As I meet people on a regular basis I am amazed at how few of them understand the basics of investing. This isn't a good thing for them. They will be pulled in many directions over time by the latest financial columnist, the latest hot fund or sector, and often, over time, they wiill be disappointed.

People would have more peace of mind and do better if they ignored 95% of what they hear, see, or read.

Before investing

Just like all athletes must master the fundamentals of their sport it is no different for Investor’s. Learn the fundamentals of investing and you will sleep better and be better off financially.

Our philosophy of investing when working with clients is to help them take a very long term view, help them build a broadly diversified portfolio to reduce risk. Our goal is too reduce emotion and often to save an investor from themselves.

Below we highlight some basics things investors should know. We believe an educated investor is more successful financially and worries less about their money.

Investing Basics 101

Do You Pay Yourself First?

Most people attempt to invest what little is left over at the end of the month after they have paid the mortgage, the car loan, the credit card bills, the grocer etc. This type of person invariably pays interest, to others, and will have very little money accumulated.

To be successful, to earn interest versus always pay it, your first payment every month must be a cheque to you.

Does your Heart Have More Say than Your Head when Investing?

Read more here

Investor Know Thyself

Are you a Speculator? Aggressive, somewhere in between, or Conservative? In my many years of working with Canadians I have noticed many people hold investments that are opposite to the type of investor they are.

Conservative investors hold investments that are aggressive in nature and in risk and vice versa. This is not good. This causes anxiety, stress, and more. Stop and think about this, is this you too?

In my practice the first thing I do is measure the investor profile or risk tolerance for my client. Once this is done now we can turn to investments that match up to his/her risk tolerance.

Because we take a long term view to investing and make few changes along the way it is important to match up a portfolio to the risk level of an investor and their need for long term investment return.

Why not measure your profile now?

Minimizing Investment Risk

Did the falling markets of 2008 get you down?

No doubt you and all investor’s were damaged by the economic dowturn in 2008. It was not uncommon to see portfolio’s shrink by 35% or more.

In trying to learn from the situation and to assist my clients going forward I became even more focused upon my investment philosphy.

I continue to believe that the most reliable approach to investing is:

1. Stay Invested for growth
2. Diversify broadly across asset classes for both growth and capital preservation
3. Maximize the benefits of compound growth through tax-efficient investing
4. Regularly rebalance to your proper asset class ratios for your level of risk

Broad diversification with annual rebalancing remains the best equity strategy I know to pursue your long-term financial goals. It is the antidote to panic in falling markets.

Correlation Matters

In my research I came across a great article that made a lot of sense to me. I think in the late 90′s we all became greedy and invested offensively. This article focused on correlation. Why you need to understand correlation?

Now that you have an understanding of the basics, the next step is to formulate an investment plan. That is where we can help. Call or email us for your introductory meeting, mention investment plan