A note on sensational media financial advice!


In a recent episode of Dr. Oz, he had financial experts advising on how to get debt free once and for all.  The segment opened with the question “how much would you have at the end of 30 days if you double a penny each day for those 30 days”.  The expert captivated the audience by telling them that they would end up with about $5,000,000 at the end of the month (he may have said $10 million). If we do the math we see it is in fact $5,000,000. It is a beautiful example to show the power of compounding.  The presentation, however, did not make it clear that it was just a demonstration of a concept. It made for a sensational sound bite “pennies can earn you millions”.  Then he goes on to rattle off something about a 10% interest rate growth and mutual funds and EFTs.  The implication was that if one buys mutual funds or ETFs they can just watch their money grow. These were the “simple” steps.

What he failed to mention was that his explanation was ALL theoretical.  He forgot to mention that for a 10% return one  would most likely to be invested in equities and this means that we have to expect volatility and losses. Anyone  following the markets recently would need a strong constitution to hold their ground with the current level of uncertainty and volatility that exists.

The expert neglected the most important factor in overcoming and remaining  debt free  and that is one has to address the behavior that caused the problem in the first place. If that behavior is not corrected, the chances of one relapsing into debt are very high. The audience would have benefited more from  understanding that there is no quick solution and that saving is important and the earlier you start and the longer you do it, the better off you will be.  How and where to save, is very specific to one’s life circumstances. These points are not very sensational or attention grabbing. If anything they sound like a lot of work.  The reality is that that dramatic headlines are just that, drama. There is no getting around fundamentals.

The other piece of advice was given by a second expert and I think its best to call this whack-a-mole financial advice. Let me explain. Dr. Oz has a 30 debt credit card challenge to get your debt in order “once and for all!” With this challenge you are not allowed to use your credit card for 30 days. You can only use cash and you are only allowed to use your debit card once and a week.  Now, on the one hand it is phenomenal to get people to stop using their credit card and realize that it is possible to live without them.  Dr. Oz has a large following, so kudos to him if he helps people get off their credit cards, even if it’s for just a month. The problem with this is that it does not address the fundamental issue of what caused the problem in the first place. This advice is akin to a crash diet.

The  advice was to literally freeze your credit card so you don’t use it! Ever tried to suppress a buoy underwater, you can do so for a bit, but once you let it go, you’re going to get smacked in the face if you don’t get out of the way!  Freezing your credit card does not fix the problem of why you overspend in the first place.  It may help you in the moment, but the backlash of that would be substantial because it is not getting you any closer to addressing fundamental spending habits and traits.


The reason people have credit card debt is because there are core financial behaviors that need to be modified. This whack-a-mole approach is only taking care of the symptoms and does not get to the root of the problem.  What is needed is for one to learn how to stop the moles from popping up in the first place.  In the beginning the whack a mole approach may work because one has the time and energy. As time passes however, the moles pop up faster and faster and then both time and energy become a problem. It would be easier to find a way to stop the moles from popping up rather than find clever ways to whack them down.

This segment may have given the viewers the erroneous idea that one can effortlessly get out of debt. The advice was not explained properly nor was it put into perspective. Rattling off a few catch phrases and taking a whack a mole approach to personal finance does not do service to anyone. Many people need real financial counselling and a five minute segment on Dr. Oz will not solve a systemic problem.

I will leave you with a few points to remember about wealth accumulation. The first is that you can accumulate wealth over a reasonable amount of time with a well-diversified portfolio that includes among other things both stocks and bonds.  Secondly, if you want to know how long it would take for you to double your money use the rule of 72.   All you have to do is divide 72 by the investment’s rate of return.  The rates of return on investments are, on average, between 5-6.5% for both the US and Canada. Given these rates, it would take somewhere between 11 (72/6.5=11.1) to 15 (72/5=14.4) years to double your money.  Finally, one’s ability to accumulate wealth has less to do with the numbers and everything to do with one’s values and lifestyle.



Dr. M




How’s Your New Year Shaping Up?


It’s almost the end of January and by now your New Year’s resolutions would either be in full swing or long forgotten. It’s a common affliction we all face. We make plans and we have the best intentions, but then things just don’t go as we wish. Sometimes we are fortunate and it’s better than we could have imagined. Other times it’s just a disaster.   Take the case of savings.  Many of us usually try to save towards some goal, whether it is for a vacation, a car or retirement. Each month we put aside a few dollars towards our goal. Then life happens, unexpected events that wipe out emergency funds and force us to dip into our savings.  My younger clients sometimes feel this frustration quite intense. They are prone to make comments like: “I try, but I just can’t do it”, “it doesn’t matter now”, “I’ll figure that out later” when it comes to savings. Sometimes it can feel like we are not in control.

The research is actually showing us that, this may not be just a feeling. The Max Planck Institute for Human Cognitive and Brain Sciences conducted studies which revealed that our decisions are made seven seconds before we become aware of them. This means that when you think you made the decision in the moment, you are actually did so seven seconds ago and you are at that moment just catching up! Every decision we make is  made seven seconds before we become aware of it.  This really puts things in a different light. Perhaps our lives are predetermined.  If so, does this means that our financial life and financial status is already determined?


As hopeless and scary as that sounds, it’s not all bad. It also doesn’t mean we don’t do anything because we are predisposed to be a particular way. Our brains are able to make a decision based only what we have allowed into our subconscious. So while on the surface it may look like we have no control, we in fact do.

If we feed our subconscious the wrong information about what we believe is true for us financially, then in spite of conscious effort, the subconscious will always win. It is the program that is running. It is the one that is making the decisions before you are even aware of them.  It is doing so based on what information we have stored there. We have to overwrite what we currently have in our subconscious. If we are not happy with the current program that is running we simply have to change it. Easier said than done, but imperative that we do. It is impossible to have negative beliefs about money and accumulate a lot of it.

To change our money programming, we have to change the way we think and feel about money and most importantly, what we believe can be true for us.

Here are some steps you can take to start the process:

  • Identify what your current thinking is. Do you believe you can be financially successful or do you think it’s just a dream?
  • Start changing any limiting or negative belief by setting small achievable goals. Show yourself, you can achieve these financial goals. Once you reach one goal keep setting bigger and bigger goals.
  • Find a role model you can relate too. Find someone who has a similar background to you and see how they became financially successful. If it is someone similar to you, it will be easier to believe that you can do it too.
  • Start practicing good financial habits. Start looking for ways to save more and spend less. Small steps for instance make coffee at home instead of stopping at the coffee shop. Small changes go a long way. Keep expanding your scope as your confidence grows.
  • There will be setbacks. Don’t throw in the towel. Get back up, shake it off and keep persevering. Changing our programming is not an easy process, so if you fall, and you will, forgive yourself and get back on track.
  • Be persistent, if you want it bad enough you have the power to change your programming. Don’t give up even when you mess up!


Dr. M



Bring on the holidays with a little What If…


The holiday season is filled with lots of merriment with family and friends. We all eat too much and spend too much over the holidays. It is that time of year where we just enjoy the moment and not worry about the consequences. We all celebrate the holidays differently. Regardless of how you celebrate, whether it is one that is filled with material goodies and grand fanfare or one that are more focused on creating special memories and experiences without all the fanfare, either way I want to ask you to just ponder an idea for a moment.

The joy you get from either the material things or the experience is really emanating from you and does not come from those external objects. If the joy came from the external objects, then everyone would get joy out of the same external objects. This is not the case. I may not find joy from the objects you love or I may not be happy doing the things you like to do. So joy or happiness subjectively depends on the person, on you.


The objects or experiences are the catalyst for letting the joy flow from inside. Imagine that warm fuzzy Christmassy feeling sticking around for good. Imagine you can feel this way and have this mood everyday 24/7 all year, every year, regardless of what is happening around you. I think that would be pretty awesome. It would be great to find a way to access that place without needing anything external to act as a catalyst.

Can you imagine what life would be like if you could get the feelings you are chasing, to emanate from inside you. We seek money for security because the future is uncertain, we seek a partner and relationships because we are lonely, and we seek to do good because we question our self-worth. What if you could get all those feelings without striving to get it? Imagine you could feel secure, loved and worthy without having to struggle to attain it.

The pleasure of eating a decadent meal, the thrill of driving a Lamborghini on an open highway, the pride of owning a fleet of vintage cars, what would it mean if you could get all those feelings internally. What if all those feelings are already there waiting for you? We seem to have found only a temporary access to this place through these external objects or experiences.  This explains why we always have to up the ante to keep accessing those feelings, the accumulation of more and more things and more and more experiences.

What if every desired feeling you want to have, you already have access to it, but you just don’t realize it, it’s like looking for your glasses while wearing them. What if you have been looking in all the wrong places and into all the wrong things? I hope you take a moment to ponder on this. I hope that you get closer to realizing that in reality, you want for nothing because you already have it all. My wish for you this season is that you get closer to the true source of all your joy.


Thank you to all my readers for your support over the last year. This is the last post for 2015, looking forward to connecting again in the New Year.
Happy Holidays


Dr. M



Do you have what it takes to be taken on?


Many people today are worried about being ripped off by their financial advisor, and rightly so. It is common to read articles about charlatan advisors who gave unscrupulous advice or absconded with their client’s money. This is an indisputable fact. This is a growing industry and because the entry requirement is low, pretty much anyone can become an advisor. As one would expect there  are numerous articles that give tips on how to assess whether an advisor is right for you. Most articles are written from the  client’s perspective all with the aim to protect and support the clients. I have to say, however, not all financial advisors are the same. There are some pretty great ones out there and if you don’t have one on them as your advisor , it may not have anything to do with the amount of money you have.

In my time as a consultant, I have turned down a few clients. I took me some time in the beginning to understand that not every prospect should become my client. Sometimes the prospects really did need advice and I knew I could help, but I also knew that we were NOT a good fit for each other. Two early examples come to mind. The first was a young, arrogant entrepreneur who walk in and slap down his files and told me what returns, he wanted and how much I should send him each month. This is even before telling me his name. Somehow he thought $60,000 investment was really a lot of money and that it would allow him to stipulate what return he wanted each month. The second was a client whose investment was $5000 and would call me at all hours of the night because he heard something on the news and wanted to know how it  would affect his investment. I never took on the young entrepreneur because he had a deluded sense of what our relationship was supposed to be. The other person eventually became an ex-client and I was very happy when our relationship ended.

My ideal client is someone who is serious about investing in their future and is willing to work together to achieve their financial goals. It is not always about how much money they have to invest initially. For me it was all about working with what I call “people of substance”.  People who know what they want, listen and ask questions about the advice they are being given, make a decision and work towards reaching their goals. Advisors are human too and sometimes it really is not about the money. I am sure you are thinking that’s an oxymoron if I ever heard one, a financial advisor who doesn’t focus on the money! The irony is not lost!

One of the reasons I stopped my practice was because I felt that I was not able to fully be there for my clients. Teaching, writing and taking care of my children were all vying for my time and attention. The trust that my clients placed in me to manage their money was a great responsibility. These people trusted me with their life savings, to really give them quality advice and attention I needed to be fully engaged. I wasn’t, so I did the next best thing. I handed them over to a colleague who is  both knowledgeable and trustworthy. He is fully engaged and is able  to give my clients the full attention they need.


Your relationship with your financial advisor is one of trust and mutual respect. Your financial advisor is there for not only financial advice, but they are there for (financial) emotional support. It is the advisor’s job to give you the best options that work for you. You have to trust that they know what they are doing and they also have to trust that you will hold your end of the deal to make your objectives realizable. At the first meeting the advisor will listen to you talk about yourself, your family, your hopes and your dreams. He or she will get a sense of what is important to you. From the first meeting they will have a sense of your personality and how they will need to interact with you. Before actually collecting your financial information and establishing your financial goals and discussing strategies, the advisor will have already made some tentative decision as to whether or not to take you on as a client.

For the seasoned advisors they can afford to be picky, while the newer ones are hunger so they tend to be less picky. A new advisor has a lot to prove and would want to ensure he or she does a good job. The secret to success in this field is referrals. The question is then-do you have the traits that make for the ideal client?  Are financial advisors willing to take you on as a client? Here are some general classifications I came up with over the last couple of years.

Ideal client classifications
On time clients. Respecting one’s time is essential.
Prepared clients. If you are asked to bring along specific documents on the first meeting do so. This will show your seriousness and commitment to the process.
Open clients. When it comes to your financial life, an advisor can really be of value to you only if you give them the complete picture of your financial life.
Engaged clients. Asking questions and discussing alternatives if you are not comfortable with the advice given.
Action oriented clients. Once you are fine with the advice, take it and follow through.

The less than ideal client classifications
Confrontational clients. These are clients with chips on their shoulders who think they know more than the advisor and are arrogant. They argue every point and object to every piece of advice.
Helicopter clients. These are clients who monitor the news daily and constantly check on their investments.
The sheepish client. This is a client that is one that is on time, has all their documents, never asks a question and says yes to everything but never follows through.
Scrambler clients. These are clients who miss appointments or are always late, never have documents ready and are complacent about taking advice.
Cloak and dagger clients. These are the clients who only give partial information and are afraid to disclose all their information for fear that you will know too much about them. Then they are not happy with the advice you gave them because it clashes with something they never told you about!

Which type of client are you? In reality, most of us have combinations of good and bad client traits. It is not a science, but these are general traits that financial advisors look for/look out for in clients. So, the next time you interview a financial advisor know that they are not the only ones being scrutinized, so are you.




The Millennials to the Rescue of the middle class!

Why is it so hard for people to realize that when you help others you are also helping yourself? From a spiritual /quantum physics perspective, we are all one and by extension what I do to others I am in fact doing to myself. If that’s too esoteric, we can look at it in a practical way, when you help others chances are they will be more than willing to help you in the future. This reminds me of that old fable “The Lion and the Mouse”. Never think you are so much above anybody that you would never need their help.

Let’s get even more specific with this concept. It really makes sense to us when we relate it to the employer –employee relationship. When employers ensure that their workers are paid well, they get a more productive workforce, which also facilitates the growth of demand for their own products. When workers earn money, they spend it, when they spend, businesses thrive and the virtuous cycle of growth and prosperity ensues and everyone benefits. The converse is true you cut and or suppress wages both productivity and consumption suffer, so in the end the business owner’s make less profit. In this scenario everybody loses.

What’s so wrong with letting everyone have a piece of the pie? The shareholders who own the business want to make a return on their money. That is both fair and natural, but does it mean that you have to undermine your employees to do so? In early 2015, The New York Times ran a couple of articles which showed that the American middle was declining. They defined the middle class as those families who earn between $35,000 and $100,000 a year. Using the same definition, it was found that Canadian middle class has stagnated. In both cases, it’s not good news. We need a growing robust middle class not a stagnant or shrinking one.

Whenever I teach macroeconomics I am always asked “If they know what to do and how to solve the problem why don’t the government just do it? “, or some variation of that question. I usually have to explain that in theory we can do a lot and solve a lot of problems. In reality, however, there are lobbyists and big business that fund political campaigns and expect their interest to be served somewhere down the line. So, even when a particular policy can be implemented that would be beneficial to the masses, it may not be implemented if it does serve the interest of a small group of already very wealthy people. After all, why be happy with $1 billion when you can make $2 billion? This usually means that means paying employees less than minimum wages and taking away as many benefits as you can all so that you can make a profit. Not realizing that you are hurting yourself in the long run, as the middle class shrinks so does your market.


I suspect there is a lot we don’t know when it comes to the dealings of politicians and big business. We are not privy to what types of deals or what agendas are struck behind closed doors. The way I see it, if we don’t buy all the nonsense they feed us literally and figuratively, we would be setting the wheels of change in motion. It is true, we can’t eradicate years of intertwined special interest and greed mentality overnight, but we can start the process and like little drops of water that erodes mighty mountains, little by little, day by day, we can effect change. This will sound cliché, but it’s true, it really all depends on you, and when I say you I mean all of us. There is no need to buy their stuff or their propaganda. It all goes back to what values we hold for ourselves and how we measure success. We have all been taught to measure success in financial terms so more money means more success. Unfortunately, the reality is that our success, at least in part, requires that we have money because have to be able to meet our basic needs of daily living. Once we have a monetary system we are at the mercy of this way of life.

For us to break free we must first WAKE UP! We have to re-examine, question the way we currently conduct our lives. Luckily, the Millennials are inherently rising to the challenge. This generation has a very different mindset when it comes to consumerism. Traditional advertising tactics don’t work, and the attitude towards work and general life balance is changing. This is a new reality for employers, shareholders and governments.

The Pew Research Center report released in 2010 showed that this generation is self-confident, ambitious, technologically savvy and highly educated. No surprise they are very “connected” and embrace technology. Millennials are also less religious, more open to diversity. They seek better work-life balance and are quick to change jobs. They focus more on being able to do the job than being qualified to do the job. This generation learns from others experienced. They don’t try to reinvent the wheel; they learn from their predecessors and find their own way to excel.

This generation will change the face of business and consumerism as we know it. They seem less taken in by the desire for profit. It is estimated that in the United States alone the Millennial will spend $200 billion annually by 2017. They are indeed a force to be reckoned with and businesses have to change the way they operate if they want to be successful. The Millennials are turning their idealism into a reality. When they consume, they want it to have meaning, they don’t just buy a product they buy a cause.

So things may not be so bleak after all, there is definitely a shift in consumer consciousness. As these Millenniums raise the next generation of kids (iGen/Gen Z) they have a chance to effect even greater change, and slowly as time passes, we may see less and less of rampant inequality and injustice and perhaps truly civil societies that really put people first.



Dr. M

We are living in a Material World!


We have come to associate the accumulation of things that money can buy as a symbol of a successful and happy life. Materialism is the belief that everything in the universe is matter and has no spiritual or intellectual existence. Researchers define it as “a value system that is preoccupied with possessions and the social image they project”. From this perspective, the goal of life is the accumulation of material objects. If we take a moment to think about this we would soon realize that we are (or at least once were, if we are lucky to have broken free) a prisoner of this value system.

When did the human species become so materialistic? In the olden days it was common to believe in both the psychical and non-physical world. It can be easily seen from the cave drawings, the sacred texts and myths of all ancient civilizations. This all changed with Galileo and Newton. They established scientific methods that would lead to the validation of materialism as the only true reality. Nietzsche was the first to use the term “God is dead” and this can be seen as the true beginning of materialism. Nietzsche argued that the entity we refer to as God, had no more significance for humans and thus did not exist. The notion of something that is non-physical is a governing force in the universe is seen by materialists as “hocus pocus” because it cannot be validated by empirical testing.


It is slowly dawning upon us that this materialistic perspective is not really working for us. We see the negative effects of this perspective in the form of less savings and higher consumer debt, personal bankruptcy and financial crises. It takes the physiological form of stress, depression, anxiety and mental exhaustion from overwork. Research has shown that materialism is negatively associated with a person’s happiness. It seems that it is both socially and individually destructive.
The Journal of Motivation and Emotion published a series of studies in July 2013, which showed that when people are more materialistic their wellbeing diminishes. Wellbeing was defined in terms of their relationships, the independence and their sense of purpose in life. When these same individuals became less materialistic the studies found that their wellbeing rose. It’s funny though that we needed empirical evidence to prove what we know intuitively. It is not enough for people to listen to us when we speak from the “heart”. It’s not scientific or rational. It is okay to find the same answers but we must do so using a scientific approach. We must engage in empirical testing and find the evidence to show that what we hypothesize intuitively is in fact true. In other words we use a materialistic approach to show or prove that the materialistic perspective of life is flawed. Go figure!

go figure

When it comes to materialism, it is not exclusive to creed or race. Everyone is susceptible to its pull men, women, rich and poor. It is a social condition that we have all bought into and is fed by government and corporate policies. We have to take the time and stop and ask ourselves why we are constantly chasing material possessions. What are we hoping to gain from this? Why is it we see it as a reflection of our self-worth. It is time that we question those who are feeding us this story. And more importantly, question ourselves as to why we believe it?

As a parent, I feel it is my duty to find answers to these questions for myself. I see it as my responsibility to give my children the best foundation I can in all aspects of their lives. Intuitively, I know that a life lived for the sake of accumulation and comparison cannot be a happy one and the research supports this contention. In a paper entitled “Understanding Materialism among Youth” published in the Journal of Consumer Psychology, (2003) the researchers found that in the United States, young people who were very materialistic had a negative attitude towards school. This resulted in poor performance in school. The researchers went on to suggest that this can lead to sexual promiscuity, drug addictions and even suicides. Grim results indeed.
In an article entitled “Growing up in a Material World: Age Differences in Materialism in Children and Adolescents”, published in the Journal of Consumer Research (2007) the researchers found that a young person’s peer group, exposure to media and family affect the extent of the growth of materialistic values through the impact on self-esteem. This means that it is important who your children keep as friends. What they watch on television and what they are exposed to online. More importantly, we have to ensure that we teach them how to value themselves. If we as parents don’t separate the accumulation of material possession from our sense of self-worth, then we will not be in a position to help our children break free from the grips of materialism. We are their first teachers and they learn by watching us. If ever there a time to practice what we preach it is now.


I have a suggestion for you today. Take a moment and think about whether or not you have a materialistic value system. If you find that you have such a value system and are willing to admit it, then have to ask whether you want to change it or not. The answer may surprise you. Change isn’t always easy or welcomed. Change requires a strong motivation. Is it so that you can stop stressing so much and sleep better at night or are you doing it for the sake of the next generation? My reason is my children. I want them to be able to value themselves for who they are and not what they possess. What’s your reason for change?


Dr. M

Money can’t buy happiness but it can buy a boat!


The first time I heard Chris Jansons’ song “Buy me a Boat” I was grinning from ear to ear. It’s both funny and true. Money and happiness are the two things we want most. Many of us believe that the more money we have, the happier we would be. The question we have to ask ourselves what is happiness. Happiness is subjective and psychologists define it as “a combination of life satisfaction and having more positive emotions than negative emotions”. As it turns out money can buy happiness, at least up to some point. In his book entitled “Does Economic Growth Improve the Human Lot? Some Empirical Evidence”, published in 1974 Professor Easterlin found that “high incomes do correlate with happiness, but long term, increased income doesn’t correlate with increased happiness”. This is now referred to as the Easterlin Paradox.

To be happy one needs to have health, financial wellbeing and a good social structure. It seems that once basic needs are met for food, clothing, shelter and entertainment, the happiness gap between the rich and poor shrinks. Research conducted by the renounced economist Angus Deaton and the noble prize winning psychologist Daniel Kahneman confirmed this paradox and they found the magic amount that correlates with happiness. In the United Sates this number is $75,000. People who earned more than $75,000 were no less happy than people earning more than $75000. Those earning less than $75000 were found to be less happy. They concluded that “… high income buys life satisfaction but not happiness…” This actual dollar amount may change as the years go by but we know now that it is possible to determine the level of income that will affect our happiness. Beyond this level it seems that impact of money on our level of happiness is inconsequential.


Money may not be able to buy you happiness, but I think it is safe to say many of us would rather be rich and unhappy than poor and unhappy. At least if you’re rich you can do it in style and be physically comfortable. All jokes aside, happiness is serious business. The World Happiness Report, which was first launched in 2012, is now being used as a “measure of social progress and the goal of public policy”. Policy makers are using this data to inform their social policies to ensure that people have better lives. The report highlighted the powerful influence that social and cultural norms have on individuals. This ranges from family, friends and the community you live in, all impact on your level of happiness.

The WHR recognizes the need for policies that “enrich the social fabric” and it recognizes the “power of empathy”. Every human wants to be validated. You want your existence to be recognized, as an individual you want to be respected and heard. This is the same for any community. When policy makers and politicians start taking these factors into account in their platforms and policies we would see higher levels of happiness in our community because people will start having more positive social interactions and less negative ones.

canada-liberal-cabinet-justin-trudeau-620x383Canada is one of the most tolerant countries in the world and Prime Minister Justin Trudeau has just raised the bar even higher by appointing the most diverse cabinet in history. This new liberal government is doing a tremendous job of further deepening and in some cases fostering for the first time a real sense of inclusion for all the varieties of Canadians. From first nations, minorities, people with disabilities, young, old, men and women everyone is represented in this cabinet. This is sure to have a positive effect on the various communities across Canada. I suspect that people may start experiencing more positive experiences than negative ones.

What does this all mean for us? First, we have to understand that money is a precursor to get us on the road to happiness. It allows us to meet basic needs and desires, but that is as far as it goes. Having more money can guarantee you a physically comfortable life, but it will not guarantee that you have more positive emotions than negative ones. No amount of money can make someone more trusting, more loving, more forgiving, less angry, less jealous or less coveting. On a personal level, we need to find a non-material, non-financial path to happiness.

Secondly, we all need more pro happiness policy makers. We need to ensure that the leaders we elect are the ones that would work towards enriching the social fabric of society rather than act as a divisive force. Let’s face it, we are all here on this planet and we have to co-exist. The same rights and privileges you want for yourself, other want as well. We all have a different perspective of how we see the world and we just have to find a way where we can all co-exists peacefully. Everyone benefits when people are happier, less crime, less harm to the environment and generally a more civil society. The old adage still rings true today treat others as you want to be treated. Empathy is a powerful force that can heal a lot of social evils and in the process lead to positive economic gain. Only good can come of treating everyone with respect and dignity.

We can think of happiness as a house of wonderfully positive curated emotions located at the end of a beautiful driveway. In this analogy money can only get you to the driveway. It may even take you to the front door, but it is not the key that unlocks the house. The community you live in and the policies that your officials implement helps to ensure that there are no potholes in the driveway so that your ride is smoother. At the end of it all, no amount of money or government policy will make the individual happy, but both assist in getting the individual on the path to happiness. The rest…well, that’s a whole other story and it’s completely in your hands.

Dr. M


What’s the real link between time and money?


We have all heard the phrase, Time is Money. Is it really though? Time is Money means that if one is not using one’s time to make money one is losing money. This statement only makes sense if we worked ALL the time. We don’t, so Time is Money is not a phrase that is very plausible to many of us. Specifically, in a traditional a nine to five world, even when we are at work, Time is Money is not so applicable because it means that if you are slacking off during the day you would be losing money. In reality workers slack off all the time and still get paid. According to a Gallup finding in 2013, seven (7) out of ten (10) people admit to wasting time at work. Top time wasting activities engaged in were chatting with coworkers and web surfing. From the employee’s perspective, in a conventional job setting, time is not money because you get paid whether you waste time or not!

Time is Money seems to be more relevant for the employers/business owners. Here it appears that this phrase has more relevance and applicability because every minute of time invested in a business has the potential to make money or make more money. Upon closer inspection, however, we soon realize that this may not be the case because working more does not always make you more money. Working smarter, not harder is the real key to success. You can be super busy, but very unproductive and that is wasting time, energy and money! Many business owners who believe staunchly in this phrase soon succumb to the law of diminishing returns. This means that in the beginning an entrepreneur will get a tremendous amount of benefit the more time they invest in their business. However, there comes a point where for every extra unit of time spend results in fewer benefits to the businesses. At this point the entrepreneur needs to take a break. It is time to recharge and reassess and come up with a more effective plan of action.

indexI think it is safe to say that the phrase Time is Money is passé. When connecting time to money, we have to connect them through value. It would be more prudent for people to implement the time value of money concept rather than Time is Money phrase. The time value of money simply states that a dollar today is worth more than a dollar tomorrow. In a nutshell, this means you should always take your money early and always pay as late as you legally can. Let’s look at why it is in your best interest to take money now rather than later. If you are presented with a choice between taking a $2,000,000 payout today or $100,000 for the next 20 years, which will you choose? After what I just told you, your response should be “Take the $2,000,000” today. This would be correct for three reasons: inflation, interest and uncertainly. Inflation erodes the purchasing power of money so it is better to have money in hand today which can be invested to counteract inflation. You can invest $2,000,000 at 5% for instance and earn $100,000 in annual interest. Life is very uncertain you are here one day and gone the next. The institution that is paying you this money may be here today and gone tomorrow as well, due to bankruptcy, government ruling or natural disaster. This means that it is your best interest to take the lump sum today rather than spread it out over time because of no one knows what will happen to either party in the future.

Some may argue that they prefer to  take $100,000 for 20 years because that way they will not spend it all at once. There is an implicit assumption that the individual is rational and disciple! Logic dictates that you would take this money and invest it to earn interest which counteracts inflation. If we are able to maintain a 5% return over twenty years you would in effect get $100,000 per year, which you can spend at your leisure and still have your $2,000,000 capital base. If you simply took the $100,000 per year at the end of 20 years that would be it, there will be no capital base and no more income.


When it comes to making payments, the opposite is true, it is better to make payments in installments rather than in a lump sum. Here to we find people who are resistant to this idea because of  their personality type and or culture they find it very hard to be indebted. They are not able to accept that not all debt is bad and owing money is not a sign of financial weakness. If you have an option to pay $100,000 now or over the next 12 months in interest free installments, you should do it because the value of the dollar erodes over time. The dollars you pay six months from now are less valuable than the dollars you pay today. Also, even if you were paying interest, you could in theory invest that money $100,000 at the same or if possible a higher interest rate, this way your $100,000 can be put to work for you to pay the interest on the amount owing. Usually for small items this strategy may not be a logical because of the work involved. However, for bigger purchases, a mortgage for instance, it is a strategy that one should explore. Given the current interest rate environment it is possible to be able in theory, to pay for your house interest free or even net a small amount for a vacation when your mortgage is paid off.

At the end of the day, using slick sounding phrases may do more harm than good because it can encourage counterproductive behaviour. The relationship between time and money is one of value, understanding how to use the time value of money concept  will be more profitable than using catchy phrases that have long passed their expiration date.


Dr. M

The Future of Money


Technological advancements are moving so rapidly that sometimes it is hard to keep up. Both the hardware and software are continuously changing. There has been a recent advancement that has the potential to radically change the financial world-Bitcoin. Bitcoin is to the financial world what the internet was to the communications industry. Bitcoin is designed to replace the current financial payment network system that existed since before the internet. Bitcoin bypasses the current convoluted process of money transfer, it facilitates the direct movement of funds from one person to another without the need for a middle man (financial intuitions). It allows the redirection of power from the hands of a few to the masses. It is completely decentralized and it is this distributive consensuses property of bitcoin that makes it so revolutionary.


Bitcoin was designed to be like precious metal which means it requires a lot of resources to obtain them. It is pretty much akin to gold in that there is a limited supply. There can only be 21 million bitcoins in circulation. There are essentially two ways to get bitcoins. You can go the one of the many bitcoin exchanges and buy bitcoins or you can mine them. If you wanted to buy bitcoins, Coinbase seems to be the most trustworthy place to do so. The current value of a bitcoin is $275.41 CAD, plus or minus 1.5%-2% volatility. Bitcoin’s volatility depends on factors such as, its ability to store value and the current media reports on Bitcoin. If you decide to mine for bitcoins, you would need a powerful CPU/GPU to run the algorithms. Mining is the term used for adding transactions to the public ledger. Using special software, if you can solve a complex algorithm you are rewarded with bitcoins. This will be added to the ledger and is verified by the hashcash proof of work function. This is what makes it secure and tamper proof. Mining is not an easy or quick process. You compete with everyone else who is also mining. There are clusters of people who are mining for bitcoins. It can be pretty expensive when you have your computer running twenty four seven. There are reports of $80,000 electric bill of some miners. Give that bitcoin highest value was $1242 it is easy to understand the appeal of mining for them.


Bitcoin as mentioned before is completely decentralized. No one owns or controls bitcoin. It is an open source code available to all. Also Bitcoin provides complete anonymity to its users. These are two of the most appealing features of Bitcoin. They just so happen to be the two most controversial features. In its pure form Bitcoin cuts out the middle man (financial intuitions) and allows the direct movement of funds from one anonymous person to another without fees, regulatory concerns or taxes. This is in contrast to the current financial paradigm where most countries have a governing financial authority. These authorities are in charge of setting monetary policy and they are both powerful and influential. However, they are not accountable. It is common that these officials are not elected, so if we don’t like what they are doing, we can’t vote them out. Bitcoin eliminates this problem. The main appeal of Bitcoin is that there is no central governing authority. In so doing, it allows individuals rather than institutions to have control of the money supply. That’s the good part. The bad part is that because there no governing authority, it means there is recourse or insurance if it hacked. When it’s gone, it’s gone. There is no one to go after or complain to or try to get some type of compensation. The second feature of anonymity, is welcomed by the consumer. It does not require your personal information and you can create as many identities as you wish. This means there is no way to track anyone’s activities using bitcoin. This is great because it protects the average consumer from identity theft. Unfortunately, it is also a great feature for those engaged in the black market. Case in point is Silk Road. Silk Road was an online black market that used bitcoin for their transactions. They were shut down by the Federal Bureau of Investigations (FBI) in 2013.



Since its inception, we have seen many variations of this innovative technology. It is not only being adopted, but also its constantly evolving. Ripple is an example of one form of its evolution. It uses the bitcoin innovation to replace how bank transfers are currently being executed. It has somewhat of a hybrid of old and new systems. How this will eventually play out I can’t say. What I can say, is that Bitcoin seems to be just the seed of a greater possibility. The fact that the creator of Bitcoin still remains a mystery does concern me somewhat, but holding that constant, we cannot deny that the possibilities of this technology are far reaching. The ability to allow people real self-governance over the movement of their assets is powerful. It is disruptive to the current financial paradigm and has far reaching implications.
Bitcoin is in its infancy. It’s only six years old. Its current status is still in flux. Today, the legality of bitcoin varies from country to country. In the US, for instance, bitcoin was approved as a convertible decentralized virtual currency in 2013. In March of 2014 the Internal Revenue Service (IRS) issued tax guidance for bitcoin business. If you reside in the state of New York you have to get a BitLicense to be able to conduct business using virtual currency. This is in contrast to Iceland, which has prohibited the use of bitcoin because it is not in accordance with their Foreign exchange act. As for the European Union (EU), they have advised their banks not to deal with virtual currency until there is a regular framework in place.


It seems that the whole purpose of bitcoin was to circumvent regulations, fees and taxes and allow direct movement of value from one person to another. The current trajectory seems that regulators are slapping on a very similar framework for regulating bitcoin as currently exists for fiat money. So while no one entity controls bitcoin there is budding regulation for controlling the ability to use bitcoin which defeats the purpose for which it was originally created. As rightly noted by Peter Rose of MoneyGram, “Obviously the frictionless is the value that Bitcoin brings, and obviously there’s supposed to be a low cost structure. But increasingly as you start to scale the business and really look at remittances on a global basis, all of the things that Bitcoin stands for will get complicated, because the structure of having to ‘know your customer’ and to be able to live under the regulations that governments are forcing you to live by, starts to diminish the benefits that Bitcoin does. The frictionless becomes more frictioned

The question to be asked is would these regulations impede the evolution of bitcoin? If left on its own, what can this cryptocurrency morph into and what impact will it have on the financial system and more importantly what impact it will have on us?

Dr. M


Schrödinger’s Cat and YOU


If you’re a  fan of The Big Bang Theory, you would have undoubtedly heard about Schrödinger’s Cat from Sheldon Copper.  Schrödinger’s Cat experiment was done in 1935 to show that the theory of quantum mechanics which postulates that the only way to know where a particle is to observe it, can lead to illogical conclusions. To make his point Schrödinger’s put a cat in a box and rigged it so that there was a 50% chance that the cat would either be dead or alive after one hour. Theoretically speaking, based on the logic of quantum mechanics before you open the box and observed the cat, it was both dead and alive! You can only determine the state of the cat after you open the box and observe the cat.

I started thinking of how similar Schrödinger’ cat experiment was to playing the lottery. Prior to the result you are both a winner and a loser, it is only when you observe the actual numbers do you know the result.  The probability of winning Lotto 649 for instance, is 1 in 13,983,816. You simply have to take your chances.  In this case Schrödinger’s Cat has a better chance of being alive than you have of winning the lotto. This fact, however, doesn’t seem to bother Canadians. Last year a polled done by the Bank of Montreal (BMO), they found that 34% of people polled said that winning the lottery was their retirement plan.


Planning for retirement results in a higher probability of success that not planning for it. Then it depends on how this plan is structured. The graph above highlights seven sources of income that Canadians plan to rely on when they retire: their children, winning the lottery, inheritance, selling their home, part-time job, RRSP/TFSA and CPP.

Let’s take a quick look at some of the pros and cons of each. First, relying on your children to fund your retirement is very risky. The two main factors which will determine the ability of the child to eventually take care of their parents would be their earning capacity and the selection of a life partner. There are no guarantees that earning capacity will be sufficient to support elderly parents, especially if your children has children of their own who are under eighteen years of age. Also the selection of life partner will be a significant factor in whether or not elder parents will be financially supported during retirement. This may sound harsh, but unfortunately it can be a reality for some.

The second,  relying on  winning the lottery to fund your retirement is simply reckless. You have no control over the selection of the winning numbers. There is nothing you can do (other than buy all the tickets) to ensure that you do win.  This strategy should be avoided at all cost. Inheritance is a good bet for your retirement assuming that all the conditions are met. These conditions include, the existence of a will and clearly stated guidelines as to whom and how much will be passed on. Additionally, you have to ensure that taxes and probate costs are taken care of so that your inheritance is actually an inheritance and not a burden financially or legally.  Here is where your lawyer and financial planner needs to work closely together.

Real estate is an essential in any portfolio and should be part of your retirement strategy. However, selling your principal residence as a source of retirement is not always recommended. Simply because there is no guarantee that your house will sell for what you are asking for. Housing market and economic conditions when you retire are impossible to predict. Also, chances are your neighbourhood  would have changed over the years. This will affect property prices and they can go either way.

Having  a part time job during retirement is an excellent strategy to keep active and be engaged. It, however, is not a strategy to rely on to fund your retirement.  RRSP and TFSA are great avenues for retirement income. You must  understand and be prepared for the possibility that that if the financial system crashes the day before you retire, then you will have no retirement saving if RRSP and TFSA were your sole sources  of retirement income.  Finally, pensions alone are not enough to survive on.  The average amount for a new beneficiary in 2015 is $640 per month with a maximum of $1065  per month.

When planning for your retirement having RRSP/TFSA, real estate (other than your principal residence), and your pension should form the core of your retirement plan. How these are structured will depend on your personal circumstances. Things like the lottery, part-time jobs, selling your  principal residence and the children as a source of support should the icing on the cake. They  should be an extra sources of income, but never your main source of income during retirement. In every venture or endeavour we are like Schrödinger’s cat, there is a 50% chance of us succeeding or failing. The difference between us and the cat is we have some control of the one outcome over another.  Even then we may not be 100% sure to get the outcome we want we can increase the chances of it, with proper preparation and planning.


Dr. M


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