1. 1. @goldlist @wealthsimple
2. 2. Wealthsimple is Canadas fastest growing online investment manager. We make smart investing easy, low-cost, and transparent.
3. 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. 4. 5 Simple Rules of Smart Investing.
5. 5. - Burton Malkiel, A Random Walk Down Wall Street Focus on what you can control and think long term.
6. 6. Rule 1 Start early.
7. 7. RULE 1 START EARLY
8. 8. 30 40 $175,000 $125,000 Einstein Called Compounding Mankinds Greatest Discovery 2 friends (ages 30 & 40) start investing $5,000 per year until they are 65. RULE 1 START EARLY
9. 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. 10. Rule 2 Dont pick stocks.
11. 11. RULE 2 DONT PICK STOCKS
12. 12. Source: Vanguard calculations using data from Morningstar. Fund classications and benchmarks provided by Morningstar. CN Equity US Equity Intl 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 DONT PICK STOCKS
13. 13. RULE #2 / DONT PICK STOCKS Winning a Stock Picking Contest at Age 12 RULE 2 DONT PICK STOCKS
14. 14. $24.40 $1.18 Contest Close 12/06/99 Acquisition 12/04/01 Mikes Winning Pick Lost 95% of itsValue Between 19992001 MGI SOFTWARE CLOSING STOCK PRICE Source: CBC acquisition announcement, Canada Trust Investment Challenge contest details RULE 2 DONT PICK STOCKS
15. 15. Rule 3 Keep costs low.
16. 16. RULE #3 / KEEP COSTS LOWRULE 3 KEEP COSTS LOW
17. 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. 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
19. 19. Rule 4 Diversify.
20. 20. RULE 4 DIVERSIFY
21. 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 DONT ALWAYS MOVE IN THE SAME DIRECTION RULE 4 DIVERSIFY
22. 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. 23. Rule 5 Drown out the noise.
24. 24. RULE 5 DROWN OUT THE NOISE
25. 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. 26. Notes: Cash ows 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-ow 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. 27. 5 Simple Rules 1. Start early 2. Dont pick stocks 3. Keep costs low 4. Diversify 5. Drown out the noise
28. 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. 29. How we do it at Wealthsimple
30. 30. Rule 1 Start early.
31. 31. Simple and transparent website RULE 1 START EARLY
32. 32. Simple and transparent reporting, everywhere RULE 1 START EARLY
33. 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. 34. Rule 2 Dont pick stocks.
35. 35. We invest in Exchange Traded Funds (ETFs) RULE 2 DONT PICK STOCKS
36. 36. Rule 3 Keep costs low.
37. 37. Your first $5k is managed for free RULE 3 KEEP COSTS LOW
38. 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. 39. You dont have to pay management fees at all RULE 3 KEEP COSTS LOW
40. 40. Rule 4 Diversify.
41. 41. Answer 6 questions RULE 4 DIVERSIFY
42. 42. and well create a portfolio for you RULE 4 DIVERSIFY
43. 43. Rule 5 Drown out the noise.
44. 44. Well 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. 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. 46. Safe and secure RULE 5 DROWN OUT THE NOISE $30M SERIES A SINCE 1925 $11M INSURANCE
47. 47. Live Demo
48. 48. Ask the Wealth Concierge
49. 49. Ask the Wealth Concierge
50. 50. Questions! RULE 5 DROWN OUT THE NOISE
51. 51. Next event: Monday August 10th at TELUS $10 in advance, $20 at the door RSVP: techtoronto.org
52. 52. wealthsimple.com/TechTO FinTechTO special offer Get your first $10,000 managed free Hurry! Youll need to fund your account in two weeks to take advantage of this offer.