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Fred Vettese: A Complete Guide to Retirement Income (EP.104)
25 juni 2020 · 1 uur 1 min
Today, we get into a masterclass on retirement planning with a true expert in the field whose perspectives are distinctly evidence-based, Fred Vettese. Fred is a Partner and former Actuary at Morneau Shepell and author of three retirement books including Retirement Income For Life. We hear Fred's thoughts on what people should be spending in retirement, why there is not a retirement crisis in Canada, and how Canadians can live on far less than they have been told. Fred talks about how to prepare for a bad investment outcome, as well as the problem of underspending early on and ending up with too many assets. He is a big proponent of people deferring their CPP until after 70 and buying an annuity with a portion of their money in most cases. Our guest weighs in on annuities, talking about how to buy them, which types to buy, and why ALDAs exacerbate the problem of early underspending. We query Fred about when people should start their CPP and OAS government benefits, and then move to hear his thoughts about different bear markets, how to invest during them, and what the current massive government interventions mean for the future of taxpayers. Fred gets into the risk of getting a retirement age date wrong, why he doesn't endorse the 4% spending rule, and how retirement planning is affected by owning versus renting a home next. He also makes a case for when reverse mortgages are a good option, why long-term care insurance makes no sense, and why interest rates are so low right now. Wrapping up, we hear Fred's thoughts on what this all means for early retirees, people still in the workforce, and those just entering it. Tune in for Fred's brilliant perspectives on all this and a lot more in what should be an evergreen resource for any Canadian looking for solid retirement instructions. Lees meer
Key Points From This Episode:
Introducing Fred Vettese and his evidence-based work on retirement planning. [0:00:16.3]
How Fred and Bill Morneau dispelled notions of a Canadian financi…
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Picking an Active Manager, Raising the OAS Clawback Ceiling, and Trading Hertz (EP.103)
18 juni 2020 · 1 uur 2 min
Welcome to another episode of the Rational Reminder Podcast! Today's main topic is how to pick an actively managed fund to invest in despite funds of this type producing lower returns than passive ones! Before getting into that, we hear a few updates on Ben's research into dollar-cost averaging versus lump-sum investing, discuss the factors that influence choice making found in an amazing new book by Sheena Iyengar, and touch on an OSC report on QuadrigaCX being a big Ponzi scheme! We get into our main topic next, introduced by the point that while Peter Lynch managed the Magellan Fund so well, none of its investors made any money out of it. We talk about the decrease in popularity of actively managed funds and Ben attempts to find out if it would be possible to sketch out a framework for picking one despite this. He does this by firstly defining active and passive investing and then tracing the evolution of the definition of Alpha (excess risk-adjusted returns) found in different key papers, where at each new contribution to the definition, the window for actually achieving Alpha gets smaller. Finally, we end with a framework but you'll find out how it falls short of being able to narrow the definition of a sensible actively managed fund to invest in down beyond a certain point. From there, we get into some amazing OAS clawback retirement hacks that could earn you a lot of extra income and wrap up with a glance at the bizarre upsurge in Robinhood investors in now-bankrupt Hertz since the pandemic! Lees meer
Key Points From This Episode:
Updates about Ben's work, fans of RRP, and brilliant upcoming guests! [0:00:40.1]
Discussing The Art of Choosing and its meditations on factors that impact choice. [0:05:11.3]
Findings of an OSC report about QuadrigaCX being a Ponzi scheme. [0:11:00.6]
An article on Peter Lynch and why Active Fund Management doesn't work. [0:14:53.4]
A framework for picking an active fund; defining active/passive investing and Alpha. [0:20:40.9]
An ev…
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Dr. Brian Portnoy: Underwriting a Meaningful Life (EP.102)
11 juni 2020 · 1 uur
Even though we learn that money is merely a means of exchange, a store of value, or a unit of account, it's so much more than this. Money captures so much of what we grapple with like hope, joy, fear, regret, and envy, yet it's widely surveyed as being the least spoken-about issue when compared to religion, mortality, and marriage. Dr. Brian Portnoy, the author of The Geometry of Wealth, joins us today to share his view on wealth, which moves past the conventional understanding of accumulation. We kick off the show by discussing some of Brian's research findings around the way people avoid talking about money. From there, we move onto his idea of funded contentment, which he hopes will get people to think about the different facets that go into a contented, joyful, and meaningful life. While this is a purposely loaded concept, Brian conveys the message in a simple, clear way to show that building wealth requires an assessment of many aspects of life. Then, we move onto how Brian believes financial crises affect people's financial wellness. Although there are certainly immediate devastating effects of these crises, Brian takes it a step further, sharing a conceptual view of how these shifts intersect with people's financial plans. After this, we turn our attention to adaptive simplicity and how it relates to goal-setting. We round the show off by discussing how the financial management industry is changing, and what Brian hopes the role of the advisor will increasingly become. Be sure to tune in today! Lees meer
Key Points From This Episode:
Learn more about Brian's rationale for comparing money to Lord Voldemort. [0:03:31.0]
Why money — contrary to what we've learned — is a qualitative, not quantitative. [0:05:58.0]
What Brian hopes to get people to think about with his 'funded contentment' idea. [0:06:44.0]
How the shapes Brian uses in Geometry of Wealth relate to the journey of achieving wealth. [0:08:36.0]
The three-step process to achieve funded contentment. [0:09:…
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Factor Nuances, Dollar Cost Averaging, and Annuities in a Pandemic (EP.101)
4 juni 2020 · 1 uur 9 min
We kick off today's episode of the Rational Reminder by discussing when Ben will be publishing his new model portfolios and a quick look at some of our upcoming guests and resources you might want to take a look at. We have been on a roll with our guests lately, and we are certainly not slowing down anytime soon. From there, we look at some of the headlines, such as CDIC developments and the myths around inflation. Next, we move onto to listener rapid-fire questions. Some of the topics include the difference between leveraged ETFs and traditional ones as well as a small-cap investment strategy for an investor with a 30-year plus investment timeline. We then turn our attention to the core topic of the show, dollar-cost averaging versus lump-sum investing. Ben presents an overview of dollar-cost averaging along with some of the perceived benefits. We dive into his analysis of dollar-cost averaging versus lump sum investing in equity portfolios over select 10-year periods across various countries. We discuss the results based on a range of factors and variables. The crux of the argument is that dollar-cost averaging is not as compelling as it's often sold to be. While there are psychological benefits, the empirical evidence shows that there are not real ones. We wrap the show up with a look at how the pandemic is likely to shape the annuities industry and retirement planning. Tune in today! Lees meer
Key Points From This Episode:
Find out when the new model portfolios will be up. [03:10]
Some books to look at ahead of upcoming guests. [05:04]
Ben and Cameron's takeaways from Tobi Lutke's appearance on Invest Like the Best. [05:43]
Current affairs, including CDIC changes, Michael Kitces recent publication, and inflation. [09:07]
Rapid fire questions: Leveraged ETFs versus traditional ETFs and size as a risk factor. [13:47]
How a small cap value investment strategy could work for an investor with a long horizon. [23:07]
Why Ben and Cameron don't talk about implementing th…
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Prof. Ken French: Expect the Unexpected (EP.100)
28 mei 2020 · 57 min
Who better to have on the Rational Reminder Podcast than Professor Ken French? Ken has been a massive inspiration to us and has remained a guiding light for sensible, evidence-based investors over the last few decades! His work with Eugene Fama stands as the seminal work on the subject of passive investment portfolios and we are so delighted to have him on the show today as we talk through some of his thoughts on a variety of subjects. This conversation was recorded near the beginning of the coronavirus outbreak on this side of the world and although Ken does mention the crisis, the situation has developed considerably since then. We start with the basics, with Ken giving us some helpful definitions and perspectives on asset pricing models and active management before we dive into the current market volatility and familiar topics such as risk tolerance and equity premiums. We also get the chance to hear Ken's reflections on a number of his papers, home-country bias, and the value of a good advisor. Some listeners may be surprised to learn that Ken still relies heavily on a financial advisor of his own and he explains exactly what functions this person performs for him and why he values their help so highly! We also discuss better strategies for long-term portfolio allocation, sustainable investing options and more, so be sure to join us for this very special episode, it is not to be missed! Lees meer
Key Points From This Episode:
Ken's description of asset pricing models and their importance to investments. [0:02:37.2]
Reasons why most people should ignore and avoid actively managed options. [0:04:50.7]
Why the same rules that apply to mutual funds apply to hedge funds too. [0:08:36.3]
Reasonable approaches to the market volatility we are currently experiencing. [0:11:01.7]
The potential impacts of the move away from active into passive investments. [0:18:22.2]
Realistic expectations for collecting a positive equity premium. [0:21:12.8]
The probability of negative pr…
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Andrew Hallam (Millionaire Teacher): How to be Wealthy (and Happy) (EP.99)
21 mei 2020 · 55 min
We often talk about better planning, reduced spending and a consistent long-term strategy on the show and today we have a guest who not only gives that advice himself but clearly lives it too! Andrew Hallam is the author of the new book Millionaire Expat in which he details some strategies for what has been called geographic arbitrage, or moving to another part of the world in order to maximize your financial independence! His earlier book, Millionaire Teacher took a similar approach to education abroad and he has built out his philosophy from there. We hear from Andrew about his definition of wealth and why so many people who earn a relatively large amount of money can never be called wealthy. Andrew lays out the researched correlations between happiness and money and more clearly between debt and misery. He also shares how he has approached spending, saving and budgeting in his own life and relationships before we get into some more technical investing topics such as the benefits of index funds and why many advisors try to persuade clients away from them. Andrew weighs in on finding the right advisor for your needs and when to seek out help with your portfolio. The last part of the show is spent on the topics of education and expatriation. Andrew is a strong believer in leading by example for your children to learn about money matters and he explains his reasons for moving abroad and the gains he has accrued. For all this from a wonderful guest, tune in today! Lees meer
Key Points From This Episode:
How Andrew defines the term 'wealthy' and why it does not depend on income. [03:43]
Links between spending and happiness, and debt and misery. [06:51]
How Andrew and his wife have managed their own values around spending. [11:55]
Benefits and costs of borrowing; could you handle it if interest rates doubled? [13:32]
Andrew's thoughts on index investing and why it is a good idea. [19:06]
Common tactics that financial advisors use to steer clients away from index funds. [2…
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Rapid Fire Listener Questions, Wealthsimple's Victory Lap, and the Historic State of Value Investing (EP.98)
14 mei 2020 · 1 uur 13 min
We spend the bulk of today's episode considering whether Wealthsimple's use of long bonds and low volatility stocks is really protecting their clients' downside, and summing up recent arguments by Cliff Asness and AQR leveled against critiques on value investing. Before that, we kick things off with thoughts on why Elon Musk aims to have no possessions, before looking at the links between empathy and the theory of relativity as well as some productivity secrets in recent books by Charles Duhigg and Shane Parrish. Next up, we briefly address a bunch of listener questions on factor tilting, and ETFs concerning COVID-19, the Smith Maneuver, and more! A final listener question about Wealthsimple's claim mentioned above leads our hosts to wonder whether volatility and drawdown are good measures of risk. Ben made a few models to help answer this question which tested consumption models as another possible measure and brings up an interesting point about the significance of considering long bonds from an expected return or a risk parity perspective. From there, we move to the investment topic of the week – the historic state of value investing. This is a contentious topic with recent papers by Cliff Asness and AQR both weighing in and you'll hear Ben and Cameron distill the main points from both. We hear about medium-term odds being on the side of value, and some great arguments showing common critiques leveled at value investing to be premature. Finally, Cameron takes us through the psychometric profiling side of measuring risk tolerance before telling listeners why they shouldn't make investment decisions based on reckless critiques. Tune in to get it all! Lees meer
Key Points From This Episode:
A reminder to comment on the new comments section on the RRP website. [0:00:44.2]
Why Elon Musk ways he intends throw away his possessions. [0:04:36.1]
New books about productivity and the links between science and empathy. [0:07:08.2]
Factor tilting: being aggressive versus non-aggr…
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Greg Zuckerman: Did Jim Simons (Renaissance Technologies) Solve the Market? (EP.97)
7 mei 2020 · 43 min
Today on the Rational Reminder Podcast we interview a seasoned journalist from The Wall Street Journal, Greg Zuckerman. With 23 years of experience with the media outlet, Greg has written extensively about the most prominent figures in the world of investing, including Jim Simons, John Paulson and Carl Icahn, generally focusing his attention on significant trades, traders and fund managers. In this episode, Greg shares how covering the stories of renowned investors and fund managers have influenced his investment philosophy. Specifically, we get into his book about John Paulson, The Greatest Trade Ever, and why Greg reckons Paulson never managed to achieve the same level of success following this famous trade. His work on the founder of Renaissance Technologies, Jim Simons, also produces fascinating points of discussion, including why their Medallion Fund became so successful and how capping the size of the fund contributed to its outstanding performance. Greg also talks about the idiosyncratic character of Simons, the role of luck, why taking an algorithmic approach to investing is likely to produce good outcomes in the long run, and why people should not always pay attention to the advice of "smart money" sources like hedge funds. Lees meer
Key Points From This Episode:
How covering the stories of prominent fund managers has affected Greg's investment philosophy. [0:03:27.1]
Thoughts on the likelihood of fund managers outperforming the market. [0:05:54.1]
Hear about John Paulson's big trade and why he has failed to outperform since. [0:07:24.1]
Find out what made Renaissance Technologies' Medallion Fund so successful. [0:11:25.1]
The role that capping the size of their fund has played in their ongoing success. [0:13:30.1]
More about Jim Simons: the mathematician with outstanding people skills. [0:14:46.1]
The influence that Simons personally had on the outcome of the Medallion Fund. [0:17:02.1]
The unpredictability of luck and intuition Simon's relied upon in his …
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Ben Rabidoux: A Reality Check on Canadian Real Estate & Macro Economics (EP.96)
30 april 2020 · 55 min
The economic effects of the coronavirus pandemic have been unprecedented and the seismic shifts have caused numerous unforeseen challenges. While no-one could have predicted the enormity and speed of the current crash before it happened, several signs indicated that an economic contraction was on the horizon. Today's guest, Ben Rabidoux, President of North Cove Advisors, a boutique research firm, is here to share some macroeconomic trends and what they tell us about the state of the Canadian economy. His research expertise includes Canadian housing, macroeconomic trends, and household credit. We kick off the episode with some listener feedback as well as a listener question, where we discuss how to incorporate unvested stock options into your personal financial planning. There are several ways to go about this and numerous factors to consider, so it's important account for them all. Ben then dives straight in, giving us an overview of the economic landscape before the sudden upheaval. He sheds some light on population growth and its relationship to economic growth. As a great deal of the economic gains was coming from non-resident growth, the crisis is likely to change this. We also talk about personal debt and HELOC loans. Coming into the recession, the household debt service ratio was incredibly high, with interest rates at an all-time low. Ben walks us through how these vulnerabilities might pan out and what could happen with HELOC debt. Along with this, we also discuss the relationship between housing and economic growth, with some truly astonishing data from Canada, the changes that are likely to happen with rental supply, and Ben's take on some personal finance topics. This show was an incredible overview of some of the larger forces at play, and it went a long way to paint a clearer overall picture. Be sure to tune in today! Lees meer
Key Points From This Episode:
Useful listener feedback and personal updates from Cameron and Benjamin. [0:01:50.0]
Data points about…
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Scott Rieckens (Playing with FIRE): Finding Financial Education, Perspective, and Freedom (EP.95)
23 april 2020 · 1 uur 5 min
The recent film, Playing with FIRE details the particulars of the FIRE Movement in a way that is accessible, informative, and impactful. Both Cameron and Ben were hugely impressed with the film and the argument it makes for the framework of FIRE. Today we are joined by the producer and star of the film, Scott Rieckens, to discuss the movie and his own journey to reach financial independence. In much the same way that the film does, Scott makes a compelling and inspiring argument for the central philosophy of the movement, emphasizing what many of us will agree are the most important part of our lives and the way we can think about these to maximize our health and happiness. We discuss values and decision making, and how the FIRE perspective accounts for psychological and emotional changes to what is meaningful in your life. Scott explains the reframing that occurs with the system and the important aspects of it, especially those that matter in an introductory setting. We talk about communication and upkeep, the 4% rule, and the individual nature of your own financial strategy. Ultimately the ideas of FIRE are just ways to think about what is really important to you and your family and they provide a way to focus and enhance these. For this truly inspiring and potentially life-changing discussion, be sure to listen in with on the Rational Reminder! Lees meer
Key Points From This Episode:
Scott's own understanding of FIRE and what it comes to mean in his life. [0:04:25.4]
The initial connection that Scott had with the FIRE movement before making the film. [0:05:23.2]
Shared values and finding common financial ground in a life-partnership. [0:08:50.8]
Mental changes that Scott and his wife, Taylor, made in response to the ideas of FIRE. [0:11:57.5]
Reframing your decisions and the necessary information to do this. [0:18:01.9]
Social changes and the impacts of the philosophical alterations Scott made. [0:22:48.1]
How Scott has communicated these ideas to his daughter as …
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The Stock Market vs. The Economy, and Assessing Risk Tolerance (EP.94)
16 april 2020 · 1 uur 18 min
When it comes to the question of whether the economy affects the stock market, it's not about whether the former is in a good or bad state, but how that relates to what the market was expecting. In today's episode we get into predictions about labour economics during COVID-19, the relationship between the market and the economy, and how to make decisions that suit your risk tolerance. We kick things off by reviewing insights Edward Lazear and Gerard O'Reilly gave in a recent webinar. They spoke about how the current crisis relates to past events from the perspective of labour economics, and what empirical data is saying about stock returns and the economy. A talking point here is the idea that recessions are defined by committees, and always long after they have either begun or ended. This leads to the topic of whether there is a relationship between economic data and stock market performance. We find many examples of cases in the short and long term where no correlation can be found between the two, and cases where the market starts to recover before the economy. We discuss how this speaks of a fundamental difference in the analytical methods of economists versus investors, not a rigged market. The first group assesses past information while the second invests based on where they think things will go. We talk about what happens when GDP is good but not as high as expectations were, and how per-share earnings growth can only keep up with GDP if no new shares were issued. We then switch to the concept of risk aversion and discuss the differences between system one and system two thinking, before moving into a comparison between two methods of analyzing risk. Tune in for your weekly reality check! Lees meer
Key Points From This Episode:
Having a baby and getting a drone license; updates from Ben and Cameron. [0:00:18.2]
Great new Netflix shows and books Cameron has been getting into. [0:03:44.6]
Predictions about labour economics during COVID in Lazear's webinar. [0:06:28.…
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Cliff Asness from AQR: The Impact of Stories, Behaviour and Risk (EP.93)
9 april 2020 · 53 min
No one credible ever said that investing was a simple endeavour. It might have some simple guidelines, that if followed are more likely to yield positive results, but the ins and outs of the markets, decisions and their impacts, movements and crashes are never straightforward one-dimensional cases. Our guest today, Cliff Asness, really brings this point to bear, showing the nuance and multiplicity of all the topics we discuss. As the experienced owner of AQR and a wealth of knowledge and insight, Cliff shares a host of ideas and thoughts on as many topics as we have time for. We start off the chat talking about market efficiency before moving into the murky waters of value. We hold value investing to be sound, as does Cliff, yet the last few years have stretched even our commitment to this philosophy a little. The perspective that Cliff is able to share, drawing from his formative years in the investing world in the '90s is invaluable and a lot of what we talk about gets contrasted to the tech bubble of that period. The conversation also covers the size of stocks and portfolio allocation. Although Cliff has strong opinions on most of these issues he does a great job of showing the lack of definitive answers to any one of them, allowing space for new knowledge and outlying evidence to make its mark. We also get into finding the right kind of investor for your own style and goals, the role of good communication in finance and the influential article that Cliff wrote about 'pulling the goalie'. In it, Cliff lays out what the data tells us about certain late-stage situations in which it is statistically wise to make more risky choices. For all of this and a fabulously entertaining conversation, listen in with us today! Lees meer
Key Points From This Episode:
Cliff's perspective on market efficiency and the impact on his portfolios. [0:03:48.5]
Value investing in today's climate where value has taken such a knock. [0:08:30.8]
Stories and behavioural effects on value; how we u…
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Taking Back your Amygdala and Flourishing Through a Crisis with Dr. Moira Somers and Dave Goetsch (EP.92)
2 april 2020 · 1 uur 11 min
In today's episode, we take a less analytical position on the current situation to focus more on the behavioral side of things. Joining us are two returning guests, Dr. Moira Somers and Dave Goetsch, who share their unique perspectives in a very real and at times refreshingly comical conversation about how people could most beneficially respond to this moment in time. Dave speaks of his personal experience going from panicky investor to getting a feel for the broad concept of index investing, and the idea that learning not to worry about the market on a day to day basis can be applied to life more generally. Dr. Somers provides some psychological background to these different strategies for tolerating stress. She shares her insights about a typical response to crises called amygdala hijack and how two main personality types called 'the monitor' and 'the blunter' deal with stress. We speak about some more healthy strategies for coping, with banding together and communicating featuring as strong solutions that allow us to clear our heads and problem solve more creatively. The conversation also covers the idea that this moment can be taken as a time to reflect, and even to double down on skills that aren't necessarily investment-related but which can help ensure financial stability in the future. Toward the end of the episode, we look at how financial advisors could be the most useful to their clients right now and hear a strong argument for a strategy that combines experience-based advice with a more important trait: a high EQ. Tune into today's episode to find out how you can gain more of a bird's eye view of your version of the current situation. Lees meer
Key Points From This Episode:
Amygdala hijack: Moira's thoughts on psychological responses to COVID-19. [0:03:33.8]
Dave's thoughts on mitigating valid worry using his understanding of markets. [0:05:54.4]
Learning not to be emotionally connected to the minutiae of the crisis. [0:13:25.0]
Non-investment related skills…
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Tax Efficiency & Leverage: The Smith Maneuver with Robinson Smith (EP.91)
26 maart 2020 · 46 min
The Smith Maneuver was developed by Fraser Smith as a smart way for Canadians to convert a traditional, non-deductible mortgage into a deductible mortgage by systematically re-borrowing to invest. Today we are joined by Fraser's son, Robinson, to talk about the maneuver, his father's legacy and explain how you can use it to your financial advantage. In his book, The Smith Maneuver, Fraser laid out a plan for working the mortgage and debt system to your advantage, by deducting the interest on a mortgage, while still being able to claim exemptions on the sale of a house. Robinson does a great job of explaining the procedure for implementing the strategy and all the possible ways to use it. He talks about risk, different kinds of debt and investor diligence, giving everything you need on the subject! Robinson believes in his father's vision of bringing the practices of the wealthy to the average Canadian and allowing wealth creation through leveraging possibilities instead of the inertia and fear that most people choose. For the last part of our conversation, Robinson gives us some examples from the Smithman Calculator, illustrating just how effective the system can be! Join us on the Rational Reminder Podcast today, to get it all! Lees meer
Key Points From This Episode:
An explanation of the Smith Maneuver and its usefulness to Canadians. [0:03:40.6]
A step by step walk-through of the implementation of the Smith Maneuver. [0:07:15.1]
The possibility of refinancing a credit line for lower mortgage rates. [0:10:18.0]
How to think about maintaining more leverage with mortgage payments. [0:13:04.9]
The risks of debt, minimizing withdrawal amounts and reversing the maneuver. [0:16:48.6]
Robinson and his father's investor experiences around the 2008 market crash. [0:18:35.3]
Why leveraging smart debt is so much better than gambling on a startup! [0:20:24.2]
The regulatory risk that is present when performing a Smith Maneuver. [0:22:04.1]
Risks that accompany not applying t…
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Bear Markets: Always Different, Always the Same (EP.90b)
23 maart 2020 · 1 uur 16 min
In our second special release episode during the 2020 COVID-19 bear market we discussed a broad history of US bear markets from 1900 to 2020, the recent volatility in the bond market, bond ETF NAV spreads, a nuance in the legislation on tax-loss harvesting, and some of the tax-related changes that Canada has rolled out in light of the current situation. Lees meer
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COVID-19: A Rational Reminder (EP.90)
16 maart 2020 · 1 uur 22 min
How we are handling the situation as a firm, investing through a crisis, historical comparisons, and more.
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Safety-First: A Sensible Approach to Retirement Income Planning with Wade Pfau (EP.89)
12 maart 2020 · 53 min
It's not unreasonable to assume that a desirable retirement equates to having the financial freedom to meet one's lifestyle and personal goals. The more efficient a person is with their assets, the higher the likelihood of this, which is why sensible retirement income planning is so necessary. Today's guest is Wade Pfau and he is arguably one of the main thinkers in the retirement income space at present – a more readable Moshe Milevsky if you will. This podcast is usually devoted to high-level discussions about portfolio investment so it was an honour to have Wade join us and have a similar kind of conversation but rather about retirement income planning. Retirees face some unique risks when it comes to strategies for asset management, insurance, and investments, which means they require tailored strategies, and today Wade weighs in on some of the different approaches we see out there. The topic of probability versus safety-first approaches, and the potential wisdom in amalgamating the two as a means of preparing for retirement, crops up a lot in this discussion. Wade talks about the four L's of the safety-first strategy, how it recommends building up a base of savings that act as an income to reach higher legacy in the long term. He suggests that people need to account for longevity risk more and argues for the efficiency of assuming that you will live until the average oldest age. That way you don't end up throttling your lifestyle by saving unnecessarily during retirement. In our discussion, Wade also shares valuable insight into low interest rates versus expected returns, the ineffectiveness of the 4% rule, annuities and deferred annuities concerning mortality credits, and different types of buffer assets. Tune in for all this and much more on the topic of retirement planning from one of the greats in the field today! Lees meer
Key Points From This Episode:
Notes on Wade Pfau, a leader in retirement income planning research. [0:00:43.0]
Unique risks faced by retirees…
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Market Drops, Biological Age, and FIRE any Time (EP.88)
5 maart 2020 · 1 uur
Welcome back to the Rational Reminder Podcast everybody. Today we are using the opportunity to have a bit of a philosophical discussion about a bunch of things related to your retirement and the financial planning that goes into it. We touch on the all too obvious topics of the coronavirus and last week's market fluctuations before we scan the last ten years for any notable data points on fluctuations and the years with the biggest dips. We look at life expectancy and how this affects a retirement planning strategy. In British Columbia, drug use among younger generations has brought down life expectancy estimates, while improved health care has extended them in some regards. This leads to a few comments on biological age and how knowledge of yours should play a big role in your personal strategy for the end of your life. The last part of the episode is spent considering the current state of the discourse around the FIRE movement and what has grown out of it. We can see that it is not uncommon for large portions of the aging population to be happy to carry on working, and that the idea of getting out of the workforce as soon as possible may only be attractive to certain kinds of professions. For all this and a whole more from Cameron and Ben, be sure to tune in! Lees meer
Key Points From This Episode:
The amazing new documentary on Herbalife called Betting on Zero. [0:02:54.5]
Market drops last week and the story that accompanied the volatility. [0:06:14.9]
Biggest and average drawdowns in recent calendar years. [0:10:03.3]
Coronavirus impacts and questions about buying stocks now when they are low. [0:14:20.2]
Conversations about the market drop and aggressive response strategies. [0:20:06.8]
Data findings for historic cases of market timing from the last century. [0:25:12.3]
Historic relations between the market and health pandemics. [0:30:22.1]
Life expectancy's huge role in long term financial plans and retirement. [0:32:31.8]
Changes in average life expectancie…
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Risk is Everywhere with Allison Schrager (EP.87)
27 februari 2020 · 33 min
You can't get anything good out of life without taking a risk, and this holds true in the world of investing too. Depending on the situation, people are willing to either pay more for high-risk or risk-free, and matters become more complex because the term 'risk-free' means a different thing to everybody. Today's guest is economist Allison Schrager, Senior Fellow at the Manhattan Institute, author of An Economist Walks into a Brothel, and long time collaborator with Nobel laureate, Bob Merton. Allison is an expert on risk and she joins us in this episode to speak about this topic in relation to retirement and retirement finance. We talk about the idea that while risk has been given conventionally bad associations, it can be more accurately understood as a probability distribution between the future occurrence of both potentially good and potentially bad things. Allison shares her opinions about how both young and old people should approach risk, and stresses the importance of having clearly defined goals and a good financial advisor. She shares her thoughts on managing systemic vs idiosyncratic risk, why the retirement crisis is not all doom and gloom, and the laddered bond portfolio she developed with Bob Merton. Joining this episode, you'll also hear Allison speak about how misinformation causes people to be hesitant about annuities, the connection between risk management in surfing and investing, and why investing in education is smarter than investing in a house. Allison covers a whole lot more risk-related topics in this episode too, so don't miss out on it. Lees meer
Key Points From This Episode:
Allison's definition of risk: as a probability distribution. [0:02:54.0]
The idea that the word risk pertains to both good and bad things. [0:03:57.2]
Relativity of the term 'risk-free' and its fundamental connection to price. [0:04:20.0]
Probability of, and skill in, taking risks depending on how they are presented. [0:05:11.0]
The value of having a clear goal in mind a…
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Uninsurable Condos, Floundering Robo Advisors, and Counterfactual Thinking (EP.86)
20 februari 2020 · 53 min
Let's say you make a choice that had you chosen differently, things would ostensibly have turned out more favourably. Later on, a similar situation comes up and you make the choice you think you should have made previously in the hope that the result you wanted before will come true this time around. This is called counterfactual thinking and it forms the main topic of our discussion in today's episode. First publicized in a fascinating paper called The Psychology of Preferences, Daniel Kahneman and Amos Tversky explore the abundance of instances where humans employ irrational 'what if' thinking in their processing of recently made decisions that resulted in an undesirable outcome. People tend to think back and wish that they had made a different choice, irrationally thinking that if they had, things would have worked out better. This idea, of course, has applications to investing in stocks with particular implications due to the utter randomness of the market. This is a mind-blowing discussion about human irrationality with links to many leading papers that research this principle in relation to different situations. Outside of our main discussion, we also touch on why you should think twice before buying a condo, the utter absurdity of the Robo-Advisor business model, monthly posted DVD accounts and the surprising birth of Netflix, and finally, the ambiguity of Vanguard's partnering with HarbourVest. Lees meer
Key Points From This Episode:
The story of Netflix's origin starting by renting DVDs out by post. [0:02:30.0]
Life expectancy, annuities, and Wade Pfau's ideas on Safety-First retirement planning. [0:04:56]
Investor/insurer reluctance and why you shouldn't buy a condo. [0:07:23]
The Robo-Advisor financing crisis and eventual merge of software and humans. [0:11:28]
Counterfactual thinking and how it affects investment patterns. [0:17:40]
The central role closeness of a related incident plays in 'what if' thinking. [0:21:21]
Contrast effects: winning $50 feels …
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Growth of the Experience Economy: A Transformation of the Financial Services Industry with Dennis Moseley-Williams (EP.85)
13 februari 2020 · 1 uur 13 min
The financial advice industry has always been a place of change, and yet certain old practices hang around for decades. Our guest today, Dennis Moseley-Williams, is all about moving things forward for the good of the client and the advisor. The basis of his understanding is the characterization of the economy as one fundamentally built around experiences. Applying this lens to the financial sector means that advisors need to think about how to provide more than just a service to their clients, they need to stage an experience and a process of curated growth and learning. In our conversation, Dennis unpacks the evolution up to this point, showing how each step requires adjustments and progress from providers and the space that opens up due to technological advances must be filled with something of value. We discuss communication, fulfillment and happiness and Dennis makes a strong argument for the role of the financial advisor reaching beyond the bank; he believes it should include all important areas of life. The last part of the episode is spent thinking about ways that willing advisors can offer the most to their clients and how to pitch and scale these businesses in the smartest ways. For this fascinating chat with a truly innovative thinker and gifted speaker, be sure to join us! Lees meer
Key Points From This Episode:
Dennis' explanation of the experience economy and trends in the financial services industry. [0:04:04.4]
How Dennis found himself in the world of finance and investments. [0:07:07.7]
The evolution of the skillset needed for good financial advice. [0:09:38.2]
The five stages of experience and the lasting impact of a meaningful experience. [0:14:40.7]
What the experience economy means in terms of finding good financial advice. [0:18:52.9]
The space created by new tech advances and what will fill it. [0:23:35.6]
Better communication in today's economy; physical and virtual experiences. [0:31:41.5]
Differences between big and small business; pitching …
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Mawer, The Value Premium, and Investing Costs plus ESG Follow-up with Tim Nash (EP.84)
6 februari 2020 · 1 uur 13 min
On today's episode of The Rational Reminder, we once again cover a host of topics. We begin with Cameron sharing his thoughts on a book he recently finished, The Ride of a Lifetime, and some of the lessons he took away from it. We then tackle three listener questions, where we cover Mawer and index funds hypothetically driving prices. Then, in the portfolio portion of the show, we turn our attention to value premiums. Fama and French recently released a paper on the topic, and Ben is naturally very excited to share his assessment on it. We unpack how value has performed in the US, unexpected big value findings, and other takeaways from the paper. After that, we explore the total cost of ownership in our planning section. These are expenses that you incur when you begin investing. We shed light on some of them and the effect they have on your investments. Finally, we end the show with Tim Nash's take on our assessment of sustainable investing in episode 82. His insights offer an interesting perspective on the topic. While we can't say we're fully on board with his active position, it's certainly a fascinating viewpoint. Don't miss out on today's jam-packed show! Lees meer
Key Points From This Episode:
Takeaways from the audience's reception to episode 83 on cryptocurrency. [0:00:52.0]
Insights and lessons from The Ride of a Lifetime, which Cameron recently finished. [0:04:13.0]
More about Mawer: Data about and insights on how the company has fared. [0:08:48.0]
What would happen if index funds could hypothetically drive prices? [0:22:34.0]
What's interesting about the timing of Fama and French's new paper, The Value Premium. [0:25:46.0]
The thesis of Fama and French's paper and what they found over measured periods. [0:26:49.0]
Why Fama and French used how value did relative to the market. [0:29:17.0]
How value performed between 1992-2019 and a surprising finding about big value. [0:31:04.0]
Ben's takeaways from the Fama and French study. [0:33:18.0]
Conclusions fro…
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Bitcoin vs. Gold: Digital Currencies as an Asset Class with Michael Sonnenshein (EP.83)
30 januari 2020 · 42 min
The last ten years have seen so much said and done in the cryptocurrency space, and yet the future of bitcoin is still somewhat unclear. For Michael Sonnenshein however, bitcoin and the crypto market still offer the freedom and possibilities that have long been espoused as their greatest values. He joins us today to talk about his role at Grayscale Investments, how Grayscale fits into the larger Digital Currency Group family and how he envisions the wide-open future possibilities for bitcoin. We discuss some basics for the bitcoin conversation and Michael does a sterling job of setting out the lay of the land at present. From there, we turn to the role of Grayscale in dealing with bitcoin which can also be bought directly. Michael then takes the opportunity to compare bitcoin and gold; showing how they overlap and then bitcoin improves on the benefits that gold investments have historically provided. The last part of the conversation is spent addressing the safety of bitcoin and how time is showing its resistance to shocks and is earning bitcoin its place among other highly trusted assets. For all this and more fascinating insights into a big part of the future, join us on the Rational Reminder today! Lees meer
Key Points From This Episode:
Michael's description of Digital Currency Group. [0:03:28.4]
A basic explanation of bitcoin and what defines a digital currency. [0:08:09.2]
What will happen when the maximum amount of bitcoin has been mined? [0:11:29.0]
Affecting the value of bitcoin through the altering of its decimal places. [0:14:04.2]
The usefulness of Grayscale when it is possible to buy bitcoin directly. [0:15:21.4]
How bitcoin differs from and improves on gold investments. [0:19:11.7]
How digital currency fits in portfolio management and who it really suits. [0:21:30.0]
Thinking about the expected returns question in regards to digital currencies. [0:23:30.3]
The high amount of institutional investments through Grayscale and deciding on allocation. [0:29…
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Sustainable Investing, Retiring on Index Funds, and Fee Location (EP.82)
23 januari 2020 · 51 min
Welcome to this week's episode of the Rational Reminder! Today, we get stuck into a commonly asked about investment topic – socially responsible or sustainable investing. The show kicks off with Cameron sharing some fantastic insights he gained from a book he recently finished, The Undoing Project. We then delve into the CalPERS story that was in the spotlight at the end of 2019. After that, we move the planning portion of our show, where we tackle the topic of sustainable investing. Many prominent Canadian pension funds have said that sustainability will be a core part of their investing going forward. We explore why sustainable investing has to mean lower returns, how this kind of investing effects social change, and what the amount you need to give up to feel good about your investments is. We also look at the subjectivity of ESG ratings and how this relates to your values. Ultimately, sustainable investing is about balancing the continuum of views and values, how closely they can be matched, and how you can do that in a diversified way. The sustainable label may not meet your expectations of sustainability which is why finding the balance can prove to be challenging. We round off the show by sharing our thoughts on how to restructure your portfolio when it comes time to live off of it. You don't want to miss out on this interesting show, so tune in today! Lees meer
Key Points From This Episode:
A book Cameron recently finished and how he applies these lessons to his work. [0:01:08.0]
More about the CalPERS story that broke in December 2019. [0:05:50.0]
Insights into active managers and actively managed funds. [0:07:40.0]
Vanguard is the first asset manager to surpass the six trillion-dollar mark and other stats. [0:10:30.0]
Portfolio topic: The growth of socially responsible investing in North America. [0:12:10.0]
The main considerations to account for when looking at socially responsible investing. [0:14:09.0]
Two main sustainable investing strategies: negative …
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Death and Marriage: The Legal Side of Financial Planning (in Ontario) with Kim Melanson (EP.81)
16 januari 2020 · 37 min
On today's show, we are joined by Kim Melanson who is a local lawyer in Ottawa. The bulk of the conversation is spent on the particulars of drafting a will and the considerations that have to go into this process. Kim also reminds just how important it is to have an up to date will, something many of us have heard but many of us do not act on! She talks about good times to update your documents and the ins and outs of naming guardians and executors before discussing inheritances, donations, and probate. We then turn to a few different types of wills, namely mutual will, mirror wills, and dual wills. Kim weighs in on the topic of 'will kits' and services that make the writing of a will appear a little easier. We also talk about some common errors that are made in the realm of estate planning before turning our attention to family law. Kim answers our questions common-law relationships, domestic contracts, divisions of assets and more, so for all of this from a true expert on Ontario legal matters, be sure to listen in with us today on the Rational Reminder Podcast! Lees meer
Key Points From This Episode:
An important legal disclaimer about today's show. [0:02:21.9]
What happens if you die in Ontario without a will? [0:03:13.6]
Reasons that every adult needs to have a will. [0:05:34.7]
How often to update a will throughout the course a lifetime. [0:07:32.7]
Best practices for the naming guardians and executors. [0:08:34.6]
Kim's recommendations for allocation of inheritances, donations, and probate. [0:14:14.4]
Understanding dual wills, how they work and when they make sense. [0:19:14.3]
Considering the use of 'will kits' and where these services might fall short. [0:21:39.6]
Mutual and mirror wills; managing and policing of these documents. [0:23:19.1]
Common and important errors made in estate planning. [0:25:19.4]
The definition of a common-law relationship in Ontario. [0:26:50.6]
Approaching the conversation and weighing the utility of domestic contracts. [0:3…
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A Planning Checklist, Portfolio Concentration, and Leverage (EP.80)
9 januari 2020 · 59 min
For our very first episode of 2020, we kick things off with some quick updates before sharing Cameron's ten best financial planning strategies for the new year. After laying out some statistics about the great asset class returns that 2019 saw, we get into the wonderful listener questions we have been receiving over the break. Our first topic is about buying versus leasing cars, and Ben shares his thoughts on some of the reasons he recently converted to leasing. Our second question is about using credit to invest in a TFSA and acts as a great segue into our main topic for today's show: implementing leverage in an investment portfolio. We discover some fascinating outputs given by a Monte Carlo simulation that compares the reliability of expected returns between diversified and concentrated investment portfolios. Surprisingly, the concentrated portfolio, while unpredictable, actually produces higher returns, even in its worst iterations. We start to think of concentrated portfolios as just another form of leveraging after comparing IUSV to VLUE ETFs, and then move on to the idea of time diversification as it relates to implementing leveraging in Lifecycle investing. As always, we end off with our bad advice of the week, with the 60/40 stocks and bonds model taking centre stage, so hop on and join us for the ride! Lees meer
Key Points From This Episode:
Different corporate cultures and the value of instilling one in your workplace. [0:05:55.0]
A top ten list of strategies for financial planning in 2020. [0:08:48.0]
Asset class returns from 2019 which were very high across the board. [0:15:34.0]
Market unpredictability and why to buy a second-hand car but lease a new one. [0:19:18.0]
When to use your unsecured line of credit to invest in a tax-free savings account. [0:22:49.0]
Three things that structure a belief: values, biases, and models. [0:24:51.0]
Ben's model and expected returns of diversified vs concentrated portfolios. [0:27:49.0]
When concentrated portfolios …
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Financial Theory in Practice: Gaining Insight from Models with Marlena Lee (EP.79)
2 januari 2020 · 52 min
Today on the show we welcome the Head of Investment Solutions at Dimensional Fund Advisors, Marlena Lee. Marlena has a Ph.D. from the University of Chicago where she served as the TA to Eugene F. Fama. She has been at Dimensional for 11 years where a big part of her role is communicating what their research team is doing for the advisors and clients who are using their products. In this fascinating episode, we discuss and define models, factors, and the importance of understanding the risks involved with any investment decision. We talk about the many different reasons why stocks have different returns, and what the research says about underperformance and our expectation of positive premiums. Marlena has some interesting perspectives on whether risk or behavior drives higher returns, and shares some of her biggest lessons gained from working with Eugene Fama, and Dimensional Fund Advisors. Lees meer
Key Points from This Episode:
The uses and limitations of models when making investment decisions. [0:02:30.0]
Understanding the concept of 'factors' and why the word is evolving. [0:04:35.0]
Why Dimensional doesn't combine Price-to-Book with price sales and cashflows. [0:13:10.0]
Marlena's thoughts on whether risk or behavior drives higher returns. [0:15:15.0]
The theoretical rationale for why we expect the value premium to be positive. [0:21:00.0]
The role of company size in identifying differences in expected returns. [0:25:10.0]
The split between dividend income and capital gains: What is the trade-off? [0:27:40.0]
How to choose which Factor Model to use for your investing decisions. [0:31:15.0]
The good arguments for owning bonds in your portfolio as a young investor. [0:35:00.0]
Risk factors and equities when it comes to fixed-income and bonds versus stocks. [0:38:00.0]
Questions investors should be asking about fees, risk, and portfolio worth. [0:41:48.0]
Evidence that investors can use Yield Curve Inversions to time the market. [0:43:33.0]
Marlena shares he…
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2019 Retrospective: A Review and Discussion of the Year's Guest Episodes (EP.78)
26 december 2019 · 56 min
As we see 2019 out and enter a new decade, we thought it only fitting to do a round-up of some of our shows this year. While we had 26 guests throughout the year, we chose 14 that best captured the sensible investing and education-focused spirit of our show. Some of the guests we have included on this special episode include Rob Carrick, from The Global Mail and leading authority on Canadian personal finance, Alexandra McQueen, a teacher at York University, who offers an explanation on the difference between financial economics and financial planning and Jonathan Clements, who explains why the hardest part of investing is keeping it simple. We also share clips about nipping overconfidence in the bud with Daniel Crosby and the next grand challenge of investing with Dave Nadig. This is just a snapshot of some of the incredibly generous people who have joined us this year. We hope that this show has contributed in some way to educating and helping investors make informed decisions and we are excited for what's on the horizon. Happy New Year from all of us here at The Rational Reminder! Lees meer
Key Points From This Episode:
Rob Carrick's insights into whether Canadians have a good relationship with money. [0:04:02.0]
Moira Somers' tips on lifestyle changes to decrease financial stress. [0:07:51.3]
Why 'debunking the nonsense' of financial advice is so important to Barry Ritholz. [0:10:23.0]
The difference between financial economics and financial planning. [0:13:10.0]
Discover the importance of having a clear belief system when it comes to investing. [0:16:51.0]
Criteria other than performance to use to choose a quant fund according to Wes Gray. [0:19:47.0]
Why the most difficult part of investing is trusting in simplicity. [0:23:14.0]
Learn what has surprised David Butler the most about working with academics. [0:28:56.0]
Ben explaining discount rates and factors to his mom. [0:31:58.0]
All factors will underperform at some stage so embracing volatility is key. [0:…
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The Ins and Outs of Estate Planning: Making the Right Arrangements with the Blunt Bean Counter (EP.77)
19 december 2019 · 34 min
On today's episode, we are joined by Mark Goodfield of The Blunt Bean Counter blog to talk about estate planning and wills. Mark is a partner at BDO Canada, a national accounting firm and has created a wealth of content on investing, tax and the relationship between the two. Lees meer
He provides full-service wealth management, but does not advise on nor manage investments. Estate planning is a difficult task because you are confronted with your mortality, but it is hugely important because without a clear-cut plan, those left behind will have to deal with many complications in the midst of grieving. Mark has seen these complications with some of his own clients and the negative effects it has had on them. Along with conventional estate planning, such as drawing up a will, Mark also strongly advises transparency about your finances both with your partner and your children. This will not only ensure that there are no surprises, but also allow them to gain a level of financial literacy to deal with money, if they currently do not have that responsibility. He believes that people are not open enough when talking about money, which has implications long after they are gone. While estate planning is largely to do with finances and assets, Mark does not believe that money automatically correlates with success. This is why it is equally important to consider the legacy you leave behind in other ways, such as strong relationships and giving time to good causes. For this and much more, join us today!
Key Points From This Episode:
What it entails being the executor of an estate. [0:02:47.0]
The implications of dying intestate. [0:04:32.0]
Why it is important to disclose assets liable to probate tax. [0:07:27.0]
Ensure that both spouses are relatively financially literate. [0:08:40.0]
Why you should involve your adult children in financial conversations. [0:11:07.0]
The two ways of consolidating your investment holdings [0:12:23.0]
The tax, legal and personal implications of g…
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Risk Parity, Rental Properties, and the Smith Maneuver (EP.76)
12 december 2019 · 35 min
Welcome to another episode of the Rational Reminder Podcast. We kick off the show today with some great listener feedback before diving into the content of a new podcast by Dr. Laurie Santos called The Happiness Lab. In a recent episode of her show, she gets into the idea of human adaptability to fortuitous or catastrophic events. Our capacity to regulate back to a default state has big implications for dreams of greater happiness through wealth acquisition. Next, we move on to three great listener questions, which by the way will be replacing the investment topic segment of the show from now on. We answer questions about the merit of Ray Dalio's all-weather portfolio, fall back rules for prospective rental property owners, and whether the Smith Manoeuvre is a good move for high-income earners. Next up you'll hear some fascinating statistics about residential property value in relation to homeownership and income in Canada. Rob Carrick's article about how tax-free savings accounts are the greatest Canadian financial success story of the century comes under our scrutiny after that. Finally, we end off with our bad advice for the week, in which we discuss the recent protest by investor advocates to speed up the banning process for early withdrawal fee-charging mutual funds. Tune in for your weekly reality check on sensible investing and financial decision-making for Canadians! Lees meer
Key Points From This Episode:
Three great reviews from our listeners on iTunes. [0:00:15.0]
Human adaptability and how bad we are at predicting our future emotions. [0:03:45.0]
Expected returns concerning risk parity and factor investing approaches. [0:06:32.0]
Cap rates, leverage, and asset-specific risk regarding investing in real estate. [0:14:02.0]
The benefits of the Smith Manoeuvre for those willing to be leveraged investors. [0:20:10.0]
Lifecycle investing and why young people should invest in stocks with leverage. [0:23:59.0]
Homeownership, income, and residential property value…
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Money & Behaviour: Understanding Investing from a Psychological Perspective with Daniel Crosby (EP.75)
5 december 2019 · 40 min
On today's episode, we have Dr. Daniel Crosby joining us for an insightful discussion about the psychology behind investing behaviour. Dr. Crosby is a behavioural finance expert and asset manager who applies his study of market psychology to help people better understand the financial decisions they make and to shed some new light on our ability to be rational. We talk about the inevitability of our emotions and how they impact our actions, but also how they might be leveraged for positive outcomes. As far as behavioural biases are concerned, overconfidence is by far the biggest threat to our investment success, but on the flip side, Dr. Cosby shares why, outside of investing, this trait can serve us really well. We enquire about his thoughts on how wealth changes people's behaviour, on whether the FIRE Movement has some credibility to it, and he explains why having a strong theoretical underpinning is necessary when making decisions based on empirical data. Join us for some more science-based investment advice! Lees meer
Key Points From This Episode:
The rationality of people and the possibility of leveraging emotion in finance. [0:02:26.0]
Research that shows why you should work with a financial professional. [0:06:46.0]
Behavioural biases and overconfidence as the most dangerous one. [0:11:05.0]
Avoiding overconfidence by understanding that investment rules are different. [0:13:47.0]
The extent to which people's behaviour is affected by those around them. [0:17:58.0]
How significant changes in net worth changes a person's investment traits. [0:25:36.0]
Thoughts on the FIRE Movement and how investors should look at risk. [0:28:06.0]
Behavioural and risk-based factors and the necessity of a theoretical underpinning. [0:37:06.0]
And much more!
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Playing with FIRE, Having a Belief System, and Term Life Insurance (EP.74)
28 november 2019 · 52 min
Thanks for joining us for another episode of the Rational Reminder Podcast. We are proud to say that last week's show received our highest amount of downloads yet, with 10 000 in its first week, so a big thank you to our listeners for that. We begin our discussion this week with some takeaways from the Playing With FIRE documentary about doing affordable things that feel good as a way of cutting costs. Next, we dive into some caller questions, discussing whether putting a downpayment on a rental property as a way of parking cash until you have enough to scale up to a bigger property would be a good idea. We also discuss whether it would make sense to invest in an individual Canadian bank stock based purely on the track record of our banks, which brings up some interesting points about how stocks work. We then dive into our main topic by beginning with some pointers on choosing the best belief system to evaluate investment strategies from, comparing our 5-Factor model with the Quality model and Jim Simons's too. This leads into a deep dive we take into the legitimacy of the definition of quality given by a variety of American and Canadian funds. We share our main takeaways from this discussion with you which should prove very useful. Our planning advice for the week is around getting insurance for income replacement in retirement. Finally, we make a lot of good out of some bad bank advice by drawing from our recent research into reverse mortgages and annuities, so don't miss out on this one! Lees meer
Key Points From This Episode:
Lessons for cutting spending in the Playing with FIRE [0:05:30.0]
Whether a rental property is a good hedge against rising real estate prices. [0:12:15.0]
The effect that leverage would have on equity through market fluctuation. [0:13:50.0]
How stock returns work and why not to invest in individual Canadian banks. [0:15:47.0]
The challenge of choosing a belief system to evaluate investment strategies. [0:18:43.0]
An explanation of the Market …
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Finance for Physicians: Personal Finance for High Income Earners with the Loonie Doctor (EP.73)
21 november 2019 · 41 min
In today's episode, we are joined by an exciting guest, The Loonie Doctor, of The Loonie Doctor blog to talk about his work not only on physician finance but also on holistic wealth. A physician by training, The Loonie Doctor has scaled back his practice to put more work into the blog and financial education. He masterfully balances precise technical advice on topics like tax alongside 'softer' aspects of money, such as how it affects relationships and other aspects of human capital. These insights are useful for many, but particularly for physicians who often to do not talk about money because of the nature of the work they do. The Loonie Doctor believes that in not talking about finance, it adversely affects physicians' ability to perform at their peak. Finance, however, is not the only marker of wealth and The Loonie Doctor offers a holistic wealth framework in which wealth can be measured in a variety of ways. He also provides a host of other insights, such as advice for DIY investors, how to avoid social pressure around spending and much more. For all this, join us today! Lees meer
Key Points From This Episode:
Some of The Loonie Doctor's background and what lead him to starting the blog. [0:02:20.0]
The two big reasons that it is important for physicians to talk to one another about money. [0:03:47.0]
Wealth must be looked at holistically as it includes financial, human, economic and social capital. [0:06:15.0]
How individual spending decisions compound and have a larger economic effect. [0:08:10.0]
What can be done to build a healthy career that inspires and adds value to your life. [0:11:16.0]
Which factors to account for when making long-term insurance decisions. [0:13:13.0]
Reasons why whole-life insurance should not be a catch-all financial plan. [0:17:06.0]
How to avoid social pressure and spending large amounts of money. [0:19:51.0]
Financial decisions should be understood in relation to non-monetary value they add. [0:22:48.0]
How The Loonie Doctor u…
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Interest Rates, Optimal Asset Location, and Reverse Mortgages (EP.72)
14 november 2019 · 43 min
Today on The Rational Reminder Podcast, we talk about the relationship between asset allocation and outcome, the ins and outs of reverse mortgages, and finally, life insurance (or lack thereof) in Canada. However, we begin by sharing some interesting points covered in a recent Barry Ritholtz interview with Eugene Fama and David Booth for his Masters in Business show. We talk about how Booth started the first index fund and discovered the value factor, and quote some of Fama's classic perspectives on behavioural finance and market bubbles. On the topic of asset location, Ben shares some of the findings of his recent research. He weighs in on his surprising discoveries about how to go about investing stocks and bonds in RRSP and taxable accounts to get the maximum yields. One of his main takeaways is the concept of putting bonds in your RRSP to intentionally trick yourself into a more aggressive portfolio. Regarding reverse mortgages, we begin with some definitions and explanations of why they might be beneficial, and then cover the question of whether or not they are the symptom of a 'debt-addicted' society. Finally, we end off by discussing a recent study by Policy Advisor which found some shocking facts about how Canadians are drastically underinsured. For all this and more, join us today! Lees meer
Key Points From This Episode:
The difficulty of predicting stock returns based on rate changes. [0:02:27.0]
Discussing the Barry Ritholtz interview with Eugene Fama and David Booth. [0:05:44.0]
Booth started the first index fund and discovered of the value factor. [0:07:43.0]
The fact of bubbles only being such in hindsight according to Fama. [0:08:51.0]
Efficient markets aren't necessarily rational. [0:09:18.0]
The reason for risk-based and behavioural explanations for asset prices. [0:09:34.0]
The value premium does not fluctuate in cycles according to Fama. [0:09:47.0]
Considering the role of expected return in making investment decisions. [0:10:21.0]
Ben's video on…
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Everything that you could ever know about ETFs with Dave Nadig (EP.71)
7 november 2019 · 48 min
Today we welcome Dave Nadig onto the show, who joins us off the back of a brilliant presentation he gave at the Wealth Stack conference last month in Scottsdale. Dave is the founder of etf.com and has had key positions at FactSet, Barclays Global Investors, and Cerulli previously. Today Dave sits down to talk about the difference between ETFs and mutual funds, EFT product saturation, the coming of Direct Indexing and well as non-transparent active funds, and risk probabilities in different asset security options such as gold and stocks. He also debunks the myth that ETFs lead to a pricing bubble, highlighting 401(k)s as part of what might be creating this illusion of top-heaviness. He also has a brilliant perspective on trusting the junk bond through a seeming disconnect, which is really one of timing that actually creates opportunities for price discovery. Dave also spends some time on the subject of his belief that the science of investing is largely figured out. He believes therefore that human behavior and decision making through a lifetime investment path is far more mysterious, and highlights the need for good financial advisors in this respect. Join us to take a deep dive into the world of ETFs with Dave today! Lees meer
Key Points From This Episode:
Dave's perspectives on content and education in improving investor outcomes. [0:01:58.2]
ETFs as a vehicle for trading multiple stocks, or wrappers for holding securities. [0:03:36.9]
Authorized participants are what makes ETFs different from mutual funds. [0:04:46.1]
Why the timing disconnect in junk bonds creates a vector for price discovery. [0:09:33.0]
Why 401(k)s have caused the belief that ETFs are causing a price bubble. [0:25:50.0]
How we have figured out investing but not financial advising. [0:14:40.8]
Different ETFs benefit the market by suiting different investor classes. [0:17:49.6]
The relationship between ETF indexes and material yields. [0:19:38.6]
ETF value systems and the benefit of sticking to…
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Fee-only Financial Planning, Home Country Bias, and Big RRSPs (EP.70)
31 oktober 2019 · 56 min
On today's episode, we cover a variety of topics, such as some tips for DIY investors, highlights from a conference Cameron recently attended, home country investment bias and whether it's possible to have too much money in your RRSP. We begin first by talking about what DIY investors can do to ensure that they are investing to the best of their abilities. As people who work in investment daily, we often forget how tricky a terrain it can be to navigate if you are not armed with all of the knowledge, so we hope to pass some of it on to you. After that, we move onto the lessons Cameron learned from the Dimensional Advisors conference. We unpack ideas such as why he believes the world is 'running towards factors,' how Dimensional is leveraging academic research to inform their work along with some other highlights. Following on from that and picking up on what was spoken about at the conference, we delve into the pros and cons of home country investment bias. In some instances, this bias makes perfect sense, both from a returns and tax perspective and in other instances less so. We take you through some of these scenarios and what they mean for an investor looking to diversify. And finally, in the planning portion of our show, we tackle RRSPs, whether it is possible to overinvest in them, how they compare to other investments and much more. To learn more, join us today! Lees meer
Key Points From This Episode:
Our team is growing and we are looking to add some extra positions at PWL. [0:01:32.0]
There are many challenges that DIY investors face not having access to professional advice. [0:05:00.0]
How to overcome asymmetries of financial knowledge between spouses and within families. [0:07:30.0]
Some of the fee-only planners available in Canada that we recommend. [0:08:49.0]
Robb Engen's services and his discount for Rational Reminder listeners. [0:09:42.0]
What factors are and why the world is 'running towards' using them. [0:12:38.0]
Dimensional provides a framework f…
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Quantitative Investing: The Solution to Human Bias with Wes Gray (EP.69)
24 oktober 2019 · 53 min
Today we are joined by Wesley Gray who is the CEO of Alpha Architect, a firm in the US that specializes in concentrated factor strategies. Having completed his MBA and PhD at the University of Chicago – the Harvard of the finance world – Wes is an authoritative voice when it comes to quantitative research and factor investing. Incredibly, he took a 4-year break during his PhD, joined the marines and went to Iraq, and has also written several books. He went from value investor and stock-picker to having a strong quant focus and realized that it was possible to eliminate the human biases while still capturing the factor premiums. Our talk with Wes illuminates the nuanced nature of factor investing, behaviour versus risk-based factor premiums and active management versus passive and indexing. He discusses the process of collecting data for his PhD, the rules according to which they structure portfolios, how their boutique firm differs from larger advisor companies and who their ideal client is. Wes also shares his views on selecting the best quant model, hedge funds, value premiums and market-cap indexing. Join us for another insightful episode! Lees meer
Key Points From This Episode:
Wesley's experience as a stock picker and riding the wave of small-cap value. [0:03:31.0]
The Value Investors Club as a data source to test stock-picking skills for his PhD. [0:06:43.0]
From stock picker to a quant and realizing the need to eliminate biases. [0:09:38.0]
The rules that govern how they build portfolios in his firm Alpha Architect. [0:14:26.0]
Comparing Alpha Architect to Dimensional Fund Advisors and AQR. [0:17:13.0]
Understanding reliability in the context of relativity and defining their ideal client. [0:22:28.0]
Advice for retail investors about quant shops and choosing the best quant model. [0:26:55.0]
Wesley's view on hedge funds and their strategies. [0:32:57.0]
Why education rather than assets should determine the active risk that is included in a portfolio. [0:36:2…
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Listener Questions and Re-Framing Risk (EP.68)
17 oktober 2019 · 48 min
Welcome back to the podcast everybody, we have another great round-up episode for you where we field questions that you sent in and cover a bunch of things we think you need to hear! We discuss how you should weight your stocks and bonds ratio and times that you could think about changing it, we also talk about index funds, Michael Burry and why his reputation is a bit overstated. Then we get into the different types of risk! We cover volatility, uncompensated risk, skewness, and inflation and help you think about each and the impact that they may have on your portfolio. The conversation then turns to planning, longevity, and sustainability and we talk about how to prepare for your last years cleverly and realistically. Goals are so important when laying out a sustainable strategy and we give you a bunch of questions to ask yourself to make the task a bit easier. We finish off with another edition of last wee's worst advice and this time around we are talking about some questionable actions and remarks from TD Ameritrade. For all this and more, join us on the Rational Reminder, today! Lees meer
Key Points From This Episode:
Considering a bond to stock ratio and when you might adjust it. [0:01:22.7]
Questions when switching to index investing and what to hold on to. [0:06:04.3]
The Michael Burry question and how much index funds affect prices. [0:11:46.0]
Risk 101; going through all the different types of risk. [0:18:07.6]
Identifying which risk you are actually averse to and the results of this. [0:31:04.2]
Planning and annuities; longevity risks and age-related questions to ask yourself. [0:32:48.1]
Increasing the sustainability of your investments and the importance of goals. [0:36:46.9]
Last week's worst advice! TD Ameritrade's confusing decisions around fees. [0:42:01.8]
Links From Today's Episode:
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.c… -
The Pursuit of Finances and Fun with Jill Schlesinger (EP.67)
10 oktober 2019 · 40 min
From a trader on Wall Street to a financial advisor with her own firm, our guest today, Jill Schlesinger, has accumulated a lifetime of knowledge in the investing and financial world. Today she is a household name and well-known media personality, appearing on a variety of CBS shows and hosting her own podcast called Jill on Money. But she is far more than an investment expert: she also has a ton of insight into people's emotional and psychological responses to money, sharing with listeners those areas that people tend to struggle with most when it comes to their financial lives. Jill also weighs in on the current talk about the inverted yield curve and the coming recession and gives her educated opinion about money in marriage, DIY investing, robo-advisors, buying versus renting and the FIRE movement. Be sure to join in our conversation! Lees meer
Key Points From This Episode:
Common blind spots that cause smart people to make poor financial decisions. [0:03:33.1]
Starting off as a trader and learning how different trading and investing are. [0:05:09.1]
A balanced perspective on the inverted yield curve and the predicted recession. [0:08:11.1]
Understanding that investing is half science, half art. [0:12:10.1]
Couples who think differently about money and teaching the younger generation. [0:17:06:1]
Weighing up DIY investing and acquiring the services of a financial advisor. [0:21:11.1]
Robo-advisors and the mass democratization of financial management. [0:25:46.1]
Thoughts on whether to buy or rent a home and the FIRE Movement. [0:28:26.1]
Interviewing Julie Andrews and a perspective on what it means to be successful. [0:35:50.1]
And much more!
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Asset Allocation Funds, Private Equity IPOs, and The Efficient Market Hypothesis (EP.66)
3 oktober 2019 · 33 min
Welcome back to Rational Reminder Podcast! We kick off today's episode with a discussion about the gap between investor performance and fund performance, the potential reasons why asset allocation funds produced a positive gap and the role that timing and volatility play in a negative behaviour gap. IPOs have been in the media a great deal lately – and not for particularly positive reasons and we tackle the topic with reference to specific companies. We also talk about Dimensional's paper on the issues with IPOs since the early nineties and then we introduce you to The Fama Portfolio, a valuable resource that we will likely quote quite a bit from in the future! As we have mentioned before, the use of empirical findings is incredibly limited without a theoretical framework and we talk about why the conversation around the efficient market hypothesis needs to change and why general statements about markets are not to be paid too much attention to. We discuss the bad advice for the week and the importance of goal setting in retirement. Lees meer
Key Points From This Episode:
The news item for the week: the gap between investor and fund performance. [0:01:33.0]
Possible reasons why asset allocation funds produced a positive gap. [0:03:09.0]
How timing and volatility play into the negative behaviour gap. [0:06:22.0]
All the private equity venture capital IPOs that's been covered in the media lately. [0:06:51.0]
Companies who took large haircuts from their last private valuations before IPO. [0:08:05.0]
How 1.3% of stocks delivered all the excess return between 1990 and 2018. [0:11:52.0]
Dimensional's findings regarding IPO issues in the States since 1992. [0:13:01.0]
The pyramid that should be used in making investment decisions. [0:16:06.0]
The complex yet high-value insight to be gained from The Fama Portfolio [0:18:05:0]
Why it is vital for empirical findings to be back up by a theoretical framework. [0:20:32.0]
The paradox of the efficient market hypothesis and wh…
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Investing Based on the Evidence Pyramid: A Few Lessons from the Medical Profession with Dr. Wendall Mascarenhas (EP.65)
26 september 2019 · 37 min
Our guest today on the Rational Reminder Podcast is Dr. Wendall Mascarenhas. Wendall is a listener, DIY investor a medical professional. He actually reached out to us on Twitter and suggested this episode, a listener-centric discussion as well as one comparing the different approaches to evidence from the medical and the financial communities. We thought this was a great idea and the perspective that Wendall offers is very illuminating and thought-provoking. We discuss some of Wendall's own experience and background in both investing and medicine and from there go onto a more theoretical discussion of evidence and literature, asking the question why the financial industry is not more concerned with data. Wendall lays out the evidence pyramid and explains a few of its layers, we discuss a few tips and think about the extent to which DIY investors should involve themselves in their money with things like factor investing. Wendall also offers some of his thoughts on financial advice and the emergence of new information. For this fresh and insightful chat, be sure to join us! Lees meer
Key Points From This Episode:
Why Wendall chose to reach out to us over Twitter. [0:03:01.8]
Wendall's medical background and the perspective he brings to investing. [0:04:00.1]
Index funds and diversified portfolios instead of active management. [0:06:41.7]
The role of evidence and literature in medical prescriptions and treatment. [0:08:17.0]
Trying to account for the differences in approach to medicine and investing. [0:10:58.2]
A description of the different levels of the evidence pyramid. [0:12:23.5]
Five tips for do-it-yourself investing from our guest! [0:19:20.5]
Should you worry about factors as a DIY investor? [0:24:24.0]
Wendall's thoughts on the value of good financial advice. [0:26:17.7]
How new information is circulated in the medical community. [0:30:11.0]
Why expert opinion is the least valuable type of evidence. [0:31:49.7]
Wendall's definition of success in his life.…
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Back to the Basics: Dividends and Explaining Factors to Benjamin's Mom (EP.64)
19 september 2019 · 44 min
Michael Burry says we should get out of indexing. Jim Cramer says it's time to jump in. These are interesting times in the world of investing! On today's episode, we discuss Burry's recent claims about passive investing and advise on a plan of action should he turn out to be right. Benjamin recently posted a new video on dividends, and we have a conversation about the responses the video triggered and give some good reasons for our stance about the irrelevance of dividends. We also talk about negative interest rates, how they affect that market and explain why it's not a good idea to do day trading for a living. In the second part of the episode, we are thrilled to be joined by Benjamin's mom to whom we will attempt to explain the ABCs of factors. Following many requests from listeners to discuss factors in layman's terms, we hope that our explanation today will shed some light on the topic! Lees meer
Key Points From This Episode:
The irrelevance of dividends and the debate our video provoked. [0:01:54.0]
How much a portfolio should be tilted towards each factor and the overlaps. [0:05:57.0]
A balanced perspective on Michael Burry's assertions about index funds. [0:09:43.0]
What you should do if Michael Burry is right and why you should do it anyway. [0:15:25.0]
How negative interest rates affect a global fixed income allocation. [0:17:57.0]
Some interesting facts about day trading for a living and why to stay away. [0:22:05.0]
Unpacking the terms "discounted cash flow" and "discount rate". [0:26:58.0]
How the risk of a stock is determined and what the market mechanism does. [0:30:37.0]
Where the factors come from and the different types of risk. [0:33:26.0]
Using factors to explain the differences in returns between two portfolios. [0:40:03.0]
The crux of why you want a diversities portfolio. [0:41:20.0]
And much more!
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Sustainable Investing: A Philosophical and Environmental Perspective on Your Money, with Tim Nash (EP.63)
12 september 2019 · 50 min
We have a really special episode in store today as we welcome Tim Nash, the Sustainable Economist! Tim shares a vast amount of knowledge and ideas with us on how investors wishing to put their money where their heart is can go about investing more ethically and sustainably. We hear about Tim's journey into investing and economics and how he wound up doing the work he currently does, helping investors clarify where their money is going and how to put it portfolios that are more aligned with their beliefs. He unpacks how these ideas and actions can have an impact and what it would take for some kind of systemic shift towards more sustainable industry and companies. We discuss the use of other modes of change as well as the personal practice of investors versus the placement of their money. Tim does such a great job of explaining how he goes about assessing different companies and portfolios and filtering which meet the criteria that he would suggest to his audience. The last part of the episode contains a really impressive argument from Tim around how investing this way can also be beneficial for strictly economic reasons and that it would suit all people to consider the factors he is espousing. For an inspirational chat with a truly great guest, listen in today! Lees meer
Key Points From This Episode:
Tim's education and how he became The Sustainable Economist. [0:01:49.6]
The actual service that Time provides for his clients and audience. [0:04:18.1]
How does this type of sustainable investing have an impact? [0:05:41.9]
Considering the efficacy of other means to bring about change. [0:11:06.4]
Squaring personal practices and investing principles of an individual. [0:14:37.3]
The criteria that Tim uses to assess items in a portfolio. [0:21:17.1]
Tim unpacks his experiences of anarchist portfolios! [0:28:54.8]
Allowing ethical investors to feel good about their portfolios. [0:31:50.6]
The usefulness of so-called ESG screening for finding robust companies. [0:33:41.3…
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The Rational Round Up: Tax Loss Selling, Gold, Michael Burry and More! (EP.62)
5 september 2019 · 39 min
Welcome back to another episode of the Rational Reminder! We are doing another variety show for all of you and this week we cover some news, current affairs, questions and of course our staple bad advice of the week! We start the show looking at the restructuring of swap-based ETF's from Horizons before looking at Michal Burry's latest commentary and predictions. From there we move onto John Rekenthaler's recent article on Morningstar about Canadian financial advice and what it is lacking. We discuss gold and why it is still not a good investment choice for almost all situations and even draw on some inspiring words from Warren Buffett on the subject! The conversation then turns to tax-loss selling; we unpack how it is possible to use this tactic to your advantage and look at some of the specifics that it entails. Lastly. we cover a particularly bad piece of advice that had the Twitter community up in arms recently! So for all of this and a bit more, listen in with us today! Lees meer
Key Points From This Episode:
Horizons' restructuring of swap-based ETF's and what this means. [0:01:48.5]
Michael Burry says that index funds are creating a bubble in large stocks. [0:05:2]
'Canadian Financial Advice, Good Intentions but Bad Results'. [0:07:51.4]
Warren Buffet's classic gold explanation from a while back. [0:11:17.7]
The example of Brazil; hyperinflation and the price of gold. [0:14:38.2]
Tax loss selling and knowing the ins and outs of how much you are paying. [0:21:37.5]
Looking at some examples of tax loss selling and how they play out. [0:26:32.6]
The best hypothetical times to do a tax loss sale. [0:31:19.8]
This week's bad advice! [0:33:50.8]
And much more!
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Ted Seides: Much More Than a Betting Man (EP.61)
29 augustus 2019 · 42 min
We have another phenomenal guest joining us on the podcast today. You might know Ted Seides from his famous bet with Warren Buffett or, more recently, from his widely successful Capital Allocators Podcast. Ted is what we would call a classically impressive guy, having studied at both Ivy League frontrunners Yale and Harvard and having founded Protégé Partners, an asset management and advisory firm that specializes in hedge funds. In addition, he has trained under the legendary David Swensen, and together with his experience and training, has become a big name in the investing world. On this episode, he discusses the wealth of knowledge he has gained from David, the criteria for selecting a fund manager and how to approach evaluating the performance of that manager over time. Contrary to the assumptions about his views on index funds, he explains what he believes about them and whether he thinks the market is likely to become saturated. We then get into a conversation about the investment habits of the wealthy, why relationships are so important in this business and why he would not make the same bet again. Don't miss out on this exciting conversation with Ted Seides! Lees meer
Key Points from This Episode:
What Ted learned from David Swensen and his core beliefs about investing. [0:03:06.0]
The foremost criteria when selecting a manager and establishing your beliefs. [0:05:04.0]
Why endowment institutions and strategies are only beneficial for a select few. [0:10:59.0]
Formulating a hypothesis to measure the outcomes of your manager. [0:13:31.0]
Whether retail investors saving for retirement should consider hedge funds. [0:15:46.0]
Ted's bet with Warren Buffett and his actual take on index funds. [0:19:02.0]
Fee compression in hedge funds and whether the market can become index saturated. [0:20:12.0]
Why there is still a significant investment in actively managed mutual funds. [0:24:33.0]
Observations about how people invest their money as their wealth increases. […
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Valuation Theory and the Imminent Recession (EP.60)
22 augustus 2019 · 40 min
Welcome back to the Rational Reminder everybody! We are taking this episode to round up all the recent goings-on and tackle a few residual issues that we believe need some attention. We start off by contemplating how much we have both been learning with the wealth of guests that come through our doors. We would never be confronted with this many ideas and inspiration if it were not for this great platform on which we find ourselves! From there we go on to discuss all the recent talk of a recession and the many assumptions that seem to be being made. Here at the Ration Reminder Podcast, we want to try and dissuade you from thinking you can easily predict the movement of the markets or believe those that say they can. It is just not that straightforward. Most often, a recession is only noticeable during or even after it has occurred. Rather stick to a good, diversified strategy without trying to guess and gamble on questionable information. The conversation also covers the portfolio changes from Wealthsimple before Benjamin does what he does best and explains valuation theory for all of us! So for all this and a few more goodies, be sure to listen in! Lees meer
Key Points from This Episode:
Effects of hosting this podcast on our own money minds. [0:00:25.4]
The impending recession that everyone is talking about. [0:03:24.5]
Wealthsimple portfolio changes this week and the paper they published. [0:08:29.4]
Risk, return, low volatility, and balancing these in your favour. [0:17:32.2]
The theoretical underpinning of factor investing and valuation. [0:18:39.8]
Fama and French's Five Factor Model. [0:26:02.5]
Retiring early; spending rules for the FIRE movement. [0:28:18.2]
More viable alternatives for saving and preparing for retirement smartly. [0:33:21.6]
This week's bad advice! [0:35:28.2]
And much more!
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Financial Economics and Annuities: Rational Planning for Retirement (EP.59)
15 augustus 2019 · 39 min
Welcome to another episode of the Rational Reminder Podcast! We have a fantastic guest joining us today to talk about annuities, or in more general terms, pensionization. Alexandra Macqueen is certified financial planner, who is also a financial author, editor, York University educator, consultant, and speaker. Alexandra co-wrote a book with Dr. Moshe Milevsky called Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life, an incredible resource on our topic today. In this episode, Alexandra talks about the important distinction between financial economics and financial planning, the former being much more rational and quantitative than the latter, which is largely based on folklores and rules of thumb. We discuss the concepts of retirement sustainability quotient (RSQ) and financial legacy value (FLV) and the impact they have on each other, before diving into explaining what annuities are and how they are meant to function. She also advises on the use of the GIC ladder, copycat annuities, and considerations for deferring your CPP. Don't miss out on this insightful conversation! Lees meer
Key Points from This Episode:
The distinction between financial economics and financial planning. [0:02:38.8]
Product allocation and how it relates to pensionization. [0:04:15.8]
The retirement sustainability quotient (RSQ) and what it measures. [0:06:46.3]
How the RSQ affects your financial legacy value (FLV). [0:07:45.7]
The idea of eliminating the probability of ruin from your portfolio. [0:09:39.6]
What exactly is an annuity and how does it work? [0:10:15.3]
The type of person and age group that annuities appeal to. [0:13:53.2]
Why allocating to an annuity can allow you to spend more on your overall capital. [0:16:20.0]
The problem with the folklore rules around appropriate withdrawal rates. [0:19:47.8]
Suggestions for annuities for wealthy people under 50. [0:23:08.3]
Why a GIC ladder is not a guaranteed stream of income. [0:26:04.9]
…
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The Ins and Outs of Real Estate: Mortgage Rate, Rentals, REITs and Variable Annuities (EP.58)
8 augustus 2019 · 30 min
On today's episode, Benjamin and Cameron are talking real estate, specifically mortgage rates and REITs. For the first time since the early 90s, fixed mortgage rates are lower than variable ones, which have always been the popular choice. However, due to the fact that Canada's yield curve is inverted, short term rates higher than their long-term counterparts. This is not usually the case, which makes it a great time to consider a fixed term mortgage, bearing in mind that it requires some lifestyle considerations. Benjamin and Cameron also provide some insights into the rental property market changes since 2015, with some astonishing figures. They then discuss REITs, which many think should be considered their own asset class. While it is often recommended to have REITs in your portfolio, research is starting to show that you are taking a great deal of risk you are not being compensated for. This means you may be better off investing in other options such as high exposure bonds which bear much less risk. For all this and much more, join us today! Lees meer
Key Points From This Episode:
Why fixed-rate mortgages are now lower than variable-rate ones. [0:03:58.0]
Interest rates went up, but the shape of the yield curve changed as well. [0:06:25.0]
Property prices have almost doubled relative to rent since 2015. [0:07:12.0]
What a rental wage is. [0:12:48.0]
What a REIT is and the benefits of investing one in your portfolio is. [0:17:05.0]
Why the risk of a REIT may not be justifiable. [0:21:01.0]
Variable annuity investors routinely outperform mutual fund investors [0:26:23.0]
And much more!
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A Masterclass in Business: Money Philosophy with Barry Ritholtz (EP.57)
1 augustus 2019 · 1 uur 11 min
On today's episode we are so happy to be joined by none other than Barry Ritholtz! As the founder and CIO of Ritholtz Wealth Management, host of the Masters in Business Podcast and regular financial blogger for more than 15 years, Barry is someone we have been dying to speak to on the show and who we have taken loads of inspiration from over the years. We talk to Barry about his own podcast which has been going strong for years now and is just about to reach its 250th episode! He also explains the beginnings of his firm and how his role has evolved in it since it started. From there, the conversation turns to the different parts of an investing philosophy we and Barry pretty much share and we ruminate on the state of the financial industry in US and Canada currently. We all feel that it is surprising that brokerage firms still find business in this day and age, when it has been shown so many times, for an extended period of time to be a far inferior business model for clients. Barry offers some pretty sensible advice on how to pursue financial growth in the long term and shares how RWM approaches client acquisition. For all of this and so much more, be sure not to miss this great episode! Lees meer
Key Points From This Episode:
Why Barry feels he has the easiest gig in podcasting. [0:03:17.6]
The inspiration behind starting the firm and Barry's day to day work. [0:05:53.9]
The RIA model versus the brokerage model in investment firms. [0:12:45.4]
How Barry and the firm have chosen to run their business model. [0:16:03]
Specific portfolios at Ritholtz and the philosophy behind them . [0:21:18.8]
It's no good breaking a record if you crash straight after! [0:28:13.1]
How Barry and the firm find customers and the client conversations they have. [0:34:04.2]
Behavioral counseling as RWMC's biggest value proposition. [0:42:34.8]
Barry's opinions on robo-advisors and the factors to consider. [0:47:06.2]
Why are there still commission based advisors in 2019? [0:50:38.9]
T…
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GIC's, Portfolio Questions and Education Saving Plans: What's Right for You in Your Retirement and Education Preparations? (EP.56)
25 juli 2019 · 38 min
On the show today we are going back to basics, just Cameron and Benjamin going through some useful topics for your financial benefit! We start talking about GIC's and the article on MoneySense that led to this conversation. GIC's have a somewhat mix and match reputation, one which we believe has been often misunderstood and misrepresented. We try to show in which ways people have been misled into thinking that GIC's are the best option when, we believe, they are not. From there we turn to more general portfolio ideas, comparing the performance of the S&P 500 over time and drawing on a very useful study that illuminates the index's limitations. Our last topic for today is around saving for college and RESP's or registered education saving plans. We talk about asset allocation, how to think about starting and best practices when drawing on these funds. We finish off the show with some bad advice regarding dividend investing that actually referenced a video we made! So for all and a bunch more great stuff, be sure to tune in today! Lees meer
Key Points From This Episode:
Our recent summer travels and getting away from it all! [0:03:02.4]
The article by Jonathan Chevreau that sparked part of today's discussion. [0:05:46]
GIC's, long term returns and the financial implications of your choices now. [0:07:15.2]
Reasons why returns on GIC's can be misleading in the short term. [0:11:02.7]
The S&P 500's performance against other portfolio options. [0:13:56.3]
Market drops and risk appetites during panic periods. [0:19:15.2]
Saving and drawing on college funds and education plans. [0:22:40.2]
Asset allocation and the best way to think about covering costs. [0:27:41.1]
Withdrawing funds and making the most of unused college savings. [0:31:21.3]
This week's bad advice! An argument about dividend investing. [0:33:30.8]
And much more!