How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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Stop-loss orders are a stock trading strategy investors use to sell a stock if it falls to a specific price. For example, if you own a $12 stock, you might tell your broker to sell it “on stop” if it hits $10. This may limit your losses if you paid more than $10. If you paid less, it may preserve some of your profits.
Stop-loss orders: A good stock trading strategy for filtering your profits
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The federal government first made tax free savings accounts (TFSAs) available to investors in January 2009. These accounts let you earn investment income — including interest, dividends and capital gains — tax free. However, you could only contribute $5,000 in 2009 to start your tax free savings account. Every year, you gain an additional $5,000 of contribution room (indexed to inflation and rounded to the nearest $500 on a yearly basis). Plus, you get to carry forward unused contribution room from previous years. So in 2010 you’ll have $10,000 of contribution room, $15,000 in 2011, and so on. (Read on for a simple strategy to help you choose between your TFSA and your RRSP, and cut your tax bill in retirement.)...
TRIMARK CANADIAN RESOURCES FUND $16.22 (CWA Rating: Aggressive) (AIM Funds Management Inc., 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. Tel: 1-800-631-7008; Web site: www.invescotrimark.com. Buy or sell through brokers) includes firms with Successful Investor Ratings of “Speculative” in its top picks. However, we like Trimark Canadian Resources Fund’s value-seeking, conservative approach to picking stocks in the volatile resource sector. The $428.9-million fund’s top holdings are EnCana, Canadian Natural Resources, Inmet Mining Corp., Husky Energy, Nexen, Cameco, Mayr-Meinhof Karton AG, Goldcorp and Talisman Energy. Trimark Canadian Resources Fund holds 50.3% of its portfolio in the Energy sector, 26.4% in Metals & Minerals and 6.3% in Industrials....
TD RESOURCE FUND $27.63 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario, M5W 1P9. Tel: 1-800-386-3757; Web site:www.tdcanadatrust.ca. No load: deal directly with the bank) invests in companies that its managers see as having strong asset bases, proven management and the ability to internally finance growth. The $195.0-million TD Resource Fund’s top stock holdings mostly have Successful Investor Ratings of “Average” or higher. They include EnCana, Suncor Energy, Talisman Energy, Goldcorp, Yamana Gold, TransCanada Corp., BHP Billiton, Barrick Gold, Husky Energy, Chevron, Marathon Oil and Nexen. TD Resource Fund holds 57.1% of its portfolio in Energy and 38.3% in Metals & Minerals....
ISHARES S&P INDIA NIFTY 50 INDEX FUND $25.51 (Nasdaq symbol INDY; buy or sell through brokers), is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities on the National Stock Exchange of India. The fund’s top holdings are: Reliance Industries (conglomerate), 13.0%; Infosys Technologies (software), 7.9%; ICICI Bank, 6.9%; Larsen & Toubro Ltd. (conglomerate), 6.7%; ITC Ltd. (conglomerate), 4.7%; HDFC Bank, 4.3%; State Bank of India, 4.1%, Oil & Natural Gas Corporation, 3.0%; and Tata Consulting Services (information technology), 2.4%. The fund’s industry breakdown is as follows: Banks, 17.1%; Refineries, 13.5%; Computers: Software, 12.1%; Engineering, 6.7%; Steel and Steel Products, 4.9%; Finance: Housing, 4.9%; Cigarettes, 4.7%; Power, 4.5%; Automobiles, 4.1%; and Electrical Equipment, 3.9%....
ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $51.79 (New York Exchange symbol ECH; buy or sell through brokers), is an ETF that aims to track the MSCI Chile Investable Market Index. This index consists of stocks that are mainly traded on the Santiago Stock Exchange. The fund’s top holdings are Empresas Copec SA (conglomerate), 12.9%; Empresa Nacional de Electricidad (electric power), 10.6%; Sociedad Quimiday Minera de Chile (mining), 7.3%; Empresas CMPC (pulp and paper), 7.2%; Cencosud SA (retailer), 5.2%; Banco Santander Chile (banking), 4.7%; CAP SA (iron-ore mining and steel), 4.3%; Lan Airlines SA (Chilean national airline), 4.2%; and Colbun SA (electric power), 3.9%. The fund’s industry breakdown is as follows: Utilities, 28.4%; Materials, 20.1%; Industrials, 19.3%; Consumer Staples, 9.9%; Financials, 8.9%; Consumer Discretionary, 7.8%; Telecommunication Services, 4.3%; Information Technology, 1.0%; and Health Care, 0.3%....
ISHARES MSCI GERMANY FUND $22.95 (New York Exchange symbol EWG; buy or sell through brokers) is an ETF that aims to track the MSCI Germany Index. This index aims to capture 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly because of limitations on foreign ownership. The fund’s top holdings are Siemens AG (engineering conglomerate), 9.6%; E.ON AG (energy), 9.6%; Bayer AG (diversified chemicals), 6.9%; Allianz (insurance), 6.7%; BASF (chemicals), 6.3%; Daimler AG (automobiles), 5.6%; Deutsche Bank AG, 5.0%; Deutsche Telekom AG, 4.9%; SAP AG (software), 4.8%; and RWE AG (energy and waste disposal), 4.4%. The fund’s industry breakdown is as follows: Financials, 19.9%; Industrials, 14.6%; Utilities, 14.2%; Consumer Discretionary, 13.6%; Materials, 12.6%; Health Care, 10.7%; Information Technology, 5.7%; Telecommunication Services, 4.9%; and Consumer Staples, 3.7%....
ISHARES MSCI SOUTH KOREA INDEX FUND $46.06 (New York Exchange symbol EWY; buy or sell through brokers), is an ETF that aims to track the MSCI Korea Index. The index aims to capture 85% of the total market capitalization of the South Korean stock market. The other 15% is unavailable for investment, partly due to limitations on foreign ownership. The fund’s top holdings are Samsung Electronics at 18.0%; Posco (steel), 7.4%; KB Financial Group, 4.3%; Shinhan Financial, 4.2%; Hyundai Motor Co., 3.8%; LG Electronics, 2.4%; Hyundai Mobis (Hyundai auto parts and service), 2.3%; Samsung Electronics preferred shares, 2.2%; LG Chemical, 2.2%; and Korea Electric Power, 2.0%. The fund’s industry breakdown is as follows: Information Technology, 28.1%; Financials, 18.3%; Industrials, 14.7%; Materials, 13.3%; Consumer Discretionary, 12.0%; Consumer Staples, 5.1%; Telecommunication Services, 3.3%; Energy, 2.4%; Utilities, 2.2%; and Health Care, 0.6%....
ISHARES MSCI EMERGING MARKETS INDEX FUND $41.85 (New York Exchange symbol EEM; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Index. The fund’s geographic breakdown includes: Brazil, 14.8%; South Korea, 12.4%; China, 11.2%; Taiwan, 10.4%; South Africa, 8.1%: Hong Kong, 6.8%; Russia, 6.3%; India, 6.0%; Mexico, 4.6%; and Israel, 3.3%. iShares MSCI Emerging Markets Index Fund’s top holdings are Samsung Electronics, 3.9%; Taiwan Semiconductor (Taiwan: computer chips), 2.7%; Petrobras (Brazil: energy), 2.6%; Banco Itau Holding Finance (Brazil: banking), 2.5%; Posco (steel), 2.2%; China Mobile (China: wireless), 1.9%; Gazprom (Russia: gas utility), 1.8%; KB Financial Group Inc. (South Korea: banking), 1.8%; and Banco Brandesco (Brazil: banking), 1.7%....
Tax-loss selling (or tax-loss harvesting) is a strategy for lowering your Canadian capital gains tax that involves selling a security at a loss in order to offset your capital gains. You can then deduct these losses against your taxable capital gains in the current tax year. For example, December 24 is the 2009 deadline for tax-loss selling on the Toronto Stock Exchange. If you sell at a loss on or before that date, you could deduct your loss against your 2009 capital gains. However, you can also carry your loss back for the three previous years (2008, 2007 and 2006), or carry it forward indefinitely to offset past or future capital gains.