Common Investment Myths – And How to Break Them
Let’s talk about investment myths. Have you started investing yet? If the answer is yes, think about the last time you sat down with a financial advisor and reviewed your portfolio to ensure your investment strategy is still aligned with your goals. If the answer is no, ask yourself why not? Maybe it’s because you don’t think you can afford it, maybe it’s because you’re afraid of the risk versus reward or maybe it’s because you don’t see the value in paying fees.
Here’s the good news, today I’m debunking common investment myths. Actually, I’m going to shatter them. Whatever the reason may be that’s holding you back from reaching your full investment potential, it all ends now. If you’re hesitant about seeking financial advice, investing in the market and exploring different investment options, don’t worry because other people are too – that’s why there are so many common investment myths.
The key is to tell the truth about the current state of investing and help Canadians implement an investment strategy that you’re comfortable with.
Here are the real answers to three common investment myths:
I can’t afford to invest
Yes, you can. Everyone, whether you’re 16 or 56 can afford to put a portion of your after-tax income towards investing. The percentage varies depending on your monthly household expenses and individual disposable income, but yes everyone can afford to invest. So often people feel that saving investing are just for the wealthy – and that’s just not true.
I don’t need professional advice
Oh yes you do, everyone does. Why? Because there is so much more to creating an investment strategy than choosing the right stock at the right time – and I don’t do that because that’s not what smart investing is about.
The truth is investing is about finding solutions that align with your short term and long-term goals as well as your risk tolerance and time horizon. The Manulife investment philosophy is “There’s a difference between access to investments and investing successfully. Managing money wisely is a full-time job which takes experts with significant experience and skill.”
On a side note, timing the market to buy in on the absolute lowest day of the year and selling on the absolute highest day of the year to gain the maximum profit is another common investment myth. That doesn’t happen.
I shouldn’t have to pay fees
Well yes you should. In life we all have to pay for a professional service. I can’t think of a scenario where you get a service for free – except for the library. If you want the best dentist then you have to pay for it. The exact same principal is true when it comes to investing.
Of course, you can open a self-directed online brokerage account and manage your own money, but do you have the years of experience and professional expertise of a financial advisor? This is the real reason why paying for a professional service is worth the cost. It’s about access to investments (because you could do that yourself online) it’s about the experience and the expertise.
I hope this helps overcome some of your hesitations when it comes to building a relationship with a financial advisor and creating an investment strategy that fits your individual needs. If you want to discuss other common investment myths then let’s chat.
*This content was originally created by Manulife Securities for information purposes only. It has been distributed for advisor publication.*
Heading off to college or university is a big milestone and a time that's filled with lots of excitement, and anxiety. Just like with most things in life, it pays to be prepared.
Studies have found that those who have a strategy for financial health save more money and are financially healthier. To avoid overspending, make sure you know what's coming in vs. what's coming out by tracking your spending to the dollar.
5 tips for an A+ on your student budget:
1. Make a budget and stick to it
Making a budget with the help of this student budget template is easy, sticking to your budget can be difficult. In the next points, I will show you how to make sticking to your budget simple.
2. Put yourself on payroll
If you’re funding your expenses through a student loan, stay within your budget by paying yourself on a weekly, bi-weekly or monthly basis from your loan. By paying yourself on pay day, it will be much easier to gauge your spending and you will gain real-life experience in pay day excitement.
3. Put money aside for your necessities first
Consider this scenario. You check your bank account before you leave for the night and you see you have a few hundred dollars left. What you’re forgetting is that you haven’t paid for that utility bill yet.
You will avoid this by putting the money for bills in a separate place. Sometimes we’re in a rush and make mistakes, but segregating your money is a great way to ensure you’re never unintentionally tapping into your bill money for fun.
4. Track and review your weekly spending
A budget means nothing if you don’t follow it. Put all your purchases on debit, or keep your receipts. Take a few minutes every week to see how well you’re sticking to budget. Don’t forget to make any necessary adjustments.
5. Draw a clear line between wants and needs
A 2:42am burrito isn’t filed as a grocery item. A late-night burrito is perfectly fine, if you have money left in your “Take Out/Order In” category from the budget template above.
Budgeting doesn’t mean restricting all spending to $0. Follow these tips and you will mitigate the stress of finance in your already stressful life. A good budget reflects what you can afford, or in some cases, what you are comfortable paying back once your university or college education is complete. Most of all, your well-planned budget makes your financial health better.
Simply put, financial planning is the PROCESS of meeting life GOALS through proper management of finances. Let the advisors and staff of Ward Financial Group/Manulife Securities Incorporated help guide you towards those goals, whatever they may be.
The PROCESS is similar to planning a trip and the financial plan can be compared to the road map itself. With individuals and their GOALS, some are big, some are small, but most importantly they have to be yours! You can run into problems, face adversity, become overwhelmed when comparing personal goals to everyone else’s goals, or even worse, start to adopt them as your own. At Ward Financial, we start by becoming clear, really clear, about client’s goals.
Wealth Creation, Wealth Protection, and Wealth Transfer are fundamental outcomes realized when goals are determined. And whether dealt with individually or comprehensively, let us help provide the necessary advice to reach those goals
Frequently Asked Questions
How does financial planning work?
Financial planning is a process that sets you on a course toward achievement of your life goals through the proper management of your financial affairs. Financial planning is more than budgeting and cutting back. The right financial plan balances what you need and want today with the personal goals you have for the future.
What is comprehensive financial planning?
A comprehensive (or integrated) financial plan looks at the big picture to consider all relevant aspects of your life, including budgeting, investing, tax, retirement, estate planning and debt or risk management. A professional financial planner will take into account various aspects of your financial situation, identifying and analyzing the interrelationships across sometimes conflicting objectives to help you meet your goals.
Does professional financial planning really make a difference?
Research shows that Canadians with financial plans feel they are saving more, living well, and experiencing higher levels of overall contentment in their lives. The Value of Financial Planning, a three-year longitudinal study which included close to 15,000 Canadians, was commissioned by FPSC® and the Financial Planning Foundation.
The study revealed that, regardless of net worth, Canadians who engage in comprehensive financial planning report significantly higher levels of financial and emotional well-being than those who do no planning or only limited planning. Those with comprehensive plans felt more on track with their financial goals and retirement plans, felt they had improved their ability to save in the past five years, felt more confident that they could deal with financial challenges in life and felt better able to indulge in their discretionary spending goals.
What letters should I look for behind my planners name?
The CFP® mark stands for Certified Financial Planner® professional, long recognized as the gold standard in financial planning in Canada. The CFP designation ensures excellence in financial planning through extensive education, a rigorous standardized national examination process, comprehensive continuing education requirements and accountability to FPSC for a code of ethics, practice standards and the rules and regulations of a professional body.
Why is it important to deal with a CFP professional?
With a focus on all aspects of your finances, a financial planner impacts your financial well-being and your ability to meet life goals, today and in the future. Yet in most Canadian provinces, there is no legislated standard in place for those who offer financial planning services. With the exception of Quebec, people who call themselves financial planners are not required to obtain any credentials whatsoever.
The CFP® designation provides assurance that the design of your financial future rests with an appropriately qualified professionals who will put clients’ interests ahead of their own.
How can I be sure my financial planner is a CFP professional?
Look for the distinctive CFP® certification marks after a financial planner’s name. An individual may only use CFP®, the words Certified Financial Planner® or in Canada with the authorization of Financial Planning Standards Council. You can also check FPSC’s Directory of CFP® professionals and FPSC Level 1 Certificants in Financial Planning™ to find a planner or verify a planner’s status.
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