Book Review

Book Review: Dollars From Change

March 9, 2006

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[Cover Image of Dollars From Change Book]

Canadians hate taxes not just because the Canada Revenue Agency collects a big chunk of our incomes. Taxes are complicated, the rules change constantly and quite frankly it is a boring and dreary topic. But a basic knowledge of our tax system is critical not only to avoid overpaying but also to arrange our affairs so that we pay as little taxes as possible.

Just in time for the tax season, Robert Smith and Michael Cavanagh have taken the challenge of explaining taxes in simple and concise terms and have succeeded admirably in their new book. They use simple analogies to explain complex concepts like tax brackets, effective and marginal tax rates and cleverly classify tax deductions into gold, silver and bronze. Of course, we want as much gold as possible, but if we can’t get gold, silver or bronze ain’t so bad. Also, they have ignored the minutiae and mind-numbing detail that puts people off taxes in the first place and firmly keep the focus on the important concepts.

The book is organized around significant life events (hence the title) and allows the reader to just skip to the relevant chapter. If you just got married, skip to Chapter 6 and if you are already having a baby, just refer to Chapter 7. The tax rules that apply to each life-stage are explained clearly and helpful sections point out where many make mistakes, which forms to use when filing the tax return and where to get more information.

The book can be ordered from the Dollars From Change website for $24.95 plus shipping and handling and would make an ideal gift for anyone wanting to get a handle on their taxes. The book’s Table of Contents is available here.

Book Review: The Investment Zoo

December 13, 2005

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Stephen Jarislowsky, the octogenarian co-founder of the money management firm Jarislowsky Fraser and one of Canada’s most respected investors, talks about a wide range of investing topics in a book that is conversational in style and is only 152 pages long.

Mr. Jarislowsky starts out with a short personal history and then launches into a scathing attack on the American War on Terror (“McCarthyism on a major scale”), overpaid and underperforming CEOs (“Corporate Crooks”), stock options (“legal theft”, “pilfering”), the board of directors (“lackeys of management”), auditors (“in cahoots with management”) and the greedy practices of the investment business (frequent trading, high mutual fund fees).

To navigate the investing jungle profitably, he offers some timeless advice for investors: start saving early to allow compounding to do its magic and invest most of it in individual, high-quality stocks; avoid frequent trading or trying to time the market; focus on dividends (“Management, workers, the banks, the tax collectors, the community – everyone gets paid, even the board of directors. So why not the shareholder?”).

In a short chapter titled A Tale of Three Stocks, my favourite in the book, Mr. Jarislowsky talks about investments of $2000 each in Reynolds Metals (an aluminum producer), United Airlines and Abbott Laboratories that he made 50 years ago to illustrate his preference for “premium high compound growth non-cyclical stocks”. The rest of the book mostly deals with offering readers a sound DIY approach to investing.

The book may not be a must-have item on the bookshelf but it is definitely worth reading.

Book Review: Stop Working

April 30, 2005

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I finally managed to borrow the book, Stop Working: Here’s How You Can!, from our local public library. It is self-published by Derek Foster, who retired at the ripe old age of 34 and promises to teach how anyone can do it.

The book reveals that Derek was able to retire early by saving regularly and diligently, and investing the proceeds in the stock market. Most of the book deals with his investment style, which he calls “Show me the money!” investing.

The author’s preferred investment vehicles are Canadian financials (banks, insurance, mutual funds), blue-chip American multi-national corporations, REITs and income trusts (power, pipeline and energy). I think the author’s strategy of investing in companies with a long history of dividend increases and his view of stocks as an investment in future cash flows are the secrets to his success.

There are no new “secrets to success” in the book (which is a good thing). I would definitely recommend the book to anyone who is just starting to invest in the market.