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How much do you know about financial independence?

Sept. 14, 2016, 11:20 a.m.
Posts: 16707
Joined: Nov. 20, 2002

If you can't pay cash, you can't have it.

I didn't realize you'd paid cash for your home.

When one person suffers from a delusion, it is called insanity.

When many people suffer from a delusion, it is called religion.

Sept. 14, 2016, 11:21 a.m.
Posts: 18134
Joined: Oct. 28, 2003

Baller.

Sept. 14, 2016, 11:34 a.m.
Posts: 7707
Joined: Sept. 11, 2003

Keeping it in the context of Gotham's "Just blows my mind that people keep spending money they don't have." (BTW, I believe Gotham doesn't own a home - how many people "own" their home outright?). If you are paying off a mortgage and have negative cash flow (or skimming off the principal) at the end of each month, you aren't doing any better.

Sept. 14, 2016, 12:31 p.m.
Posts: 2906
Joined: June 15, 2006

Keeping it in the context of Gotham's "Just blows my mind that people keep spending money they don't have." (BTW, I believe Gotham doesn't own a home - how many people "own" their home outright?). If you are paying off a mortgage and have negative cash flow (or skimming off the principal) at the end of each month, you aren't doing any better.

I don't, but lately I've thought about purchasing a home in the Maritimes for when I'm done my ROTW trip. People on the forum bitch and moan about not being able to afford a home, but maybe they aren't looking outside of the BC bubble.

Oh, I also think that those that habituate the NSMB board might have more experience with saving, since the sport requires a $3-8k investment every few years.

This trip to Kelowna was definately an undertaking - Liam and I had been planning this project for 24 hours. We worked really hard to pull out all the stops in this video. We had slo-mo goggle shots; time lapses; pedal flips; outrageous product shots; unloading and loading the bike; walking through the field with your hand in wheat. At the end of the day this trip was all about just getting out and riding with all my friends.

www.letsridebikes.ca

Sept. 14, 2016, 12:37 p.m.
Posts: 18134
Joined: Oct. 28, 2003

Investment. Riiight.

Carbon doesn't count as saving or investing. See first post.

Sept. 14, 2016, 12:50 p.m.
Posts: 15232
Joined: Nov. 20, 2002

That's very true, but not very relevant. On the topic of whether interest rates encourage or discourage savings, as I said this is very simplistic. You're relating to one notion of saving while ignoring the bigger and more important part of saving. So maybe let us change the word 'saving' to the idea of making real earned cash from one person available for another person to use it for investing in capital to create production. This is how economies are supposed to work. Not from quantitative easing, or lending money that doesn't exist with historically out of whack fractional reserves that leave them excessively vulnerable to a run.

That's not unreasonable advice, and it probably appears to be the only advice one should take in the last decade because things are so out of whack. But in the past there was money to be made by making your money available (through interest earning savings, bonds, treasuries etc), so that others could use it for capital investment. When every person's hand is forced by what amounts to negative yield (once inflation is accounted for, and not even accounting for inflation in many places such as Japan and Germany were rates actually are negative), to move their investments from cash equivalents into riskier assets, you get asset bubbles like we are experiencing now.

Yes, greed exists. Given the right circumstances virtually everyone falls prey to it. But the real issue here is that people are not given a choice. Let's say your over 65, and face it; that's who a large amount of the cash belongs to because they've had a lifetime to accumulate it (I certainly hope I have more by then, as does everyone). You need to get returns on your money to survive. You used to get yield in safe investments. In which case you had 'savings' in cash equivalents. Drop yield to zero and those evaporate as money is driven into other assets. No more 'savings'. No more money for capital investments, so it must come for quantitative easing or unprecedented fractional reserve lending ratios. This totally distorts asset prices. This is cut and dried 'no interest punishes savers and favors risk taking'.

Interest rates may not encourage you or me to save a few bucks here or there to earn an extra 4% on $1000, but you take yield away from cash equivalents and you get billions or trillions moving out of that investment class and into hard assets forming bubbles that with 100% certainty will explode at some point. There's only one end game to this and the longer it goes on the more devastating it will be.

Buddy Tom the ditch digger generally calls a spade a fucking shovel which is much easier to understand and so you sound real flowery n all but I can't figure out if you think its s good idea to save your money or no?

I get the concept that more % on your money will make more sense to save but OTOH in that scenario you would also be paying more to borrow money cuz there is still just the spread between the borrowing of $ and the lending of $ which is all that saving is … you lend your $ to a bank

So I don't make as much money saving but I make some money which I keep in a safe place and even if inflation knocks me back I got the dollar I saved. So if things are so out of whack then maybe all the usual rhetoric I hear from financial types (whom are almost always still working?) is no longer relevant, which is not to say finance won't turn around at some point?

Its not like we live in a country where there are not choices we come out of the womb with the ability to make choices which should be in our own best interests

and make excuses

Sept. 14, 2016, 12:55 p.m.
Posts: 1680
Joined: Aug. 6, 2009

I don't, but lately I've thought about purchasing a home in the Maritimes for when I'm done my ROTW trip. People on the forum bitch and moan about not being able to afford a home, but maybe they aren't looking outside of the BC bubble.

I grew up near Fredericton. You could get yourself set up very nicely in NB or NS for the price of a one bedroom condo in Vancouver.

Sept. 14, 2016, 1 p.m.
Posts: 15232
Joined: Nov. 20, 2002

Ok ^^ but then what are the opportunities for work, so how do you pay for your lifestyle

you can buy lake front up here for much [HTML_REMOVED] a million but then how do you pay for it

Sept. 14, 2016, 1:57 p.m.
Posts: 33725
Joined: Nov. 19, 2002

I grew up near Fredericton. You could get yourself set up very nicely in NB or NS for the price of a one bedroom condo in Vancouver.

Just talked to a woman living in Cape Breton, who moved their in the last year, from Alberta. She said it is noticeably less expensive than Alberta.

It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities.
- Josiah Stamp

Every time I see an adult on a bicycle, I no longer despair for the future of the human race.
- H.G. Wells

Sept. 14, 2016, 2:11 p.m.
Posts: 955
Joined: Oct. 23, 2006

Buddy Tom the ditch digger generally calls a spade a fucking shovel which is much easier to understand and so you sound real flowery n all but I can't figure out if you think its s good idea to save your money or no?

How about I put it this way.

You and your buddies dig holes with a shovel and earn a little money. You decide to start an excavator business to make more money. Your ask your buddies for some money to help and offer them the going rate of 0.15% interest on their cash.

They think it is fucking pointless because by the time you pay them back, inflation will make it worth less than it was when they gave it to you.

They hear that the bank is offering money for almost free if you buy a house, instead of depositing money into the bank for no reward, they borrow money to buy real estate. Prices start rising and they look really smart. Then 1000's of other people jump on board and prices go up more, and your friends look like geniuses.

Meanwhile you take your plan to the bank, and they don't really have any money to lend because their customers don't save anything there, and they all borrowed shit loads already to buy real estate. But Mr Banker no care. He just writes up loans anyway even though he doesn't have much cash on hand. Mr Banker knows this is not a problem because the government has his back when shit goes tits up.

But you start to see your friends make lots of money on real estate and think why the fuck should I buy an excavator when I can just borrow a shit load of money and buy real estate and make way more?

So you do, and so does everyone else. And the bankers keep lending more and more money with less and less (saved) money in reserve.

Can you see how this is a real big problem?

What about your buddy who is retired and used to make 4% on his life savings to buy food and clothes? Now that he only gets 0.15% on his savings he will starve unless he does something else. You tell him 'Buy real estate!' So he pulls his savings out of the bank and buys real estate. But since the bank is giving away loans for almost free, he borrows even more from the bank and buys 10 houses. So the bank has even less cash reserves thanks to buddy taking his savings out, and more outstanding loans thanks to the extra they gave him.

The pretty much sums up the problem. Near zero rates means people who may either save, or invest in a business decide to invest in a bubble instead. One that is going to pop and destroy much of what most people have, because… wait for it… they have no fucking savings and it's all wrapped up in bubble real estate (and substitute bubble stocks for bubble real estate anywhere you like because they are both a shit show right now). But in the meantime they are looking like financial wizards. Wrong.

And just for the record, I fit very neatly into all that is wrong with this scenario right now. But hopefully there is still time to sort it out before everyone runs for the exits.

Sept. 14, 2016, 3:09 p.m.
Posts: 1680
Joined: Aug. 6, 2009

Just talked to a woman living in Cape Breton, who moved their in the last year, from Alberta. She said it is noticeably less expensive than Alberta.

Less Newfoundlanders than Alberta as well!

15 or 20 years ago there was a lot of concern in NS about Europeans, specifically Germans, buying up big tracts of land, especially waterfront, as vacation properties. There was talk of putting in some restrictions for non-residents, but it never happened.

PEI, on the other hand, limits ownership of non-residents to a total of 5 acres, or 165ft or shore front.

Ok ^^ but then what are the opportunities for work, so how do you pay for your lifestyle

And there you have the reason that so many Maritimers have "gone away", to be "amenity migrants" (as I believe you once described it in another thread).

Sept. 14, 2016, 4:05 p.m.
Posts: 18134
Joined: Oct. 28, 2003

0.15% interest you say? I wouldnt give shovel boy any cash either.

To date, from my RSP since starting this thread:

VAB +.45% [HTML_REMOVED] +1.275% dividend
XEF +7% [HTML_REMOVED] +3.36% dividend
VCN +0% [HTML_REMOVED] +2.6% dividend
VUN +15% [HTML_REMOVED] +1.6% dividend
VEE -2.9% [HTML_REMOVED] +4.1% dividend

This is after the most recent "crash" of the last 4 days.

Thus the reason for creating this thread. Don't "save" your money in a savings account.

Sept. 14, 2016, 4:31 p.m.
Posts: 33725
Joined: Nov. 19, 2002

Don't "save" your money in a savings account.

Doh!

It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities.
- Josiah Stamp

Every time I see an adult on a bicycle, I no longer despair for the future of the human race.
- H.G. Wells

Sept. 14, 2016, 4:32 p.m.
Posts: 15232
Joined: Nov. 20, 2002

well at the end of it all I own the house and I live in it,in fact I would own everything I got, you would be suprised how many old fucks live like that, you would be suprised how little $ you need when you own everything …50% of yearly wage is fine

buddy sold out to a multinational and mostly retired except for his directorship at the CU so he don't dig holes anymore and besides he is broadly diversifyed in owning other things which is btw a key principal and so … we ski a lot

I sold out to move towns [HTML_REMOVED] chase tail so in the process I caught the high point/missed a severe RE downturn up here, I left ALL the money in cash cuz I was stoned/drunk/forget to reinvest so in the process I missed the stockmarket crash

So I'm either a fucking financial genius or financial geniusdom has become really just that random

Sept. 14, 2016, 5:15 p.m.
Posts: 955
Joined: Oct. 23, 2006

0.15% interest you say?

How much you making on your savings account again?
I'm talking about interest rates making a floor for yield on savings, and you provide examples of yields in equities. One would hope you'd do better than a savings account.

How about GIC's?
Quick search reveals Scotia's first listing is a 2 year GIC with a guaranteed minimum of 0.15% and many are 0%. You can argue that you may get more, but not in a down market you won't. Want risk free? It's directly linked to interest rates.
http://www.scotiabank.com/ca/en/0,,1115,00.html

If rates were historical norms, you'd have done better than half of those items on your list with zero risk in GIC's throughout the 90's. Let's not forget we are hitting all time highs on the DOW, so how good are you returns really?
http://www.ratehub.ca/blog/the-history-of-gic-rates/

Thus the reason for creating this thread. Don't "save" your money in a savings account.

Absolutely. I was only responding to this:

that saying is parroted enough that people believe it

which was in response to this:

and yet it punishes people for saving. Low interest rates give no incentive to save money and yet protects people who spend much more than they should.

So yeah, I agree that simply saving in a savings account as 100% of your investment strategy is not the path to riches, but I am arguing that savings 'should be' and historically was the only path to providing capital for investment, and that low rates do indeed punish savers and encourage speculation for the reasons I have outlined. It's not just parroting something false til you believe it. Savings and subsequent sound investment in income producing capital is the foundation of a healthy economy. Debt and speculation as the main drivers of an economy like we are seeing today are the basis for collapse and crisis. Appropriate rates encourage one scenario and near zero rates encourage the other. Are you arguing against this?

Doh!

LOL

So I'm either a fucking financial genius or financial geniusdom has become really just that random

I'm not doubting you've made some sound choices. That is not my point at all. Like I said before, I'm not saying 'you' should save money; I'm saying as a country, there needs to be a cash saving component. If there's zero reward for that, and big rewards for speculation, this does not grow the economy; it grows bubbles.

I don't really understand why it seems so hard for people (not directed at you in particular) to see that housing and stocks can collapse and erase phoney wealth created by bubbles when this shit has happened repeatedly in very recent times, but it's sure going to happen again. And when it does, people like you may be doing just fine (I genuinely hope so), but plenty will lose whatever gains they have made and be left holding the debt bag. And then the people with their money in a 0.15% GIC will probably look like geniuses.

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