Over the last five years, I have been helping colleagues to take control of their financial lives. It has been incredibly gratifying to see the transformation this has on people’s lives and careers. I met with one of my first mentee‘s last week. She is killing it, and now trying to help her colleagues to open their eyes. I hope that the new DIY Investor education hub that I have created will also help to expand the reach of my mission.
Taking the plunge to use a simple and effective DIY investing approach, grounded in the best evidence, is one of the most tangible and impactful ways for you to take control. Done properly, it can greatly increase how much of your money is working for you. Unfortunately, there are multiple barriers that may stop you from doing so.
I created a DIY Investor Hub to help you to crush those barriers. If you just want to check it out, then click the image below. You can also enter The Hub from my home page (just below the core curriculum section) or via the menu tab at the top of my site.
Five Big Barriers to Crush
For those of us already DIY investing, it is easy to forget how scary it was to get there. It is empowering and profitable on the other side. What seemed overwhelming obstacles at the time, now look like molehills. There are five big barriers that I have observed people commonly struggle with. Learn about how the Loonie Doctor DIY Investor Hub can help you to crush them.
#1 Industry-Driven or Complex Educational Material
There is a lot of material available about how to invest. However, that can be distracting and presents several problems.
Many of the articles or presentations are either superficial, unduly complex and scary, or are focused on products as solutions. Those industry-driven educational materials are usually followed by “contact us for a consultation”.
Even high-quality educational material can be very overwhelming and prevent action. Particularly for professionals. We are used to our smarts and hard work translating into better outcomes. It is counter-intuitive for us to accept that to be a successful investor is more about not underperforming from trying too hard.
Fortunately, most investing success can be attributed to the 90% of investing that is simple. You can always pick-up the other 10% later. If you want to. It is optional and you may also decide that it is not worth the effort.
How does the DIY Investor Hub crush this? Basic Training.
The first section is basic investor training. Learn the essential steps to invest and why we do them. With pictures.
Choose the mix of DIY and advisor service that provides you the best value. There is a detailed analysis of the costs and benefits of different DIY vs different advisor models. You can then implement your plan with confidence that you are choosing the right option for you.
The simplest and most effective way to start DIY investing is to use asset allocation ETFs. I do not give specific investing advice for your situation (I am not qualified to). However, I present the data as to why these products are useful and provide a practical comparison of the major asset allocation ETFs. That should help you to make your own decision. Unlike other reviews, I account for their taxation in different account types and even do a deep dive into the Horizon offerings (niche ETFs that may appeal to the highly taxed population).
#2 Knowledge & Operationalization are different things.
There are already some well-presented basic investor education resources out there. However, I have noticed that people still have a hard time linking that knowledge to the operational steps. How to choose and open accounts, filling the forms, funding accounts, choosing ETFs, and the button clicking to buy/sell them.
How does the DIY Investor Hub crush this? An Interactive DIY Investing Guide.
The second section of the DIY Investor Hub is an interactive guide. It goes through each step of the investing process combining the knowledge and decisions with the actions. There are direct links to the relevant educational material and tools embedded in it.
The basic training section will give you the foundation, but this builds on that and adds practical considerations in a “just-in-time” learning fashion. That closely links learning to action and puts the right tools into your hands at the right time.
For those who like a paper map, there are also printable process maps to help you keep your bearings while going through the more detailed steps of the interactive guide.
#3 We worry that we are missing something important.
High-income professionals and business owners are smart people. They know that taxes matter and see that in their lives all of the time. For many, tax is the largest line item in their budget. Most DIY investing sites simply tell you to ignore taxes. That is definitely the correct answer for the average Canadian, but more highly-taxed individuals find that hard to swallow. It also seems silly to ignore other major assets that you have, like a business, real estate, or a pension.
Avoid paralysis due to the fear of missing out due to some tax nuance or uncertainty about how DIY investing fits in with the rest of your assets. It is more important to get invested and build the base of your investing pyramid. Do that with the confidence of knowing why you don’t need to worry about the top tiers of the pyramid to start.
Plant the seed to come back to later when you are more experienced. If you are already there and considering taking it to the next level, there are two optional steps.
Demystify the specter of taxes dragging down your plan.
Learn why most people should ignore tax optimization or how we should deal with it as high-income professionals. Otherwise, we get paralyzed into inaction. We have to pay taxes, but few of us want to leave the government a tip. The issue of taxes takes on another layer of complexity and importance for those who are incorporated.
We must consider whether taxes will matter to us, or if they matter enough to try and do something about it. For most, it doesn’t matter to start. Time in the market is much more important. That is why it is optional. However, building a basic understanding may help you later if it does become important. Proceed with confidence now for your present situation and an awareness that you may want to gently adjust course later.
How do your DIY investments mesh with your other assets? Does it matter?
While the financial industry focuses on whichever investment type they are selling (stock porfolios, real estate, insurance products), you know that they are just parts of your overall wealth. If you own a marketable business, should you really ignore that? It is an asset and has risks/benefits. How does that factor into your overall portfolio? What about insurance products that you already purchased? Or real estate assets? Or a pension? Some people will have some managed investments and some that they want to DIY invest.
For a DIY investor, the most appropriate course may be to ignore these factors. However, you should learn why to ignore them, or how to consider them if you should.
How does the DIY Investor Hub crush This? Two Optional Steps in The Guide.
The Interactive DIY Investing Guide has an optional section about how DIY investments may fit with the other parts of your portfolio. It has explanations of factors to consider, and illustrative tools embedded in it to help you.
There is also an optional section on tax optimized asset location (trying to match investments to the accounts where they are most tax efficient). Learn about the different approaches and assumptions that go into asset location strategies. There will also be some examples to illustrate the potential impact. I don’t want to patronize you with a simple “just ignore it”. I want you to feel confident in your current decisions and hook you up with the tools needed to make tax optimization possible should you decide to pursue that.
#4 Basic forms and clicking are scary when money is involved.
We hold ourselves to high standards and are afraid to make mistakes. Throw in money and something new to us, and that is amplified. I know people that can calculate the Aa-gradient in their head, but weren’t sure how to fill out the beneficiary section on an RRSP application. Or where to find their client ID. Ok, that was me.
When opening a corporate account there are all sorts of jargony questions. Some of them are about US tax treatment which, for me, conjures images of going to jail the next time I cross the border. Seriously, this is the type of fear that a form can conjure in someone that makes life and decisions on a daily basis in their job.
I remember the first time I bought something on a discount brokerage. Prior to that it all seemed so complicated using my various financial advisers. It felt like the picture below. Now, it is a total snooze. Most people require some help to get over the adrenalin to thinking of it as no different than online banking.
How does the DIY Investor Hub crush this? Detailed instructions, screenshots, slide shows, and links to relevant forms.
There are explanations for the sections of forms that I have noticed people get stuck on. I honed this via years of experience and testing on human subjects. There are slideshows showing how to navigate. There are even detailed explanations with annotated screenshots to show how to buy your first ETF. Tax filing makes people nervous. So, there is a section on what to gather for tax season and how to find that information. Smart people can get stuck on just about anything and be embarrassed to ask. So, I laid it all out. In detail. With pictures.
For some of the more complex accounts to open, like a corporation or an informal trust, I have put direct links to forms and reports that you need to gather. Some of them even have typical answers for a professional corporation pre-filled. That should save a lot of frustration and really streamlines the process.
The information should be extrapolatable to other platforms, but I chose to partner with Qtrade when I built it.
I chose to use Qtrade Direct InvestingTM for a number of reasons. Of note, Qtrade is not Questrade. They are competitors and the similar names is a common point of confusion. Qtrade’s online platform works well, is competitively priced, I use it, and they have the best customer service that I have encountered at a discount brokerage. Time and frustration matter to me more than a couple dollars difference in fees here or there.
I have burned through several other brokerages over the years to form my opinion and every blogger is going to say that the brokerage they are affiliated is the best. At least, the Globe & Mail also agrees. The last thing that I want to have happen is that someone finally takes the DIY plunge and has a bad service experience.
Professionals don’t have time to waste on the phone. Most things get handled online or via email very quickly using Qtrade’s customer support. If you do like the phone, there is also a special number for family’s with >$500K invested (including your corp if at your home address).
My main goal is to help DIY investors, but my partnership with Qtrade has allowed me to do a better job of it. If you open a Qtrade account using the affiliate links on this site, then you get Qtrade’s best promo offers (not always public) and Loonie Doctor gets a small referral fee (at no cost to you). You will notice that I have no other advertising on my site. I find ads annoying, and they detract from my mission. This has added value.
#5 Breaking your mutual fund advisor’s heart can be hard.
Most of us don’t like to make people sad. When you move from high-fee proprietary mutual funds to a low-fee evidence-based strategy, your mutual fund advisor will likely need some KleenexTM. They may also try to “save the account” (ie their revenue stream).
They use several common tactics to try and dissuade you from taking control. So, I added a section exploring those arguments using some embedded tools to do the math and some facts about the stock markets. Arm yourself with logic and knowledge to stay rational if they try to pique your fear.
To further add insult to injury, there are also detailed instructions of how to exchange $CAD and $USD using Norbert’s Gambit on Qtrade. This can be done simply and all online with the Qtrade platform at a fraction of the cost. Of course, there are lots of screenshots.