Don’t be afraid to go against the grain. None of the most famous and successful investors have gotten to where they are today by following the crowd. The markets these days seem to be full of emotional investors who have replaced the common phrase “buy low, sell high” with “buy high, sell higher”. At the end of the day, investing is all about the price you pay. Are airline and cruise line stocks down significantly because of a COVID overcorrection? Sometimes when sectors are down, it might be the ideal time to buy while everyone else is selling. This contrarian view can pay off big time in the long term, particularly as an entry point for a buy and hold strategy.
As a part of my series about the The 5 Essentials of Smart Investing, I had the pleasure of interviewing Bryce Anderson.
Bryce is a mechanical engineer with a passion for finance. He is currently Vice President of Investments at RE Royalties Ltd., a company that provides innovative financing solutions for the renewable energy industry. In his role, Bryce works directly with the CEO and COO to conduct due diligence on both the renewable energy projects and the associated companies they help finance.
Bryce is both a CFA and CAIA charterholder and holds a Bachelor of Engineering Degree from the University of Victoria.
Thank you for doing this with us! Our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
Growing up, I was always very strong in math, which ultimately led me to pursue a mechanical engineering degree. While in university, I completed several work experience co-ops in both Canada and Germany. They provided me with valuable experience but, as I neared the end of my program, I realized that I didn’t see myself working in similar positions once I graduated. It was also around this time that I decided to take a business minor, which provided my first introduction to formal finance education, and I immediately fell in love. The more I learned about finance, the more I realized that there was still so much more to learn, and I pursued any further opportunity I could find. Once I graduated, it was challenging to determine which career path to pursue. Do I give up on engineering and focus solely on finance, or do I stick with a traditional engineering career path? Luckily, I found a role at RE Royalties where I could do both — using my newfound financial knowledge along with my engineering skills to analyze renewable energy investment opportunities.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
When I first heard about my current employer, RE Royalties, I was sold. Before then, I hadn’t seen any opportunities so well suited to someone with an engineering and finance background. I remember when I initially met both founders and basically begged them for the job, even offering to work for free because there was no doubt in my mind that this was where I wanted to be. Fortunately, they passed on the free labour and offered me the “CEO Package”, which sounded good at the time until they explained that they were both receiving the same package, which consisted of minimum wage as the company was still a startup. Luckily, things worked out, and RE Royalties is now a publicly-traded company, and I’ve moved up from earning minimum wage. Looking back now, I know that I lucked out, and things could have easily gone south, as they often do with startups. However, I can honestly say that even if things hadn’t worked out, I wouldn’t go back or change a thing. My main takeaway here is to never settle. If you find that dream job that you know you will wake up every day and be excited to go to, do whatever it takes. Best case, things work out, worst case, you learn a ton, dust yourself off, and try again.
Are you working on any exciting new projects now? How do you think that will help people?
Back in August, we announced our inaugural Green Bond offering. In a nutshell, Green Bonds are similar to regular bonds, but they have specific environmental or social goals that the proceeds must be used for. In our case, we are using the proceeds to invest in more renewable energy projects that help tackle climate change. Green Bonds are a fairly new financial product and have been targeted primarily towards large, institutional investors. We believe in improving access for everyday investors to invest in renewable energy, and have tailored our offering to be accessible to smaller, retail investors who want to know exactly the impact their investments are making.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience, what is the cause of these unfortunate numbers?
I think the finance industry has created a stigma where finance is very “complicated” and should only be left to the “professionals”. Similar to other specialized industries, like law, the finance industry has created a barrier to entry that serves to justify large fees for their professional advice. By creating this stigma, I think it has scared the majority of people away from trying to learn about finance. Not to mention, most K-12 educational systems do not cover basic personal finance at all. Now, to be clear, I am not saying finance isn’t complicated, but for the majority of topics that apply to the average adult during their lifetime, the math involved is really a collection of basic core concepts that should have been learned in school.
If you had the power to make a change, what 3 things would you recommend to improve these numbers?
- Make basic personal finance a mandatory teaching subject in all schools. The math required is already being taught, it’s simply a matter of showing how it can be applied to financial concepts such as a mortgage, budgeting, taxes, investing, etc.
- Require banks and other financial institutions to prove their clients have the required financial knowledge to properly evaluate their proposed service offerings (loans, mortgages, investment advice, etc.) before allowing them to sign up.
- Provide free online government resources to citizens that serve to bolster their financial knowledge (courses, articles, videos, etc.).
Ok, thank you! Now to the main question of our interview: You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each.
- Beware of home bias. This is all too common and can be quite a problem here in Canada as our capital markets only represent about 3% of the global total (vs. about 40% for the US). Investors tend to invest more in their local capital market than they should, which can have amplified devastating effects if your country enters a recession (e.g. losing your job and having significant investment losses). It can be complicated to deal with foreign currencies and public markets but, luckily, there is typically a wide range of domestic ETFs available that can offer the diversified foreign exposure you need, without dealing with other currencies.
- Don’t overestimate your knowledge of your own industry. Similar to the previous tip, investors tend to overconcentrate their portfolios in the same industry they work in as they know the most about it. This tendency can lead to a double whammy if your industry hits a rough patch — loss of your job and your financial cushion (investment portfolio). One of the first rules of smart investing is diversification, make sure you follow it.
- Don’t be afraid to go against the grain. None of the most famous and successful investors have gotten to where they are today by following the crowd. The markets these days seem to be full of emotional investors who have replaced the common phrase “buy low, sell high” with “buy high, sell higher”. At the end of the day, investing is all about the price you pay. Are airline and cruise line stocks down significantly because of a COVID overcorrection? Sometimes when sectors are down, it might be the ideal time to buy while everyone else is selling. This contrarian view can pay off big time in the long term, particularly as an entry point for a buy and hold strategy.
- Know how taxes and account types work. No one likes taxes, but if you have to pay them, it means you made money. However, knowing how different tax exempt or tax deferral investment accounts work (such as an IRA / Roth IRA or similar RRSP/TFSA here in Canada), and which investment income (capital gains, dividends, interest) have the highest tax rate, can help you pay considerably less. Putting the investments with the highest tax rate in the most tax-sheltered account can have a massive compounding effect over time, leaving you with considerably more money for your retirement.
- Set it and forget it. As tempting as it might be to check the markets every day with your finger hovering over the buy/sell button, research has shown that few, if any, professional active traders have consistently outperformed the overall market. If the pros can’t do it, it’s unlikely you will able to either. Set an investment strategy, leave your emotions out of it, and stick to it. Markets will go up and down in the short term, but you are an investor, and that means you’re focused on the long term, where markets have almost always gone up over any 20 year period (in the case of the S&P500).
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
My grandfather. I spent a ton of time with him growing up. I remember from an early age he would spend hours in the morning in his office watching the markets, adjusting his portfolio, and engaging in several online investment forums. I think a big part of my passion for finance comes from him. He even set up a portfolio for me that helped pay for a large portion of my university tuition. Lastly, he would always tell me I could do anything, and push me to make sure I was reaching my full potential.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“You don’t have to be an a**hole to get ahead.” I think business, in general, and especially finance, is often portrayed as this cutthroat, Wolf of Wall Street type industry. Obviously, there have been people who have been jerks and still made it to the top, but that is not the only way to get there. Working with the founders of RE Royalties has shown me how successful you can be while still remaining considerate, objective and fair.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂
The further democratization of investing, especially as it pertains to the renewable energy industry. To date, the industry has been dominated by large players who have access to a larger array of investment opportunities, while leaving very few options to the average retail investor. I think the individual investor demand is there, but further work needs to be done to create more financial products for this demographic, while lowering the regulatory hurdles that stand in the way.
Thank you for the interview. We wish you continued success!