The world of investments has been an exciting place over the last few years, primarily due to one thing – robo-advisors.
Robo-advisors use low-cost ETFs, leading edge technology, and sophisticated computer investment models to offer Canadians sophisticated wealth management services without minimum account sizes and high fees.
This is important because Canadians pay some of the highest fees in the world for investing services. Lowering your fees can help you save a lot of money in the long-run. Saving on fees can be a big boost to the size of your investment portfolio, which helps you hit your investing goals such as retirement, buying a home, or funding a child’s education. If you want to learn more about robo-advisors, what they do, and how the different companies compare, check out our education centre.
One of the companies on the cutting edge of this new investing trend is Nest Wealth. They offer non-registered investment accounts, RRSPs (both individual and spousal ones), TFSAs, RESPs, LIRAs, and RRIFs – essentially, they have accounts for almost every Canadian’s need.
What Nest Wealth brings to the table
Let’s start by looking at fees. Most people are initially interested in a robo-advisor like Nest Wealth for the lower fees. When presented with the potential impact fees can have on your investment portfolio, a low-fee solution can seem pretty compelling.
What does Nest Wealth charge? It all depends on your portfolio size:
- For a portfolio of up to $75,000, you pay only $20 per month.
- For a portfolio more than $75,000 but less than $150,000 you pay $40 per month.
- For a portfolio of more than $150,000 you pay $80 per month.
These fees can be hundreds (or even thousands) of dollars less than what you pay for a comparable portfolio of mutual funds (depending on your portfolio size). If you want to see what the fee difference would be for you, Nest Wealth has a mutual fund fee calculator available right on their homepage.
Best of all, you can try it free for three months.
Historically, personalized wealth management services were available, but they were limited to people with huge portfolios. This was typically due to the cost and work involved. Now that technology has caught up with the investment industry
There are a few different features available only to larger portfolio (such as tax-efficient asset allocation), but all portfolios get a similar set of basic features.
- Creation of a portfolio customized to your investment goals, timeline, and circumstances
- Diversified asset allocation within your investment portfolio
- Consistent monitoring of your portfolio
- Automated portfolio rebalancing based on your individual asset allocation
- Support from a registered advisor
- Transparent fee and performance reporting available online
Considering that you might be paying as little as $20 per month, that doesn’t sound like a bad deal at all.
While there are no guarantees when it comes to investment performance, there is research that suggests a diversified, risk-balanced, passive all-index fund portfolio is likely to outperform an actively managed mutual fund portfolio.
Essentially, while you might come for the low-fees, you stay for the low-fees and performance. Not a bad combo.
The account setup experience was surprisingly easy. Start-to-finish it appears to take about 15-20 minutes. However, be sure to have your banking information, employer address, photo ID, and other items handy. I wasn’t completely prepared for how easy the application would be, so it took me longer than necessary.
Once you’re finished signing up, it takes Nest Wealth about three days to process your account paperwork, and then you’re ready to go.
What could this mean for me?
I put my details into the Nest Wealth investment calculator and based on their estimates, choosing Nest Wealth over a portfolio of mutual funds could help me earn $253,963 more for retirement, or help me retire six years earlier.
For investing 20 minutes of time, that seems like a pretty good rate of return if all those assumptions work out.
Interested? Check it out for yourself.
- 15 Personal Finance Bloggers to Follow in 2018
- How I Saved $100,000
- The Ins and Outs of Investing in Your 30s