On Mutual Funds - a story: Part II

That was a 100% mortgage offer, nevertheless, on either count. But I'd probably save $100 per month on the latter (95/5 compared to 80/20) . I was able to secure a *job offer* from a brod, albeit on paper, which was accepted by my mortgage broker.
The only drawback was that the second mortgage was *interest-only* (therefore the principal stays forever until paid off in full) and the money was sourced out from *Greek, Mafia-type* investors ... probably the type that would break your kneecaps if you don't pay. A month after closing, I paid off the 5% second mortgage with money I raised various ways. Leaving me a 95% mortgage at a lower rate.

BTW, when I went to the Greek investors, (they looked seriously-staring godfathers, twiddling their thumbs over big tummies) told them my story on how I got the house and talked honestly as a retiree with puppy-dog eyes,  I was shocked to learn they were willing to forgive the *interest* I owe for the full month if I would pay the second mortgage in full. They made zero interest on my $15k debt. They said they could afford it. (No doubt :-).

My next task was to put in doors (all 15 internal doors were missing ... taken out by the previous owner perhaps to piss off the bank that foreclosed on them). They left the two exterior doors hanging. :-)

As a retiree, I scoured the Canadian government *grants* to see if I could qualify for a *renovation* loan. I found a little-known grant for retirees and received the maximum of $16k (forgiveable loan) to be used to renovate. After securing *licensed* contractors' job estimates, I received the $16k from the government. The basement sparkled and I bumped up the electrical amps from 100 to 200 around the house and garage, windows replaced, electrical wires all over were replaced, new electric sockets built, new washrooms, insulation bumped up to R-something- maximum (the attic insulation is now about five feet high (they pumped in the insulators using big-ass pumps from big-ass trucks)). I replaced all electric-based stoves and ran gas lines down into the basement and up the main floor. Triple- varnished the wooden floor and repainted the whole house. It is now livable. I have two room renters in the basement now too. The garage electricals were rebuilt as well. The hydro meter (*hydro* is what we call them in Canada for electricity) was relocated to the outside from the basement and it is now digital, which sends off the readings wirelessly to the hydro company.

I sought another free grant to replace the water connections.  Water pressure was a bit below par. When water is used somewhere down the basement, the pressure drops on the main floor. The bronze water meter was 45 years old.  But first, they had to *test* my house (free service too) for acceptable pressure and it was right on *acceptable* .  The inspector, however, *failed* his test to our benefit so we could have better water pressure. He replaced the water meter, complete with an outside meter reader connector, and hooked up a *puck* outside that's readable by a handheld digital device.

To fix the water pipes, the city workers came with all heavy equipment, (it's like a battallion of at least 6 *supervisors* with two or three workers ... *union rules* daw :-) ... heavy trucks, backhoes and asphalt diggers and one massive top-of-the-line, latest-technology *vacuum cleaner* of a truck to dig up dirt using suction (no more picks and shovels or even backhoes to load dirt onto trucks) and dug up the front yard and detoured all vehicles on to one side of the heavy-traffic avenue and dug up the road, replaced the water pipes from half-inch size to a bigger diameter from my house to the middle of the road.  In the process, my shut-off valve near the curb broke (old age) and they replaced that too, and replaced my grass that was damaged.

I applied for yet another freebie to replace my roof gutters and reroute them from the sewer pipes (for environmental reasons) but this is still yet to be done.  Occasionally, the city will either send me an email or call me to say to be patient due to their work backlog and all that, that I am *still on their waiting list* . I applied two years ago. (Well, can't win them all :-).

On Mutual Funds - a story: Part I

Of course, there are certain advantages to it like greater diversification which reduces risk, and ability to participate with less money and being able to select the level of risk you want to take.

... you must have a crystal ball 'cause that was what someone told me before which made me go along with mutual funds. (But there's a happy ending to my story ... non-fiction, of course :-).

When I left the Royal Bank employment to start my own business, I had a little amount ($10k) stashed in a registered plan that was funded half-and-half by employer/employee and since I was no longer with the company, it was no longer being funded. However, it sat invested in a *money market account* and it regularly earned a small interest and it kept growing steadily.  My money went up steadily over the years to $17K. Then, with a stroke of bad luck, I met a Filipino *mutual fund manager* (daw) of some sorts and what you had written (and I quoted above) was basically the same *selling point* he had said ... basically it will reduce my risk in investing. 

In hindsight, I really didn't have any risk as it was in a Royal Bank money market account and although it was earning a *guaranteed*  small interest payment (between 1 to 3% apr), it would never have a negative result.  But I became *greedy* after perusing a multi-colored (with all the pie charts that would make an investor hungry), smiling-faced happy investors pics (replete with *proven* testimonies)  and oh-so enticing mutual fund brochure touting 10% growth plus, plus, plus. I was already counting my chickens. It was such a great pitch that I threw caution to the wind and went along the (later unhappy) trails of mutual-funding.  And I didn't even know what it was all about. I was hooked in like a fish, wide-eyed ... line and sinker too. Within two years, my little nest egg plummeted to a quail's egg. Down to $12k.  My pinoy friend was very apologetic saying the market had taken a downswing (wasn't his fault really) and that he had no
control as he just *submitted* my contribution to his *real* fund manager ... and he was genuinely sorry, I suppose, that he even offered to help me take my money out of his mutual fund hands :-).

I was so dejected, but for every dark cloud there must be enough rain to drown our sorrows and beyond that, a silver lining. The sun will come out tomorrow, as little Annie would sing.

Well, in a downside market, another sector of the *investing industry* came crashing down as well.  The real estate market was going bust.  Three years ago, I went shopping for bargains and I saw one being auctioned off for $50k less than its market value. A 6-BR 2,000 (total) sq ft. brick bungalow, full basement with a half-acre lot.  My money was coming down fast in the mutal fund so I decided to pull out, which after processing and all damned fees, went south even further to $8k. To get a better credit, I paid off $3k of my debts and used what's remaining of my money ($5k) as a *bidding money* and, if successful, my deposit would be used for closing costs.

One minor problem ... if I didn't come up with the rest of the purchase money, either through cash or mortgage loan, I'd lose my deposit. (I'm not even a gambling aficionado).

My real-estate agent (a Lebanese-Canadian Muslim) didn't believe we could win it. My competitors (he said) were all developers with money coming out of their ears.  I had one chance to bid and that's it. "If we win, fine," he lamented, "but I doubt it." He telephoned and announced that our bid *amount* languished at the bottom. "Oh well," I uttered. "Don't worry, there are other houses around," he encouraged.

At the end of auction, I received a frantic call from my agent. "We did it!" he screamed, I thought my eardrums would pop.

I don't know what happened but I beat out 6 developer/investors who were slated to tear down the house and build townhouses in the huge-lot property.  For some unknown reason, Re/Max (the realtor) along with CIBC (the bank owner who foreclosed on the property) awarded me the auctioned house.  With a better credit, thank God, I was able to secure a loan. A mortgage broker (an Indian-Canadian  Muslim) ... a friend of my real estate agent, offered an 80% lower interest first and 20% second. However, he said, if I have a *job offer* to show, (he knew I was retired), he could bump it up to 95% first mortgage with a lower rate and 5% second mortgage at a higher interest.