The Investor's Podcast · Sep 26, 2026 · 1h 11m · 53m saved
With David Fagan, chartered professional accountant, manager of mbf Chartered Professional Accountants and creator of the Total Wealth Performance framework
One of David Fagan's clients compounded at 18.2% on his own index portfolio. Counting the cash he left in a bank account while waiting for a better time to buy, Fagan put the real return closer to 15%.
Most investors judge themselves by the return on a broker statement. Fagan also counts what happens before the money is invested and what is left after tax, fees and structure, and he said an average return handled that way can still build real wealth.
"Savings is a first principle, an irreducible step in wealth creation."
David Fagan, a chartered professional accountant who has spent more than two decades in public practice in Canada and manages the accounting firm mbf Chartered Professional Accountants, on The Investor's Podcast. It was his sixth episode on the show, and he runs the education site Compounding Simplicity with the host.
The full interview is covered here so you can skip it. 71 minutes of audio, 18 minutes of reading.
Here are the 13 takeaways that matter.
Key Takeaways
Fagan has saved since he spent all $40 he had on a toy racetrack that did not work, at age eight
Financial independence came from intention, not luck, starting with a spending plan at age 22
A broker statement shows only one part of total wealth performance, which also counts idle cash, tax, fees and structure
He said a 10 or 11% return can end up nearer 5% once all of those are counted
Money left in cash cost two clients several points of return in 2025
One client's 18.2% return was closer to 15% counting his uninvested cash
Another's 11 months out of the market could cost her an estimated $3 million over 40 years
Investing is hardest to learn when the stakes are highest, such as after the sale of a business
Net worth is a better scorecard than portfolio returns during the years of building wealth
Tax drag can cost investors 1% to 3% of their returns, Fagan said, and most business owners never measure it
A Nova Scotia doctor earning 4% on bonds inside a company could lose money after tax
1. Why He Became a Saver
Fagan said he started the episode reflecting on why someone with average returns can still build a meaningful net worth, and whether net worth is a good measure of financial performance. He said he was not talking about preserving wealth but about building it from near zero, and that saving comes first.
A conversation with his business partner set him thinking
He and his business partner, James Allen, had talked in the lunchroom about why saving is so hard for some people. Fagan said he then asked himself why he saves, and the answer came to him while meditating.
At eight he spent everything he had on a racetrack that did not work
In the mid-1980s, on a family trip to Cavendish on Prince Edward Island, Fagan took all his money, about $40. He spent it on a Hot Wheels track with a 360-degree loop. His father had to cover the sales tax, and asked him whether he was sure. At home, the cars could not get around the loop.
"I had blown my entire net worth as an eight-year-old on a toy I played with for an afternoon." — David Fagan
He said his father knew the toy would disappoint and let him learn the lesson.
"I've been saving ever since — so maybe in hindsight it was the best purchase I ever made, Stig, not for its utility but for its guidance." — David Fagan
He said the difference was that he cared the money had been wasted, even as a child.
