Ten whole episodes, and not a single rock thrown at us! I’m surprised and delighted. This week we kick off with quite a bit of feedback on previous endeavours. Thanks for taking the time to write us. I’m even grateful to George, who came to Magnus’ defence after last week’s episode. There’s enough space on The Fat Wallet Show for all views*.
If you’re wondering why we’re talking bonds again, it’s because we recently fell into the trap of People Who Know Things. When I’m around Simon, there’s often a very good case to be made for I’m with stupid t-shirts. Because he knows so much more than I do, I’m forever reaching for new levels of understanding. In a previous episode on bonds, I forgot to mention where I’m reaching from. I already had some information and I assumed everyone knew what I was talking about. The intent always was to talk about what bonds are and how they work, but I got excited and ended up doing exactly what The Fat Wallet tries to combat.
@kristiavh I still dont understand bonds. Never even heard of corporate bonds. What difference between that and a share?
— Charmaine (@charmaine59) July 21, 2016
Thankfully I had our friend Charmaine to keep me honest. Her tweet made me realise that I missed the mark on the bonds episode, so I’m having another go at it in this one. Charmaine, I apologise for being an
If you’re wondering why we’re talking bonds again, it’s because we recently fell into the trap of People Who Know Things. When I’m around Simon, there’s often a very good case to be made for I’m with stupid t-shirts. Because he knows so much more than I do, I’m forever reaching for new levels of understanding. In a previous episode on bonds, I forgot to mention where I’m reaching from. I already had some information and I assumed everyone knew what I was talking about. The intent always was to talk about what bonds are and how they work, but I got excited and ended up doing exactly what The Fat Wallet tries to combat.
@kristiavh I still dont understand bonds. Never even heard of corporate bonds. What difference between that and a share?
— Charmaine (@charmaine59) July 21, 2016
Thankfully I had our friend Charmaine to keep me honest. Her tweet made me realise that I missed the mark on the bonds episode, so I’m having another go at it in this one. Charmaine, I apologise for being an arrogant asshat who assumes people know things by magic. I hope this episode clears the whole thing up. I will continue to count on you to remind me what this is all about - access to information everybody can understand.
This is a gentle reminder that anything worth doing is also worth swearing about. If you are offended by swearing, The Fat Wallet Show might not be for you.
*Unless the views are racist, sexist, bigoted, full of logical fallacies or generally stupid, which George’s was not.
who assumes people know things by magic. I hope this episode clears the whole thing up. I will continue to count on you to remind me what this is all about - access to information everybody can understand.
This is a gentle reminder that anything worth doing is also worth swearing about. If you are offended by swearing, The Fat Wallet Show might not be for you.
*Unless the views are racist, sexist, bigoted, full of logical fallacies or generally stupid, which George’s was not.
Let’s start this week with a slow clap for Magnus Heystek. In a single article, he managed to troll an entire industry. Well done, sir. You got me.
I’m a huge ETF nerd. I love thinking and writing about and investing in them. I love them, because I understand them. That is not something I can say for many financial products. I believe ETFs are the easiest, safest, cheapest way for me to grow my capital. Once I got over my initial outrage, however, I remembered the point is exactly to grow capital. If there’s a chance that ETFs aren’t the best way to do that, I want to know sooner rather than later.
Stephen King advises writers to kill their babies. If your witticism doesn’t fit anywhere, the only solution is to throw it out. That approach, I believe, is a very healthy (albeit uncomfortable) way to live. Am I holding on to an idea too tightly? Am I becoming inflexible and closed off to alternatives? I’m grateful to opposing points of view, because getting angry and uncomfortable is a good indication that I need to check my ego at the door and revisit the facts.
In this episode, I try to kill ETFs. I have to keep reminding myself that I am not a crusader for a particular style of investing. If ETFs turn out not to be the best option, fuck ‘em. I’m here to grow capital so I can retire early, move to a beach and dance the salsa all day. Whatever gets me there is what I’m going to do.
Kristia
The Fat Wallet Show is a weekly humble pie eating contest (on iTunes, for all the world to witness, as of this week).
For about the first six months after joining Just One Lap, I left every meeting with a list of things to Google. Half a year in, I finally knew enough to start asking questions. However, nobody around me ever asked a question. I realised that either the expert-to-novice ratio was skewed and I was literally the only person who didn’t know what was going on, or someone was bullshitting.
The Fat Wallet Show is a direct result of the process of owning my ignorance. Since I’ve already claimed the Village Idiot title, I’m no longer shy to ask smart people to explain things to me. They already know how little I know. Once I started unabashedly owning my stupidity, the rate at which I learned things increased dramatically. Yes, sometimes I ask stupid questions, but once in a while I ask a really good question, and I’m proud of that.
This week, something really cool happened. I was reading through a report we got at the CoreShares ETF Exchange and noticed something I didn’t understand. This did not shock me. I went through my usual process, which means I asked Simon. He didn’t know. So I asked the three ETF geniuses, Helena, Candice and Nerina (*whistle*). They didn’t know. Then I asked my smartest friend, who drove over to my house so she could draw pictures. Only, she couldn’t figure it out either. It turns out an important piece of data was missing and nobody knew what was going on.
This excites me, because the financial services industry as we know it today came about in a time before fintech and, you know, cars that weren’t attached to horses. Like all new things, it didn’t start out effective and efficient. It remains a work in progress, a living thing that exists for our benefit. A simple question like, “Why is it like this?” naturally leads to, “Is there a better way to do this?” That question, hopefully, leads to improvements that can benefit the human race, not just some dude in a suit.*
Information is such a powerful tool. To get it, though, you have to plant your feet firmly in what you don’t know. This week, I tell this story, which you now have to go through twice. I apologise. Then I talk about bonds. If that’s what you’re here for, skip to the end.
By the way, ETF geniuses, where my retail bond ETF at? Gimme it.
I mention our friend Daniele in the podcast. You can follow him here.
*I’m actually a big fan of dudes in suits. Especially well-made suits that fit just right. Please don’t stop wearing them. You look fantastic.
At Just One Lap, we don’t shy away from financial products. If it exists, odds are you can find it in our archives. We do, however, have an Achilles heel. We don’t like talking about retirement annuities. Personally I have no qualms with them. I wasted the first decade of my earning life getting shafted by credit providers and poor decision-making, so I only started contributing to my RA in my 30s. By that time, 10X existed and I could settle comfortably into that delightfully cheap little nest. Simon wasn’t as lucky.
Retirement annuities are worth talking about. A few product providers are making an effort to contain fees to 1% of assets under management (AUM). While AUM is a bullshit concept, I like that they’re making an effort. 27.5% of my contribution is tax deductible, and can live in a double tax haven in my tax-free savings account. My retirement annuity also keeps the money out of my irrational little paws until I hopefully have some sense.
In this episode, Simon and I start off discussing the merits and limitations of retirement annuities. You can’t really talk about retirement without talking about lifestyle, so our conversation quickly veers into the dangerous realm of personal finances. How much should we be saving? That turns into how we should be living. Odds are you won’t like what we have to say. Perhaps you shouldn’t listen to this episode after all.
This discussion was prompted by a question we received on Facebook. Send your questions to ask@justonelap.com. It’s a judgment-free zone.
A completely risk-free investment is pretty much a unicorn. Even cash in the bank loses value over time as inflation rises. Hedging is a word obnoxious trader types use to describe investment strategies aimed at protecting your portfolio from losing money. Traders mostly hedge using derivative products, but I steer clear of the d-word as much as I can. Does that mean I can’t protect my portfolio from risk?
In this episode of The Fat Wallet Show, Simon and I try to figure out if there’s a space for hedging for a boring long-term index investor like me. Spoiler alert: There is.
Kristia