One of the biggest challenges in Canada’s rental housing crisis is the lack of new affordable housing units being built.
Despite efforts through the National Housing Strategy’s five programs, only 17,000 units were delivered after four years. This disappointing outcome is only a modest improvement over Ottawa’s track record in the past 30 years. For example, between 1996 and 2013, fewer than 7,000 new units were provided by federal and provincial governments.
In contrast, the United States built 3.5 million subsidized rental units from 1987 to 2021. Adjusted for population, this is equivalent to building 11,000 units per year in Canada. Both countries have tightened the tax benefits of rental real estate, but the U.S. offset this policy shift by introducing the Low-Income Housing Tax Credit (LIHTC) to mitigate the impact of these changes on low- and middle-income renters.
A Canadian LIHTC would offer an alternative method of federal funding by leveraging private-sector expertise in owning, building, and managing low-income rental housing. The LIHTC would provide tax credits to both for-profit and nonprofit owners of rental housing, with nonprofits having the option to sell these tax credits. A key aspect of the program would be its efficient resource allocation, achieved by creating competition among developers for tax credits and using a market-based test for the viability and need for low-income housing.
Complements existing Renter Support Initiatives
The program could be designed to complement existing renter support initiatives, such as local government programs, housing allowances, and rent supplements. It would work by providing tax credits to developers, who would then pass them on to investors to offset their income tax.
Unlike earlier tax credit programs like the Multiple Unit Residential Buildings (MURB) provision, this program would have a cap, with credits allocated annually to each region based on population. The credits would be federally funded and awarded according to provincial objectives. Continue Reading…
In this Sunday Reads we’ll begin with a look at the first half returns for the Beat The TSX Portfolio and the Canadian Wide Moat Portfolios. The Beat The TSX Portfolio is a pure value play, discovered by those big dividends. The Canadian Wide Moat Portfolio relies on the moats – a lack of competition. There are a few key oligopoly sectors in Canada. While both Canadian stock portfolio approaches have a nice history of beating the market, the BTSX is more volatile, while the Wide Moats are more low volatility by design. The BTSX Portfolio continues to struggle while the Wide Moats continue to best the market.
The wide moat portfolio has beat the TSX by some 1.6% annual over the last decade. That said, it has underperformed from 2023. I can still find no better model for the large cap Canadian space. It tracks closely to (but slightly outperforms) the BMO Low Volatility ETF – ZLB.TO.
Shareholder yield
I really liked this post and screen in the Globe & Mail (sub required). Companies that have a lot of free cash flow typically perform very well. They can buy back shares (increasing your ownership) and pay bigger and increasing dividends. We call that combination the shareholder yield. The screen also looked at valuation, quality and more. Here’s where it landed. It’s a nice sixpack …
And check out the buy back and dividend history for Canadian Natural Resources. My favourite oil and gas stock …
Solo entrepreneurs face unique financial challenges, including inconsistent income streams, high operational costs, limited access to capital and the difficulty of separating personal and business finances. Effective financial planning becomes crucial to navigating these hurdles and ensuring sustainable business operations and long-term success.
Creating realistic budgets, building emergency funds and managing expenses allows solo entrepreneurs to stabilize their financial health. Additionally, seeking professional financial advice offers personalized strategies, tax planning and investment guidance, which are essential for securing a stable and prosperous future.
Unique financial hurdles for Solo Entrepreneurs
Variable revenue presents significant challenges for solo entrepreneurs in budgeting and managing expenses. The unpredictable nature of income makes it difficult to plan for consistent cash flow, often leading to financial strain. According to a recent survey, 77% of respondents reported their expenses increased by 6% or more due to inflation, further complicating financial planning.
Solo entrepreneurs also face the challenge of managing overhead costs without the benefit of economies of scale. Unlike larger businesses that can reduce per-unit costs through bulk purchasing, they must find ways to cover operational expenses efficiently. In fact, 37% of small businesses resort to borrowing to meet their operating expenses, which highlights the financial pressure they endure.
Securing loans and investments is another hurdle for solo entrepreneurs. Financial institutions and investors may view them as high-risk due to their lack of a proven track record and limited collateral. This makes it difficult for single proprietors to obtain the necessary funding to grow and sustain their businesses. Continue Reading…
Tony Robbins’ latest book, The Holy Grail of Investing, written with Christopher Zook, is a strong sales pitch for investors to move into alternative investments such as private equity, private credit, and venture capital.
I decided to give it a chance to challenge my current plans to stay out of alternative investments. The book has some interesting parts — mainly the interviews with several alternative investment managers — but it didn’t change my mind.
The book begins with the usual disclaimers about not being intended “to serve as the basis for any financial decision” and not being a substitute for expert legal and accounting advice. However, it also has a disclosure:
“Tony Robbins is a minority passive shareholder of CAZ Investments, an SEC registered investment advisor (RIA). Mr. Robbins does not have an active role in the company. However, as shareholder, Mr. Robbins and Mr. Zook have a financial incentive to promote and direct business to CAZ Investments.”
This disclosure could certainly make a reader suspect the authors’ motives for their breathless promotion of the benefits of alternative investments and their reverence for alternative investment managers. However, I chose to ignore this and evaluate the book’s contents for myself.
The most compelling part of the pitch was that “private equity produced average annual returns of 14.28 percent over the thirty-six-year period ending in 2022. The S&P 500 produced 9.24 percent.” Unfortunately, the way private equity returns are calculated is misleading, as I explained in an earlier post. The actual returns investors get is lower than these advertised returns.
Ray Dalio and uncorrelated investment strategies
The authors frequently repeat that Ray “Dalio’s approach is to utilize eight to twelve uncorrelated investment strategies.” However, if the reported returns of alternative investments are fantasies, then their correlation values are fantasies as well. I have no confidence as an investor that my true risk level would be as low as it appears.
Much of the rest of the authors’ descriptions of alternative investments sounds good, but there is no good reason for me to believe that I would get better returns than if I continue to own public equities.
I choose not to invest in individual stocks because I know that I’d be competing against brilliant investors working full-time. I don’t place my money with star fund managers because I can’t predict which few managers will outperform by enough to cover their fees. These problems look even worse to me in the alternative investment space. I don’t lack confidence, but I try to be realistic about going up against the best in the world. Continue Reading…
In the quest for Financial Independence, milestones vary from mastering debt to embracing minimalism.
We’ve gathered insights from nine professionals, including Finance Experts and Founders, to share their personal triumphs. Discover how these individuals have navigated their paths from mastering debt through frugality to paying off mortgages independently.
Mastering Debt through Frugality
Achieving Total Debt Freedom
Securing a Higher-Paying Job
Early Retirement through Real Estate
Eliminating Debt with Side Hustles
Embracing a Debt-Free Minimalist Life
Regulating Finances with Nervous System
Strategically Paying off Student Loans
Paying Off Mortgage Independently
Mastering Debt through Frugality
Each milestone marked an important stage towards a more confident future on this road to Financial Independence. One turning point occurred when I became a master of managing Debt and adopted frugality as my way of life.
Although, in my pursuit of financial freedom, it dawned on me that Debt was both a burden and a tool; this happened at the time when I decided to confront my debts openly. Eventually, I divided them by interest rates and then talked with lenders about much better repayment terms. With discipline and focus, little by little, I got rid of a mountain of debts while coming closer to financial liberty after each payment.
Another significant landmark was when I began practicing frugality. For instance, being mindful of small savings that accumulate over time into significant wealth-creation opportunities has been one key lesson that I learned from this approach. In other words, I dissected every expense into what need was involved for its necessity or want and became good at finding creative ways to save without losing sight of the quality of life.
Whether it is meal planning or relying on loyalty programs or DIY solutions; being frugal does not mean living without but instead making conscious decisions towards personal financial objectives.
Whenever I look back on the path that led me toward my financial independence, I don’t see these checkpoints as just what they are; instead, I think of them as turning points in how I think and act. Learning how to manage debt properly and adopting a saving lifestyle have given me complete autonomy over my financial future, thus laying down a foundation for abundance and stability. –– Arifful Islam, Finance Expert, Sterlinx Global LTD
Achieving Total Debt Freedom
One of the biggest milestones on my journey to Financial Independence was finally becoming 100% debt-free. This achievement felt especially meaningful because it required a serious commitment to smart money management and embracing a frugal lifestyle.
Early in my career, I was weighed down by a ton of student loans and racked up credit-card balances. I realized all that debt was just holding me back from reaching my bigger financial goals and living the life I really wanted. So, I made a decision to make paying it all off as fast as possible my top priority.
I started by creating a super-detailed budget that accounted for every dollar of income and expenses. Then I looked for any areas where I could cut back on non-essential splurging: like eating out, entertainment, shopping sprees, etc. Any money I could free up got funneled directly towards making bigger debt payments, focusing on the highest-interest accounts first.
At the same time, I fully embraced a more frugal, minimalist lifestyle overall. I learned to appreciate simple, free pleasures and find joy in experiences over buying a bunch of material stuff. I also hustled to increase my income through side gigs like freelancing or selling unwanted items.
Through diligent budgeting, living frugally, and a strategic debt repayment plan, I managed to become 100% debt-free within just a few years. Not only did it drastically improve my overall financial situation, but it gave me this incredible sense of freedom and control over my life. It laid the foundation for even bigger money wins down the road while teaching me the value of living below my means to prioritize long-term goals. –– Loretta Kilday, DebtCC Spokesperson, Debt Consolidation Care
Securing a Higher-Paying Job
The most critical milestone I reached was getting a job that paid more than just “enough.” I’ve tried freelancing, selling online, starting a website, doing social media, and I even tried digital marketing for a startup. But it wasn’t until I got a plain old job that just paid more than I needed that I found everything I needed: peace of mind, freedom from debt, the start of a retirement fund, and more.
For anyone who’s struggling even $50 makes the difference between starving or surviving: I suggest just building your skills and portfolio and moving up to better-paying jobs. Get the certainty and security that comes from a regular salary, one that allows you to pay all your bills and gives you breathing space.
Once that’s done, you have the room to plan for the future, to pay off debt, to organize your finances so that if you want to budget, it’s actually possible. — Debashri Dutta, Founder, Dmdutta.com
Early Retirement through Real Estate
Being able to retire in my early Thirties was a significant milestone toward Financial Independence. I started investing in real estate in my twenties, and I had to work two jobs and live frugally to afford a down payment.
But today? I don’t have to worry about working a job I’m not particularly passionate about. Instead, I can spend my time doing what matters more to me, like coaching others who want to escape the rat race and build financial security for themselves.
Bottom line: If you have a goal in mind, short-term sacrifices will be worth it in the long run. — Ryan Chaw, Founder and Real Estate Investor, Newbie Real Estate Investing
Eliminating Debt with Side Hustles
I gained Financial Independence through hard work and side hustles. The biggest milestone I achieved was paying off US$60,000 in student loans. That debt was debilitating, and I was able to pay it all off by devoting all the money I made from side hustles to debt reduction. After I paid off my student loans, I used the same methods to pay off the house.
The next milestone that was incredibly important to me was having US$250,000 in savings. That milestone was important because it felt like the investment income began to snowball. It also felt like my hard work was paying off, and it made it easier to make the effort to save money after that point because I felt it working. — Jonathan Geserick, Managing Attorney, Texas Probate Pros
Embracing a Debt-Free Minimalist Life
I had a business go very south about 10-15 years ago. I held on way too long because it was “my baby.” Because of this, I racked up a lot of debt that I really knew I shouldn’t have, trying to save the business.
I moved that debt into a very low-interest situation long ago, which allowed me to pay a very small amount towards the principal and interest every month. That was a great solution; however, I recently decided to just pay the whole thing off. Continue Reading…
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