The contest

Populated as it is by cowboy astronaut warrior microaggressive cisgendered Alpha males, this blog’s comment section bristles with competition. The stock jockeys arrive to belittle to ETFers. The Bitcoin turks and bullion lickers show up to dis fiat money-holders. Everybody piles on the GIC wimps. And, right on cue, the 20x-leveraged property pimps strut and preen with each real estate board report.

But wait. Is any of this healthy? Is investing really a contest?

Of course not. In endless, boring, nauseating posts this site has said people should buy houses if they need one and can afford it without gutting personal finances or putting a family at risk. We’ve also reminded you of the greatest risk – running out of money, not losing it. And this: you can always rent a roof, but never can you lease cash flow. Remember these things. Then find the path that best suits your life, job, obligations and heart.

Having said that, let’s tackle one myth – that buying a house in a hot market always beats investing in a boring B&D financial portfolio. Comparisons are dangerous. After all, you can live in real estate and harness huge debt to own it. But it costs a ton to carry – financing, property taxes, condo fees, maintenance, insurance and large acquisition and selling charges. A portfolio of ETFs usually involves little or no leverage. You can’t inhabit it, either. But the ownership costs are negligible. Both a house and a portfolio can yield tax-free gains.

They’re wildly different things. Only a fool would dare compare. So let’s do it.

The GreaterFool B&D, all ETF-based, hormone-free portfolio of 40% fixed income (safe) stuff and 60% global growth assets has a 10-year track record of 7.1%. (Actually higher because of the last six months, but we’ll stick with the conservative number.)

This means $500,000 invested in 2011, with no income taken, no more cash invested and routine rebalancing, would have grown to be $992,806. If the funds were in RRSPs, RRIFs, TFSAs or other registered accounts, no tax would be payable in this period. So over the decade, total growth equals 98.5%. Embedded fund fees and occasional trading costs would be minimal.

How about a Toronto property? This is now the sexiest real estate market in the country. The Covid rush and mortgage rate collapse resulted in the greatest price gains in Canadian history. Surely it would cream the performance of a basket of exchange-traded funds.

Let’s see. The average 416 property cost $536,128 in 2011. Last month that had climbed to $1,136,280 amid bidding wars, extreme increases in household debt and overt speculation. That’s a 10-year gain of 120%. So real estate wins! Sucks to Garth!

Whoa. A more accurate comparison would reflect that buying that property in 2011 involved paying land transfer tax of $14,400, raising the invested amount to $550,528. Additionally, the increase in equity cannot be realized without turning the asset liquid, which involves a 5% realtor commission. So the realized value after a decade would be $1,079,466, for a 10-year cumulative gain of 96.07%. Ooops. B&D takes it.

Now, remember. Contests like this are odious, misleading and silly. Real estate provides shelter. Financial assets give you money to live on. In an ideal world, you should own both. And let’s not forget current conditions won’t last. Interest rates will augment – reducing bond prices and hiking mortgage rates. Current tax levels will not be maintained – short-term real estate ownership will be penalized and capital gains inclusion rates may increase. Inflation’s a wild card impacting the cost and value of all assets. Meanwhile pensions are eroding for most people and the pandemic has swollen both house prices and job insecurity.

So, it’s not really about who wins the most. It’s more about who best corrals risk. Being leveraged is risky. Believing loan rates will never rise is a risk. Flipping stocks is pure risk. Not investing, failing to use your TFSA or putting your family’s future ahead of your own greed (a house instead of RESPs) brings risk. Taking your investment (or vaccine) advice from some dude on Facebook, MSM media headlines, Re/Max ‘reports’ or a pathetic blog is risky. FOMO brings the ultimate risk, and sadly it’s everywhere these days.

So keep in mind there is no correct path forward. No silver bullets are left in the chamber. There’s no shame in renting. No intrinsic glory in owning. No wisdom in timing markets. And everybody – bar none – needs liquid wealth as the years peel away. So, keep yer pants on.

About the picture: “This is the latest addition to our family, Mabel,” writes Dan. “At just about 5 months old she shows us every day what it’s like to be thankful for the joy of living! This little Beagle sees every moment as a new adventure! We should all learn to live in the moment like she does. Time is the most precious commodity of all!”

189 comments ↓

#1 Dirty Dan on 10.13.21 at 12:16 pm

Why do you keep saying inflation is bad Garth. The man from the newspaper says inflation is good AND we need more of it.

https://www.washingtonpost.com/business/america-needs-higher-longer-lasting-inflation/2021/10/11/af2728e4-2a86-11ec-b17d-985c186de338_story.html

“America Needs Higher, Longer-Lasting Inflation”

“The benefits of moderately rising prices and wages outweigh the costs.”

You need to re-adjust your opinion please and thank you.

I mean, the newspaper man is right about politics, covid and everything else. Why would they lie about this — unless you’re some kind of contrarian conspiracy nut.

#2 Millennial 1%er on 10.13.21 at 12:23 pm

That’s really great garth but I’m going to just keep on buying vgro

money’s not even real anyways

#3 Dogman01 on 10.13.21 at 12:43 pm

Tom Mulcair: Freeland positioning herself to take over as Liberal leader:
https://www.ctvnews.ca/politics/tom-mulcair-freeland-positioning-herself-to-take-over-as-liberal-leader-1.5619685

In essence perhaps Trudeau’s “walk on the beach” was his version of the “walk in the snow”.

Freeland showing up at announcements that have nothing to do with her Finance Portfolio.

A press campaign of image enhancement appears to be underway, as we saw with Freeland Super-Spy “007 From Russia with Love” article last week in the G&M.

Now Freeland may be better as she is from Alberta – which likely means she understands working is actually how you pay for things.

Like Millennials, she needed her parents help to afford a home. https://ipolitics.ca/2013/10/15/chrystia-freeland-defends-1-3-million-home-purchase/

Her Plutocrats book unfortunately was a little ‘fawning” of the super rich. However there was some insightful analysis http://thediagonal.com/2012/10/21/la-serrata-why-the-rise-always-followed-by-the-fall/

#4 Mike in Calgary on 10.13.21 at 12:51 pm

With the real estate you didn’t mention the ongoing maintenance and repair costs that ownership requires. Carpets, fences, roof shinges, furnaces and everything else has to be looked after. Real estate is a capital asset and those assets need to be maintained. Every house I’ve ever owned has cost me $5K – $10K each year for these things. Some years it’s nothing. Other years…wow!! Renters just have to call the landlord for those things.

#5 Felix on 10.13.21 at 12:54 pm

Only one contest matters, and the results are always the same.

Cats win.

Dogs lose.

#6 XGRO and chill on 10.13.21 at 12:57 pm

Such is the nature of discourse online. People state opinions or facts. Then other people reply, with the sole intention of making them look stupid, or to prove them wrong. Everyone wants to look like the smartest guy in the room, to a bunch of strangers they’ve never met, on a topic they don’t even really care that much about.

If you really are happy with your life and the decisions you’ve made, you don’t feel any need to go flaunt it.

#7 John on 10.13.21 at 1:00 pm

Love the sanity!

No right answers, no silver bullets.

You can always rent a roof, but never lease a cash flow.

Time to corral me some risk!

#8 TurnerNation on 10.13.21 at 1:04 pm

Food price inflation – in the past month, I’ve seen:
Store-made 3 bean chilli +11%
Locally made organic paste sauce blend +17%

— For the #YieldHounds. AT&T stock pushing lows, yield over 8% USD.


— There is no more News only the manufacturing of Consent.
Everything that is being done it to induce our helplessness – to the global nanny state.

It was already announced the Fed paid Big Pharma tons for tend of million of “shots” into 2022-23.
Are you surprised that the ‘news’ poll is going this way?

https://www.ctvnews.ca/health/coronavirus/majority-of-canadians-interested-in-receiving-a-covid-19-booster-shot-nanos-1.5613214

— This global WW3 is for our Minds. It is not meant to be won. Into the 2030 #reset.

.Meandering facts and directives on COVID are sapping public trust (nationalpost.com)

…………
— Yesss. This is Normalcy in Kanada! Old men driving busses & trains. Sounds safe.

https://archive.is/dasyz
“The TTC is eyeing bringing employees out of retirement in case the vaccine mandate deadline causes a labour shortage”

#9 Blacksheep on 10.13.21 at 1:06 pm

“Ooops. B&D takes it.

Now, remember. Contests like this are odious, misleading and silly. Real estate provides shelter.”
————————————————-
Garth, you add a minuscule $14 K in land transfer fees, in your “silly” calculations, but only mention “Real estate provides shelter” negating the real world cost of housing for a 10 year period while your diversified portfolio builds wealth. You know, to at least try to offer some semblance of balance.

Reality: $ 2K a month rent x 120 months = 240K

#10 Evanne on 10.13.21 at 1:07 pm

Ahh but Garth forgot to mention one asset is based on scarcity (Land & the real estate it is on) while the other is not (stocks/ETF etc)

You cannot grow more land in the GTA/GVA but companies & ETF can issue more shares.

This means in the long run, land price will always go up more than inflation than say stocks.

It’s only going to get worse from here onwards.

History proves you wrong. – Garth

#11 Wrk.dover on 10.13.21 at 1:18 pm

#141 Don Guillermo on 10.13.21 at 11:32 am

I went to a seminar a few years ago in Maz on this. We’re looking to move from our condo to a house and I’m interested in solar for pool heat
__________________________________

A couple hundred feet of black plastic pipe belayed on the roof, spliced into the filter pump flow.

And done!

Also here is a song for your Mexican hideaway.
https://www.youtube.com/watch?v=gNcwBRMdjmc

#12 Wrk.dover on 10.13.21 at 1:24 pm

Balanced and diversified means what it sounds like.

Includes house, toys, tooling, big cash float and yes, a handsome investment portfolio with a professional advisor affiliated with a name brand company.

All of this, no matter how modest in scale.

#13 Dolce Vita on 10.13.21 at 1:35 pm

…or

in 2011 you bought $500,000 of VOO*, reinvested the dividends and ended up with in 2021:

$2.17 million.

15.8% annualized return. Total return 323%.

Ooops. VOO takes it.

——————–

* Vanguard S&P 500 ETF Current AUM US $252,984,000

What do you not understand about ‘balanced and diversified’? It’s not a race. – Garth

#14 Sail Away on 10.13.21 at 1:37 pm

#11 Wrk.dover on 10.13.21 at 1:18 pm
#141 Don Guillermo on 10.13.21 at 11:32 am

I went to a seminar a few years ago in Maz on this. We’re looking to move from our condo to a house and I’m interested in solar for pool heat

———

A couple hundred feet of black plastic pipe belayed on the roof, spliced into the filter pump flow.

———

Simple and elegant. Avoid two unnecessary conversions.

#15 Overheardyou on 10.13.21 at 1:45 pm

Would it be fair to say, owning a paid off real estate then borrowing against it when you’re older counts as cash flow? Cause when you’re gone and you have no dependants you’ll have no worries

#16 Ryan on 10.13.21 at 1:46 pm

Blockchain technology is eating the world in a similar fashion to how the internet and software did from the 90’s onwards. Real Estate will be tokenized and banks will have to either adapt or die.

BTC will break $100K USD by the end of the year (before a heavy correction takes place). It will continue to be the best performing asset class for those with the stomach for volatility.

Until it crashes again. – Garth

#17 Jay on 10.13.21 at 1:57 pm

I win everyday week by not playing $50 a week on the lottery like some of my bonehaed friends. I also win everyday I save my $400 a week put in my RRSP, TFSA, non-registered account discount brokerage account filled with strip bonds, reits’,GIC’s. Contests are for losers.

#18 Mean Gene on 10.13.21 at 2:00 pm

A lot of people like to keep things super simple and avoid taking any risks, too bad, life is about variety.

There seems to be a general decline in each generation’s standard of living as time goes on.

Looking strickly at the following, at one time families were large and only one parent needed to work, then the next generation, both parents worked and had less children, then it renting out the basement became common, now… whatever.

#19 alexinvestor on 10.13.21 at 2:08 pm

As someone mentioned, once you add in rent the GTA house beats the B&D portfolio, but loses to the S&P index which loses to bitcoin. The correct answer might to own a piece of everything (from B&D to art to RE to bitcoin), but that is hard for non-multi millionaires.

For us commoners … the best investment is delaying CPP if you work. Roughly worth 5%+inflation (ie if inflation is 2%, you get 7% return) GUARANTEED. Worth it to draw down the B&D portfolio to delay CPP.

Wrong answer. – Garth

#20 TurnerNation on 10.13.21 at 2:15 pm

— Normal is almost here! Think 2022-23. Likely 2025 in a full reset (UBI, ‘Climate Action’) etc).
One you get that to our global rulers WE are the virus to be contained, via control over our Feeding, Breeding and Travel/Movements this all makes more sense. ”

.’Additional measures’ may be coming to slow COVID spread in northern B.C., says Henry (cbc.ca)

—–
— Life in Kanada. Our Leaders. The new Pres at Public Health is a Vet. A Veterinarian. Come again?
(I did say our rulers see us as cattle…Moo.) Seen elsewhere:

Dr. Harpreet S. Kochhar, currently Associate Deputy Minister of Health, becomes President of the Public Health Agency of Canada, effective October 12, 2021.

https://pm.gc.ca/en/news/backgrounders/2021/10/08/dr-harpreet-s-kochhar
“Education
Doctorate in Animal Biotechnology, University of Guelph
Master of Veterinary Science, Punjab Agricultural University
Bachelor of Veterinary Science, Punjab Agricultural University”


Control over our travel. Check.

.Malfunctioning NHS app for Covid vaccine status causes travel delays (theguardian.com)

#21 Ryan on 10.13.21 at 2:17 pm

Yes, as I mentioned in my comment (before a heavy correction takes place).

Due to the halving cycles, the 70%-80% drawdowns are part of the game. The volatility is the price paid for extreme appreciation in fiat terms. This appreciation will continue; we have JPow, Yellen and co. to thank for that.

I own real estate, have a B+D portfolio, maxed TFSA’s and RRSP’s, and agree with most of your sentiments on this blog but believe strongly that those with no Bitcoin or crypto exposure will be at a significant disadvantage in the future.

I write this purely for posterity; my naivety does not extend to the point that I believe a comment on a blog would change minds.

Time will tell.

#22 Ponzius Pilatus on 10.13.21 at 2:24 pm

It’s no competition.
But punching down on the “loser” renters is half the fun of “owership”.

#23 Mattl on 10.13.21 at 2:24 pm

The GreaterFool B&D, all ETF-based, hormone-free portfolio of 40% fixed income (safe) stuff and 60% global growth assets has a 10-year track record of 7.1%. (Actually higher because of the last six months, but we’ll stick with the conservative number.)

————————————————————–

Is the 7.1% net fees? I ask because you say the costs to carry an ETF portfolio are negligible, but after fees that is closer to 6.1%, or 15% of the return. Every year.

And the SP over the same period returned nearly double.

Hey, you made this a contest, and if it is one, the clear winner is a low cost SP500 ETF held long term, fed regularly.

My strategy is to hold RE, a slightly unbalanced ETF stack and buy blue chip equities when they go on sale. Rebalance all three annually. So I have been paying attention somewhat!

Everybody’s a cowboy, until they get scared. Good luck with that strategy. As for fees, returns are always posted before any fees, since tax-deductibility depends on personal income. – Garth

#24 Philco on 10.13.21 at 2:24 pm

I wouldn’t trade my house for anything.
Its ours, custom rebuilt by me. It cozy, a nice fire insert. 10 cords of wood in the shed. Nothing like a fire on the cold wet winter day. Huge custom kitchen as we love cooking.
There’s a certain amount of pride in home ownership for people. Its different when its yours.

But I totally agree….keep your B&D and your house.
It really doesn’t matter to me about which direction the next move is on anything is. Just don’t be choking on debt and bills.
Make sure you have head room for rising prices on soup to nuts and your home insurance.

And a hard knock is a possibility. Canada is the # 1 bubble.
https://jugglingdynamite.com/2021/10/13/canada-leads-in-worlds-most-unsustainable-housing-bubbles/

#25 bdwy on 10.13.21 at 2:28 pm

#70 Jo on 10.12.21 at 6:51 pm
Off topic, but can someone on the blog recommend a good place to get home insurance in BC. Both rural and city. We are claims free, but live in older homes. Need an insurer that has some common sense and looks out for us instead of the underwriter. Thank you.

—————
square one.

the only one to let you adjust coverage amounts of possessions. saved us 60%. all others will screw you.

#26 That guy on 10.13.21 at 2:28 pm

I haven’t seen you talk about this Garth but I feel that it merits mention: the Canada Child Benefit, also called CCB. With 3 kids I am eligible for a LOT of CCB. Any RRSP contributions reduce my income, thereby reducing the CCB clawback. So add in another 19% or more to the returns for RRSPs. Another win for the investors! Working at a job seems foolish, working at the tax and benefits system seems to be much more efficient.

#27 Sail Away on 10.13.21 at 2:29 pm

#13 Dolce Vita on 10.13.21 at 1:35 pm
…or

in 2011 you bought $500,000 of VOO*, reinvested the dividends and ended up with in 2021:

$2.17 million.

Ooops. VOO takes it.

——

…or

in 2011 you bought $500,000 of TSLA and ended up with in 2021:

$84,359,639.62

Can’t believe everyone didn’t do that. Bunch of dummies.

#28 Deanna on 10.13.21 at 2:33 pm

I don’t know if anyone heard this or if will be true but my friend who is a liberal in the party know guy said The Liberals, Federal Liberals, Freeland, Trudeau are going to get rid of tax deductions for interest paid, borrowed to invest and start allowing reverse mortgage payers interest tax deductible every year.

#29 Mattl on 10.13.21 at 2:33 pm

#9 Blacksheep on 10.13.21 at 1:06 pm
“Ooops. B&D takes it.

Now, remember. Contests like this are odious, misleading and silly. Real estate provides shelter.”
————————————————-
Garth, you add a minuscule $14 K in land transfer fees, in your “silly” calculations, but only mention “Real estate provides shelter” negating the real world cost of housing for a 10 year period while your diversified portfolio builds wealth. You know, to at least try to offer some semblance of balance.

Reality: $ 2K a month rent x 120 months = 240K

————————————————————–

I’d say your rent scenario is low, by close to half if we are talking SFH. That would get you a basement suite in most places where the homes are 1MM+

My mortgage is a little under 2800 a month. Comparable rent would start at 3.5K and I’d expect to land around 4K if I could even find something. So 350-400K rent cost over the decade for my family. Can’t sleep on how hard rentals are to find, and how they tend to cost MORE then a mortgage for most families.

You need to add the missed opportunity cost of your equity to your mortgage payment. Plus property tax, insurance, closing costs and maintenance. Homeowners have turned into such liars lately. – Garth

#30 Shawn Allen on 10.13.21 at 2:34 pm

In Praise of DB Pensions

We’ve also reminded you of the greatest risk – running out of money, not losing it.

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

For that reason having a safe (government) or extremely strong corporate (think bank, utility or railroad) Defined Benefit in the mix is real nice for most people.

Ideally it should only be part of the mix. But you can’t outlive such a DB pension and that’s nice. For that reason, I am very leery of anyone advocating commuting a pension. And not taking CPP before 65 also seems wise to me. Exceptions occur for those with short life expectancies.

Of course you can run out of a DB pension. Ask a widow. Commuting makes great sense for the continuance of full family income after the death of a spouse. – Garth

#31 Mattl on 10.13.21 at 2:45 pm

Everybody’s a cowboy, until they get scared. Good luck with that strategy. As for fees, returns are always posted before any fees, since tax-deductibility depends on personal income. – Garth

——————————————————–

Didn’t say it was for everyone, and risk / reward depends on the individual.

What is cowboy about buying the whole index, contributing regularly and holding / buying through relatively short term events?

I’m not going to give up half my return to feel slightly more safe through the next downturn. Lots of evidence that central banks will step in and save the markets every time they go bump.

You are always bullish long term on CDN and US markets. If you think there is serious systematic risk I’d be interested in hearing that.

How many posts do I have to write about balance? I give up. – Garth

#32 Joseph R. on 10.13.21 at 2:49 pm

#1 Dirty Dan on 10.13.21 at 12:16 pm

“I mean, the newspaper man is right about politics, covid and everything else. Why would they lie about this — unless you’re some kind of contrarian conspiracy nut.”

———————————————————

Read the small print:

“This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Karl W. Smith is a Bloomberg Opinion columnist.”

Since you are not aware the is a difference between an columnist and a reporter, here is the Britannica explanation of a columnist:

https://www.britannica.com/topic/columnist

#33 ElGatoNerodeYVR on 10.13.21 at 2:55 pm

I don’t know about that conclusion that B&D is better. Basically after 10 years the overall $ value was the same .
Now we can all agree that propert taxes ,maintenance a.s.o (cost of carrying the house) are at worst the same as rent ,realistically much lower( unless you are the dude that buys an old beater and spends 10K almost every year on maintenance, basically rebuilding the house a bit at the time ,most of us will spend almost nothing in the first 8 -10 years ) .
So other than the liquidity issue owning is actually better if the market goes up or stagnates as you build more equity. If you own for over 10 years without a market crash or significant correction you are golden.
If the market corrects, as long as you can afford to carry the house and have time to wait it out ..who cares how much the assessed value is.

#34 Danger Dan on 10.13.21 at 2:57 pm

My favorite Garthism remains this one:

“You can rent a roof, but you can’t rent cash flow.”

Or something to that effect. It’s true, and timeless.

#35 F Cook on 10.13.21 at 3:00 pm

“#5 Felix on 10.13.21 at 12:54 pm
Only one contest matters, and the results are always the same.

Cats win.

Dogs lose.”

I once heard on a podcast someone describing cats as offering more of a non-intrusive companionship compared to dogs, which offer more in-your-face enthusiasm. So just like a balanced and diversified portfolio, I got both :)

#36 Shawn Allen on 10.13.21 at 3:01 pm

Can you run out of a DB Pension?

Of course you can run out of a DB pension. Ask a widow. Commuting makes great sense for the continuance of full family income after the death of a spouse. – Garth

************
I am talking about safe DBs from government and extremely strong corporations.

Most DB pensions give a choice to remain unchanged on death of the first spouse or to reduce by a third. None allow the pension to end on the death of a pensioner who had a spouse when the pension was set up unless that spouse signs a waiver.

You’re the one who just said running of money is the biggest risk and no government DB pension runs out before the pensioner dies and they ALL allow protection for any spouse who was present at the time the pension was set up. That is simple fact to the best of my knowledge.

Maybe ask a widow whose husband commuted the pension and lost it. Surely those widows exist?

Anyone who is ever advised to commute a pension, please get a second opinion from a neutral party. There are cases such as terminal illness where it would indeed be very wise. But be careful. Commuting a pension is not for your average person.

Be careful with broad statements. Many very stable DB plans (such as Canada Post) offer a survivor benefit of 50%. Big haircut. Taking the commuted value into a pensioner’s own hands can result in substantial benefit to the family unit long after death. It’s not just about you. – Garth

#37 the jaguar on 10.13.21 at 3:01 pm

Garth. About those silver bullets. Allow me to develop their true purpose.
We given only ten and they must be used cautiously and judiciously. The injustice must be grave and unforgivable. Of course this allows many minor indiscretions to be overlooked as time goes on and the years pass by, but we save them for those who deserve them. One can make a note of who received which one in the chamber if you keep a diary. Doesn’t matter that they are only imaginary. In your heart you know who you plugged. Hi Ho Silver!

#38 George on 10.13.21 at 3:07 pm

That Guy, I don’t understand. In order for you to have an RRSP, you had to have had earned income, working, employment income. This is means you work or have worked. Also, kids do grow up and the child tax benefit will run out and your RRSP will be taxed in the future likely higher tax rates.

#39 Lottery Winner on 10.13.21 at 3:09 pm

#17 Jay on 10.13.21 at 1:57 pm
I win everyday week by not playing $50 a week on the lottery like some of my bonehaed friends. I also win everyday I save my $400 a week put in my RRSP, TFSA, non-registered account discount brokerage account filled with strip bonds, reits’,GIC’s. Contests are for losers.

____________________________

Poor Jay. You obviously don’t realize how the lottery system is gamed, and therefore how to game it for yourself.

Since 1988, my lottery winnings, including reinvestment of prizes in B&D portfolios, has yielded net worth of over $7.2 million for my family. And this is from spending only about $350 weekly.

But I understand, if you are not able to tackle Grade 12 math, it might not work for you…..

#40 Flop… on 10.13.21 at 3:15 pm

DON on 10.13.21 at 12:19 pm

Don talking to Ponzie on the previous thread.

“Can you provide some insight here? I have been following this wunder kid since his first got elected but don’t have the eyes on the ground perspective.”

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

Ponzie as a source of information?

I don’t know what sort of Proprietary Blend I would have to be on to think that was a good idea.

Maybe the best insight he can give is when the Austrian Social Club in Richmond is going to open back up…

M47BC

#41 Don Guillermo on 10.13.21 at 3:18 pm

#11 Wrk.dover on 10.13.21 at 1:18 pm
#141 Don Guillermo on 10.13.21 at 11:32 am

A couple hundred feet of black plastic pipe belayed on the roof, spliced into the filter pump flow.

And done!

Also here is a song for your Mexican hideaway.
https://www.youtube.com/watch?v=gNcwBRMdjmc
**************************************
#13 Sail Away on 10.13.21 at 1:37 pm
#11 Wrk.dover on 10.13.21 at 1:18 pm
#141 Don Guillermo on 10.13.21 at 11:32 am

I went to a seminar a few years ago in Maz on this. We’re looking to move from our condo to a house and I’m interested in solar for pool heat

———

A couple hundred feet of black plastic pipe belayed on the roof, spliced into the filter pump flow.

———

Simple and elegant. Avoid two unnecessary conversions
***************************************
True, my plan for hot water are these types of collector pkgs sized for my needs. Neat and tidy installation.

https://www.solarenergymexico.com/solar/solar-hot-water-heaters-and-solar-collectors-for-swimming-pools-in-mazatlan/

And for power generation a separate pkg like this.

https://www.solarenergymexico.com/solar-panel-equipment-mexico/

Hey Wrk.dover. Thanks for the tune. Love it!! I’ll blast it around the pool when I get settled in.

#42 Ace (in the) Hole on 10.13.21 at 3:25 pm

Garth,

Full disclosure. I am an ETF man and love the flexibility and liquidity it brings. So I am 100% with you on this.

However, I do believe housing wins hands down. The reason being is that one only puts down a 10% downpayment on a house and any gains should be calculated relative to this amount rather than the entire cost. Yes, you must pay interest on the loan amount, but at these rates, it’s not even close.

I know that this money is highly leveraged and it can easily go either way, but one has to admit it has been a winner this past 15 years. And the gains are tax-free.

Hindsight is 20/20 and past performance is no guarantee of the future. Both for housing and ETFs!

#43 Habitt on 10.13.21 at 3:27 pm

18 mean gene Yep only one parent had to work. Average house size 800 sq/ft and no garage or finished basement. That’s too small for a starter home now. We are now all entitled. NP government can bail us all out. You bet there’s a difference. Lol

#44 Daniel on 10.13.21 at 3:46 pm

With all due respect, I disagree with the methodology in this post. I say this as someone who has chosen to rent and invest instead of own. If a “rent and invest” vs “buy” scenario as described in this post is compared based on all real world factors, the “buy” case is far superior over the past 10 years. That does not mean this will be the case going forward, since the lowering interest rate effect has largely played out.

The REAL WORLD outcome based on the assumptions in this post and as listed below is $736k net worth for “buy” vs $247k net worth for “rent and invest” at the end of 10 years.

Assumptions for “buy” case: 500k house purchase, 20% down, 30 year amortization, 7.8% annual home price growth, $2500/year starting maintenance with 3% inflation, $3500 starting property taxes with inflation, $1200 starting home owner insurance with inflation, $15000 buyer fees, 5% selling fees

Assumptions for “rent and invest” case: 7.1% investment return on down payment AND on the entire difference between home carrying costs and renting costs, $1800 starting rent (comparable to 10 years ago), 3% annual rent increase (similar to all inflation adjustments) and $250 annual starting tenant insurance.

Other assumptions: the “buy” case is a primary residence and gains are tax free. In order to compare the “rent and invest” case the investment gains were assumed to be totally tax free, as though the could all be invested in a TFSA. In reality any RRSP investments would be taxed at withdrawal but offsetting this would be a tax return; for comparison purposes RRSP taxes at withdrawal and RRSP returns were assumed to cancel.

Therefore based on Garth’s assumptions in the post and real world factors as described here, buying has beaten investing by roughly 736k to 247k net worth at the end of 10 years, or a factor of nearly 3 to 1.

I expect the next 10 years to be very different though.

#45 AM in MN on 10.13.21 at 3:47 pm

Garth,

I realize you know your audience, but you always leave out one option, owning and growing your own business, to be cashed out someday.

Yes, most people are just looking for a stress free retirement, but actual wealth is different. 95% of the “rich” people, who have liquid net worth of several $M’s, not counting primary residence, inheritance or other family type property they can’t sell, got there by owning a business, growing it, and then selling it.

The assets they eventually sold are myriad, such as real property, IP, distribution rights etc.

At the end of the day, you only have two hands and tow feet. You need either or both of, other people working for you or other people’s money working for you.

Yes it’s risky and most businesses fail, but you’re in control, including of when to sell (or pass it on). No whining about not getting promoted because you are the boss!

Plenty of tax write-offs available as well. You can sell $800k+ one-time capital gains tax free. If you’ve got family you can trust, you can set it up so that they all own shares and can each take the $800k tax free once per lifetime. It gets better if you’re doing business across border(s), lots of deductions etc.

Something to think about…

#46 JSS on 10.13.21 at 4:01 pm

Today’s post is very enjoyable to read. And the comments even more enjoyable.

#47 greyhound on 10.13.21 at 4:01 pm

A portfolio of ETFs usually involves little or no leverage.
But hey, you could do what lots of the kids are doing — just buy calls on already-3x-leveraged ETFs; then you’ll get the full boatload of leverage: you’ll be rich!
Oh, wait…

#48 Honest Realtor on 10.13.21 at 4:05 pm

True words from #44 Daniel on 10.13.21 at 3:46 pm

“With all due respect, I disagree with the methodology in this post. I say this as someone who has chosen to rent and invest instead of own. If a “rent and invest” vs “buy” scenario as described in this post is compared based on all real world factors, the “buy” case is far superior over the past 10 years. That does not mean this will be the case going forward, since the lowering interest rate effect has largely played out.

The REAL WORLD outcome based on the assumptions in this post and as listed below is $736k net worth for “buy” vs $247k net worth for “rent and invest” at the end of 10 years.

Therefore based on Garth’s assumptions in the post and real world factors as described here, buying has beaten investing by roughly 736k to 247k net worth at the end of 10 years, or a factor of nearly 3 to 1.”

Well said.

The losses for those who have not joined the property market over the last decade can only be described as devastating in any practical, financial terms. No other form of investment has come even close to the net benefits home ownership has offered since the early 2000s.

One consolation is that for those who get in now, the probability is extremely high of a 3-4X valuation increase over the next 15 years or so.

#49 Dave on 10.13.21 at 4:13 pm

Financial Lesson 101:

Ever wonder why there is a huge middle and poor class of people even after generation after generation of inheritance?

INFLATION…..Real Inflation is double digit. Fake is 2 to 3%

Only asset class that truly creates wealth and gets you well ahead of Inflation is Real Estate.

If in doubt….why are majority of people in that industry rich and others working non stop to keep there head above water?

Over multiple decades financial portfolios have outperformed residential real estate in Canada for annual asset appreciation. Look it up. – Garth

#50 Diamond Dog on 10.13.21 at 4:17 pm

#19 alexinvestor on 10.13.21 at 2:08 pm
#21 Ryan on 10.13.21 at 2:17 pm

https://en.wikipedia.org/wiki/Ponzi_scheme

The link is worth the read. BTC is one giant Ponzi. Read the red flags and tell us that Bitcoin doesn’t check off these boxes. What you are clearly high on isn’t investing, it’s gambling on a Ponzi and all Ponzi schemes end.

My own prediction with BTC is that it pancakes with the next true stock market crash (Fiat currencies, not so much). Who knows when this will be. We had one that followed the dotcom bust followed by 911, followed by the U.S. housing crash and the GFC. It’s been blue skies since except for the commodity crash of early 2016 and the pandemic crash of 2020, but these were flash crashes (and great opportunities to make a buck). Another true crash will come and when it does, Bitcoin will crash even harder and why? Because when people run out of money, they liquidate and with a Ponzi, its a race to the bottom.

What follows the next ugly Bitcoin bottom? Regulators most likely step in and shut it down because the opportunity presents itself and it really is a Ponzi not backed by anything, a failed model that checks off all the red flags in the link above not to mention that public sentiment for pancaked investments is a really hard thing to find. Bitcoin = “scapegoat sympathy”, if I might borrow from a future phrase to come.

One really good point Garth makes today is the greatest risk – running out of money, not losing it. Running out of money forces folks to liquidate what they own to keep the lights on. Stocks & Bonds, toys, real estate, investments that potentially generate future income and cash flow or recover, albeit slowly in some cases, lost value. Basically, running out of money forces people to lose it. When this is done en masse, deflation hits forcing more selloffs to keep the lights on and the rest is history.

People wonder why markets crash, there’s your answer, to keep the lights on. No one otherwise, really wants to sell but even of the fear of running out of money is strong in it’s own right. When that hits a Ponzi scheme like Bitcoin or BTC, it’s a race to the bottom and a disaster for anyone who owns it.

The link below is worth a read for the Koolaid guzzling lovers of Bitcoin. Why? It’s short history. Real estate and the markets have enjoyed essentially a 13 year bull run, longer than Bitcoin’s history. When the worm turns (and it always does), it will be Bitcoin’s swan song:

https://en.wikipedia.org/wiki/History_of_bitcoin

Everything we read about Bitcoin from “superior encryption” to “digital currency”, its not reinventing the wheel here, its a rebranding of existing technologies (that are in some cases decades old) and a Ponzi repeat. Failed investments are always marked by investors believing an investment has greater present and future value than it ever had.

Remember this comment in the future as you were both seriously warned today concerning BTC.

#51 Barb on 10.13.21 at 4:18 pm

#4 Mike
“With the real estate you didn’t mention the ongoing maintenance and repair costs that ownership requires. Carpets, fences, roof shinges, furnaces and everything else has to be looked after.”

——————————–
Plus having to cut down overhanging evergreens in a forest interface area…as per instructions from insurance company following this summer’s fires.
Or else self-insure!

#52 alexinvestor on 10.13.21 at 4:18 pm

#30 Shawn Allen — Commuting a pension. This mostly depends on the lump sum you are getting, which in large depends on the implicit interest rate used. If the implicit rate is 5% + inflation (for example), it’s probably a good idea to keep. If the implicit rate is 2%, probably a good idea to take. Of course individual circumstances matter too.

#53 Philco on 10.13.21 at 4:35 pm

Everybody’s a cowboy, until they get scared. Good luck with that strategy. As for fees, returns are always posted before any fees, since tax-deductibility depends on personal income. – Garth
—————————————-
I know a lot of folk that went on their own and invested and I mean they make me look like a guru on the investment scene. In this biz you need all the tools in the shed to succeed.
Needless to say, they now think the markets are a scam because they blew up their stuff. If you want to survive the long term…better have a solid plan or VERY good adviser and not the new guy down at IG…
Me personally… I went with the attitude 25 years ago that there would be some sort of pension crisis…ie the gov blows up along with their bonds?? CPP would be inflated away and might get ya a bag of groceries at some point…I mean we are getting there, the debt and deficit is off the chart.
I guess I have trust issues…
So it was head down ass up accumulate high cash flow commercial RE and pay it down. Worked out pretty good.
I just looked up my CPP is $650 @ 60 and $1000 @ 65 (10 years away and god knows what the situation will be on planet earth then) but good for a couple days of expenses now. lol

#54 Penny Henny on 10.13.21 at 4:47 pm

You need to add the missed opportunity cost of your equity to your mortgage payment. Plus property tax, insurance, closing costs and maintenance. Homeowners have turned into such liars lately. – Garth

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

In this case the opportunity cost is the rise in the house price in itself. $500k into an investment account or $500k into a house. No mortgage, otherwise the numbers would highly swayed in favour of the home owner.
So to make it ‘fair’, take the rent savings of $240,000 to $360,000 and then deduct the other costs that you’ve mentioned.

Debating with people who know everything, and missed the entire point of the post, is a waste of my time. Enjoy your life and choices. – Garth

#55 Ponzius Pilatus on 10.13.21 at 4:47 pm

#143 Mickey on 10.13.21 at 11:47 am
#140 Ponzius Pilatus on 10.13.21 at 11:19 am
#137 Damifino on 10.13.21 at 10:47 am
From Rex Murphy:

For as is it written in the Book of Climate Change: “Thou climate warriors, ye who assemble in fine hotels, and ye who squat on the highways and superglue your bottoms to the asphalt thereon, yea, all who vote Green — cold and want shall never visit ye. And much golden press coverage will be yours.”
—————————-

And this is why I love the man. Long live our treasured Newfie wordsmith.
————————
Pretty pathetic, if you ask me.
But then again, to each it’s own.
***************************
Quite logical for a wordbutcher not to recognize a wordsmith.
—————
English is my 3rd language.
How many do you speak?
No, Newfie does not count.

#56 Joe on 10.13.21 at 4:47 pm

Oh Garth. Who has $500,000 to invest. Real estate allows you to borrow with only 20% down. This comparison is moot. It’s apples and oranges since only 1% of Canadians have $500,000 laying around. Real estate is the best option for most. Plus the balanced portfolio gains will be taxed if not in TFSA reducing gains substantially. And markets are more volatile so they give and take crash and pop. Real estate is more stable. There you have it. Real estate wins. https://www.howestreet.com/2021/10/the-greatest-biggest-asset-you-own-may-be-under-pressure-soon-real-estate/

#57 Ken R on 10.13.21 at 4:53 pm

#4 Mike in Calgary on 10.13.21 at 12:51 pm
With the real estate you didn’t mention the ongoing maintenance and repair costs that ownership requires. Carpets, fences, roof shingles, furnaces and everything else has to be looked after. Real estate is a capital asset and those assets need to be maintained. Every house I’ve ever owned has cost me $5K – $10K each year for these things. Some years it’s nothing. Other years…wow!! Renters just have to call the landlord for those things.

5K? 10k? What happened to the $60 bucks a month maintenance figure touted by the realtor comparison last week? That explains all the empty packages laying around in the HD plumbing dept. Those folks are on the $60 a month plan.

#58 Darts on 10.13.21 at 4:57 pm

I have been renting and investing. Started a business which I have since sold so needed the cash flow, no income for a while.

That being said, your comparison missed the leverage on the house which wouldn’t be available for most buying etfs stocks etc. 20% down in 2011 would work out to over a 500% gain 10 years later

I did not miss it. Noted. And leverage is debt. – Garth

#59 Quintilian on 10.13.21 at 4:58 pm

“You cannot grow more land in the GTA/GVA but companies & ETF can issue more shares.”

Crazy realtor talk.
You can create more developable land by a stroke of a pen.

#60 Ponzius Pilatus on 10.13.21 at 5:04 pm

#40 Flop… on 10.13.21 at 3:15 pm
DON on 10.13.21 at 12:19 pm

Don talking to Ponzie on the previous thread.

“Can you provide some insight here? I have been following this wunder kid since his first got elected but don’t have the eyes on the ground perspective.”

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

Ponzie as a source of information?

I don’t know what sort of Proprietary Blend I would have to be on to think that was a good idea.

Maybe the best insight he can give is when the Austrian Social Club in Richmond is going to open back up…

M47BC
—————
Flopinsky
You’re embarrassing yourself again.
Stick with commenting on Tansmania.
I know where the Austrian Vancouver Club is.
I drive by there often.
Never been there myself, but my Chinese friends rave about the Schnitzel.
But whenever I drive by, I just wonder how much the sizable property must be in crazy Richmond.
The developers must be salivating.

#61 IHCTD9 on 10.13.21 at 5:06 pm

You can’t win with a live-in PR tax free “investment”, because putting a roof over your head is a sunk cost till death. So if you cash out on your PR, a great result would look like blowing only 50% of your ROI on your next roof because you moved out into the sticks.

That total cost: the new house cost, and all the fees associated with selling and then buying more RE again – comes right off the bottom line. You never really get to cash out on a PR because the proceeds of your final RE sale end up going then into renting, a retirement residence, or your estate. That’s because you will always need a roof, and none of them are free. They usually all go up and down at the same time too.

Sure, it’s still cash in the bank, just way less cash than a B+D where you get all of it, anytime you want, in a tax advantaged way, and before you’re dead.

#62 Calgary on 10.13.21 at 5:12 pm

https://www.zerohedge.com/political/large-canadian-town-bars-unvaccinated-couples-getting-married

Please tell me that this is not true. By the way, I am fully vaccinated.

#63 Reality Check on 10.13.21 at 5:13 pm

Government guaranteed leverage

The thing that has made Canadian real estate a killer investment over the past 30 years has been the government guaranteed 10 or 20x leverage. In the extreme you can slap $50k down and get government guaranteed debt of $1 million. So for each 5% increase in the value of the house the original investment doubles.

Oh, if I could only get that on my equity investments. Imagine 95% margin guaranteed for a 25 year term with no margin calls.

It cuts both ways. – Garth

#64 Re-Cowtown on 10.13.21 at 5:18 pm

News channels have been pimping RE in Calgary again, this time blathering on about the number of $1 million + houses sold. Technically true, but massively misleading.

High end homes are getting eviscerated price wise, with almost all of the high end stuff needing price cuts in the hundreds of thousands of dollars before they sell.

So, yes, houses are selling for a million dollars, but they started off at $1.3 million before languishing and finally selling at $1 million. Hardly the “hot luxury market” that the RE/News pimps are claiming.

Can’t really say that the RE/News pimps are pushing fake news, but it is fake-adjacent.

#65 That guy on 10.13.21 at 5:22 pm

George you are correct, I do have a job with employment income. But, if I were to spend all my pay I would pay taxes on any spending that could have been sent to an RRSP. And the CCB would be clawed back. Most people seem to spend all their pay cheques and gripe about taxes. Seems to me like the better way is to invest first, then get lower taxes and more CCB. Most people seem to want a raise or a new job, but only spend it, paying taxes and clawback all the way.

The RRSP will indeed be taxed in the future, but there’s a lot of things at play: one, taxes deferred til 71 at least. Two, possibility of RRSP meltdown loan as an idea I heard from our host.
Three: invested money provides me peace of mind. As our host says, you can rent a house but you can’t lease income.

The CCB will end, but by that time it’s time to live off the RRSP.
———–
#38 George on 10.13.21 at 3:07 pm
That Guy, I don’t understand. In order for you to have an RRSP, you had to have had earned income, working, employment income. This is means you work or have worked. Also, kids do grow up and the child tax benefit will run out and your RRSP will be taxed in the future likely higher tax rates.

#66 Ace (in the) Hole on 10.13.21 at 5:25 pm

#48 Honest Realtor

“One consolation is that for those who get in now, the probability is extremely high of a 3-4X valuation increase over the next 15 years or so.”

C’mon. Really? Average detached 6-7 mil? How can you say this with a straight face?

#67 Jo on 10.13.21 at 5:28 pm

#73 IHTD9 and #25 bdwy Thanks for the tips for home insurance. We are considering square one, like the fact you can customize your policy to fit your needs. Even comparing apples to apples the premium would be 25% less than our current insurer of 35 years can provide. When we customize to our specific needs it’s 35% less. To good to be true? Have you ever made a claim bdwy?

#68 Left GTA on 10.13.21 at 5:31 pm

I agree with Garth on balanced portfolio performing better than RE. We set up RRSP for hubby and invested as well as purchased a home and the home cost us a lot of money in maintenance. Home owners really do lie. They are also the same ones with the $80,000 SUV’s in the driveway that they lease with their HELOC! HA!
I put a lot of the purchases for the home on a spreadsheet once and stopped doing it once it hit $50,000 was a hell of a surprise. I do understand the rationale for needing a home thou. Raising a family it is nice to have a place without the worry of the rent contract ending and having to move. However thou hubby had some opportunities to move abroad for work and we didn’t because of owning a home as well as sharing it with his parents. We were pretty tied down and not mobile. Looking back not sure if that was good or bad. I think we should be teaching our kids how to manage money early so they can start investing at a young age as well as saving for a home when the time comes to raise a family. It would be ideal to have both investments and home for sure.
Now on the discussion of Commuting a DB pension.
It makes a lot of sense for many reasons. 1. reason being it allowed me to retire early as well as now my investments are spread between RRSP, LIRA, TFSA, RESP, and Non Reg Joint. I took the tax hit and now I can draw out the amount I want in the most tax effective manner. Also now my kids will likely inherit something because if hubby and I lived beyond 71 which I am hoping we will my pension to my kids would have been 0. If I took my pension at 55 after 15yrs of pay out my kids would get nothing. Lastly the DB pension plans change the rules all the time. They just reorg the commuted value calculation twice in the past 2 years. I don’t trust them.

#69 Philco on 10.13.21 at 5:35 pm

#55 Joe on 10.13.21 at 4:47 pm
—————————————–
Agreed there. I wouldn’t buy any RE now period, commercial or residential…I’m really no fan of residential only as your prime but commercial gets 2 thumbs up. No rent controls, I gets to make da rules and they sign my big fat lease with built in never ending increases.

The thing is on you home purchase you could be a dum dum back in the day and Walla down the road you paid’er down it prolly appreciated and ya got a roof all in one.
Really know knowledge or decisions required to make.
The investment market NOT so. Better be diversified, adjusting rebalancing have the right assets that don’t turn on you.
That’s why RE was a no brainer. You didn’t need a brain at all. lol

#70 Rob on 10.13.21 at 5:41 pm

I’m with #44 Daniel on this one. Why would you try to make that comparison without the obvious cost of rent and tax differences? It’s not even close, and I rent/invest.

Ownership costs normally exceed rental costs. And I clearly stated tax was not a consideration when investing in registered accounts. – Garth

#71 Do we have all the facts on 10.13.21 at 6:06 pm

When the rate of return on fixed income options is so low and the rates of return realized on the highly leveraged purchase of a principal residence are so high all caution is thrown out the window.

In the same vein however the injection of trillions of dollars into the North American economy by our governments in 2020 and 2021 contributed to the high rates of return realized from investment in corporate equities. Returns that are only partially justified by an increase in corporate earnings.

Investors in residential real estate and in corporate equities are seduced by rates of return that cannot be matched by fixed income options.

In January 2019 the average P/E ratio of the S&P 500 was 19.6. By January 2021 the average P/E ratio had increased to 36.0.

When the average price of stocks within the S&P 500 increases from 19.6 times earnings to 36 times earnings in just two years a prudent investor might question whether this increase in P/E ratios can be maintained.

I get that some companies share profits in the form of dividends but the main force behind the substantial increase in P/E ratios over the past two years is not an increase in corporate earnings but a substantial increase in total money supply and a limited range of investment options offering attractive rates of return.

Residential real estate and corporate equities are definitely competing to attract investment capital. As I see this competition the metrics behind the current prices of both options are not being given the attention they deserve.

Balance and diversity has never seemed more important.

#72 Rainman on 10.13.21 at 6:18 pm

This is no lie
Mortgage is $3500 a month approx
suite rental is $2200
So we are living in a really nice house for $1300 a month.
Yes there is property taxes, insurance, up keep etc.. But also pride in what we have.
We have pensions too, so not a one trick pony.
The house has doubled in 5 years, just saying, which has quadrupled our original investment.
all truth and not pumping anything, just don’t like being lumped in with being called a liar. :)

You ascribed zero value to the equity, looking at only cash flow. Math is hard. Pride is overrated. – Garth

#73 Mickey on 10.13.21 at 6:18 pm

#55 Ponzius Pilatus on 10.13.21 at 4:47 pm
#143 Mickey on 10.13.21 at 11:47 am
#140 Ponzius Pilatus on 10.13.21 at 11:19 am
#137 Damifino on 10.13.21 at 10:47 am
From Rex Murphy:

For as is it written in the Book of Climate Change: “Thou climate warriors, ye who assemble in fine hotels, and ye who squat on the highways and superglue your bottoms to the asphalt thereon, yea, all who vote Green — cold and want shall never visit ye. And much golden press coverage will be yours.”
—————————-

And this is why I love the man. Long live our treasured Newfie wordsmith.
————————
Pretty pathetic, if you ask me.
But then again, to each it’s own.
***************************
Quite logical for a wordbutcher not to recognize a wordsmith.
—————
English is my 3rd language.
How many do you speak?
No, Newfie does not count.
**********************
Three since immigrating here. Never visited The Rock but certainly admire Rex Murphy’s articulate prose, as do many.

#74 Lead Paint on 10.13.21 at 6:19 pm

#20 TurnerNation on 10.13.21 at 2:15 pm

I used to think you crazy. Now I read you to see what’s coming. Governments are definitely over reaching. Give us back our rights and leave our kids alone.

#75 IHCTD9 on 10.13.21 at 6:34 pm

#67 Jo on 10.13.21 at 5:28 pm
#73 IHTD9 and #25 bdwy Thanks for the tips for home insurance. We are considering square one, like the fact you can customize your policy to fit your needs. Even comparing apples to apples the premium would be 25% less than our current insurer of 35 years can provide. When we customize to our specific needs it’s 35% less.
———

I did the same thing with Allstate. Turns out basement floods are a big part of the cost. I took that out because we have a cellar, it’s all rock, can’t freeze, and everything electrical like the water pump and furnace blower are 2 feet off the floor minimum. It has flooded 3 times over the last 20 years when the mercury switch for the sump pump got hung up – no problem. I have a long stick, and can give the pump a shove with it from the stairs, that gets the switch unstuck and the pump running.

All in, my premium was cut in half.

#76 Guy in Calgary on 10.13.21 at 6:44 pm

Ah the power of leverage.

#77 bdwy on 10.13.21 at 6:50 pm

#67 Jo on 10.13.21 at 5:28 pm
… Have you ever made a claim bdwy?

…………..
yes, only once. we have a 5k deductible but they promptly paid the remainder of the replacement cost for a very expensive tractor that was stolen.

#78 Left GTA on 10.13.21 at 6:53 pm

The thing with homes is those who bought 30 years ago ago has likely run up the credit cards and car loans and then refinanced at the first 5 years at likely almost the same value the mortgage started at so added on 5 more years to the term of the mortgage. Then they needed a newer larger home so then upgraded extending the mortgage time line once again. Then down the road they have kids in uni and likely refinance again so a 25 year mortgage becomes a 40 year mortgage. People who bought at 25 still have a mortgage at 55. Majority of those around me that are 55 still have mortgages. Still paying off kids student loans and now helping them with house down payment after paying for their weddings all on the HELOC so it might be paid off at 65? Somewhere in there they purchased a condo or a home to rent out with equity from their first home. It’s like a stack of cards… Cash flow is tight because they have all these payments to make and all the money is sitting in the properties. They think they are wealthy because they have a million dollar home and a 600,000 condo or rental house yet they are burning thru their home equity spending it on stuff. These people have to work. They get very upset when payroll screws up their pay cheque because they are living pay cheque to pay cheque. Only about 20% of people actually save and invest and have some wealth. The rest just flounder around and pretend they are wealthy. This is the problem with owning a home and treating it like your investment/retirement plan. You readers are likely not these people but this is the average person which is why the attitude that home ownership is a great investment needs to stop.

#79 Philco on 10.13.21 at 6:57 pm

PS
The beauty about home ownership leverage is… Gov inflationary policies insured that the debt was pretty much inflated away over time. ie currency devaluation of sorts..
What you thought was a big fat mortgage 10 years ago looks pretty small these days.
Your portfolio has to ensure it runs ahead much faster than inflation rate and pay you as well.

#80 Rainman on 10.13.21 at 6:58 pm

This is no lie
Mortgage is $3500 a month approx
suite rental is $2200
So we are living in a really nice house for $1300 a month.
Yes there is property taxes, insurance, up keep etc.. But also pride in what we have.
We have pensions too, so not a one trick pony.
The house has doubled in 5 years, just saying, which has quadrupled our original investment.
all truth and not pumping anything, just don’t like being lumped in with being called a liar. :)

You ascribed zero value to the equity, looking at only cash flow. Math is hard. Pride is overrated. – Garth

The equity quadrupled. It is what it is. :)

#81 Jo on 10.13.21 at 6:59 pm

#75 IHCTD9 Thanks for the info. Question, where do you live?

#82 Shawn Allen on 10.13.21 at 6:59 pm

Lesson for the Day:

People believe what they want to believe.

#83 Bobby Sox on 10.13.21 at 7:06 pm

#48 Honest Realtor is the only one giving honest advice today. The numbers don’t lie and a house has been the best investment anybody could make over the last 20 years. What other investment could we get 20X leverage and a tax free windfall all together? Sure we can contribute to the RRSP but those contributions are based on our earnings and won’t get anywhere near what a leveraged home would be worth.

If someone is biased to a certain viewpoint they will try to defend that viewpoint even when the real world says it’s wrong. We aren’t living in the 20th century any more and it’s time to recognize the financial landscape has changed.

#84 under the radar on 10.13.21 at 7:11 pm

” Sure, it’s still cash in the bank, just way less cash than a B+D where you get all of it, anytime you want, in a tax advantaged way, and before you’re dead.”

Except, you better hope when you need its not in the lowest point of a bear market

The last bear market existed for three months. – Garth

#85 Capital One on 10.13.21 at 7:14 pm

RE: #19 alexinvestor on 10.13.21 at 2:08 pm

For us commoners … the best investment is delaying CPP if you work. Roughly worth 5%+inflation (ie if inflation is 2%, you get 7% return) GUARANTEED. Worth it to draw down the B&D portfolio to delay CPP.

Wrong answer. – Garth

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

I’m really interested in your reasoning here, Garth. I agree with you, the greatest risk is running out of money before you die. So if this is a high risk for a person (e.g. someone with parents in their 90s), wouldn’t delaying CPP to 70 be the correct mitigation strategy? And in your 60s – move as much as feasible (tax-wise) out of RRSPs and RRIFs into non-sheltered accounts. And live on this as well, of course.

One argument against this is the same as the DB discussion – the income from the CPP diminishes/vanishes for the surviving spouse. But that blow would be softened somewhat because of the lower taxes on the couple’s investments (because much more are now in non-sheltered accounts).

CO

If you need CPP To survive in old age, you failed financially. And you’re reading the wrong blog. – Garth

#86 IHCTD9 on 10.13.21 at 7:16 pm

“In an ideal world, you should own both.”

———

This is the real ticket. A paid for roof, and a fat 100% tax sheltered portfolio.

Don’t need to sell the roof and start renting to retire, don’t need to pay 50% (soon 75%?) CGT’s at your top marginal rate on investment property either. Everything is ready to rock with no hoops to jump through. Retire in the house you raised your family in, or sell for even more taxless $ and move sideways, or even up – with no worries.

Unfortunately, realistically being able to do this was a feature of the Old Canada. Now in the post-Trudeau New Canada, you need to be Buffet in half the country to pull this off. From here on in, our massive debt will increase the cost of living while services suffer. Wages will stagnate alongside massive immigration numbers. Prosperity will decline to where folks feel they have won the game if they see a 50% paper gain on their PR.

#87 Reximus on 10.13.21 at 7:21 pm

Real estate in toronto is in a weird place…older owners wont sell but they have a lot of equity to pass to their kids, assuming they also buy more real estate.
Did you see the figures about this by John Pasalis today? yikes

#88 Wild Bill on 10.13.21 at 7:25 pm

Ownership costs normally exceed rental costs. And I clearly stated tax was not a consideration when investing in registered accounts. – Garth

But of course tax is a consideration at withdrawal time.

Not in TFSAs. And in RRSPS all growth is untaxed. – Garth

#89 Phylis on 10.13.21 at 7:28 pm

Geeez, nobody seems to mention the aesthetic updates as a cost. Can’t call it maintenance if it ain’t broken. You know guys, those needless changes to keep the happy. Builders grade interior doors, gotta go. Taps, sinks, base boards, door hardware, too plain, update it all. Brass is out, satin nickel is in. Remember wallpaper and boarders? Sad electrical plates, change change change. It’s the continuous renovation cost. Next we can talk about furnishing rotation.

#90 Dragonfly 58 on 10.13.21 at 7:35 pm

Biggest challenge is buying a house , raising a family, having at least a tiny bit of a life, and having something left over to invest. For all to many households the investing section takes a beating. Incomes have in many cases been on life support for the last 25 + years . Something has to give and in many cases it’s the investing that takes the hit. I had a pretty decent job, demanding on a few levels but decent. But the pay didn’t keep up to prices for at least the last 15 years. No big hits, just a percent or two each year. Always cutting back a bit, as the years go by it gets depressing.
Work responsibility and demands increased each year, but the take home got thinner and thinner each year. How is a person going to set something aside to invest?
Very expense aware household, but in the Lower Mainland so land of ever rising cost of living. A $ only stretches so far. Insurance , taxes , food, heating bill, transport. And so much more doubled and beyond over the last 25 years. Income only increased by 50% or so over that same time. No debt , but apart from the house not a lot else to show.

#91 Home Owner on 10.13.21 at 7:41 pm

Psychologically, home ownership is more likely to build wealth. Not because it’s a better investment, but because people are forced to save for their shelter, rather than put away their “extra” money into investment portfolios. Most people succumb to emotions. Which is the same reason to be in a B&D portfolio rather than pure equities.

#92 Paul on 10.13.21 at 7:43 pm

#72 Rainman on 10.13.21 at 6:18 pm
This is no lie
Mortgage is $3500 a month approx
suite rental is $2200
So we are living in a really nice house for $1300 a month.
Yes there is property taxes, insurance, up keep etc.. But also pride in what we have.
We have pensions too, so not a one trick pony.
The house has doubled in 5 years, just saying, which has quadrupled our original investment.
all truth and not pumping anything, just don’t like being lumped in with being called a liar. :)

You ascribed zero value to the equity, looking at only cash flow. Math is hard. Pride is overrated. – Garth
————————————————————————————————
Some people only but value on money and return. Forgetting that home owners enjoy giving their family a stable home and safe environment of their choosing and are proud to contribute to the neighbourhood .
Plus there would be no equity if they never bought a home. Oh,all home owners are not liars!

#93 SoggyShorts on 10.13.21 at 7:49 pm

#4 Mike in Calgary on 10.13.21 at 12:51 pm
every house I’ve ever owned has cost me $5K – $10K each year for these things. Some years it’s nothing. Other years…wow!! Renters just have to call the landlord for those things.
*******************
I posted the numbers here few years back;
my parents bought for ~150K in 1992 Calgary, and over 25 years put in just over 150K in maintenance. Roofing, painting, furnace, driveway, fence, kitchen and bathroom remodels etc.
Currently worth ~500K

#94 Ponzius Pilatus on 10.13.21 at 7:57 pm

#73 Mickey on 10.13.21 at 6:18 pm
#55 Ponzius Pilatus on 10.13.21 at 4:47 pm
#143 Mickey on 10.13.21 at 11:47 am
#140 Ponzius Pilatus on 10.13.21 at 11:19 am
#137 Damifino on 10.13.21 at 10:47 am
From Rex Murphy:

For as is it written in the Book of Climate Change: “Thou climate warriors, ye who assemble in fine hotels, and ye who squat on the highways and superglue your bottoms to the asphalt thereon, yea, all who vote Green — cold and want shall never visit ye. And much golden press coverage will be yours.”
—————————-

And this is why I love the man. Long live our treasured Newfie wordsmith.
————————
Pretty pathetic, if you ask me.
But then again, to each it’s own.
***************************
Quite logical for a wordbutcher not to recognize a wordsmith.
—————
English is my 3rd language.
How many do you speak?
No, Newfie does not count.
**********************
Three since immigrating here. Never visited The Rock but certainly admire Rex Murphy’s articulate prose, as do many.
————–
Is he a poet or a political commentator?
I think he’s past his prime.
“know when to fold them”
Curios, what are your 3 languages?

#95 Flop… on 10.13.21 at 8:07 pm

Ponzius Pilatus on 10.13.21 at 5:04 pm

Flopinsky
You’re embarrassing yourself again.
Stick with commenting on Tansmania.
I know where the Austrian Vancouver Club is.
I drive by there often.
Never been there myself, but my Chinese friends rave about the Schnitzel.
But whenever I drive by, I just wonder how much the sizable property must be in crazy Richmond.
The developers must be salivating.

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

This is probably the part where Crowdie would call you Arnold Pretzellicker, or something like that but I will try to keep it constructive.

Do you remember when I put up 10,000 posts or so on here making Garth Turner’s life so miserable he contemplated returning to politics, detailing a correction in Vancouver and banging on about how unfair it was for prospective homeowners to have to go for the biggest purchase of their lives with little to no information?

I think you were asleep for those 15 months or so in class, so I will give you and all the newbies in Vancouver a refresher.

We always had BC Assessment, the assessed value of the block of land that The Austrian Social Club sits on is just over 7 million dollars, down from 7.8 last year.

What we have now to augment BC Assessment what I didn’t have when I started my crusade was Realty and REW Insights.

Maybe every 20 or 30 Pink Snow post that I wrote on here I said I wasn’t the right person to be doing it with my lack of computer skills it I wanted to do something meaningful to honour Boom and several realtors saw how valued the information was and one guy in particular stepped up to the plate.

Greaterfool Alumni, and after what he did to assist me I guess I’d call him my friend, realtor Adam Major created a website Zealty that tracks sales, among other things in real time.
This usually took 3-4 months to come up on BC Assessment and sometimes even 9 months, rendering the information near useless in fast changing markets like we had in 2016/2017.

https://www.zealty.ca

REW took over and old, outdated real estate called Property Insight, from memory, some of the information was 3 or 4 years old, now it has been updated and can be used with the aforementioned sites to give you a more complete picture if needed.

https://www.rew.ca/insights

I know by now you are probably tearing up, it’s o.k, no need to thank me, next time you drive by somewhere and are curious how much it is selling for, or assessed at, you can do it in less than a few minutes.

You’re welcome…

M47BC

#96 Dr V on 10.13.21 at 8:11 pm

I own, mortgage free for years. Roof still looks good, but replacement in next several years likely.

My B & D portfolio will pay for it in a tax advantaged way.

Oh the irony…..

#97 IHCTD9 on 10.13.21 at 8:17 pm

#44 Daniel on 10.13.21 at 3:46 pm
With all due respect, I disagree with the methodology in this post. I say this as someone who has chosen to rent and invest instead of own. If a “rent and invest” vs “buy” scenario as described in this post is compared based on all real world factors, the “buy” case is far superior over the past 10 years. That does not mean this will be the case going forward, since the lowering interest rate effect has largely played out.

The REAL WORLD outcome based on the assumptions in this post and as listed below is $736k net worth for “buy” vs $247k net worth for “rent and invest” at the end of 10 years.
———

Well, as a renter/investor, you would still – despite having paid rent for 10 years – have the $992,806.00 invested liquid and bigly tax sheltered at the end right? And no house.

The homeowner would have zero investments, but own a $1,136,280 house.

You paid rent, he paid the not insignificant costs of ownership, buying, and selling. It costs me ~600.00/mo. to live in my paid for house all-in, not including maintenance of buildings and yard (I do all that myself). But in the end, you paid a more because you bought a roof, plus convenience, and services with your dollars, and you got them. Home owning buddy paid for this too, but in sweat, stress, and headaches instead of dollars. I wouldn’t knock 100k off my investments because I bought a new diesel Denali. You rented to enable investing, and after 10 years you have almost a Mil in real world dollars at the end of it. Despite your real world $$ costs.

Now he liquidates and has about the same real world $ as you, you spent more to get there, but now he can’t put it all into tax shelters because there’s not enough room. Meanwhile, you filled them up 10 years ago, and they have doubled since. In the real world, the home owner would be making mortgage payments, and you’d be filling the TFSA/RRSP’s every year. You’d have a huge head start on a very tax advantaged retirement fund.

From here, I’d say you’d really start pulling away. House dude is now a renter just like you are, but has way less in TFSA’s and RRSP’s than you do, and this only magnifies as the decades pass.

And this is comparing the rent/invest dude making normal returns, to a homeowner buying at the most advantageous time ever, paying the lowest rates in history, and in the hottest market in the country. Most Canadians couldn’t dream of this scenario, only a fraction hit that goldmine. Anywhere else, at any other time, owning a house wouldn’t even come close.

#98 WTF on 10.13.21 at 8:20 pm

#48 House Sales person
“The losses for those who have not joined the property market over the last decade can only be described as devastating in any practical, financial terms. No other form of investment has come even close to the net benefits home ownership has offered since the early 2000s.”
————————————————————–

Ahh yes the sage words from one of the minions of the least trusted industry in existence, just below executioner.

I’m one of those, almost exactly 10 years renting. The former house I owned for 25 years hasn’t increased as much as the B/D portfolio I currently own. No “Loss” no “devastation” just pure profit.

My Landlord subsidizes me to the tune of 5k per month which I documented all the costs here a few months ago .

Your data? BS spin. Maybe stick to doing what you do best, never mind you do that frequently on this blog.

#99 Laura on 10.13.21 at 8:24 pm

#84 Wild Bill on 10.13.21 at 7:25 pm
Ownership costs normally exceed rental costs. And I clearly stated tax was not a consideration when investing in registered accounts. – Garth

But of course tax is a consideration at withdrawal time.

Not in TFSAs. And in RRSPS all growth is untaxed. – Garth

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

If “in RRSPs all growth is untaxed” then what happens when you withdraw the growth? It’s not taxed then?

Depends on how clever you’ve been. – Garth

#100 the jaguar on 10.13.21 at 8:36 pm

#78 Left GTA. Ding ding ding.

That there is the winner. He nailed it. That’s the reality.
Thank you Left GTA for your common sense analysis.

#101 the jaguar on 10.13.21 at 8:41 pm

Left GTA for Prime Minister and overlord of the Universe.
Amen.
Luv ya baby.

#102 Nonplused on 10.13.21 at 8:47 pm

#28 Deanna on 10.13.21 at 2:33 pm

“I don’t know if anyone heard this or if will be true but my friend who is a liberal in the party know guy said The Liberals, Federal Liberals, Freeland, Trudeau are going to get rid of tax deductions for interest paid, borrowed to invest and start allowing reverse mortgage payers interest tax deductible every year.”

I have to assume somebody made that up. There isn’t really a tax deduction for interest paid on investments or businesses it is a business expense that hits the balance sheet before profit. To alter this treatment would be similar to trying to tax “net revenue” which would kill almost all businesses.

People who have reverse mortgages don’t typically have any income on which to pay tax and they don’t pay any interest until they sell the house. The interest is sort of baked into how much money you get versus how much of the sales price they get.

#103 Nonno Nicola on 10.13.21 at 8:48 pm

#1 Dirty Dan

Congrats on not getting deleted Danny Boy!

#104 Bunker Dweller on 10.13.21 at 8:50 pm

One of the better posts in quite a while…

#105 Quintilian on 10.13.21 at 8:53 pm

#48 Honest Realtor
“One consolation is that for those who get in now, the probability is extremely high of a 3-4X valuation increase over the next 15 years or so.”

That could possibly happen, but of course it would have to be accompanied by a repeat of 2000 BPS reduction in interest rates as in the past.

I am not a gambler, and I don’t like those odds.

#106 Laura on 10.13.21 at 8:53 pm

#99 Laura on 10.13.21 at 8:24 pm
#84 Wild Bill on 10.13.21 at 7:25 pm
Ownership costs normally exceed rental costs. And I clearly stated tax was not a consideration when investing in registered accounts. – Garth

But of course tax is a consideration at withdrawal time.

Not in TFSAs. And in RRSPS all growth is untaxed. – Garth

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

If “in RRSPs all growth is untaxed” then what happens when you withdraw the growth? It’s not taxed then?

Depends on how clever you’ve been. – Garth

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

Point being that all RRSP withdrawals (growth included) are taxable income. Knowing this, it can sometimes be clever (for financial losers who count on CPP to help fund their retirement) to delay CPP past age 60 while withdrawing from their RRSP.

#107 Nonno Nicola on 10.13.21 at 8:57 pm

I’ve enjoyed staggering property gains on my principal residence and have made great returns on my financial investments. My only question is, “are bear markets a thing of the past?”

#108 Nonplused on 10.13.21 at 9:03 pm

#66 Ace (in the) Hole on 10.13.21 at 5:25 pm
#48 Honest Realtor

“One consolation is that for those who get in now, the probability is extremely high of a 3-4X valuation increase over the next 15 years or so.”

C’mon. Really? Average detached 6-7 mil? How can you say this with a straight face?

————————————–

It would also be a dramatic increase in the rate of increase (so acceleration, not velocity) over the last 10 years as well. $500,000 -> $1,000,000 over 10 years to become $1,000,000 -> $4,000,000 over 15 years? Yikes! Only if the dollar collapses. There ain’t nothing left with interest rates to pour on the fire.

#109 just say no on 10.13.21 at 9:10 pm

lets have a contest to see who won the most in lotteries? I believe that is how most of the new rich get their money these days.

#110 Bobby Sox on 10.13.21 at 9:10 pm

#66 Ace
C’mon. Really? Average detached 6-7 mil? How can you say this with a straight face?

Yes I can see that happening. Who would have though we’d be where we are now? With the money printing that will not stop and interest rates that will not go up we could very well be looking at 6-7 mill. We are in a new financial paradigm.

#111 crowdedelevatorfartz on 10.13.21 at 9:12 pm

Don’t want the vaccine?

Center for disease control stats.

10x more likely to become infected with Covid
52x more likely to be hospitalized
44x more likely to die.

Argue all you want.
Darwin Loves you.

#112 crowdedelevatorfartz on 10.13.21 at 9:20 pm

@#95 Floppie

You should have stopped at “Arnold Pretzellicker”….the rest of your info is lost on Property Ponzie

#113 Left GTA on 10.13.21 at 9:21 pm

Thanks Jag! I think IHCTD nailed it too. Missing out on compound interest and gaining room in tax sheltered investments. Home Depot loves home owners! So I look up the first house I bought for 180,000 in Halton Hills in 1995 at 6.2% interest so 25 yr mtg goes to 2020. But!! I look at the house sold for 880,000 in 2020 Ok! Well house has all new flooring, new kitchen, new bathrooms, finished basement, new deck, landscaping, gardens, new interlocking, a shed, new appliances, windows and I think the only thing original is the fireplace mantel and a bathtub. So 700,000 equity minus the 150,000 updates add in interest on the HELOC minus the selling cost, minus the property tax and utilites for 25 years and equity ends up to be about $300,000! Now that ladies and gents is not a lie.

#114 Nonno Nicola on 10.13.21 at 9:22 pm

#87 Reximus

Yes, some GTA hone owners have big buckeroos to pass on in their principal residence. My immigrant inlaws left a primary residence that fetched north of $3 million in their estate.

#115 SoggyShorts on 10.13.21 at 9:31 pm

#99 Laura on 10.13.21 at 8:24 pm
#84 Wild Bill on 10.13.21 at 7:25 pm
If “in RRSPs all growth is untaxed” then what happens when you withdraw the growth? It’s not taxed then?
****************************
A couple can take out
$20,000 RRSP
$20,000 non-reg capital gains
$20,000 non-reg dividends

and pay 1.6% tax, a measly grand.

Even if you double the withdrawals because you can’t live on less than $110,000 after taxes the total tax paid would be under 10%

On top of all that you have the TFSA

https://www.wealthsimple.com/en-ca/tool/tax-calculator

#116 Left GTA on 10.13.21 at 9:32 pm

Ok so now here is the interesting part. If I had invested the deposit, invested the difference between renting and owning so say about 500 a month and increase it with inflation of 2% comes out after 25 yrs to 631,000. The part that people are not taking into consideration is that the housing market only really took off the last 10 years and the interest rates not that long ago were much higher. So people who have owned for less than 10 years have made out better than those who owned for 25 years.

#117 Philco on 10.13.21 at 9:37 pm

If you need CPP To survive in old age, you failed financially. And you’re reading the wrong blog. – Garth
————–
Lol
What I said. I pretended it wasn’t there to be had.
Its peanuts now. The C-note is the new 20…
The gov knows their going to pay you with dollars worth less. Invisble taxation!

#118 Left GTA on 10.13.21 at 9:48 pm

Forgot one more thing. Didn’t factor in the over 150,000 that was spent on upgrades etc so lets add in 5000 a year over the 25 yrs in updates etc and invest that and well 1.1 Million in investments vs spending the same amount of money over 25 yrs on a house 880,000 minus RE fees final tally investing won by 270,000.

#119 Ponzius Pilatus on 10.13.21 at 9:51 pm

#95 Flopowitzko
Good to see you growing some balls.
You’ve got lots of experience in life.
Use it as a positive.
CEF is not your friend.

#120 Ponzius Pilatus on 10.13.21 at 9:54 pm

Hockey is back.
Full house.
Pandemic is over.

#121 Doug t on 10.13.21 at 10:00 pm

In the end we all end up the same

#122 Left GTA on 10.13.21 at 10:06 pm

OMG Jag u kill me! We must be drinking the same wine. Hubby is leaning over me….my fingers typing wildly …who are you writing too? Nothing its just this blog LMAO. That was surreal thou seeing the inside of my first house totally transformed. Ok nite got to go walk the dogo.

#123 Left GTA on 10.13.21 at 10:18 pm

Wait one more what @114 Soggy shorts says… yes this is why commuting DB can be better. 60,000 in RRSP & Pension income pay taxes of almost 12,000 where as just like soggy shorts says 60,000 spread out 1000 in taxes. Hence why I commuted my DB.

#124 Left GTA on 10.13.21 at 10:24 pm

I was wrong tax on 60,000 of rrsp and DB pay would be 6000 not 12000.

#125 Wrk.dover on 10.13.21 at 10:43 pm

#145 Nonplused on 10.13.21 at 11:52 am
#120 Wrk.dover on 10.13.21 at 5:56 am

“The anti solar power taliban like cavemen on this site are probably anti-vaxers too! Or unable to trust a person with no reason to mislead them.”

So what’s your apartment number again? I want to send you a card.
_____________________________

Yeah, no. you’re gross, no thanks.

#126 Ponzius Pilatus on 10.13.21 at 10:43 pm

# 20 Turner Nation
Life in Kanada. Our Leaders. The new Pres at Public Health is a Vet. A Veterinarian. Come again?
(I did say our rulers see us as cattle…Moo.) Seen elsewhere:

Dr. Harpreet S. Kochhar, currently Associate Deputy Minister of Health, becomes President of the Public Health Agency of Canada, effective October 12, 2021.

https://pm.gc.ca/en/news/backgrounders/2021/10/08/dr-harpreet-s-kochhar
“Education
Doctorate in Animal Biotechnology, University of Guelph
Master of Veterinary Science, Punjab Agricultural University
Bachelor of Veterinary Science, Pu
————————-
TN
You’ve got the pulse on the Nation again.
With so many ignoramuses taking horse medicine.
We need a Veterinarian in charge.

#127 Wrk.dover on 10.13.21 at 10:47 pm

#75 IHCTD9 on 10.13.21 at 6:34 pm
#67 Jo on 10.13.21 at 5:28 pm
#73 IHTD9 and #25 bdwy Turns out basement floods are a big part of the cost. I took that out because we have a cellar, it’s all rock, can’t freeze, and everything electrical like the water pump and furnace blower are 2 feet off the floor minimum. It has flooded 3 times over the last 20 years when the mercury switch for the sump pump got hung up – no problem. I have a long stick, and can give the pump a shove with it from the stairs, that gets the switch unstuck and the pump running.
______________________________

And a secondary pump would cost three hours net pay!

You are a mess.

#128 the jaguar on 10.13.21 at 11:14 pm

@121 Left GTA. It’s like that old episode from I Love Lucy where Lucille Ball can’t keep up with the conveyor belt of chocolates so she ends up snorfling them down and it all turns to mayhem.
This whole housing debacle is just like that.
Good on you for having the presence of mind to see through it all, but especially to walk the dog after the wine. You’ve kept your mind when all around you are losing theirs, lol. Well….maybe not the husband.

#129 Flop… on 10.13.21 at 11:18 pm

I can hear blasting out of the speakers now as Amazon goes bricks and mortar.

Olivia Newton-John belting out Let’s Get Physical…

M47BC

—————————————-

“Bezos gets physical: First it was accused of bringing traditional stores to their knees. Now, in a bitter irony, Amazon is opening shops of its own.

The ‘four-star store’ sells more than 2,000 of the most popular products from Amazon’s website in a shop the size of an Olympic swimming pool. 

And, in a further assault on the British retail landscape, it will use its carefully honed algorithms to study local shopping habits and create a tailored experience designed to trounce the competition.

Bosses are secretive about the four-star store expansion plans, but America now has more than 30.

The new shop in Kent arrives after six ‘Fresh’ Amazon grocery shops have launched in Britain in the past year – all featuring futuristic ‘checkout-free’ technology. Just scan yourself in on your smartphone, pop the items in your basket and walk out: you’ll be charged automatically.”

https://www.dailymail.co.uk/money/markets/article-10088777/Jeff-Bezos-gets-physical-Amazon-opening-real-shops-own.html

#130 Exodus 2020 on 10.13.21 at 11:19 pm

I’m sure other wise commentators have said this, but the B&D loses because A. The portfolio owner had to pay rent and be confined to the rules of the landlord etc. assume $24,000 a year rent with 4% annual increases, let’s say $300k total over 10 years. B. The homeowner used leverage, with home appreciation exceeding cost of borrowing and not the equivalent risk of portfolio leverage because they own a roof over their head regardless of how the market swings. C. Homeowner has pride and if their housing costs were relatively higher than renting in the beginning, a few years later they are likely less than market rent, especially if renewing at a lower rate. D. The B&D renter person can’t friggin move or else they have to pay current insane rental rates, whereas homeowner can sell and move, and transfer their home equity over, and if market is down so what, they sell at a lower price and buy at a lower price. E. Homeowner is building credit, and getting favorable rates with HELOC, perhaps dipping in to buy the lows of March 2020.

#131 fishman on 10.13.21 at 11:43 pm

Getting cold up in the mountains. Last year was a late freeze & the snow pack came down on unfrozen ground. Conventional wisdom is snow on frozen ground mostly run off; fills dams & reservoirs. Last year water went down. Filled up the aquifers & underground cisterns. I’ve been far down in hard rock & the water just pours in. Filled up the aquifers & cisterns with wealth unmeasurable. All the dams fill up & overflow every spring every year like clockwork too.. Yukon had record snow. The Lows coming down from the Bearing Sea & picking up the moisture in the warm Pacific don’t have the “punch”they used to. Too warm. Cant get far enough south before coming in. Not getting the moisture up into the western American mountains. Too bad for their side.
The Walton family along with New York vulture funds are spending hundreds of millions promoting & lobbying for the monetizing of western U.S. water. Big money from U.S. east is going into Montana land. The moneyed up from Seattle, Frisco.L.A. buying eastern Washington & Idaho. All good green Yankee land butting up against the 49th. The Horsey Vancouver Set buying up all the river bottom hay meadows in interior so their nags don’t run out.
The fresh water keeps coming our way. Less for the Yanks & more for us. Can’t go wrong in Beautiful B.C.

#132 KLNR on 10.13.21 at 11:55 pm

@#110 crowdedelevatorfartz on 10.13.21 at 9:12 pm
Don’t want the vaccine?

Center for disease control stats.

10x more likely to become infected with Covid
52x more likely to be hospitalized
44x more likely to die.

Argue all you want.
Darwin Loves you.

folks who don’t want the vax would probably cut off their nose to spite their face.

#133 Exodus 2020 on 10.14.21 at 12:49 am

Realistically, who had $500k of registered investment room in RRSP and TFSA combined 10 years ago? Let’s say you had $150k room, and invested fully, $100k for a down payment of 20% on a $500k home, and another $250k for unregistered investments and other costs to home ownership. After 10 years you’d have $150k tax free investment gains, $500k tax free principal residence gain, and $200k taxed unregistered investment gains. Now that’s a realistic portfolio and the clear winner.

#134 Bob Is Bob on 10.14.21 at 3:13 am

And this: you can always rent a roof

Assuming you don’t mind moving every few years. My nephew faced this. Buy for 700 grand (Waterloo) or go through the hassle of moving only to have the LL sell the house from under you again.

Of course inflation will take care of that debt!

#135 SoggyShorts on 10.14.21 at 3:28 am

#95 Flop… on 10.13.21 at 8:07 pm
Ponzius Pilatus on 10.13.21 at 5:04 pm

Flopinsky
You’re embarrassing yourself again.
Stick with commenting on Tansmania.
I know where the Austrian Vancouver Club is.
I drive by there often.
Never been there myself, but my Chinese friends rave about the Schnitzel.
But whenever I drive by, I just wonder how much the sizable property must be in crazy Richmond.
The developers must be salivating.

*******************
Fun fact: my late uncle was the founder. Great guy, and yeah the Schnizel is good.

#136 Jeremiah Bullfrog on 10.14.21 at 5:03 am

One for TN…

First were the fuel shortages, now the man-made food shortages are beginning in the UK right on cue

Meanwhile the PM made a joke about it… they really are laughing at us

“Farmers have been warning more than 100,000 pigs face destruction in the coming days because of a shortage of butchers to process their meat. ”

https://www.dailymail.co.uk/news/article-10089965/Visa-U-turn-allow-1-000-foreign-butchers-run-Christmas-100-000-pigs-face-culling.html

#137 Peter Kook on 10.14.21 at 5:26 am

This preposition repeated many times “you can always rent a roof, but never can you lease cash” is logically incorrect.
cash flow is required in any case.

nobody can rent a roof without cash flow.

#138 Immigrant man on 10.14.21 at 6:41 am

#97 IHCTD9 on 10.13.21 at 8:17 pm

Bang on! Not to mention that to buy a house one can get a low interest loan (mortgage). Even before covid one could get 3-4% mortgage from the bank. Can you instead just roll up to the bank and ask for a 500k loan with the same rate to invest in ETFs? I think not. But I am not an investment guru like most people in this blog, so please correct me if am wrong.

#139 Genevive on 10.14.21 at 7:33 am

Philco, let’s be real. CPP is a payroll tax, it is a tax on your employment income and it is very rare if you can recoup all of it. The Liberals from Jean Chretien, Paul Martin, Elliot Pierre Trudeau to Freeland, Trudeau today have to work in government because they are pretty much power hungry selfish people that never care about Canada or Canadians. All they know how to do is ruin, destroy things. To tax is to destroy, plain and simple.

#140 Senior Here on 10.14.21 at 7:54 am

Yes, Nonplused, I think Deanna is referring to when you borrow money to investment in stocks, bonds, other financial investments. The interest is tax deductible right now. This is what it sounds like she is referring too and she heard the Trudeau, Freeland Liberals could possible get rid of. As for reverse mortgage payers getting a tax deduction for interest paid or compounded on their reverse mortgages, alot of seniors I know have combined pension income of at least $50,000 to $60,000 just from CPP, OAS, some workplace pensions. They don’t take out the reverse mortgage per say for living expenses, they take the equity out of their home for house repairs, renovations, future expenses, cost of living having it in an account that maybe needed in a year or two, car purchase etc.

If they even got say a $2,000 to $3,000 annual income tax refund from their reverse mortgage interest paid, compounded every year, they would like it alot and you know who would get the votes.

#141 Henry on 10.14.21 at 8:06 am

Dave, not if interest rates go back to even 4% to 5% mortgage rates plus the relentless increases in property taxes, gas, electricity, water, garbage and many bills, condo fees, costs, expenses associated with owning a house, condo.

There will come a time where even interest rates being low but property taxes, bills, condos fees, costs, expenses remain high that will make real estate a subpar investment or better as I see it, subpar asset.

#142 IHCTD9 on 10.14.21 at 8:34 am

#126 Wrk.dover on 10.13.21 at 10:47 pm
#75 IHCTD9 on 10.13.21 at 6:34 pm
#67 Jo on 10.13.21 at 5:28 pm
#73 IHTD9 and #25 bdwy Turns out basement floods are a big part of the cost. I took that out because we have a cellar, it’s all rock, can’t freeze, and everything electrical like the water pump and furnace blower are 2 feet off the floor minimum. It has flooded 3 times over the last 20 years when the mercury switch for the sump pump got hung up – no problem. I have a long stick, and can give the pump a shove with it from the stairs, that gets the switch unstuck and the pump running.
______________________________

And a secondary pump would cost three hours net pay!

You are a mess.
_______

I don’t need a second pump – I need a bigger hole in the concrete for the pump I have so the switch doesn’t hit the wall and stop floating up.

No reason to freak out homie. 3X I had 6-12″ of water down there over 20 years. Zero damage done, and I got a nice clean floor out of the deal every time.

#143 crowdedelevatorfartz on 10.14.21 at 8:35 am

@#138 Genvieve
“To tax is to destroy, plain and simple.”

+++

While I loathe seeing my tax money wasted by govt….
I understand why we need taxes.

Enjoy driving to work on that paved road that is cleared of snow in winter.
Enjoy the water from the tap that you make your coffee with.
Enjoy the electricity that keeps the milk cold in the fridge.
Enjoy the collection of your garbage every week…..

On and on and on you enjoy things that are either provided by tax dollars or are checked for your safety by tax dollars.

Go live in the woods in a cabin you made yourself, chop your own firewood, plant potatos, burn your garbage, make candles from bees wax, gather ice in the winter for your summer refrigeration, chase chickens for the eggs, teach your kids how to read and write,…..sounds like nirvana.

#144 crowdedelevatorfartz on 10.14.21 at 8:45 am

@#119 Ponzies Pucking Predictions.

Hockey is back.
Full house.
Pandemic is over.”

++++

Regular Flu season is just starting AND the Pandemic is still here.

Whats next?
The Canucks will finally win a Stanley Cup….after 52 years of trying?

#145 Daniel on 10.14.21 at 9:05 am

#97 IHCTD9 referring to #44 Daniel

You have misunderstood the math.
It is not correct in the real world to compare a 500k home purchase with no mortgage to a 500k investment. Home owners can and almost always do use secure, low interest leverage.

The math speaks for itself. Nobody can argue with the conclusions based on the assumptions provided, (unless one doesn’t like math :) – or chooses to try and challenge the math.

The point is simple: using real world assumptions and the past 10 year time frame and return rates provided in the post, owning was better by nearly 3:1 for increasing net worth.

Also, as stated, that does not imply that will be the case for the next 10 years.

#146 gcr1968 on 10.14.21 at 9:14 am

Fantastic work Garth. I have this argument with friends and family all the time. You have provided a perfectly valid argument with numerical facts. Well done!

Thank you.

#147 OK, Doomer on 10.14.21 at 9:21 am

I find the debate between renters and owners very interesting. When you scrape away all the opinions, all you find is a great number of variables that are unique to the individual situation.

Some people made out like bandits renting, others are making out out like bandits owning. It all depends where and when you happened to buy, sell or rent. No single answer for everyone, hence the healthy debate. And I find it all very informative!

To me, though, it boils down to a simple issue: Interest rates.

I see it as a no brainer to leverage yourself to the hilt in a world of falling interest rates and get the biggest mortgage you can. The past 15 years have been stellar for that strategy.

The problem is you also have to be smart enough and disciplined enough to know when to tap out and sell the dirt, because rising interest rates and huge debt will wipe you out in a heart beat.

And no one is smart enough to time the tap out. Some are lucky and tap out at the right time by accident, but the high financial, social and family friction associated with owning real estate makes a fast calculated tap out impossible for all but the sociopathic.

A financial portfolio allows tap out at warp speed, but more importantly, it allows an infinite amount of tap out scenarios. You can tap out on all of it, a little bit, or none. No such flexibility exists in real estate.

I still think Garth’s advice is the best (yes, a MSU moment). If you can buy real estate and the purchase doesn’t gut your personal finances, go ahead.

We all buy things that don’t make strict financial sense, like buying a new car. It’s OK to blow some $$ sometimes to feel good. Just don’t endanger your family finances doing it.

#148 crowdedelevatorfartz on 10.14.21 at 9:42 am

@#141 IHCTD9

“3X I had 6-12″ of water down there over 20 years. Zero damage done, and I got a nice clean floor out of the deal every time.”

+++

Ah the upside of floods.

Montreal and New York city have major rainfall about every 10 years.
Drowns all the rats in the sewers…..

#149 Dharma Bum on 10.14.21 at 9:53 am

It’s not a contest.

Real estate on its own doesn’t win.

Financial assets on their own don’t win.

It’s all or nothing. Own one to the exclusion of the other, and you’re a loser.

Own a home for your personal benefit. The financial appreciation of it over a lifetime is a windfall that you might be able to benefit from in your old age. The bonus is the enjoyment and security derived from it for multiple decades. Plus your heirs could get something out of it too.

However, you must simultaneously accumulate and own financial assets. The wealth building power, cash flow generation, and liquidity of these assets is the fuel to power the illiquid capital real estate asset that actually COSTS you money for as long as you hold it (maintenance, interest on debt – mortgage or HELOC), repairs, property taxes, utility bills, services, etc.). These financial assets will also eventually enable you to do whatever you want to do in life (as long as it’s something money can buy). Financial assets = freedom.

Financial assets on their own, conversely, do not provide shelter, necessitating the spending on rent, and fail to provide the emotional gratification of security through a place to call your own.

Life is really no fun having one without the other.

So, you see, you need both financial assets and personal real estate to really call your life complete, It’s like having your cake and eating it too.

No contest. The only winners are those that have both.

#150 Daniel on 10.14.21 at 9:59 am

Adding to post #44

I forgot to mention mortgage rate assumption of 2% which arrives at ‘rent’ to ‘own’ net worth of 247k(‘rent’) vs 736k(‘own’)

-If 2.5% mortgage rate, ‘rent’ to ‘own’ net worth becomes 265k vs 731k
-If 3% mortgage rate, ‘rent’ to ‘own’ net worth becomes 283k vs 725k

In each case, owning a primary residence would be far better to net worth than renting.

#151 IHCTD9 on 10.14.21 at 10:14 am

#144 Daniel on 10.14.21 at 9:05 am
#97 IHCTD9 referring to #44 Daniel

You have misunderstood the math.
It is not correct in the real world to compare a 500k home purchase with no mortgage to a 500k investment. Home owners can and almost always do use secure, low interest leverage.

The math speaks for itself. Nobody can argue with the conclusions based on the assumptions provided, (unless one doesn’t like math :) – or chooses to try and challenge the math.

The point is simple: using real world assumptions and the past 10 year time frame and return rates provided in the post, owning was better by nearly 3:1 for increasing net worth.
_____

No, I don’t think so. :) I just don’t understand *YOUR* math. Clearly, looking at net worth is a bad way of looking at the results. You’re only on the ball if you look at the liquid holdings at the end of the 10 years. This is beyond obvious.

It’s hard to crow about hard asset values and net worth when you’re not getting paid a dime. Anyone who both owns a home and has built a decent nest egg understands this. Your math is simplistic and dishonest, and even seems biased despite your claim to be a renter/investor.

But – you believe what you like bro!

#152 alot of people are not paying taxes and getting alot of free stuff from government on 10.14.21 at 10:24 am

crowdedelevatorfartz, you know why taxes are higher and higher and why inflation, cost of living is getting so high and debt is so high? It is because alot of people are not paying taxes but are benefiting from society’s services, goods.

I know people that don’t pay much taxes and never did and you try to say that people that complain about taxes are the problem. If you do pay taxes and think the taxes you pay are not high enough, you can voluntarily pay more taxes each year on your income tax returns. Send more money to whatever governments you choose. You say you will but you never do it. I am sick and tired of people that are benefiting alot from this antiquated system of taxation which is really for socialism and buying liberal, NDP votes, leftists and who pays most of it, the 30% to 40% of the people that pay all the taxes in Canada. Most Canadians don’t even know how much taxes they pay and which governments get the taxes. This is because they don’t pay much taxes in the first place. They are benefiting from all the stuff you said but make most others pay for them for decades. The bully that steals your lunch money that later says he will protect you, this is how it is now.This is done on purpose, by design because most governments want most of the population to be dependent on governments.

Any taxes corporations, businesses pay are much lower and pass on most tax increases to people, consumers anyway. They have to to keep making a profit or survive. They can’t be like the 30% to 40% of Canadians stuck with the governments irresponsible, reckless, on purpose destruction with high taxation, deficits, debt financing, spending. I ask you, how much taxes do the 30% to 40% of Canadians that pay most of the taxes is enough? Currently 64% of all taxes the Federal government, Canada collects is personal income taxes and 35% of Canadians pay them all. Do we have to pay 60%, 70%, 90% 100%? How much taxes are you going to be satisfied with? Do we have to be your slave? It looks like we getting there closer everyday. Will this satisfy you?Liberals, socialists, communists, marxists, and most politicians have no shame and no limit when it comes to stealing from Peter to pay Paul.

They do it with government taxation, laws, debts, deficits, spending on anything to look like heroes with other people’s money. I can be a very generous person with other people’s money they never had to earn, pay taxes, keep, maintain, invest, save. Some taxes were needed and are still needed in the beginning and now but for now and in the future, higher taxes, higher inflation is the so called hidden tax not really hidden just not directly done from governments, it is just plain going to destroy even more work ethic, business entrepreneurship, job creation, free enterprise and personal and business investment plus make society and people even poorer and dependent on government, charities, food banks.

#153 Sail Away on 10.14.21 at 10:24 am

Similar to housing, investing can also take a lot of work and continuous maintenance. Right now, for example, we have piles of free cash with no super-compelling places to park it.

Hmmm. Miners have been bumping… especially uranium. Holy.

Fun fact: uranium has 1 million times the energy density of oil. One kilogram of uranium unleashed can drive a car 1,700,000 kilometers.

#154 Nonno Nicola on 10.14.21 at 10:25 am

#148 Dharma Bum

Truer words were never spoken. The Buddhist Middle Path comes through again. I have gained massively in my principal residence and my financial portfolio has done superbly as well. When is your place in the Bruce Penninsula going to be ready? I’ll head up for a visit.

#155 Zip it on 10.14.21 at 10:28 am

The green laugh track keeps this old cowboy rolling in cash.

http://www.bnnbloomberg.ca/global-gas-crisis-is-spilling-over-into-oil-markets-iea-says-1.1666123

#156 Sail Away on 10.14.21 at 10:40 am

Fun fact #2: if one were to walk at a continuous speed of 5 km/hr, no stops, it would take 335 days to circumnavigate earth.

Doing the same on the sun would take 100 years.

That’s a lot of solar

#157 Sharon on 10.14.21 at 10:43 am

I hear nobody talking about this but in society we have insurance for homes, cars,boats, funerals, life insurance, fire insurance, flood insurance, pet insurance, health insurance. We don’t have for now over 100 years since 1918 Spanish Flu Pandemic pandemic, epidemic insurance. Why didn’t they do this with private insurance companies and private ownership incentives of assets, investments for any future pandemic?

It just seems to me that it does look like more and more that governments, NGO’s and central banks, other world partners thrive on such a world crisis to put more people, small to medium size businesses dependent on governments and their associates, partners to do what they want and keep limiting everyone’s choices.

#158 Dragonfly 58 on 10.14.21 at 11:16 am

Dharma Bum, you hit the nail on the head ! And what you call a winning combo, house plus investments has for me at least been almost impossible. Hard to set anything aside in the context of an income that slowly looses ground to inflation { like a great many middle class and lower incomes have done in Canada during recent history }. A good income in a low cost of living area , probably a possible outcome. But that is a increasingly rare condition for most of us little Beavers.

#159 Charlie on 10.14.21 at 11:17 am

Looks like Will Dunning is doubling down on his report!

https://twitter.com/LooseCannonEcon/status/1448484650557616130

Now his argument is, if the TSX and homes go up by the same amount, homeowners win! Duh Will, it’s called leverage.

Oh, and $60 per month maintenance still sounds fine to him.

How this guy has any credibility is beyond me.

#160 IHCTD9 on 10.14.21 at 11:24 am

#148 Dharma Bum on 10.14.21 at 9:53 am

No contest. The only winners are those that have both.
___

Ah, memories of days gone by, when the Old Canada still existed.

Good luck younger Mils and Gen Z – you’re going to need it (or a passport).

#161 Daniel on 10.14.21 at 11:37 am

#150 IHCTD9

Net worth may mean nothing to you, but it probably means something to everyone else.

And I considered liquid holdings at the end of 10 years. Read the assumptions: they include purchase and sale of the house. You’d be free to rent after selling the house and be nearly 3x ahead of the renting scenario.

The math is not simplistic nor is the concept. You either buy or you rent and invest with the money you are saving. What you do with extra money beyond that scenario is not relevant and doesn’t change the conclusion.

This is nothing personal though….it’s just plain unbiased math. Nothing you are writing will challenge that.

#162 ImGonnaBeSick on 10.14.21 at 11:40 am

These comparisons are ripe for cherry-picking data. Maybe it comes from running a business, but at the end of the day, liquid investments, cash equivalents, and cash flow trump everything.

The investment account, hands-down, beats the home value “assessments” in a purely financial comparison.

It’s been said on here before; but rent is the ceiling for costs and mortgage is the floor for costs. Having consistent, predictable, monthly outflows is incredibly important to maintaining budgets.

Home owners are never honest about their costs of home ownership. Our costs far exceed just the mortgage and down payments. Renovations, repairs, maintenance, equipment, taxes, utilities, insurances and opportunity costs. This is why I’ve always found people that include their homes in their net worth to be somewhat embarrassing… especially when it’s their “assessed” values… Unless you have a decent investment account, I’m sorry, but you’re broke and you better get cracking.

#163 Doug t on 10.14.21 at 11:46 am

#148 dharma bum

what a crock

#164 MBA101 on 10.14.21 at 11:48 am

The B&D portfolio wins from a return on asset (ROA) perspective. So perhaps it was more efficient over the last 10 years. However, most investors care about their return on equity (ROE).

No one bought a 550k home in 2011 with no leverage. Let’s assume the savvy RE investor put down 20% to save on CMHC fees. The return on equity is roughly 380%, using the numbers above. The B&D portfolio with no leverage loses by a large margin. Leverage amplifies profits. It can also amplify losses.

#165 Philco on 10.14.21 at 12:06 pm

#138 Genevive on 10.14.21 at 7:33 am
———————
Absolutly….yes I saw CPP as another tax also. When the government’s in controll chances are they win you lose. Maybe way back in the day a forced savings plan was needed as most didnt save or have pensions.
One thing we know for sure the pigs at the trough have taken care of themselves.
CCP in my view is being inflated away.

Lots of good comments here btw. IHCTD9, LEFT GTA, JAG ect.

RE wealth is this…and not just living in a ballooning priced home that can be a liability if not managed right.

1) A paid for home at a price that was reasonable way back.
2) owning apt buildings (no thanks), office space or warehouse space that large productive companies that are recesion proof that has cash flow that can service everything plus put a wack of doug in your pocket monthly.

Thats when your getting there.

#166 Shawn Allen on 10.14.21 at 12:09 pm

Canada Pension Plan

#138 Genevive on 10.14.21 at 7:33 am said:

Philco, let’s be real. CPP is a payroll tax, it is a tax on your employment income and it is very rare if you can recoup all of it.

*****************
Nothing about that comment is real. It demonstrates a lack of knowledge and financial illiteracy and a general bent to conspiracy theories.

CPP money is invested and has tiny admin costs and is paid out to members. The CPP is a god-send to that huge swath of the population that is low to middle income and fails to invest on their own. The vast vast majority of people will collect more than they paid in. (For one thing the employer doubles their contributions.) The average might be some $600 a month, but do remember we are on a blog that often claims that most are $200 a month away from bankruptcy. For a LOT of people $600 a month is significant to their lifestyle.

#167 Ponzius Pilatus on 10.14.21 at 12:22 pm

159 IHCTD9 on 10.14.21 at 11:24 am
#148 Dharma Bum on 10.14.21 at 9:53 am

No contest. The only winners are those that have both.
___

Ah, memories of days gone by, when the Old Canada still existed.

Good luck younger Mils and Gen Z – you’re going to need it (or a passport).
—————————
Yeah
The “good olden days of yonder”
Could they be just a dream, a mirage, a Fata Morgana, an illusion.
But it fuels the talk on the bench under the 500 year old oak tree.

#168 Faron on 10.14.21 at 12:27 pm

#152 Sail Away on 10.14.21 at 10:24 am

Hmmm. Miners have been bumping…

Invite readers to have a look at Sail Away’s Aug 17 miner picks and crowing the next few days.

Meanwhile, Physicist went with the sector ETF XBM. The differential is huge. Best maintenance is to not listen to randos on the internet excepting your blog host and his guests.

GIGO

#169 Nick on 10.14.21 at 12:28 pm

This isn’t really a comparison that happens in the real world…At what point are people sitting at their parents house with $500k cash and a decision to either buy a house or invest in an ETF?

The difference here, is people NEED a roof over their head. They do not NEED an ETF. Yes, it’s good. But not critical to life. The average person does not have $500k cash ready to drop into an ETF. A mortgage allows people to borrow to buy a house. If someone took out a $500k loan to invest into an ETF – They probably would not have the cash flow or means to buy a home, while repaying the loan back.

The beauty of the house increase is that people NEED the home…AND it increased that much in value.

People need shelter. They need income. They do not need real estate. – Garth

#170 Ponzius Pilatus on 10.14.21 at 12:29 pm

#155 Sail Away on 10.14.21 at 10:40 am
Fun fact #2: if one were to walk at a continuous speed of 5 km/hr, no stops, it would take 335 days to circumnavigate earth.

Doing the same on the sun would take 100 years.

That’s a lot of solar
—————————
But can’t they jump about 20 meter in zero gravity?
Even Captain Kirk at 90 could do it easily before he hits 100.

#171 Dr V on 10.14.21 at 12:36 pm

146 Doomer
148 Dharma

Good posts.

#172 Philco on 10.14.21 at 12:41 pm

#2 Millennial 1%er on 10.13.21 at 12:23 pm
That’s really great garth but I’m going to just keep on buying vgro

money’s not even real anyways
———————–
Money is still real….its just a piss poor store of value now.
VGRO was a screeming buy march april 2020. Not so now like most things. Just enjoy the large divy if you bought back then :-)

#173 facts on 10.14.21 at 12:51 pm

DELETED (Anti-vax, Pro-horse paste)

#174 Sail Away on 10.14.21 at 12:52 pm

#168 Faron on 10.14.21 at 12:27 pm
#152 Sail Away on 10.14.21 at 10:24 am

Hmmm. Miners have been bumping…

——-

Invite readers to have a look at Sail Away’s Aug 17 miner picks and crowing the next few days.

Meanwhile, Physicist went with the sector ETF XBM. The differential is huge. Best maintenance is to not listen to randos on the internet excepting your blog host and his guests.

——-

Sigh. When I report what I do and the results thereof, it does not by any means constitute advice or recommendation. Relax, Mr. Obsession.

#175 Damifino on 10.14.21 at 1:09 pm

#156 Sail Away

Fun fact #2: if one were to walk at a continuous speed of 5 km/hr, no stops, it would take 335 days to circumnavigate earth. Doing the same on the sun would take 100 years. That’s a lot of solar
—————————–

That is fun. But, according to my calculations only 0.000000088% of the total energy emitted by the sun actually impinges upon the surface of the earth.

That’s not much solar. The only way to harness a significant amount of that energy is to have organic processes occurring over many millions of years on the surface creating hydrocarbon molecules.

These compounds then become storehouses of energy that, once humanity learns to use them, raise us all up from the nasty, brutish and short lives we would otherwise still collectively be living.

You’d be surprised how many folks, currently basking in undreamed of comfort, would like to see a return to that situation.

#176 Sail Away on 10.14.21 at 1:16 pm

#170 Ponzius Pilatus on 10.14.21 at 12:29 pm
#155 Sail Away on 10.14.21 at 10:40 am

Fun fact #2: if one were to walk at a continuous speed of 5 km/hr, no stops, it would take 335 days to circumnavigate earth.

Doing the same on the sun would take 100 years.

That’s a lot of solar

——-

But can’t they jump about 20 meter in zero gravity?
Even Captain Kirk at 90 could do it easily before he hits 100.

——-

In zero gravity, one could actually jump an infinite distance, although Austrians may be able to arrest their momentum by throwing turnips ahead, which would impart an equal and opposite reaction to slow and eventually stop their forward movement. This depends, of course, on the number of turnips carried by the Austrian.

#177 Habitt on 10.14.21 at 1:40 pm

166 Shawn Allen cpp contributions are the same for employees and employers. Self employed pay both portions. Yes cpp is crucial to many.

#178 Daniel on 10.14.21 at 1:41 pm

What I find shocking on this board is people who don’t get that net worth matters.
Question: would you rather
a) have a paid-off principal residence you could sell for 2 million dollars and no investments, or
b) a diversified portfolio of 1 million dollars, no house and be renting.

If your answer is b) then I would suggest you that you need some remedial education.
The answer you should choose is a), even if you prefer to rent and invest. Net worth matters. The house can be liquidated and the proceeds invested.
People who argue that at any given time they’d rather have significantly lower net worth and higher investment cash flow are simply not thinking straight.

#179 IHCTD9 on 10.14.21 at 1:43 pm

#161 Daniel on 10.14.21 at 11:37 am
#150 IHCTD9

Net worth may mean nothing to you, but it probably means something to everyone else.

And I considered liquid holdings at the end of 10 years. Read the assumptions: they include purchase and sale of the house. You’d be free to rent after selling the house and be nearly 3x ahead of the renting scenario.

The math is not simplistic nor is the concept. You either buy or you rent and invest with the money you are saving. What you do with extra money beyond that scenario is not relevant and doesn’t change the conclusion.

This is nothing personal though….it’s just plain unbiased math. Nothing you are writing will challenge that.
___

Net worth does mean something to me – it just doesn’t mean getting paid like you seem to think it does. It doesn’t – and that’s a real world fact.

Both options, to buy RE or invest/rent – result in around a million cash in hand after 10 years either way. That was the example. That’s a real world fact.

How can the home owner be doing 4X better if in the 11th year they’re both sitting on roughly a Mil in cash and renting an apartment?

What-ev.

#180 Daveyboy on 10.14.21 at 1:56 pm

I have paid my rent over twice, with my portfolio this year, renting works!

#181 IHCTD9 on 10.14.21 at 1:58 pm

#167 Ponzius Pilatus on 10.14.21 at 12:22 pm
159 IHCTD9 on 10.14.21 at 11:24 am
#148 Dharma Bum on 10.14.21 at 9:53 am

No contest. The only winners are those that have both.
___

Ah, memories of days gone by, when the Old Canada still existed.

Good luck younger Mils and Gen Z – you’re going to need it (or a passport).
—————————
Yeah
The “good olden days of yonder”
Could they be just a dream, a mirage, a Fata Morgana, an illusion.
But it fuels the talk on the bench under the 500 year old oak tree.
____

The days of buying a decent place for 3X income, raising kids, and saving meaningfully for retirement are definitely gone. Where in Canada south of the boreal forest can you do that right now?

Trudeau’s ham-fisted fiscal policy has steered every spare dollar (and then some) into real estate. He’s going for the coup de grâce now with three more dumb ideas that will inflate RE.

What a dork.

#182 Ponzius Pilatus on 10.14.21 at 2:05 pm

#149 Dharna
Life is really no fun having one without the other.
—————————-
You talking about love and marriage?
This I tell you, brother
You can’t have one without the other.
Al Bundy and Peggy.
Priceless.

#183 Habitt on 10.14.21 at 2:05 pm

152 That was an impressive rant. Tiss true lots on the dole including working poor. There will always be scammers, double dippers, fraudsters, lazy asses and such. Caution though those types are at all income/wealth levels. See 2008/2009 financial crisis. The bottom what 40% don’t pay taxes? Would they be above the poverty line if they did?

#184 Ponzius Pilatus on 10.14.21 at 2:11 pm

#176 Sailo
Good one.
But, the Austrian National root vegetable is the Rutabaga, not the Turnip.
How often do I have to point this out?

#185 NoName on 10.14.21 at 2:23 pm

I remember those commi train cabins from when i was small…

Bit early for vodka, but glass of vino with lunch ok, PRESS PLAY anyways !!!

https://www.youtube.com/watch?v=JZuOgD3-hus

#186 Daniel on 10.14.21 at 2:27 pm

#179 IHCTD9

I can see where there is a misunderstanding.
In a real world scenario you can drop 20% down on a house and finance the remainder at a low cost; you don’t need 500k cash for a 500k home.

The real world comparison starts with a 100k down payment on the 500k house and 15k closing costs (in this example). The renter starts with a 115k investment. Everything the owner forks into his home beyond what the renter’s costs are, the renter can invest.

At the end of 10 years, if the house is sold and both the ‘owner’ and ‘renter’ are sitting on liquid assets, the ‘owner’ case has nearly 3x the liquid assets, based on stated assumptions.

If a person had 500k or 1 million to invest, he could put 115k into the house and invest the remainder, similar to the renter. There is no need to pay the house off it it’s entirety when cheap financing is available. This is something that is NOT being taken into account by some.

All additional money in excess of what is required to buy and maintain the home is NOT relevant and does not affect the results or conclusion of the ‘buy’ vs ‘rent’ analysis, since the buyer is free to invest that extra money just as the renter is.

The reality is that in the scenario considered in this post home ownership has most definitely beaten the rent and invest case, despite what anyone claims to the contrary.

The math doesn’t lie.

#187 Sail Away on 10.14.21 at 2:38 pm

#184 Ponzius Pilatus on 10.14.21 at 2:11 pm
#176 Sailo

Good one.
But, the Austrian National root vegetable is the Rutabaga, not the Turnip.
How often do I have to point this out?

——–

Rutabaga is a damn fine vegetable.

Cornish pasty and rutabaga go together like a horse and carriage.

#188 Frank on 10.15.21 at 1:15 pm

ShawnAllen, you just made my point. It is a payroll tax on the higher income earners. They get taxed the most, get the least, it increases their income tax rates as most have RRSPs forced to withdraw them at death or at 71.

The only way the CPP would not be a payroll tax is if was voluntary. If people think it is a good idea, let them contribute to it. The only thing I would ask is give me the extra RRSP room for the total I contribute and my employer contributes. This way, I am responsible for my retirement and my family. This year, maximum is $3,166 for me, $3,166 for my employer. So if people like me opt out of CPP, I should get $6,332 more in RRSP deduction room.

#189 CPP on 10.15.21 at 1:34 pm

Hey, Shawn Allen, if I could contribute my and my employers CPP contribution starting this year, $6,332 and assuming a 4% annual rate of return plus a 3% annual increase in CPP contributions as a reasonable increase for the next 35 years, I would have $875,315.91.

This would provide me with a $35,012.63 annual payout assuming a 4% annual return in 2056. The maximum CPP today is $1,203 per month, assuming a 2.5% annual increase per year, it would be $2,854.96 per month or $34,259.52 a year. Yes, CPP would give some inflation increases every year but upon the death of the spouse, the spouse would only get 55% or $18,842.73 per year or $1,570.22 per month. When the spouse passes away, she will have $0 and not the $875,315.91 or whatever proceeds upon death could be more or less depending on GIC, bond rates 4% or lower or a mix of a diversified portfolio making more than 4%, maybe 5%, 6%, 7% a year rate of return.

It is in the best interest of the CPP and Canadian government and it’s workers to keep it the way it is. This is just the way it is.