The Canadian Investor - Do You Really Need 1.7 Million To Retire?

Episode Date: February 20, 2023

In this episode we go over the highlights of retirement and savings surveys done by BMO in the past year. We go over a pricing power checklist and explain what the US Dollar Index is.  Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? 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. Register for ShakepaySee 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 Belanger. The Canadian Investor Podcast. Today is February 14th. Welcome to the show. My name is Brayden Dennis, as always joined by the very thoughtful Simon Belanger. Happy Valentine's Day, sir. I know you chefed it up for the household yesterday uh what'd you make

yeah just uh fried zucchinis in the air fryer and then uh baked a pasta dish from scratch well the pasta was not from scratch but everything else was the followed recipe was uh took me a couple hours to do everything but uh with some red wine was really good and we'll have enough to uh eat for a few days in front of us so that's always good when you don't have to prep some food and can just take care of your little one you are six months old yeah next year if you're looking for a third wheel that sounds delicious i'll uh i'll be over for valentine's day uh today we have a fun show you're going to talk about two interesting surveys that came out

from BMO. I got a checklist. Everyone loves investing checklists. So I got something about pricing power. And then I'm going to talk about dieting and fitness and the analogies between it and personal finance and investing. I think you'll like that segment. All right. You want to kick us off here with what you got on the slate? Yeah, so the first one is actually the older survey of the two. So this one was done in January 2022. The other one that I will talk about was a more recent one on, amongst other things, what people think they need in order to retire, the balance. But the first one here was done on TFSA and RSPs.

And BMO actually does a survey every year. It's not always the same thing. I think it's slightly different in terms of the questions they ask, but really interesting. We'll kind of go with what some of the stuff we talked about in the past in terms of Canadians not fully understanding, whether it's the tax-free savings account or the RRSP or even the RESP, but I'll focus on the TFSA and RRSP for this segment here. Now, cash is still king in the TFSA. That's what they found. So 56% of the respondents with a TFSA have cash in it, while 29% said that cash makes up at least 75% of their TFSA holdings, which is pretty alarming because this survey was done last year when interest rates were quite low. So essentially people have money in their TFSA, pretty substantial amounts,

and they're not really getting any interest on it. 73% of respondents said they considered themselves knowledgeable about TFSA. However, only half of them were aware that the TFSA can hold both cash and at least one other type of investment. So either stock, bonds, mutual funds, ETFs, etc. So only half of them actually knew that you could hold one of the other investments. Not all of them, just one of them. So there's a big discrepancy here in terms of what people think they know and what they actually know. You have anything to add to that part before I continue?

No, I mean, I'm not surprised here. It's like, how often does it feel like these two vehicles are just so misunderstood just generally um and and here we are in 2023 as well i know it's a 2022 survey but how much how much these numbers have moved i bet you they haven't budged no exactly so i don't think it will have changed much obviously it's uh they say canadians for the survey but i say respondents because obviously there's always a margin of errors for surveys uh but i think it's probably but every bank does this report yeah uh i know our i know rbc puts it out once a year td posts something similar with their brokerage accounts and the numbers are are usually like a percent or two difference between each of the brokerage accounts and the respondents so i i

think that you know overall, overall, you can triangulate that as a pretty good representation. Yeah, exactly. And that's what surveys are for, right? It's to get a kind of general view without sampling the whole population. Now, the TFSA value grew 13% from 2020 to 2021. Not surprising, because obviously obviously the markets were generally depressed in 2020 like there was still it still gained back after the pandemic but 2021 was really the big boom year so we see this reflected here the TFSA is used for various financial goals according to this 44% use it for retirement savings 43% use it as a savings account 43% use it as a savings account. 15% use it as a means to achieve financial independence as early as possible.

Now, the biggest barrier for contributions are lack of funds and other expenses, which came at 73%. Now, 43% using it as savings account. I don't think it's... I think I get mixed feelings with that because clearly, if you do have a lot of room in your TFSA, you're not maxed out and you want to have some investments in it, but also use part of it in cash as a savings account, whether it's money market funds that will pay you close to 5% or something like our sponsor, EQ Bank, that I think

offers 3% at TFSA. I mean, if you have ample room, I don't think there's anything wrong with that. But I think where there's an issue is people using it solely as a savings account. This blows, I mean, it continues to blow my mind. Yeah. Year after year, it's the same old story, really. Yeah. And now there was the RRSP proportion was, you know, much shorter for this survey, but still interesting. So 74% of respondents considered themselves knowledgeable about RRSP, but younger respondents age 18 to 34

were 12% less likely to be knowledgeable about that type of account, which is interesting. However, only 64% knew the difference between a TFSA and an RRSP. And I can actually vouch for that with my work. A lot of people get confused with the two accounts. Some people thinking you can actually get a tax deduction for TFSA contributions, which you don't. So a lot of people kind of couldn't, you know, mix the two accounts together. And obviously, I talked about the new, I think, home savings account. I can't remember the full name a couple weeks ago. So this one will be a sort of combination for both as long as you meet the requirements. And the last thing here that I thought was interesting is another survey that came out a few weeks ago, like I said, and I'll

touch on that survey a bit more because the headlines were $1.7 million is the amount that people think they need to retire. But I thought it was interesting in terms of they have a breakdown per province and it gives the average amounts held in RSPs and average RSP contributions per year. And, you know, it's pretty much, it's pretty steady, I would say, across Canada. Quebec and BC have the two lowest balances at 125,000 on average

and Ontario has the highest, 163,000 if we round up. But the annual contributions, it's very similar on average. I would say Quebec is that laggard here, the clear laggard with 6,000, where every other province is in the 7,000 and even up to 8,000 for the Atlantic regions. And they put Atlantic all together here. I think it was probably just to make it easier. But, you know, it's not that much money that people have in RSPs. You know, we're thinking probably on average, you know, just on top of my mind like this, about 140 in Canada for people in RSPs. So if you think this includes the broad range of population, it is a little bit alarming that the average is actually that low, especially if you consider

people that may be closer to retirement. Yeah, that certainly seems concerning. And of course, it's not the only vehicle, the RSP in terms of reaching to that number that people are saying they need to get to at 1.7 whatever the number is the rsp average is clearly quite a lot lower and i wonder what it would look like on a median basis as well compared to an average because sure surely there are people with massive tens of millions of dollars actually well you would hope no one is using their RRSP like that because it's actually very tax inefficient to have that much money in their RRSP. But there are people doing that. I'm sure it exists.

Yeah, it definitely exists. That's going to skew up the average even if it doesn't make sense because look no further than 43% of people using their TFC as a savings account, like with cash. Yeah. I mean, that comes up on the pod so often. It's a staggering stat.

One question I had for you was 40. It says 44% use the TFC as a retirement account and 15% are using it as a, as a means to achieve financial independence. Those feels very similar to me. I'm not really sure. What is the difference between that? I mean, you could still be financial independent without being retired, right? So you could be, you know, dependent on, you know, a lot of content creators will probably consider themselves financial independents. I think the definition varies from people to people.

And I think that's the issue with financial independents, right? Some people will never want to retire even though they have enough money, but they would still consider themselves financial independent. Financially independent. Exactly. So, no, it was interesting. I would love to see the breakdown I gave for RSPs and even TFSA, but by age group, I think that would be really pertinent because at the same time, right? If you're, if you're 25 and you have 20,000, your RSP, like you're probably ahead of the

curve compared to most people. Uh, so I think it's important to, I've done some Googling around on that and it'll, it'll show like breakdowns in Canada. I think stats can have some stuff as well. Okay. Well, something we can look at on a future segment. 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, let's move on to a pricing power checklist. This is from my man Leandro, which is at invest quotes on Twitter. He's from Spain and he's a very nice guy. And I've had the pleasure of speaking with him on a couple of calls now. And he makes good content on the Twitter machine. So go ahead and follow him at invest quotes. He put out something that is very near and dear to my heart, which is talking about pricing power and how businesses can maintain pricing power, use their sustainable competitive advantages to flex their pricing power, not only on the market, their customers and future customers. And it does a couple of things for the business. But how does someone really determine if a business has true pricing power? Um, and if

they're able to do it for a really long time. So I thought this was an interesting framework and you and I can kind of go back and forth on this. So he says, number one, does the company have high customer retention rates? Um, and so this is not always easy to see depending on the business. But a really good example of this is like Costco typically increases their membership dues every five-ish years. They're very due for one right now. And retention rates do not budge when they increase prices. So that would, that signals to me, uh, an ex a perfect example of pricing power. Or if you look at, uh, Amazon primes, uh, retention rates after they did that fairly significant hike, that was the last year or the year before it didn't really budge good example of pricing power. And so really at the end of the day, simplified, without the jargon is, if the company improves or increases prices, does that affect the customers returning? Is that going to churn them away? Or can they can they flex that over time? Any thoughts?

No, no, I think it's good. I mean, the one thought that comes to mind is, you know, companies always regardless of whatever company you're looking at that has really good pricing power, they always have to know to what extent. Because at the end of the day, you know, there is a breaking point. if i'm thinking monopolies like an asml like yes it has pricing power but if they're selling their systems five five million you know a billion dollar each i mean i have a feeling companies will just make do with the uh deep ultraviolet system yeah exactly that's it because it won't be viable economically and same thing goes for you and I. If they're selling $5,000 iPhones, I mean, I guess I'll switch to Android, right? Yeah, yeah. And perfect example of a company that's continued to flex pricing power is Apple on their iPhones.

But they've tested it over time. They have. People still keep buying them. Yeah, they haven't gone just crazy right out of the gate. They've always been a premium-priced product, but they've been able to test the limits of their pricing power over time. And that's how they produce what, like 100 billion in free cash flow? So there you go. customer's budget. If a customer is spending a large portion of their budget, it's more likely they will be price sensitive. I think that that's pretty true, right? Like, say you sell a software solution to contractors. Say you're, I'm making some random example on the spot. Say you are a contractor, you build custom homes, you build custom cabinets for people's kitchens.

If you have like some CRM for them to help manage their customers, and it's only like, you know, 5% of their cost structure, that's not going to crush them. But if you're pricing it at like 50%, chances are your price increases are going to be more and more sensitive to that customer, the bigger percentage of their budget that you take up. That just makes sense, right? Like if I'm selling something to a retail investor, Stratosphere is a retail investor, I can't price it the same way as I'm selling it to an institution because they have completely different budgets.

I'm sure there's a million examples we could go with this one. Yeah, well, two that come to mind for people, what they buy. Just as a consumer, I think we've talked about it before, but your iCloud subscription, that's $1.50. I mean, they can probably raise it $75 or double the price, and most people would not budge an eye because it's just a pain to switch and what's an extra buck 50 or you know the the buffett investment in coca-cola so it's such you know one can of coke is pretty

cheap for most people you raise the price by five or ten percent i mean most people will probably not see too much of a you know won't think twice about it just because it's not a significant purchase. And these points we're talking about are incredibly important during an inflationary environment. And you talk, we talked about this extensively with investing businesses with pricing power when there's a lot of inflation because they're able to handle it. All right. Number three, is the product mission critical? If it's something that customers can't live without, it's more likely that they'll have to deal with the price increases. I think that that's true. You know, if you stay sustainable, competitive advantage, you have a oligopoly monopoly, chances are you're able to increase

prices just over time due to limited options in the competitive landscape. Number four, are customers profitable? Applies to B2B mainly. Customers with low profit margins will typically be more cost conscious than those with high margins. I think that that's probably mostly true. This will be case by case, I think. Yeah. Yeah.

I mean, I guess uh depends if you're looking at it now in 2021 yeah exactly yeah uh how important is that is uh 2021 or 2023 combo uh the last one here and again this is just his list uh some of them i agree with some of them i agree with less uh does the quality of the product matter more than its price in some cases the quality of the product is of utmost importance to customers because a malfunction or longer downtime can cost much more than the product costs um that's true it's kind of like how much much value does this really create? Say you have a product that saves a customer $1 million a year, and it only costs them $5,000 subscription, or that's what it costs them every year to implement something that's going to create $1 million in cost savings. something that's going to create 1 million in cost savings,

you have a lot of leverage for pricing power there because you can justify it. So the business can justify continuing to pay for that service over time so much easier. I used to think about this so much when I worked at Magna, like cost cutting was such a big part of the automotive industry, right? Because margins are so thin, you got to be operating very efficiently. And it was always just so much easier to justify new vendors if it was a net positive in cost savings, of course.

And so you're kind of building in pricing power there as well. Yeah. And I actually, this point, it reminds me of the book I listened to as an audio book about chip wars that I've talked about again before on the podcast. And early on when semiconductors started kind of being more and more just happening, not necessarily in the real world just yet, it was a lot of their consumers at the time were still just primarily military. While there was one company and I forget the names, but essentially there was one company that was producing semiconductors, but they had a failure rate of 0.5%, which does not

sound high. But when you're using it in military equipment equipment it's still too high of a failure rate and then a competitor came in and i think reduced that by multiples and of course that competitor started gaining very rapidly market share so that's a good example i don't remember exactly the pricing but i'm assuming they they may have had a slightly a premium. But when you know, these are critical components, you can't really cheap out on it, it's going to cost you more of it, the failure rate is higher. That's right. It speaks to if it's mission critical. And while you're thinking of that, I thought of an another point here is businesses that negate risk for

customers. So again, we're talking about mostly a B2B business to business situation here. But if you have a product that negates risk for your customer, that also makes it very sticky and gives you some pricing power. So I'm thinking of like cyber here, you know, just any situation where your product heavily decreases the risk of something going wrong for your customer because risk is a much more emotional selling factor than gains. If you sell a product that helps negate risk, that should always be your talking point and your marketing material and your sales speech, because that sells much more emotionally to customers. And it goes with management teams too, right?

What CFO or CEO is going to cut costs for something that negates risk, because they don't want to be the one that is known for that something going super wrong for their business. It's too costly for them to not negate that risk. It's too expensive for them. So yeah, those types of businesses really have a lot of pricing power as well. Yeah. No, I think they're really overall good points like obviously i think they're pretty pretty accurate overall i may like you i may agree for some more than others but i think you can make a case for most of them so uh no i think it was a good list the most important part is like can can it be sustained, right? Like, can... This is all backwards looking, right?

Like, can its sustainable competitive advantages allow for all of these things that we've talked about to continue to be true? I think that that's probably the most important question. And it speaks to the moat. And then the moat speaks to the pressing power i think they're very connected yeah no exactly now i'll move on to the most recent bmo survey so the one that made the twitter uh you know there was quite a lot of talk on

twitter at least some of the people i follow so this one was done last month, I think maybe a few weeks ago at most. And the main headline was probably the one that people saw is that Canadians think they now need 1.7 million to retire up from 1.4 million in 2020. So that was the main headline. But first of all, I'm not sure how people came to that figure of 1.7 million because it is a survey so you have to take it with a grain of salt all how well educated are people on decumulation what do you think the number is if you're if you're asked i mean i don't i think it really varies that's the thing i don't think there's a specific number per se i think it varies uh for

you if you were asked what would what would you throw out you know you have just you're just doing one of these quick surveys like you know x you're not spreadsheeting it out you're just thinking like what feels right uh for yeah probably i think probably around 1.5, I would say, because there are strategies you can do. Is that liquid or including your house? I would say that's liquid, whether you get that liquidity. I think overall, yeah, I think that's a safe amount because if you take the 1.7 million figure and you just use the 4% rule, which by the way has significantbacks. Essentially, 4% rule is you withdraw 4% every year you retire, and then you increase that amount just on the cost of living. It's basically $68,000 a year, but that doesn't factor other income sources like CPP and old age security

or potentially even if you have income from properties or things like that. So it may not sound like a lot for $68,000 a year. But again, you still have these other sources that you'll have access to. And on top of that, people tend to spend less when they retire. Maybe not right away when they retire, but when they reach around like mid-70s, that starts to decline for various reasons. So I think you have to – it's way more nuanced. That's what I wanted to say. True.

I agree. Yeah. And the last thing, it actually goes back to the discussion we were having with the first survey is you could easily – are you someone who wants to retire or someone who just wants to be financially independent? Or you could retire but still do some part-time consulting work or work part-time doing something that you love. Like, I mean, I've talked about it before. I'd be more than happy retired and working part-time in a bike shop.

It wouldn't feel like work. And I'm sure for you, we've talked about that a little little bit is i don't think you'll ever retire so yeah i mean there's probably some version of it yeah um and and when i eventually do uh you know decide to sell one or both of my companies it's like what do i do then? Like there's probably move into that kind of permanent state of semi-retired working. I think if I, I think I would become unwell if I started, stopped working. I know that sounds so ridiculous, but it's just who I am. Yeah, no, I mean, I've heard it before, right? I meet people with retirement and, you know, for some people it's just, you know, it's a reason to get up every day and having something to do.

And the last thing I'll mention about the 1.7 million figure is take it as a grain of salt because there's a big difference between 1.7 million in ATFSA and 1.7 in RRSP. Or clearly, I know that… Thank you. Yeah, say it again for the people in the back so because that's such a good point yeah and the survey did not talk about that and clearly the tfsa has limits you know let's say it's probably around 100k if you were 18 when the the account started but if you you did well on those investments i mean it would be pretty, you know, not out of the reason to have someone like $300,000, $400,000 balance and then the rest in maybe a mix of RRSP and a mix of a taxable account. So that really, you know, weighs differently because the tax implications are way, way different.

So I think that's something else to take into account where that $1.7 million figure, you know, I think it's just very nuanced. That's what my point is for that. Yeah, it is because, I mean, I'd be throwing out a random number here, but how much are you going to pay in tax on that over your withdrawals on an RSP versus the TFSA are all, you know out and it's amassing that amount in a tfsa is a huge feat given the contribution limits but whatever the number is say it's 100 say it's 500k uh 500k at retirement in a tfsa is not the same as 500k on money you have not paid tax on yet exactly and so And so they needed to be looked at differently.

Yeah, and you can really build strategies also based on that without giving too much in detail, but you can factor in maybe some years that makes more sense to withdraw more on your RSPs because then you'll actually have some lower income years, potentially in your 60s, if you decide to delay CPP and OAS. So you can withdraw more on RSPs. And then when you start withdrawing on OAS and CPP, you actually start withdrawing a bit more

on your TFSA while still doing some RSPs. So there's really, you know, there's a lot of ways to actually, you know, make most of the money. And I do encourage people, the book I listened to recently, Retirement Income for Life, definitely recommend it for anyone who wants to start planning for their retirement. You may agree or disagree with some of the things in the book, that's fine. But it'll, I think, give people a better perspective on the different options they have open to them when they do retire. No, that's great. Is that the last point on here? A couple more things that I found interesting with the survey. So 22% of respondent plan to retire between ages 60 and 69, with the average age being 62. That's kind of what I would have

expected. So nothing too crazy here, but fewer than half of respondents are confident they will have enough money to retire as planned. 74% are concerned about how inflation and rising prices will affect their finances, and 59% think it will affect their retirement goals. 15% said that in addition of saving for retirement, they contribute to provide inheritance to their children, which that this one is very weird, because it's, I'm not a lawyer tax expert, but apparently RSPs when someone passes away can be quite complex. So anyways, this one's a little bit of a head scratcher. 20% of respondents would like to retire in their 50s. 80% said they rely on professional financial advice. And we've been critical of professional financial advice or financial planners or financial advisors. I think personally, it's fine if you get advice from a registered one.

However, personally, I think the best kind of advisor is one that would just charge you per hour. So they put, you know, five hours in your file, they meet with you for an hour, they charge you for those five hours. I am very wary of those who charge a percentage fee in terms of your assets. Because what I've read and the stories I've heard is oftentimes people will say like, yeah, they charge me 1%. I have no idea what they do aside from putting me in mutual funds. And the good thing about just paying a, for example, an hourly fee is you can see a financial planner that charges you by the hour, but you can also go see a lawyer that specializes in a specific thing

that you need assistance with. They'll charge you per hour. Same thing if you need someone to do your, you know, do a tax assessment or tax planning, someone that specializes like that. So that's the approach that I personally like a bit more because I don't know about you. I'm not a tax expert. So I would be more than happy to see a professional tax expert to help me better plan for the future and just pay them a fair hourly rate. No, I think that that's pretty, it sounds reasonable to me, especially when you're talking about a percentage of AUM and then also what incentives are in the back of like what they're supposed to put you in like the worst thing you can do is hop into a big canadian bank and say like hey

invest my money for me because they're just going to put them put you in their own high fee management fee products like mutual funds which are going to heavily underperform any broad-based ETF over time after fees, like without question, like that you can guarantee. And so don't set yourself up for failure right away out of the gate by, you know, hopping over to your local bank branch. 1.7 million in asset, that's $17 year in fees so are you getting really 17 and not to mention you're probably going to get charged like two and a half percent on a canadian bank mutual fund like that's it's despicable yeah i mean depending if you're yeah they're with a bank or not but just you know i think it's important to remember are you getting value for what you're

being charged i think that's the one the most important question are you getting value for what you're being charged whatever it is yeah if you are i guess so but um i'm a big fan of the hourly rate that's my personal yeah right because one percent might not sound a lot, like a lot, until you're like, oh, $17,000 for this? That's a lot more money than my little 1% sounds like it. 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. Let's talk about the analogy between dieting

and personal finance and investing. So I've always been very keen on keeping in shape, you know, you as well. You know know you're the only guy i know that listens to conference call uh quarterly earnings conference calls and rides your indoor bike uh i'm always making sure i'm playing sports lifting weights you know cardio into the lifestyle and for instance as long as it wasn't a full blizzard i used to bike to my office both ways which was an 80 kilometers a week base 52 52 weeks a year just for my commute. Gym four or five times a week, hockey, golf all summer, generally very active. This past fall, dude, I looked in the mirror and I was like, I feel fine, but I look softer

than 10 ply toilet paper. And that was a tough pill to swallow. And I was like, I'm not moving enough. I'm working long hours. I got to change. I got to shred some pounds. So I reached out to a podcast listener, actually. His name is Aaron.

If you go to his website, this man looks like a Greek god. AaronAdkinFitness.com. I hope he's okay with me shouting it out. Hopefully he gets a client from this Eric Aaron Adkin fitness.com. Uh, my guy's absolutely dieseled. His six pack has a six pack on it. And I'm pretty sure, you know, his tricep has like four different shapes to it. Anyways, I'm, I'm texting him and I'm like, I got to drop 10 pounds for this beach trip. I can't be out here looking like a marshmallow. And so he gave me the no BS truth. Now, here are six things that I took away from our text conversation back and forth.

And I am not a personal trainer. I'm not a fitness. I could be horribly interpreting these, but I think it's fairly legit. And then I'm going to talk about how it relates to personal finance. And have that in mind, because these six things, you can kind of relate to finance. So here are my six things. finance. So here are my six things. One, there's no shortcuts or silver bullet when it comes to dieting and fitness. Number two, you have to simply achieve a caloric deficit, meaning more out than in. No BS to it. Number three, there are methods and strategies you can implement, but it has to go back to rule number two versus calories in versus calories out. Number four, everything promoting

some quick scheme is very likely BS. Number five, it is very difficult. It's just hard. Like it's hard. There's a hard thing about hard things. But if you do it consistently and daily, you will generally get some nice habits and results will come. Number six, it takes longer than you think to get your desired outcome. And because I'm a nerd, I'm a host of finance podcast. The whole time I'm thinking, I was like, this sounds a lot like budgeting and personal finance. One, no shortcuts. Two, it matters in versus out matters. You know, what you're making versus what you're spending matters. There are strategies you can implement, but it has to relate to in versus out. Number four uh everything promoting some get rich quick scream is bs just like fitness and you got to do it you got to put in the work number five and six it takes

longer than you think and you need patience um so that's the segment that's how i'm feeling and it's been working by the way like nice yeah you know like some of those six abs that used to hang around they're they're poking out a little bit again i think the surfing every day is definitely helping but uh you know it takes takes time and patience yeah definitely and i mean you know me i like to i like to work out i mountain bike a lot in the summer even fat bike in the winter or bike indoors. But I don't think I've talked about this on the podcast before, but I used to be obese when I was a kid up to my mid-teens.

Were you really? Oh, yeah. I was, I think, 5'5 and 210 pounds. Yeah. And now I'm 5'11 and usually around like 180, I would say, give or take a couple pounds, depending on the time of the day. How old were you when you're like, I can't be, I got to do something? I was, I think, 14, yeah.

And, you know, you're a teenage boy, and, you know, you see all your friends. Some of them started getting girlfriends and stuff, and I boy and um you know you see all your friends some of them started getting girlfriends and stuff and i'm like you know a little c-ball it's a little chunker yeah i want to yeah at some point i wanted to meet some ladies so i that was kind of the no i'm not gonna lie that was the motivation but it didn't happen overnight and i stuck with it i ate better a bit less i was definitely eating too much and I started being active more consistently. I mean, I was always, you know, even for a bigger kid, pretty athletic, good hand-eye coordination and stuff like that, but always had trouble working out unless it was

like a sport, right? So it's not always easy, at least back then, living in the suburbs a little bit to find sports. So yeah, just stick with it. I think it's my advice for anyone who's like maybe struggling to lose a little bit of weight or get in shape. And I would say the seventh point is don't compare yourself with other people. Yeah, just go on your own journey. It goes for investing as well, because it's really easy to get discouraged if you start, you know, for example, I'm not, I'm never going to look like Dwayne Johnson. Like I'm fine with that, right? No matter how I try. But I mean, I can still-

I don't know, a couple more earnings calls on the bike. Yeah, yeah. No, no, that's it. But I think it's same thing for investing, right? It's easy to look at someone and say, oh, I mean, they do like 60,000 dividend income per year. How will I ever get to that? Well, they started a long time ago and you have to go through your own journey. Yeah. Good point. I like number seven. All of them just resonate really well. And especially just like the patience part, because compounding anything, The patience part. Because compounding anything, especially wealth, it doesn't come quick. And anything promising quick results is probably bullshit. And that goes for a lot of, that goes for pretty much anything.

Yeah. Oh, yeah. You know, anything promising, low effort, good results quickly. practicing low effort, good results quickly, the bullshit alarm should be ringing on everything in the world. It should be going off. That's just my opinion. Yeah, I know. Exactly. You can do things to make things easier, but it still won't be a quick fix. I mean, especially if you're trying to get healthy or eat better a lot of people what they'll do is they'll like on sunday they'll do almost their meal prep for the whole week right so it's easy they don't have to try they don't end up eating not well just because they don't

have the time during the week so there are ways to simplify things for yourself it's like when i asked him i'm like okay what what about intermittent fasting is this is this legit and he's like it is legit in a method of you consuming less calories um and that relates to number two you know calories in versus calories out so yes but it's not some magical uh you know bro science that's gonna just you know it's not some magical bro science it is a method to achieving rule number two which is calories in versus calories out um and it's also not easy like try starving yourself for 16 hours a day it's not easy no no i wouldn't do it so i guess we'll last segment here. I thought it was interesting because we've talked about, obviously, Canadian dollar in the past, you know, Canadian home bias and so on.

And we always, as Canadians, just compare our dollar versus USD. But at the end of the day, it's not necessarily a good measure to just figure out the strength of the US dollar. And there is something that is a bit better than that has limitations, 100%. But it is called the US dollar index. If you ever hear on financial media, them talking about the Dixie, which is the DXY, this is what they're actually talking about. So the US dollar index is used to measure the value of the US dollar against a basket of six foreign currencies. All of the currencies in the basket have different weighting. So the euro is 58%. The Japanese yen is 13.6%. British pound 11.9%. Canadian dollar 9.1%. The Swedish krona 4.2%, and the Swiss franc 3.6%.

The basket only changed once, and I'm sure people may have guessed by now, it actually was a basket with additional currencies, which then became the euro. So obviously it changed when the euro became a thing, to just include the euro and the weighting was adjusted accordingly. And the index was started in 1973 it has a base of 100 and the values are related relative to that base it reached a high of 165 in 1984 and a low of 70 in 2007 for those old enough to remember i know we have some younger listeners well the canadian dollar was actually, I think

it was stronger for most of 2007 than the US dollar. So that's a good indication there. And it typically tends to range in the 90 to 110. That's typically what they'll be sitting at. And right now it's sitting slightly above 100. And then if the index is rising, it means the US dollar is gaining in strength versus the basket of currencies. And if it's dropping rising it means the US dollar is gaining in strength versus the basket of currencies and if it's dropping means the opposite so it's weakening to me it's just an interesting data point it does have its limitations here but something to keep in mind especially for businesses that have a lot of exposure to outside US currency I would say it's something just to, you know, not investment thesis changing, but just something to be aware of, especially when you start hearing, you know, the conference calls

with management saying, well, yeah, it only increased 2%. But if you remove currency fluctuation, it was actually 8% which we're hearing quite a bit. And the biggest drawback of this, I think people may have kind of figured it out, is it's missing some pretty major currencies in there. So the Chinese Yuan, for example, it may be added eventually. But I think the reasoning behind it was that they tried to have a basket with currencies that trade a lot with the u.s dollar so big trading partners so that's why it would make sense that the canadian dollar is in there and not something like the australian dollar for example these it reminds me of these companies who are global and have like they do business in so many different currencies. What does that finance department look like? That must be the worst job ever, like putting together their quarterly.

It's like, okay, we did several billions of dollars in 76 different currencies get to work. Yeah, well, the largest companies, right? That's what they deal with um but it's always interesting when you have companies that like a mercado libre which you know they basically all their revenues is in other currencies than the u.s dollar and then they report typically not very strong no exactly so it's always um you know i think the dix is just a good parameter like outside of i know people like will probably will check pretty frequently the the exchange rates between canadian dollar and the u.s just because you know you may be investing in

u.s stocks and so on but i think it's if you do that you know at the same time just double check the index it'll give you a good idea whether it's, is it the Canadian dollar only or is it actually the US dollar weakening against a broader set of currencies? That's a good point. It's something that I don't really ever look at, but you're right. I think traditionally, especially if I'm on a trip, I'm always just looking at the CAD conversion and I never look at like how the strength of it compared to other major currencies like i guess it's just something i

never look at but something that i probably should look at more um and so maybe i'm gonna start implementing this yeah no that's it so that was my last segment not sure if you wanted to add anything else um no let's uh let's wrap it there other than a quick question of the day simone is it uh is it aliens is it aliens flying over north america i mean um we'll see i don't know yeah it's um what what is it four now they've shot down it was four uh four objects and i think three of them correct me if i'm wrong some of them have been confirmed flying without any propulsion mechanism so they're balloons they're like hexagonal yeah or something I mean, yeah. I believe there's aliens out there. I don't know if this is our first finding of them publicly,

but I mean, mathematically, they got to exist. Dude, crunch the numbers. Oh, I know. No, I'm the same belief. Even Stephen Hawking was saying like, you know, if you look at how massive the universe is and, you know, we look at how massive the universe is and you know we're only starting to scratch the surface of what we think we know about the universe uh probability wise

even if it's like just a tiny tiny tiny probability um you know a grain of sand a grain of sand compared to all the sand in the world in terms of probability while there is most likely intelligent life somewhere in the universe yes and they haven't done anything yet so they're probably just studying us so just let them in give them give them what they need yeah maybe they'll do a third in like a third independence they didn't they do a second one recently it was like the the first one with will smith i think they did a second one so maybe they can do it like switch it tom cruise no no will smith the first one yeah i don't even know if you were born yeah yeah it is uh it is will smith yeah maybe they'll do like instead of independence day they'll do like instead of Independence Day, they'll do Canada Day.

Shot over the top of Alaska. Oh, yeah. It was one shot in Canada, I think over Yukon territories. Yukon, that's right. It was a US plane, but it was part of NORAD. So, yeah. Interesting. Very interesting.

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