[KaeJS]

This has been one of my favourites for a decade:

 

[KaeJS]

The GIC cannot fall 30% in the blink of an eye, as FTS did during the covid crash.

FTS had reached a high of $59.28 in early 2020, then swiftly crashed along with the market, reaching a low of $41.52 ... 30% decline in just one month.

The GICs are for capital preservation, obviously. They don't crash.

I hold tons of FTS myself too, but let's not forget they are equities and come with equity risk.

Eder knows this. He's in it for the dividends, not the equity.

Also, GIC's have GUARANTEED risk. The risk being that you lose purchasing power on a consistent basis.

 

[KaeJS]

Lol, game over. Do not pass go. Do not collect $200.

 

[KaeJS]

Instead, collect $500/week for months. It's how that chart came to be!

I'm betting the Liberals extend the programs. They are supposed to end on Saturday. But I bet you they get extended for another month.

 

[KaeJS]

But wait, even though that's a bad increase, it's a percentage, it's relative to our prior debt. Maybe we aren't that bad in absolute terms.

I mean, let's say I make $100,000/year and I have $20,000 debt, then the next year I have $40,000 debt, an increase of +100%. And let's say my friend makes $100,000/year and had a debt of $80,000 and the next year $100,000, an increase of +25%. Even though I had a huge percentage increase of my debt, I'm better off in absolute terms.

Right?

Debt to GDP Ratio by Country 2022

worldpopulationreview.com

That's a positive spin on a negative situation.

But you are correct. It's still not good, though lol

 

[KaeJS]

The future is bleak. But what do you do?
I often wonder if there is any point to saving/investing these days.

Seems more worth it to just buy **** and live life.

 

[KaeJS]

Maybe you're forgetting about the whole point of investing. It's to get a positive real return, to preserve the value of your money.

If you're investing in a diversified portfolio, the odds are that you will beat inflation over time. It's the people who don't invest, or who don't have any assets, who are in big trouble due to inflation.

Have fun making a positive real return with real estate rising more than annual salaries. You're just getting further behind, especially with your percentage of bonds and gold.

It is not I who has forgotten the point of investing.

At your age, and in this environment, you shouldn't even own bonds. What is your positive real return? And how do you feel about the real estate/rent prices?

How are you not concerned?
Do you feel you are not falling behind?

Unless you are a boomer with old property, you are in trouble. Are we not the same age?

I know you ignore some of my posts, and that's fine. But please respond to this one.

 

[KaeJS]

Yeah we're the same age. Or I'm late 30s, not sure about you.

Falling behind in real estate? Then I'll buy a smaller place, or rent forever. Who cares ... I don't need a mansion. Square footage of homes has increased tremendously since the 1970s but I'll be OK living in a small place. I would be OK with something the size of a 1960 or 1970 home.

I can't speak for other Canadians but it's their problem, if they insist that they "deserve" a very large home that's beyond their means.

With my bonds in my asset allocation, yes I am getting a positive real return. Measuring it since I started tracking it about 6 years ago, my whole portfolio is performing at 7.0% CAGR which is well above the inflation rate. And that's with 50% bonds, annual rebalancing, Canada & US equities.

An excellent, positive real return along with stability. I barely noticed the drop during the 2020 crash.

Falling further behind? I don't see it. Maybe I'm just more of an optimist than you. As far as housing, somehow I'm not concerned about that either. IMO the market will calibrate the price of housing such that mortgage payments will be comparable to rent.

I can afford rent, so I can afford a mortgage too. To me it's kind of arbitrary which way to go.

What's the point in trying to achieve a positive real return if you're so content to downsizing?

The point of investing and achieving a positive real return is to make more. To get further ahead.

Saying you don't "need" a mansion is one thing. But I'm sure you'd like one.

You don't "need" a positive real return, either. But you'd like one.

I am almost 32.

 

[KaeJS]

Even if you're got a 2% or 3% real return, you're winning.

I guess. But you're winning by a small amount while others are winning by large ones. So it's like you're winning a game that doesn't really matter.

I also don't know what you mean when you keep saying "get ahead". Get ahead of what? Aren't you already well ahead of countless other Canadians? As I recall, at age 32 you have a pretty significant net worth that's far above the median at your age.

There is no such thing as enough. Just because I have more than people my age doesn't mean I am satisfied. I'll be satisfied when my houses are paid off and I have a nice portfolio with a Porsche in the driveway. Until then, I will keep grinding. There are plenty of people who have more than us, who make more than us, who are doing better than us.

Being on a financial forum, we both know money compounds. It is a race. The faster you get it, the more you'll have for less working hours. Who doesn't want that?

 

[KaeJS]

What would you guess is the average CAGR, among everyone?

I do understand that you aspire to be above average (and so do I), but I'm really curious about where you think the average CAGR is.

I'm not sure. Going in completely blind, I'd say maybe 5%?

 

[KaeJS]

Sounds to me like you're experiencing a kind of FOMO and greed for riches.

I don't know how anyone around our age group is not experiencing FOMO looking at real estate prices.

You say you are fine and that you'll just downsize, move away, and rent. But real estate prices impact rent rates, too. These increases in real estate prices are only benefitting the people who have many properties, and mostly those that have purchased 10 years ago or more.

So, when you look at your positive real return and compare it to the insanity in real estate, crypto, meme stonkz, NFTs.... Are you really getting ahead?

Not to mention gasoline and food prices.

 

[KaeJS]

I completely have to disagree with James and Marco.

While you both might be "comfortable" with your subpar returns... The rest of the world is running away from you. I don't think you guys are seeing the wealth being created through RE and Crypto or even stocks.

You guys say you want financial freedom, but I don't think you're going to get it. Not unless your idea of freedom is sitting in a 1 bedroom apartment paying rent forever and eating ramen noodles.

I want financial independence, too. All I want in this entire world is to not have to go to my sh!tty full time job anymore. But you know what? Investing in things like bonds or gold or safe investments will mean I have to stay there for 30 years (and I STILL don't get the Porsche).

There is a reason 20 year olds are YOLO-ing their accounts. It's because money means nothing anymore. You either get rich or die trying. It honestly boggles my mind when I see people working for minimum wage. Like who would even work at a place like Subway anymore, or any fast food joint? I just can't imagine working for $15/hour. It's a waste of time. I'm surprised people still do it.

You guys may beat a mythical benchmark in terms of real return, but in real life, you're falling behind. It's not hard to see. Just look around you.

And while you guys may not agree, right now having a mortgage is an asset. A mortgage is not a liability currently. The rates are so low that it actually makes sense to NOT pay down a house at all. The only thing that makes sense is to own one and keep taking out all your equity and blending and extending your amortization.

 

[KaeJS]

Crypto and stocks, maybe.
Real estate? Nah.

 

[KaeJS]

Historical real house prices (red line) in developed countries. It doesn't only go up.

Tell that to Australia, New Zealand, Canada, Norway and Sweden.

You know, lots of these countries have a lot in common which is why the charts look relatively the same.

Canada is special and I think that is what you are missing about it versus some of the other countries. As a socialist, democratic, multicultural country with "free" healthcare... We are an attractive place to be for families. We have decent infrastructure, a good reputation, and our country is safe.

Our country is also cold and most people don't want to live past a certain point. When we also bring in foreign money and foreign people... Your house prices will forever be propped up.

There simply is too much demand for Canadian real estate. Just because some other countries (Portugal, for instance) seem to have been on a downward trend does not mean it will happen here.

I'm not saying it can't be flat for a while or even drop a tiny bit. But, I really can't see it going down long term. And I definitely don't see any crashes coming, either.

Also - the government would never let it crash. And I truly believe that.

 

[KaeJS]

I think my returns are above average, not below.

I think you are taking social media-hyped, short term returns way too seriously. This is kind of like how people look on Facebook and think all their friends and neighbours are living amazing lives.

It's often fake or misleading. Social media is not an accurate reflection of reality.

Super high returns do not persist in the long term. Gamblers get high returns one moment, then lose it all the next moment. It can't be sustained.

I'm up over 30% this year in my stock portfolio. I'd normally say that's really good, but this year that's actually not great. I thought there would be a bigger resurgence in some stocks that never materialized quite as well as I hoped and that hurt my returns.

The other thing you're missing is that people use leverage to increase their returns. You can't use leverage with bonds or gold. I mean, you could. But it would be extremely silly and you'd likely lose money. But leverage can really help you get ahead. Especially at times like this when governments are printing money like it means nothing.

I rarely use social media. I don't have time to scroll through the lives of other people. Also, I don't need to see returns online. I see them when I walk outside. I see them when I see a ferrari, or a bigger house than mine, etc. There is money being made out there, and it is being made at a much higher and faster rate than your 7% CAGR. That's all I'm saying.

And yes - to cover my bases, I understand that people finance or lease things. I could go buy a Porsche tomorrow in cash. But I won't. Because it's still out of reach for me. Just because I can afford it doesn't mean I should do it. But I do recognize not everyone has that intelligence level and that some of the success I see is not as much as I think it might be and could only be surface deep.

 

[KaeJS]

My portfolio includes many stocks, real estate, and some crypto. It also includes many bonds and gold -- because it's designed to last.

You said that the thing you want most is to leave your shitty full time job. In your situation, I might want an aggressive portfolio too, so that I could strike it big and escape. If I were 32, and stuck in a job I hated, I'd probably invest aggressively too.

My situation is different. I have enough money that I don't need to work a day job, shitty or otherwise. And I haven't needed to for quite a few years now. At this point, I don't need to take big risks. I want capital preservation.

Once you have a large portfolio, I think your attitude might change. Once you've "won" the game, why go back to the casino? You're interested in preserving your wealth. Generally, in my experience, wealthy individuals are interested in capital preservation more than growth. If you already have lots of money, you're willing to sacrifice potential growth for safety.

I'm making about 8% CAGR and am quite happy with that. I could make more, but I'd be taking more risk. I'm interested in preserving my wealth for many years to come.

(And BTW, I live in a nice house and eat well. No 1 bedroom apartment or ramen here, don't worry.)

If you've made it - you've made it. Then you're doing the right thing.

Hey - if I didn't have to work, had a nice house, ate well, and had a large portfolio like you, I'd be happy with an 8% CAGR also. That's only sensible that you'd want capital preservation as a priority.

But I'm not there yet. And as such, I need the highest returns possible.

 

[KaeJS]

Now I hold algorithmic stablecoins that earn good yield unlike bonds and can be used to rebalance (I have used them for this several times now) Stablecoins are not all created equal, need to be regulated, and do pose a risk if you don't understand what they are. But bonds on the other hand are being manipulated, yield below inflation before tax, and don't hold up when you need them

Diversification is huge for the opportunity to rebalance during volatility. Bonds are broken imo and holding 50% of anything is far too much. Ideally 30-40% max of any asset class imo

Bonds are broken. Absolutely. They don't make much sense unless you're old and/or rich as hell already.

The only Stablecoin I have right now earning me a yield is USDC.

I should probably increase my positions in Stablecoins, to be honest.

 

[KaeJS]

Anyone make some money of RIVN today?

Wouldn't touch it with a 10 foot pole...

 

[KaeJS]

He should be fined more.

I remember being short TSLA through lots of puts. Maybe it was back in 2017. I was short at like $380 when he tweeted that he was taking the company private at $420...

The guy is a d!ckhead.

He may be intelligent, but he's just as much of an a$$ as he is smart.

 

[KaeJS]

If you think raising rates is going to kill the party...

You're dreaming.