July 20, 2013


Honest Ed's at nightToronto landmark (or eyesore) Honest Ed’s is for sale. I often pass by this one-location-only discount store at Bloor/Bathurst. I haven’t been inside since I was a kid.

The 350,000 square feet of land (including the 160,000 square foot store) may fetch $100 million and get turned into more condominiums.

The Start

“Honest Ed’s … inception came at the time when merchants were notoriously unscrupulous.” --- Toronto Star today
How did Ed Mirvish start Honest Ed’s? It’s difficult to know. A common story is that he cashed in his wife Anne’s life insurance for $212. That’s $2,210 in today’s dollars (according to an inflation calculator from the Bank of Canada). Neither amount is big. Sometimes a little is enough. Maybe Ed was unable to get money from the banks and wanted to avoid loan sharks.

His father died when Ed was only 15 (the Cake Boss was 17 when he lost his dad). Neither father had life insurance. Like the Cake Boss, Ed left school and started working to support the family. Ed died in 2007 just days away from his 93rd birthday. There’s no telling how much life insurance he had.

current flyerThe Capital

It’s easy to forget that permanent life insurance provides much more than a death benefit. If you pay more than the cost of the insurance, the excess builds up in a tax-sheltered environment with whole life and universal life insurance. You might lose this accumulation if you “buy term and invest the difference” because you might buy term and spend the difference.

You can access your equity in your permanent insurance by
  • “surrendering” your policy for the cash value, as Ed did (which can have tax implications)
  • borrowing from your policy via a policy loan (Walt Disney did this (Investopedia, Dec 2011) to help raise money for Disneyland)
Lenders sometimes want life insurance as collateral for a loan. In this case, a portion of the premiums may be tax deductible. Ted Rogers used life insurance in this way.


Some purchases give you more than one benefit. Ed converted life insurance protection into cash. That’s not possible with term coverage. He turned that cash into retail income and real estate. That’s not possible by renting.

What will happen to the Honest Ed’s location? How about a Walmart or Target with condos above? You cam still shop till you drop and then take the elevator home.


Podcast 229

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PS Do you remember Sam The Record Man?

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