About fifteen years ago I began reading every book I could find about personal finance.
I literally went to WH Smith bookstores for hours, reading everything I could find right in the store.
And then buying the few books that looked the most promising.
I remember driving from Mississauga to downtown Toronto to track down a copy of a book called, Live Rich – Die Broke … LOL … I don’t recall anything about that book other than at the time I just had to have it.
There’s definitely some OCD in me…
…when I get started on a topic I tend to go “all in”.
At this point, I must be well over a hundred books deep in the personal finance category.
I’ve learned about mutual funds, stocks, puts and calls and for I while I was trading call options rather aggressively.
Actually, right around the time Nick and I got pretty serious about Real Estate I was trading options while working at my software job.
At one point I think I asked (aka, begged) my wife to watch some “option trading” videos that I purchased from somewhere … likely an infomercial.
I’m sure she was thrilled at watching them and learning how much money I spent buying them!
Being the trooper she is she politely watched ALL of them with me. Funny stuff. (Thanks, Carol, you’re the best!)
And then after a few years of owning real estate, I realized something.
The properties were completely in my control.
We could actually forecast income from a property with a fairly good accuracy rate.
With trading options, I couldn’t forecast squat.
I was constantly monitoring different crazy “indicators” that would tell me when to buy or sell.
It was literally like riding an emotional, caffeine-fuelled, roller coaster.
Buy – Sell – Buy – Sell … ah! It was never ending.
During this time the properties just kept spitting out cash.
The equity kept building up.
The appreciation would come in spurts, but it happened without any of our own intervention.
So it hit me that I wanted to study this real estate thing and get good at it.
We both started to try different things, flips, “sandwich lease options” (we’ll never try that again!), silent actions, “no money down deals”, wholesale marketing etc.
After that, we were able to identify a couple “systems” that produced consistent results for us.
So we focused on developing them, practicing them and trying to master them.
That somehow lead us to start and operate our own real estate brokerage.
Trust us, we never set off with the idea that one way we would own and operate a brokerage called “Rock Star Real Estate”.
Or that we would be able to help so many investors even a tiny bit.
But here we are and we’re grateful for it.
And something else happened.
About seven or eight years ago I said screw it and sold my RRSPs.
All of it.
$5K at a time. LOL.
Because that’s the most you can sell to get the minimum amount of withholding tax taken off (10%).
Sometimes I would call the bank two and three times a week to take out $5K.
They thought I was crazy I think.
I then had to declare that money as income on my personal taxes so I always tried to do it when I had loses (often from option trading, LOL) to offset any taxes I would have to pay. So there was a tiny tiny, wee bit of strategy involved.
Here was my thinking at the time:
1. If I can take the tax hit now and use the money to buy assets that I can control my future is in my hands.
2. And I like control. (Did I mention I may be slightly OCD?)
3. I also had this thought … I don’t think the government is EVER going to lower the tax rate so why don’t I pay it and be done with it.
Crazy, I know!!
I can hear the financial planners screaming in pain as they read this and saying something like … “Ah, he’s paying too much tax … defer, defer, defer!!”
But we gotta tell you something … I don’t regret it for a minute.
There’s a certain freedom being “out of the system” … I mean, I still pay taxes on the income generated from real estate but I know with a fair amount of certainty what my assets are doing and will do in the future.
And it feels good, real good.
One more thing…
For those of you reading this who can’t believe someone would do this based on a “feeling” that it was right here’s a little data for you courtesy of DebtClock.ca:
And here’s Canada’s historic GDP numbers:
Looking at these two things doesn’t give me any more confidence today, than I had years ago, that tax rates will be going down anytime soon.
I completely realize that my thinking here is very “simple” and doesn’t account for tax planning strategies etc.
But sometimes, we’ve found, simple is best! 🙂
For the record, Nick still has investments inside an RRSP.
So technically only one of us is crazy.
Until next time … Your Life! Your Terms!