Transcript: Forget About Buying a Home | Sep 26, 2016

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a blue gray suit, white shirt, and patterned blue tie.

A caption reads "Forget about buying a home."

The caption changes to "Twitter: @spaikin and @theagenda."

Steve says SOARING HOME PRICES
WHETHER FOR HOUSES OR CONDOS
HAVE LEFT LITTLE ROOM FOR PEOPLE
TO FOLLOW THAT SAGE-OLD ADVICE:
TO BUY LOW AND SELL HIGH.
WHAT SHOULD THEY DO INSTEAD?
WELL, WITH US TO OFFER SOME SAGE
MODERN ADVICE: SHANNON LEE
SIMMONDS, FINANCIAL PLANNER AND
FOUNDER OF THE NEW SCHOOL OF
FINANCE.
WELCOME BACK.

Shannon is in her thirties, with long slightly wavy red hair. She wears a plaid dress.

Shannon says THANKS FOR HAVING ME.

Steve says WE'RE GOING TO GIVE
YOU THREE SCENARIOS BECAUSE
PARTICULARLY IN THE CAPITAL CITY
REAL ESTATE PRICES ARE INSANE.

Steve reads a chart on screen.

Steve says SCENARIO ONE: PERSONAL WITH
SOME SAVINGS WANTS TO LIVE IN
THE CITY.
CAN AFFORD A CONDO.
NOT A HOUSE.
EVENTUALLY WANTS TO MOVE INTO A
HOUSE POTENTIALLY WITH ROOM FOR
KIDS.
AT THIS STAGE OF THEIR LIFE HOW
SHOULD THEY BE INVESTING THEIR
MONEY.

The caption changes to "Forget about buying a home. Some advice please."

The caption changes to "Shannon Lee Simmons. New School of Finance."

Shannon says OKAY.
YOU CAN LOOK AT THIS TWO WAYS:
IF THEY'RE INTO OWNING REAL
ESTATE A NEW CLEVER WAY PEOPLE
ARE DOING IT IS THEY'RE ACTUALLY
INVESTING IN REAL ESTATE OUTSIDE
THE CITIES WHERE THEY CAN STILL
AFFORD IT AND HAVING IT RENTED
OUT SO THEY'RE KIND OF PUTTING
THEIR HOUSE IN THE FUTURE ON ICE
WHILE THEY STILL LIVE IN THE
URBAN CENTRE.
THEN WHEN THEY'RE READY TO MAKE
THEIR MOVE TO THE SUBURBS OR
WHEREVER THAT PLACE IS THEY'VE
GOT THE HOUSE AT A LOWER
PRICE... HOPEFULLY ANY WAYS...
THAT'S ONE.
THAT'S A REALLY CREATIVE WAY TO
STAY IN THE CITY BUT YOU HAVE TO
HAVE THOSE SAVINGS.

Steve says IF YOU WANT TO STAY IN
THE CITY?

Shannon says IF YOU WANT TO STAY IN THE
CITY FOREVER YOU DON'T WANT TO
END UP BUYING A HOUSE OR A CONDO
WHERE YOU WANT TO MOVE IN FIVE
YEARS.
IF YOU HAVE SAVINGSES AND WANT
TO STAY IN THE CITY YOU MIGHT
LOOK AT PAYING A LOT OF MONEY IN
RENT ESPECIALLY IF YOU WANT A
FAMILY.
YOU WOULD BE LOOKING AT
INVESTING THAT MONEY.
YOU WANT TO BE SURE THAT YOU ARE
USING ALL OF THE TAX CREDITS TO
YOUR ABILITY.
USING A TFSA AND TRYING TO GET
MAYBE INCOME PRODUCING
INVESTMENTS SO THAT YOU CAN OPT
OUT OF SOME OF THE EXPENSIVE
REPRESENTATIVE YOU MIGHT HAVE.

Steve says HOW MUCH RISK SHOULD
THEY BE PREPARED TO TAKE IF THEY
WANT TO BUY A HOME 5 OR 10 YEARS
DOWN THE ROAD.

Shannon says THAT'S A GREAT QUESTION.
IT'S ALL ABOUT YOUR TIME
HORIZON.
IF SOMEBODY IS GOING TO RENT
FOREVER AND YOUR TIME HORIZON IS
LONG YOU CAN HANDLE MORE
VOLITILITY.
BUT IF YOU WANT TO BUY A HOUSE
IN FIVE YEARS AND PAD YOUR
VOLITILITY MAYBE HOLD MORE FIXED
INCOME PRODUCTS MAYBE NOT BE AS
AGGRESSIVE WITH YOUR ASSET MIX
WITH RRSPs AND TFSAs.

Steve says SCENARIO TWO.
THIS PERSON HAS MONEY TO INVEST
BUT NOT ENOUGH TO AFFORD REAL
ESTATE.
WHAT SHOULD THEY DO?

Shannon says RIGHT.
SO IF THEY'RE TRYING TO BUILD UP
TOWARD BUYING REAL ESTATE
EVENTUALLY IT WOULD KIND OF BE
SIMILAR ADVICE TO SCENARIO ONE.
JUST KEEP YOUR FIXED COSTS
REALLY LOW.
DON'T HAVE THAT INFLATED RENT.
TRY TO MAKE IT WORK WHATEVER
YOU'RE DOING IN LOW COST YOU CAN
SAVE A LOT OF MONEY.
IF THEY'RE INVESTING IN
TRADITIONAL METHODS YOU COULD
PROBABLY BE MORE AGGRESSIVE
BECAUSE YOUR TIME HORIZON MIGHT
NOT BE FIVE YEARS IT COULD GET
YOUR SOME TIME TO BUILD UP TO A
MILLION DOLLAR HOME ONE DAY.

Steve says A RISKIER APPROACH
WOULD BE WHAT?

Shannon says MUCH MORE STOCKS.
MORE EXPOSURE TO EQUITY LESS
FIXED INCOME PRODUCTS AND AGAIN
MAKING USE OF THOSE RRSPs AND
TFSAs THAT YOU ARE AVOIDING IN
DEFERRING TAXES.

Steve says PRETTY MUCH ALWAYS
GOOD ADVICE IF YOU CAN PUT THAT
MONEY ASIDE.

Shannon says THERE IS NO MAGICAL PRODUCT
WHERE YOU CAN INVEST IT HERE AND
IT GROWS BY 8 percent THAT NOBODY KNOW
B.C. IT.
I WISH I KNEW ABOUT IT.
I WOULD INVEST IN IT IF THERE
WAS.

Another slate appears with the caption "Has enough money for a house. Wants flexibility to move quickly."

Steve says SCENARIO THREE.
THIS PERSON HAS MONEY TO INVEST
BUT THEY MOVE AROUND A LOT AND
THEY CAN'T COMMIT TO LIVING IN
ONE PLACE LONG TERM.
IS IT STILL WORTH THEIR WHILE TO
INVEST IN REAL ESTATE AT ALL?

The caption changes to "Shannon Lee Simmons @shanleesimmons."

The caption changes to "Connect with us: @theagenda, tvo.org, Facebook, Youtube and Instagram."

Shannon says SO I THINK THAT BUYING REAL
ESTATE IS NOT THE ONLY WAY TO
BUILD WEALTH.
AND WE'RE DEFINITELY IN A
CULTURE WHERE WE THINK THAT.
ESPECIALLY SINCE THE 2008 CRASH
WE'RE SEEING A LOT OF
MILLENNIALS WHERE THEY'VE
EXPERIENCED SO WITH STOCK MARKET
RETURNS OR SCARIER... OR MORE
VOLATILE.
AND AMAZING HOME... LIKE REAL
ESTATE RETURNS.
SO IT'S VERY SCARY NOT TO OWN
REAL ESTATE.
BUT YOU DON'T HAVE TO.
HOWEVER, I WOULD SAY THAT IF YOU
CAN GET CREATIVE EVEN IF IT'S
NOT YOUR PRIMARY RESIDENCE AND
YOU COULD BE A LANDLORD OR BUY
AN INCOME PROPERTY OR SOMETHING
LIKE THAT IF YOU ARE ABLE TO
FROM LIKE A BROAD SPECTRUM IT
MIGHT STILL BE GOOD TO DIVERSIFY
BETWEEN STOCK MARKET RISK AND
REAL ESTATE RISK.
BECAUSE IF YOU HAVE... IF YOU
ONLY RENT AND YOU ONLY DO
INVESTMENT RISK, YOU'RE NOT
DIVERSIFIED BETWEEN THE STOCK
MARKET RISK.
AND IF YOU HAVE A HOUSE THAT YOU
CAN'T REALLY AFFORD AND HAVE YOU
NO MONEY TO SAVE IN THE STOCK
MARKET THEN YOU'RE ALL IN THE
REAL ESTATE MARKET.
AND INTEREST RATE RISK IS A
THING FOR YOU.
SO OVERALL I THINK IT'S ALWAYS A
GOOD THING TO TRY AND DIVERSIFY
BETWEEN REAL ESTATE AND
INVESTMENT.
BUT IF YOU CAN'T DO IT JUST MAKE
SURE... IF YOU CAN'T BUY REAL
ESTATE MAKE SURE YOU'RE SAVING A
LOT OF MONEY FOR RETIREMENT
LATER ON BECAUSE YOU DON'T HAVE
THAT FORCED SAVINGS THAT YOU CAN
FLIP LATER ON WITH TAX RATES.

Steve says THERE ARE TWO SCHOOLS
OF THOUGHT HERE OR TWO DIFFERENT
THEORIES HERE.
ONE IS THAT WHAT GOES UP MUST
COME DOWN AND THE OTHER THEORY
IS TORONTO... TORONTO HOUSE
PRICES ONLY EVER GO IN ONE
DIRECTION.
WHICH SHALL MORE ACCURATE?

Shannon says OKAY.
SO HAVE I A THEORY ABOUT THAT I
THINK IT WILL CONTINUE TO GO UP
UNTIL WE SEE THE
DECENTRALIZATION OF THE
WORKFORCE.
YOU ONLY HAVE TO COME INTO WORK
PHYSICALLY OWN OR TWO DAYS A
WEEK.
IN THAT WAY LIVING IN GUELPH
WOULD BE SOMETHING YOU WOULD
NEVER DO ON A DAILY BASES BUS IF
YOU ONLY HAD TO DO IT ONCE OR
TWICE A WEEK AND YOU VIDEO
CONFERENCE IT OTHER THAN THAT
NOT SO BAD.
IF WE GET THAT I THINK THERE
MIGHT BE LESS PRESSURE AND MAYBE
WE'LL SEE A SLOWING.
BUT THIS IS WHERE PEOPLE WANT TO
LIVE AND THEY'RE COMING IN
DROVES AND PEOPLE FROM ALL OVER
THE GTA.
SO UNTIL THAT HAPPENS I SEE IT
CONTINUES TO GO UP.

Steve says WHEN YOU SAY "TORONTO."
DO YOU MEAN THE 416 ONLY?

Shannon says I MEAN THE WHOLE GTA.
OFF THE GO TRAIN PEOPLE DON'T
HAVE TO DRIVE IN EVERY DAY.

Steve says 125,000 PEOPLE EVERY
YEAR MOVE INTO THE GREATER
TORONTO AREA IT'S ASTONISHING.

THAT'S WHAT I AM SAYING.
UNTIL THAT STOPS...

Steve says CAN PEOPLE DO AS WELL
IN THE LONG TERM IF THEY DECIDE
THEY DO NOT WANT TO INVEST IN
REAL ESTATE?

Shannon says YES.
I FIRMLY BELIEVE THAT WITH A
REALLY BAMMED ASSET MIX OVER THE
LONG TERM IN LIKE A DISCIPLINED
INVESTMENT STRATEGY WHICH MEANS
NOT FREAKING OUT WHEN THINGS GO
DOWN AND THEN BUYING HIGH WHEN
YOUR ACHASING RETURNS.
I BELIEVE THAT WITH DISCIPLINE
LIKE THAT OVER 10 TO 30 YEARS
YOU CAN HAVE JUST AS HIGH RETURN
AS A REAL ESTATE MARKET
ESPECIALLY IF YOU ARE SAVING
MORE BECAUSE HEY IF THE FURNACE
BREAKS IT'S NOT YOUR PROBLEM.

Steve says RIGHT.
ANY OTHER CREATIVE SOLUTIONS
THAT YOU HAVE SEEN SOME OF YOUR
YOUNGER CLIENTS OUT THERE CHASE?

Shannon says YEAH, ABNB.
IF YOU BUY A HOUSE THAT YOU
CAPTAIN AFFORD.
AIR BNB YOU GO OUT AND HANG OUT
IN THE STUB YOU ARES THAT HELPS
TO SOLVE SET COSTS IF YOU DON'T
HAVE ENOUGH MONEY TO CREATE A
BASEMENT RENTAL DEPARTMENT.

Steve says HOW MUCH CAN YOU MAKE
THAT WAY?

Shannon says ANYWHERE FROM 200 TO 450 DOLLARS A
WEEKEND DEPENDING IF TIFF IS ON
SOMEWHERE IN THE CITY THEN YOU
GET TO HANG OUT AND HAVE MOM'S
HOME COOKING AND MAKE MONEY
WHILE YOU'RE AT IT.

Steve says DO YOU EVER GIVE YOUNG
PEOPLE THE ADVICE THAT FOR YOU
YOU JUST HAVE TO KEEP LIVING IN
MOM'S BASEMENT?

Shannon says I HAVE GIVEN THAT ADVICE
BEFORE.
TYPICALLY WITH MY YOUNGER
DEMOGRAPHIC WHEN THEY FIRST
GRADUATE AND THEY'RE NOT MAKING
A LOT OF MONEY AND THEY HAVE
STUDENT DEBT I AM A FAN OF HEY
IF YOU HAVE THE PRIVILEGE OF
LIVING AT HOME AND YOU DON'T
HATE YOUR LIFE AND YOUR PARENTS
DON'T HATE YOU THEN YOU HAVE A
GOOD THING GOING FOR YOU.
NOT EVERYBODY HAS THAT
PRIVILEGE.
IF YOU HAVE THAT ABILITY WHEN
YOU'RE YOUNG YOU CAN GET AWAY
WITH IT A LITTLE LONGER THAN IF
YOU ARE 40 AND MOVING BACK HOME
WITH MOM AND DAD TAKE ADVANTAGE
OF THAT.
AND OFTEN TIMES I WILL SHOW THEM
THAT IF YOU STAY AT HOME FOR
EVEN A YEAR LONGER HERE'S WHERE
RULE' BE.
AND THAT ALONE IS ENOUGH TO
MOTIVATE THEM TO STICK IT OUT
AND I ALWAYS SAY I'M SORRY TO
MOM AND DAD.
LIKE SORRY.

Steve says SORRY BUT THIS
REPRESENTS 10, 15, 20,000.
WHICH IS THE BOTTOM LINE.

Shannon says ABSOLUTELY AND SCHOOL
CONTINUES TO RISE AS A COST AS
WELL AND WAGES ARE STAGNATED.
AND WORK IT PRECARIOUS.
IF YOU ARE YOUNG STAY AT HOME IF
YOU CAN.

Steve says SHANNON LEE SIMMONDS.
FOUNDER OF THE NEW SCHOOL OF
FINANCE. ALWAYS GOOD TO HAVE
YOU HERE ON TVO. THANKS SO MUCH.

Shannon says THANKS SO MUCH.

The caption changes to "Forget about buying a home. Producer: Cara Stern @carastern."

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