I’m the personal finance columnist for The Globe and Mail newspaper, and you can ask me anything about money. In fact, you should ask me. I can’t believe how passive people are when it comes to demanding answers about what’s happening with their bank accounts, mortgages, investments and more.

My favourite topics right now are the crazy real estate markets in some Canadian cities, the troubles that millennials are having find jobs and building careers, and how people are going to afford retirement if they live to 105. Personal finance writing used to be mainly about nagging people to spend less and save more, and that’s still part of what I do. But I’m also interested in helping people understand what’s happening in the economy and how their personal finances are affected.

My background is covering business stories in Toronto, and then writing about economics and government finances in Ottawa, where I live now. I’ve seen three bull markets for stocks, a couple of recessions and stock market crashes, one global financial crisis, the incredible rise of the housing market, soaring personal debt loads and an ever-present worry that Canadians aren’t saving enough for retirement. I have also written or co-written five books, the most recent of which is called How Not to Move Back in With Your Parents: The Young Person's Complete Guide to Financial Empowerment.


Comments: 489 • Responses: 70  • Date: 

farlinax140 karma

Hi Rob, long time Globe reader first time poster.

I can't stress how crazy the millenial job and real estate market is in Vancouver - I earn 0.5%er income, and nearly all my professional friends under 30 (not those 35+ who benefitted from getting into the market) are living in parents' basements or in situations that our US colleagues simply laugh at.

Given that Asian capital flight isn't exactly going to slow down anytime soon, all levels of politicians' voters will never vote against decreasing house prices (thereby keeping existing policies and regulations mostly in place - despite cosmetic "studies") my question is: if we can't beat them in Vancouver, should we just join them? It doesn't seem like this craziness is ending anytime soon, as no major macro conditions in Canada will really rock the boat in Vancouver.

Should we just leave and seek affordable lifestyles elsewhere? This seems to be an increasingly attractive option.

rcarrick277 karma

Should we just leave and seek affordable lifestyles elsewhere? Totally. Opt out of a crazy market that grinds up millenials to feed home values for others. Even Toronto is more affordable. Good buys in Calgary. Bargain prices down East.

CiscoLearn69 karma

Hi Rob,

I'm a moderator over @ /r/personalfinancecanada. Recently we've held some AMAs by various Canadian fintech companies,

and we have plans for more, SimpleTax is actually doing an AMA this coming Wednesday.

What is your take on the current financial tech industry in Canada, any companies that really interest you, or anything that you think is missing and an entrepreneurial minded person could step in to provide?

rcarrick42 karma

Big fan of the robo-adviser biz, and I have to give WealthSimple credit for being the most visible player. I was walking down Dundas St. in Chinatown in Toronto on Saturday and saw a WealthSimple poster on a wall. A goal for the next while is to wrap my head around online borrowing solutions like Borrowell and Mogo. I'm a bit leery, but there's obviously demand for the kinds of loans they offer. As for new opportunities, what about a combined banking/saving/investment platform that would allow me to sweep extra cash in my chequing account into a high-rate savings account or my investment account?

borkborkbr0k39 karma

I like your articles because they're a refreshing change from the usual real estate coverage in the mainstream media: "REAL ESTATE ALWAYS GOES UP! BUY NOW OR BE PRICED OUT FOREVER!"

I've noticed there's a lot of shared views between your articles and Garth Turner's blog. Are you a Greater Fool reader?

rcarrick29 karma

Since the beginning. I had Garth in to be a video guest back in 2010 and we talked about how weird it was to have a hot real estate market in a weak economy. Garth has been making good points about the vulnerability of house, but market momentum remains strong in some cities.

bigfloppydongs33 karma

Do you think it's a good idea to buy a pre-construction condo in a city like Toronto, so give yourself a few years' head-start on preparing for the switch from rental to home ownership?

rcarrick83 karma

Short answer: No. Would rather see you save for a few years and buy an existing condo. Pre-construction ties you to a property that might not suit you in a few years. If you see a condo as a temporary, transitional thing before buying a house, consider jumping right to the house, even if you have to save longer. Even if condo prices rise, the cost of selling in a few years to buy a house would cost you bigtime.

madeamashup65 karma

Speaking as someone who works in condo construction, if you purchase a home that doesn't exist yet you should be prepared for surprises, delays, and disappointments. Weigh that carefully against the pre-construction discount.

rcarrick21 karma

Thanks for that.

cheapcanadian25 karma

Hey Rob!

I used to blog as Mr. Cheap (with Mike Holman) on Four Pillars (aka Money Smarts Blog) back in the day. The Canadian personal finance blog landscape has changed dramatically in the last few years, for example the Canadian Capitalist has pretty well shut down.

What is your current view of Canadian PF bloggers and how do you think Canadian PF blogs have changed in recent years?

rcarrick21 karma

Good to hear from you, MC. I am a big fan of Canadian PF blogging right now, in part because I think it 's improving in terms of the journalism being applied. I still like the personal narrative format, but I really value posts where bloggers make calls, speak to people and dig into details. I've seen a couple of posts on robo-advisers lately that are first rate because of the research that was done. Canadian Capitalist was a pioneer, and he's missed. I notice some of the other originals are also fading from the scene. Overall, though, I think the quality of blogging is high and I encourage people to add PF blogs to their reading on personal finance topics.

FiletMcShay11 karma

Any blogs in particular you recommend?

rcarrick28 karma

Two that recently posted some sharp stuff are http://www.moneyaftergraduation.com/ and http://boomerandecho.com/

KingOfTheDipshits19 karma

Hi Rob. Big fan of your work and a regular reader.

My wife and I (36 & 38) are wrestling with the home ownership question and coming up uncertain. We have an annual household income of about 225k, we live in Downtown Toronto, we're currently renting, and our total housing costs (rent+utilities) are less than 3k/month for a detached home.

We eventually want to own, but by my math, anything approaching the equivalent of where we live now will put us in a position of about $5k/month in mortgage, plus taxes, utilities, insurance and everything else. It would roughly double our housing costs to own rather than rent. We've got savings and investments and we're socking away lots of money - given especially that our housing costs are half of what most of our friends with mortgages face.

We face this conundrum: we eventually want to own a house. Houses increase in value by 10-15% per year for what now seems like forever. Nothing will put us in a position to earn that kind of return on our investment portfolio.

What do we do? When do we buy? Do we ever buy?

Thanks again for all your advice!

rcarrick27 karma

Keep saving and building your careers until you can buy a house and carry the cost of ownership while still saving for retirement. My Real Life Ratio spreadsheet may help: http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/can-you-really-afford-that-mortgage-know-your-real-life-ratio/article17333137/

rbevans17 karma

My wife is looking to go to grad school and we're looking at undertaking student loans. What is your advice on what to look for in student loans in the United States? What is the best way to pay for these loans and is it worth paying extra towards them to pay them off early?

rcarrick37 karma

I write for a Canadian audience, and that means much a vastly different student loan environment than in the U.S. So I'll give you some broad thoughts...First off, cut your borrowing to the barest of bare minimum. Consider studying part time and working to minimize borrowing. Taking an extra year or two to get a degree means nothing for young people who can expect to live 90+ years. Totally, totally think it's worth paying extra to get loans done early. Clearing the decks opens up so many important avenues, like saving for retirement, a house down payment etc.

cloudloaddotcom15 karma

Hi Rob,

As someone in their late 20s who now has a chunk of disposable income to invest for the first time (and a long-term investment horizon) would you recommend speaking to a financial advisor to invest, or go the self-directed route by investing in index funds and ETFs? Seems at this point that index funds and ETFs can produce equal gains, and with less fees than a professionally managed fund.

Your thoughts?

rcarrick19 karma

Invest in ETFs yourself, or use a robo-adviser. Then, when you have financial planning issues (saving for a house, ensuring you're on a good track in retirement saving, covering your kids' university), see a financial planner or adviser. Just a thought.

Frajer12 karma

as someone with no familiarity with the stock market how do you suggest I get started?

rcarrick30 karma

Buy exchange-traded funds that track the S&P/TSX composite index (Canada) the S&P 500 (U.S.) and the MSCI EAFE Index (rest of the world). I'm updating my ETF Buyer's Guide right now and the latest installment with be published Saturday. To buy ETFs, you need to set up an account at an online broker. All banks are in this line of business.

rcarrick12 karma

Thanks, everyone. Great questions. I'm always reachable on Twitter at https://twitter.com/rcarrick or Facebook at https://www.facebook.com/robcarrickpf

Ennion10 karma

Do you think this Panamanian leak of the world's rich and powerful will become a large tax collection eventually when the dust settles? It could be a large influx of cash to help infrastructures and empty coffers.
Or, will it be business as usual?

rcarrick29 karma

Governments in Canada area always talking about getting tougher on enforcement to bring in more tax revenue. Here's a chance. Let's see what you got, CRA.

spr082910 karma

Hi Rob!

Longtime reader first time and first-time poster. I'm a millennial who recently experienced an unexpected job loss. Severance was a lump sum and will last me the next few months. Currently living well within my means. Where is the best place to park a windfall in the short-term?


rcarrick20 karma

Use a high rate savings account. Don't put your money in anything that can go down in value. You need that money. Hope you find work quickly.

FairviewRyder8 karma

32 years old and have owned my condo for 7 years in Vancouver. Now our family has started and we're looking for more room. We've built up $275k in equity yet a home or townhouse upgrade would be around $800k-$850k. What advice do you have for millennials looking to upgrade who would have to take on a $550k plus mortgage? -Frustrated on the Westcoast

rcarrick31 karma

It's brutal for young families on the West Coast. You're paying monster prices to lock in a profit for someone lucky enough to have bought years ago. Here's my thinking on the $550K mortgage: If you can afford it, go ahead. How do I define "afford it?" By having you try my Real Life Ratio spreadsheet: http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/can-you-really-afford-that-mortgage-know-your-real-life-ratio/article17333137/. If you get a good RLR score, it shows you can afford a house, cover living expenses and save for retirement. Don't use the banks' affordability calculators - they only look at whether you can afford the mortgage. There's a lot more to it than that. With a scary RLR, you're stuck. Save $$ to add to your home equity, or stay in the condo.

danealloyd7 karma

Hi Rob,

I am 25 years old, I have just under $40,000 in student loan debt. Solid job and saving 10%+ of my gross income. My investment/savings strategy is to max out my TFSA first and pay my minimums on student loans. My two loans are 2.70% and 5.20%. My annual investing returns are 8%+ with dividends and I get a tax credit on my student loan interest payments. Should I sacrifice maxing out my TFSA to make higher loan payments?

rcarrick9 karma

I usually suggest making student loans a priority, but it sounds like you have a good handle on things as they are. One observation: If you want to buy a house, having that student loan cleared sooner rather than later will be a big help.

bigfloppydongs7 karma

Do you think roboadvisors are a better alternative to mutual funds or ETFs from a traditional bank?

rcarrick21 karma

Here's the thing. Robo-advisers typically (though not always) use ETFs to build client portfolios. ETFs are super cheap, so they're a no-brainer for robos, which add an additional advice fee on top of ETF ownership costs. Use a robo if you want to delegate management of your ETF portfolio. Glad to have robos around - they really fill a void for people with smallish accounts who can't get decent help from traditional advisers.

farlinax8 karma

FYI: The Economist has a great article (today or yesterday?) explaining why active managed funds are experiencing huge outflows, and Vanguard, Blackrock, etc. are picking up that cash.

rcarrick10 karma

This is more of a U.S. thing than a Canadian phenomenon, but there's huge potential here for ETFs to take business away from traditional mutual funds.

kkott6 karma

There is a lot being said about the housing markets in Toronto and Vancouver. What do you think about Ottawa? As 31 yr old government employee with a defined benefit plan (contributing for 7+ yrs), does it make sense to put my savings into the housing market since I have less of a need for RRSPs?

rcarrick5 karma

I live in Ottawa and I know firsthand that the market is lukewarm at best right now. If you can afford to buy and still be saver, you seem a good candidate to buy.

mountaintop20166 karma

I'm in my late 30s and have been renting for my entire adult life. I have $100k in savings and want to build a home rather than buy one. Can it ever be more affordable than buying one already built? Is it even possible to get a mortgage to build a home?

rcarrick9 karma

Out of my area of expertise. Suggest you contact a mortgage broker and get some input.

lenlen146 karma

Hi Rob,

Thank you for holding this AMA.

Since finishing school last year I’ve been a bit more cautious with my spending habits. I have debt from OSAP, but I’m living with my parents for a while until I pay most of it off. Although I’m about $35,000 in debt, my financial situation isn’t the one I’m worried about ¬– I’m worried about my parents.

They are close to retirement, but they’re not ready for it. They aren’t done paying their mortgage, they have car payments to finish off and close to no savings. My mom has some land in the Philippines, but I’m not sure if this was much of an investment. They say they’d like to retire in the Philippines, but as far as I know they would still have to stay here few months to receive their pension.

Do you have any advice for a daughter who is worried about helping their parents when they eventually retire? How can I help them make goals for themselves before their retirement comes? Is it too late? I'm a bit terrified thinking that my parents inability to plan ahead is going to fall on my shoulders eventually.

rcarrick9 karma

Kudos to you for getting onto this while your parents are still working and have time to focus on retirement. Suggest you have a sit-down with them and ask them how they think they will live in retirement. Not just wishes and dreams, but paying living costs. Not sure of your parents' situation, but there may well be some CPP, OAS and maybe GICs. That's a foundation, but they may need some of their own savings as well.

junepet5 karma

My boyfriend and I recently bought our first home - a one-bedroom condo in the West End near Roncesvalles/High Park. We currently have a mortgage of $197,000 as well as my boyfriend's student loan which is $26,000. We borrowed $17,000 from my RRSP as part of the HBP.

We are really good at savings and are paying an extra $20 above our minimum mortgage payment every 2 weeks. I would like to max out on our mortgage payments, because we will want to move into a 2-bedroom or larger condo in a few years if we have kids. But we still have that $26,000 student loan to pay off and it doesn't seem to be going anywhere after we pay for everything else during a month and contribute to our savings.

In terms of all the debt repayment we have to do (student loan, mortgage, RRSP HBP and my sister), which would be the most important to focus on and if we have some money left over at the end of the month where should it go?

rcarrick11 karma

Kill that student loan. It's a nuisance at your stage of life and getting it paid off will simplify things for you (and help you afford payments on a bigger house). Just fyi, you need to repay 1/15 of your RRSP HBP amount every year, or it will added to your income. If you regularly make RRSP contribs, but HBP repayment would come out of that.

junepet4 karma

Thanks Rob! Really appreciate that advice. We'll work towards putting any extra $ we have left towards that student loan. Will also make sure to put our RRSP contributions towards the HBP repayment starting this year. Thank you!

rcarrick3 karma

Any time.

rbevans5 karma

I'm 33 and wondering how much should i invest a month of my take home income (not including my automatic 401k contribution)? Is it more effective to save large lump sums toward one goal or save smaller amounts toward a few goals at once?

rcarrick7 karma

I'm a huge believer in automating the process of saving and investing through auto-transfers done ever payday. At your age, saving 10 per cent of gross income is solid and 10% of net income is great.

HolyPotato5 karma

In a given week, how many people/products/things are vying for your attention in a column or your newsletter?

rcarrick6 karma

Five days a week, maybe a dozen pitches a day from PR people, companies etc., plus many other things I find with my own reading. So maybe 100.

K-Mark4 karma

What's your favorite sandwich? Toasted or not?

rcarrick5 karma

Not. The toast cools down so fast.

rcarrick15 karma

As for the sandwich, my new favourite comes from Porchetta and Co. in Toronto. Unreal.

Savvy-Moje4 karma

Hi Rob,

I'm a long time reader of your work. As a Toronto born and raised millennial, I appreciate that you don't peddle the usual "Home Ownership = Adulthood" mumbo jumbo.

As a 20-something trying to build wealth, I'm wondering if there still is truth in real estate as one of the greatest investments. I'm not talking about buying in Toronto, but is real estate investing beyond the GTA a worthwhile pursuit to grow long term wealth? I've long been interested in rental real estate investing, but all the greatest success stories I've read come from the States where it seem so much easier.

rcarrick5 karma

There will always be a demand for land in desirable places to live. Outside Toronto? I'm hearing about bidding wars in communities well outside the city, so there's that. But I think there's too much emphasis on land and housing as an investment. Money's being made now for sure, but there will be bad times as well. Anyone who bought in Toronto in the late 1980s or early 1990s knows that. Suggest buying a great house for your family and expecting it will appreciate in price at the inflation rate on average over the long term.

MrMachineMan4 karma

Hi Rob,

What is your opinion on investing through new online agencies (e.g. WealthSimple)?

rcarrick3 karma

Big fan. An ideal solution for the young investor who wants to get off to a good start and doesn't want to be hands-on.

Suivoh3 karma

Hi Rob. Why does the Globe have such a hate on for Millennials? Canadaland first pointed this out and now I can't help but see it all over your paper.

rcarrick2 karma

I think people are seeing in the Globe what is a society-wide tendency to minimize Gen Y's challenges and dismiss the cohort as spoiled, entitled whiners. From my point of view, the Globe and Mail has led the way in covering Gen Y financial issues. We are raising questions about precarious work, student debt and home affordability, and holding leaders to account on anti-millennial comments. We just launched a Gen Y Money page online. A colleague of mine and I have for the past couple of years done a fall tour of colleges and universities to do free financial literacy sessions. We at the Globe may fall back on stereotypes now and then, but I think our total coverage is out front on this.

jumpup3 karma

where do you base your information on, what are some of the sources you deem reliable?

rcarrick5 karma

I base my information on a few different levels of research. First, the internet and various news, investing and data aggregation websites, as well as several blogs. Second, I have a a network of experts on various subjects that I use to fact check what I learn online. I am picky about who I add to my network. For example, I use advisers who have a Certified Financial Planner (CFP) designation at least. I consider the big financial websites to be reliable for the most part. I consider company websites to be sales tools, and nothing more.

CosmoDanger3 karma

Hi Rob, thanks for doing this AMA.

Without naming names, what do you think of online DIY investing versus investing with FAs at the big banks?

rcarrick8 karma

DIY investing costs much less, and that can mean higher returns. However, you need some expertise -- not a tonne, but some for sure -- to be an effective DIY investor. Can you choose and maintain a portfolio of exchange-traded funds through an online broker, for example. But focusing just on cost is an over-simplification. The FA at the big bank may -- MAY -- also offer financial planning to help you meet your financial goals. If you get that planning, the higher costs of working with the adviser can be a good value. My concern is the potential to get a bank FA who is a glorified salesperson. All your problems can be solved by buying the bank's mutual funds or wrap products. I'll take DIY over that, any day.

danjahjno3 karma

At what size wealth would you say one should not be managing one's own money?

rcarrick5 karma

I wouldn't use a wealth amount here. Rather, I'd use a combination of wealth and available time. If you have modest wealth and no time to manage your money, advice makes sense.

jarude873 karma

Rent or buy?

rcarrick11 karma

Buy when you can properly afford to own and save for retirement as well. Rent until then.

mofozero3 karma

Hi Rob,

How do you see the demographics of the baby boomer retirement wave playing out in the economy over the next decade (in Canada in particular)? Will it help or hinder GenY? I've heard conflicting stories of doom and prosperity, just wondering what your take is.

rcarrick6 karma

The aging boomer demographic will add to government spending pressures, even as the tax base declines because more people will be out of the workforce. So that's a negative for millenials. On the other hand, jobs will open up and houses will go up for sale as boomers downsize. Rising supply will help control price increases.

Pugway3 karma

Hi Rob, thanks for doing this AMA

For reference, I'm a 19 year old student living in the United States. I keep hearing people talk about how you should start investing young, that if you just put away a thousand dollars a month or something, starting when you're 19, that you'll never have to worry about money, but if you wait until your mid twenties its all over. I'm being hyperbolic of course, but my point still stands.

Thing is, I don't know where these people are getting all these numbers from. I think I'm doing alright for myself, I'm working a job in the same field I am studying for, going to school full time and working 25 hours a week. I make about a thousand dollars a month, give or take. About half that goes towards rent and other expenses, and the other half I use on food or entertainment. My question is, with my meager income, what should I be doing to be proactive about my future? Do I need to be worried about investments or retirement now or should I be trying to stay as financially secure as possible? Moreover, if I should be investing now, how can I get started?

Thanks for your time.

rcarrick9 karma

You're 19? Kid, you're doing great. Aim at this point in your life to minimize or avoid debt. When you start working, then you can jump into retirement saving. If you do have extra money now, put it in index funds or ETFs. Simple and effective.

Malbec443 karma

Hi Rob! We are renewing our mortgage and we're pretty lucky when we scored a prime minus 0.8 five years ago. Now we are renewing the mortgage and are threatening one of the "big banks" to move to a different lender because of the beyond terrible service. They have offered us what they "say" are their rock bottom rates (this is round 2 of negotiation) which are 2yrs fixed at 2.09%, 3yrs fixed at 2.34, 4yrs fixed at 2.49 or five years fixes at 2.64. They have also offered us "financial compensation" to make up for the bad service plus to cover any discrepancy between lower rates that we could get from a broker. We have no idea what to do and what that financial compensation would look like. Can you help?

rcarrick3 karma

Ask them to provide a bullet point list of the terms they are offering you, including the dollar amount of compensation and how it will be applied. Then take it to a broker to see if the deal can bettered. Sounds like you bank wants to keep you, though. If you want good intel on mortgage rates, try this website: https://www.ratespy.com/

knitwasabi2 karma

I'm in a unique situation. Widowed mom of 2 (14 and 9), and the hubs did all the financial stuff. Yeah, I know. I don't have a head for this stuff at all. I'm keeping on top of the bills, we had a life insurance policy that will put the boys through college. But how do I make that money grow safely? Hubs had the awesome job, I'm really not skilled at anything and pick up work here and there, living off social security benefits really. I want to make the insurance money work for us too. But I honestly have no idea where to put it/do with it/where even to start!!

rcarrick3 karma

Ask friends, family, contacts etc. for a referral to an investment adviser who is honest, client-focused and who provides real financial planning and not just investment sales. Get this person to create an investment plan that will meet your goals.

dernbiebs2 karma

What should I do with the money I am putting aside for a down payment? Hold it as cash? invest in equities? bonds? I'm going to need the money in 2-4 years, so not a lot of time to ride out volatility in equities. Inflation is a cash killer, and rising interest aren't great for bonds. Thoughts?

rcarrick4 karma

High interest savings accounts are the only option. Stocks and bonds can fall in price and you do not want that to happen to your precious DP money. I know rates are super low on cash, but that's the cost of bullet-proof security.

vjmichael2 karma

Hello Rob - I am 28 years old, Married, home owner, and income property owner....trying to prioritize financial decisions. We have reached our own conclusions on the matters, but I would be interested in hear your opinion. I am wondering what you thoughts are on: 1) How many month's of expenses should be in an emergency fund/accessible savings account? 2) Should we pay down our mortgage or invest in RRSPs?

rcarrick3 karma

Thanks for that.

j_hurst2 karma

Hi Rob! I graduated from university in 2014, so I'm still paying off a large amount of student debt. I currently put $1,200/month toward my debt, but I'm not putting anything into savings. I've heard mixed opinions about this — some say you should save no matter what, others say you should focus on paying off debt first. What do you think I should be doing? And can you point me toward any resources (books, articles, etc.) that discuss this specifically?

rcarrick3 karma

I like your dedication to debt repayment. Very smart. That said, I would try to build up an emergency fund of at least a few thousand dollars. Enough to cover rent and expenses for a few months if you lose your job. You could modestly ratchet down debt repayment for a while and put the extra into the emergency fund.

mrblaq2 karma

What is it about Monday at Noon that stands out so much to you? Where are you in your daily routine and how does it stand apart from other days at noon. Or, other times on Monday that aren't noon?

rcarrick2 karma

Monday is a back to business day, and noon is a time when people pause from the day's work to reflect.

kagrrakid2 karma

What are your thoughts on financial advisor chains such as Edward Jones, Morgan Stanley, etc.? Are they a good option for millenials to turn to for investment management?

rcarrick2 karma

Not especially. These advisers tend to offer higher cost products and their expertise may be wasted on on the simple needs of a millenial. That said, a financial planner (a real planner not a salesperson using that term) could make sense to map a route of debt and into home ownership and retirement saving, though.

Just10Sanity2 karma

So this may be harder to answer since I'm in the states, but it's worth a shot! I work for a "big bank" as a banker with a focus on mid/high income households. My area has a very low income demographic which has shown me how much of a need there is for basic financial literacy for adults. I've found that I have a passion for educating people about their finances and credit. My writing leaves much to be desired so that field is out. Are there other avenues that exist to teach personal finance?

rcarrick3 karma

I've done financial literacy sessions on university and college campuses and find these events work well in getting people engaged. Just opening the floor to questions is a huge teaching opportunity. The trick is to make people comfortable enough to open up. Once you do, you may not be able to stop the flow of questions.

mneuc2 karma


I keep cash as part of my portfolio in a substantial amount (1-2 years spending) to weather any downturns by not having to sell investments low. I've recently shifted this cash to a Short Term Bond Index ETF to at least make something from this idle cash. Is there any stability risk involved with these ETFs? Are there any preferable alternatives?


rcarrick4 karma

Give some thought to swapping out the short-term bond ETF for a high rate savings account. EQ Bank is now paying 3% - not sure how long that will last, but it's there now. ZAG Bank paying 2.5 per cent, Peoples Trust paying 1.45%. These accounts are protected by deposit insurance, so bankruptcy risk is nil. And, unlike the short-term bond ETF, you can't lose money if interest rates creep higher. Actually, these accounts would probably pay more if that happened.

rhunter992 karma

Where can I learn more about RRSP planning and the sheer basics such as what the amounts A and B mean and to prevent over-contributing?

rcarrick11 karma

This is a very good educational website on investing and it's all unbiased - offered by regulators and not sellers of mutual funds and such. http://www.getsmarteraboutmoney.ca/en/Pages/default.aspx

glickplick2 karma

Hi Rob,

Thanks for taking the time to do an AMA. Long time reader.

I'm wondering what your thoughts are on paying down a mortgage versus investing in an RRSP. I know interest rates are very low, plus there are tax advantages to contributing to your RRSP, but it seems with such low returns being generated in the market there isn't much incentive there. I understand the whole compounding growth on your investments, but there is also compounding on your mortgage interest. . .I like doing double-up payments on my mortgage because it is essentially a guaranteed return on my money (by avoiding future interest). I'm still contributing to my RRSP's (roughly 10% of gross) but could do more if I wasn't doing double ups on my accelerated bi-weekly mortgage payments.

What are your thoughts on the matter? The prospect of being mortgage free much sooner is very appealing!

Thank you!

mofozero3 karma

What's the interest rate on your mortgage? That would essentially be your rate of return on paying down your mortgage. Most balanced stock portfolios can expect at least 6% return, so if your interest rate is less than that, I'd stick with stocks in your RRSP.

Consider that the tax advantages of an RRSP are not always guaranteed. It's tax deferred, not tax exempt. When you withdraw you will be taxed, and many factors can end up hurting you.

If it were me, my favorite answer is always diversify! Have you maxed out your TFSA? My favorite account! Also, a plain "cash" (i.e. non-registered) account can be good for Canadian stocks as they are taxed quite favorably (at the moment). Having a your money spread out in all the pots lowers the risk that you will get completely screwed.

rcarrick3 karma

My concern is that too many people are freaked out by how big their mortgages are and are shovelling money into prepayments rather than investing. I'm with mofozero - diversify. Make some mortgage double-up payments, but be sure to invest in your RRSP or TFSA for retirement. I know stocks have been nasty in the past year or so, long term investors will make out fine.

bsbllscnd9702 karma

Hey Rob, thanks for doing this. So like most of my generation, I'm covered in a mountain of debt. I've had seizures that caused me to need surgery, ambulance rides, and now have over 40k in medical debt. I'm finally down to 8k on my student loan debts, but I also had to go into default on two. The worst is im a single father who is trying to build a life for my son and I. I'm 26 years old, and recently moved back in with my parents so my son and I would have a ride to work/school. I'm a certified auto tech, I've been promoted at every job I've worked at since high school, never been fired; however, every time I have a seizure I lose my license and subsequently my job (can't be a mechanic without a license). Doctors have never been able to find the cause of my seizures (started at 19, had 6 since), but they also don't really try to since I can't afford health insurance. Last time I looked at my credit score it was in the mid 400s.

My question is what do you think the best way for me to build credit is? I'd really like to buy a house, as a solid foundation for us, but I'm not able to get a credit card or any loan to start building better credit. Am I just screwed until I get out of debt? At the current rate, I won't be able to have good enough credit for a mortgage until I'm 35. Luckily, every car I've owned I brought back to life from the junkyard and never spent more than $1000.

rcarrick4 karma

You could try getting a secured credit card, where you put a deposit down. Gives you a chance to start repairing your credit record. Sounds like you could use a break. Hope things work out.

bythelake232 karma

I am looking to learn more about index funds - do you have any go-to resources and tips?

rcarrick2 karma

this is a great blog for index investors: http://canadiancouchpotato.com/

Ambassador_throwaway2 karma

As a Canadian graduate, I've graduated from both high school and University. However, I primarily took and focused on the science streams, my knowledge and understanding on the finances/economy do not go past paying consumer taxes. I do not now jack shit zero when it comes to personal finances.

1) Should there be more emphasis/required courses on personal finances in high school? We have them for employment, civics but many of us do not know what RRSP, TFSAs, stocks, income taxes, basic management of money, credit and credit cards when we immediately graduate and have to learn them as we go through those processes.

2) For us Canadians, can you recommend a learning guide/resource one can follow/read up on to get an idea of personal finances? I shall be checking your Young Person's Complete Guide

rcarrick3 karma

1.) I'd love to see a personal finance course in first year university. I super smart finance prof once told me he doesn't think teaching FinLit works unless the students have a reason to pay attention. I think that applies to first year students who have to budget and make ends meet for the first time. I volunteer to teach that class. 2.) a very good educational site on personal finances: http://www.getsmarteraboutmoney.ca/en/Pages/default.aspx

NahanniWild1 karma

Hey Rob, thanks for doing this.

We're getting ready to pull the trigger on our first house at 31 and 28. We've saved what should cover our 20% down payment, but we're really concerned with moving forward considering the flat economic outlook. My questions is, how the heck are smaller homes in Toronto and Vancouver so expensive when there are so few high paying jobs out there especially for those of us in the 25 - 35 category? Can they possibly be sustained?

rcarrick2 karma

That's the question I keep asking. But in your case, I don't think you need to worry about prices if you have good job security, you can comfortably carry your housing costs while also saving something and you plan to stay put for 10+ years. If so, then you can ride through any, um, hiccups in the market. Finally, there aren't many examples of financial assets that go up forever in price. There are always pullbacks.

MerkyFresh1 karma

Soo I'm 25 years old. How fucked am I right now without a college education or a skill?

rcarrick5 karma

Minorly FU'd at worst. You're probably going to live 90+ years, which means you have time to get your life on track. First step: Figure out how you're going to get an education or a skill/trade.

bythelake231 karma

Have you looked at wealthsimple - what are your thoughts on the trustworthiness and ease of use etc of the platform?

rcarrick1 karma

Let's just say I have my eye on a WealthSimple TFSA account. Really easy to use. I have zero trust issues as W/S doesn't hold the money itself. A third-party custodian, BBS Securities, hold the assets and BBS is part of the Cdn Investor Protection Fund (protects assets against bankruptcy for up to $1-million).

RenegadeWild1 karma

Hey Rob,

Do you think advances in AI and automation will play a much larger role in millenials' retirement plans?

rcarrick2 karma

I do. Already happening with robo-advisers. Much potential to leverage AI to improve the offerings now available.

5one41 karma

Hi Rob!

Do you think that the infrastructure spending earmarked by the Liberal government will translate to economic growth? If so, which Canadian industries do you think will benefit most?

rcarrick2 karma

Some growth, but not sure how much. I would look to engineering, construction, heavy equipment supply and leasing.

Lovethe3beatles1 karma

Hi Rob!

I am a 24 year old student and I just landed a job where I am actually able to start saving money. However, I also owe money on my student loans. Should I open a savings account or start paying towards the principle on my loans before i graduate?

rcarrick2 karma

Contracts on the job. Suggest building up an emergency fund and then attacking the loan principal. You don't need a giant emerg fund - a couple of thousand is a good start.

lifeinsurancecanada1 karma

Life insurance question/opinion -I'm curious if you would validate or disagree with my thoughts on life insurance for children.


1) the insurance industry would have everyone buy a 20 pay whole life on children as a gift.

2) consumer advocates seem to tell people that children don't earn an income, so therefore don't insure.

I think they're both wrong. My thoughts have changed over time, based on empirical evidence. Every time I've seen a children pass prior to the parents, it's a sledgehammer to their lives. And that means they are off work for an extended period of time (6 months say) or longer. I've seen parents never return to work. So there's emotional stress, and financial stresses at that time.

I now suggest that parents insure their kids with $100,000 of 20 term insurance. The cost is relatively inconsequential. It covers the small financial catastrophy upon the death of a child due to loss of income on the parents' part. And incidentally, the conversion option on term insurance allows the option of future insurability if and when it's needed (and no explicit cost if it's not).

That's counter to pretty much everything I hear in the industry or from those outside the industry. What are your thoughts on this approach?

rcarrick5 karma

This is one of the better arguments for insuring kids, so good on you for that. Still not convinced, though. Take those premiums for life insurance on kids and put it in a registered education savings plan.

OliverWendelholmes1 karma

I have a law degree but came out of school during the recession and was forced to take a non law related job. I've applied to nearly 100 jobs in the last 4 years and my blue collar back ground doesn't provide many connections inside the legal world. At this point I don't even know if I want to be a lawyer. Do you have any career advice for leveraging an under performing degree into a related career path?

rcarrick2 karma

What about adding a business degree? Anyone else have suggestions?

savemejebus01 karma

What is the best ways to improve my credit score? Specifically how to use credit and when to ask for increases.

rcarrick3 karma

If you pay all debts on time, you won't have to ask for an increase. It will be offered automatically. Be ruthless about paying on time. Your credit score rises when you borrow sensibly and repay responsibly.

FiletMcShay-1 karma

Hi Rob,

I'm 20, and currently have about $15k that I would like to invest, instead of letting it sit in my savings account accumulating a measly amount of interest.

I've decided to split the money between TD ETFs and Tangerine's Balanced Growth investment fund. I have the money in a TFSA right now, and my plan is to have these going for the long term, 20+ years.

What do you think about this strategy? I don't have much time or the willingness to learn about more hands-on investment strategies. Thanks

rcarrick2 karma

First off, outstanding work in getting $15K into a savings account at age 20. As for your investment approach, I like your thinking. Is it the best possible strategy that will make you most most possible money? Don't know, don't care. What I do know is that you have chosen a very sound index-based approach that comes with low to reasonably low costs. Both of these characteristics provide an excellent foundation for solid returns over 20+ years. Remember to build a mix of stocks and bonds that reflects your personal risk tolerance. At age 20, you could go with all stocks if you're OK with big stock market declines now and then and won't be tempted to sell.

HolyPotato1 karma

I'll add to Rob's answer: why the split? You're losing out on the simplicity of the Tangerine funds if you're also self-managing some ETFs. Either strategy would be fine.

FiletMcShay1 karma

Part curiosity, part not wanting all my eggs in 1 basket I guess. Thanks for your advice tho; I haven't actually purchased any ETFs yet, as I just booked an appointment with TD. If it's too much hassle I might just end up going with just Tangerine funds

rcarrick1 karma

Tangerine is higher costs, but lower effort. If that helps you stay invested, all good.