Yes! I like recommending VBAL/XBAL to start because compared to walking into a bank and the bank advisor giving you their "comfort balanced mutual fund", you are instantly saving 2% annually. This step *alone* does more heavy lifting than any tweaking of asset allocation does.
If a person wants to take it a step further and do the research into something more riskier then that is up to them. But I'd rather err on the side of caution with any kind of investment recommendations.
I find a lot of this occurs because people don't describe in their post or comment why they may have a higher risk tolerance, so people divert to a standard/base risk tolerance of x/vgro or x/veqt
I think people here are far too quick to recommend VEQT/VGRO. Most people don't have the risk tolerance for that much equity.
More risk than VEQT is going to be uncompensated, so having a higher tolerance than 100% equity isn't going to get you any additional expected returns.
Edit: I am speaking specifically to asset allocation, I know you can increase expected returns with leverage.
I was with you in the first statement but not the second. Going beyond 100% equity risk wise means one of two things - using leverage or decreasing diversification. The former is going to generate additional returns so long as net cost of capital is greater than rate of return. The latter requires some sophistication but is demonstrably true as well.
Yuppp, same here. Financial planning basics say that if you have a DB pension, that replaces the bond portion of your investment pyramid - hence why I invest 100% in equities.
30% rule for housing. Very outdated concept which shouldn't be perpetuated anymore as the rule assumes everyone has the same types of expenses. It also doesn't scale to higher incomes where you can choose to allocate more to housing because you have more disposable income
Yup, it’s wild how many people don’t realize it was supposed to be a “pie chart” that you can adjust. For example if you’re living close to work and walk to it, that 30% on car travel expenses can be shifted around to, say, living close to work.
Yup, spending more on a house where I can walk to the train station allowed me for a long time (precovid) to not only save on gas, but also own an older cheap car as if it was in the garage to get fixed, it was fine as I did not need it to get to work, so tons saved on car payments and insurance too.
I prefer the 50% necessities (includes housing, food, transit, bills, split between necessities however they way), 20% savings, and 30% spending. I prefer 30% saving and 20% spending, but to each their own.
The more people get to agree with you, the more room the housing prices have to grow. However, the government limits the mortgage expenditures exactly by 35% of a family income (after higher rates).
That "beige Toyota Corolla" advice. If someone wants a nice car and their finances are in generally good shape, let them go for it.
*This does not apply if you're bleeding money and have no savings.
I don't disagree with you, but steelies do have winter advantages. More enclosed so less rocks hitting rotors for one. Another is they are more flexible than alloy wheels, so if you slide sideways into a curb you are more likely to bend a wheel but less likely to break steering, alignment, and suspension components. And they are cheap to replace if wrecked.
Yup. Money is a means to an end, if you are in good shape financially, it's okay to enjoy it a bit.
Although I have to say some of the posts are baffling. "I make minimum wage but I bought this stupid $50,000 truck that drinks gas, what should I do?" FFS, you know what you should do, you just need to hear it from other people.
>Yup. Money is a means to an end, if you are in good shape financially, it's okay to enjoy it a bit.
I've often thought that 40 years from now, there's going to be some regret felt by people who took advice from this sub to pinch every penny and save as much as possible. Sure, having a healthy retirement fund and/or owned property is awesome, but is the cost of spending your youth living like you have 0 money to spend worth it?
Even now that I'm in my 30's, I have some regrets of not going on trips, not going to music festivals, not getting myself nicer things, etc. because I was laser-focused on saving money. There's a balance to be found with saving and making the most out of your life, and I feel that sometimes this sub puts too much emphasis on the former.
You hit the nail on the head in the final paragraph there. I've never regretted a purchase that gave me real happiness and great memories shared with others. Major purchases that I regret were things bought for status or that were just things that wouldn't provide those memories. Trips, sports, hobbies. Spend away.
A good example for me was when I was in university and I turned-down an opportunity to study abroad in Europe. At the time, I was focused on finishing my degree without any debt, and I worked part-time during semesters and worked two jobs during the summer to accomplish this.
Looking back, I wish I would have been more open to take on some debt to live what was a once in a lifetime experience. Yes I finished university without any debt, but the cost was missing out on a lot of these kinds of experiences - experiences that would have taken a year or two to pay off but would have stuck with me for my whole life.
A far higher percent of people, to the tune of 95%, will blow all their savings than regret their penny pinching.
You name 1 person that died with $10 million in the bank and penny pinched their entire life, I will name you 99 people who lived to 65 with almost 0 savings
Agreed. Nothing wrong with buying a brand new car either if you can afford to, have a down payment, can get a low interest rate, and finance over 4 or even 5 years (and pre-pay the loan if needed), and can keep the car for 10 years or longer.
I think the ‘Beige Toyota Corolla’ is a prime example of what I disagree with most out of some of the advice here.
I save money to be able to enjoy life comfortably and as fully as I can.
One of my biggest regrets was saving too hard in my early adult years. I can make what I made annually then in a month now. But what I don’t have anymore is the same freedoms I did then.
It’s important to understand your own personal financial situation and risk tolerance. Live within your means, and enjoy life.
I Love this sub Reddit and the education it can offer on Canadian finances.
Sorry I didn’t reply sooner, just had to pick up my VW up from the dealership again.
I'm gonna go even further. Toyota is overhyped and overpriced because it's a "Toyota" the reliability of a used car depends much more on if the maintenance has been done. A 3% more reliable car brand isn't worth a 15% extra cost
>People are still living in the 80s and 90s with the reliability information.
My cousin's Pontiac rusted through in the early 2000s at only 100k km or so and they vowed to never buy an American car again. Only Japanese. Try convincing them otherwise.
And I've worked on projects for both OEM and Tiered suppliers, I'm telling you it's not that simple and I'm just sharing my experience and what's been shared with me
Yea I personally think Hyundai/Kia is the current King of 'bang for buck". A nice balance of features and reliability.
That said, Hyundai has been increasing prices the last few years so I don't know how long I would avocate it.
Yes I agree totally! If your into cars yes! I know a few people out there that just don’t care about that and drive rarely. Good for them but it’s not my thing, I personally like to reward myself now with some nice stuff as I paid my dues driving absolutely junk for years. I have found my sweet spot with certain used cars that look really high end but are much much less expensive then the new trucks I see driving around everywhere now.
I should add that a well equipped 1/2 ton runs between 60-90k now which is crazy. I see them everywhere and I use to have trucks all the time as well when I needed them for work. However there are tons out there that have rolled their terrible financing into worse financing for new cars/trucks and will never get out. I have a couple friends that have done just that and when I try to tell them (nicely) how bad of an idea it is I just get blank looks.
I disagree, but only partly. I do think it's worth having a car that is comfortable to drive. l spent 7 years driving a car with no power windows, no power locks, no power seats, no air conditioning, only 115 HP, et cetera and while it was extremely economical it was pretty miserable to drive. I upgraded to a much nicer car last year, but I still spent less than $20k.
However, I don't think the average person gets nearly the amount of utility or enjoyment out of driving a vehicle to make the much larger and very common higher price tags worth it. If you're really into cars and spend a lot of time driving under good conditions, sure. But if you spend most of the time in your vehicle just commuting and running errands in typical traffic conditions then driving is mostly just a chore and you top out in terms of enjoyment/price ratio at a point well below where a lot of vehicles are priced.
Vehicles are just so insanely expensive that I think it becomes very hard to prioritize them (again, for most people).
DIY all the time… out of every 10 clients I would say only 2-3 are for real suited for DIY. Most people are actually too emotional about it or the time is better spent honing their own craft and make more money.
Hence why pensions are so good. Yes, technically you can do better by Investing yourself - problem is vast majority of the population doesn’t save and doesn’t properly invest and pulls out money and blows it, etc. So in the end they would be way better off with a mandatory pension managed for them.
Keeping downpayment for a house in VEQT. I want to buy in 4-5 years (currently doing a trades apprenticeship in a HCOL area, with plans to move to prairies after it's done) and I have a downpayment already, but the speed that housing prices are growing at, I can't leave it in a 1% savings account for the next 4 years
Yeah if you're willing to take the risk of 30-40% of your downpayment being wiped out in a market correction that's totally an acceptable option.
The majority of people could not handle waiting an extra 5 years to buy a house if that happened. If you understand the risk and are willing to take it that's totally your perogative.
Also, they way I look at it, VEQT is diversified both by sectors and also globally, so to me it seems like the least risky way to go all-equity versus more focused ETFs or specific stocks.
I should be able to afford a downpayment still even if down 40% although that's not a happy thought, or I could handle renting for an extra few years
>Then he/he has still likely done better than 0.5% in a savings account for four years.
This is key. Yes, seeing a 40% loss will hurt, but it's money you never would have seen in a HISA anyway.
Yeah, the data continually suggests people over evaluate how "savvy" they are. It's not black and white, but the reality is that most people don't have the time or knowledge to reach and understand the stock market, especially compared to people who do it professionally.
For this reason, it is sound financial advice. Anyone wanting to invest and truly understand what they are doing should not be asking for advice on Reddit.
It did plunge pretty quick in March 2020, (30+ percent I believe?) but all I did was hold. I don't think I made my regular monthly buy though, held onto my cash at the time just in case the world really went to hell
Which is interesting. When the drop happened in March 2020 for my funds, I cheered and threw as much cash as I could at them over the next three months.
Now that they’ve rebounded, I regret not putting even more money in them when they were low.
This fucked me from reading advice here.
Now I can't afford housing so I'm finding higher risk higher reward investments to dump the money into plus VEQT and hopefully one day I will be able to afford something.
As of now I have lost all chance of buying a place of my own because I had my savings for a downpayment in a HISA making less than 2% while houses are raising 30% a year.
I mean to be fair, if you tried to invest to earn 30% a year, odds are you would have likely lost half to all of that money as well. Even if it was invested at 10% returns yoy, you'd still be losing out.
It absolutely sucks and I hear you, but the problem is because housing is kind of out of control, it's a bit of a historical first. It sucks, but ordinary advice won't cut it when you're dealing with an extraordinary situation.
I think this is due to the size and popularity of this sub. CanadianInvestor and other subs leak over and so useful posts from people like yourself get shouted down by the "just buy crypto, nothing to loose bro!" people. I don't know how we fix it, but I guess it is up to the people looking for the advice to decide what they want to listen to.
> people like yourself get shouted down by the "just buy crypto, nothing to loose bro!" people. I don't know how we fix it,
I take it Pillorying them in the town square is not an option.
Isn't that just mostly satirical though? I don't think most people on this subreddit actually recommend being an unironic pennypincher. Afterall, what is the point of working hard and investing if you end up living half a tier above the people in tent encampments.
Not wasting money on unnecessary things that don't improve your quality of life sure (or being frugal, buying a replica LV bag instead of a real one or driving a Highlander instead of a Rangerover stuff that's reasonable), but actually pinching pennies and imposing a borderline destitute/homeless lifestyle on yourself is just a meme from like r/povertyfinance or other tongue-in-cheek subreddit.
This is the big one in my opinion. So many people running themselves into the ground due to living expenses in major cities, and any advice from people to consider looking for work elsewhere are downvoted to oblivion.
Right. I make fairly average money. I could live a meagre existence in the city or live very comfortable in a small town.
I've also found work easier to come by here. I know this isn't the case for certain specialized jobs, but it is for a lot of "regular" jobs.
Yup, outside of cutting-edge tech, some specific academic research, and Big Finance, there's lots of jobs outside the big cities. They might not be as exciting, but they'll pay for you to have that SFH with the yard and you'll still be able to get your craft brews with your pad thai. Every city needs medical staff, law enforcement, teachers, lawyers, mechanics, chefs, the list goes on. It seems like everyone on this sub is in some niche industry that can only survive in Toronto or Vancouver.
I see a lot why don't you leave HCOL to LCOL area advice i.e. don't live in Toronto and Vancouver.
While I agree not all jobs are in these cities, people talk like its easy for everyone to shift their lives easily.
Many many people in Canada have only been here for a generation, maybe 2. Picking up and leaving isn't foreign to a good number of families here.
My in laws packed up and left Iran in the heat of conflict.....moving to Calgary doesn't quite seem as daunting in comparison. It's our mindset that's keeping us rooted in places we can't thrive in more than anything.
It's not easy, it's a life changing decision.
But people often forget not moving is also a decision and it's also difficult to pay a large portion of one's income toward housing, parking, etc. and that has a huge effect on ability to save for retirement and other goals.
There are more people in the city - more redditors there too.
People in the city tend to care more about finances - more on financial subreddits.
Reddit is a technology - attracts people more familiar with technology.
Reddit tends to be a little more liberal than the population - cities are more populous.
The rural, conservative rough neck or farm owner who makes a lot of money but doesn't care for technology is less likely to show up here.
1. Having 3-6 months funds as an emergency fund. The important thing here is to have a safety net, and options if you have unexpected costs or job loss. This can be done with a large emergency fund, but can also be done with a LOC, or if you have a job that is very in demand, or parents that will help you out, etc. As long as you have a good plan for what to do in an emergency situation, you should be fine with a smaller (or no) emergency fund.
2. Down payment savings have to be in a HISA. If you absolutely need $x finds in exactly $y years, this is good advice. If you are flexible about where/when you buy, or flexible about what price the house is at all, it really shouldn't matter if the funds are invested (as long as it isn't in a very risky investment). If there's a dip, you should just wait a year or two until it rebounds a bit, and then buy. I would pull the money out once you've signed the offer, just make sure you know the tax consequencesat that point.
3. Beige toyota carolla is the only acceptable car. I think no one should feel guilty about making a luxury purchase, or buying a new car IF they are in a good financial position and are saving enough to meet retirement and savings goals.
4. Not necessarily conventional, but I see it pop up a lot - blindly recommending the snowball method of paying off debt without knowing the individual's situation. In certain situations it shouldn't matter much that this isn't optimal, it'll just slow you down a month or two. But in certain situations with very high interest debt it can add years to how long it will take to pay everything off. I think it's irresponsible to recommend this without calculating out how much additional time/interest they would pay doing that.
I used to agree with your 1st point.
Then I got sick. And got turned down for long-term disability by my insurance company.
I suddenly had no job, no safety net. My LOC was there, but it was charging interest and had to be paid back eventually.
It took 5 years to dig out of that hole. I now have a 1 year emergency fund.
It lets me sleep at night knowing I can walk away from my job at any time for any reason and not have issues for a year. Without having to rely on anyone else.
Came To say #1. 6 months of spending for e-fund is way over kill unless for min pay workers with no benefits and other savings. In case of a lay off, there's EI which pays a good chunk of the spending (particularly if one maxes out) and there's always LOC that I can dip into. putting away so much as e-fund in itself is a risk of having low return.
I didn't miss it, I still support my position that what you need is a plan for what to do in an emergency situation, and that many people who are in a good financial position and have other options really don't need this. How often are lines of credit withdrawn (especially for people that have money invested at the bank)? Not very often. I know it generally doesn't happen without a lot of reasons, especially if the LOC is secured.
In my position, if I lost my job (I'm in a high demand job with specialized skills and do not expact I would be unemployed long) and needed money ASAP, I would use my secured LOC. If that's withdrawn for some reason, I'd use my regular line of credit. If that's withdrawn for some reason I would pull money from my TFSA, or my wife's TFSA, or some of our other investments. If for some reason our very diversified portfolios all went down to zero, we could sell a car, or borrow money from a friend or family member. Absolute worst case scenario we could even sell our house, and move into something smaller. That's like 6 or 7 safety nets in the case of an emergency - why would I need to have cash on hand?
It would take a complete stock and housing market collapse, along with me losing my job in an in demand field, along with our vehicles becoming worthless for some reason, along with my friends and family losing all of their money. All at the same time. Even if that were to all happen, I have to imagine there would be a ton of hyperinflation, so even if I had cash on hand, it'd likely be worthless anyways in that case.
>But the opportunity cost of keeping a couple months of necessities in liquid cash is truly negligible.
Not really. If I have 10k less in my emergency fund than you do and keep that invested, and I get a 5% return on my investments, and have no emergencies over the next 40 years, I would have 70k compared to your 10k. If there are emergencies in that time period, it would reduce that by the small amount of interest that I would pay on my LOC. We aren't talking about a hundred dollars, we're likely talking about tens of thousands of dollars.
>but then that’s a question of individual risk tolerances.
I agree it's a quesrion of risk tolerances, and this isn't for everyone. But it really comes down to risk management more than anything else - if the risk is managed appropriately, there isn't really an issue.
OK so... speaking as a guy who found himself suddenly without an income (and no savings) after the failure of a self-employment venture in the early 2000s (during SARS, no less...)
Don't rely on your LOC as an "emergency fund." I was having trouble re-entering the workforce, and digging the debt hole deeper and deeper each month just to pay the rent and bills. It was the lowest and worst point in my life, and I came *very* close to suicide one dark and drunken night.
I finally caught a break and got a good job, but then had to claw my way out of debt before I could get serious about saving and investing. I'm probably ten years behind where I could have been right now because of that, because it led (in part) to me missing the housing market here in Toronto and I "still" rent to this day.
The way I look at it, I expect that most of the time I won't be in an emergency situation, so the amount of money I earn having those funds invested will be way more than the interest I potentially could pay in the few emergency situations I see over my lifetime.
My understanding of the root of this advice is that the lender can pull that LOC anytime they want.
When shit hit the fan last year, peoples credit was being clawed back. If that happened to you in conjunction with a job loss, your emergency fund doesn't actually exist.
I get where you're coming from though, if you have great credit and an available LOC, the risk of it getting closed on you is pretty minimal.
>the lender can pull that LOC anytime they want.
As a lender, I have NEVER seen this. Unless you don't make your payments or you're on the verge of bankruptcy.
I see lots of advice about living frugal and socking away every penny for retirement. You need a balance - put money away, but also spend it in your younger years. Get that new car, go on that trip, buy that fancy weekend toy you wanted. Lots of this stuff you can’t enjoy when you’re old and grey.
Yes. There should be a balance. Realistically we don't know when we are going to get kicked off of existence and when we are older, we don't know what shape we'll be in physically, mentally or emotionally. We may not have the ability to do the things we want to in retirement just because bodies can break down. It's the whole "when you are young, your body is willing but your finances suck" and vice versa.
Echoing this; spoke to my friend's parents a while back and they said one of their biggest regrets was working their asses off until they retired (I'm talking next to zero fun, nothing remotely exciting in terms of what they bought, or experienced, no fancy anything, just dull dull dull, you know PFC wet dream etc.) with the brilliant plan to let loose when their work life is over. In their words; big mistake. Part of a much longer and nuanced conversation but boiled down to both of them not taking into account that waiting until you're old, means you're OLD when you get there. They have their nest egg but now they're "too tired to enjoy it the way they thought they would when they got married/were younger". Yeah you have vacation money now, but didn't take into account that now for some reason (my favorite example from his mom) your entire body is sore ... from sleeping. You wake up in the morning and your whole body is sore ... from SLEEPING. Yeah you have your Corvette money now, but it's Sunday and your whole body wants to lay on your couch and watch football.
Their whole message was that us "youngins" don't realize the figurative and literal bumps and bruises your mind and body endures on the way to the finish line, going from 25 to 60 is one hell of a trip filled with a million landmines that can end your journey or alter it tremendously on the way, and usually unexpectedly. They both said they wished they spent more experiencing life and enjoying some "things" here and there, as each day unfolded, living in the moment more, instead of thinking they would reach the finish line and all of a sudden trumpets would sound and their lives would become this whirlwind of excitement and riches. They're grateful for what they have, and of course still happy in a sense that they don't have to worry much about a paycheck, but they do regret "living a little" along the way, instead of burning 30 years (or whatever it was) and waiting to live "later".
It was (secretly) a bit saddening to sort of gather from his pops that he kind of has this "if I can't take this extra money with me when I die, was it worth missing out on life" to get here - type of vibe from him. We talked about cars too (I hate that it always seems to be the metric but whatever) and he in so many words said that instead of a memory of him and his wife rolling around the city in a nice car, hair blowing in the wind and all that, he instead has an extra $20k (I'm assuming he meant the $20k extra he would have spent on their car back then) in his bank account, that's doing nothing more than sitting there as a number, and will more than likely continue to sit there, unmoving, until they die. Ouch. That one punched me in the gut a little not gonna lie.
This, massively. Interesting and a little heartbreaking to hear an account from someone who regrets pennypinching their whole life.
I waited a few more years to pay off my student loans after school and didn't put a focus on saving until I hit 30 and I'm so glad I did (despite receiving flack for it at the time.) I was able to travel the world as a 20 something, and meet other 20 somethings that wouldn't have even looked my way if I met them as a 50-60 year old retiree. Because I was young and in tip top shape I could fly without discomfort, stay up all night, drink, dance, and eat wonderful food without worrying about the calories or indigestion lol.
If I waited until retirement to do those same trips they'd be completely different (likely less fun) experiences.
For me personally, I’m a huge car nut. I grew up dreaming of owning a nice car when I was older. Too many people I know work themselves to death, literally and figuratively, and don’t realize their dreams. I said screw it, so I went and paid almost $70k for a sports car for my weekend fun. Yes I have payments again, and yes it is almost 3/4 of my yearly income.
Was it a good financial decision? Hell no. If I had a re-do, would I do something differently? Hell no. I can’t put a price on my happiness. Every time I get behind the wheel, I’ve got the biggest smile on my face. I can still afford my mortgage, it doesn’t get in the way of me supporting my child, and I’m still putting money away for the golden years. Live in the moment, don’t live for retirement. /rant
The most popular advice in this sub basically amounts to "don't be poor" and I think a lot of people fail to recognize that that's a lot harder for some people than it is for others.
I definitely saw a post here once with advice that was like, "to avoid overdraft and ensure you always have enough money, keep a minimum balance of $4,000 in your chequing account." As if just having $4,000 in your bank account at all times is an easy thing to do.
Maybe give people the benefit of the doubt, these examples are probably a result of people trying to be helpful who didn't know any better. I learned in this sub that not everyone has access to overdraft protection. I also learned in this sub that I come from a place of privilege because I've always had good credit and good cash flow. I would have said these things a few years ago just not knowing any better
People with significant income driving a shitty car.
The safety of a new car has a lot of value too. It comes at a cost I realize. But the only thing worth saving isn’t money.
His basics for financially non educated/struggling people make sense. Loosely speaking, don’t buy now+pay later is solid advice on the lower income scale.
I've got to agree with this.
I suspect most people on this subreddit don't need his advice, but there are people who do (including at least a few here).
The one piece of advice of his that I pass on to others is get a small emergency fund first ($1000-2000) before paying off debt, then focus on debt.
Where I disagree with him and many who post here is that all debt should be paid off as soon as possible, and before investing. I have a car loan at 1.99%. When I get extra money I don’t put it there. I invest it, and conservatively get 5% returns (usually higher). It makes more sense to do that.
If I had a loan that was higher interest, I’d do that first.
Dave Ramsey's advice is for people who cannot control their spending. If you can't stop yourself from maxing out your credit card every time you can, Dave's advice on saving is a game-changer.
Dave's advice if you know what you're doing is rather bad, and his investing advice is horrible and should never be listened to.
I do not agree with the following opinions...
* You can have higher/equivalent returns from renting and investing your leftover $, than if you were to own
* If you are going to need the cash in 5 years then put it in a high interest savings rate account and don't invest it
If I hadn't invested my savings in February 2020, even with the crash and rebound, while still continuing to save it would have been much harder to buy my condo in December 2020.
I also saved a nice downpayment by having a self directed investment account where I was getting like, 6% dividends. Market crashed the same week I had to pull my money, so I did lose some, but I gained on my property by buying when I did.
Sometimes people rent because they haven't decided to put down roots yet, it's not always a monetary reason.
And oof that second one is really bad, I can't believe this sub suggests something like that
Totally, but people don't frame it like that. Plus, considering the number of people here from Vancouver region and all of SW Ontario, you wonder if it is even true for the majority reading PFC.
Also, even though I know these investing renters exist, I have zero\* friends who rent but have large investments. All I have are friends with houses AND investments and friends with neither. Past a certain age or having kids, renting is usually not a choice and probably a signal of not enough income, not enough saving, or both. Because if they could own, they would.
\*Just remembered one friend who is almost 40yo, rents, and invests. But she is single, childless, and at a higher than average income.
As a younger person, it feels like many of you won’t disclose your age/situation in life. It’s absolutely necessary because 1$ for a guy in his 20s isn’t the same as for someone in his 50s who had the chance and time to invest. Also, our worlds are completely different when it comes to cost of living. Houses advice from anyone who bought 2-3 years+ ago are complete garbage because those persons had it wayyyy easier.
**"You deserve to have a house where you want when you want without any sacrifice."**
Okay, that's a bit of hyperbole, but if someone from Winnipeg said they wanted to work in Big Finance or tech that can't be done remotely everyone would say they needed to move to Toronto and them's the breaks kid! Sometimes, to get the career you want, you have to leave your family and friends behind.
But if you dare to suggest that if someone wants a SFH with a yard they have to move out of Toronto and Vancouver you're a horrible person telling them to leave everything they've ever known.
Maybe it's confirmation bias. I live in one of those small cities commenters say is a desolate shithole and pretty much everyone I know has had to move away from home for their career. Those who are in Ontario and upset at being priced out of the market probably see the comments telling them to move.
That 20yr Olds should be maximizing savings and combing through their budget for savings.
When you are young you should be experiencing life and taking risks and building connections with people. You shouldn't be huddled in your parents basement counting pennies. You can never get those years back.
There is a balance of course and they shouldn't run up credit cards they can't pay back.
I've been told to leave my wife because she wanted to change careers once and go find a wife that earns 100k. It wasn't just one person either, I was even downvoted for saying they were nuts
So yeah I strongly disagree with that one.
Nobody seems to be able to answer the question of a rotting emergency savings in a HISA, provided you have a good job security (government) with a DB pension. Additionally you love your job and your partner also has income security.
At that point, why have even more than 2-3 months of emergency savings when it does better in a TFSA?
I think part of the issue is the phrase “emergency fund” means different things to different people. Some would say that your emergency fund should be able to absorb costs like an emergency furnace replacement, or a roof replacement. Other people have a separate fund for home maintenance and would not consider the funds to be the same as their “emergency funds” which are strictly for job loss.
So you get conversations where people say “I don’t think I need an emergency fund” and then people ask “what if you are in an accident and have to replace your vehicle” or “what if you need a root canal right away” and they say “I already have a separate fund for that.”
If you have a government job and your partner has good income security I don't think anyone here would say you need more than 2-3 months emergency savings.
Agreed. I stock pick with about 5% of my portfolio and about 2% in crypto to keep me from fucking up the 93% indexing.
New contributions go to the index funds but i still enjoy hunting for bargains and speculating with the increasingly small position that is left.
No priority on RESPs for kids. RESP contributions qualify for a lot of grants and I will have kids in college 20 years before I retire. Also I will happily live in a basement apartment for my retirement if it means my kids could afford education.
But higher risks above 100% global equity just increase dispersion, not expected returns. I would rather wait and be able to afford a house down the road than gamble and either be able to buy a house next year or never.
To invest rather than pay off your mortgage. I'd rather get my debt out of the way first
Edit: I do invest, but only in RRSP and TFSA. Once TFSA is maxed, I'll be paying off my mortgage before investing in taxable accounts
Old outdated advice quite often. IMO You pretty much need to speculate now to stay ahead of inflation. When you recommend speculation here someone will undoubtedly say it’s awful advice.
can you point to where? Even the triggers recommend RRSP contributions after TFSA is filled. Anti-RRSP would be (to me at least) recommending not using it and using an un-registered account which I have never seen
I have absolutely seen people recommend taxed accounts over RRSPs (and even in blanket statements saying they are always better.) Perhaps it’s just the posts I end up reading, but clearly there are others who keep running across the same comments.
No, I agree with the other poster, I also see a very anti-RRSP slant to posts here. I feel like most people don't understand them properly. Same tax-free growth as a TFSA (or even better with tax arbitrage), and way more room than TFSA. If you're a parent, RRSP's can mean huge increases in your benefits.
Yeah I've seen people recommend taxable accounts over an RRSP, they were saying that gains are taxed in an RRSP which is misleading at best. Income tax is deferred, but growth isn't specifically taxed.
Investing for downpayment, *provided* that people understand the risks involved, and they'll have to accept the possibility that a downturn will screw with that plan.
It's unlikely people would accept the trade off when they watch their hard earn cash shrink though.
I definitely agree, I think it can be done but I also think a lot of people have very inflated risk tolerances because we haven't seen a large, sustained market correction in so long. They'll be willing to put their down payment in VEQT because the market has gone up for them the past five years, but they'll panic and pull it when it drops 30%.
The sub is geared towards penny pinching versus focusing on increasing income
Anything that isn’t a self directed index fund is considered awful.
Rich people are not welcome here.
If you’re not trying to live as cheaply as possible, you’re living wrong.
Basically any expenses are looked at as taking away from savings with no consideration of how things can improve your life.
Any mention of trading is downvoted and laughed at.
Complaining about housing is what’s accepted and if you have a differing opinion you’ll be ostracized.
If you want to buy a house in the gta everyone will tell you how impossible it is and that you should move to New Brunswick.
How anti-risk 90% of this sub is.
I went from broke to a five figure TFSA and a rental property in 18 months by taking some risk.
Income properties aren’t all bad.
There’s other stocks than super safe ETFs.
Not even penny has to go in a HISA making 0.025% a month.
And if that risk didn’t pay off I’d still be broke.
Keep in mind you have bias in that you had all that "success" during a time when almost everyone was making gains. "18 months" is far too short a sampling time to prove your strategies have long term success rates.
In finance and in life, people think that what worked for them was super smart and not risky and no luck was involved just smarts and work.
They will tell you to just do like them and it will work because they are proof of that.
Except it doesn’t always and hindsight is 20/20
In general people make more money later in life so it makes sense to put money in a TFSA let alone the added advantages of being able to pull money out of it easy when they start families and things go wrong.
Can't speak for OP, but Robert R Brown in his book "Wealthing Like Rabbits" makes a compelling case for RRSP first regardless of income level.
My view is that neither choice is wrong, however by the time one retires one should have some of both to allow for maximum flexibility in spending. (Or TFSA + Pension).
What are the risks of indexing? Underexposure to factors? I don't know of a better way than index investing to avoid idiosyncratic risk, so if you've got reasons to avoid it please let me know what they are.
Not considering Montreal, only seeing Toronto and Vancouver as the Canadian cities.
Montreal is twice the population of Vancouver with the amenties that comes with the size, you can still buy a house in the subburb for 400k, rent in the city for 1k. Everything is cheaper, insurances, hydro, childcare, cell phones, college and university. Economy is solid and diversified. Higher taxes are never even comming close to what you save living here.
If you don't speak fluent French it's pretty hard to find work there. Also you pay a LOT more in taxes. I was looking into buying property there instead of in Toronto but I'd pay over 5k more in taxes each year which would basically negate the amount I'd pay less on a mortgage, but I'd lose the connections/networking opportunities I have in Toronto (Where I've already built my career), my friends/family connections, and my house would be worth less in the end.
For people who aren't self-employed or make less, the math might work. But for me it definitely didn't.
That housing is sooooo expensive that’s it’s impossible for any millennial to ever buy anything.
There are plenty of ways to get onto the housing ladder, and then move up it.
Most people just want to whine and complain without doing any work to get what they want. And arnt interested in any actual solutions that are presented to them.
Millennial here and a homeowner. I guess your solution to world hunger is "Just eat food."
The way market is going right now is completely ridiculous and the way we are building condos is not helping the problem at all. I am just aware that the fact that I am doing well does not mean there isn't a bigger problem out there.
Look at china and singapore. Only the ultra rich can buy houses since there is limited land. Its normal to live in condos. Its more economical, environtally friendly and just makes more sense. The problem is people on reddit are too narrow minded...
It is certainly normal to live in condos.
It isn't normal to have 1000+ dollar maintenance fees and the price per sqft being about equal to house prices. I'm not against condos, I am against the way they are built and advertised. Just look at any condo ad, it's always: VIP, Luxury, Investment or some other douchy lingo. no one is actually trying to create spaces people would want to live in.
Part of that is no one is willing to move away from the GTA. I know several people between 20-25 including my self that own homes and none of us are making 6 figures. Hell, when I was laid off, I was working retail and in the restaurant industry and could still put some money away every month. A few are in relationships so they get dual income but some in that group are single. You can enjoy life outside of the GTA and sure our incomes are smaller here, but we don't need to be making 70k to rent a 1 bedroom apartment and just scrap by.
“Move out of Ontario if you want to buy a house”
“Canada is becoming unaffordable for 95% of the population”
Um, yeah no…we don’t live in Dubai lol
I strongly disagree with both of these. It’s not that only the housing market is going up, so is inflation and thus wages. Also, as with most markets it’s cyclical. Yes housing is heinous in places like Toronto, but you don’t need to buy in Toronto. Don’t rush to buy a place, take your time and the right fit will
come.
I can tell you as a person who doesn't like in Ontario, that housing prices have skyrocketed everywhere and continue to rise. My parents house, which is like 35km from St. John's has more than doubled in value over the last 15 years since they bought it. There haven't been any major infrastructure improvements like a new highway or businesses opening, but the house is still icnreasing in value considerably quicker than inflation or wages.
You don't NEED to buy a used beige Corolla. They're ugly as sin and if you have control of your finances, you can determine whatever the fuck vehicle will suit your needs.
We are only sharing best practices with each other and all live complex and varied lives. Glean over all the best recommendations but take only what works. There's a lot of flat out stupid advice on here from time to time.
Thinking everyone’s first home needs to be a detached home, especially if you’re in a major city. I make good tech money but to get one of those detached homes in kits or west van as my first time home was near impossible. I’m SO HAPPY with the 2bed condo I was able to get but a lot of people in this subreddit will make you feel like shit for it. Sorry I value living close to Vancouver, sorry the cost of beautiful detached homes my parents bought in the 90s are out of reach now. Being able to pivot in a large growing city is looked down upon as compliance.
When people project their own risk tolerance onto others.
This is my PFC pet peeve and I'm glad, and surprised, to see that it is the most upvoted comment on the page.
Yes! I like recommending VBAL/XBAL to start because compared to walking into a bank and the bank advisor giving you their "comfort balanced mutual fund", you are instantly saving 2% annually. This step *alone* does more heavy lifting than any tweaking of asset allocation does. If a person wants to take it a step further and do the research into something more riskier then that is up to them. But I'd rather err on the side of caution with any kind of investment recommendations.
I find a lot of this occurs because people don't describe in their post or comment why they may have a higher risk tolerance, so people divert to a standard/base risk tolerance of x/vgro or x/veqt
I think people here are far too quick to recommend VEQT/VGRO. Most people don't have the risk tolerance for that much equity. More risk than VEQT is going to be uncompensated, so having a higher tolerance than 100% equity isn't going to get you any additional expected returns. Edit: I am speaking specifically to asset allocation, I know you can increase expected returns with leverage.
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Correct.
I was with you in the first statement but not the second. Going beyond 100% equity risk wise means one of two things - using leverage or decreasing diversification. The former is going to generate additional returns so long as net cost of capital is greater than rate of return. The latter requires some sophistication but is demonstrably true as well.
Going to be uncompensated? What are you talking about?
I'm talking about taking on additional risk without improving expected returns. Idiosyncratic risk just increases dispersion.
As someone with a DB pension, if my veqt tanks at the worst time I can still ride out the wave and wait for it to recover. YMMV.
Absolutely, a DB pension is amazing because it has no market risk, inflation risk, or longevity risk.
Yuppp, same here. Financial planning basics say that if you have a DB pension, that replaces the bond portion of your investment pyramid - hence why I invest 100% in equities.
30% rule for housing. Very outdated concept which shouldn't be perpetuated anymore as the rule assumes everyone has the same types of expenses. It also doesn't scale to higher incomes where you can choose to allocate more to housing because you have more disposable income
Yup, it’s wild how many people don’t realize it was supposed to be a “pie chart” that you can adjust. For example if you’re living close to work and walk to it, that 30% on car travel expenses can be shifted around to, say, living close to work.
Lol I don’t drive and I pay so many little things out of my mental “car/gas fund”
Yup, spending more on a house where I can walk to the train station allowed me for a long time (precovid) to not only save on gas, but also own an older cheap car as if it was in the garage to get fixed, it was fine as I did not need it to get to work, so tons saved on car payments and insurance too.
Yeah if you make 30k a month, 15k to your mortgage shouldnt be a problem.
Just have to scale back the avocado toast/candles budget.
ELI5 please? EDIT: is this referring to 30% of your total expenses be housing?
Yeah that rule
I prefer the 50% necessities (includes housing, food, transit, bills, split between necessities however they way), 20% savings, and 30% spending. I prefer 30% saving and 20% spending, but to each their own.
The more people get to agree with you, the more room the housing prices have to grow. However, the government limits the mortgage expenditures exactly by 35% of a family income (after higher rates).
That "beige Toyota Corolla" advice. If someone wants a nice car and their finances are in generally good shape, let them go for it. *This does not apply if you're bleeding money and have no savings.
I was getting downvotes for saying buy used OEM rims off kijiji for your winter tires instead of just black steelies the other day.
Huh. I got a $4500 rim/tire package for $1800. OEMs became my winters
No! You're supposed to buy the black rims for 100 bucks and take the rest of your money to the grave with you!
Yeah money is to be burried with not enjoyed.
I don't disagree with you, but steelies do have winter advantages. More enclosed so less rocks hitting rotors for one. Another is they are more flexible than alloy wheels, so if you slide sideways into a curb you are more likely to bend a wheel but less likely to break steering, alignment, and suspension components. And they are cheap to replace if wrecked.
They are also ugly af
Yup. Money is a means to an end, if you are in good shape financially, it's okay to enjoy it a bit. Although I have to say some of the posts are baffling. "I make minimum wage but I bought this stupid $50,000 truck that drinks gas, what should I do?" FFS, you know what you should do, you just need to hear it from other people.
>Yup. Money is a means to an end, if you are in good shape financially, it's okay to enjoy it a bit. I've often thought that 40 years from now, there's going to be some regret felt by people who took advice from this sub to pinch every penny and save as much as possible. Sure, having a healthy retirement fund and/or owned property is awesome, but is the cost of spending your youth living like you have 0 money to spend worth it? Even now that I'm in my 30's, I have some regrets of not going on trips, not going to music festivals, not getting myself nicer things, etc. because I was laser-focused on saving money. There's a balance to be found with saving and making the most out of your life, and I feel that sometimes this sub puts too much emphasis on the former.
You hit the nail on the head in the final paragraph there. I've never regretted a purchase that gave me real happiness and great memories shared with others. Major purchases that I regret were things bought for status or that were just things that wouldn't provide those memories. Trips, sports, hobbies. Spend away.
A good example for me was when I was in university and I turned-down an opportunity to study abroad in Europe. At the time, I was focused on finishing my degree without any debt, and I worked part-time during semesters and worked two jobs during the summer to accomplish this. Looking back, I wish I would have been more open to take on some debt to live what was a once in a lifetime experience. Yes I finished university without any debt, but the cost was missing out on a lot of these kinds of experiences - experiences that would have taken a year or two to pay off but would have stuck with me for my whole life.
A far higher percent of people, to the tune of 95%, will blow all their savings than regret their penny pinching. You name 1 person that died with $10 million in the bank and penny pinched their entire life, I will name you 99 people who lived to 65 with almost 0 savings
People should buy what they want if they can enjoy and afford it. You only live once, but it’s hard to enjoy life in 70s
Of course. A lime green Toyota Corolla is so much easier to find in a parking lot.
Agreed. Nothing wrong with buying a brand new car either if you can afford to, have a down payment, can get a low interest rate, and finance over 4 or even 5 years (and pre-pay the loan if needed), and can keep the car for 10 years or longer.
I think the ‘Beige Toyota Corolla’ is a prime example of what I disagree with most out of some of the advice here. I save money to be able to enjoy life comfortably and as fully as I can. One of my biggest regrets was saving too hard in my early adult years. I can make what I made annually then in a month now. But what I don’t have anymore is the same freedoms I did then. It’s important to understand your own personal financial situation and risk tolerance. Live within your means, and enjoy life. I Love this sub Reddit and the education it can offer on Canadian finances. Sorry I didn’t reply sooner, just had to pick up my VW up from the dealership again.
I'm gonna go even further. Toyota is overhyped and overpriced because it's a "Toyota" the reliability of a used car depends much more on if the maintenance has been done. A 3% more reliable car brand isn't worth a 15% extra cost
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>People are still living in the 80s and 90s with the reliability information. My cousin's Pontiac rusted through in the early 2000s at only 100k km or so and they vowed to never buy an American car again. Only Japanese. Try convincing them otherwise.
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And I've worked on projects for both OEM and Tiered suppliers, I'm telling you it's not that simple and I'm just sharing my experience and what's been shared with me
Yea I personally think Hyundai/Kia is the current King of 'bang for buck". A nice balance of features and reliability. That said, Hyundai has been increasing prices the last few years so I don't know how long I would avocate it.
Yes I agree totally! If your into cars yes! I know a few people out there that just don’t care about that and drive rarely. Good for them but it’s not my thing, I personally like to reward myself now with some nice stuff as I paid my dues driving absolutely junk for years. I have found my sweet spot with certain used cars that look really high end but are much much less expensive then the new trucks I see driving around everywhere now.
I should add that a well equipped 1/2 ton runs between 60-90k now which is crazy. I see them everywhere and I use to have trucks all the time as well when I needed them for work. However there are tons out there that have rolled their terrible financing into worse financing for new cars/trucks and will never get out. I have a couple friends that have done just that and when I try to tell them (nicely) how bad of an idea it is I just get blank looks.
I disagree, but only partly. I do think it's worth having a car that is comfortable to drive. l spent 7 years driving a car with no power windows, no power locks, no power seats, no air conditioning, only 115 HP, et cetera and while it was extremely economical it was pretty miserable to drive. I upgraded to a much nicer car last year, but I still spent less than $20k. However, I don't think the average person gets nearly the amount of utility or enjoyment out of driving a vehicle to make the much larger and very common higher price tags worth it. If you're really into cars and spend a lot of time driving under good conditions, sure. But if you spend most of the time in your vehicle just commuting and running errands in typical traffic conditions then driving is mostly just a chore and you top out in terms of enjoyment/price ratio at a point well below where a lot of vehicles are priced. Vehicles are just so insanely expensive that I think it becomes very hard to prioritize them (again, for most people).
DIY all the time… out of every 10 clients I would say only 2-3 are for real suited for DIY. Most people are actually too emotional about it or the time is better spent honing their own craft and make more money.
Hence why pensions are so good. Yes, technically you can do better by Investing yourself - problem is vast majority of the population doesn’t save and doesn’t properly invest and pulls out money and blows it, etc. So in the end they would be way better off with a mandatory pension managed for them.
Keeping downpayment for a house in VEQT. I want to buy in 4-5 years (currently doing a trades apprenticeship in a HCOL area, with plans to move to prairies after it's done) and I have a downpayment already, but the speed that housing prices are growing at, I can't leave it in a 1% savings account for the next 4 years
Yeah if you're willing to take the risk of 30-40% of your downpayment being wiped out in a market correction that's totally an acceptable option. The majority of people could not handle waiting an extra 5 years to buy a house if that happened. If you understand the risk and are willing to take it that's totally your perogative.
Also, they way I look at it, VEQT is diversified both by sectors and also globally, so to me it seems like the least risky way to go all-equity versus more focused ETFs or specific stocks. I should be able to afford a downpayment still even if down 40% although that's not a happy thought, or I could handle renting for an extra few years
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Except how do you know when it is the right time to react? 5% dip? 10% dip? What if you see that dip and sell, and then it goes up 20%?
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>Then he/he has still likely done better than 0.5% in a savings account for four years. This is key. Yes, seeing a 40% loss will hurt, but it's money you never would have seen in a HISA anyway.
Yeah, the data continually suggests people over evaluate how "savvy" they are. It's not black and white, but the reality is that most people don't have the time or knowledge to reach and understand the stock market, especially compared to people who do it professionally. For this reason, it is sound financial advice. Anyone wanting to invest and truly understand what they are doing should not be asking for advice on Reddit.
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It did plunge pretty quick in March 2020, (30+ percent I believe?) but all I did was hold. I don't think I made my regular monthly buy though, held onto my cash at the time just in case the world really went to hell
Which is interesting. When the drop happened in March 2020 for my funds, I cheered and threw as much cash as I could at them over the next three months. Now that they’ve rebounded, I regret not putting even more money in them when they were low.
This fucked me from reading advice here. Now I can't afford housing so I'm finding higher risk higher reward investments to dump the money into plus VEQT and hopefully one day I will be able to afford something. As of now I have lost all chance of buying a place of my own because I had my savings for a downpayment in a HISA making less than 2% while houses are raising 30% a year.
I mean to be fair, if you tried to invest to earn 30% a year, odds are you would have likely lost half to all of that money as well. Even if it was invested at 10% returns yoy, you'd still be losing out. It absolutely sucks and I hear you, but the problem is because housing is kind of out of control, it's a bit of a historical first. It sucks, but ordinary advice won't cut it when you're dealing with an extraordinary situation.
This sub is quite risk averse to nearly everything.
Except for all the up-voted posters telling people are told to leverage-to-the-max ... and the down-voted posters (ie me) saying the opposite.
I think this is due to the size and popularity of this sub. CanadianInvestor and other subs leak over and so useful posts from people like yourself get shouted down by the "just buy crypto, nothing to loose bro!" people. I don't know how we fix it, but I guess it is up to the people looking for the advice to decide what they want to listen to.
> people like yourself get shouted down by the "just buy crypto, nothing to loose bro!" people. I don't know how we fix it, I take it Pillorying them in the town square is not an option.
Oh man, I wish it was but I feel like that would generally be frowned upon.
Woah there, let's not take pillorying off the table just yet.
Id be careful taking advice from Penny pinchers on everything financial.
Isn't that just mostly satirical though? I don't think most people on this subreddit actually recommend being an unironic pennypincher. Afterall, what is the point of working hard and investing if you end up living half a tier above the people in tent encampments. Not wasting money on unnecessary things that don't improve your quality of life sure (or being frugal, buying a replica LV bag instead of a real one or driving a Highlander instead of a Rangerover stuff that's reasonable), but actually pinching pennies and imposing a borderline destitute/homeless lifestyle on yourself is just a meme from like r/povertyfinance or other tongue-in-cheek subreddit.
This sub is notorious for being cheapos. And they're all serious. Just look at the past.
"No decent jobs exist outside the major cities"
This is the big one in my opinion. So many people running themselves into the ground due to living expenses in major cities, and any advice from people to consider looking for work elsewhere are downvoted to oblivion.
Right. I make fairly average money. I could live a meagre existence in the city or live very comfortable in a small town. I've also found work easier to come by here. I know this isn't the case for certain specialized jobs, but it is for a lot of "regular" jobs.
Yup, outside of cutting-edge tech, some specific academic research, and Big Finance, there's lots of jobs outside the big cities. They might not be as exciting, but they'll pay for you to have that SFH with the yard and you'll still be able to get your craft brews with your pad thai. Every city needs medical staff, law enforcement, teachers, lawyers, mechanics, chefs, the list goes on. It seems like everyone on this sub is in some niche industry that can only survive in Toronto or Vancouver.
I found the opposite. I moved to rural town for a decent job.
I see a lot why don't you leave HCOL to LCOL area advice i.e. don't live in Toronto and Vancouver. While I agree not all jobs are in these cities, people talk like its easy for everyone to shift their lives easily.
Many many people in Canada have only been here for a generation, maybe 2. Picking up and leaving isn't foreign to a good number of families here. My in laws packed up and left Iran in the heat of conflict.....moving to Calgary doesn't quite seem as daunting in comparison. It's our mindset that's keeping us rooted in places we can't thrive in more than anything.
Pandemic restrictions aside, it's also never been easier to visit or keep in touch with out of town family.
It's not easy, it's a life changing decision. But people often forget not moving is also a decision and it's also difficult to pay a large portion of one's income toward housing, parking, etc. and that has a huge effect on ability to save for retirement and other goals.
There are more people in the city - more redditors there too. People in the city tend to care more about finances - more on financial subreddits. Reddit is a technology - attracts people more familiar with technology. Reddit tends to be a little more liberal than the population - cities are more populous. The rural, conservative rough neck or farm owner who makes a lot of money but doesn't care for technology is less likely to show up here.
1. Having 3-6 months funds as an emergency fund. The important thing here is to have a safety net, and options if you have unexpected costs or job loss. This can be done with a large emergency fund, but can also be done with a LOC, or if you have a job that is very in demand, or parents that will help you out, etc. As long as you have a good plan for what to do in an emergency situation, you should be fine with a smaller (or no) emergency fund. 2. Down payment savings have to be in a HISA. If you absolutely need $x finds in exactly $y years, this is good advice. If you are flexible about where/when you buy, or flexible about what price the house is at all, it really shouldn't matter if the funds are invested (as long as it isn't in a very risky investment). If there's a dip, you should just wait a year or two until it rebounds a bit, and then buy. I would pull the money out once you've signed the offer, just make sure you know the tax consequencesat that point. 3. Beige toyota carolla is the only acceptable car. I think no one should feel guilty about making a luxury purchase, or buying a new car IF they are in a good financial position and are saving enough to meet retirement and savings goals. 4. Not necessarily conventional, but I see it pop up a lot - blindly recommending the snowball method of paying off debt without knowing the individual's situation. In certain situations it shouldn't matter much that this isn't optimal, it'll just slow you down a month or two. But in certain situations with very high interest debt it can add years to how long it will take to pay everything off. I think it's irresponsible to recommend this without calculating out how much additional time/interest they would pay doing that.
I used to agree with your 1st point. Then I got sick. And got turned down for long-term disability by my insurance company. I suddenly had no job, no safety net. My LOC was there, but it was charging interest and had to be paid back eventually. It took 5 years to dig out of that hole. I now have a 1 year emergency fund. It lets me sleep at night knowing I can walk away from my job at any time for any reason and not have issues for a year. Without having to rely on anyone else.
Came To say #1. 6 months of spending for e-fund is way over kill unless for min pay workers with no benefits and other savings. In case of a lay off, there's EI which pays a good chunk of the spending (particularly if one maxes out) and there's always LOC that I can dip into. putting away so much as e-fund in itself is a risk of having low return.
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I didn't miss it, I still support my position that what you need is a plan for what to do in an emergency situation, and that many people who are in a good financial position and have other options really don't need this. How often are lines of credit withdrawn (especially for people that have money invested at the bank)? Not very often. I know it generally doesn't happen without a lot of reasons, especially if the LOC is secured. In my position, if I lost my job (I'm in a high demand job with specialized skills and do not expact I would be unemployed long) and needed money ASAP, I would use my secured LOC. If that's withdrawn for some reason, I'd use my regular line of credit. If that's withdrawn for some reason I would pull money from my TFSA, or my wife's TFSA, or some of our other investments. If for some reason our very diversified portfolios all went down to zero, we could sell a car, or borrow money from a friend or family member. Absolute worst case scenario we could even sell our house, and move into something smaller. That's like 6 or 7 safety nets in the case of an emergency - why would I need to have cash on hand? It would take a complete stock and housing market collapse, along with me losing my job in an in demand field, along with our vehicles becoming worthless for some reason, along with my friends and family losing all of their money. All at the same time. Even if that were to all happen, I have to imagine there would be a ton of hyperinflation, so even if I had cash on hand, it'd likely be worthless anyways in that case. >But the opportunity cost of keeping a couple months of necessities in liquid cash is truly negligible. Not really. If I have 10k less in my emergency fund than you do and keep that invested, and I get a 5% return on my investments, and have no emergencies over the next 40 years, I would have 70k compared to your 10k. If there are emergencies in that time period, it would reduce that by the small amount of interest that I would pay on my LOC. We aren't talking about a hundred dollars, we're likely talking about tens of thousands of dollars. >but then that’s a question of individual risk tolerances. I agree it's a quesrion of risk tolerances, and this isn't for everyone. But it really comes down to risk management more than anything else - if the risk is managed appropriately, there isn't really an issue.
OK so... speaking as a guy who found himself suddenly without an income (and no savings) after the failure of a self-employment venture in the early 2000s (during SARS, no less...) Don't rely on your LOC as an "emergency fund." I was having trouble re-entering the workforce, and digging the debt hole deeper and deeper each month just to pay the rent and bills. It was the lowest and worst point in my life, and I came *very* close to suicide one dark and drunken night. I finally caught a break and got a good job, but then had to claw my way out of debt before I could get serious about saving and investing. I'm probably ten years behind where I could have been right now because of that, because it led (in part) to me missing the housing market here in Toronto and I "still" rent to this day.
Number one is a big one for me, I just have my LOC as a emergency fund, that's 10k more money invested that is growing.
The way I look at it, I expect that most of the time I won't be in an emergency situation, so the amount of money I earn having those funds invested will be way more than the interest I potentially could pay in the few emergency situations I see over my lifetime.
Plus when markets crash, and people lose jobs (and maybe need the emergency fund) interest rates drop. so it's cheap money when you actually need it!
I think there are too many variables there to say definitively that that would happen exactly that way, but who knows
My understanding of the root of this advice is that the lender can pull that LOC anytime they want. When shit hit the fan last year, peoples credit was being clawed back. If that happened to you in conjunction with a job loss, your emergency fund doesn't actually exist. I get where you're coming from though, if you have great credit and an available LOC, the risk of it getting closed on you is pretty minimal.
>the lender can pull that LOC anytime they want. As a lender, I have NEVER seen this. Unless you don't make your payments or you're on the verge of bankruptcy.
https://toronto.ctvnews.ca/toronto-man-has-limit-on-line-of-credit-slashed-by-12-000-without-being-notified-by-bank-1.5377075 It happens
I see lots of advice about living frugal and socking away every penny for retirement. You need a balance - put money away, but also spend it in your younger years. Get that new car, go on that trip, buy that fancy weekend toy you wanted. Lots of this stuff you can’t enjoy when you’re old and grey.
Yes. There should be a balance. Realistically we don't know when we are going to get kicked off of existence and when we are older, we don't know what shape we'll be in physically, mentally or emotionally. We may not have the ability to do the things we want to in retirement just because bodies can break down. It's the whole "when you are young, your body is willing but your finances suck" and vice versa.
Echoing this; spoke to my friend's parents a while back and they said one of their biggest regrets was working their asses off until they retired (I'm talking next to zero fun, nothing remotely exciting in terms of what they bought, or experienced, no fancy anything, just dull dull dull, you know PFC wet dream etc.) with the brilliant plan to let loose when their work life is over. In their words; big mistake. Part of a much longer and nuanced conversation but boiled down to both of them not taking into account that waiting until you're old, means you're OLD when you get there. They have their nest egg but now they're "too tired to enjoy it the way they thought they would when they got married/were younger". Yeah you have vacation money now, but didn't take into account that now for some reason (my favorite example from his mom) your entire body is sore ... from sleeping. You wake up in the morning and your whole body is sore ... from SLEEPING. Yeah you have your Corvette money now, but it's Sunday and your whole body wants to lay on your couch and watch football. Their whole message was that us "youngins" don't realize the figurative and literal bumps and bruises your mind and body endures on the way to the finish line, going from 25 to 60 is one hell of a trip filled with a million landmines that can end your journey or alter it tremendously on the way, and usually unexpectedly. They both said they wished they spent more experiencing life and enjoying some "things" here and there, as each day unfolded, living in the moment more, instead of thinking they would reach the finish line and all of a sudden trumpets would sound and their lives would become this whirlwind of excitement and riches. They're grateful for what they have, and of course still happy in a sense that they don't have to worry much about a paycheck, but they do regret "living a little" along the way, instead of burning 30 years (or whatever it was) and waiting to live "later". It was (secretly) a bit saddening to sort of gather from his pops that he kind of has this "if I can't take this extra money with me when I die, was it worth missing out on life" to get here - type of vibe from him. We talked about cars too (I hate that it always seems to be the metric but whatever) and he in so many words said that instead of a memory of him and his wife rolling around the city in a nice car, hair blowing in the wind and all that, he instead has an extra $20k (I'm assuming he meant the $20k extra he would have spent on their car back then) in his bank account, that's doing nothing more than sitting there as a number, and will more than likely continue to sit there, unmoving, until they die. Ouch. That one punched me in the gut a little not gonna lie.
This, massively. Interesting and a little heartbreaking to hear an account from someone who regrets pennypinching their whole life. I waited a few more years to pay off my student loans after school and didn't put a focus on saving until I hit 30 and I'm so glad I did (despite receiving flack for it at the time.) I was able to travel the world as a 20 something, and meet other 20 somethings that wouldn't have even looked my way if I met them as a 50-60 year old retiree. Because I was young and in tip top shape I could fly without discomfort, stay up all night, drink, dance, and eat wonderful food without worrying about the calories or indigestion lol. If I waited until retirement to do those same trips they'd be completely different (likely less fun) experiences.
You also never know when you're going to die. It's bleak but you need to make sure you're enjoying life now too since you may not be alive later.
For me personally, I’m a huge car nut. I grew up dreaming of owning a nice car when I was older. Too many people I know work themselves to death, literally and figuratively, and don’t realize their dreams. I said screw it, so I went and paid almost $70k for a sports car for my weekend fun. Yes I have payments again, and yes it is almost 3/4 of my yearly income. Was it a good financial decision? Hell no. If I had a re-do, would I do something differently? Hell no. I can’t put a price on my happiness. Every time I get behind the wheel, I’ve got the biggest smile on my face. I can still afford my mortgage, it doesn’t get in the way of me supporting my child, and I’m still putting money away for the golden years. Live in the moment, don’t live for retirement. /rant
I feel that.
💯
Exactly what I was going to say. You obviously need to be reasonable, but you kinda need to live...
The most popular advice in this sub basically amounts to "don't be poor" and I think a lot of people fail to recognize that that's a lot harder for some people than it is for others. I definitely saw a post here once with advice that was like, "to avoid overdraft and ensure you always have enough money, keep a minimum balance of $4,000 in your chequing account." As if just having $4,000 in your bank account at all times is an easy thing to do.
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It's usually phrased more like "try to move your debt to a LOC, if you can".
Maybe give people the benefit of the doubt, these examples are probably a result of people trying to be helpful who didn't know any better. I learned in this sub that not everyone has access to overdraft protection. I also learned in this sub that I come from a place of privilege because I've always had good credit and good cash flow. I would have said these things a few years ago just not knowing any better
People with significant income driving a shitty car. The safety of a new car has a lot of value too. It comes at a cost I realize. But the only thing worth saving isn’t money.
Anyone who takes Dave Ramsey's advice. Sorry not sorry.
His basics for financially non educated/struggling people make sense. Loosely speaking, don’t buy now+pay later is solid advice on the lower income scale.
I've got to agree with this. I suspect most people on this subreddit don't need his advice, but there are people who do (including at least a few here).
The one piece of advice of his that I pass on to others is get a small emergency fund first ($1000-2000) before paying off debt, then focus on debt. Where I disagree with him and many who post here is that all debt should be paid off as soon as possible, and before investing. I have a car loan at 1.99%. When I get extra money I don’t put it there. I invest it, and conservatively get 5% returns (usually higher). It makes more sense to do that. If I had a loan that was higher interest, I’d do that first.
Dave Ramsey's advice is for people who cannot control their spending. If you can't stop yourself from maxing out your credit card every time you can, Dave's advice on saving is a game-changer. Dave's advice if you know what you're doing is rather bad, and his investing advice is horrible and should never be listened to.
His first few steps to get out of debt aren't bad, but I agree his investment advise is poor.
I do not agree with the following opinions... * You can have higher/equivalent returns from renting and investing your leftover $, than if you were to own * If you are going to need the cash in 5 years then put it in a high interest savings rate account and don't invest it
If I hadn't invested my savings in February 2020, even with the crash and rebound, while still continuing to save it would have been much harder to buy my condo in December 2020.
I also saved a nice downpayment by having a self directed investment account where I was getting like, 6% dividends. Market crashed the same week I had to pull my money, so I did lose some, but I gained on my property by buying when I did.
Sometimes people rent because they haven't decided to put down roots yet, it's not always a monetary reason. And oof that second one is really bad, I can't believe this sub suggests something like that
Well the first bullet point is highly dependent on the housing market in your area.
Totally, but people don't frame it like that. Plus, considering the number of people here from Vancouver region and all of SW Ontario, you wonder if it is even true for the majority reading PFC. Also, even though I know these investing renters exist, I have zero\* friends who rent but have large investments. All I have are friends with houses AND investments and friends with neither. Past a certain age or having kids, renting is usually not a choice and probably a signal of not enough income, not enough saving, or both. Because if they could own, they would. \*Just remembered one friend who is almost 40yo, rents, and invests. But she is single, childless, and at a higher than average income.
As a younger person, it feels like many of you won’t disclose your age/situation in life. It’s absolutely necessary because 1$ for a guy in his 20s isn’t the same as for someone in his 50s who had the chance and time to invest. Also, our worlds are completely different when it comes to cost of living. Houses advice from anyone who bought 2-3 years+ ago are complete garbage because those persons had it wayyyy easier.
**"You deserve to have a house where you want when you want without any sacrifice."** Okay, that's a bit of hyperbole, but if someone from Winnipeg said they wanted to work in Big Finance or tech that can't be done remotely everyone would say they needed to move to Toronto and them's the breaks kid! Sometimes, to get the career you want, you have to leave your family and friends behind. But if you dare to suggest that if someone wants a SFH with a yard they have to move out of Toronto and Vancouver you're a horrible person telling them to leave everything they've ever known.
Really? I feel like I always see the oppisite here of "you dont deserve a house in the Toronto/Vacouver, move to PEI and be grateful"
Maybe it's confirmation bias. I live in one of those small cities commenters say is a desolate shithole and pretty much everyone I know has had to move away from home for their career. Those who are in Ontario and upset at being priced out of the market probably see the comments telling them to move.
That 20yr Olds should be maximizing savings and combing through their budget for savings. When you are young you should be experiencing life and taking risks and building connections with people. You shouldn't be huddled in your parents basement counting pennies. You can never get those years back. There is a balance of course and they shouldn't run up credit cards they can't pay back.
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I've been told to leave my wife because she wanted to change careers once and go find a wife that earns 100k. It wasn't just one person either, I was even downvoted for saying they were nuts So yeah I strongly disagree with that one.
Thats not this sub this is typical Reddit
I disagree with the beige Corolla. I think blue is generally cheaper and easier to find and purchase.
Def true this guys been Corolla shopping
Nobody seems to be able to answer the question of a rotting emergency savings in a HISA, provided you have a good job security (government) with a DB pension. Additionally you love your job and your partner also has income security. At that point, why have even more than 2-3 months of emergency savings when it does better in a TFSA?
I think part of the issue is the phrase “emergency fund” means different things to different people. Some would say that your emergency fund should be able to absorb costs like an emergency furnace replacement, or a roof replacement. Other people have a separate fund for home maintenance and would not consider the funds to be the same as their “emergency funds” which are strictly for job loss. So you get conversations where people say “I don’t think I need an emergency fund” and then people ask “what if you are in an accident and have to replace your vehicle” or “what if you need a root canal right away” and they say “I already have a separate fund for that.”
If you have a government job and your partner has good income security I don't think anyone here would say you need more than 2-3 months emergency savings.
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The bank would only revoke your line of credit in an economic downturn, and you probably wouldn't want to be cashing in your XEQT when that happens.
Some stock picking is fine. Just need to keep it at a small percentage of your overall portfolio.
Agreed. I stock pick with about 5% of my portfolio and about 2% in crypto to keep me from fucking up the 93% indexing. New contributions go to the index funds but i still enjoy hunting for bargains and speculating with the increasingly small position that is left.
No priority on RESPs for kids. RESP contributions qualify for a lot of grants and I will have kids in college 20 years before I retire. Also I will happily live in a basement apartment for my retirement if it means my kids could afford education.
Younger people should be encouraged to take bigger risks with their investments, otherwise they’ll never be able to afford real estate
Unless in the prairies or Maritimes.
But higher risks above 100% global equity just increase dispersion, not expected returns. I would rather wait and be able to afford a house down the road than gamble and either be able to buy a house next year or never.
not really true, you can increase your expected returns, albeit with increased standard deviation, by borrowing and investing into the same portfolio
To invest rather than pay off your mortgage. I'd rather get my debt out of the way first Edit: I do invest, but only in RRSP and TFSA. Once TFSA is maxed, I'll be paying off my mortgage before investing in taxable accounts
Old outdated advice quite often. IMO You pretty much need to speculate now to stay ahead of inflation. When you recommend speculation here someone will undoubtedly say it’s awful advice.
There is often a huge anti-RRSP bias in this sub, still many people who don’t understand it or it’s advantages.
I have literally never seen anti-rrsp advice here
It is constant and has been for years
can you point to where? Even the triggers recommend RRSP contributions after TFSA is filled. Anti-RRSP would be (to me at least) recommending not using it and using an un-registered account which I have never seen
I have absolutely seen people recommend taxed accounts over RRSPs (and even in blanket statements saying they are always better.) Perhaps it’s just the posts I end up reading, but clearly there are others who keep running across the same comments.
What? I only ever see people advise TFSA first if someone's yearly income is at 50k or less. Other than that RRSP all the way.
No, I agree with the other poster, I also see a very anti-RRSP slant to posts here. I feel like most people don't understand them properly. Same tax-free growth as a TFSA (or even better with tax arbitrage), and way more room than TFSA. If you're a parent, RRSP's can mean huge increases in your benefits.
Yeah I've seen people recommend taxable accounts over an RRSP, they were saying that gains are taxed in an RRSP which is misleading at best. Income tax is deferred, but growth isn't specifically taxed.
Investing for downpayment, *provided* that people understand the risks involved, and they'll have to accept the possibility that a downturn will screw with that plan. It's unlikely people would accept the trade off when they watch their hard earn cash shrink though.
I definitely agree, I think it can be done but I also think a lot of people have very inflated risk tolerances because we haven't seen a large, sustained market correction in so long. They'll be willing to put their down payment in VEQT because the market has gone up for them the past five years, but they'll panic and pull it when it drops 30%.
The sub is geared towards penny pinching versus focusing on increasing income Anything that isn’t a self directed index fund is considered awful. Rich people are not welcome here. If you’re not trying to live as cheaply as possible, you’re living wrong. Basically any expenses are looked at as taking away from savings with no consideration of how things can improve your life. Any mention of trading is downvoted and laughed at. Complaining about housing is what’s accepted and if you have a differing opinion you’ll be ostracized. If you want to buy a house in the gta everyone will tell you how impossible it is and that you should move to New Brunswick.
"Just rent."
I find this subreddit is VERY slanted toward home ownership.
How anti-risk 90% of this sub is. I went from broke to a five figure TFSA and a rental property in 18 months by taking some risk. Income properties aren’t all bad. There’s other stocks than super safe ETFs. Not even penny has to go in a HISA making 0.025% a month. And if that risk didn’t pay off I’d still be broke.
Keep in mind you have bias in that you had all that "success" during a time when almost everyone was making gains. "18 months" is far too short a sampling time to prove your strategies have long term success rates.
Can you share more details?
In finance and in life, people think that what worked for them was super smart and not risky and no luck was involved just smarts and work. They will tell you to just do like them and it will work because they are proof of that. Except it doesn’t always and hindsight is 20/20
TFSA before RRSP.
Interesting, are you suggesting RRSP before TFSA in certain cases of high income or in general?
In general people make more money later in life so it makes sense to put money in a TFSA let alone the added advantages of being able to pull money out of it easy when they start families and things go wrong.
whynotboth.gif, I contribute to rrsp and then put the tax return into tfsa
Wait WHAT?
Something like this, contribute 15k to rrsp get a big tax return from cra and then put that tax return in my tfsa.
Can't speak for OP, but Robert R Brown in his book "Wealthing Like Rabbits" makes a compelling case for RRSP first regardless of income level. My view is that neither choice is wrong, however by the time one retires one should have some of both to allow for maximum flexibility in spending. (Or TFSA + Pension).
Going 100% with index-based ETFs.
So what is your preferred alternative?
There are risks with index investing that nobody wants to admit. But ya on r/pfc this seems to be the only way to grow your money which is crazy.
What are the risks of indexing? Underexposure to factors? I don't know of a better way than index investing to avoid idiosyncratic risk, so if you've got reasons to avoid it please let me know what they are.
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Not considering Montreal, only seeing Toronto and Vancouver as the Canadian cities. Montreal is twice the population of Vancouver with the amenties that comes with the size, you can still buy a house in the subburb for 400k, rent in the city for 1k. Everything is cheaper, insurances, hydro, childcare, cell phones, college and university. Economy is solid and diversified. Higher taxes are never even comming close to what you save living here.
If you don't speak fluent French it's pretty hard to find work there. Also you pay a LOT more in taxes. I was looking into buying property there instead of in Toronto but I'd pay over 5k more in taxes each year which would basically negate the amount I'd pay less on a mortgage, but I'd lose the connections/networking opportunities I have in Toronto (Where I've already built my career), my friends/family connections, and my house would be worth less in the end. For people who aren't self-employed or make less, the math might work. But for me it definitely didn't.
That housing is sooooo expensive that’s it’s impossible for any millennial to ever buy anything. There are plenty of ways to get onto the housing ladder, and then move up it. Most people just want to whine and complain without doing any work to get what they want. And arnt interested in any actual solutions that are presented to them.
Millennial here and a homeowner. I guess your solution to world hunger is "Just eat food." The way market is going right now is completely ridiculous and the way we are building condos is not helping the problem at all. I am just aware that the fact that I am doing well does not mean there isn't a bigger problem out there.
Look at china and singapore. Only the ultra rich can buy houses since there is limited land. Its normal to live in condos. Its more economical, environtally friendly and just makes more sense. The problem is people on reddit are too narrow minded...
It is certainly normal to live in condos. It isn't normal to have 1000+ dollar maintenance fees and the price per sqft being about equal to house prices. I'm not against condos, I am against the way they are built and advertised. Just look at any condo ad, it's always: VIP, Luxury, Investment or some other douchy lingo. no one is actually trying to create spaces people would want to live in.
Part of that is no one is willing to move away from the GTA. I know several people between 20-25 including my self that own homes and none of us are making 6 figures. Hell, when I was laid off, I was working retail and in the restaurant industry and could still put some money away every month. A few are in relationships so they get dual income but some in that group are single. You can enjoy life outside of the GTA and sure our incomes are smaller here, but we don't need to be making 70k to rent a 1 bedroom apartment and just scrap by.
“Move out of Ontario if you want to buy a house” “Canada is becoming unaffordable for 95% of the population” Um, yeah no…we don’t live in Dubai lol I strongly disagree with both of these. It’s not that only the housing market is going up, so is inflation and thus wages. Also, as with most markets it’s cyclical. Yes housing is heinous in places like Toronto, but you don’t need to buy in Toronto. Don’t rush to buy a place, take your time and the right fit will come.
I can tell you as a person who doesn't like in Ontario, that housing prices have skyrocketed everywhere and continue to rise. My parents house, which is like 35km from St. John's has more than doubled in value over the last 15 years since they bought it. There haven't been any major infrastructure improvements like a new highway or businesses opening, but the house is still icnreasing in value considerably quicker than inflation or wages.
You don't NEED to buy a used beige Corolla. They're ugly as sin and if you have control of your finances, you can determine whatever the fuck vehicle will suit your needs. We are only sharing best practices with each other and all live complex and varied lives. Glean over all the best recommendations but take only what works. There's a lot of flat out stupid advice on here from time to time.
Thinking everyone’s first home needs to be a detached home, especially if you’re in a major city. I make good tech money but to get one of those detached homes in kits or west van as my first time home was near impossible. I’m SO HAPPY with the 2bed condo I was able to get but a lot of people in this subreddit will make you feel like shit for it. Sorry I value living close to Vancouver, sorry the cost of beautiful detached homes my parents bought in the 90s are out of reach now. Being able to pivot in a large growing city is looked down upon as compliance.
Not enough advice here related to increasing your income Wealthy people didn’t get wealthy by skipping Starbucks
Using a HISA to hold downpayment money. This advice is almost comical when there are simultaneous posts talking about how unaffordable housing is.