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Wednesday, March 29, 2017

Interview with Derek Foster

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.

Comments

21 Responses to “Interview with Derek Foster”
  1. FourPillars says:

    Pretty neat interview!

    Mike

  2. I look forward to the book review!

  3. Good interview! I hadn’t heard that there was going to be a new book I look forward to the review.

  4. Mr. Cheap says:

    Very cool, congrats on getting an interview with him! Please make the contest something I can easily win ;-).

  5. Frank says:

    Great to hear, I really do admire this guy for retiring as early as he did and with kids to boot! I’m curious about both Stop Working! and his new book as well, does the information contained pertain mostly to citizens of canada or are they easily applied for someone living in the US?

  6. Canadian Dream says:

    Frank,

    The information is good in a general sense about the benifits of dividends, yet I’m not sure how the tax treatment of dividends is in the US. In Canada they are taxed very low, so that is a keystone in Derek’s plan to retire early. I’m not sure it would work in the US.

    Tim

  7. Frank, the main idea behind DF’s retirement is that he purchased growing dividend paying stocks when he was young, and let them grow. Along with some luck in the stock market, he was able to have enough dividend paying stocks to fund his retirement. So yes, someone in the US can use the same strategy.

  8. telly says:

    But in DF’s case he pays zero taxes and actually gets some tax credits / benefits with his strategy due to Canadian dividend prefernetial treatment. I believe that US dividends are taxed as capital gains in the US. Not entirely sure but I think so.

  9. Wolfshead says:

    Not a bad interview but there should be one thing straightened out which is causing some headaches, namely the Share Exchange board on DirectInvesting.org. The cost for a share is not merely a $10 courtesy fee. It is any fees associated with the transfer and sometimes there is a $10 courtesy fee added on. Many times, one the initial share has been purchased the single will be passed on at no charge but sometimes when no singles are available a group purchase is set up. This purchase, while still a very cheap way to go since fees are being split still has fees, other than the cost of the share itself, associated with it. These fees are those related to the purchase and transfers and have nothing to do with any courtesy fee added on. So, while we are glad Mr. Foster likes the way we invest and are glad of the mention please make sure you know what all is associated with getting started.

  10. janice alleyne says:

    I am interested in knowing if Mr. Foster conducts seminars for young adults, educating them in the essentials of money management, -savings, investing, budgetting, etc.

    I find my teenage daughter has become quite a consumer in recent years. At age 18 she is on the threshold of being sought after by credit card companies, cell phone suppliers and the like.

    I am greatly dissapointed that I have not found any investment firms that offer seminars geared to this age group to help aid in their financial development.

    Do you have an e-mail address so that I can contact Mr. Foster directly to see if he offers any such course/seminar?

    With thanks,

    Janice Alleyne

  11. JR says:

    Does anyone know how to get in touch with Derek Foster, either an email address or phone number?

  12. Canadian Dream says:

    JR,

    See his website. He’s got an email address on the bottom of the page.

    http://www.stopworking.ca/

    Tim

  13. Cate Whitsitt says:

    I enjoyed your book immensely.but it seems geared to young people . I am 61 years old, widowed , retired and on a fixed income. I have a few RRSPS and some non-registered investments(handled by an advisor in a big financial company).I know little about finance. Does your strategy apply too someone my age?

  14. Canadian Dream says:

    Cate,

    This isn’t Mr. Foster’s website, you will have to check up the website http://www.stopworking.ca to contact Derek.

    My thoughts on your situation would be, it is likely not a good idea to follow Derek’s plan exactly. Owning some dividend paying stocks isn’t a bad idea, but if you don’t know much about finance I would first bring up the idea with your adviser to see if works with what you are already doing.

    Tim

  15. kerry robinson says:

    am just starting to read your book and getting interested in stocks and investing……….read that your mom is Tina Colonnese…was she a nurse at the Riverside Hosp………also did you graduate from Carleton and where did you take your Investment course…….kerry

  16. eric says:

    Hello,

    I’ve started initiating my 6yr old boy to the finance world. He has his own little bank at home in which he keeps currency from dozens of countries, he has his own savings account in which he follows and deposits funds.

    I want to investigate the possibility of investing directly in blue chip companies. What do you suggest for a 6 yr old? I want to incorporate a ‘fun’ factor, something to get him really excited about it …. more so than he already is.

    Looking forward to your insight,

    Regards,

    Eric Leclair

    How do i contact Derek Foster?

  17. Nice interview. The big problem with Derek is that he seems to have started a career of a financial educator/book writer as opposed to a retiree living off dividends and passive income.

    Other than that his first book has some pretty neat content.

    Dividend Growth Investor

  18. Lucas says:

    I recently read an article titled “The Foster Effect” by a Canadian investor who cuts pretty deep in the Derek Foster approach in a fair method. I read his first two books, but I feel fortunate not to have followed his teachings blindly as so many appear to have done. One thing I really enjoyed in the article was the idea of no company being recession PROOF. Simply recession resistant.

  19. hunter says:

    Hi derek Foster my name is hunter vernon and i am 14 years old, i understanf you live in wasaga as i live there to. I resentally read your book and have been inspired to invest on my own. now I have some mutual funds but want to start my own by my self could you help me through the procces

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