2013 march madness_mythsmysteriesandmoneymakingmethods  v2.1
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2013 march madness_mythsmysteriesandmoneymakingmethods v2.1

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How to not lose all your hard earned money to inflation, fees and taxes.

How to not lose all your hard earned money to inflation, fees and taxes.

How did the rich make their money and how do they invest it and hold onto it?

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  • Excellent Andrew. In my experience travelling around a little, a financial planner always structures his/her advice with a bias towards the country they are in when there is huge, lower risk opportunities, in other countries, and the exchange can play in your favour, especially if you're investing with strong Canadian $'s
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2013 march madness_mythsmysteriesandmoneymakingmethods  v2.1 2013 march madness_mythsmysteriesandmoneymakingmethods v2.1 Presentation Transcript

  • 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 dont 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© Andrew Waitman 2013 06/03/2013
  • Life Stages 4 Dependent Independent Interdependent Autonomous© Andrew Waitman 2013 06/03/2013
  • Time PIE 5 Time Spent Per Day Work Sleep Necessary Activities Less Important Discretionary Activities Important Discretionary Activities© Andrew Waitman 2013 06/03/2013
  • Discretionary Time 6 Intimate Extended Current Future Family Family Enjoyment Investment© Andrew Waitman 2013 06/03/2013
  • Income PIE 7 Discretionary Income After Tax Necessities Nice to Have Luxuries Savings© Andrew Waitman 2013 06/03/2013
  • Discretionary Spending 8 Home/Food/Clothes Kids/Vacation/Social Indulgence/Fun/Vices Future Investment© Andrew Waitman 2013 06/03/2013
  • 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)© Andrew Waitman 2013 06/03/2013
  • How to Invest 10 Do it Hybrid- Investment Passive Yourself Investment Advisor Strategies Advisor© Andrew Waitman 2013 06/03/2013
  • Where do you spend your time? 11© Andrew Waitman 2013 06/03/2013
  • Scourge of Wealth Creation 12 Inflation Fees Taxes© Andrew Waitman 2013 06/03/2013
  • What is Inflation in Canada? 13© Andrew Waitman 2013 06/03/2013
  • What is Inflation in Canada? 14© Andrew Waitman 2013 06/03/2013
  • What do you earn on your savings in Canada? 15© Andrew Waitman 2013 06/03/2013
  • What do you earn on your savings in Canada? 16© Andrew Waitman 2013 06/03/2013
  • How to Become Really, Really Rich 17 Inherit Plunder Build Invest It It It It© Andrew Waitman 2013 06/03/2013
  • 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.© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • What does Risk Taking mean? 20 Low Medium High Reckless Risk Risk Risk© Andrew Waitman 2013 06/03/2013
  • Why Invest in a Home? 21© Andrew Waitman 2013 06/03/2013
  • Equity Investing Advice in 60 Seconds 22 Buy Buy Buy Banks Pillars what you Buy© Andrew Waitman 2013 06/03/2013
  • Why Buy Canadian Banks? 23© Andrew Waitman 2013 06/03/2013
  • Why Buy Canadian Banks? 24 Dividend Inflation Oligopoly Relatively Tax Protection low Risk Treatment© Andrew Waitman 2013 06/03/2013
  • Why buy Canadian Banks Stocks NOW? 25© Andrew Waitman 2013 06/03/2013
  • Why buy Canadian Banks Stocks NOW? 26© Andrew Waitman 2013 06/03/2013
  • Public Equity Investing Methods 27 Discount Full Mutual Exchange Index Broker Service Funds Traded Funds Broker Funds© Andrew Waitman 2013 06/03/2013
  • Public Equity Investing Choices 28 Industry Size of Geography or Sector Company© Andrew Waitman 2013 06/03/2013
  • Where you are at matters 29SAVINGS CALCULATOR:http://www.financialpost.com/personal-finance/calculators/savings/index.html© Andrew Waitman 2013 06/03/2013
  • More Ambitious 30© Andrew Waitman 2013 06/03/2013
  • 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!© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 321. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • Risk vs Uncertainty 34Risk is present when future events occur withmeasurable probabilityUncertainty is present when the likelihood of futureevents is indefinite or incalculable© Andrew Waitman 2013 06/03/2013
  • 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 dont 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.© Andrew Waitman 2013 06/03/2013
  • Objective vs Subjective probability 36Subjective probabilities differ from person to person. Because theprobability is subjective, it contains a high degree of personal bias.An example of subjective probability could be asking New York Yankeesfans, before the baseball season starts, the chances of New York winningthe world series.Objective probability is the probability that an event will occur based ananalysis in which each measure is based on a recordedobservation, rather than a subjective estimate. Objective probabilities area more accurate way to determine probabilities than observations basedon subjective measures, such as personal estimates.© Andrew Waitman 2013 06/03/2013
  • Equities Volatility Index 37© Andrew Waitman 2013 06/03/2013
  • Personal Risk Tolerance Assessment 38 http://www.myrisktolerance.com/riskprofilingsystem© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 391. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • 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.© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 411. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • 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.© Andrew Waitman 2013 06/03/2013
  • New On-Line Currency 43© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 441. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 461. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • 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.© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 481. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • How the rich beat Taxes 51 OFF SHORE ARMIES OF SMART INVESTING TAX LAWYERS INVESTING & DRIVE UP ACCOUNTANTS ASSET VALUES AND DECREASE INCOME© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 521. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 541. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • Eating Cat Food in Retirement 55 Bad Luck Inattention Bad All Eggs in Investments One Basket© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 561. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • Who do you listen to and why? 57 People People Great Yourself You with the Track Trust Least Records Bias© Andrew Waitman 2013 06/03/2013
  • Major Personal Financial Planning Topics 581. Risk, volatility and you2. Financial Planners3. Investment Options (Cash, Bonds, Stocks, Funds, Real Estate)4. Cost of Investing5. Equity Investing6. Tax Planning & Inflation7. 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© Andrew Waitman 2013 06/03/2013
  • 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.© Andrew Waitman 2013 06/03/2013
  • 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 dont 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?© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • Safest Place when… 62 No time to plan! Buy a home and keep upgrading then down grade in retirement.© Andrew Waitman 2013 06/03/2013
  • Stocks vs Housing 63© Andrew Waitman 2013 06/03/2013
  • Most recent Decade 64© Andrew Waitman 2013 06/03/2013
  • 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?© Andrew Waitman 2013 06/03/2013
  • Pay down debt/mortgage first? 66 YES. Almost always. Always consider tax implications. Cost of capital. Risk vs return vs cost of capital© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • 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‖© Andrew Waitman 2013 06/03/2013
  • 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© Andrew Waitman 2013 06/03/2013
  • Worth Reading 70© Andrew Waitman 2013 06/03/2013
  • How to invest in Stock Markets 71© Andrew Waitman 2013 06/03/2013
  • Read Good Books 72© Andrew Waitman 2013 06/03/2013
  • The Wealthy Barber 73© Andrew Waitman 2013 06/03/2013
  • Canada’s Gordon Pape 74© Andrew Waitman 2013 06/03/2013