I couldn’t resist commenting on the specious reasoning that Jim Stanford, an economist with the Canadian Auto Workers Union, advanced in a column in The Globe and Mail. Mr. Stanford argues that Canadians should tune out the commercials during the RRSP season and invest in their homes instead because:
At the end of the day, you have something to show for it. That’s a lot more than can be said for the outrageous management fees paid each year to well-dressed money managers sitting around Bay Street throwing darts at dartboards.
While it is always nice to know that the club of people-who-detest-high-fee-mutual-funds is expanding, Mr. Stanford’s prescription for a cure is worse than the disease:
On its own, home ownership does not constitute an adequate retirement plan; for that, we need healthy public and workplace pensions. But it’s a much better bet than playing the markets.
Mr. Stanford may not have noticed but workplace pensions are going the way of the dodo, replaced either by defined contribution plans (for the lucky employees of a few big corporations) or none at all for the majority of Canadians. For many of us, our RRSPs, not our homes, are our pension plans and having one doesn’t have to mean lining Bay Street’s pockets at our expense.
Update: Growth in Value and Canadian Dream commented on this very same column in their blogs.