The theme of my blogs since I started writing them has been to share experiences and concepts that I have observed as being helpful for my readers to get ahead in all aspects of life.  Today’s topic is about being the person who is serious about getting ahead in their work.

What does it mean to get ahead?  For the purposes of my blogs, it means to be respected in whatever station of life you are in, while growing your net worth.  King Solomon wrote in Proverbs 22:29, “Do you see a man skilled in his work?  He will serve before kings; he will not serve before obscure men.”  In the New International Study Bible commentary, it expands on what is written by describing that the craftsmen during these ancient days were considered wise.  King David was skilled in many areas of life including being a musician.  Joseph (of coat of many colors fame) was an outstanding politician and administrator and Huram (1 Kings7:14) was a sculptor in bronze.

Rabbi Daniel Lapin comments, in his book, ‘Business Secrets From the Bible’, on this same verse, citing it from the Hebrew language, “If you see a man who is quick to do his work, prompt to do his work, not when he feels like but when it needs to be done, you are looking at a man who is going to stand with kings.”(pg. 107)

Promptness to do your work, to do what you must do, not what you want to do, is the mark of the true professional.

The Latin root of amateur is from the word amor, which means “to love”.  Rabbi Lapin goes on to state that an amateur is someone who does only what he loves doing. (pg.108)

When I was active in the Employee Benefits business, a common complaint that I heard from employers was that even though there were issues around absenteeism, a growing problem was a new issue called presenteeism.  Presenteeism, defined, is the act of being physically at work, but having one’s mind or concentration elsewhere.  A small group of employees in any business will spend a lot of time on their PC’s or on their cell phones, playing games, texting, or working on things they want to do; in short, they were pretending to work or to give the benefit of the doubt, doing the work that they wanted to do.

In conclusion, if you want to get ahead in your chosen career or in your business, find a way to love your work.  If you can love your work, you will become one of the 20% that rise to the top of your profession instead of being part of the 80% that just gets by.

Al’s Nuggets

1.  Learn the difference between knowledge and wisdom.
2. Learn to know how things really work. 
3. Mastering a skill takes effort and time.  That is why most leaders tend to be older people.
4. Learning from mistakes is called Experience!

Aesop is believed to have lived during the 6^th century BC.  He was born disfigured and according to historical records, spoke with a stammer.  Being born with these handicaps and being a Greek slave on the island of Samos, Aesop is credited to have had a sharp mind and was able to teach lessons in morality through story.  His fables were compiled from oral tradition and transcribed into written word at about 300 BC.  According to Herodotus and other classical writers, Aesop was killed by the people of Delphi after he committed some grave offence against them.

According to Sir Roger L ’Estrange (1616-1704), Aesop told his stories to other underprivileged adults like himself who appreciated advice on how to make life more comfortable in an unjust world.

Today’s blog is taken from the book, Aesop’s Fables, that Sir Roger compiled in 1692.  I purchased this book at an independent bookseller, Daunt Books, while visiting in Oxford, England, July 2022.  I have copied the text almost verbatim.  I did take some small liberties in language and grammar to make the writing somewhat more modern.  Enjoy!

A Lark and her Young Ones

There was a brood of young Larks in the Corn, and the mother, when she went abroad to forage for them, laid a strict instruction upon her little ones, to pick up what news they could get before she came back with food.  They told her at her return, that the Owner of the Field had been there and offered his ripe crop to his neighbors to come and reap the Corn.

“Well,”, says the Mother Lark, “there’s no danger yet then.”  The children told her the next day that the Owner of the Field had been there and again offered his crop of corn to his neighbors.   “Well, well”, says the mother.  There is no worry yet for our home and she went out again to forage for her family.

However, on the third day, the children told their mother that the owner and his son were going to come the next morning to harvest the corn themselves.  Mother Lark immediately instructed the children to gather up their belongings because it was time to move.  “As for the neighbors and friends, I fear them not; but the owner, I’m sure will be as good as his word, because he will take care of his business!”

Al’s Nuggets

1.  As a property owner or as a business owner, you will always care more about your interests than your neighbors, your employees, or the government ever will.  That’s just human nature!
2. People have understood point #1 for thousands of years! 
3. You will glean more knowledge, and hopefully more wisdom, by reading than by watching TV!  The neighbours could have gotten some free food had they expended the effort.  However, the opportunity expired, and they had to get their food at a higher cost!
4. It seems that even though technical knowledge has improved significantly over the millennia, wisdom and human behaviour has not changed.

The reason that these blogs have been posted weekly for the past several months has been to provide my readers with some guidance and hope to improve their financial wellbeing.  Most of the blogs written have focused on personal financial planning concepts that I believe are basic to getting ahead financially.  For the next several weeks, I am going to focus on providing some insight by providing insight on self-employment and learning the art of leverage, so that you can embrace opportunities while being a blessing to others.

In the book, “Business Secrets from the Bible”, by Rabbi Daniel Lapin, the author expands on 40 secrets for us to contemplate.  Rabbi Lapin suggests that if we embrace the time-honored truths of these ancient lessons, we will set ourselves up for success and happiness in at least 5 areas of our lives.  These 5 areas: family, friends, faith, fitness, and finances, are meant to be lived in a way that allows us to enjoy balanced and happy lives.

Today’s blog focuses on Secret #1 which says that “God Wants Each of us to Be Obsessively Preoccupied with the Needs and Desires of His Other Children”.

The first paragraph of this chapter opens with the line, “As long as we all grow our own wheat and corn, and stitch our own clothes, and churn our own butter, and make our own shoes, we need nobody else.”  This means that those of us who believe that being self sufficient is an ideal to embrace are limiting our chances for success.  The author challenges us to “compare the outlook of the solitary survivalist with that of the business professional.”  “The survivalist views other people as competitors and threats whereas the business professional’s life is intricately linked to other people.” The business professional must be concerned with leveraging the skills of employees, contractors, and partners to provide enough goods and services with enough quantity and quality to attract and keep satisfied customers.  A businessperson must be concerned with the welfare of his employees and associates because “only if they are happy and fulfilled will his business prosper.”  The businessperson must also be mindful of the vendors who supply him with everything from office furniture and paper to the raw materials that supply his production processes.  In short, the businessperson must be a complete person because the total enterprise processes include many valuable internal people (employees) and a whole host of external people (vendors, contractors, professional services and customers).

The author concludes chapter 1 with this question, “Now whom do you think God prefers:  the lonesome isolationist whose slogan is “I need nobody”, or the business professional active within a complex matrix of connectivity in which he is preoccupied with making his life and the lives better for so many of God’s other children?”

Al’s Nuggets

1.  Question:  if you can make an easy $1,000 by working overtime, would you hire the teenager next door for $100 to cut your grass and wash your car?
2.  There will be times when you are up to your arse with alligators, and you will forget that your job was to drain the swamp!  Stay clear as to what you are trying to accomplish and why!
3. Learn to grow in your job and in your influence.  It is totally worth it!
4. Turn off the TV and read books that will help you grow as a complete, well-rounded person!
5. Learn to take holidays in new and interesting places.  You will meet interesting people who will be “angels” in working clothes!

A while ago, I was riding with a friend in his car.  His driving style made me quite nervous because he had this nasty driving style of having his right foot on the gas pedal and then braking aggressively using his left foot!   His jerky driving style had him taking off like a rocket when the traffic light turned green and then braking hard to tail gate behind the car in front of us.  I believe that he thought he was a young Richard Petty! (www.richardpetty.com)  Because I was appreciative of the free ride, I did not say anything about his driving.  I did, however, promise myself that I would not actively seek a ride from him ever again.

My friend’s driving habits were developed over the many years since he was 12 years old on the farm.  He was typical of young men and boys helping parents by doing different chores that included driving small and medium sized tractors.  The skills he developed early in his formative years were all self taught and over the 34 years since he started driving, the habits that he had, served him well because he had never been in an accident!

The coaching program, Strategic Coach, taught me a lot about habits. Dan Sullivan, the founder and owner of this program designed exclusively for entrepreneurs, says that all habits feel totally natural.  The difference between a bad habit and a good habit is that you get totally different results!

Now that we are getting close to January 1^st, 2023, we are going to engage in the annual ritual of stating our New Year’s resolutions.  Most of us will blow up our resolutions by noon, January 2^nd because we will try to change at least 15 resolutions at once. 

The trick to making changes in your life is to change one habit at a time.  According to psychologists, a habit takes 21 days to feel totally natural.  In theory then, you should be able to develop 17 new habits in 2023.  In my case, some resolutions that I want to embrace are:

1. Exercise for 40 minutes everyday
2. Turn off all electronics when visiting with someone
3. Write down 3 things for which I am grateful
4. Read a “hard book” for 40 minutes everyday

If you look at these 4 resolutions, you will notice that these desires are about “doing something positive” as opposed to “stopping” something.  Another coaching friend of mine, Peter Neufeldt, of Peak Performance Executive Coaching, notes that a powerful positive new habit will displace a weaker negative lifestyle.  Therefore, a resolution to “stop smoking” will not be as effective as “embrace a healthy lifestyle by exercising for 40 minutes when I get out of bed”.

I wish everyone a terrific end to 2022!

Al’s Nuggets

1.  Embrace only one new habit at a time.
2. Drink lots of water.
3. Look for ways to be generous with your money and time with those less fortunate.  More on this in my next blog.

When I was in business, I learned about competition.  Early in my business, I defined competition as the other financial services firms and salespeople in the city of Cranbrook.  There were the banks, the credit unions, the investment brokers, and the other life insurance agents who did business in my community.  In total, there were over 85 people representing these organizations including the other advisors with the firm that I represented! 

Over the years, I had to change my concept of competition to include “all items and concepts” that competed for the money that existed in the marketplace.  In a previous blog, I said that “scarce resources have alternative uses” and this truism expanded my definition of competition to include new vehicles, birthday parties, holidays, booze, cigarettes, rep hockey and snowmobiles.  Basically, my competition definition includes everything and anything that someone feels is desirable at any given moment in time.  I learned that if I thought a deal was complete, it really wasn’t, because people can always change their mind a day or two later.

To thrive within this reality, I had to learn to be “winsome’.  The definition of winsome is to “be attractive and appealing in character”.  Most people are appealing and attractive to a large degree, however, I observed that many people also believe that they “have to be true to themselves”.  This idea that what I am today is as good as things will ever be, is a malady that afflicts most people, and results in people becoming stagnant in the marketplace.  For example, I know people who have not read a difficult book since they graduated from school!

When I saw how many people really were in the marketplace, I made the decision to become more winsome.  The first thing I did was to invest my “free” time into really learning the my profession.  This meant that I started to learn the technical aspects of the business as opposed to just learning the basics.  I learned that going to seminars in other provinces and countries resulted in meeting new people and being exposed to new concepts.  The best investment that I made was in surrounding myself with a team of experts who allowed me to focus on my gifts while they used theirs to take care of the things that I did poorly.  It was revolutionary for me to learn the art of delegation; to leverage my time and skills to provide much better customer service for all my clients.

One of the simplest concepts which I became quite proficient at, was the habit of being on time. My goal for myself and my team was to be ready 10 minutes ahead of time for every business and personal appointment.  We all know what it is like to wait for someone who is always late.  We also know how we good we feel when we are affirmed by not having to wait.  Time spent waiting for someone is often time spent deciding to whom your business can be moved in order to feel respected. 

There were many different personal and operational habits that I changed over the years.  All these changes were like getting compound interest on my money.  Writing a hand written note, a little more homework in advance of a meeting, humbly apologizing when we screwed up, to name but three things, resulted in deepening the relationships with my customers, friends and family.  One of the best compliments that I ever received was from a competitor who told me over a coffee, “I don’t know what you do, but all your clients will not move, regardless of what I offer them.  You have a tremendous, well-deserved reputation and your clients are lucky to have you as their advisor!” 

Al’s Nuggets:

1. You never “arrive” in your business or career.
2. Be a lifelong learner.  Read, Read, Read!
3. When you go to a conference, do not rush home.  Stay at the location and determine how you will apply your key learning on the first day back at work.
4. If you are not healthy, do your best to become healthy!
5. Surround yourself with people that will call you on your detrimental habits and behaviors.

I recently had a conversation with a friend that focused on investing.  My friend is quite engaged in a variety of investment strategies including options and margin trading.  He is quite sophisticated as a trader and devotes a lot of time to this type of trading because the opportunities for gain and loss are significant.  In fact, this gentleman considers this his daily work.  I asked this gentleman if he uses investment funds, such as mutual funds and Exchange Traded Funds (ETF’s) within his portfolio.  His answer was revealing because he does keep approximately 70% of his investable investments in a balanced growth portfolio while actively managing the remaining 30% within his trading account.  This man went on to explain that in his opinion, the only easy thing about money is losing it.  So, while his confidence in his investment skills is significant, he does rely on professional money managers to help lower his risk.

The focus on today’s blog is to provide an overview of the different choices available to investors in Canada.  According to Morningstar Research, there are more than 5,000 different mutual funds for purchase on any given day.  If you are working with a professional advisor, he or she should be able to recommend different investment solutions for the stage of life in which you are currently living.  Financial advisors cannot be intimately knowledgeable on all funds that exist in the marketplace.  For them to provide valuable service to you, advisors should be using 3^rd party tools like Morningstar to help filter the “good” from the “not so good” investment funds choices.

Increasing the Opportunity to Make a Big Return!  There are times when you may want to hit a “home run” within your portfolio.  You can do this by narrowing the choices to be more specific within a sector.  In the mutual fund universe, you can look for a sector such as Energy or Precious Metals or Technology to name just three.  For example, 3 years ago, a different client invested 15% of her portfolio into a Precious Metals Fund which resulted in a 95% per cent return in 2019.  Fortunately, she sold her “profit” and then redeployed that money into a lower risk “Growth Portfolio”.  Had she just held the “Precious Metals” fund, her profits would have evaporated in the 3 subsequent years.  The lesson here is to learn to take your profits or alternatively, take your losses, if you are going to be an active investor.

Most investors are passive in their style.  This means that they rely on the fund manager to make the trades within the portfolio that they are in.  This approach to investing is most popular because this allows each investor to stay focused on their jobs and families.  Not everyone wants to be an “expert” in the investment world because they want to be an expert in their world.  Many people are happy to have returns 3 or 4 percentage points higher than inflation or the GiC rate over a lifetime of investing.  These people do not have expectations of retiring as a multi-millionaire, they are pleased to simply retire as millionaires.  It is a choice they make given the way they want to live their lives.

Al’s Nuggets:

1.  Whenever you review your portfolio with your advisor, ask your advisor if he will analyze your portfolio using a tool like “Morningstar”.  If your advisor does not know what Morningstar is, consider getting a new advisor. 
2. Determine if you are an aggressive investor or a passive investor or if you are somewhere in-between.  Your advisor has questionnaires to help you determine your investment style and risk profile.
3. More funds are not necessarily better than fewer funds. For example, if you have 5 different Canadian Blue-Chip funds, all five funds will probably hold the Canadian Banks.  What’s the point of having 5 funds holding the same companies?
4. Don’t spread your investment money between too many advisors.  Have enough money with each advisor to be important to him or her! 

One of the constant themes within my stories is about how we need to take care of others.  There are many ways to show love and respect to those around us and today’s blog is about looking at the options that are available through Life Insurance.

Life Insurance is an old and noble product that has its roots as far back as 600 BC, during the times of the Greek and Roman eras.   In fact, it may have even been before that, because references have been found in the time of the Babylonian king, Hammurabi.  The concept that life insurance was addressing for the past 2500 years is that each life has future value that is worth protecting.

Our modern financial systems have created 3 broad categories of Life Insurance.  This blog will provide a brief synopsis of each.  We will not discuss Life Insurance provided by employer benefit plans nor will we discuss life insurance that protects creditor risk.  We will discuss those types of coverage later.

1.  Term Life Insurance:  This type of insurance is organized to have a fixed price for a pre-determined time.  These types of policies are most popular and common with young people whose incomes are limited but the cost of living can be quite high.  For instance, I know a young couple, in their 20’s, with two young children.  Their combined income is less than 90,000 before tax. They purchased Term Life Insurance.   Because of mortgage debt and the cost of raising a young family, the two responsible young parents are covering the potential lost income if either parent were to die due to illness or injury.

The main benefit of Term Life Insurance is the low cost of coverage when the insureds are young.  Over time the price of the coverage will increase.  Most term policies expire between age 70 and 80 depending on the company and the provisions within the contract.

• Permanent Life Insurance:  This type of insurance is created to have a fixed price of insurance for as long as someone lives.  These policies are most popular with young and middle-aged people who want coverage for as long as they live.  There are many ways in which these policies can be manufactured.  Some plans, called Term – 100, are permanent policies that have a guaranteed price for as long as the insured lives. These plans have no residual value, but the insured has the comfort of knowing the cost of insurance is fixed for many years.  Other plans, called Whole Life Plans, have higher premiums, but generate residual value that sometimes appeal to people.  Sometimes these plans can be “paid up” for life after 10 or 20 years.  There are many different and clever variations to the permanent plans, however, at its core, the insured always knows that if they keep the plan in place, the insurance will pay out regardless of when death occurs.

The main benefit of Permanent Life Coverage is that insured’s beneficiaries are guaranteed a fixed amount of money, usually tax-free in Canada.  This benefit is especially valuable because Canadians are so heavily taxed.

•  Universal Life Insurance:  This type of insurance can technically be called a permanent plan because these plans are designed for someone’s complete life.  This essay is creating Universal Life Insurance as a separate category for two main reasons.  The first is because these policies often have a “non-contractual” premium paying provision which allows the policy owner to pay very heavily into the policy.  Secondly, the policy owner can invest the premiums into a variety of different investment options that may appeal to the client’s desire for risk and reward within the policy.  These plans are designed to take on a lot of money, then grow the investment in a tax-free environment, and then pay out tax-free upon death.  Universal Life plans are quite sophisticated and have a lot of “moving parts”.  If this type of plan appeals to you, make you work very closely with your insurance specialist so that you get the lifetime coverage you expect.

The main benefit of Universal Life Insurance is that it can provide another way to tax shelter money for life.  In my experience, the people who really appreciate these plans are high net worth people who have an appetite for portfolio management, on an annual basis, regardless of their age.

Al’s Nuggets

1.  This blog is a very high-level overview of these types of policies.  Work with a qualified Life Insurance agent to understand the ins and outs of each of these plans.
2. Over 90% of term life policies never pay out.  This is because term life policies simply get too expensive as people age.
3. Many term policies have conversion options available.  This means that the insured can convert from a Term Insurance Plan to a Permanent Insurance plan, without having to give medical evidence.  This is a tremendous value proposition that should be explored while one can.
4. Getting life insurance requires medical underwriting.  If you apply for coverage, you can expect to provide medical and lifestyle evidence.  The company wants your business, just not at any price (risk)!

Over the years that I was in business, my clients were always optimistic about their futures and rightly so.  Living in small town Canada having good incomes, excellent housing, fantastic food, access to good health care and tremendous family and social support, there is much to look forward to.  Despite the doom and gloom that our mainstream media continually paint, the opportunities for success in life are mostly equal for anyone who wants to reach out for the brass ring.

One thing that we all must be mindful of is death.  My financial planning business had at its core, a conversation about the importance of having an up-to-date last will and testament.  We also reviewed our clients Life Insurance policies, be they group benefits from their company benefit plans, their creditor plans that covered their debts and the personal policies that they owned.  Over my career, I was involved with each claim that my client’s families made.  The death of an important person in one’s life is always a shock even if the person had been sick for some time.

The first death claim that I had to deal with was a relatively young man.  This young man was in his early 30’s and had contracted cancer.  This husband and father had purchased his coverage when he first got married in his 20’s so that if an untimely death occurred, his wife would have enough money to cover their mortgage principal.  The risk that the client felt that he had to cover, was due to an accident given that he travelled between his home and his work that took him out of town regularly.  This clean-living family man was surprised when he was diagnosed with an illness – brain cancer.  Fortunately, he did not suffer for a long time.  I attended his funeral seven months after the diagnosis and was able to deliver the cheque to his widow.  The widow and children were able to become and continue to be debt free.  In a conversation with her 28 years later, she commented how she had never expected that the purchase of life insurance would eventually pay out.  “I expected to have a long life with my husband.  The vow ‘til death do us part’ was assumed to be in our 80’s or 90’s”, she commented wistfully, “not 8 years after our wedding.”   

Another sad event that I will share, happened about 15 years ago.  This, too, involved a young family where the husband and father were estranged from his wife and children.  In a fit of anger, he came into my office to cancel his policy on a Thursday afternoon.  Nine days later, the man was out with his friends enjoying their ATV’s.  The man flipped his “man toy” and died instantly by hitting his head on a rock.  The following week, the estranged wife came to my office to start the claims process.  I had to inform her that the policy had just been cancelled less than 2 weeks earlier.  The young mother and her 3 children found out from the creditor that the mortgage coverage also had been cancelled.  She was able to make a claim on the group benefits plan, but that coverage, only paid 1 times annual income.  The lady and her children were forced to sell the house and property and the vehicles.  She was able to get some support from her parents who lived in Alberta where she continues to reside.

The third story is about a businessman who held a couple of polices within his corporation.  The polices were in place to provide “liquidity” to his company if he died.  At age 78, the client had an accident at home while working around his acreage.  The client’s wife found him at the corner of the property several hours after she got home from town.  The coroner’s report confirmed that he had died several hours after the accident.  We were able to pay out to his company the proceeds from the life insurance policies.  The wife, who became the sole shareholder, was able to wrap up the affairs of the family business, meet the final payroll and take care of the outstanding receivables from a position of strength as opposed to desperation.

These three stories are all true.  While I am being deliberately vague about the actual details of each event, my point is that there are no guarantees of longevity.  In previous blogs, I have referenced actuarial truths that Canadians, by and large, are living well into their 80’s.  Individually, though, there is no guarantee.  “Those that have ears, let them hear!”

Al’s Nuggets

1.  Don’t be cheap… keep your wills and affairs up to date!
2. Life Insurance is usually the most cost-effective way to guarantee money for those who rely on you for financial security
3.  An experienced and educated Life Insurance agent can be a great help in your Estate Planning.
4. The next two blogs will describe the different types of Life Insurance… Term, Permanent and Universal Life

After many years of hard work saving and investing money, it is typical to turn your investments into income.  Sometimes it replaces your total paycheck and sometimes it supplements other income.  This week’s blog is a story about clients of mine, Alejandro and his wife Elena de la Vega (not their real names), who sold their family business, a sole proprietorship, after a 40-year run.  They had done quite well in business and wanted to invest the proceeds to provide themselves with a nice income while preserving their capital.  They wanted something fairly simple that paid them monthly while being very liquid.

The amount Mr. and Mrs. de la Vega had to invest was 1,250,000.00.  What choices did I show them and what they do?

First, we looked at guaranteed investments.

At the time of their sale in 2019, the best that they could get was 2.3%, paid monthly, locked in for 5 years.  This investment would pay a monthly income of $2,397.83 per month.

Second, we looked at investing into an investment portfolio of 3 different mutual funds.  Two funds paid a distribution of 7 cents/unit per month, and the 3rd paid 2 cents/unit per month.  Which fund paid the best yield while having a low-medium risk as Alejandro and Elena did not want to put their money at much risk in the market?  All three funds were top funds as rated by Morningstar Canada; an unbiased 3^rd party that ranks all mutual funds in Canada. 

Showing the math: To determine the monthly income:   $’s to be invested divided by unit price = # of units held.  # of units owned x cents/unit/month = monthly income paid.

                                  Calculation of Annual Yield:  monthly income x 12 = annual income.  Annual income/amount of money invested = yield expressed as a percentage.

Fund #1

At the time of the investment, the unit value was $23.17.   The monthly income provided by this fund was and continues to be $3776.44.

The yield from this fund is 3.6%

Fund #2

At same time, the unit value of the second fund was $11.38.  The monthly income provided by this fund was and continues to be $7688.93.

The yield from this fund is 7.4%

Fund #3

At the time of the investment, the unit value was $4.41.  The monthly income provided by this fund was and continues to be $5668.93.

The yield from this fund is 5.4%

Conclusion:  When we look at the history of these over the past 10 years, we can see that 1) the amount paid (the distribution rate) on each of these funds have not changed for over 10 years. 2) Each of these funds have had a capital gain growth and 3) each fund was taxed more preferentially than the GIC.

Al’s Nuggets:

1.  Not all mutual funds are high risk! 
2. Taxation is a big deal.  Maximize your TFSA!
3. This story, which is true, resulted in the clients splitting up their investment among these 3 funds.  They liked fund #1 because that fund had a focus on capital growth over income!  They liked the other 2 funds for the income they provided.  3 funds, 2 different fund managers, 3 different philosophies = lots of diversification!
4. There is more going on behind the scenes which a 1-page blog cannot get into.  Always talk to your financial advisor to get the full story behind their recommendations.  Full disclosure is important because you worked hard for your money.
5. You can use these same principles for any investment – even if you own rental property.  What you really earn after-tax, after-expenses should be calculated in advance before taking the plunge!

When growing up on the farm, it was not always easy to understand how our family made money.  What I knew, when I was young, was that we had some land and that we milked between 30 and 40 cows depending on the time of year.  Some of the land was pasture for our stock to graze on, some of the land was for hay and the remainder was for our feed crops of barley and oats.  We did plant some wheat which we did sell at the local Pool elevator after harvest.  The dairy cows were a constant in that we had to milk them twice a day.  The milk that we got from them was put into a large bulk tank and then every 3^rd day, a large milk tanker truck came to our yard, pumped out our bulk tank and drove away.  A few days later when we went to the post office, there was a cheque in the mail that made mom and dad happy when they deposited it at the local credit union.

In my teen years, my parents started to invest in newer and better machinery and procedures that reduced the cost of production.  These changes were made because family labor was becoming scarce and therefore more expensive.  As each of my older siblings graduated from high school and university and got other jobs, those of us that were left behind had to pick up what the older ones were leaving behind.  When their unfinished work was coupled with our own chores, something had to give.   It was eye opening lesson to realize that “time” is a resource that needs to be considered both in daily business and in investments. 

To see how time and money interact, consider the Rule of 72.  The Rule of 72 helps to estimate how long it will take to double an investment at a given interest rate. For example, if you have money invested at 1% at your bank or credit union, divide 72 by that interest rate you are getting.  The answer will tell you the number of years your savings will double (72/1 = 72 years).  Alternatively, if you are getting 4%, it will take you 18 years (72/4=18).

The great Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”  It is for this reason people search for solid returns for their work and for their money.  Farmers want good yields because the fruit of their work is always translated into money.  Retirees want good returns on their money otherwise the capital will be used up sooner than later.  So, whether you are getting interest or are getting a dividend, your ability to calculate both return and time together will help you determine the best deal.

Al’s nuggets:

1.  Money is the great equalizer among people because it is the common language that all people speak.
2. Time and Money are two commodities that should be spent wisely.
3. Time is precious because you can never get a wasted moment back.