Dr. Garth

Three years ago 14% of Canadians had no family doctor. Now it’s over 20%. That’s despite public spending of $331 billion on health care, which equals just under $9,000 per beaver. And yet 6.5 million of us are doctor-less.

What a country. You can always get a dentist (until dentalcare comes along). You can see an eye doctor or a vet (because you pay). And of course, you can have a free financial colonoscopy here at GreaterFool, where tax dollars never go to die.

So, the first patient, please, Nurse Jiggles.

“Thanks for giving your personal time to write great blogs posts almost every day,” says Rob, to the crisp snapping noise of rubber gloves. “I look forward to it daily and have learned a lot!”

My question is about the unused HELOC burning a hole in my mortgage account. It currently stands at 85K and I don’t plan to use it for any big purchase. My wife and I have savings to fall back on should something go awry. Both of us are fortunate to have solid DB pensions for the future.

We have money in TFSAs, but much space is left available. So, do we add money from the HELOC in our 60/40 TFSAs? Do we open a joint-non registered trading account? Or do we leave the HELOC money alone? Any advice helps.

You do zip, Rob. The current prime rate is 7.2%, and home equity lines of credit are running at 7.7%. That is serious money, and it looks like we won’t have a CB rate drop until April at the earliest. Maybe June. Perhaps July. But even if an optimistic scenario comes into play (a decline of 1% in 2024) your HELOC will still cost at least 6.7%.

It’s too much. Portfolios should do well this year (unless Trump starts a civil war or the Middle Eats erupts or Xi/Rocketman/Putin get out of control). But you can’t make money with leverage costing you north of 7%. If invested in a non-reg account then some interest would be deductible. In a TFSA, none. And with DB pensions, you need to have fully-stuffed tax-free accounts turning out retirement income that won’t push you into a higher tax bracket.

Let the hole burn, Rob.

Well, here’s Andrew in Vancouver, where he and his squeeze are making a great income ($375,000) and by avoiding the siren call of crazy house prices, and have amassed $600,000 in investments.

“I want to express my heartfelt gratitude for the positive impact your blog has had on me over the past several years,” he says. “Your daily insights have become a guiding light for me and have significantly influenced not only my financial decisions but also how I perceive the concept of a fulfilling life beyond societal norms.” Ah, so sweet.

“Your unwavering commitment to dispelling the notion that homeownership defines success has been particularly instrumental. Despite the constant societal pressure, your articles consistently serve as a reality check, steering me away from the perceived “goal of life” of home ownership.
My wife and I (celebrating our 5th year of marriage, 15 years together) find ourselves in a far more secure financial position than we could have achieved otherwise.

“As we embark on the journey of parenthood with a baby girl on the way, I find myself pondering the intricacies of RESPs. My understanding is that there is no annual contribution limit, only a maximum lifetime limit of $50,000. Considering the potential for 18+ years of tax-free growth for our child, I’m contemplating whether it makes sense to transfer funds from our unregistered accounts to the RESP. Specifically, I wonder if contributing the maximum amount would still allow us to claim the government grant annually or if I would not qualify. If this does forfeit the government top up, could this still be the right path forward to maximize this tax free vessel?”

Registered educational savings plans are one of Ottawa’s great gifts to families, allowing tax-free growth and compounding, withdrawals that are normally free of tax, the ability to transfer unused funds to an RRSP and – best of all – a load of cash in the form of education grants. This is probably the easiest 20% you will ever make.

Yup, the lifetime contribution limit is $50,000 and if you invest the whole enchilada and let to grow for 18 years, Junior will have $175,000, of which $125,000 is growth if you can achieve an average return of 7%. However the government grant will only flow to you in the first and second year after making the lump sum payment (the feds will pay $500 in the current year and the same for one make-up year).

Compare that with contributing an annual contribution of $2,500 (the max amount on which a grant is calculated) and adding in the five hundred free bucks – and doing so for 18 years. In this case your total allocation ($45,000) plus grants ($9,000) would become $113,000 at the end, of which $56,000 was growth.

So, A, if you’ve got an extra fifty grand, go for it. If she wants to be a TikTok influencer instead of a surgeon, it’s on you.

Ok, et maintenant, voici Olivier.

“I’m francophone, sorry for the spelling mistakes,” he said, in better English than most of the steerage section. “I’ve been reading your blog everyday since 2012. It’s been a wonderful source of information. I appreciate your writing style very much. My family’s finances would not be where they are without you. Thank you for all this free knowledge and entertainment.”

We have a decision to make : WFH allowed us to move to the countryside in 2021 without giving up my nice government job (130k/y). My wife (36 yo) and I (43 yo) sold our duplex in Montréal and bought a 150K modest house in cash in a wonderful mini town with a community. It’s big and does the job, but it’s ugly and my wife and I have little intimacy (kids 7 and 5). I invested the rest of the sell proceeds (250K) in a B&D portfolio. We save and invest about 1K every week. All our registered accounts are full. The portfolio is now over 600k.

I have been given the opportunity to purchase a 750K luxury house on the coast of the Saint-Laurent. A magnificent 2007 architect house with the most amazing view and everything we could want in a house. This house would cost over 2M in my old hood. The seller would lend us 375k at 4.3% for 5 years, which we could repay at any time without any penalty.

But taxes, electricity and heating would be our times higher. Our weekly savings would now be 200$ and we would have to gut our non registered accounts, and probably around 20k of our TFSA money. This house would also be very illiquid, because luxury houses are hard to sell in my hood. Wish you could give us your thoughts!

Well, my romantic, feminine side says living in greater intimacy with your love in a dreamy home on the river’s bank would be a life’s goal. But my hoary, manly financial flip side asks, what are you smoking, O?

You’ve got three dependents, a great savings rate, a paid-for house, a remote job with a DB pension and a growing little portfolio. Getting out of Montreal was good. Selling the duplex there allowed you to get liquid and trash debt. And now you want to walk into almost four hundred thousand in new debt while gutting your investments and slashing your cash flow all to have a few more rubs-and-giggles near the water in an asset you probably can’t sell?

Your highest obligation is to your young family. Why absorb risk and debt? What would happen if you lost your job, for example? Without income or savings, and a big expensive place to run, you’d be pooched. Affection would chill.

Stay put. Get a new bedroom door. Thick.

About the picture: “Gracie is a 2.5 years old chocolate lab,” writes Tim. “She would have loved the calm and reasonable tone of your blog, if only she could sit still long enough to read it…”

To be in touch or send a picture of yor beast, email to ‘[email protected]’.