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carrick on money

I’m on holidays for the next week, so we’re re-running the most read editions of Carrick on Money from 2018. This particular newsletter compares the merits of renting versus owning.

Danny Haines is a 30-year-old engineer with an MBA and a preference for renting instead of owning a house. He's featured in a recent CBC story about young adults in Calgary who have studied the city's housing market and decided not to buy.

Their reasoning: They can rent a home in Calgary for much less money than it costs to own, and they have more freedom. Mr. Haines was able to travel and work in New Zealand for a year because he wasn't tied down by a house, and he's been able to take advantage of a strong stock market in the past couple of years by investing money that would otherwise have been consumed by a house. There is a social cost to renting, he admits. "It's definitely come up on a first date: 'Oh, you rent this place? How much money do you make? This is weird.'"

The missing element in the thinking of Mr. Haines and the others mentioned in the CBC story is the investment aspect of owning a home. That's because low oil prices have made Calgary one of the country's quieter housing markets. In the Toronto and Vancouver areas, people are desperate to get into the housing market because they feel they're making a great investment.

With interest rates rising after a long period of rising prices, it’s hard to see the market moving dramatically higher in these cities in the near-to-medium term. This means the decision to buy has to be viewed less in terms of investment gains than the costs and benefits of owning versus renting.

Calgary rents seem to be a lot lower than ownership costs, a situation that may not apply in the red-hot Toronto and Vancouver rental markets. But renting is always cheaper than owning when you consider such ownership costs as property taxes, maintenance, improvements and higher utilities. Most young adults will end up owning, but Mr. Haines reminds us that this isn't the only path.

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Rob's personal finance reading list…

Escape from high cellphone costs

Instructions on how to unlock your phone so you can use it on another network offering a better deal on rates. Detailed info in this blog post, and you don’t have to be a tech wizard.

How to make your dishwasher last longer

The more you use a dishwasher, the faster it wears out. So think about running full loads periodically instead of many smaller loads.

Investors as lemmings

A portfolio manager stops for some Greek takeout and sees a few young adults tending to their bitcoin investment. “I’ve seen this lemming attitude before over three decades of get-rich-quick schemes,” he writes.

So you think Vancouver and Toronto homes are pricey

Check out this list of the 10 most expensive houses in the world. Homes on this list feature things like underground swimming pools, panic rooms, an auto museum and parking for 20 cars.

Today's featured financial tool

If you’re looking for the best credit card for your needs, try this new search tool. For example, you can find the best cards for business owners, college students or for personal use, and you can specify if you’re the type who pays what you owe every month or may carry a balance.

Ask Rob

The question: “I hold units of a well-rated bond fund. My statements show an unrealized loss! Am I missing something or is this investment faring poorly?”

The answer: With interest rates rising, it should be no surprise that bond funds are falling in value. Rising rates hurt the price of bonds and bond funds, while falling rates are a help. shows that the average bond fund lost 0.1 per cent in the six months to Dec. 31. Don’t lose faith in bonds. They’ll help your portfolio when the stock market next plunges (money will flow into the bond market because it’s seen as a safe haven), and they’ll also benefit if the economy loses steam and interest rates pull back. Also, the manager of your bond fund should be able to add bonds with higher yields to the portfolio over time. That will help improve returns.

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.

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