Words they live by in the investment industry: Small accounts get small consideration.
So it follows that the record of investment firms in welcoming young people as customers was pretty terrible until recently. The rise of digital investing – taking orders and sometimes providing advice online or via mobile device – has changed all that for the better by making small accounts more economical to serve.
Suddenly, there are all kinds of ways for young adults to get started as investors while keeping their costs to a minimum. There’s a free stock-trading app, and another app with zero commissions for investing in exchange-traded funds. Several online brokers offer special pricing for young clients that can reduce their costs significantly, and there are also robo-advisers to consider.
With a six-figure portfolio, paying $5 to $10 to buy stocks or exchange-traded funds is nothing to complain about. But for a young investor with a small portfolio, these costs are prohibitive. Biweekly purchases of a balanced ETF (more on these in a moment) at $9.95 per trade works out to an annualized fee of 1.7 per cent on a $15,000 account. For context, the bonds or bond funds in a portfolio might yield about 1 per cent these days.
Further costs for young investors might include annual administration fees of $100 or more for registered retirement savings plan accounts or $100 in account maintenance fees per year (often charged on a $25 per quarter basis).
Special deals for young investors are available at several online brokers, but they’re not well-publicized and thus easy to miss out on. Some examples:
- For students, CIBC Investor’s Edge reduces its regular flat $6.95 commission for trading stocks and ETFs to $5.95 and waives the $100 annual fee on registered and non-registered accounts.
- For investors 30 and younger, National Bank Direct Brokerage provides 10 free trades a year and then lowers its regular price of $9.95 per trade to $4.95; also, account admin fees are waived.
- For investors aged 18 to 30, Qtrade Investor offers a flat commission of $7.75, down from the usual $8.75, as well as waiving quarterly admin fees.
- For clients 25 and younger, Scotia iTrade will waive the $100 annual admin fee on RRSPs and the $100 per year maintenance fees on small non-registered accounts.
- The Kick Start Investment Program at Virtual Brokers allows an investor to buy (or add to) up to five ETFs each and every month, for no commission. Normally, the cost is $50 a year for this service, unless you’re a student or have graduated within the past two years.
Do-it-yourself investing happens to make great sense for young investors. Investment advisers are notoriously uninterested in young clients for the most part, unless they happen to be the kids of rich clients. Also, the needs of young investors may be too small-scale to justify the fees advisers charge.
Bank mutual funds are an easy way to get started investing, and they’re friendly to rookie investors because they can be bought at no cost. On the negative side, bank mutual funds too often combine lacklustre returns and hefty fees.
The ideal product for young investors? Consider the balanced ETF, with fees as low as 0.2 per cent (mutual fund management expense ratios are typically in the 2-per-cent-plus range).
Balanced ETFs hold underlying funds that produce blends of stocks and bonds suitable for conservative, middle-of-the-road and aggressive investors. A twentysomething could easily choose an aggressive approach, with the understanding that there will be rotten years on the way to good long-term results. Long term, by the way, means 10 years or more.
The Wealthsimple Trade app is a zero-commission way to buy and sell balanced ETFs, as well as other ETFs and stocks. The lack of commission costs invites frequent stock trading that eventually does more damage than good, but a disciplined investor could use it to stuff money into balanced ETFs on a regular basis.
TD GoalAssist, from Toronto-Dominion Bank, is another app for mobile devices that offers a cost-effective way for young people to invest. Pick one of TD’s own balanced ETFs and contribute money whenever you like with no commissions to pay. GoalAssist also lets you set investing goals and track how you’re progressing.
Robo-advisers are another way for young adults to get help in building diversified ETF portfolios. For a fee starting at roughly 0.5 per cent, a robo-adviser will assess your needs with an online questionnaire and then suggest a diversified grouping of ETFs. Investing is a simple matter of electronically transferring money to your robo-adviser, which then contributes it proportionally to the ETFs in your portfolio.
Robo-advisers typically have lower fees for larger accounts, but a young investor still gets a fair deal.
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Bitcoin hovers near 6-month high on ETF hopes, inflation worries
Bitcoin hovered near a six-month high early on Monday on hopes that U.S. regulators would soon allow cryptocurrency exchange-traded funds (ETF) to trade, while global inflation worries also provided some support.
Bitcoin last stood at $62,359, near Friday’s six-month high of $62,944 and not far from its all-time high of $64,895 hit in April.
The U.S. Securities and Exchange Commission (SEC) is set to allow the first American bitcoin futures ETF to begin trading this week, Bloomberg News reported on Thursday, a move likely to lead to wider investment in digital assets.
Cryptocurrency players expect the approval of the first U.S. bitcoin ETF to trigger an influx of money from institutional players who cannot invest in digital coins at the moment.
Rising inflation worries also increased appetite for bitcoin, which is in limited supply, in contrast to the ample amount of currencies issued by central banks in recent years as monetary authorities printed money to stimulate their economies.
But some analysts noted that, after the recent rally, investors may sell bitcoin on the ETF news.
“The news of a suite of futures-tracking ETFs is not new to those following the space closely, and to many this is a step forward but not the game-changer that some are sensing,” said Chris Weston, head of research at Pepperstone in Melbourne, Australia.
“We’ve been excited by a spot ETF before, and this may need more work on the regulation front.”
(Reporting by Hideyuki Sano in Tokyo and Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa)
These are the only times it's smart to make changes to your investment portfolio – CNBC
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Recent market volatility has many investors wondering if now is a good time to alter their investments.
The short answer experts generally advise? It’s rarely actually a good time to make changes to your investment portfolio.
“Most investors who jump in and tweak their portfolios typically do it in response to market conditions and history has shown us this just doesn’t work out in their favor,” says Tony Molina, a CPA and senior product specialist at Wealthfront. “What often feels right when it comes to investing, is usually wrong.”
Though you may feel tempted to modify your investments when the market dips, you’re often better off leaving them alone for the long haul. The reality is, downturns happen but your money is safer if you ride out the storm. Just as quickly as the market can go down, it can also go up — and keeping your cash invested throughout these fluctuations is what helps your money grow over time. This is especially true when investing in index funds and ETFs.
But, we wondered, is there ever a good time to adjust your investments? Turns out, there are a couple conditions when it’s OK.
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When it’s a good time to make changes to your investment portfolio
While it’s typically best to leave your investments alone, you may want to change course if there has been a change in your investing goals’ time horizons, and consequently, your risk tolerance, advises Ivory Johnson, a CFP and founder of Delancey Wealth Management.
On one hand, you may find that you have extended the number of years until retirement and can take on more risk. Or, on the other hand, perhaps you’re retiring sooner than you thought and shortening that timeframe means that you need to put your money in lower-risk investments.
Using a robo-advisor is an effective workaround to avoid having to worry whether your investments match your risk tolerance. Robo-advisors have users fill out a brief questionnaire that helps them know how to best allocate your cash depending on your investment goals and the top robo-advisors will regularly rebalance your portfolio for you as needed.
Betterment, for example, will recommend a stock-and-bond allocation based on your goals and adjust automatically whenever you make a deposit, withdraw funds or change your target allocation. Betterment’s algorithms will also check your portfolio drift (how far you are from your target allocation) once per day and rebalance if necessary.
On Betterment’s secure site
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For Betterment Digital Investing, $0 minimum balance; Premium Investing requires a $100,000 minimum balance
Fees may vary depending on the investment vehicle selected. For Betterment Digital Investing, 0.25% of your fund balance as an annual account fee; Premium Investing has a 0.40% annual fee
Up to one year of free management service with a qualifying deposit within 45 days of signup. Valid only for new individual investment accounts with Betterment LLC
Stocks, bonds, ETFs and cash
Betterment RetireGuide™ helps users plan for retirement
The automated investing platform through SoFi Invest® automatically rebalances investors’ portfolios as well, but on a quarterly basis. SoFi is a good option for investors also looking for lending products as SoFi members receive a 0.125% interest rate discount on SoFi’s student loan refinancing and personal loans.
Johnson adds that he would generally change an investment allocation when a big event has taken place, such as a severe illness or a large economic windfall (like an inheritance). In both of these cases, an investor’s need for capital appreciation reduces, he says.
Molina agrees that a good time for investors to make changes to their portfolios would be in response to major life events. Specifically, he means events that put the investor in a position where they would need to access their investments in the near future (three or so years). Examples include marriage, a family emergency or as an investor nears retirement.
“This would be a good reason to reduce their investment risk or pull out their funds altogether,” Molina says.
Much of an investor’s decision to change their portfolio in this scenario depends on how soon they may need to withdraw their funds. “In general, if you need the funds within the next three years or less, you may want to consider changing your investment strategy,” Molina adds.
When it comes to investing in individual stocks, keep in mind that you should be using money that you are comfortable having tied up for at least the next five years. While individual stock investors are advised to hold for the long term (especially during times of volatility) in order to best maximize their returns, they may choose to sell a losing stock if it is more risk than they can handle and it generates significant financial loss. Investing in index funds and ETFs are an easy way to take on less risk and diversify your investments.
If you’re thinking of adjusting your investments, most of the time it’s probably not the best move for your long-term growth in the market.
The exceptions to this rule are if your time horizon and risk tolerance suddenly change. Another exception is if there has been a major life event where you no longer need your money to be invested, or where you could be better off financially with the cash accessible in your wallet.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Cushman Investment in WeWork Rests on Successful Stock Listing – BNN
(Bloomberg) — Cushman & Wakefield Plc agreed to invest $150 million in WeWork Cos., contingent on the flexible work company successfully completing its forthcoming stock listing, a person familiar with the matter said.
The investment was born of a partnership the two companies unveiled Aug. 9. They said at the time that they were discussing a potential investment but hadn’t signed a definitive agreement.
A spokesman for Cushman said the company was pleased with the progress of the WeWork partnership but declined to comment on the investment. A spokesperson for WeWork also declined to comment on the investment. WeWork is preparing to go public via a $9 billion blank-check merger in late October.
The companies cited the effects of the Covid-19 pandemic as a catalyst for their accord. For many businesses, the return to the office has been a stilted process. Widespread vaccines in the U.S. brought some workers back, but the return stalled, along with vaccination rates, and outbreaks of new variants played a role.
“The partnership we announced with Cushman & Wakefield in August is a testament to WeWork’s long-term value proposition and we remain incredibly excited about the opportunities that lie ahead as we team up with one of the leading real estate firms in the world,” WeWork said in a statement Sunday.
The deal represents a marriage of old real estate and new. Cushman & Wakefied is more than a century old and one of the largest commercial real estate services companies in the world. WeWork is barely a decade old.
©2021 Bloomberg L.P.
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