Are you a savvy investor?

Ask questions and have a say in where you're investing your money.

Angela Iermieri*| Financial Planner | Desjardins Group

Take the test! Answer these 6 questions and learn some good investment practices at the same time.

1. I make my investment decisions based on...
a) What my family and friends have to say 
b) The advice of a financial advisor or planner

Answer: b) Regardless of whether they're self-directed or have professional help, savvy investors know that it's best to turn to their financial advisor or planner for advice.

Good to know
  • All too often, people don't know their investor profile or don't respect it. The result? They let themselves be influenced by the successes or failures of their knowledge. Determining your profile with the help of your advisor--that's the foundation. They'll help determine which products are right for you. 
  • Love investments? Have financial knowledge? There are thousands of products to choose from. Take the self-directed approach and do your own research on the ones that fit your profile.
But if you feel out of your depth, get advice from a professional; research shows that people who have a financial advisor have healthier finances. Ask questions and have a say in where you're investing your money.

2. In my investment portfolio...
a) All my investments are focused in one activity sector with excellent returns
b) I have a bit of everything. I don't take risks
c) I've made choices according to my objectives and investor profile

Answer: c) Savvy investors diversify their investments to reduce volatility in their portfolio. You should have different types of investments, in various sectors and countries, and in a number of asset classes.

  • It's impossible to predict which investments will perform the best. The strongest ones may not yield the best returns the following year, and if an investment has already increased significantly in value, that rise might be coming to an end. 
  • Certain investment products, such as mutual funds or exchange-traded funds (ETFs) allow you to access the return potential of the stock markets, even if you only have a modest amount of money to invest. 
  • Develop your interest and do your homework before investing. By having a solid grasp of the various types of products, you'll understand why you're investing in them and avoid passing fads and recommendations that aren't right for you.
3. Investments that offer a rate of return that's well above the market rate and a promise of zero risk (or just about) should be a warning sign of fraud.
True or false?

Answer: True. If the promised return seems too good to be true, it probably is! 

Good to know
  • Do your homework before investing. You can check with the Autorité des marchés financiers.
4. By diversifying your investments, you increase the chances of losing money.
True or false?

Answer: False.

Good to know
  • To increase the rate of return on your investments, you need to build a portfolio with different types of investments, each with different characteristics that meet your needs, and all of which match your investor profile. You know the expression "Don't put all your eggs in one basket"? When it comes to investing, truer words were never spoken.
  • Diversifying in moderation is good, but it can be taken too far. If you invest in too many different funds or with a number of different representatives, you risk spreading your investments too thin. By missing the bigger picture, you're likely to invest in the same product twice and reduce the effect of your strategy.
5. When I invest in the stock market, I'm usually...
a) Impulsive: I sell when the price starts to dip
b) Patient: Regardless of market fluctuations, I don't change my strategy

Answer: b) Savvy investors control their impulses and stick to their long-term investment strategy to reach their goals.

Good to know
  • Although it can be stressful, market volatility is part and parcel of investing. It's easy to panic as the markets fluctuate, but don't forget the golden rule of investing: potential returns are made over time. Which is why it's important to have the guidance and support of a professional who knows when is the best time to act. 
  • It's often immediately after a correction that markets perform best. If you're not investing during these times, you may be missing out.
  • On the flip side, too much optimism and confidence can also lead to poor decisions. And that's why it's important to stick to your strategy and investor profile.
6. In retirement ...
a)  My portfolio is invested according to my new needs and my money continues to grow
b)  It's no longer the time to invest. I let my money sit in my account

Answer: a) Continuing to invest will help you make the most of your retirement savings so they last as long as possible.

Good to know
  • The economy and current interest rates influence your portfolio's returns. If your portfolio is mainly made up of short-term investments or fixed-income securities and doesn't have the return potential of growth securities, the potential long-term return could be lower than the cost of living and your objectives might be affected. An investor profile that takes your new needs into account will determine the right strategy and diversification for you.
  • By determining your portfolio withdrawal strategy, you'll establish your short- and long-term investment strategy. There are different stages of retirement, and some will be more active than others. Your investments will be made to meet your needs.
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* Financial Planner and Mutual Funds Representative for Desjardins Financial Services Firm Inc.

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Commentaires publiés (2)

Christopher malone / April 17, 2018 11:21 PM
1 a, 2 b, 3 true, 4 false, 5 b, 6 a
SPYRIDON PAPADAKIS / April 17, 2018 4:17 PM
I love this bank

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