A Canuck's guide to simply successful investing

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Book: Beat the Bank: The Canadian Guide to Simply Successful Investing Author: Larry Bates Publisher: Audey Press Price: $24.95 (Paperback) $9.99 (Kindle) WHO IT’S FOR: People who want simple, actionable investment advice. MORE SPECIFICALLY: Any seasoned or novice investor who wants a simple investment strategy while also saving on fees—especially those who own mutual funds. DOES IT BUST ANY MYTHS?: Yes, that the only good way to invest is with the banks (it’s not!). It’s written by a veteran insider who shares his stories and lessons from more than 35 years in the investment industry. Larry Bates is the author who introduced the T-REX Score, a calculator that tells you how much of your investment return you actually get to keep versus what gets lost to fees—a great way for investors to see exactly how much fees eat into their returns. WHY WE LIKE IT: The tone. It’s like listening to a highly intelligent yet funny friend with experiences to share with you with the sole aim of making you a better and most cost-efficient investor. ANY LESSONS LEARNED?: Forget investing with banks. Invest some time in DIY investing to increase returns. It’s quite easy. KEY MESSAGE?: The book highlights excessive mutual fund fees paid by average Canadian investors to the banks and mutual fund companies, which is especially useful for those who often don’t have the skill set to understand—or the time to read—financial statements and fee calculations. ANY STRATEGIES TO BEAT THE BANK?: Bates points out three methods of Simply Successful Investing: DIY investing (with blue chips and high-quality bonds), build your own portfolio with index funds and ETFs and finally, robo-investing. BOTTOM LINE: Investors often lose up to half of their wealth over time as mutual fund and other bank fees grab some of your lifetime investment gains. The number two and three wealth killers are tax and asset allocation. This book gives you valuable insight into all of these. KEY TAKEAWAY: “Simply successful investing through New Bay Street offers you the potential to double your long-term investment returns compared to traditional Old Bay Street products. Doubling your investment returns can give you the freedom to turn your dreams into reality.” In other words, Simply Successful Investing matters. And you can do it!

An excerpt from Beat the Bank

Why I Wrote Beat the Bank

In early 2013 I was at my desk in the trading room on Scotiabank’s sixty-eighth floor in downtown Toronto when I received a call from my sister Mary, regarding her investments. Approaching retirement and living in New Brunswick, Mary and her husband have university degrees, devoted their careers to the health care profession, raised two girls, and sacrificed to save a modest amount to supplement their pension income. The call went something like this:

Mary: “We haven’t saved a huge amount, but every dollar of it will count when we retire. We don’t understand why our Scotiabank mutual fund has gained so little over the past twenty years when we constantly hear about how well the market is performing. Can you have a look?”

Larry: “Sure. Let me check it out.” (With a few clicks I found the ‘Fund Facts’ description of Mary’s Scotiabank mutual fund.)

Larry: “Mary, are you aware that Scotiabank charges fees amounting to 2.3 percent a year?”

Mary: “Okay, but 2.3 percent of our gains doesn’t sound like very much.”

Larry: “No. Not 2.3 percent of your gains. Scotiabank charges 2.3 percent of your total investment. Every year.”

Mary: “You mean they charge fees whether the fund goes up or down?”

Larry: “Unfortunately, yes. That’s the way mutual funds work. And at 2.3 percent annually for twenty years, fees have eaten up 30 or 40 percent of your money!”

Mary was shocked and upset. She felt betrayed. Mary made the mistake of unconditionally trusting her bank to treat her fairly. Instead, many thousands of dollars of her precious savings were lost.”

I was embarrassed. I felt ashamed of my employer and of the investment business overall. (Not to pick on Scotiabank in particular; Mary would likely have experienced the same result dealing with any big bank or traditional mutual fund provider.)

Simply Successful Investing

While previous generations of Canadians with guaranteed pensions could casually observe the markets from the sidelines, most of us today must participate directly in the markets to secure a comfortable retirement. But the structure and practices of the traditional investment industry continue to conspire against the ability of the average investor to succeed, to maximize that retirement nest egg. This compromises not only the financial well-being of individual Canadians but also the health of our retirement system and of our society as a whole. The good news for millions of Canadians is that the path to a more rewarding investment experience and a more prosperous retirement can be incredibly simple and easily accessible. But how do you get there? I call it Simply Successful Investing:

There are three key elements to Simply Successful Investing:

1. Learn investment basics: Taking the time to acquire a solid understanding of the fundamentals of investing will empower you to make better choices and achieve significantly better investment results.

2. Think long-term: Investments offering the potential for attractive long-term rates of return do not produce steady returns. All but the lowest-risk, lowest-return investments produce volatile rates of return in the short to medium term. Riding out the short-term highs and lows of the market can be stressful, but it is absolutely essential to your ultimate success. Achieving an attractive long-term rate of return on investments requires a long-term mindset.

3. Minimize costs: Your investment returns can be dramatically improved, not by attempting to beat the market but by minimizing costs and keeping more of your market gains for yourself, even if they are just average gains. This step alone has the potential to double the long-term investment returns of millions of Canadian mutual fund investors.

Take a bit of time to learn investment basics and discover if Simply Successful Investing is right for you. It’s easy when you know how.