Losing it

Trust. What’s bigger than that?

Do you trust your bank? Your employer? Your spouse? Mortgage broker? Insurance dude?  Financial advisor? How about your accountant? Or some pathetic blog?

It’s at the heart of the following note I’ve just received from Angie. But first, an epic MSU.

“You are the guru of financial literacy, net worth messiah and Darth Vader of ignorance,” she writes. “Thank you for keeping us, humble disciples of your daily financial mana, informed and entertained. Me and my husband are daily readers of your blog. We love the language, and of course the canines and the advice. You have made us laugh many times and your jargon has become a household item in referring to people and topic you write about. “

Now that I feel better, we can get to the question. And this matter of trust. The topic is a big one – borrowing to invest.

We have recently been suggested by our accountant to take out a $200k loan from B2B bank. The loan is called an investment loan, registered against the portfolio of securities it is meant to buy. Our accountant is being a bit tongue tied in explaining exactly what these investments are, how are they managed and, most importantly, what are the fees. What we do know is that the loan is prime + 0.5%, and the fees are 1.5% – 3%. The accountant says it’s a combination of ETF’s and Mutual Funds but fails to specify what exactly. He just mentioned he wants us to fill out Know Your Client document, then choose level of risk we are comfortable with. He also is not too keen on discussing this over email, prefers to talk in person in his office.

I don’t like the lack of transparency regarding this situation but my husband is attracted to the idea because the loan doesn’t affect our borrowing abilities (the accountant says it is not registered anywhere). Should we trust him?

So let’s talk about leverage. That’s the term for borrowing to buy something, whether a house or a bunch of financial assets. Sometimes it’s wise. Or not. But always leverage increases risk. If the assets you buy with a loan fall in value, you still owe the money. So leverage can magnify losses just as it can amplify gains (like buying a house with 5% down that pops in value).

Yes, there are good reasons why people borrow money to buy securities. Interest rates are low and money’s cheap. Even better, borrowing costs on an investment loan are 100% deductible from earned income. And lately investors in equities and balanced portfolios have enjoyed gains that are far larger than the interest they must pay. Win, win, win.

But it’s not all ponies. If financial markets fall and funds lose value the investment loan can be called. Sounds like Angie was offered an unsecured demand loan. In that case she’d have to sell the assets purchased, return the money and still owe B2B a pile of cash. Meanwhile, the math might not make sense at all. Prime plus a half equals a loan cost of 4.25%. If the funds being bought come with an average MER of 2%, then even with writing off some of the interest, she’d need to clear 5% to make any money. These days that’s not a stretch, but it might be in the next few years. In any case, is this enough of a potential reward to take the obvious risk?

There are some simple and well-established rules, Angie, for anyone considering borrowing cash to create a portfolio. Like this: you should make a lot of dough and be in a high tax bracket in order to take advantage of interest-deductibility. The advantage of borrowing if your income is just $70,000, for example, is far less than if you make two hundred grand. Second, you need to be financially stable. Good job. Secure income. Able to withstand a loss on the borrowed assets or to have the loan called.

Third is your age – never leverage up if you’re five or even ten years from retirement. There just isn’t enough time to recover if things go squirrelly. Fourth is the portfolio – quality assets only, highly liquid, suited to your risk profile and conservative rather than speculative. Fifth, don’t even contemplate borrowing to invest if you can’t ignore downturns, volatility or the next Trump tweet. Selling into a storm is always bad, but if you bail on a leveraged portfolio, making paper losses real, it really sucks. Finally, only do this if you already have a solid portfolio with your TFSAs brimming and RRSPs topped up.

Now, the accountant. Where did you pick this guy up? In the washroom at a desperate Tony Robbins wealth-building seminar?

Accountants are seldom licensed investment advisors, nor should they be pimps for an outfit like B2B, nor collecting trailer fees from mutual fund slingers. If the above conditions don’t apply to you, this guy shouldn’t even be suggesting you borrow money to buy mutuals. Moreover, determining what assets are appropriate comes after you’ve described your risk tolerance and goals, not before. Anybody flogging funds should present a plan and make sure you understand there’s no interest-deductibility for stuff that goes into an RRSP or a TFSA. Plus, the securities acquired should fit in with existing assets, your pension plans, real estate, family obligations and time horizon.

Leverage is a big deal. Trust is bigger. This fails the smell test.

Run, Angie.

102 comments ↓

#1 Stay at Home Astronaut on 09.10.19 at 4:28 pm

Does anyone know if a loan has to be a designated “investment loan” to be able to deduct the interest?

No. Just ensure documentation of source and funds deployment. – Garth

#2 Robot on 09.10.19 at 4:30 pm

Garth how do you feel about RRSP loans?

Good, if you use the refund to repay the loan. – Garth

#3 TurnerNation on 09.10.19 at 4:40 pm

SNC up 12% today…sell off overdone and/or pet of the current regime.
Et tu, BBD?

#4 The Accountant on 09.10.19 at 4:43 pm

There was this accountant in Toronto that met a couple of times. One had to walk up stairs to his tiny office off a seedy looking street. He was pumping out family funds into mortgages at the time. His degree was a BSc., with no accounting degree on the wall. I believe the so-called accountant in this narrative was on the take, so run fast away from the man who will not use email that documents.

#5 Ed on 09.10.19 at 4:50 pm

Holy shit. Is this ‘accountant’ deliberately trying to set off every possible red flag? We’ll be seeing this guy in the news in a few years for fleecing clients out of their savings.

#6 Vittorio on 09.10.19 at 4:52 pm

Run. It’s a bad deal. I had to go to the Ontario Securities Commission to testify against the agent.

#7 CJohnC on 09.10.19 at 4:52 pm

Angie, as Garth says. Run! Your accountant sounds like a grifter and you can’t run fast enough. Find yourself a trustworthy accountant. If you take a loan and invest it with this guy you will never see it again.

#8 Kootenay Hippie on 09.10.19 at 5:00 pm

The fact that he does not want to use email is a huge red flag. As Garth says, run. Fast.

#9 conan on 09.10.19 at 5:03 pm

Last time I met an accountant that was flogging these arrangements it turned out to be dodgy mortgage backed securities. The real value of the properties were much lower than B2B thought they were, and everyone lost money.

Turned into a lawyer fest.

#10 i think I now need an accountant ... on 09.10.19 at 5:04 pm

just to buy my car insurance from ICBC. Just renewed my insurance and as I am a long term safe driver (having never made a claim) notice that my “insurance” has basically stayed the same from last year but my “license fee” has gone up about $150.00. Do they expect us not to notice? This must be their new “cheaper for good driver” insurance rates in effect. Here we go again …

#11 The Wet One on 09.10.19 at 5:08 pm

Yeah, that accountant is sketchy as hell.

Doesn’t want anything in writing (i.e. e-mail). That right there is a tip off.

After all, he doesn’t seem to want any kind of permanent record that can be traced back to him while being cagey as heck.

Not a good sign.

#12 tccontrarian on 09.10.19 at 5:09 pm

Accountants…

My own experience with several of those is that they know very little about investing. And that’s speaking of ‘real’ accountants. This one here may be of the Realtor/shyster class (ie. of dubious ethics).

In essence, some are known to have said, accountants are ‘tools’ of the CRA. And that’s nothing to be proud of!

tcc

#13 Prairie dude on 09.10.19 at 5:14 pm

Garth,

Question for you about re-balancing couch potato investment accounts. I follow the couch potato investing strategy that consists of 4 ETF’s and an 80/20 equity/bond ratio. In the past I have stuck to the 80/20 ratio into each of our 3 accounts (the wife and my TFSA accounts and my RRSP) and pay a $9 commission with each trade through RBC. Am I better off buying the Vanguard all in one ETF VGRO and only pay $27 in commission or do the 16 trades each time I re-balance for $108 in case one sector is under/outperforming? Another question; how aggressively I should pay down the HELOC vs invest. We currently have $65k on a HELOC @ 4.3% and are looking at investing $11k into our TFSA’s and $25k into my RRSP (annual income of $175k so get a good tax deduction) in 2020. Would you pay down debt or invest? We are 34, have 3 kids and our current status is, the wife has a provincial gov pension, I have ~100k in RRSP’s, $40k in TFSA, $63k in RESP’s, $100k in equity. Would you invest the $36k (not including the gov pension) or pay off debt?

#14 JSS on 09.10.19 at 5:34 pm

Fortis Inc. Provides New Five-Year Outlook and Announces 6.1% Quarterly Dividend Increase

– Fourth quarter 2019 common share dividend increase of 6.1%, marking 46 consecutive years of increases
– Average annual dividend growth target of 6% extended through 2024

What a beautiful stock. Possibly one of the best on the tsx

Rub tummy

#15 Clayton604 on 09.10.19 at 5:38 pm

You should definitely look up your provincial accounting body, google “your province & CPA” to see if the person is even registered as an actual professional accountant.

Seems sketchy as hell. $0.02 from a CPA, TEP, CFP

#12 Prairie dude..

You should re-balance so that equities are in TFSA and RESP, all fixed income is in RRSP (since it maintains the same tax attributes inside as out), and you should switch to Questrade where you can buy ETF’s for Zilch.

#16 expat on 09.10.19 at 5:42 pm

End of cycle financial scheme is all that thing is.
Run

No more suckers left to pump to so they re-package this crap.

It’s probably mortgage backed securities or a derivative of some garbage they couldn’t sell to pension funds.

It also could BBB- credit or worse corproate debt.

Its a scam move on

#17 Catalyst on 09.10.19 at 5:44 pm

If you have investments in a tfsa/rrsp/nonreg, can you claim your mortgage interest since technically you could payoff the mortgage and reborrow.

#18 FreeBird on 09.10.19 at 5:47 pm

Agreed. Angie and husb need to find a new accountant. We’ve had same for 10+ years after ditching two previous ones. I narrowed down a list to three (referrals/yellow pages search) and set up short initial meet and greet with each. I asked them all similar questions. I may over think things at times but Ive learned to trust my instincts and do my research. A good CA is worth every penny but invest the time to find a good one even to meet with 1-2x per year. Accounting can be a black art. Good ones will know the line and avoid setting off CRA red flags. One like Angie’s will have CRA at your door. Trust. Most of us here seem to know that. Good luck.

#19 expat on 09.10.19 at 5:47 pm

BTW how many got suckered into the 1800 gold call?

Did you sell the news?
Hope so

#20 Mean Gene on 09.10.19 at 5:49 pm

The Accountant sounds a bit dodgy.

#21 leebow on 09.10.19 at 5:55 pm

One thing to keep in mind is the difference between demand loans and term loans. For demand loans, the lender can request repayment at any time. You gotta plan that they’ll call at the worst time.

#22 Kurt on 09.10.19 at 5:58 pm

Angie – really run.

#23 crowdedelevatorfartz on 09.10.19 at 6:00 pm

I got bamboozled by my last “financial advisor” to borrow and “invest” in B2B.
Absolute crap. and its all about the fees.
The investments were garbage.
I paid out the loan over 3 years and moved my money to another advisor.
Eventually broke even on that one.
Run dont walk from that “deal”

#24 Shawn Allen on 09.10.19 at 6:02 pm

Trust?

Don’t trust this obviously sketchy accountant.

On the other hand a huge level of Trust in general is absolutely essential for our civilization and economic and monetary system.

We walk out the door and trust that our possessions (or worse) won’t be forcibly grabbed. We trust other drivers on the road. We trust the grocery stores to provide our food. We trust that the food we eat won’t poison us or make us sick. We trust that electronic and paper “money” will retain its value over at least short periods. We trust our banks. And on an on. The implicit level of trust needed to function in society is huge.

Lately we see a break down of trust in government and the media. It’s a bit scary.

Of course trust should never be 100% or given in all cases. But our society would collapse without a high level of trust.

#25 Lost...but not leased on 09.10.19 at 6:06 pm

So Far…no hi capacity anti gravity pharzt or MF…

Maybe an opening act at ______???

#26 Montague on 09.10.19 at 6:09 pm

Fortis Inc. Provides New Five-Year Outlook and Announces 6.1% Quarterly Dividend Increase

– Fourth quarter 2019 common share dividend increase of 6.1%, marking 46 consecutive years of increases
– Average annual dividend growth target of 6% extended through 2024

What a beautiful stock. Possibly one of the best on the tsx

Rub tummy

————————————-

I’ve owned Fortis for over 20 years since it was $6. The share price has averaged over 11% per year and been spitting out 3.5% dividends.
Apart from potential interest rate risks, is there any potential downside to this stock?

#27 Tannhäuser Gatekeeper on 09.10.19 at 6:09 pm

While there’s nothing wrong with borrowing to invest, the greaseballs pushing these package deals are ALWAYS charging a bit too much interest and too high fees (e.g. B2B’s prime is actually 3.95%, making their borrowing cost 4.45%, and 1.5% – 3% fees on the funds? Please!)

Crap like this is sold, not bought.

Set up a spreadsheet comparing returns over 20 years with a B2B loan and B2B funds versus Interactive Brokers margin rates and, say, Vanguard funds. If you can’t do that, maybe borrowing to invest isn’t for you.

#28 north shore on 09.10.19 at 6:11 pm

#9 i think I now need an accountant …

When things were good no one said anything…. “Yehhh!!! Let’s keep ICBC. They are amazing. Let’s not privatize this at all because I hear what other provinces are paying”.

Don’t trust governments. They will promise you everything and might even throw a bone at you, but you will pay much more later on for it.

Take note, there is an election at the door

#29 Linda on 09.10.19 at 6:30 pm

Darn straight she should run! Ditch that accountant asap, Angie. If you want to borrow to invest, no reason why you couldn’t buy some low fee ETF’s & set up a portfolio along the lines described in this very blog.

#30 T on 09.10.19 at 6:34 pm

This is similar to trusting a realtor when they say it’s a great buying opportunity or, alternatively, they say it’s a great time to sell.

#31 JSS on 09.10.19 at 6:35 pm

#25 Montague on 09.10.19 at 6:09 pm

Rising interest rates would put a bit of a damper on Fortis stock, but these guys are smooth operators. They don’t have a 46 year record of dividend increases without knowing what they’re doing.

I’d just keep it and enjoy the fruit.

#32 MathMan on 09.10.19 at 6:39 pm

So i borrow 100k against my existing securities at 5% (the TD Margin Loan Rate). I buy 100k of CPD (currently paying 5.5% yield. At the end of the year I have made 5.5k, and incurred 5k of loan interest. However, I can write off the 5k of interest, and so I actually make 5.5k on my hundred k loan, while i also make money on the existing securities? If thats how it works, why arent we all doing it????

Interest is deductible from taxable income so to eliminate even half if it you need to earn more than $200,000. The dividend income is also taxable. – Garth

#33 Nonplused on 09.10.19 at 6:52 pm

Since when do accountants give investment advice? My accountants do my corporate taxes, that’s it. I have a separate guy to do investment advice who only does wealth management.

#34 jess on 09.10.19 at 7:02 pm

23% of millennials justify lying on a mortgage application, Equifax finds

Almost one-quarter of millennials think it’s acceptable to inflate income on mortgage application
Melissa Bennardo · CBC News · Posted: Sep 10, 2019 11:43 AM ET | Last Updated: 6 hours ago

#35 Guy in Calgary on 09.10.19 at 7:03 pm

Since when do accountants do KYC’s? This stinks.

#36 Lost...but not leased on 09.10.19 at 7:06 pm

#9 i think I now need an accountant … on 09.10.19 at 5:04 pm
just to buy my car insurance from ICBC. Just renewed my insurance and as I am a long term safe driver (having never made a claim) notice that my “insurance” has basically stayed the same from last year but my “license fee” has gone up about $150.00. Do they expect us not to notice? This must be their new “cheaper for good driver” insurance rates in effect. Here we go again …

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

Likewise..decades of ZERO claims.

ICBC exists not on merit, but because private insurers are gun shy via if it happened once..it can happen again ie won’t dare take a chance if ICBC was turfed…next gov’t may resurrect them.

ICBC employees get top wages..and the rot in the system has mutually beneficial symbiotic relationships between ICBC and body shops…nobody has the guts to stop this gravy train.

ICBC is also a revenue generator for gov’ts… increased premiums end up in general revenue.

Get RID of it…

#37 Guy in Calgary on 09.10.19 at 7:08 pm

#13 Prairie dude on 09.10.19 at 5:14 pm

Sounds like you should probably go see a professional to get a second opinion. Yea you pay, but it is well worth it if they help you avoid making long term mistakes that cost you money.

#38 Long-Time Lurker on 09.10.19 at 7:27 pm

#13 Prairie dude on 09.10.19 at 5:14 pm
Garth,

Question for you about re-balancing couch potato investment accounts. I follow the couch potato investing strategy that consists of 4 ETF’s and an 80/20 equity/bond ratio. In the past I have stuck to the 80/20 ratio into each of our 3 accounts (the wife and my TFSA accounts and my RRSP) and pay a $9 commission with each trade through RBC. Am I better off buying the Vanguard all in one ETF VGRO and only pay $27 in commission or do the 16 trades each time I re-balance for $108 in case one sector is under/outperforming? Another question; how aggressively I should pay down the HELOC vs invest. We currently have $65k on a HELOC @ 4.3% and are looking at investing $11k into our TFSA’s and $25k into my RRSP (annual income of $175k so get a good tax deduction) in 2020. Would you pay down debt or invest? We are 34, have 3 kids and our current status is, the wife has a provincial gov pension, I have ~100k in RRSP’s, $40k in TFSA, $63k in RESP’s, $100k in equity. Would you invest the $36k (not including the gov pension) or pay off debt?

>I’d ditch your 80 equity / 20 bond portfolio with Garth’s recommended 60 equity / 40 bond one. Couch Potato should get off of his @ss and look at how the markets look now. You can do it through two suitable Vanguard funds and save your time and money.

Pay off your HELOC: A guaranteed 4.3% return and more peace of mind for your family.

For your three kids.

#39 oh bouy on 09.10.19 at 7:32 pm

@#34 jess on 09.10.19 at 7:02 pm
23% of millennials justify lying on a mortgage application, Equifax finds

Almost one-quarter of millennials think it’s acceptable to inflate income on mortgage application
Melissa Bennardo · CBC News · Posted: Sep 10, 2019 11:43 AM ET | Last Updated: 6 hours ago
___________________________________

when i still had a mortgage you had to prove your income

#40 Treasure Island CEO - 30,800,101.88 Offshore on 09.10.19 at 7:42 pm

Cdn consumer insolvencies (+17% y/y in July, +23% on a $ liability basis) but check out business insolvencies – low base, but +30% y/y

#41 Jorden topilko on 09.10.19 at 7:54 pm

My question for many is why is wfg claiming to have such great returns but you rarely meet anybody who uses their services . What does a person need to know about what they do.
Thanks for your input.

#42 Cici on 09.10.19 at 7:56 pm

Absolutely agree with everyone telling you to run.

Especially #16 expat. Everything he said was right on the button.

#43 PastThePeak on 09.10.19 at 8:07 pm

Leaving aside the sketchy accountant (who doesn’t sound like he is even trying that hard to hide the shadiness)…

…anyone who would invest $200K lump sum into a market peak late in the cycle needs their head examined…

#44 yvr_lurker on 09.10.19 at 8:29 pm

Is this accountant a friend of Earl Jones? From the information provided and the lack of transperancy provided, there is no way I would invest a nickel with this guy. The fees seem high (and not specified) , the loan interest is always there, and one would need to clear a good return even (with little market downfall) to make all the risk worthwhile. I would never borrow $$$ to invest like this. If I were them I would try to save some $$$ and then follow Garth’s balanced approach and do it on your own. Even if you can only get 3–4% this way on your own (in contrast to the optimization of the portfolio that a financial guru could provide) that would be good enough for me. At least I would sleep at night.

#45 Reality is stark on 09.10.19 at 8:31 pm

The only thing you can take to the bank is that there will be no deal with China.
Americans believe in freedom, that is why they are great. They don’t need a Trump hat.
They will support people willing to die for freedom. As those in Hong Kong are shot some people on the mainland will rise up in support, some of them will be shot as well.
Trump may be a jerk but he won’t make a deal with the devil.
Don’t expect your investments to set you free. You can count on much higher property taxes to improve your level of happiness although you will not see service improvements.

#46 Sunshine on 09.10.19 at 8:37 pm

HELOC can be called in as well. Then we lose our home.
Isn’t that even more risky?
200k family income?

HELOCs are secured. You will not be called unless houses crash. – Garth

#47 Retired on 09.10.19 at 8:37 pm

Garth
Today’s post brings to mind: Why not do a post about AFTER retirement. All the post are about investing prior to retirement. Retirement as you often say, can last many, many years. Does the ‘balanced’ ETF portfolio 60/40%  change? What about withdrawal amounts/ percentages per year? I’ve built some nice figures, thanks to following your advice to retirement. Now, after I’m retired, what is your counsel?

#48 Rakiki on 09.10.19 at 8:42 pm

Easy call. Run! It’s a joke investment.

We leverage our portfolio, but have done all the right things before – topped up RRSPs, TFSAs and RESPs, 2 DB pensions, no other debt, etc. High tolerance. At a 2.79% interest rate for the loan and 43% marginal rate, the net cost is around 1.6%. No risk of a call, since it’s an amortized loan from our LOC. The securities yield a conservative 4.5%, which after 25% tax is around 3.25% for an interest margin of 1.65%. Whoopee, but still around 3 grand net per year. We are also factoring in 5% annual dividend growth from that portfolio, and eventual cap gains over the very long run (25 year amortization).

#49 TurnerNation on 09.10.19 at 8:54 pm

Oh our elite rulers must be roaring with laughter again in their 6-star digs. Planning our next war.

Karbon quotas coming to Kanada. Rationing. There’s a war on you know.
We and the family are its targets. You mean you can afford your $2000/month child care and $1500/mo credit interest payments and $500/mo HST and $250/mo carbon taxes?

(I beleive in my lifetime good foodstuffs will be trashed as armed men look on and people are starving. Maybe the correct karbon permit was not applied for, or the WHO claims dread disease and we comply. Trees have more rights than yourself.)

https://outline.com/3pte3k

“[Elizabeth] May: The target would have to match and there are many ways of saving ourselves. There are a million different strategies and policies one could employ. You could decide, to heck with a carbon tax, we’re just going to ration carbon. Clean, simple, draconian. It would work but I don’t think people would like it. But the main thing is, our current climate target in this country is half of what we need to do. And we haven’t achieved that yet.”

#50 leebow on 09.10.19 at 9:04 pm

#32 MathMan

You are projecting that you will receive 5.5K in dividend. It’s not certain. Also, you don’t know if you will have a gain or loss on the market value. Because you got the dividends, a substantial part of your tax credit deduction will be consumed by the dividends. This is not a riskless setup.

#51 Dr V (formerly Vampire studies Phd) on 09.10.19 at 9:11 pm

1) Amazing picture. Photoshopped??

2) run (from the “accountant”)

#52 China on 09.10.19 at 9:57 pm

Never make a judgement with the Chinese in regards to trade. They know everything that is taking place in the Canadian political world. In fact, they are giving us trading orders, but its being done in the dark now for a mutual benefit on both sides.

#53 S.Bby on 09.10.19 at 10:46 pm

ICBC went off the rails when they dumped their claims adjusters and let the auto body shops write their own estimates. Fox and hen house …

#54 SoggyShorts on 09.10.19 at 10:53 pm

#45 Reality is stark on 09.10.19 at 8:31 pm
The only thing you can take to the bank is that there will be no deal with China.
Americans believe in freedom, that is why they are great. They don’t need a Trump hat.
They will support people willing to die for freedom. As those in Hong Kong are shot some people on the mainland will rise up in support, some of them will be shot as well.
Trump may be a jerk but he won’t make a deal with the devil.

******************************************
Oh really? like he stopped making deals with Saudi Arabia after the murdered Khashoggi?

“Asked whether the US would not then walk away from Saudi Arabia, he said: “I do not want to do that and frankly they have a tremendous order, US$110 billion,” referring to promised US arms sales to the kingdom.”

Americans believe in freedom for Americans.
Trump believes in Trump

Now that you can take to the bank.

#55 SoggyShorts on 09.10.19 at 11:00 pm

#47 Retired on 09.10.19 at 8:37 pm
Garth
Today’s post brings to mind: Why not do a post about AFTER retirement. All the post are about investing prior to retirement. Retirement as you often say, can last many, many years. Does the ‘balanced’ ETF portfolio 60/40% change? What about withdrawal amounts/ percentages per year? I’ve built some nice figures, thanks to following your advice to retirement. Now, after I’m retired, what is your counsel?

*****************************
Loads of factors involved, one of which is certainly your age: if you have a long (50+) year retirement it’s historically been better to actually increase your equity exposure in retirement.

Recommended reading:
https://earlyretirementnow.com/safe-withdrawal-rate-series/

ERN takes all of the data over the last hundred years and runs simulations on every possible portfolio mix (you can input what you like into the sheet).

There are some very surprising conclusions about what withdrawal rates would have been sustainable in the past. While past performance is obviously no guarantee of future performance, you gotta make a plan based on something, right?

#56 Oh Canada, I weep. on 09.10.19 at 11:03 pm

Losing it indeed. BOC Poloz nicknamed “an ardent fool’.

https://business.financialpost.com/investing/david-rosenberg-canadas-bull-market-is-not-in-jobs-or-the-economy-but-cheerleaders

Lies lies lies coming out to support Trudeau, but otherwise a belly laugh for straight up economists. The creation of 80,000 jobs is like an 800,000 month in the US. Who was stupid enough to fall for that?

The Liberal propaganda machine can’t sell Trudeau on his own merit. His last poll showed sub 30% support. The BS is as thick as McKennas sewage dumps to float Saudi tankers at low tide.

But, when another disastrous Trudeau mandate is announced the bad news will break the $600,000,000 propaganda dam and you’ll be up to your neck. Good luck with your election Canada. The Americans just slipped Tzepirah $2,000,000 to skirt the election finance laws. I wonder who she’s voting for?

BTW, I’m big Short the Loonie. I see top of range and the above mention scenario will force Poloz to drop at least 50 bps…..and timberrrrrrrr!!!! Forget about that winter vacay.

#57 Ustabe on 09.10.19 at 11:31 pm

Garth
Today’s post brings to mind: Why not do a post about AFTER retirement. All the post are about investing prior to retirement. Retirement as you often say, can last many, many years. Does the ‘balanced’ ETF portfolio 60/40% change? What about withdrawal amounts/ percentages per year? I’ve built some nice figures, thanks to following your advice to retirement. Now, after I’m retired, what is your counsel?

Keep moving…slow down or stop and you are soon dead. It doesn’t matter if you are going for a walk or putting two people together on a deal…just keep moving, physically and intellectually.

I posted about my weight lifting some time back and soon had a tuff guy telling me how much more he could lift…don’t listen to those guys, just do your reps, keep healthy.

The money isn’t important, just keep moving. Muscles, neurons, brandy to mouth, doesn’t matter. Do stuff, be aware, love someone.

#58 dirtydebtor on 09.10.19 at 11:56 pm

Angie

All this accountant is doing, is signing you up for mutual funds to collect a commision.

Sounds like this “fund” just buys other funds. So you pay an MER on your first fund, and they pay MER on the investment products they buy. Why do you need an amateur fund manager to manage your managed funds? You will be paying prime+0.5 to the bank, 1.5-3 to the fund manager, then likely 1-2 to the individual mutual fund managers. Thats 7-10% per year in interest and fund management fees.

If you are going to pursue this reckless leveraged strategy (which is likely a bad idea), why not cut out the middleman on this. Sign up for a questrade margin account, chuck in 50 grand, then you can buy ETFs yourself. Questrade will leverage you up to 4x, so you will get 200K to play with. their rate is 3.9% right now.

#59 Smoking Man on 09.11.19 at 1:29 am

T2 is going to win.

There is no hope for Canada. Andrew is a globalist just like T2. Mad max is a raving narcissist probably on Sorors parole..

Not one party or person to save you fks trapped in 500 bucks a tone of carbon tax…..

I escaped… I’m good. A Trump Republican killed it in South Carolina..

Get the hell out of Canada. Now.

Girls that kill it at Tennis can’t save you.

Save yourself amozion girl. Get out while you can…

https://youtu.be/fregObNcHC8

#60 Smoking Man on 09.11.19 at 1:42 am

I love Canadians and Canada..

But I had to flee full on communism, can’t beat the teachers messing with the young minds who will be a huge voting block come next election..

I’m a free bird now….and I have a gun…. I have a MAGA tattoo on my back..with read cap. Just try and take it off me.

https://youtu.be/fuZyMx2NXZM

#61 Smoking Man on 09.11.19 at 2:11 am

DELETED

#62 Rargary on 09.11.19 at 2:12 am

My niece is on pace to inherit millions… my Garth vader loving sister is going to hire 3 people on her behalf… a lawyer, C.A. and Garth!

#63 Jay Currie on 09.11.19 at 4:30 am

Run…fast and far.

Anyone unwilling to leave an e-trail or a paper trail is not someone you want to take advice from.

#64 earthboundmisfit on 09.11.19 at 5:03 am

@47 Retired ….. on the topic of decumulation, suggest you read both Vetesse and Milevsky/Macqueen.

#65 crowdedelevatorfartz on 09.11.19 at 7:26 am

@#53 SBby
“ICBC went off the rails when they dumped their claims adjusters and let the auto body shops write their own estimates. ”

+++++

ICBC went off the rails when it was created.
A bloated govt bureaucracy selling CAR insurance?
Please.
And now that they have absorbed the Motor vehicle branch.
ICBC issues drivers licenses after testing.

More ICBC employees snuffling at an already ineffective, bloated trough.
ICBC general revenues are handed over to the govt.
The govt is broke.
When the govt needs more money they raise taxes and ICBC rate.

I pay $2000 per year ( after my maximum 43% “discount” for 10+ years of safe driving) for a 5 year old vehicle.

ICBC is a ripoff from start to finish and I would vote for Satan to be rid of it.

#66 dharma bum on 09.11.19 at 7:43 am

#57 Ustabe

The money isn’t important, just keep moving. Muscles, neurons, brandy to mouth, doesn’t matter. Do stuff, be aware, love someone.
——————————————————————–

Bang on.

Retirement has never been about the money.

Yah, it’s a given that you gotta have the scratch in the first place to even contemplate retirement, but that ain’t what it’s about.

It’s about FREE TIME and doing whatever you wanna do, whenever you wanna do it.

Ustabe is right about staying active. It doesn’t matter what the activity is, but you have to stay engaged and interested in something.

Assuming one has enough money, retirement is only a bad thing for the unimaginative, non-creative, self-loathing, low self esteem, boring, no-self-identity, sedentary couch potato types.

#67 dharma bum on 09.11.19 at 7:46 am

Angie forgot to mention one detail.

The accountant’s name is Bernie Madoff!

https://www.nytimes.com/2019/09/10/books/review/talking-to-strangers-malcolm-gladwell.html

#68 Papa Roach on 09.11.19 at 8:05 am

More often the Green Carpet Baggers and the lickspittles riding the gravy train ate more often admitting that Renewable Energy powering the world is fantasy. What’s going on?

https://www.forbes.com/sites/michaelshellenberger/2019/05/06/the-reason-renewables-cant-power-modern-civilization-is-because-they-were-never-meant-to/

Is it a step back from the brink? A renewable planet means a Medieval planet. Maybe that fact is finally getting through.

#69 IHCTD9 on 09.11.19 at 8:47 am

#28 north shore on 09.10.19 at 6:11 pm
#9 i think I now need an accountant …

When things were good no one said anything…. “Yehhh!!! Let’s keep ICBC. They are amazing. Let’s not privatize this at all because I hear what other provinces are paying”.
___

I’m paying about 600.00/yr for my truck from a private Insurer in Ontario.

I hear that the government run Insurance rates in BC are so high that Ponzie had to trade in his car for a bus pass…

Hey Ponzie – I got the ATV insurance renewals in, price hasn’t moved for the 3rd year in a row:

2014 Grizzly 700 SE – 160.00/year
2009 Raptor 700R – 150.00/year

#70 IHCTD9 on 09.11.19 at 8:55 am

#65 crowdedelevatorfartz on 09.11.19 at 7:26 am

I pay $2000 per year ( after my maximum 43% “discount” for 10+ years of safe driving) for a 5 year old vehicle.

ICBC is a ripoff from start to finish and I would vote for Satan to be rid of it.
___

That’s insane. My 17 year old was quoted ~4500.00/yr for full coverage in his own name on his own car – and he just got his bloody license!

Under our policy, he is paying 650.00/yr.

2K after the max discount is just (as you say) a rip off. No way should it cost you this much.

That’s what happens when you send the government in to do a job.

What’s the fine for no insurance?

#71 expat on 09.11.19 at 9:16 am

The writ drops today.

Our house in Halifax lost power for 24 hours, many folks are still out….

Dopey and his gang of thugs showed up on a taxpayer funded airplane from Ottawa to get some selfies.

When asked about the fact that cell towers lost power and hte new homeline services are fiber based and go out with the power, thus people had no way to call emergency services Goodale said….

Write to the CRTC about your complaint.

Lets just say that Dopey and his gang of thugs quickly jumped on the plane to get out…… The boos were deafening from what my sister said…..

The only thing worse would have been dopey saying “Let them eat cake” which is essentially what he said..

400,000 people out of power and he slides in for a tweet shot….

Disgusting

#72 expat on 09.11.19 at 9:25 am

As a gold physical holder for many years.

You got a taste of how sleazy this sector is.
Notice how the gold pumpers have disappeared????

I hold gold for reasons other than investment, diversification, culture, etc.

Hold the smartass comments becuase I’ve heard them all.

It is not for the normal person to try to make a quick buck…

be forewarned.

Once gold turns back up the schills will come back so when you see them here sell your positions if you have them and have no intention of holding forever.

Why, because they are….

I’ve owned gold for 50 years from my father and his father before him.

It is not an investment for us, it is an insurance policy which most likely won’t ever happen. Culturally my family holds becuase they believe in it. But is not a major part of any portfolio we have.

It just sits there.

Its a door stop until it isn’t

#73 IHCTD9 on 09.11.19 at 9:34 am

#53 S.Bby on 09.10.19 at 10:46 pm

ICBC went off the rails when they dumped their claims adjusters and let the auto body shops write their own estimates. Fox and hen house …
____

I doubt it – I was in a fender bender a few years back, and I saw the total repair estimate – 4500.00. That was more than my old POS Jeep was worth. Fanciest body shop in town does near 100% claim work only. Lots of really big repair bills being paid out in Ontario.

Rates are still a 1/3 of what BC residents pay.

The difference is in the management of the process. Put the government in charge and the cost increases will never end – that’s just how it goes.

Here in Ontario we see the exact same thing, but with electricity prices. Endless shenanigans with the billing strategy, BS claims of lowered costs, and [email protected] “services” that let you know how much your neighbours bills were.

I can’t wait till they whole bloody system goes bankrupt again.

#74 IHCTD9 on 09.11.19 at 10:00 am

https://www.fraserinstitute.org/studies/understanding-why-basic-auto-insurance-rates-in-bc-are-so-high

^ Well look at that, ICBC charges the living crap right out of their customers – and they’re STILL broke.

#75 Shabu Shabu on 09.11.19 at 10:17 am

http://www.bnnbloomberg.ca/one-in-five-millennials-have-lied-on-a-mortgage-application-equifax-1.1313195

20% of mortgages are liar loans? Wow.

#76 Shawn Allen on 09.11.19 at 10:51 am

Bank Fees and Regulation

Canadian Banks are private but regulated businesses. They are essential for our economy. They have been great investments. But they do take advantage of customers on certain fees.

I have complained before about excessive fees on transferring to U.S. dollars. This is especially the case within an RSP where the money is totally captive. You can’t take it out temporarily and go through an external currency transfer agent. So you pay about 1.75% each way on a self-serve purely electronic transfer! It can add up.

But here is another one. Most (all?) the large Canadian banks do not make it easy for you to transfer funds to an account at another Canadian Bank.

TD Bank on their web site suggests I can use Interac to move a maximum of $3000 per day for a cost of $1.00 but waived on certain accounts.

Or I can use Visa Direct and transfer a maximum of $2500 per day for a cost of $1.50.

Okay, a low charge but I can’t even move like $20,000 in a day between my own accounts at two different banks using TD.

Interestingly little banks like Simplii financial let me move large amounts between TD and Simplii for free and between other banks and Simplii for free. So I can go through Simplii and transfer from say TD to Royal Bank $20,000 in a day for free! (The money has to go to Simplii on the way, nt direct TD to Royal) This is after I register my TD and Royal accounts at Simplii. I am not sure the dollar limit but I believe it is the tens of thousands.

The big Canadian banks have never wanted to make it easy for you to move money between banks online. They want to hold our cash captive.

Regulators are apparently totally asleep on this one. What year is it again?

Perhaps others have found better ways to transfer online between Canadian banks? Is TD a laggard?

#77 Shawn Allen on 09.11.19 at 10:53 am

P.S. On RSP U.S. transfers. Yes, I do know about Norbert gambit and using DLR and DLR.u to do it. Clumsy but effective.

#78 Shawn Allen on 09.11.19 at 11:03 am

Bank Transfers

Years ago you could not pay your Royal Bank credit card as a bill payment for TD.

Today why can’t my Royal Bank chequing account be set up as a “bill payment” on TD allowing me to send cash to Royal Bank account just like paying a bill for no fee like I pay any other bill? Because TD does not want to make it that easy for deposits to leave to Royal? Hello regulators, wake up.

#79 James on 09.11.19 at 11:09 am

#60 Smoking Man on 09.11.19 at 1:42 am

I love Canadians and Canada..
But I had to flee full on communism, can’t beat the teachers messing with the young minds who will be a huge voting block come next election..
I’m a free bird now….and I have a gun…. I have a MAGA tattoo on my back..with read cap. Just try and take it off me.
https://youtu.be/fuZyMx2NXZM
_________________________________________
There is an old saying that goes “when the when the going gets tough, the tough get going.”
So what happened to you tough guy?

In your case when the going gets tough you turned tail and ran away like a whimpering baby! Good job fighting communism Old Man! It really shows what fortitude and bravery you’re made of. Keep wearing the READ cap. I HEAR READING IS GOOD FOR YOUR BRAIN.

BTW You in possession of a weapon makes me know why the United States is in complete moral decline and chaos.

#80 James on 09.11.19 at 11:14 am

#70 IHCTD9 on 09.11.19 at 8:55 am

#65 crowdedelevatorfartz on 09.11.19 at 7:26 am

I pay $2000 per year ( after my maximum 43% “discount” for 10+ years of safe driving) for a 5 year old vehicle.

ICBC is a ripoff from start to finish and I would vote for Satan to be rid of it.
_________________________________

That’s insane. My 17 year old was quoted ~4500.00/yr for full coverage in his own name on his own car – and he just got his bloody license!

Under our policy, he is paying 650.00/yr.

2K after the max discount is just (as you say) a rip off. No way should it cost you this much.

That’s what happens when you send the government in to do a job.

What’s the fine for no insurance?
___________________________________________
The fine for no insurance is “You’re wiped out financially and perhaps incarcerated via the court system in the event of an accident.”
Oh and your an a$$hole too.
Insurance is cost prohibitive for some people but it is a necessary evil.

#81 James on 09.11.19 at 11:20 am

#54 SoggyShorts on 09.10.19 at 10:53 pm

#45 Reality is stark on 09.10.19 at 8:31 pm
The only thing you can take to the bank is that there will be no deal with China.
Americans believe in freedom, that is why they are great. They don’t need a Trump hat.
They will support people willing to die for freedom. As those in Hong Kong are shot some people on the mainland will rise up in support, some of them will be shot as well.
Trump may be a jerk but he won’t make a deal with the devil.
******************************************
Oh really? like he stopped making deals with Saudi Arabia after the murdered Khashoggi?

“Asked whether the US would not then walk away from Saudi Arabia, he said: “I do not want to do that and frankly they have a tremendous order, US$110 billion,” referring to promised US arms sales to the kingdom.”

Americans believe in freedom for Americans.
Trump believes in Trump

Now that you can take to the bank
_________________________________________
Trump has clearly provided to the Saudis, and the world for that matter that the consequences for killing a person are that he will look the other way if there’s money to be made. Can Trump live with himself for letting them get away with it? Sure he is a pawn!

https://www.thedailystar.net/world/news/last-words-khashoggi-asked-killers-not-suffocate-him-1798339

#82 DON on 09.11.19 at 11:31 am

@ #74 IHCTD9

The Fraser institute is a bunch of right wing hacks that receive funding from the right wing from the states.
Their research is biased towards privatization at all costs. They are no longer taken seriously in BC.

My driving record is clean and I pay 1200 per year. Then again I have 30 + years with (knock on wood) no accidents. I shouldn’t have to pay more than 800k or less. If you are a questionable driver you should pay more.

#83 Mattl on 09.11.19 at 11:42 am

Borrowing to invest seems like a nobrainer with the following conditions; market correction, low interest rates, high marginal tax rate, stable dividend paying equities, long play.

It is hard to see how you could lose buying, say the Canadian Banks at 10-20% discount, borrowing money at 2.7%, marginal tax rate of 51%, 20 year hold.

Seems like a great way for the little guy to take on a bit of risk, and get way ahead in retirement.

#84 IHCTD9 on 09.11.19 at 12:33 pm

#82 DON on 09.11.19 at 11:31 am
@ #74 IHCTD9

The Fraser institute is a bunch of right wing hacks that receive funding from the right wing from the states.
Their research is biased towards privatization at all costs. They are no longer taken seriously in BC.

My driving record is clean and I pay 1200 per year. Then again I have 30 + years with (knock on wood) no accidents. I shouldn’t have to pay more than 800k or less. If you are a questionable driver you should pay more.
___

I knew someone would jump on the fact that the data was compiled by the Fraser Institute.

IMHO, when a dude simply discards the data outright without even reading it (especially after it seems to make total sense), it’s a good way to make said dude stupid quickly. Not to mention a tinder bed for Alex Jones types to throw lit matches at.

The report actually welcomes the actions of the current NDP government to try and reel in some of the unnecessary costs incurred by the system, and suggests further things that could be done.

To think things are fine with BC insurance rates is intellectually dishonest when it is beyond obvious that most of the country is paying half of what you guys are for the same services.

#85 Don Guillermo on 09.11.19 at 12:34 pm

#47 Retired on 09.10.19 at 8:37 pm

Garth
Today’s post brings to mind: Why not do a post about AFTER retirement. All the post are about investing prior to retirement. Retirement as you often say, can last many, many years. Does the ‘balanced’ ETF portfolio 60/40% change? What about withdrawal amounts/ percentages per year? I’ve built some nice figures, thanks to following your advice to retirement. Now, after I’m retired, what is your counsel?

I’m in a similar situation. Retired and very comfortable with my fee based managed portfolio. Having said, I was still never 100% sure what my comfortable spending pattern going forward should be. I recently hire a professional to model my finances through retirement. Of course some of the inputs are assumptions such as rate of investment returns, life expectancy etc and the best approach is to be conservative on these. I’m sure Garth provides this service but my portfolio manager doesn’t. They were sent the final report though so as to close the loop. They can agree to the assumptions and strategically plan the money being extracted as per the model. The model also provides valuable information on the most tax efficient way to draw down TFSA, RRSP’s and in my case closing down my limited company. I highly recommend doing this as your comfort level going forward can be tremendous.

#86 Saudi on 09.11.19 at 12:35 pm

Well this deception didn’t last long, because the Crown Prince has been removed. The King replaced him with a better candidate.

#87 AGuyInVancouver on 09.11.19 at 12:43 pm

#74 IHCTD9 on 09.11.19 at 10:00 am
https://www.fraserinstitute.org/studies/understanding-why-basic-auto-insurance-rates-in-bc-are-so-high

^ Well look at that, ICBC charges the living crap right out of their customers – and they’re STILL broke.
_ _ _
Blame the BC Lieberals for that. After all, they reneged on their promise to privatize once they got their hands on the money coming from ICBC. Then they bled it dry.

#88 IHCTD9 on 09.11.19 at 12:57 pm

#80 James on 09.11.19 at 11:14 am

The fine for no insurance is “You’re wiped out financially and perhaps incarcerated via the court system in the event of an accident.”
Oh and your an a$$hole too.
Insurance is cost prohibitive for some people but it is a necessary evil.
____

Actually James (after a quick Google), it looks like the fine in BC for driving with no insurance is about 600.00.

Here in Ontario it’s a bottom end fine of 5K, and can go north of 25K. Double those numbers for the second offense.

Are you doing the math? That means there is absolutely a boatload of folks in BC driving with no insurance. 600.00 fine? Pffft…

Yeah, the worst case scenario is financial pain and maybe jail, but the chances are EXTREMELY small that this will happen to most folks.

I actually can’t believe it’s only a 600.00 fine in BC. They are literally begging folks who are required to pay thousands in premiums to just roll the dice. The odds are in their favour after all.

Here in Ontario – you basically have to be desperate to risk driving sans ins.

#89 SoggyShorts on 09.11.19 at 1:18 pm

#83 Mattl on 09.11.19 at 11:42 am
Borrowing to invest seems like a nobrainer with the following conditions; market correction, low interest rates, high marginal tax rate, stable dividend paying equities, long play.

It is hard to see how you could lose buying, say the Canadian Banks at 10-20% discount, borrowing money at 2.7%, marginal tax rate of 51%, 20 year hold.
********************************
Where do you get 2.7% interest for an investment loan?
afaik only mortgages are under prime.
————————————————————-
#58 dirtydebtor on 09.10.19 at 11:56 pm
Angie
Questrade will leverage you up to 4x, so you will get 200K to play with. their rate is 3.9% right now.

***********************************
Prime (3.95) PLUS 2.5-3.5%
https://www.questrade.com/pricing/self-directed-commissions-plans-fees/margin-interest#interest
————————————————–

If someone has ACTUAL PROOF of loan rates under 4% all-in for investment purposes I’d love to see it.
The only thing I can find would be to take a maximum credit card cash advance (nasty double-digit interest) and transfer it to another credit card when you get those “zero-interest for 6 months on transfers” offers.

Instead of paying interest and fees to leverage your investing, why not just buy leveraged ETFS? the MER on those is around 1%
https://finance.yahoo.com/quote/SPXL?p=SPXL&.tsrc=fin-srch

#90 Jesse on 09.11.19 at 1:43 pm

Angie – you can borrow to invest using the Smith Manoeuvre, it’s not too complicated but it’s good to talk to an honest financial planner and/or account (yours sounds very scammy). People have done this on their own, but they need to be 100% aware of what they are buying, what the risks are and need a plan. Tread carefully.

The SM is junk. It means setting up a systematic withdrawal plan from mutual funds to cover borrowing costs. Bad advice. – Garth

#91 DON on 09.11.19 at 1:49 pm

@#84 IHCTD9

As soon as the topic of icbc came up…i knew someone would reference that article. If you follow them from the past you would see their slight of hand nuances.

Insurance is a problem and rates are high as icbc has been mismanaged and used to prop up gov revenues…it was being destroyed on purpose so it looks good to privatize.

It is always a good idea to read multiple sources and consider the context of the day. I know you know that. I had heard of problems with insurance in Ontario also…but refrain from any conversation until I receive or conduct a thorough analysis.

Cheers.

#92 James on 09.11.19 at 1:57 pm

#88 IHCTD9 on 09.11.19 at 12:57 pm

#80 James on 09.11.19 at 11:14 am

The fine for no insurance is “You’re wiped out financially and perhaps incarcerated via the court system in the event of an accident.”
Oh and your an a$$hole too.
Insurance is cost prohibitive for some people but it is a necessary evil.
____

Actually James (after a quick Google), it looks like the fine in BC for driving with no insurance is about 600.00.

Here in Ontario it’s a bottom end fine of 5K, and can go north of 25K. Double those numbers for the second offense.

Are you doing the math? That means there is absolutely a boatload of folks in BC driving with no insurance. 600.00 fine? Pffft…

Yeah, the worst case scenario is financial pain and maybe jail, but the chances are EXTREMELY small that this will happen to most folks.

I actually can’t believe it’s only a 600.00 fine in BC. They are literally begging folks who are required to pay thousands in premiums to just roll the dice. The odds are in their favour after all.

Here in Ontario – you basically have to be desperate to risk driving sans ins.
____________________________________________
I Did not know it is only 600.00 in BC. That is insane however, it goes without saying that if you are stupid enough to try doing it and the unimaginable happens then you are done! The court system will strip you of everything you own plus, plus. Some idiots have no skin in the game and are on the edge of subsistence so they are the dangerous ones that will try it. So who do you sue when Guy hits you, takes out your property and significantly injures or forbid kills someone. Can’t get water from a stone!

#93 Car Insurance on 09.11.19 at 2:00 pm

Car values drop like a rock, and an insurance company will not always pay for a collision claim. They value a car using a black book, thus check your value with care. Sometimes its cost effective to drop the collision rider from your policy.

#94 Shawn Allen on 09.11.19 at 2:29 pm

Leveraging to Invest?

Soggy Shoerts at 89 asked:

Instead of paying interest and fees to leverage your investing, why not just buy leveraged ETFS? the MER on those is around 1%

**********************************
Interesting thought.

I have never liked the idea of borrowing to invest because it requires taking on personal debt. And it would be no fun at all if the investments fell in price even temporarily. And it requires monthly payments (which takes time and effort and cash flow). ANd it creates quite a bit of work at tax time and I like to avoid work like that. And doing it in a lower risk way mean you don’t make a lot of money. I’m no longer hungry enough to get out of bed to make an extra $3k per year. For $12k it might be worth it but now I need to borrow like $400k and it’s too much risk. My dog is already well fed and all that.

So if the ETF could borrow for me that sounds better. No personal debt. No cash flow to send in monthly and the tax work would be far easier as they provide slips. But leveraged ETFs don’t borrow, they use futures markets and and tend to lose money in a stable market.

If there were maybe a closed end fund that actually borrows money at a low rate for some leverage and invests in a relatively safe way that might be of interest.

But Warren Buffett has said one way to go broke investing is to use leverage. He thinks we can do well without it.

#95 IHCTD9 on 09.11.19 at 2:44 pm

#92 James on 09.11.19 at 1:57 pm

So who do you sue when Guy hits you, takes out your property and significantly injures or forbid kills someone. Can’t get water from a stone!
____

Yep, waste of time to sue in that situation. You can get uninsured driver coverage though, my ins co was pushing it hard a while back so I caved and got it. I think you’d at least get some compensation with this in the event someone wrecks your car and has no ins. Probably wouldn’t cover a broken neck though.

#96 Tater on 09.11.19 at 2:45 pm

SoggyShorts on 09.11.19 at 1:18 pm

If someone has ACTUAL PROOF of loan rates under 4% all-in for investment purposes I’d love to see it.
The only thing I can find would be to take a maximum credit card cash advance (nasty double-digit interest) and transfer it to another credit card when you get those “zero-interest for 6 months on transfers” offers.

Instead of paying interest and fees to leverage your investing, why not just buy leveraged ETFS? the MER on those is around 1%
https://finance.yahoo.com/quote/SPXL?p=SPXL&.tsrc=fin-srch

—————————————-

Because levered ETFs fall apart when volatility and returns are close to historical norms?

#97 Don Guillermo on 09.11.19 at 3:00 pm

#95 IHCTD9 on 09.11.19 at 2:44 pm

#92 James on 09.11.19 at 1:57 pm

So who do you sue when Guy hits you, takes out your property and significantly injures or forbid kills someone. Can’t get water from a stone!
____

Yep, waste of time to sue in that situation. You can get uninsured driver coverage though, my ins co was pushing it hard a while back so I caved and got it. I think you’d at least get some compensation with this in the event someone wrecks your car and has no ins. Probably wouldn’t cover a broken neck though

Very sad. You are essentially paying for the criminals insurance.

#98 IHCTD9 on 09.11.19 at 3:11 pm

#91 DON on 09.11.19 at 1:49 pm
@#84 IHCTD9

As soon as the topic of icbc came up…i knew someone would reference that article. If you follow them from the past you would see their slight of hand nuances.

Insurance is a problem and rates are high as icbc has been mismanaged and used to prop up gov revenues…it was being destroyed on purpose so it looks good to privatize.

It is always a good idea to read multiple sources and consider the context of the day. I know you know that. I had heard of problems with insurance in Ontario also…but refrain from any conversation until I receive or conduct a thorough analysis.

Cheers.
_____

We’ve had our share of issues with ins in Ontario. Rates have been climbing steadily, but I still find it plenty reasonable (at least in my situation).

I do think that here, the bad drivers premiums get pounded much harder, while the good drivers get much better rates.

#99 Barb on 09.11.19 at 3:26 pm

I wouldn’t trust their accountant as far as I could throw him…
obviously he doesn’t want a paper record of his “advice”, among other things.

#100 Tony on 09.11.19 at 4:03 pm

Re: #89 SoggyShorts on 09.11.19 at 1:18 pm

Canadian banks are the last things on Earth you’d want to buy before interest rates plunge deep into the negative. 2021 to 2022 should see interest rates literally fall off a cliff after rising in the middle part of 2020.

#101 Marco on 09.11.19 at 4:45 pm

What if some loonie shoots Obama?

#102 Jesse on 09.11.19 at 4:54 pm

#90 Jesse on 09.11.19 at 1:43 pm

The SM is junk. It means setting up a systematic withdrawal plan from mutual funds to cover borrowing costs. Bad advice. – Garth
*****************************

Hey Garth – if SM is bad for investing (lot’s of people are doing this, what’s the catch?), what’s the best way to use leverage for investing?

Just use 3x ETF’s? 40% $UPRO / 60% TMF ??