FOMO and FOSC

Okay, it sucks. Snow and crisis in Vancouver. Freezing rain n the GTA. Deep chill in the flat places. Eight feet of snow on the Rock. It’s  winter, and we’re all supposed to be hibernating. So, what’s up with the real estate market?

Well, sales are pretty decent in most places and we’re back on the price escalator – except in Vancouver where the socialists outlawed everything. Toronto saw a 12% escalation last month, especially with detached houses. There are multiple bids erupting in Kelowna. Montreal single-family home prices are ahead 13% and even Halifax is booming.

All that’s the result of a decent job market which is fueling demand, plus pliant lenders and mortgage rates solidly sub-3%. But probably the biggest phenom right now is supply. Sellers aren’t selling. Inventory’s plopped. So every time a decent listing comes out a bunch of horny buyers are ready to pounce. It’s even brought back that disgusting realtor tactic of pricing a property low, accepting bids only on a specific day and hoping for a blind auction, pushing the market value even higher.

In Vancouver new listings have fallen by a fifth and the number of houses for sale is 20.3% lower than this time a year ago. In Montreal (the second-largest market in the nation, and one of the most affordable) inventories have fallen for 52 consecutive months. Total listings are 28% below last year’s level and the local board says, “a drop this large has never been seen in a month of January since the real estate brokers’ system began compiling this data in the year 2000.”

Ditto in the GTA, where a plunge of 17% in listings is being held responsible for a 12% jump in average price as more buyers fight over fewer properties. This was the biggest monthly hike in two years, ever since the stress test arrived. Now realtors are projecting a 10% increase in values over the course of 2020, with one major company saying it;ll be more like 20%. And just imagine what might happen if the feds are dumb enough to gut the stress test. Or if the virus spreads, infecting financial markets and sending bond yields lower.

Meanwhile, as stated, it’s winter. Early Feb. It just snowed again in YVR. Not even rutting season. So ponder what things might look like come April. Lately condo prices in the GTA have erupted, especially with pre-cons, where buyers are weirdly paying 30% more a foot than resales are commanding. FOMO is here. Again. Spring of ’20 could feel like 2017. And nobody should be happy about that.

Why are sellers not selling?

It’s FOSC – fear of selling cheap. People see residential real estate chugging higher and think they’ll get more later, so they wait. Others believe if they bail from the market they may never get in again, especially with the 5.19% stress test mortgage hurdle in place. Not only has that sucked off buying power from potential buyers, but it’s scared owners who may be sitting on windfall equity yet lack the income to actually borrow money and get back in, if they sold.

Meanwhile, all of the ‘fixes’ governments have come up with for housing has been on the demand side. The enhanced RRSP buyers program, for example. First-timer tax credits. The shared-equity mortgage. The Bank of Canada’s investor-house idea. But as FOMO is goosed and buyers encouraged, the number of available properties falls. Demand up. Supply down. Prices swell. More FOMO. It’s the same vicious circle we saw develop three years ago, when prices were surging over 30% annually.

Say Toronto realtors: “It is clear that many buyers who were on the sidelines due to the OSFI stress test are moving back into the market, driving very strong year-over-year sales growth in the detached segment.  Strong sales up against a constrained supply continues to result in an accelerating rate of price growth.”

Well, let’s see what the T2 budget brings. The best possible outcome would be nothing.

         

Time for an Audrey update. You know, the moister princess with the laundry outsourcing fetish that we dissected yesterday…

“I hope you didn’t delete any comments for my sake,” the tough girl wrote me this morning. “I’ll call you in a few years when/if reality hits me in the face. Until then, we will spend our free weekends taking our son to a million gender-neutral and socially-acceptable activities while being total helicopter parents!”

How can you not like her?

Anyway, this brings us to Matt. He teaches high school and understands financial literacy training is seriously lacking in our society – in order to prevent the wholesale production of more Audreys. He wants your help.

“I’ve enjoyed reading your blog on a nightly basis (and my wife really appreciates the dog pictures!). I am a high school math teacher who has managed to find a couple weeks in the Grade 11 curriculum to focus on financial literacy. In the past we have looked at budgeting, compound interest, mortgages/loans and credit cards. What am i missing? In your view, what are the key aspects of financial literacy that young adults need to learn?”

So let’s have it. What are the three things you think Matt should be imparting to his students? How can we save them from themselves?

 

160 comments ↓

#1 DON on 02.07.20 at 4:00 pm

Matt

Get them to do their research before they sign any contract and understand the fine print. And never rush.

Provide them with the power of reasoning.

#2 Mike on 02.07.20 at 4:00 pm

Simple,

Investing – types of investments and the need for balance.

#3 Cristian on 02.07.20 at 4:02 pm

1. DIY investing – how to find online brokers, how to open an account, how to fund it, how to buy/sell ETFs (not stocks, not mutual funds!!!), how to build up an ETFs portfolio, how and how often to rebalance it

2. TFSAs and the importance of starting early

3. Chequing, savings, retirement accounts

4. Fee-only financial planners/advisers

#4 Charity on 02.07.20 at 4:02 pm

Teach them to be first!

#5 zee on 02.07.20 at 4:03 pm

Hi

How are people getting over the stress test.
Last year this is all what I heard from everyone, sales are down due to stress test. How people cant meet the stress test.
And now suddenly no one is having an issue with the stress test, at higher prices. at 10% to 20% higher prices. how is this possible

It looks like mortgage manipulation is going on.

#6 just snootin' on 02.07.20 at 4:04 pm

Matt,

Here’s my suggestions for financial/business bliss:
1) invest in yourself; learn
2) remember you are dealing with people and people do odd things
3) buy low and sell high

#7 Dave on 02.07.20 at 4:06 pm

I wish Garth had mentioned 10 years ago that the government will do anything and everything to save real estate. Also FOSC…

I would have bought multiple houses and life would be supremely better. Feel like we got con into buying safe secure boring portfolios

#8 Swanson on 02.07.20 at 4:09 pm

If Matt really focuses on the compound interest concept, how it can either work for or against you, it would already make the kids much smarter than many adults I know.

But since Garth asked:

1) inflation (how it eats away your wealth despite earning 1.5% interest at a HISA)

2) growth within tax shield/delayed accounts, versus non-registered (show them the math! It helps drive the message)

3) Bond yield / bond price inverse relation (frankly I’m not sure if I understand this fully myself)

#9 David Heyman on 02.07.20 at 4:10 pm

What stocks and bonds are and how they work.

#10 Piano_Man87 on 02.07.20 at 4:12 pm

Matt should also teach about:
Inflation
TFSA’s and RRSP’s
The REAL costs of buying vs renting a home (e.g., renting isn’t “throwing your money away”)

#11 crowdedelevatorfartz on 02.07.20 at 4:12 pm

Budgeting first.
Loans and credit cards second week.
Compound interest and investing third week.

Had a High School teacher do the same thing for us in the 1970’s.

Pretend we were living on our own.
Gave us fictional real world jobs with fictional real world pay cheques ( we picked from a hat)

Paired up us students in groups of two and gave everyone the same amount of money for 1 month ( say $2000- 3000).
We had to find an apartment from rental listings.
Then get power hooked up.
Then grocery shopping.
Budget everything, food, heat, lights, etc.
Then he started tossing in what about transit?
What about a car?
What about if your sick?
What about hair cuts?
Entertainment?
on and on.
A real eye opener for a 17 year old.

#12 Camille on 02.07.20 at 4:12 pm

WOW. Thank you. This must the advanced real estate and financial studies class. Very informative, stacked with data. I would suggest something aptly titled and worded covering work based revenue versus speculative revenue, gambling (what it is), and risk (what is it).

#13 Ap on 02.07.20 at 4:14 pm

– Index fund exists.
[email protected] like your money, not you.
– Your expense don’t need to match your income.

#14 Re-Cowtown on 02.07.20 at 4:18 pm

Good chuckle today. One of the people fighting the TM pipeline tooth and nail is now complaining that the cost of the pipeline is too high.

Chutzpah to the nth degree.

Those people (oh no! Don Cherry!) inhabit a bizarre alternate reality where their own actions create the reality they now oppose.

Kind of like Pelosi. She’s now become an meaner and uglier version of Trump.

Why does that always happen to Social Justice Warriors? They become that which they claim to despise. Maybe it’s just karma?

#15 Polozified on 02.07.20 at 4:19 pm

One thing that’s essential to financial literacy that rarely comes up (except from Garth) is the concept of OPPORTUNITY COST.

The cost of something is not just the price, it’s the price + the potential return if you put the same amount of money to work.

#16 Anna on 02.07.20 at 4:24 pm

For Matt:
How about adding a lesson on TFSA vs RRSP as a savings tool with projections of income generated if not touched dependent on time, taxes and contribution amounts.

Biggest financial lesson I give my kids is to learn to spend less than you have.

#17 3 easy steps on 02.07.20 at 4:30 pm

1. Teach: how to make decisions
2. Teach: difference between having a system vs. a plan
3. Teach: calculate how many hours of work it takes to make the amount $ needed to fund their current lifestyle.

#18 Brent on 02.07.20 at 4:36 pm

1) Risk vs Reward
2) Opportunity Cost
3) How to be respective of NHL fans who do not cheer for the leafs

#19 clayton bolton on 02.07.20 at 4:37 pm

I always believed that financially literacy was purposefully absent from our education system in order to ensure a steady supply of over-spenders who are content being employed and having just enough disposable income to get to the next paycheck.

#20 Ian on 02.07.20 at 4:38 pm

Your students should understand the one asset they have that their parents don’t. TIME. TIME for investments to the compound.

I don’t know how interactive schools are today, but I’d ask the class what they consider rich. Then have a chart with some figures on what they need to save today to have that in the future. You should also show them what doesn’t work. Not saving. Start googling retiring poor. Scare them straight. Our governments are broke and there will be a lot more elderly who squandered their youth and have to eat cat food.

#21 BlogDog123 on 02.07.20 at 4:39 pm

Things for teenagers / young adults to learn:

1) Teach the young’ins that [email protected] is no financial expert and does not have your best interests in mind. High fees for mutual funds or portfolio mgmt for so little advice.

2) Delayed gratification on purchases. Teach them that technology loses its value quickly, so watch out paying too much for tech toys or things that depreciate quickly. When a young adult buy nice used items and replace with nicer long-lasting new stuff when you’re flush with cash.

3) Pick your future spouse carefully. You need to be aligned on spending, investing, children, fun, work hours, where to live and division of labour. The wrong choice and not working on the relationship can be a financial disaster.

#22 FreeBird on 02.07.20 at 4:42 pm

For Audrey, keep living your life as you choose. It’s your right to learn as you go. Problems are lessons and opportunities. Sounds like you know and own this. One suggestion having been very much like you albeit with teen step kids and growing a small biz with hubby is this: while you’re being a great mom, spouse, daughter and future CEO/entrepreneur set your top 3 priorities each day with Audrey at the top. Always. The oxygen mask analogy is real. If you run on empty you’re no good to anyone. You’re body will start to say NO for you long before 65. Trust me. Sounds like hubby will support this. Number 2 and 3 priority will change daily but prob btw husb/relationship, baby and career. Take 10 min daily for you even if it’s the closest bathroom. Keep living life on your terms but try to stay open to advice (even from boomers ; ). FYI in some countries helicoptering kids has long been part of society others not. Use mom’s instinct. Best of luck!

#23 jerry on 02.07.20 at 4:42 pm

– the colossal drag on returns of paying excessive management fees
– the criminality of credit card interest
-the importance of starting to save early

#24 Psydney on 02.07.20 at 4:57 pm

Maybe have a look at this curriculum:
https://www.mcgillpersonalfinance.com/

#25 John on 02.07.20 at 4:59 pm

The difference between investment vehicles out there in general terms. The miracle of compound interest and the other side of compound interest on debt and mortgages. Why renting is far superior to owning for many especially when children are moving schools. Spend $100,000 to move as an owner vs. paying for an overlap month between rentals possibly.

#26 Mjr Major on 02.07.20 at 5:01 pm

1) Analyzing Rent vs. Buy or Lease vs Own decisions;
2) Basic tax knowledge (different types of income, deductions, credits, etc);
3) Present value of future cash flows (how much do all those monthly subscription fees actually cost?)

#27 Sail away on 02.07.20 at 5:02 pm

Have them read ‘The Richest Man in Babylon’, teach them to balance a checkbook, and fill out a tax return.

That’s all they need in grade 11. They can’t even invest until they’re 18 or 19, depending on province, and they won’t available money until they’re 25. Keep it simple for now.

#28 Anthony on 02.07.20 at 5:04 pm

Matt,

Direct them to this blog. Give them a quiz on an article.

#29 The real Kip (Ret) on 02.07.20 at 5:06 pm

“So let’s have it. What are the three things you think Matt should be imparting to his students? How can we save them from themselves?”

Ah, how about the set curriculum as it’s set out by the province? You know, the people that pay his wages.

#30 Asterix1 on 02.07.20 at 5:07 pm

Trusting those crooked RE manipulated stats is not helping anyone! Cant believe those inflated numbers get traction on this site.

Interesting podcasts from Ross Kay in the past weeks, he has been destroying all those “false narratives” as he calls them. From the low inventory/higher prices “myths”. Also explains why there is is low inventory in the first place, its definitely not FOSC.

Find it hilarious when RE salespeople mention that prices will go up 10-20% in a year. Total BS…

#31 Katherine on 02.07.20 at 5:07 pm

#11 Fartz

Sounds like you had one heck of a teacher! Great assignment! I’m sure lots of kids will remember what they learned.

My two cents: encourage students do lots of research on programs they wish to apply to at college/uni. Look at marketability and remuneration. Co-op programs are great as most employers pay students quite well and give experience. This helps to limit student loans. And apply for those student grants!

#32 joblo on 02.07.20 at 5:08 pm

1. Black Scholes formula
2. Forward contracts
3. Interest Rate Swaps
and a 4th never vote Lieberal.

#33 T on 02.07.20 at 5:08 pm

The value of time.

#34 FreeBird on 02.07.20 at 5:08 pm

Matt, from talks with those younger about money and what I wish I’d known:

-needs vs wants (subjective but good to see how the two get confused)
-compound interest both working for (investments) and against (debt) financial wealth
-how interest on most mortgages work in Canada (more interest then principal is paid in first ~5 yrs
-hiw much an item put on credit card if not paid off monthly can end up costing. This incl cheap trips.
-with more young people buying condos how condo board/corps work and monthly fees (incl how they can/do incr)
-real cost of owning and maintaining a home to know it’s not just rent vs mortgage pyt
-how you can end up owing more on a car loan then the car is worth and why car ads give weekly financing rates vs monthly (add insurance/maint)
– avoid monthly paymenting yourself to death (poverty)
I’m sure many more will be added here tonight.

Good luck and thank you!

#35 HPVictoria on 02.07.20 at 5:10 pm

Before you can effectively budget, you must accurately and honestly track what you spend.

#36 Katherine on 02.07.20 at 5:13 pm

#21 BlogDog23
Pick your future spouse carefully.

So true! When I taught grade 12 accounting, I told my students to ask to see a cash flow statement as well as balance sheet and income statement from prospective spouse (jokingly but also serious). The kids would laugh. If your partner has a healthy bank account, it’s important to know where that money came from……inheritance, one-time cash sale, hard work….says a lot about a person.

Divorce is very expensive as I learned. Pick right the first time. I got lucky the second time though so all good.

#37 Chris on 02.07.20 at 5:15 pm

1) Wants vs needs
2) The power of interest paid to decay your net worth
3) Hourly rate of pay after tax (so if you want that brand new Ford F-150 — with finance — how many hours of work that is equivalent to)

#38 kommykim on 02.07.20 at 5:17 pm

RE:#16 Anna on 02.07.20 at 4:24 pm
Biggest financial lesson I give my kids is to learn to spend less than you have.

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

I agree 100%. Knowledge about ETFs, compound interest, markets, etc, is all useless if people spend their entire paycheque.

#39 Waldguy on 02.07.20 at 5:18 pm

I bought my kids stocks in five different companies they chose from Shareowner, so they could learn. Held through 2008. Might do ETFs today, but maybe not. Since gifting about 12 years ago, it’s nearly triple for both and the one that has some cash is an ETF investor.

Teach them that controlled risk is fine and that there are risks in any instrument. Have them construct a portfolio.

#40 DON on 02.07.20 at 5:23 pm

Another blog dog recently posted this. It was first mentioned last fall.

https://bc.ctvnews.ca/insurance-issues-could-cause-b-c-condo-market-collapse-homeowners-association-warns-1.4800633

“If you’re a condo owner reading this and are worried about how to protect your investment, there’s little you can do except to try to find insurance to cover high deductibles. But without a master condominium insurance policy, you’re out of luck.

The buildings that are being hardest hit are those that are the most expensive: buildings with a high number of recent claims and strata corporations that have failed to keep up with maintenance and repairs.

This is happening across Canada as the article states just highlight in Vancouver as a condo owner lost the sale as the strata ran out of insurance and the bank pulled the mortgage on the potential buyer.

The realtors and condo association want the gov to step in and make a non profilt for insurance. Socialism to the rescue of excessive capitalism??

#41 Victoria on 02.07.20 at 5:25 pm

From what I have read borrowing from subprime ie) shadow banks has jumped 30 percent. If you can’t pass the stress test then just get an alt mortgage. We just sold our house. The people that bought it used an alt-lender.

#42 Brett in Calgary on 02.07.20 at 5:26 pm

1) Budgeting (both sides of ledger, i.e. costs matter as much, or more than revenue)
2) Tax management: including use of TFSA, RRSP, Open and how to fill them (i.e. brokerage, ETFs)
===BIG ONE===
3) Marry/be with someone with the same money values as you

#43 Frank on 02.07.20 at 5:27 pm

Show them how starting to invest regularly at 17 is an easy way to become a millionaire…set it and forget it, index etc

Teach them the FV formula In excel

Stay away from New cars ; don’t buy a hous unless mortgage omg is below 25 percent of take home pay

Find like minded spouse

Retire at 50

#44 Cbo on 02.07.20 at 5:28 pm

Speak to them in their language.
Download the app called:
1. Compound by fcalculators.com. Show them how compounding works while making regularly scheduled payments. Pick an age where you no longer want to have a boss. Chart a coarse for financial freedom.
2. Mortgage by mlcalc.com. Show them how much interest you are on the hook for throughout the amortization of the loan. Forecast a higher rate over the term.
(You can do this hard way, but 99% of your students won’t remember the formulas after exams)
3. It doesn’t always pay off to run with the heard.

#45 earthboundmisfit on 02.07.20 at 5:29 pm

Teach them to own the banks, not hate or fear them.

#46 Cbo on 02.07.20 at 5:32 pm

* learn when to use ‘course’ and ‘herd’ correctly.

#47 JuliaS on 02.07.20 at 5:37 pm

Teach them to never blindly follow others. Just because a friend bought a house, doesn’t mean you have to. The time to buy is not when you want a house, but when you can afford it.

Also, be weary of advise being offered by people who have something to gain from the outcome – financial advisors, bankers and realtors.

#48 Andrewski on 02.07.20 at 5:40 pm

Matt, teacher’s like you are (unfortunately) few and far between!

1) Dividends.
2) DRIP.
3) Live below your means.
4) Time is life’s true currency.

Cheers!

#49 Drinking on 02.07.20 at 5:40 pm

Excellent comments above me; rad them, listen to there expertise, that’s first! Read Garths Blogs, it is up to you to decide which way to go, meaning to listen to his advice or just jump on the real-estate bandwagon; and third, if you can get yourself set up for another citizenship in a country that will be much more affordable and secure in the future then it is something to consider.
The way this so called country is going all young one’s should be looking for alternatives; this is coming from a person who had lived many years in this country and loves it; but it is broken. But hey, on a good note; it sure was a beautiful today in my neck of the woods. :)

#50 Andrew on 02.07.20 at 5:46 pm

Matt, bravo. Let’s get each of your students to pull out their phone and go to:

https://www.getsmarteraboutmoney.ca/calculators/rrsp-savings-calculator/

Show them how no matter what career they choose, if they start saving a little bit each week every single one of them can be worth over a million dollars. Get them to punch in different amounts of savings each week to really punch home the power of compound interest. I bet you’ll see some wide eyes. Easy way for them to take the lesson home and to the cafeteria at lunch too. Plant the seed. Well done.

#51 Sail away on 02.07.20 at 5:49 pm

#11 crowdedelevatorfartz on 02.07.20 at 4:12 pm

Budgeting first.

Loans and credit cards second week.

Compound interest and investing third week.

Had a High School teacher do the same thing for us in the 1970’s.

A real eye opener for a 17 year old.

———————————

Fartz, was this teacher one of those horrible, socialist, wealth-sucking succubusses you often rage about?

Did you pop him one in the bean for daring to teach you?

Just wondering.

#52 Andrew on 02.07.20 at 5:49 pm

Also; ask them about bitcoin. I would be curious to know how’s it’s viewed in their eyes.

#53 Alex T on 02.07.20 at 5:51 pm

There’s already this post about the 9 simple financial rules on one index card: https://www.forbes.com/sites/zackfriedman/2017/03/09/9-money-rules-index-card/#692fbb6f2c09

Sounds like you’ve got some of the basics covered. If you’re looking for advanced stuff:

1. Leverage! Real estate, financial speculation, you name it – it adds fuel on the rise up but it makes the fall that much faster.

2. Get. Rich. Quick! The number of scams out there are bewildering, and many sound legit. Consider looking at some stock-picking services and analyzing them to see how achievable their results are esp if you add in slippage, comissions, timing and missed trades. It’s a nice way to look critically at things and can highlight a lot of the finer details of stocks.

3. Look a little at some investment budgets which save 5%, 10%, 20% or 30% of income. They can highlight compounding, spend/save trade-offs, things like that. And I found that most books don’t really dive into _why_ they pick their numbers.

#54 Former National Math Champ on 02.07.20 at 5:51 pm

1. Tell them that differential is the speed of function change.
2. Tell them that the same differential equation describes pendulum movement and AC current.
3. Explain them that the same math function (exponent) describes the virus infection spread and the compound interest gain.
4. Tell them that there is faster than exponent function – hyperbolic.
5. Tell them how socialism (high taxation of businesses) negatively affects nation macro-economy. May be then they will stop voting for T2 and liberals.
6. Tell them how to integrate with the help of Excel.
7. Tell them about the inherent crisis in capitalism system that inevitably lead to economic cycles and recessions. It is not good, bit also tell them that Socialism does not make people equal. It makes them equally poor.

#55 uncle dave on 02.07.20 at 5:57 pm

teach them to pay themselves first and invest with that payment however small it is to start with.

#56 Sask to AB on 02.07.20 at 6:02 pm

1. Wait 24 hours before you buy anything more than
$200. By the next day, you may discover that you probably didn’t need it.
Save a fortune and buy used, kijiji, etc. Borrow.
2. Budget, use a notebook to track your spending for 3
months. See where your money goes.
3. Save 10 % right off the top in another bank account,
to have money for savings, TFSA, RRSP, etc.

#57 Ustabe on 02.07.20 at 6:04 pm

All of you “spend less than you have” folks have got it wrong.

You don’t spend less than you have…you earn more than you spend.

One is saying I’ll accept what I have and lower my expectations and the other is saying I reject giving up Starbucks and will see to it that I have enough to do what I want.

Giving up Starbucks or Timmy’s and brown bagging it to work never made anyone rich…all it does is instill insufferable attitudes.

#58 @careeraftschool on 02.07.20 at 6:06 pm

Matt,

Talk about a tough project. I recommend doing what I did with my kids. You invest $100k (fake money) in BCE, McDonalds, Starbucks, Royal Bank, Apple and CN Rail.

1) Review annual balance sheets and quarterly income statements
2) Review dividend and share price history over decades
3) Ask students to list future risks and opportunities for these companies

This will make it fun. Kids learn when they study companies whose products they use. Good luck!

#59 Grunt on 02.07.20 at 6:09 pm

Key inancial literacy for young adults:

Don’t shop on the internet. Only buy what you need. Junk comes home delivery via a pretty picture on your phone. Whatever it is you’re creaming in your pants for you’ll throw away in a few months. Instead allocate those monthly wasted on CC balances into a TFSA. Have something to show instead of worn-out Aritzia.

#60 Drinking on 02.07.20 at 6:19 pm

Just to add to my previous comment; looks like many feel the way I do. Do not shoot the messenger!

https://www.ctvnews.ca/politics/canadians-increasingly-negative-on-government-s-performance-13-year-nanos-study-1.4801766

#61 just a dude on 02.07.20 at 6:20 pm

Some very good basics covered here:

https://mcgillpersonalfinance.com/

#62 Nonplused on 02.07.20 at 6:25 pm

I like Matt’s curriculum. I assume when looking at mortgages he compares the total amount paid to the bank over the life of the mortgage to the original loan amount, that’s a shocker. For credit cards just comparing the annual carry on a substantial balance should be enough to scare the bejezus out of his students.

But probably his students would be more interested in car financing at that age. He could look at buying vs. leasing and definitely depreciation and operating expenses. Maybe even new with warranty vs. used with repairs. And how to accessorize your truck including lift kits and hitch balls. Or at least for the Alberta curriculum you would need that section.

#63 Left GTA on 02.07.20 at 6:25 pm

I emailed Garth this but I would like to know what kind of advice you can give a recently separated late 40’s woman with no kids and no savings and debt under 20,000. Making $40,000 a year. How does she turn things around? I have 3 friends like this.

#64 DON on 02.07.20 at 6:25 pm

https://business.financialpost.com/real-estate/mortgages/half-of-canadas-millennials-think-owning-a-home-is-just-a-pipe-dream

KMPG poll finds millennials disenchanted amid rising home prices, high levels of personal debt and stagnant incomes

#65 Flop... on 02.07.20 at 6:26 pm

#59 Grunt on 02.07.20 at 6:09 pm
Key inancial literacy for young adults:

Don’t shop on the internet. Only buy what you need. Junk comes home delivery via a pretty picture on your phone. Whatever it is you’re creaming in your pants for you’ll throw away in a few months. Instead allocate those monthly wasted on CC balances into a TFSA. Have something to show instead of worn-out Aritzia.

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

Creaming in their pants?

This is where scheduling is critical.

If the Sex Ed class is in the morning before the financial lesson, then no one is going to want to hear about a TFSA in the afternoon…

M45BC

#66 Phylis on 02.07.20 at 6:35 pm

Fill out a T1 General. That’s what I did in high school. Thk u Mr. Iannetta.

#67 Bert on 02.07.20 at 6:37 pm

“1. DIY investing – how to find online brokers, how to open an account, how to fund it, how to buy/sell ETFs (not stocks, not mutual funds!!!), how to build up an ETFs portfolio, how and how often to rebalance it

2. TFSAs and the importance of starting early

3. Chequing, savings, retirement accounts

4. Fee-only financial planners/advisers”

I’m still trying to figure this out!! Have my money with IG like a sucker. Any advice on how/where to get started with this?

#68 Linda on 02.07.20 at 6:43 pm

Whoever made the ‘snow dog’ has real artistic talent.

For Matt: I’d teach the kids about marketing. Cost comparisons, how to tell if a bargain is truly a bargain, what techniques are utilized to induce you to buy stuff. While you are at it, common ‘cons’ & how to spot when someone is trying to separate you from your money. How to guard against identify theft & how identity theft can spell years of financial grief.

Do a survey. Ask the kids how many of them plan to get a place of their own. A class project might be researching the cost to rent & furnish a one bedroom apartment from the ground up. Maybe the challenge can be a ‘high vs. low’ cost comparison (vide the one in Style at Home). I’d give extra points to those students who checked out consignment shops or researched rental ‘deals’ to score the best place for the least outlay. Don’t forget to include walkability, access to transit, shops & services as a way to bring up the point score for ‘best’ place overall. Be excellent practice for the kids when they do go looking to live on their own, whether it be to rent or buy.

#69 ALFRED E. NEUMAN on 02.07.20 at 6:44 pm

#35 HPVictoria on 02.07.20 at 5:10 pm
Before you can effectively budget, you must accurately and honestly track what you spend.
#######################

BINGO. TEACH ‘TRACKING’ OF REVENUES & EXPENSES

where you’re at, helps you get to where you wanna be

#70 Oakville Owner on 02.07.20 at 6:46 pm

Teach them to “pay themselves first” 10% minimum!!

Have them all read the Wealthy Barber ! Nice easy read for teens with valid info!

#71 Sail away on 02.07.20 at 6:57 pm

Holy cow- can you say boring? I fell asleep reading these yawnfests…

It’s really hard to learn when you’re asleep.

Show them The Big Short, Moneyball, Wolf of Wall Street, then discuss.

#72 Abc123 on 02.07.20 at 6:59 pm

Talking about single family home prices picking up steam in Toronto can’t hold a candle to multiplexes of any kind.

Absolute parabolic rise in prices along with arithmetic rising rental prices .

They have been the absolute mother lode of an investment

#73 Kurt on 02.07.20 at 7:00 pm

Matt – one word: rick. This is the thing most people don’t get, the place where our cognitive biases fool us into making bad decisions. Now, it *is* a high school class and therefore full of immortals, but at least introduce the concepts and how to take advantage of uncertain situations.

#74 crowdedelevatorfartz on 02.07.20 at 7:06 pm

@#51 sail AWAY
“Fartz, was this teacher one of those horrible, socialist, wealth-sucking succubusses you often rage about?”
+++++

Nah, he was the school geek.
He was only about 25 years old teaching teenagers. God help him.
THICK rimmed glasses, pocket protector full of pens and pencils, lived, breathed and ate math. Took holidays to business schools in the summer break and came back in Sept and told us all about the meetings at Ronald McDonald College where they argued for two days on why Ronald McDonald’s shoe laces should be red and gold……serious nerd but nice…couldnt look a pretty girl in the eye.
Oh and a succubus takes your soul (along with your libido)….not your wealth.

I learned that in History class.

#75 crowdedelevatorfartz on 02.07.20 at 7:09 pm

@#63 Left GTA
“a recently separated late 40’s woman with no kids and no savings and debt under 20,000. Making $40,000 a year. How does she turn things around? I have 3 friends like this.”
+++++

Well, leaving greater Toronto was a good start…

#76 SW on 02.07.20 at 7:17 pm

I’d teach young people about:
– pay day loan outfits and how they can ruin your life. There are lots of real-world examples in the media.
– casino gambling/lotteries etc. What are the odds? What happens to your money?
– how much a smoking/vaping/weed habit costs over your much shortened lifetime.

#77 Andrewski on 02.07.20 at 7:36 pm

Years back my wife & I volunteered our time:

https://www.jacanada.org/programs

#78 Alberta Nomad on 02.07.20 at 7:50 pm

Money. What is it, how does it work, how is it valued, how it is compared to other currencies, what it used to be, what is it now, where does it come from, what is quantitative easing, inflation, deflation, etc. etc.

#79 Leo from Markham on 02.07.20 at 7:55 pm

DELETED

#80 Flop... on 02.07.20 at 7:57 pm

Can’t say I’ve ever been compared to a first time buyers plan before, but I’ll just roll with the punches…

M45BC

“The federal First Time Buyer Incentive (FTHBI), introduced in September 2019, has so far been used by only 29 buyers in Metro Vancouver and fewer than 3,000 first buyers across Canada.

Calling the program “a flop,” Sherry Cooper, chief economist at Dominion Lending Centres, noted that total funding of $55 million was “less than a stellar start” given the FTHBI’s $1.25 billion three-year target.”

https://www.vancouverisawesome.com/real-estate/first-time-home-buyer-incentive-canada-flop-vancouver-2069969

#81 S.Bby on 02.07.20 at 7:58 pm

present the miracle of compounding interest…

#82 crowdedelevatorfartz on 02.07.20 at 7:59 pm

@#40 Don
“The realtors and condo association want the gov to step in and make a non profilt for insurance. Socialism to the rescue of excessive capitalism??”
++++

O…M…G

Not another govt run bureaucracy . Just when we hoped ICBC was going down the tubes.
Now we’ll have the BC socialist version of Fannie Mae?

Shoot me now.
Reload and shoot me again.

#83 SmarterSquirrel on 02.07.20 at 7:59 pm

Teach them how buying stuff they don’t need keeps them working longer and living with less financial freedom. I explain it here… https://smartersquirrel.com/the-things-you-own-end-up-owning-you

Hope that’s of some use to Matt!

#84 Ustabe on 02.07.20 at 8:00 pm

#67 Bert on 02.07.20 at 6:37 pm

I’m still trying to figure this out!! Have my money with IG like a sucker. Any advice on how/where to get started with this?

If you go to the link

https://www.reddit.com/r/PersonalFinanceCanada/

and scroll down the page you will see

Wiki / Frequently asked questions

read away…back in my day IG was called Investor’s Syndicate and it was full of pivoted Encyclopedia Britannica door to door salesmen selling MAP’s (money accumulation plans.) at 4% while my credit union was giving me 18% on certificates of deposit. Much has changed I expect but still…flee them!

#85 Drinking on 02.07.20 at 8:01 pm

Besides the excellent posts directed to Matt this evening I am incredibly disappointed but by no means surprised by Van and Toronto not allowing this little critter to show off his/her stuff. What’s next, no more Felix and Dawg shows?

Hey little guy you are welcome to ski the slopes in ALTA! My daughters hamster will get a kick out of it.
https://www.huffingtonpost.ca/entry/twiggy-water-skiing-squirrel-vancouver-toronto_ca_5e3ddc34c5b6b70886ffef48?utm_hp_ref=ca-homepage

#86 Kaleycat on 02.07.20 at 8:01 pm

Compound interest – friend or foe?

Rule of 72.

Never take investment advice from your friend, neighbour or… [email protected]

#87 leebow on 02.07.20 at 8:01 pm

Teach them that everything they need in this life is an arms length away. That will save them a lot of hassle.

#88 Sail away on 02.07.20 at 8:14 pm

#74 crowdedelevatorfartz on 02.07.20 at 7:06 pm

…and a succubus takes your soul (along with your libido)….not your wealth.

———————————–

Yeah, right. So when I lost my soul, chastity and wealth over a 3-day pass, it wasn’t to a succubus?

Best night of my life in Dongducheon.

Could’ve sworn it was a succubus.

#89 Two-thirds on 02.07.20 at 8:19 pm

Top 3:

– How interest works on savings/investing and debt/borrowing

– How to use a spreadsheet to do basic financial calculations: including the above

– Making financial decisions based on modeling different scenarios (using a spreadsheet). What if x changes? (where x is interest, years, price, etc.)

– How to do price comparisons and waiting before pulling the trigger on all discretionary purchases (so easy to get a great deal just by waiting and monitoring price fluctuations online)

– Work hard and play hard. In that order.

#90 Two-thirds on 02.07.20 at 8:20 pm

Also: the difference between 3 and 5…

#91 Paully on 02.07.20 at 8:37 pm

Don’t ever smoke! It eats your cash flow and destroys your future wealth!

#92 SusanM on 02.07.20 at 8:44 pm

Matt,
Read this book ~ it saved my financial life (later, so did Garth):
“Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School
by Andrew Hallam, 2017, isbn 1119356296

Then ~ have a handout for your students of the key points.

#93 Ronster on 02.07.20 at 8:44 pm

1.) location
2.) location
3.) location

PS. After this site went political about 4 months ago and Garth showed his true colors, I swore off this site. Never even peaked at it. Today, I must have inadvertently touched my “sensitive” tablet screen which took me to today’s wondrous dog picture. The rest is, as they say, his… story.

#94 Uncle Rico on 02.07.20 at 9:14 pm

Teach them nothing. Smart people will figure it out themselves because it is so basic and stupid people will not. And you can’t fix stupid.

#95 Milkman on 02.07.20 at 9:16 pm

1. Don’t buy stuff because you”deserve it”, or “work hard” or worst of all, because others have it – the other humans are living a lie.

2. You gotta make YOURSELF happy – you can’t buy it, and you can’t get it from people giving you likes on SM.

3. Nobody cares about your money as much as you do. Y
If you can’t be bothered to learn how to manage it (all available for free on the web), you will toil away – getting nowhere – until you die.

#96 Barb on 02.07.20 at 9:31 pm

Thank gawd there are Matts out there.

I hope Matt writes a follow-up, summarizing how the class perceived the value of the information and whether they could see themselves using that knowledge throughout life/career.

The Vernon Morning Star paper on Dec. 11/19 led their Business section with “Students get course in financial literacy”.

It began: “A group of Grade 12 students at Vernon Secondary School can credit a local financial ability liaison for helping them to learn about credit.”

The “local financial ability liaison” is a credit union.
Perhaps the individual brought credit card applications to the class…

Matt, so many good ideas have been posted tonight.

But please don’t bring in speakers from financial institutions.

#97 Phylis on 02.07.20 at 9:47 pm

Come to think of it, these are high school students. He will be lucky enough to get them to sit.

(Had to try a dog joke)

#98 D A Ross on 02.07.20 at 9:51 pm

Spend less than you earn, do it for a long time, and you will be financially successful.
Or a variation – give 10, save 10, live on the rest

#99 Felix on 02.07.20 at 9:54 pm

Intriguing photo. The snow dog on the right actually has 10X the IQ of the useless creature on the left.

#100 Left GTA on 02.07.20 at 9:55 pm

@#75 fartz I left the GTA not divorced phew! It was my friends who’s marriages ended and they all live in the tricities. But the cost of rent here is rising and cost of homes as well. It’s crazy. I just wondered if anyone here has experienced or knows anyone in that situation. Divorced, with debt and income around $40,000. How does one build wealth in that situation when they are almost 50.

#101 Left GTA on 02.07.20 at 10:01 pm

1. I have teenagers… I guess helping them make good career choices would be first.
2. Teach them about Garth’s rules and investment strategy.
3. Open a tfsa show them how it grows with compound interest.
4. Teach them to save for purchases and not use credit.
5. Don’t smoke! (sorry smoking man)
6. Get a dog :)

#102 Lawrence on 02.07.20 at 10:05 pm

Very simple – the time value of money. NPV and FV. It’s essential.

#103 WUL on 02.07.20 at 10:16 pm

Matt,

Most of the suggestions here, if adopted, would make the typing class a far more popular and exciting class.

They are 17 years old. They are 4 to 7 years away from making any money.

Take them for a hike in the mountains, make a fire, identify a slate-colored junco and sleep in a tent.

You’ll get much higher teacher ratings.

WUL

#104 Sail Away on 02.07.20 at 10:17 pm

#63 Left GTA on 02.07.20 at 6:25 pm

I emailed Garth this but I would like to know what kind of advice you can give a recently separated late 40’s woman with no kids and no savings and debt under 20,000. Making $40,000 a year. How does she turn things around? I have 3 friends like this.

————————————-

Here’s how:

Have the three get together and start an online side business selling women’s leggings. Source them through Alibaba- get samples first. Hire local average people of all shapes and sizes to model.

Contract an independent web designer to create a fully-automated retail platform. Piggyback Amazon.ca as an independent seller until momentum grows if needed. It’ll work. Give it 3 years to prove out.

Good luck.

#105 3 lessons on 02.07.20 at 10:17 pm

1. That any and all debit is simply, borrowing from your future. Your future time, your future labour, your future sanity. Choose wisely.
2. Don’t rely on anyone, and certainly don’t expect it will ‘all work out’. You’re it pal
3. Be very careful about linking ‘feel good emotions’ about a person by paying their way. In an awful amount of situations, you are absolving of their own financial responsibility. And you’ll end up with a dependent.

#106 Mark Doehler on 02.07.20 at 10:20 pm

Cash is king. Nothing else matters in the long run. Revenue must exceed expenses or you are hooped. If you have cash, you are OK. If you do not, it’s ugly.

#107 David Soul on 02.07.20 at 10:24 pm

My suggestions for financial health. Let jobs be created by the market. Don’t vote Liberal. No “Aid” packages for Canada’s provinces that sit on multi-hundred billion dollar resources. Let freedom reign. No Junior seats on stupid UN boondoggle councils. Stuff the UN entirely. And, don’t vote Liberal. Nuff said? Just these will create rivers of milk and honey opposed to the bum juice we are flooding Canada with under Trudeau.

#108 Lambchop on 02.07.20 at 10:27 pm

Teach them all of the above mentioned things, but also teach them basic family law as it is written in your province.
Teach them that when they decide to live with someone, married or not, that person becomes entitled to a portion of all of their crap, including investments, houses, vehicles, etc., even if their name is nowhere near the ownership papers. The entitlement gets larger over time.

It sucks to invest your hard earned money only to have someone take it from you when you break up with them.
Have a cohabitation agreement or prenuptual. The $2k or $3k it costs will save you much more in the long run.

Especially tell the girls, because men can be golddiggers too.

#109 Long-Time Lurker on 02.07.20 at 10:32 pm

#94 DagsDownunder on 02.06.20 at 8:36 pm
Mr Turner.
I am a 78 year old Australian who stumbled upon your blog about 3 months ago and have been reading it daily ever since.
A lot of the information does nor apply here, but the general concepts do of course.

Sadly I, for various reasons of stupidity have never owned a stock in my life.

I have been retired for around 18 years and receive no Government pension. I saved as hard as I could and worked weekends etc to do so.
I have relied on Term Deposits to invest. We own our Apartment and until a couple of years ago owned another, but sold it due to the stress of putting up with tenants and repairs etc and we have zero debt.
We have AU $ 300.000 in just matured term deposits withering away at 1.5% interest.

We have a further AU $ 700.000 in soon to expire 5 year term deposits ( in Aug ) receiving 3.5%.

We have a 2 year old car as new that we paid cash for, probably our last.

So with interest rates at an all time low and sure to drop further, bank term deposits are not viable any more.

I have been reading everything I can for several years educating myself financially, but as I had locked our cash away for 5 years could not do anything till now.

With the stock markets at all time highs and the threat of a major correction hanging there, I am the typical vacillating investor gripped by fear.

I understand the long term market situation but at our age, we probably do not have 20 years or more for the market to come back after a major fall.

I have no crystal ball and am considering placing this $300.000 into Australian LICS. ( Listed Investment Companies ) and a Australian ETF.

If there is a correction after we invest I will not sell.

Wrongly or rightly after rigid saving for so many years I hate the idea of starting to eat into our capital?

I am in very good health for my age , but sadly my wife is not.

Any suggests please would be gratefully received.

Kind regards from OZ.

>You should really find a financial advisor over there in Australia. Ask around and try to find a trustworthy one. After you tell him or her of your situation he or she needs to come up with a strategy that suits your ages, health, assets, and risk.

You are wise not to put more than 30% (300k AUD) into equities. You shouldn’t put all of your eggs into one basket. (Garth’s balanced and diversified.) If the advisor tells you to put all your money into one kind of asset, you should find another advisor.

If I were you I’d set up my strategy as follows:

40% Term Deposits.
(Very safe if insured. They are in Canada.)

30% Short Bonds of 1-2 years duration, held to maturity.
(Safe because of the short duration and held to maturity.)

15% Real Estate Income Trusts
(Quite safe regular income.)

15% Dividend Paying Stocks
(Quite safe regular income.)

This would provide you with a very safe financial foundation (40% Term, 30% Short Bonds) at your age of 78 while providing you with more quite safe regular higher amounts of income (15% REIT, 15% Dividend Payers).

This is just a suggestion.

Go back and look at more of Garth’s posts. He’s written many posts to help people, including the elderly. Do an internet search of Dr. Garth. He usually gives advice in those posts.

Here’s an example of one:

Old dogs
September 29th, 2019 | Book Updates | E-mail this blog post to a friend

Patrick is 48 and single, renting. His brother Les is 41, two kids, house and mortgage. Mom lives in a little condo, no financing, no savings. Dad has dementia. He’s in the hospital and not coming home. This family’s in crisis.

P reads the blog, contacted me for help and let me know his folks have owned a rental house in DT Toronto for more than half a century. It brings in about forty grand a year – which supports the parents – and is worth $2 million, even in its deferred-maintenance state. Dad’s minimum care in a dodgy public facility will cost a little under $3,000 a month. Alzheimer’s is an expensive affliction, in addition to being a personal hell. More respectful and attentive care in a private facility in the GTA costs about eight grand a month…

https://www.greaterfool.ca/2019/09/29/old-dogs/

#110 Bezengy on 02.07.20 at 10:37 pm

Matt should stick to teaching what’s in the curriculum. His students will be failing out of university having not learned advanced math skills and will be doomed because of his self interest in financial matters. If he wants to lobby the school for a extra course in personal finance then more power to him.

Or

Refer the kids to the phycology teacher as to why they think they need to buy a house they cannot afford, or drive a 4 x 4 to work, or need to live in Toronto, or are attracted to boobs, etc.

#111 Chaddywack on 02.07.20 at 10:53 pm

Vancouver is definitely in a stand-off at the higher end. The listings I do see selling are selling at prices right on the nose (and well above assessment).

Bidding wars in any hipster condo areas.

Sellers refusing to budge and just willing to “re-list in the spring.” I even saw one listing that said “full price offer or no deal.”

#112 My name is Caleb on 02.07.20 at 11:04 pm

Simple: Attitude – You can’t manage what you don’t measure. Know where your money is going!

#113 Ponzius Pilatus on 02.07.20 at 11:22 pm

Poor Audry,
Had her 15 minutes of fame.
Now back to wash and fold.

#114 Barb on 02.07.20 at 11:22 pm

Oh, and Matt, before you finish the lessons, please add:

“When you’re selecting a spouse/partner, look at the prospective partner’s parents. Look long and hard. At both of them.”

#115 Ponzius Pilatus on 02.07.20 at 11:25 pm

Socks is in Africa to garner support for Canada to become a member of the Security Council.
Make Canada proud again JT.
Your father would approve.

#116 North Van Landlord no more on 02.07.20 at 11:36 pm

A few days ago a blogdawg gave the example that a TFSA (possibly $100,000) invested carefully will allow a person to skim off a certain amount every month TAX FREE to help with a car payment until the car is paid for.
I loved that example and told one reluctant discouraged adult son that TFSAs are much better than RRSPs. He’s so discouraged. Feels he’ll never get out of debt, especially after an accident set him back.
Thanks so much Garth and blog dawgs for your gems.

#117 NorthernBrewer on 02.07.20 at 11:40 pm

Matt, they must learn to Save, Give, Invest – These things teach one that money does not have control over you. If you can do these you will become a successful investor, but, more importantly, you will live a life that is not controlled by money, you will control it. Doesn’t matter how much you make, you still save and give a little.

#118 fishman on 02.07.20 at 11:48 pm

Buy a Blueline 8 column old style accounting ledger. Its called double entry accounting. Next, in your pristine new book put first two columns under “Bank”debit & credit. Then complete with debit &/or credit headings for rent, GST, cable, everything in & out. Down the left side are individual transactions. Each horizontal line has to equal 0.
Bank deposit is a debit :personal paycheque is a credit,thats one line two columns. Expense is a debit:out of your bank is a credit. thats another line two columns.
Your bank statement is opposite because for them money in is owed so its a credit. Money taken out is debit because it reduces liability. See, everything equals zero.
Great start for budding millionaires. After getting successful the boogyman will come a calling. If the “ledger” is in good order it helps with the inevitable “search”. Won’t get rid of the stomach ache but better than a panic attack.

#119 Long-Time Lurker on 02.07.20 at 11:51 pm

For the record. 2020 coronavirus update.

Friday night update: 34,880.
From Thursday night’s 31,000.
3000+ confirmed cases in one day.

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

#120 kommykim on 02.08.20 at 12:14 am

RE:#100 Left GTA on 02.07.20 at 9:55 pm
@#75 fartz I left the GTA not divorced phew! It was my friends who’s marriages ended and they all live in the tricities. But the cost of rent here is rising and cost of homes as well. It’s crazy. I just wondered if anyone here has experienced or knows anyone in that situation. Divorced, with debt and income around $40,000. How does one build wealth in that situation when they are almost 50.

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

If they have debt, no assets, $40K income, single, and are close to 50, they are pretty much hosed. Barring hooking up with someone with money/assets, they’ll end up working to 65-70 and retiring on a small pension of CPP/OAS/GIS. Their only real option is to move to a place with cheap rent when they retire.

#121 Annick Dotal on 02.08.20 at 12:16 am

For Matt:

The Toronto Star along with TD offers a free financial literacy classroom resource. You may want to get the Course outline to see if there are topics that you’d want to include in your course. One topic that I strongly feel should be discussed is Credit Cards. The Colleges and Universities are filled with financial company reps tempting these young adults with easy credit cards. Another topic is exploring the full cost of post secondary education/training, along with accommodation costs. These are situations they will be dealing with very soon. They might as well be prepared.

#122 SoggyShorts on 02.08.20 at 12:17 am

#100 Left GTA on 02.07.20 at 9:55 pm
@#75 fartz I left the GTA not divorced phew! It was my friends who’s marriages ended and they all live in the tricities. But the cost of rent here is rising and cost of homes as well. It’s crazy. I just wondered if anyone here has experienced or knows anyone in that situation. Divorced, with debt and income around $40,000. How does one build wealth in that situation when they are almost 50.

********
Honestly? “Wealth” will never happen for them. At this point their future finances need a hospice, not a clinic- you can only hope to make them a little bit more comfortable…

1. How are they making just 30% more than minimum wage at this stage?
2. Since they are so close to minimum wage, can they move to a cheaper area?
Rent and minimum wage in AB
Vs
Rent and $20/h in GTA
The one in AB probably has more $ at the end of the month.
3. While it probably sucks even more in your 50s than 20s, getting a roommate is essential in cutting costs- if it can’t be a spouse, get a friend… Perhaps the 3 of them can be Golden girls?

#123 Mr.Mx on 02.08.20 at 12:46 am

1.cash flow
2.balance the personal books
3.the meaning of life… so they dont spend money in shallow things
4. meditation

#124 Drunken Stupor on 02.08.20 at 12:54 am

Can start here too:

https://www.mauldineconomics.com/frontlinethoughts/richard-russells-wisdom-mwo041406

#125 Karlhungus on 02.08.20 at 1:03 am

There’s no wealth building piece of advice that will make a lick of difference unless you follow this rule: live below your means. Part b to that is: your house payment + tax + insurance should not equal more then 25% of your net pay. Otherwise you’ll be in tough to follow part 1.

#126 Life Lessons on 02.08.20 at 1:26 am

As a long time renter who opted to pursue wealth generation through a portfolio instead of a house, this is what I know after tracking real estate for a decade plus:

1. While heralded as a solution to price appreciation, demand side measures have failed to curb the exponential rise in prices. Changes to down payment requirements, loan ratios, elimination of long term amortizations were all ignored by Mr Markert. The stress test, which was supposed to crush the market by wiping out 20% of potential buyers, was a nothing burger. It put prices on hold, not reduced them. So even the most interventionist policies ever implemented have not even dented the market. Think about that, and think about what happens when you have a government committed to removing those ‘interventionist’ policies. And a 10% decline or ‘correction’ in prices means nothing when houses have increased a couple hundred % in the last decade.

2. The market is too big to fail. While realtors and developers and amateur landlords all said the market will never correct because its too big to fail, the reality was/is they are right. Real estate constitutes 25% of Canada’s GDP. Its not going anywhere but holding steady or going up as every federal political party is committed to keeping the bubble inflated.

2. There is no political will to genuinely curb price appreciation at the federal level. While some provinces like Ontario and BC have tried to curb speculation through taxation and transparency measures, the reality is that actions at the federal level – like the shared equity program or gutting the stress test – increase demand, counteracting the effects of provincial demand side measures.

3. Every little .25 or 0.5 point cut in interest rates results in a disproportionate increase in prices. Experts say a 1% cut in interest rates yields a 10% increase in prices. This market has shown that a .5 basis point cut (think 2015) increases prices by 30-40% in the hottest markets and the communities surrounding those markets.

4. Any increase in supply is immediately absorbed by the highest per capita immigration levels in the world. For the past several years, Canada has been building more homes than new family units, which should have led to an oversupply. But it did not not. Immigration will always absorb any temporary oversupply of homes.
https://business.financialpost.com/real-estate/immigrant-fuelled-demand-is-helping-to-power-canadas-housing-market

5. Nobody, even the ardent bears, talk about price to income ratios and debt levels anymore like they did for many years. The whole ‘a home should cost 3 times income’ is so 90s as everywhere Canadians are taking on mortgages at many multiples of that. Canada surpassed America’s debt to income ratio of 131% back in 2008 and it has not slowed down. Every year, there is a report about how Canada has highest debt to income level and how the majority of the population is $200 away from living in the streets. Yet despite all these ‘near poverty’ Canadians, and ever worsening ratios, houses keep changing hands at ridiculous valuations after a decade of warnings.

6. The only ones who predicted that rates would be low for 10 years were the realtors. Yes, those completely ignorant of fiscal and monetary policy were the only ones who understood the role of housing in Canada and the impact of interest rates. Everyone else who predicted a return to 80s style double digit interest rates or even a return to the historical average of 5% have been dead wrong.

7. Renters have continued to subsidize wealth generation of those that own. Owners may be cash poor at time, but they have essentially land banked their houses to get a cashable tax free windfall that will never be achieved by those pursing wealth creation through the stock market. A leveraged investment in real estate at 10 or 20 times has beat the unleveraged stock investor (which is 99% if them) hands down. The average person who bought a house 10 years ago with a minimum down payment has way more wealth than the average portfolio buyer ten years ago.

Canada’s house lust has defied all logical predictions and outcomes for well over a decade. The beast has legs and nothing has the power to take it out save a return to double digit interest rates and a siloed housing market detached from the influence of immigration and globalism. And those things will never happen. So its onward and upward for the market, just as it has been for over 15 years.

Observations based on one decade of abnormal interest rates, in one city. Real estate is local, and most markets have not seen exponential increases. In any case, the growth in a balanced portfolio has equaled or exceeded that of a house in all but a few locations. But it’s not a contest. If you can’t comfortably afford real estate, don’t try. Rent and let someone subsidize your living costs. No shame in that. – Garth

#127 FAKE NEWS on 02.08.20 at 2:23 am

FOMO YEARS!!
FOMO YEARS!!

TRUMP 2020 BABY!!!

#128 under the radar on 02.08.20 at 6:45 am

work part time
learn how to pay bills on time
the financial and physical benefits of healthy eating

#129 The Wealthy Barber on 02.08.20 at 7:18 am

Have the students read one chapter per week of The Wealthy Barber, then discuss in class. Your lesson plans are made. Why re-invent the wheel.

If you have time after the 10 chapters, pick and choose specific post from this blog. For example, read the one from Audrey and ask the students what they would do differently.

#130 crowdedelevatorfartz on 02.08.20 at 7:54 am

@#122 Soggyshirt
“While it probably sucks even more in your 50s than 20s, getting a roommate is essential in cutting costs- if it can’t be a spouse, get a friend… Perhaps the 3 of them can be Golden girls?”
++++

I was thinking the same thing.
The three of them should rent a house. Share the costs of food, etc, They MIGHT save some extra cash.
Seems to be the common problem these days . Too many people realize in their 40’s that they dont want to work forever but they have nothing saved….
Staring at 50 with zero assets and debt.
They will never retire….unless they marry a rich person like Ponzie.
I hear he just sold his house for 4 mil and is into bigamy.

#131 crowdedelevatorfartz on 02.08.20 at 7:57 am

@#123 Mr Rx
“meditation”

+++++

You meant “medication” right?

#132 crowdedelevatorfartz on 02.08.20 at 8:07 am

@#115 Ponzie
“Socks is in Africa to garner support for Canada to become a member of the Security Council.”
++++

Yep.
jt2 has a whole new “look” after the Christmas Break.
A beard to make him look older and wiser.
His “stern” face in Parliament to make him appear “serious”
And now he’s in Africa trying to appear “diplomatic”.
His spin doctors are finally earning their keep.

….as the latest polls back in Canada say a majority think he’s doing a crappy job running the country ( with record low unemployment numbers…just wait until the economy pancakes…)

jt2 cant resist an opportunity to be “on stage” even if it is in Africa.
I wonder how many millions of our taxpayers dollars he’ll hand out in Africa to get a spot on the UN Security Council?
Africa…notorious for raking up Aid money and buying chalets in Switzerland next to the banks where the money is ultimately deposited.
But I digress.

#133 cto on 02.08.20 at 8:30 am

Real estate…
It has nothing to do with anything but interest rates.
Clearly the powers to be, have demonstrated to the vast public as a whole, that they are never going to raise interest rates again.
Almost everyone clearly believes this will NOT change in their lifetime. Yes to most it is definitely different this time.

#134 Dumb Wealth on 02.08.20 at 8:30 am

Teach them about time and compounding. If they start now, they could have millions by the time they retire.

https://dumbwealth.com/how-a-high-school-student-can-create-1-million-in-wealth/

Teach them to control their impulses. You don’t get rich giving other people your money.

https://dumbwealth.com/buying-something-sleep-on-it/

Teach them to be aware that the finance industry is trying to make money off them. Cost are something that can easily be controlled and can significantly improve the long term portfolio outcome.

https://dumbwealth.com/will-investing-fees-reduce-value-of-retirement-portfolio/

#135 maxx on 02.08.20 at 8:37 am

1- Know your weaknesses – commerce is eternally ready and salivating to exploit them;
2- Know and develop your strengths – for as long as you live – this is the core of your financial immune system;
3- Learn to save like there are endless tomorrows- and hone that skill – max out tax-free and tax avoidance/deferral vehicles;
4- Learn to BUY. Many of us are expert savers but lousy buyers. This is often a tricky one – reducing turnover and buying stuff that supports your long-term objective (getting rich) is a start. Buy second-hand: you can often get way better quality for peanuts. Greener too.
5- Prepare for an active LIFE in retirement. It arrives faster, costs more and is longer than you think. Stay feisty.
6- Enjoy the bounty of life. Every day. That rarely costs much at all.

#136 crowdedelevatorfartz on 02.08.20 at 8:39 am

And in fiscal belt tightening Alberta we have THIS…

https://www.theglobeandmail.com/canada/alberta/article-opening-proposal-alberta-wants-24000-government-staff-to-take-pay/

When the Alberta Govt doesnt have endless bags of money and they want govt employees with “generous pay and benefits” to take a pay cut….you know it will trickle down to the other Provinces eventually…. :)

#137 Dharma Bum on 02.08.20 at 8:49 am

When I was in high school (in the previous century), there was a course offering called “Math of Investment”.
(I guess my high school was ahead of its time.)

It taught the mechanical basics of how investing works, including compound interest, simple interest, present value, dividends, stock pricing factors, sinking funds, debt, etc., etc.

That stuff is all fine and dandy, and for sure, it helps young ‘uns develop a sense of how money can “grow”.

However, what young impressionable minds need to have drilled into their heads (I mean burned and etched into their cerebral cortex) is the proper ATTITUDE and DISCIPLINE toward money, spending, and saving.

I will suggest the following books (that can easily be read within the 2 week curriculum slot – and perhaps as further reading) be assigned:

The Wealthy Barber (David Chilton)

The Millionaire Next Door (Thomas J. Stanley & William D. Danko)

Your Money or Your Life (Vicki Robin & Joe Dominguez)

These are short, easy to comprehend, straight forward books that will set young people on the righteous path to habitually saving and investing, while not overspending or accumulating unnecessary debt. Life changing, actually.

Of course, there is a long, long list of Garth Turner’s excellent books, (90% of which I have also read).

https://www.thriftbooks.com/a/garth-turner/252939/

But, hey, you only have two weeks. (I guess the rest of the math curriculum needs to focus on the gender equality, pay gap, patriarchal, woke, politically correct, sexually orientated side of mathematics in the 21st century.)

#138 Bytor the Snow Dog on 02.08.20 at 8:55 am

Please put the royalties for the use of my picture towards my monthly bog payment.

Thanks.

#139 Dharma Bum on 02.08.20 at 9:20 am

#115 Ponzius Pilatus

Socks is in Africa to garner support for Canada to become a member of the Security Council.
——————————————————————–

Ahhhhhh…the UN Security Council;

The bastion of illegitimacy, fraud, bias, and hypocrisy.

Trudeau would fit right in.

A good place for him to spew his vile filth.

#140 crowdedelevatorfartz on 02.08.20 at 9:25 am

@#137 Dharma Bee
“Of course, there is a long, long list of Garth Turner’s excellent books, (90% of which I have also read).”
++++

You win “Major Suck-up of the Week” Award.
Can anyone else beat the 90 %?

P.S.
The Wealthy Barber was easy to read with a bit of humor tossed in..

#141 crowdedelevatorfartz on 02.08.20 at 9:27 am

@#139 Dharma Bee
“A good place for him to spew his vile filth.”
++++

He has a big act to follow with Trump in the room…..

#142 Dharma Bum on 02.08.20 at 9:28 am

#138 Bytor the Snow Dog

You rock.

https://www.youtube.com/watch?v=2UU62UcP_BA

#143 MF on 02.08.20 at 10:12 am

Tell your students to go in debt as soon as possible (preferably with other people’s money, like your parents).

Seriously.

It’s sad to write this but tell them the system is completely broken, and that all the prudent, successful, smart strategies of the past don’t work and are not rewarded anymore.

These include:

-Delayed gratification IE working hard and saving to buy something
-Staying out of debt IE similar to the first point
-Avoiding risky investments IE since interest rates are so low everyone is herded into riskier investments like stocks.

While we are at it, PLEASE Bank of Canada reduce the interest rate further!

MF

#144 ts on 02.08.20 at 10:24 am

…..But it’s not a contest. If you can’t comfortably afford real estate, don’t try. Rent and let someone subsidize your living costs. No shame in that. – Garth

Sure, if you’re even lucky enough to find a rental that doesn’t eat up half your paycheck. $2150 (average in Mississauga) for a 1 bedroom apartment? You would have to make pretty good coin to afford that.

#145 Left GTA on 02.08.20 at 10:34 am

@#104 Sail

I like the leggings idea! Thx! And yes those of you who thinks they should be roommates I agree. They are stubborn and don’t want to share a place. Sigh…

#146 CHERRY BLOSSOM on 02.08.20 at 10:36 am

financial literacy:

live within your means at all costs
learn how to save and this means cooking your own meals and brown bagging lunch etc

Know that everybodys mission in life is to get your money out of your pocket and into their pocket. Outsmart them.

All the kids and even adults should watch MIKE MALONEYS’ “HIDDEN SECRETS OF MONEY” 10 videos on You tube.

I finally understood inflation when I looked back to when 10 cents bought a tin of tuna, $1.00 could buy 10 tins. Now it takes $2.00 to buy one tin of tuna

#147 Sail Away on 02.08.20 at 11:04 am

#137 Dharma Bum on 02.08.20 at 8:49 am

Of course, there is a long, long list of Garth Turner’s excellent books, (90% of which I have also read).

——————————–

Meh. That Turner guy’s books are ok, but he seems to have some unholy fixation on real estate.

I will say they’re better than my books.

#148 Sail Away on 02.08.20 at 11:08 am

Hey Fartz, you see the original artwork in today’s blog picture? Whoever owns that sculpture must be rich.

#149 Steve on 02.08.20 at 11:12 am

Rule #1 it is not what you make, but what you spend. Consider savings as a bill and forget it

#150 Sail Away on 02.08.20 at 11:20 am

#141 crowdedelevatorfartz on 02.08.20 at 9:27 am

He has a big act to follow with Trump in the room…..

——————————

You got that right. Fantastic week for the big guy, eh?

If Trump’s in the room, nobody will even notice Trudeau, including the Canadian press.

#151 maxx on 02.08.20 at 11:25 am

@ #26

Good point. Teach them how to use a banker’s calculator. Even if there are a gazillion apps out there.

#152 NoName on 02.08.20 at 12:29 pm

#148 Sail Away on 02.08.20 at 11:08 am

Hey Fartz, you see the original artwork in today’s blog picture? Whoever owns that sculpture must be rich.

Now that you mention artwork, just other day i sow that sculpture at local grocery sore in fridge by dairy section :-).

#153 Sail Away on 02.08.20 at 12:32 pm

Elon Musk’s Starlink network (currently part of SpaceX) has 240 low-earth communication satellites in space, with thousands more ongoing. The comms/net/service system has been proven.

Take a careful look at comms companies in your portfolio – they’re about to be disrupted in a huge way in the next few years.

If Tesla cars were a disruptor, Starlink is exponentially more so. BCE, Telus and others might soon be like the typewriter companies when Steve Jobs came on the scene.
Here’s the thing: SpaceX is the only company capable of launching these. Can you say monopoly?

Will Starlink go public? Let’s hope so, but my bet is no, because Musk doesn’t have time for fools like shortsellers and those demanding quarterly profits (ahem… french fry guy), and could decide to keep it private like SpaceX.

How to take advantage? Watch this closely. Divest from traditional comms companies. Iridium and Maxar may be teaming. Sorry, BCE, Telus, Rogers- you’ve just been disrupted and also punted from my portfolio.

#154 NoName on 02.08.20 at 12:51 pm

#153 Sail Away on 02.08.20 at 12:32 pm

space internet

i am sure that smarter people than me already put some serious thought in v-band (40+ GHZ), but i cant see that being that reliable, especially in urban environments.

Wave length is so short its like pointing laser at miniature satellite. Inverse square formula will help spread signal but steel it will be narrow coverage, wont work without extensive ground infrastructure.

3-1mm wavelength from 1200km dont see it working well with hand sized devices.

Do you have anything conceptual to see and read on that spacely sprocket internet?

#155 Sail Away on 02.08.20 at 1:08 pm

#154 NoName on 02.08.20 at 12:51 pm
#153 Sail Away on 02.08.20 at 12:32 pm

space internet

i am sure that smarter people than me already put some serious thought in v-band (40+ GHZ), but i cant see that being that reliable, especially in urban environments.

——————————

Folks said the same about electric cars and private space companies.

Who proved them wrong? Exactly.

#156 Flamed out in Kitchener on 02.08.20 at 3:18 pm

Matt has a great start with his topics …
Add this:

Financial discipline in spending.
Patience and awareness for investing
Starting a TFSA as soon as you’re of age to do so

Master those, and your set up for success.

#157 Princessmech on 02.09.20 at 5:13 am

1. How to read a pay stub. What deductions are required: CPP, EI, federal income tax, provincial income tax ect. Each deduction could have a mini lesson about history, numbers differences across Canada ect.
2. TFSA & RRSP how they work, how they are different. Defined benefit plans & defined contribution plans would be a nice add on.
3. Sum it all up doing mock tax returns

#158 Bruce Kluey on 02.09.20 at 8:47 am

1 Pay yourself first
2 Invest, don’t save
3 Think outside the box….don’t follow the masses

#159 Mr Canada on 02.09.20 at 8:58 am

Another issue with lack of hosing supply ? Government of course ! The dreaded double land transfer tax in Toronto. A home owner with a home valued at $1.25 million will pay transfer tax of $21,475 twice = $42,950 — then add 5% real estate fee = $62,500 plus 5% HST of course, add the usual legal fees, moving totals = $110,000 — all after tax money. Solution = Stay Put and renovate !

#160 Kyle on 02.10.20 at 10:20 am

Teach the kids about their biggest expense other than housing….TAX. Teach them that how important tax avoidance is and that it is not the same as tax evasion.

When it comes down to the bottom line, what good is earning cash if you don’t get to keep it?