SeniorWomen.com, Magical Money Trees by Diane Girard

Magical Money Trees

When I was a small child in the mid 1940’s, I searched for the magical trees my mother said I must think money grew on. Although magnificent elms shaded our semi-rural street, I never saw one with greenbacks on it. I gave up my dream of buying Popsicles for my friends. It was a small dream and I didn’t miss it much.

Cash became a bigger issue when my mother separated from my father and took a job as bank teller in order to support us. Thanks to her frequent speeches, I learned that money could grow in a savings account, though very slowly, and I’d have to earn it first. If I managed to keep any cash in the bank, the interest I received would be miniscule and I should be grateful to receive it.

At the time, Canadian banks were formidable. Even their buildings were formidable. They often had pillars, huge metal doors, marble floors and a hush that reminded me of being in a church or an old-growth forest before the birds woke. I entered their premises with a respect that verged on awe, if I could get there between 10 a.m. and 3 p.m. My first bankbook was an impressive deep red and the teller wrote in it with a Waterman fountain pen. The pen had a cartridge, unlike the straight pens we had to use in elementary school. I was envious because it didn’t leave blobs of ink on the page or on clothes either. Yes, it was a simpler time and my relationship with the bank resembled the one described in Stephen Leacock’s classic story, My Financial Career. But things soon became more complicated.

My mother, who was an expert penny pincher, and a darn good nickel and dime pincher too, took a course on how to invest in the stock market. It was a weird thing to do in her circumstances — a tiny salary and two young children. She let me read the textbook mainly because I was a voracious reader and I always ran out of library books. Then I would pester her.

When I perused it, I discovered that buying a share in a company could entitle you to a portion of the company’s profits. The text emphasized that so well that I wanted to rush out and buy stocks in widgets immediately. Fortunately, or perhaps unfortunately, I was underage. The book also hinted that if the company did not do well, the value of its shares might go down. I think that part was in very small print. As I recall, any adult with enough money could invest in companies that made things, or in bank stocks. I didn’t know why I should share my bank interest pennies with other people but I decided I was too young to understand such intricacies. The book said that over time I would always make more money with stocks than I would if I kept money in the staid and starchy bank. It didn’t say how much time would be required. In addition to the wonders of regular shares and preferred shares, you could buy futures, if you thought you could predict the future. I already knew I couldn’t so I ignored that section.

This was before the era of leveraged buyouts, hedge funds, Internet companies, sub-prime mortgages, credit derivatives and commercial paper backed only by blarney. Nevertheless, there was a lot of complicated information about profit and equity ratios and other arcane calculations to absorb but my mother passed the course easily. She could not borrow from a bank in order to invest in the stock market. Strangely, back then, no Canadian bank would authorize a loan to a separated woman without any tangible assets except for her savings account. She could have asked my grandfather for a small stake, or she could have used her savings. She did neither of those things — she left her money in the bank and occasionally, she purchased a Canada Savings Bond. Was she afraid to lose what little she had in spite of the promise of great returns over time? Perhaps she believed that greater risk did not necessarily bring greater rewards.

She was pragmatic and had only modest expectations. Modesty was a desirable Canadian trait in those days.

In any case, her way of dealing with money had long-term effects on my own financial decisions. In the late 1980’s, I worked at an investment brokerage firm as an administrative assistant to some financial analysts. I soon found out I was in a financial Disneyland. A place of myth, and perhaps black magic, where money trees grew as tall as giant redwoods or Douglas firs and there were many cartoon-like characters. The gold analyst was really a “gold bug”. Every other day, he urged me to put at least ten percent of my salary into gold. It would always go up, world without end, amen. He pointed at the ceiling whilst he exhorted me like an evangelist, and his huge gold ring flashed under the fluorescent lights.

The communications analyst told me to buy shares in the cable company that was grinding up and swallowing smaller cable companies because the outfit would always get bigger and make tons more money. The commodities analyst said I could make a great deal of profit if only I would purchase grain futures. Grow rich along with me the best is yet to be was an article of faith. They all said I would be a fool if I didn’t take their advice and believe in the power of the money tree.

The bull market roared along, nearly everyone on Bay Street made money, or so it appeared, and many bragged about it. It used to be un-Canadian to talk about money, unless you were a farmer, then you could complain that if a drought came your crops would die and your newly planted trees would wither. I listened closely to all the analysts’ talk and insider information. Still, I couldn’t bring myself to invest in the stock market. Instead, I did something else that was risky: I took out a student loan and went back to school. When I finished the program I found a job at a small community services agency far away from the financial marketplace, or so I thought. But I was wrong.

The agency had a pension plan. All the money was in mutual funds managed by an investment firm. I participated because the agency put in a dollar amount equal to the amount deducted from my salary as my contribution, but I didn’t like the risk factors, not even a little bit. Of course, the government took Canada Pension contributions from my earnings along with a chunk for federal income tax, so I had even more deductions and considerably less cash in hand than when I worked in the financial services industry. My teachers had warned me that would happen when I went into social services, but I was still in my altruistic phase. I didn’t want to give friends Popsicles — I did want to help strangers who needed me. I suppressed my anxiety about finances most of the time, because there was no other pension option, and besides that, I enjoyed my work. I thought that what I did made a difference in one tiny corner of the word. Do you sense disaster ahead?

Well, that’s not what happened.

When I left the agency in 2001, I was able to transfer my pension money into a plan I could self-administer. As soon as I could, I sold my shares and put the cash into a Guaranteed Investment Certificate and a treasury bill. There is not a great deal of money in my account, but like the jack pine, it clings to its spot and grows by an almost invisible amount, though the ground is dry and stony and the winds of recession are fierce.

I am retired now. I live simply and within my slender means, but last year I became involved with a close friend’s finances and completely new set of money problems arose. When he became very ill, he gave me Power of Attorney for finances and asked me to take over. I did, because he has no immediate family. I had a lot of difficulty in locating his assets (that’s another story) but when I finally found them all, I was overwhelmed. There was a lot more money than I was accustomed to working with and I was unsure of how to proceed.

The first financial representative I consulted at one of the major Canadian banks suggested I consolidate everything in her bank and then invest a large chunk in mutual funds. The second bank’s financial advisor strongly suggested the same thing, in almost identical words. I wondered if they were passing the script between them. The stock market had taken a severe hit, but they assured me that blue chip stocks were undervalued. If I would only plant some acorns, buy some shares for him, they would grow into mighty oaks because the market would go up soon, or sometime, but it would go up. When I explained that my friend will be eighty-two this year, they modified their advice, but suggested putting at least some of his cash into mutual funds. I could not do it. I am what investment honchos refer to as “extremely risk-adverse” especially when the money is not mine.

If there is a moral to this tale, perhaps it is connected with expectations, or with faith in things unknown. Once upon a time, most of us did not expect that we should get a big profit in return for investing a small amount of money. But, as more people made paper fortunes in the stock market, the urge to have as much as the guy with the new Mercedes overcame caution. Many people had no idea what they were buying, nor did they care, as long as the value of whatever it was increased.

In spite of all the expert analysis of market trends, and the return of some regulation, no one can predict with certainty what the market will do, or when. It’s like a religion — you believe in it, or you don’t. I believe that not everyone can become rich. However, some of us may manage to live out our lives without losing all our savings. I plan to be one of those people because I am a wuss. I am content to watch my small jack pine survive the storm.