SPRING 2 0 1 8
SMART-RISK INVESTING
THE “SMART RISK INVESTING” METHOD IS DESIGNED
TO PROVIDE A CLEAR INVESTMENT ROADMAP USING
A SOUND, DYNAMIC AND SYSTEMATIC APPROACH.
FOR MANY people, the
idea of retirement can be
a scary proposition. Not
only could you be leaving
behind a career you
love, but also the daily
comradery and familiar
routine you may have
shared with others for
decades.
The thought of retirement
can also evoke serious
concerns related to
your financial situation.
Questions like the
following are quite
common:
• Will I have enough
income in retirement
to live the lifestyle
I’m used to?
• Will I outlive
my savings
and retirement
investments?
• Should I consider
cashing out of my
home?
The low rate of return
on interest-bearing
investments – such as
cash and government
bonds – has made it
difficult for people to
live off of savings or
guaranteed income
streams. Also
complicating the picture
are the runaway increases
in Canadian health
care costs, which have
increased by almost 70
percent during the last
two decades, according
to data from The Fraser
Institute, Comparing
Performance of Universal
Health Care Countries,
2017. 1 Yet the volatility
of the stock market and
other risky investments
– which can produce
higher returns under the
right conditions – have
many people leery of
jeopardizing their money
this way.
In my own wealth
management practice,
I’ve seen people nearing
retirement age fall into
many familiar traps,
such as hanging on to
losing stocks for too long,
chasing high-flying stocks
to unreasonable prices,
and maintaining too
many separate investment
accounts at different
institutions. Many of
these decisions are often
heavily based on emotion,
rat her than sound reason.
1
My own approach to
portfolio management was
shaped by my experience
working on Wall Street
at major investment
firms in the early 2000s
where I learned to build
investment portfolios
designed to provide
regular, pension-like
income for many of our
wealthy New York clients.
Years later, I introduced
Canadian clients to a
new way of investing
– the “Smart Risk
Investing” method is
designed to provide a
clear investment roadmap
using a sound, dynamic
and systematic approach.
Smart Risk Investing
involves 1) gathering
information about
various investments; 2)
weighing the likelihood
– or probability – of each
outcome; 3) comparing
these outcomes with
your tolerance for each;
and 4) taking step-by-
29
step actions to increase
your chances of reaching
your financial goals. In
short, it helps you make
reasonable decisions that
stack the odds of success
in your favour over the
long term.
As leader of the “Smart
Risk Revolution,” I
hope to inspire thought-
provoking conversations
about a new way to
think about risk. Many
of the old “gut-based”
methods of investing have
become outmoded as new
technologies and data
transparency have become
more prevalent in recent
years. This allows us to
better balance the use of
technology and human
expertise to broadly
diversify across global
investments using an
evidence-based approach
that tilts portfolios
towards sources of
higher expected returns,
ultimately leading to
well-diversified and cost
effective portfolios.
Be sure you understand
all aspects of your
portfolio and overall
financial strategy, and if
you have questions, try
to clarify things with
a qualified investment
advisor.
Maili Wong is a best-selling author, a leading Canadian
investment advisor and licensed portfolio manager whose
fresh, modern approach to investing for her high-net-
worth clients sets her apart from others in her field. Her
first book Smart Risk shares her personal story of resilience
as well as lessons learned and secrets gleaned from more
than 17 years of international investing experience.
. https://www.fraserinstitute.org/studies/health-care