arrow8 Comments
  1. Nathan
    May 05 - 2:36 pm

    It looks to me like that study shows the relationship between money and happiness is highly logarithmic, not linear. (Also you’ve got a typo there: much linear instead of much *more* linear.)

    • Nathan
      May 05 - 2:41 pm

      Also, the results only go up to $128k household income. That’s hardly super-rich in many places. If some economists indeed suggest that the logarithmic relationship breaks down at some point, I would expect it to be in private jet territory, not upper middle-class. (Naturally in some of the countries polled $128k would be in a much higher percentile than in Canada or the US, but once you’re talking about the rich or hyper-rich, much of their luxury spending and activities will be global anyway.)

  2. Don Listar
    May 05 - 11:15 pm

    I am happy with an amount of money I have. and can save.I suggest to people stop taking too much risk in real estate,stocks,ETF’s,preferred shares,foreign stocks and bonds,currencies,mutual funds,REIT’s,income trusts,master limited partnerships,mortgage backed securities etc.

    My wife and I contribute the maximum TFSA.RRSP,RESP every year.We also have money left over for non-registered accounts.We are debt free and I don’t care that 5 year fixed rate mortgages are 2.79%. We will never be in debt ever again.I heard recent reports that people are borrowing against their stocks,mutual funds not to buy more investments but other purchases like TV’s,vacations,cars etc.

    Most people will never have a million dollars even in 35 years.Perhaps 10% of the Canadian population will have close to 1 million dollars of investable assets.This does not include a house,cottage,vacation property,land etc.

    We can put $5,500 each in a TFSA,$9,000 in a RRSP each as well.We are conservative people so we buy long term provincial strip bonds and hold them to maturity.This is our first year we started so we bought these investments yielding 3.70% .If we contribute at this level for 35 years when we will be 63 .We will have $763,048.29 in TFSA’s and $1,248,624.48 in RRSP’s.All of our annual income tax refunds which we filled out a form with CRA to reduce our withholding taxes at source will be $114.23 per week or $5,940.00 per year.We currently have $12,000 in a cashable GIC at 1.45% and savings account at 1.75%. If we can achieve a 2.00% average interest rate over 35 years the income tax refund will be worth after tax $263,055.35.

    We are currently putting all this money in laddered GIC’s 1-5 years every 6 months from our savings account of 1.75%. We have already $21,000 in an RESP for our son and $16,000 for our daughter which are in provincial strip bonds that mature 5 of them in 2027,2028,2029,2030,2031.Our kids will be around 17-21 years old at that time.They will mature with a value of $46,000 and $39,000.We were proactive and we bought them at 5% -5.75% yields.

    People today want easy money,they want to have a $400,000 house be $1,000,000 in 10 years.They are living a fantasy land.The same with a portfolio of all types of investments.Greed will destroy your dreams.It’s that simple.

    • Canadian Capitalist
      May 06 - 10:04 pm

      @Don: I agree with your points about avoiding debt, developing a savings habit and investing conservatively. I disagree that investing in a diversified manner is “greed”. Rather, I see it as managing risk because even conservative investments such as bonds can be quite risky. If we ever experience even modest inflation, bond returns in real terms will be quite poor. Stocks, REITs and commodities could do well in such an environment. Of course, if we have deflation bonds will do very well. It is all about having a balance.

      • Don Listar
        May 08 - 4:01 am

        It is true that higher inflation is bad for bonds but in a sustained rising inflation environment bond yields rise to more normal higher levels.The 3.70% provincial strip bond yield is today’s highest yields but they will rise to higher levels in this case.Just before the great recession and financial crisis in 2007 strip bond yields were not 3.70% but were 4.65% Canada strip bonds, 4.90% to 5.00% provincial strip bonds.In my example above I used a 3.70% as a base for calculation purposes.Every year I am investing in new bonds,strips with yields higher or lower depending on inflation,economic GDP slow or fast,unemployment rising or falling,interest rate movements short to longer term and many other factors.

        Inflation is a tricky thing because in 1994 Canada’s C.P.I. was about 2.70% but long term Canada, provincial bond yields and Canada,provincial strip bond yields were 9.00% to 9.80%. They did come down after 2-3 years but real interest rates were still high.Today we have Canada’s C.P.I. is 1.20% currently.I think I saw Ontario’s C.P.I. is currently 1.70%. So Inflation is not always telling what bond yields will be.If inflation is sustained for 2 or 3 years up or down then it has more impact on future inflation expectations and interest rates usually do rise if there is no central bank or other manipulator in the bond,credit,debt markets.

        Now in 2013 with real estate prices high and rising since 1995 there is a great likely hood of deflation lower prices in Canadian housing and rising prices inflation in food,energy,gasoline,clothing,taxes,mortgage rates and other financing rates etc.If we see a lower Canadian dollar as the new governor of the Bank of Canada is starting to hint he wants to see then inflation could pick up to 2.00% to 2.30% with energy,food prices rising as well.

        I do not see much of a sustained change in bond yields up or down for at least another 2-3 years.High Canadian housing prices,record consumer debt and almost at par Canadian dollar versus U.S. dollar is the main reasons I believe this will happen.

  3. Canadian Capitalist
    May 06 - 3:15 pm

    @Nathan: Good point. Yes, the relationship between self-reported satisfaction and income is not linear. Good catch that the x-axis is log scale. The earlier understanding was that once basic needs were taken care of, more money doesn’t increase happiness. This study seems to contradict that.

    • Don Listar
      May 06 - 6:54 pm

      Money has more of a relationship with people not having it and being in debt.Once you have a certain amount of money it loses it’s appeal.There is a marginal benefit or happiness.Actually the more money you have the more problems of growing,maintaining it and trying use it wisely.You can actually get out of hand and think that everything is going to be on easy street.An example,people who most of their money was in a company stock like Nortel,Enron,Bre-X,RIM etc.They could have it all in one or two sectors like real estate,technology NASDAQ,U.S real estate crash 32% drop on average in 6 years.

  4. Troy
    May 12 - 6:42 am

    The China housing bubble has been going on for years. The main problem is that in China, most of the middle class owns 2 or 3 homes, meaning that there are a lot of empty homes. When their kids get married, they’ll give on of the homes to their kids and have to sell the other one.

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