Nov 14, 2019
Today on The Rational Reminder Podcast, we talk about the
relationship between asset allocation and outcome, the ins and outs
of reverse mortgages, and finally, life insurance (or lack thereof)
in Canada. However, we begin by sharing some interesting points
covered in a recent Barry Ritholtz interview with Eugene Fama and
David Booth for his Masters in Business show. We talk about how
Booth started the first index fund and discovered the value factor,
and quote some of Fama’s classic perspectives on behavioural
finance and market bubbles. On the topic of asset location, Ben
shares some of the findings of his recent research. He weighs in on
his surprising discoveries about how to go about investing stocks
and bonds in RRSP and taxable accounts to get the maximum yields.
One of his main takeaways is the concept of putting bonds in your
RRSP to intentionally trick yourself into a more aggressive
portfolio. Regarding reverse mortgages, we begin with some
definitions and explanations of why they might be beneficial, and
then cover the question of whether or not they are the symptom of a
‘debt-addicted’ society. Finally, we end off by discussing a recent
study by Policy Advisor which found some shocking facts about how
Canadians are drastically underinsured. For all this and more, join
Key Points From This Episode:
- The difficulty of predicting stock returns based on rate
- Discussing the Barry Ritholtz interview with Eugene Fama and
David Booth. [0:05:44.0]
- Booth started the first index fund and discovered of the value
- The fact of bubbles only being such in hindsight according to
- Efficient markets aren’t necessarily rational.
- The reason for risk-based and behavioural explanations for
asset prices. [0:09:34.0]
- The value premium does not fluctuate in cycles according to
- Considering the role of expected return in making investment
- Ben’s video on market efficiency in relation to Fama’s
perspectives on the matter. [0:10:36.0]
- Jim Simons and the mystery of the success of Renaissance
- How lead generation and aggressive sales shut Planswell down.
- Vanguard is restructuring its fees and lowering its VXC.
- Why pre-tax asset allocation doesn’t affect expected outcomes.
- Bonds in an RRSP give a better expected outcome than in a
taxable account. [0:20:56.0]
- Ben’s model endorses investing 75/25 in both the taxable and
RRSP accounts. [0:21:20.0]
- Why putting stocks in an RRSP gives a great expected outcome.
- What the highest yielding asset classes currently are.
- Why a more aggressive portfolio as far as asset location is
- How after-tax wealth remains the same through three different
location strategies. [0:29:03.0]
- The pretax drawdown difference between all bonds and all stocks
in an RRSP. [0:29:25.0]
- Future outcomes can still be detrimental to an initially
optimal asset location. [0:30:29.0]
- It is important for people to think of their asset allocation
in after-tax terms. [0:31:17.0]
- Drawing on reverse mortgages to fund retirement spending.
- ‘Reverse mortgage’ refers to extracting money from a paid-for
- The benefits of reverse mortgages vs regular mortgages.
- When you take income from a reverse mortgage, it’s not taxable.
- You can borrow more money out of your reverse mortgage as you
- Are reverse mortgages the symptom of a debt-addicted society?
- A Policy Advisor study finds that Canadians are drastically
- Shocking statistics on the underinsurance of Canadians.
- And much more!