Myth #10 Only lucky people with money taking high risks get wealthy
No way! This is a lie. All any of us have to do is to reposition our assets – AND attitude.
As Canadians, we need to reposition our homes equity to enhance our net worth.
We need to reposition our current expenditures and investments in order to gain positive leverage.
But isn’t leverage risky?
Now let me ask you this?
How did you purchase your home? Was it all cash down?
No, we borrowed. We used financing to get into our home… We used leverage to get into our home!
That’s right! We do this all the time – almost without thinking…
Is it risky?
Of course it is!
Because we have no guarantee that housing prices will continue to deliver the returns we have come to expect historically.
Now, let me ask you this – Are you a high risk investor?
Well, let’s take a look at a typical arrangement:
What would you say is I came along and offered you an investment opportunity where the typical “holding period” for you would be 20-25 years (now 30 – 40 years with the new mortgage products currently available)
Where, historically, it was mandatory for you to put at least 5-25% into the deal.
And then borrow the rest of the money to maximums of $300,000, $400,000 or $1,000,000+ or more!
Where the interest rates that would be charged on the loan would fluctuate over time and where the interest on the loan is not even tax deductible on your tax return.
What I am offering you is an investment that is relatively illiquid (meaning, not particularly easy to sell-especially in some market conditions – and lastly – is situated in a narrowly defined geographic area (i.e. your neighbourhood).
Furthermore, this investment’s value will vary over time and there is no real easy (or free) way to accurately tell how much money you are making
on this investment at any given time unless you pay to have the investment professionally appraised.
Ultimately, you will not truly know how well your investment has performed over time until you finally sell.
Oh, and when you do: you must be able to find that one person who also agrees with your valuation – and is who is prepared to hand you over a check in exchange for your set of house keys.
Oh, and let’s not forget the up keep and maintenance of this investment.
In the ideal cases, the annual maintenance is routine and is nothing much more than mowing the lawn, occasionally cleaning the gutters and painting the interior/exterior every 5-8 years.
However, in some circumstances much more radical and expensive services are necessary like installing a new furnace, re roofing the shingled roof OR “heaven forbid” dealing with a “leaky condo” situation – which could bring the investment value way, WAY down!
Does any of this above sound familiar?
Does this sound “risk free”?
No, this is definitely not a “risk free” investment…
In “point of fact”, as Canadians we are all high-risk investors!
And yet we all do this all the time – right?
Why do we do this?
Well, besides providing shelter and a place to raise a family – to make money!
And how many people like to brag about the tons of money they made in real estate?
However, the money we make in the housing market has no relation whatsoever to the money we put into the house initially or subsequently.
Also, the bank does not ask to participate in the resulting profits. (Well, nor should they because they made a ton of money from you in the form
of interest along the way).
So let’s analyze this.
It’s “risk capital” or leverage that has provided us with an asset valued many times over our annual salary.
So, if we are comfortable with this form of wealth creation strategy (and it’s a great one believe me) why is there hesitation with doing the same
thing again…and again…
Here is where it all comes down to our attitudes and belief systems…
In fact, there are many asset classes that have out performed real estate… over time!
Did you get that?
The phrase is: “over time”…
The markets: be they stock markets, bond markets, money market and yes – this includes real estate markets – don’t make us lose money – it’s our
“reaction” to the markets that make us lose.
Fear and greed!
Usually investors end up reading the popular media and reacting to the reported news.
Based on fear and greed they will usually do the wrong thing at the wrong time!
That’s how you lose money!
If the real estate market is off 20% I never hear anybody saying that they are going to put their home on “the market”!
However, based on past history – we are reasonably comfortable that real estate will continue to do what they have always done – providing shelter – and a decent return for Canadians – over time!
Again, did you get that?
The phrase: “over time”…
Returns of just 6 to 8 percent interest can create tremendous wealth. (In fact, the national Canadian average for real estate is only 5.6%)
However, it is our attitudes that will be the most important factor in determining the altitudes of our wealth.
So as you can see – how you handle your mortgage can either derail or enhance not only your retirement plans but also the time it takes to get
Remember: Every dollar you pay down on your home represents an opportunity not taken.
Every dollar departs your hand with a cost … an opportunity lost.
If you are unsatisfied of where you are today – take charge of your financial life and begin to change things around.
Myth #10 Only lucky people with money taking high risks get wealthy Pt2
Canadians! When it comes to your mortgage…
Are you tired of being on the mortgage ‘hamster wheel’?
Are you sick of being ‘house rich & cash poor’?
Are you frustrated with your banks ‘mortgage solution’?
Are you open to new ideas?
Then join the quiet Canadian revolution today!
‘The UnCanadian Way To Get Rid Of Your Mortgage & Create Wealth’
It’s waiting for you at
“I purchased Mark’s book “The UnCanadian Way To Get Rid Of Your Mortgage And Create Wealth” spontaneously after visiting his site. (
Packed with solid, actionable advice, this book eliminates the fluff so prevalent in normal finance books and clearly explains the steps the wealthy use to build up their portfolios.
It provides evidence debunking the way most Canadians deal with their finances and more importantly shows the path forward.
Mark himself is approachable, experienced and genuinely willing to help Canadians be more strategic and successful in how they manage their mortgages, wealth and debt.
I consider this ebook an investment and one of the best impulse purchases I have made!”
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Curious but still on the fence?
Get our FREE report: ‘Top 10 Myths of Canadian Home Ownership – Exposed!
http://bit.ly/Top10CanadianMortgageMyths (direct download to your digital device – 36pg pdf)
“For years, I was the guy that thought paying off your mortgage & maxing out my RRSPs were the top priorities.
Now that I really look at it, I couldn’t have been more wrong…” Kelly, Edmonton, Alberta
Video Index of 10 Top Myths of Canadian Home Ownership – Revealed!
Myth #1 Big down payment & extra principal payments