Herman Ye

So you've landed an awesome job. Good on you! You skim over the package and see a retirement savings program. Even better! In Canada, these plans typically come in two shapes. A Group Registered Retirement Saving Plan (RRSP) and a Registered Pension Plan (RPP), aka a Defined Contribution Plan. Let's see how the two compare.  Starting with the similarities: Employer contributions and employee matching. This is w hy we love these benefits . Employers will contribute a percentage of your salary automatically to your account. On top of that, they will match a portion of your contributions. Who doesn't love free money? You'll also get a choice in what to invest in - though within the constraints of the plan provider. They'll unusually have a small menu of funds. Try to find the lowest fee option that meets your needs.   Onto the differences: The tax treatment is actually the same...but different. Both plans allow you you grow your money tax free. The difference is in ho...

Self-driving cars, NFTs, AI, SPACs - what a time to be alive. With so much excitement and promise, investors are jumping in to invest in seemingly world-changing projects. It's a fun time to trade. Endless options, big gains, compelling stories. Even I've been tempted to join the fun.  The lack of fun is the cost of admission when you choose to index. Speculation is taken off the table. You'll never get rich quick. Volatility will be limited. Never will you double your money overnight. Swings of about 10% is as exciting as it gets and these days are few and far between. You'll never have amazing stories about how you were able to successfully buy the dip of a EV stock that has since tripled. You'll never be able to brag about buying Amazon at 10 bucks. You'll never play visionary by yoloing into Bitcoin because you knew it was the future.  Active and concentrated portfolios lead to great stories (good and bad). Passive and diversified ones lead to snores. No one...

It's that time of the year. Bonus season! You got a great review and the numbers to match. You've already made big plans for it. Then the day comes. What?? It's half what I expected. Why are my taxes so high?  This sticker shock is very common. Don't be alarmed, it's not a mistake. Just standard payroll practices. It's important to remember that taxes are truly only assessed ( and paid ) once a year - when you file. All the other times you're " paying taxes " is just your payroll friends pre-paying for you. Payroll withholds from your paycheck to make sure you don't get a giant tax bill come filing time.  Payroll can only estimate your annual earnings. They have no idea how much you'll make throughout the entire year. So their software will treat every paycheck as if this is how much you'll make every period ( wouldn't that be nice ). Your bonus is probably multiples of your regular paycheck and this puts you in a much higher tax br...

We saw a bit of red in the markets this week. The S&P 500 was down about 2%. Not a huge drop, but after seeing mostly green for a few months, even moderate losses are jarring. We got used to winning. The drop was largely attributed to a rise in interest rates. Similar to its relationship with bonds, interest rates and stocks tend to move in opposite directions. When rates go up, stocks fall (and vice versa). This is broadly speaking of course. There's no exact way to explain stock movements, especially in the short term. Too many factors at play. Alas, the logic is generally sound. When interest rates rise, money becomes more expensive. For businesses, the greater borrowing cost eats into their earnings. Reduced expected earnings trickles down to reduced stock prices.  For investors, when safe assets start yielding more, they become an attractive alternative. Low rates meant stocks were the only game in town. Investors would rather take a chance with stocks than earn nothing w...

Last summer, Apple's stock price went from $500 to $125. On face value, this shocking. A drop of 75% for one of the world's most successful and beloved companies. Are iPhones the next BlackBerries? Was there a scandal with Siri? Nope. The reality is much more boring.  It was a matter of corporate accounting. Apple did what many public companies do from time to time. They increased their number of shares - by splitting them. Stock splits can happen in many fashions. 2-for-1, 3-for-1, you get the picture. In Apple's case, 4-for-1.  This means Apple 4x their shares outstanding. Their overall value remained unchanged. Just more shares, worth less a piece. Seems like a lot of work to get back to same place, no? There's a reason. Stock splits help increase access. As a stock rises, it becomes more and more difficult to buy. Berkshire Hathaway is a prime example. Through decades of compounded success (and never splitting) a single share is now trading well over a whopping $300...

If you want to get in shape, turn to the fittest person you know. Do exactly as they do and you're on your way, right? Caution, I know some really fit people where pizza is half their diet. Following their footsteps will gain you nothing but pounds. We're all different (genetics and such). Them being in shape doesn't mean they know how to get you in shape. The same holds true for wealth. The media loves to interview billionaires. Where are we in the cycle? Where are we going? What should we do with our money?  There are definitely smart folks in the bunch we can learn a lot from. Warren Buffet is particularly quotable. But being rich in and of itself doesn't mean you have all the answers. Most folks become successful through a combination of skill and luck. The spectrum goes from hard work and smarts (skill) all the way to being born rich (luck). Skill is often overstated while luck is ignored. Luck can't be taught. This is why lottery winners don't give TED Ta...

Newcomers rushed to open a brokerage account last month. Fuelled by the craziness of GameStop, folks jumped into the markets head first. A get-rich-quick scheme paired with a David Vs. Goliath story, this brought investing to the mainstream. Retail investors turned thousands into millions, all while hurting hedge funds in the process. Make money and tackle inequality? How could anyone resist? Driven by emotions and momentum, this was a speculative bubble that was destined to snap back to reality ( oh there goes gravity ). A lot of people are now losing money and are screaming foul at the rich for rigging the game.  A terrible first impression. Why invest when they can change the just rules? This is the wrong lesson. Does the stock market favour the rich? Yes. They have faster computers and better information. But if you put down your broad brush you'll see the stock market is a great way for everyone to build wealth. Pros might have advantages but they don't have complete contr...

Core and explore. A popular approach to investing that allows for a sensible portfolio with a hint of recklessness. The strategy is simple. Keep most of your holdings in a risk-appropriate portfolio and reserve a small portion (up to 10%) to go nuts. Whether that be mushroom stocks, Bitcoin or GameStop. Your cheat meal to an otherwise healthy diet.  Trading is tempting. The thought of finding hidden gems or leveraging up your returns is exhilarating. It's the skydiving to indexing's drying paint. Having some "play money" is a good way to scratch this itch without putting your entire financial well-being at stake. The downside is the cost of entry. It's entirely possible you'll hit a few home runs. However, odds are you'll come up short over time. These losses compound and become a huge drag on your lifetime returns.  Trading is addicting and time consuming. You'll be constantly checking your account and stressing over your next moves. It's a toll o...

Special Purpose Acquisition Companies. A mouthful, luckily we can just call them SPACs. SPACs skyrocketed in popularity in 2020, raising over $50 billion dollars. More in a single year than in all the preceding decade. 

There's nothing like finding a good deal. You feel like an absolute winner tracking one down. Purchases feel more special as they're paired with a sense of accomplishment. Food tastes better. Clothes look sharper.  The opposite is also true. A bad deal feels foolish and taints all that's associated. No one wants to get ripped off. As investors, this aversion can make us hesitant to invest during a bull market.  Today's market feels frothy. The market is constantly rising and bubble talks dominate the airwaves. To invest right before a market crash would be devastating. The ultimate rip-off.   "I'll wait for things to settle down" is a common sentiment. The problem is, no knows when that will be. Meaningful pull backs are few and far between. Unlike retail, deals don't happen on a schedule. Waiting on the sidelines means risking significant growth. All time highs are typically followed by more all time highs. Missing the best market days can be costly. ...