“Stop reading the news.” With Jason Hartman & Leif Kristjansen

My first and most important piece of advice — stop reading the news. It will only give you more anxiety, and waste valuable time you could be doing something way more impressive.Other than that — accept where you are and tighten your belt. Yes, you’re stuck in your house; yes, you lost a lot of […]

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My first and most important piece of advice — stop reading the news. It will only give you more anxiety, and waste valuable time you could be doing something way more impressive.

Other than that — accept where you are and tighten your belt. Yes, you’re stuck in your house; yes, you lost a lot of money. It sucks, I know. But this situation is not going anywhere any time soon.

Asa part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Leif Kristjansen, the founder of started investing in his twenties and effectively retired in his 30s along with a wife, kids, and a house in an expensive city (Toronto, Canada). Leif’s blog is very to the point and very much oriented about saving your time so you can spend it on what you love. He only recommends strategies that work really well. Things that just “sort of” work don’t even make the cut. It has to be efficient, and very consistently effective. So I know what he recommends below will be to the point and useful.

Thank you for doing this with us! Before we dig in, 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?

Ihad a very roundabout way of getting into finance. I’ve always obsessively followed my passions. And my passions led me into a career in the STEM field. This was a great stepping stone to get into finance for one simple reason:

It gave me money to invest. This sparked another passion which turned into an obsession.

I actually still work in my STEM job part-time because I like it. (Actually, my coworkers assume that it’s for the need of income, and I just keep up that illusion. I call it a “Stealth Wealth”).

But back to investing — once you have a bit of money to play around with, you can really start achieving amazing results. It starts to get really exciting.

And because it’s such a passion, and I’ve freed up some time by not having a full-time job, I started my blog to write about real estate, investing, and getting motivated to save. (I’m actually working on a book too!)

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?

It’s not “laugh out loud” funny, but I’m pretty amused by how things are coming out for me with COVID, I feel like my years of planning and preparing are being tested, and I’m kind of excited to find out where I’ll end up (financially) after this whole experience. Here’s why:

  • I still work part-time so I don’t need investment money coming in.
  • But I have plenty of investment income so I don’t need my job. Therefore I’m not stressed about losing it.
  • I have most of my money in rental properties, so I don’t even care if the stock market crashes.

It’s amusing in a weird way that just because I’m in a good financial position my outlook on this entire event is wildly different than everyone else’s. I’ve never knowingly experienced this before.

The financial pundits are pulling out their hair about how crazy the economy is going, and I’m just trying to figure out how to better my position, and helping my readers do the same. (I will say that health-wise I’m with the rest of the world in being nervous for our families, but I can’t do anything about that).

Are you working on any exciting new projects now? How do you think that will help people?

Well… I always have exciting plans. They take longer than expected though.

I’m actually working on a book that will put my entire investment strategy together. You’d think I have more time during this Covid lockdown, but I don’t.

I have two little kids, and it’s impossible to get anything done with them in the house. So for now the world will have to wait while I’m being a dad.

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?

This may be cliche but that special person is my wife (edit: I am also earning myself huge bonus points right now). If you are married you have to make a very special team with your wife. When one person has trouble, the other has to pick up some slack or help them out.

My wife has done that for me countless times and I appreciate it greatly. When I share my crazy ideas, she just says “yeah, let’s do it!” So doing all of this just wouldn’t be as motivating without her.

Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?

My first and most important piece of advice — stop reading the news. It will only give you more anxiety, and waste valuable time you could be doing something way more impressive.

Other than that — accept where you are and tighten your belt. Yes, you’re stuck in your house; yes, you lost a lot of money. It sucks, I know. But this situation is not going anywhere any time soon.

Make the best of it. Think of where you are now, and what can be your best “life move” moving forward. Forget where you were on January 1st. Thinking of what you could have had will only get you down.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

Simple answer: No.

I know it’s terrifying, but those dollar cost averaging plans only work when you don’t stop regardless of what’s going on.

If the markets are high — keep those monthly allocations. Who knows when they will stop rising.

If the stocks are dropping — keep it going. You can’t time the bottom and you shouldn’t pretend that you can.

If you stop now, not only are you most likely missing out on a large discount compared to a future stock market high, but more importantly, you might start to think you can call the highs and lows — which no one can.

Then the next thing you know, you’ve held off on investing until 2021 and you just missed a 50% recovery.

Don’t think. Just keep that money rolling in. I recommend everyone just goes a little extra heavy on equities during and after a recession, but nothing drastic, just move all your new purchases to all equity.

Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

1 — Don’t change your investing plan drastically.

Like I said, if you can just move some money in every month to an index fund you should keep doing it. This is the part of dollar cost averaging and this period of putting that money in is likely the most lucrative and the best investing plans are timeless. People are going to be telling you many stressful things but you need to learn to shrug them off and stay on target.

2 — Refinance

Refinancing your mortgage and student loans are usually a winning proposition in any downturn because rates almost always plummet (but don’t pay your loans off early!). You’re guaranteed to save money, and you’re basically getting a payout on your investment in the form of interest savings. On the same vein, if you don’t own your home, try to negotiate your rent. There is no better time than during a downturn.

3 — Stay liquid

Everyone should have easy access to money because if you would ever need an emergency cash source, now is going to be the time.

It also gives you the chance to find good deals if you are so inclined (more on this later).

Right now, I’d recommend investing in index funds. You get the general market movements while leaving yourself open to move the money somewhere that took a huge hit.

(For example, during this down turn, every oil related stock took a 1 day 40% hit when OPEC+ fell apart. If you had your money in indexes it would have been easy to move a big chunk into the oil sector the same day to take advantage.)

4 — Look for deals

Some industries are going to get large and surprising hits during this recession. The people who benefit from it are ones watching AND have the money to act.

Also, my main source of income is from real estate investments. They are actually pretty simple if you learn properly. Housing prices move very slowly, so if you have some liquid money accessible you can pounce when you see a deal.

For example, if someone starts defaulting on a house they will be VERY receptive to someone who can close the house out in cash very quickly.

5 — Cut costs

It’s no fun but if there was ever an excuse to reduce your expenses it’s a global recession.

Not only can you come out of this time learning how to run a leaner life (which is great for your long term retirement prospects) but also you will generate more money to invest.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

As I write this I would be moving heavily into Aerospace and Oil if I did that kind of thing. Really I’m an index guy through and through so that’s where my money will be.

When you read this the situation might be totally different, so you should stick to the basics.

  • Invest in companies that have good long term prospects
  • Everything is so heavily discounted right now that if you buy something that doesn’t end up going bankrupt you are going to win out.
  • I am very confident the S&P 500 isn’t going bankrupt so it has most of my money.

Are there alternative investments that you think more people should look more deeply at?

Even if you have a bit of money coming in, here are two places you can invest in a huge payout:

The best sector is your basement

It’s a very lucrative use of your house. Even in uncertain times you can always guarantee a payout if you can rent it.

If this is anything like the last recession, there will be an uptick in renters (hopefully smaller though.)

Also, there will probably be a downtick in AirBNB rentals because those people are certainly spooked right now. Most of them are trying to sign long term tenants as fast as they can which will open up some opportunities.

And on a longer horizon, your skills and education.

You have the time at home anyway.

Having a better CV improves your chances of keeping your job during the recession, and rising on top of the pile when hiring resumes.

In fact, I’d be surprised not to see online courses being incentivized during this recession.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?

  1. Don’t buy into any hot company
  2. Buy something that has great fundamentals. Many airlines even though they are hammered are very solid companies. Air travel isn’t going anywhere so buy one with a strong balance sheet, not a cool new route or a new shipment of new planes on the way.
  3. The investment with the best fundamentals is the US economy (in the form of an index fund). You might have your own opinions about the political landscape at any given moment, but the US economy is strong and that’s not going anywhere any time soon.

Ok, thank you! Here is a more general finance question. 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?

Time is critical and some investments are time sucks

If watching your investments are basically another full-time job — maybe they’re not worth it. There are ways to do things quickly. You can save money quickly and make money quickly. Heck. You can even budget quickly (if you eliminate budgets like we did.)

Rental properties are a good path to long term wealth.

Housing is super lucrative if you buy the right kinds of housing. If you’re concerned about the ongoing costs — you can self-manage and treat it like a part-time job. If you’re concerned about the time and overwhelm, you can keep the effort really low with very effective management automation tools.

Investing can be very simple if you let it

I used to be a stock picker, I spend all my free time reading annual reports and balance sheets. Then I realized an index fund I kept by accident was matching my returns!

Let’s look at the facts:

  • Setting up investing accounts is simple
  • Index funds tend to beat highly paid advisors.
  • Mutual funds with managers tend to be losers too.
  • Robo advisors are very effective if you are really lazy
  • You can learn all you really need in 15 minutes

Don’t by showy with your money

A little while ago I wrote a guide about my “Stealth Wealth” and I got so many comments from people who wished they read it sooner.

If you’re growing your wealth, it’s best to keep it on the down-low. There are tons of reasons for this, but the biggest is that it’s hard to save your money when everyone assumes “you can afford it.”

Don’t let your friends influence your money too much

It can be hard to get serious about saving when you have spendy friends. My solution — get yourself motivated and get your friends motivated too. I have a simple phrase that always works for getting out of expensive outings:

“Actually, we’re saving up for a vacation right now. How about you just come over for some stir fry?”

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

If you are born poor it’s not your mistake, but if you die poor, it’s your mistake. — Bill Gates

This has always stuck with me and my mentality to always improve my position in life. Make it better than it was yesterday.

Whether it’s bonding with my kids more or buying an amazing investment property — always aim to do something better. I do realize life is harder for some people but I do always focus on making life better for me and those around me.

You are a person of enormous 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. 🙂

Spend more time with your family and friends. It’s easy to lose sight of these bedrocks of your life to chase after some career goal or new toy.

Go see your parents and invite your friends over. Maybe the next pandemic will be targeted at people your age.

Thank you for the interview. We wish you only continued success!

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