We enlisted an alt-rock icon to help you decide. ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ Why we like alternative investments for some clients Hi there, My name is Scheherazade, and I’m a Senior Advisor at Wealthsimple. Each month, the advisor team sends an email to clients on topics that we think are relevant. We hope you’ll learn something new from them. If you have other things you’re interested in hearing about, please let us know in the feedback form at the bottom of this email. Thank you for reading. More than that, thank you for investing with us. All the best, Scheherazade We talk a lot about alternative investments (we even got an iconic Canadian alt rocker talking about them — see below) because, for the right clients, we believe they can make a meaningful impact on long-term wealth. Of course, alternative assets are not for everyone. Here’s a brief quiz to help you decide if the alternative life could be right for you. Quiz: Are You Ready for Alts? 1. Do you think you’ll need access to a significant portion of your assets in the next three to five years? If the answer is yes, alts are probably not right for you. Alternative investments tend to have longer investment cycles than many assets. Returns don’t materialize overnight, so you need to have the time to wait for them to fully mature. Plus, you can’t liquidate your holdings in a moment’s notice the way you can with some other investments. There are limited withdrawal opportunities that require advance notice. If the answer is no, you might be ready for alts. 2. Are you comfortable with risk? If the answer is yes, you may be ready for alts. Alternative investments like private equity tend to come with higher risk, but that higher risk can also come with a higher reward. If the answer is no, it could go either way. Private credit is less risky than stocks but has produced similar returns — 8.8% a year over the last 15 years. How much of your portfolio you may want to dedicate to alternatives depends on the risk you’re comfortable with. Conservative investors might want smaller allocations (or none at all) compared to someone invested in a growth portfolio. 3. Are you interested in more diversification? Trick question! For one thing, everybody should have a diversified portfolio. It’s how you limit the bad times. But also, different alternative investments provide different levels of diversification. Private equity offers limited diversification because its risks are similar to that of public equities. Private credit, however, provides medium-to-high diversification and tends to respond well to periods of rising interest rates (since payments are based on floating-rate loans). 4. Are you ok with some tax gymnastics? If the answer is yes, you may be ready for alternative investments. Private credit’s returns come predominantly from interest income, which is taxed at a higher rate than typical capital gains, making them tax inefficient. (That makes private credit an excellent option to hold in a registered account.) Private equity returns are expected to come mostly in the form of capital gains, which are taxed more efficiently. They’re more suitable to hold in a non-registered account, but it’s still typically best to stick to registered accounts. If the answer is no, you still may be ready for alts, but you’re probably going to want our advisors to guide you on the tax part. For years, pension funds and other institutional investors have benefited from alternative investments. We think more investors deserve the same investment access. That’s why we created our own institutional-grade fund — without the institutional-grade minimum investment. At $10,000, our minimum allows a broader range of investors to benefit from the potential returns and diversification alternative assets offer. You do have to have at least $100,000 in assets with Wealthsimple to qualify; for many clients, that can be achieved by consolidating your retirement accounts with us. If you’re interested in investing in alternatives, head to the app to apply for an account. We’ll walk you through the requirements, then work one-on-one to confirm your eligibility and the maximum allocation we recommend based on your unique circumstances. And if you’re not interested, we hope you’ll enjoy the video below anyway. There’s a cute dog, if nothing else. Apply for Private Credit Apply for Private Equity Scheherazade Hasan Senior Advisor, Digital Advice Alt Rocker Bif Naked on Alternative Investments What’s so great about alternative investments? If you love advanced investing and the 90s, we have a treat for you: alt rocker and Canadian icon Bif Naked (and her dog) will teach you what alternative investments are, what kind of returns they offer, and how to figure out if they belong in your portfolio. Learn from Bif What’s the difference between Private Credit and Private Equity? Click the link below to go in-depth on what alts are and what to expect from a few of the more popular options. There’s even a chart, in case you don’t feel like doing all that reading. Learn more Your opinion matters We’ve been sending more of these letters lately, and we’d love your feedback. Yes, useful Could be better Not for me Wealthsimple, 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 Refer a Friend Privacy Policy Unsubscribe Replies to this email address are not monitored. Have questions? Visit our Help Centre or submit a request to our Client Support team. Managed accounts are offered by Wealthsimple Inc., a registered portfolio manager in each province and territory of Canada. Self-directed investing is offered by Wealthsimple Investments Inc. (WSII). WSII is a member of the Canadian Investment Regulatory Organization (CIRO). Customer accounts held at WSII are protected by Canadian Investor Protection Fund (CIPF) within specified limits in the event WSII becomes insolvent. A brochure describing the nature and limits of coverage is available upon request or at CIPF. © 2024 Wealthsimple Technologies Inc.