Derek Foster (2)

Similar to Foster's original book and strategy but a shift-from companies that pay high-dividends now to investing in companies that pay a smaller dividend now, but will probably pay much larger dividends in the future.

That's the theory anyway, but the list of "idiot-proof" stocks Foster recommends is eerily similar to those that were included in the original strategy.

There are some good reminders about how income is taxed.

Foster could really benefit from having an editor or even just a proof-reader, to catch typos and little linguistic quirks like the repetition of the same adjective in the same sentence.… (mehr)

Foster says this book is unlike his previous books in that those books described his personal journey and investment strategy while this book addresses what you can do. Presumably to address the most readers as possible, this book is aimed primarily at baby boomers and other adults who are following a more traditional working life (i.e. this is less about early retirement and more just a general retirement book). This meant that significant portions of this little book dealt with outlining basic concepts relating to things like using credit cards wisely, how much to expect from CPP, Old Age Security and the Guaranteed Income Supplement -- topics that I've read about plenty from other sources and that are simply not what I wanted from Foster.
Foster puts some emphasis on paying down all debt, including mortgage. It is not clear whether he is advocating being mortgage-free before starting any investing or whether this should, in his view, be done simultaneously.
Some of the topics he does usefully introduce as possibilities are:
- the couch potato portfolio
- DRIPs with SPP (dividend re-investment plan with share purchase plan)
- putting part of your investment in GICs to guarantee your principle stays intact; that way you can invest the rest in stocks and not risk the part that you've left in GICs)
- investing in preferred stocks
- use an RRSP mortgage to act as your own lender for your mortgage or your child's
There's also an additional tip at the end that if you have a year coming up where you know your income will be low and you are currently in a higher tax bracket, you may want to put a whack of money in an RRSP at the end of the high-income year and withdraw it again at the beginning of the low income year to reap some significant income tax savings.
Finally, Derek explains a bit about where his investments are at right now and why he thinks the stock market may be pretty flat for a pretty long time. He used the strategy described in Money for Nothing and Your Stocks for Free (which I have not read so can't explain and which he proposes for experienced, knowledgeable investors rather than beginning investors).
One aspect of this I will apply (because I read it not only here but in several places and I think it makes sense) is to put my investments in my RRSPs (rather than TFSA) and then put the tax savings into my TFSA.… (mehr)

What a surprise to find out from reading personal finance blogs that this was an actual book of substance rather than just a gimmicky, get-rich-quick scam for the author. Foster gives concrete tips, a concrete strategy that he used himself and all of it seems eminently doable. All from a Canadian perspective.

It's a short book, with big print, which means only that Foster doesn't repeat himself unduly. The general approach is to invest in Canadian dividend-paying stocks and live off the dividends in retirement while holding on to the underlying security.

Looking forward to his more recent books, especially with TFSAs having been added to the mix.… (mehr)