Welcome to Dynamic Wealth Management

Welcome to Dynamic Wealth Management's brand new website.  Please take a look around and take a moment to read the blog.  I will be posting my thoughts on investing and the markets every Monday, so check back every week to get the latest news.


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Mutual Funds

Mutual Funds are a portfolio of stocks that are professionally selected and managed to achieve a certain investment criteria.  Different Mutual Funds focus on different geographical markets and economic sectors.  Depending on what you’re interested in investing in, a variety of different Mutual Funds may be suitable for you.

The advantages of Mutual Funds over buying stocks yourself are as follows:

- Professionally Managed - Mutual Funds are professionally managed by someone whose sole job is to make smart investment decisions.  We’re all very busy people and although we may strive to do the best job we can when buying stocks, it is just not possible for us to research and monitor our purchases all the time with our busy schedules.  Also, professional fund managers have many sources of information that may not be accessible for the average investor.  Some fund managers actually sit on the board of companies their funds are invested in and have first hand knowledge of the inner workings of the company.  This is the kind of knowledge and expertise that is just not possible for the average investor to have.

- Diversification - Mutual Funds are diversified, meaning they contain a number of different stocks.  It’s important to never be too concentrated in one stock as it opens you up to the possibility of “losing everything”.  No Mutual Fund will ever “lose everything” as the diversification of stocks reduces your risk dramatically. 

Here’s a great example of what I mean.  Nortel was the darling of the Canadian marketplace.  Everyone was invested in the stock and it made up a huge portion of the Toronto Stock Exchange (TSX).  Money was pouring in and everyone was making money off Nortel shares.  Nortel employees who had stock options suddenly found themselves very wealthy.  They were essentially the “Apple” of Canada.  At their peak, the company’s market capitalization (the value of their shares on the market) made up ONE-THIRD of the total market capitalization of the TSX.  In other words, their stocks accounted for one-third the value of all the stocks on the TSX.  They were bigger in market capitalization than ALL SIX of the big Canadian banks COMBINED.  Not too long after that, the companies fortunes turned for the worse and the next thing you know, Nortel was bankrupt and worthless; Hero to Zero.  Nortel employees went from being very rich with stock options to unemployed.  It was a tough time for the Canadian market, but there was something to be learnt from this.  The moral of the story was that even the biggest giant can fall.  If you were invested 100% in Nortel stocks, you would have lost EVERYTHING.  If you were a smart investor who was invested in Mutual Funds, you would have only lost up to 10% of your investment value, nowhere close to losing 100%.  In fact, your fund may not have been invested in Nortel at all and you would have lost nothing!  That is why diversification is so important and why you always hear the phrase “Don’t put all your eggs in one basket!”  The same thing holds true when you’re investing your money as well!

- Transferability - The ability for you to move your investment from one sector/geographic location to another sector/geographic location without fees is another benefit of Mutual Funds.  If you were invested in individual stocks and wanted to move from the Tech Industry to Resources and then to Precious Metals, you would have to incur selling and buying commissions multiple times, which would erase most, if not all of your profits.  If you were invested in Mutual Funds, a simple call to me and the transaction is done no problem.

- Economies of Scale - Mutual Funds buy huge amounts of shares and as a result, they pay much lower commissions than you or I would pay if we bought the same stocks on our own.  Many brokerages charge between $30-$100 commission on $1,000 share transactions.  That is 3%-10% of your money gone towards commissions per transaction!  By the time you’re done, you may realize that all your profits have gone to paying commissions and the only person who made money during all of this was the brokerage!

Mutual funds can be as broad or focused as you’d like, so there are always a variety of funds that are suitable for what you would like to do.  But with over $587 Billion invested in over 2,000 Mutual Funds in Canada, how do you pick the best funds that match your investment goals?  That is where I come in and provide my knowledge, experience and expertise to you.  I take the time to understand the markets, find the best funds and monitor them so that I know which funds are the best ones in the industry for each geographical region and sector.  Like anyone else, Fund Manager’s come in many different skill levels.  Some always find themselves amongst the top and win awards for being the best at what they do, while some are always near the bottom and are always behind their peers.  It is my job to recommend to you the Mutual Funds that are managed by the BEST fund managers, in the industries and regions that are going to be providing the best returns to you.  Combining this with my excellent client service and attention to your personal detail is what makes Dynamic Wealth Management your premier destination for investing into Mutual Funds!