The publicist for the author Sandra Sexton kindly sent me a copy of the book for review. Subtitled Learn what every Canadian should know about RSPs, stocks, mutual funds & more!, the author says that the book fills “a need for simple, concise, unbiased information for the novice investor.”
The book starts off on a correct note talking about asset allocation and model portfolios for various life-stages and covers most of the investing basics including bank accounts, GICs, bonds, mutual funds, stocks, RRSPs, RESPs etc.
However, there are a few inaccuracies and poor advice that, in my opinion, detract from the utility of the book for an investing newbie. For instance, the author recommends a dividend mutual fund for the income portion of a portfolio and a balanced fund for the growth portion of a portfolio, which has two problems: dividend funds are really equity and it becomes harder to tell how much of a portfolio is in bonds. Also, for the growth portion, the author recommends six funds (an S&P 500 index fund, a NASDAQ 100 index fund, a balanced fund, a technology fund, an utility fund and a financial fund). If you notice, four of the six are sector funds and two belong to the same sector: technology.
When talking about the basics of bonds the author notes that the value of a bond will vary based on the Bank of Canada’s overnight rate, which isn’t accurate and offers this recommendation:
If the overnight rate is expected to go up, opt for terms that are less than two years. If the overnight rate is expected to go down, opt for terms that are more than two years. Many people rely on the term recommended by the banker or advisor from whom they purchase the bonds. However, you may want to consider getting a second opinion from another investment professional.
There is only one problem with such advice: the recommendation of both the advisor and the professional is not worth the paper it is written on as predicting future bond yields accurately is impossible.
The self-published book is available from Amazon.ca (non-affiliate link) and The Clever Canuck website. It is hard to recommend this book when much better information is available elsewhere for free.
