Podcast Summary: How to Money – "Becoming a Rational Investor w/ Ben Felix" (#1076)

Release Date: December 17, 2025
Hosts: Joel (with Matt in intro/outro)
Guest: Ben Felix – CFA, CFP, co-host of Rational Reminder podcast, and YouTube investing educator

Main Theme

This episode centers on demystifying rational investing for everyday people. Joel and guest Ben Felix delve into how regular investors can make better, more scientific decisions about their financial futures—sidestepping hype, sticking with evidence-based approaches, and learning how to navigate both the psychological and practical hurdles of managing wealth.

Key Discussion Points & Insights

1. Approaching Money with an Engineering Mindset

• Unscientific Nature of Finance:
  • Ben: Surprised at how "unscientific" much of financial planning was after coming from an engineering background.

    "When I came from this engineering background where everything's scientific and evidence based, it took me a while to figure out that there is a way to apply that type of thinking to financial decision making." (05:00)

• Uncertainty vs. Precision:
  • In engineering, optimal solutions can be tested precisely; in investing, uncertainty and outliers (like Warren Buffett) make truth less obvious for most.
• Importance of Evidence-Based Investing:
  • Ben advocates for following long-term data over anecdotes.

2. Why Invest at All?

• Compounding and Inflation:
  • Investing allows you to “put your money to work,” easing the savings burden required for retirement and helping to outpace inflation.

    "If you just hold cash, the amount you need to save... is much, much higher than if you invest." (07:50)

3. Savings Rate Nuance

• Rules of Thumb vs. Personalization:
  • There is no universal rule for savings rates ("10% of income" is a blunt tool).
• Utility of Spending:
  • Economics suggests early-career individuals might not need to save as much (due to high utility of consumption at lower incomes), but habit formation is vital.

    "Some research actually shows that young people should not be saving at all... but the habit thing is important." (14:00)

• Financial Projection Over Rules:
  • Felix's firm uses customized projections over general advice, considering factors like career changes and personal goals.

4. Modern Financial Advice: Less Stocks, More Therapy

• Shift in Advisor Roles:
  • Today’s best advisors serve as behavioral coaches or therapists, not stock pickers.

    "Investing is a solved problem. We know what good investing looks like... It's the behavioral piece that adds value." (18:13)

• Commoditization of Investment Products:
  • Index funds and robo-advisors commoditize investment management; human advisors help clients stick to good strategies and avoid panic selling or getting caught up in hype.
• Behavioral Value:
  • Staying disciplined and avoiding impulsive decisions (selling in bear markets, chasing fads) often produces "alpha" (outperformance) for advised clients (22:03–24:00).

5. DIY Investing: Opportunity & Perils (29:28)

• Low Barriers, High Risks:
  • The accessibility of investing is a double-edged sword, as platforms gamify risk and novices may make costly mistakes.

    "If you looked at a cross section of DIY investing accounts, my hunch is that it's a bit of a disaster." (30:13)

• Market Correction Readiness:
  • Recent years’ boom may have conditioned investors for complacency—lengthy market downturns (like post-dot-com crash) can test resolve.

6. Diversification Matters

• Sector & Country Risks:
  • Heavy U.S. home country bias is risky ("one market can underperform for a long time").
  • Felix recommends international diversification, noting that even in Canada, professional portfolios overweight home country stocks only within reason.

    "I do still think having diversification beyond that outside of the US is important." (36:33)

7. Alternative Investments: Buyer Beware

• Issues with Private and Collectible Assets:
  • Private equity and collectibles (wine, art) often come with poor transparency, high fees, liquidity constraints, and significant manager risk (adverse selection).

    "Private equity investors have gotten roughly the same returns as public equity investors. But private equity fund managers have become exceptionally wealthy..." (45:15)

• Better for GPs than Investors:
  • It’s easy for everyday investors to end up in “sloppy seconds”—less desirable, riskier funds with less chance for outperformance.

8. Total Market Index Funds & Target Date Funds

• Index Funds: Great—But Not Always a Perfect Fit:
  • The "market portfolio" is optimal for the average investor, but higher risk tolerance or special circumstances ("not average") may warrant tilts toward riskier areas.

    "For most investors, we start from [total market index funds]... if you’re the average investor, you should just own the market." (50:16)

• Target Date Funds:
  • Convenient and “not bad,” but often too conservative for young and even retired investors—potentially costing meaningful growth.

    "You probably could have higher expected returns and a better expected outcome... by taking a little bit more risk than what a target date fund would prescribe." (54:00)

9. Debt vs. Investing

• No One-Size-Fits-All Answer:
  • It's as much preference- and behavior-based as math; some abhor debt, others are comfortable leveraging for investment.

    "I think a lot of it comes down to behavior and preferences..." (55:46)

10. Habits & Behavior: The Power of Doing Less

• Underappreciated Habit:
  • The best habit is to not check your portfolio frequently.

    "Not looking at your investments... is a really, really important behavior... more frequent checking leads people to take less risk." (56:39)

• The Role of Emotion:
  • Emotions shouldn’t be ignored, but should not dictate decisions. The ideal is to use rational models as guides, then make informed, personal choices.

    "You can't ignore [emotions], but they can't dictate your decisions either." (58:13)

Notable Quotes & Memorable Moments

• On Engineering vs. Finance:

  "I started doing an internship at a local investment company. I remember being shocked really at how unscientific a lot of the work was."
  — Ben Felix (05:00)

• On Habit Formation:

  "If people listen to this podcast and say, oh, well, I'm a young person, I don't need to save at all, they might just never start saving because they never built the habit."
  — Ben Felix (15:00)

• On Advisors' Value:

  "A lot of the conversations that we have with clients are a lot closer to a therapy session than to what you would imagine a financial advice session would be like..."
  — Ben Felix (18:13)

• On Portfolio Checking:

  "Not looking at your investments, not checking them every day, is a really, really important behavior for investors to practice."
  — Ben Felix (56:39)

• On Alternative Investments:

  "Private equity investors have gotten roughly the same returns as public equity investors. But private equity fund managers have become exceptionally wealthy..."
  — Ben Felix (45:15)

• On Emotions in Investing:

  "You can't ignore your emotions, but they can't dictate your decisions either."
  — Ben Felix (58:13)

Important Timestamps

• 05:00 – Ben on engineering mindset vs. financial industry
• 07:50 – Core reasons to invest, inflation risk
• 13:00 – Nuances of savings rate and utility
• 18:13 – Advisors as therapists, not stock-pickers
• 22:03 – Behavioral alpha & avoiding hype cycles
• 30:13 – The perils of DIY investment in the app era
• 34:44 – Preparing for a prolonged downturn
• 36:33 – Home country bias and global diversification
• 44:13 – Alternative investments: risks, fees, and selection
• 50:16 – Are index funds for everyone? Maybe not
• 54:00 – Limits of target date funds for growth
• 55:46 – The investing vs. debt payoff "debate"
• 56:39 – The powerful anti-habit: not looking at your investments
• 58:13 – Balancing rationality and emotion in money decisions

Flow & Tone

The episode is engaging, approachable, and rich in actionable insights. Joel asks thoughtful, direct questions; Ben responds with clarity, humility, and nerdy enthusiasm, favoring nuance over soundbites. The duo keeps the discussion jargon-light despite complex topics, and Ben regularly grounds answers in both behavioral realities and academic research—often with a dash of dry wit.

Takeaways for Listeners

• Evidence and habit trump hype.
• Diversify across sectors and countries—don’t assume the recent past will repeat.
• Don’t chase alternative investments unless you’re truly in the top tier of access and fully understand the risks.
• Consider habit and behavior as much as calculators in your financial decisions.
• The less often you look at your portfolio, the more likely you'll stick to a sound plan.
• Let rational thinking guide you, but acknowledge your emotions—they matter, too.

For more from Ben Felix:
Search “Ben Felix” to find his Rational Reminder podcast and YouTube channel for deep dives into investment topics.