Be it resolved

Bandit decided to throw up at 4 am on New Year’s Day. A surprise, since he didn’t even have that many Shooters last night. In any case, the hours spent sitting holding his paw provided time to finish your list of 2020 resolutions.

So be it resolved that you will…

  1. Try to borrow nothing.
    Easy credit is the crack cocaine of our society. Most people are addicted and loan servicing costs are bleeding families dry. If the economy turns this year, the indebted could be pooched.
  2. If you do, make it tax-deductible.
    Using real estate equity to build a non-registered portfolio can give you more net worth and a tax-deductible mortgage. But never do this without a plan, an escape hatch and some trusted help.
  3. Max your TFSA.
    Today. Six grand. Get it in there.
  4. Seriously reconsider paying down your cheap mortgage.
    First, why trash a sub-3% home loan with valuable after-tax dollars that could earn two or three times that amount invested? Second, shoveling more of your net worth into a single asset is gambling. Diversify.
  5. Don’t try to time markets. Invest when you have money.
    Financial assets are expected to melt up early in 2020, then anything could happen. So stop looking. Invest when you have money. Do it correctly. Stay invested until you need the dough. How hard is that?
  6. Adhere to the Rule of 90.
    Try restricting the percentage of net worth in residential real estate to 90 less your age. In other words, buy what you can afford, no matter what the year brings.
  7. Got a kid? Get an RESP. The right kind.
    Schooling costs a bundle and not only does RESP money grow tax-free, but the government will give you funds every year. Where else can you get a guaranteed 20% return? But steer clear of the pre-packaged plans peddled by the baby vultures, and stay invested in growthy stuff.
  8. No stock-flipping in 2020. Go with ETFs and balance. Set it & forget it.
    Equities romped 30% last year, which is no guarantee of the future. And some assets (like weed stocks) crashed despite the market gains. When big-time fund managers can’t beat the index, why would you? Hubris.
  9. Spousal loan. Spousal RRSP. Get serious about income-splitting.
    Taxes are going up in Canada. Again. The T2 government’s return to power guarantees this, so fight back. Having a lower-income partner allows great opportunity to split income by contributing to a spousal RRSP (up to your own limit) or loaning him/her money for a non-reg investment at the CRA rate of just 2%. No attribution then.
  10. Take capital gains early, thwart Morneau.
    There’s a budget coming in February or March. Ottawa’s swimming in red ink and the masses expect more bread. One result may be a hike in the cap gains inclusion rate. If you’ve planned on cashing in some profits this year, sooner might be better than later.
  11. Lock in your mortgage.
    Rate cuts are so 2019. Given Trump and the Fed, the China trade deal and the November election, central bank easing is on hold. Loans are still dirt cheap. So lock a rate.
  12. Don’t let your parents get a reverse mortgage
    The cost is ridiculous and interest snowballs on borrowed amounts. This is a wealth-destroying vehicle. Marketers should hang their heads in shame. Get your folks to sell, invest and rent a far nicer place. And leave boodles for you.
  13. Get a will. And POAs. Name beneficiaries and a SH.
    Everybody needs a will, so get one. Power of Attorney forms need to be exchanged between spouses, at a minimum. Ensure your RRSPs have named beneficiaries but your TFSA has your partner listed as a successor holder.
  14. Don’t buy insurance unless you need it.
    Universal life, whole life and a host of other insurance products are costly and offer questionable investment benefits. Canadians are grossly over-insured, probably due to guilt. Get over it. Just insure against specific risks and usually a term policy is enough.
  15. Never retire without a non-registered account. And make it joint.
    RRSPs play an important role, but don’t retire with all your funds in vehicles which goose taxable income. A non-registered investment account’s a key part of controlling taxes, and need never be converted to a RRIF. Make it joint with your spouse so when you kick the funds become his/her property, instantly. No delay or probate.
  16. Lease your car. Instead own stuff that appreciates.
    All regular cars turn worthless. So why tie up tens of thousands in one? Rent things which depreciate. Buy things that appreciate. Also easier to write off auto expenses when you lease.
  17. Rent proudly. Invest bravely.
    Our real estate culture has enslaved a lot of people, forcing them into high leverage and a risky future strategy. Renting is a completely valid alternative, stabilizing costs, eschewing debt and freeing income for investing. Ignore what your mom says.
  18. Never buy real estate with anyone you’re not sleeping with.
    Seriously. Buying property with friends, co-workers, other couples or relatives is a completely bad idea. The entry costs may be less. The exit costs can be deadly.
  19. Retiring? Commute your pension.
    Lots of pension plans are in trouble. More will be as rates stay low and demand increases. If you can get out, taking the money, controlling it yourself, do so. The tax burden can be cut. Plus the asset belongs to you and your heirs, forever.
  20. Get a dog. Non-judgmental love, loyalty and sincerity. You need this. We all do.
    Life is not about accumulating money. Wealth just makes it easier. Being loved, and needed, makes it worth living. Start here.

 

121 comments ↓

#1 crowdedelevatorfartz on 01.01.20 at 8:30 am

I guess Bandit will be suffering from “Hair of the Dog” today?

#2 mitzerboyakaQueencitykidd on 01.01.20 at 8:38 am

Wow its 2020
Good advice Garth
i hope to be getting another canine companion this year

one of the things my departed doggie taught me was
“No matter what life brings you, kick some grass over that shit and move on.

Love is Love
hate is hate

#3 crowdedelevatorfartz on 01.01.20 at 8:45 am

@crazyfox

Perhaps we just need another “Year without Summer”….. worldwide…..

https://www.cnn.com/2019/09/17/world/tambora-eruption-year-without-summer-scn/index.html

200 years ago, most of the worlds population was agrarian and could mostly feed itself….

Now?

Not so much…

#4 Haus Edlinger on 01.01.20 at 9:19 am

#20.
Obviously a crowd fave.
And so true

#16 and #18 my personal favorites.

#5 LH on 01.01.20 at 9:30 am

Pets are expensive.
I have five (kids) already, hard to imagine having furry pets too. On the investment front, I do still love my downtown (C01, C02) houses. But since 2014, 95%+ of new money is going to stocks (US mostly). Buy and Hold and Prosper. Happy New Year!

LH

#6 Dispute Resolution on 01.01.20 at 9:31 am

Some great advice as always however I am looking forward to being mortgage fee in 2020 and the additional cash flow to follow!

Invest more, travel more and get my dog whatever bone she wants!!

#7 Ontario's Left Coast on 01.01.20 at 9:41 am

Every Canadian should read this and read it over again until it sinks in. Happy New Year to Garth, his associates and all the Dawgs!

#8 Marc Roger on 01.01.20 at 9:58 am

Thanks, Garth.
Always helpful to correctly specify the mechanics of RESPs at #7.

“the government will give you free funds every year. Where else can you get a guaranteed 20% return?”
Can be quite misleading.

Best to say when you contribute to an RESP, the govt will give you a one-time grant at a rate of 20%? Meaning a 2500$ contribution will earn a one-time 500$ CESG.

Lest people think that on top of investment gains, the govt will give you 20% of your portfolio every year.

#9 Blog Bunny on 01.01.20 at 10:23 am

What if we do not need the capital gains ? Does it make sense to cash in just to buy the same stuff in a month or two ?

It’s unwise to take investment actions solely for tax reasons. If you don’t need the cash, stay invested. Garth

#10 tfs-eh on 01.01.20 at 10:25 am

Thanks for the great list here Garth! Thanks to your advice I finally maxed my TFSA last year, and just topped up again for this year.

You’ve talked many times about gifting money to a spouses TSFA to avoid attribution. I am wondering if there are any pitfalls to avoid, or documentation required for this approach?

My understanding is that at a bare minimum, the money should go to their bank account first, and they should be the ones to contribute, but is there anything else I should be aware of to ensure everything legit? Any considerations for after they withdraw the funds?

Thanks, and happy New Year!

#11 Paully on 01.01.20 at 10:30 am

Number 20 could be number 1!!

#12 2020 on 01.01.20 at 10:31 am

Happy New Year Garth to you Dorothy and Bandit as well as all your blog readers. Let’s hope for an amazing decade ahead with less division, more listening, greater understanding and a focus on the priorities for the world that are truly important!

#13 Drill Baby Drill on 01.01.20 at 10:35 am

Happy New Year (I Hope) barking mad blog. May the oil flow westward and fill the oil barges with black gold treasure.

#14 coming soon on 01.01.20 at 10:42 am

this electric tier system works in a few states
cant happen here

#15 coming soon on 01.01.20 at 10:44 am

link

https://www.pge.com/en_US/residential/rate-plans/rate-plan-options/tiered-base-plan/tiered-base-plan.page

#16 Millennial Realist on 01.01.20 at 11:01 am

You forgot one, Garth:

21. Do not, under any circumstances, consider voting for Boomer Con governments ever again. Their historic financial incompetence will lead to massive debt and income disparity and an eventual economic disaster; plus, their deliberate ignorance of these issues as well as the climate crisis and their strategic spewing of social hatred will deny future generations of even having a chance to adapt to a challenging future.

Most Boomers are now in, or will be soon entering, their 8th decade. Three score and ten, remember that phrase? The game will soon be up.

Please. Just get out of our way.

Ok, Boomers!?

#17 JSS on 01.01.20 at 11:15 am

Happy new year!

New year, new me

#18 Number 21 on 01.01.20 at 11:27 am

Number 21
positive posts on all social media including this blog which attracts its fair share of interesting people.
Number 22
Stop being righteous not sure what’s going on in the world from honking horns to road rage, why do people feel they are right?
Number 23
Entitlement
Your not entitled to anything but hard work. Stop expecting the government to give you something.
Number 24
Be grateful
Only you can change what’s happening to yourself.
Happy New year folks

#19 MF on 01.01.20 at 11:37 am

#16 Millennial Realist on 01.01.20 at 11:01 am

#20 Earlybird on 01.01.20 at 11:51 am

Incredible list!
#17 saved our asses!
Thank you, and all the best in the New Year!

#21 joblo on 01.01.20 at 12:02 pm

Feel better Bandit!

#22 Shawn Allen on 01.01.20 at 12:05 pm

Another Resolution:

Take more responsibility for all aspects of your own life.

If you have been blaming others for your difficulties then stop.

Play the hand you were dealt or now hold. Get on with it.

#23 Half Full on 01.01.20 at 12:09 pm

If you are enrolled to become a Lawyer or a Doctor, the Banks will give you a credit card with a prime interest rate.

Not a bad thing considering your earning potential, which would constitute good debt.

#24 Keyboard Smasher on 01.01.20 at 12:16 pm

The dog appeals to cheap and facile emotions; the cat to the deepest founts of imagination and cosmic perception in the human mind.

2020 will be a great year for unloved and DEEPLY discounted Canadian oil and gas producers. Already up 30% since the start of December.

#25 Not So New guy on 01.01.20 at 12:27 pm

What is the difference between socialism and communism?

Socialism is what you have before the government runs out of money

#26 Boris Corbyn on 01.01.20 at 12:34 pm

#16 don’t you have an avocado toast to eat?
See I’m no boomer but I can do cliche too
#millenial #selfie #toughenuplifecanbehard #trudeauisntthemessiahhesjustanaughtyboy

#27 Yukon Elvis on 01.01.20 at 12:42 pm

#16 Millennial Realist on 01.01.20 at 11:01 am
Please. Just get out of our way.
Ok, Boomers!?
………………………..

Ok Millie. Over to you. Show us what u got.

#28 timP on 01.01.20 at 12:42 pm

All the best to you, your family and staff.
Hearty thanks for your consistent 20/20 vision advice.

#29 Sail Away on 01.01.20 at 12:51 pm

Three pizzas were cooked last night and cooling on the counter while we chatted with the neighbour outside. Upon return, the pizzas were gone!

It was quickly apparent a crime had been committed. Clues included tomato sauce, random fallen utensils, scattered bits of pepper and onion on the floor, even a pawprint!

And where are our brave and selfless canine house defenders? Those paragons of virtue and devotion? These models of nonjudgemental love, loyalty, and sincerity?

These most virtuous of beings seem to be scarce… ah, there they are: slinking and skulking behind furniture, guilt written on every sideways glance.

#30 Felix on 01.01.20 at 1:07 pm

#29 Sail Away

Three pizzas were cooked last night and cooling on the counter while we chatted with the neighbour outside. Upon return, the pizzas were gone!

It was quickly apparent a crime had been committed. Clues included tomato sauce, random fallen utensils, scattered bits of pepper and onion on the floor, even a pawprint!

And where are our brave and selfless canine house defenders? Those paragons of virtue and devotion? These models of nonjudgemental love, loyalty, and sincerity?

These most virtuous of beings seem to be scarce… ah, there they are: slinking and skulking behind furniture, guilt written on every sideways glance.

——————————————————-
Truer, more revealing, words are rarely spoken.

Impooch all canines in 2020.

It will be a great year!

#31 Dogman01 on 01.01.20 at 1:13 pm

Joint Non – Registered account?

If you both have individual non registered accounts now, can you just go to the institution and tell them to each one joint, or combine them – Or is there a big tax complications thingy?

#32 RE_Investor on 01.01.20 at 1:21 pm

Happy New Year!!

Some corresponding items from a Real Estate investment view point. Either way, both stock markets and real estate markets trend up over the long term. If you happen to buy at the wrong time, hang on because they tend to comeback to the purchased levels. Also dividends and rental income will soothe the perceived paper losses. Never sell at a loss.

1.) Never carry a Credit Card or HELOC balance!  If this isn’t possible, pay it off quickly!

5.) Don’t try to time Real Estate markets. Invest in RE when you have money.  Never over-leverage.  Over the long term, Real Estate and Stocks trend up.  Take your pick, either way, there is money to be made.

12.) Tell your retired parents to sell their Real Estate and then Leaseback this property.  Ensure they get an air-tight lease written by a lawyer for several years at a rent below market.  RE Investors are looking for great RE with Lease back features.  Much better to rent the property to the original owner than to go through the problems of getting renters.  Your parents will then have all the money they need to enjoy their retirement years, and also stay in the house that brought them all the joy.

14.) Make sure you get Title insurance on every property you buy.  Title insurance will pay you in the event of most issues that may be encountered in a faulty deal.

16.) When you have several Rental properties, you can depreciate your auto purchase by 30% every year (CCA class 10).  So purchase your vehicle, track all expenses and mileage and deduct from your Rental Income.

17.) Buy Rental Properties whenever the numbers make sense.  They provide a stable monthly cash flow that will compound nicely over the years.  Rental business you create will provide years of positive cash flow and will secure your family legacy.

#33 Stan Brooks on 01.01.20 at 1:27 pm

Good list. Applicable to relatively normal times.

Education/RESP… Sure. Only (highly likely) to become unemployed/underemployed at best upon graduation at times when economy ‘booms’, interest rates are at rock bottom, inflation of everything real including assets skyrockets and the young can’t afford any sustainable life outside of their parent’s house competing with cheap foreign labour.

But we enter extraordinary times. Times of total uncertainty in everything.


https://ca.finance.yahoo.com/news/new-grads-will-take-it-on-the-chin-during-the-next-recession-132051444.html

‘Doomsday’ scenario of mass layoffs due to AI unlikely, federal documents say

https://ca.finance.yahoo.com/news/doomsday-scenario-mass-layoffs-due-150004488.html

But housing market will be ‘hot’:

https://ca.finance.yahoo.com/news/what-to-expect-for-the-housing-market-2020-192026109.html

That doomsday scenario is pretty much certain.

Being managed by fools who do not care and refuse to recognize the real issues like the french villa guy with his ‘incredible’ tax breaks or the politically correct BoC that focuses on ‘transparency’, ‘integrity’ and ‘credibility’ (laughter goes here) or the completely clueless socks boy or the ‘middle class prosperity’ minister who can’t define middle class does not help at all.

To fight an issue one must recognize it.

To cut on insurance at times of disappearing government services and guaranteed ever increasing uncertainty is scary.

Rent proudly in extremely expensive cities wont’ help.

My advice:

1. Move out to cheaper places that actually grow and benefit from the globalization with your money while you still have it and can.

2. Don’t trust anyone specially ‘authorities’ ‘with integrity’. A little paranoia would help, it is actually healthy while in the jungle.

3. Go back to the land/farming, learn basic survival skills.

4. Invest and diversify.

5. Get ready for the gig economy in everything, be flexible, use it for your benefits.

6. Plan and prepare for the worst. But Enjoy life. Cut the fat/reduce you economic and tax footprint/ but enjoy it.

7. Cover your behind in every way possible.


8. Minimize your carbon/’climate change’ footprint as we face extraordinary constrains and price and tax pressure there.
This will be the theme of our life going forward.

9. Relax and enjoy the shit-show as society enters turbulent times completely unprepared but cocky and ‘confident’.

Cheers,

#34 Linda on 01.01.20 at 1:30 pm

Hope Bandit is feeling better. Happy New Year!

#35 SoggyShorts on 01.01.20 at 1:42 pm

#16 Millennial Realist on 01.01.20 at 11:01 am
You forgot one, Garth:

21. Do not, under any circumstances, consider voting for Boomer Con governments ever again.

Please. Just get out of our way.

Ok, Boomers!?
*************
I feel bad for almost all mills except you. You’re kinda gross and one of the least realistic posters here.
It’ll be interesting when the tidepod munchers surpass you after you’ve accomplished nothing. I wonder who you’ll blame them?

M40 Belize

#36 Glengarry Girl on 01.01.20 at 2:00 pm

#32 – RE_Invester

Can you suggest some good sites to advise with other tax considerations before setting up a rental property business for retirement income in Ontario?

#37 crowdedelevatorfartz on 01.01.20 at 2:12 pm

@#16 Millenial Surrealist
“21. Do not, under any circumstances, consider voting for Boomer Con governments ever again….”
++++

One wonders what “cohort” you will blame when the Cons….inevitably ….regain control of parliament.
Because…..Eventually , even the rare voting Mils will realize Trudeau is an opportunistic poser completely unfit to let the “budget balance it’s self” or … will it be the 50 cent canuck buck that does the trick…..?

Alas….either way….. too little too late for the overly tax burdened Mil voters eventually realizing….the Libs really dont care about their problems……

#38 rah rah on 01.01.20 at 2:17 pm

Love the sentiment of GT’s # 20 –

“Life is not about accumulating money. Wealth just makes it easier.”

I always loved the idea that there are two ways to be rich: make more or desire less. So maybe we should try to be content with the wealth we have and invest in things like close friends.

#39 David Fanning on 01.01.20 at 2:47 pm

Great post. I’d love a follow up one day on commuting pensions. If you have one, should you skip RRSPs (even spousal) to save up the room for commuting? Invest only in TFSA and non registered? Or is that too simplistic?

#40 Annek on 01.01.20 at 2:57 pm

“Re:
Millennial Realist on 01.01.20 at 11:01 am
You forgot one, Garth:

21. Do not, under any circumstances, consider voting for Boomer Con governments ever again. Their historic financial incompetence will lead to massive debt and income disparity and an eventual economic disaster”
———————
You must be kidding! What do you think Trudeau has done right now?All of the above…

#41 acdel on 01.01.20 at 3:00 pm

2020 will be an interesting year for sure; thanks for the list.

I was reading a story a while back regarding this new “OK Boomer saying”! First it warned of the young one’s of repercussions of a possible lawsuit due to the derogatory meaning behind it; meaning age discrimination. It is now becoming more and more prevalent in the courts.
Personally I am not a boomer but close to it and found it slightly amusing when I first heard that expression. But, just be careful when and where you say it.

Not my comment: I lifted this from another news wire, here is a posting from a reader.

The obvious answer to “Okay Boomer” is “Show us how.” In other words challenge Generation Z to demonstrate their beliefs with their own actions.

“Live a carbon free life? Show us how. Did you take the bus here? Have you given up your car? Do you commit to take no more overseas vacations?”

“Destroyed your job prospects? Show us how to create jobs. Are you creating a company that will offer green jobs to Gen Z workers?”

It is easy to criticize, much harder to do better yourself. Okay Gen Z … show us how.

—————————————

Anyways; a response to that poor soul Felix; my neighbor was telling me that his daughters stupid cat tried to swipe out a flame on a candle; that did not work out so well; I almost felt sorry for the feline; almost!! :)

#42 FreeBird on 01.01.20 at 3:04 pm

Hope Bandit is better. Can be so hard when they get older on us and them. Will pass on the list. Some of us can’t fill the last as much as we’d want (and do) for health (or other) reasons and doctor’s advice. But hoping one day yes. Look at adopting/rescuing first. There are too many great animals needing a good forever home. Some abandoned or neglected from lack of time or funds to care for them. Do some research on temperament, energy, grooming etc. It’s not a cat blog but many cats need a home too and can be a good fit for those with busy schedules or immobile rather then leaving a dog home 8-10 hrs alone most days or unable to get outside daily. Also shelters incl smaller ones always need donations. Look up their website for wish lists along with monetary ones of course. You can also name them in a will. Saves taxes and the animals/charity benefit. Win, win. Good legacy gift and topic for future blog post. Happy new year.

#43 Born in Hamilton on 01.01.20 at 3:10 pm

#16 Millennial Realist on 01.01.20 at 11:01 am

You seem like a glass-is-half-empty type of person. It’s too bad you can’t appreciate just how lucky you are to be alive today.

https://www.spectator.co.uk/2019/12/weve-just-had-the-best-decade-in-human-history-seriously/

#44 WUL on 01.01.20 at 3:14 pm

Garth,

This decrepit, aged, infirm, rich Boomer, mildly boffo and more than pathetic blog is of benefit to me. It is increasing my providence.

This year will be “annus horribilis” for my creditors as it is debt annihilation year.

I’m already striding down that trail and they’ll be pounded hard.

Best to you, Dorothy, the trophy wife hugging associates and the hungover dog (I’m a kindred spirit with Bandit today in Fort McMisery).

WUL

P.S. – A shout out to the intelligent Millennials that bark in the comment section here, like Millennial Realist and the Sunshowers dude or whatever his/her handle is. You’re HEP TO THE JIVE and have spotted the 16 tons of garbage my cohort (OK Boomers) handed you. Sorry, but my actions were not conscious decisions. I’ll make it up to you to the extent I can, even if it is only as fertilizer as I decompose. Keep it up young folk. I’m on your side and strive to have your backs. Unless it requires legal services, in which case my usual hourly rate applies.

#45 Post on 01.01.20 at 3:18 pm

Great resolution advice. Happy new year to you and your’s Garth.

#46 TurnerNation on 01.01.20 at 3:21 pm

DELETED

#47 pypes_2000 on 01.01.20 at 3:30 pm

21. Any chances of seeing new ETF’s for money laundering in 2020?

https://www.cbc.ca/news/canada/british-columbia/peter-german-money-laundering-report-2019-1.5089036

https://www.citynews1130.com/2019/05/09/province-report-dirty-money-bc-real-estate/

#48 Dean on 01.01.20 at 3:55 pm

Your 2020 BC assessment reality check is now available. If you live in my neighborhood and bought a house in 2016 I hope you have some alcohol left from a New Year celebration because this party is over.

#49 Captain Uppa on 01.01.20 at 4:00 pm

Re: Leasing a car

I know it makes sense for the reasons give, but it just feels so wrong… like I’m a second-tier citizen.

The Man must have brainwashed me well.

#50 crazyfox on 01.01.20 at 4:11 pm

A surprise, since he didn’t even have that many Shooters last night. – Garth

That you know of. What’s his name again? Like your #20 btw.

#51 Igor .B. on 01.01.20 at 4:14 pm

Thank you Garth. Happy New Year.

#52 crowdedelevatorfartz on 01.01.20 at 4:16 pm

@#PYPES_2000
I’m not so much focused on the money washing laundromat in the Lower Brainland.

Just watching the Bank of Mom and Dad second mortgaging their homes to help the Millennials fly the coop…

https://theprovince.com/news/local-news/b-c-notaries-say-first-time-homebuyers-relying-more-than-ever-on-bank-of-mom-and-dad/wcm/73633064-f2d0-4349-8784-643a87e1a99a

Its a good thing Boomers had babies….otherwise the Real estate market would be dead…….

#53 TurnerNation on 01.01.20 at 4:18 pm

It seems that I prodded a sacred cow and/or beat a dead horse in my last post. Of interest in my family I’m actually the only non-immigrant, I’m the only one born here.
Still I’m not the one pushing the Climate Emergency (my city council is, they declared it -as have most big cities).
On that note for the 2020 doomers, who knew that the world is more complex than simply:
Carbon = Earth’s Heat Control knob.

Gasp there are like clouds and stuff. But hey you get the results you pay for/paid-for.

https://electroverse.net/new-scientific-paper-proves-clouds-control-the-climate-not-man/

#54 mike from mtl on 01.01.20 at 4:32 pm

#10 tfs-eh on 01.01.20 at 10:25 am
….
You’ve talked many times about gifting money to a spouses TSFA to avoid attribution. I am wondering if there are any pitfalls to avoid, or documentation required for this approach?
/////////////////////////////////////////////////////////////////////

Is no different from writing a cheque / e-transfer. Moving like 50k might attract attention from the CRA but I doubt most would do that willynilly.

However know that once it’s in their account, it’s no longer yours. Legally they can blow it on beer and smokes and you’d have no (legal) recourse except perhaps small-claims court.

#55 Steven Rowlandson on 01.01.20 at 4:36 pm

What is the rule of 90? Work hard and save every penny for 90 years and then buy your first home and then die a virgin?

In your case, add a decade. – Garth

#56 Beatrice on 01.01.20 at 4:43 pm

Re: Dean, #48

BC Assessment reality check

Thanks for the reminder! I just checked mine and WOW!!! is the party ever over!
Almost a $200,000 drop from last year, and in an area where prices have only dropped one time (by $16,000) in 20 years.

This is amazing! Interesting times ahead for sure, especially for people who over-leveraged in the last 4 years, who will be backwards in their mortgages. Only 1 or 2 more years until their fivers come up for renewal

#57 Kevin on 01.01.20 at 4:52 pm

Great post, Garth. Thank you and happy new year!

I’m sure you’ll get some backlash about leasing a car vs buying it… I still can’t follow that advice, but I see the merits. I got in two major not at fault accidents this year and the value for my car has dropped drastically. However it’s used and purchased at a good value so I don’t mind too much.

Furthermore, one of your posts will butt heads with the other. Most landlords don’t want renters with pets. :( My parents in YVR surely don’t.

#58 acdel on 01.01.20 at 5:37 pm

#43 Born in Hamilton

Hey, at least you tried. The link you provided has a lot useful/informative info; I just wish people would perpetuate themselves to the positive things that many are doing out there as opposed to all the negatives. So much good is happening and yet people do not see it. Always easy to criticize! All the best in 2020!

Hey Garth, keep us up to date with the condition/s of your bionic Bandit; thanks again for giving a sh*t! Dawgs appreciate it! Maybe Felix as well! :)

#59 baloney Sandwitch on 01.01.20 at 5:45 pm

A masterpiece today Garth. I am framing it.

#60 Real Estate Billionaire on 01.01.20 at 6:16 pm

Flip homes in Vancouver and claim the principle residence capital gains tax exemption. If you can’t sell the home for a million dollar profit minimum, rent it rental income tax free until you can.

Special training on how to acquire the smurf buyers you need without breaking the bank.

Stay out of jail and never give a chick your real name.

#61 crowdedelevatorfartz on 01.01.20 at 6:20 pm

Did you go for a New Years Polar Bear dip in Halifax Harbour Garth?
Showed those Bluenosers how its done?

#62 Long-Time Lurker on 01.01.20 at 6:31 pm

Happy New Year!

Thank you, Garth, for continuing your blog!

#63 PA on 01.01.20 at 6:42 pm

Rule#16 Why not just buy used?

Same reasoning. – Garth

#64 Spiltbongwater on 01.01.20 at 7:11 pm

Garth, if someone bought a million dollar house in Van last year with 20% down, the new assessment shows as likely 12% drop in B.C. Would this make the mortgage high ratio now, $7??,??? debt with assett likely assessed at $880,000 or so. Would lender require more cash or to purchase CHMC insurance as loan to value now greater then 80%. Asking for a friend.

#65 RE_Investor on 01.01.20 at 7:55 pm

#36 Glengarry Girl on 01.01.20 at 2:00 pm

I suggest this approach, until you have a good handle on your rental business:
Meet with an accountant before you even consider a rental property. Also meet with a real estate lawyer before you even setup an offer, unless you are thinking about converting your principle residence to a rental property. Then the accountant will be able to advise you.

A great accountant is worth every dollar you spend when you have a rental business. I always ask for a complete data file and PDF of my filed taxes. I usually import this data into a tax program, and learn about what expenses can be used to decrease rental income. I use CCA very sparingly, and make sure you don’t depreciate the residential real estate building if possible.

I also check the CRA site for upcoming changes to the tax code.

I make sure the rental income is split between family members on title.

I track all income and all expenses daily on excel, and then provide my accountant with this data. This cuts down the cost for taxes filed and keeps you organized. It also allows you to see your cash flow from each house instantly (mine is positive!).

Develop your own administration style to deal with your properties. Always expect something to go wrong with your houses, and be prepared with a number of various contractors for quotes. Pick and choose wisely. Always keep your rentals maintained better than your own primary residence. Especially since the expenses can reduce your rental income.

Once you get enough rental units, you can even pass the management over to a property manager. They may take anywhere from 5% to 10% of the rental income plus and maintenance costs. Or if you’re fortunate, pass this onto your kids. I’ve had my kids in the loop on RE investing for many years and they are ready to take over this legacy we created.

Cheap tax program: UFILE 12 (2019)
CRA Tax code = https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html

Remember that a rental business will take up a lot of your resources and time. Not the same as paying 1.25% – 1.5% for someone to manage your balanced portfolio. But when you see the gain over years (price appreciation and rental income), you will understand that making money takes work, but it’s definitely worth the effort.

#66 Nonplused on 01.01.20 at 7:56 pm

Number 20 should be number 1, but I realize you may have saved it for last for larger impact.

The “rule of 90” at number 6 is a great one but it is difficult to maintain, unless you want to be a house flipper. I consider it to be more of a guideline when purchasing. Depending on how your other investments, house prices, and income (thus ability to save) go, it is hard to keep to the rule of 90 without large and in YVR and YYZ extremely large, purpose defeating fees. A simple real estate transaction can cost much more than your financial adviser does for a year. Selling a $500,000 house can cost $17,000 just in realtor fees. Don’t trade houses to stay rule of 90. It’s rule of 90 in, and whatever it is on the way out once the house is no longer what you need. You should no more flip houses than stocks. Maybe get HELOC if you need more exposure to your balanced portfolio but don’t flip the house. The fees are killer.

Rule # 16 “lease your car” is good advice if you insist on driving new cars or getting something that has terrible resale value, but the actual financial benefit to this is minimal because the leases are carefully calculated. It’s basically just financing. Leasing may be better than buying a car on payments but not by much. Instead, the best thing to do is buy a new or slightly used highly dependable car and run it until the wheels fall off. Unfortunately in today’s world that really only leaves a Corolla as an option, most other cars are junk. If it is a work vehicle, leasing may be the right option because it can be deducted.

This year I fully exercised point #10, I am happy to say. Not much income (I live in Alberta, the land of the shunned) so I decided it was a good time to move assets from the cash account to the TFSA. No resolution required, already done and already topped up. I should have done it earlier but tax planning is a big part of how to manage things. I made the move when I expected my tax rate to be low. So sure I know that capital gains are only taxed at 25% (50% x 50%), but saving a bunch on that seems to have been at least close to worth it.

Other than that the list is golden.

Happy new year and I hope Bandit recovers from his hangover. And I hope that is all it was. But eventually all trades must be closed. My wife has a cat that has been dying from kidney failure for 6 months now but the cat doesn’t seem to know. So she was right not to put it down until there were signs it was in discomfort. No signs yet and 6 months is a long time for a cat. Thankfully we have a good carpet cleaner. I am reminded of the scene from the original “Blade Runner” where the cop says to Harrison Ford’s character about his replicant girlfriend, “You don’t know how much time you’ve got. But then again, who does?” Or something like that anyway. Best wishes for health and prosperity to Bandit and you and your wife in the new year.

#67 Nonplused on 01.01.20 at 8:19 pm

#41 acdel

I found some of your points persuasive, but I don’t know if millennials will. It is really easy to criticize if you are not then called to offer solutions. We don’t need any more Greta’s. We need engineers. We have engineers, and I believe they are working on it.

#68 flop... on 01.01.20 at 8:20 pm

New year, new loss


if it sells at 2019 assessed = $2,603,100 loss (+ expenses)

1736 W 37th Ave, Vancouver

Sold 2015 $6,380,000
Sold 2016 $7,860,000

Now asking $6,980,000… whoops

2019 Assessed: $5,256,900
2018 Assessed: $6,650,400
2017 Assessed: $7,810,500

#69 TurnerNation on 01.01.20 at 8:20 pm

#33 Stan Brooks small problem man.
This 3 min report points out news releases, that giant Pharma companies Merck, Pfiser have bought into livestock tracking systems. Odd eh? Until we see all livestock will be tracked and by way of drones, satelites. And that all of this must adhere to UN’s “Sustainability” goals.
What are the chances…what are they, with this global control system you will be forbidden ownership of the means of food production. All in the name of “saving the planet”. Didn’t I predict man-made food shortages?

Merck, Pfizer, and the UN – Tracking All The Livestock
https://www.youtube.com/watch?v=SW6jiDfmed0

And one need watch only 10 min of this to see the advances in lab-engineered franken foods. All for “climate change” and to save the planet. See what climate change can do, usher in total global control over our food supply. Would not expect less from our tax farmers. Don’t even ask about our fertility rates, our farmers got that too

Please Stop the Ride to a Biotech Food Takeover
https://www.youtube.com/watch?v=HSyfJDbfDTI

#70 yorkville renter on 01.01.20 at 8:36 pm

Question about car ownership… looking at buying a 2-3 year old car – same style as brand new, and 50% less than new… for the same payment as the Lease I can own the car outright in 5 years and would keep it longer.

Does the same advice still apply?
I would deduct the expenses as I’m self-employed

#71 dosouth on 01.01.20 at 8:44 pm

“20. Get a dog. Non-judgmental love, loyalty and sincerity. You need this. We all do.
Life is not about accumulating money. Wealth just makes it easier. Being loved, and needed, makes it worth living. Start here.”

You are so right. We are traveling in the south right now and unfortunately one of our two passed away unexpectedly today. Great listeners, road warriors and best of all good judge of character….

Peace to all in this New Year

#72 Flop... on 01.01.20 at 8:45 pm

#68 flop… on 01.01.20 at 8:20 pm

New year, new loss.

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

Yeah, yeah, I’m still here, you don’t have to be a turkey to try and draw me out.

Can’t I at least put the suitcase away first…

M45BC

#73 meslippery on 01.01.20 at 8:52 pm

Happy New Year
https://www.sadanduseless.com/ups-dogs-gallery/?fbclid=IwAR3rJ_oVzhUdAwjSY4vRf_6IiOLJiqz9u-7_v-diXFkgzKi0G2MfBN1TDug

#74 acdel on 01.01.20 at 9:21 pm

#67 Nonplused

That is exactly my point! There is such a highly educated so called mills out there that are not using there education to the full extent but using there anger as an excuse. Every generation has gone through it.

Emagine for a moment; there are lets say one to two billion highly educated young folks out there. They put there minds together; create something brilliant; ask for funding from either the corp world or each donate a dollar or two to the cause and create something spectacular.

First question will it be listed on the stock exchange? Or two; if they stay private how much will they contribute to all they are all complaining about? Will they create affordable housing; will they create a green energy that is affordable, will they create the end on hunger and war????????? Let us hope so; at my age I have done what I could/possibly can; depends how long I live but seriously there are great examples out there of new entrepreneurs making a great difference; focus on them instead of the past!
This blaming the boomers who have made extraordinary sacrifices towards world peace; the comforts that we now enjoy minus the politics is just unfair to them. Politicians are a small minority; easy to change that.

Put your money and your education where your mouth is; make a difference, stop your whining!!

#75 PetertheSeparatistfromCalgary on 01.01.20 at 9:33 pm

Good advice Garth accept for one thing I disagree with and another I conditionally agree with.

Rather than leasing a new car why not buy a used low mileage car and pay cash or use a low interest loan like a home equity loan to pay for it. Just make sure you get it checked out by an independent mechanic before buying.

Get a dog but only if you are committed and able to take care of it for 15 years or so. This is why you can’t rent a dog.

All the other stuff I agree with!

Have a great 2020!

#76 PetertheSeparatistfromCalgary on 01.01.20 at 9:40 pm

Correction you actually can rent a dog. Isn’t google search great?

https://www.rover.com/blog/puppies-for-rent/

#77 youngfamily on 01.01.20 at 10:05 pm

Good advice. With a young family on one income we have to make some choices and can’t follow some of these. If one doesn’t expect needing the money for 16-20 years, would you take from a TFSA to fund an RESP? Thanks!

#78 Lobster Man on 01.01.20 at 10:39 pm

#56, Beatrice

BC Assessment Reality Check

All the lenders in the Lower Mainland are working overtime now, pouring over the newest BC Assessment figures.

Within a few days, those with “excessive” HELOC’s may get a call from their lenders. HELOC’s are demand loans, and as such every lender has the right to ask for additional funds (cash) to make up the “breach in the margins”. You don’t have to wait for months or years.

Happy New Year, Everyone!

LM

#79 OK, Doomer on 01.01.20 at 10:40 pm

#16 Millennial Realist on 01.01.20 at 11:01 am

Please. Just get out of our way.

Ok, Boomers!?
++++++++++++++++++++++++++++++++++++

Typical comment by MR. Just asking for Boomers to just give up and hand everything over to them. That’s what happens when everyone gets a participation ribbon when they grow up; the sense of entitlement is crippling.

Also I’ll go out on a limb and say that MR is an artist or arts/poli-sci trained. Why do I say that? Scientifically or technically trained people don’t worry about the whole climate thingy.

Artsy/poli-sci people are trained to think that every piece of a puzzle has to fit the only puzzle they can see, so they hammer the pieces until they’re all jammed in somewhere, even if the picture makes no sense. In the arts mind, only one puzzle exists.

Science trained people are perfectly comfortable throwing out pieces of the puzzle that don’t fit and are open to the possibility that the pieces that don’t fit come from another puzzle. Multiple unrelated puzzles are the norm to the sciencey-dudes, so they don’t sweat it when things don’t fit perfectly.

It’s ironic; the arts people are supposed to be the ones with the open minds, but they’re actually very closed minded and blind to any causes to climate change other than what the media tells them. Too bad they can’t escape their mental prisons. If they could they could probably contribute a lot.

#80 SeenGweeds on 01.01.20 at 10:43 pm

Does rule 4 apply always or depending on size of mortgage? What if you have 4 years left at 3.56? :)

#81 pypes_2000 on 01.01.20 at 11:16 pm

@#52 crowdedelevatorfartz

Bank of Mom and Dad second mortgaging their homes to help the Millennials fly the coop…
This is happening in fault of our Justice Department of Canada has fail to end corruption. This has helped corruption in the real estate industry since the 1990’s. Canadians are laughingstock of idiots who truly believe their cardboard mansions are worthy of millions and elected a dumb ass like Sock Boy for the second time. Yes, elect the most corrupt person in Canadian history. Oh ya there is no Canada according to peoplekind.

https://www.canadiancasinos.ca/how-it-all-started-b-c-money-laundering-commenced-in-the-90s/

https://www.casino.org/news/bc-casino-money-laundering-exploded-in-the-late-1990s-whistleblower/

#82 Karlhungus on 01.02.20 at 12:45 am

Cant agree on the car lease. The average lease has 14% cost of capital as profit for the car companies. You are basically paying 14% to lease.

#83 Nonplused on 01.02.20 at 12:52 am

#70 yorkville renter

Everyone has a different view on this and thus I really think you need to kind of do the math and figure out what the embedded interest rates are in the lease versus depreciation and maintenance. For me, I have found used cars to be much cheaper than new ones over a longer time frame. But not all. If you are going to buy a BMW or Land Rover you should lease. Chevy’s now literally fall apart on the road after 5 years, so lease. Chrysler’s are crap from day one unless they have the Cummins engine and Aisan transmission (High Output is how you tell), but that is a big truck. But nobody ever regretted buying a Toyota Corolla, new or lightly used. So the calculation cannot come down to just one sentence. There are a lot of things to do the math on including how you will use the car and what type of car you are looking at. But if it is a Porsche you lease. A Ford F150 with a V8 should be bought, but the EcoBoost should be leased. It’s all very complicated. I personally wouldn’t touch anything gas powered that has a turbo-charger with a 10 foot pole except on lease. Sure you get a bit better mileage, but you also need a new engine after 100,000 miles and it isn’t worth it.

So, as it is, there are some girls you marry and some you only date. Cars, it turns out, are the same.

#84 Dr V on 01.02.20 at 1:21 am

16 MR – I, a boomer, keep dropping the ball. The mills look at it and don’t know what to do, so I pick it up and run on..…..what is the problem?

#85 crazed and a little confused on 01.02.20 at 2:31 am

Hi garth,
I agree with most of what you said above. but I kinda timed the markets; however my trend is to buy when its going down . I mentioned before I sold mfc from 16.78
buy about 15,
sell @ 16 ish
then buy it again @ 15.
of course I’m not perfect and it kept going to 14.
as you know its about $20.38 after I sold it @$19.
I do this with 2 other stocks . I have to take more risks. I live in the 604 . most unaffordable place . Im not rich . all that trading for MFC only gave me about $5k in a year ; however dividends were about 50% more when I started . My MFC is in my TFSA acct
im not special just trying to survive

#86 James on 01.02.20 at 7:07 am

Another great post, Garth. Thank you.

#87 Sail Away on 01.02.20 at 7:19 am

#85 crazed and a little confused on 01.02.20 at 2:31 am

Hi garth,
I agree with most of what you said above. but I kinda timed the markets; however my trend is to buy when its going down .

I do this with 2 other stocks . I have to take more risks. I live in the 604 . most unaffordable place . Im not rich . all that trading for MFC only gave me about $5k in a year ; however dividends were about 50% more when I started . My MFC is in my TFSA acct

im not special just trying to survive

—————————————-

No, you’re not special, although many people who come out ahead while swing trading in a rising market seem to think they are. My brother being another.

Stop doing this if you don’t want to get killed. But you’ll learn on your own. Picking up pennies in front of the steamroller…

#88 crowdedelevatorfartz on 01.02.20 at 7:59 am

@#81 pypes_2000
“Yes, elect the most corrupt person in Canadian history…..”
++++

Then………our only choice is to put some “honesty” back in politics?

Christy Clark for Prime Minister? :)

https://www.cbc.ca/news/canada/british-columbia/christy-clark-cpc-leadership-1.5400255

I think Christy’s ego could handle it….dont you?

#89 crowdedelevatorfartz on 01.02.20 at 8:09 am

@#78 Lobsterman
“Within a few days, those with “excessive” HELOC’s may get a call from their lenders. HELOC’s are demand loans, and as such every lender has the right to ask for additional funds (cash) to make up the “breach in the margins”. You don’t have to wait for months or years.”
++++

Ohhhh yeah.
People are going to realize Mr Banker isnt their friend after all.
Canadians and their mortgage/LOC/Plastic/ debt….is gonna bite in 2020.
Time for an interest rate rise?

Millennials may actually be able to buy a house in 2021.

#90 maxx on 01.02.20 at 8:17 am

@ #1

“Hair of the dog” is the cure, and an older dog throwing up could mean something far more serious than a simple hangover, which animals are usually too smart to get in the first place.

#91 Tater on 01.02.20 at 8:45 am

#70 yorkville renter on 01.01.20 at 8:36 pm
Question about car ownership… looking at buying a 2-3 year old car – same style as brand new, and 50% less than new… for the same payment as the Lease I can own the car outright in 5 years and would keep it longer.

Does the same advice still apply?
I would deduct the expenses as I’m self-employed
—————————————————————

Cars that lose 50% of their value are not cars you want to own outside of warranty.

#92 Tater on 01.02.20 at 8:47 am

#82 Karlhungus on 01.02.20 at 12:45 am
Cant agree on the car lease. The average lease has 14% cost of capital as profit for the car companies. You are basically paying 14% to lease.
———————————————————–

Can you elaborate on this?

#93 IHCTD9 on 01.02.20 at 8:49 am

#87 Sail Away on 01.02.20 at 7:19 am

Picking up pennies in front of the steamroller…
___

Heh, that’s a good way to put it!

When I was much younger, I played in the stock market with a self directed account and a few grand. There was a bit of a frenzy going on in the late 90’s and everyone seemed to have a discount brokerage account. I pretty much got wiped out on Nortel and Celestica when the telecom bubble popped.

It was fun while it lasted – but you’ve only got to make one mistake and you’re screwed. If I had been playing with my actual retirement fund, I would have had to start over from scratch.

#94 IHCTD9 on 01.02.20 at 8:58 am

#70 yorkville renter on 01.01.20 at 8:36 pm
Question about car ownership… looking at buying a 2-3 year old car – same style as brand new, and 50% less than new… for the same payment as the Lease I can own the car outright in 5 years and would keep it longer.

Does the same advice still apply?
I would deduct the expenses as I’m self-employed
___

We usually get a decent 2-3 year old car for Ms. IH, and what you’re considering is what we did. Buy ’em 2-3 years old for around 1/2 price and drive them to 350-400K.

These cars usually ran us 8-10K, with 100-140K on the clock (higher km for the years normally).

I kept up with the maintenance myself, once over 250km, it starts coming regularly. Keeping them maintained shade tree style was part of the scheme.

By 350K, most of these cars were worthless, and were sold for peanuts/scrapped – but we normally got 6-7 years out of them first.

#95 Dharma Bum on 01.02.20 at 9:06 am

Bandit decided to throw up at 4 am on New Year’s Day.
——————————————————————–

What a coincidence.

That’s what time I went to bed.

#96 IHCTD9 on 01.02.20 at 9:11 am

#83 Nonplused on 01.02.20 at 12:52 am

…A Ford F150 with a V8 should be bought, but the EcoBoost should be leased. It’s all very complicated. I personally wouldn’t touch anything gas powered that has a turbo-charger with a 10 foot pole except on lease. Sure you get a bit better mileage, but you also need a new engine after 100,000 miles and it isn’t worth it.
___

The 3.5 EB doesn’t do much better than the GM 5.3 with the variable displacement. Boss’s 2019 F150 Limited with the 3.5 H.O. EB averages about 13-14/L 100 km, my bros Silverado with 5.3 does about 14-15/L 100 km.

The EB does make more power, and way more (diesel like) torque than the 5.3 though. It also seems to be holding out fine. I feel the same way though on the complication factor.

BTW, I’ve owned several Turbocharged gasoline fueled vehicles, no issues under the hood. My SAAB 9-3 went 250K and the engine was great right to the end (everything else on the car quit working though). A couple of my bro’s ran Turbocharged Volvo’s with the 5 cyl engine past 500K – no problemo.

#97 Dharma Bum on 01.02.20 at 9:19 am

#18 Number 21

Number 21
positive posts on all social media including this blog which attracts its fair share of interesting people.
Number 22
Stop being righteous not sure what’s going on in the world from honking horns to road rage, why do people feel they are right?
Number 23
Entitlement
Your not entitled to anything but hard work. Stop expecting the government to give you something.
Number 24
Be grateful
Only you can change what’s happening to yourself.
Happy New year folks
——————————————————————-

Number 25

Make America Great Again

#98 crowdedelevatorfartz on 01.02.20 at 9:28 am

@#90 maxx
“Hair of the dog” is the cure…

+++++

Gee thanks Max.
Good to know a pun isnt lost on you…..

Commenting about #1 and you’re #90?
You’re a little late to the party doncha think?.
You should get together with “Moping Realist” and weave Earth friendly shopping bags out of old newspapers and blame Boomers for the plight of the world.
Seems to make HIS day.

#99 OK, Doomer on 01.02.20 at 9:43 am

Ireland going full out for Electric cars

https://www.breitbart.com/europe/2020/01/02/new-law-to-ban-petrol-and-diesel-cars-in-ireland-to-avoid-climate-apocalypse/

I wish that they would step up the timetable and do it sooner. By having a very quick, very public trainwreck of a fiasco it might stop Trudeau from attempting the same thing.

BTW, did you know that Irish Mills also invented the idea of eating Tide pods and then posting it on Youtube?

Banning gas powered cars. Brought to you by the same generation that invented eating Tide Pods. What could possibly go wrong?

#100 oh bouy on 01.02.20 at 9:47 am

@#79 OK, Doomer on 01.01.20 at 10:40 pm

——————————————————-

lol, your comment is just as ignorant as MR’s.
pot meet kettle.

#101 Glengarry Girl on 01.02.20 at 9:57 am

#68 RE_Investor

Thank you for this great advice, it sounds like you made this work for you and your Family at the right time, before the housing bubble. I am still in the investigation stage, learning and studying economics. We will be deciding in the next couple of years if we will take this approach with our Nest Egg to generate our retirement income. We are still young and capable and have laid the foundation of this plan with our kids. We ran a small computer consulting business in Ontario years ago, your approach to taxes is familiar, conservative and is how we ran our business. We have rented 7 executive homes and 3 condos in the US over the past decade and have gained some valuable knowledge being on the other end of that transaction. We have no faith at all in the Stock Market and Gold and Bitcoin is not for us. It just makes sense for us to invest in hard assets like land and houses. Until then, it’s savings in insured GICs. This mentality does not get much support on this blog. I absolutely think Garth Turner is an honest person and shares many great things here. I am a daily reader, and although I don’t agree with a lot of what is shared, I do appreciate having an objective look at things and challenge myself to do that and come to my own conclusions. I like that this blog has a variety of people with different points of view sharing ideas. Happy New Year Blog Dogs.

Your ‘insured GIC’ approach has failed over the past decade, yielding nothing after inflation and taxes. Converting liquid assets into rental real estate at valuations and cap rates which will give GIC-type returns will fail in equal fashion. You sound too intelligent to be this myopic and fearful. – Garth

#102 Re-Cowtown on 01.02.20 at 10:00 am

#94 IHCTD9 on 01.02.20 at 8:58 am
#70 yorkville renter on 01.01.20 at 8:36 pm
Question about car ownership… looking at buying a 2-3 year old car – same style as brand new, and 50% less than new… for the same payment as the Lease I can own the car outright in 5 years and would keep it longer.

Does the same advice still apply?
I would deduct the expenses as I’m self-employed
___

We usually get a decent 2-3 year old car for Ms. IH, and what you’re considering is what we did. Buy ’em 2-3 years old for around 1/2 price and drive them to 350-400K.

These cars usually ran us 8-10K, with 100-140K on the clock (higher km for the years normally).

I kept up with the maintenance myself, once over 250km, it starts coming regularly. Keeping them maintained shade tree style was part of the scheme.

By 350K, most of these cars were worthless, and were sold for peanuts/scrapped – but we normally got 6-7 years out of them first.

+++++++++++++++++++++++++++++++++

Spot on. Especially on a business case. It’s all about minimizing the expenses. No one ever got rich by having big write-offs. But the problem is that very few of us are left that can tell a 1/2 drive socket from a Robertson screwdriver.

I have a 14 year old work truck. It took me a while to find a good one but it runs great and is easy to maintain. Also only cost me 10 cents on the dollar compared to a new. Sure, gas mileage isn’t as good as the new model, but I’d have to own it for 50 years before the fuel cost makes a difference.

It’s a trick I learned from an old boss of mine. He ran older but still reliable road construction equipment. All bought for pennies on the dollar. When the recession hit, he padlocked all the equipmet in the yard and went to Hawaii until the recession ended. His competitors meanwhile, with shiny new equipment and big bank loans, went broke. When the recession ended, he unlocked the gate and went back to work and bought what he needed from the bank at….pennies on the dollar. Rinse. Repeat.

#103 OK, Doomer on 01.02.20 at 10:08 am

#100 oh bouy on 01.02.20 at 9:47 am
@#79 OK, Doomer on 01.01.20 at 10:40 pm

——————————————————-

lol, your comment is just as ignorant as MR’s.
pot meet kettle.

——-

Point out to me where I’m wrong. Should be easy to do. At this point your comment is only a half-pinion, and not even a whole opinion.

If you want to make a point, say “You’re wrong because……………” and then make your point.

Otherwise just saying “You’re wrong” makes as much sense as saying “You’re strawberry”.

#104 Sail Away on 01.02.20 at 10:18 am

#93 IHCTD9 on 01.02.20 at 8:49 am
#87 Sail Away on 01.02.20 at 7:19 am

Picking up pennies in front of the steamroller…
___

Heh, that’s a good way to put it!

When I was much younger, I played in the stock market with a self directed account and a few grand. There was a bit of a frenzy going on in the late 90’s and everyone seemed to have a discount brokerage account. I pretty much got wiped out on Nortel and Celestica when the telecom bubble popped.

It was fun while it lasted – but you’ve only got to make one mistake and you’re screwed. If I had been playing with my actual retirement fund, I would have had to start over from scratch.

——————————————-

I didn’t coin the phrase and don’t know who did, although it sounds like a Mungerism. It’s appropriate, though – risking everything in hopes of a fast buck.

The stock mentioned, MFC, returned 26% plus 3.7% dividend over the year. Why bother swing trading in that case? The poster seems to assume taking on more risk somehow yields higher returns, without realizing the only reason for the success was overall rising markets. MFC dropped 75% in 2008, and could very easily do the same again.

Stock geniuses everywhere who think they’re the first to hit upon an unbeatable ‘strategy’. The fleecing will come, as it always does.

#105 YVR Expat on 01.02.20 at 10:43 am

#16 Millennial Realist on 01.01.20 at 11:01 am
You forgot one, Garth:

21. Do not, under any circumstances, consider voting for Boomer Con governments ever again. Their historic financial incompetence will lead to massive debt and income disparity and an eventual economic disaster; plus, their deliberate ignorance of these issues as well as the climate crisis and their strategic spewing of social hatred will deny future generations of even having a chance to adapt to a challenging future.

Most Boomers are now in, or will be soon entering, their 8th decade. Three score and ten, remember that phrase? The game will soon be up.

Please. Just get out of our way.

Ok, Boomers!?

*************************

Can a millennial chime in here? My generation is bitter: too much social media, too much FOMO, too much porn and not enough healthy relationships and sex. Marriage rates are down, loneliness is on the rise and depression and anxiety are rising. Millennial’s are lost and they want someone to blame. Everyone wants love and meaning, and when you don’t have it in your life you seek it out…in the days before WW1 and WW2 desperate people were easily seduced by Bolshevism and Nazism. Today, that same revolutionary spirit is back and we see the demoralized youth being radicalized by neo-Communism and ISIS.

Times change, people don’t.

#106 IHCTD9 on 01.02.20 at 10:43 am

#101 Re-Cowtown on 01.02.20 at 10:00 am

But the problem is that very few of us are left that can tell a 1/2 drive socket from a Robertson screwdriver.

I have a 14 year old work truck. It took me a while to find a good one but it runs great and is easy to maintain. Also only cost me 10 cents on the dollar compared to a new. Sure, gas mileage isn’t as good as the new model, but I’d have to own it for 50 years before the fuel cost makes a difference.
___

Would that be a red or green Robertson? :)

Before the 17 year old pick up I drive now, I had a ’99 SAAB. Bought it from a Doc in the GTA. 150K on the clock, rust free, looked like new inside and out. It did not run, and the Doc. had nowhere to store it.

I picked it up for 1300.00, fixed it for 100.00 – and drove that sucker for 5 years. I parted out and scrapped the carcass after I was done with it for 500.00 total, so I basically had 800.00 into the car less maintenance.

You are right, knowledge/skill translates directly into dollars if it allows you to avoid buying new – probably more so with vehicles than anything else!

#107 Josh in Calgary on 01.02.20 at 10:48 am

Great advice. Except for the car lease thing. I agree with #82 Karlhungus. The implied financing costs in a lease are huge.

Not to mention the “sticker price” you pay to lease is higher than if you just bring the dealership a check. Even if you have to get a loan from your bank to do it. You have way more bargaining power when you buy and are not relying on them to finance you.

Then of course you can really save money when you buy a 2 to 4 year old car. The first few years have massive depreciation (think 30%+). Let some other chump take that hit. If you’re willing to shop around and are flexible on which brand you buy then you can get a great deal. Of course you can save more on an older car, but there comes a point where you get into higher maintenance costs too.

Also, when you lease they tend to get you in a cycle of leasing a new car every few years. Having a new car is nice, but hardly a money saving move. I’ve owned our family vehicles for 5 and 10 years respectively. Do all my own maintenance so some years it’s just $200 for oil and filter changes. I plan to own them for another decade each, at which point I’ll be giving them to my kids.

Garth just needs to admit that he’s happy to pay extra to lease because he wants to free up his time to do other things. Like putter at his ice cream shop to make a little bit of money. Some of us prefer to putter around the garage to save a little bit of money.

#108 Mr Fundamental on 01.02.20 at 11:01 am

I like #7 (the growthy RESP). We have three kids and have been trying to load ours up for the past 10 years.

Speaking of RESPs, you might want to check out MrF’s latest road trip on the topic:
https://mrfundamental.com/2019/12/07/mr-fundamental-takes-a-road-trip/

#109 Glengarry Girl on 01.02.20 at 11:13 am

Garth,

There are many other factors that effect our decision making. We consider investing in our well being number one. We invest in our 30 year marriage, our health and our kids and our relationships with Family and Friends. We are full time Nomads, living an adventurous lifestyle, testing out our boundaries of how much money we need to enjoy our life of travel and we absolutely do. All while my husband still has a high income consulting job, we barely spend his salary, just save it. We live all over the US and recently worked for 2 months in Australia. Since our little buddy Rudy, our Yorkshire passed away last year at 14 we are setting our goals for international work and experiences. We bought a new townhouse in London with cash a few years ago, all three Daughters lived there, eldest two are graduated with good jobs (Engineering Technology) the youngest is third year Electrical Engineering. They paid the utilities and managed a few roommates, teaching them some good life lessons. The condo has apparently gone up more than 30% in value since we bought it. Our daughters worked hard, did without and paid cash for their educations. Having three well rounded happy and healthy kids with no debt and job ready skills is one of our biggest accomplishments. We are staying liquid intentionally to buy in the dip. For example, we bought and enjoyed a boat for 3 years and broke even, looking for another deal currently. We also live and travel in a truck and trailer, also bought with cash on a good deal. When my husband has an account, we live all expenses paid in Hotel. There are many reasons to stay in GICs and have cash in several Countries. Some of these decisions are to hold passports and work visas in more than one Country, and having your residence in the one that is best for taxation. None of these are tied by citizenship and we are open to make that decision or not to in future. Being an Expat is a good thing for our situation. I have done very well with the Nest Egg in other ways, like currency exchange (average 33% gains) I have consider giving the Nest Egg to your firm if and when I become a resident of Canada. Although, it did sting that Ryan taunted me the other day for “missing out” on this 10 year Market. I understand that people don’t get what we are doing and don’t know the bigger picture. Maybe this post explains my position a bit more. I do not ever feel that I am missing out, we are quite contented and feeling very good about our future.

#110 Mattl on 01.02.20 at 11:28 am

#48 Dean on 01.01.20 at 3:55 pm
Your 2020 BC assessment reality check is now available. If you live in my neighborhood and bought a house in 2016 I hope you have some alcohol left from a New Year celebration because this party is over.

———————————————————–

What neighborhood?

Mine – flat or slightly down from 2018 but up significantly over 2016. Would have done really well buying in my area in 2016. We bought in 2017 and assessments, for whatever they are worth, are up 20% .

#111 Mattl on 01.02.20 at 11:43 am

#78 Lobster Man on 01.01.20 at 10:39 pm
#56, Beatrice

BC Assessment Reality Check

All the lenders in the Lower Mainland are working overtime now, pouring over the newest BC Assessment figures.

Within a few days, those with “excessive” HELOC’s may get a call from their lenders. HELOC’s are demand loans, and as such every lender has the right to ask for additional funds (cash) to make up the “breach in the margins”. You don’t have to wait for months or years.

Happy New Year, Everyone!

LM

—————————————————————

While it’s likely the bank will reach out to certain customers that are at max capacity, the reality is the banks will not push someone into default because they are close to or at their lending limit. Or even underwater. The Banks don’t want to own homes – as long as the homeowner can make the payments it will be BAU.

Now, homeowners that are reliant on credit to meet their obligations will be in trouble as that credit dries up. But defaults are traditionally low because RE is religion and Canadians will do anything to stay in the home.

Hopefully boats go on sale this year as folks liquidate their toys to free up cash.

#112 Remembrancer on 01.02.20 at 11:57 am

#110 Mattl on 01.02.20 at 11:28 am
#48 Dean on 01.01.20 at 3:55 pm
Your 2020 BC assessment reality check is now available. If you live in my neighborhood and bought a house in 2016 I hope you have some alcohol left from a New Year celebration because this party is over.
———————————————————-
Asking for a friend…

Seriously? Is there any other province in Canada where an owner, a prospective buyer, or an entire neighbourhood’s sense of value is tied to an annual property tax assessment?

Now, actual property tax charges sure, along with utilities, last updates to roofs, furnace / AC and the like as associated going forward costs data points yep, but hoping for a higher assessment, jeez. Really?

#113 Re-Cowtown on 01.02.20 at 11:58 am

#106 IHCTD9 on 01.02.20 at 10:43 am
#101 Re-Cowtown on 01.02.20 at 10:00 am

__

Would that be a red or green Robertson? :)

Before the 17 year old pick up I drive now, I had a ’99 SAAB. Bought it from a Doc in the GTA. 150K on the clock, rust free, looked like new inside and out. It did not run, and the Doc. had nowhere to store it.

I picked it up for 1300.00, fixed it for 100.00 – and drove that sucker for 5 years. I parted out and scrapped the carcass after I was done with it for 500.00 total, so I basically had 800.00 into the car less maintenance.

You are right, knowledge/skill translates directly into dollars if it allows you to avoid buying new – probably more so with vehicles than anything else!
+++++++++++++++++++++++++++++++++

The one huge advantage that Mills have over the Boomers is the web. There are tons of great sites and videos for fixing any and every car ever made. Back when I started fixing cars (late Neolithic) you had to btry to find a hard copy of a shop manual or try fixing stuff by trial and error. Made you good with a wrench, but you spent hours barking up the wrong tree or breaking stuff. With Youtube I can look up darn near anything I want to fix and save a ton of time and $$$. Much better!

#114 TalkingPie on 01.02.20 at 12:00 pm

Count me as another who considers the car lease advice to be incomplete.

If your ride of choice is something new, expensive, and you plan on trading every few years and driving moderate mileage, by all means lease and chalk it up as the cost of luxury. This is doubly true if you gravitate to German cars; they’re unreliable post-warranty and the leases are often subsidized.

If the goal is reliable, economical transportation over the long haul, I’m a proponent of buying a quality used car and keeping it. With a lease you’re perpetually paying the steepest part of the car’s depreciation curve, and although you may not have capital tied up in it, you’re still paying a money factor on it. You also get hosed if you drive high mileage or bring it back in a condition other than what the dealership deems acceptable. If you drive very low mileage, you’re paying for something you didn’t use.

Likewise, fair-weather toys can be bought used and in great shape for steep discounts and enjoyed for many years. My ’99 Miata has no rust, is reliable, enjoyable, and has cost me about $3,000 in depreciation and about that figure again in maintenance and upgrades over the 8 years I’ve driven it. Try doing that with leasing.

#115 SHANE GALLANT on 01.02.20 at 12:21 pm

Garth, do you think Moncton NB is good place to buy a rental property?

Why would you? No capital appreciation and rock-bottom rents. Cheap prices are not enough incentive. – Garth

#116 world traveller on 01.02.20 at 2:18 pm

#114 TalkingPie on 01.02.20 at 12:00 pm

We had an mx5 as well, we sadly got rid of it, but still stick with the Mazda Brand, Have two used ones and both paid off, when I bought mine it was almost 4 years old and the depreciation was almost 50% once we agreed on the selling price (negotiated hard, no dealing likes having used cars that are off lease stay on the lot too long.). With new cars selling mostly above $30,000 once optioned out, used really is a no brainer, just stay away from brands that are known to be unreliable.

#117 Sail away on 01.02.20 at 4:27 pm

#109 Glengarry Girl on 01.02.20 at 11:13 am

Garth,
There are many other factors that effect our decision making. We consider investing in our well being number one. We invest in our 30 year marriage, our health and our kids and our relationships with Family and Friends.

————————————-

GG, it sounds like you enjoy and can afford a simple life.

Why would you give yourself the logistical bother, expense, and uncertainty of rental properties? People who are successful at the RE rental game have been at it for a long time and made plenty of mistakes learning the ropes. You would want to start this at a time when you could instead ease off and relax?

It’s sort of funny that you defend your choices for residential RE and GICs on a blog that is vehemently opposed to both.

You’ve supported your daughters’ educations- now you can move in with them as they get established and forgo all those RE logistics.

#118 Barb on 01.02.20 at 8:17 pm

Fingers crossed Bandit’s OK…

Thank you. Tough few days. But not the final one yet. – Garth

#119 Glengarry Girl on 01.02.20 at 8:54 pm

#117 Sail Away

Yes, we do enjoy a Simple Life and I get what you are saying about the investment properties taking away some of our peace of mind. I have no delusion that there is risk and will be work involved. I do have confidence in our skills and ability to be rewarded nicely, should we decide to go that route. Truth is, we are not settled on what to do with our Nest Egg. We actually could live quite nicely just on the GIC interest. We are currently enjoying this Freedom stage of our lives and don’t need to decide on anything at this point. There is so much uncertainty and volatility, I am comfortable sitting on the sidelines. The kids are doing their own thing, they are still learning, they will be alright. They have also done it mostly on their own, which was the environment that we set up for their development. We wanted them to be self sufficient and they are. Self reliance and independence is how you think about things, it gives you pride and confidence. Yes, it is funny that I am defending my choices on this blog, but there are a few that read that are like minded. I think the most important thing for planning for ones future, is to understand what it is that you want.

#120 Sail Away on 01.02.20 at 11:16 pm

#119 Glengarry Girl on 01.02.20 at 8:54 pm

———————————-

I love our investment income stream that requires only a keen interest in the subject and an understanding of taxes.

I’ve also seen plenty of investment RE go awry.

Dividend investing, REIT investing, index investing, balanced portfolio investing can all be low maintenance / healthy return strategies. Skepticism helps.

#121 still saving on 01.03.20 at 2:02 pm

If only the Vancouver rental market was OK with canines. Would love to get a dog for the companionship, it’s probably the biggest draw for me to move out of the East Van.