Emmanuelle Bertrand, Mouvement Desjardins
For over 15 years, Angela Iermieri, a financial planner with Desjardins Group, has seen so many investors make the same mistakes time and again.
Here are the ones she sees most often. Here’s hoping you don’t fall into the same trap!
1. Being a lone wolf
If you don’t have thorough investment knowledge, turn to a trustworthy professional. Visit the Financial Planning Standard Council website.
2. Relying on your friends and family for investment advice
All too often, people don’t know their investor profile or don’t follow it. Ask your representative to help you determine your profile so you can make sure you’re comfortable with your investment choices.
3. Follow the trend
I can’t stress enough how important it is to explore your interest and to do your homework before investing. Having a good understanding of the different types of products will help you understand why you’re investing in them and avoid fads and inadequate recommendations.
4. Believing you’ll get rich fast
If the return you’re promised seems too good to be true, that’s because it is! A 10% return is very rare. Depending on the product, returns of around 2% or 3% are more realistic.
5. Spreading your investments too thin
We often hear how important it is to diversify our portfolio, but be careful not to over-diversify! By investing in too many funds or with many representatives, you could be spreading your investments too thin. Without an overall view, you run the risk of investing in the same thing twice.
6. Reacting as soon as the market moves
If your investment goal is to save for retirement, plan your investments accordingly. When it comes to the stock market, you’ll see the real return over time. So you need to keep things in perspective if the fund doesn’t provide the returns you expect after a few years. Keep in mind that you’re counting on it to deliver results within 20 or 30 years!
7. Being emotional
The market can change quickly, and it’s easy to panic when you see certain fluctuations. Which is why it’s important to get the help of a trusted professional, who will know the right time to act.
Are you an investment novice?
Financial products fall into 2 main categories:
1. Fixed return - guaranteed by the contract provider:
- Deposit certificates (term deposits for a fixed period of time)
- Savings bonds
- Corporate bonds or debt securities (different from shares)
2. Variable return - market-linked:
- Shares (often in the form of investment funds made up of the shares of many companies)
A “portfolio” is made up of many financial products, which is what makes it “diversified.” Each product has its unique characteristics, just as every investor has their own unique situation.