I’m always looking for arbitrage opportunities to help readers make more money and live better lives.
My favorite arbitrage opportunity for the next couple of decades is investing in non-coastal city real estate due to lower valuations and higher net rental yields. Technology is accelerating the flow of capital towards attractive real estate opportunities, and I want to get in front of that wave.
Recently, I found another multi-decade opportunity by looking north towards our friends in Canada. Despite the frigid weather for four months a year, Canadians have a lot going for them.
Their GDP per capita is a respectable $45,000. Few people go through medical bankruptcies because healthcare is heavily subsidized. Meanwhile, the average annual tuition for Canadian universities was only $6,571 for the 2018/2019 academic year.
Let me share how one Canadian friend is taking advantage of America and how we, in turn, can take advantage of Canada.
How Canadians Take Advantage Of America
A 25-year-old friend in my SF softball league is from Vancouver, Canada. He went to the University of British Columbia, a top five university where annual tuition is only $5,399 in the computer science department.
When he graduated, he decided not to find a job in Canada, but come down to San Francisco where the computer engineering jobs pay much more. He works for online real estate company.
“Sam, I make twice as much in San Francisco as I would if I got a similar job in Vancouver,” my softball friend told me.
“But don’t you want to give back to your country? I thought brain drain is a big thing in Canada?” I responded.
“Yes, but let me make my money first. After five years in San Francisco making double the money, I’ll then move to Seattle with my girlfriend where my firm is headquartered. Seattle pay is similar to San Francisco pay, despite the cost of living being 30% cheaper. Further, Vancouver is only a 3.1- hour drive away.“
“Sounds like a good plan!” I responded.
“Once I’m in my 30s and ready to start a family, then I’ll move back to Canada and live a less hectic lifestyle. With a stronger government safety net, I feel more comfortable raising a family back home,” he explained.
Although I feel a little bad for Canada for not getting the benefit of his productivity after providing him with 22 years of education, I can’t fault his logic.
If Canadians wish to participate legally in our labor market and also buy and sell U.S. stocks and property, why not take advantage of the opportunity? After all, America is the greatest country in the world.
How Americans Can Take Advantage Of Canada
Following my softball friend’s logic, Americans should take advantage of Canada’s government safety net and immigrate to Canada after we’ve amassed our fortunes as well.
One of the biggest problems we face in America is the runaway cost of healthcare. Medial-related expenses is our nation’s #1 cause for bankruptcy. It would, therefore, seem logical that those who decide to retire early and are ineligible for Medicare should migrate to Canada and get their healthcare paid for.
For example, my family pays about $21,000 a year for healthcare premiums plus co-pays and co-insurance. Does this sound reasonable to you for a healthy family who never sees the physician? To generate $21,000 in retirement income at a 4% rate of return requires me to first amass $525,000 in capital.
If we moved to Canada, we’d be eliminating most of our present healthcare costs and could use the savings towards living a better lifestyle. We wouldn’t have to purposefully reduce our income to get healthcare subsidies either. What a shame to stop writing on Financial Samurai, something I love to do, just for the sake of affordable healthcare.
Further, given the average college tuition is only $6,571 a year, we would no longer have to contribute $30,000 a year in our son’s 529 college savings plan. We could easily afford to pay the $26,284 for four years in Canadian university tuition from the money sitting in our online savings account.
It is truly mind boggling that four years of Canadian university tuition costs $9,000 less than one year of private kindergarten in San Francisco!=.
Saving $51,000 a year in healthcare and college expenses just by moving to Canada sounds like a home run. That’s $1,275,000 less in capital I need to amass at a 4% rate of return.
Even though the average home price in Vancouver is an absurdly high $1.4 million, it’s still about $200,000 less than the median home price in San Francisco.
Moving to Vancouver, Canada might just be the best geoarbitrage move for us. For Americans living in lower cost of living areas, there are plenty of lower cost of living areas in Canada as well.
Our Children Can Take Advantage Of Canada Too
In addition to recommending all FIRE Americans not yet eligible for Medicare consider immigrating to Canada to take advantage of subsidized healthcare and other government benefits, there’s also a way for our children to take advantage of Canada too.
One of the reasons why I’m a high school tennis coach is because I want to learn how to interact with teenage boys before my own boy becomes a teenager in 2031. It may sound crazy to prepare so far in advance to be a better father, but I figure why not try?
During practice one day, I had a nice conversation with one of my favorite players, a senior who will be attending Occidental University in Southern California.
He mentioned a classmate was attending McGill University in Canada and I was immediately impressed because I remember having a financial analyst classmate at Goldman Sachs who had also attended McGill University.
She was extremely kind and smart and was the only one in my 1999 financial analyst class who survived the post dotbomb layoffs and made Managing Director 10 years later.
“McGill is the Harvard of Canada!” I exalted in a somewhat joking way. “I wonder what their acceptance rate is?” I asked.
My student responded, “Really? The Harvard of Canada? How can that be if their acceptance rate is 50%?“
“There’s no way Mcgill has a 50% acceptance rate! I’ll happily bet you 20 pushups that it’s 45% or less! You’ve got to accept the bet since I’m giving you a 5% buffer.” I retorted.
Secretly, I was thinking McGill’s acceptance rate was closer to 20% given the best universities in America have single digit acceptance rates.
“You’re on!” My student immediately looked up McGill’s acceptance rate on Google and started to dance.
He showed me his phone and Google had the acceptance rate at 46.3%. “Time to do some push-ups coach!“
Never one to surrender so easily, I looked at the data closely and the 46.3% acceptance rate was from 2016. As someone who is proficient with SEO, I knew Google often had old data in its featured snippets.
Once I clicked on McGill’s website, it showed they made 15,986 offers to 38,320 applications for a 41.7% acceptance rate for the 2018 school year.
“Bahaha, never challenge the coach! 20 pushups right now!” I boomed.
A 41.7% acceptance rate for arguably the best university in Canada is comical by US standards for the top school. It shows that Canadians really are much more accepting of everybody than we in America.
Let’s say you disagree that McGill is the best university in Canada. Here are the acceptance rates for the other top universities in Canada.
University of British Columbia: 52.4% acceptance rate
Queen’s University: 42% acceptance rate
McMaster University: 58.7% acceptance rate
University of Waterloo: 52% acceptance rate
University of Montreal: 57% acceptance rate
University of Toronto: 40% acceptance rate
In other words, the best universities in Canada have an acceptance rate of 40% – 58.7%!
Now let’s take a look at the acceptance rates of some of the top US colleges.
Good luck getting into a top 10 school in America unless you’re a really rich legacy student or cured malaria while fighting against gun violence.
Remember, even some rich celebrity kids couldn’t get in on their own merit. If you don’t have $500,000 in bribe money lying around, then forget about it.
What is the point of trying to grind so hard in middle school and high school to try and get into a top American university with a 10% or lower acceptance rate when you can be an average student and still get into a top five Canadian university?
The reputations of the top Canadian universities are higher than their respective acceptance rates indicate.
Over the past three years, I’ve seen and overheard my students talk incessantly about their studies and how they needed to go to expensive SAT tutoring after practice, take more practice AP exams, and so forth.
Several even showed up late to important matches because they required extra time on their exams and then wanted to talk to their teachers after. I could feel the pressure they were under to try and do it all.
Maybe the pressure cooker environment has always been there in high school. But is it really a necessary rite of passage given college is becoming less necessary thanks to the free internet?
Instead of spending $48,000 in annual tuition going to Harvard only to end up with the same type of job as everyone else, why not spend $5,399 in annual tuition at University of British Columbia and work at a US-based firm for more money instead?
Not only might you land a $120,000 computer engineering job at Zillow, but you might also even make more than $1,000,000 a year as an MD at Goldman Sachs by your early 30s!
Time To Move To Canada
I encourage all our high school students to apply to Canadian universities to get a great education and save on cost. Then once you’ve accumulated enough capital in America to leave work for good, you can then return to Canada to live off the government’s good graces.
Having a Canadian university education should make it easier to be accepted by the Canadians. You don’t even need a job thanks to Canada’s Express Entry program. All that’s required is at least one year of work experience, proficiency in English or French, and $1,500 – $2,000.
If you intend to be self-employed when you move to Canada, you’ll need to show you have at least two years’ relevant experience in the field in which you intend to self-employ.
But once you get to Canada, there’s no law that states you need to start a successful business. You can just be a hobbyist to keep yourself engaged.
Taking advantage of Canada truly is the best life hack for Americans. Who’s with me? Go Canada!
Related: In Search Of FIRE: The Never Ending Retirement Grind
Any Canadian readers who want to recommend some of the best neighborhoods in the best cities to migrate to? Given PM Trudeau is very welcoming of immigrants, surely he’s very accepting of us Americans too? Any American readers who went to Canada for university? I’d love to hear from anybody who has executed this plan and share some of the downsides.