Interest Rates, Optimal Asset Location, and Reverse Mortgages (EP.72)

<p>Today on The Rational Reminder Podcast, we talk about the relationship between asset allocation and outcome, the ins and outs of reverse mortgages, and finally, life insurance (or lack thereof) in Canada. However, we begin by sharing some interesting points covered in a recent Barry Ritholtz interview with Eugene Fama and David Booth for his Masters in Business show. We talk about how Booth started the first index fund and discovered the value factor, and quote some of Fama’s classic perspectives on behavioural finance and market bubbles. On the topic of asset location, Ben shares some of the findings of his recent research. He weighs in on his surprising discoveries about how to go about investing stocks and bonds in RRSP and taxable accounts to get the maximum yields. One of his main takeaways is the concept of putting bonds in your RRSP to intentionally trick yourself into a more aggressive portfolio. Regarding reverse mortgages, we begin with some definitions and explanations of why they might be beneficial, and then cover the question of whether or not they are the symptom of a ‘debt-addicted’ society. Finally, we end off by discussing a recent study by Policy Advisor which found some shocking facts about how Canadians are drastically underinsured. For all this and more, join us today!</p> <p> </p> <p><strong>Key Points From This Episode:</strong></p> <ul> <li>The difficulty of predicting stock returns based on rate changes. <strong>[0:02:27.0]</strong></li> <li>Discussing the Barry Ritholtz interview with Eugene Fama and David Booth. <strong>[0:05:44.0]</strong></li> <li>Booth started the first index fund and discovered of the value factor. <strong>[0:07:43.0]</strong></li> <li>The fact of bubbles only being such in hindsight according to Fama. <strong>[0:08:51.0]</strong></li> <li>Efficient markets aren’t necessarily rational. <strong>[0:09:18.0]</strong></li> <li>The reason for risk-based and behavioural explanations for asset prices. <strong>[0:09:34.0]</strong></li> <li>The value premium does not flu