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September 20, 2017 | Special

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.


Is she everyman’s dream? Barely 30, badger-aggressive, six-figures, killing it in the boy’s club as an equities trader, based in Vancouver. “So,” she barks into her headset between clicks, “here’s the deal.” I wait in abject anticipation. “I wanna retire, like those other people you did it for. Eight years.”

Turns out that would make less than her forty. She fantasizes following in the footsteps of my two egomaniac, insufferable clients who achieved millionaire status by thirty, told their bank overlords to shove it, and set off to consume the world.

What would you do when you retire, I asked?

“Travel. Hang out. You know.” And you’d be surprised how many times I hear this from people of the same age. It seems the notion of ‘career’ has shrunk from something over 30 years to something closer to a decade or a dozen. Hedonistic, entitled, special. Working for decades is so analog. So Boomer.

Hungry girl has assets of $110,000 and no debt. Not bad compared to peers. But not enough to turn into a lifetime income fund in eight years. Not even close. Besides, it’s all in high-interest savings accounts and GICs. Turns out the equity tosser doesn’t trust stocks. Interesting.

Generalizations usually suck, and say more about you than them, but it seems some common themes are at play. This was emphasized by the moister-wrinklie slugfest in yesterday’s comments section. The kids are uber-educated, insanely risk-averse, materialistic, disloyal to employers, financially illiterate, and know everything. They may be savers, but not investors. They’re employees, not entrepreneurs. Like most young, they’re lefties. A key part of social justice is taxing the crap out of old people with assets. That’s only fair. They’ll die, anyway.

Boomers aren’t used to the political pendulum swinging away from them. For their entire lives they’ve been in the majority, moving markets with their wants and desires, living for the most part in the expansion and inflation their sheer numbers created. But now the moisters outnumber them, more so daily. The son of the father is prime minister. Wealth and assets are under attack, with taxes rising. It’s all too much.

More conflict lies ahead. The kids will push for equal treatment of all dollars – whether earned as an employee (like them), a small business guy, monied investor or old retired divvy-collecting dude. Look for T2 to play to the crowd in his second term with an increase in the capital gains inclusion rate, a potential change to the tax treatment of dividends and even start contemplating a wealth tax. Maybe’s we’ll even end up like Norway – a moister fav – where you can go online and punch up anyone’s tax return.

Well, the solution for all of this – unrealistic expectations of retirement, wealth envy, financial ignorance – is for everyone to invest money. That way even the screwiest Mill can see another path forward, one of their own design with unlimited potential for success (or failure). Start with the TFSA. When that’s full split money between an RRSP (to shift tax into other years) and a non-registered portfolio (to benefit from capital gains and dividends). Stick with it, max the tax-free account with pre-authorized debits from your bank account and never, ever listen to [email protected], eschewing costly mutual funds and brain-dead GICs.

Have a balanced portfolio, with 40% in safe stuff and 60% more growth-oriented. Since rates are rising, keep the bond exposure slim (they pay nothing but reduce volatility) but have lots of rate-reset preferreds which swell along with bond yields. Carefully weight Canadian, US and international assets, taking into consideration that we’re currently on fire, Trump’s a time bomb, the US is expanding, Europe’s in recovery and nobody should bet against China. Never hold individual stocks (unless you have seven figures to invest and can achieve diversification – which requires about 60 positions).

If you have a little money, hold three or four ETFs. If you have a lot, then 17 should be about right. And keep a small cash position, since that’s a defensive asset as well as ammo if an opportunity arises.

So, 2% cash in a HISA, 20% in a mixture of government, corporate, provincial and high-yield bonds plus 18% in preferreds make up the safer stuff. Put 5% in REITs, then hold 16% in Canadian equities, an equal amount in US markets and 23% in internationals, for the growth portion. Rebalance once a year. Put higher-taxed stuff (bonds) in a tax shelter. Reserve the TFSA for fast growers (like emerging markets). Enjoy a 50% tax break on capital gains in your non-registered. And don’t forget about income-splitting with your squeeze, which can be done through a spousal plan or maybe a joint account.

Or, you can go to a pathetic blog, whine about people with more than you and plan to retire shortly after puberty. Good luck.

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September 20th, 2017

Posted In: The Greater Fool

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