Wealthsimple's 5 Simple Rules of Smart Investing
•
6 likes•5,147 views
Jason Goldlist, Chief Marketing Office at Wealthsimple, presents the 5 Simple Rules for Smart Investing at "Our Story: Wealthsimple", a FinTech Toronto event, on July 15th, 2015. You can visit Wealthsimple here: https://www.wealthsimple.com/ Illustration by Behavior Gap
Recommended
More Related Content
What's hot
What's hot (20)
Viewers also liked
Viewers also liked (11)
Similar to Wealthsimple's 5 Simple Rules of Smart Investing
Similar to Wealthsimple's 5 Simple Rules of Smart Investing (20)
Recently uploaded
Recently uploaded (20)
Wealthsimple's 5 Simple Rules of Smart Investing
- 2. Wealthsimple is Canada’s fastest growing online investment manager. We make smart investing easy, low-cost, and transparent.
- 3. What will we talk about today? 1) The Five Simple Rules of Smart Investing (~30 mins) 2) Live demo (~30 minutes) 3) Ask the Wealth Concierge (~30 minutes)
- 4. 5 Simple Rules of Smart Investing.
- 5. - Burton Malkiel, A Random Walk Down Wall Street “Focus on what you can control and think long term.”
- 7. RULE 1 START EARLY
- 8. 30 40 $175,000 $125,000 Einstein Called Compounding “Mankind’s Greatest Discovery” 2 friends (ages 30 & 40) start investing $5,000 per year until they are 65. RULE 1 START EARLY
- 9. * Assumes $5,000 annual contribution, 8% annual returns. 30 40 65 $935,511 $399,772 Age 10Years Can Add $0.5MM+ toYour Long Term Savings IMPACT OF START DATE ON WEALTH* RULE 1 START EARLY
- 10. Rule 2 Don’t pick stocks.
- 11. RULE 2 DON’T PICK STOCKS
- 12. Source: Vanguard calculations using data from Morningstar. Fund classifications and benchmarks provided by Morningstar. CN Equity US Equity Int’l Equity CN Bonds 98 500 100 86 81 72 Over 80% of Professional Stock Pickers Fail to Beat the Market PERCENT OF FUNDS THAT UNDER PERFORM RULE 2 DON’T PICK STOCKS
- 13. RULE #2 / DON’T PICK STOCKS Winning a Stock Picking Contest at Age 12… RULE 2 DON’T PICK STOCKS
- 14. $24.40 $1.18 Contest Close 12/06/99 Acquisition 12/04/01 … Mike’s Winning Pick Lost 95% of itsValue Between 1999–2001 MGI SOFTWARE CLOSING STOCK PRICE Source: CBC acquisition announcement, Canada Trust Investment Challenge contest details RULE 2 DON’T PICK STOCKS
- 15. Rule 3 Keep costs low.
- 16. RULE #3 / KEEP COSTS LOWRULE 3 KEEP COSTS LOW
- 17. * Morningstar Global Fund Investor Experience Report, 2013 Canada USA China India Italy Belgium SpainNorway KoreaFranceThailandTaiwanSingapore UK New Zealand JapanGermanyDenmark SouthAfricaSweden Netherlands SwitzerlandAustralia 2.42 0.82 Canadians Pay the Highest Fees of Any Developed Country AVERAGE EQUITY MUTUAL FUND FEES BY COUNTRY (%) RULE 3 KEEP COSTS LOW
- 18. 0 15 30 $800,594 $509,858 * Average Canadian equity mutual fund charges 2.42% vs USA average fee of 0.8% ** Assumes $100,000 initial deposit, 8% annual returns Years Growth at 2.42% fees Growth at 0.8% fees WouldYou Pay $300K For Financial Advice? 1.6% IN ADDITIONAL FEES CAN DESTROY 36% OF YOUR LONG-TERM WEALTH RULE 3 KEEP COSTS LOW
- 20. RULE 4 DIVERSIFY
- 21. 2007 1st 2nd 3rd 4th 5th 6th 2008 2009 2010 2011 2012 2013 2014 Emerging Markets Emerging Markets Emerging Markets Foreign Stocks Foreign Stocks Emerging Markets Emerging Markets Emerging Markets Emerging Markets U.S. Stocks U.S. Stocks U.S. Stocks Canadian Stocks Canadian Stocks Foreign Stocks Foreign Stocks Canadian Stocks U.S. Stocks Canadian Stocks Canadian Stocks U.S. Stocks U.S. Stocks Emerging Markets Canadian Stocks U.S. Stocks Canadian Stocks Foreign Stocks Foreign Stocks Foreign Stocks U.S. Estate Foreign Stocks Canadian Stocks Bonds Bonds Bonds Bonds Bonds Bonds BondsBonds Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate Real Estate Source: Morningstar, annual performance by asset class Ranking Markowitz Won a Nobel Prize For Discovering That Diversification Reduces Risk Without Hurting Returns ASSET CLASSES DON’T ALWAYS MOVE IN THE SAME DIRECTION RULE 4 DIVERSIFY
- 22. 2 assets 6 assets 10 assets 2.26% 5.49% 9.72%RETURNS 13.3% 8.49% 10.17%RISK 0.17 0.65 0.96RATIO Source: Bloomberg as of 3/31/14, 10 years from January 2004 – February 2014 Why Diversification IsYour New Best Friend IMPACT OF DIVERSIFICATION ON RISK AND RETURN RULE 4 DIVERSIFY
- 23. Rule 5 Drown out the noise.
- 24. RULE 5 DROWN OUT THE NOISE
- 25. • Online survey • Ability & willingness to take risk • Meet with an investment advisor • Investment goals RISK SURVEY RISK DISCUSSION KnowYour Risk Profile RULE 5 DROWN OUT THE NOISE
- 26. Notes: Cash flows represent net cash moving in or out of stock funds. Market returns are based on the S&P/TSX Composite Index. Sources: Morningstar for cash-flow data; Thomson Reuters Datastream for market returns. Market returns Equity fund flows 2002 2008 2013 $20.00 $10.00 $0.00 -$10.00 -$20.00 50.00% 25.00% 0.00% -25.00% -50.00% Have the Discipline to Stick toYour Plan IN 2009, $150B FLOWED OUT OF EQUITY FUNDS EVEN AS MARKETS CAME ROARING BACK RULE 5 DROWN OUT THE NOISE
- 27. 5 Simple Rules 1. Start early 2. Don’t pick stocks 3. Keep costs low 4. Diversify 5. Drown out the noise
- 28. RISK ASSESSMENT: wealthsimple.com ETF SELECTION: wealthsimple.com/example BROKERAGE ACCOUNT: Virtual Brokers, iTrade, Questrade, Qtrade FURTHER READING & SUPPORT How to do it yourself
- 29. How we do it at Wealthsimple…
- 31. Simple and transparent website RULE 1 START EARLY
- 32. Simple and transparent reporting, everywhere RULE 1 START EARLY
- 33. The easiest way to get started RULE 1 START EARLY Online account opening E-signatures, online bill pay & PACs Simple transfer of TFSA, RRSP, etc Wealth Concierge service
- 34. Rule 2 Don’t pick stocks.
- 35. We invest in Exchange Traded Funds (ETFs) RULE 2 DON’T PICK STOCKS
- 36. Rule 3 Keep costs low.
- 37. Your first $5k is managed for free RULE 3 KEEP COSTS LOW
- 38. We hate fees No account opening or registration fees No transaction fees No account closing fees No currency conversion margin RULE 3 KEEP COSTS LOW
- 39. You don’t have to pay management fees at all RULE 3 KEEP COSTS LOW
- 41. Answer 6 questions… RULE 4 DIVERSIFY
- 42. …and we’ll create a portfolio for you RULE 4 DIVERSIFY
- 43. Rule 5 Drown out the noise.
- 44. We’ll automatically rebalance your custom portfolio and reinvest your dividends RULE 5 DROWN OUT THE NOISE Expected Risk YOUR ASSET ALLOCATION WILL DRIFT FROM ITS TARGET AS MARKETS MOVE
- 45. Welcome to your own Wealth Concierge RULE 5 DROWN OUT THE NOISE Registered OSC Portfolio Managers Email, call, text, or web chat No commissions
- 46. Safe and secure RULE 5 DROWN OUT THE NOISE $30M SERIES A SINCE 1925 $11M INSURANCE
- 47. Live Demo
- 50. Questions! RULE 5 DROWN OUT THE NOISE
- 51. Next event: Monday August 10th at TELUS $10 in advance, $20 at the door RSVP: techtoronto.org
- 52. wealthsimple.com/TechTO FinTechTO special offer Get your first $10,000 managed free Hurry! You’ll need to fund your account in two weeks to take advantage of this offer.