The Rational Reminder Podcast – Episode 362: AMA #7 (June 19, 2025)
Hosts: Benjamin Felix & Dan Bortolotti
Special Segment: AMA (Ask Me Anything) – Listener questions
Episode Overview
This episode of Rational Reminder delivers sensible, evidence-based discussions on investing and financial decision-making, focusing on topics sourced directly from listeners’ questions in an AMA format. Benjamin and Dan delve into nuanced areas—withdrawal rates for retirees with all-equity portfolios, the role of financial advisors in keeping investors on track, reactions to market crashes, banking incentives, trend following, leverage, demographics, and more. Their goal: ground listeners in research, pragmatism, and behavioural finance for lasting investing success.
Key Discussion Points & Insights
1. Safe Withdrawal Rates for Retirees with 100% VEQT/Global Equity Portfolios
- Listener Question: “What’s the safe withdrawal rate for early and late retirees using 100% VEQT (equity ETF)?”
- Historical Context:
- Bill Bengen’s 4% rule is based on 50/50 U.S. stock/bond portfolios and 30-year horizons.
- Going global and extending time frames reduces the safe rate.
- Key Findings:
- 30-year horizon/global stocks: 3.5% withdrawal safe at 5% failure rate [03:01].
- “If I hold that safe withdrawal rate constant, I get an 8% failure rate at a 35 year horizon, a 14% failure at 40, 16% at 45, and 21% at 50.” — Ben [04:03]
- Rates drop further for longer retirements—think 3% or less for early retirees.
- 30-year horizon/global stocks: 3.5% withdrawal safe at 5% failure rate [03:01].
- Important Nuances:
- Global data lowers the rate compared to U.S. data.
- All-equity portfolios have more volatility: sequence of withdrawals (“spending during downturns hurts most”).
- “It’s not the bad return, it’s withdrawing the same amount when returns are bad.” — Ben [03:25]
- Variable Withdrawals vs. "Safe Rule":
- Amortization-based variable withdrawals may lead to higher average spending; but spending can fluctuate sharply year to year.
- “On average, you spent a lot more, but in the worst years you may have to cut back dramatically.” — Ben [08:02]
- Real World Applicability:
- “No rule works for an actual person. It’s fun to analyze, but actual retirement spending needs to be more human than a rule.” — Ben [11:05]
2. The Challenge of "Boring" Investing and Sticking with the Plan
- Listener Question: How do you forget you’re invested and stop following daily market news?
- Behavioural Reality:
- Emotional reactions to news lead clients to want to “get out” or shift conservatively.
- “It was really hard to find a planning strategy with anywhere near the impact of not decreasing the stock allocation.” — Ben [13:13]
- Role of Advisers and Automation:
- Having an advisor increases risk tolerance and portfolio discipline.
- “People who are sensitive to volatility tolerate more risk when working with an advisor.” — Dan [15:47]
- Automated, all-in-one portfolio products decrease return gaps from poor timing.
- Quotes & Wisdom:
- “The boring middle is good. Boring is the place to be in investing. If your portfolio is exciting, you’re probably doing something wrong. Embrace the boredom.” — Dan [18:06]
- Let financial planning be interesting; let investing be boring.
3. Reacting to Crashes: Investor Behaviour & Advisor Value
- Listener Question: What if 2025 starts with the worst crash ever?
- 2025 Example: U.S. stocks (XUU) fell nearly 20% early in 2025 (in C$), but by June, losses had largely reversed.
- Emotional Impact: “Super easy to look at the numbers now. 19.7%, that’s not so bad. But that doesn’t do justice to what it felt like to live through it.” — Ben [21:38]
- People Overreact, Then Look Back Calmly:
- “They’ll act like it’s the first time markets go down, and then look back and say it was no big deal.” — Dan [24:16]
- Professional Advice Mitigates Panic:
- Research shows clients with strong advisor relationships are much less likely to panic-sell after downturns.
4. Incentives, Commissions, and (Mis)Education in Banking Advice
- Listener Question: Can you talk about commissions, bank advisors, and the problems with structured notes?
- Banking Reality Check:
- “Banks sell financial products. They have a very strong profit motivation. They don’t sell financial advice.” — Ben [25:25]
- CBC’s 2024 investigation: Bank staff pressured to sell unsuitable products; lack of education compounds conflicts.
- “These are not bad people—just brought up in a bad system with the wrong incentives.” — Dan [27:11]
- Structured Notes:
- High-complexity, high-fee, often not well understood by advisors or clients.
- “Ask your advisor in plain English where that return is coming from. If there’s hemming and hawing, there’s risk you’re not seeing.” — Dan [34:26]
- Education Reform:
- New Canadian rules (2026) to raise standards and require better proficiency among advisors.
- Research confirms: Advisors who make poor personal choices replicate them in client accounts—education, not just incentives, is a root issue.
5. Trend Following & Market Timing: Evidence and Skepticism
- Listener Question: Is trend following just glorified technical analysis? Should anyone use these strategies?
- Academic Debate:
- Top journals publish opposing views on time-series momentum’s efficacy.
- “For every PhD, there’s an equal and opposite PhD.” — Ben [39:20]
- Practical Results:
- Trend-following ETFs have lagged buy-and-hold by wide margins since inception.
- “You have to have a lot of conviction and understand your philosophy; we don’t find these compelling.” — Ben [41:30]
- Takeaway:
- “There’s no magic formula or a silver bullet...If you want outsized returns, you’ve got to take outsized risk. Accept it and move on.” — Dan [42:39]
6. Life Planning Parallels: Diversification Beyond Money
- Listener Question: How do you ‘diversify’ your life for maximum ‘returns’?
- Reflections on Time and Meaning:
- Ben uses the PERMA model (Positive Emotion, Engagement, Relationships, Meaning, Accomplishment) to guide daily choices.
- “Things that don’t fit into that stuff, or if they conflict, I’ll try to eliminate or outsource.” — Ben [46:40]
- Dan: “Like a diversified portfolio, you want all the elements of a satisfying life in there all the time. But as you get older, your focus shifts—accomplishment to relationships, for example.” [49:41]
7. Leverage: Safe Ways to Use It? (Beyond Mortgages)
- Listener Question: What’s a safe way to use leverage in investing?
- Consensus:
- “It’s inherently risky, so it’s difficult to call any strategy ‘safe’.” — Ben [50:41]
- Mortgages are the only widely defensible leverage for most; volatility is lower, utility is higher, behavioral risk is lower.
- “No one panic sells houses when they fall in value.” — Dan [52:53]
- Leveraged products exist, but PWL Capital doesn’t recommend or use them; operational and behavioral risks are high.
8. Demographics, Trends & The Rise of ETFs: Should Buy-and-Hold Investors Worry?
- Listener Question: What happens when ETF investors en masse sell in retirement? Could demographics or trends cause ETF prices to disconnect from fundamentals?
- Mechanics & Research:
- ETF price/NAV gaps are rare due to arbitrage mechanisms.
- As more investors index, prices have gotten less elastic (i.e., flows may have more impact); volatility could rise at the stock level.
- “Money doesn’t leave the system when someone sells—someone else is always buying.” — Ben [57:13]
- “Index funds have inelastic demand for stocks...they buy no matter what.” — Ben [58:14]
- Vanguard reports: demographics may modestly slow growth and lower interest rates, but risk premia are not “clearly” affected.
- “At the end of the day, your best chance of success is a low-cost, globally diversified index portfolio, period.” — Dan [62:51]
- Behavioral take: Focus on what you can control, avoid action bias in response to uncertainty.
Notable Quotes & Memorable Moments
-
On rule-based spending in retirement:
“No rule works for an actual person...for you or I to sit down with a client and say, ‘You can’t do that because the rule says so,’—it’s just not going to happen.” — Ben [11:04] -
On emotional reactions during crashes:
“Nobody who experiences a 10% decline is upset over the 10% decline. They’re upset because they think that 10% might become 40%...” — Dan [21:45] -
On bank sales incentives:
“Bank employees don’t seem to be malicious...based on the CBC report, many...are stressed by the pressure to sell at all costs.” — Ben [27:11] -
On trend following as a solution:
“Part of becoming a mature investor is letting go of the idea you can get the returns of the market without the risks of the market.” — Dan [42:42] -
On life, investing, and meaning:
“Things that don’t fit into those [meaningful life] boxes, or conflict with them, I try to eliminate or outsource.” — Ben [46:40] -
On global diversification under demographic uncertainty:
“Yes, these are trends that may affect long-term returns...At the end of the day, your best chance is a low-cost, globally diversified portfolio.” — Dan [62:51]
Timestamps for Major Segments
-
Safe Withdrawal Rates (VEQT/global equity):
01:09 – 11:43 -
Sticking with the boring plan, behavioral discipline:
11:44 – 19:26 -
Market crashes and emotional reactions:
19:39 – 24:50 -
Bank advice, sales pressure, structured notes:
24:53 – 38:32 -
Trend following / market timing debate:
38:36 – 43:53 -
Life diversification and planning:
43:53 – 50:35 -
Leverage in investing:
50:35 – 54:51 -
Demographics, ETFs, mega-trends:
54:51 – 65:18
Closing Health Update & Listener Reviews
- Ben shares positive news: “All clear” at 6-month oncology check-in after testicular cancer diagnosis [66:13].
- Reminder and gratitude for international reach and listener reviews [67:17+].
Bottom Line: Podcast Wisdom
- Focus on what you can control—costs, global diversification, staying invested.
- Don’t overreact to noise or chase “certainty.”
- Advisors and automated solutions help keep behavior on track.
- Beware of complexity and conflicts in financial products—and incentives that drive them.
- Invest with humility, accept uncertainty, and design your financial (and personal) life with resilience and meaning.