5 SIMPLE RULES OF SMART INVESTING

@getwealthsimple @mkatchen

Wealthsimple is Canada’s fastest growing online investment manager. We make smart investing

easy, low-cost, and transparent.

- Burton Malkiel, author

“Focus on what you can control and think long term.”

Rule #1: Start early

Albert Einstein called compounding "mankind's greatest discovery”

3 friends (ages 30, 35, 40) start investing $5,000 per year until they are 65. By that time, they will have invested:

$125,000

$150,000

$175,000

40 35 30

$399,772

$935,511

30

Age

6535

Impact of start date on wealth*

40

$616,729

*Assumes $5,000 annual contribution, 8% annual returns.

10 years can add $0.5MM+ to your long term savings

Rule #2: Don’t pick stocks

Over 80% of professional stock pickers fail to beat the market

Source: Vanguard calculations using data from Morningstar. Fund classifications and benchmarks provided by Morningstar.

CN Equity

Int’l Equity

US Equity

CN Bonds

Percent of funds that under perform

0 10050

72

81

86

98

Personal anecdote: winning a stock picking contest at age 12…

… my winning pick lost 95% of its value between 1999 - 2001

Contest close 12/06/1999

MGI Software closing stock price

Acquisition 12/04/2001

$24.40

$1.18

Source: CBC acquisition announcement, Canada Trust Investment Challenge contest details

Rule #3: Keep costs low

Canadians pay the highest investment fees of any developed country in the world

Average equity mutual fund fees by country (%)

2.42

0.82

Can

ada

US

A

Chi

na

Ind

ia

Italy

Be

lgiu

m

Sp

ain

No

rway

Ko

rea

Fra

nce

Tha

iland

Taiw

an

Sin

gap

ore UK

Ne

w Z

eal

and

Jap

an

Ge

rman

y

De

nmar

k

So

uth

Afr

ica

Sw

ed

en

Ne

the

rland

s

Sw

itze

rland

Aus

tral

ia

*Morningstar Global Fund Investor Experience Report, 2013

Would you pay $300K for financial advice?

$509,858

$800,594

0

Years

3015

1.6% in additional fees can destroy 36% of your long-term wealth

Growth at 2.42% fees Growth at 0.8% fees

* Average Canadian equity mutual fund charges 2.42% vs USA average fee of 0.8% ** Assumes $100,000 initial deposit, 8% annual returns

Rule #4: Diversify

Harry Markowitz won a Nobel Prize for discovering that diversification reduces risk without hurting returns

Asset classes don’t always move in the same direction

Source: Morningstar, annual performance by asset class

2 assets 6 assets 10 assets

Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014

Here’s how it works

Impact of diversification on risk and return

2 assets 6 assets 10 assets

Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014

Here’s how it works

Impact of diversification on risk and return

2.26% 5.49% 9.72%Returns

2 assets 6 assets 10 assets

Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014

Here’s how it works

Impact of diversification on risk and return

2.26% 5.49% 9.72%Returns

13.3% 8.49% 10.17%Risk

2 assets 6 assets 10 assets

Source: Bloomberg as of 3/31/14, 10 years from January 2004 - February 2014

Here’s how it works

Impact of diversification on risk and return

2.26% 5.49% 9.72%Returns

13.3% 8.49% 10.17%Risk

0.17 0.65 0.96Ratio

Rule #5: Drown out the noise

Have the discipline to stick to your plan

Market returnsEquity fund flows

2002 2008 2013

In 2009, $150B flowed out of equity funds even as markets came roaring back

Notes: Cash flows represent net cash moving in or out of stock funds. Market returns are based on the S&P/TSX Composite Index. Sources: Morningstar for cash-flow data; Thomson Reuters Datastream for market returns.

Know your risk profile

Risk survey Risk discussion

• Online survey • Ability & willingness

to take risk

• Meet with an investment advisor

• Investment goals

Recap

Rule #1: Start early

Rule #5: Drown out the noise

Rule #2: Don’t pick stocks Rule #3: Keep costs low

Rule #4: Diversify

Questions?

HOW WE DO IT

We assess your risk profile and investment goals to help you create and stick to a long-term investment plan

Risk survey Suitability call

• Online survey • Ability & willingness

to take risk

• Phone call with your Wealth Concierge

• Investment goals

We build you a fully-diversified portfolio across 8-10 asset classes, customized for your risk tolerance

We monitor your portfolio every day and automatically rebalance it to keep you on track

Exp

ect

ed

re

turn

Risk

Your asset allocation will drift from its target as markets move

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$25 “harvestable” tax-loss benefit per share.

$75

Aug Sept Oct

$100

Tax-loss harvesting example*

* Illustrative example

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• Head of Ancestry Canada • Marketing and Product, 1000memories • McKinsey & Co. financial services • “Mover of the Month” by Financial Post

Michael Katchen, CEO

• Co-founder, 1000memories, YC alumni • Director of Product, Ancestry, Stripe • McKinsey & Co. financial services • Rhodes Scholar

Brett Huneycutt, COO

Team

• Co-founder, 1000memories, YC alumni • Wieden+Kennedy creative • Launched award winning campaigns for

Apple, Levi’s, Focus Features

Rudy Adler, Designer

• Engineer, 1000memories, Ancestry • Mobile developer at AOI Pro in Tokyo • Computer Science at Colby College

Peter Graham, Engineer

• Director or Marketing, Conversion Media, Powered by Search

• Founder, Marketers without Borders, Marketers Unbound

Alex Rascanu, Marketing Director

• Hacker School and HackLab.TO • Ladies Learning Code • Engineer, Virgin mobile, Konrad Group

Kate Murphy, Engineer

• Investment Advisor, RBC DS, shared $300MM book

• Canadian Investment Manager (CIM) • President of Student Council, Huron

Dave Nugent, CIO & CCO

• Founder, Genius Scan, mobile scanning app with 15MM downloads and 2MM MAUs

• Engineer, 1000memories, Ancestry, Amazon • MS in Computer Science

Bruno Virlet, CTO (pending)

• Sales assistant at Raymond James • Business Marketing at George Brown • Canadian Securities Course Candidate

Kayla Wilson, Associate Wealth Concierge

• First designer, Wattpad • Lead designer, Wave Accounting

Huda Idress, UX Designer

Advisors

• Former CEO, Assante Wealth Management • “Person of Influence of the Decade”

Joe Canavan, Advisor

• Head of Value Investing at Rotman • Author of 13 books on investment finance • Founder of the Easy Chair Portfolio

Professor Eric Kirzner, Investment Committee

• Former Dean, Rotman Business School • Former co-head of Monitor Company

Roger Martin, Advisor

• CEO, Ceridian HCM • Founder of Dayforce and Workbrain • EY Entrepreneur of the Year, Top 40 under 40

David Ossip, Advisor

• SVP at Salesforce.com • Co-Founder, Rypple (acquired in 2012)

Dan Debow, AdvisorChristian Lassonde, Adivsor

• Managing Partner, Impression Ventures • Managing Director, Next36 Ventures

• Managing Partner, Impression Ventures • Former Managing Partner, Bryker Capital

Bryan Kerdman, Advisor Andrew D’souza, Advisor

• President, Bionym • Former COO, Top Hat & Top Prospect

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Disclosures

Wealthsimple Financial Inc. is registered as a Portfolio Manager in Ontario, British Columbia, Quebec, Manitoba, and Alberta. Securities in your account are protected up to $1,000,000 CDN. See www.cipf.ca for more details.

Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in loss. We do not provide financial planning services to individual investors. Read our Full Disclosure at wealthsimple.com/legal/.disclosure.

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