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high net worth investing

Som Seif, seen in 2009.The Globe and Mail

Som Seif opened his first brokerage account while studying engineering at the University of Toronto in the late nineties, feeling pretty confident he could make some fast money from a few stock tips. Despite some hefty losses, he kept on trading during his first job as an investment banker at RBC Dominion Securities, at the height of the dot-com boom. After losing roughly $45,000 in one year – the equivalent of his base salary at the time – Mr. Seif realized stock picking wasn't going to be his path to wealth. Instead, at the age of 28, he founded Claymore Investments Inc., offering exchange-traded funds (ETFs), a relatively new concept for Canadians at the time. He sold Claymore to BlackRock Inc. in 2012 and a year later started another ETF-focused firm, Purpose Investments Inc. Mr. Seif, 39, spoke to The Globe and Mail recently about his investment strategy, and why he sees short-term stock picking as gambling.

What was your first investment?

I was working a summer job as a student and took $1,000 and invested it in [household-appliance maker] Singer. I don't know why I bought that one. It must have been something I heard or read saying it would be a good buy. The stock dropped 60 per cent that summer. After that, in my first job in investing banking at RBC, I was doing some day trading and lost money on a few bad calls. It was a wake-up call. I stopped buying single stocks and thinking I could time the market. I started to think through the concept of investing by building a portfolio through compound growth.

What was the influence behind your first company, Claymore?

In the summer of 2004 I read a journal article by Rob Arnott about the concept of fundamental indexing. I was an engineer by background and I liked technical things. I found it fascinating. I ultimately built my first company, Claymore, off of the fundamental research that was in that article. It was all about the concept of buying markets, but using what I would call a more fundamental way to select and weight companies, as opposed to just buying the market cap index. I didn't do everything based on it, but it laid the foundation of that missing piece, in my mind, as to how do you create low-cost product.

What's in your portfolio today?

About half is public, more liquid investments and the rest is private companies. The majority of my liquid portfolio today is Purpose ETFs. I do have some single stocks. For instance, I still have my RBC position from when I worked there starting in 1999. I also have companies like Facebook, Suncor and Brookfield Asset Management. I also have private investments, in my own company, of course, and in some other companies that I'm engaged with, such as Gibraltar & Co., a private investment management firm; a sandal company called Tkees; and my cousin's company, The Tea Emporium, plus a few others.

Do you invest yourself or have advisers?

A bit of both. I have two advisers I work with. I believe in the value of advice – not that they're telling me what Purpose stocks to buy, but the general feeling when something is going on, what I need to think about, for long-term planning. I also have accounts at a discount brokerage and with Wealthsimple.

What has been your worst investing move to date?

Trying to day trade during the tech bubble in 1999 and 2000. I lost about $45,000 in my first year, which was about equal to my taxable income at the time. It was awful in terms of the gut-wrenching experience of what I was doing, and the fact that the performance was so bad. At the same time, it was amazing because I learned my lesson at 23 years old. It taught me that's not what I'm going to do.

How about the best one?

Investing in myself and my companies, Claymore and Purpose, no question.

What advice you do have for others?

You don't make money in the markets. You make money investing in yourself: your education, your career. The best way to enhance your wealth is through greater income over time. The markets augment what you save.

This interview has been edited and condensed. For this series, a high-net-worth investor has investable assets of more than $750,000.