Hello everyone!

Will try and leave politics out of this Journal but section one discusses a pretty incredible financial win for Canadians, potentially.

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Personal Finance

Conservative leader Pierre Polievre wants to give Canadians $2,500,000 each, tax free.

Let me explain.

If he gets elected his government will increase the TFSA contribution limit by $5,000, making it a total of $12,000 per year.

I can’t overstate how incredibly beneficial this will be for every Canadian reading this.

I’ve espoused at length the benefits of investing in a TFSA—it is the most important wealth creation tool we have—and so I won’t bore you too much other than to highlight the following:

1. the TFSA (Tax Free Savings Account) was created in 2009

2. it is an investing account—i.e. you contribute cash, then buy investments

3. income and growth earned in the account is tax-free

4. and withdrawals are tax free

5. lifetime contribution total so far: $102,000

6. 2025 contribution room: $7,000

Tax free is bolded because in this game of life, in addition to inflation and poor decision making, taxes destroy wealth creation.

Okie dokie so where does the $2,500,000 come from?

Frequent readers of this journal are well versed in compound interest—it works wonders—the more you can contribute early in your investing journey significantly increases your future riches.

• Under the current regime, assuming we invest $7,000 in the TFSA each year for 40 years, earn a 10% return, we end up with $3.4 Million. Pretty Good.

• Under the new regime, assuming we invest $12,000 for 40 years, earn a 10% return, we end up with $5.8 Million.

• There’s your extra $2.5 million, tax free.

TFSA Growth Charts

What’s the catch? Most people won’t take advantage of this—except for all y’all frequent readers on a mission to make some serious coin.

Instead they’ll lease a brand new $75,000 car instead of buying a 10 year old perfectly good car for cash. This is bad, see The Goodwill Investing Journal - Issue #22.

Others will frequent the inside of a restaurant or order Door Dash while carrying a credit card balance. Also bad, see The Goodwill Investing Journal - Issue #11.

Anyway, enough on what others will do.

What will YOU do is the question.

Me? No matter the government, I will work my darndest to always max fund my TFSA and MJ’s TFSA.

And if for some fine reason we do get this increase to $12,000 contributions, we will most certainly be max funding that, even if that means cutting something else.

I’m pretty sure we’ll both enjoy the extra $2.5 milsky (x 2) when we’re older.

Anyway, whatever happens with the contribution balances, just strive your hardest to max fund the TFSA (or the Roth IRA for my American friends and readers 😊).

I’ll leave it there.

💝 Newsletter subscribers get 10% off the Simply Investing course with the code: SIMPLYINVEST

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Stock Markets

You know I discuss the S&P500 a lot. It is the most well known index being the largest most liquid capital market in the world, with the longest track record, so it’s easy to talk about.

Doesn’t mean I ignore the rest of the investment universe.

There’s only so much ground I can cover each week in these letters or on my social pages.

I do however offer advice and discussions within my Simply Investing Masterclass on other ETF options, including:

• XEQT - iShares Core Equity ETF portfolio. 40% US, 25% Canada, 35% International Stocks.

• XGRO - iShares Growth ETF Portfolio. 35% US, 35% Canada, 30% International, blend of 80% Stocks and 20% Bonds.

• Etc.

Depending on your age, income, spending, time horizon, risk taking ability and risk tolerating ability, sometimes you have to consider other ETFs that have different return and volatility characteristics.

Feel free to check out the website links above or my investment program.

Real Estate

Looked at a deal recently that was pitched as a “care free” investment. Eight-unit multifamily in Victoria. On paper, it checks the boxes—fully rented, renovated, walkable area, etc.

But dig a little deeper and it’s anything but “care free”.

First red flag is the cap rate itself (see Issue #32 and Issue #42 for what the “cap rate” is).

At 4.8%, and with financing costs around the same level, you’re basically running in place.

Any hiccup—vacancy, maintenance surprise, rising insurance—comes straight out of your pocket. There’s no cushion. No margin of safety.

Then there’s the building. Over 100 years old. Sure, some capital improvements have been done, but the bones are still from 1912. You don’t own something that old without budgeting for future problems—foundation shifts, plumbing, electrical, the works.

You’re also managing 8 separate tenants. Leases, turnover, late payments, maintenance calls. Doesn’t matter how “stable” it looks on a brochure, the reality of managing a multi-tenant property is work. And if you’re not doing the work yourself, a property manager will take 6–10% of gross rents. On this deal, that’s around $13,000–15,000 a year, not including extras. Do it yourself? You’re still spending time—and time has value, whether you recognize it or not.

Add property transfer tax on the way in, vacancy risk, rising utilities, and it becomes clear—this isn’t passive income. It’s a job. A job with exposure to tenant law, city regulation and rent controls, and interest rate risk.

Compare that to owning something like the S&P 500. Set and forget. No maintenance calls, no capital expenditures. Just buy and let it grow. Historical returns of 8–10%, fully liquid on demand. Volatile yes.

But your property also goes up and down in value every second of every day, you just can’t see on a daily Stock Chart it so you think it’s not.

I’m not against real estate, that’s my main job!

But be careful when you see “care free” in the real estate world.

Obviously, Brokers are doing their job—they need to represent their client, the seller, and sell the property. Just like marketing any product, it usually comes with a bit of massaging.

It’s your job to see through it.

1 Quote

“If my critics saw me walk on water, they would say it’s because I can’t swim”

Margaret Thatcher

A Question

Could someone please share some quotes they like?

I love using quotes submitted by other readers in this Journal.

_____________

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Thank you

Eddie Gudewill, CFA

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