I have worked with a financial person for about 8 years and we constantly struggle over my anxiety for fast growth and her measured approach. To begin, she is not a financial planner, nor is she a financial advisor. (or adviser, there is a huge difference) She is what’s called a “Fiducary.” Financial advisors, advisers or investment consultants typically hold security licenses allowing them to advise clients and also sell them mutual funds, stocks and other securities. With a fiduciary, you are hiring a person who develops a financial plan and then helps you to achieve it. They are not in the business of giving advice and then selling you investments, their only role is to plan and help you be accountable to the investment strategy.

For context there are approximately 28,000 financial advisors in Canada and about 17,500 are Certified Financial Planners. There are fewer than 100 Fiduciary consultants. 

The woman we work with is a fee for service consultant and created a plan for us to follow 8 years ago and over the years has guided us to create a sound financial future. She has also helped to connect us with specific types of accountants, lawyers, cross-border investment brokers and some estate planning professionals.

Where we clash at times is I, like many people want to see high returns quickly and her approach is to plan with a solid investment strategy based on consistent long term results.

What makes me smile is how she approaches investing for the future is in-line with how I advise Buyers and Sellers with their Real Estate investments. “Housing is for living in, not for speculation” is a saying that is the lens many people view Real Estate through. I believe, as does she, that Real Estate is an excellent investment, however it is a long term investment and treating it like a “get rich quick” scheme is no different than day trading stocks. Short term, it is easy to lose money and some of the shocking headlines cherry pick these types of stories. 

When looking at purchasing a property, I do my best to educate my clients to think long term. Any purchase where the goal is to sell in under 5 years is a risk. Markets cycle constantly and anyone who purchased a property in 1989 knows it took years for the value to come back to what they paid for it during that boom period. A look back in time when values dropped in the crash that took place in 1989 appears like this.

Bungalow Southdown St. Oshawa. Sold Feb/ 1989 $155,000 Sold Dec/2003 $164,000

 At first glance an observer thinks, “Wow.” It took 13 years for the value to get back to what the Buyer paid for the property, however, when you dig a little deeper here is what you find. (Assume a 20% down payment and average mortgage rates of 6%)

156 months of mortgage payments reduced the mortgage by $45,000 leaving $86,000 left on the loan. This means adding the $45,000 to the initial down payment the homeowner would now have  $75,000 in equity. The rest of the story is if the Buyer opted to rent and not buy he or she would have paid out $280,000 in rent payments over the same time period. Again, if the person decided to rent and invest the down payment in the stock market it would have a value of about $140,000 in the same time period. The homeowner would have been richer by about $75,000 and would not have had to pay rent to an investor. The renter would have still $140,000 left over, an amount that would be taxable whereas the homeowner would have a tax free investment.

Long term, Real Estate not only provides a secure investment, it also allows the homeowners a comfortable space to live. Most homes are mortgaged, and the owners are benefiting from increased values and reduced mortgages as they are paid down – some of these homes are building equity for the people who live in them and others are creating wealth for an investor. 

With so much information about Real Estate being a risky or poor investment, many homeowners are silently building for the future, mortgage payment by mortgage payment. 

If you are planning on making a move to either buy or sell, I can be reached at lindsay@buyselllove.ca or 905-743-5555