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A long-time financial journalist shares his take on debt, investing and misconceptions about growing wealth.
Financial writer and editor Michael McCullough has made a career of helping Canadians understand a wide range of money topics, from real estate to alternative investments. In addition to being a MoneySense contributor and contributing editor, Michael writes for The Globe and Mail and BCBusiness, and he’s a former managing editor of Canadian Business magazine and editorial director of Canada Wide Media.
Recently, Michael helped to update the Canadian version of Personal Finance for Dummies (7th edition), a comprehensive guide to everything from budgeting and spending to taxes and retirement. Below, he shares his own money experiences and what he thinks is the most underrated financial advice.
Maybe John Bogle, who founded The Vanguard Group, an investment firm in the U.S. that created the first index funds for retail investors. He was driven by more than self-interest. He wanted to empower small investors. Bogle also wrote The Little Book of Common Sense Investing, which made it into MoneySense’s list of 25 timeless personal finance books.
Cycling, hiking, running. I live in the Cowichan Valley on Vancouver Island, which has amazing trails right outside your door.
Travelling to expensive destinations like Paris, Japan and the South Pacific.
I seemed to “get” money from a young age. I’d save it and loan it to my teenaged siblings at pretty high rates of interest. This was the late 1970s and early ’80s, when interest rates were sky-high. Then I learned about credit risk!
A K-tel compilation record full of one-hit wonders from the 1970s.
I sold service-station coupons door-to-door on commission. It was a racket. I quit after two weeks.
When I was 22, I got ripped off by a criminal gang in Thailand. I basically had to buy my way out of possible captivity with gold, paid for with an American Express card my dad had given me for emergencies. It took me months to pay my dad back, but I knew even then that it’s only money.
I was raised on the adage that a penny saved is a penny earned. I came to realize it’s actually more than a penny earned because you pay taxes on your earnings. When you save money, you get 100 cents on the dollar.
A financial advisor I once had talked me into buying a managed futures product that was a dud. I’m a DIY investor these days.
I’d lean towards the lump sum, but it would depend on the tax implications.
When investing, get to know and minimize the fees you pay. You can’t control what your future returns will be, but you can control how much will get deducted for fees.
That they can beat the market. That they know better than the market. That market returns are not enough.
Sticking with mutual funds longer than I should have, even when I knew better.
I’ll spend money on a memorable experience, like a high-end restaurant meal that expands your palate, or an event. My wife and I recently rode in the Tour de Victoria, which is a gran fondo-style mass bike ride. It was a $500 day for the two of us, but I know, come year-end, we’ll be glad we did it.
When I was 27, I bought a one-bedroom condo in a then-sketchy part of Vancouver. But my wife and I probably spent more time buying our first new car in our 40s. We test-drove 13 models at half a dozen dealerships, I think. We ended up buying a Hyundai Santa Fe that we still have 12 years later. The things that other makes and models charged extra for came as standard features.
Avoid paying interest to buy a depreciating asset like a car, if you can. A mortgage is different, because your home appreciates in value most of the time.
We had a visit from a wine-loving friend recently, so we toured wineries around southern Vancouver Island. It was an expensive couple of days, but a whole lot cheaper than flying to France.
I helped update the latest Canadian edition of Personal Finance for Dummies. I’ll definitely buy copies for my kids and others I know. There’s good, straight-up info in there for people who might otherwise be taken in by a slick sales pitch.
Timmy’s and Starbucks gift cards I never remember to use.
My Felt F85 road bike. I got it on Craigslist five years ago. Best $800 I ever spent.
Own.
Buy.
Invest.
Not.
New flooring for my home office.
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