My eight-album retirement plan

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It is the fall of 1985. My friend Clayton is on the phone; talking up a Run DMC autograph session at the Starsounds record shop on Toronto’s College Street. Sure, I say. I can scrape together $7.

We arrive and Clayton steers me toward a compilation that features the now legendary track Here We Go (Live at the Funhouse). Clayton’s taste is always impeccable, so I follow his lead.

We get to the front of the autograph line. Sixty-six per cent of Run DMC is standing there, right in front of me. Two quick flourishes, a smile and a nod. I look down at my new record, and there they are in thick blue marker. A pair of autographs: one says RUN, the other DMC.


Joseph “Run” Simmons looks me straight in the eye, incredulous. I have offended the world’s most important rap star.

I gave the record to my kid brother – as did Clayton – forever associating mid-1980s hip hop with poor customer experience. Rob has held onto it all these 34 years, thank goodness. I’m sure it’s worth at least a hundred bucks by now.

The truth is it took me most of those three and a half decades to get over the idea that my record collection would provide some degree of long-term financial security. I have a few gems that I long believed would deliver a payday eventually. Here it is: my eight-album retirement plan, complete with net present value.

  1. Elvis Presley: Elvis’ Golden Records – Collectors Gold Vinyl Edition. Released in 1978 on RCA. I lifted this from Mom and Dad’s collection. They were a lot cooler than I was in the 1970s. Current value: $20 or less, depending on which website you visit. (I’ve also got a red vinyl 45 of My Way and America that’s worth maybe $30.)
  2. The Rolling Stones – Original 1964 U.K. Mono Pressing of their Debut. I remember the day I found it, another collector stood beside me looking down his nose. “Terrible condition,” he said, which of course signalled to me that he wanted it. I’ve seen another copy on auction for £1,100, but who knows. Mine actually is in pretty terrible condition.
  3. Nirvana: Bleach – Their Debut on the Independent Label Sub Pop. I was a lot more excited about this one until I learned that the original pressing was on white vinyl. Mine is basic black. Still, it’s an indie Nirvana release from 1989. Worth about $25.
  4. Bauhaus: Bela Lugosi’s Dead – 12-Inch Single on Blue Vinyl. Beautiful to look at and listen to. Again though, only worth about $20.
  5. Simple Minds: New Gold Dream – Gold Vinyl. Really just a big personal favourite. I couldn’t resist the gold version. And when I got it home, I couldn’t bear to stick a record needle in it. Remains completely pristine. And worth a grand total of $1.
  6. Prince: The Black Album – Bootleg CD. This was the one he changed his mind about at the last minute (or so the story goes). Only ever released unofficially. I’ve seen it online for $35.
  7. Never Mind the Bollocks Here’s the Sex Pistols – Autographed by Drummer Paul Cook. To be honest, signed by P. Cook. So who really knows? Call it $10.
  8. Blue Rodeo: Diamond Mine – Autographed by the Full (Original) Lineup. I have to hurry up and sell this because the ink is rubbing off the cover. Interested?

By the way, while my brother and I were sitting on our high-three-figure record collections, Clayton’s kid brother Russell Peters went on to become a world-famous comedian. If I’m not mistaken, he still collects records too.

Kevin Press

Growth vs. Value Investing

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Let’s say you have $1,000 to invest, and you’ve decided you want to make a bet on one company. Two retailers have caught your attention. Company A is an established market leader with 30 years of success under its belt, and it continues to earn strong revenues. Not surprisingly, it’s trading at a premium relative to its competitors because investors want to own a piece of its success.

Company B has been in the business almost as long. Until two years ago, it was among Company A’s strongest competitors. But then an aggressive expansion plan failed and the stock price took a hit. Company B’s share price has been trading at a discount relative to its competitors ever since. Management is telling investors they have a new strategy, but analysts are quick to point out how difficult it can be to grow a retail chain.

Which investment looks better to you? Obviously I haven’t given you enough information to do a proper analysis, but the two scenarios do illustrate the difference between what’s described as a growth stock (company A) and a value stock (company B).

A growth stock is a company that is growing quickly and/or consistently. It’s been doing well. It is expected to continue to do well. And its share price is expected to rise as a result of that success. That last point is important, because not all successful companies see their share price rise steadily.

Remember that the price of a company’s stock is not just a result of what the firm has done to date; it reflects what investors believe the company will earn in the future. So the challenge for growth investors is to estimate future rates of growth, understanding that past performance is not indicative. In fact, an investment is a bet that the company will not just continue to grow, but grow more than investors expect it to.

A value stock is one that is thought to be underpriced relative to its actual potential value. In our scenario, company B has been oversold as a result of the failed expansion two years ago. It has a bad reputation among investors relative to other companies in its industry right now, and so they’re being overly pessimistic about the company’s ability to produce earnings in the future.

Value investors seek companies trading at a 33% or better discount relative to what they believe the stock is worth. In other words, they’re cheap. The trick of course is not only to find these investments, but to identify those cheap stocks that are going to rise in price as other investors come to realize there is greater value there.

All of this means research. When done properly, that means poring over the company’s financial statements, reviewing its management team, looking at its competitive position and that of other companies in its industry. It means looking at the state of the industry itself and of the region or regions in which the company does business.

Benjamin Graham wrote the book on security analysis. Literally. At least he co-wrote it, with David Dodd. Security Analysis, first published in 1934 – along with The Intelligent Investor, originally published in 1949 – helped earn Graham the nickname Dean of Wall Street. Warren Buffett, whom Graham famously mentored, called The Intelligent Investor “the best book about investing ever written.”

The books contributed significantly to Graham’s reputation as the father of value investing, an approach he developed with Dodd in the years leading up to the release of Security Analysis. He contributed a great deal more though, as Benjamin Graham and the Power of Growth Stocks argues. Published in 2011, author Frederick Martin makes an argument that he himself recognizes is “almost heretical.” While the man never fully endorsed growth investing – at least not at the expense of his value philosophy – Graham did come to see merit on the growth side. In making his argument, Martin challenges the reader to rethink the traditional growth versus value debate.

It’s a technical, yet practical book. Perhaps its greatest contribution is that it republishes a lost chapter from the 1962 edition of Security Analysis that Graham wrote called Newer Methods for Valuing Growth Stocks. The book as a whole has been well received though, in part because the writing is understandable and engaging.

It’s also a useful reminder of the importance of good old fashioned research.

Kevin Press

MapleMoney’s Biggest Moments


Last time, Tom Drake looked back on a decade of MapleMoney blogging and podcasting. This time out, he shares his five biggest moments.

Biggest surprise: My biggest surprise might be the response to the podcast. We’re still within the first year and people really seem to like it. I’m still having issues listening to my own voice, but there’s a great team behind the scenes and I expect it to be the top Canadian personal finance podcast within its first year!

Biggest success:
The biggest success was the results of rebranding from Canadian Finance Blog to MapleMoney. When I made the switch, traffic dropped for six months, but I didn’t look back and have come out with a site that is ready for a new level of growth. This January’s page views were the fourth largest month ever for the site! Having a real brand, plus no longer having “blog” in the name, lead to a massive redesign and the launch of the podcast, both of which have increased visitor’s trust in the site and given us new opportunities to grow.

Biggest story:
Jim Yih from Retire Happy wrote a post on MapleMoney about a scam he uncovered when looking to buy a car. Have a look at the hundreds of comments and you’ll get an idea of the amount of money we saved people from getting scammed out of.

Biggest post:
Having a look at my analytics to confirm, the all-time biggest post over the decade has been this one on how much money you need to retire. However, looking at just last year, this newer guide to buying stocks has been doing great.

Biggest disappointment:
My biggest disappointment was back in 2012. I had taken a six-month parental leave to be with my family and give the full-time blogger thing a test drive. But that’s the same time I got hit with Google penalties that dropped my search traffic. I wasn’t really able to work on the blog “full time” because we were busy with a newborn and an energetic two year old. I think it took a couple years to fully recover from that.

Kevin Press

Tom Drake’s MapleMoney Miracle


Ten years after Tom Drake launched his MapleMoney blog, the site and its accompanying podcast have evolved as premier Canadian sources of independent guidance on “how to make money, save money, invest money and spend money.”

He and I traded emails this week about the success of

Did you ever imagine you’d get to a 10th anniversary?

I wasn’t really expecting much at all when I first started my blog. However, after a year or two in, not only could I see the 10th anniversary, I really couldn’t imagine ever giving this up. Managing the blog and helping so many Canadians with their money has become a big part of my life.

We had a sense back in 2009 that the post-crisis recovery would be long and slow. Has it played out the way you expected?

I’d say the finish line after a decade played out how I expected – the idea that the markets would recover their losses and then continue up from here. But I was expecting the lows to last longer back in 2009-2010. I sat on some cash expecting further drops, but unfortunately, it’s not easy to time the market, even at the bottom!

How significant a contribution have Canadian personal finance blogs made during that time?

I think Canadian personal finance blogs have had a huge impact on how people manage their money. More and more people are getting their information online. Even if they just visit one page and never return, what they left with might be the key to increasing their income or ensuring their retirement.

Has your blog evolved the way you expected?

I could have done without some of the traffic volatility in the past. But right now, by many metrics, MapleMoney is the largest independent personal finance blog in Canada. So I can’t really complain, but always have the drive to reach more Canadians that could use some help with their finances.

How does the podcast differ?

Ultimately we’re covering the same topics, but there are a few things that I think make the MapleMoney Show different than the blog.

First, it’s been a better medium to connect with my audience. They’ve made the decision to have me talk to them for 30 minutes each week, that’s a lot more personal than reading an article.

Next, I bring on experts that, more often than not, know more than I do about the topic for that episode.

Finally, it’s potentially a different audience that I may not have reached with writing alone. I know I listen to certain podcasts myself where I’ve never even visited their website.

A big picture blogging question: how would you describe the state of the medium?

That’s an interesting question as blogging is in constant evolution. I’d say the state of blogging is strong, but it’s more important than ever to expand with the trends.

With things like mobile and voice search, we are heading in a direction of fewer people sitting down to read something. We talked about podcasting, but other directions to go in could include video on YouTube, stories on Instagram, or in-person events. I’ve seen entire businesses built by bloggers on all of these different paths.

What’s next?

We’re looking at quite a few options for the site right now, including structuring the operations like a proper business and hiring to fill a few roles. After a decade of “seat of your pants” decision-making and doing too much work myself, it’s time to stop being “just a blog” and starting to be a legit “online publisher.”

Kevin Press

Next, Tom shares the biggest moments from a decade of MapleMoney.

Preet Banerjee and the Value of Advice


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Television host and personal finance blogger Preet Banerjee has launched a new survey on the value of financial advice. He’s been researching the subject since 2015. “I’m in the fifth and hopefully final year of this research,” he says. “My supervisor seems to be under the impression that I’ll submit my thesis before summer, and hopefully I can defend before the end of the year.”

Banerjee has chosen a difficult subject. A lot of people believe their financial advisor delivers value. Those who don’t often shop for a new one, which is another kind of belief statement. But actually quantifying what an advisor relationship is worth over a number of years has proven difficult.

“You’ll often see studies that say ‘people with advisors have more money.’ But generally speaking, financial advisors tend to only go after people with money, and people who have already accumulated some wealth or have high incomes are more active in seeking advice,” says Banerjee. “Who is really responsible for the client being in the good position that they are?”

The survey is designed to dig into causation. It asks respondents to disclose who made first contact (them or the advisor), how much money they had saved at the beginning of the relationship and what areas of financial planning they are being advised on.

“The conversation on the cost of financial advice and products is more well defined than the other big part of that equation: value,” says Banerjee. “To understand what represents a good trade off between what one pays and what one receives, is a very personal thing. There are some people who pay a lot and get poor value. But there are some people who pay a lot and get fair value in exchange.”

Banerjee says the research program will deliver insights to consumers, industry, regulators, and policy makers. “I would be very appreciative if people could take the survey. The only requirement is that you are 18 or older and live in Canada.”

The survey is easy to complete, and runs 5-10 minutes. You can access it here, on your computer or mobile device.

Kevin Press

The New Retirement


One of the programs I’m most proud of from my time at Sun Life Financial is the Unretirement Index. Dean Connor, who at the time led the Canadian organization, asked my team and me to develop a study that dug into people’s plans and expectations for retirement.

We went in with a simple hypothesis. Baby boomers would transform retirement, just as they had so many social conventions over the years. Given how many Canadians in that demographic identify so personally with their work, why wouldn’t white-collar professionals keep doing what they do after 65? Hence the term, unretirement.

My team prepared the first annual survey over the summer of 2008. Little did we know that the worst financial crisis since the Great Depression would coincide with its fielding. There we were, asking Canadians about what age they expected to retire at the same time televisions across the country screamed about a financial apocalypse.

What seemed a disaster at the time, turned out to be an extraordinary research opportunity. In the years that followed, we tracked the evolving views of Canadians about retirement in light of the crisis. By 2011, the average adult expected not to fully retire until 69.

While our hypothesis held up, it was clear that economic factors were also driving unretirement. Among Canadians who said they expected to be working at 66, 61% said they’d do so because they need to and 39% because they want to.

New research from Aon confirms that while the anxiety so prevalent in the years immediately following the crisis has largely subsided, there remains a kind of low-grade angst among a lot of Canadians about their financial future.

The firm’s Global DC and Financial Wellbeing Employee Survey delivers useful insights into the views of Canadians who are lucky enough to have employer-sponsored defined contribution (DC) retirement plans. While not a representative sample of the broader working population, it’s not a bad proxy.

A few highlights from this year’s edition:

  • 30% “expect to continue working forever in some capacity.”
  • 29% “do not feel they are saving enough for long term needs.”
  • Nearly half say “their outstanding debts prevent them from saving for retirement.”
  • Two-thirds contribute less than 10% of pay to their DC retirement plan.

“The reality is that for most people, retirement will be different than in previous generations – likely starting at older ages and incorporating phased or flexible arrangements,” according to the report. “Our research shows that retiring in your 70s – or not at all – will become increasingly common.”

Two takeaways.

First that debt stat is neither surprising nor necessarily bad news. While I’m not a fan of delaying retirement savings until your home mortgage is paid off, it’s hard to argue against clearing credit card and other high-interest debt before saving for long-term goals.

Second, if you do have a retirement plan at work, take full advantage of whatever employer-match it offers. Aon found that only 78% of respondents have signed up for the plan their employer sponsors. And 41% of those who have access to an employer-match don’t take full advantage. If your boss is prepared to match the first $100 you save for retirement each month, take it. Take all of it. Save more if you can. Just don’t miss out on free money.

Kevin Press

U.S. Recessions Don’t Start in the Third Year of a Presidency

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At a lunch for professional investors and advisors last week, Philip Orlando delivered a well-rounded argument against a U.S. recession in the near term. Economic growth may well slow down, but he doesn’t anticipate two consecutive quarters of negative gross domestic product growth until 2021 or 2022.

Orlando, senior vice president, chief equity market strategist at Federated Advisory Services in Pittsburgh pointed to a number of customary indicators to make his point. Annual wage growth sits a little north of 3% right now, short of the 4% that in his view would signal a downturn two years out. And while the yield curve (the difference between the U.S. 10- and 1-year Treasury Notes) narrowed last year, it hasn’t inverted, which is a sure sign recession is in the cards.

He also detailed historical precedents having to do with the U.S. election cycle that are less often a part of these discussions.

“Over the last 70 years … there have been 11 post-war recessions in the U.S. Not a single recession was started in the third year of the presidential election cycle,” he said. “The presidents of either party – Democrats or Republicans, everybody does it – knowing that there is a big presidential election coming up the next year, they grease the skids. They want to make sure there is enough monetary policy and fiscal policy stimulus to the system that the economy does well, that the financial markets do well. That way the voters, next year, are predisposed to vote favourably for their party. So we’ve never had a cycle of decline – a recession – in the third year.”

Canadians have seen two pre-recession peaks during the third year of a presidential term in recent years: in 1947 and 1951.

Orlando also quoted U.S. stock market numbers. “The average S&P 500 return in year three is up 21%,” he said. “That’s double the average of years one, two and four. The third year of the cycle, historically has been the most productive year in the four-year cycle. We think that’s going to happen again this year.”


Orlando did allow for the fact that political risk has to be factored into financial planning. “Robert Mueller is the ultimate black swan,” he said.

“We’re looking at March as a very important month. March 1 is the China-U.S. trade deal deadline. March 20 is the next [Federal Open Market Committee] meeting; the next set of dot plots out of the Federal Reserve. We need to see some conciliatory movement toward some sort of neutral position. And then the Brexit deadline is March 29. If we can get past March with at least two of those three – I’m saying China and the Fed in place and maybe some progress on Brexit – I think the volatility that we’ve seen in the market over the last six months or so will be behind us and we’ll be in much better shape.”

Kevin Press

Wiggle Room

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HBO’s Bill Maher was on-point in the New Rules segment of this past weekend’s season premiere. “To me,” he said, “the real lesson of this government shutdown is that we found out that federal workers – quintessential middle-class jobs – can’t afford to miss one paycheque.”

No doubt that line resonated with more than a few Canadians. New data from the MNP Consumer Debt Index, a quarterly study conducted by Ipsos, shows that almost half (46%) of adult Canadians are $200 or less from insolvency at the end of the month. Almost a third (31%) say they can’t pay their bills.

Both results are up significantly over the September report. At that time, 40% said they were that close to going broke at month-end and 24% reported having difficulties paying their bills.

“Many have so little wiggle room that any increase in living costs or interest payments can tip them over the edge,” says MNP Ltd.’s president Grant Bazian. “For most, the cause of trouble appears to be long-term accumulated debt. … They just can’t carry it any longer at higher interest rates.”

Much has been written about the value of an emergency fund. Recommendations vary, but it’s not uncommon to hear professionals suggest three to six months in savings for a rainy day. What’s most important is that you make decisions based on your own ability to save and your current financial situation.

If you might lose your job this year, factor that in. How much severance are you likely to receive? The standard benchmark is one month of pay for every year you’ve been with the company, but you can’t count on that.

How much money do you need to get through the month and how long do you think it will take you to find a new job. It’s not uncommon for middle-managers and executives to be out of work for six months, a year or even more.

If consumer debt is piling up, pay that down as quickly as you can. Identify the rate of interest you’re being charged by each of your lenders, and pay down the highest interest rate debt first.

Kevin Press

Unforced Errors

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U.S. President Donald Trump tabled a new proposal today, aimed at ending that country’s longest ever government shutdown. That he did so on television as opposed to in a White House meeting room doesn’t bode well for public-sector workers smarting from a lack of pay.

In return for Congressional approval of border-wall funding, Trump is promising to protect those who fall under the Deferred Action for Childhood Arrivals (you’ve heard it referred to as DACA) and Temporary Protected Status programs. The deal is meant to reopen the federal government and at the same time limit the political damage all of this is causing the Republicans and Democrats.

A deal along these lines has been previously suggested, more than once. It all speaks to the less-than-ideal state of U.S. politics and in particular of this presidency.

Washington’s latest unforced error comes as U.S. growth is slowing. That has mostly to do with economics, but not entirely.

As yesterday’s Focus report from BMO Capital Markets Economics notes, U.S. political risk is alive and well. “Prepared for the January 29-30 [Federal Open Market Committee] FOMC meeting, the Fed’s regional report should reflect some moderation in economic activity, while underscoring concerns about trade protectionism and labour shortages.”

Elsewhere in the same report, BMO senior economist Sal Guatieri writes: “In light of more dovish talk from policymakers and the minutes of the December FOMC meeting, we have both delayed and reduced the amount of expected rate hikes by the Federal Reserve. We now see increases in June and December – one to three months later than previously thought – and no longer expect a final move next year.”

That could have a direct effect on mortgage rates, which are driven more by U.S. rather than Canadian interest rates. This week, Royal Bank of Canada cut its five-year mortgage rate from 3.89% to 3.74%. Watch for other banks to make a similar move.

Political risk is a fact of life for investors. But while it is seldom associated with the U.S., it cannot be ignored as long as Trump is in the Oval Office.

Kevin Press


Jobs Jobs Jobs

Photo by Sam Bark on Unsplash.

A few years back, I was invited to deliver the commencement address to graduates in the faculties of Applied Science and Technology and Continuing and Professional Studies at Sheridan College in Mississauga, Ont. My goal was to deliver a practical message, hence the speech’s impossibly catchy title: “Success in an era of personal responsibility.”

“Canada’s beloved social safety net is wearing thin,” I said, trying my best not to sound like the voice of doom. “Our aging population — about 1,000 Canadians retire every day — will put unparalleled pressure on government-funded healthcare and other programs. This will transform Canada. You will be responsible for your financial well-being in ways previous generations of Canadians were not.”

That was conventional wisdom at the time. It was not uncommon to hear experts predict that baby boomer healthcare expenses, as they entered their high-use years, would so dominate government spending that our reliance on Ottawa and the provinces for virtually everything else would be significantly diminished.

Some still argue that (and they may be proven true). But increasingly, there is a recognition among policymakers that government will have to do more, not less, in the years ahead. Last month’s release of the latest Organisation for Economic Co-operation and Development (OECD) Jobs Strategy signals an emerging view that leaving citizens to fend for themselves is a bad idea.

The strategy laid out three needs:

  1. Promote high-quality jobs. Two keys here. Well-designed, quick-hit work programs can make a positive difference when economic growth slows or turns negative. The financial crisis made that clear. A high-functioning education/training system is also a must. From the report: “To better match skills with labour market needs, it is important to develop stronger links between the world of education and the world of work and have robust systems and tools for assessing and anticipating skills needs.”
  2. Put an end to labour-market exclusion. Where there are barriers to quality work, address them proactively. “To reduce the risk of workers becoming trapped in low-quality jobs or joblessness, they should have continuous opportunities to develop, maintain and upgrade skills through learning and training at all ages.”
  3. Adapt to the evolving labour market. Prepare for tomorrow. It’ll look less like today than you think. This is on both policymakers and individuals, as anyone close to the car industry knows too well. “Skills policies, social protection and labour market regulations will need to be adapted to the new world of work to achieve greater job quality and inclusiveness. … A first challenge is to equip workers with the right skills in a context where the demand for skills is likely to evolve rapidly and people continue working at a higher age, with an increased emphasis on science, technology, engineering and mathematics as well as soft skills.”

There’s a lot of detail in the report’s nearly 400 pages. More generally it represents a step back from the idea that developed world governments will download additional responsibilities to their citizens.

The assumption that Canadians would have to rely less on government has been a staple of financial advice in recent years, for good reason. But if this new OECD report is an indication of where policymakers are headed, it bears revisiting.

Kevin Press