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Saving for tomorrow can sometimes prevent living for today just the same as living for today can leave you in dire financial straits tomorrow

I have a slight bias towards the theory of efficient markets. That is, that most investments are fairly valued most of the time based on all available information. In that regard, for Milan to try to time the real estate or interest rate markets is unlikely to benefit him in the long run. In fact, I think that Milan’s answer may lay more in what he wants. He says a townhouse is something that he would like to have long term.

Financial decisions are a combination of wants and needs. Many Canadians are gravitating towards wants over needs as reflected by our record high debt to income ratio. But balance is important, in finances as in anything. Saving for tomorrow can sometimes prevent living for today just the same as living for today can leave you in dire financial straits tomorrow.

Whether or not to move from a condo to a townhouse should ultimately be based on his own financial and lifestyle considerations — not real estate market or mortgage rate timing.

Beyond that, whether or not to sell an asset should not depend on what you paid for it. This can be a detrimental investor psychological phenomenon that causes people to hold on to losing investments until all is lost.

I often pose this question to investors who have lost money: if you had the value of the investment in cash, would you buy it today? If not, sell it. And if you’re Milan, it sounds like your answer should be to sell the condo and buy the townhouse.

Jason Heath is a fee-only certified financial planner and income tax professional at Objective Financial Partners Inc. in Toronto.