With more and more people working remotely, staying at home and having a little more time to think about their money while watching the media focus on markets climbing up and up, there has been a considerable rise in individuals considering some self-directed investing. Now, what do I mean by self-directed investing? I mean, they’re doin’ it themselves. They’re choosing to create portfolios, buying and selling stocks, bonds, ETFs or mutual funds, and getting into trends and opportunities where available.

Mastering Your Money

While this is certainly not an uncommon practice amongst those individuals who are inclined to their own portfolio management, it’s becoming a “hobby” for so many more in COVID. In fact, as an independent insurance and investment advisor, I don’t discourage the practice. I’m always overjoyed when clients or non-client individuals take charge and empower themselves to learn more and become more involved in their money.

I just encourage people to not jump in blindly, and be cautious to only invest what you’re willing to lose until you understand more. You may hear stories of a stock gaining 400%, but that’s for the person who may have bought it low 8 months ago and likely researched that stock for months prior. It’s not always that easy to find the hot stocks, known when to get in and when to get out, and guarantee a phenomenal return – even for the most experienced investors. There’s a lot of work and a bit of luck.

But to get you started, here are some of my basic tips if YOU’RE thinking about managing some or all of your investment dollars:

1. Do your research on a platform: there’s a lot to consider when starting your own investing, from which platform you’re comfortable using, what the transaction fees are, and the capabilities of that platform. Most will offer analysis and recommendations based on data to buy, sell or hold a particular stock, bond or Exchange-Traded Fund (ETF). It will allow you to create a watchlist of funds you’re either holding or are looking to buy in the future so there’s easy access. And of course, consider the ease and time constraints of transferring funds in and out of your brokerage account. Most platforms offer the ability to create a Practice Account, which I strongly recommend for someone in this stage. Get in there, see how the platform works, make some fake trades, and determine if the features and user experience are what you’re looking for.

2. Do your research on the type of investment contract: are you looking to open up a TFSA, RRSP, or non-registered investment contract? What are your available RRSP and TFSA contribution limits? And remember that most but not all types of investment holdings can be held within a registered contract in Canada, so if you’ve got your eye on a particular opportunity make sure you’re opening the best contract. Also, remember that if you’re looking to cash out any earnings, you’ll have penalties and taxes on an RRSP, so while the tax shelter on the gains may be appealing, those “big wins” will be kept in that registered contract unless you want to pay the steep penalty (up to 30%).

3. Develop a strategy: knowing your risk profile is only the first step. The next is determining the sectors, are you going to be holding single stocks/bonds, or doing a bundled ETF or mutual fund option? Are you holding for a certain time period? If you’re investing in something that’s more of a trend, you’ll want to take emotion out of the equation and stick to an exit strategy so you know when you’re going to get out. And the same applies if you’re watching a stock to buy. Check to see what the historical performance data is, news stories about that company, and what may be a good low price to purchase.

Investing is complex, and can require a lot of time and a level head. There are platforms and investment options that can take some of the guesswork out of it, but be sure that you’re not checking it daily, that you stick to your strategy and have confidence in those exit strategies, pivoting as needed. 

Money is always made by TIME in the markets, not TIMING the markets, which means to make the most of your investment portfolio you want to buy stability and hold, but also be open to opportunities in down markets. Keeping cash available in your direct investing account can help with those quick picks.

Remember the number one rule that most inexperienced and emotional investors forget: buy low, sell high. So when the market takes a dip, soldier on.




Share This