More Money Podcast - From the Archives: Relistening to Dan Bortolotti Speak About Rebooting Your Portfolio

Episode Date: May 29, 2025

Dan Bortolotti, a.k.a. The Canadian Couch Potato and well-respected investment portfolio manager and financial planner at PWL Capital, came on the show back in 2022 and shared exactly what you need to do to set up the right investment portfolio for you so you can reach your goals, keep your costs low, and spend hardly any time on it per year. Dan is a legend in the personal finance community, so I hope you enjoy this episode as much as I did!This episode originally aired on June 15, 2022.To find the original show notes for this episode visit jessicamoorhouse.com/333Follow meInstagram @jessicaimoorhouseThreads @jessicaimoorhouseTikTok @jessicaimoorhouseFacebook @jessicaimoorhouseYouTube @jessicamoorhouseLinkedIn - Jessica MoorhouseFinancial resourcesMy websiteMy bestselling book Everything but MoneyFree resource libraryBudget spreadsheetWealth Building Blueprint for Canadians course Hosted on Acast. See acast.com/privacy for more information.

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get your podcasts. Hello, hello, hello, and welcome back to the More Money Podcast. I'm your host, Jessica Morehouse, and we are re-listening. This is the final re-listen episode for this season, this season 20 of the show, and I've saved the best for last. This is one of my favorite guests, favorite people in the personal finance space, someone I've been following since the beginning when I was in my early 20s, starting a blog, reading blogs when blogs were a thing. And I'm of course talking about the Canadian Couch Potato himself, Dan Bordelotti. This original episode number is 333, 333. And it's all about rebooting your portfolio. He wrote, finally, I'm so glad when he came out with his books.

I'm like, what? Yeah. What took you so long? I was waiting for him to write a book. He wrote the book Reboot Your Portfolio, Nine Steps to Successful Investing with ETFs. This is another book that I think every Canadian needs to read. And especially anyone who's looking for specific information about ETF investing or building your own portfolio, DIY investing in a passive way, if you're a passive index investor. This book has everything you want to know. And not only is Dan amazing and he's been, I don't know if he still quite honestly keeps up with his blog, I'm not sure. This episode originally aired in 2022. So some time has passed, but his book is amazing.

And he works at PWL Capital. And he sometimes makes appearances as a cohost on the Rational Reminder podcast. And I was so lucky to have been able to join Dan and Ben Felix, who I also really look up to. He's amazing on the show to talk about my book. And honestly, I was a bit starstruck the whole time. It was an incredible experience.

A great podcast. I mean, you know, I love that you listened to this podcast. Another great Canadian finance podcast, I would highly recommend such high quality, very specific and sometimes technical, but also great is the Rational Reminder podcast. Really well done. So make sure to check that out. Anyways, we go into the nitty gritty about investing as a Canadian in this episode. So

you're going to absolutely love it. So without further ado, let's get to that interview with Dan. Welcome, Dan, back to the More Money Podcast. It has been like years and years and years since you've been on this show. And I am so thrilled that you're back to kind of close out my season. You're my last episode of the season, but also to talk about your new book, reboot your portfolio, nine steps to successful investing with ETF specific for us Canadians. I literally like I emailed you on, I devoured it in a weekend. I was obsessed. I love it. It's my favorite topic and I love how you write and what you write about and can't wait to share All some some nuggets from your book in this episode. So thanks for joining me

Well, thanks again for having me. It's good to be back on the show. Yeah. Yeah. Yeah. So so so What I love about your book it and we were kind of talking about this before I hit the record button is it is a Specific guide for people that are and believe, there are so many people looking for this. So I think a lot of people are going to be like, Oh, there it is. Thank goodness. Telling people this is, these are some things you need to know foundationally, but also this is how to actually be an index investor in Canada. I think you can scour the internet and read it for hours and hours and hours and you will not get a straight answer or a specific this is how you do it in this sequence and these are some things that you need to consider because really when you get I feel like into kind of the

weeds so to speak that's where people get kind of tripped up they're like okay great I understand the overall theory but then how do I choose the right portfolio how do I choose the right ETF how do I choose how much of each ETF? And then you go in circles and kind of drive yourself a bit crazy. So I really love that you don't um, shy away from some of those topics and address them. And I think I'm assuming most likely it's because you've heard every single question under the sun about this kind of stuff as a portfolio manager, but also because you have a blog that is one of the best resources, I think, in Canada about this topic and also your popular podcast.

So I'm curious, why did you want to write this book and publish it right now? Well, I mean, it's interesting that you mentioned that one of the advantages of it, I mean, it's interesting that you mentioned that, you know, one of the advantages of it, I think, is it goes into kind of the practical specifics, because that was really my goal. You know, for people that don't know, my background is as a journalist, and that's the way I made my living for many years, until I transitioned into becoming a professional portfolio manager almost 10 years ago now. And so when I first started writing, and in fact, back when I was writing

with Money Sense Magazine, which is when I really first started to get into this stuff, so this would have been around 2011, 2012, I actually did publish a modest little book that we sold on newsstands with the magazine called The Money Sense Guide to the Perfect Portfolio. And it was essentially the same scope as Reboot Your Portfolio, the new book. But the difference was that I was writing as a journalist, and I understood a lot of

the theory and some of the practice about this stuff too. But I just didn't have the day-to-day experience that I did or that I do now in terms of managing portfolios and also just working with clients directly. So I know what the behavioral challenges are firsthand now because this is what I deal with every day. So you know that book, I mean it did very well and I think it was quite popular. It's hopelessly out of date now, but not just that. I wanted to sort of take the idea of that book, not only update it, because goodness knows the landscape is different now with robo advisors and asset

allocation ETFs and no commission trading and all of those things. But also to try to layer in the wisdom that I've gained over the last decade or so doing this every day, working with clients directly. And so, you know, I think about things that weren't in the original book that are in the new one are just things like questions I get all the time, like, okay, I agree with everything you're saying here. I want to open a brokerage account and transfer my assets over. You know, I have to open a brokerage account and transfer my assets over, you know, I have a mutual fund advisor. How do I do that? Right? Simple questions like, well, it's very easy to kind of have great intentions,

but if you literally don't know how the transfer process works, then you've stopped before you started. And so I was finding that there's a lot of people out there who had these good intentions, but then they run into a roadblock or two and that, that makes them just, you know, it, it throws enough of an obstacle in their way that they just lose the drive to do it. And then they move on to something else and that's the end of it. So I was really hoping I would be able to walk people through the whole process.

So they wouldn't stall along the way. They'd get the portfolio implemented and then they'd learn how to maintain it. Absolutely. And like you said, so much has changed in the past 10 years. It's crazy. I mean, I think back to some of the early books I read a decade ago about self-directed investing and it's completely different. I mean, at the time it's like, Oh, well, you need at least $10,000 to start and then you have to call up your broker and all that. I'm like, what now? I mean, you just download an app and you're good to go, which is good and bad. And you'd kind of address this in the book. There's now so many options and platforms. So it's great.

There's there's it's never been, easy or accessible to get started, but also then that comes with another problem. Where do you start? And I don't know if you get questions like this all the time, but I sure do, which is great. I want to use a robo advisor, which one, or I want to do self-directed investing, which brokerage should I use? And that similar to, you know, moving your money, if you're using an advisor at a bank or investment firm and you want to move it, that can stop you in your tracks. And then you know, moving your money, if you're using an advisor at a bank or investment firm and you want to move it, that can stop you in your tracks. And then you again, get the analysis paralysis, get scared. Then you don't, then you leave your money with that advisor for another year. Um, so with that, I guess what would be some of your advice for someone who

knows, you know, they've, they, they've listened to like my show and your show and they know this is what they want to do, but they just don't know actually what the first step would be to actually make some change. Where should they start? Well I think, you know, what I try to argue in the book in terms of a place to start is that the first thing that you need to do is invest a little bit of time in understanding why you're investing in the first place. And I know maybe this seems like an obvious point, but it's amazing to me still,

how many people approach investing as a question of what do I buy, right? So people say, you know, oh, I'm interested in index investing, what do I buy? What ETF do I use? And I'm like, well, why don't we take 10 steps back and ask, you know, are you in, are you saving for a down payment or are you really investing for the long term? Because a lot of people, you know, again,

I'm talking about sort of beginner investors, you know, make simple mistakes like they want to save for a goal that's two or three years away and, and, and they buy stocks with that. I mean mean stocks are not a two or three year investment. So you know you need to figure out basic questions like this. You need to figure out what your risk tolerance is and frankly most people don't know that until they're truly tested. I can ask you how you might feel if your portfolio fell 20% but I won't trust your answer unless you've lived through a 20% decline because you really don't know until it happens to you.

So I think you need to set the stage. And then I think the next piece of advice I would give to the investor getting started in that way is please don't over complicate things. One of the biggest changes, we've talked about changes that have happened in the last decade or so, and one of the greatest ones I think, has been the launch of asset allocation ETFs,

which are single ETFs that hold a diversified portfolio in one wrapper. When I started writing about this, I had to have model portfolios that had sometimes 6, 8, 10 ETFs because in order to build a diversified portfolio of stocks and bonds, you had to hold multiple ETFs. Well, you don't need to do that anymore.

The portfolio design has been done for you extremely well by companies Vanguard, iShares, BMO. They all have versions, they're all very similar, they're all excellent. And so just with a single fund, you can buy a very diversified portfolio that you can hold for decades without making any changes to it because it manages itself. It's never been easier. And these funds have been extremely popular, but there's also a lot of people out there who still feel that's too simple.

I need to do something more customizable. And you know, I get that if you're a very experienced DIY investor, but for somebody just starting out, if somebody is serving it up to you on a platter, why do you want to make things more difficult? Why do you feel that you can design a better portfolio than these professionally designed ones? So try to resist the urge to make things more complicated than they need to be. If you could just embrace the simplicity, I think you'd be better off in most cases. Yeah, no, I think that's the hard thing when it comes to DIY investing is simple doesn't make sense.

It seems too simple. And when we think things are too simple, it sounds like we're doing something wrong. And I think possibly it's because yeah, the start of it, there weren't many simple one fund solutions. There wasn't anything. Your option was to build your own thing. And I think a lot of people still have the mindset that, well, to be a true self-directed investor, you have to do your individual ETFs and rebalance yourself and organize it all

on your own. And also remember the fees, you're paying higher fees for those asset allocation ETFs, even though it's very, very minimal. But like I said, I kind of do both. I have my T of a say in an asset allocation ETF. I do individual ETFs for my RSP. And that was honestly just to get the feel for both to see what do I prefer. I wanted something passive and easy. And quite honestly, I do love having the asset allocation ETF. It's great. And, uh, but one thing,

what I hear often, you do address this in the book is for, again, those hardcore people are like, Oh, I'm doing the individual ETFs, like a, you know, kind of the traditional way of doing it. Um, you know, then you can really get over complicated and think about things like, should I incorporate us listed ETFs and what about the taxes and how do I minimize fees to, you know, the, the smallest basis point, you can really go crazy. And I kind of feel like that's counterintuitive to the whole kind of philosophy of index investing, which is simple, easy, passive. What do you kind of think about some of that?

You know, it's so interesting you bring that up because I feel in some way responsible for creating the problem. I mean, obviously inadvertently. Um, but you know, over the years, like, especially the early years, when I started writing, I was always looking for these kind of optimization techniques. You know, if you hold us listed ETFs in your RSP, you reduce your withholding tax on dividends, et cetera, et cetera. Right. And it's all true.

In a strictest sense, if you do those things, you can theoretically save a few basis points in either taxes or fees or whatever. But what I've learned from experience is that there's theory and there's practice. And in theory, if you do all of those things optimally, you can save fees and taxes. In practice, very few people do them optimally. They do them in a ham-fisted way, or they do them in frankly ways that are incorrect just because of misunderstandings, for example. I mean, just to give you an example, it's true that if you hold US listed funds in an RRSP, they can be more tax efficient.

But if you are purchasing those US funds with Canadian dollars and your brokerage is converting the currency, you're getting killed on the currency exchange and that is outweighing any benefit you're going to get from holding those funds. So that's one example. And so I guess what I have learned over time is that there are a number of things that erode your returns. One is fees. One is taxes. But a third one is mistakes.

And mistakes can be a lot more costly than modest amounts of fees and taxes. And I would, for the vast majority of people, recommend that they accept slightly higher fees and potentially slightly higher taxes in order to avoid much more costly mistakes. So that's not gonna apply to everybody. Again, if you're a very experienced investor

and you get all of this stuff, then for sure try to use some of those optimization techniques. But that's a small minority of people. And I know from the emails that I've received over time, a lot of people misunderstand some of those techniques and their mistakes end up being a lot more harmful. So I say for the vast majority of people, start with simple. Remember, these asset allocation ETFs are not the absolute cheapest, but they're pretty cheap. And you're not going to reduce your fees by more than five

or 10 basis points by choosing individual funds. And you can easily wipe that out by making a bunch of too many trades, forgetting to rebalance, whatever it is. So I've come to accept that optimization is probably not the goal anymore. Build an excellent portfolio. It doesn't have to be a theoretically optimal one. And another thing that you talk about in your book, and I think this is so important because

this is something I've been, you know, always talking to people for a while is, you know, when you are, say at this stage and you want to do DIY investing and choose your brokerage, so many people are focused again on the fees and oh, I'm going to go with this, you know, well, simple trade. Let's just say, and because there's no commissions, it's great.

There's some downsides to that. And for me, again, people are just focused on like, I'm saving so much money on those commissions, but if you're an index investor, really, you shouldn't be making that many trades in the first place. But also there are some downsides to having too much access to your investments, being able to make those trades so easily. And for me, that the, what I've heard from so many people is, uh, because of, you know,

these apps that allow you to trade so easily and freely, they are trading a lot more and buying things that are maybe outside of index funds, stocks, just because they think they should because they can and it's cheap. Which again, it goes back to the whole idea of like, but you could be losing money with all the mistakes that you're making. What would you say to someone trying to decipher, trying to decipher which, you know, is the right brokerage for me and what are some of the benefits to maybe having some of those?

I always kind of think they're barriers to your money with those fees. Like I use Questrade personally because it's free to buy, but not free to sell. And so I always have to, you know, think about why are you selling? And it makes me kind of stop in my tracks and rethink maybe trading too much. Yeah, no, I agree with you. I mean, I would say that if if a $10 trading commission is a real obstacle to you, you're trading too much. Right? I mean, I would say that if you're a DIY investor,

whether you pay $10 a trade or $0 a trade should not have much more than a trivial effect unless you're trading too much. Now this is going to be, I mean that's certainly true of people with large portfolios. If you've got a half a million dollars in your portfolio, 10 bucks here and there to make a couple of trades a year is not going to have any effect at all

If you're getting started and your account is more like ten or fifteen thousand dollars then for sure that's going to eat into it But again the same point if your portfolio is ten or fifteen thousand dollars You should be using an asset allocation ETF and making one or two trades a year, right? an asset allocation ETF and making one or two trades a year, right? You should not be in there making multiple trades with a small portfolio like that. Even if the commissions are free, you know, as you point out, you might not be losing on commissions, but you are probably touching the portfolio too much. And that's going to lead to more mistakes and those mistakes are gonna cost you more than those 995 commissions. So I Also agree with your point about a little bit of a barrier to the money

You know, I think frankly that's one of the ways we add value just as advisors like for our clients Right because our clients have the same emotions as anybody else, right? They have the same tendency to to panic when markets go down But the fact that they can't log into their accounts and just do that You know They have to they have to call me and then I have to talk to them and then usually I can get them to reconsider And then we make a better decision You know, I think that as much as almost anything else helps people stick to their long-term

plan. It's like having a coach or, you know, somebody who can walk you through those difficult times. And I think it's true. Like imagine if you, you know, maybe you have a workplace plan or something and you have your investments in a plan that you don't have immediate access to, and you probably forget about it too. A lot of people have group RSPs and pension plans and that they don't think very much about.

And in many ways, those can be great for that reason specifically, because you're not in there tinkering all the time. And so sometimes just having a bit of a buffer between you and your emotions, whether that's a commission, right, or an advisor, or, you know, a requirement to log in and, and do something with some kind of delay. That is, that is probably a good thing in the long run. Absolutely, absolutely. And another thing I hear often for people, you know, besides choosing the platform is choosing the product. And I know sometimes that is where people start. I hate honestly, when people ask me, what's your favorite ETF? I don't have one.

Come on. But you know, people are always just like, I want, again, I think it goes back to that idea of I need to optimize or do the right thing. I don't want to make a mistake. And it's, I think a lot of people still think that when it comes to things like investing, there's a right or wrong, it's very black and white, but it's, you know, there's lots of options. And I always tell people it's like, there's a lot of robo advisors. They're all pretty much the same. There's lots of asset allocation ETFs.

They're all pretty much the same. There's a lot of index ETFs. They're all pretty much the same. So when someone is thinking of, you thinking of maybe building their own index ETF portfolio from scratch and now they're stuck, they're like, oh, okay, well, we've got BlackRock here and Vanguard and BMO. Which ones should I choose? How do you know how they're really different?

And I'm just talking about the broad market index because of course these companies also have a bunch of other ones to confuse you. That's an important point, right? Because you're correct that the sort of, let's call them traditional index funds, whether you're buying them from Vanguard, from iShares, from BMO, they're very, very similar. And they're interchangeable, right?

Like if somebody says to me, do you prefer Vanguard's Canadian equity index to iShares, it's like, they're not exactly the same, but they're essentially the same. However, as you point out, those traditional ETFs now are only a small portion of the overall ETF marketplace. You know, way back, I remember when I first started working at MoneySense, literally the only index ETFs available were the iShares products, right?

I mean, this is going back 20 years, but there was nobody else. And so if you decided you wanna be an ETF investor, boy, you didn't have very many decisions to make. Now there's hundreds and hundreds of ETFs just listed on the TSX, let alone the ones that are available on the US exchanges. So I do spend some time in the book on this exact question, which is, okay I'm overwhelmed with ETF choices. How do I know, you know, what's a good one? And, you

know, obviously your opinion about what is good varies, but I start from the assumption that if we assume the goal is to get as broad of diversification as we can at the lowest possible cost, here's what to look for. And I just walk people through a few steps. I mean, you're going to want one that covers the broadest swath of the market possible. So not just the biggest 30 stocks or the biggest 50 stocks, but one that holds almost all the stocks in the market, one that doesn't have a whole bunch of embedded strategies like, well, we give higher weight to ones with dividends,

or we give higher weight to ones with some other characteristic. And then you look for ones with the lowest fees once you whittle them down based on those basic criteria. And that's usually you're going to end up with a traditional cap weighted index ETF. And that is usually the best starting point for the vast majority of investors.

And so it is worth spending a little time learning that because you certainly can fall into this trap of thinking that all ETFs are good. And so it is worth spending a little time learning that because you certainly can fall into this trap of thinking that all ETFs are good, right? ETFs good, mutual funds bad, right? Like this kind of simplistic argument that you see a lot. And it's important to understand that the strategies and the fees are what make ETFs so useful.

It's not just the fact that it's an ETF. Mm hmm. And I think what I've also seen in the past year or two is it's so important to really understand how these products are built because there's so many products coming out that are marketed as if they're something else. Like a prime example is a lot of financial institutions are releasing what they call ETF portfolios and they're actually a mutual fund wrap of ETFs. And a lot of people think that they're investing in ETFs, but it's a mutual fund with ETFs inside it that are more expensive. So, and so that's exactly playing into the idea, you know, this idea that ETFs are good

and mutual funds are bad. Everyone in the financial industry knows that that is the general perception of the public, right? Because ETFs get such good press and more and more people equate mutual funds with very high fees for good reason in the past, for sure, and still in the present. But when you break it down, right? I would rather have an index mutual fund that costs half a percent, right, than an actively managed ETF that charges one percent, right?

It's mutual fund versus ETF doesn't make much of a difference. In fact, I would argue that in many ways, the mutual fund structure is better in a lot of ways. So it's really about strategy and it's about fees, it's not about structure. But because the financial industry knows that, you're exactly right. There's a lot of companies now who create mutual funds. The mutual fund holds a number of underlying ETFs, adds its own own layer of fees on top of it and calls it an ETF fund or something, which is confusing for investors for sure.

And I wish they wouldn't do it, right? I mean, if it's an index fund, call it that. If it holds underlying ETFs, great, but don't try to piggyback on the halo, or that's a bad metaphor, but don't try to piggyback on the halo or that's a bad metaphor, but don't try to You know capture that same sort of glow That ETFs have even though you've created a product that's not much different from the old-school type Yeah, absolutely absolutely now the right products for your portfolio the other I think

Yeah, absolutely. Absolutely. Now the right products for your portfolio. The other, I think, um, you know, key thing to figure out is your asset allocation. And that's something that, you know, a lot of the students in my investment course are always asking like, okay, great. I know my overall asset allocation, let's say it's, you know, 80% stocks, 20% bonds, but how do I know how much should go towards the U S in Canada? And that's again, where you can be like, there's so many options options there's so many ways you can kind of build your asked allocation I mean again why I usually say well maybe an asked allocation ETF would be the right strategy but you know when you're at that point and trying to figure out again what is the the best you know organization for all of my ETFs for me

you know where again where would you kind of look to find the answer? Yeah, so that's a good question. It's a popular one, right? Once you start accepting, like if you start from the premise that it makes sense to hold Canadian stocks, US stocks and international stocks all in your portfolio, what is the proportion? That's quote unquote correct? Well, there's no correct asset allocation.

I think you can make a decent argument for a few different strategies, but let's consider a few of them. The first one would simply be weight each of those in proportion to their weight in the overall market. So to give you an example, right now the US is roughly 60% of the global stock market. So you could make 60% of your equity allocation US.

In Canada is only about three. So you would put only, you know, you'd have 20 times as much US equities as Canadian equities. And you know, that would not be an unreasonable starting point. I would argue, I wouldn't necessarily do that way. And we don't with our clients and the asset allocation ETFs that are marketed to Canadians don't do that either. So I would tend to look at a different option. One would be to just simply hold all three of those in roughly equal proportion. One third Canada, one third US, one third international. And there's some good evidence behind that too.

I mean, there's some reasons why you might want to overweight your home country. It's not about patriotism. It's not about, I want to support Canadian companies or I love living in Canada and I want to, you know, or I think that their market is going to outperform. It's not that, it's currency risk is one thing. If you live in Canada, you may wanna keep

the most of your investments in Canadian dollars, whereas foreign investments are denominated in foreign currencies, right? Tax preference, Canadian equities tend to have lower fees. So there are some reasons. And then the other one is just if you weight them all equally There's some evidence to show that that provides actually a little less volatility in the portfolio without giving up anything in In returns over the long term. So I that's our usual starting point is, you know, roughly one-third to each With the US being so big now

to each. With the US being so big now, it's pretty common now to see something like 30% Canada, 40% US, 30% international, so giving a little bit more weight to the US and that's perfectly reasonable as well. At the end of the day, those small details don't really matter that much. The point is that you pick a reasonable allocation, you stick to it over the long term and you rebalance from time to time. So if the US is running hot, don't pour money into it and chase that performance. Do the opposite, right? After a period that one of those assets has outperformed the other, rebalance by selling some of it and buying what's done poorly.

That is, you know, that's the essence of rebalancing right there. So you know, it's really more important to come up with a reasonable plan and stick to it than it is to try to design something optimal. Absolutely. And I think what's what I often see is, you know, you talk about this in the book is performance chasing is we looked at the past, be like, Oh, well, I should have done that. So I'm going to do that now.

You know, we've seen so many people be like, Oh, I wish I invested more in the U S because it's had a great time that the past decade, I really wish I had more exposure to the U S but like you talk about, well, that's the past. We don't know what's going to happen in the future. And so if you're just going to make your decisions based on what happened in the past, I mean, you're not necessarily going to get the exact same results. And I think that's again, another thing I see often is people just analyzing too much and regretting what

they didn't do and trying to do it now, even though it may not work out in their favor. Yeah, it's very, very easy to do, right? I mean, emotionally, that's what we all feel. And this is where it helps to have some experience. I can remember very distinctly, like when I started writing my blog, which would have been a rate around 2010, between 2000 and 2010,. stocks were a disaster. They had barely, they barely broke even in Canadian dollars over the decade.

And Canadian stocks did much better. And it was not at all unusual. And I can dredge up the old blog posts where I had to try to argue people who said, why would anyone invest in anything other than Canada? The U.S. is yesterday's guy and you know, the future belongs to Canada. Because we had just gone through a decade

where the US was a gong show and that seemed like a reasonable thing to say at the time. Of course, we now know over the next 10 years, it was the exact opposite. Not that Canada was a gong show, but that the US crushed everything. And so it's so easy to look back and remember, after 10 years of negative returns,

it's sort of reasonable for an investor to be frustrated and feel like I don't wanna stick with this asset class anymore. But I think we're seeing the same thing now with bonds, right? Bonds have had a dreadful start to the year. They had a bad year last year. And it is so easy.

Pick up a paper or read a blog and people are, bonds are dead. Yeah, I honestly wrote that down as a note to ask you. It's like I've been seeing so many conversations online being like, I don't hold any bonds. I'll be honest, I don't hold any bonds, but it's because I know my risk tolerance and I'm fine with that. But so many people are like, bonds are dead.

I'm not gonna add any bonds. I'm like, I'm eventually gonna have bonds in my portfolio. I don't think they're dead, but so many people think, oh no, they're old news. And it's exactly what you're saying. It's the exact same thing. Well, I mean, but people, they wait until something falls in value dramatically and then they say, don't include these in your portfolio. And it's, you know, I would have been great if you had made that call 16 months ago, right? And then they fell, then I would have been impressed, but it does not take an investing genius to look back

at what has done brutally over the last year and say, yeah, that was a bad buy. Right? So, I mean, and if we take this the next step is let's think about the US. Remember I said earlier that people in 2010 were saying, don't buy US equities because they've performed so poorly. Had you done the exact opposite and bought US equities in 2010, you would have made out like a bandit over the next dozen years.

Today, when people have been bearish about bonds, and a lot of people have been reluctant to buy bonds for a very long time. So I'm not suggesting this is the first we've ever heard of it. But people who happily bought bonds a year and a half ago when they were yielding barely 1%, right? Now bonds are yielding, it's pushing 3.5% in some cases because the prices have fallen so much.

And people are saying, don't buy them or worse they're saying sell the ones you already have. I mean I'm trying to figure how that's good long-term advice because you were buying bonds when they were yielding 1% but you won't buy them when they're yielding over 3%. So you know it's usually and maybe I'm being a bit contrarian here and I don't mean to suggest that you know you should always do the opposite of the consensus view, because I just mean to suggest that the consensus view is right 50% of the time, maybe even less. And so your best bet is not to make forecasts like that. Nevermind this, you don't need US equities, you don't need bonds, don't...

Just hold all of the assets all the time in some sensible proportion that is suitable to your risk tolerance and rebalance from time to time. No forecasts involved, right? It's just a systematic way of sticking to a plan over the very long term. And I know you, you discuss in your book that the, I think the hardest part, and this is what I see too, is people not giving it that the, I think the hardest part, and this is what I see too, is people not giving it time to work.

Cause it is so simple, which is beautiful. This is why I was attracted to passive investing. I'm like, oh, this is so simple. I can, even I can do it. I don't have to learn all this complicated stuff and become a portfolio manager in order to figure out how to retire one day. And I don't think anyone should have to learn all of that,

you know, but the psychology part always kicks in the, the second guessing the, am I actually doing it right? Did I miss a really important step? And I see so often people will like sign up with a robo advisor or, you know, do their own thing with their index funds. And six months later, Oh, this isn't working or this is a terrible robo advisor. They have terrible returns. I get this all the time on my YouTube channel with a few video tutorials I've done. And I'm like, um, well, how long have you been investing? Just a few short months. I'm like, well, what are you comparing it to? You know,

you can't just say this robo advisor is trash and this one's good. They're, honestly, they have the same products. They're just selling index funds. Like, I'm not really sure what you're comparing your experience to. Like for me, what the best thing that I've learned, you know, and you talk about this all the time is you have to give it time. You know, you've got to stay in. That's what the whole point of this type of investing is for long term. You're not going to get your 12, you know, million percent overnight. I mean, do crypto if you want to make that gamble, but you know, it's about sticking

with it and seeing it through. But so many people do not have that patience. I mean, it's, it's very difficult, I think, to be patient. That's the hardest part of investing. I mean, it's a natural human tendency, right? I mean, and I, I think we have to recognize that it's hard for all of us to have a long term focus, um, because it's not even amount three to five years.

I mean, it's 20 years. And if you look at stock market data, for example, the only time that stock returns start to even out is when you go over like rolling 30 year periods. So in other words, like let's say going back as far as stock data goes back, if you pick any 30 year period, the returns are not that different.

But if you start, once you start going less than that, I mean, even down to 20 years, right, which is a long time for most of us, your experience is going to depend on when you started and when you ended. And one of the things I've really noticed about this over the years writing, because I've been writing through bull markets

and bear markets, and the time that your entry point, if you will, has a huge impact on your satisfaction level, right? So if you learned about index investing in like 2009, right? And you started then, so this is right after the great crash of 08, right? Your returns over the next few years were great. And you're probably looking back at your portfolio now and say,

wow, this has worked so well, because you know, you kind of bought in the low point, and you enjoyed a very long bear market, or sorry, bull market. If your experience was different, and you, you know, you bought in at like, I don't know, 2019 or so, and you had a pretty rough ride in the last couple of years and we had the COVID crash in 2020. I mean last year was a good year. This year everybody's struggling again. So you know your experience is very different even though you're using the exact same strategy as the person who started in 09. And you know you right, you cannot possibly evaluate the strategy with any timeframe shorter than, you know, at least several years. And you always have to

remember too what indexing is, right? Indexing is a strategy designed to capture the returns of the market. So in any year where returns are negative or returns are disappointing, your returns are going to be very similar to that. And that's the whole point. Not to get disappointing returns, but to mimic the market. So you have to believe that the market return will be satisfactory over your entire investing horizon, which is probably 30 years or more. But it's so hard. I mean, to me, it's like planting a tree in your backyard and then three months later pulling up the roots and having a look and seeing how it's doing and saying, this thing

isn't growing, right? It just takes a lot longer than that. And we're not programmed to think in in 20 30 year timeframes No, that's the hardest thing. What would you say? And this is what I see a lot with especially new investors young investors They set up this system, you know, either a robo advisor or ETFs or ass allocation ETF and You know, the whole point is really to let it do its thing. Don't touch it. Live your life. Don't touch it.

People can't help but touching it. And that's why I feel like I get so many questions about, but I also want to pick stocks. What about cryptocurrency? What about NFTs? What about something else? What is this desire for, for humans just to feel like this isn't enough. It needs to be difficult or I need to do something on the side. And, and is it okay to do something on the side. And is it OK to do something on the side,

or should you just stick to what the original plan was? Yeah, that is a question that I have considered over the years, and I have changed my answer. I would say years ago, I used to say, sure, as long as you kind of do something responsible with the most of your portfolio, ago I used to say sure as long as you kind of do something responsible for with the most of your portfolio and you know presumably that's an index portfolio it's fine to carve off five or ten percent you know of your portfolio

and do something fun with it pick stocks or you know do something speculative and I think for some people that's probably fine. But what I've learned over time is that for a lot of people who do that, they end up focusing all of their investing attention on the five or ten percent play money. And a couple of things can happen. One is because they're so concerned about the stocks they picked or some other alternative asset that they bought, And a couple of things can happen. One is, because they're so concerned about the stocks they picked or some other alternative asset that they bought, they're reading a lot of financial media.

They're following a lot of day-to-day market moves. They're spending too much time, frankly, thinking about what was supposed to be fun money, right? And it's a huge distraction. And instead of focusing on what they should be, which is kind of, you know, diligent saving and sticking to a disciplined long-term plan, they're fussing about their side hustle, right? And what can also happen is it's very possible, just like people who go to the casino and play the slot machine sometimes win, right? You can have a bit on the side that does really well

in the short term. And when that happens, it's not at all uncommon for you to undermine your own long-term strategy, right? Hey, I picked a couple of stocks. Look, this one tripled, right? Maybe I'm really good at this. Why am I wasting my time with index investing when I can be a stock picker? Because obviously I have some talent for it.

And obviously that's short-term success and it's probably going to lead to long-term disappointment. So I mean, look, if you have to do it, you have to do it. But when people ask me sort of, you know, what's the right amount of the portfolio to carve off to do something fun? I say zero, right? If you can do zero, then you should do zero or as little as you can possibly manage in order to scratch that edge. No, I completely agree. I mean, I'm,

this is coming from someone too who has a little satellite portfolio, the fun money. And I think sometimes it's important for people to have that just for the experience to sometimes show you, yeah, this is why maybe this isn't good for you. I mean, for me again, I like to try different things to also test myself and my own, you know, what I think my risk tolerance is compared to what it actually is. I've learned a lot. They are expensive lessons sometimes, but there are lessons nonetheless that I like

to share with people like, okay, this is why, you know, but, um, yeah, I think one thing I did recognize was when I did start, you know, having that satellite portfolio and I really started it back in maybe 2018 or 2019, just with a few little stocks and I then I kept on, I spent too much time thinking about this minuscule part of my overall portfolio and why, why would we want to spend more time worrying about investments? Like again, the reason I became interested in passive investing is I wanted something simple and easy that I didn't have to spend all my time thinking about. And now I'm kind of doing the opposite with this 5% of my portfolio. What happened here? So I

kind of agree with what you're saying, but sometimes I feel like people, they just need something to do and whether they want that to be an expensive hobby, like that's what it kind of is, is a little bit of a hobby. It's not really investing, is it? Yeah. And you know, if you can compartmentalize the two in a healthy way, then that's, that's completely fine. So I mean, I would say crypto is probably the most common example that I hear and see

these days. And you know, I've been adamant, certainly with our clients, we don't include it as part of our portfolios. And if people ask me what I think about it, I give them my two cents. But I would say that if you're going to be paralyzed with FOMO because you don't own any, and that's going to make you frustrated, right?

Then okay, dabble in it if you want, right? Keep the, keep the amount small. Expect that, you know, you're not gonna get rich overnight. It might go to zero, whatever, as long as you're prepared for all of those things. And if doing that, I mean, again, I was arguing that for a lot of people, it distracts them from what's important. Perhaps for other people, it's the opposite. It distracts them enough that they are not tempted to tinker with their serious money. So if you've got 90% of your investments in an index portfolio, it's in an asset allocation ETF, you never look at it, and you contribute regularly, and you

want to fuss over your investments on the side, maybe that's a good thing for some people. I've seen kind of both over time, and I'm not convinced that there's a perfect answer for everybody. For me, it's just I prefer to avoid it altogether. But other people might have a bit different experience. Well, what I definitely see,

especially with the new young investors that are getting a lot of their investing information from like social media is the focus is on that kind of, what should be just a satellite portfolio instead of really having a good think about, well, what's your overall strategy for like your retirement? It should not be a hundred percent maybe in speculative stocks or crypto, but that is kind of the information they're gaining, which is why it's funny.

I like the, the longer I do this podcast, the more I'm just like, am I just getting, am I that old person just, you know, talking about the same thing over and over? But I'm like, I don't care because I feel like someone needs to keep on saying this because everyone on take doc is just talking about meme stocks and we need, we need to have some balance in that situation. I'm curious though, since you mentioned, and I, and I get asked this all the time, what is your perspective on crypto? Cause that seems like I thought it was going to be, you know, old news people were going to get bored of talking about it. And it just keeps on, especially as it was big institutions are like, Oh, we're integrating get bored of talking about it and it just keeps on especially as it's big

Institutions are like over integrating this and into our portfolios now or we're buying a big bunch of Bitcoin now What are your kind of thoughts on that? It's such a big question and it's kind of a loaded one, you know, but but I I mean again The clients ask me all the time and And so my answer is typically this, right? We don't hold gold in clients' portfolios either, right? It's not because we think gold is worthless, right? We don't hold, say, euros, right? Just the currency in client portfolios, not because we think the euro is worthless.

We don't hold those assets because we don't really know what their expected return is. We hold stocks because a stock is a business and a business makes profits and when it makes profits it grows, its price goes up, and or it pays a dividend to investors. We hold bonds because when you buy a bond, it pays you a yield and then you get your principal back at maturity. And we know what the expected returns are on those. We don't, we can't forecast them in the short term, but we have an expectation of future returns for stocks and bonds. Real estate, same thing, right? When I hold a gold bar, what is my expectation? I mean, this is Warren

Buffett's classic analogy. If I owned a lump of gold, then 10 years from now, I still own a lump of gold. It's the same size and it hasn't paid me any yield. So my expectation is it will go up in value. And why is my expectation that if it's still a lump of gold, it didn't pay me any yield. So I guess I look at crypto the same way. It's like, if I'm buying it, what is my expectation? Why do I think it's going to go up in value by some huge amount?

And I can't answer that question. I have no idea how to value cryptocurrencies. I have no idea why a certain price is ascribed to them. I can't make the argument for that. So that's the first thing is, and again, it's not because we think it's a ridiculous fad and it will all go to zero. It's not that simple.

It's just, we don't really understand what the investment characteristics are of this other than the people are trading them in the short term and making or losing lots of money. And then the second thing I would say about this is, you know, I don't know, nobody knows how crypto is going to integrate itself in our lives over the next 10 or 20 years, say, right?

The technology is fascinating. I mean, if you read about blockchain technology, for example, behind it, it's amazing, it's fascinating, and it will almost certainly become a major important part of the economy. The problem is we don't know how. And I think the best analogy I can think for that one is the internet, right? I mean, in the early 1990s, right, when the internet was new,

everybody knew it was gonna be big, it was gonna change our lives. But I think the way we thought of how the internet was gonna change our lives in 1991, right, didn't turn out to be the case. I gonna change our lives in 1991, right, didn't turn out to be the case. I don't think people anticipated smartphones, right? People didn't anticipate e-commerce in the way that it actually emerged.

And so we don't really know whether this technology is, like, are we all gonna be spending Bitcoin 20 years from now? I have no idea, but we are almost certainly going to have some exposure to blockchain. And when you hold a broad market index ETF, you know, and you hold all of the companies in the economy, some of those companies are going to be winners and some of those companies are going to be losers as a result of emerging technologies. And when you hold a broad index fund, you hold them all. So you're going to hold the winners, right? You're going to hold the next Google, you're

going to hold the next Amazon, you're going to hold the next Netflix, because they're already in your portfolio. They're really small now, but they're going to grow. And when they grow, so is your index fund. So you're already getting exposure to the technology, even if you're not getting exposure to the currency directly. Yeah. No, I think that's a great argument. I mean, that was very well spoken.

I completely agree. Well, I know I can probably talk to you for a whole other hour and I will not do that to you. I just encourage everyone to grab a copy of your book, reboot your portfolio. Where can people grab a copy and check out lots of your amazing free resources that you still have online? Yeah. So, I mean, the book is available at all the usual suspects, Amazon and Indigo online are

probably the easiest places to get it. If you buy books the old fashioned way, please support your local bookseller. I'm a big fan of that. And then just for broad resources, Canadiancouchpotato.com is the blog. And even though I'm not posting a lot of new material there, I do still answer questions and comments. So people are welcome to come and leave a question or send me a note. And I respond to all of my email. Amazing.

Well, thank you so much for coming back on the show after all these years. It was a pleasure having you on and talking about one of my favorite topics, index investing. Thanks for inviting me. I really appreciate it. And that was my episode with Dan Bordelotti. Original episode number is 333. Came out in June 2022. So a few years ago, but everything's still pretty much the

same, quite honestly. And his book, which I highly recommend you grab a copy of right now, is called Reboot Your Portfolio, 9 Steps to Successful Investing with ETFs. So so good. Incredible guy. Love him. He's the best. And you can check out his website, CanadianCatchPotato.com.

Still exists, still exists. I'm just clicking on there now. Though when was the last time he's updated his blog? Let's check it out. Cause I haven't checked it out. Okay, so 2021. So it's been a while. Quite honestly though, I still see some of this,

even though like some of the information is like, okay, things have changed. So many of his blogs are just great evergreen blog posts that you can still read and they're still amazing. And he still has a model portfolio section on his website. Quite honestly, he used to have one that really broke down how to build your own portfolio. Now he pretty much just tells you to buy an asset allocation ETF, which, agree, amazing. But if you don't know, actually, I haven't mentioned this on this episode yet.

If you want to learn more about investing and maybe you do want to build your own portfolio, not get that asset allocation ETF, but build, you know, your portfolio of five or six ETFs and maybe some whatever else. That's where I come in. Cause I've got my wealth building blueprint for Canadians course. I've had it since 2021. Hundreds of students have taken it and started building their wealth. It is grown so much in terms of what it offers since the beginning. I keep adding to it. So I'm not one of those course creators who create something just

to make money and then leaves and never updates it. I update it at least once per year. I'm active in the course. I'm always adding things or changing things to make it more comprehensive or just engaging, intuitive. And so not only does it have lots of lessons, a lot of content and worksheets and spreadsheets and things like that, it also comes with an online community on Mighty Networks. I just started offering one-on-one office hours.

You get lifetime access. There's so many good things in this course that are only available to students. So if you want to learn more about that, go to jessicamorehouse.com slash course to learn more. Okay. That is it for me. Thank you so much for listening. I'm going to see you back here next week. We've only got two more weeks of the podcast, FYI, then I'm going on a summer break and I've got two really good big guests coming on. Very excited to have them on the show. So look out for next week.

We've got a big one. And with that, have a good rest of your week. I'll see you very soon. The More Money Podcast would not be possible without the amazing talents of podcast producer Matt Rideout, who you can find at mravcanada.com.