Blessed by the Potato

2014 was a busy, busy year. I wrote and released a book, in addition to all the other stuff going on in my life like being a dad, holding down a full-time job, taking on freelance/coaching clients, etc.¹ So I did not have much time left for active investing, and that was one factor in putting in a rather shoddy under-performance of 8.6% vs my benchmark of a 50/50 mix of the Canadian and S&P500 e-series funds which pulled in almost double: 16.7%. Indeed, looking back through my notes from the year, active investing was almost entirely jettisoned from my life when the time crunch got bad. I spent almost as much time doing the bookkeeping and getting ready for tax season for my active portfolio in April as I did on researching new ideas or carefully following the ones I owned through the entire rest of the year. I did not listen to a single conference call all year. For over half of 2014 the time I invested on the active portfolio was precisely zero.

So this gets down to execution risk, another great reason to love simple index investing methods. Even if I did have a workable strategy to beat the index, and the smarts and emotional fortitude to follow through, there are still lots of ways to muck it all up (like not really doing it at all and leaving things on autopilot). That’s an added risk to active investing that we don’t talk about much, and a difficult one to accept: it’s all too easy to say something like “oh, if I had spent more time on it, I would have done better.” But the fact is that I didn’t, and I put myself into a situation where I could under-perform (and also granting that I may have underperformed no matter how much time I put in) by choosing to invest actively. It wasn’t a down year — I still made decent money, which may make it all the easier to fool myself if I wasn’t comparing to a benchmark.

I was overweight oil-related stocks, which hurt this year, but Canexus is a big stand-out mistake. It was a large part of my portfolio (a big part of out-performance in past years), and I just sat on it while it fell 55% in 2014 (and continued to decline in 2015). It’s stunning just how much value was destroyed by their attempt to build an oil-by-rail transloading terminal: over $350M invested, and it sold this year for $75M. Looking back (with the benefit of knowing that there were more declines to come), I should have seen the writing on the wall closer to mid-2014 that this supposed side project was threatening the stable, cash-generating chemicals business that I liked in the first place. That would have been a loss for the year, but not a loss on the position — instead I completely ignored what was happening and lost a lot of money by the time I woke up to how bad things had gotten this year.

I’ve been cutting down the number of positions I hold in the active portfolio and putting more and more towards the passive portfolio, but have not yet gone fully passive — at this rate it will take me several years to wind down to that point. Especially given that I wrote a book on how passive investing works and is so easy to do I should probably just liquidate the active portfolio and go fully passive. As I was putting this post together, Regal (RLC) received a take-over offer, which helps offset some of the other idiot moves I’ve made. The proceeds from selling that have been rolled into the passive portfolio. I also took that opportunity to do a big re-balance: I’ve had a mix of TD e-series and ETFs for a while now, in part because the e-series are easier to buy on autopilot, or in small pieces as the market dips (an idiosyncratic move purely for psychological comfort). I’ve now liquidated the e-series and rolled everything into just four ETFs — and I’ll note for new readers that my passive portfolio is in my TFSA and RRSP so there were no tax consequences to this roll-over, but doing the same thing in a non-registered account would have made me realize (and pay tax on) any capital gains the e-series funds had accumulated. It’s likely I will once again build up some e-series through the next year or two and do another shuffle to roll them into ETFs, or I might finally get into the habit of buying an ETF every few months for the passive portfolio.

This is two years in a row now of under-performance. My cumulative out-performance (“alpha”) is still positive, and by enough still that it raises an interesting conundrum, related to the previous posts on freelancing: in 2014 and the first half of 2015, I’ve ignored managing my active portfolio for the sure thing of freelance work (and the not-so-sure thing of the book). However, if I was able to maintain the 5-year average of out-performance from the years where I was working at it (which conveniently ignores this, my second-worst year relatively speaking), my time would actually be better spent doing investing research than editing/writing/coaching work. Of course, if I were to “risk adjust” that, then I’m back to taking the sure thing of working for a living and indexing my investments.

1. For that matter 2015 has been pretty hectic too, which is why this update on performance is coming 6 months after the fact.
Link to 2013’s update.

Last week I did some thinking out loud about freelancing, which included some discussion around some recent posts by Robb Engen at Boomer and Echo. Robb left this really long and thoughtful comment which I think should be a post in its own right so you can all see it. Here’s Robb.

Hey [Potato], I’m not sure if you’re just taking issue with the $1000/month comment or what, but this comes across as a pretty whiny rant. The point is, if you were in financially dire straits, you could easily find a way to double your best freelance earnings. You’re not in that position, so you don’t NEED to hustle that hard.

Think of it this way: the average couple with no kids could rent out a spare room or basement to reach that extra income target. But they won’t, because having a stranger in your house is weird and uncomfortable. One or both of them could take a part-time job or use a marketable skill to earn extra money on the side. But they don’t want to because they’d rather watch TV and look at Facebook.

My advice to millennials [snip] is to hustle. “Do what you love” is a great mantra, but do it on the side. Anecdotally, I know a few people who do it, and plenty who could, but choose not to.

You make a lot of assumptions about me and my situation. I’m actually offended (well, offended enough to make this comment). I’m not in the upper-stratosphere of writers — not even close! I write a lot and do a decent job promoting. I’d say my biggest strength when it comes to my side business is finding what the next thing is going to be.

When the typical online ad revenue streams dried up, I looked for other ways to increase my side income. I noticed plenty of brands trying to start a blog or newsletter, and most of the time they had no content strategy whatsoever. So I’d reach out to a few of them and offer to write articles at $250/post. I took a targeted sales approach and it paid off. Incidentally, many of those relationships turned into advertisers on B&E or RCC.

After the Toronto Star column ended, I was out $8k to $10k per year. Enter the fee-only planning business, which filled that void and to be honest takes less time than writing, finding sources, and going back and forth with an editor (as you described above).

Yes, I benefit from a short commute and a steady 9-5 job. But did you know that I work every Friday/Saturday night from September to December, and from January to March?

Yes, I’m blessed to have a stay-at-home spouse. But that does not limit the time I spend with my family and looking after my share of the household duties. Did you know that my wife has MS? I can’t imagine how tired she gets chasing after two young kids every day while keeping the house in order, groceries stocked, and family on schedule. I drove my daughter to and from Kindergarten most days. I do whatever I can to help ease that burden at home.

Finally, I’m also working on plenty of non-income generating activity on the side, such as completing the coursework required to earn my CFP designation, and doing pro-bono financial planning.

Hey, we also love binge-watching shows on Netflix and do so on a regular basis. But when The Bachelor comes on, or (shudder) Grey’s Anatomy, I pull out my laptop and get to work.

I freelance to replace my wife’s working salary so that she can stay home for her health and to look after our kids. It’s a lot of work, but I’m in no danger of burning out.

I don’t think it’s unreasonable to earn $1,000 per month on the side. Deep down, if your financial livelihood depended on it, you could hit that target. My turn for assumptions: You have the luxury of working on “dream projects” like writing a book or creating a course because you don’t necessarily need the immediate income (these projects may pay off down the road, but likely would not return the time and effort that were put into them). If you had to focus on immediate income, you could easily earn $1,000 per month or more. You know you could.

Potato again. In last week’s post I did some thinking out loud including deciding not to try to quit my job to do freelance full-time, and also trying to think of what the average person might be able to expect in terms of side income if they started freelancing. I started by referring to and criticising a recent post by Robb Engen at Boomer & Echo, which left off anchoring readers at $1000/mo, and then whining that I was nowhere near that and then thinking out loud to try to figure out if the expectation was reasonable or if I just stink [TL;DR: I leave off inconclusive, but suggesting it’s doable for some, and that my odour is not entirely that of freshly baked cookies and rainbows]. I also made some assumptions about Robb’s situation that he found offensive. Robb, for what it’s worth I’m sorry. It’s not going to stop me from continuing to run my big stupid mouth (err keyboard) over the next few lines, but I’m not intentionally trying to provoke you.

I think one thing that comes out clearer in Robb’s post here than in the original is the issue of need. Having the ability to start tapping some kind of side income if you lose your job is a great backstop (whether that’s freelancing or something else), and of course for that to be there when you need it, you have to have at least a little bit of freelancing going on while things are fine. Whether that’s going to bring in $500/mo, $1000/mo or more is hard to say, and not all that relevant except for my own neepery and nit-pickiness on numbers and setting expectations — the point is that doing it will open possibilities and create backstops for you.

His closing point here is valid. I do diddle around a lot on projects with no economic return. If I was in a needful situation I would hustle a lot more for paid work and shelve things like the book and course, and that might make me more positive on the prospects of freelancing.

And a final sticking to my guns moment: I’ll still suggest that Robb is in the upper stratosphere of freelance writers. Freelance writing is not so lucrative that said stratosphere is necessarily paved with gold, and I didn’t want to suggest that that makes it easy to do — writing a lot [hard work] and doing a decent job of promoting is how you get to be a top-level writer. And Robb is a machine.

I have to admit, I was really afraid to read Wealthing Like Rabbits based on the previews and excerpts I had seen. I was also afraid because the title was explained with this blurb: “Let’s take the word wealth, which is a noun, and start using it as a verb. The new word wealthing will replace saving when discussing any saving that increases your net wealth,” and I was scared that it was going to be wall-to-wall neologisms. I was pleasantly surprised: It’s actually a really good cheerleader for personal finance.

The book kicks off with an alternate reality comparison: what life looks life if you stretch to the max for a house and lifestyle, and what it can look like if you pare it back to something that’s still well within the comfortable range. It’s one of the best uses of this technique I’ve seen, and strongly makes the case that living within your means is not all about sacrifice, but can provide the stability and security you need to actually be happy. “Comfortable is about more than money. Much more. It’s about sleeping comfortably at night and not being afraid to check your mailbox or your inbox in the morning. It is about being comfortable driving to work in a Corolla rather than a Lexus when you are thirty-three so that you won’t have to drive to work at all when you are sixty-three.”

It’s full of highly relatable anecdotes advising readers to set up good savings habits, control their spending, and build their lives on a solid financial foundation. The irreverent examples using zombies and hockey are not taken too far (with the exception of the debt = smoking one), and each chapter has its own unique pop culture reference to help prevent them from being over-stretched.

WLR has the subtitle of An Original Introduction to Personal Finance and the key word there is introduction. It is not a guide or user’s manual, and Robert Brown is no Michael James on Money — the book has a few technical mistakes and misunderstandings… But it’s not a book on details anyway. The sins are of detail and not of message, and the message is just fantastic. It’s not detail-oriented, but like a good cheerleader it’s just to get you riled up and rooting for the home team, not to deliver a detailed game plan for the next play. And WLR is great in that role: it is so easy to read and does such a great job at those alternate life comparisons that I think it’s well worth reading for a newbie, and would make a good first introduction to personal finance — the details (that geeks like me love to nitpick) can be ironed out in their second or third PF book.

I was also relieved to find the bit on the wealthing neologism at the end of the book, and not a new phrase the author tried to wedge into the entire thing.

It is full of quotable bits, which I will end on: “It’s startling to see how a series of seemingly reasonable decisions can result in such an unreasonable amount of money going out the door.”

——

Nitpicking:

I’ve noted some points as I was reading it (and Michael James on Money already covered many in his review), so here is a breakdown of some things to watch for.

RRSPs: The most noticeable errors (in terms of affecting the message) come from discussions of RRSPs. TL;DR: just accept the take-home message that you should save and invest for your future in some combination of an RRSP and TFSA, and pick up the details elsewhere.

Early on in the book, WLR calls the refund from an RRSP contribution a windfall, and suggests that younger readers use RRSPs over TFSAs because they would rather get this windfall when young than when old. Yet later, when discussing the home buyer’s plan, he suggests the opposite: that using the tax savings for a downpayment is “…stealing from a future version of yourself.” [emphasis in the original] Describing the home buyer’s plan is a touch challenging, but to break it down simply I’ll put it this way: it’s a way to use “the government’s portion” of your RRSP as a downpayment now, or to use pre-tax money for your downpayment. For example, if you’re in the 30% tax bracket and were able to save $17.5k in your TFSA as a downpayment for a house, you could instead have put the $25k you made (and were taxed on before putting the funds in your TFSA) in an RRSP pre-tax, and then used the full $25k for your downpayment. In many cases, this difference (~$7.5k depending on your tax bracket — double for a couple) is not enough to worry about getting into a commitment to repay and the psychology of tapping into sacred retirement funds and all that. However, if that amount can make the difference between having 19% down and getting stuck paying CMHC fees or having 20% and avoiding them, it can be well worth it (though you could just save a up for a few more months too). The HBP is often described as a loan to yourself from your RRSP, which is right because you have to pay it back, but doesn’t really get to the main benefit. Of course, the main drawback is that you do have to pay it back and a shocking number of people don’t, which is why WLR comes in against it.

However, it’s also a good safety valve on the RRSP — as a young person you can start saving for “the future” with your RRSP if you want without needing a detailed plan on saving for a house versus saving for retirement, the HBP (and the flexibility of the TFSA) will let you focus on saving and sorting the details out later. WLR makes takes the opposite point of view on this opinion: “It’s important to understand that long-term (retirement) savings and saving for a house are two entirely different things and they need to be treated as such.”

What’s weird is that the book then recommends paying CMHC fees over using the HBP. The HBP has the risk of not getting repaid and costing you some RRSP room and a premature tax bill, but paying for mortgage insurance is guaranteed money out the door.

As for the windfall issue, I tackled that in an earlier post. In short, it’s not — the refund is a total red herring that confuses a lot of people with the RRSP.

When describing the benefits of enrolling in an automatic RRSP payroll deposit plan, the book says that “If you contribute $50 a week to your RRSP, you can reduce your taxes by $50 a week.” Not quite: a $50 automatic contribution will reduce your taxable income by $50; your reduced tax withheld will be more like $15, depending on your tax bracket. Again, it’s still a good idea, but the details are off.

Paying off debt vs investing: There is one bit of flawed reasoning that crops up in a few places. When discussing whether to pay of debt first or to start investing, the book says “Yes, the debt’s interest is likely higher, however, I really, truly hope that the interest on your savings will be compounding for a much longer period of time than the interest on your debt will be, which makes the math favour the savings plan.” No. There is a big benefit to starting to save early, but that applies equally to reducing debt early — investing does not get special treatment in this regard, and your savings from the future will not hitch a ride on the TARDIS to come back and thank you for birthing them earlier. If the interest on your debt is higher than your expected returns from investing, then paying the debt off aggressively is the right move. Your retirement savings may have 40 years ahead of them to compound when you’re in debt, but for the first year of building them up your debt and retirement savings both compound for a year; the year after that adds exactly one year to each: your debt (negative wealth) growing every bit as fast (or faster if the interest rate is higher) as your investments. Where it makes sense to invest before paying off your debt is when your expected return is higher than the interest on your debt — or to pay the penalty for behavioural reasons.

He does have a side point that starting to save and invest early will get you into the good habit of building up your RRSP and avoid procrastinating, and I think this has merit. I’ve seen some people get caught unsure of where to go after finally paying off their debt — starting to invest a bit before the big zero day can make the transition smoother, even if it’s not mathematically optimal. But these behavioural factors are not what the math says you should do. In the margin I starred this paragraph: “…all habits are forming. The sooner you embrace and establish the habit of saving, the easier it will be for you to maintain that habit throughout your life. If instead you develop a habit of postponing saving until a better, more perfect time, you will (with the best of intentions) establish a habit of procrastination. And you know what? There is no perfect time!” That was great and could have stood on its own.

This issue of compounding times rears its bizarre head again when discussing saving for a house. “So, while I’m saying that you need to be saving for your retirement even if you are carrying some debt, in the same sentence I’ll say that you shouldn’t be saving for a house until you are debt-free. That sounds hypocritical but it’s not. Any money you save for a house down payment will not be compounding for nearly as long as your retirement savings will be. Without the advantage of the longer time frame, the cost of servicing the debt is bound to exceed the return on your savings.”

Mortgage math: A big part of the alternate reality possibilities centre around buying a larger house or a smaller one. The most math-heavy part of the book is comparing the housing choices of two brothers, one of whom stretches to the max while the other starts with a more realistic budget. There are many tables of figures there, and even I was starting to tune out at the number over-load.

There is an exceptionally common error about mortgage payment frequency out there that also appears in WLR, “The more frequent your mortgage payments, the less total interest you will pay over the length of your mortgage.” So far so good — this is true. However, the effect of paying more frequently is quite small and often over-stated by confusing more frequent payments with accelerated payment schemes. I highly recommend aligning your mortgage payment frequency with your paycheque frequency: if you get paid biweekly, make your mortgage biweekly. But if you get paid monthly, there is no point in making your mortgage payment weekly — the savings on interest are minimal, and anyway you end up having to push a payment back just so you can keep a balance in your chequing account to spread a monthly paycheque over several weekly periods. WLR falls into the common mistake of confounding accelerated payments with more frequent payments: “The difference is substantial. A $350,000 mortgage at 5% paid monthly would …[numbers]… The same mortgage would cost only …[numbers]… a savings of $30,187 just for paying more often.” [emphasis mine] No, the savings are from paying more, not more often.

Accelerated weekly/biweekly plans are a good behavioural way to arrange paying more on your mortgage, but they are not magic. If your budget is constraining you from paying your mortgage down aggressively, signing up for an accelerated weekly or biweekly mortgage can lead to nasty surprise when you hit your first month with an extra billing period in it.

Again, these are nitpicks for geeks like me. The book is good for its anecdotal value, the relatable stories that will help people learn and remember the basics.

This has been a pretty good year for me for freelancing: I’ve had a fair number of clients on the investor education business side, as well as some editing jobs, including editing a novel-length fiction for another author — my first work of fiction (I normally work in non-fiction/science/health care/personal finance). I’ve had on my to-do list for a while to revamp my various websites because I’m doing just an absolutely atrocious job of advertising myself¹, when I realized that I’m busy enough and there is no need for that — I have almost as much work as I can handle just coming in from my terrible advertising and excellent word-of-mouth. This is my second-best year ever for freelancing, and though the year is only half over I’m on track to quadruple the average of the last three years. The only better year involved a single intensive project versus a bunch of smaller jobs.

But despite doing fairly well on a few different freelance projects, I am nowhere near the point where I would feel comfortable quitting my job and going full-time freelance. And I don’t think I will ever get to that point: I like having a steady job with benefits (and I like working in the not-for-profit sector even if I could make more freelancing or in for-profit). And with that realization in mind, I think it’s maybe time to slow down — another big reason I keep trying to not get myself worked up to creating a course for beginners to investing/planning/etc.

I’ve also had freelancing on my mind because I’ve been stuck trying to complete an interview for a really great person who does not deserve to have me sitting on her deadline for the past few months. The question that’s been holding up the works is fairly simple: “What advice would you give PhD students today [about preparing for non-academic jobs]?” And I wrote a pretty decent few paragraphs on expanding and honing your transferable skills by freelancing on stuff. And then I second-guessed that: how realistic is that advice, how good is it? Will risking burnout in grad school (or complications if they go over the typical 10-hour-per-week cap on external work) actually help grad students as advice? How repeatable would my freelancing experiences be? I mean, I think I’m pretty good at what I do, and I’m well-rounded so there are lots of things under that umbrella, which leads to a number of things I can do on a part-time basis. But would most grad students be able to devote so little time to rounding up business that it made part-time freelancing worthwhile?

This was kind of driven home for me by a few recent posts by Robb over at B&E, including this one on multiple income streams where he ends with this bit: “You’d be surprised how quickly you can accomplish your goals when you can earn an extra $1,000 or more per month.” Well yes, a ~20% raise for the average person would accomplish goals faster. But how realistic is $1k/mo in freelance income? IMHO, not at all. Look, my best year ever didn’t even hit half of that on average. Yes, I made a fair bit more than that in my busiest two months — but I could not have kept up that pace for a full year, I would have burned out — let alone being able to keep scaring up that kind of work.

He’s partly helped by not having the soul-destroying commute that I do: saving 10 hours a week could free up a lot of consulting time. He’s partly helped by his wife: add a working spouse (as is the case for many) and he’d have to do more housework and have less free time to work side projects. He also has a really steady 9-5 job, whereas I have trouble scheduling work far in advance because I don’t know when the shit will hit the fan (but then I get lieu days to freelance after it does). But he’s so far up in the stratosphere of freelance writing (where people come to him for jobs, and where he pulls in an average family’s full salary in blog income) that I’m afraid he may be losing perspective — most people are not in the position to make that level of side income², and that’s assuming that they have marketable skills that are amenable to part-time side income in the first place.

A thousand dollars a month doesn’t sound too hard, on the surface: if you bill at $60/hr (but actually earn closer to $30/hr after under-bidding on projects and doing development work and fiddling with your website and Linkedin profile), then you only need to work about 17 billable hours each month. That’s like four hours a week; even after it ends up doubling with all the unpaid work that surrounds freelancing, you’re still only out one of your weekend days each week. Of course, $60/hr is for pretty specialized work, which is kind of hard to find and may require like graduate degrees or something. Freelance writing pays more like $0.50/word if you’re lucky, maybe $0.10/word if you’re not. No problem, you’re thinking, you might be able to hammer out 1,000 words in about two hours if you’re a fast writer. Two of those a month and you’d hit that $1k target with two weeks off to yourself. Of course, only people who are already famous can hammer out a 2-hour blog post and get paid $500 for it — most³ freelance writers and most assignments will require that you do research, and interview experts, and go back and forth with your editor to polish it, which can bring your hourly rate way down. Plus you’ll have to draft and send like 20 proposals to editors for each assignment you actually land, which is hours out of your life you don’t get paid for at all. A few sites peg basic copyediting at about $30/hr — but go to the self-publishing sites and you’ll see authors claim they don’t pay over $20/hr (along with ads from hungry part-time editors willing to low-ball).

So with business development, you’re probably talking 8-10 hours per week to hit that expectation if you have some marketable skills but aren’t a super-specialized professional. If you don’t have a portfolio or a lot of skills and are just grinding away at things like fiverr jobs or brainmass, you’re talking more like 20 hours per week, which I don’t think is something to advise most people to expect.

What, then, is a reasonable expectation of what working freelance can do for you? I don’t know. I don’t know if I’m way under my potential^4,5. I believe that I’m well above the median in terms of freelancers who work full-time day jobs, at least in specialized skills if not in billable hours, which means most should not expect to break even the $500/mo point. But maybe my self-image is all wrong and the only reason I took issue with the B&E estimate is because I’m actually just unsuccessful. How much is a reasonable amount of work for the average person before burnout threatens? Again, I’ve personally prided myself on my stamina, but I lose a lot of time to other parts of my life — a young, single person with no commute could rock side income (but then is that typical/average?). Is ~10 hours/week sustainable if your commute is more reasonable? I don’t know what to suggest, which leads me back to part of why I’m stuck on that interview.

However, the main point may still apply: freelancing may be a good way to build transferable skills and improve your finances. Most Canadians struggle to save even a few thousand dollars per year, so making even $250/mo in a more realistic freelancing expectation could really beef up those retirement savings.

As for me? I think I’ll move updating my websites and profiles back down to the bottom of the to-do list.

1. I mean, I earned my American Medical Writers’ Association certificate two years ago and still haven’t gotten around to putting that fact up anywhere — in fact no where do I actually advertise that I do editing work, it’s all been thanks to word-of-mouth. And my CV/bio is just a disgrace.
2. And of course, Michael James was ahead of me again to that idea, as you can see in the comments section at B&E.
3. Look at me, talking like I’ve had any kind of success in this field at all (I haven’t), or talked to more than two people who have (I haven’t).
4. Well, I know that I am: I charge almost half of what many money coaches charge, which I justify by focusing on education and making my clients work for themselves — I do less for them, at the end of the day, so it ends up being what I consider exceptionally fair, which makes me feel good as a service provider.
5. Also, I know that I am: I spent a lot of time writing the book last year, and this year on pro bono work for the library as well as promoting the book and doing interviews — all time that I could have instead dedicated to making money by freelancing.

I keep thinking that there are a lot of people who really want or need a course on personal finance and investing, and there aren’t many resources for it. There are books of course, but some people just aren’t book learners, or prefer a course for one reason or another. There are some good continuing education courses offered through UofT and a few other universities across the country, but for most people who don’t live close to campus they’re out of luck. So I’ve thought about putting together a full online course on the matter, and while few people think it’s needed, when I actually asked who would sign up for such a beast the response was under-whelming.

A full course would be something like 12-16 hours of lectures and discussions, which would take hundreds of hours to prepare, practice, and coordinate. It’s madness to put in that kind of work before knowing for sure that there’s actually an audience at the other end. So it’s a bad idea. No one wants it, at least not online.

And yet it’s an idea that won’t die. I’ve kept thinking about how to put it together, how to change and add to the content of the book for a course, and moreover talking myself into thinking that it is needed and maybe the reason for the previous response is that people just don’t want to raise their hands over vague hypothetical options (also, the people who would want a course are likely not on r/PFC or here, excusing the underwhelming response earlier). So I’ve doodled a bit and come up with a preliminary syllabus for such a course.

But it’s still a terrible idea that’s going to take way too much time that I don’t have. Fortunately I’ve heard that Ellen Roseman plans to take one of her UofT courses online next year, and Bridget of Money After Graduation is putting together an online course on investing too. So maybe I can bow out and let them solve the problem.

Here is the preliminary course outline/syllabus, make of it what you will. Maybe it will get you excited and you’ll want to enroll or back a kickstarter-type thing to make it happen. Maybe Ellen and/or Bridgette will liberally borrow for their courses (and the outline is not the hard part of creating a new course so I don’t really mind). Maybe you will tell me that my outline is bad and that I should feel bad.

Planning, Investing, and Other Grown-up Money Concerns
Proposed Course Outline (each unit approx. 45 minutes + time for questions)

• 1. Introduction and Money 101 Review
  a. What you should already know and have mastered.
  b. Budgeting and living within your means.
  c. Saving saving saving
  d. Emergency funds (insurance?)
  e. Credit cards, lattes, etc., etc.
  f. Clever parables, Diderot’s housecoat, Chilton’s four most dangerous words.
  g. Reading list to kick-start the course.
• 2. Free Your Mind and Your Ass Will Follow
  a. The importance of attitude, behaviour, and long-term thinking.
  b. Neat grey matter tricks, including why free makes us stupid.
  c. Social animals and keeping up with the Joneses.
  d. Heuristics and rules-of-thumb (or should this be a whole other class?).
  e. Points-of-view.
  f. On uncertainty, and why a scientist is talking right now.
• 3. Canoeing Down the Spanish River: Goals, Direction, and Having Fun [w/ Sandi Martin]
  a. Sandi’s talk from TPL, expanded a bit.
• 4. Needs, Wants, and Other Sundry Topics
  a. Some concepts, because I had to stick them somewhere (inflation, compound returns, how to read graphs, use a spreadsheet, probably some other stuff).
  b. Needs and wants, and creating your minimum plan and ideal plan.
  c. Other goals and things that will affect your planning.
  d. An aside on the industry, some ranting, why I push the do-it-yourself way.
  e. Sketching out a plan and how to get there.
• 5. Finally, the One in Which He Talks About Investing
  a. Investments help us make our plans a reality.
  b. Types of investments.
  c. Investing in businesses.
  d. Lessons from active investing: intrinsic vs market value, and what it means for long-term investing in a world that survives the coming zombie apocalypse.
  e. Investing in bonds, real estate, commodities, and other stuff.
  f. History and setting reasonable expectations.
• 6. The Quick and Dirty Yet Completely Convincing Explanation of Index Investing
  a. The importance of fees.
  b. For repetition sake, a discussion of how fees matter.
  c. What can be controlled and what cannot be.
  d. Active vs passive – theory and past results.
  e. The added benefit of simplicity.
  f. Other ways of investing, and what they entail.
  g. The importance of “I don’t know”.
• 7. Risk, the Gom Jabbar, and the Unfortunate Gambling Analogy
  a. Risk in everything.
  b. Many definitions of risk, and blending of volatility and uncertainty with risk of lifestyle impairment.
  c. Risk on different timescales.
  d. Risk tolerance.
  e. Enduring a market-crash in real time and Dune’s Gom Jabbar.
• 8. Let’s Do It: Asset Allocation and Your Plan
  a. The canonical portfolio.
  b. How to decide on an allocation that will work for you.
  i. The age-based rule-of-thumb, and the completely arbitrary equity split.
  ii. The classic 60/40 one-size-fits-all portfolio.
  c. Apocrypha.
• 9. How You Actually Do This: Three and a Half Investing Options
  a. Robo-advisors.
  b. Tangerine.
  c. TD e-series.
  d. ETFs.
• 10. How You Actually Do This: Taxes and Tax-Shelters
  a. TFSA.
  b. RRSP.
  c. RESP.
  d. RDSP.
  e. Non-registered: taxes, dividend tax credit, capital gains, ACB.
• 11. How You Actually Do This: Writing Stuff Down and Making Spreadsheets (Or Whatever)
  a. Condensing your goals and direction down into a written plan.
  b. Writing down your asset allocation and a rebalancing plan.
  c. Tracking stuff with spreadsheets (or pieces of paper in a binder, or whatever works for you).
  d. Tools that already exist and can help.
• 12. Where I Talk About Processes and Take a Break to Riff
  a. Processes, lessons from engineering and health care.
  b. Good enough solutions.
  c. Execution risk, and some more talk about the behaviour gap.
  d. Some slack time to review any material from the previous classes that needs further discussion.
• 13. Au Secours, Au Secours!
  a. When to get help.
  b. How to find help.
  c. Getting value-for-money.
  d. What an advisor/coach can do, and what they can’t do.
• 14. The One Where I Reveal My Thoughts on Real Estate and You All Hate Me for It.
  a. The biggest purchase – and biggest expense – in your life, and why it deserves more thought than it gets.
  b. Rent vs buy analysis, and busting myths about renting. The ball pit analogy.
  c. Income suites are not magical.
  d. The housing bubble, and the pernicious myth of the property ladder.
  e. A look back at US housing bubble and why it’s not really different here.
  f. Real estate as an investment, direct and REITs.
• 15. The Hardest Problem in Personal Finance [hopefully w/ secret guest(s)]
  a. The options that open up as you near retirement (annuities).
  b. Government benefits in retirement, CPP.
  c. Sequence-of-returns risk, longevity risk.
  d. Sustainable withdrawal rate, and the various schemes to convert a pile of investments into lifetime income.
  e. Decumulation plans.
• 16. An Hour for Questions, or Lacking Those, Delicious Discussions of Dirty Dealing
  a. Q&A.
  b. Why I hate market-linked GICs and their dirty advertising.
  c. TANSTAAFL in general, being skeptical.