Weekend Reading – Out of control real estate edition
Welcome to my latest Weekend Reading edition when I share some of my favourite articles from the week that was across the personal finance and investing blogosphere.
In case you missed last week’s edition, about earning money in your sleep, my thoughts on #FIRE, and how much real estate you should own – check out that edition right here.
I’ve got more to say about real estate below, so read on and enjoy this Weekend Reading edition!
Have a great weekend and see you in the Comments section.
Real estate has gone wild. Or, out of control.
Blind bidding. Low-rates. High demand. Artificial listing prices. Low supply. All of these factors and more are driving Canadian real estate prices through the roof at a historic pace. One I’ve never even remotely seen before.
I’ve read countless articles over the last year about Canadian real estate. Commonly used words or phrases in these articles are:
“I did not know it was a game.”
Some agents’ “marketing strategies are illegal, deceptive, a waste of everyone’s time.”
Where does it end I wonder…?
I suspect the real estate party is not going to stop near-term.
The Bank of Canada is not moving rates in the coming months. I think that’s a given. Thus, the key interest rate will remain at 0.25% until the economy recovers easily into the fall or winter 2021 at least. So, by keeping rates at historic low levels, credit will flow, and banks will bank.
All of this seems totally irrational until you consider one thing. To paraphrase Mark Twain on real estate investing: buy land, they ain’t making any more of it.
Millennials are turning to van life (highlighted in this recent Weekend Reading edition) to either save for a home or simply avoid home ownership all together.
Readers: when do you think the real estate boom will stop? Are you looking at buying or moving yourself?
Do share your real estate thoughts in a comment below. I look forward to reading them.
My recent posts:
Insurance expert Brian So and I discussed healthcare insurance benefits and plans for retirees – something to consider unless you plan to self-insure.
I helped a reader out by answering her questions – can she afford to retire on a lower income?
Other Weekend Reads
My buddy Frugal Trader shared another epic report on Million Dollar Journey. His portfolio now generates over, a whopping, $62,000 per year in dividend income – about 50% of that income is from his corporate portfolio. Interesting to read his mindset too…
“As mentioned earlier, instead of purely accumulating and building my portfolio, I’ve made the shift to spending some of those dividends. While I believe in investing for the total return of your portfolio (not just dividends), there’s a psychological comfort in getting paid regardless of how the market is performing.”
Ben Carlson’s recent post about life is too short aligns with my post here why saving too much for retirement can be a big mistake.
In Ben’s post, he reminds readers that “striking that balance” (to spend today vs. save tomorrow) “is never easy because no one knows what the future brings.” Agreed – talking to devotees that live by any 4% rule. It is a reference I have on my site as well.
Retirement expert Michael Kitces performed a study on the 4% withdrawal rule a few years ago that shows the extraordinary upside potential in sequence of return risk – that you can actually end up with X3 if you stick to the 4% rule.
The 4% rule is a decent rule of thumb still but my goodness, don’t use it as gospel for your retirement plan.
“As the chart shows, on average a 4% initial withdrawal rate results in the retiree finishing with nearly triple the original principal, on top of sustaining an initial withdrawal rate of 4% adjusted annually for inflation! In fact, in only 10% of the scenarios does the retiree even finish with less than 100% of their starting principal (and in only one of those scenarios does the final value run all the way down to having nothing at the end, which of course is what defines the 4% initial withdrawal as “safe” in the first place).”
A Purple Life highlighted a few things not to worry about in retirement.
Another Loonie has some thoughts about real estate – coming to an end.
Cashflows & Portfolios shared some tips about automatically reinvesting your dividends. Something I do here as well because money that makes money, can make more money.
This couple has absolutely no worries about money in this Globe and Mail feature. From the article:
“Scott and Lisa have an investment portfolio of $2.7-million inside the professional corporation and $1.4-million in their personal accounts, the planner notes. The investments are well-diversified, with 65 per cent equities, 15 per cent real estate investment trusts, 10 per cent fixed income and 10 per cent cash. “With annual savings and expected growth of 4.8 per cent a year, the over-all investment portfolio should grow to $5.5-million by the time they retire,” he says.” Whoa.
Dale Roberts posted some great content in this MoneySense making sense of the markets edition.
Robb Engen posted some sensible reflections in his accepting market returns post. Robb wrote:
“Market fluctuations are normal. Markets fall from time to time. Often by a lot. That’s a feature of your index funds, not a bug.”
A have a few reader questions to get to this weekend so I’ll be replying to those and posting them soon. In the meantime, check out my updated FAQs page here where I share bits about my portfolio, how I invest, and much more by answering many reader questions.
A reminder about my Helpful Sites page where I list a number free calculators and my own services to help you with your retirement math.
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