Cash Cows, Pigs and Jackpots by David Trahair

Author:David Trahair
Language: eng
Format: epub
Publisher: Wiley
Published: 2012-09-02T16:00:00+00:00

Beware Those Trying to Sell You Something

Be careful of those people trying to sell you something. For example, say I was trying to convince you that renting is the better option because I make my living selling investments. I might enter a lofty figure for the assumed rate of return on your investments and a higher mortgage interest rate. For example, say we assume you'll make 7% and 5.5% per year on your TFSA/RRSP and investment account respectively and that long-term 25-year mortgage rates will average 6%. With our original $800,000 house appreciating at 2% per year, the rent option beats the buy option by a whopping $859,646 for the TFSA and $961,018 for the RRSP.

The overall message here is that the picture is only 100% clear after the fact—when all the variables can be calculated as realities rather than guesses. Don't be fooled into relying on overly optimistic projections.

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