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. 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 giving up ownership. [0:17:03.0] The distinction between known and presumed inheritance. [0:20:11.0] How to deal with potential uneven distribution in an estate. [0:23:23.0] When it makes sense to hire a corporate executor [0:25:49.0] The five ways that success is not always linked to money [0:27:06.0] How Mark has defined his own personal success [0:29:55.0] And much more! https://rationalreminder.ca/podcast/77

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!   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 statistics in Canada. [0:25:30.0] Different house prices for middle-income earners across Canada. [0:29:25.0] Statistics about TSFAs such as who has one versus who has an RRB. [0:30:53.0] How to use TSFAs in connection with other investments. [0:32:18.0] Rules and cautions about TSFAs such as why not to pick stocks in one. [0:32:38.0] Good reasons to use TSFAs such as when one has a low income and is young. [0:32:38.0] Why not to buy mutual funds that charge investors early withdrawal fees. [0:38:33.0] And much more! https://rationalreminder.ca/podcast/76

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!    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!

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! 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 Efficiency model. [0:23:12.0] Using Occam's Razor to compare the 5-Factor model to the Quality model. [0:23:27.0] Assess products using US-listed funds, quantitative implementation, and more. [0:26:19.0] Evaluating different funds’ definitions of quality. [0:28:03.0] The clause about defensive positions which ruins VFVA and VVL products. [0:29:25.0] Why VLUE and QUAL funds have unreliable outcomes due to low holdings. [0:30:15.0] Fidelity FQAL is a waste of basis points due to insignificant factors loaded. [0:33:45.0] Why Fidelity FDVV shouldn’t use investment as a filter. [0:34:49.0] The main takeaways from Ben’s reading of the funds: read beyond the title. [0:36:33.0] Many value factor funds are actually actively managed. [0:37:14.0] What to do as far as getting insurance for income replacement in retirement. [0:38:09.0] Retirement variables such as a mortgage payment or spouse declining to work. [0:41:20.0] Why one should discount aggressive investments when choosing insurance. [0:47:08.0] How reverse mortgages and annuities can stretch out a portfolio. [0:48:01.0] And much more!

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!   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 uses evidence effectively in investment decisions. [0:26:30.0] How to make the decision between DIY investing or using a financial planner. [00:29:16] Some of the lessons that The Loonie Doctor has learned having seen so much death. [00:34:28] Insights into The Loonie Doctor’s framework about asset location. [00:38:36]

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!   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 market efficiency in relation to Fama’s perspectives on the matter. [0:10:36.0] Jim Simons and the mystery of the success of Renaissance Technologies. [0:11:35.0] How lead generation and aggressive sales shut Planswell down. [0:14:25.0] Vanguard is restructuring its fees and lowering its VXC. [0:17:02.0] Why pre-tax asset allocation doesn’t affect expected outcomes. [0:18:11.0] Bonds in an RRSP give a better expected outcome than in a taxable account. [0:20:56.0] Ben’s model endorses investing 75/25 in both the taxable and RRSP accounts. [0:21:20.0] Why putting stocks in an RRSP gives a great expected outcome. [0:23:40.0] What the highest yielding asset classes currently are. [0:23:54.0] Why a more aggressive portfolio as far as asset location is good. [0:28:29.0] How after-tax wealth remains the same through three different location strategies. [0:29:03.0] The pretax drawdown difference between all bonds and all stocks in an RRSP. [0:29:25.0] Future outcomes can still be detrimental to an initially optimal asset location. [0:30:29.0] It is important for people to think of their asset allocation in after-tax terms. [0:31:17.0] Drawing on reverse mortgages to fund retirement spending. [0:32:39.0] ‘Reverse mortgage’ refers to extracting money from a paid-for house. [0:33:22.0] The benefits of reverse mortgages vs regular mortgages. [0:33:42.0] When you take income from a reverse mortgage, it’s not taxable. [0:35:13.0] You can borrow more money out of your reverse mortgage as you age. [0:35:45.0] Are reverse mortgages the symptom of a debt-addicted society? [0:37:13.0] A Policy Advisor study finds that Canadians are drastically uninsured. [0:39:15.0] Shocking statistics on the underinsurance of Canadians. [0:40:15.0] And much more!

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!   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 one index provider. [0:22:49.4] A slowing in ETF spreads and the coming of non-transparent active funds. [0:26:02.2] The evolution towards, and benefits of, direct indexing. [0:29:21.3] ETF as the most robust security short of stashing physical gold. [0:34:16.6] The value of financial advisors to investors who are more trustworthy nowadays. [0:38:10.2] Hourly financial advice rates work for those who don’t need advice long term. [0:41:07.2] The benefits of the AUM model as long as it is made transparent. [0:43:45.9] Charging for advice fees separately stops clients from asking for advice. [0:45:09.3]

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!   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 for investing but does not guarantee answers. [0:14:09.0] Has the value-add factor become obsolete? [0:14:55.0] Highlights from Robert Novy-Marx's presentation at the conference. [0:16:18.0] Insights into and trends in the fixed income market. [0:20:31.0] What peer to peer bond trading is and why it has seen such huge growth? [0:21:17.0] All countries in the world, except for one, have a home country investment bias. [0:22:36.0] Factors to consider when deciding how much to allocate to home country investments. [0:23:58.0] Buying and trading costs and taxes are drivers to own more home-country stocks. [0:26:19.0] The difference between tax payable on international versus Canadian stocks. [0:27:50.0] An explanation of unrecoverable foreign withholding tax related to non-taxable accounts. [0:31:50.0] Some of the ways to get around the foreign withholding tax. [0:33:08.0] How the S&P 500 has been performing in Canada over the last ten years. [0:35:29.0] Why we are comfortable having a third of investments in Canada. [0:37:00.0] Is it possible to have too much in an RRSP? [0:39:40.0] Understanding the differences between an RRSP and a taxable account. [0:41:57.0] Which tax conditions make it better to use an RRSP. [0:44:00.0] The conditions under which your OAS will be clawed back. [0:48:07.0] The one exception where you may not want to contribute to your RRSP at all. [0:51:40] This week’s piece of ‘bad advice.’ [0:53:12]

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!  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. [0:36:24.0] Thinking about persistence in the context of a behavioural component. [0:38:03.0] Why value premiums are not dead and how it relates to behavioural theory. [0:43:22.0] The global explosion of market cap indexing and guidelines for investing. [0:47:28.0] And much more!

In this podcast, the hosts discuss topics such as adjusting the stock and bond ratio, index investing, different types of risk, planning for longevity in retirement, and questionable actions from TD Ameritrade.