Category Archives: Investing Basics

6 Tips for Investing Success

By: GenXinvestor

6 tips for investing successHere are 6 tips for investing success.  When it comes to investing, lot’s of people have questions about how to make it work for the long term.  Here are 6 tips that I’ve found useful on my own investing journey that I think every investor needs to be mindful of.  Too many investors are short-sighted and buy and sell at the absolute worst time.  I think it’s important to invest for the long haul and if we follow these 6 tips we can be assured of success in the long run.

6 Tips for Investing Success

Plan Conservatively

I structure my financial planning around a 4-5% rate of return.  This works for me because my plan is to rely on dividend and rental income.  My dividend portfolio alone has given me 8-10% annually, so I feel that my expectations of a 4-5% return aren’t unreasonable.

I prefer to run my numbers conservatively for a variety of reasons.  The main reason is that by doing so, it leaves plenty of room to accommodate unexpected events.  Besides, if all goes well, what’s the worse that could happen?  I retire early?  I can definitely live with that outcome.


A properly diversified investment portfolio means that there will always be something that’s underperforming.  To get a respectable rate of return, a person doesn’t need to find that one incredible stock.  More often than not, it’s the steady growing stable companies that offer the best long term investment.

Everyone should own a mix of assets like stocks, bonds, cash, real estate and even gold.  The reason being is that different assets will perform better than others at different times.  No one wants to be all-in, 100% invested in stocks when the market crashes.  Likewise, no one wants be all-in the housing market when it pops.

Owning a variety of different assets that aren’t correlated to each other is one way to mitigate the risk of owning any one particular investment or any one asset class.  Losses will be limited to whatever portion was allocated to that particular asset class.

Rebalance Asset Mix Periodically

In January 2016, stocks were cheap and bonds expensive.  Today there is a reversal of sorts happening.  As stocks surge ahead and increase in value on economic optimism, bonds will continue to get cheaper due to rising interest rates.  Here, it makes sense to start buying bonds and selling stocks.  

Sooner or later stocks will retreat and bonds will increase in value, then it will be time to execute the reverse strategy.  This activity is called re-balancing and takes discipline to do, but it is well worth it because you’ll always be buying one type of asset “low” and selling another one “high,” and this reduces the overall investment risk.

Don’t Get Sucked into Paying High Fees

Investing isn’t “free” and there are costs associated with it.  This is definitely one area that people need to pay careful attention to.  How much does a financial advisor charge and is that fee worth the services provided?  Are there any hidden fees?  

Some mutual funds charge fees that range between 2 and 3%.  While seemingly small, over time these fees really start to add up and could end up costing you hundreds of thousands of dollars and delay your retirement by several years.  For more information about the dangers of mutual fund fees, check out this article.

There are so many low-cost investment options available for investors today.  There’s no excuse for paying high fees.  Don’t be lazy, switch to a low-cost option.  We can’t control how a particular investment will perform, but we can control how much we’re paying to own it.  

Investment Taxes

When it comes to investing, taxes are always an issue to keep in mind.  To minimize taxes, always invest in tax-sheltered accounts first like 401ks and RRSPs.  Outside of those ax-shelters, investments are subject to taxes.  

Generally speaking, capital gains and dividend income receive more favorable tax treatment in many countries.  Earning interest is usually the most heavily taxed form of investment income.

Be Patient and Think Long Term

If you’ve managed to follow the previous 5 principles, then you’re well on your way to achieving financial freedom without taking on too much risk.  I think it’s human nature to be constantly striving for better results, however, when it comes to investing, the best thing to do seems to be to just sit back and let the markets and compounding do their work.  I’ll admit that this is the hardest thing to do for most investors because we have to place a great deal of faith in something that’s volatile and chaotic in its day-to-day operation but has a proven long term track record.

Humans are naturally driven by emotions of fear and greed and a desire to do something.  But when it comes to investing, the best thing to do is nothing.  Just keep adding money to your investments and practice these tips for long term investing success.

Thanks for reading and I hope you enjoyed these 6 tips for investing success.

For more articles about investing and personal finance, check out my MUST READ PAGE.

Image courtesy of Stuart Miles /

Why Learning to Invest Can Make You Rich

By: GenXinvestor

For many people, ideas about the rich involve how many fancy cars they have and how big their houses are.  What’s often missing is the source of their wealth…their investments.  Owning investments are what makes rich people rich and if you want to one day become rich too; then you’ll need to learn how to invest your money.

There are many pathways to become rich.  You can own a successful business, develop and sell an App, own a real estate empire etc.  For most people though, the tried and true path of successfully becoming rich has been taking a long term investing approach.

The average person can become wealthy simply by buying, holding on to, and adding to, a collection of financial assets over the long term.  These financial assets can consist of stocks, bonds and mutual funds or exchange-traded funds (ETFs).

The key to investing is diversification, so that we don’t have too much of any one type of investment.  For example, assets are grouped into 5 major classes:

  1. CASH

The fact is that nobody really knows which asset classes will do well over any given period of time so it’s prudent to own a bit of them all.  While it may seem counter intuitive, ideally we would want to be buying the asset class that is the worst performer among the group.  The reason being is that it will undoubtedly be the cheapest of the bunch and, when it comes to investing, would be a bargain.  This is the “buy low, sell high” mentality that can drive long term investing success.

I think the most important factor involved in a person’s investing success is not so much what they buy or sell or even which asset classes or individual type investments like stocks that they own.  The absolute key to long term investing success is setting up an automated system that guarantees that we’ll be investing on a regular basis.  If we take the 5 or 10 minutes to set up a system of automated investing then we are guaranteed to be building our personal wealth over time.

Each week, I make regular purchases of low cost index mutual funds and ETFs.  I do so in my Tangerine Account and my Questrade Account.  Each month I make regular purchases of my favorite blue chip stocks through my dividend reinvestment plans (DRIPs).  More and more financial institutions and discount brokers are making it easier and easier for anyone to start automatically investing their money.  If you’re not already doing it, I encourage all of you to start today!

I can say from my own experience that automating my investing has made a huge difference in my financial position.  In the beginning I had serious doubts about how saving just $25 a week would ever amount to anything significant.  But year after year I kept increasing that amount and started throwing extra money into my investment accounts.  Now its’ been a little over 10 years and I’ve accumulated over half a million in financial assets.  This is why it literally pays to automate our savings and investing.

For more articles on investing check out my MUST READ page.  You can also check out my page on the best beginner personal finance books HERE.