Many years ago, when I realized how corrupt and self-serving the financial industry can be, I felt disheartened, disillusioned and thought about changing careers. At the time I had been working on the sell side of a major investment brokerage and I felt that my values had been sullied. About this time, the news was full of stories of scandal both in the business world and in the Catholic Church. From the coverage at the time, it seemed like all financial types were crooks and all Priests were pedophiles.
One day I ran into the Priest from my local parish. He is a man that I had always respected as liberal, smart and dedicated to serving his community. We got to talk and he asked me how things were going. I told him bad, I felt like I was in the wrong industry, and needed to change careers. I told him, “based on all the stories of abuse of trust in the news of late, it seems like both of our professions are hopelessly flawed.” Then Father Frank said something that changed my life. He looked at me and he said, “Do you not think that the world still needs trustworthy advisors doing this work?” “Well yes,” I said, “no doubt it does.” “Then go and be that,” he smiled.
These words reminded me that our human institutions will always be flawed, and there will always be a great need for honest, unbiased counsel. Over the past year and half since Juggling Dynamite was released, and I started writing the blog, I have heard from literally thousands of people all over the world. It has been truly over-whelming and completely unexpected. Most of them can never be clients of my money management firm, but all of them have questions. I spend probably a couple of hours each day, just answering emails and writing this blog to help shed some light. I now consider my profession my calling and my greatest honour to be of service.
One of the images that have stayed with me over the past few years is from the first Matrix movie. It is the scene where Neo wakes up in the grid of humans floating in liquid sacs and realizes that they are all connected in as living batteries to support the computers. He pulls the lines out of his arms and breaks free of the grid.
I have this same scene in mind sometimes when I think of how many people have increasingly come to support their financial institutions. I know this may seem like a weird connection. But if we think about all the fees and interest that workers have come to owe and pay every day to financial companies, you may see my point. If we think of how much of present GDP goes each day in debtor nations to support payments owed to their lenders, we see the point again.
Yes, I know we need a world financial system. I realize banks provide a necessary service and they should be paid for their service. I just want to see them (and their executives) make a little less and people keep a little more of their own.
So here is an aspect of that I want more people to consider. I am not sure how or if this applies to Americans, but I know it works in Canada. If you still owe a first mortgage on your home and you (or you and your spouse) also have savings in a Registered Retirement Savings Plan (RSP), that are at least the size of your mortgage, consider paying out your bank with funds from your RSP and hold your own mortgage. You will pay yourself the going rate on mortgages, which is higher than other fixed income and equities are paying at present. You will stop paying your investment broker fees on that portion of your retirement savings, and you will be channeling more of your own power into your grid rather than the financial industry.
Not too many people know about how to hold your own mortgage. Frankly, financial companies have no incentive to promote the idea since it cuts them out of revenue. But in many cases that I come across in emails and questions from my readers, it is an idea that will serve them well.
Here is a good summary of how it works. Given the low return, high volatility climate we currently have in world financial markets, holding your own mortgage and paying yourself going rates of 5 or 6% can be a no risk, smart, efficient for you, solution.
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Your priest was smart. Glad you listened.
FYI the link to “here's how it works” points to somewhere not accessible by mere mortals.
Thanks Danielle,
This sounds much like the plan my wife and I came up with a couple of years ago. Never followed up on it though as removing money from our RRSP accounts to repay the mortgage would have generated significant taxes. If you know of a way to jump over that little hurdle please let me know. Also, would this work with a mortgage on a revenue property?
Like the previous writer noted the link does not work.
Many thanks for spending your time on this blog. It's one of the best ones out there.
Marcus
Sorry about that, thanks for the note. I have fixed the link. D
M, you do not withdraw funds from your RSP to do it, so there are no taxes triggered. You may need to sell existing investments inside your RSP to free up the cash. Then you work with your self-directed account custodian to have your present mortgage paid out from within the RSP and then the new mortgage payable to you shows up inside your account in exchange. It is more like a swap of your present assets for a new asset– your mortgage. I fixed the link so please try again. Good luck, D
I have always thought that most of us do not excel at most things, but all of us, even the least among us, excel at at least one thing. We each can bring forth our natural born talent(s) and abilities to offer as help to others should they want it. It may be something as simple and as seemingly useless as a talent to make others smile, or as complex as the ability to learn how to build a bridge.. or as you do Danielle, conveying to others your own insights into this crazy and often dark world of complex finances.
We each have something that we excel at, something that we bring to others and all of it, if the heart is in the right place, with no expectations of any kind of reward.
More often than not it doesn't cost us a nickle to do so and the rewards eventually do become something that no amount of money can buy.
bill (in washington, dc)
Daniel
Nice to see someone speaking their mind on BNN – very refreshing.
Most the others are just pushing their stocks.
However, the bear case is looking weak looking forward:
A Major Cycle Low is due End of Sept.
All the Bad news is out now – but not the Fallout yet.
Trillions of dollars will be forced out of bonds if the Central Banks reflate the market – and the money has not where to go other then gold or stocks.
The time for being a Bear on stocks is over IMO for the intermediate term.
Any further downmove could be bought probably as Fear turns to Greed.
Oh Danielle if you could only fathom how ridicules things become when you buck the system.
I for one refused to do business with financial institutions after an incident with CIBC about 15 years ago. I have worked for companies and run several businesses in Canada over the last few decades; yet I never use merchant accounts (credit card) or cheques for payment or to pay bills. Each Month I paid my bills and taxes on time with cash. Businesses I did business with were also paid cash on the spot. Yes I carried a lot of $100 Bills.
Once when paying my taxes at a bank, the bank wanted me to fill out a form because the amount of cash I was submitting was in excess of $2,300. I digress.
One year I was audited by Revenue Canada. I came in with all my books and answered every question. I was asked where my bank statements were, to which I said I don't use banks.
Well the S**T hit the fan. The agent doing my books went into everything of mine, my wife’s, one of my teenage kids and some of the businesses I did business with. For the last 10 years CRA made my life hell. Everything was in order.
I finally moved from Canada after my kids went to University. My stress went down and my health improved. I enjoy life in the south pacific and reading about the folly in North America.
But do remember the body takes a toll when you run against the wind; and although the public tips their hat to anyone who successfully wins against injustice, I would guess that for every success there are 100 failures.
The problem with religion goes far beyond the deviant behaviour of some clergy. Much like the financial services industry, religion is a lot of smoke and mirrors. After five years of careful (and somewhat traumatic and disappointing) study I came to the conclusion that it just wasn't believable anymore.
The following is a great online book by a former missionary and Bible translator.
http://www.infidels.org/library/modern/ken_daniels/why.html
I'll warn you that you will never look at Christianity the same way again