Salary for Life

By Henry Mah

You've probably heard the saying "money doesn't grow on trees". Usually this is a warning not to take money for granted, that money is a limited resource and is not easily acquired. But I disagree. A small initial investment, given the right elements, discipline and time, can grow big and strong, and provide income for generations. So, yes, money can grow on trees!

That's the essence of what we'll discuss within the pages of this book. I am offering readers an investment strategy, for everyone of all ages, regardless of your financial position or your current earnings. I'll show you how, by applying a simple approach to investing, you can produce an income stream, a never-ending source of money that can become your own Salary for Life.

By focusing on you at particular times of life: young and single, as parents, even as grandparents, I will show you how to get started with a straightforward savings and investing plan. The goal of financial security during retirement could not be more within reach, or easier to achieve, than is it today. By learning about my Income Growth Investment Strategy, I hope that you'll be able to say, "Is it really that simple?"

And just as there are things you should do at the beginning of your life, you need to be prepared for the end as well. It's a topic which too many   ignore. Don't leave a mess for your dependents to sort out. Instead, make the decisions while you are in control, ensure your estate and assets are handled and distributed exactly as you wish.

• Language: English
• Publisher: Henry Mah
• Release date: Dec 9, 2021
• ISBN: 9781777241087

Book preview

SALARY FOR LIFE

FOR YOU & FUTURE GENERATIONS

HENRY MAH, CMA

Author of:

YOUR EVER GROWING INCOME,

YOUR TFSA COMPOUNDER,

and

INCOME INVESTING EXPLAINED

Disclaimer

The information and opinions in this book must not be considered investment advice. The information is intended to be for informational purposes only. I am not an investment or financial advisor, and I am not recommending any security or investment product. Nor should any recommendations be considered legal advice.

Opinions offered here can never be a substitution for independent analysis and due diligence. The book may contain some forward-looking statements and opinions on subject matter that is familiar and already well-covered. Your guess as to the future value of any security is as good as mine or that of a broker. Forecasting is an unreliable enterprise.

There are always risks involved with investing and investors must expect occasional losses on the risks they take. It is certain there will be periods of time when all investing strategies, including income growth investing, will underperform the market. It is always best to have measured expectations when approaching investing in any form.

Copyright © 2021 Henry Mah, CMA

All rights reserved.

ISBN: 9781777241087

Foreword

Henry... I have a complaint. Why didn’t you discover this stuff and write it down 40 years ago? But gosh, better later than never. And for that I cannot thank you enough. In less than 2 years, my wife and I have finally quit worrying about our financial future. And, in the absence of big pensions, that’s not easy. Today we own a pile of stock in the companies Henry believes in, and the dividends far exceed our expenses. We can work anyway we choose to, even if that is caring for our grandchildren.

Let me back up. I have known Henry for over 40 years. We served many of the same clients. Both of us were self-employed working stiffs trying to serve our clients well. And of course, we hoped to, somehow, achieve long term security by saving for the future. My career was as a Chartered Accountant in public practice. Besides my accounting work, I enjoyed teaching financial planning to the young CAs fresh out of university with Commerce degrees. Sadly, this was a major hole in their education. Saving up for retirement just made common sense but knowing what to invest in was challenging both for me and most of my clients. So, I saw from clients a lot of what worked and what didn’t. But two groups seemed to do well. 

One group was older clients who had bought great blue chip dividend paying stocks and tucked them away. These forgotten stocks always turned into a golden nest egg and these clients seemed happily content. I sure wish I had paid more attention. I suppose this approach looked slow and boring to me. Risk was okay for me, and I was very busy working so I happily hired various experts to take care of our future (mutual fund salesmen, stockbrokers, exempt investment dealers). 

The second group that did well were the investment experts.  While they really did care about their clients, their first motivation was to build a big book of assets under management that paid them a nice yearly income. Usually, their income was a percentage of the book’s value.  Performance affects their income, but not that much. I found that when these guys retired, they sold their book for cash. And then they were just as confused as me about what to invest in.

Over the years, my wife and I tracked the growth in our net worth but paid little attention to the level of investment income. I suppose that’s fine if you plan to work forever, but it doesn’t pay the bills in retirement. And I really wanted something solid for my wife to rely on if I departed the scene first.

About 2 years ago, Allan, a former partner of mine, told me the surprising news that Henry had written books on investing (big thanks out to Allan). I got the books immediately because I knew that Henry was a straight shooter, and I was keen to find out what he had learned. The system was immediately appealing.

But it took a few months to get going. Discount brokerage accounts had to be set up, GICs had to be cashed, and funds invested with experts had to be moved. Finally, I was all set to go but running out of time. A long-planned trip to the Galapagos Islands was days away and I didn’t want to rush the investment decisions. Off we went on the trip, sitting on cash. As that trip came to an end, Covid hit. We barely got back to Canada before Ecuador shut down. The stock market had plummeted and was still dropping. So, we waited until things started to recover and then went all in on Henry’s strategy on April 20, 2020. Lucky. Massively lucky. Of course, there has been appreciation, but we did stick to Henry’s system. We treat this fund as the key to our retirement income. That really helps on both good periods and bad. In good times, we are not scared off by success and feeling we need to sell and lock in our profits. On bad days, we have the comfort of knowing that the dividend income has not changed.

Is it hard to do? Not at all. Our stocks are scattered in TFSAs, RRSPs and in my company but we only have a grand total of 6 stocks. We just buy a bit more when the cash builds up and we have sold a tiny portion just once. Yes, we were lucky, but I have every confidence this can work just as well for others, over time. The remaining challenge today is to convince my 4 kids that this will work for them, and I need to get working on those grandchildren as well.

With this new book, A Salary for Life, I have to again thank you, Henry, for giving a big gift of wisdom to your readers.

Owen Jackson CPA CFO

Feigel Investments Ltd.

Author of Backyard BBQ Financial Planning

Acknowledgments

With this fourth book, I want to acknowledge not just those who have helped make these books possible, but also those people who I have learned from and have been my inspiration.

In the world of investing, prominent names automatically come to mind. Most are those who have accumulated large fortunes, who have managed large institutional funds and have been recognized for their success over the long-term. I have always felt that one name, in particular, is missing from the list, one I feel should be at the top, at least here in Canada, Tom Connolly. Tom has published The Connolly Report for forty years, as well as run the DividendGrowth.ca website. Both resources have many dedicated followers, all have benefited from Tom’s great advice, exhaustive research and steadfast investing philosophy.

This is the most important thing, that the advice he has imparted and the message to his subscribers has remained the same since the beginning; Invest in Quality Dividend Growth stocks. He has never recommended fixed assets, not even as a percentage of one’s holdings. He didn’t recommend mutual funds when they were popular in the late 80s, nor high-flying tech stocks during the late 90s, and not ETFs today. I learned about investing for Income from Tom, as have many others. Income, with a capital I, this is the money your investments generate, and is the cornerstone of my own investment strategy. To me, and likely to all his followers, Tom is the father of Dividend Growth Investing in Canada, and I would not have the investing success I have today without his influence.

It may seem odd to acknowledge Amazon, it’s a gigantic company, but without their Kindle Direct Publishing (KDP) division, I doubt I would have written or released my first book. Their self-publishing arm is very well organized, with a lot of helpful tools that streamlined the process. I know my book would not have attracted any attention had I sent it to traditional publishing houses. My investing strategy is just one in a sea of financial advice books already in print, and it’s hard to imagine anyone taking a chance on an unknown senior citizen’s retirement project.

Yet, even with self-publishing at my disposal, the next major hurdle was to get some exposure for my book. I must thank Tom Connolly again. I asked him to write the foreword for my first book and he didn’t hesitate. I’m sure that his endorsement prompted many of his followers to consider picking up my book. He continues to follow my progress, mentioning all my subsequent books on his website. Many of my readers have written me and told how they found me through Tom’s website.

I also want to thank Mark Seed. Mark is now recognized as one of the major financial bloggers in Canada. I first found Mark’s blog (MyOwnAdvisor.ca) about 10 years ago. I enjoyed his posts and would often add a comment or two. Eventually, we began corresponding and, in 2015, he agreed to post an article I had written about investing in company Dividend Reinvestment Plans (DRIP). Funny aside, I believe my post created more negative comments than any of Mark’s previous posts. But Mark supported my position, and when I asked if he’d read and review my first book, in early 2019, he readily agreed. He has since reviewed all my books, he is himself a believer in dividend growth investing, and has generously promoted all my books on his website. The blogging community has been very supportive, word-of-mouth is really the best marketing tool a self-publishing author has.

Being the author, with my name on the cover, some might assume I wrote the books all on my own, and, therefore, deserve all the credit. I wish. No, I owe much of my books’ success to my daughter, Theresa. She encouraged me to write my first book, and even agreed to do the editing. At first, I assumed she’d correct my spelling mistakes and grammatical errors, which she did, but she provided something much more important. Her perspective as someone very new to the concept of investing, dividend accumulation and income growth was very valuable. She asked questions, constantly made me become more detailed in my explanations and pointed out sections which didn’t seem to fit. In short, she made me realize that I really needed to consider who I was writing to, not just what I was writing about. We worked very well together and, now on our fourth book, we are a well-oiled writing/editing team (but please ignore any mistakes you find, we’re not perfect). Along with my grandson, she also helped design the covers of all my books. So, thanks Theresa.

I believe that success has many measures. Self-publishing is not a lucrative venture, I didn’t write my books to make money. But I feel I have achieved a certain amount of success. As of this writing, I have sold over 3,000 copies of my three books, no small feat for an unknown writer on a platform that outputs millions of new books a year. But this is still not the reason I feel successful. It is because so many people have reached out and told me that my books have helped them with their investments. I have been fortunate to receive many messages from readers where they shared what they liked most about my books:

They found the strategy easy to understand, it convinced them to follow my investment strategy, and it is working for them.

Not only have they benefited from reading my book, but they have since re-adjusted their investments using my strategy. 

That because my message and strategy has remained the same, it has helped them stay focused, when many others are sending mixed messages.

That by following my strategy, they no longer worry about the market or the price of their holdings. That it is so nice to find a way of investing that doesn’t blindly follow conventional rules.

Many readers have told me that they have shared my books, given them as gifts and have passed along my advice to friends, family members and colleagues.

There is no greater compliment than hearing that people have found your words helpful. It has made this whole journey very worthwhile.

Finally, I want to say how grateful I am to have found a friend and partner, whom I’ve known for over 60 years, who I was lucky enough to marry, and we just celebrated our 57th anniversary. She has been the person I always depended upon and has been our family anchor. She is the person who took care of all of us. All my love, Raelene.

Henry Mah

The old guy from Edmonton.

Table of Contents

Disclaimer

Foreword

Acknowledgments

Introduction

Chapter 1

You are born. So, let’s get started!

How parents can start the process

Dividend Reinvestment Plan (DRIP)

Starting a DRIP

Starting with small amounts

Creating a Generational DRIP

Another savings option for a child

How a RESP works

What if the child does not use all the RESP funds?

What types of investments are best for an RESP?

A Grandparent’s Gift for Life

Chapter 2

You’re now a young adult

Investment options for young adults

Making saving a priority

How to Invest as a young adult.

A Sad Truth

Why invest in a TFSA over an RRSP account?

Low Income Earners

You really have no excuse

You are in your thirties and forties

Even with an average wage, you can have a Salary for Life

You are 50 to 60, crunch time

Things are already going great, but...

The Hare & the Tortoise

Chapter 3

Finding the best stocks

For Your Eyes Only

Should you reinvest the dividends or hold the cash?

Deciding when to buy a stock

Worried about investing too much in too few stocks?

Should you buy during market highs?

What not to invest in

Don’t fall for the What If trap