Living Your Dream – removing financial stress and complexity

Living Your Dream – removing financial stress and complexity

The following is an interview with author Larry Wilson about his new book – Living Your Dream. I recognize pretty much everything right now is far from dreamlike. Yet, I wanted to go ahead with this post (and giveaway) this week to highlight that his book is here to help remove any future financial complexity and stress should you want to leverage it.

Books, blogs or otherwise, my thinking remains…I hope you continue to stay well and you continue to practice any self-care you need to for you and your family.

Mark

“Stress.

Talk with people about personal finances, and that is the emotion they exude most often. Stress. The sources of financial pressure are many, and they tend to change over time. There are a seemingly endless series of financial quandaries, all of which seem so complicated…”

With this premise in mind, this is the reason why Living Your Dream was authored by Larry Wilson, to help unpack the financial complexity associated with your financial plan and reduce some much needed stress along the way.

I got a chance to chat with Larry recently about his book, his background, what makes this book a bit different than other personal finance publications, and how it might help you out.

Thanks to Larry’s interest in my site, and readership as well, he has offered to giveaway two autographed copies of Living Your Dream to lucky readers. I will draw those names at random in the coming weeks.

Larry, thanks for showing interest in my site and your comments as well. So, tell us a bit about yourself!

No problem Mark, I enjoy your site and am impressed by the engagement of your readers!

I was born, raised and educated in Winnipeg. I attended the University of Manitoba completing two degrees, Bachelor of Science in Agriculture (economics) and Bachelor of Commerce (honours) with distinction. After graduation I articled with KPMG earning the CPA, CA designation. Over the years I have added a number of other professional credentials, including: CFP (FP Canada), CIM and DMS (Canadian Securities Institute).

One other academic achievement I am proud of is having won the award for the highest mark in the country on the Canadian Securities Course (1999). This is the one thing I have in common with David Chilton of The Wealthy Barber and Dragon’s Den fame. So far my book sales are lagging his by just a wee bit … similar in magnitude to how Connor McDavid is a just a wee bit faster on skates than I.

My wife and I retired early. I chose to write a book, Kim chose to travel. I’m still in the process of tallying-it-up to see which of those two choices was more expensive.

Good one. I hear writing books are certainly not a get rich approach but usually done out of passion. OK, how did you get started with investing? Tell me about your journey…

My initial exposure to investing came differently than it does for most people; it was in my role as an auditor. KPMG audited many mutual and pension funds, and I worked on several of these engagements. From this experience I gained an appreciation for the various asset categories and the role they played in the make-up of a properly balanced and diversified portfolio. I also got a first-hand view of the commission structures and the expense profiles associated with fund operations.

After I completed my CPA, CA designation, I started taking courses through the Canadian Securities Institute further developing my understanding of the investing landscape. I latched onto a discount brokerage account very early and have been a DIYer ever since.

As I matured (a slick way of saying learned from my mistakes), my process for investing has simplified, and our portfolio has become far less complex. I no longer try to outsmart the market through a bunch of dipsy doodle – my focus is now primarily index based and cost sensitive.

I’ve gravitated to owning more U.S. indexed products myself in recent years – seems to be a great complement to my dividend investing approach.

OK, back to you Larry. What inspired you to write the book? What were you trying to achieve that other personal finance books could not?

Great question Mark.

The main driving force behind this project boiled down to the simple fact that people need help managing their finances. In general, we are not doing it well. The statistics show that Canadians have too much debt, are spending too much of their income, are not taking full advantage of the saving and investing programs that are available, and have not adequately considered important issues such as estate planning. Unfortunately, the market volatility that we are currently living serves to highlight some of these shortcomings in a dramatic fashion.

Many people don’t have a comprehensive financial plan. I wrote Living Your Dream because I thought I could help … help young adults, through to those planning for retirement and end of life. It is never too late to improve the way we manage our finances, and there is no better time than the present to reset and refocus.

Insofar as other personal finance books go, I have read over 300 of them and found almost all of them to be useful and lots of them to be outright excellent. Most books in the market though have a narrow focus and are written by either journalists, or those employed within the industry. My aim was to provide one resource that covered a more substantial piece of the personal financial planning landscape while keeping the read as light as possible. Because I’m just a guy who wanted to write a book (with no personal agenda), I think some of my insights are less founded on biased thinking.

We all definitely have biases but I can appreciate your drive to offer something different. I hope my site does that for folks as well…

With so much changing recently, seemingly on a daily basis with new personal finance struggles to overcome, what do you believe are the biggest challenges investors face and need to overcome to live their dream?

Beyond that in “normal times” let’s face it Larry: COVID-19 is very scary. I worry about it. 

I can’t answer any investing question without acknowledging that the current market conditions are extremely trying. This is an understatement I know and I sincerely sympathize with what many people and families are going through right now. The uncertainty associated with the health and wellness of our loved one’s has served to make this one of the most unsettling times I have lived through. The sudden change in value of even well designed portfolios has been staggering. We truly are all in this together.

Financial markets hate uncertainty and they are showing that in an extreme way now.

In 1987 I was auditing a fund when the crash hit. Everyone seemed convinced that the markets would never recover. They did. The same sentiment was around when the debt crisis hit a couple decades later, and before that the tech bubble crash. But, the markets recovered again.

As I sit here retired, part of our portfolio is taking a substantial beating. Equity investing looks bleak at best. I should be in a big panic but, surprisingly, I’m not. I attribute my relative comfort at this time with two things: history tells me the markets will recover, and we have a sound financial plan in place.    

Now, back to your question Mark.

Every family has a particular set of financial challenges as well as personal goals and dreams to be funded. Oddly enough, many don’t invest the time to think about, learn about, and actively participate in managing their finances. The starting point is to develop a comprehensive, written, financial plan.

Every family should have one of these.

That said, some of the more common challenges I see would include:

1. Expenditure management. Before you can even become an investor you need to have investment capital. Consuming is much more fun than saving. Taking that a level further, consuming “want” is much more fun than consuming “need”. Spending money on wants vs. needs can be very problematic. Often people buy too much home (bigger/fancier), too much transportation (BMW SUV rather than Honda Civic, or a bus pass/uber combo), too much wedding (even the average wedding is ridiculously expensive), etc.

The most basic financial planning formula is: Income – expense = investment capital. To be an effective investor, the first hurdle for most is to understand and respect this simple formula. There are certainly things you can do to enhance the income piece, but the bigger challenge is controlling the expense piece. This is where well-articulated goals become essential. Goals help focus on that which is relatively more important. The objective is not to become excessively frugal, rather it is to direct resources based on your personal values.

(I know you’ve done this on your site Mark for years, well done on goal setting around your values.)

2. Complexity management. My preferred approach to investing is very simple and easy to implement. Define an asset allocation appropriate to your situation (review it periodically), and rebalance annually. With respect to equities, buy the market (global with an element of home bias). With respect to fixed income, the core of the portfolio is a ladder of investment grade securities that actually mature, with an add-in component of low cost Exchange Traded Funds (ETFs) dedicated to real return and high yield bonds. This is topped off with a cash balance appropriate to the investor’s circumstances to cover off emergencies, lifestyle requirements and perhaps as a strategic element of the overall portfolio.

With this approach the investor need not worry about picking individual stocks, need not worry about the myriad of alternative investments and need not worry about too many individual pieces that need to be managed. Easy peasy! People love to show how smart they are by engaging in investing practices that make the whole process, and consequently their portfolio, more complicated than necessary.

3. Investment cost management. Most investors focus on trying to increase their returns to improve their overall investment performance; minimizing cost is something that is much easier to do and is guaranteed to improve returns substantially over a long term investment horizon. There have never been more low cost options available than there are now. Using a low cost investment strategy rather than a high cost investment strategy, all else remaining equal, will result in an oversized difference in investment results over a long term investment horizon.

Those are three great areas to focus on, and I know your book goes into far more detail about what a complete financial plan actually is beyond investing. So, with that in mind Larry, what is your best financial advice?

Be an active participant in your finances, which means … spend some time educating yourself so that you can capably assess any advice you receive. Hire credentialed advice in those areas where advanced or detailed knowledge is required to supplement your understanding of the basics. Develop, or participate in the development of, a financial plan tailored to your situation. Measure your progress toward your goals. Recognize and learn from your mistakes. Enjoy your money in the manner that most pleases you over the course of your life!

Thanks for this Larry.

Readers, these are very, very challenging times. But it is my hope there are nuggets of information you might want to learn about from Living Your Dream at some point. 

You can find Larry and contact him about his practical resources and his book here..

Good luck to all participants for the giveaway and stay well.

Got questions for Larry? Send them along. He is more than happy to try and answer all reader questions or comments in this post during some incredible times of change. Comment away. Thanks for reading. Please stay well. 

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