2013 march madness_mythsmysteriesandmoneymakingmethods v2.1

Personal Financial Planning
H O W S H O U L D W E S AV E F O R O U R F U T U R E ?

P R E S E N T E D B Y AN D R E W WAI T M A N

Personal Finance in 30 Seconds
2

 What is your philosophy around saving for retirement? You should

 Where is the safest place to invest your money (that gives the best return) when
you don't have much time to plan for retirement? Bank
Stocks, iSharesETFs, Mutual Funds, Index Funds
 Besides Pythian what are some of the best investments you have made? High
Technology & High Fashion Stocks.
 What is your advice for people who are working towards paying off large debts -
should they be putting money down on debts before saving for retirement? Yes
 What was the best advice you ever received about saving? Balance savings
with living.
 What are some of the worst mistakes you have seen people make about money ?
i) NOT INVESTING THE TIME. Ii) NOT SELLING THEIR LOSER STOCKS.

© Andrew Waitman 2013 06/03/2013

Money Management Matters
3

Time Income Assets Skills


Life Stages
4

Dependent Independent Interdependent Autonomous


Time PIE
5

Time Spent Per Day

Work

Sleep

Necessary Activities

Less Important Discretionary
Activities
Important Discretionary
Activities


Discretionary Time
6

Intimate Extended Current Future
Family Family Enjoyment Investment


Income PIE
7

Discretionary Income After Tax

Necessities
Nice to Have
Luxuries
Savings


Discretionary Spending
8

Home/Food/Clothes Kids/Vacation/Social Indulgence/Fun/Vices Future Investment


Risk Appetite Asset PIE
9

Risk Application per Asset

Stable Low Risk (eg.Home)

Low Risk (eg. Emergency
Funds)
Medium Risk (eg. Wealth
Sustaining Funds)
High Risk (eg. Wealth
Creating Funds)
High Risk (eg. Rapid Wealth
Creating)


How to Invest
10

Do it Hybrid- Investment Passive
Yourself Investment Advisor Strategies
Advisor


Where do you spend your time?
11


Scourge of Wealth Creation
12

Inflation Fees Taxes


What is Inflation in Canada?
13


What is Inflation in Canada?
14


What do you earn on your savings in Canada?
15


What do you earn on your savings in Canada?
16


How to Become Really, Really Rich
17

Inherit Plunder Build Invest
It It It It


Powerful Ideas in Investing
18

There are no Know thyself INVEST Wealth Luck Plays a
silver bullets RISK TIME - You Creation Role Too
TOLERANCE get out what Takes Time
you put in.


Major Asset Investment Themes
19

Real Estate Bonds Equity Exotics
Residential Gov’t Private Derivatives
Commercial Corporate Public Currencies
REITs Gold
Land Wine
Buildings Art


What does Risk Taking mean?
20

Low Medium High Reckless
Risk Risk Risk


Why Invest in a Home?
21


Equity Investing Advice in 60 Seconds
22

Buy Buy Buy
Banks Pillars what
you Buy


Why Buy Canadian Banks?
23


Why Buy Canadian Banks?
24

Dividend Inflation Oligopoly Relatively
Tax Protection low Risk
Treatment


Why buy Canadian Banks Stocks NOW?
25


Why buy Canadian Banks Stocks NOW?
26


Public Equity Investing Methods
27

Discount Full Mutual Exchange Index
Broker Service Funds Traded Funds
Broker Funds


Public Equity Investing Choices
28

Industry Size of Geography
or Sector Company


Where you are at matters
29

SAVINGS CALCULATOR:
http://www.financialpost.com/personal-finance/calculators/savings/index.html

More Ambitious
30


Financial Planning 101
31

1. Have a plan. Be explicit.
1. Goals, objectives, short term, long term
2. Short, medium, long term
2. Do some homework
1. Understand products and options
2. Understand use/value of financial advisors
3. WEB is a treasure trove of information
3. Beware of the hidden costs, inflation & After Tax Matters
1. Most things have a cost…understand what are they.
2. Understand the after tax returns. Single biggest variable under your control.
4. Save regularly toward some goal.
1. “Bad Event” Fund
2. Home / Holiday / Cottage / Investment Portfolio
3. Kids Costs / Education / Parents Costs
4. Retirement / Travel / Opening a Business (eg. Bed and Breakfast, Coffee Shop)
5. Live and Enjoy the NOW!


Major Personal Financial Planning Topics
32

1. Risk, volatility and you
2. Financial Planners
3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)
4. Cost of Investing
5. Equity Investing
6. Tax Planning & Inflation
7. How do people become really wealthy?
8. When do you end up eating cat food in retirement?
9. Who should you listen to and why?
10. Spouses, Partners and Financial Congruence


1. Risk, Volatility and You
33

 What can you afford to lose? And in what time frame?
 Where are you in your life for risk appetite?
 You can likely absorb risk more than you think
 Inflation erodes your capital…requiring you to take some
risk
 Markowitz portfolio theory.
 Short term vs long term volatility
 Consider dollar cost averaging to smooth investment risks


Risk vs Uncertainty
34

Risk is present when future events occur with
measurable probability

Uncertainty is present when the likelihood of future
events is indefinite or incalculable


Risk and Uncertainty
35

Risk has an unknown outcome. But we know what the underlying
outcome distribution looks like.

Uncertainty also implies an unknown outcome. But we don't know
what the underlying distribution looks like.

So games of chance like roulette or blackjack are risky, while the
outcome of a war is uncertain.

Objective probability is the basis for risk, while subjective
probability underlies uncertainty.


Objective vs Subjective probability
36

Subjective probabilities differ from person to person. Because the
probability is subjective, it contains a high degree of personal bias.
An example of subjective probability could be asking New York Yankees
fans, before the baseball season starts, the chances of New York winning
the world series.

Objective probability is the probability that an event will occur based an
analysis in which each measure is based on a recorded
observation, rather than a subjective estimate. Objective probabilities are
a more accurate way to determine probabilities than observations based
on subjective measures, such as personal estimates.


Equities Volatility Index
37


Personal Risk Tolerance Assessment
38

 http://www.myrisktolerance.com/riskprofilingsystem


39

5. Equity Investing


Financial Planners
40
 Rarely add value or are worth what they charge…
 But if you want to pay no attention to your savings…they will pay
slightly more attention to your savings ‗cause it‘s their job!
 Unless you have substantial assets, complex context
(Insurance, Tax, Homes, Hold Co) etc. or have absolutely no time to
watch your savings strategy, I would advise against using FPs.
 They are a tax on your savings above inflation
and taxes.


41

5. Equity Investing


Asset Investment Alternatives
42
 Bank Accounts, Money Market Accounts
 Bonds/Fixed Income (Sovereign, Municipal, Corporate)
 Real Estate
 Mutual Funds – 100‘s of flavors, high cost
 ETFs - 100‘s of flavors, low cost
 Stocks - Publicly traded National/International
 Private Equity - Local or other business
 Complicated and exotic instruments
 Currencies, Commodities, Derivatives

 Art, Jewelry, Gold, Whiskey, Wine, Rare collections, On-
line currencies.


New On-Line Currency
43


44

5. Equity Investing


Cost of Investing
45

 Beware of both the hidden and explicit costs
 Self-Directed using ETFs are now most efficient way to
invest
 Financial planners can be very expensive for cost to value
 After inflation and after tax returns are relevant to
you because purchasing power decreases over
time


46

5. Equity Investing


Stock Market Investing
47

 Over the long term (15-20 years) equity investing IS the
best risk adjusted returns—The Warren Buffet method of
making money
 Many books on the subject
 ETFs are best/most efficient way to invest
 Mutual Funds are expensive and rarely beat the markets
over the long term
 Invest in companies you know eg. Lulu
Lemon, Starbucks, TD Bank etc.


48

5. Equity Investing


Tax Planning/Inflation
49

 Critical mass matters due to inefficiency
 Inflation erodes purchasing power. Make sure you
understand this!!!!
 Tax efficient investment can dominate long term returns.
Income vs Capital Gains. Tax driven vehicles vs
―normal‖ investments


How the rich beat Inflation
50

ASSET VALUES OWN NATURAL
WHICH TRACK BUSINESSES INFLATION
TO INFLATION THAT INCREASE HEDGES
REVENUE -Land
AHEAD OF RATE
OF INFLATION -Gold
-Businesses
-Art


How the rich beat Taxes
51

OFF SHORE ARMIES OF SMART
INVESTING TAX LAWYERS INVESTING
& DRIVE UP
ACCOUNTANTS ASSET VALUES
AND
DECREASE
INCOME


52

5. Equity Investing


How do people become really wealthy?
53

 Scarce resource control/ownership
 eg. Real Estate Accumulation/Landlord/Building etc.
 Business Founding/Creation/ownership
 Wealth Management at Scale
 Anywhere you are paid as % with large cash flows
or you own % of businesses
 Celebrity at scale
 Actors, Athletes, Authors, Artists
 Local monopoly/oligopoly over time
 Car Dealerships


54

5. Equity Investing


Eating Cat Food in Retirement
55

Bad Luck Inattention Bad All Eggs in
Investments One Basket


56

5. Equity Investing


Who do you listen to and why?
57

People People Great Yourself
You with the Track
Trust Least Records
Bias


58

5. Equity Investing


Spouses, Partners, Financial Plans
59

 Highest source of stress in relationships
 Make sure you share some financial goals eg. Kids
education, savings amount agreement
 Divorce is highly probable…keep some financial
awareness/independence. Prenups are good.
 When not divorcing, cohere financial plans when possible.


Your questions to me… in more than 30 seconds
60

 What is your philosophy around saving for retirement?
 Where is the safest place to invest your money (that gives the best
return) when you don't have much time to plan for retirement?
 Besides Pythian what are some of the best investments you have made?
 What is your advice for people who are working towards paying off
large debts - should they be putting money down on debts before saving
for retirement?
 What was the best advice you ever received about saving?
 What are some of the worst mistakes you have seen people make about
money?


Philosophy
61

 Yes.
 My way is not your way.
 Take care of living. Then take care of retirement.
 What is retirement?
 Avoiding cat food?
 The world in 40 – 20 – 10 – 5 years will be v different
 1971 – 1991 – 2011 – 2006


Safest Place when…
62

 No time to plan!
 Buy a home and keep upgrading then down grade in
retirement.


Stocks vs Housing
63


Most recent Decade
64


Best Investments I have made?
65

 When I sold a gain.
 When I invested in people not ideas.
 When I invested in Vertex One/John Theissen
 When I don‘t get too clever.
 When I purchased great stocks
Banks, Starbucks, etc. after a big crash eg.
Starbucks?


Pay down debt/mortgage first?
66

 YES. Almost always.
 Always consider tax implications.
 Cost of capital.
 Risk vs return vs cost of capital


Best Advice
67

 Warren Buffett investment strategy, duh!
 Stay away from trends/crowds/media
 You always don‘t know what you don‘t know
 Most people are bad sellers as opposed to bad
investors
 Real wealth is created in healthy growing
businesses over the long term
 The legal and accounting burden of ―doing
exotic‖ is rarely worth the tax and cost in time
and dollars

Worst Mistakes
68

 Holding on to a bad investment/decision
 Not selling a great return. (e.g. Getting greedy)
 Getting caught up in the crowd euphoria when the
going is good
 Bulls make money, Bears make money, Pigs get
slaughtered
 Not thinking about everything ―after tax and after
inflation‖


Finding Resources on-line
69

 http://www.theskilledinvestor.com/ss.category.12/financial-planning-process.html

 http://www.financialpost.com/personal-finance/calculators/savings/index.html


Worth Reading
70


How to invest in Stock Markets
71


Read Good Books
72


The Wealthy Barber
73


Canada’s Gordon Pape
74


2013 march madness_mythsmysteriesandmoneymakingmethods v2.1

Recomendados

Recomendados

Mais conteúdo relacionado

Último

Último (7)

Destaque

Destaque (20)

2013 march madness_mythsmysteriesandmoneymakingmethods v2.1