Michael Craig - Associate Portfolio Manager at Wealthsimple
"When you begin to have an open dialogue and ask questions then you'll improve your financial literacy and become more comfortable talking about money and planning for your future."
Q. Why do people feel so awkward talking about money?
I bet it’s because it isn’t something people typically talk about. When I think back to growing up, I rarely talked or learnt about money in school or in my home. I think a lot of people have been socialized to consider it a “taboo” topic. This is probably because historically money has always been associated with status or considered a determinant of personal success or “smarts” – which is why we often shy away from it in public conversation.
But if you educate yourself, money shouldn’t be an uncomfortable topic. There’s a lot to learn about and a lot to consider when you talk about your personal financial situation – investing, budgeting, savings. When you begin to have an open dialogue and ask questions then you’ll improve your financial literacy and become more comfortable talking about money and planning for your future.
Q. Why is it important to start investing? What's the difference between investing and just putting some money in my savings account?
Everyone knows it’s important to save but investing helps you increase returns on those savings. The number one rule with investing is that the earlier you start the better.
One thing you can’t get back is time – so the sooner you invest your savings the longer you have to put that money to work for you.
For example, say you put $5,000 into a Registered Retirement Savings Plan (RRSP) and your investment portfolio returned 5% over the year, you now have $5,250 in your RRSP. That’s investment earnings of $250. But when you don’t touch that money and if in another year you make another 5% return, you get $5,500. But that’s not all, you also get a 5% return on your previous returns! (compounding effect*), so your new total portfolio value would be $5,512.50. This is the essence of making your money really work for you over the long run.
If you just left that money in a savings account without investing it you might make less than inflation – this is because the cost of products around you are going up but the value of your money is staying virtually the same, so your purchase power of those products may actually be decreasing in value over time.
This is all presuming that you’re investing properly and that the markets are going well, there are ups and downs but historically it has been proven that people who invest their money over the long-term make more than people who do not.
* Compound interest (or compounding interest) is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit.
Q. Should I be saving a percentage amount of my income?
That depends on your personal situation, but a standard rule of thumb is that, if you can, it’s good to save 20 per cent of your total income.
Q. From your hiring practices and your socially responsible investing policies and features, it's clear that Wealthsimple places a strong importance on gender diversity - why is that a priority for the company?
Wealthsimple’s vision is to be an investment platform that works for everyone, regardless of gender, income, investment knowledge, or cultural background.
We believe that the only way we can legitimately and credibly build this type of platform is by representing and reflecting the diversity of our users in the process.
In terms of our corporate team, we prioritize diversity hiring across all positions from software engineers to portfolio management to client success – we believe that we need to take all viewpoints into consideration in order to ensure we adequately represent the diverse populations we service.
Q. Finance is typically a male dominated industry. What role can men, and established individuals in finance, do to support women in the workplace?
I think all companies in historically male dominated industries have a real opportunity to drive growth and success by unlocking the potential of female talent on their respective teams.
This can include creating more mentorship and sponsorship opportunities, supporting additional education opportunities and making the types of structural and organizational changes that ensure a workplace is inclusive for everyone. One example of work Wealthsimple is actively doing to support women in the workplace is directly done by our CEO Michael Katchen. Michael is part of the #GoSponsorHer initiative, which is a program that requires sponsors to actively create opportunities and advocate for their sponsoree. This program is great for helping women looking to make a move into an industry where they are typically underrepresented and puts strategic resources in place to help support them in their career aspirations
Q. My friend's an expert investor, she knows all about stocks, bonds, trades, and market pricing. She even knows about ETFs. What support can Wealthsimple give to the pros?
Well – even if she knows everything, let’s face it, we’re all busy and it’s still a big time commitment to actively manage and keep up your portfolio up to date with the rapidly changing market.
So sure, people can do what we do on their own- but do you want to? Wealthsimple allows our users to invest easily. We take care of all of the heavy lifting in terms of portfolio construction, rebalancing and decision making. This is an ideal option for busy people who want more flexibility in their schedules. Wealthsimple can liberate you from the stress and emotional roller coaster that can come from making these decisions on your own. For a small fee you have all of our investing services but also get access to a full team of client success and in house financial planners to offer you expert advice – all accessible at the touch of a button on your phone.