Financial independence

The Advocate, Wednesday March 17, 1993

This is the second article in a monthly series of "Money Matters". This column will help to simplify the complicated world of money and investing.

Investing! Investing! Do those words scare you? Are you among the up to 90 per cent of Canadians who don't know the first thing about stocks and bonds, who don't know anything about preferred shares, warrants and all those other investment terms? And you really don't care to know, because you would end up confused.

Besides, you do not have the time to devote to studying. You have too many commitments with your job and family.

Well... this column is designed for you. I hope to share simple ideas with you that will help you achieve financial goals, save taxes for you and your family, and build a sound financial future.

I hope to be able to show you how to acquire a million dollars, whether you are a $10 or $30 per hour worker, or a $200 per hour businessman.

Other than purchasing some Canada Savings Bonds (during World War II they were called Victory Bonds) and letting a friend of mine convince me to invest $2550 into 200 shares at 12 3/4 of a "hot sure to go up" stock, I know very little.

Two years later, I finally sold the 200 shares of the "hot stock" for 11 1/4. My cheque was for $2185. The stock sold for a total of $2265 less $65 commission. A loss of $285. Paying that commission after losing $285 really hurt. My total loss was $365.

When my father died, I discovered he owned some stocks that his mother had purchased in 1962, 1963 and 1969. I asked a stockbroker friend of mine if he could tell me what they were worth. He finally tracked them down and informed me they had no value. The companies were insolvent and had been dissolved years ago. Why was my father still holding on to them? They are now on my office wall as a reminder never to buy stocks directly. It is very expensive wallpaper. That's investing?

On my investments, I do a minimal amount in the way of studying. I don't have the time. I really don't understand a warrant from a preferred. I simply sit back and enjoy the results. Over the past 10 years most of my investments have averaged over 12 per cent or 15 per cent per year.

I lose very little to taxation, so that I end up with an after-tax gain of 10 to 12 per cent, and do not lose "purchasing power" but actually stay ahead of inflation.

I have achieved this through using professionals who do know how to invest. They represent some of the best financial minds, not only in this country, but throughout the world. The investment funds they manage are some of the best performing ones available. I like to call investing this way as the "lazy man's way to riches."

I'm really not that lazy, but anyone who knows me knows I'd rather be on the golf course - than worrying about my investments. I hope to share similar ideas with you in future columns.

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