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BUY BUY BUY… Your Tollbooth to PFTM Wealth

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Buy Buy Buy

I was never terrific at math in high school…

I was OK… yes… but not super gifted. But I did have my style. Or more likely I discovered my style with age and experience like a modern day Marco Polo. (Marco?… POLO!)

I hung out in class with slightly nerdy kids like Jerome and Karen and another Larry (he called me Lawrence so we wouldn’t get confused), kids who grasped and consumed math concepts like they were ambling at ease amidst the orchard trees, snacking on juicy, low hanging cherries, whereas I clumsily had to climb a shaky ladder to reach and reach to find the answers.

More often than not I dropped the fruit or fell off the ladder.

Jerome would lean across the gap between our desks and patiently explain to me the misty concept that our teacher Mr. Warneke had just chalked up all over the blackboard. Regardless, my puzzled expression rarely changed. SOL again.

The abstruse theories and hypotheses were nebulous to me, more flighty feathers than concrete. I couldn’t squint hard enough to make the numeral picture on the canvas clear, not the way my gifted cohorts naturally could.

More importantly, it wasn’t something I enjoyed. It tasted a whole lot more like vinegar than chocolate.

I have a BIG lazy gene and math drew it up to the surface like bubbling oil crude. When it came to tough thought processes, you know, the 10,000 hour rule, even the 1,000 hour rule, well…. I flipped to the other channel seeking alternate fluff… maybe it was “fake fluff”!

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I liked numbers and math, just not THOSE numbers and math. It was too much like masturbation instead of skin-to-skin sex.

I liked “real life” math that could change my life or others’ lives. Still do.

In the here and now, and in the many years since, whenever I deal with real life numbers… numbers that have an actual day-to-day meaning in my world… well… I’m in my element. The water feels so much warmer in this pool.

I like numbers that relate to meaningful things where I can have an obvious impact.

Here’s a couple of examples:

I compiled statistics for 10 years in a laboratory-based diabetes program. I was able to monitor and impact in some style the way in which people treated their own diabetes condition.

Every three months I prepared and mailed an individualized letter to thousands of local diabetics – a letter filled with real life numbers that included their blood test results for A1C (blood sugar test), Blood pressure and Cholesterol (ABC’s).

For those who had been wandering about blindly (often for years), a mechanism now arrived in their mailbox whereby they knew exactly where they stood. They could then make educated lifestyle changes (or choose not to as is sadly so often the case). That’s real world, easy-concept numbers and math.

The other real life math I invest my hours in is for my personal benefit.

It’s my tollbooth math.

Personal Financial Tollbooth Math. (PFTM)

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I’ve talked about the idea behind PFTM before, so I’ll expand on it a bit further here.

Again, an example or two.

Remember how in high school you read JD Salinger’s book, Catcher in the Rye. He wrote that in 1951. Well, today, 66 years later, this book continues to sell a quarter of a million copies each year. For God’s sake, the man has been dead for almost 8 years and he makes more money annually than I do. Tollbooth.

Elvis Presley, Marilyn Monroe, and Michael Jackson are all long gone and yet each still racks up millions and millions of dollars of yearly revenues that pour out of swollen creeks into their estate accounts. Tollbooth.

Each of these people set up a tollbooth based on their strengths, and posthumously continue to feed voraciously from their early labours and talents.

If you have a business idea or some talent that provides a steady, worry-light, form of income, I encourage you to pursue it with gusto. Eat it for breakfast, lunch and dinner.

But since I’ll likely never pen a New York Times bestseller 50 Shades of Grey book or produce a song like Thriller, I need to build my own tollbooth in my own way with the tools I have at my disposal; hence Personal Financial Tollbooth Math.

More simply put, it’s about investing in good quality companies that spin off a steady stream of dividends, preferably a stream that increases each and every year. There’s an additional layer to this called DRIP investing that I’ll write about another day.

Ownership of a well-chosen batch of these companies is a ticket to long-term financial success, and fortunately they’re not hard to find in today’s information-laden internet world.

A few choices you ask? I’d be happy to share like the Warren Buffett wannabe that I am.

I have investments in tollbooth businesses like Apple (your iPhone is 2 or 3 years old… buy a new one… Cha-ching for Apple!), or Johnson & Johnson (running low on Tylenol…psssst… J & J will take away that headache!), or Bell Canada Enterprises (BCE) (another month, another $100 to the phone company that connects me to my Apple iPhone!). They all pay quarterly dividends that increase each year. Tollbooth.

AFLAC, CVS Health, TransCanada Pipelines, Royal Bank, Disney, United Technologies, Pizza Pizza Corp. are all good conservative choices that have paid ordinary investors for years and years, and likely will for many years to come. And those are just a few.

FULL DISCLOSURE: If you’re seeking a raging blast of adrenaline rush with your investments, none of these are high flyers with 10-bagger potential (Peter Lynch‘s catchphrase for a stock whose share price increases 10-fold)… but they all offer a steady drizzle of tollbooth money into your bank account every month or every 3 months.

Dividends

Tollbooths and “real life” math go hand-in-hand to bring ease and quality to our lives. You can tell me as often as you like that money doesn’t generate happiness. I’ll grind my teeth together and then quietly remind you that $$ are a cruise ship that carries you a long way in the right direction.

I’ll keep practicing my PFTM tricks and building a stronger repertoire of those businesses that work for me and my family.

I love my investments like little children. I watch them forge ahead and build on their strengths with the occasional scraped knee along the road.

I take pride in their accomplishments, and live in the reflected glow of all they do to enhance my quality of life.

Reflecting back, my bright high school friends who put in the necessary hours mastering math concepts have all likely made millions working in high-tech fields that require a strong understanding of mathematical models and nuance. Maybe theoretical math became their tollbooth. I applaud any successes they’ve had using their own toolkit.

Even though I wasn’t in the top echelon of school math class, I fortunately discovered that life often doesn’t require brilliance or genius to deliver the goods, sometimes you only need to unearth your Personal Financial Tollbooth Math.

Einstein math

Snowball BOOYAH!

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money-snowball

I don’t want to drop names or anything but last weekend Warren Buffett sent me a long letter.

He’s very thoughtful. Warren does this every year at this time. Has for 50 years now. It feels like a grandfather’s warm, reassuring hug.

OK, it’s not only me that Warren loves.

The letter is actually his annual missive to Berkshire Hathaway shareholders, freely available to anyone, even non-shareholders like myself.

In its entirety, it’s an encyclopedic message of knowledge and hope to anyone who wants to invest, live, and retire comfortably, spoken in a folksy, left-wing, socialistic kind of way.

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Buffett… Graham… Fisher… Lynch… Cramer… Green????

A world of great 20th (and 21st) century investors. You might want to remember and study the ideas and words of those names (except the last one!) if you crave a life of lessened financial worries.

I was loitering in my former lab workplace this past week while dropping by to pick up a lab buddy to go for a sweat session at the gym.

While waiting and listening to haematology analysers counting red and white blood cells happily in the background, another young former co-worker Trina, shook her head and smiled and said incredulously to me:

Larry, how did you manage to work part-time for 25 years, raise 3 kids, help them out with university costs, retire at 57, and go travelling around the world?”. 

A rush of warm blood flooded my face and I felt the sensation of my head swelling. Doesn’t everyone love a compliment, well deserved or not?

Thoughts rushed through my mind. This was the perfect smartass moment. I latched on for one pleasing drag off the cigarette.

Looking down and thumbing the rough calluses on my fingertips, I mentioned our most recent trip to India. Tongue in cheek, I spoke of how we journeyed to the jungle of humanity that is Mumbai, to try out life in a location where we would actually be raising our standard of living.

Lots of other thoughts flashed through my head. I wanted to smile and gloat about a huge inheritance from my Grandma who owned Bloomingdales, or a monster lottery win, or maybe a clever Bonnie and Clyde-style bank heist… bang bang, but unfortunately (or you might say fortunately) I had none of those stories to offer Trina.

No fake news today!

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I soberly reflected back on the years of preparation and planning that had brought me to this point in time.

I admitted to Trina that, for sure, I’d had some lucky tailwinds that blew warm fortune my way, but the brutal reality is far more boring. Boring, but I think instructive as well.

Remarkably, she still looked interested so I pushed forward and… blah blah blahed.

First of all, while I’m wealthy in all sorts of non-financial ways, I’m truly not a financially rich man by current North American standards.

I worked in a part-time lab tech job that would have paid a full-time worker somewhere in the $65- 70,000 area with medical and retirement benefits layered on top. My wife did much the same so we finished with a combined income in the $70,000 neighbourhood.

We own a modest home in tiny Summerland, British Columbia’s Okanagan Valley where typical homes sell in the $400,000- $600,000 range, not Vancouver or Toronto’s $1 million plus real estate market.

I reflected that long before The Wealthy Barber made his millions by peddling the notion of saving 10% of each paycheque, we were on board.

The early years… before kids… were the golden opportunity to lay a foundation of savings, a sturdy structure to build the rest of the rise-to-the-heavens skyscraper of hoped-for financial fortune.

money-skyscraper

And this is that time I already mentioned where the “luck” tailwinds were gusting firmly at our backs.

As Jim Cramer says on his wacky CNBC TV show…. “there is always a bull market somewhere“. This is true yesterday, today, and tomorrow.

Opportunity will exist forever, or as it was said to Virginia about Santa: “… A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood”

Our “tailwind”? Ridiculously high mortgage rates of 20+% were terrible for those buying real estate in the early 1980’s. Monthly mortgage payments were absurd based solely on the almost usurious interest rate charged by banks.

But conversely, ridiculously high interest rates of 19.5% paid on Canada Savings Bonds were a crazy incentive to save and invest in bonds. Now there’s a low risk tailwind!

We avoided real estate and plowed our dollars into savings bonds. Cha-ching!

Time passed along and kids mysteriously insinuated their way into our world (I’m better at numbers than I am the birds and the bees). Changing the locks to the house that we finally purchased never seemed to keep them out. The little Olivers and Artful Dodgers always managed to pickpocket us and leave us bordering penniless… foolishly with our seal of approval.

It was a perpetual challenge to squirrel away 10% of our earnings, but it was a priority and when it was taken out automatically, the pain was fairly mild. Thank god I love Kraft Dinner and Friskies cat food…

And, sure as shootin’, the foundation of savings mixed together with decent returns on investing began the SNOWBALL effect.

Perhaps learning as much as I could about investing in quality stocks à la the investors I named at the top of this post helped. I’ve never scored huge gains, but a consistent annual return in the 12% range has made the snowball grow bit-by-bit.

Every snowball by necessity begins as a few grains of sticky white flakes.

But give the tiny snowball some time, and fresh snow to roll it in, and it begins growing larger and larger so that every turn of the snowball collects an ever-increasing amount of momentum-snow…. growing and growing and growing…

I’m not telling you anything you don’t already know. I’m never the smartest guy in the room, or on the web.

I’m not telling you to give up all the moments of enjoyment or pleasure you can garner, by squirrelling away every penny. This isn’t intended as a tribute to Scrooge.

Every era has its financial challenges and opportunities.

I’ve spoken with Trina about money matters before. She knows the path to her Money Valhalla. She’s doing the right things that will one day give her flexibility and financial freedom.

In the meantime, hopefully she’ll be receptive and spend a few minutes reading Warren’s wise and cozy letters each year.

Her $$ snowball merely needs some more time and patience.

BOOYAH!!

bull

 

 

 

 

The New Frontier… I Want A World…

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With apologies to Dickens, it’s… A Tale of Two Issues.

I’m repelled by Donald Trump – it’s as if some midnight jokester set a steamy bag of dog shit on my front doorstep – but dammit…

… That A-hole is making me money.

On paper, at least.

It irks me that I rub my hands together joyously in egocentric financial glee.

It’s a conundrum. I feel guilty.

It’s two-faced that I snort happily at the trough of increased wealth as my investments benefit, based almost solely on the market-swelling narcissistic tweets and ramblings of a Bah Humbug man, a man who points and yells out to adoring white-skinned (and white-hooded!) crowds spreading virulent hatred of immigrants and women and parents of dead soldiers.

Since Trump’s election to President last month, my stock holdings have soared skyward like an Olympic pole-vaulter that has finally discovered the tricky technique of gliding over the high bar.

Sure, I did my homework and carefully selected the stocks – the Apples and Aflacs, the L Brands and Royal Banks and 20 others. I chopped the vegetables and set out the spices for the monetary soup, but Trump mixed it together in the pot and magically cooked the soup to an unexpected, unnatural greatness… again, for the mainly white and wealthy.

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…………………

DEAR EDITOR: I am 8 years old.
Some of my little friends say there is no Santa Claus.
Papa says, ‘If you see it in THE SUN it’s so.’
Please tell me the truth; is there a Santa Claus?

…………………

YES Virginia… we all have personal issues of hypocrisy and confusion that divide us internally. I wrestle and spar with my occult demons regularly.

You see, I want a world filled with leaders who respect and desire peace and accommodation and compassion for others.

…………………

VIRGINIA, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except they see. They think that nothing can be which is not comprehensible by their little minds. All minds, Virginia, whether they be men’s or children’s, are little. In this great universe of ours man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.

…………………

I want a world where we hunger for everyone to do well, for all 7+ billion humans to have a standard of living that reflects a similar paycheque for similar work… in the affluent western world, we fret about women making the same wages as a man for the same work, and yet, we live in a world where we selfishly tolerate billions of men, women and children living in poverty despite working laboriously hard and very long hours.

…………………

Yes, VIRGINIA, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus. It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.

…………………

I want a world where the air is comfortably breathable in Boston, Berlin, and Beijing; a world where fish aren’t thoughtlessly killed off by industrial toxins and oil spills, a world where animal habitat is as important as human housing.

…………………

Not believe in Santa Claus! You might as well not believe in fairies! You might get your papa to hire men to watch in all the chimneys on Christmas Eve to catch Santa Claus, but even if they did not see Santa Claus coming down, what would that prove? Nobody sees Santa Claus, but that is no sign that there is no Santa Claus. The most real things in the world are those that neither children nor men can see. Did you ever see fairies dancing on the lawn? Of course not, but that’s no proof that they are not there. Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world.

…………………

I want a world where women are regarded with the same respect as men in every way, a world that doesn’t victimize and use girls as sexual chattel, prevent them from educating themselves, mere toys for the rich and famous to grab by the pussy.

…………………

You may tear apart the baby’s rattle and see what makes the noise inside, but there is a veil covering the unseen world which not the strongest man, nor even the united strength of all the strongest men that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernal beauty and glory beyond. Is it all real? Ah, VIRGINIA, in all this world there is nothing else real and abiding.

…………………

I want a world where we can all enjoy the amazing richness of peace and wealth and understanding that a 21st century globe deserves.

Surely we’ve absorbed and learned countless lessons that millennia of missteps and hardships have taught us.

This is our new frontier.

We talk in glowing epithets of Christmas spirit, and births of new hope.

If the true Christmas spirit is what most of us truly long for… I hope… hope looking through my optimistic rose-coloured glasses… that we’ll continue to push and search and work towards a place where we gaze not only inwards, as I do with my investment portfolio – no Virginia, I’ll never be Mother Teresa or Ghandi or Mandela – but outwards too with a generous spirit and a desire of goodness for all.

My sugar-plum dreams are filled with a planet that cries out in unison…

Make The World Great For Everyone“…

… not only America… not only white men… not only Christians, Jews, Muslims, Bahá’ís, Hindus, Buddhists… an aspiration, an inspiration for better…

…………………

No Santa Claus! Thank God! he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.

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Picture Yourself as a Toll Booth…

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rod serling2.jpg

Bob and Millie Frazier are average young New Yorkers who attended a party in the country last night and on the way home took a detour.

Most of us on waking in the morning know exactly where we are; the rooster or the alarm clock brings us out of sleep into the familiar sights, sounds, aromas of home and the comfort of a routine day ahead.

Not so with our young friends.

This will be a day like none they’ve ever spent – and they’ll spend it in the Twilight Zone.”

 

……………..

Murdering your chosen career is traumatic. A smudged chalky outline around your desk is all that remains of decades of your life.

Leaving the “routine” work world is a bit like entering the Twilight Zone… absent Rod Serling’s monotone voiceover.

Kissing goodbye to a regular bi-weekly magical monetary gift into your bank account takes some thought and planning.

Warren Buffett the great investor – in my Walter Mitty dream life, I’m a young Warren Buffett – says this about investing your money:

Rule No. 1: Never Lose Money.

Rule No. 2: Never Forget Rule No. 1

Buffett Uke

Sing those rules Warren…

I like RULES.

Warren has been my investing mentor for a lot of years now… I’m a slow learner so I’ve mislaid Rule #1 on more than one occasion, but even without a 12-step program I’m slowly getting better.

I’m a Number’s Nerd… a Statistical Sam… and so I spend a fair bit of time passing numbers through my head, batting them back and forth like tennis balls, sifting and sorting ideas on how to make a few dollah’s from smart investing…

The investing world is a challenge when you find yourself on the cliff’s edge of retirement (there’s that R word I hate!) and beyond.

The worry is like being perched in the starting blocks of the 100 m. Olympic race just before the gun goes “BAM!“.

You’re filled with child-like hope and anticipation of the exciting wonders that lie ahead while at the same time brooding intensely over whether if, as you’re nearing life’s finish line, you’ll be smiling Usain Bolt at the front of the field or sad Joe Blowitzky from Upper Slobovia jogging in at the back of the pack.

Investing and building an economic future is a lesson about ourselves… a lesson to be heeded and learned from, and skilfully tracked across into other areas of our lives.

Most of us spend year after year carefully – occasionally recklessly – placing the puzzle pieces of investment that fit together with our lives, measuring out the hunger to enjoy today’s fresh-faced moments with the hazy horizon of our future, more wrinkled, selves.

investment puzzle

Most of the time we make smart, disciplined decisions, but every now and then we just do something stupid.

Stupid like listening to our neighbour’s “hot tip” about that fabulous no-lose stock called BRE-X… or was it ENRON?… in my case was it YBM Magnex? Doesn’t matter, you get my point, right?

It’s often said that most marital difficulties are stirred up by financial discrepancies and arguments.

A woman I met once told me the secret answer to avoiding arguments with anyone.

If you want to stop an argument, just say the word ‘panties’,” she told me. “Everyone stops then. Men become frozen.

I’ve never actually tried this so I can’t tell you if it works but I know it made writing this next paragraph a more distracted challenge… so it obviously has some effect.

Maybe the same effect it had on the dumbstruck woman behind the counter at my bank yesterday when I told her that I wanted to deposit my Male Prostitution money into my “12-string guitar account”. Deer in the headlights.

But back to investing and building a future.

I have a few little mottos or themes that guide me in life… old standards like:

  • I live to eat, not eat to live
  • Ready. Shoot. Aim.
  • It’s better to travel hopefully, than to arrive
  • If it’s to be, it’s up to me
  • To you, I’m an atheist.
    To God, I’m the loyal opposition.

In my investment life, one of the major themes I’ve learned to love when I look at where I’ll put my money to work relates to the idea of a TOLL BOOTH. Easy $$ Cha-Ching…

Being an inherently lazy kind of guy, I want to make as much money as I can with the least amount of work. Shiftless Shekels. Lax Loot. Undemanding Dinero. Toll booth inert.

I’m actively seeking passive ways of collecting regular money like the GO corner on the Monopoly board of life.

So, for me, TOLL BOOTH investing is easily summed up in one word:

DIVIDENDS!

Without exception, every stock holding in my personal portfolio pays ME to be a Sleepy in Summerland owner.

Companies like APPLE and MICROSOFT and LBRANDS (Victoria’s Secret) and AFLAC and DISNEY and ROYAL BANK etc all pay me to go to bed at night and purr away while they stay awake making out cheques to send my way. Toll booth.

How about real estate? Do I own real estate beyond my own home? Sure. But do I ever get irritating phone calls at 2 am about broken water heaters, or tenants making noise or setting up illicit grow-ops? Nope. NEVER.

Owning Real Estate Investment Trusts like RIOCAN and H&R REIT means that I have managers working for me collecting rent cheques, cleaning dirty bathrooms and screening tenants. These are this lazy guy’s answer. Toll booth.

I just love Toll Booths where nice folks pay me to loll naked in my backyard hammock. Just try to get THAT image out of your head.

In the end, everyone seeks and discovers a monetary solution of sorts to their employment exodus (I still can’t use that R word)

There are joys and woes to using company pensions, government pensions, and your own personal guile in accumulating and investing a mini-armoury stockpile of wealth.

Nobody promises us that a life of ease will be easy.

Honestly, I’m still not sure if I’m in the Twilight Zone world of Usain Bolt or Joe Blowitzky in this race to the finish line.

But in the meantime, I think I’ll just lay back, close my eyes and count… shee… er… sweet dollar bills jumping over fences into my arms.

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