Weekend Reading
Welcome to my latest Weekend Reading edition.
It was certainly very sad to see the images and read the stories from Hurricane Harvey this past week. My heart goes out to all the families affected by this natural disaster. Then there is the utter devastation with flooding in Asia. Very tragic. I can’t imagine what they are going through…
Closer to home we are dealing with other troubles, terrible fires in British Columbia and Manitoba. Regarding the latter close to 4,000 people from three First Nations communities have been uprooted and evacuated to Winnipeg this week. Kudos to the teams involved in the evacuation effort but yet again, my thoughts are with all those individuals affected…
It’s also painful to see investors continue to be taken advantage of – by crooked thieves and fraudsters posing under the profession of financial advisers. I was directed to this story in particular. Too bad the “adviser” only got three years of prison time.
From the article:
“The fraud left the Hancocks, who are in their mid-60s, financially ruined and emotionally devastated. They were forced to sell their house and move into a small rental home in Halifax and have no money left for retirement or to help their daughter. A financial analyst said the Hancocks’ total losses were close to $1 million.”
All this to say, there always seems to be lots going on in our world – lots of people who desperately need our attention and support, including donations of time and money. There will always be people in need. Hopefully you can spare any time or funds to these causes. We will certainly do our part and will continue to so…
When you have some downtime this long weekend, amidst your plans, I hope you check out these articles including some free materials and education opportunities below.
Take good care,
Mark
Here is the paradox of money. Agreed, you only need a certain amount to be comfortable in life and all the riches in the world are largely meaningless if you don’t have your health and good relationships with others.
In case you missed this article on my site – I wrote about big problems but also big opportunities for millennial investors here.
This couple is eyeing retirement and looking forward to travelling the world. Given their ages and assets I have no idea why they wouldn’t start the journey tomorrow.
Canadian Financial Summit
A reminder about this cool and upcoming Canadian Financial Summit – a 100% FREE summit with 25+ Canadian personal finance and investing experts who will share their saving tips, investing practices, thoughts and advice on housing, how to protect yourself from $hitty advisers who steal people’s money and much, much more
I’m thrilled to join Canadian financial experts such as Rob Carrick, Preet Banerjee, Ellen Roseman, Andrew Hallam, Evelyn Jacks, and more. You can see the full speaker list here.
The event is FREE to attend however if you can’t make the scheduled session date/time, you will be given the option to purchase a special any-time, anywhere, Premium All Access Pass that will allow you stream the entire conference whenever fits you best. Besides, register now and you’re automatically entered to win one of the free Premium All Access Passes they will giving away when the event goes LIVE on September 13th. Good luck!
Curious about how deep the rabbit-debt-hole goes – with big banks giving out Home Equity Lines of Credit (HELOCs)? It’s mind-boggling…
My friends over at Young and Thrifty posted Canada’s complete guide to the best online banks.
Andrew Hallam believes schools need to step-it-up to prepare our kids for the future.
Who doesn’t love getting a deal?
Don’t forget about my Deals page where you can save hundreds or even thousands of dollars over years with better saving and investing solutions. It’s your money – get more out of it!
A Wealth of Common Sense identified when you should sell your investments.
Newbie investor?
Here is a link to some FREE resources for newbie investors.
Preet Banerjee discussed asset allocation, risk and return in his latest stellar video series.
Dividend Growth Investor shares his approach to never run out of money. Seems like a good approach but you’ll need a healthy nest egg to pull it off – to live off dividends.
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Mark,
Thanks for the shout out… Generally I would think that a sample retiree that needs $30K/year can do that either by assembling a dividend portfolio generating $30K in dividend income OR follow the conventional approach and take 3% out..
D
Happy to do so…I owe you an email reply…
Agreed, I think both approaches can work (well) but I have a bias to drawing down capital on my own terms (therefore I like dividends) vs. a forced withdrawal plan given the future is always cloudy. So, yes, I’ll probably need to save more money but there’s good discipline in that. I figure $1 M invested should do the job nicely amongst other assets and part-time work. We’ll see!
I have several issues with the information contained in the HELOC table:
1) What percentage of the ratio HELOC/Residential Mortgage is considered reasonable? And that would be based on what ?
2) How much is the HELOC amount in comparison to the total income of the household? And it also doesn’t add any other debts such as car loans and credit card debts.
The table is a starting point but is far from giving a complete picture of the situation.
Just my thoughts.
Mctronic
Fair comments. I wouldn’t think $0 is realistic for HELOCs but I’m surprised actually just how BIG those numbers are. That’s lots of leverage on a grand scale, no?
I think the biggest story could be % HELOC for lower-income families. Higher incomes could likely weather any interest rate storm, short-term. I would think lower-incomes do not have much wiggle room. My assumption could be wrong of course.
Thanks for your thoughts.
re: 1) What percentage of the ratio HELOC/Residential Mortgage is considered reasonable? And that would be based on what ?
You’d have to ask the corporations on both matters.
re: 2) How much is the HELOC amount in comparison to the total income of the household? And it also doesn’t add any other debts such as car loans and credit card debts.
From the article (and other sources):
3 million active HELOCs, $70,000 average($210 billion total) owing; average household income $75,000,
3 million active auto loans, $20,000 average owing,
70 million active credit cards, $3,000 average owing (per single credit card).
The above stats give a fuzzy picture at best. For example, not all mortgage holders have HELOCs and not all HELOC users have mortgages, etc., etc. Regarding HELOCs, 40% of users make interest-only payments. Also, most people have more than one credit card.
re: far from giving a complete picture of the situation.
Complete picture of what? Indebtedness? We already know that — 170% of income. Canada is under more water than Houston.
Canada is under water all right…..geez…
3 million active HELOCs, $70,000 average($210 billion total) owing; average household income $75,000 (My Own Advisor = $0)
3 million active auto loans, $20,000 average owing (My Own Advisor = $0)
70 million active credit cards, $3,000 average owing (per single credit card) (My Own Advisor = $0).
I have a mortgage. That’s enough debt. 🙂
For others, I suspect they don’t give a $hit. Rising interest rates will be a nice test for many people and for some, sadly, +0.25% might break them. We’ll see!
I agree on the fuzzy picture and on the under water part…plenty of vague or incomplete information here, but what we do know -170% debt/income and leading the G7 this way is alarming.
Undoubtably plenty of these people in debt are going to experience much more challenge as rates continue to rise. Investors and the overall economy may also be affected as defaults and potential home value resets become bigger factors.
Mark, the anchor will soon be gone and you’ll be part of the club!
Hi Mark,
Another interesting line up to read with some lessons and considerations there for investors, borrowers and educators etc. Financial literacy, better regulation, more appropriate penalties would be some steps in the right direction.
SST, always lots to dissect- me thinks you need your own blog.
re: SST, always lots to dissect- me thinks you need your own blog.
Are you crazy?!
1) I’m way too lazy; Mark is a far superior blogger role model…8 years and running?
2) I couldn’t deal with jerks like me who think they know it all!
Possibly…..
Re your 1) & 2) comments; ditto here. Mark sets a pretty high bar and keeps it cool.
Probably more important lessons for standardized regulation, me thinks. Unfortunately we’ve seen too many examples of advisers behaving badly and nothing is done about it. Retail investors have little defense to play because the financial industry (at large) has huge marketing dollars to offence with.
A lot…
re: investors continue to be taken advantage of…
This article is chock-full of goodies:
1 — According to the actual legal court documents, the crook was not an ‘advisEr’, he was an ‘advisOr’; registered as a ‘Dealing Representative’. Speaking from very personal (and inside) experience, DRs are usually slimy profit-focused people.
2 — With that said, ”Where there is a breach of trust by a financial adviser…” Since he was not indeed an “advisEr”, there was zero legal obligation to formulate any kind of environment of trust.
3 — If increased financial literacy is going to save the investor, then the press needs to be held accountable for what they distribute to the public, i.e. understanding the correct terminology, which in this case, they don’t.
4 — “If the public does not have that confidence, then the entire financial investment industry will collapse. If that happens, then there are limited financial resources available to fund progress. And if that happens, society as a whole suffers.”
One word: LOL. Recall the Great Financial Crisis if you will. The public had no clue of the chaos and damage going on behind the scenes…which caused the entire financial investment industry to collapse and society as a whole suffered. The most damaging actions are definitely not produced by an erosion of confidence between advisor/er and the public. That said, mistrust between the public and money handlers has been in effect since Biblical times, so…don’t think we’re gonna cure that ill any time soon.
5 — “The Nova Scotia Securities Commission fined Dunbar $350,000 and barred him from working in the investment industry in this province. He has yet to pay a cent of that fine…”
Beware you scallywag advisors! OK, forget that warning. There’s nary a penny of accountability from any of the toothless security commissions across the country. You’ll almost never get caught, being prosecuted is even more rare, and you’ll never have to pay any fine. Keep on truckin’.
6 — “What happened today [sentencing of the advisor] might be perhaps the only thing that will help, because it’s a deterrent.”
Nope, it’s no deterrent at all. Zero. See above. Punishment fails as a deterrent to all crime. As long as the financial rewards and incentives far outstrip even just the possibility of being investigated, let alone being charged and sentenced, nothing will change.
re: big banks giving out Home Equity Lines of Credit (HELOCs)
Time to sell RY and TD and buy more BNS?
Point of interest, taking just the Big 5, that’s an average of $20,000 in HELOC debt per household (the average mortgage is $200,000).
re: schools need to step-it-up to prepare our kids for the future.
This is a complex matter (and one I’m just dipping my toe into, even though I don’t have kids, and now that my MLA is the Education Minister), simply because there are sooooo many hands in the pie, and barely any parties “do it for the kids”. Financial literacy courses are a great idea, however, it’s also been well documented that students with stronger math skills have a greater financial success that those with lesser capabilities. That said, it’s also been shown that math scores for Canadian kids have been declining over the past decade — by a lot. Financial literacy won’t do much good if they can’t figure out the financial part (but both need to be stepped-up). Funny, this lifted from the BC Ministry of Education website: “…to acquire the knowledge, skills and abilities needed to contribute to a healthy society and a prosperous and sustainable economy.” Great, but if they aren’t taught what comprises a prosperous and sustainable economy (e.g. it’s NOT record levels of household debt), then how can they contribute to such?
re: Paradox of Money
Oy. This has got to be one of the most simplistic, inane, and ignorant middle-class white-privilege POV articles I’ve ever read. I’m quite sure Mr.1500 means very well and has not a malicious bone in his body, but ignorant nonetheless.
Take his “epiphany”: You don’t need money to be healthy.
Really? REALLY?! Tirade aside, all one has to do is address the ultimate health stat — life expectancy: the richest 10% live about 15 years longer than the poorest 10%. To put it bluntly, yes, you indeed do need a fair amount of money to be just physically healthy. Take the ‘Live Below the Line’ challenge ($1.50/day for food) to see just how “healthy” you are without money.
Next, it’s this doozie: You certainly don’t need it [money] to spend time with your family.
Another blind zinger. I guess if your family wants to ride the public transportation with you to your numerous part-time jobs.
Then there’s this misunderstanding: To get money, we must trade our time.
Really? How much of your time did you trade for your house (or stocks) to rise in price? Take my own personal situation situation: over the last decade my mortgage payments have decreased while my income has increased, thus I have to trade less of my time today to afford the same good as 10 years ago; not counting the fact that I trade zero of my time to enjoy the increase in market price of that same good. I’m sure it’s been a good long time since any poor person enjoyed a ‘rent decrease’?
Your assumption — time=labour=money — is in direct opposition to your financial goal: timexmoney=time. In your pre-retirement life you state labour is the only way to amass money, yet in your post-retirement life, time is the preferred way to amass money. All money is amassed via the same source of expenditure — capital (incl. human capital).
A better paradox (of sorts) of money is that society rewards financial capital (money) at far greater multiples than it rewards human capital (labour). You can figure out how that fits into your life.
And what PF blog would be complete without this dead-horse ideology: If I were to do it all over again…I’d build wealth as fast as I could to minimize my working life and maximize my freedom years.
Yup, that’s right: NOT working = Freedom, which means Working = Imprisonment. Sorry you harbour and cultivate that kind of limited mindset. Just as you said, “Wealth doesn’t create happiness. You must figure that out for yourself!”, the same can be said about employment — not being an employee doesn’t create happiness. But that seems to be the PF Game Plan: get enough money so I can QUIT! They never seem to work on figuring out the other half. Perhaps I’m the insane one for attempting to create a labour environment in which people don’t want to quit. I think the white middle-aged, middle-class dividend discussing PF tribe is beyond me (and I’m exactly all those things!).
One thing he did understand is “Relationships Are Better Than Riches”. According to many a study, the quality of personal relationships is the foundation of happiness. That said, let’s kill the fantasy that people without money are all happy, healthy, and time-rich.
Note of entertainment: one of my energy stocks did a funky kinda split on Friday and showed a +3,200% gain! Had to take a screenshot before it was heartbreakingly corrected.
Enjoy your Human Capital (Labour) Day Long Weekend!
Quite the essay 🙂
I’m growing tired of the retire early and never work again ideology. I would like to work on my own terms in another 10 years or so, but I certainly won’t “retire” and do nothing.
I certainly don’t think you’re insane for attempting to create a labour environment in which people don’t want to quit. If you’re a builder, i.e., you create jobs – that’s a great thing.
Now enjoying my Human Capital (Labour) Day Long Weekend!!!
TD has a lot more HELOCs than the other banks. They must really promote them. I do not know if this is good for their business or not.
Probably VERY good for profits! Cheers Beth.
Probably, but is that a good thing? Undermining the stability of many aspects of our society in order to reap more money? I guess it’s part of a larger strategy, such as when the defaults start rolling in the banks merely swap loan assets for real estate assets (a la US banks c.2009). Welcome to TD Avenue and Royal Bank Road. Notice too that it’s the government putting in place safety measures regarding mortgages et al, not the banks themselves.