Dr. Garth

Nurse Jiggles just showed up in the sexy little green elf suit she pours herself into every mid-December. She appears to be giving the patients more complications – so we’d better get this emergency clinic open, in the cause of reduced morbidity.

Here’s Sue. Okay, wassup?

“My previous advisor has saddled me with this lousy fund that cannot be redeemed and has now halted trading,” she says, weepily. “What are my chances of getting any of my $106k back? Any recourse that I can take as I only agree to a medium risk profile?

“Also, a life situation question.  I am so tired of the drama of investing, I want to know if I should buy some real estate so I can still have something even if the finance market tanks. If I can afford to buy a condo to live in cash and still have enough to live on modestly, should I do so? 57 yo retired single lady with about $2 million total asset, no real estate.  Will qualify for OAS and 60% of max CPP.”

Sounds like Sue hooked up with a dodgy advisor flogging junk funds. It happens. So never get into proprietary assets that are not publicly traded; never buy assets with limited or nil liquidity; and don’t invest in stuff you do not understand. Especially from a guy who leases a Porsche or wears a necklace.

Now, what to do with something in your portfolio that goes to zero?

Right. Get rid of it. Then write off the loss.

But to do so you must dispose of it, or be deemed to have done so. Give it away to someone who will take ownership of the fund units. Sell them to a brokerage, or back to the moron who initially suggested the investment. You may be able to trigger a deemed disposition of a worthless security at the end of the year in which the security blew up by filing an election with your income tax return.

As RBC puts it, when dealing with a reputable broker: “To remove a worthless security from a non-registered account, contact the financial institution to determine the procedure to follow. You should get a confirmation letter or receipt that the security was removed from your account. As well, the removal of the security will be reported to you in your tax package and reported to the Canada Revenue Agency.”

Now, how about Sue’s other question, which seems based on her bad advisor experience?

Retired, single and closing in on 60 with two mill liquid is a nice gig. But if she dumps half of that into a condo (the average price of a new unit in the GTA is just over $1 million, for example), not only will she lose mobility and flexibility, but also a lot of income.

First, markets are not going to tank. The opposite, actually. 2024 was stellar for investors. Next year looks about the same. Just ensure you have a balanced, diversified, global portfolio with name-brand ETFs and devoid of home country bias. Two million should yield about ten grand a month in tax-advantaged income. Add in government pogey, and all is good. Sue could rent a swanky place for four grand a month and live like a princess.

If she buys, a million produces no income, and she’s saddled with property taxes, insurance premiums plus strata/condo fees. Her income would drop by 50% while her living costs would reduce by only a quarter. If a special assessment were to come along down the road, it could be debilitating. As a renter, she’d never have to worry about that, or escalating ownership costs. Might she have to move one day if she rents privately? Yeah, maybe. But that’s a two-day deal. And she keeps a million. Seems worth it.

In any case, Sue needs a better, trusted, honest, transparent, ethical fee-based advisor to save her from herself. No Cayenne. Or Cybertruck.

And here’s Derek with a quick question before we close the Clinic for drinks.

“We’re both in our early 30s,” says he, “with an income of just over $250,000 a year. (Typical Millennials.)

“We have been investing our money into a balanced portfolio of ETFs (we have over $200k invested and we earn 7 to 8 percent annually on that). Just debating if we should be dumping some money toward our principal as our mortgage (now at 2.09%) comes up for renewal in December of 2025. Or should we just continue to pay the bank more interest on our mortgage.”

Is this a serious question? Why would you trade another year of crazy-low 2% mortgage payments for a loan at twice that rate? Besides, there are two – probably three – more rate cuts to come before the Bank of Canada runs out of gas and courage. It’s quite likely if you wait for a year – especially if Tariff Man ravages our nation – you’ll be renewing for something that starts with a ‘3’.

If the home loan bothers you, chunk some money against it before renewal – it’ll come right off the principal. But interest at less than the inflation rate, as you now enjoy, is basically free money. It may never come again. Let’s hope so.

About the picture: “Thanks to your chiseled abs, we secured a 10-year mortgage at 2.2% in 2020,” writes Mark. “Even though we have a few tattoos, we continue to stay diversified. Here’s Zen. May he be a reminder for us all to sit back and chill.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.