Canadian MoneySaver - The Ultimate Guide to Robo Advisors

MARCH/APRIL 2017

Yes, Bonds Are Still An Important Part Of A Portfolio Ryan Modesto P. 25

Exchange Traded Funds Versus Individual Stocks – Which Is Better?

Peter McMurtry P.15

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Kyle Prevost P.6

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MARCH/APRIL 2017

SPECIAL FEATURES The Ultimate Guide To Robo Advisors - Part 2

Kyle Prevost 6

Using A Discretionary Family Trust To Income Split Your Investment Portfolio With Spouses And Children Of Any Age

Colin Ritchie 9

New Rate Reset Preferred Shares With Floor Feature Are They Worth A Look?

Small Business Owners And Professionals Have You Got Your Money Working For You?

Stephane Ruah 12

Allan Small 13

Exchange Traded Funds Versus Individual Stocks – Which Is Better?

Peter McMurtry 15

Top Five Investing Myths

Theodor Tonca 17

Let's Go To The Store: Three Canadian Retailers Investors Can Count On

Richard Morrison 19

Reader Questions Answered: Options Contracts

Keith Richards 22

Yes, Bonds Are Still An Important Part Of A Portfolio

Ryan Modesto 25

The Costs Of Investing

Scott Ronalds 28

The Elusive And Misunderstood Stability Clause In Travel Insurance Policies?

REGULAR FEATURES

Isabelle Beaudoin 31

EDITOR-IN-CHIEF - Peter Hodson MANAGING EDITOR: Lana Sanichar CONTRIBUTING EDITORS Ed Arbuckle, Margot Bai, Robert Barney, Dan Bortolotti, Ian Burns, Bruce Cappon, John De Goey, Donald Dony, David Ensor, Ken Finkelstein, Derek Foster, Benj Gallander, Robert Gibb, Andrew Hepburn, Shelley Johnston, Robert Keats, Cynthia Kett, Ken Kivenko, Camillo Lento, Marie-Josée Loiselle, Alan MacDonald, Brenda MacDonald, Gina Macdonald, Robert MacKenzie, Ross McShane, Ryan Modesto, Caroline Nalbantoglu, Tim Parris, Peter Premachuk, John Prescott, Kyle Prevost, Brian Quinlan, Wynn Quon, Rino Racanelli, Colin Ritchie, Scott Ronalds, Norm Rothery, Stephane Ruah, Allan Small David Stanley, John Stephenson, Brian Tang, Angelo Vicere, Becky Wong.

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MARCH/APRIL 2017, Volume 36, Number 6

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Like-minded members get together to share financial information. No cost. No obligation. Just an inquiring mind. The agenda for each group is shared by all group members, i.e. it is not just the responsibility of the contact person. ShareClubs are unlike investment clubs because they are meant to share investing information only. Contact MoneySaver and volunteer to start a ShareClub in your area. When ShareClubs are filled, they are delisted.

VOLUNTEER REGION CONTACT ONTARIO Blake Hoo Ajax/Pickering blake.hoo93@gmail.com John Mayo Aurora johnmayo@sympatico.ca Frank Attobelli Bolton 905-857-6527 James Bolen Caledon 416-617-7311 Ken Kyer Cornwall kyerk@hotmail.com Al Piccoli Georgetown alpiccoli@outlook.com John Prescott Guelph guelphshareclub@gmail.com Sam Thai Hamilton samthai6@gmail.com Matthew Moore Kincardine/Port Elgin 519-371-6592 Francis Savage Kingston fsavage@cogeco.ca Richard Gerson Kitchener-Waterloo gerson@kw.igs.net Bob Gauld London 519-657-4393 Dipen Parekh Milton 647-745-2420 Paul Drummond Mitchell 519-348-9724 Linda Sopoco Delfin Mississauga 905-858-5555 Jim Ashley Newmarket cjimashley@gmail.com Peter Matsdorf North York I matsdorf@rogers.com Dominic Pun North York II hacnolde@gmail.com Gerry Hogenhout Orangeville 519-942-0220 Tom Loftus Oshawa 905-725-1979 Andre Albert Ottawa 613-741-2828 Volunteer needed Peterborough moneyinfo@canadianmoneysaver.ca Paul Mintha Port Hope 905-885-8659 John Mills Scarborough 416-267-7993 Jeff Danby St. George 519-753-7414 Gary Poxleitner Sudbury gmpoxleitner@gmail.com Luke Zhang Toronto-Central ellensdegenerates@hotmail.com Ron Closs Thunder Bay classicitems42@gmail.com Henry Lamasz Unionville/Markham hmlsz@rogers.com ALBERTA William Wood Calgary SE bwood@telusplanet.net Dominic Tremblay Fort McMurray domt@live.ca BRITISH COLUMBIA Ron Beaton

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John Richards

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Bill Macgregor

Halifax

I

haven’t yet seen the movie, GOLD, starring Matthew McConaughey, which is based on the Bre-X gold fraud, which cost investors $4 billion in 1997. Not sure if I really need to see the movie, though, having lived through that event as a small-cap fund manager.

Through sheer luck, my fund in 1997 sold all of its Bre-X shares before the fraud was exposed. The company had simply become too big to be held in my small cap fund. Sometimes, as you likely know, luck can still play a big role in investment success.

But the movie, in my view, could also be called ‘GREED’ as it was greed that fueled investors’ appetite for more and more Bre-X stock (the stock went from 25 cents to $200 per share). It was greed that allowed analysts to ignore the fact that the wrong type of gold was showing up in gold assays from the project. It was greed from fund managers who ‘needed’ to own the stock so they could keep up with their peer managers and the index, and get large bonuses. An entire town in Alberta invested in the company, and then lost it all.

I was thinking of this the other day, as we at CMS continue to get questions on the most speculative companies, binary options, leveraged ETFs and other so-called ‘investments’. Greed continues to drive the creation of new products, and investors continue to ignore the basics. If you are buying options, micro caps or leveraged products, you are gambling, not investing. We do not think ANY investment where you could lose ALL of your money is worth any consideration at all. The first rule of investment success, after all, is not to lose money.

So next time you feel you are ‘stretching’ your risk limits and are considering a high-risk investment, ask yourself if you are investing, or you are just being greedy? Bottom line: Don’t be a star or an extra in the next movie about greed.

902-717-8153 PEI

Frank Driscoll

Charlottetown

902-569-3601

4 z Canadian MoneySaver z https://www.canadianmoneysaver.ca z MARCH/APRIL 2017

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Peter Hodson