Episode #19 - Two Minutes to a Better RSP: The Benefits of Managing Your Own Investments
Announcer: Welcome to The Money Clip podcast series from The Vault, Scotiabank’s online guide to helping Canadians get ahead financially. Listen in to gain a deeper understanding of your personal finances and find out how a few small changes to the way you manage your money can make a big difference.Michael Seaton: Thank you for joining us on The Money Clip podcast series from Scotiabank. I’m your host, Michael Seaton, and with The Money Clip we provide Canadians with a deeper understanding of personal finance and money-related matters. This is our series titled “Two Minutes to a Better RSP”. We hope to put you on the path to maximize your retirement savings plan as the deadline approaches. For today’s episode thirteen, to explain some of the benefits of going the self-managed route, here again is John Ballard of ScotiaMcLeod Direct Investing.
John Ballard: What are the advantages of managing your own investments? Well, in my experience, I’ve found that people who manage their own investments talk about three major benefits that they get from doing so. The first of these is control and, of course, managing your own investments, having access to your own portfolios, gives you ultimate control over the financial plans that you may have in place and the steps that you take in order to achieve your objectives. Using online investing, of course, means that you have access to your account basically 24 hours a day, and whatever choices you make within the account are entirely up to you and are executed instantaneously by you. And, of course, as I’ve said before, nobody is more concerned about the growth in your assets than indeed you, yourself. The second major benefit that we’ve found is convenience. And the convenience of being able to manage your own investments online can in no way be matched by any other service dependent on using a third party advisor. A Sunday afternoon, sometime late in the evening – if you suddenly decide that you need to withdraw some cash from your account, or you would like to reposition some of the assets in your account, then an online service will allow you to do that. More specifically, it allows you to see the value of your assets and, should you choose to liquidate and to remove cash, then using an online service –normally speaking, if it’s an equity that you’re selling – then the cash is available to you readily within three days. And, moreover, it’s you who have chosen exactly at what moment to sell that asset, the moment that appeared to you to be the most favourable within the marketplace. Another significant convenience of managing your own assets is: I know a number of people hold certificates that they have acquired for various historic reasons, and holding certificates has a number of inconveniences, not least of which is the security of actually holding them. And, secondly, if there are any dividends paid, it becomes inconvenient to receive cheques and to handle the dividends physically. Of course, once these certificates are registered into an online account, then there is no question of security. And, secondly, the dividends are automatically paid and acquired into the account with no interference of any sort on behalf of the investor. And finally, of course, the advantage that everyone immediately recognizes with online investing is the cost. And whilst you’re managing your own investments, doing your own purchase and sale decisions, you’re not paying for expert advice, and so, inevitably, the cost of doing so becomes much less. So those are the three major benefits that we found for people who choose to manage their own investments. I hope one of those will be pertinent to you.
Michael Seaton: Thank you, John. And that will conclude another Two Minutes to a Better RSP podcast. Keep listening for more in this series as we take two minutes to review tips and suggestions to reach your retirement goals. Thank you for listening.
Announcer: Do you have any thoughts on today’s show? We’d love for you to get involved and become part of the conversation. Send us your questions, comments or money management tips so that we can address them in future podcasts. Our email address is themoneyclip@scotiabank.com and our call-in number is 1-866-652-5333. The Money Clip is brought to you by The Vault at Scotiabank. Be sure to tune in again next time.