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MoneySense columnist and senior investment advisor shares wins, losses, lessons and takeaways about investing.
Allan Small is everywhere. You’ve likely seen him on BNN Bloomberg and on the 6-o’clock news. The senior investment advisor obviously has good PR, but he also has the chops to keep getting asked back for his perspective on the markets and the economy. You may have read his work, since he has a column with MoneySense. He hosts the podcast The Allan Small Financial Show, which is also on YouTube. As a change of pace from giving Canadian investors some perspective on the headlines (like with Making sense of the markets), he’s agreed to answer the My MoneySense questionnaire to reveal his relationship with money and more.
I don’t really have any investing heroes. I like hearing Tom Lee, from Fundstrat, speak. He had the courage to stick to his guns over the past year, calling for markets to move higher, while many were predicting a doom and gloom recession. However, I wouldn’t call him my hero. I listen to many different analysts and economists to form my opinion as to what I think will happen. I am a glass half-full person, so I always try to look at the positives.
I like to spend my free time with my family—my wife and four kids. You can usually find me at the hockey rink, training or coaching my boys.
I would still be doing the same thing. I like to help people. I am a big student of the stock market. My job is not a job—it’s a lifestyle. I can’t see myself doing anything else. I always saw myself helping people, even when I was in high school. I always envisioned myself, wearing a suit and driving around in a nice car, visiting people to help them.
My earliest memory of money was receiving an allowance from my parents. I learned quickly that if I wanted to make more money, I had to work hard for it.
The first thing I remember buying with my own money as a kid was clothing.
My first job, like many kids, was a camp counsellor. With the money I made, I was able to go out with my friends for dinner, go to the movies and the amusement park.
I am not sure I can think of a money lesson. I have always been a good risk manager, making sure that if I take a risk and lose that I could handle that loss without it affecting my life. Thus, maybe that’s the lesson I learned or picked up somewhere. This is a quality I think helps me manage money for investors best. There is nothing I would do differently.
The best money advice I have received actually comes from my older clients—clients in retirement. They have told me that a person doesn’t only live once, they live many times and days. However, you only die once. Thus, live life to its fullest no matter what. Save for tomorrow but enjoy today.
I think, like many, the worst advice I received came earlier in life and it was about trying to buy some stocks and try to time the market. Buy “this hot stock” and then sell it before it goes down. That, obviously, does not work for most people. Some can get lucky and time these things, but most end up losing in the end.
I would rather receive a lump sum all at once because I believe I can then invest it and hopefully turn it into a larger amount.
Diversification. Most investors know this, however many still choose to invest in just a few baskets.
The two biggest misconceptions I come across are: first, investing is like gambling; and second, myths around age and investing.
To say “investing is like gambling,” that it’s out of your control and all [based on] luck is not true. Investing is about doing your homework and crunching numbers. The short term may be bumpy, but over the longer term, it works out. The second misconception is that the older you are, the more money you should have in fixed income and out of the stock market. This, in my opinion, is not true. What dictates your asset mix is your investment goals and risk tolerance and, in some cases, time horizon—if you know you’ll need the cash by a certain date. However, you can be 85 years old and have an all-equity portfolio to meet your goals, or you can be 30 years old and be invested in bonds or fixed income if that will fit your needs.
Looking back, I don’t really have a money regret. I can always say in hindsight that, perhaps, I should’ve had a fixed mortgage versus a variable, or something like that. But overall, there are never any wrong decisions in life. It’s how you deal with the decisions you make that means everything.
The word value to me means getting the most out of what you do or own. I don’t mind paying professionals for their services versus trying to save money by doing it on my own. I think people become more successful by obtaining the assistance of a professional. I also don’t mind spending money on quality goods. Some may try to buy lower-end goods and take their chances that they may break or rip or damage sooner. I would rather spend the extra money on something of top quality, which will last longer—hopefully.
I guess the first major purchase I made was [buying] a car. Even though I lease my cars now, that was the first major decision I had to make, followed by a house, of course.
I think sometimes people have the wrong impression of debt. Debt can be OK to carry if you are making more than the debt is costing you. For example, borrowing to invest when interest rates are low. However, you have to make sure you stay on top of it as rates start to rise on the debt you are carrying. You have to make sure you are able to meet your obligations and maybe even pay it off if it makes sense financially.
My most recent splurge was a new wardrobe when I had a milestone birthday last year. It was time.
The last book I read was called One Up On Wall Street (Simon & Schuster, 2000). It’s the philosophy of Peter Lynch—great book.
I try to always have cash in my wallet. I am a cash-person.
My most prized possessions are my kids and wife. I am a big family man.
Not sure what you mean by “money goal,” however I would say my goal is to take my business to the next level.
Own.
Lease.
Invest.
Budget.
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