Thinking - Steadyhand Investment Funds

This column is aimed at younger readers, and children and grandchildren of older readers, who are sick of hearing about how their parents’ generation built wealth owning homes and riding the stock market (while leaving a huge debt load behind).

Some have rebelled by embracing things parents don’t understand and/or can’t do, such as cryptocurrencies, meme stocks and day trading.

I’m old enough to be a grandparent but do understand these approaches and think there’s a far better way to rebel. It involves using the advantages young investors have – time, cost and product choice – and doing some basic, return-enhancing things that previous generations didn’t fully embrace.

Start earlier

From my observation, too many investors have their “come to Jesus” investing moment in their 50s or early 60s, when retirement is in sight. It’s not too late to get organized, but by getting a plan in place decades earlier and executing on it, you’ll be cruising by that age.

If you establish a routine now, it will last a lifetime. For instance, setting up automatic monthly contributions forces you to save, and takes the emotion out of decision-making.

When I look at statements of our long-standing clients, what screams out at me is the power of compounding. A portfolio that averages a 7- to 9-per-cent annual return doubles every 8 to 10 years. Even small amounts invested today will have huge impact decades from now.

Take risk

My generation has a love affair with GICs and other products that offer minimal volatility. Stable returns make sense for older investors, but your time frame is much longer. You’re not hurt by short-term market declines, and can focus on owning assets that will grow over time. For your TFSA and RRSPs, that means a diversified portfolio of stocks.

Stay steady

For older generations, return expectations go up and down like a yo-yo. After a good year or two, they expect double-digit returns until retirement. After a bad one, they’re never going to meet their goals.

You can do better. The reality is, long-term returns don’t change much after either type of market. Over your 30- to 50-year investing career, you’ll experience four to seven bull markets and the same number of bear markets. You can expect the bears to be brief and jolting, and the bulls to be long and rewarding. This combination adds up to unbelievably good odds.

Stay invested

Your predecessors ask about one thing almost as much as the weather – what is the market going to do? The question appears innocent enough, and is often a good conversation starter, but it leads to poor behaviour.

The problem is, it comes from a desire to avoid something that’s impossible to predict, a bad market. It causes investors to abandon those great odds I mentioned in pursuit of something that’s unattainable.

Bear markets, as painful as they are, are the price of admission for bull markets. Learning to embrace them may be the most important skill you’ll develop. Remember, lower prices are a blessing when you’re accumulating assets.

Find a fee fit

In the popular Questrade ads, breaking from your parents equates to doing it yourself. For certain, buying stocks and ETFs online is a great way to keep costs down, but only if you have the time, ability and confidence.

If you need advice and reassurance, you’ll have to pay for it. Unlike your parents, however, don’t be afraid to ask how much it costs and what you’re entitled to receive. You don’t want to pay for what you’re not getting or for the same thing twice (i.e. two full-service advisers).

Slay it

One disadvantage you have, which is controllable if you choose, is the amount of distraction around you. Today, there is more than ever. Hyperbolic newsfeeds and social media, a fire hose of notifications, and day-trading colleagues. They all talk about short-term, non-urgent, rapidly changing, distracting stuff.

This is where you can really rebel. Instead of getting caught up in the next interest-rate cut, political hype, or heaven forbid, what the market is going to do, stay laser-focused on the prize. What are you going to do to generate long-term investment returns? More specifically, how are you going to save, what you’re going to own, how much you’re going to pay, and what information are you going to focus on?

Cryptocurrencies, meme stocks and day trading may be part of your success, but only a part. The habits and routine you establish early on will pay far bigger dividends.

Portfolio of horrors: Beware these market monsters

Let's try a thought experiment.

Imagine you stored your clothes in four different closets.

One at home. One at your office. One at your parents' house. And one in a storage locker across town that you visit maybe twice a year.

Would that work? Technically, yes. Would it be super frustrating? You bet.

You'd spend half your life wondering where you put your good jacket. You'd buy duplicates of things you already own because you forgot you had them. And every time you needed to get dressed for something important, you'd have to mentally map out which closet had what.

Now here's the uncomfortable part: that's how a lot of people manage their money.

An RRSP from a job you left in 2015. A TFSA at the bank that you opened because they gave you a free tote bag. An investment account with an advisor you haven't spoken to in three years. Maybe a GIC that auto-renewed last December and you didn't even notice.

Each one made sense at the time. But together? It's chaos pretending to be a system.

And just like the closet situation, you don't realize how counterproductive it is until you need to make a decision. Then you're logging into four different accounts (password reset, password reset, security question you definitely made up and can't remember), trying to figure out what you actually own and whether any of it makes sense anymore.

Consolidation isn't about being tidy. It's about not making your life harder than it needs to be.

When you bring your scattered accounts to Steadyhand, something shifts. Questions get clearer. Decisions get simpler. And when you call us, you talk to an actual person who knows your situation—not a call center three provinces away reading from a script.

The 1% Match Promotion is designed to remove the friction that keeps people living out of multiple financial closets. We'll reimburse your transfer fees up to $150 + taxes, do most of the paperwork, and help you finally get everything in one place.

Once that's done? You'll wonder why you waited so long.

(Spoiler: it's because moving accounts sounded tougher than it is. We get it. That's why we handle it for you.)

Register for the 1% Match Promotion

Dear younger investors: There’s a better way to rebel

Living out of multiple closets (And pretending it’s fine)