Talking money with friends

I will give general advice and ensure people are doing certain things. ie: My friend is has two children and a stay at home wife. He makes good money and is self employed. All is well, not quite. He didn't have any life or disability insurance. I got very passionate in this situation and he is now properly insured.

The basics are easy for most people in these forums but a lot of people don't have a clue. I work with a lot of younger people and stress to them that credit card debt is the emeny. Don't bother keeping up with the Jones, because if you do it will eventually blow up in your face.

I am finding a lot of young people have a feeling of entitlement. They move out from their parent's home at the tender age of 23 and want the same type of house, lifestyle, vehicles, toy, etc that their parents have and can borrow to get them. Never does it dawn on them that their parents have been in the work force for 30 years "earning" these things.

I could rant for ever, but generally I will give basic advice when asked. Never specifics, they can see a professional for that!

It depends on the circumstances:
- I talk finances with my mother about her finances, because she wants me to look after them; she's 89 but I make no decisions unless she agrees
- My brother asked me to look at his tax return to see why he was paying so much. I answered and explained the situation (too much interest coming in with no withholding tax; not enough tax being withheld for the % bracket they are in), but didn't attempt to persuade him to do one thing or another
- I will talk in very general terms about my own finances with friends/family; I will give general information regarding different investments and how they work
- example: today with a friend who is involved in bringing musical acts to our town with me; our volunteer board is having difficulty selling tickets to finance the acts and we may have to look at disbanding; I did say that I didn't want to use my retirement money to keep the board going

I frequently discuss the latest money-saving ideas with my friends and family. I’ll recommend certain banks offering high interest rates, or help them determine which credit card gives the best rewards. If the person is interested in equity investments, I usually promote index funds, and even go as far as to recommend the TD e-series. However, I won’t suggest particular funds, and of course it’s up to the person to decide on a balance of equity and income.
I think the recession has got people more interested in finding new ways to save money, and that has only encouraged me to share my opinions and recommendations with more people, including co-workers and even complete strangers. For example, the other day I was buying a slurpee at a gas station, and the guy behind me was buying 5 of them. I knew that the station has a stamp-card thing where you buy 6 and get the 7th one free, so I suggested that he pick up a card and get 5 stamps, so that next time he’ll get one of them free. It’s hard to say if the recession has made people any more receptive to my advice, but I’d have to say that discussions have probably increased in this past year.

I realise that this comes too late for an interview, but I would like to talk about it nonetheless. I have talked to friends and co-workers about budgeting. Some even asked me to send them copies of the budgeting spreadsheets I use. When it comes to investment advice though, even though I typically have a much more sophisticated understanding of securities, I almost never give advice. And when I do, it is typically the negative sort of advice, like discussing the downside of making a particular investment. (I've had friends ask me about investing in gold. I have a pretty standard, sceptical response.) If I do recommend anything to friends, it is to follow a low-turnover indexing strategy rather than lose sleep over which investments to pick. Since I studied finance in university, I see financial advising as a profession. I see financial planning and investment advising as something that one ought to pay for. It is naive for investors to expect to get good, specific financial or investment advice for free.

On occasion I have talked about my own investment portfolio with friends. I don't consider it to be a great conversation topic though. There are basically two kinds of people I know: wealthier, typically older people with vastly larger portfolios than my own; and people with almost no savings who may be living paycheque to paycheque. As such, it's difficult for me to talk about investing since I don't know many people at the same stage of their investing lives.

I will give my opinion on things like PCF mastercard and how I save 12 cents per litre, where to get cheap bread etc.

As for specific financial advise it is usually a sleepy portfolio via e series provided they are investing for the long haul.

If asked about specifically what I do I just tell them to read The Investment Zoo by Stephen Jarislosky. He is a billionaire and I am not so it makes sense to listen to him and not me!

I also point them to read The Single Best investment by Lowell Miller. Another great book which happens to be about dividend growth investing.

I just tell people that out of everything I have learned, these 2 books seem to make the most sense to me.

If someone has read the 2 books and wants to learn more I point them towards The Intelligent Investor (one with the commentary by Zweig).

The comments after each chapter makes it easier for people to grasp as I suspect many people to find Graham a dry read.

These 3 books IMHO will point people the right way. And when the markets go down again as they have, and as they always will , at least people (hopefully) will not panic.

The upside is they can't blame me, they have to blame the book. Investment advise for friends/family to me is just like selling a car to family/friends.... DON"T DO IT!, and stay on everyone's christmas card list.

Plus I have a special gift that in the short term causes any stock I buy to gradually drop in price, and vice versa.

This is no big deal for dividend growth investors but for some people with a "buy low sell high" mindset, my gift excludes my advise from being useful.