Canadian Finance and Investing Thread - Paying More is our National Pastime

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Mantle: May 15, 2004

Lexicon posted:

Because mutual funds such as that one are unjustifiably expensive, even if they are optimally diversified (which may be in question with many of these things).

That fund you mentioned has an MER of 0.96%. Its holder is paying $3,840 each and every year for the privilege of owning that asset. By contrast, identical performance could be achieved at a cost of less than half that with TD e-series, and far cheaper still with a portfolio of ETFs.

I can understand tolerating a slightly suboptimal situation in favour of simplicity, but four thousand this year, and the next, and the next... and pretty soon you're talking real money.

edit: And 0.96% is pretty cheap in the grand scheme of things. My favourite whipping boys, the Investor's Group jokers, charge upwards of 2% or even 2.5% in some cases. That seriously adds up over a lifetime of investing.

I myself do have about $10k in the Mawer Balanced A just trying it out on my friend's recommendation. I get that it is expensive, but if it is outperforming a self balanced portfolio by more than 0.96%, isn't it worth it?

How can I achieve identical performance with a portfolio of ETFs though? I created a fantasy portfolio of the 60/40 Global Couch Potato portfolio and plotted it against the Mawer Balanced A. Is my timeline too short? Also, are the returns for the Mawer fund already accounting for the MER or do I have to calculate that myself?

# ? Apr 1, 2014 22:52

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# ? May 14, 2024 21:01

tuyop: Sep 15, 2006; Every second that we're not growing BASIL is a second wasted; Fun Shoe

Mantle posted:

I myself do have about $10k in the Mawer Balanced A just trying it out on my friend's recommendation. I get that it is expensive, but if it is outperforming a self balanced portfolio by more than 0.96%, isn't it worth it?

How can I achieve identical performance with a portfolio of ETFs though? I created a fantasy portfolio of the 60/40 Global Couch Potato portfolio and plotted it against the Mawer Balanced A. Is my timeline too short? Also, are the returns for the Mawer fund already accounting for the MER or do I have to calculate that myself?

I think the point is that, 80% of the time if you've read The Four Pillars, it won't outperform an indexed portfolio with the same balance. So you're paying for the privilege of someone else trying to beat the index and failing four out of five years.

# ? Apr 1, 2014 22:58

Mantle: May 15, 2004

tuyop posted:

I think the point is that, 80% of the time if you've read The Four Pillars, it won't outperform an indexed portfolio with the same balance. So you're paying for the privilege of someone else trying to beat the index and failing four out of five years.

I haven't read the Four Pillars yet but I hear about it all the time so I should eventually get to it. Anyways, I keep trying to find a justification for leaving the Mawer fund but from my (admittedly shaky) analysis skills that it is outperforming anything I compare it against, even with the MER.

I even found this analysis from the CCP:

http://canadiancouchpotato.com/2011/04/20/how-did-the-couch-potato-stack-up/

How are the CCP model portfolios regarded in this thread?

# ? Apr 1, 2014 23:17

Grouco: Jan 13, 2005; I wouldn't want to belong to any club that would have me as a member.

Past performance does not indicate future results.

# ? Apr 1, 2014 23:19

Saltin: Aug 20, 2003; Don't touch

Mantle posted:

I haven't read the Four Pillars yet but I hear about it all the time so I should eventually get to it. Anyways, I keep trying to find a justification for leaving the Mawer fund but from my (admittedly shaky) analysis skills that it is outperforming anything I compare it against, even with the MER.

The idea is to compare it to some indexes, but because you've got a 60/40 managed fund to compare, it is not apples to apples. If you could compare them properly, conventional wisdom is that the indexes would win, as it's pretty hard to beat them consistently.

Saltin fucked around with this message at 00:34 on Apr 2, 2014

# ? Apr 2, 2014 00:23

Mantle: May 15, 2004

Grouco posted:

Past performance does not indicate future results.

That's true, but we're talking about 10+ years of outperformance, over both bear and bull markets. Unless I am not reading the numbers right and making the correct comparisons, which is totally possible.

Saltin posted:

The idea is to compare it to some indexes, but because you've got a 60/40 managed fund to compare, it is not apples to apples. If you could compare them properly, conventional wisdom is that the indexes would win, as it's pretty hard to beat them consistently.

Lexicon said I could recreate the fund much cheaper using ETFs. Shouldn't I be comparing the fund to what I could create on my own? Why should I compare it to an index if I wouldn't be putting everything in an index anyways?

Am I right to infer that you suggest I shouldn't be diversified 60/40, regardless of my investment vehicle and that I should be 100% equities because the equities will outperform the 60/40 portfolio in the long run? If so, I think that may be true, but what if one of my goals is to reduce volatility?

# ? Apr 2, 2014 01:26

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Mantle posted:

That's true, but we're talking about 10+ years of outperformance, over both bear and bull markets. Unless I am not reading the numbers right and making the correct comparisons, which is totally possible.

Lexicon said I could recreate the fund much cheaper using ETFs. Shouldn't I be comparing the fund to what I could create on my own? Why should I compare it to an index if I wouldn't be putting everything in an index anyways?

Am I right to infer that you suggest I shouldn't be diversified 60/40, regardless of my investment vehicle and that I should be 100% equities because the equities will outperform the 60/40 portfolio in the long run? If so, I think that may be true, but what if one of my goals is to reduce volatility?

Mantle - I think you're having a few terminology issues. These financial instruments that me and others advocate are designed to track the index. It is therefore suitable to call them index funds. Generally you want to include Canadian, American and ex-North American equities, and Canadian bonds - each of which has an index (e.g. S&P500 tracks big American firms). You can achieve this either through a portfolio of TD e-series index mutual funds or a portfolio of index ETFs. CCP discusses both approaches and the pros/cons of each. Personally - I recommend starting with the former (especially with a low portfolio value) and graduating to the latter when you gain in sophistication/knowledge and portfolio value. Me and others quibble endlessly about the finer points, but this is the basic principle: own these four things in a particular allocation, and rebalance occasionally. Do this, and you're already ahead of 80% of Canadian investors, at least.

As to why you should invest this way: there is overwhelming academic, historical, and even theoretical evidence that some huge (well north of 90%) percentage of active money managers cannot beat such a portfolio on a sustained basis, especially after subtracting their considerable fees. Now, to be convinced of this fact takes some research and study. However, it is as close to an uncontroversial point as you're likely to find on this topic among disinterested (i.e. people not trying to sell you things) but knowledgeable parties. The point is not that no-one can beat a balanced index portfolio on a sustained basis - some undoubtedly do - but you have no way of identifying them - and the likelihood of any given fund or manager being able to do it is vanishingly small.

Final point: here's some historical data on CCP's performance: http://canadiancouchpotato.com/2013/01/16/updated-couch-potato-report-card/. These numbers are especially respectable given that the 00s have generally been a financial poo poo-show.

These are the numbers to beat - over a sustained period and net of fees.

# ? Apr 2, 2014 01:55

MrAmazing: Jun 21, 2005

Lexicon posted:

As to why you should invest this way: there is overwhelming academic, historical, and even theoretical evidence that some huge (well north of 90%) percentage of active money managers cannot beat such a portfolio on a sustained basis, especially after subtracting their considerable fees. Now, to be convinced of this fact takes some research and study. However, it is as close to an uncontroversial point as you're likely to find on this topic among disinterested (i.e. people not trying to sell you things) but knowledgeable parties. The point is not that no-one can beat a balanced index portfolio on a sustained basis - some undoubtedly do - but you have no way of identifying them - and the likelihood of any given fund or manager being able to do it is vanishingly small.

Final point: here's some historical data on CCP's performance: http://canadiancouchpotato.com/2013/01/16/updated-couch-potato-report-card/. These numbers are especially respectable given that the 00s have generally been a financial poo poo-show.

These are the numbers to beat - over a sustained period and net of fees.

Most mutual fund sales people like to provide examples of funds that have beaten the market consistently.

One point I want to add that often gets overlooked when explaining this to people is that given enough chances even the worst manager will beat the index on occasion. This is part of why you can go into a bank or any large institution and find funds they manage that have consistently beaten the index over 10 years. This is further compounded by the bad funds getting retired/cancelled or what have you.

Look at RBC for instance, http://funds.rbcgam.com/. With the number of funds they have both under RBC and various affiliate names it would be surprising if they don't beat the market with at least a few. Even if f they then wind up a significant number of the funds that didn't beat the market, all you would see on their website are winners as the rest would have been wound up.

To actually test the effectiveness of Mawar at managing investments, you would need to randomly pick from the list of funds they had 10 years ago and see what their performance has been against their metrics.

MrAmazing fucked around with this message at 03:47 on Apr 2, 2014

# ? Apr 2, 2014 03:01

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

MrAmazing posted:

Most mutual fund sales people like to provide examples of funds that have beaten the market consistently.

One point I want to add that often gets overlooked when explaining this to people is that given enough chances even the worst manager will beat the index on occasion. This is part of why you can go into a bank or any large institution and find funds they manage that have consistently beaten the index over 10 years. This is further compounded by the bad funds getting retired/cancelled or what have you.

Look at RBC for instance, http://funds.rbcgam.com/. With the number of funds they have both under RBC and various affiliate names it would be surprising if they don't beat the market with at least a few. If they then wind up a significant number of the funds that didn't beat the market, all you would see on their website are winners.

To actually test the effectiveness of Mawar at managing investments, you would need to randomly pick from the list of funds they had 10 years ago and see what their performance has been against their metrics.

Great point. They also do tricks like rename and discontinue funds to make historical analysis difficult.

It's worth remembering that not only are the fund companies not intellectually honest and enjoy cherry-picking - sometimes they are just flat out intellectually lazy. Dan Bortolotti and/or Ben Rabidioux ridicule them occasionally on Twitter - one manager or fund was touting that they had made 20% in their US equities in just one year... in a year where US equities were up 30 odd percent. :ughh:

.

Your typical Canadian see things like that, shrugs and says "nice - looks good to me" and plunks his money down.

# ? Apr 2, 2014 03:14

Mantle: May 15, 2004

Lexicon posted:

Final point: here's some historical data on CCP's performance: http://canadiancouchpotato.com/2013/01/16/updated-couch-potato-report-card/. These numbers are especially respectable given that the 00s have generally been a financial poo poo-show.

These are the numbers to beat - over a sustained period and net of fees.

MrAmazing posted:

To actually test the effectiveness of Mawar at managing investments, you would need to randomly pick from the list of funds they had 10 years ago and see what their performance has been against their metrics.

Lexicon posted:

Great point. They also do tricks like rename and discontinue funds to make historical analysis difficult.

Thanks for all the patient explanation and the pointers. I'll proceed with skepticism and an open mind.

# ? Apr 2, 2014 07:37

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Mantle posted:

I'll proceed with skepticism and an open mind.

Exactly the right attitude. And be especially skeptical when someone stands to profit from a particular decision you make.

# ? Apr 2, 2014 15:57

DariusLikewise: Oct 4, 2008; You wore that on Halloween?

Mantle posted:

http://www.greaterfool.ca/2014/03/31/real-men-invest/

What's wrong with buying a single mutual fund if the fund itself is diversified? Then I don't have to worry about rebalancing cause the fund does it for me. My investment advisor friend said that he has some clients that have $400k in a single fund Mawer Balanced A which is 60/40 equities/bonds. This sounds reasonable to me for someone who doesn't enjoy being a min/maxer.

Is owning a house young really that horrible and frowned upon? I bought my house when I was 20 with a 217k Mortgage and 3 and a half years later its sitting at 196k and the house could sell for 300k easily in Winnipeg's current housing market. The only other debt I have currently is 12k on a low interest line of credit(2.5%). Of course I have savings too(5k in my TFSA, 1k in savings, 16k in a locked-in RSP). I have a ton of RRSP and TFSA contribution room that I'm slowly chipping away yet, but I'm not really pushing the retirement panic button currently.

I always read real estate is dumb don't invest! But then I just kick back and let my friend living in the basement cover my base mortgage payments while I build equity and not live in my parents basement.

DariusLikewise fucked around with this message at 16:07 on Apr 2, 2014

# ? Apr 2, 2014 16:04

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

DariusLikewise posted:

Is owning a house young really that horrible and frowned upon? I bought my house when I was 20 with a 217k Mortgage and 3 and a half years later its sitting at 196k and the house could sell for 300k easily in Winnipeg's current housing market. The only other debt I have currently is 12k on a low interest line of credit(2.5%). Of course I have savings too(5k in my TFSA, 1k in savings, 16k in a locked-in RSP). I have a ton of RRSP and TFSA contribution room that I'm slowly chipping away yet, but I'm not really pushing the retirement panic button currently.

I always read real estate is dumb don't invest! But then I just kick back and let my friend living in the basement cover my base mortgage payments while I build equity and not live in my parents basement.

The thing is, you've ridden the wave of the biggest housing bubble in the country's history - and one of the biggest ones on the planet right now. I totally get that it's worked out well for you, and congrats - but the argument is that this is highly-abnormal. Don't count on the same thing happening again starting from now.

edit: This works out to a growth in value of 9.67% a year. At that constant rate, your Winnipeg house will be worth a cool $1.38 million in 20 years. Does that really seem plausible to you?

Lexicon fucked around with this message at 16:16 on Apr 2, 2014

# ? Apr 2, 2014 16:12

FrozenVent: May 1, 2009; The Boeing 737-200QC is the undisputed workhorse of the skies.

Desjardins has saving accounts at 1.5% right now, all you have to do is sign up for it on their website. It's under the savings tab in the Acces D web services thing.

They didn't just hike up the rates on regular saving accounts, just... Made new ones with a higher rate. RSRP and unregistered only.

# ? Apr 2, 2014 16:34

tuyop: Sep 15, 2006; Every second that we're not growing BASIL is a second wasted; Fun Shoe

Lexicon posted:

The thing is, you've ridden the wave of the biggest housing bubble in the country's history - and one of the biggest ones on the planet right now. I totally get that it's worked out well for you, and congrats - but the argument is that this is highly-abnormal. Don't count on the same thing happening again starting from now.

edit: This works out to a growth in value of 9.67% a year. At that constant rate, your Winnipeg house will be worth a cool $1.38 million in 20 years. Does that really seem plausible to you?

How does that 9.67% compare to a portfolio of 80/20 index funds?

# ? Apr 2, 2014 17:43

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

tuyop posted:

How does that 9.67% compare to a portfolio of 80/20 index funds?

It's higher. But that's not what I'm getting at. A house, or God-forbid, a condo, is ultimately a consumption good. Leaving aside the ability to offset some of the costs via renting the basement - it's an unproductive asset in general. I have far more faith in the ability of profit-seeking companies to create value and take advantage of technology etc => provide returns to the shareholder than I do that Canadian property values will continue to ascend far above what the incomes of their occupants can afford.

Whether or not you believe this will depend entirely on your view of markets, their historical performance, capitalism in general, etc. But I subscribe to it pretty thoroughly, at least so far (always open to counterpoints).

# ? Apr 2, 2014 17:53

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Sounds just like a question posed here

quote:

What�s wrong with buying a single mutual fund if the fund itself is diversified? Then I don�t have to worry about rebalancing cause the fund does it for me. My investment advisor friend said that he has some clients that have their entire savings of $400k in a single fund which is 60/40 equities/bonds. This sounds reasonable to me for someone who doesn�t enjoy being a min/maxer.

The mutual fund industry thanks you. � Garth

http://www.greaterfool.ca/2014/03/31/real-men-invest/

# ? Apr 2, 2014 21:53

Mantle: May 15, 2004

Lexicon posted:

Sounds just like a question posed here

http://www.greaterfool.ca/2014/03/31/real-men-invest/

Hey, I thought it was prudent to get a variety of opinions. =)

# ? Apr 2, 2014 22:04

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Mantle posted:

Hey, I thought it was prudent to get a variety of opinions. =)

Oh it is

Somehow by pure chance I ran across that - I don't even read the comments on GF that often.

# ? Apr 2, 2014 22:11

Saltin: Aug 20, 2003; Don't touch

tuyop posted:

How does that 9.67% compare to a portfolio of 80/20 index funds?

The thing is, that's the market value of the house increasing 9.67% and it does not take into account the significant investment of mortgage interest payments, property taxes, realtor fees, land transfer and upkeep required to earn it.

People who do house math never include that poo poo, and it matters a lot because it is a big outlay of cash that essentially just goes down the drain. It's like talking about Mutual Funds and leaving MER and trading fees completely out of the conversation.

# ? Apr 2, 2014 22:36

Guest2553: Aug 3, 2012

http://business.financialpost.com/2...nefit-pensions/

This article on FP provided me with a novel way to visualize my investments, maybe someone else here will like it. The quality of their financial articles seems to have improved from when last I visited, but that might just be a result of them jumping on the ETF bandwagon.

# ? Apr 2, 2014 23:28

Kalenn Istarion: Nov 2, 2012; Maybe Senpai will finally notice me now that I've dropped :fivebux: on this snazzy av

Saltin posted:

The thing is, that's the market value of the house increasing 9.67% and it does not take into account the significant investment of mortgage interest payments, property taxes, realtor fees, land transfer and upkeep required to earn it.

People who do house math never include that poo poo, and it matters a lot because it is a big outlay of cash that essentially just goes down the drain. It's like talking about Mutual Funds and leaving MER and trading fees completely out of the conversation.

Other people forget to account for the fact that housing is levered. Not necessarily taking the side of housing as an investment but don't forget that 10% total return is actually a much higher equity return since you're only putting 20% down. In this example, even if your borrowing costs were 8% over the life of the loan your equity return would be greater than that.

# ? Apr 3, 2014 00:29

Demon_Corsair: Mar 22, 2004; Goodbye stealing souls, hello stealing booty.

DariusLikewise posted:

Is owning a house young really that horrible and frowned upon? I bought my house when I was 20 with a 217k Mortgage and 3 and a half years later its sitting at 196k and the house could sell for 300k easily in Winnipeg's current housing market. The only other debt I have currently is 12k on a low interest line of credit(2.5%). Of course I have savings too(5k in my TFSA, 1k in savings, 16k in a locked-in RSP). I have a ton of RRSP and TFSA contribution room that I'm slowly chipping away yet, but I'm not really pushing the retirement panic button currently.

I always read real estate is dumb don't invest! But then I just kick back and let my friend living in the basement cover my base mortgage payments while I build equity and not live in my parents basement.

Well you have to sell the house to take advantage of that increased value. Then you are either renting or buying a house that is as expensive or even more expensive then your current house.

I don't see anything wrong with letting your friend pay your mortgage for you, but I don't know if I would call it a good investment.

# ? Apr 3, 2014 00:57

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Kalenn Istarion posted:

Other people forget to account for the fact that housing is levered. Not necessarily taking the side of housing as an investment but don't forget that 10% total return is actually a much higher equity return since you're only putting 20% down. In this example, even if your borrowing costs were 8% over the life of the loan your equity return would be greater than that.

That's very true. And the tax advantages are pretty insane also.

# ? Apr 3, 2014 02:13

tuyop: Sep 15, 2006; Every second that we're not growing BASIL is a second wasted; Fun Shoe

Someone posted this here or somewhere else:

quote:

My pal James Altucher calls homeownership a part of The American Religion, so I know I�m treading dangerous ground here. But before you get out the tar and feathers, let�s do a little thought experiment together.

Imagine over a cup or coffee or a glass of wine we get to talking about investments. Then maybe one of us, let�s say you, says:

�Hey I�ve got an idea. We�re always talking about good investments. What if we came up with the worst possible investment we can construct? What might that look like?�

Well, let�s see now (pulling out our lined yellow pad), let�s make a list. To be really terrible:

It should be not just an initial, but if we do it right, a relentlessly ongoing drain on the cash reserves of the owner.

It should be illiquid. We�ll make it something that takes weeks, no � wait � even better, months of time and effort to buy or sell.

It should be expensive to buy and sell. We�ll add very high transaction costs. Let�s say 5% commissions on the deal, coming and going.

It should be complex to buy or sell. That way we can ladle on lots of extra fees and reports and documents we can charge for.

It should generate low returns. Certainly no more than the inflation rate. Maybe a bit less.

It should be leveraged! Oh, oh this one is great! This is how we�ll get people to swallow those low returns! If the price goes up a little bit, leverage will magnify this and people will convince themselves it�s actually a good investment! Nah, don�t worry about it. Most will never even consider that leverage is also very high risk and could just as easily wipe them out.

It should be mortgaged! Another beauty of leverage. We can charge interest on the loans. Yep, and with just a little more effort we should easily be able to persuade people who buy this thing to borrow money against it more than once.

It should be unproductive. While we�re talking about interest, let�s be sure this investment we are creating never pays any. No dividends either, of course.

It should be immobile. If we can fix it to one geographical spot we can be sure at any given time only a tiny group of potential buyers for it will exist. Sometimes and in some places, none at all!

It should be subject to the fortunes of one country, one state, one city, one town�No! One neighborhood! Imagine if our investment could somehow tie its owner to the fate of one narrow location. The risk could be enormous! A plant closes. A street gang moves in. A government goes crazy with taxes. An environmental disaster happens nearby. We could have an investment that not only crushes it�s owner�s net worth, but does so even as they are losing their job and income!

It should be something that locks its owner in one geographical area. That�ll limit their options and keep �em docile for their employers!

It should be expensive. Ideally we�ll make it so expensive that it will represent a disproportionate percentage of a person�s net worth. Nothing like squeezing out diversification to increase risk!

It should be expensive to own, too! Let�s make sure this investment requires an endless parade of repairs and maintenance without which it will crumble into dust.

It should be fragile and easily damaged by weather, fire, vandalism and the like! Now we can add-on expensive insurance to cover these risks. Making sure, of course, that the bad things that are most likely to happen aren�t actually covered. Don�t worry, we�ll bury that in the fine print or maybe just charge extra for it.

It should be heavily taxed, too! Let�s get the Feds in on this. If it should go up in value, we�ll go ahead and tax that gain. If it goes down in value should we offer a balancing tax deduction on the loss like with other investments? Nah.

It should be taxed even more! Let�s not forget our state and local governments. Why wait till this investment is sold? Unlike other investments, let�s tax it each and every year. Oh, and let�s raise those taxes anytime it goes up in value. Lower them when it goes down? Don�t be silly.

It should be something you can never really own. Since we are going to give the government the power to tax this investment every year, �owning� it will be just like sharecropping. We�ll let them work it, maintain it, pay all the cost associated with it and, as long as they pay their annual rent (oops, I mean taxes) we�ll let �em stay in it. Unless we decide we want it.
For that, we�ll make it subject to eminent domain. You know, in case we decide that instead of getting our rent (drat! I mean taxes) we�d rather just take it away from them.

# ? Apr 3, 2014 06:04

Saltin: Aug 20, 2003; Don't touch

Kalenn Istarion posted:

Other people forget to account for the fact that housing is levered. Not necessarily taking the side of housing as an investment but don't forget that 10% total return is actually a much higher equity return since you're only putting 20% down. In this example, even if your borrowing costs were 8% over the life of the loan your equity return would be greater than that.

Sure, it's a great advantage as long as prices go up , and they always do, right? I know you're not coming out pro-housing per say, and full disclosure I own a place myself, but leverage can utterly ruin people too. It's not necessarily a plus, but within the context of the last 10 years, sure. I know a good number of people my parent's age that were wiped out in the 80's when interest rates went sky high. It takes forever to recover from something like that, and it's so easy to do thanks to leverage.

Saltin fucked around with this message at 12:32 on Apr 3, 2014

# ? Apr 3, 2014 12:28

DariusLikewise: Oct 4, 2008; You wore that on Halloween?

Demon_Corsair posted:

Well you have to sell the house to take advantage of that increased value. Then you are either renting or buying a house that is as expensive or even more expensive then your current house.

I don't see anything wrong with letting your friend pay your mortgage for you, but I don't know if I would call it a good investment.

I just see it as you need somewhere to live eventually, money wise I get a yearly statement that says I'm paying almost a 50/50 split in interest and principle for my house so I know I'm losing in the end. I figure having the flexibility of having my own place now to use/renovate as I please rather then living with my parents or paying rent and dumping cash into a TFSA is valuable enough to me.

# ? Apr 3, 2014 14:46

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

DariusLikewise posted:

I just see it as you need somewhere to live eventually

I don't think you mean it in this manner, but this is a frequently-pushed canard by housing pumpers.

The response of course, is: no one is advocating homelessness. The point is that it is vastly cheaper to rent.

# ? Apr 3, 2014 21:32

Kalenn Istarion: Nov 2, 2012; Maybe Senpai will finally notice me now that I've dropped :fivebux: on this snazzy av

Saltin posted:

Sure, it's a great advantage as long as prices go up , and they always do, right? I know you're not coming out pro-housing per say, and full disclosure I own a place myself, but leverage can utterly ruin people too. It's not necessarily a plus, but within the context of the last 10 years, sure. I know a good number of people my parent's age that were wiped out in the 80's when interest rates went sky high. It takes forever to recover from something like that, and it's so easy to do thanks to leverage.

It was said more in counterpoint to the comments that those returns would be less a lot of stuff, which is true but didn't address the full picture. Frankly there's a reason people have developed an expectation of successful real estate investments. The problem is that this expectation isn't necessarily borne out by the current economic situation. I own a property and I'm on the fence myself. A big part of me wants to just go gently caress it and sell the thing and buy more other poo poo, but I've also made out like a bandit on it (almost a 70% return since buying in '08) so I'm fairly insulated even if things go south.

# ? Apr 3, 2014 22:02

Saltin: Aug 20, 2003; Don't touch

Kalenn Istarion posted:

It was said more in counterpoint to the comments that those returns would be less a lot of stuff, which is true but didn't address the full picture. Frankly there's a reason people have developed an expectation of successful real estate investments. The problem is that this expectation isn't necessarily borne out by the current economic situation. I own a property and I'm on the fence myself. A big part of me wants to just go gently caress it and sell the thing and buy more other poo poo, but I've also made out like a bandit on it (almost a 70% return since buying in '08) so I'm fairly insulated even if things go south.

Understood. I'm in the same boat as you really, about 125% return in about 10 years. I don't care if it's worth less in years to come, it's my home and I'm never going to be upside down on it, so the real estate weather can do what it wants.

# ? Apr 3, 2014 22:31

cowofwar: Jul 30, 2002; by Athanatos

The decision to buy or rent is one that's determined by crunching the numbers of a personal financial situation in the context of the local housing market - especially in Canada as there are large regional differences. There is no general right or wrong answer unless you are discussing specific situations. In any case houses aren't investments and talk about the housing market in general is better suited for the Canadian housing bubble thread as there is a lot of good information and posters there.

Any Canadians have tips for accessing better ETFs for American exposure? The Canadian ones tend to be limited, more expensive and focus on Canadian securities and markets. Do you just convert funds to USD and buy US index listed funds in your account?

# ? Apr 4, 2014 05:05

Kalenn Istarion: Nov 2, 2012; Maybe Senpai will finally notice me now that I've dropped :fivebux: on this snazzy av

cowofwar posted:

The decision to buy or rent is one that's determined by crunching the numbers of a personal financial situation in the context of the local housing market - especially in Canada as there are large regional differences. There is no general right or wrong answer unless you are discussing specific situations. In any case houses aren't investments and talk about the housing market in general is better suited for the Canadian housing bubble thread as there is a lot of good information and posters there.

Any Canadians have tips for accessing better ETFs for American exposure? The Canadian ones tend to be limited, more expensive and focus on Canadian securities and markets. Do you just convert funds to USD and buy US index listed funds in your account?

Talking about housing is perfectly justifiable in the context of a personal financial plan. [/Backseatmoderating]

Re: ETFs, yes. Any of the Canadian brokerages should be able to trade on the US markets directly for you. In some cases you might need to get a special authorization on your account (I seem to remember way back that I had to sign something like the margin approval form to get USD trading) but I know at BMO and TD (the two platforms I've used) US market access is direct and otherwise indistinguishable from trading Canadian securities. You don't even have to buy US funds explicitly, they'll just do the conversion at their posted buy rates so unless you can beat that it's pretty straightforward.

# ? Apr 4, 2014 05:50

tuyop: Sep 15, 2006; Every second that we're not growing BASIL is a second wasted; Fun Shoe

Kalenn Istarion posted:

Talking about housing is perfectly justifiable in the context of a personal financial plan. [/Backseatmoderating]

Re: ETFs, yes. Any of the Canadian brokerages should be able to trade on the US markets directly for you. In some cases you might need to get a special authorization on your account (I seem to remember way back that I had to sign something like the margin approval form to get USD trading) but I know at BMO and TD (the two platforms I've used) US market access is direct and otherwise indistinguishable from trading Canadian securities. You don't even have to buy US funds explicitly, they'll just do the conversion at their posted buy rates so unless you can beat that it's pretty straightforward.

It's the same on Questrade.

# ? Apr 4, 2014 06:02

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Has anyone ever successfully opened a TD e-series TFSA without visiting a branch? This is for my brother - I've talked him into the wisdom of actually using his TFSA room and throwing $100 a week into a standard CCP portfolio. He already has an account with TD which means there should be no need to actually visit a branch (for ID verification and such). However, the application form has no TFSA option. Anyone been down this road?

# ? Apr 4, 2014 16:50

melon cat: Jan 21, 2010; Nap Ghost

tuyop posted:

Someone posted this here or somewhere else:

That's a great snippet. A lot of Canadians still see real estate as a "guaranteed" investment, despite the fact that housing crashes happen. You still need to be smart about investing in real estate, and people do get screwed when they don't do their homework. And let's be honest- you can't use your house to buy groceries. If you ever want to cash in on your house you'll either have to downsize significantly, or move to a less populated area (which most people don't want to do). Or you'll have to take out a home equity credit line, which ends up costing you in the long run.

# ? Apr 4, 2014 16:56

cowofwar: Jul 30, 2002; by Athanatos

melon cat posted:

If you ever want to cash in on your house you'll either have to downsize significantly, or move to a less populated area (which most people don't want to do). Or you'll have to take out a home equity credit line, which ends up costing you in the long run.

Yes, real estate investment per se generally doesn't include primary residences since one would have to buy and sell on the same market which prevents opportunistic investment. Non-primary residences are exposed to more transaction costs as well. Most people also tend to screw up real estate investment and take losses after bubbles because they see the rising prices and sit on the rising equity as guaranteed and only move to sell at the top of the market when indicators show a turn. At that point demand dries up and they find themselves unable to sell at the inflated price and end up riding it back down.

Basically, treating a primary residence as an investment is idiotic and additional residences have fewer subsidizations so if one is interested in the sector they should always turn to REITs.

# ? Apr 4, 2014 18:37

FrozenVent: May 1, 2009; The Boeing 737-200QC is the undisputed workhorse of the skies.

I don't know exactly how REITs work, but won't they take a massive dump when the housing bubble blows?

# ? Apr 4, 2014 18:40

Franks Happy Place: Mar 15, 2011; It is by weed alone I set my mind in motion. It is by the dank of Sapho that thoughts acquire speed, the lips acquire stains, stains become a warning. It is by weed alone I set my mind in motion.

Lexicon posted:

Has anyone ever successfully opened a TD e-series TFSA without visiting a branch? This is for my brother - I've talked him into the wisdom of actually using his TFSA room and throwing $100 a week into a standard CCP portfolio. He already has an account with TD which means there should be no need to actually visit a branch (for ID verification and such). However, the application form has no TFSA option. Anyone been down this road?

I just printed off and sent in an application for a TDW account tied to my existing TD account, and after a few weeks it was open. Part of the application was for a self directed TFSA, and once its open, the web broker treats it as a normal brokerage account in terms of being able to trade whatever you want in and out of the TFSA. You can then buy e-series funds as a normal mutual fund buy; they usually settle by the end of the next business day and there's no fees.

There's information on the TD site about self directed registered accounts, that's the form you want to add a TFSA to your Waterhouse metaaccount.

# ? Apr 4, 2014 20:26

Lexicon: Jul 29, 2003; I had a beer with Stephen Harper once and now I like him.

Interesting, thanks. Do you know if it can be automated if you go that route?

My brother earns a ton, but he's an idiot with personal finance, so automation is key here. By his own admission, he won't even miss the money.

# ? Apr 4, 2014 21:23

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# ? May 14, 2024 21:01

blah_blah: Apr 15, 2006

Lexicon posted:

Interesting, thanks. Do you know if it can be automated if you go that route?

My brother earns a ton, but he's an idiot with personal finance, so automation is key here. By his own admission, he won't even miss the money.

This is obviously useless for this case, but things like Wealthfront are amazing for this. Automatic deductions (which are used to rebalance your account, which is awesome) can be set up in about 1 minute.

# ? Apr 4, 2014 21:43

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Canadian Finance and Investing Thread - Paying More is our National Pastime

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