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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 Fund Fees = Overrated PDF Print E-mail
Written by Kalson Jang   
Monday, 26 July 2010 21:49

When comparing Mutual Funds, people often ask me what fees each Mutual Fund charges in an effort to compare the various funds.  The MER (Management Expense Ratio) of a fund is a measure of the total costs of operating a Mutual Fund as a percentage of average total assets.  In other words, it is the fee charged by the Mutual Fund Company to manage and administer the mutual fund you are buying.

Included in this fee are things such as:
- Fees paid to the fund manager(s) and their analytical/research staff
- Brokerage commissions and fees
- Taxes
- Accounting, Audit, Legal fees
- Trailer fees paid to advisor
- Interest Expenses
- Custodial Fees
- All other costs required to operate the fund such as customer service staff, annual and semi-annual reports, prospectuses etc.

When considering various Mutual Funds, investors often go into the process thinking “I will pick the fund which has the lowest fees because lower fees are good and that means I am saving money that way”.  This train of thought seems to make a lot of sense on the surface, but it’s an overly simplistic view.  As a result, investors are often surprised to hear that I do not place fees at the top of my list of considerations when choosing a Mutual Fund.

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Life Insurance for FREE!!! PDF Print E-mail
Written by Kalson Jang   
Monday, 12 July 2010 22:36

Life Insurance is a key ingredient to any financial plan and you’ll be happy to know that buying Life Insurance is easier and cheaper than you might think!

No one likes to think about what would happen if something were to happen to them, but unfortunately, life sometimes holds surprises that no one can predict.  If we do not “plan for the worst” ahead of time, our loved ones may be the ones who end up suffering because we did not take the time to protect them in the event of our death.

Consider a married couple with 2 children.  The two parents both help to support the family by paying for the mortgage on their home, putting money aside for their children’s education and investing some money for their future goals and retirement.  If things go as planned, everyone is happy and life follows the path that everyone expected.

Unfortunately, life doesn’t always go as planned.  Consider what would happen if the husband passed away in the previous scenario; the wife would be left on her own to support herself, pay the mortgage and take care of her two children.  Furthermore, she would have to use her savings to pay for the cost of the husband’s funeral and burial which could cost up to $10,000.

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TFSA vs. RRSP vs. Cash, which is BEST? PDF Print E-mail
Written by Kalson Jang   
Monday, 28 June 2010 22:06

One of the things that make Canada so great is that the government actively tries to encourage people to invest their money.  Even better is the fact that Canada has one of the strongest economies in the world, with a very solid banking system, sound fiscal policy and something that other countries want, namely commodities (such as Oil).  In fact, Canada is ranked 2nd in the world ranking of Oil Reserves with only Saudi Arabia having more; this puts Canada ahead of countries like Iran, Iraq, Kuwait and the United Arab Emirates who everyone thinks of when they think of “Oil”.  Since this world depends very heavily on oil, you can see why this is such a great benefit to the Canadian economy.  If you are curious as to why the Canadian dollar is so high right now relative to the US Dollar and the Euro, those are big reasons why.

Since the Canadian Government wants to help you invest your money and is willing to offer you tax-incentives to help you do so, why don’t we compare the options you have to see what fits your needs the best?

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How Currency Affects Your Investments PDF Print E-mail
Written by Kalson Jang   
Monday, 05 July 2010 23:14

Seeing as we just celebrated Canada’s day, I thought it would be fitting to talk about one of the main things that make investing in Canada so great right now.

Over the past year or so, the Canadian Dollar has seen a large increase in value relative to the world’s major currencies:
- On December 30, 2008, it cost $1.73 CAD to buy 1 Euro.
- On June 10, 2010 (exactly 1.5 years later) it only cost $1.25 to buy 1 Euro.
In other words, the Euro dropped 28% during that time which is a dramatic drop.

- On March 9, 2009, it cost $1.30 CAD to buy $1 USD.
- Just over a year later in April 2010, the Canadian Dollar was at PAR with the U.S. Dollar.
In other words, the USD dropped 23% during that time.

If you had made investments during those times and bought shares in Euro’s or USD’s, your investments would have also dropped by the same percentage even if the share price itself was unchanged.  That is why it’s important to know if your investments outside of Canada are “hedged” to protect you against dramatic drops in currency values.

Many mutual funds hedge themselves to make themselves “currency neutral” so that their funds will not be affected by swings in currency values.  For example, if a fund manager is interested in a U.S. Dollar stock like Apple, but is afraid that the U.S. dollar will drop, they can protect themselves by owning options, futures or contracts that would go up in value if the U.S. dollar went down.

So the next time you are thinking about making an investment in a foreign currency, please keep in mind the additional risks in doing so and talk to me about how you can help mitigate some of those risks!

Kalson Jang

416-775-8777
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www.dynamicwealth.ca

 
Investing Early = HUGE Gains PDF Print E-mail
Written by Kalson Jang   
Monday, 14 June 2010 21:22

When it comes to budgeting, it’s always natural to want to spend the money you make and then put the left-over money aside into investments and retirement plans.  No matter what your goals are, the benefits of investing early are huge; unfortunately, investing is something many people procrastinate on.

Consider the following 3 examples; in the examples, we will assume that the annual rate of return on the investments is 8%:

Example 1 – The Diligent Investor:
A young professional at the age of 25 is interested in investing some money and is able to invest $500/month.  They do this for 30-years (until age 55) and invest a total of $180,000.

After 30-years, the Diligent Investor’s investment account would be worth $750,148!
A profit of $570,148 or 317%!!!

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