September 2006 Volume 2, Number 9
In This Issue
· One Year Later
· Retirement
·
Minimum Wage
Real Estate Links
Stef Lukas, our Realtor
Richard Anserson, our Mortgage Broker
The Real Estate Investment Network
An Online Listing Service
Another Online Llisting Service
The Multiple Listing Service
Contact Us
In This Issue
· One Year Later
· Retirement
·
Real Estate Links
Stef Lukas, our Realtor
Richard Anderson, our Mortgage Broker
The Real Estate Investment Network
An Online Listing Service
Another Online Listing Service
The Multiple Listing Service
Contact Us
One
Year Later
Thanks to all of you who have been with us over the last year as we have reached a milestone with this issue as we have been sending this out for just over one year now.
The Calgary market and the Alberta market have certainly seen some interesting times during this period, and I am sure it will be even more interesting over the next year. The key for this next year will be to watch the economic fundamentals and to have fun.
Enjoy this month's issue and as always if you have any questions or topics
you would like to see addressed in the future let us know.
Retirement
I recently attended a seminar by Les Hewitt, co-author of The Power of Focus, (I tend to go to a lot of seminars) and one of the more interesting topics that arose was how much a person would need to have saved up in order to retire in twenty years.
Many of you probably have some thoughts on how much the average person requires, but the answer from many investment councilors may shock you. They are projecting that the average person requires $2.5 to $5 million dollars to retire comfortably.
You have probably heard amounts from $750,000 to $1,000,000, but this is short sighted due to two key items: 1) People are living longer and 2) Inflation eats up your savings.
It is not uncommon for people to live to 90 years old now, and that will be even more commonplace in the next 20 or 30 years. This could increase your life span up into the 100 year range. If you are presently 50, and you retire at 65, you would have to live for 35 years off that $750,000 or $1,000,000. These will also be the years you will have the most health concerns.
Secondly, with an inflation rate of only 4%, what presently costs you $25,000 today will cost you $80,000 in 30 years. A past example of this would be a North American car purchased in 1976 cost only $5,506. The current average price of a new car is $28,400 (these are based on average U.S. car prices). If this trend were to continue and you bought a car in 2036, on average it would cost $146,487.
You probably won't be driving in 2036, when you are 80 years old, but inflation will also affect the cost of food, heating, electricity, and many other basic needs. I recall buying pop when I was a kid for only a nickel, however even buying generic bulk pop still costs 35 cents a can. The list goes on and on and we have to be cognizant these prices will continue to increase.
It won't be as noticeable while you are part of the working group, as your earnings will also be increasing, but when your wages stop increasing and you are locked into a fixed retirement wage, there will be serious cause for concern.
If these thoughts are causing you apprehension, at this point it's probably time to check your present retirement status and future goals, then decide how you are going to get where you need to be.
We are not investment advisors, or investment councilors; we have just
been doing our homework. Hopefully this increases your awareness about
your future needs, as it certainly changed ours.
Minimum Wage
Recently, there has been a pitch by Mike Cardinal, Alberta's Human Resources Minister, to raise the minimum wage to $8 per hour from the present $7 per hour. Does anyone else find this a bit humorous?
Not from the aspect of people struggling to simply get by on minimum wage, but rather whether any employer can find someone to work for minimum wage anyway? As I have talked about previously, there continues to be a huge shortage of workers and an over abundance of available jobs.
If someone wants work in Alberta, as soon as they arrive it's easy to see help wanted signs everywhere and they don't start at $7 per hour or even the proposed $8 minimum wage. McDonalds now starts you off part time at $9.
Several of our properties are rooming houses, which offer temporary weekly accommodations for people moving here. In the last few months, I have had several individuals stay with us from the East with virtually no money and no work lined up. Yet with in one day, they all had jobs.
In fact, one fellow who just arrived here last week was so new to the city, he couldn't even find his work address for his first day of work. He had been hired by a temp agency, so he went back to them, they gave him a different company to work for and he is now making even more than the original job had offered.
It's this type of economy that is strengthening the prices of property and causing them to continue to grow. People are able to get new jobs that pay more than their old jobs, which perpetuates the amount they can afford to spend on housing. It is very noticeable in the spiking rental market with increases of 25-35% for rents and in house values up to 50% since last year.
Although this cannot be sustained, we will continue to see increases,
but at a slower pace over the next five to ten years. As people continue
to migrate here and wages continue to move upwards, the housing prices,
rentals, and the whole market will continue to move upwards with them.
Another summer has gone by and what great weather we had this year. We can look forward to cooler evenings, more time spent inside and another great year for Real Estate.
Please feel free to send this off to anyone else you feel who may enjoy this, and if you aren't enjoying at least 10% returns on your investments, why haven't you called us?
Bill
& Karen Biko
Kat