Episode 147: Hope Is Not A Financial Retirement Strategy: The Silent Threat Limiting Your Portfolio’s Growth

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Are you making smart financial decisions—or just hopeful ones based on optimism bias?

In this episode of the Canadian Wealth Secrets podcast, Kyle Pearce sits down with John De Goey—veteran Canadian portfolio manager and author of Bullshift—to uncover the subtle ways the Canadian financial services industry nudges you toward overconfidence and unrealistic expectations. 

With over 30 years in the Canadian financial industry, John reveals why many Canadians unknowingly rely on hope rather than strategy when it comes to investing and planning for retirement.

Whether you’re a high-income earner or business owner wondering if your savings strategy is enough, or someone approaching retirement unsure about your risk profile, this episode delivers clarity. 

John discusses the difference between risk tolerance and risk capacity, why your investing behavior in a market downturn matters more than you think, and how to avoid the trap of thinking “it won’t happen to me.” This conversation is especially relevant in today’s uncertain Canadian financial markets, where realistic planning—not blind optimism—is your best ally.

What you’ll learn:

• Learn how to assess and adjust your financial risk based on your actual capacity, not just your comfort level.
• Discover why even the most well-written financial plans can fail without behavioral discipline.
• Get real numbers and strategies for RRSP, TFSA, and advanced savings when income exceeds contribution limits.

 🎧 Hit play now to uncover how to strip away bias and start making financial decisions that truly secure your future.

Resources:

• Connect with John De Guey on his website and subscribe to his podcast “Make Better Wealth Decisions” on Apple, Spotify, or YouTube.
• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX.
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting corporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

Achieving financial independence requires smart planning, especially when it comes to growing your net worth and generating passive income. We explore conservative leverage strategies such as the Smith Maneuver to convert non-tax deductible interest on your primary mortgage to tax deductible interest as well as conservative leveraged life insurance strategies including immediate financing arrangements (IFA). For business owners, navigating the complexities of corporate structures, tax implications, and investment strategies can feel overwhelming. From understanding capital gains rules to leveraging life insurance for wealth optimization, the right approach can transform your financial future. By aligning your strategy with tax-efficient tools, you can unlock the full potential of your business and investments, ensuring sustainable growth and long-term independence for a successful Canadian retirement plan.

Transcript:

Kyle Pearce: All right now, Canadian wealth secrets seekers. I am super excited here to have a nice chat with someone that have had the opportunity to meet before. But also, what really intrigued me was digging into his most recent book called Ball Shift and, not only a creative title, but lots of really great information. We are excited to bring in John Digweed here who, John, tell us, tell the audience about who you are and what got you into the financial services industry.

John Joseph De Goey: Thanks, Kyle. Glad to be here. I am a portfolio manager with a firm called Design Securities in Toronto, Canada. I’ve been in the business for over 30 years, and I think I’m known as a bit of a consumer advocate. I write, I’ve written maybe 200 articles. I’ve written three books. One of which is bullshit. They’re over my, over my one shoulder. And I have spent pretty much my entire career advocating for ordinary investors to help them work better with their advisors to make better wealth decisions, which is my podcast, and to think about how they can maybe ask better questions and make sure that the advisor relationship they have is as fruitful as it can be.

Kyle Pearce: I love it, I love it, and, you know, I think what, like, has us in alignment in so many ways and shapes and forms is how important it is to be putting the client first. I’m curious, what have you sort of seen happening? And I’ll argue, I think, you know, I came into the industry a whole lot later in my journey than you did. One of the reasons I came in was because I had a hard enough time with my own situation and trying to, you know, trust others like the the word trust comes up so much when it comes to, you know, financial planning and advisory services. I felt like I had to do the deep dive to take care of myself and my business partners, our families, and then sort of fell in love with the process and now love doing that for others. What what have you seen happening and how how are you addressing that in your own practice?

John Joseph De Goey: First thing I’ll say is that I’m like you. I like being helpful and, you know, and I when I was in school, I did graduate work in Ottawa, and I was, doing some work on Parliament Hill, a co-op program, looking into things like the Goods and services tax and so forth. And I became a consumer advocate when I realized that there were there was some misinformation that was being put out, you know, political motives being what they are, people will proponents will overstate, opponents will misrepresent.

And and a lot of people don’t know who to believe. So bringing that back to what I’m seeing in 2025, consumers have trust issues. They want to be able to work with people who could be transparent. One of the things that I do is that, there are maybe a few of us, there’s maybe 3000 people in Canada now that are portfolio managers.

If you’re a portfolio manager, that means you can work with discretion, but you’re obligated as a portfolio manager to put your client’s interests first, which is to say you’re a fiduciary, which is a fancy word that just means that you have to do what is right for the client, which is different from most of the industry because most of the industry has a lower, hurdle to to clear.

All they have to do is make recommendations that are suitable. But of course, as long as anything is not egregiously unsuitable, regulators will say, well, that’s suitable enough, because, you know, good is not necessarily what’s best. So the industry is moving. The financial advice industry is moving toward more of a fiduciary, unbundling situation where there’s less commission and more fees and more planning work.

That’s being done as opposed to simply product placement. So I think those are the things that are becoming more and more prominent. Mercifully, in 2025 that were less prominent, say 10 or 15 years ago.

Kyle Pearce: Definitely, definitely. And, you know, it’s interesting because it’s it’s one of these scenarios or one of these industries where it can be really hard. And we talk a lot about the rational brain and the emotional side of the brain. And something I know you do a lot of is really making sure that you understand the risk profile of your client and something that I think is really difficult, and especially when those are going out and they’re they’re going down the rabbit hole, whatever.

It’s Google, you know, TikTok or YouTube or, or maybe it’s ChatGPT to try to figure out what they should be investing in or how much they should be investing or what it looks like. And I think a lot of times what ends up happening is we completely forget to think or consider that risk matters and we really just use rational thought in order to make decisions.

So for example, if I use data and I just look at, you know, the past history of the S&P 500, one might recommend that, well, everyone should be 100% equities if they’re investing for 20 plus years. However, that doesn’t consider risk profile at all. Like what what would you say you know, is is important about risk profile and what sort of, I guess, questions are you asking of your clients to really start understanding whether, a certain investment or a certain strategy or structure makes sense for that client given their own risk profile?

John Joseph De Goey: Okay. Thanks. So I’m going to go down a couple of, rabbit holes with this. I’ve got a couple different traction. So the first is that most people are only middling good, at assessing their own risk profile. And frankly, a lot of the questionnaires that the industry has developed to help people, to, determine what their risk appetite is, are not much better.

So there’s a lot of the, research shows that, people still don’t really have a sense of what they can handle. And the reason is because everyone looks like a hero and markets are going up. And so when markets are going up, people say, oh, I can handle the risk of a drawdown, but you really don’t find out whether or not you can handle it until you experience it.

And then you find out, you know, that a lot of people just can’t handle it. So the first thing that I would say is most people, to my experience, and I certainly remembering what happened in the 07209 global financial crisis, a lot of clients told me in writing we had these things called investment policy statements. Portfolio blueprints were the blueprint would say, you know, where the market’s down, I’m going to buy the dip.

I’m going to buy low and sell high. So I’m going to sell some of my bonds to buy some stocks because stocks are on sale. That’s what they agreed to in writing before things happened. But when they actually happened they lost their courage. And I was doing all I could as a behavioral coach to get them to remind them that they had told me, that we had agreed to it.

It was all codified. It was in writing. Didn’t matter. They pre committed, but they couldn’t follow through, which is part of why I became a portfolio manager, because then they basically deputized me to do it without having to get them to hold me, to hold back. Yeah, yeah, I basically I’m taking the gun out of their mouth. But the other thing that I would say with regard to risk is that people don’t think about context.

So let me put it to you this way. The S&P 500, is currently trading at more than 30 times earnings. It has a cyclically adjusted price earnings ratio of around 35, and it was up as high as 38 a couple months ago, which is very, very reliable in terms of risk going forward. But the S&P 500 has in the past traded at 15 or 20 times earnings, maybe half of the current valuation.

So when people say I can handle the risk associated with the S&P 500, what they oftentimes don’t think about is, well, can you handle the risk of the S&P 500 at 35? We’re versus can you handle the risk of the S&P if I’m trading at 17.5 times earnings. Because basically 35 times earnings basically what what a price earnings ratio means is that the price could drop by half and it would be the same investment.

It would still be the S&P 500. But now is trading at 17.5 times earnings instead of a 35 times earnings. It’s the same underlying investment. But the risk is very different when you when it’s trading at a very high multiple. And a lot of people don’t think about that. The actual context, it’s not just, what asset class, but where are we in this cycle and how expensive is this asset class compared to its historical norm.

And those are the sorts of things, those first derivative questions that a lot of people don’t ask. And that’s what oftentimes gets them into trouble.

Kyle Pearce: So it’s such a great, such a great point and a great example. And I think this is what makes it so hard is because rationally, we use historical evidence to suggest that, hey, maybe this might continue. But the big question is, is will it? And we don’t really know that. And I think there’s a lot, of, of, analysts that are suggesting that, you know, returns may not be as frothy as they have been over the past ten, 15 years.

You know, and we don’t know. We don’t know what that’s going to look like and sound like. But as you had mentioned right now, in your mind, you might say, well, I know what I’m supposed to do, and I know what I will do if it happens, but as soon as you’re there, it’s a different feeling, you know?

And I’ve been there. I’ve been there even just in 2022, being a little bit too heavy in some equities that, you know, I probably shouldn’t have been, you know, and at the time I felt great about them. But all of a sudden when they’re down you start looking and you start questioning. You start wondering, what don’t I know?

You know. And you start thinking about maybe everything I thought to be true actually wasn’t all I thought it was. Right. And this is really difficult. So I love that that, you know, you’re you’re in a position where clients get to thank you later. You’re probably not getting thanked during the process a whole lot, I’m guessing. But I’m sure over time that trust that you build, you know, especially if they’ve already been through a dip, a large dip or a correction, then I’m sure they go, okay, you know what?

John’s got this under control and everything’s going to be okay. But you know, one of the biggest pieces that I think someone like yourself and someone like what I try to do in our practice is really trying to be that accountability partner for, for the actual client. Because I’m telling you, being your own accountability partner is usually, not a good move.

And, you know, that that is definitely a challenge. Now, here is a question that I’m curious about. Okay. We talk about risk tolerance. You already address this idea that, you know, and I see it all the time. I see it in myself. I, I’m very aware that the things I know and the way I feel sometimes don’t always align.

But we talked about risk tolerance. What about risk capacity? How does that factor in here and what is what is the difference? Someone’s listening. They’re going are they the same thing? Are they not. And how would that factor into, you know, some of the decisions that you might make on behalf of a client, given that, you know, you’re actually managing the portfolio?

John Joseph De Goey: Sure. So a little over three years ago, regulators changed the way they sort of keep score with regard to suitability and, what a client has to complete when they open an account. So when when an advisor and a client’s working together, they fill out a form called an end cap, a new client application form. The old terminology is KYC, know your client.

But you just have to memorialize and codify various things. And one of the things that has historically been codified is the target risk tolerance with regard to the asset allocation, how much is in stocks, how much is in bonds, and so forth. Increasingly now, in the past three and a bit years, the move has been toward codifying risk tolerance and risk capacity.

So risk tolerance is how much can I lose with before I start losing sleep, before I start getting antsy? That’s it’s an emotional, psychological question. Risk capacity on the other hand, is oftentimes very different. It’s how much can I afford to lose because my my lifestyle depends on. I’ll give you an example. Let’s say you’ve got a half million dollars in your risk.

You’re retired and you take a long term view and you know you’re going to live another 20 years, because life expectancy being what it is and you’re in great health. So you’ve got, a great risk tolerance. And if the market is down 20 or 25%, you’re not going to sweat it. But your capacity is different because this is a risk.

And let’s say you have a traditional 6040 portfolio, 60% in stocks and 40% in bonds. And let’s say we have a major drawdown so that now you’re 60% in in stocks is only half. And you’ve got to take money out because you’re obligated under law to take your minimum risk payment out every year. If you have to take money out or you’re being forced to sell by law when stocks are down.

And and that’s not a big deal if it only happens for one year. But what if stocks go down and then they stay down for two or 3 or 4 years, and then you’ve got to make sales or on year two and a year three and a year four. And you’re drawing down on a finite pool of capital.

And it’s supposed to last you for as long as you live. You can’t buy the dip because you’re not earning more money. You’re retired. Your capacity to withstand that risk will will be at some point will be called into question. So even though you’re psychologically able to deal with it, you might not monetarily be able to do that.

And those two elements, tolerance and capacity are the way regulators are now looking at portfolio construction. And audit and, and, supervisory oversight to make sure that they are, in fact, suitable for what the client needs.

Kyle Pearce: That’s really interesting. And I think it’s really important for all of us to think about, because I and I can speak on behalf of many of the folks that listen to our podcast, because many of the times they’ll reach out to us and we’ll go through some scenarios with them and we’ll we’ll try to give them some ideas and perspectives.

But usually what people do is we’re constantly looking to maximize returns, and usually that’s in a perfect world scenario, right? We never look at, you know, next year being the big dip or, you know, in the next five years, you know, having, you know, that amount because the the market crashed. We have a big market crash or correction.

And then actually thinking about what can you actually withstand. And this aligns with, I think a lot of the things that we hear along the way is that when you are in your working years and you’re many years off from retirement, you have a 20 year, 20 or 30 year window. You can be in almost 100% equities.

Things can go up, they can go down. I don’t need or want to touch those dollars. But as we get closer to I call it financial freedom, which for a lot of people is another word for retirement, whether it’s early or late retirement or normal retirement. When we get there, risk tolerance and actual risk capacity changes your tolerance.

You probably have learned to become more tolerant throughout your lifetime, but your capacity is probably actually decreasing. Would you argue that you know it? Most people probably have less risk tolerance in the early goings and probably more risk capacity, and it probably reverses over time. You know, as as I age and as I get closer to retirement, I get used to these dips and I get more comfortable with them.

But the problem is, is that, you know, now that I am tolerant, I actually I don’t have the same capacity level. What does that look like and sound like when you’re working with a client? I love the the window of, let’s say, a 5 to 10 year runway when they’re going, I want to hit this financial freedom goal in 5 to 10 years.

What sort of conversations are you having around risk tolerance and risk capacity to help them sort of make sure that they’ve set themselves up, not just rationally, to get the greatest rates of return, but so that they’re actually in a position where they can actually follow through with that, that lifestyle change that they’re after.

John Joseph De Goey: So let’s begin by something you mentioned 5 or 6 minutes ago, which is the frothy ness of markets. And and there I would argue they were pretty frothy at the end of 2024. And now they’re less so in 2025 as we begin the year. There’s a concept called reversion to the mean. And oftentimes when things do really, really well for a while, it just means that they’re likely to normalize and start trending toward their long term average, which means they’re likely to do less well in the foreseeable future.

And of course, the inverse is also true. So that’s one part of the conversation that you can help clients to understand the map of. Where are we right now in the cycle, in in what should our portfolios look like? The thing that I, that I like to do with clients is not so much to look 5 to 10 years ahead for markets, because no one can predict markets.

But I try to look, say, 3 to 5 years ahead in people’s lives. And specifically, are you retiring in the next little while? So people who are about to have this retired when we update their new client application form, because we have to update it every year as a port, as portfolio managers, most advisors, it’s every three years.

But portfolio managers need to update every year. I’m actually in the process of rewriting it to take into account their reduced risk capacity, exactly as you said. So therefore, this might not have changed. In fact, it might have actually increased, but the capacity will have been reduced. And regulators may ask, portfolio managers and advisors to manage to the lesser of the two.

So if on a scale of 1 to 5, your tolerance is a four, but your capacity is at three, then your portfolio should be a three. Because you don’t have the four tolerance, but because you only have the three capacity. And the portfolio needs to reflect the lesser of the two. So, when people, start approaching retirement, they no longer have the opportunity to put more money in because they’re no longer earning an income.

And that combined with the fact that they’re also usually obligated to start taking money out, has a major negative impact on their on their risk capacity. And as their risk capacity is being reduced, I almost always reduce their, their risk, their risk profile and their application form to take that into account, because it’s one of those things that it’s sort of like the night, you know, the night following the day.

It’s going to happen unless you’re extremely wealthy. But for, you know, 97% of Canadians, this is the sort of thing that is going to happen. And it’s predictable and you know it. And you need to reflected in, in the codification of what the relationship is between the client and the advisor.

Kyle Pearce: This. Yeah, that’s that’s great information. I might even argue, you know, earlier in this journey, you know, as there are many, many years away, it’s almost in a way where if we could risk capacity, that number is probably the the better number for us to use. But unfortunately, the risk tolerance number, if that’s low, then we have to adhere to it because I mean if they’re not sleeping at night, right, they might thank you later, but they may have had a miserable 10 or 20 years as their, you know, as they’re wondering about their future.

Right. So, that’s a really a really interesting piece here now as well. What would you say is like one of the biggest, maybe hiccups challenge or barriers that you’re finding with working with clients so that they can actually get to that financial freedom place that they’re after. What would you say is the biggest barrier for them, holding them back from doing so?

And of course, I think without talking about, say, money, we we know that’s probably the biggest one because if they just had the money then that’s fine. It’s pretty easy to do from there. But what’s holding them back from, let’s say, taking action and getting them to that place that they’re after?

John Joseph De Goey: I think I’m going to ask, you might not be happy with the answer because it has a bit to do with money, but it’s also a little bit about taking action and calibrating your expectations. So a lot of people expect returns to be higher than they should reasonably expect them to be. So a Canada, the people who put out the, financial planning, the confer, the CFP designation, they put a guidelines every year in late April with expectations and the expectation.

The expected return for stocks in Canada in the US is between 6 and 7%. And for bonds, it’s more like 3 or 4%. So a blended 6040 portfolio might be a five. And then that’s even before you pay for products and advice and so forth, which will lower expected returns, by even more. So a lot of people think that if they work with an advisor, they should reasonably expect to get high single digit or even double digit returns.

And that’s an unreasonably high expectation. And what’s holding them back is that they don’t often want to acknowledge is that it’s within their power to reach financial independence, to reach their retirement. But what it means is that instead of, say, $2,000 a month, we have to say $1,600 a month or whatever, they should save more or they should retire later.

But those are the sorts of things that require painful trade offs and things that we don’t like to consider. Almost everyone can retire in comfort in the lifestyle they’ve grown accustomed to if they, behave properly along the way. The problem is, life is being what it is. People just they want the boat, they want the concert tickets.

They they want to do these other things. They want to get a new car even though their current car is totally fine. And when they find ways to justify, there’s an old saying that people who rationalize, tell, rationalize, and they will they will tell themselves that that that a watch is actually a need and they will then justify, spending money on something that they don’t really need.

And the one thing that they probably need more than anything is to have a secure retirement. And that money that that’s going to the so-called need, which is really just a watch, is, in fact impacting their ability to reach their real goal, their real need, which is financial independence.

Kyle Pearce: That’s a great and I appreciate how you’ve you’ve mentioned that we’ve talked about it on the show many times before. We have some episodes that are all around the most important part of the year, your retirement planning that you’re not doing, which is consistency and funding like fund it. Because here’s the crazy part, is what I find is, is that we as humans, when we see that we may have a shortfall to hitting that goal, what we then do is we start thinking about, well, how do I get better returns, right?

So then we go down the rabbit hole of like, well, if I could just get these returns and everything’s going to be okay, and we go down that we waste a lot of time doing, it may make mistakes along the way doing it as well, which there’s the risk right there. You may lose some of that capital. And the interesting part is, is that if we properly fund and let’s say if we even fund more so than we need, it allows us because our risk capacity goes up.

As you had mentioned earlier, it gives us the opportunity to take on higher risk even later in life, and therefore likely lead to having a lot more in retirement than maybe we had initially planned for in the first place. Whereas it’s almost backwards. People are starting with less money and therefore they want to take on higher risk, which is actually the wrong move because you might get lucky, but you probably won’t.

And that could put you in a really, really tough spot. I’m wondering, John, we talk about it a lot. You know, in our podcast we talk about, you know, trying to save as much as you possibly can. Is there a number that you typically are recommending to clients these days in terms of how much they should be putting away for retirement and for wealth?

You know, building alongside? I remember when I was a child, it was pay yourself first 10%. What does that look like in sound like for the majority of your clients? And I know everyone’s scenario is different, their spending is different. But what are you seeing nowadays? Because I feel like that 10%, that original number that I was told when I was younger, just doesn’t cut it, it seems nowadays.

John Joseph De Goey: So it depends on age and stage. So if you’re a young person and you’ve you’re just starting your career and you’ve got a spouse and maybe a young family and a brand new mortgage, you’re probably not going to be able to save much. You’re going to be putting down, money to, to pay your mortgage and pay your bills, build a little bit of wealth, maybe set up a spouse for your kids, and therefore you can’t put as much money into an RSP or TFSA for yourself.

But as you start to morph into actually having a more positive cash flow when you start moving toward midlife, I think a good long term objective is that the 18% that you can put into your RRSP. And by the way, as I’m sure your your listeners and viewers will know, review room carries forward. So if you’ve got 5 or 6 years in your very late 20s or early 30s where you’re not really able to maximize your RSP, your income won’t necessarily be that high.

So your tax problem probably won’t be as severe as it will be later in life. But you don’t lose that room. It just builds up and then when you get to your let’s say mid, mid to late 30s, you’re now at the point where, okay, the mortgage payments are no longer a problem. My career is under control. Now.

You can put your 18% into yours RSP and get and and do that, which I think is usually enough for almost everyone. But if you’re really, able and, and things are going very well, you can use the unused carry forward room to cash that up, and then you can start putting money into your TFSA as well, which is now $7,000 per year and growing with inflation.

And it’s like a 102,000 up until now. If you haven’t put money into a TFSA and you’ve been 18 or older since TFSA, TFS were introduced, there’s a lot of room that you could use there as well. But the simple number that I would use, Kyle, is 18%. If you can maximize your RRSP and do nothing else and put 18% of your earned income into an RSP, you’re almost certain to be fine if you do it for a long time.

If you don’t start until you’re 59 years old, that might be a problem. But if you’re able to start putting that kind of money away by the time you by the time you’re in your 30s and you do it consistently for the remainder of your life, and then if you do really, really well in life, because some people if you’re earning a quarter of $1 million a year, you can’t put 18% of your your income into an RSP.

You can put whatever the number is, 31,000 or something like that, which is less than 18% of your earned income. So that’s when you really do need to start maybe putting money to a side account, putting money into an insurance policy that you can leverage down the road, putting money into a TFSA so that you can get more money and at least, you’re putting in after tax dollars, but it grows tax free.

There are things that you can do even as you start moving toward being a one percenter that are fairly easy. I think Canada, we’re very lucky in Canada that we have government programs that make it fairly easy to save for retirement, and that are flexible and fair.

Kyle Pearce: Yeah. I’m so happy that you had mentioned about, you know, the the cap that, you know, that low $30,000 number. So when people are listening it’s like 18%. For some people all 18% might be able to go into an RSP if they’re a T4 earner. But if you’re earning well above at 180, then you need to be saving more than just what you can fit into your RSP rate, which I think sometimes people fall, you know, into a trap of like, well, I max my RSP.

Well guess what? That’s still you didn’t do 18% if you were earning 300 a year for incorporated business owners, it might also look a little different as well, because maybe you’re not going to take as high of a T4, so might still make sense to use some of that RSP room. Or maybe you’re just investing inside the corporation in the meantime.

And saving that RSP room for, let’s say, a really high tax year that maybe you can’t control in the future. But I like that 18 we say 20% quite a bit of like it’s got to happen somewhere. And the more you can do, the more flexible, you know, you’re making things for yourself because hey, if I’m committing 20% or more of my annual income now, well guess what?

I’m not going to need as much income later because I’d been taking that money and putting it towards investments. Right. So it just makes your lifestyle a way easier objective to try to reach towards or a bigger, easier goal to reach on the investment side of things. So I really appreciate that perspective. But go ahead. You were about to add something.

John Joseph De Goey: I was just going to say that, I was mindful the question I don’t want to say was a trick question, but a lot of people, when they’re asked the question, they will answer one of two ways. If they work mostly with people that are high earners, they won’t talk about maximizing the RSP because the RSP by itself is not enough.

But that’s only the top 1 or 2, or the most 3% of the of the population. Or if you’re working with ordinary people, you’ll talk about the 18% and you’ll forget that there’s 2 or 3% of the population where 18% isn’t going to cut it. So I’m trying to answer the question. Sure, 100% of Canadians, for, you know, 97%, the 18% is all you need because maximizing your RSP is all you’re going to need to do.

But there are very high earners who need to in order to get to 18% maximizing RSP and in many instances maximizing RSP and a TFSA is is not enough. Because if you’re earning over a quarter of $1 million, even if you maximize your RSP and your TFSA, you’re only putting about $38,000 a year, 38,000 is not 18% of a quarter of a million.

That only becomes more of a problem once you hit a half a million or what have you. So the I’m just trying to skate through this to, to give you the answer. That’s true for 97% of people. You don’t want the top 3%. To think that I did that. I wasn’t thinking about them. I’m trying to respond to them as well.

Kyle Pearce: No, no, no, for sure, for sure. And you did it. You did a great job there. I think a lot of people, you know, are thinking about these things, and I think that provided a lot of clarity there as well. John, we’re getting close to the end of the episode here, and I there’s so much more I’d like to ask.

I have a funny feeling we’ll probably stay in touch along the way. But give, give folks who are listening, a quick little snapshot of bullet shift. What are they? What are you hoping to help people with when they pick up that book and they read it? I love the catchy title, but, tell them a little bit about that. And then, we’ll also have you share where they could, get a little weekly dose of, some of your thinking.

John Joseph De Goey: So, both shift is about how the financial services industry shifts your attention to make you feel bullish. And the subtitle of the book is How Optimism Bias Threatens Your Finances. So we were speaking earlier on in the show about how people think they’re going to be getting these fantastic returns, and because they are lazy or they delude themselves into thinking they’re going to get great returns, or that that if they just work with an advisor, they can somehow work miracles.

They they believe things that they probably shouldn’t and they, they’re overly optimistic. And what you need to do is to be realistic. And people have tried to accuse me of being a pessimist. I am no such thing. I’m absolutely an optimist. But I’m I’m I’m an optimist who rails against optimism, bias and optimism and optimism bias are different things.

And so optimism bias is when when you, you acknowledge that bad things will happen. But for whatever reason, you think that you’re you’re bulletproof. You’re immune. Classic example newlyweds. When you ask, almost everyone knows that 40 to 50% of all marriages in Canada today end in divorce. But if you ask a newlywed, that on their wedding day, are you going to divorce?

And pretty much 100% will say, well, no, that that 40 to 50%. That’s other people. That’s that’s not me. Well, actually no, that’s statistically, you know, the odds are not better for you or than they are for anyone else. But we don’t want to acknowledge we acknowledge that bad things will happen, but we don’t want to acknowledge that somehow they’re going to happen to us.

And that’s dangerous. It’s a threat to your finances. If you don’t acknowledge that you could be harmed by not looking at things dispassionately and realistically, and I’m just trying to encourage people to infuse some realism in their financial decision making.

Kyle Pearce: I love it, and I think it aligns so well with what we try to do here, because we talk a lot about we talk a lot about using foundational assets and then looking for our risk on assets to be we call it a bit of like gravy, you know, like it’s gravy on top. You want to make sure that you’ve protected yourself.

You put yourself in a position so that you know exactly what a base case looks like for you, because it’s almost and it’s never impossible, but it’s almost impossible for it not to work out. If we follow this with very conservative thinking, but then we take on that extra risk as the opportunity to get that upsized return. Right.

And I think, I think that’s a piece that we can all, you know, learn from because you just nailed it right there. It’s like people always want to think about how how will the positive result happen to me. Nobody wants to think about the negative result. But then at the end of the day, what ends up happening is if it doesn’t work out as planned or as you thought, you know, it could, it could really, really, completely ruin your plans.

From a financial freedom perspective. So super excited to have had you on the show here, John. You replaced the other John today. You know, other host, John is gone. But, John, it’s been great to have you here. Tell folks where they can learn a little bit about you and where they can hear more about some of your thinking and some of the things that you’d shared here today on your podcast, on all podcast platforms.

John Joseph De Goey: On all platforms. So like you, Kyle, I am a podcaster and you can find my podcast, which is called Make Better Wealth Decisions, Make Better Wealth Decisions. You can find it on YouTube and on on Apple iTunes and Spotify and the usual platforms. And it comes out. I put out a new episode every, every Thursday, much like you, 25 or 30 minutes.

And then on Mondays, I’ll do about a 5 or 6 minute recap where I will offer my personal thoughts on what the guest shared on Thursday to try to give people more of a hands on, you know, what can I do with this information sort of overview. But we talk, I have guests that are sometimes I have journalists, I have academics, I have product suppliers.

But we talk about financial decision making so that we can be rational and thoughtful and and trying to guard against optimism bias so we can make better wealth decisions.

Kyle Pearce: I love it, I love it, John. It’s been a pleasure. Friends, definitely go check out the podcast and pick up the book ball shift. We’ll put all the links in the show notes. So click on the show notes page. And John, I’m, looking forward to having a chat with you sometime soon on your show. So we’ll look forward to that.

John Joseph De Goey: We’ll do that soon. Thanks.

Kyle Pearce: Go take care.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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