What Is It About Deficits And Debt That People Just Can’t Seem To Understand ?


I am, admittedly, what one might call an adverse investor, which means I don’t seem to invest in the same way others do.

I don’t have initials after my name.  No B.A., M.A., PhD, or any of the other thousands that I guess make people feel more accredit able in society.

I would not that all these “initialed” individuals are those very same people who run the “hedge funds” and banks that almost brought the world to its knees just a few short years ago, and from which it has yet to recover despite headlines that contradict this logic.

I’ve been a positive voice for Justin Trudeau’s efforts to throw out the establishment in Canada and introduce a newer way of thinking for this country, but I am disappointed to see his receptivity to running up more deficits to allegedly “kick start” the economy.

I’ve written before about the result of what I see as this “flawed logic” as all I’ve ever seen result from so doing, is the false economy in which we see ourselves today.

Now, I’m not to be confused with an economist, but really!

I’m a big follower of economic news from around the world and I simply can’t find a country, let alone a Province, a City, a School District, an anything, that does not comfortably running of debts that a chimpanzee in a suit could tell you can never be repaid!

I don’t believe in credit  .  .  .  .  .  period!

I don’t pay “interest” . . . . .period!

I’ve amassed a multi-million dollar net worth, in just over a decade and a half, from a cold start at fifty years of age and pretty well broke!

As an entrepreneur, I chased “concepts” and “dreams” most of my life from modelling to acting, to rock video production, to corporate start ups, to producing a nationally syndicated television series, but always seemed to come up short in my life and career and at fifty, I was shocked to realize that I was about to be old and without financial stability.

That wasn’t a good feeling I can assure you.

I got my real estate license in 2000, worked like a slave seven days a week fifty two weeks of the year for about 12 years, not taking lavish holidays, buying big cars and expensive designer suite and/or living that alleged “dream lifestyle”.

We stayed in a small rented apartment (despite seeing a tsunami of cash start pouring in from my web site simplycondos.com) until I had enough money to pay for our first condo, a pre-sale one plus den brownstone style building conversion in Forest Hill in Toronto.

We lived there for about three years despite the building having a number of noticeable shortfalls, like the developer having his law offices form the main floor and his son occupy the penthouse.

The building had serious sound attenuation problems and I really could not stand bumping into the developer’s kin.  When we discovered that my S500 Mercedes couldn’t physically fit into my parking space and I bumped into the developer in the elevator upon moving in.

He conveniently asked “how’s it going” and when I told him about my “problem with parking” and realizing that he had kept 23 spots for his “collection of exotic cars“, his only reply as he exited the elevator was “we all have problems“!

So, I took photographs of his S500 Mercedes startling the two parking spaces that he used for it and published his conduct and comments on my blog and sent him a copy.

It didn’t take long for his high priced litigator to jump all over me and I’ve got to confess, I thoroughly enjoyed running up his bill into the six digit range over the next fourteen months of legal jesting that followed over his frivolous threats of a law suit for Slander.

Now, I was born at night . . . . . . but it wasn’t last night!  I bought a book on Civil Litigation and Defamation (“Slander and/or Libel”) and decided to dance with this guy (at the developer’s expense).

Usually, when I send them long winded responses demanding that they reply stating “with specificity what it is they are alleging to be libellous and assuring them that I will immediately remedy the article upon having them state what exactly it was that they are alleging to be libellous“.

Usually these frivolous law suits go away when the retainer is eaten up but not with these guys and they spent tens of thousands of dollars on this guy, arguing a moot case!

You see, to libel someone you’ve got to tell a lie and I simply don’t do that.

The absolute best defines in a libel law suit is to have published “the truth”.

I did really enjoy the fight with this talented “lying” lawyer!

My strategy was to minimize all risk in my investment strategy.  Many academics scoffed at my strategy, and tried to “educate me” on the merits and logic of “leverage“.

Now, I don’t have to work hard to “play dumb“, but taking one’s key asset, their home, and borrowing against that asset to “risk” investing in another “opportunity”, just seemed like educated dysfunction to me.

Many times in my life I have been called a “risk junkie” but I realized that I was so, simply because “I had nothing to lose“!

You have to live somewhere and to lose that equates to me to losing everything!

Your home is and should always been cherished as your number one investment.

Your next best investment is “paying off your mortgage on your home“.

That’s what I did right up front and I strongly recommend that you do the same thing.

With your number one and number two investments in place, you can then decide on what to invest in and how to invest in it.

You must know that “leverage” equates to “risk“.

Your age, health, personality, instincts, life situation all factor into accepting whatever level of risk you fee comfortable with.

When I started I was already 50 years of age and basically broke!

I could tolerate “no risk” and was ready to work myself into a grave before suffering the indignity of not being able to take care of myself in my old age.

I had been told a saying while very young that stuck with me all of my life but I don’t think I ever got the true gist of it until I hit the mid-century wall and reality set in.  It went like this:  “when you are young you work for money . . . . . and when you are old you have money work for you”.

I realized that I had made what could prove to be a fatal mistake in allowing five decades to blow past me without realizing that I would be old one day.  I guess I didn’t expect to be old for very long!  I don’t know.  I just didn’t think about it I guess.

I found another new condo building just down the street (of all the areas of Toronto Forest Hill has always held the most appeal to me).

It cost me about twice what the first home did, but with no Capital Gains Tax on Principal Residences and the strong growth of the Toronto condo market I was able to take the equity growth of my original condo and apply 100% of it to the new one so I managed to pay it off in full at occupancy (if you advance all the funds at “Occupancy” you avoid paying “Occupancy Fees“).

So, if there is one tip I would give you, it is to work hard and hold onto all the money you can and pay off your home as quickly as you can before ever looking at other investments.

And don’t get caught up in these scams that you see advertised by mortgage companies showing how they can give you money (against your home) to invest in their speculative opportunities where they will make you fortunes!

My rule:  “buy your home and pay for it and then look at investing”.

I don’t “flip” properties and I don’t “do Assignments“.

Canada Revenue Agency is aggressively pursuing those who have done so over the past decade and a half and I fear for many would-be entrepreneurs who have gotten lulled into the Condo Game in Toronto where developers caught onto Assignments about a decade ago and turned the “right to Assign” into a major marketing tool!

The result of course, was that we ended up with an illegal and unregulated “futures and commodities” play, where no income taxes were paid.

I have recently been audited and caught up in the broad fishing net or CRA looking for those who have practiced this line of deceit (“income tax fraud” is a serious matter).

You see assignments work like this.

Buyer #1 attends one of these phoney VIP Condo Sales Events where he receives an “Amendment” allowing him/her to resell the condo unit before the building is registered.

Buyer #1 then Assigns the presage unit that he/she bought (above) for a profit.

Now, he/she doesn’t “own” that unit, but they are being allowed by the developer to “sell their position within the Agreement of Purchase and Sale to that unit“.

Until the building “Registers” there is no “title” to the unit (legal document registered at the government titles office showing ownership).

So there is no “paper trail” of ownership thus no paper trail of the additional money transacted.

Buyer A is left to their own conclusion regarding paying income tax on a unit for which there is no legal paper trail.

There’s a world of issues that I don’t advise getting involved with in Assignments and they do have merit in legitimate cases.

The first Assignment I ever did was for a client of mine and at that time not even lawyers knew how to go about doing one.

My personal lawyer (Myles Waxman) is a condo specialist and one of the best lawyers I have ever met (I’ve referred him to many of my global clients over the years and the accolades from them about him are truly impressive) and he wrote the first assignment agreement that I ever saw.

My client had a valid reason to not close and we got the developer to agree to our drafted Assignment Agreement and then, over night almost, the Right To Assign became one of the main marketing tools for all Toronto developers, amidst the fixation on marketing condo units exclusively through speculators (shortchanging the legitimate homeowner buyer).

The legality of Assignments even today remains cloudy to say the least but almost every condo unit that has been sold at one of those phoney VIP Sales Events in the past decade now has the Right to Assign Amendment as a buying incentive!

I fear for many of the small investor who has gotten caught up in this nightmare!

If you are one of those speculators that bought into the Assignment game being perpetrated in Toronto you had better be prepared to pay the piper, as Canada Revenue Agency (Canada’s IRS) is now aggressively pursuing you and everyone like you that bought, assigned and avoided paying income tax!

My advise would be to find a good tax lawyer.

I never “flipped” or “assigned” units but I still had a professional lawyer (Andrea Dickinson of Morris Kepes Winters LLP) with whom I am immensely impressed and satisfied (with all my experience fending off litigators, I’m not a big lawyer fan but when I find a good one I like to let others know) answer them.

So, to conclude for today, let’s just say that I don’t believe in credit or debt and that I do believe in each and every one of us accepting the responsibility to care of ourselves in our old age and the only way to do that, in my opinion, is to build it slowly while minimizing all “risk”.

I’m Charles





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