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So apparently, we are now the single most viewed, most read, and most shared story in Canada.
CBC: How a 30-something couple got rich and retired by not joining home ownership ‘cult’
If you have a few spare hours and want to cry yourself to sleep, go check out the comments section on that page. It just goes to show that the vast majority of Canadians don’t know a damned thing about money. And why would they? It’s not taught in schools (but latin is, so yay?), the Finance industry is deliberately trying to screw you, and the Boomers think they’re financial geniuses just because they happened to catch a decades long housing boom that’s about to run out of gas for us Millennials.
We’re blowing up on Reddit, Twitter, and even the Great Bearded One featured us once again on GreaterFool. But regular readers on this site know that the methods we talk about aren’t particularly crazy: Don’t Buy an Overpriced House, Invest using Index ETFs, and Rebalance When Your Asset Allocation Gets Out of Whack. Simple right?
Apparently not. We are living in a country of financial illiterates, and that’s OK. That’s not their fault. Nobody can get blamed for not knowing something if nobody ever showed them what it was. But that excuse is now gone. The whole country knows the truth. And that truth is:
Everything you’ve been told you have to do was made up.
You don’t have to do anything. You don’t have to buy a house with a giant mortgage, you don’t have to have 2.5 kids and a white picket fence, and you sure as Hell don’t have to work until you’re too old to enjoy life.
You can choose. You can choose to build the life you want.
Let’s do it together.
Update (Aug 17, 2016): our inbox is exploding with a TON of emails and interview requests. Thanks so much for all your support! We’re going through the massive pile and working on responding to everyone so please be patient.
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Except that you two made an INSANE amount of money right out of university, we are talking above 1% levels. Not that you didn’t work hard or deserve it and frankly your jobs sounded awful.
It’s not possible for the average Canadian to do this. It is possible for them to follow the (tried and true) formula: work during university and don’t go into debt, don’t buy a house that is more than 3x your income (or don’t buy at all if that’s what you prefer), save at least 15% for retirement, work a job you love.
I’m sorry, I don’t generally respond to blogs, I know there is some belief that I’m trolling (I’m not), but this is what several of those comments have been saying. IMO you’re putting your fingers in your ears to the comments that your situation is unique. Instead you are parroting your methods and stating that anyone can do it instead of realizing that your income bracket was extremely rare. If this blog is targeted to those who make $175,000 right out of university then just say so. As it is your income would have allowed any frugal minded person to sock away hundreds of thousands.
You’re assuming that you don’t get to choose what you study in university – which is incorrect. One of the choices that (at least one of) our hosts claims to have made is to receive an education in a relatively lucrative field despite not enjoying it, iirc. Choosing an education that doesn’t pay is still a choice that you get to make.
Agree, and will add that even with a shit arts degree and with an annual income below 80,000 (as a couple), bring a budget Nazi WILL allow you to retire in your 30’s. It’s all about eliminating debt and keeping that savings rate as far above 50% as you can manage. That way you have breathing room to make smart purchases (taking advantage of credit card perks, buying quality, not getting sapped by interest payments, etc.) that will drive your cost of living down and your savings rate up in a virtuous cycle. These bloggers did have an incredible advantage in their very high incomes, but all that does is accelerate a very repeatable method.
Very true, Mike. It wasn’t easy getting through engineering but it was worth it. Now that I’m an author, I know that there’s little money in writing and I don’t regret my decision for a second. If you’re strategic about your career, you can get the big salary. The trade off is happiness but the stress will be worth it once you can stock away enough cash to become FI.
I agree that 175k salary is unrealistic for most Canadians. I think the idea is that there are choices one can make other than the conventional wisdom. There’s nothing wrong with wanting a house or work at your job until 65+, but everyone should be given the chance to financial literacy/independence and choose a different path for themselves. FC and W are extremely fortunate people; most people will not be able to attain FI in their 30s. There are many FIRE blogs out there – one of the most famous ones is Mr. Money Mustache’s forum, where people of all backgrounds and SES come together to help each other achieve FI. And what you do afterwards, well, that’s entirely up to you.
“There’s nothing wrong with wanting a house or work at your job until 65+, but everyone should be given the chance to financial literacy/independence and choose a different path for themselves.”
Exactly. We’re not trying to push people into following our path. We just want to them to know that alternatives exist.
Where are you getting $175,000 from? We’re engineers not doctors or lawyers. We were making 60K each after tax when we started out. Not $175,000. That’s not an insurmountable salary. Our salaries did increase over time as we got promoted and worked overtime, but many other people have that as well.
We also have lots of friends who made more than us, but because they weren’t taught about finances, everything they made went right back out. The purpose of this blog is to share what we learned about saving and investing so that people won’t make bad financial decisions and regret it 10 years down the road. In fact, many of our friends have already said they are changing their financial habits and have way more money in the bank now than they did a year ago. So that’s promising.
A higher salary does help you get to FI faster but it’s not the ONLY thing that matters. If you look at Sean Cooper, he had an analyst job paying him $40k/year, but he brought his salary up to $100k/year by working 2 other jobs. So becoming FI is possible with a lower salary. I’m not saying it’s going to be easy but definitely possible.
60k after tax is roughly 100k before tax. Times 2. There’s your 175k. Don’t act like anyone can do this without a privileged life to begin with and a clone beside you doing the same thing you are, effectively doubling your progress. You got into a prestigious program dominated by Asians at one of the only schools that allows you to pay your way through with paid internships then landed top 1% high paying jobs and got into the stock market during one of the greatest runs seen in decades. Be real about your circumstances, you did not start from the bottom any more than Forest Hill wheelchair Jimmy did.
60K equates to 100K before taxes?! Wow, I didn’t know we lived in Denmark.
You can use https://simpletax.ca/calculator to check your before and after tax incomes.
You live in Toronto so the Ontario tax rate applies. I’ll even assume 0$ in CPP, and any other deductions after tax (which would raise your income even further pre “tax”).
So to get $60K post-tax each, that’s: $76,243 pre-tax in Ontario. Mltiply that number by 2 and you end up with $152,486.
Of course, if you accumulated tuition credits, or max out your RRSP contribution (which sounds like you guys did) then that enables you to sock away even more money on a lower income.
Point being, the $175K estimate was a little high, but not completely off the mark. I think part of the reason you’re getting some many haters on the CBC is that attitude you have when responding to some comments at times. Which is fine by me, like the bearded one’s blog, your blog, your rules.
Just saying, there’s definitively a lot of envious people out there who love nothing more than berate those that are successful. At the same time, the tone in which your message is at times conveyed, doesn’t help your cause.
Other than that, keep up the good fight and I wish the two of you every success going forward!
THANK YOU! I’m glad someone actually did the math, rather than pull random numbers out of thin air. And yes we did max out our RRSPs, so our pre-tax income was LOWER than $152,486.
Regardless, while I do agree that our high salaries (which is actually pretty normal for engineering) helped a lot, it’s not inconceivable that early retirement is completely out of reach if you have a lower salary. It’s just going to be WAY harder (like Sean Cooper, who worked 3 jobs to bring his 40K salary up to 100K). If people want to bet on houses instead, or go about their lives without trying to become FI, who am I to judge them. Live your life however you want. I’m simply trying to present a different view from the “you have to buy a house or you’re a loser” angle.
And yes, I do agree with you that my “tone” won’t help me win any “Miss Congeniality” awards and that’s fine. I’d rather be myself and be hated than pretend to be someone else. Like the saying goes “be yourself because everyone else is taken.”
I definitely agree about “being yourself” and to be frank, I see nothing bad with your “tone”. In fact I love the way you write and that’s definitely part of what made reading your blog interesting.
The LAST thing we want is yet one more completely boring “politically correct” blog that tries to please everybody! It’s sad that *anything* significant you say on the Internet is going to attract a lot of haters but that’s how things are.
I think responding to them is just a complete loss of time: they will never change. People who are stressing over every little number, every little statistic, every little word are NOT trying to understand how what you are saying can be applied to THEY could win, too. They’d rather “invest” time and energy trying to prove you wrong. You think you will really make them change their mind by responding? Good luck.
Really, WHO CARES whether you earned 175000, 150000 or 100000$? As long as you earn more than you can live on, you can save money and the logic of the plan STILL WORKS, albeit slower. You don’t need to earn 100000$ to save money!!! I think a few people should make better use of their powerful brain and time to adapt the “message” to their own situation instead of focusing on useless stuff.
Please don’t change anything, because you are a really good writer in my and the success of your blog is certainly a small proof of that!
People actually like my crazy ramblings?! Huh. *wiggles in straitjacket* *smiles creepily*
I second what Jacques is saying below: “don’t change your tone”, especially not on your blog. I was just pointing out that when people are already envious, any extra minute amount of “spark” sets them over the edge that much quicker.
BTW, been following your story since Garth first mentioned you guys a few years back and been reading your blog since May, and I’m very much enjoying it 🙂
I think I’ll use the CBC video featured above as a contrarian’s point of view for my students (I give Financial Literacy workshops to graduate students in Montreal). Some seem incredulous when I show them ways to save as little as 5% more than they currently are on a student’s stipend, your 50%+ extreme savings reminds me of MMM’s approach but all bundled in a couple of blog posts with now a 3-minute CBC video.
Curious to see the students’ reactions.
As I said before, keep up fighting the good fight. Where of to next? Thailand again after Japan, or sticking around in Europe for a few more months?
Ouch, that is harsh… “Clone beside you” and “dominated by asians”. I’m the first one to be wary and over analyze this plan before jumping into it, but you my friend are an asshole. If they have a healthy relationship and plan their goals together, sounds like teamwork to me. And the Asian thing, if you want to go do binary just go do it Himmler and don’t bitch at people who have a plan.
On a more uplifting note, thanks for some great tips. I don’t go for everything, but the finance is great and I’m off to hack me some credit card points.
Thanks, Joel! And happy travel hacking!
It does seem that in your case, where your net work is about 90% saved earnings and 10% investment returns, that a higher salary IS pretty much the main thing that matters – monetarily thinking. Of course, you need the discipline to save those earnings and not squander them, so not trying to take away anything from your accomplishment in that regard. But this idea that anyone on an average wage can have a million by 30 is selling nonsense.
I said it’s doable but I never said it would be easy. If you look at Sean Cooper, he had a 40K salary as an analyst. He hustled his ass off with 2 other jobs and brought his salary up to 100K/year. That required a lot of sacrifice, so mostly people aren’t willing to do that, but he still proved it was possible.
And you don’t need a million to become FI. MMM had 600K when he left the work force. ERE did it on 500K.
You are right, an average person couldn’t do that. Because they aren’t willing to do the hard things like work hard in their job, save lots of their income, and learn about finances. So don’t be average. Work harder, save more, and invest it well.
Preach it, Eric! 🙂
I like Eric’s thinking, because I dislike the idea that everyone has to be “average” and do “average” things(buy a house). If everyone above average brings themselves down to average then average goes down as well and everyone becomes worse off. This is what makes command (communist) economies fail.
Reality check: 175k family revenue (which is a fake number you pulled out of your ass) is NOT 1% revenue. Not even close.
For a quick reference, 100k gross INDIVIDUAL revenue is a smidge under top-5%. That equates to 200k for a couple.
And before you try to deflect, let me tell you right now that a cool million in assets does not even put you in the top 20% of richest households of 2 or more, according to Mcleans. http://www.macleans.ca/economy/money-economy/are-you-in-the-middle-class/
Next time you get an itch to categorize people, at least do a little fact-checking before.
Making an INSANE amount of money is one thing….
…exercising the self-discipline not to squander it is something else.
And while it’s true most Canadians don’t earn $100K+/yr – it’s also true that most Canadians wouldn’t have much left over, even if they DID earn that much.
Consider this: take an “average” Canadian and quadruple his or her salary. Then think about what he or she would most likely do…
Think about it…with their salaries quadrupled, how many so-called “average” Canadians would invest the difference?
Or how many would do EXACTLY what Firecracker & Wanderer say NOT to do…ie) spend the extra money on bigger houses, fancier cars, nicer TVs, more luxurious vacations, etc, etc, etc…?
So, the lesson I got from these two isn’t about having money or not having money.
For me, it’s about asking myself who I need to be in order to go after what I want….
It’s about learning to do my own thinking;
it’s about learning to do my best with the resources I DO have…with my own “acres of diamonds” so to speak.
Thank you, Andrew! Couldn’t have said it better myself.
Congrats!
Love, love, love the last line:
“If you figure out money, life is incredibly easy. If you don’t, life is incredibly hard.”
Ah-men!
Sure as rain falls, the comment section will fill up with those outraged and claiming you are frauds. But, hopefully, a few will be able to open their minds to the possibilities.
Either way, meanwhile, you’ll be out enjoying the world and getting richer. 🙂
Ha ha, haters gonna hate. I’m sure you have your fair share as well. We should compare notes and maybe do a Jimmy Kimmel “FIRECracker and JK Collins read mean comments about themselves’ bit.
I see haters are a badge of honour. If you don’t have any haters, what you’re doing doesn’t matter.
Ha! If we can make it JL, rather than JK, Collins sign me up. 😉
Meanwhile, I’ve featured you here: http://jlcollinsnh.com/2016/08/16/what-the-naysayers-are-missing/
Bah. Stupid typos. I must have JK Rowling on the brain.
Thanks for the feature! Now I can claim that I’ve been featured on JL Collins (not JK :P) and my life has peaked 😉
They’re asking for an AMA on r/personalfinancecanada if you’re up for it:) Don’t know if you saw the thread discussing your Cbc story?
Oh didn’t know about that. Thanks for letting us know and we’ll go check it out!
I originally thought your posts on why everyone wants you to fail were a bit extreme, but after reading the comments on the CBC article I think they are spot on. Much easier if you guys fail, so that everyone that can’t be bothered to take control their own life can sit back and smirk. I guess it is easier for them to live with their own lack of desire to take control and responsibility for their own actions.
And how dare you spend 5 years in one of the most demanding university programs in the country, start out with incredibly average salaries, and work hard to eventually get a promotion. All the while living in a crappy apartment and with no car and doing that ‘dangerous’ investing thing.
Too bad for the critics that they haven’t realized that there really isn’t a way that you can fail now.
It’s much easier to tear other people down than to improve their own situation. I get it. Change is hard. But what the haters don’t know is that their negativity is exactly what drives me. And SO amusing poking fun at them. Bring on the hate!
Wow, so much hate in the CBC comments, and most of it irrational. Isn’t it disappointing people take this personally and can’t be objective?
Sensitive topic. Your story is the equivalent of telling people you’ve proved God doesn’t exist.
Best thing to do is stop crusading, just go on about your lives. Don’t care about the sheep, because the sheep don’t care about you.
Fwiw, there’s strength in numbers and having visible, vocal advocates out in the open is extremely positive. Much like our hosts have described, for us there’s a lot of peer and parental pressure to buy in to the mainstream narrative (buy the house, car, settle down, etc) and if you don’t you’re weird or stupid or something else. I personally appreciate the fact that our hosts have put themselves out there in an effort to normalize this perspective.
Thanks, Mike! It’s even harder to not buy a house when you have Asian parents; It’s just part of our culture. But it’s never makes sense to do something just because you’ve been TOLD to do it. Always consider the facts first.
Many people have emailed us, thanking us for showing them they are not alone in resisting the housing market. So that helps us continue to spread our message.
We all have to stick together and not bend to societal pressure, not matter how strong it is.
“Your story is the equivalent of telling people you’ve proved God doesn’t exist.”
I love how you put that. It’s SO true. I think we hit a nerve by attacking people’s beliefs that buying houses is ALWAYS a good bet. They see it as attacking their identities.
But in addition to the haters, we’ve been getting TONS of positive e-mails from people thanking us. A lot of them are actually fighting off the pressure to buy a house and they are grateful that they were not alone. The positives outweigh the negatives. It’s like what they say:”If you’re not pissing someone off, you probably aren’t doing anything important.”
Even the folks who don’t make a helluva lot should be shunning home ownership IMHO. The lesson from this blog can be applied to everyone, irregardless of salary.
Stay out of debt.
Rent.
Live frugally.
Don’t own a car.
Save your money.
Invest your money in a balanced portfolio.
Don’t live other people’s dreams, live your own dreams.
The lesson from this blog is not one of only the rich can do this. Everyone can do this.
Spot on , tkid! Spot on! Readers like you are the exact reason why we continue to write and spread our message.
Just want to say I’m very impressed with what you guys are doing. I live in Vancouver and while I’m not against home-ownership it just doesn’t make any sense from financial perspective at anythings close to these prices for me. The renting lifestyle suits me a lot better anyway and my wife is the same.
I would say the one good thing about owning is that for people who aren’t as sensible with money it essentially forces them to save. We’ve built up about a $250k portfolio over the past 5 years so must be doing something right. 32 years old now so we are on similar path to yours albeit a little bit slower due to us being a bit less frugal that you guys.
Keep it up and ignore the people trying to bring you down!
Good job, guys! That is quite the accomplishment in 5 years! You guys are well on your way to becoming FI and we are rooting for you to cross the finish line!
We found that once the portfolio crosses 6 figures, it encourages you to keep saving and investing. A snowball effect, if you will.
Congrats on all the publicity! That is huge! The question now is how congrats on all the publicity! That is huge! The question now is how are you going to take advantage?
Sam
Thanks, FS! We’re just happy that the message is spreading! Been getting lots of positive feedback that makes this all worthwhile!
I just read Garth’s blog and had to read the article on CBC. I scrolled through the comments and couldn’t help but get frustrated at the complete lack of financial knowledge of the comments there. The vast majority of comments were along the lines of:
– “Let’s see where they are in 10 years when their money runs out”
– “They’re not retired, it’s a temporary sabbatical, they will have to work again eventually”
– “There is no way they can afford to travel for a year on $40k unless staying in hostels and eating plain pasta every meal. Rather them than me.”
– “This is irresponsible, they clearly got lucky to double their $500,000 to $1 million and it could have easily gone the other way!”
Unfortunately I don’t have the time to go through each of their ignorant comments explaining why they’re all wrong. They could find the answer to everything they said on your blog.
I do think you are fighting a losing battle with this blog (as evidenced by the mainstream backlash you get from one news article), mainly because home ownership is so ingrained in society, but I admire you for it and I for one aim for something similar to what you have (We don’t earn anything near what you did so it will never happen in our 30’s).
Out of curiosity though, one comment did pique my interest. The comment said if your portfolio stays at $1 million it will be losing purchasing power every year, and in 20 or 30 years $1 million won’t buy much. It seems a legitimate concern, how do you respond to that?
The comments definitely show a lack of understanding when it comes to investing and finances. Unfortunately, there are SO many of them (1180), we don’t have time to respond.
On the plus side, we’re actually getting a TON of positive emails from people who are turning AWAY from the housing market and making better decisions. So I wouldn’t say it’s a losing battle. And we’re not trying to stop people from buying houses, we’re trying to get them to stop getting into massive amounts of debt.
To the comment that said the $1 million would be losing purchasing power, this person clearly doesn’t understand investing. What they said would be true if the money was in a savings account, paying 1.5% per year (which doesn’t beat 2% inflation) and getting taxed at the marginal rate. When you invest, equities are a natural hedge against inflation (when inflation goes up, companies charge more for their services/products, and that goes back to the shareholders), as are Real Return Bonds, and REITs. In fact, over a 25 year period, the S&P 500 has returned 1000% versus versus the housing market returning only 247%. So over the long term, stock markets beats the housing market.
In fact, after we left work, we found that our portfolio has actually gone UP (due to capital appreciation and dividend gains), so in 10 years time, since we can live off the dividends without touching the principal, not only will it NOT lose purchasing power, it will grow.
Haters gonna hate (as seen on the CBC comments). I agree with commenter above: I think the greatest thing about your blog is not the education toward financial independence, but rather the advice on self-determination in LIFE.
“It is not our abilities that show what we truly are. It is our choices.” (Dumbledore)
I’ve been talking generally about your concepts with my kids. The 16 yo especially is already in the mindset to live a small footprint with large experiences.
Well put. Living a life you choose instead one that’s been dictated by society makes all the difference. It’s very liberating to have NO regrets. Couldn’t say that while I was working and trying to follow the herd.
Good for your 16 year old! When I was 16, didn’t know my ass from a hole in the ground.
“Didn’t know my ass from a hole in the ground” – I almost choked on my water while reading this – lol.
Where have you been all my life?? I just came across your CBC news video and started to read your blog ASAP!
I have been renting for 12 years now and always been brainwashed by my Asian parents that “buying house = success”. Such BS. How about financial independence? To me, it’s clear that if I can obtain FI, that would equal my “success”. You two have only encouraged me to move forward to gaining my FI and realizing how much money I am throwing down the drain for “temporary happiness” (i.e: new shoes, bags, clothes, cars..holy shit..I spend about $544/month for car note + insurance..that’s $6528/year and that doesn’t even include gas + maintenance!
Please continue to keep doing what you guys are doing! You guys are pure inspiration to a financial goob like me and I look forward to more posts!
THANK YOU!
Glad you’re not falling for the “BS” and good for you for renting! We’ll be rooting for you on your way to becoming FI!
What type of car are you getting for $544/month? Gotta be fancy to look good when posting on social media no? How else can one get popular?!
I do wonder.. what is more impressive with folks today: have nice stuff to show off to their friends but renting or a house they bought and having less nice stuff. It’s not like one can always post pictures of their house on social media no?
I wrote a post on encouraging ladies to focus on a guy’s HOUSE instead of his car. But I donno whether that will fly. It’s fun to try and understand the psychology and the pressures people face today from society!
Sam
Firecracker and Wanderer, this website and your message is great encouragement and affirmation. My wife and I have been doing something similar for the last five years and we’re just few years behind where you are.
Over the past few years I’ve felt a lot of external pressure to buy into the housing market (I still catch myself looking longingly at places to buy and I have to tell myself to snap out of it). Even my accountant tried to convince me that I should buy. Obviously having the investments grow is affirmation in itself, but as BikeMike said above, thanks for normalizing the perspective. There’s a lot of great information on your site and I hope it helps a lot of newbs avoid some of the pitfalls that we made.
You are not alone in this. The pull to buy a house and the feeling of FOMO is STRONG! Back when we were looking for a house, I almost fell for one with a beautiful balcony and gorgeous back yard! Luckily the crazy bidding wars and “devil house” snapped me out of it.
Stay strong! Once you reach financial independence, you’ll be SO happy you have all the freedom in the world instead of a giant house prison.
Love the CBC feature! Great work!
Thanks!
Please don’t listen to the people who say give up the blog because the masses will never change or listen! I’ve enjoyed reading from before you guys blew up. And you’ve inspired me so much. You are making a difference! What it comes down to for me is exactly what you say in this posting. I don’t make the kind of money you guys made right out of school, and I still have a crap load of student debt. But I have a huge sense of freedom and relief knowing that I don’t *have* to do anything. That as long as I can save and invest wisely, momentum will build. I’m living life on my terms, as unpopular as that may be with the rest of my generation!!
Readers like you are why we write!
Keep up the positive attitude and continue to save and invest! You don’t need to have crazy salaries to have freedom. Especially if you’re young, you have time on your side and the momentum will build. Once we crossed 6 figures, we were super motivated to keep going. It gets faster and faster over time!
Your blog is really interesting. Congratulations. Will you ever post your portfolio? I would be interested in seeing which funds you are invested in and how you rebalance. I am not a computer engineer. I work in a fairly low-paid field (as a writer ironically.) But I work hard, am good at what I do and enjoy it. I accept that it is a low-paid profession. I also agree with not buying real estate and believe there are other ways to spend/save/invest my money. I live frugally and save as much as I can and am also focusing on index investing with annual rebalancing.
(Seems the most simple method for long-term investing.) It just means that I can’t save as much as you do because I don’t earn as much income as you did. So I’ll have to work longer to feel financially independent. But I feel the same strategies can apply regardless of the size of my portfolio.
Hello, fellow writer! Once we got published, we realized how hard it was to make it in the writing industry. It doesn’t pay well but hey, at least it feeds your soul 🙂
It looks like you’re doing great already! You understand investing and you like what you do. And by living frugally and not getting into massive amounts of debt, you have way more freedom than many other people we know, who makes 6 figures but still feel poor.
Oh and to answer your question about our portfolio: since we’re not licensed financial advisors, we can’t talk about individual equities (or risk being sued), but we can tell you how we’re invested in broad strokes. Basically we have a 60/40 portfolio (60 equities, 40 fixed income) that consists of government bonds, corporate bonds, preferred shares, REITs, high-yield bonds, and CAD/US/internal equities (we use low cost ETFs and indexing).
Hey FIRECracker
Thanks so much for the reply and for some guidance on your portfolio allocations.
Just to clarify: You are not required to be a licensed financial advisor in order to talk about your own personal portfolio, or even to talk about stocks and/or funds you like in general.
You are required to be licensed to *sell* these securities to people. In other words, you can talk about different investments and say why you like or don’t like them and how much money you have made or lost on them. You just can’t take my money and purchase these same investments on my behalf.
If you want to clarify this, you can contact IIROC, the investment industry association.
That said, you’re completely within your right to *not* share your portfolio, of course. I mean, it’s personal information and if you don’t want to share it that’s totally understandable. It’s just not a law, as I understand it.
I ask because I like looking for new ideas. Right now I have bulk of my investments in a mix of Vanguard ETFs – VAB, VXC and VCN (one of the Canadian Couch Potato model portfolios) and I have a couple of other individual stocks that I liked for various reasons, including 1 REIT and a US-based ETF. But I’m not a fan of stock-picking for myself in general.
Thanks again for the reply. I got a late start to savings in part because I did a ton of travelling and living abroad in my 20s, so I completely admire what you’re doing. I’d pick life experiences over home equity any day! (Also congrats on the children’s book. That’s amazing.)
I’m betting you’ll find a new appreciation for bloggers who not only know how to write, but also monetize the more you discover a potentially new thing to do in retirement!
Re-read the post linked on how much can you really make online blogging. You’ll see the potential!
Sam
Yes, your hustle knows no bounds 🙂 Do you ever sleep? Are you even human?
So negativity doesn’t counter the fact that one could do better than they are doing.
Simply save, don’t buy real estate that is stupid over-valued.
Not everyone might get a mil at that age, but even if they get a few hun’ large by 40 they are ahead of the curve.
Some folks need to get over themselves and the nasty Boomer era, I am a boomer….
I always found myself up against the theme of needing to get the job done and they would have let me die in my cubicle and said, “oh that’s a shame….”
Remember: “Human Beings were not meant to sit in cubicles staring at computer terminals all day….” it’ll kill ya and someone gets to enjoy the good life at your expense….
My chart was a slow climb for years…. Then after selling the RE when we thought the market was at a bit of a peak in 2005, the chart just started streaming upwards….
Averaging way over 9% over the years and no mortgage when we sold and none now…
Not as balanced as it probably should be but in a mix of reasonable solid investments and a occasionally taking some funds to trade and learn that there are ways to gain on hype and never think you can make more, just enjoy when you make a gain and you can enjoy what you make instead of being buried under some mad man’s demands…
Isn’t life so delightful….
Babble, babble babble…. You guys really have great spirit and I appreciate the whole concept and for promoting going against the old school grain…
You rock! I wish all Boomers could be like you.
“What I found that realtors probably are manipulating in the back…you actually end up buying the house that the realtor wants – irrespective what you want.”
This is one of the things that turned us off housing too. Seems like realtors were deliberately holding off offers to generate bidding wars. And the fact that a lot of speculators are in the market, renting at a lose to go after capital appreciation, makes me think Toronto housing market is gambling.
And yes, I get that people are pretty scared of the stock market after 2008. But they have to remember housing lost big time in 2008 too. You have to understand what you’re getting into and plan for the worse. That’s why we like to share what we learned about investing so people are as informed as possible. I hate watching the real-estate and finance industry screw people over. It makes my blood boil.
This is the biggie. Getting a big mortgage forces you to work. You have less options. So hopefully everybody can find something they like to do and an area they like to live in for the next 10 years BEFORE taking the plunge!
Yup, some people like being stuck in one place and doing the same thing over and over. I’m not one of those people. But hey, if they like to have less options and be forced to work, more power to them!
The positive is that getting a big mortgage forces you to stay financially disciplined and work. I remember being 25 (in 2002) and feeling kind of bored/lost/burned out. I got lucky w/ a stock investment during the 2000 dot com bubble and had about $450,000 in cash/investments.
I strongly thought about moving back to Honolulu and just chilling for the rest of my life. I’d work on my grandfather’s farm. But buying property in 2003 reinvigorated me b/c I had to work and save or else I’d be screwed. I’m glad I worked another 9 years until 2012 and then called it quits w/ an engineered severance.
It was an exhilarating ride from 1999 – 2012 in the finance industry. Now it’s been a fun ride in the blogging world since 2009.
The property that was purchased in 2003 was paid off in 2015, and cash flows about $2,900 a month after all expenses.
Totally agree! Who doesn’t like to be “forced” into things. 😛
Awesome blog! Very inspirational. My wife are trying to do the same thing as you. Reading this just gives us more inspiration to leave the rat race ASAP.
Thanks! Rooting for your escape!
Im here to support your story and your message.
The people here from the article just don’t understand the underlying message. Work hard and live below your means avoiding excessive consumerism. Don’t buy into the message society force feeds you and stick to your path. Invest heavily in index funds and save like a wild man until you can live off a safe 4% SWR. It is so easy yet fear drives others to show their ignorance and instead attack you.
Anyhow, just a swing by to say well done and congrats on your determination to a goal.
Thanks! You summarized our message perfectly! Couldn’t have said it better myself 🙂
You’re talking about real estate as if it’s not an investment too. You make it sound like your only option was to take $500,000 and put in one house whereas in reality, you could’ve put that towards AT LEAST 6 rental properties which would’ve paid you guys SIGNIFICANTLY more than what it says you guys have made.
In the article, it said that you guys saved $500,000 and then had a million by 2014 if I’m not mistaken? In another, it said you guys were putting more savings down until 2014? So either you made $500,000 in those investments by 2014 or you made less, like $200,000?
In real estate, you would’ve made over a million in that same timeframe, i.e. more than $200,000-$500,000. PLUS you would’ve built equity and been able to refinance and buy additional properties so …
I don’t really comment on these types of articles but I just found it silly to see real estate described as a cult or all made up and stuff. I am 25 for the record and I have made about half a million in real estate with about $50,000 saved up just to give you an idea.
I’ve owned two properties and had tenants.
– Having $500,000 as equity to leverage six properties provides a large potential upside. But the flip side of that there is a huge amount of risk.
– How much leverage would be required to buy six properties? Let’s say ~$60K per property down payment plus ~$20K for transfer tax etc. ($80K per property x 6 = $480K) How much of a mortgage would one need to take on per property to get something a tenant wants to live in? Hypothetically, what is that a $400K mortgage per property? That’s a 13% equity stake. All of the equity one has worked for could be gone in a 20% real estate market correction and you’d be underwater until who knows when. The bank gets their money first. Good luck.
– Leveraging up that much is huge level of risk without diversification and with that many properties the risk for each are like bowling pins.
– If the real estate market slows or stalls can you sell or are you stuck? Look at historic trends. Sometimes prices stay flat for years. Markets seldom travel in a straight upward trajectory.
– What happens if there is a major repair or problem with one (or more) of the properties? Would there be enough capital/ cash flow to cover the expenses?
What happens if interest rates rise?
– Renting out six properties can also be *a lot of work*, especially if one puts one’s own sweat equity into the equation.
Firecracker and Wander are retired. They don’t need a second job (like managing properties) and can travel anywhere in the world and their equity is growing and paying them with less work, no debt, and incomparably less risk.
I’m basing this off how the market has trended since 2010 to now and what many investors I know have done. Also, these are just avg numbers. There are more strategic ways to invest to mitigate for the risk of major repairs (eg. new builds versus 50 yr old homes) and actually bring in higher numbers than what I quoted.
Further, if need be, agents/property mgmt companies could take care of the ‘work’ and either way the returns would still have been SIGNIFICANTLY higher.
Even if you look at market corrections in the past, it doesn’t take long for the market to get back up and running too.
It’s great that they’re retired now, all I’m saying is that it doesn’t make sense to say investing in real estate is cultish, made up stuff, etc. when it actually would have made them so much more to retire and reinvest with.
People have profited from property investing, sure. But that requires knowledge and market timing. And in expensive places like Toronto and Vancouver, you have to take a TON of risk because of the costs of getting into the market.
And no, I don’t believe we would’ve made more money by buying into the housing market. It would’ve cost us a ton of money to pay property taxes, maintenance, insurance, etc. Just the property taxes would’ve been more than our $800/month rent. And it would’ve introduced all sorts of ‘lifestyle inflation” costs, like buying furniture and other crap to fill the house, buying a car to commute, etc.
If people want to buy a house at all costs, and bet that the market will go up higher, go ahead. But they should know about the risks. Buying just because others are constantly telling them “renting is throwing your money away” and “buy now or buy never” is wrong. Crunch the numbers first.
The thing with “Superstar Cities” is that they’ve ALWAYS felt expensive. SF and NYC were expensive back in 2000 and 2003 when I was thinking about buying. They feel the same super expensive now! Why? There’s a massive labor market that pays high wages. The average tech worker makes $225,000 here in the SF Bay Area. If two tech workers shack up, that’s $450,000. They can easily buy a $1.5M house with that type of income.
Expensive cities tend to stay expensive and get more expensive. It’s like a Ferrari versus a Ford.
“The average tech worker makes $225,000 here in the SF Bay Area”
Average salaries in Vancouver and Toronto: 75K/family.
It’s funny that people in Toronto and Vancouver think they are in SF or NY 🙂
What’s happening is 1 + 1 + Bank of Mom & Dad. Just have to peel behind the covers a little. B of M&D is ubiquitous. After all, they are the richest generation b/c stocks and real estate are at record highs.
You’re forgetting the unprecedented access to credit as well. 🙂
Also, parents leveraging up to give their kids a down payment is a huge risk. I can’t wrap my head around the fact that many people seem to think that diversifying and mitigating risk means buying multiple copies of the same asset (ie: multiple houses).
A fun anecdote – when we were looking for our most recent rental, we talked to one woman who appeared to be at most 30 years old and was in the process of closing on a $2.5M house (house plus 2 small basement units). It was clear from the get go that the entire exercise was being run by mom & dad (and probably financed by them as well).
I’m sure, BoM&D helps, but that’s not all there is. If it were, our debt-to-income ratio wouldn’t be 165%. Even with help from M&D, that would be for the down payment, not buying the house with cash. In which case, the kid still needs to pay for the ongoing mortgage. If it were 100% BoM&D driving up the housing market, Canadians wouldn’t be in so much debt.
There are ways to mitigate some risks sure. And one of (or more) of those may catch up with you. We had a tenant in a furnished basement suite with good references; he was an athlete, and he had a good government job. He was great for a year but then he tried to commit suicide. We were lucky and we were able to save his life but he wasn’t happy about, moved out and in the end he left us with a lot of expenses. We’d just finished renovating.
The point is that one cannot completely mitigate risks and one should plan for them accordingly as if they *are* going to happen. Did anyone see the 15% tax on foreign home buyers coming? It comes at precisely the worst time for the market when sales volume has been going down and prices are still going up.
Sure the market has trended from 2010 to now upwards but will it last? Does the strategy work for other historical periods and going forward?
The past five years happens to have been one the best bull markets in Canadian real estate history. It’s fine to say in retrospect the past five odd years have been great but what are the next five years going to be like? There is still the issue of having 9:1 leverage. Does this strategy work going forward?
You said ‘Even if you look at market corrections in the past, it doesn’t take long for the market to get back up and running too.’ That hasn’t always been true. And probably won’t always be true in the future. Which is kind of the point. One does know the future so how does one plan for it?
Yes it is possible to do well in the real estate market, but one needs to take on a lot more risk to get to the same place, *especially* now in this market, which is the point.
I bought a place in 2002 in Maple Ridge. I sold the winter of 2007 to work overseas just before the 2008 crash. I made over 100% in profit. I felt great at the time, but man did I ever dodge a bullet. My place was the last townhouse to sell for two years. In 2012 an identical unit two doors down in the same complex sold for 12% less than what I sold for in 2007. Prices were stagnant for years before I bought it and dropped after I sold. Prices have just gone higher in the last couple of years. We’re talking about eight years without reaching the 2007 price again. I happened to have lucked into a bull housing market just like the one we’re in now in Vancouver. Had I bought just about any time before or after, I wouldn’t have done anywhere near as well and I may have lost money.
Even with leverage, for me at least today’s housing market is not a compelling story over the long term. Have a look at this chart: http://imgur.com/a/zrLyh
The background to the chart: there was a story on the Globe and Mail (http://goo.gl/TEu1bO) of a couple that bought a house in Point Grey for $141K in 1983. They sold sometime earlier in 2016 for $2.4 MM. I made the chart because I was curious what would have happened if they had taken their $120K down payment (which they made from a previous property sale) and put it in an RRSP investing in the Dow Jones, and reinvested the dividends.
First caveat, I made the chart. I grabbed the 33 years of data for the Dow Jones from here (https://goo.gl/iSv1YJ), one year at a time. I can’t remember exactly where I grabbed the Vancouver data from but it’s readily available on the web. Second caveat, the Vancouver data is based on the annual returns in the Greater Vancouver Regional District (GVRD) not Point Grey because I couldn’t find the data online for that neighbourhood. So the end figure for the gain on real estate ($1.8 MM) is for detached houses in the GVRD in general, not Point Grey. So just imagine instead my chart refers to a hypothetical couple somewhere else in the GVRD, not Point Grey specifically.
Third caveat, it’s a greatly simplified analysis because it doesn’t taken on all the costs of either owning or renting, only the capital appreciation. Keep in mind also that at the time property prices were something like five times average annual income. That number is now multiples higher.
With the stock market investment, we’re talking no re-balancing, no bonds to mitigate volatility, etc., just one lump sum transaction (going that far back, perhaps a once yearly fee for reinvesting the dividends – nowadays that service is free for most ETFs). Just put the $120K in the stock market and leave it, never adding a single penny to it, that’s it. If, in 2016 if they would have left the money in the market they could have sold $2.4 MM of their stock holdings and bought the same house in cash and the dividends from the remaining $1.8 MM would have paid their monthly housing expenses for the rest of their lives and made an additional 10% in unrealized capital gains since.
Yes there were greater % swings in the stock market. But not once does the Vancouver real estate market touch it as an investment; they would have always had more money. Even during the depths of the Great Recession, investing in the stock market would have netted the couple 100% more gains than GVRD real estate. And they could have spent the rest of their money like drunken sailors and they would have ended up the same. Of course one can slice and dice the numbers putting in various scenarios for renting vs own, renting out the purchased property, different investment vehicles, etc. It can make your head spin.
As I said, yes you can make money in real estate. I have. But you have to be creative and take on proportionally more risk. And that’s the point. But again what it comes down to for me is the risk especially give the housing price to average income ratio. Concentrating most of one’s equity into a single investment vehicle and using a large amount of leverage to do it is dangerous, especially now after a years of one of the best bull housing markets the city has ever seen. No one can predict the future. Saying real estate ‘actually would have made them so much more to retire and reinvest with’ is hind sight but it’s fraught with unnecessary risk going forward.
I can’t agree more. Of course I understand there ARE good reasons to desire a house even ignoring its investment values, but one has to be realistic too. For example in the current Canadian real estate market, what can one really expect? Seriously? Investment knowledge is good, but some common sense can help in life too…
I mean nobody can predict the future or the moment of a crash, stocks or houses or anything, but I for sure will always prefer to buy an historical dip than an historical high! Now after high, high, high and higher (in the Canadian market), I don’t think I need a crystal ball to know where it’s going: sooner or later.
That said, I think the worse of everything about owning a house is the fact that it’s so very much illiquid. In *ANY* market I can sell my shares at the market price and get my money right now, but a house? Good luck. Even in the crazy seller’s market of Vancouver for example, we’re talking of weeks or months before you actually see your money, and a transaction that for sure is more complex and costly than the 10$ my investment broker charges me for selling my stocks!
Don’t get me wrong: I owned 3 houses and happily raised my family in them. But the “environment” for owning a house was just so much better than it is now! Refusing to listen to real estate agents, I always found really good deals for myself. Now not only the price is bad for investment, but also the laws. Now in Canada, owning a house only means you can PAY for it, but the city laws now have more power over everything about “your” house than you have. I know it varies across the country but generally speaking home owners only lost “rights” and gained obligations. The time to put your garbage to the street, the day of the week to cut your grass, the impossibility of cutting a tree that bothers you on “your” land, even they will decide what KIND of tree you will plant, or whether they will allow your new condo to have a balcony. And on and on. You’re getting more “legalese” everywhere.
Anyway my point is, “the world” is generally speaking getting less and less stable and so in an environment like that, I will definitely not chain myself to something as costly and inflexible as a house. I much prefer flexibility and being ready to move anywhere in the world where life is good 🙂 I love my freedom!!
Well said, Andre! Very thorough analysis and I love that this is all coming from someone with experience in owning real-estate. Thank you for sharing your thoughts.
Being 25, you don’t remember the nineties, and that’s not your fault. Let me tell you how the conditions that let you make it big are exceptional.
In the nineties, landlords saw their properties lose value year after year, and the banks would of course not lend you money on your underwater properties to buy more. To make the situation worse, the rental market was so bad that free months and microwave ovens were commonly given for signing the rental contract.
Being a landlord is a good business, but is certainly not an automatic wealth making investment. You got in during a good decade, but that’s just like buying stocks during a rally. Also: I hope you planned an exit strategy or enough margin for lean years, because levering up can also mean losing your shirt because of temporary cashflow problems.
Just wanted to say thank you for sharing this info! I heard about you guys via the CBC article, and have been reading bits of your blog every day! I’m 24 and just finished undergrad with $22K in debts. I’m currently working part time while job hunting for work in my field. I love this method and really want to make it work for myself! Any tips for beginner investors who have a small amount of savings?
I have to start paying back OSAP in September. My min monthly payment would be $350. I have the ability to pay back about $1K per month with my current job. However, I’m wondering if it would make sense to only pay the minimum payment for he first couple of months, while putting all the rest of my income in investments. I guess it would depend if the return on my investments would outweigh the interest I’m paying on dragging out my loans. I just hate the idea of all my income going toward paying my loans, instead of a savings account.
I have about $3K saved up to invest or put straight into OSAP.
Any advice?
Thanks so much!
“I guess it would depend if the return on my investments would outweigh the interest I’m paying on dragging out my loans”
Correct!
If it were me, I’d pay off the loans as quickly as possible. I hate debt with the heat of a thousand suns.
I hate debt. I’d put aside a couple of grand for an emergency fund, then work like heck to pay off the debt.
It’s really funny how so many people can get seriously pissed at what you’ve accomplished. I’m pissed too, mind you, because you’ve done it (retiring) seriously faster than me!!
I’m 55 and I’m not retired yet! In fact a few years back, I seriously thought I would “work until I die” because I had no choice financially. Can you believe that?
Forward a few years and here I am, currently in Spain, writing to you during my vacation YEAR of travelling and “testing” what my upcoming retirement could look like.
What changed between these two visions of my future??? Winning the lottery? No. An inheritance from an old aunt? Nope. A bank robbery? No, no, no.
Simply put, I started applying strategies like the ones you talk about as well as others. Simple living, saving money, investing… It just works! Why wouldn’t it?? Guess what: if you eat more calories than you spend, you might get fat! If you save more money than you spend, you might get richer! Makes sense?
Of course it doesn’t mean that your exact plan works for everybody. Why should it? MY plan was a bit different because my conditions are different, my abilities different, my preferences different, my goals different… So I think it’s normal I should have to use my brain and create a plan that works “for me”.
Is there some luck involved in all this? Sure. You had some luck, wouldn’t you agree? I had, too. Different luck. I can imagine some people could be really unlucky and it would make things a bit more difficult for them. But does that discredit your whole story? I don’t think so. In fact I think one often gets luckier as one works for it 😉
Although I am well underway with my plan, I just crave reading about the stories of people like you, learning new ideas and learning that I’m not the only one believing in these “non-standard” ways of approaching life.
Thanks a lot for sharing it.
That said, I wonder where this “movement” will end up in the future as more and more people start applying these things successfully, because you know what? I just don’t believe for a minute that our “friendly, people-centered” governments (sarcasm) will let it happen that a significant portion of the population no longer would have to work at age 30, 40, 50… So hopefully people continue to ignore your strategies and we can both enjoy our good life 😉
“So hopefully people continue to ignore your strategies and we can both enjoy our good life”
Damn it! Now that you put it that way, I should’ve kept it a secret. Grrr. 😛
Hello from the United States!
I absolutely agree with you guys. The conventional advice that are passed down from our parents are mostly not working for Millennials especially buying real estate. A house is just a place to live in. I can do the same by renting.
Thanks, Michael! Nice to hear from our American neighbours 🙂
Saw your story from Jim Collin’s blog, congrats on reaching FI so young!!
I second the looking for a good college degree that you know will earn you a decent salary Make your passion a hobby rather than a career. You can always go full time into the hobby once you’re FI.
To the naysayers that complain that you got lucky, or have high paying jobs, or were fortunate enough to have engineering degrees…. There’s well paying jobs out there that don’t need a degree, they just aren’t the most popular or fun.
As an example, me and my then boyfriend were earning a pretty below average salary in software quality assurance (aka monkey testers) about 10 years ago. I recognised there was a higher salary in software development and worked part time on a distance course covering programming subjects (not a degree). Experience from that and being an outstanding worker at my job, got me a junior development role in the team. I had a few salary bumps from that, but nothing crazy like your levels of salary.
We then decided to move overseas to a country that was more expensive, but also paid a lot better. We rent a house in a city where houses are averaging $1 million+. I wasn’t happy with how slowly my income was increasing, and after some research realised QA makes a ton more money than development in this country. Applied for a QA job in a better company, and again have almost double my salary in a few years. QA is not a glamorous job but I enjoy it well enough, and there’s a market shortage in my area for the skill. Husband is also still in QA and making a decent salary. With my hard work at the company I’ve built up a good reputation, and have moved into a Product Management role that I’ll be able to build my career up further in.
My point is, moving countries was not easy. Studying part time, renting when everyone around you is buying, working extra hours and putting in more effort than anyone else at your job…. is not easy. Learning about the stock market and how to invest your money… well that was pretty easy 😉 But I really didn’t want to do it at first, I was dragged kicking and screaming into it by my awesome Dad, and I found it boring at first. But trucking away at it over the years I’ve built up a library of awesome blogs and advice that I turn to.
We were lucky, I acknowledge that 100%. We were damn lucky to be born to good parents that taught us about money, that could give us a good education, we were born in a safe country where our basic needs were met. We decided against kids because we don’t like them, and we haven’t had any “accidents”. We both have good physical and mostly good mental health 😉 Super, super lucky. The major difference between us and our colleagues is we didn’t buy into the house thing, and we save most of our paycheck instead of blowing it away.
Linda, you’re awesome! Would love to find out more about how you increased your salary and use the story in a future post. Would you be open to it?
Yes definitely! Have you got my email from my comment?
Else I’ll contact you and send my details 🙂 Thanks for asking 🙂
Sent! Thanks, Linda!
Great Blog My name is Rodney I live in Michigan and my wife lives in Brampton we have been commuting back and fourth for the last two years since we got married. My wife has a 500,000 k home the cost of living is somewhat high out in Ontario in the GTA. I own my own home free in clear in the states. I make about 90 k a year and save half of my income have about 60k in savings my wife she does a little better then I but I think what she can save monthly is a bit less. We currently reside in Windsor at the moment as my wife is teleworking for her job until the end of the year. My question for you is this ?Do you think it would be better to relocate to Toronto or wait for a few years and have my American money work for itself or have my wife relocate to Windsor and build from together when the housing market being a little less. Trump hasn’t scared us all away yet moving to Canada lol
Great blog and congratulations on your success. As a mid-40’s FI professional, who chooses to work because I find it enjoyable, this is very much do-able. I have posted articles (some featured on popular sites) that hopefully help your readers progress towards FI. Once the intent (to achieve FI) is there, the content (how to do it) can easily be learned. To me, achieving FI was mandatory and RE is optional. I am stunned by so much negativity out there by mainstream commentators about your story. For what it’s worth, know that this humble blogger supports you fully and wishes more people learn from what you have done, rather than dissecting the irrelevant details that detract from the main message.
Thank you! And you totally get it. It’s not about retiring early, it’s about having choices. You can become FI and still continue to work. It just takes away the stress.
Congrats on becoming FI!
Hi! Would you give me your ideas on how to proceed when your spouse is NOT on board? We manage our finances separately also.
I’m very interested in FI, but need to wrangle it individually, without him.