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How much do you know about financial independence?

June 17, 2023, 9:35 a.m.
Posts: 16067
Joined: Nov. 20, 2002

Unfortunatley that ^^ is an old scam I have heard before, it happened to people I know fortunately they didnt lose every thing so they must have been diversifyed ,

My diversyfication is that as an unsophisticated investor i get sent a lot of checks every month and if one didnt show up I probably wouldn't even notice it for awhile

and so i just checked on-line !


 Last edited by: XXX_er on June 17, 2023, 10:41 a.m., edited 2 times in total.
June 17, 2023, 9:54 a.m.
Posts: 16067
Joined: Nov. 20, 2002

So i was reading an artical about Macdonalds, their bidness model is to buy RE and get a franchisee to pay them for using it so their success is not the selling hamburgers its the RE

On the same vein I got a bud I have known for about 20 yrs doing more or less that same thing, he never pays rent, he buys the building ( some come with tennants ) and he operates his chain of stores, so i used to look at what he is doing and ask myself wtf are you going into that town for ??

but its not the business of selling stuff that is making the money its the keeping it afloat to pay off the RE and so in another 20 yrs of positive cash flow he will own half a doz buildings which will be worth $$$$$$$

20 yrs ago everyone in this particular business said this guy is a goof but a lot of them are no longer around and he sure is looking good now


 Last edited by: XXX_er on June 17, 2023, 2:24 p.m., edited 3 times in total.
June 17, 2023, 5:09 p.m.
Posts: 884
Joined: June 17, 2016

People seem to really like those stories about a guy someone knows who got into RE and now he owns X properties and makes Y $$$. I guess RE is tangible and the story is exciting. I also guess that it sounds hard to pull off to most people so when a slick guy in a suit offers to do it for you (Heckler's CBC link), that sounds even more exciting.

On the other hand most people don't find passive index investing very exciting. It's boring and slow. Besides it can't be that simple so it's probably a scam.

June 17, 2023, 7:29 p.m.
Posts: 16067
Joined: Nov. 20, 2002

Yes indexed funds are pretty boring and pretty safe

but actualy that whole group of mover-n-shaker types i rode with are all doing the macdonalds thing

I don't think they could not do it which is why they are called movers n shakers

so in real life its a whole lot of fucking work and a minefield of risk & problems

but it is one way to financial independence which is the title of the thread and so do i want to do it ?

a resounding NO !

June 17, 2023, 9 p.m.
Posts: 18911
Joined: Oct. 28, 2003

Re: Mcdonalds.  Did you know Walmart’s primary business is not cheap shit sold in volume?

https://www.walmartrealty.com/map/

July 5, 2023, 9:37 a.m.
Posts: 2327
Joined: Sept. 10, 2012

Although I am a Total Return person I do enjoy seeing Quarterly Dividends start to roll in.

July 5, 2023, 2:32 p.m.
Posts: 810
Joined: Jan. 2, 2018

Vikb mentioned it earlier, how it feels sketchy to have all of ones equity in a single asset (house), but every time I do the numbers, it seems like the front loaded interest on my mortgage is an absolute wealth killer,  and that if I can focus on pre/over paying against my mortgage principal, it's really hard to come up with a compelling investment strategy to compete with that. 

If I could just pay off my mortgage... ok... I mean I wouldn't be independently wealthy, but damn, life would be sooo much easier. I could work when I want, and saving would be much easier.

July 5, 2023, 3:18 p.m.
Posts: 2327
Joined: Sept. 10, 2012

With high-ish inflation I'd much much much rather have a big loan at a reasonable interest rate than a paid off house. Assuming the capital that's not sitting in the house is invested in the stock market.


 Last edited by: Vikb on July 5, 2023, 4:09 p.m., edited 1 time in total.
July 5, 2023, 6:21 p.m.
Posts: 18911
Joined: Oct. 28, 2003

VTI: 30 year CAGR: 9.9%

TSX: 50 year CAGR: 7.94%

43 year old townhouse in North Van: 20 year personal CAGR: 7.3%  bought just before the olympics were announced.  The biggest problem is we can’t eat or travel with our walls and windows.   

Wealth killer, I think not. Damper, maybe.

But…

Mortgage got paid off in 14 years in times where interest rates were higher than now (I think?), knowing literally nothing about investing a year before this thread started.  

Maintained a 6% of income matched savings rate (-2% in fees) to work sponsored RRSP plans since graduation, and killed the mortgage early by paying it off more with any bonus or raise.   Didn’t save much more than a 10k cash emergency fund before the mortgage was killed. 

All the practice with silly high mortgage payments resulted in being used to a silly high savings rate (50-60% for ten years post mortgage), instead of buying into expensive car culture. 

The best time to plant a tree was 20 years ago. The second best time is now. 

Whatever you do, diversify.  Past performance does not guarantee future results. 

The biggest advice I have is to understand how RRSP and tax brackets work in making your mortgage vs savings decisions. 

Cliches /end

July 5, 2023, 6:24 p.m.
Posts: 18911
Joined: Oct. 28, 2003

Posted by: Vikb

Although I am a Total Return person I do enjoy seeing Quarterly Dividends start to roll in.

“It’s interest day!”

A text I send my sister monthly now that she has a TFSA making her 4.6% on cash.

July 5, 2023, 7:22 p.m.
Posts: 18911
Joined: Oct. 28, 2003

Posted by: heckler

VTI: 30 year CAGR: 9.9%

TSX: 50 year CAGR: 7.94%

43 year old townhouse in North Van: 20 year personal CAGR: 7.3%  bought just before the olympics were announced.  The biggest problem is we can’t eat or travel with our walls and windows.   

Wealth killer, I think not. Damper, for sure.

Correction!   7.3% CAGR on the townhouse is incorrectly inflated, as it is purchase cost compared to assessed value 20 years later. It does not include any interest paid, which us Kennys point.

July 5, 2023, 7:34 p.m.
Posts: 2327
Joined: Sept. 10, 2012

Posted by: heckler.

“It’s interest day!”

A text I send my sister monthly now that she has a TFSA making her 4.6% on cash.

The words "cash" and "TFSA" make me sad. After inflation there's not much left to celebrate.

July 5, 2023, 7:41 p.m.
Posts: 2327
Joined: Sept. 10, 2012

Posted by: heckler

Correction! 7.3% CAGR on the townhouse is incorrectly inflated, as it is purchase cost compared to assessed value 20 years later. It does not include any interest paid, which us Kennys point.

You'd also have to subtract property taxes and maintenance/renos from the assessed value as well as realtor/legal fees and property transfer tax to get a realistic net "sale" price to calculate a return on.

People generally think they "made" a lot more money on a house than they actually did because they leave out a lot of the costs that come with owning a home.


 Last edited by: Vikb on July 5, 2023, 8 p.m., edited 3 times in total.
July 5, 2023, 9:42 p.m.
Posts: 884
Joined: June 17, 2016

Next month the 1-year lease on our apartment in Comox is up. We're getting increasingly pitiful looks from people when they learn we're "still" renting in our mid-40s. I figured it would be a good time to run the numbers on rent vs own again.

Conveniently, there is currently an exact same unit for sale in the condo part of our complex. Ben Felix' 5% rule said renting was a little cheaper than owning. Then I ran the numbers myself and the result was a little closer but still renting came out slightly cheaper.

Also interesting in relation to Vik's post above, I noted in the real estate listing the price for which the (new) unit was sold back in Jan '22. The current list price is higher but not much. After costs the owners are likely selling at a loss. Maybe they should have run the numbers and rented instead? ;-)


 Last edited by: [email protected] on July 5, 2023, 9:47 p.m., edited 1 time in total.
July 5, 2023, 10:41 p.m.
Posts: 34114
Joined: Nov. 19, 2002

Gotta keep up with the Joneses, even in Comox.

My cousin bought in Courtenay a few months ago.  $550K for a 2 bedroom rancher.  40 year old home but completely renovated inside.  The rent in the area isn't much different than the mortgage payments.  Probably a good idea to go with forced savings if you're not that driven to save on your own.

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