NestWealth.com - Simple Low Cost Diversified Investing for Papasan Pickles

Randy Cass - Honorary Papasan Pickle and CEO of Nest Wealth
3 great reasons you should invest with Nest Wealth - the one-stop, all-in-one place for low-cost, diversified investments and effective returns based on Nobel prize winning investing strategies:

Reason 1. You are less motivated than a Couch Potato (i.e., you are a Papasan Pickle, meaning you want low fees but will not expend the calories to buy a handful of ETFs and balance them once in a while).  After all you are likely curled up in a papasan chair now reading this on a tablet, as opposed to doing something active.  Just an observation ... we are not judging.

Reason 2. You have a good job allowing you to pay a few dollars in fees for the great value and service Nestwealth.com provides.  Or you have an OK job and a good hobby (e.g., chair testing at Ikea, carving walking sticks, collecting steam-punk pickles  ...meaning you have no time for investing).
Yes, steam-punk pickles exist!

Reason 3. You think that if you invest enough, Randy Cass the CEO of Nest Wealth will give you BNN Anchor Catherine Murray's phone number and you'll hook up.  Sweet mother of relish!

But seriously.

What Does Nest Wealth Do?
  • Offers a managed portfolio for only $80 / month ($40 if you are under 40 years old).
  • Creates a customized portfolio based on your "current financial situation, goals and risk tolerance".
  • Invests in low-cost ETFs (average fee of index tracking ETF in a Nest Wealth account  is 0.18% - 90% less than the average equity mutual fund in Canada (2.42%)).
  • Builds your portfolio using Nobel Prize-Winning Theories 
  • Rebalances your portfolio yearly to align with your plan, or changing circumstances.
How?
Nest Wealth uses the principles of David Swensen, head of the Yale Endowment Fund, noted as "one of the most recognized professionals in the investment industry" and the same approaches that large institutions use:
  1. Diversified holdings across 6 core asset classes (domestic equities, emerging market equities, international equities, government fixed income, real-return bonds and real estate).
  2. Regular rebalancing.
  3. In absence of a 'confident market beating strategy', use of low-cost index funds.
Our thoughts: with the use of index funds, a NestWealth.com portfolio is 'managed' at a high level, not managed in the conventional, down-in-the-weeds, individual stock-picking sense.  But that is the secret to low fees and returns that are better over the long term than high fee managed funds. Who are you to argue with that? Markowitz and Sharpe have the Nobel Prize in Economics to prove it - you have a jar of steam-punk pickles.  NestWealth.com states the low equity index ETF fee .. what about the average ETF fees?

How do the costs compare to other all-in-1 investment solutions: since fees are fixed per month on top of the underlying fund fees and yearly rebalancing trade fees it is not as easy to calculate as Wealthsimple.com's all-in costs.  We've assumed rebalancing fees and have not included currency conversion costs, nonetheless below is a Wealthsimple Nest Wealth comparison.  Top table is $80 per month Nest Wealth Fee (i.e., you are over 40 and listened to a lot of Rush). Bottom table is for the discount $40 per month fee (i.e., you are under 40 and listened to a lot of Billy Talent):


(notes this is an updated comparison table -  the original post did not multiply the Nest Wealth management fee by 12 for each month so fees are not as favourable in the update - so yes, fees are important!)

Nest Wealth comes out ahead for the young high rollers with $250 k + or older folk with $1M+ - overall fees are pretty close for under 40's in the $100k to $250k+ range or for over 40's between $250k and $1M.  Unless you are over 40 with less than $50k (meaning you may be working through retirement anyway) either investment is beating out mutual funds on fees and for higher amounts, they are competitive with ETF wraps and robo funds in terms of time and effort.

Either of these options beats the 1.07% fee of a Tangerine on-fund solution and hands down spanks the 2.0-2.8% fees on our old Investors Group funds - IG even charged 0.18% to rebalance the portfolio of expensive underlying funds.  This blog is really a diary of ideas on our journey away from IG.

A key factor here is "Simple".  Both investments give you a one stop shop and simple management. As our family is now settling a parent estate, there are some key lessons to be learned about simplifying accounts for the purpose of estate administration, or even before that as it relates to tax filing.

Post post:

If you've read our other posts you know investing101.ca favours laddered GICs to bond funds, so if you select a higher risk/growth portfolio with Nest Wealth or Wealthsimple, with a low mix of bloated bond ETF fees that's great.  You should be able to cover this plain vanilla, low risk part of you portfolio at no cost (except your time).

We also have a 'confident market beating strategy' for the spicy, kim-chi part of our portfolio that we trust in the hands of Donville Kent Asset Management - that is something you high rollers could consider while you let an all-on-one strategy take care of the middle ground in your portfolio.

Lastly, if you have options to get exposure to private equity in your pursuit of low-fee diversified investments, e.g., through OMERS AVC contributions, consider that to lessen public equity exposure.  Nest Wealth says they do what large institutions do to invest, but the largest pension funds hold private equity - Nest Wealth can put a real estate ETF into your portfolio, but OMERS will put own Oxford Properties with no market ups and downs.  The OMERS AVC management fee is in the 0.5% range which is competitive with the all-in-one fees and could offer less volatility for those with a shorter investment time horizon.