Investing - nothing fancy here, just simple, straightforward advice, written for the intended benefit (hopefully) of nieces, nephews, former students, et al:

     I don't think it is a coincidence that for most of my life I've considered one of the most important, significant and useful stories in the Bible to be the story of Joseph and his time serving the Pharoah, where he convinced the Egyptian ruler to save his grain for seven fat years, in order to have it during the seven lean years.  During my lean younger years, I learned to be a creative saver, and able to enjoy life at an expense ratio that is well within my means, even while paying my own way through university, including several extra years that had nothing to do with my eventual choice of career.  It also allowed me to travel extensively in my twenties and early thirties, between a variety of jobs. 
    When I began earning a decent salary in my mid-thirties, I treated much of that as excess to my needs, and I learned to invest the surplus.  I know that many people, perhaps most, expand their lifestyle as their income improves - new cars, fancy wardrobe, a bigger house; I admit that I did a little of that, but always less than someone else might.  Except for travelling, my savings program was of paramount importance.
    Once as a young man, when I was opining insufferably, no doubt, someone said to me: "So, if you're so smart, how come you ain't rich?"  That rocked me back a little, and I made a secret promise that I'd figure out how to do that.  The first step is to define what you consider as "rich".  The word "comfortable" might be more appropriate in my case, because I'm actually content with less than most people I know.  I also like the word "independent", with the freedom and insouciance that term implies.  In my case, it is also defined by early retirement in spite of a late start in my longest and most "serious" career choice.
    I didn't want to choose a hard-scrabble corporate career, reaching for the high salary brass ring in order to make it happen; I wanted an idealistic and somewhat artsy career with fair compensation, and teaching was the one I fell into, and loved.  The lesson here is that anyone can do it - it isn't an either/or choice, getting rich versus an honourable career.
    Now, investing should be a life-long process, but it's never too late to start; I began "investing" with my first teacher paycheque, in my mid-thirties (having used up my savings to go to teacher's college for a year - that's another kind of valid investment).  Some investors start in their fifties, or later.  The net result may be smaller if you start later, but it's still going to be positive compared to where you started. 
    Saving toward financial independence began right away for Deb and me.  We began with an inexpensive wedding: I did the caligraphy invitations and decorated the cake; we prepped and froze hors d'ouvres in advance; friends decorated the church hall, and my Dad performed the ceremony.  The ring was a pebble rather than a boulder, and the honeymoon was simply a drive west to visit family. Once we got home, I taught piano on the side to make extra income, then made over our basement and rented it out; Deb and I scrimped and paid down our first mortgage to zero in ten years flat. I quit smoking...made my own wine in the basement to avoid buying highly taxed government booze...bought second hand cars and repaired them in my driveway...I picked out second-hand work clothes when I had my shop teaching position...Deb sewed...we cooked and entertained at home to avoid restaurant prices, tax, tipping...we taped movies with the VCR and made our own popcorn instead of going out to the cinema.  That sort of thing.     
    Some people might say that it was easier for us because we had no kids, but that's a red herring: there are successful investors who've retired quicker than I have, and written books about it, who brought up well-adjusted children as well, and taught their own children to become knowledgeable savers and investors in the process - an awareness which must be one of the greatest inheritances you can provide for a child.  These days you can benefit from websites that inform and inspire, such as Get Rich Slowly, Personal Finance That Makes Cents.  If you click on the logo, you'll get to other interesting reader advice and ideas.  Mint is another helpful site for young people trying to get their heads around making financial progress and plugging financial drain holes, although geared to U.S. readers.  There are a few Canadian group buying sites on the internet now, and many other sites with ideas on how to save money - and of course, the money saved should be invested.  It's a mindset, more than anything else...you'll discover your own clever money-saving methods once you're "in the zone".
    There's a debate about whether one ought to pay down a mortgage before all else, or even whether one should own a principal residence at all - mathematically, you can argue successfully that renting is smarter than owning, although David Olive claims that buying is better than renting after six years in a home.  Of course, your home debt should not overextend you: the traditional comfort zone is between three and four times your annual income. "Safe as houses" is an old refrain that's been refuted by the economy and the market several times in the last fifty years; timing is more important than most young people realize.  Right now (fall of 2010; Canadian Centre for Policy Alternatives) we're being warned that current prices are between 4.7 and 11.3 times average income, and there's talk of a bubble, which could "burst" as it did in the U.S., or could at least "correct" by about 10%.
    However, if you do choose to own, it makes a lot of sense to remove the risk of carrying a mortgage by paying it off as quickly as you can, with balloon payments - after all, what happens if you get caught in an interest rate squeeze?  Many people have lost their homes and credit ratings by unlucky timing.  Some choose to drag out their mortgage and invest excess income in equities and other real estate, but you are creating unnecessary risk exposure for yourself if you do that.  Sleeping soundly at night is also worth something, after all.  Richard Florida (Rotman School of Management) describes how the "mobility trap" works: you can sell most falling investments at a loss, but not a house - you are stuck in it because you've committed to paying the mortgage; during a recession, that keeps a lot of workers from moving to places where they have better prospects of work, which causes a drag on the recovery and, of course, anguish for the individual home-owners.

    I got really serious about investing in stocks when I became anxious about the threat of government misappropriation of teacher pension funds.  I spent twenty years building my stock market portfolio, tweaking it, steering it through market downturns, and ultimately reaping the rewards.  It's actually been twenty-five years since my first stock market purchase, in a small cap company which predictably tanked in the '87 crash, and never recovered. I learned to diversify, avoid "professional" advisors like the plague (the few that I knew made bad calls or no useful calls, took hefty fees and made bogus performance claims), sidestep most pitfalls and profit from market crashes; sometimes I still get stung, but I average out well ahead and avoid risk with a portfolio that is still fairly aggressive for my age and stage in life, but also inflation hedged.  There's a statistic that 85% of private investors lose money in the market, but that's a meaningless statistic without defining the terms of analysis; there are more useful aphorisms, such as "Time in the market is more important than timing the market".
    [Note: I do have a very close friend of many decades who is a professional advisor, and who reminds me that advisors vary in quality as much as humans vary in character and personality.  He was quick to point out that I didn't need his help when I asked him about that some years ago, but it is also true that there will always be a need for responsible, caring advisors to help those with limited time, limited experience, and those of a nervous disposition (who wouldn't be, in a market like we've had for the last few years!)  You have to shop carefully for an advisor you can feel comfortable working with, but I'd happily recommend my friend for someone who is looking for that kind of help.]
    I'd happily share my expertise with anyone who wants to learn to save and invest, but who is confused or a little scared to get into it - my motto is the same as Nike's: "Just do it!"  Every ten dollars I've saved and invested pays me back a dollar a year for the rest of my life, and I still have the original ten dollars to blow all at once if I ever feel like it, inflation-adjusted...heck of a good deal.  Of course, that still won't impress everyone, and I do invest in things that can make more money than that, but with bigger reward comes higher risk; you have to get the timing right, be diversified, and be willing to roll the dice with a portion of your portfolio to benefit from those choices.  You will have losers as well as gainers, and you will have to have ice water in your veins when the market tumbles, as it periodically does. 

    I prefer the stock market now, after years of learning how to enjoy the fascination without being fearful, but not all good investments are to be found in the stock market.  There is a clean-and-simple, easy-in, easy-out feeling to buying and selling stocks; but real estate was actually our best investment.  Not the house we lived in, but the house we rented out.  Here's an excellent read about comparing real estate to stocks: Investplus article
    It works like this: you live in the smallest space that you can feel comfortable in, rather than stretching yourself financially to live in the largest space you can impress the Joneses with.  The benefits of a smaller space for your principal residence include lower taxes, lower maintenance costs, lower carrying cost, and less time spent cleaning and repairing your dwelling.  (A countervailing opinion comes from David Olive: he suggests that you buy "shelter you expect to enjoy for many years, regardless of its assessment value at any given time"; it should be "in a neighbourhood characterized by a high quality of living, and by gradual but steady increases in home values".)
    Now, since you would qualify (hopefully) for a much higher mortgage than you've taken on for your modest home, take any extra income and put it into a mortgage that you hold for someone else who doesn't have one, for whatever reason - i.e., a tenant.  Rent out your second property.  Do as much of the maintenance and management as you can for yourself, to cut expenses.  Make the lowest downpayment you can get away with, and keep the mortgage high - you'll be able to deduct the interest as an investment expense, as well as the taxes, insurance (never sidestep insurance!) and any maintenance costs that you have to contract out.  There are two caveats: one is that you must be able to meet the monthly mortgage out of your other income in an emergency - if not, you are over-extended.  We had friends who lost their own home as well as their investment property by overextending financially, and going bankrupt.  At the very least, you must have an emergency savings fund for any unanticipated repairs, unpaid rent, months when the property is untenanted, etc.  The second caveat is that you must calculate and choose carefully between going long or short on your mortgage, and plan ahead on how you'll weather a spike in interest payments that might happen just when your mortgage comes up for renewal.
    Speaking of unpaid rent, keep the rent as low as you can justify using market comparables, and you'll have fewer rent payment defaults and fewer no-rent months between tenants, not to mention lower advertising costs to continually attract new tenants.  Deborah screened applicants thoroughly for references and credit worthiness, and we only lost one month's rent in seventeen years; we "paid" our tenants to maintain the property by lowering their rent in exchange for services, and stating so explicitly in their lease - this wasn't always a foolproof system, but most of the time it was, and they often came up with voluntary improvements on their own simply because they were optimistic about staying in the home for a long time, and they wanted to make it more attractive and liveable.
    If you time your purchase well, screen your tenants, and keep your investment small enough to cover even through a time of no revenue stream, you'll have an asset after twenty years that is worth ten times your initial downpayment, and the tenants will actually have bought the property for you.  There are occasional rare "ten-baggers" on the stock market, always very small or microcap stocks; but they are very high risk and you have to time your buys and sells impeccably, which is harder than you might think (timing the sell is even harder than the buy, for most people).  Real estate, on the other hand, carries far less risk and the downside is limited.
    For some people, being a landlord will never be an option, or even a preference.  In that case, just save and invest in sensible blue chip stocks - try to buy when the market is low, and learn about "seasonal investing", but if that's an anxiety-ridden process for you, read about "dollar cost averaging" instead, and just keep adding to your portfolio whenever you've got enough spare cash built up.  Make sure you get good dividends, and reinvest them - use the DRIP program for any company that has one in place. 
    Two "investments" that I generally don't favour are annuities and reverse mortgages.  Study those, in the light of your own situation, in very great detail before you fall into a contract that often favours the financial institution more than the client.
    Questions?  Email me...
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