Wealth Management
If you’re new to investing, a good place to start managing your wealth is to consult your tax preparer or accountant. They may be able to provide you with financial planning services. They may also be able to refer you to somebody who can.
There are three types of professional wealth management services you can use.
- A full service stock broker - A good stock broker is one who understands investing and who has the integrity to settle conflicts of interest in the client’s favour. Good stock brokers can provide an effective and economical way to manage your investments. But if you are going to use a full-service broker, take the time to find a broker you can trust.
- A discount stock broker - A discount stock broker will simply carry out buy and sell orders for their clients, and charge lower commission rates than full-service brokers. You pay even lower commissions if you trade stocks online, instead of placing orders over the phone.
- Portfolio managers - A portfolio manager is someone who fully manages your wealth portfolio and has a fiduciary responsibility to make sound investment decisions on your behalf. Portfolio managers are more stringently regulated than full-service or discount brokers.
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Over the past few months, we’ve periodically looked at common mistakes most investors make, and given you our advice on how to avoid them. Here are 3 more common errors all investors make from time to time.
- Following an unrealistic investment strategy: Some investors, particularly newcomers, plan to buy a few hot stocks (or funds, or options or futures), and double or triple their money in a few years. Then they’ll settle into a low-risk investing style that may only return an average 10% to 12% yearly. But if you could make 200% or 300% in a few years, why would you quit? If you could do it once, you should be able to do even better as you gain experience.
Of course, if you doubt that you can keep it up indefinitely, you should also question whether you can pull it off the first time. Our advice is that the best approach for you is one that will work for you more-or-less indefinitely. You’ll want to be sure it suits your circumstances and temperament, that it won’t take up too much of your time, and that it doesn’t require luck or extraordinary circumstances for success.
I hope you are enjoying and profiting from the free investing advice you get in our TSI Network daily updates. Our dailies aim to educate you on best practices in investing. They cover a range of investment topics, and explain conservative investment strategies you can use to build the best portfolio for you, and grow your wealth with less risk.
Time-tested investing advice that can help you weather any market
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A key part of our three-part tsinetwork.ca portfolio management advice is to downplay stocks that are in the broker/public-relations limelight.
(The other two parts are to invest mainly in well-established, dividend-paying companies and spread your money across the five main economic sectors: Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities.)
It’s especially crucial to downplay stocks that are getting a lot of attention from brokers in the media....
(The other two parts are to invest mainly in well-established, dividend-paying companies and spread your money across the five main economic sectors: Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities.)
Portfolio management: Why “in the limelight” stocks are riskier than most investors think
It’s especially crucial to downplay stocks that are getting a lot of attention from brokers in the media....
The Money Game, a 1968 mega bestseller about investing, was an eye-opener for a generation of investors, myself included. The author, George Goodman, wrote under the pseudonym Adam Smith. It takes a lot of chutzpah for a writer to name himself after the 18th century Scottish father of modern economics, but Goodman/Smith pulls it off. In his book, Smith introduced a number of key investing concepts that go to the heart of our Successful Investor stock investment advice. Smith has a genius for encapsulating his ideas in anecdotes, and here’s one that jumps out. It concerns the need to invest opportunistically, rather than emotionally. The story concerns a group of portfolio managers on a tour of troubled factories in the U.S. northeast. When passing by one facility, the tour’s broker-organizer commented, “I understand this company has thousands of drug addicts among its employees in that facility alone.”...
With interest rates still near historic lows, borrowing money to invest continues to look like an attractive investment strategy. That’s especially true if you borrow to buy well-established, dividend-paying stocks. For example, you could pick from the 19 companies we recommend in our Canadian Wealth Advisor newsletter’s Safety-Conscious Stock Portfolio. These investments give you regular dividend income and cash flow to pay the interest on your investment loan. (The Safety-Conscious Stock Portfolio is one of three portfolios Canadian Wealth Advisor offers to conservative and income-seeking investors. The other two are the Index Fund and ETF Portfolio and our Safety-Conscious Income Trust Portfolio. We continually monitor and update all three portfolios.)...
A good stock broker can help you manage your investments if you don’t want to do it yourself. However, good brokers have always been hard to find. And, as any good stock broker or experienced investor can tell you, bad brokers are all too common. By “bad brokers,” we mean those who put their own interests above their clients’. Keep in mind, however, that a bad stock broker can do this in a perfectly legal fashion by catering to their clients’ whims and weaknesses. Here are 3 ways to tell if brokers are putting their interests ahead of yours:...
Aastra Technologies, symbol AAH on Toronto, develops and markets products and systems for accessing communication networks, including the Internet. The aggressive investing stock’s technology is centred around business telephone systems, and includes products that integrate traditional and mobile phones. In the three months ended December 31, 2010, Aastra’s sales fell 0.8%, to $216.0 million from $217.8 million a year earlier. If you exclude the negative impact of exchange rates, sales would have risen 8.7%. The weaker sales pushed down Aastra’s earnings by 6.1%, to $14.4 million from $15.3 million a year earlier. Earnings per share declined 8.1%, to $1.02 from $1.11, on more shares outstanding. The company gets three quarters of its sales from Europe. The weaker European economy has hurt demand for the aggressive investing stock’s products, and forced it to cut its prices. It needs a sustained European economic recovery to show a sustained rise in sales and earnings....
These 2 retirement planning tips can help you leave a well-organized and profitable estate
LoJack Corp., symbol LOJN on Nasdaq, sells systems that help track and recover stolen vehicles. LoJack sells its products in the U.S. and 30 other countries. The company’s Canadian subsidiary is Boomerang Tracking. LoJack is one of the aggressive investing stocks we analyze in our Stock Pickers Digest newsletter. In the three months ended December 31, 2010, LoJack’s revenue rose 12.4%, to $40.0 million from $35.6 million a year earlier. The international division’s revenue jumped 27.1%, to $16.4 million from $12.9 million a year earlier. Sales in Italy were especially strong in the latest quarter: the company added 2,200 clients in the country, and now has a total of 13,000 Italian clients....
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific stock advice. Each Investor Toolkit update gives you a fundamental piece of investment strategy, and shows you how you can put it into practice right away. Tip of the week: “Too many stocks are as bad as too few.” The right number of stocks for you to own depends in part on where you are in your investing career....