Your Guide to Quit Knowing ‘F***-All’ About Investing
Let’s face it, a lot of us know $#%-all about investing.
Stop being intimidated and start getting informed - I promise it’s not as scary as you think, and I swear you don’t even need a penis to figure this stuff out (shocker!!!).
Don’t take my word for it - take the wise advice from The Sustainable Economist, Tim Nash, who I connected with earlier this month to get his take on all things “green investing”.
What I got, in addition to learning the “investment code for sustainability” (more on that later), was a never-too-late and just-in-time lesson on getting my financial S#$% together.
Stop paying someone to do something you’re totally capable of - or, as Tim suggests, if you do need assistance, pay that help on the hour so that they’re not incentivized to sway you to invest in any which way (that will benefit them in the end).
In other words, stop subjecting yourself (and reducing your returns) to a hefty MER (again, stay tuned) because you feel afraid or shameful for ‘not understanding investments’ or ‘knowing enough’.
Your plight ends today.
I’m about to explain it to you just as Tim did for me, so you can quit pretending you understand all this financial investing business - and actually understand (trust me - you’ll be ahead of the game in no time at all!).
First, a little bit about Tim so you know he’s worth your attention. Tim, ‘The Sustainable Economist’, is an expert on socially responsible investing, impact investing, and the green economy. He has recently launched an amazing new company that offers investment coaching services for do-it-yourself sustainable investors: Good Investing.
Okay, let’s get into things.
In what follows, you’ll learn:
3 acronyms (+ 1 bonus) that will greatly enhance your overall understanding on investing.
What you should do (i.e. save and/or invest) if you’re a young entrepreneur.
3 incredibly cool, successful, and progressive companies worth throwing your money at.
To start, MER (*pronounced like an angry cat*).
It stands for Management Expense Ratio, and its code for ANNUAL FEE! These fees for “advice” are embedded (think: hidden and not talked about by your smarmy financial advisor) and generally range from 2.25% to 3% annually.
So now that you know that they exist, you can ask:
“What is the MER of these portfolios?”
It’s essential you know how much of your returns are being dubbed by the person “helping” you. A 10% return is a heck of a lot better than 7%...
And that brings us to the importance of you acquainting yourself with the next acronym: ETF.
Exchange Traded Funds are similar to mutual funds, BUT they are bought directly (by you) - versus through a sales agent.
Think of them like buying a plane ticket online - yourself. Sounds crazy, right? Probably not. Most of us are comfortable going on Kayak or whatever other cheap airfare finder and being our own DIY travel agent.
The world of investing is moving that way too.
The good news is pretty intuitive: less money for the middle man and more money for yourself!
Now to test if you’re still with me here, I’m going to incorporate 2 of the acronyms we’ve learned with the following statement: the MERs of ETFs are shockingly low.
If you just got super excited, you’re following.
Another exciting announcement - ETFs are totally liquid, which means you can buy and sell them whenever you want.
So instead of forking out cash into a mutual fund you don’t understand (subject to a charming man in a suit), DIY people!
That brings us to the 3rd acronym you need to be aware of: DSC.
Deferred Sales Charges sound just as bad as they are, and can be a total nightmare if you decide you want to take money out of your investment pot. Often times you’ll be locked in to investing for a period of 7 years, and if you decide you’d like to take some of that cash out - you’ll be faced with a hefty DSC. Ew.
Okay, now for the bonus acronym, since it would be rude not to mention it - Tim being The Sustainable Economist after all!
Meet your green and clean friend, ESG, which is code word for “sustainability”. It stands for Environmental Social Governance and it’s a set of standards for a company’s operations that socially conscious investors use to screen potential investments (hopefully that’s you!).
You can and should review the ESG of the companies you’re investing in, so that, as Tim so perfectly puts it: you’re not letting your money do things you wouldn't!
Next up: what are us (broke AF) entrepreneurs supposed to be doing with our money?!
Don’t worry, Tim didn’t give me a lecture on how I need to be saving buckets of money and conservatively tucking it away into an RRSP - nor should I be dishing out my pay cheques into life insurance. I’m young and building something here - I need my mula!
If you’re also a young entrepreneur and lost as to how exactly you should be managing your finances - including for the medium and long term, I’m happy to announce that it’s not rocket science and won’t make your life on earth totally unenjoyable.
Tim suggests setting up an online brokerage account, which you can do easily with your bank, or almost as simply with Questrade.
Questrade will generally get you a better rate than your bank, but if you want to take only TEENY TINY baby steps, you can have your bank set it up for you (but come on people - take charge!).
Note that The Globe and Mail shares an Online Broker Rankings annually, and so does MoneySense, if you’d like to have a look and compare options yourself (note their top pick for this past year was Qtrade).
He also suggested I set up a Tax-Free Savings Account (TFSA) and to tuck away a small amount each month so that I’ll one day have the cash to really get investing.
With that said, if you’re ready to start investing TODAY, here are some relevant and up-to-date points that Tim suggests:
Buy low, sell high ($%^# emotions).
Diversify your portfolio by geography and by sector.
While weed stocks are super trendy right now, they’re also super volatile, so try to keep them as a smaller part of your portfolio (5-10%). *PS I talked all about Cannabis Investing here.
You may want to consider the PZD - PowerShares Cleantech Portfolio (Tim is a fan and mentions it in one of his model portfolios here).
Last but certainly not least, I wanted to share a few of the incredibly cool companies that Tim thought I might get really excited about.
Novozymes - they’re replacing preservatives in food with enzymes (and doing a whole bunch of other epic stuff).
Bowhead Health - a platform for personalized wellness; they’re essentially a digital dispenser for nutraceuticals and feeds that information back into the broader knowledge of health (hello blockchain!).
Sustainalytics - okay, this one isn’t exactly a company part of a portfolio - but they can make sure the portfolio you are investing in meets the green and clean bill! They are a Toronto-based company that provides ESG analysis (you should know what that is now!) on all the large companies in the world.
In closing, I’d like to share a term that really resonated with me that Tim mentioned: “lifestyle inflation”, which refers to increasing one’s spending when income goes up. Think: more money more problems (and by problems I mean things...you most likely don’t need).
So while I encourage all of you (& me!) to start getting smart with your money and become that [green + clean] baller - I’m going to sign off with a single question that you can ask yourself right now to start living financially smarter...right now.