Many Canadians in their 30s, 40s not saving enough for retirement

[Traditional_Ale]

Originally Posted by IliketoPuck

I'm no financial advisor, but I would suggest talking to one. They could point you in the right direction with an assessment of the risks you are willing to take in relation to the returns you are looking for.

Is it a free consultation?

[Slava]

Originally Posted by Traditional_Ale

Is it a free consultation?

Absolutely. Send me a PM!

[Komskies]

Originally Posted by Traditional_Ale

So, assuming I'm in my mid 20's and don't make a tonne of money buy want to get my foot in the door with some kind of investment to start a nest egg.

Say I got, $5000. What should I do with it? BTW, I don't mind taking risks. He who dares, wins.

You could take a look at Real Estate Income Trusts (REITs)

http://en.wikipedia.org/wiki/Real_es...vestment_trust

[Traditional_Ale]

Slava: PM sent.

Komskies: Thanks and thank'd.



EDIT:

From Wikipedia on REITs:

Canada

Canadian REITs were established in 1993. They are required to be configured as trusts and are not taxed if they distribute their net taxable income to shareholders. REITs have been excluded from the income trust tax legislation passed in the 2007 budget by the Conservative government. Many Canadian REITs have limited liability.[2]

Then the bit about limited liability:

Limited liability is a concept whereby a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. In other words, if a company with limited liability is sued, then the plaintiffs are suing the company, not its owners or investors. A shareholder in a limited company is not personally liable for any of the debts of the company, other than for the value of his investment in that company. This usually takes the form of that person's dividends in the company being zero, since the company has no profits to allocate. The same is true for the members of a limited liability partnership and the limited partners in a limited partnership.[1] By contrast, sole proprietors and partners in general partnerships are each liable for all the debts of the business (unlimited liability).
Although a shareholder's liability for the company's actions is limited, the shareholder may still be liable for its own acts. For example, the directors of small companies (who are frequently also shareholders) are often required to give personal guarantees of the company's debts to those lending to the company. They will then be liable for those debts in the event that the company cannot pay, although the other shareholders will not be so liable. This is known as co-signing.

So if I'm understanding this correctly, if my investment in an REIT in Canada goes belly-up do to negligence or mismanagment then my original money is still safe? I'm so confused...

[Shazam]

Originally Posted by Komskies

You could take a look at Real Estate Income Trusts (REITs)

http://en.wikipedia.org/wiki/Real_es...vestment_trust

Is the text about REITs remaining exempt from Income Trust taxation true?

God Flaherty's a dork.

[red sky]

Originally Posted by IliketoPuck

Money at 7%/year doubles in ten Money at 10%/year doubles in 7

Money not in a savings account and working for you can augment your income quite nicely!

Rule of 70?

[IliketoPuck]

Originally Posted by red sky

Rule of 70?

Can we call it whatever rule we want?

"Rule of "x"" haha.

[Slava]

Originally Posted by red sky

Rule of 70?

Rule of 72 actually.

[red sky]

Originally Posted by Slava

Rule of 72 actually.

Details money man, details.

[Slava]

Originally Posted by red sky

Details money man, details.

Oh Sorry, I thought that you knew how it worked but just started with 70 instead of 72.

Basically the rule is that if you divide 72 by the rate of return it tells you how long it takes to double your money. If you divide 72 by the number of years it tells you rate of return required to double your money in that period.

In other words at 7.2% per year it will take 10 years to double your money. To double your money in 2 years you need a return of 36% per year and so on.

[firebug]

Originally Posted by Traditional_Ale

Then the bit about limited liability:



So if I'm understanding this correctly, if my investment in an REIT in Canada goes belly-up do to negligence or mismanagment then my original money is still safe? I'm so confused...

No.

Your liability is limited to the amount of your investment (i.e. you as an 'owner' cannot be sued for management's misdeeds).

In that type of situation you would likely lose your entire investment, but you wouldn't lose your house (or other assets).

Best regards,

Firebug

[red sky]

Originally Posted by Slava

Oh Sorry, I thought that you knew how it worked but just started with 70 instead of 72.

Basically the rule is that if you divide 72 by the rate of return it tells you how long it takes to double your money. If you divide 72 by the number of years it tells you rate of return required to double your money in that period.

In other words at 7.2% per year it will take 10 years to double your money. To double your money in 2 years you need a return of 36% per year and so on.

Oh no no. I understand it, I was just mocking your correction of 72 instead of 70. I wasn't asking details, I was more saying your attention to details... stupid internet.

[Traditional_Ale]

^ Its like THACO from AD&D 2.0!!!

[Oil Stain]

Originally Posted by Ironhorse

Or those senior engineers who are now still working because they lost half of their retirement savings in the financial crash, and have had to put their retirement on hold.

Or they find that the pay is just too lucrative to give up. Typically the last years of employment are your most highly paid in that field, and you have more vacation so why not hang on a for a few more years?

[firebug]

Originally Posted by 1stLand

I am of the opinion that people should buy income producing assets. Best bet there is - Real Estate.

An up-down basement suite in an older neighbourhood instead of buying that new house in a new development in the outskirts of town is a good decision if you would like to reduce your living expenses and build up equity in the future.

Basement suites (separate entrance / separate laundry) usually rent from anywhere between $700-1,000 a month. That extra income you have coming in will help cut your mortgage in half, or you can simply slap that on the principal and pay down your mortgage quicker.

I love new houses, but the sad reality is that they offer little benefit in the form of rental income, whether it is by renting out rooms for roommates or renting them out to families, simply for the reason they are usually far away from transit and the city core.

If realtors want to be selling 'investments' they should be licensed and regulated as such, as well as being personally liable for their recommendations.

How they have gotten away with this skirting of existing legislation for so long I have no idea.

~firebug

[Pinner]

Originally Posted by Red_Baron

.

Right now, the main component to my retirement plan is to coach my wife about unnecessary spending-it's a difficult task but will pay dividends if successful.

LoL, Good luck with that. Figure this out and write a book, I mean best seller.


My advice, do not take a spoiled young lady straight from her parents, avoid this at all costs !

[Traditional_Ale]

^ x2.

[1stLand]

Originally Posted by firebug

If realtors want to be selling 'investments' they should be licensed and regulated as such, as well as being personally liable for their recommendations.

How they have gotten away with this skirting of existing legislation for so long I have no idea.

~firebug

Personally liable for recommending purchasing a suited property as a personal residence?

hmmm interesting.

Even if it is an investment property and you can provide documentation to your client that the property will cashflow at a certain mortgage rate and current market rents, taking into consideration utility costs for comparable properties, I can't see how a Realtor should be on the hook, unless they make claims that "real estate will absolutely rise 10% in the next year, so buy now or be priced out forever".

[Slava]

Originally Posted by 1stLand

Personally liable for recommending purchasing a suited property as a personal residence?

hmmm interesting.

Even if it is an investment property and you can provide documentation to your client that the property will cashflow at a certain mortgage rate and current market rents, taking into consideration utility costs for comparable properties, I can't see how a Realtor should be on the hook, unless they make claims that "real estate will absolutely rise 10% in the next year, so buy now or be priced out forever".

An investment advisor can't/shouldn't be making those claims either (about the 10% rise) and yet we are all tightly regulated and documented. Why would a different investment operate under different scrutiny when its subject to at least as much risk?

[pylon]

Originally Posted by IntenseFan

Thanks to the pillaging that the Baby-Boomer generation has and continues to do to everyone else, I am pessimistic that I will ever be able to retire.

Whatever excess money I make is now earmarked for either them or my daughter's generation.

I couldn't disagree more. Baby boomers are for the better part very fiscally responsible. I look at my folks, who have a million plus home paid for, well into the 7 figures for retirement savings, and will never ever have to rely on the government for a dime. My dad could have bought any car sold in this city, but when he bought his new Dodge truck, he wondered if he could save a few dollars by getting the rubber floor and bench seat as opposed to the standard SLT trim.

When I was growing up, my folks could have bought me the trendy jeans, and the Polo shirts and all that, but chose not to, for us or themselves, for the security of the Family going forward as every dime adds up. And it was also explained then that stuff is not important, putting away money is. We still had great vacations, a nice house, and all that, but $100 jeans (this was the 80's) were simply a waste of money. You want a video game? Go shovel some walks or get a paper route is what I was told.

Although I got into some pretty serious debt because of the effects on our industry because of the recession, but I have typically followed their lead, and paid cash for everything, and used credit only when necessary. I think a lot has to do with how you are raised, and how you are taught to manage money, than real estate markets, and costs of schooling etc.

IMO people are too impulsive with their cash nowadays, and thats the real problem. There are so many more temptations to spend money on nowadays than there was in the 70's and 80's. It is also so easy to spend it electronically without having to part with physical 'cash'. Back then renting a movie from the video store was a big family thing, now, you just do video on demand and add it to your tab among a ton of other examples.