Risk Parity, Rental Properties, and the Smith Maneuver (EP.76)

Welcome to another episode of the Rational Reminder Podcast. We kick off the show today with some great listener feedback before diving into the content of a new podcast by Dr. Laurie Santos called The Happiness Lab. In a recent episode of her show, she gets into the idea of human adaptability to fortuitous or catastrophic events. Our capacity to regulate back to a default state has big implications for dreams of greater happiness through wealth acquisition. Next, we move on to three great listener questions, which by the way will be replacing the investment topic segment of the show from now on. We answer questions about the merit of Ray Dalio's all-weather portfolio, fall back rules for prospective rental property owners, and whether the Smith Manoeuvre is a good move for high-income earners. Next up you'll hear some fascinating statistics about residential property value in relation to homeownership and income in Canada. Rob Carrick's article about how tax-free savings accounts are the greatest Canadian financial success story of the century comes under our scrutiny after that. Finally, we end off with our bad advice for the week, in which we discuss the recent protest by investor advocates to speed up the banning process for early withdrawal fee-charging mutual funds. Tune in for your weekly reality check on sensible investing and financial decision-making for Canadians! Key Points From This Episode: Three great reviews from our listeners on iTunes. [0:00:15.0] Human adaptability and how bad we are at predicting our future emotions. [0:03:45.0] Expected returns concerning risk parity and factor investing approaches. [0:06:32.0] Cap rates, leverage, and asset-specific risk regarding investing in real estate. [0:14:02.0] The benefits of the Smith Manoeuvre for those willing to be leveraged investors. [0:20:10.0] Lifecycle investing and why young people should invest in stocks with leverage. [0:23:59.0] Homeownership, income, and residential property value statistics in Canada. [0:25:30.0] Different house prices for middle-income earners across Canada. [0:29:25.0] Statistics about TSFAs such as who has one versus who has an RRB. [0:30:53.0] How to use TSFAs in connection with other investments. [0:32:18.0] Rules and cautions about TSFAs such as why not to pick stocks in one. [0:32:38.0] Good reasons to use TSFAs such as when one has a low income and is young. [0:32:38.0] Why not to buy mutual funds that charge investors early withdrawal fees. [0:38:33.0] And much more! https://rationalreminder.ca/podcast/76