Houses for sale in Montreal.Christinne Muschi/The Globe and Mail
An 81-year-old self-described conservative investor says his concern is protecting his principal. His preference is to invest in guaranteed investment certificates, but rates are low. As a result, he's open to real estate.
I think this would be a mistake, and so does Bev Moir, senior wealth adviser at ScotiaMcleod in Toronto. Ms. Moir recently replied to a question from the 81-year-old investor in a forum on a website for advisers. "I wouldn't recommend real estate … because it's illiquid, and prices could be at the high end of the cycle," Ms.Moir wrote. Well said.
It's a worrying sign when 81-year-old conservative investors are open to investing in real estate. It means there's a feeling that real estate investing is easy money. This has actually been the case for some people over the past 10 years, but it will be much tougher to make money in real estate in the years ahead. Interest rates are expected to rise, and that will have a negative effect on the housing market. Also, governments could step in to cool the market if prices surge. All in all, real estate is not a place for an 81-year-old's savings.
Ms. Moir sensibly suggests a three-year ladder of GICs – equal investments in terms of one, two and three years. When a GIC matures, it gets invested for another three years. More aggressive options are possible, but Ms. Moir said she would need to assess this person's net worth, risk tolerance and time horizon.
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Rob's personal finance reading list…
When to get personal about money
In the past five years or so, I have seen a much bigger emphasis on the importance of people finding out about the financial habits and attitudes of their partner before marriage. Here's a guide on when in a relationship to start talking about various important money matters.
Three dumb things he's done with money
A blogger reports on what he considers to be three money mistakes. At least as interesting is the mistake he says he didn't make – buying a house that was the limit of what he could afford.
Are you aware of these credit card perks?
A rundown of some pretty cool credit-card features that you may have missed – lounge access at airports, access to a concierge, security priority at the airport and more.
A timeshare reality check
Travel blogger Barry Choi takes a dim view of timeshares in this post. Forget any ideas about them being an investment.
Today's featured financial tool
Frustrated by website outages at your bank or other companies you deal with? Head over to CanadianOutages.com to see how serious the problem is and compare notes with other customers.
Ask Rob
The question: "What do you think of online money trackers like Mint.com? Are they a security risk?"
The answer: "Mint is a free app that tracks your spending. You supply your login and password for your online bank accounts, and Mint provides a weekly overview of where your money went. I think it's a useful tool for people who want to understand how and where they spend. As for security, supplying your username and password to a third party would void the security guarantee offered by banks against losses due to fraud. However, I have not heard of a single instance of Mint's data being shown to be vulnerable. I have a Mint account."
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.
What I've been writing about
- How e-transfers are ousting paper cheques
- Can the government save the middle-class wannabe homeowner in Toronto and Vancouver?
- Some of the best options for tracking your portfolio
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Rob Carrick