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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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. MEMBERSHIP RATES - All rates for Canadian residents are printed on the inside back cover. Non-residents of Canada may purchase the online edition only – at $24.95 for one year’s service. Canadian MoneySaver (CMS) is published by The Canadian Money Saver Inc., 55 King Street West, Suite 700, Kitchener, ON N2G 4W1 Tel: 519-772-7632. Office hours: 9:30 am to 1:30 pm EST Website: http://www.canadianmoneysaver.ca E-mail: moneyinfo@canadianmoneysaver.ca PRIVACY POLICY - CMS may make its members’ mailing list or e-mail addresses available to carefully screened companies or organizations offering products or services that may be of interest to you. If you prefer not to receive these offers, send us your mailing label with “Do Not Rent” written on it. (Required statement. We do not rent addresses.) Canadian MoneySaver publishes monthly with three double issues (July/Aug, Nov/Dec and March/April). Canadian MoneySaver is an independent, totally membership-funded magazine. The information contained in Canadian MoneySaver is obtained from sources believed to be reliable. However, we cannot represent that it is accurate or complete. The views expressed are those of the writers and not necessarily those of The Canadian Money Saver Inc. Neither the information nor any opinion expressed constitutes a solicitation by us for the purchase or sale of any securities or commodities. Canadian MoneySaver is distributed with the explicit understanding that Canadian MoneySaver, its publisher or writers cannot be held responsible for errors or omissions. Shareholders of The Canadian Money Saver Inc, editors and contributors may at times have positions in mentioned investments/securities. Copyright © 2017. All rights reserved.
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MARCH/APRIL 2017, Volume 36, Number 6
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ShareClubs Join any of the listed ShareClubs by contacting your local volunteer. 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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Bill Macgregor
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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.
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