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Book Review Count On Yourself: Take Charge of Your Money

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Browsing the stacks at our local branch, I found yet another book that looked interesting to me. As someone who only recently started consolidating, simplifying and hopefully improving our savings and investments, it looked like a worthwhile read. Here’s my review of Count on Yourself: Take Charge of Your Money by Alison Griffiths.

Tone

Very calm and self confident, with a conversational tone.

Ms. Griffiths is trying to ensure you stick with the tasks without getting frightened off by jargon or judgment. The book is full of short “case studies” which are really short descriptions of people and their finances.

To set you at your ease, she describes some of her own major money mistakes and often includes her family members as “case studies.”

Who Is Taking Charge of Your Money For?

The target audience appears to be 20-70 year olds. Because she is offering sensible hands-on step-by-step advice about how to set up a very simple but diversified and asset allocated portfolio, her advice fits most age groups.

I suspect the most appreciative audience will be 40-50 year olds who are starting to save money and who are uncertain about retirement and investment.

What’s Not Included in Taking Charge of Your Money?

Despite its name, this book is not about managing and re-paying debt. This book is about saving and investing for the future.

What I Learned from the Book

“Higher risk does not necessarily translate into higher return, especially over time.”

According to her work, a portfolio of 20% cash and 60% bonds plus 10% Canadian equities and 10% American equities has returned 8.7% per year over the past 20 years.

A portfolio of 5% cash, 15% bonds, 25% Canadian equity, 25% US equity, 20% Global equity, and 10% US small companies has returned 8.8%.

Portfolios between those two extremes returned 8.6% and 8.4%.

By cash, she generally is referring to GICs.

This was interesting and somewhat reassuring to me. Our portfolio is closest to the ultra-conservative one listed above, although we have had slightly more in GICs than in bonds.

This is similar to what David Trahair reported in Enough Bull: that GICs can form the backbone of a retirement portfolio.

Regrets

I wish the book had an index.

Would I Buy Count On Yourself?

I would buy this to give to someone who is just starting to straighten out their finances and their investing. It’s encouraging and practical.

Since I’ve already completed most of the steps in her book, I wouldn’t buy it for myself.

Topics In Count on Your Money include

Why We’re Not Talking About Our Finances

Many people are extremely reluctant to share information about their finances. This may be due to fear and frustration.

Getting Organized

  • You need to make a list of every type of financial account you have (include life insurance policies; home insurance policies; etc.) and try to eliminate any unnecessary extra ones
  • You need to make a list of all of the security information associated with each financial item (passwords; user ids; security questions and answers) and store it somewhere both physically and theft safe. If it’s in a safe deposit box can your spouse and one other person with financial authority get to it?
  • It’s a good idea to make another list of all your online access accounts from email groups to eBay accounts and their Userids, passwords and security questions. The passwords etc should differ from your financial passwords.
  • Within each type of financial account (e.g. a RRSP) you need to list everything you are invested in from savings accounts to ETFs

While listing all of these items you may find duplicates, things you can cancel, and cost savings.

Know Yourself

  • your time frame for retirement and major spending
  • your financial situation (do you have a defined benefit pension? will you get CPP or OAS? etc.)
  • your investment temperament (can you handle stress and risk?)

What Types of Ways Can I Save and Invest?

introductions to and explanations of

  • bank accounts
  • TFSAs
  • RESPs
  • RDSPs
  • RRSPs
  • RRIFs
  • non-registered investment accounts

Diversification

What kinds of asset classes there are and why you should usually have something in each.

Asset Allocation

She gives a detailed and important overview of what asset allocation is and how it may be the most important factor in your investment success. (She refers to it as “How many investment eggs in which baskets?”)

Fees

She explains how fees, particularly high MER and DSC mutual fund fees, can destroy savings. She points out clearly how high fees can make the suffering worse during a market crash and significantly lengthen the time it takes for an investor to recover from a market crash.

As someone who held a small amount in an index mutual fund through the 2000 crash, I can agree completely with that, even though it had a pretty low fee. (about 0.7%)

Easy Chair Investing

Her preferred method of investing dates back to a portfolio she tracked in a newspaper column called the Easy Chair.

Basically, she strongly recommends

  • investing in 3-4 low-fee ETFs
  • re-balancing your asset allocation every year

Somewhat surprisingly, she has numbers to show that the return on investment over the past 20 years (probably ending in 2011 since the book was published in 2012) was highest for a portfolio that included cash (as GICs), bonds (as a bond ladder or bond ladder ETF) and equities (only Canadian and US; mirroring the stock indices.)

ETFs

She actually names ETFs specifically and lists the best ones available at the time she wrote the book. (This is a bit unusual in personal finance books.)

She lists fewer than 10 for each of the three classes she recommends you invest in:

  • bonds
  • Canadian equities
  • US equities
  • Index Mutual Funds

She acknowledges that for some investors ETFs are not possible yet. She therefore names the best (at time of writing) available index mutual funds. No/low loads and low fees are a must.

Asset Allocation

She reviews sample allocations for different life plans and personalities.

Count on Yourself Portfolios

She walks you through the basic steps required to set up an ETF Easy Chair including short-listing which ETFs to choose to buy in each category.

She provides some advice for investors who feel they must also include REITs or dividends, etc.

She also walks through the basic steps for setting up an index mutual fund portfolio for those who can’t use ETFs.


At amazon.ca

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Book Review: Managing Alone: Your Trusted Advisors’ Guide to Surviving the Death of Your Spouse

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My husband wasn’t too pleased when he saw this title lying on my bedside table. (He warned me that he’s seen me re-reading Agatha Christie’s lately starting after he increased his life insurance coverage and he has left an envelope to be opened by the police in the event of his death from “acute gastric enteritis” or if he commits suicide.) I pointed out that it didn’t say which spouse and discretely removed a few Post-it notes from books citing Datura and other “untraceable alkaloids.” Despite this family disharmony, I finished reading Managing Alone and would like to share my review of the book.
Title:
Managing Alone: Your trusted advisors’ guide to surviving the death of your spouse

Authors:
Jennifer Black and Janet Baccarani.

Both authors are CFPs working in Ontario. It appears that they self-published this book–perhaps in part to give to their clients as an educational tool?

Tone

This book is very easy to read. The tone is conversational and kind.

Each of the 10 chapters tells the story of a fictional couple with a different financial profile. Some examples include:

  • One couple are highly successful both financially and personally with adult children;
  • Another couple have a very modest income with all of their profits being re-invested in their growing small business;
  • Another couple has a stay-at-home parent and a working parent who is moderately successful financially.

In most cases, the death of one partner radically changes the life of the survivor. Some couples had their finances well planned, others did not.

Despite the sombre subject matter the authors carefully end each personal anecdote on a positive note: Widows and widowers re-marry or find new passions in life; families heal; children mature and find happiness.

What Topics are Covered in Managing Alone?

After each gentle narrative, different types of financial problems and plans are discussed.

Topics include

  • Setting up a trust to protect assets in the event of a re-marriage in later life
  • What to do with a successful small business when the key partner dies
  • What government benefits are available to widows/widowers and orphans
  • What to consider when selling a home and buying a smaller one
  • Establishing credit and a personal financial history
  • What does an Executor have to do
  • Questions to ask when choosing various kinds of advisors
  • What everyone should do, no matter how young, to prepare in advance for an unexpected death (joint bank accounts; insurance; power of attorney; wills; joint ownership of the home; designating beneficiaries; etc.)

Other topics are also covered.

All of the topics are discussed at a fairly high level. There are not a lot of details for completing various tasks or hands on examples.

In some cases, I think the purpose was to get the reader thinking “how would I handle that?” and to encourage them to do further research if they don’t know the answer.

Who is the Target Audience for This Book?

This book seems to be aimed at people with little or no financial planning background or experience. It serves as an introduction to the types of tasks that should be accomplished and decisions that should be made to deal with money and death.

Who is NOT the Target Audience for Managing Alone?

If you are older and have personally dealt with the death/s of friends or relatives there is likely little here that will surprise you. If you’ve already applied for CPP survivor benefits for a relative, handled a funeral, or acted as an Executor, you probably will find this book too simple.

For example, the book provides a case study of a gentleman who might want to create a trust to protect his property and investment assets to ensure they pass on to his children and grandchildren even if he re-marries. Very few actual details, however, are provided about how to set up that type of trust, who to ask for help with it, how it works, what the annual fees might be, etc. It is more an introduction of a concept than a “how to” article.

Would I Buy the Book?

No. I borrowed it from the library. It was interesting to read but I would not turn to it again in the future.

Would I Recommend the Book?

If I had friends or relatives who were really repulsed by the entire topic of planning for mortality and who in particular needed to make plans I might suggest they read this book. (For example, a single parent with young children who has a high risk of being diagnosed with a life-threatening illness; a couple with high risk careers and young children with no guardians or wills.) It might provide an opening to discuss how several simple steps, such as designating beneficiaries and holding assets jointly, could save a great deal of trouble in the future.

What Did I Personally Take Away from This Book?

Although I didn’t learn anything much new, I did get a timely reminder to

  • update our power of attorneys for personal care
  • teach our children where the financial records are kept (in case both my husband and I should die at the same time)
  • double check the Beneficiary designations are correctly reported for our newest investments (the forms were sent in but were they input correctly?)

Also, remember “Never be worth more to someone dead than alive.” Read Agatha Christie for additional details on this topic.

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