Your Ever Growing Income - My Book Review

TITLE: Your Ever Growing Income
AUTHOR NAME: Henry Mah
AUTHOR CREDENTIALS: Certified Management Accountant, Canadian Investor
GENRE: Personal Investment Strategies
NUMBER OF PAGES: 151
PUBLICATION DATE: January 2019

SYNOPSIS/SUMMARY: This book will provide you with a method of stock evaluation that identifies quality income growth stocks and show you how to build an investment portfolio that will provide you with a steady and ever growing income.. 

It is only appropriate when you have a website on 'Strategies to Grow Money' that I have a chance to review a book by Canadian investor Henry Mah.

This is a nice short read of 151 pages and 6 chapters. Henry also includes some Excel work sheets, a list of discount brokers and recommended books and websites to read.

Chapter One

Breaking away from the norm and income is the answer.

In this first chapter Henry lays out a plan for you to;

• beat the slight of hand of market timing
• eliminate guessing of how to pick stocks
• a simple effective way to identify stocks
• an alternative to market returns
• a system where your returns are not tied to market fluctuations

Henry also follows Tom Connolly who wrote the foreword to his book and runs the site dividendgrowth.ca published bi-monthly for a small fee. Tom has been investing this way since 1981. Put simply this is how he buys stocks.

"If a company does not pay a dividend, don’t buy it. If it doesn’t grow the dividend don’t buy it either.”

You can't get any simpler than that when looking for what stocks to buy. The goal is to find a few stocks that will provide you with a growing income from your investments.

The big take away here is the focus on income growth and NOT the day to day swings in the stock price. Ignore that and focus on what the stock provides you in income. Of course, the more you invest and the cheaper price you pay will definitely impact your long term return.

Chapter Two

In this short chapter the focus is on generating savings to invest and how to offset the ravages of inflation. This is about generating income for retirement and not about saving for luxuries.

The worst thing to happen to you in retirement is to run out of money. You must invest in a way so that as your expenses rise they can be offset with a strategy to grow your income. The first step is to SAVE and then invest for INCOME.

Inflation goes up every year so we need to match that with an income stream that also goes up.

Chapter Three

The focus here is developing an investment strategy suitable for you. 

Henry also covers the hazards of ETF investing which I have constantly railed against on my own blog. They just contain too many bad stocks and businesses you would never invest in on your own. I don't own any but if you just want a market return then go ahead.

Income investing means focusing just a few investments in quality companies and NOT on total market return.

ETFs are expensive to own and also cost more, the more you have invested. They are also getting more complex all the time and the landscape is bulging with options to choose from. They are becoming more and more complicated every month.

The Four Guiding Rules

You will have to buy the book to see what is presented exactly as a strategy but suffice to say it depends on dividends, how long they have been paid and whether the company has cut a dividend. Is the company consistent paying that dividend and has the dividend grown?

Studying just these rules of DG stock analysis and questions, is worth the price of this book.

For stock analysis Henry provides a link to Morningstar where you can analyze all stock components of the TSX 60. This is how you will compile a list and where you will get all the pertinent information on the company. I use it when I have more cash to invest and choose the right company for my money.

A process is illustrated in this chapter RATHER than a recommend stock buy list for you. You apply the 4 rules to each stock and then determine if it's suitable for purchase. Rather than coming up with guesswork this process will eliminate stocks and also compile a BUY list for you.

I must do this for myself instead of just relying on the list that Tom Connolly provides on his site. This way the list is yours and gives you a great sense of how successful the process is by applying the 4 rules.

UPDATE: Since writing this review, Morningstar only provides this service for subscribers (still worth it).

Chapter Four

Topics covered include;

• where to invest your money
• how many stocks to hold
• when to sell (if ever? I try not to)
• recording your investments

Lastly, Henry goes into how 'you need to forget all you've heard and followed about the basic rules of investing'.

Chapter Five

Why should change your investing course now and follow your own path.

Chapter Six

Relevant proof is provided with income data and how Henry is meeting his income needs.

My Take

Everyone should have an investing strategy. The point is to have one. Buying lottery tickets IS a strategy, just not a very smart one.

Is this book the only one - Ummm NO!

I am a student of Tom Connolly's DG strategy as I've mentioned many times on this blog. As a retiree I use it for income ideas and overall motivation. Mostly I just let my concentrated DG portfolio sit, stew and do it's work.

For Growth stock strategies I follow Robin Speziale and his Capital Compounders and love to listen to Barry Schwarz and what he recommends.

You have to do what you think is best and be comfortable doing it. I love being a Dividend Growth stock investor. Why? I think it's fun and I love seeing those dividends automatically deposited into the accounts. From there I make buying decisions based on the criteria Henry teaches in his new book.

I don't use Modern Portfolio Theory and it's adherence to asset allocation, balance and diversification. I don't believe in it and neither does Henry, Tom or Robin.

You simply buy big stable dividend growing companies that pay a consistent and rising dividend. It is suggested to focus on companies that have a record of doing that for at least 10 years.

In his book Henry DOES NOT give you specific stock recommendations or any sample portfolios. This is also what Tom Connolly does not do. Henry instead provides you with a screening and evaluation process to determine what stocks you should or shouldn't buy. This way you learn how to do it your way.

Be Like Henry 

I try to be. I don't own any funds, ETFs, bonds or preferred shares. I only own Canadian DG stocks - banks, pipelines, utilities, railroads and telcos. I also own Costco. I just couldn't resist and hated all the Canadian grocers and their low yields. Most are very expensive compared to Costco. I shop there, so I wanted to be an owner. I only purchased it last September and am already up 20%.

Other than Costco it's just those areas I'm interested in. 

NO gold and NO weed! 

Most PFs are constructed whether by professionals or ETF marketers with a 60/40 split. 60% equities - Canada, U.S. and Int'l and 40% bonds and pref shares.

I hate to pay fees. As Henry says it's still a fee and it acts like a leaky faucet in your portfolio. Those small fees add up over a lifetime of investing. Just build your own portfolio of quality companies.

Henry's Words of Investing Wisdom 

• forget diversification, it's just investing jargon and propaganda to get you to buy funds or ETFs
• quality over quantity (Henry owns just 12 stocks)
• a few great stocks are a lot better than a bunch of lousy ones
• don't chase yield

In Sum

We've all made mistakes and have made some bad buying decisions. If you use the tools Henry provides in his new book, your chances of long term investing success will greatly improve.

This is a great little book written by a Canadian for Canadians and I have no trouble at all recommending it to all investors no matter where you are on your investing journey.