Introduction to Investing Workshop
Written by Hargun Kaur, YIP Class of 2017
On Saturday, January 21st, the Toronto division of the Young Investor Program held their first workshop. Gracing the event were guest speakers from WealthSimple, a Toronto-based institution providing investment management.
WealthSimple, unlike many other investing companies, employs a robo-advisor platform, in addition to providing access to live advisors. This modern form of financial advisement is a prominent and innovative use of Financial Technology, or FinTech, and because the decisions are algorithm-based, it may even be more accurate.
Jon, the guest speaker at the workshop, was a graduate of Richard Ivey School of Business and a CFA Level III, and now works as a relationship manager at the company.
He gave the workshop attendees a presentation regarding basic investing knowledge, hoping to get them thinking about their futures.
During the presentation, the following concepts were covered:
5 Rules of Investing
- Start Early — The first and most important rule of investing is to start early to take advantage of the power of compounding.
- Keeping Costs Low — Sometimes it isn’t the best decision to go through a financial professional due to the very high costs.
- Don’t Pick Stocks — Rather than choosing a few stocks, invest in index funds and ETFs.
- Diversifying — Instead of buying a few stocks, buy industries or groups of stocks to prevent major losses.
- Drown Out Noise — Information overload causes one to make irrational decisions, reflecting the herd behaviors that exists in the market today.
Stocks vs. Bonds
- Stocks or equity investments mean buying an ownership in the company. They are⬆ risk and ⬆ potential for high returns.
- Bonds or debt investments mean lending money, while getting the principal amount and interest paid back. They are⬇ risk and ⬇ potential for high returns.
Risk and Return Balance
- The risk level of an investor determines the percentage of equity and debt investments in their portfolio
- Stocks and Bonds: More stocks in a portfolio mean higher returns, but they are accompanied by higher level of risks, while bonds are more secure yet have lower return.
- Mature and High Potential Companies: Mature companies pay constant dividends, yet high potential companies generally pay no dividends, but are growing and thus their stock price can increase
Account Types
- RRSP (Registered Retirement Saving Plans) — Income not taxed until money is taken out
- TFSA (Tax Free Saving Accounts) — Income is not taxed, even when taken out
- NRA (Non Registered Accounts) — Taxed as soon as item is bought
The workshop was an incredible experience for all the young investors, giving them a glimpse into the world of investing. It was enjoyable and super helpful, teaching all the participants the essentials of financial literacy. Learning about investing was very exciting and encouraged the students to start saving and investing now, rather than later.
When working on the portfolio pitch competition, the knowledge gained from the workshop greatly helped competitors make effective decisions.
A huge thanks to Jon and the whole WealthSimple team for the great workshop!
