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What’s My Risk Tolerance Profile?

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Written by guest writer Nabil Farah, mortgage specialist @ TD
Translated by Terrie Schauer

Have you ever wondered about your risk tolerance profile?

When investing in real estate, it’s important to understand your income profile and how this affects the types of risks you can and should take with your mortgage financing. With a better appreciation of how risk-proof your profile is, you’ll be able to choose a mortgage product that is right for your situation.
Mortgage markets are increasingly complex, and it’s important to have a macro understanding of your profile and financial situation so that you’ll be able to take maximum advantage of the financing on offer. The amount you can borrow and should borrow is not only linked to your debt ratios.
Do you know if your profile is best suited for conservative or aggressive borrowing?
Here are some factors you should consider:
  • Your income:
Depending on your credit score, allowable debt ratios will be between 42% and 44% of your gross income (this includes all debts, car loan, credit card balances, lines of credit etc) and between 35% and 39% of your net salary (for the property you are looking at purchasing, including municipal taxes, condo fees and heating).
If you earn 5,000$ gross each month, your debt service payments must be under 2,200$ and the monthly costs associated with owning the property must not exceed 1,950$. This calculation is call a “Stress Test” created by the Federal government to protect Canadians in the case of an interest rate hike. The Stress Tests are done today based on the higher of two numbers: the Bank of Canada’s Benchmark 5 year rate (fixed today at 5.14%) and the client’s quoted rate plus 2%.
For rental properties, the calculation is a bit different since some banks (including TD Canada Trust) examine each file case-by-case. The good news is that rental income balances out the expenses associated with owning the property in question, either entirely or partially, which allows you more borrowing flexibility.
  • Your financial stability
The type of income you earn is also an important factor to consider.
If you have a stable job with a base salary + commission + bonus, your additional revenue can help you should things become financially strained. Your profile will allow you to get close to the 44% permitted debt ratio.
An aggressive strategy may be a good idea.
However, if you have stable employment but few prospects for a raise or promotion, a more moderate financial plan may be a wiser option.
If your income is 100% commission or you’re an independent worker, a more conservative approach is recommended unless your income-history shows a lot of stability.
  • Your saving habits:
Your investor-profile has a lot to do with how you make your income. But banks also look at how you manage your money.
If you have considerable savings, I’d be more comfortable recommending an aggressive approach, since you know how to manage in difficult months.
If you have little or no savings (or if the purchase uses most of your savings), you’ll save time and energy in the future if you opt for a conservative strategy today.
  • Your age:
At the start of your career, you have many years of promotions, salary increases, and opportunities to look forward to. Choosing an aggressive plan makes sense for this type of profile. As time goes on, you’ll be able to pay down your mortgage faster and build equity each month.
Closer to retirement, the game changes and you’ll need a different strategy. Even if you can borrow a bit more, budgeting to use your full income each month may not be a good idea. At 58 for example, for a 20-25 year amortization period, it’s wiser to base your calculations on what your revenue will be once you retire.

Conclusion:

Wise investors question the risks facing their investments. To assess this information before making a decision, a meeting with a Specialist is always the best option. Especially in a growing and changing market, as is the case in Canada today.

Want to know more?
Come listen to Nabil on Risk Tolerance at our next investor’s workshop in May.
https://www.meetup.com/GROUPE-IMMOBILIER-MONTREAL-INVESTIR-GERER-RENTABILISER/events/249508614/

Photo by Fervent Jan on Unsplash

BRUCE LEE’S WARRIOR WISDOM

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Bruce Lee on egolessness: 

“The point is the doing of them rather than the accomplishments. There is no actor but the action; there is no experiencer but the experience.”

“The great mistake is to anticipate the outcome of the engagement; you ought not to be thinking of whether it ends in victory or in defeat. Let nature take its course, and your tools will strike at the right moment.”

“It is the ego that stands rigidly against influences from the outside, and it is this “ego rigidity” that makes it impossible for us to accept everything that confronts us.”

“Because one’s self-consciousness or ego-consciousness is too conspicuously present over the entire range of his attention, it interferes with his free display of whatever proficiency he has so far acquired or is going to acquire. One should remove this obtruding self or ego-consciousness and apply himself to the work to be done as if nothing particular were taking place at the moment.”

The EAGLE and the CHICKEN

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Be careful who you listen to!

Once upon a time, an old farmer found an eagle’s egg. Because he didn’t know where it had come from, yet he wanted the bird to have a chance at life, he placed it into the nest of one of his chickens.
The eagle hatched along with the other chickens. He learned to scratch for worms and to flap a few feet off the ground.

One day, the young eagle looked up and saw a majestic, older eagle soaring high in the sky. Captivated, he asked one of the older chickens:

“Who is that beautiful bird?”
“That is the eagle, the king of birds,” replied his chicken-friend. “They dominate the sky, while we chickens live on earth.”

The young eagle proceeded to live the rest of his life as a chicken, for that’s what everyone led him to believe he was.

BOXER'S SHOULDER

BOXER’S SHOULDER : HOW TO PREVENT OR FIX IT

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Great weigh-in pic – right?
Jean Pascal vs. Bernard Hopkins.

Now look again.
Notice anything about these guys’ shoulders? Especially Jean Pascal’s?

You should. They exhibit a perfect example of what I’ve come to call “Boxer’s shoulder”. It’s the condition where either striking or the constant push-and-pull in Jiu-Jitsu causes your pectorals and the muscles in the front of your shoulders to become too tight for your back muscles.

The result: a rounded back with shoulders that slope forward. And that oh-not-so-nice pain in between the shoulder blades because your Rhomboids are too weak to hold you in the proper position.

Prevention
If you don’t yet look like Jean Pascal, you want to try a dose of prevention.

1) If you’re striking a lot with your arms or doing a lot of Jiu-Jitsu, cut other “Pec” exercises like push-ups from your workout. You need to work on balancing your body. If you’re already over-exerting your pecs and the front of your body, take any additional time to do back exercises (like back extensions or reverse push-ups on the bench-press bar).

2) Stretch your pecs !

As muscles become stronger, they shorten. This is why boxers’ shoulders are out of alignment: their pecs are too short. You fix this by strengthening your back muscles, but also by loosening your front. A regular pec stretch on the floor or the wall should be done at the end of each workout.

Fixing Boxer’s Shoulder
If you’ve already become misaligned, you’ll want to follow the above advice, and step it up a notch. Preventing a problem is easier than re-adapting your body once it’s already gone out of whack.

You’ll want to add additional exercises to reinforce the backs of your shoulders. Try the “Dragon Fly”

or the Dolphin pose in Yoga.

The stretches to do are essentially those I mentioned earlier plus any other pec or front-of-shoulder stretches you might know.

You really want to integrate these stretches and exercises after every work-out if you find your shoulders are already slumped inwards.

You can also try to concentrate – during the day – to keep your thumbs pointing forwards when you stand. People with boxer’s shoulder tend to have the tops of their hands pointing forward when they stand. You want to rotate your hand so that the thumb points forward instead. This will force your shoulder into its correct position.

WHAT IS THE MEANING OF "DOJO"

WHAT IS THE MEANING OF “DOJO”

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I was talking to one of my teammates the other day about the meaning of the word “Dojo”, and by extension what it means to go to the place where we learn our art. According to my teammate, a “Dojo” is “the place where we kill our Ego”. I thought this was a pretty cool ancient sound-bite because it encapsulates an important aspect of learning a martial art. No matter how confident or self-assured you are when you walk into the gym, it’s simply a matter of time before something humbling takes you down a notch. Whether you’re an instructor and a student asks you a question you don’t know how to answer or a beginner who is constantly physically humbled by the others in the school, Ego-destroying experiences are a vital aspect of being a martial artist.

After all, the Ego-killing aspect is one of the beautiful things about learning a martial art. Knowing how to defend yourself may build confidence, but lest that feeling grows into pride, your teammates are there to bring you back to earth with a submission or a tough sparring session in the ring. This is, of course, a bit of a paradox: training builds confidence but destroys Ego.

That being said, my teammate’s definition got me wondering. What is the ‘real’ definition of Dojo? And does this offer any insight into what it means to be a martial artist?

Dan Prager, the martial artists and blogger, answers this very question by citing Richard Strozzi-Heckler’s book Holding the Center – Sanctuary in a Time of Confusion:

A dojo is a space of commitment in which people practice together. What is powerful about the dojo is what it tells us of learning, and ultimately, of waking up, of being alive.

In Japanese, “dojo” refers to the place where we train “in the way”. This points to two important distinctions. The first is that the dojo is a place of learning where one practices what is being taught. This is different from the conventional classroom where students sit passively taking notes or listening to a lecture. This is not to say authentic enquiry is unavailable in lecture halls, but it points to the difference between academic knowledge and an embodied knowledge that allows people to take actions that sustain and enhance their lives. In a place of learning like the dojo students practice what is being taught and over time begin to embody the subject matter. It lives in the body, it is who they are.

The second distinction revolves around the concept of “Do”, which translates as “Way”. The origin of the word “dojo” comes from the Sanskrit bodhimanda, which means the place of awakening. The Japanese kanji for Do is composed of two parts. One depicts a man walking on a road. The other is the human throat, which surrounds the jugular vein, representing the very core and pulse of our life. A man walking toward life. The Way is a theme of life. The dojo is a place where we awaken our body, grow the self, and unite with the spirit through rigorous and compassionate life-enquiry.

(You can check out Dan’s blog at http://maaml.blogspot.ca/2009/09/dojo-its-purpose-and-meaning.html)

Okay – so it looks like my teammate wasn’t totally right.
But to my mind, there’s something very meaningful in what Strozzi-Heckler says. It reminds me of something a teacher of mine once said.
“No one owns Muay Thai,” one of my old instructors told us. “It travels through us. First, we learn the art to be able to fight, and then we teach it to others for the same purpose. Our goal as fighters and teachers it to pass on our art…”
We participate in our art but do not own it. If we train and teach well, others may also follow this way too.

Food for thought!
Happy Tuesday!

UNDERSTANDING HUMAN BEHAVIOR THROUGH “DA SEIN”

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Why are some people highly sensitive to social interactions and energies? Why are others not so sensitive?

Why might one person be extremely confident and straight-forward seeing only black-and-white options, while someone else is more emotional or given to appreciating life’s complexities?

These differences between people are often sources of conflict. How many times do I hear people labelled over-emotional, a social retard, or too black and white? In interpersonal interactions, often a great deal of misunderstanding comes from the fact that all of us have a unique way of being in the world. To have greater peace in our social interactions, it’s worth taking a minute to reframe how we understand these differences.

The German philosopher Martin Heidegger came up with the concept of “Da-Sein” (being there / being in the world). His idea is actually pretty simple – each creature has its own unique way of being-in-the-world or Da-Sein. This way of being conditions the possibilities we understand for ourselves and for the objects, people, and situations we meet.

Take a tree for example. If I’m a dog, I’ll understand a tree as something to sniff or to pee on. If I’m a squirrel, I see a tree as something to climb on or as a source of food (if it grows acorns or chestnuts). If I’m a bird I might build a nest. If I’m a cat I might see the tree as an insurance policy in case of a dog emergency.

As a human being, I probably see the most options. I understand the tree through its uses to me. The tree can provide shade for me in summer, or heat in the form of wood for me in winter. I also understand that the tree was used for other animals: the dog sniffs the tree, the bird uses it as a house and so on.

But even though as a human I am able to understand these different uses, I won’t pee on the tree or smell it as a dog would. I probably don’t know what an acorn tastes like.

The point of this when applied to human behaviour is just this: in a certain way we are all trapped in our own Da-Sein. That is, we have our own unique experience of the world. Some of us are highly attuned to personal interactions, making us aware of the feelings of others, of their motivations, and of their character. Others are more perceptive when it comes to music, able to pick out the role of each instrument in a piece of music. Others are hyper-aware of smells, noises, or cleanliness, order, or structure. Others prefer lack of structure or less-orderly environments.

The point is that because we are all wired in a slightly different way, our experiences and perceptions of what we encounter is different.

In the same way, as you wouldn’t scold a dog for peeing on a tree trunk, or a bird from building a nest, you should probably avoid judging others because their Da Sein is slightly different from yours.
That being said, the tricky part can come when you share space or responsibilities with someone who has a different perception of yours. As a guideline here I would propose Jean-Paul Sartre’s phrase: “My liberty stops where the liberty of another commences.”

Don’t be peeing on your neighbour’s tree, in other words!

But the next time you’re having trouble being tolerant of another person’s way of seeing or being, remember that their Da Sein is probably a bit different from yours!

PYHRRIC VICTORY

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All-knowing Wikipedia tells us that a Pyhrric Victory is “a victory with such a devastating cost that it carries the implication that another such victory will ultimately lead to defeat. Someone who wins a “Pyrrhic victory” has been victorious in some way; however, the heavy toll negates any sense of achievement or profit.”

The phrase derives from the story of King Pyhrris who, in a particular battle with the Romans, lost so many men that his victory ultimately spelled defeat. The Romans lost more men than did Pyhrris, but because they had a much larger supply of soldiers and weapons, Pyhrris’ losses meant that he would be unable to fight another battle. The Romans had effectively won by making him unable to beat them again. The seeds of defeat were sowed in the way King Pyhrris fought and won his battle.

When deciding whether to wage a particular war on an issue, it makes sense to watch out for the seeds of Pyhrric Victory. This is true especially in dealings between people. Think how divorce lawyers end up walking away with a couple’s savings, or how a business feud can result in one side “being right” while losing the goodwill necessary for continuing profitable relations with a client or partner.

It doesn’t hurt, of course, that someone waged one such war on me this week at work.
I suppose my consolation is being on the Roman side in the end. I will live to fight another day, while my (now) adversary shot herself in the foot so badly to spite me that she will have trouble walking.

My question, I suppose, to King Pyhrris if he were still among us would be: why? Knowing that the price of a victory is ultimately defeating, why fight in the first place? What use are the efforts and metaphorical lives lost, when the outcome is fairly clear from the start?

I wonder: would there be a case over which I would fight such a war knowingly?
Tonight’s food for thought.

WHAT IF LIFE WERE LIKE DRIVING A BUS...?

WHAT IF LIFE WERE LIKE DRIVING A BUS…?

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I often wonder how to handle the less pleasant people, situations, and things that come into my life. Knowing how to deal with life’s little annoyances is key to maintaining balance.

My good friend, psychologist and Mindfulness coach Joe Flanders sent me the following article of his on the topic.

 He calls it the life-as-a-bus-metaphor.

“Imagine that you are the driver of a bus (the bus of your life). Whenever you have an experience, passengers get on the bus, whether you like it or not. Some are pleasant, some are unpleasant. You may want the pleasant ones to sit in front and the unpleasant ones to go to the back and remain quite, but it rarely pans out that way.

Sometimes, when you choose to drive toward what’s important to you, some of the unpleasant passengers become upset; they come up to the front and start demanding that you change course.

You can argue with them, but they usually fight back even stronger and the conflict escalates. In the meantime, the bus isn’t moving.

Alternatively, you can give in to their demands and go their way, so they calm down. But now, the unpleasant passengers control the direction of the bus. As soon as you try to head back in the direction that’s important to you, they attack you again, and so on.

Lastly, you can notice all the passengers, invite them along for the ride continue driving the bus in the direction you want to go. In the end, the unpleasant passengers can be pretty annoying when they come to the front of the bus, but they don’t know how to drive, so they never take the wheel.

 Which would you choose?”

You can check out Joe’s website at :

 Mindfulness-Based Tools for Valued Living
http://mindspaceclinic.com/services/mindfulness/mbtvl/

Boxing

BOXING : LESSON ONE – PERFECT STANCE

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Good boxing technique begins from the ground up.

With a heavy bag, a pair of pads or – even worse – a sparring partner in front of you, it’s easy to get carried away and sucked into throwing punches using only your arms. But if you want to build punching power, reduce tiredness and have a good defence, you need to a proper stance: everything else is built on a good starting position.

Here’s a checklist that will help you assess the quality of your stance.

1) Find a line on the ground. Now position your feet so that the toe of your front foot touches the line, while the heel of your back foot touches the same line. Your front foot should be facing almost straightforward. The back foot should point outwards at a 45-degree angle. Now lift your back heel and bend your knees.

2) Beginners and Thai Boxers often stand too upright for boxing (image on the right). If you plan to develop your boxing, you want to make sure that your knees are bent so that the muscles in your legs are activated (image on the left, although the back foot is turned too far out in this picture).
Bent knees will give you additional agility in your slips and evasive footwork, and allow you to throw punches with maximum speed and power.

3) Your shoulders should be angled at 45 degrees: standing square makes you a bigger target. Your backhand should be glued to your cheek, while your front hand can sit about a fist’s distance from your jaw.

4) Don’t forget to tuck your chin, and to roll your shoulders slightly inwards.

Now all you have to do is consistently move around in, and come back to this position… Practice this in shadow boxing!

 

 

For a more in-depth video explanation, check out D. Travis YouTube post on the subject.

Dan Millman’s E-Course : Master the Path of the Peaceful Warrior

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The writer of Way of the Peaceful Warrior, Dan Millman, brings us an e-course that helps gradually assimilate his teachings…

Last week I signed up for Dan Millman’s e-course on mastering the path of the peaceful warrior. I didn’t actually even really know that such courses existed. The concept is that once per week you receive a lesson – complete with integrated video. Each lesson focuses on one theme that will help you understand and then master the warrior’s way of life.

Being pretty familiar with Dan’s ideas, it’s a bit hard for me to rate the content of this course objectively. At this point, the course is offering me a great refresher of his material. That being said, I’ve always found Dan’s writing style to the point, clear and practicable.
I’d recommend the course.
Moreover, the program is actually pretty affordable: 25$ for twelve weeks, payable by VISA or PayPal.