Episode 151: The Million Dollar Mistake Most Canadians Are Making Part 2 | Pay Off Your Mortgage? A Case Study

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Is it smarter to pay off your mortgage fast—or start investing now?

Many Canadians instinctively rush to pay off their mortgage early, thinking it’s the safest financial move. But what if that strategy is actually costing you long-term wealth? 

In this episode, Jon Orr and Kyle Pearce unpack a common—and costly—mistake: letting equity sit idle in your primary residence while missing out on investment growth. If you’ve ever wondered whether you should pay down your mortgage faster or start investing today, this one’s for you.

Here’s what you’ll walk away with:

• A side-by-side breakdown of two real-world scenarios—aggressive mortgage paydown vs. early investing—and the long-term impact of each.

• A surprising insight into why investing earlier, even in smaller amounts, can outperform dumping extra cash into your mortgage.

• Clarity on the emotional vs. mathematical sides of money decisions—and how to find the right balance for your risk profile and goals.
  

Hit play to find out which strategy builds more wealth—and how to start making smarter decisions with every extra dollar today.

Resources:

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Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting corporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

In this episode, we explore whether paying off your mortgage early or investing is the smarter financial move, especially in the context of rising interest rates. We discuss leveraging tools like a HELOC for real estate investing and how strategies like Canadian investing, infinite banking, and bank on yourself through participating whole life insurance, permanent life insurance, or universal life insurance can help grow your wealth while minimizing income taxes and enhancing estate planning.

Transcript:

Jon Orr: In one of our previous episodes, the million dollar mistake most Canadians are making, which was, you know, if you’re keeping track of episode numbers, that was episode 102. can scroll back in our catalog and look in your podcast platform to go listen to that episode. But in that episode, we unpacked the idea of that mistake that most Canadians are making, which is thinking about or making the choice to pay off their mortgage faster or just paying off their mortgage

as a main priority of their financial goals. And we talked about it in that episode that the hidden cost there or the mistake is actually allowing the equity in your home, because you’re paying down, say, this mortgage at either a faster rate or you’re just focusing on paying down that mortgage. You’re taking your hard earned money that you’re making every day and you’re putting it on that mortgage and all of a sudden you’re creating equity in your home. And a lot of people are.

it makes it feel safe because you’re, you that’s my nest egg. That’s for the future. And then maybe we want to pay down that faster because that’s going to be less interest over time. And I think a lot of people focus on that. We’ve stories about that and some of the things that people are going through. But the mistake we were saying is that what you’re doing is when you create that equity, we call that debt equity. That equity is sitting in your home. If you’re not doing anything about it,

then or using the equity to say grow your wealth, then you’re missing out on valid investments. Or what you’re doing is maybe you’re paying down that mortgage and you’re letting that equity sit there, but maybe you’ve also missed out on other areas to grow your wealth and utilize say that equity. So in this episode, what we’re going to be doing is we’re gonna be unpacking that

that scenario, but specifically we’re asking ourselves a question, know, kind of a scenario to think about is like, if I do pay down my mortgage faster, then what I’m doing is thinking about, okay, I’m gonna pay down my mortgage faster, but I do want to invest, you know, like I wanna make sure that I’m not taking, you I’m making use of this equity or I’m making use of my money to put into these investments to grow my wealth, but it’s like, okay, wait, here’s my scenario.

If I pay down my mortgage faster and then take that mortgage payment and start investing it at that point with the amount that I was paying down the mortgage faster, is that better? Because I’m gonna save on interest and maybe I can pay down this over time and I’m not paying. Right, or the alternate scenario is I keep my mortgage payment the same.

Kyle Pearce: Right. Get rid of that debt before we start growing it, right?

Jon Orr: and whatever I was gonna pay down my mortgage faster, I start investing now. And that brought up the question. Is it better for me to pay down the mortgage as quickly as possible and then invest? Or invest to the difference of my mortgage payment and what I was going to invest to help pay down that mortgage faster? We’re digging in, we got a spreadsheet to share with you, we got an answer.

Kyle Pearce: Yep. Yeah. And you know, I think one of the things it’s like, it’s the emotional challenge of just knowing that there’s a lot of interest being paid on a mortgage, right? And typically in Canada, have, you know, housing prices are very high in many areas, which means that you probably at either at some point or still do have a large, hefty mortgage, and you’re just seeing a large payment.

you know that interest, especially in more recent times, if you’ve already renewed in the past 18 months or so, you’ve probably seen a big uptick in that payment amount. And you’re thinking to yourself, if I just get rid of that, then I could take care of all of the investing. Now, before we dig in, I think it goes without saying, but I think it’s worth mentioning that if you have high interest debt, if you have credit card debt, you have

lines of credit that were used for things other than assets, for example, or investments, car payments that aren’t say a special rate car payment, right? But remember, you probably paid it in the cost of the car. If you got 0 % financing on a car, you want to drag that thing out as long as possible. Because guess what you already paid for the interest upfront in the cost of the car, right? So like your mind as well drag that thing out, right? That’s something that you’ve already done.

So paying it off sooner actually is a win for the car company, not for you. We’re talking specifically about this ugly mortgage payment that you’re paying and we’re talking on our primary residence, right? So we’re not able to write off the interest on the actual mortgage, the traditional mortgage amount, and therefore what should we do? Now, first and foremost, I think if we do quick logic here.

I think the answer I think people can arrive rationally at the correct answer and that is if I’m paying a mortgage interest rate of say 5 % and if I’m able to invest and get at least 5 % I should be better. But actually it’s even more so like you can actually have a slightly lesser return on your mortgage or on your investment amount and still become ahead. How? Well,

If we do this and you think about compounding, the longer I’m in it, the better this investment can grow. And if I’m able to have two investments growing, my home’s going to grow at the same rate, regardless of whether I have a mortgage on it, whether I paid it off faster, slower, all of those things, it’s going to be static. So you’re going to get the same value of the property. You’re going to have different amounts of equity, of course. However,

When you introduce a second investment and you’re able to grow that investment and allow it to compound over a longer period of time, it actually allows for the return on that investment to actually be a little less than your actual mortgage interest rate. Some people will be like, wait a second, wait, doesn’t your mortgage interest compound? It does, but you’re paying down the mortgage.

right? So your mortgage balance going down every payment, whereas your investment balance is going up with every additional investment dollar you put in. So right there, there is an arbitrage, which sort of tells you that unless your mortgage balance is like, to a point where you’re like, I can’t reasonably achieve that type of average rate of return, then

I should dump all this extra money on my mortgage. But ultimately, the decision is fairly, fairly easy. If my mortgage is going to be 5 % per year, if I can get 5 % or better in an investment, I should shift those dollars to the investment. And I would argue that most people are probably not playing in like the 6 % range anymore, right? Some people may have renewed at a high 6 % rate. If that’s still you, you should definitely be talking to your mortgage broker. because it could be worthwhile to break a mortgage or hopefully they got you into a shorter term mortgage so that it is coming up for renewal as we see rates slowly dropping.

Jon Orr: Yeah, yeah. So let’s dig into some of the numbers because what Kyle is saying is that we’ve got some numbers to back up this claim that even if your mortgage rate and your investment rate are slightly different, the investment rate’s slightly lower, you still can be better off. But also, if you look at averages of investments, you’re more than better.

when you compare those two options. So first, let’s look at buying a certain home that we have, and then let’s dig into what the actual numbers look like after, 10 years, after 20 years of trying to pay off your mortgage faster. And we’re gonna look at, say, for example, doubling our mortgage payment. And this is just an example, and really that’s just speeding up how fast we pay this off. But let’s look at doubling up on our mortgage payment, comparing that

without say investing and looking at what it looks like after we pay off the mortgage and then invest the amounts into an investment. And then we’ll compare it to what it looks like if we invest while we’re paying off the mortgage. Kyle, give us the numbers.

Kyle Pearce: Definitely, definitely. you I think it’s worth saying, you mentioned this before we hit record, John, that, you know, I think too, it’s about getting your mindset straight, regardless of what path you end up going down, you might just pay off your mortgage, you know, along the regular schedule. You might pay it off faster. You might pay it off faster with an intent to use the Smith maneuver, which we’ll, we’ll address later in this episode. So those who are like eager to figure out how the Smith maneuver fits in here, we’ll talk about that. But I think the most important part is a lot of

Canadians make a huge mistake when they pay off their mortgage. Whenever that happens, that they look at the mortgage payment amount that they were paying as now new money that they can put towards lifestyle. And while that’s technically true, like you can do that, the reality is, really, if you can change your mindset to working a budget around, I’ve been paying this mortgage,

and I want to pay more on it or I want to invest more or whatever it is. And if you can keep that consistent, you’re almost never going to have any money concerns because first of all, you’ve learned to live with this budget throughout your lifetime and you’ve been doing certain things like committing to making this mortgage payment, committing to making these additional investments, whether it’s into the mortgage or into another investment. And when that mortgage finally goes away,

That’s the first opportunity that you had to redirect those dollars into something useful. But again, where most people go is they actually redirect them into having fun, into, you know, finally paying it off. I exactly I can, I can now do things that I couldn’t do before. And now while if you have a pension, if you have investments and you know, things are, you know, in a, in a, you know, a situation you’ve set yourself up so that

this truly is extra money and you don’t need to divert them into investments, then hey, go for it. But just be aware that it’s an easy shift for you to go, you know what? I wanna repurpose or continue to earmark a certain amount while I’m in my working years, However long you choose to do that, I should consider taking that extra money and diverting them into more investments because of course it’s gonna give you more optionality with your budget later.

Jon Orr: Well, I think, you know, and if you’re listening to this, you’re already thinking this way because, you know, if you’ve also listened to previous episodes, if you’re like us, then you’re trying to create a machine. And we’ve talked about flywheels and flywheels effects many times here on the podcast is you’re trying to create that flywheel effect for yourself and create that financial freedom number that says like, my investments have reached this value and you have that number,

that account for, say, your daily and lifestyle expenses, and that investment return is starting to overcome that, then you’ve got that machine working. You’ve got that passive income coming in, or you’ve got that passive amount that you can start withdrawing from that you will never have to work again. You’re trying to create that flywheel effect. And so that’s why we’re looking at this scenario is because we’re not, say, taking the funds from our mortgage and then

you know, letting our expense, know, letting our lifestyle be a little bit more extravagant than what we were before. We want that, but what we want to do is create the machine first so that we can do that forever and not have to worry about what income is coming in. that’s, you’re right, Kyle, that’s what most people would do with this and why people pay down their mortgage faster is to create the buffer in their lifestyle. But that’s not what you’re going to do because you’re listening to this episode and probably other financial podcast episodes that are trying to give you

inside secrets and inside information around how to how to get to the financial freedom number quicker.

Kyle Pearce: Yeah. So as we dig in here, we are going to look at a scenario. is up on YouTube. So head on over to YouTube. Search for doubling mortgage payment on YouTube versus investing or anything along those lines. It should pop right up. Or in the show notes, you’ll be able to click over to YouTube. That link will be there for you as well. We’re going to look at a home.

We’re going to and again, these numbers are all scalable, right? So like don’t get fixated on my home’s worth this or my home’s worth that or my mortgage amounts this and you know, you were talking about that mortgage amount. That part doesn’t really matter. It’s really about the fundamentals here of what’s happening. We already know a couple things. I already told you if you have extra dollars, putting them into an investment that’s going to earn around the same as what you’re paying in your mortgage or better.

on average is gonna be your better move. That’s the rational move. But here we wanna like show you like how important it is or how helpful that can be. So in this case, we have a home that’s worth about 625 when this person’s buying it. Okay, we’re gonna start right at the onset. The mortgage balance, we’re gonna put 20 % down on this thing and the mortgage balance is now conveniently $500,000. So you see what I did there? Trying to just keep these numbers nice and easy. So we’re starting with

a $500,000 mortgage balance. We have some equity in this home, right? Which is great. We have $125,000 of equity. Awesome. Now it’s right now it’s dead. It’s just in the home. It’s not gonna do anything. It doesn’t matter. What does matter is that, hey, if I had to sell, I’ve got some equity here and hopefully the market is favorable in that I’ll be able to walk away with some money off of this thing. But we’re gonna focus in here. We’re gonna look at the home appreciating it about

2 % per year. A lot of people, especially our GTA friends, our Vancouver friends, you’re like, what are you talking about 2 %? It’s going to be way bigger. The reality is it doesn’t actually matter. It doesn’t matter if it’s 2%, if it’s 10%, if it’s 100%. The home’s going to appreciate at that rate anyway. So it’s not as important in my mind as what we’re trying to compare here, which is what do we do with these extra dollars?

Kyle Pearce: The numbers will scale if I double my appreciation rate, but it’s not going to actually impact your decision making around where these extra dollars should go. Now the mortgage is going to be a 25 year amortized mortgage, meaning it’s set to if we just make the mortgage payments every month, we’re going to have this thing pay off in 25 years. And it puts the mortgage payment at just South of $3,000. It’s 2923.

and change, we’re going to just say 3000 for now. Okay. The numbers are accurate here, but we’re just going to round up for our discussion to keep things easy. That means each and every year this person, if they were just a regular, you know, pay this thing off on schedule is going to be putting about $35,000 on this mortgage each and every year. Like that, that feels like a lot. You’re going, my gosh, Holy smokes, lot of money. And if we just look in year one,

And we actually look at, you know, how far the mortgage balance went down. went from 500,000 down to 489 and change. So it’s like I’ve paid $35,000 and yet my mortgage balance only went down by just over $10,000. So you get the logic here. You’re going, my gosh, I’ve spent more than $20,000 in interest. And right there, you’re, you’re doing it anyway, right there though. You’re going, my gosh.

Jon Orr: Mm-hmm. You’re doing that anyway.

Kyle Pearce: I want to pay this thing off, right? Like rationally, you’re going, I’ve got to pay this thing off. But the numbers are going to tell us a slightly different story.

Jon Orr: Right, right. And so what we’re gonna do is we’re gonna kind of, also, you’re paying off your mortgage at the $35,000 in a year. remember, in this scenario, we’re going to assume that we can’t afford. Now, this is a big assumption, right? Is that we’re gonna double up our payment. So if I have an extra $3,000 a month to dedicate towards my mortgage,

This is you know, this is the option we’re looking at right now So now it’s another thirty five thousand ish and change to put down on your mortgage Now some assumptions here too is this is assuming that your mortgage allows you to double up You know on this payment some sometimes you’ve got restrictions on on how many times you can double up throughout the year Or maybe you have a you know that 10 % or 20 % lump sum So we’re assuming that we can double up our mortgage throat

the entire year. So we’re going to put that $35,000. Now in this case, it’s going to come right off the principal. So you’re paying you’re paying immediately down the principle of that $35,000. So, you know, we’re going to kind of extrapolate this down to 10 years. And we’re going to look at remember that what we’re not doing is we’re not investing this what we are going to do though is when we pay off the more cow. When we pay this mortgage off, like if we double up, like where does it scroll down a little bit so can see like we’re going to end up paying this off in year after 10 years. Yeah.

Kyle Pearce: Basically, yeah, basically like after nine-ish years or so. And yeah, like by the start of between year nine and 10, you’re gonna pay off this mortgage if you doubled it up, which again, feels amazing, feels awesome. You’ll notice too like, you know, the difference when we put this extra $35,000 down, when we look at the remaining balance before was 489, now it’s 453. You’re like, that feels good, you know, you’re like, wow, but.

All we’ve really accomplished there is we’ve created more of that debt equity, right? We’ve got some extra debt equity from appreciation, which is great. I’m not gonna complain about that, but we’ve taken this 35 and we paid it off so that now we’re gonna pay off this mortgage sooner. We’re gonna pay less interest, of course, but really when we look at the actual numbers here, the difference is if we look at our equity growth, and I’ve got a column here, you’ll see,

You’ll notice that my investment column, and right now we’re gonna assume the investment is at 7 % on average per year. Some people are like, I could do better, I could do whatever it is. It doesn’t matter. I wanna show that the number doesn’t have to be great for this to matter. I could actually put it at 5%. We’re still going to see a greater opportunity if we were to invest this difference. because like what’s happening here is,

All this money is just going as data equity. So I’m saving interest and creating equity. So if I look at this column here, you’ll see my equity is growing quite significantly, which is great. Like by year five, I have $445,000 in equity. Like I almost have as much equity as the original mortgage balance, which is awesome. You’re like, man, that’s amazing. And then as we mentioned by about year nine or year 10, you’ll notice

the end of year nine, you’ve got $746,000 of equity and the mortgage is finally paid off. Now, once again, people go like, oh my gosh, that’s good. Well, the home’s appreciated to 746 and now I owe nothing on it. So I’ve got $746,000 of equity. Now that’s $746,000 of equity is gonna continue to appreciate just like it would have if I had.

the mortgage, the original mortgage balance would have been 385 still by the same point. The difference though is that I don’t have any investments. We’re assuming in this case, this extra doubling of the payment by we should also articulate here, it doesn’t have to be double the mortgage, it could be like a bit extra, it could be a lot extra, it doesn’t matter how much extra on the mortgage payment we do, the results are going to be the same, right? They’re going to be proportional. So when we look at this, go,

Okay, I have zero investments available. I also have zero liquidity, right? Because right now, unless I have a home equity line of credit on this home, I literally have put all this money, I’ve given all the money back to the lender, and I now have no mortgage, right? So unless there’s some sort of re-advanceable home equity line of credit, you’re actually putting yourself in a spot where like if you had an emergency and you don’t have an emergency fund, or if you don’t have any other cash available to you,

you could still be in a tough spot, right? You lose a job and then you own your home. You go to the bank and say, I would like to borrow my money. I had 25 year amortization, but I paid it off in nine. I would like to, you know, get a mortgage again. And they go, but you don’t have a job. And you’re like, but I, own this entire home. They like, that’s going to be a hard sell, right? Cause how are you going to make the payments now that you don’t have a job? So there’s a lot of reasons why we don’t want to

get too crazy with overpaying unless there’s that home equity line of credit attached to it, keeping some liquidity. But as you’ll see here, even after we repay this mortgage and then start diverting $6,000, because I had 3,000 for the mortgage, I have 3,000 of additional doubling up payments that I was doing each and every month. And we’re gonna like take that money and we’re going to divert it to now only investing.

And you’ll see that that bucket’s going to grow pretty fast, right? Because I’m taking a good chunk of money. I’m taking about 70, what would it be, about $70,000 or so each and every year. And I’m putting it into this investment bucket. Like that’s got to do something. Well, it certainly does. And you know, by the end of the 25 years, right, not only is your mortgage paid off in either scenario that whether you paid it off slowly or you paid it off quickly,

You now have this investment bucket of $2 million and you have a million dollars of equity in the home, which gives you about $3.1 million of total equity and investments, which is fantastic. Now I’m going to pause for a second and say, if that’s you, like if you did this, don’t be upset with yourself. You know, you still did something pretty amazing, right? Like you, you were, you were responsible enough.

You paid off the mortgage, maybe it helped you sleep better at night. Maybe on a numbers scale, you’re going to see that we might have been able to do something a little bit different here, but it’s still amazing. It’s still way better than just paying off your mortgage and then diverting that money to lifestyle.

Jon Orr: You got it, you got it. So three million sounds pretty good. All right, let’s jump over to the scenario. You’ve already got all the details. like it’s the same scenario, same house. You know, it’s appreciating at the same rate where, you know, we’re paying the same mortgage amount. So we’re not gonna go over, you know, over those details. You’ve got the same investment, but now what we’re going to do is we’re gonna look at the case where we just pay off the mortgage. It’s gonna take 25 years to pay that mortgage off. We’re not gonna change that mortgage payment. We’re gonna pay rough.

Kyle Pearce: Gonna pay a lot in interest too.

Jon Orr: 3000, yep, $3,000, know, every single month. But now what we’re gonna do is we’re gonna take that $3,000 and we’re gonna put it in that same 7 % investment from the previous scenario. And we’re gonna look at the same comparison. We’re gonna look at what the equity in your home appreciates at. And then we’re gonna combine that with the value of the investment over that time. So that investment is growing at 7%. Your house is appreciating at 7 % and you’re paying down that mortgage.

at your mortgage rate. So we’re gonna look at that combined equity. Okay, so let’s jump to year nine-ish right off the bat because in year nine before we had paid off the mortgage and we had about $746,000 of equity before we started investing. 

Kyle Pearce: That’s okay. All right. Yeah, John. So as we look at these two scenarios in this column here for our YouTube friends, after about nine ish years, the home is fully paid off when we were doubling up the payments without doing any sort of investing. So this number that we see here in a column I nine is 7 46. That’s really what the home’s value is because there’s no more debt on there, but we also don’t have any investments either.

So we’ve just got a paid off home in this first column. Now, if we look two columns over, you’ll see that what we have is the scenario of continuing to pay off the mortgage slowly, $3,000 a month instead of 6,000. So it’s gonna pay off over 25 years. It means we have less equity in the home by year nine or the end of year nine, but I’ve been taking that extra $3,000 and we’ve been investing it.

at around 7%. Same investment, same style here, same numbers. The difference though is that now the combination of the home equity that I have on the slow pay down and the investment actually supersede the value of the fully paid off home. So what we’re looking at is instead of 746 or $747,000 of equity in this home fully paid off, we now have

about what would it be with equity here? have about 385,000 still owing on the property. The home though has appreciated the 746 and we have an investment of about $450,000. The combination of the equity we built and this investment, which is also much more liquid likely we’ll assume unless you’re fully in real estate or fully in, you know, in

you know, fixed income type products or private placements and so forth. I’m assuming there’s probably more liquidity there that combines to give you $810,000 total. So less equity in the home, but a whole lot more in investments, right? Almost a half a million dollars in other investments as well. So not only is it diversifying, but it’s giving you different opportunities that you could also

reach into that bucket at any point if you needed to, if there was an emergency or if for whatever reason you needed to say fully pay off this mortgage, right? You’d actually have an investment that’s worth more than what’s owing on the mortgage so that you could drop it down all at once. Now, as we see though, you go, okay, so that’s fine, but what about the fact that we paid off the mortgage, now we’re paying $6,000 into investments in the pay down quicker scenario.

from year nine all the way to 25. And in the other scenario, you still got $3,000 going to the mortgage. 3000 only is going into the investment. Like maybe it’ll catch up. Maybe it’ll actually supersede. And the answer is no, it won’t. You’ll see ultimately as we go down, the mortgage becomes less and less cumbersome for you as you pay it off, right? Because you paid all of the big interest in those early years anyway. So in the

doubling your payment scenario, you are still paying a lot of interest in year one, just like you were in the stretched out scenario. The difference now is you’re paying zero interest in the second half of these 25 years. But in the second case, you’re paying a much lower amount of interest. And yet you have this ever growing compounding pile of investments that keeps growing and growing and growing. So if we look all the way to the end of year 25, the doubled

payments have already been paid off for over 15 years. In the slow pay scenario, we’ve just finally paid off this mortgage completely. You’ll notice that the investment bucket for the doubling your mortgage scenario that only started investing after the mortgage was paid off after year nine has grown to about 2 million, 2.1 million. Nothing to like, we’re not gonna discount. That’s great. That’s awesome. It was smart move.

that investing and continue to invest the mortgage payment amount into investments. However, in the other scenario where we just slowly paid down the mortgage, you’ll see about 2.3, almost 2.4 million in investments. And therefore, you’re looking at a difference between $3,118,000 in the quick pace scenario, where you’re doubling your mortgage payments and investing later versus

3,399,000 or 3.4 million. So you’re looking at a couple hundred, almost a few hundred thousand dollars difference between investing early and just paying the mortgage off slowly rather than say taking all of that extra money and turning it into debt equity as fast as you can.

Jon Orr: Which means knowing this information is really important because you get to ask yourselves important questions. Is that amount worth me choosing one option versus the other? Because we talked about this at the beginning, is what will help me sleep at night? What do I feel like is a reasonable amount of safety for my investment purposes or my risk profile? And when we think about

what’s happening here because you are investing in both cases. You were just investing later or you’re investing right away. One case is that we don’t have any liquidity while that’s happening. In the other case, we’ve got some playroom here with your investment and trying to grow. And the other thing I think that this answers, Kyle, is that because your investment after…

you know, waiting the 10 years to pay off your mortgage and then investing the remaining 15 years with double the amount of investment dollars. So $6,000. and you compare that to the other, you know, the second scenario where you invested for the full 25 years, but half the amount, this, this right there, like if you can just look at those two investments, you’ve answered the question as well here is like, is it better to invest longer or more?

in a shorter time period, right? Because you’ve doubled your investment over 15 years compared to 25 years at half, half the investment and you’re coming out better there by the $300,000, right? So.

Kyle Pearce: Wow, yeah, that’s a great thought that I didn’t think about, but I think it’s really important for people to recognize that.

Jon Orr: And that’s the difference between the two investments really, you know, is really that length that you’re investing longer, which is, it really answers the question that the earlier you can get started in investing, the better you’re gonna be off, you know, you’re gonna be off.

Kyle Pearce: And the other nuance too, which I think is really important to note, like it’s really easy for us to throw around average rates of return, right? Like we have 7 % here, we’ve used 10 % in the past, but the reality is like, I don’t know anyone that consistently over like a 10, 20 year period has gotten 10 % in their returns due to drawdowns, due to all of these things. So, you know, being more conservative in your numbers, I think is…

better because it’s great to have like a nice surprise, right? That’s fantastic. But the other nuance is it really makes sense that we have to think differently if we don’t have the time horizon. So you know, when we’re looking at people that are just buying their first home, for example, it’s like, wow, like you, you have an opportunity here over a really long span of time to allow compound interest to take over the

though, that is really tough is that the people that we tend to work with most often are people who are doing this work a lot later in the journey, right? There was distraction. Maybe there’s just not liquidity in your house, right? In your home that you didn’t have the opportunity or in your in your household, I should say, you didn’t have the opportunity to even do these things or consider those things because you were just trying to get started in life. So

when that runway is shorter, we have to do things a little bit differently. We have to be more creative and we can’t put everything for example, you know, the 50 year old who wants to retire in five or 10 years and they’re just feeling like they’re just getting started going 100 % equity is probably not going to be the move for them, right? We’re going to have to make sure that we’re doing things a little differently. And ultimately why we love working so much with so many entrepreneurs and business owners in Canada is because

taking care of your personal finances is a business. It really is. It’s a cashflow decision. Like everything is about making a decision. It is your main business. And if this business goes bankrupt, then you’re in a whole lot of trouble. So we wanna make sure that we’re really thinking here behind the moves that we’re making and that we understand because emotions. and it’s your main business.

always tend, I say always win. They don’t always have to win. It’s more rational we can be and the more we convince ourselves, the more we can control our emotions to do the things that are gonna help make things better for me over the longterm. Now, for those who are, I’m picturing comments on YouTube. They’re like, what about the Smith maneuver, right? So like, we’re gonna get people asking.

Jon Orr: Now I don’t know about you, but I think we should leave this for the next episode.

Kyle Pearce: Ooh, look at you. yeah, I guess we have like made this one stretch a little long, eh? So probably not a bad move.

Jon Orr: Yeah, yeah, I think, because I think we can take a deep dive. I think we could take a deep dive into the Smith maneuver and how it relates to these two scenarios to really, you know, to really, you know, unpack, you know, how to make this work for the listener here. Let’s do it.

Kyle Pearce: I love it, I love it. So that’s exactly what we’re gonna do. Those who are looking on YouTube right now, you can see on the screen what we’re gonna be talking about next time. So we are gonna be taking a look and a deep dive, and we’re not gonna tell you the results of what’s gonna happen here with the Smith maneuver. So friends, listen, if you have found anything helpful here, do us a huge favor, share it with whoever you care about the most, whoever could make use of this information.

We appreciate ratings and reviews. And of course, if you are on your journey, personal or corporate, right? It doesn’t have to be business owners here. We are here to help support you along your way. So head on over to Canadian wealth secrets.com forward slash discovery. There’ll be a couple of questions there to help you identify what phase in the wealth building journey you are in. And for those people who are ready to hop on, you’ll be offered an opportunity.

to chat with us for a discovery call and incorporated business owners head on over to Canadian wealth secrets.com forward slash masterclass and you can get a retained earnings masterclass how you can unlock those retained earnings that feel like they are trapped inside your corporate structure.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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