Tuesday, September 28, 2010

Not an Entrepreneur? You Should Read this Dragon's New Book


Driven: How to Succeed in Business and in Life
By Robert Herjavec
50 chapters
295 pages
$32.99 CAN / $19.49 at Costco
$$$$ out of $$$$$

When auditions for Dragons' Den came to Vancouver earlier this year more than a few close friends and family members suggested that I apply to be on the show. That was weird, I thought.

I'm a self-employed writer and storyteller. I don't have a boss. I am a ball of creative fire that has the ability to make contests, courses, workshops and stories go from idea to profitable reality in a relatively short period of time. I have sacrificed security for a risky, chaotic work-style that I would not trade for any amount of cash. The thought of settling for a job makes me want to cry.  But I am not an entrepreneur. That word does not apply to me. Or so I thought until I read this book and had a classic "aha" moment.

It's funny how things converge when you work really hard at what you love. And a bunch of random stuff has happened in the last four months that has lead me to this "aha" moment.

That random stuff consists of: taking my storytelling skills into the arena of financial literacy with my new YouTube show, Money & Me; a brief appearance on the Lang & O'Leary financial news show; talking on the phone with David Chilton, author of The Wealthy Barber, about kids and gold coins; launching this blog; being invited to speak at the upcoming BC Business Educators Conference on the topic of using social media to develop financial literacy; and now reading and reviewing this book. Aha! I am an entrepreneur and a business woman...not just a writer and storyteller.

And what's so cool about this revelation is that it drives home the truth that language shapes who we imagine ourselves to be and how we imagine ourselves operating in the world. I don't come from an entrepreneurial family and I didn't take business courses in high school or university, so entrepreneurship, and all the business vocabulary that goes with it, had never really penetrated my imagination until I could put this convergence of random stuff in my work-life within the context of entrepreneurship as Herjavec describes it in this book.

And speaking of convergence, as I have been reading and reviewing Driven, I have also been writing a story for episode six of Money and Me which is all about teaching kids what an entrepreneur is. After all, getting a job (see episode one of Money and Me) isn't the only option when it comes to making a living and we should talk about that with our kids. But it's hard to do that when you don't know the language, which is why this book is such a powerful financial literacy tool for parents who might not be entrepreneurs themselves.

For parents who are entrepreneurs (like me, I'm happy to know), there is lots of great advice for taking your business to the next level no matter where you happen to be on your never-ending journey toward that hypothetical and highly subjective finish line we call success.

Indeed, whether or not you are chasing Dragon-like success, Driven is well worth the full jacket price when it comes to exposing your imagination, and that of your kids, to the language of entrepreneurship.

Copyright 2010. Laura Thomas. All Rights Reserved.
To reprint contact Laura at money@agentstory.net

Saturday, September 25, 2010

Is Oliver Stone's New Wall Street Movie Worth the Price of a Sitter?


Wall Street: Money Never Sleeps
This title does not fit the story.
Twentieth Century Fox 
They spent $50 million on this sequel to the 1987 classic, Wall Street.
2 hours 16 minutes 
Way too long!
PG for strong language 
And you need to know at least some financial jargon or a little bit about the 2008 crash.
Stars Michael Douglas 
He isn't in the film enough.
Written by Stephen Schiff and Stanley Weiser & Allan Loeb 
Two writers who are not fluent in finance and a stock broker who can't write.
Directed by Oliver Stone 
In 2007 he wasn't interested in directing the movie, but after the 2008 crash he changed his mind, a big mistake.

My rating $$ out of $$$$$

It's probably not fair to the producers that I went to the movie hoping for two things: one, that I would be entertained by an enthralling story and powerful characters; two, that I would improve my financial literacy a little bit by learning something new about high finance and the workings of Wall Street. Well...as the Beach Boys sang, "Help me, Rhonda! Help, help me, Rhonda!" It was a grueling 133 minutes of my life that I'm never getting back again. Never mind the waste of money.

Which got me wondering, how much did Twentieth Century Fox spend making this film? The final total: $50 million. That's not expensive as movies go and I suppose one could argue that it was money well spent as it employed hundreds of actors and production folk for a couple of years. But is the film worth spending your money on: $75+ for two tickets, snacks, gas, parking plus three hours of babysitting?

No way. Save your cash. Wait until it comes out on video. If you're hungry to see bankers freak out during the 2008 Wall Street crash, you can watch the Meltdown documentary series on CBC (see my reviews below). Put that extra $75+ in your savings account and move on.

On a side note, if you haven't already, rent the original Wall Street movie and watch it with your teens. It's meets my requirements of being both educational and entertaining, a $$$$ out of $$$$$.

Copyright 2010. Laura Thomas. All Rights Reserved.
To reprint contact Laura at money@agentstory.net

Thursday, September 23, 2010

What They Heard About Kids & Money: Canada's Task Force on Financial Literacy Releases Summary Report

In the wake of the financial crisis a light bulb went off in someone's head on Parliament Hill. "Duh...maybe there is a connection between financial illiteracy and the economy." And, ta-da! a task force was born.

In June 2009, our Finance Minister, Jim Flaherty, appointed 13 brave souls (including bankers, financial consultants, publishers, a journalist, and professor) to the Task Force for Financial Literacy and asked them to figure out how the government can "formulate a national strategy to strengthen the financial literacy of Canadians."

Yesterday, after months of zero activity on Twitter (FinLitTaskForce) and Facebook, they finally released a summary of what they heard from the public. They called it "What We Heard." Let's take a listen to the parts that relate to teaching our kids about money...

What is the Task Force's definition of financial literacy?
Having the knowledge, skills and confidence to make responsible financial decisions.

What did the Task Force hear from people about existing educational efforts?
That many outside groups (credit unions, curriculum developers, volunteers, some government agencies) are having some success bringing financial training to our schools. On the issue of turning financial literacy education over to the schools, concern was expressed for teachers "who are often overburdened with existing teaching requirements and who may feel uncomfortable teaching in this subject area, especially if they themselves are lacking in financial expertise" (p. 10).

What fundamentals do current educational efforts consist of?
Budgeting, consumer education, borrowing and, to a lesser extent, compound interest.

What did the Task Force hear about "when" financial literacy should be delivered?
"There was wide agreement that financial literacy should be offered throughout the elementary and high school years" (p. 11-12).

What did they hear about "how" it should be delivered?
Apparently there were conflicting opinions especially over whether financial literacy should be a stand-alone subject area or integrated into math, economics, social studies or home economics.

About "who" should deliver it?
Again their was conflict over whether or not it should just be teachers or teachers with the help of financial sector volunteers.

Overall, what did they hear?
That there should be more financial literacy education in the school system and that even though education is not the jurisdiction of the national government that Ottawa should nonetheless "lead or support the national effort to introduce financial education in the provincial and territorial school systems by identifying core, age-appropriate financial literacy topics" (p. 13).

It's hard to imagine what this is all going to translate to in the end when it comes to educating our kids about money. A national program in the context of our federal system seems to be a recipe for wasting tax payer dollars. A better idea might be an ad campaign aimed at families, something fun and provocative that gets us talking about money in the course of our daily activities. Or what about creating a Kids CBC show that builds financial literacy one word and concept at a time...hmmm...I wonder if Agent Story is available?

Copyright 2010. Laura Thomas. All Rights Reserved.

Tuesday, September 21, 2010

Episode 2 of Meltdown was a Let Down: Except for the Idea of Global Financial Interconnectedness


This will be brief because there really isn't a ton of financial literacy knowledge that we can wring out of part two of Terence McKenna's documentary series The Secret History of the Global Financial Collapse: "A Global Tsunami." In fact part two is largely a rehash of the first episode, minus some of the cool graphics.

From the trailer at the end of the first episode, I thought that episode two would focus on unemployment and homelessness. But in fact the bulk of the hour is spent reviewing the "tsunami" allegedly created by US Treasury Secretary Hank Paulson when he decided on September 17, 2008 to let Lehman Brothers fail. McKenna's tsunami story almost entirely focuses on the reactions of financial districts, CEOs and finance ministers, not on that of regular people, as promised. Like I said, it was a rehash of part one.

That said, there was one thing that seeped up through the sometimes slide show-like documentary: the idea of global financial interconnectedness. Foreclosing homes in California led to Britain putting Icelandic banks on their list of terrorists (a list which includes Al-Qaeda) and to fifteen million factory workers in China suddenly becoming unemployed. Our money is seriously, profoundly connected with all the other money in the world. And that is something our kids need to know.

Global financial interconnectedness is an important concept. It's something that we need to talk about openly while were standing in line at the bank. I think it's critical that our kids understand that diversification is not a guarantee when comes to recessions and that we need to be picky when deciding which financial institution to do business with. Just ask all  those people in multiple countries who lost their jobs or their savings in the meltdown.

And I do hope that in episode three McKenna will indeed bring us down from the lofty heights of Wall Street to the front lines where the rest of us are. I will tune in for sure, even if "Meltdown" episode three is another let down.

Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission contact money@agentstory.net

Friday, September 17, 2010

Can Compound Interest Make Me a Millionaire?

I am a good saver, make that a great saver, but I am not great at growing my money and I really want that to change. Indeed, the four pillars of my curriculum as a financial literacy storyteller are: earning money, spending money, sharing money...and growing money. How great it would be if I could say at the end of my show, "By the way, I'm a moderately successful storyteller and a millionaire."

To that end (growing my savings to the million-dollar mark) I have been learning about compound interest, the interest you can earn over time on your savings + the interest on your savings. But being an "arts major" as my friends like to remind me, I'm not a math whiz so it's hard for me to visualize how compound interest works. So I am going to work through the math and see if I can answer my own question: can compound interests make me a millionaire?

Laura, age 41, hypothetical amount to invest $100,000, goal one million dollars

Let's say, I hear about a monthly income fund (a mutual fund that that pays you a set amount every month and may also, hopefully, grow in value over time) that costs 5 dollars per unit and pays 6 cents per unit every month for a total of 72 cents per unit every year (12 x 6 cents = 72 cents) or 14.4% annual interest.

With $100,000, I can buy 20,000 units. Over 12 months I am paid monthly to a total of $14,400 per year (20,000 units x .72 cents = $14,400). At the end of 12 months my investment is now worth $14,400 + $100,000 = $114,400.

Now even if I don't buy more units with "fresh" money and I just let the $114,440 buy more units, this is how long it will take me to be a millionaire. I am assuming that the value of each unit stays at $5 and that the monthly payment stays at 6 cents (this of course can change at any time and you need to stay on top of it).

Initial Investment $100,000 / 20,000 units
All earnings are reinvested to buy more units
No additional outside cash is added to the original $100,000
In year 1, I earn $14,400 and buy 2880 units for a total of $114,400
In year 2, I earn $16,473 and buy 3296 units for a total of $130,873
In year 3, I earn $18,846 and buy 3769 units for a total of $149,719
In year 4, I earn $21,560 and buy 4312 units for a total of $171,279
In year 5, I earn $24,665 and buy 4933 units for a total of $195,944
In year 6, I earn $28,216 and buy 5643 units for a total of $224,160s
In year 7, I earn $32,279 and buy 6455 units for a total of $256,439
In year 8, I earn $36,927 and buy 7385 units for a total of $293,366
In year 9, I earn $42,244 and buy 8448 units for a total of $335,610
In year 10, I earn $48,327 and buy 9665 units for a total of $383,937
In year 11, I earn $55,285 and buy 11,057 units for a total of $439,222
In year 12, I earn $63,246 and buy 12,649 units for a total of $502,468
In year 13, I earn $72,354 and buy 14,470 units for a total of $574,822
In year 14, I earn $82,772 and buy 16,554 units for a total of $657,654
In year 15, I earn $94,691 and buy 18,938 units for a total of $752,345
In year 16, I earn $108,327 and buy 21,665 units for a total of $860,672
In year 17, I earn $123,926 and buy 24,785 units for a total of $984,598

By this time my investment is paying me about $12,000 per month so in February of year 18, I will reach my goal of being a millionaire. And, I'll only be 59 plus my money will be making about $140,000 a year for me. Awesome and totally worth saving for. I wonder if I'll still be telling stories then.

That was a lot of math, but a good lesson, especially for an arts major. If you want to play with some numbers without the carpel tunnel, plus take into account the rate of inflation, check out the Bank of Canada website. They have easy-to-understand interest rate calculators. Have fun and don't forget to share the fun with your kids. If anyone has the time to compound their way to a million bucks, it's them!

Copyright 2010. Laura Thomas. All Rights Reserved.

Wednesday, September 15, 2010

Growing Your Money: How, Where and When to Buy Gold Coins

Beyond having a small part of my portfolio in a precious metals mutual fund, I had never, until recently, thought about buying gold itself, as in a gold coin. But on September 3, 2010, the phone rang and I learned something.

The day before, I had the following investment question answered on the Lang & O'Leary Exchange (go to the last 3 minutes of the show): "How should a six-year-old invest the money she has in her savings account?" My question was answered by guest host David Chilton, author of the Canadian bestseller, The Wealthy Barber.

Chilton did not mention gold on the show but the next day he called me and suggested that my daughter consider buying a one-quarter ounce maple leaf 99% pure gold coin. I had to ask him where to buy one and he told me that Scotiabank under the name ScotiaMocatta sells them. So I called our local Scotiabank branch to get the scoop and here are the steps we are going to have to take to purchase a gold coin.

First, in order to buy a gold coin in her name, my daughter has to have photo ID (such as a passport) plus a social insurance number. Then we have to go to the branch between 9 a.m. and 1 p.m. (for those of us on Pacific Time) on a weekday while the markets are open. What happens is that when you arrive at the reception desk, they have to call in and get you a quote based on the current price of gold. Then you pay (cash only if you are not a Scotiabank customer) and place your order. The coin is shipped, at your expense, to the bank branch and you have to pick it up.

My daughter has not picked up her gold coin for two reasons. First, the price of gold is at an all time high (check the live charts here). Second, we have been toying with the idea of shopping around to get the best deal on the commission or service fees that you have to pay when you buy a gold coin.

Some friends have recommended certain coin dealers but I'm not overly confident about those. I think that in the end we probably will buy from the bank but when...I don't know.

Do we wait a few weeks and see if stocks go up and gold goes down? Or are investors really freaking out about the instability in the market and will the price of gold just keep going higher? It is possible that yesterday's high of $1276.50 USD (the price is always quoted in USD) will seem like a bargain a year from now.

Anyway...whether she buys her coin today, tomorrow or next year, the main thing is that my daughter is learning how to watch prices and read charts and to understand the instability and risk that comes along with growing your money.

Copyright 2010. Laura Thomas. All Rights Reserved.

Episode 5 Money & Me: Credit Cards

Sunday, September 12, 2010

Is "Meltdown" Documentary Series Worth Watching?

Last week, the first episode of a new, four-part documentary series by Canadian writer and director Terence McKenna aired on CBC. The series title is Meltdown: The Secret History of the Global Financial Collapse. Episode one is "The Men Who Crashed the World." And it was about men, powerful men. (Where the women were is a question that I will tackle in a future post.) But it wasn't the names and faces of CEO's and government financial leaders that held my interest, it was the time line that I found fascinating and truly educational.

And it wasn't just the time line, which ran from the boom-days of 2004 through September 2008, that I found instructive. I really liked how McKenna takes viewers around the world documenting the journey of toxic (likely to default) American mortgages from the U.S. to the rest of the world. From Iceland to Dubai to Paris and London and back to New York, the documentary makes it clear that it was a global inability to value those toxic mortgage products (called "mortgage-backed securities" or "securitized debt") that caused banks to start bleeding cash when the real estate bubble popped.

There are tons of interesting facts, and a few shocks, to be had in this first episode and I look forward to watching episode two, which promises to turn the camera away from the money men to the fallout: unemployment, homelessness and the global financial tsunami that hit the world in September of 2008.

This is not a documentary that I would watch with young children. There is a lot of advanced financial vocabulary and the story unfolds at a rapid pace. However, I would feel very comfortable watching this with a high school student but I suggest recording it so that you can pause and explain at any time.

Note that Canada is not really a player in this story with one exception. Jim Flaherty (our Finance Minister) is interviewed briefly about a panicky phone call he received from Hank Paulson, the US Treasury Secretary under George Bush, in 2006. Paulson, apparently, was worried about the real estate boom and sub-prime mortgages (costly loans made to people with very poor credit).

Though we Canadians, are thankfully, not part of this story, I highly recommend that you check your CBC listings, watch a rerun of this episode and tune in for episode two.

Copyright 2010. Laura Thomas. All Rights Reserved.

Friday, September 10, 2010

Is Canada a "Tweet" Behind the U.S. on Financial Literacy Initiatives?

I have been following someone or something on Twitter called "Fiscal Literacy." It's American, that I know, and every day there are half-a-dozen tweets with links to news about the activities of the Treasury Department's Financial Literacy and Education Commission. From what I have read, and not read, the U.S. seems to be leaving Canada more than a few tweets behind when it comes to financial literacy.

One thing that caught my eye recently was a call from the Treasury for public input on determining the core competencies that Americans should have when it comes to personal finances. The public has until September 12th to email or call in with their suggestions. Very cool--if you are American! (To get the details, you can read a good summary article in the Washington Post that ran a few days ago.) But back to our federal government and financial literacy. What are we doing to build financial literacy in Canada? And are we even talking about it?

As part of the Economic Action Plan, Jim Flaherty (our Finance Minister) created a Task Force on Financial Literacy. So, this spring, a small group of Canadian professionals set out on a cross-country journey to find out what Canadians don't know and need to know about money. They wrapped up their consultations in May and are set to report to Flaherty at the end of the year....and there hasn't been much news since.

I subscribe to the Task Force newsletter (and follow them on FB and Twitter) and during the entire summer I only received one update which is a link to the consultation document, an online appendix of all the letters that the Task Force received from business, educators and individuals. That was a month ago and, by the way, their last tweet was May 11th (FinLitTaskForce) and last Facebook wall post was May 13 (Financial Literacy Task Force).  Not good. If the Task Force leaders aren't excited about tweeting and posting on this topic then I think we are in trouble.

With our ability to move through the recession with at least a little grace, and our position as a world leader in banking regulation, Canada shouldn't be a single tweet behind any nation when it comes to financial literacy or using social media to educate and spread the word. To our credit, our Task Force has more posts on its FB page than the U.S. Commission does, and our Task Force is on Twitter, while the U.S. Commission is not. But social networking only works if you network.

Are we behind the U.S. when it comes to financial literacy initiatives? It seems so. Then again, if the Task Force would send us a tweet once in a while...we might be pleasantly surprised.

P.S. I just sent the Task Force a note on FB and Twitter saying that I'd love to have an update. I'll let you know what happens!

Copyright 2010. Laura Thomas. All rights reserved.