After the mortgage.

[bizaro86]

Originally Posted by Lt.Spears

Fair enough, but how many people took out loans based on the equity of their house only to see the market collapse and end up with nothing... quite a lot.

It can make sense if you believe the market will be steady... but that just has not been the case the past 5 years.

And in 2007, the last 5 years would have been only up, up up. Would that have made 2007 the optimal time to lever up and buy a bunch of property?

I think the last 5 years are a contrarian indicator. If there's been a big 5 year boom, it's probably time to sell. "Sell high." 5 years of lower/flat prices? "Buy low."

[The Yen Man]

I wouldn't say all Asians are debt adverse. There really are two types. The stingy type, and the go all out investing type. My gf's the latter. She's got several investment properties, and a ton of money in stocks, yet she still carries a mortgage on her house. Her thinking is, your mortgage is basically the cheapest way to borrow money. High risk high reward I guess. That said, she's done pretty well for herself so far (way better than stingy me), so who am I to question her.

[GP_Matt]

Just for conversations sake I took a look at bank stock.
If you bought CIBC shares 5 years ago today it would have cost $97.70. Today that share is worth $74.09 and pays a quarterly dividend of $0.90. 20 dividends over 5 years works out to $18 (a bit less as the dividend has likely increased a bit over the years, but I don't think too much). That puts the value of your purchase at $92.09 for a small loss across "the worst recession since the great depression". If you had bought it 10 years ago it would have cost $54.70 and be worth $110.09. Not too bad considering that that still suffered through the same recession.

[The Yen Man]

Originally Posted by GP_Matt

Just for conversations sake I took a look at bank stock.
If you bought CIBC shares 5 years ago today it would have cost $97.70. Today that share is worth $74.09 and pays a quarterly dividend of $0.90. 20 dividends over 5 years works out to $18 (a bit less as the dividend has likely increased a bit over the years, but I don't think too much). That puts the value of your purchase at $92.09 for a small loss across "the worst recession since the great depression". If you had bought it 10 years ago it would have cost $54.70 and be worth $110.09. Not too bad considering that that still suffered through the same recession.

I know someone who started investing in Canadian bank stocks since the 80's. He wouldn't buy a lot, but would try to buy some every chance he got. He's done hella well with that. His argument to me is that unlike banks in say the US, Canadian banks are usually backed up by a ton of regulations and by the government, so even if there are blips, in general over the long term, you come out on top if you stick with it. And he's been right so far.

[flamesfever]

The financial people, who are running this country, are saying that interest rates are going to go up fairly soon, and that there could be a significant drop in real estate values ...so please build that into your economics when making investment decisions. It sounds to me like Wormius's wife is his greatest asset, in her tendency to want to be debt free...especially at this period in time.

[troutman]

Sell it all and live like a King, in Central America.

[Rathji]

Originally Posted by troutman

Sell it all and live like a King, in Central America.

I actually know a guy who finished (was his own general contractor) a large build on an acreage south of town right as the boom peaked, sold it and pocketed about half a million after paying out the subs and loans.

He currently lives in Nicaragua, with his wife and kids, in the palatial home, servants, the whole 9 yards, living on part time telecommute wages for their jobs back in Calgary.

I don't know if I could handle it though.

[Teh_Bandwagoner]

Originally Posted by Lt.Spears

I know your joking but i always think people who take loans out on the equity built into their houses are so stupid.

Now why would you go and say such a thing?

That's exactly what I did, and though I'm carrying two mortgages and the HELOC at the moment, both are rented out and both are completely cash flow neutral, but both are building up equity. That's FREE equity.

Plus the rent I earn is helping me to aggressively pay off the HELOC (it'll be paid off in two years, while still having the money to cover the mortgages). How is that possibly stupid?

Once the HELOC is paid off, I may look at investing elsewhere. I don't think I'll buy another residential rental, just in case that market goes to hell. I'm leaning towards either commercial property or stock market. But I still have time to decide on that.

[Wormius]

Originally Posted by flamesfever

The financial people, who are running this country, are saying that interest rates are going to go up fairly soon, and that there could be a significant drop in real estate values ...so please build that into your economics when making investment decisions. It sounds to me like Wormius's wife is his greatest asset, in her tendency to want to be debt free...especially at this period in time.

What kind of time frame does it take for house prices to start dropping in that scenario? Wish I had some kind of a crystal ball that said "sell the house, rent a place for a year, and then buy back in". It doesn't seem like its that simple though, and we'd probably end up renting a place for so long that whatever gain we had from selling the house would be eaten up by rent. Maybe its more doable if you're a single guy and could rent a cheap place in the interim.

[Wormius]

Originally Posted by Rathji

I actually know a guy who finished (was his own general contractor) a large build on an acreage south of town right as the boom peaked, sold it and pocketed about half a million after paying out the subs and loans.

He currently lives in Nicaragua, with his wife and kids, in the palatial home, servants, the whole 9 yards, living on part time telecommute wages for their jobs back in Calgary.

I don't know if I could handle it though.

That makes me laugh, becuase I had a friend who I asked how his dad was doing, and he replied that he moved to Nicauraga, so I was kind of like... fine, okay, don't tell me.

[bomba]

I think as other posters said - a balanced portfolio that includes real estate, equities, bonds, GICs, and cash is your best bet if you are looking to protect your money.

You are heavily over balanced in real estate seeing as you are close to paying off your mortgage. Best strategy would be to wait on the investment property until you put more into your RRSPs and TFSAs. If you are inexperienced in the market invest in index ETF or dividend ETF funds that are low risk, well balanced, and have low management fees.

Also, get a subscription to moneysense magazine - I find it has a lot of good Canadian financial advice on ideas with what to do with your money.

[Pizza]

Originally Posted by GirlySports

Hard to say but RRSPs are a must.
I have a general rule that "when you get your paycheque, pay yourself first"
So when I get paid monthly, money goes into RRSP and money goes into high-interest e-savings. That's first priority and then work with whatever is left for mortgage, bills, spending whatever.

Not exactly the answer I was expecting...
but thank you none the less

[1stLand]

I dont know if living in Nicuaragua is safe.

I would be paranoid the goverment would expropriate my property.

Otherwise it sounds like a great idea.

[GirlySports]

Originally Posted by Dion

Great minds think alike. I do much the same thing. Started when I was 17 and now the RRSP has grown to a sizeable amount. That and you need a good investment guru to help invest all that money. Mine has done very well for me.

Mutual funds will also give you a better return that a high interest savings account.

Btw time has expired on my limited time offer

I'm chicken.

[MoneyGuy]

Originally Posted by GirlySports

I'm chicken.

You're afraid to invest in some of these best companies in Canada and around the world? You shouldn't be.

[VladtheImpaler]

Originally Posted by Winsor_Pilates

The lesson I will take away from this thread, is the most important part of paying off your mortgage faster and being debt free is picking the right wife.

This is the most important point of the thread. It too until Mrs. Impaler #3 to get me on the appropriate financial path.

[Kybosh]

I just read this entire thread and sighed in disappointment with myself the entire time.

[ranchlandsselling]

Originally Posted by Kybosh

I just read this entire thread and sighed in disappointment with myself the entire time.

You're either the worlds fasted reader or have an incredible lung capacity or both

[linecook]

I have 24 years to go, but I'm not concerned. My strategy is to invest the majority of my extra income in the market. Once interest rates rise, I'll lower the amount that goes in to stocks and then concentrate that money by paying down the mortgage. It's sort of the same thing as taking equity out of the house, but when you don't have any, this is probably the next best thing.

[MoneyGuy]

Originally Posted by VladtheImpaler

This is the most important point of the thread. It too until Mrs. Impaler #3 to get me on the appropriate financial path.

Ha, I'm sure your financial advisor would agree that divorce and remarriage are not a good wealth-building strategy.