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Book Reviews

Garth Turner’s 1997 Rrsp Guide

by Garth Turner

2015: After the Boom

by Garth Turner

Self-directed Rrsps: Straight Talk on Making Them Pay off for You

by S.E. Woods

FINANCIAL PLANNING BOOKS have become a fixture of the fall market heralding the tax preparation season to come. The offerings include books of self-promoting advice published by or for mutual fund vendors; better ones merge empirical studies of funds with perceived needs of investors; the best compile data on fund performance and the regulatory climate with a genuine feel for what investors need to know. Today, contemplating Canada’s population structure, authors and publishers are getting ready to cash in on a demographic explosion of the elderly and those about to be. This crop of books is for readers who have realized that they ought to begin socking away assets for the future.
Garth Turner was Minister of National Revenue in the last months of the Mulroney government. In 2015: After The Boom: How To Prosper Through the Coming Retirement Crisis, he reviews the consequences of the aging of Canada’s population, noting that by 2025, more than a third of Canada’s population will be over 65, straining social programs. He repeats the often-heard sentiment that if anyone is going to take care of Canada’s seniors-to-be, it will have to be themselves. Canada, he observes, is a heavily taxed country in which the level of income levies rose 25% during the government of the prime minister he served. Yet in spite of his former profession as Canada’s top tax collector, he urges his readers to aggressively reduce their tax profile by taking advantage of all available tax deductions and credits.” Whatever Mr. Turner may lack, it’s not chutzpah.
The statistics and tax laws Turner cites are available elsewhere, yet there is nevertheless much good advice in his book. He urges readers to lease what depreciates (cars and computers, for example) and buy what appreciates (houses, land), thus covering the field of capital cost accounting in a sentence. Turner has a felicitous style and an easy, even compelling way of turning complex information into easy-to-understand advice.
But he writes less for people who will work their own portfolios than to those in need of more advice. “Call your financial planner” is a frequent refrain, making one wonder if Turner expects his buyers to be mutual fund salesmen who want to offer books to their customers.
Garth Turner’s 1997 RRSP Guide is similar and sometimes word for word identical to 2015: After the Boom.The core of the 1997 RRSP Guide is contained in one chapter of 2015. The final chapter of each book, a pitch to buy a newsletter from Turner for $49 a year, is identical. If you want to sample his style, go for 2015; it’s a little more polemical.
Former stockbroker S.E. Woods’ first book, Through the Money Labyrinth, was notable for treating investing with more knowledge and less cliché than most introductions to stocks and bonds. His second book, Self-Directed RRSPs, shows the same attention to detail. There is a brief but good section on evaluating bond default risk, retractable bonds, and real return bonds. For those with self-invested RRSPs, his advice helps spot the traps in these assets. Another chapter deals with the appraisal of gold mine shares, which have often mined investors more than they have gold. To find such techniques of financial analysis in an investment primer is rare. A glossary that even includes some fairly uncommon financial terms, an index, and well-considered bits of advice make this an uncommonly good investment guide for the uninitiated.
There are shortcomings: On choosing a stockbroker, Woods assures readers that big firms hire honest people. Perhaps recalling his days as a broker, he calls the salesman-customer relationship a “source of satisfaction to both parties.” Even for the unlucky who get scalped in the market, or customers of brokers subsequently jailed? Yet most of the time, Woods balances information with good judgement. He has a knack for saying things with clarity and brevity. His book is a good choice for the person who wants to begin sheltering assets and wants more than paternalizing advice.
Gordon Pape is a one-time publisher, a sometimes novelist and a persistent analyst of mutual funds. The annual update of his Buyer’s Guide to RRSPs combines a manual of mutual fund offerings with a review of legislation and events pertinent to RRSPs. By its size and its comprehensiveness, it’s a basic reference for RRSP investors.
Reviewing 1996 developments, Pape notes that RRSP cutoff dates at which accumulation must cease have been changed to age 69 from age 71, and offers the sensible advice that anyone over the age limit can still make use of unused RRSP contributions by contributing to the RRSP of a spouse. The federal government’s campaign to cut contribution limits have been maintained at the $13,500 annual cap. Annual administration fees on RRSPs have been made non-deductible. Noting that accountants have figured a way to make them deductible in spite of the new rule, Pape suggests one check on the rules for the latest twists. He covers problems of insolvency of trustees, a matter that arose in the case of Confederation Life. He comments on passing fashions in asset selection such as royalty income trusts, noting that they’re risky. You don’t find all this stuff in other RRSP books.
Pape believes that mutual funds’ past performance can predict their future performance, a proposition that has been empirically tested and found wanting. Nevertheless, Pape uses a sophisticated measurement system that overcomes the habit of mutual fund vendors to only report performance in the time periods they like. Financial analysts could quibble away hours over Pape’s fund performance measures, yet this update is worth having even if one has last year’s guide. This book is so good that consulting it isn’t even a question. Bless the author and buy it.
Financial planner Sandra Foster’s You Can’t Take It With You: The Common-Sense Guide to Estate Planning for Canadians is an encyclopedia of wills, trusts, gifting, family law, life insurance, and business succession planning. It shows that it is possible to extract clarity and common sense from tomes of legal drivel. In addition to basic information on wills, she examines multiple wills, probate fees, inter vivos and testamentary trusts, and the special handling of family businesses. She does not deal very much with the quirks of Quebec’s civil law, nor does she go into the finer points of tax planning with foreign trusts. She points out that farm properties have special considerations beyond her analysis. For a first guide to estate planning, You Can’t Take It With You is astonishingly good. It’s a fine reference book and an essential guide to those who have or will have wills to sign, estates to administer, or assets to pass on to future generations.
Serial author Betty Jane Wylie’s The Best Is Yet To Come revises an earlier edition with the help of collaborator Christopher Cottier, described on the back cover as an investment adviser. Women get much of her attention. It is a consumer advice book more than a financial planning guide, and much of the instruction is elementary: “The best way to save money is not to spend it.” The authors urge that one should plan menus, shop at discount stores and manufacturers’ outlets, and avoid impulse purchases.
There is financial advice, but it is cursory. An appendix lists services and resources of interest to seniors such as tai chi lessons. In short – and that’s what most of the advice in this book is – The Best Is Yet To Come is less analysis than a collection of consumerish epigrams. This book may be of value to the deeply uninformed. However, anyone with a moderate level of sophistication in the ways of the world will know most of this book by instinct and experience.