Millennials: Avocados or homes?

[Looch City]

Good luck telling 18 year olds to invest their money instead of going to clubs and chasing girls haha

[Weitz]

Originally Posted by peter12

Hahaha, sorry, where are you getting a RoR of 7%?? And which one bedroom apartment can I buy with a $40K down payment?

You can buy lots of places with a $40k downpayment.

[Enoch Root]

Originally Posted by opendoor

Actually your example proves the opposite given that you're comparing a 29 year period with extremely high inflation to a 19 year period with low inflation. $39K in 1969 was equivalent to $184K in 1998 dollars, so those prices are dead on. On the other hand, $185K in 1998 dollars is equivalent to $264K today so the $750K example is nearly 3 times more expensive after accounting for inflation.

interest rates: 9%, 7% and 2.5% respectively

[blankall]

Originally Posted by Jason14h

This is why it is so important for young people to start saving and making hard decisions with money and investing at a young age. Have some capital available when they are 25.

Going to our Avacado example, cutting out $10 in Starbucks and Avacado's a day and invsting/saving from the age of 18 until 25, at a RoR of 7% would yield $40K by age 25. Theres the house down payment.

The problem is people don't save, and then at 30 will have a very difficult time.

Here's the problem with saving. When inflation is out of control, inflation outpaces the savings.

Also, as previously stated, the cost of living is far greater than it has been over the last 30-40 years. Saving is much harder than it used to be. The average young person does not spend $10 on coffee.

Also what investment besides real estate pay an average ROI of 7% per year guaranteed? The TSX has been flat for the last 2-3 years, while inflation has increased dramatically. Wonder if those low interest rates have anything to d with that?

Basically your advice is that if a young person was to:
1. forgo any small pleasantries
2 save all of their money, despite an abysmal job market and the need for post-graduate studies to get anywhere
3. invest it at a rate of return that will dramatically exceed historical averages and ignores present interest rates
4. enter the market at the exact right time

They just may be able to afford a hovel somewhere....after they graduate at the age of 25...work another 5 years to pay off student debt, begin the saving process, and then get a downpayment together.

You can't admit that's drastically different landscape than the one people faced 30 years ago?

[blankall]

Originally Posted by Enoch Root

If you're not getting an RoR of 7%, you might need a better advisor. Or an advisor period.

Yeah...I'd like to see this advisor that guarantees 7% rate of return over a period of 5 years in this current climate...There have been a few recent 3-4 year periods where that has happened, but all have been followed by dramatic corrections.

Any kind of guaranteed investment these days is producing at a rate below inflation.

[Enoch Root]

Originally Posted by peter12

Yeah, there were some rough times, for sure. No one is arguing otherwise, but in the aggregate things are much harder now for people under 35. That actually cannot be disputed, yet you keep trying with random anecdotes about places, times, and people that don't really exist in the real world.

Except they are not (that is the purpose of my examples, they demonstrate that other times were tough as well).

And wtf do you mean by "don't really exist in the real world"? I guess I should just take from that that you are a troll and I can ignore your posts.

[peter12]

Originally Posted by Enoch Root

Except they are not (that is the purpose of my examples, they demonstrate that other times were tough as well).

And wtf do you mean by "don't really exist in the real world"? I guess I should just take from that that you are a troll and I can ignore your posts.

You have been proven wrong, called out, and dismissed how many times now? Yes, interest rates were higher in the 1980s. Yes, there were some bad years in oil & gas in Calgary during that same time. No one is saying that 30 years ago was paradise, and that this is hell. All anyone is saying is that structurally things have come together to make it very hard for people of a certain age to go down the same path to the middle class than it was for their parents.

[blankall]

Originally Posted by Weitz

You can buy lots of places with a $40k downpayment.

Ahhh...So now the wise move is for people to spend their youth saving, and then dump all of their savings into property with a 5% down payment and historically low interest rates....nothing could go wrong there.....

What a disaster...someone with a networth of $40k should in no way be borrowing $760k. It's a crime that's allowed to happen. At best you become a slave to that mortgage that will follow you for the next 30 years....

[Fighting Banana Slug]

Still having a hard time finding a source that indicates "inflation is out of control". This is where you lose me.

[peter12]

Originally Posted by blankall

Ahhh...So now the wise move is for people to spend their youth saving, and then dump all of their savings into property with a 5% down payment and historically low interest rates....nothing could go wrong there.....

What a disaster...someone with a networth of $40k should in no way be borrowing $760k. It's a crime that's allowed to happen. At best you become a slave to that mortgage that will follow you for the next 30 years....

No, everyone started out in a little hovel which slowly, and through good, honest, Protestant labour they transformed into a palace worth millions.

My dad's salary in 1985 was $42,000, and he bought my childhood home in Deer Run for about $110,000. Yeah, interest rates were nothing to laugh at, but no one could hope to achieve that income ratio now. He paid off his mortgage in 10 years. Who gets a 10 year mortgage now!?

[Aleks]

Originally Posted by rohara66

Only because I stumbled upon this a couple days ago…. A Calgary developer has this ‘mini’ 1180ft2 house available in a new desirable suburban community. Home many people’s parents were raised in a home similar to this?



How many people really *need* a 2500ft2 3 bed, 4 bath, bonus room house?

I don't, but we purchased it with resaleability in mind. Plus, proportionately it was cheaper than the 1000sq/ft starter home I sold to first time home buyers, is significantly more efficient and cheaper to operate day to day, so I came out ahead. Thats kind of a hard argument to make when the majority of new home builds are in the 2000sq/ft range

[Enoch Root]

Originally Posted by peter12

Show me where you can get a RoR of 7% on your TFSA or RRSP.

Originally Posted by blankall

Yeah...I'd like to see this advisor that guarantees 7% rate of return over a period of 5 years in this current climate...There have been a few recent 3-4 year periods where that has happened, but all have been followed by dramatic corrections.

Any kind of guaranteed investment these days is producing at a rate below inflation.

At no point did I say guaranteed. Investing comes with risk. But you get paid to accept that risk (that's kind of the deal).

Our clients earned around 9%/yr over the last 5 years, depending on their mix.

To the bold: You clearly don't understand what you're talking about. Long term, the stock markets return 9 - 9.5% per year on average (well, geometrically to be more precise) including the corrections.

For the people that don't get a reasonable return for the risk they take - that's on them.

[peter12]

Originally Posted by Enoch Root

At no point did I say guaranteed. Investing comes with risk. But you get paid to accept that risk (that's kind of the deal).

Our clients earned around 9%/yr over the last 5 years, depending on their mix.

To the bold: You clearly don't understand what you're talking about. Long term, the stock markets return 9 - 9.5% per year on average (well, geometrically to be more precise) including the corrections.

For the people that don't get a reasonable return for the risk they take - that's on them.

To be bold: You are missing the point of this discussion.

[Clever_Iggy]

Originally Posted by blankall

Yeah...I'd like to see this advisor that guarantees 7% rate of return over a period of 5 years in this current climate...There have been a few recent 3-4 year periods where that has happened, but all have been followed by dramatic corrections.

Any kind of guaranteed investment these days is producing at a rate below inflation.

This really is counter to my experience. I don't invest in anything fancy - mutual funds, basic indexes, etc - through SunLife. I just looked back at my previous 6 years and I averaged 15.6% ROR. The past 3 years (the "downturn") has been 13.7 (2014), 9.9 (2015) and 12.26 (2016).

These are not GICs and therefore not guaranteed, but if you're blown away by 7% ROR, I agree, find a new investment advisor.

[Enoch Root]

Originally Posted by peter12

You have been proven wrong, called out, and dismissed how many times now? Yes, interest rates were higher in the 1980s. Yes, there were some bad years in oil & gas in Calgary during that same time. No one is saying that 30 years ago was paradise, and that this is hell. All anyone is saying is that structurally things have come together to make it very hard for people of a certain age to go down the same path to the middle class than it was for their parents.

Where have I been proven wrong?

You whine that things are harder now than ever before. I make a statement illustrating that things have been bad or worse in other periods. You don't believe me and say things are harder now than ever before - because! I present more examples. You get madder. And around it goes.

The only thing you have proven to me is that you are irrationally emotional about this subject.

[Enoch Root]

Originally Posted by peter12

To be bold: You are missing the point of this discussion.

I replied to other posts.

Yours in fact.

Holy #### dude.

[blankall]

Originally Posted by Enoch Root

At no point did I say guaranteed. Investing comes with risk. But you get paid to accept that risk (that's kind of the deal).

Our clients earned around 9%/yr over the last 5 years, depending on their mix.

To the bold: You clearly don't understand what you're talking about. Long term, the stock markets return 9 - 9.5% per year on average (well, geometrically to be more precise) including the corrections.

For the people that don't get a reasonable return for the risk they take - that's on them.

The last 5 years huh...That definitely paints a full picture of how investments work over time...sign me up. Wait nothing bad ever happens to investments though....what happened before 5 years ago? Y'know around 2009?

Seriously though 7% year over year is an absurdly high figure.

[Kybosh]

I don't know about anyone else, but when I was in undergrad back in the stone age (1999-2003) most summer jobs didn't cover tuition and education costs for the year ahead, let alone this supposed saving for a down payment or avocado toast. That was very different from my parent's generation where summer jobs etc. paid for the education costs and more. Now here we are in 2017, where summer jobs are often unpaid internships, or non-existent, with ever rising costs. It's always tough when you're trying to start your adult life for all generations, but the system is out of whack from a financial perspective.

[Enoch Root]

Originally Posted by blankall

The last 5 years huh...That definitely paints a full picture of how investments work over time...sign me up. Wait nothing bad ever happens to investments though....what happened before 5 years ago? Y'know around 2009?

Seriously though 7% year over year is an absurdly high figure.

Except no it isn't.

And clearly you didn't read all of my post (which is no surprise).

Also, I was literally replying to your post about 5 year returns. I REPLIED to two of you, and both of you acted like my reply was some irrelevant, off-topic comment. Astounding.

[OMG!WTF!]

Originally Posted by blankall

Ahhh...So now the wise move is for people to spend their youth saving, and then dump all of their savings into property with a 5% down payment and historically low interest rates....nothing could go wrong there.....

What a disaster...someone with a networth of $40k should in no way be borrowing $760k. It's a crime that's allowed to happen. At best you become a slave to that mortgage that will follow you for the next 30 years....

You can't get a 760k mortgage with 40k down from a primary lender. If it's a crime that's allowed to happen it's on the secondary market at nasty rates.