Investing

Candian Median family net worth was $300k!?

  • Last Updated:
  • Jan 16th, 2018 2:13 pm
Deal Addict
Oct 6, 2015
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atang810 wrote:
Jan 12th, 2018 1:46 pm
WOW! can't believe KSgill doesn't even know how the banking system works but yet talks about all the investing he does. Good response!
Too many research papers written by and for economists talk about the systemic effects of the (private) banking system, not the behavior of individual participants. Its certainly true that bank credit gets recycled into the banking system, so it could be argued that bank credit is actually created by banks. I would argue that its ultimately the depositors (and the shareholders) that create bank credit by lending to banks. Detractors from banks often spin research papers, such as those written by academic economists, into claims of unrestrained capability in the banks to create bank credit. Rather than the constraint that always applies to a private bank -- they cannot lend which they cannot borrow!

But this is getting way, way off topic for the thread, and in the context of net worth, bank credit cancels itself out completely -- ie: some Canadians will own banks and/or loans made to banks. Some will owe banks. The net should end up being zero, so meaningless on a net worth basis. But certainly can be very profitable (or alternatively, painful) if you're on the right (or wrong) side of the trade. During the US housing market collapse, for example, most Americans under 40 had negative net worth.
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Mar 24, 2008
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atang810 wrote:
Jan 12th, 2018 1:46 pm
WOW! can't believe KSgill doesn't even know how the banking system works but yet talks about all the investing he does. Good response!
Now you hurt my feelings, I am going to go and cry in a corner. Not every one can be as smart as you atang810.

Do you need to know how an engine works in order to drive it? But you are right, I don't know anything. I am not a finance major or an armchair economist like many here. BTW, I only do passive index investing. :lol:
Illegitimi non carborundum
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burnt69 wrote:
Jan 12th, 2018 2:12 pm
... Rather than the constraint that always applies to a private bank -- they cannot lend which they cannot borrow!
...
Are these not true:

1) Banks can borrow using intra bank loans (hence not ** direct** depositors money).
2) Make loans that are 9x- 10x the actual deposits that they have?

How is #2 not creating money out of thin air? Thanks!
Illegitimi non carborundum
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Oct 21, 2014
695 posts
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Burlington, ON
N8Magic wrote:
Jan 11th, 2018 4:34 pm
When did I say it was a bad way to build wealth? But on the same token, you don't want to have all your eggs in one basket.
I get that, and I didn't say that you didn't believe that housing is a bad way to build wealth... but there are a lot of posters on rfd who seem to discount the asset class because it is widely held and has seen rapid appreciation over the past ten years. I don't understand that at all. If the housing market crashes at least those who bought in have a place to live, and if they didn't go crazy on the leverage and get shaken out by interest rates which may (or may not) rise, will have an asset which is likely to rise in value.

Some families don't have enough money to both buy a house and own other many other assets, at least they're building something of value for the future.
Member
Mar 30, 2017
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ksgill wrote:
Jan 12th, 2018 4:41 pm
Are these not true:

1) Banks can borrow using intra bank loans (hence not ** direct** depositors money).
2) Make loans that are 9x- 10x the actual deposits that they have?

How is #2 not creating money out of thin air? Thanks!
marco econ 101, bank A gets deposit $1M, lends out $1M to bank B, which underwrites mortgages.
sellers deposit $1M to bank A, repeat cycle infinite number of time, there are now infinite number of assets worth $1M!
1/19/18 99.76% SVXY 0.24% cash😂 profit YTD 2.63%😂
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Mar 30, 2017
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Gungnir wrote:
Jan 12th, 2018 7:36 pm
I get that, and I didn't say that you didn't believe that housing is a bad way to build wealth... but there are a lot of posters on rfd who seem to discount the asset class because it is widely held and has seen rapid appreciation over the past ten years. I don't understand that at all. If the housing market crashes at least those who bought in have a place to live, and if they didn't go crazy on the leverage and get shaken out by interest rates which may (or may not) rise, will have an asset which is likely to rise in value.

Some families don't have enough money to both buy a house and own other many other assets, at least they're building something of value for the future.
rate rise only hurt the over leveraged ones.
if they are careful enough to take on 5yr fixed mortgage when rate was record low, say 2.5% on 25 year amortization, by the time they renew in year 6, they only need to refinance 74.4% of original amount, which if they choose to do 30year amortization, can keep monthly payment the same even if rate hike to 5%
it is safer in the sense that it is stable, monthly cash flow on housing can be fixed forever(unless of course rate go up 5%+, but so will all other investments crashing more, unless you decide to hold only cash deposit),
while renting you are on mercy of landlord.
1/19/18 99.76% SVXY 0.24% cash😂 profit YTD 2.63%😂
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seatiger wrote:
Jan 12th, 2018 8:02 pm
rate rise only hurt the over leveraged ones.
if they are careful enough to take on 5yr fixed mortgage when rate was record low, say 2.5% on 25 year amortization, by the time they renew in year 6, they only need to refinance 74.4% of original amount, which if they choose to do 30year amortization, can keep monthly payment the same even if rate hike to 5%
it is safer in the sense that it is stable, monthly cash flow on housing can be fixed forever(unless of course rate go up 5%+, but so will all other investments crashing more, unless you decide to hold only cash deposit),
while renting you are on mercy of landlord.
What's the math on this? I don't believe that you can pay off 25.6% of the loan in the first 5 years of making payments. I don't think you pay off 25% of your original loan until year 9-10 unless you make extra payments.
Illegitimi non carborundum
[OP]
Newbie
Feb 10, 2017
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atang810 wrote:
Jan 11th, 2018 10:14 am
Your net worth seems very low for someone at the age of 37. Two of you only have like $75k net worth each but you have work well over 15 years! Unless you have had a lot school debt and didn't start working until 30 I don't see how your net worth is so low.

Maybe you are paying very high rent over the years and also leasing a car? No property also kills you.
well this is what I dot understand.. I though Median family household income is $75,000k.. Can you tell me exactly how a 37 years old can have a net worth of 300k+ from that income?

http://www.cbc.ca/news/business/wealthi ... -1.1703017
Jr. Member
Jul 8, 2017
157 posts
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NA
newbiehere wrote:
Jan 13th, 2018 9:26 am
well this is what I dot understand.. I though Median family household income is $75,000k.. Can you tell me exactly how a 37 years old can have a net worth of 300k+ from that income?

http://www.cbc.ca/news/business/wealthi ... -1.1703017
You forgot that many people receive the bank of mom and dad and bought a property right after they graduated and got their first full time job, many of them are even a millionaire by now in the GTA/GVA. You might be at the same age and make the same salary as them but their networth is much higher due to early inheritance.
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Nov 9, 2013
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newbiehere wrote:
Jan 13th, 2018 9:26 am
well this is what I dot understand.. I though Median family household income is $75,000k.. Can you tell me exactly how a 37 years old can have a net worth of 300k+ from that income?

http://www.cbc.ca/news/business/wealthi ... -1.1703017
Honestly, you would be a lot happier with what you have if you stop comparing yourself to others.

Some people have more and less than others due to different circumstances in their life. Your situation is unique to you and it shouldn't matter what other people do or don't have compared to you. The natural human tendency is to compare but how does this help you?
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Mar 24, 2008
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^ this.
Illegitimi non carborundum
Sr. Member
Jul 27, 2017
582 posts
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GTA
newbiehere wrote:
Jan 10th, 2018 1:19 pm
http://www.cbc.ca/news/business/statist ... -1.4437137, this is for real? are we missing something here

We are at 37 , at most , we just half of that with no property and saving around $1000-1500 per month.

Are we doing something wrong or missing somethng here?
what you see is what it is, its an average. There are folks way up there with an high end net worth as well as someone with virtually zero net worth like my son.

take what you posted in the OP,

- You have (~50%) of the average Canadian net worth, so you have $150k. That for some folks is amazing

- that you are saving $1000 - $1500/mth

- that you don't own a property, so my guess is that you are renting or living with parents?

- you don't mention children. As most folks that have them, children add to the overall cost of living.

epilogue:

- never compare yourself to others, what you have is it. Others may be in a worse position than you

- doesn't matter if some folks have windfall dollars from wherever - if you dont have it, then likely there isnt anything that you can do about it, or is there?

- you state that your net worth is $150k, well that isn't too shabby compared to my 39 year old son whose net worth is approx $5k, lives paycheque to paycheque, rents & desn't live with us.

- you stated your net income - expenses is $1000 - $1500/mth free cash flow/savings, well that's not so bad, or is it?

- is the current lifestyle that that you live suit you, or do you want to change it - if so to what?

-
Last edited by porticoman on Jan 13th, 2018 10:57 am, edited 1 time in total.
[OP]
Newbie
Feb 10, 2017
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Silver1234 wrote:
Jan 13th, 2018 9:45 am
You forgot that many people receive the bank of mom and dad and bought a property right after they graduated and got their first full time job, many of them are even a millionaire by now in the GTA/GVA. You might be at the same age and make the same salary as them but their networth is much higher due to early inheritance.
So relying on Parent's $$ is the key to Canadian's weath =(

Unfortunately we don't have rich parents , in fact, we need to help them financially to some extend. (I though thats the norm no?)
treva84 wrote:
Jan 13th, 2018 9:47 am
Honestly, you would be a lot happier with what you have if you stop comparing yourself to others.

Some people have more and less than others due to different circumstances in their life. Your situation is unique to you and it shouldn't matter what other people do or don't have compared to you. The natural human tendency is to compare but how does this help you?
of course, but to truely to stop comparing with others is when you live on an island by yourself, not have to compete with others for your Real Estates/jobs/schools

I hate comparing, but unfortunately, we live in a very competitive world and how we live depended on what others are doing( ie. Real estate) .

Even minimalism need a place to live =(
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Jun 11, 2001
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Especially if you have kids (daycare is extremely expensive) it would be tough to grow your NW in those yrs. It does snowball if you both work in 1/2 decent companies with RRSP matching programs, live below your means (keep up with the Joneses). Regarding the expensive RE market... many have made it to high 6 to 7figures w/o even owning any property.

I know it may seem impossible especially if you start of with outrageous student loans, then you tack on a large mortgage etc. Remember it's not a race, just do your best and have some financial goals.
...zzz...zzz...zzz...

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rjg4235 wrote:
Jan 11th, 2018 2:21 pm
Did anyone even read the article? I love how everyone just thinks it's all real estate because they can't come to terms with the fact they're poor;

"All in all, Canadians held $12 trillion in assets at the end of 2016, with family homes making up a third of that value."
Recently Statscan said 80% of Canadian's wealth (on a national level) is in RE.

http://www.statcan.gc.ca/daily-quotidie ... 01-eng.htm

more-than-80-canadas-wealth-real-estate-2127617/

This seems to better illustrate where the average or typical wealth of a Canadian comes from.

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