Transparency is ultimately a useful tool and a move in the right direction: the more we know, the better. Of course, if you've hired a portfolio manager who charges a monthly or quarterly inclusive fee, you have already been enjoying full transparency, long before these regulations came into affect.
Every time you sit down with an investment professional, you are asked what your risk tolerance is. Regardless of the method for defining the risk you'll accept in your investment portfolio, you are wise to define the meaning at the outset with the person administering your money. It will save you a lot of sleepless nights.
If you're an average Canadian, you probably own a principal residence and have a few dollars invested or saved somewhere. If you have money invested in stocks, bonds or real estate, you may be concerned about losing your money. This is a reasonable thought; although, depending on what you're invested in, your concern (read: worry) is probably a waste of time.
Investing and managing money might seem like one such task that requires a large amount of personal attention and professional advice. However, an increasing number of investors have started looking to technology to help manage their money. This trend has seen the rise of a new breed of wealth manager -- "the robo-advisor."
Coupled with the outside noise of market emotions, our individual ability to justify decisions based on sometimes irrelevant and biased information, makes the seemingly simple axiom, 'buy low, sell high' difficult to execute efficiently. Luckily, there are 3 easy ways that you can create and manage an emotional firewall between you and your investments:
You survived the debt temptations of the holiday season, achieved your personal best in RSP contributions and only had to pay a small amount in additional taxes for the last year. Now you can relax until the whole headache starts again in a few months. But what if you could avoid the hassle by setting up a plan that could help reduce your next end-of-year tax bill?
Kevin O'Leary has created an entire persona around a sort of modern-day Gordon Gekko. O'Leary is fond of and famous for employing phrases like "it's all about the money," "people only care about money," and "money makes the world go round." To put it mildly, this is a superficial, even one-dimensional understanding of markets.
Whenever I think about zombies, my mind immediately creates a picture of a group of blank face dead people walking around with no thoughts of their own. When you make an investment decision, are you basing that decision on facts gathered through a due-diligence process? Or are you mindlessly following the crowd?
It is extremely easy to buy into private companies; they will be more than willing to use your money to fund their ideas and aspirations. It is very difficult for the average investor to successfully "invest" in private companies, since success requires some type of return. I'd rather sit back, enjoy a beer as a customer, and consider some other investment options.
When the conversation turns to fraud, investors can sometimes forget that tried-and-tested investment management principles still need to be applied. Even though diversification is one of the most fundamental and enduring investment principles, many investors forget to ensure their assets are diversified widely enough.
Like seatbelts, when it comes to public safety, the Federal Government can intervene. So why ban on Deferred Sales Charges? Quite simply, it's an issue of public safety. There is nothing beneficial to the consumer about a DSC. As a matter of fact, it's nothing more then a legalized trap created by companies that produce and market mutual (and segregated) funds.
All Canadians have a stake in reducing franchisees' drastic losses in startup brands. Franchising is an integral part of Canada's economy, particularly the retail sector. Canadian franchisee investors and consumers are drawn to franchise brands based on their potential to offer proven business systems, consistency and recognized goodwill.
If you want a thing done well, do it yourself. With self-directed investment accounts, discount brokers, free online financial tools and an overabundance of online personal financial advice, it may seem like consumers today are well positioned to manage their own financial path. But access to tools doesn't necessarily mean one has the skills to use them properly.
When I first started investing my money, I bought a penny stock (highly speculative investment) and didn't conduct the necessary due diligence (aka research) to really learn about the company and its potential. A well-meaning friend had recommended the stock. Thankfully I only invested a small amount of money, but lost every penny (excuse the pun). It stopped me dead in my tracks. I avoided investing for a short period of time until I regained my confidence. It took a while. I had never experienced a financial loss to this point. It was a powerful learning experience that reframed my approach to investing.
There are a number of human financial gurus working to help you become wealthy, and their advice is based on years if not decades of knowledge and experience. However, there are a number of microbial economic geniuses who have centuries of expertise developing "economic" success. Germs seem to have knowledge to keep economies solid.
Investing should always be highly rational; humans on the other hand rarely are. Emotion creeps in, leading us to make choices that are often misaligned with our overall financial needs and goals. It's forgivable to make an occasional mistake every now and then, but striving to avoid the seven deadly sins of investing can help you dodge costly bundlers and help put you on a sound financial footing.
What follows is a series of recommendations that could apply to any public board to: make it more focused on value creation; to strengthen real director independence, including from management; to strengthen management accountability to the board; and to strengthen board accountability to shareholders.