Ever make a financial move because someone else told you it was a good idea and it turned out poorly? Maybe you already apply data to your decisions, but what if it could be better? Today our guests, Stuart Kruse and Sean Brown are both advocates of applying better data to your investing decisions, and we’ll discuss how to make that work.
Plus, in our headlines segment, we FINALLY hear Joe and OG have a knock down drag out argument about a new Canadian mortgage lending law. Is it a good idea? You’ll hear the guys brutal argument on the topic today. Also, we’ll discuss how the USA ranks against other countries when it comes to mutual fund disclosures and regulations. What can you learn from a mutual fund prospectus? We’ll tackle that, too….
We’ll of course have more from the world of financial planning, throw out the Haven Life line to lucky listener Ben, who wonders if he’s paying too much in investment management fees, score with some of Doug’s delightful trivia, and more.
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- Canada Imposes Tougher Mortgage Rules Effective 2018 — 2nd Update (Fox Business)
- U.S. Receives Top Overall Grade in Global Finance Report (NAPA-Net)
<15:40>Stuart Kruse, Kruse Asset Management
Check out Stuart’s site: KruseAssetManagement.com
Sean Brown, CEO YCharts
Check out YCharts: YCharts.com
Check out the show for Sean’s discount code to use YCharts with a 20% discount.
<32:07> Doug’s Trivia
What are the names of Scrooge McDuck’s nephews?
<37:45> Haven Life Line
Need life insurance? You could be insured in 20 minutes or less and build your family’s safety net for the future. Use StackingBenjamins.com/HavenLife to calculate how much you need and apply.
- Ben wants to know if he is paying too much in management fees.
Need help with your financial plan? Use this link to schedule a meeting with OG: StackingBenjamins.com/OG
- Glen’s employer’s 401k programs aren’t up to par. What can he do?
<> Join us Friday
We have the original trio – Paula Pant, Len Penzo, and Greg McFarlane – back in the basement. But that’s not all, we’re also introducing Honeyfi. Those weekly money meetings just got a little easier. Tune in!
Hey Joe & OG,
A little clarification on the mortgage stress test — in Canada, you generally cannot get a fixed mortgage term longer than about 5 years. While you can get a mortgage with an amortization period of, say, 30 years, you are required to reapply for your mortgage rate at the beginning of each term (most commonly 5 years), so the average 30-year mortgage holder will have to apply the prevailing rates 5 or 6 times during their mortgage.
While Joe’s reasoning is not wrong, the main reason the stress test is important is because the prevailing mortgage rates at the end of your term may be higher (or lower) than today’s rates. Today’s rates of 4% or so will qualify some homebuyers for their 5-year fixed mortgage rate today, but if the Bank of Canada’s benchmark rate increases (as it has done by 50bp this year), they will be forced to qualify at a higher rate in only 5 years, and if they can’t qualify, they don’t have a lot of good options. The test is intended to try to ensure that people qualifying today will be able to absorb the predicted rate increase.
This system worked really great for homeowners when rates dropped after 2008, but not so much as they have been increasing.
Julie again — I should clarify that you don’t need to “requalify” for your mortgage at each term unless you decide to shop around for a better rate from another lender. You always have the option to swallow your existing lender’s prevailing rate at the end of your term if you cannot qualify for any other lender’s rate (hence stress-testing at the expected future higher rate).
Keep Stacking Bordens!
Re Canadian Mortgages
Mortgages are handled differently in Canada. Typically you can only get a fixed rate for the first 5 years and then renegotiated after that. That would explain why the 2% could be important in the rising rate environment.