How negative real rates distort everything Normally a mortgage is a liability. And bonds are a low risk, low return asset. However when real interest rates are negative you can throw these conventional concepts out the window. The graph below shows the difference between a government bond yield and inflation (CPI.) The economy experiences negative real rates when… Read More »
Some people are so debt averse they even refuse to borrow money when interest rates are at rock bottom. They save up for a 30% down payment for a home instead of 20% because they want to save on interest costs. This is despite the fact that Canadian mortgages only cost about 2.5% currently, or sometimes lower like in… Read More »
Borrow money to make money Today we’ll explore a common question I get asked all the time: What is my thought process behind leverage? The short answer is simple. I want to make high returns without being exposed to high risk. Normally the two go hand-in-hand. But leverage allows me to separate them. For example, a speculative marijuana stock may grow 20%… Read More »
Last month I blogged about opening up a new Interactive Brokers account to invest in stocks. I’ve received some reader’s questions since then. So in today’s follow-up post, I’d like to discuss the following topics. 🙂 How to Open an IB Account How to transfer funds between TD and Interactive Brokers How margin accounts work with IB How to… Read More »
Experts worry that the recent interest rate cut in Canada will lure people to rack up even more debt. Bankruptcy trustee Doug Hoyes warns, “the more debt you have, the greater your chances of going bankrupt. It’s simple math.” He predicts bankruptcy numbers will “skyrocket when interest rates rise and people are saddled with ballooning debt payments.” Yikes. That doesn’t sound good. 😐 Anyway, last… Read More »
You’ve probably heard on the news about the stock market correction in China. Last year, Chinese stocks experienced huge gains and surged more than 140%. Oh my Buddha, that’s insane! 😯 But since June 2015, the market has dropped by almost a third in value. Some people in the media claim this is some sort of catastrophic event comparing it to the… Read More »