The Canadian Economy.

make 20k in salary as opposed to 6K and your $3.45 interest will put you in a bigger tax bracket paying $5 more in taxes..hence making it $4,998.55 ROLMAO !!

 

This is rather ironic but my projected income for 2010 is looking to be 20k. I just ran through numbers( 2008 income/taxes, 2009 RRSP allowance, 2009 income and my projections for 2010). These numbers will help my "adviser" better plan with myself.

If you could predict my income I think you are the one I will listen to about financial advice, to the attic goes $100 bills in a money bag! I hope I don't forget about it!

 

Don't forget the moth balls or your profits will be eaten

 

Ran by my numbers and as scary as this sounds but after my projections for 2010 I can safely make all the investments I want for the 2009 and 2010 year. I'm young don't want to worry about 2011 yet as many items can change.

 

excellent

 

great

 

Being young is the key. Figuring this stuff out at 60 doesn't leave enough room for mistakes . Don't ever stop. You rule the world being young and planning like you are.
Congratulations

 

I put $50K in my RRSP when I was 24. I never have to add to it again. Contribute as early as you can and as much as you can. Compound interest is your friend!

 

Thanks for all the support guys. It's a little rough financially all over right now so I want to make sure I don't put away to much funds just in case I need to call upon it.

 

Very narrow minded viewpoint. What are you going to do in a savings account that is paying close to 0% interest? Everyone knows real inflation is WAY higher then government figures. Keeping $ in a savings account is just as risky as stocks, bonds, real estate these days. Remember you want your money to retain purchasing power. If you want safety hold silver and gold as savings.

Real estate? Prices are at all time highs in all major Canadian cities. Whats going to happen when interest rates head to 10% within the next decade? 50-60% Drops.

There is plenty of well run companies to invest in, of course investing is far different then flipping stocks. Invest for dividends and income streams. Lots of bargains out there paying 7-10% in reliable dividends. Remember you want to invest for the INCOME. Sure beats negative interest in a savings account.

Working hard and saving money the old fashion way NO LONGER applies this day in age. People are not paid in money but in currency. You will never get rich by saving money. Brokers and fund managers are a WASTE of time. 99% Will under perform benchmark index's. Do your own homework and manage your own $.

 

Items I have in mind include gold which is at record highs, waiting to buy. Oil is steady but the Dollar index is a little low. The rise of a dollar would really be nice as the market settles in for the 2010. I should be throwing all my RRSP investments in at this point hoping to drop down a tax bracket.

I'm throwing another 5 into the tax free savings accounts for 2010 as well!

 

Interest rates will never hot 10% again...the entire world economy would fall...paymentes will see increases....but not much.

THe biggest fear will be TAXES....this will be the way of the future....all goverments at all levels, or services will be cut in half....the top brass are aware of this.

Realestate is still a good vehicle, as some stocks in good companies as they will always have an intrinsic value...companies that produce...not service or distributors.

Im also bullish on Gold...but REAL gold...not buying gold paper....buying real gold....we should most likely see gold go towards $2,000 per ounce...what everyone needs is a balanced portfolio....some realestate, some cash, some gold....but i still feel CASH will be king long term....but the fear with that is, i still think the US economy will fall.

Beaware of the new monetary figure that will replace the US greenback.

 

what is that?

 

my crystal ball is not accurate, but if had to guess...i would venture either the Chinese, or India...or a combination of something new.

They have the largest population in the world, and dont mind living on $5 a day, and dont need 4,000 sqft homes .....in short ...North America and Europe is pretty much F@%$*D

The debt we owe this countries will put us under.

http://www.imf.org/external/pubs/ft/survey/so/2009/POL092109A.htm

 

I'm with Rick(I hope I got it) on this one. The U.S green should be a thing of the past unless Obama works magic. Euro may be the future standard?

 

The new world standard will be a basket of currencies and commodities like gold and silver.
The Chinese Yuan is not a free floated currency, its tied mostly to the value of the USD. The euro is a completely flawed currency as well and will never act as a standalone reserve.

How is real estate a good asset? A house is a consumption not an investment. You buy it to use it. Its no different then buying a car, homes depreciate and require constant upkeep. They have negative cashflow. Canada's real estate market has been subsidized by the CHMC for the last 8 years. All we are constructing are cheap paper homes connected to cheap big box stores selling cheap garbage goods. Toronto manufacturing factories have been replaced with condos. Real wealth producing jobs have been on a long term decline.

Cash will not be king. Governments are running MASSIVE deficits at every level as you pointed out. They will not be raising taxes as this is politcally unpopular. The next best thing to do is to print money and monetize the debt(already happening in US,UK,EU). This will cause large scale inflation, debasing existing cash in circulation. Gold and Silver will rule over all. Everyone is still underinvested in gold and silver. Everyone talks about real estate at a BBQ, everyone talks about stocks, very few talk about gold/silver. Central banks are heavily underinvested in precious metals as well.

Here is some links:
http://www.chpc.biz/
http://globaleconomicanalysis.blogspot.com/2009/11/canadian-says-short-canada.html

Interest rates are going to explode in the future, the governments are merely delaying the crisis. When this turns into a currency/funding crisis you will see rates exploding overnight. See what happend to Iceland, rates went to 20% literally overnight. I don't know when this will happen but I suspect before 2020.

 

Interesting. I have never heard personal real estate described like that, how very accurate. Though it is the only tax free zone of appreciation, if you have a monster house, it is as you describe. And then try to sell it. Unless you are on the water you will take a bath or be sitting on it for a while, while it will drain you quickly as you try to get on with your life. IMO, I would hold off reading The Yanks and the current state of the greenback their last rights though, I still think they have a final act or two.

 

Although I started this thread.....I aint one to contribute much as I am still learning. But here are my .02 cents.

I woudnt count real estate as being a bad investment. Just recently, and I mean in the last 3 weeks. 2 of my neighbours just sold their (semi detached) homes in downtown Toronto, instantly for well over list (Example one was asking $700,000.00 and sold for just under $770K, the other was listed at $650,000.00 and sold for $730K - ish)

These numbers do look promising when buying in the right area at the right time it seems. Just under 10 years ago you could buy in the low-to-mid $300's (Ask me how I know) And that's for a bit better example (ie: fully detached, which is less than 10% in downtown Toronto)

That's a serious return I think. And I am sure these examples exist in many places across our great country.

But again...this is just my 2 (old fashioned) cents

 

I am not denying many people made SERIOUS money in real estate. But you have to understand there is a total difference between an "investor" and a speculator.

How many people were making a killing 10 years ago on tech stocks? Nasdaq declined 80% after. How many were getting rich flipping homes in the US? Markets like Florida, Nevada, California are down 50-70% from peaks.

Investing in real estate means purchasing a multi unit building, renting it out and enjoying an income stream. Speculating means purchasing a home and hoping a higher bidder comes along to buy it. The same thing occured when people ordered Scuderia's and were hoping 500k bidders would come along in time. Now you see US dealers flooded with Scuds barely fetching 200k. This is speculating. The government encourages this.

The government encourages real estate speculation because it indirectly subsidizes downpayments. It used to be that to "buy" a home you had to put down 20-30% of the price. No bank would accept less. This ensured prudent and responsible buyers were in the market, buyers that would not be 1 missed paycheck away from bankruptcy.

Along comes the CHMC. They allow you to buy a home with only 5% down as they "insure" the rest. Banks have no risk in lending. A new buyer emerges, this buyer is high risk, and indebted to the max, but he can easily put down 5% and make the monthly payments at low interest. He bids up the price and turns affordable real estate into a bubble. Prudent buyers are forced to deal with the high price or rent.

How do I know real estate is overpriced in Canada? Well for one you can drive to Toronto and see the massive amount of condos under construction. This tells me there will be ample supply coming online overwhelming the market place. You can also drive around the golden horseshoe and see the ammount of suburbs exploding before your eyes. Supply will be plenty. What about new buyers? Well the average Canadian has a negative savings rate, and is holding debt well in excess of income to service it and is most likely sitting on unemployment(12%+ unemployment in major cities). Also real estate prices have far outpaced income growth over the last decade.

When is a good time to buy a home? When interest rates are HIGH and you have alot of cash! When rates are high ALOT of buyers are out of the market place as they simply can't afford the monthly payments. This kills home prices making it great for someone putting down a large cash downpayment. They will have lower payments because the principle is greatly reduced. When no one is talking about real estate and it is rarely mentioned by the general public this is usually a sign of a bottom in prices.

What to do in the meantime? Find a better asset class to invest into and rent your living. I've seen homes being rented for $2500 a month with 1 million dollar price tags if you were to buy. Now think about this? 1 million would require 200k downpayment and 15k a year in property taxes. Is it not better to invest the 200k into an income producing asset and live for free? You are still enjoying the same 1mil house as your neighbour who bought it and now has 6-7k monthly payments. The difference is you have a HIGHER free cashflow, therefore a potential higher quality of living.

Diversifying is a waste of time. Why bother? The richest people in the world are rich because they are NOT diversified but have all their $ in one place. 90% of Bill Gates net worth is in Microsoft. Diversification is something that brokers and fund managers talk about because they dont want to be blamed if something goes wrong in a portfolio. That way they spread the risk.

Remember what Warren Buffet says. The number one rule of investing is not to lose money. The number 2 rule is not to forget rule number 1.

Real estate 101.
http://www.youtube.com/watch?v=GCiFjkgZM3k

What is money? Replace Federal Reserve with Bank of Canada or Any other Central Bank.
http://www.youtube.com/watch?v=iYZM58dulPE

 

I agree with all but your interest rates exploding and how is realestate an investment....i think you are incorrect on these.

If interest rates go up 2% the world economy will fall .... too many people on borrowed money, the most in history. THey will keep interest rates low becasue what they really need is TAXES...all governments are in the red...higher interest rates will mean higher servicing of there debt as well as the individual person and business, they wont do it...they cant...instead we wil all be hit with HIGH taxes...which will be worse than interest rates...at least a debt you can pay off taxes you never do

As for realestate being a good vehicle...here is a dumbing down version that makes return on investment.
Buying a house for 300K put down 100k...200k in mortagage with 2.45% and 14 yr amortized your looking around 1,700 a month...you can rent for 1,700 a month...kick in some taxes and insuranxe money of $3,500 a year in 15 yrs its paid for by a tenant....even if that same house sold for 300K you are walking away with about 200K profit from your original 100K...nice growth there in 15yrs....this is better than any ceo on a stock stealing his 5M paycheque...and you own it...PLUS....Housing is a staple for all people here in North America, everyone needs a home to live in...its like having bread and milk...track realeastate in the last 100 yrs and you will see (just like gold) it has appreciated....and this is not speculation.....

Nice insight to you forecast...different prosective, i just dont agree with all of it....maybe we are both wrong

 

So, let me get this straight. The end of the Western World is imminent. Don't own your own home, rent a $1,000,000 home for $2,500 and invest your money in some company that is run by someone you don't know. I guess the guy that is renting his $1,000.000 home is remaining financially solvent with the $2,500 a month rental payments he receives.

The stock market is a crapshoot. Warren Buffet is rich because he can control large companies. He buys undervalued companies that make stuff or provide services. Guys like me on this board can't buy companies. We can buy teenie pieces and hope that you can ride someone's coattail.

Your home is the one thing that will go up in value over the long term, provide shelter and is a tax free capital gain when you dispose of it.

Its not what you earn its what you accumulate.

And BTW, someone send me a memo when the end is near so I can rent a 512BBi for $99.95 a month.

 

+1


Of course, there are some "golden rules" in RE investing that seem to have been totally overlooked by the example mentioned in the YouTube clip mentioned a few posts prior:

1. Location
2. Location
3. Location
4. Never buy the "castle" among the "shacks" but rather what is representative of the particular area.

No investment is ever 100% secure and guaranteed; that's why it is so important to own your first home outright (mortgage-free) as quickly as possible. With accelerated payments (weekly), a mortgage can be amortized in under 9 years! Then you can rent it out and purchase/own the second one in the same fast-track manner (or even faster!).

---> Stocks can be worthless overnight (happened to me).
---> Money can devaluate overnight (witnessed it first hand and even took advantage of it
in Indonesia in 1998/99)
---> Free shelter gives you peace of mind which is priceless, and also an opportunity to
invest what you would otherwise pay an investor (i.e. your landlord) in real estate or
even some more risky venture...

Works for me...

 

You mean like picking up these?
https://www.scotiamocatta-estore.scotiabank.com/stores/scotiamocatta/catalog/product.aspx?nst=3auSpkp8xpfFt34qaRE%2bChGpmdok%2btj0hcY1Kljigqo9t9BpbIuAQdOxJpupRvFO

https://www.scotiamocatta-estore.scotiabank.com/stores/scotiamocatta/catalog/product.aspx?nst=VP%2bXmf6VklTuOtUsUaX9PvUsQRxxACgHNQyjuBaIcN2dQp3nJYxGCKY0JDLphmfc

 

only because of the stock market and the fake paper handed out....i want to touch and feel gold ROLMAO !!!

Maybe a new Italian gold chain is in order

 

You have a point with these however you do not get taxed on incomes. You are not contracted to a term. It's all you noone middleman basically. That 100oz Silver bar looks like a nice addition to my room. This comes after reading this article,

http://www.marketwatch.com/story/poor-mans-gold-may-be-an-investors-treasure-2009-11-13