Steve Jobs Apple

Four essential lessons from Steve Jobs1.      Lesson One: Say noJobs makes it his business to obsessively hit on a small number of things that are important to him.Apple limits itself to three product lines – the Macintosh computer, the iPod, and the iPhone, with the recently announced iPad making it four.With just three main product lines, Apple has a market capitalization of more than $150 billion. Jobs has resisted the call to offer lower-end products and milk the company's great brand. His philosophy is that "it's only by saying no that you can concentrate on the things that are really important."Implications:There is no shortage of opportunities in this business. What there is a shortage of is conviction. The easy thing to do is to go to a meeting, hear a few good ideas, and then go out and try them. When that does not work, you go to another meeting or hear another speaker and make a half-committed effort with new ideas, getting similar unacceptable results.Ultimately, you find yourself trying things but never really finishing them. Most advisors have to-do lists. What fewer have but would benefit from are not-to-do lists. With not to do lists, advisors only take on initiatives that will have a dramatic impact on their business, small scale projects that only make a difference at the margin will drain energy and focus and ultimately leave you bogged down without really advancing your business.2.      Lesson 2: Practice the rule of 100%Jobs built Pixar Studios into a company that he sold to Walt Disney for $7.4 billion. At Pixar, there is no 80/20 rule. It's simply the Rule of 100% – every effort gets 100% support.Jobs is a notorious stickler for minutiae and one of the most obsessive detail oriented people you're likely ever to run into.Accordingly, Pixar delivered an average of only one movie every 18 months, many fewer than most major movie studios. However, the result was outstanding. Pixar has generated more than $3.5 billion in worldwide box-office receipts since 1995. And it has had no bombs.Implications:Many successful advisors have 500 or more clients. These advisors had successful businesses that generated substantial revenue and comfortable profits.Yet who got short changed in that deal? The clients! None of those advisors would ever go on the record as saying they did a great job of taking care of all of their clients. Typically, 20% received great care and the other 80%, well, they were mainly an entry in a database.So the key question for advisors is how to restructure their business to deliver 100% quality to 100% of clients?3.      Lesson three: Focus on your peopleJobs devotes a considerable amount of his time to talking with prospective employees that he thinks can be A-list players on his team. At the end of the day, there are no weak links in his executive suite. He's as obsessive about the quality of his people as he is about his products.Implications:Quality work starts with quality employees. For many advisors, finding and retaining quality staff members is a perennial issue. Advisors are tempted to hire the first person who marginally fits the bill.Unfortunately, that's a recipe for long-term pain. It's better to bite the bullet now and continue pursuing the right person, rather than settle for an average candidate who is destined to deliver mediocre results.If you currently have no support staff, then go out and hire your first person. Without staff, you'll have a job, but you'll never have a business. If you have existing staff, continue to support and nurture your A players – make sure they feel appreciated and know that they're an important part of your team.For your weaker links, work with them to try to get them to A status. If they can't make the jump after you've given them every opportunity to do so, it's time to let them go.4.      Lesson four: Refuse to settleThe last lesson is not to settle. Jobs says, "We're just trying to make great products. We do things where we feel we can make a significant contribution." To him, it's about staying focused. It's about doing great work. It's about loving what you do and doing it with all your energy. Don't settle for anything less.Implications:Settling is a common trap for many advisors. They rise to a level of production that makes them comfortable and then they coast. They have the house, the cars, the vacations, the club membership, and the kids' college education funded. No need to push yourself any further by asking for a referral or making more calls, right?When you get to a point in your life where you are comfortable, coasting is the worst thing you can do. You'll get stale disenchanted, and start cynical. The key is this: When growing your business is no longer satisfying, it's time to start growing your self. 
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Warren Buffet's two steps to guaranteed investment success

Warren Buffett writes that it only takes two things invest successfully – having a sound plan and sticking to it – and that of those two, it's the "sticking to it" part that investors struggle with the most. These themes were tackled in two recent columns in the Globe and Mail Report on Business:
The first column offered advice from Benjamin Graham, the father of value investing and considered the single most influential investor of the past hundred years.

1. Bring discipline and process to investing
Warren Buffett has said about his professor "Ben Graham taught us to look at stocks as businesses, use the market’s fluctuations to your advantage and seek a margin of safety. A hundred years from now, these will still be the cornerstones of investing."

2. Seeking a margin of safety, something that Graham believed was the most important principle of investing.

The margin of safety is the gap between what you can buy a stock for and what Graham called its intrinsic or true underlying value. What the margin of safety does is give you a buffer should the company run into unanticipated problems or the market as a whole go into a decline.

3. Elements of sound investments

In Graham's view, the bigger the gap between a company’s stock price and its intrinsic value, the safer an investment and the greater the likely return.
Graham advocated seeking out companies with strong balance sheets, conservative financing, solid profit margins and strong cash flow; he was an especially strong proponent of companies that paid dividends that regularly rose.
The second column focused on the obstacles to investment success, based on insights from the field of behavioural finance:

1. Overconfidence
When it comes to long term investing success, the biggest problem stems from investors overconfidence in their investing knowledge and ability.

Many do-it-yourself investors believe that by nimbly jumping in and out of stocks, they can beat the market. Research into the records of heavy traders at a discount brokerage firm discovered was that there's an inverse correlation between the amount of trading and investor returns – the more trading you do, the lower your chances of success. And even if investors do show a paper profit, often commission costs turns that into a loss.

The researchers' conclusion: "Excessive trading is dangerous to your wealth."

2. Herding
A second trap is "herding", also known as the "lemming effect".
It's hard to stand on the sidelines while everyone around us is making money – or conversely to be in the market losing money while people we talk to are safely on the sidelines.

3. Anchoring
Anchoring makes us fixate on the price we paid, regardless of whether that price is still relevant We have a tendency to latch on to what we paid or what something was worth at its peak, even after the world has changed; some investors held Nortel all the way down, waiting for it to get back to $60 or $80.

4. Regret
Another issue is regret. Research shows that investors experience more pain when they lose money than satisfaction when they make it; that's one of the drivers of risk aversion. That's why people hang on to investments that are underwater, avoiding the pain of selling them and then when they do finally sell, they often do it all at once to get it over with.

5. "We have seen the enemy and he is us"
In a Jump Start interview earlier this spring, I talked about investors' emotional responses to market movements and the resulting tendency to buy at the top and sell at the bottom – and referred to Walt Kelly's famous line from his cartoon strip Pogo: "We have seen the enemy and he is us."
This line is equally true when it comes to behavioural finance traps. The good news is that awareness is the first step to change – and growing understanding of the behaviours that undermine investment success means advisors are better positioned to help clients avoid them going forward.

Alternative view to RRSP vs TFSA article

This article was originally posted on http://my-moneytree.blogspot.com/2009/07/alternative-view-to-rrsp-vs-tfsa.html.

"It’s a very interesting concept. I like what you’ve written about the TFSA (Tax Free Savings Account). Keep in mind the idea of Inflation and the affect it has on money. If I have the choice between paying $1 of income tax today or $1 in 20 years, I would much rather pay it in 20 years. So if I get a $384 tax saving for putting in $1,000 in my RRSP today and pay $384 of income tax in 20 years when I take it out, I’ve actually paid back much less. In my mind, a person that still has any kind of debt where the interest is not tax deductible, or if the person is not on target to save enough for retirement, contribute to RRSP. In regards to the TFSA, if this person has not yet saved up enough money to pay for their child’s education, they should not put money into a TFSA other that what they like to keep in there emergency fund (usually 3 months income).

Here’s an example.

$1,000 in an RRSP will give someone with a $50,000 income a $384 tax deduction if they live in Quebec and $312 if in Ontario.

$1,000 in an RESP will give someone with the same income a $200 grant that will be added in the RESP.

$1,000 on a loan with a 5% interest rate (non tax deductible) will save them $81.70 per year ($81.70 minus $31.70 tax to pay $50)

$1,000 in a TFSA that earns 5% interest will earn $50 of interest which will save you $19.20 of income tax a year.

Hope this helps your discussion.

The best advice I can give anyone is that each situation is unique and therefore the advice for one may not be appropriate for another. That’s why everyone should have a Financial Planner with the CFP designation or Plan. Fin in Québec to help set priorities and determine the best plan of action based on their personal objectives."