Quotations by Andrew Hallam

There are four quadrants to a successful life: 1) Having enough money 2) Maintaining strong relationships (with yourself and with others) 3) Maximizing your physical and mental health 4) Living with a sense of purpose [2022] - Andrew Hallam

Sam Dogen, the man behind the popular blog Financial Samurai, says nobody should buy a car that costs more than 10 percent of their gross annual income. I bought my current car five years ago for $4,500. If I spent $50,000 on a car, it might annoy me if an errant shopping cart rolled into its door. My lower-priced car also makes it easier to relax when I’m driving in tight traffic. And I don’t have to worry about wrecking expensive wheels if I get too close to the curb while parallel parking. I’m not saying everyone should follow my lead, or Sam Dogen’s. But by worrying less, I live well. [2022] - Andrew Hallam

Happiness increases with income, but only to a point. For example, according to the Purdue study, North Americans who earned $105,000 a year reported higher levels of life satisfaction on average than those who earned $60,000 a year. But those who earned more than $160,000 a year reported lower levels of happiness on average than those who earned $105,000 a year. Research reveals that materialistic people tend be far less happy than nonmaterialistic people. The Purdue researchers also surmised that the added responsibility and time commitments of higher-income jobs can take time away from what people enjoy most: connections with friends and family, healthy amounts of sleep, hobbies, and physical activity, for example. [2022] - Andrew Hallam

The journalist Annette Schaefer referenced several commuting-related studies in her article in Scientific American. She says people with longer commutes are less happy. They spend far less time with their families and on their hobbies. Commuting also affects their health. Remember, time is the only nonrenewable resource we have. That’s why we should treasure it. If we choose to work at a job we hate because it pays a lot of money, we’re trading something precious for something that won’t necessarily improve our lives. If we want to maximize our health and happiness, that’s worth remembering. [2022] - Andrew Hallam

Close relationships—far more than money—are the single greatest influence on a happy life. In fact, personal relationships are better predictors of happiness, health, and longevity than social class, IQ, or even genetics. This is why spending time with friends and family makes so much sense. [2022] - Andrew Hallam

You might enjoy lending money to small business owners in a global region of your choice through Kiva.org. According to research published by the American Psychological Association, we gain more pleasure when we spend money on other people, compared to when we spend it on ourselves. Elizabeth Dunn, a psychology professor at the University of British Columbia and co-author of Happy Money, says that when people give money and they see the results of their generosity, it gives them far more pleasure than donating money to a faceless organization. She calls this “prosocial giving.” [2022] - Andrew Hallam

Even if you’re sixty years old, your investment duration is about thirty more years. Multiple down years in a row is actually a very normal thing. In the stock market, even ten years is a blip. When viewed through the long-term lens of time, stocks are far less risky than if you judge them through daily, weekly, monthly, annual, or even a single decade’s term. On average, stocks increase in value roughly two out of every three calendar years. That means we have to expect calendar year declines, perhaps even a decade-long decline. But the odds of a decade-long decline drop dramatically when we diversify further and add some bonds. [2022] - Andrew Hallam

When it comes to saving for retirement, savings accounts, money market funds, and CDs are far riskier than a diversified portfolio of stock and bond market index funds. If you’re saving money for a home down payment, for example, one of these accounts will work well. The same applies to emergency money (everyone should keep about six months of living expenses in such accessible cash accounts in case they lose their job). [2022] - Andrew Hallam

Fidelity Investments offers zero-fee index funds for Americans. [2022] - Andrew Hallam

In a 2018 research paper, Vanguard says index funds comprise just a small amount of the investment universe. Vanguard references Morningstar’s data when reporting that 85 percent of the money in the US stock market and 90 percent of the money in the global stock market is actively managed. [2022] - Andrew Hallam

Most financial firms sell expensive products: actively managed funds or (even worse) insurance-linked investment schemes. [2022] - Andrew Hallam

There are many financial advisory credentials. The Certified Financial Planner and Chartered Financial Planner designations (both known by the initials CFP) are the most rigorous. Not every CFP will exclusively build portfolios of index funds. In fact, most will sell higher-commission products. But a CFP is at least qualified to practice their craft. Most other three-letter designations at the bottom of an advisor’s business cards are comparatively unimpressive. [2022] - Andrew Hallam

only Americans can buy one of Vanguard’s target retirement funds from Vanguard USA. But British investors can buy similar products from Vanguard UK. Canadian and Australian investors can’t buy all-in-one portfolios of indexed mutual funds. However, Canadians and Australians can buy all-in-one ETFs from one of their home country brokerages. I believe investors behave much better in all-in-one portfolios of index mutual funds compared to investors in all-in-one ETFs. After all, with all-in-one index mutual funds, investors can set up automatic monthly deposits. This makes the process hands-free. [2022] - Andrew Hallam

Several Canadian ETF providers, including iShares, Vanguard, BMO, and Horizons, offer all-in-one portfolio products. They are just as good as each other: no better, no worse. Don’t make the natural and common mistake of comparing their past performances and making a decision based on what you find. Although they’re similarly allocated, their indexed compositions aren’t exactly the same. As a result, the iShares Core Balanced ETF (XBAL) might edge out Vanguard’s Balanced ETF Portfolio (VBAL) over one period. But over the next period, the results could be reversed. Either way, the long-term differences would be far too small to sweat. [2022] - Andrew Hallam

Canadian firms like You &Yours Financial are specialists in Canadian financial planning needs. They offer financial tutoring sessions, helping clients understand how much they’re currently paying in fees, assisting them with a wealth management plan and suitable asset allocation strategies. Plenty of people seeking a DIY approach might balk at paying a one-time fee for such a service. But most people’s financial needs are more comprehensive than they think. In a conversation I had with founder Darryl Brown, he told me, “The pay-for-service element of financial planning is especially popular among higher income earners who seek a big financial picture and don’t want to make mistakes.” [2022] - Andrew Hallam

A high stock market allocation leads to higher long-term returns compared to portfolios with lower stock allocations. I’m not talking about ten-year returns. That’s short-term. Over thirty-year durations, portfolios with higher stock allocations have historically won. [2022] - Andrew Hallam

Anyone who plans to add money to the markets for at least the next five years should prefer falling prices. When people invest consistent sums every month (dollar cost averaging) they can stockpile assets when they’re cheap. Experiencing huge losses early in the investment journey would have looked scary. But it would ultimately have boosted the returns. By adding the same amount of money every month, the consistent monthly purchases would have bought a greater number of stock market units when prices were low and fewer stock market units when prices went up. As a result, you would have paid a lower-than-average price over time. [2022] - Andrew Hallam

Statistically, the best odds of success come from investing as soon as you have the money. Don’t wait for a decline, or for the results of an election, or for a pandemic to end, or for extraterrestrials to leave Moscow after an invasion. [2022] - Andrew Hallam

Retirees should ignore their portfolio’s value and all forecasts. Instead, they should stick to an inflation-adjusted 4 percent withdrawal plan. Even if they retire on the eve of a market crash, their money should still last at least thirty years (especially if they don’t give themselves an inflation-adjusted “raise” during years when stocks decline). [2022] - Andrew Hallam

Most socially responsible investment (SRI) indexed mutual funds and ETFs charge slightly higher fees than their traditional indexed counterparts. But their returns don’t suffer. Some studies say they beat traditional indexes. Other studies show they slightly lag. Much depends on the time periods measured. Canadians can buy socially responsible all-in-one portfolio ETFs: iShares ESG Conservative Balanced (GCNS, 40% in stocks, 60% in bonds), iShares ESG Balanced (GBAL, 60% in stocks, 40% in bonds), iShares ESG Growth (GGRO, 80% in stocks, 20% in bonds), iShares ESG Equity (GEQT, 100% in stocks, 0% in bonds). [2022] - Andrew Hallam