A new Guest Post about Robo Advisors. The author is a newer face, but has some interesting opinions, well worth reading. All opinions are his.

You may have seen the ads from Wealthsimple. Here’s their youtube channel if you want a refresher. They are Canada’s most famous ‘robo advisor’ as they spend a lot of time and money attempting to reach Canadians. And when you hear about Wealthsimple you’ll often hear the phrase ‘Robo Advisor’.

So what is a Robo Advisor? It’s an investment company that helps you invest with the aid of technology. And because they make the best use of new technologies they can allow you to invest at a fraction of the costs that Canadians will typically pay. And that’s why the Robo’s are here – Canadians pay the highest mutual fund investment fees in the developed world. Those high fees can eat up a significant portion of your investment returns over time – even more than half. Those high fees are destroying the wealth of Canadians. But thankfully, there’s a better way for those that want a managed investment portfolio.

A Robo Advisor can help you invest with fees that are in the range of 50% to 80% cheaper. That can be life changing; potentially it might allow you to retire with a portfolio that is almost twice as generous, or you might be able to retire several years earlier. Those lower fees will usually allow you to better reach any investment goal, even saving for a house, or your child’s education.

And don’t let that word ‘Robo’ scare you. There are no robot advisors. In fact, while popularized, the moniker Robo Advisor is not all that accurate. At all of these investment companies there are many human advisors and customer service representatives ready to help. You can usually communicate by way of online chat or email as well.

As the CEO of Wealthsimple likes to offer …

“Humans when you want them, technology when you don’t.”

These companies simply use technology to manage the investments in an efficient and cost-effective manner. If you seek the ultimate in convenience you can certainly do everything online from your account set up (it might just take a few minutes) to the completion of an online investor questionnaire that will offer you the most appropriate comprehensive investment portfolio designed to help you reach your goals while you invest within your risk comfort level.

But once again, if you ever want that human touch, just pick up the phone.

All of these ‘Digital Wealth Managers’ offer the same style of sensible low fee investment portfolios. You’ll have a well diversified portfolio that includes large baskets of Canadian companies, US and International companies, and bonds are often present to manage the risk of the portfolio. The stock (companies) are there for growth, the bonds are present to reduce the risk or volatility. You’ll be offered a portfolio in line with your risk tolerance level.

And the portfolios are watched and professionally managed on a regular schedule. They are also re-balanced automatically to keep everything ‘in check’. There’s nothing for you to do but sit back and add monies on a regular schedule. You can view your progress online, you can call in to chat if you have questions or concerns.

You can do and get everything you would normally need; you’ll simply do it in a much more cost-effective manner. You will keep considerably more monies in your portfolio pocket.

And all of these investment companies have their unique characteristics and offerings. You can visit my Robo Advisor page for a list of the Canadian companies, and you’ll find reviews on many of these companies (I am still completing that writing process).

They also cover a wide spectrum. Questwealth and Nest Wealth offer the lowest fees; Questwealth for those with smaller to modest portfolios, while Nest Wealth is the most cost-effective for portfolios in the range of $300,000 and above. On any investment portfolio above $150,000 Nest Wealth will charge just $80 per month, capped. The savings on fees can be thousands upon thousands of dollars every year, depending on the size of your investment portfolio.

If you have a more complicated tax situation or are in need of a full financial plan you might consider Justwealth. Once again, that advice is included in the low annual fees.

Please have a look at the list of companies on my site, read some reviews and if you have any questions, please send a note to cutthecrapinvesting@gmail.com. If you are interested in this low fee approach I can direct you to the companies that might best suit your needs.

The key is to not pay those wealth-destroying high fees when you invest. Those monies belong in your pocket.

Dale Roberts is the Chief Disruptor at Cut The Crap Investing. A former advisor on low fee index portfolios, Dale now helps Canadians find the many sensible low fee options available. 

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Allow me to be clear on my opinion of GM shutting down their Oshawa plant, F*ck you GM! You take government bail-outs (fail-outs?), and you then turn around and do this? As a tax payer I am disgusted by this attitude. Yes, I realize this is a business, and it is only a “business decision”, but as a regular person, I still think the thing stinks. I have had 3 GM cars, and all have had issues, and the last one was a Lemon. My opinion of their products is they are low quality.

I recorded yet another Podcast with Doug Hoyes last week, and dropped in on the Hoyes-Michalos offices in Ottawa.  Spoke to a few of the folks in the office, and heard about the scope of the Phoenix pay debacle has had on Ottawa. The chap I spoke to said he has seen plenty of folks who ended up being burned badly by the Phoenix “Pay” system. This included folks who didn’t get paid, and tried to live on their credit which cause the entire “financial apple cart” to fall over. I passed on my personal findings of folks who are turning down promotions, for fear of it causing a “Phoenix Profile” change and endangering their pay.

The content of the Podcast was well-defined by Doug and he had questions written down, but as usual it all broke down quickly, and I am not clear exactly what the real topic ended up being. Stay tuned on the Debt Free in 30 podcast and see how he edited it together. There were cameras as well.

Banks News?

The Banks will be announcing their results, TD already has, and they seem to be doing well. Somewhere along the line things will change, but not today.

Speaking of banks, President’s Choice has redesigned their PC Mastercard site, and have decided that an ability to download into Quicken or Quickbooks isn’t needed. You can download in CSV format (for Excel or a spreadsheet), but not directly from your bank account. Given how competitive the marketplace is for Credit Cards, taking away functionality for customers isn’t something rd assume was a good thing. I have voiced my displeasure, we shall see whether I take action, or not.

Recent Articles

It’s been a while since I did one of these so here are a few of my articles from the fall of 2018.

Never was So Much Owed by So Many outlines the latest numbers from Stats Canada about household debt, and how consumer debt is a hobby Canadians dearly love. My apologies to Mr. Churchill for such a crass paraphrasing.

Make More by Reducing Debt has been sitting in my almost finished queue for a while. Again, I am being quite cheeky about the subject, but sometimes the simplest explanations are the best. Continuing in that cheeky line, Savings Motivating System really was just a quick bad bit of humor I thought up one night. Remember with interest rates going up, a savings account might not be a bad place to put money.

Do credit cards just appear on your doorstep? In Farewell New Credit Card I outline how an old credit card (that I had forgotten about) morphed into a new card, which I didn’t want. The one really important part of a credit report is to see which credit cards you thought you closed are still open.

Deep Financial Thoughts

Doug Hoyes has thoughts everywhere, and here he is in his car telling us why high interest lenders (59% rates) are causing stress.

EQ Bank Savings Plus Account

🎱 For more personal finance stories click here 🎱

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Farewell New Credit Card

Last week I received a new credit card in the mail. It was a Flexiti card, and they seem to have purchased the business from The Brick or some other store credit card. Every few months I keep getting new credit cards like this sent to me. They come with a simple activate procedure to turn them on.

Each of these new cards adds:

  • More liability to me, in the eyes of any reputable loan provider (i.e. bank or the like). In the good old days each credit cards credit limit counted against your ability to borrow I am not sure how things work these days.
  • Another attack vector for those attempting to fraudulently use my good credit. Each of these cards has a new number, a new login on-line and thus another place where thieves can attempt to steal your
  • Temptation, and this is the intangible nasty part of One day I might get into a position where if I had this card I might use it as a last resort (when maybe I should have done something sensible instead).
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Cancel the Card

To cancel this card, I called and spoke to a polite young man, who did try to convince me not to cancel the account, but relented when it became obvious I wouldn’t change my mind. I also asked for a confirmation that the card was cancelled. The credit card number and information have been put in a safe place as well (along with the date I cancelled the card).

The card has been shredded, so this credit vehicle should be dead.

As I have said previously I have too many credit cards, so cancelling this card and a few more is a very good idea for me. Your mileage may vary, but I think having one (or no) credit cards is a good idea.

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Savings Motivating System

Consumers rarely do anything unless they feel they get something out of it. I keep wondering what savings motivating system banks could put in place?

Canadians are notorious for loving rewards systems, where they can accumulate points for later purchases, maybe something like that? A points system that would pay more monthly, the more money you had in your savings account?

I think I am on to something here, if banks paid people these points that they could use to purchase things, that might motivate people to save more money.

A Savings Motivating Refinement

What if this point system allowed you to swap points for money? Better still what if you didn’t accumulate points for having more savings, you accumulated money? Money that would be added to your account balance, and then the next month you might accumulate more money because of this added money?

This is possibly the greatest idea ever to motivate consumers to save money, isn’t it?

Click here to find out more about this Interesting Idea

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Make More by Reducing Debt

So you’d like to get a pay raise, but you are afraid to go ask your boss for a raise? How could reducing debt help that? This is a cornerstone of Financial Literacy.

Here is a novel way to get more Net income, pay down debt! By reducing debt you have more disposable income. The arithmetic is simple, less debt payments (after you have paid down debt) means more money for you.

This is the simplest of arithmetic problems, yet it seems to be missed by so many people that I feel it is important to enumerate it for you.

Net Income = Income (I) – Expenditure (X)

X = all money spent (S)

I =  all money earned (E)

Where ∑ simply means the sum of the variables in this case things like bills, pay cheques etc.,

Straight forward? So to increase your Net Income you can either increase your Income (I) or decrease X (your expenses), haven’t lost anyone have I?

So if we look closer and see that:

X = sum ( Mortgage Payment,Car Payment,Hydro,Natural Gas,Credit Cards,Interest on Credit Cards,Eating Out, …)

The whole idea is to minimize X (expenditures) and thus your Net Income or Savings increases.

This means the less you spend, overall, the more you have left over. It is much easier to lower your spending, than it is to increase your income (these days). You don’t have to ask your boss for a raise, or work overtime, you simply, spend less.

BCM Simple Rule of Money #1

If you want to make more money, you either increase your income, or you lower your expenses.

The rule seems quite simple, but is it?

EQ Bank Savings Plus Account

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