PROMOD SHARMA, 50
Mutual funds and non-financial assets
For many years, Promod Sharma worked as an actuary at insurance companies. He branched out on his own in 2009 and founded Taxevity, a firm that provides independent, fee-only reviews of individuals' health- and life-insurance coverage.
In the 1980s, Mr. Sharma began putting money into mutual funds. He now wants to get out of them because he is turned off by their high annual management fees. "I'm planning to move to exchange-traded funds," he said.
How he invests
It appears that financial assets have not been a huge preoccupation for Mr. Sharma. When it comes to investing, he is guided more by the philosophy of the great industrialist, Henry Ford, who once said: "I think that much of the advice given to young men about saving money is wrong … . I invested in myself – in study, in mastering my tools, in preparation."
Mr. Sharma has taken this approach to heart and is focused on investing in himself and his business. He is allocating financial resources toward becoming proficient in communication skills and social-media technologies, which promote personal growth and brand awareness for his business.
When investing in financial markets, "volatility wipes out returns and inflation erodes buying power." When investing in ourselves, "we control the investment." The outcome depends more on our own efforts. In addition, returns from financial securities are taxed but "the government can't tax the growth that's compounding inside you."
He didn't appreciate it at the time, but contributing to a defined-benefit pension plan while employed at insurance companies worked out well. Such plans provide a nice financial cushion – monthly income for life while retired – without having to take on the work and "investment risk" that comes with building a retirement portfolio.
"Trusting my investment adviser to act in my best interest. … Early on, I got advice to buy 'can't-lose' warrants and 'can't-lose' stocks. I lost hard-earned money on his bad advice but he still got paid. I wanted a fiduciary but got stuck with a salesman."
Become financially literate. Further advice on financial matters, including insurance, is offered by Mr. Sharma at blog.riscario.com.
Special to The Globe and Mail
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