The Wealthy Barber went missing from the home office library the other day.
"You haven’t seen The Wealthy Barber by any chance, have you?” I asked my teenaged son.
He sheepishly led me into his room and there was the dog-eared best-selling money-management bible, hiding under his bed.
Under interrogation, he confessed to having smuggled The Wealthy Barber from the home office.
The barber was bookmarked on the crucial chapter, The 10 Per Cent Solution, which is about giving your paycheque a 10-per-cent trim each month as a wealth-building strategy.
For taking charge of his financial future, my son was presented with a brand-new copy of this Canadian best-seller that ought to be part of the school curriculum.
He already has another fabulous book on financial planning – The One Minute Millionaire, by Mark Victor Hansen of Chicken Soup For The Soul fame and Robert Allen.
The Wealthy Barber may well prove to be one of the most important books my son ever reads. It is author David Chilton’s timeless common-sense guide to financial independence that was initially published in 1989 and may be the best investment you could ever make in your youngster’s future.
The Wealthy Barber provides a wealth of information about financial planning in an entertaining fashion. It’s an easy read and easy to understand.
It provides the information that the school system, in its wisdom, has kept secret from students, presumably for fear they might actually turn out to be financially literate.
The Wealthy Barber’s strategies are basic and simple, yet they’re fundamentals that few people practise with consistency and discipline.
Besides the rule of skimming 10 per cent off your paycheque, the barber shows how long-term investors can avoid the market’s roller-coaster ride with dollar cost averaging, a system of investing in stocks or mutual funds at regular intervals with a fixed dollar amount.
“Thanks to the power of dollar cost averaging, even downside fluctuations can work to your advantage,” the barber tells his pals in the barber shop.
“Dollar cost averaging is as close to infallible investing as you can get. It generally slants the odds in an investor’s favour, yet I’ve read all kinds of financial planning books that haven’t even mentioned it. Most people haven’t even heard of it.”
The Wealthy Barber also manages to shock his customers with an intriguing math lesson about the magical power of compound interest, showing how one who invests $2,400 per year for 30 years at an average return of 15 per cent would earn $1.4 million.
To one who got nothing but a buzzcut and razor burn from his barber, The Wealthy Barber is a godsend.
I envy my son for his interest in taking the bull (or bear) by the horns and going to school on finances and investing.
Youngsters who don’t take their own initiatives could wind up in that school of hard knocks from which many of us have graduated with honours.
That’s the school where you flew by the seat of your pants, paying ‘tuition’ fees to credit-card companies that charge ridiculous interest rates and buying fat cigars and cognac for stock brokers who teach the art of making people go broke.
Even in the so-called information age, money talk is still mostly taboo in homes. In my day, back in Saskatchewan, it was easier to talk about sex with your parents than money.
If you quizzed your parents for financial advice, they handed you a pail and pointed to the barn where the milk cows were bawling. Dime a cow, you got paid, if you didn’t spill any.
If the rude awakening in the financial markets in recent years has taught us anything, it should be that you don’t go into the financial game without properly honing your batting eye with batting practice.
If you want to hit a financial home run, you must take charge of your financial future by doing your homework.
The bookshelves are packed with fabulous guides such as The Wealthy Barber and The One Minute Millionaire that are informative and fun to read.
You could certainly do a lot worse than pay a visit to The Wealthy Barber.
It could be the best 14 bucks you ever spend on your kid.
Heck, who knows?
One day, you may need to hit up your kid for a loan.
* SAGE WORDS: “By saving 10 per cent of your pay now, you’re virtually guaranteeing yourself financial freedom later in life. Only a fool would say no to that. So start now, and don’t stop!”
– The Wealthy Barber, David Chilton
HOT ALBERTA STOCK: LEXXOR ENERGY
LXX-TSX $1.35
Up 15 cents (+12.5%) on 481,100 shares (for week ending July 18).
Lexxor shareholders applauded the news that the oil and gas junior was merging with privately owned Sine Energy to create a new entity, Find Energy. The new company will be headed by Sine Energy CEO William Davis, whose resume includes success as head of Search Energy. Which goes a long way to explaining the market’s positive response.
COLD ALBERTA STOCK: TATHACUS RESOURCES
TTC-TSX Venture $1.42
Down 28 cents (-16.5%) on 54,700 shares (for week ending July 18).
Three years ago, investors were wild about this speculative tech play, bidding it up to $9 before the stock crashed and was eventually halted by the Venture exchange. Since the stock began trading again early this year, the shares have floundered but at least the company has had a steady stream of news. The latest release was the closing of a private placement and the issuance of an additional 357,500 common shares at $1.25 per share.
