There's a business meeting going on at the table next to where I'm sitting. It must be a sales type meeting because this one guy has not stopped talking ever since I started eavesdropping fifteen minutes ago. I can actually only see the talker because there is a post blocking my view. I can only assume there is someone else seated with the talker, as I have yet to hear any noise from behind the post. Maybe he's practicing his pitch. From what I've heard so far, not bad.
I think the talker is some type of mortgage broker. He is slinging around fancy financial terms like fixed versus variable rates, amortization, and four year versus five year terms. He thinks homeowners would save a lot of money if they chose shorter terms for their mortgages. According to him, 90% of people with a five year term end up breaking their mortgage and paying the substantial penalties. The banks are the ones getting richer because of our failure to understand human nature. I'm listening because I am genuinely interested. Personal finance stuff has been a hobby of mine since the early 1990's.
About the same time Lynda and I were buying out first home, which was in prestigious Oakville, Ontario, I was also lucky enough to have a highly specialized duty as a RCMP officer. I was responsible for protecting foreign diplomats and their families. I was so good at sitting in my white and blue police cruiser, as it was parked on beautiful tree lined streets in upscale Toronto neighbourhoods, that no terrorist would dare think of lashing out at our foreign guests. Even neighbours would think twice about running next door to ask for a cup of sugar. The Mounties were on duty and we were vigilant! Remember, this was a decade before the Twin Towers fell on September 11th. My stint in that unit even predated one of the first home grown terrorist acts, the Oklahoma City bombing. Terrorism used to be a very foreign word to North Americans. Okay, I may be exaggerating a little about my extreme vigilance. I actually learned to keep one eye peeled for suspicious activity, while keeping the other eye fixed on the pages of the books I enjoyed. Many of these were finance books. I will always fondly remember my first - The Wealthy Barber, by David Chilton. It's a must read for anyone over the age of fifteen.
I'm somewhat of an expert when it comes to money matters. Here are a few things that I have learned over the years: (1) don't purchase mortgage life insurance from your bank. It is generally more expensive and the payout actually declines as you pay down your mortgage. It is so much better to purchase a term life policy.
(2) managing investments is much more difficult than it appears. I've made just about every mistake possible. I've been sold products I didn't need, have been overcharged on commissions, and I had sleepless nights when I tried to self-manage my account and those of family and friends.
My main issue with investing, and with all financial decisions, is that you need a crystal ball in order to do it right. We make decisions today based on what we think things will be like at various points in the future. I have yet to come across a strategy that has the 100% flexibility needed to match life's ever changing circumstances. When kids come along, do you start putting away money for their education, pay off debt, or live a little? All of the commercials and articles make you out as a bad parent if you can't pay for some, if not all, of your kids' post secondary education. They're telling us that all you need is $50,000 or so per kid. No sweat! Here's another of life's hurdles. When mom had to turn her RRSP into a RRIF upon turning 71and wanted some income from her investments, even my "expertise" meet its match. Mom deserved the best, the government wanted its share, and I was confused. I don't own a crystal ball and I have never actually seen one.
Instead of smashing crystal, through sheer frustration, after making bad decision after bad decision, you need to focus on preventing seven years (and decades) of bad luck by finding a trusted professional. Unfortunately, that is easier said than done. Many are great people and superb advisers, but the companies they work for mandate a sales approach versus a client based approach. The adviser's success is based on generating revenue for the firm and not in making and saving money for the client. I have no issue with paying money for solid advice and guidance, but my welfare must come before that of the adviser. God knows I have lost enough money over the years, despite my well meaning intentions, so paying someone who is on my side should actually save me money.
I am now truly a financial expert. It happened the moment I found the right person to look after the financial affairs of my family. I get to drop by his office a couple of times a year for a cup of tea. I get to banter back and forth on the latest financial trends, which helps me feel like I'm retaining my expert status. I may even recommend a few good stocks that I heard being discussed at my favourite coffee shop. That's where the adviser is invaluable. When I was the boss, I could buy a stock simply by logging onto the internet. Thousand of shares of Nortel, Enron and Bre-X could be had with a few simple clicks of the mouse. Investing was fun and somewhat reminiscent of playing those video gaming machines that can be found in every pub and bar in Newfoundland. Now you see your money - now you don't. My adviser has taken the fun out of my investing and I'm so much better off because of it.
Mr. Talker seems to be wrapping up his presentation. He sure can talk! He must be intelligent. I'd be crazy not to follow his advice. I think I'll call my adviser and have him start the paperwork to get me out of my five year mortgage term. It'll cost a bit, but Mr. Talker says it's worth it. Wait a moment.... I just happen to get a glance of his business card when it fell on the floor beside my desk.. eh, table. I may want to rethink following his advice. His business card read "Mr. Talker, VP of Sales & Marketing, The Crystal Ball Company of Canada."
No comments:
Post a Comment