Well, that's a wrap.
Our oldest child, who is now a young adult, is finishing up university.
Time flies.
I rented a u-haul and went down to Aidan's student rental (which we do not own) to help move him out.
All his roommates seem rather torn on this...apparently they all had a very good time over the last four years. Hard not to, hanging out with good friends all day.
We'll continue to support him in many ways of course, but he's an adult now.
He's capable of making his own decisions and we're obviously super proud parents.
Hopefully we've given him enough guidance and instilled enough critical thinking tools to set him up for personal happiness.
I think we have.
But boy, is life strange, wow.
No one prepared us for this stage of life, it's pretty wild.
And speaking of strange things...
Last week, we shared some economic data points around debt and interest payments that triggered a bunch of responses.
This week, we have some more for you.
Check this out:
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Since the year 2000, the M2 Money Supply in Canada has grown at a rate of approx. 7% compounded annually.
That's insane.
So if you're earning 7% on your stock portfolio or your investments or your income growth...you're not getting ahead...you're simply keeping pace with debasement.
It's the sneaky little reason that so many people struggle to live life on their own terms even if they're working as hard as heck.
But it gets worse.
Here's the bad news.
The Canadian dollar is really just a derivative of the U.S. dollar. What the U.S. dollar does greatly affects the loonie.
So it's in our best interests to pay attention to what's going on with the U.S. dollar.
The U.S. Federal Reserve has increased its balance sheet, since 2008, at a rate of 14% per year, compounded annually.
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We chose 2008 as our starting point because, in our opinion, that's the year that capitalism broke for good.
And the monetary base in the U.S. has grown, as a result, at a rate of 13% compounded annually since 2008.
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The monetary base is more interesting to us than M2 because it is the base money that acts as collateral for banks and for their lending.
And when banks lend, they influence asset prices. And by influence, we mean they drive them higher. It's a pretty sneaky way to get new dollars into the system.
So, in our opinion we're all getting debased at a rate of 13% a year, not 7%.
If we want to "get ahead" we have to at least beat that 13% debasement...and we have to beat it every single year, forever!
Let's try a little experiment.
Allow me some creative flexibility and license here, I'm going to use 15% as the debasement rate "just to be safe" and ensure we're covering our bases.
So ideally we want our incomes, our net worth, to go up 15% per year to keep our purchasing power.
Now, do you know what a $60K salary has to be after 10 years to match a 15% compound annual growth rate (CAGR)?
$242,733.
LOL!
Do you know what it has to be after 20 years?
$981,992.
That's right. To keep up with a 15% debasement rate or "hurdle rate", your $60,000 salary has to be $981,992 after 20 years.
LOL x2!
And remember, this isn't really to "get ahead". This is just to keep pace with the loss of purchasing power that's hidden in plain sight!
No wonder people are feeling frustrated...and this has already been going on for 16 years! Since 2008.
Now let's do the reverse...what happens if you're earning $60,000 and you don't increase it annually? What happens to your purchasing power after 10 years if the debasement rate is ripping at 15% annually?
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After 10 years, your $60K in income feels like it has $11K in purchasing power.
How absolutely ridiculous is that?
Brutal.
One day the academics that tell us "deficits don't matter" will be crying in their soup as they can't afford to retire.
But, here's the good news.
If you want to live life on your terms, it's 100% possible. You just need to understand these concepts so you can act accordingly.
It's why for years we've been banging the drum of smartly leveraged income real estate.
That leverage allows you to beat this debasement rate and grow your net worth.
It's also why we've been banging the Bitcoin drum as loudly as possible now for 4 years.
Bitcoin's 4-year compound annual growth rate from January 2020 to January 2024 is 46%.
The next time someone tells you Bitcoin is "too volatile" just remember that stat.
By the way, if you haven't grabbed some Bitcoin yet and want to start, our favourite place to buy some is Bull Bitcoin.
If you visit them via RockStarBTC.ca they've kindly agreed to give you a free $20 in beautiful Bitcoin to get you started once you fund your account.
If you talk to them, tell them Tom & Nick say hello (and also tell them that we said the Leafs are much better than the Habs).
So don't get discouraged with all this.
It is possible to beat this incredibly high hurdle rate...and it is possible to live life on your terms. We see people doing it every day.
And if you want to come out to our next Introduction to Real Estate Investing Class you can do so by clicking right here.
It's on Wednesday, May 1st at 7pm.
We'll cover all the ways Canadians are investing in real estate right now, all across Ontario.
Nick or myself will be live on the webinar and we'll stick around afterwards to answer any and all questions you may have.
Together, we can get thru this mess of a financial system.
The education never stops!
Hopefully, Aidan understands that after university his education is really just beginning! (I know he does).
That's enough for this week!
Enjoy your day, and GO LEAFS GO (the refs robbed us last night).
Tom & Nick
p.s. Remember, if you'd like to hop on our Introduction to Real Estate Investing Class on Wednesday, May 1st, you can grab a seat by signing up here.
