Mars and Venus. Do men and women really think so differently when it comes to money and financial security?
Are you kidding? Of course they do. At least according to the leading financial dudettes. Famous women money bloggers like Gail Alphabet, the jar lady, put the repayment, elimination and annihilation of debt at the very tippy-top of their strategy list. Females worry about debt more than males, who spend more time dwelling on facial hair and oil changes.
But while we’re a hideously-indebted and essentially pooched society, there are times when managing debt – not trashing it – can make some sense.
This brings us to an email I received on the weekend:
Drained our two TFSAs, added to savings and paid the $307k remaining in the mortgage. Emotional, not logical. Sweet relief.
Let’s parse this. Does it make sense? Is there enough emotional tingling here to compensate for throwing savings into more real estate equity? What is the actual cost of this mortgage-hating mentality?
Well, five-year, fixed-rate home loans are now available for about 1.7%, so let’s use that number to run some simple calcs. A mortgage of $307,000 would then require monthly payments of $1,255. Over five years they total $75,359, not a small amount of cash flow.
But because rates are so incredibly low, a goodly chunk of every payment erases amortized principal. In this case the repayment portion of sixty monthly cheques adds up to $51,470. Huge. So at the end of five years the debt would be reduced to $255,529.
Now, what if the $307,000 this person possesses in liquid wealth were invested, instead of thrown at debt reduction?
If stuck into a balanced & globally diversified portfolio of ETFs for five years there’s a healthy chance the average annual return would be 6%, judging by the last few decades. (Although I’d wager in a post-Covid recovery period the gains would be outsized.) Sheltering half of this inside TFSAs would also make some gains tax-free.
So after sixty months it’s reasonable to believe the $307,000 would have swollen to become $414,200, of which more than $107,000 would be growth. Here’s a summary of what that means:
Paying off the remaining mortgage balance from investment proceeds after five years would leave a balance of $158,700. Yup, have your cake (paid-off house) and eat it too ($158,700 in assets). But the homeowner paid $75,300 in monthlies over that period, so this should be deducted from the balance, leaving a surplus of $83,400. In other words, paying the mortgage off – as Venus so desired – was a costly move when mortgages are so cheap. Eighty grand, or about $1,400 a month for five years.
Lessons?
Inflation is currently 0.7% in Canada, which is crazy low. But it also means a 1.7% mortgage is actually costing just 1%, which is even wilder. We all know that by this time next year, as the vaccine chases the virus, the economy will be recovering, prices and wages rising and inflation plumping. Mortgage money will be essentially free. Milk it. With an amortized mortgage and blended payments, a big piece of debt disappears every month.
Also be wary of concentrating all your net worth in one thing. Even your house. The less diversification in your life, the more risk. Real estate is not immune from big fluctuations caused by property taxes, employment levels, inflation, rates, zoning or a pandemic. Putting all your eggs in one basket is a poor strategy. So stuff your TFSA and keep it that way.
Is it such a bad idea to have some low-cost leverage on residential real estate which has (because of public mania) been rising in value? Of course not. Why hasten to pay it off?
Finally, remember when you get old you can always rent a roof. You can’t rent income. It’s a complete myth that you’ll be secure in a home you own when you lack the cash to heat it or to finance a happy life. Especially if you’re a long-lived woman. Get invested. Stay invested. Be diversified. Be smart about debt. But not obsessed by it.
And stop reading sexist advice.
136 comments ↓
Till debt do us part
Well I guess we’ll get to see the Debt “Venus and Mars” strategies play out on a grand scale tomorrow when the “Chrystia and Justin” Deficit show airs.
We’ll finally know how much of a debt hole the Liberals have blown through our Country’s future.
Will Chrystia spend even more?
Will Justin order her to crank up the printing presses?
Or will she start paying off the debt in 2021 through punitively higher taxes ?
Will Jagmeet play more internet fantasy games with Ocasio?
Only the politically correct, socialist justice warriors of the New Age of Deficit know for sure.
Yes, paying your monthly mortgage payment reduces more principal today at 1.7% versus 4.7% just maybe 10 years ago but the principal to buy your house is not $500,000 to $550,000 but $800,000 to $850,000 maybe $900,000 now in the GTA or worse.
So you have to pay $300,000 to $350,000 etc. more just in principal which I really regard it as prepaid interest and 1.7% interest on that too. It is much worse than this too because of the assessment values pushed up property taxes too, higher land transfer taxes and other costs, fees, taxes related to property values too. People are really financial, money clueless when it comes to small to more so with bigger, huge financial transactions needing large debt loads cars, primary houses, condos second properties etc.
– #6 Former Navy Chief on 11.27.20 at 2:37 pm
The elite global bankers with their WW3 are way ahead of you with the CV bonds. Did you think this is for our health?
https://www.bloomberg.com/news/articles/2020-04-10/deadly-virus-fails-to-trigger-world-bank-s-pandemic-bonds
— Any CGI/FX ppl here? Some flag this video of Premier Ford as being greensreen’ed, bobble head only – body is not moving. Could it be the A.I. is just talking to us – the telescreens ruling our lives? Would we even notice – or care?
https://twitter.com/fordnation/status/1332458423259176967
— Small business? If you dare open you will be fined tens of thousands and be shut down. Police will cart you away.
But the CV Religious police are light-handed with the Favoured Ones – the big box outlets.
(Please note that any drinking, frolicking, dancing or live music is forbidden under the New System (unless you are poor and on the streets already, unable to pay, then the New System will not bother with you.))
https://toronto.citynews.ca/2020/11/28/vaughan-mills-among-8-businesses-ticketed-in-york-region-on-saturday/
Lowe’s on McNaughton Road in Vaughan was charged for violating Section 22 of the Health Protection and Promotion Act and given a $750 ticket while Mazaj Lounge on Rutherford Road received a $750 fine for violating the Reopening Ontario Act.
There are 3 possibilities here:
1) Venus wants to kick Mars to the curb so easier to split one asset then chase TFSA’s and Savings; depending on jurisdiction and number of progenies + career status Venus might even get all of it plus support from Mars
2) Job prospects are bleak so not having to worry about a mortgage brings peace of mind and relationship bliss. Emotional intelligence rules in most people’s decisions and should never be discarded.Stress and anxiety are the root cause of substance abuse and poor decisions.
3) Lack of financial knowledge : given the financial educational hole we are seeing and the prevalence of emotions/arts based education vs STEM wouldn’t surprise me if this simple math would be dismissed instantly as BS by most people.
Thank you for this, Garth.
It makes even clearer that getting a mortgage on a suitable house in an affordable location can make a lot of sense right now. Invest the rest in your TFSA and RRSP.
pd. in full my mortgage way back in 2012. great feeling to be debt-free.
Drained our two TFSAs, added to savings and paid the $307k remaining in the mortgage. Emotional, not logical. Sweet relief.
——————————————————-
Not smart. With rates at historic lows, no point in doing that. There are plenty dividend payers in the 4-6% range, among other options.
Remember, happy wife, happy life!
I believe that the younger generation believes in “If we can afford the monthly payments. Then, Let us buy it.”
My mother taught me “To save then buy it”.
It worked for me. I got no debt and enough saving to last longer than me.
#81 Faron on 11.29.20 at 1:47 pm
For the weights:
56.5% of voo’s weight is also in voov
74.5% of voo’s weight is also in voog
31.7% of voo’s weight is in the 162 names that overlap voog and voov.
——————–
Perfect!
I honestly didn’t know what I wanted my PF weightings to be between value and growth, but I think I’m happy with the results.
I feel even better about the diversification held within the S&P500 now. Certainly, I feel no need to tinker with it by purchasing either VOOV or VOOG on the side.
Great work!
@ crowdedelevatorfartz #76 previous thread
FYI: In response to your comment #76 on the previous thread, in which you called out “politically correct doublespeak” from Metro Vancouver Board of Directors Chair as published in the Vancouver Sun, someone over on the Vancouver Condo Info blog has called you a “white supremacist”.
Although you are not posting under your real name, you have used the same handle on this blog for years so I am just wanting to let you know that someone is slandering you. The poster goes by the handle name, Shut It Down Already (original). Here is a link to the comment in which you were called a white supremacist:
http://vancouvercondo.info/2020/11/what-do-falling-rents-mean-for-the-condo-market.html#comment-379014
I’m wondering how many people would actually have the discipline to follow Garth’s advice – lock in at crazy low rates; continue monthly mortgage payments BUT invest any ‘additional’ money to harvest gains. Other thing I wonder about. Always reading about how one would ‘invest the difference’ between mortgage payments vs. rental payments. Does anyone ever actually have a difference to invest? Or is that just a myth?
@#12 Tommy
The vancouver condo blog?
Yawn.
They can battle it out.
I have elevators to empty.
Inflation is currently 0.7% in Canada..
Sure.
The BoC boss is actually contemplating negative nominal rates.
Trying to solve the problem of no savings and super credit bubble with less savings and even bigger credit bubble.
We both know how this ends.
Cheers,
I LOVE MY DEBT!!!
After all the Governement has proven we can just keep borrowing with no intention of paying it back.
My debt was handed down to me by a bank that got it from the government who borrowed it from another bank who borrowed it from another bank………
PONZI SCHEME!
But Garth, what if after paying off the mortgage, instead of a mortgage payment, the equivalent would be invested in that balanced portfolio each month? How would his balance look then?
I am really glad that it is so easy to scroll past Turner Nation. It’s too bad he’ll never seek the help he so seriously needs.
Seen this move before from Venus. Next move-Divorce. Then locks changed and Mars out. Checkmate.
Freedom First
The advice is solid, of course.
But for the rest of us who have avoided overpaying for bloated real estate and going into debt to do it, it can’t help but create some frustration.
This person could basically live in their home, and still get the benefits of diversified portfolios as well. Those who have been diligently saving, working 7 days a week, and investing. Why? How on earth did rates go even lower? How did housing go up? Was saving and investing worth it?
MF
Is it just me or is there something wrong with this analysis / the table? The number under the “Pay it off” column for “Gain” should be 75,300 (and not 73,500) – but more importantly “Gain after cost of payments” should be 75,300 as well, since the cost of payments in that option is 0??? So actually we’re comparing 83,400 and 75,300 – but that actually doesn’t factor in a 7% return every year on that accumulating gain after cost of payments… There’s something wrong with your numbers Garth!
5 ElGatoNerodeYVR on 11.29.20 at 2:20 pm
I completely disagree with your third point.
A stem degree doesnt guarantee an iota of financial literacy. Nor does an arts degree mean the absence of it.
It’s more about personality and logic. Besides economics itself is miles away from any form of science. It has almost no predictive ability, like a real science like physics does as an example, and is a mismash of theories that are often nothing but conjecture.
MF
I think it depends on where you are in life, let’s say in your early 50s you find yourself on a new career path with uncertain income. That path is much easier to handle if you have no debt at all. I get the argument of low interest rates/investment returns, but there is the freedom of never having to make an interest payment to anyone again that give you way less internal stress. After all money only matters because it enables you to do what you want to do, so if you can use it to reduce stress then that makes sense.
Honest Realtor on 11.29.20 at 2:22 pm
There are no “suitable houses in affordable locations” anymore. The actual worth of all canadian real estate is about 30 cents on the dollar. There has’nt been since 2009, maybe. Everything is bloated beyond recognition.
MF
But you assume the monthly mortgage payment is spent rather than invested every month. If it’s invested diligently, they come out about the same. Plus, by paying it off now they have far greater flexibility if they need to move for some reason – no payout penalty.
Clearly, I’m a woman….
“We all know that by this time next year, as the vaccine chases the virus…”
You are wrong My Liege.
Trudeau:
“Most Canadians will get COVID-19 vaccine by September”
Of course, which September of WHICH YEAR not all that prominent in the communiqué.
——————–
“Lessons?”
Our noble Leader’s theme and 2/3 of Blog was VENUS and her less than financial prowess BUT instead the Lessons learned evaporate into the Inflation, Investment Diversification, Leverage and Old Age ETHER.
Hens heard clucking in the background…
#13 Linda on 11.29.20 at 2:48 pm
I’m wondering how many people would actually have the discipline to follow Garth’s advice – lock in at crazy low rates; continue monthly mortgage payments BUT invest any ‘additional’ money to harvest gains. Other thing I wonder about. Always reading about how one would ‘invest the difference’ between mortgage payments vs. rental payments. Does anyone ever actually have a difference to invest? Or is that just a myth?
—————————————————————–
I take comfort in having a significant amount of money invested in a TFSA that’s accessible in a few days with a few mouse clicks and which could be used to pay bills in case of job loss; credit cards and an unsecured LOC can provide immediate funds if needed.
Mortgage is locked-in at below 2%. TFSA investments / LOC could cover the mortgage in case of job loss. Sure I could pay off a good chunk of the mortgage with what’s in the TFSA now, but then this money would no longer be accessible in case of job loss (I’d need to get a HELOC or refinance to get the money, but I’d need a job to quality).
My goal is to minimized the risk of running out of money and fortunately this also coincides with the goal of maximizing returns using investments.
There are self-directed investment accounts with commission free ETF purchases, which are ideal if you’re investing relatively smaller amounts of money at a time (eg. the difference between mortgage and rent), so that your money isn’t being spent on fees.
#11 SoggyShorts on 11.29.20 at 2:40 pm
#81 Faron on 11.29.20 at 1:47 pm
It ocurred to me to wonder what those numbers would be in an equal weight S&P. I think its just 162/508 which is about 32%.
Not advocating for paying off the mortgage, but if you would simply invest the saved $1255 monthly and the same expected 6% return off a balanced portfolio, I think you’d end up being ahead or is my math incorrect?
Period of 5 years with a 6% return rate with a contribution of 15060 (12 * 1255) gives me $84894.62.
Hi Linda (Comment #13),
Yes, people do rent and save the difference. Renting an $800,000 condo for $1800 in downtown Toronto. We live on one paycheque, wife’s is pure savings, and we’re even able to save a little under half of mine. Plus we both work downtown, enjoying 15 minute commutes by bike/electric scooter and don’t own a car. Oh the horror! Life is good. It’s totally doable.
People like us just stay hushed because god forbid you don’t cheer for your friends when they drain their RRSPs and TFSAs to buy in one of the most overvalued RE markets on the planet. Seriously, when we started this journey we would softly tell friends to reconsider the housing purchase, but the emotional vomiting we received in return really made us stop talking about RE all-together.
#25 Indigirl on 11.29.20 at 3:36 pm I agree, they would likely replenish the tfsa (hopefully aggressively) and have withdrawal cushion available to recontribute to if there are some excess dollars coming in down the road.
JOE BIDEN HAS BEEN RUSHED TO HOSPITAL!
This could be the first of several likely assassination attempts by Trump surrogates or hopefully something different. No further facts right now. Hope for the best.
Chaos lies ahead.
PREPARE
Mr. T, if only you’d write a book–aimed at kids–with this common sense financial info.
It’d be the first generation to “get it”.
I agree with MF .
I worked with a bunch of mechanical engineers. None of which had any desire or knowledge of investing.
They were all in their fourties, with a young family and a big mortgage, with no excess money to invest .
When one of them found out he could lose money he lost interest very quickly.
There is no doubt they can quickly come up to speed as they can absorb vast quantities of information very quickly , so when they do have expendable income they can make informed decisions.
‘Outta Here…REPRISE in a dish best served cold (or as Garth put it when the Comments started streaming in back then “Ah, their just jealous”).
My home city of Pordenone just received this honor today:
“Quality of life, Pordenone in 1st place in Italy”
Map and a reference point for the diatribe that follows to naysayers of that Blog incursion of mine courtesy of My Liege:
https://i.imgur.com/KT0AQOu.jpg
To the SE you have 50 km of Blue Flag beaches stretching from Lignano to Jesolo, almost to Venezia (48 km away, 1/2 the distance of DT YVR and beaches you can’t swim in unless you have a death wish to Chilliwack – Quality of Life hotbed in BC also 1/2 the distance to Victoria where, you know, stuff floats by in their harbour).
To the N you have Cortina d’Ampezzo (1960 Olympics) where the lifts go to 2850 m (sorry vertical drop Whistler) and N of it is Misurina (basically take Lake Louise and its hotel, put it up top where the Tea House is, throw in the 3 Dolomites and you have it – minus the peanut gorged chipmunks and whiskey jacks, the latter that can no longer fly for all the fat they’ve accumulated, sorry Banff).
To the W is Conegliano, Prosecco country. A bit farther W is Lago di Garda (Churchill’s fave vacation spot…in fact a hotel on its W shore that I frequent named a bar after him in his honor) and the lake, in the N it’s in the Alps, S in the rolling hills of vineyards, East vineyards again.
S besides the beaches is Venezia. La Serenissima needs no introduction. 60 km away (or Lunenburg to ?).
My Pordenone of 50K souls can access the above easily.
Also a home to Prosecco (1 of my cousins grows it), Tiramisù, Polenta, Radicchio, Arugula (all made popular by us) at least a dozen or so excellent wines as Pordenone surrounded by vineyards (sorry NO Tourist Tip on the wines, otherwise they’ll all end up in N. America and then become overpriced here as what happened to Barolo, Amarone and Brunello…Ok, 1 I’ll give you: PICOLIT…every bit as good as Château d’Yquem and a lot less money – per Hugh Johnson way back when).
Pordenone. Squeaky eco clean. Everything works. We are called Italia’s Swiss for reasons too lengthy to get into here (and that’s from the Fiorentini…Toscani are such sore losers).
———————
And easy on Italia.
A good chunk of your vaccine is bound to come from here Canada. At +2B doses/yr manufacturing we can easily horde it to ourselves and vaccinate every last one of us first…but we won’t. Per the EC it will be quid pro quo.
We understand well the scourge of S. L. Pathogen all to well.
Payback complete.
I will be purchasing (closing) on a home in the U.S. tomorrow afternoon. Rule of 90 observed and sleeping with the co-buyer, my wife. 30 year fixed mortgage at 2.75% with no buy-down. That’s pretty amazing.
I’d rather continue to rent of course but my co-buyer wants her house. If it will make her happy I guess I’m okay with it. Dog doesn’t care either way.
Rooseveltian or lame duck?
277 actions that are in the Biden-Sanders Unity Task
Force documents.
policy porn ?
FAST FACTS:
We found 277 policies that can be enacted through executive branch powers in the Biden-Sanders unity task force document.
48 of the policies, or 17 percent, are rollbacks of Trump-era policy changes.
Immigration (78 policies), Climate Change (54 policies), and the Economy (54 policies) have the most potential executive actions.
This story is part of the Prospect’s series on how the next president can make progress without new legislation
https://prospect.org/day-one-agenda/277-policies-biden-need-not-ask-permission/
https://joebiden.com/wp-content/uploads/2020/08/UNITY-TASK-FORCE-RECOMMENDATIONS.pdf
Biden can use the Vacancy Act at any time, even if the Senate is in session?
Max Moran:
Yes, at any time, no matter what. All that he(Biden) has to do is say that he is invoking his powers under the
Vacancies Act to make someone into an acting treasury secretary and acting what-have-you, and either,
again, bring in a commissioner from a different agency or elevate a civil servant up to the secretary job…
https://theanalysis.news/interviews/we-dont-have-to-live-in-mitch-mcconnells-world-max-moran/
I received a pretty decent inheritance earlier this year, and the guy at the bank thought I was crazy to pay off the mortgage, rather than invest the money.
But there’s something to be said for not owing anyone money, and truly owning my house outright.
I’ve invested everything since then, and feel that I’m in a much better position if things go sideways.
Most importantly, it helps me sleep at night, even if it costs me a few dollars in the long run.
I’ve been lead to believe this blog was a favorite of dog lovers and investment aficionados. I have a bit of a predicament as I’ll explain.
The wife and I bought a gorgeous Golden Retriever (aren’t they all) just over three years ago. Since that time, she’s done nothing but lie around all day, drool on my hardwood floors and make messes in the house. The cost of food is increasing all the time and it seems like I’m forever feeding her dinner. In retrospect, I’m wondering if I made the right choice.
Is it too late to change my mind?
P. S. For what it’s worth, the dog feels the same way.
#32 Apocalypse2020 on 11.29.20 at 4:13 pm
Dont spread lies dude:
“On Saturday Nov. 28, President-elect Biden slipped while playing with his dog Major, and twisted his ankle. Out of an abundance of caution, he will be examined this afternoon by an orthopedist.
You forget the bragging rights forever to say:
«My mortgage was completely paid by the time I was X years old.»
Priceless!
Anyone look at the Nikkei lately? It just broke out of its 30-year bear market.
Long Japan. Short China.
‘Outta Here…REPRISE – forgot…what we are not.
And to the most “liveable” cities such as Calgary, Edmonton, Toronto, Melbourne (sorry Flop, could not resist) all clones of concrete, glass, steel megaliths thrusting into the sky, with their roots being asphalt, parkland courtesy of the ever so Organic, au Naturel Parks & Rec, dominated by busy streets full of cars, arts of work that look like scat blobs or people want them torn down (hello Toronto and Henry Moore or Calgary)…
in Pordenone we can’t compete with that…nor do we want to.
All we have is a DT closed to traffic, where people can do their passeggiata in the AM and PM exhaust fume free and in no fear of being run over by some crazy Italian driver, cobblestone streets with 2 large piazzas with open air markets 2X a week, plenty of bars, gelaterie, pasticcerie, ristoranti, caffè and the Noncello River, like Cambridge’s…wispy willows, pastoral and all.
And it only snowed 1 time here in the last 6 years – stayed up until 3 AM to watch it…all 15 minutes of it, replaced by a light rain (“light” not like Diluvium YVR gets in Winter).
Why my moniker on Garth’s Blog is:
La Dolce Vita.
Every apartment building on Hurontario from Square One to Port Credit has shiny new For Rent signs plus 100’s of condos for rent. We need immigrants/inter’l students and soon.
Man, this lady is really stoopidz. She has no idea about finance yet plays by her emotions. You only need one or two of these mistakes (cash out your entire TFSA) to take out your income/finances in your near future and twilight years.
Great what has she done now? What does she have left over after doing this? She has nothing, and starting from zero. She is not a young spring chicken… and now with no income producing assets. Work income doesn’t count cuz Her house doesn’t make income, so it’s a liability.
What would I have done? Switch to income producing dividend stocks in the TFSA, withdraw them dividends to pay down the mortgage or whatever. You get to keep your investments, and pay down the mortgage within a reasonable time period. Win win! Now what she did is lose lose, and certainly deserves it.
There is a Chinese saying, saying “May you live in interesting times”. Indeed, this year and the next will be interesting, especially for those who have not kept up with the times for savings and debt.
#9 Leslie on 11.29.20 at 2:30 pm
Remember, happy wife, happy life!
_________________________________
And my personal favorite that ties into that one … “Ignorance is bliss! ”
How bout “there’s one born every minute!”, also a perennial favorite.
Laugh my arm off.
“Work income doesn’t count cuz Her house doesn’t make income, so it’s a liability.”
Oops, gremlins came here. Should be Work income doesn’t count cuz you’re not working forever. Just because you want to work for the company, doesn’t mean the company wants to work with you.
Houses don’t make income, and are a liability. Stocks all the way!
#39 Captain Oblivious
“The wife and I bought a gorgeous Golden Retriever (aren’t they all) just over three years ago. Since that time, she’s done nothing but lie around all day, drool on my hardwood floors and make messes in the house. The cost of food is increasing all the time and it seems like I’m forever feeding her dinner. In retrospect, I’m wondering if I made the right choice.”
I feel your pain.
Unlike most dog-lovers, you have an IQ over 95 and are sentient to the nuisance and harm caused by canines.
Owning mutts causes dogawful harm to your finances.
Cats will actually make you wealthier.
Call your local Humane Society.
Someone finally had the good sense to ask Biden’s dogs what they thought about moving into the White House. The dogs have revealed that the alleged President-elect is shopping around for a cat. No one asked the dogs any questions about Dominion Voting irregularities or the Arizona recount. I’m assuming that Biden has not shared any knowledge of these events with his pets. https://www.dailywire.com/news/pet-psychic-says-she-communicated-telepathically-with-bidens-dogs-the-daily-beast-runs-with-it
We currently are debt/mortgage-free due to selling and downsizing to a smaller house. We are currently in the process of getting as much mortgage as we can on our “new” house (80% of value). The cash from the mortgage will go directly to my moderate-income spouse who will invest it in her taxable investment account. She will make the mortgage payments from her income while I cover our other life expenses. Only 1.87% interest – plus that interest is deductible against her income. So, really it is more like 1% interest in terms of cost to us. Accounting for inflation, that really is free-money to invest. The Mars/Venus preference on debt has been a point of discussion for us over the years. However, she has come to appreciate how it works having done this with our previous mortgage on a smaller scale. Plus, our house is not the bulk of our net worth anymore and we have enough liquid assets to pay the debt if needed. That helps make it emotionally easier.
-LD
I should also point out that it is not totally a Mars/Venus thing. I was just as debt averse as my wife when we first started out. I have become less debt averse with a combination of experience, knowledge, lower interest rates, and higher net worth. We both have and those characteristics really are gender-neutral.
-LD
Back when we had a mortgage, our interest rate was about equal to what you could expect to get investing the money. Even then, we did not go nuts with trying to pay off the house, we paid weekly, with the occasional lump sum here and there.
When it comes to investing via a tax shelter, there is only so much you can stuff in there every year – you need to rely on gains inside the shelter to really get the numbers up there – and that requires time.
Investors today who get started very young have the potential to realize 7 figures 100% tax sheltered, and 100% tax free upon withdrawal via the TFSA, but it won’t happen if you forsake that 6k deposit for a decade+ so you can nuke the mortgage.
Now at today’s rates, it just becomes a no brainer to focus on stuffing that(those) TFSA(s).
Attention Bloggers, we have a NEW “Reset theory” to be debunked. They keep coming. We are broke.
Hate to say it but this winter they seemed determined to break down every last shred of culture, small business and family. This New System is a prison system as noted since March.
You feeling broke(n) in yet?
Via the Corona Broadcasting System (CBC). Never forget this war, the final one is for LAND. This war is a global effort, every (former) First World Country is on board.
Lockstep action we see.
https://archive.is/garRt
Conservatives attack Trudeau’s ‘reset’ — put forth ideas for their own
Regulatory and tax changes necessary to rebuild Canadian economy, finance critic says
Joe Biden’s dog was apparently the cause of an injury to that fragile 78 year old President-elect.
What else do dogs have up their sleeves?
https://www.foxnews.com/politics/biden-twisted-ankle-playing-with-dog-examined
If dogawful Trump gets to stay in power, you’ll know who to blame.
Deplorable mutts.
I’d bet the real reason they chose to pay off is that either Mars or Venus wants a new kitchen, and having no mortgage is an easy way to rationalize accumulating new debt. “It’ll add value to the house!”
Yes #32, an attempted assassination attempt on Biden by his rescue dog (too funny).
Comments Felix?
DEBT….. It doesn’t just come in one flavour. Or one source of origination. Some debt gets people to a better place, like student debt, the assumption being that funds weren’t borrowed heavily to study something lightweight that only got a peep a job as a Barrista at Starbucks.
Some borrow to invest when it’s sensible and disciplined, like Garth’s advice on how to drain an RRSP. But there is another kind of debt that is similar to other addiction problems. It happens in every socio-economic class for different reasons. Never think the peep you know making $200+ annually isn’t up to his ass in alligators type of debt. Much of it sometimes high interest rate credit card type debt. WTF, you might ask?
One of the most insidious reasons is what my much admired and esteemed fellow poster BillyBob refers to as “instant gratification”. Instant gratification usually has roots in emotions. Filling up on ‘stuff’ to avoid dealing with other emotions or problems. Fail to plan, plan to fail syndrome in some cases.
In many marriages one will be the bigger spender. Don’t jump to any conclusions about the female of the species until you count the number of RV’s, quads, snowmobiles, Harley’s, extensive and expensive outdoor BarBQ equipment, and especially all the really expensive home theater equipment. There’s never a positive outcome in engaging in the ‘blame game’ in these situations, but it’s a source of discontent in many relationships. I have a friend who once hid a ridiculously expensive clothing purchase from Holt Renfrew from her husband, the tactic being hiding the garment in the back of the closet that was already stuffed to the gills with other clothes that never got worn. What’s this all about, I wondered?
In no way would I wish to sound “preachy”, cause the Jaguar likes nice things too. But society seems to be on an ever faster moving conveyor belt designed by the ‘Madison Avenue types”, and sometimes we all just need to have a little talk with ourselves about getting ‘off”. All the money in the world can’t buy the things we love and value most . Anyone who has experienced a significant loss ( Spirit Dog ) knows this….. Something to think about as we await the winter Solstice, longer daytime hours, and the renewal of life as we knew it before the Pandemic…….
Felix will have a ‘Field Day’ with today’s Blog photo…
I volunteered for the Covid-19 vaccine. It’s the one developed in Russia. I received my first dose this morning at 06:20. It is safe and I’m ok, with иo side effects whatsoeveя, and that I feelshκι я чувю себя немного стрно и я думю, что вытл осные уши. чувству себя немго страо.
Best day of my life was paying off my mortgage…what a party…almost burnt the house down.
Being debt free is under rated.
I agree with Jamie Ryan we have been debt free for 37 years.
“We need immigrants/inter’l students and soon.”
I don’t think that this group of renters will have enough income to be able to finance your lifestyle or your pension.
That was so yesterday.
Houses don’t make income, and are a liability. Stocks all the way!
Depends. My now adult sons pooled their down payments and bought a duplex. They made certain to buy in an area where a suite below the owner occupied side was allowed. 2 bed suite cost $55,000 to put in and rents for $1,000. The opposite side rents for $2,300. PIIT all in the house is cash flow positive.
5 years on one bought out the other and he used that money as a down on another duplex. Same zoning, same scenario. Same guy did the suite. Didn’t cost much more either as more of the basement was already developed, full washroom already in, etc. …this one isn’t quite cash flow positive as everything, mortgage, tenants, etc is pretty brand new but it will be within the year.
housing doesn’t have to be a liability.
Flop..you were looking for this the other day
https://abcnews.go.com/2020/video/falling-sky-2020-event-special-airs-friday-98c-74326861
https://www.youtube.com/watch?v=-RpaP6hqfO4
Post covid recovery is already baked into the stock market. Sad thing is, the recovery isn’t going to take place, to the degree many investors are counting on.
If ever there was a time to pay off mortgage and play it safe, it is now.
My place had been paid off for years. I had a solid cash position–5 years worth of income, before I maxed out my tfsa.
It’s not always the best way to go, but I can sleep at night.
#35 Doe Vita
My fathers parents come from Cimolais, just north of Pordenone. It is indeed Gods country.
#62 Albertaguy (still stuck) in AB on 11.29.20 at 6:50 pm
Flop..you were looking for this the other day
https://www.youtube.com/watch?v=-RpaP6hqfO4
///////////////////////////
Thanks ABGuy, nice work!
Billybob, this is the show on 737 Max I watched on Friday night.
Has been noticeable improvement in cooperation of passing information on, since the boss of this blog cleared out some sludge that turns a lot of people off.
We are heading into the Goldilocks zone on this blog perhaps?
This always happens on here between election cycles.
Mars and Venus?
Been married to my wife for 18 years in a few weeks.
The key to our success is I don’t get between her and coffee cup in the morning.
Happy wife = Happy life?
No… I protect myself the other way.
Grumpy wife = Lumpy life…
M46BC
I’m a guy and I don’t like debt and have none of it.
My last post should have been to #35 Dolce Vita. My keyboard is hooped, keeps missing keys.
#12 Tommy on 11.29.20 at 2:48 pm
@ crowdedelevatorfartz #76 previous thread
FYI: In response to your comment #76 on the previous thread, in which you called out “politically correct doublespeak” from Metro Vancouver Board of Directors Chair as published in the Vancouver Sun, someone over on the Vancouver Condo Info blog has called you a “white supremacist”.
———————————-
Seems like the mind readers are spotting “white supremacists” everywhere they look these days. How do we even know Fartz is white? I mean I assume he/she is but how do we know? Nobody has ever seen the mystery man/woman. And does it follow that if you are white you are a white supremacist and racist? I guess it does these days.
Anyway I followed the link and this does lend more credence to Garth keeping a tight editorial standard for this comments section. “Someone who posts as “Crowdedelevatorfartz”over on Garth Turner’s blog” is not something that people should use in the first place, because Garth should not be held accountable for the comments any more so than financial advice as per the disclaimer at the bottom, but people aren’t very good at logic and rhetoric these days. It seems like as soon as someone disagrees with what you are saying they resort to mind reading and name calling.
Garth,
with interest rates so low and pretty much a guaranteed bounce in the market when vaccines comes, have you changed your mind on whether the Smith Maneuver is a good investment strategy?
Sounds like you do not even understand what that is. – Garth
FREEDOM is BITTERSWEET ain’t it?
https://www.cnn.com/2020/11/29/health/us-coronavirus-sunday/index.html
https://www.cnn.com/2020/11/29/health/us-coronavirus-sunday/index.html
No Masks, no social distancing, no isolation, no worries….
CANADA is the tenant living on the 2nd floor of a METH LAB beneath our feet.
#59 puke and potato
God it must be hard getting on that high horse everyday
Except that with no debt you have a low cost of living. You can look poor get more government benefits or pay less tax by working less. You’re not a bullseye for the taxman you’re not even a target.
Your life is more simple, peaceful even.
#19 Freedom First on 11.29.20 at 3:17 pm
Seen this move before from Venus. Next move-Divorce. Then locks changed and Mars out. Checkmate.
Freedom First
—————————
“My ex-wife took everything I had when she divorced me. It would have been worth it at twice the price.”
Count your blessings, folks. Count your blessings.
Anyway it is a $hit move by Venus, marital assets are split 50/50 no matter what they are. Child support and alimony are a different thing, but Venus can’t just “keep the house” unless there are other assets like pensions and RRSP’s to offset Mars’s half, which Mars will get to keep. Venus can negotiate say keeping the whole house in exchange for no or reduced alimony if alimony is applicable, but Venus cannot move the dial on the 50/50 split unless your lawyer is a complete idiot.
So the new rules of marriage, whether you be Venus or Mars, are thus:
– If you have significant assets when entering a marriage and you future spouse does not, get a prenup and get it lawyered.
– If there are no significant previous assets realise your spouse will own half of what you build during the marriage.
– Do not marry someone who has significant debt without offsetting assets. The spending habits will not change. (So “offsetting assets” means a mortgage and a house is ok, $40,000 in credit card debt is not. A student loan depends on what it did to earning potential, for example a doctor with a $70,000 student loan might not be a bad catch.)
– Do not marry someone who does not work. If they quit work during the marriage initiate the divorce yourself to stomp out potential alimony claims down the road.
– Realize that you cannot under any circumstances avoid child support. That vasectomy doesn’t seem so expensive now, does it?
– Remember that if your potential spouse has expensive tastes now while they are young and attractive that won’t change later on when you’ve forgotten what you are paying for.
Zoolander 3. Script update.
Location: Walking out of a Tom Harton’s Coffee Shop.
Hemlock Roans walks out of the coffee shop sipping a coffee cup in his hand. Mr. Wilson follows close behind, frowning while looking dejectedly at his coffee cup. They walk back to Hemlock Roans’ office.
Wilson: “I find coffee to be insipid, Roans.” He says with a frown and sigh while walking beside Roans.
Roans: “When in Rome do as the Romans, Wilson,” says Roans while taking another sip of coffee.
Wilson: “Regretfully so, Roans,” says Wilson, still not drinking.
They walk into the nearby office of Hemlock Roans, detective.
Roans: “Now, Wilson, what has your research turned up?”
Wilson: “I stopped short, Roans. A reporter with the Canadian Propaganda Corporation wrote that the ‘Build Back Better and Reset’ have no basis.
Roans: “I find that amusing, Wilson, for I read that same article and thought that the author deflected any actual investigation into the possible agenda whilst simultaneously directing focus to the Opposition’s necessary act of developing policies.”
Wilson: “A deception, then, Roans to make the public stop investigating?”
Roans: “Indeed. For look at what I’ve uncovered which I shall call ‘Exhibit A’. There is evidence for an agenda going by the terms, ‘Build Back Better & Reset’ It is being promoted by the Global Economic Committee and certain national leaders. The evidence is there for anyone who cares to look.”
Wilson looks at the documents astounded….
>”A Exhibit” of some interesting articles.
—
To build back better, we must reinvent capitalism. Here’s how
13 Jul 2020
Peter Bakker
President and CEO, World Business Council for Sustainable Development
…A true recovery from COVID-19 will not be about putting things back together the way they were: we need to ‘build back better’, to ‘reset’, if we are to address the deep systemic vulnerabilities the pandemic has exposed. For businesses, building back better is about much more than corporate social responsibility: it is about truly aligning markets with the natural, social and economic systems on which they depend. It is about building real resilience, driving equitable and sustainable growth, and reinventing capitalism itself….
…If we don’t seize this opportunity to build back better – to reset and reinvent rather than ‘return to normal’ – systemic risks and vulnerabilities will continue to accumulate, making future shocks both more likely and more dangerous….
https://www.weforum.org/agenda/2020/07/to-build-back-better-we-must-reinvent-capitalism-heres-how
—
WORLD NEWS
SEPTEMBER 23, 20202:34 PMUPDATED 2 MONTHS AGO
PM Johnson calls on leaders to build back greener after coronavirus
By Reuters Staff
LONDON (Reuters) – British Prime Minister Boris Johnson will call on other leaders on Thursday to “build back better” after the coronavirus crisis and commit to net zero emission targets….
https://uk.reuters.com/article/uk-un-assembly-britain-climate/pm-johnson-calls-on-leaders-to-build-back-greener-after-coronavirus-idUKKCN26E3IO
—
Justin Trudeau promises to ‘build back better’ and Erin O’Toole scoffs saying there is no plan to reduce the pandemic debt
By Kieran Leavitt
Edmonton Bureau
Mon., Oct. 26, 2020
…During his speech in front of the virtual audience, Trudeau made a commitment to “build back better in a fiscally sustainable way” but didn’t specify a financial anchor — something that would harness government spending and address debt….
—
Prime minister opens virtual Apec meeting with appeal for inclusive growth
Rob Stock
Nov 20 2020
Prime Minister Jacinda Ardern has opened the virtual Apec CEODialogues conference with a call for Asia-Pacific countries to focus on “building back better” in the economic recovery from Covid-19….
https://www.stuff.co.nz/business/123462864/prime-minister-opens-virtual-apec-meeting-with-appeal-for-inclusive-growth
—
BUILD BACK BETTER: JOE BIDEN’S JOBS AND ECONOMIC RECOVERY PLAN FOR WORKING FAMILIES
https://joebiden.com/build-back-better/
Stop wasting my blog real estate on your conspiracy insecurities. – Garth
#32 Apocalypse2020 on 11.29.20 at 4:13 pm
JOE BIDEN HAS BEEN RUSHED TO HOSPITAL!
This could be the first of several likely assassination attempts by Trump surrogates or hopefully something different. No further facts right now. Hope for the best.
Chaos lies ahead.
PREPARE
——————————-
Oh jeez. Why on earth would Trump attempt an assassination while he has the 5 big ballot drops still on the table for dissection? Or even if he didn’t why would he want Harris as president?
Logic would indicate that there is no gain for Trump or his supporters to off Biden now. Aside from the horrendously long jail and possible death sentence, it ain’t going to do near as much good as finding out where the miracle late night ballot drops came from.
Biden is an old man. A trip to the hospital is nothing to be shocked by. Unless there is a bullet wound it means nothing.
Trump was recently in the hospital with covid and nobody described that as an “assassination attempt”.
By the way, Trump lost. – Garth
@#68 nonplused
“How do we even know Fartz is white? I mean I assume he/she is but how do we know? Nobody has ever seen the mystery man/woman. And does it follow that if you are white you are a white supremacist and racist? I guess it does these days.”
+++
True enough.
I guess I could show up to the next Vancouver Condo Blog party wearing a gender neutral Rainbow bedsheet with a matching rainbow pillowcase “hood” to really trigger everyone’s pc sensibilities.
Who knows?
Might even make the Global 6pm news…..
My comment is for those who are on budgets. For many years, (financial background), I recommended to young couples that mortgages and loans allow for neccessary basic family expenses now.(not boats/cars) How do you think provinces and T2 finance their pet projects. When the kids are gone, then reduce your debts, knowing you provided all you could for the family unit with the best. Have extra cash? reits, rentals, 60/40 stocks, etc. are products that have ROI from low 2% to 14% & pays the cost of those products,and allows further family assistance, donations and low stress. Pay down mtg’s on each anniversary date and or double up pymnts. Let money work for you.
#57 the Jaguar on 11.29.20 at 6:28 pm
“Don’t jump to any conclusions about the female of the species until you count the number of RV’s, quads, snowmobiles, Harley’s, extensive and expensive outdoor BarBQ equipment, and especially all the really expensive home theater equipment.”
Those things are essentials. Swap “quads” for a boat, “snowmobiles” for skis, and “Harley’s” for the 3 Yamahas you can buy for the same price and even my wife agrees.
Now to be fair I bought the boat used for $14,000 way back Dog it has to be 20 years ago now. But it still runs. No way it would pass modern emissions standards though (cough, cough). It’s a big ol’ 3 liter 2 stroke. But it still does the boating things as good as when it was new. I don’t see the point in selling it because there isn’t much money to be got and any time I propose doing so the wife and kids vote me down. Zero plans on replacing it though. It will be my first and last boat. But we have a great number of irreplaceable family memories due to that small boat.
“Invest as if you will live forever, but live as if you will die tomorrow.”
There has to be some split between saving for the future and living for today. It is absolutely certain that the sun will rise tomorrow, but that doesn’t mean you are going to be around to see it.
“He who dies with the most toys, wins.”
“By the way, Trump lost. – Garth”
Still a premature statement. It is probably true, but I have looked at the data and the analysis and the odds that there wasn’t maleficence is about 0.02%, especially on the big 5 ballot drops. But we will find out soon. I suppose you can have smoke without fire.
I do understand that it is hard for either you or me to accept that our hoped for outcome is not the actual outcome, but let’s wait for the process to conclude. The media does not call elections in the US even though they have turned elections into a spectator sport. It is the outgoing president’s responsibility to ascertain that the election was fair, and that is what Trump is doing, under the most unusual circumstances in years or perhaps ever.
Biden does not win until the electoral college votes.
Trump has lost all significant court challenges for lack of evidence. Stop spending you day on Parler. It’s over. – Garth
#40 Faron on 11.29.20 at 5:07 pm
#32 Apocalypse2020 on 11.29.20 at 4:13 pm
Dont spread lies dude:
“On Saturday Nov. 28, President-elect Biden slipped while playing with his dog Major, and twisted his ankle. Out of an abundance of caution, he will be examined this afternoon by an orthopedist.
————————————————
Yes and oddly enough and reminiscent of Mayor Tommy Thanks on SCTV, his dog is a large stuffed pound puppy. Will be interesting to discover how it all happened.
*Tommy Shanks* stupid auto correct.
RE: excerpt from :#73 Nonplused on 11.29.20 at 8:21 pm:::
‘– Remember that if your potential spouse has expensive tastes now while they are young and attractive that won’t change later on when you’ve forgotten what you are paying for.’
HOLY JUMPIN’ CATFISH! RUN FOR COVER!
I am going to bet the farm that while this poster resides in Alberta he is not from this province. SASKATCHEWAN is my best guess, but I wouldn’t rule out Smith Falls, Peterborough area, or maybe the BC interior area near Slocan/New Denver.
Oh my god, where are my smelling salts? I’m succumbing to the vapors……..oh me…
“0.7% inflation” where is that? Gasoline has gone up in S. Alta 3.5% in one year just as an example. Have a good look at grocery items and compare the % increases. All levels of taxation has also increased.
In response to Linda, #13 comment:
I currently pay $840.00 in a one bedroom apartment in a medium sized and rapidly gentrifying downtown core in a mid-sized city in Southwestern Ontario, with rent control. I manage to save $1,000-1,800.00 per month and invest $700-1,200.00 of that every month. So there are some of is out there who do “invest the difference”. It isn’t a myth.
Still laughing……………oh me……’RUN BAMBI RUN’…HAHA
57 Jag re the home theatre equipment. The secret is a small mancave. 55″ looks great, the onkyo has never even hit the zero db and the inexpensive Klipsch can
rock the room and the bluegrass is crystal clear. Max two others can sit in the room. And the 5 year old $100 tablet can stream from the PC upstairs. Everything except the 55″ is almost 10 years old. Even the shaw PVR is getting up there.
But we all have our “thing” that we justify. My latest is a $4k gravel bike which I rode for 3 1/2 hours today with friends. Some of their bikes cost less, some more.
And no mortgage.
took on 100k debt (LOC) to invest/speculate a few years ago and now I’m debt free and almost 1%-er. Couldn’t have done it in such a short time any other way (other than winning the 6/49).
Oh, and all those 000’s have made my wife happy(er). Do women ever get really happy?? Not my experience (many do well pretending…)
People in Canada can’t even figure out a mask mandate. They confuse it for a license to throw hay makers and spit on other people.
Do you really think any substantial amount of people in Canada are going to figure out what a balanced diversified portfolio is let alone execute one to stay ahead of inflation?
#32
wow, trump voters really are r3tard3d.
My wife (of 44 years) is glad she isn’t married to some of you.
Me too!
Yep, I will go to my bank tomorrow to ask for a mortgage on my paid house so I can buy stocks at a time when the market made new highs…. Hoping they will go even higher?!
Why would you buy stocks? – Garth
“Trump has lost all significant court challenges for lack of evidence. Stop spending you day on Parler. It’s over. – Garth”
I’m not spending much if any time on Parler, and we shall see. The 5 big data dumps were all 6+ sigma events. That just doesn’t happen by accident.
#20 MF on 11.29.20 at 3:24 pm
The advice is solid, of course.
But for the rest of us who have avoided overpaying for bloated real estate and going into debt to do it, it can’t help but create some frustration.
This person could basically live in their home, and still get the benefits of diversified portfolios as well. Those who have been diligently saving, working 7 days a week, and investing. Why? How on earth did rates go even lower? How did housing go up? Was saving and investing worth it?
MF
—— ——-
Careful with lumping too many folks into one boat. We avoided overpaying for bloated real estate too – but we still own real estate. I’m not the slightest bit frustrated with RE or investing – both have been exceedingly well worth it.
The BOC is out of ammo, and we have a collection of lunatics running the country who Canadians just love to death. Want to bet how long it’ll be before 30-40 year amortizations make a come back? Just imagine sub 2% mortgages and 30-40 years to pay it off. Toronto tear-downs will cost 2 million in no time. It’s going to keep getting worse until everyone under 40 in Toronto is renting for life, or it all blows sky high. It took a 160k hhi to buy the average Toronto sfd BEFORE the cv run up.
Meanwhile, out here in the tamarack quilled marshlands of south eastern Ontario, tons of folks pay 6-700.00/mo all-in to live in a modest paid for sfd on 8-12k+/month incomes. It’s getting more stark by the day. The last 5 homes sold in our little village went to ex GTA’ers. A dude 2 doors down commutes back there for his job if you can believe it. The city just doubled the size of the carpool just south of us. I guess that’s where we’re at.
At what point are the restaurants and bars not worth the cost anymore?
Sorry Garth. Am I missing something? …in scenario 1 you are borrowing 307k to buy a house scenario 2 you magically have 307k and are investing it? And what about cost of your house via rent vehicle? Maybe I’m missing something but this sounds like 2 completely unrelated scenarios.
This sounds just like my circumstances. I’m moving to Calgary and I have purchased a house. I can pay cash for the house three times over but I managed to secure a five-year 1.64% mortgage.
Why would you ever want to pay cash when money is that cheap? It’s almost free money as far as I’m concerned and I’m very comfortable taking on this good debt!
She’s too liberal for me now, but watching Gail’s jar shows was what got me into personal finance so I thank her for that.
#13 Linda on 11.29.20 at 2:48 pm
I’m wondering how many people would actually have the discipline to follow Garth’s advice – lock in at crazy low rates; continue monthly mortgage payments BUT invest any ‘additional’ money to harvest gains. Other thing I wonder about. Always reading about how one would ‘invest the difference’ between mortgage payments vs. rental payments. Does anyone ever actually have a difference to invest? Or is that just a myth?
********************************************
Of course there are people who invest the difference – that’s how you become financially independent, regardless of income. At my peak when I was renting an apartment, I was putting aside 45% of my take-home, invested in indexes through my Questrade account. I found it funny how coworkers would tell me how I was “throwing money away on rent” and how I should take out a loan (?!) to put 5% down on a property. They’d look at me funny when I said I could put down 20% any time I wanted. In fact, I bought a car in cash almost the same week we put down 20% on our first house. Modest house, modest car, modest job income, but the practice works.
My savings rate was less after we bought our house, but definitely still net positive. I have a spouse, family, and friends who behave similarly, though it’s definitely a minority of the people. That’s why most people will never reach financial independence.
Garth,
with interest rates so low and pretty much a guaranteed bounce in the market when vaccines comes, have you changed your mind on whether the Smith Maneuver is a good investment strategy?
Sounds like you do not even understand what that is. – Garth
************************************
https://www.greaterfool.ca/2017/08/07/its-still-debt/
“Debt is debt. The world’s soaked in it. Most people would be unwise to shoulder more.
The best strategy, history will show, is to trash debt by selling high. This is high”
Do you stand by this?
OK, “How to make spouse happy 101.”
Put half of everything in her name. Make sure she has her own credit, not just a credit card. Taxation isn’t based on family income. Split evenly dividend income can provide over $100,000 annual income tax free. She makes over $50 in divvie, you make $50 divvie income, never pay a dime in capital gains or fees of any kind, ( all stock portfolio of course).
Huh you say? Because dividend income is tax advantaged and your personal deductions take you as an individual over the $50K level before you pay a dime to Justin’s Circus. You and the old lady, six figures in retirement, tax nada, sweet. Another hint, as you start to expire, start drawing down your RRSP in your lower tax years, ten years before your RRIF cliff. Use to beef up any TFSA room.
Got a kid? Stuff their TFSA max as well. You think you’re 65/70 and
going to live forever. You’re going to give it to them anyway. Get smart on tax, paying none is the Canadian way going forward.
That’s if Federal government incompetance doesn’t kill you first. Read how Liberals are now spinning the effects of being late on border security.
https://www.thestar.com/politics/2020/11/29/ottawa-extends-rules-and-restrictions-for-travelers-amid-rising-covid-19-case-counts.html
Notice , Bill Blair can’t say they secured the border, so he spins the screw up into weasel words like “almost and near”. If words and meaning are of any consequence these guys are going straight to hell.
RE: #32 Apocalypse2020 on 11.29.20 at 4:13 pm
JOE BIDEN HAS BEEN RUSHED TO HOSPITAL!
========================================
He mildly fractured his ankle while playing with his dog.
He can still walk down a ramp if needed.
For the debt averse, not having the 300K exposed to volatile markets is fine. If the would-be mortgage payments are instead used to re-build investments over the same period, probably a fine fit for their objectives.
Not everyone sleeps easy with big debt, regardless of how low the interest is.
HERE come the DEBT JUBILEE!!!!
https://www.bnnbloomberg.ca/trudeau-ready-to-open-spending-taps-for-coronavirus-and-beyond-1.1528756
“mortgage-hating mentality”
How true this statement is. Everyone should have a asset/liability working spreadsheet or whatever to keep track of the bottom line. Want to buy a new car?, take a look to see what it does to your bottom line. Need a house?, perhaps a fixer-upper can increase the bottom line a little faster. I always laugh when people say they’re mortgage free as if somehow they’re set for life. All that matters is the bottom line.
No shortage of people with money to invest in a world with a limited range of places to invest with a minimum of risk. The current flavour of the day for inclusion in a balanced and diversified portfolio are funds based on a group of stocks tied to an index.
From my unsophisticated point of view the rapid growth in the number and size of indexed funds in recent years has been a major contributor to the value of stocks within
most indexed funds. As the volume of investment in indexed funds grew the cash reserves held by a number of major companies within indexed funds grew. As cash reserves in these major companies grew these companies became even more attractive to more investors.
The market cap of 7 or 8 major companies within the S & P 500 index equals the market cap of all 30 companies within the Dow Industrial index. The result is that a major contributor to the 6.0% annual growth in indexed funds is investor confidence in the growth of a handful of companies. This is a pretty narrow base for such a high level of confidence.
With more than a trillion dollars sitting as reserves in corporate accounts it might be useful to examine how these funds could invested to stimulate economic growth. Increased dividends and share buybacks will definitely attract more investment but at some point this additional capital must be put to work.
That point seems to have arrived!!
Change is coming in about 8 hours.
https://www.bnnbloomberg.ca/trudeau-ready-to-open-spending-taps-for-coronavirus-and-beyond-1.1528756
Things simply cannot continue as they have been for those born after WWII. The environment, our survival, depends on it.
Be part of the change, Boomers.
Or be run over by it.
@#92 Paul
“wow, trump voters really are r3tard3d.”
+++
Its a good thing you didnt use that word out here in pc central… aka the easily triggered Lower Brain Land.
A local politician has recently been drawn, quartered and roasted on a huge pc bonfire for uttering such insensitive descriptions about media people he considered annoying and biased in their reporting ….
https://dailyhive.com/vancouver/barry-neufeld-chilliwack-paper-retard
Time to censor all the Dictionaries on the planet and all computer spell checks to purge all non pc words.
Its the only acceptable pc option.
Orwell would be proud.
signed,
Ministry of Truth
The complete and utter irony of the Jar Lady spending her entire professional career eschewing debt and pontificating fiscal responsibility…
…yet a good dose of her tweets show she supports the Liberal government.
Mind-boggling.
97 Catalyst on 11.29.20 at 11:26 pm
She’s too liberal for me now, but watching Gail’s jar shows was what got me into personal finance so I thank her for that.
———————-
Me too! Her shows and blog had a big influence on my personal finance journey 10+ years ago. Got my basic financial stuff in order. Greaterfool blog inspired me to start investing so thank you Garth for that!
“Inflation is currently 0.7% in Canada.”
——————————————————————–
Hahahahahahahaha!
I guess it depends what you need to spend your money on.
For example, if you happen to be someone that needs to buy, oh, say, FOOD, the price increases range from 2% to
100%, depending on the item. But food is not included in the magical inflation rate in Canada, I guess.
https://www.producebluebook.com/2020/09/21/produceiq-prices-rise-led-by-lettuce-and-peppers/#
https://tradingeconomics.com/canada/food-inflation
If you happen to need to purchase another luxury, like a roof over your head, it’ll cost you an additional 6% or so, depending where. If you’re in Ottawa, it’ll cost you about 13.5% more. If you’re in the centre of the universe (Toronto), get ready to spend 20% more.
https://www.bnnbloomberg.ca/toronto-home-prices-surge-20-in-august-to-new-record-high-1.1488659
So, you have to eat, and need a roof over your head, both of which cost more than ever. If you have the need to get around town (unless you’re a shut-in), maybe you need a vehicle? It’s a thing.
“Unsurprisingly, every province saw new and used vehicle prices increase month-over-month in October. Manitoba and Saskatchewan recorded the highest month-over-month increase for new vehicles at 6.5 per cent, followed by Alberta at 4.1 per cent and Ontario at 3.9 per cent. Alberta remains the region where consumers can expect to see the highest average price for new vehicles.”
https://www.theglobeandmail.com/drive/mobility/article-in-the-market-for-a-car-see-how-much-it-could-cost/
The “official” inflation rate is a fantasy rooted in deception and manipulation to propagate a biased narrative. The necessities of life cost more than ever.
#30 GTA Renter
People like us just stay hushed because god forbid you don’t cheer for your friends when they drain their RRSPs and TFSAs to buy in one of the most overvalued RE markets on the planet.
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Smart strategy.
It ties into Garth’s advice to tread lightly and live quietly among the masses.
People are increasingly driven by 3 emotions: Greed, Fear, and Jealousy. The latter is the most toxic. Many a friendship is lost when one achieves success in any form.
Best to keep your financial savvy and strength quiet if you want to maintain friendships. People love to pretend that they’re “so happy for you”, but in actuality, they’re eating their insides and seething with jealousy.
Keep a low profile.
#93 Nonplused on 11.29.20 at 10:49 pm
“Trump has lost all significant court challenges for lack of evidence. Stop spending you day on Parler. It’s over. – Garth”
I’m not spending much if any time on Parler, and we shall see. The 5 big data dumps were all 6+ sigma events. That just doesn’t happen by accident.
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Don’t bother trying to convince anyone. If you watch MSM you are totally out of the loop. The MSM is pushing hard and not covering anything properly.
Investigation is not allowed in MSM Journalism now. They just repeat what they are told to say by whoever pays the bills to keep them on the air.
We will see what happens this and next week. But I think it might come down to the DOJ. They are either building a huge case in the background or doing nothing.
I sincerely hope Barr is building a case in the background and it will eventually drop it and blow it wide open.
Its not over yet…. It’s over on Inauguration day.
Then our PM can really press the Globalist Gas Pedal.
Spare us the drama. It’s so over. – Garth
#24 MF on 11.29.20 at 3:33 pm
Honest Realtor on 11.29.20 at 2:22 pm
There are no “suitable houses in affordable locations” anymore. The actual worth of all canadian real estate is about 30 cents on the dollar. There has’nt been since 2009, maybe. Everything is bloated beyond recognition.
MF
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Pure BS. You are focused just on premium areas in Van and TO and are not taking into account how interest rates impact affordability.
I bought my first home in 2005 in the Fraser Valley and due to low interest rates haven’t paid much more then a renter would have in the same areas each and every year. The last house we bought in 2016, in the Okanagan, we paid 200 a sqft and we can walk to the beach, 15 mins from an international airport (I travel 70 days a year including extensive US travel from this homebase). 2 acres. mostly move in ready. 3400 including property tax to carry a place like this, rent would be 3500-4K for same place, if you could find one.
Calgary is a major Canadian city and is dirt cheap, and has been for a while.
Just be honest, you were waiting for places to drop in price so you could swoop in and pick up something cheap. You and others were trying to time the market – you go greedy. I suspect you could have easily afforded a place along the way but you wanted something cheaper.
You buy something and then you pay for it.
Thanks for the blog Garth
I totally agree on a number of things
Women do not like debt. I told about ten guys this story and they all laugh yep that’s my wife.
Luckily for me I have a wife who is not afraid of the stock market, Remember the crash in March I was petrified and wrote on here and wanted to sell! and while Garth made fun of me it was actually good advice and I hung on. My wife’s response to the crisis was oh well it will go back up eventually. Smart cookie! ! Plus she’s a wonderful women and I am a lucky man!
Fast forward to today we have a mortgage coming up for renewal, actually tomorrow and I will post the rate I am hoping to get. Anyway our TFSA are combined $300,000 our mortgage is $250,000. We have debated paying it off.
Luckily for me I said well we made an average of 10 percent per year for the last five years, and if we do the same for the next five years we will have $500,000 and owe $200,000.
Even if I saved all the payments I would not come close to $500,000. Anyway she agreed. Rule of compound interest.
if the blog is here in five years I will report back.
See you all tomorrow I am hoping for a mortgage rate of 1.64 but I think it will be 1.78. The difference is $1,000 over five years.
Cheers!
#111 Gonkman on 11.30.20 at 9:31 am
#93 Nonplused on 11.29.20 at 10:49 pm
“Trump has lost all significant court challenges for lack of evidence. Stop spending you day on Parler. It’s over. – Garth”
I’m not spending much if any time on Parler, and we shall see. The 5 big data dumps were all 6+ sigma events. That just doesn’t happen by accident.
******************************************
Don’t bother trying to convince anyone. If you watch MSM you are totally out of the loop. The MSM is pushing hard and not covering anything properly.
Investigation is not allowed in MSM Journalism now. They just repeat what they are told to say by whoever pays the bills to keep them on the air.
We will see what happens this and next week. But I think it might come down to the DOJ. They are either building a huge case in the background or doing nothing.
I sincerely hope Barr is building a case in the background and it will eventually drop it and blow it wide open.
Its not over yet…. It’s over on Inauguration day.
Then our PM can really press the Globalist Gas Pedal.
Spare us the drama. It’s so over. – Garth
……………………………………………………………………….
Wow, just simply wow. Sei matto!
If the shoe was on the other foot and Biden was screaming that this election was a fraud you would be screaming that he is over the edge.
It is over! BIDEN WON and trump LOST!
Did you inherit a Tin Foil Hat with MAGA on it?
Biden ha vinto e Trump ha perso!
@#105 Millenial Denialist
“Be part of the change, Boomers.”
+++
If “change” is punitively higher taxes tacked on with unaffordable national child day care, pharmacare, assisted living care, homeless housing care, aka Hundreds of $$$$$ billions in promises…… I’ll pass.
You can pay the piper for the next 4 decades with Canadian pesos.
‘The “official” inflation rate is a fantasy rooted in deception and manipulation ….’
that make it harder to get ahead financially, for anyone on pension. Ever heard of “adjusted for inflation”.
Excellent post Garth. Thanks eh
With the avg Canadian owing approximately $1800 for every $1000 they bring in and rising yoy – sounds like the only thing most can invest in is their debt.
330 Million people, most sophisticated country on the planet and Trump/Biden is the best they can produce? That is embarrassing and pathetic or on purpose.
Shout out to the ultimate anti-Venus, Minister Freeland. First economic update, min $450 Billion deficit. #nofear
The campaign, which launched in Vancouver and around the province, features large black signs with bold, white lettering that asks, “Am I racist?” One sign reads, “If I say I don’t see skin colour, am I racist?” Another encourages people to ponder the question: “If I want to forget our province’s history, am I racist?”
1.) Am I racist? A: I am white, so by current definitions, that makes me racist.
2.) If I don’t see skin colour, am I racist? A: That’s a good question for John Horgan.
3.) If I want to forget our province’s history, am I racist? A: Our province’s history has NEVER been accurately told and I am censored at every turn when I post my research findings about it. My qualifications are attacked and I am attacked on a personal level simply for reporting my findings. I would have to say it is the anti-racist left who are trying to forget BC history and trying to rewrite BC history or trying to prevent it from being accurately written in the first place.
This is absolutely disgusting. What are the BC NDP doing? Trying to provoke a race war? Tensions are high as it is and the white working class couldn’t be more demoralized. This is poking the bear. Absolutely sickening.
https://vancouversun.com/news/local-news/new-anti-racism-campaign-urges-vancouverites-to-ask-hard-questions
Thank you for today’s blurb in the blog. Easily my dear wife’s name could be inserted. You made it perfectly clear about not hating and fearing debt but how to use debt and time wisely to manage and create wealth—as well as killing debt wisely. Every fearful wife should real it.
#105 Millennial Realist
The environment, our survival, depends on it. [….]. Be part of the change, Boomers.
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The environment has always been ready, willing and able to eat you for lunch. Boomers (and several generations before them) have done much to mitigate the cruelest consequences of physical existence. You are enjoying the result as we speak. Show a little gratitude.
TSX starting to unload hours before Chrystia announces a much higher deficit that previously predicted and much much much higher taxes to pay for it.
Why are they announcing this at 4pm Eastern Time?
So the press cant roast them until tomorrow?
Delaying the inevitable is a tad ridiculous at this point.
Spare us the drama. It’s so over. – Garth
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Could be.. We shall see.
I didn’t bet against the US Stock market under DJT. I also won’t bet against DJT losing this election from what I have seen even if the MSM is ignoring it.
If I am wrong I will admit I was wrong on Jan 20th.
If I am right I get to say I told you so.
Now lets see what our Deputy Prime minister announces today. Woo hoo 7% GST here we go.
Excellent straight forward common sense comment, Garth. It has a hole in it as noted by #25 Indigirl. “Now, what if the $307,000 this person possesses in liquid wealth were invested, instead of thrown at debt reduction?” The problem with this question is that it assumes you have the cash to do so. Most take on a mortgage because they simply don’t have the cash, but the point Garth makes is still quite valid. Borrowing rates are so low, consider inflation and such, the money (if you can get your hands on it) is damn near free.
A wise nephew bought his first home this last week, a douplex with separate titles, a 70’s 2800 sq ft’er for $250k. If/when the market improves, he can take a cap gain selling one side or both and shove that money into investments, or eye other revenue earners for bargains. Either way, he’s on his way.
But RE and access to capital is not on my mind this morning. This morning, its investing. Moderna as we all know, is one of CNBC’s lead stories this morning to start the markets right footed. (94.5% efficacy!) How long does it work for? We don’t know. “The company said 185 cases of Covid were observed in the placebo group versus 11 cases observed in the group that received its vaccine. That resulted in an estimated vaccine efficacy of 94.1%, the company said.” Extrapolated from 11 cases. Huh.
https://www.cnbc.com/2020/11/30/moderna-covid-vaccine-is-94point1percent-effective-plans-to-apply-for-emergency-ok-monday.html
Here’s what’s wrong with that. (besides 11 mere cases used to extrapolate 94.5%) “Moderna said the vaccine’s effectiveness was consistent across age, race and gender. The 196 confirmed cases included 33 adults over the age of 65 and 42 people from Black, Latino and other “diverse” communities.” 33 adults above the age of 65 is representative. However, 42 of skin color out of 196 is not. 37% of the U.S. population has color. 42 of 196 is 21.4%, clearly not representative of the gen pop. Why is this such a big deal? See it for yourself:
https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-discovery/hospitalization-death-by-race-ethnicity.html
It’s not just demographics by skin color that Covid19 numbers bump higher btw, its coastal areas where the consumption of seafood is high (seafood contains ample amounts of Vitamin D and Zinc). Of course, vaccine manufacturers know this. They know too, that the elderly are more prone to Covid19 for various reasons. Oxford/AstraZenica’s 90% result on one set of testing for example 2 weeks ago, did not have participants over the age of 55. Accidental?
Meanwhile, both Moderna and Pfizer are not swabbing their trial participants. (Oxford/AstraZenica did) Why would this be? Why wouldn’t vaccine manufacturers want to know, say, the percentage of asymptomatic participants out there, or the true percentage of those with mild but unreported symptoms? Why wouldn’t these American vaccine manufacturers want to know that? What are they doing, infecting everyone?
Anti maskers, anti vaxxers, I suppose I’m not helping here with back of the napkin modelling and juxtapositions myself (as if other investors don’t), but neither is Pfizer and Moderna. It’s not just the CEO cashing in on his own CNBC same day hype (62% of his shares sold same day he’s telling the masses its the biggest medicine breakthrough in 100 years), or the ridiculously small sample sizes market carney barkers lead 90%+ efficacy stories with, or the obvious skewed trials to created biased results, plus, it really is the hurry and rush.
I will remind (ok, haven’t gotten to this part on this blog yet), mRNA vaccines are at the beginning of DNA sequencing. The drawback to the use of mRNA as the genetics of choice for decades has been storage, for one. If one gets around the storage hurdle, you can shave a few months off of the rollout basically and when we look at the timeline the FDA and government has to work with in vaccinating the masses before the next flu season arrives, its tight. The Libs just announced it will be September before its rolled out here, as an example.
However, Oxford/AstraZenica is a DNA platform. North American media has egged them for their “inferior” 70% efficacy (for 3$ to 5$ a vaccine I might add, its cheap) but do we really know how well Pfizer & Moderna’s claims are going to hold up? We do not. On the contrary, they’ve given the market place plenty of pause to believe much of anything they say right now at least, for those who look at why. Btw, Pfizer spends more money lobbying U.S. gov than any other drug maker. Do I need to repeat that? Guy’s like Scott Gottlieb don’t end up as FDA commissioners and directors of Pfizer by accident either. Strenuous times, I get it but there is still plenty of reason to question the results of these trials:
https://en.wikipedia.org/wiki/Scott_Gottlieb
can we redo the math taking into account the added savings over the same period?
The money used previously for the mortgage could go towards that.
To ‘Stoph’, ‘GTA Renter’ and ‘Talking Pie’ – thanks for feedback, reassuring to know that investing the difference isn’t just a myth:)
Vancouver Condo Info blog has deleted ALL of my comments and all responses to my comments. So that means the comment in which SIDA referred to crowdedelevatorfartz as a “white supremacist”. I was having a good discussion over there. They were assuring me they weren’t going to censor me again. Then poof. All my comments from the past few days are gone. I face total censorship. Please don’t censor this comment.
Looking forward to writing my column.
437 billions predicted deficit.
Cheers,
These financial breakdowns are my favourite posts of yours (that don’t include dogs)
Great lessons Garth!
Gonkman, 7% GST, not that low. They are going to push it up to 10%, so here in Ontario HST 18%, 19% to 20% HST in many other provinces.
The Trudeau, Freeland Liberals will double the GST from 5% to 10%. It may take 2,3, 4 years who knows. Don’t forget about the 2 new carbon tax increases already they did.
Gail Vaz Oxlades twitter is so dumb I feel worse for reading it. Some twice divorced, once separated “empowered” woman talking like she knows it all. What a twit. Too bad really, I did buy one of her books and enjoyed it.
A real life situation… my mom is 86. Has lived in a sweet little townhouse in tony Kitsilano in Vancouver for 38 years. To make ends meet she did a small reverse mortgage, tapped her wealthy kids for big ticket items. But it worried her. Taking on debt and being frugal at 86 had lost its lustre. So in August she listed, sold in a day for a cool million. With some guidance from me she has paid off the bank, paid back the wealthy kids, got a TFSA and filled it up, and has a portfolio of ultra conservative retirement ETFs with a couple of bank stocks, and now has a big chunk of cash. She rents in the same complex, but has no complex about being indebted to too many people. By my calculation her new wealth will last her a very long time – even with her new-found spending spree habits. Sadly she’s discovered Wayfair and Amazon. But the delivery guys now know her by name. Great advice today, Mr. Turner. As always. Do you have a tip jar?