If you have been savvy enough to have squirrelled a little pile of money away, you already understand that there are better places to deposit your loot than in a low-interest savings account or deep inside a Serta Perfect Sleeper. You know you need to invest, but in what? Should you put it all in a technology stock that you overheard that rich looking dude raving about at the bar? Sure, there’s a chance you could hit the jackpot, but stock picking is not something for the faint of heart—or the uninitiated.
We beg you — don’t dive into the stock market by yourself. Get some professional investment help. “From whom?”, you will ask, (provided you have excellent grammar). You might choose to invest through a traditional investment advisor, or an automated one.
A traditional investment advisor will assess a fee (usually about 1% of your entire managed portfolio annually) to choose investments for you and buy and sell them depending on changes in the market. An automated advisor like Wealthsimple will assess a fraction of a traditional advisor’s fee to help you invest, but rather than responding to the ups and downs of the market, will instead allow sophisticated software to make any trading decisions and periodic rebalancing of your portfolio so that it’s not too heavily weighted in one type of investment.
Traditional investment advisors may choose to invest in specific stocks, bonds, or mutual funds (a bundle of stocks or other equities chosen and regularly traded by a mutual fund manager.) Automated advisors tend to invest mostly or entirely in low fee exchange traded funds, or ETFs, which are collections of stocks that closely track major indices like the S&P 500. We’re obviously biased, but we think the absolute best way for you to turn your little stack of money into a much bigger pile is through a long term investment in ETFs using an automated advisor like Wealthsimple. Market-tracking ETFs have been shown to offer sustained, consistent growth while minimizing downside risk. That’s why even a famous stock-picker like Warren Buffett recommends that his heirs invest their inheritance in market-hugging index funds or ETFs.