More Money Podcast - 158 Practical Investing for Canadians - John Robertson, Author of The Value of Simple

Episode Date: May 9, 2018

For the second time on the podcast (I had him on the show in 2015, episode 25 if you want to check that out after), I chat with The Value of Simple author John Robertson about his tips for practical investing for Canadians. Long description: It’s crazy to see how fast time flies…like when I interviewed John Robertson, author of The Value of Simple and personal finance blogger at HolyPotato.net, for the first time for episode 25 of the Mo’ Money Podcast back in Nov. 2015. That was almost 3 years ago! And that was also back when I got my guests to come over to my tiny apartment in Toronto to record with me in person. How is it already May 2018 and I’m at episode 158? HOW?! A lot has changed since that first interview. Not only has my own life and career changed significantly, but my investing knowledge too. When I first interviewed John, I’m almost embarrassed to admit how little I understood about investing. But then again, that was the whole point of interviewing him! So I could learn more about it and help others do the same. You see, everyone starts from investing knowledge 0, but no one ever talks about that, do they? When the topic of investing comes up, it always seems like everyone in the room knows what everyone else is talking about, and the ones who don’t, well, they just keep that to themselves and presumably google what “index fund” and “diversified portfolio” mean later (like I used to do). That’s why I really loved talking to John for episode 25. He explained investing, and more specifically index investing, in a very understandable and simple way. Which is a big reason why I’m always recommending his book The Value of Simple and his Practical Index Investing for Canadians course to anyone who wants to broaden their investing knowledge and be able to take action with confidence afterwards. That’s also why I wanted to bring him back on the show, because in the 2.5 years that have passed since our first interview, not only am I much more knowledgeable and confident when it comes to investing, I’m now an Accredited Financial Counselor-Canada® (which just means I studied investing in-depth to get my certification). If there’s one thing I hope you take away from this new interview with John, it’s that investing is for everyone. It’s not reserved for the already wealthy. It’s not just something people who love stock picking do. And it’s not something you need a lot of money or time to get started. Remember, if this girl who literally didn’t know what an index fund was 3 years ago can figure it out and become an empowered investor, so can you! For full episode show notes, visit https://jessicamoorhouse.com/158 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome to episode 158 of the Mo Money Podcast. I'm your host, Jessica Morehouse. Thanks for joining me for another episode of the show. And this one is great because it's a repeat guest. I have had this guest on before, like in the early days of the show. So if you're a longtime listener, you may remember me interviewing John Robertson about DIY investing. Honestly, at that time, I really didn't know a heck of a lot about passive investing and index funds and all that kind of stuff. I was still kind of a noob myself. But I really liked chatting with him. I really liked the book that he wrote called The Value of Simple, which really breaks it down.

It's one of my go-to recommendations when people are asking, hey, totally get this whole, that is a good strategy to do this passive investing for the long term and all that kind of stuff. But I don't even know, I don't know how to do it. Especially when you're Canadian and you're like, I just need someone to show me what accounts, what a brokerage is, all that kind of stuff. And I always refer them to his book, The Value of Symbol, because it breaks it down very clearly. This is how you actually do it. And now, so many years after that first interview, I am so much more confident in all that. I'm so much more knowledgeable about all that. And I wanted to have him back on the show to have another conversation about investing, where I kind of know a little bit more about what the hell I'm talking about. Now, you can find John on his website, holypotato.net, but he also has on top of his book, The Value of Simple, a really great investing course too.

It's a really good companion with the book, and it's called Practical Index Investing for Canadians. So obviously, it is just for Canadians because it gets really specific for how to do this in Canada. But really great course. And you can check that out, jessicamorehouse.com slash investing course. It'll take you right there. And I will, of course, link to it in the show notes, jessicamorehouse.com slash 158. But before we get into that fabulous conversation about investing, here's just a few words about this episode's sponsor. It's spring cleaning time, but I'm not talking about decluttering your home. I'm talking about taking this opportunity to organize your finances. If you want to prevent

a headache next tax season and want to get your business in better shape this year, then this is the time to do something about it. Where should you start? Well, I use FreshBooks to keep my business in check, and you might want to do the same. For the past 13 years, FreshBooks has been making really intuitive cloud accounting software. And as a result, they've carved out a massive following of freelancers and self-employed folks like myself. Not only is FreshBooks ridiculously easy to use, it also has a number of powerful features. You can create an invoice in under 30 seconds. You can make professional looking proposals that include a project outline, scope of work, and timeline. You can even link your bank account so your business

expenses are automatically added to FreshBooks. You see, there's a reason I've been using it for the past few years, and that's because it's simple and it works. And FreshBooks is offering Mo Money podcast listeners a 30-day unrestricted free trial when you go to freshbooks.com slash Mo and enter Mo Money podcast in the how did you hear about a section. Once again, go to freshbooks.com slash Mo and enter Mo Money podcast in the how Did You Hear About Us section. Thank you, John, for joining me on the podcast once again. You were actually episode 25 and now we're over 150. So it's been a while. And that was actually like November 2015. It is 2018 now. That is insane how time flies. And you were nice enough when we did that first episode to actually like

that was when i was trying to do most of my interviews in person which was fun but also logistically just impossible because eventually you run out of people that live near you um but i remember you coming to my old apartment oh good times well thanks for having me on again and you know always happy to chat about this whole investing world and uh money in general i know you also want to talk about i know and you know when we did have that first uh you know episode together i really you know when i think back of like those days when i lived in that apartment just starting the podcast i really had no clue really what i was doing with investing i I felt like I had

everything else kind of figured out, but investing was that kind of missing piece. And I always felt like honestly a dummy. Like I felt like when I did talk to other people about investing, they would throw out, you know, terms and jargon and I'd be like, uh-huh, uh-huh. And then later on, I'd have to Google it because I'm like, I have no idea what they're talking about. And I think that's like the reason why I really like your book. I really like the course that you have and talking to you about investing because you're all about simplicity and that's what investing really should be. And the more I know now, I mean, so many years later, I'm kind of baffled at how I even thought it was complicated. Investing really isn't complicated when you

understand it, I think. So I kind of want to start there. Why do you feel like so many people think it's complicated? Or why do you feel like so many people overcomplicate it? Well, it works both ways. First off, when it's unknown, it seems really complicated, because there's all this language around investing, that until you know it, you know, even some of it, like what's a mutual fund, what's a stock, what's interest, what's compounded annual growth rate or CAGR. And these are all very understandable terms if you take some time to learn them a bit, but when you don't know them,

it sounds like this whole foreign language that people are speaking. And it's intimidating. It's really intimidating to try to pick this up when you don't know them it sounds like this whole foreign language that people are speaking and it's intimidating it's really intimidating to try to pick this up when you don't know it and some people particularly in the industry act or do know all this stuff and it seems really hard to like figure out what they're knowing what they already know and how to pick up all that knowledge so that that can make it seem really scary and intimidating and complex, especially because there's so many different ways to invest. And that's part of why I'm such a huge fan of index investing, not just because of all of the academic research on, you know,

performing actively investing strategies and controlling your costs and all that, but just because it also really cuts out a lot of the complexity involved in investing. You don't have to open up a stock screener and start looking for potential companies to invest like you would with some active investing strategies. You just diversify broadly and buy everything. Exactly. Which is, I feel like when I first talked to you, I'm like, I'm totally sold. I totally like this idea. I remember also, I think it was episode seven, which was like really early on into the podcast.

I talked to Barry Choi about DIY investing as well. And I'm like, okay, I like this idea, but I still had no clue how to actually do it. So that's why I really liked your book, The Value of Symbol. I've got it right here. Because it actually, as it's called, A Practical Guide to Taking the Complexity Out of Investing. And there's actually steps, which I like, like step one, step two, step three,

step four. Of course, step four has lots of variations. Now, I know you released this book several years ago, and this is a second edition. Why did you re-release this book? What's new in the book that people may want to check out? Well, the first thing that led me to re-release it is that I made a couple of changes just because the market changed around it. So part of what makes the book unique and really useful to a beginner investor is that I walk through step by step how you actually make these purchases, because it's not quite the same as just buying a book on Amazon and the incentives aren't the same who are beginner investors, is that I walk through step by step how you actually make these purchases. Because it's not quite the same as just buying a book on Amazon and the incentives aren't the same where trying to make a purchase of an ETF or mutual fund is not intuitive and

the banks and brokerages don't make it super intuitive for someone who doesn't know what they're doing to just step in and buy something. Whereas online retailers really want to make it super intuitive and easy for you to buy something. So it doesn't work quite the same way there. And that can be a big barrier to people, even when they know what investing is, what their investing plan is, what they want to buy, actually getting out there and buying it can be a barrier to getting started because just how complex and how confusing using a brokerage screen that you've never seen is.

So there's some screenshots in there along with the step-by-step instructions. And the problem is over the course of the years, every one of the institutions that I talk about has changed their flow and changed their screenshots. And I mean, once you had already learned how to do it, it's not a big deal that it's different. So once you already have your account open and they change things on you, you learned how to do it, it's not a big deal that it's different. So once you already have your account open and they change things on you, you can continue to figure it out. But when you're learning it for the first time

and what you're seeing on the screen doesn't match what you're seeing in the book, that makes it extra hard for people and I didn't like that. So I wanted to re-release it with updated screenshots, updated step-by-step instructions for how they change things. And also the market change

because pretty much the day I sent the book to the printer, Nest Wealth, Wealthsimple, and Wealthbar, and then after that, a whole bunch of other robo-advisor companies started coming out. So this whole new thing of robo-advisors, which is another great way for people to get investing. So when they want to get their money invested and they want to figure out how to do that, this became a fourth really good option alongside the other three that I detailed. So I want to talk about robo-advisors. Yeah, no, I really, I'm so glad that you did include that just because, yeah, like since we chatted, I don't believe, and that was, you know, maybe two and a half years ago, two years ago, robo-advisors wasn't, you know,

part of the lingo. No one really talked about it. I knew lots of American bloggers were talking about it because that was starting to kind of become popular in the US, but in Canada, not so much. And a lot of things have changed. Like everyone's talking about robo advisors now. And I'm a big fan of them just because for me, it is a great like introduction or gateway into just getting yourself out of high cost mutual funds. And but it's a good step before doing the DIY. I know a lot of people transition from mutual funds to a robo advisor just so they can, you know, start kind of investing, index investing with lower fees. And then as they get more comfortable with like the lingo and what's going on and how this robo advisor actually works, then they feel like they're a little bit more confident to take that.

So it's a really nice bridge, I'd say. Yeah, and even if you don't use it as a bridge, if you just invest with a robo-advisor forever, that's totally fine. Totally. They provide that investing at a much lower cost than the other way, the traditional way of investing without having to learn anything, which was going to a salesperson and having them set you up with a bunch of high fee mutual funds. And those high fees take out a huge portion of your overall potential returns after a whole career of investing, like 30, 40 years of investing.

Exactly. And cutting those down from like 2.4% or so, which is fairly typical for a retail mutual fund in Canada, to less than 1%, which a robo-advisor's own cost is going to be, is great. It's huge. Yeah. And it's so simple too. I mean, I think that's like the great thing about robo-advisors. They're completely online and you just basically have to have internet access to open up account and start going. I invest with two different robo-advisors. And it was a very simple process. But what I enjoy most about them compared to when I did invest in mutual funds with the big banks or whatever, I find that they're a little bit more clear or honest or transparent about what they're actually invested in. Like, I still remember, and again, this was, you know, a lot to do with my level of investing knowledge. But whenever I did used to, you know, go to my old bank, talk to my financial advisor there and be

like, so what's going on with my investments? I felt like they would just talk, talk, talk, and never really tell me, but what exactly am I? They'd be like, oh, you're in this specific mutual fund with this fancy name. I'm like, that's great, but what's in there? And how much do they cost? What's the MER? And then they'd just give me a sales pitch, and they'd never tell me specifically what companies are in there and what's going on with it. And so eventually, they'd just talk so much that I would just stop asking, which is terrible. But I find with lots of these robo-advisors, it's like you can open up your account and see exactly what ETFs are in there. Then you can take those ETFs and go to another website like Morningstar or whatever to see specifically what companies are in there.

For me, it really was eye-opening. Like, oh, well, that's simple. Why is the freaking bank space so complicated when I asked them yeah and part of the issue there too is um you know I don't talk about bank advisors I talk about bank sales people because really that's the role they're in even if the little placard on their desk says advisor a lot of the times they don't know very much more than you might because they are there to sell mutual funds and they've learned the minimum that they need to know to do that. Now, I'm painting with a broad brush here.

And to be fair, some of them are. Yeah, not everyone's like that for sure. But I mean, in my experience, a lot of them have been. Yes. But yeah, no, I completely agree. I feel like especially like the last one I had, like my experience is kind of twofold. I had one advisor with a big bank who was awesome. He was great, really liked him. And I felt like he did do a good job. He unfortunately left to go to another institution. So, and we didn't know

where. And so we got this other guy and he was just like complete opposite, complete salesperson. And, uh, which is a big reason why we left and then decided to move our money to robo advisors. But, uh, yeah, I just felt like the whole time he was trying to sell and wasn't advising. And that really did kind of open up my eyes to a lot of, you know, not everybody, but a lot of those advisors at big banks. They do have different incentives than say a fee only advisor, which is usually why when I talk to somebody and they're like, oh, I would like someone to kind of take care of my investments, I'm usually like, you should probably look into a fee-only advisor instead of someone that works for a bank. Because, I mean, sorry, like, you know,

someone at, you know, one of the big banks isn't necessarily going to suggest, you know, funds that that big bank doesn't have some, you know, have their own type of, I mean, for our last mutual funds, looking back, I'm like, it was all that banks mutual funds. Like it's, and I know, on the book, Millionaire Teacher by Andrew Hallam, I think there was a section on how he did kind of a test with some people he knew and said, go to some of the big banks and, and ask them if they carry ETS or index funds. And all of them had a very tough time, even though those banks do actually have them. So again, they have different kind of incentives. So just beware. Buyer beware, right? Exactly. Yeah. And that's another issue, though,

is it's easy to say buyer beware. But if you don't know what you're supposed to be aware of, it's very tough. And that's why you need something that's going to tell you what it is that investing is all about, because you need to have at least a little bit of background knowledge to know whether or not you're talking to someone who's actually giving you advice and helping you invest in a way that sure is going to cost you some money, but provide you value for that money. Or whether you're just talking to a salesperson who's trying to push like run of the mill retail mutual funds on you at very high fees that aren't going to return value for what you're paying for.

Exactly. Do you feel like a lot of this has to do with just how things have evolved, like just the financial industry has evolved in the past several decades? I feel like, and I don't know, but I feel like when I was growing up, it was common practice. Like, you know, my parents and their, you know, their friends or whatever would go to like a big bank or, you know, financial advisor and they would have that person take care of things. And they don't say like, they didn't really get screwed, you know what I mean? Like they're doing fine. They're on their path to retirement. But for us, I feel like things have shifted in that in order for us to actually, you know, reach some of our financial goals and retire and have a good, you know, amount

set aside for us, we really do need to be more informed. Like, why do you feel like it to me, like I tell everybody, I'm like, you need to understand investing because no one else will really help you. Even if they are a fee-only advisor, you really do need to know what they're talking about. But I feel like in my older generations, you didn't really need, you could still get by and do fine without kind of that knowledge. Well, I mean, part of that is the world that they were in, right? Defined benefit pension plans were much more prevalent for them. So investing was like their fun money, their bonus to help enhance their retirement, not the core of their retirement savings. So even if

they paid a whole bunch of fees and ended up with less than they could have, they still ended up with a fair bit at the end. And that's also a difficult thing. It's like, what's the counterfactual? What was the other option available to them? So even if they paid a bunch of fees, they still had money at the end and then they're living off that money and they seem like doing okay. But you don't see the case where if they had managed to invest in the same way,

but saving half of that amount of fees for doing some of the investing and implementation on their own, just getting the advice part, then they might have been even better off than they were. And then there's also other factors that go into that, like the housing market and whatnot, which I'm just not going to get into right now. I know. What I would like to get into actually is just like talking about some of the steps that you really go into in the book, which I think are super important.

Basically, it seems like putting into practice index investing, you've kind of broken it into four steps. And then the fourth step is kind of a couple of different steps, kind of depending on what avenue you want to go into. So I'll kind of just go through them quickly. We can kind of touch on each of them. So step one is make a plan. Step two is determine your risk tolerance and asset allocation. Step three is account allocation. And then step four is create an account and invest. And that could be with a number of different ways.

You can use Tangerine, a robo-advisor, TD Direct Investing, investing in ETFs. So let's first talk about make a plan. Now, what do you mean by that? Do you mean first make a financial plan for yourself? Or what do you mean by that? At least some structure of a plan. So ideally you're going to create a really nice detailed financial plan with some alternatives. You're going to lay out what your priorities are, why you're doing all of this. And there's lots of great books out there that you can read that will go more into planning and you can go and hire a fee for service financial planner to help you create that plan because that's going to help you know underlie

all of your investing goals you can come in with a really basic nebulous plan in the back of your mind which is i'm just going to invest some money so that i have more money later that's not a detailed plan no great plan but it's not terrible. At least something is a starting place. So the plan is going to help you understand what sort of risk tolerance you're going to have because you're going to have to use that next to figure out what you're going to be buying. Yeah. Let's talk about risk tolerance. What exactly does that mean and what should people be aware of? And so that's another part that you really have to understand with investing is that there is risk involved there's always risk involved and there's

risk in everything and the risk comes in different scale time scales different appearances and different like levels of risk so we tend to talk about like stocks being risky or equities being risky and bonds being less risky and so you want to find that nice balance but bonds and cash are less risky in the short term yeah but holding just cash is going to be risky for your financial plan in the future because it's not going to grow enough for you to eventually retire on it now if you want to go that way you can create a plan that lets you invest in pretty much just a savings account, like no volatility risk, no uncertainty there. But because the rate of return is going to be so low, your savings rate is going to have to be huge.

You're going to have to live on less than half your income so that you can save so much more to be able to have that and ensure that there will be enough money there for you to have a nice long retirement later. That or your plan is implicitly going to mean that you don't have a nice long retirement. So, I mean, there's all these trade-offs that you can make with your plan and your risk tolerance. Your risk tolerance is basically saying, how much am I going to be able to sleep at night? If I buy these investments that are going to go up and down, how much am I going to be able to tolerate those down periods? And what are my backup plans if something goes wrong? So if you're planning to invest for retirement, then you can take a relatively large amount of risk,

particularly if you're a younger person such as yourself. You've got decades before you're going to be retired. Even if stocks go down in the next couple of years, you've got time for them to recover and potentially be at an even higher level by the time you retire. If you're looking to replace your car in three or four years time, you might not want to be putting your car fund into stocks because you just don't have enough time to recover. If you do put them into stocks, maybe you do have a super high risk tolerance. You're like, well, even if I don't have the time, I've got other ways to be risk

coloring because I might put my car fund into stocks and then if it crashes, just buy a cheaper car. But you have to have that risk tolerance because that's your alternative. If you choose to invest that way and then risk manifests itself, you end up with less money, then you have to deal with the consequences. If you're not prepared to deal with those consequences, then you shouldn't be investing in that risky way in the first place. Exactly. Exactly. It's actually something that me and my husband have been kind of experimenting with since the fall. Both of us bought some stocks and some ETFs, mainly in the weed industry, just because everyone's like, oh, you know, it was just kind of very trendy. And we're like, you know what, let's just put a little money in there. We've never bought individual stocks before. For me, I always

thought I was like very, I mean, I am pretty risk averse, but I wanted to just set aside some money. I'm totally okay losing. So it shouldn't be a big deal if things tank or whatever. Because I just wanted to know what the experience was like because I know people talk about stock investing, oh, I made so much money, blah, blah, blah. But also there's the emotional part where it's like, and you lose it all. No one really talks about that because they're embarrassed.

So we both have been doing that for the past, I guess, four or five months or whatever. And of course, just my was, I didn't realize it because you never really know. We bought kind of at the top, but we thought things were going to go up. They crashed. Then I lost $200. And it just kind of goes to show it's like, yeah, I think my initial instinct that I am pretty, you know, I'm like balanced. I'm not too much into, you know, doing the risky thing. Yeah, that's pretty accurate. Yeah, but that's also a great example because you didn't put your retirement fund all into it.

Goodness, no. Yeah, it was like experimenting but still being safe, right? And even when it went against you, you lost 200 bucks. Yeah. For some people, 200 bucks is a weekend in Niagara Falls at the casino. That's money that you can afford to gamble and lose. Totally. And so if you keep it in that perspective, then you can have some riskier side bets. The clever, rhyming name is Core and Explore. So you got most of your money in a core, well-diversified index fund, and then you're just playing with a little bit for interest sake or to be able to generate

dinner time conversation. Yeah, it really was just for fun. And also, even though I say I lost $200, technically, yes, but also no, because I haven't actually sold those stocks. I'm just holding on to them, praying that they'll go back up and I'll make my money back. And that's another thing, too. My husband was invested in a couple different things.

I only kind of chose a few stocks. But when things started to really go down, he invested a lot more money than I did just because he could afford to. We were talking about this and wow, did we realize how emotional, like especially he got, he's like, I mean, weed stocks specifically are so volatile.

They just go up and down every single day. It was just crazy. And he would just go crazy. Like he was doing research every day. He would get up in the morning, get really excited to check his Questrate account. And I'm like, okay, this is kind of taking over your life. I think we need to take a step back and just not do this. Because it can kind of consume your life. I know lots of people that are really into stock investing. I mean, that's all they talk about, which is fine. But as long as you, you know, kind of like you said, you know, play around with that, but don't make that your kind of main engine for your retirement plan, because

you never, you just don't ever know what could happen. And even when you're not speculating on the hot industry of the day, you know, some alternatives to doing something like a really simple index investing plan, people might say, oh, you know, invest in 40 or 50 dividend-paying companies. And you'll be relatively diversified. They'll be stable companies. You'll get dividends. We love dividends.

Yay, yay, yay. The problem with that is then you're still spending those evenings and weekends researching companies. You're still watching your stock portfolio a lot more than you would if you were just like, it's in the market. The market's doing whatever the market is doing, and I can't control it. And, you know, sort of admitting that you can't control it, and there's nothing to be done except to invest and then wait is very freeing because then you get the investing problem taken care of. Your money's invested for your future, but then you don't have to sit there and spend all this time and effort and worry over what's happening day to day. But a lot of these

other strategies involve all of that kind of mental energy and focus and you have to really like it. Is your husband enjoying his time? He did. I mean, when he was making a lot of money off his stocks, he was really enjoying it. And he would come down and be like, hey, look how much I made. And then when things started to turn, then he stopped talking about it so much. So for him, I know it was a little bit of just kind of fun. It was kind of a hobby. He has lots of friends that do the same thing.

And they talk about it all the time. But yeah, it not certainly not you know and we talked about this before he you know started investing in those types of stocks that like this isn't this is like for fun but this isn't really you know our retirement plan or or anything like that so um which kind of brings me to i always get the question when i'm talking to someone about stocks how volatile they are and how you you know, I am of the same mind as you. I prefer to invest index-based. People talk about cryptocurrency because it's a very sexy, you know, trendy thing to talk about. But again, it's just kind of like stocks,

like people just feel like if they buy now, they'll get rich quick. And as we all know, there's no such thing as like an actually good get rich quick because no one sells at the right time. You know, they'll hold on always thinking that it may go up and eventually it crashes, which I believe Bitcoin did as it because it always has. I mean, come on. What are your thoughts on cryptocurrency? I'm sure you get questions like that all the time. Well, it's interesting that the questions were really coming fast and furious and sort of like november december of 2017 now that it's sort of come back from those highs i don't get any questions yeah no one's like oh shit i lost a lot of money i want to talk about it

yeah or or it doesn't look like it's rocketing up to the moon anymore so i'm not as interested in it and um you know it's just it's not an investment it's rocketing up to the moon anymore so i'm not as interested in it and um you know it's just it's not an investment it's a total rank speculation um i can be even more no i agree i think it's again fun if you want to gamble go gamble but that's what it is i mean my goodness yeah this is crazy very very much a gamble and not, you know, someplace to put your retirement nest egg. My gosh, no. And so some of the stories I've read, I remember reading something in the paper about, I think it was this couple from Vancouver. They like liquidated some of their, I think it was maybe mutual funds or something like that to,

to build their own like Bitcoin mining farm or or something and i'm like what are you doing why i hope they're okay i don't know that was back in like the fall when things were going crazy yeah and that's another thing where like bitcoin mining is its own um sort of enterprise that people are getting into and they don't realize that the economics change very quickly. Yeah. You know, as Bitcoin gets more and more expensive and you've got the mining rig, then, you know, if you're getting so many Bitcoins mined,

as they become more valuable, or whatever coin it is that you're mining, as they become more valuable, then your mining rig sort of becomes more profitable. But then as more people come in and compete with you to do the mining, you get fewer hashes discovered yourself. You get fewer coins mined. And then the economics change for you and you end up making less money as more competition comes in. And then if on top of that, the coins devalue, the investment suddenly doesn't look nearly so good.

And it's complicated and ever-changing and moving. And this is a tough space to be in. Yeah. And a lot of people have no idea what a cryptocurrency is or how it works or some of the most interested in it. And it scares me a little. It scares me too, especially just like, yeah, more people are talking about investing in cryptocurrency

than just doing boring old index investing and like they know more about that than index investing and it's just like oh my gosh no it should be the reverse start with something solid a little bit more you know secure and then you can play with your money um yeah so i mean these things are exciting and they're fun to talk about and they make the news. Yeah. Index funds don't make the news. And that's a good thing. No, they're not exciting. I know. It's a good thing. But it's boring. Try to set it up really simple, really easy to maintain, and then just go and live your life and do the things you actually enjoy. Yeah. And I feel like that was, I think, my biggest issue when I was starting investing because I did think it was overcomplicated. And the reason I thought it was overcomplicated was people were talking about all these different things like Bitcoin and stocks and, you know, options and futures and all this kind of stuff.

Hey, those things exist. That's great. But at the end of the day, if you want to just, you know, set yourself up for success, you know, it's actually pretty simple and boring. And I kind of just wish that story was, you know, made the headlines a little bit more. It's like, if you want to be a smart investor, just do these four things and you'll be fine. And it's hard because like, that's a sort of perennial message. And when I try to get across a lot, but at the same time, lots of people who are talking and most passionate about investing and trying to convince their friends to get investing, like, Hey, don't forget that this is something you should be doing. Think about your future.

I mean, they're passionate about investing. They want to talk about the complicated parts of investing because they're passionate about it. They've got into that sort of thing. And that's not a way that most of the world should be going into. They just need to get their money invested and then go back to what they do best. I know.

And that's really just like a good lesson for personal finance in general, even though like I've somehow made a career out of talking about money. What I tell people is like, my goal is just to inform people enough that they can set themselves up. They've got a plan and they could just live their lives. Like, I don't feel like everyone needs to, you know,

be as into personal finances. I am to be, to set themselves up for financial success. Like you don't, I just like talking about it a lot because there's so many different elements, but at the end of the day, there's a couple of things you need to set yourself up and then just live your life. And that's exactly, I mean, to make a comparison to another element of personal finance, like there are some people that are really into grocery shopping. Oh my gosh. It's a whole, they're on all the coupon sites.'re comparing all the flyers they know which stores will match which other ones all they got

and they can talk about that sort of stuff for hours and hours and hours that doesn't mean you need to get into that level of detail no groceries in your fridge no like you need to know like i need groceries for my fridge yeah and i want to be relatively frugal with it because groceries are an important part of my budget. Exactly. And that's about it. I know. You can get on with the rest of your life, right? I know.

I can never get on with the good money. And so it's the same thing with investing. There's all this other stuff in the weeds that people will love to talk about who are really passionate about it, but you don't need to know all that stuff. No. Well, same goes for, I'd say, travel hacking,

something that I think is great, but I just don't have the inclination or the time or the energy to like do all that stuff. I think it's awesome when someone's like, I got this trip for free from points. Like, great. I don't really care. I would rather just like spend my time doing something totally else than trying to figure out how to get some trip on points or rather just make more money so we can afford the flight myself. I don't know. That's just me. But I think it's great when people get free shit from, you know, flights and stuff.

So just talking about the two other steps in order to put things into practice. So, you know, we went through making a plan, have that solid foundation, then determining your risk tolerance and asset allocation. So actually, we didn't really touch on that. So I think you kind of, well, you kind of touched on it. It's like you want to have a good balance of riskier things and less risky things so you are more balanced. Is that kind of what the gist is? portfolios out there that are going to say yes you know get this bond fund this international fund this u.s fund and this canadian fund for your mix of equities and bonds and then you just decide on the ratios that you want so a very simple rule of thumb that i like to use is to just decide on your overall risk tolerance that determines how much you're going to put in bonds versus the other stuff which is what i call the risky stuff to put super technical

labels and everything um and then for the risky stuff. I want to put super technical labels and everything. And then for the risky stuff, just split it equally from US, Canada, and the rest of the world. Some people are going to take issue with that. And I get, you know, that's one of the more common frequently asked questions is, oh, well, this study says that, you know, Canada is only this portion of the world.

So maybe it should only do this. And oh, the CPP investment board only invests 16 in canada why do you say 33 right it really doesn't matter that much if you want to follow them then you go ahead and follow them you just have to decide that for yourself and the big thing is to just decide on and stick to it as long as you're not bouncing around it's not really going to matter because you can't know in advance which of these asset classes need to be the best which op which uh asset allocation is going to be optimal you just simply can't know and so i don't spend a ton of time talking about that just pick something and stick to it yeah whatever basis you want to go if you want to copy the cbp

investment board if you want to copy the global market cap yeah and use that or if you just want to do an even split like like I suggest as a good starting default. It doesn't really matter as long as you stick to it and you're not changing it up every six months because you read a new article that suggests some different split. 100%. Yeah, no, I like that. Again, simple, right? So simple to implement. Step three is account allocation. Does that mean where to house your investments? So that's part of it. And also just to decide which one you're going to prioritize. So if you're relatively young and early in your career, you'll probably find that the TFSA is

going to work out better for you. The RSP might work better if you're making more money and especially compared to how if you're making more money, and especially compared to how much you're going to have later in retirement. They both work to shelter your investment gains from taxes. And then if you have both, you may or may not want to split up your investments into different shelters. That can make things a lot more complicated. I generally just say clone stamp your portfolio into each of your baskets. But if you want to split it up, there is some room for

optimization there. And there you do have some basis because things like the US withholding tax would make it better to hold US-based ETFs in your RRSP versus your other accounts. But then, you know, if you don't want to get into the complexity of buying US-listed ETFs, then it matters a lot less. And then again, clone stamping your portfolio across all of your accounts makes more sense. What does clone stamping mean? I don't think I've heard that before. Sorry, that just means to copy and paste. That's what I figured, but I just wanted to double check. I've never heard clone stamping before. I thought that was a tool in Photoshop back in the day was the. Oh, yeah, it is. It is.

So basically, for most people out there, just using the same asset allocation across all your accounts, your TFSA, your RSP, and your non-registered if you end up having one, is going to be the simplest plan to follow. Yeah. Because it gets more complicated to divide up your asset allocation. It's harder to rebalance when you only have one thing in one account and one thing in a different account. And it's harder to track and follow. And also, part of the reason that we talk about asset allocation and having your risk tolerance is that when your markets start to go down, you see your portfolio balance drop. And that's very distressing and a source of stress. If all of your risky assets are in in your tfsa for example and your less risky assets are in your non-registered account or some other separate account then you see that all dropping in the one account and it looks a lot

worse than it really is because that balance that you have is across multiple accounts rather than all so when it's all in one then you see the drop more in perspective. And then that asset allocation and your risk tolerance works better for you. So lots of reasons, I think, to try not to go too far down the road of optimizing. If you want to spend the time and the effort, and again, there is going to be some mental effort involved, then there is room to optimize. But just decide whether or not you're going to optimize and then how you're going to do it. And then whether you're going to be prioritizing your TFSA over your RSP or whatever. All the more reason to grab your book to really understand everything you just said. Okay. And last but not least, there's step four, which is, all right, you've kind of figured out

your game plan and then it's really like, okay, so where are you going to go? So the options you've listed, and again, this is for Canadians, Americans, there's, you know, it's really like, okay, so where are you going to go? So the options you've listed, and again, this is for Canadians. Americans, there's, you know, it's a whole other kind of ball game of options that you can do. Yeah, Americans is a lot easier, actually. Is it? Just go to Vanguard. Oh, yeah, that's true. That is what most people talk about, Vanguard. So there you go, Americans, Vanguard.

I guess they have, like, Betterment and some of the other robo-advisors, too. Yeah, they have quite a few different robo-advisors. I know WellSimple is now in the U.S., too, so that's an option. And same from the U.K. I know it's in the other. Yeah, they have quite a few different robo advisors. I know Wellsimple is now in the US too. So that's an option. So and same from the UK. I know it's in the UK. So and like, I should really talk to someone from the UK, I would love to know what's going on over there, just in terms of anything financial, just because I feel like it's totally a different situation. But anyways, in your book, you talk about kind of these four different options. Of course, first is investing with Tangerine, which is actually the – that was actually where I first started. And it was kind of, I would say, kind of like one of the first robo-advisors because it was completely online.

You were buying index funds and all that kind of stuff. It's a really good starting point, easy peasy, after that. Or as an alternative, there's robo-advisors now everywhere. So that is another option, completely online, easy peasy to get started with. Next is TD direct investing. So that is a little bit more hands-on, right? Because it is more like you are in the kind of driver's seat. It's not automated for you.

And then last but not least is investing in ETFs. And so that would be, I guess, using some kind of discount brokerage, like a Questrate or something like that. Yeah. And so each of those options is going to work for someone to get investing. And the way to choose between them, I tried to make it very simple as sort of like a one-dimensional trade-off, is that Tangerine is going to be the easiest. Robot Advisors, just because they're a little bit newer. So some people are like, I don't know. Yeah. advisors uh just because they're a little bit newer newer so some people are like i don't know yeah yeah yeah and because their processes aren't you know are sort of in flux um again they're not

going to be very difficult no yeah like a tiny yeah yeah based on you know tangerine super super simple advisor is going to be like a touch more complicated yeah that's a tiny bit um but then you know some people are also a little leery of them just because they're new and you can never fix that. Some people are just not going to be early adopters. So Tangerine RoboAdvisors, we'll sort of group them together. They're going to be a little more expensive than the other options, but they're super simple and easy.

TDE series, they're going to be in the middle in terms of cost and in the middle in terms of complexity to manage. And then ETS are going to be the most hands-on, but they're also going to be the cheapest. And so basically, depending on where you fall in that trade-off between how easy you want it to be versus how much you want to try to save in your investing costs, you're going to find a solution that works for you. Absolutely. Easy, easy peasy, super simple. So again, I definitely suggest everyone grab a copy of The Value of Simple, the second edition, which is now updated and has a bunch of great information. But you also have a course, which I think is amazing. So it kind of is a great companion to the book. I always kind of

suggest people read the book first and then take the course just so you can really dive in and have a better understanding. But what are some things that you have in your course? What's it all about? So the course sort of evolved out of the book. So part of it is that people wanted something that was a little more interactive than just reading. So the course combines video and text. So you're sort of always moving your brain into a different mode. So you're like you're reading a couple articles and you're watching a video of me or a video of walkthrough of some slides and screenshots and step by step and then back to reading some text and looking at an infographic and stuff like that so you're getting it in different mediums but also goes

into a lot more detail because i just have the ability to do that and particularly some of the details that are changing a little more frequently where it's really difficult to change things in a book and then come up with a second edition and all that. It's relatively easy to change in an online course and to respond to people's questions. So there's going to be more detail there. Like in the book, I quickly go through, you know, what's, if you have a taxable account, if you're investing in TFSA or RSP, it makes it super simple. Not only do you save on taxes in terms of letting your investments grow tax-free, but it means that you don't have to track anything. You don't have to report anything because it's all tax-free anyway. Once you have filled up that room and you're investing in a

taxable account, it becomes a little more complicated. So in the book, I go quickly through what that table is going to look like, where you're going to have to report your capital gains. And then in the course, I'm able to go through that in a little more complicated. So in the book, I go quickly through what that table is going to look like where you're going to have to report your capital gains. And then in the course, I'm able to go through that in a little bit more detail, a little more step-by-step, and also have a look at some of the other tax forms you'll get, like a T3 for your ETFs, and see what boxes are going to be on there, what they mean, how they affect what you're reporting.

And then also just more detail on the processes and the behavioral aspect, because that is really, really key. Like just understanding how to make these transactions is something that people need to know and something that I found wasn't really addressed by other people and why I really wrote the book. Once you know that, that's just sort of like getting you started and then you're started and going. The other key thing is to is to not over complicate things to not get sucked down the rabbit hole of buying weed stocks and cryptocurrencies and whatever the next hot thing is going to be next year that people are super interested in like if you want to put a little bit of play money into a core and explore that's fine but to not start complicating your portfolio and finding that in

you know a couple years you have what we used to call the advisor 2-4 which is where you keep going to your advisor at the bank every year. And then after 24 years, you got 24 different mutual funds in there with no coordination between them. And you don't want the same thing to happen to your portfolio where you keep getting distracted by things or new things come out. And then soon enough, you got a really unwieldy portfolio that's hard to manage. You want to try to keep it simple and ramming that message

home it's kind of difficult sometimes and also the other tips and tricks that are going to help keep you on track like you know just simple things like using your calendar like if you've got google calendar calendar app on your smartphone you just organize your life put some of your investing milestones in there too like if you want to remember to rebalance once a year yeah put a yearly reminder and you can set it up and have it automatically propagate for the rest of your life as long as that digital calendar exists you'll get a yearly reminder to rebalance your portfolio and you know it doesn't have to be new year's like some people will think oh yeah yeah and that's the point i make i'm like like, I would never rebalance. That sounds like a terrible idea.

Yeah. I set it up for the end of March because that's when I'm starting to get all my stuff together to file my taxes anyways. Exactly. That's a great idea, actually. I like that. You're already in that mode. Yeah. Yeah. That's awesome. Okay. And where can people learn more about that course? So the course is at course.valueofsimple.ca and that'll forward you to the practical index investing course, which is hosted by Thinkific. Fabulous. Well, John, thank you so much for taking the time to really dive in to index investing with myself. I really appreciate it.

And where can more people find more information about you and follow you on social media? So I've got a personal blog at holypotato.net. I talk about all kinds of things. I've got all kinds of tools up there. It is an old blog and it looks old. And one day I might get around to refreshing it. I feel like you said that last time. Not many times, too.

Yeah, I know. I probably said that three years ago. It'll probably be another six years before I ever actually get around to doing it. But there's some nifty stuff on there. In addition to talking about investing, there's things like the CBP calculator that I made up and just general tiny articles that sort of come up and don't belong in a perennial thing like the course of the book. The book's website is value of simple.ca and any,

that has a little mini blog associated with it. And that's basically just focused on things related to the book. So when one of those providers changes their interface and I got to let people know, that'll be on that version of little mini blog. And if I ever get something like a library talk going, then I usually let people know in that space as well.

And then of course on Twitter, I'm at holy underscore potato. Awesome. Thank you so much, John, for joining me on the show. It was a pleasure chatting with you again after so many, so many years. I'll have to not wait so long till next time. Well, whenever you want to have me back, I'm happy to come back. I know. I'm sure there will be plenty of developments in the investing world in another year or two. Yeah. All right. Thanks, Jessica. And that was episode 158 of the Mo Money Podcast with John Robertson. Check him out on his blog,

hoolipotato.net. Also check out his investing course, Practical Index Investing for Canadians. Quick link is just jessicamorehouse.com slash investing course. And I will link to it in the show notes, jessicamorehouse.com slash 158. So you can check more about that out. Yeah, that's that. A few more things to share with you. Stick around. Just a few words about this episode's sponsor first. Track your hours, format the estimate, work out taxes, capture your expenses, chase that late payment, prepare the invoice, submit the proposal. Welcome to the worst part of being a freelancer, otherwise known as paperwork. The good news is that the good people at FreshBooks have created a ridiculously easy cloud accounting software for freelancers that turns tackling these time-sucking, never-ending tasks into no big thing.

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on like the cover of Inside Fitness. She's killing it in the fitness industry right now. We teamed up a few years ago when we were working together to create Rich and Fit, a kind of lifestyle brand about getting rich and fit. So fitness, personal finance, marrying both of those things, because those are kind of people's biggest struggles in life, right? And so we teamed up to create the Rich and Fit Bootcamp. We created that last June and launched it a few times, closed registration, opened it up again this January. And now we've actually split that bootcamp up into two different courses or two separate courses, rather. We have Rich and Fit Financial Foundations and Rich and Fit Fitness Foundation. So if you

want to focus on just your fitness, focus on just your finances or do one after the other, now it is possible to do so. And if you would like to learn more, go to richandfit.co or just check out the show notes. I'll of course include some more information about that. But if you want to take this time in your life to really take care of yourself, your finances, your fitness, your health, balance and mindfulness are really big proponents of both of those courses. If you want to, you know, get started with us, well, I want to help you do that. By that, I mean, I'm going to give you a special discount since you're a special podcast

listener. So if you head on over to the website, go to the courses page and you go to the checkout, make sure to use promo code Mo Money, M-O-M-O-N-E-Y to get 20% off just like that. And then you can get started working on getting rich and fit and being part of our private Facebook community for rich and fit students as well. But of course, if you just have some questions about it, you don't know if it's right for you or you don't know what it's all about, you want someone to talk to, you can talk to me, jessica at jessicamorehouse.com is where you can find me over email happy to answer any questions at any time. That is it for me for now. But I will of course be back here next Wednesday for

another episode. Make sure to keep on sending me those iTunes reviews. I am compiling a list and we'll be doing some shout outs very, very soon on a future episode. So if you want to get a shout out from me on a future episode, all you have to do is spend two minutes and give me an iTunes review. Would really appreciate it and just want to know what your thoughts are. Yeah, that is it. I'm going to stop yabbing and I'm going to get back to whatever I was doing before this. And I will see you back here next week, next Wednesday, same time, same place. Talk to you later. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.