Investment Workshop 25: Wrapping It All Up


Well, here we are, at the end of the road.

Investing is a lifelong journey, so in no way is your learning over, but our hope is that this workshop has given you a crash course on how to do this successfully, with the minimum of hair-pulling and panic-selling.

But first, let’s do a brief recap of what we’ve learned about investing over the year.

Investing Is Easy

This is really the big lesson we’ve been trying to teach with the Workshop. Investing really isn’t that complicated.

With mind-numbing regularity, we put more money into the portfolio every two weeks and if that seemed a bit boring to you, that’s exactly the point. Walk into any bank or turn on your local business channel and you’ll hear all sorts of smart-looking guys in $1200 suits gabbing on about alphas and futures and put/call options and risk spreads. We didn’t mention ANY of that because you don’t need to know any of it.

Buy the Index, put money in every 2 weeks. That’s all investing is.

Predicting is Really Really Hard

That being said, predicting what direction the stock market will gyrate is really really REALLY hard. When we first started this Workshop, I was CONVINCED we were entering an economic recession. Trump had just gotten elected in 2016, the Dow had tumbled 1000 points in overnight trading, and I was like “Welp, guess a 2008’s happening again.”

And I was wrong.

Utterly and completely wrong. Instead, the Dow had recovered by opening bell the next day, and ended the year in firmly positive territory.

If I had listened to my emotions and the screaming news headlines a year ago, I wouldn’t have invested money into the stock market for this Workshop. Hell, I may even have SOLD some of the equities in my “real” portfolio. And if I had done that, I would have missed out on one of the biggest stock market rallies since I started working in 2006.

But I didn’t, and that’s precisely the right thing to do. Investing decisions should never be based on trying to predict the stock market. Investing decisions should be made analytically, using cold hard math, and that’s why we’ve been so successful at it over the years.

Set Your Asset Allocation Unemotionally

The biggest and most important decision you’ll make in designing your retirement portfolio is setting your asset allocation, and you do that based on your age, time to retirement, and personal risk tolerance.

If you’re 15+ years away from retirement, you might want to have a higher equity allocation like 80/20. If you’re closer to retirement like us, make your portfolio take on a more balanced allocation like 60/40. Every other decision (how much to put in US vs International, whether to currency-hedge, etc.) will make a small difference in your portfolio’s performance, but by far the largest impact is your equity/fixed income allocation.

Make that decision unemotionally, then stick with it.

Rebalance, Rebalance, Rebalance

The only skill you need to learn when it comes to the day-to-day management of your portfolio is how to rebalance it, because every transaction essentially boils down to it.

Stocks go up? Rebalance.

Stocks go down? Rebalance.

Adding in money? Rebalance.

Taking money out? Rebalance.

In the old days, we had to perform all these rebalancing calculations manually, but nowadays we have automated tools that take care of this for you. Check out our guide on rebalancing if you need a refresher.

Don’t Pay Fees

Keep your portfolio MER’s low and don’t pay fees.

In my entire investment career I don’t think I’ve ever paid a single dime in transaction fees, account maintenance fees, or transfer fees and I’m happy to report that with this workshop we’ve kept that record.

Fees suck, and will eat away at your portfolio little by little like a thousand tiny termites if you let it. The nice thing about ETFs is that because they’re traded on the stock market, you’re not tied to any brokerage company like you would be with a mutual fund.

Which is great because when/if your brokerage company starts acting like a jerk, you can take your ETFs and skedaddle to someone else.

That is MY money, and nobody gets to put their greedy little mitts on it.

Don’t pay fees.

Watch Your Money Grow

If you followed the workshop, opened up the accounts I wrote about, and actually built this portfolio, you’ve pretty much learned all the investment skills you need to retire. This is the same portfolio we used to survive the stock market crash of 2008/2009, it’s the same portfolio that allowed us to become millionaires, and it’s the same portfolio (with some tweaks) that we now use to live off of.

For this portfolio to go up in value, all you need to do is wait. Because it’s built off of Index funds, it can NEVER go to zero and will ALWAYS go up over time. It can still go down in any given a year, but if it does all you have to do is keep putting money into it, buy into the storm, and wait for it to recover.

Thank You and Good Night

So that it. That’s how you build a low-cost Index-hugging ETF-based portfolio that will help you get to early retirement, and then fund your retirement once you’ve pulled the trigger.

Running this Investment Workshop, though a lot of work, has been a blast. Many many people have emailed me since I created this saying they finally “get” how to invest now and they’re no longer scared of the stock market, which is great. I hope we’ve all learned something from this experience, and with that we are signing off.

Thanks everyone!

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WORKSHOP TOOLS

How much does it cost to participate in the Investment Workshop? NOTHING. Because that's how we roll. All we ask is that you sign-up using the following affiliate links to keep it free forever:

For Canadians:

1) Questrade

2) Passiv

For Americans:

1) Vanguard

2) Empower



Disclaimer: The views expressed is provided as a general source of information only and should not be considered to be personal investment advice or solicitation to buy or sell securities. Investors considering any investment should consult with their investment advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decisions. The information contained in this blog was obtained from sources believe to be reliable, however, we cannot represent that it is accurate or complete.


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