Archive for March, 2008

Book Review: Am I Going to be OK?

March 30, 2008

[Front Cover of Am I Going to be OK? Book]

After reading a note on Jon Chevreau’s blog, I asked the author Francis D’Andrade for a review copy of the book, which is titled after the question most frequently asked of the author. Mr. D’Andrade has written an unusual personal finance book that talks a lot about the emotional aspects of money in a humorous, folksy style and offers a common sense framework for achieving financial security: securing an income, saving a portion of it, owning a home and planning early for retirement.

Though Mr. D’Andrade is a financial industry insider, – he is a founder of RGI Financial and was previously a top executive with Altamira – it is refreshing to read that he thinks average Canadians can have a reasonably secure retirement with real estate wealth of $250,000 and financial wealth of $250,000 supplemented by government programmes. The author has a delightful turn of phrase (“Wealth is about more; prosperity is about enough”, “Pay Yourself Second”, “A Monetary Lapse of Reason” etc.) and I can’t recall the last time I had so much fun reading a book on a dreary subject like personal finance.

The value of any instructional book lies in its capacity either to teach you something you did not already know or to show you something you already know from a different perspective. The latter is my goal for this book.

I’m pleased to report that Mr. D’Andrade succeeds brilliantly in his goal in this engaging, witty and thoughtful book. The cover price of the book is $18.95 and can be purchased through the book’s website.

Rating: 8 out of 10.

This and That

March 28, 2008

  1. Rob Carrick’s verdict on QuickTax – it’s fast, easy and annoying. Rob also writes about the lessons from the ABCP fiasco for retail investors.
  2. Everything you want to know about income splitting courtesy of James Daw of the Toronto Star.
  3. Jon Chevreau notes the highlights of the Ontario budget (not much that directly affects our pocketbooks).
  4. Tax saving tips from the nice folks at the Canada Revenue Agency (thanks to Canadian Financial DIY for the link).
  5. Thicken My Wallet wrote a guest post on the effect of the Lipson case on the Smith Manoeuvre.
  6. Where does all my Money go? on the Jim Cramer and Bear Stearns controversy.
  7. Four Pillars reviews Barbarians at the Gate, which some are calling the best business book ever written.
  8. Many thanks to this month’s sponsors: Red Flag Deals and My Virtual Mortgage Broker. We are also proud to syndicate our posts through AOL Money.

‘Lost Decade’ for Stocks

March 26, 2008


The Wall Street Journal calls the past nine years as the ‘lost decade’ for stocks:

The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.

The Standard & Poor’s 500-stock index, the basis for about half of the $1 trillion invested in U.S. index funds, finished at 1352.99 on Tuesday, below the 1362.80 it hit in April 1999. When dividends and inflation are factored into returns, the S&P 500 has risen an average of just 1.3% a year over the past 10 years, well below the historical norm, according to Morningstar Inc. For the past nine years, it has fallen 0.37% a year, and for the past eight, it is off 1.4% a year. In light of the current wobbly market, some economists and market analysts worry that the era of disappointing returns may not be over.

Despite the breast-beating the Journal column has generated (one pundit told a local radio station that stock returns will be terrible in the near future), a little perspective is needed. How many investors came into an inheritance precisely in April 1999, invested every penny in the S&P 500 and cashed out entirely on March 18, 2008? If so, how about writing a column on how great stock investing has been in the five years since March 2003 during which time the S&P is up more than 50% not counting dividends? It’s meaningless to pick arbitrary time periods and making conclusions one-way or the other.

It is entirely predictable that after years of sub par returns the ‘long term’ has come to mean a time frame of nine years. It is also an encouraging sign because the more investors throw in the towel and the lower stock valuations get in the near-term, the better stock returns will turn out to be in the time frame that matters: the really long-term of two decades or more.