The Wealthy Barber Podcast - #65 — Michael J. Wiener: Answers to the Money Questions That Matter

Episode Date: July 21, 2026

Our guest this episode is Michael J. Wiener — retired cryptologist and the writer behind the long-running Canadian personal finance blog "Michael James on Money." After a high-tech career in cryptography that produced roughly 20 patents, Michael has spent nearly two decades applying an engineer's rigour to investing and retirement math, helping everyday Canadians make clearer, lower-fee, evidence-based decisions with their money. In this episode, Dave and Michael dive into the real cost of investment fees, from high-fee group RRSPs to how seemingly small percentages quietly erode a portfolio over decades. They cover the evidence for passive investing over active management, how to optimize RESP contributions, strategies for smoothing taxes on retirement income and whether it makes sense to delay taking CPP and OAS. The conversation also explores how Michael uses the CAPE ratio to adjust his asset allocation, planning ahead for cognitive decline, the debt paydown vs. investing question and why he's skeptical of Dalbar's famous mutual fund underperformance data. Along the way, Michael shares his takes on real estate investing, reverse mortgages, budgeting for healthcare and long-term care costs, and estate planning essentials. If you want clear, math-driven thinking on investing and retirement from someone with no product to sell, this episode is packed with insights you won't want to miss.   Show Notes (00:00) Intro & Disclaimer (00:57) Intro to Michael J. Wiener (03:09) The Impact of High Fees in Group RRSPs (05:23) The Big Impact of Seemingly Small Investment Fees (07:09) Active Management vs. Passive Investing (08:46) Optimizing RESP Contributions: Lump Sum vs. Ongoing (12:02) Smooth Taxation Strategies for Retirement Income Planning (14:49) Should You Delay Taking OAS and CPP? (17:02) How Michael Uses the CAPE Ratio to Adjust His Asset Allocation (20:40) Addressing Cognitive Decline and Managing Your Investments (22:25) Balancing Debt Paydown vs. Investing (24:21) RRSP vs. TFSA Debate (25:55) Is a 100% Equity Portfolio Right for Young Investors? (27:19) Evaluating Dalbar's Mutual Fund Underperformance Data (30:34) The Realities and Hassles of Real Estate Investing (33:28) The Hidden Risks and Rules of Reverse Mortgages (35:01) Common Financial Mistakes Savers Make in Retirement (36:38) Budgeting for Healthcare and Long-Term Care Costs (39:47) Cash Value Insurance vs. Term Insurance for Canadians (41:24) Essential Estate Planning and Power of Attorney Tips (42:15) The Importance of Decluttering for the Next Generation (44:07) Engineering, Cryptography, and Quantum Computing Threats (45:01) The Story Behind Michael's Pseudonym (45:49) Finding an Initial Audience and Blogging Success (46:34) Conclusion

Hey, it's Dave Chilton, the wealthy barber and former Dragon on Dragon's Dent. Welcome to the Wealthy Barber podcast. Well, we'll be hosting some of the top minds in the world of personal finance. Yes, that's to balance me out. The podcast is about making this subject not just easy to understand, but dare I say, even fun, honest. Whether you're trying to fund your retirement, figure out how to build a down payment, save for your kids' education, manage debts, whatever, will be here to help you.

you do it. Before we jump in, a quick but important note, nothing we discuss here should be taken as investment advice. We don't know you and your personal financial situation, so we're not here to tell you we're specifically to put your investment dollars. We're here to educate, get you thinking, and we hope entertain. But please do your own research and or consult with your financial advisor before taking any action. Hey, it's Dave Chiltern, the Wealthy Barber with the Wealthy Barber podcast. I say this every week, but thank you so much for tuning in. We continue to build momentum, really enjoying the feedback that we've been receiving over the last weeks. It's interesting. Since I announced I was retiring, people seem very excited. Ever since I said

I was leaving, people are pumped up. They're getting in touch with this more than ever. So I don't know that's a good sign or not, but thrilled to be here today. Michael James is on legend in our industry. There's nobody at the high end of the Canadian financial advice industry who hasn't read several of Michael's columns over the years. Nobody. He writes, Michael James, on money, pretty low-key guy. Doesn't do a ton on social media. Comes from a math background, cryptography, very sharp,

DIY investor, and as written from a math perspective on a lot of a subject matter, I love his stuff. I'm a fan, no question about it. He and I've had a chance to speak on the phone a few times. In fact, when I was working on a math challenge myself a couple years ago

when we were putting out the videos, literally the first guy I called to run my thinking by was Michael. So it's It's a real thrill to have you on the podcast. Thank you so much for coming. Thrilled to be here. Thanks for the kind introduction. Well, your blog has added a lot of value over the years.

And a little bit like Ben Felix, I think that your impact has been huge indirectly. So the people who've read you, the average Canadian out there, they've done very well by listening to you and learning from you. But I think your bigger impact has come from industry participants reading your material and thinking, you know what? I think he's right about that. or, oh, wow, that's a different way to look at that, or I haven't heard of that before and then sharing it with their clients. So you must be quite proud of the blog's impact over the last 19 years. I agree that my impact has been indirect and I'm pretty happy to see when some of my ideas get adopted. Some pretty smart thinkers out there, if they get things right

99% of the time, when I think they might have something not quite right, that's whom I like to write about. No, and you're very outspoken, but in a good way. You're not outspoken in a mean-spirited way at all, you're outspoken because you're advocating for the proper paths and to make sure people are understanding this fully. And I want to start with a great example of that. I think you and I, literally, you may correct me here, are the only two people who've drawn attention to our first subject matter aggressively over the years. You've spoken about how the high fees embedded in a lot of the group RRSPs can over time offset some of the matching. And so let's say there's a 50 cent match instead of a dollar match and you're paying for fees that are mutual funds that have 2.29 MERs.

I'm making all this up. But it can be 17, 18 years until that 50 cents is taken away through the excess fees over a conventional ETF. I have said the same thing forever. In the United States, this actually gets a lot of attention. There are a number of people who've talked about it in the 401k arena and their fees have come way down. they have a much more aggressive use of index funds within the 401k structure. People still aren't talking about this in Canada. I wish more people were.

I think the ultimate goal would be to have the fees come down so people can do the simple thing and go for the big match and have it work out well for them. But until then, you still go for the big match and then you look for a way to get the money out after a few years. I think it is the usual answer, try to get it out when you don't face any kind of penalty. Yeah, I think for most of the way. those companies, that's not that long a period of time. And then I think the second thing that consumers have to remember, our listeners have to remember, is you can set up a separate RSP, of course,

and only allocate to the group RSP what does receive the match. And with the remaining amount of money you can contribute, go with your low cost option, your index fund, if you're using one of the platforms, et cetera. A lot of people don't go that route. They just put in whatever they can into the group RSP. Right. And part of this, too, is that when you have a lot of the, you have a lot of have a high, really good DIY investor who knows how to get the low fees. Those are the people who can benefit the most from solving this problem. If your secondary RRSP is at a big bank and you're just paying big fees there too, and it doesn't make a ton of difference. But as people learn more and they make the good choices outside their group RRSP, that's where you get the big benefit.

Now, you must be proud that in the last five, maybe seven years, all of a sudden people are paying a lot more of attention to fees. We have a lot of charts being put out about what the extra 2% a year can do to your returns because you've been talking about it forever and highlighting the fact that it's truly a huge deal. And, you know, if your dollar cost averaging in over, let's say, a 30 to 40 year period, it can make the difference of 30, 40, 50% of how much capital you end up with down the road.

It's absolutely enormous. Yes. And the focus on just talking about one year's fees really is tough for a lot of people. So I'm proud of the fact that a lot of people seem to be learning this lesson, but there are a ton of people out there who aren't. They just hear 1, 2%, it sounds like nothing to them. They tip more than that. So they pay the real estate agent more than that. But this compounds year after year, so I let to focus on 25 years. I agree. So I call my MERQ instead of just the MER. And so 2% sounds more like 39 and 40%. And that, when you tell people 40% of your money is gone after 25 years, years, well, to begin with, they don't believe it. But if you can get them to believe it, it sounds impressive and bad. And the funny thing is, I think over 25, 35, 40 year periods, it could even be worse over the next extended stretch because we've had very high market returns. But if you have lesser market returns, then that fee is eating a higher percentage of those

returns. And so that problem could be exasperated. Yeah, it could certainly get a lot worse. I mean, if you can, if you're making tons in the market like we have, well, the last 10, 15 years, it's not as painful to say, well, I could have had a lot more. But when you're not making much and you're starting to struggle a little bit, having money taken away is a big problem. Now, the pushback you always get, all of us always get is, yeah, yeah, but the bottom line is that what really matters is my net return. I believe my net return, even with the high associated fee is going to be good because my active money managers are extremely sharp. I've researched the field, my advisor's throwing himself or herself into it. We've chosen the ones that have outperformed

over the last five years. Why is that flawed thinking? I don't know how to pick somebody who's going to outperform like that. Only a small fraction of them do. I don't know how to do it. I don't know how to identify another investor who was able to do it. I don't know how to identify an advisor who can do it. I prefer to think that I'm just going to pick something very average. And average means take the market return minus whatever you pay and fees. So produce what I pay and fees, things work out better. I agree. And I mean, the bottom line is 90%, more than 90% of active money managers have trouble keeping up to the broad-based averages to their benchmarks. And again, forecasting who that person, who that group of people are going to be ahead of time

has proven to be impossible for anybody. And look at all the people in the industry trying. Not just the people selling, but there's independent journals. There's all kinds of people who've given a shot at this and none of us can figure out how to do it. And I'm not being critical. I used to try to do it, I can't do it either. I used to try to pick my own stocks and then I tried to pick my own mutual funds and I figured out after a while. I just don't have any skill in these regards compared to the brilliant people who used to work on string theory and physics and now they work on the markets instead. I can't compete with those guys. No, that's very, very true. Okay, second subject as we move through these quickly, I called you, you may remember about a year and a half ago about

RESPs. And I was getting a lot of questions from people saying, hey, the grandparents and our family happened to be quite well off. And they're looking to support our kids' effort to build up an education fund. But instead of giving us a relatively small amount each year and taking advantage of the grant, they're thinking, would we ever overfund this for lack of a better expression and put in all of the money right away, the whole 50 grand? What are your thoughts on that and how does the math look? The math says to do a compromise between the two extremes. Instead of putting it all in right now and not getting so much matching, put in some now and then hold back some and get matching over the years. Now, it doesn't mean to hold back all of it, but the math says to hold back song.

Bro, you know, if you want, if you're, if grandma wants to give the money right now, though, I mean, you can take the money. You just don't have to put it all the RSP or the RESP right away. Always take the money. Always take them. No, but honestly, we're not kidding. You and I were laughing at that on the phone. But if grandma says, I'm going to give you 50 grand, don't say, no, let's space it out. Take the 50 grand and then allocate it to the RESP as you go.

But I mean, if you're going to invest it, let's say for growth, the child's a newborn, you have 16, 17, 18 years, you've decided you're going to embrace equities, tends to be one of the better performing asset classes. You want to get that money in there relatively quickly. What is that balance point? Do you take enough to get a lot in there early, let's say 30, odd thousand and then spread out the rest of the money enough to take full advantage of the grants over the next X number of years? I found that it made sense to put in a fair bit at the

beginning, but to leave most of the grants available. But it really depends on your assumptions, but that's the way the math worked out. But the difference between a couple of years one way and a couple of years and the other is pretty small compared to just getting the money in there. Yeah, I agree with all of that. And you're right about the assumptions. I mean, if you're forecasting outstanding market returns right out of the gate, then obviously you're going to want to get a lot of it in there relatively quickly. And you're right, in the big picture of life, it's you're off by a year or two, which inevitably it will be. We won't have perfect assumptions. That's fine. But the idea of getting more in there early makes a lot of sense for people who are lucky enough

to have that opportunity. Absolutely. Now, I mean, what changes the equation too is if the money you haven't put in is still there and available and you've invested it outside, but say it's taxable or something. So it's not as, it's not. It's not. ideal, but it changes the equation a little bit. But again, for the vast majority of people, getting too excited about fully completely optimizing is just, I mean, it can be, if you find it fun, great. But if not, just do something, gets to get the money in there. I think you and I are the only two people who find that kind of thing fun. It's amazing. We found each other. We found each other. It's a very romantic moment. Yeah. Maybe Aaron Hector, too.

Yeah, he's worse than we are. Yeah. I think, yeah, he's gone to a whole new level. I mean, He's crazy. What a great guy, though. He is. And, you know, I think some of his quirky stuff, interestingly, shines the light on things from a different angle and you learn something you can apply elsewhere. And he loves this stuff. And there's a lot of people like that.

We'll talk more later about some of the trends in the financial industry. You know, when you see Adam Bourne and a lot of the people online now, YouTube in particular, have done a very good job of shining a spotlight on retirement income planning and some of the basic thinking behind that and meltdowns and delaying your OAS, CPP. But again, I'm giving you a lot of credit today. I'm not trying to build you up too much. I want our audience to know you and I are not friends. We don't hang around.

So all of this is sincere. This is the first time we've ever seen each other face to face. But you really talked about that earlier than almost anybody. And we're talking about the tax optimization approach to making sure you manage your retirement income well. I mean, let's be honest until a few years ago, that was being done horribly by the vast majority of Canadians and advisors. And so you shone a light on it. Give us some of your basic and then I'll get into some specifics in a moment. I started solving the problem for myself first.

I wrote my old software to try to model it all out and it was a really difficult optimization problem. But what turned out to be right for me was to start pulling from my RSP up to bring my income up to a particular tax bracket starting right for when I first retire, which for me now. was nine years ago. And so that was pretty early to be pulling from the RSP, but that's what made sense. And to keep my income up to, so I'd look at whatever other sources of income I had sit in November sometime, and then I would pull from the RSP enough to get up to a particular tax bracket, just to make sure I wasn't wasting those low tax brackets. Yeah, I mean, the least efficient way to do it, I'm oversimplifying here, but is to have your tax rate jumping around dramatically

year over year over year. In general, smoothing it out tends to be the optimal situation. Are you married and do you have to factor your spouse's situation in as well? Yes, we are married and we spend a lot of years spending all of my income and knock hers. So we have matching net worths by this point. And we did pretty well. We're pretty close to matching. And so we're basically both doing the same thing, pulling money out of our RSP's in a case of

our spouse of RSP to keep our incomes both out of particular tax. tax bracket. So in essence, you were doing an RRSP meltdown. Absolutely. Yeah, taking it out earlier. And were you running it through the RIF in some instances people take it directly out? So I was taking it directly out. As it happens, my discount broker wasn't charging me any fees to do that. Right. It's a benefit of some of them will do that if you're aging, have enough money with them, that sort of thing. Soon though, you will be doing it through the RIF to get the $2,000 pension credit. Yeah, that's important.

A lot of Canadians forget that you can do that. Right. That you qualify for that at a certain age, et cetera. Okay, now, that leads me to, what is your thinking on OAS and CPP? I don't know if you've been listening to the podcast. We've had a lot of experts on. And for the most part, everybody's been in agreement that for most people, not all, you're better to delay taking it.

Do you concur? With two caveats. One is that your health is at least reasonable. And the other is that you have. something to live on. Yeah, that's the key one. I don't think that one gets mentioned enough. Right. Right. You know, I mean, Ben Felix does a good job of always reminding people. That's a key part of this analysis. But sometimes that gets forgotten. That's absolutely crucial. But for those lucky enough to be able to draw down monies from other accounts, for example, your RSP slash RIF,

it makes sense just because the math is so compelling. It's pretty clear to me that if you have enough money to live on, even if you're draining your RISPs down to a fairly low level, it makes sense to delay CPP as long as you can. In my cases, and my wife would be 70 for sure. OAS is a little less clear because there's all kinds of extra considerations. Are you going to have a clawback for wealthier people and that sort of thing? So there can be some complexities there. I want to expand on that point a little bit because a lot of people have done the analysis on the OAS and more or less come to the same conclusion, but I'm with you. There are some other complicit. complexities there they have to think through. Those rules about the clawback and the levels

that they kick in at can be changed. And there's a fair amount of pressure on the government to bring the threshold down on the OAS, which could throw your math off. So if somebody said to me, I'm going to delay my CPP, I bought into the arguments, I'm lucky enough to have good health, I'm lucky off to have to have monies elsewhere. But on the OAS, I'm tempted to take it when I can. I wouldn't push back on that too hard. I wouldn't either. It's only five more years. And it doesn't go up by as much. It's not as big a deal. And if it gives some comfort, particularly people, you get people who just have a hard time spending, right? They've saved their whole lives. They got beaten up when they were 25 because they did something foolish. And they developed some habits

and those habits have worked to save money and you have to give them something. And at some point, your whole message is going to get rejected if you don't have to take anything at 65. No, absolutely agree with that. Okay, you have written in the past about, how you figure out your portfolio balance, your pro-equities, but you use a different mix depending on what the CAPE is. Walk us through our audience, what CAPE stands for, why you're doing, what you're doing, and have you ever analyzed in depth, has it worked for you? Have you ended up gaining from going that route or should you, have you stayed heavier

in equities and not paid attention to the cyclically adjusted price earnings? So, yes, as you said, cyclically adjusted price earnings ratio, just a measure of how, you know, under overpriced the whole stock market is. And the way I thought about it was, I said, well, what's we considered a normal level historically is 20-ish or something. And if I said to myself, well, if it went up to 40, would I still want to have as much in stocks? Right. And I had a feeling about, well, I want to have a little less. Well, what about 50? What about 100? Well, At about a one, I think it looked to 100, I probably want almost nothing in stocks. Right.

So then, you know, I plotted some points on a piece of paper and drew a line through it and came up with a simple rule. So I have an age-based formula that tells me you should have a certain amount in bonds. And I just add the excess kate over, I believe it was either 25 or 30. I have it all baked into a spreadsheet. But whatever the excess cape is, if it's 10 over my threshold, I had to. 10% more to bonds. So it's really that simple. Yeah, pretty simple stuff. So let's say at your age and you're in the early 60s, you've decided that you should be 70, 30, stock 70, 20, bonds 30. But the cyclical adjusted price earnings ratio is quite high. You may end up going 6436 type thing.

Absolutely. So right now I think my age-based formula comes out to something like 70, 22. But my actual portfolio is about 70-30. Yeah, because we're at a high value. level for sure. Has this worked? Have you had to back tested and looked at your data and thought, should I have done this or is this a form of market timing and like most market timing efforts, it hasn't added a lot of value? Well, I mean, I've lost money, absolutely, because stocks have gone crazy. So strong, yeah. Right. But I try to think about all the worlds that didn't happen. So if you have to, you're right. So if the stock market, we could get a big crash in any time. and I don't fear it, but I expect it.

So right now today, I would say it's cost me money. If a month from now, the stock market would have dropped 40%, and you ask me that today, I'd say, oh, it's made me a ton of money. So that's where we are. I've reduced the risk in my retirement by doing this. Well, and psychologically, there's been a benefit to this. I mean, you're obviously more comfortable doing there, so you wouldn't have put all the work into developing your approach,

and you're feeling better about things and less exposed. Right, absolutely. And part of it too was, you know, people tell me, you're going to get older, you're going to have a harder time thinking through these things very well. So I wanted to bake it all into a spreadsheet. So my spreadsheet takes into account a wide range of possible things that could happen. And so to a great extent, it sends me an email whenever I need to do something. So I don't have to think anymore. Well, I was just about to ask you, how often do you shift the portfolio mix every four months, every six months? Whenever the spreadsheet, whenever the tells me to. Tells you to. Okay. Right. So once a year, it will automatically make an adjustment to what it thinks my mix should be. And anytime my mix gets more than a certain distance away from what it's supposed to be, it'll do it again. It'll just tell me what to do, yeah. Now, you know, you brought up something we haven't spoken about much on the podcast that I think we should have, and that's cognitive decline that we all experience in our 60s and 70s. We have a much bigger group of DIY investors now. And a lot of male investors in particular really enjoy that aspect. of their retirement. They have more time. They like the stock market. They like investing. They throw themselves into it. But the bottom line is most of our skills on that front are in fact deteriorating. That doesn't mean we're not confident. But at some point, we're going to run up against the wall and maybe we should be getting more outside help or in your case trying to automate. But most of us don't have the skills you do in writing software and coming up with all of these

algorithms on our own. Do you think there's some point where you almost have to turn to an advisor as you age because you are getting a little bit less sharp? I think that there's some truth to them. The challenge is finding an advisor who's really going to help you. So I've come to know a lot of great advisors across Canada, mostly online. But you need, for the most part, you need a couple million bucks to be able to get their interest. And that's, I mean, advisors see a lot of people that kind of money, but they remember a lot of them

across Canada. No, you're right. That's not the average Canadian. and certainly not our average listener. And so if it's the AUM model, the minimums are quite high right now. And, you know, you're making an important distinction. It's great for me to say you should get an advisor, but it's the good advisor you need, not an advisor.

Absolutely. And that adjective is absolutely key. And of course, you and I have both seen a lot of plans over the years. And the difference between a good and a bad advisor is absolutely huge. Yes. So that's it. I want, by the way, anybody listening right now who's in my hockey pool to know there's no cognitive decline, do not try to be taking advantage of me through tradeoff.

I'm as sharp as I've ever been. Maybe that's not a high bar, by the way. Okay, I want to follow up your Cape argument with the question I was looking most forward to asking you. Okay. One of the questions I get the most of them in the public is the RRS versus TFSA, but also versus debt paid out. And we all have our answers to that.

You know, I've given that tremendous thought, not just what the answer should be, but how best to communicate it. But you're making an interesting point when you come back and say, hey, there's another dimension here, valuations. that if we've got a very, very rich market by any stretch, any kind of evaluation at all, then maybe the debt paydown makes more sense in that particular instance. So Dave Chiltern can say, oh, the S&P has averaged 8.6% over the last 58 years. But if it's at a very lofty level, it may be more likely to average a much lower number

in the next decade. So maybe paying down the debt, especially with the psychological benefits, deserves more attention. You agree with that? Disagree? No, I agree with that. Another factor that really makes a big difference is your income. So if you're still in your working years and how big is your debt relative to your income? Because if it's high relative to your income, your risk level is high now.

So the math is going to say, hey, pay down your debt. Really, to me, it's all about risk, what approach you should take. Well, you know, Michael, that's a good example of something that you've said a few times in articles over the years that I haven't said enough of. and that others haven't said enough of. And I just want to repeat what you're saying there, that it's great again to look at the long-term performance of numbers, but if your debt is very large relative to your income, there's an exposure there that you have to pay some attention to.

A worst-case scenario can easily jump up, whether it's through higher rates, job loss, whatever else, that you may want to whittle away at that debt. And also psychologically, it's probably more beneficial when you're paying down a big debt when it's relatively large compared to your income. So good for you for always attracting it, drawing attention to that. What about the RSP versus TFSA debate? I mean, you've seen how I've

covered it in the wealthy barber and the redo and on stage, et cetera. Are you pretty much on that same page? For me, it's very clear that my tax rate while I was working was much higher than it's going to be through retirement. So, I mean, I think my average tax rate is going to be slightly below the whatever the first tax bracket is because some of it will be untaxed, very small enough, but small some of it. So, I mean, I think my average tax rate. So, So overall, RSP was a little more value, but only when your income is high enough. Yes. So it's, it's, there's so many exceptions.

I don't like to give too many rules of thumb, but if your income is over 60, 70,000, the RSP looks a little better than the TFSA. But again, that's making a fairly fine distinction. I mean, if you're going to save money, that beats not saving money every time. So pick one. I don't care. I remember in the wealthy barber returns, as somebody, I said the people asked me, should I go the RRSP or TFSA and I say yes.

Yes. And I mean, I really go back to that a lot because, yes, you should be doing one of those two things and don't get too caught up in all of this. I tend to think exactly like you do. Once your income is at a certain level, the odds favor don't guarantee that the RSP will be a better route. It's taking too much criticism now because when you look at all the empirical evidence of people in retirement, the vast majority still have a lower tax bracket than they do

when they're working on average as they pull it out. Not for everybody, but I think it's still normally the best bet. But the key is, of course, just to get it in there and save. Do you have a problem with people like me who are out there telling younger people in their 20s to go more or less 100% equities with a lot of their long-term money? I think if they can handle it, then that's probably what they're best off doing. It comes down to what they're going to do when the stock market takes a big 30, 40% drop. And it's not easy to figure out.

I mean, I've lived through some of that, so I know what I did, but I don't know what other people are going to do. And it's hard to measure the distance between their ears or something. There's no measure when you're looking at somebody. You figured that out. So if somebody simply can't handle it, then they can't handle it. And that's all there is. No, and you nailed it. None of us can really know how we're going to handle those situations until you go through them.

Right. I mean, some people get very stressed. Some people don't really seem to get flummoxed at all. They're very good of focusing long term. And again, which camp you? fall and you really don't know until you go through it. But I will say this. I have seen a lot of people if they're using margin or if they're using borrowed money to buy equity funds, et cetera, that group has more panic on average than people who are using their own monies only. And that's

where I've seen some of the get out at the low. In fact, get out of the lowest point and it's really jumped up and by people. You know, I've always joked if you think it's stressful of having your own money go down in the stock market, try having the bank's money go down This dog, Markley. That's really challenging. Okay, next subject. I loved your stuff on Dahl Bar. I actually like a lot of the DELBarr stuff. Okay. So in general, I enjoy a lot of what they put out over the years and a lot of it in terms of fund underperformance and people's underperformance as they jump from fun to fun is matched up to the empirical evidence I've been able to gather. But a couple of their things, I don't agree with it all. You've highlighted one and I'm 100% on your side.

Walk our audience through it. So Dolbar likes to try to measure how much people underperform their old investments. So your mutual fund makes 10% in a year, but somehow you only made four, even though you were invested in that mutual fund. So, and they have their formula for calculating it all. And that formula docks you when you add new money. So if they are calculating how well people have done over the last 10 years, if you got an inheritance two years, two years ago and put all the money in, they say, well, you missed out on all the returns from the eight previous years. What a bizarre way to calculate it. Right. And what it allows them to do

is come up with pretty much any answer they want. Right. So they, if you look over the last 10 years and it doesn't give them quite the figure they want, then they can look over the last 20 or whatever it is. And then they get to, they get to say people have underperformed their own investments by 5.6% a year, whatever number they can come up with. And then they can sell reports to financial advisors to say, hey, come and hire me because I can help you not do this. So people do underperform their own investments by modest amounts. You know, one and two percent really does make a difference over a long period of time. And the Morning Star figures are closer to that sort of number than the bigger numbers.

Yeah, it's interesting. I did this. Now, admittedly, it was with just over 50 accounts because you have to have perfect data for when the money's coming in and when the money's leaving. Then I had to use that old Vestrack software. that was around that actually did all this right. It was the only software I ever saw that nailed it all. And this was properly done, unlike Delbar.

And it was fairly bad in some instance. Like I did see the three to four 100 basis points a year over extended time frames. But on average, you're right, it was certainly lower than what they purported to be. And your big argument is they're doing almost all of this in a manipulative way because they're trying to sell their services. They're trying to help the financial industry to justify their involvement. and it's all working in that kind of flywheel basis. Well, that's what it looks like from the outside.

I mean, you can't know what's going on in people's minds, but that's what it looks like to me. That's interesting. Now, when people have underperformed, a lot of listeners will say, why is that the case? A lot of times we tend to plow into the hot performing mutual funds, but they've been hot because they've been in the right sector at the right time

and, of course, regression to the means sets in, and it tends that fund to underperform the broad market averages over the next X number of years. But to Michael's point, not necessarily by four or five, six hundred basis points. That's actually fairly tough to do, which is one of the reasons why people had raised eyebrows to that data when it first came out, underperforming by 500 basis points over a 10-year stretch.

That is hard to do. Right. When it's in your own investment, if you invest in something different, sure, you can underperform, but when it's the, you're actually underperforming your own investment, that's tricky. Yeah, no, I agree. On the real estate front, do you invest in real estate at all, or have you stayed away from that because of the hassle factor? What's your general thinking on that for our average listener?

So for me, so I have not, I own my house, but I've never invested in real estate outside of that. I would be a terrible landlord. I'd be worried all the time. I don't know how to fix anything. I'm improving, but I had friends who are really good at fixing things and they laugh at me. So it's not my thing. I think not a lot of people are suited to being landlords. I'd certainly met some of them.

I have some friends who were really good at being landowners. words. One will say, oh, I just got a phone call them. One of my place is on fire. Oh, well, I guess I'll see what it's going to be tomorrow. Well, I'd be driving down there standing outside, so I'm not suited to it. But you know, there's a lesson here laughing aside. You have to know yourself. Yes. And you and I are the same. I don't want to be a landlord. I don't want to deal with all the tenant issues. I'm as bad as you. I can't fix anything. I'm horrible with all of that. In fact, in general, I have less talent in a wide variety of areas than anybody I've ever met. music, drawing, art.

Like, I'm horrible at all of it. I can't fix anything. But also all the problems we've seen in the last seven, eight, nine years with tenants. And the fact the system is being game so much more frequently, particularly in Ontario and BC, I mean, I'm hearing horror stories from friends repeatedly. Well, I'm 65 years old soon. I don't want to be dealing with all that stuff. Well, I agree completely.

It's become more difficult for landlords. And, I mean, there's some that still, they're good at it. There's some of the people that I know, though, they simply don't. believe they can do better in the stock market because they think the best they can do is go to a bank or whatever it is. So they have a different basis of comparison. So the kind of returns they get in real estate look good to investing poorly. But I'm comparing to investing with very low costs and I can't beat the stock market. You know, I must say to our listeners, I have had a tremendous number of friends do extremely well in real estate investing. You know, to Michael's point, they've enjoyed being a landlord or at least tolerated it. They have more skill. skills than I do. They're better suited to all of that. They got in and in better times, too. We've had very strong markets in most parts of the country until recently. They were supported by lower rates. The student population exploded in some areas providing tremendous opportunity. But going forward, I think it's going to be more challenging population growth is slowed. We talked about the tenant

problems, et cetera. And I think a lot of people are coming to that realization. And a lot of people I'm not sure that's where I want to put as many of my investment dollars. But for people who are good at it, and often have great instincts in terms of when to buy, where to buy, what kind of property. I'm not trying to dissuade you at all. I've seen way too many people have success to do that. Yes, and especially for people who don't mind it being a part-time job. Right. So I'm most definitely not looking for a part-time job.

I'm very happy doing my own thing. So I'm just ill-suited to it in every possible way. Now, you are in Math Geek. You would admit that. Oh, absolutely. Okay. Absolutely. And so what do you think of reverse mortgages?

One of the things that worries of me about a reverse mortgage is the provision that requires people to maintain their property to some standard. And because I've watched family, and aunt who got quite elderly, couldn't move around much. I had to go on cleaner carpets because you're from her dog and this sort of thing. And there's things falling down outside and so long. It would have been very easy to throw her out of her house. if she had a reverse mortgage. It's just saying she's not keeping it up. And I know the stats say that's not happening yet.

But the stats also say there aren't a lot of reverse mortgages out there. If there was a company that had a massive book in reverse mortgages 20 years from now and they were losing money on 5% of them because people owe more than the house's worth, that creates this incentive. So I would like to, you know,

we do something about changing the rules to make it, to make sure that no company could start, could make sure they can't sell off their book of reverse mortgages and start throwing people out. But who makes that judgment call? Is there a third party that has to go in and make that assessment? Because you'd want to make sure it's an independent view. Are they keeping it up? That's very subjective. I agree. And to be honest, I do not know what the standard would be. And I'm not sure it's really been tested that much so far. I don't. As far as I know, the number of cases of people being thrown out for not maintaining their

homes is very low. What do you see out there? right now as being the big mistakes people are making. So as you're doing your writing and you're online and you're researching, you're talking to people, where are we going wrong? I mean, we've talked about fees already as being something that Canadians still don't pay enough attention to, although we're getting better. But what else disturbs you? So I'm at an age where I'm seeing a lot of friends who are retiring and a lot of my friends were fantastic savers. And a mistake that I see is some of them are trying to live at the beginning of the retirement the same way they lived when they were working. They're trying to live on just what they see as their income. They're trying not to touch their R.SPs and so on.

And what they then do is they say, well, I better, I have to take my CPP right away because I just can't live on this little pittance that I'm getting. So that's one big mistake. But then I see the other side too. You get the odd person. who don't have a ton, they've got 300,000 saved or something. And they say, well, you know, you only live once. I'm 64. I'm retired now. And they start spending too much. So I see Solove each. And you average that out and everything's fine, but averages cover up a lot of problems. It's very true. And I do see both. Rob Engen's been on our show a couple times and talked

about the first one of the two you brought up and how tough it is to get some people to spend to the appropriate levels. They've been conditioned to save their whole life. psychologically they're having so much trouble flipping that switch and they have a fear of outliving their money which i think is a very real fear which leads me to my next question i've been through with my family we've talked about it a lot of the podcast as the baby boomers are getting older we do not have enough health care long-term care facility availability etc more and more people are having to spend a lot of money on outside help either coming into the home or coming into an assisted living facility and it is a big expense absolutely And how do you budget for it? How do you make sure you've got enough money? If you do, it means a lot less spending in those go-go years when you should be having fun. You might not even need it. You might be one of the lucky people who never needs out of the outside help.

This is tricky stuff that I don't have any definitive answers for. When I look at older family members who navigated this, they either had children that had great relationships with who lived nearby or they got along really well with some younger neighbors who were just fantastic and helping them out. Absolutely. Yeah, so from what I've seen, the answer wasn't to hold back a half a million dollars. It would have been a great answer if you hadn't. The answer was to just lean into younger people who don't care about you. No, it's true. I mean, it's hard to count on it, but it is the way it tends to play out.

In fact, I have a friend. I'll even say his name. He's such a wonderful person, Kyle McElvey, who sell many neighbors that have been aging. He'll go over and run errands for them. He'll shovel the driveway, and it's been a huge difference maker in their lives. The challenge now I'm seeing is though we're getting so many ancient people that mobility is such an issue and they're falling and they almost need to have somebody there. And of course, as you know, bringing somebody in home, the cost is absolutely crazy. We've had to do it.

And it's truly stunning. So this is a major issue. It'll be interesting to see how it plays out over the next X number of years. Yes. I mean, it seems inevitable that a significant fraction of people are just going to not be very well taken care of. There just isn't going to be enough young people to do it, whether they're doing it in a care facility or helping people in their homes or whatever it is. I feel like I'm covered. I got two great sons and I had some money, but I can't see how it can work out for everyone.

And do your sons live relatively close by? Right now they do. I mean, that can change any time. Yeah. Yeah, ask them if they'd be willing to help me out too. I'll ask, but, you know, my kids have lost dangerous. I'll tell you, my kids in their defense have been so good with my father. It's crazy. They've been such an active part of his late life caregiving to the point of just

remarkable generosity. Now, I've mentioned many times, it's been easier for us because my dad's in constant good spirits. And it's just easier to find the energy to help somebody who's appreciative and still funny and still enjoying life. I have a lot of friends who've had to go through this and the person who's receiving the help has no quality of life. And for good reasons, they're in ill health and they're quite miserable. Boy, it's tough to stay motivated to get over there hours a day to do all these things. Yeah, we euphemistically call, we call memory care. There's no, there's no good feedback. You speak to someone who doesn't know who you are and they yell at you because they think you're just the help or whatever it is, or their personalities completely change.

Those are the toughest ones. Very difficult situations. Now, being a math geek, are you into the analysis of cash value insurance versus term insurance? In Canada, I don't come across too much. many people who have thrown themselves into that, to be honest. I did in the 90s, 30 years ago now, to a degree that was almost obsessive, compulsive. And I did it because I was taking so much criticism from the insurance industry for my bi-term and invest the difference stance. And frankly, pretty vicious criticism in some instances. So I felt I had to be able to defend myself to the nth degree. And so I went out and threw myself into it. But you don't meet many people who've wanted to get involved in the intricacies of how these policies work, down to the tax

aspects and so on and so forth. Have you done a lot in that area? No, no, no. I mean, I looked at it long enough to figure out that I just want a term insurance for myself. Right. And there might be some argument for it if you already used all your RSP room, all your TFSA room, and so on. Right. And but if you can afford, if you have that kind of money, then you can afford to pay someone to figure it out for you, whether it makes sense. The typical Canadian, I don't think it makes any sense for them. But you've got that exactly right. Until you've maxed the TFSA, the RSP, you paid off your non-deductible debt, et cetera.

It's better to go the term insurance route. Now, we do have a lot of people who are fortunate enough to do that. They've made a lot of money. They've had very successful careers. But they're going to be getting outside advice from people and often have a corporate structure and there are some tricky things you can do there that actually work. In the world of personal finance, most tricky things don't work. But that particular example can't.

If it's properly structured, it can add value on an estate planning front. Speaking of estate planning, anything there you want to pass on, we're always hammering people to get their powers of attorney up to date, their wills, to think through their choices. Any observations? There's still a large fraction of people, no will, no powers of attorney, nothing. And that's low-hanging fruit. It's not something people want to face, but you need to do it if you care at all about whoever's coming after it to try to help you later or deal with your estate later. I like the way you phrase that. You're doing it to help the people who you're going to be kind of.

counting on later. That's exactly right. Making it as easy on them as possible. What a stressful thing you're going to put them through at a time when they're most likely grieving or dealing with you when you're very, very down health-wise, you want to make it as easy as possible. I mean, we're seeing more and more people creating these binders when I die, when I'm sick, here's all the details. And that's wonderful. Everybody should be doing that. Another thing people need to do is throw your stuff away. Go through the stuff in your home and get rid of it. It is soul-destroying to take months and months going through somebody's stuff. You feel like you shouldn't throw, just throw it all away.

There's stacks and stacks of papers. And I've done it too many times now. I had to do it for my father. I had to do it for an aunt. I just, it's not fun. Get rid of things you do not need. And you'll be doing the next generation favor. I couldn't agree with you more.

You know, I really believe one of the reasons I've been such a happy fellow is that I hate stuff. Yes. And I really do. I don't like, like, I don't want people ever giving me gifts. I don't get a kick out of. owning things. I tend not to have a lot of stuff. It wouldn't take long to clean my place out because, again, it just seems to me to be more of a burden. But I've gone through as you have that cleanup and you get caught in a tough position of thinking, should I really be throwing this out? Maybe it meant a lot

to them, but they're gone. All of those are complicated. I think people doing that on their own ahead of time can really add a lot of value. We are seeing more people as they get older now, bringing people in and the family ahead of time and saying, let's have some sort of lottery or auction or putting stickers on the different things you want. And they're getting on that quite early in the process to save the family conflict. That's a good trend. I agree. While the loved one is still alive, people will accept their judgment.

But once they're gone and the battles start, you can have brothers and sisters estranged for years after that just because of the conflict. But if mom said this is going to go to Dorothy, then they accept it. Very, very true. Now, is your wife as into this stuff as you are? Not the math side so much. I mean, she's an engineer, so somewhat, but she's big into the getting rid of stuff. She's read the books. Nobody wants your stuff and all this sort of thing. And so she goes on a rink page every once in a while and tears everything out of a closet and kills two thirds of it away. Now, with a cryptography expert and an engineer, these poor boys grew up under a lot of pressure to excel in math. Were they good math students, I hope? They were good students overall. I was pretty unbalanced, but they were nicely balanced. They did very well.

Yeah, that's good. Now, a quick cryptography question, do you think quantum computing is going to be able to eventually crack some of the crypto out there, including Bitcoin? That's a tough question because I don't look at it in as much detail as many of my colleagues. And there are still some, I mean, there are a lot of people who believe it's inevitable. But there's still a few holdouts who say they've looked at what's been done so far. And they say, they don't believe it's going to go anywhere. Interesting. But those people are definitely a minority. So it's really tough to say. at this point, but I would have to lead towards it's going to start breaking things, but there's already new standards for they're going to evolve to that can't be broken

by quantum and computing. Now, as we wind up here, why did you write under a pseudonym when you first started out? And are you willing to share your real name with our audience? So my full name is Michael James Weiner. And so

when, so I had this experience back in the 90s. My sister moved to Indianapolis, tried to send her email, and they all bounced. They all got flagged because it's obvious fan because, I mean, why would anyone have the word Wiener in their emails? And she, her name was changed. She was married. And so when it came to doing the blog, it was 15 years later. But I was thinking, well, I wouldn't want my name to be causing any kind of trouble in this. So I pretended that

my middle name was like my surname. And that sort of stuck and now would be weird to change, but it's never been a secret. Now, it's interesting. I mean, I said earlier, you're kind of a legend at the high end of our industry. And I mean that very sincerely. You really are. There's nobody in our industry who is into this stuff, who doesn't know who you are and hasn't read a lot of your columns. I mean, A, you must be very proud. But did you see that coming when you first started out? And also, how did you get your initial following? Because you didn't come in with a book or a brand or anything. You weren't tied into the industry directly. How did you find those first readers? I'm not sure. I really, I mean, I just wrote and put it up on the blog. I had a few friends involved in blogging.

So they were much better known. If you remember the Canadian capitalist from way back. Oh, yeah. I loved his stuff. Right. So, I mean, he had a link to my blog on his blog. So I think I got bootstrapped by seeing good friends. Well, you know, I mean, I'm going to wrap up by saying congratulations.

I mean, you can look back at this. What started out as a hobby did or not. Absolutely. You know, and the impact you've had in our industry and the way people think. And I think you command a lot of respect. People know how diligent you are in your thinking and how you come things from a lot of different angles. I wasn't going to share this, but when we put out the wealthy barber redo, there was a

math mistake in it. I'm taking no responsibility for this mistake, by the way. There was a change to a paragraph. And when the editor put the paragraph in, she put the word billion in instead of trillion or vice versa, I forget. And so I spotted it as soon as I got the buck and I'm like, oh, my gosh. And everybody said, nobody's going to spot it. Guess who the one person who called me.

And you know what's funny about this story is. that if somebody would have said to me ahead of time, Dave, one person is going to find it. I would have picked you. I would have said, it's going to be Michael James is going to spot that error and he's going to get in touch with me, which I thought was kind of you.

But you were very courteous to me last year, taking my call and walking me through your thinking in RESPs. And I've enjoyed your work immensely over the years. I really have. You've added tremendous value to the Canadian financial planning landscape. So it's a real honor to have you on the podcast. Thank you so much. Well, it's been an honor to be here.

And to hear that from you means a lot because you've been fantastic for a long time now. And I love your books. I get my sons to read them. The podcast is great. Sorry to hear you retiring. I'm happy for you. Yeah. Thank you very much.

Well, you and I will cross paths again, I'm sure, at some point. But keep up the good work. Thanks very much.