Behavioral Challenges of Index Investing

In this special Investing 101 episode, the Rational Reminder hosts—Ben Felix, Dan Bortolotti, and Ben Wilson—team up to revisit the fundamental concepts that every investor should understand before diving deep into portfolio construction or market theory. Drawing from Ben's original "Investing 101" presentation and years of client experience, the trio lay out why investing matters, how inflation shapes your future, what stocks and bonds really represent, and why a disciplined, evidence-based approach beats prediction and luck every time. They unpack core ideas like financial independence, risk versus volatility, global diversification, and market efficiency, then connect them to practical tools like ETFs and Vanguard's asset allocation funds.

Key Points From This Episode:

(0:00:24) Why this episode revisits "Investing 101"—inspired by a listener still unsure how to begin.

(0:05:03) Why investing matters: inflation erodes purchasing power, investing fights back.

(0:06:33) The math of compounding: how a 7% return versus 2% changes your retirement entirely.

(0:10:57) Saving early and often: habit formation beats late-life catch-up.

(0:11:53) The trade-off between saving more and taking more investment risk.

(0:14:04) Utility theory and the psychology of saving when young.

(0:16:39) Marginal utility: when more money no longer adds happiness or purpose.

(0:20:47) Stocks and bonds explained: ownership versus lending and the role of each.

(0:23:11) The Japan story: a cautionary tale about chasing past winners.

(0:26:49) Narrative investing: why investors love stories and get burned by them.

(0:30:19) Market capitalization weighting—how global prices tell you what to own.

(0:33:42) The stock market is not the economy: why news headlines mislead investors.

(0:37:14) The power of diversification: why most individual stocks fail—and a few drive all returns.

(0:41:56) Bonds, volatility, and inflation risk—why "safe" assets aren't risk-free.

(0:44:41) Building your mix: matching volatility tolerance with long-term goals.

(0:45:10) The behavioral challenge: risk is only useful if you can stay invested.

(0:48:08) Active management as gambling: adding unrewarded noise to your portfolio.

(0:51:43) The paradox of skill: why markets punish even brilliant active managers.

(0:55:51) Efficient markets and Eugene Fama: the evidence that prices already reflect all information.

(1:00:20) How small fees compound into big losses over decades.

(1:03:07) The behavioral hurdle of indexing: trusting a system with "no one at the wheel."

(1:04:54) The real value of financial advice: behavior, discipline, and holistic planning.

(1:07:24) Implementing the plan: how asset allocation ETFs simplify everything.

(1:11:41) Rebalancing and emotion: why automation protects investors from themselves.

(1:14:24) Paying a bit more for simplicity: why 0.10% in fees can be worth it.

Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Dan Bortolotti — https://pwlcapital.com/our-team/

Dan Bortolotti on LinkedIn — https://ca.linkedin.com/in/dan-bortolotti-8a482310

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)