Dave and Sue have done lots right. Selling the house was one of them. Becoming addicted to this pathetic blog was another. But now, they’ve a hit a wall. The worst kind. Psychological. Let’s try and boost them over.
“It’s a wonderful blog,” he says, doing well with the MSU. “I only wish I could have been aware of it many years ago. Anyhow here is our story….
I am going to be 73 yrs old in a couple of months and my sweet wife of 43 yrs is 67 yrs old. We had been purchasing homes all our married life, three years ago we sold our home on Vancouver Island and decided to walk away from the real estate table, we had played our last hand. We have rented a town home and pay $1500 a month since then. Have no desire to ever purchase again. Which is been largely due to your advice I have read on your blog.
We have a combined income of pensions of $53,000 per year, no debts. Investments of $100,000 in TFSA account (GIC 2.7% ) which has matured this week. Our Credit Union have offered us 2.7 % for a further 12 months non-redeemable. I will await your reply. We have a $305,000 GIC that maturing which has been @ 2.75% and $20,000 US funds 3% GIC 12 month that matures in November.
I know your opinion of the GIC but as seniors we do not have time on our side and not a lot of investment knowledge either. I do not have any trust in the so called personal investment people in the banks, all they are after is their next commission cheque.
Please could you advise us on what our best course of action should be. We would like to be in a position that we could have an income ($400-$500 per month ) to have a cushion for extra things that we like to do. My wife has $50,000 room that she can use in RRSP. Many thanks for what you do to set the young people on the right chartered course for their life’s journey on your blog. I know if I could turn the clock back it would have been rent and invest.
Yeah, maybe, Dave. But this is now. Stop looking behind you. There’s much time left. Seventy-four may sound to a moister like you’re crawling into the crypt, but there’s a damn good chance you’ll still be reading this blog in 15 years (God help me…), so let’s get on a more sustainable path.
First the old stuff, though. You and Sue need wills, up to date, reviewed every year. Pick a date – like your anniversary – then you can have a romantic bottle of Sea Star Pinot Noir and review your final testament. What a fun night. And don’t make your kids executors.
Second, POAs. The powers of attorney for financial stuff and continuing care are essential, giving your spouse the ability to make decisions if you lose your mind reading the comments section. Your registered accounts need to name each other as beneficiaries. And the TFSAs should spell out that you are each ‘successor holders’. Finally, if you have a joint non-registered account (we’ll get to that in a minute) then should one of you pass all of the funds become the property of the other person – no probate, no deductions, no delay. This is an essential part of estate planning.
Now, that’s out of the way, so let’s discuss what you’re doing with your $450,000 in liquid net worth – which is far too little. [email protected] might be engaging and trustworthy, plus she is close by and you can have a visit, but this GIC things is not doing you any favours.
First, a return of 2.7% is just not enough when official inflation is 2%, yet everything seems to go up 10% annually. Worse, most of this money is taxable in your hands – and interest is treated by the CRA just the same as earned income. Not cool. Third, the GICs give you no income. They’re just worth a bit more when they mature, which is money you can only access at the end of the term. Fourth, you may have to pay tax on interest you have yet to receive.
It sounds like your combined income of $53,000 a year come from CPP and OAS and a little bit of pension. And it’s not enough. Clearly. Rent alone is $18,000, so with food, gas, a vehicle, insurance and clothing there’s precious little left to whoop it up with. Thus you are correct to ask for some advice on investing for a better return. (And forget putting money in Sue’s RRSP – no refund benefit and you’ll make the money taxable when withdrawn.)
My answer is consistent and simple – get a liquid portfolio of low-cost ETFs (in a joint non-reg account as well as the TFSAs) that’s balanced (safe assets and growth assets) and very diversified (US, Canada and international exposure as well as some REITs). If market fluctuations worry you, adopt a 50/50 approach – with half in safer assets (like government, corporate and provincial bonds) and the other 50% in equity-based funds, plus the real estate investment trusts. This portfolio has less volatility and has kicked out about 5% annually over the last decade (in which we had lots of volatility).
So on $450,000 you could skim off at least $1,500 a month in consistent revenue and still maintain the principal for your estate or unforeseen health issues (happens). That’s enough to totally pay your rent – a 34% increase in annual income. And because a good hunk of this would be in dividend or capital gains, the tax hit would be minimal, given your incomes.
Now [email protected] is probably not up to this task, so it means finding a fee-based advisor to put it together. But look at the advantages – capital preservation, a big bump in income, better tax efficiency, monthly cash flow, increased endorphins and far more Pinot Noir in your future.
Getting old sucks. You don’t need to.
87 comments ↓
Good advice.
Both my Mom and Dad have stated that they have named me as executors to their estates, since my other siblings are a LOT less financially astute, and I have told them both that I don’t want it. I am a co-executor with my sister, and I hope she has no qualms with my suggestion of immediately turning it all over to an impartial estate lawyer the instant I have to.
The other siblings are total pants with money, and will probably raise a tantrum that I don’t want to deal with, as has happened before in our family over inheritances. I am dreading not only the loss of my parents, but the fallout of the bickering over their assets with the spendthrifts in line.
Well, why you guys were arguing about climate change, whether aliens exist, or whatever else was going on here at the time, I was swapping information with a guy that I thought was really trying to help me.
It’s been 3 years this week since Roy H. Stacey passed, and I miss his online friendship every day.
What our friendship would have developed into, we will never know, but I know he liked and cared for me and I thought he was a good role model.
I did take some of his advice, such as not going, too conservative, too early, and switched over to a 70/30 mix.
He helped me a lot, calmed my nerves, and in a lot of ways we had a lot in common, definitely had similar sense of humour and humility.
He was looking over my shoulder right to the end, regularly messaging and encouraging me, the short message where he was concerned about my health, and it was he that passed a short time later, gets me every time.
Below are a couple of messages, not our most important exchanges, but just some of the stuff he was trying to help me with, also in the second one he showed his appreciation for the host and the regulars.
He wrote these useful messages to me at the end of August 2016.
He died on the 5th of September.
Loved that guy…
M45BC
———————–
#51 BOOM! on 08.30.16 at 9:24 pm
#3 #27 FLOPPETTE
Don’t worry about anybody’s numbers, except your own.
Hey, guy your only 42 or 43… you have TWO DECADES to stuff the TFSA and RRSP’s to the nuts. Don’t worry about things use an 80/20 split for now, change it to 70/30 when you hit 50, 60/40 when you hit 60. Change comes slowly in life, like grey hair / no hair. Don’t look at it, don’t fret, and for gawd sakes never change it!!
I feel like a pauper, so many making 6 figure incomes.
WE never hit a 6 figure income, except for ONE year, the year before I retired. That was with two people working full time! Oh, we’re only HS graduates, no inheritances.
Oh well. We have done OK by our wits, nit and half.
Were never really house horny, buying more house than we could pay off. That might of helped.
——————————
#145 BOOM! on 08.31.16 at 3:42 pm
Flopper….
We will do decently who read and heed the free financial advice dispensed here so magnanimously by the proprietor and guests. I have learned a good deal here, and have learned some ‘thinking skills’ as well from several posters, who shall remain unidentified.
The point for me at least, is to have ‘enough’ to last for whatever time yet remains, and to enjoy a decent quality enroute to terminus. Sounds awful, doesn’t it?
Last I checked another dreary day in the markets.
M64WI
At least they have a bit of “dosh” to work with …..unlike the majority of retirees…..
I’m sure much much worse financial “horror” stories to follow…..as the Boomers age out into the reality of “retirement”.
Sad that financial managing of one’s money isnt a prerequisite credit in all junior and high schools… for at least 3 years…..
10 percent inflation is about right according to my records … check out the chapwood index if you think I’m crazy. So much for the 7 percent return on my diversified etf portfolio. Maybe i should just buy what i need for retirement now … Canned goods, socks, underwear, toothpaste, retirement cottage, southern property, boat …
What about annuities? Are they ever a good option for retirement income?
Not with interest rates in the ditch. – Garth
Splurge a little & try a bottle of the Stag’s Leap 2015 Cab Sauv, on sale right now at the LCBO. Yummy.
https://www.lcbo.com/webapp/wcs/stores/servlet/en/lcbo/stags-leap-winery-cabernet-sauvignon-996405#.XWwisBoTGhA
Noticed a lot of FUD (fear,uncertainty, doubt) lately about liquidity issues with ETFs during turbulent times. Would enjoy hearing your thoughts on a slow day about it. Thanks!
Aha! Garth, comforting to know you will keep this blog going for a while yet. Despite the ill mannered residents in steerage. :-)
“…but there’s a damn good chance you’ll still be reading this blog in 15 years (God help me…), so let’s get on a more sustainable path.”
BTW, I think that has got to be one of the best “sans dog” lead in pictures ever! Right up there with you and Mrs. Turner a few days ago!!
Good advice. Get a lawyer to do your wills. Hold everything jointly. You can write off the fees for the fee-based financial advisor, BTW. That should free up some cash for the Harley.
“And don’t make your kids executors.”
—————
From experience. Agreed. Same with POAs. May work if if only one child but death of a parent can/will often bring out the best and worst in most. Also try to be very explicit about how personal effects (esp jewelry), knick knacks, furniture, art etc should be dispersed. And let heirs know now to sort out who really wants what while you can answer for yourself. Don’t leave it up to sole discretion of executor(s). Also transfer all physical photos into digital format. This make things much easier. We have a file marked ESTATE/ICE. Soon saved in digital for easy access fire executors via password. Important for young parents to understand what kids can and cannot inherit and how the law of use setting up legal guardianship in case of death. Too many we’ve talk to simply have a verbal agreement with family or friends and something or something quickly written down on paper and we’ve been told by the court may not acknowledge this. Just things to think about. We’ve already started simplifying/decluttering to make a future move easier and for reviewing wills this year. Not an easy subject to tackle but well worth it if possible while not under duress.
Autocorrect what a pain. Obv should say ‘how law views setting up legal guardianship…’ Ignore other typos. Ability to edit comment after would be good but this keeps you on your toes.
wittingly
sim swapping
…’the hack of Twitter CEO Jack Dorsey’s account on Friday revealed a flaw in the social network’s systems that could leave anyone vulnerable, from lawmakers to CEOs to the average Twitter user. And it raised a serious question as to how you can keep your account safe from the same thing.
https://www.cnn.com/2019/08/31/tech/twitter-security-jack-dorsey-hack/index.html
“We’re talking about kids aged mainly between 19 and 22 being able to steal millions of dollars in cryptocurrencies. I mean, if someone gets robbed of $100,000 that’s a huge case, but we’re now dealing with someone who buys a 99 cent SIM card off eBay, plugs it into a cheap burner phone, makes a call and steals millions of dollars. That’s pretty remarkable.”
https://krebsonsecurity.com/2018/11/busting-sim-swappers-and-sim-swap-myths/
I am whining again…
I find many “elites” to be arrogant – my way or the highway. I find American minions to be the worst but we have Canadian champions. It is like talking to battering ram – not on my watch. Let’s see how it likes fire and destruction of the operators. An axe is my tool of choice and I am quite comfortable with them. I can even use them against walls. What brought this up?
My youngest daughter recently started a job as HR in a privately owned American company. It seems there is an employee the owners want fired over a sick day issue. She spoke to the corporate lawyer who mentioned “at will employment”- danger, danger Will Robinson.
https://en.wikipedia.org/wiki/At-will_employment
Small wonder wage growth is slow in the US. I don’t know what the issue is but I would be looking at substance abuse to rule out. I know sick days are abused by Canadian public servants but not by all – it is a use them or lose them thing. She must learn and is not something to be obeyed unless earned.
Preferred shares are puzzling me. I don’t understand their fall in value. My guess is ETF’s of ilk invest in investment grade by charter for liquidity so why you buy them when the commons pay nearly the same with growth prospects – think financials. I have sold off a few REITs to pursue a few non-investment grade preferreds. It means I am going against the current but if I can buy under my criteria…
I find it hard to believe Government interest rates are heading to zero or less – where are the adults who advocate responsibility? I see the Federal budget is heading to 20 billion deficit in so called prospered times – so much for it to balance itself!
Excellent Wills initiative for all 55 years of age & up:
https://freewillsmonth.ca/
These two sentences from PH&N Investment caught my attention.
“Our own models suggest that the risk of fixed-income losses is elevated in all regions, particularly outside North America. The threat to sovereign-bond prices stems from the potential for a significant increase in real interest rates to their long-term average, which would be a headwind for bond prices and could lead to low or even negative total returns in fixed income for a very long period.”
Source: Fixed Income commentary found here:
https://www.phn.com/insight/asset-class-commentary-summer-2019
I know it says, “outside North America”, but still something to be aware of; – for a very long period.
#7 Andrew on 09.01.19 at 4:01 pm
Noticed a lot of FUD (fear,uncertainty, doubt) lately about liquidity issues with ETFs during turbulent times. Would enjoy hearing your thoughts on a slow day about it. Thanks!
———
Liquidity issues?
Step 1: Go online and login to brokerage account.
Step 2: Place sell order on ETF with limit or market order.
Step 3: Press confirm button.
Step 4: ETF sold. Oh my…sold for 2 pennies less than
expected. Quelle horreur!
What liquidity issue?
Pity Pension Plans
Yukon Elvis at 5 yesterday quoted a story saying
The true madness is pension funds being forced to invest in assets which will be guaranteed to lose…
*************************************
Pension funds are not normally “forced” to invest in bonds. They have Investment Policies approved by their boards and could avoid bonds if they wanted to. But in their judgement they should stay with bonds and so far that has worked out well.
It is indeed madness. Extremely low yields are extremely bad for pension funds and have caused contribution rates to go to numbers like 20% often shared between employee and employer (often the government). In some cases for earnings above the Canada pension maximum the contributions to government DB plans approach 30%! between employee and government. This insures retirees get no cut. Thank you.
Insurance companies may be forced by regulation to buy bonds. Except for Berkshire Hathaway due to being located in Nebraska and due to being massively “over” capitalized, Berkshire insurance companies are permitted to invest in equities and basically whatever Warren Buffett wants partly in justifiable deference to the great man.
Also any pension fund that has basically declared sort of bankruptcy I should add is indeed forced to invest in bonds. That way they can be CERTAIN of making a very poor return rather than just risking a poor or even negative return in a balanced fund. True story.
If Dave had an RRSP, it’s now a RRIF and Sue can be named as the successor annuitant (allowing the plan to maintain the investments).
In a pool in the desert, lots of old fks. Probably more pee in this pool than in all of lake Ontario.
Do I care? Not one fk.
3 Long Isaland ice tees makes the world more inclusive.
DELETED
Re: Wills and Estates
My Experience……
My parents divorced in 1980.
My Dad passed away in 2015.
My sibling and I searched his home for a WILL…as he stated he had one. I had a hunch where it might be and we found it. I was named a Executor, but the look on my siblings face indicated she was very upset she was not named(but at the ie she was not of legal age)
3 days later..I caught her at my Father’s home(I lived about one mile away..whilst she lived an hours drive away. )aka what was she doing there, as, in essence I as Executor effectively was in control of the home.
Concurrently…our mother was diagnosed with dementia back in 2014, and my sibling had placed her in a certain seniors home without my pre-approval aka and I focussed on my dying Fathers care, but said once he was gone I stated would focus on my Mother.
Then SHTF….
My Mother had made made me and my sibling joint Powers of Attorney(POA) back in 2013…yet as noted earlier she had placed my mother in a certain care home (which my Mother detested)..
*******but NOTE: there are ZERO checks and balances !!!!******
Within a month of my Dads passing….my power of POA was at issue..but my Mothers FINANCIAL ADVISOR at a MAJOR BANK told me their lawyers reviewed the document and said I was E-Q-U-A-L POA….so all’s fine..right?
NOOOOOOOOOOOOOOOOOOOO!!!
I found out the hard way that my sibling had taken my mother to a lawyers office(late Oct.2015) and had her do a (2) step..
(i) Totally revoke the POA
(ii) Tricked my mother into signing a “Representation Agreement ”
NOTE: My mother was not senile…she had a short term memory issues…but a buddy of mine and I have a number of videos explaining to my mother what happened and she is very lucid in our conversations.
The other issue was other than short term memory loss…my mother was reasonably fit…and may have qualified for either assisted or independent living..which would have been approx HALF the cost.
Later..I found out my mothers brother had an “Enduring Power Of Attorney”..which was never legally expunged…
I later deduced that my Mothers Financial advisor referred my sibling to this slimeball lawyer…..they must have some joint referral to exploit seniors.
The Coup De Grace was “COMMITTEESHIP”… where to get 100% ULTIMATE control they applied to the courts to have total control over all my mother’s affairs..aka financial, medical…
My Mother passed in early 2018…and I was named Co- Executor for her will….but my sibling coerced me into relinquishing this as a condition of settling my Fathers estate.
I am on my 2nd lawyer, as another TIP to others is how lawyers send each other poorly worded and ill -defined correspondence to milk the estates.
ADVICE:
My tale of woe is not unique…make sure you are fully aware of the legal landmines out there and plan accordingly.
Also gather as much evidence asap….highly recommend audio- visual records. As noted..take ZERO for granted..there are NO “senior’s police” out there..which makes one wonder how epidemic senior exploitation is.
FYI: my tale of woe is going very public very soon.
If you don’t believe in God. Take a second and pretend you do..
220 mile an hour sustained winds for the Bahamas.
Please pray for them. They need everyone right now.
“..First, a return of 2.7% is just not enough when official inflation is 2%, yet everything seems to go up 10% annually..” – Garth
_ _ _
So, as someone who has been in the belly of the beast, why/how is StatsCan under-measuring inflation?
#2 Flop… on 09.01.19 at 3:25 pm
Well, why you guys were arguing about climate change, whether aliens exist, or whatever else was going on here at the time….
>Thanks for reminding me, Flop. Hey, Smokey, I’ve got another X-File for you. NASA’s “Inca City” on Mars:
Mars Global Surveyor
Mars Orbiter Camera
“Inca City” is Part of a Circular Feature
MGS MOC Release No. MOC2-319, 8 August 2002
“Inca City” is the informal name given by Mariner 9 scientists in 1972 to a set of intersecting, rectilinear ridges that are located among the layered materials of the south polar region of Mars. Their origin has never been understood; most investigators thought they might be sand dunes, either modern dunes or, more likely, dunes that were buried, hardened, then exhumed.
Others considered them to be dikes formed by injection of molten rock (magma) or soft sediment into subsurface cracks that subsequently hardened and then were exposed at the surface by wind erosion….
https://mars.jpl.nasa.gov/mro/mgs/msss/camera/images/8_2002_releases/incacity/index.html
https://www.jpl.nasa.gov/spaceimages/details.php?id=PIA03918
https://mars.nasa.gov/resources/22446/angustus-labyrinthus/
Fluorine, cross your fingers that your siblings don’t contest the will. This happened with my Grandmother years back and the mixture of emotions (grief, outrage, greed, retribution), combined with manipulative lawyers and old sibling rivalries made it drawn out, expensive and ugly. Keep in mind that this was an estate that was worth less than $1.5 million divided among 9 offspring. We are not talking big bucks here. Everyone lost except the lawyers.
#4 Jack on 09.01.19 at 3:43 pm
10 percent inflation is about right according to my records … check out the chapwood index if you think I’m crazy. So much for the 7 percent return on my diversified etf portfolio. Maybe i should just buy what i need for retirement now … Canned goods, socks, underwear, toothpaste, retirement cottage, southern property, boat …
The funny thing is that the sheeple thinks there is no inflation. Your number sounds about right.
Veggies up 20 % on YOY bases.
#20 Smoking Man on 09.01.19 at 6:28 pm
In a pool in the desert, lots of old fks. Probably more pee in this pool than in all of lake Ontario.
Do I care? Not one fk.
3 Long Isaland ice tees makes the world more inclusive.
……………………………
I had to look away when you showed up in that thong. Actually I ran. Did the children ever stop screaming?
@#23 Smokie
” Dorian: 220 mph sustained wind….”.
******
Pffffft.
Speed of Sound Smokey…..
https://health.howstuffworks.com/human-body/systems/digestive/how-fast-does-fart-travel.htm
The stress of living in Vancouver is starting to get to me.
I am not the only one.
I am hearing anecdotal stories of more than a few people that are leaving.
The City has been torn to pieces, and like the GTA, it is being filled with garbage 540 square foot closets in ‘ice cube tray’ high rise buildings – apparently not many are selling.
Presales boys, that thought they were really smart a few years ago are taking a massive haircut.
There is also a coterie of people who are facing insane commutes from their new homes, further and further up the Valley – places like Hope – and face more than 2 hours each way, barring any accidents – on one stupid 1950’s era ‘highway’.
“Getting old sucks. You don’t need to.”
—————————
Well, no… of course you don’t need to get old. Of the available options, though, it’s the one I prefer.
“Boom” sure could make friends.
R.I.P
Weird things are happening. Interest rate can be negative. Time is warped.
On Saturday Ryan Lewenza was channeling Morgan Stanley analyst’s Sunday’s article.
https://www.zerohedge.com/news/2019-09-01/only-question-matters-now-will-us-consumer-hold
#6 Andrewski what on Earth do you do for a living to buy a $50 bottle of wine?
The hubs and I pull in 200k/yr combined, both w/DB pensions (currently, at least… He’ll probably quit in 2 yrs, can’t take the insanity of it much longer) and I’d never dream of spending that amount!
I own a home that I can sell at any time. I could pay off the mortgage on our 2500sq ft home, but my 300,000 mortgage costs just 1700 a month…the same as renting a much smaller townhouse. Meanwhile my 300,000 (that can pay off the mortgage) is invested and brings home 1,200 a month. Oh, and 900 of that 1700 goes into paying off the mortgage. Just be smart with your money and don’t spend it on crap like new cars or expensive vacations to impress your whatever.
Turner Travel Agency hasn’t given out any good suggestions lately.
I did enjoy my suggested trip to Monterey a few years back even though I was struggling to walk at the time.
Apart from checking out all the big cities down south, also like to go to smaller cultural and perhaps even a bit quirkier places.
Going to Corpus Christi for Xmas, not expecting anything too exotic but the people of Texas are a friendly bunch who know how to have a good time.
Spring Break has got me stuck, no point paying mega dollars to stay on a beach somewhere, as my wife won’t touch the water.
Thinking of going somewhere like Oklahoma City or Little Rock, Arkansas.
Got any off the beaten path suggestions?
No idea too crazy, I hang out here daily, don’t I?
Was in a National Park once and an elderly lady heard my accent and we got to talking.
I told her I once went to St.Louis for Spring Break.
All she kept saying as she shuffled off was,”But why?”.
Because I could…
M45BC
If Dave clocks out first, his OAS gets removed from the household income, his workplace pension shrinks and his CPP will shrink as well, depending on what Sue is receiving she may get nothing.
#30 Bill Grable on 09.01.19 at 7:45 pm
The stress of living in Vancouver is starting to get to me.
Took the freeway last week on a weekday from South Delta to downtown Abby to visit an old friend. 2 Hrs. Glad I am retired but still love the LM. Lot’s to do here … nice people around me. Cheap if everything is paid for.
The magic number for most people is 80. Plan for that!
Enjoy your wealth! Live life! Save and invest as you feel comfortable! The only person handling your money should be you! Do a little homework and it’s not that hard! Your estate won’t be difficult if you spend your money wisely! Remember, every dollar you don’t spend, someone else will!
# 36 FLOP:
Thinking of going somewhere like Oklahoma City or Little Rock, Arkansas.
Got any off the beaten path suggestions?
=======================
Our family did a multi -state (2) week tour this past Spring…
Started in New Orleans first 5 days…(French Quarter etc…Swamp Tours).
Rented a minivan…drove to Alabama…..Mississippi …..Tennessee..
Attended Grand Ole Opry…Elvis’ Graceland Home…SunRecord Studios where numerous pioneering artist recorded….Martin Luther Kings home and Lorraine Motel where assassinated…
Nashville’s unreal music scene….a couple of original plantations…LSU campus….Huey Long new capital building and where he was assassinated…Vicksburg =a crucial battleground re Civil War…
Duly Note:
There is a lot of open space in between destinations…which explain why RE is so cheap…the urban centers do NOT have the same degree of amenities as we in Canada are accustomed to…they tend to be far outside urban areas and located adjacent to highways.
Re: #34 Millennial905er.
Bon vivant, Lol!
I’m with you, waaaay more than I’d spend on a bottle of wine. I was given this bottle as a congrats on beating Cancer!
(The grape skins in red wine contain a polyphenol, or a plant-based compound, called resveratrol, which has been shown in laboratory studies to act as an antioxidant that can fight cancer. It’s theorized, then, that resveratrol may cancel out any negative effects of light drinking and help prevent cancer.)
Cheers.
34 Mill905 – I don’t buy $50 wines either, but this may be Andrewski’s “thing” that he enjoys from time to
time. I bet you have some “thing” too that you see great value in, that you treat yourself to, that others
consider a little over the top.
I see Andrewski addressed this……congrats on the cancer beatdown…..live long and prosper…..
Garth,
I have been told a number of time that the Joint non-registered account is not necessary. Further that all contributions need to be attributed back to the contributor for tax purposes. And that the will solves the remaining problem of transfer at death.
Wrong on all points. – Garth
I have found that investing in goods is a great way to beat inflation. I’ve often come across something like clothing or shoes that I liked and have bought them. Two years down the road or whatever the time frame when they wear out I have found that going back the price has gone up 20% or the manufacturer is now cheating on the quality.
Once they have found their crowd with quality, they tend to stick it to them. This is modern manufacturing for you.
If you have space in your home, one of the solutions I have found is to buy one. If you come across a gem that you like then buy a few more. Quality never goes out of style and you are paying yourself if the price is going up 10%-20% per year. This also works very well for dry good like toilet paper, etc.
Yes, you need to be careful about buying things that are improving all the time but the improvement won’t be that much over a half dozen years and you can save yourself a lot of inflation that way
So who should be the executors? Is leaving it all up to the family lawyer OK, or should there also be someone with your family’s personal interests involved?
#30 Bill Grable on 09.01.19 at 7:45 pm
The stress of living in Vancouver is starting to get to me.
I lived in the GTA in the early to mid 1980’s. Garth wrote a column for one of the daily newspaper in those days. I never got used to the ugly commutes. In the beginning I took a ‘GO BUS’ from Mississauga to Yorkdale. Later I drove daily from Oakville to Dixon Road area. There and back again it ate into my daily existence, especially if there was an accident or major snowfall. I was advised “People commute here. Get used to it. Your time will become more valuable to you”. I could understand that rationale, but when I escaped back to Alberta 6 1/2 years later I burst into tears as I crossed the Montana border back into the province where my family has lived since 1885. Finally home. Bloodied, but unbowed, this is the best province in all of Canada. Come join us, Bill Grable. If you need to visit friends or family the plane ride to the lower mainland is only 1 hour. Price of gas in today in Calgary —$96.50 per litre. You can drive if you prefer.
It’s 110 degrees in Laughlin right now. Been trying to make it to the losers lounge at Riverside. Where I belong..Can’t do it. Day drinking takes it’s toll..
Wobling back to my room, dogs need out…
I’m a good daddy..
To the wife. About to make her first million trading forex. Shit you do when the life insurance company after the blood test says No..
Rock on kids.
https://youtu.be/URwX1oWdnUY
#36 Flop… on 09.01.19 at 8:39 pm
Turner Travel Agency hasn’t given out any good suggestions lately.
—————- It’s time Flop ————–
Cuba and now Flop.
Economic devastation could be on the horizon.
They now take Canadian and Not the US Dollar on the street ( not the bank or exchanges ).
Thank me later. Do an all inclusive in Veradero to keep it easy. Take tours with other canadians into Havana or other fun places.
Tip them well. Lovely people for the most part. Get to know your bartender and coffe shop people, treat them very well, they reciprocate with culture, referrals , tip of the day, a private cab ride etc! Or a few days in a family BnB place. Treat them like a Canadian does so well, not like the other toUristS.
It is Time…..
Legit post.
I have a stack of cash going into the markets once they bottom. I am okay with missing 15% potential growth this year on the probability of a down turn in 2020. Then I will drop in.
I did this exact move in 2009/2010 including buying a house in Metro Van on a 1/4 acre lot for 509k (negotiating the price down 65k after a collapsed offer, including subjects and inspection), which peaked out in 2016 at a value of 1.4m and was offloaded in 2015 at 1.2m. Current value is 890k and you might get 950k if lucky. This is bottom of the barrel
I know markets are hard to time precisely, but if you understand the cycle and watch for the trends and actual market levels, it is not hard to know when to buy and when to sell.
If you can’t find opportunity, go elsewhere. Just like 2011 deals in US housing. There are always opportunities.
36 FLOP:
Thinking of going somewhere like Oklahoma City or Little Rock, Arkansas.
Got any off the beaten path suggestions?
=======================
Arkansas is really nice, very family oriented. Unfortunately, I had to leave a few years back (for reasons I can’t mention here) , but if you happen to see my wife and daughter, please say hello to her.
I’ll look at Dave and Sue’s situation from a slightly different viewpoint. Their pensions cover all the basics, and with any CPI increases included, may cover raises in rent over time. Their investments of $400k becomes their discretionary spending, so they can tolerate some
ups and downs.
The down side is the loss or reduction in pensions when one of them passes on, so that has to be considered as well.
And best to avoid $50 bottles of wine…..
Happy Labour day
Having a cigarette in the none Smoking section of the casino..
Victory Lane….
$450,000 to retire on, that sucks. What the hell went wrong? Still it’s better than the 61% of people who admit to having zero savings. The Mills will pay, there’s no other way. I see a clash of generations on the horizon. Mills already hate and envy Boomers. Boy, the crap is going to hit the fan.
And, look what’s hitting Australians as the real restate boom crashes hard.
http://www.abc.net.au/news/2019-09-02/townsville-property-housing-market-boom-bust-mining-north-qld/11464454
Hey Garth, was nice to see you yesterday on the street in Halifax, what a surprise.
The day before, me, my wife and the kid went to Lunenburg, nice little town, under Unesko protection.We saw the “BMO” building, I didn’t try to go in, and later regretted.
But what a surprise yesterday, first with my kid we saw the dog ( walking slowly and looking good :) ) and then I recognized you, I couldn’t stop myself to say hello.
Coming from Toronto for a short time here and to meet you on the streets of Halifax that was a blast. Anyway… I started to read your blog almost 3 years ago and I didn’t miss one of your posts. Learned a lot of things, very helpful. Thank you for your work and helping so many people. Thanks again and keep doing what you do.
Vudi
Where did all the money go from the sale of the Vancouver home? 2016 was the peak in Vancouver and the home would have sold around the 2 million dollar mark. Where is the missing one and a half million dollars? A net worth of only $450,000?
Garth,
I have been told a number of time that the Joint non-registered account is not necessary. Further that all contributions need to be attributed back to the contributor for tax purposes. And that the will solves the remaining problem of transfer at death.
Wrong on all points. – Garth
———–
Wrong on all points —how? If one spouse is the majority investor or its a single income family its all attributed back to the contributor.
From RBC website
https://ca.rbcwealthmanagement.com/delegate/services/file/162517/content
“Proportionate Tax Reporting
Each owner of a joint account is required to report their individual portion of the total income (e.g.,
interest, dividends, capital gains, return of capital) according to the same ratio as their proportionate
contribution of funds to the joint account.
Joint accounts cannot be used to achieve an income splitting tax advantage. In other words, you and the
other joint owner(s) cannot arbitrarily split the income 50% each, solely on the basis that it is a “joint”
account, or to choose some other ratio to report on your respective tax returns each year to optimize your
tax savings. If you are the primary joint account holder receiving the tax slips, but are not responsible for
reporting the income, consider asking your financial institution to switch your name to the secondary joint
account holder. This will avoid having to make copies of your tax slips for the other joint account holder(s)
who are responsible for reporting the income and providing CRA with explanations for not reporting the
entire income amount, thereby simplify your tax reporting at the end of the year. ”
So in families where the investments are skewed towards one partner what’s the point?
In the real world married couples together own financial assets in a joint non-reg account which accrued from their years together building wealth in many ways. As for the money flowing from one person to another after death via a will, you have obviously never been an executor nor seen the process function. Every married couple with joint investment assets should strive to have a NR account which becomes the property of the surviving spouse instantly upon the passing of their partner. No probate. No bank withholding access to the funds. No waiting. – Garth
Gasoline inflation and Stan
The Jag above at 46 said “Price of gas in today in Calgary —$96.50 per litre.” We all know what he meant but off by a factor of a hundred. Probably Stan pays that though who faced I think about 10% annual inflation these last couple decades.
Gasoline in Calgary today is about the same as 20 years ago.
Natural gas in Alberta is practically free for the commodity itself. Over-investment by the industry. Now Alberta is thinking about mandated production cuts. Welcome to Albertastan. Trudeau and other pipe blockers made us do it.
#23 Smoking Man
Please pray for them. They need everyone right now.
——————————————————————–
Pray to whom?
If you believe that there is a god, then either god sent the hurricane or he really doesn’t care if it wipes out everything in its path. I mean, god must know about it, right? I heard he is omniscient and omnipotent. So why doesn’t he just stop the destruction on his own. Unless he did it in the first place.
New flash: praying won’t work because nobody’s listening.
People who are seriously concerned (i.e., not phoney posers) need to get their butts down their and hook up with a volunteer relief team and help people directly.
DELETED
Garth, one point you made, that may be lost in all that financial advice, was the recommendation of a fine Pino Noir. Bravo!
Question Mr. Turner, in respect to investment accounts (non-RRSP, meaning cash accounts)
My wife and I both have substantial holdings invested in separeately held cash accounts. We’re ummm….let’s just say “getting up there”
Is there a tax friendly method that allows us to consolidate our separate non sheltered cash accounts into a jointly held cash account?
It certainly seems to makes sense in respect inheritance (she gets mine, I get hers..coz it’s all ours) without probate or tax, but what about tax implications when the separately held accounts are merged into a joint account before one of us kicks off?
Oh MBFW (Manly Bearded Financial Wizard = mandatory suck up) any guidance would be most appreciated.
Just make each other joint holders of your existing accounts. No capital gains tax triggered. No attribution on future sales. But if one of you passes the other person becomes owner of the assets, and it is not a taxable event. – Garth
Helping Hurricane Victims
dharma bum said:
People who are seriously concerned (i.e., not phoney posers) need to get their butts down their and hook up with a volunteer relief team and help people directly.
***********************************
True, well wishes and prayers don’t provide any true relief.
Red Cross offers ability to donate to things like this. For charity I gave some through Red Cross to victims of African Cyclone Idai earlier this year.
Warren Buffett says the answer to where should I donate? is “where it will do the most good”. To me that is not in wealthy places but in poor areas. Basically no one will die of poverty and exposure after a storm in Canada so I would rather donate to third world. But many people donate far more in dollars and proportionately than I do.
But I also donate blood, though I should do more than twice yearly. But it is something.
Going on relief team is very laudable indeed. I likely don’t have the needed skills. I gotta think though that would be something to look back on with great pride if I did it.
ooops. sorry for the gas price type-o.
#27 Stan Brooks on 09.01.19 at 7:07 pm
The funny thing is that the sheeple thinks there is no inflation. Your number sounds about right.
Veggies up 20 % on YOY bases.
Just like your tampons
#64 Shawn Allen on 09.02.19 at 9:27 am
Going on relief team is very laudable indeed. I likely don’t have the needed skills. I gotta think though that would be something to look back on with great pride if I did it
If doing it resulted in pride then you did it horribly wrong
It should be something to look back on with great humility
As for wine, I always recommend Gewuerztraminer.
Always get a kick out of hearing non German speakers trying to pronounce it after a few glasses.
To each its own, I know.
Interesting comments from Garth about spouses holding a joint non registered bank account.
I had a friend a few years ago who smoked 2 packs a day, never exercised, was obese, diabetic, on dialysis, and when he had a jammer at 55…… No Will.
Left a stay at home wife and two teenage kids.
I saw his wife at the funeral a week later and she said, ” The only thing that’s going to save me from missing the mortgage payments and paying all the bills was our spousal bank account. ”
(She had enough money for about 8 months of living expenses in there until the other legal BS released his invested funds, pension and a 600k Life Insurance policy.)
The spousal bank account.
No waiting, no seizure of assets, no legal BS, nothing.
It was hers to access….immediately.
A question to anyone with a spouse and bills to pay (after you… or they….are dead).
If you dont trust your spouse with your money…..why are you still married?
#47 jaguar
“Price of gas $96.50 per liter” WHAT???
Commute to work: 8 minute walk to train. 15 minute train to airport. Off-peak fare: £3.20.
Life is too short to sit in a car every day for 2 hours each way. After a long flight I’m home in bed before my commuting colleagues have reached the car park.
Public transit in North America is so far behind the rest of the world it will never catch up.
#31 thanks for the belly laugh!
57 Tony – Vancouver Island is not Vancouver. Prices much less on the island outside of Victoria. They have increased considerably since 2016 though. Average selling prices was about $400k then. Over $500k in 2018.
So these folks could have had a paid-for home, $50k in savings, and their pensions. Not great, but not the end of the world either.
“The powers of attorney for financial stuff and continuing care are essential, giving your spouse the ability to make decisions if you lose your mind reading the comments section.”
———————————————
When my Mom was hospitalized at 93 years of age (a year before she passed away), the RNs at the hospital asked me if I had a Medical Representation Agreement.
I printed one off the internet, took it back to the hospital where Mom and I filled in the two or three short paragraphs on quality of life, DNR (do not resusitate), and the nurses offered to sign the document as witnesses (after asking me to step outside the room for a moment so they could speak privately to Mom).
The kindhearted nurses saved me (an only child) a lot of difficulty over the next year, and stated “we do this witnessing etc a lot, and it will help you”.
They were absolutely correct, and I am still grateful.
The bottom line is without cashflow, income from dividends and interest is all really gambling not investing.
your worst fear
Both parents mid nineties both parents in assisted living
Just about to run out of their savings. They Can no longer pay for assisted living.
I fully get being fully invested, but is this time different?
World debt out of control. I see no happy ending in the debt problem, maybe negative interest rates will solve the debt problem, would love a mortgage to pay me interest like in Denmark.
The past is no guarantee of the future, I agree GICs are not the answer but ….
75 Greg – dividends represent an owners share of a business’ profit. how is this not a form of cashflow?
How is owning a share of this business any more gambling than working for it and running the risk of losing your job?
#76 Outlive your investments on 09.02.19 at 12:37 pm
your worst fear
Both parents mid nineties both parents in assisted living
Just about to run out of their savings. They Can no longer pay for assisted living.
I fully get being fully invested, but is this time different?
World debt out of control. I see no happy ending in the debt problem, maybe negative interest rates will solve the debt problem, would love a mortgage to pay me interest like in Denmark.
The past is no guarantee of the future, I agree GICs are not the answer but ….
———
And that is where you, the loving child, steps in and does what is necessary to ensure you cover the difference so they can maintain an existence with dignity.
This is also where you, as a loving parent (if you have kids), teach your children about the hard realities of life and they get first hand knowledge on the consequences of poor financial planning. And then you hope that this crucial learning sticks in their brain and they don’t make the same errors as their grandparents.
the Jaguar on 09.02.19 at 9:53 am
——————————————————————-
Yes, a typo; however, in the wrong direction. Here is an update :
https://www.gasbuddy.com/GasPrices/Alberta/Calgary
#71 BillyBob on 09.02.19 at 10:54 am
Speak for yourself.
My commute in the GTA is about 20 minutes with public transport. If I drive, it would be half.
A lot of North American geography was devised with the automobile in mind. It started to change in the 70’s, but has since began to accelerate. End result? Urbanization. A big reason why condos will not drop in value in the GTA (or other big cities).
MF
Thank you for the answer Mr Turner, but one line…I just don’t know what it means:
Just make each other joint holders of your existing accounts. No capital gains tax triggered. No attribution on future sales…… – Garth
What does no attribution on future sales reference?
Perhaps something to do with Capital gains in the future when the holding is sold since it is jointly held?
Thanks again.
#67 Leo Trollstoy on 09.02.19 at 10:08 am
#64 Shawn Allen on 09.02.19 at 9:27 am
Going on relief team is very laudable indeed. I likely don’t have the needed skills. I gotta think though that would be something to look back on with great pride if I did it
If doing it resulted in pride then you did it horribly wrong
It should be something to look back on with great humility
—————————————
Troll, the way you feel somebody should feel about providing help is small-minded and petty. If they are helping others, they can feel any damn way they please whether it meets your lofty requirements or not.
People help others for all different reason of their own and the important thing is that they help, not their reason for doing so. The person getting food doesn’t care if the provider feels proud.
Get over your judgementaly-ness.
What i get from Greg Franklin’s post is if you are not getting paid to wait or stay invested, you are betting only a share price going up and that could be a disaster like the tech wreck or dot.com boom turned bust of late 90’s early 2000’s.
#41 Andrewski well deserved then! Cheers! Or better yet, à votre santé!!!
#82 Sail Away on 09.02.19 at 7:00 pm
“Get over your judgementaly-ness.”
I think the word you’re looking for is condescension . :)
#5 – Annuities… why not Garth.
The couple makes no mention of wanting to leave an estate or inheritance..do they even have kids.. do they like them.. do the kids need the $$???
A $300K joint non reducing annuity would spit out $1325 a month.. of which only $224 is taxable.. Nearly covers the rent, and allows the TFSA to remain fully invested in equities. When couples with OAS, CPP and small private pension, 50K per year
is $4160 a month.. probably can continue to contribute and grow the TFSA’s, and maybe even start investing in a non registered portfolio
2 cents
Ever feel like a drunken pin ball. Knowing that you will bounce off a few bumbers but have no clue where you end up..
That’s living muts, story of my life….