Blogs & Comment

Contrarian finances and investing

Toronto chartered accountant David Trahair has a new book coming out in August: Enough Bull: How to Retire Well without the Stock Market, Mutual Funds or even an Investment Advisor. It should be another zinger, a frontal assault on cherished shibboleths in the personal finance and investing fields.
You may recall his first book of a few years ago: Smoke and Mirrors: Financial Myths that Will Ruin Your Retirement Dreams. He took aim at financial planners and advisers, labeling them salespersons using scare tactics and rule of thumb methods to vacuum money out of the pockets of clients.
Take the rule that one needs 70% of their income or $1 million to retire. Trahair argues 40% will do the trick. He also challenges the mantra that one does not have to worry about investing in stocks over the long run. Getting into stocks is like signing up for a ride down the Niagara River where eventually one faces the prospect of going over the falls; the few extra percentage points to be earned (in theory at least) just arent worth the volatilityand uncertainty over the final outcome. And paying down your mortgage would be better than contributing to RRSPs: it effectively yields a certain return of 5% to 7% as opposed to the risky returns in stocks and lower rates on fixed-income.
Trahair has put the introduction to his new bookonline at his website and it gives a few hints what will be in it. Here is what will likely be on the hit list:

  • Smith Manoeuvre and borrowing to invest
  • Maximizing RRSP contributions each year
  • Stocks for the long run
  • Getting rich automaticallyby skipping the daily Starbucks
  • Paying an advisor 2% a year to beat the market

What will be the investment strategy recommended? Well, stocks look like a no go. That leaves fixed income, most likely a ladder of GICs.