5 Simple Rules of Smart Investing with Telus
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Wealthsimple lunch & learn with Telus team. 5 Simple Rules of Smart Investing
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5 Simple Rules of Smart Investing with Telus
- 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. - Burton Malkiel, author “Focus on what you can control and think long term.”
- 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. $399,772 $935,511 30 Age 6535 Impact of start date on wealth* 40 $616,729 *Assumes $5,000 annual contribution, 8% annual returns. 10 years can add $0.5MM+ to your long term savings
- 7. Rule #2: Don’t pick stocks
- 8. Over 80% of professional stock pickers fail to beat the market Source: Vanguard calculations using data from Morningstar. Fund classifications and benchmarks provided by Morningstar. CN Equity Int’l Equity US Equity CN Bonds Percent of funds that under perform 0 10050 72 81 86 98
- 9. Personal anecdote: winning a stock picking contest at age 12…
- 10. … my winning pick lost 95% of its value between 1999 - 2001 Contest close 12/06/1999 MGI Software closing stock price 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 NewZealand Japan Germany Denmark SouthAfrica Sweden Netherlands Switzerland Australia *Morningstar Global Fund Investor Experience Report, 2013
- 13. Would you pay $300K for financial advice? $509,858 $800,594 0 Years 3015 1.6% in additional fees can destroy 36% of your long-term wealth 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
- 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. 2 assets 6 assets 10 assets Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014 Here’s how it works Impact of diversification on risk and return
- 17. 2 assets 6 assets 10 assets Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014 Here’s how it works Impact of diversification on risk and return 2.26% 5.49% 9.72%Returns
- 18. 2 assets 6 assets 10 assets Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014 Here’s how it works Impact of diversification on risk and return 2.26% 5.49% 9.72%Returns 13.3% 8.49% 10.17%Risk
- 19. 2 assets 6 assets 10 assets Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014 Here’s how it works Impact of diversification on risk and return 2.26% 5.49% 9.72%Returns 13.3% 8.49% 10.17%Risk 0.17 0.65 0.96Ratio
- 20. Rule #5: Drown out the noise
- 21. Have the discipline to stick to your plan Market returnsEquity fund flows 2002 2008 2013 In 2009, $150B flowed out of equity funds even as markets came roaring back 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.
- 22. Know your risk profile Risk survey Risk discussion • Online survey • Ability & willingness to take risk • Meet with an investment advisor • Investment goals
- 23. Recap Rule #1: Start early Rule #5: Drown out the noise Rule #2: Don’t pick stocks Rule #3: Keep costs low Rule #4: Diversify
- 24. Questions?
- 25. HOW WE DO IT
- 27. 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
- 28. We build you a fully-diversified portfolio across 8-10 asset classes, customized for your risk tolerance
- 29. We monitor your portfolio every day and automatically rebalance it to keep you on track Expectedreturn Risk Your asset allocation will drift from its target as markets move
- 30. We optimize your portfolio for tax efficiency on a daily basis $25 “harvestable” tax- loss benefit per share. $75 Aug Sept Oct $100 Tax-loss harvesting example* * Illustrative example
- 31. Transparent and intuitive reporting via web and mobile
- 32. • Head of Ancestry Canada • Marketing and Product, 1000memories • McKinsey & Co. financial services • “Mover of the Month” by Financial Post Michael Katchen, CEO • Co-founder, 1000memories, YC alumni • Director of Product, Ancestry, Stripe • McKinsey & Co. financial services • Rhodes Scholar Brett Huneycutt, COO Team • Co-founder, 1000memories, YC alumni • Wieden+Kennedy creative • Launched award winning campaigns for Apple, Levi’s, Focus Features Rudy Adler, Designer • Engineer, 1000memories, Ancestry • Mobile developer at AOI Pro in Tokyo • Computer Science at Colby College Peter Graham, Engineer • Director or Marketing, Conversion Media, Powered by Search • Founder, Marketers without Borders, Marketers Unbound Alex Rascanu, Marketing Director • Hacker School and HackLab.TO • Ladies Learning Code • Engineer, Virgin mobile, Konrad Group Kate Murphy, Engineer • Investment Advisor, RBC DS, shared $300MM book • Canadian Investment Manager (CIM) • President of Student Council, Huron Dave Nugent, CIO & CCO • Founder, Genius Scan, mobile scanning app with 15MM downloads and 2MM MAUs • Engineer, 1000memories, Ancestry, Amazon • MS in Computer Science Bruno Virlet, CTO (pending) • Sales assistant at Raymond James • Business Marketing at George Brown • Canadian Securities Course Candidate Kayla Wilson, Associate Wealth Concierge • First designer, Wattpad • Lead designer, Wave Accounting Huda Idress, UX Designer
- 33. Advisors • Former CEO, Assante Wealth Management • “Person of Influence of the Decade” Joe Canavan, Advisor • Head of Value Investing at Rotman • Author of 13 books on investment finance • Founder of the Easy Chair Portfolio Professor Eric Kirzner, Investment Committee • Former Dean, Rotman Business School • Former co-head of Monitor Company Roger Martin, Advisor • CEO, Ceridian HCM • Founder of Dayforce and Workbrain • EY Entrepreneur of the Year, Top 40 under 40 David Ossip, Advisor • SVP at Salesforce.com • Co-Founder, Rypple (acquired in 2012) Dan Debow, AdvisorChristian Lassonde, Adivsor • Managing Partner, Impression Ventures • Managing Director, Next36 Ventures • Managing Partner, Impression Ventures • Former Managing Partner, Bryker Capital Bryan Kerdman, Advisor Andrew D’souza, Advisor • President, Bionym • Former COO, Top Hat & Top Prospect
- 34. Get your first $5,000 managed for free: wealthsimple.com
- 35. Disclosures Wealthsimple Financial Inc. is registered as a Portfolio Manager in Ontario, British Columbia, Quebec, Manitoba, and Alberta. 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.