At Destiny Capital we rely both on our own portfolio design and also on external third-party asset managers when it makes sense for our clients. The Destiny Digital platform leverages the expertise of Marstone both for the technology that powers Destiny Digital as well as their investment expertise for assets managed on the platform. Marstone's investment philosophy and algorithms for portfolio construction are based on the latest advances in behavioral economics and modern portfolio theory. Within the Destiny Digital platform, clients have the ability to create investment portfolios based on a personal risk assessment questionnaire, or pick a predefined portfolio. The underlying investment philosophy is to create the highest expected risk-adjusted returns by maximally diversifying client portfolios. These portfolios are constructed to hold allocations of strategic and globally-diversified asset mixes, and are composed of liquid and low-cost investment products—index tracking Exchange Traded Funds (ETFs) and Money Market Funds.
How much do I need to invest?
The minimum investment is $5,000 for both retail and retirement accounts. There is a daily $10,000 transfer limit for retail accounts and an annual $5,500 maximum contribution for retirement accounts.
What is an ETF?
In its simplest form, an exchange traded fund, or ETF, is a basket of stocks that has been built to mimic an index. When people say “the stock market was up 1% today,” they are saying that a certain stock market index was up 1%, and the ETF that tracks this index should be up about 1% as well. These passive ETFs are managed by companies like Vanguard who charge a small fee for keeping the ETF as close to the index as possible. Because of their size (Vanguard manages ~$2.4 trillion), they are able to buy & sell the underlying securities much more efficiently than most investors.
But an ETF doesn’t necessarily have to hold stocks, there are now ETFs for just about everything, including: bonds, commodities, master limited partnerships or real estate investment trusts. The big takeaway is that an ETF is a cheap way to invest in a broad range of securities so that you don’t have to purchase a huge number of securities to ensure your portfolio is well-diversified, potentially saving you tons of time, effort and money.
Other benefits of ETFs include:
- Tradability: ETFs are traded as a stock, so you are able to buy or sell any time the markets are open.
- Transparency: ETFs publish their holdings daily so you always know what you own
- Tax efficiency: because ETFs have very little active trading, you only have a tax bill when you ultimately sell your shares (and when you receive dividends), which can be different than some mutual funds
- Costs: because of the passive nature of the investment, costs are extremely low
- Because the investor is deciding when to buy and sell, investment performance can be negatively impacted when emotions run high
- Unlike a mutual fund, and because the ETFs trade throughout the day, there could potentially be a disconnect between the underlying asset value of the ETF and its quoted price. This is often miniscule as any small deviation is usually quickly closed by market participants
- For smaller or less-established ETFs, there is not a lot of trading so market participants require a higher than normal "spread" to buy or sell the ETF
Why wouldn't I just go buy the Destiny Digital recommended ETFs directly?
You absolutely could go through our risk tolerance questionnaire and then buy the same ETFs from a different, transaction-based brokerage firm. One of the primary benefits of having a Destiny Digital account, however, is knowing that we are continuously monitoring your portfolios to ensure that allocations remain within your calculated risk tolerance. Also, we charge less than you would normally expect to pay for this level of support and services. We think these low fees are less than the value we provide. There are no transaction charges. Destiny Digital and Marstone’s investment committee regularly scour the market, looking for more cost-efficient ETFs to give you consistent broad-market exposure.
Will my Destiny Digital portfolio beat the market?
Destiny Digital's portfolios are designed to achieve long-term growth in line with the user's ability & willingness to take risk. Marstone has designed these portfolios to benefit from diversification across geographies (US, International and Emerging Markets) and asset classes (stocks, bonds, commodities, and real estate), so we don't think trying to "beat" the returns to the US Stock Market is the appropriate comparison. What our portfolios offer, however, is strong diversification coupled with automated rebalancing to ensure your portfolio is always aligned with your risk tolerance. We look to consistently grow your portfolio while not deviating from your long-term risk profile.
How do you calculate the return displayed on my dashboard page?
Returns on your dashboard have been calculated by a third-party with over 15 years of performance reporting experience. They calculate the performance on your account based on a time-weighted return calculation, meaning that the performance number presented is not impacted by the timing of any contributions or withdrawals from your account.
What does rebalancing mean and does it lower my risk?
Rebalancing is a very important aspect of investing, but is often overlooked. If after taking our risk tolerance questionnaire you are gauged to have a moderate risk tolerance, we will create a portfolio that is pretty evenly split between stocks and bonds. Over time, the stocks will likely perform better than the bonds, increasing their weight in the portfolio. When this happens, the portfolio’s risk profile changes from your initial allocation and is not likely to match your risk profile. We monitor this situation and make the necessary trades to keep the portfolio in alignment. Our rebalancing studies suggest rebalancing helps with performance as well. Specifically, because you have a diversified portfolio, the performance of the underlying securities will be different. When you rebalance, you are effectively living the old maxim “buy low, sell high” which we think will help performance over time.