The way out?

So if half the people on your street are within $200 a month of insolvency, they must be morons, right?

Nah. Of course not. They’ve just made bad choices. They have kids, cell phones, cars, houses, Netflix and jobs. They’re getting by. Taking vacations. Going to the mall. Timmies. Hockey. Living a life. Doing what they think they should. And it’s all damned expensive. Running out of month before you run out of money is a big win. Even if it’s by two hundred bucks.

Yesterday I opined, as a wounded, narcissistic, entitled, coy little blogger, that the words published here (all 2.7 million of them, so far) had fallen on deaf ears. Financial failure surrounds us, I said. We’re awash in debt, deficient in assets and steaming towards a retirement iceberg. House lust has been the fatal flaw leading to the point where, yes, just paying the bills is an achievement.

“I was a little taken aback when you wrote that your blog is a failure for not reaching enough Canadians to reverse their financial fortunes,” blog dog Bill says, trying to stanch my bleeding ego. “ I would say that is completely inaccurate.

“Your blog is reaching all corners of Canadian society and having quite an influence. There is a reason it is the top financial blog in the country. As such, I suspect that influence is likely now a political force large enough to not be ignored. It would not surprise me if the central bank governor himself drops in for visits, or any of his deputies.”

But this is more than just a MSU. Let’s actually talk about how the average schmuck can be helped to get off the debt treadmill, build some solid net worth and look forward to life-long financial security as a wrinklie.

“I didn’t write you to point out the obvious, but rather to ask if you could write a few blog articles about what our future governments can do to avoid financial disaster regarding the wave of “retirees” that is entering the system present day,” Bill continues. “Don’t sell yourself short, I know you are the person responsible for the introduction of the present day TFSA.  I had one idea – raise the non taxable level on RRIFs and not receive the OAS in return, as an example. No losers in that, since no Canadian has to pay in to it.  I’m sure yourself or the blog dogs will have better ideas than mine.”

Actually, I have a few suggestions to add. Hey, Chateau Bill and Poloz, you guys here today?

First, let’s help people make better decisions about money, spending, investing and borrowing.

  • Teach financial literacy as a mandatory course in high school.
  • Don’t allow car loans longer than the bloody car lasts
  • No more pay day loan outfits. They prey on ignorance and misfortune. Vultures.

Second, we must find ways to stomp down house-horniness and reduce the risk from concentrating on a single asset. Real estate.

  • Increase the mandatory minimum downpayment for CMHC insured mortgages to 10%. That would turn 20x leverage into 10x.
  • Tax capital gains on personal houses the same as personal investments – speculation is the enemy of affordable housing, and this ridiculous, historic tax break has turned us into a nation of speckers. Sure, phase it in.
  • Don’t gut the stress test
  • Don’t cave and bring back 30-year amortizations
  • Do not introduce 30-year mortgage terms. More debt and higher house prices would result.
  • Require the Canada Child Benefit money to actually be spent on children, not the mortgage, property taxes or hardwood flooring
  • Ban Airbnb. It turns houses into businesses, jacks up prices, sucks off rentals
  • Ban reverse mortgages. They Hoover off a punitive amount of equity, destroy the wealth of retired people, and reduce available real estate for younger families
  • Instead, allow retirees selling houses to grant VTBs (vendor take-back mortgages) and enjoy tax-free interest payments.
  • Legislate that HELOC and LOC payments be amortized – not interest-only – so they’re actually repaid instead of hanging around for years.
  • Abolish the Bank of Mom.

Next, let’s clear up some of the misrepresentation that confuses and misleads people.

  • Federally regulate everyone calling themselves a ‘financial advisor’, mandating standardized training and titles. [email protected] is a salesperson, not an advisor. Insurance floggers are not advisors. Mutual fund reps have the same level of training as realtors. And look where that got us.
  • Let’s have full transparency on how financial people are paid. No hidden, high-cost MERs on mutual funds. No trailer fees. These things kill investor returns.
  • Ottawa should stop spending big bucks on TV and elsewhere advertising CDIC insurance. It’s pointless. If a major bank fails (won’t happen) we’re all pooched. This scares people away from investing. And that’s just stupid.

Finally, how do we mitigate the retirement storm now gathering on the horizon? What do people with no savings or investments think they will live on?

  • Bill’s suggestion is a good one: allow people to opt out of OAS in return for lower or waived taxes on RRIF withdrawals. Should be revenue-neutral.
  • Incentivize companies with lower corporate taxes to enhance their employee pension plans and up matched contribution limits
  • Make fees paid to manage RRSPs and TFSAs tax-deductible to encourage saving, investing and avoid the dumb mistakes most people make with their money.
  • Restore the TFSA limit to $10,000. The US limit for IRAs is $7,000 a year – and tax rates are much lower there. In the UK, people can put the equivalent of $34,000 a year in this kind of account.
  • Don’t raise the capital gains inclusion rate or diddle with dividends. Encourage people to invest instead of taxing them more on money their after-tax funds earn.
  • Goose CPP contributions by employees (not those of employers since that kills off jobs) and flow them into enhanced benefits. The feds have started this, but more guts are required.

So, there are a few ideas. Some would work nicely. Others have hair all over them. But clearly this is a discussion we need to have, while our political leaders fiddle.

Something to add? I’m listening. So will they.

 

208 comments ↓

#1 Sold Out on 01.22.20 at 3:52 pm

To Garth’s list I would add:

– Get rid of provincial home owner grants. If you can’t afford your property taxes, sell the damn house.

– End provincial programs that allow deferred payment of property taxes. See above.

#2 Dave on 01.22.20 at 3:54 pm

Increase Interest Rates

#3 Income Splitting! on 01.22.20 at 3:55 pm

INCOME SPLITTING! My family gets hammered because my wage is a lot higher than my spouse. But any benefit from the government to us is measured on ‘family income’. Yes, even you know that’s unfair but your too chicken to do anything about it. Please, prove me wrong.. trust me, the extra funds would most definately be invested….

#4 Cristian on 01.22.20 at 4:00 pm

“Teach financial literacy as a mandatory course in high school.”

My son had a one-day class of “financial literacy” where someone from a bank came and talked to them about mutual funds and how wonderful it was to own such a thing. My son was really excited about it when he came home, took a while to deflate him.

#5 Marco on 01.22.20 at 4:01 pm

Restore the TFSA limit to $100,000. Also, start basic income program, now. Or let used immigrants go home and keep their GIS overseas. They will be not burden for health care, here and we can import replacements.

#6 Sold Out on 01.22.20 at 4:06 pm

#139 TurnerNation on 01.22.20 at 3:40 pm
#133 Sold Out I can’t until Drug Stores and Drug companies being handing out free cancer prevention medications. I can’t wait. Just think of the benefit to economies. I totally get you.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Too late, health authorities are already giving out free, cancer prevention medication – it’s called the HPV vaccine and it prevents several oral/genital cancers.

https://www.cancer.ca/en/prevention-and-screening/reduce-cancer-risk/make-informed-decisions/get-vaccinated/all-about-hpv-vaccines/?region=on

#7 Chris in Edm on 01.22.20 at 4:10 pm

Implement all of this or if only 1, teach financial literacy in schools. Have I used calculus lately in my daily life? Nope! If our governments combined all of these suggestions with actual proper procurement (that’s buying stuff… Spending your money), our country would be #1 in everything. Remember how Trudope spent something like $212k on a budget cover… A COVER! Yes…. $212k on the cover of a book that a couple people are going to read? Tell me that’s not insane, and that’s only 1 of probably millions of instances of poor spending / waste that happens daily throughout all levels of government. We all hear of instances like this. Remember the $600k spent on a set of wooden stairs a few years ago? I firmly believe that proper procurement could get us out of deficit as a country, and the same could be done for every province or city. Procurement is the one thing that has an effect on EVERYTHING.

Yours truly,
Someone in Supply Chain / Procurement. :-)

#8 Stan Brooks on 01.22.20 at 4:16 pm

Surprise, surprise:

Bank of Canada Opens Door to Rate Cut on Persistent Slowdown

https://ca.finance.yahoo.com/news/bank-canada-holds-rates-signals-150000652.html

To summarize:
1. Confidence is down
2. Investment is down
3. There is slowdown in the ‘economy’ read consumption…..

while interest rates are at rock bottom and we are running record deficits at all levels!

And the cherry on the cake…


Meaningful Shortfall’

If the bank cuts in the future, “it would not be a cut against a hypothetical or a possibility” rather it would mean that the forecast was showing a “meaningful shortfall on our inflation target,” he said.

That is right folks, inflation of 8-10 % is not enough for the clueless incompetent bureaucrats at BOC, they want double and triple that.

Cheers

#9 dantheman on 01.22.20 at 4:18 pm

I like it. Good suggestions overall, though I would disagree with banning Airbnb. Airbnb is great for those who believe in ‘free markets’. Sure, maybe it shouldn’t be completely free, just like most other markets, so let’s reasonably regulate it. But the benefits are plentiful and if you own property you should be able to determine it’s higher value use (within a proper regulatory framework).

#10 Another Deckchair on 01.22.20 at 4:18 pm

As a Wrinklie, final Y/Y Dec31 2018->2019 numbers are in.

About 25 years ago, I wondered if I’d be eating cat-food in retirement. Not much savings and no DB pension. First partner had kicked me out. Now got a wonderful partner (who got kicked out as well) who is on the same page.

Not quite freedom 55, but how about freedom 60? Working’s fun, but should stop and do other things sometime. That’s another story.

Ok:
“$$ worth” up $280k in 2019. It’s mainly investment income; a part of it is actual income from still working.

From a combination of:

– saving over time and investing most of what’s saved (we are keeping some in cash just in case of a multi-month downturn)

– watching where the $$ goes from the wallet; *amazing* where the money flows;

– going through about 10 years of [email protected] “investment statements” and figuring out where EXACTLY the money was flowing.

——————–

That last one taught me what [email protected] was doing, and, I figured I could do about the same, but without the huge fees taking about 50% of the investment return. I mean, it’s not rocket science, is it?

Now, about half of the $$ investments are managed personally, and about half with a good advisor at a new bank; some things, like RRSPs (and other equivalents0 are less hassle to let someone else do.

By doing things myself, I keep the [email protected] on their toes; I UNDERSTAND what is happening. They actually like that; someone who’s not just another sheep.

——————–

Lessons for the Mills who *might* let a boomer talk? Sure – keep at it; don’t buy on impulse, put something away, and watch things grow. Life’s short – enjoy every day.

Simple.

Ok. Boomer Out. ;-)

#11 Doug in London on 01.22.20 at 4:18 pm

Wow, half the people on your street are within $200 a month of insolvency. There’s something seriously wrong with this picture. A lot of people will blame the government, saying taxes are too high or whatever other excuse they come up with. Just from my observations, a lot of people have only themselves to blame. If you’re looking for some good reading, go to page B8 in the Jan. 20 Globe and Mail and read the article: Feeling financially stressed? It’s up to you to become a saver. Here are a few highlights: High income doesn’t necessarily insulate you from financial stress. At low income, below $50,000, about half of people were financially stressed. At higher income of at least $150,000 researchers still found a hefty 20 percent were financially stressed.

I’ve seen how it happens. In my working days, I was often asked questions like why don’t you get a new car? I reasoned, quite correctly, that the car I had worked just fine and it made no sense to put a lot of my money and life energy to something that’s going to sit there depreciating and only be used about an hour a day on average. The economics just didn’t support it, even an idiot like me who failed a college financial course could see that. I would get comments like how I need a truck to haul around lot of expensive toys. I’ve also heard comments like if I had your money I’d buy all this junk that I actually didn’t want. I would say, that’s why you don’t have any money. Wow, imagine that, sensible money management. What a radical idea! No wonder I’ve often been seen as a wierdo or misfit.

As for Garth’s recommendations I would gladly vote for anyone proposing such changes. However, if you actually believe most people would vote for such radical ideas, could I sell you some Nortel shares for the dirt cheap price of only 20 grand U.S. each? While we’re at it, maybe I could also sell you some shares in Enron, Eastman Kodak, and Sears Canada.

#12 Niagara Region on 01.22.20 at 4:19 pm

NO TFSAs FOR DUAL AMERICAN-CANADIAN CITIZENS LIVING IN CANADA
Last week a lawyer licensed to practice in the US and Canada–and who is married to a US accountant–told me that any Canadian who is also a US citizen cannot have TFSAs. The reason: the US-Canada tax treaty does not recognize TFSAs and considers them a foreign trust, which is taxed heavily. The lawyer advised me, a dual citizen, to dump all my TFSA accounts. (She did say, however, that when a new US-Canada tax treaty is negotiated, TFSAs are likely to start being addressed and tax exempt.)

#13 Mr Mister on 01.22.20 at 4:19 pm

“More than 8 out of every 10 people who file insolvency are working; it’s not unemployment that directly causes most insolvencies, it’s cash flow.” Doug Hoyes, co-founder of Hoyes, Michalos & Associates, told Yahoo Finance Canada.

“The issue is that expenses are rising faster than income, so people use debt to make ends meet.”

tiny.cc/7481iz

#14 NotLegalAdvice on 01.22.20 at 4:19 pm

I would love to tell the government to stop interfering with the real estate market. Your policies are making expensive houses less expensive, but still out of reach for Millennials. Example, a 1.8 million dollar house drops to 1.4million …still unaffordable.

As a result, investors run to the affordable houses causing their price to sky rocket and out of reach for Millennials.

Let Mr. Market correct the Market.

#15 Phylis on 01.22.20 at 4:22 pm

Sure, phase it in.

…. and in addition, phase it out. Meaning have a schedule setup that would tax the gain initially if held for say less than 5 years then decrease to zero at maybe at 10,20 or whatever data supports it.

#16 How bout ... on 01.22.20 at 4:25 pm

making people out here on the left side actually have to pay their property taxes and not just defer them. Seemed like it was a good idea when it was started but abused now. Don’t know what the rest of the provinces do.

#17 Ft Mac #1 for housing on 01.22.20 at 4:27 pm

http://www.demographia.com/dhi.pdf#page=25

A good example of how a bubble can burst. One wishes no evil upon our fellows in FM, but it’s only to serve as a reminder that when we project today’s numbers to the moon, we are likely kidding ourselves. They will say the same when the big one hits us on the West Coast.

#18 Piano_Man87 on 01.22.20 at 4:30 pm

Phase out the CMHC. Anyone who can’t afford a 20% downpayment cannot afford a home.

Get rid of the RRSP First Time Homebuyer’s plan. We have a retirement crisis, not a lack of home ownership crisis.

#19 John on 01.22.20 at 4:33 pm

Require the Canada Child Benefit money to actually be spent on children, not the mortgage, property taxes or hardwood flooring…

Maybe you shouldn’t comment on something you know nothing about. Are you really trying to say that people are neglecting their responsibilities and spending that money on a house? Shelter is part of raising a child in case you weren’t aware. Do you think they stop buying diapers and formula so they can pocket all this free government money. Having kids means you have less disposable money even with the child benefit. You should really get someone to proof read your blog before you post stupid condescending things boomer.

#20 Joe Schmoe on 01.22.20 at 4:33 pm

Thanks for the ideas Garth!

I think the largest culprit was removing the max borrowing amount for CMHC.

In 2001 it was $250K MAX purchase price to buy with less than 20% down.

Then shortly after it was limitless with only 5% down and 30 years amortization.

Now to cool things off…they added a $1M cap.

Look at inflation from 2001-2019…add to the $250K and voila…rational borrowing limits. The number would be ~$350K to buy a house with CMHC.

Things would get rational real fast…except for those that purchased between 2001 and now.

I know you talk about how people think RE is a “right”, but I was more confused on why we think debt is “right”.

#21 Sask to AB on 01.22.20 at 4:34 pm

Fantastic post, Garth!
So appreciate your sage ideas and advice.

F56AB

#22 NameGoesHere on 01.22.20 at 4:35 pm

To add to the list: raise the max lifetime contribution limit on RESPs. $50,000 doesn’t go very far – let alone in 10 or 20 years from now (even when factoring in growth etc.).

#23 Asterix1 on 01.22.20 at 4:40 pm

* Force all government agencies to stop using TREB/CREA/OREA/Teranet-NBank and other RE industry produced and manipulated statistics.

* Create a non-biased and independent Housing Statistics Federal Agency.

* Open a Federal investigation into the financial ties that bound our newspapers to the RE cartel. Without proper reporting and analysis , the public keep getting fooled into believing these marketing pieces.

#24 Roberto Padinha on 01.22.20 at 4:43 pm

Wish we had someone like you in our current government

#25 Nat on 01.22.20 at 4:44 pm

Garth for PM! Or finance minister. Save us all

#26 Captain Uppa on 01.22.20 at 4:44 pm

Taxing capital gains on principal residences is a god awful idea. It won’t stop anything, investment wise, and you are hurting the majority of Canadians financially.

No CDN government would survive that.

#27 Epictetus on 01.22.20 at 4:48 pm

Before anyone asks : MSU is the official TLA for ‘Mandatory Suck-up’.

(Now what’s a TLA?)

#28 Deficits? on 01.22.20 at 4:55 pm

they dont matter

see japan

see USA

canada is just following suit

just print monies…as long as the equity market are goign up, no one cares.

its not that hard to understand

#29 FreeBird on 01.22.20 at 5:00 pm

Agree with all in today’s post. Some more then others but any putting more control in hands of individual earners and out of govts and banks I doubt will fly. You missed stop funding wealthy royal refugees.

Also to help alleviate growing pressure on our public health care system allow (encourage) retired/semi-retired physicians and nurse practitioners to operate independently similar to home care agencies in terms of billing with both private, insurance and public/tax funded. It could encourage those who willing/wanting to work even part-time to be enticed to move to smaller cities with a slower lifestyle and in need of MDs esp for 60 plus. Some MDs do this already for palliative homecare patients at nominal fees. I believe Montreal MDs do for fee home visits now but my idea would open it up to both private and public funding. Private pays would not be allowed as tax claims. Increasing private medical options (which exist now to be honest) with regulation in general but don’t allow any claim on taxes as medical expense. With the massive growing burden on our public system esp our home care/long term care system something needs to give. Just throwing more money at a broken system from future tax hikes isn’t the answer.

#30 Linda on 01.22.20 at 5:00 pm

An interesting suggestion regarding opting out of OAS in exchange for lower/no tax on RRIF withdrawals. Obviously those who don’t opt out will still have to pay tax. Tracking/administering this could be costly & just as a ‘what if’ – what if the RRIF is used up prior to demise? Would the former RRIF recipient then be able to get OAS or would the rule be ‘once opted out, no opting back in’?

The wave of retirees. Well, if the finances of so many Boomers are as dire as depicted, can’t see how they can retire because even maximum CPP/OAS is unlikely to be enough to cover the bills that working income doesn’t cover now. There is a reason why the percentage of homeless elderly in shelters has increased & it isn’t because they thought it would be fun to camp out of doors in the dead of winter. As for VTB’s (vendor take back mortgages) for retirees, is that something that simply isn’t done or doesn’t exist as yet or what?

I think increasing CPP contributions, even if it is only the employee portion, would go a long way to ensure future financial stability in retirement. Maybe the increase in contributions should mirror the amount paid in OAS, with the intent that by doing this OAS would be phased out for all but those who qualify for GIS. RRIF recipients would see the amount they would have received in OAS mirrored by a tax free income equivalent. Would the CPP contribution increase make a lot of people scream that they can’t afford to work for a living? Probably, but seems to me that folks want things both ways. They want a higher income in retirement, but don’t want to have to pay more for it. Those much envied ‘government worker’ DB plans not only have a hefty contribution deduction from the take home pay but an equivalent reduction known as the ‘pension adjustment’ to the amount they can contribute to an RRSP. Funny how those issues never seem to matter. Maybe what we need to do to fix things is change CPP to match what the government DB plan rules are & force everyone to shell out. That wouldn’t make a lot of folks happy either, but it sure would put paid to the pension envy issue.

#31 FM Lifer on 01.22.20 at 5:03 pm

#17 Ft Mac #1 for housing on 01.22.20 at 4:27 pm

They couldn’t even spell our city’s name correctly!

#32 Riddlemethis on 01.22.20 at 5:03 pm

#19 John

I think Garth knows exactly what he wrote. See if from another angle. How are 50% of people 200 dollars away from being financially screwed!

#33 Useless on 01.22.20 at 5:04 pm

#19 John

Maybe you shouldn’t comment on something you know nothing about. Are you really trying to say that people are neglecting their responsibilities and spending that money on a house? Shelter is part of raising a child in case you weren’t aware. Do you think they stop buying diapers and formula so they can pocket all this free government money. Having kids means you have less disposable money even with the child benefit. You should really get someone to proof read your blog before you post stupid condescending things boomer.

Garth how did this slip by? Ban this mouth breather

#34 Garth for PM on 01.22.20 at 5:04 pm

Garth run for leadership of the Conservatives. Implement these excellent ideas and pull the country out of this Liberal economic death spiral.

#35 FreeBird on 01.22.20 at 5:08 pm

Cochrane Group study reviews of HPV vaccines.

https://www.cochrane.org/search/site/hpv%20vaccines

#36 DM in C on 01.22.20 at 5:10 pm

Bring back local-market maximums for CMHC insurance coverage, and use a scale based on income, not interest rates.

That would bring the market back to sanity.

#37 Bytor the Snow Dog on 01.22.20 at 5:11 pm

Too many families are in trouble because men won’t use the word “no”.

#38 Figure it Out on 01.22.20 at 5:16 pm

For my country to run a trade surplus, some other country/countries must run a corresponding deficit.

For my household to run a savings surplus, somebody else must run a deficit (i.e. borrow, sell shares in a venture, etc.).

If my government goes from deficit (say $-30B/year) to balance, the private sector goes from receiving $30B more than it pays in tax, to receiving only what it pays in tax — a net $30B deficit in household income per year.

You can help *A* Joe average with his finances. Or even 1,000 or 10,000 of them. But you can’t help all of them, or even a significant fraction, because THEIR debt is where OUR surplus is going. If all the debtors balanced their budgets, the creditors would have nowhere to invest. I’m a creditor/investor. So are you. And many readers of this blog , it seems.

#39 The Wet One on 01.22.20 at 5:17 pm

Just for the record, financial education isn’t saving grace one would hope it would be. It helps (which is something I hadn’t clearly heard before) but it’s utility isn’t as great as one would expect: file: https://www.researchgate.net/publication/321071759_Does_Financial_Education_Impact_Financial_Literacy_and_Financial_Behavior_and_If_So_When

Which is unfortunate.

Who does it help least? Those with low income and lots of education, with describes a fair whack of the Canadian populace. Sadly.

#40 Franc on 01.22.20 at 5:20 pm

Garth. This is perfect. What can we do to help make these ideas come to reality. We need these changes. Who can we reach out to. I am sharing this post with everyone I know. We need this change. Garth. Run for the conservative leadership. Please

#41 The Wet One on 01.22.20 at 5:21 pm

Also, cars last quite a long time. My car has lasted 16 years this July. I paid off my loan in a year.

The next car won’t be paid off so fast (Kids are expensive), but will, more likely than not, last as long. If people actually kept and drove the cars they bought for their lifetime, this would work. But they don’t. From this, the debt issues follow.

I see nothing wrong with the payday loan outfit ban. Sounds like good policy to me.

#42 lifeisgood on 01.22.20 at 5:22 pm

Best post ever, Garth.

You have influence, keep pounding !

#43 Sail away on 01.22.20 at 5:25 pm

#12 Niagara Region on 01.22.20 at 4:19 pm

NO TFSAs FOR DUAL AMERICAN-CANADIAN CITIZENS LIVING IN CANADA

Last week a lawyer licensed to practice in the US and Canada–and who is married to a US accountant–told me that any Canadian who is also a US citizen cannot have TFSAs. The reason: the US-Canada tax treaty does not recognize TFSAs and considers them a foreign trust, which is taxed heavily. The lawyer advised me, a dual citizen, to dump all my TFSA accounts. (She did say, however, that when a new US-Canada tax treaty is negotiated, TFSAs are likely to start being addressed and tax exempt.)

————————————–

It’s not clear. As far as I know, no dual citizens have yet been penalized by the IRS on TFSAs as a foreign trust, but there is that possibility. Many Canadian/US tax lawyers have written arguments that TFSAs should be treated similarly to US Roth IRAs.

My wife and I have TFSAs, but do not fund them because of the uncertainty. I wouldn’t close any accounts- you are allowed to have them, but it would be worth keeping watch on it, and if the IRS does take an interest that requires complicated tax filing, it might be time to take action. At the worst, you could be required to pay income tax at your nominal rate on gains.

Same with RESPs.

We used/use RESPs and include a letter to the IRS when we file taxes explaining that these should be considered similarly to US 529 education plans. No response and no problems yet. Hopefully none ever.

The thing is… the US has accounts that are similar in almost every way to the TFSA, RRSP and RESP. I suspect the IRS will continue to turn a blind eye to these due to the similarities.

#44 Lead Paint on 01.22.20 at 5:25 pm

Reduce the size of government so taxes can be lowered, people can save more. Each year five programs must be canceled or merged to achieve staffing reductions and other efficiencies.

#45 The Wet One on 01.22.20 at 5:25 pm

I not that based on your suggestions (many of which I can agree with in principle) will be regarded as communist, socialist, paternalistic or otherwise evil by a whole lot of groups in society (especially banks).

In short, good luck with that.

Still though, good stuff.

Me, I’m glad I got some education about this stuff at home and then was motivated to learn about it all on my own. It took time, effort and money, but the ROI on my knowledge is pretty high, so it’s all good. I feel sorry for those who aren’t similarly interested.

#46 Chris in Edm on 01.22.20 at 5:31 pm

Not really gov’t mandated, but anyone driving a vehicle worth more than $5k should not be allowed to get food from the food bank. People driving up in an $80k SUV do not need help from the food bank. They need to cut back on their expenditures.

#47 espressobob on 01.22.20 at 5:31 pm

Live humble and well below your means. Learn how to make more coin and how to invest.

Badda Bing Badda Boom.

#48 Kitsilano Kid on 01.22.20 at 5:31 pm

Garth “V I Lenin” Turner. Your suggestions are worse than the current NDP/Green/Mayor Kennedy commies governing YVR. Stop regulating my stuff and let me live free to make my own decisions, mistakes and successes. DON’T TREAD ON ME!

#49 allovertheplace on 01.22.20 at 5:43 pm

Wow #19 John, you’re everything wrong with this country summed up in a succinct paragraph, well done!

Listen, if you’re in a position where you require the CCB simply to function and you’re still struggling, well you’re exactly the problem that Garth is talking about.

Why on earth should taxpayers be on the hook for your inability to do math before embarking on one of the most expensive optional experiences in the modern world?

Not sure why you’re calling out boomers – you seem to have their exact mindset and level of entitlement except you live in a vastly different time.

You are the problem.

#50 Sunshine 66 on 01.22.20 at 5:45 pm

Hi,
Great suggestions that all focus on governments doing things differently. Ultimately people have to change their behaviour – your faithful followers could help create a list of things people can live without (or do with less), but don’t. I.E. putting three kids in hockey and private music lessons when only one parent works (my neighbours and it is beyond me how they afford food), annual trips south in the winter (remember when a big trip was a once in a lifetime event?), eating out daily, multiple streaming service subscriptions … the list could be endless… Thanks for all you do Garth – love your blog.

#51 Dog Thoughts on 01.22.20 at 5:54 pm

Spotted human slipping a pancake into my bowl. secret?

I wait. I eat. What! surprise pancake.

I am grateful.

#52 Ak on 01.22.20 at 5:55 pm

Question, i dont want to sound stupid, but I will ask anyway.
We have tax deducted every paycheck, why do we pay tax again on that earned income.
We should only be paying taxes on gains from that income, like interest.
.

#53 Boris Corbyn on 01.22.20 at 6:01 pm

“Teach financial literacy as a mandatory course in high school.” but, but how would the banks sell us credit cards then?

Payday loans are a small part of the problem, let’s ban credit card interest rate above 5%, amply sufficient profit for doing nothing.

Banning airbnb and the main residence exemption is like putting a big DO NOT COME sign on this country and there is enough of those coming up suc as Mad Max from la bill22 province and all those property taxes in BC and soon to come to Toronto.

#54 Ray on 01.22.20 at 6:04 pm

Imagine a future where vehicles could made money for the owner. An electric battery autonomous vehicle that could be “hailed out” for rides when the owner does not need it during his/her working part of the day. Imagine the vehicle could operate at one tenth the cost of an Internal Combustion Engine (ICE) vehicle and require virtually no ongoing maintenance. In this scenario, almost everyone could/ would opt to not own an ICE vehicle, but just hail a vehicle through their smart phone, instruct the autonomous vehicle through the phone, and pay through the phone at the end of the ride. The number of miles travelled by these vehicle could go up by a factor of ten, and the number of vehicles purchased would go down by a factor of ten. Almost all city parking lots would be available for new use, like new housing or green space. Traffic jams would be history. The demand for oil could drop from a current 100 million bpd to maybe 50-60 million bpd, and this could drop the price of oil to $15-$30 USD / barrel. This could financially eliminate all of the high cost oil producers, oil sands, fracking, deep well etc, and negatively affect the currency of countries overly reliant on oil as an export. Imagine this future is only five, maybe ten years away. It only took 10 years for the horse and buggy being 95% mode of travel to the automobile being 95% mode of travel. Disruptive change occurs exponentially , and if two growing technologies combine ( renewable energy and battery storage ), the synergy change can be an exponent of an exponent.
(527) Tony Seba #CleanDisruption @ Robin Hood Investors Conference 2019 #RHIC2019 – YouTube

#55 BS on 01.22.20 at 6:04 pm

My genius idea:

Combine EI and CPP. Convert EI deductions into CPP deductions. Yup eliminate EI deductions by employers and employees and increase the CPP deductions by the same amount for both. Then create a limited EI where someone can still get EI but it takes from their CPP. Those who never take EI will get more CCP when they retire. Those who do take EI get less CPP but they would never get less than the current CPP entitlement. End EI for seasonal jobs after 1 or 2 claims.

This would make EI work like insurance should. If you use it you will pay for it. If you use it too much it runs out. If you don’t use it then you get some of that money back at retirement. It creates an incentive for people not to use EI (get a job) and helps boost pensions.

#56 Ustabe on 01.22.20 at 6:12 pm

I find it redolent with irony that a lot of responses all require government to do something in order to implement the poster’s favourite initiative.

Aren’t we supposed to be the party of less government intrusion into our lives?

When posters on here misuse advise/advice, can’t understand the relationship between assessment, mill rate and property tax, seemingly hate teachers (who would be charged with delivering this government mandated financial literacy program) and elect folks who want this education system to be just like Alabama’s…

Makes me wonder who actually needs this government sanctioned, public servant delivered financial literacy program.

#57 Millennial Realist on 01.22.20 at 6:24 pm

#1. Put millennials in charge of everything financial.

But don’t worry, we will do it anyway – by 2025, 75% of the workforce will be us.

https://www.inc.com/peter-economy/the-millennial-workplace-of-future-is-almost-here-these-3-things-are-about-to-change-big-time.html

OK Boomers, be part of the change.

Or be run over by it.

#58 grasshopper on 01.22.20 at 6:24 pm

If the primary residence is not exempt from capital gains, will we be able to deduct expenses like a new roof? new furnace? paint? property tax? interest on loan? real estate commission? land transfer tax? opportunity cost … etc.

I am missing a few receipts. But I think this would be an example of moving the goalposts after the game started.

Perhaps if the rule was, all property purchased after Jan 1, 2025 will be subject to capital gains … interest and expenses will be tax deductible???

#59 Tater on 01.22.20 at 6:31 pm

8 Stan Brooks on 01.22.20 at 4:16 pm
Surprise, surprise:

Bank of Canada Opens Door to Rate Cut on Persistent Slowdown

https://ca.finance.yahoo.com/news/bank-canada-holds-rates-signals-150000652.html

To summarize:
1. Confidence is down
2. Investment is down
3. There is slowdown in the ‘economy’ read consumption…..

while interest rates are at rock bottom and we are running record deficits at all levels!

And the cherry on the cake…

Meaningful Shortfall’

If the bank cuts in the future, “it would not be a cut against a hypothetical or a possibility” rather it would mean that the forecast was showing a “meaningful shortfall on our inflation target,” he said.

That is right folks, inflation of 8-10 % is not enough for the clueless incompetent bureaucrats at BOC, they want double and triple that.

Cheers

—————————————-

Here comes Stan again, with more delusions of double digit inflation. Ask your doctors to up your Risperdal dose.

Amazes me how you could possibly think inflation is running at a rate that would cut everyone’s standard of living in half every 7 years without riots breaking out.

#60 grasshopper on 01.22.20 at 6:32 pm

Require the Canada Child Benefit money to actually be spent on children

Respectfully, I disagree. I think the Child Benefit should be spent on up to two Children. If you have a third child, then you forfeit your Child Benefit.

For those that care about the environment, I can not believe that it is good for the planet for the population to continue to grow at the current rate.

#61 Useless on 01.22.20 at 6:33 pm

#57 Millenial Realist

Ok comrade. Back in the USSR

I’m a millenial and this is scary as hell.

#62 SoggyShorts on 01.22.20 at 6:34 pm

#57 Millennial Realist on 01.22.20 at 6:24 pm
#1. Put millennials in charge of everything financial.

But don’t worry, we will do it anyway – by 2025, 75% of the workforce will be us.
**********************
It’ll be the millennial winners, not whiners, so you’re still out.

imagine putting a bunch of financial losers in charge of everything *shudders*

#63 JonBoy on 01.22.20 at 6:34 pm

Require the Canada Child Benefit money to actually be spent on children, not the mortgage, property taxes or hardwood flooring

—–

Do children not need shelter? Do they not need transportation? Do they not need clothing? Do they not need exercise? This type of “requirement” is unenforceable and (sorry – I have to say it) ridiculous.

If you have children, you’re paying for them and their needs, one way or the other. CCB payments are going to the household pool of cash, out of which all costs for the family are taken. If there’s some money left over every month, who’s to say that it was the CCB payments that weren’t “spent on children”?

Who cares where it comes from? It’s there to supplement your income to support your family. If you’re supporting your family, that’s what counts.

We don’t get much CCB but we also don’t sit around saying “We’re using our CCB for the kids”. It goes into our bank account and is spent no differently than our other money. It’s spent when and where it’s spent (or saved, as the case may be), without distinction of source or purpose.

The benefit is to support children, not pay your property taxes. – Garth

#64 SoggyShorts on 01.22.20 at 6:36 pm

#51 Boris Corbyn on 01.22.20 at 6:01 pm
Payday loans are a small part of the problem, let’s ban credit card interest rate above 5%, amply sufficient profit for doing nothing.
**********************
I’m not sure that’s a great idea– what happened when we dropped interest rates on houses? People went nuts buying houses.

Drop CC rates to 5% and people will max out their visas and make minimum payments until they die.

#65 Salvation Found on 01.22.20 at 6:36 pm

Garth,
Yesterday’s post came as a shock. I feared not seeing a post today. A dreadful shame it would have been.
Your blog and your unique way of passing along the truths of financial life have become the start of everyone one of my days.
Garth, from the bottom of my heart, thank you. Without word of a lie, your advice, quite literally saved my life. Before I found this pathetic blog I was mired in debt, trapped in a hateful loveless marriage and caught in the mortgage trap. I was blind to my perilously bleak future. Your pathetic blog armed with the knowledge, it made me see the light. In the 4 years since I’ve been reading I have escaped the marriage, unsaddled the debt, and took control of my financial situation. Today I am happy, have a secure future, found my Dorothy and I thank you and this pathetic blog everyday for contribution to be continued success. You’ve reached at least one person.
Thank you Garth

#66 BlogDog123 on 01.22.20 at 6:44 pm

Financial illiteracy:

How about you can’t get certain government benefits unless you can pass some financial literacy test. Make it online, biometric / proof it’s you doing the test. A way for government to nudge you away from financial foolery.

But I have seen all kinds of financial foolery:

– not signing up for company RRSP matching for years.
– buying more house than needed.
– all the toys that sit in the shed waiting to get stolen by the neighbourhood kids.
– enough piercings & tattoos to scare away any job interview prospects
– hiding in your parents basement waiting for a magical employer to call you and offer you a dream job with no overtime, effort, sweat or nights/weekend work.

I’ve seen it all.

#67 Sail away on 01.22.20 at 6:47 pm

I suggest “no net increase” for all legislation for all layers of government.

If a new law/bylaw/regulation/code requirement is enacted, a previous one must be removed.

#68 Yukon Elvis on 01.22.20 at 6:51 pm

The benefit is to support children, not pay your property taxes. – Garth
…………………………………..

Anything that keeps a roof over the kids’ heads benefits them. Would u rather the parents spend the money on rent?

#69 Leftover on 01.22.20 at 6:52 pm

Removing the capital gains exemption on principal residences would do the most good (as long as it was accompanied by an allowable mortgage interest expense on the first $500k as it is in the USA).

It would help young people and eliminate the incentive to invest only in real estate.

#70 Tater on 01.22.20 at 6:53 pm

Add another vote for income splitting with the provision that both people need to be working. As silly as it is that 2 couples with the same income can have dramatically different tax bills depending on the income distribution, it would be just as silly for the middle class to subsidize a high earners desire to have their spouse at home.

#71 Leo Trollstoy on 01.22.20 at 6:55 pm

Government debt doesn’t matter – Warren Buffett

https://www.axios.com/warren-buffett-national-debt-6fa22c24-bc40-4cda-8895-973605ea465a.html

Ratio of GDP to debt matters

That’s why Ontario wins. Ontario actually has a productive economy despite our debt

Newfoundland might have less debt but their economy is non-existent

#72 akashic record on 01.22.20 at 6:59 pm

This list is basically the reflection of fight how to divide the shrinking cake, which is the root cause of the variety of symptoms. They were not as big problem when the cake was bigger.

“Chateau Bill and Poloz” are unlikely to hang out here, they are probably busy solving that big puzzle.

#73 Terry on 01.22.20 at 7:02 pm

How about making the interested on loans used to max out TFSA’S and RRSP’S tax deductable!

#74 Cbo on 01.22.20 at 7:10 pm

Haven’t read all the comments, so perhaps this was raised.
All for phasing in the primary residence tax exemption to stunt flippers, speckers AND exempting those completely who own over 5 years makes sense BUT phase in primary residence tax deductions for interest paid on those mortgage payments.

Perhaps you achieve the double whammy of slowing down the use of homes as investment vehicles while you spare those souls who’ve signed up for $800K mortgages by offering them some tax relief over the course of their amortizations.

#75 Big Bucks on 01.22.20 at 7:10 pm

No worries –a guaranteed income is coming for all.

#76 Jimbob on 01.22.20 at 7:14 pm

The acid test for me of a story like this is whether or not it tallies with what I see around me. And it does, big time. I live in the Metro Van area. I see couples welching on going for drinks, trips with their kids to a ten-dollar movie, etc – because they simply have nothing left. I hear of couples willingly paying financial institutions $500 as a fee to be considered for a HELOC. Not “to get a HELOC”. To be considered for one, because they already have two. And an $500,000 mortgage. Oh, and did I mention these guys are in their 50s and one of them has no savings? And on, and on. This will not end well. Thanks Garth. PS as a point of fact, I believe the ISA limit in the UK is £24,000, which is closer to $40,000. And don’t forget there’s no practical limit on RRSPs in the UK – max contrib is £50,000 a year, which hardly anyone can manage. Cheers and keep up the good work. Jimbob

#77 Paully on 01.22.20 at 7:15 pm

Shutter the CMHC!!

#78 will on 01.22.20 at 7:17 pm

Garth, do you have metrics on how many times your blog is shared? I’m going to share twice today. Once by text and once to fb.

And what about all you dogs out there? Are you going to share today’s blog? Or are you just showing up for the daily intellectual treats thrown your way and eat them up and guardedly jealously keeping them to yourself? Eating in secret?

#79 JacqueShellacque on 01.22.20 at 7:18 pm

Just painting around the edges, Garth, I’m sorry to say. Financial insolvency is a symptom of wider economic and social decline in Western society. Changing this requires much more radical measures:
-governments can never run deficits, books must be balanced no matter what.
-no more unlimited free trade, in order to bring jobs back, raise wages (free trade has largely been paid for with government and consumer debt), and get our skilled engineers and technically inclined people back into R&D and industry and away from spinning paper in the financial sector.
-no subsidies or inducements to buy a house or go to school. Pay for what you can afford. This will bring people back into the trades and productive.

#80 Mr Canada on 01.22.20 at 7:20 pm

While you are at it — Public Sector Defined Benefit Pensions should be grandfathered to DC plans. Also, there should be a maximum threshold on the annual pension salary they can collect. Next, end the practice of including “overtime” as pensionable earnings as well. Why do public sector employees have not just gold plated benefit plans but platinum plated benefit plans funded by the taxpayer.

#81 45north on 01.22.20 at 7:28 pm

“Your blog is reaching all corners of Canadian society and having quite an influence. There is a reason it is the top financial blog in the country. As such, I suspect that influence is likely now a political force large enough to not be ignored.

yet the political parties are doing their utmost to ignore it

There is a mood to Garth’s blog which is the opposite of the political mood of the country. For example, if we assume that the Liberal Party adopts policy to suit the mood of the country then it’s evident that it’s opposite to the mood of Garth’s blog. The Liberal Party is certainly aware of Garth’s blog but they dismiss it as being an outlier – irrelevant when it comes to winning elections – or even losing elections.

Thank God for Garth’s blog for without it the present mood would sweep over the country and we would be stupider.

#82 Nonplused on 01.22.20 at 7:28 pm

I disagree with putting a capital gains tax on primary residences, mainly for one reason: Houses are not money. Until your estate sells your last house, a house is a house, and if you sell one and then buy another, you still only have one house. So putting a capital gains tax on primary residences will have exactly the same affect as these insane land transfer taxes, stripping people of hard earned income and locking them into their house, unable to move due to all the cost if their job changes, there is a divorce, or their family grows. For this reason at the very least no capital gains should be payable unless another house is not purchased within some specified time period. There is no gain if you are still in the market for a similar or larger house.

So all capital gains taxes (and land transfer taxes) will do is make the market more attractive to long term investors like REIT’s and less attractive to home buyers, who literally might not be able to afford to sell if they have a job change, divorce, or children.

Capital gains on spec houses, vacation homes, and rentals are fine with me though. Most times those are businesses or speculations anyway and I think they are already subject to capital gains taxes. But they are, with the exception of vacation homes, also subject to tax write-offs.

—————

Requiring the Canada Child Benefit money to be spent in a certain way will prove to be almost impossible to do due to how household finances typically work. In short it would be just too much trouble to try and associate specific payments with specific expenses. It typically all goes through 1 or 2 accounts. This is why the courts don’t do it with child support payments. Schedule 7 expenses for things like hockey or piano lessons are the only payments that have a receipt attached to them because they are above the regular child support amount.

A better idea might be to abolish this payment altogether and direct the money to so sort of more universal benefit. After all, why should people who don’t have kids be paying taxes for this free gift of money to people who do? And what about my cousin, who for religious reasons ended up with 17 kids before Dog finally “closed the womb”? If they were all on the role at the same time (they weren’t) it would be $20,400 a year! Meanwhile our schools are starving for money.

Also I think it sends a terrible message to people to believe that if they have kids the government will pay them money. People should not be having kids they cannot afford. Having kids I suppose is a right, and it’s also nature. But expecting someone else to pay for them is not.

—————

How would you be able to abolish the bank of mom? But anyway how many moms are there who can give their kids substantial amounts of money? I think the number is probably pretty low. But if mom does have money the kids are going to get it eventually anyway. So many parents who do have money don’t see why they shouldn’t help out now instead of making junior wait until they croak (or give him incentive to speed it along).

My grandmother did not have much money when she passed. But she did have a paid-for house. That was a nice $100,000 payday for my aunts and uncles. Now they were all already done paying for their own houses, but I assume the money went somewhere.

So I don’t think the bank of mom really distorts the market that much. The money is coming sooner or later anyway. And mom wants grandchildren. That early inheritance creates all kinds of leverage for mom.

—————–

Other than that, great ideas.

#83 VanIsle Retiree on 01.22.20 at 7:29 pm

RE: *18:
I totally agree with the suggestion to delete CMHC. In fact, I have argued this for some time now. If we put the onus back on the banks to ensure that they are lending to credit-worthy people, a lot of things would fall back into place.

#84 Sprawl on 01.22.20 at 7:36 pm

Make the Stress Test universal and scrape the CMHC New Comer Program. Drop the gender economic, whatever that is, thing. Adopt anthropogenic economics tailored to mitigate population growth.

#85 crowdedelevatorfartz on 01.22.20 at 7:40 pm

@#57 Millenial Relist
“75% of workers will be millenials by 2025…”

+++++++

Bwhahahahahahaha.

from what I’ve seen so far….a huge productivity crash awaits as endless meetings to decide who should do what and when….
Bwahahahahahaha.
Just call mom to help out when things get too stressful.
I cant wait.

#86 Doug t on 01.22.20 at 7:42 pm

MMT – it’s gonna be the bigger than tickle me Elmo

#87 AGuyInVancouver on 01.22.20 at 7:45 pm

#5 Marco on 01.22.20 at 4:01 pm
Restore the TFSA limit to $100,000. Also, start basic income program, now. Or let used immigrants go home and keep their GIS overseas. They will be not burden for health care, here and we can import replacements.
_ _ _
What’s a “used immigrant”? A middle aged Romanian poledancer?

Anyway, I digress. Sound advice from Garth on all points. I’d only add make renting in Canada less precarious. You can’t blame renters for wanting to own when they see people being renovicted all around them.

#88 WindsorDon on 01.22.20 at 7:52 pm

Aside from buying a home, a car is probably the second-most expensive purchase you will ever make in your life. Too often, people will purchase a car without having a realistic understanding of how much more it will actually cost to own it. As a result, they end up spending too much and exceeding their budget. 
A rule to follow is to spend no more than 10% of your gross annual income on the purchase price of a car. Cutting down your base purchase price or lease is a way to save money. 
 If you make the median household income of about $60,000 a year, don’t spend more than $6,000 on a car.

https://www.cnbc.com/2019/11/04/follow-this-simple-rule-for-car-buying-if-you-want-to-get-rich-says-millionaire-money-expert.html

#89 the ryguy - In cabo on 01.22.20 at 7:57 pm

When I was 19, god thats so long ago..but anyway, I was built like a fire hydrant. My friends dad did repos for one of the predecessors of payday loan companies. Basically you could get quick cash with an asset, and a lot of people used their vehicles as collateral. Now and then he offered me cash to tag along for some of his potentially troublesome repos. Nothing physical ever happened, but there was definitely some upset clients. They knew we were coming though..back then we had to send a notarized letter warning repossession would occur in 60 days..and then repeat the process at 30 days..and you could only send the first letter after 30 days of non payment..so basically they had 3 months notice.

Anyway I ended up staying on with them over the winter. My job was to sell all the collateral and occasionally repo vehicles. I knew the kelly blue book inside and out. Cars, RV’s, quads, jewelry, stereo equipment, desks, furniture, power tools etc etc. I can tell you EVERYONE used these companies. I thought it was just poor people..boy was I wrong. Dentists, doctors, executives, even a couple of Oiler assistants if you can believe it. I can’t recall the brand name but I was trying to figure out how much this specific desk was worth..this was pre google of course, I had a guy at the brick look it up and it was like $22k brand new. This was back in probably 2001.

This experience I had helps me believe the half of canadians are $200 from monthly insolvency. Many people believe the more month than money is exclusive to poor people..its not, I saw it, most people spend right up to whatever they make..and then some.

#90 just a dude on 01.22.20 at 8:04 pm

Garth,

I applaud you for taking the time and having the courage to assemble and post these excellent suggestions. Thank you.

I admit that a couple made me wince but for the most part, I came away thinking that the implementation of most if not all of your suggestions would do our country much good over the medium to long term.

So many opportunities exists for improving this great country’s overall strength. Will our leaders have the courage to think beyond the short term and their own self interest however?

#91 wheretonow on 01.22.20 at 8:13 pm

These are all solid points so I agree with everything.
I still can’t believe people voted T2 in again, sadly I dont think his gang can figure much of this stuff out.

#92 paracho on 01.22.20 at 8:16 pm

@Garth Turner !
Keep up the great work. Read your blog daily and discuss these ideas with friends often . I have shared your blog posts on my social media accounts and even emailed the link to friends in places like Croatia , Argentina and Australia .
An again population and retirement crisis is prevalent in not only Canada but places like Italy , Croatia, Spain … etc .
Much of this advice is common sense globally .

I agree with the points above .
Especially regarding down payments . A 5% down payment is meager to say the least . 10% or even 15% or 20% would be safer not only for the borrower but for society as a whole . The stress test should stay in place . In fact it can even be revised to make it marginally harder to get a mortgage . Society is already over indebted !
TFSA should be promoted more . The limit returned to $10,000 or even $12,000. I still do not see most peopkk li e taking advantage of this . But most would not even if it was lowered to $1000 per annum .
Reverse mortgages are a plunder on those who are desperate and/or financially illiterate. Spoke to a few people who were utterly confused of his they worked .
One older man I know has a nice GTA house paid off in the 1980s. Kids gone widower . Descent man who is not flashy . A saver. CPP and OAS with a small company pension . RRIF . But still finds it challenging to live in his own house .
He receive the pamphlets in the mail bi weekly . Even had a nice young man come to his house with a young lady to encourage him to get a reverse mortgage . They keep using the line “ the hidden equity in your home “ and “ your money “. Very deceptive .He almost did it until I described it to him in more detail .
At t he r minimum , thre should be more rules in place regarding how the interest accumulated within a reverse mortgage . Minimally less than 55% of the persons equity in the house !
And lettting someone get a reverse mortgage on a house that already has a first mortgage outstanding us criminal !
Tax incentives should be given to employers to provide pension plans to employees .
RRSP contribution room should be raised by at least another 2 to 5% with more of a tax savings .
Still many would not hit the limit . But the government can claim it tried .

#93 Canadian Moose on 01.22.20 at 8:17 pm

I agree respectfully with Garth on many of his ideas but like always it takes a government bureaucracy to implement it AND since government terms are short, the supporting federal public service is in constant servitude to the whims of these politicians. Parties in power are going to do everything they can to serve their voting masses to ensure they continue their mandate for another 4 years.

Anyone in Canada can get to retirement age and be financially independent by the CHOICES they make thru life utilizing the simple rules that have been discussed on this blog time after time. There are exceptions of course but that’s not what I am talking about.

Look in the mirror. You are your success or failure. Government cannot be our saviour but you can.

Thoughts from the Hinterland

#94 Lifelong Lefty on 01.22.20 at 8:27 pm

Would vote Garth if he ran for the Conservatives.

#95 Stone on 01.22.20 at 8:28 pm

#5 Marco on 01.22.20 at 4:01 pm
Restore the TFSA limit to $100,000. Also, start basic income program, now. Or let used immigrants go home and keep their GIS overseas. They will be not burden for health care, here and we can import replacements.

———

Really? And what should we do with you once you’re “used”? Should we import a replacement for you as well?
Sounds like a stupid, ignorant comment from a stupid, ignorant person.

#96 TurnerNation on 01.22.20 at 8:28 pm

As this is an investment weblog I can certainly state this name on my watch list – the future. PGNY.US – Fertility related co. That’s about all I know about the current state affairs for our young people.
Given all the stuff being put into us and: https://www.reuters.com/article/us-usa-water-foreverchemicals/u-s-drinking-water-widely-contaminated-with-forever-chemicals-report-idUSKBN1ZL0F8


— This short clip of a disasterous rally car team reminds me of Blog Dogs’ Messrs. C & P’s handling of the housing market:

https://invidio.us/watch?v=D9-voINFkCg
“Samir….You’re breaking the car!!!”

#97 IHCTD9 on 01.22.20 at 8:28 pm

#19 John on 01.22.20 at 4:33 pm
Require the Canada Child Benefit money to actually be spent on children, not the mortgage, property taxes or hardwood flooring…

Maybe you shouldn’t comment on something you know nothing about. Are you really trying to say that people are neglecting their responsibilities and spending that money on a house?
——-

Yep they do, also at the YAMAHA and GM dealerships.

The problem is they are handing out way too much at the low end, and still handing out thousands even at six figure household income levels.

I know way too many folks getting over 10 grand per year that don’t need a penny of it.

#98 Drill Baby Drill on 01.22.20 at 8:28 pm

Excellent post today Garth. Too deep for politicians unfortunately.

#99 MrC on 01.22.20 at 8:29 pm

“Teach financial literacy as a mandatory course in high school.”

There needs to be efforts from the government/ministry to develop the right material to be taught in school. In the BC curriculum, we would teach students to do budgeting as part of a mandatory career course, but that is very limited. Depending on the stream of the math class taken, students may learn compound interest and mortgage calculations, but textbook questions of “calculating the monthly payment of…” does not inspire interest.

I tried teaching the following in my senior science classes:

– Government revenue/expenditure/debt:
Compare debt to the size of yearly revenue.
Compare debt service charge to current deficit.
Analyze the history of government debt to identify the culprit.
– Investment:
How much do you need to retired by comparing income stream and expenditure?
Asset classes: RE, stocks, bonds and their risk/return
How to open a trading account
What’s a TFSA and RRSP?
Investment vehicles like ETF and mutual funds.

I got mostly yawns since the kids are not interested in things that they are not involved with. As long as the bank of mom pays for stuff, they are not worried about any of this. I might have turned a couple of students into stock flippers despite repeating warning after warning. That is how far I got in my experimentation before focusing on teaching the “core competencies” in the new curriculum so that my school can pass the inspection.

Are there government funding to community groups that can put out some financial literacy support instead of going to those insolvency agencies that’s advertising on the radio? It seems like there is quite a wide range of community groups that would come to visit our school for free. Surely the government can fund something where a regular person can walk into and ask questions about anything related to personal finance without worrying about being taken advantage of.

Basically, government-funded Garth-clones sitting in booths giving everyone interested some free 1-on-1 Dr. Garth time.

#100 VicPaul on 01.22.20 at 8:30 pm

#55 BS on 01.22.20 at 6:04 pm
My genius idea:

Combine EI and CPP….Then create a limited EI where someone can still get EI but it takes from their CPP. Those who never take EI will get more CCP when they retire. Those who do take EI get less CPP but they would never get less than the current CPP entitlement. End EI for seasonal jobs after 1 or 2 claims.

*********

Interesting idea.
Fun fact for all those angered that they chose not to pursue a career with a DB plan (yeah, you had a choice like most everyone else – whine in the mirror). A career teacher with a continuing contract will pay into EI benefits for thirty years with no opportunity to EVER get EI benefits – unless they leave the profession.
I imagine that fact is not widely known (like the fact that BC Teachers have been without a contract since last June).

M56BC

#101 Sail Away on 01.22.20 at 8:33 pm

#89 the ryguy – In cabo on 01.22.20 at 7:57 pm

—————————

Re: selling repo

Haha- if you were selling repo near me, we’d probably know each other. I’m sitting at my very nice $40 office desk in my $25 chair writing this. We furnished two offices of 2,700 s.f. total at startup with used equipment from other offices going out of business.

Some people get a sense of accomplishment from paying more. My favourite clients!

#102 Shawn Allen on 01.22.20 at 8:35 pm

uuummm Catnip

Two days of total catnip for the dogs to chime in on. Well done. This even brings out the irregulars to comment.

#103 Dog Pill Commy Nest on 01.22.20 at 8:36 pm

Tax luxury sales
Tax the rich
Eat the rich
Digest the rich
Poop the rich
Compost the rich
Grow trees from the rich
Harvest the rich
Puree the rich
Eat the rich
Digest the rich
Poop the rich
Continue the cycle…

#104 IHCTD9 on 01.22.20 at 8:46 pm

Capital gains tax on principal residences, 100% inclusion rate up to 10 years, goes to zero after that.

Triple CMHC rates, 30% down to be exempt, and we can ditch the stress test.

Get rid of full recourse mortgages, anyone can chuck the keys at the bank and walk.

Foreclosure fine for banks, 10% of sale value per default.

Package deal all of the above – that should fix things.

#105 Entrepreneur on 01.22.20 at 8:47 pm

A lot of good points here, especially #79 Jacque Shellacque on trade, jobs and housing, good points.

Shutting down CMHC another one, and many more good comments.

Some countries tried regulating Airbnb but in the end banning it. So I say ban Airbnb, the sooner the better, heard this is a huge problem.

I also like the child support for only two children, a no-brainer.

All your points are good, GT, but will have to go back to read again after reading the comment section, lol.

#106 palebird on 01.22.20 at 8:49 pm

#54 Ray

You know they have these things called hi speed trains and subways in a lot of countries other than Canada. Powered by electricity. They link up to almost everything so no real need for a “car”. Canada and USA are so far behind it is not even funny. Funny thing is I love to drive my hi powered hot rods just for kicks. Gives me a lot of satisfaction and smiles all around. Oh well. If I can ride a fast efficient transit system through a crowded city I am on it. As far as electric vehicles go , well, until we figure out batteries a little better they are not the answer. Ever priced out battery replacement outside of warranty? Prepare to be shocked, literally.

#107 S.Bby on 01.22.20 at 8:57 pm

For BC I’d add… stop the property tax deferral program for owners over 55 whereby they can defer paying their property tax on their principal residence until the place is sold.

#108 MF on 01.22.20 at 9:06 pm

Great post.

These suggestions are great. Hopefully they won’t be ignored.

My suggestions are similar to Garth’s I guess:

-get rid of the capital gains exemption. It’s the human equivalent of the appendix and needs to go.
-keep the stress test, actually make it even stronger
-forget the 30 year mortgage thing. Just stupid.
-raise the interest rate.
-get rid of cmhc. Overstayed it’s welcome.

Also,

-the OAS suggestion is good.
-increase the tfsa to 10k/year again.
-get rid of dual citizenship.

Let’s see if they listen. I really hope someone sees today’s post and (some) of the comments.

MF

#109 cramar on 01.22.20 at 9:08 pm

Fascinating Captain! Great list of actions to ponder. I would disagree with a couple of items.

1. “Tax capital gains on personal houses the same as personal investments”

Only for those those who own and have lived in their houses LESS than 5 YEARS! If not, then leave it alone!

2. “Restore the TFSA limit to $10,000.”

I’d like to see it made retroactive back to the beginning! And raise it to $15,000 going forward. If not retroactive, then $20k from now on. If the Mother Country can do it—so can we!

———–

Concerning this pathetic blog. . . .

Seriously if you really want to reach and influence more, it would help to reach millennials and younger if brand Garth Turner had more of a social media presence, and even a much more visible public media presence. If you want to reach them, you have to be on every social media site possible, doing subtile marketing. Plus this blog would have to be upgraded to make it look good and appeal to the younger set on their smartphones. Words are wisdom, but images attract.

Call yours “The Financially-Literate Canadian.” FLC for short.

It would cost a small fortune to do this, but you’d have to weigh the cost/benefits. If you want to carry on as now, you ARE reaching some. Just not enough.

#110 WUL on 01.22.20 at 9:14 pm

#91 wheretonow on 01.22.20 at 8:13 pm

… I still can’t believe people voted T2 in again,…

that’s easy…that’s easy…that’s easy…

The alternative was Scheer.

The next election will have the same result.

Might be sad to some, but absent some self reflection, introspection, real change, getting with the times and evolution, the Conservatives will still be riding the pine as benchwarmers.

I turn 64 in a few weeks and I can spot the required changes. My views on the world have moved on from 1960. Why can’t the Cons open their eyes?

M63AB

#111 Sia on 01.22.20 at 9:21 pm

Garth,

What do you think of an Australian style Superannuation plan. Employers are forced to “set aside” at least 10% of your gross income into an account which can’t be touched until retirement. People get to control how the account is managed and invested but can’t pull the money out until retirement. The money grows tax free. It’s a forced savings program. In Australia, this is a fact of life and to stay competitive, employers offer a higher rate than the mandated 10%.

Put this program in place and get rid of OAS and CPP.

#112 Millennial Realist on 01.22.20 at 9:31 pm

DELETED

#113 Kill me now on 01.22.20 at 9:40 pm

#48 Kitsilano Kid on 01.22.20 at 5:31 pm
Garth “V I Lenin” Turner. Your suggestions are worse than the current NDP/Green/Mayor Kennedy commies governing YVR.

note the chorus of approval , high entertainment
the consensus here is- we want a crash, we want high interest rates, the government should do something,
and the Chinese ruined my life

#114 Niagara Region on 01.22.20 at 9:44 pm

While I would not disagree that many Canadian consumers are overspending, it is important to remember that, on average, most Canadians and Americans now work more hours per week for lower earnings than workers did in the 1960s and 1970s. Yes, many consumers should curb their spending; but because of the myriad low-wage jobs that now proliferate across Canada and the US–and because of the general depression of wages across the spectrum of occupations since the 1960s and 1970s–to increase people’s financial security, it is important to scrutinze wages and benefits.

#115 Keyboard Smasher on 01.22.20 at 9:51 pm

Hi Garth, and others, this might be of interest because I believe the blog did predict that the CRA would be reviewing unusually high TFSA accounts in the hunt for new revenue to fund daddy Trudeau’s expensive promises. Or some vague notion to that effect.

A guy on Reddit who made over $500,000 in weed stocks on 30,000 in principle is now being penalized for over-contributing because his capital gains were made on what they deemed highly speculative assets, and thus undeserving of generating so much contribution room.

The precedent thus would establish, is INTERESTING….

#116 armpit on 01.22.20 at 9:52 pm

EVERYONE pays FEDERAL TAX. MINIMUM 5-10% from the total income, including All Benefits including Social Assistance (off set by an increase).

This way….EVERYONE IS A TAXPAYER. A nice psychological feeling knowing you pay to live here.

I know it sounds silly…

#117 Keyboard Smasher on 01.22.20 at 9:54 pm

And I forgot to paste the link…

https://www.reddit.com/r/PersonalFinanceCanada/comments/esie4d/cra_retroactively_removing_tfsa_room_built_up_by/?utm_source=reddit&utm_medium=usertext&utm_name=CanadianInvestor&utm_content=t1_ffakzjt

#118 mike from mtl on 01.22.20 at 9:59 pm

#66 BlogDog123 on 01.22.20 at 6:44 pm
….
– not signing up for company RRSP matching for years.
….
//////////////////////////////////////////////////////////////////////

Gotta say, if I was not forced to I’d opt out of my corp’s crappy mutuals, even if it’s matched. Currently I have it at the minimum of 1%.

They’re terrible performers (insurance junk mutuals), RRSP melting is not tax efficient in future and you can’t claim the matching portion on tax returns.

#119 JWD on 01.22.20 at 10:11 pm

“Tax capital gains on personal houses the same as personal investments – speculation is the enemy of affordable housing, and this ridiculous, historic tax break has turned us into a nation of speckers. Sure, phase it in.”

You’d go from loved to hated Garth – that would take way Canada’s passion for RE and their only way to get rich no? It’d be like shutting down Timmies; but I agree with you.

Canadians need a wake up call and a shift away from this RE obsession. Back to saving, investing, credit controls etc. Some other great ideas on your list…

How about a sliding tax scale from selling RE inside 5 years. Year 1, 10% to a Year 5 of 2% on the selling price for example. And RE commissions? Why an agent still makes about 25k on an average transaction is beyond me. This fee structure is ridiculous. Maybe a good blog topic…

#120 TFSA on 01.22.20 at 10:11 pm

If the system must bilk the rich and increase capital gains and dividends taxes, then dramatically increase the TFSA of everyday people. Why should everyday savers be punished along with the persecuted rich?

#121 Nonplused on 01.22.20 at 10:18 pm

#103 Dog Pill Commy Nest

Who do you define as rich? Are we going to eat all the doctors and dentists? I don’t think that will work out well. Lawyers on the other hand, pass the ketchup.

#122 Doug t on 01.22.20 at 10:19 pm

LOL – several commentators on here have me imagining that they are sitting in a wingback chair in a very woody study with a roaring fire surrounded by books and other intellectual stuff with a pipe in their hand and wearing Hugh Hefner’s pyjamas looking down their very intellectual noses and nodding as they type their very approving words and tell Garth how much they agree with his very astute words from on high

#123 Casey on 01.22.20 at 10:26 pm

Cut out EI deductions and payments – raise level on welfare.

#124 oslerscodes on 01.22.20 at 10:30 pm

You missed the part about “financial advisors” having a fiduciary duty to their clients…..

#125 Robin on 01.22.20 at 10:33 pm

– Teach financial literacy as a mandatory course in high school.

It sounds like a good idea, but the high school students can’t put it into context, as they don’t have much money.

Perhaps we can consider something different:
– A course you must pass before you can borrow money
– Government advertising on financial literacy
– ???

#126 Last of the Boomers on 01.23.20 at 12:00 am

What is really killing folks in YVR is a combination of factors centred around housing.

I cannot believe the number of residential properties held by real estate trusts, numbered companies, corporations, MIC’s, foreign owners with the odd occasional smattering of old stock home owners, and air b n b supported Millennialist. The occupied condos are left for the rest of the population to wrestle over (never you mind about the number of unoccupied houses , condos and town homes). No wonder we are in such a mess! Sponsored media FOMO has no boundaries.

Can’t wait for at least some of this to be revealed in May 2020, but by then beneficial owners will probably figure out another way to hide it under another rug.

#127 just snootin' on 01.23.20 at 12:19 am

I prefer free market solutions, rather than regulated ones. Demographics are an impending wall that cannot be overcome. It’s too late for governments banking on progress to accept decline. That’s why the scheming, the carbon tax, the unbalanced budgets… the governments are broke. Natural law (namely gravity) will grab hold of the economy and give it a good throttling in very short time.

#128 Tony on 01.23.20 at 12:41 am

Bill’s suggestion is a good one: allow people to opt out of OAS in return for lower or waived taxes on RRIF withdrawals. Should be revenue-neutral.

A stupid suggestion that would only benefit the rich but might keep more rich people in Canada upon retirement. A zero per cent change of ever hearing this absurd suggestion again. The rich have to pay all of the OAS back anyway each taxation year in a clawback.
Increasing the capital gains tax would see the rich migrate to another country out of Canada.

#129 Tony on 01.23.20 at 12:52 am

Re #99 MrC on 01.22.20 at 8:29 pm

You can’t reach financial literacy today in schools because virtually everything today is rigged and manipulated. The law of supply and demand no longer exists. Almost every book from the past on economics is now either defunct or obsolete.

#130 cmj on 01.23.20 at 1:13 am

One of the best posts yet, Garth. If you state a problem, then you need to be part of the solution. Thanks for all this food for thought.
Our government needs to act responsibly and quit buying votes. We need to stand up and let them know the potential solutions.

#131 Barb on 01.23.20 at 1:15 am

Outstanding post, Mr. T.

I’d add:
Deficits should be illegal…all levels of government.

#132 Dr V on 01.23.20 at 1:22 am

70 Tater – Waay too many holes in that argument. Lots of unintended consequences. Problem would be eliminated ( or greatly reduced) with a flat (or flatter) income tax rate.

#133 Damifino on 01.23.20 at 1:23 am

#106 palebird

As far as electric vehicles go , well, until we figure out batteries a little better they are not the answer
————————————–

True. Believing battery design is all that stands between us and a great green future is certainly a seductive dream. But it is not to be. Nuclear is the future. The distant future. Perhaps thorium reactors. In the meantime, it’s good old reliable hydrocarbons. Sorry.

#134 T on 01.23.20 at 2:12 am

Some ideas from my perspective:

– legislation around true personal accountability for realtors
– legislation around making all housing data public (assessments, listings, sales)
– public education campaigns around what are true professional careers vs sales professions with misleading titles (doctor/lawyer/pm vs realtor/used car salesman/[email protected])
– faster and more punitive enforcement of financial crimes
– financial incentives to live healthier lifestyles
– employ strategies to bolster the value of the Canadian dollar

——

MF, I agree with all your points except one. Why would you want to eliminate dual citizenship?

#135 Casual observer on 01.23.20 at 2:52 am

Suggest they consider to change the rules of commuting a pension to allow for what is now a taxable portion of it to be routed from the person with the pension over to their spouse by allowing the spouses RRSP unused contribution amounts to be reduced through the commuted value taxable portion. This would allow a more fair and timely application of taxes when removed during retirement after having grown over time in a taxable account.

#136 Fortune500 on 01.23.20 at 3:33 am

A really good list Garth. The only one I have strong objections to would be mandating how the CCB was spent.

Perhaps it is my Libertarian streak, but I think the government should stay out of how families conduct their business. If you want to keep the cash, then keep it, but if you have decided to create the CCB, trust that it will be used wisely by those who know and love their children more than anyone outside.

Sometimes getting a babysitter and having a chance to go out for dinner with the spouse you have become distant with, would be better for one’s family than than say $200 worth of school supplies.

The government has a hard time paying it’s employees. I doubt they will do a better job determining how people spend their money …

#137 Stan Brooks on 01.23.20 at 3:37 am

#59 Tater on 01.22.20 at 6:31 pm

Here comes Stan again, with more delusions of double digit inflation. Ask your doctors to up your Risperdal dose.

Amazes me how you could possibly think inflation is running at a rate that would cut everyone’s standard of living in half every 7 years without riots breaking out.

Hm, delusion of high inflation you say…
It seems that delusion is quickly spreading around.

The top post from that link:


I really would like to know how they establish the inflation rate at 2.2 %. Is it just me or has anybody else noticed how much more groceries, fruit, vegetables and meat in particular, costs from just a year ago? I would guess that the increase for the year is at least 10 %. The only thing which has been more or less costing the same (in Ontario) is gas.

Why do I have the feeling that their way of measuring inflation is nothing more than creative bookkeeping.

23 approvals, 3 disapprove.

As for protests against falling standard of living: You are dealing with some exceptionally stupid and brainwashed sheeple here. It will die of hunger first before protesting.

See what happens in France that has much better social net and the minimum pension is 1000 Euro/1700 Cad net with much cheaper food and free retirement homes.

That provincial servitude attitude with ‘don’t rock the boat, suck it up and move on’ combined with a false sense of superiority is the exact reason the incompetents monetary ‘authorities’ are that bold, all it takes here to be ‘successful’ is to be politically correct and confident (even if it is in your own stupidity)

Until it all falls apart ‘suddenly’.

Watching for a side the roaring inflation of necessities and food is scary while rejections of it are quite entertaining.

Cheers,

#138 Serenity Sam on 01.23.20 at 3:59 am

You forgot to include banning Double Dipping by Canada’s big civil service unions. Any politician or blogger who champions that will gain millions of Mill votes . Young people vote Liberal for welfare. None of them realize that six figure jobs are the answer to their misery, not more socialism. The cancer is hopelessness. Stop double dipping and give young people a future.

#139 Stan Brooks on 01.23.20 at 4:10 am

https://www.narcity.com/news/ca/justin-trudeaus-vacation-to-costa-rica-is-already-being-criticized-on-twitter

https://torontosun.com/news/national/streams-of-flights-cast-cloud-over-pms-costa-rica-vacation

Hm, it seems that climate emergency is just for the sheeple that consumes too much energy, while the ‘climate activist’ members of the elite jet around the world and live the good life.

Note: he uses a business jet (actually 2 jets), not economy class on a commercial flight.

Guess who is paying for that vacation and the security around it?

———————————————

https://www.cbc.ca/news/politics/trudeau-her-majesty-prince-harry-meghan-security-costs-canada-1.5434579

British tabloid outlets have reported that Trudeau has agreed already that Canada would pay for the couple’s security. The London-based Evening Standard reported that Trudeau has “privately assured the Queen” that Canada would shoulder the costs of protecting Harry and Meghan.

There goes the pensions of at least 100 retirees.

Cheers,

#140 James Deen on 01.23.20 at 6:09 am

China shuts down second City as Wuhan virus out of control. Canada is weeks behind. CBC hot a few GP doctors to explain that the reason staff abandoned Toronto hospitals during SARS was “concern for family”.

https://www.straitstimes.com/asia/east-asia/china-locks-down-two-more-cities-huanggang-and-ezhou-after-wuhan

God help us, because our local media is not spinning the truth. Suit up, avoid, wash, wipe and mask. You can bet it’s already here.

Get a grip. The thing has killed less than 2 dozen people in a country of a billion. This year the flu will kill 80,000 Americans. Turn off the stupid media. – Garth

#141 Steven Rowlandson on 01.23.20 at 6:18 am

RE #1

Why not replace property taxes in Canada with a 1% municipal income tax collectible along with the other income taxes? Government should not have a stake in escalating real estate values or being an accessory to genocide.

#142 Steven Rowlandson on 01.23.20 at 6:29 am

Re#128

It is entirely possible that a further increase in home prices and rents plus an anti homeless repression could turn Canada into a source of refugees. Not sure where they could go to be safe from the genocidal real estate madness as it seems to be universal. The next solar system?

#143 DMER on 01.23.20 at 6:40 am

DELETED

#144 Stan Brooks on 01.23.20 at 6:52 am

#115 Keyboard Smasher on 01.22.20 at 9:51 pm
Hi Garth, and others, this might be of interest because I believe the blog did predict that the CRA would be reviewing unusually high TFSA accounts in the hunt for new revenue to fund daddy Trudeau’s expensive promises. Or some vague notion to that effect.

A guy on Reddit who made over $500,000 in weed stocks on 30,000 in principle is now being penalized for over-contributing because his capital gains were made on what they deemed highly speculative assets, and thus undeserving of generating so much contribution room.

The precedent thus would establish, is INTERESTING….

What is the definition of highly speculative assets? And who defines it, based on what? What is a medium or a low, or a normal speculative assets, what is the criteria of defining each?

The previous tax confiscation was for ‘frequent trading’.

………….

It is not a precedent. It is a general rule that the sheeple should be kept poor/in debt and taxed to death. While there are different rules for the connected, ‘deserving’ /offshore account holders, the french villa guy buddies.

What is unfair for the poor schmucks is very fair for the rich, connected guys. The same with the small (‘tax thieves’)/big corporations – ‘our’ Empire’s club buddies.

It is a class system folks and you are stuck in the low, ‘undeserving’, servants class, to be clear – there is no vertical mobility here.

Cheers,

TFSAs are not for professional traders, financial professionals or gamblers to abuse or use as covers for commercial activities. The CRA is correct. You are not. – Garth

#145 maxx on 01.23.20 at 7:05 am

Make financial literacy mandatory starting in grade school, age 8.

By then, kids have reading and basic math under their belts and use them early. They then realize that these are useful tools. For life.

I grew up hearing my parents discuss how to use their limited resources to pay everything off so as to avoid debt. They saw it as a plague. My 18 year-old niece has stuffed her TFSA to the limit, has an RSP and saves like crazy. She has a nearly full-time job while at university. Talk about motivated. Her parents started her financial education at about age 8.

What a difference it makes.

#146 NotLegalAdvice on 01.23.20 at 7:14 am

#5 Marco on 01.22.20 at 4:01 pm
Restore the TFSA limit to $100,000.

This would be incredible!

#147 James Smith on 01.23.20 at 7:27 am

I sent Garth’s list to my MP. Please contact yours: https://www.ourcommons.ca/Members/en/search

#148 Shawn on 01.23.20 at 7:58 am

BOC rate cuts coming. They’re going to correct their policy error of not following the FED and other central banks…

The consensus is one quarter-point cut in 2020. Or it might be a quarter-point increase. Either way, there’s no big move anticipated. And there was no error. – Garth

#149 Shawn on 01.23.20 at 8:00 am

Drop in oil and commodities coming. Secular deflation.

$CAD

TSLA

#150 Shawn on 01.23.20 at 8:02 am

I still think we haven’t seen the lows for interest rates.

#151 Shawn on 01.23.20 at 8:04 am

Definitely was a policy error. The BOC should have been cutting along side of similar economies. ie RBA

They’ll cut now or delay future hikes when the next tightening cycle begins.

#152 IHCTD9 on 01.23.20 at 8:05 am

#136 Fortune500 on 01.23.20 at 3:33 am

A really good list Garth. The only one I have strong objections to would be mandating how the CCB was spent.
___

Handing out 5 figures tax free for 18 years is stupid. Canada only has about 60% labour participation, and about 40% of these pay no net tax now thanks largely to Trudeau’s [email protected] CCB. The Canadian Gov has really pickled themselves with this dingbat move. Add it on top of all the options a guy has to reduce taxable income and you’ve got all kinds of good household incomes that pay jack for income taxes.

A bro and I added up our combined tax returns and CCB payments since Trudeau was elected, and the total from 2015-2019 was a rather shocking $193,600.00. That does not include our personal efforts to avoid taxes on the consumption end (which are significant on their own) We’re just regular working schmoes, but do fine and don’t need any freebies from Trudeau. There has to be thousands of households in our situation with decent incomes, yet paying squat for taxes.

They’ll never be able undo this, and the handout grows bigger every year.

There is a reason the Americans hand out food stamps to families as a supplement, instead of depositing tax-free cash into citizens’ bank accounts. People are predictable. They come to see the money as an entitlement, spend a huge amount of it on real estate-related expenses. The result is a further inflation of property values via government money, which benefits no families. Bad policy. Good politics. – Garth

#153 Shawn on 01.23.20 at 8:07 am

I see a 2012 onward scenario playing out for markets again. US > international. USD strength. Technology continues to lead. Inflation elusive. Corporate bonds catching a bid. Govt bonds meandering.

#154 Dharma Bum on 01.23.20 at 8:07 am

The government isn’t stupid. They get all of this. They really just don’t care.

Politicians DO NOT CARE. Get it?

They are only interested in getting elected and re-elected.

They are in it for their own personal gain, whether it be financial or egotistical.

They will do anything and say anything to con the dumbest, most naive, simple minded, ignorant, lowest common denominator Canadians into voting for them.

Whatever comes out of their mouths is complete rot.

They perpetuate their self interest at the expense of the citizens and the country. By the time the damage is done, they’ve moved on with lined pockets and feathered nests.

They will not listen to intelligent suggestions from the public – especially not from the superknowledgeable Blog Dogs (we are their ENEMY) – because they encourage ignorance among the masses in order to propagate their personal agendas and dogma.

The public must fend for themselves. Parents must educate their own children about financial literacy. They must set the example as well as teach their kids how to do this stuff every single step of the way. That means opening TFSAs, Questrade accounts, advisor accounts, etc., for their kids and showing them exactly what to do.

If the adults don’t know what to do, then they need to seek out advice and educate themselves first. DOn’t wait for the government to do it for you. Don’t rely on the government for anything you don’t have to. They hate you.

And talk about money to the kids (like you would talk about sports, movies, TV, hobbies, life, and everything else). Start when they are old enough to understand – like 7 years old. Piggy banks, saving for a rainy day, money for chores. Increase the complexity of the ideas as they grow. Reward them for saving by giving them a little bonus allowance, or something, so they learn that saving and investing is beneficial to them.

Finally, act as a counterbalance to the horrid propaganda machine that is our consumer culture. The single biggest effort by the world of marketing and advertising is on molding the minds of young children at their most vulnerable age and brainwashing them into becoming lifelong addicted mega consumers. Over consumption is their only goal. This is what the government is complicit in. They do not want it to stop. They do not want us to be saving or investing. They want us to spend, spend spend.

If you are looking to the government to help citizens improve financial literacy, help you learn to invest, help you save, and become a more responsible (frugal) and intelligent (selective) consumer, you are seriously misguided.

Only Garth can save you, and only you can save your children by strictly educating them on how to stop the madness. The rest of the plebes and peons are too far gone. They are doomed. Pooched – as our fearless leader would say.

Everyone else will suffer the consequences.

Sorry to say, we’re on our own. Only we can save ourselves.

Stop overspending. Delay gratification. Save and invest.

#155 IHCTD9 on 01.23.20 at 8:13 am

#6 Sold Out on 01.22.20 at 4:06 pm

Too late, health authorities are already giving out free, cancer prevention medication – it’s called the HPV vaccine and it prevents several oral/genital cancers.

___

Yes, but up until recently, only for females (at least in Ontario).

If you wanted your male offspring vaccinated – you had to pay your own way.

#156 Tater on 01.23.20 at 8:21 am

#132 Dr V on 01.23.20 at 1:22 am
70 Tater – Waay too many holes in that argument. Lots of unintended consequences. Problem would be eliminated ( or greatly reduced) with a flat (or flatter) income tax rate.

——————————————-

Oh I agree, a flatter tax that has the middle class paying more (1k or so per year) while reducing taxes on the top would be ideal. Just don’t see it ever happening so I’ll advocate for tax reform where I can get it.

#157 G. on 01.23.20 at 8:24 am

***it would be just as silly for the middle class to subsidize a high earners desire to have their spouse at home.***

We heard this sort of thing a lot when Harper was proposing the income splitting. Seems a lot of people don’t get that there are large numbers of couples who would love to have one spouse stay home but can’t quite swing it (or feel they can’t), but would be able to with income splitting. This “it would only benefit high earners” thing is a myth.

#158 Tater on 01.23.20 at 8:26 am

137 Stan Brooks on 01.23.20 at 3:37 am
#59 Tater on 01.22.20 at 6:31 pm

Here comes Stan again, with more delusions of double digit inflation. Ask your doctors to up your Risperdal dose.

Amazes me how you could possibly think inflation is running at a rate that would cut everyone’s standard of living in half every 7 years without riots breaking out.

Hm, delusion of high inflation you say…
It seems that delusion is quickly spreading around.

The top post from that link:

I really would like to know how they establish the inflation rate at 2.2 %. Is it just me or has anybody else noticed how much more groceries, fruit, vegetables and meat in particular, costs from just a year ago? I would guess that the increase for the year is at least 10 %. The only thing which has been more or less costing the same (in Ontario) is gas.

Why do I have the feeling that their way of measuring inflation is nothing more than creative bookkeeping.

23 approvals, 3 disapprove.

——————————————-
So between you, the poster and the 23 approvals, you’ve managed to find 25 people who don’t understand how inflation is calculated. Congratulations on your ignorance.

The price of manufactured goods, clothing, cars, etc are all down. The average person buys a basket of these goods along with food. And guess what? As the amount the need to spend on some parts of the basket go down it leaves more money chasing the same quantities of goods in the other basket. Those items go up lots, but the overall basket goes up a little.

If all you do is shelter and feed yourself you are not a full economic participant and monetary policy should not be tuned to you.

#159 crowdedelevatorfartz on 01.23.20 at 8:27 am

@#153 Dharma
“The government isn’t stupid. They get all of this. They really just don’t care.
Politicians DO NOT CARE. Get it?
They are only interested in getting elected and re-elected.
They are in it for their own personal gain, whether it be financial or egotistical.
They will do anything and say anything to con the dumbest, most naive, simple minded, ignorant, lowest common denominator Canadians into voting for them.
Whatever comes out of their mouths is complete rot.
They perpetuate their self interest at the expense of the citizens and the country. By the time the damage is done, they’ve moved on with lined pockets and feathered nests.
They will not listen to intelligent suggestions from the public – ”

+++++
Truer words deserve repeating.
Not to worry Dharma.
Millennial Relist and his hard working, smug cohort have it all figured out.
If we make it to 2025 they will save us because….they will be in the majority and they are vastly superior in every way.
Nietzsch’s “supermen” as it were…..and all while video gaming in the basement….. we’re saved….

#160 Q2 Class No. 6131 on 01.23.20 at 8:33 am

Garth –

Great ideas, every last one. All make perfect sense, which virtually guarantees none will ever be adopted by the gang currently running Ottawa.

P.S. Should be ‘stanch’, not ‘staunch’.

#161 Tater on 01.23.20 at 8:34 am

As for the CCB, don’t give it to parents. Put it directly into an RESP for the kids. If your parents are broke enough to be getting it, you better get an education.

#162 G. on 01.23.20 at 8:35 am

***several commentators on here have me imagining that they are sitting in a wingback chair in a very woody study ***

Hahaha yeah like the “CERTAINLY no more than two children” people, I picture them with an affected, snobby British accent and a finger wag…

#163 milly on 01.23.20 at 9:05 am

Hi Garth,

A lot of these are awesome ideas that would work, especially with housing. It seems so obvious, so why don’t our leaders think about doing these things when we have a housing and retirement crisis looming? What brings them to such inaction?

#164 Jendra on 01.23.20 at 9:12 am

#55 BS on 01.22.20 at 6:04 pm
My genius idea:

Combine EI and CPP….Then create a limited EI where someone can still get EI but it takes from their CPP. Those who never take EI will get more CCP when they retire. Those who do take EI get less CPP but they would never get less than the current CPP entitlement. End EI for seasonal jobs after 1 or 2 claims.

*********

Interesting idea.
Fun fact for all those angered that they chose not to pursue a career with a DB plan (yeah, you had a choice like most everyone else – whine in the mirror). A career teacher with a continuing contract will pay into EI benefits for thirty years with no opportunity to EVER get EI benefits – unless they leave the profession.
I imagine that fact is not widely known (like the fact that BC Teachers have been without a contract since last June).

M56BC

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

This idea of BS is not feasible because it would disproportionately harm women’s retirement income. Women draw from EI for maternity leave benefits and parental leave benefits when they give birth. Men can draw for parental leave, but statistically few do. And no man can draw as much as a woman in total per child because the maternity leave benefits are for recovering from the birth, and are separate from parental leave benefits.
Basically, on top of the financial hit women take to have babies in the first place (careers tend to suffer for mothers), the issue would then be even more compounded in retirement.
We need women to birth new people if we wish society to continue. Economies are essentially built on people having children (babies are the real job creators of this world, because what drives any economy is people: to work, to spend, to create, to employ, to consume, to produce). This is a fact.
So, anything that financially penalizes those who bear the brunt of providing this non-negotiable must-have for any civilization is highly unreasonable. Women already face financial penalties for motherhood without formally enshrining more penalties into the system.

#165 Shawn on 01.23.20 at 9:30 am

I think the $CAD will trade in a range between 60-70 cents during the 2020s

#166 Shawn on 01.23.20 at 9:56 am

WTI back to $40?

#167 crazyfox on 01.23.20 at 10:05 am

Something to add? I’m listening. So will they. – Garth

Nope. You’ve covered it. Tougher regs, keep the stress test, more money down, get rid of the credit vultures, increments, this is the way to contain our debt bubble and real estate lust mentality. Politicians love easy credit for the wealth effect it brings but it comes with a price for as asset values rise, so does risk of default and people struggle more to get ahead.

Excellent advice, nicely done Garth.

#168 Incubus on 01.23.20 at 10:13 am

Simply abolish CMHM, let the bank assume 100% of the risk.

I guarantee real estate will deflate.

#169 Keyboard Smasher on 01.23.20 at 10:13 am

RE: Garth

>TFSAs are not for professional traders, financial professionals or gamblers to abuse or use as covers for commercial activities. The CRA is correct. You are not. – Garth

The guy made 4 trades in 4 years. The issue was the very speculative nature of the asset and the egregious capital gain. It’s a bit murky here, unless the CRA has already made such determinations within their RRSPs that I’m not aware of…

#170 Penny Henny on 01.23.20 at 10:19 am

To Shawn Allen and others, I thought you might enjoy the read.

https://www.mawer.com/assets/Transcripts/EP51-Negative-interest-rates-in-an-unprecedented-time.pdf?utm_source=itrac&utm_medium=email&utm_campaign=AOB%3A+Negative+interest+rates+in+an+unprecedented+time+%7C+EP51+on+Jan+24%2C+2020+2020-01-22

#171 PetertheSeparatistfromCalgary on 01.23.20 at 10:24 am

Take fiscal policy away from elected officials. Have the Bank of Canada set how much the government can spend in a year.

The government would decide how to spend the budget, but the maximum level of spending would be set by the Bank of Canada based on things like inflation, demographics, economic growth, revenues, fiscal capacity and deficit targets.

#172 ADH on 01.23.20 at 10:37 am

Stop treating primary residences/rentals like a golf score card (an honor system) as follows

Tax the PRE gains. Also any HELOC withdrawals that are more than purchase price for the house are a capital gain. ie paid 200k for the house, now 800k MV, owner withdraws 400k, the 200k is taxable.

Rentals – T slips? Why not, everything else has one? AirBNB should have a T slip to CRA. RE Agents listing rentals, T slip. Kijij/ViewIT, same deal.

Make homeowners insurance forms require checkbox by law about rentals in the unit – T slip.

Tenants – declare rent mandatory. Penalties to owner and tenants as well.

It just seems the residential RE doesnt have the same standards for tracking fund flow like all other investments.

#173 mike from mtl on 01.23.20 at 10:47 am

#169 Keyboard Smasher on 01.23.20 at 10:13 am

RE: Garth

>TFSAs are not for professional traders, financial professionals or gamblers to abuse or use as covers for commercial activities. The CRA is correct. You are not. – Garth

The guy made 4 trades in 4 years. The issue was the very speculative nature of the asset and the egregious capital gain. It’s a bit murky here, unless the CRA has already made such determinations within their RRSPs that I’m not aware of…
////////////////////////////////////////////////////////////////////

Exactly. Had it have been a spectacular loss we would not hear about it and the CRA presumably would not care. In theory it would be exactly the same ‘issue’ with a RRSP or non-reg – but no because they get their cut.

What determines a “professional trader” or commercial activities? The guy hocking Insurance Seg funds? An accountant who has trading interest? a CFO that does his own trades? a ‘gambler’ as stated who puts real cash at risk that hits the jackpot? And if it happens to be a great gain, so.. that’s what it is for.

Either the TFSA is tax free or it is not.

With the amount of $$ tied sunk in bricks and drywall here how many examples of HNW TFSA can there be? Of course RE is truly the wild west in terms of taxation – it’s no wonder we go all-in on RE here.

#174 Leeann on 01.23.20 at 10:57 am

Absolutely, pay day lenders are vultures praying on the needy. And most of the readers of this blog will never need one (me included). But if you don’t have helpful family and your car breaks down on the way to your low-paying job and you need $762 to fix it so you can get to work tomorrow, what’s the alternative?

#175 joblo on 01.23.20 at 10:58 am

“Something to add? I’m listening. So will they.”

But will Irving, Rogers, Power Corp, McCain, Weston, Onex, Shaw, etc etc? Doubt it?

In my view they control Kanada, not T2’s gang of incompetents.

#176 Stan Brooks on 01.23.20 at 11:02 am

TFSAs are not for professional traders, financial professionals or gamblers to abuse or use as covers for commercial activities. The CRA is correct. You are not. – Garth

I agree, just bitching about the inability to define clear rules on such important topic, leaving it a subject of interpretations which in same borderline cases can be very controversial and confusing.

But generally they are correct, pay up and move on is the correct attitude when one/the average Joe Schmo yields no weight whatsoever.

————————–

#158 Tater on 01.23.20 at 8:26 am
That was just an example.

If you honestly believe that inflation is sub 2 % you have much bigger problems. Do a survey about the inflation and see which option – 2 % or 8 % for example will fetch bigger number of votes.

Cheers,

#177 Dina Santos on 01.23.20 at 11:13 am

My whole family has been made fun of all my like for saving money every year maxing out RRSP’s, TFSA’s, paying down mortgage every year, keeping debts away or keep them very low, making a reserve fund way before any so called expert suggested or advised it.

I don’t believe almost 50% of the Canadian population is that ignorant or dumb. They knew that credit card debt and other debts at high levels is a major financial mistake and ruins them but they don’t care. They were the poster people for lower and lower interest rates.

This is all planned ahead and the powers at be, those in charge want the Canadian and other world populations to be stuck and are so glad it has worked so well. There is no more responsibility for their own decisions and bad choices. I don’t see a better future ahead even if we are set financially for the rest of our lives. Taxing the personal residence is a joke and is just a tax grab because most people will not see it every month.

What needs to be done is raise that monthly mortgage payment by 50% at least with higher interest rates and shorter amortizations to pay off the mortgage. It worked in the past and since that has changed dramatically, we are in a mess now since 25 years ago when mortgage rates dropped from 10%-11% to 2.35% to 3.5% 5 year mortgage rates today plus tax breaks with them.

Those in charge know this would happen and it was all done on purpose. It is a planned destruction of Canada and other western countries. A slow debt buildup of almost everyone, every government, every company is their plan all along.

#178 Sonny on 01.23.20 at 11:16 am

I second this!

#168 Incubus on 01.23.20 at 10:13 am
Simply abolish CMHC, let the bank assume 100% of the risk.

I guarantee real estate will deflate.

#179 Steve on 01.23.20 at 11:27 am

#178 Sonny on 01.23.20 at 11:16 am
I second this!

#168 Incubus on 01.23.20 at 10:13 am
Simply abolish CMHC, let the bank assume 100% of the risk.

I guarantee real estate will deflate.

CMHC actually handles more than just mortgage insurance, so maybe avoid a position of abolishing the agency in its entirety, and focus on reform for mortgage insurance, since that appears to be the concern? Not that I agree that a cold turkey cessation/transfer of risk would be responsible, but at least villainize and debate the specific issue.

#180 Stoph on 01.23.20 at 11:34 am

Have RESP grants for kids of low income families.

It’s great if families can put the Canada Child Benefit money into the RESP, but families may need the money for taking care of kids’ immediate needs.

For public universities, tuition is a secondary cost of higher education. The cost of living and missed opportunity costs of not working while at university are much higher, so RESPs are needed. Free tuition would only go so far in improving university accessibility.

#181 Stoph on 01.23.20 at 11:44 am

Does anyone have actual data of what people are spending their Canada Child Benefit money on?

Even if it’s not very fiscally prudent, at least the child benefits from money spend on houses, renos and vacations.

#182 mnpr on 01.23.20 at 11:48 am

RE: dogthoughts….. funny… good addition to this blog to add lightness… keep ’em coming. (I’ve always wondered what my goldie was thinking).

#183 Chop Suey on 01.23.20 at 12:01 pm

In regards to “Ban Air Bnb”, I thought I’d share an anecdote from Denver…

I live in a downtown apartment building (note, institutionally owned ‘multi-family’ not individual condos) and the building has just implemented a ‘home-sharing’ program, allowing residents to sublease their rental when they are out of town.

Building management run the entire process, from vetting and liaising with Air Bnb guests to removing resident sheets, towels and toiletries and replacing them with its own. Essentially, all the resident has to do is ensure any valuables are locked away (the building installed locks on closets), beyond which, everything is taken care of.

I think this program is genius. It is an amenity to residents, a revenue stream for ownership (residents receive a fixed check of $75-$100 per night depending on how many beds their unit contains), a tax revenue stream for the city and does not remove any housing stock from the market.

The fee to residents is enough to warrant participating in the program (why not receive $150 each weekend you head away skiing) but too little to profit from, removing the temptation to arrange ‘other accommodation’ and profit from the program.

As I see it, if this program were to be rolled out, it would drastically increase short-term rental accommodation (reducing hotel rates) without distorting rental stock, while affording program participants more disposable income.

To ensure the program is not abused, participation could be limited to 10 nights per month… What am I missing here!??

#184 Sail away on 01.23.20 at 12:06 pm

#140 James Deen on 01.23.20 at 6:09 am

China shuts down second City as Wuhan virus out of control. Canada is weeks behind. CBC hot a few GP doctors to explain that the reason staff abandoned Toronto hospitals during SARS was “concern for family”.

https://www.straitstimes.com/asia/east-asia/china-locks-down-two-more-cities-huanggang-and-ezhou-after-wuhan

God help us, because our local media is not spinning the truth. Suit up, avoid, wash, wipe and mask. You can bet it’s already here.

——————————–

Get a grip. The thing has killed less than 2 dozen people in a country of a billion. This year the flu will kill 80,000 Americans. Turn off the stupid media. – Garth

——————————–

Yep. Look behind the hysteria. Apply the same thinking to Australian bush fires, climate change, mainstream (and especially financial) news, etc.

Use pragmatism and logic.

#185 Sail away on 01.23.20 at 12:20 pm

Leave it alone.

Every time something changes, my opportunistic strategy has to change. Things are working very well right now.

Don’t meddle!

Well… maybe quadruple insurance costs on Audis and all other luxury gas cars so Tater has to buy a Tesla.

Other than that- don’t meddle!

#186 IHCTD9 on 01.23.20 at 12:25 pm

#181 Stoph on 01.23.20 at 11:44 am

Does anyone have actual data of what people are spending their Canada Child Benefit money on?

__

CCB and tax returns past have gone towards mortgage payments, Tuition, Braces, and Investments.

CCB and tax returns future are going to YAMAHA, GM, investments, and renovations.

The reality is those couples with joint bank accounts receive the funds every month and they get expensed on whatever without being budgeted specifically for anything in particular.

#187 Editrix on 01.23.20 at 12:27 pm

To quote Dickens’ Mr. Micawber: “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

#188 Midnights on 01.23.20 at 12:53 pm

#89 the ryguy – In cabo on 01.22.20 at 7:57 pm

You would like the book, The Millionaire Mind.
There’s a chapter that’s deals with repossession etc.
Good book overall.

#189 Renter's Revenge! on 01.23.20 at 12:55 pm

“Require the Canada Child Benefit money to actually be spent on children, not the mortgage, property taxes or hardwood flooring”

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

This statement suffers from mental accounting bias.

Money is fungible. Once it’s in someone’s account, where it came from has nothing to do with where it goes.

https://www.investopedia.com/terms/m/mentalaccounting.asp

Then change the method of distribution. It’s why the US gives out food stamps, instead of cash. It’s why some have suggested it should go into RESPs. These billions should not go into real estate. – Garth

#190 Shawn on 01.23.20 at 1:04 pm

US home builders are breaking out to new ATHs. ITB XHB

If a new housing boom is underway in the US it is highly likely that the Canadian housing boom continues.

#191 IHCTD9 on 01.23.20 at 1:09 pm

#187 Editrix on 01.23.20 at 12:27 pm

..twenty pounds ought and six
___

I have no idea what that is.

Is it similar to a thirty-aught-six?

(There’s my redneck humor for the day)

#192 IHCTD9 on 01.23.20 at 1:17 pm

#185 Sail away on 01.23.20 at 12:20 pm

Well… maybe quadruple insurance costs on Audis and all other luxury gas cars so Tater has to buy a Tesla.

_____

Surely Tater would rather own one of these sweet machines? (coming in 2021):

https://insideevs.com/reviews/377328/ford-f150-electric-truck-details/

I know Ponzie would be on these babies like a dog in heat.

#193 Ubul on 01.23.20 at 1:23 pm

There is a reason the Americans hand out food stamps to families as a supplement, instead of depositing tax-free cash into citizens’ bank accounts. People are predictable. They come to see the money as an entitlement, spend a huge amount of it on real estate-related expenses. The result is a further inflation of property values via government money, which benefits no families. Bad policy. Good politics. – Garth

You have personal view that prefers not having a child, with a professional view on investment in real estate versus financial portfolio. The latter is with direct interest for making a living for yourself in the portfolio business.

In your argument above you are connecting your two views together – predictably, as any other people.

You need to provide actual data to support a claim that in Canada parents from child support money “spend a huge amount of it on real estate-related expenses. The result is a further inflation of property values via government money, which benefits no families”.

How many percentage of the inflation of property values can be attributed to “misspent” child support money?

The CCB program transfers $22 billion a year to families, without controls. It is paid to people earning up to $189,000. It’s directly responsible for 40% of households paying no net tax, while the country this year is $28 billion in deficit. Bad policy. Good politics. By the way, what do you spend your free money on? – Garth

#194 Mad Hatter on 01.23.20 at 1:35 pm

Hey Garth cheer up! I don’t think you realize all of the positive influence you are having on Canadians and it takes time to change behaviour. I started a conversation with a new hire at work about investing as he is young, married, and with kid along the way. He said he was doing what [email protected] was telling him to do. I introduced your website to him and we discuss your advice daily at coffee break. It took a year of convincing before he decided to actively manage his own financial future. Also, I would have never known about the ability to break a 10 year mortgage and refinance after 5 years. This advice saved me thousands of dollars over the next 5 years. So you are helping ordinary Canadians! Thank you.

#195 Tater on 01.23.20 at 1:45 pm

#185 Sail away on 01.23.20 at 12:20 pm
Leave it alone.

Every time something changes, my opportunistic strategy has to change. Things are working very well right now.

Don’t meddle!

Well… maybe quadruple insurance costs on Audis and all other luxury gas cars so Tater has to buy a Tesla.

Other than that- don’t meddle!
—————————————

Would never buy a Tesla, but looked pretty hard at the etron. But, the Q7 I got was 20k cheaper. Assuming the etron was free to fuel, still works out to 10k cheaper over the next 4 years. And that’s even after I bought some carbon offsets to appease my wife.

What a win/win. I get 1000km of highway range, save money and a few hundred trees get planted. Plus I have a legitimate manufacturer standing behind the product.

#196 Ubul on 01.23.20 at 1:58 pm

#193 Ubul on 01.23.20 at 1:23 pm

There is a reason the Americans hand out food stamps to families as a supplement, instead of depositing tax-free cash into citizens’ bank accounts. People are predictable. They come to see the money as an entitlement, spend a huge amount of it on real estate-related expenses. The result is a further inflation of property values via government money, which benefits no families. Bad policy. Good politics. – Garth

You have personal view that prefers not having a child, with a professional view on investment in real estate versus financial portfolio. The latter is with direct interest for making a living for yourself in the portfolio business.

In your argument above you are connecting your two views together – predictably, as any other people.

You need to provide actual data to support a claim that in Canada parents from child support money “spend a huge amount of it on real estate-related expenses. The result is a further inflation of property values via government money, which benefits no families”.

How many percentage of the inflation of property values can be attributed to “misspent” child support money?

The CCB program transfers $22 billion a year to families, without controls. It is paid to people earning up to $189,000. It’s directly responsible for 40% of households paying no net tax, while the country this year is $28 billion in deficit. Bad policy. Good politics. By the way, what do you spend your free money on? – Garth

Among how many children are the $22 billion split?
You claim “These billions should not go into real estate”.
How many “billions” of the $22 billion “goes into real estate”?

By the way I get no free money – other than tax break on investment income. None of your business, of course how I spend that.

#197 Shawn Allen on 01.23.20 at 2:05 pm

In Summary…

I think the consensus is: Please tax other people more and me less. Please remove or lower tax credits that do not benefit me. Please regulate other people more and me less. Thank you.

Well, self interest drives the economy so it good to know that self-interest is so prominent.

#198 Rate of inflation on 01.23.20 at 2:08 pm

Here’s an idea…include real estate in the inflation rate that the Bank of Canada monitors for rate decisions.

#199 Rate of inflation on 01.23.20 at 2:08 pm

Here’s an idea…include real estate in the inflation rate that the Bank of Canada monitors for rate decisions.

#200 TorontoCA on 01.23.20 at 2:12 pm

#100 VicPaul on 01.22.20 at 8:30 pm

Ok, so they pay a few hundred bucks a year in to EI with no chance of ever collecting. Let’s assume annual EI premiums of $800 x 25 year career = $20k paid over their career.

On the flip side, they retire with one of the best pensions in the world, the majority of which is paid for by us, the taxpayers. I think teacher pension is somewhere in the neighbourhood of 70% of the average of their top 3 earning years, or the equivalent.

As all teachers in Canada are earning north of $100k at retirement, this means they will receive $70k+/year for the rest of their lives.

You’ll never hear it in Canadian media, but Canadian teachers are third highest paid in the world.

#201 Sail away on 01.23.20 at 2:15 pm

#195 Tater on 01.23.20 at 1:45 pm
#185 Sail away on 01.23.20 at 12:20 pm

Leave it alone.

Well… maybe quadruple insurance costs on Audis and all other luxury gas cars so Tater has to buy a Tesla.

—————————————
Would never buy a Tesla, but looked pretty hard at the etron. But, the Q7 I got was 20k cheaper. Assuming the etron was free to fuel, still works out to 10k cheaper over the next 4 years. And that’s even after I bought some carbon offsets to appease my wife.

What a win/win. I get 1000km of highway range, save money and a few hundred trees get planted. Plus I have a legitimate manufacturer standing behind the product.

——————————

Meh- trees plant themselves… always have, always will.

When you do finally break down and buy a Tesla, you will enjoy the greatest driving experience of your entire life.

Full disclosure: I’m long Tesla.

#202 Xerglacia on 01.23.20 at 2:21 pm

Maybe I missed it in the other comments, but I don’t think so.

My other suggestion would be to hold the Real Estate agents/industry to the same standard as the financial industry in what they can claim about the performance of their assets.

Which means no more lying that the house they want you to buy is going to go up in value by 10% next year, and that you’ll earn 200% is you just follow these easy steps, etc.

#203 unbalanced on 01.23.20 at 2:29 pm

I guess my comment got lost is pace so I will try again. In 2013 Mawer Global Small Cap went up 47%. Thats right 47 %. If held in my TFSA would CRA be coming after me? If it went down, would they care. Its all about the money. A guy makes 4 trades in 4 years. Yup he sure is a day trader!!!! He wasnt a greedy pig and so he took his profit. There will be many changes to the TFSA, just wait and see.

#204 PBrasseur on 01.23.20 at 4:54 pm

No politician will have the balls to tax capital gains on homes, ever.

This bubble will explode when it’s ready, not before.

#205 Boris Corbyn on 01.23.20 at 6:36 pm

#64

Good point as it’s exactly what’s happening on HELOC’s and other similar products. Still a 19.99% rate on something they are getting for 0.50% (not exactly but you get my drift) is usurious. And I’m a capitalist borderline libertarian (pass the meds or send my IP to the liberals:-)

#206 Gruff403 on 01.23.20 at 7:38 pm

#100 VicPaul on 01.22.20 at 8:30 pm

Holy Crap! Which provincial teachers pension is paying out 70% of their best three years? My current teachers pension is 45% of my best five and I’m grateful for it. Never made 100K with two degrees. Those with Master’s degrees might. Currently making 85% net of what I made as a teacher due to income splitting, pension tax credit, drawing down RRSP early, stock dividends in our non reg. No longer pay into CPP, EI,Union,Pension and taxes are reduced by 2/3. I also taught a course called Financial Management for Teens. I still hold a mortgage and with these low interest rates will likely never pay it off. Would rather buy more dividend stocks. ENB just gave me a 10% raise! Debt to asset ratio is 1:3 without pension. Net worth solid and did all that on a single salary. Honey focused on kids and charitable work.
BTW Canada does extremely well on international testing. Curriculum for financial stuff already exists but my goodness it’s boring. I would rather chase the pretty girl in high school PE then learn about interest rates- as a student not a teacher!

#207 Big Dog on 01.23.20 at 7:52 pm

Lots of good ideas here, Garth, but I’d like to hear more on your thoughts on taxing gains on the sale of a primary residence. As other commenters have said, people whose families are growing or changing, or whose jobs move, should be free to “swap” or “upgrade” houses. Perhaps the whole capital gains system could use an overhaul to allow asset rebalancing as well, but in the mean time, for the housing market, it would be counterproductive to add friction to the property market at the expense of longer commutes, less job mobility, etc.

#208 Doug in London on 01.23.20 at 10:19 pm

@Rate of inflation, post #199:
That’s exactly what I’ve thought for many years now. That would bring us back to the good old days of the high interest rates of 1981, probably long overdue.