How much does the average Canadian save per month?

[bitteeinbit]

I'd like to do a poll here, but given that Beyonders are pretty much ballers, I figure it's better to just ask about stats on the average Canadian (besides, the poll option is all fucked up... Can't write any questions). EDIT: Realized that poll options come after posting... So might as well as beyonders: how much are you typically able to put aside per month? Meaning: money from your paycheck which you drop into a savings account, a mutual fund or invest elsewhere... Mortgage payments don't count...

Does anyone have good stats regarding this? What's the latest you've heard Also, stats are one thing, but among your friends/family, how much would you say the average Canadian puts aside per month? I know it varies widely, but sometimes I think it must be pretty low. 100$-500$? 500-1000$? Pretty sure it can't be more than 1000$. I'd venture and guess 250-300$ or so, maybe even less, but I'd love to hear what you guys think.

[ExtraSlow]

I'd say on average, almost zero. Many people aren't saving a dime, and are in fact spending more than they save.

[Tik-Tok]

$300-$500 of my own personal money

Company matches that though, so $600-$1000 total.

Still not enough :(

[AudiPWR]

$0
YOLO

[a social dsease]

Might be more interesting to see what % of peoples income goes to savings. Because saving $1000/month might be nothing for someone who's making $200k/yr, but alot for someone who's only making $40k/yr.

Personally I save about 40% of my after tax income. Not going to give a $ figure but I voted >$1500

[max_boost]

Originally posted by ExtraSlow
I'd say on average, almost zero. Many people aren't saving a dime, and are in fact spending more than they save.

When you read/hear things like the average Canadian owes $16,XXX.XX

http://business.financialpost.com/2013/10/29/canada-debt-rbc-survey/

Ain't nobody got time for that! (saving money).

[Twin_Cam_Turbo]

I was saving $2000ish a month before I moved into my place, now that I have a mortgage my ultimate goal is to be saving $1000 a month after everything, but anything over $500 a month for me is a good start!

I am not baller.

[BigMass]

I save enough every month to buy a new condo downtown, cash. But then again, I am a beyond.ca member...

[ercchry]

does building equity count? :rofl:

[Sugarphreak]

...

[max_boost]

Originally posted by ercchry
does building equity count? :rofl: Nope. Cold hard cash! haha

[ercchry]

Originally posted by Sugarphreak


Is it above and beyond your mandatory mortgage payment?

sure... in the form of another mortgage :rofl:

[Redlyne_mr2]

Having been through lots of ups and downs I save as much as I can. I'm not rich by any means but it makes work easier when you're in a position where you could leave your job without issue if it came down to it.

[Sugarphreak]

...

[ercchry]

Originally posted by Sugarphreak


I think that qualifies... unless there is a market crash, in which case you've simply just thrown all your money away


not MY money :poosie:

i do "save" as well... but i dont really build my savings too much before investing in something.. or impulse buying something stupid :nut:

[Sugarphreak]

...

[Stewjoe]

10% of my gross and the company matches 25% of that. Money is invested in shares that do well and pay out dividends.

[benyl]

Originally posted by ExtraSlow
I'd say on average, almost zero. Many people aren't saving a dime, and are in fact spending more than they earn.

Fixed.

[nzwasp]

Savings or RRSPs?

Because savings are generally a bit more liquid than saying i save XX and my company matches XX into a locked investment.

[ZenOps]

Twenty pounds of nickels.

[Stewjoe]

Originally posted by nzwasp
Savings or RRSPs?

Because savings are generally a bit more liquid than saying i save XX and my company matches XX into a locked investment.

This directed at me? The company funds are vested after a year, I can access the money at any time though if I needed to. After the company portion is vested I transfer to a TFSA.


My 10% gross is pennies compared to many people but it's nice to have some money set aside that's growing but I can access if I want.

[Asian_defender]

Typical beyond
I doubt 36% of people here save more than 1500/month

[amear]

Every dime I can get.
JK , I keep putting my money aside and use it wisely. Than i dump about 3 grand on my cars every 6 months or so.
Besides I still live with family so all I got is gas and car mods to pay for :)

[woodywoodford]

Wait I need to change my answer. Subtract one from the $0, I forgot about the companies RRSP program - save just shy of $600/month if you include the companies contributions. As far as pure cash savings, thats still $0. Got too many student loans to pay off so I can't really justify setting aside cash yet.

[heavyfuel]

500-1000 lbs of copper each month lol

[NoMoreG35]

Originally posted by Asian_defender
Typical beyond
I doubt 36% of people here save more than 1500/month

Care to elaborate??

[Twin_Cam_Turbo]

Originally posted by heavyfuel
500-1000 lbs of copper each month lol

If serious, good move haha!

[pheoxs]

I try to budget to have an excess of 500$ per month after all usual expenses and a small allocation for unexpected/stupid spending. Usually I'm pretty close to that, and I try to maintain it regardless of how much I work. When there's months of huge OT then that all gets pushed straight to savings or occasionally a trip.

Though I'm still renting, hopefully within a year I'm buying a house so that'll all change probably.

[CapnCrunch]

Exactly $1500 here, but about $200 of that is a RESP for my kid.

[A790]

Originally posted by NoMoreG35


Care to elaborate??
He's got a point.

I saw the poll and my first thought was "bullshit". There's no way that 35% of beyond saves more than $1,500/month.

The average Calgarian household takes in $94,000/yr (source: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm). This works out to be about $5,800/mo after taxes.

The average house price is $517,598. Assuming a 30 year mortgage at 2.9% interest this works out to be about $1,970/mo for just the mortgage. Add on property taxes, utilities, and other common household expenses and you're into your home for nearly $3k/mo, easily.

So, the average Calgarian spends nearly $3k/mo for their household expenses. Calgary, being laid out the way that it is, basically requires you to have a car so now you have car payments, insurance, gas, maintenance, etc.

So, being blunt: a bunch of people on here are either lying, or the Beyond.ca demographic earns significantly more than the average Calgarian. The average Canadian saves less than 3% of their income (source: http://www.moneysense.ca/save/are-you-saving-as-much-as-the-average-canadian).

Personally, we manage to save about $1,200/mo and both my wife and I work two jobs (she serves at my bistro as well as runs the operations at Neatfreak, and I run Neatfreak and SauveSites).

Once our wedding is paid for we hope to be able to save $2k/mo, but that's us knowing that we'll have to continue our current lfiestyle (eat out quite rarely, make infrequent large purchases, etc.).

[GTS4tw]

Originally posted by A790

He's got a point.

I saw the poll and my first thought was "bullshit". There's no way that 35% of beyond saves more than $1,500/month.

The average Calgarian household takes in $94,000/yr (source: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm). This works out to be about $5,800/mo after taxes.

The average house price is $517,598. Assuming a 30 year mortgage at 2.9% interest this works out to be about $1,970/mo for just the mortgage. Add on property taxes, utilities, and other common household expenses and you're into your home for nearly $3k/mo, easily.

So, the average Calgarian spends nearly $3k/mo for their household expenses. Calgary, being laid out the way that it is, basically requires you to have a car so now you have car payments, insurance, gas, maintenance, etc.

So, being blunt: a bunch of people on here are either lying, or the Beyond.ca demographic earns significantly more than the average Calgarian. The average Canadian saves less than 3% of their income (source: http://www.moneysense.ca/save/are-you-saving-as-much-as-the-average-canadian).

Personally, we manage to save about $1,200/mo and both my wife and I work two jobs (she serves at my bistro as well as runs the operations at Neatfreak, and I run Neatfreak and SauveSites).

Once our wedding is paid for we hope to be able to save $2k/mo, but that's us knowing that we'll have to continue our current lfiestyle (eat out quite rarely, make infrequent large purchases, etc.).

You forget about all the people on beyond who make 2k a month but live in their Moms basement, easy to save 1500 plus.

[ercchry]

i dunno... you got to look at why we are all (originally) here... cars. poor people cant afford to modify cars, its expensive... but at the same time i dont know a single hardcore car nut that has any savings since whenever they have got the cash they dump it right into a car :rofl:

so i guess technically i could see that many "saving" $1500/moth for the most part. but no way it actually builds as cash year after year

[flipstah]

Originally posted by ercchry
i dunno... you got to look at why we are all (originally) here... cars. poor people cant afford to modify cars, its expensive... but at the same time i dont know a single hardcore car nut that has any savings since whenever they have got the cash they dump it right into a car :rofl:

so i guess technically i could see that many "saving" $1500/moth for the most part. but no way it actually builds as cash year after year

+1.

I "save" $1k/month but if I see something nice for the car, fuck it.

:rofl:

[Unknown303]

Originally posted by Asian_defender
Typical beyond
I doubt 36% of people here save more than 1500/month

:bigpimp: I have a hard time spending all the money I make so I usually just put it into savings.

[killramos]

It's not that hard.

10% Salary into Savings plan (unregistered) company matches 1.5 times in 1 year restricted stock (up to 25% of base salary now). All out into a TTFSA that is automatically conveyed to TFSA after 1 year. That pays an 8% divi.

This is also all before taxes so it ends up being quite a lot more than 25% of take home.

I won't list my salary but I'm a new grad engineer so A level salary survey. This puts base salary at 72,000 per year. That is exactly 1,500 dollars per month saved. I have noticed a lot of engineers on beyond and most of them are well past A level.

It's not completely unfeasible that 36% of beyond save that much. It isn't that difficult when you think about it that way.

Not that I'm saying everyone makes an engineers salary but the demographic on here is definitely out of whack.

[SkiBum5.0]

I find the easiest way to save is to convert fixed monthly costs to savings - for example - once the truck was paid off, I just switched the payment into a savings account. My wife and I tried the same thing with the amount we had been saving for the wedding, but instead upgraded our house with that amount.

I think that saving money is all about momentum - it's really hard to start saving, but once you get a little bit stashed away you tend to want to see it grow.

[flipstah]

Originally posted by SkiBum5.0
I find the easiest way to save is to convert fixed monthly costs to savings - for example - once the truck was paid off, I just switched the payment into a savings account. My wife and I tried the same thing with the amount we had been saving for the wedding, but instead upgraded our house with that amount.

I think that saving money is all about momentum - it's really hard to start saving, but once you get a little bit stashed away you tend to want to see it grow.

:thumbsup:

[sexualbanana]

Are we talking about savings plans (RRSP and stuff) or just what we net monthly after all is said and done?

[Asian_defender]

Originally posted by killramos
It's not that hard.

10% Salary into Savings plan (unregistered) company matches 1.5 times in 1 year restricted stock (up to 25% of base salary now). All out into a TTFSA that is automatically conveyed to TFSA after 1 year. That pays an 8% divi.

This is also all before taxes so it ends up being quite a lot more than 25% of take home.

I won't list my salary but I'm a new grad engineer so A level salary survey. This puts base salary at 72,000 per year. That is exactly 1,500 dollars per month saved. I have noticed a lot of engineers on beyond and most of them are well past A level.

It's not completely unfeasible that 36% of beyond save that much. It isn't that difficult when you think about it that way.

Not that I'm saying everyone makes an engineers salary but the demographic on here is definitely out of whack.

10% of your salary and 1.5x contribution from your company does not come close to $1500/month.

On a 72,000 base I don't see how you can save $1500/month with a mortgage, insurance, car maintenance.

[killramos]

Originally posted by Asian_defender


10% of your salary and 1.5x contribution from your company does not come close to $1500/month.

On a 72,000 base I don't see how you can save $1500/month with a mortgage, insurance, car maintenance.

How does it not?

72,000 / 12 = 6000

6,000 x 10% = 600

600 x 1.5 = 900

600 + 900 = 1,500

You sure you're Asian there bud?

I manage just fine off my salary whole supporting my GF while she is in school...

[ercchry]

Originally posted by killramos


How does it not?

72,000 / 12 = 6000

6,000 x 10% = 600

600 x 1.5 = 900

600 + 900 = 1,500

You sure you're Asian there bud?

I manage just fine off my salary whole supporting my GF while she is in school...

i dont see how this doesnt get taxed first... TFSA should be funds that have already been taxed...

[snowcat]

I minimized my expenses this year and paid off all my debt besides my car loan, and by no means a beyond baller.

I save 1100-1300 a month.

[bjstare]

Originally posted by ercchry


i dont see how this doesnt get taxed first... TFSA should be funds that have already been taxed...

haha I noticed that too.

EDIT: I'm one that answered $1500+

I'm an engineer in the early stages of my career (not a new grad anymore though) and make right around average for my level according to the APEGA survey. I sold my house earlier this year because I left my wife, so currently I'm renting with a buddy. Given that my monthly expenses went from ~3k to ~1.5k, it made it a lot easier to start saving once the lawyer bills stopped coming...

[Kloubek]

My company provides a 50% match to my RRSP contributions. In total, I save about $500/month consistently.

I could save more. Much of my disposable income goes towards assets which help make me money. For example, I've recently spent thousands on developing my basement... but it will bring in rental income and increases the value of the home overall. I buy cars from time to time, and while I know these are typically considered a depreciating asset, I always make a healthy profit on them. So I'm kinda saving but the funds are tied up until a sale is made....

[n1zm0]

Originally posted by Tik-Tok
Company matches that though

Still not enough :(

Same here, the stock/shares program is going good, enough savings for fun things atm, not enough atm though for great things :(

[killramos]

Originally posted by ercchry


i dont see how this doesnt get taxed first... TFSA should be funds that have already been taxed...

Sorry thought I replied to this a few hours ago, what I get for posting from an iPhone.

Contributions are all based on base salary so the taxes come off of what's left before Direct Deposit. Never said anything about this being tax efficient. The company match is taxable as well which in turn increases my deductions. All
Of this is done trough payroll and the savings and company match gets sent over to my standard life account.

[Strider]

It doesn't seem like much of a stretch for a higher percentage of Calgarians to save $1500/month, especially within the Beyond demographic (lots of young professionals -- doesn't everyone read/post from their cushy office job?)... This poll says nothing about the "average Canadian", even if everyone answers truthfully.

Anyone who earns $100k (aka everyone on Beyond) who maxes out their RRSP contributions is already at $1500/month.

Edit: I guess I never answered the original question... I have roughly the same arrangement at my company as killramos. I put in 10% of gross salary, company matches... that gets rolled into RRSP and TFSA.
Even with zero other savings, that's well over $1500/month... I manage to put away quite a lot more than that though. Professional DINKs, modest mtg, low interest rates, no car payments ftw!

[Feruk]

$1,500 a month is $18,000 a year. If I saved that little, I'd be scared shitless about never being able to retire. But then again I'm one of these foolish people who rents. Not like some of the ballaz on here who have multiple properties with insane GRMs that will clearly make you rich.


Originally posted by killramos
It's not that hard.

10% Salary into Savings plan (unregistered) company matches 1.5 times in 1 year restricted stock (up to 25% of base salary now). All out into a TTFSA that is automatically conveyed to TFSA after 1 year. That pays an 8% divi.

This is also all before taxes so it ends up being quite a lot more than 25% of take home.

I won't list my salary but I'm a new grad engineer so A level salary survey. This puts base salary at 72,000 per year. That is exactly 1,500 dollars per month saved. I have noticed a lot of engineers on beyond and most of them are well past A level.

It's not completely unfeasible that 36% of beyond save that much. It isn't that difficult when you think about it that way.

Not that I'm saying everyone makes an engineers salary but the demographic on here is definitely out of whack.
I bet I know exactly where you work. Does it rhyme with... Denn Pest?

[killramos]

Originally posted by Feruk
$1,500 a month is $18,000 a year. If I saved that little, I'd be scared shitless about never being able to retire. But then again I'm one of these foolish people who rents. Not like some of the ballaz on here who have multiple properties with insane GRMs that will clearly make you rich.


I bet I know exactly where you work. Does it rhyme with... Denn Pest?

Haha nope, PW doesn't pay an 8% divi any more and I believe their plan must be registered unless it's changed significantly. My plan was designed to headhunt PW employees so it's designed to be similar.

[Kloubek]

Originally posted by Feruk
$1,500 a month is $18,000 a year. If I saved that little, I'd be scared shitless about never being able to retire.

Are you kidding me?

I've always heard from multiple sources that the general rule of thumb to ensure a reasonable retirement was to save 10% of your earnings. Under such a model, you'd have to be making 180g/year to afford to save 1,500 a month. And while I know there are some ballers on here, I don't think many of us make that much.

How you're managing to save significantly more than $1,500, I have no idea. Guess you're a baller who rents. :)

[A790]

Originally posted by Kloubek
How you're managing to save significantly more than $1,500, I have no idea. Guess you're a baller who rents. :)
Lifestyle choices can also impact that. My wife and I aren't ballers but we could save that amount if we set a budget and stuck to it.

[Feruk]

Originally posted by Kloubek
How you're managing to save significantly more than $1,500, I have no idea. Guess you're a baller who rents. :)

Haha I'm not a Beyond baller, I just pay cheap rent and most of my hobbies (excluding skiing) don't cost much. With a lot of people's employers matching employee contributions, and not spending your bonus just because you got one, $1,500/month isn't too hard to hit.


Originally posted by killramos
Haha nope, PW doesn't pay an 8% divi any more and I believe their plan must be registered unless it's changed significantly. My plan was designed to headhunt PW employees so it's designed to be similar.
Guess number two: Rhymes with Pong Fun Energy. I'm kinda curious now as I used to work at Penn West.

[killramos]

Originally posted by Feruk


Haha I'm not a Beyond baller, I just pay cheap rent and most of my hobbies (excluding skiing) don't cost much. With a lot of people's employers matching employee contributions, and not spending your bonus just because you got one, $1,500/month isn't too hard to hit.


Guess number two: Rhymes with Pong Fun Energy. I'm kinda curious now as I used to work at Penn West.

Replace the last but with exploration and you might have something ;)

If you used to be at PW it's not a hard guess haha.

[Cos]

.

[J.M.]

I just paid off my student loan and I still live at home haha so hopefully be saving $1500-$2000/month for the next little while. I usually end up buying shit I don't really need though :rofl:

[nissanK]

Originally posted by A790

Lifestyle choices can also impact that. My wife and I aren't ballers but we could save that amount if we set a budget and stuck to it.

This is exaclty how we're able to save $1500+ a month. We live off my income ONLY and every penny she brings in goes towards savings. Mind you she's a hair stylist and brings in tips as well. On top of that we save $400 a month in TFSA's from my income as well.

Here's the key:

We're debt free, no car payments, do a budget every 2 weeks and live within our means (currently renting saving for house).:bigpimp:

-------------------------------------------------------------------------


Now I know the first response to this is going to be. 'What if she gets pregnant, you won't be saving $1500+ an month anymore' 'Oh well you rent no wonder'' 'Owning a house will break that budget' etc.....

Yes, if she gets pregnant and doesn't work of course we won't be in the same savings bracket we are now. We'll be down to roughly 10% savings with the TSFA plan. Still means that everything above my current income (mat leave benefits, bonuses etc...) will be gravy.

We're actually moving to a SMALLER place in the new year to stay on track an maximize our savings. Yes that's right, WE'RE DOWNSIZING VOLUNTARILY :D (live within your means)

When we do buy a house, it will be one we can afford on one income (again, live within our means). Yes we won't be debt free anymore (technically) but the goal will remain the same.

[BoostinAround]

Saving is a horrible strategy in an inflationary economy....I INVEST at least 10% of our income per month.

[nonofyobiz]

I don't know where my money goes but I save pretty much nothing or I could easily be $1500+ if I'm getting overtime. The problem is once you save it some other expense come around and there it goes (usually vehicle related lol)

[Feruk]

Originally posted by BoostinAround
Saving is a horrible strategy in an inflationary economy....I INVEST at least 10% of our income per month.
Inflation's just over 1% right now. I think by "save" a lot of people mean "invest."

[BoostinAround]

Real inflation is more than 1% on goods that people buy on a day to day basis.

Rent
Housing
Food
Gas
Transportation
Utilities
Etc.

Real numbers are MUCH higher.

Also just curious...have you ever done the math on owning vs renting?
You seem to downplay owning, by saying you are better off renting and saving. You can own for the same price as rent, and with ~30-40% of your mortgage payment going towards principle how does that make it worse than renting? Just interested on your perspective on this one.

[bitteeinbit]

Depends on the city, locations, etc. Owning also means tons of repairs and maintenance, not just a mortgage. If someone is able to save the difference (that 30-40% you talk of) by renting, then it works out to about the same if not better.

[Xtrema]

Originally posted by Kloubek


Are you kidding me?

I've always heard from multiple sources that the general rule of thumb to ensure a reasonable retirement was to save 10% of your earnings. Under such a model, you'd have to be making 180g/year to afford to save 1,500 a month. And while I know there are some ballers on here, I don't think many of us make that much.

How you're managing to save significantly more than $1,500, I have no idea. Guess you're a baller who rents. :)

If we are counting RRSP, $18k is 18% of $100K.

Not really that out of reach especially if your employer contributes as well.

[killramos]

But how many people have the discipline to apply the savings from renting (where they exist) to long term actual savings?

At least with home ownership you are looking to have on the order of 6-7 figures of equity built up by retirement Worst case you can live off cpp and reverse mortgage / downsizing.

I'm not personally one to say that I need things to be kept from me for my own good but I'm just saying for the majority of people this is a good idea.

As for repairs and maintenance I think you are pretty seriously downplaying this. There are lots of insecurity issues with renting (how many people rent a place for 10+ years) and having to deal wth landlords and claims courts etc.

There is also the idea that one day, sooner than many would think, you can be mortgage free which few would argue is cheaper than renting. If you are diligent in paying down principal early in the mortgage you can start getting interest payments to well below 50% soon enough.

I personally hated renting through university and it made me sick thinking of how much of my money just disappeared monthly.

[max_boost]

Lol when you guys say renting is throwing money away, you sound as if you are getting nothing in return.

[CapnCrunch]

Originally posted by A790

He's got a point.

I saw the poll and my first thought was "bullshit". There's no way that 35% of beyond saves more than $1,500/month.

The average Calgarian household takes in $94,000/yr (source: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm). This works out to be about $5,800/mo after taxes.

The average house price is $517,598. Assuming a 30 year mortgage at 2.9% interest this works out to be about $1,970/mo for just the mortgage. Add on property taxes, utilities, and other common household expenses and you're into your home for nearly $3k/mo, easily.

So, the average Calgarian spends nearly $3k/mo for their household expenses. Calgary, being laid out the way that it is, basically requires you to have a car so now you have car payments, insurance, gas, maintenance, etc.

So, being blunt: a bunch of people on here are either lying, or the Beyond.ca demographic earns significantly more than the average Calgarian. The average Canadian saves less than 3% of their income (source: http://www.moneysense.ca/save/are-you-saving-as-much-as-the-average-canadian).


If the average household income is $94,000, you realize that means 50% of households make MORE than $94,000.

Since beyond has 35% saving $1500, if anything that means beyonders are worse at saving than an average family, wouldn't it? :rofl:

[variance]

Originally posted by CapnCrunch


If the average household income is $94,000, you realize that means 50% of households make MORE than $94,000.

Since beyond has 35% saving $1500, if anything that means beyonders are worse at saving than an average family, wouldn't it? :rofl:

you are confusing average with median.

[GTS4tw]

Originally posted by CapnCrunch


If the average household income is $94,000, you realize that means 50% of households make MORE than $94,000.

No it doesn't mean that.

[ercchry]

Originally posted by bitteeinbit
Depends on the city, locations, etc. Owning also means tons of repairs and maintenance, not just a mortgage. If someone is able to save the difference (that 30-40% you talk of) by renting, then it works out to about the same if not better.

but the major thing about owning is... well, interest rate aside... my month housing bill is going to be the same for the next 25 years, how about your rent? then how about past the 25 year mark? :poosie:

[nissanK]

Originally posted by BoostinAround

Also just curious...have you ever done the math on owning vs renting?
You seem to downplay owning, by saying you are better off renting and saving. You can own for the same price as rent, and with ~30-40% of your mortgage payment going towards principle how does that make it worse than renting? Just interested on your perspective on this one.

I assume this is addressed to me so I'll respond. I'm not necessarily 'down playing' owning, it's just that the numbers for renting vs. owning, renting mostly wins. Of course it all depends on housing markets.

Monthly Renting costs wasted (no return) = Rent, insurance, utilities

Monthly Owning costs wasted (no return) = Mortgage interest, insurance, maintenance, property taxes, utilities

Owning Costs WITH return = Home equity


Run the real world numbers in this calculator: https://docs.google.com/spreadsheet/lv?key=0AktN0CUf4uaVdHNvWFFzT0VPVFZTdi1ra0dCUC1jU3c&pli=1

(I noticed that utilities are not included in the rental scenario so I included the utilities in the rental payment)

Calgary Median Home price: $450,000
POTENTIAL Home Value after 25 years (2% yearly appreciation) = $723,797

Interest paid over 25 years = $278,836.88
Property Tax over 25 years = 120,527
Insurance Over 25 years = 46,856
Maintenance Over 25 years = $238,384

Total Funds NOT INVESTED = $684,603

People seem to have no problem paying 168% for a house..........

Take that $684k that a renter doesn't have to pay and invests it @ average 7% return = $743,816



Sources: http://business.financialpost.com/2012/09/14/why-its-better-to-rent-than-buy/

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/would-you-be-better-off-financially-renting-or-buying-a-home/article11952313/

[A790]

Originally posted by CapnCrunch


If the average household income is $94,000, you realize that means 50% of households make MORE than $94,000.

Since beyond has 35% saving $1500, if anything that means beyonders are worse at saving than an average family, wouldn't it? :rofl:
That's incorrect. The average is calculated by looking at all the data and dividing salary totals by the sample size.

So if 10 people make $500,000/yr and 20 people make $1/yr the average income for the sample size would be $166,667/yr. According to your logic that would also mean that 50% make more than $166,667/yr which, obviously, is incorrect.


Originally posted by ercchry


but the major thing about owning is... well, interest rate aside... my month housing bill is going to be the same for the next 25 years, how about your rent? then how about past the 25 year mark? :poosie:
No way. Annual property tax increases, along with annual maintenance, generally make it a wash.

[ercchry]

must resist.... repeating beyond arguments...

[Sugarphreak]

...

[Xtrema]

Originally posted by bitteeinbit
Depends on the city, locations, etc. Owning also means tons of repairs and maintenance, not just a mortgage. If someone is able to save the difference (that 30-40% you talk of) by renting, then it works out to about the same if not better.

It's all gambling.

You win on renting if you are betting economy/RE market is going down.

You win on owning if you are betting economy/RE market is going up.

In Calgary, there isn't any significant saving in renting over owning. Historically, you probably only win with renting for may be 5 years out of the last 20.

[ercchry]

where is heavyfuel anyway? :rofl:

[Xtrema]

Originally posted by ercchry
where is heavyfuel anyway? :rofl:

Let him stay in that RRSP thread. :rofl:

[CapnCrunch]

Originally posted by A790

That's incorrect. The average is calculated by looking at all the data and dividing salary totals by the sample size.

So if 10 people make $500,000/yr and 20 people make $1/yr the average income for the sample size would be $166,667/yr. According to your logic that would also mean that 50% make more than $166,667/yr which, obviously, is incorrect.


No way. Annual property tax increases, along with annual maintenance, generally make it a wash.

Jesus, you assholes know what I meant lol. No need to turn this into a statistics class.

This thread just got asianed.

[ercchry]

here NissanK... i predicted my own future, first i de-ontario'd the spreadsheet... then i put in numbers i feel are fair

http://i.imgur.com/ub9Chj5.png

my personal spreadsheet looks different... and is even more grossly in favor of owning. and since its cut off, by 2042 the owner is $1mm ahead

[Strider]

Originally posted by A790
I saw the poll and my first thought was "bullshit". There's no way that 35% of beyond saves more than $1,500/month.

The average Calgarian household takes in $94,000/yr (source: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm). This works out to be about $5,800/mo after taxes.


Originally posted by CapnCrunch
If the average household income is $94,000, you realize that means 50% of households make MORE than $94,000.

Since beyond has 35% saving $1500, if anything that means beyonders are worse at saving than an average family, wouldn't it? :rofl:

Originally posted by A790

That's incorrect. The average is calculated by looking at all the data and dividing salary totals by the sample size.

The $94k figure quoted (from your own link) is a median household income... So CapnCrunch is right.

[pheoxs]

Originally posted by Xtrema


Let him stay in that RRSP thread. :rofl:

Screw that you guys take him back ...

[Strider]

Originally posted by Kloubek
I've always heard from multiple sources that the general rule of thumb to ensure a reasonable retirement was to save 10% of your earnings. Under such a model, you'd have to be making 180g/year to afford to save 1,500 a month. And while I know there are some ballers on here, I don't think many of us make that much.

I would definitely re-evaluate that with some real numbers... I wouldn't even be comfortable with just maxing out my RRSP contributions.

[Sugarphreak]

...

[kaput]

.

[Neil4Speed]

Originally posted by nissanK


Calgary Median Home price: $450,000
POTENTIAL Home Value after 25 years (2% yearly appreciation) = $723,797

Interest paid over 25 years = $278,836.88
Property Tax over 25 years = 120,527
Insurance Over 25 years = 46,856
Maintenance Over 25 years = $238,384

Total Funds NOT INVESTED = $684,603

People seem to have no problem paying 168% for a house..........

Take that $684k that a renter doesn't have to pay and invests it @ average 7% return = $743,816



Sources: http://business.financialpost.com/2012/09/14/why-its-better-to-rent-than-buy/

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/would-you-be-better-off-financially-renting-or-buying-a-home/article11952313/

But then... Where do you live? Did I miss something? I mean, if your paying even 2k a month for rent, your spending 600,000k over that period. So your spending $84k to own home.

[Gman.45]

When we lived in Calgary, which was up until recently since 1993, we saved a varying amount each month, but we always saved something.

We built our first home in Cranston in 1999/2000, it was a Morrison home, not that big, only 1400sq ft or so, and the mortgage after my down payment was 150$k, which at the time with the rates was 5$ under 1000$ per month for me.

I think this question comes down to your rent/mortgage responsibilities. A good friend of mine's father owns Wallace and Carey, a large business that's been privately owned by his family since the 1950's. His father told me that once I owned my own home, life gets much easier. He was right. We saved everything we could, hit some good spots in the housing market when we sold, plus I worked overseas as a private contractor and made really good $ which was paid in overseas accounts, giving a lot of options in terms of sheltering it etc.

When we were new home owners, if we saved 500$ it was a celebratory occasion at the end of the month, it was rare to save 4 digits until fortunate higher paying work came along, plus the housing value increase of 2005/6 didn't hurt either.

I just turned 40 a couple weeks ago, and both our home and lake house have been paid for for about 2 years now. Essentially that means all of the money I have saved, and will make in the near future, can also be saved, as can my wife's, who is making low 100$k ish money right now.

You don't have to be a baller to be lucky, and that's really how I feel about the whole thread and question - hard work and discipline is important, but if you didn't buy a home at the right time, sell it at the right time, or strike a job with huge earnings, it's going to be hard for 90 percent of Canadians including beyond to save 4 figures a month right now if they are under 30 in my opinion. They just came too late for the cheap homes and mortgages, and the wages haven't increased correspondingly at all. I was very, very lucky, as I got to buy a home that was well under 200$k which would cost 650$k now at least as my 1st home, plus I was again lucky to have a job where I only worked 6 months a year and took home 150$k for it for the period of about 3 years. I'm also lucky I have a frugal wife that is 3x smarter than I am, and makes more than I ever will ever the long term.

I'm sure there is that other 10 percent of the "ballers" on beyond who make mid to high 6 figures, or have family $, and that's cool, we need those people in the economy in a big way, it's just that they don't really apply to the whole "saving" theory, as their income and wealth puts them beyond this sort of thing IMO.

[Xtrema]

Originally posted by Neil4Speed


But then... Where do you live? Did I miss something? I mean, if your paying even 2k a month for rent, your spending 600,000k over that period. So your spending $84k to own home.

Amotized interest cost. Although, the maintenace of 240K over 25 years is a bit high IMO.

Renter lover to say the mortgage interest and maintenance isn't their problem but both will be factored into the price of rent. Nobody has a mortgage payment of $2000 will rent it out for $1500 unless the market is in the shithole.

When you rent, you are basically paying the landlord's interest cost at a very minimum.

And NissanK's argument, even with the overly exaggerated maintenance cost is compare an asset work $723K vs investment portfolio of $743K.

A whopping $20K of difference after 25 years based on an assumption that he will average 7% on investment vs houses will always raise @ 2%.

Any slight adjustment either way and owning will be better.

[A790]

Originally posted by Strider




The $94k figure quoted (from your own link) is a median household income... So CapnCrunch is right.
O SNAP. lol

[Strider]

Originally posted by nissanK
Interest paid over 25 years = $278,836.88

While it makes sense, this whole calculation is a bit too general. In Calgary, apart from major downturns in the O&G market, the cost of rent is high enough that it covers the landlord's entire mortgage payment, P+I.


Originally posted by Xtrema
When you rent, you are basically paying the landlord's interest cost at a very minimum.

I hit reply to say this before your edit.


Can a mod split this and create one be all / end all rent vs own thread? This has diverged very far from the average savings topic, which is pretty interesting in itself.

[Tik-Tok]

Originally posted by Neil4Speed


But then... Where do you live? Did I miss something?

In a van, down by the river. Obviously.

[Feruk]

Originally posted by ercchry
but the major thing about owning is... well, interest rate aside... my month housing bill is going to be the same for the next 25 years, how about your rent? then how about past the 25 year mark? :poosie:
I don't think you understand the effect interest rates have on housing value, and the effect they have on your "monthly housing bill" staying the same. Rising interest rates will mean your living expenses will go up on mortgage renewal, but rental prices will actually go DOWN (inflation adjusted), not up as you'd suggested. A raise of a few percent is a few hundred dollars a month more in payments, which shrinks your buyer pool. Supply vs demand, housing prices have to come down as people don't magically make more money. When housing prices drop, rent prices soon follow. The only one paying more is the homeowner who got in at the lower interest rates.

Your spreadsheet assumptions (without seeing the cost and interest rate ones) aren't fair. The math works the way you'd like it to because you assumed massive leverage (5% down) and an investment return of 5% where the S&P 500 average since 1926 is 9.44%. So yes, if you start with a bias, the numbers will work your way. Garbage in = garbage out.

[Feruk]

Originally posted by BoostinAround
Real inflation is more than 1% on goods that people buy on a day to day basis.

Rent
Housing
Food
Gas
Transportation
Utilities
Etc.

Real numbers are MUCH higher.

Also just curious...have you ever done the math on owning vs renting?
You seem to downplay owning, by saying you are better off renting and saving. You can own for the same price as rent, and with ~30-40% of your mortgage payment going towards principle how does that make it worse than renting? Just interested on your perspective on this one.
Agreed on real inflation being higher.

I've looked at a couple houses and half a dozen scenarios for buying a property in Alberta. That mortgage vs rent calculator is a pretty good resource for home ownership vs renting actually (not good for investment property). I have yet to find a single situation where I'm ahead in 25 years by buying a property (for habitation or as an investment) in Alberta. Another way to analyze if you'll make money is evaluating the investment's GRM (gross rate multiple) or Cap Rate. Good read in link below.

Link (http://www.milliondollarjourney.com/landlord-math-cap-rate-and-return-on-investment.htm)

[ercchry]

why did i even type "well, interest rate aside"? and yes, no shit you change future numbers and you get a different outcome, shocking :eek:

was kind of the point i was making

i really dont care how you invest your money. i enjoy how mine is sitting. i enjoy having hard assets, even more so ones that are as dynamic as real estate

[CapnCrunch]

Originally posted by Feruk

I don't think you understand the effect interest rates have on housing value, and the effect they have on your "monthly housing bill" staying the same. Rising interest rates will mean your living expenses will go up on mortgage renewal, but rental prices will actually go DOWN (inflation adjusted), not up as you'd suggested. A raise of a few percent is a few hundred dollars a month more in payments, which shrinks your buyer pool. Supply vs demand, housing prices have to come down as people don't magically make more money. When housing prices drop, rent prices soon follow. The only one paying more is the homeowner who got in at the lower interest rates.

Your spreadsheet assumptions (without seeing the cost and interest rate ones) aren't fair. The math works the way you'd like it to because you assumed massive leverage (5% down) and an investment return of 5% where the S&P 500 average since 1926 is 9.44%. So yes, if you start with a bias, the numbers will work your way. Garbage in = garbage out.

Are you suggesting that your rent stays the same when the mortgage your landlord has on your rental goes up?

http://www.businessinsider.com/monthly-rent-vs-monthly-mortgage-payment-2013-1

[jdmXSI]

Originally posted by nissanK


I assume this is addressed to me so I'll respond. I'm not necessarily 'down playing' owning, it's just that the numbers for renting vs. owning, renting mostly wins. Of course it all depends on housing markets.

Monthly Renting costs wasted (no return) = Rent, insurance, utilities

Monthly Owning costs wasted (no return) = Mortgage interest, insurance, maintenance, property taxes, utilities

Owning Costs WITH return = Home equity


Run the real world numbers in this calculator: https://docs.google.com/spreadsheet/lv?key=0AktN0CUf4uaVdHNvWFFzT0VPVFZTdi1ra0dCUC1jU3c&pli=1

(I noticed that utilities are not included in the rental scenario so I included the utilities in the rental payment)

Calgary Median Home price: $450,000
POTENTIAL Home Value after 25 years (2% yearly appreciation) = $723,797

Interest paid over 25 years = $278,836.88
Property Tax over 25 years = 120,527
Insurance Over 25 years = 46,856
Maintenance Over 25 years = $238,384

Total Funds NOT INVESTED = $684,603

People seem to have no problem paying 168% for a house..........

Take that $684k that a renter doesn't have to pay and invests it @ average 7% return = $743,816



Sources: http://business.financialpost.com/2012/09/14/why-its-better-to-rent-than-buy/

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/would-you-be-better-off-financially-renting-or-buying-a-home/article11952313/

Just out of curiosity, why does your example end at 25 years and not 40 years? One would think that the longer you go on ownership it would favor the purchaser and not the renter, right? Also, isn't your cost of maintinance a little high at $10k per year? It's not like you are re-doing the sidding and roof every second year.

[Feruk]

Originally posted by CapnCrunch
Are you suggesting that your rent stays the same when the mortgage your landlord has on your rental goes up?

http://www.businessinsider.com/monthly-rent-vs-monthly-mortgage-payment-2013-1
What I'm saying is interest rate rise is the rare situation where your rent stays the same while the mortgage for existing landlords only goes up. Think about it...
(a) Rates rise, income does not or does at a meager pace
(b) Dollar can't buy the same, housing prices fall
(c) Existing landlords go to renew in a few years, their rate is increased to current rate, but unlike new entries, they bought the house before the drop caused by interest rates. Their mortgage goes up. Can they increase rent? Unlikely! Other units are renting for market value, so (unless the landlord's lucky) the landlord either eats the extra cost or lets the property sit vacant eating the entire cost. Lose-lose.

Of course this is a simplification barring any extenuating circumstances.

[ercchry]

Originally posted by Feruk

What I'm saying is interest rate rise is the rare situation where your rent stays the same while the mortgage for existing landlords only goes up. Think about it...
(a) Rates rise, income does not or does at a meager pace
(b) Dollar can't buy the same, housing prices fall
(c) Existing landlords go to renew in a few years, their rate is increased to current rate, but unlike new entries, they bought the house before the drop caused by interest rates. Their mortgage goes up. Can they increase rent? Unlikely! Other units are renting for less, so (unless the landlord's lucky) the landlord either eats the extra cost or lets the property sit vacant eating the entire cost. Lose-lose.

Of course this is a simplification barring any extenuating circumstances.

or d)landlord has multiple years to plan for his renewal and sells the property right before renewal and tenant is now homeless :dunno: dumps equity into primary and pays it off. laughs at everyone

remember, i can still live in my house no matter the value. you cant live in your portfolio

[Feruk]

Originally posted by jdmXSI
Just out of curiosity, why does your example end at 25 years and not 40 years? One would think that the longer you go on ownership it would favor the purchaser and not the renter, right?
The number on there is 25 because that's the mortgage length I think? You'd have to do the math, but I think the renter is still ahead after 40 by an even larger gap. Renter is compounding annually at 7% on a million dollars +, where the owner is only getting 2% return on the house and just starting to save to compound money.

[Feruk]

Originally posted by ercchry
or d)landlord has multiple years to plan for his renewal and sells the property right before renewal and tenant is now homeless :dunno: dumps equity into primary and pays it off. laughs at everyone

remember, i can still live in my house no matter the value. you cant live in your portfolio
What you forgot to mention is in (d) rates are up, value is down, and landlord takes capital loss on selling property. I'm not saying landlord goes broke, just saying in the long term when rates go up, he is far behind on value of portfolio, which is what this conversation is about.

[ercchry]

depends on timing. you normally dont see rate jump huge amounts overnight... so you could easily capitalize on the panic buying of people locking in before they skyrocket

EDIT: rentals are getting even more off topic... but you do realize that the home owner should STILL have enough money leftover each month to diversify with and will STILL have a decent portfolio in 25 years

[Xtrema]

$300K mortgage, 4%, 25 years

Rent: $1500

Ownership:
Mortgage Interest: $1100 ($1600 mortgage)
Tax: $160
Maintenance: $100
Insurance/and or condo fee: $200

Ownership = $1560.

So by year end, renter would have extra $6720 to invest vs owner. But just for argument sake, renter had $7000 at the beginning of the year and made 30% return after tax. He made $2100.

Owner on the other hand enjoy 2% increase on property @ $300K. He makes on paper, $6K.



Owner's cost is mostly protected for at least 5 years.

Renter's cost is based on market.

[Feruk]

Originally posted by ercchry
depends on timing. you normally dont see rate jump huge amounts overnight... so you could easily capitalize on the panic buying of people locking in before they skyrocket


No doubt. I think the issue is the same as with stocks. By the time you've realized the trend was occurring, it's already over. Timing the market is really difficult, and more often than not comes down to luck.


Originally posted by ercchry
EDIT: rentals are getting even more off topic... but you do realize that the home owner should STILL have enough money leftover each month to diversify with and will STILL have a decent portfolio in 25 years

What the homeowner has left over, the renter has left over as well. Since 1 = 1, it's left out of the calculation.