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Tips and advice
Tips and advice
Your investments are your gateway to financial freedom. They symbolize your hopes and dreams, represent the fruits of your labour and are key to a comfortable future for you and your loved ones. They help you turn your dreams into reality.
This section contains some useful tips to help you make sound decisions.
Get time on your side.
Investing while you’re still young is a winning strategy, even if you don’t have a lot of money.
Let’s see what happens to two investors.
a. Investor A: He invests $3,000 per year from ages 30 to 39, for a total of $30,000.
b. Investor B: He also invests $3,000 per year for 20 years, from ages 41 to 60, for a total of $60,000.
With half as much capital, Investor A still ends up with the same value when he’s 60!
It’s normal to feel nervous when the markets fluctuate, but your emotions can lead you to make bad decisions. Learning to manage them will help you reach your goals.
Below are the most common behaviours we see in investors when it comes to the stock market.
What is a stock market investment? It’s an investment in the shares or stock of a company listed on a stock exchange. You might also see this kind of investment referred to as an “equity” or “growth” investment. They have a long-term growth objective and represent a higher risk than fixed-income investments (like bonds) or cash investments (like Treasury bills).
Investor emotions and the stock markets
|When the stock markets are||Investors feel|
|at their peak, the risks are at their highest and investors buy at a high price.||
Optimism: "The market keeps going up. This must be a good time to invest."
Euphoria: "I can’t pass up these kinds of returns. I have to buy more!"
|in a downturn, opportunities are at their highest and yet investors sell, despite low prices.||
Worry: "I’m sure it’s only temporary. It doesn’t matter… I’m in it for the long term."
Panic: "I have to sell. I can’t lose any more money!"
Capitulation: "I’ll never get back what I’ve lost!"
|in an upturn, apprehensive investors miss out on the recovery and the best market opportunities.||
Depression: "I wish I thought this through better."
Hope: "Things are looking up. I’m going to see if it lasts before I reinvest."
Optimism… and the cycle starts over!
Take advantage of the market's best days
The best returns are often achieved after a stock market correction.* Not staying invested during that time can significantly affect your investments’ long-term performance. Don’t miss out on the potential of the best days!
Take advantage of market opportunities
There’s no way to predict stock market performance. That’s why it pays to invest regularly. Take advantage of market lows and avoid buying only when things are rosy and prices are high. The objective of a periodic investment program is to get the best average cost per share possible and capitalize on market opportunities.
Past performance does not guarantee future results
The same securities rarely produce stellar performances year after year. That’s why it’s important to diversify. Portfolios that incorporate different economic sectors, countries, management styles and asset classes have a higher return potential and a lower risk of being significantly affected by volatility.
Stick to your long-term investment strategy. This gives you a better chance of achieving positive returns in times of volatility. The markets have always had ups and downs but over time, they’ve generally gone up. So just sit back and let time do its job!
When you work with a professional, you have access to an experienced, objective advisor who understands your financial situation. A study from The Investment Funds Institute of Canada (PDF, 547 KB) External link. Opens in a new window. confirms that people who use the services of a financial advisor are in better shape financially.
According to this study, here are the advantages of getting professional advice:
A higher net worth
Improve the prospects of growing your wealth with the help of an advisor. The earlier you start working with a financial advisor, the longer your assets have an opportunity to grow.
Advised households have more assets than non-advised households:
- 1.58 times after 4 to 6 years,
- 1.99 times after 7 to 14 years and
- 2.73 times after 15 or more years.
Higher savings rates and better savings habits
By working with a financial advisor, you’re more likely to develop better savings habits and save at twice the rate of households that manage their own finances.
Households who don’t work with an advisor have a savings rate of 4.3% compared to 8.6% for those who do.
Better retirement planning
Having access to financial advice could have a major impact on how retirement-ready you are.
Be more confident about having enough money to last throughout your retirement.
Increase your likelihood of having a comfortable retirement.
It makes sense to ask a few questions before entrusting your investments to any institution, large or small. The financial scandals of recent years have made many investors more cautious. Choosing a financial institution is not a decision you should make lightly.
Desjardins Group is the leading cooperative financial group in Canada and the sixth largest cooperative financial group in the world, with assets of close to $275.1 billion1. It has been rated one of the Best Employers in Canada by Aon Hewitt. To meet the diverse needs of its members and clients, Desjardins offers a full range of personal and products and services to individuals and businesses through its extensive distribution network, online platforms and subsidiaries across Canada. Ranked among the world’s strongest banks by The Banker magazine, Desjardins has some of the highest capital ratios and credit ratings in the industry.
- Moody’s Aa2
- Standard & Poor’s A+
- Dominion Bond Rating Service AA
- Fitch AA-
1. As at December 31, 2017
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