Thursday, November 3, 2016

Money Show 2016 - Derek Foster

Derek Foster's talk was entitled "How Any Idiot (or non-idiot) Can Become a Millionaire: Your 10 Step Guide." Derek Foster is an author and wrote The Idiot Millionaire.

You can decide to be wealthy. What you need to decide is what is important to you. Read the book the Millionaire Next Door Thomas J. Stanley. You can see reviews of this book here.

Basically you need to decide if you want time or stuff. Money can give you time. Budgeting does not work if you do not want to do it. If you do a budget you hate, you will not follow it. When you go to buy stuff ask yourself if this item is going to enhance your life.

What you need to do is spend less than you earn. Studies show that happiness equals less TV and people are less happy that watch TV. Do no buy crap.

There is a difference between being frugal and cheap. If you are frugal you are careful how you spent your money. If you are cheap you will deny yourself what you really want and you save in a bank because money does not grow on trees. Your biggest expense is taxes. This is non-life enhancing spending. The worse thing to do is to take a job because a lot of your pay goes to taxes. Other money goes into commuting to a job and more for clothes for a job. Do not invest in a Mutual Fund with 2.5% in Fees. Instead look at their top ten investments and invest in these items.

Do not worry about starting our small, say with $100.00. Start early and start DRIPs with your stocks. Some investors try to make a quick gain. If you plant a tree you harvest the fruit, you do not cut the tree and sell for firewood. Dividends are like that. DRIPs allow you to buy more shares without paying fees. Grace is a woman who bought Abbot Laboratories and years later it was worth $7M. You can read her story at Wikipedia.

Focus on idiot proof stocks. Do not be attracted to complicated ideas. Ink pens would not work in outer space. The American spent millions of dollars to produce a pen that worked in outer space. The Russian used pencils.

People thought that the internet was the future and so bought things like Nortel and lost. You are further ahead buying idiot proof stocks, like a beer stock. Nortel was too complicated. Another type of stock is Colgate which makes toothpaste that everyone uses. What the Fed does, does not affect this sort of stock. Colgate has increased their dividends every year for 50 years. With idiot proof business, no matter what happens they will be ok. Another stock is Visa. 90% of all people have this card. Banks pay a fee to Visa to use their cards. Retailers pay a fee to Visa to use their cards. Visa gets a very small piece of each transaction fee.

Look for other similar opportunities. Remember to keep it simple. Usually the Canadian Dollar is lower than the US$. He remembers only twice when the CDN$ was higher than the US$ which was a few years ago and once in the 1970's.

Be patient with the market. Markets are kind of expensive at the moment. Put options are good at the moment. A put is a promise to buy at a certain price over, say the next 6 months. You pay a premium for the put option. He tends to buy and hold stock because it is tax efficient. You only pay tax when a stock is sold.

You should have a destination plan. It is boring investing that works. You need to have realistic plan. You need to put a certain amount of money in your plan each year. Look at things like the Saskatchewan Pension Plan. Anyone can join this plan. Stick to your plan and do not do anything stupid. Stick to simple things when investing. You can invest in companies you hate, like Bell or Rogers because everyone has to have their products.

On my other blog I wrote yesterday about Pason Systems Inc. (TSX-PSI, OTC-PSYTF)... learn more. Tomorrow, I will write about Molson Coors Canada (TSX-TPX.B, NYSE-TAP)... learn more on Friday, November 4, 2016 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter.

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