Are you a financial wizard?


I am a big fan of Harry Potter, if you haven’t read the books or seen the movies then this post will be very confusing. Sometimes my kids think that I am a wizard when it comes to money. It seems that I just have to wave my magic wand and money appears. I wish it was that easy.

I believe that behavioural phycology plays a bigger role than analytical skills in successful investing. What kind of financial wizard are you?


Ron can be scared and confused sometimes when it comes to investing. He wants to invest, he knows that he should! He comes from a family of very good investors which intimates him. There are periods that his investments aren’t very good but every so often he does comes up with a brilliant investment idea.



Harry is a bold and reckless investor. He jumps in without thinking. Even when he does make an investment plan, something always goes wrong. He has a lot of natural talent but most of his successes comes from just blind luck. Without the aid of his investing friends, he would have lost everything.


Snape is a market timer and sometimes a day trader. He thinks he is smarter than the whole market. He can invest for the  long-term or short sell the market. He gets in and gets out of the market numerous times but ends up losing everything. (Snape could also represent the mind set of Hedge fund managers)


Dumbledore is an overconfident and arrogant type investor. Although, he is very knowledgeable and a seasoned investor, he refuses to get any advice. He makes many mistakes which eventually destroys his portfolio.



Hermione is a hard-working, dedicated and insightful investor. She comes from a non-investing family but that doesn’t discourage her from being the best in her class. She is always doing research and see things that others miss. She is always prepare and reacts well to pressure. She not only invests wisely, she knows how to protect her portfolio and gets excellent investment results.



These people look like they all work on Wall Street?


When it comes to making investment decisions, does gender play a role? There are some interesting theories and studies available. I found these two thought-provoking:

“A six-year study by two professors, Brad Barber and Terrance Odean, found that men trade 45% more than women, and it reduces their net returns by 2.65 percentage points per year as opposed to 1.72 percentage points for women. The study involved using account data for over 35,000 households from a large discount brokerage.”

“There are three significant ways in which men and women differ on financial decisions, as described in a new analysis by Nelli Oster, director and investment strategist at BlackRock. “Several studies, including a national survey by LPL Financial, show that women tend to research investments in depth before making portfolio decisions, and the process, as a result, tends to take more time,” explained Oster. “Women also tend to be more patient as investors and consult their advisors before adjusting their portfolio positioning, whereas men are more prone to market timing impulses. To gather information, women often prefer group discussions to men’s more independent learning approach.”

What do you think, does gender play a role in making investment decisions? Which fictional character above defines your investment decision making process?





Money Lessons From “Its a Wonderful Life”



Spoiler alert, if you have never seen this movie, then I suggest that you watch it before reading this post. This movie is a Christmas classic because so many people can relate to the many different heart warming themes. Most of us have experienced similar life struggles regarding our career and the lack of money that George faces in the film. This post isn’t about being like Mr. Potter, the evil,  heartless, money grabbing businessman.  However, if you look deep enough there are some important lessons regarding money.

1. George has a plan, he has delayed going to college until he saved enough money. He stuck to his plan even though most of his friends are almost finished college.


2. George sees an old broken down house but Mary sees the potential of it coming a home. Sometimes the best deals are not obvious to most people. Buying a fixer upper can be a good investment.


3. Despite George’s lack of education, the board members offer him a job because of his passionate speech and working experience. Employers put a lot more weight on work experience compared to education when hiring.


4. George convinces his shareholders not to panic, selling to Mr. Potter at $0.50 on the dollar isn’t the right thing to do. “Mr. Potter isn’t selling, he is buying!” Succumbing to fear is a sure way to lose money.

5. Having a good financial adviser could help you avoid making bad investment decisions.


6. George  makes a large impact in his community by building affordable houses.  Although it is shown in a positive light in the movie, loaning out money to individuals with low credit scores is dangerous. The crash of the sub-prime mortgage market  which helped cause the recession of 2008-2009 in the U.S. is a perfect example.


7.  Mr. Potter offers George an overly generous short term  job offer. George is tempted until he realizes that the offer sounds too good to be true and it is.


8. George needs to borrow money to stay out of jail. Financial institutions don’t care about your character or work experience. They loan money based on your credit score, collateral and income. George’s life insurance wasn’t good collateral, maybe he should have used the equity in his home.


9. Family, friends and business associates are important sources for funds in times of great need. The key is ensuring that the loans are documented and paid back.

I hope you enjoyed reading my outlook on the money theme in this movie.

Happy Holidays!!!!



Suggestions for President Obama & the Republicans on Tax Reform

white house                 gop


Today, I was watching CNBC while eating lunch. The President talked to business leaders about issuing facing America. One issue was corporate tax reform which to me doesn’t make sense, when 70% of economic growth comes from consumer spending. U.S. corporations have so much cash that they are buying back shares instead of expanding their businesses. Giving them more cash by lower taxes will not lead to more economic growth.

On the other hand, student debt is crippling the American economy, young people are putting off starting a family and buying their first home. Middle class families are also suffering with additional debt because they make too much income to get government aid for their kids but not enough to pay tuition fees. Interest payments on debt doesn’t create jobs or economic growth.

Any tax policies that increase student aid, lower interest rates on student loans or larger tax deductions will put more cash into young people’s pockets. Family formations leads to spending and economic growth. The problem is the government still has large annual deficits, so how can they pay for these changes.

I have two suggestions:

  1. Increase the tax on corporate stock options, fat cat executives’ pay low capital gains tax on options. Image making a million dollars in stock options and only paying tax on half of it. Hold the options for over a year and pay the lower long-term tax rate. These same executives take company cash to buy back shares to artificially increase the price of their stock.
  2. Mortgage interest deductibility has to have a limit. U.S. tax payers are bankrolling the cost of mansions and second homes. Imagine that a yacht is classified as a second home and is eligible for mortgage interest deductibility.

The outstanding student debt levels in the U.S. is over 1.2 trillion dollars and still climbing! It is time for the 1% to help give the next generation the opportunity to succeed!

Teaching Kids the Joy of Giving & Save Money

  • gringe       

It is the season for spending. American Thanksgiving is only is only a week away. Black Friday in the U.S. is the biggest and busiest Christmas shopping day of the year. Retailers are going to entice you to spend more than you had planned. Some of them even plan on staying open on Thanksgiving! It is sad but many families will go into debt this year by over spending. I find it depressing that exchanging gifts has become the focal point of Christmas.

For me, the magic of Christmas is spending time with family and friends. It is a time to be thankful for what we have and help those who are less fortunate. Don’t get me wrong, I love to watch children opening presents on Christmas morning, getting down on the floor and playing with them. But let’s put some focus on the act of giving and not receiving.

Some Gift Ideas for Kids to Give

  • Letter writing – If they are old enough to write a letter to Santa then get them to write a letter to grandma & grandpa telling them why they love them so much. (Expect some tears of joy)
  • Homemade gifts- there are many cheap crafts ideas available for kids of all ages that can be make into gifts. If you like to bake, get your kids to help make cookies to give as presents.
  • Donate toys– go through their toy box and encourage them to give away a toy to your local charity.
  • IOU coupons – to make dinner, take out the garbage, clean the house, wash the car….etc
  • Use part of their allowance– take your children to the grocery store to buy a small food item to give to your local food bank or buy a new toy to donate to charity
  • Donate Time – get your children to donate time to a charity like helping out at your local food bank, better yet, go together
  • Be a role model– show them how you give to those who are less fortunate
  • Christmas movies – watch them as a family to reinforce the concept of giving

There are many Christmas movies that are ideal to reinforce the concept of giving. My two favorites for young children are Dr. Seuss “How the Grinch Stole Christmas” and “the Muppet Christmas Carol”! Make sure that you watch as a family and make it an annual tradition.

Save Money

  1.  Homemade gifts are not only a great way to save money but could be appreciated much more than a store bought gift.
  2.  IOU coupons for; a home cook meal, a Sunday afternoon to watch a sporting event on T.V., instead of a gift card for the movies, go with them, time spent with family & friends is a great gift, use your imagination.
  3.  Donate to Charity, pick the person’s favourite charity, not only does it help the less fortunate but you get a tax deduction.
  4.  Secret Santa, for large families, reduce the number of gifts, put family names in a hat and pick one to buy a Christmas gift.
  5.  Steal a gift, everyone buys or makes a gift, set a dollar limit, a number is put into a hat for each family member, each person draws a number out of a hat and #1 picks a gift, #2 can steal #1’s gift or pick another one, the stealing is over when the last number picks the last gift. Great fun for young & old.

Some of my fondest Christmas memories was  playing rummoli on Christmas Eve and  watching “It is a Wonderful Life” and “Scrooge” with my teenage daughter. (Scrooge with Alastair Sim 1951 is our favourite)

If your children don’t learn the joy of giving when they are young, don’t expect them to be generous as adults.


life-movie             scrooge


Talk to your Elderly Parents about Money

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I believe in planning for the worse and hoping for the best. Money conversations between parents and adult children can be difficult. Don’t wait for tragedy to strike before talking about issues such as your parents’ estate planning wishes and elder care issues.

Initiate the conversation early while both of them are healthy. Don’t be shy about bringing up detailed questions. Like “have you updated your wills lately’? How about power of attorneys for financial and medical matters?

Before going on a vacation, my wife and I would tell our kids “The will is in the safe” It was not intended to scare the kids but to let them know that we have planned ahead. We inform them that in the safe was a contact list for our insurance agent, lawyer, accountant and investment advisors. We also included an inventory of all  assets and liabilities.

Assets and liabilities to inventory could be:

  • real estate (residence, vacation home)
  • investments
  • retirement accounts
  • insurance policies
  • annuities
  • interest in a business
  • checking and savings accounts
  • safety deposit box number and location of the  keys
  • art and collectibles
  • cars
  • credit card debt
  • mortgages
  • other loans outstanding

Don’t be surprise if your parents refuse to discuss exact figures, in their minds you are still children. However, it is important that they compile the information so that the surviving spouse or children can deal with financial and medical matters.

These issues can be really difficult

  • Where will the money come from in the event of a long-term care situation?
  • Who will take over your parents’ financial affairs in the event they become unable to do so?
  • What are your parents’ wishes, including disposition of their assets upon their death, burial, staying in their home, etc.?
  • How to transfer your parents’ wealth to the next generation to avoid taxes?

If you are like me and have already lost one parent, you can not delay in having “the talk”! There are no issues with my siblings as to who does what because I am an only child. No doubt, this will be a difficult situation with siblings.  Getting everyone to agree on a course of action will take time and be prepared for some conflict.  Check your emotions at the door and do what is best for Mom and Dad.

At the end of the day, what is really at stake is the opportunity for parents to communicate their wishes to their adult children and for children to help their parents make those wishes come true.