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JUNE 2017 BCBUSINESS 35 BCBUSINESS.CA so modest that "you could liquidate our entire household for $10,000," he calculates. The psychological eects for those who have suddenly found themselves wealthy through real estate or investments, however, are at the oppo- site end of the spectrum. The rich-on-paper group is vulnerable to what economists call the wealth eect. It's when you start spending more money on daily living just because you feel rich, even if you haven't cashed in your sudden investment pro•ts or your real estate holdings. That trend has cropped up in U.S. studies since the 1960s of how people changed their spending behaviour. After the dotcom stock-market spike in the early 2000s, for example, people started spending more as their paper wealth grew. Cana- dians appear to be more restrained, but they're not invulnerable to the wealth-eect dynamic. "I have seen people recently, not in a big way, but some come close to paying o their mortgage, and then they've used their home- equity line of credit to buy a cottage," says Graham Bodel, co-founder of investment man- agement •rm Chalten Fee-Only Advisors Ltd. in Vancouver. "It is a danger point." W E A L T H Y A N D W I S E The same trend has taken hold outside the Lower Mainland hothouse. "I certainly have to have a lot of conversa- tions about tamping expectations," says Patrick Hay ton, a "inancial planner who works in the Courtenay-Comox area. "The biggest mistake people make is overestimating the income that a portfolio will produce." So Hayton spends plenty of time giving warn- ings, even though his clients are in a region with a generous layer of wealth supporting the population. Although real estate prices are nothing like those in Vancouver or Victoria, and residents' investment holdings are in the so-so range, Comox ranks as the second city in B.C., after cen- tral Saanich, for the value of employer-supported pensions. With a military base, a decent local economy that produces a certain number of jobs with good pensions, and a high appeal for Lower Mainland retirees looking for a small but interest- ing and well-serviced community, people there are doing better than most on one of the three pillars of household wealth. Helen and Kelly Watkinson are among them, retirees who cashed out of Vancouver, bringing with them substantial pensions and the pro•t from selling their Burnaby house last August for $1.5 million. They're both 61 and put in a solid four decades in the workforce, methodically accruing pensions and assets. She started at 20 as a psychiatric nurse, while he was a mechanical designer for a health technolo˜y company. Neither expected to become rich. Both were savers, opting to go without a stove in the "irst house they bought in their 20s until they felt they could afford to move up from a hot plate and microwave. Helen says they learned a lesson in the early 2000s when they, along with others, made what looked like a small fortune during the dotcom bubble. Some of her husband's friends $0 – $25,000 – $50,000 – $75,000 – $100,000 – $125,000 – $150,000 – $175,000 – Canada B.C. Alberta Saskatchewan Manitoba Ontario Quebec Atlantic Territories In 2015, with just shy of $125,000, B.C. households ranked below the national average for growth of employee pension plan assets +5.7% +5.3% +4.4% +6.5% +8.4% +4.4% +7.5% +8.3% +4.9% Helen Watkinson says she and her husband, Kelly, learned a les- son in the early 2000s when they, along with oth- ers, made what looked like a small fortune during the dotcom bubble. Some of Kelly's friends went out and splurged on the strength of their theo- retical wealth. One bought a Porsche Boxster. Then everything collapsed ++ P E R S O N A L F I N A N C E 2014 2015

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