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Investing in the stock market - Discussion

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Maxing out your TFSA is the best thing you could do.

Next best thing is pumping anything extra into RRSP.

People that know what they're doing avoid single stocks altogether and simply go SUPER boring. That is to say, find mutual funds that have at least a 10-year history of making good gains, put the money into those and LEAVE it alone.

If those mutual funds can make you say 7-8% while compounding every year it blows away guys that try to time markets, jump in and out, etc...

I don't know your age, but the number one asset that many people on these boards have is their age.

If you put $1000 into a mutual fund at age 20 and add $200 monthly (expecting 8% return over it's life), you retire with over $1,000,000.

Compound interest!

Dollar cost averaging and buy and hold work if you are young.

Studies have shown that not avoiding bear markets gets riskier as you grow older and might need to start withdrawing your money soon.

Imagine somebody who invested his life savings in the DOW spider in 2007, thinking the DOW of course has a good long term track record. Over the last 8 years he would've only made about 15% or so. That's 8 years almost wasted, and according to some this bear market is far from over.

Edited by Hugor Hill

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OK, so we're agreed it works if you're young.

Maybe not so great if you're old-ish (pushing 60 as in your example).

But say a guy is middle-aged - say 40 and is thinking about retirement.

He's got $100,000 saved over the past 10-15 years and has the ability to put $1000 monthly into a mutual fund that should get 8% yearly.

Those 25 years (65 - 40 = 25) still leaves him with over $1.5m.

Pretty good strategy as long as a guys not TOO old, right?!

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OK, so we're agreed it works if you're young.

Maybe not so great if you're old-ish (pushing 60 as in your example).

But say a guy is middle-aged - say 40 and is thinking about retirement.

He's got $100,000 saved over the past 10-15 years and has the ability to put $1000 monthly into a mutual fund that should get 8% yearly.

Those 25 years (65 - 40 = 25) still leaves him with over $1.5m.

Pretty good strategy as long as a guys not TOO old, right?!

True I guess.

But it's fun to be able to avoid the bear market!

I myself pulled my mutual funds a bit late. I only sold a few weeks ago right before black Monday, while I had a feeling that things are going wrong a few months ago when the Chinese market started crashing. I was slow to the trigger. Dang.

Some people are saying the worst is over. I don't know. Guess we won't know until.........

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Dollar cost averaging and buy and hold work if you are young.

Studies have shown that not avoiding bear markets gets riskier as you grow older and might need to start withdrawing your money soon.

Imagine somebody who invested his life savings in the DOW spider in 2007, thinking the DOW of course has a good long term track record. Over the last 8 years he would've only made about 15% or so. That's 8 years almost wasted, and according to some this bear market is far from over.

As the saying goes, timing is everything...

LT+Dow.png

...of course, that top band was taken out in the the last 2 years, but only after years of ZIRP.

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Right now I'm saving some money to do a larger sized investment. I'm always a big fan of coke, not based on price but that dividend is hard to turn down

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True I guess.

But it's fun to be able to avoid the bear market!

I myself pulled my mutual funds a bit late. I only sold a few weeks ago right before black Monday, while I had a feeling that things are going wrong a few months ago when the Chinese market started crashing. I was slow to the trigger. Dang.

Some people are saying the worst is over. I don't know. Guess we won't know until.........

The people I listen to say that's exactly where people go wrong.

Much like playing with single stocks, trying to time in-and-out of the market inevitably leads to some wins and the odd loss over the course of a 40 year investing plan.

At the end of those 40 years that person is behind the guy that just VERY BORINGLY buys a bit more every month (no matter if the markets are up or down - when it's up he looks great, when it's down his monthly purchase buys more which looks great when the market inevitably continues to climb).

I don't claim to be any expert or anything, I'm just sharing what I've been told and what's been working for me.

Years ago a wealth manager told me simply to read the book "The Wealthy Barber" as the best starting point. It's by David Chilton from Dragons Den that he wrote before he had any fame - it's written super easy-to-read, like a grade 9 reading level and actually a little bit enjoyable (if not somewhat cheesy) because it's written like a story/novel rather than non-fiction.

If anyone has any interest in 'starting' to learn about investing that's where I still point them.

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As the saying goes, timing is everything...

LT+Dow.png

...of course, that top band was taken out in the the last 2 years, but only after years of ZIRP.

The people I listen to say that's exactly where people go wrong.

Much like playing with single stocks, trying to time in-and-out of the market inevitably leads to some wins and the odd loss over the course of a 40 year investing plan.

At the end of those 40 years that person is behind the guy that just VERY BORINGLY buys a bit more every month (no matter if the markets are up or down - when it's up he looks great, when it's down his monthly purchase buys more which looks great when the market inevitably continues to climb).

I don't claim to be any expert or anything, I'm just sharing what I've been told and what's been working for me.

Years ago a wealth manager told me simply to read the book "The Wealthy Barber" as the best starting point. It's by David Chilton from Dragons Den that he wrote before he had any fame - it's written super easy-to-read, like a grade 9 reading level and actually a little bit enjoyable (if not somewhat cheesy) because it's written like a story/novel rather than non-fiction.

If anyone has any interest in 'starting' to learn about investing that's where I still point them.

Thing is, in real life, most people's investment horizon is never over 20 years, much less 40 or longer. Life changes may require you to be flexible with your capital. You might lose your job, or go through a costly divorce. You might have a great business investment opportunity landing on your lap, or inheriting large sums of money... or you just get sick of your 9 to 5 and decide to forgo your regular pay cheque and embark on your own business venture. Your investment goal all the sudden changes to short term, capital preservation with some conservative opportunities for growth, and you can't afford to lose.

Of course if you have money to play with, and better if you are young'ish, then boring buy & hold + dollar cost averaging would be a very viable part of your long term money management plan. It can simply serve as something safe and something long term prepping for the retirement.

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Yes.

Thing is, in real life, most people's investment horizon is never over 20 years, much less 40 or longer. Life changes may require you to be flexible with your capital. You might lose your job, or go through a costly divorce. You might have a great business investment opportunity landing on your lap, or inheriting large sums of money... or you just get sick of your 9 to 5 and decide to forgo your regular pay cheque and embark on your own business venture. Your investment goal all the sudden changes to short term, capital preservation with some conservative opportunities for growth, and you can't afford to lose.

Of course if you have money to play with, and better if you are young'ish, then boring buy & hold + dollar cost averaging would be a very viable part of your long term money management plan. It can simply serve as something safe and something long term prepping for the retirement.

Yes.

I would re-qualify the "if you have money to play with" as you've simply got to find money to put in no matter how small the amount just so long as it's regular.

As far as life moving in different directions, I pulled all the money I'd been saving/investing when it came time to buy a house - that had only been maybe 5 years into my journey and would have been WAY better if I could have kept that growing. Instead I took the modest growth that had been realized in 5 years, bought my house and continued afterwards in the same vein of investing.

In the end, I got a house that continues to grow in value with some investments growing as well.

All thanks to reading that book The Wealthy Barber and starting young-ish.

As far as the OP, that TFSA helps with the liquidity when you need it and all the growth is tax free! boom.

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Yes.

Yes.

I would re-qualify the "if you have money to play with" as you've simply got to find money to put in no matter how small the amount just so long as it's regular.

As far as life moving in different directions, I pulled all the money I'd been saving/investing when it came time to buy a house - that had only been maybe 5 years into my journey and would have been WAY better if I could have kept that growing. Instead I took the modest growth that had been realized in 5 years, bought my house and continued afterwards in the same vein of investing.

In the end, I got a house that continues to grow in value with some investments growing as well.

All thanks to reading that book The Wealthy Barber and starting young-ish.

As far as the OP, that TFSA helps with the liquidity when you need it and all the growth is tax free! boom.

Depends on where your real estate is, it should appreciate in value over time. People say RE is almost never a bad investment.

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What are your guys opinion on ETF'S

I'm probably way over my head as soon as we're talking about anything beyond basic investing.

The guys at this blog (http://canadiancouchpotato.com/) are pretty well respected though and they're crazy about ETFs especially within Vanguard.

The advantage to Vanguard is extremely low fees...a Royal Bank mutual fund might have a 2% fee, whereas Vanguard would have almost exactly the same fund (& therefore same rate of return) but with a much lower fee therefore making you much more money over the long term.

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I'm probably way over my head as soon as we're talking about anything beyond basic investing.

The guys at this blog (http://canadiancouchpotato.com/) are pretty well respected though and they're crazy about ETFs especially within Vanguard.

The advantage to Vanguard is extremely low fees...a Royal Bank mutual fund might have a 2% fee, whereas Vanguard would have almost exactly the same fund (& therefore same rate of return) but with a much lower fee therefore making you much more money over the long term.

Some good reading there. Just took a quick look over it. I like ETF'S because as a beginner/young investor they are easy to understand and seem like good buy and hold investments. They could become a real great backbone of your portfolio

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What are your guys opinion on ETF'S

ETF's are a great way to get exposure to certain sectors without gambling on individual names. The days of paying a front end load plus a 2% management fee on a mutual fund are over.

However, you must avoid 2x and 3x ETF's like the plague. These are not for investment, they are basically designed to go to zero. Or in many cases low single digits then reverse split.

They are to be used for intra day trading only, says so right in the prospectus.

Many people have no clue then are left wondering why their 3x S&P ETF has declined while the S&P has gained 30%.

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Natural resources is where you want to be. Down cycle on all commodities...best time to buy.

I have been thinking about the commodities and oil given that they have been beaten up. I have typically bought stocks when they were down. I made some money off Cameco in the past when a mine they were starting flooded. There was already a shortage of uranium given the number of reactors that were proposed to come online. When the stock dropped I bought. The mine was not going to be online for years anyhow. Sure enough it rebounded quickly and I sold before Uranium prices dropped when the Russians started converting their missiles into Uranium fuel.

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Physical gold and silver is another place you want to be. I'm betting that there's going to be inflationary pressures kicking in shortly and most likely hard precious metals that you can hold in your safety deposit box is going to serve you well.

Definitely want some physical gold. Will be reading a book on gold soon.

Alternative energy sector is worth taking a look. UN policies on climate control is something an investor can cash in on...wind is best option IMO. Nominal forecast shows $2.5 trillion in capital investments for wind infrastructure over the next 25 years. And anything to do with water generation (especially atmospheric water generation technologies and de-salination/reverse osmosis technology).

Very interested in renewable energies. It seems clear, to me at least, the future for renewable's is bright. Ferrari builds a hybrid for fracks sake - times have changed!

I have been looking at some solar energy companies. I have also been wondering about batteries. Everything is running on batteries and batteries will be needed to store renewable energy when there is no wind or sun etc. Tesla announced plans to produce batteries for household power. I believe Tesla, Google and Apple are building giant battery factories or researching newer improved batteries.

Commercial vertical farming is another interesting emerging sector. Conventional farming will still rule food production for the masses (i.e., Monsanto), but highly productive vertical/organic farms will allow for improved yields and growth cycles in a controlled environment that is pesticide free.

Yes to food and water production. We will need those technologies more and more. Not sure where to invest in that as of now.

These are the things that I'm paying attention to...I attended a number of investment forums in New York and Europe from 2006 to 2012, and the number of global funds setting themselves up for these sectors during those years was staggering. A lot of the institutional monies raised to date have gone into rapid growth of these sectors...now, it's readied itself for retail investors like us schmoes here on CDC.

We are always the last to the party with the least amount of information! I like your thinking in looking for ways to invest in the future game changers.

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look at the list of what stock Cascade Investments owns (google it). This is where Bill Gates and the Bill & Melinda Gates Foundation keep over $100 billion US in stocks. Im not saying to buy what they own, they hold long term and the bus has sailed on when to buy most of what they own but its still interesting.

OP. I have sold a lot of stock recently. I held onto TD and BCE for the solid dividends and am currently weighing options. Theres going to be some downward pressure in the next little while and I want to have the capitol to take advantage of the opportunities this brings. I made a LOT in 2009 after the crash hit bottom and CN was my main vehicle from then to late 2014. Nintendo was a fun ride but I wish I had put more in. I wish I had put everything in. but Im just waiting now.

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Wait till the full on crash happens and take advantage of any reputable blue chip that took a heavy hit. This is the best time to make money.

If the market crashes I will be borrowing money to invest. It is cheap right now.

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Maxing out your TFSA is the best thing you could do.

Next best thing is pumping anything extra into RRSP.

Not sure how much emphasis I will put into my RRSP after my TFSA is maxed. I will probably be in a higher tax bracket when I retire!!!!

My next priority may be a small development property and/or rentals! I am a wannabe Scott McGillivray

People that know what they're doing avoid single stocks altogether and simply go SUPER boring. That is to say, find mutual funds that have at least a 10-year history of making good gains, put the money into those and LEAVE it alone.

If those mutual funds can make you say 7-8% while compounding every year it blows away guys that try to time markets, jump in and out, etc...

I often think about this route and just letting the pros handle everything. For now I enjoy getting up and checking the markets.

Edited by AV's Coin

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Years ago a wealth manager told me simply to read the book "The Wealthy Barber" as the best starting point. It's by David Chilton from Dragons Den that he wrote before he had any fame - it's written super easy-to-read, like a grade 9 reading level and actually a little bit enjoyable (if not somewhat cheesy) because it's written like a story/novel rather than non-fiction.

I concur this is a great book to start with - maybe should be required reading in school. I have read it but will probably read it again to refresh.

There is some good info here as well. Thanks for the link.

http://canadiancouchpotato.com/

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