Happy renter, happy indexer, happy life – Q&A with Holy Potato (John Robertson)
Fans of My Own Advisor will know I’m a fan of taking a balanced approach when it comes to our personal finances. That means a little bit of saving, some investing for our financial future, and lots of good ol’ fashioned fun and downtime spent on experiences. In working through our balanced approach to money stuff I continue to be inspired by the blogging community I interact with, and John Roberston (aka Canada’s Holy Potato guy) is one of those people.
For those that don’t know John, beyond the informative blog he runs (Blessed by the Potato), he is the knowledgeable and respected author of The Value of Simple, a practical guide to index investing for Canadians.
He has developed and currently manages a comprehensive and appealing online course along the same lines called Practical Index Investing for Canadians (affiliate with John). If that isn’t enough, he’s also a key contributor to the Because Money Podcast with Sandi Martin and Chris Enns.
Then he has a day job or day jobs. John is/was (sort of) a fee-for-service financial advisor (and he maintains a listing of them at directory.valueofsimple.ca) and Dr. Robertson owns a PhD from Western in Medical Biophysics so he writes about that – stuff I haven’t taken (nor understood) since my early undergraduate days!
I wanted to interview John (about a year ago!), talk about his journey into all things personal finance and basically catch up. Here is our interview together.
John, welcome to the site!
Thanks for having me on the site Mark and the interview – it’s a good way to virtually (if publicly) catch up, as I missed seeing you at the CPFC in Toronto last year. Also, thanks for your understanding in how very long it took me to get back to you about this 😉
No sweat John, we all get busy and life gets in the way of little things like these interviews! I hope to make it to the next Canadian Personal Finance Conference (CPFC) and re-connect with you and others. I couldn’t go there and miss The Grey Cup last year here in Ottawa!?
OK, let’s back up. How the heck did a doctor in medical biophysics get so passionate about money stuff?
To some extent it’s always been there. On my way into undergrad I accepted admission to University of Toronto for the Bachelor of Commerce program; it was only when I was picking my courses that summer that I had physics, biology, math, and chaos theory on my slate for electives… and no room left for my core commerce and economics classes! So, I switched into science. The whole time I was learning stuff from my dad, who ran his own business and is an active investor, but only sort of paying half a mind to it, and figured I could always pick up business stuff later, outside university. I had been budgeting throughout university; avoided debt by living at home, so I came out of undergrad in good shape.
It was in grad school when money stuff really started to click for me. I had a scholarship for my doctorate, but it was only for 4 years and there was no chance I’d be done that fast (it took just over 5 years in the end). This was like a miniature version of the work-then-retire problem for everyone else: I had to save some of that money over the first few years to carry me in the future.
Sounds like you learned the value of money early on. How did you get started in investing? How are you investing today?
My dad got me into investing at a fairly young age. Talking about stocks and broker reports was just typical dinnertime conversation in the Robertson household. He picked a few initial investments for me as soon as I had five grand or so free to invest at the end of undergrad. But it wasn’t until my doctorate years that I really started to get genuinely interested and reading. I read the classics: Intelligent Investor, etc., and got clued into the blog scene (about the same time you’ll see Blessed by the Potato swings to becoming almost exclusively a personal finance blog). Then I could start to intelligently talk about stocks: read balance sheets, try to figure out value, etc.
I also learned about index investing and diversification and realized I’d just never have a properly diversified portfolio with the amount I had to invest. So, I started with a hybrid approach: indexing part to get diversified cheaply and control the hubris of thinking I could out-smart the market (which carries the risk of under-performing), and actively investing part in what interested me. The 2008/2009/2010 years were a very exciting time to be an active investor. I was up late almost every night reading balance sheets or learning more about investing.
I still have a few of those individual positions, but am more and more of an index investor these days. As my active positions work out (or fail) and get sold, that money goes into the indexing positions for me. The thing about active investing is, it takes time and attention, and I just don’t have enough of those to go around, particularly not since becoming a daddy. Plus, if I want to end the year with more money, my time is better spent on freelance opportunities to earn more income than active investing to try to get higher returns on my portfolio.
I could see that – time is money! Index investing using low-cost Exchange Traded Funds (ETFs) seems to be a sensible way for most investors to invest. Why are you such a fan (so much so that you wrote a book about it?)
Indexing is simple and that’s the biggest reason I’m a proponent of it. Investing is hard and scary for people who are new to it, and it’s all too easy for people who have been doing it for a few years or for whom it just came naturally to forget just how hard it is to get started as a newbie.
Indexing takes many complications off the table so you can address other important things like risk tolerance and how to actually do all this (from placing trades to reporting on your taxes). Plus, I’ve found a lot of people starting off don’t care too much for arguments for what style is better or might have the potential for higher returns or different risk profiles or whatever – they just want to be told something that’s going to work so they can get going. If there’s a portfolio that’s only going to have 3 or 4 moving parts and then they can focus on the rest of their lives and not do a tonne of research, that’s a huge benefit.
Good argument. So, can I assume you hate dividend investing then? (Big reminder to John: I invest this way!)
Look, you can look up the academic evidence and arguments for the superiority of index investing and the challenge of out-performing, but frankly I don’t care much about that aspect of it. I’ve tried to teach people who have middling interest in investing how to pick stocks and it’s hard. If someone is not currently a do-it-yourself investor and is looking to start, then indexing is the one and only thing I’m going to show them because anything else is overwhelming and adds so much complexity.
But there are no points for purity in the world, and if you’re passionate enough to do the research (and even write a blog) on dividend investing then all the best to you. Indeed, there are some behavioural benefits to dividend investing: those steady dividends can help keep people from panic selling in a downturn, you get really invested (pun intended) in your positions so you’re not about to sell in a panic at the first sign of trouble. And really, no matter what style you pick, sticking with investing for the long term is the most important thing, and dividend investing works for that even if we can have some debates about diversification and the like.
However, dividend investors do need to keep in mind that it does take more skill and effort than indexing. So, overall, indexing is better for diversification and ensuring you don’t under-perform markets. Win-win.
Let’s switch topics. Housing – why are you renting right now? What do you make of the housing market?
I’m renting because it’s cheaper than owning, has less risk, and I expect more from investing in equities than in real estate. Pretty short and simple, but there are a lot of assumptions that go into that. Given all the risk in owning in this market, that seemed like a poor bet. I chose to rent.
Plus, we really wanted a detached house to raise our family in, and because renting is cheaper, we were able to do that and fit it in our budget – we didn’t have to save and invest the full difference, we also had the choice to spend a bit more to get what we wanted. And because the cashflow commitment was lower, we weren’t completely dependent on two incomes to stay in the house (and we did actually lose one income for a long time – even if we would have made more money with a leveraged bet on GTA real estate several years ago, we’d also have been forced to sell and move).
When it comes to the GTA housing market, I don’t think it’s going to end well, but I also don’t think it’s going to be a sudden crash that fixes the problem overnight (and I’ve been saying that for years, FWIW). Even a crash will take years to play out.
You seem very content and happy overall John, which mirrors your indexing approach, financial goals and that more carefree renting thing. As an author, blogger, investing coach and more – what words of financial wisdom do you have for readers – saving, spending, investing, debt, other?
Content and happy? Whose blog are you reading?!
I mean, the grand façade is working!
Er… I mean, yes. Yes I am. A-hem.
Your readers are a smart bunch, and your archives are deep, so there isn’t likely much I can say for them except by accident.
However, they probably have friends and family that need more help with financial literacy. Even if we do get financial literacy in the school curriculum, it won’t be a panacea, and it won’t help the people who are already out of school. I guess I would advocate to start having those money conversations and breaking the money taboo. You don’t have to have all the answers – sometimes there aren’t any, sometimes it can be good to have some books or websites or courses to point to (and not just my course, there are lots out there from local libraries, schools, as well as online).
And as bloggers and blog readers we tend to be huge on do-it-yourself solutions. But for lots of people out there paying marginally more for a robo-advisor may get them investing sooner and more successfully than trying to teach them about dividends and brokerage accounts. And while I love Excel more than a man should be able to care for a piece of office software, lots of people who don’t read PF blogs for fun would gladly pay a money coach or planner to help them if they only knew that such things existed.
Well said John.
Thanks for taking the time with me and I hope you and family enjoy the summer. I want to thank my friend John Robertson for this interview and sharing his money perspectives. A reminder you can follow John’s site, check out his book, his course in the links enclosed in this article.
What do you make of John’s advice about removing the money taboo? Thoughts? Discuss with me in a comment below. Thanks for reading.