Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

061: Roger Whitney on the Myths to Retirement Planning and the Lazy Mans Method to Saving

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061: Roger Whitney on the Myths to Retirement Planning and the Lazy Mans Method to Saving

Roger Whitney began his career as a Financial Advisor in 1991 and witnessed first-hand the rise and fall of the ‘New roger whitneyEconomy’ and the Dot-com bubble that ended in 2000.

This experience made Roger realise that financial management is about people, not money, and that they are served best by advisors that are fiduciaries to their clients and have the heart of a teacher.

In 2003 Roger left, at the time, the largest private bank in the world and co-founded WWK Wealth Advisors. Today, they are a firm of 14 professionals managing over $200 million in assets.

Roger is a lifelong learner and holds many degrees and certifications. He has a B.A. in International Relations, is a Certified Investment Management Analyst and a Certified Private Wealth Advisor.

Roger also teaches courses on Wealth Management, Retirement Planning and Employee Benefits.

Roger’s blog, The Retirement Answer Man, was recently awarded the 2015 PLUTUS award for the best Retirement focused blog and podcast. You can check it out at rogerwhitney.com as well as on iTunes.

Advice:

“Make sure you make the most of the only life you have. Retirement is part of that but don’t miss where you’re at today” – Roger Whitney

Economics/Finance:

In this interview, Roger mentions: the Permanent Income Hypothesis, retirement, retirement planning, pensions, social security, demographics, baby boomers, capitalism, growth, IRAs, Roth IRAs, 401k, quantitative easing, real estate, cash flow, investment, private placement memorandum and capital rates.

Economists:

In this interview, Roger mentions: Milton Freidman

In this episode you will learn:

  • the problem with budgeting.
  • develop one habit to control your budgeting needs and requirements.
  • lazy man’s method to saving.
  • four myths that could ruin your retirement and how to avoid them.
  • the Permanent Income Hypothesis.
  • how Roger got his cashflow in place when setting up his business.
  • that cutting your cable bill won’t create the opportunity to generate income.
  • the biggest regrets that people have when they retire.
  • the 3 Phases of Retirement.
  • whether we have a pension time bomb or if capitalism will reduce the risks.
  • what are IRAs and Roth IRAs work.
  • the possible scenario for the next generation to fund a bankrupt social security in the US.

Quotes by Roger in Episode 61 0f the Economic Rockstar podcast:

The bigger opportunity is how to generate extra income – Roger Whitney

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“I know quantitative easing. I know how bad all this stuff might be. At the end of the day, we just have to have out own house in order. And if we have our own house in order, we can insulate ourselves from a lot of things. That’s the only way I know how to get through things.” – Roger Whitney

4 Myths that Could Ruin Your Retirement and How to Avoid Them:

  1. Retirement is not a number: How much do I need to save for retirement?
  2. You’re spending is going to be consistent throughout your retirement.
  3. Retirement means not working.
  4. Having a financial plan is enough.

3 Phases of Retirement:

  1. The Go-Go Years
  2. The Slow-Go Years
  3. The No-Go Years

Books:

  • QBQ! the Question Behind the Question: Practicing Personal Accountability at Work and in Life by John G. Miller

  • The How of Happiness: A New Approach to Getting the Life You Want by Sonja Lyubomirsky

Podcasts:

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058: Morten Jerven on Poor Numbers and Why Economists Get It Wrong With Africa

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058: Morten Jerven on Poor Numbers and Why Economists Get It Wrong With Africa

Morton Jerven is Professor of Economic History and Development at the School for International Studies at Simon Fraser University in Vancouver, Canada.

In 2014, Morton was appointed Associate Professor in Global Change and International Relations at Noragrica at the Norwegian University of Life Sciences.

Morton has published widely on African economic development, and particularly on patterns of economic growth and on economic development statistics.

Upon the release of his book, Poor Numbers: How We Are Misled by African Development Statistics and What to Do about It, Morton caused uproar across Africa and had been expelled from two conferences. His latest book Africa: Why Economists Get It Wrong is now available on Amazon.

Morton is an economic historian, with an MSc and PhD from the London School of Economics.

Economics:

In this interview, Morten mentions: capital markets, sovereign bonds, National Income Statistics, GDP, demographics, wages, rents, profits, consumption, investment, exports, imports, population growth, m-pesa, debt-to-GDP ratio, poverty and GDP per capita.

Economists:

In this interview, Morten mentions: Jonathan Temple, Stephen Durlauf, Simon Johnson, Shanta Deverajan, Neil Fantom (World Bank) and Wolfgang Stolper.

In this episode you will learn:

  • why Morten was expelled from two conferences in Africa.
  • about the knowledge problem that exists in economic statistical data.
  • if economic statistics is underfunded relative to other social sciences.
  • whether economic data from African countries is intentionally misleading or if it’s a methodology and availability problem.
  • what is GDP and why is it used.
  • the problems with measuring GDP.
  • why the production approach is really the only valid method to measuring GDP.
  • why a country’s GDP is estimate by proxy and how productivity data is difficult to collect.
  • how population growth is used as a proxy for GDP.
  • whether we should allow Google and other companies that store big data to provide economic data.
  • whether cooperation or conflict between big data and official statistics will emerge.
  • how observing the brightness of countries from space is now being used to measure economic growth.
  • what the IMF does to missing data, such as GDP.
  • why Morten collected his own data for a number of African countries since the IMF wouldn’t share their own.
  • whether papers written by the IMF and the World Bank undergo a peer-review process.
  • how the ‘branding’ of statistics by the World Bank and the IMF can mislead the user.
  • how using the 3 methods of calculating GDP for all African countries shows significant differences when ranking each from poorest to wealthiest.

Quotes by Morten Jerven:

Statistics is the archetypal way of generalising from complex social realities to a very orderly aggregate picture – Morten Jerven

Make everything count. If you write something, make sure it’s going somewhere. If you prepare a lecture to speak about something, make sure you have an idea about how that can become a publishable unit – Morten Jerven

Make sure, as an academic working, it’s important not to think that working long hours is the key to being effective. Start writing early. It’s important – Morten Jerven

Organisations Mentioned in this Episode:

Books:

Papers/Articles:

Resources:

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040: Rebecca Harding on Trade Finance and How Delta Economics Can Help Identify Growth Opportunities World-wide

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040: Rebecca Harding on Trade Finance and How Delta Economics Can Help Identify Growth Opportunities World-wide

Dr Rebecca Harding is CEO of Delta Economics, which specialises in the area of Trade Finance. Rebecca is an independent economistRebecca Harding with an extensive background in modelling economic growth, trade, productivity, innovation and enterprise.

Rebecca is the author of nine books and has written over 250 articles on economic issues. She has held senior positions in leading academic, think-tank and corporate organisations, including roles at the London Business School, Deloitte and the Work Foundation.

Rebecca has advised the European Union and regional governments and agencies in the UK and Germany on innovation and enterprise policy.

Rebecca is a Board Member of the Society of Business Economists and a Board Member and Trustee of the German British Forum. In 2013, she was elected as a national representative of the European Movement UK.

Rebecca holds a BA in Economics and German and an MSc and PhD in the economics of Science and Innovation from the University of Sussex and writes on her blog rebeccanomics.com.

How Rebecca First Discovered Economics:

Rebecca was taught economics as a kid by her father who was a sociologist. “An economist who’s taught by a sociologist is quite an unusual thing. He started off with the fundamental principle that economics is wrong because people aren’t rational. So the first lesson in economics I had was my father telling me that the subject was wrong”.

I have a very eclectic background. I was taught by a sociologist. Some of my big influences when I was in university were in geopolitics and international relations. I’ve done a lot of political science and a lot of philosophy as well. And then, of course, I have an economics, mathematics and language background. So I’m a bit weird. I call myself a hybrid.

Find Out:

  • about Dr Harding’s company DeltaEconomics.
  • about the data used by DeltaEconomics and why it has developed its database of statistics.
  • what is Trade Finance and how it has experienced phenomenal growth in recent years.
  • how companies bridge the finance gap between the time they export goods to the time they receive payment.
  • what the challenges are with long-term growth in trade.
  • if there are inherent risks associated with the trade finance market as more sophisticated derivative and credit markets emerge.
  • about the inherent risks that may appear in the derivatives markets for trade finance.
  • if a market collapse could be the outcome of a non-compliant and unregulated trade finance securities market.
  • if could an implosion in trade finance is possible with large defaults in payments due mainly to the development of a derivatives and securities market.
  • if sovereign risk will become prominent if trade finance risk increases.
  • if enough data exists for trade finance to allow it to mature into a fully functioning wholesale and derivatives market.
  • about some risks to the global supply chain.
  • about the pioneers of innovation and productivity in economic theory.
  • how productivity and trade finance could be correlated.

Economics:

In this interview, Rebecca mentions and discusses: trade finance, credit, exports, growth, derivatives, securitisation, risk aversion, sovereign risk, business risk, contagion, commodities, inflation, fiscal policy, monetary policy, foreign direct investment, demographics, innovation and total factor productivity.

Economists:

In this interview, Rebecca mentions and discusses: Joseph Schumpeter, Christopher Freeman, Carlota Perez, J. K. Galbraith and Frances Coppola.

Influencers:

Karl Marx, Christopher Freeman, Carlota Perez, Joseph Schumpeter, J. K. Galbraith,

On Delta Economics:

“For trade data, it’s the best platform in the world – it’s corrected, it’s clean, it’s comprehensive and it covers continents like Africa all on one platform. It gives clients information on what the trading opportunities are” – Rebecca Harding, CEO of Delta Economics.

“We view the world from a trade perspective. Trade is important because it’s how businesses interact with one another.”

Delta Economics – It’s macroeconomic big data! – Rebecca Harding

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What we’ve done is pioneer the way in which big data is used in economics – Rebecca Harding

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What is Trade Finance?

Trade Finance is everything that drives trade itself. From a financial perspective, if you look at the value of world trade, about 80% of that is financed by banks or backed up by big insurance companies or finance through export credit agencies. It’s a huge market and grew very quickly in the from 2000 to 2007. The reason being was due to emerging markets entering into global trade in a very much aggressive way. Banks saw huge opportunities for financing trade.

Essentially, if you are trading with another company in another country, then what you need is some kind of bridging finance between the gap from when you put your goods onto a ship or an aeroplane and when it’s received by the person in the other country and paid for. So what this company needs is some kind of financing gap between those two points. That’s what trade finance is.

By including trade finance data into forecasting, you get much more accurate forecasts as to what’s going to happen to trade. In 2007, there was a tightening of credit available to businesses since the credit in the financial markets of developed countries had locked up. Subsequently, much of the trade finance went to emerging Asia and emerging Latin America and financed huge growth there.

The whole Trade Finance market is largely driven through very large finance houses such as JP Morgan, HSBC, Barclays, Bank of America, Merrill Lynch and BNP Paribas. These very big global banks are the ones that are involved on a day-to-day basis with the trade-receivables, the credit lines, the letters of credit, the open account and the working capital.

What’s also interesting about Trade Finance is that you also have quasi-government agencies and export credit agencies, which are part of the private sector and which are sometimes supported by the public sector. There is also a massive insurance market and legal sector attached to it. With such growth in the Trade Finance market, there is interest now coming from private sector private equity companies who see an opportunity to buy the debt and securitise it and actually use it as an asset class. What Delta Economics also do is it allows the data user to understand trade finance as an asset class. Companies can securitise the debt and trade that securitisation. The derivatives market will be an important component of this.

The Trade Finance market is estimated to be worth $7.4 trillion annually. There are many companies , like Lloyds, who will be putting security behind the money they are backing up.

It was seen as a way of fuelling long-term economic growth through trade.

Data Sources Mentioned in this Episode:

Recommended Books:

Where to Find Rebecca Harding:

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