You Know What Really Grinds My Gears? Now with 3x more gears...

[Slava]

Originally Posted by Mr.Coffee

Risk free 4% is not risk adjusted whatever guess % in market. It’s not as clear cut as you’re suggesting. There’s a comfort of mind part of the equation here that is also personal and can’t be calculated. It’s gotta be all thought through.

Still your point kind of stands. No decision like this is cut and dried so I don’t like seeing black and white comments on something like this. What are GICs these days anyway?

A 1-year GIC is just over 4% today, but we'll see how those look after the Bank of Canada tomorrow.

Yeah, there's definitely a psychological element. People would rather not have the debt, and I get that. All I'm saying is that if you have a 25-year amortization and compare paying the mortgage off as opposed to investing prudently for those 25 years, the outcomes aren't particularly close. That might not feel as good if you have an aversion to debt, but that's the situation.

[DigitalCarpenter]

Originally Posted by Slava

A 1-year GIC is just over 4% today, but we'll see how those look after the Bank of Canada tomorrow.

Yeah, there's definitely a psychological element. People would rather not have the debt, and I get that. All I'm saying is that if you have a 25-year amortization and compare paying the mortgage off as opposed to investing prudently for those 25 years, the outcomes aren't particularly close. That might not feel as good if you have an aversion to debt, but that's the situation.

Another factor is you are not paying interest on your mortgage and can use your now freed up monthly payments to invest with instead. This way you get the piece of mind never worrying about what the current interest rate is and build your wealth at the same time.

This of course assumes you keep working vs retiring in the 4M scenario.

[Slava]

Originally Posted by DigitalCarpenter

Another factor is you are not paying interest on your mortgage and can use your now freed up monthly payments to invest with instead. This way you get the piece of mind never worrying about what the current interest rate is and build your wealth at the same time.

This of course assumes you keep working vs retiring in the 4M scenario.

Yeah, but the truth is that investing that money each month will be well short of investing the lump sum at the beginning. I completely understand that this is a psychological decision as much as a financial one. I've talked through this with clients many, many times. But that is just what the math says.

[Jason14h]

Originally Posted by PepsiFree

Household isn’t the same as individual.

Isn't the same but includes and doesn't change the point that by your definition half of Calgary households are living a life of luxury.

[Fuzz]

Originally Posted by Jason14h

Isn't the same but includes and doesn't change the point that by your definition half of Calgary households are living a life of luxury.

You know the difference between average and median, right?

[Sliver]

Originally Posted by Fuzz

You know the difference between average and median, right?

I did at one point, but now I forget. Now whenever somebody says something like that IRL I just say, 'yeah, obviously because I'm not a moron,' but really I am a moron and just don't want to admit it. Here is a safe space, though.

[CorsiHockeyLeague]

Originally Posted by Sliver

I did at one point, but now I forget. Now whenever somebody says something like that IRL I just say, 'yeah, obviously because I'm not a moron,' but really I am a moron and just don't want to admit it. Here is a safe space, though.

Median is you sort from low to high and pick the one in the middle. Average is you add them all up and divide by how many entries there were in the population.

[OutOfTheCube]

Originally Posted by Sliver

I did at one point, but now I forget. Now whenever somebody says something like that IRL I just say, 'yeah, obviously because I'm not a moron,' but really I am a moron and just don't want to admit it. Here is a safe space, though.

This applies to so many conversations though.

I feel like I've had entire conversations with people where neither of us really know what we're talking about, but neither will admit it.

[kevman]

Originally Posted by Slava

A 1-year GIC is just over 4% today, but we'll see how those look after the Bank of Canada tomorrow.

Yeah, there's definitely a psychological element. People would rather not have the debt, and I get that. All I'm saying is that if you have a 25-year amortization and compare paying the mortgage off as opposed to investing prudently for those 25 years, the outcomes aren't particularly close. That might not feel as good if you have an aversion to debt, but that's the situation.

And that's why I'm 15 years into a 35 year mortgage with an average interest rate of <2% over the first 3 terms. You'd be a fool to pay down your sub 2% loan when you can do far better investing.

But then I spent the difference instead of investing it so perhaps there is some merit to paying down your mortgage.

[mrkajz44]

Oh man, I didn't mean to set this off with my comment, but I guess my immediate work group is a good proxy as it seems lots of people on this board agree that $4m is somehow not enough.

Here is what I don't understand, if you were to present value the remainder of your lifetime earnings, I doubt you'll actually make it $4m. So how is $4m not enough to retire on? For pretty much everyone, you will be retiring on less in reality.

[kevman]

Originally Posted by mrkajz44

Oh man, I didn't mean to set this off with my comment, but I guess my immediate work group is a good proxy as it seems lots of people on this board agree that $4m is somehow not enough.

Here is what I don't understand, if you were to present value the remainder of your lifetime earnings, I doubt you'll actually make it $4m. So how is $4m not enough to retire on? For pretty much everyone, you will be retiring on less in reality.

Age is going to play a big part on this one. Huge difference in remaining earning potential between someone in their 30's and 50's. Also I believe one's career aspirations would come into play. If you're in your 30's and you assume you've topped out with cost of living raises for the rest of your life you're going to have a different number than planning for some significant promotions.

I might be able to make $4m work. If the wife still works and contributes equally to the bills that is. If she won $4m too, we'd probably be OK. But even with $8m between both of us, it would mean we'd be officially giving up on the ski-in/ski-out second home dream. (A dream which probably isn't actually realistic but that's why they're called dreams.)

It's kind of like signing the 8 year UFA deal now or bridging for 4 and hoping for a bigger 8 year deal. You betting on yourself or not?

Edit: I'd probably put $4m into said dream home and then go on with my life with a bitchin legacy property for my family to enjoy. So nope, not enough to retire.

[Cappy]

Originally Posted by mrkajz44

Oh man, I didn't mean to set this off with my comment, but I guess my immediate work group is a good proxy as it seems lots of people on this board agree that $4m is somehow not enough.

Here is what I don't understand, if you were to present value the remainder of your lifetime earnings, I doubt you'll actually make it $4m. So how is $4m not enough to retire on? For pretty much everyone, you will be retiring on less in reality.

The vast majority of working age Calgarians will not make 4 million in their lifetime, let alone 150-200k per year (from the immediate returns of 4mil).

I suspect people are either underestimating or overestimating what it would take to quit their jobs. Lotto winners constantly say they will show up to work, but after a while, giving up 2100 hours a year to earn an extra 70k doesnt appeal to everyone when you are receiving 150-200k already.

Time is a luxury that many forget

[PepsiFree]

Originally Posted by Jason14h

Isn't the same but includes and doesn't change the point that by your definition half of Calgary households are living a life of luxury.

Well, that’s not “by my definition” at all, it’s by your definition which you just admitted is different than mine.

But I can see you don’t even know what average means, so I’m not really sure why you’re trying to make a point about this at all.

[Fuzz]

Originally Posted by Sliver

I did at one point, but now I forget. Now whenever somebody says something like that IRL I just say, 'yeah, obviously because I'm not a moron,' but really I am a moron and just don't want to admit it. Here is a safe space, though.

So the median is 100k, the average is $131k. Sometimes it does matter. Lots of above average earners skew the average, so it's not really a great measure of the middle.

https://www03.cmhc-schl.gc.ca/hmip-p...ood&SearchTags[0].Key=Households&SearchTags[0].Value=Number&SearchTags[1].Key=Statistics&SearchTags[1].Value=AverageAndMedian

[btimbit]

I'd definitely 'retire' but would find something productive to fill a lot of my time with that would almost be job-like, but fun. But like, keep showing up at some job at someone else's beck and call? No way

Maybe buy a plane and see who wants to go flying, at least get some costs covered

[Sliver]

Originally Posted by Fuzz

So the median is 100k, the average is $131k. Sometimes it does matter. Lots of above average earners skew the average, so it's not really a great measure of the middle.

https://www03.cmhc-schl.gc.ca/hmip-p...ood&SearchTags[0].Key=Households&SearchTags[0].Value=Number&SearchTags[1].Key=Statistics&SearchTags[1].Value=AverageAndMedian

Median is always higher than average. Got it. Thanks.

[kevman]

Originally Posted by Cappy

The vast majority of working age Calgarians will not make 4 million in their lifetime, let alone 150-200k per year (from the immediate returns of 4mil).

I suspect people are either underestimating or overestimating what it would take to quit their jobs. Lotto winners constantly say they will show up to work, but after a while, giving up 2100 hours a year to earn an extra 70k doesnt appeal to everyone when you are receiving 150-200k already.

Time is a luxury that many forget

Agreed, the vast majority will not. But you don't know where he works to know the situation of the group that he was speaking to. The vast majority do not earn that kind of money, but there are no shortage of people that do in this city that would not hit their "number" today with an extra $4m.

[Sliver]

Geez after all this talk of 4 million today I kind of convinced myself I was lined up to get 4 million.

Instead it was a slow day at work.

[kevman]

Originally Posted by Sliver

Geez after all this talk of 4 million today I kind of convinced myself I was lined up to get 4 million.

Instead it was a slow day at work.

Very slow. I think topfiverecords nailed it with this one:

Originally Posted by topfiverecords

Let’s be real. Most of you are soft retired already.

I'm surprised so many people are in a rush to quit their jobs when they're getting paid to post on CP all day.

[ResAlien]

Wtf how did a link fuzz posted bork this page so badly? Looks like booty juice on mobile now. Thanks fuzz and everyone who quoted it