“We’ll move to Bellingham in the spring, where house markets are far lower. We’ll live without health care, in a country at war, with the biggest debt in history, BUT, we will be able to afford having a family.”

“My wife who’s from the states and I got married a year ago, our dream was keep living in Squamish or Vancouver where she could keep working as a nurse. We realized that we won’t ever be able to buy a house and even rent it outrageously expensive. Starting a family would be impossible if we still want to have time to play outside. So we’ve decided to move to Bellingham in the spring, where house market are way, way lower but we’ll still live in a beautiful place, without health care, in a country at war, with the biggest debt in history. BUT, we will be able to afford having a family. Thanks for squeezing the middle class out of Canada, Canada.”
‘Phil from Squamish’, comment, Vancouver Sun, 18 Oct 2011 10:21am

50 responses to ““We’ll move to Bellingham in the spring, where house markets are far lower. We’ll live without health care, in a country at war, with the biggest debt in history, BUT, we will be able to afford having a family.”

  1. The money he’ll save on housing, lower taxes, and lower cost of living is much more than the additional expense of healthcare.

  2. Depends on the healthcare you require. Occasional cold… no biggie. Break a bone? That’ll be over $1000. Have a child and need an operation and several overnights? That’ll be several thousand dollars. Have a pre-existing condition that requires regular specialist care and would not qualify for insurance? That’ll be prohibitively expensive. Trust me, I know.

    • Trust me, I know too… having lived in the USA with an ~$65k/year family income at the time.

      There are a wide variety of excellent plans to fit all tastes. Of course, you have to have income to get onboard these things. But this doesn’t sound like a problem in this case.

      And, once onboard, the care is as good as in Canada. In some cases… better.

  3. The key is to stay employed. As long as he’s employed, his company will likely pay for his healthcare.

    • And insurance companies will still find ways to weasel out of paying. Lots of cases of that in US.

      • Basement Suite PhD

        Exactly. There is no health insurance in the US.

        ***
        Disclaimer for the guy with nothing better to do than attack a wannabe PhD economist: Look elsewhere. I am a biostatistician, not a wannabe economist and certainly not a wannabe “quant”. My name on this board is to portray my story, a well-educated high earner living in a basement suite due to Vancouver real estate prices. So get over it.

  4. dont go there by air or water transport after the date the surchage takes place. they are so BK that they might ding you for $5 each time you cross!

  5. Verdadera Cocina Mexicana! @ DosPadres would work for ‘Nem’… and I wonder if the Stetsoned patrons ‘o Bob’sTavern/Blaine still dance the TwoStep to the same old WurlizterJuke?… (In the 70’s, Bob’s wasn’t fussy about ‘carding’ cross-border ‘juvie’ traffic, especially on Sundays). Nostalgia.

  6. I have warned readers to question Garth Turner’s advice, here is a great analysis:

    “#50 Devil’s Advocate on 10.26.11 at 8:21 am
    And that’s just it, for this is not a real estate blog at all. This is a financial investment blog. It is just that you have picked up an interested and interesting audience of listeners, readers and watchers along the way to which you have become a reluctant messiah. You craftily use this mob who “occupy” the courtyard and streets of your “pathetic blog” as megaphone to draw the attention of your true audience – they who quietly reside between them and the “truly wealthy”. For your blog followers cannot afford your advice and the “truly wealthy” do not need it.

    Your actual intended audience though has much vested in real estate and little in other such financial securities. You warn them against their lack of diversification. What better way to make your point but through exaggeration. But you are an honest man and would not be disingenuous. But let your “blog dogs” do so you can with an occasional tug on their choke chain but not so much they become passive poodles.

    I get it.

    Real estate makes people hot and horny. People don’t think rationally when hot and horny. They do things they ought not under the influence. Like driving a car intoxicated it leads to carnage.

    “If it bleads it leads.”

    Greater Fools, Cannon Fodder… Naïveté

    Sigmund of Kelowna. — Garth”

    • Garth is no philanthropist (although he claims to give his retirement income from being politician to charities), he’s just a fairly smart cookie with a great (understand entertaining) writing style. His blog is just the marketing tool of his financial advisory service (http://www.wellingtonwest.com/advisors/turnertomenson/advisorBio.aspx?advisorid=408).

      His strategy, repeated ad nauseum on his blog, is very simple. Thousands of boomers are going to retire without enough savings, but with houses paid off. He’s trying to get them sold their houses and give the proceeds to a “fee-based” advisor to manage on their behalf, which will give them 7 or 8% return on their investment (that’s what he claims without ever backing that up).

      It turns out that fee-based advisors are a pretty rare species and if you ask him a contact of one in Vancouver, he’ll tell you that he doesn’t know any (obviously!) but he can give you a favor by being yours…

      Now, think about it for a second. Let say, through his blog, he manages to get a total of 1,000 customers to do exactly what he advises. And let say these people have on average a $400,000 house (it might be a bit high but, you know, I’m from Vancouver). That turns out to be $400 million under his management. As a fee-based advisor, he charges 1% every year as management fee, that’s $4 million per year in his pocket.

      If you have ever wondered why he’s so consistent in posting on his blog and “genuinely” helping his fellow Canadians, now you have your answer.

      I don’t give much credit to his financial advice, but I always have a good laugh reading him.

      • Does a ‘fee-based’ advisor charge a percentage of money under management? Isn’t that what a money manager would do?
        Doesn’t a ‘fee-based’ advisor simply charge by the hour?

      • “As a fee-based advisor, he charges 1% every year as management fee”

        Well every advisor has a fee. I think vreaa you mean fixed-fee advisor, though those are exceedingly rare because there’s perceived more money by charging a cut from the portfolio.

        Never mind that the advice you receive with a portfolio of $10K is the same as that for $200K, and arguably more.

        They’ll try to play the “boutique” angle too. Because everyone’s tastes are different.

    • that’s what you call “great analysis”? Why is that Vancouver real estate bulls seem like such greater fools?

  7. Vreaa, from what I’ve understood reading his blog is that there is 2 kinds of financial investors: the one that has takes a share of the profits you make from the investment, and the one that that charges a “small” defined fee (of 1% of the investment in his case) regardless of the performance of the investment. Do you really think Garth would charge his customers by the hour?
    Another advantage he claims to have over banks or mutual funds is that he doesn’t sell you pre-determined package, that the bank or MF has an interest to sell you, but he can invest in whatever he wants.

    Yeah, that’s a pretty good business model for him: no risk, fixed income for years, etc…

  8. Hey, we’re down to only one war now.

  9. Fee based advisor simply means that they are charging you directly rather than taking a commission from a 3rd party for selling you products from the 3rd party (eg. insurance, mutual fund, etc). However some advisors do double-dip which is a big no-no and I believe illegal.

    There are also some advisors that charges by the hour but they don’t manage your investments, you do. They simply review your current portfolio, your financial circumstances, taxes, goals, etc and prepare a financial plan/investment policy for you. Think of it like hiring a consultant to do a personal financial review for you. The consultant charges by the hour and gives a report, you decide what to do with the report.

    The problem I have with Garth is that most of his advices are just bad when you peel away the nice sound covers. He gives a lot of talk about diversifications, tax efficiencies, etc. But the actual advices/strategy he proposes, especially borrow to invest, are not suitable for the average investor. As well his claims of making 7% annually with no risk is simply unethical and likely illegal as financial advisors are not to ever state/claim/promise a minimum/guaranteed/set rate of return, nor are they allowed to mis-represent risk of investing. It’s lucky he is not a CFA charterholder as his charter would likely be revoked pretty fast for his claims.

    • Turner talks about tax efficiencies and borrowing to invest in markets other than the RE market, which is what everyone is pouring into right now and he’s illustrating that you can borrow to invest in RE, which is what most people are doing, or you can borrow to invest in a multitude of wealth-building instruments. Houses get you no tax breaks. I suppose at the very least capital gains tax is less than income tax. Tax efficiencies in terms of if I take my HELOC on my paid-for house and instead of borrowing $20,000 for granite, stainless and a hot tub and new tile for the foyer I put it in a balanced portfolio of “bank preferreds, ETFs and bonds,” or whatever it is that he advocates, then I get to write off the interest on the HELOC on my tax return. I use the dividends from those investments to pay the interest on the HELOC and I’m laughing. That’s my take on what he says.

      If I borrow money to “‘invest” in my home and I get no tax breaks. If you’re saying borrowing to invest is a bad strategy for a lot of Canadians, what do you think Canadians are doing when they renovate? They’re borrowing to invest. Sure they get to use the hot tub and enjoy the granite, but it’s illiquid and if the SHTF, like job loss, it’s faster and easier to sell some stock than rip out the hot tub and put it on Craigslist.

      I think GT makes it pretty clear what his bias is (unlike vreaa ;P), that he’s a fee-based advisor and he’s a writer selling books. Fee-based sounds way better to me than commission, someone that’s trading and moving my money around just to get paid more.

      And I think the 7 – 8% return is an example to illustrate that TFSAs are not simply savings account products where you are doomed to make 2 – 3% like the banks would have you believe, he’s saying that you can put investments in the TFSA basket and make two to three times what the banks pays you as a savings rate. I haven’t seen anywhere he’s making any sort of guarantee about the return, it’s simply an example and to make people to searching for better, because there are so many comments on his blog, “The lady at the bank didn’t know what I was talking about when I asked about putting stock in my TFSA, they only have a TFSA that pays 2%,” as though a TFSA is a product in itself and not a basket in which to put a variety of things, which may or may not include savings earning 2%, because there’s nothing wrong with that if that’s what you want to do.

      • ““The lady at the bank didn’t know what I was talking about when I asked about putting stock in my TFSA, they only have a TFSA that pays 2%,” as though a TFSA is a product in itself and not a basket in which to put a variety of things, which may or may not include savings earning 2%, because there’s nothing wrong with that if that’s what you want to do.”

        Wow. People who don’t know how to use the Internet to harvest information are really handicapped these days.

    • CM.PR.M – preferred share currently yielding 6%
      FIE – income ETF currently yielding 7.5%
      PGF – energy trust currenty yielding 8%

      Just sayin’.

  10. Garth Turner sells fear and anger – if you’re taking the hook there’s a pretty good chance you’ve fearful or angry.
    Some simple advice…find out what’s creating these emotions and make a plan to change your situtation.

  11. 1% per annum of money under management is a massive amount to charge, especially considering the ultra low interest rate environment.
    I know that may be the ‘norm’, but it’s still daylight robbery.
    Great work if you can get it. Harvesting money each year while your clients take all the risk. Sure, you’ll make them happy if you outperform but why take the risks necessary to outperform if you risk losing clients?

    What would be fair?
    1) “fixed-fee” advising (thanks for the term jesse). Even if the hourly rate was very high, this’d be fair.
    or
    2) a scaled % base rate (dropping away to very small percentages when a portfolio is into 6 and 7 figures)
    or
    3) a flat rate for managing a portfolio
    or
    4) a sharing in profit AND risk, where, for instance, a manager charged no base rate fee but took a percentage of the performance over the benchmark (say TSX or SPX), and paid you back a percentage if they underperformed by more than, say, 2%. (The latter measure to stop them simply gambling with your money for a big win). Complicated but not impossible.

    • I’m too lazy to go back to to the hundreds of comments of his posts, but I remember him responding to someone who was questioning him on that 1% fee that it was “cheap”. His point was, if he gives you an 8% return on your investment, it’s fair he takes a chunk of the profit.
      Cheap? no kidding…

  12. You make some good points, vreaa.

    But for the sake of argument, how many hours a year do you suppose a self directed investor puts in to managing a 300k portfolio themselves? What is the value of that time? How much is it worth to have someone else deal with it, who might actually be better at it than oneself?

    Per month, 1% of 300k would be $250. I know people who spend more than that on a triathlon coach.

    I have not yet engaged such services but I can see how someone might.

    • Jross, you make a good point. That’s were Garth’s marketing strategy is a very smart one. Most of his readers are worried baby boomers and unsophisticated investors that blindly trust him. He has probably already convinced a lot of people to use his service and he makes his money by multiplying his customers.

      His customers will not question his investment decisions and whether he has 10 or 1,000 customers doesn’t change anything for him in terms of work he has to do.

    • Comparing investment advice to a triathalon coach? k

  13. What keeps popping into my mind is all the athletes and pop stars that have had their money stolen by their “financial advisers”.

    Unless you have mega-millions and no time, or have someone very trustworthy, I recommend putting in the effort to manage your own portfolio.

  14. When you say “It’s easy to make a 7% return per year with very little risk”, that’s pretty much considered to be guarantee an return without the proper disclosure of risk, which is a big no no for financial advisors.

    As for the argument that people borrow to buy houses or they can borrow to buy investments and get a tax deduction, that’s not actually the important point. The important point is that leverage investments of any kind is dangerous due to the leverage used and is not suitable for most people. That’s why mortgage are fairly structure in that you have to do regular monthly payments to pay down the principle, banks do due diligences or get insurance, etc. With investment loans, most are simply interest only loans and most are sold on the premise, which Garth harps on a lot, that you pay the interest with the income/gain from the investments. That makes it a lot more risky. As well most investment loans are demand loans meaning that the lender can do margin calls as investment values fall, and/or demand the loan be repaid in full at any time. With mortgages, you at least know the bank can’t demand full payment until after the term of mortgage. There’s a lot of risk that Garth just glosses over.

    You can call it clever marketing and I do agree. However I also feel it’s a bit shady and unethical as well as it can lead a lot of people into as much trouble as buying a house right now.

    Yes I know there are stocks, trusts, etc that pays 7%. However stop and think why they have to pay 7% when everybody just have to pay 2% or 3% or 4%? Are you willing to put a few hundred K into just the 5 to 10 stocks that pays that much?

    • When has GT ever talked about interest-only investment loans? He advocates investing the equity in your home. Instead of letting it sit there and gather dust and do nothing for you, which he says is really risky at the mo, he’s saying people should make it work for them, because the RE market is going to go down and that equity will disappear and then what?

      Where is this massive, inherent risk in dividend paying stocks? No investment is riskless, true. Trading and investing are different though. I get the impression you’re talking about trading and I don’t think GT is saying that Buying Groupon at the IPO and selling it two days later is trading, buying Proctor and Gamble, who have paid a dividend 121 consecutive years since 1890, is investing, imo. There certainly is a place for both in a portfolio, depending on the individual, their risk tolerance, their needs. Garth Turner is not saying that you should buy up RIM and Lululemon and hold them forever or trade them daily, he’s talking about bank preferred shares and dividend paying stocks. I agree that if people blindly listen to ANYONE’s advice without doing their own research they are going to get in trouble. He’s not Robert Kiyosaki with his disgusting multi level marketing scheme. GT’s not specific enough in his advice for anyone to actually go out and build a portfolio around it. He never mentions specific stocks, does he? His lack of specificity is actually quite annoying.

      And the fear tactic is very useful, it’s getting people to move, do something, ask questions, take control, have a discussion. This economic mess was created by Joe Sixpacks taking the easy route and failing to ask questions, same as the tech bubble – easy route.

      Granted there seem to be some seriously pissed off people who sold their houses in 2009 on Garth’s advice and rented expecting a decline, and I agree that GT went from “2010 will be a great year to buy cheap property,” to “2015 will be a great year to buy property,” but I don’t think any of us imagined emergency interest rates going on this long really. It depends if you just want an affordable home in your ‘hood, which seems to be still years away for a lot of us, or if you’re looking for properties to buy and rent out, be it residential or commercial. There are deals out there coming available I have no doubt, but if I live in Vancouver and don’t want to buy a property in 100 Mile I’m probably going to continue to think that this RE market decline is a pipe dream. It doesn’t mean GT is full of $hit, when you boil it down it’s just a guy with an opinion and a following. What’s wrong with that? That’s what the internet is for, access to information and all kinds of opinions…like here!

      • and how are you going to get that equity to work without selling the house? If you go back to his 2010 posts, there are lots where he was saying people can use a HELOC to get the home equity and then invest. He also used similar strategy to make people’s mortgage more tax efficient. And yes, he technically didn’t specify any specific stocks rather just asset classes. However if you invest mostly in bank preferred shares and REITs, you aren’t very diversified. As well, preferred shares and REITs are actually fairly complicated beasts and they aren’t safe as bonds like he portrayed. There is extra risk.

        I never said he’s full of shit. What I said is that he promises/implies that 7% per year is easy to do without a lot of risk when it is not true. If 7% per year for a balanced 60% equity/40% bonds portfolio is that easy to do, then why the hell are the managers who can do that consistently paid millions of dollars by their clients? Seriously?

        As for buying dividend stocks, again, my point is that why would one stock pay 7% dividend while most others are paying 4% or less if there are the same risk profile and growth prospect?

        Lastly, Garth strategy is more sector/asset allocation and rotating in and out sectors along with regular rebalancing. Regular rebalancing is good. Sector rotation is good in theory but very difficult to carry out in real life.

        Basically my beef with Garth is that he’s selling investing as something that’s easy, low risk, good return without much work and you can invest your home equity via say HELOC when this is patently false for most people, including a lot of professional investors/advisors. If investing is as easy as he says, there wouldn’t be that money people making millions in finance industry, and you wouldn’t have like 75%+ professional money managers failing to match, never mind, beat their benchmarks.

  15. He never mentions specific stocks, does he? His lack of specificity is actually quite annoying.

    Sure he does. He’s talked about certain Canadian banks offering over 6% on their preferred shares. It would take an idiot not to be able to find out which banks these are.

    And he frequently talks about emerging market ETFs. How hard would it be to collect a basket of 4 or 5 from China, India, Brazil and Singapore, for example?

    IMO Garth offers enough of a skeleton that any person with a little effort could approximate his portfolio.

    • What vehicle allows one to pick and choose bonds, shares, etc. oneself to build up a portfolio? Is it a self-managed account with one of the banks/credit unions linked to an e-trading account? or do you go directly to the e-trading site? and, which one do you recommend? I would really appreciate someone’s advise on what the first steps are. Thank you.

      Reading the above thread has made me realize it is time to take charge ourselves and invest the time required to look after our interests – paying a commission based adviser is clearly an outdated model that will end in a painful shafting – ask me how I know.

      The wife says all she wanted was to hand the money over to someone who is an expert, knows what they are doing, and can handle the decisions with greater efficiency and correctness than we can. I am shocked that an economically half-witted buffoon like myself has already easily outperformed the financial “advise”r that we TRUSTED. I know it wasn’t this way in the past… I guess if you want something done in your own best interests, you have to do it yourself.

      (On that same subject: I have worked on a handful of cars as an amateur diy home mechanic, and have discovered horrendous things that mechanics have done to the cars… oil overfilled in the crankcase, missing air filter, brake pad backing shims that have been placed incorrectly such that they slip and begin slicing through the wheel hub, camshaft sprockets placed backwards so the flange that is supposed to stop the belt from slipping off doesn’t…. and that’s just the ones I recall off the top. I trust NO mechanic now to take care of any car I drive. Period.)

      • Afterthought: Is anyone here a financial planner who is up to the task of building us up a mythical “garthfolio” that returns 5% in the current markets?? What would be your fee structure? (Jesse: aren’t you a FA by trade?)

      • Advisors are not trained to beat the market, they *are* the market. Do yourself a massive favour and get a self directed trading account at any of the big five banks. Buy a couple ETFs and be done with it:

        http://ca.ishares.com/product_info/fund/overview/XEI.htm

        $30 in, $30 out.

        Quarterly dividends will iron out some of the volatility:

        http://ca.ishares.com/product_info/fund/distributions/XEI.htm

        Learn something about moving averages and you will likely beat your ‘advisor’.

      • I cannot thank you enough. Is investing in an equity income index a bullish or hedging move right now?

      • “Is investing in an equity income index a bullish or hedging move right now?”

        You looking for hot tips or are you looking to build a portfolio? You can’t build a Garth-olio, as you put it. There is no such thing. Garth or any decent portfolio manager should be building a “TPFKAA-olio” so to speak. If you are a 28-year-old private sector employee with two young kids your portfolio would look probably a lot different than two 50-something government workers who’s kids have flown the coop.

      • Ha-ha, yea, I can’t really answer that one. If you ask me, we are almost as likely to revisit the 2008 lows as we are to see a hyperinflation scenario (through currency debasement, not demand) that sends the price of most assets through the roof.

        I am overweight in precious metals but most people can’t handle the volatility so I shy away from recommending them.

        The dividends themselves are a form of hedging though. If the company stays in business long enough and continues to pay their divvies you will eventually be paid out *and* own the shares. Kind of like an apartment building…

      • @ACP:

        Hot tip or build a portfolio – same thing as far as I am concerned. I am interested in conservative growth, if any of it is out there – a GIC will be just fine if nothing else provides a guaranteed return. I care not for profits, but preservation. Later, when conditions improve, I will invest for longer term growth if not use the savings as a downpayment.

        And, sincerely no offense intended, but I still have to do due diligence on any recommendation made on an online forum by some dude/chick/teenager with the handle “Blammo” 🙂 (not criticising handle choice, or saying your observations are not helpful and accurate – jus sayin how awkward it wold be to explain things to the wife – “Honey, I’m sorry I lost 30% of our savings in that fund – It’snot my fault. Blammo told me to do it!!”

      • For online trading/account I’m with Soctia iTrade and have been for over 5 years (when they were still E*Trade). I find that they are a bit lacking on individual bonds but overall it’s pretty good.

        I would highly recommend that you do a lot of reading and research before you start investing. The reason is that based on the questions and responses you are providing gives me the feeling that you are just starting on learning about investing and have a long way to go yet.

        If you have the time and effort/will to learn it, I would highly recommend buying a set of old CFA level 1 and level 3 study guides off craiglist and start with Level 3 portfolio management section, especially the Investment Policy Statement section. I would also recommend the weekly free letter from John Mauldin – Thoughts from the Frontline and Outside the Letter – who I think does a much better job at providing sound info and advice than Garth even though he rarely offers any actual advice.

        Feel free to contact me for questions about investing if you have some. I’m not a personal/financial advisor, but I am a CFA charterholder. I wouldn’t give specific stock advices but I don’t mind giving out some honest answers.

        And yes, I have realized that I will not make it as a financial advisor ever because most of the time, my advices to potential client would result in me not making a dime.

      • @Space889:

        Thank you so much for the kind advice and offer! You are correct, I know virtually nothing about financial products and investments – all i have is an overview of economic conditions gained from perusing blogs like zerohedge and reading BNN, businessweek, the news from various quarters, etc. and a critical mindset focused on reading between the lines so to speak. To me any fool with internet can predict when NOT to invest in something; very few can say WHEN to invest and in what. I need far, far more information about bonds equities, ETFs, preferreds, etc. before I feel comfortable making a move. Well, no choice but to get informed I guess.

  16. What vehicle allows one to pick and choose bonds, shares, etc. oneself to build up a portfolio? Is it a self-managed account with one of the banks/credit unions linked to an e-trading account?

    For stocks and ETFs listed in Canada and/or US, I use Questrade. I don’t buy bonds; I’d rather keep the liquid portion in cash to take advantage of oversold conditions.

    • Thanks Robert!

      • Robert Dudek

        Also, make sure you start with the TFSA account and max that out before you put anything in the margin account. The margin account should be only for your speculative component (if you have one). TFSA should be buy and hold stocks or ETFs, typically solid dividend plays – though I Iike to spice it up with some promising junior miners. That way, if you get lucky and the junior explodes, the profit is tax free.

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