Book Giveaway: The Beginner’s Guide to Saving and Investing for Canadians

A group of Canadian bloggers and an online insurance specialist got together to write The Beginner’s Guide to Saving and Investing for Canadians, edited by Dan Bortolotti. Having followed the authors’ excellent blogs for years now, it’s no surprise that the book is well-written. At only about 100 pages long, the book’s main strength is that it sticks to the big important issues rather than diving too far into minutia. At the bottom of this review, I’ll describe how you can enter a draw to win a copy of the book.

The first chapter, by Krystal Yee, covers budgeting and basic cash-flow planning to get out of debt and create savings. Although quite basic stuff, many Canadians make the kinds of mistakes Yee describes. It’s hard to build a solid financial future while paying interest on credit-card debt.

Jim Yih goes through the alphabet soup of different types of savings accounts (RRSP, RESP, TFSA, etc.). It’s possible to write a complete book on the details associated with each type of account, but Yih sticks to the high-level facts to help you determine which types of savings accounts you should consider.

Ram Balakrishnan covers a more difficult topic for beginners: investing. He recommends passive investing in indexes rather than actively choosing stocks. Balakrishnan does a good job of explaining the low-cost benefits of passive investing, but some beginners will have difficulty following this path. For example, the advice to “look for a discount brokerage [at] the bank where you have your main chequing account” won’t work well for those who don’t know the difference between a discount brokerage and bank branch staff who sell expensive mutual funds. Hopefully, the sample portfolios at the end of the chapter will help beginners see the difference between these low-cost portfolios and the kinds of portfolios that are typically sold to Canadians.

A blogger who goes by the name Frugal Trader wrote a chapter on dividend investing. Many dividend investing enthusiasts are quite rabid, but Frugal Trader gives a balanced view including both advantages and disadvantages of dividend investing. In my opinion, he overstates the tax efficiency of dividends from Canadian corporations, particularly now that Canada has TFSAs. It’s true that dividend taxes are very low if your income is around $40,000, but how many people with incomes this low have used up all their RRSP and TFSA room? For people with higher incomes, capital gains taxes are either about the same or lower than dividend taxes, depending on the province. Overall, I think the benefits of dividend investing are largely emotional, but this can be important. Whatever keeps people on the right track with their savings and investing and sticking to a solid plan is a good thing. Investors who follow Frugal Trader’s low turnover dividend investing plan will get far better investing results than the average Canadian.

Because I know less about insurance than investing, Glenn Cooke’s chapter on buying the right insurance was the most illuminating for me. He covered life and disability insurance in a way that simplified the subject without hiding important information. He makes it clear what types of insurance you may need and what types to avoid.

I found 7 typos in the book, which is a little disappointing for a book only about 100 pages long. However, none of the errors is likely to create confusion for readers. I actually reviewed a digital copy, and perhaps these typos were caught before the book went to print.

Overall, this is an excellent book for the average Canadian who is looking for clarity in the confusing world of personal finance. Understanding the ideas in this book can make the difference between perpetual money problems and having a sound financial future.

To enter the giveaway:

Just send an email with the following things:
– Subject: Book Giveaway
– Answer to the following skill-testing question: (7 x 8) + 6 – 2
– Use the email address listed at the “Contact” link (For those who are reading my feed, you’ll have to click through to my web site to get the email address.)

Another benefit of going to my site when reading a post is to see the comments other readers leave on that post. All entries received before noon Eastern Time on Sunday, August 5th will be considered for the draw. I will make a random draw without favouring any particular entries. I reserve the right to eliminate entries that I judge to be outside the spirit of the contest. Good luck!