Ben Felix, a finance expert and Chief Investment Officer at PWL Capital, joins the podcast to break down the biggest financial decisions people face — from renting versus owning a home, to investing psychology, to the most common money mistakes — all grounded in academic research rather than sales-driven advice.
His core philosophy is that investing itself is “solved” (use low-cost index funds and capture market returns), but human psychology is what prevents most people from doing it well.
He emphasizes that most financial principles apply universally, whether someone has $10,000 or $10 million, and that overcomplicating finance often leads to worse outcomes.
The Psychology Behind Financial Decisions
Investing is solved — behavior is the hard part. The evidence overwhelmingly supports low-cost index funds as the best strategy for most people. The challenge is sticking with it, because our brains are wired for survival, not for abstract long-term thinking.
Looking at your investments too often hurts returns. Academic research shows that the more frequently people check their portfolios, the less risk they take and the lower their returns, because daily volatility makes the market feel riskier than it actually is for long-term holders.
The PERMA model from positive psychology can clarify financial goals. Developed by Martin Seligman, PERMA stands for Positive Emotion, Engagement, Relationships, Meaning, and Accomplishment. Ben uses it as a framework to help people think about what they actually want from life, so their financial goals serve something real rather than arbitrary targets like “buy a Ferrari.”
Most people have never clearly defined what a good life looks like for them, and without that clarity, they tend to drift toward short-term spending decisions that don’t serve their long-term well-being.
Goals that don’t map to any PERMA category may not be worth pursuing financially.
The 10 Biggest Financial Mistakes
Not earning enough money. Many people feel trapped by their income, but investing in “human capital” — education, skills, entrepreneurship — can increase earning potential. The key insight is building a rare and complementary skill stack (e.g., engineering plus content creation, or biotech knowledge plus writing) rather than just more of the same skill.
Not saving enough. Wealth compounds over time, and delaying savings makes it exponentially harder to catch up. Some people don’t realize the problem until their 50s or 60s, at which point there’s very little they can do.
Overspending on wrong things. If spending doesn’t contribute to the life you actually want (as defined by something like the PERMA framework), it’s preventing you from funding things that would.
Not taking investment risks. Many people avoid stocks entirely or hold overly conservative portfolios. The opportunity cost is enormous: a 7% stock return versus 2% on cash means a $10,000 investment grows to roughly $150,000 over 40 years instead of much less. That $10,000 car purchase is effectively spending $150,000 in future wealth.
Taking the wrong risks. Picking individual stocks, trading options, or chasing crypto often have negative expected returns or high costs. The reliable approach is index fund investing.
Missing tax planning opportunities. Most people can optimize their tax situation using government-provided accounts (RRSP/TFSA in Canada, Roth/traditional IRA and 401K in the US, ISA in the UK). Higher earners have additional strategies. A good CPA or tax professional can identify these, though the opportunities are often limited and one-time optimizations.
Under-insuring catastrophic risks. If a household depends on one person’s income, life insurance (especially cheap term life) and disability insurance are essential to replace “human capital” if something goes wrong.
Missing estate planning. Without a will, the government decides how assets are distributed, which may not align with your wishes and can result in unnecessary taxes. Everyone with dependents should have a will.
Who you marry matters financially. Academic research identifies “tightwads” (people who feel pain spending) and “spendthrifts” (people who enjoy spending). Opposites attract, but tightwad-spendthrift pairings tend to have more marital conflict around money and lower relationship satisfaction. A simple quiz can identify your spending profile.
Prenups, while unromantic, can prevent devastating financial outcomes in the event of divorce. If both partners are comfortable, it’s a practical conversation to have.
Renting Versus Owning a Home
Buying a home to live in is not really an investment. It’s purchasing an asset that funds your housing consumption. The only way to evaluate it is a side-by-side comparison with renting.
The unrecoverable costs of homeownership are far higher than most people realize:
Mortgage interest — money paid for the use of money that you never get back.
Opportunity cost of equity — the down payment and principal sitting in a home could have been invested in the stock market, which has historically far outpaced real estate appreciation.
Property taxes — typically 0.5% to 1% of property value per year, gone forever.
Maintenance costs — often underestimated at 1% of property value per year; academic research suggests 2% or more is more realistic. Ben’s own experience as a homeowner confirms this. This includes the hidden cost of time spent coordinating repairs.
Emergency costs — major repairs like a new roof or cracked foundation require liquid cash, which itself carries an opportunity cost.
Renovation spending — homeowners inevitably upgrade beyond mere maintenance when fixing things, spending money they wouldn’t spend as renters.
The 5% rule is a rough rule of thumb to determine whether renting or owning makes more financial sense: multiply the home price by 5%, then divide by 12. The result is the monthly rent at which you’re roughly indifferent. For a $300,000 home, that’s $1,250/month. If you can rent for less, renting is the better financial decision.
This is a simplification. PWL Capital has a more detailed calculator on their website that accounts for individual factors like asset allocation, tax rates, and local costs.
For young people especially, renting often makes more sense because it preserves mobility. Homeownership can trap you in a location, preventing you from pursuing higher-paying opportunities elsewhere. Transaction costs of buying and selling are significant, and needs change over time (condo → townhouse → house).
Homeowners are not clearly happier than renters. Once you control for property type and neighborhood, the life satisfaction difference disappears. Any happiness gap in uncontrolled data is explained by owned homes tending to be nicer and in better neighborhoods, not by ownership itself.
Who should buy? People who are very risk-averse, certain they’ll stay in one place long-term, taxable investors in high tax brackets (since primary residence gains are tax-preferred in many countries), or those in markets where rents are rising unsustainably.
Historical home price appreciation is not a reliable guide for the future. Past gains (e.g., a house bought for $100,000 now worth $600,000) were driven by unique conditions — falling interest rates, immigration surges, supply constraints — that may not repeat. In Canada, real estate has experienced one of its largest drawdowns (inflation-adjusted) since 1975.
Investment Strategy and Asset Allocation
The controversial life-cycle asset allocation paper analyzed data from 39 countries going back to 1890, simulating a million hypothetical lifetimes using bootstrap simulation. It found that a 100% equity portfolio (1/3 domestic, 2/3 international stocks) outperformed target-date funds and 60/40 portfolios on nearly every metric, including retirement consumption utility and probability of running out of money.
The finding is controversial because it contradicts the deeply ingrained conventional wisdom of shifting toward bonds with age.
The key insight is that bonds are riskier than they appear for long-term investors because high inflation devastates bond returns, while stocks provide a hedge against it.
For US investors, the optimal domestic allocation is relatively flat between 10% and 50%, so market-cap weighting (~60-65% domestic) is fine. For Canadians and others, 1/3 domestic avoids excessive home country bias.
Fees compound and destroy wealth. Even small differences in fees (0.5% vs. 1%) have enormous long-term impacts on outcomes. This is a key reason to use low-cost index funds.
Cash loses value to inflation. At 3% inflation, $10,000 kept as cash loses half its purchasing power over 20 years. Holding cash is itself a form of risk — it has a negative expected return in real terms.
Dollar-cost averaging vs. lump sum: Ben personally would invest a lump sum immediately rather than spreading it out, since markets trend upward over time.
Financial Products to Avoid
Covered call ETFs are heavily marketed as providing both income and capital appreciation, but they cap your upside significantly. The implied cost of giving up gains above the call strike price is enormous, and the strategy exploits investors’ mental accounting bias (preferring income over capital gains).
Thematic ETFs (AI, cannabis, electric vehicles, space) are typically launched after a sector has already surged in price. By the time the product exists to buy, the theme is overvalued, and subsequent returns tend to be poor.
Private company access products (offering exposure to SpaceX, AI startups, etc.) charge high fees and may not actually be buying the underlying securities at good prices. They prey on investor FOMO.
Financial firms are very good at creating products that fulfill investor desires (income, access to hot themes, excitement) even when those products are not good for the investor.
Cryptocurrency
Ben acknowledges that Bitcoin solved a genuinely interesting technical problem (digital cash without a trusted third party) and that the technology is fascinating.
However, he views crypto primarily as an ideological vehicle and a speculative asset. PWL Capital does not allocate to it for clients, and Ben personally does not hold it (aside from small amounts purchased for research purposes years ago).
His view is that it’s not a reliable investment in the way that a diversified stock portfolio is.
AI, Technological Change, and Investing
History suggests technological revolutions create more jobs than they destroy, even if the transition is painful. ATMs were supposed to eliminate bank teller jobs, but instead reduced the cost of operating branches, leading to more branches and more tellers. The Jevons paradox (cheaper coal led to more coal use, not less) illustrates how efficiency gains can expand markets.
AI may be different in speed of adoption — it can be deployed instantly via the internet, unlike previous industrial revolutions. This could mean faster displacement, particularly for entry-level jobs (Anthropic’s report suggests 13% of entry-level jobs are already being disrupted).
For individuals, the best preparation is building rare, complementary skills that are hard to automate. For investors, the best preparation is having a globally diversified portfolio and an asset allocation you can stick with through volatility.
There are legitimate concerns about an AI investment bubble. Carlota Perez’s research on technological revolutions shows a consistent pattern: capital floods into the hot technology, asset prices become unsustainable, and a contraction follows. However, this doesn’t necessarily mean a total market collapse for diversified investors.
The efficient market hypothesis suggests that if a market collapse were predictable, prices would already reflect it. Crashes happen when new, unexpected information emerges. This is why trying to time the market is futile.
Geopolitical Uncertainty and Long-Term Investing
The world has always been in crisis. An 1847 magazine article describing geopolitical turmoil sounds almost identical to today. Despite all of it, stock markets have delivered positive long-term returns.
For a globally diversified investor, the best approach during times of war, political upheaval, or uncertainty is usually to do nothing — maintain your asset allocation and let the long-term trend work.
Ben’s advice to a friend considering remortgaging her house: investing in the stock market is generally preferable to buying more real estate, though borrowing to invest (leverage) increases both expected returns and risk.
Who Should Have a Financial Advisor and a Will
Financial advisors can be valuable, but the industry has a structural problem: many advisors are salespeople, not fiduciaries. Finding someone through a trusted referral is one workaround, but even well-meaning advisors may not always act in the client’s best interest. Many people can manage their finances themselves using low-cost index funds.
Wills are essential for anyone with dependents. Without one, the government’s default rules determine asset distribution, which may not match your wishes and can result in higher taxes.
Women as Investors
The data consistently shows women outperform men as investors. Fidelity found women beat men across 5.2 million accounts; Warwick Business School found women outperformed by 1.8% per year; UC Berkeley found men traded 45% more often, leading to 1.4% lower annual returns; Revolut found UK women outperformed men by 4%.
The primary reason is that men tend to be overconfident and overtrade, chasing stock picks (like buying Tesla because they like the car) and trying to time the market.
What You Can Control
You cannot control markets or your performance relative to the market. Trying to outperform usually makes you worse off.
What you can control: having an appropriate financial plan, setting meaningful goals (using frameworks like PERMA), choosing an asset allocation you can stick with through downturns, maintaining emergency savings, tax planning, and minimizing investment fees.
