Hello everyone!

Super excited as next week I’ll be doing my first lunch and learn with a group of students at Glenlyon Norfolk School on the topic of Careers in Finance, the first of (hopefully) a larger series of discussions on money, investing and financial literacy for kids.

These are challenging topics to teach but so crucial given the alarming rates of debt and financial insecurity we see in the world. Hopefully, with the right initiatives today we can get students excited about making money and building a huge portfolio for their future. They have so much time, such an advantage compared to everyone else, they just have to harness it.

Knowing that teens need relatability and efficiency to stay engaged, I have to figure out a way to ensure the delivery is successful.  

So, for now, my plan for next week, is to start by asking a question…

“Who here wants to work in Finance, be an Investment Banker, for example?”

….I expect 10% of hands—maybe—to go up…

I will call on those hands

….“good….tell me WHY?”

….”because I want to be RICH!”

→ now that would be a perfect segue into an engaging discussion about Finance.

Back to you next week with an update on how it went!

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Personal Finance

On the topic of investing, whether you like it or not, everyone—absolutely everyone—is an investor. In some form or another.

Why is this?

Whether you are a

• business owner

• university student

• real estate developer

• employee of the month

• mother or father of the month

We all have something in common.

And that is finite time…and long time readers here know how I like to say: time is money, and money is time.

So maybe you haven’t bought a stock or started a business yet, but every day you do something, every minute you spend here or there, you are making an investment of YOUR TIME.

And that investment is either unproductive or productive. There is no middle ground.

Like in personal health, something is either net positive, or net negative; never neutral.

Same thing with how you spend your time.

• are you reading

• are you learning something, i.e. how to invest

• are you doing something today instead of tomorrow

• are you exercising—a doctor recently told me—if we could “prescribe” exercise like we prescribe drugs, we would.

Hopefully, you are trying to do all of these things, and more.

The world is a wild place, especially now with Trump in the Whitehouse like a bull in a China shop breaking things so fast that the regular media has no idea where to start, nor do his opposition. What he’s doing today might be infinitesimal compared to what he does tomorrow. And who knows what happens after Trump (3.9 years to go).

So the message today is, regardless of what’s happening externally, focus on the internal, things you can control—or at least greatly influence.

And that includes how you invest your time, and your money, to create the best situation for you and your family.

To create wealth is to create optionality.

And optionality, well, that is the basis of real freedom.

Stock Markets

While this news won’t exactly change your life, it is still pretty sweet to see the innovator of the Index Fund—Vanguard, founded by Jack Bogle (RIP 2019)—lower fees across hundreds of its ETF products (source).

This is sending shockwaves across the entire ETF industry, with the likes of Blackrock - the largest ETF issuer, feeling the pressure in the form of a significant decline in their stock in reaction to this news.

Anytime a competitor lowers fees and can do it sustainably, the rest of the market must adjust to the new normal—because the products are essentially the same—and so investors have to reduce the revenue forecasts for these competitors and figure out how that affects potential earnings, which then influences the value, or perceived value of a stock price.

Vanguard was the innovator of the Index Fund, brought about by Jack Bogle who wanted to level the financial playing field for every day investors by providing them low cost access to the broad diversified markets, which 9 times out of 10, beats individual stock picking.

Indeed, the entire financial industry makes money based on FEES they charge investors, whether these are investment banking fees, portfolio management fees, mutual fund fees, trailer fees, performance fees, admin fees, transfer fees, forex fees, etc.

In short, FEES are everywhere, and mostly to the benefit of Wall Steet. But in ETF land, they are literally almost 0 and therefore a gift for you, me, and other DIY investors, too.

Why it won’t change your life is because ETF fees are already extremely low and favourable. So a reduction in fees from 0.09% to 0.05%, for example, won’t make a huge difference to your future net worth (although pennies do add up over time). Ultimately, it is wonderful to see the “Vanguard Effect” in real time → continuing to bring everyday investors easy access to Wall Street, without going through Wall Street.

I have been espousing for over a year in this newsletter, and more than 2 years on social media, about the benefits of ETFs. For long time readers, you probably have a good idea already. For those new, hopefully this newsletter helps your investing journey, and for a little extra ‘investment’ of time and money, take a look at my Simply Investing Masterclass (shameless plug).

Real Estate

We are progressing nicely toward final closing of our industrial deal in Edmonton and it is a great way to start the year. Competition for this deal was fierce, with high quality buyer groups coveting the deal. We won it, by a sliver. The metrics are very solid and provide a margin of safety for the capital invested, with upside.

A couple of you are new investors to Narland by way of this investment and while I still cannot publicize anything of substance due to confidentiality at this point, I will provide a link to the press release once it is finalized so the rest of you can see more about it.

Personally, while I am part of a General Partner—Narland—that runs Real Estate Limited Partnerships, I love to invest in a handful of other private real estate deals as a small Limited Partner (of course, keeping an eye on how much “illiquid” investments I hold, and still emphasizing my stock market/ETF exposure).

In exchange for my capital, I am buying the privilege of owning a piece of real estate that I would otherwise have no ability to acquire myself despite its great investment merits, nor the capacity to acquire, asset manage, property manage, and add value for sale and profit as a standalone investor.

Indeed, a HUGE amount of work and man/womanpower is required to perform all that is required to stick handle a large transaction toward a positive result for investors.

If you are ever considering investing in a private real estate deal, let me know, happy to provide you a second opinion or even make introductions to the other Sponsors that I know that are high quality.

1 Quote

A Question

What’s your favorite way to unwind after a hectic day?

Me: lying flat on the couch after eating a big ol’ bowl of pasta bolognese.

_____________

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Thank you

Eddie Gudewill, CFA

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