Stephanie O’Mahoney, Portfolio Manager at Wealthsimple, on why you should start investing today.

I met Stephanie O’Mahoney a year ago at a conference for female business owners, where she led a session on the importance of looking after your own personal finances and why you should start investing ASAP. I took away so much from her session and I was so thrilled when she agreed to sit down for an interview to talk about why it’s so important for women to start investing NOW.

Stephanie spent time as an Investment Advisor at RBC before joining Wealthsimple, one of Canada’s fastest growing companies in the fintech space, as a Portfolio Manager. 

“Finance is for everybody. Everybody needs to think about their personal finances, regardless of what field you’re in. As much as money is not happiness and it is not everything, it does open up a lot of doors and allows you to live the life you want. Being  a resource to help people achieve financial freedom and think differently about their money has always been really appealing for me.”

Why do you think thinking about investing or having a financial plan is important?
“Money is the leading cause of stress, and I see this everyday with our clients. Having a roadmap enables you to plan for the future. It’s kind of a key to freedom, in my opinion. People think about money as being really restrictive, and being on a budget means thinking about all the things you can’t do. But a better way to think about it is – what kind of doors can my finances open for me? Could I make a year of sabbatical happen? Retire early? Freely enjoy dinner with friends without worrying about my goals? You decide what you really care about and constructing a financial plan helps you achieve and attain those goals.” 

Why do you think it’s particularly important for women to think about investing?
“I’ve noticed that women are really great savers, but studies show we’re not great at investing what we save. So we’re creating this wealth gap between us and our male counterparts in the long run. Investments allow your money to work for you passively, which means that it is working without you needing to intervene. There’s a saying that compound interest is the 8th wonder of the world, and it’s capitalizing on tools like this that will help women close the wealth gap. This is especially important when we acknowledge that we already make only $0.87 to every dollar a man makes, so our dollars better be working as hard as possible!”

What are the biggest perceived barriers women have before investing?
“I think women have been traditionally put off investing because we don’t think we know enough to do it well. Studies show that we are less confident in our investment knowledge than men are, and I think a big part of that is the difference between how men and women have traditionally approached money. Men bond over discussing stocks and tend to dominate the financial industry, and women are taught that it’s impolite to talk about salaries or how much is in our portfolio. I’ve noticed an uptick in my friends discussing investments and strategies and it is so exciting to see these barriers being broken down. 

With investing, it’s such a broad area and it can be quite intimidating. There is no one perfect way to invest or one size fits all approach, or everyone would be doing it. Seek resources that speak your language and you can relate to, and embrace that it is an ongoing education. There are some fundamental concepts that can really put you ahead of the curve, and we broke it down in a super easy to watch 45 minute video here. Becoming a stock market genius isn’t the only way to grow your wealth – even the pros get it wrong most of the time; explore your options and try different approaches.”

What’s the one piece of advice you’d want to leave us with?
“Just start now! No other decision you make is going to be more powerful than that. People do a lot of research like what asset class, what firm to do it with, etc. The impact those decisions will make on your performance is nowhere close to just simply doing it for longer. Compound interest and compound returns – you can’t replicate that.”

What are the considerations between choosing a Wealthsimple vs. a traditional advisor?
“I love this question because I’ve been on both sides. I was given amazing opportunities and grew a lot in the traditional advisory business but felt that Wealthsimple was more in line with my career aspiration of bringing financial freedom to all Canadians. Ultimately, everyone needs something different, and like I said, there is no ‘right’ way to do this. We wrote an article on how to choose a financial advisor, and it’s worth a read if this is a question on your mind. If your situation is extremely complex and you prefer to do things in person, a financial advisor might be a good option. 

However, most Canadians’ needs are pretty straightforward and they just need someone they can call when questions come up or to have a sounding board. At Wealthsimple, you still have advisors available to you regardless of how much you have invested with us – going with an online solution doesn’t always mean you give up human interaction. 

The fee for a traditional advisor is between 1-2% per year, while the fee for Wealthsimple is 0.5% (0.4% over $100k of investments). The mutual fund fees in Canada are also some of the highest in the world at 2.35% on average compared to 0.82% in the US. The difference doesn’t sound like a lot but over time, similar to compound interest, it will add up. I have always told my clients to figure out the dollar amount that you’re paying and ask yourself if you are happy with what you got for that amount. If you’re not sure what your fees or performance is – ask! You’re your own best advocate.”

Stephanie and the Wealthsimple team were kind enough to provide our community with a code that allows users to have the first $10,000 invested with no fees for one year. You can access it here.

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