Issue #6 - Don’t Get Caught With Your Hand in the Cookie Jar

Feb 29, 2024

Read time: 4 minutes  


Hello everyone, we are back in Vancouver after an excellent trip South. Despite the rainy weather, coming home is always as sweet as the vacation itself.

A quick thank you to all readers of the Journal as well as the new 60+ new subscribers this week alone - this is a great community we are building! New subscribers can read past issues on my website

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1. Personal Finance

What is better, an RRSP, or an Index Fund?

That's like asking if socks or shoes are better. You need both!

We see adverts from our banks saying, "buy an RRSP today!" 

This means absolutely nothing.

An investor doesn't simply "buy" an RRSP and then they are all of a sudden investing.

Yes, there are tax benefits, but I will save that for another post. 

It's what you buy when the money is INSIDE the RRSP that counts. 

Think about it like this:

  1. Your socks are the account (RRSP/TFSA etc.) you put your feet into. 
  2. Your shoes are the investments you buy.
  3. Buy some good shoes, and make sure they are great value (cost) - they will take you farther than you imagine.

An S&P500 Index Fund like the iShares IVV costs 0.03% and has averaged ~10% compounded returns.

PS. If you are considering to contribute to the RRSP, the deadline for RRSP contributions is February 29, 2023.

If you haven't maximized your TFSA yet, you should probably do that before you think about contributing to your RRSP.


2. Stock Markets

Speaking of 10% returns...

Assuming American innovation continues on in good form for the next 40 years, the little one in the picture is on track to easily have $3,000,000 tax free when she’s 40.

This is how you can do it, too:

  1. Open brokerage account - choose TFSA (or Roth IRA if you are American).
  2. Contribute maximum $7,000/yr ($583/month).
  3. Buy S&P500 with every contribution no matter what the news headlines say.
  4. Make child beneficiary of TFSA in case you die early.
  5. Simply give her the $3,000,000 tax free when you feel like it - in our family’s case, we think 40 is best.

When she is 40, we'll be 75 and ready to help with a warm hand, not a cold one. Obviously, she’ll need to demonstrate  that she appreciates hard work and understands the value of a dollar.

Importantly, since kids under 18 can't legally have an account, except for an RESP, this strategy starts using your personal TFSA. And this doesn’t account for the money she will make when she starts working. When she turns 18, she can start her own TFSA. 

Pretty powerful to think about what you can do now to build for your family's future. The sky is the limit, only time must be on your side. 

Start now. 


3. Real Estate 

Don't buy real estate because everyone says to buy real estate.

Buying one or several rental units is a bloody headache:

  • bad tenants
  • tax reporting
  • market issues
  • late payments
  • capital expenditures
  • utilities management
  • insurance management
  • the list goes on.

Put simply, Real Estate investing is not passive. Not one bit.

Unless you buy Public REITs on the stock market - but then you have to stay on top of management's strategy and deal with the volatility.

Unless you invest as a Limited Partner - but then you have to find the right sponsor with experience to manage through cycles and agree to have your money tied up for several years.

At Narland, we act as Sponsor (General Partner) and handle everything from deal sourcing, property management, asset management, accounting, and dispositions. 

You, the investor, provide capital - Narland invests minimum 10% in the deal for alignment - and in exchange for managing the entire process and distributing available cash flows, investors agree to share a greater portion of profit with us. 

You could do this yourself, but it is a lot of work. 

Always tradeoffs!


1 Quote

"Those fuckers got caught with their hand in the cookie jar"

-anonymous reaction to the Eby government canceling their proposed changes to the Land Act in B.C after some much needed public outcry.


A Question  

What are you reading? Mj and I are in a book club and are about to start this: The Power by Naomi Alderman.



If you enjoyed this issue, please forward this email to your friends to subscribe. 

Thank you

Eddie Gudewill, CFA


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