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Carrick on money

The domino effect: What happens if millennials never buy houses Add to ...

The debate over whether we have a healthy housing market has lately begun to look beyond the question of whether a correction is coming. There’s a new emphasis now on the implications of continued rising prices, particularly on first-time buyers.

Vice Canada recently posed the question of what would happen if young people stopped buying homes to two experts: Paul Kershaw, a policy professor at the UBC School of Population and Moshe Milevsky, a professor of finance at the Schulich School of Business at York University. Prof. Kershaw says fewer purchases by young buyers could have a negative effect on home prices in general.

I argued in a recent column that declining housing affordability means we’re going to get over our prejudice against renting. Housing economist Paul Smetanin nicely makes the case for renting in saying: “You don’t have to own your own home in order to have a great home.”

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This is what scares baby boomers most
Investment advisers say the top concern of their baby boomer clients is not running out of money; it’s developing dementia and becoming a burden on their families. Tips for lowering the risk of Alzheimers are included here.

These cars are good to buy used
It’s because they depreciate quickly in price. The original buyer’s loss is your gain.

10 myths about finding cheap travel
A merciless look at all the wrong ideas people have for finding travel bargains. Bereavement fares for a flight? Forget about it.

There’s no such thing as good debt
A useful deconstruction of the widely held view that it’s sometimes smart to borrow. I prefer to call debt a necessary evil when used to buy a home or get a post-secondary education.

Are you wasting time to save money?
A reminder to start valuing your time as well as your money when looking for the best deals on everything from groceries and gas to vacations and even houses.

Beware the personal finance echo chamber
A blogger observes that people in the online world of personal finance say a lot of the same things – debt is bad, saving is good and so forth. It’s a great point to raise because it’s debatable how effective it is to keep offering these messages in the same old way.

Today’s featured financial tool
Here’s a tool I use all the time – the Bank of Canada’s inflation calculator. Handy for figuring out how much your earnings and expenses years ago would be worth today.

Ask Rob
The question:
“The social contract is broken for millennials - student debt, followed by precarious work with few health benefits, and no pension. Retirement for my husband and me is secure. Would two times $80,000, invested now and left for 20 years, provide enough of a safety net for each of our two kids so that they can withstand these shocks in their thirties/forties? Are other parents looking at doing this?”

My reply: Not that I’ve heard. Parents helping their adult kids today seem obsessed about getting them into the housing market, not providing a financial cushion that can be used in a variety of ways. I really like this idea. Oh - $80,000 invested for 20 years with an average annual return of 5 per cent after fees would produce $212,264 before taxes. Most generous.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length.

Featured Video
Some smart thinking in this video about how to get millennials interested in saving for retirement. Make the conversation more about buying financial freedom that about saving for the distant future.

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I’m afraid I’ll never be able to buy a first house – should I jump in now? (The Globe and Mail)

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