Today we have another financial independence case study to learn how a real-life couple here in Canada were able to reach their financial independence number by the age of 34.

We talk specifically about the practical tactics, strategies and mindset that you can apply in your own life, to help hit your financial independence number quicker. Or, if you’re already at financial independence, these tactics can further help solidify and enhance your net worth and that extra financial cushion that’s always nice to have, when you’re living off your portfolio. 

Our guest today is Kyle Prevost who I have run the Canadian Financial Summit with for the past 2 years. What makes Kyle unique with his financial independence story, is that he and his wife were able to get there on two teacher salaries. 

Oftentimes when we hear these stories of couples who have achieved financial independence early, they are often engineers, programmers, or other high paying professions which makes achieving that early retirement number easier. In Kyle’s case, they were able to do it on two teacher salaries instead, so we’re definitely getting a nice unique perspective here.

This interview and presentation that Kyle prepared was actually one of the bonuses that we offered to Canadian Financial Summit attendees who bought the All-Access-Pass so you’ll hear him reference his slides at a few points during this talk, but don’t worry, all the lessons and advice still make total sense without the slides. 

Enjoy the interview and presentation!

Resources from the episode:

The live Retirement Planning Workshop on November 29th at 1pm EST is over at BuildWealthCanada.ca/workshop

The Canadian Financial Summit mentioned on the episode is over at BuildWealthCanada.ca/summit

You can see more of Kyle's writing over at milliondollarjourney.com

Questions from the episode:

1) Kyle, for those not familiar with you, let’s just start with the usual first question in a job interview - “Tell us a little about yourself”.

2) You recently reached financial independence - tell us about what that term means to you, and what your plans are in terms of work going forward.

3) Tell us what you think your keys to financial success were.

4) How did you and your wife Molly earn money after leaving university?

5) Let’s peak inside your portfolio, and tell us how you invest.

6) To wrap up, just to give folks a broad overview on what the financial independence by 34 road map has looked like for you and Molly, can you sum up how you two were able to do it?

Many Canadians tend to dabble in at least a bit of active investing, picking individual stocks, even if they consider themselves primarily total market index investors. As long-time listeners of the show know, I personally only do total market index investing through ETFs, but I think it’s important to stay educated and hear the other perspective of how and why active investors choose to invest the way that they do. 

This episode is going to be a bit of a hybrid because our guest today, Braden Dennis, is an active stock investor who owns an investment research platform called Stratosphere.io. He’s also the host of the Canadian Investor podcast, and with these two companies, it appears that he’s already hit financial independence at a really young age.

So, in addition to asking him about how one should research companies if they want to buy individual stocks, we also get into one of the ways of reaching financial independence and early retirement quickly, which is by starting your own business.

Interview Questions:

1. What would you say is your investing style and what made you pick that over total market index investing?
   
   
2. When I speak to a passive vs an active investor, one of the main things that they seem to think differently about is the efficient market hypothesis. Can you explain what that is for anybody not familiar, and what is your take on it?
   
   
3. Bonds have really taken a hit lately, making many investors wonder whether they should instead do GICs, stay the course, put more into equities (despite those falling recently as well), using a high interest savings account, or using some other investment vehicles. What are your thoughts on bonds and fixed income, and what do you personally do in your own investment portfolio? If you were 5 years away from retirement, would your answer be different?
   
   
4. As someone that is very active in the investing and personal finance field, I imagine you have things pretty planned out and optimized when it comes to the most efficient way to get to your financial independence number. What are you personally doing in your investment portfolio, personal finances, and life to get to that financial independence number as quickly and efficiently as possible?
   
   
5. What keeps you going since it sounds like you can technically just fully retire now and never work again?
   
   
6. One of the ways that I’ve seen you move to your financial independence number quicker is by starting your own businesses, which I see are there to help you and other active investors like yourself. Can you tell us more about the tools and businesses you’ve developed?
   
   
7. I noticed that you’re able to search for index ETFs in Stratosphere too. Does your tool do anything for ETF investors or is it primarily for those that want to research individual stocks?
   
   
8. If somebody wants to do some stock picking, even if it’s just for a small portion of their portfolio, where do you suggest they go and learn? Where did you learn?
   
   
9. Which investment account would you recommend Canadians use if they are going to do any stock picking?

 

Today we have a case study of someone that was able to pull off an early retirement (we get to learn how he did it, and apply those lessons to our own life). He also wrote a book that I personally consider life-changing, in particular when it comes to financial independence, early retirement, and achieving happiness. 

His name is Jordan Grumet, and his book is called Taking Stock, A Hospice Doctor's Advice on Financial Independence, Building Wealth, and Living a Regret-Free Life.

I highly recommend you check out the book. I wish I had it when I first set out on my financial independence journey, and I’ve also found it helpful in designing the lifestyle that we want, in this semi-retired life stage that we’re in right now. 

In addition to the book, in this interview, we also cover:

• How Jordan was able to achieve financial independence at such an early age
• How he figured out whether he had enough to retire
• How he ensures that he’s withdrawing a sustainable amount from his investment portfolio and not depleting it prematurely
• Tips on how you can reach your financial independence number quicker, and much more.

Questions Covered:

1. For anybody that is hearing you speak for the first time, can you take us through your financial independence story, the path you took to get there, how things actually changed for you once you hit your financial independence number, and what you’re doing now?
   
   
2. When you were on your way to financial Independence, what is the process that you did to figure out whether you had enough to retire?
   
   
3. Now that you have hit your financial independence number, what is the process that you do or the calculations that you do to ensure that you are withdrawing a sustainable amount from your portfolio every year?
   (ex. variable percentage withdrawal, 4% rule, spending floor and ceiling, etc.)
   
   
4. Are there any online tools or calculators that you like to use or that you found helpful when it comes to figuring out your financial independence number and your sustainable withdrawal rate from your portfolio?
   
   
5. For those that are still working towards reaching their financial independence number, are there any specific tips that you can give them that had a substantial impact on your own life, that helped you get to your financial independence number quicker?
   
   
6. Once you hit your financial independence number, what were some of the mistakes you made that you think could have been avoided knowing what you know now?
   
   
7. One of the fascinating things that I recall hearing from you when you were being interviewed by Paula Pant, is that you actually went through depression once you hit financial independence. I think this sounds very surprising to most as the underlying assumption that I think most people have of financial independence is that once you reach it, you quit your job, and you have all the time and money you need to focus on being consistently happy. What triggered that depression in your case, and what can we all learn from that experience so that we don’t fall into that same trap?
   
   
8. For me, as somebody that is not in the medical profession, being a doctor seems like one of the most meaningful and fulfilling careers that one could have as you are literally saving lives, or at the very least, vastly improving the lives of others in a significant way when conducting your craft. Yet, you decided to move from that to the field of communication via your book, podcasting, speaking and writing about matters relating to personal finance.
   
   Did you ever feel like you were helping less, or not achieving your maximum amount of positive contribution to society by focusing on personal finance instead of saving lives and healing others as a doctor? (i.e. If we achieve fulfilment and happiness by serving others, wouldn’t the medical field be the way where we can have the biggest positive societal impact?)
   
   
9. In your book, you talk about focusing on enjoying the journey instead of the destination by focusing on “the climb” (striving toward our own unique purpose, identity, and connection). Can you explain what “the climb” is, and how can it be applied by those on their way towards financial independence, and those that are already there?
   
   
10. Speaking of your book, can you tell us more about it, and what listeners can expect to get out of it? 
    
    
11. After achieving financial independence, we have all this time to do what we want and on the one hand, we want to enjoy what we worked so hard to achieve. However, if we just live a life of pure relaxation and hedonism, that ends up being very unfulfilling, and it's easy to start to feel anxiety and potentially depression because we are not achieving our potential, and not living a life where we are working towards something that we find meaningful and fulfilling.
    
    Have you figured out a way to achieve balance in this regard where you still get to enjoy the fruits of your labour from achieving financial independence (pure fun and relaxation), while also filling your time with challenging activities that bring you joy, fulfilment, and meaning?
    
    
12. How do you deal with any anxiety that comes from opportunity cost while financially independent? For example, the internal dialogue of: “I deserve to relax as I just finished doing meaningful thing X and I should strive for work/life balance, but that means that I’m not working on Y which is a great opportunity, which could be lucrative and would help a lot of people.”
    
    (i.e. If you take on too much, you end up getting burnt out. At least that’s what happened with me post-FI).
    
    
13. In terms of maximizing happiness and fulfilment, is there a routine that you follow during any part of your day that works well for you? Or, do you take a more fluid, go-with-the-flow approach, where things are more spontaneous? (i.e. Morning routine, and how structured to you keep the rest of your day?)
    
    
14. What have you found to give you the most fulfilment, whether it's pre-financial independence or post financial independence?
    
    
15. As someone that used to be a full-time doctor, I imagine you have a wealth of knowledge when it comes to maximizing one’s longevity. Can you give us some advice on that?
    
    
16. Tell us again where we can find your book, as well as all the other educational content that you produce.

One resource that I check out every year is MoneySense’s “Best ETFs in Canada” guide.

They bring on a panel of experts to find Canada’s top ETFs for DIY index investors (like myself). I found this guide extremely helpful when I was first getting started in investing, and now, many years later, I still read it when it gets updated annually, just to be “in the know” of what’s happening when it comes to index investing in Canada, and to stay up to date on any significant changes like the updated fees, new ETF offerings, and any changes to existing top ETFs that you and I have in our portfolios already.

This podcast interview is different from you just reading the written version of the guide because we actually do a deep dive into the different ETFs that are in the guide. 

Definitely check out the written version of the guide as well, especially since it has some really useful tables that nicely summarize what the top ETFs are, in the different categories. But, definitely still listen to this interview as the writer of the MoneySense guide is on the show today to dive deeper into the findings, along with one of the top panellists and experts, Ben Felix from PWL Capital to provide his analysis on the different top ETFs.

Questions Covered:

1. Bryan, can you start by telling us about your background, as well as this annual initiative led by MoneySense to determine the best ETFs in Canada? Ben, can you tell us a bit about your background and the work that you do?
   
   
2. Bryan, how does voting work among the panellists before an ETF is admitted as one of the “Top ETFs in Canada”?
   
   
3. Bryan, there are a lot of different investing strategies out there. When you and the panellists are evaluating what the best ETFs in Canada are, what is the goal and strategy that you are all focused on and what kind of investor is this top ETFs list for?
   
   
4. Ben, before we get into the results, what should someone do if they are holding a past ‘top pick’, and now they no longer see that pick on this year’s list? In other words, when should we actually really consider swapping to a completely different ETF if we already have a good diversified index portfolio in place?
   
   
5. Ben, when it comes to switching from one ETF to another, what are the trading costs that we need to be aware of? The $5-$10 trading commissions are the one I think most people are familiar with, but what about the bid/ask spread, how much of a cost impact does that have? And are there any other costs we need to be aware of, when for example someone is tempted to switch ETFs because let’s say, a top pick for this year has a slightly lower MER?

Top Canadian ETFs:

1. Alright, let’s take a look at the top Canadian, total market, index ETFs that give you exposure to the Canadian stock market. I noticed that all three of the top picks have the same management fee.
   
   We have BMO with ZCN, Vanguard with VCN, and iShares with XIC. Ben, BMO’s ZCN and iShares’ XIC look almost identical to me. Are there any key differences between these two that we should be aware of?
   
   
2. The other thing that jumped out at me is that Vanguard’s VCN has fewer holdings, 181 vs 240 compared to the iShares and BMO ETFs. Would this be considered a concern by implying that the Vanguard ETF is less diversified than the BMO and iShares versions? i.e. Why would you go with Vanguard when you can get more holdings and be more diversified with XIC or ZCN?
   
3. Bryan, another top pick in this category is Horizons’ HXT ETF, which covers the S&P/TSX 60. You mention in the article that “it’s tax-efficient; and has a rock-bottom 0.04% fee after the rebate, until at least Dec. 31, 2022”. Can you explain what this rebate is, and why the “at least Dec 31 2022” timeline?
   
   
4. Ben, Horizons has this unique tax structure with some of their ETFs, like HXT, where you don’t receive the dividend payouts as income, but instead they get added to the fund so that you instead receive more capital gains. I realize that I’m maybe oversimplifying things a bit here, but essentially by holding an ETF like HXT in a personal taxable or corporate trading account, some Canadians save money by reducing their clawbacks when it comes to things like CPP, OAS, the Canada Child Benefit (CCB), and avoid the high tax rate when investing in a corporate account.
   
   Now in the past, the government closed this, (what I would consider a) loophole, but Horizons figured out a way to restructure their ETFs so that Canadians can still get these tax savings.
   
   This raises the concern of: What if the government changed things again, closes the 2nd loophole, and Canadians that were holding Horizons ETFs like HXT start selling off ETFs like HXT in large quantities because it no longer has this tax advantage? In this scenario, would the ETF plummet in price? Or no, because the ETF is still holding companies (in a way), and it’s not like the value of all those companies will drop because there is a massive sell-off of the Horizons ETFs.
   
   
5. The last time this closing of the “loophole” happened where the government changed the rules, I recall Horizons doing a press release where they said that if they can’t find a workaround, they may have to close down those ETFs. If that was to happen in the future, would Canadian investors be hurt by this?
   
   
6. Bryan and Ben: The other concern with HXT, is that it is only 60 Canadian companies, and I think most Canadians (myself included) would rather go for the total market approach with an ETF like ZCN, where they are now getting the entire S&P/TSX index with its 240 stock holdings.
   
   Do you think this tradeoff is worth it? (where you’re getting less diversification, but some potential tax savings and/or clawback reduction on government benefits).
   
   
7. Bryan and Ben, most Canadians do have a home country bias when it comes to their investment portfolio. Even when we look at asset allocation ETFs from all the major providers, they definitely hold more of Canada than Canada’s percentage of the world equity markets. Why is that, and what is your stance on what percentage Canadian stocks should make up of a Canadian DIY investor’s investment portfolio?

US Market ETFs:

1. Alright, let’s jump to the US market. XUU still appears to be the favourite here among the panelists, as far as Canadian listed, US total market index ETFs go. The runner-up seems to be VUN which is comparable in terms of US stock market representation, but has a higher fee of 0.15% vs XUU’s extremely low fee of 0.07%.
   
   Do you guys have any thoughts and comments on this one?

International ETFs:

1. Alright, let’s jump to international stocks. Can you give us your thoughts on these, while touching on some of the nuances when it comes to choosing the different combinations, from the different providers, when it comes to emerging and developed international markets?

If you’ve done any sort of research on index investing and ETFs, then I’m almost certain you would have heard of Vanguard, as they are one of the pioneers in this space.

They have a very impressive massive following in the US and have really established themselves in Canada as well, where they are the 3rd largest ETF provider. 

I always wanted to interview them because I’m sure, like you, as one invests, you begin to wonder about certain things when it comes to index investing, and ETFs in general. 

I’ve been accumulating this list of questions for them over the years and it’s exciting to finally get a chance to interview them. 

Questions Covered:

1. Asset allocation ETFs have become incredibly popular here in Canada so I thought we could start our conversation there.
   
   First, for anybody just getting started in DIY investing, can you briefly explain what asset allocation ETFs are?
   
   
2. One of the key appeals of asset allocation ETFs for many Canadians, is that the funds within the ETF are automatically rebalanced. Therefore, DIY investors don’t need to use tools or a spreadsheet to do this themselves.
   
   How often are the Vanguard asset allocation ETFs rebalanced? And when we have something like the large but brief crash from COVID, are the asset allocation ETFs rebalanced at a different interval during such significant events?
   
   
3. A dilemma that I’m sure many Canadians face is whether they should use an asset allocation ETF for their entire portfolio, or whether they should split it up and buy individual ETFs instead, to get a slightly lower cost and increased tax efficiency by being able to place the individual ETFs in the account type that is most efficient for that ETF.
   
   Is there a certain threshold in terms of portfolio size, or something else where you think Canadians should consider switching from an asset allocation ETF to individual ETFs?
   
   
4. When it comes to your asset allocation ETFs, I noticed that your allocations definitely differ from your main competitor iShares. Can you take us through how your asset allocation ETFs are different from iShares, and why you believe your methodology is superior?
   
   
5. DIY Investors that classify themselves as total market index investors often hear that their equity asset allocation should be based on market cap weights. For example, since Canada is only 2.4% of the world markets, then only 2.4% of our portfolio should be in Canada (source).
   
   
6. However, when we look at the asset allocation ETFs of Vanguard (and your competitors), we notice that Canada is overrepresented (i.e. a home country bias), and the US is underrepresented with respect to just their market cap weights.
   
   I know there is a reason you do this and Vanguard has done research on this so can you take us through why your weights don’t actually try to exactly match the market cap weights that we see across the world?
   
   
7. One particular ETF that I’m sure has caught the attention of many retirees (or soon to be retirees) is the Vanguard Retirement Income ETF (VRIF). Can you explain what this ETF is, and the pros and cons of using it vs just holding a more traditional core total market index portfolio (like VGRO or VBAL for example).
   
   
8. One of your popular ETFs is VUN (the Vanguard US Total Market Index ETF). Traditionally, Vanguard and iShares tend to have almost identical fees (MER), when it comes to total market index investing.
   
   However, I’ve had several listeners ask why in the case of VUN, its main competing ETF (XUU from iShares) is at a 0.08% MER whereas Vanguard is double at 0.16% MER.
   
   Now I realize that these are both still really low MERs, especially when we compare them to traditional mutual funds that tend to have MERs of 2%+, but I was wondering if this uncommon discrepancy in fees is something that is on Vanguard’s radar, and is Vanguard considering matching iShares like it has in the past with many of its other ETFs?
   
   
9. This next one is a bit technical, but for Canadian investors that are really trying to optimize their portfolio: Whether stocks are held directly or through an ETF in another country like the US becomes important, due to the two layers of withholding tax that we have to pay if we’re holding international stocks through a US listed ETF.
   
   With the Vanguard international ETFs (VEE and VIU), are the international companies now held directly instead of through a US listed ETF? And if not, is that something that Vanguard is looking into changing in the future so that Canadian investors no longer have to endure those two layers of dividend withholding tax?
   
   
10. Vanguard is seen by many Canadians as the pioneer when it comes to passive, total market index investing, especially with your founder Jack Bogle being such a strong supporter of total market index investing. I noticed however that Vanguard also has an active investing division. Can you tell us more about that as typically active investing is viewed by DIY passive index investors as the complete opposite of passive total market index investing.
    
    
11. Why does Vanguard believe that having a combination of both active and passive funds plays a critical role in a well-diversified investment portfolio?
    
    
12. Can you tell us about the different resources available on your site for investors?

Today I have Brandon Beavis on the show who runs one of, if not THE largest YouTube channels on investing, specifically for Canadians. He has over 187,000 subscribers, and also runs the channel with his dad who has decades of financial planning experience here in Canada. 

Since Brandon and I have each been optimizing our finances and investments for so long, and since we each specialize in this, we thought it would be fun to do a collaboration where we each share how we’ve optimized our investments and finances so that everybody watching on his channel and listening on my podcast can get two different perspectives and ways of doing things. Then you can pick and choose whatever you think is a better fit for you, and what you think will have the biggest impact on your finances.

Come join me at the Canadian Financial Summit:

Before we get into the show, I wanted to invite you to join me, for free, at the Canadian Financial Summit this year. It’s a fully online educational event, you can stream all the talks for free, it starts this October 12, 2022, and you can get free tickets to stream the talks for free over at BuildWealthCanada.ca/summit. 

We have over 35 speakers this year, there are already over 22,000 Canadians registered for the event, and we'll be covering investing, real estate, financial planning, early retirement, and much more.

We've got some really high-profile guests again this year including Brandon Beavis and Benjamin Felix who each run one of, if not the largest YouTube channels in Canada on investing. We have Rob Carrick from the Globe and Mail, many of the top writers from MoneySense are presenting, along with some of the largest Canadian personal finance bloggers and writers like Robb Engen, Mark Seed, Ed Rempel, Jason Heath, and many more.

Here's the link for your free tickets: BuildWealthCanada.ca/summit. 

I hope to see you there!

And now, let’s get into the interview.

Today I have one of, if not THE largest financial literacy educators in Canada on the show, and we’re going to go over some practical tips to deal with this horrific inflation that we’ve all been experiencing here in Canada. 

 

These tips and education covered in the episode are of course, applicable right now as we go through this high inflation period. But, even if you end up listening to this episode years after it’s been launched, we made sure that they are still relevant and applicable long term as well.  

 

You might have seen our first guest on Dragon’s Den, where literally all the dragons were bidding to partner with him. His name is Kevin Cochran and he is the founder of Enriched Academy, which is a company that teaches financial literacy, and does financial coaching for everyday Canadians like you and I. They are also now in many schools across Canada, teaching financial literacy as well. 

 

Also from Enriched Academy, we have Arian Beyzaei back on the show. He’s one of our really popular past guests, and you might have seen him featured on Financial Post, Globe and Mail, and other news sources. 

 

I’m really excited to get things going here as both Kevin, Arian, and myself are actually born in different generations so I thought it would be fun and insightful to have the 3 of us on, as that way you get a unique perspective, no matter which age group you fall into.

 

Free Tickets to the Canadian Financial Summit:

Before we get into the show, I wanted to invite you to join me, for free, at the Canadian Financial Summit this year. It’s a fully online educational event, you can stream all the talks for free, and it starts this October 12, 2022 (so only a few days away). 

 

You can get free tickets to stream the talks for free over at: buildwealthcanada.ca/summit 

 

We have over 35 speakers this year, there’s already over 20,000 Canadians registered for the event. We'll be covering investing, real estate, financial planning, early retirement, and much more.

 

We’ve got some really high-profile guests again this year including Brandon Beavis and Benjamin Felix who each run one of, if not the largest YouTube channels in Canada on investing. We have Rob Carrick from the Globe and Mail, many of the top writers from MoneySense and some of the largest Canadian personal finance bloggers and writers like Robb Engen, Mark seed, Ed Rempel, Jason Heath, and many, many more.

 

I hope to see you there! Here is the link again for the free tickets:

buildwealthcanada.ca/summit 

 

Resources Mentioned:

 

The free assessment call mentioned on the episode is available here: buildwealthcanada.ca/call

The Ultimate Phone Script PDF is available for free download here: buildwealthcanada.ca/script

 

Questions Covered:

1. What is the dynamic of inflation and interest rates?
   
   
2. What is the right mindset for Canadians to help them through these challenging times without creating stress and harm to themselves?
   
   
3. What are some defensive financial strategies to help Canadians get through these times?
   
   
4. What are some financial strategies to help Canadians thrive during these challenging times ie. Investments?

I always thought it would be neat to interview someone, that is actually part of the organization that runs the Toronto Stock Exchange.

Most of us have the majority of our retirement savings in ETFs or stocks and so it makes sense to actually have some understanding of the exchanges here in Canada, how they work, and the relationships that exist between the brokerage that you use to actually buy your investments, the stock exchange itself, and the governing bodies and regulators that are there to ensure that investors like you and I are protected.

To help us with this, I have Richard Ho on the show. Richard works for the TMX Group, which is the organization that actually runs the Toronto Stock Exchange, the Montreal Exchange, and other exchanges that we’ll learn about today, here in Canada.

One of Richard’s responsibilities, is leading educational initiatives to help improve investor education, for Canadians like you and I. 

One of the educational initiatives that I wanted to really highlight, is that Richard and his team have put together a free to enter competition, with a $10,000 grand prize, and 7 weekly prizes of $500 each. The competition revolves around investing using options.

If you’ve ever wanted to learn more about what options are, and how they can be used to make money, definitely listen to this episode, but also take part in this free competition as it’s a risk-free trading simulation contest, with a lot of educational resources.

The way that it works is that you have a virtual portfolio of $100k, and the question is: Can you strategize and trade options to earn the highest returns in hopes of winning the weekly cash prizes, a $10,000 grand prize and bragging rights as Canada’s Top Options Trader? 

The contest runs for 8-weeks and kicks off on September 19, 2022. You can register for free here.

There’s no entry fee, it’s just good education on the subject, and a way that you can try options as a tool in your investment portfolio, without actually risking any of your own real money. 

So good luck, and now let’s get into the interview with Richard. 

Our Expert Guest:

I’ve invited Richard Ho, DMS, CAIA, FCSI, Director of Equity Derivatives and Customer Relationship Management at TMX Montréal Exchange, who is responsible for leading educational initiatives and partnerships with brokerage firms to discuss what makes this contest exciting, how it differs from past editions, and the educational component surrounding it.  

Richard also collaborates on Option Matters, a Montréal Exchange blog whose mission is to help individuals increase their knowledge of the options market. 

Resources Mentioned:

• You can enter the contest for free here (it runs from September 19th 2022 to November 11th 2022).

More educational resources:

Education on Options: optionmatters.ca

Montreal Exchange Education Resources: m-x.ca/education

Montreal Exchange Equity Derivatives & Options Education: m-x.ca/options

The Montreal Exchange Main Site: m-x.ca/en

The main TMX site (where all the Canadian exchanges are): tmx.com

Questions Covered:

1. To set the foundation, can you take us through the different exchanges here in Canada. For instance, most of us know about the Toronto Stock Exchange, but what are the other exchanges in Canada? and what do we need to know about them as Canadian investors?
   
   
2. You are part of the TMX Group. Can you explain what the relationship is between the TMX Group, and these exchanges? And where can we go to learn more, for anybody that wants to dive deeper?
   
   
3. Since the exchanges are such a critical component in Canada’s economy and our personal retirement savings, how are investors protected? I imagine there is a lot of government regulation and monitoring?
   
   
4. Options have become a very popular topic lately, yet most of us haven’t been taught anything about them when in school. For somebody completely new to options, can you give us some detail on what options are, how they work, what type of investor they tend to be suited for, and where can we go to learn more about them?
   
   
5. A lot of the investors on the show (myself included) are DIY, passive, total market index investors. Options seem like a tool that we can learn about and have in our arsenal, to use when needed. 
   
   
6. What purpose can they serve for a passive do-it-yourself investor that typically just tries to buy the market as a whole using ETFs? And how much of a time commitment is it to learn how to do it properly?
   
   
7. When it comes to the work that you and your team do, what are your actual goals or mandate? For instance, the TMX Group is a publicly traded company on the Toronto Stock Exchange, just like other for-profit companies, yet you don’t actually sell anything to DIY Canadian investors like myself, and I noticed that your team also produces a lot of educational content for Canadian investors like optionmatters.ca, and you even do contests and competitions to encourage investor education. How does all that work?
   
   
8. Can you tell us more about the free-to-enter competition that you have coming up?
   
   
9. For anybody that maybe doesn’t feel comfortable entering the competition yet, or is listening to this podcast episode months after the competition has already taken place, where can they go to learn more and access the different free investor education resources that you and the team have put together? 
   
   
10. Can you take us through any basic options strategies that investors can try out, both during the contest and/or in real-life?
    
    
11. Tell us again where we can go to access more of the free investor education tools that you have available, as well as where we can signup, for free, to the Options Trading Simulation Contest.

One question that I’ve been getting asked a lot, both from listeners of the podcast, as well as those in my investing course, is how to deal with and optimize any sort of investments through your work. 

Typically, in Canada, when you work for a mid-size or large organization, you’ll either be part of a defined contribution pension plan, or a defined benefit pension plan. 

We’re going to cover both types of pensions in this interview, and specifically, some of the things we’ll cover are:

1. How should a pension factor into how you view your finances/investments? (And again, this is all going to be for both types of pensions, no matter which one you have).
   
   
2. What should your portfolio look like with a pension (i.e. more equity than bonds?), especially depending on the type of pension that you have.
   
   
3. How to factor a pension into an early retirement.
   
   
4. The tax implications of potentially taking a buyout for early retirement (if that's an option)

We cover all that, and much more in the interview (scroll down for the full list of questions). 

Our Expert Guest:

To help me with this, I have Robb Engen on the show, who is one of the most reputable fee-for-service financial planners that I know of in Canada. 

He also runs one of the largest and most reputable personal finance blogs in Canada called boomerandecho.com. 

He’s regularly quoted or featured in financial media such as the Globe & Mail, MoneySense, the Financial Post, CBC, and Global News. He used to actually work for a university here in Canada, where he had one of those nice gold-plated pensions, but ended up transitioning from that to becoming self-employed, so he had to go through this pension analysis himself first-hand on what to do when you have a pension, and then no longer wish to stay with that employer. 

Because of his background, first-hand experience with pensions, and fantastic reputation in this space here in Canada, I thought he’d be a great fit for this episode, as he’s gone through these options and this analysis himself, so it’s not just some theory that we’re going to be talking about here.

Resources Mentioned:

Robb's Site:

BoomerAndEcho.com

Robb's Fee-for-Service Financial Planning Page:

https://boomerandecho.com/fee-only-advice/

You can get your free Passiv account here:

BuildWealthCanada.ca/free

My guide on how to redeem your free premium account upgrade in Passiv is here:

BuildWealthCanada.ca/passiv

You can view the stock/equity side of my portfolio (what I invest in and how much of each ETF type I buy) here:

BuildWealthCanada.ca/portfolio

The account that I use for the safe part of my portfolio is here (I use the high-interest savings account, but they also do GICs if you are willing to lock in the money for a bit to get a higher rate):

BuildWealthCanada.ca/safe

Questions Covered:

1. To start things off, can you take us through what the main pension types are for Canadians, and what are the key differences between them?
   
   
2. How should the 2 different pension types factor into how you view your finances and investments?
   
   
3. What should your investment portfolio look like, depending on the type of pension that you have?
   (ie. more equity than bonds if you have a defined benefit pension?)
   
   
4. How do you factor in a pension into an early retirement? (for both pension types)
   
   
5. What are the tax implications of potentially taking a pension buyout for early retirement? (if that's an option)
   
   
6. Robb, you had a defined benefit pension when you worked at the university before becoming self-employed as a fee-for-service financial planner. Can you take us through how you decided between keeping the pension vs receiving the buyout?
   
   What are the pros and cons of each approach?
   
   
7. When you have a defined benefit pension plan, your RRSP contribution room gets reduced. This begs the question of whether employees with good defined benefit pension plans should even bother with RRSPs.
   
   Let’s also tackle this question for those with a defined contribution pension too.
   
   
8. Let’s talk about our investment options with the two different pension types.
   
   For people with defined benefit pensions, do they have any options in terms of how much to contribute, and what that money goes into? (ex. Something environmentally or socially conscious (ESG), something more aggressive, more conservative, etc?)
   
   
9. For defined contribution pensions, you definitely have to pick what the money goes into but it can be overwhelming analyzing and choosing from the different investment options offered by the company that your employer has selected.
   
   When you speak to a client that is struggling with this, is there a certain process or approach that you suggest to them to help them decide on what investments to pick?
   
   I’ve gotten asked this a lot by students of my investing course so I came up with a process that I thought I’d share. Robb, feel free to jump in if you have anything to add or if you disagree on anything and that way listeners have a nice step-by-step process from both of us that they can use.
   
   
10. Can you take us through some common mistakes that you see people do with the two different pension types?
    
    
11. Thanks so much for coming on again Robb. We look forward to seeing you at the Canadian Financial Summit again this year as one of the speakers. Tell us again where we can see more of your, content, research, and learn more about your practice?

Long-time listeners of the show know that I am always on the hunt for personal finance and investing tools that actually work for us Canadians. Too often we hear about some great tool or resource and then it turns out that it’s only for those in the US.

With that said, I wanted to bring on two CEOs today. The first is from a tool that I’ve been using and been hooked on for years now, which essentially automates any rebalancing that I have to do in my portfolio (so I don’t have to do the tedious data entry into a spreadsheet anymore to calculate how much of each ETF I have to buy every time that I have some money to invest).

One thing that I recently noticed is that I almost never log into my Questrade account anymore, because I would much rather just buy the investments right within one tool for all our accounts, whether it’s my account, my wife’s account, or our kids’ RESP, instead of having to log in and out of each account and doing the trades and calculations manually.

Our Guests:

The tool and company that I’m talking about is Passiv. The CEO and our 1st guest today is Brendan Lee Young, and you can actually use Passiv for free, over at BuildWealthCanada.ca/free. They integrate with different Canadian Brokerages out there like Wealthsimple Trade for example, but if you’re a Questrade user like me, you actually get their Premium account for free, so that you can do the trades right within the tool and make your portfolio more tax efficient right from within Passiv.

Our second guest CEO is Alex from Global Predications which is a tool that I just recently heard about that is now available in Canada. I’m in the process of trying it out now. Some of its main functionality is that it can help find risks and problem areas within your investment portfolio, give suggestions on how to improve your portfolio, and let you visualize your net worth using all your assets (instead of just your investment portfolio). And, if you want to check them out, their Canadian page where you can get a free account is here. 

I thought we could have an interview to discuss some of the tools available to us Canadians, and as a bonus, what’s really neat is that Passiv actually has a way for you to share what investments you’re holding with others, so in this episode, I also provide a link to my portfolio in Passiv so you can see exactly which ETFs I buy, and what my asset allocation is in terms of bonds vs stocks, and in terms of geography (so how much I have in Canada vs US vs International).

I hope you enjoy the discussion!

Resources Mentioned:

You can learn more about Passiv and get a free account here.

You can also see my asset allocation and what ETFs I buy using Passiv here.

Here is the Global Predictions page where you can get free access, specifically for Canadians. FYI, this page is specifically for Canadians so you'll find it more relevant than just going to globalpredictions.com (which is the US version).

Thank You To Our Sponsor: Shopify

A big thanks to Shopify for sponsoring this episode. You can get a free 14-day trial of Shopify here.

Shopify, helps make it easier than it’s ever been to start, run, and grow your own business. There’s no need for you to know how to design or code, and I really love how Shopify makes starting your own business possible for anyone.

You can start selling on Shopify today by going to shopify.ca/bwc where you’ll receive a FREE 14-day trial.

When learning how to invest, we are consistently told to conduct our “due diligence” on the investments that we’re considering buying. Yet, almost all of us haven’t actually been trained on how to analyze the investments that we’re considering, so that we choose the ones that are right for our particular situation.

To help remedy this, I thought it would be good to give listeners a bit of a training on how to actually interpret the figures and terminology that we see used here in Canada, when we’re considering purchasing an investment. 

Now this is obviously a very large topic as there are many types of investments, so I thought we could start with learning how to understand bonds (especially bond ETFs). 

We’ve definitely seen some drops in the market recently and I suspect many investors are wondering about holding bonds, if they are holding the right types of bonds, and how to actually interpret the data that you see when you’re looking up information about a bond ETF. 

Guest Bio:

To help me with this, I have Danielle Neziol back on the show. Danielle and her team actually created and continue to manage the largest bond ETF in Canada (and in case you’re curious, that ETF is ZAG from BMO ETFs which now has over $5.8 billion in net assets). 

Danielle is the Vice President over at BMO ETFs, and I thought it would be great for us to actually get some training from her on how to interpret the facts sheets that we all see when we look up any type of bond ETF, no matter who the provider is.

My goal is that this interview gives you the knowledge to be more confident in your investing, and hopefully helps relieve any anxiety that you may feel when it comes to choosing your own investments, or helping ensure that you are in the types of investments that are the best fit for you.

Resources Mentioned:

Danielle and her team host free weekly webinars where you can learn more about ETFs, as well as ask them your ETF questions. I've been a guest there several times and it really is a great resource for Canadian DIY investors.

You can view past replays and sign up to attend the upcoming webinars for free here: etfmarketinsights.com

Also, be sure to subscribe to the ETF Market Insights YouTube Channel where you can also see past recordings.

Questions Covered:

1. Investors place a lot of time deciding how much of their portfolio should go into bonds vs stocks. Yet, when it comes to bonds, there are several different types and they can each behave differently. Can you speak to the different types of bond ETFs out there, and what differences can we expect from them? Especially when it comes to changing interest rates and different economic climates?
   
   
2. When examining all these different types, I can see it being overwhelming for some investors when they do a search and see dozens of different bond ETFs out there from all the different providers. One may begin to wonder whether they should pick and choose individual bond ETFs, or whether they should just hold one large aggregate bond ETF like ZAG which holds all these different types of bonds in a diversified manner. For those struggling with this question, what advice can you give?
   
   
3. Does a rising interest rate environment like we are in now change how we should be thinking about bonds?
   
   
4. Often when I see a model portfolio from a professional in the industry, the bond portion of the portfolio includes a bond ETF that contains only Canadian bonds. ZAG if I’m not mistaken also holds exclusively different types of Canadian bonds. Why is that, when with equities on the other hand, we want international diversification?
   
   
5. One of Canada’s largest bond ETFs (ZAG) is designed to replicate the FTSE Canada Universe Bond Index. Is this index a standard that many other bond ETF providers are using as well? And for us index investors, how can we make sure that the ETF we choose is trying to replicate the correct index?
   
   
6. When evaluating which bond ETF(s) to use for our investment portfolio, we should be looking at the fact sheets of those bond ETFs to get a better understanding of what they are and how they are likely to behave.
   
   Yet, most of us haven’t been trained on how to read these, especially in regard to what the different terms mean. I was hoping that we could go through a real-life bond ETF fact sheet and you could tell us what some of the less obvious terms mean, and what we should be looking for.
   
   Let’s use ZAG as an example. Listeners can go to BuildWealthCanada.ca/zag for anybody that wants to follow along:
   
   Weighted Average Term (year): Can you speak to what that is, and what impact does that have on what you can expect from the ETF?
   
   I think at the end of the day, a lot of investors what to know, “If I buy this bond ETF now, what kind of interest income can I expect to receive?” When we look at the fact sheet of a bond ETF however, we see three different percentages. There’s the: 

• • “Weighted Average Coupon %”
  • the “Annualized Distribution Yield”
  • and the “Weighted Average Yield to Maturity”.
    
    What do each of these mean? And how can we interpret the numbers provided there?
    
    Next, we have two terms that apply to equity ETFs as well, and that’s “Maximum Annual Management Fee” and “Management Expense Ration” (the MER). Can you explain the difference between the two, and how should investors interpret these numbers when they see them on any ETF in the marketplace?
    
    What would you consider a higher vs low MER?

7. ETF fact sheets typically have an annualized performance section where they show how the ETF performed relative to its index. For ETFs that are looking to match the index, what would be considered a reasonable spread between the two vs a concerning number?

8. One page that seems especially critical to evaluate, whether evaluating a bond ETF or an equity ETF, is the “Holdings” page where we see all the investments that the ETF contains. Let’s pretend that you just pulled up a core bond ETF like ZAG and went to its holdings page. What would you look for and how would you analyze and interpret the data that you see there? (for anybody that wants to follow along, you can go to BuildWealthCanada.ca/zag and that will forward you there) and click on the holdings tab.

Areas to cover:

• Sector allocation
• Geographic allocation
• Maturity
• Credit allocation

Are there any other areas that you think are critical to look at, and if an investor is feeling overwhelmed by the large amount of bond ETFs out there and is getting into a bit of paralysis analysis, what would you recommend as their next step?

9. Can you speak to the relationship that bonds have with rising interest rates, and at what point do we start to take advantage of those higher interest rates in our bond portfolio to offset the drop in price that occurs when interest rates go up?

10. For anybody looking to learn more, can you tell us more about ETF Market Insights, the YouTube channel, and any other resources listeners may find helpful?

Today I’m extremely excited to have Canadian best-selling author, Andrew Hallam back on the show. His first book, Millionaire Teacher continues to be the #1 best seller in the Investment and Portfolio Management category on Amazon.

He is one of the world’s most prolific financial wellness speakers and over the past 16 years, he has given hundreds of talks in over 30 different countries espousing research on financial wellness, sound investing and life satisfaction.

He has been investing in the stock market for 32 years, having built a million-dollar portfolio on a schoolteacher's salary when he was in his late 30s.

In today’s interview with Andrew, we cover the subject of how to achieve balance, and how to maximize your happiness, health, and wealth.

We also cover what to expect and how to maintain balance after having hit your financial independence number. Lots of early retirees in the FIRE movement and traditional retirees continue to do some sort of productive paid work. Why is that, and is it realistic to never work again after you retire? 

As you can imagine, generating some minor income after retirement, doing something you love, can drastically decrease how much money you actually need to retire from your day job, potentially letting you leave that job you may dislike or be bored with many years earlier. 

Since Andrew is already financially independent, we dissect how Andrew has found that balance in his life between taking on meaningful and fulfilling work, and balancing that with leisure, health, and happiness.

Questions Covered:

1. When a lot of people, myself included start their financial independence journey, the goal is to never work again and that becomes a major motivator to accumulate all those savings to be able to retire.

Yet from my own experience and after interviewing many other early retirees, I've noticed a pattern where most if not all still end up doing some sort of productive work or something that could be classified as “work” even though they don't have to, since they've already reached their financial independence number.

Did you have the same experience as you moved from the accumulation stage to the financial independence and retirement stage, and from your experience what have you found to be a good balance in your own life?

2. You've spoken with many other early retirees who I assume had a similar experience in terms of that progression from initially never wanting to work again and live a life of leisure permanently, versus eventually realizing that there needs to be a balance to achieve sustainable happiness. Have you noticed any patterns from those you've talked to in terms of how they were able to find sustainable happiness and what that balance was for them in order to achieve it?

3. After reading your book, it becomes very clear that health and longevity is something that is a high priority for you, and should be for all of us since what’s the point of accumulating all this wealth and retiring if you don’t live long enough to enjoy it.

From the research that you’ve done, what have you found to be the best practices to maximize our health and longevity?

1. 1. Nutrition?
   2. Types of exercise and frequency?
   3. Cancer prevention?
   4. Stress control?
   5. Energy maximization?

4. In terms of maximizing happiness in retirement, is there a routine that you follow during any part of your day that works well for you? Or do you take a more fluid, go-with-the-flow approach, where things are more spontaneous?

5. Do you find that goal setting and trying to achieve growth and improvement in retirement adds to your happiness and fulfilment? Or do you take the approach of trying to just be happy with where you are, living in the moment, as opposed to continuously striving for more?

6. Please tell us again where we can learn more from you and get your latest book.

When it comes to the safe portion of our portfolio, we’ve talked about GICs and high-interest savings accounts before, but one option that we haven’t talked about yet, is one that gives you guaranteed income for life, no matter what the markets are doing, and those are called annuities.

So, I thought it would be good for you and me to get some annuities 101 knowledge under our belts, so that we can better understand what’s out there, what are the pros and cons of annuities, and so that we can better determine if they are something that we should look into further, based on each of our particular situations.

To learn more about this, I thought it would be good to get our information from two different sources. The first, would be fee-for-service financial planners who don’t actually create or sell annuities, but are responsible for potentially using annuities as part of a total financial plan. 

With that in mind, I’m definitely going to be asking financial planners that I interview in the future about annuities, so that we can get a holistic view and multiple perspectives on the subject.

The other source of information that I thought would be good to interview, is an actual creator of annuities. This way we’re getting the information right from the source about how they actually work, their intent, the pros and cons, and how they can potentially fit as part of a financial plan. 

To help me with this, I have Selene Soo on the show. She is the Director of Product Strategy and Development in the area of Wealth Management over at RBC. She has been there for over 17 years, and has been in the industry itself for over 2 decades, so she definitely has a wealth of experience and knowledge when it comes to annuities.

I thought I’d pick her brain so that we can get a solid foundation on annuities, and one question that I’ve been extremely curious to ask someone like her that’s actually in the industry, is for those of us who don’t have a defined benefit pension through our work (for example, those of us that are not government works, teachers, police officers etc.), is there a way that we can get the type of guaranteed income for life in retirement that the government workers get, by using annuities?

We definitely get into that question, plus a lot more. Thanks for tuning in, enjoy the learning, and now let’s get into the interview. 

In this episode, we cover the rising interest rate environment that we're currently in here in Canada, and how it can impact you financially.

We also cover how to decide whether you should go fixed or variable on your mortgage in the current interest rate environment.

Next, we cover the subject of how you can take out some of the equity that you’ve built up in your home, so that you can either use it to invest, or deploy it elsewhere (without having to actually sell your home).

We also discuss the Smith Manoeuvre, which is a technique that you can use here in Canada to make your mortgage interest tax-deductible (and be able to invest a bit easier when you pay down your mortgage).

All this and more on this month's episode. 

Questions Covered: 

1. For the first time in over 3 years, the Bank of Canada has started raising interest rates. What should we be considering if we have a variable rate mortgage or have debt that’s tied to the prime rate (like a home equity line of credit)?
2. For Canadians that have their mortgage coming up for renewal in the near future, or those looking for a new mortgage, based on the current environment, what is the mortgage rate outlook for the coming year and how can those Canadians best decide whether they should go fixed or variable?
3. From what you’re seeing, what is the real estate market outlook for this coming spring and the rest of the year? Is it likely to be a buyer's market or a seller's market? What kind of buying/selling environment should people be ready for if they are thinking of moving, buying/selling a house?
4. Home prices have grown substantially over the years making many Canadians who already own a house pretty wealthy on paper, but much of that money or equity is tied up in the house, and I’m sure many of us would like to be able to use some of those gains either for investing, or other things. We’ve probably all heard of using a home equity line of credit (HELOC) to take some of that money out, but what are the other options available to us, and what are the pros and cons of using a HELOC vs these other options? 
5. On the flip side, with the rising cost of living (we’re hearing about inflation a lot), cash flow is becoming a challenge for some Canadians, making it even more difficult to find extra cash to invest for their retirement, while also paying down their mortgage and other expenses. However, there are strategies to pay down your mortgage and invest at the same time. Can you explain this strategy to listeners that are in this situation? And what are the pros and cons? 

On this month's episode, we're going to discuss some of the most frequently asked investing questions that I receive.

The first of these is helping you decide if you should just pick one ETF for your entire portfolio (these are referred to as asset-allocation ETFs), or if you should pick and choose multiple ETFs for your portfolio to fine-tune tune it based on your specific preferences. 

We also talk about how to determine the asset allocation for your portfolio (the stock to bond mix), as well as how to determine how risky the ETFs that you're considering actually are.

It turns out that there is an actual standardized risk rating in Canada to help you determine this which I think you'll find really helpful.

Last but definitely not least, we cover socially responsible investing (also known as ESG investing) to help you decide whether ESG ETFs could be a good fit for your investment portfolio, and some things to be careful about and consider, when partaking in socially responsible investing by buying these types of ETFs.

To help me with this, I'm thrilled to have Danielle Neziol back on the show. Danielle and her team actually create some of the most popular ETFs that Canadians invest in.

She works for BMO ETFs which is the largest Canadian ETF provider in the country, so we're literally getting this information right from the source here which I'm always a big fan of. 

Danielle and her ETF research team have put together a lot of free resources for Canadian DIY investors over the years, and because there are so many of them, I created a resources page where you can see them listed and access them easily. 

They're all free, they're not affiliate links or anything like that, and you can check them out and start learning over at buildwealthcanada.ca/bmo

Enjoy, a big thanks to Danielle and the team for putting these together and making them available free of charge, and now let's get into the interview. 

Many listeners of the show (myself included) are total market index investors, where we just buy ETFs that are meant to represent the entire market as a whole, worldwide (as opposed to stock picking, or trying to speculate what will go up or down and investing based on that).

After you’ve been index investing for a while though, it’s easy to begin to wonder whether you should customize your portfolio a bit further so that it’s more aligned with your particular situation, or so that it holds more of the types of companies that you want in your portfolio.

When you start looking into this, you’ll quickly come across what is known as factor investing, which can be used to tweak your portfolio so that it holds more companies that contain specific attributes that you like.

In this interview, we talk about the benefits of doing this so that you can better decide for yourself whether it’s worth the added complexity in your portfolio.

We also discuss the risks that you need to be aware of if you partake in modifying your investment portfolio in this way, and we cover how you can analyze factor ETFs to find out which (if any) are the right fit for you.

Of course, we also cover some of the different types of factor ETFs out there and what they mean, so that you can better decide about potentially incorporating them into your portfolio.

Questions:

1. A lot of the listeners of the show are total market index investors, where we just buy the market as a whole using the same core ETFs. What is the advantage of now also adding factor ETFs into our portfolio?

2. What are the risks of incorporating factor ETFs into our portfolio vs just sticking with a total market indexing strategy?

3. There are a lot of factor ETFs out there. How do we begin to analyze them as a DIY investors to find out which (if any) are the right fit for us? Are there any educational resources you can recommend?

4. Would you consider factor investing to be “active” investing?

5. When I spoke with your team in the past, it was mentioned that BMO believes that it is most optimum to have both passive and active investments within our portfolio. Interestingly, when I interviewed Vanguard in the past, they also had the same viewpoint (I wonder if that’s a common viewpoint among all the major ETF providers).
   
   Can you share why you think our investment portfolio should have an active component as opposed to just being 100% passive through total market index ETFs?

6. When factor ETFs get launched, they don’t have a long history where we can, for example, stress test them by seeing how they performed during the 2008 financial crisis or the tech crash in the 2000s.
   
   If we want to see/simulate how that ETF would have performed in adverse market conditions, how would we go about doing that?
   
   I suppose we can use this approach for most new ETFs that get launched and that we want to evaluate?

7. How is using factor ETFs different from just using active ETFs or mutual funds?

8. Would it be fair to say that we can start with a broad, total market ETF approach, but then we can use factors to fine tune our portfolio for our specific needs?
   
   (i.e. To either increase potential returns at the cost of risk/volatility, or to reduce volatility/risk at the expense of lower expected returns?).
   
   Are there things that we should consider other than just looking at returns and volatility?

9. In one of the BMO white papers I read, it was mentioned how one strategy is to go into and out of factors depending on the economic climate. For example, if we’re seeing slowing vs rising growth, or increasing vs decreasing inflation. However, most listeners of the show (myself included), I think prefer the set-it-and-forget-it approach where we don’t have to follow the economy, the different economic markers, or the markets.
   
   Instead, we would rather just have the same ETFs to buy every month with a piece of every paycheque, and just hold those ETFs long term until retirement.
   
   For those types of investors, should they just do total market index investing or can factors still be a smart tool to use, without having to analyze what economic climate we are in?

10. Can we go through each of the different factor types and explain what they are?

11. Where can we learn more about factor investing, and where can we get some of your free tools, white papers, and other resources?

Resources:

Free ETF Tools and Resources

ETF Market Insights (Free resources, webinars, and Q&A)

Factor Based Investing ETF White Paper

BMO ETF Lookup, News and Resources: BMOetfs.com

ETF Comparison Tool (for both: Non-BMO and BMO ETFs)

Today I’m extremely excited to have Canadian best selling author, Andrew Hallam on the show. His first book, Millionaire Teacher is currently the #1 best seller in the Investment and Portfolio Management category on Amazon.

He has been investing in the stock market for 32 years, having built a million-dollar portfolio on a schoolteacher's salary when he was in his late 30s. 

Over the past 16 years, he has given hundreds of talks in over 30 different countries espousing research on financial wellness, sound investing and life satisfaction.

We cover a lot of areas in this interview, but since Andrew achieved financial independence in his 30s, I especially wanted to ask him how we Canadians can live off our portfolios long term, without depleting it prematurely (while also maximizing the income that we are able to withdraw). 

We discuss what to do when it comes to our withdrawal strategy in different economic environments, and we discuss how one can best use the 4% rule, and how we can modify it, depending on what happens in the markets. 

We also talk about one of my favourite topics, variable withdrawal strategies which help us maximize how much income we can take out of our portfolio every year (while not running out of money).

Questions:

1. For anybody that hasn’t read your books or is hearing about you for the first time, can you tell us a bit about yourself, especially when it comes to the world of investing, financial planning, and retirement?
   
   
2. You're someone that has achieved financial independence many years ago and has had to learn how to live off your portfolio indefinitely in a sustainable fashion.
   
   Just to set the groundwork and for somebody that hasn't read your books before, can you tell us what kind of investments your portfolio consists of that has allowed you to do this and retire early?
   
   
3. Do you have a system or process that you follow to determine how much money you can take out from your portfolio to live off of every year? (with the implied goal that you’re trying to maximize how much you can take out annually, while still having that amount be sustainable so that you don’t run out of money in the future).
   
   
4. There are many withdrawal strategies that one can use to live off their portfolio. Apart from the one that you just mentioned that you do yourself, are there any other ones that you like or have found to work well for others?
   
   
5. What are your thoughts on variable percentage withdrawal approaches? Ex. Taking out 4% of whatever the portfolio value is at the time, instead of more static approaches like the traditional “4% rule”.
   
   
6. Before we get into more questions can you tell us more about your new book called Balance and where can we get it.
   
   
7. When we spoke before the interview, you mentioned that sometimes when pursuing money and financial independence, we can actually fall into a trap and miss the point of why we pursue it in the first place. And in relation to that, in your book, you talk about how we need to be careful about how we define success, and how we need to strive for the goal of life satisfaction as opposed to just a high monetary figure within our portfolio. Can you speak to that bit?

If you’re working with a good certified financial planner here in Canada (a CFP), there are specific categories that they should be helping you optimize. According to FP Canada, which is the organization that issues the Certified Financial Planning designation (the CFP), there are 6 areas that should be covered, as they are critical to your financial health. 

For your reference, the pillars are insurance and risk management, financial management, investment planning, tax planning, retirement planning, estate planning and legal aspects. 

Today, we’re going to talk about the insurance and risk management pillar to help you optimize that, and my returning guest today is insurance expert, Laura McKay.

Laura used to work as an actuary, and is now the Co-founder of PolicyMe. 

One of the things that I REALLY like about PolicyMe, is that they have an incredibly useful tool on their site to help you determine how much, if any, life insurance you actually need. 

What I found really sets it apart from the other online calculators that I’ve seen, is that it will actually honestly tell you, if you do not need life insurance. 

Questions Covered:

1. As the new year kicks off and we look for ways to optimize our finances, one important area when it comes to our financial health is insurance coverage and risk management.
   
   A big piece of this has to do with life insurance. In case somebody is on the fence or not really motivated to look into life insurance, can tell us why this should be on our radar, and what are the consequences of not having this type of insurance when we need it?
   
   
2. Can you tell us more about what the role of life insurance is in financial planning?
   
   
3. I suspect that one of the reasons that looking into life insurance isn’t often near the top of Canadians’ to-do lists, is that it’s perceived as expensive and as an additional cash flow drain month-to-month.
   
   Can you give us a ball-park range of what life insurance can typically cost us in Canada, and what things can we do (that we have control of), to get the absolutely lowest rates for the coverage that we need?
   
   
4. Is there any innovation around insurance happening in Canada that we should be aware of, especially when it comes to making insurance more affordable? 
   
   
5. I’ve definitely heard of Canadians getting some really slick and persuasive sales pitches to use permanent life insurance as an investment vehicle, in addition to the life insurance coverage that it provides.
   
   Often large tax savings are mentioned as one of the key benefits. Can you talk about the pros and cons of using a less expensive term life insurance policy to just cover our life insurance needs, vs using permanent life insurance like whole life or universal life to receive both life insurance as well as an additional investment vehicle (please define whole life and universal life insurance for anybody not familiar too).
   
   
6. Of course now, with COVID being the big elephant in the room, I’m sure many Canadians are wondering whether COVID has impacted their life insurance in any way, and if they are in the process of getting life insurance, will they still receive the payout if the insured person in their family passes away due to COVID.
   
   How can we best ensure that we are covered if we get life insurance now, and for those that already have life insurance, what’s the best way to check that we're still covered?
   
   
7. For anybody listening that does not currently have life insurance, how can we best determine if we actually need it for our particular situation?
   
   
8. Whether we’re shopping around for a policy, or already have one, what kind of analysis can we do ourselves to evaluate the quality of a policy?
   
   
9. Are there certain types of Canadians for which life insurance is especially critical?
   
   
10. Personally, I've always felt a bit skeptical when asking somebody that sells insurance “How much insurance coverage I need?”. I’d think of it like asking a real estate agent how big of a house I need when their commission is obviously higher the bigger the house I purchase. With insurance, I find it often a similar story where the insurance expert that you are speaking to is maybe compensated more depending on how large the policy is that I buy, so there is an incentive for them to paint a story of why you need as much insurance as possible.
    
    For people like myself that have this concern how can we best determine how much insurance we actually need without having to take advice from someone that is financially incentivized to sell us as large of a policy as possible?
    
    
11. Can you tell us where we can get more of your educational resources and what is a good next step for someone that thinks life insurance is something that should be on their radar, but either doesn’t have any life insurance, or is not sure if they have enough through their employer, or other sources?