Assets Can Disappear Debts Never Do

I was reading an article in the Globe and Mail entitled Markets are Flush, rates are low and I fear it will all end in tears and it occurred to me that this is relevant to my experience as a Trustee in Bankruptcy for one simple reason. Humans are by nature optimistic and we never seem to plan for the worst. If you have borrowed money to invest you have ensure that you can make the payments on the debt even if the assets you invested in (like the stock market) goes down in value or ceases to have value entirely. I lived in Edmonton in the early 1980s - I know that even the value of your home can drop precipitously if the economy gets bad really quickly.

Also, if you are retired and dependent on the income from your investments you have to be particularly careful if you are carrying any debt because it will be that much harder to service that debt if you know longer have income from employment and your income from your investments drops or vanishes. As I mentioned in my recent article about the increase of Saskatchewan bankruptcy filings, we are seeing more people over the age of 60 filing bankruptcy because they have carried debt into retirement.

It’s not our place to provide investment advice, there are many places to get that and ultimately you have to make your own decisions about what assets you invest in, whether that is stocks, bonds, rental properties, your home, etc.

I do want to make sure you have considered if you can service your debt even if the assets related to it have dropped in value. If you find yourself in the situation where you can't service your debt then please call us to have a free confidential consultation to review your situation. You should remember that RRSPs are generally exempt in all provinces in Canada, which means that you get to keep them - even in the worse case scenarios.