Good morning, some light personal finance and investing to go with your Friday morning coffee.
Picture of the week:
This fine creature, a Majestic Blue Heron, Bob, outside our bedroom window. Bob comes often, morning and night. In keeping with his steadfast love of relaxation, it appears Bob is practicing a new yoga technique; seriously, never see him do this before, held the pose for at least 10 mins.
Have a great weekend.
Eddie
Personal Finance
From a personal finance perspective, Wealthsimple is excellent. Their offering is second to none in my opinion, and their growth is showing.
Wealthsimple has grown to +$155 Billion in Assets Under Management, almost double vs last year. While the big banks still dominate, with around $1-2 Trillion each, I believe the traditional banking sector is being put on notice; they will need to adapt, lest they become obsolete. Interestingly, 1 in 4 Canadians aged 18-40 use Wealthsimple, while the boomer generation is slower to come aboard. This is understandable, given the traditional banking experience they are used to. Eventually, the demographic trend will dominate as younger users who demand simple, tech-efficient, low cost banking and investing will dominate the population.
Take me, I’ve been using the platform since 2023 and I’m 95% of the way to scrapping my Scotia bank chequing and visa after almost 20 years using their service.
The features that I like:
Elite mobile application, easy to use, and simple to open investing accounts - non-registered, RRSP/RRIF, RESP, TFSA, FHSA, corporate investing account.
Simple to automate investing system - automatic buys/sells, automatic dividend reinvestment, automatic contributions and eithdrawals, scheduling recurring e-transfers.
Zero commission trading for stocks and ETFs.
Easy to initiate wire transfers rather than line up at the bank for 20 minutes and be questioned about where and why you are sending your money.
Personal chequing accounts, business chequing accounts. Personal visa, corporate visa (corporate visa is a prepaid version). Portfolio lines of credit, and margin accounts (must be careful using these of course).
The chequing/cash spending account is the best in town. No monthly fees, plus 2.25% interest vs 0 interest and ~$17 monthly fees at the traditional bank.
Tax filing made easy with Wealthsimple tax, efficent since it will auto load all your tax slips.
A few things they still need to work on, in no particular order:
Mobile cheque deposits are slower than the big banks, for now.
Cannot deposit or withdraw foregin currency bills while in Canada, like you would at a bank branch before going on a trip. You can use an ATM while in the foreign country, however.
Still don’t provide In Trust For accounts - ie when you want to truly start investing in your kids name before they turn 18, assuming you maxxed out your own accounts first.
No GICs or certain fixed income products like access to individual bonds or treasury bills. Not a bother for me, but sometimes a locked in GIC will pay more for cash equivalents than the money market ETFs (like CASH.TO) that pay 2.25%.
I would be remiss if I didnt mention my distaste of their pursuit of options and prediction market products, but that is for another newsletter.
The list of things I still yearn for is small vs the ones I use frequently. How long I remain a client of the big bank, remains to be seen. I think the time is nigh…
Anyway, if you don’t have Wealthsimple, it doesn’t hurt to try, nor cost anything to download the app.
If you have any questions on the experience, let me know.
Wealthsimple is matching 1% on investment account transfers of $25k or more right now. Move a $500k portfolio and you get $5,000 back in your pocket. It's the platform I use for my own investing. Full disclosure: I earn a referral bonus if you join through my link. Use Code PRGS3Q to get the 1%, sign up here.
Stock Markets
Interesting year:
inflation
oil shock/war
‘elevated valuations’
interest rates / bond yields soaring
k-shaped economy - haves vs have nots
US president potentially losing house and senate
a whole bunch of other scary shit
And yet, the S&P500 is up 13.61% year to date.
One last thing, on the ‘elevated valuations’. The forward Price to Earnings multiple on the SP500 is sitting at 19x, down from 23x last October, and in line with the last 10 year average. So, even though prices are up, earnings are up more. Ergo, P/E valuations are down, meaning ‘elevated valuations’ isn’t a valid argument (for now).
Source: Factset, Federal Reserve
Also I fully understand that 19x P/E doesnt guarantee the market will keep going up as it has. The future is always uncertain, and if earnings don‘t meet expectations, and the multiple compresses, that is how stocks decline. At any rate, for my long term money portfolio, that really doesnt matter anyway.
Want to invest yourself? Everything in this issue points the same way…you don’t need to pay a bank 1% a year to build wealth. My Simply Investing Masterclass walks you through the exact system I use and many others have used too. Start to finish in 2 hours, $197, lifetime money back guarantee.
1 Quote
Me: "I don’t have any money”
My wife: “But you go on all these golf trips”
Me: “Oh that’s different money”
A Question
What platform do you use to invest?
