Just because you may have a pension, doesn’t mean you shouldn’t have an RRSP. You also should have a TFSA and your only financial goal should be to be out of debt by the time you retire.

If you have an emergency fund, do you have a plan on when you might use it? Simply having money sitting somewhere with no plan on when it should be used, is really just a savings account.

An RRSP is simply a tax deferral savings program. It works best if you use it for your retirement, but that is the main goal of it. You can’t use it like a TFSA, but it is not solely for your retirement either.

The TFSA is a badly named program. It is Tax Free, and you can save in it, but it is not only a savings account. Many banks are fooling you into thinking the program is a 1 savings account. It is not. Open a TFSA with a trading firm like Questrade, Directline or others.

Debt is simply borrowing money from your future self. I know it is not in vogue to say debt is a bad thing, but it is. Your first goal, should be to deaden your debt load, the rest of the financial plan is gravy.

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Financial Echo Chamber

Many of us seem to be living in a financial Echo Chamber. We have friends, and family who we agree with, and we read financial articles the reinforce our financial plans.

What do I mean by Echo Chamber?

“an environment in which the same opinions are repeatedly voiced and promoted, so that people are not exposed to opposing views…”

Dictionary.com definition (2nd)
Amazon Link to Book

Michael James pointed me at a very good book by Annie Duke, “Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts“, which is quite an eye opener. Ms. Dukes is known as a world class Poker Player but she was a Doctoral Candidate in Psychology before that, and she writes in a very entertaining way.

If all you do is listen to people who agree with your perspective, how can you be sure you are on the right path? Without exposure to differing perspectives and ideas, how can you be sure you are that correct?

As I get older, I seem to be slowly turning to Ms. Dukes perspective on seeing differing points of view. I have never enjoyed hearing arguments that disagree with my inner beliefs, but I have learned it is important to hear them. There is a need to empathize in some fashion with opposing viewpoints to at least understand where they came from.

Empathy does not imply agreement, it is simply understanding it.

For a long time I had a perspective on folks who got into financial troubles, was usually of their own making, but I now think that is a flawed perspective. After living through my own lay off I started questioning my theories, but after talking with Doug Hoyes and reading his book, “Straight Talk on Your Money: The Biggest Financial Myths and Mistakes . . . and How to Avoid Them” (Amazon Link) I really realized how incorrect my perspective was.

Understanding our own biases is an important part of growth.

Examples

If you’d like a few examples where you could benefit from listening to opposing money viewpoints?

  • If you are an Index Fund investor, read some of the active trading newsletters out there, to at least understand their perspectives on the markets.
  • If you believe your house is your biggest investment, maybe read some of the interesting studies on the perspectives of lifetime renters. Their perspectives on the freedom of not owning a home are quite thought provoking.
  • If you live in one of the large cities of Canada and are of the perspective that Real Estate can only go up in price, there are contrary writers to that perspective as well.

Everyones Opinion Matters?

I am not saying you should immerse yourself in contrarian perspectives, but it is important to at least read some different perspectives on things. Understanding their perspectives will help you have a better view on the entire story.

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More Financial Advice from a Comedian

My wife and I thoroughly enjoyed LetterKenny Live, and as part of the show is stand-up from K. Trevor Wilson. Mr. Wilson’s comedy is very topical and he had financial advice for young folks that resonated with us.

Financial Advice from a Comedian
K. Trevor Wilson

“… when you are young, eat in, but poop out…”

K. Trevor Wilson – Actor and Comedian

This is a paraphrase, I don’t remember his exact words. Don’t be too literal when reading the quote.

When you are young, eating in will save you money, and teach you how to survive in the world. It will give you culinary skills and teach you how much food costs.

When you start living by yourself, there are a lot of expenses, including toilet paper. If you can hold it, do your pooping at work or at external sites, but buy nice toilet paper for the times you can’t hold it, at home.

This is a little extreme (or esoteric) in terms of financial advice, but it was very funny (to me) and  topical. I am starting to think that comedians are better financial advisors than a great many financial folks I have met in my travels.

I would also recommend seeing Mr. Wilson’s show (or on Letterkenny) he is very funny.

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Christmas Advice: How to Deal with Uncle Frank the Financial Expert

Christmas is only a few days away. We will soon all be getting together with friends and families, to share in this happy season. The big Christmas question this year is how will you deal with your family’s financial expert Uncle Frank ?

Every family has an Uncle Frank (or Aunt Francine). The family member who claims to be a money expert and will chew your ear off about how they are doing well financially. How do you deal with a financial expert like this? You are OK with your investments, you don’t want advice, but if you duck Uncle Frank, Aunt Frieda (the crazy cat lady) will corner you in the kitchen.

Save up to 50% on life insurance.

If you are comfortable with it, you could simply argue with Uncle Frank about how leveraged Hedge Funds are the last thing your 70 year old mother should be investing in, or how the next market crash (or huge gain) may not be due to happen soon, but most folks just want to try to change the subject, or hide in the basement (or drink a lot more eggnog).

financial expert and motivational speaker
Uncle Frank telling some sage financial advice

As a service to my readers, here are some helpful phrases to throw at Uncle Frank. They may help you slow down this  relentless financial expert:

  • I have heard that with Trump’s election, the Russian economy will be making huge gains, so I am planning on putting my money in a Vodka Hedge fund.
  • Someone I work with has got me some inside information on how bees (the insect) will soon all be gone, so I should invest in honey futures (aka the Bee Movie fake out).
  • Given the exploding prices of houses and condos in Toronto and Vancouver, I have decided to live in a Van down by the river (aka the Chris Farley method).
  • I have a great multilevel sales opportunity that guarantees me huge paybacks, if I can get other folks to join in on this rare chance to make money, can I sign you up ?

Christmas is a wonderful time of the year, catch up on your family’s news, but try to leave money discussions out of things. Are there any other escapes from Uncle Frank I missed ?

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Advice from a Rich Man

Why don’t I trust advice infomercials about money, or better still alleged interviews about money on “news” shows? I think my overlaying point of view is a simple one (if not overly paranoid), that, if I knew how to make money (unfailingly) I wouldn’t tell anybody about it, until I couldn’t make any more money from it.

Financial Scam
Wonder if Fish Realize It’s a Scam?

Example, if I devised an algorithm that could beat the market every time, if I told a whole bunch of folks about it, I would then be competing with them and with the market. Unless (of course) my whole scheme was to manipulate the market, by having “dupes” buy the wrong thing.

Under the same reasoning as Groucho Marx’s line, “I would never join a club that would have me as a member” (I am paraphrasing), I cannot believe any “make money fast” scheme, because I think the real scheme is to get you to buy the scheme, not the scheme itself (and from what I can tell there is a lot of money in flogging stupid investing schemes to unsuspecting folk). I guess I am a, “glass is half full (of poison)” kind of guy when it comes to that kind of advice.

Any scheme that claims to be fool-proof, yet they are trying to fool you into buying it, seems to be the greatest dichotomy, isn’t it? Would you tell everyone how to do it, if you figured out how to make money fast?

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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