Millennials: Avocados or homes?

[Bill Bumface]

Originally Posted by peter12

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

You can literally dump money blindly at ETFs and beat 7%:

http://www.moneysense.ca/save/invest...rmance-tables/

Rates of return (%)

Couch Potato portfolio Canadian stock index
(annualized since 1976)
10.7 10.4

Year-by-year performance (%)
Year | Couch Potato portfolio | Canadian stock index
1976 18.3 10.1
1977 6.0 9.8
1978 15.6 28.7
1979 18.7 43.6
1980 21.7 29.1
1981 -6.7 -11.0
1982 24.4 3.3
1983 22.7 36.2
1984 8.3 -3.2
1985 29.4 24.1
1986 13.6 8.1
1987 1.5 5.0
1988 9.0 10.2
1989 20.6 20.4
1990 -5.2 -15.5
1991 21.5 11.1
1992 8.7 -2.2
1993 21.9 31.5
1994 -1.1 -1.0
1995 23.8 13.6
1996 20.8 27.3
1997 23.4 14.1
1998 16.1 -2.4
1999 12.6 30.7
2000 3.8 6.6
2001 -5.3 -13.3
2002 -8.9 -13.1
2003 12.3 25.7
2004 8.6 13.6
2005 12.6 23.2
2006 11.7 17.0
2007 5.3 9.8
2008 -23.2 -33.0
2009 20.88 35.05
2010 12.49 17.62

[peter12]

Canadian equities had an expected rate of return of 6.4% in 2016. Not sure where you geniuses are trading.

http://fpsc.ca/alerts-updates/2016/0...ion-guidelines

[blankall]

Originally Posted by Bill Bumface

You can literally dump money blindly at ETFs and beat 7%:

http://www.moneysense.ca/save/invest...rmance-tables/

Rates of return (%)

Couch Potato portfolio Canadian stock index
(annualized since 1976)
10.7 10.4

Year-by-year performance (%)
Year | Couch Potato portfolio | Canadian stock index
1976 18.3 10.1
1977 6.0 9.8
1978 15.6 28.7
1979 18.7 43.6
1980 21.7 29.1
1981 -6.7 -11.0
1982 24.4 3.3
1983 22.7 36.2
1984 8.3 -3.2
1985 29.4 24.1
1986 13.6 8.1
1987 1.5 5.0
1988 9.0 10.2
1989 20.6 20.4
1990 -5.2 -15.5
1991 21.5 11.1
1992 8.7 -2.2
1993 21.9 31.5
1994 -1.1 -1.0
1995 23.8 13.6
1996 20.8 27.3
1997 23.4 14.1
1998 16.1 -2.4
1999 12.6 30.7
2000 3.8 6.6
2001 -5.3 -13.3
2002 -8.9 -13.1
2003 12.3 25.7
2004 8.6 13.6
2005 12.6 23.2
2006 11.7 17.0
2007 5.3 9.8
2008 -23.2 -33.0
2009 20.88 35.05
2010 12.49 17.62

Index funds only make sense for people investing long term. We're talking about people looking to buy a house within 5 years with their savings.

Index funds are often very volatile. They contain a lot of the hot stocks and industries. For example in 2000 around 50% of the S&P was in tech and in 2008 40% was in financials.

So you basically have to hope you don't get stuck with with a 2008, 2001-2, 1997, or 1990 in that 5 year period that your supposedly saving.

Once again, I think this is better advice for people who already have lots of capital and can afford to tuck it away long term.

My financial advisor specifically stated to me that I should avoid index funds if I was looking to buy a home in the next few years.

[blankall]

Originally Posted by peter12

Canadian equities had an expected rate of return of 6.4% in 2016. Not sure where you geniuses are trading.

http://fpsc.ca/alerts-updates/2016/0...ion-guidelines

This is CP. Everyone makes six figures and 7% ROI are laughable. You can easily make twice that by following simple advice apparently.

[Clever_Iggy]

Originally Posted by peter12

Canadian equities had an expected rate of return of 6.4% in 2016. Not sure where you geniuses are trading.

http://fpsc.ca/alerts-updates/2016/0...ion-guidelines

I'm literally the definition of an inactive investor: money comes off my pay cheque and goes into my RRSP, TFSA and an employee share purchase plan. This thread made me dig into the actual return numbers and summaries provided by SunLife to see where I stood relative to other posters. I'm not sure how to answer your question other than I selected a moderately aggressive "growth" portfolio based on my age, number of years remaining to retirement and "risk tolerance" (for me, I consider myself "moderate).

I have a small investor edge account through CIBC which I use for my share awards and to invest on my own in companies I find interesting (we're talking <$10k in capital). My current portfolio consists of a couple small O&G companies, a royalties land company, a potash company, two rail related companies and a tech company. Over the past 2 years I've only averaged 6.67% ROR.

[GirlySports]

Originally Posted by peter12

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

pretty much any bundled mutual fund. it may go up more some years or down some other years but over 5-10 years it'll make 7%.

[Enoch Root]

Originally Posted by blankall

Index funds only make sense for people investing long term. We're talking about people looking to buy a house within 5 years with their savings.

Index funds are often very volatile. They contain a lot of the hot stocks and industries. For example in 2000 around 50% of the S&P was in tech and in 2008 40% was in financials.

So you basically have to hope you don't get stuck with with a 2008, 2001-2, 1997, or 1990 in that 5 year period that your supposedly saving.

Once again, I think this is better advice for people who already have lots of capital and can afford to tuck it away long term.

My financial advisor specifically stated to me that I should avoid index funds if I was looking to buy a home in the next few years.

Probably because your advisor wouldn't earn any trailer fee if you bought index funds

[OMG!WTF!]

Originally Posted by blankall

This is CP. Everyone makes six figures and 7% ROI are laughable. You can easily make twice that by following simple advice apparently.

No one is saying twice that. But 7% is not at all astronomical and it really isn't far off of 6.4%.

[V]

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....

I think I'm finally getting where you're going.

I'm in my house that will finally be my retirement home, and I paid $470k two years ago.

What 25 year old is going to buy an $800k house? You're feeding into the stereotype.

[Weitz]

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....

I am unsure how from my post you came up with this nonsense.

[peter12]

Originally Posted by OMG!WTF!

No one is saying twice that. But 7% is not at all astronomical and it really isn't far off of 6.4%.

But 6.4% was the right answer, and 7% wasn't.

To be clear, I am not complaining. I invest a lot of my savings, and I do okay, but there is some absolute nonsensical bragging going on this thread with basically circumstantial and anecdotal evidence being offered.

[peter12]

I think what is really happening here is that you have a Calgary crowd arguing with a Vancouver crowd. You really couldn't imagine a more disparate comparison.

A few years ago, I was looking at nice little homes in Ramsay that basically checked off a lot of boxes that were well within my price range. I actually realized that I didn't want to buy a home at that time in my life, and I still feel that way.

What I don't like is the absolute arrogant preachiness exhibited by some of the posters in this thread.

[CliffFletcher]

Originally Posted by afc wimbledon

I got a suitcase and a 'you're 19 now piss off' from my mum, probably a good thing, not untypical for my generation and the UK.

Yeah, when people talk about help from parents there are different kinds of help.

My parents stayed married and held down steady jobs. They didn't suffer from addictions or mistreat me. So that's a pretty good foundation.

However, they never talked about money. Never paid any attention to what I was doing in school (so long as I was passing). Never gave me advice about money, studies, or jobs. They let me live at home rent-free as long as I was in university, but that's about it. When I first moved out at 20 my mom bought me groceries a couple times because she thought I might starve, but she stopped when my dad said she was babying me.

That approach was pretty common among the parents of my friends. You're 20, a fully independent adult, good luck out there. Don't forget to call your mom on her birthday.

Millennials, in general, are much closer to their parents. And their parents, in turn, nurture and support them for much longer than previous generations. That has its pros and cons. More emotional and financial support. But less independence fostered.

TLDR; I had little deliberate support from my parents once I was an adult, but being left to figure stuff out on your own at 20 ends up providing valuable life lessons.

[peter12]

Originally Posted by CliffFletcher

Yeah, when people talk about help from parents there are different kinds of help.

My parents stayed married and held down steady jobs. They didn't suffer from additions or mistreat me. So that's a pretty good foundation.

However, they never talked about money. Never paid any attention to what I was doing in school (so long as I was passing). Never gave me advice about money, studies, or jobs. They let me live at home rent-free as long as I was in university, but that's about it. When I first moved out at 20 my mom bought me groceries a couple times because she thought I might starve, but she stopped when my dad said she was babying me.

That approach was pretty common among my friends. You're 20, a fully independent adult, good luck out there. Don't forget to call your mom on her birthday.

Millennials, in general, are much closer to their parents. And their parents, in turn, nurture and support them for much longer than previous generations. That has its pros and cons. More emotional and financial support. But less independence fostered.

TLDR; I had little deliberate support from my parents once I was an adult, but being expected to figure stuff out on your own at 20 ends up providing valuable life lessons.

Well, they suffered from you.

[OMG!WTF!]

Originally Posted by peter12

But 6.4% was the right answer, and 7% wasn't.

To be clear, I am not complaining. I invest a lot of my savings, and I do okay, but there is some absolute nonsensical bragging going on this thread with basically circumstantial and anecdotal evidence being offered.

To be honest though, 7% is a joke. But I'm not sure what you expect other than circumstantial or anecdotal evidence to prove that. I'd be robbing neighborhood cats for my dinner if I did 7%.

[Weitz]

Originally Posted by peter12

I think what is really happening here is that you have a Calgary crowd arguing with a Vancouver crowd. You really couldn't imagine a more disparate comparison.

A few years ago, I was looking at nice little homes in Ramsay that basically checked off a lot of boxes that were well within my price range. I actually realized that I didn't want to buy a home at that time in my life, and I still feel that way.

What I don't like is the absolute arrogant preachiness exhibited by some of the posters in this thread.

Why would we care about Vancouver?

[peter12]

Originally Posted by V

I think I'm finally getting where you're going.

I'm in my house that will finally be my retirement home, and I paid $470k two years ago.

What 25 year old is going to buy an $800k house? You're feeding into the stereotype.

Yeah, to take the other side, there is a fear of missing out that is driving a lot of millennial anxiety on the housing subject. Me, I will just wait it out or rent my entire life, and put all the costs of domestic upkeep into my investments or my lifestyle.

[peter12]

Originally Posted by Weitz

Why would we care about Vancouver?

Because it is a pretty shaky linchpin in this country's economy, and if it goes belly-up, it will be on the same level of disaster as the 2008 economic crisis.

Also, have you been reading the thread at all?

[peter12]

Originally Posted by OMG!WTF!

To be honest though, 7% is a joke. But I'm not sure what you expect other than circumstantial or anecdotal evidence to prove that. I'd be robbing neighborhood cats for my dinner if I did 7%.

Then, you're lying. Average RoR for Canadian equity in 2016 was 6.4%. How did you beat the market?

[blankall]

Originally Posted by V

I think I'm finally getting where you're going.

I'm in my house that will finally be my retirement home, and I paid $470k two years ago.

What 25 year old is going to buy an $800k house? You're feeding into the stereotype.

A person who wants to have a family? It's great that you can get a 1 bedroom for $400k, but how then how do you make the next step up?

Once again it can be done...pour all money into savings age 18-25, buy condo age 25, buy house in undesirable neighbourhood age 33, buy actual house age 40.

This was not the experience a generation ago. It was more like buy house age 25.