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Six Investing Do’s & Dont’s

Posted on October 31, 2007 at 11:56 am
Filed Under Canadian Taxes, Financial Planning, Investment Planning, Retirement Planning

An article was published in the Financial Post defining six “Do’s & Dont’s” when it comes to your investing habits.

I found this article to be a great read and would recommend it to anyone. Of the six points that Duncan Stewart makes, the one that stands out the most to me is “Do #1″. He talks about the importance of proper asset mix and diversification and says that “More than 50% of the variance in portfolio returns among all investors is determined by the mix between bonds, equities and cash — so get it right.” Those are pretty powerful words and I couldn’t agree more with his stance that simply throwing paint on the wall will not give you the masterpiece you are looking for, or in turn, the return you want or deserve.

Your Take-Away: It is always enticing to jump into the hottest stock, buy an investment property when you know you are getting a good deal, or even backing down and converting your equities into cash in a market down turn, but there is much more to consider then a quick buck. You have unquestionably met investors who have struck it rich through a hot stock or some other investment vehicle, but don’t think they are the norm. Take the necessary time to review your entire financial situation before making any significant portfolio changes, and always ensure that your “hot” or “new” investment is properly diversified with the rest of your portfolio.

Risk in and of itself is by no means a bad thing, and is necessary for those of us looking for substantial returns on our investment. Just don’t forget to make sure your risk is properly balanced with its potential reward and the rest of your existing portfolio.

Happy Investing!

Chris

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