The Rational Reminder Podcast

Gaining financial literacy is critical if you want to thrive in today's society. And yet, only about a third of the global population can be described as being financially literate. Joining us today to unpack the concept of financial literacy and its impact is Dr. Annamaria Lusardi, Professor of Economics and Accountancy at George Washington University. Dr. Lusardi has taught Economics for over 20 years, and her passion for financial literacy is reflected in everything she does. Her career has been instrumental in furthering the cause of increased global financial literacy, from being the Founder and Academic Director of the Global Financial Literacy Excellence Center, to serving as the co-chair of the G53 Financial Literacy and Personal Finance Research Network. In our conversation, Dr. Lusardi breaks down the definition of financial literacy, how it's measured by leading experts across the world, along with some of the key differences we see between people in richer and poorer countries. She explains why financial advice isn't a replacement for financial literacy and provides guidance on what we should be doing to educate various population groups. We also discuss how global trends have created an increased need for financial literacy as an essential skill, especially for young people, and why greater global financial literacy is beneficial to everyone, including governments and wealthier individuals. Tune in as we delve into the many facets of financial literacy and the important role it plays in our collective health, happiness, and success! Key Points From This Episode: Lusardi defines the concept of financial literacy and the importance of being able to apply it as a skill. (0:04:30) How experts measure financial literacy and some of the key challenges involved. (0:07:55) The global survey that was conducted on financial literacy in 2014 and its dismal findings. (0:11:44) The areas of financial literacy that people struggle with most and why the need for financial literacy has increased over time. (0:15:26) The costs and benefits of gaining financial literacy and the concept of optimal financial knowledge. (0:22:42) An overview of the type of person who should be investing in financial literacy and why. (0:27:46) How the strength of your government's social safety net affects financial literacy rates. (0:30:15) The extent to which financial literacy affects stock market participation and wealth accumulation. (0:31:18) Some of the common mistakes that those with low levels of financial literacy tend to make. (0:35:10) Why financial literacy's end goal should be geared towards happiness and living a good life. (0:39:24) The impact that financial advice and financial advisors have on economic outcomes. (0:43:18) How financial literacy varies across demographic groups and some of the factors that account for disparities in financial literacy. (0:45:42) How financial education programs can yield positive results and where this education should take place for it to be optimal. (0:52:13) What listeners can do to increase financial literacy for those around them and why there is no alternative to good financial knowledge. (0:58:55) Participate in our Community Discussion about this Episode: 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.ca/ Shop Merch — https://shop.rationalreminder.ca/ Join the Community — https://community.rationalreminder.ca/ Follow us on Twitter — https://twitter.com/RationalRemind Follow us on Instagram — @rationalreminder Benjamin on Twitter — https://twitter.com/benjaminwfelix Cameron on Twitter — https://twitter.com/CameronPassmore Dr. Annamaria Lusardi — https://www.annamarialusardi.com/ 'Financial literacy and financial resilience: Evidence from around the world' — https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.12283 'The Economic Importance of Financial Literacy: Theory and Evidence' — https://gflec.org/wp-content/uploads/2014/12/economic-importance-financial-literacy-theory-evidence.pdf 'Optimal Financial Knowledge and Wealth Inequality' — https://www.journals.uchicago.edu/doi/10.1086/690950 'Financial literacy and stock market participation' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X11000717 'Employee Financial Literacy and Retirement Plan Behavior: A Case Study' — https://onlinelibrary.wiley.com/doi/abs/10.1111/ecin.12389 'Skating on thin ice: New evidence on financial fragility' — https://www.dnb.nl/media/uxldldkl/working-paper-no-670_tcm47.pdf 'Stereotypes in financial literacy: Evidence from PISA' — https://www.sciencedirect.com/science/article/abs/pii/S0929119920302753?via%3Dihub 'Fearless Woman: Financial Literacy and Stock Market Participation' — https://gflec.org/wp-content/uploads/2021/03/Fearless-Woman-Research-Final.pdf?x53868 'How Financially Literate Are Women? An Overview and New Insights' — https://onlinelibrary.wiley.com/doi/abs/10.1111/joca.12121 'Factors Contributing to Financial Well-Being among Black and Hispanic Women' — https://jor.pm-research.com/content/9/1/71 'Financial Education Affects Financial Knowledge and Downstream Behaviors' — https://gflec.org/wp-content/uploads/2020/04/Working-Paper-Financial-education-affects-financial-knowledge-and-downstream-behaviors-April_2020.pdf

Today is our final episode featuring just the two of us before our annual wrap-up show, and we thought we would use this opportunity to cover some important foundational aspects of rational investing. Ben goes over some of the most fundamental concepts about market prices, risk, and actual returns before answering five common questions that relate to this level of information. From investing in an employer's stock to predicting the future and real estate comparisons, these five touch-points are always worth returning to, and should even interest the more experienced of our listeners. For the second half of the show, we offer a quick book review of The Culture Playbook by Daniel Coyle, and have a brief and illuminating conversation with Professor Amer Kaissi about his book, Humbitious, and some of his thoughts on the part that reading plays in rich and progressive life. Press play to catch all this and more on the Rational Reminder Podcast. Key Points From This Episode: Picking up a thread from our discussion on the 2% Rule. (0:06:05) Getting to grips with investing basics. (0:10:45) How market prices work in response to traders' actions and risk. (0:17:59) The main determinants of actual returns and starting points for your portfolio. (0:23:15) Unknowable futures and the eternal doom and gloom predictions. (0:35:43) Assessing the value of owning an employer's stock. (0:38:21) Holding stock picks in Tax-Free Savings Accounts. (0:42:07) How to prepare a portfolio when a recession is predicted. (0:43:49) Comparing investments in real estate with the stock market. (0:45:14) Weighing the value of building and emergency fund. (0:47:11) A thirty-second recap of our episode with Cliff Asness. (0:50:06) Today's book review focussing on the lesson from The Culture Playbook by Daniel Coyle. (0:51:48) Professor Kaissi shares a quick summary of his book, Humbitious. (0:58:40) The potential to develop characteristics and the role that reading plays. (0:59:38) Professor Kaissi talks about his reading habits. (1:02:12) Application of ideas from books and how Professor Kaissi captures and organizes information in his own reading. (1:05:15) A few of Professor Kaissi's favourite book recommendations and how to increase your reading habit. (1:08:52) Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-231-investing-basics-and-common-questions-plus-reading-habits-w-amer-kaissi-discussion-thread/20716 Books From Today's Episode: Humbitious: The Power of Low-Ego, High-Drive Leadership — https://amzn.to/3WjHjry Mindset — https://amzn.to/3Wzl7Kr Quiet — https://amzn.to/3htlN4X The Five Dysfunctions of a Team — https://amzn.to/3YmKqRv The SPEED of Trust — https://amzn.to/3UWCljq Top Five Regrets of the Dying — https://amzn.to/3uQcUWf The Assertiveness Workbook — https://amzn.to/3VVDVUf How to Raise Your Self Esteem — https://amzn.to/3BDM33p Ego Is the Enemy — https://amzn.to/3BAyCkZ 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.ca/ Shop Merch — https://shop.rationalreminder.ca/ Join the Community — https://community.rationalreminder.ca/ Follow us on Twitter — https://twitter.com/RationalRemind Follow us on Instagram — @rationalreminder Benjamin on Twitter — https://twitter.com/benjaminwfelix Cameron on Twitter — https://twitter.com/CameronPassmore Amer Kaissi on Twitter — https://twitter.com/amerkaissi10 Amer Kaissi on LinkedIn — https://www.linkedin.com/in/amer-kaissi-ph-d-38258919/ Amer Kaissi — http://www.amerkaissi.com 'The Value of Goals-Based Financial Planning' — https://www.financialplanningassociation.org/article/journal/JUN15-value-goals-based-financial-planning 'Excessive Extrapolation and the Allocation of 401(k) Accounts to Company Stock' — http://independent401kadvisors.com/library_articles/ExcessiveExtrapolation.pdf 'The Agony of Ecstasy: The risks and rewards of a concentrated stock position' — https://assets.jpmprivatebank.com/content/dam/jpm-wm-aem/global/pb/en/insights/eye-on-the-market/agony-ecstasy-2021.pdf 'The financial resilience and financial well-being of Canadians during the COVID-19 pandemic' — https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2021008-eng.htm

The world is a highly competitive place, and becoming successful requires hard work, dedication, and luck. This is the view of today's guest, Professor Robert Frank, who helps us unravel the nuance of conspicuous consumption trends and the role of luck in gaining financial success. Professor Frank is the emeritus Henrietta Johnson Louis Professor of Management at Cornell University and holds an MA in statistics and a Ph.D. in Economics from UC Berkeley. He is also a prolific author, having written 12 books, financial textbooks, and many peer-reviewed articles in journals such as the American Economic Review, Econometrica, and Journal of Political Economy. He is passionate about how policy can help drive positive consumer behaviour, reduce inequality, and increase individual happiness. His work has also focused on the role of luck in achieving financial success which he covers in his book Success and Luck. In this episode, we unpack how individuals can improve societal collective action, the role of policy in driving those changes, and how luck interplays with success. We discuss economic and financial relativism, the dangers of conspicuous consumption, how expenditure cascades occur, and what influences consumption trends in society. We also dive into the topic of luck, whether wealthy people are happier, what behavioural changes are needed to create a better society, and more. Key Points From This Episode: Professor Frank describes the difference between departures from rational choice with regret and without regret. (0:04:34) Whether he classifies his work as behavioural economics. (0:07:38) An explanation of economic and financial relativism. (0:10:50) The role of economic and financial relativism in consumption trends. (0:12:44) Find out what constitutes a positional good. (0:16:56) How the consumption of positional goods affects psychological well-being. (0:19:32) Why people choose to engage in consumption arms races. (0:21:52) The relationship between the consumption of luxury goods and happiness. (0:24:45) What people can do to recognize and avoid negative consumption behaviours. (0:26:31) How the spending of the super-rich impacts the spending habits of the typical consumer. (0:27:38) Ways in which social media influencers have affected consumption. (0:30:32) We learn about the link between consumption and inequality. (0:32:40) How well differences in human capital explain differences in income. (0:35:04) Professor Frank explains how likely it is that the most skilled person gets the best outcome in a competitive market. (0:38:13) Professor Frank shares how they measure luck. (0:41:20) The influence luck has on achieving a successful outcome. (0:42:09) Find out if luck influences consumption trends and inequality. (0:44:03) A thought experiment concerning the wealthy and higher taxes. (0:46:56) We discuss whether winner-take-all markets are a good thing for society. (0:50:22) How people should behave differently to help drive positive change. (0:53:06) Advice for people to stay motivated and work hard. (0:57:19) What Professor Frank thinks about working a job you hate for more money. (0:58:59) He provides insight for people who work jobs they hate. (0:59:59) His approach on the subject of luck and meritocracy with young kids. (1:00:47) We discuss the idolization of financially successful people. (1:03:36) How successful individuals should behave differently in an economy where luck plays such an important role. (1:05:38) The response of successful people to Success and Luck. (1:08:15) Steps people can take to positively affect those around them. (1:09:29) Discover what Professor Frank's position is on policy. (1:14:20) We hear how Professor Frank defines success in his life. (1:18:33) Links From Today's Episode: Professsor Robert Frank on Twitter — https://twitter.com/econnaturalist Cornell University — https://www.cornell.edu/ Success and Luck — https://www.amazon.com/Success-Luck-Good-Fortune/ Luxury Fever — https://www.amazon.com/Luxury-Fever/ Principles of Economics — https://www.amazon.com/Principles-Economics/ The Winner-Take-All Society — https://www.amazon.com/Winner-Take-All-Society/ American Economic Review — https://www.aeaweb.org/journals/aer Econometrica — https://onlinelibrary.wiley.com/journal/14680262 Journal of Political Economy — https://www.jstor.org/journal/jpoliecon Project Sunroof — https://sunroof.withgoogle.com/ 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/?hl=en Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on Twitter — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on Twitter — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Traditionally, people saving for retirement and financial advisors relied on the 4% rule when calculating how much to save for retirement and the associated income those savings would provide after retirement. What if you found out it does not work? Is there another option? Today, we offer you an alternative approach, which is the 2% rule for retirement spending. Before we delve into today's main topic, we update listeners on the recent London meet-up, what to expect on upcoming shows, and who our special guest is to kick off the first episode of 2023. Then, we discuss today's main topic and learn what the 2% rule is, how it compares to the 4% rule, and whether the safe percentage for retirement is actually higher. We unpack retirement spending through the lens of several empirical papers, historical data, and market comparisons. We also find out why the US market has always been able to bounce back from uncertainty and whether there is empirical data to support the 4% rule. We also talk about the many financial challenges and opportunities that young people face, the biggest mistake people make regarding retirement, the value of financial literacy, book reviews, and more! Key Points From This Episode: An update on the 22 in 22 Reading Challenge. (0:05:21) Outline of today's content and the main topic: the 2% rule for retirement spending. (0:06:27) An overview of the "2% rule", the motivation behind it, and how it was formulated. (0:08:17) We discuss if the safe withdrawal rate for retirement savings is higher than 4%. (0:13:31) The inspiration for the higher average realized rate of return on investment theory. (0:19:59) Whether the past returns on US stocks will repeat in the future. (0:21:54) Why the US stock market has been historically exceptional and resilient, and how other markets compare. (0:23:44) The biggest limitation of the seminal work which helped established the 4% rule. (0:28:38) How data gaps were dealt with in the paper by Scott Rieckens and results are discussed. (0:33:16) Other aspects to consider regarding the research on retirement funds. (0:38:35) The challenges and opportunities that young people face today. (0:42:24) How financial literacy impacts investment opportunities, returns, and overall happiness. (0:46:59) What are the potential solutions and reasons to be optimistic regarding the current financial market. (0:47:48) Our usual episode review under a minute: episode 30 with Larry Swedroe. (0:52:31) This week's book review and choice architecture. (0:54:35) We discuss the reviews and feedback received on a previous episode. (1:02:32) Hear an update about our idea regarding CE credits and reviews about the show. (1:06:01) Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-229-the-2-rule-for-retirement-spending-discussion-thread/20473 Book From Today's Episode: The Elements of Choice: Why the Way We Decide Matters — https://amzn.to/3VvxZR8 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.ca/ Shop Merch — https://shop.rationalreminder.ca/ Join the Community — https://community.rationalreminder.ca/ Follow us on Twitter — https://twitter.com/RationalRemind Follow us on Instagram — @rationalreminder Benjamin on Twitter — https://twitter.com/benjaminwfelix Cameron on Twitter — https://twitter.com/CameronPassmore 'Determining Withdrawal Rates Using Historical Data' — https://retailinvestor.org/pdf/Bengen1.pdf 'Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable' — https://www.researchgate.net/profile/Carl-Hubbard/publication/265279441/ 'Global stock markets in the twentieth century' — https://onlinelibrary.wiley.com/doi/abs/10.1111/ 'Is The United States A Lucky Survivor: A Hierarchical Bayesian Approach' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3689958 'The Safe Withdrawal Rate' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4227132 'The equity premium: A puzzle' — https://www.sciencedirect.com/science/article/abs/pii/0304393285900613 'Long-Horizon Losses in Stocks, Bonds, and Bills' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3964908 'Financial System Review 2022' — https://www.bankofcanada.ca/2022/06/financial-system-review-2022/#:~:text=The%20tightening%20of%20monetary%20policy,remain%20two%20key%20interconnected%20vulnerabilities. 'The financial resilience and financial well-being of Canadians during the COVID-19 pandemic' — https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2021008-eng.htm 'Hopefulness is declining across Canada' — https://www150.statcan.gc.ca/n1/daily-quotidien/220517/dq220517d-eng.htm 'Global Investor Experience Study: Fees and Expenses' — https://assets.contentstack.io/v3/assets/blt4eb669caa7dc65b2/blt60e320775385837a/62431900eed9f60f2de8ad55/GIE_2022.pdf 'Financial Literacy Around the World' — https://gflec.org/wp-content/uploads/2015/11/3313-Finlit_Report_FINAL-5.11.16.pdf 'Ontario Securities Commission Investor Knowledge Study' — https://www.osc.ca/sites/default/files/2022-09/inv_research_20220907_investor-knowledge-study_EN.pdf 'Measuring the Financial Sophistication of Household' — https://www.nber.org/system/files/working_papers/w14699/w14699.pdf 'Investment Literacy, Overconfidence and Cryptocurrency Investment' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3953242 'Financial Literacy and Attitudes to Cryptocurrencies' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3482083 'Bitcoin Awareness, Ownership and Use: 2016–20'— https://www.bankofcanada.ca/wp-content/uploads/2022/04/sdp2022-10.pdf 'Optimal Financial Knowledge and Wealth Inequality' — https://repository.upenn.edu/cgi/viewcontent.cgi?article=1093&context=bepp_papers 'Financial Literacy and Retirement Planning in the United States' — https://www.nber.org/system/files/working_papers/w17108/w17108.pdf 'Financial Well-Being of the Millennial Generation' — https://gflec.org/wp-content/uploads/2019/12/Financial-Well-Being-of-the-Millennial-Generation-Paper-20191122.pdf

In this episode, we are joined by the CIO of Avantis Investors, Eduardo Repetto, to have an in-depth conversation about his philosophy and approach to many of the central concepts that are important to our listeners. Eduardo weighs in on asset pricing factor investing, premiums, and also shares some of his perspectives on what makes Avantis different from its competitors. Eduardo's wealth of experience and technical know-how make this very practical exploration, complete with some inventive and demonstrative analogies. Despite the high-level concepts discussed, our guest's ability to communicate these in an accessible manner also helped maintain a level of approachability throughout. Toward the end of the episode, we get to hear a little about Eduardo's Ph.D. in aeronautics and some of the surprising overlaps he sees between his two fields of interest. Key Points From This Episode: Eduardo's approach to communicating what Avantis can offer their clients. (0:02:57) Advantages of the ETF structure for managing portfolios. (0:05:07) Advice for investors for quantitatively assessing the expected return advantage of a factor-tilted portfolio. (0:10:26) Practical approaches for individual investors when assessing a factor tilt in portfolios. (0:13:54) Eduardo unpacks the idea of trust in relation to the premium. (0:20:45) When does a completely small-cap value portfolio make sense? (0:27:23) Avantis' method for targeting value and profitability. (0:31:03) The weighting of different metrics that Avantis uses when building portfolios. (0:34:43) Eduardo unpacks cash profitability versus operating profitability. (0:36:53) The approach at Avantis to sector weights. (0:39:56) Understanding adjusted book value when pricing a company. (0:43:53) Eduardo describes the premium for the Goodwill adjustment. (0:50:02) How Avantis views pursuing credit premium in fixed income investments. (0:51:32) Determining the size of factors tilts on particular products. (0:57:05) Reasons that there are no emerging market small cap value strategies. (0:59:48) Comparing the research behind inflation-focused equity strategy to a more general value profitability premium. (1:06:03) Avantis' strategy for staying on the cutting edge of the latest research. (1:10:34) Conversations between Avantis and American Century Investments about different investment philosophies. (1:18:22) Eduardo shares his opinion about Avantis' competitive advantage. (1:19:56) Where Avantis and Eduardo are aiming their energy in the near future, and the succession plan for the company. (1:23:11) Some surprising similarities between aeronautics and asset management. (1:27:21) Eduardo talks about his personal definition of success. (1:31:31) 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.ca/ Eduardo Repetto — https://www.avantisinvestors.com/content/avantis/en/about-us/our-team/eduardo-repetto.html Avantis Investors — https://www.avantisinvestors.com/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/?hl=en Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on Twitter — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on Twitter — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

In today's episode, we pull relevant quotes from past guests (namely John Cochrane, Gene Fama, and Jonathan Berk) to extricate who should own market cap funds. We look at the variable risks of value stocks and factor investing and hear counter-views on owning the market. We also delve into the hot topic of tax loss selling, with an overview of a recent Financial Analyst Journal paper on loss harvesting outcomes, sorted by investor profiles. This episode will get you up to date on the biggest finance news of the week, from crypto collapses to Amazon's catapulting gains and losses. Tune in to hear all of this and more, including a recap of our conversation with Dave Goetsch and our Financial Literacy Month book reviews. Key Points From This Episode: A neat way to keep track of the value of your purchases over time. (0:00:33) The results of the Rational Reminder financial literacy survey. (0:02:44) An overview of this episode's topics. (0:05:45) Who should invest in market cap-weighted index funds. (0:07:28) How to determine whether you're different from the average investor. (0:16:13) Gene Fama's take on the possibility of identifying state factors. (0:22:13) The variable risks of value stocks. (0:23:25) What drives people to increase their value tilts over time. (0:25:11) The risks of factor investing, and trading in general. (0:28:26) Jonathan Berk's take on owning the market. (0:31:53) A summary of who should invest in total market index funds. (0:33:20) The big crypto news of the week! (0:38:21) Other significant market news. (0:42:17) An overview of a recent Financial Analyst Journal paper on loss harvesting outcomes, sorted by investor profiles. (0:44:59) Our book reviews for Financial Literacy Month. (0:55:15) A recap of our conversation with Dave Goetsch. (1:01:47) A few of our listeners' reviews. (1:02:50) Participate in our RR CE Credits Survey: https://forms.office.com/Pages/ResponsePage.aspx?id=xVA-B3TS3UeuUte5Yx-hRi0Vpj3fzvhNpOTm6eRMYJ5UN0tOM1A5MFdPQzJFT1hZOTJLN1pHRVFYSS4u Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-227-who-should-invest-in-cap-weighted-index-funds-discussion-thread/20230 Books From Today's Episode: The Geometry of Wealth: How to shape a life of money and meaning — https://amzn.to/3Od9J3N Retirement Income for Life: Getting More without Saving More — https://amzn.to/3GpkHRN We're Talking Millions!: 12 Simple Ways to Supercharge Your Retirement — https://amzn.to/3UI3uaE Common Sense on Mutual Funds — https://amzn.to/3AjUsIM The Investment Answer: Learn to Manage Your Money and Protect Your Financial Future — https://amzn.to/3UWeSPM Money Like You Mean It: Personal Finance Tactics for the Real World — https://amzn.to/3g9bT7Q 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.ca/ Shop Merch — https://shop.rationalreminder.ca/ Join the Community — https://community.rationalreminder.ca/ Follow us on Twitter — https://twitter.com/RationalRemind Follow us on Instagram — @rationalreminder Benjamin on Twitter — https://twitter.com/benjaminwfelix Cameron on Twitter — https://twitter.com/CameronPassmore 'An Intertemporal Capital Asset Pricing Model' — https://www.jstor.org/stable/1913811 'Risk and Return of Value Stocks' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=112553 'The Value Premium' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=351060 'A Consumption-Based Explanation of Expected Stock Returns' — https://repository.upenn.edu/cgi/viewcontent.cgi?article=1146&context=fnce_papers 'Who Are the Value and Growth Investors?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2426823 'Is There a Replication Crisis in Finance?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3774514 'Amazon Becomes World's First Public Company to Lose $1 Trillion in Market Value' — https://www.bloomberg.com/news/articles/2022-11-09/amazon-hits-unwelcome-milestone-with-1-trillion-in-value-lost?leadSource=uverify%20wall

In this episode, we speak to renowned Canadian figure Colonel Chris Hadfield. For those who don't know, Chris is a heavily decorated astronaut, engineer, and pilot, and has received many awards, such as the Order of Canada, the Meritorious Service Cross and the NASA Exceptional Service Medal. Colonel Hadfield became a worldwide sensation with his video of David Bowie's "Space Oddity" which was viewed by over 75 million people. He aims to make space more accessible and continues to share the wonders of outer space and science with as many people as possible. Besides his phenomenal professional background, he is also known for his music which he writes and plays on earth and in space! He is also the author of several books, namely An Astronaut's Guide to Life on Earth, You Are Here, and a children's book, The Darkest Dark. Although Colonel Hadfield has a very different background from previous guests, his 35-year career has afforded him many lessons that apply to life, which he shares in our conversation with him. We learn the importance of goals and why reaching your goals should not define your happiness. Hear ways to overcome fear when facing uncertainty, the value of competence, and why enjoying the road to success is more important than success itself. Find out why sweating the small is essential to success, whether Colonel Hadfield suffers from imposter syndrome, and where true happiness comes from. Tune in and discover the secret to success and happiness in this one-of-a-kind conversation with special guest, Colonel Chris Hadfield! Key Points From This Episode: What motivated Commander Hadfield to take pictures onboard the International Space Station. (0:04:10) He briefly explains the amount of effort that went into taking pictures for his book You Are Here. (0:05:14) What lessons Commander Hadfield learned as an astronaut that he applies to life. (0:06:34) How to keep motivated to achieve your goals with the knowledge that you probably won't achieve them. (0:08:41) Why his goal was becoming an astronaut and not to be an astronaut. (0:11:05) Whether there is a time to reconsider or quit a goal that you have set for yourself. (0:12:46) The best way to prepare for situations with uncertain outcomes. (0:14:51) How to prepare for situations that you cannot prepare or practice for. (0:18:18) Ways to mitigate fear when dealing with risk and uncertainty. (0:20:55) Learn if building competence is different for different people. (0:23:48) Hear the benefits of negative thinking and sweating the small stuff. (0:25:33) Commander Hadfield explains how to prepare for novel situations. (0:29:07) He shares where he thinks life satisfaction comes from. (0:31:49) Find out if Commander Hadfield ever suffers from imposter syndrome. (0:34:14) What life lessons he hopes to impart to his grandchildren. (0:36:09) How Commander Hadfield defines success in his life. (0:38:04) We highlight the main takeaways from our conversation with Commander Hadfield. (0:41:14) Links From Today's Episode: Commander Chris Hadfield — https://chrishadfield.ca/ Commander Chris Hadfield on Twitter — https://twitter.com/Cmdr_Hadfield/ Commander Chris Hadfield on Instagram — https://www.instagram.com/colchrishadfield/ Commander Chris Hadfield on Facebook — https://www.facebook.com/AstronautChrisHadfield Commander Chris Hadfield on LinkedIn — https://www.linkedin.com/in/chris-hadfield/ Commander Chris Hadfield on YouTube — https://www.youtube.com/c/ChrisHadfieldAstronaut/featured A Space Oddity — https://www.youtube.com/watch?v=KaOC9danxNo You Are Here — https://www.amazon.com/You-Are-Here-Photographs-International/dp/0316379646 An Astronaut's Guide to Life on Earth — https://www.amazon.com/Astronauts-Guide-Life-Earth-Determination/ The Darkest Dark — https://www.amazon.com/The-Darkest-Dark/

Are index funds a menace to the market? Are pension funds still a wise way to secure your financial future? In this episode, we discuss index funds, the state-sponsored pension plan in Canada, and much more. First, we unpack the nuances of index funds and take a look at the impact that active and passive investors have on the market. We discuss current index fund trends, when to switch from a passive to an active investor, and the dreaded index fund tipping point. To help us understand pension funds, we also chat with Jordan Tarasoff, a financial planner at PWL Capital, about the recent controversy regarding state pension schemes in Canada, and he provides us with some valuable insights into the government's upcoming plan. We switch up our usual book review to celebrate Financial Literacy Month and share five recommended books that will help you improve your understanding of finance. We also try something new by giving listeners a condensed overview of a previous episode with one of our favourite guests, Scott Rieckens. Finally, we go through some of the feedback and comments we've received from the growing Rational Reminder community about the show and our recent financial goals survey. Key Points From This Episode: What to look forward to in next week's episode. (0:05:08) Hear about a special promotion to celebrate Financial Literacy Month. (0:05:43) Introducing today's topic and what to expect in the episode. (0:05:56) Worries and biggest critiques of index funds. (0:08:23) Current trends regarding index funds in relation to the market. (0:09:40) When investors should switch from passive to active. (0:12:45) Some good news about the index fund tipping point. (0:15:46) What investors should be aware of when actively investing. (0:16:32) How informed and misinformed managers contribute to the index fund tipping point. (0:19:38) Who the investors and managers are that change to passive investment. (0:20:52) How switching from active to passive investing affects the value of the market. (0:25:38) Unpacking the concept of markets being 'inelastic' as a result of index funds. (0:28:52) Whether passive investing undermines price efficiency concerning index funds. (0:30:03) What would cause the index tipping point to occur. (0:31:40) A brief background on today's guest, Jordan Tarasoff. (0:35:00) Details about the Canada Pension Plan (CPP) and how it works. (0:35:28) Jordan outlines the benefits of deferring a pension plan claim. (0:36:28) Recent changes that make deferring your pension plan non-beneficial. (0:38:20) What age group the recent pension plan changes impact the most. (0:42:14) Why the Consumer Price Index (CPI) can't be used to predict wage growth. (0:43:53) How Jordan is approaching his clients' pensions regarding the new changes. (0:45:10) Review of our top five books for increasing financial literacy. (0:48:57) Our new segment: summarizing a past episode in sixty seconds. (0:56:57) We 'talk cents' about financial values and spending. (0:58:49) Recent reviews and feedback received about the podcast and goals survey. (1:02:40) Links From Today's Episode: Jordan Tarasoff — https://www.pwlcapital.com/profile/jordan-tarasoff/ Scott Rieckens — http://www.scottrieckens.com/ Efficient Frontier — http://efficientfrontier.com/ef/0adhoc/2books.htm Episode 95: Scott Rieckens (Playing with FIRE): Finding Financial Education, Perspective, and Freedom — https://rationalreminder.ca/podcast/95 Episode 99: Andrew Hallam (Millionaire Teacher): How to be Wealthy (and Happy) — https://rationalreminder.ca/podcast/99 Episode 108: Dr. William Bernstein: Praying for a Bear Market — https://rationalreminder.ca/podcast/108 Episode 128: Morgan Housel: The Psychology of Money — https://rationalreminder.ca/podcast/128 Episode 159: Bill Schultheis: Build Wealth and Get on With Your Life — https://rationalreminder.ca/podcast/159 Episode 186: Andrew Hallam: Balancing Money, Relationships, Health, and Purpose — https://rationalreminder.ca/podcast/186 Episode 191: Emerging Markets: Diversifying Asset or a Reverse Lottery? (plus Reading Habits w/ Morgan Housel) — https://rationalreminder.ca/podcast/191 Episode 212: Prof. Ralph Koijen: Demand System Asset Pricing & Inelastic Markets — https://rationalreminder.ca/podcast/212 Episode 124: Prof. Lubos Pastor: Equilibrium Models vs. Intuition — https://rationalreminder.ca/podcast/124 Episode 220: Jonathan Berk and Jules van Binsbergen: The Arithmetic of Active Management, Revisited — https://rationalreminder.ca/podcast/220 'On the Size of the Active Management Industry' — https://www.jstor.org/stable/10.1086/667987 'Disagreement, tastes, and asset prices' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X06001954 'Measuring skill in the mutual fund industry' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X15000628 'Which Investors Matter for Equity Valuations and Expected Returns?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3378340 Balance: How to Invest and Spend for Happiness, Health, and Wealth — https://www.amazon.com/Balance-Invest-Happiness-Health-Wealth/dp/1774580756 If You Can: How Millennials Can Get Rich Slowly — https://www.amazon.com/If-You-Can-Millennials-Slowly/dp/098878033X The Coffeehouse Investor's Ground Rules — https://www.amazon.com/Coffeehouse-Investors-Ground-Rules-Happiness/dp/1119717086 The Psychology of Money — https://www.amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681 Think, Act, and Invest Like Warren Buffett — https://www.amazon.com/Think-Invest-Like-Warren-Buffett/ The November Meet-up Email — info@rationalreminder.ca 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/?hl=en Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on Twitter — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on Twitter — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Are stocks and bonds good in the long game? What are the best long-term investment options? In this episode, we speak to Professor Scott Cederburg about the nuance surrounding the stock market, bonds, and other investment types in the long term. He has a Ph.D. in Finance from the University of Iowa and is currently the Associate Professor of Finance at Eller College of Management at the University of Arizona. His research focuses on the long-horizon performance of a range of asset classes and investment types and has published in high-ranking academic journals, making him the perfect person to speak to about the subject. We discuss the topic through the lens of several papers he has written on stocks, bonds, retirement savings, and return predictability. In our conversation, we unravel the nuance of the returns on long-term stocks and bonds, hear details about his research design, and learn how unanticipated events can affect the market. He also provides insight into the different biases surrounding long-term investments, the block bootstrap approach, reasons why the block bootstrap approach is needed, and why bonds and bills may not be the long-term investment you were hoping for. We also discuss the best options for investors regarding pre-tax and post-tax accounts and the differences between high-beta and low-beta portfolios. He also shares some basic steps for investors to help them protect their investments. Join us as we dig into the past to uncover the financial future with Professor Scott Cederburg. Key Points From This Episode: We begin with Professor Cederburg describing his research design for his work investigating long-term returns on stocks and bonds. (0:04:20) Hear examples of how unanticipated events lead to impacts on stocks and bonds. (0:08:08) What the overall trend in the data was from his research on stocks and bonds. (0:11:05) Why considering different biases is essential for financial decision-making. (0:11:45) How the historical experience in the US stock and bond markets compare to other developed markets. (0:12:45) Details about the data he collected regarding domestic stocks and investors. (0:13:55) Learn how probable it is that domestic stocks will deliver losses in the long term. (0:16:41) Outline of the factors which tend to cause long-term stock losses. (0:17:36) What potential losses are in the long-term for international stocks. (0:18:58) How likely stocks will deliver catastrophic losses as opposed to traditional forms of loss. (0:22:15) Find out how much the probability of loss decreases with longer horizons. (0:23:59) The contribution of currency and domestic inflation to the trends in the data. (0:24:52) We compare how well international stocks hedge against long-term real losses in domestic stocks. (0:25:25) He shares how he thinks investors should approach the home country bias. (0:26:34) A rundown of the expropriations that exist in Professor Cederburg's data. (0:27:34) We talk about long-term stocks and their implications on asset allocations. (0:28:48) How wide the distribution of long-run stock payoffs are. (0:29:28) Discover how likely bonds and bills are to real losses over a long period. (0:30:16) Breakdown of what the distribution looks like for bond returns. (0:31:52) Whether bonds act as a hedge against poor stock returns. (0:33:24) Common economic conditions that explain the poor long-term returns for stocks and bonds. (0:34:58) Ways in which the results can be used to make predictions for the economic future. (0:38:36) Professor Cederburg tells us if stocks are safe or risky in the long term. (0:40:23) He unpacks mean reversion in the full-time series compared to the block bootstrap approach. (0:41:27) Why emerging markets were not considered in the study. (0:43:55) Advice for investors given the findings of his study. (0:45:00) We discuss the applicability of the findings within a contemporary market setting. (0:47:04) Which variables need to be considered when deciding between a pre-tax or post-tax savings account. (0:49:19) Factors that make a pre-tax and post-tax account valuable. (0:50:41) Hear the investment type most exposed to future tax schedule uncertainty. (0:54:50) Whether using a post-tax account can build resilience to tax uncertainty. (0:56:29) Simple rules for listeners to help them optimize the location of their savings. (0:59:08) How the simple rules compare to the optimization analysis performed for the research paper. (1:01:40) Risk-adjusted performance for high beta and low beta portfolios. (1:03:02) We learn what the implications are for someone investing in low-beta assets. (1:05:58) Professor Cederburg shares his definition of success. (1:09:17) Links From Today's Episode: Global Financial Data — https://globalfinancialdata.com/ 'Stocks for the long run? Evidence from a broad sample of developed markets' — https://www.sciencedirect.com/science/article/ 'Tax Uncertainty and Retirement Savings Diversification' — https://www.sciencedirect.com/science/article/ 'Does it pay to bet against beta? On the conditional performance of the beta anomaly' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12383

We recently created and conducted a very interesting survey based on financial goals, and today, we get to share some of the data we collected and the answers that were given to the questions. Although there are some definite limitations to our expertise as surveyors and data collectors, the findings are most definitely illuminating, surprising, and useful. Listeners will get to hear a bit about the process of building the survey as well as some of the raw numbers and data before we get into the list of goals that were submitted, collated, and ranked. We also share some of the ways that these were split across demographics such as age and gender. Apart from this focus on the survey, we share some thoughts on Eat the Rich, Coin, and The Next Millionaire Next Door, and finish off the show with some very impactful letters from listeners that we have received recently. Key Points From This Episode: Thoughts on the new Netflix show, Eat the Rich, and the story of GameStop. (0:01:58) What to expect on the podcast in November during Canadian Financial Literacy Month. (0:05:17) Reflections on the new film, Coin, and the founding of Coinbase. (0:08:08) Introducing the results from our recent survey on goals. (0:11:23) The process of building the survey and the questions we included. (0:18:22) A look over the basic data of the survey. (0:22:27) Popular objectives from the survey and how these were split across different demographics. (0:23:17) The answers that were given in relation to each specific question. (0:28:02) Developing best practices for goal setting for an advisor environment. (0:30:17) Limitations to our expertise in designing this survey and analyzing the data. (0:32:43) Running through the complete list of goals in order. (0:34:29) Introducing this week's book discussion on The Next Millionaire Next Door. (0:39:46) Standout findings from the research that was conducted for the book. (0:44:00) Utilization of an 'expected net worth test' in the book. (0:49:50) A look at some of the listener messages we have received lately. (0:52:29) Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-223-a-financial-goals-master-list-n-310-discussion-thread/19742 Books From Today's Episode: The Next Millionaire Next Door — https://www.amazon.com/Next-Millionaire-Door-Enduring-Strategies/dp/1493035355 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.ca/ Shop Merch — https://shop.rationalreminder.ca/ Join the Community — https://community.rationalreminder.ca/ Follow us on Twitter — https://twitter.com/RationalRemind Follow us on Instagram — @rationalreminder Benjamin on Twitter — https://twitter.com/benjaminwfelix Cameron on Twitter — https://twitter.com/CameronPassmore Financial Goals Summary - https://www.pwlcapital.com/resources/goals-survey-summary/ 'Generating Objectives' — https://repository.library.georgetown.edu/handle/10822/707941 Tom McHugh YouTube Video — https://www.youtube.com/watch?v=MbaAkJHvCIw 'Generating Objectives' — https://repository.library.georgetown.edu/handle/10822/707941 Tom McHugh YouTube Video —https://www.youtube.com/watch?v=MbaAkJHvCIw