Conversation with Jon Chevreau Author of Findependence Day Part 3
Monty Loree: Okay. So I'm just noticing here, chapter two here you've got “Money, Money, Money - It's a Rich Man's World”. So basically what you're saying is the best investment is paying off debt.
Jon Chevreau: I think when you're in your 20s and 30s, I think in particular with all the stock market volatility - I think essentially get rid of your student loans, get rid of your credit card debt and ultimately buy a house, pay for it. Before getting worried too much about the stock market, I think for most people you have to get rid of the debt. If your employer offers you a pension plan where they match your contributions, even if you don't, then I think that should be your first exposure to the stock market. Just find whatever the corporate pension plan is giving you. Secondly of course, RSP, I think the TSSA - I started one for my daughter, she's 18. She's already got one going. Mind you it's not her money, but it doesn't matter. Baby boomer parents can certainly get these tips going for them. She's really excited about Apple so I bought stock. Not so much because I thought it was a great investment. It might be, it might not be, but I wanted her that feeling of sense of ownership. This whole being - own and not her loan anything and hopefully by seeing it grow and she's going to get a feel of ownership. Then maybe start one day, I hope, contributing her own money through tips or anything. As a financial planner yourself, you know what a great start it would be. If you put $5,000.00 in domestic property from the age 18 up ‘till you're 55, she would've her Findependence day 50, no problem.
Monty Loree: Exactly. That's interesting because my girl is 16 years old and she's just learning the concepts. We're just starting for her to learn the concepts. So that's important. I appreciate that you're doing that. Again, I'm talking with Jonathan Chevreau here today. He's the author of Findependence Day and we're talking about the book because it's a pretty good one. People need to read it, I think. Chapter 4, you got “Baby You're a Rich Man - The Concept of Human Capital”. That's all about realizing that, what I got from it was that people actually already have wealth.
Jon Chevreau: That's right. Scotiabank says, “You're richer than you think.” I'm not sure if they're referring to human capital. Moshe Milevski of the York Univestiy articulates the human capital argument well in a book he called, put out about a year ago, Are You a Stock or a Bond? Basically you start out in life with no financial capital, but you've got this great human potential - your earnings potential. This is why you need to spill the insurance because if you can't save them, you can't convert your human capital to financial capital things are not good. Same with life insurance, you need life insurance if you're married because if you die, then all that human capital that you've eventually converted to financial capital doesn't happen. Therefore the life insurance kicks in to provide the financial capital to the surviving spouse. So as life goes on, so in this 22-year time frame of this financial novel, Jamie gradually converts his human capital into financial capital. Because he's an owner not a loaner, he tries to build a business. A lot of the plot revolves around that. She, on the other hand, again a different personality. She has a secured, fine investment plan. She's a teacher, a salaried employee. So I tried to have that contrast, not just by money personalities but even in one is a stock, one is a bond. One is an employee, one is an entrepreneur - that way you kind of draw a lot more lessons from this couple's experience than if they were both of the same money personality.
Monty Loree: Okay. So I'm just noticing here, chapter two here you've got “Money, Money, Money - It's a Rich Man's World”. So basically what you're saying is the best investment is paying off debt.
Jon Chevreau: I think when you're in your 20s and 30s, I think in particular with all the stock market volatility - I think essentially get rid of your student loans, get rid of your credit card debt and ultimately buy a house, pay for it. Before getting worried too much about the stock market, I think for most people you have to get rid of the debt. If your employer offers you a pension plan where they match your contributions, even if you don't, then I think that should be your first exposure to the stock market. Just find whatever the corporate pension plan is giving you. Secondly of course, RSP, I think the TSSA - I started one for my daughter, she's 18. She's already got one going. Mind you it's not her money, but it doesn't matter. Baby boomer parents can certainly get these tips going for them. She's really excited about Apple so I bought stock. Not so much because I thought it was a great investment. It might be, it might not be, but I wanted her that feeling of sense of ownership. This whole being - own and not her loan anything and hopefully by seeing it grow and she's going to get a feel of ownership. Then maybe start one day, I hope, contributing her own money through tips or anything. As a financial planner yourself, you know what a great start it would be. If you put $5,000.00 in domestic property from the age 18 up ‘till you're 55, she would've her Findependence day 50, no problem.
Monty Loree: Exactly. That's interesting because my girl is 16 years old and she's just learning the concepts. We're just starting for her to learn the concepts. So that's important. I appreciate that you're doing that. Again, I'm talking with Jonathan Chevreau here today. He's the author of Findependence Day and we're talking about the book because it's a pretty good one. People need to read it, I think. Chapter 4, you got “Baby You're a Rich Man - The Concept of Human Capital”. That's all about realizing that, what I got from it was that people actually already have wealth.
Jon Chevreau: That's right. Scotiabank says, “You're richer than you think.” I'm not sure if they're referring to human capital. Moshe Milevski of the York Univestiy articulates the human capital argument well in a book he called, put out about a year ago, Are You a Stock or a Bond? Basically you start out in life with no financial capital, but you've got this great human potential - your earnings potential. This is why you need to spill the insurance because if you can't save them, you can't convert your human capital to financial capital things are not good. Same with life insurance, you need life insurance if you're married because if you die, then all that human capital that you've eventually converted to financial capital doesn't happen. Therefore the life insurance kicks in to provide the financial capital to the surviving spouse. So as life goes on, so in this 22-year time frame of this financial novel, Jamie gradually converts his human capital into financial capital. Because he's an owner not a loaner, he tries to build a business. A lot of the plot revolves around that. She, on the other hand, again a different personality. She has a secured, fine investment plan. She's a teacher, a salaried employee. So I tried to have that contrast, not just by money personalities but even in one is a stock, one is a bond. One is an employee, one is an entrepreneur - that way you kind of draw a lot more lessons from this couple's experience than if they were both of the same money personality.
