Comments on: Know When to Fold ‘Em

By: BFM

BFM — Sun, 07 Jun 2009 04:21:38 +0000

I totally agree on what you say. Setting up an exit strategy for a stock is a critical step in trading. Your advice is appreciated.

By: Saver Queen

Saver Queen — Fri, 05 Jun 2009 13:49:32 +0000

Sedonahike, great information! I wish you had a blog – I’d love to read more from you.

By: This and That: Bank of Canada rate decision, Bank earnings and more… | Canadian Capitalist

Fri, 05 Jun 2009 13:09:06 +0000

[...] Now that stocks have recovered somewhat, Gail says investors should establish some investment rules to keep emotions in check. [...]

By: Geoff

Geoff — Thu, 04 Jun 2009 21:22:26 +0000

Erin, +1 on finding out.

If you get any grief, shutdown the operation. (Don’t ask to cash out cause that might be more trouble and cost you more in taxes than its worth) but stop contributing further.

Questions to ask:

1) What exactly am I investing in?
2) What is the ANNUAL Management Expense Ratio I’m being charged, if any (aka MER). Don’t buy the argument that ‘oh its free’. What other fees are there? Ain’t nothing free.
3) What are the risks involved?

But don’t take this response to mean stop investing cause its scary. It’s a bit like learning to drive, really. You have to start somewhere and its important. If you don’t start, you might not (most people I know who can’t drive in their 30s didn’t learn in their teens like the rest of us).

By: Sedonahike

Sedonahike — Thu, 04 Jun 2009 17:22:00 +0000

Erin, find out! One phone call or meeting should do it. Since you have just started out, I presume that you have opened up an RSP account with your bank (that’s usually where most people begin). That RSP account is likely a savings account with a low interest rate coming to you.

You have lots of choices of what to do with the money – the first step is making the contribution, congrats, you’re on your way. You can leave your contributions in a savings account however they will not grow very fast. Once you have accumulated enough capital – say $1000 you could then buy a Guaranteed Investment Certificate (GIC), which would yield a higher interest rate. You can also buy stocks or mutual funds (if you educate yourself about what you are getting into and understand the risk involved).

If your account is with a bank then you must be aware that they will only talk to you about their products (nothing wrong with bank products!), just be aware that the advice and options you get will not show the whole picture of what is out there for you.

Good luck. The hardest part is getting the monthly payment started, the second hardest part is figuring out what to do with it to make it grow.

By: *pol

*pol — Thu, 04 Jun 2009 17:05:23 +0000

These tips are great!
Unfortunately I really don’t know enough to say if the bits in my investments are doing any of that stuff…. mostly because I have a “diversified” moderate risk fund, and I hate to admit it, but I haven’t a clue what is going in and out, and I have to keep faith that these “professionals” are making the right decisions on my investment’s behalf!
The one thing I do have control over is whether to bail out or not.
My darling husband had a panic attack when the first major drop happened, he wanted to sell it all and cash out, NOW. But I felt it was time to hold strong and wait. It dropped further (of course) but we are still putting money in (buying more shares per dollar). I hope I made the right choice, though the market value is still worth less than the total dollar value put in, we have 30 years still until we need to think about it as a source of income. The way I try to look at it, the money isn’t lost or gained until the funds are cashed in, right?!
It’s so hard to think that far ahead when you see it looking all crappy…. Buying and selling stocks myself is an intriguing concept, but a little too much like gambling since I am not educated enough to make wise choices.

By: erin

erin — Thu, 04 Jun 2009 17:03:47 +0000

Silly question…I started rrsp’s a few months ago. I have no idea where that money is going…$50’s a month that I could part with. I think she said something about diversifying.

By: MarieC

MarieC — Thu, 04 Jun 2009 16:42:10 +0000

Thanks so much for these rules. I have been leary of investment mainly because of my lack of knowledge on what to do. THese are great rules to follow! And thanks Sedonahike for your input… something else to think about.

By: Sedonahike

Sedonahike — Thu, 04 Jun 2009 13:32:06 +0000

Rule #9 is the golden rule for me – “take some of the profit you’ve accumulated in shares you’ve been holding for a while”. Without taking the profits you have made you are only what I call a “paper millionnaire” – you havent’t made any money until you sell at a higher price than you bought at. So, periodically take your profits, no matter the stock price!! Reinvest that profit into something “safer” to protect your gain.

Before the tech bubble burst, I had about $1000 in a very high risk, venture capital stock (only a tiny portion of my entire portfolio) – it made me a ton of money, doubling every couple of months or so – BUT, I only made this money because I sold it regularly to get my profit out and left my initial $1000 investment to continue to grow. My initial $1000 is only worth about $300 right now, but so what, I’m still ahead of the game because I took at least $10,000 out of that in profits and reinvested them in longer term, deeemed “safer” investments (bond funds, GIC’s, etc.).

One final note, and this is something I can’t seem to get across to my friends — if you have a financial advisor – they are not in charge of your money – YOU ARE! Use their expertise for what it is, find someone you trust and establish a relationship with them. That means, meeting with them quarterly (or at LEAST twice a year) to review your portfolio, make adjustments, review your risk profile, review any upcoming changes in your life, etc. Don’t absolve yourself of all responsibility when you have a financial advisor – YOU are still the decision maker. If you have all your money invested with an advisor and you don’t monitor it regulary, you’re a fool (albeit with a heart of gold!).

By: Jamie

Jamie — Thu, 04 Jun 2009 13:04:14 +0000

I work at an investment dealer, and I get exactly what you’re talking about! So many people panic, and no matter how much you tell them to stick with the plan, they will sell at the lowest point and lose all the gains they’ve made.

Anyone with any investment knowledge, knows the adage “buy low, sell high” but since money is so emotional, it is extremely hard to let logic guide you.