Book Review: Stop Working

by Adrian Bryksa

So, what would you do if you didn’t have to work? Most people I talk to say that they wouldn’t know what to do with themselves. This is the challenge that Derek Foster puts to the readers of his book Stop Working: Here’s How You Can. Mr. Foster claims to be Canada’s youngest retiree, hanging up his calculator at the ripe old age of 34 (while never earning more than 25k a year), and has made his list of life goals that he wants to accomplish. Just like you I began asking the questions – How did he do it? What are the secrets? How can I stop working?

According to Mr. Foster, there is no limit on who can benefit from using his strategies. The key to ‘financial freedom’ is of course to pay yourself and to get out of debt as soon as possible. What you do with that money you pay yourself is critical. Mr. Foster suggests investing in the stock market (surprise, surprise) into high dividend paying stocks. The strategy is simple, buy enough stocks that pay enough dividends to replace your monthly income. What this strategy allows you to do is to basically live just below the poverty line, collecting all those nice government benefits that you used to enjoy such as GST rebates etc. Due to the fact that the tax rates for dividend income is far less than tax rates for us working schleps, you need far less income from dividends than you would from a job.

So, the question is how do you pick your stocks? Foster says to buy stocks in companies that make / market products you use everyday. The idea behind this is that no matter what the economic situation, people need food, electricity, gas, tobacco and liquor. Buy these stocks at their lows (pray for a stock market crash), collect the monthly dividends and hold on to these stocks forever.

Now some disclaimers, Foster claims to have put away $200.00 per month since 1992. Based off of my calculations, Foster would have $28800 in cash to fund his retirement at the time of publishing. In his book, he quotes his portfolio value to be around $100000. The issue I have with this is that I didn’t see an answer to how that 28 thousand turned into a 100 thousand dollar portfolio? Foster suggests potentially trading on margin (risky idea), borrowing money at low interest rates and deferring tax payments. He also doesn’t believe in RRSP’s, there is no sense deferring your high tax rate when you should be paying the minimums! Oh yeah, I forgot to tell you he was an accountant. If anyone knows the tax laws or how to hide money, it would be him. Plus, selling a book and having a bit of celebrity being the ‘youngest’ retiree could be a nice supplement to his pension.

In any event, I have to admire Foster as he is living the dream and is willing to share his strategy on how he got there. Would I recommend reading this book? Absolutely. Would I recommend adopting the strategies? No question. Would I recommend buying it? No way, you need to think about your retirement. Now excuse me as I have to start working on writing out my list of life goals.

  • Book Review: Stop Working
  • by Adrian Bryksa
  • Published on March 22nd, 2006
Author: Derek Foster Published: January 2005 Price: $19.95(cdn)

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