Build Wealth Canada Podcast

Kyle Prevost, expert on retirement planning in Canada, discusses the applicability of the 4% rule for Canadians, adjustments for inflation, and alternative spending strategies based on market performance. They also explore the value of side income and passion projects in retirement, while highlighting upcoming events and thanking sponsors.

With the multiple interest rate hikes that we’ve been experiencing here in Canada, many Canadians have seen their monthly cashflow take a hit, whether it’s because you have a variable rate mortgage, a line of credit, or other forms of debt. So what are your options if you’re paying more than you’d like on your interest payments, or maybe you have that mortgage coming up for renewal and you’re going to have to make that multi-thousand dollar decision on how you’re going to proceed? Should you go with a fixed or variable rate mortgage when interest rates are high like they are right now? Keep in mind too that if you have a mortgage coming up for renewal, then you won’t be able to get as good of an interest rate upon renewal, as you did when you first got that mortgage years ago, due to all these massive interest rate hikes that we’ve been experiencing. To tackle all of this, I’ve brought on an expert that deals with these types of interest and mortgage related questions every day, and that is the show’s resident mortgage expert, Sean Cooper.  Sean is who I go to and who I send friends and family to for any mortgage related questions. He is the bestselling author of the book Burn Your Mortgage, and he is an independent mortgage broker so he’s not tied to any one particular lender which gives him access to the top mortgages available in Canada. Sean has also been kind enough to answer for free, any questions that you, the Build Wealth Canada listeners have. I’ve set up a special page for him so all you have to do is go to buildwealthcanada.ca/sean, and there you can send him a message with your questions, or, if you prefer, you can even pick a time on his calendar on that page for a phone or video call to get your questions answered with him live, for free. Sean is a licensed mortgage broker too, so I definitely also encourage you to reach out to him if you’re looking to get a new mortgage or if your mortgage is coming up for renewal, as at the very least he’ll be able to provide you with a short list of the best mortgages that he’s been able to find across all of Canada from the 60+ lenders that he monitors. None of this costs you anything, and there’s no obligation to get your mortgage through him or use any of those suggested mortgages. That link again to get in touch with Sean to get your questions answered, and get his research on the best mortgages that he’s been able to find in Canada is over at  buildwealthcanada.ca/sean. Enjoy the episode. :) Questions Covered:    After pausing rate hikes since January, the Bank of Canada shocked many by starting to raise interest rates again in June. What was behind this? What does the future hold? Some homeowners in Canada are facing a doubling or more of their mortgage rates at renewal. What options do homeowners have? For those in that situation where they’ll be dealing with deciding between a fixed vs variable mortgage, how should they be approaching this dilemma, factoring in the current interest rate environment? When you and I spoke offline, you mentioned that there is a really big missconception that some people have when it comes to mortgages, that could really be causing them to overpay on their mortgages. Can you speak to that? With higher interest rates, it’s not all doom and gloom since tools like high interest savings accounts and GICs are now paying out more to us consumers compared to what they were offering when we had those rock bottom interest rates. Are there any tools or strategies that you are using yourself or are fond of, when it comes to taking advantage of these higher interest rates and how are you investing these days when it comes to the fixed income portion of your portfolio? (ex. HISA vs GIC vs Bonds). Are you buying more shorter-term or longer-term investments? (ex. short term vs longer term bonds/GICs etc.) If any of the listeners have some form of debt, and they suspect that maybe they aren’t paying the absolute lowest amount that they could be paying on that debt (it doesn’t have to be some kind of really high credit card debt, just any debt that they think seems high), what are the tools or options available to them, here in Canada, in terms of taking that higher interest debt and turning it into the lower interest debt? For anybody listening that has questions for you, or would potentially like to work with you or see your research on the top mortgages that you’ve been able to find here in Canada as a mortgage broker, can you tell us more what the process is for Build Wealth Canada listeners to get a free call with you?  

Today we have Canadian author and speaker Fred Masters on the show. Fred has been a professional financial educator for decades here in Canada. He speaks at different universities to students and alumni, teaching financial wellness. In this episode, he’s going to share his findings on: What he’s found to be the main problem areas that tend to prevent us Canadians from reaching financial independence years earlier.  What type of investing he has found to be the most effective in helping us achieve early retirement as quickly as possible here in Canada. Fred is also the author of the book “Lessons on Mastering Money” where he identifies six key pillars that can really move the needle for us, when it comes to our finances. We cover those, and much more in the interview.  Enjoy! Get show notes and more free educational resources over at BuildWealthCanada.ca

Today, you’re going to learn how you can save money on your investments, by having the right investments, in the right accounts so that you pay as little tax as possible here in Canada. For example, if you hold Canadian stocks, or ETFs that hold Canadian stocks, should you put those in your RRSP? Your TFSA? Or your taxable account? Which one of those is the most tax efficient? What about your US and other international ETFs and stocks? What accounts should they go into so that you pay the least foreign tax on those investments? For us Canadians, different investments are taxed differently depending on what those investments include, and what investment accounts you put them in. It’s essentially an optimization puzzle that you can solve, by putting the right investments in the right accounts to pay the least Canadian and foreign tax, on those investments. If you choose to optimize to this extent like I do, you can essentially reap the benefits of these tax savings for the rest of your life, since those savings will compound over your investment lifetime, and can accelerate your net worth, since every dollar saved in taxes on your investments, is a dollar that stays invested, and continues to grow and compound for you. Resources mentioned in the episode: My guide on How to do Norbert's Gambit The video guide on: How to Setup Passiv to Pay the Least in Investing Taxes (for Canadians) You can get a free Passiv account at this link. Instructions on how to get the free PREMIUM account from Passiv is here.

Today, you are going to learn about how much you can save in fees and taxes on your investments, depending on how much time you want to spend optimizing your investment portfolio. In Canada, there are inexpensive options that make things extremely easy and automated for you, but they are slightly more expensive and slightly less tax efficient. On the other end of the spectrum, there are other investments available to Canadians that are as optimized as you can get in terms of keeping your fees low, and saving you money on both Canadian and international taxes. The trade-off though, is that these optimizations take a fair bit of work on your end to learn and implement. So how big are these optimization benefits to you? How much are you really saving by going with a fully optimized approach vs. a semi-optimized approach? How big should your investment portfolio be before you start optimizing? or should you start optimizing right away? We also cover where to go to check what fees you’re currently paying on your investments, so that you can have a nice apples-to-apples comparison when you are debating what fund or ETF to buy, or to check whether you are currently overpaying on your investments. We cover all this and more on this episode. This week’s episode is a little different since I optimize my investments to this highest level (in terms of paying the lowest fees and lowest taxes), and my guest also does the same. And so, in this episode, instead of the guest doing 90% of the talking, we instead each talk about how we both tackle these questions and I figure this way you are getting two educated perspectives, from two different people, in Canada, who have already been doing this for years. I think ultimately this approach to the episode will help you make an educated decision on what level of optimization you want to pursue in your own portfolio.  Enjoy the episode. :) Kornel

Today I’m going to be answering your questions, to help you out as much as I can in the world of personal finance and investing, here in Canada. We’re going to focus on actionable, practical advice, specifically for Canadians while taking into account the investment options that we have here in Canada, factoring in our Canadian taxes to make sure that we’re not overpaying, and much more. In today’s Q&A session, I’m going to be answering questions around: 1.     How to determine if you should sell a particular investment that you own. 2.     How to evaluate whether your investment returns should be higher.  3.     What rate of return should you expect on your investments? 4.     Where can you go to check your “total return” on your investments (growth + dividends) and not just the increase in price. 5.     And much more.  If you would like to submit a question, the easiest way is to sign up anywhere for free over at buildwealthcanada.ca. When you do that you’ll get taken to a page where you can leave a comment with your question. Also, when you do that, I’ll email you my guide on the “Top Personal Finance and Investing Tools” that I personally use. Enjoy the episode :)

It’s graduation season here in Canada, so we thought it would be good to focus this episode on parents with kids, those with nieces and nephews, as well as those that are students or fresh out of school. This week, we cover the topic of how to best set up young Canadians and young adults for success, when it comes to money.  Sadly, if you’re my generation or older then you probably got zero education about money when you were in school or fresh out of school. Yet, those are the crucial years where you either establish good or bad money habits, and there are so many things that can lead a young person astray.  Heck, knowing how to keep your investment fees low can literally save you hundreds of thousands of dollars over your investment lifetime, so why wouldn’t you want to know about these things as a student or upon graduation so that you can set yourself up for financial success? To help me with this topic, I have Canadian author, Douglas Price on the show. Douglas has written the book “Seventeen to Millionaire” a personal finance book for teens and young adults, specifically here in Canada, aimed to help them become financially literate and establish that strong financial foundation to set them up for success. Enjoy the interview. :) Questions To kick things off, can you tell us about your book and why you decided to write it? Whether we’re a child, teenager or adult, learning to manage our cashflows is a critical skill that we have to employ our entire lives. What process do you recommend to ensure that we are managing our income and expenses appropriately and not overspending? When someone is entering the world of investing in the markets for the first time (whether it’s someone that just turned 18, or an established adult that is now learning how to navigate the world of investing), where do you stand on using something like a robo advisor vs a single asset allocation ETF vs buying multiple individual ETFs vs other options (ex. mutual funds, using an advisor at a bank, etc.). Follow up question: Do you have any advice on how to prevent overwhelm when teaching someone this for the first time? Your book focuses on helping teenagers learn about money and how it works so that they can have that strong foundation for the rest of their lives, but what are your thoughts about how parents of younger children can best educate them and set them up for success when they are still in elementary school, or early high school? When it comes to kids or teenagers learning about money, what have you found that they struggle with the most, where us parents or educators need to spend some extra time on? What would you say are your top ‘best practices’ that us parents can do to ensure that our kids are set up for success when it comes to their financial lives? The world is obviously a lot different now than it was when you and I were kids. Are there any areas that have changed a lot when it comes to money that us parents need to be cognizant of when trying to set our kids up with that strong foundation when it comes to financial literacy? One of the things that I found impressive in your book, is that you hired high school students to test out your book to ensure that the lessons were communicated in a way that is engaging and digestible for them. Did you learn anything from those feedback sessions when it comes to how to best teach your kids or teenagers about anything, as a parent or educator? I’d really like to thank you for clearly putting in a significant effort to help educate young Canadians when it comes to financial literacy. Can you tell us again where we can get your book and where we should go to learn more?

In this episode, I interview S&P, the creator of the S&P 500, Dow Jones, and many other popular indices used around the world by millions of investors.  On today’s interview, we’re going to be covering the SPIVA scorecards which are semiannual reports published by S&P that compare the performance of active funds (i.e. active investing) vs taking the passive index investing approach. In other words, when you hear the debate of whether you should be a passive index investor, or an active investor, the SPIVA scorecards actually look at how well the active managers have done compared to if you just invested in the index. Our guests today are Joe Nelesen from S&P, and Erin Allen from BMO ETFs. Joe is the Senior Director of Index Investment Strategy over at S&P, and Erin is the Vice President over at BMO ETFs, which is the largest Canadian provider of ETFs. I thought we could have both Joe and Erin on the show, as that way we can learn more about the insights and discoveries learned from the SPIVA reports when it comes to the active vs passive debate. And, since Erin and her team actually create these ETFs for Canadians, we discuss how to actually practically apply these SPIVA findings and insights, when constructing or optimizing our own investments portfolio, here in Canada. In other words, what to look for and things to watch out for when we are actually building, optimizing, and deciding which ETFs to use for our own portfolio.  Questions Covered: Joe, to make this friendly to anybody new to the world of investing, can you start by telling us a bit about S&P, as well as the SPIVA reports and why they are important for us everyday investors? The SPIVA analysis has over 20 years of data at this point. Can you speak to what these decades of analysis have taught you and individual investors about passive and active management around the world? Erin, for those like myself who are totally on-board with what the SPIVA findings suggest and are looking to just have an easy-to-manage investment portfolio where they’re just looking to buy the total market index; what are the options available to them in Canada, and can you take us through the pros and cons of these different approaches? Joe, one of the reports that I’ve always found fascinating is the persistence scorecard that you publish. Can you speak to what it is, where can listeners find it, and what is the role of ‘persistence’ when measuring active outperformance? Erin, when it comes to the core ETFs and asset allocation ETFs that try to mimic the index, one of the critical metrics that individual investors need to be aware of is the tracking error, especially when trying to choose a comparable ETF from one provider to another. Can you take us through: What ‘tracking error’ is? Why is it important? How can we check it ourselves? Is some tracking error normal, and how do fees (MER) factor into the tracking error number that we see published? At what point would a tracking error be considered high? And does that number vary depending on which index we’re looking at? (ex. S&P TSX vs something like an MSCI emerging markets index) Joe, it seems like with the thousands of investment products out there, the definition of the word “passive” can really vary quite a bit, not just amongst individual investors but amongst companies offering these products as well. I’ve even heard arguments about the S&P 500 not actually being 100% passive as there is still a committee that chooses which stocks are included in the S&P 500 index. Can you speak to that a bit and also, how do you think individual investors should define “passive” vs “active”? Erin, when a DIY investor is purchasing total market index ETFs, do those literally include all publicly traded companies on any exchange that fit that region? (ex. S&P TSX for Canada), or is it more of a representative sample of that region? Also, I think it would be good for investors to know about what the difference and implications are of a capped index, vs an uncapped index. Can you explain these? Usually, we see the Canadian index (S&P/TSX) being capped when it comes to ETFs like with your ETF, ZCN. What about core index ETFs for other countries like the US, and beyond. Are those typically capped as well? Joe, in the past, you mentioned how indexes help us manage our own human behavioral biases and overcome market hurdles that can otherwise derail our investing success. Can you elaborate on this? Thank you to both of you for coming on. Erin, can you tell us where we can learn more on your end, and perhaps let everyone know about the ETF Market Insights sessions that you run every week where listeners of the show can submit their questions and have them answered live.Joe, thank you very much for coming on as well. Can you tell us more about where we can learn more from you and your team, and where we can find the SPIVA reports and any other resources that Canadian investors may find helpful.

Today we have a great case study of somebody that I really respect, and who has been able to achieve financial independence, at a really early age. I wanted this episode to be relevant to you no matter where you are on your financial independence journey, so I thought we could approach it from two angles: If you are in the asset accumulation phase and working towards financial independence, we get into how you can get there quicker AND also enjoy the process and not get burned out as you're working your way towards it. If you are already financially independent or are getting close to it, we tackle how to live a happy, fulfilling and meaningful life once you transition to the financially independent stage of your life. Questions Covered: One of my favourite things to do on the show is interview those that have achieved financial independence early, where they can retire if they choose. Then, I like to dissect and take lessons from that journey, that we can all learn from and apply to our own lives to help us get to financial independence quicker, and to actually be happy with the journey before and after achieving financial independence, where we can retire if we choose. There are lots of different paths to get there. For anybody hearing about you for the first time, can you tell us about your journey and how you got to early financial independence? I’ve been following your work for a long time, and it’s clear that you definitely don’t need to be working at all anymore, and definitely don’t need to be taking on any new income producing projects in your semi-retirement. Yet, it seems like you keep taking on significantly large projects, like the YouTube channel that you launched and worked a lot on to get to where it is today, and of course you have your giant book launch today that took you three years. All this takes up a good amount of time obviously, and I imagine it’s really not about the money anymore for you. So what keeps you going? Why not just relax, or at least scale things back a bit? How many years have you been financially independent now? What were some of the most critical lessons that you learned about financial independence? Was there anything that surprised you? You’ve interviewed over 450 entrepreneurs on your My Wife Quit Her Job Podcast. Some were incredibly successful where they are most certainly financially independent and could just close up the business or sell it, and just live off the proceeds from their investments. Have you found commonalities in regards to what keeps them going? Why do they keep working? What are your sources of fulfilment in semi-retirement? and what have you found to generate the most meaning in your life after hitting financial independence? From those that you interviewed, have you noticed any patterns in terms of what tends to add the most to that feeling of fulfilment, purpose, and happiness once money is no longer the priority? Our Guest: Steve Chou Steve's New Book: The Family First Entrepreneur Steve is a highly recognized influencer and speaker in the e-commerce space. His blog, MyWifeQuitHerJob.com has been featured in Forbes, Inc, The New York Times, Entrepreneur and MSNBC. His podcast, My Wife Quit Her Job, is one of the top 25 marketing shows on all of Apple Podcasts, and he and his wife run a 7 figure e-commerce store called BumblebeeLinens.com Steve also runs one of my favourite marketing podcasts here.

One critical topic that can have a substantial financial impact on both us and our loved ones, is the subject of inheritance, and how to ensure that you and your loved ones don’t end up overpaying in both taxes and fees, once the whole inheritance process starts taking place.  To help me with this subject, I’d like to welcome back Selene Soo on the show. We learned a lot from her last time in the interview on annuities, and this time, we’re going to focus on some best practices, when it comes to inheritance. Selene is the Director of Wealth Products at RBC Insurance. She has been in the wealth management industry for over two decades, so she definitely has a really large wealth of experience and knowledge when it comes to different retirement planning solutions, whether it’s annuities, segregated funds, and much more. Enjoy the episode, I hope you learn a lot from the session, thanks for tuning in, and now, let’s get into the interview. Questions: Why is it important to have an estate plan here in Canada? Selene, I was told that you and your team did a new survey when it comes to how prepared Canadians are when it comes to inheritance. Can you take us through the insights and lessons learned from those results, that we can then apply to our own lives? One component that I think is a bit of an unknown for those of us that haven’t gone through the process, is the subject of probate and probate fees. Can you speak to this, and what are the options available to us for minimizing probate fees? Are there any other fees or taxes that we should be aware of when thinking of inheritance and estate planning? I suspect that the word “will” is often used interchangeably with “estate planning”. Can you speak to what the differences are between the two, in particular, so that we can all be aware of the different components of estate planning here in Canada, and plan accordingly. To tie everything together, can you give us a synopsis as well as anything else that you’d like to add in regard to best practices that we Canadians can do to ensure that we have this critical part of our financial planning taken care of? When it comes to inheritance and estate planning, I suspect that I common challenge most Canadians experience, is bringing up the subject with their loved ones, and then carefully navigating some of the really sensitive and emotion triggering questions that inevitably come up. How do you think it’s best to bring this subject up? and what are some good questions to ask, and “next actions” to do, to actually get the ball rolling on this project? Can you tell us more about what you and your team do, and direct us to any educational resources that we may find helpful when we start working on optimizing our inheritance and estate planning? Resources from the Episode: Retirement Investment Solutions - RBC Insurance Facebook: @RBCInsurance LinkedIn: https://www.linkedin.com/company/rbcinsurance/ Check out my previous interview with Selene on Annuities - Guaranteed Income for Life