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Love the blog.
I love hearing that you love the blog. *gets warm and fuzzy*
This is going to be a multipart question.
How did you learn how to start investing?
I just started reading articles, books, anything I could get my hands on.
I started with MSN Money, they had simple articles on the basics of money management and investing. Then I graduated over to the Globe and Mail, and started reading about personal finance there – learning about the different ways you could invest, what to invest in, etc.
Anything I didn’t understand at first like “RRSP” or “TFSA” when it came out, I googled.
I also read a whole bunch of books – I like these ones for Canadians.
Where do you currently learn about where to invest?
I don’t really need to ‘learn’ any more. I will occasionally pick up a book if it looks interesting, browse through it and see if I can glean anything new from it, but 99% of the time, I’m flipping through it, not taking notes.
I have not been interested in doing more advanced things like trading options, puts, calls, etc. I don’t do short selling either, and frankly, just buy, sell and hold stocks and/or mutual funds.
Can I ask how come you don’t invest in real estate?
Because real estate doesn’t return as much money as people think it does.
My friend and I were JUST talking about this the other day. No one thinks about properly valuating an investment like a home, on the same cost basis year over year, as an investment in the market.
A house purchased 20 years ago at $300K, worth $800K now (taking my parents’ home as an example), may seem like a sweet profit at $500K, but does not take into account all of the OTHER costs that go into owning said house – maintenance, fees (if any), taxes, the cost to buy and sell said home (you need to pay for upgrades, fixes, to stage the home), etc.
If you work in those costs, and then work out how much it would have been had they just plowed $300K into the stock market instead 20 years ago, I daresay the average rate of return for the stock market would be higher than a home.
I also don’t like to invest in buying rental properties or anything like that because even though everyone says – Your house will always go up in value! (see above), that statement is also not necessarily true from just a value perspective.
City economies can die overnight if not properly managed and diversified – look at Detroit. Huge booming city, great place for work and jobs, but because it was so one-sided and only focused on automotive, when that went bellyup, the entire city became a ghost town.
Okay let’s pretend you only want to invest in real estate in diversified cities like Montreal or Toronto….. even then, you have to consider the capital you have to put down for the down payment, the realtor fee to buy it, the yearly taxes, maintenance of said place, and assuming an apartment you have condo fees as well.
Plus, you have to now find tenants who are reliable, and long-term, pay on time, and hopefully aren’t drama llamas.
You have to assume the place, like a hotel, is only currently rented 50% of the time over the course of your investment, AND, every time you switch tenants, you need to go through the process again, clean the place, do maintenance, etc.
All. Of. This. Takes. Time. And. Money.
I do not care to bother with the hassle of renters, and rental income, and I do not want calls on my phone screaming about a leak or whatever other BS that comes down the pipeline. I know a few landlords, and they regale me with tales of how stressful the job can be. Sometimes, you even have to get up in their face and threaten them because they can get nasty.
Lastly, imagine having to kick out a deadbeat tenant..? In Québec it is near to impossible due to a law that truly protects renters. You have to file a complaint with the Régie, wait for a court date, etc. In the meantime, said deadbeat is not paying you income, and trashing your place.
No. Thank. You.
I currently have $12k in a Tangerine RRSP mutual fund, but would like to invest in stocks or something with a higher yield but don’t know where to start!
Er….. I need more info on this. You put $12K in an RRSP mutual fund. Which mutual fund? You are already technically investing in stocks, but on a broader basis, as your mutual fund comprises of individual stocks.
I have, written a book about this by the way, on the basics of investing – Investing like a Boss, if you want to get started with that.
As for investing in stocks specifically, this is something that cannot be covered in just a simple response. The bottom line is that you are in fact, already investing in stocks indirectly.
If you are looking to invest in something with a higher yield, it comes with more work / research, risk, and/or active money management. You need to understand what you are getting into before you decide to do it.
I will mention however, that I do an alternative investment in small business lending with a business called Lending Loop, that is outside of normal stock market investing. I wrote all about them here – Lending Loop review – and it is riskier, for sure, as it’s lending to small businesses, but my gross return is at 12.1%.
I do have some loans that are delinquent or late, but these loans are at $50 or under and total only $257.05 that could potentially be “lost”.
The rest of my $10K is with businesses that have been carefully and properly paying back their loans, which is not a bad return.
If you want risk, that’s one way to go about it without learning about stocks and taking the time to read how to evaluate an individual stock.
My parents meanwhile, just sold their house and have $400k to invest but don’t know where. Where would you invest $400k?Any advice would be appreciated. Thank you!
This is tricky as it depends on how old your parents are, their other assets in their current portfolio, their goals, their income, their expenses, and basically.. their entire financial life.
Where your parents are in their life, is not the same as where I am currently. They may be thinking of retirement, preserving capital, and not growth, knowing they have time on their hands to wait out 40+ years for a market to recover.
I am cautious about this answer I am giving you because MANY PEOPLE during the 2008-2009 recession, lost everything while in retirement and had to go back to work, panicking as they did. This is not an issue I take lightly.
I cannot advise you and will not, on investing $400K for your parents.
But if you are asking me if I personally had $400K and wanted to invest it, I’d personally put $200K in dividend-paying stocks because I personally have a strategy / goal of $12K a year in dividend income (my short list of stocks you can research on individually and make an informed decision to buy or not), and the other $200K in mutual funds.
That’s where MY money would go if I had $400K, but I would not however, take my advice as advice for your parents, as again.. they have a different situation from mine.
I would need to review, interview and understand what the situation is before I could help. You can of course, buy my time here as well if that is the route you want to go , or refer to the resources above – books I have recommended on what to do.
In the meantime while you are deciding, I would strongly suggest having them put it in a HIGH interest savings account (Tangerine has a promo on right now for 2.74%), but you can also put it in EQ Bank that gives a solid 2.3% year round.
Park the money in a high interest savings account, and then come up with a strategy that makes sense, THEN invest the money.
Don’t just jump into something because you have the cash. Research first, then make an informed decision.