Episode Details

Are index funds a menace to the market? Are pension funds still a wise way to secure your financial future? In this episode, we discuss index funds, the state-sponsored pension plan in Canada, and much more. First, we unpack the nuances of index funds and take a look at the impact that active and passive investors have on the market. We discuss current index fund trends, when to switch from a passive to an active investor, and the dreaded index fund tipping point. To help us understand pension funds, we also chat with Jordan Tarasoff, a financial planner at PWL Capital, about the recent controversy regarding state pension schemes in Canada, and he provides us with some valuable insights into the government's upcoming plan. We switch up our usual book review to celebrate Financial Literacy Month and share five recommended books that will help you improve your understanding of finance. We also try something new by giving listeners a condensed overview of a previous episode with one of our favourite guests, Scott Rieckens. Finally, we go through some of the feedback and comments we've received from the growing Rational Reminder community about the show and our recent financial goals survey.

Key Points From This Episode:

• What to look forward to in next week's episode. (0:05:08)
• Hear about a special promotion to celebrate Financial Literacy Month. (0:05:43)
• Introducing today's topic and what to expect in the episode. (0:05:56)
• Worries and biggest critiques of index funds. (0:08:23)
• Current trends regarding index funds in relation to the market. (0:09:40)
• When investors should switch from passive to active. (0:12:45)
• Some good news about the index fund tipping point. (0:15:46)
• What investors should be aware of when actively investing. (0:16:32)
• How informed and misinformed managers contribute to the index fund tipping point. (0:19:38)
• Who the investors and managers are that change to passive investment. (0:20:52)
• How switching from active to passive investing affects the value of the market. (0:25:38)
• Unpacking the concept of markets being 'inelastic' as a result of index funds. (0:28:52)
• Whether passive investing undermines price efficiency concerning index funds. (0:30:03)
• What would cause the index tipping point to occur. (0:31:40)
• A brief background on today's guest, Jordan Tarasoff. (0:35:00)
• Details about the Canada Pension Plan (CPP) and how it works. (0:35:28)
• Jordan outlines the benefits of deferring a pension plan claim. (0:36:28)
• Recent changes that make deferring your pension plan non-beneficial. (0:38:20)
• What age group the recent pension plan changes impact the most. (0:42:14)
• Why the Consumer Price Index (CPI) can't be used to predict wage growth. (0:43:53)
• How Jordan is approaching his clients' pensions regarding the new changes. (0:45:10)
• Review of our top five books for increasing financial literacy. (0:48:57)
• Our new segment: summarizing a past episode in sixty seconds. (0:56:57)
• We 'talk cents' about financial values and spending. (0:58:49)
• Recent reviews and feedback received about the podcast and goals survey. (1:02:40)

Links From Today's Episode:

Jordan Tarasoff — https://www.pwlcapital.com/profile/jordan-tarasoff/

Scott Rieckens — http://www.scottrieckens.com/

Efficient Frontier — http://efficientfrontier.com/ef/0adhoc/2books.htm

Episode 95: Scott Rieckens (Playing with FIRE): Finding Financial Education, Perspective, and Freedom — https://rationalreminder.ca/podcast