Interview with Bank Breakers Jesse

Smart Money: Hello, and welcome to the inaugural interview episode of smart money. I'm super excited and pleased to have with me, Jesse, from bank breakers, which is a great blog to teach Canadian finance, real estate, investing, saving, and so much more. Jesse, thank you so much for joining us.

Bank Breakers - Jesse: And thank you very much for having me. It's a pleasure.

Smart Money: So why don't you give us a little intro? What made you want to start this? Why are you so interested in finance?

Bank Breakers - Jesse: That's actually a really good question. So It really started last year during the pandemic. I was actually attending university during that time. And, I'd say the real starting point for certain the website and just even getting into personal finance in general is I'm going to credit it to rich dad, poor dad by Robert Kiyosaki.

That book really is the pinnacle, to me. It's really motivated me to really take this path serious more than anything. And that's what I'm just trying to translate as well, provide great content to, to our readers and even help them start their own personal finance journey.

Smart Money: I love that. That's a great context and that's a very old book, but still definitely a great book for people. And I think that's actually a great topic. Why don't we start there? Cause. I know one of the websites sections that you have on your blog focuses around book reviews and summaries. So if I had to ask you your top three books to choose off the top of your head for people who've never read and want to get into finance, what would be the top three books?

Bank Breakers - Jesse: You really had to put me on the spotlight there. And that's a really tough question. Off the top of my head, I will say rich dad, poor dad by Robert Kiyosaki. The second one I think is going to be total money makeover by Dave Ramsey. If nothing else I would automatically recommend anyone to read that book.

You don't have to read rich dad, poor dad. Just read ,total money makeover, has a lot of great value in that book. And the third one. Oh man, that's a really, really tough one. I would probably give it to: a beginner's guide to the stock market by Matthew crater. And the reason I say that is because it provides a great exposure to the stock market and different investment strategies as well.

So if anyone's looking to start investing in the stock market, I would recommend reading that book first. So then you can learn a little bit more, and then if you want to specialize in a certain investment strategy, it will provide you that exposure and you can. After that do more research on it.

Smart Money: I love that. And so what are some of the books that you're reading today? Maybe give us a preview of your next book review or even not book review. What is the book that has your attention right now?

Bank Breakers - Jesse: Right now, it's going to be, think and grow rich. So I just barely started it. It is a book by Napoleon Hill and that is another older book. I think it was, the version I have, it was published in the 1960s. So, you're, you're really talking about a very, very old book at this point, but it's caught my attention because originally when I was going to purchase rich dad, poor dad, it came down between the choice between that book and this book think and grow rich.

So it was a very hard decision for me to choose between the two but this one has caught my attention for awhile. And again, I just barely started it, but I could tell it's going to be a very good one.

Smart Money: And I'm curious, are you reading books outside of the finance topic? Because one of the things that I personally, at least one of the books that I really enjoyed and this was earlier on and I think it's, it's great for just a positive mental attitude is, Finding the giant within, or the giant within by Tony Robbins, which, putting aside all of the media about Tony Robbins, I think the concepts that are in this book are very powerful.

It talks about believing in yourself and also about finance as well. And so have you done any reading outside of traditional finance books? And if so, what would you recommend?

Bank Breakers - Jesse: Absolutely. And in fact, one of my next books I'm going to read is that exact same one you mentioned but for the recent books I've read. I've read and I've actually done an article based on that, on the website, a showboat, which was produced by Roland Lazenby. It's the life of Kobe Bryant. So I'm maybe the biggest Kobe Bryant fan.

You, you might find I'll leave that for debate of course, if anyone wants to have a debate with me about that, but I've read that book and really what I tried to do. As I mentioned, I'm a Kobe fan. So I'm familiar with a lot of aspects in his personal basketball career and a little bit outside of his life.

So what I tried to do is is, is the fact that I had the insight of his entire really his entire life. I tried to break down the lessons that can be learned. So obviously we know how much of a competitor, and as one of the all-time greats in what he did and tries to try to take some of the lessons, he applied to his work ethic and his professional career and apply that to my own life. As well another book I've just finished actually was the 48 laws of power by Robert Green. That was an interesting book. I have to say. It provides a lot of content and it basically, I consider it a small textbook because there's so much content in there, but I would definitely recommend those two. The Showboat, the life of Kobe Bryant and try to apply those lessons that it a teachers to your own life.

Smart Money: Yeah, for sure. And obviously very unfortunate Kobe's early passing, very, very early passing. So let's talk a little bit about stocks because I know you're quite passionate about investing and what, what exactly, what type of stocks are you interested in? I know you have a section called stock reviews.

You talk a little bit about ETF, some ETFs you can buy for \$20. , what excites you? What type of investor are you?

Bank Breakers - Jesse: so traditionally I like to look at index funds slash ETF. So I do like my traditional stock, of course. And what I look for is I like to look for kind of small cap stocks that I think can obviously go up in their value. So I kind of think of myself as a value investor in a sense and as well for ETFs.

I kind of liked the ones that track indexes. So once I might track the S&P 500 that article I covered on the four Canadian ETFs you could buy for around \$20, the, I shares one, XCI is the ticker. I really liked that one. I think the dividend on is, is, is pretty good.

But what I look for in a stock, I look at the ratios and I also look at the financial statements of the company. So I, yes, I have done stock reviews and in that I try to look at the company as well as the stock. You can't really base the value of a stock on its price, but instead, what you can do is base it on the company itself. Right?

So I look at that and as the financial statements, which it's not easy to do. Fortunately I have, I'm going to school for an accounting degree, so I might have a little bit of an advantage there and being able to read the financial statements. I definitely like to look at the company itself and if it's something that's, if it's a product or service I would buy from them, then yeah, I definitely would invest in them.

Smart Money: So even when it comes to, so let's say like the S&P 500 index tracking funds, what are your thoughts on hedged vs unhedged, especially given the fact we live in Canada and we can invest either in Canadian , or us and hedge against the currency rates. What do you have? Strong feelings either way.

Bank Breakers - Jesse: Not necessarily, I would, my investing sell is just whatever I prefer hedged , unhedged it, it really doesn't matter. If we're going to talk about different, different stocks on different exchanges. Again, I would attribute to the fact that if I'm willing to buy a product or service from the company, and I also believe in that company, yeah, I'm going to go ahead and purchase a stock in them. When it comes to an ETF I will probably stick with more Canadian based ETFs. I know that US-based ETFs index funds and even stocks. There's a lot of great value there. And of course I have a few of them in my portfolio , but I do believe in investing in Canadian stocks and Canadian securities as well, so you don't have to pay any excess tax.

And as well, you don't have to pay any extra in a dividend tax or anything like that. So I definitely look for Canadian, but I'm not going to just solely focus on Canadian. I will also look at other foreign exchanges.

Smart Money: Very well put, as far as the stocks that you're interested today, what are you keeping your eye on?

Bank Breakers - Jesse: Right now what I've been keeping an eye on? Actually that's the, the Bitcoin ETF. I've been looking into that a little bit. I'm not that well-versed or really, I need to do more research on Bitcoin and cryptocurrency in general. I do have particular investments in XRP or ripple. I thought it was good initially when I read upon it.

And it's more of just money I can lose. That's the way I look at it. It's just for fun. And I like doing that sometimes instead of just, investing for retirement or building wealth, anything like that. But, any stocks have recently caught my attention, I would say. Not actually, to be honest, I'm still just kind of looking here and there sometimes you'll get articles based on certain stocks that you should purchase.

Like, for example, it might say, do you have \$3,000? Here are two Canadian stocks you should purchase today. And I will actually click on the article just to see what they recommend and then I'll do my own research just initially if I see some key ratios there or a dividend that's, that's really compelling.

I will do more research and I will look into the financials and dig a little deeper there, but unfortunately I don't have any stocks that I'm looking at exactly right now, but I'm still doing my research. And if I do find anything, I'll be glad to share.

Smart Money: I think that's actually a very, from my perspective is a very wise answer. And I think, it speaks to doing research and making sure that you're informed and the thing that I liked that you touched on there was setting aside money that you can afford to lose versus money that, you want to save for retirement and investing, for the longterm.

And so oftentimes people who don't have a well put out budget or don't have self restraint, can think, Oh, I'm gonna make a quick buck. And I think obviously, GameStop and even Bitcoin can be sometimes pumped and dumped in the news. When the news is hyped, it can go up and then there's a little bit of a drought, not as much news coverage, the price can go down a little bit and then it goes through a cycle.

But the fact that you're more interested in the price to earnings and the value investing I think is definitely a very, very wise strategy. And at the same time you can set out I don't know for me, it would be something like 10%. I'd love to hear how much, but for me, it'd be like 10% that you're comfortable quote, unquote gambling with or taking more risks investments.

Bank Breakers - Jesse: So that's another good question. You're you're you're absolutely killing it with the questions I got to give you a big props. For the amount I would set aside to gamble so to say of my, like the amount I would go to investing in my portfolio, it's just basically whatever I feel. I don't want to put a lot.

So for example, my ripple investment, I just put like \$25, I'd say, not a lot. And compared to, to the portfolio and what I would contribute. No, not a lot, but I just, if I feel like throwing 20, 40, 50, \$60 into something, I will, like I said, I like to have fun with investing.

You should right. You should try to have fun with it whenever you can. Although it's a very serious matter to invest for your retirement or to build wealth.

Smart Money: And just on that point, I would hope just as a caution, and this is for the listeners. Any gambling money quote, unquote, should be put into a non-registered account. The reason I say that is because you can offset any losses. And carry them forward against future capital gains.

So, if in the unfortunate scenario, let's just say that \$60 goes to zero. You can take that \$60. And in the future, when you make money in that same non-registered accounts, you can depreciate or take down the first \$60 before you have to pay any gains tax versus in a TFSA or RRSP you've lost that contribution room.

That's \$60 is no longer tax deductible, in a registered account, like a TFSA or RRSP. So, for me personally, I would recommend for everybody as well, make sure you keep quote-unquote gambling money in a non-registered account. That just means a normal trade accounts.

Bank Breakers - Jesse: You really did hit a good point there. If you're going to put in some money or some gambling money, we'll say into a certain stock. Invest what you can lose, do not break the budget, because that capital loss it's great for, for tax returns. And yeah, it can certainly reduce a tax bill, but you, like you said, you don't want to lose any contribution room because that contribution room, if it's going towards your retirement, that really matters. Whenever it comes time to withdraw the funds. So I just want to add that, but you really did talk about that very well.

Smart Money: I love it. So we're going to take a quick 20 second break.

We're back, let's jump right into the next topic. So you touched a little bit on ripple there and I'm personally a little conflicted on cryptocurrencies.

I do believe crypto is, is powerful technology. And I'm going to do a future episode on this because I think there's a very cool story, that I can make a better video on, but very quickly , I sold 4.4 Bitcoin for \$11 each, in 2012. Just for reference today, the Bitcoins are trading around 70,000 CAD a pop.

That's always a fun little story that I like to tell people. I was very early into crypto, as you can tell, like they were selling for \$10 a piece. You can check when that was, but, I personally, today, don't think that there's going to be as much upside as I saw when I got into it.

And you know, if it goes from 50,000 to a million still great, don't get me wrong with 20 X return. But there are also normal stocks that have a similar return. One of my favorite examples is Shopify, which is a great Canadian company. If you look at Shopify over the last 10 years, it's gone up 5000%. You heard that, right?

So. , and it's it's if you put it next to Bitcoin, it literally looks one to one. So, there are certainly investments outside of crypto today that can achieve the same returns with what I personally would consider less risks. But I'd love to hear your thoughts on that.

Bank Breakers - Jesse: Yeah. So first I got to say, I'm very sorry for your loss. I would definitely do the same back in 2012 as you did, because crypto certainly wasn't as big as it is now. And I didn't expect cryptocurrency to pop off, especially Bitcoin to pop off, up to like \$70,000. Like, I don't know if any of us predicted that, but I mean, I still don't know how I feel about cryptocurrency.

It's certainly a volatile investment because one minute it goes up by a large amount, which is great, because if you come in at a low price and you're making excellent returns, but at the same time, if it goes down, then you could have lost a significant portion of your investment. So. I recently was talking to someone about this and now you see all the hype, like recently I've read a story.

I think it was based on, yeah, it was based on the fact that now Tesla is allowing you to purchase their vehicles for Bitcoin, which is crazy. But I think we're going to see more of that. So that kind of makes me wonder, okay, is Bitcoin or other cryptocurrency. Really going to be the investment vehicle of the future.

So it's really hard to say you can earn good rates of return, just like you can stocks and ETFs and such Shopify was a great example, like you said, but I'm still like, I'm still really unsure to me. It's just very risky. If you just want to put some of quote-unquote gambling money into cryptocurrency by all means, I think that's fine.

It's exactly what I did, but it's only, I'm only betting on speculation. I'm not betting on facts. And I'm just a little concerned over cryptocurrency investing because of how volatile it's been. But I, again, I do need to really, really do more research into it.

Smart Money: I agree. I think that you wrapped it up well there like it's volatile, and needs to do more research. You recently put out an article that I actually really, really liked. And I, I learned quite a bit that I didn't know which was about tax season. You put out an article about. I'm trying to find the exact title, 10 things to know about Canadian dividend tax in 2021, which was an interesting read.

And for people that are interested in dividend stocks, and dividend tax in general, they should definitely take a read. You have some really solid examples in there. Any other tricks and tips that you didn't include in there or anything you want to highlight?

Bank Breakers - Jesse: First, thank you for the nice comments on the article. One thing I would want to highlight, and I really never knew this, until recently. So the way I was exposed to Canadian dividend tax and even the dividend tax credit was through, as I mentioned, I'm going to school for an accounting degree.

And one of the courses I took just last semester was income taxation. And that provided a lot of great value just for looking at personal income taxes and, and other various topics. But what, the main thing I would want to highlight is on dividends. Like it seems like it would be taxed normally. As interests would, right.

You just have under your incomes, the amount you've earned from interest or dividends, and then you're just tax based on a certain tax bracket you fall under. Right. It seems pretty simple like that, but it necessarily isn't. And I've tried to make it as basic as I could in the article, but there's two types of dividends. You can be taxed on: eligible and non-eligible dividends. So just to briefly explain eligible dividends are typically dividends paid by a public Canadian company. So for example, if a CIBC, if you hold a stock in CIBC and they obviously pay a dividend, we would most likely consider that a eligible dividend. For the second type of dividend that you're taxed on it's non-eligible so that's mainly from Canadian private companies, which might be a little harder to invest in, but nonetheless, you are still taxed on it. So I'll stick with eligible dividends since most likely Listeners are invested in, in Canadian public companies.

So what you want to know is on the dividends you earn outside of a TFSA, you are taxed an additional 38% on it. So what I highlighted in the article is I gave an example. So the example was, an individual who was named Serge earned a thousand dollars in dividend income. The tax on that dividend, the additional tax was 38%.

So that's \$380. His taxable income is now \$1,380. And then the dividend tax credit is a little complicated. I would recommend listeners to check out the article. There's different ways it's computed. And again, I try to make it as basic as I could, but the dividend tax credit doesn't fully cover the dividends at all.

Especially the 38% taxed additionally, on those dividends. So when investing, you might not necessarily take that into consideration, especially if you're, you're a big dividend investor, but I just wanted to highlight it because it's important to know. I feel because maybe it will change your strategy a little bit, but nonetheless, it's also good to know where you're additionally taxed.

Smart Money: I love that. All right so I think, you mentioned you had a question for me, so why don't we take that now?

Bank Breakers - Jesse: Yeah, I, I most certainly did. So I've been watching the podcast for a little while now and I found your content very good. And what I really like about it, it's very quick and to the point, which I really do appreciate, but I found that there's one topic you haven't focused on. And I just want to get your initial thoughts on, I imagine you'll probably do a podcast and video on it later, and I look forward to, to that being done.

How about you'd give me some additional ways to save money.

Smart Money: I love it. All right. I mean, I put out a video yesterday and the podcast went out a little bit ago, but I'm a big believer in: small purchases add up quickly. And it's hard to realize how quickly they add up, but I gave an example of Starbucks. Like you can very easily save a thousand dollars a year if you go to Starbucks.

And the example I used was, \$10 at Starbucks, three times a week, that's \$30. 50 weeks in a year, you can do the math, that's over \$1,500 if I'm not mistaken. So, it's quite crazy when you just multiply the math out like that. So the biggest way is to reduce small purchases. I think the other side to saving is also where you put that money because there are oftentimes, just a normal savings account, which doesn't pay a great interest rate on itself. And we talked a little bit about exchange, traded funds. We talked a little bit about stocks. We talked a little bit about dividend stocks. I think those are all great ways to save cause when people, I think, think about saving, they think about I'm just going to put the money in the bank, but that's not good enough.

You need to go one step further and have that money generate income for you because what the bank does, it, it pays you the inflation rate realistically, or sometimes even less than inflation. So you could be losing money if you just put the money in the bank. So saving is also about taking that money and putting it to work.

And then finally, when it comes to saving, I think I'll flip this on its head and maybe this is not necessarily what you're talking about, but another great way to save is to generate a second income. So if you can sell your old clothes, just for example, like you can donate them. Wonderful. If you can afford to donate them, I fully support that and you can typically get a charitable tax donation and write that off against their incomes.

So great, a hundred percent support that on the flip side, you can also sell them. So there's, there's things like depop and I, I'm not big into fashion or reselling, but I know there's a huge market out there. You can resell services. So if you're a carpenter, if you have some type of skill, like you mentioned, you're an accountant.

Obviously you need to get, a CPA and become a licensed and have the insurance and stuff, but you can sell those services on the side, and generate an income. So I think that's another great way to save is. That's that's net new money. So in an ideal world, you should be able to save a hundred percent of that income.

So this is assuming you're not getting a second job to sustain yourself and your family and your loved ones. It's just to purely save. And so they would be in some sense, the most effective saving strategy, because you can put a hundred percent of it away.

Bank Breakers - Jesse: Yeah. You know, I really love those answers you provided. And whenever you mentioned earn a second income the first thing that popped up into my mind was Robert Kiyosaki. And what I find is the best value I've earned in that book is to learn, to buy assets, not liabilities. So I won't go into too much detail there if, If you really want to know, you can always feel free to check out the article on the website.

I did explain that, but as well, I wanted to touch on, just briefly on another point you made and the Starbucks, because that's one of the ways I, I thought about saving extra money is what you spend your money on, right? Especially with your day-to-day interactions. I believe it's \$3 for a cup of large ice coffee.

You know, that adds up over time. And if you can see the bigger picture, I think that could motivate more people to learn how to save money and to cut back on those, additional spendings. So you can even make iced coffee at home. I'm sure. And it's much cheaper to purchase the necessary ingredients to make it, rather than obviously going to a Starbucks or even a Tim Horton's to purchase it.

So I really liked those couple of different methods you stated. And if you are also going to do a podcast, video talking specifically about saving I'm, I would definitely look forward to seeing any additional methods you have.

Smart Money: Yeah, I'll have to brainstorm because I just gave away all my secrets. As we wrap up let's say 60 second clip that we can share and you have somebody in an elevator go, what do you want to say to them?

Bank Breakers - Jesse: Personal finance is really no joke. Whenever I think of personal finance, I think of retirement. And I'm sure, you know individuals who, who are getting towards the age of 65 or even 70, and wants to retire, but, but really can't personal finance is just such an important topic that I don't think a lot of people look into because maybe they think it's too complicated, but the truth is it isn't. And I always think of retirement and those people who were going to retire later, later in life, like when they're 70 or 80 and thinking about when they were 20 or 30, all the things they could've done to retire early and happier, don't let that be you.

Smart Money: I love that that's so powerful. And one thing that I would add to that is. The earlier you start the easier it is, you talk about how it's not hard and it shouldn't be scary. And I think the earlier you start, the easier it is just because of the power of compound interest. Like if you can start at 18, I think that's the best you can start.

I don't really think you can start before 18 you're miles and miles ahead. And, and so it's never too late to start. Also an important thing to note, but it is easy. And the earlier you do it, the better it is. So Jesse, where can people find out more about you and bank breakers?

Bank Breakers - Jesse: Yeah so if anyone wants to reach out they can go to our website. The website is www.bankbreaking.com. So that's BA N K B R E a K I N g.com. You can also reach us on Instagram at bank underscore breaking and feel free to reach out by leaving a comment on the article. Reaching out to us there on Instagram as well, or under our website on the contact page.

There's an email there you can contact. If you have any inquiries or any concerns over anything, I'm more than happy to respond and even have a conversation with everyone.

Smart Money: Awesome. I hope people take full advantage of that. And as always, if you're looking to find out more in the latest tips and tricks, please check out www.smartmoneytricks.com.