# living off passive income



## geewilickers (May 21, 2009)

In 5 months I will be mortgage free, and my condo is worth around $300K. I would like to live off passive income so that I can use my free time to work on my projects. My lifestyle is pretty frugal, I spend on average $12-15K a year, and no more than $20K. 

I have thought of buying a town house for $250,000 and renting out my condo, which after maintenance fees, property taxes and mortgage would give me a profit of $200-$300, or around $2000-$3600 a year..Definitely can't live off that. I could also try renting out the town house, but I would prefer the extra room as my condo is too small for my needs.

I could also sell my condo for $300,000, and buy a townhouse for $250,000, and use my line of credit ($170,000) + $50,000 for generating passive income. However bank interest rates would probably negate any passive income in the long run.

A third option is to buy 1-2 pieces of real estate, flip, and sell, and then I wouldn't have to work the remaining year.

Any ideas? 

Much appreciated.


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## the-royal-mail (Dec 11, 2009)

Your plan sounds way too complicated. It would be much easier to simply get a job/keep your existing job.

The idea of flipping real estate as a way for the average person to make money is nothing more than an urban legend. That only works if you can bring a skill or capital improvement to the property or if you are your own RE agent etc.


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## MoneyGal (Apr 24, 2009)

Most of your ideas aren't really passive income strategies. The "buy and flip houses" idea is probably the polar opposite of passive income. 

IMO you don't have enough income-generating assets (actually, you haven't described *any* income-generating assets) in order to make this work. 

If you did sell and then borrow to invest, what would your investing strategy be? Looks like you'd need to clear a minimum 7% after-tax, after-costs, real return in order to generate $15K per year. How would you plan on doing that? 

(And where is your emergency fund?)


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## geewilickers (May 21, 2009)

What do you consider income generating assets? The point of this thread is so that I can get a picture of how to *start* generating passive income.. not necessarily do it overnight. I'm looking for anything that will help me reach my goal.

What resources could I look that will help me start with passive income? My first goal was to get rid of debt, which is what I will be doing come 5 months.

Thanks.


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## FrugalTrader (Oct 13, 2008)

Once you get rid of your debt, put your old mortgage payment + savings towards investments that produce passive income. Do some reading on dividend stocks, bonds etc. 

It may take a while to get to financial freedom using that method, but you'd be on your way.


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## MoneyGal (Apr 24, 2009)

geewilickers said:


> What do you consider income generating assets?


Assets that generate income.  

My point was just that right now, in the situation you are currently in, you have one large asset - a principal residence - with little to no debt against it. However, you did not say that you have ANY other assets (i.e., an unregistered investment portfolio) that could be used to generate income. So, in order to generate passive income from assets, you will need to acquire some. 

You have talked about some strategies which make use of your existing asset, but the tax, inflation and interest hurdle rate on that strategy is very high. 

FP has suggested a way you can generate passive income, using dividend-paying stocks. You would need to build up an asset base sufficient to generate the income you require after taxes, fees and any other costs, such as interest.


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## KaeJS (Sep 28, 2010)

Unless you have a lot of the following:

Money
Time
Handyman Skills
Connections/Contacts

Flipping Houses is a liability. (In my opinion, of course )

Renting a house out is a good idea, but you just dont have the capital. You're forgetting that your $3600/year will slowly be eaten away by vacancies, repairs, and any other issue that comes up. The only thing that will be passive about that investment is the mortgage. Which, wouldn't meet your goal. (It would meet mine, though!)

Like FrugalTrader said, what you need to do is grab some investments. Dividend Paying Stocks, Mutual Funds, Bonds, ETF's, Money Market. If I were you, I would get a mix of most of those. I would grab some Dividend Paying Stocks (as well as some "SAFE" non-dividend paying stocks for a little growth/capital gain). I'd also grab some bonds. Since you are in debt, ETF's are not a good choice for you because they are only efficent if you have a lump sum of money to invest. Because of this, you should invest in a Mutual Fund. (BMO has a pretty good Monthly Income Fund. Its about $8/unit and pays a guaranteed $0.06 per share every month, plus capital appreciation if there is any. Its cheap. Its reliable. The only downside is that it's BMO ) As for Money Market style Securites and T-bills and all the like -- they're basically useless and won't generate anything worthwhile.

Look up some online stock trading brokers (discount brokers) such as www.questrade.com and set up an account to purchase some dividend paying stocks. You can also purchase ETF's this way. Also, go to your current bank (and others) and speak to them about their "Fixed Income" mutual funds. 

Remember, there are ALWAYS fees to investing. Some brokers charge more, some less. Some Mutual Funds have a higher MER (Management Expense Ratio) than others, but it does not mean they perform better.

And Passive income is a fantastic idea, just remember that the more capital you have, the more passive income you can make. It may be wise to work for a year (or more) and invest everything into passive income.

Are you planning to retire soon, or just take a break from work? Switch careers? Why the need for 20k worth of passive income? Do your "projects" that you want to work on generate income?


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## rgarand (Sep 19, 2010)

As others have mentioned you now have a lot of flexibility to pursue traditional investing - which has its faults but a few less than trying short-term arbitrage in an emotional market you don't know very well 

Aside from the usual question of return rates and fees/taxes, one of the biggest things that determines the relation between investing and living off the returns is the ratio of what you invest to what you spend. Since you have low expenses and soon no mortgage you may be able to invest a multiple of your expenses every year, considerably shortening the time you'll need to spend in this phase.

It also sounds like you're not quite at traditional retirement age and you want to be doing a lot after your expenses are covered (just not the same things you're doing now). It might be worth considering if any of these are worth money. When you compare the income you can get from working one month a year to the investments you would need to replace it, and consider that you can choose when you work, what you do, and who you work with when you aren't risking unpaid bills, it might not be a bad way to knock off 8% of your asset needs.


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## davext (Apr 11, 2010)

Honestly, I don't think you have enough money to live off of at this point unlike you're ok with just dipping into your savings while you work on your projects. 

Keep in mind the real estate commission fees, legal fees, moving expenses etc. when considering selling your condo.


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## Cal (Jun 17, 2009)

Yeah...real estate agent fees may knock your 50K profit from your home sale down to 40K....then when you buy your new townhome you would have to pay a lawyer....leaving you with 35K.

Add that to a 170K LOC....205K total....invested to give you 5-6% passive income (preferreds/dividends)....would be 10-12K a year in passive income...although if you were going to make LOC payments towards at least the interest (which would be tax deductable) you would be left with less than 10K.

So a few more years of work to pad the savings....at least you are thinking about it, too few are not.


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## Square Root (Jan 30, 2010)

This question reminds me a bit of that old Steve Martin "Wild and crazy guy" comedy routine of "How to make a million dollars and pay no tax ". Ie first you make a million dollars. in this case the answer is "first you get some assets"


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## geewilickers (May 21, 2009)

KaeJS said:


> Unless you have a lot of the following:
> 
> Money
> Time
> ...


Thanks KaeJS, this post has been very helpful. To answer your question, yes my projects do generate income, and they're passive as well. They're products that I sell to engineers and they will stay passive for a year.. Haven't done it in a while because I'm working a full time job..


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## geewilickers (May 21, 2009)

Thanks, FT, KaeJS, rgarand, Cal, and everyone else for your input!

I think what I'll do is, once my mortgage is fully paid off I will work on my income earning projects, but at the same time try to build a passive income portfolio.

I will research some more passive income earning vehicles..


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## HaroldCrump (Jun 10, 2009)

geewilickers said:


> I will research some more passive income earning vehicles..


The only truly passive income is a pension, such as CPP or a DBP pension.
Off the top, following is how I would stack sources of passive income in order of their passivity:
- Govt. pension (CPP or DBP)
- Private DBP pension (Teacher's, Health Care, City/Municipal, etc.)
- Govt. 5-year bond ladder
- Investment grade corporate 5-year bond ladder
- Dividend stock portfolio, including income trusts & REITs
- Rental properties
- An established single proprietorship or joint partnership business (food franchise, etc.)

And oh wait, #1 passive income idea: write books about how to make passive income


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## MoneyGal (Apr 24, 2009)

Oh, let me assure you, writing a book is not a passive income technique. 

And here is a quick fact for you: royalties on a book deal in Canada are typically about 10% of sale price. My book sells for $16 at Chapters. TOTAL royalties payable on that sale are $1.60. There are two authors...you do the math.


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## brad (May 22, 2009)

MoneyGal said:


> Oh, let me assure you, writing a book is not a passive income technique.


It requires a lot of work up-front, of course, but once it's out in the wild and your initial publicity stint is over it can generate income for years. Obviously not enough to live on unless you write a few books that happen to become hugely popular.

When I was a freelance science writer, a few of the magazine articles I wrote got syndicated and I would get royalty cheques out of the blue, years after I wrote the articles. Composing music is like that too; I've had a few of my tunes published and several have been recorded, but so far I think I've made a grand total of 10 bucks.


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## HaroldCrump (Jun 10, 2009)

MoneyGal said:


> Oh, let me assure you, writing a book is not a passive income technique.


Oh, I know that.
That statement was a tongue-in-cheek comment more for sarcasm than anything else.
And if wasn't directed towards you at all.
If anything, it was directed at another dearly MIA forum member.
I didn't want that to distract from the rest of my post, which was in all seriousness.
My apologies if it came across that way.


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## GeniusBoy27 (Jun 11, 2010)

*Book Royalties*

MoneyGal:

Hmmm, I think the amount of money I've made on my books equals the ink and paper used in writing them. (or at least, it feels that way.)


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## Four Pillars (Apr 5, 2009)

MoneyGal said:


> Oh, let me assure you, writing a book is not a passive income technique.
> 
> And here is a quick fact for you: royalties on a book deal in Canada are typically about 10% of sale price. My book sells for $16 at Chapters. TOTAL royalties payable on that sale are $1.60. There are two authors...you do the math.


Sure, but two authors = half as much work.


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## MoneyGal (Apr 24, 2009)

Harold! No offense taken. I was just taking a shot at you AND MYSELF in the process!

FP: you'd THINK, wouldn't you?!


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## kcowan (Jul 1, 2010)

MoneyGal said:


> FP: you'd THINK, wouldn't you?!


Those of us in the know realize that the second named author does most of the work for half the credit.

(My very first thesis was published by my thesis supervisor in a learned journal.)

But once in a while the residuals makes for very nice passive income. It is just a long shot!

The DB pension is a portion of earnings. It is just that the public sector is taking too much from the trough. Back in the day, they sacrificed 30% of current earnings for their rich benefits package. That has all changed in the last 30 years.


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## rgarand (Sep 19, 2010)

Well-known authors tend to get well-paid speaking engagements (or if they do technical work, very well-paid consulting work) which can quickly outweigh what they earn from the book... it's not "not working" but passive income is always relative. If you want real passive you may need to build a mechanized biosphere encased in concrete and steel thousands of feet under the surface and live alone for the rest of your life  (hoping nothing breaks down and requires un-passive repair work)

If it's something that interests you, having a bit of savings to spend the time writing a book without having to work a full-time job, and then working from that to spend more time on that area in the future, could be helpful. It's not for everyone, but the idea of leveraging an interest in something you would be doing anyways and a minimal amount of time can be applied to many situations.


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## geewilickers (May 21, 2009)

rgarand said:


> Well-known authors tend to get well-paid speaking engagements (or if they do technical work, very well-paid consulting work) which can quickly outweigh what they earn from the book... it's not "not working" but passive income is always relative. If you want real passive you may need to build a mechanized biosphere encased in concrete and steel thousands of feet under the surface and live alone for the rest of your life  (hoping nothing breaks down and requires un-passive repair work)
> 
> If it's something that interests you, having a bit of savings to spend the time writing a book without having to work a full-time job, and then working from that to spend more time on that area in the future, could be helpful. It's not for everyone, but the idea of leveraging an interest in something you would be doing anyways and a minimal amount of time can be applied to many situations.


I think people tend to confuse passive with not working. Passive income doesn't mean not working, it just means the amount you make isn't tied to the amount of hours you work. For example, you could earn money while you're sleeping. Active income means you're trading time for money, passive income means anything but that.

So to say that royalties are not passive income because it requires work is not true, perhaps the book you're writing doesn't sell as well as another genre. The money you make is still passive.. I'm sure J.K Rowling is rolling in dough from her Harry Potter series. It could go both ways, you could work your butt off and barely make anything (hence MoneyGal's situation), but it would still be passive because the amount isn't tied to hours worked, it's tied to volume, sales, uniqueness, demand, quality, and all other market/business elements..


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## kcowan (Jul 1, 2010)

geewilickers said:


> Active income means you're trading time for money, passive income means anything but that...


There are three ways of making money. You can trade
1) your time for money,
2) your money for money, or
3) other people's time and money for money.

Real leverage come in category 3. Entrepreneurs fall into category 3. Royalties are just a form of deferred payment for category 1.

Active investors try to increase their returns from category 2 by spending their own time.


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## HaroldCrump (Jun 10, 2009)

geewilickers said:


> Passive income doesn't mean not working, it just means the amount you make isn't tied to the amount of hours you work.


lol, then I'm making passive income 
I don't define it like that.
In my mind, passive income is one that is relatively guaranteed without requiring time and effort on your part.
Which is why I say sources of income have degrees of passivity.
I listed a few in order or passivity in a post above.

I rate rental income low on the passivity scale because of the oversight and management required.
Even a dividend yielding stock portfolio requires regular monitoring, re-balancing, etc.


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## Square Root (Jan 30, 2010)

For me earning dividends is pretty passive. More of a hobby really. Only do a few trades a year. You can make it as active as you want but that would not likely improve your results much.


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## the-royal-mail (Dec 11, 2009)

My RRSP (tier 3) is passive. I invest the money and see the numbers change every time I log into online banking. Other than the tweaks I've done lately, that account has been treated quite passively. 

I wouldn't call the gains income, however. There's just not enough there to have seen any meaningful gains that would allow me to live from.


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## sprocket1200 (Aug 21, 2009)

that is a passive rrsp strategy!


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## Sherlock (Apr 18, 2010)

I think he does have enough assets to generate sufficient passive income to live off of.

He can sell his condo and invest the 300k. Assuming a 6% return, he gets 18k per year. After taxes that is, what? 15k per year? That's significantly more than a single person on welfare gets, and even more than many old people on CPP/OAS get, certainly enough to rent an apartment and buy food and other life necessities.


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## FrugalTrader (Oct 13, 2008)

And where is he going to put his money to guarantee a 6% return?


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## MoneyGal (Apr 24, 2009)

You are saying he can do it with a 6% *constant* return, not a 6% average return. Or...what does he do in the periods with negative returns?


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## Sherlock (Apr 18, 2010)

I don't know, what does Warren Buffet do during periods when his investments have negative returns?


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## kcowan (Jul 1, 2010)

You mean like now? He stays the course and does not panic.

Even with his investment in Goldman Sacks, he has stayed the course. Unfortunately he has become tainted being associated with them.


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## celishave (May 8, 2010)

Your expenses are pretty damn low - even lower than me as I can get by on about 20K a year which is what i spend now as my mortgage is also paid off and most consider this freakishly low. Having said that I would not retire on anything less than $1Million and my goal is about $1.5Million to be safe (perhaps too safe). 20K a year can't possibly include car and furniture replacement, condo special assessments, medical (I mean dental, optical, drugs), etc. It would be a pretty bare bones existence. For myself I plan to switch to some kind of part time arrangement as I get closer to my target.


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## MoneyMaker (Jun 1, 2009)

Sherlock said:


> I don't know, what does Warren Buffet do during periods when his investments have negative returns?


lots and lots of dividends... plus that $100k salary he gets from Berkshire..


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## canadianbanks (Jun 5, 2009)

geewilickers said:


> In 5 months I will be mortgage free, and my condo is worth around $300K. I would like to live off passive income so that I can use my free time to work on my projects. My lifestyle is pretty frugal, I spend on average $12-15K a year, and no more than $20K.
> 
> I have thought of buying a town house for $250,000 and renting out my condo, which after maintenance fees, property taxes and mortgage would give me a profit of $200-$300, or around $2000-$3600 a year..Definitely can't live off that. I could also try renting out the town house, but I would prefer the extra room as my condo is too small for my needs.
> 
> ...


All your passive income ideas assume that real estate won't tank. A very dangerous assumption.


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## Rox (Oct 17, 2010)

rgarand said:


> Well-known authors tend to get well-paid speaking engagements (or if they do technical work, very well-paid consulting work) which can quickly outweigh what they earn from the book... it's not "not working" but passive income is always relative. If you want real passive you may need to build a mechanized biosphere encased in concrete and steel thousands of feet under the surface and live alone for the rest of your life  (hoping nothing breaks down and requires un-passive repair work)
> 
> If it's something that interests you, having a bit of savings to spend the time writing a book without having to work a full-time job, and then working from that to spend more time on that area in the future, could be helpful. It's not for everyone, but the idea of leveraging an interest in something you would be doing anyways and a minimal amount of time can be applied to many situations.


Not to mention there is one more thing to gain from writing books : fame, I'd feel great if people say : hey that's the guy who wrote that book on such and such,...

By the way, referring to below para :-

BMO has a pretty good Monthly Income Fund. Its about $8/unit and pays a guaranteed $0.06 per share every month, plus capital appreciation if there is any. Its cheap. Its reliable. The only downside is that it's BMO )

This sounds interesting. Can someone tell me what is the name of this fund and perhaps some links on where to read-up abot it ? 6cts payout per current price of $8 of share unit equates to an annualized yield of, ... 9% ? 

Not bad at all,...


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## NorthernRaven (Aug 4, 2010)

Rox said:


> By the way, referring to below para :-
> 
> _BMO has a pretty good Monthly Income Fund. Its about $8/unit and pays a guaranteed $0.06 per share every month, plus capital appreciation if there is any. Its cheap. Its reliable. The only downside is that it's BMO )
> _
> ...


From what I can see (and the experts here can correct me), the BMO Monthly Income Fund isn't guaranteeing a return, but setting a level of distributed income. In their words, "_If the fund doesn’t earn enough income and capital gains to meet the distribution, it will return capital to make up the difference. A return of capital will reduce the adjusted cost base of your units._" So if the investments don't make enough in the month to pay out that 6 cents/share, they'll make up the difference with a bit of the capital. You get a predictable monthly revenue stream, but in bad times it is consuming a bit of itself to provide it. It seems to be a fairly plain mix of stocks and bonds, with returns between 2-7% over the last 10 years. It's BMO, not magic...


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## warp (Sep 4, 2010)

Sherlock said:


> I don't know, what does Warren Buffet do during periods when his investments have negative returns?




In case you don't know:

Warren Buffet receives about $42 MILLION dollars a year in DIVIDENDS,
from his own personal holdings.... (quite apart from his berkshire stock)


Dont believe it? look at the link below:

http://seekingalpha.com/article/199395-10-dividend-stocks-that-help-buffett-make-ends-meet

If Warren Buffet buys div stocks and holds them long term...maybe we should too!!

Any thoughts out there??


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## Sherlock (Apr 18, 2010)

Warren Buffet does so many different things, I'm sure no matter what investment strategy you think of, he's probably doing it with at least some portion of his money.

I think it's more valuable for me as a low networth person to look at what someone did to get rich, rather than what he does once he's rich.


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## Square Root (Jan 30, 2010)

From what I've read Buffet got rich by buying good companies at reasonable prices then keeping them for a long time. Easy to say-tough to do consistently. Good companies often pay and grow their dividends.


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## warp (Sep 4, 2010)

More or less, thats exactly what he did.

Finding good companies, and figuring out what a "good" price is, is what makes it difficult.

It didnt hurt that Buffet was a math whiz, and was very , very patient.
( something harder to do these days when cash earns you next to nothing)

Not known by many, he also did a lot of arbitrage trading..and was hugely successsfull at it.

As well, with his clout he was involved in a lot of convertible deals where he almost always made out great.

Basically , lets just face it.....he was the master..and A lot smarter than me or you guys out here.

Then again,,,he did buy good old style div stocks, and held them long , long term.....even I can do at least that!


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## HaroldCrump (Jun 10, 2009)

warp said:


> Not known by many, he also did a lot of arbitrage trading..and was hugely successsfull at it.
> 
> As well, with his clout he was involved in a lot of convertible deals where he almost always made out great.


That's very important.
When we look at the masters like Buffet (and he is one, bar none) we should account for the fact that they are not playing in the retail space that you and I are.
They are not spending hours reading discount brokerage reviews and debating endlessly on $4.95 vs. $19.99.
The deals they are making are not available to us.
Consider his deal acquiring GE prefs.
And his positions in GS.
His objective is not dividends (at least not the primary objective).
His objective is getting a say in the management of the company and being able to control its future direction and its policy.
He is a true capitalist in that regard.
The returns are almost a side effect


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## kcowan (Jul 1, 2010)

Buffet believed and practiced in buy and hold. He was patient, waiting for a good time to buy (not the best time), and paying attention to returns through dividends. He was also unafraid to hold outsized positions (concentration not asset-allocation) and in that trait, he has shared it with Bill Gates and Carlos Slim.

So the only thing that he can share with us is to have the courage of your convictions and ignore the common sense advice from the industry.

His behaviour in the last few years has been more of a rent-seeker, but then he is in maintain mode rather than growth mode.


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## Square Root (Jan 30, 2010)

Agree with your comments. There are several Canadian companies that might qualify as a Buffet investment. Perhaps TD&RY (look a bit like Wells Fargo). Any others?


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## kcowan (Jul 1, 2010)

I am not sure that any Canadian stock would qualify. Buffet likes global reach. Bank CEOs act too much like sheep I think. So picking value stocks in Canada is sub-optimal.


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## Square Root (Jan 30, 2010)

Don't agree about the sheep comment. The top 3 banks (RY/TD/BNS) have very different strategies which seem to be working fairly well. Each is up 500-600% over last 15 years plus dividends. Each is expanding internationally and attempting to take advantage of their relative strength in management and capital. There may be better examples of Buffet type companies outside Canada but these 3 come close I would say.


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## HaroldCrump (Jun 10, 2009)

One reason Buffet may not be interested in our 5 big banks is because they are in no particular trouble.
Buffet thrives on and loves good companies that have fallen into rough times.
He "rescues" those companies and in return negotiates good deals for his investment firm (BRK) as well as a participation in the management of those companies so that he can control the future direction and policy of that company.
Look at GE among his recent adventures.
He is a patient, old man - like the proverbial vulture he waits for a good company to go through a rough patch, and that's when makes his move.
And I don't mean the vulture analogy as a disrespect at all - I think he has done more for the capitalist system and our modern society than many other people like Donald Trump for example.


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## Square Root (Jan 30, 2010)

Good points Harold.


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## kcowan (Jul 1, 2010)

Square Root said:


> Don't agree about the sheep comment. The top 3 banks (RY/TD/BNS) have very different strategies which seem to be working fairly well...


But they make most of their profit through retail banking, and they are not very different there. Other than TDs long hours which are really from Canada Trust.

But hey if you want to love these guys, more power to you!

I agree with humble on Buffet. He is also looking for a world reach which would eliminate Canadian Banks.


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## Square Root (Jan 30, 2010)

Keith- You are right that they make most of their profit through domestic retail banking but I think you would have to agree that TD after it's purchase of CT in 2000, has made considerable progress. They have increased these domestic earnings (from a combined total of about $200 million then to almost $800 million per quarter now) almost 4 times since then. TD has gone from a weak number 5 to very close to #1. The retail banking business in Canada has a ROE of about 32%. Furthermore they are now the largest Canadian bank in the US by a wide margin despite only purchasing their first asset there in 2004. Their ROI in the US is only about 5% and they would need around 8% to earn their cost of capital. Their CEO has "promised" this by 2013. Contrast this performance with the CIBC which has been struggling over the same period. CIBC used to have a retail franchise almost as good as the Royal's. Yes I like the banks (at least TD/RY/BNS) and I believe for good reasons.


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## kcowan (Jul 1, 2010)

Square Root said:


> Yes I like the banks (at least TD/RY/BNS) and I believe for good reasons.


No question about that. But from a long-term investment viewpoint, I would recommend regular weighting in your portfolio. This also means taking extra steps in TSX ETFs to provide equal weighting to other sectors!


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## Square Root (Jan 30, 2010)

Solid advice thanks.


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## Eclectic12 (Oct 20, 2010)

kcowan said:


> But they make most of their profit through retail banking, and they are not very different there. Other than TDs long hours which are really from Canada Trust.
> 
> But hey if you want to love these guys, more power to you!
> 
> I agree with humble on Buffet. He is also looking for a world reach which would eliminate Canadian Banks.


Hmmm ... I'm not so sure BNS fits the lack of "world reach". I ran into lots of their ATMs in Mexico. Then too, I ran into lots of TD in Washington.


Hmmm ... I'll have to go back to my annual reports.


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## humble_pie (Jun 7, 2009)

the way i see it, canadian banks are cradle-to-grave core holdings for the DIYer. Basic bread, even without the butter. I don't bother to study their metrics, because, as square root has pointed out, their annual reports - which he at one time helped to write - are incomprehensible anyhow.

what i find is that if one bank lags behind, say in its US penetration or its investment banking division, sooner or later, in time, it will correct itself and catch up. So i don't market-time banks or sweat much among my 3, which are td, ry & bmo. My only frill on this basic no-brainer are the strangled options that i continually sell on canadian bank stocks, thus pushing current yield up near 8 and sometimes even (gasp) 9% levels.

recently i read that roybank is pushing more strongly into the UK and beyond, into europe. So i am left wondering about its geographical footprint. Did ry change its mind in favour of the UK because, for years now, it has not succeeded too well in its US forays. Is it moving into the UK at an opportune time, with eurobanking on the verge of collapse in some countries, or is it moving too soon into a devastated area. Bref, is ry making another poorish geographical move after its blah US record.

and then one thinks about scotia, with its strong latin american footprint and its more recent expansions into asia. If any economies are booming, these are they, so one cannot imagine scotia to be making a mistake (from time to time i ask myself why i never have any scotia stock) (then i tell myself that it's because their options are somewhat less liquid than the 3 i hold.)

square root, would you have a comment on the geographical footprints of these 4 banks. Might one say that td & bmo are concentrating on the US, the other 2 on europe and latin america plus asia respectively.


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