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Old 12-11-2012, 10:14 AM   #21
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Read this first.

The Richest Man in Babylon

http://thepdi.com/Richest%20Man%20in%20Babylon.pdf
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Old 12-11-2012, 10:31 AM   #22
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Quote:
Originally Posted by Milton View Post
(you are too young to remember when the real estate market sold off a couple of decades ago)
To the OP:

When we returned from Saudi, (early 1989), the Toronto market was at a peak......friends relocating from Montreal were (very) anxious to buy, (against our advice to rent for a while, since the bubble signs were evident to us, having been through them before)........they paid top dollar for a multi-level condo apartment, and dropped $50K into renovations.

After the collapse, our friend allowed that, at that time, he couldn't sell the place for what they owed on the mortgage, (forget the down payment and reno expenses).

The market eventually rebounded, but there were hairy times.

Rental income: Have you ever been a landlord? I have, and shared the duties/annoyances with partners.......wouldn't do it again.
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Old 12-11-2012, 11:21 AM   #23
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zxcvlk

I live in the GTA, yet I can't find anything that will guarantee me over 6%. If you know something I don't, please share as I would be very interested.


As for the housing market, it was at a boom, about 8 months ago, then there was an anouncement about no longer offering 40 year mortages. Since I don't have a mortgage I can't remember the details but I think it's 30 years and the demand for housing went down considerably. The house down the street was listed for $625,000. just when the mortgage changes were implimented and the house sold last month for $535,000. Mind you it's possible it was overpriced to begin with.

As for your early retirment, I think the key points mentioned were;

LBYM,
Save,
Invest wisely,

and all will fall in place.

I was in the same situation as you when I was around 27, but my life changed as well as my priorities when I met my wife and eventually had too kids. I ended up retiring when I was 49, but was FI before that.

You've received a lot of great advice, stick around as it only gets better.
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Old 12-11-2012, 04:23 PM   #24
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There seems to be a misconception I am living above my means. I guess that is from listing my varying incoming at the low end. I have made closer to 90k for the past few years.

With my company match I met or exceed the 10% gross saving in a pension (used to be RRSP match but it has been discontinued for a pension). I am unsure of how a pension works and assume it will payout when I retire. I don't know if I qualify for LBYM, but I do live within them.

I have also rented out a condo previously when I was living with my folks. It was not as difficult as people say and I managed the property myself. The only thing I did other then cashing monthly checks was email the building manager for a new garage remote, or I found a perfect tenant. My cash flow was positive after expenses (mortgage, maintenance, property tax, insurance, etc.)

Being on the younger side of this board I am more open to risk. Leveraging a line of credit seems to be a bad idea and I will scrap that option. I still have 40k in cash and 40k in stocks. With a possible market downturn I want to purchase a condo at the right price and still take advantage of the low mortgage rates (even with the Finance Minister's mortgage restriction).

I will need to read up on TFSA to see if it is a better option to grow my assets. I haven't contributed anything. From what I understand, I can contribute 5k/year and it carries over the next year if I do not. I believe It has been 4-5years since TFSA was launch. Can I invest 20k-25k to this account since I've never contributed, are there management or commission fees involved, or should I speak with a Financial Adviser?




Quote:
Originally Posted by Lazarus View Post
Read this first.

The Richest Man in Babylon

http://thepdi.com/Richest%20Man%20in%20Babylon.pdf
I've tried to read this book. I hated the way it was written and gave up. The only books I have read are "Rich Dad, Poor Dad", "The Wealthy Barber" and "Stop Working". I do not recall the exact name of the third book. It was about buying blue chip stocks at low prices and wait for the dividends to grow.
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Old 12-11-2012, 05:51 PM   #25
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I will need to read up on TFSA to see if it is a better option to grow my assets. I haven't contributed anything. From what I understand, I can contribute 5k/year and it carries over the next year if I do not. I believe It has been 4-5years since TFSA was launch. Can I invest 20k-25k to this account since I've never contributed, are there management or commission fees involved, or should I speak with a Financial Adviser?
Your available contribution room in a TFSA is as follows:

2009: $5000
2010: $5000
2011: $5000
2012: $5000
2013: $5500 (first ever increase)

So by January 2, 2013, you could transfer up to $25,500 into a TFSA. Very easy to set up. You could set up the account electonically with ING or with your Big Six bank. Once the account is there, you will be able to transfer cash between the TFSA and your checking account. (If you take the money out, you can't put it back in again until the following year, but you don't lose the contribution room.) Any money that you put in a TFSA in cash or GICs generates no commissions and any interest earned is tax free. However, once the money is in the TFSA, you can invest it in stocks, mutual funds, etc, as you please. If you put money in a TFSA in ING, you could transfer some or all of the cash to a low MER Streetwise fund, all done electronically. If you want to buy GICs (and you could start a nice ladder with $5000 maturing each year) speak to your bank. If you keep some of your TFSA in cash, that makes a nice emergency fund. All of this information will be easy to find on the banks' websites.

Hope that helps.
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Old 12-11-2012, 06:23 PM   #26
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Good luck to you.
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Old 12-11-2012, 09:29 PM   #27
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Originally Posted by zxcvlkj
The only books I have read are "Rich Dad, Poor Dad", "The Wealthy Barber" and "Stop Working". I do not recall the exact name of the third book. It was about buying blue chip stocks at low prices and wait for the dividends to grow.
Wow, you are really missing out. Try Dicken's "Bleak House", or the Trollope classic "The Way We Live Now". Mark Twain and Stephen Leacock are good, too. Or Henry Fielding, E.M. Forester, Jane Austen, etc. etc.
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Old 12-16-2012, 08:49 PM   #28
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You're doing great so far. $230,000 in home equity at your age is fantastic ... just be prepared for a dip in the market. If you're not planning on moving for a while, you should be able to weather the dips.

At your current savings rate, I doubt you'll be able to retire before 50. You make a decent income, but TO is an expensive city ... and your mortgage is going to suck a huge chunk of your income. If your main goal is to retire early, you're going to have to look at reducing expenses, or finding more income. No easy solutions I'm afraid. Like someone had previously stated, life has a tendancy to throw game-changing curves at a person. Sometimes good (spouse that makes a bunch of money), and sometimes bad.

If you're main goal is to retire early, then you're also going to want to use all the tools at your disposal. Compounding interest is a key one. Definitely get a TFSA set up. It's as simple as going to the bank and asking them to set one up for you. They'll try to sell you on their investments, but you can simply move cash in and take your time with any investment type decisions. Or, if you're more of a DIY investor, set up an online discount brokerage account. Once set up, you can separately set up a TFSA account. Once set up, you simply move cash in, and choose your investments. The only thing I'd caution you about is to know the rules regarding TFSA's before transferring any monies into, or out of the account. There are penalties for going over the limit.

I'm not saying you can't retire at 40, but not in your current situation. Having said that, you're doing way better than I was at your age. Well done!
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Old 12-16-2012, 11:08 PM   #29
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Just a quick note on Canadian Health Care.

I don't know Ontario's Health Care at all, but in Alberta, most prescriptions are not covered, as well as dental costs and many other health related expenses.

Canadian health care is significantly less expensive than State side (especially for emergency / life threatening care), but it's not completely free either. You should budget for some basic medical / dental insurance, or set some money aside for these costs.
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Old 12-17-2012, 08:37 AM   #30
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If your expenses after paying down the mortgage really go down to 35K, you would need "only" 875K-1Mio. of invested assets. This does not include your home equity!
That seems doable. Once my mortgage is paid and I downgrade I would have maybe another 200k.
Not meaning to rain on your parade, but another 200k will not get you there. You currently have about 105k (Cash 40k, Stocks 40k, RRSP 25k) of assets that are or could be invested. Money tied up in house or car doesn't help.
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Old 12-19-2012, 06:23 PM   #31
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So by January 2, 2013, you could transfer up to $25,500 into a TFSA.
i'll look into this in the new year.


Quote:
Originally Posted by Milton View Post
Wow, you are really missing out. Try Dicken's "Bleak House", or the Trollope classic "The Way We Live Now". Mark Twain and Stephen Leacock are good, too. Or Henry Fielding, E.M. Forester, Jane Austen, etc. etc.
i'm not much of a reader. summary of the point would be appreciated.

e.g.
rich dad, poor dad = acquire assets
wealthy barber/richest man in babylon = save 10%
stop working = purchase low blue chip stocks with dividend growth


Quote:
Originally Posted by naggz View Post
Just a quick note on Canadian Health Care.

I don't know Ontario's Health Care at all, but in Alberta, most prescriptions are not covered, as well as dental costs and many other health related expenses.

Canadian health care is significantly less expensive than State side (especially for emergency / life threatening care), but it's not completely free either. You should budget for some basic medical / dental insurance, or set some money aside for these costs.
same in ontario.


Quote:
Originally Posted by RISP View Post
Not meaning to rain on your parade, but another 200k will not get you there. You currently have about 105k (Cash 40k, Stocks 40k, RRSP 25k) of assets that are or could be invested. Money tied up in house or car doesn't help.
based on my math i'm 30% there with two decades to go.
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Old 12-20-2012, 02:43 AM   #32
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based on my math i'm 30% there with two decades to go.
You've cut your retirement age back to 49? That's smart. I was still under the impression that you are planning for a very quick exit from the workforce.

Would you kindly explain how 105k/875k=30% ? Because based on MY math, this is 12%.
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Old 12-20-2012, 07:12 AM   #33
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Are we to assume you will remain single with no kids for the rest of your life, oh and no girl/boyfriend for ever? Not that there is anything wrong with it!

I think $875k is too low as I didn't retire in the Toronto area with less then 1M and still I wonder if it's enough based on the economy.
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Old 12-20-2012, 08:33 AM   #34
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10% savings rate means you'll work for a long time.

Check out this article by Wade Pfau on savings rates, look at the chart in particular.

http://www.fa-mag.com/news/is-there-...rate-7860.html
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Old 12-26-2012, 01:31 PM   #35
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Really . . . you are way too young to give up on w*rk. My advice is to find something you like to do. If you can't find worthwhile w*rk how are you going to find something worthwhile to do in retirement for the next 50-60 yrs?

I ER'd at 55 but I'm thankful I had 30 yrs of w*rk I loved.
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