The fade

In a normal world (remember that?) 70% of the economy is derived from spending on services. But when a virus hits and lockdowns happen, everything can change. And it did.

The last 18 months brought serious nesting, home renos, new hot tubs, boxes of stuff from Amazon and Wayfair, furniture buys, electronics and (especially) laptops, computerized kitchen appliances and puppies. Lots and lots of puppies. The amount we shoveled into restaurants, airlines, child care, haircuts and clothing stores plunged.

Now the pandemic is ending. The supply chain is a mess. Factories that had to close for a while because of Covid can’t keep up with demand. Look at semiconductors. The car guys can’t get enough to make vehicles. Apple just announced iPhone production will drop by ten million units. No chips. No phones.

Demand is shifting back into services and prices are exploding there, too. Lumber and golden retrievers may cost less than last year, but energy is surging. So food will cost more, along with gasoline, natgas and everything made from oil. The implications for your finances, portfolio and retirement are growing more profound. Are you ready?

It continues. Oil is over $80 a barrel and on its way to a hundred bucks, many believe. Gasoline prices have hit all-time highs in much of the country. There’s an acute shortage of natural gas as the global recovery sucks off supplies. Electricity costs are going up, since these fuels (and coal) are used to make it. Energy is one of the biggest components of inflation. It’s bordering on being out of control.

And look at China. The world’s biggest exporter. Second-largest economy. Power shortages there cut factory production in 20 provinces last month. Prices are rising at the fastest clip in 26 years. Bad news for Wal-Mart shoppers. Official inflation in the States is 5.4% and in Canada’s it’s at 4.2% – far above the Bank of Canada’s target rate of 1-3%.

Economists here figure our CB will let inflation run hot since ruining the fortunes of retirees is less of a danger than crippling the post-Covid economic recovery. The Bank of Canada’s cryptic boss, Tiff Macklem, has downplayed the surge, saying this is all ‘transitory.’ This week the head of RBC disagreed. No wonder. At over 4% inflation is the highest in two decades and, in reality, the sting is far worse than that. Look at housing prices. Insurance rates. A litre of gas. Tomatoes.

The central bank’s mandate is being renewed this year and the T2 gang has to decide to up the inflation ceiling or leave it be (at 2%). In other words, should the BoC let inflation rage in order to assure more growth and jobs, or start chilling with rate hikes? If you’re retired and living on fixed income – like a DB pension or GICs – it’s a simple ask. Quell prices and grow interest. But for working and mortgaged Canadians the desire is for exactly the opposite.

The bottom line is simple. Inflation erodes the value of money. Your income buys less. Purchasing power is destroyed. The ‘inflation protection’ baked into pensions, union contracts, CPP or OAS is a joke, based on the official estimates. So far it looks like Tiff will turn a blind eye to this. CB rate hikes are not expected to click in until the second half of next year.

What to do about it?

Crypto and Bitcoin have been on a tear while the supply chain flounders and inflation rages. But these assets are backed by nothing, are prone to fraud, essentially unregulated and immensely volatile. Many believe BTC will ultimately go to nothing and be the world’s biggest financial scam. Put your pennies here in retirement? Fuggedaboutit.

Gold has been a traditional inflation edge, but bullion pays neither interest nor dividends and has performed poorly during the entire pandemic. Oil’s proven to be a far better bet as the world economy rekindles, and a decent way to gain exposure is through an ETF that owns the Toronto stock market – where commodity exposure is high.

Real estate has inflated wildly, but more due to emotion, FOMO and WFH than demand as a hedge against rising costs. The threats are current over-valuations and the certainty of higher mortgage rates in the next few years. Unless there’s a big move up in incomes, there could be a serious correction in house values.

Equities give excellent inflation protection, but also being danger. For example, the FAANG guys are intensely interest-rate sensitive and could be impacted as CBs eventually more to normalize rates. Banks, on the other hand, like hikes in interest. Overall, having a broad diversification, through ETFs that own an entire market (like the S&P500) is a wise move in times like these. Ditto for REITs. Real estate investment trusts offer the intrinsic inflation-protection of that asset class, along with tax-advantaged distributions.

And speaking of tax, these are the days to ensure no room in a TFSA or RRSP goes unfilled. Remember if inflation is 4% and you need 4% growth to fund your needs, then assets must grow by 8%. So shelter them from tax. Income-split with your squeeze. Fund your adult kids’ tax-free accounts. Have a spousal RRSP. Considering investing some home equity with tax-deductible interest.

GICs and HISAs? Nope, Losers. Move some of that loot into preferred shares instead. The rate reset kind, through an ETF. They rise in value as interest rates increase. More stable than common stock. They pay a regular dividend two or three times greater than a GIC. And you get a tax credit. Everything but a hug & a tickle, both of which are apparently now illegal.

About the picture: “I’m a long time reader if your blog. Thanks for continuing to beat the B&D drum,” writes Michael. “Every time I get the itch to day trade or pour all of my money into bitcoin, your latest post appears and reminds me to stay the sensible course. I’ve attached a picture of Hutch, my wonderful Great Dane who left us yesterday after 9.5 years. This photo is from years ago. When we took him for what would be his last trip to the vet, he was clumsy, drooly and gassy – and I miss him terribly. The house just isn’t the same without him. I would be honoured to have his picture appear on your blog. “

184 comments ↓

#1 Lt. Commander Data on 10.14.21 at 2:44 pm

Here you go. Once again, Canadian humans appear to be allowing the preventable to happen.

Apparently these lives are not worth the rapid test before allowing people to enter, or other measures.

And once again, long term care homes appear to be burning.

But do not worry, the stories are only posted on websites in the overnight hours when no one reads the websites, and main stream media does not report.

https://www.theglobeandmail.com/canada/article-covid-19-outbreaks-rising-in-long-term-care-homes-across-the-country/

#2 EP on 10.14.21 at 2:49 pm

In the meantime, we are asked to do with less while it is good for population to keep growing.
This means GDP still grows so the top tier who benefit from scaling can still reap the returns while the little people as individuals have to do with less.
As we max out resources, including roads and living space, “thank goodness” for remote work so now we can time share our roads and spaces. …remember GDP still has to grow because those returns at the top have to keep rolling in. In the meantime, remember to preserve and conserve.

#3 Paddy on 10.14.21 at 2:52 pm

Hutch looks like he was a happy boy.

“he was clumsy, drooly and gassy”…..had a giggle at that one.

Thanks for sharing Michael.
Rest In Peace ol’ buddy.

#4 TurnerNation on 10.14.21 at 2:53 pm

-#62 Calgary on 10.13.21 at 5:12 pm
Getting married ‘on the books’ will not be a good financial strategy.
People might claim spouse as a tenant, charge a tiny rent and collect UBI* (Say 3k a month).
That’s $6k a month in income. Plus Federal child benefits. *UBI coming likely in 2022-23.

Many are doing this now, only with cash under the table. A small business owner last week told me that people are willing to work under the table in retail/food for $8-10.

—-
– Nope guys the Reset is NOT over. It’s only begun. Our elites want endless CHAOS but *only* in the Former First World Countries. When happens when 911 no longer picks up or responds?

.CHICAGO — The chief of the union that represents rank-and-file Chicago police officers warned that the force could be at half-strength over the weekend as a result of a City Hall mandate that officers must be either vaccinated against COVID-19 or tested regularly for the coronavirus.

.Fears of ‘chaos’ as Italy adopts tough Covid pass regime (news.yahoo.com)

.No guarantee next phase of reopening will take place on October 22nd (Ireland) (irishtimes.com)

——
— Circling back to Q2 2020. What has changed in over a year’s time?

“#35 TurnerNation on 06.08.20 at 4:49 pm
Every system has been turned against us <—
Your house will become a target. But the police are being slowly disbanded. Insurance will skyrocket. Forcing people out of rural areas (little to no policing/long response time.) Into cities.
Man these elites are good, so many steps ahead of us."

#6 TurnerNation on 03.08.21 at 2:15 pm
"This is what I was getting at – multi-dimentional warfare of WW3. As noted mid last year EVERY system designed to protect us has been turned against us.
– Schools have prison-like rules. Learning? Who cares. The global CV rules only ,matter."

#5 ts on 10.14.21 at 2:57 pm

“So food will cost more, along with gasoline, natgas and everything made from oil. The implications for your finances, portfolio and retirement are growing more profound. Are you ready?”

Garth, don’t you think these increases alone will impact housing? How can people afford high prices on these basic necessities when they have such huge mortgages?

#6 Billy Buoy on 10.14.21 at 2:57 pm

Lacy Hunt mentioned today Bond yields are going down.

Enjoy your preferreds while you can and btw…

Keep putting your Fiats into assets….there is NO WAY IN HELL, interest rates are going up in a meaningful way.

NO WAY. Too much debt and the 1% wants it ALL.

Houses to the moon!!! Keep the Ponzi going.

#7 Ryan on 10.14.21 at 3:00 pm

For a man that I view as being insightful and wise, it’s disappointing to read a take on cryptocurrency like the one below. It shows a clear absence of any effort to familiarize oneself with the industry which is about to hit $2.5T in market cap.

“Crypto and Bitcoin have been on a tear while the supply chain flounders and inflation rages. But these assets are backed by nothing, are prone to fraud, essentially unregulated and immensely volatile. Many believe BTC will ultimately go to nothing and be the world’s biggest financial scam. Put your pennies here in retirement? Fuggedaboutit.”

“Many believe” is also a huge cop-out. Your readers come here as they value your position. Is it going to zero Garth? Are you one of the many you speak of?

The only aspect of the industry you were correct on is the volatility. Fraud and Scam? Look at our current financial system to find an abundance of that.

We would never include crypto in a client’s portfolio. The wild swings epitomize its inherent instability. – Garth

#8 Soviet Capitalist on 10.14.21 at 3:03 pm

I know how to fix this issue: remove energy, food, shelter and anything else that went up in price from CPI calculation. Thus, we can claim inflation is zero. Oh, wait, authorities have already thought about this…

#9 facts on 10.14.21 at 3:05 pm

DELETED (Anti-vax, Pro-horse paste)

#10 Yukon Elvis on 10.14.21 at 3:07 pm

Gassed up in Kelowna this am. No regular or mid grade gas available at my local station. Premium gas only at $173.9. Seems like there are a few kinks in the supply chain.

#11 Leftover on 10.14.21 at 3:14 pm

I guess our new neighbours finally woke up to the fade:

SFH bought April 27 2021: $1,472,500
Listed October 13 2021: $1,399,000

The kind of flip only their realtor could love.

#12 TurnerNation on 10.14.21 at 3:18 pm

Copper runaway:

https://finviz.com/futures_charts.ashx?t=HG&p=d1

–Jobs/Reset dept. Remember, the A.I. will be running everything.
Comrade if your social credit score is weak your phone will not open the door.

https://www.blogto.com/eat_drink/2021/10/aisle-24-toronto/
“24-hour convenience stores with no employees are the latest thing in self-serve shopping, and they’ve now been popping up in Toronto thanks to a local company called Aisle 24”
“Shopping in the store works by using an app. You need to first download and create an account in the app which will then let you unlock the door to the store.”
—-
—-

Watch your travel rights! Possible TSA shutdown/work to rule in USA? Our global ruling elites have tons more CHAOS planned. Of course it be at Christmas time.

.TSA says 40% of employees are unvaccinated as deadline looms
https://www.wlwt.com/article/40-percent-tsa-employees-are-unvaccinated/37953501#
The deadline for civilian federal government workers to be fully vaccinated is Nov. 22 — the Monday before Thanksgiving, one of the busiest travel times of the year.

.American Airlines in early September told employees that they “must submit proof of full vaccination as soon as possible – no later than Wednesday, Nov 24, 2021.”
”To be clear, if you fail to comply with the requirement, the result will be termination from the company,” the memo threatened.


— General strike. Keep an eye on the food supply, green & yellow drives it:

.More than 10,000 workers at 14 different John Deere locations went on strike at the stroke of midnight after the United Auto Workers union said it was unable to reach a new contract with the tractor company. (npr.org)


Science in Kanada. Wait this is science, or compliance? Almost back to normal!

https://www.cp24.com/news/york-public-school-board-threatens-to-suspend-teacher-who-wore-respirator-instead-of-blue-surgical-mask-in-class-1.5621883

#13 Damifino on 10.14.21 at 3:18 pm

Oil is over $80 a barrel and on its way to a hundred bucks, many believe. Gasoline prices have hit all-time highs in much of the country. There’s an acute shortage of natural gas as the global recovery sucks off supplies.
——————————

Sounds like Canada has the potential to be an energy superstar to the benefit of every citizen, save for the dweebs in Ottawa who craft policy based upon the scolding of a Swedish teenager.

#14 Ryan on 10.14.21 at 3:24 pm

Nerve hit I suppose

#15 habitt on 10.14.21 at 3:34 pm

Those in the bottom 30% will really take it in the teeth then?

#16 Trexx on 10.14.21 at 3:35 pm

Sounds pretty straightforward to me.Let inflation rage.Hammer all the savers and frugal worker bees. Keep all the house horny kiddies safely in their highly mortgaged house.What could possibly go wrong?

#17 Italians Love RE on 10.14.21 at 3:37 pm

At this rate, Italians will soon be the richest ethnic group in Canada.
It also means many vacant construction jobs.

#18 red falcon on 10.14.21 at 3:39 pm

Inflation affects us all, and gov’t need it to wash away the debt that’s been accumulated. T2 is to blame for him, in his ever spending ways… it won’t balance itself, especially for millions of lower income families.

#19 Quintilian on 10.14.21 at 3:43 pm

For all intents and purposes, we are at full employment, inflation is raging, very little slack left in the economy.

Energy potential galore; proceed with caution Albertans. Oil is probably close to max price.

#20 Dolce Vita on 10.14.21 at 3:45 pm

Fantastic advice Garth:

“Oil’s proven to be a far better bet as the world economy rekindles, and a decent way to gain exposure is through an ETF that owns the Toronto stock market – where commodity exposure is high.”

Started last week with + threadbare $ on a Cdn Oil ETF investment for my Threadbare portfolio. More targeted to oil, quarterly dividend, yield of 15% past year, here is my no-name investment vs. USO and S&P 500 – past 3 months, clear oil is a winner now:

https://i.imgur.com/ugA3Ykh.png

Much to my surprise USOI doing very well too in the past month +4% in price…where they own no underlying securities, are VERY HIGH RISK (an ETN, the new parlance for Derivative), use your cash to make Covered Calls on USO and give you premium income every month as a “coupon” (the new parlance for dividends, still at +20% paid monthly).

Just going to reinvest dividends in USOI and hope for the best (threadbare amount, no new money from me).

—————–

Saw this coming, will ride the wave until the oil price stabilizes.

You’re a good man Garth for letting us know.

#21 vanreal on 10.14.21 at 3:50 pm

The central bank wants to keep interest rates low while inflation continues to increase. They allows them to pay off their huge debt must faster as the debt is devalued by inflation. They did this before after WWII when countries racked up huge war debt. Interest rates won’t be increased for awhile while inflation continues to climb. Too bad so sad for the average person but not for the government.

#22 Nonplused on 10.14.21 at 3:51 pm

“Energy is one of the biggest components of inflation. It’s bordering on being out of control.”

Well, yes, because in a mechanized society energy is everything, and everything is energy.

Even a potato farmer cannot get by without his tractors, irrigation pumps, washers, and tractor-trailers. Some estimates put the total caloric content of modern farming at 90% non-solar inputs like diesel and electricity by the time the food gets to the table.

Other things like laptops are perhaps even worse, because not only does it take a lot of energy to run the manufacturing plant and ship the products, but a lot of the raw materials (plastics especially) are derived from petroleum products. The remainder are mined and mining is very energy intensive. And then the laptop steams along using 45 watts for the entirety of its’ useful life.

So there is perhaps nothing more inflationary and more damaging to the standard of living than prolonged and substantial increases in the cost of energy, because the cost of everything else except labor follows. In the modern world, when the price of energy rises, the price of everything rises.

Fortunately, there are no real physical shortages of energy at the moment. Yes, peak oil is coming but it ain’t here yet. Much coal remains. Natural gas is in good supply. But regulations are strangling those sources and they are doing so intentionally.

The most obvious replacement that scales to the sort of numbers we need to run society as we know it with reduced CO2 emissions is nuclear, but that also is a regulatory nonstarter in much of the world. Plus it takes a long time to build a nuclear plant. We should have started down that road some 20-30 years ago. Instead that is about when we shut it down.

(Yes, I know, “what about Chernobyl and Fukashima??” Both very old designs that could never be built today, at least not in a first or second world country. Even the Russians and Chinese build them better than that now. And then there is the possibility of Thorium.)

#23 Nonno Nicola on 10.14.21 at 3:55 pm

#11 Leftover

May I ask what city this failed flip is taking place in?

#24 canuck on 10.14.21 at 3:56 pm

Looks like the Alberta Gov’t will be given a much needed shot in the arm from increased royalties. Now if they can only find the guts to tell Ottawa to shove their equalization where the sun doesn’t shine… Maybe they should hire some lawyers from Quebec.

#25 Sail Away on 10.14.21 at 3:56 pm

“TSB investigation of Lytton fire finds no evidence of railway operations’ involvement”

https://www.tsb.gc.ca/eng/medias-media/communiques/rail/2021/r21v0143-20211014.html

#26 Summertime on 10.14.21 at 3:58 pm

https://apnews.com/article/business-consumer-prices-inflation-prices-e80c0c24a6ec5ca1c977eccd6294d01b

comparing to Tiff’s policies bitcoin sounds damn stable.

#27 Shawn Allen on 10.14.21 at 3:58 pm

Inflation Indexing a Joke?

Garth said:

The ‘inflation protection’ baked into pensions, union contracts, CPP or OAS is a joke, based on the official estimates.

*********************************
Are you suggesting the official CPI numbers from Statistics Canada are a joke? The one that you said showed 4.2% in the latest number for Canada?

Inflation indexing on both CPP and Old Age Pension I understand is 100% of official CPI.

I don’t get where that’s a joke.

Not everyone spends their money the same way. Official CPI is the best available estimate of overall inflation and erosions of purchasing power, no?

Usually pensions with even 60% inflation protection are known as “gold plated”

The rate of indexing for the CPP and for public service pensions in 2021: 1%. Maybe, given this comment and the erroneous one you made about survivor pensions, you might wish to Google a tad before you type. It’s free. – Garth

#28 Dolce Vita on 10.14.21 at 4:10 pm

#17 Italians Love RE

Not in Italia they don’t. A home is just a home in Italia, not a retirement investment and/or ATM piggy bank.

Those would be Ital-CANADESI you are talking about.

Canada:
https://tradingeconomics.com/canada/housing-index

Italia:
https://tradingeconomics.com/italy/housing-index

Those are averages. Indices higher for Toronto and Vancouver.

ONLY thing comparable in Italia is Milano, scroll down and view price chart on RHS:

https://www.immobiliare.it/vendita-case-indipendenti/milano/?criterio=rilevanza

Near 2X of Pordenone where I live, #1 most liveable city in Italia, lots of jobs and industry:

https://www.immobiliare.it/vendita-case-indipendenti/pordenone/?criterio=rilevanza

[Science prices on your own: €1 = CAD 1.44, 1 sq.m. = 10.764 sq.ft.]

——————–

Ital-CANADESI infected by the Cdn RE disease.

Has yet to come to Italia, thank God.

#29 willworkforpickles on 10.14.21 at 4:11 pm

The fallout of runaway debt transitioned to inflation is settling in as was expected. And the inflation isn’t transitory. This is a big lie as many already know. Inflation is here to stay and will soon be coming at us in spades. The steady news now of rising prices and cost of everything is becoming a bombardment and this is only the real beginning of the worst of what’s to come.
It doesn’t look promising for savers with little saved.
Not working and holding out for higher wages is a movement that is about to be crushed as the rising cost of everything will force the sit at home masses back to work….that is – unless government comes to their rescue all over again in a truly viscous circle of more inflationary debt creation to support them.

#30 Leichendiener on 10.14.21 at 4:13 pm

Garth, you’re right on with this post.

#31 Derek R on 10.14.21 at 4:19 pm

Everybody said that inflation was caused by too much money.

Turns out it was really caused by not enough stuff.

#32 IHCTD9 on 10.14.21 at 4:32 pm

#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.
_______

Here’s my *real world* on a 500K house and equal investment.

The home buyer puts down 20% (100K) and pays 15K (probably low) closing costs. There’s 115K gone right off the bat. From there he pays mortgage payments on 400K at 2% of 20424.00/yr, and COO of 8K/yr (probably low) for 10 years. There’s 284K more gone forever. After 10 years, he will be into it for 399K, and still owe 264K on the 2%/400K mortgage.

Now he liquidates for 1.1 Million. Then he pays off the remaining mortgage of 264K, and shells out 5% to the Realtor and 10K in misc closing costs so say about 65K, There’s another 329K gone forever. So he’s out with 771K in the bank later that week.

In the end, buddy, buddy pumped in 728K in, sold and now has 771K in his bank account free and clear and is looking for an apartment.

This I look at as “money in – money out” to keep it simple. Is there anything wrong with the above?

#33 Brett in Calgary on 10.14.21 at 4:35 pm

Good ol’ XEG and ZPR carrying the missus and I to the promise land!

#34 willworkforpickles on 10.14.21 at 4:36 pm

#19 Quintilian
“For all intents and purposes, we are at full employment,”
………………………………………………………………………………………………………

The sit at home masses aren’t included in the employment stats as they have dropped from the active seeking employment radar screen.
Mega jobs go begging for workers to fill them as a result and production continues to decline.
Higher and higher still inflation will more than likely force the sit at home not working masses back to fill many of those jobs well before wages go up enough to entice them back to work.

#35 espressobob on 10.14.21 at 4:39 pm

Day trading done the right way can be fun with small positions on whatever. Others go deep and get eviscerated as they should. That never gets old.

Investors today own global. One index goes south, another north, it’s all good. Corrections provide buying opportunities while many throw in the towel out of fearing the worst.

Experience counts if you want play this game on your own.

Hate to sound condescending, but history never gets old either…

#36 Joe on 10.14.21 at 4:46 pm

Curious what this means for those preferred bank etfs?

#37 Barb on 10.14.21 at 4:49 pm

Awwww…Hutch was a regal gentleman.
So sorry for your loss.

#38 earthboundmisfit on 10.14.21 at 4:51 pm

Covid-19 v.5 will be brought to you, as was v.4, courtesy of the Ontario PCs who recently, and mistakenly, released Doug from the basement. Slow learners, these folks.

#39 George S on 10.14.21 at 4:51 pm

Bitcoin seems like a perfect opportunity for putting people that are incapable of learning from history in their place.

What does bitcoin represent? -nothing

What can physical bitcoin be used for? -nothing

What protection is in place to prevent it from going to zero? -nothing

Does bitcoin have any of the usual properties that are used to at least get a sort-of idea of what may happen to an investment? -no, none at all

It would seem that an investment that represents nothing, has no security whatsoever in any way, shape, or form, is completely unregulated, and is traded outside of any legitimate infrastructure is an accident waiting to happen.

At least if you pay $2.5 million for a tulip bulb you can plant it and enjoy the flower.
You can always use a sports card for lighting a fire.
Paper money can at least be used for unpleasant toilet paper.
Gold keeps some value because it is a somewhat useful metal and rich people like using it as jewelry.

Maybe by 2030 we will be able to cut our emissions by 45% by banning bitcoin mining on Dec. 20th, 2029 given the progression of energy use for bitcoin mining around the world.

#40 Stone on 10.14.21 at 4:51 pm

#10 Yukon Elvis on 10.14.21 at 3:07 pm
Gassed up in Kelowna this am. No regular or mid grade gas available at my local station. Premium gas only at $173.9. Seems like there are a few kinks in the supply chain.

———

Who buys premium or even intermediate? Seriously?

#41 Chip Chipperson on 10.14.21 at 4:55 pm

DELETED (Anti-vax, Pro-horse paste)

#42 Saving Grace on 10.14.21 at 4:58 pm

We have already our $40,000 left every year after all CPP, OAS, investment income minus taxes, living expenses so we am okay. We will be cutting out some of our expenses, the second car so there is easily $800 to $900 a month in savings from gas, insurance, car payments and more. Yes $50,000 a year set aside every year here, we come.

#43 Millennial 1%er on 10.14.21 at 4:59 pm

this is why you make sure you have rare skills. Your income inflate along with the goods.

300k tc whats good

#44 Ponzius Pilatus on 10.14.21 at 5:01 pm

#1 Lt. Commander Data on 10.14.21 at 2:44 pm
Here you go. Once again, Canadian humans appear to be allowing the preventable to happen.

Apparently these lives are not worth the rapid test before allowing people to enter, or other measures.

And once again, long term care homes appear to be burning.

But do not worry, the stories are only posted on websites in the overnight hours when no one reads the websites, and main stream media does not report.

https://www.theglobeandmail.com/canada/article-covid-19-outbreaks-rising-in-long-term-care-homes-across-the-country
————————-
No wonder.
Many long term home workers refuse to get vaccinated.
The carrot is not working, time for the stick.

#45 Bezengy on 10.14.21 at 5:21 pm

Part of the supply chain issue is that folks who make good money choose not to work overtime due to high taxes. All they see is the bottom line on their paycheck, and another $100 for a 12 hour OT shift just doesn’t cut it.

#46 crowdedelevatorfartz on 10.14.21 at 5:22 pm

@ Anti Vaxxers

Just curious…
Does getting a needle of
Ivermectin in your rectum
hurt?

#47 Wrk.dover on 10.14.21 at 5:27 pm

#40 Stone on 10.14.21 at 4:51 pm
Who buys premium? Seriously?
______________________________

BINGO!

No ethanol in premium. It stores better. Or I should say, it stores, unlike the lower grades.

#48 Lt. Commander Data on 10.14.21 at 5:27 pm

#44 Ponzius Pilatus on 10.14.21 at 5:01 pm
#1 Lt. Commander Data on 10.14.21 at 2:44 pm
Here you go. Once again, Canadian humans appear to be allowing the preventable to happen.

Apparently these lives are not worth the rapid test before allowing people to enter, or other measures.

And once again, long term care homes appear to be burning.

But do not worry, the stories are only posted on websites in the overnight hours when no one reads the websites, and main stream media does not report.

https://www.theglobeandmail.com/canada/article-covid-19-outbreaks-rising-in-long-term-care-homes-across-the-country
————————-
No wonder.
Many long term home workers refuse to get vaccinated.
The carrot is not working, time for the stick.
————————-
Illogical emotional response. Long Term Care Homes can hardly afford to lose workers, but more importantly they have the highest vaccination rate out there. Who of these vulnerable doesn’t get vaccinated? For a patient in these homes to refuse the vaccine would be illogical by any data metric.

Actually, if you manage to read this article, point of which is minimally reported elsewhere and is conveniently behind a paywall so to be seen by fewest eyes, it may result in other questions being asked.

243 seniors homes across New Brunswick have outbreaks. What in the world?

The exponential growth is occurring as Canadian Humans have tools available to them, why are they not being used?

Long Term Care home residence were among the first to have access to vaccine. Why is the booster just now being offered? Isreal had the data for a long time to suggest it was the path for those at risk.

The level of incompetence around this specific issue in Canada has crossed the line of willful disregard. I have no emotions, but in the very least this is highly suspect and illogical. At Star Fleet we would actually make those on the watch answer for these outcomes at threat of penalties.

Am I correct to assume that such court case has commenced, to call those in charge to answer, under consequence of manslaughter for each count?

#49 Gramps on 10.14.21 at 5:28 pm

Thanks for sharing, Michael.
Hutch looked good in your photo.
I remember taking our Great Dane to the vet. Wasn’t easy if they didn’t want to go, and I know it couldn’t have been easy when they didn’t put up a fight either.
RIP Hutch.

#50 IHCTD9 on 10.14.21 at 5:32 pm

Inflation sucks. Mostly for poorer folks, they’ve really been getting hammered in Canada since 2015.

If Trudeau’s new house pumping policies weren’t enough, now everything else is getting jacked up too. What exactly are the Liberals and the BOC shooting for? 100K new homeless folks every year?

We have to expect both massive tax increases and big service cuts the second rates climb too, thanks to our brand new Trillion dollar Liberal debt pile. These will eventually have to be plunked right on top of everything else that’s going on.

What a troop of monkeys.

#51 Yukon Elvis on 10.14.21 at 5:35 pm

#40 Stone on 10.14.21 at 4:51 pm
#10 Yukon Elvis on 10.14.21 at 3:07 pm
Gassed up in Kelowna this am. No regular or mid grade gas available at my local station. Premium gas only at $173.9. Seems like there are a few kinks in the supply chain.

———

Who buys premium or even intermediate? Seriously?
++++++++++++++++++
I do. It beats walking. Regular gas next time. Maybe.

#52 Richard L on 10.14.21 at 5:39 pm

The government being responsible for setting the Bank of Canada inflation target is a conflict of interest. The extreme level of federal debt causes this.

#53 Daniel on 10.14.21 at 5:41 pm

#32 IHCTD9

You’re close for the ‘buy’ case; actually the result is a bit less than the 771k you obtained since some of your approximations were likely a bit low as you mentioned. I get 736k free and clear for the buy case after 10 years.

FYI, The mortgage payments would be ~$1478 per month for the 500k, 20% down house.

The renter/investor starts with 115k and adds on an average about $258 per month for the first year, $221 per month for the second year…(this decreases since rent increases annually whereas mortgage payments remain constant assuming constant interest rate) which is the difference between all the home carrying costs vs all the renting costs, based on assumptions listed in #44 comment yesterday.

Renter/investor ends up with about 247k liquid vs the ‘buyer’ at 736k liquid after 10 years.

Both the buyer and renter are free to invest excess funds at any time as they wish, but that doesn’t affect the comparison.

Also, that was the past 10 years. Buying a 1.2 million dollar home today and hoping for 7+ percent annual gains for the next 10 years is probably not going to happen. Interest rates may also go up from their very low base and negatively affect the ‘buy’ case going forward.

#54 Where'd who go?.... on 10.14.21 at 5:41 pm

Does anyone know what happened to Brian Ripley and his Canadian Housing Price Charts?

no longer at his website (someone else has that url and is trying to recreate?) and google doesn’t produce much in the way of answers.

#55 crowdedelevatorfartz on 10.14.21 at 5:47 pm

@#44 Ponzies Planted Plot
“The carrot is not working, time for the stick.”

+++

Pfft.
Hit them with a burlap sack half full of Rutabagas and see if you get any lip….

#56 Quintilian on 10.14.21 at 5:49 pm

34 willworkforpickles:

If so many people are not working, who then is using up, and putting upward pressure on primary materials?

And how do you explain the explosive growth of GDP?
We are or exceeding pre pandemic levels.

#57 Don Guillermo on 10.14.21 at 5:52 pm

My wife manages her family’s farm. Fertilizer cost last year was $45,000. They locked in a few weeks ago for next year. $90,000. Natural gas is the key input for fertilizer products. Fertilizer is just one input of many for farmers.

#58 crowdedelevatorfartz on 10.14.21 at 5:53 pm

@#48 Lt. Cdr. Data

“Illogical emotional response. Long Term Care Homes can hardly afford to lose workers”

+++

Time for dumb robots?

https://globalnews.ca/news/8261356/robots-long-term-care-residents-vancouver/

#59 John on 10.14.21 at 5:54 pm

We are surprised how little income taxes impact us in retirement, Saving Grace. I get $1,104 in CPP, $626 OAS, my wife gets $945 in CPP, $626 OAS. It is not bad with $3,301 a month between us. We have no RRSPs as we never wanted to get the tax hit later upon death or possibly in retirement. We were never been in a high enough tax bracket, 25% to 28% at most. We never liked the whole RRIF required withdrawals situation. It was not worth it for us. We made a very detailed analysis with our CPP, OAS, interest income and income taxes before and now as retirees. We have been told that we would pay still quite a decent amount of income taxes, deductions in retirement. We paid $16,345 in total income taxes, CPP, EI in our last year of full employment. We are both retired this year at 65 years old.

We do have $180,000 in TFSAs compounded in 7 year 3.5% GICs which is making us $7,001 a year income tax free and no benefits, pensions cuts. We do have other regular GICs, $241,000 in also 3.5% for 7 years which gives us $8,435 a year interest. We are really good savers, been debt free with our modest house and no other debts for 25 years now.

We have two modest $225,000 life insurance policies which are quite affordable until 90 which costs us $165 a month each which is fixed, known payments. This should cover in the event one of our deaths 10 to 11 years of CPP, OAS lost.

We paid total $1,857 in annual income taxes but got $1,221 in Ontario property tax, sales tax credits and GST, HST credits. We paid a total of $636 in total net income taxes of $55,048, a 1.155% net tax rate.

We are also saving $4,818 a year in payroll taxes, CPP cntributions, E.I. contributions and another $2,200 a year in gas to go to work. So really even as we were making $79,000 gross employment income a year were really makes gross $71,982 gross a year due to work related taxes we don’t pay now on our incomes.

Even though we are making 76.47% of our gross employment income we are still able to add $25,000 a year to our savings because of the very little impact of income taxes as seniors, retirees we have higher personal amounts, age amounts $21,000 of income each, $42,000 a year combined is almost income tax free and $7,001 from our TFSAs are income tax free plus some senior tax credits for property taxes etc.

#60 Left GTA on 10.14.21 at 5:58 pm

Cost of living adjustment for inflation for HOOPP for 2021 was 0.73% and they are not guaranteed. Also they removed COLA from the commuted value calculation as well.

#61 Left GTA on 10.14.21 at 6:04 pm

Going back to theory of how great of an investment a house is.

https://www.cbc.ca/news/business/heloc-debt-fcac-1.4978987

#62 Faron on 10.14.21 at 6:04 pm

#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

…not constitute advice or recommendation…

Attention all comments section participants, we’ve got a gaslight special running in comment #152. Quantities are unlimited! Offer expires once Sail Away’s stonks go up.

#63 Sail Away on 10.14.21 at 6:05 pm

#40 Stone on 10.14.21 at 4:51 pm

Who buys premium or even intermediate? Seriously?

——

I buy premium exclusively, and make a point to place the can carefully in my Tesla’s frunk so it doesn’t spill on the way home for use in the lawnmower, leaf blower and chainsaw.

Probably 3-4 gallons per year.

#64 Joseph R. on 10.14.21 at 6:06 pm

#40 Stone on 10.14.21 at 4:51 pm
#10 Yukon Elvis on 10.14.21 at 3:07 pm
Gassed up in Kelowna this am. No regular or mid grade gas available at my local station. Premium gas only at $173.9. Seems like there are a few kinks in the supply chain.

———

Who buys premium or even intermediate? Seriously?

———————————————–

If no regular gas is available for the customer, they have to sell the premium at regular prices.

If you have a turbo engine, the owner’s manual will recommend to fuel your vehicle with premium gas. Turbo engines generally have a lower compression ratio than regular engines (14:1); as such require premium gasoline to prevent pre-ignition (gas burns too fast) to occur. If pre-ignition occurs, then you can experience engine knocking.

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

#65 Cristian on 10.14.21 at 6:08 pm

“Gold has been a traditional inflation edge, but bullion pays neither interest nor dividends and has performed poorly during the entire pandemic.”

Wrong.
After dropping in price in March 2020 together with all the other financial asset classes, gold shot up to over CA$ 2,500 in July-August 2020 (I know because that’s when I sold, for a cumulative gain of more than 40% over 6 years – not because I am some finance genius but because it seemed unnatural to me for gold to rise so fast in such short time).
Yeah, after that gold has performed poorly, but then again, nobody holds gold for capital gains; instead, it is being held to cushion a portfolio against unexpected turmoil and somewhat against inflation.
I am still holding some 10% of my portfolio in gold and feel very comfortable about it.

Most people comfortable about things don’t write a post justifying them. – Garth

#66 Faron on 10.14.21 at 6:10 pm

#43 Millennial 1%er on 10.14.21 at 4:59 pm

.. rare skills…

Is that a BBQ thing?

#67 Lt. Commander Data on 10.14.21 at 6:14 pm

#58 crowdedelevatorfartz on 10.14.21 at 5:53 pm
@#48 Lt. Cdr. Data

“Illogical emotional response. Long Term Care Homes can hardly afford to lose workers”

+++

Time for dumb robots?

https://globalnews.ca/news/8261356/robots-long-term-care-residents-vancouver/

+++

Based on data out of Israel, it would appear that it is time to ensure Long Term Care home residents are given a booster every 3-4 months.

Seems less complicated than robots.

#68 Penny Henny on 10.14.21 at 6:14 pm

#32 IHCTD9 on 10.14.21 at 4:32 pm

Here’s my *real world* on a 500K house and equal investment.

The home buyer puts down 20% (100K) and pays 15K (probably low) closing costs. There’s 115K gone right off the bat. From there he pays mortgage payments on 400K at 2% of 20424.00/yr, and COO of 8K/yr (probably low) for 10 years. There’s 284K more gone forever. After 10 years, he will be into it for 399K, and still owe 264K on the 2%/400K mortgage.

Now he liquidates for 1.1 Million. Then he pays off the remaining mortgage of 264K, and shells out 5% to the Realtor and 10K in misc closing costs so say about 65K, There’s another 329K gone forever. So he’s out with 771K in the bank later that week.

In the end, buddy, buddy pumped in 728K in, sold and now has 771K in his bank account free and clear and is looking for an apartment.

This I look at as “money in – money out” to keep it simple. Is there anything wrong with the above?

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

For one you forgot that the owner had a place to live and the renter had to pay rent on the equivalent place.

next (using your numbers)
Sold for 1.1M less costs of 399k and 329 mortgage and closing cost- net 372k profit tax free

don’t forget that the home owner only used 100k of the 500k he had so he invested the rest at your 7% p.a.

400k turns into 800k after 10 years.

so in total 372k tax free from house sale, 800k in investment account and in the meantime did not shell out 300k in rent.

IHCTD9, you’re better than this.

#69 Dr V on 10.14.21 at 6:21 pm

32 IHCTD9

“The home buyer puts down 20% (100K) and pays 15K (probably low) closing costs. There’s 115K gone right off the bat.”

Only 15K is gone – the $100k is in equity.

“From there he pays mortgage payments on 400K at 2% of 20424.00/yr, and COO of 8K/yr (probably low) for 10 years. There’s 284K more gone forever.”

The portion that is principal repayment is not gone, it is also in equity. Renter is out $216k using Daniel’s $1800 per month. So 284-216+15=$83k that the renter has for
investment spread over the 10 years not taking into account the inflation.

“After 10 years, he will be into it for 399K, and still owe
264K on the 2%/400K mortgage.”

Balance sounds about right.

“Now he liquidates for 1.1 Million. Then he pays off the remaining mortgage of 264K, and shells out 5% to the Realtor and 10K in misc closing costs so say about 65K, There’s another 329K gone forever. So he’s out with 771K in the bank later that week.”

Which I think is about the number that Daniel had??

What you have to do is forget that it is RE, and just pretend it’s an investment.

Daniel may be a low on some costs, but as he pointed out, due to the leverage used, and the similar returns on either investment, the homeowner has easily won over the last 10 years.

#70 It’s pronounced nuclear! on 10.14.21 at 6:28 pm

1) where do they find these BoC governors? Let it run a little hot? Things are seriously out of control right now with the cost of living. Everyone is losing money in real terms when all we get is 1-2% cost of living increases. That should help the recovery really well when none of us have any disposable income!

2) it is pure delusion to think that we can just go to solar and wind, turn off the rest of the energy infrastructure without a transition and let 12 year old Africans mine the lithium and cobalt. Seeing countries turn their coal fired electric generators back on should be proof enough we need to adjust our current plan.

#71 Penny Henny on 10.14.21 at 6:31 pm

#54 Where’d who go?…. on 10.14.21 at 5:41 pm
Does anyone know what happened to Brian Ripley and his Canadian Housing Price Charts?
///////////////

I thought that he announced here that he was hanging up his hat.

For Wrk.over, you might want to check out the gas retailer’s websites. Most premium blends now do indeed contain ethanol.

#72 Ricky on 10.14.21 at 6:33 pm

I retired due to a back injury in 2017 and have been living off my EI, severance, savings for 2.5 years until my pension was transferred to a LIRA then I converted to a 30 year LRIF which I get $2,800 a month until 2049. I did finally get my CPP disability which is $1,325 a month just a few months ago. In 6 years. I will get more than my current CPP disability with CPP, OAS by at least $225 a month, combined $1,550 a month. My wife retired from the rat race in June-2020, the whole covid thing put her off. She is living off her EI and severance now as well. She will get her early CPP in 2 years and that will be $750 a month. We are both fortunate, better positioned than alot of Canadians as we have only a $40,000 mortgage left but no debts, the house is at least worth $650,000 maybe more. Right now, we are able to be in the positive every month by $1,600 which is pretty good and this seems where will be for the next 5 to 6 years. We are fine as our emergency fund is well stocked with 12 months of living expenses, $29,000.

#73 Garth's Son Drake on 10.14.21 at 6:34 pm

Roll the dice and let it run hot.

But we are in for some serious pain if Oil keeps going up unabated, hitting $100 per barrel and beyond.

Nothing motivates CBs to jack rates more than oil shooting up in price.

Some obvious collateral damage would be the Canadian housing market as rising rates will cause a price adjustment and crash depending on much rates adjust.

#74 willworkforpickles on 10.14.21 at 6:35 pm

#56 Quintilian
“We are or exceeding pre pandemic levels.”
“If so many people are not working, who then is using up, and putting upward pressure on primary materials?”
………………………………………………………………………………………………..

Canada GDP 2019…1.742 trillion us dollars
Projected Canada GDP 2021…1.670 trillion us dollars.

Non working people on generous (covid) gov. support (along with working people) have been consuming goods like never before. Many haven’t been paying rent and many utilized mortgage deferrals as well allowing them to spend. Regardless…GDP won’t match nor exceed pre-pandemic numbers this year.

#75 IHCTD9 on 10.14.21 at 6:36 pm

#53 Daniel on 10.14.21 at 5:41 pm
#32 IHCTD9

You’re close for the ‘buy’ case; actually the result is a bit less than the 771k you obtained since some of your approximations were likely a bit low as you mentioned. I get 736k free and clear for the buy case after 10 years.

FYI, The mortgage payments would be ~$1478 per month for the 500k, 20% down house.

The renter/investor starts with 115k and adds on an average about $258 per month for the first year, $221 per month for the second year…(this decreases since rent increases annually whereas mortgage payments remain constant assuming constant interest rate) which is the difference between all the home carrying costs vs all the renting costs, based on assumptions listed in #44 comment yesterday.

Renter/investor ends up with about 247k liquid vs the ‘buyer’ at 736k liquid after 10 years.
———

Well, this shows where we differ in a real world scenario.

Looks like we agree on the buy end: Buddy pumps in 728k over 10 years to round trip a 500k house, and walks away with 771k or thereabouts.

I say the investor gets to pump in the same as the homebuyer: 728k. That’s apples to apples. That’s 6067.00/ month. Let’s say he pays 1300 for rent, so he pumps in 4766 every month for 10 years starting Jan of year one with the first deposit of 4766. He’d walk away with 783K after 10 years at 6% compounded annually. I’d call that conservative, and both tax shelters would be pretty much maxed out depending on income.

This is pretty much the result Garth gave yesterday, and we’re comparing the absolute best case house buy scenario to slightly sub-par market returns that pretty much anyone can expect.

#76 Sail Away on 10.14.21 at 6:43 pm

#59 John on 10.14.21 at 5:54 pm

We do have other regular GICs, $241,000 in also 3.5% for 7 years which gives us $8,435 a year interest.

——-

In a non-registered account? Oh my.

Your post causes me physical pain.

#77 pPrasseur on 10.14.21 at 6:49 pm

“And look at China. ”

Absolutely, declining China is where you should look because that’s where the next crisis will come from, and it will be epic!

The RE bubble in China is gigantic, a mega ponzi scheme that drives much of the economy and that is completely stalled right now and is going to explode unless a massive amount of investment happens, very soon. And given the current level of confidence in that market that’s not likely. Evergrande is the first domino but others have fell already and more will follow.

Recurring power outages caused by state mismanagement of the coal supply and a silly ego dispute with Australia. And what to say of Covid massive cover-ups if not worse…

Samsung is leaving China, many Japanese companies and others too, even Apple is pulling out a portion of its activities (and instructing its suppliers to do the same).

If China Ponzi scheme goes bust what do you thinks will happen to our own dirty little secret…

#78 facts on 10.14.21 at 7:04 pm

DELETED

#79 JSquared on 10.14.21 at 7:05 pm

It would be interesting to track how much money homeowners vs. renters pile into their homes, over and above the monthly expenses, throughout the years. Pride of ownership seems to go hand in hand with exorbitant spending on never ending re-decorating, renos, gardening/landscaping, maintenance, tools, sound systems, man caves, pets, entertaining etc., not to mention at least 1-2 vehicles in the garage for commuting. To each their own.

Being a renter myself I’ve never gotten into accumulating “stuff”, keep life simple, call the landlord anytime there’s a problem and live car free by living close to work.

Maybe it’s a North American thing, but from what I’ve seen, something about home ownership really does seem to trigger hyper-consumerism.

https://www.youtube.com/watch?v=KmUyTauQBQ4

#80 Ponzius Pilatus on 10.14.21 at 7:10 pm

#57 Donnie G
Time to go organic

#81 Philco on 10.14.21 at 7:15 pm

#54 Where’d who go?…. on 10.14.21 at 5:41 pm
Does anyone know what happened to Brian Ripley and his Canadian Housing Price Charts?
no longer at his website (someone else has that url and is trying to recreate?) and google doesn’t produce much in the way of answers.
——————————
Ya I talked to him a waz back. He pulled the chute and another guy was apparently taking over.
Actually Ill give’em a holler see how he’s doing?

#82 IHCTD9 on 10.14.21 at 7:20 pm

#64 Dr V on 10.14.21 at 6:21 pm
32 IHCTD9

“Only 15K is gone – the $100k is in equity.”

Of course, but 115K left his wallet.

“The portion that is principal repayment is not gone, it is also in equity.”

Of course, but 284k left his wallet.

“Balance sounds about right.”

I used a mortgage calculator for that number so it should be close.

“Which I think is about the number that Daniel had??”

His was lower.

“What you have to do is forget that it is RE, and just pretend it’s an investment.”

Correct me if I’m wrong, but you are agreeing with my general totals, yes?

“Daniel may be a low on some costs, but as he pointed out, due to the leverage used, and the similar returns on either investment, the homeowner has easily won over the last 10 years”

Not if you play it apples to apples, see my subsequent reply to Daniel above.

#83 AM in MN on 10.14.21 at 7:23 pm

As I’ve mentioned here before, its that ’70’s show again…

You’ll forgive me if I DO think about monetary policy once in while, but there is always a lag between the money printing and the bad effects. In this case, the worse will be the public sector strikes that will be coming in the next few years. They will want big pay hikes to cover the BoC created inflation, which will cause the BoC to have to print even more money to give to the government(s).

I disagree that loose money causes economic growth.

England built a global empire based on two centuries worth of gold standard zero inflation.

Investment and productivity gains cause growth and wealth.

Long term, this might help hasten the day when Canada can become a truly wealthy nation once the young ones grow up seeing the mess and having to pay for it, and decide they’d rather opt for a wealth producing political structure instead of a wealth destroying one.

It isn’t hard. Get off the global warming fraud kick and other anti-industrial policies and focus on providing things that people actually use.

Hydrocarbon energy will die off when no one buys it any more. Until then, while people want electricity and transportation and warm homes, sell them what they want. If BC had built any of the LNG plants it talked about for 10 years, they wouldn’t have a deficit right now.

BTC at $100k by year end. I don’t know anyone credible who thinks it’s going to zero, including fantasists that think quantum computing that can crack the wallet codes will take it there, assuming that the people that run what is now the world’s largest computer network (completely decentralized), won’t figure out a work around.

Rulings by the SEC that BTC is “property” like gold, while others are “securities”, needing regulation, will allow some of the big money to start moving in. Legal tender in Brazil soon will help, added to the other small countries where it is not working out and peasants without bank accounts are gaining real wealth from remittance payments.

#84 Doug t on 10.14.21 at 7:26 pm

#4 turnernation

Your sounding more and more correct all the time buddy – the world is definitely heading in a direction of societal lockouts in many forms – the future ain’t for the weak

#85 Ponzius Pilatus on 10.14.21 at 7:29 pm

#79
Maybe it’s a North American thing, but from what I’ve seen, something about home ownership really does seem to trigger hyper-consumerism.
——————
Yes
But everyone is trying to catch up
Race to the bottom

#86 Reality Check on 10.14.21 at 7:35 pm

Debt pig governments love inflation

The Liberals must be salivating at the prospect of 5% annual inflation for the next decade. Cuts the deficit by more than 50% in real terms.

Long-term inflation at 5% would double interest rates and blow up the budget with debt service costs. – Garth

#87 Philco on 10.14.21 at 7:36 pm

#40 Stone on 10.14.21 at 4:51 pm
#10 Yukon Elvis on 10.14.21 at 3:07 pm
Gassed up in Kelowna this am. No regular or mid grade gas available at my local station. Premium gas only at $173.9. Seems like there are a few kinks in the supply chain.
———
Who buys premium or even intermediate? Seriously?
———————
Someone with a high compression engine?
57 Chevy with an LT1 350 @ 10.5:1….
Or hot shot with his Ferrari at 12.5:1?
or me with the Tundra when Costco ran out of Low and threw in prem. for the same $s

#88 Quintilian on 10.14.21 at 7:44 pm

#74 willworkforpickles

“Canada GDP 2019…1.742 trillion us dollars
Projected Canada GDP 2021…1.670 trillion us dollars.”

That is still quite impressive, given that prices were depressed at the begining of 2021 which dragged down GDP for 2021.

Also 2020 GDP would have been lower than 2019, as the world economy had started to slow.

The Pandemic proved to be a politician’s dream, it made the low lives look like heroes.

#89 Nonno Nicola on 10.14.21 at 7:44 pm

#77 pPrasseur

Would you point out where our empty cities are in Canada? You are comparing a massive housing surplus in China to a housing shortage in Canada. See anything wrong with your comparison?

#90 IHCTD9 on 10.14.21 at 7:47 pm

#68 Penny Henny on 10.14.21 at 6:14 pm

“For one you forgot that the owner had a place to live and the renter had to pay rent on the equivalent place.”

I said absolutely nothing about the rent/invest scenario in that post.

“next (using your numbers)
Sold for 1.1M less costs of 399k and 329 mortgage and closing cost- net 372k profit tax free”

Buddy pumped in 728, and left with 771 after 10 years. Let me know if you disagree. I’ll let you decide what the profit portion of that is, it don’t really matter, he’s got 771K.

“don’t forget that the home owner only used 100k of the 500k he had so he invested the rest at your 7% p.a.”

No, he needs the cash to pay the mortgage. If the homeowner can do both, then I propose the renter can also buy a house in addition to investing with his un-invested funds.

Then we can throw the original comparison we were trying to make in the trash while we’re at it…

“IHCTD9, you’re better than this.”

Sure.

#91 Sail Away on 10.14.21 at 7:54 pm

#62 Faron on 10.14.21 at 6:04 pm
#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

…not constitute advice or recommendation…

——–

Attention all comments section participants, we’ve got a gaslight special running in comment #152. Quantities are unlimited! Offer expires once Sail Away’s stonks go up.

——–

A cripple in a wheelchair once tried to pick a fight with me. This feels hauntingly similar. Please stop.

#92 Steven Rowlandson on 10.14.21 at 7:54 pm

“In a normal world (remember that?)”
That might have been way back in the early 1960s maybe.

#93 Flop… on 10.14.21 at 8:01 pm

Stuck in traffic on 41st Avenue in Vancouver.

Looked over and someone had written some graffiti with on the retaining wall with the smiley face beside.

Quit Your Job…

M47BC

#94 Philco on 10.14.21 at 8:07 pm

#80 Ponzius Pilatus on 10.14.21 at 7:10 pm
#57 Donnie G
Time to go organic
——————
LOL
Ponzi you never been on a farm?
We used Cow and Chicken sh*t on our small farm.
FYI
“Although the organic crop production process only uses fertilizer and nutrients sourced 100% naturally, all farmers depend on nutrients found in fertilizers and supplements to keep their soil and crops healthy for a better growing environment.”

#95 Scott on 10.14.21 at 8:07 pm

I don’t like GICs at these low rates of 1.8% to 2.5% right now but Sail Away, I don’t think you read the whole post of John and his wife, they paid only 1.15% total income taxes on income of $55,000 CPP, OAS, tax free GIC interest, plus their non-registered GIC interest and are able to save $25,000 a year to their savings. They are even using some of their GIC interest to pay for $225,000 life insurance polices for each other for $165 a month times two to replace 10 to 11 years of CPP, OAS pensions upon death of one of their spouse.

Yes, they are making net after taxes 3.5% and it looks like they are very conservative with this and using life insurance, GICs, tax free GICs and adding savings of $25,000 a year on $421,000 investments. They are not doing too bad being ahead $100,000 in 4 years, $200,000 in 8 years. They also have the benefit of $225,000 tax free upon the death of a spouse if they die before 90.

#96 Daniel on 10.14.21 at 8:15 pm

#75 IHCTD9

Your end result for the buy case was somehow close, but your costs are off. Based on stated assumptions over 10 years I will break this down, but note that the 10 year totals do not tell the whole story since the timing of each expense and investment are important.

Total property taxes paid are $40515, total maintenance paid is $28939, total home owner insurance is $13891, total mortgage interest is $70161, total principal repayment is $108735+$100,000 down payment (this you get back after sale of house but does affect cash flow during the 10 years, and this is taken into account) + $15,000 closing fees at start.

Home value after 10 years is about 1,066,000. Remaining mortgage is about $291k. Sales and closing fees assumed about 39k.
Liquid value about 736k for ‘buy’ case.

Total inputs are 377k spread out over the 10 years (including the principal repayment which is returned at the end).

The 377k input cash spread out over 10 years can be used for the ‘rent case’ to pay for rent and tenant insurance. The renter will pay $250,000 in rent and $2900 in tenant insurance. A crude approximation would leave about $124,000 to invest, which includes the 115k at the start and the remainder spread out. Renter/investor ends up with 247k.

One thing to note is that total renting costs overtake total ownership costs after year 7 since rents constantly increase, whereas mortgage payments remain constant given a constant interest rate. This means that an investor would need to remove a certain amount from their portfolio each month after year 7 to keep total input costs equal and make the comparison valid. Yes, this is valid and must be accounted for. That is why the 124k total at the end of 10 years may seem a bit low on the surface…however it is accurate.

The total 10 year numbers just provided above don’t tell the whole story because their final effect depends on the timing. However, the final numbers of 736k vs 247k include the effects of inflation and compounding as well as the timing of each expense and investment.

I hope that helps.

If different cost assumptions are made, obviously the results change, but these are the results for the example provided.

#97 Shawn Allen on 10.14.21 at 8:16 pm

The rate of indexing for the CPP and for public service pensions in 2021: 1%. Maybe, given this comment and the erroneous one you made about survivor pensions, you might wish to Google a tad before you type. It’s free. – Garth

**********************
Thanks for the advice on Google which says CPP and Old age pension are indexed to CPI.

It does also say CPP also got only 1% for in 2021 which was presumably due to low inflation in 2020.

“Canada Pension Plan (CPP) rate increases are calculated once a year using the Consumer price index (CPI) All-Items Index. They come into effect each January. These increases are legislated under the Canada Pension Plan so that benefits keep up with the cost of living.”

Based on the 4.2% inflation you mentioned, CPP and old age pensioners can expect a bigger increase this year.

#98 Shawn Allen on 10.14.21 at 8:22 pm

Bring on 4100 oil

#73 Garth’s Son Drake on 10.14.21 at 6:34 pm

“But we are in for some serious pain if Oil keeps going up unabated, hitting $100 per barrel and beyond.

****************************
Depends who you include in “we”. A lot of Albertans will benefit from $100 oil.

#99 kc on 10.14.21 at 8:28 pm

#40 Stone on 10.14.21 at 4:51 pm
Who buys premium? Seriously?
______________________________

BINGO!

No ethanol in premium. It stores better. Or I should say, it stores, unlike the lower grades.

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

My Carb’ed truck does not run on corn juice…..

#100 Do we have all the facts on 10.14.21 at 8:35 pm

I find if interesting that financial advisors around the world have come to view the S&P 500 index as a relatively risk free investment opportunity.

Between September 2020 and September 2021 the total market capitalization of the S&P 500 increased from $27.9 trillion (US) to $36.54 trillion (US).

Viewing a $8.7 trillion (US), or 31% increase in market capitalization of the S&P 500 in just one year as a foundation for future performance seems a bit risky to me.

I get that the S&P 500 has a great track record but the current prices of the shares of most companies within the S&P 500 have increased through a demand driven by the current lack of other investment options. There are over 50 ETFs based on the S&P 500 and their popularity is increasing every day.

As I mentioned in a previous post the average P/E ratio of
companies within the S&P 500 has increased by over 70% in the last year. This is far cry from historical P/E ratios for the S&P 500 and creates the potential for a retreat to traditional P/E ratios in the near future.

The current popularity of an investment option should not undermine the importance of market fundamentals.

The index is a proxy for the US economy. In the long run, never bet against America. – Garth

#101 Faron on 10.14.21 at 8:36 pm

#91 Sail Away on 10.14.21 at 7:54 pm
#62 Faron on 10.14.21 at 6:04 pm

A cripple in a wheelchair once tried to pick a fight with me. This feels hauntingly similar. Please stop.

Maybe telling them how to walk was a bad idea?

#102 Don Guillermo on 10.14.21 at 8:43 pm

#80 Ponzius Pilatus on 10.14.21 at 7:10 pm
#57 Donnie G
Time to go organic
++++++
Hahaha PP. I knew you didn’t like people wealthier than you – let’s just call them plumbers but I had no idea you hated the poor as well. I know, let them eat organic cake.

#103 Overheardyou on 10.14.21 at 8:47 pm

I wonder what the odds are that since so many are over leveraged on their homes, inflation causes a spike in homes for sale despite record low rates

#104 Dr V on 10.14.21 at 8:59 pm

82 IHCTD9

“Of course, but 115K left his wallet.”

If the renter buys an investment, the $115k has also
left his wallet. You are arguing that because an
investment is not liquid, the money is gone. Irrelevant
to the return.

“Of course, but 284k left his wallet.”

Again, a portion became equity with gains and $216k plus inflation has left the renters wallet, for which he gets no equity gains.

“I used a mortgage calculator for that number so it should be close.”

But you count the $264k as money put out by the homeowner. The financier put that money in, and upon sale of the house, took it back. Only cost the homeowner some interest included in the $284k. That’s the leverage that the renter did not have access to. And again the homeowner gains on it. It’s called OPM for a reason.

“Correct me if I’m wrong, but you are agreeing with my
general totals, yes?”

The singular components seem OK, but not the logic applied.

I’m surprised you’re not grasping the effect. The house
immediately starts appreciating at almost $40k/yr. The
renter’s stash at about $8-9k.

#105 VladTor on 10.14.21 at 9:13 pm

Garth, very informative today.
What conclusion I did for myself – useful for everybody too!
Pretty soon I can pick up very good and expensive puppy from the street for free. Why ? WFHs will return in office and they don’t need anymore puppy OR FOMO home buyers don’t have enough money for dog food b’s lost job or b’s interest will be increased and somebody have no choice as sell the house and throw out the unfortunate puppy (of course in night time and not city where he/she living now) and so on….

If Dorothy want to have new puppy – just wait and look around you when going to park for relaxing. Always take with you dog leash.

#106 Philco on 10.14.21 at 9:18 pm

#97 Shawn Allen on 10.14.21 at 8:16 pm
“Canada Pension Plan (CPP) rate increases are calculated once a year using the Consumer price index
Based on the 4.2% inflation you mentioned, CPP and old age pensioners can expect a bigger increase this year.
—————————-
I think the points is kinda moot.
When your getting crushed with like 20% increases on meat, fuel, building materials and other things….
CPP is peanuts….and it ain’t been keeping up for sometime.
Headlines may read “No steak for you.”
I bought a side this month. Cut and wrapped $5lb

#107 VladTor on 10.14.21 at 9:22 pm

Garth…CB rate hikes are not expected to click in until the second half of next year.

*********
I’m skeptical about this. Earlier! My forecast in first quarter next year or if things will going in same pace like now (inflation, government debt, energy cost) we will see increasing rate before Christmas and 50/50 it will not be at 0.25 – will be 0.5 or even 0.75.

The next mortgage hikes come tomorrow. Five years goes up to 2.44%. – Garth

#108 Nonno Nicola on 10.14.21 at 9:25 pm

#160 IHCTD9

The old Canada you keep referring to are those who invested in real estate in the “good ol days.” The new Canada is for those who have to enter the bloated real estate market at this time. Has it occurred to you that some boomers have multiple properties and have inherited millions from estates in this “new Canada” and passed this along to their children?

#109 The Joy of Adele on 10.14.21 at 9:27 pm

Hey Garth… this can’t be news to you, but Adele has some new music out…. 6 years you’ve been waiting… you must be super pumped!

#110 Nonno Nicola on 10.14.21 at 9:32 pm

“Never bet against America” – Garth

Truer words were never spoken! Especially when America has the world’s reserve currency…

#111 Nonno Nicola on 10.14.21 at 9:39 pm

#91 Sail Away

“A cripple in a wheelchair once tried to pick a fight with me.”

Did the cripple kick your ass?:)

#112 Wrk.dover on 10.14.21 at 9:49 pm

#71 Penny Henny on 10.14.21 at 6:31 pm

For Wrk.over, you might want to check out the gas retailer’s websites. Most premium blends now do indeed contain ethanol.
___________________________

Thanks for the kick in the teeth! I just googled to learn the $185 of Esso Synergy I bought yesterday is only good for molotov cocktails. Now I have to transfer that monkey piss from the twin tank camper to the already full daily driver and logging monster 4X4, and take the camper to a Shell station before they spray gurry all over the road.

I’m now understanding the January 6th mob’s emotions.

I haven’t found out what is in the Atlantic based Irving gas in the rest of our rides yet.

Every last facet of the World is messed up.

#113 IHCTD9 on 10.14.21 at 10:09 pm

#104 Dr V on 10.14.21 at 8:59 pm
82 IHCTD9

“Of course, but 115K left his wallet.”

If the renter buys an investment, the $115k has also
left his wallet. You are arguing that because an
investment is not liquid, the money is gone. Irrelevant
to the return.

“Of course, but 284k left his wallet.”

Again, a portion became equity with gains and $216k plus inflation has left the renters wallet, for which he gets no equity gains.

“I used a mortgage calculator for that number so it should be close.”

But you count the $264k as money put out by the homeowner. The financier put that money in, and upon sale of the house, took it back. Only cost the homeowner some interest included in the $284k. That’s the leverage that the renter did not have access to. And again the homeowner gains on it. It’s called OPM for a reason.

“Correct me if I’m wrong, but you are agreeing with my
general totals, yes?”

The singular components seem OK, but not the logic applied.

I’m surprised you’re not grasping the effect. The house
immediately starts appreciating at almost $40k/yr. The
renter’s stash at about $8-9k.

—- –

I understand what you’re saying, but the minutiae you’re pointing out doesn’t matter. The point was to see what the homeowner walked away with, not categorize all the funds involved. Dude, I know what equity is and how it works. I clearly stated that I simplified the numbers into a “cash in – cash out” answer to that.

So, do you agree that Buddy pumped in 728k over 10 years to round trip a 500k house, and walked away with 771k or thereabouts?

Or not?

#114 IHCTD9 on 10.14.21 at 10:11 pm

#108 Nonno Nicola on 10.14.21 at 9:25 pm
#160 IHCTD9

The old Canada you keep referring to are those who invested in real estate in the “good ol days.” The new Canada is for those who have to enter the bloated real estate market at this time. Has it occurred to you that some boomers have multiple properties and have inherited millions from estates in this “new Canada” and passed this along to their children?

———

Yep. And sure, I’ll probably be one of them (except I’m Gen X).

#115 IHCTD9 on 10.14.21 at 10:23 pm

#96 Daniel on 10.14.21 at 8:15 pm
#75 IHCTD9

Your end result for the buy case was somehow close, but your costs are off…
———

Let’s deal with the meat and potatoes first, we can argue all the details later. That’ll save us a ton of typing.

It seems to me you essentially agree that the homeowner pumped in 728, and left with 771 (or 736 per your numbers) after 10 years.

Yes?

#116 Dd on 10.14.21 at 10:31 pm

I’d be interested in more thoughts on Bitcoin. I used to dismiss it as another bubble and I understand it technically could go to zero but only if everyone who’s buying and holding decide they dont want it anymore. I figured with some 80% of bitcoin currently being held long term by institutional money and so called whales etc the future prices of bitcoin could easily double as theres not much available. I’ve got some s and p and I own silver and gold miner etfs. It made sense to me to get some bitcoin. Am I an idiot? If I am… please advise why

#117 BillyBob on 10.14.21 at 10:33 pm

#102 Don Guillermo on 10.14.21 at 8:43 pm
#80 Ponzius Pilatus on 10.14.21 at 7:10 pm
#57 Donnie G
Time to go organic
++++++
Hahaha PP. I knew you didn’t like people wealthier than you – let’s just call them plumbers but I had no idea you hated the poor as well. I know, let them eat organic cake.

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

If he hates plumbers for being wealthier than him, he’ll really loathe pilots lol.

Frankly I find the envy silly. Like cripples picking fights from wheelchairs. Not a great move, tactically speaking.

#118 Sail Away on 10.14.21 at 11:16 pm

#95 Scott on 10.14.21 at 8:07 pm

I don’t like GICs at these low rates of 1.8% to 2.5% right now but Sail Away, I don’t think you read the whole post of John and his wife, they paid only 1.15% total income taxes on income of $55,000 CPP, OAS, tax free GIC interest, plus their non-registered GIC interest and are able to save $25,000 a year to their savings. They are even using some of their GIC interest to pay for $225,000 life insurance polices for each other for $165 a month times two to replace 10 to 11 years of CPP, OAS pensions upon death of one of their spouse.

Yes, they are making net after taxes 3.5% and it looks like they are very conservative with this and using life insurance, GICs, tax free GICs and adding savings of $25,000 a year on $421,000 investments. They are not doing too bad being ahead $100,000 in 4 years, $200,000 in 8 years. They also have the benefit of $225,000 tax free upon the death of a spouse if they die before 90.

———

I read it. The painful part is the unused RRSP. This could have added $70-90k to their portfolio and been drawn down with little effect on overall taxation. Exploit, exploit.

#119 DON on 10.15.21 at 12:34 am

#93 Flop… on 10.14.21 at 8:01 pm
Stuck in traffic on 41st Avenue in Vancouver.

Looked over and someone had written some graffiti with on the retaining wall with the smiley face beside.

Quit Your Job…

M47BC

*****
Stuck in traffic on 41st….brings back memories, but I do not miss that traffic.

Lots of folks are thinking about retiring early. changing Provinces or going to competitors.

#120 Diamond Dog on 10.15.21 at 5:54 am

#7 Ryan on 10.14.21 at 3:00 pm
#39 George S on 10.14.21 at 4:51 pm

https://www.cnbc.com/2021/10/14/united-wholesale-mortgage-ditches-its-plan-to-accept-bitcoin-ethereum.html

United Wholesale (U.S. second largest mortgage lender hyping the use of Bitcoin as an SPAC and only mortgage lender to do so) sold all of 6 homes in crypto and is now scrapping the idea of using bitcoin, citing incremental costs and regulatory uncertainty.

“It’s the latest evidence that many cryptocurrency users are treating it as an investment rather than a replacement for money. While cryptocurrency prices have risen in the last year, it’s still seldom used to buy and sell physical goods. Instead, most investors adhere to a “HODL” (hold on for dear life) mindset, wherein they buy and hold their virtual coins in hopes they’ll rise in value. In the last year, that’s been a good bet — bitcoin is worth more than five times as much as it was a year ago, while ether is up more than 10 times.” – CNBC

I’m far from the first to say it, Bitcoin = Ponzi.

#121 Do we have all the facts on 10.15.21 at 8:20 am

Real GDP in the United States (inflation adjusted and chained to $2012) grew from $13.3 trillion in 2001 to $19.37 in 2021. This represents an increase of $6.07 trillion over 20 years at an average annual increase in real GDP of $300 billion per year.

In September 2001 the total debt of the US Federal government was $3.34 trillion or $11,715/capita.

By September 2021 the total debt of the US Federal government was $28.43 trillion or $85,250/capita

Between 2001 and 2021 total debt of the US Federal government increased by an average of $1.25 trillion per year, or an average of $950 billion/year more than average annual growth of real GDP.

I understand that the United States has evolved into an economic powerhouse however a considerable portion of the US economy that exists in 2021 was achieved through the assumption debt. A level of debt that will be difficult, if not impossible, to repeat in the future.

At some point the debt level of the Federal government of the United States will come under scrutiny and this scrutiny will result in changes within the global economy.

All I was pointing out was that a major contributor to growth of the S&P 500 over the past 12 months was a belief by most investors that past performance will continue in to future.

I am not certain that betting on an economy that required the assumption of $25 trillion in additional debt over the past 20 years is a such sure thing.

Just one mans opinion!

#122 IHCTD9 on 10.15.21 at 8:21 am

#112 Wrk.dover on 10.14.21 at 9:49 pm
#71 Penny Henny on 10.14.21 at 6:31 pm

For Wrk.over, you might want to check out the gas retailer’s websites. Most premium blends now do indeed contain ethanol.
___________________________

Thanks for the kick in the teeth! I just googled to learn the $185 of Esso Synergy I bought yesterday is only good for molotov cocktails. Now I have to transfer that monkey piss from the twin tank camper to the already full daily driver and logging monster 4X4, and take the camper to a Shell station before they spray gurry all over the road.

I’m now understanding the January 6th mob’s emotions.

I haven’t found out what is in the Atlantic based Irving gas in the rest of our rides yet.

Every last facet of the World is messed up.
_____

I don’t think you’re ever going to get away from ethanol in gasoline, if you’re worried about your gaskets and seals I do believe you can get replacement parts that are compatible with it these days.

Pure Ethanol is actually a great fuel in a lot of ways. Super high octane, very cool running, low emissions, renewable, and you can make like double the power of gasoline if you want.

Drawbacks are you can’t see it burning in daylight, Stoichiometric AFR for ethanol is 9:1 so running it in an engine designed for gasoline literally cuts your fuel mileage in half, it’s very expensive, not the best in winter, it is corrosive to some materials.

But at least if you run out of Vodka unexpectedly some evening after the LC closes up, you’ve got options.

#123 crowdedelevatorfartz on 10.15.21 at 8:24 am

@#117 BillyBob

” Like cripples picking fights from wheelchairs. Not a great move, tactically speaking.”

+++++
I disagree.

Years ago a friend of mind who is in a wheelchair was heading home late on a Saturday night.
He had to pass through the drunks on Grandville St.
There was a fleet of US navy ships in town that weekend so the American Shore patrol were out with the VPD keeping an eye on things.

My buddy stopped to have a smoke and talk with one of the bouncers at the door of a bar. They both worked out at the same gym.
My buddy could bench over 300lbs. Had arms bigger than the average persons legs

A couple of drunk US sailors started beaking off at my buddy. He ignored them. He finished his smoke with the bouncer and started wheeling home.
Gets about a half block.
Shove.
Brave sailor wants a fight with his drunk sailor buddy egging him on.
My friend laughed and said, “Bring it on.”
The 1st sailor leaning in to say something.
Bang. Out cold. On the deck.
Sailor number two tackles him out of his chair.
They roll around on the sidewalk until my buddy is on top. One. Two. Three punches.
Lights out for sailor number two.
The gathering crowd is cheering and help him back in his chair.
The cops and Shore patrol push their way through and start laughing .
Two KO’d sailors and a guy in a wheelchair lighting another smoke.
“Wait til the entire ship hears about this.” said one of the laughing SP’s, ” These guys will NEVER live it down.”

My buddy went on his way with a few scrapes and two more KO’s under his belt.

#124 IHCTD9 on 10.15.21 at 8:37 am

#87 Philco on 10.14.21 at 7:36 pm
#40 Stone on 10.14.21 at 4:51 pm
#10 Yukon Elvis on 10.14.21 at 3:07 pm
Gassed up in Kelowna this am. No regular or mid grade gas available at my local station. Premium gas only at $173.9. Seems like there are a few kinks in the supply chain.
———
Who buys premium or even intermediate? Seriously?
———————
Someone with a high compression engine?
57 Chevy with an LT1 350 @ 10.5:1….
Or hot shot with his Ferrari at 12.5:1?
or me with the Tundra when Costco ran out of Low and threw in prem. for the same $s
___

Yep. I think Premium has more ethanol than regular does – you can literally smell it.

E85 has been a boon for car guys in the USA. Cheap with massive HP potential just as forced induction really started taking off. I recall reading about an E85 fueled turbo Civic. 1.8 litre engine, 45 lbs of boost, 700 to the wheels.

I’m not into fast cars anymore because by 2005, it seemed like everyone had a 10 second car. Then things went parabolic with all these corn-fed turbo cars. I read an article on a legit street Viper ACR a while back. 3000+HP and 6 second ET’s – gimmie a break!

#125 Daniel on 10.15.21 at 8:43 am

#115 IHCTD9 on 10.14.21 at 10:23 pm

No, the buyer’s inputs are ~377k only (not 728k)
I listed all the total inputs in my last post (based on my stated assumptions).

If you are using different maintenance, insurance, property taxes, mortgage rates etc. your costs may differ, but I don’t think they should be that high.

If you stick to my assumptions then you should get ~377k inputs.

#126 Penny Henny on 10.15.21 at 8:55 am

#112 Wrk.dover on 10.14.21 at 9:49 pm
#71 Penny Henny on 10.14.21 at 6:31 pm

For Wrk.over, you might want to check out the gas retailer’s websites. Most premium blends now do indeed contain ethanol.
___________________________

Thanks for the kick in the teeth! I just googled to learn the $185 of Esso Synergy I bought yesterday is only good for molotov cocktails.

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

better to find out now rather than later

#127 Daniel on 10.15.21 at 9:02 am

#115 IHCTD9 on 10.14.21 at 10:23 pm

Further to what I just posted about the 377k inputs.

Your mortgages payments are off on a 30 year amortization.

I also notice you’ve included the remaining mortgage balance at the end as an input cost for the buyer, which is not correct since it gets cancelled with the sale; the rent and invest case would never see that money.

Use my assumptions, and you’ll get ~377k input costs.

#128 Philco on 10.15.21 at 9:28 am

#124 IHCTD9 on 10.15.21 at 8:37 am
————–
Speaking of fast cars…its insane now and really why??!
True story. One of my tenants, a great, and respectable guy, 62 and head sales for a massive company (not some punk ass kid).
So his kids late for hockey so hes basting 30kms over the speed limit on the island hwy in the Bowser area to Nanaimo. Open hwy super safe, and the blue berry and the cherrys lite up on the roof behind him.
Cop pulls him over says “your not going to like this, your licence, registration and….. your keys”
Ford f150 impounded…$3000 later.
So what the hells the point of gobs of power you cant use?…..we live in the no fun land now.
I’d be in jail for how I ran my Mustang back in the day…
I guess its just pen!s power now.

#129 Nonno Nicola on 10.15.21 at 9:32 am

#123 Fartzy

Wow! Kudos to your buddy! Was one of the sailors Sail Away?:)

#130 Nonno Nicola on 10.15.21 at 9:35 am

#122 IHCTD9

You should start a reality show with your knowledge of all things mechanical ! Very impressive mon ami!

#131 Nonno Nicokq on 10.15.21 at 9:41 am

#121 Do We have all the Facts

The US has evolved into an economic superpower? They have always been an economic superpower. They have the world’s reserve currency. Their debt is in US dollars which central banks around the world buy up as their backing for local currencies. As Garth has pointed out, “don’t bet against America.”

#132 Nonno Nicola on 10.15.21 at 9:45 am

#125 Daniel

Your debate with IHCTD9 needs to be settled in a pub over a few beers and an arm wrestle. I will referee it!

#133 Sail Away on 10.15.21 at 9:54 am

#129 Nonno Nicola on 10.15.21 at 9:32 am
#123 Fartzy

Wow! Kudos to your buddy! Was one of the sailors Sail Away?:)

———

No, I dazzled my self-declared nemesis with footwork by taking the stairs. Violence averted.

#134 IHCTD9 on 10.15.21 at 9:54 am

#127 Daniel on 10.15.21 at 9:02 am
#115 IHCTD9 on 10.14.21 at 10:23 pm

Further to what I just posted about the 377k inputs.

Your mortgages payments are off on a 30 year amortization.

I also notice you’ve included the remaining mortgage balance at the end as an input cost for the buyer, which is not correct since it gets cancelled with the sale; the rent and invest case would never see that money.

Use my assumptions, and you’ll get ~377k input costs.
_____

Do you agree that Buddy pumped in 728k over 10 years to round trip a 500k house, and walked away with 771k or thereabouts?

Or not?

I get the feeling you are avoiding the question…

#135 IHCTD9 on 10.15.21 at 10:00 am

#130 Nonno Nicola on 10.15.21 at 9:35 am
#122 IHCTD9

You should start a reality show with your knowledge of all things mechanical ! Very impressive mon ami!

___

What – you mean the part about drinking the “shine” out of your gas tank? :)

My knowledge is 10 years dated and climbing. I used to live and breathe horsepower, fast cars and drag racing, but I just lost all interest in it.

I am learning a lot about diesels these days though!

#136 AM in MN on 10.15.21 at 10:03 am

#120 Diamond Dog on 10.15.21 at 5:54 am

“It’s the latest evidence that many cryptocurrency users are treating it as an investment rather than a replacement for money. While cryptocurrency prices have risen in the last year, it’s still seldom used to buy and sell physical goods. Instead, most investors adhere to a “HODL” (hold on for dear life) mindset, wherein they buy and hold their virtual coins in hopes they’ll rise in value. In the last year, that’s been a good bet — bitcoin is worth more than five times as much as it was a year ago, while ether is up more than 10 times.” – CNBC

I’m far from the first to say it, Bitcoin = Ponzi.

———————————————————

You’re thinking is from a first world perspective. You live in a country that does not owe money in another country’s currency, but that is the exception not the rule.

Also a functional banking system with easy to use electronic payments, even for small transactions.

Go outside to the rest of the world where average people don’t trust their own currency, which is most of them, and you can start to see the value of a currency that is not under the control of the local despot whose cousin runs the central bank.

Check out El Salvador right now, working out well. Without approval, doing OK in Venezuela and Afghanistan and others as well. Coming in Brazil, which is big.

If inflation takes off in any significant way in the western countries, say north of 5%/yr for many years (coming), people will look for more stable alternatives. In the past they used Gold, but the powers that be have cornered the Gold markets.

Need something fast and easy to use and not under their control, which is why BTC has a future.

#137 Dharma Bum on 10.15.21 at 10:10 am

#154 Nonno Nicola (from yesterday’s comments)

When is your place in the Bruce Penninsula going to be ready? I’ll head up for a visit.
———————————————————————————————-

I’ll be glad to have you.

It’s progressing like a glacier moves. Imperceptively slowly.

I lucked out with the land purchase, stumbling onto it pre COVID. However, by the time it closed, COVID was full blown, and the house/cottage renovation market exploded.

The skilled trades supply up there is really tight. Builders, and related trades are booked out for years. There’s a development in the area with 22 lots – all sold out like hotcakes during COVID – sitting empty because they can’t get enough trades to get going.

I was really lucky to sign up with a guy before I closed on the land, so I had him lined up for the spring of 2021. Unfortunately, he got way behind on his backlog, and like all of these dudes, he overbooked himself into the future, so he, and all his tradespeople are spread real thin.

The concrete foundation is done, the drains and conduits are in, it’s backfilled, and the pillars, joists and subfloor are installed. Now I’m just waiting for the framing to get started.

So, yah, it’ll be a while. I’m hoping to at least get it closed in for the winter.

Maybe there’s a chance it’ll be ready by late next summer.

Hope to see you then!

In the meantime, I’ll just chill out.

#138 IHCTD9 on 10.15.21 at 10:17 am

#132 Nonno Nicola on 10.15.21 at 9:45 am
#125 Daniel

Your debate with IHCTD9 needs to be settled in a pub over a few beers and an arm wrestle. I will referee it!
____

He already knows the end of this debate, that’s why he won’t clearly and forthrightly answer the question – same with Dr. V.

I don’t blame ’em, not unequivocally answering that question. If they say yes the numbers are correct – then I can clearly show the renter and homeowner walked away with about the same $ after 10 years, with the rent/invest dude slightly edging the homeowner out. Same conclusion Mr. T arrived at.

If they say no the numbers are wrong, then they’ll have to show where they are wrong, and well… they ain’t wrong.

#139 Chris on 10.15.21 at 10:30 am

Otherwise known as terrible Tiff

#140 crowdedelevatorfartz on 10.15.21 at 10:31 am

@#117 BillyBob

Oh.
I forgot to mention.
My buddy in the wheelchair is a pilot.
Uses hand controls for his feet.

His grandfather was a pilot in WII. His father flew one of the first Beavers Float Planes off the assembly line.
That Beaver is in the national Flight Museum in Ottawa.

My friend, his father and grandfather rebuilt a WWII Harvard Trainer in the early 80’s and flew it for about 20 years. Sold ito a US museum.
They still see it flying every so often on Youtube with it’s original Canadian insignia.
My buddy had about 140 hours in a Harvard before he got his pilots license. ( after he broke his back)
His instructor was a tad skeptical about his flying abilities until they went up.
I’ve been in lots of Cessnas and he is one of the best pilots I’ve been up with.

But, medicals, money and motivation have pretty much grounded him now.

#141 IHCTD9 on 10.15.21 at 10:33 am

#128 Philco on 10.15.21 at 9:28 am
#124 IHCTD9 on 10.15.21 at 8:37 am
————–
Speaking of fast cars…its insane now and really why??!
True story. One of my tenants, a great, and respectable guy, 62 and head sales for a massive company (not some punk ass kid).
So his kids late for hockey so hes basting 30kms over the speed limit on the island hwy in the Bowser area to Nanaimo. Open hwy super safe, and the blue berry and the cherrys lite up on the roof behind him.
Cop pulls him over says “your not going to like this, your licence, registration and….. your keys”
Ford f150 impounded…$3000 later.
So what the hells the point of gobs of power you cant use?…..we live in the no fun land now.
I’d be in jail for how I ran my Mustang back in the day…
I guess its just pen!s power now.
____

Heh, we are cut from the same cloth – I went through 5 fox-bodies in the 90’s and early 2000’s! I started getting annoyed with the hobby after the first “Fast and Furious” movie came out and every kid who smashed up his Civic in a street race made the front page news. Before long the “Stunt Driving” legislation came out where you faced a 10K fine and vehicle seizure just for doing a burnout. Also, the drive-clean program showed up – that kicked my ’84GT off the road. Around 2007, I threw in the towel and started liquidating everything.

I’d still like a cool/fast car someday – but mainly just to listen to it, and nostalgia. The 5.0/5.7 HO roller motors just sound awesome with a decent cam, an off-road H, and a couple Flowmaster 2 Chambers! :)

#142 crowdedelevatorfartz on 10.15.21 at 10:49 am

Garth.

Have you pre booked your tickets?

https://www.reuters.com/world/uk/adele-makes-music-comeback-with-new-single-easy-me-2021-10-14/

#143 crowdedelevatorfartz on 10.15.21 at 10:53 am

@#133 Sail Away
“No, I dazzled my self-declared nemesis with footwork by taking the stairs. Violence averted.”
+++

Stairs slow him down a bit but dont stop him.
But, if you put the doorbell at the 6ft level……

#144 Ponzius Pilatus on 10.15.21 at 10:58 am

Bumper sticker on an Albertan F-150.
“Oh Lord, give us high oil prices again.
We promise not to piss it away this time”
Well the Lord listened.
Do your part, people from Alberta.

#145 Shawn Allen on 10.15.21 at 11:01 am

Canada Pension Plan Actual Facts

Not sure anyone cares about actual facts and returns for Canada Pension Plan. But just in case here are my actual figures.

I’m 61 and stopped paying CPP at 55 and won’t pay any more. I paid the maximum for 29 years and smaller amounts for the first 8 years paying in a total of 37 years.

Surprisingly with having stopped at age 55 the estimator says I qualify for 88% of the max.

Life expectancy for a 61 year old is 82.

I will assume collecting from age 65 until age 80. Of course no one knows their expiry date. I will assume no spousal continuation as she has her own CPP.

I have paid in a total of $44,128. The calculator estimates I will collect $202,907 assuming no inflation and I calculate the return there as 5.4% compounded annually. If I had been self employed and paid in double the return (so what CPP actually made counting employer contributions) was 2.9%.

If I assume 2% inflation (CPP is fully indexed to official all-items inflation) then my return on my own contributions works out modestly higher at 5.8% and for total collected by CPP at 3.4%.

So that’s fact based on my actual contributions and assuming collecting from age 65 to 80.

It’s an okay but not incredible return.

And let’s keep in mind that if CPP was not deducted from their pay cheques the vast majority of people, especially lower income people would never have saved that money. Comparing it to what they might have made in the market is meaningless.

Possibly but not very likely these actual figures might enlighten someone. In reality though most people like to continue to believe whatever they believed before and don’t have any time or interest in actual facts. (And get angry and if anyone disagrees or presents contrary facts.)

#146 Don Guillermo on 10.15.21 at 11:07 am

Looked out over Cabo bay this morning from my patio to see the shotgun start of the Bisbee Black & Blue Marlin Tournament, one of the worlds richest fishing tournaments. Bay was full of boats of all shapes and sizes. In 2006 the Black & Blue had its biggest overall cash payout of $4,165,960, the largest in sports fishing history. Very cool.

https://www.bisbees.com/

#147 Daniel on 10.15.21 at 11:12 am

#134 IHCTD9

No I do not agree, I thought that was very clear.
He put in 377k, as I have now mentioned several times.
I have also pointed out where your numbers are wrong and I have shown how to arrive at the correct 10 year inputs.
Just add the numbers I gave you in post #96 to arrive at 377k.
You mortgage payments on a 30 year amortization are wrong, and your assumption about the remaining mortgage at the time of sale being an input cost the renter could utilize are wrong.

#148 Ponzius Pilatus on 10.15.21 at 11:13 am

#128 Philly
An F-150 a fast car?
Every car can drive 30 clicks over speed limit.
Take’m up the mountain.
Then we’ll see who the speedster is.
When I had my BMW X5, I always raced them up the CocaCola.
At 160, they always gave up.
German engineering, my friend.

#149 IHCTD9 on 10.15.21 at 11:20 am

#125 Daniel on 10.15.21 at 8:43 am
#115 IHCTD9 on 10.14.21 at 10:23 pm

No, the buyer’s inputs are ~377k only (not 728k)
I listed all the total inputs in my last post (based on my stated assumptions).
_______________________

You’re working way too hard trying to figure this out.

Do you agree that the homeowner left with 771K (or 736 per your calculation) in his pocket?

That’s all that matters right? This is a great way to look at it. We don’t know if he won or lost, all we can say for certain is that he got a roof for 10 years, and then received 771K.

All this work saying this money went here, or there, is this, or that – is meaningless if we already know he left with 771K and we both agree on that right?

#150 Dragonfly 58 on 10.15.21 at 11:28 am

I am with you IHC, Started my driving years as a Muscle Car guy. 1969 Mercury CJ, pretty rare car. Ram air 428 CJ , but only a C6. Then a 1969 Buick GS 400.
Built several pretty hot customer cars back in my tradesman mechanic days, late 1970’s , early 1980’s.
Some of my customers had resource industry jobs and therefore very deep pockets.
But yes , out here in B.C. as well the boy’s in blue have no sense of humor, except the big giggle they get from roadside car seizures.
All my high performance stuff is gone for decades now.
I had always hoped to get back into it once the house was paid for and kids were independent. These days no debts but retired and no money to speak of beyond covering the basics. , plus a 21 year old still at home. He is working hard as a landscaper. but not making nearly enough to survive on his own in the Lower Mainland.
I now drive a Hyundai Accent. Gas out here is a killer , its one of the few cars that make sense in my situation.
Things sure have gone down hill for my little part of the Canadian middle class

#151 Nonno Nicola on 10.15.21 at 11:41 am

#137 Dharma Bum

Thanks for the update sir and thanks for accepting my visit. I look forward to it! Good luck with the remaining work!

#152 Nonno Nicola on 10.15.21 at 11:43 am

#133 Sail Away

Well done by avoiding a scrap! Blessed are the peacemakers.:)

#153 NEVER GIVE UP on 10.15.21 at 11:49 am

How is it that New car dealers can say “0% interest on a new car”?

When I last bought a new Chevy at a major dealer, I was quoted 2 prices. One for Cash and one for 0% interest.
The 0% interest price was $3000.00 higher!

I challenged the salesman who like a robot simply kept to his line. “this is the 0% interest price”…”this is the 0% interest price”. He couldn’t possibly admit to the fraud or he would likely lose his job!

I understand this still goes on.
How can our government allow this to continue to defraud “thinkingly challenged” people?

#154 DON on 10.15.21 at 11:51 am

#128 Philco on 10.15.21 at 9:28 am
#124 IHCTD9 on 10.15.21 at 8:37 am
————–
Speaking of fast cars…its insane now and really why??!
True story. One of my tenants, a great, and respectable guy, 62 and head sales for a massive company (not some punk ass kid).
So his kids late for hockey so hes basting 30kms over the speed limit on the island hwy in the Bowser area to Nanaimo. Open hwy super safe, and the blue berry and the cherrys lite up on the roof behind him.
Cop pulls him over says “your not going to like this, your licence, registration and….. your keys”
Ford f150 impounded…$3000 later.
So what the hells the point of gobs of power you cant use?…..we live in the no fun land now.
I’d be in jail for how I ran my Mustang back in the day…
I guess its just pen!s power now.

***********

Where did he get pulled over? Browser to Parksville virtually rcmp free. Speeding through Nanoose/Lantzville trying to run the gauntlet? I got pulled over in my mustang late late at night…thought I had it made climbing the hill towards Parksville. Then a 5 litre RCMP mustang came outta nowhere and tagged me, late 90s…had premium gas in my mustang so the motor wasa humming. Only got a $100 fine and a late night chat about mustangs old and new. We were both curious if I could beat him off the line. He did mention he had a hard time catching up to me.

@IH

When a turbo sprint passed me after I beat it off the line…that was an eye opener still love the roar of the old motors though nothing beats those sounds.

#155 Penny Henny on 10.15.21 at 11:58 am

To Daniel and Dr. V. It’s no use, he’s using Dolce math.

As Shawn Allen said ‘people see what they want to see’.

#156 WTF on 10.15.21 at 11:58 am

Uh Oh trouble in shyster land. I look foreword to the day when predatory isn’t part if the lexicon regarding this, cough, “profession”.

There is the honest hard working person who drives a tow truck, then, several steps below on the trustworthy pecking order we have marketplace exposing the RE rot……

“Cartel” indeed

Didn’t even address the Kreskin like future prediction abilities we see on display daily.

The 600 plus and growing Comments are less than supportive of the maligned, and I’m sure misunderstood, poor hard working guardians of self interest.

https://www.cbc.ca/news/canada/marketplace-real-estate-agents-1.6209706

#157 Damifino on 10.15.21 at 12:03 pm

#70 It’s pronounced nuclear!

it is pure delusion to think that we can just go to solar and wind, turn off the rest of the energy infrastructure without a transition
—————————————-

And note that, in the USA at least, the “rest of the energy” is practically all of it!

US solar and wind combined generated 401,800 gigawatt hours of the total 4,126,882 gigawatt hours (or 9.7% of total net electricity generation) in 2019.

U.S. Energy Information Administration – Electricity Data Browser

US solar and wind provided 3,755 quadrillion BTU of the total 100,450 quadrillion BTU (or 3.75% of primary energy) in 2019.

U.S. Energy Information Administration – Total Energy Monthly, Primary Energy Consumption by Source

#158 Dr V on 10.15.21 at 12:08 pm

IHCTD9 – Good morning. FYI, I am 3 hours behind you.

“So, do you agree that Buddy pumped in 728k over 10 years to round trip a 500k house, and walked away with 771k or thereabouts?”

No I do not as it does not properly account for the OPM.
This is what you are missing. The renter does not have access to this money.

Let’s revise some starting points and assumptions to make the effect and cost clearer.

Same $500k house, same $100k DP and transaction cost. Revise returns slightly so they are identical and both double over the 10 years.

Mortgage interest only, 2.5% on $400k. That’s $833/mo. Same rent $1800. Let’s say other costs for owner add $967/mo so his monthly equals the rent.
I think that’s somewhere close to Daniel’s number.
We’ll ignore inflation which does have an effect on both owner and renter.

Now both parties could invest additional funds in identical amounts, let’s say they do not or cannot.

After 10 years, the renters $115k has doubled to $230k.

The house also doubles and is sold for $1M and the $400k balance is paid off and the $50k transaction cost is paid. Leaves $550k.

That is about as clear as I can make it. O….P….M

#159 George S on 10.15.21 at 12:09 pm

#47 Wrk.dover on 10.14.21 at 5:27 pm said:
#40 Stone on 10.14.21 at 4:51 pm
Who buys premium? Seriously?
______________________________

BINGO!

No ethanol in premium. It stores better. Or I should say, it stores, unlike the lower grades.

——–

There is some premium that contains ethanol so you have to watch carefully at the pumps to avoid it. Almost all small engines that are used seasonally should be run on ethanol free premium gasoline. It saves you from experiencing many expensive and time consuming to fix problems. Ethanol free premium gasoline (and any ethanol free gasoline for that matter) stores longer and is non-corrosive after long storage.

#160 DON on 10.15.21 at 12:15 pm

#103 Overheardyou on 10.14.21 at 8:47 pm
I wonder what the odds are that since so many are over leveraged on their homes, inflation causes a spike in homes for sale despite record low rates

********
Lack of purchasing power…reduced consumption…unemployment…etc

Will be intetesting.

#161 Sail Away on 10.15.21 at 12:20 pm

#154 DON on 10.15.21 at 11:51 am

still love the roar of the old motors though nothing beats those sounds

——–

Yes! In the Tesla, those motor sounds start in front, get really loud side by side, then rapidly recede behind. We both enjoy the game: they get to make noise, I get to actually go fast. Win-win.

#162 IHCTD9 on 10.15.21 at 12:24 pm

#155 Penny Henny on 10.15.21 at 11:58 am

To Daniel and Dr. V. It’s no use, he’s using Dolce math.

As Shawn Allen said ‘people see what they want to see’.
____

Did the homeowner put 728K in round tripping a 500K property over 10 years and walk away after selling for 1.1 Million with roughly 77K in his pocket? Or not?

Daniel’s calculations have already been posted a couple times now at 736K – that’s pretty damn close to what I got. Is he wrong too? What about Garth’s numbers which are right in line as well – is he also wrong?

Is everyone wrong – except for you?

#163 Dr V on 10.15.21 at 12:25 pm

155 Penny

“To Daniel and Dr. V. It’s no use, he’s using Dolce math.”

I wasnt going to bring that up. IHCTD9 is a good blogger. Nobody’s insulted anyone.

I wonder if there’s a vaccine for Dolce math?

#164 IHCTD9 on 10.15.21 at 12:27 pm

#162 IHCTD9 on 10.15.21 at 12:24 pm

…with roughly 77K in his pocket? Or not?
_____

Make that 771K of course. Although it would have been interesting to have left that typo there to see how many folks would suddenly feel like answering the question finally… :)

#165 Dragonfly 58 on 10.15.21 at 12:30 pm

My 69 Cyclone cost me $3,000.00 back when I was making $15.00 / hr. as a mechanic. Your Tesla wondercar cost how much Sail Away ?
Unfortunately as a retired person I am not even earning twice as much today as I earned in the late 1970’s as a tradesman. For a number of working years I was bumping Canada’s upper middle class. As a retired person, barely middle class.

#166 Philco on 10.15.21 at 12:37 pm

#141 IHCTD9 on 10.15.21 at 10:33 am
Heh, we are cut from the same cloth
——————-
HA! I do believe we are.
Ya was cool wrenching the fast stuff then life got in way. I meant wife ;-)
Na just career lots of travel. Thats why my milk gett’rs A Leaf Plus. Virtually zero maintanence and 1.2cent a km to drive. Pretty quick 0-100km 6 sec and cheap $32k landed from the states with 10oookms. Now with fuel costs covid cant even find a used one.
I was thinking the same was going to buy a Mustang Elinor now I could afford one easy but the movie Gone in 8 Seconds ruined it for me.
Price was up there but the last few years..poof!
Maybe Shelby interceptor but as with inflation Art and cool cars went nuts.
Well….as ya know backhoes, saw mills, land, trucks i got enough to do.
Your out east???

#167 Daniel on 10.15.21 at 12:41 pm

#149 IHCTD9 on 10.15.21 at 11:20 am

you wrote:
“Do you agree that the homeowner left with 771K (or 736 per your calculation) in his pocket? That’s all that matters right? This is a great way to look at it”

No, it’s the wrong way to look at this. You need to know how much of the home buyer’s OWN money he is spending to buy, maintain and sell the house in order to compare how much free cash the renter/investor can invest over and above what the buyer can. Otherwise it’s a false comparison.

The home buyer needs nowhere near 728k of his OWN cash to buy, maintain and complete the sale of the house. When you realize he only needs ~377k of his OWN money to complete the full cycle transaction from purchase to maintenance to sale, then you will be on the right track conceptually.

If you don’t get this concept, you will never be able to do an accurate comparison. PERIOD.

#168 Philco on 10.15.21 at 12:48 pm

#162 Philco on 10.15.21 at 12:37 pm
#141 IHCTD9 on 10.15.21 at 10:33 am
PS
In grade 11 i pulled the heads off my Stang polished ported them with my Dads B&D (Black and Decker) router, re did the valves dropped a wobbler comp cam in while other kids couldnt even Re and re a distributor!
Then in grade 12 we had Baker Day.
Thats where everyone pulled their ride up and lit up the place IN FRONT of the high school. Massive smoke plumes….the Good oldays are gone.
If theres reincarnation I wont be back.
Suck at city dead ahead bro

#169 DON on 10.15.21 at 1:02 pm

#161 Sail Away on 10.15.21 at 12:20 pm
#154 DON on 10.15.21 at 11:51 am

still love the roar of the old motors though nothing beats those sounds

——–

Yes! In the Tesla, those motor sounds start in front, get really loud side by side, then rapidly recede behind. We both enjoy the game: they get to make noise, I get to actually go fast. Win-win.

******
You could always play a cd of motor sounds to be inclusive.

#170 Francis on 10.15.21 at 1:05 pm

SailAway, The RRSP $70,000 to $90,000 more if these numbers are true and accurate, I have no idea where you go these numbers does not seem alot when future governments like the Liberals, Justin Trudeau, Chrystia Freeland are tax hungry socialists want to tax, spend, more debt over and over. If that $70,000 to $90,000 is in an RRSP, it is really worth $45,000 to $60,000 after income taxes paid when one spouse dies.

They are saving $16,000 a year in yearly income taxes which will easily make up the $45,000 to $60,000 the RRSP is really going to be worth in the future in the hands of one of the surviving spouse. They were in a lower tax bracket 25% to 28% so their RRSP income tax refund would not be worth it over the years.

#171 IHCTD9 on 10.15.21 at 1:07 pm

#158 Dr V on 10.15.21 at 12:08 pm

No I do not/ *snip*
____

Excellent, here are my numbers:

100K down, 15K closing = [115K]

Mortgage payments on 400K, 25 year amortization at 2% of (~1700.00/mo) 20424.00/yr, and Cost of Ownership of 8K/yr for 10 years = [284K]

Residual of mortgage after 10 years = [264K] <- you have already agreed with this number.

5% of 1.1M sale price to Realtor, + 10K misc closing costs = [65K]

115+284+264+65 = 728K That's how much money exited his wallet in 10 years round trip.

The day he sold 1.1M *entered* his wallet, Yes?

But the bank still wants the mortgage paid off and that is 264K (which you agreed with). Also the Realtor wants to get paid too, so there's another 55K, and 10K more for closing costs. 1.1M-264K-55K-10K = 771K

Now buddy has 771K in his pocket yes? That cash represents all the equity he paid down, all the equity he gained through appreciation, and reflects all the costs he incurred over the course of 10 years of ownership. He's out with 771 – period.

Thus I say he put in 728K, and he left with 771K.

Now – what about the above don't you agree with?

#172 IHCTD9 on 10.15.21 at 1:25 pm

#150 Dragonfly 58 on 10.15.21 at 11:28 am
I am with you IHC, Started my driving years as a Muscle Car guy. 1969 Mercury CJ, pretty rare car. Ram air 428 CJ , but only a C6. Then a 1969 Buick GS 400.
Built several pretty hot customer cars back in my tradesman mechanic days, late 1970’s , early 1980’s.
Some of my customers had resource industry jobs and therefore very deep pockets.
But yes , out here in B.C. as well the boy’s in blue have no sense of humor, except the big giggle they get from roadside car seizures.
All my high performance stuff is gone for decades now.
I had always hoped to get back into it once the house was paid for and kids were independent. These days no debts but retired and no money to speak of beyond covering the basics. , plus a 21 year old still at home. He is working hard as a landscaper. but not making nearly enough to survive on his own in the Lower Mainland.
I now drive a Hyundai Accent. Gas out here is a killer , its one of the few cars that make sense in my situation.
Things sure have gone down hill for my little part of the Canadian middle class
____

Ah, you got to live some of the glory days though :). When I came of age, a 350ci V8 made 120 HP lol! Compression at 8:1, pellet style cats, single 2″ exhaust, and 1 bbl carbs. I’m 14 years past giving a rip about 10 second street cars now. I still like trucks and I gained a new hobby with antique heavy equipment – very car like machines, and you never break a rusty bolt head off :).

These days a stock 5.0 runs super low 12’s and a blower drops you right into the 10’s and even 9’s. You need a full cage, and a loop to run those. There’s no challenge anymore. It’s just money now.

Right now I am trying to build a light truck with a specific diesel, just for fuel mileage and light towing, and if I get to do it, I’ll enjoy it just as much as bolting on a new single plane intake manifold 20 years ago. May be even more :).

Maybe you should have a look at moving West one province. They like fast cars and trucks too – and they won’t send you to the poor house just to live there either. Watch those oil prices!

#173 IHCTD9 on 10.15.21 at 1:41 pm

#154 DON on 10.15.21 at 11:51 am

@IH

When a turbo sprint passed me after I beat it off the line…that was an eye opener still love the roar of the old motors though nothing beats those sounds.
____

That’s the thing with those turbo FWD weed whackers. You kill ’em off the line, then they go charging past you at 3/4 track :(.

#174 Nonno Nicola on 10.15.21 at 1:56 pm

Rest in peace Hutch. When humans learn to love like man’s best friend, our world will be a much better place.

#175 IHCTD9 on 10.15.21 at 1:57 pm

#161 Sail Away on 10.15.21 at 12:20 pm

Yes! In the Tesla, those motor sounds start in front, get really loud side by side, then rapidly recede behind. We both enjoy the game: they get to make noise, I get to actually go fast. Win-win.
___

Yep, times are a changing. Check out the numbers for the Tesla Model S Plaid

60ft – 1.52 seconds
0-60 mph (96.5 km/h) – 2.18 seconds
1/8 mile – 6.00 seconds at 121.71 mph
60-130 mph – 4.56 seconds
0-130 mph (209 km/h) – 6.74 seconds
1,000 ft – 7.74 seconds at 140.10 mph
100-150 mph (240 km/h) – 4.56 seconds
1/4 mile – 9.22 seconds at 153.05 mph (246 km/h)

This car needs 10 point cage, driveshaft loop, parachute, and fire system, while the driver (pilot?) needs a fire suit, and an NHRA competition license to be legal to run at a sanctioned track. It’s bonkers fast!

It does 60 ft slow though, and the 0-60 is also slow for the ET. Should be closer to 1.2-3 for 60′, and sub 2 second 0-60. But that could be the weight, street tires, software, or all of the above. The highway passing power with this car would feel like getting launched into orbit. Best thing is, it could run these insane numbers over and over and probably would not break a single drivetrain part!

But… they don’t sound good at all! :)

#176 James on 10.15.21 at 2:24 pm

#161 Sail Away on 10.15.21 at 12:20 pm

#154 DON on 10.15.21 at 11:51 am

still love the roar of the old motors though nothing beats those sounds

——–

Yes! In the Tesla, those motor sounds start in front, get really loud side by side, then rapidly recede behind. We both enjoy the game: they get to make noise, I get to actually go fast. Win-win.
___________________________________________
Yes, yes so your Tesla is fast. So we will meet for a beer 500km down the road to discuss. See you there tomorrow if you start charging today.

#177 Travelbug on 10.15.21 at 2:38 pm

#28 Dolce Vita – you finally gave away where you live!
I looked it up, in the beautiful Friuli region. Will be in Venice next spring, might come and visit you…love Italian culture and especially food and wine!

#178 Dr V on 10.15.21 at 2:40 pm

IHCTD9 – I do not agree with the $728k.

You are still missing the concept.

A very simple question.

If you lend me $264k, and I give it back to you. Am I out $264k?

#179 Sail Away on 10.15.21 at 3:09 pm

70 Francis on 10.15.21 at 1:05 pm

SailAway, The RRSP $70,000 to $90,000 more if these numbers are true and accurate, I have no idea where you go these numbers does not seem alot when future governments like the Liberals, Justin Trudeau, Chrystia Freeland are tax hungry socialists want to tax, spend, more debt over and over. If that $70,000 to $90,000 is in an RRSP, it is really worth $45,000 to $60,000 after income taxes paid when one spouse dies.

They are saving $16,000 a year in yearly income taxes which will easily make up the $45,000 to $60,000 the RRSP is really going to be worth in the future in the hands of one of the surviving spouse. They were in a lower tax bracket 25% to 28% so their RRSP income tax refund would not be worth it over the years.

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Accumulating the non-reg money ($241k) in RRSPs during working years would have decreased taxes by $70-90k over those years, and could be efficiently drawn down now during retirement.

When one dies, the RRSP rolls over to the spouse tax-deferred, so no big tax hit.

Registered accounts are powerful tools.

#180 Sail Away on 10.15.21 at 3:21 pm

#176 James on 10.15.21 at 2:24 pm

Yes, yes so your Tesla is fast. So we will meet for a beer 500km down the road to discuss. See you there tomorrow if you start charging today.

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You do realize that overnight charging happens all by itself without supervision, right? Like magic.

500km at a supercharger will take an hour or so. Good time for a meal- I’ll get us a table while you’re at the gas station and my car’s charging itself. Like magic and for free.

#181 Philco on 10.15.21 at 3:24 pm

#154 DON on 10.15.21 at 11:51 am
#128 Philco on 10.15.21 at 9:28 am
#124 IHCTD9 on 10.15.21 at 8:37 am
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LOL good stuff. I think up where the lighted intersection is the speed limits slower for a jont.
I was nodded to wind down my passenger window 1am @ 41st and Fraser by a couple cops at the red light WAY back. I was crapping my pants had a couple beers in me. Cop says NICE CAR!. Thank you sir….as i putted into the green light slowly…I made sure they were faster than me.
Next time I was over speed on the stretch on the final to YVR to pickup my sis. Blue and Red fires up behind me….cop say my sisters got the same car but it sure don’t look or sound like that….Ah can I jest get my ticket so I can go get my sis.
I wasn’t happy that was a lot of gas/beer money back then

#182 Philco on 10.15.21 at 3:58 pm

#175 IHCTD9 on 10.15.21 at 1:57 pm
#161 Sail Away on 10.15.21 at 12:20 pm
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Sail
Wish I had time to keep up here.
Ya Tesla’s super fast. Really overkill. Your paying for power ya cant use.
Ill race ya in my dually Duramax with my Lance 2 slide camper 4800lbs.
You’ll kick my ass but when I get there Ill pull over have a beer and catch a knap!
Cheers

#183 Sail Away on 10.15.21 at 4:43 pm

#182 Philco on 10.15.21 at 3:58 pm

Ya Tesla’s super fast. Really overkill. Your paying for power ya cant use.

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Peak performance just warms the cockles of a guy’s heart. You should see my bird dogs.

#184 Linda on 10.15.21 at 9:42 pm

Not always true, Sail Away, yes registered accounts are powerful tools but the TFSA is tax free unlike the RRSP. You also needed non-registered money for keeping taxes lower and more options than just be stuck in all registered accounts, especially an RRSP. I read alot of yours and the other posters but I still don’t see any of your numbers where they came from and you keep avoiding the big tax hit when the second spouse dies. My mother passed away and had not that much more than that $241,000, she had $275,000 in her RRSP transferred from my father years back and she had to pay upon death $145,000. You never want to mention this. Also, with big RRSP balances, one spouse has say $300,000, the other spouse has $200,000, when one spouse passes away, now that one spouse has $500,000 which affects everything from OAS clawbacks to higher income taxes each year to like I said a real big or bigger tax hit upon death of the final spouse.

If someone gets maximum a 25% to 28% tax rate back as a refund from their RRSP deductions, this is not always a big enough tax benefit to have an RRSP. I think a non-registered account gives flexibility in not having to rely on big RRSP withdrawals in retirement or big RRIF withdrawals in retirement. If you need $30,000 for a car and you have $30,000 in a non-registered account, it is there $30,000 taken out of your account but if you need $30,000 for a car but you need to take it out of your RRSP, you will need $50,000 so taxes hit you hard and you have much less RRSP now. It just seems to me you have no backing in actual numbers, figures and are just talking as if it is always best to have an RRSP. It is not always the case.