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Homes in downtown Toronto. Canada’s housing outlook is more uncertain today than it has been since the financial crisis in 2008-09. (Fred Lum/The Globe and Mail)
Homes in downtown Toronto. Canada’s housing outlook is more uncertain today than it has been since the financial crisis in 2008-09. (Fred Lum/The Globe and Mail)

Carrick on money

Why these parents are giving their adult kids an early inheritance Add to ...

One of the effects of expensive housing seems to be a change in the psychology of parents about inheritances. A substantial number of parents are helping their adult children buy houses, whether through gifts or loans. Call it an early inheritance.

A recent Manulife Bank survey suggested that 45 per cent of millennial buyers had family financial help. Early inheritances are obviously gaining traction, but we haven’t heard much from the parents who are handing over this money. That’s why a recent New York Times story is so interesting. It’s a first-hand account from a man who, with his wife, has been giving cash gifts to their four adult kids.

This husband and wife are comfortable, not wealthy. But they find themselves with more money than they need on a day-to-day basis and want to share with their adult children. The kids are using the money to buy houses, to save for their own children’s education and to help start a restaurant. “I will not waste a minute worrying about how they are going to spend the money,” their father writes. “And I am glad we gave it to them.”

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Get used to lower returns Investment advisers talk here about how they are being conservative in estimating client returns. Forget any notions of double-digit returns for a diversified portfolio. One adviser quoted here estimated 3 per cent after fees and inflation.

The case for cash-back travel rewards cards
A head-to-head comparison between a cash-back travel card and a competitor that offers a fixed deal on flights. A big win for cash back overall.

A present you can give your adult kids
De-clutter your home. Save your kids from having to get rid of stuff that, sorry to say, no one really wants.

Old is a loaded word
A lot of questions emerge from the aging demographic trend in Canada and other countries. For example, when do you qualify as being “old?” A gerontologist argues here that the term should only be applied to people who are frail.

Today’s featured financial tool
Find out how much the electricity to run various household appliances costs.

Ask Rob
The question: “What’s the easiest way to see how well the returns on your actively managed mutual funds measure up against a similarly structured index portfolio, perhaps one that’s 75 per cent equity, 25 per cent income?”

The answer: “Start with individual benchmarks – say a mix of Canadian, U.S. and international stock indexes, plus a Canadian bond index. You’ll find performance data on those indexes here. Next, subtract roughly 0.25 to 0.35 of a percentage point from the benchmark returns to cover the cost of owning index-tracking exchange-traded funds.”

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.

In case you missed these Globe and Mail personal finance stories
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- Canada household debt-to-income ratio hovers near record highs 
- Couple set their sights on buying a house, starting a family

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