Or just buy a $1 office building instead March 4, 2024 Sign Up | View online IN THIS ISSUE 7 min read 💭 70-year home dreams 🏢 $1 office towers 🧮 50/30/20 budgets Budgeting doesn’t need to be as stressful as it was for Ben Affleck in The Accountant. We’ve got an easy, light-on-math process in the Big Important Story, below. | Warner Bros. THE WEEK IN MARKETS Full Greed Ahead Investors like to talk about markets as a pendulum swinging between cycles of greed and fear. And right now, it’s full greed ahead. Last week, U.S. stocks hit another all-time high, and Canadian stocks reached another 2024 peak. What else is up? Big tech: even bigger. Crypto winter: officially over (Bitcoin is back above US$60K). Even Beyond Meat, one of the poster-stocks of 2021’s over-exuberance, is showing signs of plant life. All this comes even after the timeline for long-awaited rate cuts got pushed back. So if history’s a guide, a stock plunge is coming, right? Eventually, sure. But a greed cycle can stretch for months or years, particularly when corporate profits are good (like they are now). Yes, it’s a pendulum, but you never know which part of the swing you’re on until the change happens. THE WEEK IN ONE NUMBER $0 If you’re on salary, that’s probably how much money you made on Feb. 29. On leap years, the average salaried worker loses out on $351 for working the day for free. WHAT HAPPENED LAST WEEK IMPORTANT Has the starter home gone extinct? According to a new report, the typical single-income aspiring homeowner in Ontario will need to save up for 50 to 70 years to afford that first (and likely last) downpayment. Why is this the case? It might have something to do with the average home price across Canada having risen by more than 200% in the past 20 years while the average income has only gone up by around 21%. If you’re looking to buy, better fall in love first: coupling up cuts the average savings timeline down to a mere 12 to 26 years. Alberta kneecaps renewables. Officials just added fresh restrictions on renewable-energy investment — never mind that experts believe Alberta’s oil-dependent economy sorely needs to develop more green-energy projects. The “soft moratorium,” driven by rural communities concerned about who’d be on the hook for clean-up costs, includes a ban on new green projects within 35 kilometres of “pristine viewscapes,” as well as any land suitable for agriculture, aka all of Alberta. According to one clean-energy think-tank, the pause could impact 118 projects worth $33 billion of investment. INTERESTING The Canada Pension Plan sold a New York office tower for $1. The CPP is cutting its losses, which means getting rid of the US$46 million it’ll cost to redevelop the 20-storey Park Avenue building. But still, one dollar! Commercial real estate is in deep trouble thanks to COVID, and the CPP — among the world’s most prolific real-estate buyers — is trying to limit its exposure and move cash elsewhere. The CPP deserves some benefit of the doubt given its long-term performance, but last year’s meagre 1.3% return amid a booming stock market leaves zero doubt: this particular bet was a costly boondoggle. Google’s AI image generator … generates BIPOC Nazis. Screenshots shared on social media last week made clear that Gemini, Google’s new AI tool, still has some kinks to work out. AI image generators often have bias issues (like making all CEOs white), but Google’s hasty fixes created fresh problems (like Black Nazis), adding embarrassment to Gemini’s rushed launch and cementing the view that Google has squandered its massive head start over OpenAI. The search behemoth launched its first machine-learning system way back in 2015, spurring Elon Musk et al. to launch OpenAI in the first place and prevent Google from cornering the market. No worries about that now! –Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🥣 Kellogg’s suggests saving money by having cereal for dinner, either in a bowl or just scattered on your high-chair tray. Source 🚂 Railway CEO gets raise after derailment that cost company $1B. They like to reward people who think outside the track. Source 💊 New pharmacare deal provides free birth control and diabetes drugs, so have all the sex and candy you want! Source ⚕️ Billion-dollar donation allows Bronx medical school to waive tuition forever. Might even restock the vending machines. Source CRASH & BURN TO THE MOON 🌲 Woman has $1.1M injury claim rejected after photo surfaces of her tossing Christmas tree. Christmas tree now making claim. Source 🍫 Parents upset Willy Wonka event “looked like a meth lab.” Everyone knows it’s supposed to look like an acid trip. Source 🏚️ B.C. is implementing a new 20% tax on flipping homes, which will really hurt aspiring reality TV stars. Source 💸 Wendy’s says they won’t do dynamic pricing like Uber, but they will make you chase them around the corner. Source WHO CARES THE BIG IMPORTANT STORY PERSONAL FINANCE The Budget for People Who Hate Budgeting (and Also Want a Bidet) Here’s a topic we’ve (somehow) never covered in this newsletter: budgeting. And here’s a person we’ve never mentioned: U.S. Senator Elizabeth Warren. The two connect! Stick with us! You might have seen Warren on TV talking about why big tech ought to be broken up. Before she got into politics, though, she was an academic who studied consumer bankruptcy. One outgrowth of her research was her 2006 book All Your Worth: The Ultimate Lifetime Money Plan, which popularized the 50/30/20 rule — a budgeting technique for people who loathe budgeting. It’s designed to help you pay your bills, work toward your financial goals, and splurge a little on yourself without a lot of tedious penny-counting. Now is a good time to think about such things, since you’ll be reviewing your finances to file your taxes. And if you’re smart (and a little boring), you’ll take some time to make a budget. Here’s how the 50/30/20 rule works: 50% of your income should go toward your MUST-HAVES. This includes housing, food, and all your essential bills. Keeping your must-haves at 50% gives you something precious: flexibility. “You are in control,” Warren explains. “You can manage an unexpected expense like a car accident or a leaky roof” without slipping into debt. 30% of your income should go toward WANTS, like travel, dining out, a Stanley tumbler, an in-home bidet, whatever. Splurging a little will help your budget feel sustainable. “Anyone can live on rice cakes — for a day,” Warren writes. But you want a budget you can stick with for life. 20% of your income should serve your FINANCIAL GOALS. That is, debt reduction, cash savings, and investing for retirement (ideally in that order). Why budgeting is brutal right now: Did reading that breakdown fill you with dread? If so, we get it. One in three Canadians today are struggling to pay their bills, and 44% of Canadians saved not a cent from 2022 to 2023, thanks to inflation, rate hikes, and unaffordable housing. Given these factors, some financial experts argue the 50/30/20 rule is no longer feasible for many workers. So, don’t panic if it seems wildly ambitious. It is ambitious! But it’s more of a yardstick than a hard-and-fast rule anyway. Do the best you can, and if you can’t save a full 20% of your paycheque, putting away 6% to 12% is a solid start. Give me an example! Again, try not to panic. Let’s say you and your partner have an annual household income of $128,000, which is typical for two Canadians with university degrees. In Ontario, that’s a monthly take-home income of $7,470. According to the 50/30/20 rule, you should use $3,735 of that cash for needs, $2,241 for wants, and $1,494 for savings or paying down debt. The problem is that in Toronto, for instance, a two-bedroom apartment rents for about $3,600/month, which would leave you with $135 for other must-haves. Which ain’t possible. In such a situation, Warren suggests cutting your wants first, which might translate into cancelling your gym membership or forgoing a trip to Prince Edward County. You could also try to find cheaper housing or relocate. In Edmonton, you can get a two-bedroom for just $1,700/month, which helps to explain why, in the first three quarters of 2023, 45,000 folks moved to Alberta. Reducing your savings should be a last resort, says Warren, to ensure you have enough for retirement. (We’ve previously covered the benefits of investing early and often.) How do you stick to your budget? One trick is to set up automatic bank transfers that move your money into separate accounts — one for must-haves, one for savings, etc. — so you’re budgeting on autopilot. Also, keep in mind that while a budget can initially feel like a straitjacket, it can also be freeing. If you live within your means, you can guiltlessly go on that cottage-country vacay. Or, at the very least in this economy, you can hit the gym again. OTHER VERY GOOD READS 💰 Watch It Burn Two scammers, a web of betrayal, and Europe's fraud of the century. | The Atavist 🐭 The “Disney Adult” Industrial Complex Grown-up fans get mocked. But they’re a corporate creation. | New Statesman ⛏️ B.C.’s Multimillion-Dollar Mining Problem Mining looks to a future of EV batteries, but the legacy of past booms remains. | The Narwhal THE WISDOM OF X Despite all the social-media mocking, Wendy’s only contemplated “dynamic pricing,” not surge pricing. But this meme was so good we had to share it anyway. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Ben Mathis-Lilley (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Nikki Holmes (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (senior lifecycle specialist), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Disclosures: Contributors to this newsletter own shares in Google. Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 Replies to this email address are not monitored. Have questions? Visit our Help Centre or submit a request to our Client Support team. VIEW IN BROWSER PRIVACY POLICY UNSUBSCRIBE TLDR is offered by Wealthsimple Media Inc. and is for informational purposes only. 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