Financial Literacy For Young Adults – Doug Allan

 

What would a comfortable life look like to you when you’re 60? How much money do you need to have to your name to live comfortably when you retire? These are not questions you ask yourself when you’re 50, 40, or even 30. The younger you get an awareness of the financial side of life, the better your chances will be in the future. That is why Doug Allan devotes his time and energy to improve the state of financial literacy among the youth. He does this through his book, A Fighting Chance, and the social media blog and presentation that goes with it. This interview with him Doug will bring great value to parents looking to educate their children on financial literacy and young adults looking to learn how to build wealth and understand their finances for a successful future. Tune in and learn the most foundational pieces of financial know-how that everyone needs to have, especially at young adulthood.

 

Get in touch with Doug Allan:

LinkedIn: https://www.linkedin.com/in/doug-allan/

Website: https://afightingchancefinance.com/

 

If you are interested in learning more about passively investing in multifamily and Build-to-Rent properties, click here to schedule a call with the CPI Capital Team or contact us at info@cpicapital.ca. If you like to Co-Syndicate and close on larger deal as a General Partner click here. You can read more about CPI Capital at https://www.cpicapital.ca/.

#avabenesocky #augustbiniaz #cpicapital

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Watch the episode here

 

Listen to the podcast here

 

Important Links

• Doug Allan
• Burrard Properties
• A Fighting Chance: The High School Finance Education Everyone Deserves
• The Wealthy Barber
• Instagram – Doug Allan
• Rich Dad Poor Dad
• LinkedIn – Doug Allan
• https://www.Amazon.ca/Fighting-Chance-Education-Everyone-Deserves/dp/0228847710

 

About Doug Allan

Doug Allan is a Chartered Professional Accountant and Real Estate Finance professional with over 15 years of experience in the finance sector. Doug currently works as VP of Finance for Burrard Properties, a developer of multi family projects in BC and Washington State. As a father of two, financial education is something Doug prioritizes with his children. In 2021 Doug released his first book, A Fighting Chance: The High School Finance Education Everyone Deserves. This book, and the social media, blog and presentation activity that goes with it, is designed to provide 17-25 year olds with the financial education Doug wished he was given when he was young. After all, time is the most valuable asset to us all when building wealth.

 

Financial Literacy For Young Adults – Doug Allan

August and I are back in Vancouver. We’ve been all around the world at conferences in Vegas and Scottsdale.

I think our mind has been in Florida. You’re going back to Scottsdale for Investor. We’re going to be in Toronto for the multifamily conference, which we were very excited about. There’s some big news coming up. It’s a little bit of hush-hush now, but we’re launching something big. We’re excited about the multifamily conference in Toronto. What’s our current event? The Fed raised interest rates by 25 basis points. They have raised their interest rates ten consecutive times. It’s interesting times when it comes to the economy. Banks are failing and GPs are going bankrupt. There are a lot of things happening here. It’s May 4th, 2023, if anybody tunes in to this in the future.

It’s a rough time. That’s why we sat on the sidelines while everything was going on. The market and the economy were in a little bit of chaos. We decided to sit on the sidelines.

You sometimes hear from GPs this term capital calls. Their cashflows are so depleted that they do a capital call. Thankfully all of our deals are performing excellently. We’re talking about the interest rates being risen 25 basis points and the effects it’s having on the economy, on real estate broadly, and particularly commercial real estate. In commercial real estate, a nominal change in interest rates equates to negative leverage and negative cashflow, which is detrimental. Whereas in single-family, interest rates go up. Some people have certain mortgages that don’t take their payments higher. Also, for somebody buying a home, if their interest rates are a few hundred bucks more, it doesn’t stop them from buying. In some cases, it does.

Everything has a trickle effect. We’ll get into this, but if somebody’s interest rate on their personal home goes up, then they might not be looking to invest much. They might sit back a little bit more. They’re a little bit more hesitant. I’m excited about our show, August. Let’s jump into things. This is never spoken about. It’s about the schooling system not talking about financial literacy. A lot of us have discussed this time and time again, and it’s a big problem. We’re excited to have our guest on because we’re going to be discussing that concept.

 

 

Our guest is an author with a special focus on this idea of financial literacy for young adults, children, teenagers, and what have you. The reason this hits home is because we’ve had over 160 expert guests on our show. We’ve learned so much from these people investing in real estate. They’re in finance and thought leaders. We wish that we had learned about this stuff earlier. Even though we were both in business and real estate for over a decade each, we didn’t know about a lot of these tricks of the trade and gambits that people use and different strategies to invest.

Imagine how farther along people could be if they learned about this in school. Let’s get into this. We’re joined by Doug Allan. We’re super excited. A little bit about Doug. He’s a Chartered Professional Accountant and Real Estate Finance Professional with over fifteen years of experience in the finance sector. Doug works as a VP of Finance for Burrard Properties, a developer of multifamily projects in BC and Washington State.

As a father of two, financial education is something Doug prioritizes with his children. In 2021, Doug released his first book, A Fighting Chance: The High School Finance Education Everyone Deserves. This book and the social media blog and presentation activity that goes with it is designed to provide 17 to 25-year-olds with the financial education Doug wished he was given when he was young. After all, time is the most valuable asset to us all when building wealth. August and I believe this interview with Doug will bring great value to parents looking to educate their children on financial literacy, and young adults looking to learn how to build wealth and understand their finances for a successful future. Doug, thank you so much for being on our show. Welcome.

Thank you so much for having me on.

We’re excited about this topic. Before we get into everything, can you give us a quick background? Tell us about your background and your start in real estate.

I went to business school at McGill. I come from a long generation of chartered accountants. I’m a fourth-generation chartered accountant, so my great-grandfather and all the way through to me. When I graduated, I went into public practice accounting. I worked for Ernst & Young for about eight years and then moved into the real estate world.

As I transitioned into being a full-fledged adult getting into investing, I quickly realized that I had a significant advantage over the average person out there that doesn’t have a Business degree, doesn’t become an accountant, and doesn’t work in real estate, or the power of knowledge on my own personal financial objectives. I saw this almost injustice that there’s an education gap between people who take a Business degree through education and people who don’t. I tried to create a book that would bridge that gap.

My entry into real estate was a pretty unique one. I was working at Ernst & Young. I was a manager there doing audits and tax and advisory work. I ended up volunteering on a not-for-profit board for an art gallery in North Vancouver called Polygon Gallery. It just so happened that this gallery was going through effectively a real estate development. It was in an old building built in the late 1970s, christened by the original Prime Minister Trudeau. They were about to move to a new facility.

This was architectural design, construction financing, construction admin, fundraising, and project management. I was the treasurer on the board throughout the real estate development of this new art gallery. A couple of years later, I was fortunate enough to have Christian Chan of Burrard join the board and that was that. A couple of years later, he brought me over to his family business which works on multifamily real estate investment. Here I am seven years later and still loving it.

Let’s get right into the discussion where maybe you, like us and many others, didn’t receive financial literacy in your upbringing or in your household. Now, you are a father yourself. Not only are you teaching your own children but you’re also trying to teach many others, not only here in North America but probably around the world. Talk to us about that connection between your upbringing and your own children.

I come from a family that’s more business and entrepreneurial. My father was an entrepreneur and ran his own business and I had a little bit of education at home, but throughout my high school career, there was zero. You get little career planning in terms of writing a resumé, interviewing, and that sort of stuff. There was nothing on finance, accounting, investing, inflation, interest rate, credit cards, and debt.

That’s what most people are equipped with. That’s why more than half of Canadians are living paycheck to paycheck. That’s why nobody has enough savings for retirement. They just never got educated. I was fortunate enough to get that knowledge through my university and professional career, but you have millions upon millions of people who were never equipped with any skills at all.

More than half of Canadians are living paycheck to paycheck. Nobody has enough savings for retirement. It’s because they never got educated financially. Click To Tweet

It’s right to have education focused on topics that are important like science, math, arts, and so on. Those are important because brains need to be wired and people need to learn how to learn. Practical skills are important too like learning how to do a tax return, how to invest, and how to balance your own personal balance sheet. I felt someone had to do something. There have been authors in the past that have tried. One of my mentors in this book and someone I talked to is David Chilton, who wrote The Wealthy Barber.

The advice that I got from a lot of financial literacy authors was that you’re on your own. The school system is very much bureaucratic. There are a lot of politics around school curriculums, what they’ll put in the classrooms, what they want, and how they can change this topic or that topic to fit in something new. It was a crusade on my own to figure out how to get to these 16, 17, and 18-year-olds without the school system helping me. Time is everything when it comes to building wealth and investing. If people wait until they’re 30, 35, or 40 to learn these things, it’s too late in many cases. They don’t have enough time to grow their wealth.

Children are usually very distracted, as it is. Young adults are very distracted. In today’s world with social media and the internet, distraction is even more. How do you spawn the enthusiasm for them to even bother to learn about investing and financial literacy? It is a marathon, not a sprint when it comes to investing and the reward is not there. It’s not like they can buy some Bitcoin and it goes from $1 to $10 gazillion. It’s a long-term plan. That’s the issue I had as a young adult. Anytime somebody told me about investing, the plan was always 30 years to 40 years when I retire. I didn’t want to even hear about that. I wanted some satisfaction now. How do you create that excitement at this stage for a young adult to even want to listen to you?

I often go into high school classrooms and I try to attack that very topic. When I do, I try and put things in visual terms and put practical examples in front of them. One thing I’ll often say is I’ll put up a chart of how compounding affects things over time. Ultimately, I was trying to show them that it’s not now, but one day, you could be pretty wealthy and it doesn’t take a lot of effort.

Any high school student can earn $2,000 in a summer job doing whatever. I’ll say, “If you put that $2,000 in some index fund and it earns 10% for 45 years, then you got $150,000 at the end of the time. If you wait ten years and you put that same $2,000 in an index fund, you only have 35 years for it to grow. It’s only $56,000 at the end. You waited 10 years, but you’ve lost 70% of the compounding value. Are you willing to sacrifice buying an Xbox now for buying a BMW 7 series while you get out of the work world?”

There’s no right answer and it’s important to live your life now. It’s important to have joy and do things that made you happy. At the same time, you’ll find yourself in a position where you’re getting into your 60s and 70s and you don’t have enough money to comfortably live. It’s about balance. You put the images up of like, “I can have a cool car. I can probably have a cool house. I can have this amazing lifestyle. All it takes is a few thousand bucks at this point in my life to have potentially hundreds of thousands to millions.”

That’s a good way to put it. Kids falter into getting themselves into trouble with student debt, credit card debt, overwhelming home loans, car payments, and other expenses.

If they’re lucky, they’ll have home loans.

Especially in Vancouver. Doug, what would you say to young people who didn’t get an education but would like to correct their expenses now? They started getting interested in learning how. What are the common financial pitfalls that they get themselves into?

One of the things I like to discuss with younger people is that there are a lot of messages that were passed down to them through generations from parents. That’s where financial education is coming from. It’s through the household. One example that needs to be disbanded is that all debt is bad. You should never have debt. You should pay down your house, pay for credit cards, and pay out your student loans. You should have no debt.

That probably made a lot of sense in the late ‘70s and early ‘80s when you have 15% to 20% interest rates. It’s pretty punitive. Equipping younger people with the message that not all that is bad. It’s a double-edged sword, of course. There’s going to be some debt that’s horrible to have on your balance sheet like credit card debt, personal payday loans, and debt that you’re taking on to buy things like cars and trips. A lot of debt is good and a lot of the wealthiest people out there use debt to create their wealth.

 

I’m trying to make younger people feel respected and empowered, and that they are smart enough to understand these concepts for themselves and use the information as they see fit. I try to disband some of these messages they’ve been getting from their parents because economic environments change over time. We might find ourselves back to a place where interest rates are 20% and all debt is bad debt, but it’s about giving them the education. If they can learn calculus, they can learn about finance.

The consequences were different as well. The older generations’ debt is such a scary thing.

My dad built a home back in good old Fort Saskatchewan, and he got it paid off right away. He was so proud of it. He’s like, “Mortgage free.” It was such a pride thing for that.

Biblically as well. In religion, debt is always seen as bad. Around 1.6 billion Muslims around the world don’t believe in charging debt. It’s the same thing in Christianity. Charging debt is shunned upon.

I love that Doug said, “There’s good debt out there and you got to utilize it.” Doug, what are some of the foundational concepts that everyone needs to master?

One of the foundational concepts which are so front and center these days is around inflation. Whether you’re thinking about how much to save, how much to spend, how much to invest, or what to do with your money, understanding inflation is so foundational. I always show the chart that shows the buying power of a dollar over the last 100 years. It goes to zero through inflation, whether it’s 2% per year as the governments want to get to, or more like 10% in the last couple of years. Dollars go down in value every year.

 

That’s the foundation that says if you’re the person that’s afraid to invest because you might lose your money, you’ll definitely lose your money if you put it into your mattress. It will happen. Creating that sense of urgency is very important so that students understand that if they don’t earn more than inflation on the money that they’ve earned, then they are technically getting less wealthy every year.

If they don’t keep their salary growing by an amount that is more than inflation, they’re taking pay cuts every year. That’s huge to me. On top of that, you have this value of time and this excuse of, “I’ll wait until I’ve got a $100,000 salary and I’m 30 years old, then I’ll deal with this whole investing and saving for retirement thing.” That is such a flawed theory that I’m trying to disband.

The third one would be the opportunity cost. Another finance concept that’s not taught is the concept that every financial decision that you’re making comes with this invisible costs or opportunity costs. It’s effectively what you could have done with that money. You could go buy a $200 pair of jeans and you could like it, but your opportunity cost is you could have invested that $200 into the market and created tens of thousands of dollars into your financial future. As an accountant, maybe I’m a little stingy, but I never go shopping because I can’t bear the cost to my own financial future of spending money on consumables.

One more thing about that is also you are sophisticated enough to know about options. Most people don’t know about investment options they even have. Maybe they got to their bank and they’ve been offered certain RSPs or TFSAs and some very simple investing options. When you realize the options that exist out there, this idea that you’d rather invest your money than go and buy things becomes much more realistic.

 

 

Do you want to know what I tell young adults when I talk to them? I literally tell them, “I want you to learn from your mistakes.” They’re like, “Learn from my mistakes.” It’s almost painful thinking about making good money in your twenties. I pivoted to real estate and private equity and started learning about investing when I was 30 years old. I always tell them, “You can buy those beautiful bags or jeans that you want to buy off of passive income. Wait for that sacrifice now and that’ll feel so much better in the future.”

I always tell that story and it clicks with them. They’re like, “That’s cool. That’s possible,” and everything else. You got to connect with them in some way, shape, or form. Doug, you recommended that young people take risks. What are these appropriate risks that young people should take? How does one go about assessing a good risk-reward trade-off?

Personal finance is called personal finance because it’s personal, and everybody has their own appetite for risk. This is why investment advisors always go through “know your client” exercises. If you take on a risk where maybe your investment can go up by 30%, but maybe you can also lose 15% of your money, some folks go, “I’m okay with that because I have lots of time and have an appetite for that,” and others will go, “No way.”

Personal finance is called personal finance because it's personal and everybody has their own appetite for risk. Click To Tweet

From a general standpoint, when you’re young and you have 20, 30, 40, or 50 years of investment timeline to go, the general advice is to take as much risk as you’d like when you’re young because you have time to recover from any losses. Later on in life, when you’re 50, 60, or 70 years old and you need that money to live on, you have less appetite for risk.

I like to encourage people to take risks to an extent. Right now, a lot of the social media influencers in the personal finance world are often peddling these products like crypto, tokens, and all kinds of things that come with it, NFTs, and all the digital funding money. There have been some pretty challenging losses taken by a lot of people who put way more than they ever should have into those types of assets. Everyone likes to go to Vegas and play a few rounds of the blackjack table. Sometimes you win and sometimes you lose.

For that piece of your net worth, you have to be prepared to lose it all. It’s finding this balance of risks and looking at the weighted average of all the risks you’re taking. That’s how you build a portfolio that suits your own objectives. It’s hard to do that to me. One of the first chapters of my book is about creating an end game for yourself as I call it. Figure out, “How do I want my life to look when I’m 50 or 60? What do I want to be doing every day? What do I want to be living in? Where do I want to live? What will that cost?” Figure out, “Maybe I need $2 million when I’m 65 to be able to be comfortably retired and enjoy life,” and then work back from there.

What does that mean in terms of rates of return that you need, or contributions that you need to make? You might find, “Based on my income, I need to invest an average of 7% return to get to where I want to be. Maybe that’s 40% in equities that I can make 10%, or maybe a smaller percentage and more fixed-income safe stuff. Maybe 5% in high-risk early-stage companies, pending stocks, crypto, and all that stuff.” You need to figure out a work-back strategy as opposed to blindly going, “I’ll just invest in this stock, that crypto, and that property.” Why? What plan does it suit?

Talking about strategies, I want to touch on creating a culture of investing. A strategy differs depending on what part of life someone is in. If somebody is in elementary school or high school, or they’re going to university and eventually they get their first job, going up the corporate ladder, are there different strategies for each of those parts of life that you would recommend?

The younger you are, the more risk you should have in your portfolio because of the compounding sector. You want your portfolio to grow as fast as it can and as early as it can. With risk comes reward, generally speaking. When you’re seventeen years of age or younger, you should have almost everything you have in higher-risk assets like stocks, equities, and index funds that invest in equity markets. When you’re 50 and you have a little bit less time to work with and a little bit less appetite for risk, that should be diversified out.

It’s personal and one person might say, “I want to have $20 million before I retire.” That means you need to have a much higher rate of return. You need to necessarily take more risks. One person might say, “I’m going to move to Saskatchewan. I’m going to live a simple life and I need $500,000 to retire.” That means maybe you need just a hair over inflation to make that happen. It’s really personal.

 

 

Moose Jaw, Saskatchewan, that’s where you can move to save a lot of money. Ava, this question was more your question that we discussed before the show that you were going to ask, but let me ask it because I have a few other follow-up questions. Doug, I want to get your thesis or your recommendation on this.

We’re living in Vancouver where median home prices are somewhere around $1.5 million. The median income is $90,000. It’s becoming impossible for people to own a home. You see the same thing happening in a lot of places around the world, but it’s the norm. In Hong Kong or certain places in the Middle East or other areas in the world and big cities, it’s near impossible for people to own a home. Vancouver is becoming the same.

What is your recommended strategy to let’s say a young couple? There was a CBC story on a young couple, Stephanie Williams and Celestian Rince. They were renting but they were saving all their money. Should it be that if you’re living in Vancouver or one of these higher cost-of-living cities around the world that all your focus should be on saving money to buy your primary residence? Can someone rent and build wealth from that strategy?

Also, possibly to retire sooner, but no eating out or no cell phones. It’s very strict.

It’s more about the own or rent thesis. I used to be in single-family home development and I used to buy homes from people who owned it for 30 years. They bought the home for $20,000. In Vancouver, you could buy a home for $40,000. The same home is worth well over $2 million now. Should people living in these high-cost cities focus on buying their primary residence in real estate, be it a condo or a home? Should they rent and try to build that nest egg in a different way? What is your advice there?

I think Vancouver has over $400 billion of residential equity in the city. That wealth is here and it’s moving through families. That’s why this market stays very resilient, on top of the fact that it is geographically constrained. We have the ocean to the West, mountains to the North, borders to the South, and mountains to the East. We have to build up.

Also, an agricultural land reserve or ALR that you can’t build on.

We need food. For someone who doesn’t have that generational wealth where the parents bought a house for $20,000 and now they have a multimillion-dollar house, what’s happening is a lot of the houses are being purchased with that generational wealth. Parents are passing it down. The benefit of owning a home in Vancouver is that it’s one of the safest markets for investment on this planet.

It’s been called a bubble for fifteen years.

I think one of the great parts about owning a property is that it is a forcing function for many to save and build equity in their home. If you’re going to pay the mortgage, you’re going to pay the property taxes because if you don’t, your bank is going to foreclose and you’re not going to have a roof over your head. For a lot of people, that’s helpful because they don’t have the willpower or the ability to take the money that would otherwise go to a mortgage and pay the principal down and save it.

The argument for renting is this. Let’s assume you have to have a down payment. The whole concept of “can I buy or should I rent” only matters if you have a down payment. Let’s say you do it with a down payment and you do have $100,000 and your options are, “I can buy a $400,000 studio apartment in downtown Vancouver or I can take my $100,000 and I can invest it and rent.”

That relies on the fact that you do invest that $100,000 in something that appreciates well like an index fund or a stock. Any money that you’re saving on top of your rent that would otherwise go to principal, interest payments, property taxes, and home maintenance, you’re investing that too because you’re going to get taxed on it. The principal resident’s exemption is a huge factor in Canada. All principal resident’s gains are tax-free, which is massive. People have made millions of dollars on their houses and paid zero tax.

There are pros and cons to both. Some jobs are more mobile than others. Some people that work in technology will bounce around from Vancouver to Toronto to Seattle to New York to LA. Owning a home is challenging because of property transfer tax, commissions, and transaction costs. They want more flexibility.

You have to look at your own situation and think, “Am I going to be in one spot for probably seven-plus years minimum to make those transaction costs make sense? What is my ability to control my level of financial behavior such that if I don’t buy and I’m forced to funnel my equity into this house, am I going to be diligent with it? Am I going to properly invest the difference and grow my wealth that way?” A lot of folks don’t have that diligence. They’ll go buy their pairs of jeans, bags, and trips.

They’ll go to Lo-Lo’s Chicken and Waffle.

That’s okay. That’s fair money to spend. Let’s switch the conversation a bit and talk about coming out of the demographic of teenagers, and looking at your past and growth where you went from Ernst & Young into being the VP of a finance and development company.

He worked at one of the Big Four accounting firms, then he pivoted.

What is your advice there? You talked about gurus online pitching an idea where the consistent message is leaving your W-2 in the US or T-4 income as it’s known here in Canada. It’s this idea of people leaving their job and becoming business owners or having this new gig that gets them to get out of their 9:00 to 5:00 type of job. What is your advice there for somebody who finished university or college and is looking to get into the workforce? Is the plan to build something, learn the ways of the business, and then go on their own, or this idea of going up the corporate ladder still a realistic idea? What is your advice there since you’ve been on both sides?

I think about this all the time. I’m 37 now. Could I leave the corporate world and go start my own thing? Sure, but I’m also a parent of two young kids and my life is very busy. Having been in this corporate world now for a couple of decades, I know now that owning and running a business is a 24/7, 365 job. To do it properly, grow a business, and work on all aspects of it from finance to strategy, marketing, HR, and capital raising, it takes all seven days of the week.

I’m at a point in my life where my kids are 7 and 10. They have activities. My wife is busy. She works. If I was to do that, I would probably have to make sacrifices in other personal parts of my life. Right now, I’m not willing to do that. I also think that business is complex and it’s challenging. The idea of starting a business and all of a sudden, you’re making lots of money, it’s cashflowing, and life is great is not always the case. It’s important to me to get some experience working for someone else first, particularly in a business that’s established and has proper processes, structures, and strategies in place so you can learn.

Before starting a business, it’s important to get some experience working for someone else first, particularly in a business that's established and has proper processes, structures and strategies in place. Click To Tweet

I learned at work every day. I’ve been doing this for 15 to 20 years. It’s about education to me. That’s why I’m so grateful that I did it through eight years at Big Four, having dozens of different clients in different industries and talking to different people, learning about different approaches, and now working in real estate but also working within development, investment, and different asset classes.

The more you learn, the better equipped you are if one day you can make a choice to run your own show, but it’s personal too. For a lot of folks that are younger and don’t have kids yet and don’t have those personal commitments, that’s a great time to give it a go. I would advise that after getting out of college, go work for somebody else and learn. Position yourself as though you’re being paid to learn about business. Don’t just go to work every day and work from 9:00 to 5:00 and go home.

Use those opportunities as an opportunity to learn and absorb every piece of knowledge you can with the thought that one day you’ll apply it to your own business. There’s no better place to learn. You have to do these things. You can’t read books to learn about business and then go start a business without being out there in the world and interacting with lawyers, insurance brokers, consultants, and vendors. You need to live it to learn it.

 

That’s the best way to do it. I couldn’t agree with you more. I’m going to switch back to investing because I’m looking forward to this question for you, Doug. We can all agree that real estate investing is probably one of the best wealth-building strategies out there. There are a lot of exciting things happening now that are enabling non-accredited investors to invest as well. We’re doing some awesome stuff here at CPI Capital with smaller funds so that they can diversify their portfolios to get exposure to real estate investing. Doug, what’s your take on alternative investments in commercial real estate and then multifamily syndications?

I love real estate. I do invest in multifamily syndications myself because I love the scale of them. I’ve done everything from individual properties, condos, and presales, all the way up to investing in 100-unit multifamily projects with sponsors like yourselves. My preference is with the larger assets because the vacancy risk becomes much smaller, the scale brings so much efficiency, and it becomes purely passive to the LP or the investor.

Whereas when you buy a single condo, you are the landlord. You’re the one dealing with the tenant. If that tenant leaves, your unit is empty and you have zero income coming in. There’s much more risk. I think it’s important for people to diversify into these assets. It’s wonderful that they’re being made more and more available to non-accredited investors. I always scratch my head that anyone can go buy some crypto token that has extreme amounts of risk and they can go buy a $0.02 stock for a junior mining company with no assets, but investing in an institutional grade multifamily asset is not allowed.

Before getting to the next segment of our show, I want to touch on you’ve authored a book. You also talked about social media, blogs, and presentations. What is it that you do? For someone who tunes in to the show that wants their teenage son or daughter to learn more, do you offer any services when it comes to that or is it mainly the book? Talk to us about that part.

The whole Fighting Chance brand or collection is a two-part thing for me. It was a pandemic project and it was more of a social project than it was a financial one. For me, it’s about giving back. I wrote the book. It’s available on Amazon and Chapters and all kinds of different platforms. I author a blog on my website, AFightingChanceFinance.com. I post pretty regularly on my Instagram, which is probably the most active platform. If I have an idea or a concept that’s topical in everyone’s mind, I’ll post my thoughts about it. That’s been pretty good as well.

I do presentations as well in high schools, mostly across Vancouver here for sure. It’s interesting that the public schools have been much less willing to have me than the private schools, which is counterintuitive. I’d like to give back. I’ve done Junior Achievement BC, the other organizations focusing on financial literacy. If there’s an opportunity out there for me to get involved, I’ll definitely say yes.

No monetized actual coaching program yet or possibly in the works. I’ll give you a call, Doug. I might partner with you on that. Thank you for sharing all the wisdom and knowledge. Let’s get to the next segment of the show.

Here we go. It’s the ten championship rounds to financial freedom. Doug, whatever comes top of mind. I’m going to ask you a series of questions. Are you ready?

Sure.

First question, who has been the most influential person in your life?

This is going to have to be my dad because he took that entrepreneurial plunge. He bought a business and unbeknownst to me at the time because I was a young child, he mortgaged the house. He borrowed money and he went and bought this business that was in a challenging place. I think they were in bankruptcy protection. He bought the business, turned it around, rebranded it, grew it, and made it into this amazing business.

That was such an inspirational thing for me that pushed me to move towards business as my career choice. To this day, we still chat about business and finance all the time. This is a wonderful guy to talk to. Those family connections are so important. The conversations you have around the dinner table with your parents and then your siblings form the foundation of who you become. He formed me.

What I’ve noticed about that question is if our guests’ wives are in a 2-mile radius, the answer is always, “My wife.” When they’re a little farther away, the answer changes. Let’s go to the next question.

Doug, what’s the number one book you’d recommend?

Aside from mine? Most of my reading in the evening is fiction reading because all I do all day at work is read the Gray Manson contracts, PSAs, loan documents, and all that stuff. When it comes to reading about finance and investing, it’s pretty hard to beat Rich Dad Poor Dad, Robert Kiyosaki’s book. He was an influential guide to me. I was lucky enough to read that earlier on in my life, along with The Wealthy Barber and some other great ones as well. I don’t know. Do you guys think that people still read books or is everyone on Instagram a video viewer now?

Exactly, or ChatGPT.

We still try to fit in books. I think it’s important. The purple bible, a lot of people have said that that has been a big influence in their life.

Change your mindset. It allows you to challenge the status quo of what you’ve been taught and think about what’s the truth about finance.

 

 

Next question. If you had the opportunity to travel back in time, what advice would you give your younger self?

Buy Amazon stock. If I could go back to when I was getting my first summer jobs at 14 or 15 years old, I was spending every penny that I got on going out with friends. I was a big music guy. I sang in a rock band. I was spending all kinds of money on CDs. If I had put some money into the stock market back then, I’d be in a far different place than I am now, which is the impetus for why I’ve been doing what I’ve been doing.

It’s hard when you’re young and you’re a teenager to care about your future and put any effort or finances into it. If I can go back in time, I’ll be shaking myself, “What are you doing? You’re wasting your financial future. Do something.” Start learning about practical things that can benefit you later because it makes your life so much easier when you’re in your 30s, 40s, or 50s.

Doug, what’s the best investment you’ve ever made?

The highest return I’ve ever had was a presale that I bought in Langford, BC, which is close to here. I bought the presale in 2017. It closed in 2020 and I owned it for a year and a half to two years and then sold it. That was hundreds of percent ROI on my equity. This was the time when you could borrow on your home equity line of credit for 3% for your down payment. You could borrow from a bank for the 75% or 80% rest of the loan. Effectively, you’re buying that $300,000 or $400,000 asset for almost nothing of your own money. It went up in value like crazy.

As you know, interest rates remained low during the pandemic and real estate values went crazy. You make great amounts of money with nothing invested in your own cash. It worked out pretty well. The timing of the sale was also the greatest thing. It slowed down thereafter. There was a risk as well. It was not a riskless thing to do, but the returns were pretty wild.

What’s the worst investment you’ve ever made and what lessons did you learn from it?

In the early days of cannabis legalization in Canada, I was pulled into making a couple of bets on some of the early-stage cannabis stocks, which skyrocketed originally but then it tanked. It came way back down to earth. It was a total hype speculative thing to do. It was like lottery gaming. These businesses didn’t have income. They didn’t have cashflows. Their balance sheets were weak, yet their valuations were in the hundreds of millions or billions of dollars.

I got caught at the tail end. I’m not making much money and in some cases, I’m losing money. The lesson was speculative investments that you make without due diligence, without underwriting balance sheets, without looking at management, without looking at cashflows, and without coming up with a proper valuation are gambling. That’s fine. A little bit of your portfolio for that is fine, but you better be prepared to lose money.

Next question. How much would you need in the bank to retire today? What’s your number?

I live in Vancouver. As you mentioned earlier, a livable house with a yard that works for a family is $2 million or $3 million. I’m 37 and I probably have 70 years to live. I’m a believer in healthcare continuing to accelerate and I’ll probably live north of 100. For 70 years of income, it’s millions. I think it’s many millions. For me to hang up the cleats right now, stop working, and feel comfortable sleeping at night, it’s probably $10 million, to be honest.

We’ve got that number many times before.

I like that he’s a centenarian.

This is so important for people to be thinking about. At this moment, life expectancy for people is late 70s, or maybe early 80s, but 1 or 2 generations ago, it was even less than that. We’re accelerating the expected life of human beings pretty rapidly here. In 60 or 70 years from now, maybe the average life expectancy is 95, 100, or 105. Being financially prepared for that has serious consequences. If you intend to retire at 60 or 65, you may have 40 years of no income life to live and enjoy. You do your math and you work back on the amortization of what you need to enjoy 40 years of enjoyable lifestyle. It’s a big number.

If you intend to retire at 60 or 65, you may have 40 years of no income life to live and enjoy. Do your math and you work back on the amortization of what you need to enjoy 40 years of enjoyable lifestyle. Click To Tweet

Doug, if you could have dinner with someone dead or alive, who would it be?

They are alive and it’s a little embarrassing, but it would be Patrick Stewart. I am a massive Star Trek fan. My wife always makes fun of me for it. Captain Piccard of the Star Trek Enterprise would be unbelievable for me.

In character or out of character?

Out of character. He’s a phenomenal guy. He’s on Shakespeare. He’s an interesting guy.

Doug, if you weren’t doing what you’re doing today, what would you be doing now?

I love what I do now, to be honest. In a different life, I would enjoy working with my hands. When I go to construction sites that we work on or the development sites, I see these guys out there framing, building, and creating homes for people. I think I would enjoy that side of things. There are pros and cons to working in an office in a more white-collared career versus being out in the field. I think I would enjoy building with my hands.

That’s not artistic. We’re talking about trades.

I don’t do art.

My favorite question. Book smarts or street smarts?

Street smarts. Books are important as I wrote one. It’s important to supplement knowledge at all times. Whether it’s a book, podcast, TV show, documentary, or whatever, learning, in general, is always good, but there’s no replacement for living it. It’s getting out there and getting experience, talking to people, and getting real-life examples that you can use to build on and grow yourself personally and professionally. It’s street smarts all the way. Some of the most successful billionaires out there dropped out of school and did wonderful things. If I had to pick one, it’s street smarts.

Doug, last question. If you had $1 million in cash and you had to make one investment now, what would it be?

It is a very challenging time to answer that question.

Real estate might take a little longer. Let’s say in a very close, somewhat near future type of thing.

If you asked me that question a year ago before the last ten rate hikes, I would say all day long, I’ll go by $3 million of real estate. The answer still remains these days. There are certainly fewer deals to buy because there are fewer sellers willing to sell these days. In the next 6 to 12 months, we’ll be seeing a lot of amazing opportunities in the market to acquire. I would go south of the border. I do think that multifamily real estate is the best in the United States. I’d probably buy into a market with stable cashflows. There are so many approaches that come with real estate. You can say, “I’d buy real estate,” but where? What kind? What grade? What’s the topology? What neighborhood? I think I would go with something that has a cap rate that produces cashflow. Cashflow is king.

If you can find a fixed rate of interest on your debt, you can cashflow from it, and you’re able to hold it over long periods of time no matter what happens to the value, that’s where my risk profile lies. I’m less of the guy that’s willing to go and buy the $2,000 per square foot condo in downtown Vancouver that has no chance of ever cashflowing and banking on probably getting some appreciation. That’s not me. I’d rather run an actual real estate business where there’s a business plan, an improvement plan, forced depreciation through a roadmap to cashflow, and stability.

 

We see eye to eye on that, Doug. Last thing. What’s the best way people can reach you?

My website is the best place to start, which is AFightingChanceFinance.com. I’m big on LinkedIn and on Instagram as well. Look me up, Doug Allan, CPA, CA.

We appreciate your time. Thank you for coming here and sharing your knowledge and wisdom.

This has been great, Doug. Thank you so much.

It’s been great. We’re going to have your book as one of our top books to recommend.

Thanks for having me.