The Canadian Investor - What Financial Planning Should Look Like with Mark McGrath

Episode Date: March 18, 2024

In this special episode, join Simon alongside Mark McGrath, a certified financial planner from PWL, as they dive deep into the intricacies of financial planning and investment strategies. They begin by discussing the benefits of index investing as a cornerstone of sound financial planning including the pros and cons of home country bias. The conversation then pivots to debunking the myths surrounding dividend investing, providing a critical examination of the pursuit for high yields and the necessity for thorough research to avoid common traps. As the dialogue progresses, Simon and Mark explore the dynamic realm of cryptocurrency investments. With the advent of new Spot Bitcoin ETFs in the US, Mark provides insight if he has seen increased interest from clients as a result of the launch. The episode rounds off with a crucial conversation on pension plans, specifically the distinctions and misunderstandings between Defined Benefit (DB) and Defined Contribution (DC) plans. They underscore the essential need for investors to grasp the subtleties of their retirement savings options, challenging the prevailing notion that all DB plans are inherently superior. Mark’s twitter: @MarkMcGrathCFP 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 Dan’s Twitter: @stocktrades_ca 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 for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. 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

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Okay. Well, okay. So I'll just say financial planner. Good enough. That's good. So well, Mark, thanks for coming on the podcast. I've been following you on Twitter, you always have some pretty, I find some pretty interesting takes, you know, I agree for the most part. I mean, sometimes I don't fully agree, but I think that's okay. I mean, I think you have some good discussions. And, you know, for the most part, some good logic behind it. So you want to tell us a little bit about yourself because you've never been on the podcast before. I know some of our listeners are familiar with you, but you can just introduce yourself and also your general guiding principle as a financial planner. Sure, sure. Thanks. I mean, thanks for having me. It's great to be here. I know you've got

maybe not that many financial planners or advisors that get an opportunity to come here and chat with you. So I'm honored to be here. Thank you. Yep. So Mark McGrath, I work at PWL Capital, as you said, Simon. I've been doing this for about 14 years off and on, kind of doing different roles within or adjacent to the financial planning and investment advice space. I joined PWL just last year in July after following a lot of what PWL had been doing for years and years and years, like going back to the Canadian Couch Potato, the Rational Reminder podcast, which maybe some of your listeners are familiar with. So I've been kind of following PWL for a long time and I was truly thrilled when I got the opportunity to join them. I'm out in BC. I'm

about halfway between Vancouver and Whistler. I'm in Squamish, BC. Moved up here in 2019, early 2019. I've got two young kids now, and so we wanted to get out of the city and come to the suburbs. And yeah, as you mentioned, I'm quite active on Twitter. I like to go out there and chat with people all the time and talk about index funds and financial planning and all that fun stuff. No, that's great. You'll have to plug me in with Ben Felix from the Rational Reminder, just because I think he's in Ottawa. So it'd be good to kind of meet in person, maybe have him on the podcast, but I digress. So we've been pretty critical of financial advisors, financial planners on the podcast. I mean, I think it's just because of the experience and

the feedback we've had from our listeners, people I know in my personal life, friends and family, the typical and I don't think that'll come as a surprise where you have an air quotes this financial advisor, who I usually I think is just someone with a mutual fund license that will be putting them in these high fees, 2% plus mutual funds that are underperforming the market, oftentimes extremely high bond allocation for someone that would be in the 30s, for example, and providing little to no advice, just meeting with them once a year to just go over, I guess, their returns. And that's about it. So how do you defer? And I saw a tweet in terms of like how you approach new clients, I think, you know, meeting with them first,

you know, collecting some information and then, you know, without a cost, yeah, just letting them decide whether they want to continue with you. So do you want to talk about the differences and maybe some of the gripes that you also have with, you know, people call themselves financial advisors? Sure. Yeah, it's a good question.

It's a big question. And I largely agree with you. And I think it's a function of how the industry kind of started and where it is today. I mean, a lot of the financial advice industry has largely been built up on commissions, right? I mean, if we go back to like DSC, deferred sales charges on mutual funds, as an example, or even front load fees on mutual funds. A lot of advisors when they were just getting started, that's how they paid the bills was transaction fees, right? And commissions. And so because of that, the focus was always on investment products. And that's how advisors built practices, right? It was very, very transactional and commission based in nature. And I think that's changing a lot. So myself and PWL, we are what we would call, I guess, AUM advisors

or fee. There's many different terms for it, but fee only means we charge a fee on the portfolios that we manage, but we don't have transaction commissions or anything like that. So we're not compensated through the transactions. It doesn't matter what our clients have in their portfolios, our compensation doesn't change. But I think a lot of it also comes from where you were trained. trained. And so we have this, we have these kind of echo chambers, I think, in the industry where if you grew up in a firm that was very sales oriented, and you were trained from the top down to do things a certain way or to sell a certain type of mutual fund with high fees, for example, that they think can beat the market, you grew up in that environment, that's all you know. And you think that's the best way to do things. And then maybe you change to a different firm where they do things a little bit differently

and you have maybe a bit of an epiphany and go, oh, actually, this is the right way to do it. But that might not be much better than what you had learned before. And so I think for a lot of advisors, it's difficult to break out of this, these kind of echo chambers that they fall into. Like everybody's got to start somewhere, right? I started at the bank and we all have our opinions about the banks, but they're very sales focused, right? So it takes a keen interest and curiosity about, I think, the evidence and about the bigger scope of investment advice to kind of break free from that. And we're just talking about the investment side here, but really where the value is, in my opinion, is around all of the other things that aren't investment related, right? So I talk about financial planning all the time. And that's a, that's a big catch all

term. And what does financial planning mean, right? The way I think about it is that most people are likely to make 1000s of financial decisions in their lives, right around many, many different topics from retirement planning, to investing to insurance and risk management, to state planning, small business concerns. If you have a corporation education planning for kids, there's dozens and dozens of things that people generally need advice about. And that's where good advisors or good financial planners, I believe can add value to their clients. So my process, as you mentioned, is basically I do often a 30 minute call with somebody and just get to know them a little bit. And the whole purpose of that call is to see,

are we the right people for you? Right? Like is what you need in your life right now, somebody like us, or is it better for you to go and see like a fee only project based type of advisor where you pay them once to solve a couple of problems? Because we're not for everybody. And I don't think everybody needs a financial advisor. But I will say that focusing on the financial planning aspects first, if they do come on board, getting to know them, getting to solve a lot of those bigger financial planning pieces first, the investment recommendation follows from that, right? Like you can't, I can't tell you how to build a portfolio unless I know you very intimately. So that's, it's a bit of a reverse from, I think, how the industry was built.

Yeah, no, I think that's a great point because people will look at, you know, at me, my investments or my co-hosts, and we always remind them, look, we have a certain risk tolerance. We have a certain, we have a certain risk tolerance. We know the businesses we own. I also own a mix of index funds. So I do kind of a more hybrid approach. I'll research some businesses less than 10. I own them.

And then I have an index fund approach. But it's not for everyone. Obviously, index investing is a pretty powerful tool. And it's usually what I'll recommend to people who, you know, want to do it themselves, but don't want to put in too much time. And I think the time component, but also being able to read financial statements and be willing to learn that stuff is really important. So I do, I do like that approach. And I guess you also do, maybe not you, but your team, I'm assuming you work with other people, tax planning, estate planning,

all these kinds of things. Exactly. And that's where we spend most of our time, right? Like when people come to me, I tell them like, we're going to spend probably 10%, 15% of our time on the actual portfolio management side. Because once a portfolio, to your point, we're index investors as well. We use different types of indexes, we use factor indexes. But at the end of the day, it's just a different type of index. So we're all about low cost indexing. And once that portfolio is set up, it's very, very simple. For many of my clients and our clients and myself included, we use a single fund. And it owns 12,000 stocks all around the world.

So once we've got that in place, there's not a lot of maintenance to be done around the actual investment portfolio itself. But the beautiful thing about that is it opens up all of our time to really focus on the important things, tax planning and estate planning. We're not accountants, we're not lawyers, we're planners. And so we look deep into the future for clients and identify things that we think are going to help down the road. Whereas often, not always the case, but often accountants are a little bit backwards looking, for example, right? You meet with your accountant and they're looking at the prior year to see where can we save you some tax. So it's very common for us to sit down with our

clients, accountants, or their estate lawyers and go through those areas with them. Yeah. And it wasn't one of the things I mentioned to you, but I am interested to hear your thoughts on this. So there's always this debate between TFSA and RRSP. You see it a lot, people on Twitter. And I do agree, some situation, for example, if you have a high earner out of a couple, for example, one person earns way more than the other person, spousal RSP and potentially withdrawing the money a couple of years down the line could be really tax efficient. But from the TFSA perspective, I find that a lot of people, and it's hard to quantify, but the certainty with taxes is a big advantage because as much as you like to plan and if you're lot of people, at least on Twitter that I see.

No, you're absolutely right. And the way you just phrased it is exactly the way to think about it, right? The RSP is a trade-off for tax certainty versus the TFSA. So you earn your money and you decide, am I going to pay tax on it now? Or am I going to pay tax on it later? And if I'm going to pay tax on it later, I'm going to use the RSP. And the primary reason I want to do that is because I believe that I'm going to pay a lower rate of tax on the withdrawals than the bracket that I'm in today. But to your point, future taxes are unknowable. Taxes have been actually pretty stable in Canada. I know there's been some variation, but if you look at charts of marginal tax rates historically, it's not that they just continuously go up. I think a lot of people believe that. But if you actually look it up, the marginal tax rates haven't changed really significantly. But there

is that uncertainty and there is that risk that tax rates could be higher in the future. And so the TFSA does give you that certainty today. A big problem with the TFSA is that the contribution room is relatively limited for higher earners, right? Like $7,000 a year. I mean, yeah, if you compound that out over decades and decades, you're going to have a seven-figure TFSA in future value. But RSP room is generally a lot higher. So to your point for higher income earners specifically, the RSP can be very, very compelling. I'm a huge fan of the RSP and I think it gets a lot of flack that is undeserved. And it's a deceptively complex account when you really look at it and when you try to factor in these future taxes. But to your

point, the TFSA is simple. It's tax certainty today. And it's very flexible because you can withdraw without taxes or without penalty and you can recontribute. So in a perfect world, if you're a high earner, max out both. If your income is lower, TFSA is a beautiful thing. Yeah. And just in case some people aren't aware, so the RSP room is accumulated. It's 18% of your salary up to the maximum. I think it's what, 31, 32,000? I think it's 3,700 or something like that for last year. Yeah. I always get confused with the money purchase limit, which is just a year before basically the RSP limit. Yeah. So no, those are great points. Yeah. So no, those are great points. 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

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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. Before we talk about index investing and then dividend investing, so what are like maybe two most common mistakes that you see from an individual who start working with you? And I know you focus primarily working with physicians, right? Yeah, historically, I've worked primarily with physicians. I do have a number of clients who are not physicians. But

I'd say it's hard to answer what are the most common mistakes because everybody is so unique in what they've done so far with their financial plan. And I get a lot of clients or prospective clients that come to me, they don't all come from the same place. So many of them were do-it-yourselfers who are now either don't have the inclination, the time, the effort, the energy, and they don't want to do it themselves. Or some of them come from other institutions where other planning has been done for them. But I'd say a lot of from the do-it-yourself crowd, the biggest mistakes I see are thinking you're an index investor because you own an index fund. For example, I had a client that had all of his money in industrial ETFs, like industrial

sector ETFs. And so he's like, no, I don't need your help. I'm an index investor. I'm like, let me take a look at the portfolio. And the spirit of indexing is really to grab the global market cap weighted portfolio and participate in the market returns. But this individual, by owning an index fund, identified themselves as an index investor, but there was a lack of diversification there for sure. So I think people tinker with their portfolios. They over-allocate to risky sectors. They under-diversify. That's a big thing that we see. And the other one is, I'd say, not playing defense properly.

Like most people, maybe not most, but many people don't have the right types or amounts of insurance, like life insurance, disability insurance, that type of thing. Or they've got some through work and they think that's enough and it turns out it's nowhere near enough. And the other defensive tactic is estate planning, right? Not having wills, not having accounts set up in a way that's going to allow you to distribute your assets if something happens to you, in not only a tax efficient way, but in a quick manner and to the people that you want the assets to go to. But there's lots, right? Like

people paying high fees for closet indexing at a different institution or misunderstanding things like RSPs versus TFSAs and having preconceived notions about things where it's really just a financial literacy issue. Yeah, I totally agree. I mean, I think there should be more just financial education in our in our schools, just because a lot of stuff I've learned, I've just, I learned on my own, because I'm interested in it. I've always been good at math. So it's just came a bit naturally. But I'm looking back and I went to a really, really good high school as well as like one of the top schools in Quebec. And I think we had one course that talked a little bit about the basics of the stock markets and bonds, but it was just a basic, basic. So it's not surprising that, you know, there's a lot of

people and I may be guilty of one of these mistakes. The will is on my to-do list this year because I have a daughter now. So it is definitely something I will be doing. Now to go back to index investing. So I'm going to push back a little bit. And you had tweeted that VQT, so the Vanguard All Equity Fund or XEQT were a great option for global equity exposure. And the reason I want to push back is because it has a big weighting to Canada. And we've been pretty critical on this podcast about home country bias for Canadians. And even though I think this fund is not bad at all, it's actually a pretty good fund, quite low fees. Maybe something that would be like XAW, which is the

old world excluding Canada, and mixing that with maybe a 5% to 10% allocation to a Canadian index fund would make a bit more sense. So what's your kind of thought process on those two funds that I just mentioned? I mean, those are great, great funds, right? To your point, you can combine them to generate the amount of home bias that you want and still then have a global index portfolio, which is great. I think at the end of the day, home bias is a preference. It's a choice. You can set up your portfolio to have some, none, and quite frankly, many people have too much home bias, right? The reason that I think funds like VEQT and XEQT are solid is, or let me back up, one of the reasons that home bias matters is currency and taxes, right? I mean, we're Canadians, presumably we're going to consume in Canadian dollars, we're going to retire in Canada and consume in Canadian dollars. And having a home bias acts as a currency hedge for your future consumption in some

way, right? So you had mentioned XAW, if you had everything in XAW with a very small allocation to Canada, if the Canadian dollar is very strong over your investment horizon, and there's no way to predict that, it's going to have an adverse effect on your returns, right? So if the Canadian dollar grows, you're not capturing the returns of the marketing Canadian dollars. And so you can introduce a lot of risk to your portfolio just from the currency standpoint. So having a bit of a hedge against the currency risk by allocating more to Canadian stocks, I think helps. Another reason is taxes. So dividends are relatively tax efficient, right? And in Canada, Canadian eligible dividends, I should say, because foreign dividends are actually quite punitive from a tax perspective.

They're taxed as just like interest would be so fully taxed. And you get into foreign withholding taxes and all these other things. So there's some tax benefits to holding some home bias. There's a few good studies about it as well. I mean, there's a paper that came out recently that looked at this and suggested that the optimal home bias was 30 to 40%. Now, this is based on historical data, of course, and Canada's had a really good run compared to many, many countries, right? If you were in Italy holding 30 to 40%, home bias would have been pretty bad news. Yeah, or Japan, I don't think you'd done either. Yeah, totally. So there are there are countries where historically that that wouldn't have made a lot of sense. Canada's got a, you know, pretty stable economy in the grand scheme

of things. But there's some risk to having too much, there's risk to not having enough. And so I think a lot of it just comes down to you to uh to preference and and understanding those risks something like xeqt because it's one fund and i think it's got about 24 in canadian for me i think that's i think it's a reasonable decision to make right no that's fair and also the the angle i'm coming from too is i'll also presuppose that a lot of people's you know living currently is dependent on the Canadian economy maybe not fully right there's different levels so having such a large allocation to Canadian equities it just makes the person very dependent on the Canadian economy and hoping it performs well so that's kind of where I'm coming from for that and no that's it's a

good point right and especially if you work for a Canadian company in your day job, you have your human capital tied up in the Canadian economy and you have your financial capital tied up in the Canadian economy. And if you live here and you own your home, you have your shelter tied up in the Canadian economy. So I mean, absolutely, you want to diversify the level of Canadian home bias you have in the portfolio. Again, I think it's a preference. The studies show 30 to 40%. I think 5% is probably a little bit too low, even though to your point, it does more closely mirror the global cap weights of the Canadian economy. But if you got 10 to 20%, and all of this is just based on we don't know what the future's going to hold too, right? So there's no way to know in advance what the optimal amount is. We can only look at this by

looking backwards. No, exactly. And speaking of the Canadian market, we have a lot of dividend payers in Canada, as you definitely know. And I have nothing against dividend stocks. I do own some in my portfolio. But the plans I tend to approach these Canadian stocks that are dividend payers or just dividend payers in general is that, to me, I'm trying to achieve the best total returns, right? So if I can achieve that with these dividend stocks,

definitely, you know, I want to own some. But what I've seen is this kind of income focused, I would say, dividend, like, especially on Twitter, so dividend Twitter, where you see them just pose the income that they have. And I've checked multiple accounts. And I know you know some of the accounts I'm talking about. I've checked some videos on YouTube where literally they never talk about their returns. It's always about the monthly dividend payment for the month. And where I have an issue, and feel free to expand on that is it's just not being I don't know. I don't know if they're willfully being not transparent to people or it's just they believe so much in it. It's almost like cult like where, you know, that's what they think.

They like getting paid for their stocks and they don't really care about the total return. So what's I mean, do you have anything to add on that? What's your thoughts on this? I largely agree with you. And anybody who knows me or follows me that's listening to this will know about some of the sort of epic dividend battles I've gotten myself into on Twitter. And we usually, you know, end up fairly friendly with the dividend accounts at the end of the day. But, you know, I fully agree at the end of the day, total returns is what you eat, right? And there are a lot of accounts and a lot of proponents of dividends out there that I think don't really understand that. Part of it is because they see the dividend as infinitely sustainable and they separate mentally the capital from the income. And so they focus on the dividend income and they never want to spend their capital, so to speak. And I just think that's dangerous. Like dividends get cut all the time. And Walgreens

was a good example. Was it late last year? I think they'd been paying dividends for something like 47 years in a row and they cut the dividend in half or eliminated it. I don't quite remember, but the stock took an absolute hammering, right? And so there's no way to know which the dividend aristocrats or the dividend kings are going to be in the future. And so dividend growth is, I think there's risk to it that a lot of investors don't realize. To your point, I think it's easy to focus on the income. And psychologically, when the markets are down, if that keeps you in your seat and keeps you from making mistakes with the portfolio, I absolutely agree there can definitely be some behavioral benefits to it.

But at the end of the day, dividends aren't free money. A lot of people see them as an additional source of return. But you're just moving money from the business's balance sheet to your pocket, basically, right? And so the company must be less valuable after the dividends paid. And so to your point, the total returns are really, really all that matters. And a lot of new investors get caught up in this. And this is where I, I think, have a major concern with it is you have these accounts touting the power of dividends over time. And you get newer or novice investors focusing just on the yield and selecting only stocks that pay a dividend. And dividend stocks have done relatively well historically, like absolutely, they perform pretty well. But it's not because

they pay a dividend, it's because they're usually profitable companies bought at good prices, and they have conservative investment mandates at the company and they're run very well. So if you can create a portfolio with those characteristics, which are the characteristics that actually drive returns over the long run and kind of ignore dividends, I think you can build a better portfolio and you can still get that dividend income. Yeah. And I've noticed some of these accounts, they also, even some that have like, you know, 100,000 a year in dividend income, when you ask them to, you know, tell you about why they invested in that business, they usually have a really hard time, right? Even then, they tend to

focus on the dividend, whether it's like looking at the payout ratio compared to their earnings or free cash flow. Oftentimes, they don't even look at that, which to me should be one of the first steps if you want to see if there's actually some sustainability there to the dividend. But I've noticed they don't do the basic homework on the companies themselves. They just focus zoning on the dividend and nothing else matters. Yeah. And I mean, the irony in this is that I own more dividend stocks than all these guys because I own 12,000 stocks. I own all of them, right? And so I get into these fights with them and then I just pull that card. I own more dividend stocks than you do, right? So it's not about the dividends. I have no problem with dividends. I certainly want to keep the dividends that are paid to me. But I think, I mean, as an indexer, I'd argue

the type of work you're talking about to analyze a company isn't worth doing in the first place. I know you disagree with that. I'm sure a lot of your listeners do. But again, I'm an indexer, so I'm biased towards that strategy. But you're right. I think a lot of us, we see these businesses, especially Canadian dividend stocks, like the banks or the telcos and the utilities, they just feel invincible, right? We have this kind of oligopoly in some of these industries, I guess. And it just feels like the gut feeling is those companies are never going to go away. They're always going to be profitable. They're always going to do well. And that could be true, but buying good businesses at bad prices isn't a good investment.

And you can buy bad companies at great prices and it can be a great investment. So by just focusing on the wrong metrics, things like the dividend yield, you're not really putting together a very thoughtful portfolio, in my opinion. And if you can just keep your expected return the same by diversifying and owning other companies, like what you're doing is concentrating your risk. And you shouldn't really expect a higher return by concentrating your risk. You should expect a lot more volatility, but not necessarily a higher expected return over the long run. So I think people should just diversify and ignore the dividends. Like I have no idea what the yield is on my portfolio. Couldn't tell you. Yeah, me neither. I mean, and the problem too, especially a higher dividend yielder is especially those are looking to achieve like 5% dividend or

more. They tend to be very concentrated in certain industries, right? You said telecos, I guess industrials, maybe real estate. You also have utilities. They tend to be those that are most concentrated on. So I think it adds up some level of risk there. And the other issue I have, especially with the higher yielder or the ones that have been paying a dividend. So the dividend aristocrats or kings for 25 plus years is I always get the impression that hamstrings are the management team a little bit. When the, you know, sometimes the better decision would be to either stop growing the dividend or potentially cut it for the longer term for the business to be more successful longer term. But because they're so afraid to cut the dividend,

they actually don't do it, which will impact the future returns that you'll have with that company. Yeah, and I think 2008, like the great financial crisis, is a good example of that. The Canadian banks, as far as I remember, didn't cut or stop paying dividends. And in hindsight, that all worked out for them. But at the time, when we're at the hard right edge of one of the worst market meltdowns in history, and it's a credit crisis, and the banks are looking at their investors and going, we have to keep paying these dividends

because if we don't, the share price is going to tumble. So to your point, I think in that moment, paying those dividends may not have been a great idea. But the optics around cutting a dividend can be devastating to the company, right? So they continue to pay them. And then again, it all kind of worked out in the end. But you're right, it does. It does constrain them. And I know a lot of dividend investors see that as a good thing, right? Because it forces management

to be potentially more cognizant of what they're doing with their with their money, because they know they've got these dividend payments they have to make. And so they're maybe more conservative. But if you look at the literature on this, it's it's companies that have conservative investment. That's, that's the key factor that you want in a company. It's not that they pay the dividend. So if you have a good management team that doesn't pay a dividend, but manages their capital and their cash flow that way, that's really the factor that you want to expose yourself to, not necessarily just the dividend. Yeah, or they take on debt to keep the dividend, which has been known to happen.

There was an article a couple of weeks ago about private equity. And I know that's not the same necessarily as stocks in a lot of ways. But there, this headline, I think it was New York Times, or maybe Forbes was that private equity firms are taking on record debt in order to pay out dividends. So they're loading up these companies with debt in order to pay out dividends to satisfy investors. Is that a good business move? I don't know. It's good for the optics of it. But yeah, I'm not a big fan of private equity. I actually dug into that some few months ago, and I have some big issues with just the IR,

so the total rates of returns that they actually say, because these returns are, for the most part, estimated. They don't know for sure until they have an exit strategy, right? So they have these returns, and then they base their performance bonuses on that. And then investors, which are typically institutionals end up, you know, being stuck in the fund, because they're only able to withdraw 50% of the capital at the end of the life expectancy of the fund. Yeah. And the way that they draw capital to like the capital calls, if you put a million dollars with a private equity firm, but they only draw 300 of that, your capital is tied up there, because you have to be able to meet any capital calls that they make. But then they calculate the IRR often just on the 300 that they

drew, but you've sidelined a million dollars to make the investment. So your actual investment return that you've earned yourself is not actually equivalent to the IRR that the fund is posting. Michael James actually put out a very succinct and great piece on his blog about this a couple weeks ago that I read. He tweeted about it, but it's an interesting way to think about private equity and the fees are really, really high. Yeah. No, and that's what I found too. I think Warren Buffett a couple, maybe three, four years ago said the same thing. Essentially, you have that capital frozen and then they'll just start calculating the IRR on whatever they deployed, even though you're not getting much on your capital, maybe now a little more if you have it in US treasuries or short-term

T-bills. But yeah, it's a big problem. And I think it would be welcome, I think, in my opinion, for more oversight in those industries. But I feel like there's a lot of lobbying happening in the state to prevent that from happening. street, but I feel like there's a lot of lobbying happening in the state to prevent that from happening. 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, money sense. 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

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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. Now we Airbnb.ca forward slash host. Now we'll move on. So I'm sure you've been aware. I know you had a few tweets about Bitcoin. I was just kind of scrolling down your timeline on Twitter or sorry, X. And I was just interested in knowing about your perspective for the spot Bitcoin ETF that launched in the US,

knowing that obviously in Canada, it's been here for a couple of years now. So have you seen like greater interest from your clients since the launch? Have you had people just inquiring about it? Just because obviously I think Larry Fink has been cheerleading that amongst others. I'm just curious to see the impact in Canada

because I saw a Bitwise survey that even a couple of weeks before it was approved, that very, very few financial planners in the US were actually anticipating the spot Bitcoin to be approved this year and it happened 10 days in or 11 days in. Yeah, that's interesting. Yeah, Bitcoin's super fascinating. I've largely been critical of Bitcoin. What's funny, I started buying Bitcoin in 2016. And part of the reason I bought it is just because I was getting a lot of inquiries about it. And so I was like, okay, I got to figure out what this is, I got to learn to at least buy it. So I can explain to my clients,

how I did it and what the experience was. So I was buying a little bit of it in 2016. And then I largely stopped. And then the more I thought about it, the sillier I thought Bitcoin was. And so I get into these kind of discussions with people on Twitter about Bitcoin. And I realized quite recently that it's not fair for me to be critical of it if I haven't at least taken their viewpoint on it seriously. And so they've got a number of books that they always recommend that you read to understand Bitcoin more fully. So I went and I read those three highly recommended books this year. One's The Bitcoin Standard. The other one was Broken Money by Lynn Alden.

And the other one was Jeff Booth's Price of Tomorrow. So I read all three. And I thought they were great. They were great books. I mean, a lot of my questions or skepticism around Bitcoin was largely addressed in those books. And I was like, oh, okay. So now I'm starting to see why Bitcoin enthusiasts are so enthusiastic about it. And so I actually started buying a little bit of it again recently. I still think there's huge risks to it. You see a lot of people talking as if they know the future and Bitcoin is absolutely, there's no chance of failure. And I think that's a bit silly. I think you have to take a look at this from a risk management perspective and just

realize that lots of bad things can still happen to Bitcoin investors. Government intervention could ramp up, right? I'm not saying it will, but there's absolutely risks, right? Yeah. I think I'm less critical of it now. And I think I have a bit of a better viewpoint on it than I did before. My clients generally, like some do own it for sure. And some people will come to me and they already own some, but they want to diversify or whatever. And I don't tell people to sell or to buy more or anything like that. i think if you have an interest in it and you understand it and you're buying it for a good reason that you can elucidate to me without just speculating like i want to buy it because i think it's going to go up well that's very very speculative and that's fine if you want

to do that with a little bit of your money but i don't think people should make a core portfolio position built around a very volatile and speculative asset. But you want to go through a couple bucks and scratch the itch to manage a bit yourself. Like, absolutely. Interest hasn't really picked up since the spot ETFs in my experience, but that could just be a bad sample bias. Like a lot of my clients I've worked with for a long time, and they've been critical of it for a long time as well. So it was kind of like when the spot ETFs came out, i expected the price to do nothing and it largely did and then it's it's it's come back so i think a good chunk

of it was priced in but yeah if you want to own it i have no problem with it no and i think that's a good point like look i own it it's probably too big of a portion of my portfolio but i it's because i started buying essentially after the the crash in early 2018. And to add to what you were saying for risk, I actually initially bought Bitcoin in 2013, but the exchange that I bought it on essentially was, you know, they ran away with the money and was a bit of a scam. So I lost half a Bitcoin back then. So I was kind of snake bitten a little bit and then got back in later on.

But I think your tweet had some really good points and you had some people that were kind of going backitten a little bit and then got back in later on. But I think your tweet had some really good points and you had some people that were kind of going back and forth with you. But that's what I like. You always remain respectful, even if you disagree. And I try to do the same on Twitter. And one of the big, I think, issues with Bitcoin is for people who want to actually own the Bitcoin. It's not it's a learning curve. So especially if you want to do self-custody, whether it's cold storage, or if you want to do some kind of multi-signature service, like there's a couple of them out there. They don't come to mind right away, but I think Casa is one of them. That's a pretty big. I think it's scary for a lot of people,

right? It's just different versus just going into their broker, their online broker, and just, you know, buying an ETF. And then you click, it's done. You know, it's the same as buying an index fund. So have you seen that being a little bit of an issue with clients where they're just kind of struggling to get started and just that fear of messing it up, basically? Yeah. And it's a real fear.

Like, I have my Bitcoin in cold storage, like on a wallet. I don't own a lot, just to be clear. But yeah, I have it in cold storage. And I tried to sell it like a couple years ago. And I couldn't figure out how. Like, it'd been a couple years since I'd bought it and like had figured out the wallet. And I was like, I can't remember how to sell this. So I had to do a bunch of research. And I kind of just gave up. I was like, oh, whatever, I'll just leave it. Because it's hard to interact with unless you're kind of in that space all the time and really learning and thinking about it just gave up. I was like, oh, whatever, I'll just leave it because it's hard to interact with unless you're kind of in that space all the time and really learning and thinking about it. And I think about people like, you know, my mom or kind of older generations

who might not have the same technical capabilities as younger generations. And I think about her trying to interact with Bitcoin. And I'm like, she can barely, you know, we have to reset her password three times a week on her email, right? Like there's no way, there's no way she's getting into Bitcoin. And so I think the ETFs at least give people the opportunity to interact with the price of Bitcoin. And if that's why you're investing, then I think the ETF is a great way to do that. There was an article yesterday that I tweeted about a guy who lost $350 million worth of Bitcoin. Yeah, yeah. That's the replies I was looking at. Yeah, yeah. And I was like, how is this not a problem, right? And I was just posing that

question to people on Twitter, because maybe there's a great answer here that I just don't know about. And you mentioned multi signature wallets and Casa. I just learned about that yesterday from that Twitter thread. It was like, okay, so there are safer ways to interact with Bitcoin. But the risk of losing it all is is real. And so if you're trying to own it directly and self custody it, unless you're very, very careful and have some redundancies in place, the possibility of losing everything is real. And if you've got $100,000 in cash and physical bills, you're probably not going to lose it unless it's taken from you or robbed or something like that. But if your entire Bitcoin is written down on a piece of paper because it's just a seed phrase or something, you lose that paper or the

ink dries or you spill wine on it or whatever it is, you've got a real problem. So I think the ETF solved that problem. But I know a lot of the maximalists and enthusiasts, that's not why they necessarily own Bitcoin. Like they do believe the price is going to go up, of course, but they own it because it's a lot of them are, you know, very anti-government. And so the self-custody and the trustless aspect of it is actually a feature, not a bug. Yeah. Yeah. And I mean, that's the part why I own it, right? To me, I see that a little bit of like insurance against our financial system, just because they're, I'm sure you can agree, there's been a lot of weird stuff happening, especially since 2008, 2009, which is government intervention. So to me, that's the way I see it. And when people ask me, like, how much should I

own? I just say, look, you know, I can't really tell you how much you should own. I usually tell them to learn about it, learn how it works. And then, you know, usually I will tell them to be able to deal with the volatility. I'll say just on whatever percentage you're comfortable with going to zero. I'm not saying that it will, but at least like that, if you see a drawdown that's 50%, you're not going to panic. So that's usually the approach I take when people ask me what percentage of my portfolio and the upside, you know, technically could be so big that even just a 1%, you know, could be 10x. I don't know, right? But if it goes to zero, then you're just losing 1%. So that's the way I see it. Yeah, I think that's a totally reasonable way to look at it, right?

And for me, I own it because it's a hedge against me being wrong about it. And I don't know that Bitcoin's going to 10x, but there's this what-if aspect, right? Everybody says, yeah, get off zero, have fun staying poor, you're not going to make it. And I make fun of those people. And then I'm like, what if they're right? And there's no way to know. So a small allocation just gets me owning it. And if I'm wrong about my previous thoughts on Bitcoin, then I'm kind of hedged against my own my own mistake. about owning gold, especially in the last three, four years? Just kind of curious with,

obviously, the lack of better words, the money printing that's been going on with all the governments. Do you see a higher interest in gold? From some of the more conservative investors, I think with gold, it really depends on your worldview in a lot of ways. To your point, with money printing and government intervention in the markets, you get a lot of people who are very concerned about that. And gold is a way to kind of have some sort of physical assets, right? That in theory is a little bit more inflation resistant. And so for certain types of people, they're very big on gold. For others, they have no use for gold. They don't understand why you would own gold. And if the market's going to return some kind of equity risk premium in the future where I can get a reasonable return net

of inflation over a long period of time, then they don't see the utility of gold. So I think whether someone wants to own gold or owns gold is more a reflection of that person's view on things like government and the state of the world and that type of thing. We talk about it from time to time with clients. As index investors, we own all the gold miners anyway. And I know that's not obviously quite the same as owning gold because there's a ton of management risk and stuff there. But you do have exposure to commodities, especially if you have some home bias in your portfolio because the Canadian market is a little bit more biased towards the resource sector. But yeah, it really just depends on the

person. I don't recommend an allocation specifically to gold for clients. But if they're really adamant that they want, they want something like, sure, we can do that. Okay. No, I was just interesting. Just the kind of discussion that people will, or the question, are there any other questions that sometimes you get are pretty frequent from clients, just like they'll want through your perspective on a certain type of asset that I didn't talk about, didn't mention? It's usually just stocks that have done well recently, like Nvidia is popular these days, right? Or Tesla when Tesla was on that crazy run,

like should I own Tesla? And this is just the classic investor mistake that we're all biased to is look at the returns. Imagine that I bought that a year ago, how much money I would have made is now the time to buy it. Is it going to keep going up? And a lot of this is just recency bias and hindsight bias and these sort of standard human errors that we make. But inevitably, whatever the shiny object of the week or the month is, we're going to get questions about it. And that's a big reason why people hire folks like us is to keep them in their seat and keep them from making mistakes. And that's not me making a prediction on where those assets are going to go in the future. But it's to keep them making rational decisions as frequently as possible about their portfolio and not getting

sucked into these headlines and news events and that type of thing. Yeah, that's funny you mentioned that because I was listening to, are you familiar with MacroAlf on Twitter? Yes, actually. Yeah. Yeah, exactly. He's Italian and I was listening to an interview of him and he was talking about NVIDIA and saying similar things to you is like, it's the neighbor test, right? Because even if you have a good portfolio is performed pretty well, if your neighbors owns NVIDIA, and he's tripled his money in the matter of a year, then you're gonna hear that and say, why am I not invested in NVIDIA? So that's, it's just bad benchmarking, right? And so we used to have clients that do this all the time. The S&P is up 12%. Why isn't my portfolio 100% S&P 500? Well, I mean, other markets do better over different timeframes. And if you're diversified,

you're always going to be upset about some part of your portfolio. That's entirely the point. That's the risk you are trying to systematically diversify away, right? But I mean, remember, the people who have conviction in companies like NVIDIA, many of them have the same conviction going into stocks like Peloton and Zoom and the darlings of COVID and you get wiped out, right? So like nobody buys a stock they think is going to go down. They buy a stock because they have the conviction that it's going to go up. But markets can be very punitive and you're not generally rewarded for taking these big risks on individual companies. And you only hear about the winners, right? Yeah. And I've been listening to an

audio book recently and I'm not finished quite yet, but one of the big things he mentioned is that since especially the last 20 years or so, the stock markets have been really focused on price appreciation and less so on the actual businesses. And he goes and makes a case for dividends because having a dividend and he's talking about obviously sustainable dividends and businesses that are growing, not necessarily the 7%, 8%, 10% yielders. But he said by doing this, you actually make sure that you're investing in businesses if they have a sustainable dividend and you're less focused on the price appreciation. And you mentioned that that is actually a potential big problem brewing because we're so focused on just the price appreciation.

Do you have any take on that? I know it's a bit of a curveball here, but I'm just curious to hear what you think. Yeah, it's interesting. I think, I don't know. I think, I mean, we've talked about dividend investing and how focused dividend investors get on the dividend to their own detriment sometimes because they're not looking at the price appreciation or depreciation, or they're not looking at the total return. And you probably, to your point, have people on the other side of that really that are just buying in order to try to realize some sort of price appreciation and don't care about the business, the profitability of the business. Like, if you think about all the companies out there, somebody owns all the stocks, right? Like every every stock. So I often get into these kind of discussions where it's like,

oh, well, I would have never, you know, nobody's buying that stock. Well, somebody owns all the shares, right? Like not one person, but all those shares are owned by people. So investors do own all of the shares. And I'm sure nobody is investing in companies they think are terrible and are going to go down in value, right? But there's gonna be a lot of good companies, there's gonna be a lot of bad companies, and people get fixated on recent price appreciation, maybe to their own detriment, and they pile in at the top. And you look at things like ARK, for example, the ETF. And it was in my, and this is probably my own hindsight bias, but it was so obvious to me that this thing had to come back down to earth.

And when things like that happen, most people lose money because money piles in at the top. The only reason they're buying is because they see it going up. And so more money piles in and it becomes this exponential problem where eventually things kind of dry up and it's like musical chairs, right? The party stops and there's just no chairs for anybody. So I think an unhealthy focus on only price appreciation is probably equal or equally bad to an unhealthy focus on only the dividends, right? It's the total returns that matter. You want to earn or own good businesses over long periods of time. And if you just earn reasonable returns over very long periods of time,

you will build wealth. But people want to get rich today, right? Yeah. Yeah. I mean, FOMO is a powerful drug. Yeah. As an advisor, I experience my own FOMO when I see these things. I tweeted yesterday, I was like, oh, the best thing about being an index investor is that I don't care about NVIDIA's earnings call. And then I see it spike after hours. I'm like, oh man, the FOMO is kicking in. I do own it. It's a big position for me as well because I own the index. But you see everybody high-fiving and celebrating because they were predicting this and had big positions in it. And the FOMO kicks in for real. Yeah. Imagine being a high dividend

yield investor only and not having any stake in NVIDIA through index funds. So that would not be the best feeling. And the returns of the market are largely driven by a small subset of stocks over time, right? And so that's the idea behind indexing is you don't know where the next Microsoft Apple or NVIDIA is out there, but they do exist. And you want to own them before they become the next Microsoft, Apple or Nvidia. You don't want to own them once they're already the biggest, most expensive companies in the world, because typically your future returns are lowered when you buy these big expensive stocks. So indexing gives you that ability to at least own the next market is buying the haystack instead of the needle, as I think, as I think Pogel said. No, definitely. And now the last question I wanted to talk to you about.

So like I talked to you before, we started recording and people know I work in pension and retirement. So I don't like to talk about my employer because I like to keep things separate, although they're well aware I have a podcast. But essentially we have two plans. So we have a defined benefit plan, legacy plan, and then for new employees or employees roughly in the past 10 years of defined contribution plan.

Both are very generous. One thing that I've seen on both ends, whether it's the DB or the DC plan, is people don't have a very good understanding. I've also noticed that people tend to equal any pension plan to a DB plan. That's something I've seen quite a bit. And people tend to also think that all DB plans are equal. Are you seeing the same thing? Because obviously, I mean, I could go on and on about all the differences, all the, you know, the funding ratios and so on. But is that what you're seeing as well from clients? Traditionally, I'd say, yeah, like you mentioned earlier, I work with a lot of physicians and physicians generally don't have a pension plan.

So it's not something that I've had to spend a ton of time with. But I do have a lot of clients that have pensions. I think you're right. A lot of people when I ask them like new clients or whatever, do you have a workplace plan of some kind? And their answer is usually, yeah, I've got something. But they don't often know much more than that, right? So I ask, is it like one of those things where when you retire, you're going to get an income for life? Or do you actually see your investments and get to choose them? And they go, oh, no, it's that I get to choose my investments.

So you're right. They do conflate the idea of a pension as being one or the other without really knowing the differences. Pensions are great. I love them. I think you have probably a more interesting or even better perspective than I do on things like funding ratios and the sustainability of these pension plans. But you bring up a good point. I mean, you look at companies like Ford, I think,

in the US and Sears, Nortel, these pensioners and these private pensions, they got largely wiped out. And so some of these are not as gold plated as maybe we think they are. But there are, I think there's a couple things, especially in Canada, or at least in BC, like the municipal pension plans, they're pre-funded, they're pretty well funded. They're like multi-employer pensions, I think. Yeah, like OMERS in Ontario. Yeah, yeah. So they're, I think, relatively robust compared to something like Nortel, where it's like

a private plan or something. And the other thing people can do, and maybe a lot of people don't know this, but you can do something called a copycat annuity. Is that something that you're familiar with? No, I have an idea of what it is just based on the name. Just based on the name. Yeah. Yeah. So if you're worried about the health of the pension or the sustainability of the pension, you can buy an annuity with your pension assets at retirement. And it has to look basically identical as to what you would have got if you took the pension. But you can basically transfer the risk of your pension

from the pension company and the pension managers to an insurance company in exchange for buying an annuity. So that can also be an option for those who are worried about the health of their pension plan. Okay. No, I wasn't aware of that. I guess it must vary from pension to pension. I'm assuming they would take the commuted value and then bring it to the insurer yeah and you have to this isn't something i have a lot of experience with as i mentioned because i don't deal with a lot of pensions but the annuity that you buy the copycat annuity has to basically be identical to what you would have got in the pension so you have to work with somebody who's done these before you have to work with the insurance company work with your pension company work with an advisor or an accountant or a tax lawyer, somebody who knows these things very,

very well. So it's not something you just want to try and set up yourself, but there is a way to kind of transfer the risk from the pension to an insurance company. Yeah. And I was talking with a colleague of mine too, and a lot of people seem to think that a DB pension is guaranteed. And I always like to remind people that it is a promise and promises can be broken. I don't want to make people panic, obviously, but it is a promise and it's not a guarantee. And recently we saw with the autoworkers negotiation, I think in Canada, part of the, one of the things that they gained, and I will say gained in air quotes, cause I don't think it's necessarily a gain is they had a defined contribution plan. Then they went to DB going forward. And my question was that, okay, like,

I don't know how the auto industry will look in 15, 20 years from now. And if I were them, I'd rather have a good DC plan where I can actually know that the money is set aside and I control the investments versus a promise from a company that there could be a lot of disruption in the next 15, 20 years, especially if you're not in. Why? Even if you're retiring in a few years, obviously, you're going to be receiving income from that. Well, that's why a lot of companies have gone from defined benefits to defined contribution plans, right? Just take the risk off of the employer or the pension company and put that risk into the hands of the actual employee. And the employer can kind of just wipe their hands of it and say, hey, we gave you the money, we contributed, what you do with it is

your problem, right? So I can see why companies move primarily towards defined contribution plans. It's pretty rare for companies to go the other way, I find, from a DC plan to a DB plan. So that's interesting that they did that. Yeah, I think it's just the current state, right, where you had workers that had a lot of bargaining power with these automakers. I think they use that to their advantage. But again, I feel like the leadership of those unions probably don't have a deep understanding of how pension plan works. And I think it was maybe misguided a little bit. I mean, maybe it ends up working out well for them. But I think there is definitely some risk for the plan members there. And one of the things I always mention about defined benefit plans is they're as strong as obviously the funding, but also the formula,

because a lot of people think it's indexed, it could be conditionally indexed, it could also have no indexation at all where you're losing purchasing power. So that's why I'm always when I hear people that don't know a lot about pension plans and they think that DB plans are all great, you know, I'm always, I always have a really hard time because I know there's so many differences. For sure. And I think having some kind of, you're right, like the risks aside, right? Like your pension may not be there. I think there's a pretty good probability, at least for the public pensions here, that that's not going to be an issue, hopefully. I will say that many people who otherwise wouldn't be prepared for retirement and maybe aren't that financially literate or aren't saving enough or wouldn't save enough on their

own, that pension really does backstop them. And this is why I love CPP. People, you know, chirp me on Twitter all the time because I do love CPP because I've seen it. I've seen retirees who are basically saved by CPP who wouldn't have contributed enough for their own retirement. Otherwise, I think for many pensioners, that's likely the same. So the pension puts them in a far better spot. The other thing is it's a lifetime pension, right? So it's a longevity hedge. If you live to be 110, great, you've got income coming in. Yes, inflation can be in risk. Yes, inflation is capped on some of these plans as well. So it might not actually match the CPI increases over time, but you do often get some inflation protection.

But the big thing is that you don't have to worry about what's going on in your portfolio as much. In your portfolio, a volatile portfolio of risky assets doesn't have to do as much of the heavy lifting. I told this story to somebody recently, but my happiest client ever was this retired doctor. And he was in his, I think, late 80s, maybe when I took him on. But he had taken basically every penny and bought an annuity back in like the 90s when interest rates were pretty high. And he had something like $8,000 a month of income coming in in his 80s. And the only other asset he

owned was his townhouse. And he was the happiest client I ever had. We never talked with the markets. He didn't care. He didn't really need my help in a lot of ways. He just wanted to come and get a small portfolio. But 99.9% of his income came from this annuity. And there's actually good research, I believe, that shows that people with annuitized retirement income actually live longer. And that's probably just a function of the reduction in stress. So I think if you can get some kind of fixed income that's guaranteed in retirement, you're going to likely have a better outcome in many cases. But to your point, it's a promise and not a guarantee. Yeah. And maybe last question on this. What do you think about viewing CPP as like fixed income in your portfolio when you retire? That's kind of what I like to view it at.

I think it's a good way to look at it. It is a fixed income. It is an inflation adjusted fixed income, which is very difficult to buy because even annuities in Canada, you can't really buy, as far as I know, annuities that are actually indexed to CPI, like to inflation. You can buy annuities that have fixed indexing, like it'll go up by 2% per year, but you can't actually have an annuity that's tied to whatever CPI is, right? So CPP is actually pretty much the only way to guarantee yourself a real inflation hedged pension for life. So it is the definition of fixed income. And it's probably one of the safest incomes that you can go out and buy, because it's a it's a government plan. So I think that's a good way to look at it.

Yeah. And even if you could get it fully indexed, I mean, obviously the cost would be pretty ridiculous. Like insurance companies are not stupid, right? They'll hedge accordingly. Oh, of course. Yeah. You're going to pay for it through the nose, but the peace of mind that that gives you and just knowing that your consumption is kind of locked in, at least for part of your income and knowing you don't have to worry about that, I think can be pretty powerful. Like when we run retirement plans, we do, it's called the Monte Carlo analysis. So you run basically a thousand simulations, for example, that says, hey, when we're projecting returns, they're not going to be linear. Like even if you get 5% on your portfolio, you're not going to get 5% every year.

And the order of returns that you earn is going to be really important to your outcome. So we run a thousand simulations. But those that have pensions or fixed income, obviously those simulations simulations look a lot better most of the time, because there's no variability on the returns of that. And they just get that fixed income over time. And to your point, it can allow them to take more equity risk with their portfolio, because they have the source of fixed income. And that can actually provide a much better outcome because they have a higher expected return on the portfolio over the long run. expected return on the portfolio over the long run. Yeah. And a great book for people who want to learn more about that kind of stuff is Retirement Income for Life by Frederic Vitesi. Yeah, you know the book. So he was a former, I think, head actuary of Morneau-Chapelle or Lifeworks or whatever they've changed their name into. Yeah. Yeah. There's another really good book. That is a great book. Vitesi's books are awesome. Alexander McQueen and Mosh Malevsky, both Canadians, and they've written a book called Pensionize Your Nest Egg, I want to say. And it's about this concept that we're

talking about, about taking at least a portion of your retirement and creating some kind of guaranteed income stream out of it, at least to hedge your fixed expenses in retirement. It's a great book. No, I think that's it pensionize your nest egg by millevsky and mcqueen yeah that's it yeah yeah so for people interesting but uh no i think there's been a great conversation before i let you go mark uh do you want to just let us know where people can find you and get in touch with you if they're interested sure yeah twitter or x i'm still i'm still not used to calling it x i still still call it Twitter. I still call it tweets. That's kind of where I hang out most of the time.

My handle there is at MarkMcGrathCFP. People can email me. They can look me up on the PWL Capital website as well. My email is mmcgrath at pwlcapital.com. And I'm always happy to chat with people. And thanks, it was great to be here. And thanks for the conversation. Yeah, thanks for coming on, Mark.