This is a guest post by Derek Foster, author of the popular book “Stop Working, Here’s How You Can!”

Throughout my 20s I never had a high-paying job, but I focused on saving some of everything I did manage to earn. To be fair, I could have saved much more quickly, but I also wanted to enjoy my time – so I spent a summer backpacking around Europe, a year traveling around Australia and New Zealand, and lived in Asia for a couple of years. But I also saved – religiously!

I was too much of an idiot to start my own business and earn big bucks, so I invested in the businesses of others – through stocks. I took calculated risks – even borrowing to invest at times, but the big break for me came during the tech stock bubble of the late 1990s. I never made a penny from tech stocks because I never invested in any.

However, while other investors chased the “easy” money from tech stocks, it opened up opportunities to buy boring income trusts at VERY cheap prices. At that time I was buying investments yielding 12-13% in some cases – all tax-advantaged due to income trust tax rules. These lush yields allowed me to earn a decent, tax-advantaged, passive income and retire at the age of 34.

I became a millionaire in my mid-30s through investing. But I slowly began to realize that high dividend yields were not the key to growing my wealth, but instead higher-growing yields (and earnings) were the key! This factor is why the rich get richer over time and the second million is so much easier to get than the first. Let me explain…

The Concept of “Look Through” Earnings

Warren Buffett has used the term “look-through” earnings to account for the earnings of the massive stock portfolio at Berkshire Hathaway. The concept is simple. For example, Berkshire owns billions of shares in Coca-Cola, but the company only counts the dividends as income (for accounting purposes). However, Coke might only be paying 50% of income in dividends and the remainder is being reinvested in expansion or used to buy back shares.

So in reality, according to Buffett, over time Berkshire is becoming wealthier at the rate of Coke’s earnings even though accounting only counts dividends in Berkshire’s earnings. In other words, as part owners of Coca-Cola, whenever Coke invests in new plants or expands its business, Berkshire is becoming wealthier (which will be reflected in the stock price over the long-term).

How Does “Look Through” Earnings Apply to You?

It’s the same thing with you if you’re an investor. Think about this…

Suppose you are on a “million dollar journey” and you work and earn $100K per year, so let’s say $70K after taxes. If you save $30K and live on $40K, you would be gradually moving towards you million dollar goal…

Now let’s suppose you earn $40K per year in dividends (and pay little or no tax depending on your situation). Let’s assume your stocks have an average of a 40% payout ratio with the other 60% being reinvested in your companies – so you’re in essence accumulating wealth at the rate of $60K per year!

From this, it only makes sense that even though you are spending every last cent of your income, you will still accumulate another $1 million much faster than working for it! This is the reason the rich always get richer – automatically (unless they spend their capital).

This realization has allowed me to travel around North America for a year with my family and not worry if I spend every last cent I earn (even though “paying myself” is ingrained as this was the key to my financial freedom). My stocks are doing the heavy lifting of wealth accumulation for me!

My portfolio has a payout ratio of around 35% with dividends increasing annually at a pretty good clip. This means that over 60% of my “look-through” income is quietly building wealth for me, WITHOUT taxes reducing its growth! Many people have asked why I chose the stocks I did and this is the reason I did…I want to build wealth without having to save any more money.

The second million is much easier!

About the Author: Derek Foster left the rat race at the age of 34 despite spending his 20s backpacking across Europe, Australia, and New Zealand – and living a number of years in Asia. He later became “The Idiot Millionaire” using a simple investment strategy outlined in his 6 National Bestselling books.  In his free time, Derek writes a free monthly newsletter


  1. idiotmillionaire on February 8, 2013 at 3:31 pm


    Did a quick check looking at long-term price performance
    (30 years of performance, so starting in 1983):

    Colgate stock: Then $2.50 Now $108 …43 times
    Gold: Then $400 Now $1660 … 4 times

    This EXCLUDES dvidends which Colgate has paid and increased every year during this time and gold has paid nothing.

    If you are smart enough to trade gold or silver for profit – more power to you! I’m not, so I will stick to blue-chip dividend-payers…There are many people who have different trading strategies, but not me – but kudos to you if you can do it!

    Derek Foster (The Idiot Millionaire)

  2. LPC on February 8, 2013 at 4:23 pm


    Well, I for one liked your books. Even though I worked for stockbrokers early in my career, I never even knew you could buy stocks directly from the company instead of paying broker fees per transaction, or about DRIP plans. At the time, the brokers I worked with charged 10% of the transaction or $50 after, whichever was less. On top of that, the financial industry isn’t very good at helping small investors get started, apart from offering mutual funds and we all know how well that works!

    People, why aren’t you taking Derek’s account for what it is? He wrote about his experience and tells you how he got to where he is. Economic conditions were different in the 1990 where interest rates were in the low teens, so it’s wasn’t impossible, all things considered. Read the books, take what you need and leave the rest to reach your goals. Don’t believe in dividend paying stocks as an investment? Then don’t do it, instead of shooting the messenger because you don’t agree. It’s not constructive.

  3. Aston on February 8, 2013 at 5:26 pm


    If you’re confused as to why you’re being put in a tough spot here, the answer’s simple. People listen to you because you’re a millionaire, and they want to know how you did it. If you weren’t a millionaire, no one would bother to read your books, because there are no new glorious insights you’re offering.

    You would’ve been better off writing a book about how to make risky leveraged bets — that would’ve been a more honest look at how you got to where you are today.

  4. Mike on February 8, 2013 at 6:35 pm


    He is making the exact same point that Warren Buffet has made in the past regarding gold:

    You are really pushing a losing argument. Gold is not an investment, its value is a product of human irrationality. Just because some irrational idiot is willing to pay more than the irrational idiot that bought that cube beforehand doesn’t mean anything. The fact that it has been used as currency in the middle ages when we were humans were far less advanced is not an argument for the validity of gold as a store of wealth. If a smarter civilization were to watch us pulling gold up out of the ground and then burying it somewhere else, they would all be scratching their heads.

    It is no more rational than what the islanders of Yap used to do. I think the funniest story that isn’t mentioned in the wikipedia entry is of a stone disc that fell off of a boat and ended up at the bottom of the ocean. It has never been recovered, but ownership of this stone still trades hands and is considered to be one of the most valuable pieces!

  5. Dave on February 8, 2013 at 6:45 pm

    Derek’s story can basically be narrowed down to 3 things: leveraging, timing and luck

  6. Jungle on February 8, 2013 at 11:27 pm

    Aston your answer is a baseless assumption (like most of what SST says) that people only read his book because he’s a millionaire.

    I had no clue, nor do I care, that he is a millionaire. And the “no glorious insight” was not the reason I read his book, despite your conclusion. A lot of this stuff was new to me, when the books came out. There are lots of readers that found information they did not know about and value-heck, read above your post.

    Looks like Derek has more credibility then some commenters here.

  7. Jungle on February 8, 2013 at 11:33 pm

    SST I love how you always cherry pick your gold returns. I would suggest you do not write a book, but your contributions have attracted more more traffic to comments, but in a negative way for the readers.

  8. SST on February 8, 2013 at 11:59 pm

    @Dave: let me know when you become “wealthy” as per the title of Mr. Foster’s books. I’ll buy a book then.

    @im: Thanks for ignoring my statement:
    “You also have to understand asset cycles. There will most definitely be a time to sell gold, but I won’t be selling in a panic as you did.”

    Just as you sold your principle residence instead of renting it (CASH FLOW!).
    Perhaps you think the top is in with RE and acted to cash-out.
    That time will come for gold soon enough.

    And thanks for cherry-picking.

    Any reason you went with 1983 as a starting point in your comparison?
    Why 30 years? Have YOU even been buying stocks for 30 years?

    Why not pick 1871, the year so many financial “professionals” use as the start for long-term S&P 500 returns (although fraudulently)?
    Over this span the S&P has gained ~4% annually on average; price of gold has risen 3% annually on average. Not bad considering gold is high-risk and does nothing, as well as being price-pegged by the government for 100 years of this span.

    Perhaps starting in 1972, the year gold was fully in free-market status vs. the S&P 500:
    gold average return = 8.5%; S&P average return = 6.7%! How can this be!?!
    I’ll even throw in the faulty “dividends reinvested” theoretical return for you = 10%.

    Hmmm…so the ENTIRE cadre of S&P 500 dividend paying companies could only outpace useless, high-risk gold by a mere 1.5% (at the unrealistic extreme) over 40 years?

    Want to compare Colgate over the same time (1972+) — all dividends reinvested?
    It gives up 10.8% annual return.
    Holding gold as a base (which a very many central banks do), Colgate is worth only 2.3% per year.
    That company does a LOT of work for only 2.3% “cash flow”!
    (Oops! Forgot, you have pay tax on those dividends!)

    Or we could compare gold vs. Colgate from YOUR buy in — late-2004 (I’ll use September until corrected):
    CL = 145% total return before dividend tax; gold = 234% total return; silver = 320%.

    Damn. You lose. Again.
    So much for “cash flow”.

    Maybe when I sell my gold I’ll buy depressed Colgate stock.
    The above is a valuable lesson in understanding asset cycles.

    Ignore the FACTS all you want, most people usually do, most people are poor.

    As well, you still have not addressed my question:

    How can you write a book which touts people can become “wealthy” — if they buy your books, that is — when there is obvious and overwhelming historical and mathematical data showing that it is near impossible to achieve (and maintain) that million-dollar mark and that most millionaires have gained their wealth NOT via the stock market, but through creation and operation of their own business and through wage payment (that is, they did not “STOP WORKING!”) ?

    Perhaps you have a different definition of “wealthy”.

    And to all those who think I am so nasty towards Mr. ‘Millionaire Maker”, head on over to FinancialWebRing or to CanadianMoneyForum (of which our own Frugal Trader and the well-respected MoneySense contributor, Canadian Capitalist, are administrators) to read others’ comments on his material.

    p.s. — are you still collecting government transfer cheques?

    Don’t believe the hype.

  9. SST on February 9, 2013 at 12:07 am

    @Jungle: thanks! I just play the same game that the financial “professionals/experts” do! It’s fun!

    Watch for my book hopefully sometime next year.

    It’ll be #140,001 on Amazon.

  10. Neil on February 9, 2013 at 12:20 am

    Holy crap. What a bunch of sour haters.

    Read some of the books. Enjoyed them. Found them useful and started taking more control of my own investments. Currently enjoy watching dividends contribute to my net worth, and feel better off for what I’ve learned.

    Honestly, who cares if a book’s title is flashy? It’s kind of par for the course in publishing, no? Judge a lot of books by their covers? The content, should you read it, definitely has merit. Probably particularly valuable if you actually bought it thinking it would make you an instant millionaire, since it does cover simple practical realities in an accessible way.

    Anyway, thanks DF.

  11. Dave on February 9, 2013 at 1:14 am

    @SST: I have most certainly become wealthier as a result of Derek’s books. However, my definition of wealth is most likely different from Derek’s version, from FT’s version and, dare I say, different from your version. Each individuals definition of wealth will vary.

    I know that what I define as wealth could not be achieved without Derek’s sage advice. He has most certainly contributed to the long term financial security for me and my family.

    You Ma’am (Sir?), have contributed nothing. You have hooked yourself into some self-righteous obscure tangent to what Derek discusses. Unfortunately your efforts fail to be a conversation, let alone a constructive critique.

    But thats just my two cents for whatever they may be worth. I do not wish for this thread to be hijacked any further as it only perpetuates this unproductive noise (which I now feel I have unfortunately contributed to). SST, please feel free to shout into the wind.

    @Derek – again, my family and I thank you.


  12. Anonymous on February 9, 2013 at 2:22 am

    @SST Derek concencentrated on cashflow (dividends and distributions from REITS and Income Trusts) to escape rat race. He has admitted he used leverage with the Phillip Morris, a rental property, and RIOCAN REIT. The good thing about cashflow is that money gets paid to you over and over as long as you own the investment. You can spend this cashflow however you choose like helping to increase your means or reinvested it with new capital. He escaped the rat race, (i.e. financial freedom ) cause he had more than enough money coming in than going out in expenses.

    Gold and Silver, if you hold it in its physical form, its has to go up in order to sell to make money. Then you have to buy another investment.

    People believe this house is an asset. Your house is a doodad ( a liability people think is an asset.) . I assuming Derek is classifying his house as an asset as most people do. A personal residence takes money out of your pocket every month in mortgage, taxes, insurance and upkeep.

    You can choose the total amount of your “portfolio” or the income generated from your portfolio as you measure of success.

    @SST check out . This investor bought a farm recently and has a tenant farmer.

  13. SST on February 9, 2013 at 6:10 am

    Sorry, I thought Mr. Foster was selling a “Millionaire-Maker” product.

    Guess I was wrong.

    That wealthy moniker applies only to the author and his “exceptional” circumstance.

    As for hijacking the OP…it’s useless to discuss “the second million” without taking into account how to achieve the first million. And since only 1% of the Canadian population has $1,000,000+…there’s a lot of empty seats in the room.

    I’m all ears for those who have made a million bucks using Mr. Foster’s “idiot” strategies.


  14. idiotmillionaire on February 9, 2013 at 8:29 am


    I chose 30 years because it is the reasonable expected investor time-frame -and I thought it was a resonable long-term snapshot.

    We sold our house for a combination of reasons, but yes, one of the factors was that I felt housing prices were on the high side. We also wanted to travel and perhaps visit my wife’s family and renting becomes a headache. That money is/has generating cashflow as it’s been invested in stocks – and has done pretty well, but short-term results mean very little…We also wanted a different area to live – but why is all this relevant to anything?

    Anyhow, if you look at the math, the long-term average of stocks is around 10%. So if a couple each saved $100/week, they would have over $1 million within 25 years ($100/week is roughly the TFSA amount, so this could also be tax-free). If you don’t believe the numbers, plug them in here (takes 5 seconds):

    I understand some people love gold now as it’s had a great run (and you might be right, it might have a lot more upside), but that’s just not the sandbox I play in. Please don’t take it personally or anything, I’m just saying dividend stocks make much more sense to me.

    We can go on and on and never agree – but here’s an outside opinion on the subject from Warran Buffett (billionaire stock investor – although he did own silver for a short time a dozen years ago):

    Derek Foster (The Idiot Millionaire)

  15. idiotmillionaire on February 9, 2013 at 8:40 am

    To everyone,

    Sorry, I should add somthing so you all understand the Buffett video clip and what he is saying:

    When Buffett analyses something, he assumes he buys the whole thing for comparison purposed. So when he talks about a 67-yard cube of gold, that is roughly equal to the total amount of gold in the world. Then he figures the price per ounce and comes up with a figure of how much would it cost him to buy all the gold in the world.

    With that figure, he thinks, with that money would he rather own the big block of gold and fondle it all day or ALL the farmland in the US plus 7 Exxonmobil companies plus $1 trillion dollars in spending money – the price right now is about the same.

    I go with Buffett’s thinking on this one, but I have a bias as I think he’s the best investor in the world, so I listen to what he has to say. I undstand others might think differently…

    Derek Foster (The Idiot Millionaire)

  16. idiotmillionaire on February 9, 2013 at 9:01 am


    You asked me to address your question about becoming a millionaire so here goes…

    I agree with you that most people who achieve wealth do so through starting a business – BUT what if you already have a career and kids and a mortgage? Or what if that’s just not the kind of person you are? It’s pretty hard to up and start a business for a lot of people. But investing allows you to do the next best thing and buy small pieces of businesses – with very little effort on your part. Also it’s not mutually exclusive – if you start a business, you can still invest to increase your wealth and diversify…

    A lot of people have invested over time to become wealthy…

    Google the name “Grace Groner” – this lady invested $180 and enrolled in DRIPs and it grew to over $7 million! She left that money to charity. Read “Stocks for the Long Run” which details tons of empiracal data, then plug the various numbers into the investment calculator I provide above, and see how much you end up with.

    Or if you don’t belive me, read “The Investment Zoo” written by Stephen Jarislowsky (a multi-billionaire Canadian investor (our Warren Buffett) and right in there (I don’t have the book on me, so I can’t quote verbatum) but he mentions that accumulating at least $2 million through investing is well within reach of most average investors. It’s interesting that he also says after decades of investing, he only finds a small number of worthy stocks to invest in.

    Or look at the book, “8 Steps to 7 Figures” where the author offers real-life example after example of investors who have invested to become millionaires – and details the strategies they use.

    My books were written because I believe in stocks. I enjoy reading 400-page investment books or annual reports (I know, I have no life) – but a lot of people don’t! So my books are sort of a compilation of what I’ve learned from a lot of different investors. I learned and copies THEM (the same way Honda and Toyota originally copied the US car companies to get going)

    Derek Foster (The Idiot Millionaire)

  17. idiotmillionaire on February 9, 2013 at 9:08 am

    Final comment and goodbye.

    When I wrote this article, I promised Frugal Trader that I would answer questions from posters – and I think I’ve honoured my promise. But I don’t do my own blog because it can get time-consuming and I have 5 kids and other things I prefer to do, so this is my last post.

    Thanks for all the questions and comments and I wish everyone well – (even SST – your have a unique way of expressing your thoughts, but you do extract more comments from me, so I think that “back and forth” might offer everyone more thougths and ideas…

    I don’t do a blog but I do a FREE monthly e-letter for those who are interested here:

    Good luck to all…

    Derek Foster (The Idiot Millionaire)

  18. Shopdoc on February 9, 2013 at 12:10 pm

    Hi Derek,
    Just wanted to say that I enjoy reading books written about the acheivements of others in the financial world. The investment universe is constantly evolving, and I believe too many folks think all things that worked in the 80’s or 90’s will work today. Most investment books should be put into the “history” section of the library. Yes, we should learn from history, but don’t think everything can always be applied today. I find most of your books an entertaining read, but I also enjoyed “The Pig and the Python” and we know how that information “didn’t work out”. However, it got a person thinking, and I believe that is the best part about your books. They make the reader really think about investing.

  19. SST on February 9, 2013 at 12:51 pm

    Gold and Buffett: doesn’t matter what Buffett thinks. In Capitalism, all that matters is money. In #56 the FACTUAL MATH shows gold gives up nearly as much money than a principle basket of companies (or even more money vs. individual stocks). You can choose to ignore this mathematical fact in favour of supporting your belief system, but in no way does that eliminate the truth.

    Buffett is good but definitely not perfect (he himself admits he was born into the perfect storm, investment-wise) and a limiting factor to his philosophy is that he NEEDS a company. He will never buy anything which is driven by the human condition (ie. emotions et al). He will never buy art, he will never buy gold etc., even if it means forgoing larger gains.

    Never forget the greatest “investor”, Gary Dahl.

    Now for some quotes:

    *”But investing allows you to do the next best thing and buy small pieces of businesses – with very little effort on your part.”

    Exactly the reason so very few people have gained wealth through the stock market — very little effort. It’s so easy to give your money to the financial industry and hope they make the most of it. Remember, the financial “professionals/experts” are largely non-accountable and self-serving (how else do collapsed banks “earn” record profits?). This is actually one point on which we strongly agree — DIY.

    *”I enjoy reading 400-page investment books or annual reports…”

    So…basically just the opposite of “very little effort”. Weird.
    If it’s so easy as you claim in your books, then why did you continue on after reading your first book on investing?

    *”So my books are sort of a compilation of what I’ve learned from a lot of different investors. I learned and copies THEM…”

    In other words, nothing sets your books apart from all the rest.
    Not a great selling point.

    *“Stocks for the Long Run”
    Oy vey. Yet ANOTHER great fallacy sold by the financial industry (and Siegel teaches this…”stuff”!). There are plenty of Seigel detractors out there, all of them much more accomplished than I.

    I’ve yet to get an answer out of Ed ‘Mr. Mutual Fund’ Remple, so perhaps you could answer:
    1) before 1977, how possible was it for an average investor to buy ALL the stocks within the S&P 500 in order to reap not only the over-all growth but dividend return? (Don’t forget all the additions and substitutions along the way!)

    2) Mr. Remple states a good average for an investment/savings span is 35 years. Why would I use a 200-year long data set to guide my strategy? Especially considering it is unrealistic for 85% of the range (see above).
    The author also makes a very faulty comparison with gold, as gold was actual currency during most (86%) of the “Long Run” and its price was set static by the government. Kind of like comparing the S&P 500 to a dollar bill — an exhibitionist demonstration at best.

    Would YOU still buy Colgate if the government set the stock price at $2…for 200 years? Didn’t think so. Gold was the ultimate IPO.

    *” “The Investment Zoo” written by Stephen Jarislowsky…mentions that accumulating at least $2 million through investing is well within reach of most average investors.”
    Then he would be wrong. Because, again, the FACTUAL MATH reveals a very small portion of the population (1%) to possess $1 million or more in investable assets (eg. stocks). Theory is one thing, reality is what matters and millionaires are NOT the average.
    Jarislowsky gained his wealth through creation and operation of a company, and not stand-alone equity investing. This line might be blurred for some as his business is equities.

    140,000 investment book titles published (and probably just as many financial advisors employed) and the millionaire landscape has not altered.
    Either acquiring $1,000,000 is very difficult or the information in the books is near useless or a combination of the two.

    Keep up the good work.

    p.s. — a person has more chance of winning $20 in the lottery than becoming a millionaire.

  20. SST on February 9, 2013 at 2:01 pm

    Hmmm…Mr. Foster never did answer my final question: if he still collects government transfer cheques, and if so, does he assume this income into his “STOP WORKING!” strategy.

    Perhaps someone who has read his books could enlighten me.

  21. Aston on February 10, 2013 at 5:10 pm

    “Aston your answer is a baseless assumption (like most of what SST says) that people only read his book because he’s a millionaire.”

    But it’s not baseless. If he was “The Idiot Income Trust Investor”, it would be much less catchy. There are scores of other people writing books about the same topics, but none of them are best-sellers.

    Try turning your book into a best-seller. It’s not easy unless you have a hook (like being a millionaire), and even then it’s difficult.

  22. SST on February 10, 2013 at 6:27 pm


    When selling a product labeled “Millionaire-Maker” people are buying it under the assumption that said product will make them a millionaire. (It won’t, btw.)

    And to be fair to Mr. Foster, it only takes 5,000 sales to register as a ‘Best Seller’ in Canada. So, it’s not like a million people have bought into his scheme.

    What I am VERY curious to know, however, is if Mr. Foster is collecting NCBS government cheques — payments designed for low-income families. With his last-reported income of $40,000 for a family of seven — five children and an unemployed spouse — this amount would come out to around $8,000 per year, or 20% of a $40,000 income.

    Of course, if all payments comprise total income, the NCBS payments would come in around $9,600 per year or 25% of total income of $40,000.

    Now, for someone strutting around the arena marketing himself as a wealthy retired millionaire, yet possibly up to 25% of his income is derived from collecting LOW-INCOME government payments…well, you can make up your own mind on that one.

    I’m just wondering if it states in his books to utilize government transfers as a means of income.


  23. Jungle on February 10, 2013 at 7:11 pm

    SST I’m reading your posts like, “if only 1% of the population are millionaires, the stock market does not work. ”

    The stock market works. Maybe better way of saying it would be, “people do not build wealth, because they do not save and grow money, start their own business or use the stock market effectively. ”

    He showing you an effectively way to build wealth. Since you claim there are 140,001 books that do the same thing, you now have more choice of reading material.

    Have you read any of his books to say they are the same thing as 140,001 others? Have you read the other 140,000 books to know it’s the same thing?

  24. Richard F on February 10, 2013 at 7:41 pm

    I have been quite interested in reading these comments and commend both SST and Derek for you well thought out replies .
    I too am a big believer in investing in Canadian good quality dividend paying stocks . This has served me well as my dividend income allowed me to take early retirement at 60 . Furthermore it opened the door for me to defer taking my normal company pension which was transferred to a RRSP to a Large Canadian Bank for their managing . As the proceeds of my company pension was rolled into an RRSP it continues to be shelter from being taxed and continues to grow in value . My plan is to defer using it until age 72 as in the meantime my present income of OAS and Prov Pension plus dividends and a mortgage free house is sufficient to onlive very comfortably . The best part is that because of the dividend component of my income , I pay no Federal Tax and only a very modest Provincial income tax .
    I was surprised to read that Derek has turned to US Stocks instead of Canadian Dividend paying stocks given the difference in how each is treated with respect to the Canadian income taxes.
    I expect Derek saw an opportunity to improve his income situation and tailored his tax planning accordingly .
    In conclusion it is my opinion that folks getting close to 60 years of age really need to look at different options with respect to income tax and consider deferring drawing down on RRSPS if they can until age 72 especially if you plan on living to 90 as I expect to .
    While the Canadian Government has been soft on me with respect to what I pay currently in income tax they know that eventually they will get their just pound of tax flesh when I turn 72 when I start drawing on my RRIF . So in the end most of us will return a large part of the tax free dollars we got to save when we die . Wishing everyone a long and happy life .

  25. SST on February 10, 2013 at 9:17 pm

    Dear Jungle,

    Never once have I said “the stock market does not work”.
    But thank-you.

    And why do I need to read Mr. Foster’s material when he openly admitted:
    “my books are sort of a compilation of what I’ve learned from a lot of different investors…I learned and copies THEM”.

    Why would I read a diluted re-hashed mish-mash when I can opt for the pure source? Why read Foster when I can read Buffett?
    Yes indeed, his books are more of the same, nothing new under the sun.

  26. Mike on February 11, 2013 at 1:32 am

    I must say that I have not read Derek Foster’s books but his post and responses here are coherent and well thought out. He has shown an exorbitant amount of patience in responding to SST’s comments/accusations. It is unfortunate that a guest writer would be subjected to such relentless criticism from an individual who hides behind the anonymity of the Internet. Hopefully other (potential) guest writers are not put off by this type of trolling.

    There are many paths to wealth and they all have their pros and cons. At least for the majority of people reading this blog they are taking action. The same can not be said of the general population.

    I happen to have the vast majority of my net worth in real estate (paid off principal residence, luxury rental cottage, and 3 rental homes). While I do have some equities they comprise less than 20% of my total portfolio. I’m sure there are countless people who would tell me what I’ve done is wrong but I’m comfortable with the path I’ve chosen and it has allowed me to “retire” in my mid-thirties (I’ve put retired in quotes because I still do some consulting and manage the cottage property). The key is I’m doing what I want to be doing and that to me is retirement. The same can be said for Derek. Weather or not you agree with his strategy it is hard to argue with the results.

  27. SST on February 11, 2013 at 4:47 am

    Dear Mike Nolastname,

    But yet our own host, Frugal Trader, hides behind the exact same anonymity. What’s good for the goose…

    And yes, I will take anyone who tries to sell the ‘You Can Be a MILLIONAIRE!” scheme to task. If you put it in the market place, you had better be prepared to defend.

    That’s why I’ve started writing a personal finance book of my own, so when I guest article on this site in a couple of years you can rip me and my ‘Best Seller’ to bits and I’ll gleefully glaze over most comments. But by then it won’t matter, will it? I’ll have my million, you’ll have your million, most people won’t, and the show will go on.

    You do have a point though, it is the internet, all this is free, so you get what you pay for.

    Happy Family Day!

  28. Rob on February 11, 2013 at 5:05 pm

    “SST” and Mr. Foster both rightly point out the benefits/downfalls of investing in gold using this or that starting point. Gold is difficult to assign a fair value to, being so hostage to sentiment. “SST” has done well in a gold investment? Great, more power to him. I’m always happy to see another man make a good buck.

    Personally, I sleep better with my Colgate Palmolive stake. I won’t shoot out the lights but it’s a name with a reasonably predictable earnings stream letting me extrapolate into the future probable pricing.

    Warren Buffett said with only a little hyperbole you should be able to describe your investment thesis on a stock with a crayon and a piece of paper. He took that idea one step further saying he would give a failing mark to anyone in a group of business students offering an answer to his asking them to value a technology stock.

    I dip my toes in a few technology stocks for diversification’s sake. I do so with some trepidation because they entail so many moving parts. Derek Foster prudently said some months ago he’d never touch Apple alluding to not being able to form a meaningful opinion on same. I bought the beast in September 2006 with a 71 buck handle and sold my 100 shares last November 1 for an even 601 bucks per share. The point is, all the time I held I can’t honestly say I had an intelligent opinion on it’s value or where it should be heading. No help were the pros who were caught up in the hype, B. S. and murky questions about competition and vagaries of all the moving parts. Can some of the same be attributable to gold?

    Mr. Foster writes simple but genuinely helpful books on the genre. His are not going to be stealing any glory from Soros’ “Alchemy Of Finance”. The latter I found impressive but not really that useful to mere mortals like me. By the way, reading it also short circuited my feeble brain giving off smoke through my ears.

    I like to maintain a cohort of 30 stocks and hopefully not trade very often. In actual fact very few are going to have a chance of shooting the lights out. Derek Foster’s slow and steady sounds OK to me.

  29. Paul on February 12, 2013 at 4:39 pm

    just want to say thank you Derek for educating us as to how to use investing for our benefit.

  30. SST on February 12, 2013 at 10:15 pm

    Hi Rob,

    Good points, but it’s not about owning gold vs. stocks vs. real estate vs. bonds etc., it’s about owning the right asset class at the right time.

    Mr. Foster’s strategy will never create a millionaire out of his readers because, for one thing, he suggests stocks, and stocks only. This is not diversification by any means. At best, Mr. Foster’s strategy possibly provides a somewhat stable growth environment.

    I would further elaborate on your post (and Mike’s re: RE), but these are points I will be entering into my manuscript, and I want to sell as many books as possible so I won’t be giving away too many secrets!

    Speaking of secrets, has anyone unveiled if Mr. Foster utilizes the National Child Benefit Supplement (NCBS) low-income family payments as a sector of his income?
    Or if his books state using government transfer payments as income to “STOP WORKING” ?


  31. LPC on February 14, 2013 at 10:23 pm

    @SST, how could someone receiving enough income from investments not to work qualify as low income to receive benefits? You admit you haven’t read Derek’s books, so why are you insinuating that Derek is falsifying information to milk the government? On what evidence are you basing that assumption?

    I sincerely hope you get treated with the same respect you’re dishing out when your book is published.

  32. SST on February 14, 2013 at 10:43 pm

    @LPC: in recent reports and articles about Mr. Foster, he admits to living off ~$40,000 a year income. Previous reports and interviews have him stating part of his income was/is comprised of the CCTB.

    Please re-read post #72 for further information and calculations on this matter.

    I’m not big on blind faith.

    Nor am I writing a personal finance book in hopes of garnering respect. Can’t pay the bills or retire early on respect. Money is where it’s at.


  33. S.R.W. on February 14, 2013 at 11:54 pm

    If that figure of $40,000 per year is correct, then I don’t know how a person with 5 kids can live on that, or why they would want to. That isn’t close to anything that most people would call “retirement” so I think Mr. Foster is a bit mis-leading.

    Also, I find it very sad that anyone as young as he is wants to or is “retired.” Billions of people on this planet are cold, hungry, poor, uneducated, sick, and/or at war, and he is “retired”???? Give me a break; talk about selfishness….

  34. LPC on February 15, 2013 at 10:42 am

    @SST, whether or not you’re right that Derek Foster is getting Goverment cheques, your calculation based on your unverified assumption is not evidence that he is. So why are you throwing these accusations in the ring?

    Why don’t you just say you disagree with Derek and leave it at that? Just as you don’t believe in “blind faith”, don’t assume that the reading public is so stupid that they are. It’s pretty arrogant on your part that you think you need to shine the light on exaggerated language. The basic information concerning investing in dividend bearing investments is still sound.

  35. LPC on February 15, 2013 at 11:04 am

    @S.R.W. On what evidence do you base your assumption that’s it’s impossible to live on $40,000 with five kids? Unless you control someone’s wallet and verify for yourself what their spending patterns are, you don’t really know whether it possible or not.

    As to your second comment about being retired young as selfish, what do you know how someone uses their free time? Have you considered that he may be devoting his time to charity work? Compared to us working stiffs, he’s got 40 hours a week more than we do for things he considered important because he doesn’t need to be earning a living. There are better examples of selfishness and greed in this world.

  36. SST on February 15, 2013 at 11:47 am

    @LPC: It’s not accusation/assumption/exaggeration — Mr. Foster provided the information himself. Thus, if it is indeed all those villainous descriptors, then it’s Mr. Foster to blame.

    When someone publishes a book entitled “STOP WORKING”, under the guise of being able to “retire” on “dividend bearing investments”, yet admits a portion of his “retirement” income is derived from government cheques…I want to know if any portion of those government transfers is comprised of NCBS payments.

    I take no offense to Mr. Foster being “retired”, because he isn’t, really. He works on writing more books and giving talks etc., as well as managing his portfolio and family. We live in a capitalist society, after all; if a person accumulates enough wealth to enable him to not have a direct employer, then so be it.
    It’s not like he collects CPP either, a true sign of retirement!


  37. S.R.W. on February 15, 2013 at 1:31 pm


    I did not say that a person could not live on $40,000. I just don’t know why a person would want to. I have 3 kids and I spend $10,000 a month… To each their own.

    Mr. Foster is not “retired” as he claims. He writes books etc. etc. What he means is that he was able to be self-employed at age 32. I did it at age 23.

    I have had correspondence with Mr. Foster and he has lead me to understand that he “works” his business, raises 5 kids via home schooling, is presently travelling in a trailer full time and has made no comment about any kind of charitable or philanthropist type of activities. Frankly, reading between the lines, he it too busy, not in any one place for long, and his net worth does not support much giving. That’s is why I think a young guy like him should do more working and make more money to do more giving….

    By Mr. Foster’s definition of “retirement” I have been retired a long time, I am not 60 yet, have never been busier, and give more money away in a year than most people make, trying to make the world a better place. My point is that Mr. Foster does not seem to feel that way, which I find unfortunate. We live in far too much of a, “it is all about me” world. How sad….

  38. LPC on February 15, 2013 at 5:27 pm

    @S.R.W. Because his definition of being retired doesn’t match with yours, he’s not retired? Is that really important? What does retired mean, in your opinion then? Don’t forget to wear your “Internet Retirement Police” (IRP) hat on while thinking about it. My take is that self-employed implies that you still need to work to earn money. Retired doesn’t have that connotation.

    @SST, same to you. Wear your IRP hat proudly. As for government cheques that Derek is receiving, it’s none of your business, really. If you really want to know, write to your MP complaining about it and see if he’ll break privacy laws for you to find out. There’s no point ranting about it until you have the power to do anything about it.

  39. S.R.W. on February 15, 2013 at 8:26 pm

    As a person of the “older generation” it never ceases to amaze me that now that we have the “anonymous internet” that people often voice their opinion (educated or otherwise) without the slightest bit of dignity or civility. In short, it is filled with nasty rude people who cower under the disguise of the net. Politeness does go a long way….

    I suppose if you asked the average Canadian what “retirement” was, they probably say that it was the ability to live at home, without employment, and still pay the bills. If you have a different definition than that, you are welcome to your opinion which I will not be so rude as to condemn. Please do not condemn me for mine.

    Frankly folks, I have bigger fish to fry than to get into arguments with people, so I wish you all a good day, and I am out of here….

  40. SST on February 15, 2013 at 9:42 pm

    @SRW: “We live in far too much of a, “it is all about me” world.”

    Not necessarily so. But we do live in a capitalist society, by which money is the measuring stick. Generations have been programmed to get as much as they can (the article is entitled “The SECOND Million…”, as if one million wasn’t enough; and “Greed is Good!” won an Oscar, remember) among other ugliness. The amount of money won’t make the world a better place, only better people can do that (otherwise the US would be a $15 trillion Garden of Eden!).

    A reflection of this is Mr. Foster’s books being national “best sellers” — “You can Stop Working!”, “Lazy Investor”, “YOU Can Become Wealthy!” — kind of reveals the desperate/greedy nature of some humans.

    You make the world a better place by giving money away, others make the world a better place by calling shady practices into the light. We all do our part. It is a bit odd, though, stating you spend $10,000 a month on three children in the same breath as your quote at the top.

    @LPC: the source of Mr. Foster’s income is actually my business, as he has revealed his income and sources (in partial) in a public forum in order to support the sales of his product. If I am going to spend money on his “Stop Working/YOU Can be Wealthy/Millionaire-Maker” strategies, I want to know if I need to have multiple children and a dependent spouse in order to attain the same “low-income retired millionaire” status as the author.

    I might have to cede and actually leaf through his material to find out first hand.


    p.s. — want a great read about a quality and very authentic Canadian millionaire? Read “Driven: How to Succeed in Business and Life” by Robert Herjavec.

  41. SST on May 12, 2013 at 11:08 am

    Anyone discovered yet if millionaire Mr. Foster uses the National Child Benefit Supplement low-income family payments as a portion of his income?

    Or if his books state using government transfer payments as income to “STOP WORKING” ?

    Is Mr. Foster even relevant? :|

  42. SST on September 13, 2013 at 10:26 pm

    As I was checking updates on my Suncor holdings (dividends 4.5%, cap gains 105%), I ran across this current Derek Foster interview for Motley Fool Canada:

    What caught my attention definitely wasn’t what Foster said about oil — we use it now, we’ll be using it in 50 years — it’s what he says about his current account and lifestyle:

    “I don’t spend all of the money that my portfolio brings in.”

    Of course he doesn’t.
    If he did, he would be living on far more than his last reported $40,000/yr and would NOT qualify for any “poor family” government assistance money.

    I applaud Foster for being a true Capitalist and taking advantage of the system (money doesn’t have morals, after all). Just wonder if The ‘Idiot Millionaire’ will ever come clean and re-dub himself ‘The Low-Income Millionaire’?

  43. LPC on September 14, 2013 at 6:20 pm

    SST, you’re still harping on about this after all this time?!? I mean, you have the time? Get. A. Life. Do your research and only come back when you have proof that Mr. Foster is getting Government assistance. Maybe the rest of us will care by then. As it stands, in February and now, you don’t have the facts, like Mr. Foster’s tax return to back-up your accusations. Better yet, go to appropriate authorities with your suspicions instead of continually spreading rumours of wrongdoing based on your interpretation of someone else’s lifestyle.

  44. SST on September 15, 2013 at 11:21 am

    LPC, you seem to care a lot about what I care a lot about…I love you, too.
    I only go on about this as much as others go on about the infallibility of the stock market or mutual funds.

    From Mr. Foster’s very own fingertips: “posts should be factual, imo…people seem to believe anything and don’t question the reliability of the source…”

    As it stands, in February and now (and always), Mr. Foster continues to diligently avoid chewing on this slice of his financial pie. I have repeatedly questioned the source, it has repeatedly remained silent.

    Yes, yes, I know, we should all just shut up, turn a blind eye, and let the hoards of financial industry gurus and semi-professionals spew out whatever kind of fantastical drivel they wish. Perhaps you are a staunch supporter of disclaimer-based legal fraud?

    Or we can strive to propagate truth and integrity — in all forms — in capital markets. I choose the latter, although it might be more successful trying to breed unicorns.

    As per your request to “Get. A. Life.”, me and my life just enjoyed a three week paid vacation in Hawai’i (gotta love gov’t jobs!). Thanks for caring. :)

  45. lpc on September 15, 2013 at 5:50 pm

    Good for you for having enjoyed Hawaii. I’m just coming back myself from my cottage on Nantucket Island.

    You say: “Mr. Foster continues to diligently avoid chewing on this slice of his financial pie. I have repeatedly questioned the source, it has repeatedly remained silent.” And he hasn’t answered, with good reason: he doesn’t have to provide you with an answer and/or it’s none of your business. So, that begs the question, why are you persisting in asking? Two, why aren’t you independently conducting a private investigation to uncover the truth without Mr. Foster’s help? Three, why haven’t you gone to the authorities with your suspicions already?

    If you haven’t done an investigation or gone to the authorities, why do you think these anonymous posts on this forum is an appropriate venue to get your accusations resolved and answered? You’re just crying wolf, otherwise.

    I’ve already asked some of these questions in my previous post, and instead of answering, you try to turn the situation around by insinuating that I’m supporting fraud. Really? You need to stoop that low because I refuse to believe you without proof?

    I’m asking again: where’s your proof and evidence to back up your accusations of fraud? Until he’s arrested, he’s presumed innocent under the law. Or don’t you believe in that concept either?

  46. SST on September 16, 2013 at 11:10 am

    One: “…he doesn’t have to provide you with an answer and/or it’s none of your business.” True, it’s not. But when a person sells themselves and their product as being one thing, yet it is something else in reality… ‘Legal fraud’, as I like to call it; unfortunately not an arrestable action. Foster seemingly has no problem discussing other areas of his income (dividends) or government transfers (taxes) — yet refuses to discuss the whole truth on other income and government transfer topics.

    Two: What better way to conduct an investigation than to go straight to the source — Derek Foster himself? None of his past interviewees have bothered to ask him any sort of questions regarding this issue, either because of lack of knowledge or lack of guts. Fortunately, we still have privacy laws in this country which don’t allow citizens to root through their neighbour’s documentation.

    As for your concern over anonymity…the very host and owner of is anonymous and Foster saw no problem lending his name and content to such. If Foster sees such forums appropriate to push his products, then the same forums are just as valid place to seek the truth.

    Merely wanting to get 100% of the facts before I decide to part with any of my hard fought cash for any of Foster’s products.

    Again, thanks for caring.

  47. Mike on September 16, 2013 at 11:16 am

    FT, can you not ban this troll?

  48. SST on September 16, 2013 at 11:32 am

    A “troll” for wanting truth and transparency?

    Funny, funny stuff.

  49. cathy on February 23, 2014 at 8:10 am

    @SST Bravo! I am glad to see that someone finally spoke the truth. When I saw his interview article with the globe and mail, it was unbelievable to know that asset rich people can collect so much money from government in Canada. He was not shy about it. His wife is a Korean like me. I was pretty upset about that. Since I love Korea. I was working hard and struggling to take care of my young child. I felt very much cheated. His suggested early retirement is not honest approach.
    Back then he had two children. Collecting about $400 according to the article.
    Child support should be based on the asset and the income. Working and building personal wealth has been blessing. My family asset is about1.5 mil. Which is from frugal life style, saving and investment in stock, mutual fund and property.

    Thank God for blessing me to raise my children with honest money.

    P.s. I read all his books. Borrowed from library last year out of curiosity.
    We should all write a book with a catch title like “How to be a smart millionaire without child support benefit…”

  50. SST on February 24, 2014 at 10:42 pm

    Thanks Cathy, but no adulation required.

    I seek only to expose factual truths, especially when it comes to money matters. Most of us spend our lives working too hard and too long to be bamboozled by salesmen of any stripe.

    However, some people, on both sides of the equation, would rather not face facts. Some would rather remain doe-eyed at their ‘Heroes of Hope’: “If he can do it, I too can become an Idiot Millionaire!”. On the flip side, some know that exposure of the truth could reduce, or eliminate, their vantage point.

    As an example, Mr. Foster has never once publicly addressed, either in the media or in his publications, the issue of his utilization of the National Child Benefit Supplement low-income family payments to supplement his million dollar portfolio (kinda Lance Armstrong-ish).
    It’s much easier “to build wealth without having to save any more money” when a third-party is supplying a nice chunk of your income.

    Lifted from
    ” ‘Truth’ is a very simple concept, understood perfectly well by three-year-olds, but often made unnecessarily complicated by adults.”

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