The Canadian Investor - Building Wealth With Index Funds

Episode Date: July 21, 2022

In this episode of the Canadian Investor Podcast, Kornel Szrejber. Kornel talks about how his desire to learn about investing in Canada led him to start his podcast. Braden and Kornel discuss why an index ETF strategy is such a powerful strategy for investors. Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Bélanger. The Canadian Investor Podcast. My name is Brayden Dennis, as always joined by the mythical Simon Bélanger. Simon, we got an interview today, but of course, we wouldn't go without some Simon and Brayden banter before that starts. Today, I interviewed Cornell Schreiber, who has been in the Canadian financial media for, feels like forever. Him and

I have chatted and compared notes for what feels like a better part of a decade now, which seems kind of insane to even say, but it is true. How are you feeling today, my man? Yes, feeling good, feeling good feeling good yeah just say excited to uh for a little hey hey this of recording so i can enjoy the summer it's always fun to enjoy the nice weather when we have some minus 30s here oh yeah the question for you in ottawa are there street cars no no you know the street cars in toronto right there's no street we have buses good old buses. Just good old buses. So you're a cyclist too.

Dude, if you have never slipped your tire on a streetcar track before, it is an experience. I took a serious wipeout yesterday or the day before in the middle of the street. It was so embarrassing. You're lucky you don't have streetcar tracks because when your tire goes in there and you know you're going down, you're like, how can I make this so I don't like partially die here? Like there's no like saving yourself. You're not like, how can I get out of this? It's like, how can I not die during this maneuver I'm going to make with my tire slipping into the streetcar track? Yeah, but keep in mind, I'm mountain bike.

So for me, I just, you know, it will happen. It will just, you know, I'll be either solo or with a few people. So there's not a whole lot of people seeing it. There may be the occasional fox or turkey, especially wild turkeys. That sees that. Yeah, that will see it. I've seen tons of foxes on the golf course random thought so when you fall mountain biking is it like a tomahawk tumble or is it like how would you describe that i mean i have most of the time knee pads because the knees tend to be one of

the first point of contact but you know sometimes there's trees i've had bruised shoulders i've had shin scrape do you wear the armor top armor guard thing? No, just any pads. Because I see people pretty intense, but I've seen that too. No, I mean, yeah. So my mom just like cringes every time she sees me because in the summer, because I'll have shorts and she's like, what happened to your legs? Yeah, yeah.

Why do you look like you got mauled by a cat? Yeah, or your arms. So no, I've had, you know, it's part of the fun. I think the adrenaline and it's just, I go to my happy place. So I can't really complain. It's just part of, you know, the adrenaline kicks in. So usually as long as you're able to still use the body part that you injured, usually you're good.

Today's interview with Cornell was awesome. I enjoyed it. I think you guys are going to enjoy it as well. It's nice to get a fresh perspective and kind of double click on the art of just passive index investing just through ETFs. I did it for five plus years before owning individual stocks. I say it's like the easiest, lowest friction, lowest cost, all the benefits with no effort to just do index ETF investing. And you and I have high praise for it, even though we love studying businesses and pick stocks because we love studying businesses. It's

such a good option for Canadians. And so we touch on it with Cornell today. Yeah, everyone like, you know, I think you probably get that a lot too, when you have friends and families or you meet someone and then they know you have an investing podcast. So they start talking about stocks or like, oh, how do I invest and stuff like that. And one of the most common things I'll recommend to people is just like, look, if you're willing to just put a little bit of time and be consistent, index ETFs are a great way to go because it doesn't require a lot of time. You don't have to do a ton of work. You have to do a little bit of work to start, learn how to use the platform, learn how to buy a ticker, and then you just are consistent. You set it and forget it. It's a great way. There's low fees. I mean, what's not to like? I think for it probably, honestly, like 90% of the population, that's probably the best option. Let's be honest there. Oh, totally. 100%. I wholeheartedly agree. And if you're new to that and you've done nothing,

what I always say is go read Andrew Hallam's book, The Millionaire Teacher. It's good for Canadians. You go from zero to having an indexed approach. And so Cornell talks about that today too. to having an indexed approach. And so Cornell talks about that today too. So let's, without any further delay, here is my chat that I had just a few hours ago with Mr. Cornell Schreiber. Enjoy. The Canadian Investor Podcast listeners, we have a nice little interview with you today. Cornell Schreiber, thanks for coming on the show. It has been far too long since you and I have got together and had this chat. So thanks for coming on, man. No problem. Thanks for the invite. You and I, I feel like maybe you definitely do, but I feel like I do as well. I feel like the OGs

in Canadian investing media and particularly podcasting. Now, there are obviously tons of content for international listeners in the personal finance, investing community type space. But what was your aha moment to really doubling down and focusing on helping Canadians? Yeah. So I started the Build Wealth Canada podcast in my late 20s. And at that point, we actually arranged our lifestyle in a way where we were only living on, my wife and I were only living on one salary. And so we were trying to hit our financial independence number as quick as possible. And so we thought, okay, if we can have our lifestyle where we're just living on one salary, that means we would have one salary to basically invest.

Right. And so that was kind of the goal. And once we've decided that, it's like, okay, well, this is actually quite a bit of money at stake here. I mean, we're doing one salary annually, right into RSPs, TFSAs, taxable accounts once we, you know, max out those other ones. And so I was like, well, I better research this to the extreme so I don't mess this up. And so I went on, you know, the rabbit hole, I went on the hunt to learn everything I could about the subject. And I came to the frustration that there was just so much really good content, but it was US-based. So much of it was US-based. And so you get into this whole thing where, okay, well, does this

apply to me with the Canadian tax code and how things are over here? What applies? What doesn't apply? A lot of these tools and things they mentioned aren't even available to Canadians. And so I thought, okay, this is getting frustrating. What if I was able to learn some of this, you know, myself by interviewing the top experts that I could find in Canada, and there was, you know, Canadian specific. So we're not talking about Roth IRAs anymore. We're talking about RSPs and TFSAs and, you know, index investing, but specifically for Canadians and Canadian taxes. And so that was kind of the whole idea is, you know, maybe I could just pick and learn from all these different people. And what I learned though, too, in Canada, and I mean, you're aware of this, I'm sure many

of your listeners are too, there's so much conflict of interest in the industry in Canada. I mean, other countries too, but in my case, I was like, okay, I want to learn from someone. So if I go and ask someone, what should I invest in? A lot of the time when you go on that hunt, you get someone that's basically selling you something. So if they sell insurance investments, they're going to be pitching you that and saying, oh, this is the best thing. If they have the ability to sell mutual funds, they're going to try to sell you that. And so like, okay, I'm having some trust issues here because I don't know who to believe.

Especially if you walk into a Canadian bank and say, hey, take my money. What should I invest in? You know what it's going to, and it's going to be high fee products like mutual funds. And so it's just bad news. Exactly. Exactly. Right. So those kind of two things was, okay, I'm looking for game specific content. It's kind of hard to find. And then also the whole conflict of interest thing. So I said, okay, I'll start this Build Wealth Canada podcast. My goal would be to interview the top experts that I can find in the field. And that way, you know, I'm getting, I can research them beforehand to make sure there is no conflict of interest. And even if there is something, well, you know, we're getting different opinions from different people. So I can interview people

where we're hearing both sides of the story. And then myself and the listeners can make their own decision on what makes sense to them and do it that way. And my whole kind of idea there was, even if the podcast fails completely, maybe people just hate listening to my voice or whatever, it's like it still won't be a complete fail because I've still learned all these best practices from all these experts in Canada

and I can apply them in my own portfolio. So kind of my worst case scenario was, okay, the podcast never takes off, but hey, at least I know how to do this investing thing now. And then, you know, fortunately, the podcast, you know, did take off. It's one of the, you know, top ones in Canada. It has been for a while now. So everything worked out great sort of in that regard. But at the same time, you know, it was always nice to be able to have this sort of knowledge that I can now apply to my own portfolio. And then now I'm sharing it with other Canadians so that they can apply it to their own portfolio. And so, yeah, that was kind of how that whole podcast started.

And then years later, I became the owner of the Canadian Financial Summit, one of the owners. And this kind of amplifies it even more because I'm sure, especially, you know, you're owning Stratosphere. There's times where you're doing the podcast and you're like, oh, I wish I could show someone visually, like in a video,

like a stream, how to actually do this analysis, right, in video format. There's just, you know, when you have that visual component, it can add so much to it. And so the Canadian Financial Summit, when I became a part owner of that, that was kind of a way where, okay, we're still getting best practices from all these top experts in Canada, but now it's a stream video. And so you can actually see how they do it and how they use these tools and their slides and things like that. And so it's nice and kind of holistic, right? We've got the podcast, but then we've got the conference as well. So yeah, it's like a fully online conference for anybody that hasn't heard of it. And then we do give out tickets for free to everyone as well. So if anybody ever wants to

check it out, we're having it this October, it's buildwealthcanada.ca slash summit is the link. And if you go there, you can basically register for free and you can access basically just about everything. And Brayden, you're going to be on this year as well. So I'm super excited. You're going to be showing off Stratosphere. So yeah, I'm really excited to learn more about that. Yeah, I'm pumped. Can't wait. I'll be there. learn more about that. Yeah, I'm pumped. Can't wait. I'll be there. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free so that you can choose

the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm

away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. All right. So a big term in the space is FIRE.

The concept of basically saving as much as you can and paraphrase me here because I'm like, I'm not familiar with this community because I'm trying to make hundreds of bajillions of dollars in my career. Not just like, you know, there just a few bucks and then 4% year over year. Give us the 101 on fire and perhaps discuss the pros and cons because I've had my moments of this is a great idea and a couple where I think it's taken too far and too extreme. I think that you probably know what I mean. So maybe you can just talk about the pros and cons and define what FIRE is.

Sure. Yeah. So it stands for financial independence, retire early. Probably most of your listeners have heard this at some point. And basically, so the first part, the FI, the financial independence piece, I define that as basically being able to live off your investment portfolio so that you don't need to work for money anymore. So it's not that you cannot work, but it's just your portfolio was large enough where if you wanted to just quit your job, you could just live off that indefinitely and be fine. So that I find is very appealing and it can be very inspirational, especially for people that let's say, you know, they're in their 30s and they really don't like their job and they really don't want to do this job or this career until they're 60, 65.

So that was kind of the case with me is, you know, you kind of learn up. Well, it was my 20s, but I was like, OK, I don't really like this job. But hey, here's this thing where you don't have to keep doing this until you're 60. And so it's very nice. You know, you get motivated. It's inspirational. You'll get your finances in order. You start saving. So I think it's a really good story for your finances. And like I said, especially for people that dislike their jobs. But the sort of big secret with FIRE,

because I've actually gone through it. We had our FIRE number when I was 32. So we've sort of gone through this whole process where, like I said, we're living off one salary to get there quicker. And then we got there, you know, and then 32, we hit it, I'm turning 38 this month, right? So we've sort of gone through that whole process. Personally, like I this isn't theory, like we've actually done this. And I find that kind of the big secret is that you can't just, especially if you're the kind of person that can achieve that level of net worth that quickly, you're not going to be fulfilled or happy or feel like you have a lot of meaning if you just sit and do just leisure for the rest of your life. You know, you're just, if you're wired to be this like Taipei, go, go, go make this money, you know, all this. And then all of a sudden you're just playing like video games, watching movies, sitting on a beach. That is fun for a certain period of time. And I've interviewed quite a few people on this and talked to many who have hit their financial independence number early. You know, a lot of, for, I would say a lot of people, it takes less than almost everyone I find that I've talked to, it takes less than a year. So for me, it took six months after six

months, I was like, I need something else. This is not fulfilling at all. Because the first six months is like honeymoon phase, right? And then you're like, all right, I don't know. I'm not living up to my potential. You know what I mean? What did you do for those six months? What did I do? Like lots of sports, watching, like catching up on all the like Netflix movies, you know,

video games. I have kids too. So like lots of family time, which I still lots of family time now. video games i have kids too so like lots of family time which i still lots of family time now but you're just kind of yeah just very very you know like life of leisure kind of thing you're in your early 30s and you're like i guess i'm retired now like yeah and it's funny because you know i talked to friends who have known me since i was a kid that i grew up with and they're just like and i'm like yeah i'm not feeling like i want to just i need something else that i need there needs to be more than this and they're just like well of course like we know you there's no way like we could have told you this yeah that you're not just

going to be able to hang up your hat and do nothing right so so i find that's kind of the big so when you ask about like the pros and the cons that's kind of one of i guess cons is that people think that okay we're just going to retire and never work again. And I'm going to be happy and happiness is now guaranteed because I don't have to work at my job. But really that's not the whole story. You need more than just sort of the financial piece to be happy. You need the intellectual stimulation. So, you know, being social, being part of a community, overcoming challenges, getting good at something like mastery, you know, that gives a lot of sort of fulfillment, happiness, satisfaction, being in flow, right? Like where you're doing something that you know you're good at, and you're getting better at it. So there's all these like mental health,

psychological things that you need, that you don't get by only relaxing, essentially. And so my kind of big thing lately has been like, I just want people to know that. Because if you know that, then you're like, Oh, wait a minute, I can actually quit the job I hate a lot earlier. Because if I'm just like, well, if I'm doing my, you know, cash flow projections, and I'm assuming I'm going from a full time to full time salaries to zero, then yeah, you need quite a bit of money. But if you're like, hey, I can just part time, work on my own business doing something I actually love. And I mean, that could be carpentry. For me, it's like podcasting, right and interviewing other people. If I can just generate some money that i know is going to come in i can actually retire way way earlier so that's

cool you know and then that way also you know like i said you're much healthier sort of from the mental state as well so that's i would say a big thing that i want people to know and yeah andrew hallam he wrote a really good book called balance and he's actually found some studies where he where it said how people that actually do some sort of like productive work, they actually live longer. Because again, it checks off those sort of mental boxes, like the challenging intellectual stimulation, creative outlets, socialization, right? All these things that you just don't get if you're sitting watching Netflix all day. So yeah, I think that kind of covers the pros and cons and things to look out for. So I think the goal is not to have enough money so you never work again, I think that kind of covers the pros and cons and things to look out for.

So I think the goal is not to have enough money so you never work again. I think the better goal is find what you like to do that you would do anyway just for fun because it's like a hobby. And for some reason, people are willing to pay you for it, right? So it's like if I was a carpenter guy, which I'm not, but it's like I would be doing carpentry for fun anyway. But hey, there's only so much stuff I can store. And so sure, I'll sell some of it. Oh, I would be doing carpentry for fun anyway, but Hey, there's only so much stuff I can store. And I was so sure I'll sell some of it. Oh, look, now I've got money coming in. Right.

And now I can use that to take an extra vacation or, or whatever. Right. But it doesn't actually feel like work for me. It's like that with interviewing. So yeah, hopefully that answers it. Okay. No, it does answer it well, because I think that, you know, being young and not fulfilled career wise is a recipe for disaster for many people.

Now, for a lot of people, they're like, hey, dude, I'm going to have no problem doing nothing. Trust me. Just me and the golf course, I'll be good. I totally get that perspective, but it really comes down to knowing yourself. And so for a lot of people, it just wouldn't work. Like for instance, Max Levchin, when he left PayPal with more money than he could possibly spend in his twenties and for six months, he was the most miserable of his entire life after that, because he was doing nothing. And that's not the type of person he is. And so, you know, he's the type of person that builds billion dollar companies. And so it really comes down to each person. But I'm glad that you laid that out because there

are some kind of like, not so sexy things to talk about in the mix, because it's all hurrah, hoorah, you know, we're retiring. Yeah. But I just wanted to kind of bring some light to that as not so sexy things to talk about in the mix because it's all hurrah, hoo hurrah, we're retiring. Yeah. But I just wanted to kind of bring some light to that as well. So thank you for doing that. Gornal, can you walk us through your portfolio and your investing strategy? Because there's no one or wrong way to do this. And I think that what you're doing makes a lot of sense for a lot of people, like maybe even most, maybe I would even go with most people. Sure. Yeah. So I would definitely count myself as a, I call myself a purist total market index investor. And what I mean by purist is that I don't sort of dabble in

individual stocks or cryptocurrency or anything like that. I just do the very boring, non-thrilling, like if you look at an asset allocation ETF, for example, like an XCQT, let's say, something like that, that's pretty much all that I do. Now, where I spend my time, so instead of reading financial statements of companies and things like that, I will instead put my energy into optimizing things from a tax perspective. So I do a lot more analysis in terms of the financial planning and tax optimization. But in terms of the investment product piece, I just do total market index investing with ETFs. So that works really well for me personally. And like I said, I think it works well for a lot of people just because it really, I would say it's pretty much as passive as you can get without just handing your money over to someone and then paying 2.5% MIR.

Right. You get all the results with no effort. That's a trade. I like to engage it. Exactly. Exactly. And then like, you can do the tax optimization thing, but then it's like, you can, you know, try to optimize that as much as you want, but it's not this like giant thing that you have to take on. But yeah. So like in terms of allocation, I'm pretty much almost all equities, like 95% plus I'm in equities i do have the build both canada podcast and the financial summit so those do generate some cash flow as well and so the reason i'm like even though when we hit our like retirement number i'm still very high in equities but that's i think one

of the reasons that works well for us is that i also i still have these two their businesses where they do generate some cash flow so when we see markets take a hit like they have been lately okay then I can actually just use some of that money for groceries instead of you know selling some of our equities when they're down you know 20 30 percent whatever you know wherever it is that they're going so that seems to work really really well because I kind of get that fulfillment fun piece from the businesses but they also help provide a bit of a cash cushion. And it lets me be high on the equity side, which has the higher expected return. So that works really well for me personally. And then I buy the ETFs individually, basically to optimize for taxes with respect to accounts. So instead of just buying an asset allocation ETF, like a XCQT, for example,

what I actually do these days is I actually just model, I buy XEQT, but I actually buy the individual underlying ETFs within it, right? So instead of buying- Because is XET one that just holds a basket of other BlackRock ETFs? Exactly, yeah. So XEQT is like your internet, it's basically the BlackRock, iShares, 100% all equity asset allocation ETFs. So you're getting that like international exposure. You're holding total market Canada, total market US, emerging markets and international developed, right? So those are the sort of the main core pillars of that one.

So what I do though, and it's fine if I wasn't so into this, I'd probably just buy XCQT and be done with it because then it will rebalance this automatically. That makes it super easy for people. I really like those types of products. However, for me, I like to optimize things, like I said, from a tax perspective. So I'll buy the underlying ones that that XCQT is made up of, and then I'll put it in the right account where it is the most tax efficient.

You know, so typically like for the US market, I'll have that in the RRSP because of the withholding taxes. For the Canadian, like our RRSPs and TFSAs are pretty much maxed out. So for taxable account, I'll do like the Canadian equities. And then for TFSA, I'll do emerging markets and international developed. I do have like, you know, bits and pieces of them in as well, because there is value in having more than just like a single, you know, ETF in one account, because sometimes you want to withdraw from one account for tax purposes, but maybe that one's like down. So it's good to have like other ETFs to pick from, you know, but generally speaking, that's how I do it is I just plug them into the most tax

efficient account. And so that way you save money on taxes, you save money on withholding tax, and also you pay less in terms of the MER as well. So that's how I have things maximized or optimized in that way. And then what I do is I use a two cold passive, which I'm a huge fan of, and they help me with the rebalancing. So I used to do is I use a tool called Passive, which I'm a huge fan of, and they help me with the rebalancing. So I used to do everything in my spreadsheet. I have a course and there's a spreadsheet that you plug your things in and it'll automatically rebalance for you. So I still have that, but I've been using Passive for so long that now I just use Passive and they will basically tell me how much I have to buy of each thing, of each ETF to get back into my target portfolio

allocation. So I just do that lately. So I don't even have to like plug things into the spreadsheet anymore. So that's essentially kind of what it is in a nutshell. And if anybody wants to, what's kind of cool is that they have this feature now where you can actually share your portfolio with other people. So I get this question a lot on my podcast is like, well, what do you actually buy? What's your asset allocation? So I can share that with you. If you go to buildwealthcanada.ca slash portfolio, that will basically take you there and you can see my like asset allocation

and the ETFs that I have in the account and that kind of stuff. You don't need to sign, like you can just go in there and see it. And yeah, so hopefully that's helpful to people. Yeah, that is helpful. And it's nice to see it, you know, people doing what they're saying they're doing,

which is nice to see, right? Like that kind of verification is always nice on see it, people doing what they're saying they're doing, which is nice to see. That kind of verification is always nice on the internet, right? For sure. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by Money Cents, and with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real

people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit Questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a

great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. All right, let's talk about fees because this is the name of the, like, this is like the why.

This is your why when it comes to moving to a passive strategy versus someone else managing it for you. At the end of the day, the biggest benefit, in my opinion, is the fee structure. I luckily had that realization still very early in my lifetime. Thankfully, I picked up Andrew Hallam's book when I was like 17. And thank goodness, shout out Andrew, thank goodness, because he kind of exposes those fees, especially for Canadians. And so luckily I had that and it really destroys wealth compounding and wealth creation from those fees. So when did you have that kind of aha moment with moving to this fee structure and just talk about how big of a difference it can make

for someone who may have been paying some of this management fees over the past you know 20 30 years yeah the difference is huge and yeah when i first started investing like i read every like reputable book i could get my hands on on the subject and like i said i started the the podcast as well to to pick the brains of others. And I noticed that, yeah, it seemed like everyone that wasn't trying to, every book that I read or article I read where it was from someone that wasn't selling mutual funds, they were basically saying like, yeah, this index investing through ETFs, definitely consider this because you're going to be paying a lot less. And all the people that were like, no.

No one's a bigger fan than Warren Buffett himself. Yeah, exactly. Exactly. Yeah. So it makes a huge difference. And that's been pretty much, it's almost like a consensus from all the guests that I've interviewed. Even the people that actually buy individual stocks like yourself and others that I've

interviewed who are like, I had Peter Hudson, who at one point ran one of the largest hedge funds in Canada, like even people like that, who are just really good at picking individual stocks, even in Warren Buffett is another excellent example, right? They will say, yeah, like the total market index investing thing is actually very appropriate for the vast majority of people. Like if you want to, if you enjoy this stuff and you like looking at, you know, the different ratios and financial statements, and you want wanna try to get some alpha there,

like awesome, right? Like sure, if that's your thing, but for a lot of people, that's not their thing. They just wanna get their investment thing taken care of and then they wanna go and play with their kids or focus on their like actual job, like whatever their career is, right? Like, you know, you're a doctor, go be a doctor.

Don't spend all your time trying to pick individual, you know, reading financial statements and things of that nature. Yeah, so it makes a huge difference. I think it's easy for people to miss that are just getting started, because we'll see something like a 2% MER two and a half. And that seems like nothing compared to something like an 18% they see on their credit card. You know, it's kind of like, oh, well, you know, this, this doesn't seem like that much, you know, but the thing is that that compounds over time. And sort of what really flipped the switch in my head was first when I heard from, I

forgot exactly who it was, but it was some reputable source. This could literally save you hundreds of thousands of dollars, like a six-figure sum over your investment lifetime. Over $300,000 is the number that I have come up with. 300? Over $300,000. And when I first heard that, I was like, that's got to be an exaggeration. Anything Over $300,000. And when I first heard that, I was like,

that's got to be an exaggeration. Like anything over 100,000 sounds way too much. And then I actually went on a spreadsheet and did the math myself. And yeah, it was like well over 100K. So I was like, oh wow, this is okay. Like they weren't, they're not exaggerated here.

This is actually, you know, correct. Yeah, so I mean, the difference is it really, really is massive because of how much it compounds. And yeah, and if somebody is not really, if that hasn't like sunk into your, someone's brain and hasn't really hit them yet, just do the calculations yourself. Like I have a course where like, I would give students the spreadsheet and actually show them and they can like calculate what their fees are now that they're paying versus what they could be with the ETFs. So like that's out there as well. But, but I mean, you can just do it yourself

on a spreadsheet, just if you wanted to the calculations. And like, that's what got me to do it is I saw the actual math on a spreadsheet. And then at that point, it's like, it's a no brainer. It's irrefutable. Yeah. So I hope that answers the question. No, it does. And that calculation, I mean, it's just going to go, you know, from 100k to the number that I've came up with, which is about $320,000 over your lifetime, is based on the assumption that you're investing for 45 years at market returns of 10%. I know a lot of people will say, oh, use 8%. It's more conservative. I'm like, the S&P is done 10%. I'm not making that number up.

It just is what it has performed. I'm comfortable using that number. Sure, it's better to be conservative in your projections. I think that that's wise to do. It is spectacular, the difference it can make at the end of that 35 years, 40 35 years, 40 years into that 45 year period, that's compound interest mathematics. That's just good old mathematics at work right there. And it is spectacular, the difference it can make. And so whether you are a passive investor, like the strategy you do, which I think is a good solution for a lot of people, or you do a bit of both, you do like a hybrid, you know, like half your portfolio is like just in the index and you know, you got that kind of index returns. And then you try to make,

get some alpha with the other 50% of your portfolio. If you're like for me, who look at this stuff all day and just buy and hold great businesses in your portfolio, either way, you're doing something which is accomplishing this gigantic fee reduction in terms of the structure. And I think that's a really good thing. Because I don't know if you've seen the data, Cornell, if you have anything to share on here, but I've seen some data from S&P Global. They post every year that Canadians have historically paid a top three mutual fund fees in the world, like some of the highest fee structures in the entire world. I'm sure you've seen something similar to that. Yeah. I remember

hearing that quite a bit. Yeah. That we do, we do have the highest fees pretty much in the world. And it's easier than ever now to, to get away from that because of the asset allocation ETFs, like obviously do your own due diligence and all that. But I mean, at least my sort of hypothesis is that I think just from talking to listeners of the show and all that is that people, I think, get intimidated by the rebalancing piece, because not everyone is like a spreadsheet person like you and I, you know, and which is which is fair, like we all have our things. And so to be like, okay, now I got to rebalance and how do I plug that in? And how do I do this math? And I, you know, haven't done math since, you know, maybe high school, like, you know, like actual spreadsheet math and stuff, you know, but now with the asset allocation ETFs, it does the rebalancing for you. And you're paying like

0.25% MER, you know, versus two and a half percent, let's say. So it's really, to me, it's a no brainer to do that. And it's easier than ever. Now, it's not like you've got to go to get an MBA in finance to be able to figure out how to shave off those fees. I mean, it's really been nice here in Canada that Canadians have access to this so easily now. My opinion is that I think the main benefit is the fee structure. But one of the main benefits of hands-off by the entire global market index is when you have drawdowns like we have had this year, it really takes the nerviness of investing in a stock that's down like 40, 50% in a drawdown to, well, the index is down 20%. Seems like a good time to do that instead of having to worry about the nuance of each company's fundamentals, right? You look at the index today and you're like, okay, the NASDAQ is

down 30% year to date as of recording. Let's double our DCA contribution this month because I can afford it and look at the market, right? And that kind of takes some of this decision-making out of it and will probably serve you well because money's made in bear markets, right? Like money is made today, not when everyone's, you know- Riding high because, oh, we had a 20% gain last year. Yeah, not when the greed index is at the full end of the spectrum, right?

For sure, for sure. No, I agree. I agree a hundred percent. Yeah, it does. It is a nice anxiety redu of the spectrum, right? For sure, for sure. No, I agree. I agree 100%. Yeah, it does. It is a nice anxiety reducer, I will say, because I know for myself, if I was picking individual, and again, it depends on your temperament and I'm sure your level of experience and knowledge, right, which you can build, and then you become less nervous about that stuff.

But I find for me, if my stock, my index portfolio was down, let's say 20%, and I had some stocks in there that were down, or even one stock that was down 40%. My brain would start going, Oh, am I sure? Like, maybe I picked the wrong stock? I don't know. Right. But it but because it's an index, I'm buying the just the index. I'm like, Alright, like, I don't have to worry about Oh, did I pick the right one? It's just well, no, because I bought the whole index. So just write it out. And if I have extra money to invest, I will invest it now. Personally, that's what I do. No, that's really smart. And this is like one of the main problems that I ran into for getting this message across to people who own individual securities who are really nervous about buying a company based on where the stock price is, right? They're like,

for good or for bad. And the sentiment of stock prices drives the narrative, right? Like this stock is way up. The company must be doing really good. Or like, you know, this stock's way down. The fundamentals must be terrible. And so I ran into that problem so often that I decided to build out a legitimate S&P 500 and TSX 60 database for every single company's key fundamentals. Because if we look at Netflix as an example, that stock has been absolutely decimated because they're not growing subscribers anymore. And the quarterly print was revenue is up. So if you look at it, you're like, oh, revenue is up, but the stock got hammered. And you're like, Cornell, what the hell? They reported 7% revenue

growth and the stock's down 36% today. And it's a hundreds and hundreds of millions of dollars and billions in market cap. So I was like, okay, we got to start tracking these KPIs because that's the actual business fundamentals. It's not revenue, it's subscribers. And that's the one that people actually care about. So that is officially live on stratosphere.io. We launched it yesterday. And this database is pretty badass. That's awesome. I remember hearing something similar about Apple,

where they had like some record profit quarter or something like that. And once that got released, the stock still fell because it didn't meet the expectations of the analysts, right? And I remember I was like, how? That's wild to me, right? meet the expectations of the analysts right and i remember i was like how how this is that's that's wild to me right is just that something can do like record record month and it's like oh but it's not as good as we hoped so down yeah yeah yeah or it's like the iphone segment underperformed

right and it's like well that's the only one we care about right now so right and so uh i've tried to make that a little easier for people to understand, but you know what, this has been a great chat. There are so many ways to do this and hit your number like you talked about, but it really depends on each person and kind of gaining that confidence to really own it. Right. That's the big thing, right? Because when you started, your confidence may have been like a one, but now your ability to roll out your strategy of managing and rebalancing these index ETFs is like a 10 out of 10, right? Like it's really not that difficult, but at the beginning, it seems quite difficult. And so that confidence being built up over time, it just takes some time. Cornell, can we give a handoff on the two

things that you're working on? I think it's relevant for Canadians listening to this show right now. Awesome. Yeah, thanks. Yeah. So for sure, anybody wants to check out the podcast, it's Build Wealth Canada podcast. You can take a look. Like I said, that's where I bring on some of the top experts in Canada, specifically for Canadians, a lot of sort of financial planning, total market index investing, lots of good things there. And then we have the Canadian Financial Summit coming up in October. Like's all digital, so you can literally be anywhere in Canada and stream pretty much just about all the talks for free. And to get the free tickets, that's over at buildwealthcanada.ca slash summit. And that's it. So yeah, hopefully I'll see you guys there. And then yeah, in the summit, it's not just index investing. Like I said, Brain's going to be there. We've got others as well. So we have both people in sort of the indexing space, but also people sort of on the

active side as well. So we really do cover a pretty broad range of topics. So I'm sure you'll find something that will be relevant for any one of your listeners. Yeah, I'm pumped to do it. What if I just like come on there and just pull a fast one on you all of a sudden, I'm like promoting some pyramid scheme, like mid-financial summer. You're like, no, no, what is this? You're like, you do the stratosphere thing and then, hey, I want to sell you some timeshare or something. Yeah, all of a sudden,

everyone's being looped into some timeshare. Yeah, no, there's no timeshare at the summit. That would be so funny, but also brutal. This is why we pre-record the videos, Brayden, so that someone knows when to post the last one. I'm glad I learned that now because that timeshare proposal

was coming in hot. Yeah, we do quality control there, sir. That is a smart move. Thanks so much for listening to today's show. Thank you to Cornell. Go check out his stuff in the summit. I'm going to be there this year. It's going to be a smart move. Thanks so much for listening to today's show. Thank you to Cornell. Go check out his stuff in the summit. I'm going to be there this year.

It's going to be a good time. As well as give the show a rating. Check out the Patreon. That is joinTCI.com. It gives you our updates every month on what Simone and I are doing in this tough market in 2022. Stay in the course. Think in long term. That's what it's all about. And as I was hinting before, we just launched stratosphere.io's company-specific metrics,

key performance indicators for hundreds and hundreds of companies. Go check it out because it is a ridiculous, grueling exercise to put them all together. So if you enjoy them, it's really key for investors. So go check that out at stratosphere.io. Cornell, thanks for coming on, man. Really appreciate it. Awesome. Thanks for having me on. Take care, Braden. The Canadian Investor Podcast should not be taken as investment or financial advice. Braden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.