Posted by Tim Stobbs on September 6, 2007
In case you haven’t heard Derek Foster, author of Stop Working, has come out with a second book called The Lazy Investor. So out of curiosity I sent Derek an email requesting an interview and he was kind enough to give me a call (I should point out I did the interview before I had read the book, I’ll post a book review tomorrow complete with a contest to win a copy of the book).
Tim: So what can we expect in the new book?
Derek: This book is basically the strategy that I would have done if I could do it all over again. People often think I came up with my investment strategy all in one go. I didn’t. The strategy evolved over time. I started in mutual funds which isn’t something I would do now.
Tim: Ok, how would you start now?
Derek: I would start with as little as $50 and use DRIP’s and SPP’s. Are you familiar with those?
Tim: I know the DRIP is a Dividend Reinvestment Plan, but I’m not familiar with SPP.
Derek: A SPP is a stock purchase plan with isn’t offered by a lot of companies in Canada. You can buy shares directly from the company without having to pay any fees. [Editor’s Note: Also sometimes referred to as DSPP -Direct Stock Purchase Plan]
Tim: Ok, how do you start.
Derek: You have two options on how to can get your first share of a company that offers both a DRIP and SPP. The first is through a discount broker, which is more expensive. First you buy the share and then request the stock certificate. The total cost will run you about $80. The other option is to go to a share exchange board like the Investing Resource Center. There you can request that someone will sell you a single share. The cost of this is a $10 courtesy fee.
Tim: Sound’s great. So where did the idea for this all come from?
Derek: The idea started from my own kids [Editor’s Note: Derek is now up to four kids ages 7, 5, 4, and 1], which is why the second section of the book deals with investing just for kids. I don’t like RESP’s and I wanted to provide something for their future, but still leave them with responsibility for paying for their own education.
Tim: I can totally agree with that. I don’t intend to pay for everything for my own kid either. So you started a similar strategy for each kid?
Derek: Yes, I started with $8500 for each kid and invested in four companies in their names. I believe financial education is sorely lacking in our schools and this will provide some incentive for the kids to learn. After all some of the dividends they earn pays for their allowances when they get older.
Tim: Now that is a great idea. So do you also provide an update on your own situtation from the last book?
Derek: Yes in the appendix I address some of the most common questions I’ve been asked.
Tim: Derek, thank you so much for your time. It’s been great talking with you.
I should point out that this interview actually went on for a lot longer, but I had to paraphrase it down to a reasonable length.