Hi again, everyone, Update on the above info, offered by my friend the accountant whom I first met at the investment group about 5 years or more ago. The guy who retired last year, without a pension, and who now borrows at about 6% (interest deductible when used for investment) and puts it out to earn about 12% (much of current return at low tax rate, some of it deferred, to be taxed at low rate when withdrawn). He says that the amount of current income that that can be obtained free of tax is closer to $50,000.00. Same provisos as outlined above - with possibility of bumping up the amount that is received free of tax given some of the situations as mentioned. Sorry that the situation applies only to Canadian residents, folks. Good wishes to you and yours. ole joyful P.S. We had a visitor/new member at our investment group last week, who said that she felt rather at sea, among such skilled investors. We told her not to feel bad - that in the investment game, there are no stupid questions. That she should ask any of us to explain various terms or situations that were unfamiliar to her. Each of us learns as we go, a step at a time. Compensation usually increases commensurate with increased knowledge! o j

After I'd bought some equity-based mutual funds, for that fabled "diversification", I decided that I didn't like the fees that I was paying to the managers - darn near as high as the income tax that I paid on on the average rate of gain (but some of the growth was deferred until I sold, of course). By the way ... when you own mutual funds that produce capital gain, in a regular account (not one of the tax-deferred retirement account ones) you must keep track of not only what you paid in the first place, but add all of those payiouts that they reported to you from time to time, usually annually, as the years went along, as they were reinvested. When you sell, your "cost" (for calculating capital gain) wasn't just the amount of your original investment, but included all of those distributions, that were reinvested. If you don't add those (usually annual) reinvested amounts ... you'll be paying tax on them twice - if they're outside of a tax-deferred retirement account! I decided some time ago that I prefer to buy individual stocks myself. On some of the stocks that I own, I used to be taxed at a low rate on dividends, and that rate was reduced even farther, recently. If I earn those dividends in a tax-deferred retirement account, I have no tax liability on the dividends currently, an advantage. But ... when I cash out, I pay tax at regular rate on every dollar ... so I lose the tax advantage that I would currently enjoy if they were taxable now. When I borrow to invest, for solid stocks, aiming at the long term - to fund that retirement - I use the current dividends that the stocks bought with the borrowed funds produce, plus some of the ones earned by the shares that I'd bought with my cash, to pay the interest on the loan ... and that interest is deductible. So I end up paying next to no tax on those dividends, or even gain a bit. When I take money our of my retirement account - taxed on every dollar, at full rate. When I sell some of my regular stocks (the non-tax-deferred-retirement-account ones), I deduct the amount that I invested originally (plus the reinvested dividends, if I have been using a dividend-reinvestment plan) anddeduct that from the amount of the proceeds of sale to find tha capital gain. I pay at regular rate on half of that capital gain ... but I get half of it free of tax. It makes sense, in this country, to keep bonds, GICs, etc. where the number of dollars originally invested won't grow, and the regular earnings are interest, that's taxed at top rate, in those tax-deferred retirement avccounts. Not equities, and certainly not Canadian equities. I'm nearing 80 years of age, and I have about 80% of my assets in equity-based investments ... and that suits me well. Good wishes to you for increasingly wise use of your income ... plus assets. ole joyful

This is the first time I noticed the 'retirement' forum! I too, have to scrimp. I was injured several years ago at work, and broke my neck. I am downsizing- my 4 bedroom home is no longer a 'dream', but a burden. It is paid for, thank goodness, as I cannot imagine other people who are on Social Security Disability having to pay a mortgage! I will be selling this house in Wyoming, and moving to Texas to build a 800ft2 house. I don't know that living the way that I will, would be good for other people, but I'll tell you what I plan to do. Sell this house (Wyoming). I will move to Texas, propbably some place between San Antonio and Austin (Austin is out because of high costs, unless any of you know of a way to live there). Build a small 800ft2 metal building- the same kind that barns, storage, garages are made from. It will be on a concrete slab, I will stain the concrete, so there will be no carpet/tile expense. (That is both for cost and severe asthma). There will be no interior walls, except for a bathroom, to save on building costs. Will try to do as much as I can, which is not much. If I am in Bexar County, I will be able to get a free water saving toilet from SAW. Buy a small, 'split' air conditioning unit, so there will be no central air to have to run through the house. I have been researching how to build with the lowest cost. I know of no 'plans' to help you build. I am trying to build for my health(allergic to 91 different things/severe asthma). The property taxes in Texas are horrible- even a small home would be about $3,000- 1/4th my income. I will try to get 11 acres on a privious 'ag exempt' property. That means I will have to raise '3 livestock'- 3 horses, 3 cattle- 3 hogs- whatever. I want to be legal. I will have to put out the cost to raise them, and then sell. I hope that will work, because I rarely eat meat- maybe once every month or two. I probably will not be able to be by a public transportation service, but that would sure be nice- saves gas. As far as food/household items, it does not make sense for me to have a Costco card, as it is just me- too many of their items are in such big bulk that it would go stale/bad. Works well for families like joyfulguy, but for a single person I am really good at buying on sale. Lately, I have found out that we really can go without- it doesn't kill ya! I really didn't need all those clothes that I accumulated while I was working! To the church they went! It will make things cleaner, and help me to be able to build a smaller place! The healthfood stores are good to buy organic, but a bit too expensive. Which is the way to go??? Use the library, or the computer- the computer is my one splurge- it keeps me in contact with the world. I used to use a wood stove, but now unable to chop/split wood- hopefully in Texas, I will not need to use a 'warmer' much, and will be able to do wood again. This was the first time I had heard of Angel Food- I will apply when I get there. I do not have a printer, so right now I cannot use coupons to shop, but somehow will try to find a way. It makes no sense to use the library computer, as they charge 15 cents for each printout. I will keep reading your site, and learn of other ways to save. If any of you can think of other ways to save, I am very happy to do so.

Hi again, all you Canadians, Suppose, when the bank stock was at about $105.00, I'd decided to borrow $40.00 using those certificates as collateral (a lot more that the $4.00 original value!), and having certificates issued for the new shares and giving them to the bank to add to the collateral. When the original stock dropped to $68, a drop of about 1/3, (thanks almost entirely to that dratted U.S. sub-prime mortgage debacle - smells a lot like a hot shot lender-generated scam, to me) ... that would have been a real "loss" had I lost my nerve and sold it. If I'd used that $40. to have bought more stock of the same bank (not a good idea - best to own a variety of issues), that $40. stock value bought with the loan, having also declined by 1/3, to $26, would, added to the $68 of the original, produce $92.00 total current value ... more than double the $40.00 that I'd borrowed. So I'd have avoided a margin call on the loan, i.e. bring in some money to reduce the lender's loan to below 50% of total asset value, or more shares to add to the worth of the collateral ... by late today, tomorrow at the latest! And it would have been a lot wiser had I had stocks in about three not only actual companies, but types of industry, used as the collateral: less risky ... or, rather, spreading the risk over a wider area. Also, I still owed the bank $40. .. but the asset that it had bought was now worth only $26. By the way: note this aspect of calculating. The stock price dropped from 105 by a third to 68 ... but it's gotta gain by a half to break even: 68 + 34 = 102. It's a quality stock - it'll recover. I've got time to let it happen ... well, if, at 79, I don't, the executor of my will does. Neither of my major beneficiaries are under any more pressure to liquidate under pressure than am I. The pressure would be to pay income tax, about a year or slightly more later ... and there are other assets at close to real value to take care of that. Or, if everything were undervalued, she could use some of them to borrow to pay the tax, repaying the loan after recovery ... but the trouble with that would be that the loan interest wouldn't be deductible. Further to the rule of 72. At the price of $68., the stock price has doubled from the original $4.00 or so about 4 times: 8, 16, 32, 64. When one divides the 41 year period by the number of doubles, or 4, one gets 10.25, i.e., it took 10.25 years on average to double. Divide 72 by 10.25, one gets 7.02: the growth rate of the basic asset was about 7%. On the other hand, if you know the rate of interest that you expect a certain investment to achieve and divide that number into 72, say, 6%, you'll get a result of 12 ... it'll take your investment about 12 years to double (with no allowance for erosion of the income by tax, or of the value of the asset by inflation). In addition to the approximately 7% growth rate that my bank shares achieved, over the years they paid me about 3% in dividends, for a total growth rate of 10% or so: not too shabby ... especially when it's tax-advantaged, deferred and also tax-advantaged. And the annual rate of dividend grew since my last report to $3.48, which I think that they will make a strong effort to maintain, despite the drop in value of the stock. If they drop it back somewhat, it'll likely hit the stock price for a while, but I won't cry too hard. Earlier, at $105., or 4.5 doubles (8, 16, 32, 64, 128), dividing the 40 years by 4.5 gives 8.888, which is the rate of growth that the stock developed. Add about 3% or a little more of dividends that the shares paid over the years, and you get a total growth rate of close to 12%. I can handle that ... especially when I remember that I pay a low rate of tax on all of those dividends. I use the full amount earned by the loan-purchased stocks, plus part of that earned by my original cash amount invested to pay the interest on the loan, which interest is deductible (as it would not be were I to borrow to purchase an RRSP) and I think that you may get an idea of the reason that I prefer non-RRSP investing in a number of situations. Especially since, were I to cash out at either $105. or $68., after I deducted the $4.00 of original investment, I'd get half of the difference with no tax liability. But every dollar that I withdraw from an RRSP (or successor RRIF after age 69) ... gets added directly to income, and taxed at regular rate. If you can't avoid tax, defer it. But if you can pay some tax now and not only arrange for ongoing income to be taxed at a low rate ... but defer a substantial portion ... and then arrange for a major portion of it to be tax-free ... so much the better. So ... I think that sometimes it makes sense to pay some now, in order to arrange major tax benefits ... not only ongoing ... but later, as well. Not only that, when you have a major portion of your assets in an RRSP ... ... supposing that you need some money during those years of living and want to ask your lender for a loan. Can you use your RRSP assets as collateral for a loan? Officially, no ... unless you have a very accomodating lender, who'll make one without collateral (since they already carry your RRSP). Some will - some won't. Even so, the rate of interest might be higher. Good wishes for increasingly effective management of both your income and your assets. ole joyful P.S. Have you read my thread somewhere around here that outlines how to borrow to invest at almost no net cost (without making any allowance for possible increase in value of the invested asset)? Plus another asking which ordinary person/investor gains from the erosion in value of one's investment by inflation? o j