For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).
Sensible Investing TV has posted part 8 of its How to Win the Loser’s Game series of videos, which you can view by clicking here.
Does it make sense for the average investor to invest in an active fund? The active investor who does invest in an active fund has to expect to lose relative to a passive strategy.
If an active investor chooses to overweight some stock then at least one other active investor has to underweight that stock. One might win by overweighting; but if he wins, he loses by underweighting. So it’s a zero sum game before we start thinking about costs.
What we see over and over again is that active trading costs money and active managers charge a lot for their services. One of them might have been brilliant but to the extent that one of them is brilliant, another person must have been whatever the opposite of brilliant is here … Minus brilliant.
“If you are serious about investing and building wealth the video documentary series ‘How To Win the Loser’s Game’ is a must-see. It’s excellent.” — Paul Philip, Financial Wealth Builders Securities
An uncomfortable truth … and the reason to examine Regulation; Technology Disruption; and Convergence – the topic of ETFinsight’s upcoming Mar 3+4 Ottawa event.
In the movie The Big Short, Steve Carrell’s character, Mark Baum, is a hedge fund specialist coming at the world with a cynical take: “Let me understand how I am being screwed,” can’t believe what he hears and sees… The fact is … conducting some out-of-the-box and on-the-ground due diligence that will guide whether he bets against US Housing … that things are way worse than he ever fathomed, and unbelievably so, everyone seems to be in on it.
Perhaps on a more serious note – while not suggesting the Great Recession we are still struggling to fully recover from wasn’t , despite several scenes in the movie easily drawing out cynical laughter … I recently attended a presentation at the Ontario Securities Commission, speaking to the topic of Advisor Compensation & Investor Outcomes, as well as Mutual Fund Fees, Flows, and performance. Continue Reading…
Jon Chevreau: Most robo advisers in North America seem to use a model of charging a fee based on assets. As one of Canada’s original robo-adviser services, NestWealth.com uses a quite different model, based on subscriptions, correct? One, I might add, that you say is also unique in all of North America?
Randy Cass: Nest Wealth’s members pay a flat monthly price for access to a customized portfolio and a dedicated portfolio manager. Our subscription model doesn’t incentivize or commission sales people based on how much of a product they sell. We’re enabling Canadians to sidestep high fees and outdated banking practices that take a percentage of everything they invest throughout their lives.
Nest Wealth’s subscriber community understands that our subscription service fundamentally challenges the model banks, and even newer robo-advisors, have used to charge investors. Not only are we able to deliver a proven investment service capable of saving Canadians up to half of their potential wealth, but we’re continuously improving that service by listening and adapting to our members’ needs. This is a transformational advantage of the subscription model, and it’s one important reason why we see so many industries adopting it as a revenue model.
JC: Is this unique, both in Canada and the US and rest of world?
RC: Nest Wealth is the first and only subscription-based investing service that handles everything from end to end. Investors of all ages can subscribe to our service for $20 a month — less than the cost of a gym membership. And their subscription is capped at $80 no matter how much their assets grow overtime. We want to help Canadians do the math and recognize that our low, flat subscription payment can leave them with 100 per cent more savings than a traditional fee structure that charges based on assets.
The good news is we’re witnessing a clear shift in how Canadians want to pay for and access financial services. A new report by business consultancy EY says that the adoption of fintech services among Canadians will triple over the next 12 months. The report also shows that although consumers trust technology, they still lack awareness of its benefits. We are passionately committed to helping consumers understand and seek out a better way to build wealth. Broader awareness and education will lead to more informed choices about how families plan for their future. There’s quite a bit at stake here.
JC: Where did you get the idea in the first place?
RC: The ‘Aha’ moment came when I was watching Netflix with my youngest son and I recognized that the principles of subscription services like Netflix, Spotify, Salesforce and Zipcar were much more in line with how investors needed to be treated than the status quo.
In the Aesop fable of “The Ant and the Grasshopper,” a hungry grasshopper is refused food by the hard-working ant when the winter comes. The fable sums up the moral lessons about the virtues of hard work and planning for the future. As you get ready to file your 2015 personal income taxes, now is the time to look ahead and plan for 2016.
Reduction in the small business corporate income tax rate
Canadian-controlled private corporations (CCPCs) are entitled to claim a small business deduction on the first $500,000 of business income. Commencing in 2016, the federal tax rate will decrease by 0.5% a year for four years, reducing the small business income tax rate in Ontario to 15.0% in 2016, 14.5% in 2017, 14.0% in 2018, and 13.5% in 2019.
Tax planning point: Defer the receipt or recognition of corporate income eligible for the small business deduction limit to future years.
Can a Registered Retirement Savings Plan (RRSP) ever get too large? From time to time, you’ll hear certain financial advisors say so and propose “melting down” RRSPs in a tax-effective manner.
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Sensible Investing TV has posted part 8 of its How to Win the Loser’s Game series of videos, which you can view by clicking here.“If you are serious about investing and building wealth the video documentary series ‘How To Win the Loser’s Game’ is a must-see. It’s excellent.” — Paul Philip, Financial Wealth Builders Securities
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