The Canadian Investor - Mailbag episode - Investing at all time highs, Storage Vault, saving for a down payment and more!

Episode Date: August 2, 2021

In this episode of the Canadian Investor Podcast we discuss the topics below which all came from listener questions. Investing when the markets are at all time highs Where to put funds that are meant for a house down payment How Braden and Simon met each other before starting the podcast Storage Vault Canada Holding Japanese stocks in a TFSA or RRSP What investment vehicle to use once you’ve maxed out registered accounts Tickers of stocks discussed: SVI.V, ITOCY Getstockmarket.com Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital https://www.canada.ca/en/department-finance/services/designated-stock-exchanges.html https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/types-investments.html 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. Live from the great white north, 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 July 28th, 2021.

We have a fun episode today for you guys because we're doing a mailbag episode. We're taking your questions, giving you our hot takes. I'm joined by Simon Belanger, as always. And with these mailbag episodes, I really just want to specify, this is not personalized investment advice. Do your own due diligence. And when it comes to these specific questions, of course, you need to make decisions that

make sense for you and your situation. Simon and I can't know fully what is going on behind the scenes, but we can give our take on what we would do moving forward. So how's it going, Simon? It's going well. It's going well. Excited to do this episode. It's been a while since we've done it. Probably, what, three, four months? I'm not even sure, but yeah, it has been a while. We have a couple of questions lined up here. So let's not delay. I guess the only other administrative thing to mention is that right after we record this, we're going to be doing a experimental second episode for the week. The second episode of the week will be on top of our usual programming. We're going to talk about

more news, more earning stuff with earning season in full swing right now. We figure it's a good time to try to test it out. But the Monday release will continue, which is more of the same investing concepts, specific companies, deep dives, and whatever Simon and I feel like talking about. So all right, let's get right into it. We have Marco up first, and let's roll his question. Hi, guys. Like the podcast, just found out about it. Just have a couple questions for you.

I'm looking to start a new portfolio. I had some stocks that I took on the venture a couple years ago, the TSX venture that I did pretty well on, but recently married and have a child, so looking to get something just a bit more blue chip. But I'm doing some research here to start a portfolio, but it's really hard to justify buying any of these stocks nowadays. The big banks are all up 40, 50%. Pretty much everything is up across the board, 30,, 30, 40, 50 percent. Having a tough time justifying buying at these record highs. What's your opinion?

Is it a good idea to hold some cash and just wait for a correction and buy? Or, I mean, I guess nobody has a crystal ball, but what do you suggest? A new portfolio? Would you do that right now or would you hoard cash and wait? Thank you. So, Marco, that's a great question. It's always hard to buy at all time highs. So that's the first thing you need to kind of wrap your head around. There's no way around it. You can't help but think when you buy at an all time high, human psychology that you always have that feeling, well, you know, it's an all time high,

could just go down at that point. But oftentimes, these all-time highs will just be followed later on by another all-time high. So I pulled some data, just some random data to give you a bit of a sense of what I'm talking about. The S&P 500 saw more than 30 new all-time highs in the year 2013, 2014, 2017, 2019, 2020, and of course 2021. I believe we're at 40 so far this year, so we're well above that pace. The reason I mentioned this is to show you that there can always be a future all-time high, even if we're at a current all-time high. I'm talking here about the broad market of course for specific company valuation and future growth will have a big impact on whether a company can keep growing even though it may reach a recent high. If you hold cash you won't be getting any returns while you're holding cash and I know Brayden will talk about that a bit later and yes it's great to have some ammo as cash but if there's a pullback you can still make a case that there could be a

significant pullback right now this year in the past year for example and there still hasn't been so the risk of holding cash is that you're slowly losing purchasing power And a lot of people think holding cash is very safe. Personally, I tend to disagree with that because the fact that you're losing purchasing power is a risk in itself. So if you put money in at regular intervals by doing dollar cost average or DCA, you essentially remove the guessing game from it and you'll buy at the highs, the lows and anywhere in between. So if you already have a decent amount of cash saved up then what you can also do is dca by investing it in installments so the more you spread out that dca if you have i'm talking here of a lump sum the lower variance

you'll get as you average it out over a longer period of time and increase the odds that you're hitting both potential bottoms tops of the market the issue with spreading the dc over too long period of time is that you'll still hold a pretty decent amount of cash on the sideline that you're waiting to dca and not getting any returns on so on the other end the less you spread out that dollar cost average again i'm talking about a lump sum here the more variance or more upside or downside you may get. So there's really nothing that prevents you from keeping some cash on the sideline while doing a dollar cost average strategy with the rest of your money on a specific schedule, which would be more of a hybrid approach. Again, I would always recommend

if you have new cash or if you want to get into the habit of investing money regularly. So as you get your pay, for example, you put a certain amount in the market. So you DCA. It's automatic. You don't have to think about it. And that's personally the best approach you can do. Yeah, well put. From my personal take, I think that cash is trash.

Now, that's an easy thing to say, cash is trash. It kind of rhymes. But you know what? Keeping cash as an emergency fund or saving cash for a specific thing you're saving up for, like a house, or a small portion of your portfolio is cash that you can jump on opportunities that's all fine and and i keep a very conservative emergency fund when it comes to cash because that's how i sleep better at night but that that's just me now in terms of not wanting to invest because of all-time highs that's a completely different story waiting for the stock market to crash is a loser's game. Simon just mentioned that there's

already been 40 new all-time highs this year. That means that there's also been lots of volatility and it's been impossible to predict if you're getting 40 new peaks throughout the year. So what happens when the market does crash like March of 2020? People are too scared to invest. They've been waiting, they've been waiting, and then they go, oh no, CNBC told me that it's a nightmare out there and I shouldn't be investing in stocks. So investing at all-time highs shouldn't be some terrible thing. If the stock market didn't continue to reach new highs, then what on earth are we doing investing in securities? The broader stock market has continued to climb to new highs for the last few hundred years with lots of volatility along the way. So I hate the term all-time highs referring to it as some sort of negative.

At the end of the day, we are bottom-up investors. We're looking for great companies to hold for a really long time. And we're not really concerned about the macro environment when it comes to the broader market. So given that, buy good companies, try not to overpay and hold them for a long time. And then do what Simon's saying, dollar cost average over time. Great question, Marco. Let's move on. We got Joshua.

He's got a question about buying a house. Hi there, guys. My name is Josh and I am from Hamilton, Ontario. My girlfriend and I, we just began listening to your podcast about a month ago, and we have thoroughly enjoyed it. Since then, we have put our money into some Vanguard ETFs, a tech ETF, and a S&P 500 ETF, all based on kind of like recommendation you guys have given. And we've also put them in a handful of stocks based on sectors that we really like and your recommendations and what we know. sectors that we really like and your recommendations and what we know. We just kind of want to know what your recommendations are for long-term, not so much long-term growth, but our goal is ultimately to put a down payment on a house. So do you suggest we kind of leave what we have right now?

And when that down payment comes, we sell everything to make that down payment. We just kind of want to know some suggestions for a big purchase like that, because that will be the biggest purchase of our lives up until that point. So we want to know kind of what the best avenue would be. We appreciate all your help and we will continue listening. Well, that's a great question, Joshua. And I think that's a question that a lot of people will be struggling with that are looking to purchase a house because on the one hand, you're seeing the housing market. I'm speaking broadly in canada but i know in ottawa and i think in toronto as well you're seeing the housing markets go to just like we just mentioned all-time highs

and you want to put a down payment towards the house but if you just keep saving that money and putting in a savings account you may be swimming against a tide and have a really hard time to get enough of a down payment to buy your home. So it's definitely a nuanced answer that I'll give. And I know Brayden will talk about the first-time homebuyers program as well. He wanted to mention that. So for me, without knowing your full situation, as a general rule, the wisdom when it comes to that is you don't want to be investing money in the stock market that you'll need in the near term. What you're defining at near term may vary from, you know, people to people. But say you're looking to need that money within a year or two. say you're looking to need that money within a year or two.

Even some people that are more on the conservative side would say that you shouldn't invest money that you would need in the next five years. The problem with keeping money in the stock market with the purpose of wanting to withdraw it and using it as a down payment is that if the market drops like last March, 40, 30%, whatever it is, and you find a house that you really want

and you need the money for a down payment, well, you'll be forced to sell at a potential loss, obviously, depending at what price you bought it. If you keep the money in a savings account, on the other hand, you'll probably get about, what, 1% on your money? So you'll be losing money when it comes to purchasing power. So this means that you're trading potential returns for safety if you're choosing a savings account and for capital preservation.

But the safety you're getting, like I said, means that you won't be keeping up with inflation. So if you're $100 in purchasing power, today is guaranteed to be worth $95 in purchasing power next year. Again, is it really safe? I kind of come back to that notion from the first questions we had. In the end, you'll need to really make a decision on what works best for you while understanding the pros and cons of each option. Something you could do is to keep a portion in a savings account and then a portion invested. Therefore, you're kind of hedging safety versus potential return. But again, this is not without risk this approach. All that to say, there's not an easy answer.

I think you'll have to look at your own situation and just understand the type of risk you're willing to take versus the kind of safety of putting the money in a savings account. Yeah, well put. Josh, thanks for the kind words, by the way. We're really glad you like the podcast. So the only problem with this question is I didn't hear the time frame for when you're looking to purchase the house. So it's really hard for Simon and I to give some real clear direction on what we would do in this situation. But let's say it's more than three years. You can dabble with their ETFs and the stocks you mentioned and do it in an RRSP because you can take advantage of that

first-time home buyers, which allows you to withdraw on your RRSP up to $35,000 for buying your first home, which you will have to pay back over 15 years, I believe is the number. Sounds about right. I think it's 15. I don't have it in front of me, but sounds about right. But $35,000 over 15 years, you're investing it and you are putting it in equities, we know equities move around all the time like a roller coaster, even if the business you are owning is executing great. We see volatility all the time. So when you're doing this, you want to

consider potentially withdrawing it over a year period instead of withdrawing it all on the same trading day. The same reason we dollar cost average into the market is the same reason that we want to do this over a time period when withdrawing out of the market, similarly to what folks do when withdrawing funds in retirement. A good retirement plan is not, okay, you turned 65, let's withdraw it all tomorrow. That's a terrible idea. So if it's less than a year, like honestly, don't really, like I wouldn't bother.

Just hold that cash. Try to do like a high interest savings account. Shop it around. I don't know what the highest rates are these days. I know EQ bank has some pretty good rates. And if you're looking for these blue chippers to just kind of hold in your portfolio safety, you know, stratosphereinvesting.com, I have a model portfolio called dividend appreciation. It is a list of rock solid blue chips with lower beta. So like less volatility than the market. That could be great for this shorter holding timeframe, especially when the companies inside of that portfolio are some of the best businesses in

the world and some real staples in the economy. 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. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends.

And there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, Blossom Social in the app store and I'll see you there. We got an awesome question. The next one coming up, Luke. I'll take this one, but let's roll Luke's question.

Hello, guys. My name is Luke, long-time listener. The question I have is not related to finance, but I wanted to know how did you guys meet each other? Thanks. Great question, Luke. We really have not discussed this on the podcast. The answer is that Simon and I met on Tinder. No, I'm kidding. Correct me if I'm wrong, Simon, on the

details here. It's been years, but this is how I remember us meeting. So I was doing an interview style podcast called the Stratosphere Investing Podcast. I guess you had heard it and sent me an email. Is that true? Yeah, I think I sent you either an email or a message on Instagram, one or the other. And I think I'd mentioned about AltaGas and seeing like the payout ratio being all out of whack.

And then, you know, we just, I think, started talking about potentially doing a podcast together. I think that's kind of the initial contact. Yeah. Yeah, that's what it was. Simon's like, hey, let's do a podcast. And obviously we hadn't met yet. And Simon was in Toronto for work.

This would have been the summer of 2019, right? And he was in Toronto for work. This would have been the summer of 2019, right? And he was in Toronto for work, and we went for some beers at a bar downtown. I had plans to go to the Jays game after that, if I recall correctly. So we said, well, we sat down for beers at the bar there in Toronto. We said, all right, let's do this thing. And we came up with the name, The Canadian Investor. We figured that it would rank well on organic searches. And here we are doing a weekly episode going strong. So we've been a great team. We keep each other motivated, keep the podcast consistent with that weekly episode because running a podcast is a lot of work and it can be draining to be draining to find new topics as well um so simon and i we talk every day we become great friends and i think we're just getting started really uh

we have big plans for this podcast and other projects in the future yeah yeah exactly and i think being two really helps because you know we're dividing the work kind of as much as we can um so some people probably know i i do most of the audio editing but brayden does a lot of the other stuff like some of the recent ads and so on so that's why you hear his beautiful voice on those ads but it does helps because if not i think it would almost be a full-time job just to do that it would too like simon doesn't even know this like i'm being super candid here simon literally has no idea about this but i have thought about you know calling it quits on this thing multiple times because right when it's like you know that weekly

episode you have to really be on your game all the time and it can be mentally kind of difficult um especially when you start to get bigger and you have people not like what you said about a certain company um and at the end of the day it's our podcast we can say what and do whatever we want so um i'm really glad we're doing it and i think it's just getting bigger from here so uh yeah yeah and i'm thanks for listening i'm really glad we're doing it. And I think it's just getting bigger from here. So yeah, yeah. And I'm thanks for listening. I'm glad we both stuck with it. Yeah, because especially with the pandemic to like, just, you know, at times, it wasn't easy, just generally speaking, right? Like just being stuck at home and stuff. So we do appreciate all the nice messages

we get. And you know, the feedback, as long as it's constructive um not everyone is but i would say 99.9 percent of people are literally 99 of people are the best like our fans are super nice and really really awesome um yeah especially like just going back on that point right you're like it's hard to do it especially when you're you at home. You've been on Zoom calls all day. And then it's like, okay, let's go hop on another hour and 20 Zoom call. And by the way, put up 10 pages of notes for the research you're going to do. It's a lot of work. Anyways.

But we do enjoy it. Yeah, I'll bet. We do enjoy it. We would not do it if we didn't want to do it. That's it. Okay, David's got a question about storage REIT. Actually, it's not structured as a REIT. Anyways, here's the question. Hey guys, this is David. I'm curious on your thoughts on a stock, SVI, on the Venture Exchange. I don't like venture stocks,

but this one has a market cap of getting close to $2 billion and has been around quite a while. The stock returns have been pretty great for a number of years, yet it is not turning up a profit. It seems to grow by acquisitions, and I'm curious on your thoughts of an unusual stock like this one. Thanks. Venture Exchange, to be honest, compared to other types of businesses on there. I looked just very high glance at them a few years back, so I'm somewhat familiar with them. I don't think they're structured like a REIT, but they do talk about themselves almost like a REIT. So they'll talk

about funds from operations, for example. So to give people a bit of a background, it's listed, like I said, on the TSX Venture, has a market cap of $1.79 billion. It's not a bad space to invest in, but will tend to be slower growth. And it competes with much larger US players, including public storage. So I'm sure people have seen public storage across all over Canada. Some of the other names that are publicly listed are CubeSmart, Extra Space Storage, Life Storage. Not all of them have operations in Canada, but they are publicly listed in the US. I'm just going to give you a few things to keep in mind when it comes to storage REITs. So look at FFO, some funds from operations, and AFFO,

adjusted funds from operation metrics. Those are really useful when it comes to REITs. They can usually be found in supplemental information documents that are released along with the financial statements. Look at the debt coverage ratio. Look at the total debt when it and when it comes due. Look at its dividend or for REITs, they'll call it distributions and the payout ratio when it comes to FFO. Storage REITs tend to be short-term rentals. So it's just their nature where people can rent them by the month. So that means that revenue can be lumpier than long-term triple net leases, for example. And triple net leases would be typically where the tenant would pay for essentially all the expenses that's just an easy way to do it and they tend to be longer

term contracts as well but the fact that they're short term enables them to have more flexibility on pricing depending on demand so for example if demand is really weak, well they can lower their prices to try and get that occupancy up very easily. But again if demand is very high they could actually increase their prices quite rapidly on a month over month where these long-term contracts you don't have as much flexibility. So if it's something you're interested in investing in I would recommend comparing it to the US listed peers just to get a sense of where storage vaults kind of places itself in terms of them, including storage REITs, I would recommend reading the Intelligent REIT Investor. I've talked about it before. It's a really good primer for anyone looking to invest in REITs. Hey, this has been a hell of a stock, so nice

find. And I was just looking right now, and I noticed that the insiders have only been buying stock. They haven't sold any stock in the last 12 months, and almost all the insiders have only been buying stock. They haven't sold any stock in the last 12 months, and almost all the insiders are continuing to buy more shares, which is rare. Most companies have net selling because there's always many reasons that insiders sell the stock to pay themselves or whatever to have extra money, but there's only one reason that they buy it. And that's because they think the business is doing well. So I do like investing in roll-up strategies. I don't think that's a secret around here. Roll-up strategies like a grow by acquisition if the market is really fragmented. And what I mean by fragmented is that there's lots of private

family owned storage companies that they could roll up into this larger holdco. So right when I heard storage vaults, I thought this has got to be pretty fragmented. So all kinds of privately owned family owned vaults, you can roll up into this holdco. So when you invest in these roll ups, you are giving your full faith in the capital allocation ability of the management team. There is no more important type of company to study the people who run it than a roll-up company. So listen to the conference calls, do some digging. The successful roll-up strategies have been executed by amazing capital allocators who are obsessed

with creating shareholder value, like Mark Leonard of Constellation Software. If you are giving your capital for them to deploy and buying private assets and bringing it into the larger company, the mothership, if you will, you have to make sure that the management team has a pedigree for creating value. And if you do, you can find a winner. I mean, look, there's been some amazing capital allocation stories of giving your capital to a world-class allocator to create value for you. I mean, come on, look at Berkshire Hathaway. This is literally the definition of giving your keys to Warren Buffett to let him drive the ship for you. And it's been a great strategy for a lot of investors who find these winners, but you got to make sure you're investing

with someone that you trust and that can demonstrate that they have the ability to not only deploy your capital efficiently, but at high rates of return for a long time. 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. Calling all DIY, do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time.

And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo-style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there.

I encourage you, go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Okay, we got a question about Japanese stocks from Angelo. Let's roll that one. Hey, Brian. Hey, Simone. My name is Angelo. I'm from British Columbia. I've been a long-time listener and first-time question to the show. My question is concerning about OTC

stocks. Since Warren Buffett had placed investments in Japan, I've been watching the Japanese economy and I see quite a number of companies out there that are trading very cheap to their value. One in particular, Itoshi Corporation, ticker symbol I-T-O-C-Y, is a stock I would love to own. But my question is, what kind of restrictions are we faced when owning this type of a stock in our TFSA and RRSP accounts. We'd love to be like Buffett and get in on the Japanese market, but I also don't want to see any punishment. So if you can help me on that, that'd be great.

Thanks and keep up the good work. Thank you for the question, Angelo. I think it's a great question. I can see why you'd be looking at Japanese stocks, seeing how Warren Buffett has made some acquisitions or investments in Japan recently. So it gets a little tricky when it comes to holding foreign stocks in a TFSA or RSP. So I'll add a couple of links to the description that should help you. So the first thing that you'll need to understand is your stocks that are eligible for the TFSA and RSP have to be listed on designated exchanges. So that is the language directly from the Canada Revenue Agency.

So if you determine that it's not listed on that designated exchange, then you'd have to hold it in a non-registered account, also known as a taxable account. then you'd have to hold it in a non-registered account also known as a taxable account. So it can get a bit tricky for the stock in particular ITOCY ticker. I mean I'm not a hundred percent sure I'll be honest but with the two links you'll see all the designated stock exchanges as well as how it's considered for the TFSA and RRSP, so registered accounts in Canada. But like we mentioned before, because we've had this question about Tencent, is whether Tencent is eligible because it trades OTC. The reason why Tencent is eligible because it's listed in Hong Kong, which is a designated exchange. So that is the reason that it is eligible. But that does not apply to all foreign stocks and all OTC stocks. So you really have to make sure that's the case. And like the last thing

I would say is you can always, you know, give the Canada Revenue Agency a call to see if they can provide some insight on there on that. The only issue is from what I've talked to people about the CRA is I've heard people calling more than once and getting different answers when they ask them questions. So that's always something a bit tricky. And I guess they'll still hold you responsible even if they gave you the incorrect information. So anyways, all that to say, we will add the links to the description. I would recommend having a look at those and then you can make your own assessment whether it makes sense or not for you to have in your TFSA or RSP. Not much more to add there. Agree with everything you said.

We have another question here from Matt. He has some more TFSA or RSP type questions. So let's roll Matt's question. This is Matt Hasson out of Fergus, Ontario. I've just been an avid listener of the show, listened for, well, since the first episode came out. I'm 19 and I'm wondering, I've maxed out my TFSA and my RRSP contributions.

I'm just looking for another investment vehicle. I don't know whether a taxable account is a good option for me or whether I should just put it into a savings account and save for the medium term. I'm looking to buy a house down the road here and just wondering what your opinions are on taxable accounts versus other investment routes. Thanks. Bye. Matt, thank you for being a longtime fan, and congrats on maxing out your accounts, your contribution limits, and you're 19 years old.

So good work. That's awesome. The question is, as you unlock more TFSA room, since you're only 19, your ceiling of TFSA room is not very high because you started unlocking it when you're 18, is will you have another 6K to throw at it next year if you invest it in a taxable non-registered account now? I ask this because you're only 19, and man, when I was 19, I was broke. So I didn't have much cash to invest. If you do, and you're a working lad, then go for it. Start using that taxable non-registered.

That's what I did in my early 20s once I maxed out my TFSA, and then I fueled up my RRSP with that $35,000 for that first time homebuyers tax incentive. Not a tax incentive, but that first time homebuyers incentive, that $35,000 in my RSP, filled that, filled my TFSA. And then yeah, I mean, the world's your oyster. Start running up a taxable non-registered. Not much more to add to there, man. You're doing so great. While your friends are looking to flex on Instagram, leasing BMWs they can't afford, you're going to keep compounding some serious wealth. At the end of the day, as Morgan Housel says, true wealth is what you don't see. So keep up the good work, Matt, and you're killing it. Yeah, yeah, not much more I can add to that. I just wish I

would have been like you at 19 years old and just been on top of it. Even though I was investing, I was probably not investing in a smart way. I've gone through my transgressions before about the companies. We've talked about your dark times. My dark times. But yeah, like Brayden said, I think that totally applies. And then if you do have extra money to invest and you have more than enough to cover next year's TFSA's room, then yes, the taxable account is probably a good way to go. And the beauty about that is there is no limit. And there are certain advantages that we've talked about before. that there is no limit and there's certain advantages that we've talked about before you know for example tax loss harvesting and different other things that you can do with those type of accounts but uh yeah just keep doing what you're doing honestly you're

you're definitely on the right path yeah and the reason i said specifically 35k is hear me out again not investment advice hear me out the reason i say 35k in the rsp and then me personally i in my early 20s i didn't touch it after that it's because i wasn't making a whole lot of money so like i wasn't taking off a lot of taxable income the whole benefit of using your rsp uh and if you are like matt here and you're 19 and you're already maxing out your accounts TFSA and RRSP said you are going to be compounding that RRSP over the next 50 years to a number that is so absurdly massive we can't even comprehend how big it's going to be if he keeps at this because of the power of compounding. And what you will do is you'll have a RRSP that's actually

too big. And we've talked about this. You can get an RRSP that's too big. Don't at me. I don't want to hear about it on Twitter. I stand by this. You can have an RRSP that's too damn big, and then it's not tax efficient. And it is more tax efficient to run a taxable account instead of continuing to invest in your RRSP that's too big to begin with. So that's why I say, don't go crazy on the RRSP. If you're 19 and you're maxing it out like nuts, it'll be more tax efficient for you to go non-registered because your RRSP is going to be huge, Matt. It's going to be massive, which is great.

Like I said, your friends are buying things they can't afford to impress the friends that don't even like them while you are compounding some serious wealth. So great job. We're splitting splitting hairs over, uh, like you're doing, you're doing amazing. So, so keep it up. All right, guys, we, uh, we're going to record now another episode. We are running an experimental second episode on the podcast. The people have spoken on Twitter. They want another episode. We're going to do an earnings thing so that's going to come out later in the week so look out for that later this week yeah

i would say what probably thursday or friday will give me more time yeah more time to edit it uh wednesday would be a bit too early and probably too close to to our monday release so thursday friday i'm hoping thursday but uh yeah i'm'm thinking Thursday but if you hear that if you hear that and it's not released Thursday it'll be Friday that's right okay so we'll have like

the Monday and the Thursday episode again this is experimental see what you guys like thank you so much for listening and thank you for all the questions on the mailbag episodes based on the numbers y'all like the

the mailbag episodes and we enjoy the numbers, y'all like the mailbag episodes and we enjoy doing them. So keep dropping us questions. Thank you guys so much. See you next week. Bye-bye. The Canadian investor is not to be taken as investment advice.

Braden or Simone may own securities mentioned on this podcast. Always make sure to do your own research and due diligence before making investment decisions.