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Erwin Szeto [00:00:11] This episode is brought to you by the Halton Real Estate Investors Group. May 26 The Halton REI will be meeting at Sheridan College in Oakville, Ontario. And as always, we have a wonderful guest speaker. Fresh off completing hundreds of tax returns for 2017, the most amazing Real Estate accountant and author Terry Chan, CPA, will be sharing the winning and losing investments from 2017. After reviewing hundreds of tax returns, you will be shocked at the variety and creativity investor’s risk to make returns, and only a handful of strategies were successful. Find out how to reduce risk and maximize returns from Jerry Chan because only a fool learns from their own mistakes. A smart person learns from other people’s mistakes. This is a presentation you do not want to miss. To get yourself on the invite list, go to www.youtube.com Real Estate Investing Dossier Meeting Again This WW w talked truth about real estate investing dossier slash meeting. If you already on the guest list, keep an eye on your email inbox and hope to see you there talking. Ladies and gentlemen, investors across Canada. My name is Erwin Szeto, a.k.a. Mr. Hamilton, and welcome to the truth about real estate investing show. As always, I have the pleasure of interviewing the titans of Canadian real estate to figure out what makes them successful. We will listen to their teachings, learn from their mistakes and experiences, so we may to replicate their success. If you enjoy the show, please leave me a review on Apple’s iTunes in a comment. I read everyone and I’m grateful for every review. If you have some constructive feedback, please send me an email too. I’m not sure where and I will endeavor to improve. Before we get started, I’d like to share with you a daily affirmation. I started using that I learned while reading The Morning Miracle by Hal Elrod. And it goes something like this. First and foremost, I understand that money is inherently good or bad. It is what a person does with it that makes it so the more money I have, the more options I have to make, the impact I want to make in the world. It also I also understand that my financial situation up until this point is simply a reflection of how I related to money making it, saving it and growing it. But there are virtually no limits to how much money I can earn, save and grow. It’s simply a matter of investing time in developing my money mindset. Through learning about money, so I will commit to consistently read articles and books that will teach me how to earn, save and invest money so that I can be financially free. Pretty cool, huh? I go forth, be awesome. Make lots of money and help those who need it. Why would anyone want to build a $1 million RSP with Kathleen Vandenberg? It all started when I sent an article to CFP member Kathleen Van Den Berg in an article titled How to Build a Million Dollar RRSP. It isn’t as hard to get there as you think. She responded by correcting me and saying, I think they are asking the wrong question. Why would anyone want to build a $1 million RSP? To which I responded? I don’t know. Let’s listen in on the podcast. So we booked the time you made it happen, and right after we had, unfortunately, we had to wait for the snow to melt, which thankfully it has for Kathleen’s snowmobiling season to end. In order for us to get her on the phone and to figure out what she’s talking about, because it sounds good to me, but she explains why it’s not such a great idea to have a million to build a million dollars pee wee ice cover or some other hot topics, such some hot topics such as how much we need to retire. Financial advice for folks in different stages of their lives. And having trouble. Folks having trouble getting their six or eleventh or 15th mortgage for an investment property. You’ll want to hear about the benefits of whole life insurance. As I personally know, folks who were out of credit, they can no longer buy new property or refinance existing property. And once they had something called whole life insurance, they were able to do so. So you’ll want to hear what Kathleen has to say about that. So without further ado, I give you Kathleen Van Den Berg. How was snowmobiling season?
Kathleen Van Der Berg [00:04:03] oh, it was terrible. Yeah, I’m getting very disheartened with it. It’s a terrible investment, a snowmobile. And I think cars are a bad investment. You should see a bad snowmobiles are. It’s really, it’s really tough. Like you can’t go snowmobiling until the lakes freeze, right? And you also need snow. So what often happens is it snows, but the lake doesn’t freeze. And then when the lake freezes, it’s because it’s cold. You get lack of snow, so you need the snows in the trails. And so it’s a fine lake. You’re lucky if it’s a five to six week weekend sort of thing. So but one thing we did do was that we took a week off Lake, you know, so living life on our terms, right? Because they were such because it was such a short season, we were able to do that. So it was we did that. So how long did you take off? Sorry,
Kathleen Van Der Berg [00:04:56] A week. Yeah, as like a winter week up at the cottage?
Erwin Szeto [00:05:00] No, wifi up there, no internet.
Kathleen Van Der Berg [00:05:02] Oh no. We have five weeks internet. I think, you
Erwin Szeto [00:05:06] know, I just figured you’d you would spend some more time and because you could probably work from your wherever you were.
Kathleen Van Der Berg [00:05:14] Yeah, it’s tough. I’m starting to do a little bit more remote work, but my files are here. And then occasionally, you know, like you really have to see clients face to face. So.
Kathleen Van Der Berg [00:05:26] Yeah.
Erwin Szeto [00:05:26] Very cool. And then for those who don’t own snowmobiles that you own yours, right?
Kathleen Van Der Berg [00:05:31] Yes.
Erwin Szeto [00:05:32] Yes. Do you rent them?
Kathleen Van Der Berg [00:05:36] No. The I can’t even fathom what the insurance would be to rent those out.
Erwin Szeto [00:05:41] No, no. That’s one thing that the consumer or the consumer market doesn’t understand is how much it costs to operate and insure stuffs. Yeah, for example, like a couple of friends of ours, people you know to, you’ve talked about like going on a date, like going into ATVs and then we’re like, completely surprised. There’s like no ATVs within an hour drive where we live. Sure, it’s the same thing with snowmobiles. You can’t find them to rent.
Kathleen Van Der Berg [00:06:06] No, no. It’s very expensive to rent. I know I think that there’s some places in Haliburton. I know there’s some places in Quebec and the trails are pretty good out there too, but they’re the coolest place to go. And they do rent them is actually interior B.C. like gold. And then you’re in the mountains. So that’s a really cool place.
Kathleen Van Der Berg [00:06:28] Cool. Cool.
Erwin Szeto [00:06:30] Yeah, it is a fun thing. I don’t know if you’ve seen it in social media, how there’s a new go cart place opening up in Agra Falls and they claim to be a Mario Kart theme. But yeah, these being Canadian, you know everything. All these businesses are so seasonal, it’s easy exactly to make it run out of things, right?
Kathleen Van Der Berg [00:06:49] No, no.
Erwin Szeto [00:06:51] You know, thank God we don’t have 12 months of snowmobiling season. I’m sorry.
Kathleen Van Der Berg [00:06:58] I know, but I want a nice winter, good winter, Canadian winter. But it came late. So it’s still snowing. But the lakes aren’t frozen anymore.
Erwin Szeto [00:07:08] So what are your investments doing?
Kathleen Van Der Berg [00:07:11] They’re doing fabulous. Just fabulous. They just really run kind of tickety boo. Got good tenants. I think that’s one of the most important thing you can do is to spend the time to vet the tenants, for sure.
Kathleen Van Der Berg [00:07:26] So, yeah, I’m thinking, well,
Erwin Szeto [00:07:28] I’ve one of one that we’re putting through the OTB right now, but we’ll share that on a future date once we have like some closure to it other than other than Real Estate. So actually, let’s expand on the Real Estate. You have property in Lindsay anywhere else.
Kathleen Van Der Berg [00:07:45] I just bought another property in Lindsay that we’re going to close on mid-May, and I have the cottage up in Apsley. I have a condo in Brooklyn, which our in-laws are in. And I have a duplex in Whitby and I have a rent to own and Curtis, and I think that’s it.
Erwin Szeto [00:08:08] Is Lindsey part of germ region or what region is that?
Kathleen Van Der Berg [00:08:11] No, it will be part of the coauthors. So a lot of people are looking at Peterborough as an alternative to Lindsay. Peterborough is starting to open up or investigate their secondary suites process, right? But they’re not quite there yet. So but I think Peterborough is well, it’s more desirable than Lindsay in many respects because it’s got a much higher population, has got more employment, it’s got a bigger hospital, it’s got the university and a college where Lindsay’s like an offshoot of college, Lindsay’s much smaller population. I couldn’t even tell you what it is, but Lindsay is a little bit of a hidden gem.
Erwin Szeto [00:09:02] I can’t we can’t read to one day go back to Peter Bro.
Kathleen Van Der Berg [00:09:05] Sorry, go ahead.
Kathleen Van Der Berg [00:09:06] I’m actually on Google Maps yesterday, marking the distance from Lindsay to the four oh seven and Peter Burke to the four seven their exact same setup.
Erwin Szeto [00:09:19] Okay, and can you explain why that’s important?
Kathleen Van Der Berg [00:09:21] Well, you know, transit is one of the biggest factors that you want to be looking at when you look for income, properties or properties in general, if you’re looking for appreciation. It’s like, how quickly can they get two jobs in Markham or jobs at in Durham or Darlington? Things like that. How quickly can they get to the go train? I don’t think anybody from 1s is necessarily commuting downtown Toronto, but it’s always it’s always about the commute and the driving distance. So they saved like Toronto, getting closer and closer, right, like Oshawa, is closer to Toronto than it used to be. Well, we didn’t move Oshawa, we didn’t move St. Catharines. It’s just the transit is more available.
Erwin Szeto [00:10:01] Yeah, more go train expansion for 07, those sorts of things.
Kathleen Van Der Berg [00:10:05] Yeah.
Erwin Szeto [00:10:06] Very cool. Yeah, I would just say Rob Break on you, Stanley, telling me how things are getting competitive in Brant and Peterborough and everybody’s branching out. So then I start by asking people like, What’s next? What’s the next? So once, once Lindsay’s done? What’s your next to the next city?
Kathleen Van Der Berg [00:10:25] I can’t think of anything that is like Lindsay Small.
Kathleen Van Der Berg [00:10:29] It is
Erwin Szeto [00:10:30] 20000 population in
Kathleen Van Der Berg [00:10:31] 2011. I feel like it sort of hit the max, but I think. Hi, Lindsay, is. Lindsay and Peterborough still have a lot of land to develop, and this is just a lesson I learned when I lived in Calgary. You see, Calgary supply eventually caught up with demand because there was still lots of land to develop. That was in 30 minute commute of downtown Calgary. So Toronto, there’s barely any land to develop, whereas in Lindsay and Peterborough, there’s still a lot of a lot of land that they can develop. So I can’t see Lindsay and Peterborough being done. Any time soon. Whereas places like Oshawa St. Catharines are sort of at maximum density,
Kathleen Van Der Berg [00:11:21] anything
Erwin Szeto [00:11:22] unless you want to start doing condos.
Kathleen Van Der Berg [00:11:24] Right, right?
Erwin Szeto [00:11:26] Yeah, there’s an article which came out. I saw that I was actually kind of low at something in the 40s for like just over 40 percent of condo sales are ambassador that are owned by investors. But just over 40 percent of them are negative cash flow and I thought was interesting.
Kathleen Van Der Berg [00:11:42] Yeah, everybody seems when they look at condos, they buy it on that that potential appreciation. Mm-Hmm. Which is something you have to be very careful about because you’re better off to look at something that can cash flow as well. Now I being said, a lot of my clients that they don’t want to be landlords and they need something easy if they have young children at home when they have demanding jobs. A condo can be something that’s really kind of easy and turnkey. So I don’t completely discount it depending on the type of client that’s looking for the property.
Erwin Szeto [00:12:26] Yeah, it’s just it’s a challenge. It’s a challenge that that’s been becoming more prevalent for us investors as we run out of places to invest cash listed more difficult to get. And then this is recent. This recent correction in the real estate market where you look at the trial real estate market, for example, everything hurt, right? Everything came down in price. The overall market was down like some around 13 percent from the peak. But then if you broker condos, condos for on the trio’s Toronto Real Estate Board, they’re actually above where they were last spring.
Kathleen Van Der Berg [00:13:04] So look for defensive asset.
Erwin Szeto [00:13:06] It’s been defensive, but yeah, it won’t cash flow at 20 down or 30 down. You’d have to put down significantly more.
Kathleen Van Der Berg [00:13:13] Yeah, you’re right. It is defensive because it’s a good entry level property. It’s a good millennial type of property. So those types of sort of entry level typically are a lot more stable.
Erwin Szeto [00:13:33] So I’m actually trying to find a greenbelt map. So I’m trying to see if Lindsay’s actually within the greenbelt, you know,
Kathleen Van Der Berg [00:13:40] no, it’s above the greenbelt.
Erwin Szeto [00:13:41] So you don’t have that issue. Interesting. Yeah. But actually, I don’t know if you know, it’s actually Tony that told me this so good source because she’s a builder and TWC, so this may not apply to you, but it’s a question to ask your folks in that are in government and Lindsay is in kW. See, those Wooroloo is not releasing any more land to develop for development. They wouldn’t even release it to the university, not protective of it. And they are outside the green belt as well, which was. And this was interesting because back at the REIN meeting about three years ago, officials from their government came from the local government came and said, Hey, we don’t have these. We don’t have green belt issues. We have plenty of land. They do have plenty of land, but they’re not allowing anyone to have any really interesting.
Kathleen Van Der Berg [00:14:33] Yeah, yeah. That’d be a good question to ask, because certainly Lindsay and Peterborough, all they’re on the Trent seven waterways and flood plains are an issue, and they really to their growth plan. So all these things are crucial for planning department. So they need to grow in a proper way for sure that it’s healthy for the city and that’s healthy for the land and the environment, right?
Erwin Szeto [00:15:01] Because in tripping all over the place, but then Branford, for example, where they know where their floodplains are, they don’t allow basement suites. So it’s very important for investors to know where they’re investing. And then a past guest of the show, Sarah Larbi. She’s actually had a couple of floods.
Kathleen Van Der Berg [00:15:16] So, yeah, it’s exactly the same thing. They’re in the process of developing the rules, but one of the rules is going to be no basement suites, flood plains, and I was actually looking at a property this week. The realtor didn’t know the listing rep didn’t know, but I called the city and Maggie’s skim the address, and I knew right away it was on the floodplain, right? So it was easy.
Erwin Szeto [00:15:42] And that’s great advice for our listeners. If you don’t know, call the city, you don’t trust the agent.
Kathleen Van Der Berg [00:15:51] I can say that.
Kathleen Van Der Berg [00:15:54] Well, the agent should really the agent should have been aware of that.
Kathleen Van Der Berg [00:15:58] They should be absolutely aware. And I didn’t
Erwin Szeto [00:15:59] tell them to call the city. They don’t call. Don’t hold me accountable to it, right?
Kathleen Van Der Berg [00:16:04] But it’s also one of the event is when you work with a realtor like yourself that investment proper property savvy and listing agent wasn’t, wasn’t it? He was selling a single family home, and I was looking at it as a potential conversion, right? But if you’re not investment property savvy, you’re not going to ask those questions.
Erwin Szeto [00:16:23] Yeah, but you should still be sales savvy, in my opinion. Yes, you should be able to know how to sell that property to any customer that comes in through this might. This is my how I feel about it, too. So we scheduled this call a long, long time ago.
Kathleen Van Der Berg [00:16:38] You know,
Erwin Szeto [00:16:40] it’s mostly my fault for postponing and canceling.
Kathleen Van Der Berg [00:16:47] So I would say that I think it was hard to get a hold of as well,
Kathleen Van Der Berg [00:16:50] yeah,
Erwin Szeto [00:16:50] yeah, you had to snowmobile. Yeah, that’s fine. Like, you know, snowmobiles your passion. So you know, and you had finite time to do it, so you do it when you can. But we are we were training emails because as funny as finding ice and you like interesting articles and there’s one of the financial posts that I think this is not the last one I sent you. And the headline was how to build a million dollar RRSP. It is. It was hard to get there, as you think. So what are your thoughts?
Kathleen Van Der Berg [00:17:16] Well, first of all, I just think that’s the wrong, the wrong question to be asking why? Like, why would you even want to have a million dollar RSP? I think that that is hugely problematic. Anybody that you know, or most people that have a million dollars probably focused on just this one aspect of wealth, so much so that they put too many eggs in this basket. That’s a bomb. I mean, just for your listeners to reiterate, you know, I’m not a huge fan of our response because I just think this tax bomb waiting to happen. So you have a million dollars and you’re pretty much going to be guaranteed that you’re going to be in a high tax bracket when you go and take it out. Hmm. So and if you’re if you’re married with a spouse and one when one of you passes away, it rolls to the other and now you’re in an even higher tax bracket, which means OAS benefits are clawed back. Maybe things like HST will be affected. It’s a horrible it’s a horrible strategy, especially if you’re putting all of your eggs in one basket. So why would you want to be that?
Erwin Szeto [00:18:27] Do you know the history behind it? Why was it created?
Kathleen Van Der Berg [00:18:31] Well, I mean, it’s created so that Canadians would be self-sufficient for their retirement. It was created as an alternative. I mean, way back when decades, decades and decades ago, centuries ago, employers provided a defined benefit plan. So you were basically guaranteed an income when you retire and you stayed at your job for forever, right? But then as the economy changing that more small businesses, they didn’t want to be providing defined benefit plans because they’re there. There are huge risk to the employers liability. Yeah, they have to guarantee the investments and then even larger corporations started decreasing it. And then they change from defined benefit plans to defined contribution plans, which are more like ours, meaning you pick the investments. So if you mess up with the investments or the market doesn’t do what you want, then you’re on the hook and you don’t have enough to retire on. So I mean back. Another thing is a back. When the retirement age was set at age 65, life expectancy was probably around 65. But now we see life expectancy that, you know, 80 to 85, which means some 50 percent of the population is going beyond that. So it’s crucial for us to have retirement savings accounts.
Erwin Szeto [00:20:01] So then the question I had was then how much do we need to retire?
Kathleen Van Der Berg [00:20:06] Good question. And it’s different for everybody. Have you ever played the game? The rich dad, poor dad game cash flow?
Erwin Szeto [00:20:12] Yeah. Yeah, it’s been a while.
Kathleen Van Der Berg [00:20:14] It’s been a while. OK, so just the way the game works is you’re given a profession right to start. So you might be a plumber, you might be an architect, you might be a doctor, and everybody thinks that you should be the doctor because the doctor makes the most amount of money, but the doctor has also the most amount of expenses. Mm-Hmm. So it’s harder for the doctor to retire because it’s harder for the doctor to replace his income on a passive basis. So for every person, it’s different. And I suggest that people really do a proper budget and figure out what they need on a monthly basis. Mm-Hmm. I always say it’s not. I don’t need a million dollars to invest or $2 million to ask me personally. My goal is to have eight thousand dollars a month. OK, so I don’t need an asset base. I need income base, right? Because that’s what I’m trying to replace the income. But I will say one more thing that if you save money, you’re met. You guys can google this. If you Google safe withdrawal rate and they’ll be like thousands and thousands of hits, but you’ll see that the safe withdrawal rate, it’s four percent. It could be anywhere between two and four percent. So that means if you accumulated two million dollars, the financial gurus are telling you that you can only safely withdraw about four percent of that money. So at two million dollars, you should have an income of about 80000. And that number is based on the fact that you’ve got market volatility. When you’re older, you’re probably going to invest in more conservative investments. And you we don’t know how long we’re going to live, but really, it’s no plan at all because if the markets do really well or your real estate portfolio. It does really well, you could probably take more from your money. But if things go into the crapper, then you have to start to readjust. And that’s why it’s sort of hit at that four percent level
Kathleen Van Der Berg [00:22:25] It’s interesting.
Erwin Szeto [00:22:27] So when you say eight thousand a month, is that for you, your household? Is that for you and your husband is that’s just you?
Kathleen Van Der Berg [00:22:33] Yeah, that’s no. That’s me and my husband. I sort of benchmark that based on our expenses and our lifestyle and what we want for vacations and our snowmobile bill.
Erwin Szeto [00:22:46] Interesting because I always have in the back of my mind that if I ever want to give up as in like sell off everything, yeah, I could have a bit and then I could, for example, live fairly, really cheap in the Caribbean. Yeah, I’ve done. I’ve done. I’ve been a bit of research on places like Panama, for example, or like Belize countries like that where taxes are low. Health Care’s cheap weather is great.
Kathleen Van Der Berg [00:23:17] And yeah, absolutely. If you if you do your due diligence and you know that you can live off of less than you’re willing to move to a place like that, that’s great. We’re actually going to Costa Rica. It looks like a Christmas. So I’m going to try and look at some properties there because I’ve heard good things about Costa Rica, too.
Erwin Szeto [00:23:37] Yeah. Which city you going to?
Kathleen Van Der Berg [00:23:40] I don’t know.
Kathleen Van Der Berg [00:23:41] OK, we’re looking to that stay at the review, so I’m not sure what major city that is near. OK.
Erwin Szeto [00:23:48] The friends of the show, like James Mags and Richard, Oh boy, can’t believe last believes me right now. But he just bought a hotel and I saw him on the podcast. He just bought a hotel in in Huckle Beach.
Kathleen Van Der Berg [00:24:03] Oh, really? Well, oh, I’ll have to go check that out.
Erwin Szeto [00:24:06] Yeah. So how cool is it? It’s the biggest tourist town in Costa Rica. It’s on the West Coast. It’s the biggest tourist town because it’s the best was the biggest and they have a good surfing there. So, for example, I think a year or two years ago, they hosted the World Championship of Surf so that city received a lot of investment. So the roads between the airport and Hakka were where repaved and done nicely so. And also a lot of investment went into the city. But it’s not like anything. If you’ve been to any like major Caribbean city, that’s a popular travel destination like Mexico or yeah, or Dominican. It’s not nearly that developed.
Kathleen Van Der Berg [00:24:48] OK.
Erwin Szeto [00:24:49] Like, I don’t even think they have a Starbucks.
Kathleen Van Der Berg [00:24:51] Like, why
Erwin Szeto [00:24:53] would they have a KFC? I recall a KFC.
Kathleen Van Der Berg [00:24:57] All right. Yes.
Erwin Szeto [00:24:59] So, yeah, if you if you need if you need some introductions to people who can who know their way around. Yeah, yeah, like the REU, I don’t think would be anywhere near it for because the hacker doesn’t have any of those all-inclusive style resorts nearby.
Kathleen Van Der Berg [00:25:14] OK. Hmm.
Erwin Szeto [00:25:16] Yeah, my friend Jay-Z owns a condo there. Sorry. Yeah, he does. He owns a condo. It’s a townhouse, kind of like a twelve hundred square foot. It’s really a semi. It’s a semi. It’s on the ground like 300 yards from the beach.
Kathleen Van Der Berg [00:25:27] No. What did he pay for it or what would it be worth now?
Erwin Szeto [00:25:30] Just over two hundred American. He only bought it like two years ago. Yeah, yeah. And then he then the builder financed it. So it’s like he couldn’t get bank financing, right? So it’s basically VTB.
Kathleen Van Der Berg [00:25:41] Oh, yeah.
Erwin Szeto [00:25:44] For like for like four percent interest or something like that, something very reasonable.
Kathleen Van Der Berg [00:25:48] Yeah, that’s great.
Erwin Szeto [00:25:49] Oh yeah, totally. Because yeah, again, he could have done the deal, though otherwise. Does he know it is? Yeah. Like, our credit doesn’t always travel. Credit in general. Doesn’t always travel.
Kathleen Van Der Berg [00:26:00] No. There are some. It’s easier, I think, in the states. There are some banks that, like TD is over there and I think Scotiabank is in states, but it’s hard anyways.
Erwin Szeto [00:26:13] So I don’t know if you want to. So you mentioned like eight thousand dollars a month in income a month. How would you advise someone to get to go about getting obtaining that? Do they thousands get them out? Like that’s ninety six thousand a year. It’s almost 100 grand.
Kathleen Van Der Berg [00:26:29] Yeah. Well, I mean, I think that the best strategy is definitely cash flowing properties. Yeah, I think, yeah, that’s what I that’s what I focus on personally. It’s not that I don’t have r2bees. I have some, I have some crisps. I think they’re good tax tools and I have some locked in plans from when I was with the employee. But my focus has been on income properties and with a whole life cash value kind of backup plan to it as well.
Erwin Szeto [00:27:12] I looked it up as Rich Dan Beaver bought the hotel in Alco Beach, so definitely like when you when you’re ready to do something, you may want to look him up.
Kathleen Van Der Berg [00:27:20] Hmm.
Erwin Szeto [00:27:22] So yeah, just still Real Estate.
Kathleen Van Der Berg [00:27:25] Well, they’re looking for a different answer. Well, there are or at least or
Erwin Szeto [00:27:33] at least six other stuff we can be doing on top of our Real Estate.
Kathleen Van Der Berg [00:27:36] Well, first of all, I think being having like a side gig, being having self-employed and doing something on the side, it is great tax write offs. It gives you extra income, starts that sort of entrepreneurship. So. And with the write offs, then you get more cash flow, which means you can invest more. There’s certainly look, there’s great there’s other opportunities other than Real Estate. There obviously is there are businesses, there are limited partnerships, there are you can invest in private mortgages, but
Erwin Szeto [00:28:13] but no stocks and bonds are saying
Kathleen Van Der Berg [00:28:15] this.
Kathleen Van Der Berg [00:28:17] No, I mean, I’m not against stocks and bonds. And I think,
Kathleen Van Der Berg [00:28:24] you know
Kathleen Van Der Berg [00:28:25] I wouldn’t touch a bitcoin.
Erwin Szeto [00:28:27] Well, you can’t literally touch.
Kathleen Van Der Berg [00:28:29] Yes, I
Kathleen Van Der Berg [00:28:32] wouldn’t, you know, like a nice dividend portfolio isn’t bad either. But as a type of diversification, I look at the alternatives of what it’s going to be and the amount that you can leverage it and the risk to leverage on Real Estate versus on a stock portfolio. It’s a really a no brainer. And if you were to buy, let’s say, 100000 of TD stock, the dividend yield might be three, three and a half percent, something like that. Yeah, and you can leverage it two to one. But if that you get a stock market crash, you’re going to get a call right, a margin call, and you have to either cough it up or sell it when it’s low. So it’s a lot more volatile right now. If we saw a stock market crash, so if we saw a 20 percent pullback or a 50 percent pullback, my answer will be very different. So I really believe that you should buy stock investments on crashes. Not otherwise. And then it’s that whole thing to have opportunity cash available, right? Right, right. So have cash on cash available either through lines of credit or just for opportunities. So it’s always great to have cash for opportunities.
Erwin Szeto [00:29:55] Of course, cash is king. The same thing, a thing was coined for a reason. Yeah, because, for example, when there’s no credit anymore. Yeah, the guy with the cash is going to win the guy or gal. Yeah.
Kathleen Van Der Berg [00:30:08] But even having cash to close quickly or on a property
Erwin Szeto [00:30:12] or larger down payment
Kathleen Van Der Berg [00:30:14] network, or
Erwin Szeto [00:30:15] there is no financing available. So it’s a big commercial property. Yeah, a person who’s got cash can do it right because that means certainly a lot of cash. So for folks. So for folks who aren’t as financial savvy, like why not those three things I want to ask? So actually, before we before we get to that, how about what are your feelings on the market now? Like, for example, it’s today’s April 10th. Yeah. Looks like we’re getting ready for another trade war.
Kathleen Van Der Berg [00:30:54] Right?
Erwin Szeto [00:30:54] Well, indeed, Trump are talking about exchanging missiles.
Kathleen Van Der Berg [00:30:57] Yeah, we’ve been on a bull run since 2008, and the crash was going to have to happen. I’m just worried that that we could see a crash that is really significant like a 2008 and that lasted longer. I think the risk is out there with all of the money that’s been pouring into ETFs. We never really resolve the problems that we had in 2008 with debt and with lending and mortgage backed securitization and whatnot. So. And, you know, with Trump and trade wars and missile threats and everything, something’s going to, something’s going to happen. But I mean, I’m not Christian. It could happen this year. It could happen. It might not happen for another two years. But I am not putting. I’ve been I’ve been out of the stock market for about a year and a half. I probably pulled out a little earlier. But yeah, I just I don’t trust it. I find Real Estate an easier solution, and I’m not worried about a pullback in Real Estate Real Estate. It’s just as high. Well, let’s face it, real estate’s high as well as the stock market. But when you when you buy properly, if you buy properties properly that are cash flowing, that are in good neighborhoods that are in the, you know, that are where jobs are, where growth is, where transit is expanding, you really limit your downside risk. And if you’re going to hold a property for 10 20 years, this little 13 percent dip is nothing. Mm-Hmm.
Erwin Szeto [00:32:43] Yeah, just pull up the chart compared to like, oh yeah, we’re way up from like 2008. Now just looking at the S&P 500, for example, we’re up like two and a half times from 2008 levels. The S&P 500. And then so your recommendation is wait for the pullbacks, wait for the crash. And that’s the time to invest, rather than like being a long term buy and hold person, which is pretty much the opposite of what any CFP says. He does ride the ups and downs. Stock market always goes up.
Kathleen Van Der Berg [00:33:14] Well, it doesn’t always go up, but it doesn’t.
Erwin Szeto [00:33:17] I think Eric was forever going up.
Kathleen Van Der Berg [00:33:20] I mean, don’t get me wrong, I manage people’s money in stock portfolios as well. I mean, if ever as PS already or insurance or if they don’t want to be landlords, I do it and I tend to be sort of a stable blue woodchip approach. Dividend stocks with a diversified globally, I’m very boring. I’ve never bought a pot stock. I’ve never bought some. But it’s not me. It’s not what I do for people’s money. So I’m.
Kathleen Van Der Berg [00:33:55] That’s me.
Erwin Szeto [00:33:56] Yeah, you’re like the third person on the podcast who’s talked about just blue chips. Dividend yield and then buying more when things dip. No, you mentioned you mentioned ETFs earlier. Can you explain like what the issue is? Because I don’t know if I completely understand it either, but all of a sudden, I don’t know. The last two years, it seems everyone’s promoting ETFs so that first of all, what’s a stand for and then what’s going on?
Kathleen Van Der Berg [00:34:22] Yeah, an ETF stands for electronic traded fund, and they are index based funds, generally speaking. So that means when you put your dollar into that, the portfolio manager buys the index.
Erwin Szeto [00:34:36] So like the price, they have to buy it right.
Kathleen Van Der Berg [00:34:39] So if you buy the S&P 500 or the TSX three hundred, they buy all three hundred stocks equally proportionally. They buy the good ones and they buy the bad ones. They just buy them indiscriminately. So there’s no active management. Nobody’s looking at the actual companies, right? And everybody says, well, active management, they haven’t been able to outperform the index. So why am I paying for an active manager, right? But with an active manager, you’re paying for the downside risk rather than upside potential. And let me explain why. So everybody’s pouring money into these ETFs and the great stocks are going up and the crappy stocks are also going up because they have to buy it. But when people start to pull money out in a crash now, they have to sell the good stocks and they have to sell the bad stocks. The problem is that the small time poor, poorly managed stock that nobody wants like a Bombardier or something, there’s actually no bid for that stock.
Kathleen Van Der Berg [00:35:43] Oh, then you’re screwed.
Kathleen Van Der Berg [00:35:45] So it drops to zero and forces everything down and it becomes this does just this financial disaster in the stock market because you’re forced to sell stocks. And there might be like what if somebody puts in a bid for a penny, then that the portfolio manager has to sell it at that price because they have the market sell evenly? So the ETFs have pushed the market higher than they should have, especially for the poorer stocks, and they will drive the market down. And that will be a great time to pick up good blue chip stocks. I mean, I remember in 2008, BMO actually with after the crash had a dip, excuse me, a dividend yield of 11 percent. At one point, you could have picked up BMO stock, and the dividend alone would have given you 11 percent for the rest of your life.
Kathleen Van Der Berg [00:36:43] Fantastic.
Kathleen Van Der Berg [00:36:45] Yeah. So if that happens again, I’m all in, that happens again. I mean, borrow and invest. If we see a 50 percent crash there, then I’d be all in. But not until then.
Erwin Szeto [00:36:59] You’ll text me when that happens.
Kathleen Van Der Berg [00:37:06] Now I was actually, I should.
Erwin Szeto [00:37:08] I haven’t dug into more, but I get this feeling that there’s way too much ETF money flowing into the market.
Kathleen Van Der Berg [00:37:18] Yeah. So then mean,
Kathleen Van Der Berg [00:37:20] yeah, everyone’s doing it, buying indiscriminately. They say, I have some stats on it. I can share with you later. I just don’t have them handy. But the growth is all in these ETFs, especially in the states,
Erwin Szeto [00:37:32] because like Tony Robbins book Smart Money, mastering the game talked a lot about ETFs that, well, simple company that Trudeau a big fan of, which doesn’t necessarily mean. Good company that that’s what they’re promoting ETFs. It seems to be a hot term.
Kathleen Van Der Berg [00:37:50] Oh, it’s you know, they’re low fees, which they are. Yeah, yeah. They have since 2008 outperformed the active managers. Hmm. But would you rather what would you rather own if there’s a problem? Would you rather own kind of a strong word? Somebody handpicked the stock, stable dividends or just sort of across the board? What’s going to fall more so I’m okay with earning eight percent when the index goes up 10. As long as when the index falls by 50 percent, that I only fall 15. That’s what I want. I want the down tection and the ETF will have zero downside protection.
Erwin Szeto [00:38:34] It just seems like the ETFs are almost a victim of their own success because Buffett had that million dollar bet with hedge funds as well. At the end, though, they can’t beat the index, so Hep C is basically him. Investing in an ETF will outperform hedge funds which are actively managed, and they could do whatever the heck they want because they’re basically no rules. But when it’s grown so big. Yeah, and that money is being indiscriminately thrown at the market. And now you were your mark. And then these ETF, I don’t know if you call them managers, they’re forced to pay whatever price it is because that’s their mandate, even though even though the valuation be made, it makes no sense. For example, I was at as a as watching a presentation on you were at the scene one a couple of stock valuations where companies were reporting worse performances, but their stocks were going up. Yeah. And then like why? That makes no sense based on market theory. But when ETFs are uneducated, they don’t make decisions based on values, right? They don’t do any sort of financial analysis. Then the market has become kind of fat and lazy.
Kathleen Van Der Berg [00:39:43] Absolutely. Absolutely. Yeah. Yeah, there that’s exactly. That’s exactly what’s happening. But so what do you want to own at the end of the day? That’s the question. Right?
Kathleen Van Der Berg [00:39:55] So I think
Erwin Szeto [00:39:56] I think the answer goes back to being a savvy investor than yourself.
Kathleen Van Der Berg [00:40:02] Well, they say, you know, when everybody is getting in right and so that’s when you should be the most fearful, right? So everybody’s jumping in, then that’s where the risk is, right?
Erwin Szeto [00:40:18] I don’t know. It’s just me or who I hang out with, but I see fear all the time. I see people getting fat all the time, too. And I see a lot of fat and the Real Estate in the financial markets. Yeah. Yeah. You know, we could be in for we could be in for a significant correction.
Kathleen Van Der Berg [00:40:37] We could.
Erwin Szeto [00:40:38] Yeah, if these trade wars really happen. Well, already they’ve been happening for a while. It’s just it’s just Trump’s much more vocal about it, and he’s and he’s doing more with the currency, what’s been going on for a while, but we won’t get into that. Let’s be on the I don’t give you any prep for this discussion.
Kathleen Van Der Berg [00:40:59] Okay.
Erwin Szeto [00:41:01] So I want to ask, what are what are investors or even Canadians at large? What are what are you concerned about that they’re not thinking about? What’s the what’s their blindside?
Kathleen Van Der Berg [00:41:15] I think the biggest thing is that they don’t realize when they go to retire like something I said earlier, they don’t realize what their safe withdrawal rate is.
Erwin Szeto [00:41:26] That’s the first I’ve heard it.
Kathleen Van Der Berg [00:41:28] Yeah. I mean, if you if you think someone comes to me at 65 with two million dollars and I have to tell them that now they have to live on 80000 a year before taxes and they’re 65, they can’t correct the problem. So the thing that concerns me the most is that people aren’t they don’t know this until they’re 65. Because once you’re 65, you can’t correct the problem. It’s only, you know, when you’re 30, 40, even 50, you can correct the problem, which you can’t fix the problem at 65 when you’re done working and all of a sudden you realize you have to live on significantly, significantly less. And that’s what that’s what worries me the most.
Kathleen Van Der Berg [00:42:12] I don’t know. A lot of people
Erwin Szeto [00:42:14] get that because that’s been that’s in the news. That’s in the news. Like regularly around like 60 percent of Canadians who don’t have a pension now cannot retire now. And that’s the majority of Canadians. Most of us don’t have pensions. And then 60 percent of the,
Kathleen Van Der Berg [00:42:32] you know, a couple of years ago, I was getting insurance leads from an insurance company. So I guess these people wouldn’t have had financial planners because if they had, they would have gone through them so. But when I met with them, I met. There was one week I met with two people that were in the exact same situation. She was 65. He was 70. He was still working, earning $100000 a year. They had 100000 saved up in an RSP. And they had a house which had 25 percent equity. This these people had one year’s worth of savings. And he’s like 70. And what? Like what? What if you can’t work? What if something happens at age 70?
Erwin Szeto [00:43:19] You can’t stand. You can’t sit.
Kathleen Van Der Berg [00:43:21] These people are snookered. They’re snookered. If they sell their house and rent, they might have two years’ worth of income. And it was it was very eye-opening. And I wonder they’re just not looking at it. And sometimes people, when there’s no solution, they just don’t try and find a solution, right? You can help everybody, but you can’t save everybody.
Erwin Szeto [00:43:44] What do they do? Will they end up doing his work?
Kathleen Van Der Berg [00:43:49] They ended up selling their home and they ended up renting, moving to apartments and I don’t know. I don’t know what it’s gone on from there. They couldn’t afford the insurance that they wanted to have. And we’ll see. Like if they if they live too long, the money will run out, right? Oh boy. We’ll have to live out their kids, maybe. Or health or lovely?
Erwin Szeto [00:44:15] Yeah. Diane Beggs said it said it a long time ago. The best, the best gift you can give to your kids is your own financial independence, then your health and your health. The independence, as well as getting
Kathleen Van Der Berg [00:44:27] 100 percent,
Kathleen Van Der Berg [00:44:28] agree 100
Erwin Szeto [00:44:28] percent. And then for those of us who like to take a little bit further. You know, I’ve been I’ve tried to dwell on this too long, but I’ve been sharing this with a lot of people lately because I believe a lot of people, a lot of Canadians are banking on their homes as their retirement plan. They have no other significant savings. Their plan is to liquidate their home in order to live off of that money. Well, my concern is how their kids ever enter the market, right? Because my thought is already that we’re I’m probably going to pass my house to my kids, right? But if someone else decides to sell their home to return that money? How will their kids get into the market and enter the middle class? And then how their future generations to ever enter the middle class because housing costs are ridiculous?
Kathleen Van Der Berg [00:45:17] Yeah. And seniors, I find seniors like my folks went through this too. They thought, you know, at one point they would sell their house and they would live further away at a cheaper home. But now they realize they want to be close to grandkids or they want to be close to medical facilities, REIN. Or they think they’re going to downsize and go into a condo because they can’t handle the amount of work for the house. While the house was 50 years old and the condo in Durham was newer and the price going was the same. So they weren’t getting any extra money to live off of in that situation, even though they’re downsizing. But I’m hearing people moving out to Trenton and Quinta, and they’ve got nice homes. But that’s what they’re doing. So they’re moving further away.
Kathleen Van Der Berg [00:46:08] Crazy.
Erwin Szeto [00:46:09] Yeah, that’s funny because I think part of my retirement plan would be possibly to live closer to Toronto. But that’s another conversation. But I want to ask you, a whole life insurance is running out of time. I’ve been hearing it more. Mm hmm. And it’s it gets me excited because, for example, one friend got a whole life insurance plan within like three months or something, and then their bank came back to them said, Hey, would you like to start refinancing your properties? And this particular investor has been as completely stretched for credit to sue. She is a fantastic investor. Yeah. All right. You know, we all run into walls for credit wise. But then the door opened because she had whole life insurance. Is that? Is that a real thing?
Kathleen Van Der Berg [00:46:56] Absolutely. The Lindsay property that I’m buying in May. Yeah, but my insurance policy is mine and my husband. I pulled out 40000 from each of them. And that’s the down payment.
Kathleen Van Der Berg [00:47:09] But to
Erwin Szeto [00:47:13] give you break that down for is,
Kathleen Van Der Berg [00:47:15] I guess that’s
Kathleen Van Der Berg [00:47:16] just sounds
Erwin Szeto [00:47:16] crazy because you don’t know what’s going through. My head is you don’t own that money fund.
Kathleen Van Der Berg [00:47:23] OK, well,
Kathleen Van Der Berg [00:47:25] so you
Erwin Szeto [00:47:26] start from the beginning,
Kathleen Van Der Berg [00:47:27] you sure.
Kathleen Van Der Berg [00:47:30] What do most people do when they want to buy their first income property? Where do they get the money from?
Erwin Szeto [00:47:36] home equity line of credit?
Kathleen Van Der Berg [00:47:37] So they refinanced their house. They pull out eighty thousand from their house, their property. They have an asset. It’s the house. They put eighty thousand by the property. Their network hasn’t changed. But their income has and their cash flow, and now they’ve got two assets going up. All I did was exactly the same thing. I went to an asset. Hmm. Just this time it wasn’t my house, it was my insurance policy, except paying into it. It’s an asset. Unlike term insurance, that’s an expense hole. A permanent cash value insurance is a is an asset. So actually, there’s cash values that you can pull out. And I just took another policy, which I am pumping in for an eight year period. Twenty one thousand. But I can take out even my first year. I think I can put in twenty one, but I can take out 15. But by year four, I can pretty much take out everything I’ve put in. Plus, I have the death benefit, which is like twice as much as the money I put in.
Kathleen Van Der Berg [00:48:37] Hmm.
Kathleen Van Der Berg [00:48:38] Oh, the idea like the real the benefit is, is that you can live off of almost twice as much money if you have this. So imagine what you do. Erwin as you amass $2 million. Hmm. And it’s a hundred percent real estate portfolio, let’s say. And then you find out safe withdrawal rate. You can really only live off of eighty thousand a year from that portfolio as a result, because other and you’re encroaching on capital, by the way, where I have amassed less money than you, I’ve amassed one point six million because I also invested in this, this tool, this asset, which is permanent cash value insurance. But I can live off of 10 percent, which is one hundred and sixty thousand. You’re living off 80. I’m living off of one hundred and sixty. Well, what world is different? What’s the difference between your world and my world z in your world? You have to stick to the safe withdrawal rate because markets, you know, Real Estate markets can go up and down. You might have better. That doesn’t pay one month. So you’ve just got this one asset class in my world. I can live off of 10 percent because of this stock market crashes. I don’t have to sell a property. I can go to the cash value in my permanent insurance plan and use that live off that for a couple of years. Allow my real estate portfolio to rebound, allow, you know, wait for the tenant to pay their rent or put other tenants in so I can live off of twice as much income, even though I have less money. You have two million I 1.6. My income is twice yours, but nothing to have. Yeah, neither you nor I really want to invest in insurance, right? We want to buy properties, love equities. We’re addicted to them. But with permanent cash value, you can have both because every penny that you put into the insurance policy, you can take back out and use for investment purposes. And that’s why I’m selling. I am helping so many people buy this whole life. Hmm. Right. So it fixes a retirement plan and that allows it gives them twice as much income. But for businesspeople or Real Estate investors that can utilize that money for growth opportunities, right? Like businesspeople, it works great for two, because if a business venture, they want to pump more, they’ve got an opportunity in the business. They just pull out the cash value and use it. And similarly, Real Estate investors. And even if you’re not a real estate investor, the whole life fixes your retirement nest in that and basically can double your income in retirement. But when you’re a Real Estate investor, it’s even better because you can use it now, right? If you’re if you’re not a real estate investor in retirement, it’s still great. But you got to wait for retirement. You’re not pulling it out to go on a vacation. But when you’re a real estate investor, you can pull it out right away and use it for opportunities first.
Erwin Szeto [00:51:43] Could you pull up more in your example you pull? You pull that forty thousand for each policy
Kathleen Van Der Berg [00:51:51] that just happened to be the cash value that was available. So I basically pulled out all that was available in those policies, right in our hands on what you put into them, right?
Kathleen Van Der Berg [00:52:01] So, so could you.
Erwin Szeto [00:52:05] So it’s not an easy question to answer, I’m sure. But in my friend’s case, how come she was able to access more equity in their homes because she had whole life?
Kathleen Van Der Berg [00:52:14] Well, she like organizations like CIBC, they want to see. And on top of the mortgages you have to have, sometimes if you’re got a lot of properties, like hundred thousand of liquid assets. Yeah, yeah, that might have been her liquid assets. The other thing is that they’re considered
Erwin Szeto [00:52:32] liquid a
Kathleen Van Der Berg [00:52:33] cool. Yeah, it’s liquid. You can get your money like within five days a week or whatever, but you can just call insurance company and borrow against it. That also, I just I’ll mention two things you can borrow against it. If you borrow the money through the life insurance company, the rates are a little bit higher, but it. Doesn’t hit your credit score. So even though it’s a loan against your policy, it doesn’t affect your boring capacity.
Kathleen Van Der Berg [00:52:58] Kind of interesting.
Kathleen Van Der Berg [00:52:59] I’m sure they don’t know about it.
Erwin Szeto [00:53:02] What kind of rate you the pay to borrow,
Kathleen Van Der Berg [00:53:06] the rate you pay if you borrow from the insurance company because in today’s market, it’s around seven or eight percent, but that’s because that’s what it’s earning. So. Imagine it’s kind of like, let’s say you had a TV star hundred thousand.
Kathleen Van Der Berg [00:53:26] but it’s better than that. So Tony stock, as an example, you have one hundred thousand, the bank says, lend you the 100000. So but you’ve got to pay seven percent on your 100000, but you’re investing it in an income property, which you know you’re probably making more than seven. But your TV stock still exists and it’s going up by seven. So it’s basically free money. Let me say that one more time.
Erwin Szeto [00:53:53] It just sounds too good to be true.
Kathleen Van Der Berg [00:53:56] You’re OK. You borrow against your house.
Erwin Szeto [00:53:59] No, I believe you.
Kathleen Van Der Berg [00:54:00] It’s just but your house is still appreciating in value. Yeah. So you’re right. If you borrow against your house, let’s say it was seven percent as an example, but your house is still going up its market by seven percent. So it’s the same thing.
Erwin Szeto [00:54:17] At the Halton, have you come up to the group you’re planning on coming into the group to speak? Are you not?
Kathleen Van Der Berg [00:54:23] I don’t have anything booked, but I would love to.
Erwin Szeto [00:54:25] Yeah. And when we are talking about it, still snowmobile season, so it wasn’t going to happen,
Kathleen Van Der Berg [00:54:31] but
Erwin Szeto [00:54:31] it’s sort of stopped snowing.
Kathleen Van Der Berg [00:54:36] So yes, sort
Erwin Szeto [00:54:38] of because if people understand how this works, like because we discussed last time we discussed it, it’s kind of like kind of stupid if you don’t do it.
Kathleen Van Der Berg [00:54:48] You know, there’s a saying that if you don’t own whole life insurance, you either don’t understand it or you can’t afford it, right? I mean, what I tend to do with my clients is, well, you know, we’ll refinance a house. We’ll get an income property with cash flow. We use the cash flow to buy permanent cash value insurance. Now the insurance is rising, the income property is rising, you’ve got the cash flow and then you can go back to the policy even in a couple of years and buy another one. Even if all you do is borrow against the policy and pay off a mortgage, now your property is cash flowing more in retirement. You see how it can get you more money in retirement having this?
Erwin Szeto [00:55:28] Oh, I’m a visual person I can’t wait for.
Kathleen Van Der Berg [00:55:33] Maybe we should do
Erwin Szeto [00:55:35] well to work it out, let alone a time outside this call. But yeah, I’d love to see the numbers.
Kathleen Van Der Berg [00:55:39] Yeah, absolutely.
Erwin Szeto [00:55:41] It’s so awesome.
Kathleen Van Der Berg [00:55:43] I’m going to work on maybe an audio, a video presentation on this.
Erwin Szeto [00:55:47] So. Yeah, because I used to go to webinar so we can you can. You can share your screen and there will be record that type thing.
Kathleen Van Der Berg [00:55:53] Yeah, yeah.
Kathleen Van Der Berg [00:55:55] But OK, a minute I’ll do it. Awesome.
Erwin Szeto [00:55:57] OK, so for anyone interested, how do we follow up with you if they’re interested in learning more about any of this stuff?
Kathleen Van Der Berg [00:56:03] One of the best ways is to go through my website, which is K the wealth strategies dot com. You can join my newsletter and you’ll get tidbits from me. Also, the Facebook group called Durham Money Matters, so you can get in touch with me through either medium.
Erwin Szeto [00:56:25] So it’s super awesome and you’ll be at a future Halton REI event as well. I’ll now announce it when, when? When we’ve confirmed the date.
Kathleen Van Der Berg [00:56:34] Yeah, absolutely.
Erwin Szeto [00:56:36] Awesome. So I have this last question just because I saw David Halton to speak recently. So he’s the author is bestselling author, wealthy barber. And he said he said, No, I’m not saying good or bad. He said save 10 percent of what you make in your retirement age of 65. What would you say about that?
Kathleen Van Der Berg [00:57:01] Two things. First of all, I believe that the number needs to be 15 percent. The reason why is there? That’s just to sort of keep up if you look at how the world changed, like did you ever envision that everybody in your family would have an individual phone or that everybody would have a laptop like me growing up I had I was big when I got an electric typewriter, right?
Kathleen Van Der Berg [00:57:28] And you know,
Kathleen Van Der Berg [00:57:29] I think we should buy a new phone. Yeah. Than it is to replace the battery in our lifestyle grows. We’re never going to get a car that doesn’t have power windows again. So to just kind of keep up with current standard of living, the number has to be 15. The second thing is, I don’t like the word save. The traditional financial planning is based on saving, and it’s based on the accumulation theory. All you do is you put your money into an RSP or a TFSA, and it grows right. You invest it and it grows and grows. But that’s not what the financial institutions do with your money. They use what we call velocity of money, getting your money to do different things, which is exactly what an income portfolio does, an income property portfolio and exactly what permanent cash value. So you and you know you putting your money in motion, you refinance your house, you buy an income property, it’s providing cash. So it’s providing tax benefits. It’s appreciation appreciating. You can use the money for retirement. You can use the money for children’s education. It’s not like a one solution product, so you’re keeping your money in motion. So saving. I don’t like the word savings REIN with cash value insurance. It provides you the insurance you want. You can access the capital, it fixes your fixes your retirement, you can use it to buy properties or other opportunities. So it’s I don’t want to save you want to invest in assets and keep me in motion. Those are the two things I would improve upon that his statement.
Erwin Szeto [00:59:08] My first thought was actually to bring down the age, but I have no interest in working till 65.
Kathleen Van Der Berg [00:59:15] If you if you put your money in motion and you, you can definitely do it earlier.
Erwin Szeto [00:59:25] Is this a funny thing? Because we talked about earlier, but how do people buy their first investment property that they take their home line? They didn’t have to save for it.
Kathleen Van Der Berg [00:59:33] REIN. Crazy.
Kathleen Van Der Berg [00:59:36] That’s see, that’s it, that’s putting it that’s a perfect example of putting your money in motion. If you think and this is the struggle is how many millennials are trying to save for their first property with food? Yeah, they can’t get ahead because it keeps going up. But if you have money and you can put it in motion and you can do things with it, that’s I mean, that’s what businesses do. That’s what economies do. That’s how economies grow. Yet they want to convince us to save our money. Just do that accumulation theory.
Erwin Szeto [01:00:07] It seems that the governments are more about promising what they’re going to spend on felons talking about saving right now. He actually when government used to talk about to get a pension where we all of us non pension people were supposed to get a pension, would that go?
Kathleen Van Der Berg [01:00:23] Yeah, yeah.
Kathleen Van Der Berg [01:00:24] Get up. And yeah, you remember that like then? Yeah, yeah. But the federal government came out with some solution that was the alternative, but that never ended up happening, either.
Erwin Szeto [01:00:33] Then guess start Googling and just interested.
Kathleen Van Der Berg [01:00:35] And they want the governments want you to save because then you put money in financial institutions and businesses and they can grow the economy. Though the governments need the economy to keep growing. Mm hmm. S. And having us save and having us sort of be permanently indebted to a J-O-B is how they do it.
Kathleen Van Der Berg [01:00:57] Mm hmm.
Erwin Szeto [01:00:59] I should remember I’m keeping you over time. I just want to make this one point. When the four one K was invented in the states, I, I recall that the stock market had an immediate jump just over just because there’s so much more money in the market and then always makes you wonder, like what were people and what was the government’s motivation for doing so?
Kathleen Van Der Berg [01:01:21] Yeah. Yeah.
Kathleen Van Der Berg [01:01:23] And things like that. We’ll have short term definitely have short term blips into the money into the market, for sure.
Kathleen Van Der Berg [01:01:29] Mm hmm.
Erwin Szeto [01:01:30] Definitely. It’s always a slice. I always learn so much when I talk to you.
Kathleen Van Der Berg [01:01:35] Thank you and thank you for making me clean my office for the video call. You’re grow my hair.
Erwin Szeto [01:01:42] I seriously had to fix my bed had. Before this,
Kathleen Van Der Berg [01:01:44] I
Kathleen Van Der Berg [01:01:45] referred to coming out to your group to present in person.
Erwin Szeto [01:01:49] Yeah, it is. It’s tough to talk numbers or like for myself personally, it’s really hard for me to do numbers over verbally.
Kathleen Van Der Berg [01:01:56] Well, these are all conceptual ideas that people like, but I’ve heard they’ve heard then we can look at their actual numbers based on their age.
Erwin Szeto [01:02:05] Awesome. Super awesome.
Kathleen Van Der Berg [01:02:07] Do you get the opportunity?
Erwin Szeto [01:02:08] Yeah, I’m sorry that the snowmobiling season’s over.
Kathleen Van Der Berg [01:02:14] I’ll talk to you soon. All right. Bye.
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Kathleen Van Der Berg [01:03:24] We.