Thanks to a friend, the talented editor of the book in fact, I was handed a copy of Money Talks – Lessons from Canada’s Wealthiest by author Sam Sivarajan. Sam has extensive experience in the investment banking industry and has worked with a number of wealthy Canadians and clients in the UK and Asia. Money Talks takes readers through a fictional series of coffee talks amongst friends, discussing a host of personal finance and investing lessons learned from Sam’s real-world experience in working with high net worth clients. The coffee talks are organized into the following book chapters:
- Chapter 1 – The Ground Rules of Wealth Creation
- Chapter 2 – Risk and Return: The Yin and Yang of Investing
- Chapter 3 – Planning: The Foundation of Successful Wealth Creation
- Chapter 4 – Portfolio Construction: Building Your Optimal Portfolio
- Chapter 5 – The Value of Advice
- Chapter 6 – Death and Taxes
- Chapter 7 – The Acid Test: Pulling It All Together
The information in Money Talks is not new, I suppose like most personal finance books, but it is written in a clever way that engages the reader to reflect upon their current set of saving and investing money rules and question them. Here are some of the highlights, what you can learn from Canada’s wealthiest based on Sam’s work with high net worth clients over the years:
- Pay yourself first.
- Leverage the power of compounding; reinvest dividends whenever possible to make your portfolio grow faster.
- Don’t try and time your entries into the market, it’s not worth it and you can’t do it successfully over time anyhow.
- Risk is not a bad thing; risk is not a good thing. Risk is just something you need to live with.
- Beating the average annual return of the TSX is very difficult. Most professional money managers cannot do it, so why try? This means passive investing, via Exchange Traded Funds (ETFs) or index funds could be a much better solution for many investors although there are drawbacks with this approach. (Not all indices are diversified; indices ignore individual company fundamentals.)
- History has demonstrated that financial planning, while not perfect, can make a huge positive difference.
- Diversification is critical, since there are no sure-fire stock winners. Ensure you diversify across companies, sectors, countries and asset classes like stocks, bonds and real estate.
- Good advice can help you stay the course.
- Paying down debt is always a good move, since it maximizes your financial flexibility. “Remember you pay interest with after-tax income.”
Overall, Money Talks is a good read for anyone just starting out with their investment journey. Although this book does not go into specific courses of action let alone financial products, it does set out to help readers where the author said it would: layout some investing concepts that are easy to understand but not so easy for anyone to apply consistently. You can buy Money Talks – Lessons from Canada’s Wealthiest here.