Build Wealth Canada Podcast

Today's guest has written over 1,000 financial plans for Canadians and is truly as experienced as it gets in this field. He has extensive knowledge on some of the higher impact investment strategies that can really help accelerate our returns such as the Smith Manoeuvre and how to use an RESP properly. We also cover how to structure your investment portfolio and what investments to buy.

Links and Resources Covered

• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest

Questions Covered:

1. To start things off, tell us a bit about yourself and how you got into financial planning.

2. One of the strategies that I wish I knew about back when I was younger was how to make your mortgage tax deductible. Our friends in the US are able to easily deduct their mortgage interest against their taxes, whereas this is generally not allowed in Canada. However, you suggest a strategy called the Smith Manoeuvre for Canadians which when properly structured and deployed, lets Canadians deduct their mortgage interest as well.

Now you've set this up for many Canadians within you financial planning practice. Can you start off by taking us through what the Smith Manoeuvre actually is, how it makes all this possible, and how much money can actually be saved by doing this. In other words, is this actually worth our time to look into?

2.1. I get the impression that Canadians use this with their primary residence a lot, but what if somebody has their mortgage paid off or has a rental property. Is it highly beneficial to use this strategy then too? (ex. taking out equity from the home using a HELOC and using it for leveraged investing?)

3. I've researched the Smith Manoeuvre a fair bit and a common theme seems to be that you have to be very careful with how it's set up so that the Canada Revenue Agency doesn't flag you and treat this as tax evasion where you end up paying all sorts of fees. Can you talk about what to be careful of, and what the common mistakes are when Canadians try to set this up?

4. A lot of Canadians hear about the free money you can get from the government if you put money in an RESP. I remember when we had our daughter I got numerous calls from companies that were trying the "help" us with setting up an RESP.

To kick things off, can you explain what an RESP is, and is this something that we need a company to set up for us?

When you work with clients, at what point do you advise them to start moving the investments to something less volatile like bonds once their child starts approaching the age when they start their post-secondary education?

Do you start with a diversified, all stock portfolio, and then use a formula to know how much to move into bonds every year?

5. Let's say you had to retire tomorrow with a $1,000,000 portfolio. You have no debt, a paid off house, but no work pension. How would you structure your portfolio and what investments would you buy so that it would last you indefinitely?

Would you change your investments and portfolio structure at all once you hit 65 (assuming that's when you choose to start receiving CPP and OAS from the government).

6. Traditionally, the general accepted rule has been that the older you get, the more you should put towards bonds to keep your portfolio less volatile. You wrote a very interesting article talking about how loading up too much on bonds isn't actually the sustainable thing to do. Can you talk about your findings and research.

7. Tell us more about where we can learn more from you?

8. What are some of the most common questions and problems that you tackle for your clients?

Today I’m excited to have Mark Seed on the show, who runs the popular Canadian blog, My Own Advisor. On the blog, Mark documents his journey and lessons learned as he invests towards achieving an early retirement, and works on growing his portfolio to 1 million dollars. What’s very interesting about Mark, is that he […]

Today I'm excited to have Mark Seed on the show, who runs the popular Canadian blog, My Own Advisor. On the blog, Mark documents his journey and lessons learned as he invests towards achieving an early retirement, and works on growing his portfolio to 1 million dollars.

What's very interesting about Mark, is that he is a hybrid investor meaning he doesn't just invest in one particular way (for example, he doesn't just buy the index with ETFs). Instead, he uses ETFs to hold US and international companies, but when it comes to the Canadian portion of his portfolio, he holds individual stocks of strong dividend paying companies instead of just holding a single ETF that captures all the major companies in Canada.

This is a bit of a different strategy than what I've been doing, so I thought it would be great to have Mark on the show to broaden our view by seeing how others invest, learn why he invests in that way (the pros and the cons), and see if maybe it's a good fit for the way you invest.

Links and Resources Covered

• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest

Questions Asked During the Interview:

1. What made you decide to be a hybrid investor instead of just sticking with index investing or just dividend investing?
2. What is your process you take for selecting which dividend paying companies to buy?
3. Once you've done your due diligence on the company, what analysis do you do to determine whether now is the right time to buy? For example, how do you decide whether a company is currently overvalued or undervalued?
4. How do you deal with the risk that you are investing in individual companies? As opposed to hundreds or thousands of companies through an ETF. For example, let's say you're holding CIBC. How do you deal with the worry that something might happen at that particular company and it could potentially never recover back to its previous stock price? (ex. Nortel, Blackberry)
5. What made you choose to buy individual dividend paying companies vs buying something like the aristocrat ETF?
6. Once you choose to retire, how do you plan on changing your asset allocation, if at all? (i.e. Going from an asset accumulation stage, to an asset decumulation phase).
   1. What if you retired early?
   2. What if you did a traditional retirement where CPP, OAS, and your pensions kick-in right away (or almost right away).
7. If you did a much earlier retirement where CPP and OAS don't kick-in yet, would you move all or most of your investments to stable Canadian dividend payers partially due to the dividend tax credit?
8. Speaking of asset allocation, what are your thoughts about using bonds as part of your portfolio, especially in retirement? Many Canadians are feeling reluctant to use them due to their low returns, and are expecting their prices to drop due to their fear of rising interest rates here in Canada. What's your take on this?
9. A common criticism against the Canadian index is that we as Canada are too concentrated in just a few sectors (i.e. energy, financials, materials). I imagine you run into the same challenge with Canadian dividend investing. Do you do anything to offset this in your portfolio? Have you come across any good solutions?
10. Do you have any other advice for dividend focused investors? (or investors in general)
11. Tell us more about My Own Advisor and what's the best way to hear more from you?

Today we're going to take a deep dive into the world of real estate, and we're going to approach it from 2 sides:

First, we'll talk about real estate as an investment (i.e. If you've ever thought about investing in a property and renting it out).

Now if you've listened to past episodes of the show, then you know that it can actually be really hard to get the numbers to work when buying a home and trying to rent it out as an investment. Today's expert, however, is going to share some strategies with us that she uses to actually successfully invest, and make the numbers work, despite the high prices of real estate that we've been seeing.

Next, we'll shift focus and talk about the different home buying tips, and expensive mistakes that you can avoid when buying a home for yourself. Even if you've bought a home in the past, I still recommend that you tune-in as the real estate market has likely changed since you last bought a home. Join me in welcoming today's guest, Limor Markman, as she shares the latest money saving tips and ways to protect yourself, whether you're buying a home for personal use, or as an investment.

Links and Resources

• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• Have a mortgage question? Ask our own in-house expert, Sean Cooper over at www.BuildWealthCanada.ca/sean
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest

On this episode, we cover some of the top financial mistakes Canadians make, as well as common misconceptions that may be holding you back in accelerating your investments and net worth.

Links and Resources:

• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• The Canadian Financial Summit is available at CanadianFinancialSummit.com
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest

In this episode, we talk about what a robo advisor is, and how it can be a lot less expensive than the traditional approach of investing in high-fee, actively managed mutual funds.

I find robo advisors to be the easiest way to invest in Canada, but this does result in higher fees than if you were to just buy the investments yourself (which is actually really easy).

I personally just buy the investments myself to get the lowest fees and pay the least tax possible (You can see exactly how I do it over at www.BuildWealthCanada.ca/invest.)

With that said, I realize not everybody wants to learn how to actually be a passive investor and get the lowest possible fees, and so robo advisors can be a good option if you value simplicity of fees.

Links and Resources

• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest

Questions Covered:

1. For those just getting started in investing, can you explain what a robo advisor service is, and especially why we as Canadians should care?

2. When you build investment portfolios for Canadians, why are ETFs such a core part of your portfolios? (perhaps explain what an ETF is first for all the listeners just getting started with this)

3. Nest Wealth mentions that you manage the money based on proven investing principles and Nobel Prize-winning theories. Can you elaborate on the Nobel Prize-winning theories component?

4. One thing I noticed on your Nest Wealth site, is that you actually list all the ETFs you buy (which is nice, I really like that transparency), but if I'm just a regular Canadian, why don't I just buy the ETFs myself through a discount brokerage (especially since some discount brokerages let me buy ETFs for free) and then save on the fees that Nest Wealth charges?

5. Anybody following the financial services industry knows that there are a LOT of robo advisor services out in Canada. What sets Nest Wealth apart from all the rest?

5.a. One of the things that really intrigued me when I first heard of you guys is that you have a flat fee model. For those not familiar, can you explain what that is and why it's actually a pretty big deal?

5.b. You mention that your portfolios are "custom built" unlike your competitors. Can you elaborate how this works and why it's so important?

6. I imagine that a big concern Canadians have is that with all these robo advisor companies out there, it's totally conceivable that not all of them will survive long term. Because of this, it wouldn't surprise me if some Canadians are holding back from investing because they are afraid of losing all their money if something was to ever happen. Can you speak to this concern?

7. What customer support do you offer? Ex. If somebody has questions while going through the automated portfolio building process?

What about after all is set up?

8. One of the other things that intrigued me was that on your site you mention that as a client you get your own portfolio manager that you can speak with, text or call. What types of things is a Portfolio Manager ideally suited to help you with? And what types of question are beyond the scope of a Portfolio Manager like this? (I'm trying to gauge what kind of other professionals you need on your team apart from Nest Wealth).

10. I went through Nest Wealth and had it build a portfolio for me. I noticed that there were different goals that you can select, and I assume Nest Wealth will optimize your portfolio, depending on your goal correct?

How does Nest Wealth change what portfolio it recommends depending on whether somebody is savings for retirement vs is already retired and now needs the income instead of growth?

What about if they're saving for something like a down payment on a home or post-secondary education for their child? What's the strategy behind those types of portfolios?

11. I noticed Nest Wealth will build your portfolio based on your questions, but it won't actually tell you whether you will be able to actually retire by an age you specify, and whether your income in retirement is sustainable. Is that because that is an area where you actually need a financial planner to do a more in-depth, 1-on-1 personalized analysis with you?

12. How is the MER absorbed? Is that covered by the monthly fee? What about other fees?

13. To close things off, who is Nest Wealth not for?

ex. Those with credit card debt?

13. Who is Nest Wealth ideally for? What type of person benefits most from what your service?

Giveaway: Enter the giveaway for your chance to win a signed copy of Sean’s book: Burn Your Mortgage Get your free audiobook: Click Here to get your FREE audiobook by signing up for the free Audible trial. Over 180,000 titles to choose from for your iPhone, Android, Kindle or mp3 player. Download or Stream the episode […]

Today I'm excited to have Sean Cooper on the show. There's a good chance that you've already heard of Sean whether it's on the radio, TV, or the internet as Sean is the guy that bought his first house when he was just 27 and paid off his mortgage at 30 in 3 years.

As you may know, my wife and I also paid off our mortgage early at the age of 28 and 29 (you can learn more about it by checking out past episodes of the show). But what makes Sean's story interesting, is that he did it in Toronto (which as we all know has some of the highest real estate prices in Canada), and he did it with a single income. That to me is really impressive, so it was fun to pick Sean's brain about how he did it, and the strategies he uses and recommends to save money and get out of debt.

UPDATE: Since publishing this episode, Sean has become the show's Resident Mortgage Expert. If you have a mortgage question, you can speak to Sean for free over at www.BuildWealthCanada.ca/sean

A bit more about Sean: He's an in-demand personal finance journalist, money coach and speaker. His articles have been featured in publications such as the Toronto Star, Globe and Mail, MoneySense and Tangerine's Forward Thinking blog.

He makes regular appearances on national radio and television shows to discuss personal finance, real estate and mortgages. He's also the author of the new book, Burn Your Mortgage, which helps anyone —from new buyers to experienced homeowners — pay down their mortgage sooner and live well while doing it.

Links and Resources

• Get a free one-on-one meeting with Sean to get your mortgage and home buying questions answered at www.BuildWealthCanada.ca/sean
• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest

Questions Covered:

1. To start things off, tell us your story and the steps you took that got you mortgage free at such a young age.
2. Tell me about the moment when you realized that you need to write a book. What motivated you to write it in the first place?
3. With the house prices being where they are, and the frenzy that we seem to be experiencing in the real estate market right now, do you think it still makes sense for millennials to buy a home? (as opposed to renting for a lot less and investing their excess cash flows). Are there exceptions?
4. Are there some creative ways that you recommend Canadians (and millennials in particular) can get into the real estate market?
5. Tell me about the internal dialogue that you had in your head, with yourself, when deciding whether you should pay off your mortgage quicker or invest.
6. Now that you are debt free, are you also financially independent? Tell me your definition of financial independence.
7. If yes, how do you structure your investments, cash flows, etc.?
8. What are you doing with the cash flows that aren't going towards your mortgage anymore? -What are you investing in? -Your strategy. Reasoning? -How are you using registered accounts? Are you using non-registered too?
9. Have you considered doing a home equity line of credit (HELOC) on your property and using the proceeds to invest?
10. Are you thinking of buying more rental properties?
11. What's next for you?
12. To finish things off, tell us more about your book and what we can expect to learn from reading it.
13. Where can we follow you if we want to learn more?

Today we have Susan Daley on the show and we're going to talk all about early retirement, such us how to pull it off, what to look out for, and some of the most common mistakes that Canadians make when trying to plan this out.

Susan is an Associate Portfolio Manager at PWL Capital in Waterloo, where she provides financial planning and investment management services to a wide range of clients. She's also an Honours BBA graduate from Wilfrid Laurier University, which is actually where I graduated from too, so it's always fun to chat with a fellow grad about best practices when it comes to financial planning and investing.

Links and Resources

• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest
• You can reach out to Susan at [email protected] and she's at www.pwlcapital.com/waterloo

Questions Covered:

1. For somebody that is saving money for a large purchase like a house, wedding, a car, etc., where do you suggest they keep their money to let it grow safely?
2. What to consider when deciding between RRSP vs TFSA vs non-registered?
3. What if you're planning to retire or semi-retire early (ex. 30s or 40s where it's still a long time before government benefits come in). Does that change anything in terms of what accounts you put the funds in?
4. Is there any time that you would use a non-registered account before using an RRSP and TFSA?
5. How to determine if you've saved enough to retire early?
6. Once you hit that number, what changes do you make to your portfolio since now you're focused on sustainability instead of growth (changes in terms of asset allocation, and the investment products you choose).
7. Would the answer be different if the person is in their 60s and about to receive government benefits vs if they are retired much earlier (ex. 40s)?
8. What cash cushion do you recommend for those in retirement and semi-retirement?
9. Some advisors recommend real return bonds for those in retirement. What are your thoughts?
10. How to decide what accounts to take money from in retirement? (RRSP vs TFSA vs non-registered)

In this episode, we're going to continue covering the subject of "How to Not Run Out of Money in Retirement", specifically for Canadians.

This is from a live webinar that I did for Canadian MoneySaver Magazine so in case you weren't able to make it, I wanted to provide you with as many tips as possible from that presentation in audio form.

If you missed part 1 of the series, it's the episode right before this one (episode 31).

Links and Resources

• Top Tools and Resources for Financial Independence (for Canadians): Sign up anywhere on www.BuildWealthCanada.ca for a free guide on all the top tools and sites that I've personally used to help us achieve financial independence in our early 30s. They're also what we use now to optimize and manage our finances, and ensure that we're paying the lowest fees while getting solid returns on our investments.
• Kornel's investing course with free sample lessons at www.BuildWealthCanada.ca/invest

Bonuses for Build Wealth Canada Listeners:

You are eligible to receive a free 1-year paid subscription to Canadian MoneySaver Magazine by signing up for the free 5i Trial at www.buildwealthcanada.ca/trial.

If you would like more information, just listen to the beginning of the episode or you can learn more about 5i Research below:

In case you're new to the show, 5i Research is Canada's only conflict-free investment research network. What that means is that as you know, there is a lot of conflict of interest in Canada when it comes to people telling you what to invest in.

So let's say you go to your bank and ask to speak to a financial advisor because you want to invest some money. Well what many of them will do, is try to sell you their investment products like their mutual funds for example.

You'll get a well-rehearsed sales pitch, but what they don't tell you is how ridiculously high their fees are compared to just investing the money yourself using ETFs or stocks.

There's also a conflict of interest because they are incentivised (either through bonuses or getting a promotion at work) to sell you products that make the company the most money, but may not necessarily be the best fit for you and make you the most money.

So here's the thing, why would you ask someone what you should invest in when that person has a financial incentive to sell you what makes them the most money, as opposed to what makes you the most money so that you can, for example, retire early because you're not paying ridiculous fees on underperforming investments?

Where 5i Research comes in is that they actually have a team of analysts that do the research, and all the financial math and analysis for you on the best investments to own (whether it's the top stocks or the top ETFs in Canada), and whether you're a growth focused investor, or a dividend focused investor. What makes them stand out, is that they don't try to sell you any investments, so they're not getting some commission or fee on the back-end, and the result is you getting unbiased investment analysis and insights, where you never have to worry that they are recommending something just because they are getting some sort extra compensation on the back-end.

What's also neat, is that you can ask them questions, like if you're considering a particular stock or ETF. Or, maybe you have no clue what you should invest in, and in that case they can recommend some model portfolios for you depending on your risk tolerance, objectives, and whether you want to invest in ETFs, stocks, or both.

They actually already have over 54,000 answered quested in their database, so you can actually see what others are asking too about the stock or ETF that you're considering buying, and see the answers to those too.

Now as a listener of the Build Wealth Canada Show, you can actually get full access to everything for free for 1 month. In other words, you get full access to all the stock and ETF recommendations, all the model portfolios, as well as 5i's database of over 54,000 answered investing questions. I definitely encourage you to check it out as at the very least you'll learn a ton and it's all free anyway.

And if for some strange reason that's not enough, I've also arranged for Build Wealth Canada listeners to get two extra bonuses:

Bonus 1: The first, is that when you sign up for the free trial, you'll also get a 1 year, paid subscriptions to Canadian MoneySaver Magazine, absolutely free.

This is the exact same magazine that you see at Chapters and other stores all across Canada, and you get the entire subscription, for free, for an entire year, no strings attached.

Bonus 2: The 2nd bonus, is that you'll also get 1 question credit for free, on the 5i Research site. This means you can actually ask 5i's team of analysts your most pressing investment question and they'll answer it for you, using the knowledge and investment tools that you and I simply don't have access to.

So enjoy, it's all free, you'll learn an absolute ton, and you can get it all by going to www.BuildWealthCanada.ca/trial.

In Closing:

If you enjoyed the episode, please take a moment to leave an honest review and rating on iTunes by clicking the "View in iTunes" button at this link.

If you have any tips, suggestions or comments, please be sure to leave a comment in the section below. I read all responses and look forward to hearing from you.

Have a great week,

Kornel