Why You Need to be an Armchair Economist

What is an armchair economist?

According to Urbandictionary.com, an armchair economist is “any person who does not have the intelligence or experience to even begin to understand the world’s economies but decides their opinions are what will return the world to a time of prosperity anyway. These people often make no effort to even consider the possibility that people who do this for a living are acting in the best interest of the majority.”

I guess that’s why I got a D on my university papers when I cited urbandictionary.com as a source LOL!

To me, that is an awful and even dangerous definition.  Basically, what it is saying, is that you should just shut up, let your government do its thing, don’t question anything, and just follow the rest of the sheep and trade your time for money, save some of those beautiful Canadian dollars at your favourite bank and live happily ever after.

News flash folks, savers are losers. You know why we know this is true? We play armchair economists!

And you have to if you want to get ahead in this crazy world.

Don’t ask your parents or grandparents how to retire early. It was a completely different world back then. And if you don’t play armchair economist, you might blindly follow their blueprint and not realize that you won’t be able to retire until it is way too late.

I (Mike) work with many company pension plans in the Windsor and Essex County area.  Sometimes, I have to sit and review with employees their pensions and help them make investment choices within their plan.

Well a few weeks ago, I sat with employees at a company that once had a defined benefit plan (you have a defined retirement date) that was later changed to a defined contribution plan (no defined retirement date) for new hires.  I sat down with one employee in particular, who was in his late 40s and had a father who worked for the company for many years and retired quite early. This employee asked me “what year would this pension allow me to retire.

I said “I don’t know. What are your retirement goals? Do you have any other savings?”

He looked at me with a blank stare, then said “my dad said after so many years, this pension will start paying me in retirement a certain percentage of my income.”

Boy oh boy, this guy was clueless. In his head, he thought that his company would just take care of him like they did for his dad.

If he played armchair economist, he would’ve known that defined benefit plans were introduced in high interest environments. He would’ve known that they are extremely hard for a private company to maintain today’s low interest environment.

If he played armchair economist, he would have had investments outside his company pension plan.

Full disclosure, I am not a financial planner.  I have the credentials to do so, but I don’t believe stocks and bonds are the only investment you should have unless you are Warren Buffett.  And to make money as a financial planner, you need to think this way. Instead, I chose to focus on helping business owners with their life insurance, company benefits plans, and company pension plans because I love the mentality of business owners. They play armchair economists.

Gone are the days when you can just save money and invest in savings accounts, bonds and GICs. You need to take on more risk.  By playing armchair economist, you can take on CALCULATED risks.

Had we not played armchair economists, Vince & I would have never invested in cashflow investments. Vince & I would not have any single family real estate, dividend stocks, mobile homes, etc.

If you have a company pension plan, we’re not saying don’t participate.  Your company is offering you a great benefit and you should take advantage of it.  Instead, we’re telling you to understand it and figure out what else you need to do to live in the position of FU. Don’t rely on your employer.

Be an armchair economist. Question things your government is doing and figure out a way to take advantage of their actions.

Today, the government is printing money like no tomorrow and offering huge stimulus packages. And we’re not going to sit here and bitch about whether the Liberals are doing a good thing or not.  There’s 2 sides to this argument, we don’t need to go there.

Instead, we look at the situation and analyze it. We play armchair economist.  What does this mean to our economy? What does this mean for asset prices? How can we take this information and run with it to put ourselves and our families in a better position?

We are not economist. We each took a few economics classes in University, and that’s about all the knowledge and experience we have.

But we read.  We read a lot and stay up to date. And that is enough to play armchair economist.  We’re not saying that we think we can run the country better than the people in charge.  But we do have a right to criticize and analyze their decision and come up with our own conclusion.

If we don’t do this, we will just end up like that poor employee that will work a factory job for the rest of his life if he doesn’t change his ways.

Instead, we play armchair economists and get ahead.  Based on our own analysis, in today’s landscape, we believe you get ahead with cashflow and hard assets.

So, hopefully you agree and start learning and playing armchair economist so you can one day sit in the glorious position of FU.


Vince & Mike

P.S. If you know of any family and friends that are depending on their pension without much knowledge of how it works, please forward this to them. I couldn’t believe how many people don’t understand how it works.

P.P.S. If you agree, but don’t know how to play armchair economist, subscribe to our monthly newsletter by becoming a Canadian Cashflownaire Member.  We share our economic views, as well as tips and strategies to get ahead and live a prosperous lifestyle.