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August 21, 2018 | Apology

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.

I must apologize to the 40-year-old who wrote to this blog yesterday for free financial advice. I failed to understand she is, well, sensitive. Special. And I was, like, so unfair. Apparently it is no fault of hers that she lives in a $200,000-per-year household without investments, real estate, savings nor a budget. It was crass, paleo and crusty of me to miss the fact the letter was intended not for guidance and corrective advice, but to elicit admiration and approbation. For that, I am sorry. An email full of gold stars and emojis is on its way back.

To be totally fair, and avoid the legal action I am sure is coming from BC Human Rights and Anti-Boomer Commission, here is her letter (and some comments):

“While I was initially excited to read the advice of someone I respected, and leverage it to make positive changes in my financial life, my feelings quickly melted into disappointment and hurt as I read through.

I certainly expected a certain dose of acerbic ribbing — I’ve been reading your blog long enough to know the tone. But I also expected it to be accompanied by useful advice, beyond “put away 20% of your take-home, save $2 mil for retirement”. Google could have given me that information, without the public flogging.

– Is that $2 million per person, to for a couple, at minimum?
– Does that $2 million included projected CPP/OAP earnings?
– Do I still need $2 million if I have a home that is paid off at retirement?
– Does that 20% take-home investment include the RESP contribution, or is the RESP contribution on top of that?
– How much should one ideally have socked away in an RESP for each child by their 18th birthday?
– How much emergency cash reserve should I have in the bank, and should I be addressing that first, or alongside my retirement contributions?

If you could re-address my questions in a constructive manner, it would be very helpful to me, and probably a lot of others, too. I can’t be the only financially illiterate almost-40-year old reading your blog.

And as a side note to you and your evil Comments trolls, the $10,500 monthly earnings I stated are recent — within the last two years. Prior to that, we were earning half that amount, and paying $2,000 in rent. Not a tonne of savings opportunities there. And not wanting to feed my kid processed food or have them living in a neighbourhood scattered with used hypodermic needles, where crackheads haunt transit stations and doorways (AKA “the affordable parts of Vancouver”)… does that really make me a “hedonistic, self-centred wombat”?

If I were you, I wouldn’t be sleeping well at night either; pinning a scarlet dollar sign to a well-meaning fellow citizen, just to set an example/get some laughs — not good karma. – Late to the Investment Party.”

The answers, Late, are easy to provide (and kinda obvious). Two mill for a couple will provide an income stream to replace about 60% of what your household brings in now. Seeing as you save nothing, that’s probably still not enough. No, it does not include CPP. Use that to buy kibble for your next Frenchie. OAS will be clawed back completely (and may not exist in 25 years).

A paid-off home in Vancouver in two decades with your spending habits? In your dreams. No, not included. As for the RESP, it’s only $2,500 a year and for that you get a 20% government grant. One less latte a day, babe. And how much education money you have depends on future unknowns. Since you have nothing now, just start. As for emergency cash, none. That’s what a LOC is for. Besides, you’d just spend it.

Your problem isn’t strategy or knowledge, it’s discipline. Budgeting. Saving. Plus attitude. I know it’s hard to believe, but there are people who scrape by in $2,000-a-month condos and somehow avoid being mugged in transit stations and doorways. Apparently not everyone shops at Whole Foods Market, and yet they still manage to keep their teeth and fend off child mortality.

Regarding your greatest fear – becoming a responsible adult (and mother) only to eventually die without partying enough –  how is that not being both self-centred and hedonistic?

Finally, as for being a wombat, that’s an affectionate term for a marsupial that poops in cubes. Seriously. It loves being noticed.

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August 21st, 2018

Posted In: The Greater Fool

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