More Money Podcast - 258 A Smarter Way to Do Passive Investing - Brendan Wood, Co-Founder & CTO of Passiv

Episode Date: December 17, 2020

DIY investing has always been a popular topic on the show, so I’m thrilled to have Brendan Wood on the show, who is the co-founder and CTO of Passiv. As he shares on the show, he grew up in New Foundland and then studied engineering at the University of New Brunswick. After managing his own investment portfolio like so many others do, using Questrade and spreadsheets, he started to wonder if there was an easier way to do it. Realizing that others on forums like Reddit wondered the same thing, he went to work to develop Passiv, an app that works with a number of discount brokerages to make it easier and saving you precious time managing your own portfolio. The best part? Currently, Passiv is free to use for all Questrade clients, so you can try it out yourself and see how much easier it is to use compared to your traditional spreadsheet. This is great news because the one thing I hear all the time is that after listening to my podcast, so many people want to try out DIY investing but aren’t sure how to start. Passiv is a new entry point into self-directed investing, which means it just got easier to start investing and growing your wealth. For full episode show notes visit https://jessicamoorhouse.com/258 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello. Welcome back to the Momentum Podcast. This is episode 258. This is a special episode because it's Thursday. Two episodes in one week. How special. Little holiday treat, if you will. Maybe that's too far. I'm so excited to have my next guest on the show because this is a topic that whenever I have a guest on the show to talk about self-directed investing, also known as DIY investing, people love it. They can't get enough of it. And not only is my next guest on the show to talk about it, but also he created a solution to make it easier for DIY investors. And that has always been kind of my, I guess, kind of issue with DIY investing, especially if you want to do the, you know, typical couch potato portfolio, you know, build your own portfolio, rebalance it yourself, is it can be kind of complicated or hard to get started. And it can be somewhat time consuming.

Again, if you're just kind of getting, you know, really at the start of it. And so he, as a DIY investor himself, created a solution called Passive. And they've been a sponsor of the show, as you may have heard their ads. So who am I talking to on this episode? I've got Brendan Wood. He is the CTO of Passive. He is also the co-founder of Passive. He's also a father of three. Busy guy. He grew up in Newfoundland. He studied engineering, which makes a lot of sense when you think about him developing this software. And he now lives in Fredericton with his family. And he founded Passive with the aim of helping Canadians to take control over their investments and achieve their goals sooner. And it's funny, when we had this interview, I'm like, he has his path of becoming

a DIY investor and using spreadsheets and kind of doing all the things that I've just, I've heard this story like so many times of like going on Reddit and seeing what other people are investing in or looking at the Canadian cabbage potato blog by Dan Bertolotti, which is a great resource. And, you know, looking at those model portfolios and, and kind of, you know, but him being an engineer and really having that background and experience and expertise, it's actually really great that he's like, huh, how can I make this easier for me? And then how can I actually make it easier for people? Because one thing I hear is I would love to do it. I just don't know how to do it. And it seems really hard. So I'm just probably not going to do it. And so he's created Passive

to make it a lot easier. So we kind of talk about his journey, things to know about DIY investing, and also how his software could potentially help you. And also, if you don't know, if you're a Questrade client, it is free. So you can sign up for it for free right now. So take advantage and check it out yourself. That would be really cool. I will also be kind of exploring Passive more, doing some kind of video tutorials in my upcoming new investing course, which will launch in the new year. But that's all I can really say about it right now. If you want to learn more about Passive, just go to Passive.com slash MoMoney, and you can take a look and try it out for yourself. But without further ado,

here is that interview with Brendan Wood, the co-founder of Passive. Welcome to the MoMoney podcast, Brendan. I'm so excited to have you on the show because honestly, investing, especially DIY investing is a topic I love to talk about, but also I talk to so many people about this. So I have a lot of questions from the listeners and I'm sure they can't wait to hear some of your thoughts about this. So welcome to the show. Awesome. Thanks so much for having me, Jessica. I'm really excited to be here. Yes, you're so welcome. So let's start off a little bit in case people don't know you. So you are a co-founder of the program Passive. But I mean, I feel like people don't really fall into creating software that's all about DIY investing. How did you get into that? What

sparked this idea? And were you always really passionate about DIY investing? Or how did this all start? So first off, no, I haven't always been passionate about DIY investing. It was something that I kind of grew into. And Passive really came around very organically. It's not like I sat down one day trying to come up with startup ideas or anything like that. I've been a software developer for about 10 years now. And early in my career, I started saving money in RRSP just because it was partially funded by the company I was working for, which is kind of the standard, like, oh, I guess this is the thing to do. I guess I'll do that.

And I didn't really put a lot of thought into it for the first couple of years and once i uh i guess it was the personal finance communities on sub on reddit that um really kind of like made me question am i doing this right like maybe i should ask more questions to my advisor or figure out like how the money's being invested and when i started asking those questions i started realizing like oh this is actually not looking that good they've got me in an index fund, but they're taking out a 2% fee every year. Like that's, that adds up to a lot over at the time over time. I kind of did the math and over the course of my career was like, that's a significant fraction of every dollar I ever save is going into these fees. And so I started doing couch potato investing by

following the guides on, you guides on personal finance communities. And that kind of got me into a brokerage account and ETFs and doing things that way, kind of a do-it-yourself investor. And after doing that for a while, it actually just got tedious. Yeah, I can imagine. It's one of the things they don't really tell you when you start it, right? They're like, oh, it's a little bit more work, but it's not that much. But really, I found it to be a tedious thing, and I found it hard to stay on top of all of my accounts

and all of the contributions that were coming in. At the time that I first started thinking about automating this process, I had four different accounts at Questrate, and those accounts each had contributions coming into them once or twice a month. The savings account for my kids, the RESP, that account had then government top-ups coming in and matching a couple weeks after every contribution.

So there was so many things going on in these accounts. And trying to make sure that I was aware of it and making sure I was fully invested all the time, I found that to be a hassle and just sort of like a mental drain. It was like this chore that I didn't really look forward to doing because it's not like me clicking a couple of buttons adds a lot of value to my portfolio. It's just something that you kind of have to do, right? How often did you have to feel like you logged into Questrade to rebalance or make a trade because you have some cash sitting in there? Was it weekly? Yeah, it was weekly, sometimes even more than weekly, depending on when the cash hit the account.

And it's not like it was all synchronized, so all the accounts needed to be done at once. It was like they'd be offset by a couple of days, right? Yeah, I really found it dragging. And I was almost to the point where I was going to switch over to a robo-advisor because you kind of like save on the fees, you do similar ETF investing, but it's more hands-off. But I didn't because I realized that Questrate had an API. And as a software developer, I was sort of uniquely positioned to be able to build something to do the thing that I actually wanted to do. So I spent a weekend writing a simple little script that did most of the things that I needed to do with my contributions. It would just kind of let me know when cash hit the account and then

calculate here are the trades you need to make. You can go do them now and it would just kind of make that easier for me. And so it started as like a personal thing that I ran on my own computer when I wanted to run it. And as I talked to more people about it, I found that I'm not the only one with this problem. There's a lot of people who are trying to do this style of investing for various reasons, whether it's saving on fees or because they want more control over how their money's invested, that sort of thing. And so that's when it sort of dawned on me that this is a product idea. This is something that a lot of people could benefit from. I'm going to turn this into an app and help people do this.

Yeah. I mean, for years, I've been talking to people about DIY investing and I feel like at a high level, a lot of people say, oh, it's very simple. I just rebalance like once a year or every quarter or twice a year. For things like that, that's like a very simple case. But like you said, it's like you had four different accounts for different purposes. You have an RESP and all these other things. It's not as easy as just rebalancing once a year and just setting it and forgetting it. It's like most of us have lots of different things going on and it can be kind of overwhelming. And a lot of people are intimidated by the spreadsheets of it all, right? Like I like spreadsheets, but also I don't like the idea of, yeah, like going in there weekly and trying to fix it up. You have

a life and a family and stuff. You have other stuff that you probably want to spend your time doing. So for years, I've been hearing people ask, is there a way to automate things? And for a while, I'm like, no. That is kind of why robo-advisors exist to automate things and take that away. But it's so crazy that you kind of share that story. Cause I'm like, you're kind of journey of like, just, you know, doing the, you know, RESP or RRSP thing, probably in, you know, index funds or mutual funds and, you know, learning stuff on Reddit, go and doing the couch potato thing. Like that's a very similar journey to myself and a lot of people listening. It's just so fascinating that you're

like, Hmm, I wonder if I can create something to make this process easier. Because yeah, for years, it's just been spreadsheets. And it's funny too, when recently I was talking to my sister who uses Questrade and she's been DIY investing for years. And then she noticed, oh, there's this passive thing. What do you think about that? I'm like, I mean, anything to make your life simple. She has a baby now. She didn't have time to do spreadsheets. So it's nice to have something to kind of make the process easier. And I think especially less intimidating because I talk to a lot of people who want to get into building their own portfolios, DIY investing. They don't know where to start.

And they also like it's scary because there's no, really, it's just kind of the wild west. You kind of find the information on your own from online. You're like, I hope I'm doing it right. So it's kind of nice to have an app that will give you a little bit of guidance that I think people are looking for. Do you want to kind of now explain what is Passive? If someone were to look at what this app will do, what can you expect? So the short of it is that Passive is an app that helps you manage a portfolio in your brokerage account. And specifically, the brokerage account is a big part of it. It's not like a mutual fund where you can just put money into a mutual fund

and forget about it. It's like you have a brokerage account, so there's a lot of power that comes along with something like that and also a lot of complexity. So it's an app that connects to your brokerage account and can essentially help you figure out what trades you need to make in order to follow your target portfolio. You tell Passive, here's how I want my money invested. Here are the accounts that I have. You can kind of group them by a shared purpose. If you have an account for your kids or you have

multiple retirement accounts between yourself and your spouse, you can group them for a shared purpose, give it a target, and then Passive will continuously monitor your portfolio compared to your target and tell you here are the steps you need to take in order to make sure you're following your target as closely as possible. And so that's kind of the core of it. It's just kind of like it stays on top of things for you and lets you know when something needs your attention. But it even helps you do actions as well. So we'll tell you here are the trades, if you've got cash coming into your account, for example, we'll send you an email saying, hey, your monthly contribution, just hit your account, log into Passive and we'll help you allocate it. You log in, we give you a list of

trades, and then there's even a button that says allocate. And if you click that button, we essentially generate the order, send them over to your broker, and help you place those orders. And it happens in a second rather than the minutes or hours it would take to manually kind of do all that stuff yourself. That is so great. I'm wondering because I think you kind of implied this. There's a way that you will get notifications being like, oh, hey, it's time to do this. Because I think that's one of the things that most people don't like is trying to stay on top, like logging in, you know, putting all the new numbers in their spreadsheet to be like, do I have to rebalance yet

or not? So that's kind of like the core use case that gets people coming into the app and they keep coming back. It's just kind of like saying, we'll let you know when something needs your attention. And so there's a few different ways that that happens. So like the most common way is with contributions. So if you're depositing into your accounts on a regular basis, we let you know as soon as that cash is in your account and available to be allocated. Another thing is like, well, the whole rebalancing side of things, which is a funny angle because like, you know, a lot of the focus of Canadian Couch Potato and like these sorts of blogs that talk about how to do this, they focus on the rebalancing aspect. And they say, oh, you only got to do it once a year.

It's not a big deal, right? And it is, in fact, not a big deal. The rebalancing part of it is not something that comes up that often because the market doesn't really change that often. On a day-to-day basis, it doesn't change that much. And Passive will even structure the trade calculations to help you move closer to your target with your contributions. So it's kind of like a continuous rebalancing thing where you don't have to think about it. So personally, I've been using Passive

for probably about four years now since I wrote the original script. And the first time I actually had to log in and do a proper rebalance was in March of this year when the market crashed. And so it's not a very common thing that you'd actually have to do that, but Passive does have these notifications built into it.

We call them drift notifications. So if your portfolio accuracy falls too low, we'll send you an email and say, hey, did you know that your portfolio shifted? You might want to log in and consider if this is something you're going to rebalance for, or maybe it's just that your targets have changed over the years and you just need to adjust your targets, something like that. That's awesome. I

think another thing that lots of people don't really think about is, you know, if you were to use a robo-advisor, for instance, you can set it up through your bank where you can make weekly contributions if you want. Like just make it automatic, out of sight, out of mind. That's a great way to start investing is, you know, automate investing is automate things, pay yourself first and all that kind of stuff. For DIY investing, I think a lot of people get stuck on how do I do those automatic contributions frequently to benefit from dollar cost averaging? How do I do that? Because again, a lot of people talk about, oh, I just rebalance and rebalance with new money. So maybe I get cash to accumulate and then I rebalance that way once a year or twice a year or quarterly. But a lot of people are like, but I want to maybe invest every week or more frequently than that.

Does passive kind of help with how to balance new contributions? Yep. When we see these new cash transactions, we'll let you know. Obviously, you'd still need to come in and like click a button to allocate that money each time it comes in. So it's like slightly more work for you. But it's something that takes on the order of like, you know, 20 seconds to log in and click a button. So it's not a huge burden, you can do it as frequently as you want. And as far as we're concerned, it doesn't matter, the system is kind of automated, it's doing it on its own. That's so interesting. And so you mentioned Questrade, it works with Questrade. And I know

it's also free if you're a Questrade client. So there's no downside, really. You can use it for free if you're a Questrade client? Yeah, that's right. So at the moment, that's a time-limited thing. They're covering it for the first year. We're hoping they'll make it a permanent thing. But again, that's something that we'll kind of shake it in the wash. This is kind of a very new thing, both for us and for Questrate. So we're just making sure everybody's happy and it's working out well. Awesome.

And does it, passive, if someone's not with Questrate, does it work with a different discount brokerage? It works with other discount brokers outside of Canada. Right now, Questrate is the only one in Canada that we work with. And that wasn't really a conscious choice from the beginning. It was more like Questrate has an API and they were the only ones who had an API.

So it's kind of like it just happened to be that way. There are other brokers who are opening up APIs now and we're looking into ways to support assets outside of Questrade as well. So like you could kind of factor it into your total portfolio if you want. But at least for now, yeah, Questrade is the one because, I mean, they even have the trade integrations, which is amazing. Yeah. Okay. So that's actually interesting. So you mentioned that this isn't just Canadian for Canadian investors, Americans, you can use passive with their portfolios at American discount brokers? That's right. Yeah. So the biggest one we support is TD Ameritrade.

And there's a few other ones as well. So besides TD, there is Interactive Brokers, there's Tradier, and Alpaca, which is a smaller one that's focused more on software developers. But basically, we're trying to integrate with any broker that offers an API, because that's sort of like the key requirements we need in order to be able to support the brokerage. Right on. So a lot of the people I talk to are, you know, beginner investors, but they also listen to my show where I talk a lot about the benefits of ETF investing and DIY investing. How easy is it for like a beginner investor to, you know, open a Questrate account, let's say we're talking about a Canadian investor, and then start using Passive? If they've never done it before,

is it a fairly easy process for them to get started? I think it is. But the key thing that you need is a motivation and a reason to do it. If you have no reason to do it and you don't really understand what you're getting into, then you'll probably be overwhelmed with the complexity fairly quickly. Not that it is that complex, but that there is more to it than opening an account with a robo-advisor. One of the key things that makes a brokerage account different from a robo-advisor or a mutual fund is that you need to know how you're going to invest your money. You need to have an investment plan yourself. If you go to a robo, you fill out a questionnaire and they will tell you,

we think you fit into this bucket and we're going to allocate your money this way. And they kind of do that. When you're at a brokerage, the term is self-directed. So it means you are in control of your money and nobody's going to be telling you what things you should buy with it. There are places you can go out there to get model portfolios. I mean, the Canadian couch potato model portfolios are the iconic ones for Canadians. You know, there was our portfolios that are constructed by professionals that are designed to meet certain investment goals. And you can kind of like scale them based on what level of risk you find to be comfortable. But really, it boils down to like, are you willing to take on a little bit of additional responsibility with

your investments? And if you don't already understand how ETFs work and how investments work, it's a bit of learning, right? So there is a learning curve to it. Right. So it's not something that anyone should just jump into, which I mean, that makes sense. You need to know what you're doing. When you're a DIY or self-directed investor, you are your own portfolio manager. So there is that extra responsibility. So you do need to know, have the groundwork first before kind of diving in. Otherwise you're going to invest in a way that may not be appropriate for you and make some mistakes. And that's, I think the other thing that people are scared of that are just start, you know, getting started out is the, the idea that they're totally responsible. They're not getting any advice. Um, and they don't really,

you know, it's, it's, it's great cause you can do whatever you want, but then it's also bad cause you can do whatever you want. And so there's a lot of options. Exactly. Yeah, that's the trick. One of the core beliefs that I have is that brokerage accounts are kind of like a double-edged sword. You can do amazing things with them, but you can also do amazingly horrible things to your portfolio with them if you use them irresponsibly. So that's actually something that I think is kind of timely with the pandemic. And it's really kind of brought it more into my awareness is that with all the market volatility, there's, you know, a lot of companies that are doing really amazingly well out there. And there's other companies that are doing really, really poorly and like more so than

ever in the past. So if you pick the right stock, you can end up making a pile of money. But if you pick the wrong stock, you can get absolutely fleeced, right? And because of this, it's sort of like a seductive thing where it's easy to think you can do well. And there's a lot of beginners coming into the market right now, like brokerages. They're being inundated with new account requests because people are hungry for it. And that's the kind of thing you got to watch out for. With a brokerage account, it's easy to think you can do so much better than the market or a well-diversified index. And you might be able to, but you might not. I want to talk a little bit about the pandemic because obviously you have a lot of people using passive. You can maybe, I i don't know but are you

gathering like analytics to see like how have people reacted to what happened in the spring or i mean are people that use passive like pretty i guess logical they kind of know what to do what not to do when there's a crash did people just were they calm cool collected or did you see some people freak out and just like cash out uh There was definitely like a jump in the trading volume and the usage of our app around the time around, you know, March, April timeframe. We weren't, you know, we don't go into like detailed stats on what individuals are doing, but we do kind of look overall at the application usage and like, are people following target portfolios or are they picking stocks and we kind of check that by we have a feature called excluded assets so like some people do use their

brokerage accounts to buy stocks on the side right they'll sort of have like a core balanced diversified portfolio and then they'll like have a few stock picks on the side and that's a pretty common thing people do with passive and so we have a feature that allows you to ignore or exclude your stock picks so that we're not telling you to sell them because they're not a part of your target or whatever. So we found that there was somewhat of an increase in usage in excluded assets at the time. So it means that people were kind of like picking things outside of their regular target. But the vast majority of the assets stayed in their diversified balanced portfolios. And kind of the biggest thing that we saw from it actually was people just using the market crash as like a trigger to rebalance

their account. We got a lot of requests in the space of about a week or two for people saying, hey, I'm doing a rebalance. I just sold off, you know, like 20% of my portfolio to do this rebalance, but I don't want to allocate it all at once. I want to dollar cost average my May back into the market with this percentage that I freed up to rebalance. And we were thinking, oh, that's interesting. That's not a use case that we'd previously thought about. I personally always thought of rebalance as like, you want to click a button and have it done instantaneously. You sell and then you buy the things you need and then you're done. But a lot of people really did want to ease their way back into it. So we got so many of these

feature requests in the space of two weeks that we kind of dropped everything we're working on and said, we need to support this use case. People need to do this thing where they want to slowly work their way back in and we don't really support that right now. So we scrambled on it and within a week we had a feature released that we call Cash Management and it enables you to do sort of like a periodic dollar cost rebalancing back into the market. Wow, how does that actually work? How does that look like?

Does it give you notification to like, hey, remember to place a trade today or something like that? It's actually even simpler than that. We don't even go as far as telling you when to come in and do it. It's just a rule that puts a limit on how much cash you want to allocate in a given set of transactions. So you could say, I want to put at most $1,000 in. Okay, so you can do that. We'll generate the trades based on using only $1,000 of whatever cash you have available to make these trades.

And you place the trades, and then the next set of trades will be queued up. Okay, you want to allocate another $1,000? You can do that. And if you want to wait a week or a day or whatever, you can do that. Okay, interesting. I'm also curious, too, just because you have a good sense of, I mean, I'm sure a lot of DIY investors kind of ditch their spreadsheets to use this app just because it makes things easier.

Do you have a sense of what your demographics are? Is it mainly young people doing this or is it kind of a variety of people? Because I feel like sometimes I'm in a bit of a bubble. I'm a millennial. So I feel like all these millennials are all about ETFs, but what does it actually look like? I would say that the largest segment of our users are millennials and even Gen Xers, I guess. And it's sort of like, you know, it's a blend between it. And we get people on all sides of the spectrum. So we have some users who are like fresh out of high school. They're 18 years old and they're now eligible to open a brokerage account.

And that's the first thing they do. You know, it's like they've been hanging out on personal finance for years and just itching to get their brokerage account. So there are some people like that. On the other side of things, we have some users who are actually in a much older demographic. There was a woman who I had a phone call with a couple months ago, and she started off by telling me,

I want you to know that I'm 80 years old, and I've never opened a brokerage account before, but I did, and I found your app, and I want to use it that I'm 80 years old and I've never opened a brokerage account before, but I did and I found your app and I want to use it. I'm like, wow, that's amazing. I had no, you know, I just didn't, I didn't think that we reached that demographic. I want to know where she, is she on Reddit? Like how is she learning about this? That's awesome. Yeah, very much so that it is like people in the kind of millennial target though, that is like the bulk of our user base. And they skew towards people with more professional careers. I mean, like, you know, if you're if you're investing, then you probably need to be out of debt to some extent. So like it biases people towards like, you know, being midway through their careers, that sort of thing. Well, I'm curious, since you started this just as a, you know, individual investor, and then just wanted to kind of make things easier for people. And now you've got this

company called Passive. Have you learned anything about yourself as an investor or just investing in general that maybe at the beginning when you're just, you know, managing your own portfolio, you maybe didn't think of? The temptation to not day trade is kind of a difficult thing to manage, for me personally, anyway. Yeah. I'm not sure if it's something that everybody struggles with. I imagine there's always like a little bit of temptation there. But, you know, for me personally, that is like, you know, I'll see something and think, oh, that's really cool. I think this company is going to go through the roof. I should go put some money into that. And then I kind of have to take a chill pill and be like, really? Do I really believe that? Do I actually know anything about this company?

So that's been like a thing for me is just like knowing how to keep my own mentality in check. And then there's the like fear aspect of it as well, right? Like you are taking responsibility for a lot of your own money. And when the market isn't doing so hot or when, you know, weird things happen, um, it is sometimes, uh,

easy to get scared and think, Oh my gosh, the market is collapsing. You know, like when, when this thing happened in March, um, the whole world economy shut down,

right? That's never happened before. It was like, okay, everyone just stop what you're doing. Go home for two months. Like, how can you get, how can you think of what a fair valuation might be on your portfolio when all the companies you're invested in have essentially shut down?

So that was a scary time for me. And really, my reaction to it was like, I feel like I want to pull my money out, but I know that I shouldn't. This is one of the times when you can see whether or not you're the kind of person who should be managing your own portfolio based on how you react to an event like this. Right. I mean, I feel like, you know, the silver lining of what happened in March was that you really kind of figure out what kind of investor you are. Like for me, I mean, when the last crash was, I didn't have any money in the game. I didn't have any investments. And even though it affected my career path and everything like that, I started investing in 2011. And so I didn't really kind of feel what it is when you have a lot of money

invested and you see it drop by tens of thousands of dollars in like a day and you freak out. And it was very interesting to, like for me, I mean, I talked to people all day long about this stuff to see what my personal reaction was. It kind of reminded me like, A, we're all human and you can't really, you know, help how you feel. But it's like, how do you, what kind of actions do you take? And it's been interesting for me. It made me realize actually I can take on a lot more risk than I thought because I didn't do some really bad stuff. Like, man, did I want to pull out all of my money and just like live like in the. Oh, yeah. I was like making fun. I'm like, you know what?

It's not the zombie apocalypse. Like we need to chill. But everyone was, you know, remember the headlines. It seems almost so long ago, but it wasn't even that long ago that, you know, this is the worst

than the Great Depression or we've never seen anything like this. When you hear stuff like that, I mean, of course, you're going to panic. But and now, you know, if you were smart and kept your money

in the game and just kept on with your investment plan, you'd probably be way better off now than you were before the pandemic happened. Well, and that's the amazing thing, right? It's like the turnaround. I mean, I recognize we're not out of the woods yet, right? Yeah. We're still here. Yeah. Kind of in the middle of the second wave. But it's sort of unprecedented how quickly it turned around from like your portfolio is down 30% to like now you're probably better off than you were if you didn't pull out, right? Most of the time when you have a market crash, if you look historically, it takes, you know, three to five years to recover from a drop like that. And this happened in the space of six months. And it's still going up. And I'm not an economist, but I look at like where things currently stand and I'm

just like, I don't understand how that makes sense. But again, like I'm not the person who should be making that call because I'm, you know, so I just kind of, I'm sticking to my plan. I'm doing the passive investment thing where contributions are going in, they're being allocated and I'm just trying to stay with this target that I set for myself. Totally. And I feel like, yeah, this whole year has reaffirmed my belief that I'm a passive investor. And that's why I'm going to keep on talking about it because no one can predict what's going to happen. No one's been able to really understand this whole year. So the best thing you can do is just to have a diversified portfolio and investment in a ton of different companies and different sectors, different countries. So you've got a

lot of exposure to lots of different things. You never want to be too concentrated. But yeah, I totally feel like when you're talking about the feel for day trading, oh my gosh, because people were just talking about what stocks should I buy and all these stocks that skyrocketed. And I've definitely started buying some individual stocks. I still do passive investing, but I do have a part of my portfolio that I do kind of play with. But I'm still, by play with, I mean buy a stock and I'm not going to touch it for like three to five years. But it's hard when you really get into it or especially when maybe you're using passive and you're thinking more about investing and buying your own investments. There's the urge to like, maybe I should just allocate a little bit more money to buy this stock and let's see what happens.

It's a slippery slope, so let's be careful. It is. Yeah. I kind of look at it as like, you know, buying stocks is not necessarily bad if you're picking an individual stock, but it really depends more on like the amount that you're buying and like the percentage of your portfolio you're putting in. Personally, like I kind of look at it as like blowing off steam to some extent. Like, oh, I really want to like YOLO my portfolio on Tesla and be a millionaire. I really want to do that, right? But maybe I could just buy like two shares and that'll like get it out of my system.

Totally. You don't have to spend 10 grand on Tesla today just because you feel like, you know, FOMO, I don't want to miss out on this opportunity. Because I mean, pretty much every time I've bought some stocks, I'm like, oh, you know, I really, okay, this is, it seems like a good time.

I'm going to buy. It immediately drops right after I buy. And I feel like that's another thing people don't realize it's like and that's why i do like passive investing because it doesn't matter but when you're buying individual stocks it's like guaranteed it will continue to drop after you buy and you have to just like not freak out just let it do its thing yeah one of my greatest personal lessons about investing is even if you have the good idea and you pick the good stock and you make a good choice long term, that doesn't mean that the market's going to react the way you expect it to. So way back when I opened my first brokerage account in 2011 or sometime, I was just finishing up my degree at the time, my master's degree, and I was doing like GPU programming. And so I was like really into GPUs. Like it was kind of related to my field of

research. So I was, I knew a lot about AMD and I knew a lot about Nvidia and I knew a lot about the architectures they had coming out. And I was like, man, these stocks are way undervalued. I'm going to buy particularly AMD. So I bought AMD at like, I don't know, $10 a share. I only put like a thousand bucks into it, which was a lot for me at the time. But like, you know bought AMD at like, I don't know, $10 a share. I only put like a thousand bucks into it, which was a lot for me at the time. But like, you know, I was like, I'm going to buy in this because this company is going to do really well in the long run. And it went down and it went down and it went down. And this is over a period of about three years. Like it just kept going lower and lower and lower. And eventually it hit like around two bucks a share or something. And I was

like, you know, lost 80%. And I was like, like okay maybe they're dead in the water you know maybe they just couldn't execute so i sold right and now this year amd i think they i don't follow it that closely but i think i saw them at like 80 just a few days ago you know right right so like even if even if like i picked the right thing 10 years ago, you know, it didn't matter because I gave up before it turned around. And like, who even could have seen that coming? You know? No, I know.

And you never know. It's like, should I, is this going to bounce back or is it not? And what should I do? I mean, that sounds like my husband who several years, not several, maybe it was like two years ago, really him and his friend got really into stock, weed stocks really. And she's like, oh, this was before it got legalized. She was like, oh, this is going to be the future, man. We're going to make so much. And he did for a period of time, but he didn't sell when he should have, when he made a profit and then like, you know, walk away. He's like, maybe, you know, you kind of get greedy. You're like, maybe I'll keep on

going up. And let's just say it did not continue to go up. He still didn't cash out. You're like, maybe I'll keep on going up. And let's just say it did not continue to go up. He still didn't cash out. He's like, I'm still waiting because at this point, he's lost quite a bit of money on those stocks. But that's the thing. You just never know. That's the risk with individual stocks. They're fun, but they can also be heartbreaking. That's why you want a large core portfolio of broadly diversified, balanced funds, right? Absolutely. Absolutely. Well, this has been so good.

Before I let you go, just because I feel like you've gone through this and you've probably talked to so many people, and I have a lot of younger people listening about younger people, like millennials, 20s, 30s. What would be some of your key advice for someone who either, yeah, let's start with someone who wants to get started with passive investing. What are some things that they should know just before they get started? Well, the single most important thing to do passive investing is to save. So, you know, whether you need to get yourself on a budget or like you just kind of have the innate ability to set aside cash.

Some people can do that, I guess. It's start doing that and start growing this nest egg. And, you know, a lot of people think, especially when they're getting started out, oh, I want to do it right from day one. You know, I've got my first thousand dollars saved. I'm going to open a brokerage account and I'm going to do it with the ETFs because that's the most efficient way to do it. Right. And you can do that, but it's also like, you know, a very, very steep learning curve. And you're kind of like taking the hard way up the hill when it doesn't even matter that much at the low dollar amounts, right? Like until you get to the point where you

have like 50 to $100,000 or more saved, the fees that you're paying annually for a robo advisor or a mutual fund are actually quite small dollar-wise, right? So I would say don't feel like you need to rush into getting into the brokerage side of things and micro-optimizing your portfolio to minimize every last dollar. The most important thing, especially when you're young, is to get yourself into the habit of saving money and then investing that money. Because you're just getting started, it doesn't matter where you invest it as long as you are investing it and you're kind of building that into your lifestyle. If you start your first job and you start earning reasonable amounts of money and you spend every dollar of it, then eventually when you're 30 years old, you're

going to realize, oh, I haven't really saved anything. I'm a little bit behind. And it's going to be that much harder for you to get into it because now you need to like reduce aspects of your lifestyle in order to set aside that cash. Whereas if you started doing that when you got your first job, you wouldn't even miss it. You know, your life would be built around the expectation that 30% of your income is going into savings or whatever. That's such great advice. I feel like especially the idea that, and I feel like, I mean, I'm a perfectionist. I think a lot of people listening to my show can relate to that as I want to do it right. I don't want to make a mistake. Here's the thing, you're going to make mistakes and that's okay. You know how many mistakes I've made? I've made so many mistakes. I probably just don't share

all of them on the show, but I've definitely made some mistakes with my money, let me tell you. And so it's really just about getting started as soon as possible, whether that means, and usually for lots of people that they want to do DIY investing, but they just don't have that core knowledge or even the confidence to really do it. That's okay. You can do that later. Just start somewhere, whether that's working with an investment firm or using a robo-advisor or whatever you want to start investing your money, you can change it at any time. I think a lot of people forget that your money is not locked into any place. You can move it at any point in time. Nothing's permanent.

That's right. And I think a lot of people might be afraid of the awkward conversation you'd have with an advisor. If you start with an advisor and you know, you have this, it's sort of like a personal relationship to some extent, right? To sort of like pull that away from them kind of feels awkward, but on the other hand, it doesn't really have to, right? Especially if it's like not a personal friend, it's just like somebody who's managing your money. Well, you don't even need to talk to them. You know, you can go to any other institution and fill out a transfer request with your new institution and the money will appear in your new account. And, you know, you don't need to have the hard breakup conversation or any of that awkwardness if you don't want.

No, I even got some questions recently about like, how hard is it to, you know, I'm with this robo advisor. I want to move to a brokerage. How do I get my money out? And I'm like, it's actually so simple. I've done it recently. You usually just, usually there's a form or you just email them and be like, I want to withdraw my money. And then they send it to you. It's actually as easy as you think it is. So you can do whatever you want. But yeah, usually what I recommend is start wherever makes sense and that you're comfortable with. And if you want to do DIY investing, but you don't know if it's right

for you at the minute, take this time to invest in yourself and your knowledge. So you do feel better about it and then start like if it's next year, that's okay. But yeah, save and pay off debt number one and then start investing. But also take the time to educate yourself about investing. And also check out passive,, I guess, which I think is just a very great tool. I'm going to tell my sister to definitely check it out because she's been doing the spreadsheet thing for a while. And I think she's fed up with it. So it's nice that you have an option for people that want to ditch the spreadsheets. Maybe not completely.

People like spreadsheets. But, yeah, make it easier for people. Well, you know, I find that a lot of people who use Passive, they also like to fact check us too, you know? Uh-huh. Yeah. They come in and they set up Passive for the first time. And if they've been doing this on their own, they have a spreadsheet. And so they compare the two and they're like, now, what are these guys doing? Is it the same? Is it slightly different?

And often it is slightly different because we sort of like, you know, the easy way to do an allocation of the spreadsheet is just be like, oh, I want this percent of the new money into this asset and that percent to the next one. So it's like straight up. Whereas we sort of like try to continually rebalance. Right. So we would say, oh, what's your most underweight asset? Put more money towards that. You know, but people when people fact check as they find out that they actually tend to like it a lot. It works really well. It's easy. Yeah. That's awesome. Well, thanks so much for

coming on the show and sharing your, uh, expertise. I love talking about investing and I feel like every time I have someone like you on the show, people listening that are still just getting into this or like, I think I understand this a little bit better. So hopefully I'll push more people to start investing sooner in life. All right. Well, thanks so much for having me on, Jessica. I appreciate it. Absolutely.

Yeah. And just before you go, where can people find more information about Passive and check it out for themselves? You can go to our website at Passive.com. That's P-A-S-S-I-V.com. Awesome. Thank you so much. And that was episode 258 with Brendan Wood. He is, again,

the co-founder of Passive. He is also the current CTO. You can find more information about Passive at Passive.com slash Mo Money. Give me that tracking link to make sure that, you know, Passive knows that I'm directing you there. But you can also learn more about Brendan if you want to connect with him on LinkedIn, huh? Right? You can find him at linkedin.com slash IN slash Brendan Caleb Wood. Well, sorry, I am wearing my glasses surprisingly. So yeah, so check that out. If you want to check out the show notes for this episode, I'll include links and more information about what we chatted about, make sure to go to jessicamorehouse.com slash 258. And since I mentioned a lot of things in yesterday's episode, maybe you didn't hear it. I'm going to mention it again because like super important, I'd say I'm going to start with this one. I'm running an Instagram or a contest on my Instagram page right now. And it actually

closes tomorrow at midnight on Friday, December 18th at midnight. And I don't want you to miss out because it's a pretty awesome contest if I do say so myself. It's really just something I want to do to kind of wrap up the year and to say thank you for like listening to the podcast, supporting me, following on Instagram and all that kind of stuff. And so it's not sponsored. It's just me literally bought all these things myself with my own personal money and I'm giving them away to you. So I'm giving away four prizes and I'll kind of start with the fourth prize. The fourth prize is a $25 gift card to Tim Hortons. Third prize is a $30 gift card to Netflix. Um, second prize is a $50 gift card to Starbucks and the grand prize for one very special winner. It's valued at $250. You get a copy of the a hundred day Financial Gold Journal by Alyssa Davies.

You get Work Optional by Tanya Hester, The Credit Game by Richard Moxley, Talk Money to Me by Kelly Keene. So you get four personal finance books. You also get a $50 Shoppers Drug Mart gift card. You get a bunch of fine tip gel pens by Colorlex to use with your financial gold journal. You get a 12-ounce keep cup, which are awesome. 250 gram bag of coffee beans from Ethica Coffee Roasters, a local roaster in Toronto. And lastly, a mini vanilla maple syrup candle just to set the mood, you know, just to smell nice. This contest, unfortunately, is only available to Canadians because I am personally mailing these things to you. So you'll also get a holiday card from me. How exciting. Who doesn't love a card in the mail? Who doesn't love a holiday card? Like,

I freaking love them. So you'll get that with your prize if you win. So all you have to do is go to my Instagram page at Jessica I. Morehouse. And all the details on how to enter are there. It's not complicated. It's really not complicated. And best and best of luck. Hope you win. Um, other contests that you should know about, of course, though, is a Jessica warehouse.com slash contest. That is where you can find all the books that I'm giving away that have been featured on season 11 of the podcast. Uh, I'm going to be wrapping it, the contest up next week because next week is the end of the season. Next Wednesday, Wednesday will be the last episode of the season. Then I'm going to take a little bit of a break over Christmas and I'll be back.

Oh, I've got a date for you, y'all. I've got a date for you. And the podcast is starting earlier than I expected, but I've got a sponsor and we're doing it. We're going to go real quick. So once this wraps next week, which is the 23rd, um, then I'll be taking, you know, that week off like the, the boxing week off. Um, and then like kind of the new year's week off and then I'll be back January 13th, Wednesday, January 13th, we'll be back. So

you really only have two weeks off, um, and then back on the show. So yeah, right on. Uh, okay. So I mentioned two contests. Oh yeah. The other kind of announcement, just in case you don't know, I'm not sure. Well, yeah, I'm not shutting down my Facebook group, the money life balance community. I'm actually, uh, shifting over ownership to Alyssa Davies, who I mentioned, she's part of the contest cause she has that financial gold journal. Um, so you can still, um, get into the, the group is called the money life balance community Community. You can find it on Facebook. But basically, I'm going to be leaving and giving it to her to run as of December 30th. So just so you know, because the reason is really, I've been working tirelessly all this month to revamp my online courses. I'm focusing on the

investing course first. So that will be out soon in January. I'm very excited. And then I will be doing kind of the revamp version of my Fix Your Finances Masterclass later in January. But I'm going to be creating communities for those students. And I just really don't have the capacity to do all these different Facebook groups. I can do two. Three seems like a bit of overkill. I don't know if I can handle that. So that's why that is happening. So, so I feel like that is really all I've got to say at the minute. If you're not on my email list, make sure to check it out. You know, this is how you stay in the loop of all these things. Okay. JessicaMoorhouse.com slash subscribe is how you can get onto my email list. I've also got a free resource library in case you don't know. JessicaMoorhouse.com slash resources. It it is on my website a bunch of free guides checklists and helpful um things that you may want to check out

and also if you don't know i have a bunch of budget spreadsheets on my shop page jessicamorehouse.com shop a few free ones if you paid ones that are really cheap they're like 20 bucks okay um and they have a bunch of video tutorials a video library that walks you through them. So you can get your stuff together, get your money organized. Okay, that is it for me. Thanks so much for listening. I will be back next week

with the final episode of season 11 and the final episode of 2020. Wow, crazy. So I will see you back here next Wednesday. Have a good rest of your week. Good weekend. See you very soon