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In this new series, Behind the Advice, we ask advisors about their relationship with money from a young age, lessons learned over the years, and how their experiences influence the advice they give clients today.
Paul Harris, partner at Harris Douglas Asset Management Inc. in Toronto, talks about the money lessons he learned when saving to buy his first bicycle and the personal investing mistake he made during one of his first jobs on Bay Street.
What was your first money lesson?
My family moved to Canada from India when I was a boy. We didn’t have a lot of money. My parents gave us what they could, but if I wanted something outside of what they could provide, I had to find a way to get it myself. So, at age 12, I got a newspaper route. The money I earned helped me buy my first bicycle. After that, I went on to do other small part-time jobs including bagging groceries and working at a bakery and a deli. These experiences helped me realize that if I wanted something, I’d have to save for it first. It also forced me to figure out what I could afford to buy. So, for instance, I had to research what kind of bike I could buy that provided the best value for the money I had at the time.
How did these experiences influence your money habits?
It made me realize that spending comes after saving. I never wanted to have debt. If you need to go into debt, it should be with a goal to pay it down as quickly as possible. For instance, I paid off my mortgage as fast as possible, even though I could have made higher returns in the stock market over that period.
What’s your biggest money mistake, and what did you learn from it?
In my mid-20s, I had a job on Bay Street that involved researching and analyzing companies for other investors. But, for some reason, I wasn’t as diligent with some of my personal investments. I remember back then buying a company based on a tip from a friend that kept grass from growing too long. The pitch was it would help cut down on lawn maintenance and that everyone would want to own this product. I invested a couple thousand dollars in it but lost all of it. The idea never took off, and the company went out of business. The issue was that it was not a viable company with earnings and cash flow. I learned you should research every investment idea before buying into them – and only invest in great businesses.
What’s the best money decision you’ve made?
My wife and I bought a house in Toronto in the fall of 1992 during a recession. It was a good time to buy a house because prices were down, but it was still risky. We were starting our careers and could barely make the mortgage payments at the time. We sacrificed a lot to make it work, living like students and holding off on major investments like new furniture and other items for the first several years. Instead, we focused on the quality of life that home would bring us in the long term. We raised our daughter in that home and continue to live there today. The home’s value has increased a lot, which is great, but we still view it as our home and not an investment. To me, that’s the key to home ownership.
What’s the hardest piece of money advice for you to follow?
I think it’s the same for most investors – being patient, especially when so many things are changing in the markets today. We’re inundated with so much information, and it comes so quickly that we often feel the need to react. The hardest thing to do is nothing; to stick with your investment plan.
What are you best at when it comes to your own money?
I very often save first and spend later. I’ve also been good at saving a little bit at a time. In one of my first jobs, I contributed to an employee stock purchase plan, which came straight out of my paycheque, and the company would match part of it. I worked there for 10 years, barely noticing the money coming out, and when I left, I had this huge chunk of money. More workers should take advantage of these programs if they can.
What do you worry about?
I worry about younger generations not having the same financial discipline of saving first and spending later. I worry they’re not saving enough money or relying too much on receiving their parents’ wealth, especially given people are living longer, costs are rising, and the government can’t be relied on to support them.
This interview has been edited and condensed.
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