Teri Courchene is a former economist and director of research at one of Canada’s big banks. With an academic background in economics and education, Teri teaches investing at The University of Toronto School of Continuing Studies. I attended Teri’s presentation at the Toronto Reference Library and really enjoyed it. After exchanging a couple of emails, we met at the Toronto Reference Library on November 26, 2019 (Tuesday @ 12:30pm) for this interview. The duration of the interview was 24 minutes and 17 seconds.
Urgen Kuyee (UK): Hi Teri, why don’t you let my readers know a little bit about yourself? Which school did you go to? How did you get into personal finance?
Teri Courchene (TC): Okay, it might be a bit of a long answer…I did my undergrad at the University of Western Ontario in economics. Then I did a Masters degree in economics at Queen’s. I worked as an economist for 13 years. Then I decided to rethink everything and retired from the corporate world.
I went back to school to obtain an AMI Montessori diploma and then opened my own little Montessori school. To keep on learning, I did a Masters in education part-time and became interested in math education. About 5 years ago, I switched into math tutoring and I’ve really enjoyed helping kids succeed in math. In the back of my mind, I had always hoped to get into teaching adults and I got the opportunity to teach investing at U of T four years ago. Now I’m doing a wide range of work, from working on building financial literacy in young children and teens, to math tutoring to teaching adults about investing.
UK: I did attend your talk at the reference library last week and it was a full house. Also, I know you teach the course with Ellen Roseman at U of T.
TC : That’s right. First of all, I have to say I am deeply indebted to Ellen Roseman who’s been my mentor at U of T. So, she’s been amazing and she offered to co-teach with me so I am really grateful to her for that.
UK: That’s awesome.
TC: Yes, she’s wonderful and I know you have interviewed her.
UK: Yup. What are some of the common questions asked to you by your students?
TC: We get a lot of questions and it’s great because that shows us where the holes are in people’s knowledge. So, one of the gaps is not understanding that you can invest with your Tax-Free Savings Account (TFSA). Some people think it’s just a savings account because of the name of the TFSA. Another key question and problem is that there is a lot of confusion about how much fees investors are paying. They want to know how much they should pay in fees, or what is a reasonable amount to pay based on the service they are receiving. Another question is often: How hard is it to become a do-it-yourself (DIY) investor?
We walk people through several ways to do this and it really isn’t that hard. There are a lot of ways to make it easier and you don’t have to have a complicated portfolio. We introduce people to robo-advisors or automated investing platforms, which make it very simple to get started and stay on track with a diversified portfolio that matches your investment goals and risk tolerance.
UK: Are your students mostly millennials or is it a mixed group?
TC: It’s a really mixed group but even in just the past four years, I have seen the age get younger in the classes I have taught. Now we have a number of young students just graduating from university and we even had a high school student once in our class. Now that’s starting early!
UK: Talk about compound interest, right?
TC: Absolutely! We can see that there is a bit of a gap in the education system in that students aren’t taught about personal finance – even if they are in business school. So, I think it is a great gap to fill as a teacher. It’s so rewarding because people are so grateful when we can help break down the barriers of investing jargon and the fear of making mistakes. Our students say they gain confidence and knowledge about investing from our courses and that’s the best outcome.
UK: From your role as an economist at one of the big banks for 13 years +, what were some of the lessons you learned?
TC: The main thing I learned from being an economist at a bank is first of all, to step back from the minute details and use the numbers to tell a clear story. You really have to step back and give people the big picture. It’s not important to fixate on whether growth in Ontario is going to be 1.9 or 2.1 per cent, for example. What matters is what are the risks on the horizon, what should people think about, is the interest rate likely to go up or down? Is the Canadian dollar at a point where you would say okay, it has nowhere to go but down or nowhere to go but up? In other words, looking for the big things that are warning flags on the horizon. That’s the key thing for investors to learn from economists – not the precise forecasts, which we know aren’t going to be right most of the time!
UK: We are in a 10 year bull market run, what would you advice Canadians to do with their portfolio? I mean no one can predict the market but we can prepare, right?
TC: Yes. I think you know my advice because if someone is an index investor or passive investor, then they buy and hold. They ride out the cycles. If you are a passive investor and you are buying long-term Investments, you are buying index funds, you don’t try to predict the market. You don’t act differently based on what the market is doing.
There’s one exception to that and that is if you are just starting out and let’s say you have $10,000 to invest. Let’s say you are starting absolutely from zero. You have $10,000, you are going to put into your tax free savings account (TFSA) which is a great place to do it and you want that money to be invested for a long time and you understand there are risks in the market. So, the question is do you put your money all in today or do you invest the money gradually?
Given that we are late in the market cycle right now, I think that it would be less stressful to invest your money gradually. There is a fairly good probability that we will get some market drop or correction in the next year or two. So, it’s a good idea to spread your money out a bit more – maybe investing a thousand a month instead of putting it all in at once. Then any one day’s craziness or one week’s craziness won’t stress you out as much. And of course, that’s a great way to invest on a regular basis – maybe with each paycheck – for everyone.
UK: What are one to three books that have greatly influenced your life?
TC: In the realm of investing or generally?
UK: Investing, personal development, anything.
TC: That’s just such a good question. I have to think about that one.
UK: Sure. We can come back. Let’s say a 27-year-old nurse, she makes about $60,000/year and wants to save about 10 percent yearly for her retirement. Would you tell her to go with a TFSA or an RRSP? Also, she has a great defined benefit pension, HOOPP to which she contributes every pay check.
TC: HOOPP is an amazing pension plan and really a gold standard in the industry. If someone is lucky enough to have a job that gives them a defined benefit pension plan, that means they have the security of knowing that they will receive this pension amount in retirement. That’s great, but it’s locked in, it’s not accessible, you can’t get that money out. So I think for someone who is in that situation, the TFSA is preferable to an RRSP because it allows you to get money out if you need to.
Let’s say you want to save money for a downpayment on a house and you want your money to be sheltered from tax. To me, I think it’s better to do this in a TFSA. As well, there are no tax implications so when you put it in or take it out – it doesn’t matter what your income tax rate is. Unlike the RRSP, you don’t have to think about whether it is a good time to take it out or good time to put it in. The flexibility of the TFSA is great. Also, if you find you are able to put money back into the TFSA in subsequent years, you don’t lose the room.
UK: After working as a nurse for three years +, I have realized that women do tend to live longer than men.
TC: They do. Yes.
UK: We also know that close to 50% of women dissolve their marriages. What are some other reasons you think women should be saving more than men?
TC: I have this belief that we should not really be comparing ourselves to others. That is one of my core beliefs. It is not important to focus on how much money we have whether we have more or less than others. I don’t buy into that. Everyone’s situation is different and we have to have respect for everyone’s different life path that has brought them to their current point. So, I would say don’t look at other people. Figure out what a reasonable amount is that you can save and do that first and then spend what you have left over. So, I would rather look at everyone’s individual path and focus on trying every year to have a higher net worth than the previous year. So, if you are in debt, bring your debt down each year. Make progress.
I think the big thing for women is not so much that they have to save more, I think the big thing is they have to make their own financial decisions as early as possible. I am 54 and for some women who come to our classes, who are let’s say maybe my age or older, they may have had their partner/husband keeping tabs on the finances. When their partner is aging, or less able to take care of their finances or maybe has passed away, then the burden falls to them and it’s difficult because it’s all new. So, to me the message is if you are a woman (or a man) in a household, take on half the role, get involved and make sure you learn as you go because it will definitely pay off. Women are very willing to admit they don’t know and to educate themselves so we find a lot of women taking our courses. It comes back to the old stereotype of the man not willing to ask for directions while driving..
UK: And getting lost.
TC: Yes, getting lost. That was pre-GPS of course! So, I think women are much more willing to say I don’t know and I want to find out the right way to go. Women are perfectly capable of making those decisions and managing their finances. We are seeing so many women of all ages in our classes now that it’s really encouraging. That’s my take on it.
UK: I recall someone saying, don’t tell us what to invest in, tell us or show us what is in your portfolio. Do you mind sharing how do you invest your money and what’s in your portfolio today?
TC: Sure. My husband and I invest together, and we have regular investment meetings. First of all, we look at what is our percentage in fixed income versus equities/stocks. That big percentage drives everything so once we get that percentage fixed, then we delve down into each account and make everything line up with that. So, what we end up doing then is figuring out for tax reasons and timing reasons, which investments should go where (RRSP vs TFSA, etc.) We are at a stage where some point soon, we are going to be drawing down some of our assets in retirement. And, then, which types of investments or funds is the third decision.
The overwhelming majority of our money is invested in index funds. We have a discount brokerage account and we do that ourselves. We also invest in individual stocks.
UK: Canadian stocks? U.S. Stocks?
TC: We have a dividend portfolio of Canadian stocks and we have a few US stocks for growth. I have a very small, very small portfolio of a bit more speculative stocks for fun, but at times it’s not as much fun if they are not doing well!
UK: Holidays are around the corner. Christmas can be expensive. Do you have any tips to share so Canadians can save money?
TC: I do. Our kids are older: turning 30, one is turning 26 today, and our youngest is 19. Our fun tradition is to do a Yankee Swap gift exchange on Christmas Eve. We have a party where we have family and a couple of friends and everyone brings a small wrapped gift. And then no one knows who it’s from and then you draw a number and pick a gift. People can steal the gift and there are rules to the game, so it’s an absolutely hilariously fun time.
For Christmas itself, we have really cut back on the gifts but I do stockings and I buy little odds and ends. And we do give the kids money so that they can buy something for themselves, and for the third year, my husband and I decide together on a donation to a good cause. Let me say that we feel very lucky to be able to do this.
We make the donation our family Christmas gift and then we talk about our donation Christmas morning. So, to me I think the changes in the past few years are to get away from buying gifts and to make the holidays more about enjoying our time together. I think it’s a good idea to have discussions before the holiday season starts about not exchanging gifts with friends. I think that’s a really easy way to make the holidays easier and save money because we all have too many things, too many possessions.
UK: Lastly, what are bad recommendations you hear about personal finance and investing in Canada? What advice should Canadians ignore?
TC: The biggest advice to ignore is to borrow money to invest. Don’t do that. The other bad thing is if you are thinking of investing your money and the adviser or someone tells you “oh this can’t lose, it’s going to go up for sure, 10% or 20% a year”. If someone is trying to sell you something without explaining it or promising returns that sound really high, don’t do it. It is not reputable advice. It is not honest advice. Don’t fall for it.
UK: Would you like to take a stab at one to three books that have greatly influenced your life before I let you go?
TC: Yes. The books that had the greatest impact on me were probably the books I read as a child. These days I read books all the time but I don’t read a lot of finance books. The best finance book that I would recommend for anyone thinking ahead to retirement is Retirement Income For Life by Frederick Vettese. Absolutely number one. I think it’s important because it talks about CPP, OAS and making smart decisions. The second one I would recommend for someone just starting out is The Wealthy Barber Series, very easy to get into. The book that had the biggest impact on me is The Holy Man by Susan Trott. The Holy Man is about a monk who shows people how to live life with kindness, patience and respect. My husband and I chose excerpts from this book to be read at our wedding.
UK: Thank you Teri. Where can people find you?
TC: Well I have a website, tericourchene.com and I put everything there, upcoming courses and free library seminars as well as a lot of information about different investing resources. I also have tips for parents to help their kids with math and financial literacy.
UK: Awesome. Thank you Teri.
TC: Thank you Urgen. It was a pleasure to talk with you.
This interview has been edited and condensed.