Asset allocation funds are mutual funds that distribute their assets in accordance with all investors’ goals (consistent returns, diversified investments, etc.). Unlike balanced funds, they can shift their portfolio allocations between stocks, bonds and cash in order to capitalize on perceived investment opportunities in any one of those classes.

If a fund’s name includes the term “asset allocation,” it means …read more »

Cautious investors wonder if they own enough different stocks, or perhaps even too many.

The right number of stocks for investors to own for portfolio diversification depends, in part, on where they are in their investing careers.

When they’re just starting out, most people have modest amounts of money to invest. Even so, it generally pays to invest at least several …read more »

Registered education savings plans (RESPs) are one of the best ways to save for a child’s post-secondary education. RESPs are a government-assisted form of savings, similar to registered retirement savings plans (RRSPs).

How RESPs work
There are no annual limits for contributions to RESPs. However, RESPs have a lifetime limit (from birth to age 17) per child of $50,000. Only the first …read more »

Now more than ever we think you need to invest in only the highest-quality mutual funds. Here are some keys to building a sound portfolio with these mutual funds.

Diversify. Spread your portfolio out over several funds that practice a variety of investing styles. Vary your exposure to each style to reflect your individual financial circumstances, temperament and goals.

Invest in just …read more »

When stock prices go down as much as they have lately, it generally means the stock market offers some highly attractive buying opportunities. But many investors now wonder if we are headed for a period of years of weak stock markets.

In fact, we’ve already gone through more than a decade of unsettled stock markets. Stock prices have dropped more than …read more »

Economic turmoil over the past few months, and the sharp drop in stock prices, have rekindled investor interest in bonds. This is understandable, since bonds provide steady income streams and a guarantee to repay the principal at maturity.

However, bond prices will likely fall over the next few years as interest rates inevitably rise again. Big government budget deficits could spur …read more »

Canadian banks have recently issued new preferred shares to raise capital. To attract investors in a time of weak stock markets, they’ve issued these preferreds on especially attractive terms.

The preferreds pay dividends that give them yields of 6.25% to 6.50%. That’s higher than current Government of Canada long-term bond yields of 4% or so.

What’s more, preferred dividends are treated the …read more »

Some investors base buy and sell decisions in part on p/e ratios (the ratio of a stock’s price to its per-share earnings). When we provide a p/e, we try to eliminate all one-time items from earnings. These include writedowns, investment gains or restructuring charges. This gives you a clearer, truer view of a company’s profitability.

For decades, investors have used p/e’s …read more »

At times like this, when deciding what to do with your portfolio, you should resist the urge to dump high-quality investments just because you think they may get dragged down by a further decline in the market.

After all, when things look bleakest (as they do today), the market often turns around and begins rising. That’s especially true of high-quality stocks …read more »

Investors today often focus on two key questions: When is the market likely to turn around and start to rise again, and which stocks are likely to lead the way upward?

On the first question, my view is that the rise could start any time from now through May. Many stocks are cheap at current prices, even in view of the …read more »