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Money Advice for Life
Investing advice I wish I could give my younger self
There are many things we’ve done in life where we’d love a second chance, especially when it comes to finances. Knowing when and how to invest can be tricky. So, I sat down with some of our own experts to learn how they approach investing, common mistakes people make, and what advice they wish they could go back and give their younger self.
Hindsight is 20/20
Have you ever made a choice and regretted that decision years later? For me, it was bangs at fourteen. I wish I’d known then what I know now and that can be said for a lot of things, especially finances. We’ve all made bad spending decisions but many poor financial decisions or lack of action center around investing. We aren’t always as rational as we think we are which can lead to decisions and behaviours that may not be in our best long-term interest.
Now, although we can’t time travel, we can share advice and learn from those around us. I sat down with some of our own experts at Conexus to learn how they approach investing, common mistakes people make, and what advice they wish they could go back and give their younger self.
Let’s meet the experts:
Ryan McDonald, Wealth Advisor at Credential Securities
Nadia Antoschkin, Financial Advisor at Conexus Credit Union, Mutual Funds Specialist at Credential Asset Management Inc.
Natasja Barlow, Branch Manager at Conexus Credit Union
Each expert offers a unique perspective which is fitting as there is typically no one-size fits all approach to investing. From your preferred risk level to to the amount you want to invest, it’s a discovery process to find what’s going to work for you. You may not find all the answers you’re hoping for (and that’s okay), but here are a few tips and key learnings from the experts themselves to help equip you for your own investing journey.
It’s okay not knowing all the answers
Like anything, you won’t know everything when you first start out. You still might not know everything even five, ten years down the line. The world is in a constant state of change and evolution, which impacts everything around us. This is especially true for the stock market, which has high volatility, making it difficult to know when the right time to enter the market is (but don’t worry, I’ll touch on this later).
The good news is you don’t need to have all the answers. Ryan shared – “the first thing I do is educate. People aren’t always going to be experts and we don’t expect them to be, so I always make sure to discuss the various types of investments and plans that are available.”
Nadia also shared some tips that have helped her to get started:
Separate your money into different accounts. One for your daily expense and one for excess cash flow you could use to start saving or investing.
Start small and test the waters. She started with $50 a month.
Check-in. Is $50 working for you or could you increase that amount?
Learning to understand what you can manage and what you’re comfortable with takes a little trial and error. Also, don’t be afraid to do some searching to find out what you’re passionate about. Natasja shared “what I would do differently is invest the time in learning about my investments and being interested in where my money is going.” By starting with educating yourself, you’re laying that foundation and setting yourself up for success.
Focus on your goals
Investing is personal. We all have different goals, dreams and moments that we envision for our future selves. Ask yourself – what am I investing for? Is it retirement? Your education? A dream vacation? Or your first home? I bet if you asked three different people this question, the answer is going to be different for each of them.
A common mistake people tend to make is “doing the same thing as a friend or maybe even a family member” says Natasja Barlow. As human beings, we have a tendency to follow what those around us are doing especially if they are finding success. For example, most children tend to do their banking with the same financial institution as their parents because it’s familiar and they trust their parents. However, it’s important that you know what you’re investing for so that you can create a personalized plan. What makes sense for your friends or family may not make sense for you. For instance, if your parents are nearing retirement, their risk tolerance on a mutual fund may lean towards a conservative level when it is recommended to be a little more liberal in your 20s and 30s to generate a higher rate of return.
Many people struggle to start their investing journey as it can be intimidating. We often tell ourselves common misconceptions like the market is too volatile or we need a lot of money in order to begin. It’s never too early to begin and it’s never too late to start. For Nadia, this couldn’t be more true:
“I moved from Germany when I was 35-years old, didn’t speak any English, and didn’t know anything about investing. Now, I have my own diversified savings accounts.”
You don’t need thousands or even hundreds of dollars to get started. Investing in consistently small increments will add up over time – “if I had known about this when I was younger, I would have been better off”, says Nadia.
Start early, start small and be consistent! If you’re looking for ways to get started, check out our blog Why You Need To Be Investing During Your 20s and 30s.
Ride the turbulence
I touched on this earlier but depending on the investing option you go with – the market can be volatile. This means that there is often unexpected or sudden change which can drive the value of your investments up and down. When this happens, as humans it is natural to react. However, this reaction is often triggered by fear or worry which causes us to make irrational decisions like pulling your investments before they have the chance to recover.
In this article by the Financial Post, they discuss how strong emotions can influence investor behaviour in ways that may jeopardize their long-term investment goals.
Ryan explained it best using the “airplane analogy”. If you’ve been in an airplane, you’ve likely experienced turbulence. In these circumstances, our brain doesn’t say ‘oh it’s bumpy, let’s jump out and swim the rest of the way’, because eventually the plane gets back on track and to our destination a lot faster than we could swimming.”
He also shared, “investing is best if it’s boring and you do the basics of paying yourself first, investing early, staying invested and having a diversified portfolio. In 2008 I had been in the industry for two years and decided I should day trade my investments. This was the worst decision of my life.” Day trading is the practice of purchasing and selling a security within a single trading day. This involves buying a stock when it was low in price range and selling it as it moved up in range. Day trading can lead to obsessive behaviour and constantly watching your investments which can lead to urges to pull investments when they are better left untouched.
Sometimes it’s a matter of reducing your investment amount versus stopping all together. “If I would have reduced my investment instead of stopping it, I would be further ahead. That is a key learning for me.” says Natasja. But remember, it should always come back to your goals. What are you investing for? What is your risk level? Is this a short or long-term investment?
Investing isn’t one size fits all – it’s personal and is based on your individual goals, risk tolerance, or stage in life. You’re also going to hit some bumps along the way and make some mistakes – even with all of this advice. You know why? You’re human. My hope is that this blog at least encourages you to start and removes some of the worry or fear standing in your way.
Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. This report is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities.