earnings.
—————————

Buy and hold of leveraged ETFs is dumb and we’ve talked about why a few time.

If Garth let’s us write again I’m absolutely going to send in an in-depth explanation of why.

#76 Sail away on 07.24.19 at 4:35 pm

#70 TheDood on 07.24.19 at 2:36 pm
#66 Sail away on 07.24.19 at 1:23 pm
#61 Penny Henny on 07.24.19 at 11:23 am
This is how I determined I had enough F-You money and tricked my former employer to constructively dismiss me and then settle for damages.
—————————————-
You sound morally bankrupt, untrustworthy and selfish. Why would you ever think that defrauding your employer is something anyone wants to hear? Are you proud of this sleazy maneuver?
If you were one of my past employees and I saw this type of commentary, I’d hire a private investigator to track your social media boasting and start a lawsuit to regain the stolen funds.
People like you deserve zero respect.
______________
Is unfortunate that many live their lives a certain way. Still, without knowing the context behind the scenario, it’s easy to sit and judge. With corporate greed now an accepted societal norm, why expect different from an employee? Follow the leader ……….

————————————–

Are you serious? It’s now acceptable to commit crimes against those we’re unhappy with?

All we can do is regulate our own actions. When someone brags about criminal activity on social media, they are completely in the wrong. Felony fraud is a very serious crime.

#77 Sail away on 07.24.19 at 4:52 pm

#70 TheDood on 07.24.19 at 2:36 pm

Is unfortunate that many live their lives a certain way. Still, without knowing the context behind the scenario, it’s easy to sit and judge. With corporate greed now an accepted societal norm, why expect different from an employee? Follow the leader ………..

——————————————–

Dood, as you say, it’s easy to judge. You seem to be judging corporations very harshly.

If you owned a corporation, you may feel differently. Legal profit is completely different than illegal theft.

#78 Jesse on 07.24.19 at 4:58 pm

#74 Sail away on 07.24.19 at 4:35 pm
#70 TheDood on 07.24.19 at 2:36 pm
#66 Sail away on 07.24.19 at 1:23 pm
#61 Penny Henny on 07.24.19 at 11:23 am
This is how I determined I had enough F-You money and tricked my former employer to constructively dismiss me and then settle for damages.
—————————————-
You sound morally bankrupt, untrustworthy and selfish. Why would you ever think that defrauding your employer is something anyone wants to hear? Are you proud of this sleazy maneuver?
If you were one of my past employees and I saw this type of commentary, I’d hire a private investigator to track your social media boasting and start a lawsuit to regain the stolen funds.
People like you deserve zero respect.
______________
Is unfortunate that many live their lives a certain way. Still, without knowing the context behind the scenario, it’s easy to sit and judge. With corporate greed now an accepted societal norm, why expect different from an employee? Follow the leader ……….

————————————–

Are you serious? It’s now acceptable to commit crimes against those we’re unhappy with?

All we can do is regulate our own actions. When someone brags about criminal activity on social media, they are completely in the wrong. Felony fraud is a very serious crime.

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I don’t recall anyone actually stating that they broke the law (his lawyer probably gave him the idea). The modern world has grown corrupt and litigious. Just look at how many women collude with their lawyers before filing for divorce, and they encourage women to file false claims to gain custody, the house, etc. It’s pretty sad, but it’s the world we live in.

#79 Jesse on 07.24.19 at 5:05 pm

#73 Tater on 07.24.19 at 3:46 pm
#63 Jesse on 07.24.19 at 12:36 pm
#38 Vik on 07.23.19 at 9:45 pm
VBAL, for example, is made up of 7 individual ETFs and holds 40% in bonds – too much. No prefs. No REITs.

For simplicity sake, would it make sense to hold 80% in an asset allocation growth ETF(80%Eqt+20%FixInc) and 20% in a pref ETF? I’m taking into account that the growth ETF holds REITs
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VBAL seems to lag big time. MAW104 is the only all-in-one solution I’d consider (and hold in my TFSA).

Consider: 40% UPRO / 60% TMF to accelerate your retirement earnings.
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Buy and hold of leveraged ETFs is dumb and we’ve talked about why a few time.

If Garth let’s us write again I’m absolutely going to send in an in-depth explanation of why.

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I’d like to hear your reply on why. I wouldn’t put all your eggs in one basket, but 40% UPRO / 60% TMF seems to have good risk parity, even in a 2008-style crisis, TMF will spike, and UPRO will eventually come back with the S&P 500. I’d wager 10% on this type of investment, but not the whole nest egg.

#80 Leo Trollstoy on 07.24.19 at 6:13 pm

RESP

Best option for 17 year time horizon is to invest $50k right from the start and forgo CESG grant

https://www.theglobeandmail.com/globe-investor/investor-education/whats-better-for-an-resp—lump-sum-payment-or-annual-contributions/article4554816/

Second best option is to front load RESP with $16.5k right from the start and collect $500 CESG for the next 14 yrs going forward

https://business.financialpost.com/personal-finance/young-money/resps-how-to-get-the-biggest-bang-for-your-buck

Worst options are 1) slow investing into the RESP $2500/yr for a decade and a half and completely losing out on the time value of money or 2) not investing

#81 baloney Sandwitch on 07.24.19 at 8:37 pm

The biggest unappreciated “demand” hood in the 416 is surprisingly scarborough. Houses are affordable, plenty of greenery, TTC and Dougie is bringing the subway.