Stocks for FUN and PROFIT: Questions and Answers about adventures of an amateur investor

Stocks for FUN and PROFIT: Questions and Answers about adventures of an amateur investor

Fans of this site will know for many years now, I’ve reviewed a host of personal finance and investing books.  These are just some recent examples:

Benefits of The 6-Pack Portfolio.

Retirement Income for Life

Straight Talk on Your Money

Victory Lap Retirement

Your Money or Your Life

The Essential Retirement Guide

And the list goes on…

Over years, these books have improved my financial IQ, matured my investing behaviour and in some cases, changed my ways for the better.  Some books that I’ve read have been insightful, not because I didn’t know some of this financial information, but rather they are packaged from much different perspective – Stocks for FUN and PROFIT is one of those books.

Each chapter of this book, written by amateur investor Herman VanGenderen, takes the reader through Herman’s ups and downs with investing over the last four years (since June 2014) – highlighting how he has invested (and his opportunities missed) using three investing accounts:  TFSA, RRSP and a non-registered account.  His objective for the book was to share his learnings, help demystify the market and educate Canadian investors through his own personal journey.  Basically, a blog in print format with “20/20 hindsight” for reflection.

Stocks for FUN and PROFIT

I got a chance to chat with Herman about his book recently.  Here’s what we discussed….

Welcome to the site Herman!   As you know, I use this site to chronicle our financial freedom journey.  I think most readers know who I am and how I invest.  I’m curious about your background.  Can you provide some details for readers?   Also, why write the book now?

Bio:

  • Name: Herman VanGenderen
  • Age: 60
  • Family status: Married with 2 sons. One working as a financial analyst, and the other just starting grad school in bio-chemistry.
  • Background: A career in agricultural sales and sales management. Still operating a seed business in the Calgary area.
  • Semi-Retired since 2009, when I was 51, but as busy as ever.
  • Retirement plans: I never plan on fully retiring, even though we’ve had the financial means to do so for quite some time.   The annual dividends on our stock portfolios would sustain a very nice lifestyle, which is the goal of My Own Advisor! One of my goals with the book is not just to demonstrate that it can be done, but that’s fairly easy if the right approach is taken. The other reason is to help others, especially younger readers, avoid many of the “knocks” from the “School of Hard Knocks” that I experienced in my investing career.  My wife and I are both very active and really enjoy traveling and hiking. We plan on increasing those activities this next decade. We also enjoy wine and while she hates beer, I love craft beer. For those who wish to retire, stock investing can provide a great and productive pastime, to help keep one’s mind active and engaged.

Interesting path!  You just completed a 200+ page book on investing.  How did your investing journey evolve for you?

I started immediately after graduating university. The company I worked for had a stock purchase plan that I participated in. My first decade of stock investing however, was relatively unsuccessful. The reasons for this are all described in the second chapter of the book, but basically came down to over-reliance on the stockbrokers I worked with. Therefore I initially focused more on real estate than stocks. I re-evaluated the situation in 1992 and moved my RRSP into a self-directed stock account.

My real estate journey, which is chronicled in Chapter #12, has also been successful. However, having over time gained confidence in stock investing, and given the workload of real estate, I started to de-emphasize real estate in favour of stocks. But I still do some of both.

There is lots of debate in the personal finance community on investing using the TFSA first vs. RRSP first vs. simply paying down your mortgage.  What’s your take based on your experiences?

Technically speaking Mark, a lower income person should focus on their TFSA and a higher income person should focus on the RRSP.  However, in my books a higher income person should strive to max out both accounts, because they have the means to do so!  I have always maxed out all tax-advantaged accounts, the reasons for which are explained in a couple of the early chapters.

My first focus would be the TFSA because of its simplicity and flexibility.  I know you’ve written about that here – why you continue to maximize contributions to this account…

On paying down the mortgage…well….how I feel about that is in Chapter #12 as well.  Let’s just say I don’t even consider the house lived in as an investment. This may be controversial but I think the culture of believing your house is your biggest and most important investment is flawed, and is a key factor keeping people from achieving financial freedom.

That said, my first house mortgage was about 14% interest, and today mortgage borrowing costs hover about 3%. This changes the picture. Since I believe 9-12% average annual returns can be achievable with stock investing a case can be made for keeping the non-tax deductible interest expense and at least maxing both the TFSA and RRSP. I had this discussion with my oldest son when he purchased his first vehicle. He was 23 at the time and chose to take the 2-3% finance charge on the vehicle and stay fully invested in the market.

Let’s break down how you invest for folks that haven’t read the book yet.  How do you invest using your TFSA?  Why?

Both my own and my wife’s TFSA are 100% common shares of dividend paying corporations, located in Canada, the UK and Bermuda. This way I avoid paying dividend withholding taxes. I max our contributions every year in early January. My compound annual return since we started the accounts has been 17.4%, and my wife’s has been 13.9%. I feel really bad I’m not doing as well for her as myself J!   Then again, I always tell others the 17.4% is not sustainable and will moderate in time.

How do you invest using your RRSP?  Why?

Our RRSPs are almost entirely made up of dividend paying corporations located in the US and Canada.   We hold about 60% American assets.  We put U.S. assets inside the RRSP since there are no dividend withholding taxes on U.S. companies held inside this account – you just referred to that in a recent post actually Mark!

My 25-year record is 11.7% annual gains and my wife’s 22-year record is 9.3%.  You might think with the performance of our TFSAs and RRSPs we employ some kind of rocket science approach, but that couldn’t be further from the truth. I still own Bank of Nova Scotia purchased at about $5.50 per share in 1992. I also own other companies purchased in the 1990’s. My annual portfolio turnover is only about 5-10% per year, and that’s mostly the result of corporate takeovers. If one adopts a true investor mentality (vs. a trading or speculating mentality), workload and stress are reduced, and performance is enhanced.  Model TFSA and RRSP portfolios, based on our own approaches, are outlined in the book.

How do you invest using your non-registered account?  Why?

Our non-registered accounts are similar to the registered accounts with a couple of additions. I employ ETFs to gain exposure to some specific sectors, like gold, and other geographies such as Europe and Emerging Markets.  I also employ options very successfully.

I started a non-registered account specifically for my newsletter which is outlined in the book.  That account is now about 2.5 years old and has a total return of 53.9% as of June 30th.   Again, like my TFSA, I will warn readers that that kind of return is unsustainable but it sure is FUN right now!  And let’s face it, the FUN and the PROFIT parts are highly correlated for me!

Before we wrap up, what are your investing plans for the future?

Well, after a lot of trial and erroring if you will, I believe I am now on a sustainable and repeatable path, which is another reason for writing the book. I would not have had the confidence 10-15 years ago that I knew what I was doing. It takes a long track record with stock investing to be confident that it isn’t $___ luck (fortuity). Therefore, my plans are to stay-the course, and help others learn from what I did.

You look like you’re on a similar path Mark. I applaud My Own Advisor for sharing your journey (and your mistakes).  Financial literacy is extremely weak across North America, leading to many of the social problems we face as a society.

Lastly, a final plug – why buy your book?

I have read over 40 investing books. Some are better and some not so good, but in the end they tended to deal with just one aspect of investing. They were like one piece in a puzzle. I have attempted to put together the entire puzzle using my lessons learned, success stories and my own account information in detail – few books actually put that type of detail in print!

My book shares true bottom-line performance and tracks the portfolios over time. It is a real-life demonstration. This unique approach has resonated well, as reviews to-date have been exceptional.

Thanks for this interview Mark.  I look forward to the comments on your site and anyone that might have questions about my journey or my book.  Your audience is welcome to check my website anytime:  www.you1stenterprises.com.  Thanks again.

Enter to win this book below.  I’ll draw one random name in the coming weeks!  Good luck 🙂

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My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're inching closer to our ultimate goal - owning a 7-figure investment portfolio for semi-retirement. We're almost there! Subscribe and join the journey. Learn how I'm getting there and how you can get there too!

62 Responses to "Stocks for FUN and PROFIT: Questions and Answers about adventures of an amateur investor"

  1. Would love this book for myself, but moreso for my nephew who is starting to have a keen interest in financial literacy and investing, and has already devoured all the books in our (tiny) collection!

    Reply
    1. Wonderful. I started my kids in 2010 when they were 13 and 16 with their small savings of $1923 and $4933. One son got so interested he took finance in university. Their results have been excellent. The annual returns of my 13 year old (now 21) have been 10.1%, 7.1%, 5.2%, 8.7%, 18.5%, 11.1%, 18.2%, and 11.3%, and the other son has been slightly better. Investing in stocks is a wonderful learning opportunity.

      Reply
  2. re: the culture of believing your house is your biggest and most important investment is flawed
    Yup. But it’s the Canadian Way — (Perceived) Safety First!

    re: My 25-year record is 11.7% annual gains
    Not so outlandish considering ~2/3rds of that time period was spent in a bull market.

    Reply
    1. I would agree that 11.7% average isn’t outlandish, but it is rarely achieved. It’s unfortunate that the market on average returns 10%, the average equity mutual fund about 6-8%, and the average equity investor about 3-4%. I would challenge all readers to measure your own results with the same protocol as described in Chapter 8, to see how you have fared in the past. While measuring annual returns is easy to do, it is often done poorly or not done at all. By the way, they teach in business and investing schools that it is impossible to beat the market. Really?

      Reply
  3. Used a great example with BNS, then his actual portfolio doesn’t follow his example. Look at the dividend history of the 8 stocks listed, to 2017
    – 2 Cut their dividend
    – 4 have little or no Div Gth
    – 2 have good Div Gth
    – holds cyclical stocks
    – holds us stocks in tfsa account
    Why would I read further, even if he offers some good advice.

    Reply
    1. I’m not quite sure which eight stocks the comment relates too as there were none specifically mentioned in the interview except BNS. However, I have had stocks cut their dividend and I have made mistakes. That’s both part of the perpetual learning process and the nature of investing in stocks. However, all those mistakes are reflected in the bottom line performance mentioned. One big difference I tried to create in my book vs. others, was for readers to experience what is REAL. Many other books and newsletters focus on what went right. I included everything so the reader can experience reality, what is also likely to happen to them, and to focus on the portfolio rather than the individual stock.
      For clarification I don’t hold US stocks in my TFSA. If you read my one blog that has a couple US in it, it is because I was designing a all-purpose model portfolio as if a reader just had a TFSA. As mentioned in the book, they are best to avoid but if a TFSA is all you have the US should be part of it.

      Reply
      1. From the book, your TFSA Holdings:
        Rogers Comm
        Teck Res
        Ensco UK-US
        Glaxo UK-US
        Ship Fin Bermuda US
        AT & T US
        TD Bank
        Innvest REIT
        Two US from UK, 1 Bermuda and 1 US
        looked up the 10yr div history on Morningstar.
        My criteria is a Growing Income from my holdings, not whether we match, beat or under-perform the market We’ve found that stocks which grow their dividend will also show price appreciation, but its the growing income we seek.

        Reply
        1. Thanks for clarifying and allowing me to address. I’m not sure how far you read into the book. Here is my clarification:
          That was how the portfolio looked on June 1st, 2014.
          AT&T: right on the page where I shared that it was in my personal portfolio, I explained that I wouldn’t put it into a TFSA portfolio anymore, but I had purchased before I realized the dividend withholding tax issue. Not something that was discussed in the press much over the years. I did not put into the model portfolio because of that, and sold personally shortly thereafter.
          Teck and Ensco: I don’t expect you got to the part in the book where I chastised myself for having too much resource exposure in my TFSA and made an adjustment to make sure I didn’t get that lopsided again. The book is intended to demonstrate these kind of realities and how I adjusted.
          ShipFinance pays a very high but variable dividend based on earnings. The shipping industry has been really tough but SFL seems to keep chugging along. No withholding tax on Bermuda based companies, and none from UK based even though we buy in the US (as explained in the book)
          Innvest was the real star when it got bought out by a Chinese company.
          Rogers and TD are core holdings and have done very well.

          SO: despite all those errors the portfolio has provided over 17% annual gains which I think is pretty good. I agree 100% that companies growing income and dividends will do better over time, but nobody is perfect in their selections. I share those mistakes as being part of a real portfolio, and to demonstrate how a portfolio evolves over time. It is quite different today. Thanks for your comments

          Reply
          1. Amazon provided a few pages for review. Thanks for explaining and I don’t profess to have being perfect through our investing span. However, we eventually found DG, actually The Connolly Report which allowed us to find a strategy which worked for us.
            All the best.

  4. It’s always interesting and inspiring to see how other people get to retirement nicely. It’s also a good learning opportunity to compare that with our own progress.

    Reply
  5. I want to win because… I’m a new investor and love the blog and all the articles. I’m always looking for highly recommended books for amateur investors as I seem to have so-so luck picking my own books a lot of the time they are very dense and read like a finance textbook – its difficult to engage with the writing.

    Reply
    1. Thanks very much for the comment. This is a review lifted right from the Amazon website: “I enjoyed the book very much – well written with humour, so easy to read, and very informative.” It’s not a story book but given the subject matter, really tried to keep it light and lively.

      Reply
    1. I congratulate you Cheryl on knowing the difference between an Investor, a Trader, and a Speculator. Many people refer to Traders and Speculators as Investors but in my books that is not the case. Long term, true investors do better. Thanks for the comment.

      Reply
  6. Mark, that was a good, if short, interview. I have been mentoring my 3 sons on the ins and outs of investing and money management for several years now. Like Herman I’ve been managing my own funds for around 20 years and have learned a lot that I’m passing along to my children and fellow retirees.
    If I get a copy of the book I’ll pass that along to my sons as well.

    Keep up the good work mark!

    Reply
  7. This would be a great book to read, I think. I’m quite new to investing (only about 2 years of active interest) and practically newborn to dividend growth investing which I switched my focus to back in April! Still so much to learn, though I soak up blogs like this like a sponge on long night shifts.

    Reply
  8. In my retirement accounts I hold all 5 big banks, 3 telcos, 3 utilities, 2 pipes and the 2 rails in some form or another which forms the core of the portfolio. I hold spec positions in my non-reg account for gambling and to generate capital gains. This is where I get my FUN but is def not for everyone. We all walk different paths and I appreciate the success stories of others.

    Reply
    1. “In my retirement accounts I hold all 5 big banks, 3 telcos, 3 utilities, 2 pipes and the 2 rails in some form or another which forms the core of the portfolio.”

      I suspect most Canadian DIY stock investors hold the same ones for the same reasons 🙂

      Nothing wrong with a bit of speculation but investors/speculators need to know the risks.

      “We all walk different paths and I appreciate the success stories of others.” Well said.

      Reply
    1. RBull (59, retired, married, rural coastal NS) · Edit

      And even better than the NS teachers plan.

      Although OTPP has only only 36% equity, 25% real assets so excellent returns considering. I suspect we’re talking 100% equity with Herman.

      Reply
      1. Yes it is all equity and it will likely stay all equity until I am 100. That might not be for everyone but equity provides the best long term results. And once you get the annual dividends to a level that provide a good lifestyle, they are self sustaining and generally inflation adjusted.

        Reply
        1. RBull (59, retired, married, rural coastal NS) · Edit

          Thanks for the reply. I am retired with a DIY 60/40 mostly passive portfolio that is serving us well. The school of hard knocks taught me some things along our journey (and still does), along with soaking up a little more knowledge through books, forums, research news etc.

          It seems you have done very well with your profession and with your investing over 25 years, and are passing your investing experiences and knowledge on to your sons and to investors through your book. To me if this can help investors be more successful and reach their goals a little sooner that’s a good thing.

          G/L with the book.

          Reply
  9. Lloyd (58, retired (but farm a bit), married, rural MB) · Edit

    Is it just me or is this slightly ludicrous. A book by an amateur investor that’s been doing it for only four years? Gotta ask, why would anyone pay for something that is basically free on the internet?

    Reply
    1. Cuz that’s the way it’s done, Lloyd. Remember, everyone thinks they are above average…there is no bell curve, just a R-side tail only. Thus we get inundated with ego-driven self-published noise. Simply muddies the water with almost-always unreproducible tactics* for those seeking actual knowledge.

      And expensive too! $36 for a paperback?!
      PF Lesson #1: buy personal finance books at used book shops for 1/10th the retail price…or just go to the library and get them for free.

      *(a piece on who’s the all-time “greatest” investor, and why:
      https://www.pragcap.com/greatest-investors-time/
      You’d do far better to read any books by those on the second list than blow a wad of cash on anything self-published. )

      Reply
        1. Lloyd (58, retired (but farm a bit), married, rural MB) · Edit

          Lloyd was incorrect in his assessment and ought to have A) understood it better or B) at least knew what he was talking about. He didn’t do either.

          But in his defense he apologized for his goof.

          Reply
          1. Yes, I saw that Lloyd. Like Mike I was referring to the information being free.

            To me DIY investing is about not paying for advice you have learned the hard way (like I have) and cobbling together your own strategy from a lot of reading and research.

            On a positive note I bought a nice lightly used Gravely 27 ton wood splitter yesterday for $1000. This makes me happy 🙂 My 3 pt hitch tractor model had been leaking oil and I have a mountain of maple to split.

    2. I would like to address this and all the associated and implied comments as they highlight many of my frustrations as well. Careful read of the interview would show that I have 35 years of experience. As mentioned 10 unsuccessful and the last 25 very successful. The book takes place over a time frame of 2014-2017, but integrates all the lessons from those 35 years. Admittedly results from 4 years is not a long enough time frame to totally evaluate performance, which is why I fully discuss the 25 year record in detail. The process followed to develop the portfolios in the book, are what I follow myself.

      In no way do I claim to be the worlds greatest investor. Will leave Warren Buffett with that title. My purpose was to write something from the perspective of an amateur investor who has done it and succeeded, for others who wish to get a reasonable return on their investments, without having to spend a lot of time.
      The book took tremendous effort, so I’m not about to apologize for the price. I sincerely hope those who purchase also implement, and benefit tremendously over their investing career.

      My reply above under SST is also applicable to these numerous comments.

      Reply
      1. Thanks for sharing Herman, and clarifying. I tried to be clear in the interview you’ve had decades of experience (good and bad) as an investor but I know folks might only focus on the newsletter period. That’s OK. There is a passionate group of readers here and it’s great they are challenging some assumptions!!

        Reply
      2. Lloyd (58, retired (but farm a bit), married, rural MB) · Edit

        “Careful read of the interview …”

        Yup, I blew that one. Should have followed the old carpenter’s adage….measure twice, cut once. (read twice/completely before commenting). Sorry, my bad.

        Reply
  10. LL: “Is it just me or is this slightly ludicrous. A book by an amateur investor that’s been doing it for only four years? Gotta ask, why would anyone pay for something that is basically free on the internet?”
    – I actually agree with this comment! and can add “why gamble with your money? – that’s not fun or wise to do. But – heck it might help sell books!

    Reply
    1. Well, to be more clear, he developed his newsletter in June 2014 and the book is a collection of those newsletters. As an investor, he has been investing for decades Mike.

      Reply
        1. Lloyd, all good, you don’t need to apologize. You strike me as not the person that would immediately discount what anyone is saying just be confrontational – you have good critical thinking and it’s good not to take anything for face value.

          Reply
          1. Lloyd (58, retired (but farm a bit), married, rural MB) · Edit

            “Lloyd, all good, you don’t need to apologize.”

            Yup, I sure do. Way I was brought up. Make a mistake, apologize. It’s what the big boys do. (of course if this big boy had comprehended what he read versus what he thought he read he might not have had to).

            Having said that, I likely won’t buy the book as I bet I’ve made all the same mistakes (and then some) already. Furthermore, I’ll bet that a LOT of what is in the book has likely been covered in this very blog (supposition on my part but highly probable).

      1. Even if he has been investing for decades, as the link I provided infers, an investing system has to be reproducible in order to be useful (e.g. I still own Bank of Nova Scotia purchased at about $5.50 per share in 1992 — is BNS the same company as it was 25 years ago? Does it contain the same amount of growth? More/less risk? Better/worse value? Buying BNS today isn’t the same as buying it 25 years ago).

        Perhaps the most successful investors in the last 100 years have been the Dodge brothers, making something like a 55,000% return within a few of years of investing in Ford Co. Zero degree of duplication. I’ve made decent returns over the last couple of decades but there is no way even I could repeat my own process if I started today.

        I suspect (probably with high probability) that what’s contained within this book is not all that replicable, thus not all that useful (i.e. how is the content different than what contained in the other 40 investing books the author has read, and more importantly, different than the other 40,000 investing books listed on Amazon.ca? Will 40,001 investing books really move the needle?)

        Reply
        1. You raise a good point about companies changing over time. I would sure hope BNS is not the same company it was 25 years ago!

          I’ve read the book. Herman is sharing his journey, successes and failures and learnings alike. Not everyone will learn from it but that wasn’t the point of writing the book. He was simply hopeful some would. Kudos to him for making the effort even if it doesn’t become a best-seller. I can appreciate it took some work and labour of love.

          Reply
        2. Let me ask, which do you feel is more replicable: 1) 55,000% within a few years. or 2) 11.7 % annually with 25 year track record?

          As mentioned in the interview I believe how I approach the market is sustainable and repeatable or I wouldn’t have written the book. Of course we will only know for sure in another 25 years. Here is a quick discussion with a person when I was signing books at a book store, and I had the TFSA feature article from MoneySense on the table showing my TFSA at $105,000 (in January). He said “I’m ahead of you, mine is $300,000.” I replied, “wonderful, how did you do that?” He said ” I put everything into marijuana stocks.” I asked “Have you sold?” “Yes” , Me “Great, do you realize what you did isn’t repeatable?” “Yes, I realize it was $___ luck”. Me “Great, you are smarter than most in recognizing it was luck. If you purchase my book it will help you learn how to truely invest, and put that money to work for longer term” He hummed and hawed and said no-thanks. Then he came back a half hour later and said “I thought about what you said” and he bought the book.
          The book is different as it is written by an amateur investor for other like minded amateurs who want to learn how to get a decent return, and it shares reality. It also shares portfolios and bottom line performance, both the good and the bad because every investor will experience both. It’s how we handle the these situations that determine our success, and I hope that I demonstrated how I handled them in the book.

          Reply
      2. This is the comment that I agreed to “Gotta ask, why would anyone pay for something that is basically free on the internet?” Mark – Now you confirm that all his newsletters are basically the book! So why buy the book? As for “Fun” – Ya sure, investing can be fun when your buys turn out great. But… is it FUN when you have a few losers? and gamble on other losers to make ground?

        Reply
        1. Hey Mike. Herman is passionate about investing and he decided to write a book based on his newsletters. If that’s how he wants to express his passion – good on him I think.

          Just so you know, everything “basically free” on internet is not always a) good for you nor b) correct. 🙂

          Reply
  11. It is surely an interesting journey and I have very curious about the composition of his portfolio. Very interesting yield over such a long interval from a “normal” guy! I like to find out his trading in relation stock analyst recommendations and to discover a novel way to look at investing for the regular guys.

    Reply
    1. His portfolio mix is rather interesting, I can see the appeal for British ADRs in his TFSA for international diversification (tax-free at that)!

      Why?
      There are withholding taxes on US stock dividends paid into an TFSA = 15%. However, a British American Depository Receipt (foreign stocks that trade in the US) – given the US and UK have a tax treaty – there are no dividend withholding taxes charged by the ADR. Thus, if you purchase a British ADR for a UK company will you escape dividend withholding taxes if it is kept in your TFSA.

      A good strategy. Examples includes RDS.B, AZN. Herman can likely comment further!
      https://www.moneysense.ca/save/investing/tfsa/a-tperfect-tfsa-portfolio/

      Reply
      1. Sure Mark: Actual portfolios and rational are in the book but here is the skinny.
        TFSA = UK and Canada
        RRSP = US and Canada
        Regular = Everything with less focus on dividends, especially with US company’s as the same tax as interest income. CAD dividends get preferential tax treatment. I also integrate ETF’s and Options (for more experienced investors)
        I try to identify companies that look like long term holds so not constantly trading. Less stress and work.

        Reply
  12. The market place (vs the author’s marketing skills) will decide the worthiness of this book.

    Then again, The Pet Rock sold 1.5 million units…

    Reply
    1. In a way it already has. In about 7 months it has sold about 6 times what the average independent author sells over the lifetime of their book, and the reviews have even blown me away. It might not be for everyone and some may not need it, but if I can help a few thousand people achieve financial security I will be happy with the effort.

      Reply
  13. I want to win because I want our finances to be in good shape when we retire, also could use all the practical advice I can get on managing the moving parts of investing, mortgage, etc

    Reply

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