November 19, 2014 Wealthsimple's 5 Simple Rules of Smart Investing

1. 5 SIMPLE RULES OF SMART INVESTING
@getwealthsimple
@mkatchen

2. Wealthsimple is Canada’s fastest growing online
investment manager. We make smart investing
easy, low-cost, and transparent.

3. “Focus on what you can control and think long term.”
- Burton Malkiel, author

4. Rule #1: Start early

5. Albert Einstein called compounding "mankind's greatest
discovery”
3 friends (ages 30, 35, 40) start investing
$5,000 per year until they are 65. By that
time, they will have invested:
$125,000
$150,000
$175,000
40 35 30

6. 10 years can add $0.5MM+ to your long term savings
$935,511
$399,772
30
Impact of start date on wealth*
35 65
Age
40
$616,729
*Assumes $5,000 annual contribution, 8% annual returns.

7. Rule #2: Don’t pick stocks

8. Over 80% of professional stock pickers fail to beat the market
Percent of funds that under perform
CN Equity
US Equity
Int’l Equity
CN Bonds
72
81
86
98
0 50 100
Source: Vanguard calculations using data from Morningstar. Fund classifications and
benchmarks provided by Morningstar.

9. Personal anecdote: winning a stock picking contest at age 12…

10. … my winning pick lost 95% of its value between 1999 - 2001
MGI Software closing stock price
Contest close
12/06/1999
Acquisition
12/04/2001
$24.40
$1.18
Source: CBC acquisition announcement, Canada Trust Investment Challenge contest details

11. Rule #3: Keep costs low

12. Canadians pay the highest investment fees of any developed
country in the world
Average equity mutual fund fees by country (%)
2.42
0.82
Canada
USA
China
India
Italy
Belgium
Spain
Norway
Korea
France
Thailand
Taiwan
Singapore
UK
New Zealand
Japan
Germany
Denmark
South Africa
Sweden
Netherlands
Switzerland
Australia
*Morningstar Global Fund Investor Experience Report, 2013

13. Would you pay $300K for financial advice?
$800,594
$509,858
1.6% in additional fees can destroy 36% of
0
your long-term wealth
15 30
Years
Growth at 2.42% fees Growth at 0.8% fees
* Average Canadian equity mutual fund charges 2.42% vs USA average fee of 0.8%
** Assumes $100,000 initial deposit, 8% annual returns

14. Rule #4: Diversify

15. Harry Markowitz won a Nobel Prize for discovering that
diversification reduces risk without hurting returns
Asset classes don’t always move in the same direction
Source: Morningstar, annual performance by asset class

16. Here’s how it works
Impact of diversification on risk and return
2 assets 6 assets 10 assets
2.26% returns 5.49% returns 9.72% returns
13.3% risk 8.49% risk 10.17% risk
0.17 return/risk 0.65 return/risk 0.96 return/risk
Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014

17. Rule #5: Drown out the noise

18. Know your risk profile
Risk survey Risk discussion
• Online survey
• Ability & willingness
to take risk
• Meet with an
investment advisor
• Investment goals

19. Have the discipline to stick to your plan
In 2009, $150B flowed out of equity funds
even as markets came roaring back
2002 2008 2013
Equity fund flows Market returns
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.

20. Recap
Rule #1: Start early
Rule #2: Don’t pick stocks Rule #3: Keep costs low
Rule #5: Drown out the noise
Rule #4: Diversify

21. HOW WE DO IT

23. We assess your risk profile and investment goals to help you
create and stick to a long-term investment plan
Risk survey Suitability call
• Online survey
• Ability & willingness
to take risk
• Phone call with your
Wealth Concierge
• Investment goals

24. We build you a fully-diversified portfolio across 8-10 asset
classes, customized for your risk tolerance

25. We monitor your portfolio every day and automatically
rebalance it to keep you on track
Expected return
Your asset allocation will drift from its
target as markets move
Risk

26. We optimize your portfolio for tax efficiency on a daily basis
$25 “harvestable” tax-loss
benefit per share.
Tax-loss harvesting example*
$75
$100
Aug Sept Oct
* Illustrative example

27. Transparent and intuitive reporting via web and mobile

28. We charge a lot less than everyone else

29. Our advisors
Joseph Canavan
• Former CEO, Assante Wealth Management
• “Person of Influence of the Decade”
Prof. Eric Kirzner
Roger Martin
• Former Dean, Rotman Business School
• Former co-head of Monitor Company
David Ossip
• CEO, Ceridian HCM
• Founder of Dayforce and Workbrain
Dan Debow
• SVP at Salesforce.com
• Co-Founder, Rypple
Christian Lassonde
• Managing Partner, Impression Ventures
• Managing Director, Next36 Ventures
Andrew D’Souza
• President, Bionym
• Former COO, Top Hat, Top Prospect
• Chair in Value Investing at the Rotman
• Founder of the Easy Chair Portfolio
Bryan Kerdman, Advisor
• Managing Partner, Impression Ventures
• Former Managing Partner, Bryker Capital

30. Our team
Michael Katchen, Founder & CEO
• Head of Ancestry.ca, VP at 1000memories
• McKinsey & Co, financial services practice
Brett Huneycutt, COO
• Co-founder, 1000memories
• Director of Product, Ancestry.com and Stripe
• Rhodes Scholar
Dave Nugent, PM & CCO
• Investment Advisor, RBC
• Canadian Investment Manager (CIM)
Peter Graham, Engineer
• Engineer, 1000memories and Ancestry.com
• Computer Science at Colby College
Rudy Adler, Product Design
• Co-founder, 1000memories
• Wieden+Kennedy creative
Kate Murphy, Engineer
• Hacker School and HackLab.TO
• Ladies Learning Code
Alex Rascanu, Marketing
• Director, Conversion, Powered by Search
• Founder, Marketers without Borders
Kayla Wilson, Associate Wealth Concierge
• Sales assistant at Raymond James
• Business Marketing at George Brown

31. Get your first $5,000 managed for free:
wealthsimple.com

32. Disclosures
Wealthsimple Financial Inc. is registered as a Portfolio Manager in Ontario and British
Columbia. Securities in your account are protected up to $1,000,000 CDN. See
www.cipf.ca for more details.
!
Past performance is no guarantee of future results. Any historical returns, expected
returns, or probability projections may not reflect actual future performance. All securities
involve risk and may result in loss. We do not provide financial planning services to
individual investors. Read our Full Disclosure at wealthsimple.com/legal/.disclosure.
!
Copyright 2014 Wealthsimple Financial Inc.